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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 29, 1996 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
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- ------------------------
Common Stock (without par value) New York Stock Exchange
Preferred Share Purchase Rights Chicago Stock Exchange
Pacific Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes[X]. No[ ].
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.[X]
Aggregate market value of the Company's voting stock held by non-affiliates
on March 11, 1997, based upon the closing price of the Company's Common Stock as
reported on the New York Stock Exchange Composite Transactions list for such
date: approximately $4,391,000,000.
At March 11, 1997 there were 122,692,797 shares of the Company's Common
Stock outstanding.
The following documents are incorporated by reference, in part:
1996 Annual Report to Stockholders (Parts I and II, to the extent
described therein).
Definitive Proxy Statement for the May 6, 1997 Annual Meeting of
Stockholders (Part III, to the extent described therein).
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<PAGE>
PART I
ITEM 1. BUSINESS.
Tribune Company (the "Company") is an information, education and
entertainment company. Through its subsidiaries, the Company is engaged in the
publishing of newspapers, books, educational materials and information in print
and digital formats and the broadcasting, production and syndication of
information and entertainment in metropolitan areas in the United States. The
Company was founded in 1847 and incorporated in Illinois in 1861. As a result of
a corporate restructuring in 1968, the Company became a holding company
incorporated in Delaware. References in this report to "Tribune Company" or "the
Company" include Tribune Company and its subsidiaries, unless the context
otherwise indicates. The information in this Item 1 should be read in
conjunction with the information contained under the heading "Management's
Discussion and Analysis of Results of Operations and Financial Condition" in the
Company's 1996 Annual Report to Stockholders, which information is incorporated
herein by reference. Certain prior year amounts have been restated to conform
with the 1996 presentation. All share and per share data has been restated to
reflect a two-for-one common stock split effective January 15, 1997.
This Annual Report on Form 10-K contains certain forward-looking statements
that 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,
interest rates and other economic conditions and the effect of acquisitions and
dispositions on the Company's results of operations or financial condition.
BUSINESS SEGMENTS
The Company's operations are divided for reporting purposes into three
industry segments: publishing, broadcasting and entertainment, and education.
These segments operate in the United States. The education segment was
established in 1994. The following table sets forth operating revenues and
profit information for each segment of the Company (in thousands).
<TABLE>
<CAPTION>
Fiscal Year Ended December
----------------------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Operating Revenues:
Publishing ...................................... $1,336,639 $1,312,767 $1,246,377
Broadcasting and Entertainment .................. 876,750 828,806 764,197
Education........................................ 192,316 103,101 102,082
---------- ---------- ----------
Total Operating Revenues.................... $2,405,705 $2,244,674 $2,112,656
---------- ---------- ----------
Operating Profit (1):
Publishing ...................................... $ 281,312 $ 270,143 $ 287,590
Broadcasting and Entertainment (2)............... 200,537 160,616 132,413
Education........................................ 39,422 4,586 2,829
Corporate expenses............................... (31,195) (30,134) (26,207)
---------- ---------- ----------
Total Operating Profit...................... $ 490,076 $ 405,211 $ 396,625
---------- ---------- ----------
- -----
(1) Operating profit for each segment excludes interest income and expense, non-operating gains and
losses and income taxes.
(2) 1996 includes a $10 million non-recurring pretax gain, representing the Company's equity interest
in a gain recorded by Qwest Broadcasting for the cancellation of an option to purchase a television
station.
</TABLE>
1
<PAGE>
The following table sets forth asset information for each industry segment
(in thousands).
<TABLE>
<CAPTION>
Fiscal Year Ended December
----------------------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Assets:
Publishing....................................... $ 686,730 $ 693,853 $ 757,889
Broadcasting and Entertainment................... 1,616,797 1,405,213 1,321,768
Education........................................ 544,226 211,510 210,445
Corporate (1).................................... 853,147 977,679 495,723
---------- ---------- ----------
Total Assets................................ $3,700,900 $3,288,255 $2,785,825
---------- ---------- ----------
- -----
(1) Corporate assets include the investment in and advances to QUNO in 1995 and 1994.
</TABLE>
Prior to 1993 the Company also had a segment called Newsprint Operations,
which consisted entirely of QUNO Corporation ("QUNO") and operated in Canada. In
March 1996, the Company completed the sale of its holdings in QUNO as part of
QUNO's merger with Donohue Inc. QUNO was a wholly owned subsidiary of the
Company until February 1993, when QUNO completed an initial public offering of 9
million shares of common stock. This reduced the Company's ownership to 59% and
its voting interest to 49%. In April 1994, the Company reduced its ownership
holdings in QUNO to 34% by selling 5.5 million shares of QUNO common stock. The
Company began accounting for its investment in QUNO using the equity method in
1993. QUNO has been accounted for as a discontinued operation in the
consolidated financial statements.
The Company's 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. Results for the
second quarter usually reflect spring advertising, while the fourth quarter
includes advertising related to the holiday season. In education, second and
third quarter revenues are typically higher than first and fourth quarter
revenues. Fiscal years 1996 and 1994 comprised 52 weeks. Fiscal year 1995
comprised 53 weeks. The effect of the additional week in 1995 on the comparisons
of the financial statements taken as a whole is generally not significant.
PUBLISHING
The publishing segment represented 56% of the Company's consolidated
operating revenues in 1996. The twelve-month combined average circulation of the
Company's daily newspapers was approximately 1.3 million daily and 1.9 million
Sunday. The Company's primary newspapers are the Chicago Tribune, the Fort
Lauderdale-based Sun-Sentinel, The Orlando Sentinel and the Newport News, Va.
Daily Press. In California, the Company owned two daily newspapers and a weekly
newspaper located in suburban areas in the San Diego market that were sold in
July 1995 for approximately $16 million in cash. The Company recorded a $7.5
million pretax loss on this sale in 1995. The Company also operated one daily
newspaper and several weekly newspapers in Palo Alto, California, which ceased
publication in March 1993. The Company recorded a $15.3 million pretax charge in
1992 for the closure of these Palo Alto-based papers. For 1996, the portion of
total publishing operating revenues represented by each of the Company's
newspaper subsidiaries was as follows: Chicago Tribune Company--55%;
Sun-Sentinel Company--22%; Sentinel Communications Company--17%; and The Daily
Press--4%. In addition, the Company owns a newspaper syndication and media
marketing company and other publishing-related businesses.
Each of the Company's newspapers operates independently to most effectively
meet the needs of the area it serves. Editorial policies are established by
local management. The Company coordinates certain aspects of operations and
resources in order to provide greater operating efficiency and economies of
scale.
2
<PAGE>
The Company's newspapers compete for readership and advertising in varying
degrees with other metropolitan, suburban and national newspapers, as well as
with television, radio and other media. Competition for newspaper advertising is
based upon circulation levels, readership demographics, price, service and
advertiser results, while competition for circulation is based upon the content
of the newspaper, service and price.
The Company's newspapers are printed in Company-owned production
facilities. The principal raw material is newsprint. In 1996, the Company's
newspapers consumed approximately 357,000 metric tons of newsprint. In 1995 and
1994, the North American newsprint industry increased newsprint prices several
times due to higher demand for newsprint in the U.S. and overseas. As a result,
average newsprint transaction prices increased 45% in 1995 over 1994. The higher
newsprint prices increased newsprint expense at the Company's newspapers by
approximately $75 million in 1995. The Company's publishing operations offset
most of this increase through cost controls, a decrease in newsprint consumption
and revenue increases. Newsprint prices peaked in the first quarter of 1996 and
then declined throughout the remainder of the year. As a result, average
newsprint transaction prices decreased 1% in 1996 from 1995.
The Company is party to a contract with Donohue Inc. expiring in 2007 to
supply newsprint based on market prices. Under the contract, the Company has
agreed to purchase specified minimum amounts of newsprint each year subject to
certain limitations. The specified minimum annual volume is 250,000 metric tons
in years 1997 to 1999, 225,000, 200,000 and 175,000 metric tons in years 2000 to
2002, respectively, and 150,000 metric tons in each of years 2003 to 2007. In
1996, approximately 74% of the newspapers' newsprint supply was purchased from
Donohue.
The following table provides a breakdown of revenues for the publishing
segment for the last three years.
Operating Revenues
(In thousands)
Fiscal Year Ended December
---------------------------------------------
1996 1995 1994
---------- ---------- ----------
Advertising
Retail............... $ 433,373 $ 450,141 $ 438,235
General.............. 140,741 130,680 135,742
Classified .......... 456,912 429,961 387,717
---------- ---------- ----------
Total........... 1,031,026 1,010,782 961,694
Circulation ........... 252,263 249,860 242,993
Other (1).............. 53,350 52,125 41,690
---------- ---------- ----------
Total........... $1,336,639 $1,312,767 $1,246,377
---------- ---------- ----------
- -----
(1) Primarily includes revenues from advertising placement services; the
syndication of columns, features, information and comics to newspapers;
commercial printing operations; delivery of other publications; direct mail
operations; and other publishing-related activities.
Total advertising revenues improved in 1996 due to rate increases. The
decline in retail advertising revenues was mainly due to a decrease in the food
and drug, hardware and department store categories, primarily in Chicago.
General advertising revenues rose at all of the newspapers due to higher
advertising in the transportation, hi-tech and other categories. Classified
advertising revenues also rose at each of the newspapers due primarily to
increases in help wanted advertising.
3
<PAGE>
Chicago Tribune Company
Founded in 1847, the Chicago Tribune is published daily, including Sunday,
and primarily serves an eight-county market in northern Illinois and Indiana.
This market ranks third in the United States in number of households. For the
six months ended September 1996, the Chicago Tribune ranked 7th in average daily
circulation and 4th in average Sunday circulation in the nation, based on ABC
averages. Approximately 76% and 57% of the Tribune's daily and Sunday
circulation, respectively, is sold through home delivery, with the remainder
primarily sold at newsstands and vending boxes. The daily edition's newsstand
price increased by $.15 to $.50 in September 1992. The Sunday edition's
newsstand price increased by $.25 to $1.75 in October 1995. In June 1996, the
Chicago Tribune began to phase in a weekly home delivery price increase of $.10
to $4.00. The following tables set forth selected information for the Chicago
Tribune daily newspaper and other related activities.
<TABLE>
<CAPTION>
Averages for the Twelve Months Ended December
-----------------------------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Circulation:
Daily......................... 674,000 683,000 682,000
Sunday........................ 1,052,000 1,085,000 1,092,000
</TABLE>
<TABLE>
<CAPTION>
Fiscal Year Ended December
-----------------------------------------------------
1996 1995 1994
-------- -------- --------
(In thousands)
<S> <C> <C> <C>
Advertising Inches:
Full Run (all zones)
Retail...................... 953 1,123 1,211
General..................... 354 314 338
Classified.................. 1,330 1,339 1,320
-------- -------- --------
Total . . . ............. 2,637 2,776 2,869
Part Run...................... 4,877 5,160 5,017
Preprinted Inserts............ 2,967 3,045 2,852
-------- -------- --------
Total Inches............. 10,481 10,981 10,738
-------- -------- --------
Operating Revenues.............. $735,158 $723,344 $678,297
-------- -------- --------
</TABLE>
The 1996 decline in advertising volume was mainly due to a weaker retail
advertising market and the extra week in 1995, partially offset by increases in
general and classified help wanted inches.
Based on ABC averages for the six months ended September 1996, the Chicago
Tribune had a 37% lead in total daily paid circulation and a 136% lead in Sunday
paid circulation over its principal competitor, the Chicago Sun-Times. The
Chicago Tribune's total advertising volume and operating revenues are estimated
to be substantially greater than those of the Sun-Times. The Chicago Tribune
also competes with other city, suburban and national daily newspapers, direct
mail operations and other media. In September 1993, the Chicago Tribune began
publishing Exito!, a weekly newspaper targeted to Spanish-speaking households.
The Chicago Tribune owns Chicago Tribune Direct, a direct mail operation
acquired in 1991. The Chicago Tribune also operates audiotex services and
publications targeted to specific consumer market segments. In January 1995, the
Chicago Tribune acquired RELCON, Inc. for approximately $8 million in cash,
which publishes free apartment and new home guides and provides apartment rental
referral services to prospective renters.
4
<PAGE>
Sun-Sentinel Company (Fort Lauderdale)
The Sun-Sentinel is published daily, including Sunday, and leads the
Broward/South Palm Beach market in circulation. Approximately 70% and 64% of the
Sun-Sentinel's daily and Sunday circulation, respectively, is sold through home
delivery, with the remainder sold at newsstands and vending boxes. The paper's
principal competition comes from the Miami Herald and national and local
publications, as well as other media. The Miami/Fort Lauderdale market ranks
16th in the nation in terms of households. The daily Broward edition's newsstand
price increased by $.10 to $.35 in May 1995. The daily South Palm Beach
edition's newsstand price increased $.15 to $.50 in January 1996. The newsstand
price of all Sunday editions was increased by $.25 to $1.00 in November 1989. In
January 1992, the newsstand price of the South Palm Beach Sunday edition
increased by $.25 to $1.25. In March 1996, the weekly home delivery price for
the Broward edition increased $.15 to $2.75. In November 1996, the weekly home
delivery price for the South Palm Beach edition increased $.25 to $3.00. The
following tables set forth selected information for the Sun-Sentinel daily
newspaper and other related activities.
<TABLE>
<CAPTION>
Averages for the Twelve Months Ended December
-----------------------------------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Circulation:
Daily......................... 256,000 262,000 268,000
Sunday........................ 371,000 370,000 365,000
</TABLE>
<TABLE>
<CAPTION>
Fiscal Year Ended December
-------------------------------------------------------
1996 1995 1994
-------- -------- --------
(In thousands)
<S> <C> <C> <C>
Advertising Inches: (1)
Full Run (all zones)
Retail...................... 1,161 1,203 1,237
General..................... 240 226 237
Classified.................. 2,425 2,451 2,442
-------- -------- --------
Total.................... 3,826 3,880 3,916
Part Run...................... 2,980 2,967 2,979
Preprinted Inserts............ 1,521 1,748 1,660
-------- -------- --------
Total Inches............. 8,327 8,595 8,555
-------- -------- --------
Operating Revenues .............. $292,248 $284,838 $267,095
-------- -------- --------
</TABLE>
- -----
(1) Excludes inches for Gold Coast Shopper and other targeted publications.
The 1996 decline in advertising volume was mainly due to the extra week in
1995 and lower preprint linage.
The Sun-Sentinel Company owns Gold Coast Shopper, a publication located in
Deerfield Beach. In 1991, two weekly publications, XS and Exito!, targeted to
young adults and Spanish-speaking households, respectively, were launched and
have continued to expand readership. The Sun-Sentinel also offers alternate
delivery services, audiotex services and publications targeted to specific
consumer market segments, such as South Florida Parenting, acquired in 1994.
5
<PAGE>
Sentinel Communications Company (Orlando)
The Orlando Sentinel is published daily, including Sunday, and serves
primarily a five-county area in Central Florida. It is the only major daily
newspaper in the Orlando market, although it competes with other Florida and
national newspapers, as well as other media. Approximately 77% of the paper's
daily and 67% of its Sunday circulation is sold on a home delivery basis, with
the remainder sold at newsstands and vending boxes. In March 1992, the newsstand
price of the daily edition increased $.15 to $.50, except for most Thursday
editions, which had been priced at $.50 since February 1991. The newsstand price
of the Sunday edition was increased to $1.50 from $1.25 at the end of 1990. In
October 1995, the weekly home delivery price was increased by $.10 to $3.85. The
Orlando/Daytona Beach/Melbourne market ranks 22nd among U.S. markets in terms of
households. The following tables set forth selected information for The Orlando
Sentinel daily newspaper and other related activities.
<TABLE>
<CAPTION>
Averages for the Twelve Months Ended December
------------------------------------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Circulation:
Daily......................... 261,000 268,000 269,000
Sunday........................ 383,000 389,000 390,000
</TABLE>
<TABLE>
<CAPTION>
Fiscal Year Ended December
--------------------------------------------------------
1996 1995 1994
-------- --------- --------
(In thousands)
<S> <C> <C> <C>
Advertising Inches:
Full Run (all zones)
Retail...................... 914 930 971
General..................... 133 137 99
Classified.................. 1,728 1,848 1,842
-------- -------- --------
Total.................... 2,775 2,915 2,912
Part Run ..................... 1,387 1,506 1,884
Preprinted Inserts............ 2,764 2,787 2,741
-------- -------- --------
Total Inches ............ 6,926 7,208 7,537
-------- -------- --------
Operating Revenues.............. $232,874 $221,786 $214,125
-------- -------- --------
</TABLE>
The 1996 decline in advertising volume was mainly due to the extra week in
1995 and lower transportation, automotive and real estate advertising, partially
offset by increased help wanted inches.
The Orlando Sentinel also publishes US/Express, a free weekly entertainment
publication that is used to distribute advertising to non-subscribers.
US/Express is syndicated nationally. In 1995, The Orlando Sentinel purchased
Family Journal Publications, a group of central Florida parenting magazines, and
began publishing RELCON free apartment and home guides for the central Florida
market.
The Daily Press (Newport News, Virginia)
The Daily Press is published daily, including Sunday, and serves the
Hampton Roads market. The Daily Press constitutes the only major daily newspaper
in the market, although it competes with other regional and national newspapers,
as well as other media. The Hampton Roads market includes Newport News, Hampton,
Williamsburg and eight other cities and counties in Virginia. This market area
is also commonly called the Virginia Peninsula and, together with Norfolk,
Portsmouth and Virginia Beach, is the 40th largest U.S. market in terms of
households. The newsstand price of the daily edition increased by $.15 to $.50
in July 1996. The Sunday edition newsstand price was increased to $1.50 from
$1.25 in October 1995. The weekly home delivery price was increased by $.30
6
<PAGE>
to $3.05 in October 1995. Approximately 81% of the paper's daily and 77% of its
Sunday circulation is sold on a home delivery basis, with the remainder sold at
newsstands and vending boxes. The following tables set forth selected
information for the Daily Press.
<TABLE>
<CAPTION>
Averages for the Twelve Months Ended December
--------------------------------------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Circulation:
Daily......................... 100,000 103,000 104,000
Sunday........................ 121,000 126,000 126,000
</TABLE>
<TABLE>
<CAPTION>
Fiscal Year Ended December
-------------------------------------------------------
1996 1995 1994
------- ------- -------
(In thousands)
<S> <C> <C> <C>
Advertising Inches:
Full Run (all zones)
Retail...................... 610 674 728
General..................... 28 18 29
Classified.................. 858 887 880
------- ------- -------
Total.................... 1,496 1,579 1,637
Part Run ..................... 125 110 115
Preprinted Inserts ........... 1,184 1,185 1,147
------- ------- -------
Total Inches............. 2,805 2,874 2,899
------- ------- -------
Operating Revenues ............ $52,618 $51,555 $49,866
------- ------- -------
</TABLE>
Related Businesses
The Company is also involved in syndication activities, advertising
placement services, Internet and other online-related businesses and other
publishing-related activities. The syndication activities, conducted primarily
through Tribune Media Services ("TMS"), involve the marketing of columns,
features, information and comic strips to newspapers. TMS is also engaged in
advertising placement services for television listings in newspapers and the
development of news products and services for electronic and print media. In
1996, the Company acquired a 20% equity interest in Digital City, Inc., a
venture with America Online to develop a national network of local interactive
services. The Digital City affiliate in each of the Company's newspaper markets
is wholly owned by the Company. Internet and other online-related businesses
include the electronic publishing of each of the Company's daily newspapers with
enhanced content on the Internet.
Total operating revenues for these publishing-related businesses are shown
below, net of intercompany revenues.
Operating Revenues
(In thousands)
Fiscal Year Ended
December
--------
1996................................ $23,741
1995................................ 22,739
1994................................ 19,519
7
<PAGE>
BROADCASTING AND ENTERTAINMENT
The broadcasting and entertainment segment represented 36% of the Company's
consolidated operating revenues in 1996. At December 29, 1996, the segment
included WB television affiliates located in New York, Los Angeles, Chicago,
Philadelphia, Boston, Houston, Denver and San Diego, a CBS television affiliate
(effective December 1994) in Atlanta, an ABC television affiliate (effective
January 1996) in New Orleans and five radio stations located in New York,
Chicago and Denver (three stations).
In January 1996, the Company acquired television station KHTV-Houston for
approximately $102 million in cash. In February 1996, the Company acquired the
remaining minority interest in WPHL-Philadelphia for $23 million in cash. In
April 1996, the Company acquired television station KSWB-San Diego for $72
million in cash. In November 1995, the Company swapped its two Sacramento radio
stations, KYMX and KCTC, for $3 million in cash and a Denver radio station. The
Company acquired television station WLVI-Boston in April 1994, for $25 million
in cash. In June 1994, the Company acquired Farm Journal Inc., publisher of The
Farm Journal, a leading farm magazine, for $17.5 million in cash. Farm Journal
results are reported in radio. In 1997, the Company reached an agreement to sell
Farm Journal for $17 million in cash. The sale is expected to close in
March 1997. In January 1993, the Company acquired two Denver radio stations,
KOSI-FM and KEZW-AM, for $19.9 million in cash. The acquisitions were accounted
for as purchases.
In March 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 Company 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, relating to the Miami television station and the Fort
Lauderdale Sun-Sentinel. The Company plans to appeal the FCC's ruling on the
cross-ownership issue. The Company cannot predict the outcome of such FCC
rulemaking or any such appeal. With the acquisition of the six Renaissance
stations, the Company became the second largest TV station group in the nation
with a reach of 33.4% of US households (measured by Nielsen Market Ranks, DMAs,
for 1996-1997). Under FCC rules, which count UHF stations at half credit, the
Company's household coverage is 24.8%, well under the regulatory cap of 35%.
In entertainment/Chicago Cubs, the Company owns the Chicago Cubs baseball
team and produces and syndicates television programming. Cable programming/
development includes CLTV News, a Chicago-area news cable channel, and the
Company's equity income or loss from its investments in The WB Network, TV Food
Network (a basic cable channel specializing in cooking, nutrition and fitness
programming) and Qwest Broadcasting.
The following table shows sources of revenue for the broadcasting and
entertainment segment for the last three years.
Operating Revenues
(In thousands)
<TABLE>
<CAPTION>
Fiscal Year Ended December
-------------------------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Television (1).......................... $680,504 $629,502 $598,532
Radio (2)............................... 89,260 88,435 68,817
Entertainment/Chicago Cubs (3).......... 98,415 103,689 92,080
Cable Programming/Development........... 8,571 7,180 4,768
-------- -------- --------
Total............................... $876,750 $828,806 $764,197
-------- -------- --------
</TABLE>
8
<PAGE>
- -----
(1) Includes WLVI-Boston since its acquisition in April 1994, KHTV-Houston
since its acquisition in January 1996 and KSWB-San Diego since its
acquisition in April 1996.
(2) Includes Farm Journal Inc. since its acquisition in June 1994.
(3) 1996 reflects the impact of the cancellation of two Tribune Entertainment
syndicated programs, "Charles Perez" and "The Road." 1995 and 1994 reflect
the impact of the Major League baseball strike which began August 12, 1994
and ended in April 1995.
Television
In 1996, television contributed 78% of broadcasting and entertainment
operating revenues. The Company's television stations compete for audience and
advertising with other television and radio stations, cable television and other
media serving the same markets. Competition for audience and advertising is
based upon various interrelated factors including programming content, audience
acceptance and price. Selected data for the Company's television stations,
including the six stations acquired in March 1997, is shown in the following
table.
<TABLE>
<CAPTION>
Market (1) Major
----------------------------- Commercial Expiration
National % of U.S. FCC Stations in of FCC
Rank Households % Channel Affiliation Market (2) License (3)
-------- ---------- --- ------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
WPIX - New York, NY.............. 1 6.9 6.9 11-VHF WB 6 1999
KTLA - Los Angeles, CA........... 2 5.1 5.1 5-VHF WB 7 1998
WGN - Chicago, IL............... 3 3.2 3.2 9-VHF WB 7 1997 (4)
WPHL - Philadelphia, PA.......... 4 2.7 1.3 17-UHF WB 6 1999
WLVI - Boston, MA................ 6 2.2 1.1 56-UHF WB 7 1999
KDAF - Dallas, TX (5)............ 8 1.9 1.0 33-UHF WB 8 1998
WGNX - Atlanta, GA............... 10 1.7 0.8 46-UHF CBS 7 1997 (6)
KHTV - Houston, TX .............. 11 1.7 0.8 39-UHF WB 7 1998
WDZL - Miami, FL (5)............. 16 1.4 0.7 39-UHF WB 6 1997 (7)
KWGN - Denver, CO................ 18 1.2 1.2 2-VHF WB 6 1998
KTXL - Sacramento, CA (5)........ 20 1.2 0.6 40-UHF Fox 6 1998
WXIN - Indianapolis, IN (5)...... 25 1.0 0.5 59-UHF Fox 6 1997 (8)
KSWB - San Diego, CA............. 26 1.0 0.5 69-UHF WB 6 1998
WTIC - Hartford, CT (5).......... 27 1.0 0.5 61-UHF Fox 6 1999
WGNO - New Orleans, LA........... 41 0.6 0.3 26-UHF ABC 6 1997 (9)
WPMT - Harrisburg, PA (5)........ 45 0.6 0.3 43-UHF Fox 5 1999
- -----
(1) Source: Nielsen Station Index, September 1996. Ranking of markets is based on number of television households in DMA
(Designated Market Area).
(2) Source: Nielsen Metered Market Service Station Index Report, November 1996.
(3) See "Governmental Regulation."
(4) Expires December 1997. Renewal application will be filed.
(5) Acquired March 1997.
(6) Expires April 1997. Renewal application filed in December 1996 is pending.
(7) Expired February 1997. Renewal application filed in September 1996 is pending.
(8) Expires August 1997. Renewal application will be filed.
(9) Expires June 1997. Renewal application filed in January 1997 is pending.
</TABLE>
Programming emphasis at the Company's WB affiliated stations is placed on
syndicated series, feature motion pictures, local and regional sports coverage,
news and children's programs. The stations acquire most of their programming
from outside sources, including The WB Network, although a significant amount is
produced locally or supplied by Tribune Entertainment (see "Entertainment/
Chicago Cubs"). Contracts for purchased programming generally cover a period of
one to seven years, with payment also typically made over several years. The
expense for amortization of television broadcast rights in 1996 was $233
million, which represented approximately 34% of total television operating
revenues.
9
<PAGE>
Average audience share information for the Company's television stations
for the past three years is shown in the following table.
<TABLE>
<CAPTION>
Average Audience Share (1)
Year Ended December
--------------------------------------
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
WPIX - New York, NY.................. 11.0% 10.0% 9.8%
KTLA - Los Angeles, CA............... 8.5 10.0 9.3
WGN - Chicago, IL................... 10.0 10.8 10.8
WPHL - Philadelphia, PA ............. 4.8 5.3 4.8
WLVI - Boston, MA (2)................ 4.3 4.5 5.0
KDAF - Dallas, TX (3)................ 8.3 10.0 9.3
WGNX - Atlanta, GA................... 8.3 9.3 7.0
KHTV - Houston, TX (4)............... 5.8 6.3 6.8
WDZL - Miami, FL (3)................. 6.5 6.8 7.3
KWGN - Denver, CO ................... 8.8 9.0 9.8
KTXL - Sacramento, CA (3)............ 9.3 10.0 11.5
WXIN - Indianapolis, IN (3).......... 7.8 9.3 10.8
KSWB - San Diego, CA (5)............. 3.3 2.5 3.0
WTIC - Hartford, CT (3).............. 8.3 8.8 9.8
WGNO - New Orleans, LA............... 7.3 9.0 9.5
WPMT - Harrisburg, PA (3)............ 7.3 6.8 7.5
- -----
(1) Represents the estimated number of television households tuned to a specific
station as a percent of total viewing households in a defined area. The
percentages shown reflect the average Nielsen ratings shares for the February,
May, July and November measurement periods for 7 a.m. to 1 a.m. daily.
(2) Acquired April 1994.
(3) Acquired March 1997.
(4) Acquired January 1996.
(5) Acquired April 1996.
</TABLE>
Radio
In 1996, the Company's radio operations contributed 10% of broadcasting and
entertainment operating revenues. The largest radio station owned by the
Company, measured in terms of operating revenues, is WGN. Radio operations
include Tribune Radio Networks, which produces and distributes farm and sports
programming to radio stations, primarily in the Midwest, and Farm Journal Inc.
Selected information for the Company's radio operations is shown in the
following table.
<TABLE>
<CAPTION>
Number of
National Operating
Market Stations in Audience
Format Frequency Rank (1) Market (2) Share (3)
------------------------ --------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
WQCD - New York, NY New Adult
Contemporary/Jazz 101.9-FM 1 45 3.2%
WGN - Chicago, IL Personality/Infotainment
/Sports 720-AM 3 43 6.4%
KOSI - Denver, CO Adult Contemporary 101.1-FM 23 31 5.7%
KEZW - Denver, CO Nostalgia 1430-AM 23 31 2.8%
KKHK - Denver, CO Classic Rock 99.5-FM 23 31 3.7%
- -----
(1) Source: Radio markets ranked by Arbitron Metro Survey Area, Arbitron Company 1996.
(2) Source: Arbitron Company 1996.
(3) Source: Average of Winter, Spring, Summer and Fall 1996 Arbitron shares for persons 12 years old and over,
6 a.m. to midnight daily during the period measured.
</TABLE>
10
<PAGE>
Entertainment/Chicago Cubs
In 1996, entertainment/Chicago Cubs contributed 11% of the segment's
operating revenues. This portion of the broadcasting and entertainment segment
includes Tribune Entertainment Company, the Chicago Cubs baseball team and one
minor league baseball team. Agreement on a new five-year contract between the
Major League Baseball Players Association ("MLBPA") and Major League Baseball
was reached in December 1996. The previous contract expired on December 31,
1993. The MLBPA initiated a strike on August 12, 1994, and on August 28, 1994,
the owners canceled the remainder of the 1994 Major League Baseball season. In
April 1995, the National Labor Relations Board invalidated the owners' posted
rules, and the players ended their strike. The 1995 baseball season began April
26, 1995. The strike shortened the 1995 season by 18 games and continued to
impact attendance throughout the season. The new contract is not expected to
have a material impact on the Company's results of operations.
Tribune Entertainment Company was formed to acquire and develop
programming for Company television stations and for syndication. Tribune
Entertainment participates in the production or distribution of first-run
programming, including one daily talk show, music and variety shows, television
shows, movies and specials. Tribune Entertainment's most popular program is
"Geraldo," a one-hour, daily talk show which is aired on 106 stations that cover
81% of U.S. television households, and is sold internationally to many cities in
Canada, as well as to several countries in Latin America and Europe. During the
1996-1997 television season, Tribune Entertainment originated or syndicated
approximately 10.5 hours of first-run programs per week. On average, the
Company's ten television stations utilized more than six hours per week of
programming furnished by Tribune Entertainment.
The Company owns the Chicago Cubs baseball team. In addition to providing
local sports entertainment, the Cubs represent an important source of live
programming for the Company's Chicago-based broadcasting operations and regional
cable programming service. The Company also owns a Class A Midwest League
franchise in Rockford, Illinois.
Cable Programming/Development
Cable programming/development contributed 1% of the segment's operating
revenues in 1996. CLTV News, a regional 24-hour cable news programming service,
was launched in January 1993 and currently is available to more than 1.5 million
cable households in the Chicago-area market. The Company acquired a 12.5% equity
interest in The WB Network in 1995, and agreed to increase its equity interest
to 21.9% in March 1997. In 1995, the Company acquired a 33% equity interest in
Qwest Broadcasting, which owns WB affiliate television stations in Atlanta and
New Orleans. In 1993, the Company acquired a 31% equity interest in TV Food
Network, a 24-hour basic cable channel focusing on cooking, nutrition and
fitness. These investments are accounted for under the equity method of
accounting, and accordingly, the Company records its share of the investment's
net income or loss in cable programming/development.
EDUCATION
The education segment represented 8% of the Company's consolidated
operating revenues in 1996. Education revenues are derived from publishing
supplemental and curriculum education materials and adult education and trade
books. Education operating revenues in 1996 were $192 million, up 87% from 1995
due mainly to acquisitions. The education market consists primarily of two
components, core curriculum education products and supplemental education
materials. The Company's education segment has become one of the nation's
largest publishers for grades K-12.
11
<PAGE>
In March 1996, the Company acquired Educational Publishing Corporation for
$205 million in cash and NTC Publishing Group for $83 million in cash.
Educational Publishing publishes supplemental and curriculum education
materials. NTC Publishing publishes trade books and educational products for the
school and consumer markets. In August 1995, the Company acquired Everyday
Learning Corporation, a publisher of mathematics materials for grades
kindergarten through 6, for approximately $25 million. In February 1994, the
Company acquired The Wright Group, a publisher of supplemental education
materials for the elementary school market, for approximately $96 million in
cash. In July 1993, the Company acquired Contemporary Books, Inc., a publisher
of nonfiction trade titles and educational books and materials, for
approximately $22 million in cash and $18.5 million in common stock. In
September 1993, the Company acquired Compton's Multimedia Publishing Group for
approximately $57 million in cash. The Company sold Compton's to The Learning
Company, Inc. in December 1995. The acquisitions were accounted for as
purchases.
DISCONTINUED OPERATIONS (QUNO CORPORATION)
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 Company owned approximately 34% of QUNO's common stock plus $138.8
million in convertible debt. 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. In April 1994, the
Company reduced its ownership holdings in QUNO from 59% to 34% by selling 5.5
million shares of QUNO common stock. The sale of the shares resulted in an
after-tax gain in 1994 of $13 million, or $.10 per share. QUNO has been
accounted for as a discontinued operation in the Company's consolidated
financial statements.
The following table shows QUNO newsprint sales to affiliated (Tribune) and
unaffiliated customers for 1995 and 1994.
Newsprint Sales
(In thousands of metric tons)
Fiscal Year Ended December
-----------------------------
1995 1994
---------- ----------
Affiliated customers........................... 251 256
Unaffiliated customers......................... 585 531
------- -------
Total sales............................. 836 787
------- -------
See "Publishing" for a discussion of the supply contract between the
Company and Donohue.
GOVERNMENTAL REGULATION
Various aspects of the Company's operations are subject to regulation by
governmental authorities in the United States.
The Company's television and radio broadcasting operations are subject to
Federal Communications Commission jurisdiction under the Communications Act of
1934, as amended. FCC rules, among other things, govern the term, renewal and
transfer of radio and television broadcasting licenses, and limit concentrations
of broadcasting control inconsistent with the public interest. Federal law also
regulates the rates charged for political advertising and the quantity of
advertising within children's programs. The Company is permitted to own both
newspaper and broadcast operations in the Chicago market by virtue of
"grandfather" provisions in the FCC regulations. National limits on the number
of broadcast stations a licensee may own were removed by Congress in
12
<PAGE>
1996. However, federal law continues to limit the number of radio and television
stations a single owner may own in a local market, and the percentage of the
national television audience that may be reached by a licensee's television
stations in the aggregate. Television and radio broadcasting licenses are
subject to renewal by the FCC, at which time they may be subject to competing
applications for the licensed frequencies. At December 29, 1996, the Company had
FCC authorization to operate ten television stations and two AM and three FM
radio stations. In March 1997, the Company received FCC authorization to operate
the six Renaissance television stations, subject to certain conditions as
outlined on page 8.
From time to time, the FCC revises existing regulations and policies in
ways that could affect the Company's broadcasting operations. In addition,
Congress from time to time considers and adopts substantive amendments to the
governing communications legislation. The Company cannot predict what
regulations or legislation may be proposed or finally enacted or what effect, if
any, such regulations or legislation could have on the Company's broadcasting
operations.
EMPLOYEES
The average number of full-time equivalent employees of the Company in 1996
was 10,700, approximately 200 more than the average for 1995. The increase was
due to the net impact of the 1995 and 1996 acquisitions and dispositions.
Pension and other employee benefit plans are provided for substantially all
employees of the Company. Eligible employees also participate in the Company's
Employee Stock Ownership Plan.
During 1996, the Company's publishing segment employed approximately 7,400
full-time equivalent employees, about 7% of whom were represented by a total of
five unions. Contracts with unionized employees of the publishing segment expire
at various times through September 1999.
Broadcasting and entertainment had an average of 2,700 full-time equivalent
employees in 1996. Approximately 23% of these employees were represented by a
total of 22 unions. Contracts with unionized employees of the broadcasting and
entertainment segment expire at various times through December 1999.
Education had an average of 600 full-time equivalent employees in 1996.
Approximately 9% of these employees were represented by one union. The contract
with the unionized employees of the education segment expires in October 1998.
EXECUTIVE OFFICERS OF THE COMPANY
Information with respect to the executive officers of the Company as of
March 11, 1997 is set forth below. The descriptions of the business experience
of these individuals include the principal positions held by them since March
1992.
Robert D. Bosau (50)
Executive Vice President, Tribune Education Company* since August 1994; Vice
President/Administration of Tribune Publishing Company* from 1991 to August
1994.
Joseph D. Cantrell (52)
Executive Vice President, Tribune Publishing Company* since August 1994;
President of The Daily Press, Inc.* and Publisher of the Daily Press from 1986
to August 1994.
- -----
* A subsidiary of the Company.
13
<PAGE>
James C. Dowdle (63)
Executive Vice President/Media Operations since August 1994, Executive Vice
President of the Company since August 1991; President and Chief Executive
Officer of Tribune Broadcasting Company* since 1981; President of Tribune
Publishing Company* since August 1994; Director of the Company since 1985.
Dennis J. FitzSimons (46)
Executive Vice President, Tribune Broadcasting Company* since August 1994;
President of Tribune Television* from 1992 to August 1994; Vice President/
General Manager of WGN-TV* from 1987 to 1992.
Donald C. Grenesko (48)
Senior Vice President/Finance and Administration since August 1996, Senior Vice
President and Chief Financial Officer from March 1993 to August 1996 and Vice
President and Chief Financial Officer of the Company from October 1991 to March
1993.
David D. Hiller (43)
Senior Vice President/Development since November 1993, Senior Vice President and
General Counsel from March to November 1993 and Vice President and General
Counsel of the Company from 1988 to March 1993; Partner, Sidley & Austin until
November 1993.
Crane H. Kenney (34)
Vice President/General Counsel and Secretary since August 1996, Vice President/
Chief Legal Officer from February 1996 to August 1996, Senior Counsel from March
1995 to January 1996 and Counsel of the Company from February 1994 to February
1995; Associate, Schiff, Harden & Waite until January 1994.
Luis E. Lewin (48)
Vice President/Human Resources since October 1996, Director of Human Resources
of the Company from March 1994 to October 1996; Acting Publisher of Exito! in
Chicago from December 1995 to September 1996; Vice President/Human Resources of
Sun-Sentinel Company* from 1991 to 1994.
John W. Madigan (59)
Chairman since January 1996, Chief Executive Officer since May 1995, President
since May 1994 and Chief Operating Officer of the Company from May 1994 to May
1995; Executive Vice President of the Company and President and Chief Executive
Officer of Tribune Publishing Company* from August 1991 to May 1994; Publisher
of the Chicago Tribune from August 1990 to May 1994 and President and Chief
Executive Officer of Chicago Tribune Company* until September 1993; Director of
the Company since 1975.
Ruthellyn Musil (45)
Vice President/Corporate Relations since March 1995 and Director of
Communications of the Company from July 1992 to March 1995; Director of Employee
Communications of Chicago Tribune Company* from 1989 to July 1992.
Jeff R. Scherb (39)
Senior Vice President/Chief Technology Officer of the Company since August 1996;
Chief Technology Officer and Senior Vice President, Dun & Bradstreet Software
from March 1995 to August 1996; Vice President/Systems Development, Turner
Broadcasting from 1994 to 1995; Senior Vice President/Product Development,
Delphi Information Systems from 1992 to 1994.
- -----
* A subsidiary of the Company.
14
<PAGE>
ITEM 2. PROPERTIES.
The corporate headquarters of the Company are located at 435 North Michigan
Avenue, Chicago, Illinois. The general character, location and approximate size
of the principal physical properties used by the Company on December 29, 1996
are listed below. In addition to those listed, the Company owns or leases
transmitter sites, parking lots and other properties aggregating approximately
572 acres in 47 separate locations, and owns or leases an aggregate of
approximately 1,238,000 square feet of space in 178 locations. Included in these
figures is a 115,000 square foot office building in Philadelphia, Pennsylvania
which was sold by the Company on December 30, 1996. This office building had
been occupied by the Company's subsidiary, Farm Journal, Inc. until October
1995, when Farm Journal employees relocated to leased space in Philadelphia. The
Company also owns the 39,000-seat stadium used by the Chicago Cubs baseball
team. The Company considers its various properties to be in good condition and
suitable for the purposes for which they are used.
<TABLE>
<CAPTION>
Approximate Area in Square Feet
-------------------------------
General Character of Property Owned Leased
----------------------------- ----------- -----------
<S> <C> <C>
Publishing:
Printing plants, business and editorial offices,
and warehouse space located in:
Chicago, Illinois.................................. 1,327,000 (1) 166,000
Orlando, Florida................................... 406,000 98,000
Deerfield Beach, Florida........................... 386,000 -
Fort Lauderdale, Florida........................... 279,000 (2) 33,000
Northlake, Illinois................................ - 216,000
Newport News, Virginia............................. 207,000 -
Franklin Park, Illinois............................ - 78,000
Broadcasting and Entertainment:
Business offices, studios, garages and
transmitters located in:
Los Angeles, California............................ 253,000 -
New York, New York................................. - 129,000
Chicago, Illinois.................................. 99,000 4,000
Philadelphia, Pennsylvania......................... 22,000 50,000
Oak Brook, Illinois................................ - 69,000
Denver, Colorado................................... 46,000 11,000
Houston, Texas..................................... 35,000 -
Boston, Massachusetts.............................. 28,000 -
Chula Vista, California............................ 22,000 -
New Orleans, Louisiana............................. - 22,000
Atlanta, Georgia................................... - 21,000
Education:
Business offices and warehouse space located in:
Chicago, Illinois.................................. 185,000 29,000
Alsip, Illinois.................................... - 171,000
Kirkland, Washington............................... - 126,000
Lincolnwood, Illinois.............................. - 74,000
Bothell, Washington................................ - 60,000
Grand Rapids, Michigan............................. - 53,000
Mountain View, California.......................... - 28,000
</TABLE>
- -----
(1) Includes Tribune Tower, an approximately 630,000 square foot office
building in downtown Chicago, and Freedom Center, the approximately 697,000
square foot production center of the Chicago Tribune. Tribune Tower houses
the
15
<PAGE>
Company's corporate headquarters, the Chicago Tribune's business and
editorial offices, offices of various subsidiary companies and
approximately 70,000 square feet of space leased to unaffiliated tenants.
Freedom Center houses the Chicago Tribune's printing, packaging and
distribution operations.
(2) Represents New River Center, an approximately 279,000 square foot office
building in downtown Fort Lauderdale. New River Center houses the business
and editorial offices of the Sun-Sentinel, which occupies approximately
94,000 square feet. The remaining space is leased to or available for
commercial tenants.
ITEM 3. LEGAL PROCEEDINGS.
The Company and its subsidiaries are defendants from time to time in
actions for matters arising out of their business operations. In addition, the
Company and its subsidiaries are involved from time to time as parties in
various regulatory, environmental and other proceedings with governmental
authorities and administrative agencies.
The State of Florida Department of Environmental Protection ("DEP") and the
Company's subsidiary, Sentinel Communications Company (the "Sentinel"), have
entered into a consent decree under which the Sentinel will assist the DEP in
remediating certain trichloroethene groundwater contamination in downtown
Orlando, Florida. The Company currently estimates that the Sentinel's share of
the remediation costs will not be material and has provided for the costs in the
Company's consolidated financial statements.
The Sun-Sentinel Company (the "Sun-Sentinel") has been notified by the
United States Environmental Protection Agency ("EPA") that it is a potentially
responsible party ("PRP") under Superfund legislation with respect to the
Wingate Road site in Fort Lauderdale. The EPA has also identified 30 other PRP's
for the site. The Company denies liability for clean-up costs at the site;
however, the Company estimates that its liability, if any, will not be material.
The Company does not believe that any of the matters or proceedings
presently pending will have a material adverse effect on its consolidated
financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
16
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The Company's Common Stock is presently listed on the New York, Chicago and
Pacific stock exchanges. Per share data has been restated to reflect a
two-for-one common stock split effective January 15, 1997. The high and low
sales prices of the Common Stock by fiscal quarter for the two most recent
fiscal years, as reported on the New York Stock Exchange Composite Transactions
list, were as follows:
1996 1995
--------------------- -----------------------
Quarter High Low High Low
------- ------- -------- -------- ---------
First............. $34 1/2 $28 5/16 $28 1/16 $25 3/8
Second............ 38 1/8 32 1/16 30 3/8 26 7/8
Third............. 39 1/2 31 5/8 34 1/8 29 7/8
Fourth............ 44 1/8 37 7/8 34 7/16 29 13/16
At March 11, 1997, there were 5,165 holders of record of the Company's
Common Stock.
Quarterly cash dividends declared on Common Stock were $.15 per share in
1996 and $.14 per share in 1995. Total cash dividends declared on Common Stock
by the Company were $73,742,000 for 1996 and $72,524,000 for 1995.
During 1996, the Company did not sell any of its equity securities in
transactions that were not registered under the Securities Act of 1933, as
amended.
ITEM 6. SELECTED FINANCIAL DATA.
The information for the years 1992 through 1996 contained under the heading
"Eleven Year Financial Summary" in the Company's 1996 Annual Report to
Stockholders is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The information contained under the heading "Management's Discussion and
Analysis of Results of Operations and Financial Condition" in the Company's 1996
Annual Report to Stockholders is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Company's Consolidated Financial Statements and Notes thereto and the
information contained under the heading "Business Segments" appearing on pages
53 through 71 of the Company's 1996 Annual Report to Stockholders, together with
the report thereon of Price Waterhouse LLP dated February 11, 1997, appearing on
page 76 of such Annual Report and the information contained under the heading
"Quarterly Results (Unaudited)" on pages 72 and 73, are incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
Not applicable.
17
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information contained under the heading "Executive Officers of the
Company" in Item 1 hereof, and the information under the heading "Election of
Directors" in the definitive Proxy Statement for the Company's May 6, 1997
Annual Meeting of Stockholders is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information contained under the heading "Executive Compensation"
(except those portions relating to Item 13, below) in the definitive Proxy
Statement for the Company's May 6, 1997 Annual Meeting of Stockholders is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The information contained under the subheadings "Principal Stockholders"
and "Management Ownership" under the heading "Ownership Information" in the
definitive Proxy Statement for the Company's May 6, 1997 Annual Meeting of
Stockholders, is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information contained under the heading "Executive Compensation"
(except those portions relating to Item 11, above) and the subheadings
"Compensation of Directors" and "Other Transactions" in the definitive Proxy
Statement for the Company's May 6, 1997 Annual Meeting of Stockholders, is
incorporated herein by reference.
18
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(1)&(2) Financial Statements and Financial Statement Schedule filed as part
of this report
As listed in the Index to Financial Statements and Financial
Statement Schedule on page 22 hereof.
(a)(3) Index to Exhibits filed as part of this report
As listed in the Exhibit Index beginning on page 25 hereof.
(b) Reports on Form 8-K
The Company filed two reports on Form 8-K during the last quarter
of the period covered by this report.
o The Company filed a Form 8-K Current Report dated October 18,
1996, which reported under Item 5 the Company's third quarter
1996 earnings press release. No financial statements were filed
as part of the report.
o The Company filed a Form 8-K/A-3, Amendment No. 3, (dated
July 26, 1996, date of earliest event reported) on
November 8, 1996 which amended and supplemented the Form 8-K
dated July 26, 1996. The Form 8-K/A-3 reported under Item 7 the
financial statements of Renaissance Communications Corp. for the
quarter ended September 30, 1996, the unaudited pro forma
condensed consolidated balance sheet of Tribune Company as of
September 29, 1996 and the unaudited pro forma condensed
consolidated statements of income for Tribune Company for the
fiscal year ended December 31, 1995 and the first three quarters
ended September 29, 1996 to reflect all completed or pending
acquisitions and dispositions.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, on
March 27, 1997.
TRIBUNE COMPANY
(Registrant)
/s/ John W. Madigan
-------------------
John W. Madigan
Chairman, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the registrant and in the capacities indicated on March 27, 1997.
Signature Title
--------- -----
/s/ John W. Madigan
-------------------
John W. Madigan Chairman, President and Chief Executive Officer
and Director (principal executive officer)
/s/ James C. Dowdle
-------------------
James C. Dowdle Executive Vice President and Director
/s/ Donald C. Grenesko
----------------------
Donald C. Grenesko Senior Vice President/Finance and Administration
(principal financial officer)
/s/ R. Mark Mallory
-------------------
R. Mark Mallory Vice President and Controller
(principal accounting officer)
20
<PAGE>
Signature Title
--------- -----
/s/ Diego E. Hernandez
----------------------
Diego E. Hernandez Director
/s/ Robert E. La Blanc
----------------------
Robert E. La Blanc Director
/s/ Nancy Hicks Maynard
-----------------------
Nancy Hicks Maynard Director
/s/ Dudley S. Taft
------------------
Dudley S. Taft Director
/s/ Arnold R. Weber
-------------------
Arnold R. Weber Director
21
<PAGE>
TRIBUNE COMPANY
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULE
Page
----
Consolidated Statements of Income for each of the three
fiscal years in the period ended December 29, 1996......................... *
Consolidated Balance Sheets at December 29, 1996 and
December 31, 1995.......................................................... *
Consolidated Statements of Cash Flows for each of the
three fiscal years in the period ended December 29, 1996................... *
Consolidated Statements of Shareholders' Equity for each
of the three fiscal years in the period ended December 29, 1996............ *
Notes to Consolidated Financial Statements.................................... *
Report of Independent Accountants on Consolidated
Financial Statements....................................................... *
Report of Independent Accountants on Financial
Statement Schedule.........................................................23
Financial Statement Schedule for each of the three fiscal
years in the period ended December 29, 1996 .............................. 24
Schedule II Valuation and qualifying accounts and reserves.
- -----
* Incorporated by reference to the Company's 1996 Annual Report to
Stockholders. See Item 8 of this Annual Report on Form 10-K.
-----
All other schedules required under Regulation S-X are omitted because they are
not applicable or not required.
22
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of Tribune Company
Our audits of the consolidated financial statements referred to in our report
dated February 11, 1997 appearing in the 1996 Annual Report to Stockholders of
Tribune Company (which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K) also included an
audit of the Financial Statement Schedule listed in Item 14(a) of this Form
10-K. In our opinion, this Financial Statement Schedule presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements.
/s/ Price Waterhouse LLP
- ------------------------
PRICE WATERHOUSE LLP
Chicago, Illinois
February 11, 1997
23
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE II
TRIBUNE COMPANY
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(In thousands of dollars)
Additions
Balance at Charged to Balance
Beginning Costs and at End of
Description of Period Expenses Deductions Period
----------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Valuation accounts deducted from assets
to which they apply:
Year ended December 29, 1996
Accounts receivable allowances:
Bad debts....................................... $ 23,078 $ 19,846 $ 18,479 $ 24,445
Rebates, volume discounts and other............. 7,076 20,313 17,428 9,961
-------- -------- -------- --------
Total..................................... $ 30,154 $ 40,159 $ 35,907 $ 34,406
======== ======== ======== ========
Year ended December 31, 1995
Accounts receivable allowances:
Bad debts....................................... $ 24,464 $ 19,745 $ 21,131 $ 23,078
Rebates, volume discounts and other............. 9,534 27,754 30,212 7,076
-------- -------- -------- --------
Total..................................... $ 33,998 $ 47,499 $ 51,343 (1) $ 30,154
======== ======== ======== ========
Year ended December 25, 1994
Accounts receivable allowances:
Bad debts....................................... $ 17,589 $ 18,024 $ 11,149 $ 24,464
Rebates, volume discounts and other............. 7,843 18,284 16,593 9,534
-------- -------- -------- --------
Total..................................... $ 25,432 $ 36,308 $ 27,742 $ 33,998
======== ======== ======== ========
- -----
(1) For 1995, $9,389 represents deductions pertaining to Compton's NewMedia and Times Advocate Company, sold in 1995.
</TABLE>
24
<PAGE>
TRIBUNE COMPANY
EXHIBIT INDEX
Exhibits marked with an asterisk (*) are incorporated by reference to
documents previously filed by Tribune Company with the Securities and Exchange
Commission, as indicated. Exhibits marked with a circle (o) are management
contracts or compensatory plan contracts or arrangements filed pursuant to Item
601(b)(10)(iii)(A) of Regulation S-K. All other documents listed are filed with
this Report.
Number Description
------ -----------
2 * Pre-Amalgamation Agreement among Donohue Inc., Tribune
Company and QUNO Corporation, dated as of December 22,
1995 (Exhibit 99.2 to Form 8-K Current Report dated
January 8, 1996); Pre-Amalgamation Amendment Agreement
thereto dated as of December 28, 1995 (Exhibit 99.3 to
Form 8-K Current Report dated January 8, 1996).
2.1 * Agreement and Plan of Merger among Tribune Company, Tower
Acquisition Company, Inc. and Renaissance Communications
Corp. dated as of July 1, 1996 (Exhibit 99.1 to Form 8-K
Current Report dated July 9, 1996).
3.1 * Restated Certificate of Incorporation of Tribune Company,
dated April 21, 1987; Certificate of Designations of
Series A Junior Participating Preferred Stock, dated
December 31, 1987; Certificate of Designations of Series B
Convertible Preferred Stock, dated April 4, 1989 (Exhibit
3.1 to Annual Report on Form 10-K for 1991).
3.2 By-Laws of Tribune Company As Amended and In Effect on
December 10, 1996.
4 * Rights Agreement between Tribune Company and The First
National Bank of Chicago, as Rights Agent, dated as of
December 22, 1987 (Exhibit 1 to Form 8-K Current Report
dated January 6, 1988); First Amendment thereto dated as
of July 31, 1990 (Exhibit 4 to Form 10-Q Quarterly Report
for the quarter ended July 1, 1990); Second Amendment
thereto dated as of October 31, 1990 (Exhibit 4 to Form
10-Q Quarterly Report for the quarter ended September
30, 1990).
4.1 * Indenture, dated as of March 1, 1992 between Tribune
Company and Continental Bank, National Association
(Incorporated by reference to Registration Statement on
Form S-3, Registration No. 333-02831).
4.2 * Indenture, dated as of January 1, 1997 between Tribune
Company and Bank of Montreal Trust Company (Incorporated
by reference to Registration Statement on Form S-3,
Registration No. 333-18921).
10.1 o* Chicago Tribune Company Split-Dollar Insurance Plan dated
June 29, 1978, together with first amendment dated
August 28, 1981, covering certain employees of Tribune
Company and Chicago Tribune Company (Exhibit 10.4 in File
No. 2-86087).
10.2 o* Tribune Company Supplemental Retirement Plan, as amended
and restated on January 1, 1989 (Exhibit 10.6 to Annual
Report on Form 10-K for 1988).
25
<PAGE>
Number Description
------ -----------
10.2a o* First Amendment of Tribune Company Supplemental Retirement
Plan, effective January 1, 1994 (Exhibit 10.4b to Annual
Report on Form 10-K for 1993).
10.3 o* Tribune Company Directors' Deferred Compensation Plan, as
amended and restated on July 1, 1994 (Exhibit 10.7 to
Annual Report on Form 10-K for 1994).
10.4 o* Tribune Company Bonus Deferral Plan, dated as of December
14, 1993 (Exhibit 10.8 to Annual Report on Form 10-K for
1993).
10.4a o First Amendment of Tribune Company Bonus Deferral Plan,
effective December 1, 1996.
10.5 o* Tribune Company Management Incentive Plan, dated as of
January 1, 1991 (Exhibit 10.10 to Annual Report on Form
10-K for 1990).
10.5a o* Amendment effective January 1, 1992 to the Tribune
Company Management Incentive Plan dated as of January 1,
1991 (Exhibit 10.9b to Annual Report on Form 10-K for
1991).
10.6 o* Tribune Company Amended and Restated 1984 Long-Term
Performance Plan, effective as of July 25, 1989 (Exhibit
19.2 to Form 10-Q Quarterly Report for the quarter ended
June 25, 1989); Forms of Incentive Stock Option Agreement
and Non-Qualified Stock Option Agreements for Tribune
Company Amended and Restated 1984 Long-Term Performance
Plan (Exhibit 19.2 to Form 10-Q Quarterly Report for the
quarter ended July 1, 1990).
10.7 o* Tribune Company 1992 Long-Term Incentive Plan, dated as
of April 29, 1992 and as amended and in effect on April
19, 1994 (Exhibit 10.11 to Annual Report on Form 10-K for
1994).
10.8 o* Tribune Company Executive Financial Counseling Plan, dated
October 19, 1988 and as amended effective January 1, 1994
(Exhibit 10.13 to Annual Report on Form 10-K for 1993).
10.9 o* Tribune Company Amended and Restated Transitional
Compensation Plan for Executive Employees, effective as of
January 1, 1995 (Exhibit 10.14 to Annual Report on Form
10-K for 1994).
10.10 o* Tribune Company Supplemental Defined Contribution Plan,
effective as of January 1, 1994 (Exhibit 10.15 to Annual
Report on Form 10-K for 1993).
10.11 o* Tribune Company Amended and Restated Employee Stock
Purchase Plan, dated October 22, 1996 (Exhibit 10.20 to
Form 10-Q Quarterly Report for the quarter ended September
29, 1996).
10.12 o* 1988 Restricted Stock Plan For Outside Directors, dated
February 16, 1988 (Exhibit 10.12 to Annual Report on Form
10-K for 1992).
10.12a o* Amendment effective April 28, 1992 to the 1988 Restricted
Stock Plan For Outside Directors (Exhibit 10.12b to Annual
Report on Form 10-K for 1993).
10.13 o* Tribune Company Amended and Restated 1995 Nonemployee
Director Stock Option Plan, dated October 22, 1996
(Exhibit 10.19 to Form 10-Q Quarterly Report for the
quarter ended September 29, 1996).
26
<PAGE>
Number Description
------ -----------
10.14 o* Tribune Company Amended and Restated 1996 Nonemployee
Director Stock Compensation Plan, dated October 22, 1996
(Exhibit 10.21 to Form 10-Q Quarterly Report for the
quarter ended September 29, 1996).
11 Statements of Computation of Primary and Fully Diluted Net
Income Per Share.
12 Computation of Ratios of Earnings to Fixed Charges.
13 The portions of the Company's 1996 Annual Report to
Stockholders which are specifically incorporated herein by
reference.
21 Table of subsidiaries of Tribune Company.
23 Consent of Independent Accountants.
27 Financial Data Schedule.
99 Form 11-K financial statements for the Tribune Company
Savings Incentive Plan (to be filed by amendment).
27
EXHIBIT 3.2
BY-LAWS
OF
TRIBUNE COMPANY
A Delaware Corporation
As Amended and In Effect on December 10, 1996
ARTICLE I0.
Registered Office and Agent
Section 1.1 Registered Office and Agent. The registered office of the Company in
the State of Delaware shall be the office of The Corporation Trust Company in
the City of Wilmington, County of New Castle, and the registered agent in charge
thereof shall be The Corporation Trust Company.
ARTICLE II
Meetings of Stockholders
Section 2.1 Place of Meeting. Meetings of stockholders shall be held at such
locations as are designated by the Board of Directors or the officers calling
such meetings.
Section 2.2 Annual Meeting. The annual meeting of the stockholders shall be held
on such date (not a legal holiday) and at such time as is designated by
resolution of the Board of Directors, for the purpose of electing directors and
for the transaction of such other business as may properly be brought before the
meeting.
Section 2.3 Special Meetings. Special meetings of the stockholders may be called
by the Chief Executive Officer of the Company or the Board of Directors.
Business transacted at any special meeting of stockholders shall be limited to
the purposes stated in the notice of the meeting.
Section 2.4 Notice of Meetings. Unless otherwise required by statute, written
notice stating the place, date and hour of each meeting of stockholders and the
purpose or purposes of each such meeting shall be given to each stockholder
entitled to vote at such meeting not less than ten nor more than sixty days
before the date of the meeting. In the case of a meeting to vote on a merger or
consolidation such notice shall be given not less than twenty nor more than
sixty days before the date of the meeting. If given by mail, such notice shall
be deemed to be given when deposited in the United States mail,
<PAGE>
postage prepaid, directed to the stockholder at his address as it appears on the
records of the Company.
Section 2.5 Notice of Stockholder Business. At an annual meeting of the
stockholders, only such business shall be conducted as shall have been properly
brought before the meeting. To be properly brought before an annual meeting
business must be (a) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of Directors, (b) otherwise
properly brought before the meeting by or at the direction of the Board of
Directors, or (c) otherwise properly brought before the meeting by a
stockholder. For business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the Secretary of the Company. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Company not less than 60 days prior to the meeting; provided, however, that in
the event that less than 70 days' notice or prior public disclosure of the date
of the meeting is given or made to stockholders, notice by the stockholder to be
timely must be so received not later than the close of business on the 10th day
following the day on which such notice of the date of the annual meeting was
mailed to stockholders or such public disclosure was made, whichever occurs
first. A stockholder's notice to the Secretary shall set forth as to each matter
the stockholder proposes to bring before the annual meeting (a) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (b) the name and
address, as they appear on the Company's books, of the stockholder proposing
such business, (c) the class and number of shares of the Company which are
beneficially owned by the stockholder, and (d) any material interest of the
stockholder in such business. Notwithstanding anything in these By-Laws to the
contrary, no business shall be conducted at an annual meeting of stockholders
except in accordance with the procedures set forth in this Section. The chairman
of an annual meeting shall, if the facts warrant, determine and declare to the
meeting that business was not properly brought before the meeting and in
accordance with the provisions of this Section, and if he should so determine,
he shall so declare to the meeting and any such business not properly brought
before the meeting shall not be transacted.
At any special meeting of the stockholders, only such business shall be
conducted as shall have been brought before the meeting by or at the direction
of the Chief Executive Officer or the Board of Directors.
Section 2.6 List of Stockholders. The officer or agent having charge of the
stock ledger of the Company shall make, at least ten days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of and the
number of shares registered in the name of each stockholder. Such list shall be
open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours,
- 2 -
<PAGE>
for a period of at least ten days prior to the meeting, either at a place within
the city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
Section 2.7 Inspectors. In advance of any meeting of stockholders the Company,
by its Board of Directors or by its Chairman or President, shall appoint one or
more inspectors of voting who shall receive and count the ballots and make a
written report of the results of the balloting, and who shall perform such other
duties in connection therewith as is provided by law. The Company may also
designate one or more persons as alternate inspectors to replace any inspector
who is unable or fails to act.
Section 2.8 Quorum. The holders of record of shares of capital stock of the
Company having a majority of the votes entitled to be cast at the meeting,
represented in person or by proxy, shall constitute a quorum at all meetings of
stockholders. Where a separate vote by class or classes is to be held, the
holders of stock having a majority of the votes entitled to be cast by such
class or classes, represented in person or by proxy, shall constitute a quorum
at the meeting. Regardless of whether a quorum is present or represented, the
chairman of the meeting, or stockholders represented in person or by proxy at
the meeting voting a majority of the votes cast by such stockholders on the
matter, shall have the power to adjourn the meeting to another time and/or
place. Unless the adjournment is for more than thirty days, or unless a new
record date is set for the adjourned meeting, no notice of the adjourned meeting
need be given to any stockholder; provided that the time and place of the
adjourned meeting were announced at the meeting at which the adjournment was
taken. At the adjourned meeting the Company may transact any business which
might have been transacted at the original meeting.
Section 2.9 Voting of Shares; Proxies. The voting rights of holders of common
stock and preferred stock of the Company shall be as set forth in the Restated
Certificate of Incorporation, as from time to time in effect, and in resolutions
of the Board of Directors providing for series of the preferred stock. A
stockholder may vote either in person, by proxy executed in writing by the
stockholder or an authorized officer, director, employee or agent of the
stock-holder, or by electronic transmission as provided by law. No proxy shall
be voted or acted upon after three years from the date of its execution, unless
the proxy provides for a longer period. Action on any question or in any
election may be by a voice vote unless the presiding officer shall order that
voting be by ballot. The presiding officer at the meeting shall fix and announce
at the meeting the date and time of the opening and the closing of the polls for
each matter upon which the stockholders will vote at the meeting.
- 3 -
<PAGE>
Section 2.10 Required Vote. At any duly constituted meeting of stockholders, the
affirmative vote of holders of a majority of the voting power of all shares
represented at the meeting in person or by proxy and entitled to vote on the
matter shall be necessary for the adoption or approval of any matter properly
brought before the meeting, unless the proposed action is for the election of
directors or is one upon which, by express provision of statute or of the
Restated Certificate of Incorporation, a different affirmative vote is
specified or required, in which case such express provision shall govern and
control the decision of such question. In elections for directors, the nominees
receiving the highest number of votes cast for the number of director positions
to be filled shall be elected. Where a separate vote by class or classes is to
be held, unless otherwise provided by statute or the Restated Certificate of
Incorporation, the affirmative vote of the holders of a majority of the voting
power of all shares of such class or classes represented at the meeting in
person or by proxy shall be the act of such class or classes.
Section 2.11 Action Without a Meeting. Action by the stockholders may be taken
without a meeting as provided in the Restated Certificate of Incorporation.
ARTICLE III
Directors
Section 3.1 Number, Tenure and Qualifications. The business and affairs of the
Company shall be managed by a Board of no less than ten (10) nor more than
fifteen (15) directors, as fixed from time to time by resolution of the Board of
Directors. Individuals shall be eligible to serve as a director of the Company
until the annual meeting next occurring after such person's 72nd birthday.
Officers of the Company shall not be eligible for service as a director
following their retirement or resignation as an officer of the Company. The
Board shall be classified with respect to the time during which they hold office
into three classes, as nearly equal in number as possible based on the then
current membership of the Board, as determined by the Board of Directors, all as
provided in the Restated Certificate of Incorporation. One class of directors
shall be elected at each annual meeting of the stockholders to hold office for
the term of three years or until their respective successors are duly elected
and qualified or until their earlier resignation or removal.
Section 3.2 Nominating Procedures.
Section 3.2.1 Eligibility to Make Nominations. Nominations of candidates for
election as directors at any meeting of stockholders called for that purpose may
be made by the Board of Directors or by any stockholder entitled to vote at such
meeting, in accordance with the following provisions.
- 4 -
<PAGE>
Section 3.2.2 Procedure for Nominations by the Board of Directors. Nominations
made by the Board of Directors shall be made at a meeting of the Board of
Directors, or by written consent of the directors in lieu of a meeting, not less
than 30 days prior to the date of the meeting of stockholders at which directors
are to be elected. At the request of the Secretary of the Company, each proposed
nominee shall provide the Company with such information concerning himself or
herself as is necessary for purposes of the Company's proxy statement relating
to the meeting.
Section 3.2.3 Procedure for Nominations by Stockholders. Not less than 90 days
(except as provided below) prior to the date of a meeting of stockholders at
which directors are to be elected, any stockholder who intends to make a
nomination at such meeting shall deliver a notice to the Secretary of the
Company setting forth (i) the name, age, business address and residence address
of each nominee proposed in such notice, (ii) the principal occupation or
employment of each such nominee, (iii) the number of shares of capital stock of
the Company which are beneficially owned by each such nominee and (iv) such
other information concerning each such nominee as would be required, under the
rules of the Securities and Exchange Commission, in a proxy statement soliciting
proxies for the election of such nominees. Such notice shall be accompanied by a
signed consent of each proposed nominee to serve as a director of the Company if
elected. In the event that less than 100 days' notice or prior public disclosure
of the date of the meeting is given or made to stockholders, notice of
stockholder nominees to be timely under this Section must be delivered not later
than the close of business on the 10th day following the day on which notice of
the date of the meeting is mailed to stockholders or public disclosure thereof
is made, whichever occurs first.
Section 3.2.4 Substitution of Nominees. In the event that a person is validly
designated as a nominee in accordance with the preceding Sections and shall
thereafter become unable or unwilling to stand for election to the Board of
Directors, the Board of Directors or the stockholder who proposed such nominee,
as the case may be, may designate a substitute nominee. At the request of the
Secretary of the Company, each substitute nominee shall provide the Company with
such information concerning himself or herself as would be necessary for
purposes of a proxy statement relating to the meeting.
Section 3.2.5 Determination of Compliance with Procedures. If the chairman of
the meeting of stockholders determines that a nomination for director was not
made in accordance with the foregoing procedures, such nomination shall be void.
Section 3.3 Regular Meetings. A regular meeting of the Board of Directors shall
be held without other notice than this By-Law immediately after, and at the same
address as, the annual meeting of stockholders. The Board of Directors may fix
the time and place for the holding of additional regular meetings. No notice or
call shall be required.
- 5 -
<PAGE>
Section 3.4 Special Meetings. Special meetings of the Board of Directors may be
called by the Chairman, the President or any two directors, by notice to the
Secretary of the Company. The person or persons authorized to call special
meetings of the Board of Directors may fix any place as the place for holding
any special meeting of the Board of Directors called by them, provided that any
meeting called at the request of directors shall be held at Tribune Tower,
Chicago, Illinois. Notice of any special meeting shall be given to all directors
at least twenty-four hours in advance thereof (except as set forth below),
either (a) personally or by telephone or (b) by mail or telegram addressed to
the director at his/her address as it appears on the records of the Company.
Such notice shall include the time and place at which the meeting is to be held.
If mailed, such notice must be given at least five days prior to the meeting and
shall be deemed to be delivered when deposited in the United States mail so
addressed, with postage thereon prepaid. If notice is to be given by telegram,
such notice shall be deemed to be delivered when the telegram is delivered to
the telegraph company. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the Board of Directors need be specified
in the notice of such meeting.
Section 3.5 Quorum and Action. A majority of the total number of directors then
in office shall constitute a quorum for the transaction of business at any
meeting, but if less than a quorum is present a majority of the directors
present may adjourn the meeting from time to time without further notice. The
vote of the majority of the directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors, unless the act of a greater
number is required by statute, the Restated Certificate of Incorporation or
these By-Laws.
Section 3.6 Vacancies. Any vacancy occurring in the Board of Directors and any
newly created directorship resulting from an increase in the authorized number
of directors may be filled by a majority of the directors then in office,
although less than a quorum, and the directors so chosen shall hold office for
the unexpired portion of their designated terms of office and until their
successors are duly elected and qualified, or until their earlier resignation or
removal.
Section 3.7 Compensation of Directors. The Board of Directors, by the
affirmative vote of the majority of the directors then in office, and
irrespective of any personal interest of any of the directors, shall have
authority to fix the compensation of directors for services to the Company as
Board members, committee members or otherwise.
Section 3.8 Removal of Directors. Any one or more directors may be removed from
office only for cause, and only by the affirmative vote of holders of at least a
majority of the voting power of all of the then outstanding shares of voting
stock of the Company, voting together as a single class.
- 6 -
<PAGE>
Section 3.9 Committees.
Section 3.9.1 Executive Committee. The Board of Directors, by resolution of a
majority of the whole Board, shall appoint an Executive Committee to consist of
not less than five members of the Board, one of whom shall be the person
designated as Chief Executive Officer of the Company. The Executive Committee
shall have the right to exercise the full power and authority of the Board of
Directors of the Company to the fullest extent permitted by Section 141(c) of
the General Corporation Law of the State of Delaware; provided, that, in
addition to the restrictions provided in said Section 141(c), such Executive
Committee shall not have the authority of the Board of Directors in reference
to: (a) electing or removing officers of the Company or members of the Executive
Committee; (b) fixing the compensation of any officer or director; (c) amending,
altering or repealing these By-Laws or any resolution of the Board of Directors;
(d) submission to the stockholders of any matter whatsoever; (e) action with
respect to dividends; or (f) any action which either the Chief Executive Officer
or two other members of the Executive Committee shall designate, by written
instrument filed with the Secretary of the Company, as a matter to be considered
by the full Board. All action taken by the Executive Committee between Board
meetings on matters of a nature ordinarily requiring Board action shall be
promptly reported to the Board of Directors.
Section 3.9.2 Audit Committee. The Board of Directors, by resolution of a
majority of the whole Board, shall appoint an Audit Committee to consist of not
less than three directors, none of whom shall be an officer or employee of the
Company or of any subsidiary or affiliated corporation. The Audit Committee (a)
shall recommend to the Board of Directors the appointment of independent public
accountants for each year to audit the books, records and accounts of the
Company and to perform such other duties as the board of Directors or Audit
Committee may from time to time prescribe, (b) shall review the financial
statements submitted by the independent public accountants and shall report to
the Board of Directors the results of such review, (c) shall review all
recommendations made by the independent public accountants to the Board of
Directors with respect to the accounting methods used, the organization and
operations of the Company and the system of internal control followed by the
Company and shall advise the Board of Directors with respect thereto and (d)
shall have authority to examine, and to make recommendations to the Board of
Directors with respect to, the audit conducted by the Company's independent
public accountants. The scope and frequency of the Audit Committee's review and
examination shall be determined by the Committee, which shall have all the
powers of the Board of Directors in carrying out its duties.
Section 3.9.3 Finance Committee. The Board of Directors, by resolution of a
majority of the whole Board, shall appoint a Finance Committee to consist of not
less than three directors. The functions of the Finance Committee shall be (a)
to supervise generally the financial affairs of the Company, (b) to review with
management the capital needs
- 7 -
<PAGE>
of the Company and its subsidiaries, (c) to provide consultation on major
borrowings and proposed issuances of debt and equity securities and (d) to
report to the Board of Directors from time to time with respect to the
foregoing. The Finance Committee shall make recommendations to the Board
concerning the Company's financial strategies, policies and structure, and shall
undertake such additional functions and activities related to the foregoing as
may be requested from time to time by the Board of Directors.
Section 3.9.4 Governance and Compensation Committee. The Board of Directors, by
resolution of a majority of the whole Board, shall appoint a Governance and
Compensation Committee to consist of not less than three directors, none of whom
shall be an officer or employee of the Company or of any subsidiary or
affiliated corporation. The functions of the Governance and Compensation
Committee shall be (a) to identify and make recommendations to the Board of
Directors regarding candidates for election to the Board, (b) to review and make
recommendations to the Board of Directors regarding the renomination of
incumbent directors, (c) to perform other related tasks, such as studying the
size, committee structure or meeting frequency of the Board, making studies or
recommendations regarding management succession, or tasks of similar character
as may be requested from time to time by the Board of Directors or the Chief
Executive Officer, (d) to establish the compensation of the Chief Executive
Officer of the Company, (e) to consult with the Chief Executive Officer with
respect to the compensation of officers and executive employees of the Company
and its subsidiaries, (f) to fix and determine awards to employees of stock or
stock options pursuant to any of the Company's employee stock option or stock
related plans now or from time to time hereafter in effect and to exercise such
other power and authority as may be permitted or required under such plans and
(g) to undertake such additional similar functions and activities as may be
required by other compensation plans maintained by the Company or as may be
requested from time to time by the Board of Directors.
The Board of Directors, by resolution of a majority of the whole Board, shall
designate one member of the Governance and Compensation Committee to act as
chairman of the Committee. The Committee member so designated shall (a) chair
all meetings of the Committee, (b) chair meetings involving only non-employee
directors, (c) coordinate an annual performance evaluation of the Company, (d)
coordinate the evaluation of the performance of the Chief Executive Officer, and
(e) perform such other activities as from time-to-time are requested by the
other directors or as circumstances indicate.
Section 3.9.5 Other Committees. In addition to the Committees provided for in
Sections 3.9.1 through 3.9.4 above, the Board of Directors may, by resolution
passed by a majority of the whole Board, designate and appoint one or more other
Board committees, each such committee to consist of two or more directors of
the Company. Any such Board committee, to the extent provided in the resolution
creating it and authorized by statute, shall have and may exercise the powers of
the Board of Directors in the
- 8 -
<PAGE>
management of the business and affairs of the Company, and may authorize the
seal of the Company to be affixed to all paper which may require it. The Board
of Directors may also appoint other committees for the administration of the
affairs of the Company, whose members may or may not be directors. Every
committee appointed by the Board of Directors may, unless the Board provides
otherwise, fix its own rules of procedure and hold its meetings in accordance
with such rules. The Board may designate one or more persons as alternate
members of any Board or other committee, as applicable, who may replace any
absent or disqualified member at any meeting of such committee.
Section 3.10 Action By Directors Without Meeting. Any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if all members of the Board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board or committee.
Section 3.11 Meetings By Telephone. Members of the Board of Directors, or any
committee of the Board, may participate in a meeting of the Board or of such
committee by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in a meeting pursuant to this Section shall constitute
presence in person at such meeting.
ARTICLE IV
Officers
Section 4.1 Officers of the Company. The officers of the Company shall consist
of a Chairman and/or a President, a Secretary and a Treasurer, elected or
appointed by the Board of Directors. The Board may also elect or appoint as
officers of the Company a Controller, a General Counsel and one or more Vice
Chairmen, Executive Vice Presidents, Senior Vice Presidents, Vice Presidents,
Deputy General Counsels, Assistant Controllers, Assistant Secretaries,
Assistant Treasurers or Assistant Vice Presidents, and such other officers, as
the Board may from time to time determine. If the Board of Directors shall at
any time elect or appoint both a Chairman and a President, the Board shall
specify which individual is to serve as the Chief Executive Officer of the
Company. Any two or more offices may be held by the same person except that
neither the Chairman nor the President may also hold the office of Secretary.
All officers of the Company shall have such authority and perform such duties in
the management of the property and affairs of the Company as are provided in
these By-Laws or as may be determined by resolution of the Board of Directors
and, to the extent not so provided, as generally pertain to their respective
offices, subject to the control of the Board.
- 9 -
<PAGE>
Section 4.2 Election and Term of Office. The officers of the Company shall be
elected annually by the Board of Directors at the first regular meeting of the
Board of Directors held after the annual meeting of stockholders. Each officer
shall hold office until his successor is duly elected and qualified or until his
earlier resignation or removal.
Section 4.3 Removal. Any officer elected or appointed by the Board of Directors
may be removed at any time by the affirmative vote of a majority of the whole
Board of Directors, with or without cause, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed. Election or
appointment of an officer shall not of itself create any contract rights.
Section 4.4 Vacancies. A vacancy in any office by reason of death, resignation,
removal, disqualification or otherwise may be filled by the Board of Directors
for the unexpired portion of the term.
Section 4.5 Delegation of Duties of Officers. In case of the absence of any
officer of the Company, or for any other reason that the Board of Directors may
deem sufficient, the Board of Directors may temporarily delegate the power or
duties of an officer to any other officer or to any other person.
Section 4.6 The Chairman; Chief Executive Officer. If the Board of Directors
shall elect a Chairman, that person when present shall preside at all meetings
of the stockholders and of the Board of Directors. The Chairman shall also have
the power to vote shares of stock registered in the name of the Company and
shall exercise such other powers and duties as from time to time may be provided
in these By-Laws or as may be prescribed by the Board of Directors. If the
Chairman shall be designated as Chief Executive Officer of the Company, he or
she shall have the general management and direction, subject to the authority of
the Board of Directors, of the Company's business and affairs and its officers
and employees, with the power to appoint and to remove and discharge any and all
employees of the Company not elected or appointed directly by the Board. The
Chief Executive Officer shall, upon consultation with the Governance and
Compensation Committee of the Board, fix the salaries and bonuses (if any) of
all officers and executive employees of the Company and its subsidiaries other
than himself.
Section 4.7 The President. If the Board of Directors shall elect a President,
that person when present and in the absence of a Chairman shall preside at all
meetings of the stockholders and of the Board of Directors. If there is no
Chairman, or if the Board of Directors shall designate the President as the
Chief Executive Officer of the Company, the President shall have all of the
powers of the Chief Executive Officer enumerated in the preceding Section. The
President shall also have the power to vote shares of stock registered in the
name of the Company, and shall exercise such other powers and duties
- 10 -
<PAGE>
as from time to time may be provided in these By-Laws or as may be prescribed by
the Board of Directors.
Section 4.8 Vice Chairman, Executive Vice President, Senior Vice President, Vice
President. Each Vice Chairman, Executive Vice President, Senior Vice President
or Vice President of the Company shall perform such duties as may from time to
time be assigned by the Chief Executive Officer or the Board of Directors. The
Chief Executive Officer or the Board of Directors may add words signifying the
function or position to the title of any Vice Chairman, Executive Vice
President, Senior Vice President or Vice President appointed by the Board. The
persons holding the foregoing positions shall each have the power to vote shares
of stock registered in the name of the Company where such ownership interest
constitutes less than 20% of the total voting interest of the corporation
issuing the stock.
Section 4.9 The Secretary. The Secretary shall record all of the proceedings of
the meetings of the stockholders and directors in a book to be kept for that
purpose, and shall perform like duties for the standing committees, when
requested; shall have custody and care of the corporate seal, records, minutes
and stock books of the Company; shall keep a suitable record of the addresses
of stockholders and of directors, and shall, except as may be otherwise required
by statute or these By-Laws, issue all notices required for meetings of
stockholders and of the Board of Directors and committees thereof. The Secretary
shall have authority to cause the seal of the Company to be affixed to all
papers requiring the seal, to attest the same, and to attest any instruments
signed by an officer of the Company. The Secretary shall perform such other
duties as from time to time may be assigned by the Chairman, the President or
the Board of Directors.
Section 4.10 The Treasurer. The Treasurer shall have charge of the safekeeping
of the Company's funds, and shall perform such other duties as may from time to
time be assigned by the Chief Executive Officer or the Board of Directors. The
Treasurer may be required to give bond to the Company, at the Company's expense,
for the faithful discharge of his or her duties in such form and in such amount
and with such sureties as shall be determined by the Board of Directors.
Section 4.11 The Controller. The Controller shall have charge of the general
accounting department of the Company, and shall see that correct accounts of
the Company's business are properly kept. He or she shall perform such other
duties as from time to time may be assigned by the Chief Executive Officer or
the Board of Directors. The Controller may be required to give bond to the
Company, at the Company's expense, for the faithful discharge of his or her
duties in such form and in such amount and with such sureties as shall be
determined by the Board of Directors.
- 11 -
<PAGE>
Section 4.12 General Counsel. The General Counsel shall be the chief legal
officer of the Company and shall be responsible for the management of the legal
affairs of the Company. The General Counsel shall perform such other duties as
from time to time may be assigned by the Chief Executive Officer or the Board of
Directors.
Section 4.13 Deputy General Counsel, Assistant Controller, Assistant Secretary,
Assistant Treasurer and Assistant Vice President. The Deputy General Counsel
shall assist the General Counsel in such manner and perform such duties as may
be designated from time to time by the General Counsel. Each Assistant Vice
President shall have such duties as may from time to time be assigned by the
Vice President or Vice Presidents to whom he or she reports. Each Assistant
Controller, Assistant Secretary and Assistant Treasurer shall assist the
Controller, the Secretary or the Treasurer, as the case may be, in the
performance of the respective duties of such principal officers. Each Assistant
Secretary shall have the authority to affix the corporate seal to any instrument
requiring it, to attest the same, and to attest any instrument signed by an
officer of the Company. The powers and duties of the Controller, the Secretary,
the Treasurer and the General Counsel, respectively, shall in case of the
absence, disability, death, resignation, or removal from office of such
principal officer, and except as otherwise ordered by the Board of Directors,
temporarily devolve upon the first appointed deputy or assistant who is able to
serve. Deputy or assistant officers shall perform such other duties as may be
assigned to them from time to time. The Chief Executive Officer or the Board of
Directors may add words signifying function or position to the title of any
deputy or assistant officer.
ARTICLE V
Capital Stock
Section 5.1 Certificates for Shares. Subject to the provisions of Section 5.2,
every holder of fully paid stock in the Company shall be entitled to have a
certificate or certificates signed in the name of the Company by the Chairman,
the President or any Vice President and by the Secretary or an Assistant
Secretary of the Company, representing and certifying the number of shares of
the Company's capital stock owned by such holder. Any or all of the signatures
on each certificate may be facsimile. In case any officer, transfer agent or
registrar whose signature or facsimile signature appears on a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Company with the same effect as
if such person were such officer, transfer agent or registrar at the date of
issue.
Section 5.2 Certificates for Fractional Shares. The Board of Directors may
provide that, with respect to classes or series of stock as to which the
issuance and ownership of fractional shares are permitted in accordance with the
Restated Certificate of Incorpora-
- 12 -
<PAGE>
tion, the ownership of fractional interests shall be evidenced by scrip
certificates in lieu of the certificates referred to in Section 5.1 of these
By-Laws. Any or all of the signatures on each scrip certificate may be
facsimile. The Board of Directors may specify from time to time, with respect to
any series or class of stock, particular fractions in which ownership will be
permitted and recognized and as to which certificates will be issued.
Section 5.3 Registration and Transfer of Shares. The Company will maintain or
cause to be maintained a register for the registration of shares of its capital
stock. Transfers of shares and exchanges of stock certificates shall be recorded
on the books of the Company only at the request of the holder of record thereof
or by his legal representative, who shall furnish proper evidence of authority
to transfer, or by his attorney thereunto authorized by power of attorney duly
executed and filed with the Secretary of the Company, and only upon the
surrender for cancellation of the certificate or certificates for such shares.
Section 5.4 Only Holder of Record Entitled to Recognition. The Company shall be
entitled to treat the holder of record of any share or shares as the owner
thereof for all purposes and accordingly shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise provided by law.
Section 5.5 Fixing Record Date. For the purpose of determining stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action, the Board of Directors may fix a date as the record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which shall not
be more than sixty nor less than ten days (or, in the case of a meeting to vote
on a merger or consolidation, not more than sixty nor less than twenty days)
before the date of such meeting, nor more than sixty days prior to any other
action. The record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be as provided by law. The
record date for determining stockholders for any other purpose shall be at the
close of business on the day on which the Board of Directors adopts the
resolution relating thereto. When a determination of stockholders entitled to
notice of or to vote at any meeting of stockholders has been made as provided in
this Section, such determination shall apply to any adjournment thereof;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
Section 5.6 Lost Certificates. If an outstanding certificate of stock shall be
lost, destroyed or stolen, the holder thereof may have a new certificate issued
to him or her
- 13 -
<PAGE>
upon producing evidence satisfactory to the Company of such loss, destruction,
or theft, and also upon furnishing to the Company a bond of indemnity deemed
sufficient by the Secretary to protect the Company and any registrar or transfer
agent against claims under the certificate alleged to be lost, destroyed or
stolen; provided, however, that upon good cause shown the Board of Directors may
waive the furnishing of such bond of indemnity.
ARTICLE VI
Miscellaneous
Section 6.1 Execution of Instruments. Contracts and other written documents of
the Company shall be executed as the Board of Directors may from time to time
direct. In the absence of specific directions by the Board, the officers of the
Company shall duly execute all necessary contracts and other written instruments
properly coming within the scope of their respective powers and duties. When the
execution of any contract or other written instrument of the Company has been
authorized by the Board of Directors without specification of the executing
officers, the Chairman, the President, any Vice Chairman or any Vice President
may execute the same in the name and on behalf of the Company and the Secretary
or any Assistant Secretary may attest the same and affix the corporate seal
thereto.
Section 6.2 Loans. No loans (except loans for current expenses) shall be
incurred on behalf of the Company and no evidences of indebtedness shall be
issued in its name unless authorized by a resolution of the Board of Directors
or a duly authorized committee thereof. Such authority may be general or
confined to specific instances. No loans shall be made by the Company to any
director or officer except upon the affirmative vote of a majority of the
disinterested directors.
Section 6.3 Bank Deposits and Check Authorization. The funds of the Company
shall be deposited to its credit in such banks, trust companies or other
financial institutions as may be determined from time to time by the Chairman
or President and the Secretary of the Company, evidenced by joint written
action. By such joint written action, filed with the minutes of the Board of
Directors, the Chairman or President together with the Secretary may authorize
(a) the opening of one or more deposit accounts at any such institution and (b)
the designation of, or a change in the designation of, the officers or
employees upon whose signature checks may be written or funds withdrawn on any
Company account at any such institution, provided that the signature of one
person other than the Chairman, President and Secretary shall be required
therefor. By the adoption of this Section 6.3 of these By-Laws the Board of
Directors adopts the form of any resolution or resolutions requested by or
acceptable to any financial institution in connection with the foregoing
actions, provided that the Secretary of the Company (x) believes that the
adoption of such resolution or resolutions is
- 14 -
<PAGE>
necessary or advisable and (y) files such resolution or resolutions with the
minutes of the Board of Directors.
Section 6.4 Fiscal year. The fiscal year of the Company shall begin on the first
Monday after the last Sunday in December of each year and end on the last Sunday
in the following December.
Section 6.5 Seal. The corporate seal shall be in the form of a circle and shall
have inscribed thereon the name of the Company and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed, affixed, printed or otherwise reproduced. The Board of Directors may
give general authority to any officer to affix the seal of the Company and to
attest the fixing by his or her signature.
Section 6.6 Waiver of Notice. Whenever any notice whatever is required to be
given by statute, by the Restated Certificate of Incorporation of the Company,
by these By-Laws or otherwise, in connection with any meeting of stockholders,
directors or members of a committee of directors, a written waiver thereof,
signed by the person entitled to such notice, whether before or after the event
as to which such notice is required, shall be deemed equivalent to such required
notice. In addition, attendance by a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of such meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
meeting of stockholders, directors or members of a committee of directors need
be specified in any written waiver of notice.
ARTICLE VII
Amendments of By-Laws
Section 7.1 These By-Laws may be altered, amended or repealed and new by-laws
may be made (a) by the stockholders as provided in the Restated Certificate of
Incorporation or (b) by the affirmative vote of a majority of the whole Board of
Directors at any regular or special meeting thereof.
- 15 -
EXHIBIT 10.4a
FIRST AMENDMENT
---------------
OF
--
TRIBUNE COMPANY BONUS DEFERRAL PLAN
-----------------------------------
WHEREAS, Tribune Company (the "Company") maintains TRIBUNE
COMPANY BONUS DEFERRAL PLAN (the "Plan"); and
WHEREAS, it is now deemed desirable to amend the Plan;
NOW, THEREFORE, by virtue and in exercise of the amending
power reserved to this Company under Section 7 of the Plan, the Plan be and it
hereby is amended, effective as of December 1, 1996, in the following
particulars:
1. By substituting the phrases "subsection 3.3" and
"subparagraph 3.1(b)" for the phrases "Section 3.3" and "subsection 3.1(b)",
respectively, where the two latter phrases occur in the first sentence of
subsection 1.2 of the Plan; and by adding the following sentence to subsection
1.2 of the Plan at the end of said subsection:
"Effective with respect to elections made by participants on and after
December 1, 1996, it is an additional purpose of the Plan (i) to permit
Participants to elect irrevocably that the 'Increments' thereafter
credited for specific periods to all or a portion of their Accounts
under subsections 4.2 and 4.1 below, respectively, be calculated based
on the investment performance of the common stock of the Company during
that period and (ii) that said portion of any Participant's Account
shall be distributed to him in the form of shares of common stock of
the Company, all as described in greater detail below."
<PAGE>
2. By substituting the following for subparagraphs (a) and
(b) of Section 2 of the Plan:
"(a) is a participant in the Tribune Company Management Incentive
Plan, or any successor plan designated by the Committee, and
(b) has an annualized rate of Compensation (as defined in the SIP)
in excess of the then applicable maximum annual dollar
limitation on Compensation described in the SIP in accordance
with Sections 401(a)(17) and 404(l) of the Internal Revenue
Code."
3. By adding the following subparagraph (d) to subsection 3.1
of the Plan, immediately following subparagraph (c) of said subsection:
"(d) Election of Manner in which Increments Are Determined and
Medium in which Deferred Amounts Are Paid. Each election
under this subsection (including an automatic election
under subparagraph (b) above) made by a Participant on or
after December 1, 1996 shall indicate the portions of the
amount being deferred pursuant to that election, which the
Participant elects to have credited to the cash subaccount
and stock subaccounts maintained within his Account as of
the following March 1 under subsection 4.1 below. In
addition, the Committee may permit each Participant to
elect, on his annual deferral election forms and/or on
such other forms (at such other times and in accordance
with such rules as the Committee may in its discretion
determine), that all or a portion of the balance credited
to his cash subaccount as of the following March 1 (after
all other adjustments to his Account and subaccounts as
of that date have been made) be transferred and credited
to his stock subaccount. Any amounts to be credited to a
Participant's stock subaccount as of a March 1 shall be
credited in the form of a number of full and fractional
(rounded to the nearest hundredth)
-2-
<PAGE>
hypothetical shares of common stock of the Company which
is the quotient of the cash amount that would otherwise be
so credited, divided by the fair market value (as defined
in subsection 4.5 below) of a share of common stock of the
Company on that March 1. Any election by a Participant
under this subparagraph (d) to have amounts credited to
his stock subaccounts shall be irrevocable, and a
Participant may not at any time elect to transfer all or
any portion of the balance of his stock subaccount to his
cash subaccount."
4. By adding the following to subsection 4.1 of the Plan,
immediately following the last sentence of said subsection:
"Effective with respect to elections made after December 1, 1996 under
subparagraphs (a) through (d) of subsection 3.1 above, there shall be
established within each Participant's Account a 'cash subaccount' and a
'stock subaccount.' The balance in the Account of any Participant as of
December 1, 1996 shall initially be credited to his cash subaccount.
After December 1, 1996, Participants may elect in accordance with
subparagraph 3.1(d) above that all or a portion of any future deferral
be credited to a particular subaccount or that all or a portion of the
balance in their cash subaccounts be transferred to their stock
subaccounts."
5. By substituting the following for subsection 4.2 of
the Plan:
"4.2. Increments. With respect to Participants' Accounts:
(a) Through December 1, 1996: Prior to and
through December 1, 1996, the balance credited
to each Participant's Account was deemed to earn
'interest' at a rate equal to the thirty-year
United States Treasury bond rate determined as
of
-3-
<PAGE>
March 1 of each year or, if that March 1 was not
a business day, then the first business day
following that March 1 (in which event
references in the Plan to March 1 shall mean the
first business day following that March 1).
Interest was credited to Participants' accounts
as of the last day of each fiscal quarter of the
Company. Any interest deemed to have been earned
on the Participant's Account balance is referred
to as an 'Increment' for purposes of this Plan.
(b) After December 1, 1996: Cash Subaccounts:
After December 1, 1996, increments to
Participants' cash subaccounts established under
subsection 4.1 above shall be determined and
credited in the same manner as described in
subparagraph (a) above.
(c) After December 1, 1996: Stock Subaccounts:
The hypothetical shares of common stock of the
Company credited to each Participant's stock
subaccount shall have no voting rights.
Dividends, rights, warrants and options declared
or created with respect to actual shares of
common stock of the Company shall also be deemed
to have been declared or created with respect to
hypothetical shares of common stock of the
Company credited to each Participant's stock
subaccount. Stock dividends deemed declared on
such hypothetical shares credited to a
Participant's stock subaccount shall be credited
to that subaccount; cash dividends deemed
declared on such hypothetical shares shall be
converted to additional hypothetical shares in
accordance with the formula contained in
subparagraph 3.1(d) above, based on the fair
market value of a share of common stock of the
Company as of the day the dividend was paid.
Rights, warrants and options, if any, deemed
created with respect to such hypothetical shares
shall be deemed held, exercised or sold by all
Participants uniformly, as soon as
-4-
<PAGE>
practicable, as determined by the Committee in
its sole discretion, and the hypothetical
proceeds thereof attributable to a Participant's
stock subaccount shall be applied in the same
manner as cash dividends paid on such shares.
Stock splits shall be treated in the same manner
as stock dividends. In the event of a corporate
transaction which results in a change to the
outstanding common stock of the Company, the
hypothetical shares of common stock of the
Company credited to the stock subaccounts of
participants shall be adjusted hereunder as if
those hypothetical shares were shares of
outstanding common stock of the Company."
6. By adding the following new subsection 4.5 to
Section 4 of the Plan, immediately following subsection 4.4 thereof:
"4.5. Fair Market Value. The 'fair market value' of a share of common
stock of the Company shall mean as of any date the closing price of
said common stock as reported on the New York Stock Exchange Composite
Transaction List for such day or, if the common stock was not traded on
such day, then the next preceding day on which the common stock was
traded."
7. By substituting for subsections 5.1 and 5.2 of the
Plan the following new subsections 5.1 and 5.2:
"5.1. Amount of Payment. The amount to be paid to a Participant
following his settlement Date in a lump sum under subsection 5.3 or 5.5
below (or in the case of installments under subsection 5.3 below, the
amount from which the first installment payment amount will be derived)
shall be an amount equal to the sum of (a) the net credit balance in
his cash subaccount and the number of hypothetical shares of common
stock of the Company credited to his stock subaccount, as of the last
day of the Fiscal Year immediately preceding his Settlement Date, after
all adjustments required to be made to those subaccounts within his
Account as of that date have been made,
-5-
<PAGE>
plus (b) the deferred amount (if any) of his Qualifying Bonus for the
Fiscal Year preceding the year in which his Settlement Date occurred."
"5.2. Medium of Payment. All payments of stock subaccount balances
under this Plan shall be made in whole shares of common stock of the
Company, with the fair market value of any fractional share (as of the
day preceding the date of payment) being paid in cash. All payments of
cash subaccount balances, and of the deferred amounts of Qualifying
Bonuses for the Fiscal Year preceding the year in which payment is made
or commences, shall be made in cash."
8. By substituting the following two sentences for the
fourth and fifth sentences of subsection 5.3 of the Plan:
"If a Participant's Account balance is paid in installments, it shall
be credited with Increments during the Payout Period at the rate or in
the manner from time to time determined under subsection 4.2. The
installment payment to a Participant in any year shall be in an amount
equal to the quotient obtained by dividing his cash subaccount balance,
and the number of hypothetical shares of common stock of the Company
credited to his stock subaccount, as of the last day of the preceding
Fiscal Year by the number of payments remaining in his Payout Period,
including the current payment."
9. By substituting the phrase "dollar value amount" for
the phrase "dollar amount" wherever the latter phrase occurs in the last
sentence of subsection 5.3 of the Plan.
10. By adding the following sentence to subsection 6.9 of
the Plan, immediately following the last sentence thereof:
"Any such deduction with respect to payments of shares of common stock
of the Company shall be made
-6-
<PAGE>
by withholding a sufficient number of the shares which would otherwise
be paid to the Participant."
IN WITNESS WHEREOF, the Company acting through its duly
authorized representative hereby adopts the foregoing amendment this 17th day
of December, 1996.
TRIBUNE COMPANY
By: /s/ Crane H. Kenney
-------------------
Its: Vice President
-7-
<TABLE>
<CAPTION>
EXHIBIT 11
TRIBUNE COMPANY
STATEMENTS OF COMPUTATION OF PRIMARY AND FULLY DILUTED
NET INCOME PER SHARE (A)
(In thousands, except per share amounts)
Fiscal Year Ended December
----------------------------------------
PRIMARY 1996 1995 1994
- ------- -------- -------- --------
<S> <C> <C> <C>
Income from continuing operations $282,750 $245,458 $233,149
Discontinued operations of QUNO, net of tax 89,317 32,707 8,898
-------- -------- --------
Net income 372,067 278,165 242,047
Preferred dividends, net of tax (18,786) (18,841) (18,574)
-------- -------- --------
Net income attributable to common shares $353,281 $259,324 $223,473
-------- -------- --------
Weighted average common shares outstanding 122,842 129,580 134,426
-------- -------- --------
Primary net income per share:
Continuing operations (B) $ 2.15 $ 1.75 $ 1.60
Discontinued operations .73 .25 .06
-------- -------- --------
Total $ 2.88 $ 2.00 $ 1.66
======== ======== ========
FULLY DILUTED
- -------------
Income from continuing operations $282,750 $245,458 $233,149
Additional ESOP contribution required assuming
all preferred shares were converted, net of tax (13,498) (14,759) (14,639)
-------- -------- --------
Adjusted income from continuing operations 269,252 230,699 218,510
Discontinued operations of QUNO, net of tax 89,317 32,707 8,898
-------- -------- --------
Adjusted net income $358,569 $263,406 $227,408
-------- -------- --------
Weighted average common shares outstanding 122,842 129,580 134,426
Assumed conversion of preferred shares into common shares 11,407 11,774 12,100
Assumed exercise of stock options, net of common
shares assumed repurchased with the proceeds 2,404 1,658 1,620
-------- -------- --------
Adjusted weighted average common shares outstanding 136,653 143,012 148,146
-------- -------- --------
Fully diluted net income per share:
Continuing operations $ 1.97 $ 1.61 $ 1.48
Discontinued operations .65 .23 .06
-------- -------- --------
Total $ 2.62 $ 1.84 $ 1.54
======== ======== ========
(A) All share and per share data has been restated to reflect a two-for-one common stock split
effective January 15, 1997.
(B) 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.
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT 12
TRIBUNE COMPANY
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(In thousands, except ratios)
Fiscal Year Ended December
----------------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Income from continuing operations before
cumulative effects of accounting changes $282,750 $245,458 $233,149 $204,646 $179,534
Add:
Income tax expense 191,663 167,076 158,698 142,212 120,089
Losses on equity investments 13,281 13,209 9,739 1,857 1,903
--------- -------- -------- -------- --------
Subtotal 487,694 425,743 401,586 348,715 301,526
-------- -------- -------- -------- --------
Fixed charge adjustments
Add:
Interest expense 47,779 21,814 20,585 24,660 35,301
Amortization of capitalized interest 2,108 2,253 2,362 2,392 2,434
Interest component of rental expense (A) 9,362 8,200 8,236 8,732 8,182
-------- -------- -------- -------- --------
Earnings, as adjusted $546,943 $458,010 $432,769 $384,499 $347,443
======== ======== ======== ======== ========
Fixed charges:
Interest expense $ 47,779 $ 21,814 $ 20,585 $ 24,660 $ 35,301
Interest capitalized 168 610 - 1,099 1,092
Interest component of rental expense (A) 9,362 8,200 8,236 8,732 8,182
Interest related to guaranteed ESOP debt (B) 20,134 22,057 24,017 25,742 27,019
-------- -------- -------- -------- --------
Total fixed charges $ 77,443 $ 52,681 $ 52,838 $ 60,233 $ 71,594
======== ======== ======== ======== ========
Ratio of Earnings to Fixed Charges 7.1 8.7 8.2 6.4 4.9
======== ======== ======== ======== ========
(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>
EXHIBIT 13
Tribune Company and Subsidiaries
MANAGEMENT'S DISCUSSION
AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The following discussion presents the significant factors that have affected the
businesses of Tribune Company and its subsidiaries (the "Company") over the last
three years. This commentary should be read in conjunction with the Company's
consolidated financial statements and Eleven Year Financial Summary, which are
also presented in this annual report. Certain prior year amounts have been
restated to conform with the 1996 presentation. All share and per share data has
been restated to reflect a two-for-one common stock split effective January 15,
1997.
This Management's Discussion and Analysis of Results of Operations and
Financial Condition contains certain forward-looking statements that 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, interest
rates and other economic conditions and the effect of acquisitions and
dispositions on the Company's results of operations or financial condition.
................................................................................
SIGNIFICANT EVENTS
................................................................................
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 Company owned approximately 34% of QUNO's common stock plus $138.8
million in convertible debt. 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. In April 1994, the
Company reduced its ownership holdings in QUNO from 59% to 34% by selling 5.5
million shares of QUNO common stock. The sale of the shares resulted in an
after-tax gain in 1994 of $13 million, or $.10 per share. QUNO has been
accounted for as a discontinued operation in the Company's consolidated
financial statements.
In the first quarter of 1997, the Company expects to complete its
acquisition of Renaissance Communications Corp., a publicly traded company
owning six television stations, for approximately $1.1 billion in cash. The
stations to be acquired consist of KDAF-Dallas, WDZL-Miami, KTXL-Sacramento,
WXIN-Indianapolis, WTIC-Hartford and WPMT-Harrisburg. The transaction is subject
to various closing conditions, including Federal Communications Commission
approval. The FCC is reviewing a cross-ownership issue relating to the Miami
station and the Company's Fort Lauderdale Sun-Sentinel. Depending on the outcome
of such review, the Miami television station may need to be divested.
A new five-year contract between the Major League Baseball Players
Association ("MLBPA") and Major League Baseball was signed in December 1996. The
previous contract expired on December 31, 1993. The MLBPA initiated a strike on
August 12, 1994, and on August 28, 1994, the owners canceled the remainder of
the 1994 Major League Baseball season. In April 1995, the National Labor
Relations Board invalidated the owners' posted rules, and the players ended
their strike. The 1995 baseball season began April 26, 1995. The strike
shortened the 1995 season by 18 games and continued to impact attendance
throughout the season. The new contract will not have a material impact on the
Company's results of operations.
45
<PAGE>
................................................................................
RESULTS OF OPERATIONS
................................................................................
The Company's fiscal year ends on the last Sunday in December. Fiscal years 1996
and 1994 comprised 52 weeks. Fiscal year 1995 comprised 53 weeks. The effect of
the additional week in 1995 on the comparisons of the financial statements taken
as a whole is generally not significant.
ACQUISITIONS AND DISPOSITIONS
In 1996, the Company acquired television station KHTV-Houston in January,
Educational Publishing Corporation and NTC Publishing Group in March and
television station KSWB-San Diego in April. In August 1995, the Company
purchased Everyday Learning Corporation. In 1994, the Company acquired The
Wright Group in February, television station WLVI-Boston in April and Farm
Journal, Inc. in June. The results of these businesses have been included in the
consolidated financial statements since their respective dates of acquisition.
The Company has also made several equity investments, including The Warner Bros.
Television Network ("The WB Network") and Digital City, Inc. in 1996 and The WB
Network, Qwest Broadcasting LLC and Interealty in 1995. The Company's share of
these companies' results of operations has been included in the consolidated
financial statements since their respective investment dates.
In December 1995, the Company sold its Compton's NewMedia subsidiary to The
Learning Company, Inc. for $123.5 million of The Learning Company common stock
and also invested $150 million in The Learning Company convertible notes. These
transactions resulted in a pretax gain of $6.9 million, or $.03 per share on a
primary basis. At December 29, 1996, the Company had a net unrealized loss on
The Learning Company common stock investment of $47 million. The Company
believes this loss was temporary at December 29, 1996. In July 1995, the Company
sold its California newspaper subsidiary, Times Advocate Company in Escondido,
for approximately $16 million in cash. The sale resulted in a pretax loss of
$7.5 million, or $.03 per share. In March 1995, the Company sold shares of
America Online common stock for approximately $17 million. The sale resulted in
a pretax gain of $15.3 million, or $.07 per share.
CONSOLIDATED
The Company's consolidated financial results for 1996, 1995 and 1994 were as
follows:
<TABLE>
<CAPTION>
Change
(In millions, except per share amounts) 1996 1995 1994 96-95 95-94
===========================================================================================================
<S> <C> <C> <C> <C> <C>
Operating revenues $2,405 $2,244 $2,112 + 7% + 6%
Operating profit 490 405 396 + 21% + 2%
Dispositions of subsidiary stock and investment - 15 - * *
Income from continuing operations 283 245 233 + 15% + 5%
Discontinued operations of QUNO, net of tax 89 33 9 + 173% + 268%
Net income 372 278 242 + 34% + 15%
Continuing operations before
non-recurring items 277 237 233 + 17% + 2%
Primary net income per share
Continuing operations 2.15 1.75 1.60 + 23% + 9%
Discontinued operations .73 .25 .06 + 192% + 317%
Total 2.88 2.00 1.66 + 44% + 20%
Continuing operations before
non-recurring items 2.10 1.68 1.60 + 25% + 5%
* Not meaningful
</TABLE>
NET INCOME PER SHARE -- Primary net income per share from continuing operations
in 1996 was $2.10, up 25% from $1.68 in 1995, excluding the 1995 net gain from
dispositions of subsidiary stock and investment and a 1996 non-recurring gain.
The improvement was mainly due to solid gains in all three business segments. In
the fourth quarter of 1996, the Company recorded a non-recurring pretax gain of
$10 million, or $.05 per share on a primary basis, representing the Company's
equity interest in a gain recorded by Qwest Broadcasting for the cancellation of
an option to purchase a television station. The 5% increase in 1995 primary net
income per share from continuing operations before non-recurring items was
mainly due to increased television operating profit and a lower number of shares
outstanding as a result of stock repurchases during 1995. Average common shares
outstanding decreased 5% in 1996 and 4% in 1995.
46
<PAGE>
OPERATING PROFIT AND REVENUES -- The following table shows consolidated
operating revenues, EBITDA and operating profit by business segment.
<TABLE>
<CAPTION>
Change
(In millions) 1996 1995 1994 96-95 95-94
===========================================================================================================
<S> <C> <C> <C> <C> <C>
Operating revenues
Publishing $1,336 $1,312 $1,246 + 2% + 5%
Broadcasting and Entertainment 877 829 764 + 6% + 8%
Education 192 103 102 + 87% + 1%
- -----------------------------------------------------------------------------------------------------------
Total operating revenues $2,405 $2,244 $2,112 + 7% + 6%
- -----------------------------------------------------------------------------------------------------------
EBITDA (1)
Publishing $ 362 $ 344 $ 359 + 5% - 4%
Broadcasting and Entertainment (2) 246 198 168 + 24% + 18%
Education 54 13 10 + 308% + 33%
Corporate expenses (29) (29) (25) + 1% - 18%
- -----------------------------------------------------------------------------------------------------------
Total EBITDA $ 633 $ 526 $ 512 + 20% + 3%
- -----------------------------------------------------------------------------------------------------------
Operating profit
Publishing $ 281 $ 270 $ 287 + 4% - 6%
Broadcasting and Entertainment (2) 201 160 132 + 25% + 21%
Education 39 5 3 + 760% + 62%
Corporate expenses (31) (30) (26) - 4% - 15%
- -----------------------------------------------------------------------------------------------------------
Total operating profit $ 490 $ 405 $ 396 + 21% + 2%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(1) EBITDA is defined as earnings before gain/loss on stock sales, interest,
taxes, depreciation and amortization. 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.
(2) 1996 includes the $10 million non-recurring pretax gain related to Qwest
Broadcasting.
As shown above, consolidated 1996 operating revenues were up 7%, or $161
million, from 1995 and 1995 revenues increased 6%, or $132 million, from 1994,
with all three segments reporting gains in both years.
Consolidated operating profit increased 21%, or $85 million, in 1996.
Excluding the non-recurring Qwest gain in 1996, consolidated operating profit
increased 18% in 1996, or $75 million, due to gains in all three business
segments. Publishing was up 4% due primarily to lower newsprint costs,
broadcasting and entertainment was up 19% due mainly to a full season of
baseball which benefited both television and the Chicago Cubs, and education was
up $34 million due to the 1996 acquisitions. Excluding the non-recurring Qwest
gain, consolidated 1996 EBITDA was up $97 million, or 18%, due to gains in all
three segments. Consolidated operating profit increased 2%, or $9 million, in
1995. Publishing was down $17 million due primarily to higher newsprint prices,
while broadcasting and entertainment was up $28 million due mainly to higher
television profits. Consolidated 1995 EBITDA was up $14 million, or 3%, due
primarily to broadcasting and entertainment, which was up $30 million, or 18%.
OPERATING EXPENSES -- Consolidated operating expenses were as follows:
<TABLE>
<CAPTION>
Change
(In millions) 1996 1995 1994 96-95 95-94
==============================================================================================
<S> <C> <C> <C> <C> <C>
Cost of sales $1,172 $1,164 $1,059 + 1% + 10%
Selling, general and administrative 600 554 542 + 8% + 2%
Depreciation and amortization
of intangible assets 143 121 115 + 18% + 5%
- ----------------------------------------------------------------------------------------------
Total operating expenses $1,915 $1,839 $1,716 + 4% + 7%
- ----------------------------------------------------------------------------------------------
</TABLE>
47
<PAGE>
The 1% increase in cost of sales in 1996 was due to the acquisitions made
since mid-1995, partially offset by the dispositions. Excluding the acquisitions
and dispositions, cost of sales decreased $26 million, or 2%, due to lower
newsprint and ink expense and lower programming costs from the cancellation of
"Charles Perez" and "The Road." Newsprint and ink expense decreased $15 million,
or 6%, as average newsprint transaction prices fell 1% and consumption decreased
7%. Entertainment programming costs decreased $17 million in 1996. The 10%, or
$105 million, increase in cost of sales in 1995 was due primarily to increased
newsprint and ink expense and additional costs from acquisitions made since the
beginning of 1994. Excluding the acquisitions, cost of sales increased $82
million, or 8%. Newsprint and ink expense rose $67 million, or 36%, as average
newsprint prices increased 45%.
Selling, general and administrative expense increased 8%, or $46 million,
in 1996 mainly due to the acquisitions. Excluding the acquisitions and
dispositions, SG&A expense increased 5%, or $24 million, in 1996 primarily due
to higher development costs for Internet and other online-related publishing
businesses of $19 million. SG&A expense increased 2%, or $12 million, in 1995
mainly due to the acquisitions. Excluding the acquisitions, SG&A expense
remained virtually unchanged in 1995. The increase in depreciation and
amortization of intangible assets in both 1996 and 1995 was principally due to
acquisitions and capital expenditures.
PUBLISHING
OPERATING PROFIT AND REVENUES -- The following tables and discussion exclude
Times Advocate Company, which was sold in July 1995. The following table
presents publishing operating revenues, EBITDA and operating profit for daily
newspapers and other publications/services/development. The latter category
includes syndication of editorial products, advertising placement services,
niche publications, delivery of other publications, direct mail operations,
online/electronic products and, for EBITDA and operating profit, equity losses
from investments.
<TABLE>
<CAPTION>
Change
(In millions) 1996 1995 1994 96-95 95-94
=============================================================================================================
<S> <C> <C> <C> <C> <C>
Operating revenues
Daily newspapers $1,266 $1,238 $1,176 + 2% + 5%
Other publications/services/development 70 66 53 + 6% + 23%
- -------------------------------------------------------------------------------------------------------------
Total operating revenues $1,336 $1,304 $1,229 + 2% + 6%
- -------------------------------------------------------------------------------------------------------------
EBITDA
Daily newspapers $ 383 $ 350 $ 368 + 10% - 5%
Other publications/services/development (21) (5) (7) - 287% + 25%
- -------------------------------------------------------------------------------------------------------------
Total EBITDA $ 362 $ 345 $ 361 + 5% - 4%
- -------------------------------------------------------------------------------------------------------------
Operating profit
Daily newspapers $ 310 $ 281 $ 301 + 10% - 7%
Other publications/services/development (29) (9) (10) - 197% + 6%
- -------------------------------------------------------------------------------------------------------------
Total operating profit $ 281 $ 272 $ 291 + 4% - 7%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Publishing operating revenues increased 2%, or $32 million, in 1996 due
principally to higher advertising revenues of 3%, or $27 million. Operating
revenues increased 6%, or $75 million, in 1995 due principally to higher
advertising revenues of 6%, or $57 million.
Operating profit increased 4% in 1996 to $281 million from $272 million in
1995 due to a 10% increase at the four daily newspapers, partially offset by
increased spending for the development of Internet and other online-related
businesses. The daily newspapers benefited from a 6%, or $15 million, decrease
in newsprint and ink expense and higher revenues. Operating profit for 1995 was
down 7% to $272 million from $291 million in 1994, as gains in operating
revenues were more than offset by increased expenses resulting primarily from
significantly higher newsprint prices.
Daily newspaper operating margins were 24.5% in 1996 compared to 22.7% in
1995 and 25.6% in 1994. The increase in 1996 was primarily due to the decrease
in newsprint costs, while the decline in 1995 was mainly due to the significant
increase in newsprint costs.
48
<PAGE>
Total publishing operating revenues by classification were as follows:
<TABLE>
<CAPTION>
Change
(In millions) 1996 1995 1994 96-95 95-94
=======================================================================================
<S> <C> <C> <C> <C> <C>
Advertising
Retail $ 433 $ 447 $ 430 - 3% + 4%
General 141 130 135 + 8% - 3%
Classified 457 427 382 + 7% + 12%
- ---------------------------------------------------------------------------------------
Total advertising 1,031 1,004 947 + 3% + 6%
Circulation 252 249 241 + 1% + 3%
Other 53 51 41 + 3% + 26%
- ---------------------------------------------------------------------------------------
Total operating revenues $1,336 $1,304 $1,229 + 2% + 6%
- ---------------------------------------------------------------------------------------
</TABLE>
Advertising revenues increased in 1996 due to rate increases. The 3%
decline in retail advertising revenues was mainly due to a decrease in the food
and drug, hardware and department store categories, primarily in Chicago.
General advertising revenues rose at all of the newspapers and climbed 8% in
total due to higher advertising in the transportation, hi-tech and other
categories. Classified advertising revenues also rose at each of the newspapers
due primarily to increases in help wanted advertising.
Advertising revenues in 1995 increased largely due to rate increases.
Retail advertising revenues increased due primarily to improvements in the
general merchandise category in Chicago. Classified advertising revenues rose
12% as a result of increased help wanted advertising at all of the newspapers
and increased real estate advertising in Chicago and Fort Lauderdale. General
advertising was down 3% in 1995 due to decreased transportation advertising in
Chicago and Fort Lauderdale.
The following table presents advertising linage for 1996, 1995 and 1994.
<TABLE>
<CAPTION>
Change
(Inches in thousands) 1996 1995 1994 96-95 95-94
=======================================================================================
<S> <C> <C> <C> <C> <C>
Full run
Retail 3,638 3,930 4,147 - 7% - 5%
General 755 695 703 + 9% - 1%
Classified 6,341 6,525 6,484 - 3% + 1%
- ---------------------------------------------------------------------------------------
Total full run 10,734 11,150 11,334 - 4% - 2%
Part run 9,369 9,743 9,995 - 4% - 3%
Preprint 8,436 8,765 8,400 - 4% + 4%
- ---------------------------------------------------------------------------------------
Total inches 28,539 29,658 29,729 - 4% -
- ---------------------------------------------------------------------------------------
</TABLE>
Total advertising linage decreased 4% in 1996 due to declines at all four
of the newspapers. Full run retail advertising linage was down 7% due to
decreases at all of the newspapers. Full run general linage increased 9% due to
increases at Chicago, Fort Lauderdale and Newport News. Part run advertising
linage was down 4% in 1996 due primarily to decreases in retail and classified
in Chicago and retail in Orlando. Preprint advertising linage decreased 4% in
1996 due primarily to lower linage in Fort Lauderdale. Total advertising linage
in 1995 was virtually unchanged from 1994. Full run retail advertising linage
was down at all four of the newspapers. Part run advertising linage was down 3%
in 1995 due primarily to decreases at Orlando in both retail and classified.
Preprint advertising linage increased 4% in 1995 due in part to a new large
customer in Chicago.
Circulation revenues rose 1% in 1996 and increased 3% in 1995 due primarily
to selective price increases. Total average daily circulation was down 2% in
1996 to 1,291,000 from 1,316,000 in 1995, and total average Sunday circulation
was down 2% to 1,927,000 in 1996 from 1,970,000 in 1995. Total average daily
circulation was down slightly in 1995 to 1,316,000 from 1,323,000 in 1994, and
total average Sunday circulation also was down slightly to 1,970,000 in 1995
from 1,973,000 in 1994.
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; and other publishing-related
49
<PAGE>
activities. The 1996 increase in other revenues was due primarily to higher
advertising placement services. The 1995 increase in other revenues resulted
primarily from higher advertising placement services and from the addition of
RELCON, an apartment listing service acquired in January 1995.
OPERATING EXPENSES -- Publishing operating expenses increased 2%, or $23
million, in 1996. This growth was due to a $22 million increase in costs
associated with the development of Internet and other online-related businesses
and an additional $5 million of depreciation and amortization expense at the
daily newspapers. These increases were partially offset by a decline in
newsprint and ink expense of 6%, or $15 million, as average newsprint prices
were down 1% and consumption declined 7%.
Publishing operating expenses increased 10%, or $94 million, in 1995.
Newsprint and ink expense rose $69 million, or 37%, as average newsprint selling
prices increased 45%. Newsprint consumption declined 5% in 1995 mainly due to
lower full run and part run linage and to actions at the newspapers to reduce
newsprint usage. Compensation costs rose $18 million, or 5%, with full-time
equivalent employees down slightly from 1994.
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 and, for EBITDA and operating profit, the Company's equity
income or loss from its investments in The WB Network, TV Food Network and Qwest
Broadcasting. This table and the discussion that follows exclude the $10 million
non-recurring Qwest gain.
<TABLE>
<CAPTION>
Change
(In millions) 1996 1995 1994 96-95 95-94
========================================================================================================
<S> <C> <C> <C> <C> <C>
Operating revenues
Television $681 $630 $599 + 8% + 5%
Radio 89 88 69 + 1% + 29%
Entertainment/Chicago Cubs 98 104 92 - 5% + 13%
Cable Programming/Development 9 7 4 + 19% + 51%
- --------------------------------------------------------------------------------------------------------
Total operating revenues $877 $829 $764 + 6% + 8%
- --------------------------------------------------------------------------------------------------------
EBITDA
Television $230 $215 $189 + 7% + 14%
Radio 17 15 13 + 12% + 15%
Entertainment/Chicago Cubs 7 (17) (24) * + 29%
Cable Programming/Development (18) (15) (10) - 17% - 42%
- --------------------------------------------------------------------------------------------------------
Total EBITDA $236 $198 $168 + 19% + 18%
- --------------------------------------------------------------------------------------------------------
Operating profit
Television $193 $186 $162 + 4% + 15%
Radio 13 11 10 + 9% + 16%
Entertainment/Chicago Cubs 3 (21) (28) * + 25%
Cable Programming/Development (18) (16) (12) - 15% - 39%
- --------------------------------------------------------------------------------------------------------
Total operating profit $191 $160 $132 + 19% + 21%
- --------------------------------------------------------------------------------------------------------
* Not meaningful
</TABLE>
Broadcasting and entertainment revenues increased 6%, or $48 million, in
1996 from $829 million in 1995 due mainly to increases in television. Television
revenues increased 8%, or $51 million, due primarily to the acquisition of
stations KHTV-Houston and KSWB-San Diego and to improvements at WPIX-New York,
WGN-Chicago and KWGN-Denver. Excluding the two new stations, television revenues
were up 3%, or $19 million, in 1996. Entertainment/Chicago Cubs revenues
decreased 5% due to lower Tribune Entertainment revenues as a result of the
cancellation of "Charles Perez" and "The Road," partially offset by higher Cubs
revenues due to a full season of baseball.
Operating revenues increased 8%, or $65 million, in 1995 from $764 million
in 1994. Television revenues were up 5%, or $31 million, with strong growth at
all of the Company's stations except KTLA-Los Angeles and KWGN-Denver, which
declined due to soft advertising markets. The largest increases were reported by
WGN-Chicago, WPIX-New York and WPHL-Philadelphia. Television revenues include
those of WLVI-Boston, acquired in
50
<PAGE>
April 1994. Excluding WLVI-Boston, television revenues were up 4%, or $25
million, in 1995. Radio revenues include those of Farm Journal Inc., acquired in
June 1994. Excluding Farm Journal, radio revenues were up 4%. Entertainment/
Chicago Cubs revenues were up 13% in 1995 as a result of higher Cubs revenues
and more shows in syndication. Cubs revenues in 1994 and 1995 were impacted by
the Major League Baseball strike that affected both the 1994 and 1995 seasons.
Broadcasting and entertainment operating profit was up 19% in 1996 to a
record $191 million. The increase was due primarily to improvements at the
Chicago Cubs, Tribune Entertainment and in television. The Chicago Cubs
benefited from a full season of baseball in 1996 and Tribune Entertainment
improved due to the cancellation of the "Charles Perez" syndicated program.
Television operating profit increased 4%, or $7 million, due primarily to the
addition of the two new stations and improvements at WGN-Chicago and WPIX-New
York. Excluding the acquisitions, television operating profit was up 2%.
Operating profit was up 21%, or $28 million, in 1995 to $160 million due
primarily to a 15%, or $24 million, increase in television and a 25%, or $7
million, improvement in entertainment/Chicago Cubs. Entertainment results in
1994 were significantly impacted by programming and development costs recorded
for "The Road," a program canceled in 1995. These improvements were partially
offset by equity losses from the Company's investment in The WB Network.
OPERATING EXPENSES -- Broadcasting and entertainment operating expenses
increased 3%, or $18 million, in 1996 due primarily to the acquisition of
television stations KHTV-Houston and KSWB-San Diego. Excluding the acquisitions,
operating expenses were down 2%, or $11 million, due to lower expenses at
Tribune Entertainment from the cancellation of "Charles Perez" and "The Road,"
offset partially by a $3 million increase in television broadcast rights
amortization and higher equity losses from The WB Network.
Broadcasting and entertainment operating expenses increased 6%, or $37
million, in 1995 due primarily to the 1994 acquisitions of Farm Journal and
WLVI-Boston, equity losses from The WB Network, and increased Chicago Cubs
expenses as more games were played in 1995. These increases were partially
offset by a reduction in programming and development costs for "The Road."
Excluding WLVI-Boston, Farm Journal and the Cubs, total operating expenses for
the group were up $7 million, or 1%.
EDUCATION
OPERATING PROFIT AND REVENUES -- The following table and discussion excludes
Compton's NewMedia, which was sold in December 1995. The following table
presents operating revenues, EBITDA and operating profit for the education
segment.
Change
(In millions) 1996 1995 1994 96-95 95-94
========================================================================
Operating revenues $192 $77 $59 + 151% + 29%
EBITDA 54 22 18 + 149% + 21%
Operating profit 39 17 14 + 136% + 21%
Education revenues are derived from publishing supplemental and curriculum
education materials and adult education and trade books. Education operating
revenues were up 151% to $192 million from $77 million in 1995 due primarily to
the acquisitions of Everyday Learning, Educational Publishing and NTC Publishing
and growth in the existing business units. Excluding the acquisitions and
Compton's, revenues were up 9%, or $6 million, in 1996.
Education operating revenues in 1995 increased 29%, to $77 million in 1995
from $59 million in 1994. This increase was due to growth at both The Wright
Group and Contemporary Books and to the acquisition of Everyday Learning.
Excluding Everyday Learning, revenues were up 25% in 1995.
Education operating profit was $39 million in 1996, up $22 million from $17
million in 1995, and EBITDA increased $32 million to $54 million in 1996. The
improvements were due to the acquisitions. In 1995, education operating profit
was up 21% to $17 million, and EBITDA increased 21% to $22 million. The
increases were due to improvements at The Wright Group and Contemporary Books,
offset partially by losses at Everyday Learning. Everyday Learning's revenues
are highly seasonal and substantially all of its profits are earned in the
summer months, which was prior to its acquisition by the Company.
OPERATING EXPENSES -- Education expenses were up 155%, or $93 million, in 1996
primarily due to the recent acquisitions. Excluding the acquisitions, operating
expenses were up 13%, or $8 million, as a result of higher sales and expenses
for a new warehouse/distribution facility at The Wright Group. Education
expenses were up 32% to $60 million in 1995 and $46 million in 1994 due mainly
to higher sales volume and the acquisitions of The Wright Group in 1994 and
Everyday Learning in 1995.
51
<PAGE>
DISCONTINUED OPERATIONS (QUNO CORPORATION)
Income from discontinued operations of QUNO, net of tax, in 1995 was $32.7
million, or $.25 per share compared with $8.9 million, or $.06 per share, in
1994. Excluding the $13 million gain on the April 1994 QUNO stock sale, there
was a loss from discontinued operations of $4.1 million, or $.03 per share in
1994. The improvement in 1995 was mainly due to increased newsprint prices and
higher sales volume. QUNO's average newsprint selling prices increased 47% in
1995, and newsprint shipments were up 6%.
INTEREST INCOME AND EXPENSE
The components of net interest expense were as follows:
Change
(In millions) 1996 1995 1994 96-95 95-94
==============================================================================
Interest income $ 32 $ 14 $ 16 + 122% - 8%
Interest expense (48) (21) (21) + 119% + 6%
- ------------------------------------------------------------------------------
Net interest expense $ (16) $ (7) $ (5) + 113% + 54%
- ------------------------------------------------------------------------------
Interest income consists primarily of interest on The Learning Company and
Qwest Broadcasting convertible debentures, a mortgage note receivable from a
real estate affiliate (repaid in October, 1996) and short-term marketable
securities. Interest income increased 122% in 1996 mainly due to the addition of
the convertible debentures at the end of 1995. Interest expense increased 119%
in 1996 due to higher average debt levels resulting from acquisitions and stock
repurchases. Average debt levels increased $412 million in 1996 to $913 million.
Outstanding debt increased to $1.0 billion at year-end 1996 from $786 million at
the end of 1995. Interest expense increased 6% in 1995 due to higher average
debt levels. Average debt levels increased $13 million in 1995 to $501 million.
Outstanding debt increased to $786 million at year-end 1995 from $439 million at
the end of 1994.
................................................................................
LIQUIDITY AND CAPITAL RESOURCES
................................................................................
Cash flow generated from operations is the Company's primary source of
liquidity. Net cash provided by operations was $342 million in 1996 and $394
million in 1995. The reduction was mainly due to the payment of taxes on the
sale of QUNO and changes in working capital. 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 or stock.
Net cash used for investments totaled $151 million in 1996 compared to $393
million in 1995. In 1996, the Company spent $501 million for acquisitions,
including Educational Publishing, NTC Publishing and television stations
KHTV-Houston and KSWB-San Diego, and $72 million for investments. Capital
spending totaled $93 million in 1996. Gross proceeds from the sale of QUNO of
$427 million and from the repayment of a mortgage note receivable of $83 million
partially offset these expenditures.
Net cash provided from financing activities was $61 million in 1996.
Proceeds from the issuance of long-term debt and the sale of stock to employees
were partially offset by purchases of treasury stock, dividends and repayments
of long-term debt. In 1996, the Company issued $470 million of medium-term notes
with an average interest rate of 6.6% and repurchased 4.5 million shares of its
common stock for $148 million. At December 29, 1996, the Company had
authorization to repurchase an additional 5 million shares. Dividends on common
and preferred shares were $92 million in 1996. Dividends on common stock
increased 7% in 1996 to $.60 per share. At December 29, 1996, the Company had no
commercial paper outstanding. The Company has revolving credit agreements with
banks in the aggregate amount of $1.2 billion that extend to December 31, 2001.
These agreements are fully available to support the issuance of commercial
paper. The Company's cash balance at December 29, 1996 was $274 million.
In the first quarter of 1997, the Company expects to complete its
acquisition of Renaissance Communications Corp. for approximately $1.1 billion
in cash. In the third quarter of 1996, the Company's debt ratings were
downgraded due to the anticipated financing of this acquisition. The rating
changes are not likely to significantly restrict the Company's ability to borrow
funds or materially affect the cost of those funds. The Company intends to
finance this acquisition using available cash, medium- to long-term borrowings
and commercial paper.
In December 1996, the Company filed a shelf registration and prospectus
supplement with the Securities and Exchange Commission relating to the offer and
sale from time to time of up to $500 million principal amount of the Company's
Medium-Term Notes, Series E. Funds borrowed under this issue will be used for
general corporate purposes, including the funding of acquisitions.
Capital spending for 1997 is expected to total approximately $135 million
for a variety of normal replacement projects, as well as for press enhancement
and pagination projects at the newspapers and the purchase of digital equipment
at the television stations.
52
<PAGE>
<TABLE>
<CAPTION>
Tribune Company and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of dollars, except per share data) Year Ended Dec. 29, 1996 Dec. 31, 1995 Dec. 25, 1994
===============================================================================================================================
<S> <C> <C> <C> <C>
OPERATING Publishing
REVENUES Advertising $1,031,026 $1,010,782 $ 961,694
Circulation 252,263 249,860 242,993
Other 53,350 52,125 41,690
------------------------------------------------------------------------------------------------------------
Total 1,336,639 1,312,767 1,246,377
Broadcasting and Entertainment 876,750 828,806 764,197
Education 192,316 103,101 102,082
------------------------------------------------------------------------------------------------------------
Total operating revenues 2,405,705 2,244,674 2,112,656
- -------------------------------------------------------------------------------------------------------------------------------
OPERATING Cost of sales (exclusive of items shown below) 1,172,664 1,164,609 1,059,306
EXPENSES Selling, general and administrative 600,072 553,868 541,350
Depreciation and amortization of intangible assets 142,893 120,986 115,375
------------------------------------------------------------------------------------------------------------
Total operating expenses 1,915,629 1,839,463 1,716,031
- -------------------------------------------------------------------------------------------------------------------------------
OPERATING PROFIT 490,076 405,211 396,625
Dispositions of subsidiary stock and investment - 14,672 -
Interest income 32,116 14,465 15,807
Interest expense (47,779) (21,814) (20,585)
- -------------------------------------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 474,413 412,534 391,847
Income taxes (191,663) (167,076) (158,698)
- -------------------------------------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS 282,750 245,458 233,149
DISCONTINUED OPERATIONS OF QUNO, NET OF TAX 89,317 32,707 8,898
- -------------------------------------------------------------------------------------------------------------------------------
NET INCOME 372,067 278,165 242,047
Preferred dividends, net of tax (18,786) (18,841) (18,574)
- -------------------------------------------------------------------------------------------------------------------------------
NET INCOME ATTRIBUTABLE TO COMMON SHARES $ 353,281 $ 259,324 $ 223,473
- -------------------------------------------------------------------------------------------------------------------------------
NET INCOME PER SHARE
Primary: Continuing operations $ 2.15 $ 1.75 $ 1.60
Discontinued operations .73 .25 .06
------------------------------------------------------------------------------------------------------------
Net income $ 2.88 $ 2.00 $ 1.66
------------------------------------------------------------------------------------------------------------
Fully Diluted: Continuing operations $ 1.97 $ 1.61 $ 1.48
Discontinued operations .65 .23 .06
------------------------------------------------------------------------------------------------------------
Net income $ 2.62 $ 1.84 $ 1.54
------------------------------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements.
53
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
ASSETS (In thousands of dollars, except share data) Dec. 29, 1996 Dec. 31, 1995
======================================================================================================================
<S> <C> <C> <C>
CURRENT ASSETS Cash and short-term investments $ 274,170 $ 22,899
Accounts receivable (less allowances of $34,406 and $30,154) 350,773 296,363
Inventories 80,525 45,348
Broadcast rights 154,904 163,339
Prepaid expenses and other 26,349 17,651
-----------------------------------------------------------------------------------------------------
Total current assets 886,721 545,600
- ----------------------------------------------------------------------------------------------------------------------
INVESTMENT IN AND ADVANCES TO QUNO (see Note 2) - 356,925
- ----------------------------------------------------------------------------------------------------------------------
PROPERTIES Machinery, equipment and furniture 965,739 886,601
Buildings and leasehold improvements 377,682 355,369
-----------------------------------------------------------------------------------------------------
1,343,421 1,241,970
Accumulated depreciation (813,501) (725,995)
-----------------------------------------------------------------------------------------------------
529,920 515,975
Land 56,951 55,849
Construction in progress 55,837 68,922
-----------------------------------------------------------------------------------------------------
Net properties 642,708 640,746
- ----------------------------------------------------------------------------------------------------------------------
OTHER ASSETS Broadcast rights 173,552 194,038
Intangible assets (less accumulated amortization of $232,557
and $197,090) 1,251,470 795,856
Investments 629,129 549,735
Mortgage note receivable from affiliate - 82,599
Other 117,320 122,756
-----------------------------------------------------------------------------------------------------
Total other assets 2,171,471 1,744,984
-----------------------------------------------------------------------------------------------------
Total assets $3,700,900 $3,288,255
-----------------------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements.
</TABLE>
54
<PAGE>
<TABLE>
<CAPTION>
Tribune Company and Subsidiaries
LIABILITIES AND SHAREHOLDERS' EQUITY Dec. 29, 1996 Dec. 31, 1995
======================================================================================================================
<S> <C> <C> <C>
CURRENT Long-term debt due within one year $ 31,073 $ 28,665
LIABILITIES Accounts payable 119,605 112,357
Employee compensation and benefits 98,331 107,755
Contracts payable for broadcast rights 178,589 164,443
Deferred income 51,591 43,961
Income taxes 83,467 8,401
Accrued liabilities 110,445 91,571
-----------------------------------------------------------------------------------------------------
Total current liabilities 673,101 557,153
- ----------------------------------------------------------------------------------------------------------------------
LONG-TERM DEBT (less portions due within one year) 979,754 757,437
- ----------------------------------------------------------------------------------------------------------------------
OTHER Deferred income taxes 189,673 223,756
NON-CURRENT Contracts payable for broadcast rights 209,754 225,771
LIABILITIES Compensation and other obligations 109,112 144,229
-----------------------------------------------------------------------------------------------------
Total other non-current liabilities 508,539 593,756
- ----------------------------------------------------------------------------------------------------------------------
COMMITMENTS (see Note 11) - -
- ----------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' Series B convertible preferred stock (without par value)
EQUITY Authorized: 1,600,000 shares
Issued and outstanding: 1,425,842 shares in 1996 and
1,471,795 shares in 1995 (liquidation value $220 per share) 312,470 322,540
Common stock (without par value)
Authorized: 400,000,000 shares; 163,543,316 shares issued 1,018 1,018
Additional paid-in capital 149,861 126,796
Retained earnings 2,210,024 1,930,380
Treasury stock (at cost)
40,598,300 shares in 1996 and 38,439,618 shares in 1995 (1,034,012) (923,828)
Unearned compensation related to ESOP (218,668) (247,281)
Cumulative translation adjustment - (19,188)
Unrealized gain on investments 118,813 189,472
-----------------------------------------------------------------------------------------------------
Total shareholders' equity 1,539,506 1,379,909
-----------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $3,700,900 $3,288,255
-----------------------------------------------------------------------------------------------------
55
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Tribune Company and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars) Dec. 29, 1996 Dec. 31, 1995 Dec. 25, 1994
===============================================================================================================================
<S> <C> <C> <C> <C>
OPERATIONS Net income $ 372,067 $ 278,165 $ 242,047
Adjustments to reconcile net income to net cash
provided by operations:
Discontinued operations of QUNO, net of tax (89,317) (32,707) (8,898)
Dispositions of subsidiary stock and investment - (14,672) -
Depreciation and amortization of intangible assets 142,893 120,986 115,375
Deferred income taxes (24,503) (883) (803)
Losses on equity investments 13,281 13,209 9,739
(Increase) decrease in working capital items
excluding effects from acquisitions:
Accounts receivable (34,917) 20,455 (18,999)
Inventories, prepaid expenses and other current assets (12,920) (15,585) (593)
Accounts payable, employee compensation and
benefits, deferred income and accrued liabilities 3,653 10,678 37,655
Income taxes (20,298) (13,939) (36,457)
Decrease in broadcast rights net of current and
long-term contracts payable 7,554 20,998 20,319
Other, net (15,962) 6,962 9,402
---------------------------------------------------------------------------------------------------------------
Net cash provided by operations 341,531 393,667 368,787
- -------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS Capital expenditures (93,324) (117,863) (91,626)
Acquisitions (501,375) (39,817) (138,477)
Investments (72,127) (271,939) (24,186)
Proceeds from sale of QUNO 426,828 - 94,936
Proceeds from mortgage note receivable from affiliate 83,313 - -
Proceeds from dispositions of subsidiary stock and investment - 32,729 -
Other, net 5,840 4,291 (12,039)
---------------------------------------------------------------------------------------------------------------
Net cash used for investments (150,845) (392,599) (171,392)
- -------------------------------------------------------------------------------------------------------------------------------
FINANCING Proceeds from issuance of long-term debt 470,000 383,876 -
Repayments of long-term debt (219,803) (12,826) (77,100)
Sale of common stock to employees, net 51,256 40,794 20,410
Purchase of treasury stock (148,445) (314,667) (49,080)
Dividends (92,423) (91,202) (88,325)
Redemption of preferred stock - (5,968) -
---------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) financing 60,585 7 (194,095)
- -------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH AND SHORT-TERM INVESTMENTS 251,271 1,075 3,300
Cash and short-term investments at the beginning of year 22,899 21,824 18,524
---------------------------------------------------------------------------------------------------------------
Cash and short-term investments at the end of year $ 274,170 $ 22,899 $ 21,824
- -------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL Cash paid for:
CASH FLOW Interest (net of amounts capitalized) $ 44,324 $ 20,646 $ 20,957
INFORMATION Income taxes $ 206,371 $ 165,675 $ 175,965
---------------------------------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements.
</TABLE>
56
<PAGE>
<TABLE>
<CAPTION>
Tribune Company and Subsidiaries
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Common
Series B Stock and Treasury Stock
Convertible Additional ------------------ Unearned Cumulative Unrealized
(In thousands, Preferred Paid-In Retained Amount Compensation Translation Gain on
except per share data) Stock Capital(1) Earnings Shares - at cost (ESOP) Adjustment Investments Total
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 26, 1993 $335,532 $106,837 $1,589,695 (29,582) $(607,332) $(298,969) $(30,136) - $1,095,627
- -----------------------------------------------------------------------------------------------------------------------------------
Net income 242,047 242,047
Translation adjustment (2) 9,461 9,461
Unrealized gain on investments 77,972 77,972
Redemptions of convertible
preferred stock (6,246) 1,589 228 4,657 -
Dividends declared
Common-$.52/share (69,907) (69,907)
Preferred-$17.05/share (25,619) (25,619)
Tax benefit on dividends
paid to the ESOP (3) 7,201 7,201
Repayment of ESOP debt 24,868 24,868
Purchase of treasury stock (1,894) (49,080) (49,080)
Shares issued under option
and stock plans 5,216 1,806 36,467 41,683
Stock tendered as payment
for options exercised (698) (21,273) (21,273)
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 25, 1994 329,286 113,642 1,743,417 (30,140) (636,561) (274,101) (20,675) 77,972 1,332,980
- -----------------------------------------------------------------------------------------------------------------------------------
Net income 278,165 278,165
Translation adjustment 1,487 1,487
Change in unrealized gain 111,500 111,500
Redemptions of convertible
preferred stock (6,746) 171 28 607 (5,968)
Dividends declared
Common-$.56/share (72,524) (72,524)
Preferred-$17.05/share (25,094) (25,094)
Tax benefit on dividends
paid to the ESOP (3) 6,416 6,416
Repayment of ESOP debt 26,820 26,820
Purchase of treasury stock (10,378) (314,667) (314,667)
Shares issued under option
and stock plans 14,001 3,936 86,018 100,019
Stock tendered as payment
for options exercised (1,886) (59,225) (59,225)
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1995 322,540 127,814 1,930,380 (38,440) (923,828) (247,281) (19,188) 189,472 1,379,909
- -----------------------------------------------------------------------------------------------------------------------------------
Net income 372,067 372,067
Translation adjustment (2) 19,188 19,188
Change in unrealized gain (70,659) (70,659)
Redemptions of convertible
preferred stock (10,070) 1,120 368 8,950 -
Dividends declared
Common-$.60/share (73,742) (73,742)
Preferred-$17.05/share (24,311) (24,311)
Tax benefit on dividends
paid to the ESOP (3) 5,630 5,630
Repayment of ESOP debt 28,613 28,613
Purchase of treasury stock (4,531) (148,445) (148,445)
Shares issued under option
and stock plans 21,945 3,410 82,243 104,188
Stock tendered as payment
for options exercised (1,405) (52,932) (52,932)
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 29, 1996 $312,470 $150,879 $2,210,024 (40,598)$(1,034,012) $(218,668) - $118,813 $1,539,506
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Issued shares of common stock totaled 163,543,316 for all dates presented.
(2) Includes write-offs of the cumulative translation adjustment related to the sale of QUNO common stock in 1994 and 1996.
(3) Excludes the tax benefit on allocated preferred shares held by the ESOP, which is credited to income tax expense.
See Notes to Consolidated Financial Statements.
57
</TABLE>
<PAGE>
Tribune Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The significant accounting policies of Tribune Company and subsidiaries (the
"Company"), as summarized below, conform with generally accepted accounting
principles and reflect practices appropriate to the businesses in which they
operate. The preparation of financial statements in conformity with generally
accepted accounting principles requires the use of management's estimates.
Certain prior year amounts have been reclassified to conform with the 1996
presentation. All share and per share data has been restated to reflect a
two-for-one common stock split effective January 15, 1997.
................................................................................
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
................................................................................
FISCAL YEAR -- The Company's fiscal year ends on the last Sunday in December.
Fiscal years 1996 and 1994 comprised 52 weeks. Fiscal year 1995 comprised 53
weeks.
PRINCIPLES OF CONSOLIDATION -- The consolidated financial statements include the
accounts of Tribune Company and all majority-owned subsidiaries. Investments
comprising 20 to 50 percent of the voting stock of companies and joint ventures
and certain partnership interests are accounted for using the equity method. All
other investments are generally accounted for using the cost method. All
significant intercompany transactions are eliminated.
SHORT-TERM INVESTMENTS -- Short-term investments are stated at cost, which
approximates market value. For purposes of the consolidated statements of cash
flows, investments with maturities of three months or less at the time of
purchase are considered to be cash equivalents.
INVENTORIES -- Inventories are stated at the lower of cost or market. Cost is
determined on the last-in, first-out ("LIFO") basis for newsprint and on the
first-in, first-out ("FIFO") or average basis for all other inventories.
BROADCAST RIGHTS -- Broadcast rights consist principally of rights to broadcast
syndicated programs, sports and feature films and are stated at the lower of
cost or estimated net realizable value. The total cost of these rights is
recorded as an asset and a liability when the program becomes available for
broadcast. Broadcast rights that have limited showings are generally amortized
using an accelerated method as programs are aired. Those with unlimited showings
are amortized on a straight-line basis over the contract period. The current
portion of broadcast rights represents those rights available for broadcast that
are expected to be amortized in the succeeding year.
PROPERTIES -- Property, plant and equipment are stated at cost. Depreciation is
computed using the straight-line method over the properties' estimated useful
lives, ranging from 3 to 40 years.
INTANGIBLE ASSETS -- Intangible assets primarily represent the excess of cost
over the fair market value of tangible net assets acquired. The excess cost
related to net assets acquired since 1971 is being amortized on a straight-line
basis over various periods ranging from 3 to 40 years, with the majority being
amortized over 40 years. Intangible assets of $23.5 million related to pre-1971
acquisitions are not being amortized as the Company believes there has been no
diminution of value. The Company evaluates the carrying value of intangibles
periodically in relation to the projected future undiscounted cash flows of the
related businesses.
PENSION PLANS -- The Company contributes to pension plans that provide
retirement benefits for substantially all employees. These plans are sponsored
either by the Company or by unions. Under the Company-sponsored plans, pension
benefits are primarily a function of both the years of service and the level of
compensation for a specified number of years, depending on the plan. It is the
Company's policy to fund the minimum for Company-sponsored pension plans as
required by ERISA. Contributions made to union-sponsored plans are based upon
collective bargaining agreements.
INVESTMENTS -- The Company records its investments in debt and equity securities
at their fair value, except for debt securities that the Company intends to hold
to maturity and equity securities that are accounted for under the equity method
or that are issued by private companies. All of these investments have been
classified as available for sale. The difference between cost and fair value,
net of related tax effects, is recorded in a separate component of shareholders'
equity.
58
<PAGE>
STOCK-BASED COMPENSATION -- The Company accounts for its stock-based
compensation plans in accordance with Accounting Principles Board Opinion No. 25
and related Interpretations. In 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting
for Stock-Based Compensation," which requires either recording the estimated
fair value of stock-based compensation over the applicable vesting period in the
financial statements or disclosing the unrecorded pro forma effect on net income
in the Notes to the Financial Statements. The Company has chosen not to change
its method of accounting for stock-based compensation plans and has included the
required pro forma disclosures in Note 14. This standard does not apply to
employee stock ownership plans.
NET INCOME PER SHARE -- Primary net income per share is computed by dividing net
income attributable to common shares by the weighted average number of common
shares outstanding during the period. Fully diluted net income per share is
computed based on the assumption that all of the convertible preferred shares
are converted into common shares. For purposes of calculating fully diluted net
income per share, net income is reduced by the additional Employee Stock
Ownership Plan ("ESOP") contribution that would be required for ESOP debt
service, and the weighted average number of shares outstanding is increased by
(i) the additional common shares that would be issued upon conversion of the
preferred shares based on the stated conversion rate plus any additional common
shares that would have to be issued to meet the redemption price guarantee for
all preferred shares that have been allocated to participants, and (ii) the
effect of stock options. The numbers of common shares used in the computations
of primary and fully diluted net income per share were as follows:
(In thousands) 1996 1995 1994
===========================================================
Primary 122,842 129,580 134,426
Fully diluted 136,653 143,012 148,146
................................................................................
NOTE 2: DISCONTINUED OPERATIONS (QUNO CORPORATION)
................................................................................
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 Company owned approximately 34% of QUNO's common stock plus $138.8
million in convertible debt. 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 was a wholly owned subsidiary of the Company until February 1993, when
QUNO completed an initial public offering of 9 million shares of common stock.
This reduced the Company's ownership to 59% and its voting interest to 49%. In
April 1994, the Company reduced its ownership holdings in QUNO to 34% by selling
5.5 million shares of QUNO common stock. The sale of the shares resulted in an
after-tax gain in 1994 of $13 million, or $.10 per share on a primary basis.
The Company's consolidated financial statements reflect the 1996 and 1994
gains on the sale of QUNO stock, equity earnings from QUNO and interest income
from the QUNO convertible debenture, net of income tax, as discontinued
operations. Income tax expense related to discontinued operations was $82.7
million in 1996, $5.1 million in 1995 and $28.0 million in 1994.
QUNO's sales of newsprint to the Company's newspapers, at market prices,
were $161.4 million in 1995 and $112.8 million in 1994, which represented 66%
and 67% of their total newsprint consumption, respectively.
................................................................................
NOTE 3: CHANGES IN OPERATIONS AND NON-RECURRING ITEMS
................................................................................
ACQUISITIONS -- The Company recorded acquisitions totaling $501.4 million in
1996, $39.8 million in 1995 and $138.5 million in 1994. These acquisitions were
accounted for as purchases. The intangible assets recorded on these acquisitions
are being amortized on a straight-line basis over periods from 3 to 40 years.
The results of these operations are included in the consolidated statements of
income from their respective dates of acquisition.
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 and NTC Publishing Group. Educational
Publishing, purchased for $205 million in cash,
59
<PAGE>
publishes supplemental and curriculum education materials. NTC Publishing was
acquired for $83 million in cash and publishes trade books and educational
products in print, audio and multimedia formats for the foreign language,
English as a second language and language arts markets. In April 1996, the
Company acquired San Diego television station KSWB for $72 million in cash.
In August 1995, the Company acquired Everyday Learning Corporation for $25
million in cash. In February 1994, the Company acquired The Wright Group for $96
million in cash. In April 1994, the Company acquired Boston television station
WLVI for $25 million in cash. In June 1994, the Company acquired Farm Journal
Inc. for $17.5 million in cash.
Supplemental cash flow information for acquisitions in 1996, 1995 and 1994
is summarized as follows:
(In thousands) 1996 1995 1994
=============================================================================
Fair value of assets acquired (1) $547,044 $ 45,903 $183,668
Liabilities assumed (45,669) (6,086) (45,191)
- -----------------------------------------------------------------------------
Net cash paid $501,375 $ 39,817 $138,477
- -----------------------------------------------------------------------------
(1) Net of acquisition-related deferred taxes.
In the first quarter of 1997, the Company expects to complete its
acquisition of Renaissance Communications Corp., a publicly traded company
owning six television stations, for approximately $1.1 billion in cash. The
stations to be acquired consist of KDAF-Dallas, WDZL-Miami, KTXL-Sacramento,
WXIN-Indianapolis, WTIC-Hartford and WPMT-Harrisburg. The transaction is subject
to various closing conditions, including Federal Communications Commission
approval. The FCC is reviewing a cross-ownership issue relating to the Miami
station and the Company's Fort Lauderdale Sun-Sentinel. Depending on the outcome
of such review, the Miami television station may need to be divested.
INVESTMENTS -- In 1996, 1995 and 1994, respectively, the Company invested cash
of $72.1 million, $271.9 million and $24.2 million in several companies. The
1996 investments included $18 million in The WB Network, $15 million in Digital
City, Inc., $10 million in The Lightspan Partnership, Inc. and $7 million in
Excite, Inc. The 1995 investments included $150 million in The Learning Company,
Inc. convertible notes, $70 million in Qwest Broadcasting LLC and $8 million in
The WB Network.
The Company's current investment in Qwest Broadcasting is composed of a $9
million equity interest (33%) and $67 million in convertible notes and accrued
interest. The notes bear interest at 6%, are convertible into an additional 47%
interest and may only be converted when and if FCC regulations permit such
conversion. In December 1995, Qwest Broadcasting acquired television stations in
Atlanta (WATL) and New Orleans (WNOL) for approximately $167 million.
DISPOSITIONS -- In December 1995, the Company sold Compton's NewMedia to The
Learning Company for $123.5 million of The Learning Company common stock. In
connection with the Compton's sale, the Company also invested $150 million in
The Learning Company in exchange for five-year, 5.5% notes, convertible into
common stock at $53 per share. The notes were recorded at $100 million,
representing their estimated fair value at the time of the transaction. The $50
million difference between fair value and face value is being amortized into
interest income over the five-year term of the notes, with an effective interest
rate of 15.5%. These transactions resulted in a pretax gain of $6.9 million, or
$.03 per share on a primary basis. Compton's operating results included in the
consolidated statements of income were operating revenues of $26.4 million and
$42.8 million in 1995 and 1994, respectively, and operating losses of $12.1
million and $11.0 million in 1995 and 1994.
In July 1995, the Company sold Times Advocate Company, a California
newspaper subsidiary, for approximately $16 million in cash. The sale resulted
in a pretax loss of $7.5 million, or $.03 per share. Times Advocate operating
results included in the consolidated statements of income were revenues of $8.5
million and $17.5 million in 1995 and 1994, and operating losses of $1.4 million
and $3.2 million in 1995 and 1994, respectively.
In March 1995, the Company sold shares of America Online common stock for
approximately $17 million. The sale resulted in a pretax gain of $15.3 million,
or $.07 per share.
OTHER -- In the fourth quarter of 1996, the Company recorded in operating profit
a non-recurring pretax gain of $10 million, or $.05 per share, representing the
Company's equity interest in a gain recorded by Qwest Broadcasting for the
cancellation of an option to purchase a television station.
60
<PAGE>
................................................................................
NOTE 4: INVESTMENTS
................................................................................
Investments, excluding QUNO, consisted of the following:
<TABLE>
<CAPTION>
(In thousands) Dec. 29, 1996 Dec. 31, 1995
=============================================================================================================
<S> <C> <C>
Cost method investments $336,707 $343,345
Equity method investments 72,009 31,878
Debt securities 220,413 174,512
- -------------------------------------------------------------------------------------------------------------
Total investments $629,129 $549,735
- -------------------------------------------------------------------------------------------------------------
</TABLE>
At December 29, 1996 the Company's cost and equity method investments consisted
primarily of the following:
<TABLE>
<CAPTION>
Cost Method Investments Equity Method Investments
- ----------------------------------------------------------------------- -----------------------------
Public % Private % Private %
Companies Owned Companies Owned Companies Owned
======================================================================= =============================
<S> <C> <C> <C> <C> <C>
America Online, Inc. 4% iVillage 12% Digital City, Inc. 20%
CheckFree Corporation 6% The Lightspan Partnership, Inc. 5% ImageBuilder Software 23%
Excite, Inc. 7% Mercury Mail, Inc. 13% Interealty 25%
The Learning Company, Inc. 12% Peapod LP 13% Qwest Broadcasting 33%
Open Market, Inc. 6% TV Food Network 31%
StarSight Telecast, Inc. 4% The WB Network 12.5%
</TABLE>
For investments recorded at fair value under SFAS No. 115, the aggregate cost
basis, net unrealized gain and fair value were as follows:
<TABLE>
<CAPTION>
December 29, 1996 December 31, 1995
Cost Unrealized Fair Cost Unrealized Fair
(In thousands) Basis Gain Value Basis Gain Value
======================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Marketable equity securities $160,660 $151,695 $312,355 $146,040 $188,716 $334,756
Debt securities 176,611 43,802 220,413 174,512 - 174,512
QUNO debenture - - - 138,757 121,891 260,648
</TABLE>
At December 29, 1996 the net unrealized gain on marketable equity
securities included a $47 million unrealized loss on The Learning Company common
stock investment. The Company believes this loss was temporary at December 29,
1996. The difference between cost and fair value, net of related tax effects, is
recorded in a separate component of shareholders' equity and amounted to a net
gain of $118.8 million at December 29, 1996 and $189.5 million at
December 31, 1995.
61
<PAGE>
................................................................................
NOTE 5: FAIR VALUE OF FINANCIAL INSTRUMENTS
................................................................................
Estimated fair values and carrying amounts of the Company's financial
instruments were as follows:
<TABLE>
<CAPTION>
December 29, 1996 December 31,1995
Fair Carrying Fair Carrying
(In thousands) Value Amount Value Amount
===============================================================================================================
<S> <C> <C> <C> <C>
Cost method investments:
Practicable to estimate fair value $340,011 $331,413 $345,620 $340,766
Not practicable - 5,294 - 2,579
Debt securities 220,413 220,413 174,512 174,512
QUNO debenture - - 260,648 260,648
Mortgage note receivable - - 89,070 83,313
Debt 1,039,385 1,010,827 847,577 786,102
Contracts payable for broadcast rights 350,498 388,343 349,845 390,214
</TABLE>
The following methods and assumptions were used to estimate the fair value
of each category of financial instruments.
COST METHOD INVESTMENTS, DEBT SECURITIES AND QUNO DEBENTURE -- Cost method
investments in public companies, debt securities and the QUNO debenture were
recorded at fair value in the consolidated balance sheets (see Notes 1 and 4).
Cost method investments in private companies were recorded at cost, and fair
value was generally estimated based on prices recently paid for shares in that
company. For several investments, it was not practicable to estimate fair value.
MORTGAGE NOTE RECEIVABLE -- Fair value was estimated using the discounted cash
flow method.
DEBT -- Fair value was determined based on quoted market prices for similar
issues or on current rates available to the Company for debt of the same
remaining maturities and similar terms.
CONTRACTS PAYABLE FOR BROADCAST RIGHTS -- Fair value was estimated using the
discounted cash flow method.
................................................................................
NOTE 6: INVENTORIES
................................................................................
Inventories consisted of the following:
(In thousands) Dec. 29, 1996 Dec. 31, 1995
=========================================================
Finished goods $60,341 $21,638
Newsprint (at LIFO) 10,186 12,473
Supplies and other 9,998 11,237
- ---------------------------------------------------------
Total inventories $80,525 $45,348
- ---------------------------------------------------------
Newsprint inventories are valued under the LIFO method and were less than
current cost by approximately $11.4 million at December 29, 1996, $12.8 million
at December 31, 1995 and $8.0 million at December 25, 1994. Finished goods
primarily include books and supplementary educational materials.
................................................................................
NOTE 7: MORTGAGE NOTE RECEIVABLE FROM AFFILIATE
................................................................................
In October 1996, the Company received $83 million as prepayment of a mortgage
note receivable from an affiliate. The Company held the mortgage note on a
building in which the Company had an equity interest. The note had an interest
rate of 13% plus contingent interest based upon the building's cash flow and
appreciation.
62
<PAGE>
................................................................................
NOTE 8: CONTRACTS PAYABLE FOR BROADCAST RIGHTS
................................................................................
Contracts payable for broadcast rights are classified as current or long-term
liabilities in accordance with the payment terms of the contracts. Required
payments under contractual agreements for broadcast rights recorded at December
29, 1996 are: $178.6 million in 1997, $111.5 million in 1998, $67.6 million in
1999, $19.0 million in 2000, $5.9 million in 2001 and $5.7 million thereafter.
................................................................................
NOTE 9: LONG-TERM DEBT
................................................................................
Long-term debt consisted of the following:
(In thousands) Dec. 29, 1996 Dec. 31, 1995
===============================================================================
Promissory notes, weighted average
interest rate of 5.7% in 1995 $ - $208,718
Medium-term notes, weighted average
interest rate of 6.6%, due 1996-2006 667,300 307,300
6.25% notes due 2026, putable to the Company
at par in 2001 100,000 -
8.4% guaranteed ESOP notes, due 1996-2003 210,606 235,648
8.19% guaranteed ESOP note, due 1996-1998 8,062 11,633
Other notes and obligations 24,859 22,803
- -------------------------------------------------------------------------------
Total debt 1,010,827 786,102
Less portions due within one year (31,073) (28,665)
- -------------------------------------------------------------------------------
Long-term debt $ 979,754 $757,437
- -------------------------------------------------------------------------------
The Company has issued all of its $200 million Series B medium-term notes
and $500 million Series C medium-term notes. These notes have maturities from 2
to 10 years and may not be redeemed by the Company prior to maturity. In 1996,
the Company began offering up to $500 million of its Series D medium-term notes,
of which $350 million were issued and outstanding at December 29, 1996. As part
of the Series D medium-term note program, the Company sold $100 million of 6.25%
notes that mature in 2026. These notes may be put back to the Company in 2001 at
100% of the principal amount, plus accrued interest. The proceeds from the sale
of the notes have been used for general corporate purposes, including the
funding of acquisitions.
The notes issued by the Company's ESOP are unconditionally guaranteed by
the Company as to payment of principal and interest. Therefore, the unpaid
balance of these borrowings is reflected in the accompanying consolidated
balance sheets as long-term debt. An amount equivalent to the unpaid balance of
these borrowings, representing unearned employee compensation, is recorded as a
reduction of shareholders' equity.
Certain debt agreements limit the amount of secured debt the Company can
incur without equally and ratably securing additional borrowings under those
agreements.
In 1997, the Company intends to refinance $31.0 million of Series B
medium-term notes scheduled to mature in 1997 and has the ability to do so on a
long-term basis through existing revolving credit agreements. Accordingly, these
notes were classified as long-term and treated as maturing in fiscal year 2001.
The Company has revolving credit agreements with a number of banks in an
aggregate amount of $1.2 billion, extending to December 31, 2001, which are
fully available to support the issuance of promissory notes. These agreements
contain various interest rate options and provide for annual fees based on a
percentage of the commitment. Such fees totaled approximately $.5 million in
1996, 1995 and 1994.
Debt at December 29, 1996 matures as follows: $31.1 million in 1997, $34.7
million in 1998, $59.7 million in 1999, $78.2 million in 2000, $165.1 million in
2001 and $642.0 million thereafter.
63
<PAGE>
................................................................................
NOTE 10: INCOME TAXES
................................................................................
The following is a reconciliation of income taxes computed at the U.S. federal
statutory rate to income taxes from continuing operations reported in the
consolidated statements of income:
<TABLE>
<CAPTION>
(In thousands) 1996 1995 1994
======================================================================================================================
<S> <C> <C> <C>
Income from continuing operations before income taxes $474,413 $412,534 $391,847
- ----------------------------------------------------------------------------------------------------------------------
Federal income taxes at 35% $166,045 $144,387 $137,146
State and local income taxes, net of federal tax benefit 27,747 24,344 24,000
Other (2,129) (1,655) (2,448)
- ----------------------------------------------------------------------------------------------------------------------
Income taxes reported $191,663 $167,076 $158,698
Effective tax rate 40.4% 40.5% 40.5%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Components of income tax expense charged to income from continuing operations
were as follows:
<TABLE>
<CAPTION>
(In thousands) 1996 1995 1994
======================================================================================================================
<S> <C> <C> <C> <C>
Currently payable: U.S. federal $165,169 $137,420 $135,145
State and local 47,491 37,389 37,390
- ----------------------------------------------------------------------------------------------------------------------
212,660 174,809 172,535
- ----------------------------------------------------------------------------------------------------------------------
Deferred: U.S. federal (18,360) (7,617) (10,380)
State and local (2,637) (116) (3,457)
- ----------------------------------------------------------------------------------------------------------------------
(20,997) (7,733) (13,837)
- ----------------------------------------------------------------------------------------------------------------------
Total $191,663 $167,076 $158,698
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Significant components of the Company's net deferred tax liabilities were as
follows:
<TABLE>
<CAPTION>
(In thousands) Dec. 29, 1996 Dec. 31, 1995
======================================================================================================================
<S> <C> <C>
Net properties $ 84,807 $ 87,956
Net intangible assets 103,268 58,483
Pensions 8,849 9,226
Unrealized gain on investments 76,684 74,024
Investment in QUNO - 59,792
Other investments 7,634 12,146
Other future taxable items 7,310 7,102
- ----------------------------------------------------------------------------------------------------------------------
Total deferred tax liabilities 288,552 308,729
- ----------------------------------------------------------------------------------------------------------------------
Broadcast rights (15,538) (20,211)
Postretirement and postemployment benefits other than pensions (20,132) (19,646)
Deferred compensation (20,759) (26,733)
Disposition of New York Daily News (12,905) (6,448)
Other accrued liabilities (18,047) (18,100)
Accrued employee compensation and benefits (18,831) (19,012)
Federal benefit on deferred state taxes (23,517) (16,952)
Accounts receivable (14,786) (11,822)
Other future deductible items (15,242) (7,199)
- ----------------------------------------------------------------------------------------------------------------------
Total deferred tax assets (159,757) (146,123)
- ----------------------------------------------------------------------------------------------------------------------
Net deferred tax liability $128,795 $162,606
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
64
<PAGE>
................................................................................
NOTE 11: COMMITMENTS
................................................................................
The Company has entered into commitments for broadcast rights that are not
currently available for broadcast and are therefore not included in the
financial statements. These commitments totaled $265 million at December 29,
1996. Payments for broadcast rights generally commence when the programs become
available for broadcast.
The Company had commitments totaling $74 million at December 29, 1996
related to the purchase of inventory, property, plant and equipment and talent
contracts.
The Company leases certain equipment and office and production space under
various operating leases. Rental expense totaled $28.1 million in 1996 and $24.6
million in 1995 and 1994. Future minimum rental commitments under non-cancelable
operating leases are $22.3 million in 1997, $19.2 million in 1998, $17.6 million
in 1999, $15.4 million in 2000, $13.7 million in 2001 and $66.9 million
thereafter.
The Company has guaranteed certain obligations of affiliates totaling $21.6
million at December 29, 1996.
................................................................................
NOTE 12: CONTINGENCIES AND LEGAL PROCEEDINGS
................................................................................
The Company and its subsidiaries are defendants from time to time in actions for
matters arising out of their business operations. In addition, the Company and
its subsidiaries are involved from time to time as parties in various
regulatory, environmental and other proceedings with governmental authorities
and administrative agencies.
The State of Florida Department of Environmental Protection ("DEP") and the
Company's subsidiary, Sentinel Communications Company (the "Sentinel"), have
entered into a consent decree under which the Sentinel will assist the DEP in
remediating certain trichloroethene groundwater contamination in downtown
Orlando, Florida. The Company currently estimates that the Sentinel's share of
the remediation costs will not be material and has provided for the costs in the
Company's consolidated financial statements.
The Company does not believe that any of the matters or proceedings
presently pending will have a material adverse effect on its consolidated
financial position or results of operations.
................................................................................
NOTE 13: CAPITAL STOCK
................................................................................
In December 1996, the Board of Directors declared a two-for-one common stock
split effective January 15, 1997, to holders of record on December 27, 1996. All
share and per share data has been restated to reflect the stock split.
Under the Company's Restated Certificate of Incorporation, 5 million shares
of preferred stock are authorized. In 1989, the Company established a series of
1.6 million shares of Series B Convertible Preferred Stock of which 1.59 million
shares were issued to the Company's ESOP. Each share of such preferred stock
pays a cumulative dividend of 7.75% annually, has a liquidation value of $220
per share, is convertible into eight shares of the Company's common stock and is
voted with the common stock with an entitlement to 9.16 votes per preferred
share.
In December 1987, the Company adopted a Share Purchase Rights Plan and
declared a distribution of one right on each outstanding share of the Company's
common stock. Each right will entitle stockholders to buy one two-hundredth of a
share of Series A Junior Participating Preferred Stock at an exercise price of
$75. The rights have no voting rights and are not exercisable until 10 days
after the occurrence of certain triggering events, upon which the holders of the
rights are entitled to purchase either the common stock of an acquiror or
additional common stock of the Company at a discounted price. The rights are
redeemable at the option of the Company for $.005 per right. The Company has
established a series of 800,000 shares of Series A Junior Participating
Preferred Stock in connection with the plan, none of which have been issued.
The Board from time to time has authorized the repurchase of shares of the
Company's common stock in the open market or through private transactions to be
used for employee benefit programs and other purposes. At December 29, 1996, the
Company had authorization to repurchase 5.0 million shares of its common stock.
There were approximately 5,100 holders of record of the Company's common
stock at February 11, 1997.
65
<PAGE>
................................................................................
NOTE 14: INCENTIVE COMPENSATION AND STOCK PLANS
................................................................................
EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) -- In 1988, the Company established an ESOP
as a long-term employee benefit plan to supplement the Company's employee
pension plan. In connection therewith, the ESOP purchased, in 1988 and 1989,
approximately 1.6 million common shares and 1.59 million Series B convertible
preferred shares for an aggregate of $375 million. The ESOP provides for the
awarding of shares of the Company's preferred and common stock on a
noncontributory basis to eligible non-union employees of the Company. At
December 29, 1996, 11.4 million shares of common stock were reserved for
issuance in connection with this plan.
Shares of stock held by the ESOP have been placed with the ESOP Trustee and
are allocated to eligible employees annually. These common and preferred shares
are allocated in the same proportion that the current year's principal and
interest payments bear to the total principal and interest to be paid over the
lives of the related borrowings. Each preferred share is convertible into eight
shares of the Company's common stock. The ESOP Trustee must convert the
preferred shares when making distributions to participants upon their withdrawal
from the ESOP. If at the time of such conversion the price of the Company's
common stock is below $27.50 per share, the Company must, at its option, either
pay the difference in cash or issue additional common stock. At December 29,
1996, preferred shares allocated and committed to be released were 584,353 and
114,657, respectively, and common shares allocated and committed to be released
were 932,180 and 154,036.
The Company recognizes expense for this plan based upon cash contributions
it makes to the ESOP. The ESOP services its debt requirements with amounts
received from preferred dividends, common dividends earned on unallocated common
shares and Company contributions. The following table summarizes ESOP debt
service activity for the three years ended December 29, 1996:
(In thousands) 1996 1995 1994
==========================================================================
Debt Requirements:
Principal $28,613 $26,820 $24,868
Interest 20,676 22,927 25,015
- --------------------------------------------------------------------------
Total $49,289 $49,747 $49,883
- --------------------------------------------------------------------------
Debt Service:
Dividends $24,589 $25,439 $26,019
Company cash contributions 24,700 24,308 23,864
- --------------------------------------------------------------------------
Total $49,289 $49,747 $49,883
- --------------------------------------------------------------------------
SAVINGS INCENTIVE PLAN -- The Company maintains various qualified 401(k) savings
plans, which permit eligible employees to make voluntary contributions on a
pretax basis. The Savings Incentive Plan provides for uniform employer
contributions to eligible employees of $.25 for each $1.00 contributed by
participants up to 4% of the participants' eligible compensation. This plan
allows participants to invest their savings in various investments including the
Company's common stock. Company contributions to this plan for 1996, 1995 and
1994 were $3.0 million, $2.6 million and $2.3 million, respectively. The Company
had 800,000 shares of common stock reserved for possible issuance under this
plan at December 29, 1996.
EMPLOYEE STOCK PURCHASE PLAN -- This plan permits eligible employees to purchase
up to 8 million shares of the Company's common stock at 85% of market price. The
Company's only expense relating to this plan is for its administration. During
1996, 1995 and 1994, 230,688, 222,034 and 221,850 shares, respectively, were
sold to employees under this plan. As of December 29, 1996, a total of
4.1 million shares were available for sale. The weighted average fair value of
shares sold in 1996 was $36.08.
1992 LONG-TERM INCENTIVE PLAN -- The 1992 Long-Term Incentive Plan provides for
the granting of stock options or various other types of awards to eligible
employees. General awards available under this plan each year are equal to
nine-tenths of one percent (.009) of the shares used to calculate fully diluted
net income per share for the preceding year, plus shares of stock available for
awards in previous years that have not been awarded and any previously forfeited
or expired options. These options vest in two years. At December 29, 1996 and
December 31, 1995, 1.3 million and 1.5 million shares, respectively, were
available for general awards.
An additional number of shares is available for replacement options. The
number of shares available for replacement options each year is generally equal
to four-tenths of one percent (.004) of the shares used to calculate fully
diluted net income per share for the preceding year, plus shares of stock
available for awards in previous years that have not been awarded and any
previously forfeited or expired replacement options. At December 29, 1996 and
December 31, 1995, 7.1 million and 6.1 million shares, respectively, were
available for replacement options.
Under the 1992 plan, the option price is the market value of the Company's
common stock at the time the option is granted. Options are exercisable not less
than six months or more than 10 years after the date the option is granted.
66
<PAGE>
A summary of stock option activity and weighted average prices follows:
<TABLE>
<CAPTION>
1996 1995 1994
Weighted Avg. Weighted Avg. Weighted Avg.
(Shares in thousands) Shares Exercise Price Shares Exercise Price Shares Exercise Price
=======================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning of year 8,906 $27.30 10,090 $24.27 9,786 $22.88
Granted 2,965 $36.46 2,950 $31.67 2,100 $28.03
Exercised (3,370) $26.88 (3,908) $22.70 (1,664) $20.55
Canceled (95) $31.12 (226) $28.17 (132) $27.89
- -----------------------------------------------------------------------------------------------------------------------
Outstanding, end of year 8,406 $30.68 8,906 $27.30 10,090 $24.27
- -----------------------------------------------------------------------------------------------------------------------
Exercisable, end of year 4,017 $26.05 5,092 $25.31 6,450 $22.70
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
The following table summarizes information about stock options outstanding and
options exercisable at December 29, 1996 (shares in thousands):
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------------------- ------------------------------
Range of Number Weighted Avg. Weighted Avg. Number Weighted Avg.
Exercise Prices Outstanding Remaining Life Exercise Price Exercisable Exercise Price
============================================================================================================================
<S> <C> <C> <C> <C> <C>
$19.31 - $28.88 3,250 5.51 $24.54 3,154 $24.49
$29.19 - $34.81 3,865 7.57 33.03 863 31.72
$34.88 - $43.69 1,291 5.14 38.90 - -
</TABLE>
STOCK PLANS PRO FORMA DISCLOSURE -- The Company's 1992 Long-Term Incentive Plan
and Employee Stock Purchase Plan are accounted for under APB Opinion No. 25.
Accordingly, no compensation cost has been recognized in the consolidated
statements of income. Under SFAS No. 123, compensation cost is measured at the
grant date based on the fair value of the award and is recognized as
compensation expense over the vesting or service period. Had compensation cost
for these plans been determined consistent with SFAS No. 123, the Company's net
income and net income per share would have been reduced to the following pro
forma amounts:
<TABLE>
<CAPTION>
1996 1995
(In thousands, except per share data) As Reported Pro Forma As Reported Pro Forma
============================================================================================================================
<S> <C> <C> <C> <C>
Net income $372,067 $361,116 $278,165 $272,469
Net income attributable to common shares 353,281 342,330 259,324 253,628
Primary net income per share 2.88 2.79 2.00 1.96
Fully diluted net income per share 2.62 2.54 1.84 1.80
</TABLE>
Because the SFAS No. 123 method of accounting has not been applied to
options granted prior to 1995, the pro forma compensation cost in 1995 and 1996
is not representative of that in future years.
The weighted average fair value of options granted was estimated to be
$8.06 and $7.47 in 1996 and 1995, respectively. In determining the proforma
compensation cost, the fair value of each option grant was estimated on the date
of grant using the Black-Scholes option pricing model with the following
weighted-average assumptions used for 1996 general awards and replacement
options, respectively: risk-free interest rates of 6.7% and 6.5%; expected
dividend yields of 1.7% and 1.7%; expected lives of 5 and 3 years; and expected
stock price volatility of 22.2% and 18.9%. The weighted average assumptions used
for 1995 general awards and replacement options, respectively, were: risk-free
interest rates of 6.2% and 6.2%; expected dividend yields of 1.7% and 1.7%;
expected lives of 5 and 3 years; and expected stock price volatility of 26.0%
and 20.9%.
67
<PAGE>
................................................................................
NOTE 15: EMPLOYEE PENSION PLANS
................................................................................
In connection with the establishment of the ESOP, the Company amended, effective
January 1989, its Company-sponsored pension plan for employees not covered by a
collective bargaining agreement. The pension plan will continue to provide
substantially the same pension benefits as under the pre-amended plan until
December 1998. After that date, the plan provides that the pension benefit
credits be frozen in terms of pay and service. In addition, the Company
maintains several small plans for other employees.
Net pension expense (credit) for Company-sponsored plans in 1996, 1995 and
1994 included the following components:
<TABLE>
<CAPTION>
(In thousands) 1996 1995 1994
===================================================================================================
<S> <C> <C> <C>
Benefits earned during the period (service costs) $ 10,093 $ 8,256 $ 9,038
Interest cost on projected benefit obligation 21,783 20,302 17,912
Recognized return on plan assets (29,199) (27,857) (27,424)
Amortization, net (971) (531) (380)
- ---------------------------------------------------------------------------------------------------
Net pension expense (credit) $ 1,706 $ 170 $ (854)
- ---------------------------------------------------------------------------------------------------
</TABLE>
Actual returns on plan assets were gains of $57.2 million in 1996 and $57.9
million in 1995 and a loss of $2.0 million in 1994.
The following table sets forth the funded status of the Company-sponsored
pension plans as of year-end 1996 and 1995:
<TABLE>
<CAPTION>
(In thousands) Dec. 29, 1996 Dec. 31, 1995
=====================================================================================================
<S> <C> <C>
Plans' assets at fair value $365,740 $324,860
Actuarial present value of benefit obligations:
Vested benefits 286,720 288,086
Non-vested benefits 10,841 10,872
- -----------------------------------------------------------------------------------------------------
Accumulated benefit obligation 297,561 298,958
Projected future salary increases 8,231 8,324
- -----------------------------------------------------------------------------------------------------
Projected benefit obligation 305,792 307,282
- -----------------------------------------------------------------------------------------------------
Plans' assets in excess of projected benefit obligation 59,948 17,578
Unrecognized net asset at transition
being amortized through 2003 (10,550) (12,120)
Unrecognized net (gain) loss due to actual experience
varying from actuarial assumptions (17,113) 27,941
Unrecognized prior service costs (26) 131
- -----------------------------------------------------------------------------------------------------
Pension asset recognized in the consolidated balance sheets $ 32,259 $ 33,530
- -----------------------------------------------------------------------------------------------------
</TABLE>
The plans' assets consist primarily of listed common stocks and bonds. In
determining the projected benefit obligation for the plans, the weighted average
assumed discount rate used was 7.75% in 1996 and 7.25% in 1995, while the
assumed average rate of increase in future salary levels was 5.0% for 1996 and
4.5% for 1995. The weighted average expected long-term rate of return on assets
used in determining net pension expense or credit was 9.5% in 1996 and 1995, and
9.75% in 1994. Total pension expense for union-sponsored pension plans was $5.7
million in 1996, $5.6 million in 1995 and $5.8 million in 1994. The Company's
portion of assets and liabilities for multi-employer union pension plans is not
determinable.
68
<PAGE>
................................................................................
NOTE 16: POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
................................................................................
The Company provides postretirement health care and life insurance benefits to
eligible employees under a variety of plans. Employees become eligible for these
benefits if they meet age and service requirements. Effective January 1991, the
Company provides a fixed medical contribution to participants who retire between
the age of 55 to 65 and have 10 or more years of service. Medical coverage for
these participants ends when they reach age 65. Retirees are also eligible for
life insurance benefits, which are primarily a function of both the years of
service and the level of compensation at retirement. The cost of postretirement
medical and life benefits is accrued over the active service periods of
employees to the date they attain full eligibility for such benefits. It is the
Company's policy to fund postretirement benefits as claims are incurred.
Postretirement benefit cost for 1996, 1995 and 1994 included the following
components:
<TABLE>
<CAPTION>
(In thousands) 1996 1995 1994
======================================================================================================
<S> <C> <C> <C>
Service cost of benefits earned during the year $ 265 $ 222 $ 350
Interest cost on accumulated postretirement
benefit obligation ("APBO") 3,244 3,437 3,069
- ------------------------------------------------------------------------------------------------------
Postretirement benefit cost $3,509 $3,659 $3,419
- ------------------------------------------------------------------------------------------------------
</TABLE>
The plans' APBO and the Company's postretirement liability were as follows:
<TABLE>
<CAPTION>
(In thousands) Dec. 29, 1996 Dec. 31, 1995
======================================================================================================
<S> <C> <C>
Actuarial present value of benefit obligations:
Retirees $40,391 $42,705
Active participants, fully eligible 1,466 1,405
Active participants, not eligible 2,592 2,649
- ------------------------------------------------------------------------------------------------------
APBO 44,449 46,759
Unrecognized net gain (loss) due to actual experience
varying from actuarial assumptions 317 (3,699)
- ------------------------------------------------------------------------------------------------------
Postretirement benefit liability $44,766 $43,060
- ------------------------------------------------------------------------------------------------------
</TABLE>
In determining the APBO, the weighted average assumed discount rate used
was 7.75% in 1996 and 7.25% in 1995. Increases of 9.5% in the cost of covered
health care benefits were assumed for fiscal 1997. These rates were assumed to
decrease ratably to 7.0% after five years and remain at that level thereafter.
The effect of a one percentage point increase in the assumed health care cost
trend rate for each future year would increase the total APBO at year-end 1996
by $3.2 million and the 1996 net benefit cost by $.3 million.
69
<PAGE>
................................................................................
NOTE 17: SEGMENT INFORMATION
................................................................................
Tribune Company is an information, education and entertainment company
comprising three business segments. As of December 29, 1996, the Company's
publishing segment consisted of four daily newspapers and other related
publications and services. The newspapers are the Chicago Tribune, the Fort
Lauderdale-based Sun-Sentinel, The Orlando Sentinel and the Newport News-based
Daily Press. The Company's broadcasting operations consisted of WB television
affiliates in New York, Los Angeles, Chicago, Philadelphia, Boston, Houston,
Denver and San Diego, an ABC television affiliate in New Orleans, a CBS
television affiliate in Atlanta and five radio stations. In entertainment, the
Company owns the Chicago Cubs baseball team, produces and syndicates television
programming and has interests in cable programming. The Company's education
segment consisted of The Wright Group, Educational Publishing, NTC/Contemporary
Publishing and Everyday Learning. In 1995, the Company sold Times Advocate
Company, its California newspaper subsidiary, and Compton's NewMedia, an
education software company (see Note 3). Financial data for each of the
Company's business segments is presented on the following page.
In determining operating profit for each segment, none of the following
items have been added or deducted: interest income and expense, nonoperating
gains and losses or income taxes. Assets represent those identifiable tangible
and intangible assets used in the operations of each segment. The Company's cost
of sales by business segment was as follows:
(In thousands) 1996 1995 1994
================================================================================
Publishing $ 657,466 $ 679,037 $ 608,327
Broadcasting and Entertainment 454,828 451,749 412,704
Education 60,370 33,823 38,275
- --------------------------------------------------------------------------------
Total cost of sales $1,172,664 $1,164,609 $1,059,306
- --------------------------------------------------------------------------------
70
<PAGE>
<TABLE>
<CAPTION>
Tribune Company and Subsidiaries
BUSINESS SEGMENTS
(In thousands of dollars) 1996 1995 1994
==================================================================================================================
<S> <C> <C> <C> <C>
OPERATING Publishing $1,336,639 $1,312,767 $1,246,377
REVENUES Broadcasting and Entertainment 876,750 828,806 764,197
Education 192,316 103,101 102,082
-------------------------------------------------------------------------------------------------
Total operating revenues $2,405,705 $2,244,674 $2,112,656
- ------------------------------------------------------------------------------------------------------------------
OPERATING Publishing $ 281,312 $ 270,143 $ 287,590
PROFIT Broadcasting and Entertainment (1) 200,537 160,616 132,413
Education 39,422 4,586 2,829
Corporate expenses (31,195) (30,134) (26,207)
-------------------------------------------------------------------------------------------------
Total operating profit $ 490,076 $ 405,211 $ 396,625
- ------------------------------------------------------------------------------------------------------------------
DEPRECIATION Publishing $ 73,379 $ 68,123 $ 66,639
Broadcasting and Entertainment 24,873 21,384 18,891
Education 2,693 2,818 1,554
Corporate 2,265 1,048 1,575
-------------------------------------------------------------------------------------------------
Total depreciation $ 103,210 $ 93,373 $ 88,659
- ------------------------------------------------------------------------------------------------------------------
AMORTIZATION Publishing $ 7,564 $ 5,675 $ 4,990
OF INTANGIBLE Broadcasting and Entertainment 20,567 16,188 16,216
ASSETS Education 11,552 5,750 5,510
-------------------------------------------------------------------------------------------------
Total amortization of intangible assets $ 39,683 $ 27,613 $ 26,716
- ------------------------------------------------------------------------------------------------------------------
CAPITAL Publishing $ 58,686 $ 65,676 $ 51,205
EXPENDITURES Broadcasting and Entertainment 27,233 38,025 21,041
Education 6,153 4,883 4,905
Corporate 1,252 9,279 14,475
-------------------------------------------------------------------------------------------------
Total capital expenditures $ 93,324 $ 117,863 $ 91,626
- ------------------------------------------------------------------------------------------------------------------
ASSETS Publishing $ 686,730 $ 693,853 $ 757,889
Broadcasting and Entertainment 1,616,797 1,405,213 1,321,768
Education 544,226 211,510 210,445
Corporate 853,147 977,679 495,723
-------------------------------------------------------------------------------------------------
Total assets $3,700,900 $3,288,255 $2,785,825
-------------------------------------------------------------------------------------------------
(1) In 1996, the Company recorded a pretax gain of $10 million, representing
the Company's equity interest in a gain recorded by Qwest Broadcasting for
the cancellation of an option to purchase a television station.
71
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
QUARTERLY RESULTS (UNAUDITED)
Quarters
1996 (In thousands of dollars, except per share data) First Second Third Fourth Total
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
OPERATING Publishing $327,333 $330,495 $322,784 $356,027 $1,336,639
REVENUES Broadcasting and Entertainment 187,195 253,280 222,905 213,370 876,750
Education 22,594 58,152 72,638 38,932 192,316
-----------------------------------------------------------------------------------------------------------------
Total operating revenues $537,122 $641,927 $618,327 $608,329 $2,405,705
- -----------------------------------------------------------------------------------------------------------------------------------
OPERATING Publishing $ 63,243 $ 72,861 $ 60,989 $ 84,219 $ 281,312
PROFIT Broadcasting and Entertainment (1) 29,024 65,904 41,449 64,160 200,537
Education 2,222 13,749 21,839 1,612 39,422
Corporate expenses (7,414) (7,641) (7,964) (8,176) (31,195)
-----------------------------------------------------------------------------------------------------------------
Total operating profit 87,075 144,873 116,313 141,815 490,076
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest expense (2,405) (3,208) (4,992) (5,058) (15,663)
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 84,670 141,665 111,321 136,757 474,413
Income taxes (34,291) (57,375) (45,085) (54,912) (191,663)
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS 50,379 84,290 66,236 81,845 282,750
DISCONTINUED OPERATIONS OF QUNO, NET OF TAX (2) 89,317 - - - 89,317
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCOME 139,696 84,290 66,236 81,845 372,067
Preferred dividends, net of tax (4,696) (4,697) (4,697) (4,696) (18,786)
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCOME ATTRIBUTABLE TO COMMON SHARES $135,000 $ 79,593 $ 61,539 $ 77,149 $ 353,281
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCOME PER SHARE (3)
Primary: Continuing operations $ .37 $ .65 $ .50 $ .63 $ 2.15
Discontinued operations .72 - - - .73
-----------------------------------------------------------------------------------------------------------------
Net income $ 1.09 .65 $ .50 $ .63 $ 2.88
-----------------------------------------------------------------------------------------------------------------
Fully Diluted: Continuing operations $ .34 $ .60 $ .46 $ .57 $ 1.97
Discontinued operations .66 - - - .65
-----------------------------------------------------------------------------------------------------------------
Net income $ 1.00 $ .60 $ .46 $ .57 $ 2.62
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON DIVIDENDS PER SHARE $ .15 $ .15 $ .15 $ .15 $ .60
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK PRICE (HIGH-LOW) $34 1/2- $38 1/8- $39 1/2- $44 1/8-
28 5/16 32 1/16 31 5/8 37 7/8
- ------------------------------------------------------------------------------------------------------------------
Notes to Quarterly Results:
(1) In December 1996, the Company recorded a pretax gain of $10 million, or $6 million after taxes ($.05 per share on a primary
basis), representing the Company's equity interest in a gain recorded by Qwest Broadcasting for the cancellation of an option
to purchase a television station.
(2) In March 1996, the Company sold its holdings in QUNO Corporation as part of QUNO's merger with Donohue Inc. The sale resulted
in an after-tax gain of $89.3 million, or $.73 per share on a primary basis.
(3) Quarterly and full year net income per share amounts are calculated independently based on the weighted average number of
common shares outstanding for each period. All share and per share data has been restated to reflect a two-for-one common
stock split effective January 15, 1997.
(4) In March 1995, shares of America Online common stock were sold, which resulted in a pretax gain of $15.3 million, or
$9.1 million after taxes ($.07 per share on a primary basis). In July 1995, Times Advocate Company was sold, which resulted
in a pretax loss of $7.5 million, or $4.5 million after taxes ($.03 per share). In December 1995, Compton's NewMedia was
sold, which resulted in a pretax gain of $6.9 million, or $4.1 million after taxes ($.03 per share).
</TABLE>
72
<PAGE>
<TABLE>
<CAPTION>
Tribune Company and Subsidiaries
Quarters
1995 (In thousands of dollars, except per share data) First Second Third Fourth Total
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
OPERATING Publishing $323,547 $327,787 $304,686 $356,747 $1,312,767
REVENUES Broadcasting and Entertainment 176,432 220,910 217,031 214,433 828,806
Education 21,427 28,521 30,527 22,626 103,101
-----------------------------------------------------------------------------------------------------------------
Total operating revenues $521,406 $577,218 $552,244 $593,806 $2,244,674
- -----------------------------------------------------------------------------------------------------------------------------------
OPERATING Publishing $ 70,805 $ 74,991 $ 52,186 $ 72,161 $ 270,143
PROFIT Broadcasting and Entertainment 28,724 53,024 35,058 43,810 160,616
Education (356) 3,862 3,215 (2,135) 4,586
Corporate expenses (7,139) (7,366) (7,336) (8,293) (30,134)
-----------------------------------------------------------------------------------------------------------------
Total operating profit 92,034 124,511 83,123 105,543 405,211
- -----------------------------------------------------------------------------------------------------------------------------------
Dispositions of subsidiary stock and investment (4) 15,272 - (7,500) 6,900 14,672
Net interest expense (923) (1,438) (1,553) (3,435) (7,349)
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 106,383 123,073 74,070 109,008 412,534
Income taxes (43,085) (49,845) (29,998) (44,148) (167,076)
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS 63,298 73,228 44,072 64,860 245,458
DISCONTINUED OPERATIONS OF QUNO, NET OF TAX 4,665 8,899 11,828 7,315 32,707
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCOME 67,963 82,127 55,900 72,175 278,165
Preferred dividends, net of tax (4,621) (4,622) (4,622) (4,976) (18,841)
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCOME ATTRIBUTABLE TO COMMON SHARES $ 63,342 $ 77,505 $ 51,278 $ 67,199 $ 259,324
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCOME PER SHARE (3)
Primary: Continuing operations $ .44 $ .53 $ .31 $ .47 $ 1.75
Discontinued operations .04 .07 .09 .06 .25
-----------------------------------------------------------------------------------------------------------------
Net income $ .48 $ .60 $ .40 $ .53 $ 2.00
-----------------------------------------------------------------------------------------------------------------
Fully Diluted: Continuing operations $ .41 $ .49 $ .28 $ .44 $ 1.61
Discontinued operations .03 .06 .08 .05 .23
-----------------------------------------------------------------------------------------------------------------
Net income $ .44 $ .55 $ .36 $ .49 $ 1.84
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON DIVIDENDS PER SHARE $ .14 $ .14 $ .14 $ .14 $ .56
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK PRICE (HIGH-LOW) $28 1/16- $ 30 3/8- $ 34 1/8- $34 7/16-
25 3/8 26 7/8 29 7/8 29 13/16
- -------------------------------------------------------------------------------------------------------------------
73
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ELEVEN YEAR FINANCIAL SUMMARY
(Dollars in thousands, except per share data) 1996 1995 1994 1993
==================================================================================================================================
<S> <C> <C> <C> <C>
OPERATING RESULTS
OPERATING REVENUES
Publishing excluding Daily News $1,336,639 1,312,767 1,246,377 1,163,116
New York Daily News $ - - - -
Broadcasting and Entertainment $ 876,750 828,806 764,197 727,213
Education $ 192,316 103,101 102,082 21,209
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL OPERATING REVENUES $2,405,705 2,244,674 2,112,656 1,911,538
- ----------------------------------------------------------------------------------------------------------------------------------
OPERATING PROFIT
Publishing excluding Daily News $ 281,312 270,143 287,590 253,050
New York Daily News $ - - - -
Broadcasting and Entertainment $ 200,537 160,616 132,413 125,684
Education $ 39,422 4,586 2,829 2,071
Corporate expenses $ (31,195) (30,134) (26,207) (24,402)
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL OPERATING PROFIT $ 490,076 405,211 396,625 356,403
- ----------------------------------------------------------------------------------------------------------------------------------
Net interest expense $ (15,663) (7,349) (4,778) (9,545)
Other $ - 14,672 - -
- ----------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES $ 474,413 412,534 391,847 346,858
Income taxes $ (191,663) (167,076) (158,698) (142,212)
- ----------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS $ 282,750 245,458 233,149 204,646
DISCONTINUED OPERATIONS OF QUNO, NET OF TAX $ 89,317 32,707 8,898 (16,040)
Cumulative effects of changes in accounting principles $ - - - -
- ----------------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) (1) $ 372,067 278,165 242,047 188,606
- ----------------------------------------------------------------------------------------------------------------------------------
SHARE INFORMATION (2)
Primary net income (loss) per share (1)
Continuing operations $ 2.15 1.75 1.60 1.40
Discontinued operations $ .73 .25 .06 (.12)
Net income $ 2.88 2.00 1.66 1.28
Common dividends per share $ .60 .56 .52 .48
Shareholders' equity per share $ 11.69 10.34 9.47 7.77
Weighted average common shares outstanding (000's) 122,842 129,580 134,426 132,742
FINANCIAL RATIOS
Operating profit margin 20.4% 18.1% 18.8% 18.6%
Net income margin 15.5% 12.4% 11.5% 9.9%
Net income as a percentage of average shareholders' equity 25.5% 20.5% 19.9% 18.8%
Debt to capital 37% 33% 23% 31%
FINANCIAL POSITION AND OTHER DATA
Total assets $3,700,900 3,288,255 2,785,825 2,536,410
Long-term debt $ 979,754 757,437 411,200 510,838
Shareholders' equity $1,539,506 1,379,909 1,332,980 1,095,627
Capital expenditures $ 93,324 117,863 91,626 75,620
Repurchase (issuance) of treasury stock, net $ 97,189 273,873 28,670 (46,138)
Dividends $ 92,423 91,202 88,325 81,927
Amortization of broadcast rights $ 244,110 234,065 244,361 236,468
Employees (full-time equivalents) 10,700 10,500 10,500 9,900
- ----------------------------------------------------------------------------------------------------------------------------------
(1) Includes a gain on sale of QUNO of $89.3 million or $.73 per share and a non-recurring gain related to Qwest Broadcasting of
$6 million or $.05 per share in 1996, a gain on sale of America Online common stock of $9.1 million or $.07 per share, a loss
on sale of Times Advocate Company of $4.5 million or $.03 per share, and a gain on sale of Compton's NewMedia of $4.1 million
or $.03 per share in 1995, a gain on sale of QUNO stock of $13 million or $.10 per share in 1994, the cumulative effects of
accounting changes of $16.8 million or $.13 per share in 1992, charges relating to New York Daily News totaling $255.0 million
or $1.93 per share in 1990, a non-recurring net loss of $21.1 million or $.13 per share in 1987 and a non-recurring net gain of
$151.6 million or $.94 per share in 1986.
(2) All share and per share data has been restated for a two-for-one common stock split effective January 15, 1997.
74
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Tribune Company and Subsidiaries
1992 1991 1990 1989 1988 1987 1986
====================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
1,136,619 1,122,434 1,183,177 1,197,077 1,117,487 1,043,310 943,366
- - 321,823 422,024 436,843 419,853 411,840
684,051 617,514 623,981 584,326 505,729 485,276 466,231
- - - - - - -
--------------------------------------------------------------------------------------------------------------------
1,820,670 1,739,948 2,128,981 2,203,427 2,060,059 1,948,439 1,821,437
--------------------------------------------------------------------------------------------------------------------
224,509 217,031 278,594 299,282 248,567 239,358 209,525
- - (114,468) (2,179) 15,167 (47,357) (9,228)
121,267 100,175 107,528 96,803 77,754 62,858 65,537
- - - - - - -
(23,643) (22,256) (22,654) (22,100) (22,699) (25,815) (17,650)
--------------------------------------------------------------------------------------------------------------------
322,133 294,950 249,000 371,806 318,789 229,044 248,184
--------------------------------------------------------------------------------------------------------------------
(22,510) (30,387) (23,478) (12,040) (33,341) (33,414) (29,019)
- - (295,000) 3,133 - - 276,587
--------------------------------------------------------------------------------------------------------------------
299,623 264,563 (69,478) 362,899 285,448 195,630 495,752
(120,089) (106,514) 22,055 (150,948) (135,135) (101,349) (219,520)
--------------------------------------------------------------------------------------------------------------------
179,534 158,049 (47,423) 211,951 150,313 94,281 276,232
(42,909) (16,068) (16,110) 30,470 60,093 47,256 16,638
(16,800) - - - - - -
--------------------------------------------------------------------------------------------------------------------
119,825 141,981 (63,533) 242,421 210,406 141,537 292,870
--------------------------------------------------------------------------------------------------------------------
1.24 1.09 (.49) 1.38 .99 .60 1.71
(.33) (.12) (.12) .21 .40 .30 .11
.78 .97 (.61) 1.59 1.39 .90 1.82
.48 .48 .48 .44 .38 .32 .26
6.66 6.39 5.84 7.80 7.94 7.18 6.95
130,036 128,728 132,064 144,780 151,272 157,072 161,354
17.7% 17.0% 11.7% 16.9% 15.5% 11.8% 13.6%
6.6% 8.2% (3.0)% 11.0% 10.2% 7.3% 16.1%
13.6% 17.6% (6.9)% 21.4% 18.4% 12.9% 29.1%
46% 47% 51% 41% 32% 30% 29%
2,751,570 2,795,298 2,826,099 3,013,537 2,905,382 2,738,484 2,571,432
740,979 897,835 998,962 880,686 650,118 551,651 522,750
911,889 851,699 764,512 1,077,996 1,188,480 1,094,943 1,101,274
130,232 93,931 148,897 238,307 213,596 191,895 147,726
(31,918) (10,007) 178,517 296,738 56,185 108,647 65,893
80,407 78,415 80,110 75,298 57,416 50,025 42,201
233,859 207,392 228,605 221,897 192,045 169,921 155,183
12,400 12,900 16,100 17,100 16,800 16,800 17,300
--------------------------------------------------------------------------------------------------------------------
75
</TABLE>
<PAGE>
Tribune Company and Subsidiaries
................................................................................
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS
................................................................................
FINANCIAL STATEMENTS
Management is responsible for the preparation, integrity and fair presentation
of the Company's consolidated financial statements and related financial
information included in this annual report to stockholders. The consolidated
financial statements have been prepared in accordance with generally accepted
accounting principles and necessarily include certain amounts that are based on
management's best estimates and judgments.
The consolidated financial statements were audited by Price Waterhouse LLP,
independent accountants, and their report is shown below. Price Waterhouse LLP
was given unrestricted access to all financial records and related data,
including minutes of all meetings of stockholders, the Board of Directors and
committees of the Board. The Company believes that all representations made to
the independent accountants during their audits were valid and appropriate.
INTERNAL CONTROL SYSTEM
Management is also responsible for establishing and maintaining a system of
internal control, designed to provide reasonable assurance to the Company's
management and Board of Directors regarding the preparation of reliable
published financial statements. The system of internal controls is continually
reviewed for its effectiveness and is augmented by written policies and
procedures, the careful selection and training of qualified personnel and a
program of internal audit. Each year, the Company's independent accountants
conduct a review of internal accounting controls to the extent required by
generally accepted auditing standards and perform such tests and related
procedures as they deem necessary to arrive at an opinion on the fairness of the
financial statements.
The Audit Committee of the Board of Directors is responsible for reviewing
and monitoring the Company's financial reporting and accounting practices. The
Audit Committee consists of five independent directors. The Committee meets with
representatives of management, the independent accountants and internal auditors
to discuss financial reporting, accounting and internal control matters. Price
Waterhouse LLP and the internal auditors have direct access to the Audit
Committee.
/s/ John W. Madigan
- -------------------
John W. Madigan
Chairman, President and Chief Executive Officer
/s/ Donald C. Grenesko
- ----------------------
Donald C. Grenesko
Senior Vice President/Finance and Administration
................................................................................
REPORT OF INDEPENDENT ACCOUNTANTS
................................................................................
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF TRIBUNE COMPANY
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of income, of cash flows and of shareholders'
equity present fairly, in all material respects, the financial position of
Tribune Company and its subsidiaries at December 29, 1996 and December 31, 1995,
and the results of their operations and their cash flows for each of the three
years in the period ended December 29, 1996, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
- ------------------------
Price Waterhouse LLP
Chicago, Illinois
February 11, 1997
76
<TABLE>
<CAPTION>
EXHIBIT 21
TRIBUNE COMPANY
TABLE OF SUBSIDIARIES
Jurisdiction of Other names under which
Incorporation subsidiary does business
PUBLISHING --------------- ------------------------
- ----------
<S> <C> <C>
Tribune Publishing Company Delaware
Chicago Tribune Company Illinois
Chicago Tribune Newspapers, Inc. Illinois Chicago Tribune; Exito!
Chicago Tribune Press Service, Inc. Illinois Tribune Newspaper Network
Newspaper Readers Agency, Inc. Illinois
Tribune Direct Marketing, Inc. Delaware Chicago Tribune Direct
RELCON, Inc. Delaware
Tribune Media Services, Inc. Delaware TV Log; TV Week; TV Listings; TMS
Stocks; Voice News Network
Sun-Sentinel Company Delaware Sun-Sentinel; Gold Coast Labeling
Gold Coast Publications, Inc. Delaware Gold Coast Shopper; Porch Plus; XS;
Exito!; iCE; Vital Signs; South
Florida Parenting
New River Center Maintenance Association, Inc. Florida
Sentinel Communications Company Delaware The Orlando Sentinel; US Express;
Magic Magazine; Tribune Interactive
Network Services; Downtown Orlando
Magazine; Florida Journal
Publications; Black Family Today;
Central Florida Family; Tampa Bay
Family; Jacksonville Family
Neocomm, Inc. Delaware Porch Plus; Relcon of Florida;
Sentinel Communications News Ventures, Inc. Delaware Neocomm of Delaware, Inc.
Tribune Interactive Delaware
South Florida Interactive Delaware
Orlando Interactive Delaware
Hampton Roads Interactive Delaware
Chicago Interactive Delaware
The Daily Press, Inc. Delaware Daily Press
Hampton Roads Newspapers, Inc. Virginia
Tribune National Marketing Company Delaware
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
Jurisdiction of Other names under which
Incorporation subsidiary does business
BROADCASTING AND ENTERTAINMENT --------------- ------------------------
- ------------------------------
<S> <C> <C>
Tribune Broadcasting Company Delaware Tribune Plus; Tribune Plus Corporate
Sales; Tribune Creative Services
Group
Tribune Broadcasting News Network, Inc. Delaware TribNet
ChicagoLand Television News, Inc. Delaware ChicagoLand Television/CLTV News
Oak Brook Productions, Inc. Delaware
ChicagoLand Microwave Licensee, Inc. Delaware
Tribune Regional Programming, Inc. Delaware
Tribune New York Radio, Inc. Delaware WQCD-FM
Tribune Denver Radio, Inc. Delaware KOSI; KEZW; KKHK
Tribune Denver Direct Mail, Inc. Delaware To be dissolved
WGN Continental Broadcasting Company Delaware WGN-TV; WGN Radio; Tribune
Radio Networks
Tribune Entertainment Company Delaware
Magic T Music Publishing Company Delaware
Tribune Entertainment Production Company Delaware
Chicago River Production Company Delaware
435 Production Company Delaware
5800 Sunset Productions Inc. Delaware
North Michigan Production Company Delaware
Tribune (FN) Cable Ventures, Inc. Delaware
KWGN Inc. Delaware KWGN-TV
WGNO Inc. Delaware WGNO-TV
WGNX Inc. Delaware WGNX-TV
KTLA Inc. California KTLA-TV
WPHL-TV, Inc. Pennsylvania WPHL-TV
WPIX Inc. New York WPIX-TV; Tribune New York
Holdings
WLVI Inc. Delaware WLVI-TV
Tribune Network Holdings Company Delaware
KSWB Inc. Delaware KSWB-TV
KHTV Inc. Delaware KHTV-TV
Renaissance Communications Corporation (1) Delaware
Hartford Television, Inc. Delaware
61 Licensee, Inc. Delaware WTIC Hartford
Indianapolis Television, Inc. Delaware
59 Licensee, Inc. Delaware WXIN Indianapolis
Channel 33, Inc. Delaware
33 Licensee, Inc. Delaware KDAF Dallas
Channel 43, Inc. Delaware
Channel 43 Licensee, Inc. Delaware WPMT York/Harrisburg
Channel 40, Inc. Delaware
Channel 40 Licensee, Inc. Delaware KXTL Sacramento
Channel 39, Inc. Delaware
Channel 39 Licensee, Inc. Delaware WDZL Miami
- -----
(1) Acquired in March 1997.
2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Jurisdiction of Other names under which
Incorporation subsidiary does business
BROADCASTING AND ENTERTAINMENT --------------- ------------------------
- ------------------------------
(Continued)
<S> <C> <C>
Interstate Radio Network, Inc. Illinois To be dissolved
Tribune California Properties, Inc. Delaware
Farm Journal, Inc. Pennsylvania Rockwood Research Corporation
Farm Journal Tours, Inc. Pennsylvania
Chicago National League Ball Club, Inc. Delaware Chicago Cubs
Diana-Quentin, Inc. Illinois
Rockford Professional Baseball Club, Inc. Florida Rockford Cubbies
Rock River Concessions, Inc. Florida
Orlando Baseball Club, Inc. Delaware To be dissolved
EDUCATION
- ---------
Tribune Education Company Delaware
NTC/Contemporary Publishing Company Illinois Contemporary Books; Best
Publications Company; Best Books
Company; National Textbook
Company; Passport Books; VGM
Career Horizons; The Quilt Digest
Press; NTC Business Books
Wright Group Publishing, Inc. Delaware
NewMedia Source, Inc. California
Jamestown Publishers, Inc. Rhode Island
Everyday Learning Corporation Illinois
Janson Publications, Inc. Rhode Island
Educational Publishing Corporation Delaware Creative Publications
Ideal School Supply Corporation Delaware
Instructional Fair, Inc. Delaware Instructional Fair.TS Denison
Tribune Education Sales, Inc. Delaware
MISCELLANEOUS
- -------------
Tribune Properties, Inc. Delaware New River Center Management Co.
Tribune New York Properties, Inc. Delaware
Riverwalk Center I Joint Venture Florida (Partnership)
Tower Acquisition Company, Inc. Delaware
</TABLE>
3
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses
constituting parts of the Registration Statements on Form S-3 (File Nos.
333-02831 and 333-18921) and in the Registration Statements on Form S-8 (File
Nos. 2-90727, 33-21853, 33-26239, 33-47547, 33-59233, 333-00575, 333-03245 and
333-18269) of Tribune Company of our report dated February 11, 1997 appearing in
the 1996 Annual Report to Stockholders, which is incorporated in this Annual
Report on Form 10-K. We also consent to the incorporation by reference of our
report on the Financial Statement Schedule, which appears in this Form 10-K.
/s/ Price Waterhouse LLP
- ------------------------
PRICE WATERHOUSE LLP
Chicago, Illinois
March 27, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
1996 Consolidated Statements of Income and Consolidated Balance Sheets and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-29-1996
<CASH> 0
<SECURITIES> 274,170
<RECEIVABLES> 385,179
<ALLOWANCES> 34,406
<INVENTORY> 80,525
<CURRENT-ASSETS> 886,721
<PP&E> 1,456,209
<DEPRECIATION> 813,501
<TOTAL-ASSETS> 3,700,900
<CURRENT-LIABILITIES> 673,101
<BONDS> 0
0
312,470
<COMMON> 1,018
<OTHER-SE> 1,226,018
<TOTAL-LIABILITY-AND-EQUITY> 3,700,900
<SALES> 0
<TOTAL-REVENUES> 2,405,705
<CGS> 0
<TOTAL-COSTS> 1,172,664
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 47,779
<INCOME-PRETAX> 474,413
<INCOME-TAX> 191,663
<INCOME-CONTINUING> 282,750
<DISCONTINUED> 89,317
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 372,067
<EPS-PRIMARY> 2.88
<EPS-DILUTED> 2.62
<FN>
Per share data reflects a two-for-one common stock split effective
Janury 15, 1997 to holders of record on December 27, 1996. Prior
financial data schedules have not been restated.
</FN>
</TABLE>
