- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 29, 1998
Commission file number 1-8572
TRIBUNE COMPANY
(Exact name of registrant as specified in its charter)
Delaware 36-1880355
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
435 North Michigan Avenue, Chicago, Illinois 60611
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 222-9100
No Changes
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /x/ No / /
At May 8, 1998 there were 122,092,433 shares outstanding of the Company's
Common Stock (without par value).
- --------------------------------------------------------------------------------
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
---------------------
TRIBUNE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands of dollars, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
First Quarter Ended
----------------------------------
March 29, 1998 March 30, 1997
-------------- --------------
<S> <C> <C>
Operating Revenues......................................................... $672,693 $593,919
Operating Expenses
Cost of sales (exclusive of items shown below)............................. 323,131 278,724
Selling, general and administrative........................................ 158,241 150,514
Depreciation and amortization of intangible assets......................... 47,269 36,569
-------- --------
Total operating expenses................................................... 528,641 465,807
-------- --------
Operating Profit........................................................... 144,052 128,112
Net loss on equity investments............................................. (14,325) (11,703)
Sale of investment......................................................... 7,299 -
Interest income............................................................ 1,441 9,430
Interest expense........................................................... (21,140) (15,574)
-------- --------
Income Before Income Taxes................................................. 117,327 110,265
Income taxes............................................................... (47,250) (45,760)
-------- --------
Net Income................................................................. 70,077 64,505
Preferred dividends, net of tax............................................ (4,695) (4,699)
-------- --------
Net Income Attributable to Common Shares................................... $ 65,382 $ 59,806
======== ========
Earnings Per Share:
Basic..................................................................... $ .53 $ .49
====== ======
Diluted................................................................... $ .49 $ .45
====== ======
Dividends per common share................................................ $ .17 $ .16
====== ======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
2
<PAGE>
TRIBUNE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
<TABLE>
<CAPTION>
March 29, 1998 December 28, 1997
-------------- -----------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash and short-term investments............................................. $ 4,551 $ 66,618
Accounts receivable, net.................................................... 411,032 442,332
Inventories................................................................. 99,969 99,491
Broadcast rights............................................................ 199,061 190,339
Prepaid expenses and other.................................................. 60,983 48,969
---------- ----------
Total current assets........................................................ 775,596 847,749
Property, plant and equipment............................................... 1,569,397 1,550,897
Accumulated depreciation.................................................... (924,531) (900,450)
---------- ----------
Net properties.............................................................. 644,866 650,447
Broadcast rights............................................................ 129,950 162,096
Intangible assets, net...................................................... 2,527,745 2,503,069
Investments................................................................. 625,380 481,544
Other....................................................................... 137,935 132,649
---------- ----------
Total assets................................................................ $4,841,472 $4,777,554
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Long-term debt due within one year.......................................... $ 33,347 $ 33,348
Contracts payable for broadcast rights...................................... 213,361 210,565
Deferred income ............................................................ 76,231 53,065
Income taxes................................................................ 78,256 31,367
Accounts payable, accrued expenses and other current liabilities............ 376,064 377,875
---------- ----------
Total current liabilities................................................... 777,259 706,220
Long-term debt.............................................................. 1,385,264 1,521,453
Deferred income taxes....................................................... 407,878 363,186
Contracts payable for broadcast rights...................................... 201,564 230,832
Compensation and other obligations.......................................... 133,187 129,859
---------- ----------
Total liabilities........................................................... 2,905,152 2,951,550
Shareholders' equity
Series B convertible preferred stock........................................ 294,149 303,864
Common stock and additional paid-in capital................................. 214,229 202,419
Retained earnings........................................................... 2,555,538 2,506,292
Treasury stock (at cost).................................................... (1,182,565) (1,159,832)
Unearned compensation related to ESOP....................................... (188,380) (188,380)
Accumulated other comprehensive income...................................... 243,349 161,641
---------- ----------
Total shareholders' equity.................................................. 1,936,320 1,826,004
---------- ----------
Total liabilities and shareholders' equity.................................. $4,841,472 $4,777,554
========== ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
TRIBUNE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
First Quarter Ended
----------------------------------
March 29, 1998 March 30, 1997
-------------- --------------
<S> <C> <C>
Operations
Net income................................................................... $ 70,077 $ 64,505
Gain on sale of investment................................................... (7,299) -
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization of intangible assets................... 47,269 36,569
Other, net........................................................... 86,889 55,371
--------- ----------
Net cash provided by operations.............................................. 196,936 156,445
--------- ----------
Investments
Capital expenditures......................................................... (25,007) (14,886)
Acquisitions and investments................................................. (61,908) (1,131,788)
Proceeds from sale of investment............................................. 9,052 -
Other, net................................................................... (3,481) (1,195)
--------- ----------
Net cash used for investments................................................ (81,344) (1,147,869)
--------- ----------
Financing
Proceeds from issuance of long-term debt..................................... 25,000 793,681
Repayments of long-term debt................................................. (161,190) (6,101)
Sale of common stock to employees, net....................................... 14,846 5,622
Purchase of treasury stock................................................... (35,484) (34,298)
Dividends.................................................................... (20,831) (19,611)
--------- ----------
Net cash provided by (used for) financing.................................... (177,659) 739,293
--------- ----------
Net decrease in cash and short-term investments.............................. (62,067) (252,131)
Cash and short-term investments at the beginning of year..................... 66,618 274,170
--------- ----------
Cash and short-term investments at the end of quarter........................ $ 4,551 $ 22,039
========= ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
TRIBUNE COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1:
- -------
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments necessary to present
fairly the financial position of Tribune Company and its subsidiaries (the
"Company" or "Tribune") as of March 29, 1998 and the results of their operations
and their cash flows for the quarters ended March 29, 1998 and March 30, 1997.
All adjustments reflected in the accompanying unaudited condensed consolidated
financial statements are of a normal recurring nature. Results of operations for
interim periods are not necessarily indicative of the results to be expected for
the full year. Certain prior year amounts have been reclassified to conform with
the 1998 presentation. The condensed consolidated financial statements should be
read in conjunction with the consolidated financial statements and the related
notes included by reference in the Company's Annual Report on Form 10-K.
Note 2:
- -------
In 1998, the Company adopted the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income." The
statement requires companies to report comprehensive income, which includes
net income and certain items that are reported as separate components of
shareholders' equity. For the Company, the only comprehensive income item
reported as a separate component of shareholders' equity is unrealized gains and
losses on marketable securities classified as available-for-sale. The Company's
comprehensive income was as follows (in thousands):
<TABLE>
<CAPTION>
First Quarter Ended
----------------------------------
March 29, 1998 March 30, 1997
-------------- --------------
<S> <C> <C>
Net income.......................................................... $ 70,077 $64,505
Unrealized holding gain (loss) on marketable
securities, before tax:
Arising during the period........................................ 141,741 (42,799)
Less: reclassification adjustment for gain included
in net income.................................................. (7,299) -
-------- -------
Unrealized gain (loss)........................................... 134,442 (42,799)
Income taxes........................................................ (52,734) 16,788
-------- -------
Net other comprehensive income (loss)............................... 81,708 (26,011)
-------- -------
Comprehensive income................................................ $151,785 $38,494
======== =======
</TABLE>
5
<PAGE>
Note 3:
- -------
In 1997, the Company adopted the provisions of SFAS No. 128, "Earnings Per
Share," which requires presentation on the face of the income statement of both
basic and diluted earnings per share. Basic and diluted earnings per share have
replaced the previously presented primary and fully diluted earnings per share.
Prior years have been restated. Basic earnings per share is computed by dividing
net income attributable to common shares by the weighted average number of
common shares outstanding during the period. Diluted earnings per share is
computed based on the assumption that all of the convertible preferred shares
held by the Company's Employee Stock Ownership Plan are converted into common
shares.
The computations of basic and diluted earnings per share were as follows
(in thousands, except per share data):
<TABLE>
<CAPTION>
First Quarter Ended
----------------------------------
March 29, 1998 March 30, 1997
-------------- --------------
<S> <C> <C>
BASIC
Net income.................................................................. $70,077 $64,505
Preferred dividends, net of tax............................................. (4,695) (4,699)
------- -------
Net income attributable to common shares.................................... $65,382 $59,806
------- -------
Weight average common shares outstanding.................................... 122,574 122,546
------- -------
Basic earnings per share.................................................... $ .53 $ .49
======= =======
DILUTED
Net income.................................................................. $70,077 $64,505
Additional ESOP contribution required assuming
all preferred shares were converted, net of tax.......................... (3,197) (3,288)
------- -------
Adjusted net income......................................................... $66,880 $61,217
------- -------
Weighted average common shares outstanding.................................. 122,574 122,546
Assumed conversion of preferred shares into common shares................... 10,738 11,101
Assumed exercise of stock options, net of common shares
assumed repurchased with the proceeds.................................... 1,840 1,148
------- -------
Adjusted weighted average common shares outstanding......................... 135,152 134,795
------- -------
Diluted earnings per share.................................................. $ .49 $ .45
======= =======
</TABLE>
6
<PAGE>
Note 4:
- -------
Inventories consist of (in thousands):
March 29, 1998 Dec. 28, 1997
-------------- -------------
Finished goods.......................... $81,347 $78,058
Newsprint (at LIFO)..................... 9,680 11,653
Supplies and other...................... 8,942 9,780
------- -------
Total inventories....................... $99,969 $99,491
======= =======
Newsprint inventories are valued under the LIFO method and were less than
current cost by approximately $10.9 million at March 29, 1998 and $10.5 million
at December 28, 1997. Finished goods primarily include books and supplementary
educational materials.
Note 5:
- -------
In the first quarter of 1998, the Company sold approximately .7 million
shares of Open Market common stock for $9 million in cash and recorded a pretax
gain of $7.3 million, or $.03 per diluted share.
At the beginning of the 1997 second quarter, the Company sold its Farm
Journal subsidiary for approximately $17 million in cash. The Company had
acquired Farm Journal in 1994 for approximately $17 million.
In May 1997, the Company reached an agreement with Emmis Broadcasting
Corporation regarding the sale or exchange of the Company's WQCD radio station
in New York ("WQCD"). Effective July 1, 1997 and in connection with the
agreement, Emmis assumed responsibility for certain operations of the station
for up to three years for an annual fee of approximately $8 million, after which
Emmis has the right to purchase the station. In December 1997, the Company
signed an agreement with Emmis to exchange substantially all of the assets of
WQCD, with a fair market value of approximately $160 million, and cash for the
assets of television stations KTZZ-Seattle and WXMI-Grand Rapids. Emmis has
agreed to acquire these television stations as part of its acquisition of Dudley
Communications Corporation. The transaction, pending FCC approval, is expected
to close during the second quarter of 1998.
Note 6:
- -------
In January 1998, the Company acquired ownership of the North American
Sunshine line of educational materials. In March 1998, the Company acquired
RGA Publishing, Inc., including the Lowell House business, a leading niche book
publisher of children's educational workbooks and adult reference titles.
In March 1997 and 1998, the Company exercised options to increase its
ownership interest in The WB Television Network ("The WB Network") to 22% and
25%, respectively.
7
<PAGE>
On March 25, 1997, the Company acquired Renaissance Communications Corp.,
a publicly traded company that owned six television stations, for $1.1 billion
in cash. The stations acquired were KDAF-Dallas, WBZL-Miami (formerly WDZL),
KTXL-Sacramento, WXIN-Indianapolis, WTIC-Hartford and WPMT-Harrisburg. The
Federal Communications Commission ("FCC") order granting the Company's
application to acquire the Renaissance stations contained waivers of two FCC
rules. First, the FCC temporarily waived its duopoly rule relating to the
overlap of WTIC's and WPMT's broadcast signals with those of other Tribune
stations. The temporary waivers were granted subject to the outcome of pending
FCC rulemaking that is expected to make such duopoly waivers unnecessary.
Second, the FCC granted a 12-month waiver of its rule prohibiting
television/newspaper cross-ownership in the same market, which relates to the
Miami television station and the Fort Lauderdale Sun-Sentinel newspaper. The FCC
subsequently issued a rule review to consider modifying its cross-ownership
rule. In March 1998, the FCC granted the Company a waiver extension to allow
continued ownership of both the Miami television station and the Sun-Sentinel
newspaper until the rule review has concluded. The Company cannot predict the
outcome of the FCC duopoly rulemaking or cross-ownership rule review.
In September 1997, the Company acquired Shortland Publications Limited for
$32 million in cash. Shortland is a New Zealand-based company that publishes
reading, language arts, science and social studies materials for several
international elementary school markets. In December 1997, the Company acquired
approximately 80% of Landoll, Inc. for $77 million in cash. Landoll publishes
children's books for the mass market.
The acquisitions are being accounted for by the purchase method, and
accordingly, the results of operations of the companies have been included in
the consolidated financial statements since their respective dates of
acquisition.
Unaudited pro forma results of operations of the Company for the first
quarters of 1998 and 1997 are shown below. The pro forma information was
prepared assuming the 1997 acquisitions, investments and dispositions and the
1998 investment in The WB Network discussed in Notes 5 and 6 had occurred at the
beginning of each year. The pro forma results may not be indicative of the
results that would have been reported if the transactions had actually occurred
at the beginning of each year presented, or of results that may be attained in
the future. The unaudited pro forma results do not reflect any synergies
anticipated by the Company as a result of the acquisitions.
First Quarter Ended
----------------------------------
(In thousands, except per share data) March 29, 1998 March 30, 1997
-------------- --------------
Operating revenues........................... $672,693 $641,269
Net income .................................. $69,256 $53,258
Diluted earnings per share .................. $.49 $.37
8
<PAGE>
Note 7:
- -------
Financial data for each of the Company's business segments is as follows
(in thousands):
<TABLE>
<CAPTION>
First Quarter Ended
----------------------------------
March 29, 1998 March 30, 1997
-------------- --------------
<S> <C> <C>
Operating revenues:
Publishing........................................... $372,508 $355,126
Broadcasting and Entertainment....................... 240,358 201,390
Education............................................ 59,827 37,403
-------- --------
Total operating revenues................................... $672,693 $593,919
======== ========
Operating profit:
Publishing........................................... $ 99,020 $ 97,185
Broadcasting and Entertainment....................... 54,472 39,399
Education............................................ (696) (160)
Corporate expenses................................... (8,744) (8,312)
-------- --------
Total operating profit..................................... $144,052 $128,112
======== ========
</TABLE>
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
-----------------------------------------------------------------------
The following discussion compares the results of operations of Tribune
Company and its subsidiaries (the "Company") for the first quarter of 1998 to
the first quarter of 1997.
This discussion contains certain forward-looking statements that are based
largely on the Company's current expectations and are subject to certain risks,
trends and uncertainties that could cause actual results to differ materially
from those anticipated. Among such risks, trends and uncertainties are changes
in advertising demand, newsprint prices, interest rates, regulatory rulings and
other economic conditions and the effect of acquisitions, investments and
dispositions on the Company's results of operations and financial condition. The
words "believe," "expect," "anticipate" and similar expressions generally
identify forward-looking statements. Readers are cautioned not to place undue
reliance on such forward-looking statements, which are as of the date of this
filing.
SIGNIFICANT EVENTS
- ------------------
On March 25, 1997, the Company acquired Renaissance Communications Corp.,
a publicly traded company that owned six television stations, for $1.1 billion
in cash. The stations acquired were KDAF-Dallas, WBZL-Miami (formerly WDZL),
KTXL-Sacramento, WXIN-Indianapolis, WTIC-Hartford and WPMT-Harrisburg. The
Federal Communications Commission ("FCC") order granting the Company's
application to acquire the Renaissance stations contained waivers of two FCC
rules. First, the FCC temporarily waived its duopoly rule relating to the
overlap of WTIC's and WPMT's broadcast signals with those of other Tribune
stations. The temporary waivers were granted subject to the outcome of pending
FCC rulemaking that is expected to make such duopoly waivers unnecessary.
Second, the FCC granted a 12-month waiver of its rule prohibiting
television/newspaper cross-ownership in the same market, which relates to the
Miami television station and the Fort Lauderdale Sun-Sentinel newspaper. The FCC
subsequently issued a rule review to consider modifying its cross-ownership
rule. In March 1998, the FCC granted the Company a waiver extension to allow
continued ownership of both the Miami television station and the Sun-Sentinel
newspaper until the rule review has concluded. The Company cannot predict the
outcome of the FCC duopoly rulemaking or cross-ownership rule review.
In September 1997, the Company acquired Shortland Publications Limited for
$32 million in cash. In December 1997, the Company acquired approximately 80% of
Landoll, Inc. for $77 million in cash. The operating results of these businesses
have been included in the consolidated financial statements since their
respective dates of acquisition.
In the first quarter of 1998, the Company sold approximately .7 million
shares of Open Market common stock for $9 million in cash and recorded a pretax
gain of $7.3 million, or $.03 per diluted share.
In May 1997, the Company reached an agreement with Emmis Broadcasting
Corporation regarding the sale or exchange of the Company's WQCD radio station
in New York ("WQCD"). Effective July 1, 1997 and in connection with the
agreement, Emmis assumed responsibility for certain operations of the station
for up to three years for an annual fee of approximately $8 million, after which
Emmis has the right to purchase the station. In December 1997, the Company
signed an agreement with Emmis to exchange substantially all of the assets of
WQCD, with a fair market value of approximately $160 million, and cash for the
assets of television stations KTZZ-Seattle and WXMI-Grand Rapids. Emmis has
agreed to acquire these television stations as part of its acquisition of Dudley
Communications Corporation. The transaction, pending FCC approval, is expected
to close during the second quarter of 1998.
10
<PAGE>
At the beginning of the 1997 second quarter, the Company sold its Farm
Journal subsidiary for approximately $17 million in cash. The Company had
acquired Farm Journal in 1994 for approximately $17 million.
RESULTS OF OPERATIONS
- ---------------------
The results of operations, when examined on a quarterly basis, reflect the
seasonality of the Company's revenues. In both publishing and broadcasting and
entertainment, second and fourth quarter advertising revenues are typically
higher than first and third quarter revenues. 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 education
revenues are typically higher than first and fourth quarter revenues. Results
for the second and third quarters generally reflect the timing of sales to
educational institutions for the upcoming school year, which begins in
September. Results for the 1998 and 1997 first quarters reflect these seasonal
patterns.
CONSOLIDATED
The Company's consolidated operating results for the first quarter of 1998
and 1997 and the percentage changes from 1997 were as follows:
First Quarter
(Dollars in millions, ------------------------
except per share amounts) 1998 1997 Change
---- ---- ------
Operating revenues........................... $673 $594 + 13%
Operating profit ............................ 144 128 + 12%
Net loss on equity investments............... (14) (12) + 22%
Sale of investment (non-recurring)........... 7 - *
Net income................................... 70 65 + 9%
Diluted earnings per share
Before non-recurring item................ .46 .45 + 2%
Non-recurring item....................... .03 - *
Total.................................... .49 .45 + 9%
*Not meaningful
Earnings Per Share -- Diluted earnings per share for the 1998 first quarter rose
to $.46, up 2% from $.45 last year, excluding a non-recurring item in 1998. The
increase was mainly due to operating profit gains in broadcasting and
entertainment and in publishing, partially offset by higher net interest expense
and higher equity losses.
11
<PAGE>
Operating Profit and Revenues -- The Company's consolidated operating revenues,
EBITDA (operating profit before depreciation, amortization, equity results and
non-recurring items) and operating profit by business segment for the first
quarter were as follows:
First Quarter
------------------------
(Dollars in millions) 1998 1997 Change
---- ---- ------
Operating revenues
Publishing.................................... $373 $355 + 5%
Broadcasting and Entertainment................ 240 201 + 19%
Education..................................... 60 38 + 60%
---- ----
Total operating revenues........................... $673 $594 + 13%
EBITDA*
Publishing.................................... $118 $116 + 1%
Broadcasting and Entertainment................ 75 52 + 45%
Education..................................... 6 4 + 46%
Corporate expenses............................ (8) (7) - 5%
---- ----
Total EBITDA....................................... $191 $165 + 16%
Operating profit
Publishing.................................... $ 99 $ 97 + 2%
Broadcasting and Entertainment................ 54 39 + 38%
Education..................................... (1) - **
Corporate expenses............................ (8) (8) - 5%
---- ----
Total operating profit............................. $144 $128 + 12%
* EBITDA is defined as earnings before interest, taxes, depreciation,
amortization, equity results and non-recurring items. The Company has
presented EBITDA because it is comparable to the data provided by other
companies in the industry and is a common alternative measure of
performance. EBITDA does not represent cash provided by operating
activities as reflected in the Company's consolidated statements of cash
flows, is not a measure of financial performance under generally accepted
accounting principles ("GAAP") and should not be considered in isolation or
as a substitute for measures of performance prepared in accordance with
GAAP.
** Not meaningful
Consolidated operating revenues for the 1998 first quarter increased 13%
to $673 million from $594 million in 1997, primarily due to recent acquisitions
and higher newspaper advertising revenues. Excluding acquisitions and
divestitures, revenues were up 6% for the first quarter.
Consolidated operating profit grew 12% and EBITDA increased 16% in the
first quarter of 1998. Publishing operating profit increased 2% in the first
quarter as continued strong advertising revenues were tempered by higher
newsprint prices. Broadcasting and entertainment operating profit grew 38% in
the first quarter due mainly to significant growth in television operating
profit. Education reported a 1998 first quarter operating loss of $.7 million
compared with a loss of $.2 million in 1997, as gains at most businesses were
offset by a decline at Creative Publications. First quarter results for the
education group reflect the seasonality of the industry.
12
<PAGE>
Operating Expenses -- Consolidated operating expenses increased 13% in the first
quarter as follows:
First Quarter
------------------------
(Dollars in millions) 1998 1997 Change
---- ---- ------
Cost of sales.................................. $323 $279 + 16%
Selling, general & administrative.............. 158 150 + 5%
Depreciation & amortization
of intangible assets......................... 48 37 + 29%
---- ----
Total operating expenses....................... $529 $466 + 13%
Cost of sales increased 16%, or $44 million, in the 1998 first quarter.
Excluding acquisitions and dispositions ("on a comparable basis"), cost of sales
increased 9%, or $25 million, in the quarter primarily due to increased
newsprint and ink expense and $4 million of additional expenses for development
activities. Newsprint and ink expense increased 19%, or $10 million, in the 1998
first quarter as average newsprint prices were up 12% and consumption increased
7%.
Selling, general and administrative ("SG&A") expense was up 5%, or $8
million, in the 1998 first quarter. On a comparable basis, SG&A expense was
virtually unchanged in 1998.
The increase in depreciation and amortization of intangible assets
reflects the acquisitions and capital expenditures made in 1998 and 1997.
PUBLISHING
Operating Profit and Revenues -- 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, direct
mail operations and Internet/electronic products.
First Quarter
------------------------
(Dollars in millions) 1998 1997 Change
---- ---- ------
Operating revenues
Daily newspapers............................... $350 $336 + 4%
Other publications/services/development........ 23 19 + 23%
---- ----
Total operating revenues............................ $373 $355 + 5%
EBITDA
Daily newspapers............................... $120 $116 + 3%
Other publications/services/development........ (2) - *
---- ----
Total EBITDA........................................ $118 $116 + 1%
Operating profit
Daily newspapers............................... $103 $ 98 + 4%
Other publications/services/development........ (4) (1) -172%
---- ----
Total operating profit.............................. $ 99 $ 97 + 2%
*Not meaningful
13
<PAGE>
Publishing operating revenues for the 1998 first quarter were up 5% to
$373 million from $355 million in 1997 due to higher classified advertising
revenues at all of the newspapers. Total advertising revenues increased 5% due
to higher rates and linage. Operating profit for the 1998 first quarter was $99
million, up 2% from $97 million, primarily due to the higher classified
advertising revenues offset by higher newsprint expense. Daily newspaper
operating margins increased slightly to 29.4% from 29.3% in 1997.
Publishing group revenues by classification were as follows:
First Quarter
--------------------------
(Dollars in millions) 1998 1997 Change
---- ---- ------
Advertising
Retail................................ $106 $106 - 1%
General............................... 38 37 + 3%
Classified............................ 144 130 + 11%
---- ----
Total advertising......................... 288 273 + 5%
Circulation............................... 63 65 - 4%
Other..................................... 22 17 + 31%
---- ----
Total revenues............................ $373 $355 + 5%
Classified advertising increased in the quarter due to increased help
wanted advertising at all of the newspapers, improvements in the automotive and
real estate categories in Chicago, Fort Lauderdale and Orlando and advertising
from Internet/electronic projects.
Total advertising linage increased 4% in the 1998 first quarter. Full run
retail advertising linage decreased 2% due to declines at Orlando, Chicago and
Newport News. Full run general advertising linage dropped 3% due to decreases at
Chicago and Orlando. Full run classified linage increased 7% due to gains at all
the daily newspapers. Part run advertising linage was up 5% due primarily to
increases in Chicago and Fort Lauderdale in classified and Orlando in retail.
Preprint advertising linage was up 3% due to increases at all of the daily
newspapers except Orlando. The following summary presents advertising linage for
the first quarter:
First Quarter
---------------------------
(Inches in thousands) 1998 1997 Change
----- ----- ------
Full run
Retail................................. 869 886 - 2%
General................................ 191 196 - 3%
Classified............................. 1,725 1,610 + 7%
----- -----
Total full run............................. 2,785 2,692 + 3%
Part run................................... 2,504 2,376 + 5%
Preprint................................... 2,100 2,041 + 3%
----- -----
Total inches............................... 7,389 7,109 + 4%
Circulation revenues decreased 4% in the 1998 first quarter due primarily
to a decline at Chicago as a result of a February 1998 promotion to sell the
Sunday edition of the Chicago Tribune at a discount at retail outlets. Total
average daily circulation was up 1% to 1,326,000 copies in the 1998 first
quarter, and total average Sunday circulation was up less than 1% to 1,973,000
copies.
14
<PAGE>
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; revenues from Internet/electronic products; cable news programming;
and other publishing-related activities. The increase in other revenues in the
1998 first quarter resulted primarily from higher revenues from direct mail
operations, commercial printing operations and Internet/electronic projects.
Operating Expenses -- Publishing operating expenses increased 6%, or $16
million, in the first quarter of 1998. Newsprint and ink expense increased 19%,
or $10 million, as average newsprint prices were up 12% from 1997, and newsprint
consumption increased 7%. Other expenses were up 3%, or $6 million, mainly due
to increased development of online businesses.
BROADCASTING AND ENTERTAINMENT
Operating Profit and Revenues -- The following table presents operating
revenues, EBITDA and operating profit for television, radio and
entertainment/other. Entertainment/other includes Tribune Entertainment and the
Chicago Cubs.
First Quarter
--------------------------
(Dollars in millions) 1998 1997 Change
---- ---- ------
Operating revenues
Television............................... $210 $162 + 30%
Radio.................................... 13 25 - 48%
Entertainment/other...................... 17 14 + 17%
---- ----
Total operating revenues...................... $240 $201 + 19%
EBITDA
Television............................... $ 73 $ 51 + 43%
Radio.................................... 5 5 + 1%
Entertainment/other...................... (3) (4) + 37%
---- ----
Total EBITDA.................................. $ 75 $ 52 + 45%
Operating profit
Television............................... $ 53 $ 40 + 32%
Radio.................................... 5 4 + 7%
Entertainment/other...................... (4) (5) + 33%
---- ----
Total operating profit........................ $ 54 $ 39 + 38%
Broadcasting and entertainment first quarter 1998 operating revenues
increased 19% to $240 million from $201 million in 1997 due mainly to a 30%, or
$48 million, increase in television revenues. The growth in television was
primarily due to the March 1997 acquisition of the six television stations from
Renaissance Communications and to gains in Atlanta, Chicago, Houston and New
York. Excluding Renaissance, television revenues increased 5%. Radio revenues
decreased 48% due mainly to the absence of Farm Journal, which was sold in March
1997, and the transfer of WQCD radio operations to Emmis Broadcasting in return
for a monthly management fee in July 1997. Excluding Farm Journal and WQCD,
radio revenues increased 3%.
15
<PAGE>
First quarter 1998 operating profit for broadcasting and entertainment was
up 38% to $54 million from $39 million in 1997. The growth was mainly due to a
32% increase in television operating profit as a result of the Renaissance
acquisition and gains at several existing stations. Excluding Renaissance,
television operating profit increased 13% to $45 million.
Operating Expenses -- Broadcasting and entertainment operating expenses
increased 15%, or $24 million, in the 1998 first quarter. The increase was
primarily due to the Renaissance acquisition, partially offset by the absence of
Farm Journal and the transfer of WQCD radio operations to Emmis Broadcasting.
Excluding Renaissance, Farm Journal and WQCD, broadcasting and entertainment
operating expenses increased 2%, or $3 million, for the first quarter.
EDUCATION
Operating Profit and Revenues -- The following table presents operating
revenues, EBITDA and operating profit for the education segment:
First Quarter
--------------------------
(Dollars in millions) 1998 1997 Change
---- ---- ------
Operating revenues.......................... $60 $38 + 60%
EBITDA...................................... 6 4 + 46%
Operating profit............................ (1) - *
*Not meaningful
Education's first quarter 1998 operating revenues were up 60% to $60
million from $38 million in 1997. The improvement was primarily due to the
acquisitions of Landoll (in December 1997) and Shortland (in September 1997), as
well as to revenue gains at NTC/Contemporary Publishing and Ideal/Instructional
Fair. Excluding the acquisitions, education revenues were up 11%.
Education's first quarter operating loss was $.7 million in 1998 and $.2
million in 1997, as gains at most businesses were offset by a decline at
Creative Publications. Creative has recently established a new management team
to focus on sales efforts. First quarter results for the education segment
reflect the seasonality of the industry.
Operating Expenses -- Education's operating expenses for the first quarter of
1998 were up 61%, or $23 million, primarily due to the recent acquisitions.
Excluding the acquisitions, first quarter operating expenses were up 15%, or $6
million, mainly due to increased cost of goods sold, as a result of higher
sales, and increased sales and marketing costs.
16
<PAGE>
EQUITY RESULTS
Net loss on equity investments for the first quarter of 1998 totaled $14
million compared to $12 million in 1997. The increase was primarily due to
losses from new investments. The majority of the first quarter's equity losses
in both years came from the Company's stake in the growing WB Network. In the
first quarter of 1998, the Company increased its equity position in The WB
Network to 25% from 22%.
OTHER
Interest expense for the 1998 first quarter increased 36% to $21 million
from $16 million last year due to higher average debt levels resulting from
acquisitions and stock repurchases. Interest income for the 1998 first quarter
declined 85% to $1 million from $9 million last year, primarily due to the
December 1997 sale of The Learning Company convertible notes. The effective tax
rate was 40.4% and 41.5% for the 1998 and 1997 first quarters, respectively,
excluding the non-recurring item in 1998.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash flow generated from operations is the Company's primary source of
liquidity. Net cash provided by operations in the first quarter increased to
$197 million in 1998 from $156 million in 1997 mainly due to higher net income
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.
Net cash used for investments totaled $81 million in the first quarter of
1998 as the Company spent $62 million for acquisitions and investments. The
Company received $9 million in gross proceeds from the sale of Open Market
common stock.
Net cash used for financing activities in the 1998 first quarter was $178
million due to the repayments of debt, purchases of treasury stock and payment
of dividends, partially offset by proceeds from the issuance of long-term debt
and the sale of stock to employees. In the first quarter of 1998, the Company
repurchased .6 million shares of its common stock for $35 million. At March 29,
1998, the Company had authorization to repurchase an additional 6.6 million
shares and has continued to repurchase shares in the 1998 second quarter. The
first quarter 1998 dividend on the Company's common stock increased 6% to $.17
per share from $.16 per share in 1997.
17
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
(a) The Company held its annual meeting of stockholders on May 5, 1998.
(b) No answer required.
(c) Proposal 1 involved the election of four directors to serve until
the 2001 Annual Meeting. Those directors and the voting results
were as follows:
Votes Votes
"For" "Not For"
----------- -----------
John W. Madigan 113,376,463 7,484,313
Nancy Hicks Maynard 112,867,809 7,992,967
James J. O'Connor 113,390,044 7,470,732
Arnold R. Weber 112,878,287 7,982,489
Proposal 2 involved the ratification of the selection of Price
Waterhouse LLP to serve as the Company's independent accountants
for 1998. The voting results were as follows:
Votes Votes Votes
"For" "Not For" "Abstained"
----------- ----------- -----------
119,664,838 359,561 836,377
Proposal 3 involved a stockholder proposal for the formation of a
Tribune values committee. The voting results were as follows:
Votes Votes Votes
"For" "Not For" "Abstained"
----------- ----------- -----------
11 120,860,727 38
(d) Not applicable.
18
<PAGE>
Item 5. Other Information.
------------------
The computation of the ratios of earnings to fixed charges, filed
herewith as Exhibit 12, is incorporated herein by reference.
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) Exhibits.
10.11 - Tribune Company Amended and Restated Employee Stock
Purchase Plan, dated May 5, 1998.
11 - Statements of computation of basic and diluted
earnings per share.
12 - Computation of ratios of earnings to fixed charges.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed in the first quarter of 1998.
19
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRIBUNE COMPANY
(Registrant)
Date: May 12, 1998 /s/ R. Mark Mallory
-------------------
R. Mark Mallory
Vice President and Controller
(on behalf of the Registrant
and as Chief Accounting Officer)
20
TRIBUNE COMPANY
EMPLOYEE STOCK PURCHASE PLAN
(As Amended and Restated May 5, 1998)
The purpose of the Tribune Company Amended and Restated Employee Stock Purchase
Plan (the "Plan") is to enable employees of Tribune Company and its qualified
subsidiaries to purchase shares of the Common Stock (without par value) of
Tribune Company ("Common Stock") at a discount through payroll withholding. The
Plan was amended and restated effective May 5, 1998.
1. Shares Subject to Plan. An aggregate of 8,000,000 shares of Common
Stock (the "Shares") may be sold pursuant to the Plan. Such Shares may be
authorized but unissued Common Stock or authorized and issued Common Stock
acquired by Tribune Company for the purposes of the Plan or held in Tribune
Company's Treasury. Shares that are subject to rights granted under the Plan
which expire or terminate unexercised shall again be available for sale under
the Plan. If there is any change in the outstanding shares of Common Stock by
reason of a stock dividend or distribution, stock split-up, recapitalization,
combination or exchange of shares, or by reason of any merger, consolidation or
other corporate reorganization in which Tribune Company is the surviving
corporation, the number of Shares available for sale shall be equitably adjusted
by the Committee appointed to administer the Plan to give proper effect to such
change.
2. Administration. The Plan shall be administered by a Committee
consisting of at least three members of the Board of Directors of Tribune
Company that shall be "nonemployee directors" within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934 (or any successor to such Rule) as now
or hereafter amended. For as long as it continues to meet this requirement, the
Governance and Compensation Committee of the Board of Directors of Tribune
Company shall serve as the Committee. The Committee shall have the authority to
make rules and regulations governing the administration of the Plan, and any
interpretation or decision made by the Committee regarding the administration of
the Plan shall be final and conclusive.
3. Eligibility. All regular employees of Tribune Company, and of each
qualified subsidiary of Tribune Company which may be designated by Tribune
Company's Board of Directors, other than:
(a) employees whose customary employment is 20 hours or less per week, and
(b) employees whose customary employment is for not more than 5 months
per year
shall be eligible to participate in the Plan. For the purposes of this Plan, the
term "qualified subsidiary" means any subsidiary, more than 50% of the total
combined voting power of all classes of stock in which is now owned or hereafter
acquired by Tribune Company or any such qualified subsidiary. The term
"subsidiary" means any corporation, 50% or more of the total combined voting
power of all classes of stock in which is now owned or hereafter acquired by
Tribune Company or any such subsidiary.
<PAGE>
4. Participation. An eligible employee may elect to participate in the
Plan as of any "Enrollment Date". Enrollment Dates shall occur on the first
day of each payroll period following an employee's election to participate in
the Plan. Any such election shall be made by completing and forwarding a payroll
deduction authorization form to the employee's appropriate payroll location
authorizing payroll deductions up to, but not exceeding, 10% of the employee's
regular rate of cash compensation. A participating employee may increase or
decrease his payroll deductions effective with the next payroll period by
completing and forwarding a revised payroll deduction authorization form to his
or her appropriate payroll location; provided, that changes in payroll
deductions shall not be permitted to the extent that they would result in total
payroll deductions exceeding 10% of the employee's regular rate of cash
compensation for the payroll period immediately preceding the date as of which
the change takes effect.
5. Payroll Deduction Accounts. Tribune Company shall establish a payroll
deduction account for each participating employee, and shall credit all payroll
deductions made on behalf of each employee pursuant to paragraph 4 to his or her
payroll deduction account. No interest shall be credited to any payroll
deduction account.
6. Withdrawals. An employee may withdraw from an offering at any time by
completing and forwarding a written notice to the employee's appropriate payroll
location. Upon receipt of such notice, payroll deductions on behalf of the
employee shall be discontinued commencing with the immediately following payroll
period, and such employee may not again be eligible to participate in the Plan
until the first day of each payroll period immediately following a Cutoff Date.
Amounts credited to the payroll deduction account of any employee who withdraws
shall remain in the account and be used to purchase Shares in accordance with
paragraph 8 hereof, subject to the limitations in paragraph 7 hereof.
7. Offerings. The third Wednesday of each March, June, September and
December prior to the termination of the Plan shall constitute the purchase
dates (the "Purchase Dates") on which each employee for whom a payroll deduction
account has been maintained shall purchase the number of Shares determined under
paragraph 8(a). Notwithstanding the foregoing, Tribune Company shall not permit
the exercise of any right to purchase Shares:
(a) to an employee who, immediately after the right is granted,
would own stock possessing 5% or more of the total combined
voting power or value of all classes of stock of Tribune
Company or any subsidiary; or
(b) which would permit an employee's rights to purchase stock under
this Plan, or under any other qualified employee stock purchase
plan maintained by Tribune Company or any subsidiary, to accrue
at a rate in excess of $25,000 of the fair market value of such
stock (determined at the time such rights are granted) for each
calendar year in which the right is outstanding at any time.
2
<PAGE>
For the purposes of subparagraph (a), the provisions of Section 425(d) of the
Internal Revenue Code shall apply in determining the stock ownership of an
employee, and the stock which an employee may purchase under outstanding rights
or options shall be treated as stock owned by the employee.
8. Purchase of Shares. (a) Subject to the limitations set forth in
paragraph 7, each employee participating in an offering shall have the right to
purchase as many whole Shares (plus any fractional interest in a Share) as may
be purchased with the amounts credited to his or her payroll deduction account
as of the payroll date coinciding with or immediately preceding the second
Wednesday of the month in which occurs the applicable Purchase Date (the "Cutoff
Date"). Employees may purchase Shares only through payroll deductions, and cash
contributions shall not be permitted.
(b) The Purchase Price for each Share shall be 85% of the closing
price of one share of Common Stock as reported on the New York Stock Exchange
Composite Transactions list for the applicable Purchase Date. If no sales of
Common Stock were reported on that date, the Purchase Price shall be the closing
price of one share of Common Stock reported for the last preceding date on which
sales of Common Stock were so reported.
(c) On each Purchase Date, the amount credited to each participating
employee's payroll deduction account as of the immediately preceding Cutoff Date
shall be applied to purchase as many whole Shares (plus any fractional interest
in a Share) as may be purchased with such amount at the applicable Purchase
Price. Any amounts remaining in an employee's payroll deduction account as of
the relevant Cutoff Date in excess of the amount that may properly be applied to
the purchase of Shares shall be refunded to the employee as soon as practicable.
9. Brokerage Accounts or Plan Share Accounts. By enrolling in the Plan,
each participating employee shall be deemed to have authorized the establishment
of a brokerage account on his or her behalf at a securities brokerage firm
selected by the Committee. Alternatively, the Committee may provide for Plan
share accounts for each participating employee to be established by Tribune
Company or by an outside entity selected by the Committee which is not a
brokerage firm. Shares purchased by an employee pursuant to the Plan shall be
held in the employee's brokerage or Plan share account in his or her name, or if
the employee so indicates on his or her payroll deduction authorization form, in
the employee's name jointly with a member of the employee's family, with right
of survivorship. An employee who is a resident of a jurisdiction which does not
recognize such a joint tenancy may request that such Shares be held in his or
her name as tenant in common with a member of the employee's family, without
right of survivorship. A participating employee may take part in any dividend
reinvestment program offered by the brokerage firm or, if the stock is held in a
Plan share account, in the Company's dividend reinvestment plan.
10. Rights as Stockholder. An employee shall have no rights as a
stockholder with respect to Shares subject to any rights granted under this Plan
until payment for such Shares has been
3
<PAGE>
completed at the close of business on the relevant Purchase Date. An employee
shall have no right to vote any fractional interest in a Share credited to his
account.
11. Certificates. Certificates for whole Shares purchased shall be issued
as soon as practicable following an employee's written request. Tribune Company
may make a reasonable charge for the issuance of such certificates. Fractional
interests in Shares shall be carried forward in an employee's brokerage or Plan
share account until they equal one whole Share or until the termination of the
employee's participation in the Plan, in which event an amount in cash equal to
the value of such fractional interest shall be paid to the employee in cash.
12. Termination of Employment. If a participating employee's employment is
terminated for any reason, including death, if an employee is granted a leave of
absence of more than 90 days duration or if an employee otherwise ceases to be
eligible to participate in the Plan, payroll deductions on behalf of the
employee shall be discontinued and any amounts then credited to the employee's
payroll deduction account shall remain in the account and be used to purchase
Shares in accordance with paragraph 8 hereof, subject to the limitations in
paragraph 7 hereof.
13. Rights Not Transferable. Rights granted under this Plan are not
transferable by a participating employee other than by will or the laws of
descent and distribution, and are exercisable during an employee's lifetime only
by the employee.
14. Employment Rights. Neither participation in the Plan, nor the exercise
of any right granted under the Plan, shall be made a condition of employment, or
of continued employment, with Tribune Company or any subsidiary.
15. Application of Funds. All funds received by Tribune Company pursuant
to this Plan may be used for any corporate purpose.
16. Amendments. The Board of Directors may at any time, and from time to
time, amend this Plan in any respect, except that no amendment:
(a) increasing the number of Shares available for sale under this
Plan (other than as permitted by paragraph 1);
(b) changing the classification of employees eligible to participate
in the Plan or the definitions of "subsidiary" or "qualified
subsidiary"; or
(c) materially changing the method for determining the Purchase Price
of Shares;
shall be made without the affirmative vote of stockholders holding at least a
majority of the voting power of all shares of Tribune Company represented in
person or by proxy at a duly held stockholders' meeting.
4
<PAGE>
17. Termination. This Plan, and all rights of employees under any offering
hereunder, shall terminate upon the first to occur of:
(a) June 30, 2002;
(b) the date on which the Committee determines that the total number
of Shares then available for sale under the Plan is not
sufficient to meet all unfilled purchase requirements; or
(c) the date on which the Plan is terminated by the Board of
Directors of Tribune Company.
Upon termination of the Plan, all payroll deductions shall cease and all amounts
then credited to the participating employees' payroll deduction accounts shall
be equitably applied to the purchase of whole Shares then available for sale,
and any remaining amounts shall be promptly refunded to the participating
employees.
18. Applicable Laws. This Plan, and all rights granted hereunder, are
intended to meet the requirements of an "employee stock purchase plan" under
Section 423 of the Internal Revenue Code, as from time to time amended, and the
Plan shall be construed and interpreted to accomplish this intent. Sales of
Shares under the Plan are subject to, and shall be accomplished only in
accordance with, the requirements of all applicable securities and other laws.
19. Expenses. Except to the extent provided in paragraph 11, all expenses
of administering the Plan, including expenses incurred in connection with the
purchase of Shares for sale to participating employees, shall be borne by
Tribune Company and its subsidiaries.
5
EXHIBIT 11
TRIBUNE COMPANY
STATEMENTS OF COMPUTATION OF BASIC AND DILUTED
EARNINGS PER SHARE
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
First Quarter Ended
----------------------------------
BASIC March 29, 1998 March 30, 1997
- ----- -------------- --------------
<S> <C> <C>
Net income $ 70,077 $ 64,505
Preferred dividends, net of tax (4,695) (4,699)
-------- --------
Net income attributable to common shares $ 65,382 $ 59,806
-------- --------
Weighted average common shares outstanding 122,574 122,546
-------- --------
Basic earnings per share $ .53 $ .49
======== ========
DILUTED
Net income $ 70,077 $ 64,505
Additional ESOP contribution required assuming
all preferred shares were converted, net of tax (3,197) (3,288)
-------- --------
Adjusted net income $ 66,880 $ 61,217
-------- --------
Weighted average common shares outstanding 122,574 122,546
Assumed conversion of preferred shares into common shares 10,738 11,101
Assumed exercise of stock options, net of common
shares assumed repurchased with the proceeds 1,840 1,148
-------- --------
Adjusted weighted average common shares outstanding 135,152 134,795
-------- --------
Diluted earnings per share $ .49 $ .45
======== ========
</TABLE>
EXHIBIT 12
TRIBUNE COMPANY
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(In thousands, except ratios)
<TABLE>
<CAPTION>
First Quarter Fiscal Year Ended December
Ended --------------------------------------------------------
3/29/98 1997 1996 1995 1994 1993
------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Income from continuing operations $ 70,077 $393,625 $282,750 $245,458 $233,149 $204,646
Add:
Income tax expense 47,250 265,375 191,663 167,076 158,698 142,212
Losses on equity investments 14,325 34,696 13,281 13,209 9,739 1,857
-------- -------- -------- -------- -------- --------
Subtotal 131,652 693,696 487,694 425,743 401,586 348,715
-------- -------- -------- -------- -------- --------
Fixed charge adjustments
Add:
Interest expense 21,140 86,502 47,779 21,814 20,585 24,660
Amortization of capitalized interest 518 2,076 2,108 2,253 2,362 2,392
Interest component of rental expense (A) 2,728 10,416 9,362 8,200 8,236 8,732
-------- -------- -------- -------- -------- --------
Earnings, as adjusted $156,038 $792,690 $546,943 $458,010 $432,769 $384,499
======== ======== ======== ======== ======== ========
Fixed charges:
Interest expense $ 21,140 $ 86,502 $ 47,779 $ 21,814 $ 20,585 $ 24,660
Interest capitalized - 224 168 610 - 1,099
Interest component of rental expense (A) 2,728 10,416 9,362 8,200 8,236 8,732
Interest related to guaranteed ESOP debt (B) 3,918 17,901 20,134 22,057 24,017 25,742
-------- -------- -------- -------- -------- --------
Total fixed charges $ 27,786 $115,043 $ 77,443 $ 52,681 $ 52,838 $ 60,233
======== ======== ======== ======== ======== ========
Ratio of earnings to fixed charges 5.6 6.9 7.1 8.7 8.2 6.4
======== ======== ======== ======== ======== ========
</TABLE>
(A) Represents a reasonable approximation of the interest cost component of
rental expense incurred by the Company.
(B) Tribune Company guarantees the debt of its Employee Stock Ownership Plan
(ESOP).
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
March 29, 1998 condensed consolidated statement of income and condensed
consolidated balance sheet and is qualified in its entirety by references to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-27-1998
<PERIOD-START> DEC-29-1997
<PERIOD-END> MAR-29-1998
<CASH> 4,551
<SECURITIES> 0
<RECEIVABLES> 450,811
<ALLOWANCES> 39,779
<INVENTORY> 99,969
<CURRENT-ASSETS> 775,596
<PP&E> 1,569,397
<DEPRECIATION> 924,531
<TOTAL-ASSETS> 4,841,472
<CURRENT-LIABILITIES> 777,259
<BONDS> 0
0
294,149
<COMMON> 1,018
<OTHER-SE> 1,641,153
<TOTAL-LIABILITY-AND-EQUITY> 4,841,472
<SALES> 0
<TOTAL-REVENUES> 672,693
<CGS> 0
<TOTAL-COSTS> 323,131
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,140
<INCOME-PRETAX> 117,327
<INCOME-TAX> 47,250
<INCOME-CONTINUING> 70,077
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 70,077
<EPS-PRIMARY> .53
<EPS-DILUTED> .49
<FN>
The information reported above under "EPS-PRIMARY" represents basic earnings
per share for the quarter ended March 29, 1998.
</FN>
</TABLE>
