- --------------------------------------------------------------------------------
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 June 28, 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 August 7, 1998 there were 121,949,179 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>
Second Quarter Ended First Half Ended
------------------------------ -------------------------------
June 28, 1998 June 29, 1997 June 28, 1998 June 29, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Operating Revenues...................................... $785,584 $719,742 $1,458,277 $1,313,661
Operating Expenses
Cost of sales (exclusive of items shown below).......... 361,182 326,347 684,313 605,071
Selling, general and administrative..................... 173,325 165,553 331,566 316,067
Depreciation and amortization of
intangible assets.................................... 48,414 45,144 95,683 81,713
-------- -------- ---------- ----------
Total operating expenses................................ 582,921 537,044 1,111,562 1,002,851
-------- -------- ---------- ----------
Operating Profit........................................ 202,663 182,698 346,715 310,810
Net loss on equity investments.......................... (7,540) (5,666) (21,865) (17,369)
Sales of subsidiary and investments,
net of write-downs................................... 85,800 28,529 93,099 28,529
Interest income......................................... 1,339 5,757 2,780 15,187
Interest expense........................................ (20,890) (25,060) (42,030) (40,634)
-------- -------- ---------- ----------
Income Before Income Taxes.............................. 261,372 186,258 378,699 296,523
Income taxes............................................ (113,724) (75,326) (160,974) (121,086)
-------- -------- ---------- ----------
Net Income.............................................. 147,648 110,932 217,725 175,437
Preferred dividends, net of tax......................... (4,696) (4,700) (9,391) (9,399)
-------- -------- ---------- ----------
Net Income Attributable to Common Shares................ $142,952 $106,232 $ 208,334 $ 166,038
======== ======== ========== ==========
Earnings Per Share:
Basic................................................... $1.17 $ .86 $1.70 $1.35
===== ===== ===== =====
Diluted................................................. $1.07 $ .80 $1.57 $1.25
===== ===== ===== =====
Dividends per common share.............................. $ .17 $ .16 $ .34 $ .32
===== ===== ===== =====
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
2
<PAGE>
TRIBUNE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
<TABLE>
<CAPTION>
June 28, 1998 December 28, 1997
------------- -----------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash and short-term investments............................................. $ 39,946 $ 66,618
Accounts receivable, net.................................................... 484,789 442,332
Inventories................................................................. 102,629 99,491
Broadcast rights............................................................ 147,150 190,339
Prepaid expenses and other.................................................. 53,602 48,969
---------- ----------
Total current assets........................................................ 828,116 847,749
Property, plant and equipment............................................... 1,592,905 1,550,897
Accumulated depreciation.................................................... (947,690) (900,450)
---------- ----------
Net properties.............................................................. 645,215 650,447
Broadcast rights............................................................ 132,393 162,096
Intangible assets, net...................................................... 2,685,967 2,503,069
Investments................................................................. 772,705 481,544
Other....................................................................... 140,556 132,649
---------- ----------
Total assets................................................................ $5,204,952 $4,777,554
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Long-term debt due within one year.......................................... $ 31,209 $ 33,348
Contracts payable for broadcast rights...................................... 184,019 210,565
Deferred income............................................................. 62,065 53,065
Income taxes................................................................ 79,981 31,367
Accounts payable, accrued expenses and other current liabilities............ 386,202 377,875
---------- ----------
Total current liabilities................................................... 743,476 706,220
Long-term debt.............................................................. 1,553,406 1,521,453
Deferred income taxes....................................................... 498,660 363,186
Contracts payable for broadcast rights...................................... 181,578 230,832
Compensation and other obligations.......................................... 163,258 129,859
---------- ----------
Total liabilities........................................................... 3,140,378 2,951,550
Shareholders' equity
Series B convertible preferred stock........................................ 293,043 303,864
Common stock and additional paid-in capital................................. 231,806 202,419
Retained earnings........................................................... 2,673,126 2,506,292
Treasury stock (at cost).................................................... (1,287,926) (1,159,832)
Unearned compensation related to ESOP....................................... (186,325) (188,380)
Accumulated other comprehensive income...................................... 340,850 161,641
---------- ----------
Total shareholders' equity.................................................. 2,064,574 1,826,004
---------- ----------
Total liabilities and shareholders' equity.................................. $5,204,952 $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 Half Ended
-------------------------------
June 28, 1998 June 29, 1997
------------- -------------
<S> <C> <C>
Operations
Net income................................................................... $217,725 $ 175,437
Adjustments to reconcile net income to net cash
provided by operations:
Gain on sales of subsidiary and investments, net of write-downs.......... (93,099) (28,529)
Depreciation and amortization of intangible assets....................... 95,683 81,713
Other, net............................................................... 49,967 (38,483)
-------- ----------
Net cash provided by operations.............................................. 270,276 190,138
-------- ----------
Investments
Capital expenditures......................................................... (55,502) (40,264)
Acquisitions and investments................................................. (110,226) (1,170,486)
Proceeds from sales of investments, subsidiary and assets.................... 14,738 178,213
Other, net................................................................... (17,228) (7,170)
-------- ----------
Net cash used for investments................................................ (168,218) (1,039,707)
-------- ----------
Financing
Proceeds from issuance of long-term debt..................................... 34,871 641,897
Repayments of long-term debt................................................. (3,183) (6,668)
Sales of common stock to employees, net...................................... 22,224 23,972
Purchases of treasury stock.................................................. (131,751) (34,354)
Dividends.................................................................... (50,891) (48,632)
-------- ----------
Net cash provided by (used for) financing.................................... (128,730) 576,215
-------- ----------
Net decrease in cash and short-term investments.............................. (26,672) (273,354)
Cash and short-term investments at the beginning of year..................... 66,618 274,170
-------- ----------
Cash and short-term investments at the end of quarter........................ $ 39,946 $ 816
======== ==========
</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 June 28, 1998 and the results of their operations
for the quarters and first halves ended June 28, 1998 and June 29, 1997 and cash
flows for the first halves ended June 28, 1998 and June 29, 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>
Second Quarter Ended First Half Ended
----------------------------- -----------------------------
June 28, 1998 June 29, 1997 June 28, 1998 June 29, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net income............................................ $147,648 $110,932 $217,725 $175,437
Unrealized holding gain on marketable
securities, before tax:
Arising during the period......................... 165,262 82,851 307,003 40,052
Less: reclassification adjustment for
net gains included in net income............... (4,832) (32,129) (12,131) (32,129)
-------- -------- -------- --------
Unrealized gain................................... 160,430 50,722 294,872 7,923
Income taxes.......................................... (62,929) (19,896) (115,663) (3,108)
-------- -------- -------- --------
Net other comprehensive income........................ 97,501 30,826 179,209 4,815
-------- -------- -------- --------
Comprehensive income.................................. $245,149 $141,758 $396,934 $180,252
======== ======== ======== ========
</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>
Second Quarter Ended First Half Ended
------------------------------ ------------------------------
June 28, 1998 June 29, 1997 June 28, 1998 June 29, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
BASIC
Net income.......................................... $147,648 $110,932 $217,725 $175,437
Preferred dividends, net of tax..................... (4,696) (4,700) (9,391) (9,399)
-------- -------- -------- --------
Net income attributable to common shares............ $142,952 $106,232 $208,334 $166,038
-------- -------- -------- --------
Weighted average common shares
outstanding....................................... 122,139 122,822 122,356 122,684
-------- -------- -------- --------
Basic earnings per share............................ $ 1.17 $ .86 $ 1.70 $ 1.35
======== ======== ======== ========
DILUTED
Net income.......................................... $147,648 $110,932 $217,725 $175,437
Additional ESOP contribution required
assuming all preferred shares were
converted, net of tax............................. (3,188) (3,288) (6,377) (6,576)
-------- -------- -------- --------
Adjusted net income................................. $144,460 $107,644 $211,348 $168,861
-------- -------- -------- --------
Weighted average common shares
outstanding....................................... 122,139 122,822 122,356 122,684
Assumed conversion of preferred shares
into common shares................................ 10,715 11,093 10,715 11,093
Assumed exercise of stock options, net of
common shares assumed repurchased
with the proceeds................................. 1,834 1,419 1,845 1,292
-------- -------- -------- --------
Adjusted weighted average common shares
outstanding....................................... 134,688 135,334 134,916 135,069
-------- -------- -------- --------
Diluted earnings per share.......................... $ 1.07 $ .80 $ 1.57 $ 1.25
======== ======== ======== ========
</TABLE>
6
<PAGE>
Note 4:
- ------
Inventories consist of (in thousands):
June 28, 1998 Dec. 28, 1997
------------- -------------
Finished goods................................ $ 82,975 $78,058
Newsprint (at LIFO)........................... 10,082 11,653
Supplies and other............................ 9,572 9,780
-------- -------
Total inventories............................. $102,629 $99,491
======== =======
Newsprint inventories are valued under the LIFO method and were less than
current cost by approximately $10.5 million at June 28, 1998 and December 28,
1997. Finished goods primarily include books and supplemental educational
materials.
Note 5:
- ------
The second quarter of 1998 and 1997 included several non-recurring items.
In June 1998, the Company completed the exchange of its WQCD radio station in
New York and cash for the assets of television stations KTZZ-Seattle and
WXMI-Grand Rapids, Mich. The divestiture of WQCD was accounted for as a sale and
the acquisition of the television stations was recorded as a purchase. The
transaction resulted in a pretax gain of $85 million, or $.32 per diluted share.
In the second quarter of 1997, the Company sold approximately 2 million
shares of America Online common stock for $96 million in cash and recorded a
pretax gain of $94 million, or $.43 per diluted share. Also in the second
quarter of 1997, Tribune concluded that the decline in the value of its $123.5
million investment in The Learning Company common stock was other than temporary
and wrote down the investment to fair market value in accordance with SFAS No.
115, "Accounting for Certain Investments in Debt and Equity Securities." The
write-down resulted in a non-cash, pretax loss of $77 million, or $.35 per
diluted share.
In March 1997, the Company sold its Farm Journal subsidiary for
approximately $17 million in cash. The Company had acquired Farm Journal in 1994
for approximately $17 million. In June 1997, the Company completed the sale of a
building in Fort Lauderdale, which is approximately 35% occupied by the
Company's Sun-Sentinel newspaper subsidiary. The Company received proceeds of
approximately $43 million and deferred, under sale and leaseback accounting
rules, the pretax gain of approximately $11 million, which is being amortized
over the Sun-Sentinel's 14 year lease term.
The Company also sold certain other investments and recorded other
investment write-downs in the second quarter of both 1998 and 1997, and sold an
investment in the first quarter of 1998. In the aggregate, non-recurring items
increased second quarter pretax income and diluted earnings per share by $86
million and $.32 in 1998 and $29 million and $.13 in 1997, respectively. For the
first half, non-recurring items increased pretax income and diluted earnings per
share by $93 million and $.35 in 1998 and $29 million and $.13 in 1997,
respectively.
7
<PAGE>
Note 6:
- ------
In January 1998, the Company acquired ownership of the North American
Sunshine line of educational materials. In June 1998, the Company acquired the
assets of television stations KTZZ-Seattle and WXMI-Grand Rapids, with a fair
value of approximately $179 million, in exchange for its WQCD radio station in
New York and cash.
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.
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
halves of 1998 and 1997 are shown below. The pro forma information was prepared
assuming the 1998 and 1997 acquisitions, investments and dispositions 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 Half Ended
--------------------------------
(In thousands, except per share data) June 28, 1998 June 29, 1997
------------- -------------
Operating revenues......................... $1,467,237 $1,390,462
Net income................................. $215,495 $162,173
Diluted earnings per share................. $1.55 $1.15
8
<PAGE>
Note 7:
- ------
Financial data for each of the Company's business segments is as follows
(in thousands):
<TABLE>
<CAPTION>
Second Quarter Ended First Half Ended
------------------------------ ------------------------------
June 28, 1998 June 29, 1997 June 28, 1998 June 29, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Operating revenues:
Publishing................................. $377,311 $360,131 $ 749,819 $ 715,257
Broadcasting and Entertainment............. 322,633 300,267 562,991 501,657
Education.................................. 85,640 59,344 145,467 96,747
-------- -------- ---------- ----------
Total operating revenues...................... $785,584 $719,742 $1,458,277 $1,313,661
======== ======== ========== ==========
Operating profit:
Publishing................................. $100,440 $ 94,328 $ 199,460 $ 191,513
Broadcasting and Entertainment............. 97,814 84,839 152,286 124,238
Education.................................. 13,321 11,481 12,625 11,321
Corporate expenses......................... (8,912) (7,950) (17,656) (16,262)
-------- -------- ---------- ----------
Total operating profit........................ $202,663 $182,698 $ 346,715 $ 310,810
======== ======== ========== ==========
</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 second quarter and first
half of 1998 to the second quarter and first half 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
divestitures 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
- ------------------
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 had 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 and cash for the assets of television stations KTZZ-Seattle and WXMI-Grand
Rapids. Emmis agreed to acquire these television stations as part of its
acquisition of Dudley Communications Corporation. In June 1998, the Company
completed the exchange of WQCD and cash for the assets of KTZZ and WXMI. The
transaction resulted in a pretax gain of $85 million, or $.32 per diluted share.
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 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.
10
<PAGE>
In the second quarter of 1997, the Company sold approximately 2 million
shares of America Online common stock for $96 million in cash and recorded a
pretax gain of $94 million, or $.43 per diluted share. Also in the second
quarter of 1997, Tribune concluded that the decline in the value of its $123.5
million investment in The Learning Company common stock was other than temporary
and wrote down the investment to fair market value in accordance with SFAS No.
115, "Accounting for Certain Investments in Debt and Equity Securities." The
write-down resulted in a non-cash, pretax loss of $77 million, or $.35 per
diluted share.
In March 1997, the Company sold its Farm Journal subsidiary for
approximately $17 million in cash. The Company had acquired Farm Journal in 1994
for approximately $17 million. In June 1997, the Company completed the sale of a
building in Fort Lauderdale, which is approximately 35% occupied by the
Company's Sun-Sentinel newspaper subsidiary. The Company received proceeds of
approximately $43 million and deferred, under sale and leaseback accounting
rules, the pretax gain of approximately $11 million, which is being amortized
over the Sun-Sentinel's 14 year lease term.
The Company also sold certain other investments and recorded other
investment write-downs in the second quarter of both 1998 and 1997, and sold an
investment in the first quarter of 1998. In the aggregate, non-recurring items
increased second quarter pretax income and diluted earnings per share by $86
million and $.32 in 1998 and $29 million and $.13 in 1997, respectively. For the
first half, non-recurring items increased pretax income and diluted earnings per
share by $93 million and $.35 in 1998 and $29 million and $.13 in 1997,
respectively.
11
<PAGE>
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 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 second quarters reflect these seasonal patterns.
CONSOLIDATED
The Company's consolidated operating results for the second quarter and
first half of 1998 and 1997 and the percentage changes from 1997 were as
follows:
<TABLE>
<CAPTION>
Second Quarter First Half
(Dollars in millions, ---------------------- --------------------------
except per share amounts) 1998 1997 Change 1998 1997 Change
---- ---- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Operating revenues............................ $786 $720 + 9% $1,458 $1,314 + 11%
Operating profit.............................. 203 183 + 11% 347 311 + 12%
Net loss on equity investments................ (8) (6) + 33% (22) (17) + 26%
Sales of subsidiary and investments,
net of write-downs (non-recurring)......... 86 29 * 93 29 *
Net income.................................... 148 111 + 33% 218 175 + 24%
Diluted earnings per share
Before non-recurring items................. .75 .67 + 12% 1.22 1.12 + 9%
Non-recurring items........................ .32 .13 * .35 .13 *
Total...................................... 1.07 .80 + 34% 1.57 1.25 + 26%
*Not meaningful
</TABLE>
Earnings Per Share -- Diluted earnings per share for the 1998 second quarter
rose to $.75, up 12% from $.67 last year, excluding non-recurring items. For the
first half of 1998, diluted earnings per share increased 9% to $1.22 from $1.12
in 1997, excluding non-recurring items. The improvements were due to higher
operating profit at all three business groups, led by broadcasting and
entertainment. Including non-recurring items, diluted earnings per share
increased 34% to $1.07 in the second quarter of 1998 and increased 26% to $1.57
in the first half.
12
<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 second
quarter and first half were as follows:
<TABLE>
<CAPTION>
Second Quarter First Half
---------------------- --------------------------
(Dollars in millions) 1998 1997 Change 1998 1997 Change
---- ---- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Operating revenues
Publishing................................. $377 $360 + 5% $ 750 $ 715 + 5%
Broadcasting and Entertainment............. 323 300 + 7% 563 502 + 12%
Education.................................. 86 60 + 44% 145 97 + 50%
---- ---- ------ ------
Total operating revenues...................... $786 $720 + 9% $1,458 $1,314 + 11%
EBITDA*
Publishing................................. $120 $114 + 5% $ 238 $ 230 + 3%
Broadcasting and Entertainment............. 119 106 + 13% 195 158 + 24%
Education.................................. 20 15 + 27% 25 20 + 31%
Corporate expenses......................... (8) (7) - 10% (16) (15) - 7%
---- ---- ------ ------
Total EBITDA.................................. $251 $228 + 10% $ 442 $ 393 + 13%
Operating profit
Publishing................................. $101 $ 94 + 6% $ 200 $ 192 + 4%
Broadcasting and Entertainment............. 98 85 + 15% 152 124 + 23%
Education.................................. 13 12 + 16% 13 11 + 12%
Corporate expenses......................... (9) (8) - 12% (18) (16) - 9%
---- ---- ------ ------
Total operating profit........................ $203 $183 + 11% $ 347 $ 311 + 12%
</TABLE>
* 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.
Consolidated operating revenues for the 1998 second quarter rose 9% to $786
million from $720 million in 1997 and for the first half increased 11% to $1.5
billion from $1.3 billion in 1997, mainly due to recent acquisitions and higher
advertising revenues. Excluding acquisitions and divestitures, revenues were up
6% for both the second quarter and the first half.
Consolidated operating profit increased 11% in the 1998 second quarter and
12% in the first half, while EBITDA increased 10% in the second quarter and 13%
in the first half. Publishing operating profit increased 6% in the 1998 second
quarter and 4% in the first half as continued strong classified advertising
revenues were tempered somewhat by higher newsprint prices and increased
development spending. Broadcasting and entertainment operating profit grew 15%
in the 1998 second quarter and 23% in the first half primarily due to
significant growth in television. Education operating profit increased 16% in
the second quarter and 12% in the first half mainly due to acquisitions and
growth at existing businesses. Excluding acquisitions and divestitures,
consolidated operating profit was up 11% in the second quarter and 8% in the
first half, and EBITDA increased 9% in the second quarter and 7% in the first
half.
13
<PAGE>
Operating Expenses -- Consolidated operating expenses increased 9% in the
second quarter and 11% in the first half as follows:
<TABLE>
<CAPTION>
Second Quarter First Half
---------------------- --------------------------
(Dollars in millions) 1998 1997 Change 1998 1997 Change
---- ---- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Cost of sales................................. $361 $326 + 11% $ 684 $ 605 + 13%
Selling, general & administrative............. 173 166 + 5% 332 316 + 5%
Depreciation & amortization
of intangible assets....................... 49 45 + 7% 96 82 + 17%
---- ---- ------ ------
Total operating expenses...................... $583 $537 + 9% $1,112 $1,003 + 11%
</TABLE>
Cost of sales increased 11%, or $35 million, in the 1998 second quarter and
increased 13%, or $79 million, in the first half. Excluding acquisitions and
divestitures ("on a comparable basis"), cost of sales increased 8%, or $25
million, in the second quarter and was up 8%, or $49 million, in the first half.
The growth in both periods was due to increased compensation expense, higher
newsprint and ink expense and increased broadcast rights amortization expense.
Compensation expense was up 7%, or $9 million, in the second quarter and 5%, or
$11 million, in the first half. Newsprint and ink expense increased 8%, or $4
million, in the second quarter of 1998 and grew 13%, or $14 million, in the
first half. Broadcast rights amortization increased 10%, or $7 million, in the
second quarter and was up 9%, or $10 million, in the first half, largely due to
higher production costs at Tribune Entertainment.
Selling, general and administrative expenses ("SG&A") were up 5%, or $7
million, in the 1998 second quarter and increased 5%, or $16 million, in the
first half. On a comparable basis, SG&A expenses were virtually unchanged in the
1998 second quarter and first half.
The increase in depreciation and amortization of intangible assets reflects
the acquisitions and capital expenditures made in 1998 and 1997.
14
<PAGE>
PUBLISHING
Operating Profit and Revenues -- The following table presents publishing
operating revenues, EBITDA and operating profit for daily newspapers and other
publications/services/development for the second quarter and first half. The
latter category includes syndication of editorial products, advertising
placement services, niche publications, direct mail operations and
Internet/electronic products.
Second Quarter First Half
-------------------- --------------------
(Dollars in millions) 1998 1997 Change 1998 1997 Change
---- ---- ------ ---- ---- ------
Operating revenues
Daily newspapers................. $354 $342 + 4% $703 $678 + 4%
Other publications/
services/development.......... 23 18 +27% 47 37 + 25%
---- ---- ---- ----
Total operating revenues........... $377 $360 + 5% $750 $715 + 5%
EBITDA
Daily newspapers................. $122 $114 + 7% $241 $230 + 5%
Other publications/
services/development.......... (2) - * (3) - *
---- ---- ---- ----
Total EBITDA....................... $120 $114 + 5% $238 $230 + 3%
Operating profit
Daily newspapers................. $104 $ 96 + 8% $207 $195 + 6%
Other publications/
services/development.......... (3) (2) -71% (7) (3) -111%
---- ---- ---- ----
Total operating profit............. $101 $ 94 + 6% $200 $192 + 4%
*Not meaningful
Publishing operating revenues for the 1998 second quarter increased 5% to
$377 million, and for the first half were up 5% to $750 million, principally due
to higher classified advertising revenues at all of the newspapers. Advertising
revenues increased 5% in both the second quarter and first half due to higher
linage and rates. Operating profit for the 1998 second quarter was up 6% to $101
million, and for the first half was up 4% to $200 million, primarily due to the
higher classified advertising revenues which were tempered somewhat by higher
newsprint prices and increased development spending. In the second quarter of
1998, daily newspaper operating profit margins increased to 29.4% from 28.2% in
1997 and in the first half increased to 29.4% from 28.8% in 1997.
Publishing group revenues, by classification, for the second quarter and
first half were as follows:
Second Quarter First Half
-------------------- --------------------
(Dollars in millions) 1998 1997 Change 1998 1997 Change
---- ---- ------ ---- ---- ------
Advertising
Retail.......................... $114 $111 + 3% $220 $218 + 1%
General......................... 40 38 + 4% 77 75 + 4%
Classified...................... 140 132 + 6% 285 262 + 9%
---- ---- ---- ----
Total advertising................. 294 281 + 5% 582 555 + 5%
Circulation....................... 61 62 - 2% 124 127 - 3%
Other 22 17 +33% 44 33 +32%
---- ---- ---- ----
Total revenues.................... $377 $360 + 5% $750 $715 + 5%
15
<PAGE>
Classified advertising revenues for the 1998 second quarter and first half
rose due to increases in help wanted advertising at all of the newspapers,
higher automotive advertising in Chicago and Fort Lauderdale and increased
advertising from Internet/electronic products.
Total advertising linage increased 4% in both the 1998 second quarter and
first half. Full run general advertising linage increased 4% in the second
quarter due to increases at Fort Lauderdale and Orlando. Full run classified
advertising linage increased 4% in the second quarter and 6% in the first half
primarily due to increases in Fort Lauderdale and Newport News. Part run
advertising linage declined 3% in the second quarter mainly due to decreases in
Fort Lauderdale and Chicago in retail and Chicago in classified; part run
advertising improved 1% in the first half mainly due to increases in Chicago and
Fort Lauderdale in classified and Orlando in retail. Preprint advertising linage
increased 12% in the 1998 second quarter and 8% in the first half due primarily
to higher preprint part run linage in Chicago and Newport News and increased
full run linage in Chicago, Fort Lauderdale and Orlando. The following summary
presents advertising linage for the second quarter and first half.
Second Quarter First Half
---------------------- ------------------------
(Inches in thousands) 1998 1997 Change 1998 1997 Change
----- ----- ------ ------ ------ ------
Full run
Retail.................. 915 909 + 1% 1,784 1,795 - 1%
General................. 209 201 + 4% 400 397 + 1%
Classified.............. 1,739 1,670 + 4% 3,464 3,280 + 6%
----- ----- ------ ------
Total full run............ 2,863 2,780 + 3% 5,648 5,472 + 3%
Part run.................. 2,547 2,624 - 3% 5,051 5,000 + 1%
Preprint.................. 2,667 2,379 + 12% 4,767 4,420 + 8%
----- ----- ------ ------
Total inches.............. 8,077 7,783 + 4% 15,466 14,892 + 4%
Circulation revenues decreased 2% in the 1998 second quarter and 3% in the
first half. Total average daily circulation decreased slightly to 1,264,000
copies in the 1998 second quarter, and total average Sunday circulation was down
1% to 1,868,000 copies. For the first half of 1998, total average daily
circulation improved slightly to 1,294,000 copies, while total average Sunday
circulation was down less than 1% to 1,920,000 copies.
Other revenues are derived from advertising placement services; the
syndication of columns, features, information and comics to newspapers;
commercial printing operations; delivery of other publications; direct mail
operations; revenues from Internet/electronic products; cable news programming;
and other publishing-related activities. The increase in other revenues in the
1998 second quarter and first half resulted primarily from higher revenues from
direct mail operations, commercial printing operations and Internet/electronic
products.
Operating Expenses -- Publishing operating expenses increased 4%, or $11
million, in the second quarter of 1998 and 5%, or $27 million, in the first
half. In the second quarter of 1998, newsprint and ink expense increased 8%, or
$4 million, as average newsprint prices were up 5% and consumption increased 2%.
Other expenses were up 3%, or $7 million, mainly due to increased development
spending, primarily in online businesses. For the first half, newsprint and ink
expense increased 13%, or $14 million, as average newsprint prices were up 8%
and consumption increased 5%. Other expenses were up 3%, or $13 million, in the
first half mainly due to increased development spending.
16
<PAGE>
BROADCASTING AND ENTERTAINMENT
Operating Profit and Revenues -- The following table presents operating
revenues, EBITDA and operating profit for television, radio and
entertainment/other for the second quarter and first half. Entertainment/other
includes Tribune Entertainment and the Chicago Cubs.
Second Quarter First Half
-------------------- --------------------
(Dollars in millions) 1998 1997 Change 1998 1997 Change
---- ---- ------ ---- ---- ------
Operating revenues
Television.................. $260 $243 + 7% $470 $405 + 16%
Radio....................... 15 18 - 20% 28 43 - 36%
Entertainment/other......... 48 39 + 23% 65 54 + 22%
---- ---- ---- ----
Total operating revenues....... $323 $300 + 7% $563 $502 + 12%
EBITDA
Television.................. $113 $101 + 12% $187 $152 + 22%
Radio....................... 5 7 - 27% 10 12 - 14%
Entertainment/other......... 1 (2) * (2) (6) + 76%
---- ---- ---- ----
Total EBITDA................... $119 $106 + 13% $195 $158 + 24%
Operating profit
Television.................. $ 94 $ 82 + 14% $147 $123 + 20%
Radio....................... 4 6 - 29% 9 10 - 13%
Entertainment/other......... - (3) * (4) (9) + 60%
---- ---- ---- ----
Total operating profit......... $ 98 $ 85 + 15% $152 $124 + 23%
*Not meaningful
Broadcasting and entertainment operating revenues increased 7% to $323
million in the 1998 second quarter and increased 12% to $563 million in the
first half primarily due to increased television revenues. Television revenues
were up 7%, or $17 million, in the second quarter due to gains primarily at
WPIX-New York, WGN-Chicago, WBZL-Miami, KDAF-Dallas, KHTV-Houston and KTLA-Los
Angeles, and the addition of KTZZ-Seattle and WXMI-Grand Rapids. The two new
television stations were acquired in June 1998 in exchange for the Company's
WQCD radio station and cash. Television revenues were up 16%, or $65 million, in
the first half primarily due to the acquisitions of six Renaissance stations (in
March 1997) and KTZZ-Seattle and WXMI-Grand Rapids. Excluding acquisitions,
television revenues increased 5% in the first half primarily due to gains at
almost every existing station. Radio revenues decreased 20% to $15 million in
the 1998 second quarter and declined 36% to $28 million in the first half mainly
due to the divestitures of WQCD and Farm Journal. Excluding WQCD and Farm
Journal, radio revenues increased 2% in both the quarter and the first half.
Entertainment/other revenues increased 23%, or $9 million, in the 1998 second
quarter and were up 22%, or $11 million, in the first half due to improvements
at Tribune Entertainment and the Cubs. Tribune Entertainment revenues increased
due to the September 1997 launch of the "Gene Roddenberry's Earth: Final
Conflict" and "NightMan" syndicated programs. Cubs revenues improved mainly due
to eight more home games in 1998 versus 1997 through the end of the first half.
Second quarter 1998 operating profit for broadcasting and entertainment was
up 15% to $98 million from $85 million in 1997. The growth was primarily due to
a 14% increase in television operating profit as a result of gains at almost
every station and the addition of KTZZ-Seattle and WXMI-Grand Rapids.
17
<PAGE>
For the first half, operating profit increased 23% to $152 million from $124
million in 1997, mainly due to a 20% increase in television. Excluding
acquisitions, television operating profit was up 12% in the first half due to
gains at almost every station.
Operating Expenses -- Broadcasting and entertainment operating expenses
increased 4%, or $10 million, in the second quarter of 1998 and 9%, or $33
million, in the first half. In the second quarter, the increase was primarily
due to higher player salaries at the Cubs and increased broadcast rights
amortization, which was largely due to higher production costs at Tribune
Entertainment. The increase in operating expenses for the first half was
primarily due to the television station acquisitions, higher broadcast rights
amortization and increased player salaries at the Cubs, partially offset by the
WQCD and Farm Journal dispositions. Excluding acquisitions and divestitures,
broadcasting and entertainment operating expenses increased 4%, or $12 million,
in the first half.
EDUCATION
Operating Profit and Revenues -- The following table presents education
operating revenues, EBITDA and operating profit for the second quarter and first
half:
Second Quarter First Half
-------------------- --------------------
(Dollars in millions) 1998 1997 Change 1998 1997 Change
---- ---- ------ ---- ---- ------
Operating revenues............. $86 $60 + 44% $145 $97 + 50%
EBITDA......................... 20 15 + 27% 25 20 + 31%
Operating profit............... 13 12 + 16% 13 11 + 12%
Education's second quarter 1998 operating revenues increased 44% to $86
million and were up 50% to $145 million in the first half. The improvement was
primarily due to the acquisitions of Landoll (in December 1997) and Shortland
(in September 1997) and growth at existing businesses. Excluding the
acquisitions, education revenues increased 6% in the 1998 second quarter and 8%
in the first half.
Education's second quarter 1998 operating profit increased 16% to $13
million and was up 12% to $13 million in the first half. The improvements were
primarily due to the acquisitions and second quarter growth at existing
businesses. Excluding the acquisitions, education operating profit increased 3%
in the second quarter and decreased 10% in the first half. For the first half,
gains at most businesses were offset by a decline at Creative Publications.
Creative has recently established a new management team and sales force to focus
on sales efforts.
Operating Expenses -- Education operating expenses increased 51%, or $24
million, in the 1998 second quarter, and 56%, or $47 million, in the first half,
primarily due to the acquisitions. Excluding acquisitions, education operating
expenses increased 7%, or $3 million, in the 1998 second quarter and 10%, or $9
million, in the first half due to higher sales volume.
18
<PAGE>
EQUITY RESULTS
Net loss on equity investments in the second quarter of 1998 totaled $8
million compared to $6 million in 1997 and for the first half totaled $22
million compared to $17 million in 1997. The majority of equity losses in both
years came from the Company's equity interest 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 second quarter decreased 17% to $21 million
primarily due to lower commercial paper debt levels. For the first half,
interest expense increased 3% to $42 million primarily due to higher average
debt levels resulting from acquisitions and stock repurchases. Interest income
declined 77% to $1 million in the 1998 second quarter and decreased 82% to $3
million in the first half, mainly due to the December 1997 sale of The Learning
Company convertible notes. The effective tax rate, excluding non-recurring
items, was 40.4% and 40.8% for the 1998 and 1997 second quarters, respectively,
and 40.4% and 41.1% for the 1998 and 1997 first halves, respectively.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash flow generated from operations is the Company's primary source of
liquidity. Net cash provided by operations in the first half was $270 million in
1998, up from $190 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 $168 million in the 1998 first half
as the Company spent $110 million for acquisitions and investments.
Net cash used by financing activities in the 1998 first half was $129
million due to the repayments of debt, purchases of treasury stock and payments
of dividends, partially offset by the issuance of long-term debt and salesof
stock to employees. In the first half of 1998, the Company issued $10 million
of commercial paper and repurchased 2 million shares of its common stock for
$132 million. At June 28, 1998, the Company had authorization to repurchase an
additional 5.1 million shares and expects to continue to repurchase shares in
1998. The 1998 common dividend increased 7% to $.34 per share for the first half
from $.32 per share in 1997.
In August 1998, the Company issued 4.6 million of Debt Exchangeable for
Common Stock securities ("DECS") for proceeds of approximately $128.5 million.
The DECS have a 6 1/4% coupon and mature on August 15, 2001. At maturity, the
DECS will be exchanged for shares of common stock of The Learning Company, Inc.
("TLC") or, at the Company's option, the cash equivalent thereof. The Company
currently owns 5.2 million shares of TLC common stock. The number of TLC shares
deliverable at maturity is determined by reference to the market value of the
TLC common stock adjusted in accordance with a predetermined formula that
allocates a portion of the appreciation, if any, to the Company. Holders of the
DECS bear the full risk of a decline in the value of TLC common stock prior to
maturity. Proceeds from the issuance of the DECS will be used for general
corporate purposes. Under current accounting pronouncements, changes in the
market value of the DECS and the underlying investment in TLC
19
<PAGE>
common stock are included in accumulated other comprehensive income, a separate
component of shareholders' equity, net of applicable taxes. In June 1998, the
Financial Accounting Standards Board issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities", which is effective in fiscal
year 2000. The statement will impact the accounting for the DECS and the
underlying investment in TLC common stock. Management is currently reviewing the
impact of this new accounting pronouncement.
In July 1998, the Company established a stock compensation fund to purchase
common stock of the Company for the purpose of funding certain stock-based
compensation plans. On August 10, 1998, one million shares of common stock were
purchased for approximately $67 million, pursuant to privately negotiated stock
purchase agreements with a financial institution. To complete the transactions,
the financial institution borrowed Tribune shares and will be purchasing
replacement shares in the open market over a period not to exceed six months.
The initial purchase price is subject to future market price adjustments until
the financial institution completes the transactions. The initial purchase price
and any market price adjustments will be recorded as a separate component of
shareholders' equity.
20
<PAGE>
Item 3. Quantitative and Qualitative Disclosure About Market Risk.
---------------------------------------------------------
The following represents an update of the Company's market sensitive
financial information. This information should be read in conjunction with Item
7A of the Company's 1997 Form 10-K and contains forward looking statements.
Equity price risks. The Company has common stock investments in several publicly
traded companies which are subject to market price volatility. These investments
are classified as available for sale and are recorded on the balance sheet at
fair value with unrealized gains or losses, net of related tax effects, reported
in a separate component of shareholders' equity.
The following analysis presents the hypothetical change in the fair value
of the Company's common stock investments in publicly traded companies arising
from selected hypothetical changes in each stock's price. The fair value of the
Company's common stock investments in publicly traded companies assuming stock
price fluctuations of plus or minus 10%, 20% and 30% would be as follows (in
thousands):
<TABLE>
<CAPTION>
Valuation of Investments Valuation of Investments
Assuming Indicated Decrease Assuming Indicated Increase
in Each Stock's Price in Each Stock's Price
------------------------------- June 28, 1998 -------------------------------
-30% -20% -10% Fair Value +10% +20% +30%
-------- -------- -------- ------------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Common stock
investments in
public companies $388,953 $444,518 $500,082 $555,647 $611,212 $666,776 $722,341
</TABLE>
During the last 12 quarters, market price movements have caused the fair
value of the Company's common stock investments in publicly traded companies to
change by 10% or more in eight of the quarters, by 20% or more in four of the
quarters and by 30% or more in four of the quarters.
21
<PAGE>
PART II. OTHER INFORMATION
Item 5. Other Information.
-----------------
The computation of the ratios of earnings to fixed charges, filed herewith
as Exhibit 12, is incorporated herein by reference.
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibits.
11 - Statements of computation of 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 second quarter of 1998.
22
<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: August 11, 1998 /s/ R. Mark Mallory
-------------------
R. Mark Mallory
Vice President and Controller
(on behalf of the Registrant
and as Chief Accounting Officer)
23
EXHIBIT 11
TRIBUNE COMPANY
STATEMENTS OF COMPUTATION OF BASIC AND DILUTED
EARNINGS PER SHARE
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Second Quarter Ended First Half Ended
----------------------------- -----------------------------
BASIC June 28, 1998 June 29, 1997 June 28, 1998 June 29, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net income $147,648 $110,932 $217,725 $175,437
Preferred dividends, net of tax (4,696) (4,700) (9,391) (9,399)
-------- -------- -------- --------
Net income attributable to common shares $142,952 $106,232 $208,334 $166,038
-------- -------- -------- --------
Weighted average common shares outstanding 122,139 122,822 122,356 122,684
-------- -------- -------- --------
Basic earnings per share $ 1.17 $ .86 $ 1.70 $ 1.35
======== ======== ======== ========
DILUTED
Net income $147,648 $110,932 $217,725 $175,437
Additional ESOP contribution required assuming
all preferred shares were converted, net of tax (3,188) (3,288) (6,377) (6,576)
-------- -------- -------- --------
Adjusted net income $144,460 $107,644 $211,348 $168,861
-------- -------- -------- --------
Weighted average common shares outstanding 122,139 122,822 122,356 122,684
Assumed conversion of preferred shares into
common shares 10,715 11,093 10,715 11,093
Assumed exercise of stock options, net of common
shares assumed repurchased with the proceeds 1,834 1,419 1,845 1,292
-------- -------- -------- --------
Adjusted weighted average common shares outstanding 134,688 135,334 134,916 135,069
-------- -------- -------- --------
Diluted earnings per share $ 1.07 $ .80 $ 1.57 $ 1.25
======== ======== ======== ========
</TABLE>
EXHIBIT 12
TRIBUNE COMPANY
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(In thousands, except ratios)
<TABLE>
<CAPTION>
First Half Fiscal Year Ended December
Ended ---------------------------------------------------
6/28/98 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Income from continuing operations $217,725 $393,625 $282,750 $245,458 $233,149 $204,646
Add:
Income tax expense 160,974 265,375 191,663 167,076 158,698 142,212
Losses on equity investments 21,865 34,696 13,281 13,209 9,739 1,857
-------- -------- -------- -------- -------- --------
Subtotal 400,564 693,696 487,694 425,743 401,586 348,715
-------- -------- -------- -------- -------- --------
Fixed charge adjustments
Add:
Interest expense 42,030 86,502 47,779 21,814 20,585 24,660
Amortization of capitalized interest 1,036 2,076 2,108 2,253 2,362 2,392
Interest component of rental expense (A) 5,291 10,416 9,362 8,200 8,236 8,732
-------- -------- -------- -------- -------- --------
Earnings, as adjusted $448,921 $792,690 $546,943 $458,010 $432,769 $384,499
======== ======== ======== ======== ======== ========
Fixed charges:
Interest expense $ 42,030 $ 86,502 $ 47,779 $ 21,814 $ 20,585 $ 24,660
Interest capitalized 807 224 168 610 - 1,099
Interest component of rental expense (A) 5,291 10,416 9,362 8,200 8,236 8,732
Interest related to guaranteed ESOP debt (B) 7,812 17,901 20,134 22,057 24,017 25,742
-------- -------- -------- -------- -------- --------
Total fixed charges $ 55,940 $115,043 $ 77,443 $ 52,681 $ 52,838 $ 60,233
======== ======== ======== ======== ======== ========
Ratio of earnings to fixed charges 8.0 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
June 28, 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> 6-MOS
<FISCAL-YEAR-END> DEC-27-1998
<PERIOD-START> DEC-29-1997
<PERIOD-END> JUN-28-1998
<CASH> 39,946
<SECURITIES> 0
<RECEIVABLES> 524,494
<ALLOWANCES> 39,705
<INVENTORY> 102,629
<CURRENT-ASSETS> 828,116
<PP&E> 1,592,905
<DEPRECIATION> 947,690
<TOTAL-ASSETS> 5,204,952
<CURRENT-LIABILITIES> 743,476
<BONDS> 0
0
293,043
<COMMON> 1,018
<OTHER-SE> 1,770,513
<TOTAL-LIABILITY-AND-EQUITY> 5,204,952
<SALES> 0
<TOTAL-REVENUES> 1,458,277
<CGS> 0
<TOTAL-COSTS> 684,313
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 42,030
<INCOME-PRETAX> 378,699
<INCOME-TAX> 160,974
<INCOME-CONTINUING> 217,725
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 217,725
<EPS-PRIMARY> 1.70
<EPS-DILUTED> 1.57
<FN>
The information reported above under "EPS-PRIMARY" represents basic earnings
per share for the quarter ended June 28, 1998.
</FN>
</TABLE>
