<PAGE> 1
FILED PURSUANT TO RULE 424(b)(3)
REGISTRATION NO. 333-18921
SUBJECT TO COMPLETION, DATED JULY 21, 1998
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JANUARY 9, 1997)
4,600,000 DECS(SM)
(DEBT EXCHANGEABLE FOR COMMON STOCK(SM))
[TRIBUNE LOGO]
% EXCHANGEABLE NOTES DUE AUGUST 15, 2001
(SUBJECT TO EXCHANGE INTO SHARES OF COMMON STOCK, PAR VALUE
$.01 PER SHARE, OF THE LEARNING COMPANY, INC.)
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The principal amount of each of the % Exchangeable Notes Due August 15,
2001 (each, a "DECS") of Tribune Company ("Tribune" or the "Company") being
offered hereby will be $ (the last sale price of the Common Stock, par
value $.01 per share (the "Learning Common Stock"), of The Learning Company,
Inc. ("The Learning Company") on , 1998, as reported on the New York Stock
Exchange Composite Tape) (the "Initial Price"). The DECS will mature on August
15, 2001. Interest on the DECS, at the rate of % of the principal amount per
annum, is payable quarterly on February 15, May 15, August 15, and November 15,
beginning November 15, 1998. The DECS are not subject to redemption or any
sinking fund prior to maturity.
At maturity (including as a result of acceleration or otherwise), the
principal amount of each DECS will be mandatorily exchanged by Tribune into a
number of shares of Learning Common Stock (or, at Tribune's option under the
circumstances described herein, the cash equivalent thereof and/or such other
consideration as permitted or required by the terms of the DECS) at the Exchange
Rate (as defined herein). The Exchange Rate is equal to, subject to certain
adjustments, (a) if the Maturity Price (as defined herein) per share of Learning
Common Stock is greater than or equal to $ per share of Learning Common
Stock, shares of Learning Common Stock per DECS, (b) if the Maturity Price
is less than $ but is greater than the Initial Price, a fraction equal to
the Initial Price divided by the Maturity Price of one share of Learning Common
Stock per DECS and (c) if the Maturity Price is less than or equal to the
Initial Price, one share of Learning Common Stock per DECS. The "Maturity Price"
means the average Closing Price (as defined herein) per share of Learning Common
Stock on the 20 Trading Days (as defined herein) immediately prior to (but not
including) the date of maturity, except as otherwise described herein.
Accordingly, the value of the Learning Common Stock to be received by holders of
the DECS (or the cash equivalent thereof) at maturity will not necessarily equal
the principal amount thereof. The DECS will be unsecured obligations of Tribune
ranking pari passu with all of its other unsecured and unsubordinated
indebtedness. The Learning Company will have no obligations with respect to the
DECS. See "Description of DECS."
SEE "RISK FACTORS RELATING TO THE DECS" BEGINNING ON PAGE S-6 OF THIS
PROSPECTUS SUPPLEMENT FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CAREFULLY CONSIDERED BY PROSPECTIVE PURCHASERS.
Attached hereto is a prospectus supplement and prospectus of The Learning
Company relating to the shares of Learning Common Stock that may be received by
holders of DECS at maturity. The Learning Common Stock is listed on the New York
Stock Exchange ("NYSE") under the symbol "TLC."
For a discussion of certain U.S. federal income tax consequences for holders
of the DECS, see "Certain United States Federal Income Tax Considerations."
Application will be made to list the DECS on the NYSE.
"DECS" and "Debt Exchangeable for Common Stock" are service marks of Salomon
Brothers Inc.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) TRIBUNE(1)(3)
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<S> <C> <C> <C>
Per DECS $ $ $
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Total(4) $ $ $
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- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from the issue date.
(2) For information regarding indemnification of the Underwriter, see
"Supplemental Plan of Distribution."
(3) Before deducting expenses payable by Tribune, estimated to be $250,000.
(4) Tribune has granted the Underwriter an option, exercisable within 30
days following the date hereof, to purchase up to an additional 610,796
DECS at the Price to Public, less the Underwriting Discount, solely to
cover over-allotments, if any. If the Underwriter exercises such option
in full, the total Price to Public, Underwriting Discount and Proceeds
to Tribune will be $ , $ and $ , respectively. See
"Supplemental Plan of Distribution."
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The DECS are offered subject to receipt and acceptance by the Underwriter,
to prior sales and to the Underwriter's right to reject any order in whole or in
part and to withdraw, cancel or modify the offer without notice. It is expected
that delivery of the DECS will be made at the office of Smith Barney Inc., 333
West 34th Street, New York, New York 10001, or through the facilities of The
Depository Trust Company, on or about , 1998.
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SALOMON SMITH BARNEY
July , 1998
THIS PROSPECTUS SUPPLEMENT RELATES TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND IS SUBJECT TO COMPLETION OR
AMENDMENT. THIS PROSPECTUS SUPPLEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAW OF ANY
SUCH STATE.
<PAGE> 2
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE DECS OR THE
LEARNING COMMON STOCK, INCLUDING PURCHASES OF THE DECS OR THE LEARNING COMMON
STOCK TO STABILIZE THE MARKET PRICE OF SUCH SECURITIES AND PURCHASES TO COVER
SOME OR ALL OF A SHORT POSITION IN SUCH SECURITIES MAINTAINED BY THE
UNDERWRITER. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "SUPPLEMENTAL PLAN OF
DISTRIBUTION."
S-2
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SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing or incorporated by reference in this Prospectus Supplement
and the Prospectus.
TRIBUNE COMPANY
Tribune is a media company. Through its subsidiaries, the Company is
engaged in the publishing of newspapers, books, educational materials and
information in print and digital formats and the broadcasting, production and
syndication of information and entertainment in metropolitan areas in the United
States. The Company was founded in 1847 and incorporated in Illinois in 1861. As
a result of a corporate restructuring in 1968, the Company became a holding
company incorporated in Delaware.
THE LEARNING COMPANY, INC.
The Learning Company develops and publishes a broad range of high-quality
branded consumer software for personal computers ("PCs") that educate across
every age category, from young children to adults. The Learning Company's
primary emphasis is on education and reference software, but it also offers a
selection of lifestyle, productivity and, to a lesser extent, entertainment
products, both in North America and internationally. In February 1994, The
Learning Company, which was then known as WordStar International Incorporated,
completed a three-way business combination with Softkey Software Products Inc.
and Spinnaker Software Corporation in which The Learning Company changed its
name to SoftKey International Inc. In October 1996, The Learning Company changed
its name from SoftKey International Inc. to The Learning Company, Inc. to
reflect its expanded emphasis on educational software.
THE OFFERING
Securities Offered......... Up to 4,600,000 % Exchangeable Notes Due
August 15, 2001 (each a "DECS").
Offering Price............. $ per DECS, the closing price per share of
Learning Common Stock as reported on the NYSE
Composite Tape on , 1998.
Maturity Date.............. August 15, 2001.
Interest................... Interest will accrue at the rate of % of the
principal amount per annum. Interest will be paid
quarterly on February 15, May 15, August 15 and
November 15 of each year, commencing November 15,
1998.
Ranking.................... Each DECS is an unsecured obligation of Tribune and
will rank equally with all other unsecured and
unsubordinated indebtedness of Tribune.
Exchange................... On August 15, 2001, Tribune will exchange each DECS
into a number of shares of Learning Common Stock
(or, at Tribune's option, the equivalent amount
of cash) at the Exchange Rate. The "Exchange
Rate" is equal to (a) if the Maturity Price (as
defined below) is greater than or equal to
$ (the "Threshold Appreciation Price"),
shares of Learning Common Stock per DECS,
(b) if the Maturity Price is less than the
Threshold Appreciation Price but is greater than
the Initial Price, a fraction equal to the
Initial Price divided by the Maturity Price of
one share of Learning Common Stock per DECS and
(c) if the Maturity Price is less than or equal
to the Initial Price, one share of Learning
Common Stock per DECS.
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The "Maturity Price" is defined as the average
Closing Price (as defined under "Description of
DECS -- General") per share of Learning Common
Stock on the 20 Trading Days (as defined under
"Description of DECS -- General") immediately
prior to (but not including) the date of
maturity; provided, however, that if there are
not 20 Trading Days for the Learning Common Stock
occurring later than the 60th calendar day
immediately prior to, but not including, the date
of maturity, "Maturity Price" will be defined as
the market value per share of Learning Common
Stock as of maturity as determined by a
nationally recognized investment banking firm
retained for such purpose by Tribune.
Therefore, if on August 15, 2001, the Maturity
Price is greater than or equal to $ ,
Tribune will receive % of the appreciation
in market value above $ and the DECS
holder will receive % of the appreciation
in market value above $ . If the
Maturity Price is greater than $ and
less than $ , Tribune will retain all of
the appreciation in the market value of the
Learning Common Stock. If the Maturity Price is
less than or equal to $ , the DECS
holder will realize the entire loss on the
decline in market value of the Learning Common
Stock.
Certain Adjustment
Events..................... In the event that certain events affecting the
Learning Common Stock occur prior to the maturity
of the DECS, the Exchange Rate will be subject to
adjustment or each holder of a DECS will receive
cash or other securities in lieu of or in
addition to shares of Learning Common Stock.
These events include, among other things, the
payment of a stock or extraordinary cash dividend
to holders of Learning Common Stock, a stock
split or a recapitalization of outstanding
Learning Common Stock, a distribution of
securities or other property to holders of
Learning Common Stock and a merger or
consolidation of The Learning Company with
another company.
No Early Redemption........ Tribune will not have the option to exchange the
DECS for Learning Common Stock prior to August
15, 2001.
Investment in the DECS..... The terms of the DECS differ from those of ordinary
debt securities in that the value of the Learning
Common Stock (or cash equivalent thereof) that a
holder of the DECS will receive upon mandatory
exchange of the principal amount thereof at
maturity (the "Amount Receivable at Maturity") is
not fixed, but is based on the market price of
the Learning Common Stock. In addition, the
opportunity for equity appreciation afforded by
an investment in the DECS is less than the
opportunity for equity appreciation afforded by a
direct investment in Learning Common Stock
because the Amount Receivable at Maturity will
only exceed the principal amount of such DECS if
the Maturity Price exceeds the Threshold
Appreciation Price, which represents an
appreciation of % of the Initial Price.
Moreover, holders of the DECS will only be
entitled to receive upon exchange at maturity
% of any appreciation of the value of
Learning Common Stock in excess of the Threshold
Appreciation Price. If the Maturity Price is less
than or equal to $ , DECS holders will
realize the entire loss on the decline in market
value of the Learning Common Stock. The DECS,
however, do pay interest at % per year,
while a direct investment in Learning Common
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Stock would only pay dividends, if any. The
Learning Company has not paid cash dividends on
the Learning Common Stock and has stated that it
does not anticipate doing so in the foreseeable
future.
Obligations of Tribune
Company.................. The DECS are the obligations of Tribune and are not
the obligations of The Learning Company or any
other company.
U.S. Federal Income Tax
Considerations........... Neither the Internal Revenue Service nor any court
has decided how the DECS should be treated for
U.S. federal income tax purposes. See "Certain
United States Federal Income Tax Considerations."
Prospective purchasers of the DECS should consult
their own tax advisors regarding the U.S.
federal, state, local and foreign tax
consequences to them of holding the DECS.
Listing.................... Application will be made to list the DECS on the
NYSE.
Use of Proceeds............ The net proceeds to be received by Tribune from the
sale of the DECS will be used by Tribune for
general corporate purposes.
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RISK FACTORS RELATING TO THE DECS
As described in more detail below, the trading price of the DECS may vary
considerably prior to the date of maturity (including by acceleration or
otherwise, "Maturity") due to, among other things, fluctuations in the market
price of Learning Common Stock and other events that are difficult to predict
and beyond Tribune's control.
COMPARISON TO OTHER DEBT SECURITIES; RELATIONSHIP OF THE DECS TO LEARNING COMMON
STOCK
The terms of the DECS differ from those of ordinary debt securities in that
the value of the Learning Common Stock (or, at Tribune's option, the cash
equivalent thereof) that a holder of the DECS will receive upon mandatory
exchange of the principal amount thereof at Maturity (the "Amount Receivable at
Maturity") is not fixed, but is based on the market price of the Learning Common
Stock as specified in the Exchange Rate. There can be no assurance that the
Amount Receivable at Maturity will be equal to or greater than the principal
amount of the DECS. For example, if the Maturity Price of the Learning Common
Stock were less than the Initial Price, the Amount Receivable at Maturity will
be less than the principal amount paid for the DECS, in which case an investment
in the DECS would result in a loss and, if The Learning Company became insolvent
or bankrupt, could result in a total loss. Holders of the DECS, therefore, bear
the full risk of a decline in the value of the Learning Common Stock prior to
Maturity.
In addition, the opportunity for equity appreciation afforded by an
investment in the DECS is less than the opportunity for equity appreciation
afforded by a direct investment in Learning Common Stock because the Amount
Receivable at Maturity will only exceed the principal amount of such DECS if the
Maturity Price exceeds the Threshold Appreciation Price, which represents an
appreciation of % of the Initial Price. Moreover, holders of the DECS
will only be entitled to receive upon exchange at Maturity % of any
appreciation of the value of Learning Common Stock in excess of the Threshold
Appreciation Price. See "Description of DECS" for an illustration of the Amount
Receivable at Maturity that a DECS holder would receive at various Maturity
Prices. Because the market price of the Learning Common Stock is subject to
market fluctuations, the Amount Receivable at Maturity may be more or less than
the principal amount of the DECS.
The market price of the DECS at any time is expected to be affected
primarily by changes in the price of Learning Common Stock. The price of the
Learning Common Stock has been extremely volatile and it is impossible to
predict whether the price of Learning Common Stock will rise or fall. Trading
prices of Learning Common Stock will be influenced by The Learning Company's
operational results and by complex and interrelated political, economic,
financial and other factors that can affect the capital markets generally, the
stock exchange on which Learning Common Stock is traded and the market segment
of which The Learning Company is a part. See the prospectus supplement and
prospectus of The Learning Company relating to the Learning Common Stock
attached hereto. Trading prices of Learning Common Stock also may be influenced
if Tribune, another principal shareholder of The Learning Company or other
persons hereafter issue securities with terms similar to those of the DECS or if
Tribune or another principal shareholder of The Learning Company otherwise
transfers shares of Learning Common Stock. As of the date hereof, Tribune held
an aggregate of 5,210,796 shares of Learning Common Stock, up to 4,600,000
shares of which (up to 5,210,796 shares if the Underwriter's over-allotment
option is exercised in full) Tribune may deliver to holders of the DECS at
Maturity.
IMPACT OF THE DECS ON THE MARKET FOR THE LEARNING COMMON STOCK AND POSSIBLE
ILLIQUIDITY OF SECONDARY MARKET
Although application will be made to list the DECS on the NYSE, it is not
possible to predict accurately how or whether the DECS will trade in the
secondary market or whether such market will be liquid. The DECS are novel and
innovative securities and there is currently no secondary market for the DECS.
The Underwriter currently intends, but is not obligated, to make a market in the
DECS. See "Supplemental Plan of Distribution." Any market that develops for the
DECS is likely to influence and be influenced by the market for the Learning
Common Stock. For example, the price of the Learning Common Stock could
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<PAGE> 7
become more volatile and could be depressed by investors' anticipation of the
potential distribution into the market of substantial additional amounts of
Learning Common Stock at the maturity of the DECS, by possible sales of the
Learning Common Stock by investors who view the DECS as a more attractive means
of equity participation in The Learning Company and by hedging or arbitrage
trading activity that may develop involving the DECS and the Learning Common
Stock.
DILUTION OF LEARNING COMMON STOCK
The Amount Receivable at Maturity is subject to adjustment for certain
events arising from, among other things, stock splits and combinations, stock
dividends and certain other actions of The Learning Company that modify its
capital structure. See "Description of DECS -- Dilution Adjustments; Other
Adjustment Events." Such Amount Receivable at Maturity may not be adjusted for
other events, such as offerings of Learning Common Stock for cash or in
connection with acquisitions, that may adversely affect the price of Learning
Common Stock and, because of the relationship of such Amount Receivable at
Maturity to the price of Learning Common Stock, such other events may adversely
affect the trading price of the DECS. There can be no assurance that The
Learning Company will not make offerings of Learning Common Stock or take such
other action in the future or as to the amount of such offerings, if any.
In addition, until such time, if any, as Tribune shall deliver shares of
Learning Common Stock to holders of the DECS at Maturity thereof, holders of the
DECS will not be entitled to any rights with respect to Learning Common Stock
(including, without limitation, voting rights and the rights to receive any
dividends or other distributions in respect thereof).
NO OBLIGATION ON THE PART OF THE LEARNING COMPANY WITH RESPECT TO THE DECS
The Learning Company has no obligation with respect to the DECS or the
Amount Receivable at Maturity, including any obligation to take the needs of
Tribune or of holders of the DECS into consideration for any reason. The
Learning Company will not receive any of the proceeds of the offering of the
DECS made hereby and is not responsible for, and has not participated in, the
determination of the quantities of or prices for the DECS to be issued or the
determination or calculation of the Amount Receivable at Maturity. The Learning
Company is not involved with the administration or trading of the DECS.
UNCERTAINTY OF FEDERAL INCOME TAX CONSEQUENCES
No statutory, judicial or administrative authority directly addresses the
characterization contained herein of the DECS or instruments similar to the DECS
for U.S. federal income tax purposes. As a result, significant aspects of the
U.S. federal income tax consequences of an investment in the DECS are not
certain. No ruling is being requested from the Internal Revenue Service with
respect to the DECS and no assurance can be given that the Internal Revenue
Service will agree with the conclusions expressed under "Certain United States
Federal Income Tax Considerations."
RISK FACTORS RELATING TO THE LEARNING COMPANY
Investors in the DECS should carefully consider the information in the
prospectus supplement and prospectus of The Learning Company attached hereto,
including the information contained therein under "Risk Factors." The prospectus
supplement and prospectus of The Learning Company are attached hereto and
delivered to potential purchasers of the DECS together with this Prospectus
Supplement and accompanying Prospectus of Tribune solely for convenience of
reference. The prospectus supplement and prospectus of The Learning Company do
not constitute a part of this Prospectus Supplement or the accompanying
Prospectus of Tribune, nor are they incorporated by reference herein. Tribune
takes no responsibility for any information included in or omitted from the
prospectus supplement or prospectus of The Learning Company.
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TRIBUNE COMPANY
Tribune is a media company. Through its subsidiaries, the Company is
engaged in the publishing of newspapers, books, educational materials and
information in print and digital formats and the broadcasting, production and
syndication of information and entertainment in metropolitan areas in the United
States. The Company was founded in 1847 and incorporated in Illinois in 1861. As
a result of a corporate restructuring in 1968, the Company became a holding
company incorporated in Delaware.
The executive offices of the Company are located at 435 North Michigan
Avenue, Chicago, Illinois 60611, and its telephone number is (312) 222-9100.
THE LEARNING COMPANY, INC.
The Learning Company develops and publishes a broad range of high-quality
branded consumer software for PCs that educate across every age category, from
young children to adults. The Learning Company's primary emphasis is on
education and reference software, but it also offers a selection of lifestyle,
productivity and, to a lesser extent, entertainment products, both in North
America and internationally.
The Learning Company's educational products are principally sold under a
number of well-known brands, including The Learning Company, Minnesota
Educational Computing Corporation and Creative Wonders brands. The Learning
Company develops and markets educational products for children ages 18 months to
seven years in the popular "Reader Rabbit" family, which includes both
single-subject and multi-subject titles such as Reader Rabbit's Reading 1,
Reader Rabbit's Math 1, Reader Rabbit's Toddler, Reader Rabbit's Preschool,
Reader Rabbit's Kindergarten and Reader Rabbit's 1st Grade. The Learning Company
also publishes educational products for this age group based on the popular
Sesame Street and Madeline characters, among others. For children seven years
and older, The Learning Company develops and markets engaging educational
products such as the long-running "Trail" series, which includes The Oregon
Trail 3rd Edition, as well as products based on the popular The Baby-Sitters
Club books. During 1997, The Learning Company launched The American Girls
Premiere title, which is marketed towards girls in this age group.
The Learning Company's reference products include the "Compton's Home
Library" line which includes, among others, Compton's Interactive Encyclopedia
and Compton's 3D World Atlas Deluxe. In addition, The Learning Company offers a
line of medical reference products that includes BodyWorks, Home Medical Advisor
and Mosby's Medical Encyclopedia. The Learning Company's productivity line is
marketed under the SoftKey and the Creative Office brands. The Learning Company
also publishes a lower-priced line of products in box version under the Key and
Classics brands and a jewel-case only version under the SoftKey brand.
The Learning Company develops and markets several different lines of
software designed to teach children and adults such foreign languages as French,
German, Spanish and Japanese. These lines include, among others, the Learn to
Speak and Berlitz lines of products. The Learning Company also offers an
Internet filtering product, Cyber Patrol, which allows parents and teachers to
choose what content on the Internet is appropriate for children. As a result of
The Learning Company's recent acquisition of Mindscape, Inc. and related
entities in March 1998, The Learning Company also sells the popular Mavis Beacon
Teaches Typing, Chessmaster 5500, Print Master Platinum and The Complete
National Geographic.
The Learning Company distributes its products through retail channels,
including direct sales to computer electronics stores, office superstores, mass
merchandisers, discount warehouse stores and software specialty stores, which
control over 23,000 North American storefronts. The Learning Company also sells
its products directly to consumers through the mail, telemarketing and the
Internet, and also directly to schools. The Learning Company's international
sales are conducted from subsidiaries in Germany, France, Holland, Ireland, the
United Kingdom, Australia and Japan. The Learning Company also derives revenue
from licensing its products to original equipment manufacturers which bundle The
Learning Company's products for sale with computer systems or components and
through on-line offerings.
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On June 22, 1998, The Learning Company and Broderbund Software, Inc.
("Broderbund") announced that they had reached a definitive agreement to merge.
Under the terms of the agreement, The Learning Company will issue 0.80 shares of
Learning Common Stock for each outstanding share of Broderbund common stock.
Based on the number of shares of Broderbund common stock issued and outstanding
on May 31, 1998 (excluding stock options, warrants or other rights to acquire
Broderbund common stock), The Learning Company expects to issue approximately
16,800,000 shares of Learning Common Stock in the transaction. The closing of
the merger is subject to a number of conditions, and there can be no assurance
that the transaction will be completed on a timely basis or at all. Broderbund
develops, publishes and markets a broad line of interactive personal
productivity, entertainment and education software for use in the home, school
and small business markets. Broderbund's products include The Print Shop family
of personal productivity products, the Carmen Sandiego family of educational
products, the Family Tree Maker line of genealogy products, and the
entertainment products Myst and Riven.
The Learning Company's executive offices are located at One Athenaeum
Street, Cambridge, Massachusetts 02142. Its telephone number is (617) 494-1200,
and its Internet web site is located at http:/www.learningco.com. "The Learning
Company, Inc." and all of The Learning Company's logos and product names are
trademarks of The Learning Company.
For additional information about The Learning Company, including risks
associated with an investment in Learning Common Stock, see the prospectus
supplement and prospectus of The Learning Company attached hereto.
RELATIONSHIP BETWEEN TRIBUNE AND THE LEARNING COMPANY
Tribune acquired 5,210,796 shares of Learning Common Stock in connection
with Tribune's sale to The Learning Company on December 28, 1995 of two of its
wholly owned subsidiaries, Compton's New Media, Inc. and Compton's Learning
Company (the "Compton's Transaction"), and certain related transactions. As part
of the Compton's Transaction, Tribune and The Learning Company entered into a
Standstill Agreement, dated as of December 22, 1995 (the "Standstill
Agreement"), pursuant to which, among other things, Tribune generally agreed
that, for a period of five years, it would not (i) acquire more than 20% of The
Learning Company's outstanding voting securities, (ii) solicit proxies in
opposition to the recommendation of The Learning Company board of directors or
(iii) otherwise seek to obtain control of The Learning Company. The Learning
Company agreed in the Standstill Agreement that one individual designated by
Tribune would be added to The Learning Company board of directors. In addition,
for so long as Tribune owns not less than 5,000,000 shares of Learning Common
Stock, under the Standstill Agreement Tribune generally has the right to
designate a second person to The Learning Company's board of directors if The
Learning Company's board of directors is increased to 10 or more members.
However, if Tribune owns fewer than 2,800,000 shares of Learning Common Stock,
then Tribune's designated director will be removed from The Learning Company
board of directors. Pursuant to the Standstill Agreement, Mr. James C. Dowdle,
an Executive Vice President and director of Tribune, was appointed as a director
of The Learning Company. Mr. Dowdle resigned from The Learning Company board of
directors as of May 22, 1998. In addition, Tribune has waived its right to
designate a second director in connection with the election of three new
directors of The Learning Company in 1998. The issuance and sale of the DECS
will not be deemed a sale of the related shares of Learning Common Stock under
the Standstill Agreement until such shares have been delivered to the holders of
the DECS. Accordingly, until such time as the shares of Learning Common Stock
are actually delivered, Tribune retains the right under the Standstill Agreement
to have one designee appointed to The Learning Company board of directors.
In addition to the Standstill Agreement, Tribune and The Learning Company
entered into a Securities Resale Registration Rights Agreement dated as of
December 22, 1995 (the "Registration Rights Agreement"), pursuant to which The
Learning Company agreed to use its best efforts to file and to have declared
effective for three years a shelf registration statement for the resale of The
Learning Company securities held by Tribune.
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Neither the Standstill Agreement nor the Registration Rights Agreement will
be affected by the issuance and sale of the DECS.
Notwithstanding any of the foregoing, Tribune does not believe that its
holdings of Learning Common Stock or its right to designate a member on The
Learning Company board of directors affords it the power to control the
management or policies of The Learning Company. Moreover, Tribune is not
required to retain its present holdings of Learning Common Stock in connection
with the DECS and may sell or transfer some or all of such shares from time to
time. The Learning Company will not receive any proceeds from the sale of the
DECS and has no obligations with respect to the DECS, including any obligation
to take the needs of Tribune or the holders of the DECS into consideration for
any reason. The prospectus supplement and prospectus of The Learning Company are
attached hereto and delivered to potential purchasers of the DECS together with
this Prospectus Supplement and accompanying Prospectus of Tribune solely for
convenience of reference. The prospectus supplement and prospectus of The
Learning Company do not constitute a part of this Prospectus Supplement or the
accompanying Prospectus of Tribune, nor are they incorporated by reference
herein. Tribune takes no responsibility for any information included in or
omitted from the prospectus supplement or prospectus of The Learning Company.
In connection with the offering of the DECS, The Learning Company has
agreed to indemnify Tribune against certain liabilities, including liabilities
under the Securities Act.
PRICE RANGE OF LEARNING COMMON STOCK
The Learning Common Stock is listed on the NYSE under the symbol "TLC." The
Learning Company has not paid cash dividends on the Learning Common Stock and
has stated that it does not anticipate doing so in the foreseeable future.
The following sets forth the quarterly high and low sales prices for the
fiscal periods indicated.
<TABLE>
<CAPTION>
1996 HIGH LOW
---- ---- ---
<S> <C> <C>
First Quarter.......................................... $27.75 $ 13.375
Second Quarter......................................... 30.3125 17.25
Third Quarter.......................................... 22.375 15.25
Fourth Quarter......................................... 25.75 13.375
</TABLE>
<TABLE>
<CAPTION>
1997 HIGH LOW
---- ---- ---
<S> <C> <C>
First Quarter.......................................... $18.00 $ 5.75
Second Quarter......................................... 9.625 5.50
Third Quarter.......................................... 15.75 8.5625
Fourth Quarter......................................... 20.50 13.78125
</TABLE>
<TABLE>
<CAPTION>
1998 HIGH LOW
---- ---- ---
<S> <C> <C>
First Quarter.......................................... $25.75 $ 14.125
Second Quarter......................................... 30.00 22.625
Third Quarter (through July 20, 1998).................. 32.8125 28.25
</TABLE>
For a recent sales price of the Learning Common Stock, see the cover page
of this Prospectus Supplement. See also "Price Range of Common Stock and Related
Matters" in the prospectus supplement of The Learning Company attached hereto.
Tribune makes no representation as to the amounts of dividends, if any,
that The Learning Company will pay in the future. In any event, holders of the
DECS will not be entitled to receive any dividends that may be payable on the
Learning Common Stock until such time as Tribune, if it so elects, delivers
Learning Common Stock at Maturity of the DECS, and then only with respect to
dividends having a record date on or after the date of delivery of such Learning
Common Stock. See "Description of DECS."
S-10
<PAGE> 11
USE OF PROCEEDS
The net proceeds to be received by Tribune from the sale of the DECS,
estimated to be approximately $ (after estimated underwriting discounts
and offering expenses), will be used by Tribune for general corporate purposes.
RATIOS OF EARNINGS TO FIXED CHARGES
The Company's Ratios of Earnings to Fixed Charges for each of the periods
indicated are as follows:
<TABLE>
<CAPTION>
FIRST
QUARTER
ENDED
MARCH FISCAL YEAR ENDED DECEMBER
----------- --------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges......... 5.6 6.1 6.9 7.1 8.7 8.2 6.4
</TABLE>
For purposes of computing the foregoing ratios: (i) Earnings consist of
income from continuing operations plus income tax expense and losses on equity
investments plus Fixed Charges (including amortization of capitalized interest
but excluding capitalized interest and interest related to the Company's
guarantees of the debt of its Employee Stock Ownership Plan); and (ii) Fixed
Charges consist of interest, whether expensed or capitalized, the portion of
rental payments on operating leases estimated to represent an interest component
and interest related to the Company's guarantees of the debt of its Employee
Stock Ownership Plan.
S-11
<PAGE> 12
SELECTED HISTORICAL AND FINANCIAL DATA OF TRIBUNE
The selected financial information below should be read in conjunction with
the historical consolidated financial statements and notes thereto incorporated
by reference in Tribune Company's Annual Report on Form 10-K for the year ended
December 28, 1997. See "Incorporation of Certain Documents by Reference" in the
accompanying Prospectus. Selected historical data for each of the five years in
the period ended December 28, 1997 have been derived from Tribune's audited
financial statements. The selected financial information as of and for the
quarters ended March 29, 1998 and March 30, 1997 is derived from the unaudited
condensed consolidated financial statements of Tribune, have been prepared on
the same basis as Tribune's audited consolidated financial statements and, in
the opinion of management, contain all normal recurring adjustments necessary
for a fair presentation of the financial position and results of operations for
these periods. Results of operations for interim periods are not necessarily
indicative of the results to be expected for the full year.
<TABLE>
<CAPTION>
FIRST QUARTER
ENDED
MARCH 29 MARCH 30 FISCAL YEAR ENDED DECEMBER
-------- -------- ------------------------------------------
1998 1997 1997 1996 1995 1994 1993
FOR THE PERIOD: ---- ---- ---- ---- ---- ---- ----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Operating revenues:
Publishing...................... $ 373 $ 355 $1,437 $1,336 $1,312 $1,246 $1,163
Broadcasting & Entertainment.... 240 201 1,057 877 829 764 727
Education....................... 60 38 226 192 103 102 21
------ ------ ------ ------ ------ ------ ------
Total operating revenues.......... 673 594 2,720 2,405 2,244 2,112 1,911
Operating profit:
Publishing...................... 99 97 354 291 272 291 252
Broadcasting & Entertainment.... 54 39 286 204 171 138 128
Education....................... (1) -- 36 39 5 3 2
Corporate expenses.............. (8) (8) (34) (31) (30) (26) (24)
------ ------ ------ ------ ------ ------ ------
Total operating profit............ 144 128 642 503 418 406 358
Net loss on equity investments.... (14) (12) (35) (13) (13) (10) (2)
Asset sales, net of write-downs... 7 -- 112 -- 15 -- --
Net interest expense.............. (20) (6) (60) (16) (7) (5) (10)
Income from continuing
operations...................... $ 70 $ 65 $ 394 $ 283 $ 245 $ 233 $ 205
AT THE END OF PERIOD:
Total assets...................... $4,841 $4,752 $4,778 $3,701 $3,288 $2,786 $2,536
Long-term debt.................... $1,385 $1,769 $1,521 $ 980 $ 757 $ 411 $ 511
Shareholders' equity.............. $1,936 $1,530 $1,826 $1,540 $1,380 $1,333 $1,096
</TABLE>
S-12
<PAGE> 13
DESCRIPTION OF DECS
The following description of the particular terms of the DECS supplements,
and to the extent inconsistent therewith replaces, the description of the
general terms and provisions of Debt Securities set forth in the accompanying
Prospectus of Tribune, to which description reference is hereby made. See
"Description of Debt Securities" in the accompanying Prospectus.
GENERAL
The DECS are one series of Debt Securities (as defined in the Prospectus of
Tribune accompanying this Prospectus Supplement), to be issued under an
Indenture dated as of January 1, 1997 (as supplemented from time to time, the
"Indenture," which term includes the supplemental indenture setting forth the
terms of the DECS pursuant to such indenture), between Tribune and Bank of
Montreal Trust Company, as trustee (the "Trustee"). All references herein to
"Debt Securities" shall refer to debt securities issued under the Indenture. The
following summary of certain provisions of the Indenture does not purport to be
complete and is qualified in its entirety by reference to the Indenture, a copy
of which is filed as an exhibit to the Registration Statement to which this
Prospectus Supplement relates.
The DECS will be unsecured and will rank on a parity with all other
unsecured and unsubordinated indebtedness of Tribune. The aggregate number of
DECS to be issued will be 4,600,000 plus such additional number of DECS as may
be issued pursuant to the over-allotment option granted by Tribune to the
Underwriter (see "Supplemental Plan of Distribution"). The DECS will mature on
August 15, 2001 (including by acceleration or otherwise, "Maturity"). The
Indenture does not limit the amount of Debt Securities which may be issued
thereunder, and in the future, Tribune may issue additional Debt Securities or
other securities with terms similar to those of the DECS.
Each DECS, which will be issued with a principal amount of $ (the
"Initial Price"), will bear interest at the annual rate of % of the
principal amount per annum (or approximately $ per annum) from the date of
original issuance, or from the most recent Interest Payment Date (as defined
below) to which interest has been paid or provided for, until the principal
amount thereof is exchanged at Maturity pursuant to the terms of the DECS.
Interest on the DECS will be payable quarterly in arrears on February 15, May
15, August 15 and November 15, commencing November 15, 1998 (each, an "Interest
Payment Date"), to the persons in whose names the DECS are registered at the
close of business on February 1, May 1, August 1 and November 1 immediately
preceding such Interest Payment Date, provided that interest payable at Maturity
shall be payable to the person to whom the principal is payable. Interest on the
DECS will be computed on the basis of a 360-day year of twelve 30-day months. If
an Interest Payment Date falls on a day that is not a Business Day (as defined
below), the interest payment to be made on such Interest Payment Date will be
made on the next succeeding Business Day with the same force and effect as if
made on such Interest Payment Date, and no additional interest will accrue as a
result of such delayed payment.
At Maturity (including as a result of acceleration or otherwise), the
principal amount of each DECS will be mandatorily exchanged by Tribune into a
number of shares of Learning Common Stock (or, at Tribune's option, the
equivalent amount of cash) at the Exchange Rate (as defined below). The
"Exchange Rate" is equal to (a) if the Maturity Price (as defined below) is
greater than or equal to $ (the "Threshold Appreciation Price"),
shares of Learning Common Stock per DECS, (b) if the Maturity Price is
less than the Threshold Appreciation Price but is greater than the Initial
Price, a fraction equal to the Initial Price divided by the Maturity Price of
one share of Learning Common Stock per DECS and (c) if the Maturity Price is
less than or equal to the Initial Price, one share of Learning Common Stock per
DECS. The Exchange Rate is subject to adjustment as provided in "-- Dilution
Adjustments; Other Adjustment Events." THE VALUE OF THE LEARNING COMMON STOCK TO
BE RECEIVED BY HOLDERS OF THE DECS (OR, AS DISCUSSED BELOW, THE CASH EQUIVALENT
TO BE RECEIVED IN LIEU OF SUCH SHARES) AT MATURITY WILL NOT NECESSARILY EQUAL
THE PRINCIPAL AMOUNT OF SUCH DECS. The ratios of shares of Learning Common Stock
per DECS specified in clauses (a), (b) and (c) above of the Exchange Rate
definition are hereinafter referred to as the "Share Components." Any shares of
Learning Common Stock delivered by Tribune to the holders of the DECS that
S-13
<PAGE> 14
are not affiliated with The Learning Company will be free of any transfer
restrictions, and the holders of the DECS will be responsible for the payment of
any and all brokerage costs upon the subsequent sale of such shares. No
fractional shares of Learning Common Stock will be issued at Maturity as
provided under "-- Fractional Shares" below. Tribune may at its option deliver
cash in lieu of delivering shares of Learning Common Stock at Maturity. The
amount of cash deliverable in respect of each DECS shall be equal to the product
of the number of shares of Learning Common Stock otherwise deliverable in
respect of such DECS on the date of Maturity, multiplied by the Maturity Price.
In the event Tribune elects to deliver cash in lieu of shares of Learning Common
Stock at Maturity, it will be obligated pursuant to the Indenture to deliver
cash to all holders of DECS. On or prior to the fourth Business Day prior to
August 15, 2001, Tribune will notify the Trustee, which in turn will notify The
Depository Trust Company, and publish a notice in a daily newspaper of national
circulation stating whether the principal amount of each DECS will be exchanged
for shares of Learning Common Stock or cash.
Notwithstanding the foregoing, (i) in the case of certain dilution events,
the Exchange Rate will be subject to adjustment and (ii) in the case of certain
adjustment events, the consideration received by holders of the DECS at Maturity
will be shares of Learning Common Stock, other securities and/or cash. See
"-- Dilution Adjustments; Other Adjustment Events" below.
The "Maturity Price" is defined as the average Closing Price per share of
Learning Common Stock on the 20 Trading Days immediately prior to (but not
including) the date of Maturity; provided, however, that if there are not 20
Trading Days for the Learning Common Stock occurring later than the 60th
calendar day immediately prior to, but not including, the date of Maturity,
"Maturity Price" will be defined as the market value per share of Learning
Common Stock as of Maturity as determined by a nationally recognized investment
banking firm retained for such purpose by Tribune. The Maturity Price is subject
to adjustment as provided in "-- Dilution Adjustments; Other Adjustment Events."
The "Closing Price" of any security on any date of determination means (i) the
closing sale price (or, if no closing price is reported, the last reported sale
price) of such security (regular way) on the NYSE on such date, (ii) if such
security is not listed for trading on the NYSE on any such date, as reported in
the composite transactions for the principal United States securities exchange
on which such security is so listed, (iii) if such security is not so listed on
a United States national or regional securities exchange, as reported by the
NASDAQ Stock Market, (iv) if such security is not so reported, the last quoted
bid price for such security in the over-the-counter market as reported by the
National Quotation Bureau or similar organization, or (v) if such security is
not so quoted, the average of the mid-point of the last bid and ask prices for
such security from each of at least three nationally recognized independent
investment banking firms selected by Tribune for such purpose. A "Trading Day"
is defined as a Business Day on which the security, the Closing Price of which
is being determined, (A) is not suspended from trading on any national or
regional securities exchange or association or over-the-counter market at the
close of business and (B) has traded at least once on the national or regional
securities exchange or association or over-the-counter market that is the
primary market for the trading of such security. "Business Day" means any day
that is not a Saturday, a Sunday or a day on which the NYSE, banking
institutions or trust companies in The City of New York are authorized or
obligated by law or executive order to close.
For illustrative purposes only, the following chart shows the number of
shares of Learning Common Stock or the amount of cash that a holder of DECS
would receive for each DECS at various Maturity Prices. The table assumes that
there will be no adjustments to the Exchange Rate described under " -- Dilution
Adjustments; Other Adjustment Events" below. There can be no assurance that the
Maturity Price will be within the range set forth below. Given the Initial Price
of $ per DECS and the Threshold Appreciation Price of $ , a
DECS holder would receive at Maturity the following number of shares of Learning
Common Stock or amount of cash (if Tribune elects to pay the DECS in cash):
<TABLE>
<CAPTION>
MATURITY PRICE OF NUMBER OF SHARES
LEARNING COMMON OF LEARNING AMOUNT
STOCK COMMON STOCK OF CASH
----------------- ---------------- -------
<S> <C> <C>
$ $
</TABLE>
S-14
<PAGE> 15
As the foregoing chart illustrates, if at Maturity, the Maturity Price is
greater than or equal to $ , Tribune will be obligated to deliver
shares of Learning Common Stock per DECS, resulting in Tribune receiving
% of the appreciation in market value above $ and the DECS holder
receiving % of the appreciation in market value above $ . If
at Maturity, the Maturity Price is greater than $ and less than
$ , Tribune will be obligated to deliver only a fraction of a share of
Learning Common Stock having a market value equal to $ , resulting in
Tribune retaining all of the appreciation in the market value of the Learning
Common Stock. If at Maturity, the Maturity Price is less than or equal to
$ , Tribune will be obligated to deliver one share of Learning Common
Stock per DECS, regardless of the market price of such shares, resulting in the
DECS holder realizing the entire loss on the decline in market value of Learning
Common Stock.
Interest on the DECS will be payable, and delivery of Learning Common Stock
(or, at the option of Tribune, its cash equivalent and/or such other
consideration as permitted or required as described below) in exchange for the
DECS at Maturity will be made upon surrender of such DECS, at the office or
agency of Tribune maintained for such purposes; provided, however, that payment
of interest may be made at the option of Tribune by check mailed to the persons
in whose names the DECS are registered at the close of business on the February
1, May 1, August 1 and November 1 immediately preceding the relevant Interest
Payment Date. See " -- Book-Entry System." Initially such office will be the
principal corporate trust office of the Trustee in New York City, which is
located at 77 Water Street, New York, New York 10005.
The DECS will be transferable at any time or from time to time at the
aforementioned office. No service charge will be made to the holder for any such
transfer except for any tax or governmental charge incidental thereto.
The Indenture does not contain any restriction on the ability of Tribune to
sell, pledge or otherwise convey all or any portion of any Learning Common Stock
held by it or its subsidiaries, and no such shares of Learning Common Stock will
be pledged or otherwise held in escrow for use at Maturity of the DECS.
Consequently, in the event of a bankruptcy, insolvency or liquidation of Tribune
or its subsidiaries, the shares of Learning Common Stock, if any, owned by
Tribune or its subsidiaries will be subject to the claims of the creditors of
Tribune or its subsidiaries, respectively. In addition, as described herein,
Tribune will have the option, exercisable in its sole discretion, to satisfy its
obligations pursuant to the exchange for the principal amount of each DECS at
Maturity by delivering to holders of the DECS either the specified number of
shares of Learning Common Stock or cash in an amount equal to the product of
such number of shares multiplied by the Maturity Price. As a result, there can
be no assurance that Tribune will elect at Maturity to deliver Learning Common
Stock or, if it so elects, that it will use all or any portion of its holdings
of Learning Common Stock at that time, if any, to make such delivery. Holders of
the DECS will not be entitled to any rights with respect to Learning Common
Stock (including without limitation voting rights and rights to receive any
dividends or other distributions in respect thereof) until such time, if any, as
Tribune shall have delivered shares of Learning Common Stock to holders of the
DECS at Maturity thereof and the applicable record date, if any, for the
exercise of such rights occurs after such date.
DILUTION ADJUSTMENTS; OTHER ADJUSTMENT EVENTS
The Exchange Rate is subject to adjustment if The Learning Company shall
(i) pay a stock dividend or make a distribution, in each case, with respect to
the Learning Common Stock in shares of such stock, (ii) subdivide or split the
outstanding shares of Learning Common Stock, (iii) combine its outstanding
shares of Learning Common Stock into a smaller number of shares, (iv) issue by
reclassification (other than a reclassification pursuant to clause (ii), (iii),
(iv) or (v) of the definition of Adjustment Event below) of its shares of
Learning Common Stock any shares of common stock of The Learning Company, or (v)
issue rights or warrants to all holders of Learning Common Stock entitling them
to subscribe for or purchase shares of Learning Common Stock (other than rights
to purchase Learning Common Stock pursuant to a plan for the reinvestment of
dividends) at a price per share less than the Market Price (as defined below) of
the Learning Common Stock on the Business Day next following the record date for
the determination of holders of shares of Learning Common Stock entitled to
receive such rights or warrants.
S-15
<PAGE> 16
In the case of the events referred to in clauses (i), (ii), (iii) and (iv)
above, the Exchange Rate shall be adjusted by adjusting each of the Share
Components of the Exchange Rate in effect immediately prior to such event so
that a holder of any DECS shall be entitled to receive, upon exchange of the
principal amount of such DECS at Maturity, the number of shares of Learning
Common Stock (or, in the case of a reclassification referred to in clause (iv)
above, the number of shares of other common stock of The Learning Company issued
pursuant thereto) which such holder of such DECS would have owned or been
entitled to receive immediately following such event had such DECS been
exchanged immediately prior to such event or any record date with respect
thereto.
In the case of the event referred to in clause (v) above, the Exchange Rate
shall be adjusted by multiplying each of the Share Components of the Exchange
Rate in effect on the record date for the determination of holders of Learning
Common Stock entitled to receive the rights or warrants referred to in clause
(v) above by a fraction of which the numerator shall be (A) the number of shares
of Learning Common Stock outstanding on such record date plus (B) the number of
additional shares of Learning Common Stock offered for subscription or purchase
pursuant to such rights or warrants, and of which the denominator shall be (x)
the number of shares of Learning Common Stock outstanding on such record date
plus (y) the number of additional shares of Learning Common Stock which the
aggregate offering price of the total number of shares of Learning Common Stock
so offered for subscription or purchase pursuant to such rights or warrants
would purchase at the Market Price of the Learning Common Stock on the Business
Day next following such record date, which number of additional shares shall be
determined by multiplying such total number of shares by the exercise price of
such rights or warrants and dividing the product so obtained by such Market
Price of Learning Common Stock. To the extent that such rights or warrants
expire prior to the Maturity of the DECS and shares of Learning Common Stock are
not delivered pursuant to such rights or warrants prior to such expiration, the
Exchange Rate shall be readjusted to the Exchange Rate which would then be in
effect had such adjustments for the issuance of such rights or warrants been
made upon the basis of delivery of only the number of shares of Learning Common
Stock actually delivered pursuant to such rights or warrants. Any shares of
Learning Common Stock issuable in payment of a dividend shall be deemed to have
been issued immediately prior to the close of business on the record date for
such dividend for purposes of calculating the number of outstanding shares of
Learning Common Stock under this paragraph.
"Market Price" means, as of any date of determination, the average Closing
Price per share of Learning Common Stock for the 20 Trading Days immediately
prior to the date of determination; provided, however, that if there are not 20
Trading Days for the Learning Common Stock occurring later than the 60th
calendar day immediately prior to, but not including, such date, the Market
Price shall be determined as the market value per share of Learning Common Stock
as of such date as determined by a nationally recognized investment banking firm
retained for such purpose by Tribune.
All adjustments to the Exchange Rate will be calculated to the nearest
1/10,000th of a share of Learning Common Stock (or if there is not a nearest
1/10,000th of a share of Learning Common Stock to the next lower 1/10,000th of a
share of Learning Common Stock). No adjustment in the Exchange Rate shall be
required unless such adjustment would require an increase or decrease of at
least one percent therein; provided, however, that any adjustments which by
reason of the foregoing are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.
If an adjustment is made to the Exchange Rate pursuant to clauses (i),
(ii), (iii), (iv) or (v) above, an adjustment shall also be made to the Maturity
Price as such term is used to determine which of clauses (a), (b) or (c) of the
Exchange Rate definition will apply at Maturity. The required adjustment to the
Maturity Price shall be made at Maturity by multiplying the original Maturity
Price by the cumulative number or fraction determined pursuant to the Exchange
Rate adjustment procedure described above. In the case of a reclassification of
any shares of Learning Common Stock into any common stock of The Learning
Company other than Learning Common Stock, such common stock shall be deemed to
be shares of Learning Common Stock solely to determine the Maturity Price and to
apply the Exchange Rate at Maturity. Each such adjustment to the Exchange Rate
and the Maturity Price shall be made successively.
S-16
<PAGE> 17
In the event of (i) any dividend or distribution by The Learning Company to
all holders of Learning Common Stock of evidences of its indebtedness or other
assets (excluding (1) dividends or distributions referred to in clause (i) of
the first paragraph under this caption "-- Dilution Adjustments; Other
Adjustment Events," (2) any common shares issued pursuant to a reclassification
referred to in clause (iv) of such paragraph and (3) Ordinary Cash Dividends (as
defined below)) or any issuance by The Learning Company to all holders of
Learning Common Stock of rights or warrants (other than rights or warrants
referred to in clause (v) of the first paragraph under this caption "-- Dilution
Adjustments; Other Adjustment Events"), (ii) any consolidation or merger of The
Learning Company with or into another entity (other than a merger or
consolidation in which The Learning Company is the continuing corporation and in
which the Learning Common Stock outstanding immediately prior to the merger or
consolidation are not exchanged for cash, securities or other property of The
Learning Company or another corporation), (iii) any sale, transfer, lease or
conveyance to another corporation of the property of The Learning Company as an
entirety or substantially as an entirety, (iv) any statutory exchange of
securities of The Learning Company with another corporation (other than in
connection with a merger or acquisition) or (v) any liquidation, dissolution or
winding up of The Learning Company (any such event, an "Adjustment Event"), each
holder of a DECS will receive at Maturity, in lieu of or (in the case of an
Adjustment Event described in clause (i) above) in addition to, shares of
Learning Common Stock as described above, cash in an amount equal to (A) if the
Maturity Price is greater than or equal to the Threshold Appreciation Price,
multiplied by the Transaction Value (as defined below), (B) if the
Maturity Price is less than the Threshold Appreciation Price but is greater than
the Initial Price, the product of (x) the Initial Price divided by the Maturity
Price multiplied by (y) the Transaction Value and (C) if the Maturity Price is
less than or equal to the Initial Price, the Transaction Value. Following an
Adjustment Event, the Maturity Price, as such term is used in this paragraph and
throughout the definition of Exchange Rate, shall be deemed to equal (A) if
shares of Learning Common Stock are outstanding at Maturity, the Maturity Price
of the shares of Learning Common Stock, as adjusted pursuant to the method set
forth in the preceding paragraph, plus the Transaction Value or (B) if shares of
Learning Common Stock are not outstanding at Maturity (or if the Learning Common
Stock, as a result of an Adjustment Event, is not (i) listed on a United States
national securities exchange, (ii) reported on a United States national
securities system subject to last sale reporting or (iii) traded in the
over-the-counter market and reported on the National Quotation Bureau or similar
organization, and for which bid and ask prices are not available from at least
three nationally recognized investment banking firms), the Transaction Value.
Notwithstanding the foregoing, with respect to any securities received in
an Adjustment Event that (A) are (i) listed on a United States national
securities exchange, (ii) reported on a United States national securities system
subject to last sale reporting, (iii) traded in the over-the-counter market and
reported on the National Quotation Bureau or similar organization or (iv) for
which bid and ask prices are available from at least three nationally recognized
investment banking firms and (B) are either (x) perpetual equity securities or
(y) non-perpetual equity or debt securities with a stated maturity after the
stated maturity of the DECS ("Reported Securities"), Tribune may, at its option,
in lieu of delivering the amount of cash deliverable in respect of Reported
Securities received in an Adjustment Event, as determined in accordance with the
previous paragraph, deliver a number of such Reported Securities with a value
equal to such cash amount, as determined in accordance with clause (ii) of the
definition of Transaction Value, as applicable; provided, however, that (i) if
such option is exercised, Tribune shall deliver Reported Securities in respect
of all, but not less than all, cash amounts that would otherwise be deliverable
in respect of Reported Securities received in an Adjustment Event, (ii) Tribune
may not exercise such option if Tribune has elected to deliver cash in lieu of
Learning Common Stock, if any, deliverable upon Maturity or if such Reported
Securities have not yet been delivered to the holders entitled thereto following
such Adjustment Event or any record date with respect thereto, and (iii) subject
to clause (ii) of this proviso, Tribune must exercise such option if Tribune
does not elect to deliver cash in lieu of Learning Common Stock, if any,
deliverable upon Maturity. If Tribune elects to deliver Reported Securities,
each holder of a DECS will be responsible for the payment of any and all
brokerage and other transaction costs upon the sale of such Reported Securities.
If, following any Adjustment Event, any Reported Security ceases to qualify as a
Reported Security, then (x) Tribune may no longer elect to deliver such Reported
Security in lieu of an equivalent amount of cash and (y) notwithstanding clause
(ii) of the definition of Transaction Value, the Transaction Value of such
Reported Security shall mean the fair
S-17
<PAGE> 18
market value of such Reported Security on the date such security ceases to
qualify as a Reported Security, as determined by a nationally recognized
investment banking firm retained for this purpose by Tribune.
The amount of cash and/or the kind and amount of securities into which the
DECS shall be exchangeable after an Adjustment Event shall be subject to
adjustment following such Adjustment Event in the same manner and upon the
occurrence of the same type of events as described under this caption
"-- Dilution Adjustments; Other Adjustment Events" with respect to Learning
Common Stock and The Learning Company.
For purposes of the foregoing, the term "Ordinary Cash Dividend" means,
with respect to any consecutive 365-day period, any dividend with respect to
Learning Common Stock paid in cash to the extent that the amount of such
dividend, together with the aggregate amount of all other dividends on Learning
Common Stock paid in cash during such 365-day period, does not exceed on a
per-share basis 10% of the average of the Closing Prices of Learning Common
Stock over such 365-day period.
The term "Transaction Value" means (i) for any cash received in any
Adjustment Event, the amount of cash received per share of Learning Common
Stock, (ii) for any Reported Securities received in any Adjustment Event, an
amount equal to (x) the average Closing Price per security of such Reported
Securities for the 20 Trading Days immediately prior to Maturity multiplied by
(y) the number of such Reported Securities (as adjusted pursuant to the second
preceding paragraph) received per share of Learning Common Stock and (iii) for
any property received in any Adjustment Event other than cash or such Reported
Securities, an amount equal to the fair market value of the property received
per share of Learning Common Stock on the date such property is received, as
determined by a nationally recognized investment banking firm retained for this
purpose by Tribune; provided, however, that in the case of clause (ii), (x) with
respect to securities that are Reported Securities by virtue of only clause
(A)(iv) of the definition of Reported Securities in the third preceding
paragraph, Transaction Value with respect to any such Reported Security means
the average of the mid-point of the last bid and ask prices for such Reported
Security as of Maturity from each of at least three nationally recognized
investment banking firms retained for such purpose by Tribune multiplied by the
number of such Reported Securities (as adjusted pursuant to the method set forth
in the second preceding paragraph) received per share of Learning Common Stock
and (y) with respect to all other Reported Securities, if there are not 20
Trading Days for any particular Reported Security occurring later than the 60th
calendar day immediately prior to, but not including, the date of Maturity,
Transaction Value with respect to such Reported Security means the market value
per security of such Reported Security as of Maturity as determined by a
nationally recognized investment banking firm retained for such purpose by
Tribune multiplied by the number of such Reported Securities (as adjusted
pursuant to the method set forth in the second preceding paragraph) received per
share of Learning Common Stock. For purposes of calculating the Transaction
Value, any cash, Reported Securities or other property receivable in any
Adjustment Event shall be deemed to have been received immediately prior to the
close of business on the record date for such Adjustment Event or, if there is
no record date for such Adjustment Event, immediately prior to the close of
business on the effective date of such Adjustment Event.
No adjustments will be made for certain other events, such as offerings of
Learning Common Stock by The Learning Company for cash or in connection with
acquisitions.
Tribune is required, within ten Business Days following the occurrence of
an event that requires an adjustment to the Exchange Rate or the occurrence of
an Adjustment Event (or, in either case, if Tribune is not aware of such
occurrence, as soon as practicable after becoming so aware), to provide written
notice to the Trustee and to each holder of DECS of the occurrence of such
event, including a statement in reasonable detail setting forth the method by
which the adjustment to the Exchange Rate or change in the consideration to be
received by holders of DECS following the Adjustment Event was determined and
setting forth the revised Exchange Rate or consideration, as the case may be;
provided, however, that in respect of any adjustment to the Maturity Price, such
notice will only disclose the factor by which the Maturity Price is to be
multiplied in order to determine which clause of the Exchange Rate definition
will apply at Maturity.
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<PAGE> 19
FRACTIONAL SHARES
No fractional shares of Learning Common Stock or Reported Securities will
be issued if Tribune exchanges the DECS for shares of Learning Common Stock or
Reported Securities. If more than one DECS is surrendered for exchange at one
time by the same holder, the number of full shares of Learning Common Stock or
Reported Securities which shall be delivered upon exchange, in whole or in part,
as the case may be, shall be computed on the basis of the aggregate number of
DECS so surrendered at Maturity. In lieu of any fractional share of Learning
Common Stock or other security otherwise issuable in respect of all DECS of any
holder which are exchanged at Maturity, such holder shall be entitled to receive
an amount in cash equal to the value of such fractional share of Learning Common
Stock or security at the Maturity Price.
DELIVERY OF SECURITIES UPON MATURITY
All Learning Common Stock and Reported Securities deliverable to holders of
the DECS upon Maturity will be delivered to such holders, whenever practicable,
in such manner (such as by book-entry transfer) so as to assure same-day
transfer of such securities to such holders and otherwise in the manner
customary at such time for delivery of such securities and securities of the
same type. Notwithstanding the foregoing, it may not be possible under market
practices prevailing at the Maturity of the DECS to transfer Learning Common
Stock and/or Reported Securities so as to assure same-day transfer of such
securities to holders of the DECS. Accordingly, such holders of the DECS may
receive all or a portion of the Learning Common Stock and/or Reported Securities
into which such DECS are exchangeable after the date of Maturity.
REDEMPTION
The DECS are not subject to redemption prior to Maturity and do not contain
sinking fund or other mandatory redemption provisions. The DECS are not subject
to payment prior to the date of Maturity at the option of the holder.
BOOK-ENTRY SYSTEM
The Depository Trust Company ("DTC") will act as securities depository for
the DECS. The DECS will be issued as fully-registered securities registered in
the name of Cede & Co. (DTC's partnership nominee). One fully-registered DECS
certificate will be issued for the DECS, in the aggregate principal amount of
such issue, and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC holds securities that its participants ("Participants") deposit
with DTC. DTC also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations. DTC is owned by a number
of its Direct Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as
securities brokers and dealers, banks, and trust companies that clear through or
maintain a custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the Securities and Exchange Commission.
Purchases of the DECS under the DTC system must be made by or through
Direct Participants, which will receive a credit for the DECS on DTC's records.
The ownership interest of each actual purchaser of each DECS ("Beneficial
Owner") is in turn to be recorded on the Direct and Indirect Participants'
records. Beneficial Owners will not receive written confirmation from DTC of
their purchase, but Beneficial Owners are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participant through
which the Beneficial Owner
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<PAGE> 20
entered into the transaction. Transfers of ownership interests in the DECS are
to be accomplished by entries made on the books of Participants acting on behalf
of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in the DECS, except in the event that use
of the book-entry system for the DECS is discontinued.
To facilitate subsequent transfers, all DECS deposited by Participants with
DTC are registered in the name of DTC's partnership nominee, Cede & Co. The
deposit of the DECS with DTC and their registration in the name of Cede & Co.
effect no change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the DECS; DTC's records reflect only the identity of the
Direct Participants to whose accounts such DECS are credited, which may or may
not be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to the DECS.
Under its usual procedures, DTC mails an Omnibus Proxy to the issuer of
securities as soon as possible after the record date. The Omnibus Proxy assigns
Cede & Co.'s consenting or voting rights to those Direct Participants to whose
accounts the securities are credited on the record date (identified in a listing
attached to the Omnibus Proxy).
Principal and interest payments on the DECS will be made to Cede & Co., as
nominee of DTC. DTC's practice is to credit Direct Participants' accounts, upon
DTC's receipt of funds and corresponding detail information from Tribune, on the
payable date in accordance with their respective holdings shown on DTC's
records. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the accounts of customers in bearer form or registered in "street
name," and will be the responsibility of such Participant and not of DTC, the
Underwriter, or Tribune, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of principal and interest to Cede &
Co. is the responsibility of Tribune, disbursement of such payments to Direct
Participants shall be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be the responsibility of Direct and
Indirect Participants.
DTC may discontinue providing its services as securities depository with
respect to the DECS at any time by giving reasonable notice to Tribune. Under
such circumstances, in the event that a successor securities depository is not
obtained, DECS certificates are required to be printed and delivered.
Tribune may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor securities depository). In that event, DECS
certificates will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that Tribune believes to be reliable, but Tribune
takes no responsibility for the accuracy thereof.
SAME-DAY FUNDS SETTLEMENT SYSTEM AND PAYMENT
Settlement for the DECS will be made by the Underwriter in immediately
available funds. All payments of principal and interest on the DECS will be made
by Tribune in immediately available funds.
The DECS will trade in DTC's Same-Day Funds Settlement System until
Maturity, and secondary market trading activity in the DECS will therefore be
required by DTC to settle in immediately available funds. No assurance can be
given as to the effect, if any, of settlement in immediately available funds on
trading activity in the DECS.
REGARDING THE TRUSTEE
Tribune maintains banking relationships in the ordinary course of business
with the Trustee.
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<PAGE> 21
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a discussion of certain of the material U.S. federal
income tax consequences that may be relevant to a citizen or resident of the
United States, a corporation, partnership or other entity created or organized
under the laws of the United States, an estate the income of which is subject to
U.S. federal income taxation regardless of its source and a trust that is a
United States person for U.S. federal income tax purposes (any of the foregoing,
a "U.S. person") who is the beneficial owner of a DECS (a "U.S. Holder"). All
references to "holders" (including U.S. Holders) are to beneficial owners of the
DECS. This summary is based on U.S. federal income tax laws, regulations,
rulings and decisions in effect as of the date of this Prospectus Supplement,
all of which are subject to change at any time (possibly with retroactive
effect). As the law is technical and complex, the discussion below necessarily
represents only a general summary.
This summary addresses the U.S. federal income tax consequences to holders
who are initial holders of the DECS, who purchase the DECS at par and who will
hold the DECS and, if applicable, the Learning Common Stock as capital assets.
This summary does not address all aspects of federal income taxation that may be
relevant to a particular holder in light of his or its individual investment
circumstances or to certain types of holders subject to special treatment under
the U.S. federal income tax laws, such as dealers in securities or foreign
currency, financial institutions, insurance companies, tax-exempt organizations
and taxpayers holding the DECS as part of a "straddle," "hedge," "conversion
transaction," "synthetic security," or other integrated investment. Moreover,
the effect of any applicable state, local or foreign tax laws is not discussed.
No statutory, judicial or administrative authority directly addresses the
characterization of the DECS or instruments similar to the DECS for U.S. federal
income tax purposes. As a result, significant aspects of the U.S. federal income
tax consequences of an investment in the DECS are not certain. No ruling is
being requested from the Internal Revenue Service (the "IRS") with respect to
the DECS and no assurance can be given that the IRS will agree with the
conclusions expressed herein. ACCORDINGLY, A PROSPECTIVE INVESTOR (INCLUDING A
TAX-EXEMPT INVESTOR) IN THE DECS SHOULD CONSULT ITS TAX ADVISOR IN DETERMINING
THE TAX CONSEQUENCES OF AN INVESTMENT IN THE DECS, INCLUDING THE APPLICATION OF
STATE, LOCAL OR OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR
OTHER TAX LAWS.
Pursuant to the terms of the Indenture, the Company and every holder of a
DECS will be obligated (in the absence of an administrative determination or
judicial ruling to the contrary) to characterize the DECS for all tax purposes
as a forward purchase contract to purchase Learning Common Stock at Maturity
(including as a result of acceleration or otherwise). Under the terms of this
forward purchase contact: (i) at the time of issuance of the DECS the holder
deposits irrevocably with the Company a fixed amount of cash equal to the
purchase price of the DECS to assure the fulfillment of the holder's purchase
obligation described in clause (iii) below, which deposit will unconditionally
and irrevocably be applied at Maturity to satisfy such obligation; (ii) until
Maturity the Company will be obligated to pay interest on such deposit at a rate
equal to the stated rate of interest on the DECS as compensation to the holder
for the Company's use of such cash deposit during the term of the DECS; and
(iii) at Maturity such cash deposit unconditionally and irrevocably will be
applied by the Company in full satisfaction of the holder's obligation under the
forward purchase contract, and the Company will deliver to the holder the number
of shares of Learning Common Stock that the holder is entitled to receive at
that time pursuant to the terms of the DECS (subject to the Company's right to
deliver cash in lieu of the Learning Common Stock). (Prospective investors
should note that cash proceeds of this offering will not be segregated by the
Company during the term of the DECS, but instead will be commingled with the
Company's other assets and applied in a manner consistent with the "Use of
Proceeds" discussion above.)
Consistent with the above characterization, (i) amounts paid to the Company
in respect of the original issue of a DECS will be treated as allocable in their
entirety to the amount of the cash deposit attributable to such DECS; and (ii)
amounts denominated as interest that are payable with respect to the DECS will
be characterized as interest payable on the amount of such deposit, includible
annually in the income of a U.S. Holder as interest income in accordance with
such holder's method of accounting. The IRS could, however,
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<PAGE> 22
seek to treat a portion of the issue price of the DECS or the coupon payments on
the DECS as allocable to the forward purchase contract, with consequences that
are described in the fourth succeeding paragraph below.
Under the above characterization of the DECS, a holder's tax basis in a
DECS generally will equal the holder's cost for that DECS. Upon the sale or
other taxable disposition of a DECS, a U.S. Holder generally will recognize
capital gain or loss equal to the difference between the amount realized on the
sale or other taxable disposition and the U.S. Holder's tax basis in the DECS.
If the Company delivers Learning Common Stock at Maturity, a U.S. Holder will
recognize no gain or loss on the purchase of the Learning Common Stock by
application of the monies received by the Company in respect of the DECS. A U.S.
Holder will have a tax basis in Learning Common Stock so purchased equal to the
U.S. Holder's tax basis in the DECS (less the portion of the tax basis in the
DECS allocable to any fractional interest in Learning Common Stock, as described
in the next sentence). A U.S. Holder will recognize short-term capital gain or
loss with respect to cash received in lieu of a fractional interest in Learning
Common Stock, in an amount equal to the difference between the cash received and
the portion of the tax basis in the DECS allocable to the fractional interest in
Learning Common Stock (based on the relative number of fractional interests in
Learning Common Stock and full interests in Learning Common Stock delivered to
the holder). If at Maturity the Company pays the DECS in cash, a U.S. Holder
will recognize capital gain or loss equal to any difference between the amount
of cash received from the Company and the U.S. Holder's tax basis in the DECS at
that time.
Notwithstanding the contractual obligation of the Company and all holders
to treat the DECS in accordance with the above characterization, there can be no
assurance that the IRS will accept, or that a court will uphold, this
characterization. The documentation of the DECS as unsecured debt obligations of
the Company suggests that the IRS might seek to apply to the DECS the Treasury
regulations governing contingent payment debt instruments (the "Contingent
Payment Regulations"). If the IRS were successful in doing this, then, among
other matters, (i) gain realized by a holder on the sale or other taxable
disposition of a DECS (including as a result of payments made at Maturity) would
be characterized as ordinary income, rather than as capital gain, and (ii) a
U.S. Holder would recognize ordinary income, or ordinary or capital loss (as the
case may be, under the rules summarized in the following paragraph), on the
receipt of Learning Common Stock rather than capital gain or loss upon the
ultimate sale or other taxable disposition of Learning Common Stock.
The Contingent Payment Regulations are complex, but very generally apply
the original issue discount rules of the Internal Revenue Code to a contingent
payment debt instrument by requiring that original issue discount be accrued
every year at a "comparable yield" for the issuer of the instrument, determined
at the time of issuance of the obligation. In addition, the Contingent Payment
Regulations require that a projected payment schedule, which results in such a
"comparable yield," be determined, and that adjustments to income accruals be
made to account for differences between actual payments and projected amounts.
To the extent that the comparable yield as so determined exceeds the interest
actually paid on a contingent payment debt instrument, the holder of that
instrument will recognize ordinary interest income in excess of the cash the
holder receives, and such excess will increase the holder's tax basis in the
debt instrument. To the extent that the comparable yield is lower than the cash
received, however, the holder will recognize ordinary interest income that is
less than the cash received, and the holder's tax basis in the contingent
payment debt instrument will be correspondingly reduced. Any gain realized on
the sale, exchange or redemption of a contingent payment debt instrument will be
treated as ordinary income. Any loss realized on such sale, exchange or
redemption will be treated as an ordinary loss to the extent the holder's
original issue discount inclusions with respect to the contingent payment debt
instrument exceed prior reversals of such inclusions required by the adjustment
mechanism described above. Any loss realized in excess of such amount generally
will be treated as a capital loss.
Even if the Contingent Payment Regulations do not apply to the DECS it is
possible that the IRS could seek to characterize the DECS in a manner that
results in tax consequences to initial holders of the DECS different from those
reflected in the Indenture and described above. Under alternative
characterizations of the DECS, it is possible, for example, that a DECS could be
treated as including a debt instrument and a forward contract or two or more
options. In connection with such analysis or otherwise, the IRS could seek for
federal income tax purposes to allocate some portion of the issue price of the
DECS to such imputed forward contract
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<PAGE> 23
or options (resulting in the creation of original issue discount on the imputed
debt instrument) or to treat some portion of the coupon payments on the DECS as
being attributable to such forward contract or options (possibly resulting in
such portion being treated as option premiums or other amounts that are not
currently taxable to holders).
NON-UNITED STATES PERSONS
In the case of a holder of the DECS that is not a U.S. person, payments
made with respect to the DECS should not be subject to the withholding of U.S.
federal income tax, provided that such holder complies with applicable
certification requirements. Any capital gain realized upon the sale or other
disposition of the DECS by a holder that is not a U.S. person will generally not
be subject to U.S. federal income tax if (i) such gain is not effectively
connected with a U.S. trade or business of such holder and (ii) in the case of
an individual, such individual is not present in the United States for 183 days
or more in the taxable year of the sale or other disposition.
BACKUP WITHHOLDING AND INFORMATION REPORTING
A holder of the DECS may be subject to information reporting and to backup
withholding at a rate of 31 percent of certain amounts paid to the holder unless
the holder provides proof of an applicable exemption or a correct taxpayer
identification number and otherwise complies with applicable requirements of the
backup withholding rules. Backup withholding is not an additional tax. Rather,
any amounts withheld from a payment to a holder under the backup withholding
rules are allowed as a refund or credit against the holder's U.S. federal income
tax liability, provided the required information is furnished to the IRS.
SUPPLEMENTAL PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in the Underwriting Agreement
(the "Underwriting Agreement") among Tribune, The Learning Company and Smith
Barney Inc. (the "Underwriter"), Tribune has agreed to sell to the Underwriter,
and the Underwriter has agreed to purchase, the number of DECS set forth
opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER DECS
----------- ---------
<S> <C>
Smith Barney Inc............................................ 4,600,000
</TABLE>
Tribune has been advised by the Underwriter that it proposes to offer the
DECS directly to the public initially at the public offering price set forth on
the cover page of this Prospectus Supplement and to certain dealers at such
prices less a concession not in excess of $ per DECS. The Underwriter
may allow, and such dealers may reallow, a concession not in excess of
$ per DECS to other dealers. After the initial public offering, such
public offering price and such concession and reallowance may be changed.
The Learning Company and Tribune have agreed not to (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase or
otherwise transfer or dispose of, directly or indirectly, (or enter into any
transaction which is designed to, or might reasonably be expected to, result in
the disposition (whether by actual disposition or effective economic disposition
due to cash settlement or otherwise) by The Learning Company or any affiliate of
The Learning Company) or announce the offering (or plans to make an offering)
of, any shares of Learning Common Stock or any securities convertible into or
exercisable or exchangeable for shares of Learning Common Stock; (ii) enter into
any swap or other arrangement that transfers to another, in whole or in part,
any of the economic consequences of ownership of shares of Learning Common
Stock; or (iii) waive any rights The Learning Company has against any entity
which is an affiliate of The Learning Company which prevent such entity from
effecting a disposition or transfer (whether by actual disposition or effective
economic disposition due to cash settlement or otherwise) of the ownership of
Learning Common Stock, or waive any such rights against any entity in respect of
any underwritten offering, whether any such transaction described in clause (i),
(ii) or (iii) above is to be settled by delivery of shares of Learning Common
Stock or
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<PAGE> 24
such other securities, in cash or otherwise, for a period of 60 days from the
date of this Prospectus Supplement without the prior written consent of the
Underwriter; provided, however, that (1) The Learning Company may issue shares
of Learning Common Stock directly to shareholders of companies acquired by The
Learning Company as consideration for the acquisition, and in connection
therewith announce such issuance or contemplated issuance; (2) The Learning
Company may sell warrants to purchase equity securities in offerings made
pursuant to Canadian law solely to non-U.S. residents so long as such warrants
(or such other securities into which such warrants are exchangeable or
convertible) are not available to be resold in the United States or to U.S.
residents (and The Learning Company takes no action to permit such resale) until
a date that is at least 60 days from the date of this Prospectus Supplement; (3)
The Learning Company may exchange the 5 1/2% Senior Convertible Notes due 2000
of The Learning Company which are currently outstanding by issuing shares of
Learning Common Stock provided that the recipients of such Common Stock are
subject to the foregoing restrictions for the remainder of the 60 day period;
(4) The Learning Company may issue shares of Learning Common Stock pursuant to
any stock option plan, equity incentive plan, stock purchase plan or dividend
reinvestment plan of The Learning Company in effect on the date the Underwriting
Agreement is executed or pursuant to any warrant or other equity security
convertible into or exercisable or exchangeable for Learning Common Stock
outstanding on the date the Underwriting Agreement is executed; and (5) in
connection with an acquisition by The Learning Company or any affiliate of The
Learning Company, The Learning Company may announce that to finance such
acquisition, The Learning Company is reviewing a number of alternatives,
including a debt or equity offering by The Learning Company. If any such consent
is given, it would not necessarily be preceded or followed by a public
announcement thereof.
Tribune has granted to the Underwriter an option, exercisable for the
30-day period after the date of this Prospectus Supplement, to purchase up to an
additional 610,796 DECS from Tribune, at the same price per DECS as the initial
DECS to be purchased by the Underwriter. The Underwriter may exercise such
option only for the purpose of covering over-allotments, if any, incurred in
connection with the sale of DECS offered hereby.
The DECS will be a new issue of securities with no established trading
market. Application will be made to list the DECS on the NYSE, and the
Underwriter intends to make a market in the DECS, subject to applicable laws and
regulations. However, the Underwriter is not obligated to do so and any such
market-making may be discontinued at any time at the sole discretion of the
Underwriter without notice. Accordingly, no assurance can be given as to the
liquidity of such market.
In connection with this offering, the Underwriter and its affiliates may
engage in transactions that stabilize, maintain or otherwise affect the market
prices of the DECS or the Learning Common Stock. Such transactions may include
stabilization transactions effected in accordance with Rule 104 of Regulation M,
pursuant to which such persons may bid for or purchase DECS or Learning Common
Stock for the purpose of stabilization of their market prices. The Underwriter
also may create a short position for its account by selling more DECS than they
are committed to purchase from Tribune, and in such case may purchase DECS in
the open market following completion of the offering to cover all or a portion
of such short position. The Underwriter may also cover all or a portion of such
short position in the DECS, up to 610,796 DECS, by exercising the Underwriter's
over-allotment option referred to above. In addition, the Underwriter may impose
"penalty bids" whereby they may reclaim from dealers participating in the
offering the selling concession with respect to the DECS that are distributed in
the offering but subsequently purchased for the account of the Underwriter in
the open market. Any of the transactions described in this paragraph may result
in the maintenance of the prices of the DECS or the Learning Common Stock at
levels above those which might otherwise prevail in the open market. These
transactions may be effected on the NYSE, in the over-the-counter market or
otherwise. None of the transactions described in this paragraph are required
and, if they are undertaken, they may be discontinued at any time.
The Underwriting Agreement provides that Tribune and The Learning Company
will indemnify the Underwriter against certain liabilities, including
liabilities under the Securities Act, or contribute to payments the Underwriter
may be required to make in respect thereof.
In connection with the offering of the DECS, Tribune (referred to herein as
the "Lender") and Smith Barney Inc. intend to enter into a Securities Loan
Agreement (the "Securities Loan Agreement") which
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<PAGE> 25
provides that, subject to certain restrictions and with the agreement of the
Lender, Smith Barney Inc. may from time to time borrow, return and reborrow
shares of Learning Common Stock from the Lender (the "Borrowed Securities");
provided, however, that the number of Borrowed Securities at any time may not
exceed 2,000,000 shares, subject to adjustment for certain dilutive events. The
Securities Loan Agreement is intended to facilitate market-making activity in
the DECS by Smith Barney Inc. Smith Barney Inc. may from time to time borrow
shares of Learning Common Stock under the Securities Loan Agreement to settle
short sales of Learning Common Stock entered into by Smith Barney Inc. to hedge
any long position in the DECS resulting from its market-making activities. Such
sales will be made on the NYSE or in the over-the-counter market at market
prices prevailing at the time of sale or at prices related to such market
prices. Market conditions will dictate the extent and timing of Smith Barney's
market-making transactions in the DECS and the consequent need to borrow shares
of Learning Common Stock. The availability of shares of Learning Common Stock
under the Securities Loan Agreement at any time is not assured and any such
availability does not assure market-making activity with respect to the DECS and
any market-making actually engaged in by Smith Barney Inc. may cease at any
time. The foregoing description of the Securities Loan Agreement does not
purport to be complete and is qualified in its entirety by reference to such
Agreement, a copy of which will be filed as an exhibit to the Registration
Statement relating to this Prospectus Supplement.
In the ordinary course of their respective businesses, the Underwriter and
its affiliates may have engaged in and may in the future engage in commercial
and investment banking transactions with Tribune, The Learning Company and their
respective affiliates, for which customary compensation has been or may be
received.
LEGAL OPINIONS
The validity of the DECS will be passed upon for Tribune by Sidley &
Austin, Chicago, Illinois, and for the Underwriter by Mayer, Brown & Platt,
Chicago, Illinois.
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<PAGE> 27
PROSPECTUS
TRIBUNE COMPANY
DEBT SECURITIES AND
WARRANTS TO PURCHASE DEBT SECURITIES
Tribune Company (the "Company") intends to issue from time to time in one
or more series its unsecured debt securities ("Debt Securities") and warrants
("Warrants") to purchase Debt Securities (the Debt Securities and the Warrants
being herein collectively called the "Securities") with an aggregate initial
public offering price or purchase price of up to $500,000,000, or the equivalent
thereof if any of the Securities are denominated in a foreign currency or
composite currency such as the European Currency Unit ("ECU"). The Debt
Securities of each series and the Warrants will be offered on terms to be
determined at the time of sale. See "Description of Debt Securities" and
"Description of Warrants." The Debt Securities and Warrants may be sold for
United States dollars, foreign currencies or composite currencies such as the
ECU, and the principal of, premium, if any, and any interest on the Debt
Securities may be payable in United States dollars, foreign currencies or
composite currencies such as the ECU. The specific designation, aggregate
principal amount, the currency or composite currency in which the principal,
premium, if any, and any interest are payable, the rate (or method of
calculation) and the time and place of payment of any interest, authorized
denominations, maturity, offering price, any redemption terms and any other
specific terms of the Debt Securities in respect of which this Prospectus is
being delivered are set forth in the accompanying Prospectus Supplement (the
"Prospectus Supplement"). With regard to the Warrants, if any, in respect of
which this Prospectus is being delivered, the Prospectus Supplement sets forth a
description of the Debt Securities for which the Warrants are exercisable and
the offering price, if any, exercise price, duration and any other specific
terms of the Warrants.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Securities may be sold by the Company directly to purchasers, through
agents designated from time to time, or to or through underwriters or dealers.
If underwriters or agents are involved in the offering of Securities, the names
of the underwriters or agents will be set forth in the Prospectus Supplement. If
an underwriter, agent or dealer is involved in the offering of any Securities,
the underwriter's discount, agent's commission or dealer's purchase price will
be set forth in, or may be calculated from the information set forth in, the
Prospectus Supplement, and the net proceeds to the Company from such offering
will be the public offering price of the Securities less such discount in the
case of an offering through an underwriter or the purchase price of the
Securities less such commission in the case of an offering through an agent, and
less, in each case, the other expenses of the Company associated with the
issuance and distribution of the Securities. See "Plan of Distribution."
The date of this Prospectus is January 9, 1997.
<PAGE> 28
AVAILABLE INFORMATION
Tribune Company (the "Company") is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission") and
with the New York, Chicago and Pacific stock exchanges, on which the Company's
Common Stock is listed. Such reports, proxy statements and other information
concerning the Company can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices at Seven World Trade
Center, 13th Floor, New York, New York 10048; and Citicorp Center, 500 W.
Madison Street, 14th Floor, Chicago, Illinois 60661. Copies of such materials
can be obtained upon written request addressed to the Commission, Public
Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. In addition, such materials may be inspected at the offices of the New
York Stock Exchange, 20 Broad Street, New York, New York 10005; the Chicago
Stock Exchange, 440 South LaSalle Street, Chicago, Illinois 60605; and the
Pacific Stock Exchange, 301 Pine Street, San Francisco, California 94104. Copies
of reports, proxy statements and other information electronically filed with the
Commission by the Company may be inspected by accessing the Commission's World
Wide Web site at http://www.sec.gov.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is made to the Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to Sections 13 and 14 of the Exchange Act (File No. 1-8572) are incorporated
herein by reference: (i) the Company's Annual Report on Form 10-K for the year
ended December 31, 1995, (ii) the Company's Quarterly Reports on Form 10-Q for
the quarters ended March 31, 1996, June 30, 1996 and September 29, 1996 and
(iii) the Company's Current Reports on Form 8-K dated January 8, 1996, February
13, 1996, March 12, 1996, March 15, 1996, July 9, 1996, July 26, 1996, August 2,
1996, August 14, 1996, October 21, 1996 and November 8, 1996. All documents
filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the Securities shall be deemed to be incorporated
by reference in this Prospectus.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, on the written or oral request of such person, a
copy of any or all of the documents incorporated herein by reference, excluding
the exhibits to such documents (unless such exhibits are specifically
incorporated by reference in such documents). Requests should be directed to the
Corporate Relations Department, Tribune Company, Suite 600, 435 North Michigan
Avenue, Chicago, Illinois 60611, telephone (312) 222-3238.
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<PAGE> 29
THE COMPANY
Tribune Company is an information, entertainment and education company.
Through its subsidiaries, the Company is engaged in the publishing of
newspapers, books, educational reference material and information in print and
digital formats and the broadcasting, production and syndication of information
and entertainment in metropolitan areas in the United States. The Company was
founded in 1847 and incorporated in Illinois in 1861. As a result of a corporate
restructuring in 1968, the Company became a holding company incorporated in
Delaware. The executive offices of the Company are located at 435 North Michigan
Avenue, Chicago, Illinois 60611. Its telephone number is (312) 222-9100.
USE OF PROCEEDS
The Company expects to add substantially all of the net proceeds from the
sale of the Securities to its general funds to be used for general corporate
purposes, including capital expenditures, working capital, repayment of
long-term and short-term debt, securities repurchase programs and the financing
of acquisitions. Funds not required immediately may be invested in short-term
marketable securities.
RATIOS OF EARNINGS TO FIXED CHARGES
The Company's Ratios of Earnings to Fixed Charges for each of the periods
indicated are as follows:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED FISCAL YEAR ENDED
SEPTEMBER DECEMBER
----------- --------------------------------
1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges................ 6.9 8.6 8.7 8.2 6.4 4.9 4.0
</TABLE>
For purposes of computing the foregoing ratios: (i) Earnings consist of
income from continuing operations before cumulative effects of accounting
changes plus income tax expense and losses on equity investments plus Fixed
Charges (including amortization of capitalized interest but excluding
capitalized interest and interest related to the Company's guarantees of the
debt of its Employee Stock Ownership Plan); and (ii) Fixed Charges consist of
interest, whether expensed or capitalized, the portion of rental payments on
operating leases estimated to represent an interest component and interest
related to the Company's guarantees of the debt of its Employee Stock Ownership
Plan.
DESCRIPTION OF DEBT SECURITIES
GENERAL
The Debt Securities will be issued under an Indenture, as supplemented from
time to time in accordance with its terms (the "Indenture"), to be entered into
between the Company and Bank of Montreal Trust Company (the "Trustee"). The
following brief summary of the Indenture and the Debt Securities is subject to
the detailed provisions of the Indenture, a copy of which is an exhibit to the
Registration Statement. Wherever references are made to particular provisions of
the Indenture, such provisions are incorporated by reference as a part of the
statements made herein and such statements are qualified in their entirety by
such reference. Certain defined terms in the Indenture are capitalized herein.
References in italics are to section numbers of the Indenture.
The Indenture does not limit the amount of Debt Securities which may be
issued thereunder. It provides that Debt Securities may be issued from time to
time in series. The Debt Securities will be unsecured obligations of the Company
and will rank pari passu with all other unsecured and unsubordinated
indebtedness of the Company.
Reference is made to the Prospectus Supplement for a description of the
following terms of the Debt Securities in respect of which this Prospectus is
being delivered: (i) the title of such Debt Securities; (ii) the limit, if any,
upon the aggregate principal amount of such Debt Securities; (iii) the dates on
which or periods
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<PAGE> 30
during which such Debt Securities may be issued and the date or dates on which
the principal of (and premium, if any, on) such Debt Securities will be payable;
(iv) the rate or rates, if any, or the method of determination thereof, at which
such Debt Securities will bear interest, if any; the date or dates from which
such interest will accrue; the dates on which such interest will be payable; and
the regular record dates for the interest payable on such interest payment
dates; (v) the obligation, if any, of the Company to redeem, repay or purchase
such Debt Securities pursuant to any sinking fund or analogous provisions or at
the option of a holder and the periods within which or the dates on which, the
prices at which and the terms and conditions upon which such Debt Securities
will be redeemed, repaid or purchased, in whole or in part, pursuant to such
obligation; (vi) the periods within which or the dates on which, the prices, if
any, at which and the terms and conditions upon which such Debt Securities may
be redeemed, in whole or in part, at the option of the Company; (vii) if other
than denominations of $1,000 and any integral multiple thereof, the
denominations in which such Debt Securities will be issuable; (viii) whether
such Debt Securities are to be issued at less than the principal amount thereof
and the amount of discount with which such Debt Securities will be issued; (ix)
provisions, if any, for the defeasance of such Debt Securities; (x) if other
than United States dollars, the currency or composite currency in which such
Debt Securities are to be denominated, or in which payment of the principal of
(and premium, if any) and interest on such Debt Securities will be made and the
circumstances, if any, when such currency of payment may be changed; (xi) if the
principal of (and premium, if any) or interest on such Debt Securities are to be
payable, at the election of the Company or a holder, in a currency or composite
currency other than that in which such Debt Securities are denominated or stated
to be payable, the periods within which, and the terms and conditions upon
which, such election may be made and the time and the manner of determining the
exchange rate between the currency or composite currency in which such Debt
Securities are denominated or stated to be payable and the currency in which
such Debt Securities are to be paid pursuant to such election; (xii) if the
amount of payments of principal of (and premium, if any) or interest on the Debt
Securities may be determined with reference to an index including, but not
limited to an index based on a currency or currencies other than that in which
such Debt Securities are stated to be payable, the manner in which such amounts
shall be determined; (xiii) whether such Debt Securities will be issued in the
form of one or more Global Securities and, if so, the identity of the depository
for such Global Securities; (xiv) any additional Events of Default or covenants
relating solely to such Debt Securities or any Events of Default or covenants
generally applicable to Debt Securities which are not to apply to the particular
series of Debt Securities in respect of which this Prospectus is being
delivered; and (xv) any other terms of such Debt Securities not inconsistent
with the provisions of the Indenture. (Section 3.01) Unless otherwise indicated
in the applicable Prospectus Supplement, the Indenture does not afford the
holder of any series of Debt Securities the right to tender such Debt Securities
to the Company for repurchase, or provide for any increase in the rate or rates
of interest per annum at which such Debt Securities will bear interest, in the
event the Company should become involved in a highly leveraged transaction.
The Debt Securities may be issued under the Indenture bearing no interest
or interest at a rate below the prevailing market rate at the time of issuance,
to be offered and sold at a discount below their stated principal amount.
Federal income tax consequences and other special considerations applicable to
any such discounted Debt Securities or to other Debt Securities offered and sold
at par which are treated as having been issued at a discount for federal income
tax purposes will be described in the Prospectus Supplement relating thereto.
A substantial portion of the assets of the Company is held by subsidiaries.
The Company's right and the rights of its creditors, including the holders of
Debt Securities, to participate in the assets of any subsidiary upon its
liquidation or recapitalization would be subject to the prior claims of such
subsidiary's creditors, except to the extent that the Company may itself be a
creditor with recognized claims against such subsidiary. There is no restriction
in the Indenture against subsidiaries of the Company incurring unsecured
indebtedness.
Unless otherwise described in the Prospectus Supplement, the Debt
Securities will be issued only in fully registered form without coupons, in
denominations of $1,000 and multiples of $1,000, and will be payable only in
United States dollars. (Section 3.02) In addition, all or a portion of the Debt
Securities of any series may be issued in permanent registered global form which
will be exchangeable for definitive Debt Securities only under certain
conditions. (Section 2.03) The Prospectus Supplement indicates the denominations
to be issued, the procedures for payment of interest and principal thereon, and
other matters. No service charge will
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<PAGE> 31
be made for any registration of transfer or exchange of the Debt Securities, but
the Company may, in certain instances, require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
(Section 3.05)
GLOBAL SECURITIES
The Debt Securities of a particular series may be issued in the form of one
or more Global Securities which will be deposited with a depository (the
"Depositary"), or its nominee, each of which will be identified in the
Prospectus Supplement relating to such series. Unless and until exchanged, in
whole or in part, for Debt Securities in definitive registered form, a Global
Security may not be transferred except as a whole by the Depositary for such
Global Security to a nominee of such Depositary, by a nominee of such Depositary
to such Depositary or another nominee of such Depositary or by such Depositary
or any such nominee to a successor of such Depositary or a nominee of such
successor. (Section 2.03) The specific terms of the depository arrangement with
respect to any portion of a particular series of Debt Securities to be
represented by a Global Security will be described in the Prospectus Supplement
relating to such series. The Company anticipates that the following provisions
will apply to all depository arrangements.
Upon the issuance of a Global Security, the Depositary therefor or its
nominee will credit, on its book entry and registration system, the respective
principal amounts of the Debt Securities represented by such Global Security to
the accounts of such persons having accounts with such Depositary
("participants") as shall be designated by the underwriters or agents
participating in the distribution of such Debt Securities or by the Company if
such Debt Securities are offered and sold directly by the Company. Ownership of
beneficial interests in a Global Security will be limited to participants or
persons that may hold beneficial interests through participants. Ownership of
beneficial interests in a Global Security will be shown on, and the transfer of
such ownership will be effected only through, records maintained by the
Depositary therefor or its nominee (with respect to beneficial interests of
participants) or by participants or persons that hold through participants (with
respect to interests of persons other than participants). The laws of some
states require certain purchasers of securities to take physical delivery
thereof in definitive form. Such depository arrangements and such laws may
impair the ability to transfer beneficial interests in a Global Security.
So long as the Depositary for a Global Security or its nominee is the
registered owner thereof, such Depositary or such nominee, as the case may be,
will be considered the sole owner or holder of the Debt Securities represented
by such Global Security for all purposes under the Indenture. Except as provided
below, owners of beneficial interests in a Global Security will not be entitled
to have Debt Securities of the series represented by such Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of Debt Securities of such series in definitive form and will not be
considered the owners or holders thereof under the Indenture.
Principal, premium, if any, and interest payments on a Global Security
registered in the name of a Depositary or its nominee will be made to such
Depositary or nominee, as the case may be, as the registered owner of such
Global Security. None of the Company, the Trustee or any paying agent for Debt
Securities of the series represented by such Global Security will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial interests in such Global Security or for
maintaining, supervising or reviewing any records relating to such beneficial
interests.
The Company expects that the Depositary for a Global Security or its
nominee, upon receipt of any payment of principal, premium or interest, will
immediately credit participants' accounts with payments in amounts proportionate
to their respective beneficial interests in the principal amount of such Global
Security as shown on the records of such Depositary or its nominee. The Company
also expects that payments by participants to owners of beneficial interests in
such Global Security held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers registered in "street name," and will be the
responsibility of such participants.
If the Depositary for a Global Security representing Debt Securities of a
particular series is at any time unwilling or unable to continue as Depositary
and a successor Depositary is not appointed by the Company within 90 days, the
Company will issue Debt Securities of such series in definitive form in exchange
for such
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<PAGE> 32
Global Security. In addition, the Company may at any time and in its sole
discretion determine not to have the Debt Securities of a particular series
represented by one or more Global Securities and, in such event, will issue Debt
Securities of such series in definitive form in exchange for all of the Global
Securities representing Debt Securities of such series.
CERTAIN COVENANTS OF THE COMPANY
Limitation on Indebtedness Secured by a Mortgage. The Indenture provides
that neither the Company nor any Restricted Subsidiary will create, assume,
guarantee or suffer to exist any Indebtedness secured by any mortgage, pledge,
lien, security interest, conditional sale or other title retention agreement or
other similar encumbrance ("Mortgage") on any assets of the Company or a
Restricted Subsidiary unless the Company secures or causes such Restricted
Subsidiary to secure the Debt Securities equally and ratably with, or prior to,
such secured Indebtedness. This restriction will not apply to Indebtedness
secured by (i) Mortgages on the property of any corporation which Mortgages
existed at the time such corporation became a Restricted Subsidiary; (ii)
Mortgages in favor of the Company or a Restricted Subsidiary; (iii) Mortgages on
property of the Company or a Restricted Subsidiary in favor of the United States
of America or any State or political subdivision thereof, or in favor of any
other country or any political subdivision thereof, to secure payment pursuant
to any contract or statute or to secure any indebtedness incurred for the
purpose of financing all or part of the purchase price or the cost of
construction or improvement of the property subject to such Mortgages; (iv)
Mortgages on any property subsequently acquired by the Company or any Restricted
Subsidiary, contemporaneously with such acquisition or within 120 days
thereafter, to secure or provide for the payment of any part of the purchase
price of such property, or Mortgages assumed by the Company or any Restricted
Subsidiary upon any property subsequently acquired by the Company or any
Restricted Subsidiary which were existing at the time of such acquisition,
provided that the amount of any Indebtedness secured by any such Mortgage
created or assumed does not exceed the cost to the Company or Restricted
Subsidiary, as the case may be, of the property covered by such Mortgage; (v)
Mortgages representing the extension, renewal or refunding of any Mortgage
referred to in the foregoing clauses (i) through (iv), inclusive; and (vi) any
other Mortgage, other than Mortgages referred to in the foregoing clauses (i)
through (v), inclusive, so long as the aggregate of all Indebtedness secured by
Mortgages pursuant to this clause (vi) and the aggregate Value of the Sale and
Lease-Back Transactions in existence at that time (not including those in
connection with which the Company has voluntarily retired funded debt as
provided in the Indenture) does not exceed 10% of Consolidated Net Tangible
Assets of the Company and its consolidated Subsidiaries. (Section 10.07)
Limitation on Sale and Lease-Back Transactions. The Indenture provides
that neither the Company nor any Subsidiary will enter into any Sale and
Lease-Back Transaction with respect to any Principal Property unless either (i)
the Company or such Subsidiary would be entitled, pursuant to the foregoing
covenant relating to "Limitation on Indebtedness Secured by a Mortgage," to
create, assume, guarantee or suffer Indebtedness in a principal amount equal to
or exceeding the Value of such Sale and Lease-Back Transaction secured by a
Mortgage on the property to be leased without equally and ratably securing the
Debt Securities or (ii) the Company, within four months after the effective date
of such transaction, applies an amount equal to the greater of (x) the net
proceeds of the sale of the property subject to the Sale and Lease-Back
Transaction and (y) the Value of such Sale and Lease-Back Transaction, to the
voluntary retirement of the Debt Securities or other unsubordinated Indebtedness
of the Company. (Section 10.08)
Certain Definitions. A "Sale and Lease-Back Transaction" is defined in the
Indenture as the leasing by the Company or a Subsidiary for a period of more
than three years of any Principal Property which has been sold or is to be sold
or transferred by the Company or any such Subsidiary to any party (other than
the Company or a Subsidiary) to which funds have been or will be advanced by
such party on the security of the leased property. (Section 10.08)
"Value" is defined in the Indenture to mean, with respect to any particular
Sale and Lease-Back Transaction, as of any particular time, the amount equal to
the greater of (i) the net proceeds of the sale or transfer of the property
leased pursuant to such Sale and Lease-Back Transaction or (ii) the fair value
in the opinion of the Board of Directors of the Company of such property at the
time of the Company's entering into
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<PAGE> 33
such Sale and Lease-Back Transaction, subject to adjustment at any particular
time for the length of the remaining initial lease term. (Section 10.08)
"Principal Property" is defined in the Indenture to mean any manufacturing
or printing plant, warehouse, office building, power plant or transmission
facility owned by the Company or any Subsidiary or any property or right owned
by or granted to the Company or any Subsidiary and used or held for use in the
newspaper, newsprint, radio or television business conducted by the Company or
any Subsidiary, except for any such property or right which, in the opinion of
the Board of Directors of the Company, is not material to the total business
conducted by the Company and its Subsidiaries considered as one enterprise.
(Section 1.01)
"Indebtedness" is defined in the Indenture to mean (i) long-term
liabilities representing borrowed money and purchase money obligations as shown
on the liability side of a balance sheet (other than liabilities evidenced by
obligations under leases and contracts payable for broadcast rights), (ii)
indebtedness secured by any mortgage, pledge or lien existing on property owned
subject to such mortgage, pledge or lien, whether or not such secured
indebtedness has been assumed and (iii) contingent obligations in respect of, or
to purchase or otherwise acquire, any such indebtedness of others described in
the foregoing clauses (i) and (ii) above, including guarantees and endorsements
(other than for purposes of collection in the ordinary course of business of any
such indebtedness). (Section 10.07)
"Consolidated Net Tangible Assets" is defined in the Indenture to mean
total consolidated assets of the Company and its Consolidated Subsidiaries, less
(i) current liabilities of the Company and its Consolidated Subsidiaries; (ii)
contracts payable for broadcast rights; (iii) the net book amount of all
intangible assets of the Company and its Consolidated Subsidiaries; (iv)
appropriate amounts to account for minority interests of other persons holding
stock in Subsidiaries; and (v) investments in Subsidiaries (other than
Restricted Subsidiaries) aggregating in excess of 10% of the Net Worth of the
Company and its Consolidated Subsidiaries. (Section 10.07)
"Consolidated Subsidiary" is defined in the Indenture to mean a Subsidiary
the accounts of which are consolidated with those of the Company for public
financial reporting purposes. (Section 1.01)
"Restricted Subsidiary" is defined in the Indenture to mean each Subsidiary
of the Company as of the date of the Indenture and each Subsidiary thereafter
created or acquired, unless expressly excluded by resolution of the Board of
Directors of the Company before, or within 120 days following, such creation or
acquisition. (Section 10.07)
"Subsidiary" is defined in the Indenture to mean a corporation more than
50% of the outstanding voting stock of which is owned, directly or indirectly,
by the Company or by one or more other Subsidiaries or by the Company and one or
more other Subsidiaries. For the purposes of this definition, "voting stock'
means stock which ordinarily has voting power for the election of directors,
whether at all times or only so long as no senior class of stock has such voting
power by reason of any contingency. (Section 1.01)
"Net Worth" is defined in the Indenture to mean the aggregate amount of
stockholders' investment as determined in accordance with generally accepted
accounting principles. (Section 10.07)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Indenture provides that the Company may not consolidate with or merge
into any other corporation, or convey, transfer or lease its properties and
assets substantially as an entirety to any other party, unless, among other
things, (i) the corporation formed by such consolidation or into which the
Company is merged or the party which acquires by conveyance or transfer, or
which leases the properties and assets of the Company substantially as an
entirety, is organized and existing under the laws of the United States, any
State thereof or the District of Columbia and expressly assumes the Company's
obligations on the Debt Securities and under the Indenture by means of an
indenture supplemental to the Indenture; and (ii) immediately after giving
effect to such transaction no Event of Default, and no event which, after notice
or lapse of time, or both, would become an Event of Default, shall have happened
and be continuing. (Section 8.01)
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<PAGE> 34
EVENTS OF DEFAULT, WAIVER AND NOTICE
With respect to the Debt Securities an Event of Default is defined in the
Indenture as being (i) default for 30 days in payment of any interest upon the
Debt Securities; (ii) default in payment of the principal of or premium, if any,
on the Debt Securities when due either at maturity or upon acceleration,
redemption or otherwise; (iii) default by the Company in the performance of any
other of the covenants or warranties in the Indenture applicable to the Company
which shall not have been remedied for a period of 60 days after Notice of
Default; and (iv) certain events of bankruptcy, insolvency or reorganization of
the Company or any Significant Subsidiary. (Section 5.01) Within 90 days after
the occurrence of any default under the Indenture, the Trustee is required to
notify the Holders of Debt Securities of any default (except in payment of
principal of or premium, if any, or interest on any Debt Securities), unless the
Board of Directors, the executive committee or a trust committee of the Board of
Directors or Responsible Officers of the Trustee in good faith considers it in
the interest of the Holders of Debt Securities not to do so. (Section 6.02)
"Significant Subsidiary" is defined in the Indenture to mean any Subsidiary
(i) which, as of the close of the fiscal year of the Company immediately
preceding the date of determination, contributed more than 7% of the
consolidated gross operating revenues of the Company and its Subsidiaries for
such year or (ii) the Net Worth of which (determined in a manner consistent with
the manner of determining consolidated Net Worth of the Company and its
Subsidiaries) as of the close of such immediately preceding fiscal year exceeded
7% of the consolidated Net Worth of the Company and its Subsidiaries. (Section
5.01)
The Indenture provides that if an Event of Default with respect to Debt
Securities shall have occurred and be continuing, either the Trustee or the
Holders of at least 25% in aggregate principal amount of the Debt Securities
then outstanding may declare the entire principal and accrued interest of all
Debt Securities to be due and payable immediately. However, any time after a
declaration of acceleration with respect to the Debt Securities has been made,
but before a judgment or decree for the payment of money based on such
acceleration has been obtained by the Trustee, the Holders of a majority in
principal amount of the Outstanding Debt Securities, may, under certain
circumstances, rescind and annul such acceleration. The Holders of a majority in
principal amount of the Outstanding Debt Securities may waive any past defaults
under the Indenture with respect to the Debt Securities, except defaults in
payment of principal of or premium, if any (other than by a declaration of
acceleration), or interest on the Debt Securities or covenants that may not be
modified or amended without the consent of the Holders of all Outstanding Debt
Securities. (Sections 5.02 and 5.13)
The Company will be required to furnish to the Trustee annually a statement
as to the performance by the Company of its covenants and agreements under the
Indenture. (Section 10.09)
Subject to certain conditions set forth in the Indenture, the Holders of a
majority in principal amount of the then Outstanding Debt Securities shall have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee under the Indenture in respect of such
series. No Holder of any Debt Securities shall have any right to institute any
proceedings, judicial or otherwise, with respect to the Indenture or any remedy
thereunder unless, among other things, the Holder or Holders of Debt Securities
shall have offered to the Trustee reasonable indemnity against costs, expenses
and liabilities relating to such proceedings. (Sections 5.12 and 5.07)
MODIFICATION OF THE INDENTURE
With respect to the Debt Securities, modification or amendment of the
Indenture may be made by the Company and the Trustee with the consent of the
Holders of a majority in aggregate principal amount of the Debt Securities,
except that no such modification or amendment may, without the consent of the
Holders of all then Outstanding Debt Securities (i) change the due date of the
principal of, or any installment of principal of or interest on, any Debt
Securities; (ii) reduce the principal amount of, or rate of interest on, or any
premium payable on redemption of any Debt Securities; (iii) reduce the principal
amount of any Debt Securities payable upon acceleration of the maturity thereof;
(iv) change the place or the currency of payment of principal of, or any premium
or interest on, any Debt Securities; (v) impair the right to institute suit for
the enforcement of any payment on or with respect to any Debt Securities on or
after the due date thereof (or, in
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<PAGE> 35
the case of redemption, on or after the redemption date thereof); (vi) reduce
the percentage in principal amount of Debt Securities then outstanding, the
consent of whose holders is required for modification or amendment of the
Indenture or for waiver of compliance with certain provisions of the Indenture
or for waiver of certain defaults; or (vii) modify certain provisions of the
Indenture regarding the amendment or modification of, or waiver with respect to,
any provision of the Indenture or the Debt Securities. (Section 9.02)
DEFEASANCE
If provision is made pursuant to Section 3.01 of the Indenture for the
defeasance of a series of Debt Securities, and if such series is payable only in
United States dollars (unless otherwise specifically provided), the Company, at
its option, in respect of such series of Debt Securities (i) will be discharged
from any and all obligations in respect of such Debt Securities (except for
certain obligations to register the transfer or exchange of Debt Securities,
replace stolen, lost or mutilated Debt Securities, maintain paying agencies and
hold moneys for payment in trust) or (ii) will not be subject to, among other
things, the provisions of the Indenture described above under "Consolidation,
Merger and Sale of Assets," "Limitation on Indebtedness Secured by a Mortgage,"
and "Limitation on Sale and Lease-Back Transactions' if the Company deposits
with the Trustee, in trust, money or U.S. Government Obligations which through
the payment of interest thereon and principal thereof in accordance with their
terms will provide money in an amount sufficient to pay all the principal of,
and interest on, such Debt Securities on the dates such payments are due in
accordance with the terms of such Debt Securities. To exercise any such option,
the Company is required to deliver to the Trustee (x) an opinion of a nationally
recognized tax counsel to the effect that the deposit and related defeasance
would not cause the holders of the Debt Securities to recognize income, gain or
loss for federal income tax purposes as a result of the Company's exercise of
its option and would cause the holders of the Debt Securities to be subject to
federal income tax on the same amount and in the same manner and at the same
times as would have been the case if such option had not been exercised, and, if
the Company is being discharged from any and all obligations in respect of such
Debt Securities (other than as specified above), accompanied by a ruling to that
effect received from or published by the Internal Revenue Service and (y) if the
Debt Securities are then listed on the New York Stock Exchange (the "NYSE"), an
opinion of counsel to the effect that the Debt Securities would not be delisted
from the NYSE as a result of the exercise of such option. (Sections 13.01 and
13.02)
THE TRUSTEE
Bank of Montreal Trust Company, a wholly-owned subsidiary of Harris Trust
and Savings Bank, will be the Trustee under the Indenture. The Trustee is a
depository for funds of and performs other services for and transacts other
banking business with the Company in the normal course of business. Bank of
Montreal, an affiliate of the Trustee, is a commercial lender under the
Company's credit facilities.
DESCRIPTION OF WARRANTS
The following description of the terms of the Warrants sets forth certain
general terms and provisions of the Warrants to which any Prospectus Supplement
may relate. The particular terms of the Warrants offered by any Prospectus
Supplement and the extent, if any, to which such general provisions may apply to
the Warrants so offered will be described in the Prospectus Supplement relating
to such Warrants.
GENERAL
Warrants may be offered together with any series of Debt Securities offered
by a Prospectus Supplement and if so offered will be attached to such Debt
Securities and will entitle the holder thereof to purchase additional Debt
Securities having the same terms and interest rate as the offered Debt
Securities. Each series of Warrants will be issued under a separate warrant
agreement (a "Warrant Agreement") to be entered into between the Company and a
bank or trust company, as warrant agent (the "Warrant Agent"), all as described
in the Prospectus Supplement relating to such series of Warrants. The Warrant
Agent will act solely as the
9
<PAGE> 36
agent of the Company under the applicable Warrant Agreement and in connection
with the certificates for the Warrants (the "Warrant Certificates") of such
series, and will not assume any obligation or relationship of agency or trust
for or with any holders of such Warrant Certificates or beneficial owners of
Warrants. A copy of the form of Warrant Agreement, including the form of Warrant
Certificates, is filed as an exhibit to the Registration Statement. The
following summary of certain provisions of the forms of Warrant Agreement and
Warrant Certificates does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the Warrant
Agreement and the Warrant Certificates.
Reference is hereby made to the Prospectus Supplement relating to the
particular series of Warrants, if any, offered thereby for the terms of such
Warrants, including, where applicable: (i) the offering price; (ii) the currency
or currencies in which such Warrants are being offered; (iii) the designation,
aggregate principal amount, currency or currencies, denominations and other
terms of the series of Debt Securities purchasable upon exercise of such
Warrants; (iv) the designation and terms of the series of Debt Securities with
which such Warrants are being offered and the number of such Warrants being
offered with each such Debt Security; (v) the date on and after which such
Warrants and the related series of Debt Securities will be transferable
separately; (vi) the principal amount of the Debt Securities purchasable upon
exercise of each such Warrant and the price at which and currency or currencies
in which such principal amount of Debt Securities may be purchased upon such
exercise; (vii) the date on which the right to exercise such Warrants shall
commence (the "Exercise Date") and the date on which such right shall expire
(the "Expiration Date"); and (viii) any other terms of such Warrants not
inconsistent with the applicable Warrant Agreement.
Warrants of any series will be exchangeable into Warrants of the same
series representing in the aggregate the number of Warrants surrendered for
exchange. Warrant Certificates may be presented for exchange or transfer at the
corporate trust office of the Warrant Agent for such series of Warrants (or any
other office indicated in the Prospectus Supplement relating to such series of
Warrants). Prior to the exercise of their Warrants, holders of Warrants will not
have any of the rights of holders of the series of Debt Securities purchasable
upon such exercise, including the right to receive payments of principal of,
premium, if any, or interest, if any, on the Debt Securities purchasable upon
such exercise, or to enforce any of the covenants in the Indenture.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder thereof to purchase such principal
amount of the related series of Debt Securities at such exercise price as shall
in each case be set forth in, or calculable as set forth in, the Prospectus
Supplement relating to such Warrant. Warrants of a series may be exercised at
the corporate trust office of the Warrant Agent for such series (or any other
office indicated in the Prospectus Supplement relating to such series) at any
time on or after the Exercise Date and prior to 5:00 P.M., Chicago time (unless
otherwise indicated in the related Prospectus Supplement), on the Expiration
Date set forth in the Prospectus Supplement relating to such series of Warrants.
After the close of business on the Expiration Date relating to such series of
Warrants, unexercised Warrants of such series will be void.
Warrants of a series may be exercised by delivery to the appropriate
Warrant Agent of payment, as provided in the Prospectus Supplement relating to
such series of Warrants, of the consideration required to purchase the principal
amount of the series of Debt Securities purchasable upon such exercise, together
with certain information as set forth on the reverse side of the Warrant
Certificate evidencing such Warrants. Such Warrants will be deemed to have been
exercised upon receipt of the exercise price, subject to the receipt of the
Warrant Certificate evidencing such Warrants within five business days. Upon
receipt of such payment and such Warrant Certificate, properly completed and
duly executed, at the corporate trust office of the appropriate Warrant Agent
(or any other office indicated in the Prospectus Supplement relating to such
series of Warrants), the Company will, as soon as practicable, issue and deliver
the principal amount of the series of Debt Securities purchasable upon such
exercise. If fewer than all of the Warrants represented by a Warrant Certificate
are exercised, a new Warrant Certificate will be issued and delivered for the
remaining amounts of Warrants.
10
<PAGE> 37
PLAN OF DISTRIBUTION
The Company may sell the Securities in any of three ways: (i) to or through
underwriters or dealers, (ii) through agents or (iii) directly to one or more
purchasers. With respect to each series of Securities being offered hereby, the
terms of the offering of the Securities of such series, including the name or
names of any underwriters, dealers or agents, the purchase price of such
Securities and the proceeds to the Company from such sale, any underwriting
discounts, selling commissions and other items constituting underwriters',
dealers' or agents' compensation, any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers or agents, and
any securities exchanges on which the Securities of such series may be listed,
will be set forth in, or may be calculated from the information set forth in,
the Prospectus Supplement. Only underwriters so named in the Prospectus
Supplement are deemed to be underwriters in connection with the Securities
offered thereby.
If underwriters are used in the sale, the Securities will be acquired by
the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. The
Securities may be offered to the public either through underwriting syndicates
represented by managing underwriters or by underwriters without a syndicate.
Unless otherwise set forth in the Prospectus Supplement, the obligations of the
underwriters to purchase Securities will be subject to certain conditions
precedent and the underwriters will be obligated to purchase all the Securities
offered by the Prospectus Supplement if any of such Securities are purchased.
Any initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
Securities may also be sold directly by the Company or through agents
(which may also act as principals) designated by the Company from time to time.
Any agent involved in the offer or sale of the Securities in respect of which
this Prospectus is delivered will be named, and any commissions payable by the
Company to such agent will be set forth in, or may be calculated from the
information set forth in, the Prospectus Supplement. Unless otherwise indicated
in the Prospectus Supplement, any such agent will be acting on a best efforts
basis for the period of its appointment. In the case of sales made directly by
the Company, no commission will be payable.
If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase Securities from the Company at the public offering
price set forth in the Prospectus Supplement pursuant to delayed delivery
contracts providing for payment and delivery on a future date specified in the
Prospectus Supplement. Such contracts will be subject to the conditions set
forth in the Prospectus Supplement, and the Prospectus Supplement will set forth
the commissions payable for solicitation of such contracts.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments which the agents or underwriters may be required to make in respect
thereof. Agents and underwriters may be customers of, engage in transactions
with, or perform services for the Company or its affiliates in the ordinary
course of business.
In the event that the Securities of any series are not listed on a national
securities exchange, certain broker-dealers may make a market in the Securities
of such series, but will not be obligated to do so and may discontinue any
market making at any time without notice. No assurance can be given that any
broker-dealer will make a market in the Securities or as to the liquidity of the
trading market for the Securities. The Prospectus Supplement with respect to the
Securities of any series will state, if known, whether or not any broker-dealer
intends to make a market in such Securities. If no such determination has been
made, the Prospectus Supplement will so state.
LEGAL MATTERS
Certain legal matters relating to the Securities will be passed upon for
the Company by Sidley & Austin, Chicago, Illinois, and for the underwriters and
agents, if any, by Mayer, Brown & Platt, Chicago, Illinois.
11
<PAGE> 38
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Annual Report on Form 10-K of the Company for the year ended December 31,
1995 have been so incorporated in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The consolidated financial statements of Renaissance Communication Corp. at
December 31, 1994 and 1995 and for each of the years in the three-year period
ended December 31, 1995, appearing in the Company's Current Report on Form 8-K
dated July 26, 1996, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such incorporated financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
12
<PAGE> 39
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<PAGE> 40
===============================================================================
NO DEALER, SALESPERSON OR ANY PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION, OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS OF TRIBUNE, IN CONNECTION WITH THE OFFER
CONTAINED IN THIS PROSPECTUS SUPPLEMENT, AND THE PROSPECTUS OF TRIBUNE, AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY TRIBUNE OR THE UNDERWRITER. NEITHER THE DELIVERY OF
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER AND
THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF TRIBUNE SINCE THE DATE HEREOF. THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS ARE NOT AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITY IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Summary............................ S-3
Risk Factors Relating to the
DECS............................. S-6
Tribune Company.................... S-8
The Learning Company, Inc.......... S-8
Relationship Between Tribune and
The Learning Company............. S-9
Price Range of Learning Common
Stock............................ S-10
Use of Proceeds.................... S-11
Ratios of Earnings to Fixed
Charges.......................... S-11
Selected Historical and Financial
Data of Tribune.................. S-12
Description of DECS................ S-13
Certain United States Federal
Income Tax Considerations........ S-21
Supplemental Plan of
Distribution..................... S-23
Legal Opinions..................... S-25
PROSPECTUS
Available Information.............. 2
Incorporation of Certain Documents
by Reference..................... 2
The Company........................ 3
Use of Proceeds.................... 3
Ratios of Earnings to Fixed
Charges.......................... 3
Description of Debt Securities..... 3
Description of Warrants............ 9
Plan of Distribution............... 11
Legal Matters...................... 11
Experts............................ 12
</TABLE>
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4,600,000 DECS(SM)
(DEBT EXCHANGEABLE FOR
COMMON STOCK(SM))
TRIBUNE COMPANY
% EXCHANGEABLE NOTES
DUE AUGUST 15, 2001
[TRIBUNE LOGO]
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PROSPECTUS SUPPLEMENT
JULY , 1998
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SALOMON SMITH BARNEY
===============================================================================
