- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 28, 1999
Commission file number 1-8572
TRIBUNE COMPANY
(Exact name of registrant as specified in its charter)
Delaware 36-1880355
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
435 North Michigan Avenue, Chicago, Illinois 60611
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (312) 222-9100
No Changes
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
At May 7, 1999 there were 118,501,017 shares outstanding of the Company's
Common Stock (without par value).
- --------------------------------------------------------------------------------
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
--------------------
TRIBUNE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands of dollars, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
First Quarter Ended
----------------------------------
March 28, 1999 March 29, 1998
-------------- --------------
<S> <C> <C>
Operating Revenues............................................. $719,859 $672,693
Operating Expenses
Cost of sales (exclusive of items shown below)................. 337,436 323,131
Selling, general and administrative............................ 174,222 158,241
Depreciation and amortization of intangible assets............. 52,036 47,269
-------- --------
Total operating expenses....................................... 563,694 528,641
-------- --------
Operating Profit............................................... 156,165 144,052
Net loss on equity investments................................. (14,212) (14,325)
Sales of subsidiary and investments............................ 444,927 7,299
Interest income................................................ 1,501 1,441
Interest expense............................................... (23,187) (21,140)
-------- --------
Income Before Income Taxes..................................... 565,194 117,327
Income taxes................................................... (221,932) (47,250)
-------- --------
Net Income..................................................... 343,262 70,077
Preferred dividends, net of tax................................ (4,659) (4,695)
-------- --------
Net Income Attributable to Common Shares....................... $338,603 $ 65,382
======== ========
Earnings Per Share:
Basic.......................................................... $2.85 $ .53
===== =====
Diluted........................................................ $2.61 $ .49
===== =====
Dividends per common share..................................... $ .18 $ .17
===== =====
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
2
<PAGE>
TRIBUNE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
<TABLE>
<CAPTION>
March 28, 1999 December 27, 1998
-------------- -----------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents............................................... $ 22,577 $ 12,433
Investments............................................................. 105,766 -
Accounts receivable, net................................................ 489,843 555,229
Inventories............................................................. 109,977 99,005
Broadcast rights........................................................ 220,028 232,394
Prepaid expenses and other.............................................. 63,694 46,068
---------- ----------
Total current assets.................................................... 1,011,885 945,129
Property, plant and equipment........................................... 1,705,129 1,664,526
Accumulated depreciation................................................ (998,668) (987,791)
---------- ----------
Net properties.......................................................... 706,461 676,735
Broadcast rights........................................................ 175,674 207,757
Intangible assets, net.................................................. 3,074,015 2,703,993
Investments............................................................. 1,913,513 1,249,979
Other................................................................... 145,728 151,977
---------- ----------
Total assets............................................................ $7,027,276 $5,935,570
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Long-term debt due within one year...................................... $ 29,629 $ 29,905
Contracts payable for broadcast rights.................................. 260,594 260,264
Deferred income ........................................................ 96,025 55,097
Income taxes............................................................ 135,887 59,607
Accounts payable, accrued expenses and other current liabilities........ 386,447 423,257
---------- ----------
Total current liabilities............................................... 908,582 828,130
Long-term debt.......................................................... 1,555,098 1,616,256
Deferred income taxes................................................... 1,088,424 701,778
Contracts payable for broadcast rights.................................. 221,906 268,099
Compensation and other obligations...................................... 190,969 164,690
---------- ----------
Total liabilities....................................................... 3,964,979 3,578,953
Shareholders' equity
Series B convertible preferred stock.................................... 282,127 293,203
Common stock and additional paid-in capital............................. 204,299 210,492
Retained earnings....................................................... 3,141,217 2,819,474
Treasury stock (at cost)................................................ (1,423,642) (1,414,661)
Treasury stock held by Tribune Stock Compensation Fund (at cost)........ (99,250) (26,602)
Unearned compensation related to ESOP................................... (156,495) (156,495)
Accumulated other comprehensive income.................................. 1,114,041 631,206
---------- ----------
Total shareholders' equity.............................................. 3,062,297 2,356,617
---------- ----------
Total liabilities and shareholders' equity.............................. $7,027,276 $5,935,570
========== ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
TRIBUNE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
First Quarter Ended
----------------------------------
March 28, 1999 March 29, 1998
-------------- --------------
<S> <C> <C>
Operations
Net income............................................................... $343,262 $ 70,077
Adjustments to reconcile net income to net cash
provided by operations:
Gain on sales of subsidiary and investments......................... (444,927) (7,299)
Depreciation and amortization of intangible assets.................. 52,036 47,269
Deferred income taxes............................................... 112,216 (8,057)
Other, net.......................................................... 124,615 99,070
-------- --------
Net cash provided by operations.......................................... 187,202 201,060
-------- --------
Investments
Capital expenditures..................................................... (30,582) (25,007)
Acquisitions and investments............................................. (68,948) (61,908)
Proceeds from sales of investments....................................... 95,445 9,052
Net (increase) decrease in advances to investee.......................... 34,578 (4,124)
Other, net............................................................... 355 (3,481)
-------- --------
Net cash provided by (used for) investments.............................. 30,848 (85,468)
-------- --------
Financing
Proceeds from issuance of long-term debt................................. - 25,000
Repayments of long-term debt............................................. (71,544) (161,190)
Sales of common stock to employees, net.................................. 15,423 14,846
Purchases of treasury stock.............................................. (28,791) (35,484)
Purchases of treasury stock by Tribune Stock Compensation Fund........... (101,475) -
Dividends................................................................ (21,519) (20,831)
-------- --------
Net cash used for financing.............................................. (207,906) (177,659)
-------- --------
Net increase (decrease) in cash and cash equivalents..................... 10,144 (62,067)
Cash and cash equivalents at the beginning of year....................... 12,433 66,618
-------- --------
Cash and cash equivalents at the end of quarter.......................... $ 22,577 $ 4,551
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
TRIBUNE COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1:
- ------
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments necessary to present
fairly the financial position of Tribune Company and its subsidiaries (the
"Company" or "Tribune") as of March 28, 1999 and the results of their operations
and their cash flows for the quarters ended March 28, 1999 and March 29, 1998.
All adjustments reflected in the accompanying unaudited condensed consolidated
financial statements are of a normal recurring nature. Results of operations for
interim periods are not necessarily indicative of the results to be expected for
the full year. The condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and the related notes
included by reference in the Company's Annual Report on Form 10-K.
Note 2:
- ------
Other comprehensive income includes foreign currency translation
adjustments and unrealized gains and losses on marketable securities, net of the
change in the current maturity value of the Company's Debt Exchangeable for
Common Stock securities ("DECS"). The Company's comprehensive income was as
follows (in thousands):
<TABLE>
<CAPTION>
First Quarter Ended
----------------------------------
March 28, 1999 March 29, 1998
-------------- --------------
<S> <C> <C>
Net income........................................................... $343,262 $ 70,077
Net foreign currency translation adjustment.......................... 670 -
Unrealized holding gain on marketable securities,
net of the change in DECS maturity value:
Arising during the period, before tax............................ 852,696 141,741
Less: reclassification adjustment for gain included
in net income.................................................. (94,840) (7,299)
-------- --------
Unrealized gain, before tax...................................... 757,856 134,442
Income taxes..................................................... (275,691) (52,734)
-------- --------
Net unrealized gain on securities................................ 482,165 81,708
-------- --------
Net other comprehensive income....................................... 482,835 81,708
-------- --------
Comprehensive income................................................. $826,097 $151,785
======== ========
</TABLE>
5
<PAGE>
Note 3:
- ------
Basic earnings per share is computed by dividing net income attributable
to common shares by the weighted average number of common shares outstanding
during the period. Diluted earnings per share is computed based on the
assumption that all of the convertible preferred shares held by the Company's
Employee Stock Ownership Plan are converted into common shares. The computations
of basic and diluted earnings per share were as follows (in thousands, except
per share data):
<TABLE>
<CAPTION>
First Quarter Ended
----------------------------------
March 28, 1999 March 29, 1998
-------------- --------------
<S> <C> <C>
BASIC
Net income........................................................... $343,262 $ 70,077
Preferred dividends, net of tax...................................... (4,659) (4,695)
-------- --------
Net income attributable to common shares............................. $338,603 $ 65,382
-------- --------
Weight average common shares outstanding............................. 118,957 122,574
-------- --------
Basic earnings per share............................................. $ 2.85 $ .53
======== ========
DILUTED
Net income........................................................... $343,262 $ 70,077
Additional ESOP contribution required assuming
all preferred shares were converted, net of tax................... (3,076) (3,197)
-------- --------
Adjusted net income.................................................. $340,186 $ 66,880
-------- --------
Weighted average common shares outstanding........................... 118,957 122,574
Assumed conversion of preferred shares into common shares............ 10,299 10,738
Assumed exercise of stock options, net of common shares
assumed repurchased with the proceeds............................. 1,140 1,840
-------- --------
Adjusted weighted average common shares outstanding.................. 130,396 135,152
-------- --------
Diluted earnings per share........................................... $ 2.61 $ .49
======== ========
</TABLE>
Note 4:
- ------
Inventories consist of (in thousands):
March 28, 1999 Dec. 27, 1998
-------------- -------------
Finished goods................................ $ 81,127 $74,631
Newsprint (at LIFO)........................... 16,965 12,207
Supplies and other............................ 11,885 12,167
-------- -------
Total inventories............................. $109,977 $99,005
======== =======
Newsprint inventories are valued under the LIFO method and were less than
current cost by approximately $8.5 million at March 28, 1999 and $9.9 million at
December 27, 1998. Finished goods primarily include books and supplemental
educational materials.
6
<PAGE>
Note 5:
- ------
In August 1998, the Company reached an agreement with Meredith Corporation
to acquire the assets of television station KCPQ-Seattle in exchange for the
assets of the Company's WGNX-Atlanta television station and cash. In March 1999
and in a three-way transaction, Meredith purchased KCPQ from Kelly Television
Co. and then exchanged the station for WGNX. The divestiture of WGNX was
accounted for as a sale and the acquisition of KCPQ was recorded as a purchase.
The Company recorded the assets of KCPQ at fair market value and recognized a
pretax gain of $348 million, which increased diluted earnings per share by
$1.62. Current Federal Communications Commission ("FCC") regulations preclude
the Company from owning both KCPQ and the Company's KTWB-Seattle (formerly KTZZ)
television station. As part of the transaction, the Company transferred the
assets of KTWB into a disposition trust. Pursuant to the terms of the
disposition trust, an independent trustee is charged with finding a buyer for
KTWB by September 1, 1999.
Also in March 1999, the Company sold one million shares of America Online
common stock for $95 million in cash, resulting in a pretax gain of $95 million
and increasing diluted earnings per share by $.45. In the aggregate,
non-recurring items added $2.08 to diluted earnings per share in the first
quarter of 1999.
In the first quarter of 1998, the Company sold approximately 0.7 million
shares of Open Market common stock for $9 million in cash, resulting in a pretax
gain of $7 million and adding $.03 to diluted earnings per share.
Note 6:
- ------
In February 1999, the Company acquired JDTV, Inc. a distributor of
television listings information to the cable and satellite television
industries. In March 1999, the Company acquired the assets of television station
KCPQ-Seattle, with a fair value of approximately $380 million, in exchange for
its WGNX-Atlanta television station and cash.
In January 1998, the Company acquired ownership of the North American
Sunshine line of educational materials. In June 1998, the Company acquired the
assets of television stations KTWB-Seattle and WXMI-Grand Rapids, with a fair
value of approximately $179 million, in exchange for its WQCD radio station in
New York and cash. In September 1998, the Company purchased South Florida
Newspaper Network Inc., a publisher of weekly newspapers in South Florida.
The acquisitions are being accounted for by the purchase method, and
accordingly, the results of operations of the companies have been included in
the consolidated financial statements since their respective dates of
acquisition.
Note 7:
- ------
In April 1999, the Company issued 8.0 million of its Exchangeable
Subordinated Debentures due 2029 ("PHONES"), for an aggregate principal amount
of approximately $1.2 billion. The principal amount was equal to the then
current market value of 8.0 million shares of America Online ("AOL") common
stock at $157 per share. At maturity, the PHONES will be redeemed at the greater
of the then market value of AOL common stock or $157 per PHONES. Interest on the
debentures will be paid quarterly at an annual rate of 2%. Proceeds from the
issuance of the PHONES will be used for general corporate purposes.
7
<PAGE>
During the first quarter of 1999, the Company entered into a one-year hedge
transaction ("AOL collar") with respect to 1.0 million shares of its AOL common
stock investment. The AOL collar locks in the value of these shares within the
price range of $92 - $106 per share. Since this transaction will settle in the
first quarter of 2000, the value of these shares under the collar is classified
as a current asset in the balance sheet at March 28, 1999.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities," effective for fiscal year 2000. The Company
has elected early adoption of SFAS 133 as of the beginning of its second quarter
of 1999. SFAS 133 requires that all derivative instruments be recorded in the
balance sheet at fair value. The provisions of SFAS 133 will impact the
Company's accounting for its 8.0 million PHONES, its 4.6 million Debt
Exchangeable for Common Stock securities ("DECS") and its AOL collar for 1.0
million shares. Under the provisions of SFAS 133, the value of the PHONES and
the DECS will each be split into a debt component and a derivative component.
Any change in the fair value of the derivative component of these securities
will be recorded in the statement of income.
Prior to the adoption of SFAS 133, changes in the fair value of the
Company's 8.0 million AOL shares and 4.6 million of The Learning Company ("TLC")
shares related to the PHONES and DECS, respectively, have been recorded in the
accumulated other comprehensive income component of shareholders' equity in the
Company's balance sheet, as these securities had been classified as available-
for-sale. With the adoption of SFAS 133, the 8.0 million shares of AOL common
stock and the 4.6 million shares of TLC common stock will be reclassified
to trading securities. As a result of this change in classification, the Company
will recognize in its second quarter 1999 income statement pretax gains totaling
approximately $1.3 billion as of March 28, 1999. In addition, beginning in the
second quarter of 1999, the Company will record subsequent changes in the fair
value of these securities in the income statement.
Changes in the fair value of the AOL and TLC shares should at least
partially offset changes in the fair value of the derivative component of the
PHONES and the DECS, respectively. However, there may be periods with
significant non-cash increases or decreases to the Company's net income
pertaining to the PHONES, DECS and the related AOL and TLC shares.
Also in the second quarter of 1999, the Company will record a net after-tax
charge of approximately $3 million, representing the cumulative effect of the
change in accounting principle resulting from adjusting the DECS securities
and the AOL collar to fair value.
Note 8:
- ------
In March 1997, the Company acquired Renaissance Communications Corp., a
publicly traded company that owned six television stations. The stations
acquired included WBZL-Miami, WTIC-Hartford and WPMT-Harrisburg. The FCC order
granting the Company's application to acquire the Renaissance stations contained
waivers of two FCC rules. First, the FCC temporarily waived its duopoly rule
relating to the overlap of WTIC's and WPMT's broadcast signals with those of
other Tribune stations. The temporary waivers were granted subject to the
outcome of pending FCC rulemaking that is expected to make such duopoly waivers
unnecessary. Second, the FCC granted a 12-month waiver of its rule prohibiting
television/newspaper cross-ownership in the same market, which relates to the
Miami television station and the Fort Lauderdale Sun-Sentinel newspaper. The FCC
subsequently issued a rule review to consider modifying its cross-ownership
rule. In March 1998, the FCC granted the Company a waiver extension to allow
continued ownership of both the Miami television station and the Sun-Sentinel
8
<PAGE>
newspaper until the rule review has concluded. The Company cannot predict the
outcome of the FCC duopoly rulemaking or cross-ownership rule review.
Note 9:
- ------
Financial data for each of the Company's business segments is as follows
(in thousands):
<TABLE>
<CAPTION>
First Quarter Ended
--------------------------------
March 28, 1999 March 29, 1998
-------------- --------------
<S> <C> <C>
Operating revenues:
Publishing............................................ $391,815 $372,508
Broadcasting and Entertainment........................ 263,823 240,358
Education............................................. 64,221 59,827
-------- --------
Total operating revenues.................................... $719,859 $672,693
======== ========
Operating profit:
Publishing............................................ $102,793 $ 99,020
Broadcasting and Entertainment........................ 62,974 54,472
Education............................................. (1,066) (696)
Corporate expenses.................................... (8,536) (8,744)
-------- --------
Total operating profit...................................... $156,165 $144,052
======== ========
</TABLE>
The assets of the broadcasting and entertainment segment increased by
approximately $280 million during the first quarter of 1999. The increase was
largely due to the acquisition of KCPQ-Seattle in March 1999. Also, Corporate
assets rose by approximately $740 million in the 1999 first quarter, mainly due
to increases in the fair value of the Company's investment portfolio.
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
-----------------------------------------------------------------------
The following discussion compares the results of operations of Tribune
Company and its subsidiaries (the "Company") for the first quarter of 1999 to
the first quarter of 1998.
FORWARD-LOOKING STATEMENTS
- --------------------------
This discussion, the information contained in the preceding notes to the
financial statements and the information contained in Item 3, "Quantitative and
Qualitative Disclosure About Market Risk," contain certain forward-looking
statements that are based largely on the Company's current expectations. Such
forward-looking statements include estimates and statements regarding the
Company's plans to address Year 2000 issues and associated costs and risks.
Forward-looking statements are subject to certain risks, trends and
uncertainties that could cause actual results and achievements to differ
materially from those expressed in the forward-looking statements. Such risks,
trends and uncertainties, which in some instances are beyond the Company's
control, include changes in advertising demand, newsprint prices, interest
rates, competition, regulatory rulings and other economic conditions; the effect
of professional sports team labor strikes, lock-outs and negotiations; the
effect of acquisitions, investments and divestitures on the Company's results of
operations and financial condition; and the Company's reliance on third-party
vendors for various services. The words "believe," "expect," "anticipate,"
"estimate" and similar expressions generally identify forward-looking
statements. Readers are cautioned not to place undue reliance on such
forward-looking statements, which are as of the date of this filing.
SIGNIFICANT EVENTS
- ------------------
In February 1999, the Company acquired JDTV, Inc. a distributor of
television listings information to the cable and satellite television
industries. In March 1999, the Company acquired the assets of television station
KCPQ-Seattle, with a fair value of approximately $380 million, in exchange for
the assets of its WGNX-Atlanta television station and cash.
In January 1998, the Company acquired ownership of the North American
Sunshine line of educational materials. In June 1998, the Company acquired the
assets of television stations KTWB-Seattle and WXMI-Grand Rapids, with a fair
value of approximately $179 million, in exchange for its WQCD radio station in
New York and cash. In September 1998, the Company purchased South Florida
Newspaper Network Inc., a publisher of weekly newspapers in South Florida.
The operating results of these acquired businesses have been included in
the consolidated financial statements since their respective dates of
acquisition.
In March 1999, the exchange of the Company's WGNX-Atlanta television
station for television station KCPQ-Seattle resulted in a pretax gain of $348
million and increased diluted earnings per share by $1.62. Also in March 1999,
the Company sold one million shares of America Online common stock for $95
million in cash, resulting in a pretax gain of $95 million, which increased
diluted earnings per share by $.45. In the aggregate, non-recurring items added
$2.08 to diluted earnings per share in the first quarter of 1999.
In the first quarter of 1998, the Company sold approximately 0.7 million
shares of Open Market common stock for $9 million in cash, resulting in a pretax
gain of $7 million and adding $.03 to diluted earnings per share.
10
<PAGE>
RESULTS OF OPERATIONS
- ---------------------
The results of operations, when examined on a quarterly basis, reflect the
seasonality of the Company's revenues. In both publishing and broadcasting and
entertainment, second and fourth quarter advertising revenues are typically
higher than first and third quarter revenues. Results for the second quarter
usually reflect spring advertising, while the fourth quarter includes
advertising related to the holiday season. In education, second and third
quarter education revenues are typically higher than first and fourth quarter
revenues. Results for the second and third quarters generally reflect the timing
of sales to educational institutions for the upcoming school year, which begins
in September. Results for the 1999 and 1998 first quarters reflect these
seasonal patterns.
CONSOLIDATED
The Company's consolidated operating results for the first quarter of 1999
and 1998 and the percentage changes from 1998 were as follows:
First Quarter
(Dollars in millions, --------------------------
except per share amounts) 1999 1998 Change
---- ---- ------
Operating revenues............................... $720 $673 + 7%
Operating profit ................................ 156 144 + 8%
Net loss on equity investments................... (14) (14) - 1%
Sales of subsidiary and investments
(non-recurring)................................ 443 7 *
Income
Before non-recurring items................... 73 66 + 11%
Non-recurring items.......................... 270 4 *
Net income................................... 343 70 +390%
Diluted earnings per share
Before non-recurring items................... .53 .46 + 15%
Non-recurring items.......................... 2.08 .03 *
Total........................................ 2.61 .49 +433%
*Not meaningful
Earnings Per Share -- Diluted earnings per share for the 1999 first quarter rose
to $.53, up 15% from $.46 last year, excluding non-recurring items. The increase
was mainly due to operating profit gains in the broadcasting and entertainment
and publishing segments and fewer shares outstanding. Including non-recurring
items, diluted earnings per share increased 433% to $2.61 in the 1999 first
quarter.
11
<PAGE>
Operating Revenues and Profit -- The Company's consolidated operating revenues,
EBITDA (operating profit before depreciation, amortization, equity results and
non-recurring items) and operating profit by business segment for the first
quarter were as follows:
First Quarter
--------------------------
(Dollars in millions) 1999 1998 Change
---- ---- ------
Operating revenues
Publishing.................................. $392 $373 + 5%
Broadcasting and Entertainment.............. 264 240 + 10%
Education................................... 64 60 + 7%
---- ----
Total operating revenues......................... $720 $673 + 7%
EBITDA*
Publishing.................................. $123 $118 + 5%
Broadcasting and Entertainment.............. 87 75 + 15%
Education................................... 6 6 - 2%
Corporate expenses.......................... (8) (8) + 3%
---- ----
Total EBITDA..................................... $208 $191 + 9%
Operating profit
Publishing.................................. $103 $ 99 + 4%
Broadcasting and Entertainment.............. 63 54 + 16%
Education................................... (1) (1) - 53%
Corporate expenses.......................... (9) (8) - 2%
---- ----
Total operating profit........................... $156 $144 + 8%
* EBITDA is defined as earnings before interest, taxes, depreciation,
amortization, equity results and non-recurring items. The Company has
presented EBITDA because it is comparable to the data provided by other
companies in the industry and is a common alternative measure of
performance. EBITDA does not represent cash provided by operating
activities as reflected in the Company's consolidated statements of cash
flows, is not a measure of financial performance under generally accepted
accounting principles ("GAAP") and should not be considered in isolation or
as a substitute for measures of performance prepared in accordance with
GAAP.
Consolidated operating revenues for the 1999 first quarter increased 7% to
$720 million from $673 million in 1998, primarily due to acquisitions and higher
advertising revenues. Excluding acquisitions and divestitures ("on a comparable
basis"), revenues were up 5% for the first quarter.
Consolidated operating profit grew 8% and EBITDA increased 9% in the first
quarter of 1999. Publishing operating profit increased 4% in the first quarter
on a 5% increase in revenues and lower newsprint prices. Broadcasting and
entertainment operating profit rose 16% in the first quarter due to significant
growth in television operating profit. Education reported a 1999 first quarter
operating loss of $1.1 million compared with a loss of $0.7 million in 1998.
Education results are historically lower in the first quarter due to the
seasonality of school sales.
12
<PAGE>
Operating Expenses -- Consolidated operating expenses increased 7% in the first
quarter as follows:
First Quarter
--------------------------
(Dollars in millions) 1999 1998 Change
---- ---- ------
Cost of sales.................................... $338 $323 + 4%
Selling, general & administrative................ 174 158 + 10%
Depreciation & amortization
of intangible assets........................... 52 48 + 10%
---- ----
Total operating expenses......................... $564 $529 + 7%
Cost of sales increased 4%, or $15 million, in the 1999 first quarter. On
a comparable basis, cost of sales increased 1%, or $4 million, primarily due to
increased compensation costs, higher broadcast rights amortization and increased
newspaper manufacturing and distribution costs, partially offset by lower
newsprint and ink expense. Compensation grew 5%, or $5 million and broadcast
rights amortization increased 2%, or $2 million. Newsprint and ink expense
declined 7%, or $4 million, as newsprint prices were down 6% and consumption
fell 2%.
Selling, general and administrative ("SG&A") expense was up 10%, or $16
million, in the 1999 first quarter. On a comparable basis, SG&A expense grew 8%,
or $12 million, due to increased compensation costs of 7%, or $5 million, higher
Year 2000 compliance costs of $3 million and increased expenses for development
activities.
The increase in depreciation and amortization of intangible assets
reflects the acquisitions and capital expenditures made in 1999 and 1998.
13
<PAGE>
PUBLISHING
Operating Revenues and Profit -- The following table presents publishing
operating revenues, EBITDA and operating profit for daily newspapers and other
publications/services/development. The latter category includes syndication of
editorial products, advertising placement services, niche and weekly
publications, direct mail operations, cable news programming, distribution of
television and movie listings information and Internet/electronic products.
First Quarter
--------------------------
(Dollars in millions) 1999 1998 Change
---- ---- ------
Operating revenues
Daily newspapers.............................. $355 $350 + 2%
Other publications/services/development....... 37 23 + 60%
---- ----
Total operating revenues......................... $392 $373 + 5%
EBITDA
Daily newspapers.............................. $122 $120 + 2%
Other publications/services/development....... 1 (2) *
---- ----
Total EBITDA..................................... $123 $118 + 5%
Operating profit
Daily newspapers.............................. $105 $103 + 2%
Other publications/services/development....... (2) (4) + 56%
---- ----
Total operating profit........................... $103 $ 99 + 4%
*Not meaningful
Publishing operating revenues for the 1999 first quarter were up 5% to
$392 million from $373 million in 1998 due to higher retail and general
advertising revenues and increased other revenues. Total advertising revenues
increased 3% due to higher rates and linage. Operating profit for the 1999 first
quarter was $103 million, up 4% from $99 million, primarily due to revenue
growth and lower newsprint expense. Daily newspaper operating margins increased
slightly to 29.5% from 29.4% in 1998.
Publishing group revenues by classification were as follows:
First Quarter
--------------------------
(Dollars in millions) 1999 1998 Change
---- ---- ------
Advertising
Retail......................................... $113 $106 + 7%
General........................................ 44 38 + 16%
Classified..................................... 141 144 - 2%
---- ----
Total advertising................................ 298 288 + 3%
Circulation...................................... 63 63 -
Other............................................ 31 22 + 45%
---- ----
Total revenues................................... $392 $373 + 5%
Advertising revenues grew in the first quarter due to both linage and rate
increases, as well as from the acquisition of South Florida Newspaper Network in
September 1998. Retail advertising revenues, excluding South Florida Newspaper
Network, rose 3% mainly due to higher food and drug advertising in
14
<PAGE>
Chicago. General advertising revenues increased 16% primarily due to
improvements in the financial, resorts and high-tech categories in Chicago and
higher automotive advertising in Orlando and Fort Lauderdale. Classified
advertising revenues decreased 2% mainly due to declines in Chicago in the help
wanted and real estate advertising categories, offset in part by improved
automobile advertising.
Total advertising linage increased 3% in the 1999 first quarter. Full run
general advertising linage grew 26% due to gains at Orlando, Fort Lauderdale and
Chicago. Full run classified linage declined 2% due to decreases in Orlando and
Fort Lauderdale. Part run advertising linage was down 3% due primarily to
decreases in Chicago in classified and Chicago and Fort Lauderdale in retail.
Preprint advertising linage was up 12% due to increases at all of the daily
newspapers except Fort Lauderdale. The following summary presents advertising
linage for the first quarter:
First Quarter
--------------------------
(Inches in thousands) 1999 1998 Change
----- ----- ------
Full run
Retail......................................... 872 869 -
General........................................ 240 191 + 26%
Classified..................................... 1,697 1,725 - 2%
----- -----
Total full run................................... 2,809 2,785 + 1%
Part run......................................... 2,424 2,504 - 3%
Preprint......................................... 2,358 2,100 + 12%
----- -----
Total inches..................................... 7,591 7,389 + 3%
Circulation revenues totaled $63 million in the first quarter of 1999,
essentially even with last year. Total average daily circulation was down 2% to
1,295,000 copies in the 1999 first quarter, and total average Sunday circulation
declined 1% to 1,955,000 copies. Although circulation copies decreased,
circulation revenues were flat as a result of reduced discounting.
Other revenues are derived from advertising placement services; the
syndication of columns, features, information and comics to newspapers;
commercial printing operations; delivery of other publications; direct mail
operations; revenues from Internet/electronic products; cable news programming;
distribution of television and movie listings information and other
publishing-related activities. The increase in other revenues in the 1999 first
quarter resulted primarily from the acquisition of JDTV in February 1999 and
higher revenues from direct mail operations and commercial printing operations.
Operating Expenses -- Publishing operating expenses increased 6%, or $16
million, in the first quarter of 1999, mainly due to the acquisitions of South
Florida Newspaper Network and JDTV. Excluding acquisitions, expenses increased
2%, or $6 million. The increase was mainly due to higher compensation costs,
Year 2000 compliance expenses and higher development expenses, partially offset
by lower newsprint and ink expense. Excluding acquisitions, compensation grew
6%, or $6 million, Year 2000 compliance expenses were up $2 million and
development expenses increased $1 million. Newsprint and ink expense declined
7%, or $4 million, as average newsprint prices fell 6% and consumption decreased
2%.
15
<PAGE>
BROADCASTING AND ENTERTAINMENT
Operating Revenues and Profit -- The following table presents operating
revenues, EBITDA and operating profit for television, radio and
entertainment/other. Entertainment/other includes Tribune Entertainment and the
Chicago Cubs.
First Quarter
--------------------------
(Dollars in millions) 1999 1998 Change
---- ---- ------
Operating revenues
Television.................................... $240 $210 + 14%
Radio......................................... 11 13 - 14%
Entertainment/other........................... 13 17 - 25%
---- ----
Total operating revenues......................... $264 $240 + 10%
EBITDA
Television.................................... $ 89 $ 73 + 22%
Radio......................................... 3 5 - 49%
Entertainment/other........................... (5) (3) - 72%
---- ----
Total EBITDA..................................... $ 87 $ 75 + 15%
Operating profit
Television.................................... $ 66 $ 53 + 24%
Radio......................................... 2 5 - 50%
Entertainment/other........................... (5) (4) - 54%
---- ----
Total operating profit........................... $ 63 $ 54 + 16%
Broadcasting and entertainment first quarter 1999 operating revenues
increased 10% to $264 million from $240 million in 1998 due to a 14%, or $30
million, increase in television revenues. Television revenues grew due to strong
performance of the syndicated show "Friends" which debuted in Fall 1998,
improvement of The WB prime time, and the acquisitions of stations in Grand
Rapids and Seattle. In addition to KCPQ-Seattle, which was acquired in exchange
for WGNX-Atlanta in March 1999, Tribune acquired KTWB-Seattle and WXMI-Grand
Rapids in June 1998 in exchange for Tribune's WQCD radio station. Radio revenues
declined 14% in the first quarter of 1999, due to the sale of WQCD in June 1998.
On a comparable basis, radio revenues grew 3%. Entertainment/other revenues
decreased 25%, or $4 million, in the first quarter. The decline was due to lower
revenues at Tribune Entertainment from the absence of "The Geraldo Rivera Show,"
which ended after the 1997-1998 season.
First quarter 1999 operating profit for broadcasting and entertainment was
up 16% to $63 million from $54 million in 1998. The growth was due to a 24%
increase in television operating profit, resulting mainly from improvements at
WPIX-New York, WGN-Chicago, KTLA-Los Angeles and WLVI-Boston.
Operating Expenses -- Broadcasting and entertainment operating expenses
increased 8%, or $15 million, in the first quarter. The increase was in part due
to the television station acquisitions, partially offset by the sale of
WGNX-Atlanta. Excluding acquisitions and divestitures, broadcasting and
entertainment operating expenses were up 4%, or $8 million, mainly due to higher
compensation costs, increased broadcast rights amortization, higher Year 2000
compliance expenses and increased costs at KDAF-Dallas, from the launch of a
prime-time newscast in 1999. Compensation costs increased 5%, or $2 million and
broadcast rights amortization grew 2%, or $2 million.
16
<PAGE>
EDUCATION
Operating Revenues and Profit -- The following table presents operating
revenues, EBITDA and operating profit for the education segment:
First Quarter
--------------------------
(Dollars in millions) 1999 1998 Change
---- ---- ------
Operating revenues............................... $64 $60 + 7%
EBITDA........................................... 6 6 - 2%
Operating profit................................. (1) (1) - 53%
Education revenues for the first quarter were up 7% to $64 million from
$60 million in 1998. The growth was mainly due to higher sales at
Ideal/Instructional Fair and NTC/Contemporary Publishing through both the school
and consumer channels, as well as increased sales of digital educational
products at The Wright Group.
The education group reported a first quarter operating loss of $1.1
million versus an operating loss of $0.7 million in 1998. Education results are
historically lower in the first quarter due to the seasonality of school sales.
Operating Expenses -- Education operating expenses increased 8%, or $5 million,
reflecting higher sales and marketing costs of $2 million, increased cost of
sales of $1 million and higher product development costs of $1 million.
EQUITY RESULTS
Net loss on equity investments totaled $14 million in the first quarter of
1999, essentially even with the first quarter of 1998. Equity losses relate
primarily to Internet activities and Tribune's ownership interest in the growing
WB Network.
OTHER
Interest expense for the 1999 first quarter increased 10% to $23 million
from $21 million last year due to higher average debt levels resulting from
stock repurchases. Interest income for the 1999 first quarter was $1.5 million
compared with $1.4 million last year. The effective tax rate was 39.5% and 40.4%
for the 1999 and 1998 first quarters, respectively, excluding the non-recurring
items.
17
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash flow generated from operations is the Company's primary source of
liquidity. Net cash provided by operations in the first quarter decreased to
$187 million in 1999 from $201 million in 1998 as higher net income was more
than offset by changes in working capital. The Company normally expects to fund
dividends, capital expenditures and other operating requirements with net cash
provided by operations. Funding required for share repurchases and acquisitions
is financed by available cash flow from operations and, if necessary, by the
issuance of debt.
Net cash provided by investments totaled $31 million in the first quarter
of 1999 as the Company received $95 million in gross proceeds from the sales of
investments while spending $69 million for acquisitions and investments.
Net cash used for financing activities in the 1999 first quarter was $208
million due to the repayments of debt, repurchases of common stock and payment
of dividends, partially offset by proceeds from the sales of common stock to
employees. In the first quarter of 1999, the Company repurchased 2.0 million
shares of its common stock for $130 million. Of this total, the Tribune Stock
Compensation Fund ("TSCF") purchased 1.5 million shares from a financial
institution for $101 million, or $66.54 per share, which is subject to a
market-price adjustment provision. The Company established the TSCF in July 1998
to purchase common stock for the purpose of funding certain existing stock-based
compensation plans. At March 28, 1999, the Company had authorization to
repurchase an additional $475 million of its common stock. Quarterly dividends
on the Company's common stock increased 6% to $.18 per share from $.17 per share
in 1998.
In April 1999, the Company issued 8.0 million of its Exchangeable
Subordinated Debentures due 2029 ("PHONES"), for an aggregate principal amount
of approximately $1.2 billion. The principal amount was equal to the then
current market value of 8.0 million shares of America Online ("AOL") common
stock at $157 per share. At maturity, the PHONES will be redeemed at the greater
of the then market value of AOL common stock or $157 per PHONES. Interest on the
debentures will be paid quarterly at an annual rate of 2%. Proceeds from the
issuance of the PHONES will be used for general corporate purposes.
18
<PAGE>
YEAR 2000 COMPLIANCE
- --------------------
The Company relies on various technologies throughout its business operations
that could be affected by the date change in the Year 2000. The Company is
progressing through a comprehensive program to evaluate and address the impact
of the Year 2000 issue on its operational and financial reporting systems and
equipment with embedded technology and the Year 2000 risks associated with its
vendors and customers. The program has been assigned a high priority in relation
to other business projects. The Company has formed a Project Management Office
to provide company-wide leadership, oversight and coordination of the Year 2000
project. The Company's Chief Technology Officer and Chief Financial Officer head
the Project Management Office. These project heads receive frequent updates from
the other members of the Project Management Office team. In addition, progress
reports on the Year 2000 program are presented regularly to the Company's board
of directors and senior management.
State of Readiness
- ------------------
Both internal and external resources are being utilized throughout the Company
to implement the program, which includes the following overlapping phases:
system and equipment inventory and analysis; remediation, testing and
implementation; contingency planning; and vendors and investments. The Company
expects that its internal operational and financial reporting systems and
equipment will be substantially Year 2000 compliant by June 30, 1999. None of
the Company's other significant information technology projects has been delayed
as a result of the Company's Year 2000 compliance efforts.
System and Equipment Inventory and Analysis -- The system and equipment
inventory and analysis phase consists of compiling a detailed inventory of all
of the Company's information and non-information technology hardware, software,
systems and equipment to determine which of these items are date-sensitive and
require remediation to become Year 2000 compliant. This analysis involves both
an internal assessment and contact with the systems and equipment manufacturers.
The principal systems and equipment identified by the Company as requiring
remediation are financial systems, human resource systems and news production
systems. This phase is complete.
Remediation, Testing and Implementation -- The remediation, testing and
implementation phase consists of determining and implementing a remediation
method (upgrade, replace or discontinue) for date-sensitive items. The
remediated item is tested and returned to normal operations when compliant.
Testing for significant systems may include functional testing of remedial
measures and regression testing to validate that changes have not altered
existing functionality. A separate Year 2000 mainframe environment has been
created to test all operating system software and program product software. This
Year 2000 environment is designed to accomplish "end to end" testing of the
larger systems applications and to validate interface communications between
systems applications. The Company is also performing its own tests of mission
critical vendor-provided systems and equipment, even if vendor certification of
Year 2000 compliance has been received. The Company is working with the
manufacturers of its affected systems and other outside vendors to implement
required upgrades. The Company has also identified vendors from whom the Company
can procure new systems and equipment to replace non-compliant systems and
equipment. The Company expects to be substantially complete with this phase by
June 30, 1999, except for certain recently acquired companies which are expected
to be Year 2000 compliant by August 31, 1999.
Contingency Planning -- Contingency planning consists of developing solutions
and options in the event that the Company experiences a failure in its
production processes or in the operations of certain of the Company's vendors.
Contingency plans and enactment dates for production processes and vendors are
being developed, but have not yet been finalized. The Company will continue to
develop, review, test and
19
<PAGE>
revise contingency plans, as more information becomes available from internal
testing and external vendor assessment.
Vendors and Investments -- Vendor management consists of assessing vendor
readiness, and if necessary, identifying alternate channels to receive critical
materials and/or supplies. The Company has initiated formal communications with
its vendors through an assessment survey. For critical vendors, including
utilities, banks, newsprint and ink suppliers and a satellite provider, site
visits have been completed. In the event that satisfactory commitments from key
suppliers are not received, the Company is forming plans for the continuing
availability of critical materials and supplies through alternate channels. In
general, the Company is comfortable with the progress made by critical vendors
to date and no critical issues have been identified, except for a general
concern with the utilities industry as alternative suppliers may not be
available. Tribune is also assessing Year 2000 compliance of the companies in
its venture investment portfolio. Tribune will continue to monitor information
provided by these companies regarding their progress toward remediation of Year
2000 issues.
Risks
- -----
The Company may discover additional Year 2000 problems, including that
remediation or contingency plans are not feasible or that the costs of such
plans exceed current expectations. In many cases, the Company is relying on
assurances from vendors that their systems, or that new or upgraded systems
acquired by the Company, will be Year 2000 compliant. The Company believes that
one of its principal Year 2000 risks is the effect the Year 2000 issue will have
on its vendors, especially the utilities industry. A substantial part of the
Company's day-to-day operations is dependent on power and telecommunications
services, for which alternative sources of service may be limited. The Company
will continue to investigate the readiness of its suppliers, including
utilities, and pursue the availability of alternatives to further analyze and
diminish the extent of any impact Year 2000 issues may have on the Company.
Although there can be no assurance that the Company will be able to complete all
of the modifications in the required timeframe and that unanticipated events
will not occur, it is management's belief that the Company is taking adequate
action to address Year 2000 issues. In the event that either the Company or the
Company's vendors fail to adequately address Year 2000 issues, the Company could
suffer business interruptions. If such interruptions cause the Company to be
unable to fulfill its obligations to third parties, the Company could be exposed
to liability to such third parties.
Costs
- -----
The Company does not currently expect that the costs of addressing the Year 2000
issue will have a material effect on the consolidated financial position or
results of operations of the Company. Year 2000 compliance costs are expensed as
incurred and are funded through operating cash flow. The Company currently
estimates total expenses to range from $20 to $25 million, of which $11 million
was incurred through March 28, 1999.
20
<PAGE>
Item 3. Quantitative and Qualitative Disclosure About Market Risk.
---------------------------------------------------------
The following represents an update of the Company's market sensitive
financial information. This information should be read in conjunction with Item
7A of the Company's 1998 Form 10-K.
Equity price risk. The Company has common stock investments in several publicly
traded companies that are subject to market price volatility. These investments
are classified as available-for-sale and are recorded on the balance sheet at
fair value with unrealized gains or losses, net of related tax effects, reported
in the accumulated other comprehensive income component of shareholders' equity.
The following analysis presents the hypothetical change in the fair value
of the Company's common stock investments in publicly traded companies assuming
hypothetical stock price fluctuations of plus or minus 10%, 20% and 30% in each
stock's price. At March 28, 1999, this analysis excludes 4.6 million shares of
The Learning Company common stock related to the Company's Debt Exchangeable for
Common Stock securities. See Note 6 to the Company's Consolidated Financial
Statements in the 1998 Annual Report to Shareholders for further discussion.
This analysis also excludes one million shares of America Online ("AOL") common
stock related to a one-year hedge transaction. See Note 7 to the Company's
Condensed Consolidated Financial Statements in this Form 10-Q for further
discussion.
<TABLE>
<CAPTION>
Valuation of Investments Valuation of Investments
Assuming Indicated Decrease Assuming Indicated Increase
in Each Stock's Price in Each Stock's Price
---------------------------------- Mar. 28, 1999 ----------------------------------
(In thousands) -30% -20% -10% Fair Value +10% +20% +30%
---------- ---------- ---------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Common stock
investments in
public companies $1,094,800 $1,251,200 $1,407,600 $1,564,000 (1) $1,720,400 $1,876,800 $2,033,200
- ----
(1) Includes 10 million shares of AOL common stock valued at $1,255,000.
</TABLE>
During the last 12 quarters, market price movements have caused the fair
value of the Company's common stock investments in publicly traded companies to
change by 10% or more in nine of the quarters, by 20% or more in eight of the
quarters and by 30% or more in five of the quarters.
21
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
(a) The Company held its annual meeting of shareholders on May 4, 1999.
(b) No answer required.
(c) Proposal 1 involved the election of four directors to serve until
the 2002 Annual Meeting. Those directors and the voting results were
as follows:
Votes Votes
"For" "Withheld"
----------- ----------
Kristie Miller 117,029,631 1,605,230
Donald H. Rumsfeld 117,491,312 1,143,549
Patrick G. Ryan 117,551,967 1,082,894
Dudley S. Taft 117,714,446 920,415
Proposal 2 involved the ratification of the selection of
PricewaterhouseCoopers LLP to serve as the Company's independent
accountants for 1999. The voting results were as follows:
Votes Votes Votes
"For" "Against" "Abstained"
----------- ---------- -----------
117,812,638 443,738 378,485
(d) Not applicable.
22
<PAGE>
Item 5. Other Information.
-----------------
The computation of the ratios of earnings to fixed charges, filed
herewith as Exhibit 12, is incorporated herein by reference.
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibits.
12 - Computation of ratios of earnings to fixed charges.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed in the first quarter of 1999.
23
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRIBUNE COMPANY
(Registrant)
Date: May 11, 1999 /s/ R. Mark Mallory
---------------
R. Mark Mallory
Vice President and Controller
(on behalf of the Registrant
and as Chief Accounting Officer)
24
EXHIBIT 12
TRIBUNE COMPANY
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(In thousands, except ratios)
<TABLE>
<CAPTION>
First Quarter Fiscal Year Ended December
Ended -------------------------------------------------------
3/28/99 1998 1997 1996 1995 1994
------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Income from continuing operations (A) $343,262 $414,272 $393,625 $282,750 $245,458 $233,149
Add:
Income tax expense 221,932 290,817 265,375 191,663 167,076 158,698
Losses on equity investments 14,212 33,980 34,696 13,281 13,209 9,739
-------- -------- -------- -------- -------- --------
Subtotal 579,406 739,069 693,696 487,694 425,743 401,586
-------- -------- -------- -------- -------- --------
Fixed charge adjustments
Add:
Interest expense 23,187 88,451 86,502 47,779 21,814 20,585
Amortization of capitalized interest 516 2,068 2,076 2,108 2,253 2,362
Interest component of rental expense (B) 2,751 10,671 10,416 9,362 8,200 8,236
-------- -------- -------- ------- -------- --------
Earnings, as adjusted $605,860 $840,259 $792,690 $546,943 $458,010 $432,769
======== ======== ======== ======== ======== ========
Fixed charges:
Interest expense $ 23,187 $ 88,451 $ 86,502 $ 47,779 $ 21,814 $ 20,585
Interest capitalized 364 1,897 224 168 610 -
Interest component of rental expense (B) 2,751 10,671 10,416 9,362 8,200 8,236
Interest related to guaranteed ESOP debt (C) 3,286 15,578 17,901 20,134 22,057 24,017
-------- -------- -------- -------- -------- --------
Total fixed charges $ 29,588 $116,597 $115,043 $ 77,443 $ 52,681 $ 52,838
======== ======== ======== ======== ======== ========
Ratio of earnings to fixed charges (A) 20.5 7.2 6.9 7.1 8.7 8.2
======== ======== ======== ======== ======== ========
</TABLE>
(A) Income from continuing operations includes non-recurring net gains of $270.5
million in the 1999 first quarter, $63.5 million in fiscal year 1998, $68.9
million in 1997, $6.0 million in 1996 and $8.7 million in 1995. Excluding
these non-recurring items, the ratio of earnings to fixed charges was 5.4 in
the 1999 first quarter, 6.2 in fiscal year 1998, 5.9 in 1997, 7.1 in 1996
and 8.4 in 1995. See Note 5 to the Company's Condensed Consolidated
Financial Statements in this Form 10-Q and the Eleven Year Financial Summary
in the Company's 1998 Annual Report to Shareholders for further discussion
of these non-recurring items.
(B) Represents a reasonable approximation of the interest cost component of
rental expense incurred by the Company.
(C) Tribune Company guarantees the debt of its Employee Stock Ownership Plan
(ESOP).
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
March 28, 1999 condensed consolidated statement of income and condensed
consolidated balance sheet and is qualified in its entirety by references to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-26-1999
<PERIOD-START> DEC-28-1998
<PERIOD-END> MAR-28-1999
<CASH> 18,273
<SECURITIES> 4,304
<RECEIVABLES> 535,077
<ALLOWANCES> 45,234
<INVENTORY> 109,977
<CURRENT-ASSETS> 1,011,885
<PP&E> 1,705,129
<DEPRECIATION> 998,668
<TOTAL-ASSETS> 7,027,276
<CURRENT-LIABILITIES> 908,582
<BONDS> 0
0
282,127
<COMMON> 1,018
<OTHER-SE> 2,779,152
<TOTAL-LIABILITY-AND-EQUITY> 7,027,276
<SALES> 0
<TOTAL-REVENUES> 719,859
<CGS> 0
<TOTAL-COSTS> 337,436
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,187
<INCOME-PRETAX> 565,194
<INCOME-TAX> 221,932
<INCOME-CONTINUING> 343,262
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 343,262
<EPS-PRIMARY> 2.85
<EPS-DILUTED> 2.61
<FN>
The information reported above under "EPS-PRIMARY" represents basic earnings
per share for the quarter ended March 28, 1999.
</FN>
</TABLE>
