Tribune Company (NYSE: TRB) today reported fourth quarter 2003 diluted earnings per share (EPS) of $1.00 compared with $.57 in the fourth quarter of 2002. The 2003 fourth quarter results included a net non-operating gain of $.34 per diluted share. Non-operating items had no impact on 2002 fourth quarter diluted earnings per share.
For the full year 2003, Tribune reported diluted earnings per share of $2.61 compared with $1.30 in 2002. The 2003 full year results included a net non-operating gain of $.52 per diluted share. In 2002, Tribune recorded a net non-operating loss of $.02 per diluted share, a restructuring charge of $.05 per diluted share and a one-time $.50 loss per diluted share for the cumulative effect of a change in accounting principle related to the initial application of the impairment provisions of FAS 142.
Tribune presents earnings per share amounts on a generally accepted accounting principles (“GAAP”) basis only. This differs from the pro forma earnings per share amounts supplied by broker analysts to databases such as First Call.
“Our financial results reflect solid growth at Tribune’s publishing and broadcast groups,” said Dennis FitzSimons, Tribune’s Chairman, President and CEO. “We met our goal of increasing operating cash flow to $1.6 billion. Despite higher retirement plan costs, cash operating expenses were up just 3 percent, reflecting our intense focus on cost containment. Looking to 2004, we’ll continue to focus on top line revenue growth by meeting the changing needs of our readers, viewers and advertisers.”
FOURTH QUARTER 2003 RESULTS
Tribune’s 2003 fourth quarter operating revenues increased 2.8 percent to $1.47 billion from $1.43 billion in the 2002 fourth quarter. Consolidated cash operating expenses decreased $2 million, or 0.2 percent, in the fourth quarter of 2003 primarily due to lower broadcast rights expense and a decline in Radio/Entertainment expenses, partially offset by higher retirement plan and newsprint expenses and the impact of the KPLR-TV, St. Louis and KWBP-TV, Portland, Ore. acquisitions. Operating cash flow was up 10 percent to $458 million, compared with $416 million in the fourth quarter of 2002. Tribune’s operating profit increased 11.6 percent to $400 million, compared with $359 million in 2002.
Publishing’s fourth quarter operating revenues were $1.08 billion, up 2.3 percent from last year’s fourth quarter. Publishing cash operating expenses rose by 0.8 percent. Publishing operating cash flow was $304 million, a 6.6 percent increase from $285 million in 2002. Publishing operating profit increased 8.4 percent to $260 million, up from $240 million in 2002.
Retail, national and classified advertising revenues discussed below include both print and interactive revenues for 2003 and 2002.
Retail advertising revenues rose by 1 percent for the quarter. Preprint revenues increased 8 percent, with a 20 percent increase in South Florida, an 8 percent increase in Chicago and a 7 percent increase in Los Angeles. Increases in furniture/home furnishing, hardware, electronics and health care were partially offset by a decline in department stores and food.
National advertising was up 7 percent for the quarter with increases in the movies/entertainment, financial and hi-tech categories, partially offset by decreases in travel/resorts and auto manufacturers.
Classified advertising was up 3 percent for the quarter. Auto increased 4 percent and real estate was up 8 percent. Help wanted revenues for the group were up
3 percent; New York rose 4 percent and Los Angeles was up 2 percent while Chicago fell 7 percent.
Interactive revenues were $26 million, up 37 percent, due to strength in classified and banner/sponsorship advertising.
Cash operating expenses increased 0.8 percent from fourth quarter 2002 due primarily to higher newsprint prices and a lower pension credit. Newsprint and ink expense was 5 percent higher than 2002 as newsprint cost per ton was up 8 percent and consumption decreased 2 percent.
In the fourth quarter 2003, publishing’s operating cash flow margin was
28.0 percent, up from 26.9 percent in 2002.
BROADCASTING AND ENTERTAINMENT
Broadcasting and Entertainment’s fourth quarter operating revenues increased 4.1 percent to $386 million, up from $371 million in 2002. Group cash operating expenses were down 4.8 percent in the fourth quarter of 2003. Operating cash flow was $170 million, up 18.1 percent from $144 million in 2002. Operating profit rose 18.7 percent to $156 million from $131 million last year.
Television’s fourth quarter revenues increased 4.1 percent to $353 million, up from $339 million in 2002. Television cash operating expenses decreased 2.2 percent from last year. Television operating cash flow was up 12.8 percent and operating profit rose 12.6 percent.
Radio/Entertainment’s fourth quarter revenues increased 4.2 percent to $33 million, up from $32 million in 2002 due to playoff related revenues for the Chicago Cubs, partially offset by fewer programs in production at Tribune Entertainment. Radio/Entertainment cash operating expenses decreased 21.1 percent from last year primarily due to the production of fewer programs at Tribune Entertainment. Radio/Entertainment operating cash flow was $8.9 million, up from $1.1 million in 2002 and operating profit was $7.5 million, up from a loss of $0.4 million in 2002.
Television results excluding acquisitions:
o Television revenues increased 1 percent in the quarter compared to the fourth quarter of 2002 which showed a 22 percent increase.
o Television cash operating expenses were down 6 percent compared with last year primarily due to decreased broadcast rights amortization, partially offset by higher compensation and benefits expense.
Television’s operating cash flow margin was 45.5 percent, up from 42 percent in 2002.
The Company reached a multi-level agreement with Comcast, the nation’s largest MSO and the dominant cable provider in the Chicago area. In partnership with Comcast and the White Sox, Bulls and Blackhawks, the Company will launch a new regional sports network in September 2004. The Company will receive significant rights fees for the 72 Cubs games that will air on the channel, plus a percentage of the network’s profits. The Company has also sold its 8.6% interest in The Golf Channel to Comcast for $100 million.
Equity income was $12 million in the fourth quarter of 2003, compared with $11 million in the fourth quarter of 2002.
In the 2003 fourth quarter, Tribune recorded a net after-tax non-operating gain of $114 million, or $.34 per diluted share, while in the 2002 fourth quarter the Company recorded a net after-tax non-operating loss of $2 million. Non-operating items in 2003 included gains from the sale of the Company’s ownership interest in The Golf Channel, marking-to-market the Company’s PHONES derivatives and related Time Warner investment, and insurance recoveries related to Sept. 11, 2001 damage sustained by WPIX-TV in New York. The 2002 fourth quarter non-operating items included a loss from marking-to-market the Company’s PHONES derivatives and related Time Warner investment. In addition, in the fourth quarters of 2003 and 2002, the Company reduced its income tax expense and liabilities by $25 million and $26 million, respectively, as a result of favorably resolving certain state and federal income tax issues.
FULL YEAR RESULTS
For the full year 2003, operating revenues increased 3.9 percent to $5.6 billion, up from $5.4 billion in 2002. Consolidated cash operating expenses were up 3.1 percent. Operating cash flow was $1.6 billion, a 6.0 percent increase over the $1.5 billion reported in 2002. Operating profit, before restructuring charges, was up 6.6 percent to $1.4 billion, from $1.3 billion last year.
For the full year 2003, operating revenues for Publishing increased 2.4 percent to $4.0 billion, up from $3.9 billion in 2002. Cash operating expenses increased 2.1 percent in 2003. Operating cash flow grew 3.5 percent to $1.1 billion, from $1.0 billion. Operating profit, before restructuring charges, increased 4.0 percent to $885 million, up from $851 million in 2002.
BROADCASTING AND ENTERTAINMENT
For the full year 2003, operating revenues for Broadcasting and Entertainment increased 7.9 percent to $1.6 billion, up from $1.4 billion in 2002. Cash operating expenses increased 5.6 percent in 2003. Operating cash flow rose 11.9 percent to $579 million from $517 million. Operating profit, before restructuring charges, increased 12.4 percent to $529 million, from $470 million.
For the full year 2003, operating revenues for television increased 8.3 percent to $1.3 billion, up from $1.2 billion in 2002. Cash operating expenses increased 6 percent in 2003. Operating cash flow grew 11.7 percent to $552 million from $494 million. Operating profit, before restructuring charges, increased 11.9 percent to $507 million, from $453 million.
Radio/Entertainment’s full year 2003 revenues increased 5.6 percent to $235 million, up from $222 million in 2002. Radio/Entertainment cash operating expenses increased 4.3 percent from last year primarily due to higher player compensation for the Chicago Cubs and increased program costs at Tribune Entertainment. Radio/Entertainment operating cash flow was up 17.3 percent to $27 million, from $23 million in 2002 and operating profit, before restructuring charges, was up 27.4 percent to $21 million, from $17 million in 2002.
Equity income was $6 million for the full year 2003, compared with a loss of $41 million in 2002. The full year 2002 losses included two one-time items related to CareerBuilder. In the first quarter of 2002, the Company recorded its $7.5 million share of a restructuring charge for CareerBuilder. In the third quarter, there was a one-time charge for Tribune’s $18 million share of CareerBuilder’s tax liability resulting from its conversion to a Limited Liability Company in September 2002. The full year 2003 also reflects the recognition of equity income from TV Food Network.
ADDITIONAL FINANCIAL DETAILS
Corporate expenses for the 2003 fourth quarter increased 25 percent to $16 million from
$13 million in the fourth quarter of 2002 mainly due to higher compensation and benefits expense. Corporate expenses for the full year 2003, before restructuring charges, increased 16.6 percent to $53 million from $46 million in 2002.
Net interest expense for the 2003 fourth quarter decreased to $47 million, down 5.6 percent from $50 million in the fourth quarter 2002. For the full year 2003, net interest expense decreased 6.1 percent to $192 million, down from $204 million in 2002. The decrease was primarily due to a reduction in outstanding debt. Debt at year-end 2003, excluding the PHONES, was approximately $2.0 billion compared with $2.75 billion at the end of 2002.
The effective tax rate in the 2003 fourth quarter was 33.8 percent, compared with a rate of 29.4 percent in the fourth quarter of 2002. The effective tax rate for the full year 2003 was 37.0 percent, compared with a rate of 35.3 percent for the full year 2002. In both the fourth quarters and full years of 2003 and 2002, the Company reduced its income tax expense and liabilities as a result of favorably resolving certain state and federal income tax issues. The adjustment in 2003 was $25 million and was recorded in the fourth quarter. The 2002 adjustment was $35 million, of which $26 million was recorded in the fourth quarter.
Capital expenditures were about $90 million in the fourth quarter and $194 million for the full year 2003.
2004 FULL YEAR OUTLOOK
As stated at the December 2003 analyst conferences, the Company anticipates consolidated revenue growth of about 6 percent in 2004, including about 1 percent from new publications. Consolidated operating expenses should grow in the range of 5.5 percent due to higher expenses for retirement plans, medical, newsprint and the impact of new publications. Full year 2004 diluted earnings per share is expected to be within the range of current Wall Street analyst estimates. This projection assumes that non-operating items are not material in 2004.
WEBCAST OF CONFERENCE CALL
Today at 8 a.m. (CDT), a live Webcast of the 2003 fourth quarter conference call will be accessible through www.tribune.com and www.ccbn.com. An archive of the Webcast will be available on these sites from Jan. 28 through Feb. 4. More information about Tribune is available at www.tribune.com or by calling 800/757-1694.
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TRIBUNE (NYSE: TRB) is one of the country’s premier media companies, operating businesses in broadcasting and publishing. It reaches more than 80 percent of U.S. households and is the only media organization with television stations, newspapers and Web sites in the nation’s top three markets. In publishing, Tribune operates 13 leading daily newspapers including the Los Angeles Times, Chicago Tribune, Newsday and Spanish-language Hoy, plus a wide range of targeted publications. The company’s broadcasting group operates 26 television stations; Superstation WGN on national cable; WGN-AM in Chicago; and the Chicago Cubs baseball team. Popular news and information Web sites complement Tribune’s print and broadcast properties and extend the Company’s nationwide audience.
This press release contains certain comments or forward-looking statements that are based largely on the Company’s current expectations and are subject to certain risks, trends and uncertainties. Such comments and statements should be understood in the context of Tribune’s publicly available reports filed with the SEC, including the most current annual 10-K report and quarterly 10-Q report, which contain a discussion of various factors that may affect the company’s business. These factors could cause actual future performance to differ materially from current expectations. Tribune Company is not responsible for updating the information contained in this press release beyond the published date, or for changes made to this document by wire services or Internet service providers. This press release is being furnished to the Securities and Exchange Commission through a Form 8-K.