Tribune Company Reports First Quarter 2014 Results Revenue increases 21% and Adjusted EBITDA increases 37%

CHICAGO, May 20, 2014 /PRNewswire/ -- Tribune Company (the "Company" or "We"; OTC:TRBAA) today reported its results for the first quarter ended March 30, 2014.  The condensed consolidated financial statements along with management's discussion and analysis of financial condition and results of operations are available in the Financial Information section of the Company's corporate website, www.tribune.com, and on the Company's investor relations app.

Q1 Highlights

  • Consolidated revenue +21% compared to the 1st quarter of 2013
  • Consolidated Adjusted EBITDA +37% compared to the 1st quarter of 2013
  • Completed the acquisition of Gracenote on January 31, 2014

Company Results

Consolidated revenues in the first quarter of 2014 were $852.2 million compared to $705.0 million in the first quarter of 2013, representing an increase of $147.2 million, or 21%.  The acquisition of Local TV increased revenues by $144.8 million

Consolidated Adjusted EBITDA increased to $297.9 million in the first quarter of 2014 from $216.9 million in the first quarter of 2013.  The increase was primarily due to the acquisition of Local TV and an increase in cash distributions from equity investments, partially offset by costs incurred in the initial stages of establishing Tribune Digital Ventures and an increase in Corporate expenses. 

Cash distributions from equity investments in the quarter were $120.3 million, which included a $12.4 million one-time receipt from TV Food Network relating to a management fee dispute that was settled in December 2013. The distributions received in the same period in 2013 were $89.9 million.

Broadcasting

Broadcasting revenues were $398.4 million in the first quarter of 2014, an increase of 67% or $159.2 million as compared to $239.2 million in the first quarter of 2013. 

Broadcasting Adjusted EBITDA was $139.1 million in the first quarter of 2014, compared to $79.6 million in the first quarter of 2013, an increase of 75%. 

Pro forma for acquisition of Local TV (see attached quarterly pro forma financial disclosures)(1)

Pro forma for the acquisition of Local TV, Broadcasting revenues were $398.4 million in the first quarter of 2014 compared to $369.3 million in the first quarter of 2013.  This represents an increase of $29.1 million or 7.9%. Retransmission consent revenues in the quarter were $55.6 million, compared to $29.6 million in the first quarter of 2013, an increase of $26.0 million, or 88%.  Advertising revenues increased to $304.3 million in the first quarter of 2014 as compared with $300.6 million in the first quarter of 2013, representing an increase of $3.7 million, or 1.2%.  Political advertising revenues accounted for $1.4 million of this increase.

Pro forma for the acquisition of Local TV, Broadcasting Adjusted EBITDA was $139.1 million in the first quarter of 2014, compared to $130.1 million in the first quarter of 2013.  The increase was driven by the growth in the TV Station group including the acquisition of Local TV, of $26.4 million, offset primarily by declines in WGN America resulting from increased production and promotion investments associated with new programming, and costs incurred in the initial stages of establishing Tribune Studios.

Publishing

Publishing segment revenues in the first quarter of 2014 were $453.8 million, compared to $465.9 million in the first quarter of 2013, a decline of $12.1 million or 2.6%.  This decline was primarily attributable to declines in advertising revenue of $19.3 million and declines in revenues from commercial printing and delivery services of $4.1 million, offset by increases in other revenues largely resulting from the acquisition of Gracenote in the quarter.

Publishing Adjusted EBITDA was $55.8 million in the first quarter of 2014, compared to $58.0 million in the first quarter of 2013, a decline of 3.8%. Adjusted EBITDA in the newspaper businesses was essentially flat, while costs incurred in the initial stages of establishing Tribune Digital Ventures negatively impacted the year-over-year comparison.

Commenting on the first quarter results, Peter Liguori, Tribune Company President and Chief Executive Officer stated, "In the first quarter of 2014 we demonstrated early signs of the strength of our new broadcast scale. As a consolidated business with the Local TV stations, revenues generated by retransmission consent fees hit an all-time high for the Company -- growing 88% compared to last year. We are also encouraged by the activity we are seeing in the political landscape and its prospects for advertising for the second half of 2014. Programming and branding investments on WGN America resulted in the successful launch of the network's first original series, Salem, in April, which delivered the highest ratings for the network in seven years. We also scaled our metadata competencies through the acquisition of Gracenote in the quarter. Additionally, our newspapers continued to deliver very good results in a challenging environment, and we are confident in the prospects for that business as we move closer to spinning it off from Tribune Company. We remain focused on achieving our objective to drive profitable growth in each of our businesses."

TRIBUNE is one of the country's leading multimedia companies, operating businesses in broadcasting, publishing, and interactive. The company's broadcasting group owns or operates 42 television stations, WGN America on national cable, the national multicast networks Antenna TV and THIS TV, Tribune Studios and Chicago's WGN-AM. In publishing, Tribune's leading daily newspapers include the Los Angeles Times, Chicago Tribune, The Baltimore Sun, Sun Sentinel (South Florida), Orlando Sentinel, Hartford Courant, The Morning Call and Daily Press. Popular news and information websites complement Tribune's print and broadcast properties and extend the company's nationwide audience.

Non-GAAP Financial Measures

This press release includes a discussion of Adjusted EBITDA for the Company and our operating segments (Publishing, Broadcasting and Corporate). Adjusted EBITDA is a financial measure that is not recognized under accounting principles generally accepted in the U.S. ("GAAP"). Adjusted EBITDA is defined as earnings before income taxes, interest income, interest expense, pension expense, equity income and losses, depreciation and amortization, stock-based compensation, certain special items (including severance), non-operating items and reorganization items plus cash distributions from equity investments less cash pension contributions. Adjusted EBITDA for the Company's operating segments is calculated as segment operating profit plus depreciation, amortization, pension expense, stock-based compensation and certain special items (including severance). We believe that Adjusted EBITDA is a measure commonly used by investors to evaluate our performance and that of our competitors. We also present Adjusted EBITDA because we believe investors, analysts and rating agencies consider it useful in measuring our ability to meet our debt service obligations. We further believe that the disclosure of Adjusted EBITDA is useful to investors, as this non-GAAP measure is used, among other measures, by our management to evaluate our performance. By disclosing Adjusted EBITDA, we believe that we create for investors a greater understanding of, and an enhanced level of transparency into, the means by which our management operates our company. Adjusted EBITDA is not a measure presented in accordance with GAAP, and our use of the term Adjusted EBITDA may vary from that of others in our industry. Adjusted EBITDA should not be considered as an alternative to net income (loss), operating profit, revenues or any other performance measures derived in accordance with GAAP as measures of operating performance or liquidity.

Cautionary Statement Regarding Forward-Looking Statements

Certain disclosures in this press release include certain forward-looking statements that are based largely on our current expectations and reflect various estimates and assumptions by the Company. 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 such forward-looking statements, and are in some instances beyond our control. Such risks, trends and uncertainties include: the Company's adoption of fresh-start reporting which caused its consolidated financial statements for periods subsequent to the date we and our subsidiaries (the "Debtors") emerged from chapter 11 bankruptcy to not be comparable to prior periods; the Company's ability to satisfy future capital and liquidity requirements; our ability to access the credit and capital markets at the times and in the amounts needed and on acceptable terms; our ability to retire outstanding debt and satisfy other contractual commitments; increased interest rate risk due to variable rate indebtedness; changes in advertising demand, circulation levels and audience shares; changes in the overall market for television advertising, regulatory and judicial rulings; availability and cost of broadcast rights; competition and other economic conditions including fragmentation of the media landscape and competition from other media alternatives; our ability to develop and grow its on-line businesses; changes in newsprint prices; changes in accounting standards; adverse results from litigation, governmental investigations or tax-related proceedings or audits; our ability to settle unresolved claims filed in connection with the Debtors' chapter 11 cases and resolve the appeals seeking to overturn the confirmation order issued by the U.S. Bankruptcy Court for the District of Delaware on July 23, 2012; our ability to satisfy its pension and other postretirement employee benefit obligations; our ability to attract and retain employees; the effect of labor strikes, lock-outs and labor negotiations; our ability to realize benefits or synergies from acquisitions or divestitures or to operate our businesses effectively following acquisitions or divestitures; our ability to successfully integrate the acquisition of Local TV Holdings, LLC ("Local TV"), including our ability to program the acquired stations to successfully generate improved ratings and increased advertising revenue and to maintain relationships with cable operators, satellite providers and other key commercial partners of Local TV, retain key Local TV employees, and realize the expected benefits and synergies including the expected accretion in earnings; our ability to successfully complete the proposed spin-off of essentially all of our publishing businesses, including the ability to (i) realize the anticipated benefits of the proposed spin-off transaction, achieve requisite regulatory approvals and retain key personnel and (ii) successfully navigate unanticipated developments that may delay or negatively impact the proposed spin-off transaction, changes in market conditions and disruption to business operations as a result of the proposed transaction; our reliance on third-party vendors for various services; our ability to adapt to technological changes; and other events beyond our control that may result in unexpected adverse operating results.

The words "believe," "expect," "anticipate," "estimate," "could," "should," "intend," "may," "plan," "seek," "will," "designed," "assume," "implied" and similar expressions generally identify forward-looking statements. Whether or not any such forward-looking statements are in fact achieved will depend on future events, some of which are beyond the control of the Company. Readers are cautioned not to place undue reliance on such forward-looking statements, which are being made as of the date of this press release. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

(1) Amounts are pro forma for the acquisition of Local TV, which was completed on December 27, 2013, as if the acquisition had occurred as of the beginning of 2013, and are based on Local TV's historical basis of presentation and do not reflect the impact of purchase accounting.

 

Tribune Company and Subsidiaries

Condensed Consolidated Statements of Operations

(In thousands of dollars, except per share data)

(Unaudited)













Three months ended
March 30, 2014


Three months ended
March 31, 2013






Operating Revenues


$                  852,212


$                  705,031






Operating Expenses





   Cost of sales (exclusive of items shown below)


422,757


375,635

   Selling, general and administrative


268,616


199,493

   Depreciation


24,233


16,428

   Amortization


62,258


29,961

   Total operating expenses


777,864


621,517






Operating Profit


74,348


83,514






Income on equity investments, net


37,928


16,090

Interest income


171


113

Interest expense


(43,303)


(12,122)

Other non-operating gain (loss), net


157


(111)

Reorganization items, net


(2,226)


(7,292)

Income Before Income Taxes


67,075


80,192

Income tax expense


26,007


21,833

Net Income


$                    41,068


$                    58,359






Earnings per common share:





Basic and Diluted


$                       0.41


$                       0.58

 

 

Tribune Company and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands of dollars)

(Unaudited)








 March 30, 2014


December 29, 2013

Assets










Current Assets





   Cash and cash equivalents


$         723,652


$               640,697

   Restricted cash and cash equivalents


19,911


221,879

   Accounts receivable (net of allowances of $16,785 and $16,254)


593,913


644,024

   Inventories


14,630


14,222

   Broadcast rights


88,162


105,325

   Income taxes receivable


2,543


11,240

   Deferred income taxes


60,714


54,221

   Prepaid expenses and other


69,657


43,672

   Total current assets


1,573,182


1,735,280






Properties





   Property, plant and equipment


1,131,311


1,115,253

   Accumulated depreciation


(95,947)


(74,446)

   Net properties


1,035,364


1,040,807






Other Assets





   Broadcast rights


82,724


61,175

   Goodwill


3,882,544


3,815,196

   Other intangible assets, net


2,566,965


2,516,543

   Assets held for sale


7,891


-

   Investments


2,082,585


2,163,162

   Other


148,871


143,846

   Total other assets


8,771,580


8,699,922

   Total Assets


$     11,380,126


$           11,476,009

 

 

Tribune Company and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands of dollars, except share and per share data)

(Unaudited)








 March 30, 2014


December 29, 2013

Liabilities and Shareholders' Equity










Current Liabilities





   Accounts payable


$           90,087


$                 93,396

   Senior Toggle Notes


-


172,237

   Other debt due within one year


42,047


32,472

   Accrued reorganization costs


15,198


15,521

   Employee compensation and benefits


161,099


200,033

   Contracts payable for broadcast rights


124,878


139,146

   Deferred revenue


96,236


77,029

   Accrued expenses and other current liabilities


97,524


69,003

   Total current liabilities


627,069


798,837






Non-Current Liabilities





   Long-term debt


3,750,293


3,760,475

   Deferred income taxes


1,427,720


1,393,413

   Contracts payable for broadcast rights


94,795


80,942

   Contract intangible liability, net


189,392


193,730

   Pension obligations, net


189,749


199,176

   Post-retirement, medical, life and other benefits


67,959


63,123

   Other obligations


59,570


60,752

   Total non-current liabilities


5,779,478


5,751,611






Shareholders' Equity





   Preferred stock ($0.001 par value per share)





   Authorized: 40,000,000 shares; No shares issued and outstanding at March 30, 2014 and at Dec. 29, 2013





-


-

   Class A Common Stock ($0.001 par value per share)





   Authorized: 200,000,000 shares; Issued and outstanding: 93,076,289 shares at March 30, 2014 and 89,933,876 shares at Dec. 29, 2013





93


90

   Class B Common Stock ($0.001 par value per share)





   Authorized: 200,000,000 shares; Issued and outstanding: 2,946,097 shares at March 30, 2014 and 3,185,181 shares at Dec. 29, 2013





3


3

   Additional paid-in-capital


4,550,248


4,543,228

   Retained earnings


282,623


241,555

   Accumulated other comprehensive income


140,612


140,685

   Total shareholders' equity


4,973,579


4,925,561

   Total Liabilities and Shareholders' Equity


$     11,380,126


$           11,476,009

 

 

Tribune Company and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands of dollars)

(Unaudited)













Three months ended
March 30, 2014


Three months ended
March 31, 2013




Operating Activities





Net income


$                    41,068


$                    58,359

Adjustments to reconcile net income to net cash provided by (used for) operating activities:









   Stock-based compensation


9,248


-

   Pension credits, net of contributions


(9,534)


(8,616)

   Depreciation


24,233


16,428

   Amortization of contract intangible assets and liabilities


(3,963)


(3,564)

   Amortization of other intangible assets


62,258


29,961

   Income on equity investments, net


(37,928)


(16,090)

   Distributions from equity investment


120,270


89,865

   Amortization of debt issuance costs and original issue discount


3,340


937

   Other non-operating (gain) loss, net


(157)


111

   Non-cash reorganization items, net


-


(138)

   Excess tax benefits from stock-based awards


(976)


-

   Transfers from restricted cash related to bankruptcy disbursements


46


107,195

   Changes in working capital items, excluding effects from acquisitions:





   Accounts receivable, net


66,777


54,754

   Inventories, prepaid expenses and other current assets


(14,251)


16,134

   Accounts payable


(5,671)


(95,104)

   Employee compensation and benefits, accrued expenses and other 

current liabilities






(45,390)


(41,830)

   Deferred revenue


13,661


4,093

   Accrued reorganization costs


(323)


(81,743)

   Income taxes


26,044


(33,736)

   Deferred compensation, postretirement medical, life and other benefits


(544)


(1,059)

   Change in broadcast rights, net of liabilities


(4,737)


305

   Deferred income taxes


(5,039)


45,092

   Change in non-current obligations for uncertain tax positions


-


(10,792)

   Other, net


(2,734)


(613)

Net cash provided by operating activities


235,698


129,949






Investing Activities





Capital expenditures


(17,601)


(12,964)

Acquisitions, net of cash acquired


(158,814)


-

Transfers from restricted cash, net


200,853


-

Investments


(1,805)


(181)

Proceeds from sales of investments and real estate


-


10,388

Net cash provided by (used for) investing activities


22,633


(2,757)






Financing Activities





Repayment of Senior Toggle Notes


(172,237)


-

Repayments of long-term debt


(914)


(3,384)

Excess tax benefits from stock-based awards


976


-

Tax withholdings related to net share settlements of share-based awards


(3,201)


-

Net cash used for financing activities


(175,376)


(3,384)






Net Increase (Decrease) in Cash and Cash Equivalents


82,955


123,808

Cash and cash equivalents, beginning of period


640,697


430,574

Cash and cash equivalents, end of period


$                  723,652


$                  554,382






Supplemental Schedule of Cash Flow Information





Cash paid during the period for:





   Interest


$                    28,462


$                    10,482

   Income taxes, net of refunds


$                      4,855


$                    21,259

 

 

Tribune Company - Consolidated

Reconciliation of Operating Profit to Adjusted EBITDA

(in thousands of dollars)








First  Quarter



2014


2013

Revenue


$   852,212


$    705,031
















Operating Profit


$     74,348


$      83,514

Depreciation


24,233


16,428

Amortization


62,258


29,961

EBITDA


160,839


129,903






Special Items/Stock-Based Compensation:





   Stock-based compensation


9,248


   Severance and related charges


2,963


1,672

   Transaction-related costs


12,241


1,373

   Other


1,850


2,687

EBITDA excluding Special Items/Stock-Based Compensation


187,141


135,635

Pension (credit) expense


(7,804)


(8,266)

Total Segment Adjusted EBITDA


179,337


127,369

Cash distributions from equity investments


120,270


89,865

Cash pension contributions


(1,730)


(350)

Adjusted EBITDA


$   297,877


$    216,884

 

 

Tribune Company - Broadcasting

Summary of Broadcasting Revenues

(In thousands of dollars)










First Quarter
2014


First Quarter
2013



As Reported


As Reported


Pro forma (1)

Advertising


$     304,343


$    191,377


$     300,649

Retransmission consent fees


55,565


9,948


29,567

Carriage fees


14,128


13,733


13,733

Barter/trade


10,311


7,414


10,341

Copyright royalties


6,532


9,708


9,708

Other


7,535


6,979


5,306

Total operating revenues


$     398,414


$    239,159


$     369,304


(1) Amounts are pro forma for the acquisition of Local TV, which was completed on December 27, 2013, as if the acquisition had occurred as of the beginning of 2013.

 

 


Tribune Company - Broadcasting

Reconciliation of Operating Profit to Adjusted EBITDA

(In thousands of dollars)










First Quarter
2014


First Quarter
2013



As Reported


As Reported


Pro forma (1)








Operating Profit


$      64,153


$      46,979


$       89,273

Depreciation


12,376


6,463


12,264

Amortization


56,655


26,008


28,169

EBITDA


133,184


79,450


129,706








Special items/Stock-Based Compensation:







   Stock-based compensation


2,523


-


200

   Severance and related charges


1,414


109


109

   Transaction-related costs


417


-


-

   Other


1,556


155


155

EBITDA excluding Special Items/Stock-Based Compensation


139,094


79,714


130,170

Pension (credit) expense


43


(69)


(69)

Total Segment Adjusted EBITDA


$     139,137


$      79,645


$     130,101









(1) Amounts are pro forma for the acquisition of Local TV, which was completed on December 27, 2013, as if the acquisition had occurred as of the beginning of 2013. Pro forma operating expenses, depreciation and amortization for Local TV are based on Local TV's historical basis of presentation and do not reflect the impact of purchase accounting.

 

 

Tribune Company - Publishing

Summary of Publishing Revenues

(In thousands of dollars)








First Quarter



2014


2013






Advertising





   Retail


$113,341


$129,493

   National


52,433


55,601

   Classified


68,691


68,710

   Total advertising


234,465


253,804






Circulation


107,307


107,114

Other


112,026


104,954

Total operating revenues


$453,798


$465,872

 

 

Tribune Company - Publishing

Reconciliation of Operating Profit to Adjusted EBITDA

(In thousands of dollars)








First  Quarter



2014


2013






Operating Profit


$38,664


$46,390

Depreciation


11,708


9,879

Amortization


5,603


3,953

EBITDA


55,975


60,222






Special Items/Stock-Based Compensation:





   Stock-based compensation


1,448


   Severance and related charges


1,157


1,563

   Transaction-related costs


3,141


383

   Other


292


2,532

EBITDA excluding Special Items/Stock-Based Compensation


62,013


64,700

Pension (credit) expense


(6,216)


(6,731)

Total Segment Adjusted EBITDA


$55,797


$57,969

 

 

 

Tribune Company - Corporate

Reconciliation of Operating Profit to Adjusted EBITDA

(In thousands of dollars)








First  Quarter



2014


2013

Operating Profit


$(28,469)


$  (9,855)

Depreciation


149


86

Amortization



EBITDA


(28,320)


(9,769)






Special Items/Stock-Based Compensation:





   Stock-based compensation


5,277


   Severance and related charges


392


   Transaction-related costs


8,683


990

   Other


2


EBITDA excluding Special Items/Stock-Based Compensation


(13,966)


(8,779)

Pension (credit) expense


(1,631)


(1,466)

Total Segment Adjusted EBITDA


$(15,597)


$(10,245)

 

 


Tribune Company - Broadcasting

Reconciliation of Operating Profit to Adjusted Segment EBITDA - Pro forma (1)

(in thousands of dollars)














Q1 2013


Q2 2013


Q3 2013


Q4 2013


Full Year 2013



Pro forma (1)


Pro forma (1)


Pro forma (1)


Pro forma (1)


Pro forma (1)

Advertising


$     300,649


$     336,589


$     319,249


$     336,912


$     1,293,399

Retransmission consent fees


29,567


32,029


34,167


34,774


130,537

Carriage fees


13,733


13,719


13,408


12,936


53,796

Barter/trade


10,341


10,634


10,540


11,253


42,768

Copyright royalties


9,708


6,296


6,261


10,689


32,954

Other


5,306


6,710


6,407


9,328


27,751

Total operating revenues


369,304


405,977


390,032


415,892


1,581,205












Operating expenses


280,031


299,590


295,600


307,047


1,182,268












Operating Profit


89,273


106,387


94,432


108,845


398,937

Depreciation


12,264


13,408


13,599


14,444


53,715

Amortization


28,169


28,172


28,264


29,451


114,056

EBITDA


129,706


147,967


136,295


152,740


566,708












Special items/Stock-Based Compensation:











   Stock-based compensation


200


663


923


792


2,578

   Severance and related charges


109


504


726


302


1,641

   Transaction-related costs


-


-


48


181


229

   Other


155


1


77


1,275


1,508

EBITDA excluding Special Items/Stock-Based Compensation


130,170


149,135


138,069


155,290


572,664

Pension (credit) expense


(69)


26


(21)


(22)


(86)

Total Segment Adjusted EBITDA


$     130,101


$     149,161


$     138,048


$     155,268


$       572,578













(1) Amounts are pro forma for the acquisition of Local TV, which was completed on December 27, 2013, as if the acquisition had occurred as of the beginning of 2013. Pro forma operating expenses, depreciation and amortization for Local TV are based on Local TV's historical basis of presentation, exclude certain one-time costs related to the change in control, and do not reflect the impact of purchase accounting.

 

 

SOURCE Tribune Company



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