Television's second quarter operating revenues increased 2 percent to $292 million in 2008. Television cash operating expenses were up 7 percent, or $13 million, from last year. Television operating cash flow was $92 million, down 8 percent from $100 million in 2007.
The increase in television revenues in the second quarter of 2008 was driven by an increase in market share at most stations.
While the Tribune Company reported a second quarter 2008 loss from continuing operations of $3.8 billion compared with income from continuing operations of $35 million in the second quarter of 2007, they were able to repay $807 million in debt principal in the quarter. Mr. Zell took over Tribune in December in a leveraged buyout that boosted the company’s debt to about $12.5 billion. Interest expense in the quarter was $211 million.
Tribune reduced expenses 6% in the quarter, in part by trimming payroll. Company wide, there were 930 fewer full-time positions in the second quarter compared with the prior quarter. The company is expected to cut at least 500 more positions this quarter.
The 2008 loss from continuing operations was due to after-tax non-cash charges of $3.8 billion to write down the Company's publishing goodwill and newspaper masthead intangible assets, nearly all of which resulted from the Company's Times Mirror acquisition in 2000.
Cash operating expenses in the second quarter of 2007 included a charge of $24 million for the write-off of Los Angeles Times plant equipment, a charge for severance of $27 million and a charge of $8 million for stock-based compensation expense. Operating cash flow in the second quarter of 2008 decreased 2 percent to $221 million, down from $226 million in the same quarter a year ago. Operating profit before the 2008 write-downs of intangible assets was $168 million in 2008, down 4 percent from $175 million in 2007.
Debt was $12.5 billion at the end of the 2008 second quarter and $9.3 billion at the end of the 2007 second quarter. The increase was primarily due to financing the going-private transaction completed in the fourth quarter of 2007.
Cash and cash equivalents was $161 million at the end of the 2008 second quarter and $262 million at the end of the 2007 second quarter. Capital expenditures, excluding the TMCT real estate purchase discussed below, were $21 million in the second quarter of 2008.
In March 2007, the Company announced an agreement to sell its Southern Connecticut Newspapers -- The Advocate (Stamford) and Greenwich Time (collectively "SCNI"). The sale of SCNI closed in November 2007, and excluded the SCNI real estate in Stamford and Greenwich, Connecticut, which was sold in a separate transaction on April 22, 2008.
During the third quarter of 2007, the Company entered into negotiations to sell the stock of one of its subsidiaries, EZ Buy and EZ Sell Recycler Corporation ("Recycler"). The sale of Recycler closed in October 2007. The results of operations for all of these business units are reported as discontinued operations.
On April 22, 2008, the Company sold the SCNI real estate in Stamford and Greenwich, Connecticut, for $30 million. The net proceeds from these transactions, along with available cash, were used to purchase the real estate formerly leased from TMCT, LLC for $175 million on April 28, 2008.
These transactions were structured as a like-kind exchange, which allowed the Company to defer income taxes on essentially all of the gains from these dispositions.
You can identify these and other forward-looking statements by the use of such words as "will," "expect," "plans," "believes," "estimates," "intend," "continue," or the negative of such terms, or other comparable terminology.
Forward-looking statements also include the assumptions underlying or relating to any of the foregoing statements. Actual results could differ materially from the expectations expressed in these statements.
Factors that could cause actual results to differ include risks and other factors described in Tribune's publicly available reports filed with the Securities and Exchange Commission ("SEC"), which contain a discussion of various factors that may affect Tribune's business or financial results.
Such risks, trends and uncertainties, which in some instances are beyond the Company's control, include:
our ability to generate sufficient cash to service the significant debt levels and other financial obligations that resulted from the Company's going-private transaction;
our ability to comply with or obtain modifications or waivers of the financial covenants contained in our senior credit facilities, and the potential impact to operations and liquidity as a result of restrictive covenants in such senior credit facilities;
our dependency on dividends and distributions from our subsidiaries to make payments on our indebtedness; increased interest rate risk due to our higher level of variable rate indebtedness;
the ability to maintain our subchapter S corporation status;
changes in advertising demand, circulation levels and audience shares;
consumer, advertiser and general market acceptance of various new marketing and product initiatives that the Company has introduced or may pursue in the future and the Company's ability to implement such initiatives without disruption or other adverse impact on the Company's business and operations;
regulatory and judicial rulings, including changes in tax laws or policies; availability and cost of broadcast rights; competition and other economic conditions; changes in newsprint prices;
changes in the Company's credit ratings and interest rates;
changes in accounting standards;
adverse results from litigation, governmental investigations or tax related proceedings or audits;
the effect of labor strikes, lock-outs and negotiations; the effect of acquisitions, joint ventures, investments and divestitures;
the effect of derivative transactions; the Company's reliance on third-party vendors for various services; and other events beyond the Company's control that may result in unexpected adverse operating results.
These factors could cause actual future performance to differ materially from current expectations. Tribune 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 SEC through a Form 8-K. Financial tables to this press release are included in the exhibit to the Form 8-K and are also available on the Company's website. The Company's next 10-Q report to be filed with the SEC may contain updates to the information included in this release.
In publishing, Tribune's leading daily newspapers include the Los Angeles Times, Chicago Tribune, The Sun (Baltimore), South Florida Sun-Sentinel, Orlando Sentinel, Hartford Courant, Morning Call and Daily Press.
The Company's broadcasting group operates 23 television stations, WGN America on national cable, Chicago's WGN-AM and the Chicago Cubs baseball team.
Popular news and information websites complement Tribune's print and broadcast properties and extend the Company's nationwide audience. At Tribune we take what we do seriously and with a great deal of pride. We also value the creative spirit and are nurturing a corporate culture that doesn't take itself too seriously.
(1) "Operating profit" excludes interest and dividend income, interest
expense, equity income and losses, non-operating items and income
taxes. "Operating cash flow" is defined as operating profit before
depreciation and amortization and write-downs of intangible assets.
"Cash operating expenses" are defined as operating expenses before
depreciation and amortization and write-downs of intangible assets.
References to individual daily newspapers include their related