-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, nKHPuYj0/MYMGuS32J10qLhPYXRt752tl1vv2W7qd5FE2RVlgf4Hf2Om1ypPvver Gt1UQ50wCrAn7u1TaSY3Mg== 0000950131-94-000370.txt : 19940324 0000950131-94-000370.hdr.sgml : 19940324 ACCESSION NUMBER: 0000950131-94-000370 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 14 CONFORMED PERIOD OF REPORT: 19931226 FILED AS OF DATE: 19940323 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRIBUNE CO CENTRAL INDEX KEY: 0000726513 STANDARD INDUSTRIAL CLASSIFICATION: 2711 IRS NUMBER: 361880355 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 34 SEC FILE NUMBER: 001-08572 FILM NUMBER: 94517402 BUSINESS ADDRESS: STREET 1: 435 N MICHIGAN AVE CITY: CHICAGO STATE: IL ZIP: 60611 BUSINESS PHONE: 3122229100 10-K 1 FORM 10-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 26, 1993 Commission 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 officer) (Zip Code) Registrant's telephone number, including area code: (312) 222-9100 Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on Title of each class which registered - ------------------- ------------------------- Common Stock (without par value) New York Stock Exchange Preferred Share Purchase Rights Chicago Stock Exchange Pacific Stock Exchange
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. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [x] Aggregate market value of the Company's voting stock held by non-affiliates on March 3, 1994, based upon the closing price of the Company's Common Stock as reported on the New York Stock Exchange Composite Transactions list for such date: approximately $3,427,000,000. At March 3, 1994 there were 67,167,342 shares of the Company's Common Stock outstanding. The following documents are incorporated by reference, in part: 1993 Annual Report to Stockholders (Parts I and II, to the extent described therein). Definitive Proxy Statement for the April 19, 1994 Annual Meeting of Stockholders (Part III, to the extent described herein). PART I ITEM 1. BUSINESS. Tribune Company (the "Company") is an information and entertainment company. Through its subsidiaries, the Company is engaged in the publishing of newspapers, books and information in print and digital formats and the broadcasting, production and syndication of information and entertainment in metropolitan areas in the United States. The Company also has an ownership interest in a Canadian newsprint manufacturer. The Company was founded in 1847 and incorporated in Illinois in 1861. As a result of a corporate restructuring in 1968, the Company became a holding company incorporated in Delaware. References in this report to "Tribune Company" or "the Company" include Tribune Company and its subsidiaries, unless the context otherwise indicates. The information in this Item 1 should be read in conjunction with the information contained under the heading "Management's Discussion and Analysis of Results of Operations and Financial Condition" in the Company's 1993 Annual Report to Stockholders, which is incorporated herein by reference. BUSINESS SEGMENTS Through 1992, the Company's operations were divided for reporting purposes into three industry segments: Publishing, Broadcasting and Entertainment, and Newsprint Operations. The newsprint operations segment consisted entirely of QUNO Corporation ("QUNO"), which operates in Canada while the other segments operate in the United States. As a result of an initial public offering completed by QUNO in February 1993, the Company's ownership interest in the newsprint operations segment was reduced from 100% to 59%, and its voting interest was reduced to 49%. As the Company's voting interest is now less than 50%, the Company is using the equity method of accounting for its investment in QUNO beginning in 1993 and newsprint operations is no longer reported as a business segment. On March 20, 1991, the Company sold its New York newspaper, the Daily News. The following table sets forth operating revenue and profit information regarding each segment of the Company and presents publishing results both including and excluding the New York Daily News (in millions).
FISCAL YEAR ENDED DECEMBER ----------------------------------------------------- 1993 1992 1991 1990 1989 --------- --------- --------- --------- --------- Operating Revenues: Publishing Publishing excluding Daily News (1)..... $1,229.4 $1,176.2 $1,150.9 $1,205.6 $1,216.4 New York Daily News..................... - - - 321.8 422.0 -------- -------- -------- -------- -------- Total Publishing..................... 1,229.4 1,176.2 1,150.9 1,527.4 1,638.4 Broadcasting and Entertainment (2)....... 727.2 684.0 617.5 624.0 584.3 Intercompany............................. (4.1) (4.4) (4.0) (3.2) (3.4) -------- -------- -------- -------- -------- Total................................ 1,952.5 1,855.8 1,764.4 2,148.2 2,219.3 Newsprint Operations..................... - 366.3 422.1 351.7 456.7 Intercompany............................. - (117.2) (142.5) (138.0) (213.5) -------- -------- -------- -------- -------- Total Operating Revenues............. $1,952.5 $2,104.9 $2,044.0 $2,361.9 $2,462.5 -------- -------- -------- -------- -------- Operating Profit (Loss) (3): Publishing Publishing excluding Daily News (4)..... $ 255.1 $ 224.5 $ 217.0 $ 278.6 $ 299.3 New York Daily News..................... - - - (114.5) (2.2) -------- -------- -------- -------- -------- Total Publishing..................... 255.1 224.5 217.0 164.1 297.1 Broadcasting and Entertainment (2)....... 125.7 121.3 100.2 107.5 96.8 Corporate expenses....................... (24.4) (23.6) (22.2) (22.6) (22.1) -------- -------- -------- -------- -------- Total................................ 356.4 322.2 295.0 249.0 371.8 Newsprint Operations..................... - (53.8) (7.0) (11.1) 61.3 -------- -------- -------- -------- -------- Total Operating Profit............... $ 356.4 $ 268.4 $ 288.0 $ 237.9 $ 433.1 -------- -------- -------- -------- --------
1 - ---------- (1) 1992 amounts have been restated to conform to the 1993 presentation. (2) 1992 includes $12.3 million of Major League Baseball expansion fees. (3) Operating profit for each segment excludes interest income and expense, non- operating gains and losses, equity in QUNO net loss and income taxes. (4) 1992 includes a $15.3 million charge for the disposition of The Peninsula Times Tribune. The following table sets forth asset information for each industry segment (in millions).
FISCAL YEAR ENDED DECEMBER --------------------------------------------------- 1993 1992 1991 1990 1989 -------- -------- -------- -------- -------- Assets: Publishing...................... $ 988.4 $ 856.4 $ 861.9 $ 924.3 $1,018.4 Broadcasting and Entertainment.. 1,155.3 1,149.5 1,120.0 1,065.0 1,175.4 Corporate (1)................... 392.7 133.2 132.2 148.6 157.2 Intercompany receivables........ - (10.8) (18.7) (12.3) (29.2) -------- -------- -------- -------- -------- Total....................... 2,536.4 2,128.3 2,095.4 2,125.6 2,321.8 Newsprint Operations............ - 623.3 699.9 700.5 691.7 -------- -------- -------- -------- -------- Total Assets................ $2,536.4 $2,751.6 $2,795.3 $2,826.1 $3,013.5 -------- -------- -------- -------- --------
- ---------- (1) 1993 Corporate assets include a $250.9 million investment in and advances to QUNO Corporation. The Company's results of operations, when examined on a quarter-by-quarter basis, reflect the seasonality of advertising that affects both publishing and broadcasting operations. 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. PUBLISHING The publishing segment represented 63% of the Company's consolidated operating revenues for 1993. The combined average circulation of the Company's newspapers was approximately 1.4 million daily and 2.0 million Sunday, according to Audit Bureau of Circulation ("ABC") averages for the six-month period ended September 1993. The Company's primary newspapers are the Chicago Tribune, the Fort Lauderdale-based Sun-Sentinel and The Orlando Sentinel. In Virginia, the Company owns the Newport News Daily Press. In California, the Company owns two daily newspapers and a weekly newspaper located in suburban areas in the San Diego market. The Company also operated one daily newspaper and several weekly newspapers in Palo Alto, California, which ceased their publication in March 1993. The Company recorded a $15.3 million pre-tax charge in 1992 for the closure of these Palo Alto-based papers. For 1993, the portion of total publishing operating revenues represented by each of the Company's principal newspapers was as follows: Chicago Tribune--53%; Sun-Sentinel--19%; The Orlando Sentinel--16%; and California and Virginia Newspapers--5%. On July 28, 1993, the Company acquired Contemporary Books, Inc., a publisher of non-fiction trade titles and educational books and materials, for $22.0 million in cash and $18.5 million in common stock. On September 13, 1993, the Company acquired Compton's Multimedia Publishing Group for $57 million in cash. Compton's develops and distributes interactive multimedia software for the consumer and education markets. Both of these acquisitions were accounted for as purchases and the results of their operations are included in the consolidated statements of income from the respective dates of their acquisition. In February 1994, the Company acquired substantially all of the assets of The Wright Group, a leading publisher of "whole language" educational materials for the elementary school market, for approximately $100 million in cash. The acquisition will be accounted for as a purchase in 1994. In addition, the Company owns a newspaper syndication and media marketing company, direct mail operations and other publishing-related businesses. 2 Each of the Company's newspapers operates independently to meet most effectively the needs of the area it serves. Editorial policies are established by local management. The Company coordinates certain aspects of operations and resources in order to provide greater efficiency and economies of scale. The Company's newspapers compete for readership and advertising in varying degrees with other metropolitan, suburban and national newspapers as well as with television, radio and other media. Competition for newspaper advertising is based upon circulation levels, readership demographics, price, service and advertiser results, while competition for circulation is based upon the content of the newspaper, service and price. The Company's newspapers are printed in Company-owned production facilities. The principal raw material is newsprint. In 1993, the Company's newspapers utilized approximately 376,000 metric tons of newsprint. Approximately 70% of the newspapers' supply was purchased from QUNO, with the remainder purchased from outside sources. The Company is party to a contract with QUNO expiring in 2007 to supply newsprint based on market prices. Under the contract, the Company has agreed to purchase specified minimum amounts of newsprint each year subject to certain limitations. The specified minimum annual volume is 250,000 metric tons in years 1994 to 1999, 225,000, 200,000 and 175,000 metric tons in years 2000 to 2002, respectively, and 150,000 metric tons in each of years 2003 to 2007. See "QUNO Corporation" for a discussion of the Company's investment in the newsprint manufacturing business. The following table provides a breakdown of revenues for the publishing segment for the last five years, excluding revenues at the Daily News.
OPERATING REVENUES EXCLUDING DAILY NEWS (IN THOUSANDS) FISCAL YEAR ENDED DECEMBER ---------------------------------------------------------- 1993 1992 1991 1990 1989 ---------- ---------- ---------- ---------- ---------- Advertising: Retail........ $ 435,107 $ 427,997 $ 429,340 $ 442,946 $ 455,959 General....... 120,589 128,501 124,391 129,481 128,813 Classified.... 336,828 311,553 300,795 356,356 374,480 ---------- ---------- ---------- ---------- ---------- Total...... 892,524 868,051 854,526 928,783 959,252 Circulation..... 246,093 238,302 234,720 222,992 210,305 Other (1) (2)... 90,785 69,827 61,636 53,844 46,823 ---------- ---------- ---------- ---------- ---------- Total...... $1,229,402 $1,176,180 $1,150,882 $1,205,619 $1,216,380 ---------- ---------- ---------- ---------- ----------
- ----------- (1) 1992 amounts have been restated to conform to the 1993 presentation. (2) Primarily includes revenues from advertising placement services, the syndication of columns, features, information and comics to newspapers, publishing books and information in print and digital formats, commercial printing operations, direct mail operations and other publishing-related activities. 1993 includes revenues from Contemporary Books and Compton's, from their respective dates of acquisition, totaling $24 million. Total advertising revenues improved in 1993 due to increases in full run linage and preprint volume and higher advertising rates. The increase in retail advertising reflects increases in the electronics and department store categories in Chicago and Fort Lauderdale. General advertising revenues decreased in 1993 due to lower advertising in the transportation and resorts categories at nearly all the newspapers. Classified advertising also increased in 1993 as help wanted and automobile advertising improved at most newspapers. Chicago Tribune Founded in 1847, the Chicago Tribune is published daily, including Sunday, and primarily serves an 3 eight-county market in northern Illinois and Indiana. This market ranks third in the United States in number of households. For the six months ended September 1993, the Chicago Tribune ranked 8th in average daily circulation and 5th in average Sunday circulation in the nation, based on ABC averages. Approximately 69% and 50% of the Tribune's daily and Sunday circulation, respectively, is sold through home delivery, with the remainder primarily sold at newsstands and vending boxes. The daily edition's newsstand price increased by $.15 to $.50 and its home delivery price increased $.05 to $.40 effective September 27, 1992. The Sunday edition's newsstand price increased by $.25 to $1.50 effective April 8, 1990. The following tables set forth selected information for the Chicago Tribune.
AVERAGES FOR THE TWELVE MONTHS ENDED DECEMBER ---------------------------------------------------------- 1993 1992 1991 1990 1989 ---------- ---------- ---------- ---------- ---------- CIRCULATION: Daily................. 700,000 715,000 733,000 728,000 731,000 Sunday................ 1,113,000 1,114,000 1,121,000 1,119,000 1,132,000 FISCAL YEAR ENDED DECEMBER -------------------------------------------------------- 1993 1992 1991 1990 1989 -------- -------- -------- -------- -------- (IN THOUSANDS) ADVERTISING INCHES: Full Run (all zones) Retail.............. 1,222 1,202 1,195 1,181 1,343 General............. 294 345 347 386 396 Classified.......... 1,214 1,183 1,213 1,452 1,572 -------- -------- -------- -------- -------- Total............ 2,730 2,730 2,755 3,019 3,311 Part Run.............. 4,672 4,442 4,299 4,523 4,683 Preprinted Inserts.... 2,437 2,210 2,002 1,874 1,753 -------- -------- -------- -------- -------- Total Inches..... 9,839 9,382 9,056 9,416 9,747 -------- -------- -------- -------- -------- OPERATING REVENUES...... $647,112 $619,670 $604,703 $632,001 $635,548 -------- -------- -------- -------- --------
The 1993 improvement in advertising volume is due to increases in part run and preprinted inserts as more targeted zoning options were offered to advertisers. The daily edition price increase on September 27, 1992 contributed to the decrease in circulation volume between 1993 and 1992. Based on ABC averages for the six months ended September 1993, the Chicago Tribune had a 29% lead in total daily circulation and a 110% lead in Sunday circulation over its principal competitor, the Chicago Sun-Times. The Chicago Tribune's total advertising volume and operating revenues are estimated to be substantially greater than those of the Sun-Times. The Chicago Tribune also competes with other city, suburban and national daily newspapers, direct mail operations and other media. In September 1993, the Chicago Tribune began publishing Exito!, targeted to Spanish-speaking households. The Chicago Tribune also operates Chicago Online, a local interactive computer service that offers news and entertainment information through a joint venture with America Online and audiotex services and publications targeted to specific consumer market segments. Sun-Sentinel The Sun-Sentinel is published daily, including Sunday, and leads the Fort Lauderdale market in circulation. Approximately 66% and 64% of the Sun- Sentinel's daily and Sunday circulation, respectively, is sold through home delivery, with the remainder sold at newsstands and vending boxes. The paper's principal competition comes from the Miami Herald and national and local publications, as well as other media. The Miami/Fort 4 Lauderdale market ranks 16th in the nation in terms of households. The newsstand price of all Sunday editions was increased by $.25 to $1.00 on November 20, 1989. In January 1992, the newsstand price of the Palm Beach Sunday edition increased by $.25 to $1.25. Prior to March 27, 1992, the News and the Sun-Sentinel, based in Fort Lauderdale, Florida, were published in the afternoon and morning, respectively. The paper was combined for Saturday and Sunday editions as the Fort Lauderdale Sun-Sentinel. The News, which accounted for approximately three percent of 1991 circulation, discontinued publication after the March 27, 1992 edition. The following tables set forth selected information for the Sun-Sentinel.
AVERAGES FOR THE TWELVE MONTHS ENDED DECEMBER ---------------------------------------------------- 1993 1992 1991 1990 1989 -------- -------- -------- -------- -------- CIRCULATION: Daily................. 263,000 259,000 251,000 245,000 254,000 Sunday................ 362,000 350,000 338,000 328,000 330,000 FISCAL YEAR ENDED DECEMBER ---------------------------------------------------- 1993 1992 1991 1990 1989 -------- -------- -------- -------- -------- (IN THOUSANDS) ADVERTISING INCHES: Full Run (all zones) Retail.............. 1,155 1,105 1,182 1,221 1,421 General............. 203 214 214 252 259 Classified.......... 2,261 2,091 2,159 2,520 2,661 -------- -------- -------- -------- -------- Total............ 3,619 3,410 3,555 3,993 4,341 Part Run.............. 2,831 2,889 2,629 2,326 2,284 Preprinted Inserts.... 1,564 1,473 1,314 1,269 1,581 -------- -------- -------- -------- -------- Total Inches..... 8,014 7,772 7,498 7,588 8,206 -------- -------- -------- -------- -------- OPERATING REVENUES...... $233,169 $221,881 $214,990 $226,763 $228,333 -------- -------- -------- -------- --------
The 1993 improvement in advertising volume is primarily due to increased help wanted and automotive advertising. The 1991 and 1990 reductions in advertising volume are attributable primarily to the slowdown in the south Florida economy during those years. In 1989, the Sun-Sentinel began a commercial printing operation. In 1991, two weekly publications, XS and Exito!, targeted to young adults and Spanish- speaking households, respectively, were launched and continued to expand readership in 1992 and 1993. Like the Chicago Tribune, the Sun-Sentinel also operates audiotex services and publications targeted to specific consumer market segments. The Orlando Sentinel The Orlando Sentinel is published daily including Sunday and serves primarily a five-county area in central Florida. It is the only major daily newspaper in the Orlando market, although it competes with other Florida and national newspapers as well as other media. Approximately 74% of the paper's daily and 66% of its Sunday circulation is sold on a home delivery basis, with the remainder sold at newsstands and vending boxes. On October 12, 1992, the weekly home delivery price was increased by $.50 to $3.75. On March 30, 1992, the newsstand price of the daily edition increased $.15 to $.50, except for most Thursday editions, which had been priced at $.50 since February 1991. The newsstand price of the Sunday edition was increased to $1.50 from $1.25 at the end of 1990. The Orlando/Daytona Beach/Melbourne market ranks 23rd among U.S. markets in terms of households. The following tables set forth selected information for The Orlando Sentinel. 5
AVERAGES FOR THE TWELVE MONTHS ENDED DECEMBER ------------------------------------------------ 1993 1992 1991 1990 1989 -------- -------- -------- -------- -------- CIRCULATION: Daily................. 269,000 281,000 283,000 280,000 269,000 Sunday................ 387,000 387,000 382,000 384,000 371,000 FISCAL YEAR ENDED DECEMBER ------------------------------------------------ 1993 1992 1991 1990 1989 -------- -------- -------- -------- -------- (IN THOUSANDS) ADVERTISING INCHES: Full Run (all zones) Retail.............. 956 985 1,074 1,074 1,113 General............. 83 90 93 118 142 Classified.......... 1,665 1,522 1,468 1,796 2,005 -------- -------- -------- -------- -------- Total............ 2,704 2,597 2,635 2,988 3,260 Part Run.............. 1,766 2,024 2,157 1,890 1,963 Preprinted Inserts.... 2,508 2,220 1,877 1,924 1,902 -------- -------- -------- -------- -------- Total Inches..... 6,978 6,841 6,669 6,802 7,125 -------- -------- -------- -------- -------- OPERATING REVENUES...... $202,327 $196,043 $196,180 $203,307 $207,974 -------- -------- -------- -------- --------
The economy in central Florida began to strengthen in 1993. Advertising volume was up overall due to improved help wanted and automotive advertising and increased preprint volume from increased zoning. The 1991 and 1990 reductions in advertising volume are attributable primarily to the slowdown in the central Florida economy during those years. In 1990, The Orlando Sentinel launched US Express, a free weekly entertainment publication that is used to distribute advertising to non-subscribers. US Express is syndicated nationally, beginning in 1993. California and Virginia Newspapers The Times Advocate, located in Escondido, California, serves the northern portion of San Diego County. The Times Advocate was published weekday afternoons and Saturday and Sunday mornings until April 1992, when the weekday afternoon edition was converted to a morning edition. In 1988, the Times Advocate acquired several weekly newspaper publications, which complement the paper's daily coverage with more local news and advertising. In June 1990, one of these weekly publications, The Californian, began publishing six days a week. The Palo Alto-based Times Tribune ceased publication in March 1993. A $15.3 million pre-tax charge was recorded at December 27, 1992, for the closure of the Times Tribune. In 1986, the Company purchased the Daily Press/The Times-Herald in Newport News, Virginia. The Daily Press is published every morning including Sunday. The Times-Herald was published each weekday afternoon until September 1, 1991, when this edition was discontinued. The Daily Press constitutes the only major daily newspaper in the market, although it competes with other regional and national newspapers as well as other media. In addition to Newport News, the Daily Press market includes Hampton, Williamsburg and eight other cities and counties in Virginia. This market area is commonly called the Virginia Peninsula and, together with Norfolk, Portsmouth and Virginia Beach, is the 39th largest U.S. market in terms of households. The weekly home delivery price was increased by $.30 to $2.75 in September 1992. The newsstand price of the daily edition increased by $.10 to $.35, and the Sunday edition newsstand price was increased to $1.25 from $1.00, both effective October 1, 1990. Approximately 78% of the paper's daily and 75% of its Sunday circulation is sold on a home delivery basis, with the remainder sold at newsstands and vending boxes. 6 The following tables set forth selected combined information for the California and Virginia daily newspapers.
AVERAGES FOR THE TWELVE MONTHS ENDED DECEMBER ------------------------------------------------ 1993 1992 1991 1990 1989 -------- -------- -------- -------- -------- CIRCULATION (1): Daily....................... 154,000 153,000 154,000 159,000 150,000 Sunday...................... 179,000 178,000 175,000 177,000 162,000 FISCAL YEAR ENDED DECEMBER ------------------------------------------------ 1993 1992 1991 1990 1989 -------- -------- -------- -------- -------- (IN THOUSANDS) ADVERTISING INCHES (1) (2): Full Run (all zones) Retail.................... 1,111 1,114 1,154 1,269 1,456 General................... 61 61 88 99 125 Classified................ 1,362 1,227 1,176 1,319 1,537 ------- ------- ------- ------- ------- Total.................. 2,534 2,402 2,418 2,687 3,118 Part Run (3)................ 781 801 922 948 674 Preprinted Inserts (3)...... 3,313 3,198 3,129 2,962 2,688 ------- ------- ------- ------- ------- Total Inches........... 6,628 6,401 6,469 6,597 6,480 ------- ------- ------- ------- ------- OPERATING REVENUES (3)....... $65,146 $82,506 $86,323 $92,233 $93,853 ------- ------- ------- ------- -------
- ----------- (1) The Peninsula Times Tribune was closed on March 12, 1993. Circulation and inches relating to the Times Tribune have been excluded from all years presented. (2) The Times-Herald (afternoon edition) was discontinued on September 1, 1991. Inches relating to this edition have been excluded from all years presented. (3) Includes related weekly publications. The increased inches in 1993 reflect the improving economies of both Virginia & California. Related Businesses The Company is engaged in publishing books and information in print and digital formats through Contemporary Books Inc. and Compton's Multimedia Publishing Group, both acquired in 1993. The Company is also involved in syndication activities, primarily through Tribune Media Services, Inc. ("TMS"), involving the marketing of columns, features, information and comic strips to newspapers, direct mail operations through AmeriComm/Illinois, acquired in 1991, and other publishing-related activities. TMS is also engaged in advertising placement services for television listings in newspapers and the development of news products and services for electronic and print media. Tribune Properties is responsible for oversight of the Company's real estate assets and property leasing transactions. The Company also owns Gold Coast, a shopper publication located in Fort Lauderdale. During 1990, 13 other shoppers and weekly publications located on Florida's Gulf Coast were sold and during 1989 Penny Saver, an Illinois shopper publication, was sold. Total operating revenues for these related businesses are shown below, net of intercompany revenues. The amount for 1992 has been restated to conform to the 1993 presentation. 7 RELATED BUSINESS REVENUES --------------------------- (IN THOUSANDS) 1993.......... $81,648 1992.......... 56,080 1991.......... 48,686 1990.......... 51,315 1989.......... 50,672 Sale of the New York Daily News On March 20, 1991 the Company sold the New York Daily News to Maxwell Newspapers, Inc. ("Maxwell"). Daily News operating losses for 1991 through the date of sale were recorded as part of the Company's 1990 financial statements. Founded in 1919 by Tribune Company as America's first tabloid newspaper, the Daily News serves the New York metropolitan area, the largest market in the United States. The following tables set forth selected historical information for the New York Daily News included as part of total Publishing through 1990.
FISCAL YEAR ENDED DECEMBER -------------------------- 1990 1989 -------- -------- (IN THOUSANDS) OPERATING REVENUES: Advertising: Retail............................... $114,151 $152,580 General.............................. 47,981 59,920 Classified........................... 43,147 63,730 -------- -------- Total............................. 205,279 276,230 Circulation............................ 116,222 145,629 Other.................................. 322 165 -------- -------- Total............................. $321,823 $422,024 -------- -------- ADVERTISING INCHES: Full Run (all zones) Retail............................... 467 591 General.............................. 141 183 Classified........................... 189 294 -------- -------- Total............................. 797 1,068 Part Run............................... 919 1,341 Preprinted Inserts..................... 854 1,097 -------- -------- Total Inches...................... 2,570 3,506 -------- --------
BROADCASTING AND ENTERTAINMENT The broadcasting and entertainment segment represented 37% of the Company's consolidated operating revenues for 1993. The segment currently includes independent VHF television stations located in New York, Los Angeles, Chicago and Denver, independent UHF television stations located in Philadelphia, Atlanta and New Orleans, and six radio stations in New York, Chicago, Denver (2) and Sacramento (2). In November 1993, the Company announced that it had reached an agreement to acquire independent television station WLVI-Boston for approximately $25 million in cash plus the amount of working capital at closing. The acquisition is expected to be completed in the second quarter of 1994, subject to FCC approval. In January 1993, the Company acquired its 8 two Denver radio stations, KOSI-FM and KEZW-AM, for $19.9 million. The acquisition was accounted for as a purchase in 1993. In June 1992, the Company exercised its warrant to acquire a controlling common equity interest in WPHL- TV, Inc., in Philadelphia. This warrant was acquired by the Company in 1991 for $19 million. The exercise of the warrant was accounted for as a purchase and the results of WPHL are included in the Company's consolidated statements of income since June 1992. In entertainment, the Company owns the Chicago Cubs baseball team, produces and syndicates television programming and, beginning in 1993, operates a Chicago area cable programming service. The following table shows sources of revenue for the broadcasting and entertainment segment for the last five years.
OPERATING REVENUES (IN THOUSANDS) FISCAL YEAR ENDED DECEMBER ------------------------------------------------ 1993 1992 1991 1990 1989 -------- -------- -------- -------- -------- Television (1)...... $536,773 $477,193 $445,883 $458,897 $419,416 Radio (2)........... 58,740 49,552 49,167 47,380 48,728 Entertainment (3)... 131,700 157,306 122,464 117,704 116,182 -------- -------- -------- -------- -------- Total........... $727,213 $684,051 $617,514 $623,981 $584,326 -------- -------- -------- -------- --------
- ----------- (1) Includes WPHL-Philadelphia since its acquisition on June 5, 1992. (2) Includes KOSI/KEZW-Denver since their acquisition on January 6, 1993. (3) 1992 includes $12.3 million of Major League Baseball expansion fees. Television In 1993, television broadcasting contributed 74% of broadcasting and entertainment operating revenues. The Company's television stations compete for audience and advertising with other television and radio stations, cable television and other media serving the same markets. Competition for audience and advertising is based upon various interrelated factors including programming content, audience acceptance and price. Selected data for the Company's television stations is shown in the following table.
MARKET (1) MAJOR -------------------- COMMERCIAL EXPIRATION HOUSEHOLDS NATIONAL STATIONS IN OF FCC (000'S) RANK CHANNEL MARKET (2) LICENSE (3) ---------- -------- --------- ---------- ------------- WPIX - New York, New York... 6,692 1 11-VHF 6 1994 (4) KTLA - Los Angeles, California........... 5,006 2 5-VHF 7 1993 (5) WGN - Chicago, Illinois.... 3,071 3 9-VHF 7 1997 WPHL - Philadelphia, Pennsylvania......... 2,661 4 17-UHF 6 1994 (6) WGNX - Atlanta, Georgia..... 1,510 11 46-UHF 6 1997 KWGN - Denver, Colorado..... 1,091 21 2-VHF 6 1993 (7) WGNO - New Orleans, Louisiana............ 609 41 26-UHF 5 1997
- ----------- (1) Source: Nielsen Station Index, September 1993. Ranking of markets is based on number of television households in DMA (Designated Market Area). (2) Source: 1993 Television & Cable Fact Book. (3) See "Governmental Regulation." (4) Expires on June 1, 1994. Renewal application filed on February 1, 1994 is pending. (5) Expired on December 1, 1993. Renewal application filed on August 2, 1993 is pending. (6) Expires on August 1, 1994. Renewal application will be filed. (7) Expired on April 1, 1993. Renewal application filed on December 1, 1992 is pending. 9 Independent television stations, in contrast to network affiliates, are required to produce or acquire all of their programming and to sell all advertising time. Programming emphasis at the Company's stations is placed on syndicated series, feature motion pictures, local and regional sports coverage, news and children's programs. The stations acquire most of their programming from outside sources, although a significant amount is produced locally or supplied by Tribune Entertainment (see "Entertainment"). Contracts for purchased programming generally cover a period of one to seven years, with payment also typically made over several years. The expense for amortization of television broadcast rights in 1993 was approximately $221 million, which represents approximately 41% of total television operating revenues. Average audience share information for the Company's television stations for the past five years is shown in the following table.
AVERAGE AUDIENCE SHARE (1) YEAR ENDED DECEMBER --------------------------------- 1993 1992 1991 1990 1989 ---- ---- ---- ---- ---- WPIX - New York, New York............ 10.8% 11.5% 10.5% 9.8% 9.0% KTLA - Los Angeles, California....... 9.5 9.5 9.8 9.8 10.3 WGN - Chicago, Illinois............. 11.5 12.0 13.0 13.0 13.5 WPHL - Philadelphia, Pennsylvania (2) 5.8 5.0 5.0 4.8 5.5 WGNX - Atlanta, Georgia.............. 7.0 7.3 7.5 6.8 6.3 KWGN - Denver, Colorado.............. 12.0 9.8 10.3 9.8 10.8 WGNO - New Orleans, Louisiana........ 8.0 7.8 7.3 6.5 6.8
- ------------ (1) Represents the estimated number of television households tuned to a specific station as a percent of total viewing households in a defined area. The percentages shown reflect the average Nielsen ratings shares for the February, May, July and November measurement periods for 7 a.m. to 1 a.m. daily, except for WGNO's 1992 and 1991 figures, which are based on Arbitron ratings shares calculated in the same manner. (2) Acquired June 5, 1992. Radio In 1993, the Company's radio stations contributed 8% of broadcasting and entertainment operating revenues. The largest radio station owned by the Company, measured in terms of operating revenues, is WGN. Radio operations include Tribune Radio Networks, which produces and distributes farm and sports programming to radio stations, primarily in the Midwest. Selected information for the Company's radio stations is shown in the following table.
NUMBER OF NATIONAL OPERATING MARKET STATIONS IN AUDIENCE FORMAT FREQUENCY RANK (1) MARKET (2) SHARE (3) ------------------ --------- --------- -------------- --------- WQCD - New York, New York.... Contemporary Jazz 101.9-FM 1 48 3.1% WGN - Chicago, Illinois..... Talk/News/Sports 720-AM 3 37 6.8% KOSI - Denver, Colorado (4).. Adult Contemporary 101.1-FM 24 33 6.7% KEZW - Denver, Colorado (4).. Big Band/Nostalgia 1430-AM 24 33 2.4% KYMX - Sacramento, California Adult Contemporary 96.1-FM 29 25 5.1% KCTC - Sacramento, California Big Band/Nostalgia 1320-AM 29 25 2.5%
10 - ----------- (1) Source: Radio markets ranked by Arbitron Metro Survey Area, Arbitron Company 1993. (2) Source: Arbitron Company 1993. (3) Source: Average of Winter, Spring, Summer and Fall 1993 Arbitron shares for persons 12 years old and over, 6 a.m. to midnight daily during the period measured. (4) Acquired January 1993. Entertainment In 1993, entertainment contributed 18% of the segment's operating revenues. The entertainment portion of the broadcasting and entertainment segment includes Tribune Entertainment Company, the Chicago Cubs baseball team, two minor league baseball teams, ChicagoLand Television News and Tribune Regional Programming. Starting in 1993, the Company has a 31% equity share in Television Food Network, a 24-hour basic cable channel of nutrition and fitness. The Chicago Cubs baseball team received $12.3 million in Major League Baseball expansion fees in December 1992. Tribune Entertainment Company was formed in 1982 to acquire and develop programming for Company television stations and for syndication. Tribune Entertainment participates in the production or distribution of first-run programming, including a daily talk show, a combination home shopping and talk show, music and variety shows, television movies and specials. Tribune Entertainment's most popular program is "Geraldo," a one-hour, daily talk show which is aired on 142 stations that cover 95% of U. S. television households and is sold internationally to many cities in Canada, as well as to several countries in Latin America and Europe. During the 1993-1994 television season, Tribune Entertainment will originate approximately 13 hours of first-run programs per week. On average, the Company's seven television stations will utilize over 9 hours per week of programming furnished by Tribune Entertainment. The Company owns the Chicago Cubs baseball team. In addition to providing local sports entertainment, the Cubs represent an important source of live programming for the Company's Chicago-based broadcasting operations and regional cable programming service. In 1992, the Company acquired a Class AA Southern League franchise in Orlando and a Class A Midwest League franchise in Rockford, Illinois. ChicagoLand Television News, a regional 24-hour cable news programming service, was launched in January 1993 and currently is available to more than 1.1 million cable households in the Chicago-area market. Tribune Regional Programming, Inc. was formed to develop and produce cable television services dedicated to specific local markets. QUNO CORPORATION In February 1993, QUNO completed an initial public offering of 9 million shares of common stock. At the conclusion of the offering, the Company holds 8.8 million, or 49%, of the voting common shares and 4.2 million non-voting common shares of QUNO for a combined total of 59% of QUNO's total 22 million outstanding common shares. The Company also holds a $138.8 million subordinated debenture, convertible into 11.7 million voting common shares of QUNO. As the Company's voting interest is now less than 50%, the Company is accounting for its investment in QUNO using the equity method of accounting beginning in 1993. QUNO is no longer a business segment for reporting purposes. Based in Canada, QUNO's principal operation is the manufacturing and marketing of newsprint. QUNO's related operations presently include a sawmill, a materials recycling company and 60% ownership of a hydro-electric power company in Baie-Comeau, Quebec. QUNO operates two newsprint mills, in Thorold, Ontario and Baie-Comeau, Quebec. The mills were started in 1913 and 1937, respectively, to assure a dependable supply of newsprint at competitive prices for the Company's newspapers. QUNO ranks seventh in production capacity among newsprint-producing groups in North America. 11 The following table shows sources of revenue for QUNO Corporation from 1989 through 1992, the last year QUNO's balance sheet and income statement were consolidated in the Company's financial statements. OPERATING REVENUES (IN THOUSANDS OF U.S. DOLLARS)
FISCAL YEAR ENDED DECEMBER -------------------------------------------- 1992 1991 1990 1989 -------- -------- -------- -------- Newsprint: Affiliated Customers...... $117,195 $142,585 $137,986 $213,458 Unaffiliated Customers.... 224,781 255,603 185,597 210,893 Lumber and Other............ 24,293 23,940 28,155 32,315 -------- -------- -------- -------- Total................... $366,269 $422,128 $351,738 $456,666 -------- -------- -------- --------
Diminished newsprint revenues for 1992 reflect lower transaction prices. Production and Sales The Company's paper mills in Baie-Comeau and Thorold currently have annual newsprint production capacities of approximately 469,000 and 346,000 metric tons, respectively. Competition for newsprint sales is based upon price, product quality and customer service. Sales of newsprint through 1993 are shown in the following table.
NEWSPRINT SALES (IN THOUSANDS OF METRIC TONS) FISCAL YEAR ENDED DECEMBER ---------------------------------------- 1993 1992 1991 1990 1989 ---- ---- ---- ---- ---- Affiliated customers........... 271 266 269 250 363 Unaffiliated customers......... 471 508 473 332 367 --- --- --- --- --- Total sales............. 742 774 742 582 730 --- --- --- --- ---
QUNO reported an operating loss of $31 million in 1993, $23 million less than the $54 million operating loss incurred in 1992. This was partially the result of higher average newsprint selling prices. The North American newsprint industry has endured significant economic difficulties over the past several years mainly caused by a capacity/demand imbalance. New mills and improvements to existing paper machines have increased overall production capacity, while demand has diminished or remained stagnant. As a result, QUNO's transaction prices over the 1989-1993 period have declined by approximately 20%. On August 1, 1992, and again on March 1, 1993, QUNO began implementing, along with the rest of the industry, a reduction in discounts offered on newsprint sales. Though prices began to soften in the second half of 1993, newsprint prices averaged 5% higher in 1993 than in 1992. QUNO supplies newsprint to most of the Company's newspapers. The newspapers also purchase newsprint from other suppliers to maintain diversified sources of supply. Approximately 35% of QUNO's 1993 sales (in metric tons) were to the Company's newspapers. See "Publishing" for a discussion of the supply contract between the Company and QUNO. 12 QUNO sells newsprint to approximately 100 unaffiliated customers located primarily in North America. The majority of such sales are to medium and small newspapers and commercial printers, with no single unaffiliated customer accounting for more than 10% of total newsprint revenue. Generally, QUNO sells newsprint under renewable contracts varying in length from one to five years. These contracts base the selling price on the list price for comparable newsprint at the date of shipment, with negotiated discounts from the list price. Manufacturing Facilities QUNO's Baie-Comeau mill is the largest newsprint mill in eastern Canada, with an annual production capacity of approximately 469,000 metric tons. The mill is on the St. Lawrence tidewater with year-round navigable access to the Atlantic seaboard, overseas ports and a rail ferry service with connections to the railway systems of North America. The Thorold mill, with annual production capacity of about 346,000 metric tons, currently uses a blend of two types of pulp in making newsprint. One type is thermo-mechanically produced and the other is produced from de-inked recycled waste newspapers and magazines. Scierie des Outardes ("SDO"), the QUNO sawmill located near the Baie-Comeau newsprint mill, produces finished lumber that is sold in North America and overseas. SDO is a source of fiber to the Baie-Comeau mill, providing wood chips for conversion into pulp. SDO can produce approximately 225,000 cubic meters of construction grade lumber per year. The papermaking process generally requires substantial quantities of power and steam. The Baie-Comeau mill purchases approximately 45% of its total electric power needs from the Manicouagan Power Company, a 60%-owned QUNO subsidiary, and the remainder from Hydro-Quebec, a governmental agency. The Thorold mill purchases all of its power directly from Ontario Hydro, a governmental agency. Power supplies at both mills are believed to be adequate to meet QUNO's needs for the foreseeable future. Fiber Supply The primary ingredient in the manufacture of newsprint is fiber, which is derived from roundwood logs, wood chips and recycled newspapers and magazines. The Baie-Comeau mill processes both roundwood logs and wood chips obtained primarily from QUNO's timber limits and its sawmill in Quebec. At Thorold, the mill's newsprint is produced approximately 70% from recycled paper pulp and 30% from virgin wood pulp. The wood chips are obtained from outside contractors who harvest QUNO's Ontario timber limits and process the cuttings into chips. Recycled papers for the Thorold mill are obtained primarily in the southern Ontario area from newspaper publishers, magazine printers and community recyclers. Timber limits in Canada are generally made available by provincial governments to forest products companies by means of long-term licenses or forest supply and management agreements. Under such agreements, QUNO holds exclusive cutting rights in Quebec and Ontario on a total of approximately 8,270 square kilometers of timberlands. QUNO's agreements with the Province of Quebec are for a term of 25 years and are subject to a review of QUNO's performance every five years. In Ontario, QUNO has 20-year forest management agreements that call for a review every five years of QUNO's performance under the reforestation provisions thereof. QUNO also owns 700 square kilometers of timberlands. QUNO believes its combined fiber sources continue to be adequate to meet its needs for the foreseeable future. 13 GOVERNMENTAL REGULATION Various aspects of the Company's operations are subject to regulation by governmental authorities in the United States and Canada. The Company's television and radio broadcasting operations are subject to Federal Communications Commission ("FCC") jurisdiction under the Communications Act of 1934, as amended. FCC rules, among other things, govern the term, renewal and transfer of radio and television broadcasting licenses, prohibit concentrations of broadcasting control inconsistent with the public interest, strictly limit common ownership of most communications media in the same market and regulate network programming and syndication of programs. The FCC also regulates certain commercial practices of local broadcast stations, including the rates charged for political advertising and the quantity of advertising within children's programs. The Company is permitted to own both newspaper and broadcast operations in the Chicago market by virtue of "grandfather" provisions in the FCC regulations. Licensees are currently permitted to own up to 12 television stations, 18 AM radio stations and 18 FM radio stations. These numerical limits are subject to other FCC regulations which impose geographic market restrictions and limit the percentage of the national television audience that may be reached by a licensee's television stations in the aggregate. Television and radio broadcasting licenses are subject to renewal by the FCC at five-year and seven-year intervals, respectively, and at such times may be subject to competing applications for the licensed frequencies. The Company presently has FCC authorization to operate seven television stations and three AM and three FM radio stations. From time to time, the FCC revises existing regulations and policies in ways that could affect the Company's broadcasting operations. In addition, Congress from time to time considers and adopts substantive amendments to the Communications Act of 1934 and related legislation. The Company cannot predict what regulations or legislation may be proposed or finally enacted or what effect, if any, such regulations or legislation could have on the Company's broadcasting operations. EMPLOYEES The average number of full-time equivalent employees of the Company in 1993 was 9,900, approximately 2,500 less than the average for 1992. This decrease was due to QUNO employees being included in the Company's 1992 total, but omitted in 1993 due to the deconsolidation of QUNO in 1993. Pension and other employee benefit plans are provided for substantially all employees of the Company. Eligible employees also participate in the Company's Employee Stock Ownership Plan. During 1993, the Company's publishing segment employed approximately 7,700 full-time equivalent employees, about 9% of whom were represented by a total of 7 unions. Contracts with unionized employees of the publishing segment expire at various times through October 1996. Broadcasting and entertainment had an average of 2,100 full-time equivalent employees in 1993. Approximately 26% of these employees are represented by a total of 21 unions. 14 EXECUTIVE OFFICERS OF THE COMPANY Information with respect to the executive officers of the Company is set forth below. The descriptions of the business experience of these individuals include the principal positions held by them since March 1989. Charles T. Brumback (65) Chairman since January 1993, President since January 1989 and Chief Executive Officer since August 1990 (Chief Operating Officer until July 1990) of the Company; formerly President and Chief Executive Officer of Chicago Tribune Company*; Director of the Company since 1981. James E. Cushing, Jr. (38) Vice President and General Counsel of the Company since November 1993; Vice President/Business Affairs of ChicagoLand Television News* from March 1993 to November 1993 (Director/Business Affairs from March 1992 to March 1993); Senior Counsel from October 1990 to March 1992 and Counsel of the Company until October 1990. James C. Dowdle (60) Executive Vice President of the Company since August 1991; President and Chief Executive Officer of Tribune Broadcasting Company* since 1981; Director of the Company since 1985. Stanley J. Gradowski (55) Vice President and Secretary of the Company since 1982. David J. Granat (47) Vice President (since May 1991) and Treasurer (since 1985) of the Company. Donald C. Grenesko (45) Senior Vice President and Chief Financial Officer (since March 1993) and Vice President and Chief Financial Officer (from October 1991 to March 1993) of the Company; President and Chief Executive Officer (until September 1991), Chicago National League Ball Club, Inc.* Joseph A. Hays (63) Vice President/Corporate Relations of the Company since 1983. David D. Hiller (40) Senior Vice President/Development since November 1993; Senior Vice President and General Counsel (from March to November 1993) and Vice President and General Counsel (until March 1993) of the Company; Partner, Sidley & Austin until November 1993. John E. Houghton (62) Retired since January 1993. Chairman since January 1989 (Chief Executive Officer until January 1991) of QUNO Corporation. Director of the Company since 1980. M. Catherine Jaros (44) Vice President/Marketing of the Company since November 1992; formerly Director of Marketing, Strategy and External Development, May-October 1992; Director of Corporate Strategies and Acquisitions, September 1991 to May 1992; Director of Marketing and Specialty Products, May-August 1991; Director of Strategy, December 1990 to May 1991, all at Kraft USA; Vice President Business Development until 1990 at Tappan Capital Partners. - ----------- *A subsidiary of the Company. 15 John S. Kazik (51) Senior Vice President/Information Systems since March 1993; Vice President/Information Systems from December 1989 to March 1993 of the Company and Vice President of Chicago Tribune Company* since 1982. James N. Longson (47) Vice President/Technology of the Company since August 1992; Director of Corporate Development of the Company from April 1991 to August 1992; Vice President/Director of Marketing and Strategic Planning of the New York Daily News from July 1990 to April 1991; formerly Vice President, Facilities and Systems Development of the New York Daily News. John W. Madigan (56) Executive Vice President of the Company and President and Chief Executive Officer of Tribune Publishing Company* since August 1991; Publisher of the Chicago Tribune since August 1990 and President and Chief Executive Officer of Chicago Tribune Company* until September 1993. Director of the Company since 1975. R. Mark Mallory (43) Vice President and Controller since May 1991 (Controller and Director of Planning until May 1991) of the Company. William B. Nelson (43) Vice President/Financial Operations of the Company since February 1994 and Vice President/Chief Financial Officer of Chicago Tribune Company* since January 1983. Andrew J. Oleszczuk (37) Vice President/Development of the Company since December 1993; Director of Planning from August 1990 to December 1993 and Manager of Planning of Tribune Broadcasting Company* until August 1990. Shaun M. Sheehan (49) Vice President/Washington of the Company since July 1992 and Vice President/Washington of Tribune Broadcasting Company* since February 1986. John T. Sloan (42) Senior Vice President/Administration since March 1993 and Vice President/Human Resources of the Company from August 1991 to February 1993; Vice President and Director of Human Resources of the New York Daily News from September 1989 to July 1991; formerly Vice President and Director of Employee Relations of Chicago Tribune Company*. Scott C. Smith (43) President and Chief Executive Officer of Sun-Sentinel Company* (since September 1993); Senior Vice President/Development (August 1991 to September 1993), Senior Vice President and Chief Financial Officer (October 1989 to July 1991) and Vice President/Finance until October 1989 of the Company. - ------------ *A subsidiary of the Company. 16 ITEM 2. PROPERTIES. The corporate headquarters of the Company are located at 435 North Michigan Avenue, Chicago, Illinois. The general character, location and approximate size of the principal physical properties used by the Company at December 26, 1993 are listed below. In addition to those listed, the Company owns or leases transmitter sites, parking lots and other properties aggregating approximately 338 acres in 29 separate U.S. locations, and owns or leases an aggregate of approximately 1,927,000 square feet of space in 187 locations. Included in these figures are 82,000 square feet of space owned by The Peninsula Times Tribune. On March 12, 1993, the Times Tribune ceased publication. Also included in these figures are 62 acres and 233,000 square feet of space owned by the Company which had previously been owned by the New York Daily News. On March 20, 1991, the Company sold the Daily News. The Times Tribune and Daily News properties are being offered for sale. The Company also owns the 39,000- seat stadium used by the Chicago Cubs baseball team. The Company considers its various properties to be in good condition and suitable for the purposes for which they are used.
APPROXIMATE AREA IN SQUARE FEET ------------------------------- GENERAL CHARACTER OF PROPERTY OWNED LEASED ----------------------------- --------- ------- Publishing: Printing plants, business and editorial offices, and warehouse space located in: Chicago, Illinois..................... 1,512,000(1) 111,000 Orlando, Florida...................... 407,000 81,000 Fort Lauderdale, Florida.............. - 135,000(2) Deerfield Beach, Florida.............. 386,000 - Newport News, Virginia................ 207,000 - Escondido, California................. 62,000 - Carlsbad, California.................. - 49,000 Broadcasting and Entertainment: Business offices, studios, garages and transmitters located in: Chicago, Illinois...................... 99,000 4,000 Oak Brook, Illinois.................... - 69,000 Philadelphia, Pennsylvania............. 22,000 3,000 New York, New York..................... - 78,000(3) Los Angeles, California................ 253,000 - Denver, Colorado....................... 46,000 7,000 New Orleans, Louisiana................. - 15,000 Atlanta, Georgia....................... - 21,000 - -----------
(1) Includes Tribune Tower, an approximately 630,000 square foot office building in downtown Chicago, and Freedom Center, the approximately 697,000 square foot production center of the Chicago Tribune. Tribune Tower houses the Company's corporate headquarters, the Chicago Tribune's business and editorial offices, offices of various subsidiary companies and approximately 77,800 square feet of space leased to unaffiliated tenants. Freedom Center houses the Chicago Tribune's printing, packaging and distribution operations. (2) Consists of space leased in New River Center, which is owned by a real estate joint venture in which the Company had a 50% interest at December 26, 1993. No portion of this building is listed as "owned" property in the table. (3) Includes space leased by subsidiary companies in the New York Daily News building, which is owned by a limited partnership in which the Company has a minority interest. No portion of this building is listed as "owned" property in the table. 17 ITEM 3. LEGAL PROCEEDINGS. The Company and its subsidiaries are defendants from time to time in actions for libel and other matters arising out of their business operations. In addition, the Company and its subsidiaries are involved from time to time as parties in various regulatory, environmental and other proceedings with governmental authorities and administrative agencies. The Company does not believe that any such proceedings presently pending will have a material adverse effect on its consolidated financial position or results of operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not Applicable. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. The Company's Common Stock is presently listed on the New York, Chicago and Pacific stock exchanges. The high and low sales prices of the Common Stock by fiscal quarter for the two most recent fiscal years, as reported on the New York Stock Exchange Composite Transactions list, were as follows:
1993 1992 ---------------- ---------------- QUARTER High Low High Low ------- ------ ------- ------ ------- First.......................... $56 7/8 $47 5/8 $46 3/4 $39 1/2 Second......................... 56 1/4 50 47 1/2 38 3/4 Third.......................... 55 48 3/8 47 1/4 40 Fourth......................... 61 1/4 50 7/8 50 3/4 42 3/8
At March 3, 1994 there were 4,180 record holders of the Company's Common Stock. Quarterly cash dividends declared on Common Stock for both 1993 and 1992 were $.24 per share. Total cash dividends declared on Common Stock by the Company were $63,799,000 for 1993 and $62,450,000 for 1992. ITEM 6. SELECTED FINANCIAL DATA. The information for the years 1989 through 1993 contained under the heading "Eleven Year Financial Summary" in the Company's 1993 Annual Report to Stockholders is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The information contained under the heading "Management's Discussion and Analysis of Results of Operations and Financial Condition" in the Company's 1993 Annual Report to Stockholders is incorporated herein by reference. 18 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The Company's Consolidated Financial Statements and Notes thereto and the information contained under the heading "Business Segments" appearing on pages 35 through 51 of the Company's 1993 Annual Report to Stockholders, together with the report thereon of Price Waterhouse dated January 28, 1994, appearing on page 52 of such Annual Report and the information contained under the heading "Quarterly Results" on pages 54 and 55, are incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Not Applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. The information contained under the heading "Executive Officers of the Company" in Item 1 hereof, and the information under the heading "Election of Directors" in the definitive Proxy Statement for the Company's April 19, 1994 Annual Meeting of Stockholders is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION. The information contained under the heading "Executive Compensation" (except those portions relating to Item 13, below) in the definitive Proxy Statement for the Company's April 19, 1994 Annual Meeting of Stockholders is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The information contained under the subheadings "Principal Stockholders" and "Management Ownership" under the heading "Ownership Information" in the definitive Proxy Statement for the Company's April 19, 1994 Annual Meeting of Stockholders, is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. The information contained under the heading "Executive Compensation" (except those portions relating to Item 11, above) and the subheadings "Compensation of Directors" and "Other Transactions" in the definitive Proxy Statement for the Company's April 19, 1994 Annual Meeting of Stockholders, is incorporated herein by reference. 19 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (a)(1)&(2) Financial Statements and Financial Statement Schedules filed as part of this report As listed in the Index to Financial Statements and Financial Statement Schedules on page 23 hereof. (a)(3) Index to Exhibits filed as part of this report As listed in the Exhibit Index beginning on page 32 hereof. (b) Reports on Form 8-K The Company filed a Form 8-K Current Report dated October 29, 1993, which reported under Item 5 the filing of a Prospectus Supplement on October 25, 1993 relating to the offer and sale from time to time of up to $300,000,000 principal amount of the Company's Medium-Term Notes, Series C. This Supplement was to a Registration Statement on Form S-3 (File No. 33-45793), effective July 13, 1992. No financial statements were filed with the report. 20 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 21, 1994. TRIBUNE COMPANY By: Charles T. Brumback Chairman, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 21, 1994. Signature Title --------- ----- Charles T. Brumback Chairman, President and Chief Executive Officer and Director (principal executive officer) James C. Dowdle Executive Vice President and Director John W. Madigan Executive Vice President and Director Donald C. Grenesko Senior Vice President and Chief Financial Officer (principal financial officer) 21 Signature Title --------- ----- R. Mark Mallory Vice President and Controller (principal accounting officer) Stanton R. Cook Director Diego E. Hernandez Director Robert E. La Blanc Director Newton N. Minow Director Donald H. Rumsfeld Director 22 TRIBUNE COMPANY INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES PAGE ---- Consolidated Statements of Income for each of the three fiscal years in the period ended December 26, 1993 ..................................... * Consolidated Statements of Financial Position at December 26, 1993 and December 27, 1992 ...................................................... * Consolidated Statements of Cash Flows for each of the three fiscal years in the period ended December 26, 1993 .................................. * Consolidated Statements of Stockholders' Investment for each of the three fiscal years in the period ended December 26, 1993 ..................... * Notes to Consolidated Financial Statements ............................... * Report of Independent Accountants on Consolidated Financial Statements ... * Report of Independent Accountants on Financial Statement Schedules ....... 24 Financial Statement Schedules for each of the three fiscal years in the period ended December 26, 1993 (as applicable) ......................... 25-31 Schedule II Amounts receivable from related parties and underwriters, promoters and employees other than related parties. Schedule IV Indebtedness of and to related parties - noncurrent. Schedule V Property, plant and equipment. Schedule VI Accumulated depreciation, depletion and amortization of property, plant and equipment. Schedule VII Guarantees of securities of other issuers. Schedule VIII Valuation and qualifying accounts and reserves. Schedule X Supplementary income statement information. - ----------- * Incorporated by reference to the Company's 1993 Annual Report to Stockholders. See Item 8 of this Annual Report on Form 10-K. ------------ All other schedules required under Regulation S-X are omitted because they are not applicable, not required or the required information is shown in the consolidated financial statements or notes thereto. Columns omitted from certain schedules included herein have been omitted because the information is not applicable. Financial statements of entities accounted for by the equity method have been omitted because they do not constitute significant subsidiaries. 23 REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES TO THE BOARD OF DIRECTORS OF TRIBUNE COMPANY Our audits of the consolidated financial statements referred to in our report dated January 28, 1994 appearing on page 52 of the 1993 Annual Report to Stockholders of Tribune Company (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the Financial Statement Schedules appearing on pages 25 through 31 of this Form 10-K. In our opinion, these Financial Statement Schedules present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Price Waterhouse Chicago, Illinois January 28, 1994 24 SCHEDULE II TRIBUNE COMPANY AND SUBSIDIARIES SCHEDULE II--AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES (IN THOUSANDS OF DOLLARS) ================================================================================
BALANCE AT DEDUCTIONS- BALANCE AT BEGINNING AMOUNTS END OF PERIOD- NAME OF DEBTOR OF PERIOD ADDITIONS COLLECTED NOT CURRENT - -------------- ---------- --------- ---------- -------------- Year ended December 26, 1993 J. J. Kusper (1) $242 $ - $242 $ - E. B. Lasak (1) 142 - 142 - Year ended December 27, 1992 J. J. Kusper (1) $242 $ - $ - $242 W. J. McNally (2) 150 - 150 - E. B. Lasak (1) 142 - - 142 Year ended December 29, 1991 J. J. Kusper (1) $242 $ - $ - $242 W. J. McNally (2) 150 - - 150 E. B. Lasak (1) 142 - - 142 J. T. Sloan (1) 460 - 460 - E. R. Moss (1) 168 - 168 - C. T. Brumback (3) 40 - 40 -
All of the above loans were made to assist in financing the purchase of residences upon the employee's transfer at the request of the Company. - ------------ (1) Promissory note secured by personal residence at a rate contingent upon the net appreciation of the residence acquired. (2) Non-interest bearing demand note secured by personal residence. (3) Non-interest bearing demand note secured by shares of a cooperative association and by common stock owned by Mr. Brumback. ================================================================================ 25 SCHEDULE IV TRIBUNE COMPANY AND SUBSIDIARIES SCHEDULE IV--INDEBTEDNESS OF AND TO RELATED PARTIES--NONCURRENT (IN THOUSANDS OF U.S. DOLLARS) ================================================================================
INDEBTEDNESS OF ---------------------------------------------------- BALANCE AT BALANCE AT NAME DEC. 27, 1992 ADDITIONS DEDUCTIONS DEC. 26, 1993 - ---- ------------- --------- ---------- ------------- QUNO Corporation Convertible Debenture (1) $138,757 - - $138,757 Riverwalk Center I Joint Venture Mortgage Note (2) - $35,500 - $ 35,500 220 East Joint Venture Mortgage Note $ 84,486 - (549) $ 83,937
(1) The QUNO convertible debenture matures in 2002, is convertible at the option of the Company into 11.7 million voting common shares of QUNO, and is callable by QUNO after December 27, 1997. (2) The mortgage note, purchased by the Company in 1993, is on a building owned by a partnership in which the Company held a 50% interest at December 26, 1993. ================================================================================ 26 SCHEDULE V TRIBUNE COMPANY AND SUBSIDIARIES SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT (IN THOUSANDS OF DOLLARS) ================================================================================
OTHER CHANGES BALANCE AT ADD (DEDUCT) BALANCE BEGINNING ADDITIONS RETIRE- ----------------- AT END CLASSIFICATION OF PERIOD AT COST MENTS (2) (3) OF PERIOD -------------- ---------- -------- ------- ------ --------- ---------- Year ended December 26, 1993 Land...................................... $ 51,724 $ 2,583 $ 315 $1,095 $ (616) $ 54,471 Buildings and leasehold improvements...... 459,367 9,303 3,614 743 (158,533) 307,266 Machinery, equipment and furniture........ 1,327,533 69,651 12,610 4,109 (596,041) 792,642 Timber limits and leases, and land improvements............................ 53,556 131 25 -- (45,975) 7,687 Construction in progress.................. 95,285 (6,048)(1) -- -- (50,136) 39,101 ---------- -------- ------- ------ --------- ---------- $1,987,465 $ 75,620 $16,564 $5,947 $(851,301) $1,201,167 ========== ======== ======= ====== ========= ========== Year ended December 27, 1992 Land..................................... $ 48,152 $ 4,850 $ -- $ 135 $ (1,413) $ 51,724 Buildings and leasehold improvements..... 458,567 20,119 2,433 250 (17,136) 459,367 Machinery, equipment and furniture....... 1,325,716 76,261 17,725 4,528 (61,247) 1,327,533 Timber limits and leases, and land improvements........................... 58,332 3,929 4,961 -- (3,744) 53,556 Construction in progress................. 70,630 25,073(1) 30 478 (866) 95,285 ---------- -------- ------- ------ --------- ---------- $1,961,397 $130,232 $25,149 $5,391 $ (84,406) $1,987,465 ========== ======== ======= ====== ========= ========== Year ended December 29, 1991 Land..................................... $ 47,707 $ 121 $ -- $ -- $ 324 $ 48,152 Buildings and leasehold improvements..... 438,921 19,674 801 95 678 458,567 Machinery, equipment and furniture....... 1,273,051 67,393 19,722 852 4,142 1,325,716 Timber limits and leases, and land improvements........................... 51,652 6,191 3 -- 492 58,332 Construction in progress................. 74,501 552(1) 83 -- (4,340) 70,630 ---------- -------- ------- ------ --------- ---------- $1,885,832 $ 93,931 $20,609 $ 947 $ 1,296 $1,961,397 ========== ======== ======= ====== ========= ==========
- ----------- (1) Includes spending on construction projects less amounts transferred during the year to other categories as the projects become operational. (2) Property, plant and equipment of acquired companies. (3) Represents (i) for 1992 and 1991, the effect of translating Canadian dollar denominated accounts to U.S. dollars, as well as certain reclassifications of items between categories, (ii) for 1992, deductions of $15.2 million related to the disposition of The Peninsula Times Tribune and (iii) for 1993, deductions related to the assets of QUNO Corporation. As a result of the initial public offering by QUNO in February 1993, QUNO's balance sheet is no longer included in the consolidated financial statements. For 1993, the deduction for QUNO's assets is as follows: Land $ 616 Buildings and leasehold improvements 158,438 Machinery, equipment and furniture 594,708 Timber limits and leases, land improvements 45,975 Construction in progress 49,863 -------- Total $849,600 ========
================================================================================ 27 SCHEDULE VI TRIBUNE COMPANY AND SUBSIDIARIES SCHEDULE VI--ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT (IN THOUSANDS OF DOLLARS) ================================================================================
ADDITIONS OTHER BALANCE AT CHARGED CHANGES BALANCE BEGINNING TO COSTS & ADD AT END OF CLASSIFICATION OF PERIOD EXPENSES RETIREMENTS (DEDUCT)(1) PERIOD -------------- ---------- ---------- ----------- ----------- --------- Year ended December 26, 1993 Buildings and leasehold improvements ................. $189,576 $ 14,791 $ 2,288 $ (67,479) $134,600 Machinery, equipment and furniture ................... 697,061 65,824 11,012 (289,424) 462,449 Timber limits and leases, and land improvements ...... 26,885 474 7 (24,849) 2,503 -------- -------- ------- --------- -------- $913,522 $ 81,089 $13,307 $(381,752) $599,552 ======== ======== ======= ========= ======== Year ended December 27, 1992 Buildings and leasehold improvements ................. $176,125 $ 21,721 $ 2,161 $ (6,109) $189,576 Machinery, equipment and furniture ................... 647,463 97,269 14,933 (32,738) 697,061 Timber limits and leases, and land improvements ...... 34,104 1,488 4,910 (3,797) 26,885 -------- -------- ------- --------- -------- $857,692 $120,478 $22,004 $ (42,644) $913,522 ======== ======== ======= ========= ======== Year ended December 29, 1991 Buildings and leasehold improvements ................. $154,586 $ 20,806 $ 441 $ 1,174 $176,125 Machinery, equipment and furniture ................... 570,001 95,479 18,413 396 647,463 Timber limits and leases, and land improvements ...... 31,836 2,262 - 6 34,104 -------- -------- ------- --------- -------- $756,423 $118,547 $18,854 $ 1,576 $857,692 ======== ======== ======= ========= ========
Estimated useful lives and methods used for depreciation, amortization and depletion are as follows: Buildings--7 to 55 years--straight line. Leasehold improvements--5 to 40 years--straight line. Machinery, equipment and furniture--3 to 25 years--straight line. Land improvements--10 to 30 years--straight line. Timber limits and leases--5 years--straight line and unit-of-production method. - ------------ (1) Represents (i) for 1992 and 1991, the effect of translating Canadian dollar denominated accounts to U.S. dollars, as well as certain reclassifications of items between categories, (ii) for 1992, deductions of $9.2 million related to the disposition of The Peninsula Times Tribune and (iii) for 1993, deductions related to assets of QUNO Corporation, whose balance sheet is no longer consolidated in the Company's financial statements, beginning in 1993. For 1993, the deduction for QUNO's assets is as follows: Building and leasehold improvements $ 67,543 Machinery, equipment and furniture 289,294 Timber limits and leases, land improvements 24,733 -------- Total $381,570 ======== ================================================================================ 28 SCHEDULE VII TRIBUNE COMPANY AND SUBSIDIARIES SCHEDULE VII--GUARANTEES OF SECURITIES OF OTHER ISSUERS (IN THOUSANDS OF DOLLARS) ================================================================================
NAME OF ISSUER AMOUNT OWNED OF SECURITIES BY PERSON AMOUNT IN NATURE OF GUARANTEED BY TITLE OF ISSUE TOTAL AMOUNT OR PERSONS TREASURY OF ANY DEFAULT PERSON FOR OF EACH CLASS GUARANTEED FOR WHICH ISSUER OF BY ISSUER WHICH STATEMENT OF SECURITIES AND STATEMENT IS SECURITIES NATURE OF IN PRINCIPAL IS FILED GUARANTEED OUTSTANDING FILED GUARANTEED GUARANTEE AND INTEREST - --------------- --------------- ------------ ------------ ----------- ------------ ------------ Year ended December 26, 1993 Tribune Company 8.19% Note due $ 17,970 -- -- Guarantee of -- Employee Stock June 15, 1994- principal Ownership Plan Dec. 15, 1998 and interest Tribune Company 8.40% Notes due $280,999 -- -- Guarantee of -- Employee Stock Dec. 15, 1994- principal and Ownership Plan Dec. 15, 2003 interest
================================================================================ 29 SCHEDULE VIII TRIBUNE COMPANY AND SUBSIDIARIES SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (IN THOUSANDS OF DOLLARS) ==============================================================================
ADDITIONS BALANCE AT CHARGED TO BALANCE BEGINNING COSTS AND AT END OF DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS PERIOD - ----------- ----------- ---------- ----------- --------- Valuation accounts deducted from assets to which they apply: Year ended December 26, 1993 Allowance for doubtful accounts: Bad debts............................... $19,329 $15,017 $14,672(1) $19,674 Rebates and volume discounts............ 4,082 17,375 15,699 5,758 ------- ------- ------- ------- Total........................... $23,411 $32,392 $30,371 $25,432 ======= ======= ======= ======= Year ended December 27, 1992 Allowance for doubtful accounts: Bad debts............................... $19,423 $14,924 $15,018 $19,329 Rebates and volume discounts............ 3,926 15,299 15,143 4,082 ------- ------- ------- ------- Total.......................... $23,349 $30,223 $30,161 $23,411 ======= ======= ======= ======= Year ended December 29, 1991 Allowance for doubtful accounts: Bad debts............................... $15,453 $21,397 $17,427 $19,423 Rebates and volume discounts............ 3,126 14,026 13,226 3,926 ------- ------- ------- ------- Total........................... $18,579 $35,423 $30,653 $23,349 ======= ======= ======= =======
- -------------- (1) For 1993, $4,612 represents deductions pertaining to QUNO Corporation. As a result of an initial public offering by QUNO in February 1993, QUNO's balance sheet is no longer consolidated in the Company's financial statements. ================================================================================ 30 SCHEDULE X TRIBUNE COMPANY AND SUBSIDIARIES SCHEDULE X--SUPPLEMENTARY INCOME STATEMENT INFORMATION (IN THOUSANDS OF DOLLARS) ================================================================================
CHARGED TO COSTS AND EXPENSES ----------------------------- YEAR ENDED DECEMBER ----------------------------- ITEM 1993(1) 1992 1991 ---- ------- ------- ------- 1. Maintenance and repairs..................... $18,060 $60,240 $61,190 2. Amortization of intangible assets........... 21,673 19,101 18,501 3. Taxes, other than payroll and income taxes.. 15,613 25,532 27,113 4. Advertising costs (2)....................... 44,126 49,594 46,015
- ---------- (1) 1993 excludes supplementary income statement information for QUNO Corporation as QUNO's income statement is no longer included in the Company's consolidated financial statements. Amounts in 1992 and 1991 relating to QUNO were as follows:
1992 1991 ------- ------- Maintenance and repairs $42,894 $44,909 Amortization of intangible assets - - Taxes, other than payroll and income taxes 10,856 13,120 Advertising costs 1,060 98
(2) Includes all costs related to advertising, public relations and promotion of the Company's products. Amortization of preoperating costs and other deferrals and royalties are omitted as none of these items exceed one percent of the Company's consolidated operating revenues in any of the years. ================================================================================ 31 TRIBUNE COMPANY EXHIBIT INDEX Exhibits marked with an asterisk (*) are incorporated by reference to documents previously filed by Tribune Company with the Securities and Exchange Commission, as indicated. Exhibits marked with a circle (o) are management contracts or compensatory plan contracts or arrangements filed pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K. All other documents listed are filed with this Report.
NUMBER DESCRIPTION ------ ----------- 3.1 * Restated Certificate of Incorporation of Tribune Company, dated April 21, 1987; Certificate of Designations of Series A Junior Participating Preferred Stock, dated December 31, 1987; Certificate of Designations of Series B Convertible Preferred Stock, dated April 4, 1989 (Exhibit 3.1 to Annual Report on Form 10-K for 1991). 3.2 * By-laws of Tribune Company. 4 * Rights Agreement between Tribune Company and The First National Bank of Chicago, as Rights Agent, dated as of December 22, 1987 (Exhibit 1 to Form 8-K Current Report dated January 6, 1988); First Amendment thereto dated as of July 31, 1990 (Exhibit 4 to Form 10-Q Quarterly Report for the quarter ended July 1, 1990); Second Amendment thereto dated as of October 31, 1990 (Exhibit 4 to Form 10-Q Quarterly Report for the quarter ended September 30, 1990). 10.1a o* Employment agreement dated as of July 31, 1990 between Tribune Company and Stanton R. Cook (Exhibit 19.1 to Form 10-Q Quarterly Report for the quarter ended September 30, 1990). 10.1b o Consulting agreement dated as of December 14, 1993 between Tribune Company and Stanton R. Cook. 10.2a o Employment agreement dated as of July 27, 1993 between Tribune Company and Charles T. Brumback. 10.2b o Amendment dated February 15, 1994 to employment agreement dated as of July 27, 1993 between Tribune Company and Charles T. Brumback. 10.3 o* Chicago Tribune Company Split-Dollar Insurance Plan dated June 29, 1978, together with first amendment dated August 28, 1981, covering certain employees of Tribune Company and Chicago Tribune Company (Exhibit 10.4 in File No. 2-86087). 10.4a o* Tribune Company Supplemental Retirement Plan, as amended and restated on January 1, 1989 (Exhibit 10.6 to Annual Report on Form 10-K for 1988). 10.4b o First Amendment of Tribune Company Supplemental Retirement Plan, effective January 1, 1994. 10.5 o* Quebec and Ontario Paper Company Ltd. Supplemental Retirement Plan dated January 1, 1989 (Exhibit 10.7 to Annual Report on Form 10-K for 1988).
32
NUMBER DESCRIPTION ------ ----------- 10.6 o* Tribune Company Deferred Compensation Administration Plan, as adopted on July 29, 1982, and first amendment thereto dated December 1, 1982 (Exhibit 10.16 in File No. 2-86087); second amendment thereto dated October 29, 1984, and third amendment thereto dated December 16, 1986 (Exhibit 10.8b to Annual Report on Form 10-K for 1989). 10.7 o* Tribune Company Directors' Deferred Compensation Plan, as amended and restated on December 14, 1992 (Exhibit 10.7 to Annual Report on Form 10-K for 1992). 10.8 o Tribune Company Bonus Deferral Plan, dated as of December 14, 1993. 10.9a o* Tribune Company Management Incentive Plan, dated as of January 1, 1991 (Exhibit 10.10 to Annual Report on Form 10-K for 1990). 10.9b o* Amendment effective January 1, 1992 to the Tribune Company Management Incentive Plan dated as of January 1, 1991 (Exhibit 10.9b to Annual Report on Form 10-K for 1991). 10.10 o* Tribune Company Amended and Restated 1984 Long-Term Performance Plan, effective as of July 25, 1989 (Exhibit 19.2 to Form 10-Q Quarterly Report for the quarter ended June 25, 1989); Forms of Incentive Stock Option Agreement and Non-Qualified Stock Option Agreements for Tribune Company Amended and Restated 1984 Long-Term Performance Plan (Exhibit 19.2 to Form 10-Q Quarterly Report for the quarter ended July 1, 1990). 10.11 o* Tribune Company 1992 Long-Term Performance Plan, effective as of April 29, 1992 (Exhibit 10.11 to Annual Report on Form 10-K for 1992). 10.12a o* 1988 Restricted Stock Plan For Outside Directors, dated February 16, 1988 (Exhibit 10.12 to Annual Report on Form 10-K for 1992). 10.12b o Amendment effective April 28, 1992 to the 1988 Restricted Stock Plan For Outside Directors. 10.13 o Tribune Company Executive Financial Counseling Plan, dated October 19, 1988 and as amended effective January 1, 1994. 10.14 o* Tribune Company Transitional Compensation Plan for Executive Employees, as amended and restated on July 26, 1988 (Exhibit 10.16 to Annual Report on Form 10-K for 1988); amendment dated October 30, 1990 to Tribune Company Transitional Compensation Plan for Executive Employees (Exhibit 10.14b to Annual Report on Form 10-K for 1990). 10.15 o Tribune Company Supplemental Defined Contribution Plan, effective as of January 1, 1994. 10.16 * Amendment and Restated Agreement of Limited Partnership of Two Twenty East Limited Partnership, dated as of November 5, 1982, and first amendment thereto dated December 6, 1982 (Exhibit 10.25 in File No. 2-86087).
33
NUMBER DESCRIPTION ------ ----------- 10.17 * Asset Purchase Agreement dated March 14, 1991 by and among Maxwell Newspapers, Inc., Mirror Group PLC, New York News Inc. and Tribune Company; and letter amendment thereto dated March 20, 1991 (Exhibits 10.1 and 10.2 to Form 8-K Current Report dated March 14, 1991). 10.18 * Newsprint Agreement dated December 2, 1992 between Tribune Company and QUNO Corporation (Exhibit 10.17 to Annual Report on Form 10-K for 1992). 11 Statements of Computation of Primary and Fully Diluted Net Income Per Share. 12 Computation of Ratios of Earnings to Fixed Charges. 13 The portions of the Company's 1993 Annual Report to Stockholders which are specifically incorporated herein by reference. 21 Table of subsidiaries of Tribune Company. 23 Consent of Independent Accountants. 99 Form 11-K financial statements for Tribune Company Savings Incentive Plan (to be filed by amendment).
34 EX-10.1B 2 CONSULTING AGREEMENT Exhibit 10.1b Tribune Company 435 North Michigan Avenue Chicago, Illinois 60611 December 14, 1993 Mr. Stanton R. Cook 224 Raleigh Road Kenilworth, IL 60043 Dear Stan: We are writing on behalf of the Board of Directors to confirm the arrangements as to continuation of the consulting services you perform relative to the Chicago Cubs as first described in our letter dated December 14, 1992. You have agreed to provide consulting services during 1994 which will include your representing Tribune Company's ownership interest in the Chicago Cubs at meetings of Major League Baseball, the National League and any of their committees to which you may be appointed. In addition, your consulting activities will include serving as Chairman of the Board of Directors of Chicago National League Ball Club, Inc. During 1994, you will lead the search for a president and chief executive officer for the Cubs. You will serve as acting CEO of the Cubs for the portion of the year prior to appointment of the permanent president and chief executive officer. You will be compensated for these services as provided in the employment agreement between you and Tribune Company dated July 31, 1990. It is specifically agreed that for your services during 1994, you will be compensated $31,250 per month (or part thereof) payable at the end of each month. In addition, the Company will reimburse you for out-of-pocket travel and business expenses you incur in rendering the consulting services. This reimbursement will include reimbursement of dues at the Chicago Club, the 410 Club and Tavern Club. The foregoing arrangement will terminate on December 25, 1994. Any consulting service to be provided by you after that date will be mutually agreed upon based on circumstances that then exist. We will be happy to discuss any questions you may have concerning these arrangements. Sincerely, Charles T. Brumback ------------------- Chairman & Chief Executive Officer Andrew J. McKenna ----------------- Chairman, Governance & Compensation Committee EX-10.2A 3 EMPLOYMENT AGREEMENT Exhibit 10.2a EMPLOYMENT AGREEMENT -------------------- THIS AGREEMENT, made effective as of the 27th day of July, 1993, by and between CHARLES T. BRUMBACK, of Chicago, Illinois ("Brumback") and TRIBUNE COMPANY, a Delaware corporation (the "Company"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Company and Brumback are parties to an employment agreement dated as of August 1, 1990 which agreement, as amended, is now in full force and effect; and WHEREAS, the Company and Brumback now desire to further amend said agreement, and to replace it with the agreement as set forth herein; NOW, THEREFORE, in consideration of the premises, and of the mutual covenants hereinafter set forth, the parties do hereby agree as follows: 1. Employment. The Company agrees to employ Brumback, and Brumback agrees to remain in the full-time employ of the Company, for the period (the "Employment Period") beginning on the effective date of this Agreement and ending on the earliest to occur of December 31, 1994, the date as of which Brumback's employment terminates pursuant to paragraph 6 or paragraph 8 of this Agreement, or the date of Brumback's death. During the Employment Period, Brumback shall render such services of an executive or administrative character to the Company and its subsidiaries as the Company's Board of Directors may from time to time direct; provided, that such services are not of such nature as to diminish the prestige and responsibility of his position as an executive officer of the Company. Until the Company's Board of Directors shall determine otherwise, Brumback shall serve as the Company's Chairman and Chief Executive Officer. Brumback shall devote his best efforts and all of his business time and attention (except for usual vacation periods and reasonable periods of illness or other incapacity) to the business of the Company and its subsidiaries and shall, if elected to such a position, also serve as a director of the Company or of one or more of the Company's subsidiaries without additional compensation. 2. Location. Brumback shall be based at, and shall perform his duties in, Chicago, Illinois, or at such other location as may be mutually agreed upon by Brumback and the Board of Directors of the Company. Brumback shall, however, also travel to other locations at such times as may be appropriate for the performance of his duties under this Agreement. 3. Compensation. During the Employment Period, Brumback shall be compensated as follows: (a) Salary. Brumback shall be paid a salary at a rate which is not less than six hundred ninety-five thousand dollars ($695,000) per year, exclusive of bonuses, if any, which may from time to time be awarded to Brumback at the discretion of the Board of Directors of the Company or its Governance and Compensation Committee. Brumback's salary shall be paid in bi-weekly installments. (b) Expenses. Brumback shall be reimbursed for all reasonable business expenses incurred in the performance of his duties pursuant to this Agreement, to the extent such expenses are substantiated and are consistent with the general policies of the Company relating to the reimbursement of expenses of its executive officers. (c) Fringe Benefits. Brumback shall be entitled to participate, during the Employment Period, in any and all pension, profit sharing, and other employee benefit plans or fringe benefit programs which are from time to time maintained by the Company for its executive officers, in accordance with the provisions of such plans or programs as from time to time in effect. (d) Deductions and Withholding. All compensation and other benefits payable to or on behalf of Brumback pursuant to this Agreement shall be subject to such deductions and withholding as may be agreed to by Brumback or required by applicable law. 4. Deferred Compensation. (a) If Brumback continues in the active employ of the Company until the end of the Employment Period, he shall be entitled to receive, as deferred compensation, one hundred twenty-five thousand dollars ($125,000) per year for a period of ten (10) years. Such amount shall be paid in quarterly installments and shall commence within ninety (90) days after the last day of the Employment Period; provided, that if the Employment Period terminates pursuant to paragraph 8 (as a result of Brumback's voluntary termination) such payments shall commence within ninety (90) days after December 31, 1994. (b) If the Employment Period terminates as a result of Brumback's death, if the Employment Period terminates pursuant to paragraph 6 or paragraph 8 and Brumback dies prior to the date on which the payments provided for in paragraph 4(a) begin, or if Brumback dies within ten (10) years after the payments provided for in paragraph 4(a) have begun, the amounts that would otherwise have been paid to Brumback during such ten (10) year period (or the remainder thereof) shall be paid to the beneficiary or beneficiaries named in the last written instrument 2 signed by Brumback for such purpose and received by the Company prior to his death; provided, that if Brumback fails to so name any beneficiary, such amounts shall be paid to Brumback's estate. Such amounts may be paid in annual or quarterly installments, in the Company's discretion, and shall commence within ninety (90) days after the date of Brumback's death. (c) If Brumback is living at the end of the ten (10) year period specified under paragraph 4(a), he shall be entitled to receive, as deferred compensation, payments at the rate of sixty thousand dollars ($60,000) per year for the remainder of his life. Such amounts shall be paid in quarterly installments and shall commence within ninety (90) days after the last day for which he received payments provided in paragraph 4(a). (d) If Mary H. Brumback survives Brumback, is married to him at the time of his death and is living on the tenth (10th) anniversary of the date on which the payments provided for in paragraph 4(a) began, she shall be entitled to receive payments at the rate of sixty thousand dollars ($60,000) per year for the remainder of her life. Such amounts shall be paid in quarterly installments, and shall commence within ninety (90) days after the later of the tenth (10th) anniversary of the date on which the payments provided for in paragraph 4(a) began or the date of Brumback's death. (e) Brumback agrees that he and his beneficiaries shall be unsecured, general creditors of the Company with respect to his or their right to receive such amounts. 5. Consulting and Advisory Services. (a) Due to Brumback's wide and intimate knowledge of all aspects of the operations of the Company and its subsidiaries, the Company desires to retain the benefit of Brumback's consulting and advisory services after the termination of the Employment Period. Accordingly, Brumback agrees that, subsequent to the Employment Period, he will render such consulting and advisory services to the Company as its Board of Directors may reasonably request. Brumback will inform the Company of any plans he may from time to time make for holidays or travel and the Company will not, except in emergencies, call for consulting or advisory services at times which would interfere with such plans; provided, that such plans shall not render Brumback unavailable for consultation for more than two (2) months in any calendar year. (b) The Company shall compensate Brumback at the rate of Two Hundred Fifty Dollars ($250.00) per hour for the performance of consulting and advisory services rendered to the Company. Brumback shall keep, and shall submit to the Company upon request, adequate records of the time spent in the 3 performance of such services. Brumback agrees that any amounts paid to him pursuant to this paragraph 5 shall, for purposes of federal, state, and local income taxes, be treated as compensation for the performance of services rendered as an independent contractor, and neither Brumback nor his successor shall take any position inconsistent with such treatment. 6. Disability. If, during the Employment Period, Brumback shall become incapacitated by accident or illness and, in the opinion of the Board of Directors of the Company, shall be unable to perform the duties of the positions he then occupies for a period of six (6) consecutive months, the Company shall have the right to terminate the Employment Period effective at any time after such six (6) month period of disability by thirty (30) days advance written notice to Brumback. Brumback's right to receive his full salary during the period of disability prior to termination shall be in lieu of his rights, if any, to collect his full salary for a specified period (currently twenty-six (26) weeks) under the Company's Short-Term Disability Plan. 7. Other Benefits. Except to the extent provided in paragraph 6, the compensation provisions of this Agreement shall be in addition to, and not in derogation or diminution of, any benefits that Brumback or his beneficiaries may be entitled to receive under the provisions of any pension, profit sharing, disability, or other employee benefit plan now or hereafter maintained by the Company or by any of its subsidiaries. 8. Termination. Brumback may voluntarily terminate his employment by giving one hundred and eighty (180) days prior written notice to the Company, whereupon the Employment Period shall terminate on the later of the date specified in such notice or the last day of such one hundred and eighty (180) day notice period. 9. Competition. (a) During the Employment Period, Brumback will not, except with the express written consent of the Board of Directors of the Company, become engaged in or permit his name to be used in connection with any business other than the businesses of the Company and its subsidiaries, whether or not such other business is competitive with the businesses of the Company or its subsidiaries; provided, that Brumback may participate in charitable, civic, and governmental activities to the extent that such participation does not conflict with his obligations to the Company under this Agreement. (b) In consideration of his continued employment by the Company, and of his entitlement to the amounts payable under paragraphs 4 and 5 of this Agreement, Brumback covenants and agrees that for a period of five (5) years after the termination 4 of the Employment Period, he will not, except with the express written consent of the Board of Directors of the Company, engage directly or indirectly in or permit his name to be used in connection with the sale or distribution of any product or service which was being sold, offered, or developed for sale by the Company or any of its subsidiaries during a period of eighteen (18) months preceding the last day of the Employment Period, in an area within a radius of one hundred (100) miles of any city in which such product or service is then being sold or offered for sale by the Company or any of its subsidiaries. (c) For the purposes of this paragraph 9, the phrase, "engage directly or indirectly in" shall encompass: (i) all of Brumback's activities whether on his own account or as an employee, director, officer, agent, consultant, independent contractor, or partner of or in any person, firm, or corporation (other than the Company and its subsidiaries), and (ii) Brumback's ownership of more than fifteen (15%) of the voting capital stock of any corporation, three percent (3%) or more of the gross income of which is derived from any business or businesses in which Brumback may not then engage. 10. Confidential Information. Brumback agrees that he will not, without the prior written consent of the Board of Directors of the Company, during the term or after termination of his employment under this Agreement, directly or indirectly disclose to any individual, corporation, or other entity (other than the Company or any subsidiary thereof, their officers, directors, or employees entitled to such information, or to any other person or entity to whom such information is regularly disclosed in the normal course of the Company's business) or use for his own or such another's benefit, any information, whether or not reduced to written or other tangible form, which: (a) is not generally known to the public or in the industry; (b) has been treated by the Company or any of its subsidiaries as confidential or proprietary; and (c) is of competitive advantage to the Company or any of its subsidiaries and in the confidentiality of which the Company or any of its subsidiaries has a legally protectible interest; (such information being referred to in this paragraph 10 as "Confidential Information"). Confidential Information which becomes generally known to the public or in the industry, or in the confidentiality of which the Company and its subsidiaries cease to have a legally protectible interest, shall cease to be subject to the restrictions of this paragraph. 5 11. Enforcement. If, at the time of enforcement of any provision of paragraphs 9 and 10, a court of competent jurisdiction shall finally determine that the period, scope, or geographical area restrictions stated therein are unreasonable under circumstances then existing, the maximum period, scope, or geographical area reasonable under the circumstances shall be substituted for the stated period, scope, or area. In the event of a breach by Brumback of any of the provisions of paragraphs 9 and 10, the Company may, in addition to any other rights and remedies existing in its favor, apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce or prevent any violations of the provisions thereof. 12. Rights in the Event of a Dispute. If a claim or dispute arises concerning the rights of Brumback or a beneficiary to benefits under the Agreement, regardless of the party by whom such claim or dispute is initiated, the Company shall, upon presentation of appropriate vouchers, pay all legal expenses, including reasonable attorneys' fees, court costs, and ordinary and necessary out-of-pocket costs of attorneys, billed to and payable by Brumback or by anyone claiming under or through Brumback (such person being hereinafter referred to as "claimant"), in connection with the bringing, prosecuting, defending, litigating, negotiating, or settling such claim or dispute; provided, that Brumback or the claimant shall repay to the Company such expenses theretofore paid or advanced by the Company if and to the extent that the party disputing Brumback's rights obtains a judgment in its favor from a court of competent jurisdiction from which no appeal may be taken, whether because the time to do so has expired or otherwise, and it is determined that such expenses were not incurred by Brumback or the claimant while acting in good faith. 13. General Provisions. (a) Assignments. This Agreement shall be binding upon, and shall inure to the benefit of, any successor to all or substantially all of the business or assets of the Company. Brumback's rights and interests under this Agreement may not be assigned, pledged, or encumbered by him without the Company's written consent. (b) Effect of Headings. The headings of paragraphs and subparagraphs of this Agreement are inserted for convenience of reference only, and shall not affect the construction or interpretation of this Agreement. (c) Modification, Amendment, Waiver. No modification, amendment, or waiver of any provision of this Agreement shall be effective unless approved in writing by both parties. The failure of either party at any time to enforce any of the 6 provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of either party thereafter to enforce each and every provision of this Agreement in accordance with its terms. (d) Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. (e) No Strict Construction. The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against either party. (f) Choice of Law. All questions concerning the construction, validity, and interpretation of this Agreement shall be governed by the laws of the State of Illinois. (g) Notices. Any notice to be served under this Agreement shall be in writing and shall be mailed by registered mail, return receipt requested, addressed: If to the Company, to: Tribune Company 435 North Michigan Avenue Chicago, Illinois 60611 Attention: Corporate Secretary; or If to Brumback, to: Charles T. Brumback 1500 Lake Shore Drive Chicago, Illinois 60610; or to such other place as either party may specify in writing, delivered in accordance with the provisions of this subparagraph. (i) Survival. The rights and obligations of the parties shall survive the term of Brumback's employment to the extent that any performance is required under this Agreement after the expiration or termination of such term. (j) Entire Agreement. This Agreement constitutes the entire agreement of the parties with respect to the subject matter thereof, and supersedes all previous agreements between the parties relating to the same subject matter. 7 IN WITNESS WHEREOF,the parties hereto have executed this Agreement as of the day and year first above written. TRIBUNE COMPANY By Andrew J. McKenna ---------------------- Charles T. Brumback ------------------------ Charles T. Brumback 8 EX-10.2B 4 AMEND TO EMPLOY AGREE Exhibit 10.2b AMENDMENT AGREEMENT made February 15, 1994 between Tribune Company, a Delaware corporation (the "Company"), and Charles T. Brumback of Chicago, Illinois ("Brumback"). The Company and Brumback are parties to an employment agreement effective as of July 27, 1993 (the "Agreement"). The Company and Brumback now desire to amend the Agreement in order to increase the salary rate set forth in Paragraph 3(a) of the Agreement. Therefore, effective as of February 28, 1994, the salary rate set forth in Paragraph 3(a) shall be increased from $695,000 to $ 730,000. IN WITNESS WHEREOF, the Company and Brumback have executed this Amendment on the date above set forth. TRIBUNE COMPANY By Andrew J. McKenna ----------------------------- Chairman of the Governance & Compensation Committee Charles T. Brumback ----------------------------- Charles T. Brumback 2/14/94 EX-10.4B 5 1ST AM TO SUPP RET PLAN Exhibit 10.4b FIRST AMENDMENT --------------- OF -- TRIBUNE COMPANY SUPPLEMENTAL RETIREMENT PLAN -------------------------------------------- (As Amended and Restated Effective January 1, 1989) WHEREAS, this Company maintains TRIBUNE COMPANY SUPPLEMENTAL RETIREMENT PLAN (the "Plan"); and WHEREAS, the Plan has been amended previously from time to time and it is now deemed desirable to amend the Plan further; NOW, THEREFORE, IT IS RESOLVED that, by virtue and in exercise of the amending power reserved to this company under Section 4 of the Plan, the Plan be and it hereby is amended, effective January 1, 1994, in the following particulars: 1. By substituting the following sentence for the fourth sentence of subsection 1.2 of the Plan: "In addition, Sections 401(a)(17) and 404(l) of the Internal Revenue Code limit the amount of employees' annual compensation that may be taken into account in determining the benefits that may be paid to them from a qualified defined benefit pension plan and the deductible Employer contributions that may be made to that plan to provide those benefits (the 'Compensation Limitation')." 2. By substituting the following sentence for the first sentence of subsection 1.4 of the Plan: "The Plan will be administered by the Governance and Compensation Committee of the Board of Directors of the Company (or such successor committee of said Board as shall from time to time have responsibility for compensation matters) (the 'Committee')." 3. By substituting the date "January 1, 1994" for the phrase "Restatement Effective Date" where the latter phrase occurs in subsection 1.5 of the Plan. 4. By substituting the following for subparagraph 2.1(a) of the Plan: "(a) such participant under the Pension Plan has been designated by the Board of Directors of the Company (by resolutions adopted on December 13, 1988) or thereafter by the Committee as being part of a select group of management or highly compensated employees covered by this Plan (and such designation has not been revoked by the Committee); provided, that no revocation of a designation under this subparagraph (a) shall be effective if made (i) on the day of, or within 36 months after, the occurrence of a 'Change-In-Control' (as defined in subsection 3.1 below), (ii) prior to a Change-In-Control but at the request of any third party participating in or causing the Change-In- Control, or (iii) otherwise in connection with or in anticipation of a Change-In-Control; and" 5. By adding the following two sentences to subsection 2.2 of the Plan, immediately after the last sentence of that subsection: "Each Participant's Supplemental Benefits hereunder shall accrue on an annual basis on the last day of each Plan Year, unless the Participant's employment with the Employers and Related Companies terminated during the Plan Year, in which case the increase in a Participant's Supplemental Benefits which is attributable to the Plan Year in which his employment terminates shall accrue on the date of his employment -2- termination. The Committee shall determine the amount of each Participant's accrual for a Plan Year as of the appropriate date described in the preceding sentence." IT IS FURTHER RESOLVED, that the Secretary of the Company is authorized to prepare a restatement of the Plan to incorporate the foregoing amendments. * * * I, Stanley J. Gradowski, Secretary of Tribune Company, hereby certify that the foregoing is a correct copy of a resolution duly adopted by the Board of Directors of said corporation on December 14, 1993, and that the resolution has not been changed or repealed. Dated this 14th day of December, 1993. Stanley J. Gradowski ------------------------------ As Secretary as Aforesaid (Corporate Seal) -3- EX-10.8 6 BONUS DEFERRAL PLAN Exhibit 10.8 TRIBUNE COMPANY --------------- BONUS DEFERRAL PLAN ------------------- McDermott, Will & Emery Chicago, Illinois TRIBUNE COMPANY BONUS DEFERRAL PLAN ----------------------------------- SECTION 1 --------- Introduction ------------ 1.1. The Plan. TRIBUNE COMPANY BONUS DEFERRAL PLAN (the "Plan") has been established by TRIBUNE COMPANY, a Delaware corporation (the "Company"), effective as of December 14, 1993. 1.2. Purpose. The Company and certain of its subsidiaries which have adopted, and become "Employers" under, the Plan in accordance with subsection 1.3 below, intend through the use of the Plan (a) to offer a select group of senior officers and other highly compensated key employees of the Employers who are described in Section 2, the opportunity to defer the receipt of all or a portion of any Qualifying Bonus (as defined in Section 3.3 below) which would otherwise be payable to them currently, and (b) to provide for involuntary deferral of certain Participants' Qualifying Bonuses in specified circumstances (as described in subsection 3.1(b) below), for the period provided in the Plan. 1.3. Employers; Related Companies; SIP. The Company and each subsidiary of the Company that (a) is a "Related Company" under the Tribune Company Employees' Savings Incentive Plan (the "SIP") and (b) employs one or more employees who have become Participants in accordance with subsection 2.1 below, shall each be an "Employer" under this Plan. For purposes of this Plan, a "subsidiary" of the Company shall mean any corporation, more than 50% of the voting stock of which is owned, directly or indirectly, by the Company. 1.4. Plan Administration. The Plan will be administered and interpreted by the Governance and Compensation Committee of the Board of Directors of the Company (or such successor committee of said Board as shall from time to time have responsibility for compensation matters) (the "Committee"). The Committee has, to the extent appropriate and in addition to the powers described in subsection 3.1 below, full discretionary authority to construe and interpret the terms and provisions of the Plan, to adopt, alter and repeal such administrative rules, guidelines and practices governing this Plan and perform all acts, including the delegation of its administrative responsibilities, as it shall, from time to time, deem advisable, and to otherwise supervise the administration of this Plan. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan, or in any election hereunder, in the manner and to the extent it shall deem necessary to carry the Plan into effect. Any decision, interpretation or other action made or taken in good faith by or at the direction of the Company, the Board of Directors of the Company, or the Committee (or any of its members) arising out of or in connection with the Plan shall be within the absolute discretion of all and each of them, as the case may be, and shall be final, binding and conclusive on the Company, the other Employers and all employees and Participants and their respective heirs, executors, administrators, successors and assigns. The Committee's determinations hereunder need not be uniform, and may be made selectively among eligible employees, whether or not they are similarly situated. Any actions to be taken by the Committee will require the consent of a majority of the Committee members. 1.5. Fiscal Year. Reference in this Plan to a "Fiscal Year" means the fiscal year of the relevant Employer, which is a 52-53 week year ending on the last Sunday occurring within each calendar year. SECTION 2 --------- Participation ------------- Subject to the conditions and limitations of the Plan, each employee of an Employer on or after the Effective Date shall become a "Participant" under this Plan as of the first day as of which such employee: (a) is a participant in the Tribune Company Management Incentive Plan, and (b) has an annualized rate of Compensation (as defined in the SIP) in excess of $150,000. SECTION 3 --------- Deferral -------- 3.1. Election of Deferral; Automatic Deferral; Settlement Date. Subject to the following provisions of this subsection -2- 3.1 and the provisions of subsection 3.2 below, within a period specified by the Committee before each Fiscal Year that begins after the Effective Date, a Participant may make an irrevocable written election (on a form prescribed by the Committee) to defer receipt of all or a specified portion (in whole multiples of 5%) of the Qualifying Bonus earned for that Fiscal Year, regardless of the year in which that Qualifying Bonus is normally or actually paid. Notwithstanding the foregoing provisions of this subsection 3.1: (a) Minimum Deferral. The portion of a Participant's Qualifying Bonus earned for any Fiscal Year which the Participant elects to defer hereunder may not be less than $10,000. (b) Automatic (Deemed) Election. In the case of any Participant who, with respect to a particular Fiscal Year beginning after the Effective Date, in the judgment of the Committee may be a "covered employee" under Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code") for such Fiscal Year and may have "applicable employee remuneration" (as defined in said Section) for that year of more than $1,000,000, the Committee may determine in its sole discretion that the Participant will be deemed and treated as having elected to defer all or a portion of his Qualifying Bonus for that year. (c) Deferral of Qualifying Bonus Earned for 1994 or for First Year of Participation. Each Participant on the Effective Date may elect prior to January 31, 1994, to defer all or a portion of his Qualifying Bonus earned for the 1994 Fiscal Year and payable during calendar year 1995, in accordance with the otherwise applicable provisions of this subsection 3.1. An employee of an Employer who becomes a Participant during a Fiscal Year ending after 1993 may file a deferral election under this subsection 3.2 within 30 days after the date he receives notice that he has become a Participant (but before the end of that Fiscal Year), which election shall be applicable to his Qualifying Bonus for that Fiscal Year. Any amounts which a Participant elects to defer under this subsection 3.1 shall be deferred until the March 1 following the end of the Fiscal Year in which the Participant's termination of employment with the Employers and other Related Companies occurs; provided, however, that a military or personal leave of absence granted by an Employer or Related Company shall not constitute a termination of employment for -3- this purpose; and provided further, that the Committee shall have the authority to require deferral beyond that date to a later date to the extent necessary to avoid or reduce a limitation on the deductibility by an Employer under Section 162(m) of the Internal Revenue Code, of the amounts so deferred. Said March 1 or later date described in the preceding sentence shall be referred to herein as the Participant's Settlement Date. 3.2. Limitations on Deferral Elections. The Committee may set, from time to time, limitations on the amount of Participants' Qualifying Bonuses which may be subject to deferral hereunder, including but not limited to establishing annual limitations relating to particular employment positions or grades of employees. The applicable limitations for a particular Fiscal Year shall be set forth in an attachment to the form of deferral election relating to such year. 3.3. Qualifying Bonus. A Participant's "Qualifying Bonus" earned for any Fiscal Year means the bonus that he is awarded under the Tribune Company Management Incentive Plan for that Fiscal Year. SECTION 4 --------- Treatment of Deferred Amounts ----------------------------- 4.1. Accounts. Each Employer shall maintain on its books a separate account (the "Account") for each Participant who has deferred all or a portion of any Qualifying Bonus from that Employer under this Plan. The amount of the Qualifying Bonus earned for a particular Fiscal Year which the Participant elected to defer shall be credited to such Participant's Account (on the books of the Employer that paid that Qualifying Bonus) as of the March 1 (or the first business day thereafter) nearest the date as of which the Qualifying Bonus was awarded. 4.2. Increments. The balance credited to each Participant's Account shall be deemed to earn "interest" at a rate equal to the thirty-year United States Treasury bond rate determined as of March 1 of each year (or if that March 1 is not a business day, then the first business day following that March 1). Interest will be credited to Participants' accounts as of the last day of each fiscal quarter of the Company. Any interest deemed to have been earned on the Participant's Account balance -4- shall be referred to as an "Increment" for purposes of this Plan. 4.3. Funding. The Plan and the recording of Accounts hereunder shall not constitute a trust and shall merely be for the purpose of recording an unsecured contractual obligation. Amounts payable under this Plan to a Participant or his beneficiary shall be paid (i) directly by the Employers from their general assets and/or (ii) from Tribune Company Deferred Benefit Trust, in such proportions (if any) as the Company shall determine. The provisions of this Plan shall not require that the Employers segregate on their books or otherwise any amounts to be used for payments under Section 5 of this Plan, except as to any amounts paid or payable to Tribune Company Deferred Benefit Trust. 4.4. Reports. Until the entire net credit balance in a Participant's Account shall have been paid in full, the Participant's Employer will furnish to the Participant a report, at least annually, setting forth transactions in, and the status of, his Account. SECTION 5 --------- Payment of Deferred Amounts --------------------------- 5.1. Amount of Payment. The amount to be paid to a Participant following his Settlement Date in a lump sum under subsection 5.3 or 5.5 below (or in the case of installments under subsection 5.3 below, the amount from which the first installment payment amount will be derived) shall be an amount equal to the sum of the net credit balance in his Account as of the last day of the Fiscal Year immediately preceding his Settlement Date, after all adjustments required to be made to his Account as of that date have been made, plus the deferred amount (if any) of his Qualifying Bonus for the Fiscal Year preceding the year in which his Settlement Date occurred. 5.2. Medium of Payment. All payments of Account balances under this Plan shall be made in cash. 5.3. Method of Payment. Subject to subsection 6.9 below, the net credit balance in a Participant's Account shall be payable either in a single lump sum payable as of his Settlement Date, -5- or in a series of annual installments beginning as of his Settlement Date and thereafter payable as of each subsequent anniversary thereof. In this regard, each Participant will elect on his initial deferral election form the method of payment of his Account (i.e., lump sum or installments) and, if payment is to be made in installments, the number of annual installments over which his Account balance shall be paid (the "Payout Period"). A Participant may elect a different method of payment or Payout Period on any subsequent year's deferral election form (validly filed during the Fiscal Year immediately preceding the Fiscal Year in which his Settlement Date occurs), which will automatically revoke all previous elections as to method of payment and Payout Period. If a Participant's Account balance is paid in installments, it shall be credited with Increments during the Payout Period at the rate from time to time determined under subsection 4.2. The installment payment to a Participant in any year shall be in an amount equal to the quotient obtained by dividing his Account balance as of the last day of the preceding Fiscal Year by the number of payments remaining in his Payout Period, including the current payment. A Participant's Payout Period shall include not more than 15 annual installments; provided, however, that notwithstanding the foregoing provisions of this subsection 5.3, the Committee, in its discretion, may from time to time set a minimum dollar amount applicable to individual annual installment payments permitted under the Plan, and may adjust the duration of the Payout Period elected by a Participant to provide that the dollar amount of any annual installment to that Participant is not projected to be less than the minimum annual dollar amount in effect at the beginning of his Payout Period. 5.4. Payment Following Death or Permanent Disability. Notwithstanding the Payout Period selected by the Participant, if the employment of a Participant is terminated as a result of the Participant's death or permanent disability, the entire net credit balance in such Participant's Account may, in the sole discretion of the Committee, become payable in a lump sum to such Participant (or, in the case of death, to his beneficiary) on the March 1 immediately following the Participant's death or termination of employment due to permanent disability, or on a later date to the extent the Committee believes appropriate to avoid or reduce a limitation on the deductibility by an Employer under Section 162(m) of the Internal Revenue Code (or any successor provision). For purposes of this Plan, a Participant's employment shall be deemed to have been terminated as a result of permanent disability in the event the Participant suffers a physical illness, injury or other impairment with respect to which the Participant is entitled to receive bene- -6- fits under the long-term disability plan maintained by the Company. 5.5. Acceleration of Payments. Notwithstanding any other provision of this Plan to the contrary, the Committee, in its sole discretion, is empowered to accelerate the payment of a Participant's Account or of all Participants' Accounts (before or after any termination of employment), including conversion to a smaller number of installment payments or to a single lump sum payment, for any reason the Committee may determine to be appropriate without any premium or penalty. Neither the Employers nor the Committee shall have any obligation to make any such acceleration for any reason whatsoever. SECTION 6 --------- General Provisions ------------------ 6.1. Interests Not Transferable. Except as to withholding of any tax under the laws of the United States or any state or municipality, the interests of Participants and their beneficiaries to amounts deferred under the Plan are not subject to the claims of their creditors and may not be voluntarily or involuntarily transferred, assigned, alienated or encumbered. 6.2. Controlling Law. To the extent not superseded by the laws of the United States, the laws of Illinois shall be controlling in all matters relating to the Plan. 6.3. Gender and Number. Where the context admits, words in the masculine gender shall include the feminine and neuter genders, the plural shall include the singular and the singular shall include the plural. 6.4. Action by the Company. Any action required of or permitted by the Company under the Plan shall be by resolution of its Board of Directors or by a duly authorized committee of its Board of Directors, or by any person or persons authorized by resolution of its Board of Directors or such committee. 6.5. Successor to the Company or Any Other Employer. The term "Company" as used in the Plan shall include any successor to the Company by reason of merger, consolidation, the purchase or transfer of all or substantially all of the Company's assets, or otherwise. The term "Employer" as used in the Plan with respect to the Company or any of its subsidiaries shall include any successor to that corporation by reason of merger, consolidation, the purchase or -7- transfer of all or substantially all of the assets of that corporation, or otherwise. 6.6. Facility of Payment. Any amounts payable under this Plan to any person under a legal disability or who, in the judgment of the Committee, is unable to properly manage his affairs may be paid to the legal representative of such person or may be applied for the benefit of such person in any manner which the Committee may select. 6.7. Expenses. The Employers, in such proportions as the Company determines, shall bear all expenses incurred by them and by the Committee in administering this Plan. If a claim or dispute arises concerning the rights of a Participant or beneficiary amounts deferred under the Plan (including Increments thereon), regardless of the party by whom such claim or dispute is initiated, the Employers shall, in such proportions as the Company determines, and upon presentation of appropriate vouchers, pay all legal expenses, including reasonable attorneys' fees, court costs, and ordinary and necessary out-of- pocket costs of attorneys, billed to and payable by the Participant or by anyone claiming under or through the Participant (such person being hereinafter referred to as the Participant's "claimant"), in connection with the bringing, prosecuting, defending, litigating, negotiating, or settling of such claim or dispute; provided, that: (a) The Participant or the Participant's claimant shall repay to the Employers any such expenses theretofore paid or advanced by the Employers if and to the extent that the party disputing the Participant's rights obtains a judgment in its favor from a court of competent jurisdiction from which no appeal may be taken, whether because the time to do so has expired or otherwise, and it is determined that such expenses were not incurred by the Participant or the Participant's claimant while acting in good faith; provided further, that (b) In the case of any claim or dispute initiated by a Participant or the Participant's claimant, such claim shall be made, or notice of such dispute given, with specific reference to the provisions of this Plan, to the Committee within one year after the -8- occurrence of the event giving rise to such claim or dispute. 6.8. Other Benefits. The benefits provided under the Plan shall, except to the extent otherwise specifically provided herein, be in addition to, and not in derogation or diminution of, any benefits that a Participant or his beneficiary may be entitled to receive under any other plan or program now or hereafter maintained by the Company or by any of its subsidiaries. 6.9. Withholding. The Employers shall have the right to deduct from any payment to be made pursuant to this Plan any federal, state or local taxes required by law to be withheld. The Employers shall have the further right to deduct from any other payment to be made to a Participant any federal, state or local taxes required to be withheld with respect to amounts deferred under this Plan. 6.10.No Obligation. Neither this Plan nor any elections hereunder shall create any obligation on the Employers to continue any other existing award plans or policies or to establish or continue any other programs, plans or policies of any kind. Neither this Plan nor any election made pursuant to this Plan shall give any Participant or other employee any right with respect to continuance of employment by the Employers or any subsidiary or of any specific aggregate amount of compensation, nor shall there be a limitation in any way on the right of the Employers or any subsidiary by which an employee is employed to terminate such employee at any time for any reason whatsoever or for no reason, nor shall this Plan create a contract of employment. 6.11. Designation of Beneficiary. In the event of the death of a Participant, the amount payable under Section 5.5 hereof shall, unless the Participant shall designate to the contrary as provided below, thereafter be made (a) to such person or persons who, as of the date payment is to be made under this Plan, would receive distribution of the Participant's account balances, if any, under the terms of the SIP, or (b) if the Participant is not a participant in the SIP at the time of his death, then to his surviving spouse or (if there is no surviving spouse) to his estate. Notwithstanding the preceding sentence, a Participant may specifically designate the person or persons (who may be designated successively or contingently) to receive payments under this Plan following the Participant's death by filing a written beneficiary designation with the -9- Committee during the Participant's lifetime. Such beneficiary designation shall be in such form as may be prescribed by the Committee and may be amended from time to time or may be revoked by the Participant pursuant to written instruments filed with the Committee during his lifetime. Beneficiaries designated by a Participant may be any natural or legal person or persons, including a fiduciary, such as a trustee of a trust or the legal representative of an estate. Unless otherwise provided by the beneficiary designation filed by a Participant, if all of the persons so designated die before a Participant on the occurrence of a contingency not contemplated in such beneficiary designation, then the amount payable under this Plan shall be paid to the person or persons determined in accordance with the first sentence of this subsection 6.11. 6.12. Liability. No member of the Board of Directors of the Company or any Employer, no employee of an Employer and no member of the Committee (nor the Committee itself) shall be liable for any act or action hereunder whether of omission or commission, by any other member or employee or by any agent to whom duties in connection with the administration of the Plan have been delegated or, except in circumstances involving his bad faith, gross negligence or fraud, for anything done or omitted to be done by himself. The Employers will fully indemnify and hold the members of the Committee harmless from any liability hereunder, except in circumstances involving a Committee member's bad faith, gross negligence or fraud. The Company or the Committee may consult with legal counsel, who may be counsel for the Company or other counsel, with respect to its obligations or duties hereunder, or with respect to any action or proceeding or any question of law, and shall not be liable with respect to any action taken or omitted by it in good faith pursuant to the advice of such counsel. SECTION 7 --------- Amendment and Termination ------------------------- While the Employers expect to continue the Plan, the Company must necessarily reserve and reserves the right to amend the Plan from time to time or to terminate the Plan at any time. However, neither an amendment of Plan nor termination of the Plan may, without the Participant's consent adversely affect any deferred amounts or Increments already credited to his Account as of the date such amendment is made or the termination of the Plan occurs and which, but for such amendment or -10- termination, are payable under this Plan on, or would become payable under this Plan after, the date such amendment is made or the termination of the Plan occurs. -11- EX-10.12B 7 AM TO RESTRICTED STX PLN Exhibit 10.12b Tribune Company Amendment to 1988 Restricted Stock Plan for Outside Directors Effective April 28, 1992 The following is added at the end of Section 10: "; and provided further that the Plan shall not be amended more than once every six months, other than to comport with changes in the Internal Revenue Code of 1986 or the Employee Retirement Income Security Act of 1974, or the rules thereunder." EX-10.13 8 EXEC FININCIAL CONSELING Exhibit 10.13 TRIBUNE COMPANY EXECUTIVE FINANCIAL COUNSELING ------------------------------ This memorandum describes the Executive Financial Counseling program for executives of Tribune Company as approved by the Company's Board of Directors on October 19, 1988 and as amended effective January 1, 1994. Types of Services - ----------------- The plan permits participants to obtain the following types of services: Financial planning: a) Investment planning and analysis b) Cash management and budgeting Tax planning: a) Income tax planning b) Estate and gift tax planning Tax return preparation: a) Federal income tax b) State and city income tax c) Gift tax Will and trust agreement drafting Service Provider - ---------------- Each participant may obtain assistance in these areas from the financial counseling firm, law firm and/or accounting firm of the executive's choice. Reimbursement Arrangements - -------------------------- The service provider(s) should bill the executive for services rendered and the executive should pay for these services directly. Once a year, the executive may submit copies of the invoices and cancelled checks covering the preceding 12 months for reimbursement by the Company. The annual reimbursement is limited to the lesser of: a) 1.73 times the fees paid, or b) 1.5% of cash compensation (salary plus bonus). The limit is 3% of compensation for the first year of participation. The fees eligible for reimbursement do not include any charges based on the amount of money under management, the value of the investments made or insurance policies purchased, etc. Thus, the Company will not reimburse brokerage fees, investment management fees, commissions and similar charges. The amount reimbursed to the executive will be treated as additional income on the W-2 from the Company. Participants - ------------ The financial counseling program will be provided to employees who serve on the Tribune Company Board of Directors and other executives designated by the chief executive officer of the Company. sjg/cc 12/17/93 TRIBUNE COMPANY FINANCIAL COUNSELING PARTICIPANTS -------------------- John W. Madigan Charles T. Brumback James C. Dowdle Thomas P. O'Donnell Harold R. Lifvendahl Laurence A. Himes Dennis J. FitzSimons Jack Fuller sjg/cc 12/17/93 EX-10.15 9 SUPP DEF CONTRIB PLAN Exhibit 10.15 TRIBUNE COMPANY --------------- SUPPLEMENTAL DEFINED CONTRIBUTION PLAN -------------------------------------- McDermott, Will & Emery Chicago, Illinois TRIBUNE COMPANY SUPPLEMENTAL DEFINED CONTRIBUTION PLAN ------------------------------------------------------ SECTION 1 --------- Introduction ------------ 1.1. The Plan. TRIBUNE COMPANY SUPPLEMENTAL DEFINED CONTRIBUTION PLAN (the "Plan"), as set forth herein, has been established by TRIBUNE COMPANY, a Delaware corporation (the "Company"), effective January 1, 1994 (the "Effective Date"). 1.2. Purpose. The Company and certain of its subsidiaries maintain, and are Employers under, the Tribune Company Employee Stock Ownership Plan (the "ESOP") which is intended to constitute an employee stock ownership plan that meets the requirements for qualification under Sections 401(a) and 4975(e)(7) of the Internal Revenue Code. Sections 401(a)(17) and 404(l) of the Internal Revenue Code limit the amount of employees' annual compensation that may be taken into account after December 31, 1993 in determining the amount of deductible Employer contributions that may be allocated to their accounts under a qualified employee stock ownership plan or other qualified defined contribution plan, to $150,000 (subject to cost-of-living adjustments of that amount calculated as described in said Section 401(a)(17)) (the "Compensation Limitation"). The purpose of this Plan is to provide for Participants in this Plan the amount of Employer contributions that would have been allocated to their respective accounts under the ESOP for plan years beginning on and after the Effective Date but for the Compensation Limitation, subject to certain limitations on recognized compensation described in subsection 2.2 below. 1.3. Employers. The Company and each subsidiary of the Company that is an Employer under the ESOP shall be an "Employer" under this Plan unless specified to the contrary by the Company by written notice filed with the Committee described in subsection 1.4. 1.4. Plan Administration. The Plan will be administered by the Governance and Compensation Committee of the Board of Directors of the Company (or such successor committee of said Board as shall from time to time have responsibility for compensation matters) (the "Committee"). The Committee has, to the extent appropriate and in addition to the powers described in subsection 2.1 below, the same powers, rights, duties and obligations with respect to the Plan as the Administrative Committee under the ESOP has with respect to that plan. The Committee's determinations hereunder need not be uniform, and may be made selectively among eligible employees, whether or not they are similarly situated. The Plan will be administered on the basis of a "Plan Year" which is each calendar year beginning on or after the Effective Date. SECTION 2 --------- Participation and Supplemental Benefits --------------------------------------- 2.1. Eligibility. Subject to the conditions and limitations of the Plan, each Employee of an Employer on or after the Effective Date who is a participant in the ESOP shall become a "Participant" under this Plan, entitled to "Supplemental Benefits" payable under this Plan, as of the first day of the first plan year under the ESOP which begins on or after the Effective Date, and during which: (a) such participant under the ESOP has been designated by the Board of Directors of the Company (by resolutions adopted on ____________, 19__) or thereafter by the Committee (by a written instrument filed with the Secretary of the Company) as being part of a select group of management or highly compensated employees covered by this Plan, and such designation has not been revoked by the Committee; provided, that no revocation of a designation under this subparagraph (a) shall be effective if made (i) on the day of, or within 36 months after, the occurrence of a "Change-In-Control" (as defined in subsection 3.1 below), (ii) prior to a Change-In-Control but at the request of any third party participating in or causing the Change-In-Control, or (iii) otherwise in connection with or in anticipation of a Change-In- Control; and (b) the Compensation (as defined in the ESOP) of such participant under the ESOP is greater than the Compensation Limitation. In the event of the death of such a Participant, his beneficiary shall be entitled to participate in the Plan as of the date benefit payments to such beneficiary commence under the Plan, to the extent provided by the following subsections of the Plan. -2- 2.2. Amount of Supplemental Benefits. The Committee shall maintain or cause to be maintained in the records of the Plan a separate account in the name of each Participant. As of the last day of each Plan Year that ends after the date as of which he first became a Participant, the Committee shall: (a) First, charge to each Participant's account all payments (if any) made from that account since the last day of the preceding Plan Year that have not been charged previously; (b) Next, increase the net credit balance in each Participant's account, as adjusted as described in subparagraph (a) above, by 7.75 percent thereof; and (c) Finally, credit each Participant's account with an amount, expressed as cash, equal to the difference between (i) the value of the number of shares of Company Stock that would have been credited to the Participant's accounts under the ESOP for that Plan Year pursuant to subparagraph 5.2(d) of the ESOP if the Compensation Limitation in effect for that Plan Year had been $235,840 and (ii) the value of the number of shares of Company Stock that were in fact credited to the Participant's accounts under the ESOP for that Plan Year pursuant to subparagraph 5.2(d) of the ESOP after application of the Compensation Limitation actually in effect for that Plan Year. provided, that the $235,840 amount in subparagraph (c) above shall be adjusted for each Plan Year by the same percentage by which the actual Compensation Limitation amount was adjusted for that Plan Year in accordance with Section 401(a)(17) of the Internal Revenue Code. A Participant's Supplemental Benefits under the Plan as of any Valuation Date shall be the Nonforfeitable Percentage (determined in accordance with the vesting schedule under the ESOP) of the net credit balance in his account under this Plan as of that Valuation Date. 2.3. Payment of Supplemental Benefits. The Supplemental Benefits that a Participant (or, in the event of the Participant's death, the Participant's beneficiary) becomes entitled to receive under the Plan on account of the retirement, other termination of employment or death of the Participant on or after the Effective Date shall be paid at the same time and in the same manner as benefits that are to be paid to the Participant (or his beneficiary) under the Tribune Company Bonus Deferral Plan. Notwithstanding any other provision of this Plan to the contrary, the Committee, in its sole discretion, is empowered to accelerate the payment of a Par- -3- ticipant's Supplemental Benefits or of all Participants' Supplemental Benefits, to a smaller number of installment payments or to a single lump sum payment, for any reason the Committee may determine to be appropriate. Neither the Employers nor the Committee shall have any obligation to make any such acceleration for any reason whatsoever. 2.4. Funding. Supplemental Benefits payable under this Plan to a Participant or his beneficiary shall be paid (i) directly by the Employers from their general assets and/or (ii) from Tribune Company Deferred Benefit Trust, in such proportions as the Company shall determine. The provisions of this Plan shall not require that the Employers segregate on their books or otherwise any amount to be used for payment of Supplemental Benefits under this Plan, except as to any amounts paid or payable to Tribune Company Deferred Benefit Trust. SECTION 3 --------- General Provisions ------------------ 3.1. Terms. References in this Plan to an individual as being a "participant" in the ESOP and (unless expressly provided to the contrary in this Plan) terms used in this Plan that also are used in the ESOP as to that individual shall have the meanings for those terms set forth in the ESOP, except that a reference in this Plan to the "beneficiary" of a Participant shall mean for purposes of this Plan any person who becomes entitled to benefits under the ESOP because of the Participant's death. For purposes of this Plan, a "subsidiary" of the Company shall mean any corporation, more than 50% of the voting stock in which is owned, directly or indirectly, by the Company, and the term "Change-In- Control" shall mean a change in control as defined in the Tribune Company Transitional Compensation Plan for Executive Employees as in effect on the Effective Date of this Plan. 3.2. Employment Rights. Establishment of the Plan shall not be construed to give any participant in the ESOP the right to be retained in the service of the Company or any of its subsidiaries or to any benefits not specifically provided by the Plan. 3.3. Interests Not Transferable. Except as to withholding of any tax under the laws of the United States or any state or municipality, the interests of Participants and any other -4- persons who become entitled to a Supplemental Benefit under the Plan are not subject to the claims of their creditors and may not be voluntarily or involuntarily transferred, assigned, alienated or encumbered. 3.4. Controlling Law. To the extent not superseded by the laws of the United States, the laws of Illinois shall be controlling in all matters relating to the Plan. 3.5. Gender and Number. Where the context admits, words in the masculine gender shall include the feminine and neuter genders, the plural shall include the singular and the singular shall include the plural. 3.6. Action by the Company. Any action required of or permitted by the Company under the Plan shall be by resolution of its Board of Directors or by a duly authorized committee of its Board of Directors, or by any person or persons authorized by resolution of its Board of Directors or such committee. 3.7. Successor to the Company or Any Other Employer. The term "Company" as used in the Plan shall include any successor to the Company by reason of merger, consolidation, the purchase or transfer of all or substantially all of the Company's assets, or otherwise. The term "Employer" as used in the Plan with respect to the Company or any of its subsidiaries shall include any successor to that corporation by reason of merger, consolidation, the purchase or transfer of all or substantially all of the assets of that corporation, or otherwise. 3.8. Facility of Payment. Any amounts payable under this Plan to any person under a legal disability or who, in the judgment of the Committee, is unable to properly manage his affairs may be paid to the legal representative of such person or may be applied for the benefit of such person in any manner which the Committee may select. 3.9. Rights in the Event of Dispute. If a claim or dispute arises concerning the rights of a Participant or beneficiary to benefits under the Plan, regardless of the party by whom such claim or dispute is initiated, the Company shall, upon presentation of appropriate vouchers, pay all legal expenses, including reasonable attorneys' fees, court costs, and ordinary and necessary out-of-pocket costs of attorneys, billed to and payable by the Participant or by anyone claiming under or -5- through the Participant (such person being hereinafter referred to as the Participant's "claimant"), in connection with the bringing, prosecuting, defending, litigating, negotiating, or settling of such claim or dispute; provided, that: (a) the Participant or the Participant's claimant shall repay to the Company any such expenses theretofore paid or advanced by the Company if and to the extent that the party disputing the Participant's rights obtains a judgment in its favor from a court of competent jurisdiction from which no appeal may be taken, whether because the time to do so has expired or otherwise, and it is determined that such expenses were not incurred by the Participant or the Participant's claimant while acting in good faith; provided further, that (b) in the case of any claim or dispute initiated by a Participant or the Participant's claimant, such claim shall be made, or notice of such dispute given, with specific reference to the provisions of this Plan, to the Committee within one year after the occurrence of the event giving rise to such claim or dispute. 3.10. Other Benefits. The benefits provided under the Plan shall, except to the extent otherwise specifically provided herein, be in addition to, and not in derogation or diminution of, any benefits that a Participant or his beneficiary may be entitled to receive under any other plan or program now or hereafter maintained by the Company or by any of its subsidiaries. SECTION 4 --------- Amendment and Termination ------------------------- While the Company and its subsidiaries that become Employers expect to continue the Plan, the Company must necessarily reserve and reserves the right to amend the Plan from time to time or to terminate the Plan at any time. However, neither an amendment of the Plan nor termination of the Plan may: (a) cause the reduction or cessation of any Supplemental Benefits (and of the Employers' obligation to provide such benefits) which had accrued as of the date such amendment is made or the termination of the Plan occurs and which, but for such amendment or termination, are payable under this Plan on, or would -6- become payable under this Plan after, the date such amendment is made or the termination of the Plan occurs; or (b) cause the modification, rescission or revocation of (i) the provisions of subsection 2.1 with respect to a Change-In-Control or (ii) any written determinations by the Committee pursuant to subsection 2.3 as to the form of payment of Supplemental Benefits to any person that are in effect on said date. In addition, no amendment or termination of the Plan which has the effect of reducing or diminishing the right of any participant to receive any payment or benefit under the Plan will become effective prior to the expiration of the 36 consecutive month period commencing on the date of a Change-In-Control, if such amendment or termination was adopted (i) on the day of or subsequent to the Change-In-Control, (ii) prior to the Change-In-Control, but at the request of any third party participating in or causing the Change-In-Control, or (iii) otherwise in connection with or in anticipation of a Change-In-Control. -7- EX-11 10 STATE OF COMPUTATION Exhibit 11 TRIBUNE COMPANY STATEMENTS OF COMPUTATION OF PRIMARY AND FULLY DILUTED NET INCOME PER SHARE
(In thousands, except per share amounts) Fiscal Year Ended December ------------------------------ 1993 1992 1991 -------- -------- -------- PRIMARY - ------- Income before cumulative effects of changes in accounting principles $188,606 $136,625 $141,981 Cumulative effects of changes in accounting principles, net of tax - (16,800) - -------- -------- -------- Net income 188,606 119,825 141,981 Preferred dividends, net of tax (18,439) (18,168) (16,900) -------- -------- -------- Net income attributable to common shares $170,167 $101,657 $125,081 -------- -------- -------- Weighted average common shares outstanding 66,371 65,018 64,364 -------- -------- -------- Primary net income per share: Before cumulative effects of changes in accounting principles $2.56 $1.82 $1.94 Cumulative effects of accounting changes, net - (0.26) - -------- -------- -------- Total $2.56 $1.56 $1.94 ======== ======== ======== FULLY DILUTED - ------------- Income before cumulative effects of changes in accounting principles $188,606 $136,625 $141,981 Additional ESOP contribution required assuming all preferred shares were converted, net of tax (12,442) (12,408) (11,600) Assumed elimination of tax benefit on certain ESOP preferred dividends (2,248) (1,606) - -------- -------- -------- Adjusted net income before cumulative effects of changes in accounting principles 173,916 122,611 130,381 Cumulative effects of changes in accounting principles, net of tax - (16,800) - -------- -------- -------- Adjusted net income $173,916 $105,811 $130,381 -------- -------- -------- Weighted average common shares outstanding 66,371 65,018 64,364 Assumed conversion of preferred shares into common shares 6,126 6,331 6,576 Assumed exercise of stock options, net of common shares assumed repurchased with the proceeds 1,198 971 448 -------- -------- -------- Adjusted weighted average common shares outstanding 73,695 72,320 71,388 -------- -------- -------- Fully diluted net income per share: Before cumulative effects of changes in accounting principles $2.36 $1.70 $1.83 Cumulative effects of accounting changes, net - (0.24) - -------- -------- -------- Total $2.36 $1.46 $1.83 ======== ======== ========
See Notes to Consolidated Financial Statements. EX-12 11 COMPUTATION OF RATIOS Exhibit 12 TRIBUNE COMPANY COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES (In thousands, except ratios)
Fiscal Year Ended December ----------------------------------------------------- 1993 1992 1991 1990 1989 -------- -------- -------- -------- -------- Net income (loss) before cumulative effects of accounting changes $188,606 $136,625 $141,981 ($63,533) $242,421 Add: Income tax expense (benefit) 143,821 96,266 99,894 (30,695) 168,463 Losses on equity investments 20,212 1,903 1,107 2,285 2,221 -------- -------- -------- -------- -------- Sub-total 352,639 234,794 242,982 (91,943) 413,105 -------- -------- -------- -------- -------- Fixed charge adjustments Add: Interest expense 24,660 49,254 63,083 53,576 47,866 Amortization of capitalized interest 2,392 5,304 5,258 4,850 4,098 Interest component of rental expense (A) 8,732 9,329 9,047 14,467 12,333 -------- -------- -------- -------- -------- Earnings (loss), as adjusted $388,423 $298,681 $320,370 ($19,050) $477,402 ======== ======== ======== ======== ======== Fixed charges: Interest expense $ 24,660 $ 49,254 $ 63,083 $ 53,576 $ 47,866 Interest capitalized 1,099 3,445 1,976 8,652 13,614 Interest component of rental expense (A) 8,732 9,329 9,047 14,467 12,333 Interest related to guaranteed ESOP debt (B) 25,742 27,019 27,500 27,757 20,508 -------- -------- -------- -------- -------- Total fixed charges $ 60,233 $ 89,047 $101,606 $104,452 $ 94,321 ======== ======== ======== ======== ======== Ratio of Earnings to Fixed Charges 6.4 3.4 3.2 (C) 5.1 ======== ======== ======== ======== ========
(A) Represents a portion of rental expense incurred by the Company, which is a reasonable approximation of the interest cost component of such expense. (B) Tribune Company guarantees the debt of its Employee Stock Ownership Plan (ESOP). (C) The net loss for 1990 reflects an after-tax non-recurring loss of $185 million ($295 million before income taxes) relating to the sale of the New York Daily News. Excluding this non-recurring item, the ratio for 1990 was 2.6. As a result of the loss incurred for the full-year 1990, the Company was unable to cover the indicated fixed charges. The Company's loss, as adjusted, plus the indicated fixed charges for 1990 totaled $124 million. EX-13 12 ANNUAL REPORT EXHIBIT 13 Portions of the Company's 1993 Annual Report to Stockholders (Annual Report Pages 28-52, 54-57) Tribune Company and Subsidiaries MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The following discussion presents the significant factors that have affected the businesses of Tribune Company and its subsidiaries (the "Company") over the last three years. This commentary should be read in conjunction with the Company's consolidated financial statements and Eleven Year Financial Summary, which are also presented in this annual report. RESULTS OF OPERATIONS - --------------------- The Company's fiscal year ends on the last Sunday of the calendar year. Fiscal years 1993, 1992 and 1991 all included 52 weeks. CONSOLIDATED The Company's consolidated financial results as reported for 1993, 1992 and 1991 were as follows:
Change (Dollars in millions, except per share amounts) 1993 1992 1991 93-92 92-91 - ------------------------------------------------- ------ ------ ------ ----- ----- Operating revenues $1,953 $2,105 $2,044 - 7% + 3% Operating profit 356 268 288 +33% - 7% Equity in QUNO net loss (18) - - * - Net income 189 120 142 +57% -16% Before accounting changes 189 137 142 +38% - 4% Primary net income per share 2.56 1.56 1.94 +64% -20% Before accounting changes 2.56 1.82 1.94 +41% - 6% * Not Meaningful
On February 17, 1993, the Company's previously wholly owned newsprint subsidiary, QUNO Corporation ("QUNO"), completed an initial public offering of 9 million shares of common stock. The Company now holds 8.8 million, or 49%, of the voting common shares and 4.2 million non-voting common shares for a combined total of 59% of QUNO's total 22 million outstanding common shares. The Company also holds a $138.8 million subordinated debenture, convertible into 11.7 million voting common shares of QUNO. As the Company's voting interest is now less than 50%, the Company is using the equity method of accounting for its investment in QUNO beginning in 1993. Accordingly, QUNO's balance sheet and income statement are no longer consolidated in the Company's financial statements. The Company's investment in and advances to QUNO are reported separately in the consolidated statement of financial position and the Company's share of QUNO's net income or loss is reported separately in the consolidated statement of income. Prior year financial statements were not restated. Effective as of the beginning of 1992, the Company adopted three new Financial Accounting Standards Board ("FAS") rules, and recorded in earnings a one-time, non-cash cumulative effect for each rule. FAS 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," resulted in an after-tax charge against earnings of $37.6 million, or $.58 per share on a primary basis. FAS 109, "Accounting for Income Taxes," resulted in a credit to earnings of $26.3 million, or $.40 per share. FAS 112, "Employers' Accounting for Postemployment Benefits," resulted in an after-tax charge against earnings of $5.5 million, or $.08 per share. These cumulative effects resulted in a net after-tax charge against 1992 earnings of $16.8 million, or $.26 per share on a primary basis. Prior year financial statements have not been restated. -28- Net Income Per Share--The 41% increase in 1993 primary net income per share before accounting changes was due to higher profits at the media businesses, lower QUNO losses and a reduction in the Company's share of those losses, and lower net interest expense. The 6% decrease in 1992 primary net income per share, before accounting changes, compared to 1991 resulted from significantly larger operating losses at QUNO, partially offset by higher operating profit from the Company's media groups and a 23% decrease in net interest expense. The effective income tax rate increased in 1993 to 43.3% from 41.3% in 1992 and 1991, mainly due to the new 1993 tax law. Average common shares outstanding increased 2% in 1993 and 1% in 1992. Operating Profit and Revenues--The following table shows consolidated operating profit (loss) by business segment:
Change (Dollars in millions) 1993 1992 1991 93-92 92-91 - ------------------------------ ---- ---- ---- ----- ----- Publishing $255 $225 $217 +14% + 3% Broadcasting & Entertainment 125 121 100 + 4% +21% Corporate expenses (24) (24) (22) - 3% - 6% - ------------------------------ ---- ---- ---- ----- ----- 356 322 295 +11% + 9% Newsprint Operations (QUNO) - (54) (7) - -671% - ------------------------------ ---- ---- ---- ----- ----- Total operating profit $356 $268 $288 +33% - 7% - ------------------------------ ---- ---- ---- ----- -----
Excluding QUNO, operating profit increased 11% to $356 million in 1993 and 9% to $322 million in 1992, primarily due to increased revenues. Consolidated 1993 revenues decreased 7%, or $152 million, from 1992. A 5% increase in the publishing segment and a 6% increase in the broadcasting and entertainment segment were more than offset by the absence of QUNO's revenues in 1993. Excluding QUNO from 1992, consolidated operating revenues grew 5%, or $97 million, in 1993. Consolidated 1992 revenues increased 3%, or $61 million, from 1991. Excluding QUNO, 1992 revenues increased 5% from 1991, resulting primarily from increased advertising revenues and the acquisition of WPHL-Philadelphia in June 1992. Operating Expenses--Consolidated operating expenses, excluding QUNO from 1992 and 1991, were as follows:
Change (Dollars in millions) 1993 1992 1991 93-92 92-91 - ----------------------------------- ------ ------ ------ ----- ----- Cost of sales $ 998 $ 954 $ 938 +5% + 2% Selling, general & administrative 495 484 440 +2% +10% Depreciation & amortization of intangible assets 103 96 91 +7% + 6% - ----------------------------------- ------ ------ ------ ----- ----- Total operating expenses $1,596 $1,534 $1,469 +4% + 4% - ----------------------------------- ------ ------ ------ ----- -----
Cost of sales was 51% of revenues in 1993 and 1992, and 53% in 1991. The 5% increase in cost of sales in 1993 was due primarily to increased compensation costs of $12 million, or 4%, higher newsprint and ink expense of $11 million, or 6%, and the acquisition of Contemporary Books, Inc. and Compton's Multimedia Publishing Group in 1993. In 1992, the increase in cost of sales resulted primarily from higher production costs for original programming in entertainment and increased television broadcast rights expense. SG&A expense increased 2% in 1993 from 1992, mainly due to increased compensation costs of $10 million, or 4%. The increase in SG&A expense in 1992 from 1991 was mainly attributable to a $15.3 million charge recorded in the fourth quarter of 1992 for the closure of the Palo Alto-based Times Tribune and higher compensation costs. Compensation costs increased $17 million, or 8%, in 1992. The increase in depreciation and amortization of intangible assets in 1993 was principally due to capital expenditures at the Chicago Tribune and 1992 and 1993 acquisitions. Depreciation and amortization of intangible assets in 1992 increased due to the addition of WPHL-Philadelphia in 1992. -29- PUBLISHING Operating Profit and Revenues -- Publishing operating profit for 1993 was up 14% from 1992 to $255 million. The 1993 increase was principally due to higher 1993 revenues and the absence of the $15.3 million charge recorded in 1992 for the March 12, 1993 closure of the Times Tribune. Publishing operating profit in 1992 was $225 million, up 3% from the 1991 operating profit of $217 million. The 1992 increase was primarily due to higher revenues and lower newsprint prices, partially offset by the $15.3 million charge for the closure of the Times Tribune. Operating revenues increased 5%, or $53 million, in 1993 due to increased advertising revenues and the revenues from two acquisitions in 1993. Advertising revenues increased 3% in 1993 due to increases in full run linage and preprint volume and higher advertising rates. Operating revenues for 1992 were $1.2 billion, 2% higher than 1991, due to an increase in advertising and other revenue. Excluding the Times Tribune from 1992 and 1991 results, 1993 publishing revenues grew 6% while operating profits rose 5%, and 1992 publishing revenues rose 2% over 1991 while operating profits were up 9%. Revenues in 1993 include those of Contemporary Books, Inc., acquired in late July and Compton's Multimedia Publishing Group, acquired in mid- September. These acquisitions are being accounted for by the purchase method, and their results of operations have been included in the consolidated financial statements since the dates of acquisition. Excluding revenues from these acquisitions as well as 1992 revenues of the Times Tribune, 1993 revenues were up 4%. Operating margins for 1993 were 20.8% compared to 19.1% in 1992 and 18.9% in 1991. The 1993 increase was due to higher revenues, while the 1992 increase resulted primarily from lower newsprint prices. Total publishing revenues by classification, excluding the Times Tribune from 1992 and 1991, were as follows:
Change (Dollars in millions) 1993 1992 1991 93-92 92-91 - ----------------------- ------ ------ ------ ----- ----- Advertising Retail $ 435 $ 420 $ 419 + 4% - General 120 127 123 - 5% + 4% Classified 337 305 294 +11% + 4% - ----------------------- ------ ------ ------ ----- ----- Total advertising 892 852 836 + 5% + 2% Circulation 246 236 233 + 4% + 2% Other 91 69 61 +32% +13% - ----------------------- ------ ------ ------ ----- ----- Total revenues $1,229 $1,157 $1,130 + 6% + 2% - ----------------------- ------ ------ ------ ----- -----
Retail advertising revenues were up 4% in 1993 due to increases in the electronics and department store categories in Chicago and Fort Lauderdale. General advertising revenues declined 5% in 1993 due principally to lower advertising in the transportation and resorts categories at nearly all the newspapers. Classified advertising revenues rose mainly due to increases in help wanted and automotive advertising. All newspapers reported improved classified advertising except the Company's newspaper in Escondido, California. Retail advertising revenues in 1992 were relatively unchanged from 1991 as increases in Chicago and Fort Lauderdale were offset by declines in Orlando and Escondido. General advertising revenues increased 4% in 1992 due to stronger financial and insurance advertising at the larger newspapers. Classified advertising revenues increased 4% due primarily to higher help wanted and automobile advertising. Most newspapers reported improved classified advertising. The following table presents 1993, 1992 and 1991 advertising linage, excluding the Times Tribune: -30-
Change (Inches in thousands) 1993 1992 1991 93-92 92-91 - ----------------------- ------ ------ ------ ----- ----- Full run Retail 4,444 4,406 4,605 + 1% - 4% General 641 710 742 -10% - 4% Classified 6,502 6,023 6,016 + 8% - - ----------------------- ------ ------ ------ ----- ----- Total full run 11,587 11,139 11,363 + 4% - 2% Part run 10,050 10,156 10,007 - 1% + 1% Preprint 9,822 9,101 8,322 + 8% + 9% - ----------------------- ------ ------ ------ ----- ----- Total inches 31,459 30,396 29,692 + 3% + 2% - ----------------------- ------ ------ ------ ----- -----
The 1993 increases in retail and classified full run linage reflect generally improved economic conditions. The decrease in general full run linage in 1993 reflects the continued shift in advertising to preprints. The 1993 increase in preprint advertising linage is mainly attributable to the increased number of advertising zones offered by the Company's newspapers. The declines in full run linage in 1992 resulted from the weak economic conditions experienced throughout most of 1992 and the shift in advertising to part run and preprint. The increases in both part run and preprint linage were mainly attributable to increases in the number of advertising zones offered by the Company's newspapers. Increased zoning enables advertisers to target specific market areas for their advertisements. Circulation revenues, excluding the Times Tribune, increased in both 1993 and 1992 due primarily to increased newspaper prices. Total average daily circulation, excluding the Times Tribune, decreased 2% in 1993 to 1,386,000 copies from 1,408,000 copies in 1992, while total average Sunday circulation increased to 2,041,000 in 1993 from 2,029,000 copies in 1992. Total average daily circulation, excluding the Times Tribune, decreased to 1,408,000 copies in 1992 from 1,421,000 copies in 1991, while total average Sunday circulation increased to 2,029,000 in 1992 from 2,016,000 copies in 1991. The decrease in average daily circulation for both years was primarily due to pricing action at Chicago, Orlando and Newport News in 1992, offset partially by an increase in circulation in Fort Lauderdale. Other revenues are derived from publishing books and information in print and digital formats; advertising placement services; the syndication of columns, features, information and comics to newspapers; commercial printing operations; direct mail operations; and other publishing-related activities. The increase in 1993 resulted from the 1993 acquisitions of Contemporary Books in late July and Compton's in mid-September. Excluding these acquisitions, other revenues declined 3% due to a decrease in commercial printing revenues. The 1992 increase resulted mainly from higher revenues from advertising placement services and direct mail operations. Operating Expenses -- Publishing operating expenses increased 2% in both 1993 and 1992. Excluding the Times Tribune, operating expenses increased 7% from 1992. The increase was due to higher newsprint and ink expense, increased circulation expenses and the addition of Contemporary Books and Compton's. Excluding the two 1993 acquisitions and the Times Tribune, expenses increased $39 million, or 4%, in 1993. Newsprint and ink expense rose 7%, or $13 million, in 1993 due to a 5% increase in newsprint prices and a 2% increase in consumption. Circulation costs rose 9%, or $11 million, primarily due to higher selling, postage and delivery expenses for expanding total market coverage in Chicago. Other expenses, including compensation, increased $15 million, or 2%, in 1993. Full-time equivalent employees, excluding the Times Tribune, decreased 1% in 1993. Excluding the Times Tribune, operating expenses increased 1% in 1992 from 1991. Newsprint and ink expense decreased 16%, or $32 million, due to lower newsprint prices as consumption was essentially unchanged in 1992 from 1991. Other expenses increased $38 million, or 5%, in 1992. The largest increase was in compensation costs which rose 6%, or $19 million, due to increased benefit costs and pay rates. -31- BROADCASTING AND ENTERTAINMENT Operating Profit and Revenues--Broadcasting and entertainment operating profit was up 4%, or $4 million, in 1993 from 1992. The Company's Chicago Cubs subsidiary received $12.3 million of Major League Baseball expansion fees in December 1992, which was recorded in operating revenues in 1992. Excluding the expansion fees from 1992, operating profit in 1993 was up 15%, or $17 million. This increase was primarily the result of improved television and radio results due to higher revenues, partially offset by lower profit from entertainment due principally to increased player compensation costs at the Chicago Cubs. Broadcasting and entertainment operating profit for 1992 was up 21% from 1991 due to improved television results and the receipt of the $12.3 million of baseball expansion fees. Broadcasting and entertainment revenues and profits, exclusive of the baseball expansion fees, were both up 9% in 1992. Operating revenues for the group were as follows:
Change (Dollars in millions) 1993 1992 1991 93-92 92-91 - ----------------------- ---- ---- ---- ----- ----- Television $537 $477 $446 +12% + 7% Radio 59 50 49 +19% + 1% Entertainment 131 157 122 -16% +29% - ----------------------- ----- ----- ----- ----- ----- Total revenues $727 $684 $617 + 6% +11% - ----------------------- ---- ----- ---- ----- -----
Television revenues were up at all of the Company's stations in 1993. The 12% increase in 1993 was largely due to higher revenues at WPIX-New York and KTLA-Los Angeles, as well as the addition of WPHL-Philadelphia, which was acquired June 5, 1992. Excluding WPHL, television revenues were up 9% in 1993. Radio revenues increased 19% in 1993 principally due to the addition of two Denver radio stations, KOSI-FM and KEZW-AM, acquired in January 1993. Excluding revenues from these stations, radio revenues rose 5% in 1993 primarily due to higher revenues at WQCD-New York. Entertainment revenues decreased 16% in 1993, due to the cancellation of the syndicated programs "The Dennis Miller Show" and "Now It Can Be Told" in the second half of 1992, and the inclusion in 1992 of the $12.3 million of baseball expansion fees. Excluding the expansion fees from 1992, entertainment revenues declined 9% in 1993. Television revenues increased in 1992 as a result of growth at both WPIX-New York and WGN-Chicago and the addition of WPHL-Philadelphia. All stations except KTLA-Los Angeles experienced revenue gains in 1992. Excluding WPHL, television revenues increased 3% in 1992. Radio group revenues increased modestly in 1992 as most stations reported gains. Entertainment revenues, excluding baseball expansion fees in 1992, increased 18% mainly due to the addition of new shows and higher revenues from existing syndicated programming. Operating Expenses--Expenses for the group increased 7%, or $39 million, in 1993. The increase was principally due to higher compensation costs and higher television broadcast rights expense, partially offset by a decrease in production costs for original entertainment programming. Compensation costs increased 15% in 1993 to $184 million, primarily due to increased player compensation at the Chicago Cubs, the addition of the new television and radio stations and the January 1993 start-up of ChicagoLand Television News (a regional news cable channel.) Excluding these new operations and the Cubs, compensation costs rose 5% in 1993. Television broadcast rights expense increased $21 million, or 10%, to $221 million in 1993 due primarily to the addition of Los Angeles Dodgers and Philadelphia Phillies baseball in 1993. Production costs for original programming were down 46%, or $22 million, due to the cancellation of "The Dennis Miller Show" and "Now It Can Be Told." Operating expenses for the broadcasting and entertainment group increased 9% in 1992, principally due to increased production costs for original programming in entertainment, additional television broadcast rights expense and higher compensation costs. Production costs increased 67%, or $19 million, in 1992 due to new shows at Tribune Entertainment, while television broadcast rights expense increased 4%, or $8 million, mainly due to the addition of WPHL- Philadelphia in June 1992. Excluding WPHL, television broadcast rights expense increased 1% in 1992. Compensation costs rose $17 million, or 12%, in 1992 primarily due to -32- increases of $8 million at the Chicago Cubs due to higher player salaries and $4 million at new operations included for the first time in 1992. EQUITY IN QUNO NET LOSS The Company's 1993 equity in QUNO's net loss, after interest expense and taxes, was $18.4 million. This amount represents 100% of QUNO's net loss prior to February 17, 1993, the date of QUNO's stock offering, and 59% of QUNO's net loss thereafter. QUNO reported an operating loss of $31 million in 1993, $23 million less than the $54 million operating loss incurred in 1992. This was the result of higher average newsprint selling prices and lower operating expenses, partially offset by a 4% decrease in newsprint shipments. Though average newsprint selling prices began to soften in the second half of 1993, they averaged 5% higher in 1993 than in 1992 due to the implementation of transaction price increases in August 1992 and March 1993. QUNO's 1993 fourth quarter results included a one-time $13 million pre-tax charge for the closure of a pulping operation. This charge reduced the Company's 1993 net income by approximately $5 million, or $.08 per share on a primary basis. Total revenues were up 6% to $387 million in 1993 from $366 million in 1992 due to increased newsprint selling prices and improved sawmill revenues. Operating expenses declined 1% from 1992 due to the decline in newsprint sales volume and the benefit of the weaker Canadian dollar on QUNO's cash operating expenses, partially offset by a non-cash $5 million increase in foreign currency exchange losses. The foreign currency losses relate primarily to QUNO's U.S. dollar-denominated debt and resulted from a 5% decline in the Canadian dollar during 1993. QUNO reported an operating loss of $54 million for 1992, compared to a loss of $7 million in 1991. The 1992 loss was largely due to a 17% decrease in average newsprint transaction prices from the 1991 average, resulting from weak newsprint industry economic conditions. The 1991 loss also resulted primarily from weaker newsprint pricing brought on by unfavorable industry conditions. QUNO's revenues decreased 13% in 1992, despite a 4% increase in shipments, due to the decline in average newsprint selling prices. Operating expenses decreased 2% in 1992 due to lower compensation costs as a result of continued cost- reduction efforts and the 1992 decline of the Canadian dollar in relation to the U.S. dollar, partially offset by additional costs resulting from higher newsprint shipments. Compensation costs declined $11 million, or 8%, in 1992. INTEREST INCOME AND EXPENSE The components of net interest expense were as follows:
Change (Dollars in millions) 1993 1992 1991 93-92 92-91 - ----------------------- ----- ----- ----- ----- ----- Interest income $ 19 $ 14 $ 17 +38% -19% Interest expense (25) (49) (63) -50% -22% - ----------------------- ----- ----- ----- ----- ----- Net interest expense $ (6) $ (35) $ (46) -84% -23% - ----------------------- ----- ----- ----- ----- -----
Interest income consists primarily of interest on mortgage notes receivable from real estate affiliates, the QUNO convertible debenture and short-term marketable securities. Interest income increased 38% to $19 million in 1993 due to the convertible debenture. Interest expense decreased 50% in 1993 to $25 million due to lower average debt levels primarily as a result of the QUNO initial public offering. Average debt levels declined approximately $280 million in 1993 to $585 million. Outstanding debt dropped to $537 million at year-end 1993 from $841 million at the end of 1992. Interest expense decreased 22% in 1992 as compared to 1991 due to lower 1992 average debt levels and lower average short-term interest rates. Average debt levels declined approximately $140 million in 1992 to approximately $865 million. Outstanding debt dropped from $918 million at year-end 1991 to $841 million at year-end 1992. Short-term interest rates for 1992 averaged 2.5 percentage points lower than in 1991. -33- FINANCIAL CONDITION - ------------------- LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operations was $302 million in 1993 compared to $278 million in 1992. The 1993 increase was primarily due to higher net income. Net cash used for investments was $55 million for 1993 compared to $158 million in 1992. The 1993 amount includes the acquisitions of the Denver radio stations, Contemporary Books and Compton's Multimedia Publishing Group, the purchase of a mortgage note and capital expenditures, partially offset by intercompany debt repayments of $180 million received from QUNO as a result of its initial public offering and debt issuances. The Company acquired the Denver radio stations on January 6, 1993 for approximately $20 million in cash; Contemporary Books, Inc. on July 28, 1993 for approximately $22 million in cash and $18.5 million in common stock; and Compton's Multimedia Publishing Group on September 13, 1993 for approximately $57 million in cash. The Company announced in November 1993, that it had reached an agreement to acquire independent television station WLVI-Boston for approximately $25 million in cash plus the amount of working capital at closing. This acquisition, which is subject to Federal Communications Commission approval, is expected to be completed in the second quarter of 1994. The Company also announced, on January 24, 1994, that it will acquire The Wright Group for approximately $100 million in cash. The Wright Group is the leading publisher of "whole language" educational materials for the elementary school market. The acquisition is expected to be completed in February 1994. Capital expenditures of $76 million in 1993 included a project to provide additional color press capacity for the Chicago Tribune and a variety of projects to increase efficiencies and lower costs throughout the Company. Capital spending for 1994 is expected to total approximately $90 million. The 1994 spending will include a variety of modernization and normal replacement projects throughout the Company. Net cash used for financing activities in 1993 was $246 million compared to $120 million in 1992. Net cash used for financing activities in 1993 included dividends of $82 million and $284 million of debt repayments primarily funded with the proceeds received from the QUNO stock offering and debt financing and $78 million of Medium-Term Notes, Series B, issued in September 1993. QUNO's New Zealand dollar notes of approximately $80 million, which were unconditionally guaranteed by the Company, were repaid by QUNO in April 1993. On July 1, 1993, the Company elected to redeem at par its $100 million 8% notes. The redemption was financed with commercial paper and available cash. Net cash used for financing activities in 1992 reflects dividends of $80 million, early repayment of the $100 million, 10.5% Eurodollar notes and repayments of $14 million of medium-term notes. These uses of cash in 1992 were partially offset by a net increase in commercial paper of $47 million and net proceeds from sale of common stock to employees. The Company has revolving credit agreements with banks in the aggregate amount of $445 million that are fully available to support the issuance of commercial paper and extend to December 31, 1995. At December 26, 1993, the Company had commercial paper outstanding of $42 million with a weighted average interest rate of 3.3% and authorization to repurchase 900,000 shares of its common stock. On October 25, 1993, the Company filed a Prospectus Supplement with the Securities and Exchange Commission relating to the offer and sale from time to time of up to $300 million principal amount of the Company's Medium-Term Notes, Series C, originally registered with the SEC under a shelf registration effective July 13, 1992. Funds borrowed under this issue will be used for general corporate purposes. The Company expects to fund 1994 dividends, capital expenditures and other operating requirements with net cash provided by operations. IMPACT OF INFLATION Tribune Company's financial statements have been prepared in accordance with generally accepted accounting principles and are expressed in historical dollars, which measure amounts of dollars used at the dates the related transactions occurred. Management does not believe that the effects of inflation are significantly any more or less adverse on the Company's businesses than they are on other companies. -34- Tribune Company and Subsidiaries Consolidated Statements of Income
(In thousands of dollars, except per share data) Year Ended Dec. 26, 1993 Dec. 27, 1992 Dec. 29, 1991 - ---------------------------------------------------------------------------------------------------------------------------------- Operating Publishing Revenues Advertising $ 892,524 $ 868,051 $ 854,526 Circulation 246,093 238,302 234,720 Other 90,785 69,827 61,636 ---------- ---------- ---------- Total 1,229,402 1,176,180 1,150,882 Broadcasting and entertainment 727,213 684,051 617,514 Newsprint operations (Canada) - 366,269 422,128 Intercompany (4,105) (121,556) (146,551) ---------- ---------- ---------- Total operating revenues 1,952,510 2,104,944 2,043,973 ---------- ---------- ---------- Operating Cost of sales (exclusive of items shown below) 998,345 1,150,956 1,121,334 Expenses Selling, general and administrative 495,000 546,046 497,616 Depreciation and amortization of intangible assets 102,762 139,579 137,048 ---------- ---------- ---------- Total operating expenses 1,596,107 1,836,581 1,755,998 ---------- ---------- ---------- Operating Profit 356,403 268,363 287,975 Equity in QUNO net loss (18,355) - - Interest income 19,039 13,782 16,983 Interest expense (24,660) (49,254) (63,083) ---------- ---------- ---------- Income Before Income Taxes 332,427 232,891 241,875 Income taxes (143,821) (96,266) (99,894) ---------- ---------- ---------- Income Before Cumulative Effects of Changes in Accounting Principles 188,606 136,625 141,981 Cumulative effects of changes in accounting principles, net of tax - (16,800) - ---------- ---------- ---------- Net Income 188,606 119,825 141,981 Preferred dividends, net of tax (18,439) (18,168) (16,900) ---------- ---------- ---------- Net Income Attributable to Common Shares $ 170,167 $ 101,657 $ 125,081 ---------- ---------- ---------- Net Income Per Share Primary: Before cumulative effects of changes in accounting principles $ 2.56 $ 1.82 $ 1.94 Cumulative effects of accounting changes, net - (.26) - ---------- ---------- ---------- Net income $ 2.56 $ 1.56 $ 1.94 ---------- ---------- ---------- Fully diluted: Before cumulative effects of changes in accounting principles $ 2.36 $ 1.70 $ 1.83 Cumulative effects of accounting changes, net - (.24) - ---------- ---------- ---------- Net income $ 2.36 $ 1.46 $ 1.83 ---------- ---------- ----------
See Notes to Consolidated Financial Statements. -35- Tribune Company and Subsidiaries Consolidated Statements of Financial Position
Assets (In thousands of dollars, except share data) Dec. 26, 1993 Dec. 27, 1992 - ---------------------------------------------- --------------------------------------------------- -------------- -------------- Current Assets Cash and short-term investments $ 18,524 $ 16,768 Accounts receivable (less allowances of $25,432 and $23,411) 284,110 295,742 Inventories 26,290 82,124 Broadcast rights 144,233 160,703 Prepaid expenses and other 18,102 19,001 ---------- ---------- Total current assets 491,259 574,338 ---------- ---------- Investment in and Advances to QUNO 250,923 - ---------- ---------- Properties Machinery, equipment and furniture 792,642 1,327,533 Buildings and leasehold improvements 307,266 459,367 Timber limits and leases, and land improvements 7,687 53,556 ---------- ---------- 1,107,595 1,840,456 Accumulated depreciation (599,552) (913,522) ---------- ---------- 508,043 926,934 Land 54,471 51,724 Construction in progress 39,101 95,285 ---------- ---------- Net properties 601,615 1,073,943 ---------- ---------- Other Assets Broadcast rights 217,229 226,981 Intangible assets (less accumulated amortization of $156,372 and $135,664) 719,965 645,385 Mortgage notes receivable from affiliates 119,437 84,486 Other 135,982 146,437 ---------- ---------- Total other assets 1,192,613 1,103,289 ---------- ---------- Total assets $2,536,410 $2,751,570 ---------- -------------
See Notes to Consolidated Financial Statements. -36-
Liabilities and Stockholders' Investment Dec. 26, 1993 Dec. 27, 1992 - --------------------------------------------------------------------------------------------------- -------------- -------------- Current Liabilities Long-term debt due within one year $ 25,817 $ 99,992 Employee compensation 77,335 76,691 Accounts payable 85,334 106,703 Contracts payable for broadcast rights 142,686 152,605 Accrued liabilities 135,497 163,463 Income taxes 38,358 33,545 ---------- ---------- Total current liabilities 505,027 632,999 ---------- ---------- Long-Term Debt (less portions due within one year) 510,838 740,979 ---------- ---------- Other Deferred income taxes 87,605 85,018 Non-Current Contracts payable for broadcast rights 194,846 182,190 Liabilities Compensation and other obligations 141,716 192,462 ---------- ---------- Total other non-current liabilities 424,167 459,670 ---------- ---------- Commitments (see Note 13) - - Minority Interest in Subsidiaries 751 6,033 ---------- ---------- Stockholders' Series B convertible preferred stock (without par value) Investment Authorized: 1,600,000 shares Issued and outstanding: 1,531,084 shares in 1993 and 1,554,352 shares in 1992 (liquidation value $220 per share) 335,532 340,634 Common stock (without par value) Authorized: 400,000,000 shares; 81,771,658 shares issued 1,018 1,018 Additional paid-in capital 105,819 100,445 Retained earnings 1,589,695 1,483,016 Treasury stock (at cost) 14,791,114 shares in 1993 and 16,292,181 shares in 1992 (607,332) (667,668) Unearned compensation related to ESOP (298,969) (321,690) Cumulative translation adjustment (30,136) (23,866) ---------- ---------- Total stockholders' investment 1,095,627 911,889 ---------- ---------- Total liabilities and stockholders' investment $2,536,410 $2,751,570 ---------- ----------
-37- Tribune Company and Subsidiaries Consolidated Statements of Cash Flows
(In thousands of dollars) Dec. 26, 1993 Dec. 27, 1992 Dec. 29, 1991 - ------------------------- ------------- ------------- ------------- Operations Net income $ 188,606 $ 119,825 $ 141,981 Adjustments to reconcile net income to net cash provided by operations: Equity in QUNO net loss 18,355 - - Cumulative effects of accounting changes, net - 16,800 - Depreciation and amortization of intangible assets 102,762 139,579 137,048 Deferred income taxes 3,531 (35,527) (25,163) (Increase) decrease in working capital items excluding effects from acquisitions: Accounts receivable (27,311) (658) (15,267) Inventories, prepaid expenses and other current assets (4,288) 19,144 (573) Accounts payable, employee compensation and accrued liabilities (11,166) (477) 55,344 Income taxes (2,166) (15,760) 33,815 Decrease in broadcast rights net of current and long-term contracts payable 28,959 21,470 31,274 Other, net 4,676 13,948 3,614 --------- --------- --------- Net cash provided by operations 301,958 278,344 362,073 --------- --------- --------- Investments Capital expenditures (75,620) (130,232) (93,931) Acquisitions (excluding $18.5 million of stock issued in 1993) (98,918) (3,293) (4,192) Repayment of note receivable from QUNO 179,846 - - Purchase of mortgage note (35,500) - - Sale of New York Daily News, net (14,240) (13,726) (91,591) Other, net (10,020) (10,799) (24,227) --------- --------- --------- Net cash used for investments (54,452) (158,050) (213,941) --------- --------- ---------- Financing Proceeds from issuance of long-term debt 78,050 - 18,424 Repayments of long-term debt (283,968) (67,876) (92,940) Sale of common stock to employees, net 46,138 31,918 10,007 Dividends (81,927) (80,407) (78,415) Redemption of preferred stock (4,043) (4,118) (1,871) --------- -------- --------- Net cash used for financing (245,750) (120,483) (144,795) --------- --------- --------- Net Increase (Decrease) in Cash and Short-Term Investments 1,756 (189) 3,337 Cash and short-term investments at the beginning of year 16,768 16,957 13,620 --------- ---------- --------- Cash and short-term investments at the end of year $ 18,524 $ 16,768 $ 16,957 --------- --------- --------- Supplemental Cash paid for: Cash Flow Interest (net of amounts capitalized) $ 28,015 $ 53,768 $ 68,892 Information Income taxes $ 121,727 $ 128,921 $ 15,261 --------- --------- ---------
See Notes to Consolidated Financial Statements. -38- Tribune Company and Subsidiaries Consolidated Statements of Stockholders' Investment
Series B Treasury Stock Unearned Convertible Additional ----------------- Compen- Cumulative (In thousands, Preferred Common Paid-In Retained Amount sation Translation except per share data) Stock Stock(1) Capital Earnings Shares --at cost (ESOP) Adjustment Total - ---------------------------------------------------------------------------------------------------------------------------- Balance at December 30, 1990 $348,218 $1,018 $103,758 $1,380,032 (17,613) $(714,501) $(358,531) $ 4,518 $ 764,512 - ---------------------------------------------------------------------------------------------------------------------------- Net income 141,981 141,981 Translation adjustment (1,014) (1,014) Redemptions of convertible preferred stock (2,356) 36 11 449 (1,871) Dividends declared Common--$.96/share (61,736) (61,736) Preferred--$17.05/share (26,909) (26,909) Tax benefit on dividends paid to the ESOP 10,230 10,230 Repayment of ESOP debt 16,499 16,499 Shares issued under option and stock plans (2,518) 826 33,531 31,013 Stock tendered as payment for options exercised (464) (21,006) (21,006) - ---------------------------------------------------------------------------------------------------------------------------- Balance at December 29, 1991 345,862 1,018 101,276 1,443,598 (17,240) (701,527) (342,032) 3,504 851,699 - ---------------------------------------------------------------------------------------------------------------------------- Net income 119,825 119,825 Translation adjustment (27,370) (27,370) Redemptions of convertible preferred stock (5,228) 107 25 1,003 (4,118) Dividends declared Common--$.96/share (62,450) (62,450) Preferred--$17.05/share (26,502) (26,502) Tax benefit on dividends paid to the ESOP (2) 8,545 8,545 Repayment of ESOP debt 20,342 20,342 Shares issued under option and stock plans (938) 1,417 57,685 56,747 Stock tendered as payment for options exercised (494) (24,829) (24,829) - ---------------------------------------------------------------------------------------------------------------------------- Balance at December 27, 1992 340,634 1,018 100,445 1,483,016 (16,292) (667,668) (321,690) (23,866) 911,889 - ---------------------------------------------------------------------------------------------------------------------------- Net income 188,606 188,606 Translation adjustment (6,270) (6,270) Redemptions of convertible preferred stock (5,102) 228 20 831 (4,043) Dividends declared Common--$.96/share (63,799) (63,799) Preferred--$17.05/share (26,104) (26,104) Tax benefit on dividends paid to the ESOP (2) 7,976 7,976 Repayment of ESOP debt 22,721 22,721 Shares issued under option and stock plans 908 1,225 50,171 51,079 Stock tendered as payment for options exercised (92) (4,941) (4,941) Shares issued for Contemporary Books acquisition 4,238 348 14,275 18,513 - ---------------------------------------------------------------------------------------------------------------------------- Balance at December 26, 1993 $335,532 $1,018 $105,819 $1,589,695 (14,791) $(607,332) $(298,969) $(30,136) $1,095,627 - ----------------------------------------------------------------------------------------------------------------------------
(1) Issued shares of common stock totaled 81,771,658 for all dates presented. (2) Excludes the tax benefit on allocated preferred shares held by the ESOP, which must be credited to income tax expense beginning in 1992. See Notes to Consolidated Financial Statements. -39- Tribune Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - ---------------------------------------------------- The significant accounting policies of Tribune Company and subsidiaries (the "Company"), as summarized below, conform with generally accepted accounting principles and reflect practices appropriate to the businesses in which they operate. Certain prior year amounts have been reclassified to conform with the 1993 presentation. Fiscal Year -- The Company's fiscal year ends on the last Sunday in December. The fiscal years included herein comprised 52 weeks. Principles of Consolidation -- The consolidated financial statements include the accounts of Tribune Company and all majority-owned subsidiaries. Investments comprising 20 to 50 percent of the voting stock of companies and joint ventures are accounted for using the equity method. All significant intercompany transactions are eliminated. Short-Term Investments -- Short-term investments are stated at cost, which approximates market value. For purposes of the consolidated statements of cash flows, investments with maturities of three months or less at the time of purchase are considered to be cash equivalents. Inventories -- Inventories are stated at the lower of cost or market. Cost is determined on the last-in, first-out ("LIFO") basis for U.S. newsprint and on the first-in, first-out ("FIFO") or average basis for all other inventories. Broadcast Rights -- Broadcast rights consist principally of rights to broadcast feature films, sports and syndicated programs and are stated at the lower of cost or estimated net realizable value. The total cost of these rights is recorded as an asset and a liability when the program becomes available for broadcast. Broadcast rights that have limited showings are generally amortized using an accelerated method as programs are aired. Those with unlimited showings are amortized on a straight-line basis over the contract period. The current portion of broadcast rights represents those rights available for broadcast that are expected to be amortized in the succeeding year. Properties -- Property, plant and equipment are stated at cost. Depreciation is computed using the straight-line method over the properties' estimated useful lives. Depreciation expense was $81.1 million in 1993, $120.5 million in 1992 and $118.5 million in 1991. Intangible Assets -- Intangible assets primarily represent the excess of cost over the fair market value of tangible net assets acquired. The excess cost related to net assets acquired since 1971 is being amortized on a straight-line basis over various periods ranging from 3 to 40 years, with the majority over 40 years. Intangible assets of $23.5 million related to pre-1971 acquisitions are not being amortized as the Company believes there has been no diminution of value. Pension Plans -- The Company contributes to pension plans that provide retirement benefits for substantially all employees. These plans are sponsored either by the Company or by unions. Under the Company-sponsored plans, pension benefits are primarily a function of both the years of service and the level of compensation for a specified number of years, depending on the plan. It is the Company's policy to fund at least the minimum for Company-sponsored pension plans as required by ERISA. Contributions made to union-sponsored plans are based upon collective bargaining agreements. New Accounting Principles -- In 1992, the Company adopted three new Financial Accounting Standards Board ("FASB") rules and recorded the cumulative effects of these changes in accounting principles in the 1992 consolidated statement of income. Statement No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," resulted in an after-tax charge against earnings of $37.6 million, or $.58 per share on a primary basis. Statement No. 109, "Accounting for Income Taxes," resulted in a credit to earnings of $26.3 million, or $.40 per share on a primary basis. Statement No. 112, "Employers' Accounting for Postemployment Benefits," resulted in an after-tax charge against earnings of $5.5 million, or $.08 per share on a primary basis. Additional annual expense for 1992 due to the adoption of these principles was not material. Prior year financial statements were not restated. -40- In 1993, the FASB issued Statement No. 115, "Accounting for Certain Investments in Debt and Equity Securities" ("FAS 115"), effective for fiscal year 1994. This statement generally will require the Company to record investments in debt securities and publicly traded equity securities at their market value, except for debt securities which the Company intends to hold to maturity and equity securities which are accounted for using the equity method. The market value of the Company's long-term investments in less-than-20%-owned publicly traded companies was approximately $40 million in excess of the investments' $10 million carrying value at December 26, 1993. The Company also holds a $138.8 million convertible debenture issued by QUNO Corporation (see Note 2). The market value of this debenture, based on the $23 Canadian quoted market price per share of the underlying QUNO Corporation common stock at December 26, 1993, was approximately $200 million. FAS 115 requires that changes in market value from historical cost for these investments be reported, net of tax, in a separate component of stockholders' investment until realized. The Company estimates that the effect of adopting this statement in 1993 would have been to increase assets by approximately $100 million and stockholders' investment by $60 million at December 26, 1993, with no impact on net income. Net Income Per Share -- Primary net income per share is computed by dividing net income attributable to common shares by the weighted average number of common shares outstanding during the period. Fully diluted net income per share is computed based on the assumption that all of the convertible preferred shares are converted into common shares. For purposes of calculating fully diluted net income per share, net income is reduced by the additional Employee Stock Ownership Plan ("ESOP") contribution that would be required for ESOP debt service, and the weighted average number of shares outstanding is increased by (i) the additional common shares that would be issued upon conversion of the preferred shares based on the stated conversion rate plus any additional common shares that would have to be issued to meet the redemption price guarantee for all preferred shares that have been allocated to participants, and (ii) the effect of stock options. The numbers of common shares used in the computations of primary and fully diluted net income per share were as follows:
(In thousands) 1993 1992 1991 - ------------------------------------------------------------------- Primary 66,371 65,018 64,364 Fully diluted 73,695 72,320 71,388
NOTE 2: INVESTMENT IN QUNO CORPORATION - --------------------------------------- On February 17, 1993, the Company's previously wholly-owned newsprint subsidiary, QUNO Corporation ("QUNO"), completed an initial public offering of 9 million shares of common stock. The Company now holds 8.8 million, or 49%, of the voting common shares and 4.2 million non-voting common shares for a combined total of 59% of QUNO's total 22 million outstanding common shares. The Company also holds a $138.8 million subordinated debenture, convertible at the option of the Company into 11.7 million voting common shares of QUNO. The debenture is callable by QUNO after December 27, 1997, matures in 2002 and bears interest at an effective rate of 2.77%. As the Company's voting interest is less than 50%, the Company is using the equity method of accounting for its investment in QUNO beginning in 1993. Prior year financial statements have not been restated. At closing, QUNO used the net proceeds of approximately $100 million from the stock offering plus proceeds of approximately $80 million from QUNO's new stand-alone bank financing agreement to repay a portion of its intercompany borrowings owed the Company. The net price per share realized from the offering was approximately the same as the Company's carrying value per share of its investment in QUNO. Summarized 1993 financial information for QUNO was as follows:
(In thousands) - --------------------------------------------------------------------- Revenues $386,646 Current assets $130,989 Operating loss $(31,110) Non-current assets $458,649 Net loss $(28,881) Current liabilities $ 82,213 Non-current liabilities $309,346
-41- The financial statements and transactions of QUNO are maintained in its functional currency (Canadian dollars) and translated into U.S. dollars. Translation adjustments are accumulated in a separate component of stockholders' investment. QUNO separately issues its financial statements in accordance with Canadian accounting principles. The financial information included herein has been adjusted to reflect U.S. accounting principles. QUNO manufactures newsprint for sale to the Company's newspapers and other North American and overseas customers. The Company is party to a contract with QUNO expiring in 2007 to supply newsprint based on market prices. Under the contract, the Company has agreed to purchase specified minimum amounts of newsprint each year subject to certain limitations. The specified minimum annual volume is 250,000 metric tons in years 1994 to 1999, 225,000, 200,000 and 175,000 metric tons in years 2000 to 2002, respectively, and 150,000 metric tons in each of years 2003 to 2007. In 1993, 33% of QUNO's sales, or $127.2 million, were to the Company's newspapers, which represented 74% of their consumption. During the period that QUNO was a wholly-owned subsidiary, provision was made for U.S. income taxes on undistributed earnings of QUNO that were expected to be remitted to the Company. No provision for U.S. income taxes, however, was made on undistributed earnings that were intended to be reinvested in facilities and other assets in Canada for an indefinite period of time. The cumulative amount of unremitted earnings and other book/tax bases differences that has been reinvested indefinitely totaled approximately $75.0 million as of December 26, 1993. Determination of the taxes due on this amount is not practicable. No U.S. tax benefit has been provided on the Company's 1993 equity in QUNO net loss. NOTE 3: CHANGES IN OPERATIONS AND UNUSUAL ITEMS - ------------------------------------------------- Acquisitions and Investments -- The Company recorded acquisitions totaling $117.4 million in 1993, $3.3 million in 1992 and $4.2 million in 1991. These acquisitions were all accounted for as purchases. The intangibles recorded on these acquisitions are being amortized on a straight-line basis over periods from 3 to 40 years. The results of these operations are included in the consolidated statements of income from the respective dates of their acquisitions and were not material. The Company acquired two Denver radio stations, KOSI-FM and KEZW-AM, on January 6, 1993 for $19.9 million in cash. On July 28, 1993, the Company acquired Contemporary Books, Inc., a publisher of nonfiction trade titles and educational books and materials, for $22.0 million in cash and $18.5 million in common stock. On September 13, 1993, the Company acquired Compton's Multimedia Publishing Group for $57.0 million in cash. Compton's develops and distributes interactive multimedia software for the consumer and education markets. The Company has reached an agreement to acquire independent television station WLVI-Boston for approximately $25 million in cash plus working capital at closing. This acquisition, which is subject to Federal Communications Commission approval, is expected to be completed in the second quarter of 1994. The Company has also reached an agreement to acquire The Wright Group, the leading publisher of "whole language" educational materials for the elementary school market, for approximately $100 million in cash. This acquisition is expected to be completed in February 1994. Both the WLVI-TV and The Wright Group acquisitions will be accounted for as purchases in 1994. In June 1992, the Company exercised a warrant, acquired in 1991 for $19.0 million, to acquire a controlling common equity interest in WPHL-TV, Inc., an independent television station in Philadelphia. Prior to June 1992, the investment was accounted for using the cost method. Dispositions -- The Company recorded a $15.3 million pretax charge in the fourth quarter of 1992 as a result of its decision to close The Peninsula Times Tribune, a Palo Alto-based newspaper, which ceased operations on March 12, 1993. The charge, reflected in selling, general and administrative expenses in the accompanying 1992 consolidated statement of income, reduced net income by $7.6 million and primary net income per share by $.12. Total operating revenues and losses for the Times Tribune in 1992 and 1991 were not material. -42- Baseball Expansion Fees -- In December 1992, the Company's Chicago Cubs subsidiary received Major League Baseball expansion fees totaling $12.3 million, which increased net income by $7.7 million and primary net income per share by $.12. The fees have been included in operating revenue and profit of the broadcasting and entertainment business segment. NOTE 4: MORTGAGE NOTES RECEIVABLE FROM AFFILIATES - --------------------------------------------------- The Company holds a mortgage note resulting from the sale in 1982 of the New York Daily News building to a limited partnership in which the Company holds a 23% interest. The note, which has a remaining principal balance of $83.9 million, is due in 1997 and bears interest at 13% plus contingent interest based upon the building's cash flow and appreciation. In 1993, the Company purchased a mortgage note on a building owned by a partnership in which the Company holds a 50% interest for $35.5 million. The note is due in 1995 and had an effective interest rate of 5.6% in 1993. The estimated fair values of these mortgage notes receivable approximated their book values, using the discounted cash flow method.
NOTE 5: INVENTORIES - --------------------- Inventories consist of: (In thousands) Dec. 26, 1993 Dec. 27, 1992 - ----------------------------------------------------------------------------- Supplies and materials $16,302 $ 7,353 U.S. newsprint (at LIFO) 9,988 9,212 QUNO Corporation - 65,559 - ----------------------------------------------------------------------------- Total inventories $26,290 $82,124 - -----------------------------------------------------------------------------
If U.S. newsprint inventories were valued at FIFO cost, such inventories would have been greater by $9.3 million at December 26, 1993, $8.5 million at December 27, 1992 and $10.8 million at December 29, 1991. QUNO's inventory in 1992 consisted of $30.7 million of pulpwood and other fiber, $31.1 million of supplies and materials and $3.8 million of newsprint.
NOTE 6: LONG-TERM DEBT - ------------------------ Long-term debt consists of: (In thousands) Dec. 26, 1993 Dec. 27, 1992 - ------------------------------------------------------------------------------ Promissory notes, weighted average interest rate of 3.3% $ 41,829 $200,387 Medium-term notes, weighted average interest rates of 7.3% and 8.7%, due 1993-2003 163,200 107,900 New Zealand dollar notes, U.S. dollar interest rate of 8.6%, paid 1993 - 77,427 8.0% notes, paid 1993 - 100,000 8.40% guaranteed ESOP notes, due 1993-2003 280,999 300,913 8.19% guaranteed ESOP note, due 1993-1998 17,970 20,777 Other notes and obligations 32,657 33,567 - ------------------------------------------------------------------------------ Total debt 536,655 840,971 Less portions due within one year (25,817) (99,992) - ------------------------------------------------------------------------------ Long-term debt $510,838 $740,979 - ------------------------------------------------------------------------------
In 1990, the Company began offering up to $200.0 million of its Series B medium-term notes, which have maturities from two to 10 years and may not be redeemed by the Company prior to maturity. The proceeds from the sale of the notes have been used for general corporate purposes. The final $78 million of these notes were issued during 1993. The Company redeemed its $100 million 8% notes prior to their scheduled maturity. These notes, which were originally due in 1996, were redeemed in July 1993 at par. The Company financed this redemption with commercial paper. QUNO's New Zealand dollar notes were repaid by QUNO in April 1993 with proceeds from its new stand-alone bank financing agreement. -43- The notes issued by the Company's ESOP are unconditionally guaranteed by the Company as to payment of principal and interest. Therefore, the unpaid balance of these borrowings is reflected in the accompanying consolidated statements of financial position as long-term debt. An amount equivalent to the unpaid balance of these borrowings, representing unearned employee compensation, is recorded as a reduction of stockholders' investment. Certain debt agreements limit the amount of secured debt the Company can incur without equally and ratably securing additional borrowings under those agreements. In 1994, the Company intends to refinance $41.8 million of promissory notes and $27.4 million of Series B medium-term notes scheduled to mature in 1994, and has the ability to do so on a long-term basis through existing revolving credit agreements. Accordingly, these notes were classified as long-term and treated as maturing in fiscal year 1995. The Company has revolving credit agreements with a number of banks in the aggregate amount of $445.0 million that are fully available to support the issuance of promissory notes. These agreements extend to December 31, 1995, contain various interest rate options and provide for annual fees based on a percentage of the commitment. Such fees totaled approximately $.5 million for each of the last three years. The estimated fair values of the Company's total debt at fiscal year end 1993 and 1992 were not significantly different from carrying values, as determined based on quoted market prices for similar issues or on current rates offered to the Company for debt of the same remaining maturities and similar terms. Long-term debt at December 26, 1993 is scheduled to mature as follows: $25.8 million in 1994, $106.0 million in 1995, $40.6 million in 1996, $63.4 million in 1997, $38.2 million in 1998 and $262.6 million thereafter. NOTE 7: INCOME TAXES - ---------------------- The amounts of income (loss) before income taxes and cumulative effects of accounting changes attributable to U.S. and foreign operations, and a reconciliation of income taxes computed at the U.S. federal statutory rate to income taxes reported in the consolidated statements of income follow:
(In thousands) 1993 1992 1991 - ----------------------------------------------------------------------------- Income (loss) before income taxes and accounting changes: U.S. $350,782 $321,989 $281,420 Foreign (18,355) (89,098) (39,545) - ----------------------------------------------------------------------------- $332,427 $232,891 $241,875 Federal income taxes at 35% in 1993, 34% in 1992-1991 $116,349 $ 79,183 $ 82,238 Increase (decrease) resulting from: State and local income taxes, net of federal tax 18,502 15,781 12,811 Equity in QUNO net loss 6,424 - - Amortization of intangible assets 4,814 5,141 5,034 Other (2,268) (3,839) (189) - ----------------------------------------------------------------------------- Income taxes reported $143,821 $ 96,266 $ 99,894 Effective tax rate 43.3% 41.3% 41.3% - ----------------------------------------------------------------------------- Components of income tax expense charged to income before cumulative effects of accounting changes were as follows: (In thousands) 1993 1992 1991 - ------------------------------------------------------------------------------ Currently payable U.S. Federal $106,678 $101,856 $ 41,100 Foreign - 1,812 88 State 28,654 24,027 9,258 - ------------------------------------------------------------------------------ 135,332 127,695 50,446 - ------------------------------------------------------------------------------ Deferred U.S. Federal 8,679 534 51,002 Foreign - (31,847) (11,706) State (190) (116) 10,152 - ------------------------------------------------------------------------------ 8,489 (31,429) 49,448 - ------------------------------------------------------------------------------ Total $143,821 $ 96,266 $ 99,894 - ------------------------------------------------------------------------------
-44- Deferred income tax expense for 1993 and 1992 was calculated as the change during the year in the Company's deferred tax liabilities and assets, adjusted in 1993 for the deconsolidation of QUNO. The effect on deferred income taxes of the 1% increase in the 1993 Federal tax rate was not material. Significant components of the Company's net deferred tax liabilities were as follows:
(In thousands) Dec. 26, 1993 Dec. 27, 1992 - ---------------------------------------------------------------------------- Net properties $ 98,680 $ 146,028 Net intangible assets 64,006 55,195 Pensions 12,452 17,212 Other future taxable items 7,522 13,897 - ---------------------------------------------------------------------------- Total deferred tax liabilities 182,660 232,332 QUNO net operating loss carryforwards - (36,374) Broadcast rights (27,991) (28,601) Postretirement and postemployment benefits other than pensions (17,457) (27,531) Deferred compensation (27,091) (23,642) Disposition of New York Daily News (9,218) (14,176) Other accrued liabilities (12,144) (13,609) Accrued employee compensation (10,988) (10,041) Federal benefit on deferred state taxes (13,125) (10,695) Accounts receivable (10,556) (9,611) Disposition of Times Tribune - (7,695) Other future deductible items (3,197) (10,428) - ---------------------------------------------------------------------------- Total deferred tax assets (131,767) (192,403) - ---------------------------------------------------------------------------- Net deferred tax liability $ 50,893 $ 39,929 - ----------------------------------------------------------------------------
In 1991, in accordance with the accounting rules then in effect, the Company provided deferred income taxes of $49.4 million for certain revenue and expense items reported in different years for financial reporting and tax purposes. The sources of the timing differences and the tax effect of each were the sale of the New York Daily News - $74.6 million; reversal of deferred Canadian income taxes - $(11.7) million; compensation - $(3.7) million; depreciation and amortization - $(3.4) million; collection of mortgage note - $(5.3) million; and other, net - $(1.1) million. NOTE 8: EMPLOYEE PENSION PLANS - ------------------------------- The Company amended its Company-sponsored U.S. pension plans, effective January 1989, for employees not covered by a collective bargaining agreement. The amendments were made in connection with the establishment of the Company's ESOP and to comply with the provisions of the Tax Reform Act of 1986. These pension plans will continue to provide substantially the same pension benefits as under the pre-amended plans until December 1998. After that date, the plans provide that the pension benefit credits will be frozen in terms of pay and service. Since the Company no longer consolidates QUNO's financial statements, the tables below include the Canadian plans in 1992 and 1991 only. Net pension expense (credit) for Company-sponsored plans in 1993, 1992 and 1991 included the following components:
1992 1991 (In thousands) 1993 U.S. QUNO U.S. QUNO - ----------------------------------------------------------------------------- Benefits earned during the period (service costs) $ 8,000 $ 7,699 $ 3,288 $ 7,698 $ 3,401 Interest cost on projected benefit obligation 17,900 17,364 15,180 16,781 16,462 Recognized return on plan assets (27,151) (27,036) (17,549) (25,802) (20,797) Amortization, net (511) (443) (337) (441) 580 - ----------------------------------------------------------------------------- Net pension expense (credit) $ (1,762) $ (2,416) $ 582 $ (1,764) $ (354) - -----------------------------------------------------------------------------
-45- Actual returns on U.S. plan assets were: gains of $37.1 million in 1993, $21.1 million in 1992 and $44.0 million in 1991. Actual returns on plan assets for Canadian plans were: gains of $7.6 million in 1992 and $29.7 million in 1991. The following table sets forth the funded status of the Company-sponsored pension plans as of year-end 1993 and 1992:
1992 (In thousands) 1993 U.S. QUNO - ----------------------------------------------------------------------------- Plans' assets at fair value $297,125 $273,712 $182,241 Less: Actuarial present value of benefit obligations Vested benefits 224,800 199,867 155,349 Non-vested benefits 12,900 7,879 6,887 - ----------------------------------------------------------------------------- Accumulated benefit obligation 237,700 207,746 162,236 Projected future salary increases 16,188 15,540 15,450 - ----------------------------------------------------------------------------- Projected benefit obligation 253,888 223,286 177,686 - ----------------------------------------------------------------------------- Plans' assets in excess of projected benefit obligation 43,237 50,426 4,555 Less: Unrecognized net asset at transition being amortized through 2001 15,251 16,817 10,959 Unrecognized net gain (loss) due to actual experience varying from actuarial assumptions (2,509) 6,176 (26,635) Unrecognized prior service costs (1,932) (3,011) - - ----------------------------------------------------------------------------- Pension asset recognized in the consolidated statements of financial position $ 32,427 $ 30,444 $ 20,231 - -----------------------------------------------------------------------------
The plans' assets consist primarily of listed common stocks and bonds, including 423,725 shares of the Company's common stock having an aggregate market value of $25.3 million at December 26, 1993. In determining the projected benefit obligation for the U.S. plans, the weighted average assumed discount rate used was 7.25% in 1993 and 8.25% in 1992, while the average rate of increase in future salary levels was 4.5% for 1993 and 5.5% for 1992. The weighted average expected long-term rate of return on assets used in determining net pension credit was 10% in 1993 and 10.5% in 1992 and 1991. For the Canadian plans in 1992, the weighted average assumed discount rate used was 8.0%, while the average rate of increase in future salary levels was 6.5%. The expected long-term rate of return on assets was 8.5% in 1992 and 11% in 1991. Total pension expense for union-sponsored pension plans was $4.9 million in 1993, $5.1 million in 1992 and $5.4 million in 1991. The Company's portion of assets and liabilities for multi-employer union pension plans is not determinable. NOTE 9: CAPITAL STOCK - ----------------------- Under the Company's Restated Certificate of Incorporation, 5.0 million shares of preferred stock are authorized. In 1989, the Company established a series of 1.6 million shares of Series B Convertible Preferred Stock of which 1.59 million shares were issued to the Company's ESOP. Each share of such preferred stock pays a cumulative dividend of 7.75% annually, has a liquidation value of $220 per share, is convertible into four shares of the Company's common stock and is voted with the common stock with an entitlement to 4.58 votes per preferred share. In December 1987, the Company adopted a Share Purchase Rights Plan and declared a distribution of one right on each outstanding share of the Company's common stock. Each right will entitle stockholders to buy one one-hundredth of a share of Series A Junior Participating Preferred Stock at an exercise price of $150. The rights have no voting rights and are not exercisable until 10 days after the occurrence of certain triggering events, upon which the holders of the rights are entitled to purchase either the common stock of an acquiror or additional common stock of the Company at a discounted price. The rights are redeemable at the option of the Company for $.01 per right. The Company has established a series of 800,000 shares of Series A Junior Participating Preferred Stock in connection with the plan, none of which have been issued. There were approximately 4,100 holders of record of the Company's common stock at January 28, 1994. -46- NOTE 10: INCENTIVE COMPENSATION AND STOCK PLANS - ------------------------------------------------- Employee Stock Ownership Plan (ESOP) -- In 1988, the Company established an ESOP as a long-term employee benefit plan to supplement the Company's U.S. employee pension plan. In connection therewith, the ESOP purchased, in 1988 and 1989, approximately 800,000 common shares and 1.59 million Series B convertible preferred shares for an aggregate of $375.0 million. The ESOP provides for the awarding of shares of the Company's preferred and common stock on a noncontributory basis to eligible non-union employees of the Company. At December 26, 1993, 6.1 million shares of common stock were reserved for issuance in connection with this plan. Shares of stock held by the ESOP have been placed with the ESOP Trustee and are allocated to eligible employees annually. These common and preferred shares are allocated in the same proportion that the current year's principal and interest payments bear to the total principal and interest paid over the lives of the related borrowings. Each preferred share is convertible into four shares of the Company's common stock. The ESOP Trustee must convert the preferred shares when making distributions to participants upon their withdrawal from the ESOP. If at the time of such conversion, the price of the Company's common stock is below $55 per share, the Company must, at its option, either pay the difference in cash or issue additional common stock. As of December 26, 1993, approximately 59,800 shares of Series B Convertible Preferred Stock had been redeemed. The Company recognizes expense for this plan based upon cash contributions it makes to the ESOP. The ESOP services its debt requirements with amounts received from preferred dividends, common dividends earned on unallocated common shares and Company contributions. The following table summarizes ESOP debt service activity for the three years ended December 26, 1993:
(In thousands) 1993 1992 1991 - ------------------------------------------------------------------------------ Debt Requirements: Principal $22,721 $20,342 $16,499 Interest 26,932 28,885 30,281 - ------------------------------------------------------------------------------ Total $49,653 $49,227 $46,780 - ------------------------------------------------------------------------------ Debt Service: Dividends $26,548 $27,019 $27,500 Company cash contributions 23,105 22,208 19,280 - ------------------------------------------------------------------------------ Total $49,653 $49,227 $46,780 - ------------------------------------------------------------------------------
Employee Stock Purchase Plan -- This plan permits eligible employees to purchase shares of the Company's common stock at 85% of market price. A total of 4.0 million shares of stock may be sold under the plan. The Company's only expense relating to this plan is for its administration. During 1993, 1992 and 1991, 99,809, 121,747 and 136,500 shares, respectively, were sold to employees under this plan. As of December 26, 1993, a total of 2.4 million shares were available for sale. Savings Incentive Plan -- The Company maintains various qualified Savings Incentive Plans, whereby eligible employees may make voluntary contributions to these plans on a pre-tax salary reduction basis. The plans provide for uniform employer contributions to eligible employees of $.25 for each $1.00 contributed by participants up to 4% of the participants' compensation. These plans allow participants to invest their savings in various investments including the Company's common stock. Company contributions to these plans for each of the last three years were not material. The Company had 400,000 shares of common stock reserved for possible issuance under these plans at December 26, 1993. Restricted Stock Plan for Outside Directors -- This plan provides for the granting of restricted shares of the Company's common stock to outside directors. The Company has reserved 50,000 shares of common stock in connection with this plan. Upon each election or re-election, each outside director receives an award of 300 shares of the Company's common stock for each year in the term for which he or she is elected. The Company granted 2,700, 2,100 and 3,900 shares -47- of its common stock under this plan in 1993, 1992 and 1991, respectively. At December 26, 1993, 31,700 shares were available for future grant in connection with this plan. 1992 Long-Term Incentive Plan -- In 1992, the 1984 Long-Term Performance Plan was terminated and replaced with the 1992 Long-Term Incentive Plan. Remaining options outstanding under the 1984 plan at December 26, 1993 totaled 2.9 million shares. No further awards will be made under the 1984 plan. The 1992 plan provides for the granting of stock options or various other types of awards to eligible employees. General awards available under this plan, on an annual basis, are equal to nine-tenths of one percent (.009) of the adjusted average number of common shares outstanding used by the Company to calculate fully diluted net income per share for the preceding year, plus shares of stock available for awards in previous years which have not been awarded, and any previously forfeited or expired options. At December 26, 1993 and December 27, 1992, .7 million and .6 million shares, respectively, were available for general awards. An additional number of shares is available for replacement options. The number of shares available for replacement options is generally equal to four- tenths of one percent (.004) of the adjusted average number of common shares outstanding used by the Company to calculate fully diluted net income per share for the preceding year, plus shares available under the 1984 Long-Term Performance Plan for which no awards had been granted prior to its termination, plus shares of stock available for awards in previous years which have not been awarded, and any previously forfeited or expired replacement options. At December 26, 1993 and December 27, 1992, 2.0 million and 1.9 million shares, respectively, were available for replacement options. Shares not awarded in any year carry over and are available for award in subsequent years. Under the 1992 plan, only 3.0 million of the shares available for general awards may be used for certain outright stock awards and other stock-based awards, and only 3.0 million of the shares may be used for incentive stock options. No such awards have been granted. The option price is the market value of the Company's common stock at the time the option is granted. Options are exercisable not less than six months or more than 11 years after the date the option is granted. At December 26, 1993, 3.4 million options were exercisable. A combined summary of stock option activity and prices is as follows:
(Shares in thousands) 1993 1992 1991 - ------------------------------------------------------------------------------ Options Outstanding Beginning of year 5,261 5,596 5,252 Granted 889 1,187 1,060 Exercised (1,131) (1,293) (686) Cancelled (126) (229) (30) - ------------------------------------------------------------------------------ End of year 4,893 5,261 5,596 Prices of Options Granted $51 1/8-57 7/8 $41 1/4-50 3/8 $37 7/8-47 5/8 Exercised 16 7/8-47 3/8 16 7/8-41 16 7/8-41 Outstanding at year end 16 7/8-57 7/8 16 7/8-57 3/4 16 7/8-57 3/4
NOTE 11: POSTRETIREMENT BENEFITS OTHER THAN PENSIONS - ------------------------------------------------------ The Company provides postretirement health care and life insurance benefits to eligible employees under a variety of plans. Employees become eligible for these benefits if they meet age and service requirements. The tables below include QUNO plan information in 1992 only. For U.S. plans and effective January 1991, the Company provides a fixed medical contribution to participants who retire between the age of 55 to 65 and have 10 or more years of service. Medical coverage for these participants ends when they reach age 65. Retirees are also eligible for life insurance benefits, which are primarily a function of both the years of service and the level of compensation at retirement. -48- Since 1992, the cost of postretirement medical and life benefits is accrued over the active service periods of employees to the date they attain full eligibility for such benefits. Previously, the cost of such benefits was generally expensed as claims were incurred. It is the Company's policy to fund postretirement benefits as claims are incurred. Postretirement benefit cost for 1993 and 1992 included the following components:
1992 (In thousands) 1993 U.S. Canada - ---------------------------------------------------------------------------------- Service cost of benefits earned during the year $ 288 $ 278 $ 492 Interest cost on accumulated postretirement benefit obligation ("APBO") 3,159 3,175 2,249 - ---------------------------------------------------------------------------------- Postretirement benefit cost $ 3,447 $ 3,453 $ 2,741 - ----------------------------------------------------------------------------------
The plans' APBO and postretirement liability were composed of the following:
Dec. 27, 1992 (In thousands) Dec. 26, 1993 U.S. Canada - ------------------------------------------------------------------------------------- Actuarial present value of benefit obligations: Retirees $37,193 $35,736 $15,578 Active participants, fully eligible 2,271 1,980 3,284 Other participants 3,673 3,484 8,401 - ------------------------------------------------------------------------------------- APBO 43,137 41,200 27,263 Unrecognized net loss due to actual experience varying from actuarial assumptions (1,488) - - - ------------------------------------------------------------------------------------- Postretirement benefit liability $41,649 $41,200 $27,263 - -------------------------------------------------------------------------------------
In determining the APBO for U.S. participants, the weighted average assumed discount rate used was 7.25% in 1993 and 8.25% in 1992, while the average rate of increase in future salary levels was 4.5% in 1993 and 5.5% in 1992. For Canadian employees, the discount rate was 8.5% and the average rate of increase in future salary levels was 6.5% in 1992. For U.S. plans, 13.4% and 11.0% increases in the cost of covered health care benefits were assumed for fiscal 1994 for pre-age 65 employees and post-age 65 employees, respectively. These rates were assumed to decrease ratably to 7.0% after 10 years and remain at that level thereafter. The effect of a one percentage point increase in the assumed health care cost trend rate for each future year for U.S. employees would increase the total APBO at year-end 1993 by $2.8 million and the 1993 net benefit cost by $.2 million. NOTE 12: CONTRACTS PAYABLE FOR BROADCAST RIGHTS - ------------------------------------------------- Contracts payable for broadcast rights are classified as current or long-term liabilities in accordance with the payment terms of the contracts. The fair value of these contracts payable was $299.4 million at December 26, 1993 and $298.2 million at December 27, 1992, using the discounted cash flow method. Required payments under contractual agreements for broadcast rights recorded at December 26, 1993 are:
(In thousands) Amount ---------------------------------- 1994 $142,686 1995 82,575 1996 54,610 1997 23,144 1998 10,893 Thereafter 23,624
NOTE 13: COMMITMENTS - --------------------- The Company has entered into commitments for broadcast rights that are not currently available for broadcast and are therefore not included in the financial statements. These commitments totaled approximately $256.0 million at December 26, 1993. Payments for broadcast rights generally commence when the programs become available for broadcast. The Company had commitments totaling $115.7 million at December 26, 1993 related to the purchase of property, plant and equipment and to talent contracts. -49- The Company leases certain equipment and office and production space under various operating leases. Rental expense totaled $26.2 million in 1993, $28.0 million in 1992 and $27.3 million in 1991. Future minimum rental commitments under non-cancellable operating leases are $18.0 million in 1994, $16.1 million in 1995, $12.7 million in 1996, $11.3 million in 1997, $11.4 million in 1998 and $81.1 million thereafter. NOTE 14: LEGAL PROCEEDINGS - --------------------------- The Company and its subsidiaries are defendants from time to time in actions for libel and other matters arising out of their business operations. In addition, the Company and its subsidiaries are involved from time to time as parties in various regulatory, environmental and other proceedings with governmental authorities and administrative agencies. The Company does not believe that any such proceedings presently pending will have a material adverse effect on its consolidated financial position or results of operations. NOTE 15: SEGMENT INFORMATION - ----------------------------- Tribune Company is an information and entertainment company engaged, through its subsidiaries, in the publishing of newspapers, books and information in print and digital formats and the broadcasting, production and syndication of information and entertainment. The Company's principal newspapers are the Chicago Tribune, the Fort Lauderdale-based Sun-Sentinel and The Orlando Sentinel. The Company's book and information publishing operations consist of Contemporary Books and Compton's. The Company's broadcasting operations consist of independent television stations in New York, Los Angeles, Chicago, Philadelphia, Atlanta, Denver and New Orleans, and six radio stations. In entertainment, the Company owns the Chicago Cubs baseball team and produces and syndicates television programming. The Company currently holds a 59% ownership interest in QUNO Corporation, which manufactures newsprint for sale to the Company's newspapers and other North American and overseas customers. Prior to February 1993, when QUNO completed an initial public offering, QUNO was a wholly owned subsidiary and was reported as the newsprint operations business segment. Beginning in 1993, QUNO is no longer consolidated in the Company's financial statements. Financial data for each of the Company's business segments is presented on page 51. Operating revenues by business segment include sales to unaffiliated customers and intercompany sales, which are made at prices prevailing in the industry at the time of sale. In calculating operating profit for each segment, none of the following items have been added or deducted: interest income and expense, non- operating gains and losses, equity in QUNO net loss or income taxes. Assets represent those identifiable tangible and intangible assets used in the operations of each segment. The Company's cost of sales by business segment is as follows:
(In thousands) 1993 1992 1991 - -------------------------------------------------------------------------- Publishing $588,338 $ 569,232 $ 587,690 Broadcasting and Entertainment 410,007 384,860 350,839 - -------------------------------------------------------------------------- Total 998,345 954,092 938,529 Newsprint Operations (Canada) - 314,059 325,390 Intercompany (newsprint) - (117,195) (142,585) - -------------------------------------------------------------------------- Total cost of sales $998,345 $1,150,956 $1,121,334 - --------------------------------------------------------------------------
-50- Tribune Company and Subsidiaries Business Segments
(In thousands of dollars) 1993 1992 1991 - -------------------------------------------------- ----------- ---------- ---------- Operating Publishing $1,229,402 $1,176,180 $1,150,882 Revenues Broadcasting and Entertainment (1) 727,213 684,051 617,514 Intercompany (4,105) (4,361) (3,966) ---------- ---------- ---------- Total 1,952,510 1,855,870 1,764,430 Newsprint Operations (Canada) - 366,269 422,128 Intercompany - (117,195) (142,585) ---------- ---------- ---------- Total operating revenues $1,952,510 $2,104,944 $2,043,973 ---------- ---------- ---------- Operating Publishing (2) $ 255,121 $ 224,509 $ 217,031 Profit (Loss) Broadcasting and Entertainment (1) 125,684 121,267 100,175 Corporate expenses (24,402) (23,643) (22,256) ---------- ---------- ---------- Total 356,403 322,133 294,950 Newsprint Operations (Canada) - (53,770) (6,975) ---------- ---------- ---------- Total operating profit $ 356,403 $ 268,363 $ 287,975 ---------- ---------- ---------- Capital Publishing $ 56,838 $ 67,391 $ 34,683 Expenditures Broadcasting and Entertainment 18,782 20,958 20,305 ---------- ---------- ---------- Total 75,620 88,349 54,988 Newsprint Operations (Canada) - 41,883 38,943 ---------- ---------- ---------- Total capital expenditures $ 75,620 $ 130,232 $ 93,931 ---------- ---------- ---------- Depreciation Publishing $ 67,559 $ 64,345 $ 61,988 and Broadcasting and Entertainment 35,203 31,753 28,871 Amortization ---------- ---------- ---------- of Intangible Total 102,762 96,098 90,859 Assets Newsprint Operations (Canada) - 43,481 46,189 ---------- ---------- ---------- Total depreciation and amortization of intangible assets $ 102,762 $ 139,579 $ 137,048 ---------- ---------- ---------- Assets Publishing $ 988,348 $ 856,383 $ 861,875 Broadcasting and Entertainment 1,155,331 1,149,482 1,120,066 Corporate 392,731 133,181 132,186 Intercompany receivables - (10,747) (18,733) ---------- ---------- ---------- Total 2,536,410 2,128,299 2,095,394 Newsprint Operations (Canada) - 623,271 699,904 ---------- ---------- ---------- Total assets $2,536,410 $2,751,570 $2,795,298 ---------- ---------- ----------
(1) 1992 includes $12.3 million of Major League Baseball expansion fees. (2) 1992 includes a $15.3 million pretax charge for the closure of The Peninsula Times Tribune. -51- Tribune Company and Subsidiaries MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS FINANCIAL STATEMENTS - -------------------- Management is responsible for the preparation, integrity and fair presentation of the Company's consolidated financial statements and related financial information included in this annual report to stockholders. The consolidated financial statements have been prepared in accordance with generally accepted accounting principles and necessarily include certain amounts that are based on management's best estimates and judgments. The consolidated financial statements were examined by Price Waterhouse, independent accountants, and their report is shown below. Price Waterhouse was given unrestricted access to all financial records and related data, including minutes of all meetings of stockholders, the Board of Directors and committees of the Board. The Company believes that all representations made to the independent accountants during their audit were valid and appropriate. INTERNAL CONTROL SYSTEM - ----------------------- Management is also responsible for establishing and maintaining a system of internal control, designed to provide reasonable assurance to the Company's management and Board of Directors regarding the preparation of reliable published financial statements. The system of internal controls is continually reviewed for its effectiveness and is augmented by written policies and procedures, the careful selection and training of qualified personnel and a program of internal audit. Each year, the Company's independent accountants conduct a review of internal accounting controls to the extent required by generally accepted auditing standards and perform such tests and related procedures as they deem necessary to arrive at an opinion on the fairness of the financial statements. The Audit Committee of the Board of Directors is responsible for reviewing and monitoring the Company's financial reporting and accounting practices. The Audit Committee consists of four independent directors. The Committee meets with representatives of management, the independent accountants and internal auditors to discuss financial reporting, accounting and internal control matters. Price Waterhouse and the internal auditors have direct access to the Audit Committee. Charles T. Brumback Donald C. Grenesko Chairman/CEO Senior Vice President and Chief Financial Officer REPORT OF INDEPENDENT ACCOUNTANTS TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF TRIBUNE COMPANY - ------------------------------------------------------------- In our opinion, the accompanying consolidated statements of financial position and the related consolidated statements of income, of cash flows and of stockholders' investment present fairly, in all material respects, the financial position of Tribune Company and its subsidiaries at December 26, 1993 and December 27, 1992, and the results of their operations and their cash flows for each of the three years in the period ended December 26, 1993, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. As discussed in Note 1 to the consolidated financial statements, in 1992 the Company changed its method of accounting for postretirement benefits other than pensions, for income taxes and for postemployment benefits. Price Waterhouse Chicago, Illinois January 28, 1994 -52- Tribune Company and Subsidiaries Quarterly Results (Unaudited)
Quarters 1993 (In thousands of dollars, except per share data) First Second Third Fourth Total - ---------------------------------------------------------- -------------- ---------- ---------- -------------- ---------- Operating Publishing $ 294,583 $ 301,536 $ 292,363 $ 340,920 $1,229,402 Revenues Broadcasting and Entertainment 140,981 216,903 195,352 173,977 727,213 Intercompany (1,016) (996) (1,046) (1,047) (4,105) -------------- ---------- ---------- -------------- ---------- Total operating revenues $ 434,548 $ 517,443 $ 486,669 $ 513,850 $1,952,510 -------------- ---------- ---------- -------------- ---------- Operating Publishing $ 55,729 $ 63,697 $ 52,546 $ 83,149 $ 255,121 Profit (Loss) Broadcasting and Entertainment 9,170 49,254 32,053 35,207 125,684 Corporate expenses (5,798) (5,860) (6,345) (6,399) (24,402) -------------- ---------- ---------- -------------- ---------- Total operating profit 59,101 107,091 78,254 111,957 356,403 -------------- ---------- ---------- -------------- ---------- Equity in QUNO net loss (2,711) (2,757) (5,849) (7,038) (18,355) Net interest expense (3,779) (73) (173) (1,596) (5,621) -------------- ---------- ---------- -------------- ---------- Income Before Income Taxes 52,611 104,261 72,232 103,323 332,427 Income taxes (22,960) (41,976) (33,637) (45,248) (143,821) -------------- ---------- ---------- -------------- ---------- Net Income 29,651 62,285 38,595 58,075 188,606 Preferred dividends, net of tax (4,628) (4,628) (4,672) (4,511) (18,439) -------------- ---------- ---------- -------------- ---------- Net Income Attributable to Common Shares $ 25,023 $ 57,657 $ 33,923 $ 53,564 $ 170,167 -------------- ---------- ---------- -------------- ---------- Net Income Per Share (1) Primary $ .38 $ .87 $ .51 $ .80 $ 2.56 -------------- ---------- ---------- -------------- ---------- Fully diluted $ .36 $ .80 $ .48 $ .73 $ 2.36 -------------- ---------- ---------- -------------- ---------- Common Dividends Per Share $ .24 $ .24 $ .24 $ .24 $ .96 -------------- ---------- ---------- -------------- ---------- Common Stock Price (High - Low) $56 7/8-47 5/8 $56 1/4-50 $55-48 3/8 $61 1/4-50 7/8 -------------- ---------- ---------- --------------
Notes to Quarterly Results: (1) Quarterly and full year net income per share amounts are calculated independently based on the weighted average number of common shares applicable for each period. (2) Fourth quarter 1992 includes Major League Baseball expansion fees of $12.3 million, before tax, which increased fourth quarter and full year primary net income per share by $.12. (3) Fourth quarter 1992 includes a pretax charge for the closure of The Peninsula Times Tribune of $15.3 million, which decreased fourth quarter and full year primary net income per share by $.12. (4) Relates to the adoption in 1992 of new accounting rules for retiree benefits, income taxes and postemployment benefits. -54-
1992 (In thousands of dollars, Quarters except per share data) First Second Third Fourth Total - ---------------------------------------------------- -------- -------- -------- -------- ---------- Operating Publishing $285,788 $297,276 $280,380 $312,736 $1,176,180 Revenues Broadcasting and Entertainment (2) 127,295 196,424 183,293 177,039 684,051 Intercompany (1,069) (1,186) (1,020) (1,086) (4,361) -------- -------- -------- -------- ---------- Total 412,014 492,514 462,653 488,689 1,855,870 Newsprint Operations (Canada) 90,832 90,566 89,950 94,921 366,269 Intercompany (32,408) (27,185) (26,115) (31,487) (117,195) -------- -------- -------- -------- ---------- Total operating revenues $470,438 $555,895 $526,488 $552,123 $2,104,944 -------- -------- -------- -------- ---------- Operating Publishing (3) $ 51,396 $ 65,342 $ 49,935 $ 57,836 $ 224,509 Profit (Loss) Broadcasting 5,897 43,389 34,769 37,212 121,267 and Entertainment (2) Corporate expenses (5,495) (5,574) (6,232) (6,342) (23,643) -------- -------- -------- -------- ---------- Total 51,798 103,157 78,472 88,706 322,133 Newsprint Operations (Canada) (15,093) (15,765) (12,192) (10,720) (53,770) -------- -------- -------- -------- ---------- Total operating profit 36,705 87,392 66,280 77,986 268,363 -------- -------- -------- -------- ---------- Net interest expense (10,012) (9,144) (8,761) (7,555) (35,472) -------- -------- -------- -------- ---------- Income Before Income Taxes 26,693 78,248 57,519 70,431 232,891 Income Taxes (11,077) (33,245) (23,519) (28,425) (96,266) -------- -------- -------- -------- ---------- Income Before Cumulative Effects of Changes in Accounting Principles 15,616 45,003 34,000 42,006 136,625 Cumulative effects of changes in accounting principles, net of tax (4) (16,800) - - - (16,800) -------- -------- -------- -------- ---------- Net Income (Loss) (1,184) 45,003 34,000 42,006 119,825 Preferred dividends, net of tax (4,542) (4,542) (4,542) (4,542) (18,168) -------- -------- -------- -------- ---------- Net Income (Loss) Attributable to Common Shares $ (5,726) $ 40,461 $ 29,458 $ 37,464 $ 101,657 -------- -------- -------- -------- ---------- Net Income (Loss) Per Share (1) Primary: Before cumulative effects of changes in accounting principles $ .17 $ .62 $ .45 $ .57 $ 1.82 Cumulative effects of accounting changes, net (4) $ (.26) - - - (.26) -------- -------- -------- -------- ---------- Net income (loss) $ (.09) $ .62 $ .45 $ .57 $ 1.56 -------- -------- -------- -------- ---------- Fully diluted: Before cumulative effects of changes in accounting principles $ .17 $ .58 $ .43 $ .53 $ 1.70 Cumulative effects of accounting changes, net (4) $ (.26) - - - (.24) -------- -------- -------- -------- ---------- Net income (loss) $ (.09) $ .58 $ .43 $ .53 $ 1.46 -------- -------- -------- -------- ---------- Common Dividends Per Share $ .24 $ .24 $ .24 $ .24 $ .96 -------- -------- -------- -------- ---------- Common Stock Price (High - Low) $46 3/4- $47 1/2- $47 1/4- $50 3/4- 39 1/2 38 3/4 40 42 3/8 -------- -------- -------- --------
55 Tribune Company and Subsidiaries Eleven Year Financial Summary
(Dollars in thousands, except per share data) 1993 1992 1991 1990 - --------------------------------- ---------- --------- --------- --------- Operating Results Operating Revenues Publishing excluding Daily News $1,229,402 1,176,180 1,150,882 1,205,619 New York Daily News $ - - - 321,823 Broadcasting and Entertainment $ 727,213 684,051 617,514 623,981 Intercompany $ (4,105) (4,361) (3,966) (3,248) ---------- --------- --------- --------- Total $1,952,510 1,855,870 1,764,430 2,148,175 Newsprint Operations (Canada) $ - 366,269 422,128 351,738 Intercompany $ - (117,195) (142,585) (137,986) ---------- --------- --------- --------- Total Operating Revenues $1,952,510 2,104,944 2,043,973 2,361,927 Operating Profit (Loss) Publishing excluding Daily News $ 255,121 224,509 217,031 278,594 New York Daily News $ - - - (114,468) Broadcasting and Entertainment $ 125,684 121,267 100,175 107,528 Corporate expenses $ (24,402) (23,643) (22,256) (22,654) ---------- --------- --------- --------- Total $ 356,403 322,133 294,950 249,000 Newsprint Operations (Canada) $ - (53,770) (6,975) (11,058) ---------- --------- --------- --------- Total Operating Profit $ 356,403 268,363 287,975 237,942 Equity in QUNO net loss $ (18,355) - - - Net interest expense $ (5,621) (35,472) (46,100) (37,170) Other $ - - - (295,000) ---------- --------- --------- --------- Income (loss) before income taxes $ 332,427 232,891 241,875 (94,228) Income taxes $ (143,821) (96,266) (99,894) 30,695 ---------- --------- --------- --------- Income (Loss) Before Cumulative Effects of Changes in Accounting Principles $ 188,606 136,625 141,981 (63,533) Cumulative effects of changes in accounting principles $ - (16,800) - - ---------- --------- --------- --------- Net Income (Loss)(1) $ 188,606 119,825 141,981 (63,533) Share Information Primary net income (loss) per share(1) $ 2.56 1.56 1.94 (1.22) Common dividends per share $ .96 .96 .96 .96 Stockholders' investment per share $ 15.54 13.32 12.78 11.68 Weighted average common shares outstanding (000's) 66,371 65,018 64,364 66,032 Financial Ratios Operating profit margin 18.3% 12.7% 14.1% 10.1% Net income margin 9.7% 5.7% 6.9% (2.7)% Net income as a percentage of average stockholders' investment 18.8% 13.6% 17.6% (6.9)% Long-term debt to total capital 30% 43% 47% 51% Financial Position Data Total assets $2,536,410 2,751,570 2,795,298 2,826,099 Long-term debt $ 510,838 740,979 897,835 998,962 Stockholders' investment $1,095,627 911,889 851,699 764,512 Cash Flow and Other Data Capital expenditures $ 75,620 130,232 93,931 148,897 Repurchase (issuance) of treasury stock, net $ (46,138) (31,918) (10,007) 178,517 Dividends $ 81,927 80,407 78,415 80,110 Amortization of broadcast rights $ 236,468 233,859 207,392 228,605 Employees (full-time equivalents) 9,900 12,400 12,900 16,100 (1) Includes the cumulative effects of accounting changes of $16.8 million or $.26 per share in 1992, charges relating to New York Daily News totaling $255.0 million or $3.86 per share in 1990, and significant non-recurring items including: a net loss of $21.1 million or $.27 per share in 1987 and a net gain of $151.6 million or $1.88 per share in 1986.
-56-
1989 1988 1987 1986 1985 1984 1983 --------- --------- --------- --------- --------- --------- --------- 1,216,380 1,132,033 1,053,194 950,864 950,693 873,099 755,291 422,024 436,843 419,853 411,840 405,862 402,509 384,287 584,326 505,729 485,276 466,231 384,723 322,082 260,083 (3,434) (3,348) (3,322) (2,474) (2,520) (2,010) (1,648) --------- --------- --------- --------- --------- --------- --------- 2,219,296 2,071,257 1,955,001 1,826,461 1,738,758 1,595,680 1,398,013 456,666 462,550 385,023 378,181 368,554 356,433 342,308 (213,458) (191,809) (182,879) (175,811) (170,235) (156,616) (151,598) --------- --------- --------- --------- --------- --------- --------- 2,462,504 2,341,998 2,157,145 2,028,831 1,937,077 1,795,497 1,588,723 299,282 248,567 239,358 209,525 171,932 149,623 118,214 (2,179) 15,167 (47,357) (9,228) 3,040 (4,817) 21,840 96,803 77,754 62,858 65,537 45,693 41,182 40,471 (22,100) (22,699) (25,815) (17,650) (19,459) (15,441) (13,861) --------- --------- --------- --------- --------- --------- --------- 371,806 318,789 229,044 248,184 201,206 170,547 166,664 61,285 99,154 73,009 33,126 40,206 17,929 (21,002) --------- --------- --------- --------- --------- --------- --------- 433,091 417,943 302,053 281,310 241,412 188,476 145,662 - - - - - - - (25,340) (39,515) (32,459) (35,026) (16,416) (16,283) (28,027) 3,133 - - 276,587 6,466 14,421 (4,823) --------- --------- --------- --------- --------- --------- --------- 410,884 378,428 269,594 522,871 231,462 186,614 112,812 (168,463) (168,022) (128,057) (230,001) (107,618) (83,571) (43,545) --------- --------- --------- --------- --------- --------- --------- 242,421 210,406 141,537 292,870 123,844 103,043 69,267 - - - - - - - --------- --------- --------- --------- --------- --------- --------- 242,421 210,406 141,537 292,870 123,844 103,043 69,267 3.17 2.78 1.80 3.63 1.53 1.28 .95 .88 .76 .64 .52 .44 .38 .34 15.60 15.88 14.35 13.91 11.19 10.23 9.55 72,390 75,636 78,536 80,677 81,045 80,801 73,251 17.6% 17.8% 14.0% 13.9% 12.5% 10.5% 9.2% 9.8% 9.0% 6.6% 14.4% 6.4% 5.7% 4.4% 21.4% 18.4% 12.9% 29.1% 14.3% 12.9% 10.1% 40% 32% 31% 29% 41% 20% 22% 3,013,537 2,905,382 2,738,484 2,571,432 2,445,924 1,737,142 1,635,416 880,686 650,118 551,651 522,750 732,521 244,982 255,889 1,077,996 1,188,480 1,094,943 1,101,274 908,486 827,676 771,540 238,307 213,596 191,895 147,726 171,687 122,352 97,278 296,738 56,185 108,647 65,893 (5,692) (2,336) (123,325) 75,298 57,416 50,025 42,201 35,490 30,383 25,016 221,897 192,045 169,921 155,183 83,463 66,888 50,913 17,100 16,800 16,800 17,300 18,700 18,400 18,700
-57- TRIBUNE COMPANY AND SUBSIDIARIES APPENDIX TO EXHIBIT 13 DESCRIPTION OF GRAPHS MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Annual Report Page Number Description ------------ ----------- 28 Bar graph of Net Income (Excluding Accounting Changes and Daily News) (in millions). 1989 - $244, 1990 - $191, 1991 - $142, 1992 - $137, 1993 - $189. 29 Bar graph of Operating Profit Excluding QUNO and Daily News (in millions). 1989 - $374, 1990 - $364, 1991 - $295, 1992 - $322, 1993 - $356. 29 Pie Chart of 1993 Consolidated Expenses as a Percent of Revenues. Compensation - 28%, Amortization of Broadcast Rights - 12%, Newsprint & Ink - 9%, Other - 33%, Operating Margin - 18%. 30 Stacked bar graph of Publishing Advertising Revenues Excluding Daily News (in millions). Retail, 1989 - $456, 1990 - $443, 1991 - $429, 1992 - $428, 1993 - $435; General, 1989 - $129, 1990 - $129, 1991 - $124, 1992 - $129, 1993 - $121; Classified, 1989 - $374, 1990 - $356, 1991 - $301, 1992 - $312, 1993 - $337. 31 Pie Chart of 1993 Publishing Revenues by Market. Chicago - 53%, Fort Lauderdale - 20%, Orlando - 16%, Virginia/CA - 5%, National - 6%. 31 Bar graph of % Recycled Newsprint (Share of Tons Consumed Containing Recycled Fiber). 1989 - 23%, 1990 - 15%, 1991 - 29%, 1992 - 67%, 1993 - 96%. 32 Bar graph of Net Investment in Broadcast Rights (in millions). 1989 - $162, 1990 - $136, 1991 - $103, 1992 - $53, 1993 - $24. 33 Bar graph of Net Interest Expense (in millions). 1989 - $25, 1990 - $37, 1991 - $46, 1992 - $35, 1993 - $6. 34 Bar graph of Long-Term Debt to Total Capital. 1989 - 40%, 1990 - 51%, 1991 - 47%, 1992 - 43%, 1993 - 30%. 34 Bar graph of return on Equity (Excluding Accounting Changes and Daily News). 1989 - 21.5%, 1990 - 18.3%, 1991 - 17.6%, 1992 - 15.3%, 1993 - 18.8%.
EX-21 13 LIST OF SUBSIDIARIES EXHIBIT 21 TRIBUNE COMPANY SUBSIDIARIES ----------------------------
Jurisdiction of Other names under which Incorporation subsidiary does business --------------- ------------------------ PUBLISHING - ---------- Tribune Publishing Company Delaware Chicago Tribune Company Illinois Chicago Tribune; Exito! Chicago Relay Service Association Illinois Chicago Tribune Newspapers, Inc. Illinois Tribune Newspaper Network Chicago Tribune Press Service, Inc. Illinois Newspaper Readers Agency, Inc. Illinois Tribune Direct Marketing, Inc. Delaware AmeriComm/Illinois Precision Home Delivery, Inc. Delaware Tribune Media Services, Inc. Delaware TV Log; TV Week Sun-Sentinel Company Delaware Sun-Sentinel; Gold Coast Labeling Gold Coast Publications, Inc. Delaware Gold Coast Shopper; Porch Plus; XS; Exito!; iCE; Vital Signs New River Center Maintenance Association, Florida Inc. Sentinel Communication Company Delaware The Orlando Sentinel; US Express; Magic Magazine; Sentinel Publishing; Sentinel Direct; Tribune Interactive Network Services Neocomm, Inc. Delaware Porch Plus Peninsula Newspapers, Inc. Delaware
Jurisdiction of Other names under which Incorporation subsidiary does business --------------- ------------------------ Peninsula Community Newspapers, Inc. Delaware Times-Advocate Company Delaware Times-Advocate; GO Magazine; The Californian; The Californian Extra Twin County Community Newspapers, Inc. Delaware The Enterprise; The Extraprize The Daily Press, Inc. Delaware Daily Press Hampton Roads Newspapers, Inc. Virginia Tribune Properties, Inc. Delaware New River Center Management Co. Tribune New York Properties, Inc. Delaware Tribune National Marketing Company Delaware Real Estate Information Connection/REIC Contemporary Books, Inc. Illinois Congdon & Weed, Inc. New York Wright Group Publishing, Inc. Delaware Compton's Learning Company Delaware Compton's NewMedia, Inc. California Compton's Multimedia Publishing Group, Inc. Delaware NewMedia Source, Inc. California BROADCASTING AND ENTERTAINMENT - ------------------------------ Tribune Broadcasting Company Delaware Tribune Plus; Tribune Plus Corporate Sales; Tribune Creative Services Group Tribune Broadcasting News Network, Inc. Delaware Trib Net ChicagoLand Television News, Inc. Delaware ChicagoLand Television/CLTV ChicagoLand Microwave Licensee, Inc. Delaware
Jurisdiction of Other names under which Incorporation subsidiary does business --------------- ------------------------ Tribune Regional Programming, Inc. Delaware Tribune New York Radio, Inc. Delaware WQCD-FM Tribune Denver Radio, Inc. Delaware KOSI; KEZW WGN Continental Broadcasting Company Delaware WGN-TV; WGN Radio; Tribune Radio Networks; Tribune Sacramento Radio, Inc. Delaware KYMX; KCTC Tribune Entertainment Company Delaware Magic T Music Publishing Company Delaware Tribune Entertainment Production Company Delaware Chicago River Production Company Delaware The Road 435 Production Company Delaware Gossip Production Company Delaware North Michigan Production Company Delaware Fairfax Media, Incorporated Virginia Tribune Productions, Inc. Delaware Tribune (FN) Cable Ventures, Inc. Delaware KWGN Inc. Delaware KWGN-TV WGNO Inc. Delaware WGNO-TV WGNX Inc. Delaware WGNX-TV KTLA Inc. California KTLA-TV GWB Productions Delaware WPHL-TV, Inc. Pennsylvania WPHL WPIX Inc. New York WPIX-TV; Tribune New York Holdings WLVI Inc. Delaware Tribune California Properties, Inc. Delaware Chicago National League Ball Club, Inc. Delaware Chicago Cubs Diana-Quentin, Inc. Illinois Rockford Professional Baseball Club, Inc. Florida Rockford Royals Rock River Concessions, Inc. Florida Orlando Baseball Club, Inc. Delaware Orlando Cubs Orlando Baseball Concessions, Inc. Delaware
Jurisdiction of Other names under which NEWSPRINT/FOREST PRODUCTS Incorporation subsidiary does business - ------------------------- --------------- ------------------------ QUNO Corporation Quebec Scierie des Outardes Marlhill Mines Limited Ontario Manicouagan Power Company Quebec Baie Comeau Company (1990) Ltd. Quebec Quebec and Ontario Recycling Limited Ontario 907153 Ontario Inc. Ontario 907154 Ontario Inc. Ontario
3/17/94 EX-23 14 CONSENT OF PRICE WATERHS EXHIBIT 23 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Prospectuses constituting part of the Registration Statements on Form S-3 (File No. 33-45793) and on Form S-8 (File Nos. 2-90727, 33-21853, 33-26239 and 33-47547) of Tribune Company of our report dated January 28, 1994 appearing on page 52 of the 1993 Annual Report to Stockholders which is incorporated by reference in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report on the Financial Statement Schedules, which appears on page 24 of this Form 10-K. Price Waterhouse Chicago, Illinois March 21, 1994 -----END PRIVACY-ENHANCED MESSAGE-----