The restructuring charge of approximately $131 million, or $.26 per share, recorded in the quarter covers expenses primarily associated with staff reduction initiatives that will save the company $58 million annually.
Cash earnings (defined as after tax income plus amortization expense, excluding restructuring charges, income tax adjustment and non-operating items) were $98 million in the 2001 third quarter, down from $137 million during the same period last year. In the 2001 third quarter, cash EPS, excluding restructuring charges, income tax adjustment and non-operating items, decreased to $.29, down from $.39 per share in the 2000 third quarter.
We have been presented with very significant external challenges, said John W. Madigan, Tribune’s chairman and chief executive officer. Our first priority since the attacks of September 11, has been to keep our readers, viewers and listeners informed with comprehensive news coverage of America’s war on terrorism.
The financial impact of this commitment to serving the public is significant-our newspapers published extra editions, our television and radio stations aired extended news coverage, and our web sites increased capacity, continued Madigan. And, at the same time, advertisers began rethinking their buying strategies.
But we continue to achieve significant cost savings by holding down expenses, reducing staff and positioning the company for long-term success when the economy recovers, said Madigan.
Tribune’s 2001 third quarter operating revenues decreased 7 percent to $1.3 billion, down from $1.4 billion in the 2000 third quarter. EBITDA (earnings before interest, taxes, depreciation, amortization, equity results, restructuring charges and non-operating items) was down 26 percent to $260 million in the third quarter of 2001, compared with $351 million in the third quarter of 2000. For the 2001 third quarter, Tribune’s operating profit, before restructuring charges, declined 37 percent to $149 million, compared with $237 million in the 2000 third quarter.
In the 2001 third quarter, operating revenues for broadcasting and entertainment decreased 3 percent to $354 million, down from $365 million in the same period last year. EBITDA fell 17 percent in the 2001 third quarter to $107 million, excluding restructuring charges, from $129 million in the third quarter of 2000. Operating profit in the quarter declined 24 percent to $76 million, excluding restructuring charges, from $101 million in the third quarter of last year.
Television revenues declined 6 percent to $274 million in the 2001 third quarter, down from $293 million in last year’s third quarter. Tribune television stations lost approximately $12 million from the events of September 11. Excluding programming and acquisition costs, television cash operating expenses in the quarter were down 5 percent.
Revenues for Entertainment/Other increased 14 percent to $66 million, up from $57 million in last year’s third quarter due mainly to increased advertising revenues at Tribune Entertainment.
Publishing revenue declined 8 percent to $907 million in the 2001 third quarter, compared with $991 million in 2000. Publishing EBITDA, excluding restructuring charges, was $166 million, down 32 percent from $245 million in the third quarter of last year. Publishing operating profit, excluding restructuring charges, decreased 45 percent to $89 million, from $164 million in the 2000 third quarter. Publishing cash expenses including newsprint were down 1 percent in the 2001 third quarter, excluding acquisitions.
In the 2001 third quarter, advertising revenue totaled $684 million, 13 percent below last year’s third quarter total of $783 million. Tribune Publishing had approximately $8 million in ad cancellations as a result of the events of September 11.
Retail advertising revenue decreased 7 percent in the third quarter 2001, mainly due to weakness in the electronic and department store categories. National advertising revenue was 9 percent below last year’s third quarter, primarily due to lower dot.com and weakness in other high tech, travel and financial categories. Classified advertising revenue declined 20 percent from last year’s third quarter because of weakness in the help wanted category.
Newsprint expense fell 8 percent in the 2001 third quarter, as consumption declined 6 percent and newsprint prices decreased 3 percent.
In the 2001 third quarter, interactive revenues rose 20 percent to $15.1 million, up from $12.6 million in the same period last year, primarily on higher classified revenues. For the 2001 third quarter, interactive operating cash flow losses decreased 50 percent to $4.1 million, from $8.2 million in the 2000 third quarter.
Equity losses for the 2001 third quarter were $13 million, down from $26 million in 2000. The losses were primarily due to Tribune’s ownership interests in CareerBuilder, The WB Network, BrassRing and Classified Ventures.
Interest expense for the 2001 third quarter decreased to $63 million, down 20 percent from $79 million in 2000. This decrease was primarily due to the reduction of outstanding debt and lower interest rates.
Excluding restructuring charges and non-operating items, the effective tax rate in the 2001 third quarter was 61.7 percent, compared to 42.8 percent in 2000. The 2001 third quarter included an income tax adjustment of $8.6 million, which reduced diluted earnings per share by $.03. The catch-up adjustment resulted from an increase in the company’s estimated effective tax rate for the year. The higher rate was due to lower than projected earnings in the second half of 2001, while goodwill amortization did not change. The adjustment represents the impact of the higher rate on earnings for the first half of 2001.
