UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 30, 2003
Commission file number 1-8572
TRIBUNE COMPANY
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

36-1880355
(I.R.S. Employer
Identification No.)

435 North Michigan Avenue, Chicago, Illinois
(Address of principal executive offices)

60611
(Zip code)

Registrant's telephone number, including area code: (312) 222-9100
No Changes
(Former name, former address and former fiscal year, if changed since last report)

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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes / X / No / /

At May 2, 2003, there were 308,990,587 shares outstanding of the Company’s Common Stock ($.01 par value per share), excluding 83,441,765 shares held by subsidiaries and affiliates of the Company.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

TRIBUNE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of dollars, except per share data)
(Unaudited)

	First Quarter Ended
	March 30, 2003		March 31, 2002
Operating Revenues	$ 1,290,047		$ 1,233,638

Operating Expenses
Cost of sales (exclusive of items shown below)	628,607		613,862
Selling, general and administrative	328,240		313,157
Depreciation	54,249		52,290
Amortization of intangible assets	2,542		2,595
Restructuring charges (Note 2)	–		27,253

Total operating expenses	1,013,638		1,009,157


Operating Profit	276,409		224,481

Net loss on equity investments	(9,014	)	(20,697	)
Interest income	2,075		2,072
Interest expense	(50,947	)	(55,092	)
Loss on change in fair values of derivatives
and related investments	(37,220	)	(45,515	)
Gain on sales of subsidiaries and investments, net	50,279		1,426
Loss on investment write-downs	(228	)	(1,489	)

Income Before Income Taxes and Cumulative Effect of
Change in Accounting Principle	231,354		105,186
Income taxes	(90,202	)	(41,169	)

Income Before Cumulative Effect of Change in Accounting
Principle	141,152		64,017
Cumulative effect of change in accounting principle, net of tax	–		(165,587	)

Net Income (Loss)	141,152		(101,570	)
Preferred dividends, net of tax	(6,231	)	(6,395	)

Net Income (Loss) Attributable to Common Shares	$ 134,921		$ (107,965	)

Earnings (Loss) Per Share (Note 5):
Basic:
Before cumulative effect of change in accounting principle	$ .44		$ .19
Cumulative effect of accounting change, net	–		(.55	)

Net income (loss)	$ .44		$ (.36	)

Diluted:
Before cumulative effect of change in accounting principle	$ .41		$ .18
Cumulative effect of accounting change, net	–		(.51	)

Net income (loss)	$ .41		$ (.33	)

Dividends per common share	$ .11		$ .11

See Notes to Condensed Consolidated Financial Statements.

TRIBUNE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
(Unaudited)

	March 30, 2003		Dec. 29, 2002
Assets
Current Assets
Cash and cash equivalents	$ 102,425		$ 105,931
Accounts receivable, net	711,936		814,511
Inventories	42,314		47,462
Broadcast rights	311,494		326,557
Deferred income taxes	146,857		149,570
Prepaid expenses and other	72,299		80,623

Total current assets	1,387,325		1,524,654

Property, plant and equipment	3,403,146		3,386,123
Accumulated depreciation	(1,628,126	)	(1,586,497	)

Net properties	1,775,020		1,799,626

Broadcast rights	392,408		413,857
Goodwill	5,494,886		5,419,113
Other intangible assets, net	3,256,244		2,997,958
AOL Time Warner stock related to PHONES debt	181,600		199,040
Other investments	685,954		700,582
Prepaid pension costs	869,208		864,626
Other assets	149,072		158,872

Total assets	$ 14,191,717		$ 14,078,328

See Notes to Condensed Consolidated Financial Statements.

TRIBUNE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
(Unaudited)

	March 30, 2003		Dec. 29, 2002
Liabilities and Shareholders' Equity
Current Liabilities
Long-term debt due within one year	$ 46,438		$ 46,368
Contracts payable for broadcast rights	308,602		334,545
Deferred income	139,597		87,962
Accounts payable, accrued expenses and other current liabilities	614,032		685,101

Total current liabilities	1,108,669		1,153,976

PHONES debt related to AOL Time Warner stock	545,200		523,440
Other long-term debt	2,618,696		2,703,262
Deferred income taxes	2,172,794		2,081,092
Contracts payable for broadcast rights	551,473		578,034
Compensation and other obligations	895,739		898,424

Total liabilities	7,892,571		7,938,228

Shareholders' Equity
Series B convertible preferred stock	224,446		227,408
Series C convertible preferred stock, net of treasury stock	44,260		44,260
Series D-1 convertible preferred stock, net of treasury stock	38,097		38,097
Series D-2 convertible preferred stock, net of treasury stock	24,510		24,510
Common stock and additional paid-in capital	8,376,413		8,342,505
Retained earnings	4,621,555		4,516,291
Treasury common stock (at cost)	(7,020,417	)	(7,047,670	)
Unearned compensation related to ESOP	(33,772	)	(33,772	)
Accumulated other comprehensive income	24,054		28,471

Total shareholders' equity	6,299,146		6,140,100

Total liabilities and shareholders' equity	$ 14,191,717		$ 14,078,328

See Notes to Condensed Consolidated Financial Statements.

TRIBUNE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
(Unaudited)

	First Quarter Ended
	March 30, 2003		March 31, 2002
Operations
Net income (loss)	$ 141,152		$(101,570	)
Adjustments to reconcile net income (loss) to net cash provided
by operations:
Loss on change in fair values of derivatives
and related investments	37,220		45,515
Gain on sales of subsidiaries and investments, net	(50,279	)	(1,426	)
Loss on investment write-downs	228		1,489
Cumulative effect of accounting change, net	–		165,587
Depreciation	54,249		52,290
Amortization of intangible assets	2,542		2,595
Deferred income taxes	21,704		11,890
Decrease in accounts receivable	102,575		78,512
Other, net	22,731		7,122

Net cash provided by operations	332,122		262,004


Investments
Capital expenditures	(30,120	)	(42,295	)
Acquisitions and investments	(230,309	)	(10,577	)
Proceeds from sales of investments and subsidiaries	5,063		3,407
Other, net	–		7,096

Net cash used for investments	(255,366	)	(42,369	)


Financing
Repayments of long-term debt	(89,983	)	(184,600	)
Sales of common stock to employees, net	45,609		46,231
Purchases of treasury common stock related to ESOP	–		(27,487	)
Other purchases of treasury common stock	–		(748	)
Dividends	(35,888	)	(34,978	)

Net cash used for financing	(80,262	)	(201,582	)


Net increase (decrease) in cash and cash equivalents	(3,506	)	18,053

Cash and cash equivalents, beginning of year	105,931		65,836

Cash and cash equivalents, end of quarter	$ 102,425		$ 83,889

See Notes to Condensed Consolidated Financial Statements.

TRIBUNE COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1: BASIS OF PREPARATION

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary for a fair statement of the financial position of Tribune Company and its subsidiaries (the “Company” or “Tribune”) as of March 30, 2003 and the results of their operations and cash flows for the quarters ended March 30, 2003 and March 31, 2002. All adjustments reflected in the accompanying unaudited condensed consolidated financial statements are of a normal recurring nature. Results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Certain prior year amounts have been reclassified to conform with the 2003 presentation. These reclassifications had no impact on reported 2002 total revenues, operating profit or net income.

Previously, the Company’s interactive and publishing businesses were separate reporting segments. However, as a result of various management and organizational changes, the two groups were integrated during 2003. Consequently, and in accordance with segment reporting guidelines, the operating results for the Company’s interactive businesses are now reported as part of the operating results of the publishing segment. For comparison purposes, prior year results are also shown on this basis.

NOTE 2: RESTRUCTURING CHARGES

In the first quarter of 2002, the Company recorded pretax restructuring charges of $27.3 million ($16.7 million after-tax) for various cost reduction initiatives. Approximately 300 full-time equivalent employee positions were eliminated as a result of these initiatives. Pretax restructuring charges of approximately $25 million were recorded at the publishing segment, $1.1 million at the broadcasting and entertainment segment and $1.2 million at corporate during 2002. These restructuring charges, consisting primarily of compensation expense, are presented as a separate line item in the unaudited condensed consolidated statement of operations.

A summary of the significant components of the pretax restructuring charges for the quarter ended March 31, 2002, is as follows (in millions):

	Publishing	Broadcasting	Corporate	Total
Severance costs	$ 18.2	$ 0.8	$ 0.4	$ 19.4
Enhanced early retirement
pension costs	2.2	–	–	2.2
Asset disposals	3.0	0.3	0.2	3.5
Lease termination costs	1.6	–	0.6	2.2

Total	$ 25.0	$ 1.1	$ 1.2	$ 27.3

Accruals for the restructuring charges amounted to $8.1 million at March 30, 2003. The accruals primarily consist of costs related to severance and lease termination costs. A summary of the activity with respect to the restructuring accrual is as follows (in millions):


Restructuring accrual at Dec. 29, 2002	$ 11.1
Payments	(3.0	)

Restructuring accrual at March 30, 2003	$ 8.1

NOTE 3: NEW ACCOUNTING STANDARDS

In December 2002, the Financial Accounting Standards Board (“FASB”) issued Financial Accounting Standard (“FAS”) No. 148, “Accounting for Stock-Based Compensation - Transition and Disclosure - an amendment of FASB Statement No. 123.” FAS No. 148 requires disclosure in both annual and quarterly financial statements about the method of accounting for stock-based employee compensation, and the effect of the method used on reported results. These additional disclosures are required beginning with the Form 10-Q for the first quarter of 2003.

The Company accounts for its stock-based compensation plans in accordance with Accounting Principles Board (“APB”) Opinion No. 25 and related Interpretations. Under APB 25, no compensation expense is recorded because the exercise price of employee stock options equals the market price of the underlying stock on the date of grant. Under FAS No. 123, “Accounting for Stock-Based Compensation,” compensation cost is measured at the grant date based on the estimated fair value of the award and is recognized as compensation expense over the vesting or service period. Had compensation cost for these plans been determined consistent with FAS 123, the Company’s first quarter net income and EPS would have been reduced to the following pro forma amounts (in thousands, except per share data):

	First Quarter Ended March 30, 2003		First Quarter Ended March 31, 2002
	As Reported	Pro Forma	As Reported		Pro Forma
Net income (loss)	$141,152	$122,502	$(101,570	)	$(121,191	)
Net income (loss) attributable
to common shares	$134,921	$116,271	$(107,965	)	$(127,586	)
Basic EPS	$ 0.44	$ 0.38	$ (0.36	)	$ (0.43	)
Diluted EPS	$ 0.41	$ 0.35	$ (0.33	)	$ (0.39	)

In determining the pro forma compensation cost, the weighted average fair value of options granted at date of grant was estimated to be $13.21 in the first quarter of 2003 and $12.68 in the first quarter of 2002, using the Black-Scholes option pricing model and assumptions as provided under FAS 123. The following weighted average assumptions were used for general awards and replacement options:

	First Quarter Ended March 30, 2003				First Quarter Ended March 31, 2002
	General Awards		Replacement Options		General Awards		Replacement Options
Risk-free interest rate	2	.8%	1	.5%	5	.0%	4	.6%
Expected dividend yield	1	.0%	1	.0%	1	.0%	1	.0%
Expected stock price volatility	32	.7%	29	.7%	31	.3%	37	.3%
Expected life (in years)		5		2		5		2

Under certain circumstances, replacement options are granted when a participant pays the exercise price of a stock option and related tax withholding obligations with previously acquired shares of common stock. The number of replacement options granted is equal to the number of shares used to pay the exercise price and related tax withholding obligations. The exercise price of a replacement option is equal to the market price of the underlying stock on the date of grant, and the term is equal to the remaining term of the original option. Replacement options vest one year from the date of grant. The after-tax compensation cost related to replacement options represented $4.6 million of the $18.7 million pro forma reduction to net income in the first quarter of 2003. The after-tax compensation cost related to replacement options represented $2.7 million of the $19.6 million pro forma reduction to net income in the first quarter of 2002. The Company granted broad based stock options in the first quarter of 2002 to the majority of employees, in lieu of merit wage increases. The broad based stock option grants vested after one year and had an after-tax compensation cost of $3.9 million in the first quarter of 2002.

NOTE 4: GOODWILL AND OTHER INTANGIBLE ASSETS

The provisions of FAS No. 142, “Goodwill and Other Intangible Assets,” that pertain to impairment of intangible assets have superceded the impairment related provisions included in FAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of.” Under FAS 142, the annual impairment review of goodwill and other intangible assets that are not being amortized must be based generally on fair values; the review under FAS 121 was based generally on projected future undiscounted cash flows. The estimated fair values of these assets subject to the impairment review were calculated as of Dec. 30, 2001 and Dec. 29, 2002 based on projected future discounted cash flow analyses. As a result of initially applying the new impairment provisions of FAS 142, the Company recorded a pretax charge of $271 million ($166 million after-tax, or $.51 per diluted share) in the first quarter of 2002. The charge related to certain of the Company’s newspaper mastheads ($226 million), a Federal Communications Commission (“FCC”) license ($43 million) and a television network affiliation agreement ($2 million), and is presented as the cumulative effect of a change in accounting principle in the Company’s unaudited condensed consolidated statements of operations. The impairments were primarily the result of decreases in operating revenues compared to forecasts prepared at the dates the respective companies were acquired. No adjustment to intangible assets was required as a result of the impairment review conducted in the fourth quarter of 2002.

Goodwill and other intangible assets at March 30, 2003 and Dec. 29, 2002 consisted of the following (in thousands):

	March 30, 2003				Dec. 29, 2002
	Gross Amount	Accumulated Amortization		Net Amount	Gross Amount	Accumulated Amortization		Net Amount
Intangible assets continuing to be
amortized
Subscribers (useful life of 15
to 20 years)	$195,697	$(35,365	)	$160,332	$195,697	$(32,885	)	$162,812
Other (useful life of 3 to 40 years)	42,804	(1,710	)	41,094	18,002	(1,648	)	16,354

Total	$238,501	$(37,075	)	201,426	$213,699	$(34,533	)	179,166



Goodwill and other intangibles no
longer being amortized
Goodwill
Publishing	4,017,144	4,016,882
Broadcasting and Entertainment	1,477,742	1,402,231

Total goodwill	5,494,886	5,419,113
Newspaper mastheads	1,575,814	1,575,814
FCC licenses	1,214,810	1,003,970
Network affiliation agreements	256,262	231,076
Tradename	7,932	7,932

Total	8,549,704	8,237,905

Total goodwill and other intangible
assets	$8,751,130	$8,417,071

NOTE 5: EARNINGS PER SHARE

The computations of basic and diluted earnings per share (“EPS”) were as follows (in thousands, except per share data):

	First Quarter Ended
	March 30, 2003		March 31, 2002
Basic EPS:
Income before cumulative effect of change in accounting
principle	$ 141,152		$ 64,017
Cumulative effect of change in accounting principle, net of tax	–		(165,587	)

Net income (loss)	141,152		(101,570	)
Preferred dividends, net of tax	(6,231	)	(6,395	)

Net income (loss) attributable to common shares	$ 134,921		$(107,965	)
Weighted average common shares outstanding	306,966		299,089

Basic EPS	$ .44		$ (.36	)

Diluted EPS:
Income before cumulative effect of change in accounting
principle	$ 141,152		$ 64,017
Cumulative effect of change in accounting principle, net of tax	–		(165,587	)

Net income (loss)	141,152		(101,570	)
Additional ESOP contribution required assuming Series B preferred
shares were converted, net of tax	(2,447	)	(2,570	)
Dividends on Series C, D-1, and D-2 preferred stock	(2,063	)	(2,014	)
LYONs interest expense, net of tax	1,560		–

Adjusted net income (loss)	$ 138,202		$(106,154	)

Weighted average common shares outstanding	306,966		299,089

Assumed conversion of Series B preferred shares into common
shares	16,225		17,225
Assumed exercise of stock options, net of common shares assumed
repurchased with the proceeds	6,521		6,025
Assumed conversion of LYONs debt securities	6,975		–

Adjusted weighted average common shares outstanding	336,687		322,339

Diluted EPS	$ .41		$ (.33	)

Basic EPS is computed by dividing net income attributable to common shares by the weighted average number of common shares outstanding during the period. Diluted EPS was computed assuming that the Series B convertible preferred shares, for the first quarters of 2003 and 2002, and the LYONs debt securities, for the first quarter of 2003, were converted into common shares. For the first quarter of 2002, the calculation of diluted EPS did not assume the conversion of the LYONs debt securities because the conversion would have had an antidilutive effect on diluted EPS before the cumulative effect of change in accounting principle. Also, for both years, weighted average common shares outstanding was adjusted for the dilutive effect of stock options. The Company has certain other convertible securities which were not included in the calculation of diluted EPS because their effects were antidilutive.

NOTE 6: CHANGES IN OPERATIONS AND NON-OPERATING ITEMS

Acquisitions – On March 21, 2003, the Company acquired the stock of KPLR-TV, St. Louis, and the assets of KWBP-TV, Portland, Oregon, from ACME Communications for a total of $275 million. The Company acquired the stock of KPLR-TV for $200 million in cash. The acquisition of the assets of KWBP-TV was structured as a like-kind asset exchange for income tax purposes. It was funded with the remaining assets of the Denver radio station group (KKHK-FM, now known as KQMT-FM), with an estimated fair market value of $55 million, plus $20 million in cash. The results of operations of KWBP-TV and KPLR-TV are included in the unaudited condensed consolidated statements of operations since their date of acquisition.

Non-Operating Items – The first quarters of 2003 and 2002 included several non-operating items, summarized as follows (in thousands):

	First Quarter Ended March 30, 2003				First Quarter Ended March 31, 2002
	Pretax Gain (Loss)		After-tax Gain (Loss)		Pretax Gain (Loss)		After-tax Gain (Loss)
Loss on change in fair values
of derivatives and related investments	$(37,220	)	$(22,779	)	$(45,515	)	$(27,855	)
Gain on sales of subsidiaries and
investments, net	50,279		30,771		1,426		872
Loss on investment write-downs	(228	)	(139	)	(1,489	)	(911	)

Total non-operating items	$ 12,831		$ 7,853		$(45,578	)	$(27,894	)

In the first quarter of 2003, changes in the fair values of the Company’s derivatives and related investments resulted in a non-cash pretax loss of $37 million. This loss resulted primarily from a $20 million increase in the fair value of the derivative component of the Company’s PHONES and a $17 million decrease in the fair value of the related 16.0 million shares of AOL Time Warner common stock.

In the first quarter of 2003, the gain on sales of subsidiaries and investments resulted primarily from the divestiture of the assets of the Company’s remaining Denver radio station, KKHK-FM, now known as KQMT-FM, plus cash of $20 million, for the assets of KWBP-TV, Portland, Ore. The divestiture of the Denver radio station assets resulted in a pretax gain of $51 million.

In the first quarter of 2002, changes in the fair values of the Company’s derivatives and related investments resulted in a non-cash pretax loss of $46 million. This loss resulted primarily from a $151 million decrease in the fair value of 16.0 million shares of AOL Time Warner common stock, which was only partially offset by a $106 million decrease in the fair value of the derivative component of the PHONES.

NOTE 7: INVENTORIES

Inventories consisted of the following (in thousands):

	March 30, 2003	Dec. 29, 2002
Newsprint (at LIFO)	$30,656	$36,065
Supplies and other	11,658	11,397

Total inventories	$42,314	$47,462

Newsprint inventories are valued under the LIFO method and were less than current cost by approximately $1.4 million at March 30, 2003 and equal to current cost at Dec. 29, 2002.

NOTE 8: LONG-TERM DEBT

Debt consisted of the following (in thousands):

	March 30, 2003		Dec. 29, 2002
Commercial paper, weighted average interest rate of 1.4% and 1.5%	$ 263,561		$ 348,529
Medium-term notes, weighted average
interest rate of 6.2%, due 2003-2008	972,235		972,235
8.4% guaranteed ESOP notes, due 2003	33,772		33,772
Capitalized real estate obligation, effective interest rate of
7.7%, expiring 2009	96,660		99,595
7.45% notes due 2009	395,273		395,092
7.25% debentures due 2013	142,059		141,907
LYONs due 2017	292,270		289,721
7.5% debentures due 2023	93,902		93,844
6.61% debentures due 2027	242,373		242,297
7.25% debentures due 2096	129,179		129,133
Other notes and obligations	3,850		3,505

Total debt excluding PHONES	2,665,134		2,749,630
Less amounts classified as due within one year	(46,438	)	(46,368	)

Long-term debt excluding PHONES	2,618,696		2,703,262
2% PHONES debt related to AOL Time Warner stock, due 2029	545,200		523,440

Total long-term debt	$ 3,163,896		$ 3,226,702

The discounted debt and derivative components of the PHONES were as follows (in thousands):

	March 30, 2003	Dec. 29, 2002
PHONES Debt:
Discounted debt component (at book value)	$424,960	$422,640
Derivative component (at fair value)	120,240	100,800

Total	$545,200	$523,440


AOL Time Warner stock related to PHONES (at fair value)	$181,600	$199,040

Under the provisions of FAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” the PHONES consist of a discounted debt component, which is presented at book value, and a derivative component, which is presented at fair value. Changes in the fair value of the derivative component of the PHONES are recorded in the statement of operations. The derivative component of the PHONES debt is calculated as the difference between the quoted market value of the PHONES and the estimated fair value of the discounted debt component of the PHONES. The fair value of the discounted debt component of the PHONES is calculated based on an estimate of the current interest rate available to the Company for debt of the same remaining maturity and similar terms to the PHONES. The book value of the discounted debt component is based on the prevailing interest rate (8.125%) at issuance of the PHONES. The market value of the PHONES, which are traded on the New York Stock Exchange, was $618 million and $584 million at March 30, 2003 and Dec. 29, 2002, respectively.

Notes issued under the commercial paper program have maturities of less than 90 days. The Company intends to refinance $264 million of commercial paper and $89 million of medium-term notes, scheduled to mature by March 30, 2004, 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. At March 30, 2003, the Company had revolving credit agreements with a number of financial institutions providing for borrowings in an aggregate amount of up to $1.2 billion, of which $100 million expired in April 2003, $500 million expires in March 2004 and $600 million expires in December 2005. No amounts were borrowed under these credit agreements as of March 30, 2003.

NOTE 9: COMPREHENSIVE INCOME

Other comprehensive income for the quarters ended March 30, 2003 and March 31, 2002 includes unrealized gains and losses on interest rate swaps and unrealized gains and losses on marketable securities classified as available-for-sale. Other comprehensive income for the quarter ended March 31, 2002 also included an unrealized gain on newsprint swaps.

The Company’s comprehensive income (loss) is as follows (in thousands):

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