Tribune boss: We're OK

From: Dennis J. FitzSimons/Chicago-Tower/Tribune@mailbox
Sent: Monday, October 03, 2005 10:56 AM
Subject: Update
Dear Fellow Employee:

I want to review and update last week' s events.

As you know, late last Tuesday we learned that the U.S. Tax Court ruled against our position in the Matthew Bender dispute, which was based on a 1998 transaction by the Times Mirror Company. Tribune inherited the dispute when we acquired Times Mirror in 2000. We immediately announced that we would appeal the decision, and we held a conference call with investors to ensure that they fully understood the situation.

On Friday we made the $880 million federal portion of the required tax payment. Funding came primarily from the issue of short-term debt. Because of our strong financial position> -> both from a cash flow and debt perspective> -> our interest rate was below 4%. Our debt level is now $2.9 billion (compared to $5.5 billion when we acquired Times Mirror) and we remain one of the highest-rated media companies in the credit markets.

As expected with news of this magnitude, our stock declined about 5% following the announcement of the Tax Court decision. TRB shares gained $.28 on Friday and are up slightly so far today.

While we had hoped that the Tax Court decision would go our way, strong cash flow from our operating businesses and good financial planning ensure that we still have the flexibility to pay down debt, invest in our core businesses, make acquisitions that fit strategically and buy back our own stock.

Looking ahead, let me assure you that Tribune remains strong, with a positive future. We have a solid financial position, plus valuable major-market businesses that are important to the cities and regions they serve. Most important, we have dedicated employees who will continue to serve our communities and customers well.

Thank you for all your efforts.

Sincerely,
Dennis