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Seeing Through Tribune's Mirage

In coverage of the second-quarter 2005 earnings report for Tribune (NYSE: TRB  ) , it's been reported that the struggling media company's earnings per share had "more than doubled from a year ago." Sorry, fellas, but this isn't quite reflective of underlying conditions.

Tribune's results contain a maze of one-time charges from this year and last. For example, $0.09 in charges were applied during the 2004 second quarter for expected settlements with advertisers over circulation scandals involving Newsday and Spanish-language paper Hoy and for laying off more than 300 workers. Plus, early retirement of debt last year gouged EPS by more than $0.26 per stub. Investment gains? They accounted for $0.12 per share during Q2 2005 and $0.04 during the same period a year ago. Do the math, and you'll soon find that Tribune didn't do so well after all:

Item Q2 2004 Q2 2005

Reported earnings per share

$0.29 $0.73
Gain on investments ($0.04) ($0.12)
Ad settlement and layoffs $0.09 $0.00
Early retirement of debt $0.26 $0.00
Other non-operating income $0.02 ($0.01)
EPS excluding charges $0.62 $0.60

That's right -- if you subtract all one-time and non-operating gains and losses, Tribune looks to have done worse than it did a year ago in its core media business. This is debatable, of course. The set-aside for advertisers and layoffs could be construed as perfectly legit operating expenses that ought to be part of a year-over-year comparison, for example. But we're still talking about $0.60 versus $0.62 during Q2 2004. A double? Hardly.

Taking shortcuts in researching a company's numbers can prove very costly. So do yourself a favor and look under the hood each and every quarter. You and your portfolio will be better off for the effort.

You don't need to read between the lines for related Foolishness. It's all here:

Intimidated by all of this math? Allergic to homework? Don't worry, your portfolio needn't suffer. Let us do the work for you. Give any of our investing newsletters a try risk-free.

Fool contributor Tim Beyers thinks the Chicago Tribune is one of the country's best newspapers. What's your take? Share your thoughts with other Fools at the Tribune Company discussion board. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out what's in his portfolio by checking Tim's Fool profile. The Motley Fool has a disclosure policy.

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