First Quarter 1997 Earnings
ARLINGTON, Va. — Gannett announced today that earnings per share from continuing operations advanced 55 percent in the first quarter to 96 cents per share, a new record. In the first quarter of 1996, earnings per share from continuing operations were 62 cents per share.
Net income from continuing operations increased 56 percent in the quarter to $135,064,000 from $86,448,000 in the year-earlier quarter. Operating revenues from continuing operations gained 5 percent in the quarter to $1,076,757,000, compared to $1,023,883,000 in 1996’s first quarter. Operating income from continuing operations advanced 36 percent to $260,820,000 from $192,309,000 in the first quarter of 1996. Operating cash flow from continuing operations advanced to $335,444,000 in the quarter from $264,661,000 in the prior year reflecting strong advertising demand at our local newspapers and at USA TODAY, sharply lower newsprint costs year over year and a healthy broadcast environment.
First quarter expense included the gift of the Niagara Gazette newspaper to the Gannett Foundation. Subsequent to the transfer, the Gannett Foundation sold the Niagara Gazette so that the proceeds could be used to fund the Foundation and its community grants. The sale also resolved the FCC newspaper-television cross-ownership issues that arose as a result of the company’s acquisition of a television station in Buffalo, New York.
Average shares outstanding in the quarter totaled 141,421,000, compared with 140,680,000 in 1996’s first quarter.
In a statement the company said each of its business segments posted record operating results for the quarter. Newspaper earnings soared reflecting stronger advertising demand, a 29 percent reduction in newsprint expense compared to the year earlier quarter, strong operating results at USA TODAY, and a favorable comparison year to year at The Detroit News. The Broadcasting group also achieved record results for the first quarter.
Operating cash flow from newspapers jumped 32 percent in the quarter to $248,343,000 and revenues in the quarter were 5 percent higher than last year. Advertising revenues grew 7 percent, including a 10 percent gain in classified and a 6 percent gain in local advertising revenues. Newspaper advertising volume advanced 7 percent for the quarter.
In the first quarter of 1997, the company reported a profit at The Detroit News versus a loss in the first quarter of 1996. The strike that began in Detroit in July 1995 ended in February 1997. However, while the strike has ended, a subscriber and advertiser boycott continues as the unions do not yet have contracts.
At USA TODAY, advertising revenues grew 9 percent. Paid advertising pages advanced 5 percent to 1,129 compared to 1,080 in the first quarter of 1996.
Broadcasting cash flow advanced 14 percent in the quarter to $72,212,000 as revenues gained 6 percent to $150,606,000. On a pro forma basis, revenues advanced 7 percent, including a 6 percent gain in television revenue. Radio revenues increased 24 percent in the quarter.
Cable and Security operating cash flow grew 8 percent in the first quarter to $29,858,000 from $27,678,000 in the first quarter of 1996. Revenues gained 9 percent to $61,546,000. Basic cable subscribers totaled 470,272 at the end of the quarter, equal to 61percent of homes passed. Pay units numbered 320,492 at quarter end.
In January, Gannett announced that it had entered into an agreement to acquire two television stations in Arizona. On April 10 the company announced that it had reached agreement to sell its remaining five radio stations to Evergreen Media. Both closings are expected to occur after regulatory approvals are obtained.
Gannett is a nationwide news and information company that publishes 91 daily newspapers, including USA TODAY, and USA WEEKEND, a newspaper magazine. Gannett also operates 16 television stations, five radio stations, cable television systems in five states and alarm security services.
CONSOLIDATED STATEMENTS OF INCOME
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
Quarter ended % Inc
Mar. 30, 1997 Mar. 31, 1996 (Dec)
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Net Operating Revenues:
Newspaper advertising $ 593,552 $ 556,885 6.6
Newspaper circulation 233,370 229,417 1.7
Broadcasting 150,606 141,688 6.3
Cable & Security 61,546 56,612 8.7
Other 37,683 39,281 (4.1)
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Total 1,076,757 1,023,883 5.2
Operating Expenses:
Cost of sales and operating expenses,
exclusive of depreciation 566,522 590,515 (4.1)
Selling, general and administrative
expenses, exclusive of depreciation 174,791 168,707 3.6
Depreciation 49,782 48,837 1.9
Amortization of intangible assets 24,842 23,515 5.6
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Total 815,937 831,574 (1.9)
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Operating income 260,820 192,309 35.6
Non-operating income (expense):
Interest expense (25,618) (39,528) 35.2
Other (5,088) (1,583) (221.4)
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Total (30,706) (41,111) 25.3
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Income before income taxes 230,114 151,198 52.2
Provision for income taxes 95,050 64,750 46.8
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Income from continuing operations 135,064 86,448 56.2
Discontinued operations:
Income from discontinued operations,
net of income taxes 2,902 (100.0)
------------- ------------- -----
Net income $ 135,064 $ 89,350 51.2
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Earnings per share:
Earnings from continuing operations $0.96 $0.62 54.8
Earnings from discontinued
operations, net of tax $0.02 (100.0)
----- ----- -----
Net income per share $0.96 $0.64 50.0
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Dividends per share $0.36 $0.35 2.9
BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Quarter Ended
March 30, 1997 March 31, 1996 % Inc
-------------- -------------- -----
Operating Revenues:
Newspaper publishing $ 864,605 $ 825,583 4.7
Broadcasting 150,606 141,688 6.3
Cable and Security 61,546 56,612 8.7
-------------- -------------- -----
Total $ 1,076,757 $ 1,023,883 5.2
============== ============== =====
Operating Income:
(net of depreciation and amortization)
Newspaper publishing $ 207,194 $ 146,971 41.0
Broadcasting 57,400 50,039 14.7
Cable and Security 13,365 11,717 14.1
Corporate (17,139) (16,418) (4.4)
-------------- -------------- -----
Total $ 260,820 $ 192,309 35.6
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Depreciation and Amortization:
Newspaper publishing $ 41,149 $ 40,716 1.1
Broadcasting 14,812 13,119 12.9
Cable and Security 16,493 15,961 3.3
Corporate 2,170 2,556 (15.1)
-------------- -------------- -----
Total $ 74,624 $ 72,352 3.1
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Operating Cash Flow:
Newspaper publishing $ 248,343 $ 187,687 32.3
Broadcasting 72,212 63,158 14.3
Cable and Security 29,858 27,678 7.9
Corporate (14,969) (13,862) (8.0)
-------------- -------------- -----
Total $ 335,444 $ 264,661 26.7
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NOTE:
Operating Cash Flow represents operating income for each of the Company's
business segments plus related depreciation and amortization expense.