First Quarter 1998 Earnings
ARLINGTON, Va — Gannett announced today that diluted earnings per share, excluding a net non-operating gain principally from the sale of several businesses, advanced 17 percent to 56 cents per share in the first quarter, a new record. In the first quarter of 1997, diluted earnings per share were 48 cents.
Non-operating income included a net non-operating gain of 64 cents per share primarily from the disposition of the company’s five remaining radio stations in Chicago, Dallas and Houston and from the sale of the assets of Multimedia Security Services, Inc. Diluted earnings per share, including the 64 cent gain, totaled $1.20 in the first quarter.
Net income, excluding the net non-operating after tax gain of $183,607,000, increased 18 percent in the first quarter to $159,243,000 from $135,064,000 in the year earlier quarter. Operating revenues gained 11 percent to $1,199,910,000 in the quarter, compared to $1,076,757,000 in 1997’s first quarter. Operating income advanced 11 percent to $288,243,000 from $260,820,000 in the first quarter of 1997. Operating cash flow advanced to $367,724,000 in the quarter from $335,444,000 in the prior year reflecting strong advertising demand at our local newspapers and a healthy broadcast environment.
Average diluted shares outstanding in the quarter totaled 286,874,000 compared to 284,320,000 in 1997’s first quarter.
In a statement, the company said each of its business segments posted record operating results for the quarter. Newspaper earnings advanced reflecting continued strong advertising demand, particularly in classified, and a favorable comparison year to year at The Detroit News. Newsprint expense rose 26 percent for the first quarter. The television group also achieved record results benefitting from advertising related to the broadcast of the Super Bowl on its NBC-affiliated stations and demand for television advertising during the Winter Olympics at the CBS stations.
Operating cash flow from newspapers was 10 percent higher than last year and revenues in the quarter grew 13 percent. If the same group of newspapers had been held in both periods, pro forma advertising revenues would have increased 7 percent in the quarter, including a 10 percent gain in classified, a 7 percent increase in national and a 1 percent gain in local. Pro forma newspaper advertising volume advanced 5 percent for the quarter.
At USA TODAY, paid advertising pages increased 15 percent to 1,294 compared to 1,129 in the first quarter of 1997. Advertising revenues grew 15 percent.
Broadcasting cash flow rose 12 percent in the quarter to $80,922,000 as revenues gained 7 percent to $160,692,000. On a pro forma basis, television revenues advanced 12 percent. On December 29, the first day of its 1998 fiscal year, the company sold all of its remaining five radio stations. A portion of the proceeds were used to acquire two television stations, WCSH-TV, the NBC affiliate in Portland, Maine and WLBZ-TV, the NBC affiliate in Bangor, Maine.
Cable and Security revenues were $64,062,000 in the first quarter of 1998, and operating cash flow was $30,070,000. Basic cable subscribers totaled 482,308 at the end of the quarter, equal to 62 percent of homes passed. Pay units numbered 337,789 at quarter end. Pro forma cable revenues increased 9 percent in the quarter to $55,822,000.
The company announced on February 26 that it had entered into an agreement to acquire WLTX-TV, the CBS affiliate in Columbia, S.C. Closing is expected to occur after regulatory approvals are obtained.
Gannett is a nationwide news and information company that publishes 87 daily newspapers, including USA TODAY, and USA WEEKEND, a newspaper magazine. Gannett also operates 20 television stations and cable television systems in five states.
CONSOLIDATED STATEMENTS OF INCOME
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
Quarter Ended % Inc
Mar. 29, 1998 Mar. 30, 1997 (Dec)
Net Operating Revenues:
Newspaper advertising $ 669,994 $ 593,552 12.9
Newspaper circulation 254,079 233,370 8.9
Broadcasting 160,692 150,606 6.7
Cable & Security 64,062 61,546 4.1
Other 51,083 37,683 35.6
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Total 1,199,910 1,076,757 11.4
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Operating Expenses:
Cost of sales and operating expenses,
exclusive of depreciation 642,980 566,522 13.5
Selling, general and administrative
expenses, exclusive
of depreciation 189,206 174,791 8.2
Depreciation 53,030 49,782 6.5
Amortization of intangible assets 26,451 24,842 6.5
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Total 911,667 815,937 11.7
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Operating income 288,243 260,820 10.5
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Non-operating income (expense):
Interest expense (23,229) (25,618) (9.3)
Other* 307,356 (5,088) ****
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Total 284,127 (30,706) ****
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Income before income taxes 572,370 230,114 148.7
Provision for income taxes 229,520 95,050 141.5
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Net income $ 342,850 $ 135,064 153.8
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Net income per share - basic $1.21 $0.48 152.1
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Net income per share - diluted $1.20 $0.48 150.0
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Dividends per share $0.19 $0.18 5.6
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* 1998 results include a net non-operating gain principally from the disposition
of several businesses including Radio and Alarm Security totaling $307 million
pre-tax and $184 million on an after tax basis ($.65 per share-basic and $.64 per share-diluted.
Pro Forma Earnings Summary Excluding
1998 Net Non-operating Gain
Quarter Ended % Inc
Mar. 29, 1998 Mar. 30, 1997 (Dec)
Operating income $ 288,243 $ 260,820 10.5
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Non-operating income (expense):
Interest expense (23,229) (25,618) (9.3)
Other 829 (5,088) ****
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Total (22,400) (30,706) (27.1)
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Income before income taxes 265,843 230,114 15.5
Provision for income taxes 106,600 95,050 12.2
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Net income $ 159,243 $ 135,064 17.9
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Net income per share - basic $0.56 $0.48 16.7
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Net income per share - diluted $0.56 $0.48 16.7
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Dividends per share $0.19 $0.18 5.6
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BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollarsQuarter Ended % Inc
Mar. 29, 1998 Mar. 30, 1997 (Dec)
Operating Revenues:
Newspaper publishing $ 975,156 $ 864,605 12.8
Broadcasting 160,692 150,606 6.7
Cable and Security 64,062 61,546 4.1
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Total $ 1,199,910 $ 1,076,757 11.4
============ ============ =======Operating Income
(net of depreciation and amortization):
Newspaper publishing $ 225,919 $ 207,194 9.0
Broadcasting 65,967 57,400 14.9
Cable and Security 13,916 13,365 4.1
Corporate (17,559) (17,139) (2.5)
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Total $ 288,243 $ 260,820 10.5
============ ============ =======Depreciation and Amortization:
Newspaper publishing $ 46,157 $ 41,149 12.2
Broadcasting 14,955 14,812 1.0
Cable and Security 16,154 16,493 (2.1)
Corporate 2,215 2,170 2.1
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Total $ 79,481 $ 74,624 6.5
============ ============ =======Operating Cash Flow:
Newspaper publishing $ 272,076 $ 248,343 9.6
Broadcasting 80,922 72,212 12.1
Cable and Security 30,070 29,858 0.7
Corporate (15,344) (14,969) (2.5)
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Total $ 367,724 $ 335,444 9.6
============ ============ =======NOTE:
Operating Cash Flow represents operating income for each of the Company's business segments plus related depreciation and amortization expense.