Fourth-Quarter and Full-Year 1997 Earnings
ARLINGTON, Va. — Gannett announced today that basic earnings per share from continuing operations advanced 17 percent in the fourth quarter to 81 cents per share, a new record. In the year-earlier quarter, basic earnings from continuing operations, excluding a one-time gain from a radio/television exchange transaction, were 69 cents.
For 1997, basic earnings per share from continuing operations advanced 34 percent to a record $2.52. In 1996, basic earnings per share from continuing operations, excluding the one-time gains from the sale of our Outdoor and entertainment programming businesses, and a radio/television exchange transaction, were $1.88.
In the fourth quarter the company adopted a mandated accounting rule change, Statement of Financial Accounting Standards No. 128 “Earnings Per Share,” which requires the disclosure of earnings per share on a diluted basis, giving effect to assumed dilution from outstanding stock options and stock incentive rights. Therefore, diluted earnings per share from continuing operations were 80 cents for the fourth quarter of 1997 and 69 cents in the year-earlier quarter. Diluted earnings per share were $2.50 for the full year 1997 and $1.87 for 1996.
Net income advanced 18 percent in the fourth quarter to $230,422,000 from $195,589,000, excluding a $93,481,000 non-recurring after-tax gain from a radio/television exchange in 1996. Including that one-time 1996 gain, net income declined 20 percent in the fourth quarter. Operating revenues from continuing operations gained 10 percent in the quarter to $1,318,817,000, compared to $1,195,227,000 in 1996’s fourth quarter. Operating income from continuing operations grew 15 percent to $413,227,000 from $360,384,000 in the year-earlier quarter. Operating cash flow from continuing operations advanced to $489,923,000 in the quarter from $430,643,000 in 1996’s fourth quarter reflecting continued strong advertising demand at our local newspapers and USA TODAY, and a healthy broadcast environment.
Average basic shares outstanding in the quarter totaled 283,760,000, compared to 282,194,000 in 1996’s fourth quarter, adjusted for the two-for-one stock split that was effective Oct. 6, 1997.
For the year, income from continuing operations rose 14 percent to $712,679,000 from $623,967,000 in 1996. The 1996 total includes a $93,481,000 non-recurring non-cash gain from the radio/television station exchange. Operating revenues from continuing operations were 7 percent higher at $4,729,491,000, while operating income from continuing operations gained 23 percent to $1,316,268,000 from $1,066,405,000 in 1996. Operating cash flow from continuing operations rose 20 percent to $1,617,341,000 from $1,353,775,000 in 1996. Average basic shares outstanding in 1997 were 283,360,000, compared to 281,782,000 in 1996, adjusted for the two-for-one stock split that was effective Oct. 6, 1997.
In a statement, the company said each division reported higher earnings in the quarter and for the year. Newspaper results reached a new record benefiting from strong advertising demand, particularly for classified advertising, record operating results at USA TODAY and a favorable year to year comparison at The Detroit News, which reported an operating profit for the quarter and the full year. Newsprint expense rose 9 percent in the fourth quarter but was 15 percent lower for the full year 1997. If current pricing trends continue, newsprint expense for the first quarter of 1998 will be higher than in the first quarter of 1997. The broadcast group achieved record results for the quarter and the year overcoming the absence of political and Olympics-related advertising that buoyed 1996’s results.
Operating cash flow from newspapers grew 13 percent in the fourth quarter to $358,345,000, and revenues were 12 percent higher than last year. Pro forma advertising revenues grew 7 percent in the quarter, including a 9 percent gain in classified, a 2 percent gain in local and a 15 percent gain in national. Pro forma newspaper advertising volume increased 5 percent for the fourth quarter.
At USA TODAY, paid advertising pages increased 11 percent to 1,743 compared to 1,565 in the fourth quarter of 1996. Advertising revenues grew 16 percent. For the full year, paid advertising pages increased 7 percent to 5,516, compared to 5,148 in 1996. Advertising revenues gained 12 percent in 1997 to $291 million.
Broadcasting cash flow rose 13 percent in the quarter to $114,597,000 as revenues gained 5 percent to $198,812,000. On a pro forma basis, revenues also advanced 5 percent, including a 4 percent gain in television revenues and a 15 percent gain in radio revenues. On Dec. 29, the first day of its 1998 fiscal year, the company sold all of its remaining five radio stations.
Cable and security revenues were $65,852,000 in the fourth quarter of 1997, and operating cash flow was $31,473,000. Basic cable subscribers totaled 477,969 at year end versus 464,690 at the end of 1996, a 3 percent increase. Pay units numbered 339,528 at year end.
In October, Gannett completed the purchase of New Jersey Press, Inc. In December, the company announced that Multimedia Cablevision will acquire cable systems serving approximately 128,000 subscribers in Kansas from TCI Communications, Inc. in exchange for its cable systems serving approximately 93,000 subscribers in suburban Chicago, plus cash. Gannett completed the acquisition of WCSH-TV, the NBC affiliate in Portland, Maine, and WLBZ-TV, the NBC affiliate in Bangor, Maine, in January. The company announced on Jan. 20 that it had entered into an agreement to sell the assets of Multimedia Security Services, Inc., a wholly-owned subsidiary of Gannett’s Multimedia Cablevision to Protection One Alarm Monitoring, Inc.
Gannett is a nationwide news and information company that publishes 88 daily newspapers, including USA TODAY, and USA WEEKEND, a newspaper magazine. Gannett also operates 20 television stations and 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
Dec. 28, 1997 Dec. 29, 1996(a) (Dec)
Net Operating Revenues:
Newspaper advertising $ 751,457 $ 669,871 12.2
Newspaper circulation 247,095 231,803 6.6
Broadcasting 198,812 190,063 4.6
Cable & Security 65,852 59,824 10.1
Other 55,601 43,666 27.3
----------- ----------- -------
Total 1,318,817 1,195,227 10.3
----------- ----------- -------
Operating Expenses:
Cost of sales and operating expenses,
exclusive of depreciation 623,986 576,930 8.2
Selling, general and administrative
expenses, exclusive of depreciation 204,908 187,654 9.2
Depreciation 51,363 46,368 10.8
Amortization of intangible assets 25,333 23,891 6.0
----------- ----------- -------
Total 905,590 834,843 8.5
----------- ----------- -------
Operating income 413,227 360,384 14.7
----------- ----------- -------
Non-operating income (expense):
Interest expense (24,423) (23,521) 3.8
Other (1,382) 161,982 ----
----------- ----------- -------
Total (25,805) 138,461 ----
----------- ----------- -------
Income before income taxes 387,422 498,845 (22.3)
Provision for income taxes 157,000 209,775 (25.2)
----------- ----------- -------
Income from continuing operations 230,422 289,070 (20.3)
Discontinued operations:
Income from discontinued operations,
net of income taxes
Gain from sale of discontinued operations,
net of income taxes
----------- ----------- -------
Net income $ 230,422 $ 289,070 (20.3)
=========== =========== =======
Earnings per share - basic:
Earnings from continuing operations $0.81 $1.02 (20.6)
Earnings from discontinued operations,
net of tax
Gain from sale of discontinued operations,
net of tax
------- ------- ------
Net income per share (b) $0.81 $1.02 (20.6)
==== ==== ====
Earnings per share - diluted: (c)
Earnings from continuing operations $0.80 $1.02 (21.6)
Earnings from discontinued operations,
net of tax
Gain from sale of discontinued operations,
net of tax
------- ------- ------
Net income per share (b) $0.80 $1.02 (21.6)
==== ==== ====
Dividends per share (b) $0.19 $0.18 5.6
==== ==== ====
(a) 1996 results include a $158 million pre-tax, non-cash, non-operating gain
on a radio/television exchange transaction ($93 million after-tax gain or
$.33 per share).
(b) All per common share amounts have been adjusted to reflect the two-for-one
stock split effective on October 6, 1997.
(c) Diluted earnings per share give effect to assumed dilution from outstanding
stock options and stock incentive rights.
PRO FORMA EARNINGS SUMMARY
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
Pro Forma Earnings Summary
Excluding the 1996 Non-Cash,
Non-Operating Gain on
Radio/Television Exchange
Quarter Ended % Inc
Dec. 28, 1997 Dec. 29, 1996 (Dec)
Operating income $ 413,227 $ 360,384 14.7
----------- ----------- ------
Non-operating income (expense):
Interest expense (24,423) (23,521) 3.8
Other (1,382) 3,501 ----
----------- ----------- ------
Total (25,805) (20,020) 28.9
----------- ----------- -------
Income before income taxes 387,422 340,364 13.8
Provision for income taxes 157,000 144,775 8.4
----------- ----------- -------
Income from continuing operations 230,422 195,589 17.8
Discontinued operations:
Income from discontinued operations,
net of income taxes
Gain from sale of discontinued operations,
net of income taxes
------------ ----------- -------
Net income $ 230,422 $ 195,589 17.8
============ =========== =======
Earnings per share - basic:
Earnings from continuing operations $0.81 $ .69 17.4
Earnings from discontinued operations,
net of tax
Gain from sale of discontinued operations,
net of tax
------- ------- ------
Net income per share (a) $0.81 $ .69 17.4
==== ==== ====
Earnings per share - diluted: (b)
Earnings from continuing operations $0.80 $ .69 15.9
Earnings from discontinued operations,
net of tax
Gain from sale of discontinued operations,
net of tax
------- ------- ------
Net income per share (a) $0.80 $ .69 15.9
==== ==== ====
Dividends per share (a) $0.19 $0.18 5.6
==== ==== ====
(a) All per common share amounts have been adjusted to reflect the two-for-one
stock split effective on October 6, 1997.
(b) Diluted earnings per share give effect to assumed dilution from outstanding
stock options and stock incentive rights.
CONSOLIDATED STATEMENTS OF INCOME
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
Fiscal Year Ended % Inc
Dec. 28, 1997 Dec. 29, 1996(a) (Dec)
Net Operating Revenues:
Newspaper advertising $ 2,634,334 $ 2,417,550 9.0
Newspaper circulation 948,141 917,677 3.3
Broadcasting 703,558 686,936 2.4
Cable & Security 255,263 232,500 9.8
Other 188,195 166,444 13.1
------------ ----------- -------
Total 4,729,491 4,421,107 7.0
------------ ----------- -------
Operating Expenses:
Cost of sales and operating expenses,
exclusive of depreciation 2,368,572 2,367,848 0.0
Selling, general and administrative
expenses, exclusive of depreciation 743,578 699,484 6.3
Depreciation 201,100 193,011 4.2
Amortization of intangible assets 99,973 94,359 5.9
------------ ----------- -------
Total 3,413,223 3,354,702 1.7
------------ ----------- -------
Operating income 1,316,268 1,066,405 23.4
------------ ----------- -------
Non-operating income (expense):
Interest expense (98,242) (135,563) (27.5)
Other (9,047) 155,825 ----
------------ ----------- -------
Total (107,289) 20,262 ----
------------ ----------- -------
Income before income taxes 1,208,979 1,086,667 11.3
Provision for income taxes 496,300 462,700 7.3
------------ ----------- -------
Income from continuing operations 712,679 623,967 14.2
Discontinued operations:
Income from discontinued operations,
net of income taxes 24,540
Gain from sale of discontinued operations,
net of income tax 294,580
------------ ----------- -------
Net income $ 712,679 $ 943,087 (24.4)
============ =========== =======
Earnings per share - basic:
Earnings from continuing operations $2.52 $2.21 14.0
Earnings from discontinued operations,
net of tax 0.09
Gain from sale of discontinued operations,
net of tax 1.05
------- ------- ------
Net income per share (b) $2.52 $3.35 (24.8)
==== ==== ====
Earnings per share - diluted: (c)
Earnings from continuing operations $2.50 $2.20 13.6
Earnings from discontinued operations,
net of tax 0.09
Gain from sale of discontinued operations,
net of tax 1.04
------- ------- ------
Net income per share (b) $2.50 $3.33 (24.9)
==== ==== ====
Dividends per share (b) $0.74 $0.71 4.2
==== ==== ====
(a) 1996 results include a $158 million pre-tax, non-cash, non-operating gain
on a radio/television exchange transaction ($93 million after-tax gain or
$.33 per share).
(b) All per common share amounts have been adjusted to reflect the two-for-one
stock split effective on October 6, 1997.
(c) Diluted earnings per share give effect to assumed dilution from outstanding
stock options and stock incentive rights.
PRO FORMA EARNINGS SUMMARY
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
Pro Forma Earnings Summary
Excluding the 1996 Non-Cash,
Non-Operating Gain on
Radio/Television Exchange
Fiscal Year Ended % Inc
Dec. 28, 1997 Dec. 29, 1996 (Dec)
Operating income $ 1,316,268 1,066,405 23.4
------------ ----------- -------
Non-operating income (expense):
Interest expense (98,242) (135,563) (27.5)
Other (9,047) (2,656) 240.6
------------ ----------- -------
Total (107,289) (138,219) (22.4)
------------ ----------- -------
Income before income taxes 1,208,979 928,186 30.3
Provision for income taxes 496,300 397,700 24.8
------------ ----------- -------
Income from continuing operations 712,679 530,486 34.3
Discontinued operations:
Income from discontinued operations,
net of income taxes 24,540
Gain from sale of discontinued operations,
net of income tax 294,580
------------ ----------- -------
Net income $ 712,679 $ 849,606 (16.1)
============ =========== =======
Earnings per share - basic:
Earnings from continuing operations $2.52 $1.88 34.0
Earnings from discontinued operations,
net of tax 0.09
Gain from sale of discontinued operations,
net of tax 1.05
------- ------- ------
Net income per share (a) $2.52 $3.02 (16.6)
==== ==== ====
Earnings per share - diluted: (b)
Earnings from continuing operations $2.50 $1.87 33.7
Earnings from discontinued operations,
net of tax 0.09
Gain from sale of discontinued operations,
net of tax 1.04
------- ------- ------
Net income per share (b) $2.50 $3.00 (16.7)
==== ==== ====
Dividends per share (b) $0.74 $0.71 4.2
==== ==== ====
(a) All per common share amounts have been adjusted to reflect the two-for-one
stock split effective on October 6, 1997.
(b) Diluted earnings per share give effect to assumed dilution from outstanding
stock options and stock incentive rights.
BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Quarter Ended % Inc
Dec. 28, 1997 Dec. 29, 1996 (Dec)
Operating Revenues:
Newspaper publishing $ 1,054,153 $ 945,340 11.5
Broadcasting 198,812 190,063 4.6
Cable and Security 65,852 59,824 10.1
------------ ------------ ---------
Total $ 1,318,817 $ 1,195,227 10.3
============ ============ =========
Operating Income
(net of depreciation and amortization):
Newspaper publishing $ 313,396 $ 276,400 13.4
Broadcasting 102,036 89,068 14.6
Cable and Security 14,453 11,794 22.5
Corporate (16,658) (16,878) 1.3
------------ ------------ ---------
Total $ 413,227 $ 360,384 14.7
============ ============ =========
Depreciation and Amortization:
Newspaper publishing $ 44,949 $ 40,145 12.0
Broadcasting 12,561 12,657 (0.8)
Cable and Security 17,020 15,719 8.3
Corporate 2,166 1,738 24.6
------------ ------------ ---------
Total $ 76,696 $ 70,259 9.2
============ ============ =========
Operating Cash Flow:
Newspaper publishing $ 358,345 $ 316,545 13.2
Broadcasting 114,597 101,725 12.7
Cable and Security 31,473 27,513 14.4
Corporate (14,492) (15,140) 4.3
------------ ------------ ---------
Total $ 489,923 $ 430,643 13.8
============ ============ =========
NOTE:
Operating Cash Flow represents operating income for each of the Company's business
segments plus related depreciation and amortization expense.
BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollarsFiscal Year Ended % Inc
Dec. 28, 1997 Dec. 29, 1996 (Dec)
Operating Revenues:
Newspaper publishing $ 3,770,670 $ 3,501,671 7.7
Broadcasting 703,558 686,936 2.4
Cable and Security 255,263 232,500 9.8
------------ ------------ -------
Total $ 4,729,491 $ 4,421,107 7.0
============ ============ =======Operating Income
(net of depreciation and amortization):
Newspaper publishing $ 1,001,965 $ 786,235 27.4
Broadcasting 328,311 297,332 10.4
Cable and Security 54,026 47,127 14.6
Corporate (68,034) (64,289) (5.8)
------------ ------------ -------
Total $ 1,316,268 $ 1,066,405 23.4
============ ============ =======Depreciation and Amortization:
Newspaper publishing $ 168,526 $ 161,886 4.1
Broadcasting 56,459 51,561 9.5
Cable and Security 67,368 64,606 4.3
Corporate 8,720 9,317 (6.4)
------------ ------------ -------
Total $ 301,073 $ 287,370 4.8
============ ============ =======Operating Cash Flow:
Newspaper publishing $ 1,170,491 $ 948,121 23.5
Broadcasting 384,770 348,893 10.3
Cable and Security 121,394 111,733 8.6
Corporate (59,314) (54,972) (7.9)
------------ ------------ -------
Total $ 1,617,341 $ 1,353,775 19.5
============ ============ =======NOTE:
Operating Cash Flow represents operating income for each of the Company's business
segments plus related depreciation and amortization expense.