Gannett Reports Second-Quarter Earnings
ARLINGTON, VA – Gannett Co., Inc. announced today that diluted earnings per share from continuing operations were 88 cents for the second quarter of 2001. In the year earlier quarter, diluted earnings per share from continuing operations were $1.00. After-tax cash flow per diluted share (defined as after-tax income from continuing operations plus depreciation and amortization expense, per diluted share) was $1.29 in the second quarter of 2001 versus $1.31 in 2000’s second quarter.
Results for the quarter include the operations of: News Communications & Media PLC acquired in June 2000; 19 daily newspapers along with numerous weekly and niche publications acquired from Thomson Newspapers Inc. in July 2000; and Central Newspapers, Inc. acquired in August 2000.
Operating revenues from continuing operations gained 12 percent to $1,627,232,000 in the second quarter. If Gannett had owned the same complement of properties in both quarters, revenues from continuing operations would have declined 7 percent. During the quarter, reported revenues from our United Kingdom operations were unfavorably impacted by the decline in the exchange rate for Sterling. If the exchange rate had remained constant year-over-year, pro forma revenues would have declined 6 percent. Operating cash flow from continuing operations increased 4 percent to $556,878,000 in the quarter from $537,130,000 in the year earlier interval. Operating income from continuing operations was $446,362,000 in the second quarter compared to $454,681,000 in the same quarter of 2000.
Average diluted shares outstanding in the quarter totaled 266,754,000 compared to 266,294,000 in 2000’s second quarter.
For the first six months of 2001, operating revenues from continuing operations increased 16 percent to $3,202,180,000. Operating cash flow from continuing operations increased 6 percent from $975,022,000 to $1,037,541,000. Operating income from continuing operations advanced to $814,401,000 from $812,199,000. Diluted earnings per share from continuing operations were $1.53 for the first six months of 2001. In the same period in 2000, diluted earnings per share from continuing operations were $1.73. After-tax cash flow per diluted share from continuing operations was $2.37 for the first half of 2001 versus $2.33 for the same interval in 2000.
In a statement, Douglas H. McCorkindale, chairman, president and chief executive officer said: “The continuing economic downturn, which has affected advertising spending disproportionately, impacted revenues at most domestic Gannett operations. The newspaper segment also was affected by substantially higher newsprint expense. However, stringent cost controls and the hard work and dedication of Gannett employees continued to enable the company to achieve one of the best year-over-year earnings performances in the industry. Our Newsquest properties, benefiting from strong advertising demand particularly in employment classified, made solid contributions to cash flow and earnings per share.”
Operating cash flow from newspapers grew 10 percent in the second quarter to $476,067,000 and revenues rose 17 percent over the same period last year. If the same group of newspapers had been owned in both quarters, pro forma advertising revenues would have declined 7 percent in the quarter. Local advertising revenues declined 3 percent, classified fell 9 percent and national decreased 11 percent. Pro forma newspaper advertising volume declined 4 percent. Newsprint expense rose 27 percent for the quarter as a result of higher usage related to recent acquisitions and substantially higher year-over-year prices. On a pro forma basis, newsprint expense would have risen 4 percent in the second quarter. Total pro forma newspaper segment expense declined 5 percent in the quarter.
At USA TODAY, paid advertising pages declined 21 percent to 1,445 compared to 1,833 in the second quarter of 2000. Advertising revenues declined 19 percent. For the year-to-date, USA TODAY’s advertising revenues decreased 19 percent and paid pages numbered 2,777 compared to 3,517 last year, a 21 percent decline.
Television revenues declined 13 percent to $178,692,000 in the second quarter from $205,413,000 in the same interval last year. Operating cash flow decreased to $94,103,000 from $118,779,000 in the second quarter. Television operating expenses declined 2 percent in the quarter.
At the end of the second quarter, Gannett had more than 100 domestic publishing related Web sites, including USATODAY.com, one of the most popular newspaper sites on the Web. The company also has Web sites in all of its 19 television markets. In June, Gannett’s consolidated domestic Internet audience share was 9 million unique visitors reaching 8 percent of the Internet audience, according to Nielsen/Net Ratings. In the first half of 2001, the company generated about $35 million in revenues from Internet activities.
Gannett Co., Inc. (NYSE: GCI) is an international news and information company that publishes 98 daily newspapers in the USA, including USA TODAY, the nation’s largest-selling daily newspaper. The company also owns in excess of 300 non-daily publications in the USA and USA WEEKEND, a weekly newspaper magazine. In the United Kingdom, Gannett subsidiary Newsquest plc publishes nearly 300 titles, including 15 daily newspapers. Gannett also operates 22 television stations in the United States and is an Internet leader with sites sponsored by most of its TV stations and newspapers.
Certain statements in this press release may be forward looking in nature or “forward looking statements” as defined in the Private Securities Litigation Reform Act of 1995. The forward looking statements contained in this press release are subject to a number of risks, trends and uncertainties that could cause actual performance to differ materially from these forward looking statements. A number of those risks, trends and uncertainties are discussed in the company’s SEC reports, including the company’s annual report on Form 10-K and quarterly reports on Form 10-Q. Any forward looking statements in this press release should be evaluated in light of these important risk factors.
Gannett is not responsible for updating the information contained in this press release beyond the published date, or for changes made to this press release by wire services, Internet service providers or other media.
For investor inquiries, contact:
Gracia Martore
Gannett Co., Inc.
Treasurer and Vice President/Investor Relations
703-284-6918
or
For media inquiries, contact:
Tara Connell
Gannett Co., Inc.
Director of Public Affairs
703-284-6049
SECOND-QUARTER 2001 FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
Thirteen weeks ended % Inc
July 1, 2001 June 25, 2000 (Dec)
Net Operating Revenues:
Newspaper advertising $ 1,057,899 $ 911,949 16.0
Newspaper circulation 306,019 251,524 21.7
Television 178,692 205,413 (13.0)
Other 84,622 78,921 7.2
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Total 1,627,232 1,447,807 12.4
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Operating Expenses:
Cost of sales and operating
expenses, exclusive of
depreciation 824,030 683,084 20.6
Selling, general and
administrative expenses,
exclusive of depreciation 246,324 227,593 8.2
Depreciation 51,059 47,070 8.5
Amortization of intangible assets 59,457 35,379 68.1
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Total 1,180,870 993,126 18.9
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Operating income 446,362 454,681 (1.8)
------------- ------------- ------
Non-operating income (expense):
Interest expense (61,728) (22,666) 172.3
Other 528 7,947 (93.4)
------------- ------------- ------
Total (61,200) (14,719) 315.8
------------- ------------- ------
Income before income taxes 385,162 439,962 (12.5)
Provision for income taxes 151,700 174,200 (12.9)
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Net income $ 233,462 $ 265,762 (12.2)
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Net income per share-basic $0.88 $1.01 (12.9)
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Net income per share-diluted $0.88 $1.00 (12.0)
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Dividends per share $0.22 $0.21 4.8
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CONSOLIDATED STATEMENTS OF INCOME
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
Twenty-six weeks ended % Inc
July 1, 2001 June 25, 2000 (Dec)
Net Operating Revenues:
Newspaper advertising $ 2,078,833 $ 1,742,199 19.3
Newspaper circulation 619,028 505,670 22.4
Television 334,305 372,202 (10.2)
Other 170,014 149,056 14.1
------------- ------------- ------
Total 3,202,180 2,769,127 15.6
------------- ------------- ------
Operating Expenses:
Cost of sales and operating
expenses, exclusive of
depreciation 1,663,577 1,350,570 23.2
Selling, general and
administrative expenses,
exclusive of depreciation 501,062 443,535 13.0
Depreciation 104,340 93,678 11.4
Amortization of intangible assets 118,800 69,145 71.8
------------- ------------- ------
Total 2,387,779 1,956,928 22.0
------------- ------------- ------
Operating income 814,401 812,199 0.3
------------- ------------- ------
Non-operating income (expense):
Interest expense (142,170) (42,841) 231.9
Other 976 6,621 (85.3)
------------- ------------- ------
Total (141,194) (36,220) 289.8
------------- ------------- ------
Income before income taxes 673,207 775,979 (13.2)
Provision for income taxes 265,200 307,200 (13.7)
------------- ------------- ------
Income from continuing operations 408,007 468,779 (13.0)
------------- ------------- ------
Discontinued Operations:
Income from the operation of
discontinued operations, net
of tax 2,437 --
Gain on sale of cable business,
net of tax 744,700 --
------------- ------------- ------
Net income $ 408,007 $ 1,215,916 (66.4)
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Earnings from continuing
operations per share-basic $1.54 $1.74 (11.5)
Earnings from discontinued
operations:
Discontinued operations per
share-basic $0.01 --
Gain on sale of cable business
per share-basic $2.77 --
----- ----- -------
Net income per share-basic $1.54 $4.52 (65.9)
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Earnings from continuing
operations per share-diluted $1.53 $1.73 (11.6)
Earnings from discontinued
operations:
Discontinued operations per
share-diluted $0.01 --
Gain on sale of cable business
per share-diluted $2.74 --
----- ----- -------
Net income per share-diluted $1.53 $4.48 (65.8)
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Dividends per share $0.44 $0.42 4.8
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Earnings Summary Excluding
2000 Discontinued Operations
Twenty-six weeks ended % Inc
July 1, 2001 June 25, 2000 (Dec)
------------- ------------- -------
Operating income $ 814,401 $ 812,199 0.3
------------- ------------- -------
Non-operating income (expense):
Interest expense (142,170) (42,841) 231.9
Other 976 6,621 (85.3)
------------- ------------- -------
Total (141,194) (36,220) 289.8
------------- ------------- -------
Income before income taxes 673,207 775,979 (13.2)
Provision for income taxes 265,200 307,200 (13.7)
------------- ------------- -------
Income from continuing operations $ 408,007 $ 468,779 (13.0)
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Earnings from continuing ----- ----- -------
operations per share-basic $1.54 $1.74 (11.5)
===== ===== =======
Earnings from continuing ----- ----- -------
operations per share-diluted $1.53 $1.73 (11.6)
===== ===== =======
----- ----- -------
Dividends per share $0.44 $0.42 4.8
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BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Thirteen weeks ended % Inc
July 1, 2001 June 25, 2000 (Dec)
Operating Revenues:
Newspaper publishing $ 1,448,540 $ 1,242,394 16.6
Television 178,692 205,413 (13.0)
------------- ------------- -----
Total $ 1,627,232 $ 1,447,807 12.4
============= ============= =====
Operating Income (net of
depreciation and amortization):
Newspaper publishing $ 384,142 $ 369,231 4.0
Television 77,003 101,870 (24.4)
Corporate (14,783) (16,420) 10.0
------------- ------------- -----
Total $ 446,362 $ 454,681 (1.8)
============= ============= =====
Depreciation and Amortization:
Newspaper publishing $ 91,925 $ 63,243 45.4
Television 17,100 16,909 1.1
Corporate 1,491 2,297 (35.1)
------------- ------------- -----
Total $ 110,516 $ 82,449 34.0
============= ============= =====
Operating Cash Flow:
Newspaper publishing $ 476,067 $ 432,474 10.1
Television 94,103 118,779 (20.8)
Corporate (13,292) (14,123) 5.9
------------- ------------- -----
Total $ 556,878 $ 537,130 3.7
============= ============= =====
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 dollars
Twenty-six weeks ended % Inc
July 1, 2001 June 25, 2000 (Dec)
Operating Revenues:
Newspaper publishing $ 2,867,875 $ 2,396,925 19.6
Television 334,305 372,202 (10.2)
------------- ------------- -----
Total $ 3,202,180 $ 2,769,127 15.6
============= ============= =====
Operating Income (net of
depreciation and amortization):
Newspaper publishing $ 712,927 $ 676,666 5.4
Television 131,269 167,997 (21.9)
Corporate (29,795) (32,464) 8.2
------------- ------------- -----
Total $ 814,401 $ 812,199 0.3
============= ============= =====
Depreciation and Amortization:
Newspaper publishing $ 186,068 $ 125,532 48.2
Television 34,083 33,035 3.2
Corporate 2,989 4,256 (29.8)
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Total $ 223,140 $ 162,823 37.0
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Operating Cash Flow:
Newspaper publishing $ 898,995 $ 802,198 12.1
Television 165,352 201,032 (17.7)
Corporate (26,806) (28,208) 5.0
------------- ------------- -----
Total $ 1,037,541 $ 975,022 6.4
============= ============= =====
NOTE:
Operating Cash Flow represents operating income for each of the company's
business segments plus related depreciation and amortization expense.