Gannett Reports Third-Quarter Results
MCLEAN, VA – Gannett Co., Inc. (NYSE: GCI) reported today that 2002 third quarter earnings per diluted share were 99 cents versus 85 cents per share on a comparable basis (as described in paragraph three below) for the third quarter of 2001, a 16 percent increase. After-tax cash flow per diluted share (defined as after-tax income plus depreciation and amortization) was $1.20, up from $1.05 in 2001’s third quarter on a comparable basis.
Diluted earnings per share for the first nine months of 2002 increased 9 percent to $3.02. In the same period in 2001, diluted earnings per share were $2.78 on a comparable basis. After-tax cash flow per diluted share was $3.64 for the nine months of 2002 versus $3.38 for the same interval in 2001.
At the beginning of 2002, Gannett adopted SFAS No. 142, which changes the accounting rules for goodwill and intangible assets. The previously reported earnings per share of 66 cents for the third quarter of 2001 included 19 cents for goodwill amortization expense, net of tax, that would not have been required had SFAS No. 142 been in effect. Similarly, the previously reported earnings per share of $2.19 for the first nine months of 2001 included 59 cents for goodwill amortization expense, net of tax. Included in this press release are pro forma schedules detailing third quarter and year-to-date results for 2001 as if SFAS No. 142 had been adopted at the beginning of 2001.
Net income increased 17 percent to $265.6 million in the third quarter from $227.1 million, on a comparable basis, in 2001. Operating cash flow (defined as operating income plus depreciation and amortization) increased 13 percent to $507.1 million in 2002’s third quarter from $448.8 million in the year earlier quarter, reflecting very strong television results and an improved newspaper operating performance. Operating revenues for the company rose 4 percent to $1.58 billion in the third quarter.
Average diluted shares outstanding in the quarter totaled 269,306,000 compared with 266,910,000 in 2001’s third quarter.
For the first nine months of 2002, net income rose 10 percent to $813.1 million from $741.4 million on a comparable basis in 2001. Operating cash flow increased 3 percent to $1.52 billion. Operating revenues were modestly higher at $4.73 billion for the first nine months.
Commenting on the company’s performance, Douglas H. McCorkindale, Chairman, President and CEO said: “Gannett achieved strong year-over-year earnings growth as both our publishing and broadcasting operations reported improved results in the quarter. The television group’s performance was buoyed by significant political advertising spending and an improved ad revenue environment for highly rated television stations. Our newspaper operations posted year-over-year gains in advertising revenues, operating income and cash flow in the third quarter. Newsprint expense declined 23 percent for the quarter. Overseas, our Newsquest properties made a contribution to cash flow and earnings despite a continued challenging advertising climate. A decline in interest expense also contributed to earnings growth.”
Total newspaper operating cash flow, which includes USA TODAY and our UK properties, increased 7 percent to $430.6 million in the third quarter, versus $401.8 million in the same quarter of 2001. Operating revenues were $1.40 billion for the quarter. Pro forma, or assuming Gannett had owned the same group of newspapers in both quarters, advertising revenues would have risen 2 percent. Local advertising revenues were 3 percent higher and classified increased 2 percent, while national declined 1 percent. Newspaper volume increased 4 percent. Newsprint expense declined, reflecting substantially lower year-over-year prices but a small uptick in consumption.
At USA TODAY, advertising revenues declined 7 percent in the third quarter. Paid advertising pages totaled 1,017 compared with 1,192 in the same quarter of 2001, a 15 percent decline. For the year-to-date, USA TODAY’s advertising revenues decreased 9 percent and paid pages numbered 3,431 compared with 3,969 last year, a 14 percent decline. USA TODAY’s results in the quarter continue to reflect, in part, lower demand for financial and technology-related advertising.
In the third quarter, television operating cash flow jumped 44 percent to $87.9 million from $60.8 million in the corresponding interval in 2001. Television revenues increased 24 percent to $184.0 million, reflecting very strong political advertising and solid advertising gains in several other categories including automotive.
At the end of the third 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 had Web sites in all of its 19 television markets. In August, Gannett’s consolidated domestic Internet audience share was 15.3 million unique visitors reaching about 13 percent of the Internet audience according to Nielsen//Net Ratings. Newsquest is also an Internet leader in the United Kingdom where its network of Web sites attracts more than 15 million monthly page impressions from more than a million unique users. In the first nine months of 2002, Gannett generated about $66 million in revenues from Internet activities and achieved a profit.
Gannett Co., Inc. is a leading international news and information company that publishes 94 daily newspapers in the USA, including USA TODAY, the nation’s largest-selling daily newspaper. The company also owns in excess of 400 non-daily publications in the USA and USA WEEKEND, a weekly newspaper magazine. Gannett subsidiary Newsquest is the United Kingdom’s second largest regional newspaper company. Newsquest publishes more than 300 titles, including 15 daily newspapers and a network of prize-winning Web sites. Gannett also operates 22 television stations in the United States and is an Internet leader with sites sponsored by its TV stations and newspapers including USATODAY.com, one of the most popular news sites on the web.
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
Senior Vice President of Finance and Treasurer
703-854-6918
gmartore@gannett.com
CONSOLIDATED STATEMENTS OF INCOME
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
Thirteen weeks ended % Inc
Sept. 29, 2002 Sept. 30, 2001 (Dec)
-------------- -------------- -----
Net Operating Revenues:
Newspaper advertising $ 1,006,923 $ 988,045 1.9
Newspaper circulation 303,908 306,139 (0.7)
Television 184,039 148,229 24.2
Other 86,058 75,515 14.0
-------------- -------------- -----
Total 1,580,928 1,517,928 4.2
-------------- -------------- -----
Operating Expenses:
Cost of sales and operating expenses,
exclusive of depreciation 820,131 824,839 (0.6)
Selling, general and administrative
expenses, exclusive of
depreciation 253,735 244,308 3.9
Depreciation 54,572 50,916 7.2
Amortization of intangible assets 1,830 61,267 (97.0)
-------------- -------------- -----
Total 1,130,268 1,181,330 (4.3)
-------------- -------------- -----
Operating income 450,660 336,598 33.9
-------------- -------------- -----
Non-operating income (expense):
Interest expense (39,709) (48,600) (18.3)
Other (6,015) 530 (1,234.9)
-------------- -------------- -----
Total (45,724) (48,070) (4.9)
-------------- -------------- -----
Income before income taxes 404,936 288,528 40.3
Provision for income taxes 139,300 113,700 22.5
-------------- -------------- -----
Net income $ 265,636 $ 174,828 51.9
============== ============== =====
Net income per share-basic $0.99 $0.66 50.0
===== ===== =====
Net income per share-diluted $0.99 $0.66 50.0
===== ===== =====
Dividends per share $0.24 $0.23 4.3
===== ===== =====
CONSOLIDATED STATEMENTS OF INCOME
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
Thirty-nine weeks ended % Inc
Sept. 29, 2002 Sept. 30, 2001 (Dec)
-------------- -------------- -----
Net Operating Revenues:
Newspaper advertising $ 3,022,664 $ 3,066,878 (1.4)
Newspaper circulation 919,716 925,167 (0.6)
Television 542,524 482,534 12.4
Other 244,928 245,529 (0.2)
-------------- -------------- -----
Total 4,729,832 4,720,108 0.2
-------------- -------------- -----
Operating Expenses:
Cost of sales and operating expenses,
exclusive of depreciation 2,449,058 2,488,416 (1.6)
Selling, general and administrative
expenses, exclusive of
depreciation 756,600 745,370 1.5
Depreciation 161,303 155,256 3.9
Amortization of intangible assets 5,497 180,067 (96.9)
-------------- -------------- -----
Total 3,372,458 3,569,109 (5.5)
-------------- -------------- -----
Operating income 1,357,374 1,150,999 17.9
-------------- -------------- -----
Non-operating income (expense):
Interest expense (109,564) (190,770) (42.6)
Other (8,388) 1,506 (657.0)
-------------- -------------- -----
Total (117,952) (189,264) (37.7)
-------------- -------------- -----
Income before income taxes 1,239,422 961,735 28.9
Provision for income taxes 426,300 378,900 12.5
-------------- -------------- -----
Net income $ 813,122 $ 582,835 39.5
============== ============== =====
Net income per share-basic $3.05 $2.20 38.6
===== ===== =====
Net income per share-diluted $3.02 $2.19 37.9
===== ===== =====
Dividends per share $0.70 $0.67 4.5
===== ===== =====
BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Thirteen weeks ended % Inc
Sept. 29, 2002 Sept. 30, 2001 (Dec)
-------------- -------------- -----
Net Operating Revenues:
Newspaper publishing $ 1,396,889 $ 1,369,699 2.0
Television 184,039 148,229 24.2
-------------- -------------- -----
Total $ 1,580,928 $ 1,517,928 4.2
============== ============== =====
Operating Income
(net of depreciation
and amortization):
Newspaper publishing $ 384,298 $ 308,199 24.7
Television 81,506 43,743 86.3
Corporate (15,144) (15,344) 1.3
-------------- -------------- -----
Total $ 450,660 $ 336,598 33.9
============== ============== =====
Depreciation and Amortization:
Newspaper publishing $ 46,252 $ 93,613 (50.6)
Television 6,400 17,098 (62.6)
Corporate 3,750 1,472 154.8
-------------- -------------- -----
Total $ 56,402 $ 112,183 (49.7)
============== ============== =====
Operating Cash Flow (1):
Newspaper publishing $ 430,550 $ 401,812 7.2
Television 87,906 60,841 44.5
Corporate (11,394) (13,872) 17.9
-------------- -------------- -----
Total $ 507,062 $ 448,781 13.0
============== ============== =====
After-tax Cash Flow (2):
-------------- -------------- -----
Total $ 322,038 $ 287,011 12.2
============== ============== =====
(1) Operating Cash Flow represents operating income for each of the company's
business segments plus related depreciation and amortization expense.
(2) After-tax Cash Flow represents net income after tax plus depreciation and
amortization expense.
BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Thirty-nine weeks ended % Inc
Sept. 29, 2002 Sept. 30, 2001 (Dec)
-------------- -------------- -----
Net Operating Revenues:
Newspaper publishing $ 4,187,308 $ 4,237,574 (1.2)
Television 542,524 482,534 12.4
-------------- -------------- -----
Total $ 4,729,832 $ 4,720,108 0.2
============== ============== =====
Operating Income
(net of depreciation
and amortization):
Newspaper publishing $ 1,154,226 $ 1,021,126 13.0
Television 248,738 175,012 42.1
Corporate (45,590) (45,139) (1.0)
-------------- -------------- -----
Total $ 1,357,374 $ 1,150,999 17.9
============== ============== =====
Depreciation and Amortization:
Newspaper publishing $ 136,802 $ 279,681 (51.1)
Television 19,148 51,181 (62.6)
Corporate 10,850 4,461 143.2
-------------- -------------- -----
Total $ 166,800 $ 335,323 (50.3)
============== ============== =====
Operating Cash Flow (1):
Newspaper publishing $ 1,291,028 $ 1,300,807 (0.8)
Television 267,886 226,193 18.4
Corporate (34,740) (40,678) 14.6
-------------- -------------- -----
Total $ 1,524,174 $ 1,486,322 2.5
============== ============== =====
After-tax Cash Flow (2):
-------------- -------------- -----
Total $ 979,922 $ 918,158 6.7
============== ============== =====
(1) Operating Cash Flow represents operating income for each of the company's
business segments plus related depreciation and amortization expense.
(2) After-tax Cash Flow represents net income after tax plus depreciation and
amortization expense.
PRO FORMA CONSOLIDATED STATEMENTS OF INCOME*
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
Thirteen weeks ended % Inc
Sept. 29, 2002 Sept. 30, 2001 (Dec)
-------------- -------------- -----
Net Operating Revenues:
Newspaper advertising $ 1,006,923 $ 988,045 1.9
Newspaper circulation 303,908 306,139 (0.7)
Television 184,039 148,229 24.2
Other 86,058 75,515 14.0
-------------- -------------- -----
Total 1,580,928 1,517,928 4.2
-------------- -------------- -----
Operating Expenses:
Cost of sales and operating expenses,
exclusive of depreciation 820,131 824,839 (0.6)
Selling, general and administrative
expenses, exclusive of
depreciation 253,735 244,308 3.9
Depreciation 54,572 50,916 7.2
Amortization of intangible assets 1,830 1,833 (0.2)
-------------- -------------- -----
Total 1,130,268 1,121,896 0.7
-------------- -------------- -----
Operating income 450,660 396,032 13.8
-------------- -------------- -----
Non-operating income (expense):
Interest expense (39,709) (48,600) (18.3)
Other (6,015) 530 (1,234.9)
-------------- -------------- -----
Total (45,724) (48,070) (4.9)
-------------- -------------- -----
Income before income taxes 404,936 347,962 16.4
Provision for income taxes 139,300 120,900 15.2
-------------- -------------- -----
Net income $ 265,636 $ 227,062 17.0
============== ============== =====
Net income per share-basic $0.99 $0.86 15.1
===== ===== =====
Net income per share-diluted $0.99 $0.85 16.5
===== ===== =====
Dividends per share $0.24 $0.23 4.3
===== ===== =====
* As if Statement of Financial Accounting Standards No. 142 (SFAS No. 142)
had been adopted at the beginning of 2001.
PRO FORMA CONSOLIDATED STATEMENTS OF INCOME*
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
Thirty-nine weeks ended % Inc
Sept. 29, 2002 Sept. 30, 2001 (Dec)
-------------- -------------- -----
Net Operating Revenues:
Newspaper advertising $ 3,022,664 $ 3,066,878 (1.4)
Newspaper circulation 919,716 925,167 (0.6)
Television 542,524 482,534 12.4
Other 244,928 245,529 (0.2)
-------------- -------------- -----
Total 4,729,832 4,720,108 0.2
-------------- -------------- -----
Operating Expenses:
Cost of sales and operating expenses,
exclusive of depreciation 2,449,058 2,488,416 (1.6)
Selling, general and administrative
expenses, exclusive of
depreciation 756,600 745,370 1.5
Depreciation 161,303 155,256 3.9
Amortization of intangible assets 5,497 5,499 (0.0)
-------------- -------------- -----
Total 3,372,458 3,394,541 (0.7)
-------------- -------------- -----
Operating income 1,357,374 1,325,567 2.4
-------------- -------------- -----
Non-operating income (expense):
Interest expense (109,564) (190,770) (42.6)
Other (8,388) 1,506 (657.0)
-------------- -------------- -----
Total (117,952) (189,264) (37.7)
-------------- -------------- -----
Income before income taxes 1,239,422 1,136,303 9.1
Provision for income taxes 426,300 394,900 8.0
-------------- -------------- -----
Net income $ 813,122 $ 741,403 9.7
============== ============== =====
Net income per share-basic $3.05 $2.80 8.9
===== ===== =====
Net income per share-diluted $3.02 $2.78 8.6
===== ===== =====
Dividends per share $0.70 $0.67 4.5
===== ===== =====
* As if Statement of Financial Accounting Standards No. 142 (SFAS No. 142)
had been adopted at the beginning of 2001.
PRO FORMA BUSINESS SEGMENT INFORMATION (1)
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Thirteen weeks ended % Inc
Sept. 29, 2002 Sept. 30, 2001 (Dec)
-------------- -------------- -----
Net Operating Revenues:
Newspaper publishing $ 1,396,889 $ 1,369,699 2.0
Television 184,039 148,229 24.2
-------------- -------------- -----
Total $ 1,580,928 $ 1,517,928 4.2
============== ============== =====
Operating Income
(net of depreciation
and amortization):
Newspaper publishing $ 384,298 $ 357,043 7.6
Television 81,506 54,333 50.0
Corporate (15,144) (15,344) 1.3
-------------- -------------- -----
Total $ 450,660 $ 396,032 13.8
============== ============== =====
Depreciation and Amortization:
Newspaper publishing $ 46,252 $ 44,769 3.3
Television 6,400 6,508 (1.7)
Corporate 3,750 1,472 154.8
-------------- -------------- -----
Total $ 56,402 $ 52,749 6.9
============== ============== =====
Operating Cash Flow (2):
Newspaper publishing $ 430,550 $ 401,812 7.2
Television 87,906 60,841 44.5
Corporate (11,394) (13,872) 17.9
-------------- -------------- -----
Total $ 507,062 $ 448,781 13.0
============== ============== =====
After-tax Cash Flow (3):
-------------- -------------- -----
Total $ 322,038 $ 279,811 15.1
============== ============== =====
(1) As if Statement of Financial Accounting Standards No. 142 (SFAS No. 142)
had been adopted at the beginning of 2001.
(2) Operating Cash Flow represents operating income for each of the company's
business segments plus related depreciation and amortization expense.
(3) After-tax Cash Flow represents net income after tax plus depreciation and
amortization expense.
PRO FORMA BUSINESS SEGMENT INFORMATION (1)
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Thirty-nine weeks ended % Inc
Sept. 29, 2002 Sept. 30, 2001 (Dec)
-------------- -------------- -----
Net Operating Revenues:
Newspaper publishing $ 4,187,308 $ 4,237,574 (1.2)
Television 542,524 482,534 12.4
-------------- -------------- -----
Total $ 4,729,832 $ 4,720,108 0.2
============== ============== =====
Operating Income
(net of depreciation and
amortization):
Newspaper publishing $ 1,154,226 $ 1,164,078 (0.8)
Television 248,738 206,628 20.4
Corporate (45,590) (45,139) (1.0)
-------------- -------------- -----
Total $ 1,357,374 $ 1,325,567 2.4
============== ============== =====
Depreciation and Amortization:
Newspaper publishing $ 136,802 $ 136,729 0.1
Television 19,148 19,565 (2.1)
Corporate 10,850 4,461 143.2
-------------- -------------- -----
Total $ 166,800 $ 160,755 3.8
============== ============== =====
Operating Cash Flow (2):
Newspaper publishing $ 1,291,028 $ 1,300,807 (0.8)
Television 267,886 226,193 18.4
Corporate (34,740) (40,678) 14.6
-------------- -------------- -----
Total $ 1,524,174 $ 1,486,322 2.5
============== ============== =====
After-tax Cash Flow (3):
-------------- -------------- -----
Total $ 979,922 $ 902,158 8.6
============== ============== =====
(1) As if Statement of Financial Accounting Standards No. 142 (SFAS No. 142)
had been adopted at the beginning of 2001.
(2) Operating Cash Flow represents operating income for each of the company's
business segments plus related depreciation and amortization expense.
(3) After-tax Cash Flow represents net income after tax plus depreciation and
amortization expense.
The following information was added subsequent to the original press release:
NON-GAAP FINANCIAL INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
"Operating cash flow", a non-GAAP measure, is defined as operating income plus
depreciation and amortization of intangible assets. Management believes that use
of this measure allows investors and management to measure, analyze and compare
the cash resources generated from its business segment operations in a
meaningful and consistent manner. The focus on operating cash flow is
appropriate given the consistent and generally predictable strength of cash flow
generation by newspaper and television operations, and the short period of time
it takes to convert new orders to cash.
A reconciliation of these non-GAAP amounts to the company's operating income,
which the company believes is the most directly comparable financial measure
calculated and presented in accordance with GAAP on the company's consolidated
statements of income, follows:
Thirteen Weeks Ended September 29, 2002
Newspaper Consolidated
Publishing Television Corporate Total
------------ ---------- --------- -----------
Operating cash flow $ 430,550 $ 87,906 $(11,394) $ 507,062
Less:
Depreciation (44,422) (6,400) (3,750) (54,572)
Amortization (1,830) -- -- (1,830)
----------- --------- -------- -----------
Operating income $ 384,298 $ 81,506 $(15,144) $ 450,660
=========== ========= ======== ===========
Thirty-nine Weeks Ended September 29, 2002
Newspaper Consolidated
Publishing Television Corporate Total
------------ ---------- --------- -----------
Operating cash flow $ 1,291,028 $ 267,886 $(34,740) $ 1,524,174
Less:
Depreciation (131,305) (19,148) (10,850) (161,303)
Amortization (5,497) -- -- (5,497)
----------- --------- -------- -----------
Operating income $ 1,154,226 $ 248,738 $(45,590) $ 1,357,374
=========== ========= ======== ===========