Gannett Reports 2002 First-Quarter Results
McLEAN, VA – Gannett Co., Inc. (NYSE: GCI) reported today that 2002 first-quarter earnings per diluted share were 91 cents versus 85 cents per share on a comparable basis for the first quarter of 2001, a 7 percent increase, despite continued challenging operating conditions. After-tax cash flow per share (defined as after-tax income plus depreciation and amortization) was $1.11, up from $1.05 in 2001’s first quarter on a comparable basis.
At the beginning of 2002, Gannett adopted Statement of Financial Accounting Standards (SFAS) No. 142, which changes the accounting rules for goodwill and intangible assets. The previously reported earnings per share of 66 cents for the first quarter of 2001 included 19 cents for goodwill amortization expense, net of tax, that would not have been required had the new Statement been in effect. Included in this press release are pro forma schedules detailing first-quarter 2001 results as if SFAS No. 142 had been adopted at the beginning of 2001.
Operating revenues for the company declined 3 percent to $1.52 billion in the first quarter from $1.57 billion in the similar interval of 2001. Operating cash flow (defined as operating income plus depreciation and amortization) was $457.7 million in 2002’s first quarter compared with $480.7 million in the year earlier quarter, reflecting a decline in newspaper segment advertising revenues, partially mitigated by lower expenses. Net income increased 8 percent to $243.6 million versus $225.5 million on a comparable basis in the first quarter of 2001 assuming the previously noted change in accounting rules was in effect in both years. After-tax cash flow increased 6 percent to $298.8 million in the first quarter from $280.6 million on a comparable basis in 2001. Both net income and after-tax cash flow improved year-over-year primarily reflecting significantly lower interest expense in the period versus the same quarter in 2001.
Average diluted shares outstanding in the quarter totaled 268,546,000 compared with 266,415,000 in 2001’s first quarter.
Commenting on the company’s results, Douglas H. McCorkindale, chairman, president and CEO, said, “Gannett achieved higher net income and after-tax cash flow despite a continued difficult advertising environment in the first quarter.
“Newspaper operating results trailed our year ago performance but recent trends suggest a more encouraging economic environment. Advertising shortfalls, especially in help-wanted, were mitigated in part by significantly lower newsprint expense, which declined 18 percent for the quarter, and continued tight cost controls. In the UK, our Newsquest properties made a solid contribution to cash flow and earnings despite a more subdued advertising climate. Our
broadcast properties achieved year-over-year gains benefiting from Winter Olympics-related advertising on our thirteen NBC-affiliated stations. Substantially lower interest expense also contributed to the rise in first-quarter income.”
NEWSPAPERS
Total newspaper segment operating cash flow, which includes USA TODAY and our UK properties, was $389.9 million in the first quarter, versus $422.9 million in the same quarter of 2001. Operating revenues were $1.36 billion for the quarter. Newsprint expense declined 18 percent reflecting substantially lower year-over-year prices and reduced consumption.
At USA TODAY, advertising revenues declined 9 percent in the first quarter. Paid advertising pages totaled 1,178 compared with 1,332 in the same quarter of 2001, a 12 percent decline. USA TODAY’s results in the quarter continued to reflect diminished demand for travel-related advertising.
TELEVISION
In the first quarter, television operating cash flow advanced 11 percent to $79.2 million from $71.2 million in the corresponding interval in 2001. Television revenues increased 7 percent to $167.2 million reflecting solid Winter Olympics-related advertising.
INTERNET
At the end of the first 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 February, Gannett’s consolidated domestic Internet audience share was 11.2 million unique visitors reaching 9.4 percent of the Internet audience according to Nielsen/NetRatings. USA TODAY Careers Network, the company’s national online recruitment site, had over 1 million unique visitors and more than 440,000 registered users in March. In the first quarter, the company generated approximately $20 million in revenues from all Internet activities.
Gannett Co., Inc. is an international news and information company that publishes 95 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 more than 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 its TV stations and newspapers including USATODAY.com, one of the most popular news sites on the Web. Newsquest is also an Internet leader in the UK.
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 Thirteen weeks
ended ended %Inc
March 31, 2002 April 1, 2001 (Dec)
Net Operating Revenues:
Newspaper advertising $ 969,803 $ 1,020,934 (5.0)
Newspaper circulation 310,712 313,009 (0.7)
Television 167,186 155,613 7.4
Other 76,907 85,392 (9.9)
------------- ------------- ------
Total 1,524,608 1,574,948 (3.2)
------------- ------------- ------
Operating Expenses:
Cost of sales and operating
expenses, exclusive of
depreciation 818,566 839,547 (2.5)
Selling, general and
administrative expenses,
exclusive of depreciation 248,331 254,738 (2.5)
Depreciation 53,369 53,281 0.2
Amortization of intangible assets 1,833 59,343 (96.9)
------------- ------------- ------
Total 1,122,099 1,206,909 (7.0)
------------- ------------- ------
Operating income 402,509 368,039 9.4
------------- ------------- ------
Non-operating income (expense):
Interest expense (28,754) (80,442) (64.3)
Other (2,292) 448 (611.6)
------------- ------------- ------
Total (31,046) (79,994) (61.2)
------------- ------------- ------
Income before income taxes 371,463 288,045 29.0
Provision for income taxes 127,900 113,500 12.7
------------- ------------- ------
Net income $ 243,563 $ 174,545 39.5
============= ============= ======
Net income per share-basic $0.92 $0.66 39.4
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Net income per share-diluted $0.91 $0.66 37.9
===== ===== ======
Dividends per share $0.23 $0.22 4.5
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BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Thirteen weeks Thirteen weeks
ended ended % Inc
March 31, 2002 April 1, 2001 (Dec)
Net Operating Revenues:
Newspaper publishing $ 1,357,422 $ 1,419,335 (4.4)
Television 167,186 155,613 7.4
------------- ------------- -----
Total $ 1,524,608 $ 1,574,948 (3.2)
============= ============= =====
Operating Income (net of
depreciation and amortization):
Newspaper publishing $ 344,703 $ 328,785 4.8
Television 72,769 54,266 34.1
Corporate (14,963) (15,012) 0.3
------------- ------------- -----
Total $ 402,509 $ 368,039 9.4
============= ============= =====
Depreciation and Amortization:
Newspaper publishing $ 45,235 $ 94,143 (52.0)
Television 6,417 16,983 (62.2)
Corporate 3,550 1,498 137.0
------------- ------------- -----
Total $ 55,202 $ 112,624 (51.0)
============= ============= =====
Operating Cash Flow (1):
Newspaper publishing $ 389,938 $ 422,928 (7.8)
Television 79,186 71,249 11.1
Corporate (11,413) (13,514) 15.5
------------- ------------- -----
Total $ 457,711 $ 480,663 (4.8)
============= ============= =====
After-tax Cash Flow (2):
Total $ 298,765 $ 287,169 4.0
============= ============= =====
(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.
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PRO FORMA CONSOLIDATED STATEMENTS OF INCOME*
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
Thirteen weeks Thirteen weeks
ended ended % Inc
March 31, 2002 April 1, 2001 (Dec)
Net Operating Revenues:
Newspaper advertising $ 969,803 $ 1,020,934 (5.0)
Newspaper circulation 310,712 313,009 (0.7)
Television 167,186 155,613 7.4
Other 76,907 85,392 (9.9)
------------- ------------- ------
Total 1,524,608 1,574,948 (3.2)
------------- ------------- ------
Operating Expenses:
Cost of sales and operating
expenses, exclusive of
depreciation 818,566 839,547 (2.5)
Selling, general and
administrative expenses,
exclusive of depreciation 248,331 254,738 (2.5)
Depreciation 53,369 53,281 0.2
Amortization of intangible assets 1,833 1,833 0.0
------------- ------------- ------
Total 1,122,099 1,149,399 (2.4)
------------- ------------- ------
Operating income 402,509 425,549 (5.4)
------------- ------------- ------
Non-operating income (expense):
Interest expense (28,754) (80,442) (64.3)
Other (2,292) 448 (611.6)
------------- ------------- ------
Total (31,046) (79,994) (61.2)
------------- ------------- ------
Income before income taxes 371,463 345,555 7.5
Provision for income taxes 127,900 120,100 6.5
------------- ------------- ------
Net income $ 243,563 $ 225,455 8.0
============= ============= ======
Net income per share-basic $0.92 $0.85 8.2
===== ===== ======
Net income per share-diluted $0.91 $0.85 7.1
===== ===== ======
Dividends per share $0.23 $0.22 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 Thirteen weeks
ended ended % Inc
March 31, 2002 April 1, 2001 (Dec)
Net Operating Revenues:
Newspaper publishing $ 1,357,422 $ 1,419,335 (4.4)
Television 167,186 155,613 7.4
------------- ------------- -----
Total $ 1,524,608 $ 1,574,948 (3.2)
============= ============= =====
Operating Income (net of
depreciation and amortization):
Newspaper publishing $ 344,703 $ 375,856 (8.3)
Television 72,769 64,705 12.5
Corporate (14,963) (15,012) 0.3
------------- ------------- -----
Total $ 402,509 $ 425,549 (5.4)
============= ============= =====
Depreciation and Amortization:
Newspaper publishing $ 45,235 $ 47,072 (3.9)
Television 6,417 6,544 (1.9)
Corporate 3,550 1,498 137.0
------------- ------------- -----
Total $ 55,202 $ 55,114 0.2
============= ============= =====
Operating Cash Flow (2):
Newspaper publishing $ 389,938 $ 422,928 (7.8)
Television 79,186 71,249 11.1
Corporate (11,413) (13,514) 15.5
------------- ------------- -----
Total $ 457,711 $ 480,663 (4.8)
============= ============= =====
After-tax Cash Flow (3):
Total $ 298,765 $ 280,569 6.5
============= ============= =====
(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 March 31, 2002
Newspaper Consolidated
Publishing Television Corporate Total
------------ ---------- --------- -----------
Operating cash flow $ 389,938 $ 79,186 $(11,413) $ 457,711
Less:
Depreciation (43,402) (6,417) (3,550) (53,369)
Amortization (1,833) -- -- (1,833)
----------- --------- -------- -----------
Operating income $ 344,703 $ 72,769 $(14,963) $ 402,509
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