First-Quarter 2000 Earnings
Arlington, Va. — Gannett announced today that diluted earnings per share from continuing operations advanced 22 percent to 74 cents, a new record. In the year earlier quarter, diluted earnings per share from continuing operations were 61 cents. Results for the quarter include the operations of Newsquest plc, a U.K. based newspaper company acquired in July 1999.
The sale of the assets of Multimedia Cablevision, Inc., a wholly owned subsidiary of Gannett’s Multimedia Inc., was completed in January 2000. Operating results for the first quarter exclude contributions from cable, which is reported as a discontinued operation in the company’s financial statements. The sale resulted in a first quarter after-tax gain of approximately $745 million, or $2.69 per diluted share. After-tax income from the discontinued operations, for the five weeks Multimedia Cablevision was owned in the first quarter of 2000, was $2,437,000 or 1 cent per share. For the full quarter in 1999, income from discontinued cable operations was $8,925,000, or 3 cents per diluted share.
Operating revenues from continuing operations gained 15 percent to $1,364,443,000 in the first quarter. If Gannett had owned the same complement of properties in both quarters, revenues from continuing operations would have increased 4 percent. Operating cash flow from continuing operations increased 21 percent to $437,892,000 in the quarter, from $362,221,000 in the year earlier interval. Operating income from continuing operations advanced 21 percent to $357,518,000, compared to $296,592,000 in the prior year period. Income from continuing operations advanced 19 percent in the first quarter to $203,017,000 from $169,968,000 in 1999’s first quarter.
Average diluted shares outstanding in the quarter totaled 276,207,000, compared to 281,677,000 in 1999’s first quarter. Approximately 11.7 million shares were repurchased in the first quarter of 2000.
In a statement, the company said that the newspaper segment posted record operating results for the quarter. Newspaper profitability benefited from strong advertising demand, particularly in national and classified, record operating results at USA TODAY and a contribution from the Newsquest properties, which boosted operating cash flow and earnings per share. Newsprint expense declined 3 percent in the quarter. The television group achieved improved operating results year-over-year. However, television comparisons were impacted by the exchange of Gannett’s station in Austin, Texas, for a station in Sacramento, Calif., plus other consideration, which occurred in June 1999.
Operating cash flow from newspapers grew 25 percent in the first quarter to $369,724,000, and revenues were 17 percent higher than the same period last year. Pro forma advertising revenues grew 6 percent in the quarter, including a 16 percent gain in national, a 7 percent increase in classified and a 1 percent decline in local. Pro forma advertising volume advanced 5 percent for the quarter.
At USA TODAY, paid advertising pages increased 17 percent to 1,684, compared to 1,439 in the first quarter of 1999. Advertising revenues grew 24 percent.
Television cash flow rose 1 percent to $82,253,000 and revenues increased 3 percent to $166,789,000. Pro forma television revenues increased 2 percent.
At the end of the first quarter, Gannett had 61 domestic newspaper Web sites, including USA TODAY.com, one of the largest general-interest news sites on the Web with nearly 15 million unique monthly users, and 15 television Web sites. In addition, all of Newsquest’s newspapers have an Internet presence. In the first quarter, the company generated about $14 million in revenue from Internet activities.
On Feb. 1, Gannett announced that its Board approved a $500 million share repurchase authorization. On Feb. 23, having used a substantial portion of that authorization, the Board approved an additional $500 million for share repurchases. On March 17, the company completed the acquisition of WJXX, the ABC affiliate in Jacksonville, Fla. Gannett continues to own and operate WTLV-TV, the NBC affiliate in Jacksonville.
Gannett Co., Inc. is an international news and information company that publishes 74 daily newspapers in the USA, including USA TODAY, the nation’s largest-selling daily newspaper. The company also owns a variety of non-daily publications and USA WEEKEND, a weekly newspaper magazine. Newsquest plc, a wholly owned Gannett subsidiary acquired in mid-1999, is one of the largest regional newspaper publishers in England with a portfolio of more than 180 titles. Its publications include 11 daily newspapers with a combined circulation of approximately 450,000. Newsquest also publishes a variety of non-daily publications, including Berrow’s Worcester Journal, the oldest continuously published newspaper in the world. Gannett also operates 22 television stations.
CONSOLIDATED STATEMENTS OF INCOME
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
Thirteen weeks ended % Inc
Mar. 26, 2000 Mar. 28, 1999 (Dec)
Net Operating Revenues:
Newspaper advertising $ 873,789 $ 720,551 21.3
Newspaper circulation 267,062 253,357 5.4
Television 166,789 161,194 3.5
Other 56,803 50,837 11.7
------------ ------------ ------
Total 1,364,443 1,185,939 15.1
Operating Expenses:
Cost of sales and operating expenses,
exclusive of depreciation (1) 700,696 629,881 11.2
Selling, general and administrative
expenses, exclusive of depreciation (1) 225,855 193,837 16.5
Depreciation 46,608 42,715 9.1
Amortization of intangible assets 33,766 22,914 47.4
------------ ------------ ------
Total 1,006,925 889,347 13.2
------------ ------------ ------
Operating income 357,518 296,592 20.5
Non-operating income (expense):
Interest expense (20,175) (16,592) 21.6
Other (1,326) 2,368 *****
------------ ------------ ------
Total (21,501) (14,224) 51.2
Income before income taxes 336,017 282,368 19.0
Provision for income taxes 133,000 112,400 18.3
------------ ------------ ------
Income from continuing operations $ 203,017 $ 169,968 19.4
Discontinued Operations:
Income from the operation of
discontinued operations, net of tax 2,437 8,925 (72.7)
Gain on sale of cable business,
net of tax 744,700 -
------------ ------------ ------
Net income $ 950,154 $ 178,893 *****
============ ============ ======
Earnings from continuing
operations per share-basic $0.74 $0.61 21.8
Earnings from discontinued operations:
Earnings from the operation of
discontinued operations per
share-basic $0.01 $0.03 (72.2)
Gain on sale of cable business
per share-basic $2.72 -
-------- ------- ------
Net income per share-basic $3.47 $0.64 *****
======== ======= ======
Earnings from continuing
operations per share-diluted $0.74 $0.61 21.8
Earnings from discontinued operations:
Earnings from the operation of
discontinued operations per
share-diluted $0.01 $0.03 (72.2)
Gain on sale of cable business
per share-diluted $2.69 -
-------- ------- ------
Net income per share-diluted $3.44 $0.64 *****
======== ======= ======
Dividends per share $0.21 $0.20 5.0
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(1) Certain 1999 amounts have been reclassified to conform with the current
year presentation.
BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollarsThirteen weeks ended % Inc
Mar. 26, 2000 Mar. 28, 1999 (Dec)
Operating Revenues:
Newspaper publishing $ 1,197,654 $ 1,024,745 16.9
Television 166,789 161,194 3.5
------------ ------------ -------
Total $ 1,364,443 $ 1,185,939 15.1
============ ============ =======Operating Income (net of
depreciation and amortization):
Newspaper publishing $ 307,435 $ 247,675 24.1
Television 66,127 65,717 0.6
Corporate (16,044) (16,800) 4.5
------------ ------------ -------
Total $ 357,518 $ 296,592 20.5
============ ============ =======Depreciation and Amortization:
Newspaper publishing $ 62,289 $ 47,697 30.6
Television 16,126 15,708 2.7
Corporate 1,959 2,224 (11.9)
------------ ------------ -------
Total $ 80,374 $ 65,629 22.5
============ ============ =======Operating Cash Flow:
Newspaper publishing $ 369,724 $ 295,372 25.2
Television 82,253 81,425 1.0
Corporate (14,085) (14,576) 3.4
------------ ------------ -------
Total $ 437,892 $ 362,221 20.9
============ ============ =======NOTE:
Operating Cash Flow represents operating income for each of the Company's
business segments plus related depreciation and amortization expense.