Fourth-Quarter and Full-Year 1996 Earnings
ARLINGTON, Va. — Gannett announced today that earnings per share from continuing operations, excluding a one-time gain from a radio/television station exchange transaction completed in December 1996, advanced 31 percent in the fourth quarter to $1.39 per share, a new record. In the year-earlier quarter, earnings from continuing operations were $1.06 per share. Results include the operations of Multimedia, Inc., a South Carolina-based media company purchased in December 1995.
The exchange of the company’s six radio stations in Los Angeles, San Diego and Tampa for a television station in Tampa was completed on December 9, 1996. The exchange resulted in, for financial reporting purposes, an after-tax gain of $93 million in the fourth quarter, or 66 cents per share. Earnings per share from continuing operations including the 66-cent gain totaled $2.05 in the fourth quarter.
Operating revenues from continuing operations gained 12 percent to $1,195,227,000 in the 13-week interval, from $1,070,427,000 in the year-earlier quarter, which spanned 14 weeks. Despite the shorter operating period in 1996, if Gannett had owned the same complement of properties in both quarters, revenues from continuing operations would have increased 3 percent. Operating income from continuing operations increased 35 percent to $360,384,000 from $266,958,000 in the year-earlier quarter. Operating cash flow from continuing operations advanced 34 percent to $430,643,000 from $321,946,000 in the prior year.
Average shares outstanding in the quarter totaled 141,097,000, compared to 140,304,000 in 1995’s fourth quarter.
The company also completed the sale of its television entertainment programming business, Multimedia Entertainment, in December 1996. Operating results for Multimedia Entertainment are reported as a discontinued operation in the company’s financial statements along with the results of the company’s Outdoor business, which was sold in August 1996. Earnings from continuing operations of $2.47 per share, previously reported for the nine months ended September 29, 1996, have been restated to $2.38 per share, reflecting the classification of Multimedia Entertainment as a discontinued operation.
For the year, earnings per share from continuing operations, excluding the non-recurring gain from the radio/television station exchange, advanced 15 percent to a record $3.77, from $3.28 in 1995. Income from continuing operations was $623,967,000, including the $93,000,000 after-tax gain from the exchange, compared to $459,411,000 in 1995. Operating revenues from continuing operations were 18 percent higher at $4,421,107,000, while operating income from continuing operations gained 30 percent to $1,066,405,000 from $821,932,000 in 1995. Average shares outstanding in 1996 were 140,891,000, compared to 140,156,000 in 1995.
In a statement, the company said that the properties acquired from Multimedia continued to boost operating cash flow, but their contribution to earnings per share was tempered by the incremental interest, taxes and goodwill amortization associated with the transaction. The broadcast group, which enjoyed incremental gains from political advertising in the fourth quarter, achieved record results for the quarter and full year. Newspaper profitability benefitted from continued strong advertising demand at USA TODAY, lower newsprint expense in the quarter compared to the year-earlier quarter, and a favorable comparison year to year at The Detroit News. In the fourth quarter of 1996, the company reported a profit at The Detroit News versus a loss in the year-earlier quarter. Newsprint expense fell 19 percent for the fourth quarter, but rose 15 percent for the full year 1996.
Operating cash flow from newspapers was 27 percent higher than last year and revenues in the quarter grew 4 percent. While there was one less week in the fourth quarter of 1996, if the same group of newspapers had been held in both periods, pro forma newspaper revenues would have gained 1 percent, including a 3 percent gain in pro forma advertising revenues. National advertising revenues increased 15 percent, while classified advertising grew 3 percent. Pro forma newspaper advertising volume was down 1 percent for the quarter. Excluding the extra week from the fourth quarter of 1995, pro forma advertising volume would have increased 5 percent in the comparable 1996 quarter.
At USA TODAY, paid advertising pages jumped 33 percent to 1,565 compared to 1,174 in the fourth quarter of 1995. Advertising revenues grew 27 percent. For the full year, paid advertising pages increased 30 percent to 5,148, compared to 3,953 in 1995. Advertising revenues gained 30 percent in 1996 to $260 million.
Broadcasting cash flow advanced 28 percent in the quarter to $101,725,000 as revenues gained 32 percent to $190,063,000. Strong demand for television advertising lifted broadcasting pro forma revenues 9 percent higher in the fourth quarter. Pro forma radio revenues were up 12 percent in the quarter.
Cable and security revenues were $59,824,000 in the fourth quarter of 1996, and operating cash flow was $27,513,000. Basic cable subscribers totaled 464,690 at year end, equal to 61 percent of homes passed. Pay units numbered 332,530 at year end.
Gannett is a nationwide news and information company that publishes 92 daily newspapers, including USA TODAY, and USA WEEKEND, a newspaper magazine. Gannett also operates 16 television stations, five radio stations, cable television systems in five states and alarm security services.