Fourth-Quarter and Full-Year 1999 Earnings
Arlington, Va. — Gannett announced today that diluted earnings per share from continuing operations advanced 15 percent in the fourth quarter to $1.01, a new record. In the year earlier quarter, diluted earnings per share from continuing operations were 89 cents. Results for the quarter include the operations of Newsquest plc, a U.K.- based newspaper company acquired in July.
The sale of the assets of Multimedia Cablevision, Inc., a wholly owned subsidiary of Gannett’s Multimedia Inc., to Cox Communications, Inc. for $2.7 billion will be completed today. Operating results for the fourth quarter and full year exclude contributions from the cable and security segment which is reported as a discontinued operation in the company’s financial statements. Prior year results have been restated to conform with the current year presentation.
Diluted earnings per share including after-tax income from discontinued operations of 4 cents per share totaled $1.05 in the fourth quarter. For the fourth quarter of 1998, diluted earnings per share including the results of the discontinued operations were 92 cents. For 1999, diluted earnings per share from continuing operations, excluding a net non-operating after-tax gain from a television station exchange, advanced 15 percent to $3.15 per share, a new record, from $2.74 in 1998. Including the results from the discontinued operations and excluding the net non-operating after-tax gain, earnings per share were $3.29 for 1999. In 1998, earnings per share including results from discontinued operations and excluding a net non-operating gain principally from the disposition of several businesses, were $2.86.
Average diluted shares outstanding in the quarter totaled 280,333,000 compared to 281,635,000 in 1998’s fourth quarter. Approximately 1.1 million shares were repurchased in the fourth quarter of 1999. Average diluted shares outstanding in 1999 were 281,608,000 compared to 285,711,000 in 1998. During 1999, the company repurchased approximately 2.4 million shares of common stock. In 1998, Gannett repurchased approximately 6 million shares of common stock.
Operating revenues from continuing operations gained 13 percent to $1,501,072,000 in the fourth 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 17 percent to $584,369,000 in the quarter from $500,929,000 in the year-earlier interval. Income from continuing operations advanced 14 percent in the fourth quarter to $284,025,000 from $248,879,000 in 1998’s fourth quarter. Operating income from continuing operations advanced 17 percent to $510,032,000, compared to $437,408,000 in the year-earlier quarter.
For the year, operating revenues from continuing operations were 8 percent higher at $5,260,190,000, while operating income from continuing operations gained 13 percent to $1,563,101,000 from $1,385,814,000 in 1998. Income from continuing operations, excluding a $32,780,000 net non-operating after-tax gain, advanced 13 percent to $886,607,000. Income from continuing operations for 1998, excluding a $183,607,000 net non-operating after-tax gain principally from the sale of several businesses, was $782,818,000.
The company said that the newspaper segment posted record operating results for the quarter and the year. Newspaper earnings benefited from strong advertising demand, record operating results at USA TODAY for both the quarter and the year and a contribution from the Newsquest properties which boosted operating cash flow and earnings per share. Newsprint expense declined 8 percent in the fourth quarter and 6 percent for all of 1999.
The television group achieved improved operating results in the quarter despite the absence of political spending that contributed to results in the fourth quarter of 1998. Television segment results were affected by recent television station transactions including the exchange of Gannett’s station in Austin, Texas, for a station in Sacramento, Calif., plus other consideration.
For the full year, television comparisons were also impacted by the absence of advertising related to the broadcast of the Super Bowl on our NBC-affiliated stations and the Winter Olympics on our CBS stations in 1998.
Operating cash flow from newspapers grew 21 percent in the fourth quarter to $475,363,000, and revenues were 15 percent higher than the same period last year. Pro forma advertising revenues grew 6 percent in the quarter, including a 15 percent gain in national, a 7 percent increase in classified and a 2 percent decline in local advertising. Pro forma advertising volume advanced 4 percent for the quarter.
At USA TODAY, paid advertising pages increased 13 percent to 2,203 compared to 1,955 in the fourth quarter of 1998. Advertising revenues grew 14 percent. For the full year, paid advertising pages advanced 13 percent to 6,741, compared to 5,985 in 1998. Advertising revenues gained 17 percent in 1999 to $383 million.
Despite the absence of political advertising, television revenues increased 2 percent to $206,198,000 while operating cash flow was $122,576,000 in the quarter. Recent television transactions, including the previously mentioned station exchange, unfavorably impacted television operating results.
The company announced on Nov. 16 an agreement to acquire WJXX, the ABC affiliate in Jacksonville, Fla. Gannett will also continue to own and operate WTLV-TV, the NBC affiliate in Jacksonville. Closing is expected to occur as soon as regulatory approvals are obtained.
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, including USA WEEKEND, a weekly magazine. Newsquest plc, a wholly owned Gannett subsidiary acquired in mid-1999, is the largest regional newspaper publisher in England with 11 daily newspapers and a variety of non-daily publications, including Berrow’s Worcester Journal, the oldest continuously published newspaper in the world. Gannett also operates 21 television stations.
CONSOLIDATED STATEMENTS OF INCOME
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)Quarter Ended % Inc
Dec. 26, 1999 Dec. 27, 1998 (Dec)
Net Operating Revenues:
Newspaper advertising $ 966,225 $ 818,979 18.0
Newspaper circulation 264,597 251,863 5.1
Television 206,198 202,682 1.7
Other 64,052 56,579 13.2
------------ ------------ ------
Total 1,501,072 1,330,103 12.9
------------ ------------ ------
Operating Expenses:
Cost of sales and operating expenses,
exclusive of depreciation 692,401 631,119 9.7
Selling, general and administrative
expenses, exclusive of depreciation 224,302 198,055 13.3
Depreciation 40,290 39,780 1.3
Amortization of intangible assets 34,047 23,741 43.4
------------ ------------ ------
Total 991,040 892,695 11.0
------------ ------------ ------
Operating income 510,032 437,408 16.6
------------ ------------ ------
Non-operating income (expense):
Interest expense (37,701) (18,645) 102.2
Other (556) (3,654) (84.8)
------------ ------------ ------
Total (38,257) (22,299) 71.6
------------ ------------ ------Income before income taxes 471,775 415,109 13.7
Provision for income taxes 187,750 166,230 12.9
------------ ------------ ------
Income from continuing operations $ 284,025 $ 248,879 14.1
Discontinued operations:
Income from discontinued operations 10,561 8,856 19.3
------------ ------------ ------
Net income $ 294,586 $ 257,735 14.3
============ ============ ======Earnings from continuing
operations per share-basic $1.02 $0.89 14.8
======== ======== ======
Earnings from discontinued
operations per share-basic $0.04 $0.03 19.9
======== ======== ======
Net income per share-basic $1.06 $0.92 14.9
======== ======== ======
Earnings from continuing
operations per share-diluted $1.01 $0.89 14.7
======== ======== ======
Earnings from discontinued
operations per share-diluted $0.04 $0.03 19.8
======== ======== ======
Net income per share-diluted $1.05 $0.92 14.8
======== ======== ======
Dividends per share $0.21 $0.20 5.0
======== ======== ======NOTE: The company plans to complete the sale of its cable division on
January 31, 2000. As a result, the cable and security segment operating
results are reported as discontinued operations.CONSOLIDATED STATEMENTS OF INCOME
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)Fiscal Year Ended % Inc
Dec. 26, 1999 Dec. 27,1998 (Dec)
Net Operating Revenues:
Newspaper advertising $ 3,292,894 $ 2,942,995 11.9
Newspaper circulation 1,022,520 1,010,238 1.2
Television 728,642 721,298 1.0
Other 216,134 206,160 4.8
------------ ------------- ------
Total 5,260,190 4,880,691 7.8
------------ ------------- ------
Operating Expenses:
Cost of sales and operating expenses,
exclusive of depreciation 2,608,469 2,498,347 4.4
Selling, general and administrative
expenses, exclusive of depreciation 808,529 743,067 8.8
Depreciation 169,460 163,776 3.5
Amortization of intangible assets 110,631 89,687 23.4
------------ ------------- ------
Total 3,697,089 3,494,877 5.8
------------ ------------- ------
Operating income 1,563,101 1,385,814 12.8
------------ ------------- ------
Non-operating income (expense):
Interest expense (94,619) (79,412) 19.1
Other 58,705 305,323 (80.8)
------------ ------------- ------
Total (35,914) 225,911 (115.9)
------------ ------------- ------Income before income taxes 1,527,187 1,611,725 (5.2)
Provision for income taxes 607,800 645,300 (5.8)
------------ ------------- ------
Income from continuing operation $ 919,387 $ 966,425 (4.9)
------------ ------------- ------
Discontinued operations: (2)
Income from discontinued operations 38,541 33,488 15.1
------------ ------------- ------
Net income $ 957,928 $ 999,913 (4.2)
============ ============= ======Earnings from continuing
operations per share-basic $3.29 $3.41 (3.5)
====== ====== ======
Earnings from discontinued
operations per share-basic $0.14 $0.12 16.8
====== ====== ======
Net income per share-basic $3.43 $3.53 (2.8)
====== ====== ======
Earnings from continuing
operations per share-diluted $3.26 $3.38 (3.5)
====== ====== ======
Earnings from discontinued
operations per share-diluted $0.14 $0.12 16.8
====== ====== ======
Net income per share-diluted $3.40 $3.50 (2.8)
====== ====== ======
Dividends per share $0.82 $0.78 5.1
====== ====== ======Earnings Summary Excluding
1999 and 1998 Net Non-operating Gains (1)Fiscal Year Ended % Inc
Dec. 26, 1999 Dec. 27,1998 (Dec)Operating income $ 1,563,101 $ 1,385,814 12.8
------------ ------------- ------
Non-operating income (expense):
Interest expense (94,619) (79,412) 19.1
Other 4,175 (1,204) *****
------------ ------------- ------
Total (90,444) (80,616) 12.2
------------ ------------- ------Income before income taxes 1,472,657 1,305,198 12.8
Provision for income taxes 586,050 522,380 12.2
------------ ------------- ------
Income from continuing operation $ 886,607 $ 782,818 13.3
------------ ------------- ------
Discontinued operations: (2)
Income from discontinued operations 38,541 33,488 15.1
------------ ------------- ------
Net income $ 925,148 $ 816,306 13.3
============ ============= ======Earnings from continuing
operations per share-basic $3.18 $2.76 14.9
====== ====== ======
Earnings from discontinued
operations per share-basic $0.14 $0.12 16.8
====== ====== ======
Net income per share-basic $3.32 $2.88 15.0
====== ====== ======
Earnings from continuing
operations per share-diluted $3.15 $2.74 14.9
====== ====== ======
Earnings from discontinued
operations per share-diluted $0.14 $0.12 16.8
====== ====== ======
Net income per share-diluted $3.29 $2.86 15.0
====== ====== ======
Dividends per share $0.82 $0.78 5.1
====== ====== ======
NOTES:
(1) 1999 results include a net non-operating gain principally from the
exchange of KVUE-TV in Austin, Texas for KXTV-TV in
Sacramento, California totaling $55 million pre-tax and $33 million
after-tax. The 1998 results include a net non-operating gain principally
from the disposition of several businesses including radio and alarm
security totaling $307 million pre-tax and $184 million after-tax.(2) The company plans to complete the sale of its cable division on
January 31, 2000. As a result, the cable and security segment operating
results are reported as discontinued operations.BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Quarter Ended % Inc
Dec. 26, 1999 Dec. 27, 1998 (Dec)Operating Revenues:
Newspaper publishing $ 1,294,874 $ 1,127,421 14.9
Television 206,198 202,682 1.7
------------ ------------ ------
Total $ 1,501,072 $ 1,330,103 12.9
============ ============ ======
Operating Income (net of depreciation
and amortization):
Newspaper publishing $ 418,812 $ 346,945 20.7
Television 107,013 106,408 0.6
Corporate (15,793) (15,945) 1.0
------------ ------------ ------
Total $ 510,032 $ 437,408 16.6
============ ============ ======
Depreciation and Amortization:
Newspaper publishing $ 56,551 $ 46,062 22.8
Television 15,563 15,387 1.1
Corporate 2,223 2,072 7.3
------------ ------------ ------
Total $ 74,337 $ 63,521 17.0
============ ============ ======
Operating Cash Flow:
Newspaper publishing $ 475,363 $ 393,007 21.0
Television 122,576 121,795 0.6
Corporate (13,570) (13,873) 2.2
------------ ------------ ------
Total $ 584,369 $ 500,929 16.7
============ ============ ======NOTES:
Operating Cash Flow represents operating income for each of the Company's
business segments plus related depreciation and amortization expense.The company plans to complete the sale of its cable division on
January 31, 2000. As a result, the cable and security segment operating
results are reported as discontinued operations and are excluded from the
Business Segment Information.BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Fiscal Year Ended % Inc
Dec. 26, 1999 Dec. 27, 1998 (Dec)Operating Revenues:
Newspaper publishing $ 4,531,548 $ 4,159,393 8.9
Television 728,642 721,298 1.0
------------ ------------ ------
Total $ 5,260,190 $ 4,880,691 7.8
============ ============ ======
Operating Income (net of depreciation
and amortization):
Newspaper publishing $ 1,291,665 $ 1,109,221 16.4
Television 337,537 343,512 (1.7)
Corporate (66,101) (66,919) 1.2
------------ ------------ ------
Total $ 1,563,101 $ 1,385,814 12.8
============ ============ ======
Depreciation and Amortization:
Newspaper publishing $ 207,720 $ 184,718 12.5
Television 62,861 60,023 4.7
Corporate 9,510 8,722 9.0
------------ ------------ ------
Total $ 280,091 $ 253,463 10.5
============ ============ ======
Operating Cash Flow:
Newspaper publishing $ 1,499,385 $ 1,293,939 15.9
Television 400,398 403,535 (0.8)
Corporate (56,591) (58,197) 2.8
------------ ------------ ------
Total $ 1,843,192 $ 1,639,277 12.4
============ ============ ======NOTES:
Operating Cash Flow represents operating income for each of the Company's
business segments plus related depreciation and amortization expense.The company plans to complete the sale of its cable division on
January 31, 2000. As a result, the cable and security segment operating
results are reported as discontinued operations and are excluded from the
Business Segment Information.