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Gannett Reports First Quarter Results

MCLEAN, VA – Gannett Co., Inc. (NYSE: GCI) reported today that 2004 first quarter earnings per diluted share, on a GAAP (generally accepted accounting principles) basis, were $1.00 versus
93 cents for the first quarter of 2003, a new record. The company achieved strong earnings growth as advertising demand accelerated late in the quarter across the company.

Total operating revenues for the company totaled $1.73 billion for the quarter compared to $1.55 billion for the same period last year, an 11.4 percent increase. Net income rose 9.8 percent to $274.4 million versus $249.8 million in 2003’s first quarter. Operating cash flow (defined as operating income plus depreciation and amortization) increased to $507.2 million from $467.1 million for the same quarter a year ago.

Average diluted shares outstanding in the first quarter totaled 275,507,000 compared with 270,059,000 in 2003’s first quarter. Approximately 1.0 million shares were repurchased since the company announced the reactivation of its share repurchase program on February 9, 2004.

Commenting on the company’s results, Douglas H. McCorkindale, Chairman, President and CEO said: “We are pleased to report another quarter of record revenues, earnings and operating cash flow, with each of our operating divisions posting improved results for the quarter. Newspaper segment results reflected stronger advertising revenue growth and the benefit of acquisitions tempered by higher newsprint and benefit costs. Our Newsquest properties in the UK, also reflecting an improving advertising climate and favorable exchange rate, added significantly to our results. The television group achieved improved operating results year-over-year benefiting, in part, from politically-related advertising demand.”


Newspaper results in the quarter include the SMG Publishing business, the Texas-New Mexico Newspapers Partnership, Clipper Magazine, Inc., and NurseWeek acquired in February 2004.

Total newspaper segment operating cash flow, which includes USA TODAY and our UK properties, rose 8.5 percent to $442.8 million, versus $408.1 million in the same quarter of 2003. Operating revenues were $1.56 billion for the quarter, an 11.9 percent increase year-over-year. Assuming Gannett had owned the same group of properties in the first quarter of both 2004 and 2003, advertising revenues would have increased 9.4 percent. On the same basis, classified advertising grew 12.6 percent, national revenues advanced 10.5 percent and local advertising revenues increased 6.0 percent. Reported newsprint expense increased 13 percent due to higher usage related to acquisitions and higher year-over-year prices.

At USA TODAY, advertising revenues increased 10.0 percent in the first quarter. Paid advertising pages totaled 1,099 compared with 1,096 in 2003’s first quarter.


In the first quarter, television operating cash flow increased 9.2 percent to $77.0 million from $70.5 million in the corresponding interval in 2003. Television revenues increased 7.1 percent to $169.5 million from $158.2 million in the same quarter in 2003.


The company’s interest expense was $31.8 million in the quarter, down from $36.1 million in the first quarter of 2003, reflecting lower debt levels and lower short term interest rates.

During the first quarter, the company exchanged its daily newspaper in Gainesville, Georgia for two daily and three non-daily publications in Tennessee. The company recorded a non-monetary gain from the exchange which is reflected in non-operating income and was partially offset by other non-operating charges for minority interest and Internet investments.

At the end of the quarter, Gannett had more than 100 domestic publishing Web sites, including, 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 over 19 million unique visitors reaching almost 13 percent of the Internet audience according to Nielsen//NetRatings. Newsquest is also an Internet leader in the United Kingdom.

Subsequent to the end of the quarter the company completed the acquisition of the assets of Captivate Network Inc., a national news and entertainment network that delivers quality programming and advertising on television screens in elevators in premier office towers across North America.

* * *

All references in this release and attachments to “operating cash flow” are to a non-GAAP financial measure. Management believes that use of this measure allows investors and management to analyze and compare the company’s performance in a more meaningful and consistent manner. A reconciliation of these non-GAAP amounts to the company’s consolidated statements of income is presented on an attachment.

As previously announced, the company will hold an earnings conference call at 10:00 a.m. EDT today. The call can be accessed via a live Webcast through the Investor Relations section of the company’s Web site,, or listen-only conference lines, by dialing 1-800-838-4403 (in the U.S.) and 1-973-317-5319 (outside the U.S.) at least 10 minutes prior to the scheduled start of the call. Replay of the conference call will be available about two hours after the live call. To access the replay, dial 1-800-428-6051 (in the U.S.) and 1-973-709-2089 (outside the U.S.). The access code for the replay is 344506. Materials related to the call will be available through the Investor Relations section of the company’s Web site Tuesday morning.

Gannett Co., Inc. is a leading international news and information company that publishes 101 daily newspapers in the USA, including USA TODAY, the nation’s largest-selling daily newspaper. The company also owns in excess of 500 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 17 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, 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:
Jeff Heinz
Director, Investor Relations

For media inquiries, contact:
Tara Connell
Vice President of Corporate Communications

Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)

Thirteen weeks ended % Inc
Mar. 28, 2004 Mar. 30, 2003 (Dec)
Net Operating Revenues:
Newspaper advertising $ 1,156,011 $ 1,006,047 14.9
Newspaper circulation 312,389 302,431 3.3
Television 169,458 158,176 7.1
Other 91,826 85,591 7.3
------------- ------------- ------
Total 1,729,684 1,552,245 11.4
------------- ------------- ------
Operating Expenses:
Cost of sales and operating
expenses, exclusive of
depreciation 939,448 836,622 12.3
Selling, general and
administrative expenses,
exclusive of depreciation 283,030 248,571 13.9
Depreciation 58,974 54,229 8.7
Amortization of intangible
assets 2,383 1,830 30.2
------------- ------------- ------
Total 1,283,835 1,141,252 12.5
------------- ------------- ------
Operating income 445,849 410,993 8.5
------------- ------------- ------
Non-operating income
Interest expense (31,791) (36,109) (12.0)
Other 2,850 4,852 (41.3)
------------- ------------- ------
Total (28,941) (31,257) (7.4)
------------- ------------- ------

Income before income taxes 416,908 379,736 9.8
Provision for income taxes 142,500 129,900 9.7
------------- ------------- ------
Net income $ 274,408 $ 249,836 9.8
============= ============= ======

Net income per share-basic $1.01 $0.93 8.6
===== ===== ======
Net income per share-diluted $1.00 $0.93 7.5
===== ===== ======
Dividends per share $0.25 $0.24 4.2
===== ===== ======

Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars

Thirteen weeks ended % Inc
Mar. 28, 2004 Mar. 30, 2003 (Dec)

Net Operating Revenues:
Newspaper publishing $ 1,560,226 $ 1,394,069 11.9
Television 169,458 158,176 7.1
------------- ------------- ------
Total $ 1,729,684 $ 1,552,245 11.4
============= ============= ======
Operating Income (net
of depreciation and
Newspaper publishing $ 392,265 $ 362,485 8.2
Television 70,158 63,955 9.7
Corporate (16,574) (15,447) (7.3)
------------- ------------- ------
Total $ 445,849 $ 410,993 8.5
============= ============= ======
Depreciation and
Newspaper publishing $ 50,538 $ 45,582 10.9
Television 6,881 6,571 4.7
Corporate 3,938 3,906 0.8
------------- ------------- ------
Total $ 61,357 $ 56,059 9.5
============= ============= ======
Operating Cash Flow (1):
Newspaper publishing $ 442,803 $ 408,067 8.5
Television 77,039 70,526 9.2
Corporate (12,636) (11,541) (9.5)
------------- ------------- ------
Total $ 507,206 $ 467,052 8.6
============= ============= ======

(1) Operating Cash Flow represents operating income for each of the
company's business segments plus related depreciation and
amortization expense. See attachment for reconciliation of
amounts to the Consolidated Statements of Income.

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 the 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 28, 2004

Newspaper Consolidated
Publishing Television Corporate Total
---------- ---------- --------- ------------

cash flow $ 442,803 $ 77,039 $ (12,636) $ 507,206
Depreciation (48,155) (6,881) (3,938) (58,974)
Amortization (2,383) - - (2,383)
---------- ---------- --------- ------------
Operating Income $ 392,265 $ 70,158 $ (16,574) $ 445,849
========== ========== ========= ============

Thirteen weeks ended March 30, 2003

Newspaper Consolidated
Publishing Television Corporate Total
---------- ---------- --------- ------------

cash flow $ 408,067 $ 70,526 $ (11,541) $ 467,052
Depreciation (43,752) (6,571) (3,906) (54,229)
Amortization (1,830) - - (1,830)
---------- ---------- --------- ------------
Operating Income $ 362,485 $ 63,955 $ (15,447) $ 410,993
========== ========== ========= ============