Gannett Reports Second-Quarter 2002 Results
McLEAN, VA – Gannett Co., Inc. (NYSE: GCI) reported today that 2002 second-quarter earnings per diluted share were $1.13 versus $1.08 per share on a comparable basis (as described in paragraph three below) for the second quarter of 2001, a 5 percent increase. After-tax cash flow per diluted share (defined as after-tax income plus depreciation and amortization) was $1.33, up from $1.28 in 2001’s second quarter on a comparable basis.
Diluted earnings per share for the first six months of 2002 were $2.04. In the same period in 2001, diluted earnings per share were $1.93 on a comparable basis. After-tax cash flow per diluted share was $2.45 for the first half of 2002 versus $2.33 for the same interval in 2001.
At the beginning of 2002, Gannett adopted SFAS No. 142, which changes the accounting rules for goodwill and intangible assets. The previously reported earnings per share of 88 cents for the second quarter of 2001 included 20 cents for goodwill amortization expense, net of tax, that would not have been required had SFAS No. 142 been in effect. Similarly, the previously reported earnings per share of $1.53 for the first six months of 2001 included 40 cents for goodwill amortization expense, net of tax. Included in this press release are pro forma schedules detailing second quarter and year-to-date results for 2001 as if SFAS No. 142 had been adopted at the beginning of 2001.
Operating revenues for the company were almost flat at $1.62 billion in the second quarter. Operating cash flow (defined as operating income plus depreciation and amortization) increased to $559.4 million in 2002’s second quarter compared with $556.9 million in the year earlier quarter, reflecting stronger television results partially mitigated by a decline in newspaper segment advertising revenues. Net income increased 5 percent to $303.9 million in the second quarter from $288.9 million on a comparable basis in 2001.
Average diluted shares outstanding in the quarter totaled 269,473,000 compared with 266,754,000 in 2001’s second quarter.
For the first six months of 2002, operating revenues declined 2 percent to $3.15 billion. Operating cash flow decreased 2 percent from $1.04 billion to $1.02 billion.
Commenting on the company’s results, Douglas H. McCorkindale, Chairman, President and CEO said, “We are very pleased to once again report higher net income and after-tax cash flow in a subdued advertising environment. Our broadcast properties achieved strong year-over-year gains reflecting an improved advertising revenue environment for highly rated television stations. Our newspaper operations made progress during the quarter but were modestly behind our year ago performance. Newsprint expense declined 24 percent for the quarter. In the UK, our Newsquest properties made a contribution to cash flow and earnings despite a challenging advertising climate. Substantially lower interest expense also contributed to the increase in earnings in the second quarter.”
NEWSPAPERS
Total newspaper operating cash flow, which includes USA TODAY and our UK properties, was $470.5 million in the second quarter, versus $476.1 million in the same quarter of 2001. Operating revenues were $1.43 billion for the quarter. Pro forma advertising revenues declined 1 percent in the quarter. Local and classified advertising revenues were both modestly lower and national decreased 4 percent. Pro forma newspaper volume increased 3 percent. Newsprint expense declined 24 percent, reflecting substantially lower year-over-year prices.
At USA TODAY, advertising revenues declined 9 percent in the second quarter. Paid advertising pages totaled 1,236 compared with 1,445 in the same quarter of 2001, a 14 percent decline. For the year-to-date, USA TODAY’s advertising revenues decreased 9 percent and paid pages numbered 2,414 compared with 2,777 last year, a 13 percent decline. USA TODAY’s results in the quarter continue to reflect, in part, lower demand for financial and technology-related advertising.
TELEVISION
In the second quarter, television operating cash flow advanced 7 percent to $100.8 million from $94.1 million in the corresponding interval in 2001. Television revenues increased 7 percent to $191.3 million, reflecting solid automotive advertising and better than expected political advertising.
INTERNET
At the end of the second 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 Websites in all of its 19 television markets. In June, Gannett’s consolidated domestic Internet audience share was almost 12 million unique visitors reaching about 10 percent of the Internet audience according to Nielsen/Net Ratings. In the first half of 2002, the company generated about $43 million in revenues from Internet activities and achieved a modest profit.
Gannett Co., Inc. is an international news and information company that publishes 94 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 ended % Inc
June 30, 2002 July 1, 2001 (Dec)
------------- ------------ ------
Net Operating Revenues:
Newspaper advertising $ 1,045,938 $ 1,057,899 (1.1)
Newspaper circulation 305,096 306,019 (0.3)
Television 191,299 178,692 7.1
Other 81,963 84,622 (3.1)
------------- ------------- -----
Total 1,624,296 1,627,232 (0.2)
------------- ------------- -----
Operating Expenses:
Cost of sales and operating expenses,
exclusive of depreciation 810,361 824,030 (1.7)
Selling, general and administrative
expenses, exclusive of depreciation 254,534 246,324 3.3
Depreciation 53,362 51,059 4.5
Amortization of intangible assets 1,834 59,457 (96.9)
------------- ------------- -----
Total 1,120,091 1,180,870 (5.1)
------------- ------------- -----
Operating income 504,205 446,362 13.0
------------- ------------- -----
Non-operating income (expense):
Interest expense (41,101) (61,728) (33.4)
Other (81) 528 (115.3)
------------- ------------- -----
Total (41,182) (61,200) (32.7)
------------- ------------- -----
Income before income taxes 463,023 385,162 20.2
Provision for income taxes 159,100 151,700 4.9
------------- ------------- -----
Net income $ 303,923 $ 233,462 30.2
============= ============= =====
Net income per share-basic $1.14 $0.88 29.5
===== ===== ====
Net income per share-diluted $1.13 $0.88 28.4
===== ===== ====
Dividends per share $0.23 $0.22 4.5
===== ===== ====
CONSOLIDATED STATEMENTS OF INCOME
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
Twenty-six weeks ended % Inc
June 30, 2002 July 1, 2001 (Dec)
------------- ------------ ------
Net Operating Revenues:
Newspaper advertising $ 2,015,741 $ 2,078,833 (3.0)
Newspaper circulation 615,808 619,028 (0.5)
Television 358,485 334,305 7.2
Other 158,870 170,014 (6.6)
------------- ------------- -----
Total 3,148,904 3,202,180 (1.7)
------------- ------------- -----
Operating Expenses:
Cost of sales and operating expenses,
exclusive of depreciation 1,628,927 1,663,577 (2.1)
Selling, general and administrative
expenses, exclusive of depreciation 502,865 501,062 0.4
Depreciation 106,731 104,340 2.3
Amortization of intangible assets 3,667 118,800 (96.9)
------------- ------------- -----
Total 2,242,190 2,387,779 (6.1)
------------- ------------- -----
Operating income 906,714 814,401 11.3
------------- ------------- -----
Non-operating income (expense):
Interest expense (69,855) (142,170) (50.9)
Other (2,373) 976 (343.1)
------------- ------------- -----
Total (72,228) (141,194) (48.8)
------------- ------------- -----
Income before income taxes 834,486 673,207 24.0
Provision for income taxes 287,000 265,200 8.2
------------- ------------- -----
Net income $ 547,486 $ 408,007 34.2
============= ============= =====
Net income per share-basic $2.05 $1.54 33.1
===== ===== =====
Net income per share-diluted $2.04 $1.53 33.3
===== ===== =====
Dividends per share $0.46 $0.44 4.5
===== ===== =====
BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Thirteen weeks ended % Inc
June 30, 2002 July 1, 2001 (Dec)
------------- ------------ ------
Net Operating Revenues:
Newspaper publishing $ 1,432,997 $ 1,448,540 (1.1)
Television 191,299 178,692 7.1
------------- ------------ -----
Total $ 1,624,296 $ 1,627,232 (0.2)
============= ============ =====
Operating Income
(net of depreciation and amortization):
Newspaper publishing $ 425,225 $ 384,142 10.7
Television 94,463 77,003 22.7
Corporate (15,483) (14,783) (4.7)
------------- ------------ -----
Total $ 504,205 $ 446,362 13.0
============= ============ =====
Depreciation and Amortization:
Newspaper publishing $ 45,315 $ 91,925 (50.7)
Television 6,331 17,100 (63.0)
Corporate 3,550 1,491 138.1
------------- ------------ -----
Total $ 55,196 $ 110,516 (50.1)
============= ============ =====
Operating Cash Flow (1):
Newspaper publishing $ 470,540 $ 476,067 (1.2)
Television 100,794 94,103 7.1
Corporate (11,933) (13,292) 10.2
------------- ------------ -----
Total $ 559,401 $ 556,878 0.5
============= ============ =====
After-tax Cash Flow (2): ------------- ------------ -----
Total $ 359,119 $ 343,978 4.4
============= ============ =====
(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.
BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Twenty-six weeks ended % Inc
June 30, 2002 July 1, 2001 (Dec)
------------- ------------ ------
Net Operating Revenues:
Newspaper publishing $ 2,790,419 $ 2,867,875 (2.7)
Television 358,485 334,305 7.2
------------- ------------ -----
Total $ 3,148,904 $ 3,202,180 (1.7)
============= ============ =====
Operating Income
(net of depreciation and amortization):
Newspaper publishing $ 769,928 $ 712,927 8.0
Television 167,232 131,269 27.4
Corporate (30,446) (29,795) (2.2)
------------- ------------ -----
Total $ 906,714 $ 814,401 11.3
============= ============ =====
Depreciation and Amortization:
Newspaper publishing $ 90,550 $ 186,068 (51.3)
Television 12,748 34,083 (62.6)
Corporate 7,100 2,989 137.5
------------- ------------ -----
Total $ 110,398 $ 223,140 (50.5)
============= ============ =====
Operating Cash Flow (1):
Newspaper publishing $ 860,478 $ 898,995 (4.3)
Television 179,980 165,352 8.8
Corporate (23,346) (26,806) 12.9
------------- ------------ -----
Total $ 1,017,112 $ 1,037,541 (2.0)
============= ============ =====
After-tax Cash Flow (2):
------------- ------------ -----
Total $ 657,884 $ 631,147 4.2
============= ============ =====
(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.
PRO FORMA CONSOLIDATED STATEMENTS OF INCOME*
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
Thirteen weeks ended % Inc
June 30, 2002 July 1, 2001 (Dec)
------------- ------------ ------
Net Operating Revenues:
Newspaper advertising $ 1,045,938 $ 1,057,899 (1.1)
Newspaper circulation 305,096 306,019 (0.3)
Television 191,299 178,692 7.1
Other 81,963 84,622 (3.1)
------------- ------------- -----
Total 1,624,296 1,627,232 (0.2)
------------- ------------- -----
Operating Expenses:
Cost of sales and operating expenses,
exclusive of depreciation 810,361 824,030 (1.7)
Selling, general and administrative
expenses, exclusive of depreciation 254,534 246,324 3.3
Depreciation 53,362 51,059 4.5
Amortization of intangible assets 1,834 1,833 0.1
------------- ------------- -----
Total 1,120,091 1,123,246 (0.3)
------------- ------------- -----
Operating income 504,205 503,986 0.0
------------- ------------- -----
Non-operating income (expense):
Interest expense (41,101) (61,728) (33.4)
Other (81) 528 (115.3)
------------- ------------- -----
Total (41,182) (61,200) (32.7)
------------- ------------- -----
Income before income taxes 463,023 442,786 4.6
Provision for income taxes 159,100 153,900 3.4
------------- ------------- -----
Net income $ 303,923 $ 288,886 5.2
============= ============= =====
Net income per share-basic $1.14 $1.09 4.6
===== ===== ====
Net income per share-diluted $1.13 $1.08 4.6
===== ===== ====
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 CONSOLIDATED STATEMENTS OF INCOME*
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
Twenty-six weeks ended % Inc
June 30, 2002 July 1, 2001 (Dec)
------------- ------------ ------
Net Operating Revenues:
Newspaper advertising $ 2,015,741 $ 2,078,833 (3.0)
Newspaper circulation 615,808 619,028 (0.5)
Television 358,485 334,305 7.2
Other 158,870 170,014 (6.6)
------------- ------------- -----
Total 3,148,904 3,202,180 (1.7)
------------- ------------- -----
Operating Expenses:
Cost of sales and operating expenses,
exclusive of depreciation 1,628,927 1,663,577 (2.1)
Selling, general and administrative
expenses, exclusive of depreciation 502,865 501,062 0.4
Depreciation 106,731 104,340 2.3
Amortization of intangible assets 3,667 3,666 0.0
------------- ------------- -----
Total 2,242,190 2,272,645 (1.3)
------------- ------------- -----
Operating income 906,714 929,535 (2.5)
------------- ------------- -----
Non-operating income (expense):
Interest expense (69,855) (142,170) (50.9)
Other (2,373) 976 (343.1)
------------- ------------- -----
Total (72,228) (141,194) (48.8)
------------- ------------- -----
Income before income taxes 834,486 788,341 5.9
Provision for income taxes 287,000 274,000 4.7
------------- ------------- -----
Net income $ 547,486 $ 514,341 6.4
============= ============= =====
Net income per share-basic $2.05 $1.94 5.7
===== ===== ====
Net income per share-diluted $2.04 $1.93 5.7
===== ===== ====
Dividends per share $0.46 $0.44 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 ended % Inc
June 30, 2002 July 1, 2001 (Dec)
------------- ------------ ------
Net Operating Revenues:
Newspaper publishing $ 1,432,997 $ 1,448,540 (1.1)
Television 191,299 178,692 7.1
------------- ------------ -----
Total $ 1,624,296 $ 1,627,232 (0.2)
============= ============ =====
Operating Income
(net of depreciation and amortization):
Newspaper publishing $ 425,225 $ 431,179 (1.4)
Television 94,463 87,590 7.8
Corporate (15,483) (14,783) (4.7)
------------- ------------ -----
Total $ 504,205 $ 503,986 0.0
============= ============ =====
Depreciation and Amortization:
Newspaper publishing $ 45,315 $ 44,888 1.0
Television 6,331 6,513 (2.8)
Corporate 3,550 1,491 138.1
------------- ------------ -----
Total $ 55,196 $ 52,892 4.4
============= ============ =====
Operating Cash Flow (2):
Newspaper publishing $ 470,540 $ 476,067 (1.2)
Television 100,794 94,103 7.1
Corporate (11,933) (13,292) 10.2
------------- ------------ -----
Total $ 559,401 $ 556,878 0.5
============= ============ =====
After-tax Cash Flow (3):
------------- ------------ -----
Total $ 359,119 $ 341,778 5.1
============= ============ =====
(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.
PRO FORMA BUSINESS SEGMENT INFORMATION (1)
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Twenty-six weeks ended % Inc
June 30, 2002 July 1, 2001 (Dec)
------------- ------------ ------
Net Operating Revenues:
Newspaper publishing $ 2,790,419 $ 2,867,875 (2.7)
Television 358,485 334,305 7.2
------------- ------------ -----
Total $ 3,148,904 $ 3,202,180 (1.7)
============= ============ =====
Operating Income
(net of depreciation and amortization):
Newspaper publishing $ 769,928 $ 807,035 (4.6)
Television 167,232 152,295 9.8
Corporate (30,446) (29,795) (2.2)
------------- ------------ -----
Total $ 906,714 $ 929,535 (2.5)
============= ============ =====
Depreciation and Amortization:
Newspaper publishing $ 90,550 $ 91,960 (1.5)
Television 12,748 13,057 (2.4)
Corporate 7,100 2,989 137.5
------------- ------------ -----
Total $ 110,398 $ 108,006 2.2
============= ============ =====
Operating Cash Flow (2):
Newspaper publishing $ 860,478 $ 898,995 (4.3)
Television 179,980 165,352 8.8
Corporate (23,346) (26,806) 12.9
------------- ------------ -----
Total $ 1,017,112 $ 1,037,541 (2.0)
============= ============ =====
After-tax Cash Flow (3):
------------- ------------ -----
Total $ 657,884 $ 622,347 5.7
============= ============ =====
(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 June 30, 2002
Newspaper Consolidated
Publishing Television Corporate Total
------------ ---------- --------- -----------
Operating cash flow $ 470,540 $ 100,794 $(11,933) $ 559,401
Less:
Depreciation (43,481) (6,331) (3,550) (53,362)
Amortization (1,834) -- -- (1,834)
----------- --------- -------- -----------
Operating income $ 425,225 $ 94,463 $(15,483) $ 504,205
=========== ========= ======== ===========
Twenty-six Weeks Ended June 30, 2002
Newspaper Consolidated
Publishing Television Corporate Total
------------ ---------- --------- -----------
Operating cash flow $ 860,478 $ 179,980 $(23,346) $ 1,017,112
Less:
Depreciation (86,883) (12,748) (7,100) (106,731)
Amortization (3,667) -- -- (3,667)
----------- --------- -------- -----------
Operating income $ 769,928 $ 167,232 $(30,446) $ 906,714
=========== ========= ======== ===========