Second Quarter 1998 Earnings
ARLINGTON, Va. — Gannett announced today that diluted earnings per share advanced 15 percent to 78 cents per share in the second quarter, a new record. In the second quarter of 1997, diluted earnings per share were 68 cents.
Net income increased 14 percent in the second quarter to $222,809,000 from $194,733,000 in the year earlier interval. Operating revenues gained 10 percent to $1,304,137,000 from $1,187,827,000 in 1997’s second quarter. If Gannett had owned the same complement of properties in both quarters, revenues would have increased 6 percent. Operating income advanced 9 percent to $389,859,000 from $357,520,000 in the second quarter of 1997. Operating cash flow advanced to $466,477,000 from $432,394,000 in the prior year, reflecting continued strong advertising demand at our local newspapers and a healthy broadcast environment.
Average diluted shares outstanding in the quarter totaled 287,447,000 compared to 285,355,000 in 1997’s second quarter.
For the first six months of 1998, net income, excluding a $183,607,000 net non-operating gain principally from the sale of several businesses, advanced 16 percent to $382,052,000 from $329,797,000 in the year earlier interval. Diluted earnings per share, excluding the net non-operating after tax gain, increased 15 percent to $1.33 compared to $1.16 in 1997. Operating cash flow was $834,201,000, compared to $767,838,000 in 1997. Operating revenues increased 11 percent to $2,504,047,000 for the six months.
In a statement, the company said each division reported record operating results for the quarter. Newspaper earnings advanced reflecting the impact of continued strong advertising demand, particularly in classified advertising, tempered by a 28 percent increase in newsprint expense. The broadcasting group achieved record operating results buoyed by strong demand for television advertising.
Operating cash flow from newspapers was 9 percent higher than last year and revenues in the quarter grew 12 percent. If the same group of newspapers had been held in both periods, pro forma advertising revenues would have increased 7 percent in the quarter, including an 8 percent gain in classified, a similar gain in national and a 5 percent gain in local. Pro forma newspaper advertising volume advanced 7 percent for the quarter.
At USA TODAY, paid advertising pages increased 7 percent to 1,494 compared to 1,397 in the second quarter of 1997. Advertising revenues grew 9 percent. For the year to date, USA TODAY’s advertising revenues are up 12 percent, and paid pages numbered 2,788, compared to 2,526 last year, a 10 percent increase.
Broadcasting cash flow rose 7 percent in the quarter to $119,668,000 as revenues grew 5 percent. On a pro forma basis, television revenues grew 8 percent and cash flow advanced 11 percent. The company sold all of its remaining five radio stations on the first day of its 1998 fiscal year. A portion of the proceeds were used to acquire WLTX-TV, the CBS affiliate in Columbia, S.C., this quarter.
Cable revenues increased 8 percent in the quarter to $57,228,000 from $53,150,000 in the year earlier quarter. Operating cash flow from cable advanced 6 percent to $27,808,000. The company sold the assets of Multimedia Security Services, Inc. in the first quarter. Prior to the sale, the results of this segment included both the cable and security businesses. Basic cable subscribers totaled 478,271 at the end of the quarter, equal to 61 percent of homes passed. Pay units numbered 325,701 at quarter end.
In July, Gannett sold five daily newspapers to Community Newspaper Holdings, Inc. and completed the acquisition of several newspapers in New Jersey, including the Daily Record in Morristown and the Ocean County’s Observer in Toms River.
Gannett is a nationwide news and information company that publishes 84 daily newspapers, including USA TODAY, and USA WEEKEND, a newspaper magazine. Gannett also operates 21 television stations and cable television systems in five states.
CONSOLIDATED STATEMENTS OF INCOME
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
Quarter Ended % Inc
June 28, 1998 June 29, 1997 (Dec)
Net Operating Revenues:
Newspaper advertising $ 746,675 $ 656,306 13.8
Newspaper circulation 252,762 232,237 8.8
Broadcasting 198,799 189,245 5.0
Cable and Security 57,228 64,363 (11.1)
Other 48,673 45,676 6.6
-------------- -------------- -------
Total 1,304,137 1,187,827 9.8
-------------- -------------- -------
Operating Expenses:
Cost of sales and operating expenses,
exclusive of depreciation 646,755 575,646 12.4
Selling, general and administrative
expenses, exclusive of depreciation 190,905 179,787 6.2
Depreciation 50,365 49,976 0.8
Amortization of intangible assets 26,253 24,898 5.4
-------------- -------------- -------
Total 914,278 830,307 10.1
-------------- -------------- -------
Operating income 389,859 357,520 9.0
-------------- -------------- -------
Non-operating income (expense):
Interest expense (20,348) (24,783) (17.9)
Other 2,498 (1,004) ----
-------------- -------------- -------
Total (17,850) (25,787) (30.8)
-------------- -------------- -------
Income before income taxes 372,009 331,733 12.1
Provision for income taxes 149,200 137,000 8.9
-------------- -------------- -------
Net income $ 222,809 $ 194,733 14.4
============== ============== =======
Net income per share - basic $0.78 $0.69 13.0
============== ============== =======
Net income per share - diluted $0.78 $0.68 14.7
============== ============== =======
Dividends per share $0.19 $0.18 5.6
============== ============== =======
NOTE: The Company's radio and alarm security businesses were sold in the first
quarter of 1998 - refer to Business Segment Information for pro forma
comparisons.
CONSOLIDATED STATEMENTS OF INCOME
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
Year-to-date Ended % Inc
June 28, 1998 June 29, 1997 (Dec)
Net Operating Revenues:
Newspaper advertising $ 1,416,669 $ 1,249,858 13.3
Newspaper circulation 506,841 465,607 8.9
Broadcasting 359,491 339,851 5.8
Cable and Security 121,290 125,909 (3.7)
Other 99,756 83,359 19.7
-------------- -------------- -------
Total 2,504,047 2,264,584 10.6
-------------- -------------- -------
Operating Expenses:
Cost of sales and operating expenses,
exclusive of depreciation 1,289,735 1,142,168 12.9
Selling, general and administrative
expenses, exclusive of depreciation 380,111 354,578 7.2
Depreciation 103,395 99,758 3.6
Amortization of intangible assets 52,704 49,740 6.0
-------------- -------------- -------
Total 1,825,945 1,646,244 10.9
-------------- -------------- -------
Operating income 678,102 618,340 9.7
-------------- -------------- -------
Non-operating income (expense):
Interest expense (43,577) (50,401) (13.5)
Other 309,854 (6,092) ----
-------------- -------------- -------
Total 266,277 (56,493) ----
-------------- -------------- -------
Income before income taxes 944,379 561,847 68.1
Provision for income taxes 378,720 232,050 63.2
-------------- -------------- -------
Net income $ 565,659 $ 329,797 71.5
============== ============== =======
Net income per share - basic $1.99 $1.17 70.1
============== ============== =======
Net income per share - diluted $1.97 $1.16 69.8
============== ============== =======
Dividends per share $0.38 $0.36 5.6
============== ============== =======
NOTE:
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 $184 million on an after-tax basis ($.65 per share-basic and $.64 per share-diluted).
Earnings Summary Excluding
1998 Net Non-operating Gain
Year-to-date Ended % Inc
June 28, 1998 June 29, 1997 (Dec)
Operating income $ 678,102 $ 618,340 9.7
-------------- -------------- -------
Non-operating income (expense):
Interest expense (43,577) (50,401) (13.5)
Other 3,327 (6,092) ----
-------------- -------------- -------
Total (40,250) (56,493) (28.8)
-------------- -------------- -------
Income before income taxes 637,852 561,847 13.5
Provision for income taxes 255,800 232,050 10.2
-------------- -------------- -------
Net income $ 382,052 $ 329,797 15.8
============== ============== =======
Net income per share - basic $1.34 $1.17 14.5
============== ============== =======
Net income per share - diluted $1.33 $1.16 14.7
============== ============== =======
Dividends per share $0.38 $0.36 5.6
============== ============== =======
BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Quarter Ended % Inc
June 28, 1998 June 29, 1997 (Dec)
Operating Revenues:
Newspaper publishing $ 1,048,110 $ 934,219 12.2
Broadcasting 198,799 189,245 5.0
Cable and Security 57,228 64,363 (11.1)
----------- ----------- ------
Total $ 1,304,137 $ 1,187,827 9.8
=========== =========== ======
Operating Income
(net of depreciation and amortization):
Newspaper publishing $ 287,570 $ 263,584 9.1
Broadcasting 104,630 96,991 7.9
Cable and Security 14,563 13,884 4.9
Corporate (16,904) (16,939) 0.2
----------- ----------- ------
Total $ 389,859 $ 357,520 9.0
=========== =========== ======
Depreciation and Amortization:
Newspaper publishing $ 46,113 $ 41,363 11.5
Broadcasting 15,038 14,682 2.4
Cable and Security 13,245 16,659 (20.5)
Corporate 2,222 2,170 2.4
----------- ----------- ------
Total $ 76,618 $ 74,874 2.3
=========== =========== ======
Operating Cash Flow:
Newspaper publishing $ 333,683 $ 304,947 9.4
Broadcasting 119,668 111,673 7.2
Cable and Security 27,808 30,543 (9.0)
Corporate (14,682) (14,769) 0.6
----------- ----------- ------
Total $ 466,477 $ 432,394 7.9
=========== =========== ======
NOTES:
Operating Cash Flow represents operating income for each of the Company's
business segments plus related depreciation and amortization expense.
In the first quarter of 1998, the Company sold its alarm security business
which had been reported in the Cable and Security business segment. On a pro
forma basis for the second quarter, giving effect to this sale, cable
operations reported gains in revenue of 8%, operating income of 13% and
operating cash flow of 6%. On a year-to-date basis, pro forma cable operations
reflect a 9% revenue gain, a 12% improvement in operating income and a 6% gain
in operating cash flow.
On the first day of fiscal 1998, the Company sold its five remaining radio
stations, which had been reported in the Broadcasting business segment. The
Company also purchased two television stations in Maine in early fiscal 1998
and a television station in Columbia, South Carolina in May 1998. On a pro
forma basis for the second quarter, giving effect to these transactions,
television operations reported gains in revenue of 8%, operating income of
13% and operating cash flow of 11%. On a year-to-date basis, pro forma
television operations reflect a 10% revenue gain, a 16% improvement in
operating income and a 13% gain in operating cash flow.
BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollarsYear-to-date Ended % Inc
June 28, 1998 June 29, 1997 (Dec)
Operating Revenues:
Newspaper publishing $ 2,023,266 $ 1,798,824 12.5
Broadcasting 359,491 339,851 5.8
Cable and Security 121,290 125,909 (3.7)
----------- ----------- -----
Total $ 2,504,047 $ 2,264,584 10.6
=========== =========== =====Operating Income
(net of depreciation and amortization):
Newspaper publishing $ 513,489 $ 470,778 9.1
Broadcasting 170,597 154,391 10.5
Cable and Security 28,479 27,249 4.5
Corporate (34,463) (34,078) (1.1)
----------- ----------- -----
Total $ 678,102 $ 618,340 9.7
=========== =========== =====Depreciation and Amortization:
Newspaper publishing $ 92,270 $ 82,512 11.8
Broadcasting 29,993 29,494 1.7
Cable and Security 29,399 33,152 (11.3)
Corporate 4,437 4,340 2.2
----------- ----------- -----
Total $ 156,099 $ 149,498 4.4
=========== =========== =====
Operating Cash Flow:
Newspaper publishing $ 605,759 $ 553,290 9.5
Broadcasting 200,590 183,885 9.1
Cable and Security 57,878 60,401 (4.2)
Corporate (30,026) (29,738) (1.0)
----------- ----------- -----
Total $ 834,201 $ 767,838 8.6
=========== =========== =====
NOTE:
Operating Cash Flow represents operating income for each of the Company's business segments plus related depreciation and amortization expense.