Second Quarter 1999 Earnings
ARLINGTON, Va. — Gannett announced today that diluted earnings per share, excluding a net non-operating gain principally from a television station exchange transaction, advanced 12 percent to 87 cents per share in the second quarter, a new record. In the second quarter of 1998, diluted earnings per share were 78 cents.
The company completed the acquisition of KXTV, the ABC affiliate in Sacramento-Stockton-Modesto, California and received other consideration in exchange for KVUE, the ABC affiliate in Austin, Texas on June 1, 1999. Net income included a net non-operating after-tax gain of 11 cents, principally from this exchange. Diluted earnings per share, including the 11 cent gain, totaled 98 cents in the second quarter.
Net income, excluding the net non-operating after-tax gain of $32,780,000, increased 10 percent in the second quarter to $244,190,000 from $222,809,000 in the year-earlier interval. Operating revenues gained 3 percent to $1,343,345,000 from $1,304,137,000 in 1998’s second quarter. Operating income advanced 8 percent to $419,217,000 compared to $389,859,000 in the second quarter of 1998. Operating cash flow increased to $497,777,000 in the quarter from $466,477,000 in the prior-year period.
Average diluted shares outstanding in the quarter totaled 282,212,000, compared to 287,447,000 in 1998’s second quarter. In the last half of 1998, Gannett repurchased approximately 6 million shares of common stock.
For the first six months of 1999, net income, excluding the $32,780,000 net non-operating after-tax gain, advanced 11 percent to $423,083,000. Net income for the first six months of 1998, excluding a $183,607,000 net non-operating after-tax gain principally from the sale of several businesses, was $382,052,000. Diluted earnings per share, excluding the net non-operating after-tax gain of 11 cents, increased 13 percent to $1.50. In 1998, diluted earnings per share, excluding the net non-operating after-tax gain of 64 cents, totaled $1.33. Operating cash flow was $888,602,000, compared to $834,201,000 in 1998. Operating revenues increased 4 percent to $2,591,410,000 for the first six months.
In a statement, the company said that the newspaper segment posted record operating results for the quarter. Newspaper earnings advanced reflecting the impact of continued strong advertising demand, particularly in classified and national advertising, very strong operating results at USA TODAY, USA WEEKEND and our recently acquired New Jersey properties and a 9 percent decline in newsprint expense for the quarter. Television segment results were impacted by the absence of political advertising, and the Seinfeld finale on our NBC-affiliated stations, which bolstered results in the second quarter of 1998.
Operating income from newspapers grew 12 percent in the second quarter to $320,502,000 and revenues increased 4 percent over the same period last year. If the same group of newspapers had been held in both periods, pro forma advertising revenues would have increased 6 percent in the quarter, including a 16 percent gain in national, an 8 percent increase in classified and a 2 percent decline in local. Pro forma newspaper advertising volume advanced 5 percent for the quarter.
At USA TODAY, paid advertising pages increased 11 percent to 1,657 compared to 1,494 in the second quarter of 1998. Advertising revenues grew 20 percent. For the year-to-date, USA TODAY’s advertising revenues are up 18 percent and paid pages numbered 3,096 compared to 2,788 last year, an 11 percent increase.
Television cash flow declined 4 percent to $115,103,000 and revenues were $194,480,000 in the second quarter. The company purchased a television station in Columbia, S.C. in May 1998 and completed the previously mentioned television exchange in June 1999. On a pro forma basis, giving effect to these transactions, television revenues and operating cash flow both declined 4 percent, again reflecting the absence of political advertising and the Seinfeld finale on our NBC-affiliated stations.
Cable revenues increased 11 percent in the second quarter to $63,727,000 from $57,228,000 in the year earlier quarter. Operating cash flow was $29,366,000 for the quarter. Basic cable subscribers totaled 508,963 at the end of the quarter, equal to 61 percent of homes passed. Pay subscribers numbered 296,219 at quarter end.
The company announced on June 24th the terms of an offer to acquire the entire issued and to be issued share capital of Newsquest plc by Gannett U.K. Limited, a wholly owned subsidiary of Gannett. Newsquest is the largest publisher of regional newspapers in England and the third largest in the U.K. Closing is expected to occur by the end of the third quarter of 1999.
Gannett is a nationwide news and information company that publishes 74 daily newspapers, including USA TODAY, and USA WEEKEND, a newspaper magazine. Gannett also operates cable television systems in three states and 21 television stations.
CONSOLIDATED STATEMENTS OF INCOME
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
Quarter Ended % Inc
June 27, 1999 June 28, 1998 (Dec)
Net Operating Revenues:
Newspaper advertising $ 788,274 $ 746,675 5.6
Newspaper circulation 248,812 252,762 (1.6)
Television 194,480 198,799 (2.2)
Cable 63,727 57,228 11.4
Other 48,052 48,673 (1.3)
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Total 1,343,345 1,304,137 3.0
Operating Expenses:
Cost of sales and operating expenses,
exclusive of depreciation 646,222 646,755 (0.1)
Selling, general and administrative
expenses, exclusive of depreciation 199,346 190,905 4.4
Depreciation 50,499 50,365 0.3
Amortization of intangible assets 28,061 26,253 6.9
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Total 924,128 914,278 1.1
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Operating income 419,217 389,859 7.5
Non-operating income (expense):
Interest expense (13,852) (20,348) (31.9)
Other 55,305 2,498 ****
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Total 41,453 (17,850) ****
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Income before income taxes 460,670 372,009 23.8
Provision for income taxes 183,700 149,200 23.1
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Net income $ 276,970 $ 222,809 24.3
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Net income per share - basic $0.99 $0.78 26.9
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Net income per share - diluted $0.98 $0.78 25.6
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Dividends per share $0.20 $0.19 5.3
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NOTE: 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.
Earnings Summary Excluding
1999 Net Non-operating Gain
Quarter Ended % Inc
June 27,1999 June 28,1998 (Dec)
Operating income $ 419,217 $ 389,859 7.5
Non-operating income (expense):
Interest expense (13,852) (20,348) (31.9)
Other 775 2,498 (69.0)
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Total (13,077) (17,850) (26.7)
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Income before income taxes 406,140 372,009 9.2
Provision for income taxes 161,950 149,200 8.5
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Net income $ 244,190 $ 222,809 9.6
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Net income per share - basic $0.87 $0.78 11.5
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Net income per share - diluted $0.87 $0.78 11.5
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Dividends per share $0.20 $0.19 5.3
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CONSOLIDATED STATEMENTS OF INCOME
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
Year-to-date Ended % Inc
June 27, 1999 June 28, 1998 (Dec)
Net Operating Revenues:
Newspaper advertising $ 1,508,825 $ 1,416,669 6.5
Newspaper circulation 502,169 506,841 (0.9)
Television 355,674 359,491 (1.1)
Cable and Security 125,853 121,290 3.8
Other 98,889 99,756 (0.9)
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Total 2,591,410 2,504,047 3.5
Operating Expenses:
Cost of sales and operating expenses,
exclusive of depreciation 1,307,576 1,289,735 1.4
Selling, general and administrative
expenses, exclusive of depreciation 395,232 380,111 4.0
Depreciation 101,601 103,395 (1.7)
Amortization of intangible assets 55,867 52,704 6.0
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Total 1,860,276 1,825,945 1.9
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Operating income 731,134 678,102 7.8
Non-operating income (expense):
Interest expense (30,444) (43,577) (30.1)
Other 57,673 309,854 (81.4)
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Total 27,229 266,277 (89.8)
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Income before income taxes 758,363 944,379 (19.7)
Provision for income taxes 302,500 378,720 (20.1)
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Net income $ 455,863 $ 565,659 (19.4)
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Net income per share - basic $1.63 $1.99 (18.1)
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Net income per share - diluted $1.62 $1.97 (17.8)
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Dividends per share $0.40 $0.38 5.3
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NOTE: 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.
Earnings Summary Excluding
1999 and 1998 Net Non-operating Gains
Year-to-date Ended % Inc
June 27,1999 June 28,1998 (Dec)
Operating income $ 731,134 $ 678,102 7.8
Non-operating income (expense):
Interest expense (30,444) (43,577) (30.1)
Other 3,143 3,327 (5.5)
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Total (27,301) (40,250) (32.2)
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Income before income taxes 703,833 637,852 10.3
Provision for income taxes 280,750 255,800 9.8
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Net income $ 423,083 $ 382,052 10.7
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Net income per share - basic $1.51 $1.34 12.7
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Net income per share - diluted $1.50 $1.33 12.8
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Dividends per share $0.40 $0.38 5.3
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BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Quarter Ended % Inc
June 27, 1999 June 28, 1998 (Dec)
Operating Revenues:
Newspaper publishing $ 1,085,138 $ 1,048,110 3.5
Television 194,480 198,799 (2.2)
Cable 63,727 57,228 11.4
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Total $ 1,343,345 $ 1,304,137 3.0
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Operating Income (net of depreciation
and amortization):
Newspaper publishing $ 320,502 $ 287,570 11.5
Television 99,035 104,630 (5.3)
Cable 16,106 14,563 10.6
Corporate (16,426) (16,904) 2.8
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Total $ 419,217 $ 389,859 7.5
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Depreciation and Amortization:
Newspaper publishing $ 46,682 $ 46,113 1.2
Television 16,068 15,038 6.8
Cable 13,260 13,245 0.1
Corporate 2,550 2,222 4.8
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Total $ 78,560 $ 76,618 2.5
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Operating Cash Flow:
Newspaper publishing $ 367,184 $ 333,683 10.0
Television 115,103 119,668 (3.8)
Cable 29,366 27,808 5.6
Corporate (13,876) (14,682) 5.5
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Total $ 497,777 $ 466,477 6.7
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NOTES:
Operating Cash Flow represents operating income for each of the Company's
business segments plus related depreciation and amortization expense.
In May 1998, the Company purchased a television station in Columbia,
South Carolina. In June, 1999, the Company exchanged its station in Austin,
Texas, for a station in Sacramento, California, plus other consideration.
On a pro forma basis for the quarter, giving effect to these purchases,
television operations reported declines in revenues of 4%, operating income
of 5% and operating cash flow of 4%.
BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollarsYear-to-date Ended % Inc
June 27, 1999 June 28, 1998 (Dec)
Operating Revenues:
Newspaper publishing $ 2,109,883 $ 2,023,266 4.3
Television 355,674 359,491 (1.1)
Cable and Security 125,853 121,290 3.8
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Total $ 2,591,410 $ 2,504,047 3.5
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Operating Income (net of depreciation
and amortization):
Newspaper publishing $ 568,177 $ 513,489 10.7
Television 164,752 170,597 (3.4)
Cable and Security 31,431 28,479 10.4
Corporate (33,226) (34,463) 3.6
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Total $ 731,134 $ 678,102 7.8
============ ============ =====Depreciation and Amortization:
Newspaper publishing $ 94,379 $ 92,270 2.3
Television 31,776 29,993 5.9
Cable and Security 26,539 29,399 (9.7)
Corporate 4,774 4,437 7.6
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Total $ 157,468 $ 156,099 0.9
============ ============ =====Operating Cash Flow:
Newspaper publishing $ 662,556 $ 605,759 9.4
Television 196,528 200,590 (2.0)
Cable and Security 57,970 57,878 0.2
Corporate (28,452) (30,026) 5.2
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Total $ 888,602 $ 834,201 6.5
============ ============ ====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 year-to-date, giving effect to the sale of the
Alarm Security Business, cable operations reported gains in revenues of 12%,
operating income of 13% and operating cash flow of 7%.In May 1998, the Company purchased a television station in Columbia, South
Carolina. In June, 1999, the Company exchanged its station in Austin, Texas,
for a station in Sacramento, California, plus other consideration. On a pro
forma basis for the year-to-date, giving effect to these purchases,
television operations reported declines in revenues of 3%, operating income
of 4% and operating cash flow of 3%.