Second-Quarter 2000 Earnings
Arlington, Va. — Gannett announced today that diluted earnings per share from continuing operations advanced 19 percent to $1 in the second quarter of 2000, a new record. In the year-earlier quarter, diluted earnings per share from continuing operations, excluding a net non-operating gain principally from a television station exchange transaction, were 84 cents. Results for the quarter include the operations of Newsquest plc, acquired in July 1999, and News Communications & Media plc, acquired in June 2000, both U.K.-based newspaper companies. Operating results exclude contributions from cable, which is reported as a discontinued operation in the company’s financial statements. The sale of the assets of Multimedia Cablevision, Inc. was completed in January 2000.
Operating revenues from continuing operations gained 16 percent to $1,490,200,000 in the second 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 15 percent to $537,130,000 in the quarter from $468,411,000 in the year-earlier interval. Operating income from continuing operations advanced 13 percent to $454,681,000, compared to $403,111,000 in the prior-year period. Income from continuing operations advanced 13 percent in the second quarter to $265,762,000 from $234,834,000 in 1999’s second quarter, which excluded the next after-tax gain from the television station exchange.
Average diluted shares outstanding in the quarter totaled 266,294,000, compared to 282,212,000 in 1999’s second quarter. Approximately 3 million shares were repurchased in the second quarter of 2000 and about 14.7 million shares were repurchased in total in the first half of 2000.
For the first six months of 2000, operating cash flow from continuing operations increased 17 percent from $830,632,000 to $975,022,000. Income from continuing operations, which excludes the $745 million after-tax gain from the sale of the cable assets, advanced 16 percent to $468,779,000. Income from continuing operations for the first six months of 1999, excluding a net after-tax gain from the television station exchange, was $404,802,000. Diluted earnings per share from continuing operations, which excludes the gain from the sale of cable of $2.74 per diluted share, increased 21 percent to $1.73. In 1999, diluted earnings per share from continuing operations, excluding the net after-tax gain of $33,000,000, totaled $1.43. Operating revenues from continuing operations increased 16 percent to $2,854,643,000 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 national and classified and a contribution from the Newsquest properties which boosted operating cash flow and earnings per share. Newsprint expense increased 9 percent for the quarter, primarily as a result of higher usage related to our U.K. acquisitions. The television group achieved improved operating results year-over-year. However, television comparisons were impacted by the exchange of Gannett’s station in Austin, Texas, for a station in Sacramento, Calif., plus other consideration, which occurred in June 1999.
Operating cash flow from newspapers grew 18 percent in the second quarter to $432,474,000, and revenues were 18 percent higher than the same period last year. Pro forma advertising revenues grew 5 percent in the quarter, including a 9 percent gain in national, a 4 percent increase in classified and a 2 percent rise in local. Pro forma advertising volume advanced 3 percent for the quarter.
At USA TODAY, paid advertising pages increased 11 percent to 1,833, compared to 1,657 in the second quarter of 1999. Advertising revenues grew 12 percent. For the year to date, USA TODAY’s advertising revenues are up 18 percent and paid pages numbered 3,517, compared to 3,096 last year, a 14 percent increase.
Television cash flow increased 3 percent to $118,779,000 and revenues rose 6 percent to $205,413,000. Pro forma television revenues advanced 4 percent.
At the end of the second quarter, Gannett had 68 domestic newspaper Web sites, including USATODAY.com, one of the largest general interest news sites on the Web with nearly 14 million unique users, and 16 television Web sites. In addition, all of Newsquest’s newspapers have an Internet presence. In the first half of 2000, the company generated about $28 million in revenue from Internet activities.
On June 8 the company announced an agreement to acquire 21 daily newspapers along with numerous weeklies and niche publications, from Thomson Newspapers, Inc. for an aggregate purchase price of $1.125 billion. The company announced on June 28 an agreement to acquire Central Newspapers, Inc. for an approximate cash purchase price of $2.6 billion. Closing on both of these transactions is expected to occur by the end of the third quarter of 2000.
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 in excess of 200 non-daily publications and USA WEEKEND, a weekly newspaper magazine. In the United Kingdom, Gannett subsidiary Newsquest plc publishes nearly 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 most of its TV stations and newspapers including USATODAY.com, one of the most popular news sites on the Web.
CONSOLIDATED STATEMENTS OF INCOME
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
Thirteen weeks ended % Inc
June 25, 2000 June 27, 1999 (Dec)
Net Operating Revenues:
Newspaper advertising $ 956,895 $ 788,274 21.4
Newspaper circulation 264,165 248,812 6.2
Television 205,413 194,480 5.6
Other 63,727 48,052 32.6
------------- ------------- ------
Total 1,490,200 1,279,618 16.5
Operating Expenses:
Cost of sales and operating expenses,
exclusive of depreciation (1) 715,655 615,083 16.4
Selling, general and administrative
expenses, exclusive of
depreciation (1) 237,415 196,124 21.1
Depreciation 47,070 42,130 11.7
Amortization of intangible assets 35,379 23,170 52.7
------------- ------------- ------
Total 1,035,519 876,507 18.1
------------- ------------- ------
Operating income 454,681 403,111 12.8
Non-operating income (expense):
Interest expense (22,666) (13,852) 63.6
Other 7,947 55,305 ----
------------- ------------- ------
Total (14,719) 41,453 ----
------------- ------------- ------
Income before income taxes 439,962 444,564 (1.0)
Provision for income taxes 174,200 176,950 (1.6)
------------- ------------- ------
Income from continuing operations $ 265,762 $ 267,614 (0.7)
Discontinued Operations:
Income from the operation of
discontinued operations, net of tax 9,356 ----
------------- ------------- ------
Net income $ 265,762 $ 276,970 (4.0)
============= ============= ======
Earnings from continuing
operations per share-basic $1.01 $0.96 5.2
Earnings from discontinued operations:
Discontinued operations per
share-basic $0.03 ----
----- ----- ------
Net income per share-basic $1.01 $0.99 2.0
===== ===== ======
Earnings from continuing
operations per share-diluted $1.00 $0.95 5.3
Earnings from discontinued operations:
Discontinued operations per
share-diluted $0.03 ----
----- ----- ------
Net income per share-diluted $1.00 $0.98 2.0
===== ===== ======
Dividends per share $0.21 $0.20 5.0
===== ===== ======
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.
(1) Certain 1999 amounts have been reclassified to conform with the current year
presentation.
Earnings Summary Excluding
1999 Net Non-operating Gain
and Discontinued Operations
Thirteen weeks ended % Inc
June 25, 2000 June 27, 1999 (Dec)
Operating income $ 454,681 $ 403,111 12.8
Non-operating income (expense):
Interest expense (22,666) (13,852) 63.6
Other 7,947 775 ----
------------- ------------- ------
Total (14,719) (13,077) 12.6
------------- ------------- ------
Income before income taxes 439,962 390,034 12.8
Provision for income taxes 174,200 155,200 12.2
------------- ------------- ------
Income from continuing operations $ 265,762 $ 234,834 13.2
============= ============= ======
Earnings from continuing operations
per share basic $1.01 $0.84 20.2
===== ===== ======
Earnings from continuing operations
per share diluted $1.00 $0.84 19.0
===== ===== ======
CONSOLIDATED STATEMENTS OF INCOME
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
Twenty-six weeks ended % Inc
June 25, 2000 June 27, 1999 (Dec)
Net Operating Revenues:
Newspaper advertising $ 1,830,684 $ 1,508,825 21.3
Newspaper circulation 531,227 502,169 5.8
Television 372,202 355,674 4.6
Other 120,530 98,889 21.9
------------- ------------- ------
Total 2,854,643 2,465,557 15.8
Operating Expenses:
Cost of sales and operating expenses,
exclusive of depreciation (1) 1,416,351 1,244,964 13.8
Selling, general and administrative
expenses, exclusive of
depreciation (1) 463,270 389,961 18.8
Depreciation 93,678 84,845 10.4
Amortization of intangible assets 69,145 46,084 50.0
------------- ------------- ------
Total 2,042,444 1,765,854 15.7
------------- ------------- ------
Operating income 812,199 699,703 16.1
Non-operating income (expense):
Interest expense (42,841) (30,444) 40.7
Other 6,621 57,673 ----
------------- ------------- ------
Total (36,220) 27,229 ----
------------- ------------- ------
Income before income taxes 775,979 726,932 6.7
Provision for income taxes 307,200 289,350 6.2
------------- ------------- ------
Income from continuing operations $ 468,779 $ 437,582 7.1
Discontinued Operations:
Income from the operation of
discontinued operations, net of tax 2,437 18,281 (86.7)
Gain on sale of cable business,
net of tax 744,700 ----
------------- ------------- ------
Net income $ 1,215,916 $ 455,863 166.7
============= ============= ======
Earnings from continuing
operations per share-basic $1.74 $1.56 11.5
Earnings from discontinued operations:
Discontinued operations per
share-basic $0.01 $0.07 (85.7)
Gain on sale of cable business
per share-basic $2.77 $0.00 ----
----- ----- ------
Net income per share-basic $4.52 $1.63 ----
===== ===== ======
Earnings from continuing
operations per share-diluted $1.73 $1.55 11.6
Earnings from discontinued operations:
Discontinued operations per
share-diluted $0.01 $0.07 (85.7)
Gain on sale of cable business
per share-diluted $2.74 $0.00 ----
----- ----- ------
Net income per share-diluted $4.48 $1.62 ----
===== ===== ======
Dividends per share $0.42 $0.40 5.0
===== ===== ======
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.
(1) Certain 1999 amounts have been reclassified to conform with the current year
presentation.
Earnings Summary Excluding
1999 Net Non-operating Gain
and Discontinued Operations
Twenty-six weeks ended % Inc
June 25, 2000 June 27, 1999 (Dec)
Operating income $ 812,199 $ 699,703 16.1
Non-operating income (expense):
Interest expense (42,841) (30,444) 40.7
Other 6,621 3,143 110.7
------------- ------------- ------
Total (36,220) (27,301) 32.7
------------- ------------- ------
Income before income taxes 775,979 672,402 15.4
Provision for income taxes 307,200 267,600 14.8
------------- ------------- ------
Income from continuing operations $ 468,779 $ 404,802 15.8
============= ============= ======
Earnings from continuing operations
per share basic $1.74 $1.44 20.8
===== ===== ======
Earnings from continuing operations
per share diluted $1.73 $1.43 21.0
===== ===== ======
BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Thirteen weeks ended % Inc
June 25, 2000 June 27, 1999 (Dec)
Operating Revenues:
Newspaper publishing $ 1,284,787 $ 1,085,138 18.4
Broadcasting 205,413 194,480 5.6
------------- ------------- ------
Total $ 1,490,200 $ 1,279,618 16.5
============= ============= ======
Operating Income
(net of depreciation and
amortization):
Newspaper publishing $ 369,231 $ 320,502 15.2
Broadcasting 101,870 99,035 2.9
Corporate (16,420) (16,426) 0.0
------------- ------------- ------
Total $ 454,681 $ 403,111 12.8
============= ============= ======
Depreciation and Amortization:
Newspaper publishing $ 63,243 $ 46,682 35.5
Broadcasting 16,909 16,068 5.2
Corporate 2,297 2,550 (9.9)
------------- ------------- ------
Total $ 82,449 $ 65,300 26.3
============= ============= ======
Operating Cash Flow:
Newspaper publishing $ 432,474 $ 367,184 17.8
Broadcasting 118,779 115,103 3.2
Corporate (14,123) (13,876) (1.8)
------------- ------------- ------
Total $ 537,130 $ 468,411 14.7
============= ============= ======
NOTE:
Operating Cash Flow represents operating income for each of the company's
business segments plus related depreciation and amortization expense.
BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Twenty-six weeks ended % Inc
June 25, 2000 June 27, 1999 (Dec)
Operating Revenues:
Newspaper publishing $ 2,482,441 $ 2,109,883 17.7
Broadcasting 372,202 355,674 4.6
------------- ------------- ------
Total $ 2,854,643 $ 2,465,557 15.8
============= ============= ======
Operating Income
(net of depreciation
and amortization):
Newspaper publishing $ 676,666 $ 568,177 19.1
Broadcasting 167,997 164,752 2.0
Corporate (32,464) (33,226) 2.3
------------- ------------- ------
Total $ 812,199 $ 699,703 16.1
============= ============= ======
Depreciation and Amortization:
Newspaper publishing $ 125,532 $ 94,379 33.0
Broadcasting 33,035 31,776 4.0
Corporate 4,256 4,774 (10.9)
------------- ------------- ------
Total $ 162,823 $ 130,929 24.4
============= ============= ======
Operating Cash Flow:
Newspaper publishing $ 802,198 $ 662,556 21.1
Broadcasting 201,032 196,528 2.3
Corporate (28,208) (28,452) 0.9
------------- ------------- ------
Total $ 975,022 $ 830,632 17.4
============= ============= ======
NOTE:
Operating Cash Flow represents operating income for each of the company's
business segments plus related depreciation and amortization expense.