Third Quarter 1997 Earnings
ARLINGTON, VA — Gannett announced today that earnings per share from continuing operations gained 38 percent in the third quarter to 54 cents per share, a new record. In the third quarter of 1996, earnings from continuing operations were 39 cents per share. Earnings per share results reflect a two-for-one common stock split that was effective Oct. 6, 1997. On a pre-split basis, earnings per share would have been $1.08 for the quarter compared to 79 cents in the year-earlier quarter.
Income from continuing operations increased 37 percent in the quarter to $152,460,000 from $111,210,000 in the third quarter of 1996. Operating revenues from continuing operations gained 5 percent in the quarter to $1,146,090,000, compared to $1,092,703,000 in 1996’s third quarter. Operating income from continuing operations grew 22 percent to $284,701,000 from $233,038,000 in the year-earlier quarter. Operating cash flow from continuing operations advanced to $359,580,000 in the quarter from $305,282,000 in the prior year reflecting continued strong advertising demand at our local newspapers and at USA TODAY and significantly lower newsprint costs.
Average shares outstanding in the quarter totaled 283,597,000 compared to 281,888,000 in 1996’s third quarter. The shares outstanding reflect the two-for-one stock split.
For the first nine months of 1997, earnings per share from continuing operations increased 44 percent to $1.70, compared to $1.18 in 1996. On a pre-split basis, earnings per share would have been $3.41 for the nine months, compared to $2.38 for the same period of 1996. Income from continuing operations grew 44 percent to $482,257,000 from $334,897,000 in 1996. Operating cash flow from continuing operations was $1,127,418,000, compared to $923,132,000 in the year-earlier interval. Operating revenues from continuing operations increased 6 percent to $3,410,674,000 for the nine months.
In a statement, the company said that the newspaper segment posted record operating results for the quarter. Newspaper profitability reflected continued strong advertising demand, particularly in classified, continued strong operating results at USA TODAY, a favorable comparison year over year in Detroit and a 15 percent reduction in newsprint expense. If current pricing trends continue, newsprint expense for the fourth quarter may be up slightly compared to the fourth quarter of 1996. While the Broadcasting group continued to experience strong advertising demand in the quarter, the segment posted unfavorable comparisons year over year reflecting the absence of Summer Olympics-related advertising which buoyed results in the third quarter of 1996.
Operating cash flow from newspapers jumped 29 percent in the quarter to $258,858,000, and revenues were 7 percent higher than last year. Pro forma advertising revenues grew 7 percent, including a 9 percent gain in classified, a 5 percent gain in local and a 9 percent gain in national. Pro forma newspaper advertising volume increased 7 percent for the quarter.
Despite the absence of Olympics-related advertising, advertising revenues at USA TODAY increased 5 percent. Paid advertising pages numbered 1,247 compared to last year’s 1,250. For the nine months, paid pages totaled 3,773 compared to 3,583 last year, and advertising revenues gained 10 percent.
Broadcasting cash flow declined 3 percent in the quarter to $86,288,000. Revenues declined 8 percent to $164,895,000 again reflecting the absence of Olympics-related advertising. On a pro forma basis, revenues declined 5 percent, including a 6 percent decline in television revenues and a 15 percent increase in radio revenues.
Cable and Security operating cash flow advanced 5 percent to $29,519,000, from $28,155,000 in the third quarter of 1996. Revenues gained 9 percent to $63,502,000. Basic cable subscribers totaled 472,947 at the end of the quarter, equal to 61 percent of homes passed. Pay units numbered 332,864 at Sept. 30, 1997. Security ended the quarter with 122,380 customers.
In August, Gannett completed the purchase of Army Times Publishing Company. Also in August, the company announced that it had entered into an agreement to purchase New Jersey Press, Inc. Closing is expected to occur in the fourth quarter.
Gannett is a nationwide news and information company that publishes 89 daily newspapers, including USA TODAY, and USA WEEKEND, a newspaper magazine. Gannett also operates 18 television stations, five radio stations, cable television systems in five states and alarm security services.