Third Quarter 1999 Earnings
ARLINGTON, Va. — Gannett announced today that diluted earnings per share advanced 19 percent to 74 cents per share in the third quarter, a new record. In the third quarter of 1998, diluted earnings per share were 62 cents. Results for the quarter include the operations of Newsquest plc, a U.K. based newspaper company acquired in July.
Net income increased 18 percent in the third quarter to $207,479,000 from $176,519,000 in the year earlier interval. Operating revenues gained 11 percent to $1,358,229,000 from $1,226,062,000 in 1998’s third quarter. If Gannett had owned the same complement of properties in both quarters, revenues would have increased 4 percent. Operating income advanced 18 percent to $370,015,000 from $312,666,000 in the third quarter of 1998. Operating cash flow increased to $457,132,000 from $389,666,000 in the prior year.
Average diluted shares outstanding in the quarter totaled 282,200,000 compared with 286,923,000 in 1998’s third quarter. During the third quarter, Gannett repurchased approximately 1.3 million shares of common stock. In the last half of 1998, the company repurchased approximately 6 million shares.
For the first nine months of 1999, net income, excluding a $32,780,000 net non-operating after-tax gain, advanced 13 percent to $630,562,000. Net income for the first nine months of 1998, excluding a $183,607,000 net non-operating after-tax gain principally from the sale of several businesses, was $558,571,000. Diluted earnings per share, excluding the net non-operating after-tax gain of 11 cents, increased 15 percent to $2.24. In 1998, diluted earnings per share, excluding the net non-operating after-tax gain of 64 cents, totaled $1.95. Operating cash flow was $1,345,734,000, compared to $1,223,867,000 in 1998. Operating revenues increased 6 percent to $3,949,639,000 for the nine 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 and USA WEEKEND and a 9 percent decline in newsprint expense for the quarter. The newly acquired Newsquest properties also boosted operating cash flow and made a contribution to earnings per share. The television group achieved improved revenues. However, television segment results were impacted by recent television station transactions including the exchange of Gannett’s station in Austin, TX for a station in Sacramento, CA, plus other consideration.
Operating income from newspapers grew 23 percent in the third quarter to $304,676,000 and revenues advanced 12 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 5 percent in the quarter, including a 12 percent gain in national, a 6 percent increase in classified and flat local revenues. Pro forma advertising volume also advanced 5 percent for the quarter.
At USA TODAY, paid advertising pages jumped 16 percent to 1,443 compared to 1,242 in the third quarter of 1998. Advertising revenues grew 21 percent. For the year-to-date, USA TODAY’s advertising revenues were up 19 percent and paid pages numbered 4,539, compared with 4,030 last year, a 13 percent increase.
Television revenues increased 5 percent to $166,770,000 while operating cash flow was $81,295,000. Recent television station transactions, including the previously mentioned exchange completed in June 1999, unfavorably impacted the operating margins of the television group.
Cable revenues increased 11 percent in the third quarter to $64,668,000 and operating cash flow was $28,942,000 for the quarter. Basic cable subscribers totaled 516,951 at the end of the quarter, equal to 62 percent of homes passed. Pay subscribers numbered 355,184 at quarter end.
On July 27 the company announced that it had entered into an agreement to sell the assets of Multimedia Cablevision, Inc., a wholly owned subsidiary of Gannett’s Multimedia Inc., to Cox Communications, Inc. for approximately $2.7 billion in cash. Closing is expected to occur in the first 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. In addition, the company owns a variety of non-daily publications, including USA WEEKEND, a weekly magazine. Newsquest plc, a wholly-owned Gannett subsidiary acquired in mid-1999, is the largest regional newspaper publisher in England with 11 daily newspapers and a variety of non-daily publications, including Berrow’s Worcester Journal, the oldest continuously published newspaper in the world. 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
Sept. 26, 1999 Sept. 27, 1998 (Dec)
Net Operating Revenues:
Newspaper advertising $ 817,844 $ 707,347 15.6
Newspaper circulation 255,754 251,534 1.7
Television 166,770 159,125 4.8
Cable 64,668 58,231 11.1
Other 53,193 49,825 6.8
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Total 1,358,229 1,226,062 10.8
Operating Expenses:
Cost of sales and operating expenses,
exclusive of depreciation 686,661 648,320 5.9
Selling, general and administrative
expenses, exclusive of depreciation 214,436 188,076 14.0
Depreciation 51,726 49,878 3.7
Amortization of intangible assets 35,391 27,122 30.5
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Total 988,214 913,396 8.2
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Operating income 370,015 312,666 18.3
Non-operating income (expense):
Interest expense (26,474) (17,190) 54.0
Other 1,588 (877) --
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Total (24,886) (18,067) 37.7
Income before income taxes 345,129 294,599 17.2
Provision for income taxes 137,650 118,080 16.6
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Net income $ 207,479 $ 176,519 17.5
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Net income per share - basic $0.74 $0.62 19.4
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Net income per share - diluted $0.74 $0.62 19.4
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Dividends per share $0.21 $0.20 5.0
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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
Sept. 26, 1999 Sept. 27, 1998 (Dec)
Net Operating Revenues:
Newspaper advertising $ 2,326,669 $ 2,124,016 9.5
Newspaper circulation 757,923 758,375 (0.1)
Television 522,444 518,616 0.7
Cable and Security 190,521 179,521 6.1
Other 152,082 149,581 1.7
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Total 3,949,639 3,730,109 5.9
Operating Expenses:
Cost of sales and operating expenses,
exclusive of depreciation 1,994,237 1,938,055 2.9
Selling, general and administrative
expenses, exclusive of depreciation 609,668 568,187 7.3
Depreciation 153,327 153,273 0.0
Amortization of intangible assets 91,258 79,826 14.3
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Total 2,848,490 2,739,341 4.0
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Operating income 1,101,149 990,768 11.1
Non-operating income (expense):
Interest expense (56,918) (60,767) (6.3)
Other 59,261 308,977 (80.8)
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Total 2,343 248,210 (99.1)
Income before income taxes 1,103,492 1,238,978 (10.9)
Provision for income taxes 440,150 496,800 (11.4)
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Net income $ 663,342 $ 742,178 (10.6)
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Net income per share - basic $2.37 $2.61 (9.2)
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Net income per share - diluted $2.35 $2.59 (9.3)
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Dividends per share $0.61 $0.58 5.2
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Earnings Summary Excluding
1999 and 1998 Net Non-operating Gains
Year-to-date Ended % Inc
Sept. 26, 1999 Sept. 27, 1998 (Dec)
Operating income $ 1,101,149 $ 990,768 11.1
Non-operating income (expense):
Interest expense (56,918) (60,767) (6.3)
Other 4,731 2,450 93.1
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Total (52,187) (58,317) (10.5)
Income before income taxes 1,048,962 932,451 12.5
Provision for income taxes 418,400 373,880 11.9
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Net income $ 630,562 $ 558,571 12.9
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Net income per share - basic $2.26 $1.96 15.3
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Net income per share - diluted $2.24 $1.95 14.9
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Dividends per share $0.61 $0.58 5.2
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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.
BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Quarter Ended % Inc
Sept. 26, 1999 Sept. 27, 1998 (Dec)
Operating Revenues:
Newspaper publishing $1,126,791 $1,008,706 11.7
Television 166,770 159,125 4.8
Cable 64,668 58,231 11.1
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Total $1,358,229 $1,226,062 10.8
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Operating Income (net of
depreciation and amortization):
Newspaper publishing $304,676 $248,786 22.5
Television 65,773 66,507 (1.1)
Cable 16,649 13,883 19.9
Corporate (17,083) (16,510) (3.5)
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Total $370,015 $312,666 18.3
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Depreciation and Amortization:
Newspaper publishing $56,789 $46,386 22.4
Television 15,522 14,643 6.0
Cable 12,293 13,758 (10.6)
Corporate 2,513 2,213 13.6
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Total $87,117 $77,000 13.1
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Operating Cash Flow:
Newspaper publishing $361,465 $295,172 22.5
Television 81,295 81,150 0.2
Cable 28,942 27,641 4.7
Corporate (14,570) (14,297) (1.9)
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Total $457,132 $389,666 17.3
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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.
BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollarsYear-to-date Ended % Inc
Sept. 26, 1999 Sept. 27, 1998 (Dec)Operating Revenues:
Newspaper publishing $3,236,674 $3,031,972 6.8
Television 522,444 518,616 0.7
Cable and Security 190,521 179,521 6.1
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Total $3,949,639 $3,730,109 5.9
========== ========== =====Operating Income (net of
depreciation and amortization):
Newspaper publishing $872,853 $762,276 14.5
Television 230,524 237,104 (2.8)
Cable and Security 48,080 42,362 13.5
Corporate (50,308) (50,974) 1.3
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Total $1,101,149 $990,768 11.1
========== ========== =====Depreciation and Amortization:
Newspaper publishing $151,168 $138,656 9.0
Television 47,298 44,636 6.0
Cable and Security 38,832 43,157 (10.0)
Corporate 7,287 6,650 9.6
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Total $244,585 $233,099 4.9
========== ========== =====Operating Cash Flow:
Newspaper publishing $1,024,021 $900,932 13.7
Television 277,822 281,740 (1.4)
Cable and Security 86,912 85,519 1.6
Corporate (43,021) (44,324) 2.9
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Total $1,345,734 $1,223,867 10.0
========== ========== =====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
11%, operating income of 15% and operating cash flow of 6%.