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Gannett Co., Inc. Reports Non-GAAP Earnings per Diluted Share of $0.43, Earnings per Diluted Share of $0.34 on GAAP basis

MCLEAN, Va., Oct. 21, 2013 /PRNewswire/ -- Highlights for the quarter include the following:

  • Company-wide digital revenue growth of 12 percent, now comprising 30 percent of total revenue
  • Digital Segment revenue up 5 percent
  • Broadcasting revenues almost 14 percent higher excluding cyclical impact of Olympic and political advertising
  • Belo shareholders approve definitive merger agreement on September 25, 2013

Gannett Co., Inc. (NYSE: GCI) reported non-GAAP (generally accepted accounting principles) earnings per diluted share of $0.43 for the third quarter compared to $0.56 for the same quarter last year. Results were driven by higher revenue in the Digital Segment as well as substantial revenue growth in the Broadcasting Segment excluding the cyclical impact of Olympic and political advertising.

In June, the company entered into a definitive merger agreement with Belo Corp. (Belo) under which Gannett will acquire all outstanding shares of Belo for $13.75 per share in cash, or approximately $1.5 billion, plus the assumption of $715 million in existing debt for an enterprise value of approximately $2.2 billion. This transaction was approved by Belo shareholders during the quarter. However, the transaction is subject to antitrust and Federal Communications Commission (FCC) approval and other customary closing conditions.

Gracia Martore, president and chief executive officer, said, "In the third quarter, we continued to take steps to further expand our digital offerings and execute across all of our media and marketing platforms.  We achieved a 12 percent increase in digital revenue company-wide, which underscores our ongoing evolution into a more highly diversified, higher margin multi-media company. In our Broadcast and Publishing businesses, despite challenging comparisons to third quarter 2012 -- which benefited from Summer Olympic advertising, record political spending and the significant ramp-up of our content subscription model -- we performed well. Total company-wide third quarter 2013 revenue was essentially flat, excluding the incremental impact from Olympic and political spending last year." 

Martore added, "We are also pleased that during the quarter, Belo shareholders approved the pending acquisition, and we continue to anticipate bringing the transaction to a close following the attainment of regulatory approvals. We are working towards a seamless integration that will accelerate our transformation and create an even stronger Gannett."

CONTINUING OPERATIONS

Operating revenues for the company were $1.25 billion in the third quarter compared to $1.31 billion during the same quarter a year ago. These results reflect an increase in Digital Segment revenues offset by lower revenues in Publishing and Broadcasting. Publishing Segment revenues were impacted by softer advertising demand and circulation revenue comparisons due to the roll out of the All Access Content Subscription Model last year. The decline in Broadcasting Segment revenue reflects the cyclical absence of $75 million of Olympic and political advertising which generated incremental revenues in the same period a year ago.

Net income attributable to Gannett on a non-GAAP basis (excluding special items) was $99.8 million in the third quarter while net income attributable to Gannett on a GAAP basis totaled $79.7 million. Earnings per diluted share on a non-GAAP basis totaled $0.43 compared to $0.56 for the third quarter in 2012. Earnings per diluted share on a GAAP basis were $0.34 for the third quarter.

On September 25th, Gannett contributed the assets of Captivate to a new company jointly owned by Gannett and Generation Partners that will fund the continued growth and expansion of Captivate. Gannett retained an 18 percent interest in the partnership and will continue to participate in the future value creation at Captivate and benefit from the ongoing distribution of its content for Captivate's displays. Following the transaction, the company will no longer consolidate the results of Captivate and as a result, now accounts for its retained interest in this business using the equity method.

Special items in the third quarter of 2013 totaled $36.2 million ($20.1 million after tax or $0.09 per share) reflecting charges associated with workforce restructuring, facility consolidation and the Captivate transaction. Results for the third quarter of 2012 included $17.9 million ($10.9 million after tax or $0.05 per share) of special charges. These special items were offset by a tax benefit of $13.1 million ($0.06 per share) related primarily to a tax settlement covering multiple years.

The table below details third quarter results on a GAAP and non-GAAP basis:

 

Dollars in thousands, except per share amounts






















GAAP
Measure


Special Items


Non-GAAP Measure


Thirteen

weeks ended

Sept. 29, 2013


Workforce

restructuring


Transformation

costs


Other non-operating items


Thirteen

weeks ended

Sept. 29, 2013

Operating income

$

171,698



$

9,246



$

5,880



$



$

186,824


Total non-operating (expense) income

(47,497)





4,412



16,613



(26,472)


Income before income taxes

124,201



9,246



10,292



16,613



160,352


Provision for income taxes

26,700



3,600



4,100



8,400



42,800


Net income

97,501



5,646



6,192



8,213



117,552


Net income attributable to Gannett Co., Inc.

79,748



5,646



6,192



8,213



99,799


Net income per share - diluted

$

0.34



$

0.02



$

0.03



$

0.04



$

0.43


 

Additional information on the special items can be found in the "Use of Non-GAAP Information" section below.

Operating income was $171.7 million in the quarter. On a non-GAAP basis, operating income totaled $186.8 million compared to $231.9 million in the third quarter a year ago. Operating cash flow in the quarter (a non-GAAP term defined as operating income plus special items, depreciation and amortization) totaled $233.1 million.

Operating expenses including special charges and $9.5 million of initiative investment were $1.08 billion in the quarter compared to $1.09 billion in the third quarter last year, a decrease of 1.0 percent. On a non-GAAP basis, operating expenses, which exclude special items and include the impact of the investments in strategic initiatives, were $1.07 billion, a 1.0 percent reduction from $1.08 billion in the same quarter last year. Higher expenses in the Digital segment, due primarily to higher sales costs related to revenue growth at CareerBuilder, were more than offset by continuing cost control efforts in the Publishing Segment.

Corporate expenses on a non-GAAP basis were up $4.3 million in the quarter reflecting the absence of a small asset sale gain in the third quarter last year as well as an increase in stock compensation expense.

During the third quarter, the company repurchased approximately 1.5 million of its shares for $37.4 million. Year-to-date, 3.5 million shares have been repurchased totaling $78.8 million.

PUBLISHING

Publishing Segment revenues were $858.1 million in the quarter compared to $890.2 million in the third quarter last year. Advertising revenues were $520.2 million compared to $552.7 million in the third quarter a year ago, a 5.9 percent decline. Secular pressures as well as the relatively tepid pace of economic growth continued to impact advertising demand. While lower, year-over-year comparisons in the retail category were better than second quarter year-over-year comparisons. National advertising was lower in the quarter due in part to the absence of advertising at USA TODAY related to the Olympics that benefited third quarter results last year. Classified advertising was 6.2 percent lower, although all major advertising categories comparisons were slightly better than second quarter comparisons. A summary of the year-over-year percent change for the company's advertising categories can be found on Table 5.

Circulation revenue was down just 0.6 percent in the quarter driven by an increase in circulation revenue of over 1 percent at local domestic publishing operations that were impacted by the All Access Content Subscription Model. The benefit to circulation revenue of the All Access Content Subscription Model was tempered in the quarter as the model was rolled out to over 85 percent of local domestic publishing sites at the end of the third quarter last year. Circulation revenue at USA TODAY was lower in the quarter reflecting, in part, progress to digital platforms with its hotel partners. At Newsquest in the UK, circulation revenue was up 10.3 percent, in pounds, reflecting cover price increases.

Publishing Segment digital revenues were up 20.9 percent in the quarter reflecting growth associated with the All Access Content Subscription Model as well as digital advertising and marketing solutions. Digital revenues at all publishing operations were higher in the quarter. Local domestic publishing operations increased 22.0 percent, USA TODAY and its associated businesses were up 12.6 percent and Newsquest's digital revenues were 13.3 percent higher, in pounds.

Publishing Segment operating expenses, which include $8.1 million in strategic initiative investment, were 2.6 percent lower in the quarter and totaled $795.3 million. Non-GAAP Publishing segment operating expenses declined 2.9 percent to $781.0 million compared to $804.3 million in the third quarter last year. The decline reflects ongoing cost control and efficiency efforts offset, in part, by strategic initiative investment.

Publishing Segment operating income totaled $62.7 million including special items and strategic initiative investments. Publishing segment operating income on a non-GAAP basis was $77.1 million in the quarter while operating cash flow totaled $103.5 million.

BROADCASTING

Reported Broadcast Segment revenues (which include Captivate through September 25, 2013) totaled $203.4 million, a 14.2 percent decline from $237.0 million in the third quarter of 2012. The decrease reflects the absence of Olympic and political spending partially offset by significant growth in retransmission revenue and digital revenue growth of 20.7 percent.

Television revenues were $198.5 million compared to $233.0 million in the third quarter last year. Retransmission revenues were up 62.8 percent. Television revenues would have been 13.6 percent higher excluding the incremental impact of Olympic and political spending year-over-year, in line with guidance provided in July.

Based on current trends and reflecting a record level of political revenues achieved in the fourth quarter in 2012, we expect the percentage decrease in total television revenues for the fourth quarter of 2013 to be in the high teens compared to the fourth quarter of 2012 (excluding the extra week in the period). Record political advertising totaling $91.2 million positively impacted television revenues in the fourth quarter of 2012. Excluding the incremental impact of political spending, total television revenues in the fourth quarter this year compared to the fourth quarter last year are expected to be up in the range of 10 to 12 percent.

Broadcasting Segment operating expenses were $119.6 million in the quarter, up 1.0 percent compared to $118.4 million in the third quarter last year. On a non-GAAP basis, Broadcasting Segment expenses were $118.8 million, relatively unchanged from the prior year. Operating income on a non-GAAP basis totaled $84.6 million while operating cash flow was $91.5 million.

DIGITAL

Operating revenues in the Digital Segment totaled $191.4 million compared to $182.0 million in the third quarter in 2012 due primarily to higher revenues at CareerBuilder. Digital Segment operating expenses were $149.4 million, an increase of 5.1 percent from $142.1 million in the third quarter last year. The increase was driven by higher sales costs associated with revenue growth at CareerBuilder. Operating income was $42.1 million compared to $39.9 million in the third quarter of 2012, an increase of 5.4 percent. Operating cash flow was 4.3 percent higher and totaled $50.4 million.

Digital revenues company-wide, including the Digital Segment and all digital revenues generated by the other business segments, was $376.1 million compared to $334.6 million in the third quarter a year ago, an increase of 12.4 percent. The increase is due to the continued impact of the All Access Content Subscription Model in addition to higher digital advertising and digital marketing services revenue.

At the end of the quarter, Gannett had about 120 domestic web sites launched by its local publishing and television markets as well as USA TODAY. In September, Gannett's consolidated domestic Internet audience share increased approximately 18 percent driven by 68.1 million unique visitors reaching 30.2 percent of the Internet audience, according to comScore Media Metrix. USATODAY.com is one of the most popular news sites on the Web, reflecting approximately 19 million downloads of the USA TODAY news app including those across iPad, iPhone, Android, Windows and Kindle Fire. USA TODAY's mobile and video traffic continue to grow. Mobile visitors in September were 213 percent higher than September last year while video plays were up 919 percent. Newsquest is also an Internet leader in the UK where its network of web sites attracted 107.1 million monthly page impressions from approximately 14 million unique users in September 2013. CareerBuilder's unique visitors in September averaged 20.1 million.

NON-OPERATING ITEMS

The company's equity earnings include its share of operating results from unconsolidated investees including the California Newspapers Partnership, Texas-New Mexico Newspapers Partnership, Tucson newspaper partnership and other online/digital businesses including Classified Ventures.

Equity income in unconsolidated investees totaled $11.7 million in the quarter compared to $3.0 million in the third quarter a year ago reflecting better results at Classified Ventures and the newspaper partnerships and a special item that unfavorably impacted the third quarter last year. Excluding the special charge last year, equity income would have increased $5.5 million.

Interest expense totaled $41.6 million in the quarter, a 16.2 percent increase from the third quarter a year ago primarily reflecting the impact of a $600 million senior note issuance in July with a coupon of 5.125 percent that is set to mature in 2020. Subsequent to the quarter close, the company issued $1.25 billion in fixed rate debt comprised of $600 million maturing in 2019 with a coupon of 5.125 percent and $650 million maturing in 2023 with a coupon of 6.375 percent. The new senior note issuances are expected to increase interest expense by approximately $26 million in the fourth quarter this year.

Other non-operating items reflect primarily the $16.6 million charge associated with the change in control and sale of interests related to Captivate. Excluding special items, other non-operating income would have totaled $3.4 million in the third quarter compared to $2.9 million in the third quarter last year.

Net cash flow from operating activities was $125.0 million while free cash flow (a non-GAAP measure) totaled $105.7 million in the quarter. The balance of long-term debt was $1.98 billion and total cash was $811.4 million at the end of the quarter.

USE OF NON-GAAP INFORMATION

The company uses non-GAAP financial performance and liquidity measures to supplement the financial information presented on a GAAP basis. These non-GAAP financial measures are not to be considered in isolation from or as a substitute for the related GAAP measures, and should be read only in conjunction with financial information presented on a GAAP basis.

In this earnings report, the company discusses non-GAAP financial performance measures that exclude from its reported GAAP results the impact of special items consisting of workforce restructuring charges, transformation costs, pension settlement charges, a loss related to a change in control and sale of interests in a business, charges for accelerated depreciation recognized by an equity method investee, non-cash impairment charges, a currency-related loss recognized in other non-operating items and certain credits to its income tax provision. The company believes that such expenses and credits are not indicative of normal, ongoing operations and their inclusion in results makes for more difficult comparisons between periods and with peer group companies. Workforce restructuring expenses primarily relate to incremental expenses the company has incurred to consolidate or outsource production processes and centralize other functions. These expenses include payroll and related benefit costs. Transformation costs include incremental expenses incurred by the company to execute on its transformation and growth plan. Transformation costs also include incremental expenses associated with optimizing Gannett's real estate portfolio including accelerated depreciation and charges to reduce the carrying value of assets held for sale to fair value less costs to sell. The pension settlement charges result from the acceleration of expense related to the timing of certain pension payments. Other non-operating items include: a loss related to the change in control and sale of interests in Captivate; a non-cash impairment charge that was recorded to reduce the book value of an investment accounted for under the equity method to fair value, as the business underlying this asset had experienced significant and sustained unfavorable operating results; a currency loss related to the weakening of the British pound associated with the downgrade of the UK sovereign credit rating; and charges for accelerated depreciation recognized by an equity method investee related to outsourcing certain production processes. The year-to-date period for 2013 included credits to the income tax provision related to reserve releases as a result of federal exam resolution and lapse of a statute of limitation. Third quarter and year-to-date periods for 2012 included a credit related primarily to tax settlements covering multiple years.

The company also discusses operating cash flow, a non-GAAP financial performance measure that it believes offers a useful view of the overall operation of its businesses. This non-GAAP measure is calculated by adding amounts associated with the special expense items described above, as well as depreciation and amortization, to operating income as reported on a GAAP basis. This earnings report also discusses free cash flow, a non-GAAP liquidity measure. Free cash flow is defined as "net cash flow from operating activities" as reported on the statement of cash flows reduced by "purchase of property, plant and equipment" as well as "payments for investments" and increased by "proceeds from investments" and voluntary pension contributions, net of related tax benefit. The company believes that free cash flow is a useful measure for management and investors to evaluate the level of cash generated by operations and the ability of its operations to fund investments in new and existing businesses, return cash to shareholders under the company's capital program, repay indebtedness, add to the company's cash balance, or use in other discretionary activities. Management uses free cash flow to monitor cash available for repayment of indebtedness and in its discussions with the investment community.

Management uses non-GAAP financial performance measures for purposes of evaluating business unit and consolidated company performance. The company therefore believes that each of the non-GAAP measures presented provides useful information to investors by allowing them to view the company's businesses through the eyes of management and the Board of Directors, facilitating comparison of results across historical periods and providing a focus on the underlying ongoing operating performance of its businesses. In addition, many of the company's peer group companies present similar non-GAAP measures so the presentation of such measures facilitates industry comparisons. Tabular reconciliations for the non-GAAP financial measures are contained in Tables 6 through 11 attached to this news release.

As previously announced, the company will hold an earnings conference call at 10:00 a.m. ET today. The call can be accessed via a live webcast through the company's web site, www.gannett.com, or listen-only conference lines. U.S. callers should dial 1-888-710-4019 and international callers should dial 913-312-1491 at least 10 minutes prior to the scheduled start of the call. The confirmation code for the conference call is 9659021. To access the replay, dial 1-888-203-1112 in the U.S. International callers should use the number 719-457-0820. The confirmation code for the replay is 9659021. Materials related to the call will be available through the Investor Relations section of the company's web site Monday morning.

About Gannett
Gannett Co., Inc. is an international media and marketing solutions company that informs and engages more than 100 million people every month through its powerful network of broadcast, digital, mobile and publishing properties. Our portfolio of trusted brands offers marketers unmatched local-to-national reach and customizable, innovative marketing solutions across any platform. Gannett is committed to connecting people - and the companies who want to reach them - with their interests and communities. For more information, visit www.gannett.com.

Certain statements in this press release may be forward looking in nature or "forward looking statements" as defined in the Private Securities Litigation Reform Act of 1995. The forward looking statements contained in this press release are subject to a number of risks, trends and uncertainties that could cause actual performance to differ materially from these forward looking statements. A number of those risks, trends and uncertainties are discussed in the company's SEC reports, including the company's annual report on Form 10-K and quarterly reports on Form 10-Q. Any forward looking statements in this press release should be evaluated in light of these important risk factors.

Gannett is not responsible for updating the information contained in this press release beyond the published date, or for changes made to this press release by wire services, Internet service providers or other media.

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Gannett Co., Inc. and Subsidiaries

Unaudited, in thousands (except per share amounts)




















Table No. 1









Thirteen

weeks ended

Sept. 29, 2013


Thirteen

weeks ended

Sept. 23, 2012


% Increase

(Decrease)

Net operating revenues:







Publishing advertising


$

520,189



$

552,676



(5.9)


Publishing circulation


274,999



276,655



(0.6)


Broadcasting


203,364



237,039



(14.2)


Digital


191,447



182,022



5.2


All other


62,891



60,869



3.3


Total


1,252,890



1,309,261



(4.3)









Operating expenses:







Cost of sales and operating expenses, exclusive of depreciation


713,369



720,941



(1.1)


Selling, general and administrative expenses, exclusive of depreciation


315,677



318,385



(0.9)


Depreciation


38,195



40,460



(5.6)


Amortization of intangible assets


8,071



8,045



0.3


Facility consolidation charges


5,880



4,231



39.0


Total


1,081,192



1,092,062



(1.0)


Operating income


171,698



217,199



(20.9)









Non-operating (expense) income:







Equity income in unconsolidated investees, net


11,711



3,005



***


Interest expense


(41,628)



(35,829)



16.2


Other non-operating items


(17,580)



2,933



***


Total


(47,497)



(29,891)



58.9









Income before income taxes


124,201



187,308



(33.7)


Provision for income taxes


26,700



38,700



(31.0)


Net income


97,501



148,608



(34.4)


Net income attributable to noncontrolling interests


(17,753)



(15,525)



14.4


Net income attributable to Gannett Co., Inc.


$

79,748



$

133,083



(40.1)









Net income per share - basic


$

0.35



$

0.58



(39.7)


Net income per share - diluted


$

0.34



$

0.56



(39.3)









Weighted average number of common shares outstanding:







Basic


228,587



230,556



(0.9)


Diluted


234,438



235,550



(0.5)









Dividends declared per share


$

0.20



$

0.20




 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Gannett Co., Inc. and Subsidiaries

Unaudited, in thousands (except per share amounts)




















Table No. 2









Thirty-nine

weeks ended

Sept. 29, 2013


Thirty-nine

weeks ended

Sept. 23, 2012


% Increase

(Decrease)

Net operating revenues:







Publishing advertising


$

1,609,164



$

1,698,376



(5.3)


Publishing circulation


840,626



803,929



4.6


Broadcasting


606,906



618,593



(1.9)


Digital


552,875



531,700



4.0


All other


183,753



182,290



0.8


Total


3,793,324



3,834,888



(1.1)









Operating expenses:







Cost of sales and operating expenses, exclusive of depreciation


2,159,962



2,164,070



(0.2)


Selling, general and administrative expenses, exclusive of depreciation


950,407



943,005



0.8


Depreciation


115,588



120,320



(3.9)


Amortization of intangible assets


26,567



24,002



10.7


Facility consolidation charges


15,163



14,116



7.4


Total


3,267,687



3,265,513



0.1


Operating income


525,637



569,375



(7.7)









Non-operating (expense) income:







Equity income in unconsolidated investees, net


28,929



15,980



81.0


Interest expense


(113,207)



(111,542)



1.5


Other non-operating items


(28,954)



2,688



***


Total


(113,232)



(92,874)



21.9









Income before income taxes


412,405



476,501



(13.5)


Provision for income taxes


71,700



116,500



(38.5)


Net income


340,705



360,001



(5.4)


Net income attributable to noncontrolling interests


(42,772)



(38,806)



10.2


Net income attributable to Gannett Co., Inc.


$

297,933



$

321,195



(7.2)









Net income per share - basic


$

1.30



$

1.38



(5.8)


Net income per share - diluted


$

1.27



$

1.35



(5.9)









Weighted average number of common shares outstanding:







Basic


228,940



233,390



(1.9)


Diluted


234,724



237,699



(1.3)









Dividends declared per share


$

0.60



$

0.60




 

BUSINESS SEGMENT INFORMATION

Gannett Co., Inc. and Subsidiaries

Unaudited, in thousands of dollars




















Table No. 3









Thirteen

weeks ended

Sept. 29, 2013


Thirteen

weeks ended

Sept. 23, 2012


% Increase

(Decrease)

Net operating revenues:







Publishing


$

858,079



$

890,200



(3.6)


Broadcasting


203,364



237,039



(14.2)


Digital


191,447



182,022



5.2


Total


$

1,252,890



$

1,309,261



(4.3)









Operating income (net of depreciation, amortization and

facility consolidation charges):







Publishing


$

62,744



$

73,731



(14.9)


Broadcasting


83,810



118,672



(29.4)


Digital


42,050



39,912



5.4


Corporate


(16,906)



(15,116)



11.8


Total


$

171,698



$

217,199



(20.9)









Depreciation, amortization and facility consolidation charges:





Publishing


$

32,183



$

33,276



(3.3)


Broadcasting


7,059



6,879



2.6


Digital


8,309



8,391



(1.0)


Corporate


4,595



4,190



9.7


Total


$

52,146



$

52,736



(1.1)









Operating cash flow:







Publishing


$

94,927



$

107,007



(11.3)


Broadcasting


90,869



125,551



(27.6)


Digital


50,359



48,303



4.3


Corporate


(12,311)



(10,926)



12.7


Total


$

223,844



$

269,935



(17.1)














Operating cash flow represents operating income from each of the company's business segments plus related depreciation, amortization and facility consolidation charges. See Table No. 10 for reconciliation of amounts to the Condensed Consolidated Statements of Income.

 

BUSINESS SEGMENT INFORMATION

Gannett Co., Inc. and Subsidiaries

Unaudited, in thousands of dollars




















Table No. 4









Thirty-nine

weeks ended

Sept. 29, 2013


Thirty-nine

weeks ended

Sept. 23, 2012


% Increase

(Decrease)

Net operating revenues:







Publishing


$

2,633,543



$

2,684,595



(1.9)


Broadcasting


606,906



618,593



(1.9)


Digital


552,875



531,700



4.0


Total


$

3,793,324



$

3,834,888



(1.1)









Operating income (net of depreciation, amortization and
facility consolidation charges):







Publishing


$

208,073



$

239,982



(13.3)


Broadcasting


265,578



285,873



(7.1)


Digital


100,931



92,706



8.9


Corporate


(48,945)



(49,186)



(0.5)


Total


$

525,637



$

569,375



(7.7)









Depreciation, amortization and facility consolidation charges:





Publishing


$

95,834



$

100,226



(4.4)


Broadcasting


20,968



21,113



(0.7)


Digital


26,799



24,626



8.8


Corporate


13,717



12,473



10.0


Total


$

157,318



$

158,438



(0.7)









Operating cash flow:







Publishing


$

303,907



$

340,208



(10.7)


Broadcasting


286,546



306,986



(6.7)


Digital


127,730



117,332



8.9


Corporate


(35,228)



(36,713)



(4.0)


Total


$

682,955



$

727,813



(6.2)














Operating cash flow represents operating income from each of the company's business segments plus related depreciation, amortization and facility consolidation charges. See Table No. 10 for reconciliation of amounts to the Condensed Consolidated Statements of Income.

 

PUBLISHING SEGMENT REVENUE COMPARISONS

Gannett Co., Inc. and Subsidiaries

Unaudited

















Table No. 5
















The percentage changes for the Publishing segment advertising and classified revenue categories were as follows:









Third quarter 2013 year-over-year advertising comparisons:






U.S.

Publishing

(including USA TODAY)


Newsquest

(in pounds)


Total

Publishing

segment

(constant currency)


Total

Publishing

segment









Retail

(4.7%)


0.6%


(4.2%)


(4.3%)

National

(9.7%)


(12.3%)


(9.9%)


(10.1%)

Classified

(5.1%)


(8.1%)


(5.9%)


(6.2%)

Total advertising

(5.7%)


(5.4%)


(5.7%)


(5.9%)









Year-to-date 2013 year-over-year advertising comparisons:






U.S.

Publishing

(including USA TODAY)


Newsquest

(in pounds)


Total

Publishing

segment

(constant currency)


Total

Publishing

segment









Retail

(4.5%)


(3.0%)


(4.4%)


(4.6%)

National

(4.2%)


(17.3%)


(5.3%)


(5.4%)

Classified

(5.2%)


(7.7%)


(5.9%)


(6.3%)

Total advertising

(4.7%)


(6.9%)


(5.0%)


(5.3%)









Third quarter 2013 year-over-year classified comparisons:






U.S.

Publishing

(including USA TODAY)


Newsquest

(in pounds)


Total

Publishing

segment

(constant currency)


Total

Publishing

segment









Automotive

(0.3%)


(7.3%)


(1.1%)


(1.3%)

Employment

(8.6%)


(6.9%)


(8.1%)


(8.5%)

Real Estate

(3.2%)


(9.3%)


(5.5%)


(6.1%)

Legal

(10.9%)


—%


(10.9%)


(10.9%)

Other

(7.4%)


(8.5%)


(7.8%)


(8.3%)

Total classified

(5.1%)


(8.1%)


(5.9%)


(6.2%)









Year-to-date 2013 year-over-year classified comparisons:






U.S.

Publishing

(including USA TODAY)


Newsquest

(in pounds)


Total

Publishing

segment

(constant currency)


Total

Publishing

segment









Automotive

(1.4%)


(9.7%)


(2.4%)


(2.7%)

Employment

(8.7%)


(4.7%)


(7.5%)


(8.0%)

Real Estate

(3.7%)


(8.5%)


(5.5%)


(6.2%)

Legal

(9.3%)


—%


(9.3%)


(9.3%)

Other

(5.7%)


(8.5%)


(6.6%)


(7.2%)

Total classified

(5.2%)


(7.7%)


(5.9%)


(6.3%)

 

NON-GAAP FINANCIAL INFORMATION

Gannett Co., Inc. and Subsidiaries

Unaudited, in thousands of dollars (except per share amounts)





































The company uses non-GAAP financial performance and liquidity measures to supplement the financial information presented on a GAAP basis. These non-GAAP financial measures are not to be considered in isolation from or as a substitute for the related GAAP measures and should be read only in conjunction with financial information presented on a GAAP basis.


Tables No. 6 through No. 11 reconcile these non-GAAP measures to the most directly comparable GAAP measure.













Table No. 6













GAAP

Measure


Special Items


Non-GAAP

Measure




Thirteen

weeks ended

Sept. 29, 2013


Workforce

restructuring


Transformation costs


Other non-operating items


Thirteen

weeks ended

Sept. 29, 2013



Cost of sales and operating expenses,
exclusive of depreciation

$

713,369



$

(7,162)



$



$



$

706,207





Selling, general and administrative expenses, exclusive of depreciation

315,677



(2,084)







313,593





Facility consolidation charges

5,880





(5,880)









Operating expenses

1,081,192



(9,246)



(5,880)





1,066,066





Operating income

171,698



9,246



5,880





186,824





Other non-operating items

(17,580)





4,412



16,613



3,445





Total non-operating (expense) income

(47,497)





4,412



16,613



(26,472)





Income before income taxes

124,201



9,246



10,292



16,613



160,352





Provision for income taxes

26,700



3,600



4,100



8,400



42,800





Net income

97,501



5,646



6,192



8,213



117,552





Net income attributable to Gannett Co., Inc.

79,748



5,646



6,192



8,213



99,799





Net income per share - diluted

$

0.34



$

0.02



$

0.03



$

0.04



$

0.43

















GAAP

Measure


Special Items


Non-GAAP

Measure


Thirteen

weeks ended

Sept. 23, 2012


Workforce

restructuring


Transformation costs


Pension settlement charges


Special tax benefits


Thirteen

weeks ended

Sept. 23, 2012

Cost of sales and operating expenses, exclusive of depreciation

$

720,941



$

(6,706)



$



$



$



$

714,235


Selling, general and administrative expenses, exclusive of depreciation

318,385



(1,244)





(2,523)





314,618


Facility consolidation charges

4,231





(4,231)








Operating expenses

1,092,062



(7,950)



(4,231)



(2,523)





1,077,358


Operating income

217,199



7,950



4,231



2,523





231,903


Equity income in unconsolidated investees, net

3,005





3,220







6,225


Total non-operating (expense) income

(29,891)





3,220







(26,671)


Income before income taxes

187,308



7,950



7,451



2,523





205,232


Provision for income taxes

38,700



3,000



3,000



1,000



13,100



58,800


Net income

148,608



4,950



4,451



1,523



(13,100)



146,432


Net income attributable to Gannett Co., Inc.

133,083



4,950



4,451



1,523



(13,100)



130,907


Net income per share - diluted (a)

$

0.56



$

0.02



$

0.02



$

0.01



$

(0.06)



$

0.56














(a) Total per share amount does not sum due to rounding.

 

NON-GAAP FINANCIAL INFORMATION

Gannett Co., Inc. and Subsidiaries

Unaudited, in thousands of dollars (except per share amounts)





































Table No. 7













GAAP

Measure


Special Items


Non-GAAP

Measure


Thirty-nine

weeks ended

Sept. 29, 2013


Workforce

restructuring


Transformation costs


Other non-operating items


Special tax benefits


Thirty-nine

weeks ended

Sept. 29, 2013

Cost of sales and operating expenses,
exclusive of depreciation

$

2,159,962



$

(29,692)



$



$



$



$

2,130,270


Selling, general and administrative expenses, exclusive of depreciation

950,407



(6,647)









943,760


Facility consolidation charges

15,163





(15,163)








Operating expenses

3,267,687



(36,339)



(15,163)







3,216,185


Operating income

525,637



36,339



15,163







577,139


Equity income in unconsolidated investees, net

28,929







731





29,660


Other non-operating items

(28,954)





14,811



18,690





4,547


Total non-operating (expense) income

(113,232)





14,811



19,421





(79,000)


Income before income taxes

412,405



36,339



29,974



19,421





498,139


Provision for income taxes

71,700



14,300



11,900



8,700



27,800



134,400


Net income

340,705



22,039



18,074



10,721



(27,800)



363,739


Net income attributable to Gannett Co., Inc.

297,933



22,039



18,074



10,721



(27,800)



320,967


Net income per share - diluted

$

1.27



$

0.09



$

0.08



$

0.05



$

(0.12)



$

1.37















GAAP

Measure


Special Items


Non-GAAP

Measure


Thirty-nine

weeks ended

Sept. 23, 2012


Workforce

restructuring


Transformation costs


Pension settlement charges


Special tax benefits


Thirty-nine

weeks ended

Sept. 23, 2012

Cost of sales and operating expenses, exclusive of depreciation

$

2,164,070



$

(28,770)



$



$



$



$

2,135,300


Selling, general and administrative expenses, exclusive of depreciation

943,005



(5,205)





(7,946)





929,854


Facility consolidation charges

14,116





(14,116)








Operating expenses

3,265,513



(33,975)



(14,116)



(7,946)





3,209,476


Operating income

569,375



33,975



14,116



7,946





625,412


Equity income in unconsolidated investees, net

15,980





3,220







19,200


Total non-operating (expense) income

(92,874)





3,220







(89,654)


Income before income taxes

476,501



33,975



17,336



7,946





535,758


Provision for income taxes

116,500



13,500



6,900



3,200



13,100



153,200


Net income

360,001



20,475



10,436



4,746



(13,100)



382,558


Net income attributable to Gannett Co., Inc.

321,195



20,475



10,436



4,746



(13,100)



343,752


Net income per share - diluted (a)

$

1.35



$

0.09



$

0.04



$

0.02



$

(0.06)



$

1.45














(a) Total per share amount does not sum due to rounding.

 

NON-GAAP FINANCIAL INFORMATION

Gannett Co., Inc. and Subsidiaries

Unaudited, in thousands of dollars































Table No. 8











GAAP

Measure


Special Items


Non-GAAP

Measure




Thirteen

weeks ended

Sept. 29, 2013


Workforce

restructuring


Transformation

costs


Thirteen

weeks ended

Sept. 29, 2013



Operating income:










Publishing

$

62,744



$

8,607



$

5,741



$

77,092




Broadcasting

83,810



639



139



84,588




Digital

42,050







42,050




Corporate

(16,906)







(16,906)




Total

$

171,698



$

9,246



$

5,880



$

186,824














Depreciation, amortization and facility consolidation charges:









Publishing

$

32,183



$



$

(5,741)



$

26,442




Broadcasting

7,059





(139)



6,920




Digital

8,309







8,309




Corporate

4,595







4,595




Total

$

52,146



$



$

(5,880)



$

46,266














Operating cash flow (a):










Publishing

$

94,927



$

8,607



$



$

103,534




Broadcasting

90,869



639





91,508




Digital

50,359







50,359




Corporate

(12,311)







(12,311)




Total

$

223,844



$

9,246



$



$

233,090















GAAP

Measure


Special Items


Non-GAAP

Measure


Thirteen

weeks ended

Sept. 23, 2012


Workforce

restructuring


Transformation

costs


Pension settlement charges


Thirteen

weeks ended

Sept. 23, 2012

Operating income:










Publishing

$

73,731



$

7,950



$

4,231



$



$

85,912


Broadcasting

118,672









118,672


Digital

39,912









39,912


Corporate

(15,116)







2,523



(12,593)


Total

$

217,199



$

7,950



$

4,231



$

2,523



$

231,903












Depreciation, amortization and facility consolidation charges:









Publishing

$

33,276



$



$

(4,231)



$



$

29,045


Broadcasting

6,879









6,879


Digital

8,391









8,391


Corporate

4,190









4,190


Total

$

52,736



$



$

(4,231)



$



$

48,505












Operating cash flow (a):










Publishing

$

107,007



$

7,950



$



$



$

114,957


Broadcasting

125,551









125,551


Digital

48,303









48,303


Corporate

(10,926)







2,523



(8,403)


Total

$

269,935



$

7,950



$



$

2,523



$

280,408












(a) Refer to Table No. 10



 

NON-GAAP FINANCIAL INFORMATION

Gannett Co., Inc. and Subsidiaries

Unaudited, in thousands of dollars































Table No. 9











GAAP

Measure


Special Items


Non-GAAP

Measure




Thirty-nine

weeks ended

Sept. 29, 2013


Workforce

restructuring


Transformation

costs


Thirty-nine

weeks ended

Sept. 29, 2013



Operating income:










Publishing

$

208,073



$

35,700



$

15,024



$

258,797




Broadcasting

265,578



639



139



266,356




Digital

100,931







100,931




Corporate

(48,945)







(48,945)




Total

$

525,637



$

36,339



$

15,163



$

577,139














Depreciation, amortization and facility consolidation charges:









Publishing

$

95,834



$



$

(15,024)



$

80,810




Broadcasting

20,968





(139)



20,829




Digital

26,799







26,799




Corporate

13,717







13,717




Total

$

157,318



$



$

(15,163)



$

142,155














Operating cash flow (a):










Publishing

$

303,907



$

35,700



$



$

339,607




Broadcasting

286,546



639





287,185




Digital

127,730







127,730




Corporate

(35,228)







(35,228)




Total

$

682,955



$

36,339



$



$

719,294















GAAP

Measure


Special Items


Non-GAAP

Measure


Thirty-nine

weeks ended

Sept. 23, 2012


Workforce

restructuring


Transformation

costs


Pension settlement charges


Thirty-nine

weeks ended

Sept. 23, 2012

Operating income:










Publishing

$

239,982



$

35,631



$

14,116



$



$

289,729


Broadcasting

285,873









285,873


Digital

92,706