MCLEAN, Va.--(BUSINESS WIRE)--
Gannett Co., Inc. (NYSE:GCI) reported today that 2008 third
quarter earnings per diluted share from continuing operations were
$0.69 compared with $1.01 per share in the third quarter of 2007. The
results for the quarter include $23.0 million in pre-tax severance
expenses ($14.4 million after tax or $0.07 per share) related to
reductions in force and efficiency efforts in the U.S. and the UK.
Absent severance expenses in the quarter, the company would have
earned $0.76 per share.
As previously reported, the company acquired all of its partners'
ownership stakes in ShopLocal LLC on June 30, 2008. In addition, the
company acquired an additional 10 percent stake in CareerBuilder
increasing its ownership to 50.8 percent on September 3, 2008. The
results for ShopLocal and CareerBuilder were fully consolidated
beginning in the seventh and ninth periods, respectively. Prior to
these acquisitions the company's equity share of CareerBuilder and
ShopLocal results was reported as equity earnings. Beginning with the
third quarter, a new "Digital" business segment is being reported
which includes CareerBuilder and ShopLocal results from the date of
full consolidation as well as PointRoll, Planet Discover and Schedule
Star. Prior period results for PointRoll, Planet Discover and Schedule
Star have been reclassified from the publishing segment to the digital
segment.
"While our results this quarter reflect the difficult and volatile
economy both here and in the UK, they also highlight our determination
to move forward with our strategic plan," said Chairman, President and
Chief Executive Officer Craig Dubow.
"Our positive online results confirm, for instance, the importance
of digital to our plan going forward. We also were delighted to
complete, this quarter, the acquisition of an additional 10 percent
stake in CareerBuilder, the largest online job site in the U.S., and
the remainder of ShopLocal.
"Within our core operations, revenues from Olympics advertising
reflected the strength of our NBC affiliated stations. Political
advertising is strong and continues to surge as we move toward
November. Meanwhile, we continue to transform our cost structure and
create efficiencies as we manage through this economic downturn.
"And there were some headwinds in addition to the weakening
economic conditions which impacted ad spending across the board,"
Dubow said. "We faced significantly higher newsprint prices and an
unfavorable exchange rate."
Total reported operating revenues for the company were $1.64
billion in the third quarter compared to $1.80 billion in the same
quarter a year ago. The decline was due to softer publishing
advertising demand resulting primarily from weak economic conditions
in the U.S. and the UK, offset partially by Olympic and political ad
spending in Broadcasting and revenues from the consolidation of
CareerBuilder and ShopLocal. On a pro forma basis, assuming Gannett
owned the same complement of properties in the third quarters of 2008
and 2007, operating revenues would have been 10.2 percent lower.
Reported operating expenses declined 2.2 percent in the quarter to
$1.38 billion from $1.41 billion in the third quarter of 2007. The
decline was driven by continued cost containment and efficiency
efforts and lower newsprint expense, reduced, in part, by severance
expenses, the consolidation of CareerBuilder and ShopLocal expenses
and our accelerated ramp up of our digital initiatives. On a pro forma
basis and excluding severance costs, operating expenses declined 5.3
percent for the quarter. Corporate expenses were $14.3 million, 19.2
percent lower than the year ago quarter driven by cost control efforts
offset slightly by buyout expenses. Operating cash flow (defined as
operating income plus depreciation and amortization) was $324.0
million. Net income in the quarter was $158.1 million.
Average diluted shares outstanding in the third quarter totaled
228,331,000 compared with 232,698,000 in 2007's third quarter.
PUBLISHING
Publishing segment operating revenues were $1.36 billion for the
quarter, a 14.4 percent decline from the third quarter of 2007.
Advertising revenues were $977.1 million compared to $1.19 billion in
the third quarter of 2007. On a pro forma basis, advertising revenues
were 17.6 percent lower. Pro forma advertising revenues declined 14.9
percent in the U.S. and 23.6 percent, in pounds, at Newsquest, our
operations in the UK. On a pro forma basis for the publishing segment,
retail advertising revenues were 10.1 percent lower, national revenues
declined 7.8 percent and classified revenues were down 28.5 percent.
For comparison purposes, the exchange rate of the British pound in the
quarter declined compared to last year. If the exchange rate had
remained constant year-over-year total pro forma advertising revenues
would have been 16.5 percent lower including declines of 9.5 percent
in retail, 7.3 percent in national and 27.0 percent in classified.
Lower pro forma classified revenues were driven by declines of
41.5 percent in real estate, 34.0 percent in employment and 21.4
percent in automotive. For U.S. Community Publishing classified
revenues were down 26.5 percent comprised of declines of 33.4 percent
in real estate, 36.5 percent in employment and 18.7 percent in
automotive. In the UK, classified revenues were 29.1 percent lower, in
pounds, reflecting declines of 51.3 percent in real estate, 25.2
percent in employment and 25.3 percent in automotive.
At USA TODAY, advertising revenues were 7.1 percent lower in the
third quarter compared to the year ago quarter. Paid advertising pages
totaled 713 compared with 803 in the same quarter of 2007. Growth in
the advocacy, financial and home and building categories was offset by
softness in the entertainment, travel, automotive and technology
categories.
Total publishing operating expenses were $1.18 billion, a 6.6
percent decline from the same quarter a year ago reflecting continued
efficiency efforts in the U.S. and the UK and lower newsprint expense
offset in part by severance expenses. Pro forma publishing expenses
excluding severance expenses were 7.1 percent lower. Newsprint expense
declined 3.4 percent for the quarter reflecting a 15.9 percent
increase in usage prices which was more than offset by a 16.7 percent
decline in consumption. Operating cash flow in the third quarter for
the total publishing segment, which includes USA TODAY and Newsquest,
was $231.7 million.
BROADCASTING
Broadcasting revenues (which include Captivate) were $197.0
million in the quarter, a 3.9 percent increase compared to $189.5
million in the third quarter of 2007. The increase was driven by
almost $24 million in ad spending related to the Olympics on our NBC
affiliates and about $26 million in politically related advertising.
Online revenue in the quarter was up 15.0 percent. The weakening
economy had an unfavorable impact on certain core advertising
categories including auto and retail which partially offset the
increase from Olympic and political ad revenue.
Operating expenses in the broadcasting segment totaled $113.0
million down 4.3 percent from $118.1 million a year ago reflecting
continued efficiencies, offset in part by severance expense.
Broadcasting expenses excluding severance were down 6.0 percent.
Operating cash flow was $92.5 million in the third quarter. Television
revenues were 4.8 percent higher and totaled $192.8 million. Based on
where we are today, we would expect television revenues to be up in
the low single digits for the fourth quarter of 2008 compared to the
fourth quarter of 2007 led by strong political advertising demand.
DIGITAL
As noted previously, the digital segment includes results for
CareerBuilder, PointRoll, ShopLocal, Planet Discover and Schedule
Star. Results for ShopLocal were included for the entire third quarter
while CareerBuilder's results were included for the last month in the
quarter. Results for PointRoll, Planet Discover and Schedule Star,
which had been previously reflected in the publishing segment, have
been reclassified to the digital segment. Total digital operating
revenues from these businesses were $77.6 million in the quarter
driven by the consolidation of CareerBuilder and ShopLocal. Operating
expenses totaled $71.5 million. Operating cash flow was $10.2 million
reflecting positive results for CareerBuilder, PointRoll and ShopLocal
partially offset by continued investment in Schedule Star and the ramp
up of our digital infrastructure.
NON-OPERATING ITEMS
The company's equity share of operating earnings or losses from
our unconsolidated investees including the California Newspapers
Partnership, Texas-New Mexico Newspapers Partnership, Tucson and
online/new technology businesses is reported in "Equity income
(losses) in unconsolidated investees, net" in the non-operating
section of the Consolidated Statements of Income. These amounts
include the company's equity share of results for CareerBuilder and
ShopLocal for periods prior to September 3, 2008 and June 30, 2008,
respectively.
The decline in equity income from unconsolidated investees for the
third quarter of 2008 was due primarily to: lower results from our
newspaper partnerships reflecting the challenging publishing
advertising environment; continued investment in digital assets like
Metromix; and the inclusion of CareerBuilder results for two months in
the quarter compared to 3 months in last year's third quarter.
The decrease in other non-operating items reflects the inclusion
of minority interest expense related to CareerBuilder, a reduced level
of investment income and foreign currency charges associated primarily
with UK pound-denominated transactions.
Interest expense for the third quarter was $46.8 million, a 25.7
percent decline compared to $63.0 million for the third quarter in
2007. The decline was due to lower interest rates and average debt
balances.
As expected, some favorable tax settlements of prior year state
return positions and a lower UK statutory tax rate impacted the tax
rate for the quarter. We expect further favorable tax settlements in
the fourth quarter.
At the end of the quarter, Gannett had more than 100 domestic
publishing Web sites, including USATODAY.com, one of the most popular
newspaper sites on the Web. The company also had Web sites in all of
its 19 television markets. In September, Gannett's consolidated
domestic Internet audience share was 25.4 million unique visitors
reaching 15.6 percent of the Internet audience according to
Nielsen//NetRatings. Newsquest is also an Internet leader in the UK
where its network of Web sites attracted more than 85.6 million
monthly page impressions from approximately 6.5 million unique users.
CareerBuilder's average unique visitors year-to-date totaled 23.4
million, an increase of almost 6 percent compared to last year.
All references in this release to "comparable" revenue results and
"operating cash flow" are to non-GAAP financial measures. Management
believes that this use allows management and investors to analyze and
compare the Company's results in a more meaningful and consistent
manner. A reconciliation of the non-GAAP operating cash flow amounts
to the Company's consolidated statements of income is attached.
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 Investor Relations section of the company's
Web site, www.gannett.com, or listen-only conference lines. U.S.
callers should dial 1-888-215-7015 and international callers should
dial 913-312-1504 at least 10 minutes prior to the scheduled start of
the call. The confirmation code for the conference call is 5339774. 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 5339774. Materials related to the call will be available
through the Investor Relations section of the company's Web site
Friday morning.
Gannett Co., Inc. is a leading international news and information
company that publishes 85 daily newspapers in the USA, including USA
TODAY, the nation's largest-selling daily newspaper. The company also
owns nearly 900 non-daily publications in the USA and USA WEEKEND, a
weekly newspaper magazine. Gannett subsidiary Newsquest is the United
Kingdom's second largest regional newspaper company. Newsquest
publishes nearly 300 titles, including 17 daily newspapers, and a
network of prize-winning Web sites. Gannett also operates 23
television stations in the United States and is an Internet leader
with sites sponsored by its TV stations and newspapers including
USATODAY.com, one of the most popular news sites on the Web.
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 of dollars (except per share amounts)
Thirteen Thirteen
weeks weeks
ended ended
Sept. 28, Sept. 30, % Inc
2008 2007 (Dec)
----------- ----------- -------
Net Operating Revenues:
Publishing advertising $ 977,111 $1,187,744 (17.7)
Publishing circulation 298,978 309,143 (3.3)
Digital 77,594 17,181 ***
Broadcasting 197,000 189,540 3.9
All other 86,627 95,085 (8.9)
----------- ----------- -------
Total 1,637,310 1,798,693 (9.0)
----------- ----------- -------
Operating Expenses:
Cost of sales and operating expenses,
exclusive of depreciation 985,004 1,026,041 (4.0)
Selling, general and administrative
expenses, exclusive of depreciation 328,320 313,654 4.7
Depreciation 57,682 61,017 (5.5)
Amortization of intangible assets 7,123 8,852 (19.5)
----------- ----------- -------
Total 1,378,129 1,409,564 (2.2)
----------- ----------- -------
Operating income 259,181 389,129 (33.4)
----------- ----------- -------
Non-operating (expense) income:
Equity income in unconsolidated
investees, net 5,711 15,332 (62.8)
Interest expense (46,802) (63,010) (25.7)
Other non-operating items (3,333) 4,173 ***
----------- ----------- -------
Total (44,424) (43,505) 2.1
----------- ----------- -------
Income before income taxes 214,757 345,624 (37.9)
Provision for income taxes 56,700 111,600 (49.2)
----------- ----------- -------
Net Income $ 158,057 $ 234,024 (32.5)
=========== =========== =======
Earnings per share - basic $ 0.69 $ 1.01 (31.7)
=========== =========== =======
Earnings per share - diluted $ 0.69 $ 1.01 (31.7)
=========== =========== =======
Dividends per share $ 0.40 $ 0.40 ***
=========== =========== =======
In period 9, 2008, the company increased its ownership in
CareerBuilder to 50.8% from 40.8%, and in connection therewith the
results of CareerBuilder beginning with period 9 are now fully
consolidated. In period 7, 2008, the company increased its ownership
in ShopLocal to 100% from 42.5%, and in connection therewith the
results of ShopLocal beginning with period 7 are now fully
consolidated. Prior to these acquisitions, the equity share of
CareerBuilder and ShopLocal results were reported as equity earnings.
Beginning with the third quarter, a new "Digital" business segment is
being reported, which includes CareerBuilder and ShopLocal from the
date of full consolidation as well as PointRoll , Planet Discover and
Schedule Star. Prior period revenues for PointRoll, Planet Discover
and Schedule Star have been reclassified from "All other" to
"Digital".
To conform with current year presentation, the company's equity share
of operating results for 2007 from its newspaper partnerships,
including Tucson, which participates in a joint operating agency, the
California Newspapers Partnership and the Texas-New Mexico Newspapers
Partnership, have been reclassified from "All other" revenue above
and are reflected in a separate line in the Non-Operating section of
the Statements of Income titled " Equity income in unconsolidated
investees, net." All other revenue is now comprised principally of
commercial printing revenues.
Equity income in unconsolidated investees, net includes
losses/earnings from newspaper partnerships, as discussed above, and
equity income and losses from online/new technology businesses which
were previously classified in "Other" non-operating items.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
Thirty-nine Thirty-nine
weeks ended weeks ended
Sept. 28, Sept. 30, % Inc
2008 2007 (Dec)
------------ ------------- -------
Net Operating Revenues:
Publishing advertising $ 3,182,194 $ 3,690,926 (13.8)
Publishing circulation 914,150 939,184 (2.7)
Digital 111,495 46,614 ***
Broadcasting 559,748 577,265 (3.0)
All other 264,581 288,553 (8.3)
------------ ------------- -------
Total 5,032,168 5,542,542 (9.2)
------------ ------------- -------
Operating Expenses:
Cost of sales and operating
expenses, exclusive of
depreciation 2,960,042 3,136,453 (5.6)
Selling, general and administrative
expenses, exclusive of
depreciation 922,755 954,811 (3.4)
Depreciation 182,902 185,879 (1.6)
Amortization of intangible assets 21,838 26,562 (17.8)
Goodwill and other asset
impairments 2,491,365 - ***
------------ ------------- -------
Total 6,578,902 4,303,705 52.9
------------ ------------- -------
Operating income (loss) (1,546,734) 1,238,837 ***
------------ ------------- -------
Non-operating (expense) income:
Equity income (losses) in
unconsolidated investees, net (258,837) 31,322 ***
Interest expense (139,308) (202,355) (31.2)
Other non-operating items 26,158 14,459 80.9
------------ ------------- -------
Total (371,987) (156,574) ***
------------ ------------- -------
Income (loss) before income taxes (1,918,721) 1,082,263 ***
Provision for income taxes 22,200 352,000 (93.7)
------------ ------------- -------
Income (losses) from continuing
operations (1,940,921) 730,263 ***
------------ ------------- -------
Income from the operation of
discontinued operations, net of
tax - 6,221 ***
Gain on disposal of newspaper
businesses, net of tax - 73,814 ***
------------ ------------- -------
Net Income (loss) $(1,940,921) $ 810,298 ***
============ ============= =======
Earnings (loss) from continuing
operations per share - basic $ (8.49) $ 3.12 ***
Discontinued operations per share -
basic - 0.03 ***
Gain on disposal of newspaper
businesses per share - basic - 0.32 ***
------------ ------------- -------
Net Income (loss) per share - basic $ (8.49) $ 3.47 ***
============ ============= =======
Earnings (loss) from continuing
operations per share - diluted $ (8.49) $ 3.12 ***
Discontinued operations per share -
diluted - 0.03 ***
Gain on disposal of newspaper
businesses per share - diluted - 0.32 ***
------------ ------------- -------
Net Income (loss) per share -
diluted $ (8.49) $ 3.46 ***
============ ============= =======
Dividends per share $ 1.20 $ 1.02 17.6
============ ============= =======
In period 9, 2008, the company increased its ownership in
CareerBuilder to 50.8% from 40.8%, and in connection therewith the
results of CareerBuilder beginning with period 9 are now fully
consolidated. In period 7, 2008, the company increased its ownership
in ShopLocal to 100% from 42.5%, and in connection therewith the
results of ShopLocal beginning with period 7 are now fully
consolidated. Prior to these acquisitions, the equity share of
CareerBuilder and ShopLocal results were reported as equity earnings.
Beginning with the third quarter, a new "Digital" business segment is
being reported, which includes CareerBuilder and ShopLocal from the
date of full consolidation as well as PointRoll, Planet Discover and
Schedule Star. Prior period revenues for PointRoll, Planet Discover
and Schedule Star have been reclassified from "All other" to
"Digital".
To conform with current year presentation, the company's equity share
of operating results for 2007 from its newspaper partnerships,
including Tucson, which participates in a joint operating agency, the
California Newspapers Partnership and the Texas-New Mexico Newspapers
Partnership, have been reclassified from "All other" revenue above
and are reflected in a separate line in the Non-Operating section of
the Statements of Income titled " Equity income (losses) in
unconsolidated investees, net." All other revenue is now comprised
principally of commercial printing revenues.
Equity income (losses) in unconsolidated investees, net includes
losses/earnings from newspaper partnerships, as discussed above, and
equity income and losses from online/new technology businesses which
were previously classified in "Other" non-operating items.
BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Excluding discontinued operations
Thirteen Thirteen
weeks weeks
ended ended
September September % Inc
28, 2008 30, 2007 (Dec)
Net Operating Revenues:
Publishing $1,362,716 $1,591,972 (14.4)
----------------------------------------------------------------------
Digital 77,594 17,181 ***
----------------------------------------------------------------------
Broadcasting 197,000 189,540 3.9
----------------------------------------------------------------------
Total $1,637,310 $1,798,693 (9.0)
----------------------------------------------------------------------
Operating Income (net of depreciation
and amortization):
Publishing $ 183,432 $ 329,365 (44.3)
----------------------------------------------------------------------
Digital 6,136 6,043 1.5
----------------------------------------------------------------------
Broadcasting 83,957 71,479 17.5
----------------------------------------------------------------------
Corporate (14,344) (17,758) (19.2)
----------------------------------------------------------------------
Total $ 259,181 $ 389,129 (33.4)
----------------------------------------------------------------------
Depreciation and amortization:
Publishing $ 48,224 $ 56,264 (14.3)
----------------------------------------------------------------------
Digital 4,094 1,330 ***
----------------------------------------------------------------------
Broadcasting 8,513 8,270 2.9
----------------------------------------------------------------------
Corporate 3,974 4,005 (0.8)
----------------------------------------------------------------------
Total $ 64,805 $ 69,869 (7.2)
----------------------------------------------------------------------
Operating Cash Flow:
Publishing $ 231,656 $ 385,629 (39.9)
----------------------------------------------------------------------
Digital 10,230 7,373 38.7
----------------------------------------------------------------------
Broadcasting 92,470 79,749 16.0
----------------------------------------------------------------------
Corporate (10,370) (13,753) (24.6)
----------------------------------------------------------------------
Total $ 323,986 $ 458,998 (29.4)
----------------------------------------------------------------------
In period 9 2008, the company increased its ownership in CareerBuilder
to 50.8% from 40.8%, and in connection therewith the results of
CareerBuilder beginning with period 9 are now fully consolidated. In
period 7 2008, the company increased its ownership in ShopLocal to
100% from 42.5%, and in connection therewith the results of ShopLocal
beginning with period 7 are now fully consolidated. Prior to these
acquisitions, the equity share of CareerBuilder and ShopLocal results
were reported as equity earnings. Beginning with the third quarter, a
new "Digital" business segment is being reported, which includes
CareerBuilder and ShopLocal from the date of full consolidation as
well as PointRoll, Planet Discover and Schedule Star. Prior period
results for PointRoll, Planet Discover and Schedule Star have been
reclassified from the "Publishing" segment to the "Digital" segment.
To conform with current year presentation, the company's equity share
of operating results for 2007 from its newspaper partnerships,
including Tucson, which participates in a joint operating agency, the
California Newspapers Partnership and the Texas-New Mexico Newspapers
Partnership, have been reclassified from "Publishing" revenues above
and are reflected in a separate line in the Non-Operating section of
the Statements of Income titled "Equity income in unconsolidated
investees, net."
Broadcasting includes results from the company's 23 television
stations and Captivate Network. Captivate is a national news and
entertainment network which delivers programming and full motion
video advertising through wireless digital video screens in elevators
of office towers and select hotels across North America.
Operating Cash Flow represents operating income for each of the
company's business segments plus related depreciation and
amortization. See attachment for reconciliation of amounts to the
Consolidated Statements of Income.
BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Excluding discontinued operations
Thirty-nine Thirty-nine
weeks ended weeks ended
September 28, September % Inc
2008 30, 2007 (Dec)
Net Operating Revenues:
Publishing $ 4,360,925 $ 4,918,663 (11.3)
----------------------------------------------------------------------
Digital 111,495 46,614 ***
----------------------------------------------------------------------
Broadcasting 559,748 577,265 (3.0)
----------------------------------------------------------------------
Total $ 5,032,168 $ 5,542,542 (9.2)
----------------------------------------------------------------------
Operating Income (Loss) (net of
depreciation and amortization):
Publishing $ (1,737,470) $ 1,063,268 ***
----------------------------------------------------------------------
Digital 9,784 12,027 (18.6)
----------------------------------------------------------------------
Broadcasting 220,996 223,053 (0.9)
----------------------------------------------------------------------
Corporate (40,044) (59,511) (32.7)
----------------------------------------------------------------------
Total $ (1,546,734) $ 1,238,837 ***
----------------------------------------------------------------------
Depreciation, amortization and
intangible asset impairment:
Publishing $ 2,648,943 $ 171,116 ***
----------------------------------------------------------------------
Digital 6,876 3,952 74.0
----------------------------------------------------------------------
Broadcasting 27,168 25,452 6.7
----------------------------------------------------------------------
Corporate 13,118 11,921 10.0
----------------------------------------------------------------------
Total $ 2,696,105 $ 212,441 ***
----------------------------------------------------------------------
Operating Cash Flow:
Publishing $ 911,473 $ 1,234,384 (26.2)
----------------------------------------------------------------------
Digital 16,660 15,979 4.3
----------------------------------------------------------------------
Broadcasting 248,164 248,505 (0.1)
----------------------------------------------------------------------
Corporate (26,926) (47,590) (43.4)
----------------------------------------------------------------------
Total $ 1,149,371 $ 1,451,278 (20.8)
----------------------------------------------------------------------
In period 9 2008, the company increased its ownership in CareerBuilder
to 50.8% from 40.8%, and in connection therewith the results of
CareerBuilder beginning with period 9 are now fully consolidated. In
period 7 2008, the company increased its ownership in ShopLocal to
100% from 42.5%, and in connection therewith the results of ShopLocal
beginning with period 7 are now fully consolidated. Prior to these
acquisitions, the equity share of CareerBuilder and ShopLocal results
were reported as equity earnings. Beginning with the third quarter, a
new "Digital" business segment is being reported, which includes
CareerBuilder and ShopLocal from the date of full consolidation as
well as PointRoll, Planet Discover and Schedule Star. Prior period
results for PointRoll, Planet Discover and Schedule Star have been
reclassified from the "Publishing" segment to the "Digital" segment.
To conform with current year presentation, the company's equity share
of operating results for 2007 from its newspaper partnerships,
including Tucson, which participates in a joint operating agency, the
California Newspapers Partnership and the Texas-New Mexico Newspapers
Partnership, have been reclassified from "Publishing" revenues above
and are reflected in a separate line in the Non-Operating section of
the Statements of Income titled "Equity income (losses) in
unconsolidated investees, net."
Broadcasting includes results from the company's 23 television
stations and Captivate Network. Captivate is a national news and
entertainment network which delivers programming and full motion
video advertising through wireless digital video screens in elevators
of office towers and select hotels across North America.
Operating Cash Flow represents operating income for each of the
company's business segments plus related depreciation and
amortization. See attachment for reconciliation of amounts to the
Consolidated Statements of Income.
NON-GAAP FINANCIAL INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
"Operating cash flow", a non-GAAP measure, is defined as operating
income plus depreciation and amortization. Management believes that
use of this measure allows investors and management to measure,
analyze and compare the performance of its business segment
operations at a more detailed level and in a meaningful and
consistent manner.
A reconciliation of these non-GAAP amounts to the company's operating
income, which the company believes is the most directly comparable
financial measure calculated and presented in accordance with GAAP on
the company's consolidated statements of income, follows:
Thirteen weeks ended September 28, 2008
Consolidated
Publishing Digital Broadcasting Corporate Total
------------ -------- ---------------------- ------------
Operating
cash flow $ 231,656 $10,230 $ 92,470 $(10,370) $ 323,986
Less:
Depreciation (43,594) (1,966) (8,148) (3,974) (57,682)
Amortization (4,630) (2,128) (365) - (7,123)
------------ -------- ------------ --------- ------------
Operating
income $ 183,432 $ 6,136 $ 83,957 $(14,344) $ 259,181
============ ======== ============ ========= ============
Thirteen weeks ended September 30, 2007
Consolidated
Publishing Digital Broadcasting Corporate Total
------------ -------- ---------------------- ------------
Operating
cash flow $ 385,629 $ 7,373 $ 79,749 $(13,753) $ 458,998
Less:
Depreciation (49,026) (81) (7,905) (4,005) (61,017)
Amortization (7,238) (1,249) (365) - (8,852)
------------ -------- ------------ --------- ------------
Operating
income $ 329,365 $ 6,043 $ 71,479 $(17,758) $ 389,129
============ ======== ============ ========= ============
Thirty-nine weeks ended September 28, 2008
Consolidated
Publishing Digital Broadcasting Corporate Total
------------ -------- ---------------------- ------------
Operating
cash flow $ 911,473 $16,660 $ 248,164 $(26,926) $ 1,149,371
Less:
Depreciation (141,519) (2,192) (26,073) (13,118) (182,902)
Amortization (16,059) (4,684) (1,095) - (21,838)
Asset
impairments (2,491,365) - - - (2,491,365)
------------ -------- ------------ --------- ------------
Operating
income $(1,737,470) $ 9,784 $ 220,996 $(40,044) $(1,546,734)
============ ======== ============ ========= ============
Thirty-nine weeks ended September 30, 2007
Consolidated
Publishing Digital Broadcasting Corporate Total
------------ -------- ---------------------- ------------
Operating
cash flow $ 1,234,384 $15,979 $ 248,505 $(47,590) $ 1,451,278
Less:
Depreciation (149,404) (205) (24,349) (11,921) (185,879)
Amortization (21,712) (3,747) (1,103) - (26,562)
------------ -------- ------------ --------- ------------
Operating
income $ 1,063,268 $12,027 $ 223,053 $(59,511) $ 1,238,837
============ ======== ============ ========= ============
In addition to the results reported in accordance with accounting
principles generally accepted in the United States ("GAAP") included
in this press release, the company has provided information regarding
diluted earnings per share ("EPS") from continuing operations
excluding severance expenses. Management believes EPS excluding
severance expenses better reflects the ongoing performance of the
company and enables management and investors to meaningfully trend,
analyze and benchmark the performance of the company's operations.
This measure is also more comparable to financial measures reported
by our competitors. EPS excluding severance expenses should not be
considered a substitute for EPS calculated in accordance with GAAP.
The table below reconciles earnings per share prepared in accordance
with GAAP to earnings per share excluding severance expenses:
Thirteen weeks ended Thirteen weeks ended
Sept. 28, 2008 Sept 30, 2007
-------------------- ---------------------
Diluted Earnings from
Continuing Operations per
Share:
Earnings per Share (GAAP
basis) $0.69 $1.01
Severance expenses 0.07 0.03
-------------------- ---------------------
Adjusted Earnings per Share
(Non-GAAP basis) $0.76 $1.04
==================== =====================
Source: Gannett Co., Inc.