Gannett Co., Inc. Reports Third Quarter Results Including Total Revenue Growth of 3 Percent and Net Income Growth of 33 Percent

Reported and Non-GAAP Earnings per Diluted Share of $0.56

Operating Cash Flow Totaled $280 million Excluding Special Items

Free Cash Flow Totaled $162 million

15 Oct, 2012, 08:30 ET from Gannett Co., Inc.

MCLEAN, Va., Oct. 15, 2012 /PRNewswire/ -- Gannett Co., Inc. (NYSE: GCI), a leading international media and marketing solutions company, today reported strong third quarter financial results. Earnings per diluted share, on a GAAP (generally accepted accounting principles) basis were $0.56 for the third quarter of 2012 compared to $0.41 for the third quarter last year. Excluding special items in 2012 and 2011, third quarter earnings per diluted share were $0.56 this year compared to $0.44 for the third quarter of 2011.  

Gracia Martore, president and chief executive officer, said, "We are extremely pleased to report strong results and a return to revenue growth. We achieved record third quarter results in our Broadcasting segment. Our TV stations leveraged top 10 ratings positions and a more locally focused sales effort to generate substantially higher Olympic spending. Through strong ratings and a great footprint, they also maximized the opportunity to attract political spending. The early success of our new, all access content subscription model resulted in significant growth in company-wide circulation revenue, the first increase since early 2007. CareerBuilder once again delivered outstanding results that in turn enhanced Digital segment performance. Our digital strategies are working and company-wide digital revenue now represents more than 25 percent of total revenues. Finally, our continuing focus on creating efficiencies played an important role in delivering higher profitability and operating cash flow this quarter."

Martore went on to say, "Our results this quarter demonstrate that the growth strategy we announced in February is gaining traction. Our all access content subscription model has been rolled out in 71 markets and is delivering the circulation revenue gains we anticipated. Our digital marketing services business is operational in all markets and we are excited by its long term prospects. In September, we re-launched our flagship USA TODAY brand, which has been re-imagined and redesigned for today's consumers and advertisers. We are seeing early successes and making great progress in positioning Gannett for growth in the digital era."

Results for the third quarter of 2012 include $14.7 million of special charges affecting operating income in addition to $10 million of strategic investments. Non-cash facility consolidation charges totaled $4.2 million ($2.4 million after tax or $0.01 per share) reflecting primarily accelerated depreciation costs primarily associated with the transfer of production activities. Workforce restructuring charges in our Publishing segment of $7.9 million ($4.9 million after tax or $0.02 per share) reflect principally the impact of employee acceptances of an early retirement plan during the third quarter. Results for the third quarter of 2012 also include a pension settlement termination charge totaling $2.5 million ($1.5 million after tax or $0.01 per share). Non-operating items included $3.2 million ($2.0 million after tax or $0.01 per share) of non-cash charges for a newspaper partnership investment. Offsetting these was a tax benefit of $13.1 million ($0.06 per share) related primarily to a tax settlement covering multiple years.

Results for the third quarter of 2011 included special charges affecting operating income related to workforce restructuring which totaled $8.7 million ($5.3 million after-tax or $0.02 per share). A non-cash impairment for an investment in an online business of $1.9 million ($1.1 million after-tax) was also recorded in that quarter which affected non-operating items.

Amounts reported in accordance with GAAP are contained in Tables 1 through 4. Certain amounts and comparisons included in the following discussion of GAAP results are supplemented by discussions which exclude the effect of special items. Details of these special items and their effect on GAAP results are included on the Non-GAAP Financial Information Tables 5 through 10 attached to this release. The company's basis for providing discussions of non-GAAP results is detailed below.

CONTINUING OPERATIONS

Net income attributable to Gannett totaled $133.1 million in the third quarter of 2012. Net income attributable to Gannett on a non-GAAP basis was $130.9 million, an increase of 23.3 percent from 2011. Reported operating income was $217.2 million in the third quarter of 2012. Non-GAAP operating income totaled $231.9 million, 12.1 percent higher than the third quarter last year. Operating cash flow in the quarter (a non-GAAP term defined as operating income plus special items, depreciation and amortization) was $280.4 million compared to $255.8 million in the third quarter a year ago.

Total operating revenues for the company in the third quarter were 3.4 percent higher than the prior year and totaled $1.31 billion. Broadcasting revenues were substantially higher in the quarter increasing 36.0 percent driven by significantly higher ad demand associated with the Olympics and political spending. Digital segment revenues were up 4.7 percent due primarily to revenue growth at CareerBuilder.  Publishing segment revenues were 3.0 percent lower reflecting softer advertising demand partially offset by a 5.6 percent increase in circulation revenue due to the positive impact of the all access content subscription model.

Operating expenses including the special charges noted above were $1.09 billion in the quarter, 2.3 percent higher than the third quarter in 2011. Higher costs associated with revenue growth drove the increases in the Broadcasting and Digital segment operating expenses. Strategic initiative investments that totaled approximately $10 million and a $5 million increase in pension expense were partially offset by continued cost reduction and cost efficiency efforts company-wide.  Operating expenses on a non-GAAP basis, which exclude special items but include the impact of the investment in strategic initiatives and pension expense, were up just 1.7 percent from the third quarter last year and totaled $1.08 billion.

In the first quarter, the company announced a new capital allocation plan that included a 150 percent increase in the annual dividend to $0.80 per share and a $300 million share repurchase program targeted to be completed over the next two years. During the third quarter the company purchased approximately 2.4 million shares for $35.5 million. Year-to-date, shares repurchased totaled 8.2 million shares for $116.5 million.

PUBLISHING

Publishing segment operating revenues in the quarter were $890.2 million compared to $917.8 million in the third quarter in 2011, a 3.0 percent decline as the slow pace of the economic recovery resulted in soft advertising demand. Publishing revenue year-over-year comparisons improved sequentially within the quarter and third quarter comparisons were better than first and second quarter comparisons.  

Advertising revenues totaled $552.7 million, a 6.6 percent decline compared to the third quarter last year. Third quarter year-over-year comparisons were better than first and second quarter comparisons this year. Advertising revenues declined 7.0 percent in July, were down 6.8 percent in August, and were 5.9 percent lower in September.  In the U.S., advertising revenues decreased 6.0 percent in the quarter while at Newsquest, the company's operations in the UK, ad revenues declined 7.4 percent, in pounds.  The percentage changes for the Publishing segment advertising revenue categories for the quarter were as follows:

 

Third Quarter 2012 Year-over-Year Comparisons

 

 

 

U.S. Publishing

(including USA TODAY)

 

Newsquest

(in pounds)

Total

Publishing

Segment

(constant currency)

Total

Publishing

Segment

Retail

(6.9%)

(5.5%)

(6.8%)

(7.0%)

National

(7.6%)

(12.1%)

(7.9%)

(8.1%)

Classified

(3.4%)

(7.7%)

(4.6%)

(5.1%)

(6.0%)

(7.4%)

(6.2%)

(6.6%)

 

All major advertising category comparisons in the third quarter were in line with or better than second quarter comparisons. Retail advertising was down 7.0 percent in the quarter as tepid economic growth impacted ad demand. Soft national ad demand domestically and in the UK resulted in an 8.1 percent decline in national advertising revenues although comparisons improved sequentially in the quarter.

Classified advertising revenues in the U.S. declined 3.4 percent, in line with second quarter comparisons. Automotive advertising was 1.3 percent higher compared to the third quarter in 2011. Employment was 4.4 percent lower due, in part, to tepid job growth. Real estate advertising was down 10.2 percent. The year-over-year comparison was stronger than the second quarter comparison and reflects modest improvements in the housing market. Classified advertising comparisons, in pounds, at Newsquest were uneven in the quarter and were 7.7 percent lower compared to the third quarter last year.

The percentage changes in the classified categories were as follows:

Third Quarter 2012 Year-over-Year Comparisons

 

 

 

U.S.

Publishing

 

 

 

Newsquest

(in pounds)

 

Total

Publishing

Segment

(constant currency)

 

 

Total

Publishing

Segment

Automotive

1.3%

(14.9%)

(1.1%)

(1.5%)

Employment

(4.4%)

(4.0%)

(4.3%)

(5.0%)

Real Estate

(10.2%)

(9.2%)

(9.9%)

(10.6%)

Legal

1.2%

---

1.2%

1.2%

Other

(7.0%)

(6.5%)

(6.9%)

(7.6%)

(3.4%)

(7.7%)

(4.6%)

(5.1%)

 

The rollout of the all access content subscription model drove a 5.6 percent increase in company-wide circulation revenue. Circulation revenue at our local domestic publishing operations grew for the second consecutive quarter and was up 9.8 percent.

The impact of the all access content subscription model as well as an increase in digital advertising and marketing solutions resulted in a 64.6 percent increase in digital publishing revenues. Digital revenues at our local domestic publishing operations were 76.0 percent higher due primarily to the all access content subscription model. At USA TODAY and its associated businesses, digital revenues were up 69.7 percent while Newsquest's digital revenues were 10.4 percent higher, in pounds.

Reported publishing segment operating expenses were $816.5 million in the quarter up 0.8 percent compared to $809.8 million in the third quarter a year ago. On a non-GAAP basis, Publishing segment operating expenses were slightly higher and totaled $804.3 million including $9 million of strategic investments. Newsprint expense was 11.4 percent lower in the quarter due to both lower consumption and newsprint usage prices. For the fourth quarter of 2012, the company expects its newsprint expense will again be below year ago levels.

Reported Publishing segment operating income, which includes the impact of strategic investments, was $73.7 million. Publishing segment operating income on a non-GAAP basis totaled $85.9 million in the quarter and operating cash flow was $115.0 million.

BROADCASTING

Results in the Broadcasting segment (which include Captivate) reflected a record level of third quarter revenues and operating results. Operating revenues were 36.0 percent higher in the quarter and totaled $237.0 million compared to $174.3 million in the third quarter last year.  Our TV stations leveraged their strong ratings and footprint to generate substantial ad spending associated with the Summer Olympics on our NBC affiliates and significantly higher political spending. A solid increase in retransmission revenue also contributed to the growth.

Television revenues were up 38.1 percent to $233.0 million, compared to $168.8 million in the third quarter a year ago. The revenue growth was driven by $41.7 million in politically related advertising and approximately $37 million in ad spending related to the Summer Olympics. Approximately $4 million of political spending that aired during the Olympics is included in both the political and Olympic categories. Retransmission revenues were $22.3 million, an increase of 11.5 percent in the quarter. Television station digital revenues were 6.4 percent higher than the third quarter of 2011. Based on current trends, the percentage increase in television revenues in the fourth quarter is projected to be in the very high-twenties. However, it is difficult to project fourth quarter revenues due to political advertising which will be more than a third of total spot advertising in the quarter.

Broadcasting segment operating expenses were $118.4 million, an 11.9 percent increase compared to the third quarter last year. Higher sales and marketing costs associated with higher revenues drove the increase. Operating income was 73.1 percent higher and totaled $118.7 million, while operating cash flow was up 65.9 percent and totaled $125.6 million

DIGITAL

Digital segment operating revenues totaled $182.0 million in the quarter, an increase of 4.7 percent due primarily to strong revenue growth at CareerBuilder. Digital segment operating expenses were up 1.8 percent to $142.1 million due to higher costs at CareerBuilder and strategic spending on digital initiatives. Digital segment operating income was 16.2 percent higher in the quarter and totaled $39.9 million while operating cash flow was up 14.8 percent and totaled $48.3 million.

Digital revenues company-wide, including the Digital segment and all digital revenues generated by the other business segments, were $334.6 million, up 22.8 percent from the third quarter in 2011. The increase was driven primarily by the impact of the all access content subscription model as well as higher revenue associated with digital advertising and marketing solutions across all segments.

At the end of the quarter, Gannett had about 120 domestic web sites affiliated with its local publishing and television markets, USA TODAY, Gannett Government Media and Gannett Healthcare Group. USATODAY.com is one of the most popular newspaper sites and the USA TODAY app is now a top news app with 16.1 million downloads across iPad, iPhone, Android, Windows and Kindle Fire. USA TODAY's mobile traffic was up in September compared to the prior year as page views increased 125 percent and total monthly visitors were 79 percent higher compared to September a year ago. In September, Gannett's consolidated domestic Internet audience share increased 12.0 percent from September of 2011 to 57.6 million unique visitors reaching 26.2 percent of the Internet audience, according to Comscore Media Metrix. Newsquest is also an Internet leader in the UK where its network of web sites attracted 89.2 million monthly page impressions from approximately 10.5 million unique users in September 2012. CareerBuilder's unique visitors in the third quarter averaged 21.7 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 investments totaled $3.0 million, a 17.2 percent increase compared to the third quarter last year. Excluding special non-cash charges in the third quarters of 2012 and 2011, equity income was up $1.8 million. Stronger results at certain newspaper partnerships drove the increase.  

Interest expense was $35.8 million, a decline of 12.5 percent compared to the third quarter last year. The decline was primarily due to lower average debt balances slightly offset by higher average interest rates.

The reconciliation of the company's effective tax rate on a GAAP and non-GAAP basis is below:

 

Tax Rate Calculation (Dollars in thousands)

GAAP

Non-GAAP

Thirteen

weeks ended

Sept. 23, 2012

Thirteen

weeks ended

 Sept. 25, 2011

Thirteen

weeks ended

 Sept. 23, 2012

Thirteen

 weeks ended

 Sept. 25, 2011

Income before taxes

(per Table 5)

 

187,308

 

156,580

 

205,232

 

167,142

Noncontrolling interest

(per Table 1)

 

(15,525)

 

(11,992)

 

(15,525)

 

(11,992)

Income before taxes

attributable to GCI

 

171,783

 

144,588

 

189,707

 

155,150

Provision for income

taxes (per Table 5)

 

38,700

 

44,800

 

58,800

 

49,000

Effective Tax Rate

22.5%

31.0%

31.0%

31.6%

 

Net cash flow from operating activities was $182.2 million, while free cash flow (a non-GAAP measure) totaled $161.8 million in the quarter. Both numbers reflect the impact of an $18 million contribution to the company's principal retirement plan during the third quarter. The balance of long term debt at quarter end was $1.63 billion. Total cash at the end of the quarter was $237.4 million.

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, facility consolidation expenses, pension settlement charges, charges to investments accounted for under the equity method 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 and facility consolidation 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 and accelerated depreciation.  The pension settlement charges result from the acceleration of expense related to the timing of certain pension payments. The charge related to the equity method investment in 2011 reflects the reduction of book value to fair value caused by significant and sustained declines in the operating performance of an investee. The charge in 2012 reflects accelerated depreciation recognized by an investee related to outsourcing certain production processes. The credits to the tax provision are 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."  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 its businesses, 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 5 through 10 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 1-888-466-4447 and international callers should dial 719-325-2337 at least 10 minutes prior to the scheduled start of the call.  The confirmation code for the conference call is 8138491. 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 8138491.  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

Thirteen

weeks ended

weeks ended

% Inc

Sept. 23, 2012

Sept. 25, 2011

 (Dec)

 Net Operating Revenues: 

 Publishing advertising 

$                 552,676

$                591,676

(6.6)

 Publishing circulation 

276,655

262,099

5.6

 Digital 

182,022

173,930

4.7

 Broadcasting 

237,039

174,340

36.0

 All other 

60,869

63,989

(4.9)

 Total 

1,309,261

1,266,034

3.4

 Operating Expenses: 

 Cost of sales and operating expenses, exclusive of depreciation 

720,941

721,888

(0.1)

 Selling, general and administrative expenses, exclusive of depreciation 

318,385

297,001

7.2

 Depreciation 

40,460

41,263

(1.9)

 Amortization of intangible assets 

8,045

7,721

4.2

 Facility consolidation charges  

4,231

-

 *** 

 Total 

1,092,062

1,067,873

2.3

 Operating income  

217,199

198,161

9.6

 Non-operating (expense) income: 

 Equity income in unconsolidated investees, net 

3,005

2,563

17.2

 Interest expense 

(35,829)

(40,939)

(12.5)

 Other non-operating items 

2,933

(3,205)

 *** 

 Total 

(29,891)

(41,581)

(28.1)

 Income before income taxes 

187,308

156,580

19.6

 Provision for income taxes 

38,700

44,800

(13.6)

 Net income 

148,608

111,780

32.9

 Net income attributable to noncontrolling interests 

(15,525)

(11,992)

29.5

 Net income attributable to Gannett Co., Inc. 

$                 133,083

$                   99,788

33.4

 Net income per share - basic 

$                       0.58

$                       0.42

38.1

 Net income per share - diluted 

$                       0.56

$                       0.41

36.6

 Weighted average number of common shares outstanding 

 Basic 

230,556

239,688

(3.8)

 Diluted 

235,550

243,350

(3.2)

 Dividends declared per share 

$                       0.20

$                       0.08

 *** 

 CONDENSED CONSOLIDATED STATEMENTS OF INCOME  

 Gannett Co., Inc. and Subsidiaries 

 Unaudited, in thousands (except per share amounts) 

 Table No. 2 

Thirty-nine

Thirty-nine

weeks ended

weeks ended

% Inc

Sept. 23, 2012

Sept. 25, 2011

 (Dec)

 Net Operating Revenues: 

 Publishing advertising 

$            1,698,376

$            1,840,276

(7.7)

 Publishing circulation 

803,929

795,745

1.0

 Digital 

531,700

504,971

5.3

 Broadcasting 

618,593

522,575

18.4

 All other 

182,290

188,667

(3.4)

 Total 

3,834,888

3,852,234

(0.5)

 Operating Expenses: 

 Cost of sales and operating expenses, exclusive of depreciation 

2,164,070

2,179,057

(0.7)

 Selling, general and administrative expenses, exclusive of depreciation 

943,005

891,744

5.7

 Depreciation 

120,320

124,971

(3.7)

 Amortization of intangible assets 

24,002

23,881

0.5

 Facility consolidation charges 

14,116

14,050

0.5

 Total 

3,265,513

3,233,703

1.0

 Operating income  

569,375

618,531

(7.9)

 Non-operating (expense) income: 

 Equity income in unconsolidated investees, net 

15,980

13,994

14.2

 Interest expense 

(111,542)

(132,309)

(15.7)

 Other non-operating items 

2,688

1,933

39.1

 Total 

(92,874)

(116,382)

(20.2)

 Income before income taxes 

476,501

502,149

(5.1)

 Provision for income taxes 

116,500

126,700

(8.1)

 Net income 

360,001

375,449

(4.1)

 Net income attributable to noncontrolling interests 

(38,806)

(33,641)

15.4

 Net income attributable to Gannett Co., Inc. 

$                 321,195

$               341,808

(6.0)

 Net income per share - basic 

$                       1.38

$                       1.42

(2.8)

 Net income per share - diluted 

$                       1.35

$                       1.40

(3.6)

 Weighted average number of common shares outstanding 

 Basic 

233,390

239,897

(2.7)

 Diluted 

237,699

243,551

(2.4)

 Dividends declared per share 

$                       0.60

$                       0.16

 *** 

 

BUSINESS SEGMENT INFORMATION

Gannett Co., Inc. and Subsidiaries

Unaudited, in thousands of dollars

Table No. 3

Thirteen weeks ended

Thirteen weeks ended

% Inc

Sept. 23, 2012

Sept. 25, 2011

  (Dec)

Net Operating Revenues:

Publishing

$                        890,200

$                        917,764

(3.0)

Digital

182,022

173,930

4.7

Broadcasting

237,039

174,340

36.0

Total

$                     1,309,261

$                     1,266,034

3.4

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

Publishing

$                          73,731

$                        107,942

(31.7)

Digital

39,912

34,350

16.2

Broadcasting

118,672

68,552

73.1

Corporate

(15,116)

(12,683)

19.2

Total

$                        217,199

$                        198,161

9.6

Depreciation, amortization and facility consolidation charges:

Publishing

$                          33,276

$                          30,186

10.2

Digital

8,391

7,729

8.6

Broadcasting

6,879

7,118

(3.4)

Corporate

4,190

3,951

6.0

Total

$                          52,736

$                          48,984

7.7

Operating Cash Flow:

Publishing

$                        107,007

$                        138,128

(22.5)

Digital

48,303

42,079

14.8

Broadcasting

125,551

75,670

65.9

Corporate

(10,926)

(8,732)

25.1

Total

$                        269,935

$                        247,145

9.2

Operating Cash Flow represents operating income for each of the company's business segments plus related depreciation, amortization and facility consolidation charges.  See Table No. 9 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

Thirty-nine weeks ended

% Inc

Sept. 23, 2012

Sept. 25, 2011

  (Dec)

Net Operating Revenues:

Publishing

$                     2,684,595

$                     2,824,688

(5.0)

Digital

531,700

504,971

5.3

Broadcasting

618,593

522,575

18.4

Total

$                     3,834,888

$                     3,852,234

(0.5)

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

Publishing

$                        239,982

$                        364,185

(34.1)

Digital

92,706

86,608

7.0

Broadcasting

285,873

212,416

34.6

Corporate

(49,186)

(44,678)

10.1

Total

$                        569,375

$                        618,531

(7.9)

Depreciation, amortization and facility consolidation charges:

Publishing

$                        100,226

$                        106,377

(5.8)

Digital

24,626

22,801

8.0

Broadcasting

21,113

22,042

(4.2)

Corporate

12,473

11,682

6.8

Total

$                        158,438

$                        162,902

(2.7)

Operating Cash Flow:

Publishing

$                        340,208

$                        470,562

(27.7)

Digital

117,332

109,409

7.2

Broadcasting

306,986

234,458

30.9

Corporate

(36,713)

(32,996)

11.3

Total

$                        727,813

$                        781,433

(6.9)

Operating Cash Flow represents operating income for each of the company's business segments plus related depreciation, amortization and facility consolidation charges.  See Table No. 9 for reconciliation of amounts to the Condensed Consolidated Statements of Income.

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. 5 through No. 10 reconcile these non-GAAP measures to the most directly comparable GAAP measure.          

 

 Table No. 5 

 Non-GAAP 

 GAAP Measure 

 Special Items 

 Measure 

Thirteen

 Facility 

 Pension 

Thirteen

weeks ended

 Workforce 

 consolidation 

 settlement 

 Special 

weeks ended

Sept. 23, 2012

 restructuring 

 charges 

 charges 

 tax benefits 

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 

$                       0.56

$                     0.02

$                     0.02

$                     0.01

$                   (0.06)

$                     0.56

 (a) 

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

 Non-GAAP 

 GAAP Measure 

 Special Items 

 Measure 

Thirteen

 Asset 

Thirteen

weeks ended

 Workforce 

 impairment 

weeks ended

Sept. 25, 2011

 restructuring 

 charges 

Sept. 25, 2011

 Cost of sales and operating expenses,  

 exclusive of depreciation 

$                 721,888

$                 (7,467)

$                        -

$               714,421

 Selling, general and administrative expenses, 

 exclusive of depreciation 

297,001

(1,218)

-

295,783

 Operating expenses 

1,067,873

(8,685)

-

1,059,188

 Operating income  

198,161

8,685

-

206,846

 Equity income in unconsolidated investees, net 

2,563

-

1,877

4,440

 Total non-operating (expense) income 

(41,581)

-

1,877

(39,704)

 Income before income taxes 

156,580

8,685

1,877

167,142

 Provision for income taxes 

44,800

3,400

800

49,000

 Net income 

111,780

5,285

1,077

118,142

 Net income attributable to Gannett Co., Inc. 

99,788

5,285

1,077

106,150

 Net income per share - diluted 

$                       0.41

$                     0.02

$                        -

$                     0.44

 (a) 

 (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. 6 

 Non-GAAP 

 GAAP Measure 

 Special Items 

 Measure 

Thirty-nine

 Facility 

 Pension 

Thirty-nine

weeks ended

 Workforce 

 consolidation 

 settlement 

 Special 

weeks ended

Sept. 23, 2012

 restructuring 

 charges 

 charges 

 tax benefits 

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 

$                       1.35

$                     0.09

$                     0.04

$                     0.02

$                   (0.06)

$                     1.45

 (a) 

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

 Non-GAAP 

 GAAP Measure 

 Special Items 

 Measure 

 Facility 

 consolidation 

Thirty-nine

 and asset 

 Prior year 

Thirty-nine

weeks ended

 Workforce 

 impairment 

 tax reserve 

weeks ended

Sept. 25, 2011

 restructuring 

 charges 

 adjustments, net 

Sept. 25, 2011

 Cost of sales and operating expenses,  

 exclusive of depreciation 

$              2,179,057

$               (19,677)

$                        -

$                        -

$            2,159,380

 Selling, general and administrative expenses, 

 exclusive of depreciation 

891,744

(3,767)

-

-

887,977

 Facility consolidation charges 

14,050

-

(14,050)

-

-

 Operating expenses 

3,233,703

(23,444)

(14,050)

-

3,196,209

 Operating income  

618,531

23,444

14,050

-

656,025

 Equity income in unconsolidated investees, net 

13,994

-

1,877

-

15,871

 Total non-operating (expense) income 

(116,382)

-

1,877

-

(114,505)

 Income before income taxes 

502,149

23,444

15,927

-

541,520

 Provision for income taxes 

126,700

8,900

6,400

20,100

162,100

 Net income 

375,449

14,544

9,527

(20,100)

379,420

 Net income attributable to Gannett Co., Inc. 

341,808

14,544

9,527

(20,100)

345,779

 Net income per share - diluted 

$                       1.40

$                     0.06

$                     0.04

$                   (0.08)

$                     1.42

NON-GAAP FINANCIAL INFORMATION

Gannett Co., Inc. and Subsidiaries

Unaudited, in thousands of dollars

Table No. 7

Non-GAAP

GAAP Measure

Special Items

Measure

Thirteen

Facility 

Pension

Thirteen

weeks ended

Workforce

consolidation

settlement 

weeks ended

Sept. 23, 2012

restructuring

charges

charges

Sept. 23, 2012

Operating Income

Publishing

$                   73,731

$                7,950

$               4,231

$                      -

$                85,912

Digital

39,912

-

-

-

39,912

Broadcasting

118,672

-

-

-

118,672

Corporate

(15,116)

-

-

2,523

(12,593)

Total Operating Income

$                 217,199

$               7,950

$               4,231

$             2,523

$             231,903

Depreciation, amortization and facility consolidation charges

Publishing

$                   33,276

$                        -

$             (4,231)

$                      -

$               29,045

Digital

8,391

-

-

-

8,391

Broadcasting

6,879

-

-

-

6,879

Corporate

4,190

-

-

-

4,190

Total depreciation, amortization and facility consolidation charges

$                   52,736

$                        -

$             (4,231)

$                      -

$               48,505

Operating Cash Flow (a)

Publishing

$                 107,007

$               7,950

$                        -

$                      -

$            114,957

Digital

48,303

-

-

-

48,303

Broadcasting

125,551

-

-

-

125,551

Corporate

(10,926)

-

-

2,523

(8,403)

Total Operating Cash Flow

$                 269,935

$               7,950

$                        -

$             2,523

$             280,408

(a) Refer to Table No. 9.

Non-GAAP

GAAP Measure

Special Items

Measure

Thirteen

Thirteen

weeks ended

Workforce

weeks ended

Sept. 25, 2011

restructuring

Sept. 25, 2011

Operating Income

Publishing

$                 107,942

$             8,685

$         116,627

Digital

34,350

-

34,350

Broadcasting

68,552

-

68,552

Corporate

(12,683)

-

(12,683)

Total Operating Income

$                 198,161

$            8,685

$         206,846

Depreciation, amortization and facility consolidation charges

Publishing

$                   30,186

$                     -

$           30,186

Digital

7,729

-

7,729

Broadcasting

7,118

-

7,118

Corporate

3,951

-

3,951

Total depreciation, amortization and facility consolidation charges

$                   48,984

$                     -

$           48,984

Operating Cash Flow (a)

Publishing

$                 138,128

$            8,685

$          146,813

Digital

42,079

-

42,079

Broadcasting

75,670

-

75,670

Corporate

(8,732)

-

(8,732)

Total Operating Cash Flow

$                 247,145

$            8,685

$          255,830

(a) Refer to Table No. 9.

NON-GAAP FINANCIAL INFORMATION

Gannett Co., Inc. and Subsidiaries

Unaudited, in thousands of dollars

Table No. 8

Non-GAAP

GAAP Measure

Special Items

Measure

Thirty-nine

Facility 

Pension 

Thirty-nine

weeks ended

Workforce

consolidation

settlement

weeks ended

Sept. 23, 2012

restructuring

charges

charges

Sept. 23, 2012

Operating Income

Publishing

$                 239,982

$           35,631

$              14,116

$                      -

$                 289,729

Digital

92,706

-

-

-

92,706

Broadcasting

285,873

-

-

-

285,873

Corporate

(49,186)

(1,656)

-

7,946

(42,896)

Total Operating Income

$                 569,375

$           33,975

$              14,116

$             7,946

$                 625,412

Depreciation, amortization and facility consolidation charges

Publishing

$                 100,226

$                      -

$            (14,116)

$                      -

$                   86,110

Digital

24,626

-

-

-

24,626

Broadcasting

21,113

-

-

-

21,113

Corporate

12,473

-

-

-

12,473

Total depreciation, amortization and facility consolidation charges

$                 158,438

$                      -

$            (14,116)

$                     -

$                 144,322

Operating Cash Flow (a)

Publishing

$                 340,208

$           35,631

$                        -

$                     -

$                 375,839

Digital

117,332

-

-

-

117,332

Broadcasting

306,986

-

-

-

306,986

Corporate

(36,713)

(1,656)

-

7,946

(30,423)

Total Operating Cash Flow

$                 727,813

$           33,975

$                        -

$            7,946

$                 769,734

(a) Refer to Table No. 9.

Non-GAAP

GAAP Measure

Special Items

Measure

Thirty-nine

Facility 

Thirty-nine

weeks ended

Workforce

consolidation

weeks ended

Sept. 25, 2011

restructuring

charges

Sept. 25, 2011

Operating Income

Publishing

$                 364,185

$           23,444

$             14,050

$        401,679

Digital

86,608

-

-

86,608

Broadcasting

212,416

-

-

212,416

Corporate

(44,678)