Gannett Co., Inc. Reports Non-GAAP Earnings per Diluted Share of $0.58, Increasing 4% Over Prior Year; Earnings per Diluted Share of $0.48 on GAAP basis
Highlights for the quarter include the following:
- Agreement to acquire
Belo Corp. - Local domestic circulation revenue up 11 percent; fifth consecutive quarter of growth
- Broadcasting revenue of
$212 million , 3 percent higher than prior year - Company-wide digital revenue growth of 20 percent reaching almost 30 percent of total revenue
- New
$300 million , two-year share repurchase program replacing current program; existing dividend program will continue
During the quarter, the company also entered into a definitive merger agreement with
Martore added, "Our long-term strategic plan - with a focus on both investment and execution - continues to position us for success well into the future.
CONTINUING OPERATIONS
Operating revenues for the company totaled
Net income attributable to
Special items in the second quarter of 2013 totaled
Earnings per diluted share, on a GAAP (generally accepted accounting principles) basis were
The table below details second 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 Jun. 30, 2013 |
Workforce restructuring |
Transformation costs |
Thirteen weeks ended Jun. 30, 2013 | ||||||||||||
Operating income |
$ |
202,882 |
$ |
21,727 |
$ |
4,498 |
$ |
229,107 |
|||||||
Total non-operating (expense) income |
(36,541) |
— |
9,479 |
(27,062) |
|||||||||||
Income before income taxes |
166,341 |
21,727 |
13,977 |
202,045 |
|||||||||||
Provision for income taxes |
39,600 |
8,600 |
5,600 |
53,800 |
|||||||||||
Net income |
126,741 |
13,127 |
8,377 |
148,245 |
|||||||||||
Net income attributable to Gannett Co., Inc. |
113,620 |
13,127 |
8,377 |
135,124 |
|||||||||||
Net income per share - diluted |
$ |
0.48 |
$ |
0.06 |
$ |
0.04 |
$ |
0.58 |
Additional information on the special items can be found in the "Use of Non-GAAP Information" section.
Operating income totaled
Operating expenses including special charges were
In addition to the agreement to acquire Belo, the company announced that it will continue its existing dividend payment program and extended its share buyback program replacing its existing remaining authorization with a new
PUBLISHING
Publishing segment revenues in the quarter totaled
The continued positive impact of the all access content subscription model resulted in a 6.0 percent increase in total circulation revenue compared to the second quarter last year. Circulation revenue growth at local domestic publishing operations was up 11.4 percent, the fifth consecutive quarter of circulation revenue growth.
Second quarter advertising revenues totaled
Publishing segment digital revenues were 49.8 percent higher in the quarter. The all access content subscription model and digital advertising and marketing solutions all contributed to the growth. Digital revenues at all of our publishing operations were up in the quarter. Local domestic publishing operations were 56.9 percent higher,
Publishing segment operating expenses, which include a net increase of
Publishing segment operating income totaled
BROADCASTING
Broadcasting revenues (which include Captivate) were 3.2 percent higher in the quarter and totaled
Television revenues were
Based on current trends and reflecting the significant political and Summer Olympic revenues achieved in the third quarter last year, we expect the percentage decrease in total television revenues for the third quarter of 2013 to be in the mid-teens compared to the third quarter of 2012. Television revenues in the third quarter of 2012 benefited from approximately
Broadcasting segment operating expenses were
DIGITAL
Operating revenues in the Digital segment were
Digital revenues company-wide, including the Digital segment and all digital revenues generated by the other business segments totaled
At the end of the quarter,
NON-OPERATING ITEMS
The company's equity earnings include its share of operating results from unconsolidated investees including the
Equity income in unconsolidated investees totaled
Interest expense totaled
Net cash flow from operating activities was
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 non-cash impairment charge, 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
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
About
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
CONDENSED CONSOLIDATED STATEMENTS OF INCOME Gannett Co., Inc. and Subsidiaries Unaudited, in thousands (except per share amounts) | |||||||||||
Table No. 1 |
|||||||||||
Thirteen weeks ended Jun. 30, 2013 |
Thirteen weeks ended Jun. 24, 2012 |
% Increase (Decrease) | |||||||||
Net operating revenues: |
|||||||||||
Publishing advertising |
$ |
562,476 |
$ |
594,262 |
(5.3) |
||||||
Publishing circulation |
279,655 |
263,938 |
6.0 |
||||||||
Broadcasting |
211,962 |
205,381 |
3.2 |
||||||||
Digital |
186,506 |
181,326 |
2.9 |
||||||||
All other |
62,100 |
62,133 |
(0.1) |
||||||||
Total |
1,302,699 |
1,307,040 |
(0.3) |
||||||||
Operating expenses: |
|||||||||||
Cost of sales and operating expenses, exclusive of depreciation |
726,869 |
720,889 |
0.8 |
||||||||
Selling, general and administrative expenses, exclusive of depreciation |
320,615 |
316,301 |
1.4 |
||||||||
Depreciation |
38,467 |
40,157 |
(4.2) |
||||||||
Amortization of intangible assets |
9,368 |
8,078 |
16.0 |
||||||||
Facility consolidation charges |
4,498 |
5,097 |
(11.8) |
||||||||
Total |
1,099,817 |
1,090,522 |
0.9 |
||||||||
Operating income |
202,882 |
216,518 |
(6.3) |
||||||||
Non-operating (expense) income: |
|||||||||||
Equity income in unconsolidated investees, net |
9,424 |
8,663 |
8.8 |
||||||||
Interest expense |
(36,174) |
(36,142) |
0.1 |
||||||||
Other non-operating items |
(9,791) |
(2,280) |
*** |
||||||||
Total |
(36,541) |
(29,759) |
22.8 |
||||||||
Income before income taxes |
166,341 |
186,759 |
(10.9) |
||||||||
Provision for income taxes |
39,600 |
51,200 |
(22.7) |
||||||||
Net income |
126,741 |
135,559 |
(6.5) |
||||||||
Net income attributable to noncontrolling interests |
(13,121) |
(15,670) |
(16.3) |
||||||||
Net income attributable to Gannett Co., Inc. |
$ |
113,620 |
$ |
119,889 |
(5.2) |
||||||
Net income per share - basic |
$ |
0.50 |
$ |
0.51 |
(2.0) |
||||||
Net income per share - diluted |
$ |
0.48 |
$ |
0.51 |
(5.9) |
||||||
Weighted average number of common shares outstanding: |
|||||||||||
Basic |
228,837 |
233,334 |
(1.9) |
||||||||
Diluted |
234,636 |
237,136 |
(1.1) |
||||||||
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 |
|||||||||||
Twenty-six weeks ended Jun. 30, 2013 |
Twenty-six weeks ended Jun. 24, 2012 |
% Increase (Decrease) | |||||||||
Net operating revenues: |
|||||||||||
Publishing advertising |
$ |
1,088,975 |
$ |
1,145,700 |
(5.0) |
||||||
Publishing circulation |
565,627 |
527,274 |
7.3 |
||||||||
Broadcasting |
403,542 |
381,554 |
5.8 |
||||||||
Digital |
361,428 |
349,678 |
3.4 |
||||||||
All other |
120,862 |
121,421 |
(0.5) |
||||||||
Total |
2,540,434 |
2,525,627 |
0.6 |
||||||||
Operating expenses: |
|||||||||||
Cost of sales and operating expenses, exclusive of depreciation |
1,446,593 |
1,443,129 |
0.2 |
||||||||
Selling, general and administrative expenses, exclusive of depreciation |
634,730 |
624,620 |
1.6 |
||||||||
Depreciation |
77,393 |
79,860 |
(3.1) |
||||||||
Amortization of intangible assets |
18,496 |
15,957 |
15.9 |
||||||||
Facility consolidation charges |
9,283 |
9,885 |
(6.1) |
||||||||
Total |
2,186,495 |
2,173,451 |
0.6 |
||||||||
Operating income |
353,939 |
352,176 |
0.5 |
||||||||
Non-operating (expense) income: |
|||||||||||
Equity income in unconsolidated investees, net |
17,218 |
12,975 |
32.7 |
||||||||
Interest expense |
(71,579) |
(75,713) |
(5.5) |
||||||||
Other non-operating items |
(11,374) |
(245) |
*** |
||||||||
Total |
(65,735) |
(62,983) |
4.4 |
||||||||
Income before income taxes |
288,204 |
289,193 |
(0.3) |
||||||||
Provision for income taxes |
45,000 |
77,800 |
(42.2) |
||||||||
Net income |
243,204 |
211,393 |
15.0 |
||||||||
Net income attributable to noncontrolling interests |
(25,019) |
(23,281) |
7.5 |
||||||||
Net income attributable to Gannett Co., Inc. |
$ |
218,185 |
$ |
188,112 |
16.0 |
||||||
Net income per share - basic |
$ |
0.95 |
$ |
0.80 |
18.8 |
||||||
Net income per share - diluted |
$ |
0.93 |
$ |
0.79 |
17.7 |
||||||
Weighted average number of common shares outstanding: |
|||||||||||
Basic |
229,116 |
234,807 |
(2.4) |
||||||||
Diluted |
234,866 |
238,774 |
(1.6) |
||||||||
Dividends declared per share |
$ |
0.40 |
$ |
0.40 |
— |
BUSINESS SEGMENT INFORMATION Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars | |||||||||||
Table No. 3 |
|||||||||||
Thirteen weeks ended Jun. 30, 2013 |
Thirteen weeks ended Jun. 24, 2012 |
% Increase (Decrease) | |||||||||
Net operating revenues: |
|||||||||||
Publishing |
$ |
904,231 |
$ |
920,333 |
(1.7) |
||||||
Broadcasting |
211,962 |
205,381 |
3.2 |
||||||||
Digital |
186,506 |
181,326 |
2.9 |
||||||||
Total |
$ |
1,302,699 |
$ |
1,307,040 |
(0.3) |
||||||
Operating income (net of depreciation, amortization and facility consolidation charges): |
|||||||||||
Publishing |
$ |
85,192 |
$ |
104,211 |
(18.3) |
||||||
Broadcasting |
98,092 |
94,586 |
3.7 |
||||||||
Digital |
35,277 |
36,531 |
(3.4) |
||||||||
Corporate |
(15,679) |
(18,810) |
(16.6) |
||||||||
Total |
$ |
202,882 |
$ |
216,518 |
(6.3) |
||||||
Depreciation, amortization and facility consolidation charges: |
|||||||||||
Publishing |
$ |
31,415 |
$ |
33,736 |
(6.9) |
||||||
Broadcasting |
6,974 |
7,124 |
(2.1) |
||||||||
Digital |
9,383 |
8,330 |
12.6 |
||||||||
Corporate |
4,561 |
4,142 |
10.1 |
||||||||
Total |
$ |
52,333 |
$ |
53,332 |
(1.9) |
||||||
Operating cash flow: |
|||||||||||
Publishing |
$ |
116,607 |
$ |
137,947 |
(15.5) |
||||||
Broadcasting |
105,066 |
101,710 |
3.3 |
||||||||
Digital |
44,660 |
44,861 |
(0.4) |
||||||||
Corporate |
(11,118) |
(14,668) |
(24.2) |
||||||||
Total |
$ |
255,215 |
$ |
269,850 |
(5.4) |
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 |
|||||||||||
Twenty-six weeks ended Jun. 30, 2013 |
Twenty-six weeks ended Jun. 24, 2012 |
% Increase (Decrease) | |||||||||
Net operating revenues: |
|||||||||||
Publishing |
$ |
1,775,464 |
$ |
1,794,395 |
(1.1) |
||||||
Broadcasting |
403,542 |
381,554 |
5.8 |
||||||||
Digital |
361,428 |
349,678 |
3.4 |
||||||||
Total |
$ |
2,540,434 |
$ |
2,525,627 |
0.6 |
||||||
Operating income (net of depreciation, amortization and facility consolidation charges): |
|||||||||||
Publishing |
$ |
145,329 |
$ |
166,251 |
(12.6) |
||||||
Broadcasting |
181,768 |
167,201 |
8.7 |
||||||||
Digital |
58,881 |
52,794 |
11.5 |
||||||||
Corporate |
(32,039) |
(34,070) |
(6.0) |
||||||||
Total |
$ |
353,939 |
$ |
352,176 |
0.5 |
||||||
Depreciation, amortization and facility consolidation charges: |
|||||||||||
Publishing |
$ |
63,651 |
$ |
66,950 |
(4.9) |
||||||
Broadcasting |
13,909 |
14,234 |
(2.3) |
||||||||
Digital |
18,490 |
16,235 |
13.9 |
||||||||
Corporate |
9,122 |
8,283 |
10.1 |
||||||||
Total |
$ |
105,172 |
$ |
105,702 |
(0.5) |
||||||
Operating cash flow: |
|||||||||||
Publishing |
$ |
208,980 |
$ |
233,201 |
(10.4) |
||||||
Broadcasting |
195,677 |
181,435 |
7.8 |
||||||||
Digital |
77,371 |
69,029 |
12.1 |
||||||||
Corporate |
(22,917) |
(25,787) |
(11.1) |
||||||||
Total |
$ |
459,111 |
$ |
457,878 |
0.3 |
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: | |||||||
Second 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 |
(5.3%) |
(7.5%) |
(5.5%) |
(5.8%) | |||
National |
2.1% |
(31.1%) |
(0.7%) |
(1.0%) | |||
Classified |
(5.2%) |
(8.9%) |
(6.1%) |
(6.8%) | |||
Total advertising |
(4.0%) |
(10.5%) |
(4.9%) |
(5.3%) | |||
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 |
(4.4%) |
(4.8%) |
(4.5%) |
(4.7%) | |||
National |
(1.4%) |
(19.5%) |
(3.0%) |
(3.1%) | |||
Classified |
(5.3%) |
(7.4%) |
(5.8%) |
(6.3%) | |||
Total advertising |
(4.2%) |
(7.7%) |
(4.7%) |
(5.0%) | |||
Second 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 |
(0.8%) |
(9.6%) |
(1.9%) |
(2.3%) | |||
Employment |
(8.6%) |
(5.9%) |
(7.8%) |
(8.6%) | |||
Real Estate |
(3.2%) |
(9.5%) |
(5.6%) |
(6.7%) | |||
Legal |
(7.9%) |
—% |
(7.9%) |
(7.9%) | |||
Other |
(5.9%) |
(10.4%) |
(7.3%) |
(8.3%) | |||
Total classified |
(5.2%) |
(8.9%) |
(6.1%) |
(6.8%) | |||
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 |
(1.9%) |
(10.9%) |
(3.1%) |
(3.3%) | |||
Employment |
(8.7%) |
(3.6%) |
(7.2%) |
(7.8%) | |||
Real Estate |
(3.9%) |
(8.2%) |
(5.5%) |
(6.3%) | |||
Legal |
(8.4%) |
—% |
(8.4%) |
(8.4%) | |||
Other |
(4.8%) |
(8.5%) |
(6.0%) |
(6.7%) | |||
Total classified |
(5.3%) |
(7.4%) |
(5.8%) |
(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 Jun. 30, 2013 |
Workforce restructuring |
Transformation costs |
Thirteen weeks ended Jun. 30, 2013 |
||||||||||||||||
Cost of sales and operating expenses, exclusive of depreciation |
$ |
726,869 |
$ |
(18,039) |
$ |
— |
$ |
708,830 |
|||||||||||
Selling, general and administrative expenses, exclusive of depreciation |
320,615 |
(3,688) |
— |
316,927 |
|||||||||||||||
Facility consolidation charges |
4,498 |
— |
(4,498) |
— |
|||||||||||||||
Operating expenses |
1,099,817 |
(21,727) |
(4,498) |
1,073,592 |
|||||||||||||||
Operating income |
202,882 |
21,727 |
4,498 |
229,107 |
|||||||||||||||
Other non-operating items |
(9,791) |
— |
9,479 |
(312) |
|||||||||||||||
Total non-operating (expense) income |
(36,541) |
— |
9,479 |
(27,062) |
|||||||||||||||
Income before income taxes |
166,341 |
21,727 |
13,977 |
202,045 |
|||||||||||||||
Provision for income taxes |
39,600 |
8,600 |
5,600 |
53,800 |
|||||||||||||||
Net income |
126,741 |
13,127 |
8,377 |
148,245 |
|||||||||||||||
Net income attributable to Gannett Co., Inc. |
113,620 |
13,127 |
8,377 |
135,124 |
|||||||||||||||
Net income per share - diluted |
$ |
0.48 |
$ |
0.06 |
$ |
0.04 |
$ |
0.58 |
|||||||||||
GAAP Measure |
Special Items |
Non-GAAP Measure | |||||||||||||||||
Thirteen weeks ended Jun. 24, 2012 |
Workforce restructuring |
Transformation costs |
Pension settlement charges |
Thirteen weeks ended Jun. 24, 2012 | |||||||||||||||
Cost of sales and operating expenses, exclusive of depreciation |
$ |
720,889 |
$ |
(8,156) |
$ |
— |
$ |
— |
$ |
712,733 |
|||||||||
Selling, general and administrative expenses, exclusive of depreciation |
316,301 |
(1,580) |
— |
(5,423) |
309,298 |
||||||||||||||
Facility consolidation charges |
5,097 |
— |
(5,097) |
— |
— |
||||||||||||||
Operating expenses |
1,090,522 |
(9,736) |
(5,097) |
(5,423) |
1,070,266 |
||||||||||||||
Operating income |
216,518 |
9,736 |
5,097 |
5,423 |
236,774 |
||||||||||||||
Income before income taxes |
186,759 |
9,736 |
5,097 |
5,423 |
207,015 |
||||||||||||||
Provision for income taxes |
51,200 |
3,900 |
2,000 |
2,200 |
59,300 |
||||||||||||||
Net income |
135,559 |
5,836 |
3,097 |
3,223 |
147,715 |
||||||||||||||
Net income attributable to Gannett Co., Inc. |
119,889 |
5,836 |
3,097 |
3,223 |
132,045 |
||||||||||||||
Net income per share - diluted (a) |
$ |
0.51 |
$ |
0.02 |
$ |
0.01 |
$ |
0.01 |
$ |
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 | |||||||||||||||||||||
Twenty-six weeks ended Jun. 30, 2013 |
Workforce restructuring |
Transformation costs |
Other non- operating items |
Special tax benefits |
Twenty-six weeks ended Jun. 30, 2013 | ||||||||||||||||||
Cost of sales and operating expenses, exclusive of depreciation |
$ |
1,446,593 |
$ |
(22,530) |
$ |
— |
$ |
— |
$ |
— |
$ |
1,424,063 |
|||||||||||
Selling, general and administrative expenses, exclusive of depreciation |
634,730 |
(4,563) |
— |
— |
— |
630,167 |
|||||||||||||||||
Facility consolidation charges |
9,283 |
— |
(9,283) |
— |
— |
— |
|||||||||||||||||
Operating expenses |
2,186,495 |
(27,093) |
(9,283) |
— |
— |
2,150,119 |
|||||||||||||||||
Operating income |
353,939 |
27,093 |
9,283 |
— |
— |
390,315 |
|||||||||||||||||
Equity income in unconsolidated investees, net |
17,218 |
— |
— |
731 |
— |
17,949 |
|||||||||||||||||
Other non-operating items |
(11,374) |
— |
10,399 |
2,077 |
— |
1,102 |
|||||||||||||||||
Total non-operating (expense) income |
(65,735) |
— |
10,399 |
2,808 |
— |
(52,528) |
|||||||||||||||||
Income before income taxes |
288,204 |
27,093 |
19,682 |
2,808 |
— |
337,787 |
|||||||||||||||||
Provision for income taxes |
45,000 |
10,700 |
7,800 |
300 |
27,800 |
91,600 |
|||||||||||||||||
Net income |
243,204 |
16,393 |
11,882 |
2,508 |
(27,800) |
246,187 |
|||||||||||||||||
Net income attributable to Gannett Co., Inc. |
218,185 |
16,393 |
11,882 |
2,508 |
(27,800) |
221,168 |
|||||||||||||||||
Net income per share - diluted |
$ |
0.93 |
$ |
0.07 |
$ |
0.05 |
$ |
0.01 |
$ |
(0.12) |
$ |
0.94 |
|||||||||||
GAAP Measure |
Special Items |
Non-GAAP Measure |
|||||||||||||||||||||
Twenty-six weeks ended Jun. 24, 2012 |
Workforce restructuring |
Transformation costs |
Pension settlement charges |
Twenty-six weeks ended Jun. 24, 2012 |
|||||||||||||||||||
Cost of sales and operating expenses, exclusive of depreciation |
$ |
1,443,129 |
$ |
(22,064) |
$ |
— |
$ |
— |
$ |
1,421,065 |
|||||||||||||
Selling, general and administrative expenses, exclusive of depreciation |
624,620 |
(3,961) |
— |
(5,423) |
615,236 |
||||||||||||||||||
Facility consolidation charges |
9,885 |
— |
(9,885) |
— |
— |
||||||||||||||||||
Operating expenses |
2,173,451 |
(26,025) |
(9,885) |
(5,423) |
2,132,118 |
||||||||||||||||||
Operating income |
352,176 |
26,025 |
9,885 |
5,423 |
393,509 |
||||||||||||||||||
Income before income taxes |
289,193 |
26,025 |
9,885 |
5,423 |
330,526 |
||||||||||||||||||
Provision for income taxes |
77,800 |
10,500 |
3,900 |
2,200 |
94,400 |
||||||||||||||||||
Net income |
211,393 |
15,525 |
5,985 |
3,223 |
236,126 |
||||||||||||||||||
Net income attributable to Gannett Co., Inc. |
188,112 |
15,525 |
5,985 |
3,223 |
212,845 |
||||||||||||||||||
Net income per share - diluted (a) |
$ |
0.79 |
$ |
0.07 |
$ |
0.03 |
$ |
0.01 |
$ |
0.89 |
|||||||||||||
(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 Jun. 30, 2013 |
Workforce restructuring |
Transformation costs |
Thirteen weeks ended Jun. 30, 2013 |
||||||||||||||||
Operating income: |
|||||||||||||||||||
Publishing |
$ |
85,192 |
$ |
21,727 |
$ |
4,498 |
$ |
111,417 |
|||||||||||
Broadcasting |
98,092 |
— |
— |
98,092 |
|||||||||||||||
Digital |
35,277 |
— |
— |
35,277 |
|||||||||||||||
Corporate |
(15,679) |
— |
— |
(15,679) |
|||||||||||||||
Total |
$ |
202,882 |
$ |
21,727 |
$ |
4,498 |
$ |
229,107 |
|||||||||||
Depreciation, amortization and facility consolidation charges: |
|||||||||||||||||||
Publishing |
$ |
31,415 |
$ |
— |
$ |
(4,498) |
$ |
26,917 |
|||||||||||
Broadcasting |
6,974 |
— |
— |
6,974 |
|||||||||||||||
Digital |
9,383 |
— |
— |
9,383 |
|||||||||||||||
Corporate |
4,561 |
— |
— |
4,561 |
|||||||||||||||
Total |
$ |
52,333 |
$ |
— |
$ |
(4,498) |
$ |
47,835 |
|||||||||||
Operating cash flow (a): |
|||||||||||||||||||
Publishing |
$ |
116,607 |
$ |
21,727 |
$ |
— |
$ |
138,334 |
|||||||||||
Broadcasting |
105,066 |
— |
— |
105,066 |
|||||||||||||||
Digital |
44,660 |
— |
— |
44,660 |
|||||||||||||||
Corporate |
(11,118) |
— |
— |
(11,118) |
|||||||||||||||
Total |
$ |
255,215 |
$ |
21,727 |
$ |
— |
$ |
276,942 |
|||||||||||
GAAP Measure |
Special Items |
Non-GAAP Measure | |||||||||||||||||
Thirteen weeks ended Jun. 24, 2012 |
Workforce restructuring |
Transformation costs |
Pension settlement charges |
Thirteen weeks ended Jun. 24, 2012 | |||||||||||||||
Operating income: |
|||||||||||||||||||
Publishing |
$ |
104,211 |
$ |
9,736 |
$ |
5,097 |
$ |
— |
$ |
119,044 |
|||||||||
Broadcasting |
94,586 |
— |
— |
— |
94,586 |
||||||||||||||
Digital |
36,531 |
— |
— |
— |
36,531 |
||||||||||||||
Corporate |
(18,810) |
— |
— |
5,423 |
(13,387) |
||||||||||||||
Total |
$ |
216,518 |
$ |
9,736 |
$ |
5,097 |
$ |
5,423 |
$ |
236,774 |
|||||||||
Depreciation, amortization and facility consolidation charges: |
|||||||||||||||||||
Publishing |
$ |
33,736 |
$ |
— |
$ |
(5,097) |
$ |
— |
$ |
28,639 |
|||||||||
Broadcasting |
7,124 |
— |
— |
— |
7,124 |
||||||||||||||
Digital |
8,330 |
— |
— |
— |
8,330 |
||||||||||||||
Corporate |
4,142 |
— |
— |
— |
4,142 |
||||||||||||||
Total |
$ |
53,332 |
$ |
— |
$ |
(5,097) |
$ |
— |
$ |
48,235 |
|||||||||
Operating cash flow (a): |
|||||||||||||||||||
Publishing |
$ |
137,947 |
$ |
9,736 |
$ |
— |
$ |
— |
$ |
147,683 |
|||||||||
Broadcasting |
101,710 |
— |
— |
— |
101,710 |
||||||||||||||
Digital |
44,861 |
— |
— |
— |
44,861 |
||||||||||||||
Corporate |
(14,668) |
— |
— |
5,423 |
(9,245) |
||||||||||||||
Total |
$ |
269,850 |
$ |
9,736 |
$ |
— |
$ |
5,423 |
$ |
285,009 |
|||||||||
(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 |
|||||||||||||||||
Twenty-six weeks ended Jun. 30, 2013 |
Workforce restructuring |
Transformation costs |
Twenty-six weeks ended Jun. 30, 2013 |
||||||||||||||||
Operating income: |
|||||||||||||||||||
Publishing |
$ |
145,329 |
$ |
27,093 |
$ |
9,283 |
$ |
181,705 |
|||||||||||
Broadcasting |
181,768 |
— |
— |
181,768 |
|||||||||||||||
Digital |
58,881 |
— |
— |
58,881 |
|||||||||||||||
Corporate |
(32,039) |
— |
— |
(32,039) |
|||||||||||||||
Total |
$ |
353,939 |
$ |
27,093 |
$ |
9,283 |
$ |
390,315 |
|||||||||||
Depreciation, amortization and facility consolidation charges: |
|||||||||||||||||||
Publishing |
$ |
63,651 |
$ |
— |
$ |
(9,283) |
$ |
54,368 |
|||||||||||
Broadcasting |
13,909 |
— |
— |
13,909 |
|||||||||||||||
Digital |
18,490 |
— |
— |
18,490 |
|||||||||||||||
Corporate |
9,122 |
— |
— |
9,122 |
|||||||||||||||
Total |
$ |
105,172 |
$ |
— |
$ |
(9,283) |
$ |
95,889 |
|||||||||||
Operating cash flow (a): |
|||||||||||||||||||
Publishing |
$ |
208,980 |
$ |
27,093 |
$ |
— |
$ |
236,073 |
|||||||||||
Broadcasting |
195,677 |
— |
— |
195,677 |
|||||||||||||||
Digital |
77,371 |
— |
— |
77,371 |
|||||||||||||||
Corporate |
(22,917) |
— |
— |
(22,917) |
|||||||||||||||
Total |
$ |
459,111 |
$ |
27,093 |
$ |
— |
$ |
486,204 |
|||||||||||
GAAP Measure |
Special Items |
Non-GAAP Measure | |||||||||||||||||
Twenty-six weeks ended Jun. 24, 2012 |
Workforce restructuring |
Transformation costs |
Pension settlement charges |
Twenty-six weeks ended Jun. 24, 2012 | |||||||||||||||
Operating income: |
|||||||||||||||||||
Publishing |
$ |
166,251 |
$ |
27,681 |
$ |
9,885 |
$ |
— |
$ |
203,817 |
|||||||||
Broadcasting |
167,201 |
— |
— |
— |
167,201 |
||||||||||||||
Digital |
52,794 |
— |
— |
— |
52,794 |
||||||||||||||
Corporate |
(34,070) |
(1,656) |
— |
5,423 |
(30,303) |
||||||||||||||
Total |
$ |
352,176 |
$ |
26,025 |
$ |
9,885 |
$ |
5,423 |
$ |
393,509 |
|||||||||
Depreciation, amortization and facility consolidation charges: |
|||||||||||||||||||
Publishing |
$ |
66,950 |
$ |
— |
$ |
(9,885) |
$ |
— |
$ |
57,065 |
|||||||||
Broadcasting |
14,234 |
— |
— |
— |
14,234 |
||||||||||||||
Digital |
16,235 |
— |
— |
— |
16,235 |
||||||||||||||
Corporate |
8,283 |
— |
— |
— |
8,283 |
||||||||||||||
Total |
$ |
105,702 |
$ |
— |
$ |
(9,885) |
$ |
— |
$ |
95,817 |
|||||||||
Operating cash flow (a): |
|||||||||||||||||||
Publishing |
$ |
233,201 |
$ |
27,681 |
$ |
— |
$ |
— |
$ |
260,882 |
|||||||||
Broadcasting |
181,435 |
— |
— |
— |
181,435 |
||||||||||||||
Digital |
69,029 |
— |
— |
— |
69,029 |
||||||||||||||
Corporate |
(25,787) |
(1,656) |
— |
5,423 |
(22,020) |
||||||||||||||
Total |
$ |
457,878 |
$ |
26,025 |
$ |
— |
$ |
5,423 |
$ |
489,326 |
|||||||||
(a) Refer to Table No. 10 |
NON-GAAP FINANCIAL INFORMATION Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars | |||||||||||||||||||
Table No. 10 |
|||||||||||||||||||
"Operating cash flow", a non-GAAP measure, is defined as operating income plus depreciation, amortization and facility consolidation charges. 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. | |||||||||||||||||||
Reconciliations 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 condensed consolidated statements of income, follow: | |||||||||||||||||||
Thirteen weeks ended Jun. 30, 2013: |
|||||||||||||||||||
Publishing |
Broadcasting |
Digital |
Corporate |
Consolidated Total | |||||||||||||||
Operating cash flow |
$ |
116,607 |
$ |
105,066 |
$ |
44,660 |
$ |
(11,118) |
$ |
255,215 |
|||||||||
Less: |
|||||||||||||||||||
Depreciation |
(22,776) |
(6,793) |
(4,337) |
(4,561) |
(38,467) |
||||||||||||||
Amortization |
(4,141) |
(181) |
(5,046) |
— |
(9,368) |
||||||||||||||
Facility consolidation charges |
(4,498) |
— |
— |
— |
(4,498) |
||||||||||||||
Operating income as reported (GAAP basis) |
$ |
85,192 |
$ |
98,092 |
$ |
35,277 |
$ |
(15,679) |
$ |
202,882 |
|||||||||
Thirteen weeks ended Jun. 24, 2012: |
|||||||||||||||||||
Publishing |
Broadcasting |
Digital |
Corporate |
Consolidated Total | |||||||||||||||
Operating cash flow |
$ |
137,947 |
$ |
101,710 |
$ |
44,861 |
$ |
(14,668) |
$ |
269,850 |
|||||||||
Less: |
|||||||||||||||||||
Depreciation |
(24,869) |
(6,943) |
(4,203) |
(4,142) |
(40,157) |
||||||||||||||
Amortization |
(3,770) |
(181) |
(4,127) |
— |
(8,078) |
||||||||||||||
Facility consolidation charges |
(5,097) |
— |
— |
— |
(5,097) |
||||||||||||||
Operating income as reported (GAAP basis) |
$ |
104,211 |
$ |
94,586 |
$ |
36,531 |
$ |
(18,810) |
$ |
216,518 |
|||||||||
Twenty-six weeks ended Jun. 30, 2013: |
|||||||||||||||||||
Publishing |
Broadcasting |
Digital |
Corporate |
Consolidated Total | |||||||||||||||
Operating cash flow |
$ |
208,980 |
$ |
195,677 |
$ |
77,371 |
$ |
(22,917) |
$ |
459,111 |
|||||||||
Less: |
|||||||||||||||||||
Depreciation |
(46,001) |
(13,547) |
(8,723) |
(9,122) |
(77,393) |
||||||||||||||
Amortization |
(8,367) |
(362) |
(9,767) |
— |
(18,496) |
||||||||||||||
Facility consolidation charges |
(9,283) |
— |
— |
— |
(9,283) |
||||||||||||||
Operating income as reported (GAAP basis) |
$ |
145,329 |
$ |
181,768 |
$ |
58,881 |
$ |
(32,039) |
$ |
353,939 |
|||||||||
Twenty-six weeks ended Jun. 24, 2012: |
|||||||||||||||||||
Publishing |
Broadcasting |
Digital |
Corporate |
Consolidated Total | |||||||||||||||
Operating cash flow |
$ |
233,201 |
$ |
181,435 |
$ |
69,029 |
$ |
(25,787) |
$ |
457,878 |
|||||||||
Less: |
|||||||||||||||||||
Depreciation |
(49,620) |
(13,872) |
(8,085) |
(8,283) |
(79,860) |
||||||||||||||
Amortization |
(7,445) |
(362) |
(8,150) |
— |
(15,957) |
||||||||||||||
Facility consolidation charges |
(9,885) |
— |
— |
— |
(9,885) |
||||||||||||||
Operating income as reported (GAAP basis) |
$ |
166,251 |
$ |
167,201 |
$ |
52,794 |
$ |
(34,070) |
$ |
352,176 |
NON-GAAP FINANCIAL INFORMATION Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars | ||||||||
Table No. 11 |
||||||||
"Free cash flow" is a non-GAAP liquidity measure used in addition to and in conjunction with results presented in accordance with GAAP. Free cash flow should not be relied upon to the exclusion of GAAP financial measures. | ||||||||
Free cash flow is a non-GAAP liquidity measure that 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 to 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. | ||||||||
Thirteen weeks ended Jun. 30, 2013 |
Twenty-six weeks ended Jun. 30, 2013 |
|||||||
Net cash flow from operating activities |
$ |
187,658 |
$ |
223,941 |
||||
Purchase of property, plant and equipment |
(32,801) |
(48,898) |
||||||
Voluntary pension employer contributions |
— |
15,507 |
||||||
Tax benefit for voluntary pension employer contributions |
— |
(6,125) |
||||||
Payments for investments |
(1,378) |
(2,379) |
||||||
Proceeds from investments |
19,305 |
29,365 |
||||||
Free cash flow |
$ |
172,784 |
$ |
211,411 |
TAX RATE CALCULATION Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars | |||||||||||||||
Table No. 12 |
|||||||||||||||
The calculations of the company's effective tax rate on a GAAP and non-GAAP basis are below: | |||||||||||||||
GAAP |
Non-GAAP | ||||||||||||||
Thirteen weeks ended Jun. 30, 2013 |
Thirteen weeks ended Jun. 24, 2012 |
Thirteen weeks ended Jun. 30, 2013 |
Thirteen weeks ended Jun. 24, 2012 | ||||||||||||
Income before taxes (per Table 6) |
$ |
166,341 |
$ |
186,759 |
$ |
202,045 |
$ |
207,015 |
|||||||
Noncontrolling interests (per Table 1) |
(13,121) |
(15,670) |
(13,121) |
(15,670) |
|||||||||||
Income before taxes attributable to GCI |
$ |
153,220 |
$ |
171,089 |
$ |
188,924 |
$ |
191,345 |
|||||||
Provision for income taxes (per Table 6) |
$ |
39,600 |
$ |
51,200 |
$ |
53,800 |
$ |
59,300 |
|||||||
Effective tax rate |
25.8% |
29.9% |
28.5% |
31.0% |
|||||||||||
GAAP |
Non-GAAP | ||||||||||||||
Twenty-six weeks ended Jun. 30, 2013 |
Twenty-six weeks ended Jun. 24, 2012 |
Twenty-six weeks ended Jun. 30, 2013 |
Twenty-six weeks ended Jun. 24, 2012 | ||||||||||||
Income before taxes (per Table 7) |
$ |
288,204 |
$ |
289,193 |
$ |
337,787 |
$ |
330,526 |
|||||||
Noncontrolling interests (per Table 2) |
(25,019) |
(23,281) |
(25,019) |
(23,281) |
|||||||||||
Income before taxes attributable to GCI |
$ |
263,185 |
$ |
265,912 |
$ |
312,768 |
$ |
307,245 |
|||||||
Provision for income taxes (per Table 7) |
$ |
45,000 |
$ |
77,800 |
$ |
91,600 |
$ |
94,400 |
|||||||
Effective tax rate |
17.1% |
29.3% |
29.3% |
30.7% |
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SOURCE
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