UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported):
July 12, 2006
GANNETT CO., INC.
(Exact name of registrant as specified in charter)
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Delaware |
1-6961 |
16-0442930 |
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(State or Other Jurisdiction of Incorporation or |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
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7950 Jones Branch Drive, McLean, Virginia |
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22107-0910 |
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(Address of principal executive offices) |
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(Zip Code) |
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(703) 854-6000 |
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(Registrant's telephone number, including area code) |
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Not Applicable |
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(Former name or former address, if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On July 12, 2006, Gannett Co., Inc. reported its consolidated financial results for the second quarter ended June 25, 2006. On July 12, 2006, the company also issued a press release announcing the company's statistical report for the period and quarter ended June 25, 2006. Copies of these press releases are furnished with this report as exhibits.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits
See Index to Exhibits attached hereto.
SIGNATURE
Pursuant to requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Gannett Co., Inc. |
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Date: July 12, 2006 |
By: |
/s/George R. Gavagan |
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George R. Gavagan |
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Vice President and Controller |
INDEX TO EXHIBITS
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Exhibit No. |
Description |
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99.1 |
Gannett Co., Inc. Earnings Press Release dated July 12, 2006. |
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99.2 |
Gannett Co., Inc. Statistical Report Press Release dated July 12, 2006. |
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News Release
FOR IMMEDIATE RELEASE
Wednesday, July 12, 2006
Gannett Co., Inc. Reports Second Quarter Results
McLEAN, VA - Gannett Co., Inc. (NYSE: GCI) reported today that 2006 second quarter earnings per diluted share from continuing operations were $1.31 compared to $1.34 per share in the second quarter of 2005. In the second quarter of 2006, the company recorded stock compensation expense of $10.3 million ($6.4 million after tax or $0.03 per share).
The company completed the expansion and reorganization, with MediaNews Group, of the Texas-New Mexico Newspapers Partnership on December 25, 2005. Results for the partnership are no longer consolidated in the company's financial statements. The company's 40.6 percent interest in the partnership results is now included in other operating revenues.
As previously reported, the company completed an exchange of properties with
Knight Ridder, Inc. in August 2005. Operating results for 2005 exclude
contributions from the former Gannett properties which have been reclassified to
income from discontinued operations. The Detroit Newspaper Partnership, L.P. has
been fully consolidated in the financial statements of Gannett along with a
minority interest charge for MediaNews Group's interest since August 1, 2005.
CONTINUING OPERATIONS
Total operating revenues for the company increased 6.1 percent to $2.03 billion in the second quarter from $1.91 billion in the similar interval in 2005. This increase is due primarily to the full consolidation of Detroit newspaper operations. On a pro forma basis, assuming Gannett owned the same complement of properties in the second quarter of 2006 and 2005, total operating revenues would have been 0.5 percent higher. Operating cash flow (defined as operating income plus depreciation and amortization) was $606.4 million compared with $623.7 million in the year earlier quarter. However, excluding stock compensation expense, operating cash flow was $7.1 million or 1.1 percent lower. Income from continuing operations was $310.5 million in the second quarter of 2006 versus $332.6 million in the same quarter of last year. Again, excluding stock based compensation expense, income from continuing operations for the second quarter of 2006 was $316.9 million.
Reported operating expenses increased 9.5 percent in the quarter reflecting principally the full consolidation of Detroit newspaper operations, as well as stock based compensation. On a pro forma basis and excluding stock based compensation, total operating expenses were 1.0 percent higher, primarily reflecting higher newsprint expense. Corporate expense totaled $20.3 million for the quarter, a $3.0 million increase compared to the second quarter in 2005. The increase was due principally to the portion of stock based compensation expense attributable to the corporate segment. Excluding that cost, corporate expense would have been flat for the quarter.
(more)
Average diluted shares outstanding in the second quarter totaled 237,767,000 compared with 248,009,000 in 2005's second quarter. Approximately 1.3 million shares were repurchased during the current quarter.
Commenting on the company's performance, Craig A. Dubow, Chairman, President
and CEO said: "Our performance in the quarter was in line with expectations
and continues to reflect the unevenness of the advertising environment in the
various markets we serve. Our domestic community newspapers generated
advertising gains during the quarter, particularly in the local and real estate
categories. Our efforts in both digital, and niche publications again were
strong contributors to our growth. Our positive domestic results were partially
offset by continued soft ad demand at our UK operations although we are seeing
some signs of stabilization in that market. Our Broadcasting segment reported
higher revenues driven by politically related ad demand and significant online
revenue growth. However, higher newsprint and interest costs, stock
compensation expense and an unfavorable exchange rate tempered our
results."
NEWSPAPERS
Newspaper results in the quarter include Exchange & Mart and Auto Exchange (acquired in September 2005), Tallahassee (acquired in August 2005), 100 percent of the Detroit Newspaper Partnership (established in August 2005), PointRoll, Inc. (acquired in June 2005) and Hometown Communications (acquired in March 2005).
Operating revenues were $1.82 billion for the quarter, a 6.4 percent increase from the second quarter of 2005. Reported advertising revenues were 6.4 percent higher for the quarter. Assuming Gannett had owned the same group of newspapers in both the second quarter of 2006 and 2005, advertising revenues would have increased 0.3 percent. On a comparable basis, local advertising revenues were 2.8 percent higher, national ad revenues were 0.8 percent lower and classified was down 1.7 percent. On a constant currency basis, total advertising revenues would have been up 0.6 percent; local would have been up 3.0 percent and national and classified would have declined 0.6 percent and 1.2 percent, respectively. In the U.S., pro forma advertising revenues were up 2.2 percent in the quarter. Total newspaper segment operating cash flow which includes USA TODAY and our UK properties was $521.1 million in the second quarter versus $538.4 million in the same quarter of 2005.
For the quarter, total newspaper operating expenses increased 9.8 percent reflecting the full consolidation of the Detroit newspaper operations and higher newsprint expense. Assuming Gannett had owned the same group of properties for the second quarter of 2006 and 2005, pro forma expenses would have increased 1.3 percent. On a pro forma basis and also excluding stock based compensation expense, newspaper segment costs were held to a 0.9 percent increase, which includes higher newsprint expense. The consolidation of Detroit also had an impact on reported newsprint expense, which increased 12.2 percent in the quarter, reflecting higher newsprint prices and usage. On a pro forma basis, however, newsprint expense increased 5.2 percent.
At USA TODAY, advertising revenues were up 0.7 percent in the second quarter. Paid advertising pages totaled 1,107 compared with 1,191 in the same quarter of 2005.
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BROADCASTING
Broadcasting generated revenues of $205.4 million for the quarter, a 3.8 percent increase from the second quarter of 2005. The increase reflects stronger politically related ad demand, a 63 percent increase in online revenues as well as higher revenues at Captivate. Operating cash flow in the quarter totaled $101.4 million compared with $98.7 million in the year ago quarter. Broadcasting expenses were 4.7 percent higher in the quarter. Excluding stock based compensation, broadcasting costs would have increased 3.4 percent.
In the second quarter of 2006, television revenues were $199.0 million, a 3.2 percent increase compared to $192.8 million in the second quarter of 2005.
NON-OPERATING ITEMS
Interest expense for the second quarter increased $19.0 million and was $67.4 million compared to $48.4 million in the same quarter of 2005. The increase is attributable to higher short-term interest rates and debt outstanding. During the quarter the company issued $1.25 billion in debt comprised of $750 million in three-year, floating rate notes with interest based on 3-month LIBOR and $500 million in five-year, fixed rate notes with a coupon of 5.75 percent. Other non-operating expense primarily reflects non-operating charges for minority interests and Internet investment costs in part offset by investment income and gains.
The company announced during the quarter that it had acquired Planet Discover, a provider of local, integrated online search and advertising technology. It also announced that it had reached an agreement to acquire WATL-TV in Atlanta which will create the company's third duopoly. The transaction will close at the conclusion of a regulatory review. The company contributed the Muskogee (OK) Phoenix to the Gannett Foundation in April, 2006. Subsequent to the close of the quarter, the company established its second duopoly when it completed the acquisition of KTVD-TV in Denver.
On June 29th, the company announced that Craig A. Dubow was elected Chairman effective July 1st.
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 June, Gannett's consolidated domestic Internet audience share was approximately 22.2 million unique visitors reaching over 14 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 46.1 million monthly page impressions from approximately 3.5 million unique users.
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.
(more)
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
1-800-500-0177 and international callers should dial 719-457-2679 at least 10
minutes prior to the scheduled start of the call. The confirmation code for the
conference call is 7154088. 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 7154088. Materials related to the call will be available
through the Investor Relations section of the company's Web site Wednesday
morning.
Gannett Co., Inc. is a leading international news and information company that publishes 90 daily newspapers in the USA, including USA TODAY, the nation's largest-selling daily newspaper. The company also owns nearly 1,000 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 more than 300 titles, including 17 daily newspapers, and a network of prize-winning Web sites. Gannett also operates 22 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.
For investor inquiries, contact:
Jeffrey Heinz
Director, Investor Relations
703-854-6917
jheinz@gannett.com
For media inquiries, contact:
Tara Connell
Vice President of Corporate Communications
703-854-6049
tjconnel@gannett.com
# # #
CONSOLIDATED STATEMENTS OF INCOME Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars (except per share amounts)
Thirteen weeks ended % Inc
June 25, 2006 June 26, 2005 (Dec)
Net Operating Revenues:
Newspaper advertising $ 1,377,004 $ 1,293,992 6.4
Newspaper circulation 321,222 310,061 3.6
Broadcasting 205,420 197,888 3.8
Other 124,263 108,691 14.3
----------- ---------- ------
Total 2,027,909 1,910,632 6.1
----------- ---------- ------
Operating Expenses:
Cost of sales and operating
expenses, exclusive of
depreciation 1,096,263 989,008 10.8
Selling, general and
administrative expenses,
exclusive of depreciation 325,275 297,913 9.2
Depreciation 60,724 69,379 (12.5)
Amortization of intangible assets 7,764 4,696 65.3
----------- ---------- ------
Total 1,490,026 1,360,996 9.5
----------- ---------- ------
Operating income 537,883 549,636 (2.1)
----------- ---------- ------
Non-operating income (expense):
Interest expense (67,374) (48,424) 39.1
Other (3,112) (3,040) 2.4
----------- ---------- ------
Total (70,486) (51,464) 37.0
----------- ---------- ------
Income before income taxes 467,397 498,172 (6.2)
Provision for income taxes 156,900 165,600 (5.3)
----------- ---------- ------
Net income from continuing
operations 310,497 332,572 (6.6)
----------- ---------- ------
Discontinued Operations:
Income from the operation of
discontinued operations,
net of tax - 6,071 ***
----------- ---------- ------
Net Income $ 310,497 $ 338,643 (8.3)
=========== ========== ======
Earnings from continuing operations per share-basic $1.31 $1.35 (3.0)
Earnings from discontinued
operations:
Earnings from the operation of
discontinued operations per
share-basic - 0.02 ***
----------- ---------- ------
Net Income per share-basic $1.31 $1.37 (4.4)
=========== ========== ======
Earnings from continuing operations per share-diluted $1.31 $1.34 (2.2)
Earnings from discontinued
operations:
Earnings from the operation of
discontinued operations per
share-diluted - 0.02 ***
----------- ---------- ------
Net Income per share-diluted $1.31 $1.37 (4.4)
=========== ========== ======
Dividends per share $0.29 $0.27 7.4
=========== ========== ======
Note: Beginning August 1, 2005, Newspaper publishing results (revenues and expenses) reflect 100% of Detroit newspaper operations. Prior to that date, the company's 50% interest in Detroit's operating income was reflected in other revenues. Beginning in 2006, the company's 40.6% investment in the Texas-New Mexico Newspaper Partnership is reflected in other revenue. In 2005 the results of the partnership were fully consolidated.
CONSOLIDATED STATEMENTS OF INCOME Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars (except per share amounts)
Twenty-six weeks ended % Inc
June 25, 2006 June 26, 2005 (Dec)
Net Operating Revenues:
Newspaper advertising $ 2,643,895 $ 2,492,684 6.1
Newspaper circulation 645,272 619,039 4.2
Broadcasting 387,995 362,445 7.0
Other 233,288 204,914 13.8
----------- ---------- ------
Total 3,910,450 3,679,082 6.3
----------- ---------- ------
Operating Expenses:
Cost of sales and operating
expenses, exclusive of
depreciation 2,171,341 1,951,730 11.3
Selling, general and
administrative expenses,
exclusive of depreciation 644,509 592,054 8.9
Depreciation 121,883 129,601 (6.0)
Amortization of intangible assets 15,528 8,501 82.7
----------- ---------- ------
Total 2,953,261 2,681,886 10.1
----------- ---------- ------
Operating income 957,189 997,196 (4.0)
----------- ---------- ------
Non-operating income (expense):
Interest expense (132,095) (93,362) 41.5
Other (3,288) (13,959) (76.4)
----------- ---------- ------
Total (135,383) (107,321) 26.1
----------- ---------- ------
Income before income taxes 821,806 889,875 (7.6)
Provision for income taxes 276,000 296,500 (6.9)
----------- ---------- ------
Net income from continuing
operations 545,806 593,375 (8.0)
----------- ---------- ------
Discontinued Operations:
Income from the operation of
discontinued operations,
net of tax - 11,005 ***
----------- ---------- ------
Net Income $ 545,806 $ 604,380 (9.7)
=========== ========== ======
Earnings from continuing operations per share-basic $2.30 $2.38 (3.4)
Earnings from discontinued
operations:
Earnings from the operation
of discontinued operations
per share-basic - 0.04 ***
----------- ---------- ------
Net Income per share-basic $2.30 $2.42 (5.0)
=========== ========== ======
Earnings from continuing operations per share-diluted $2.29 $2.37 (3.4)
Earnings from discontinued
operations:
Earnings from the operation
of discontinued operations
per share-diluted - 0.04 ***
----------- ---------- ------
Net Income per share-diluted $2.29 $2.42 (5.4)
=========== ========== ======
Dividends per share $0.58 $0.54 7.4
=========== ========== ======
Note: Beginning August 1, 2005, Newspaper publishing results (revenues and expenses) reflect 100% of Detroit newspaper operations. Prior to that date, the company's 50% interest in Detroit's operating income was reflected in other revenues. Beginning in 2006, the company's 40.6% investment in the Texas-New Mexico Newspaper Partnership is reflected in other revenue. In 2005 the results of the partnership were fully consolidated.
BUSINESS SEGMENT INFORMATION Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars
Thirteen weeks ended % Inc
June 25, 2006 June 26, 2005 (Dec)
Net Operating Revenues:
Newspaper publishing $ 1,822,489 $ 1,712,744 6.4
Broadcasting 205,420 197,888 3.8
----------- ---------- ------
Total $ 2,027,909 $ 1,910,632 6.1
=========== ========== ======
Operating Income
(net of depreciation
and amortization):
Newspaper publishing $ 464,935 $ 476,206 (2.4)
Broadcasting 93,288 90,739 2.8
Corporate (20,340) (17,309) (17.5)
----------- ---------- ------
Total $ 537,883 $ 549,636 (2.1)
=========== ========== ======
Depreciation and Amortization:
Newspaper publishing $ 56,213 $ 62,232 (9.7)
Broadcasting 8,088 7,944 1.8
Corporate 4,187 3,899 7.4
----------- ---------- ------
Total $ 68,488 $ 74,075 (7.5)
=========== ========== ======
Operating Cash Flow:
Newspaper publishing $ 521,148 $ 538,438 (3.2)
Broadcasting 101,376 98,683 2.7
Corporate (16,153) (13,410) (20.5)
----------- ---------- ------
Total $ 606,371 $ 623,711 (2.8)
=========== ========== ======
Broadcasting includes results from the company's 21 television stations and Captivate Network, Inc. Captivate is a national news and entertainment network which delivers programming and full motion video advertising through wireless digital video screens in elevators of premier office towers. Captivate was acquired in early April 2004.
Operating Cash Flow represents operating income for each of the company's business segments plus related depreciation and amortization expense. See attachment for reconciliation of amounts to the Consolidated Statements of Income.
Beginning August 1, 2005, Newspaper publishing results reflect 100% of Detroit newspaper operations. Prior to that date, the company's 50% interest in Detroit's operating income was reflected in Newspaper publishing revenues. Beginning in 2006, the company's 40.6% investment in the Texas-New Mexico Newspaper Partnership is reflected in other revenue. In 2005 the results of the partnership were fully consolidated.
Beginning with the first quarter of 2006, the Company began recording stock compensation expense in connection with the requirements of Statement of Financial Accounting Standards No. 123R, "Share-Based Payment". For the second quarter of 2006, this non-cash expense item totaled $10.3 million and has been allocated to the Newspaper, Broadcasting and Corporate segments.
BUSINESS SEGMENT INFORMATION Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars
Twenty-six weeks ended % Inc
June 25, 2006 June 26, 2005 (Dec)
Net Operating Revenues:
Newspaper publishing $ 3,522,455 $ 3,316,637 6.2
Broadcasting 387,995 362,445 7.0
----------- ---------- ------
Total $ 3,910,450 $ 3,679,082 6.3
=========== ========== ======
Operating Income
(net of depreciation
and amortization):
Newspaper publishing $ 832,904 $ 881,827 (5.5)
Broadcasting 165,093 149,423 10.5
Corporate (40,808) (34,054) (19.8)
----------- ---------- ------
Total $ 957,189 $ 997,196 (4.0)
=========== ========== ======
Depreciation and Amortization:
Newspaper publishing $ 112,930 $ 114,570 (1.4)
Broadcasting 16,114 15,644 3.0
Corporate 8,367 7,888 6.1
----------- ---------- ------
Total $ 137,411 $ 138,102 (0.5)
=========== ========== ======
Operating Cash Flow:
Newspaper publishing $ 945,834 $ 996,397 (5.1)
Broadcasting 181,207 165,067 9.8
Corporate (32,441) (26,166) (24.0)
----------- ---------- ------
Total $ 1,094,600 $ 1,135,298 (3.6)
=========== ========== ======
Broadcasting includes results from the company's 21 television stations and Captivate Network, Inc. Captivate is a national news and entertainment network which delivers programming and full motion video advertising through wireless digital video screens in elevators of premier office towers. Captivate was acquired in early April 2004.
Operating Cash Flow represents operating income for each of the company's business segments plus related depreciation and amortization expense. See attachment for reconciliation of amounts to the Consolidated Statements of Income.
Beginning August 1, 2005, Newspaper publishing results reflect 100% of Detroit newspaper operations. Prior to that date, the company's 50% interest in Detroit's operating income was reflected in Newspaper publishing revenues. Beginning in 2006, the company's 40.6% investment in the Texas-New Mexico Newspaper Partnership is reflected in other revenue. In 2005 the results of the partnership were fully consolidated.
Beginning with the first quarter of 2006, the Company began recording stock compensation expense in connection with the requirements of Statement of Financial Accounting Standards No. 123R, "Share-Based Payment". For year-to-date 2006, this non-cash expense item totaled $20.6 million and has been allocated to the Newspaper, Broadcasting and Corporate segments.
NON-GAAP FINANCIAL INFORMATION Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars
"Operating cash flow", a non-GAAP measure, is defined as operating income plus depreciation and amortization of intangible assets. Management believes that use of this measure allows investors and management to measure, analyze and compare the cash resources generated from its business segment operations in a meaningful and consistent manner. The focus on operating cash flow is appropriate given the consistent and generally predictable strength of cash flow generation by newspaper and television operations, and the short period of time it takes to convert new orders to cash.
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 June 25, 2006
Newspaper Broadcasting Corporate Consolidated
Publishing Total
Operating cash flow $521,148 $101,376 $(16,153) $606,371
Less:
Depreciation (48,639) (7,898) (4,187) (60,724)
Amortization (7,574) (190) - (7,764)
-------- -------- -------- --------
Operating income $464,935 $93,288 $(20,340) $537,883
======== ======== ======== ========
Thirteen weeks ended June 26, 2005
Newspaper Broadcasting Corporate Consolidated
Publishing Total
Operating cash flow $538,438 $98,683 $(13,410) $623,711
Less:
Depreciation (57,945) (7,535) (3,899) (69,379)
Amortization (4,287) (409) - (4,696)
-------- -------- -------- --------
Operating income $476,206 $90,739 $(17,309) $549,636
======== ======== ======== ========
Twenty-six weeks ended June 25, 2006
Newspaper Broadcasting Corporate Consolidated
Publishing Total
Operating cash flow $945,834 $181,207 $(32,441) $1,094,600
Less:
Depreciation (97,781) (15,735) (8,367) (121,883)
Amortization (15,149) (379) - (15,528)
-------- -------- -------- --------
Operating income $832,904 $165,093 $(40,808) $957,189
======== ======== ======== ========
Twenty-six weeks ended June 26, 2005
Newspaper Broadcasting Corporate Consolidated
Publishing Total
Operating cash flow $996,397 $165,067 $(26,166) $1,135,298
Less:
Depreciation (106,724) (14,989) (7,888) (129,601)
Amortization (7,846) (655) - (8,501)
-------- -------- -------- --------
Operating income $881,827 $149,423 $(34,054) $997,196
======== ======== ======== ========
News Release
Wednesday, July 12, 2006
Gannett Co., Inc. Releases June Statistical Report
McLEAN, VA - Gannett Co., Inc. (NYSE: GCI) reported today that total pro forma operating revenues for the sixth period ended June 25, 2006 increased 1.1 percent resulting from an increase in ad demand at its domestic community newspapers and broadcasting segment offset, partially, by soft ad demand at its UK properties. For comparison purposes, the exchange rate of Sterling year-over-year also affected results for the company's UK operations. If the exchange rate had remained constant year-over-year, total pro forma operating revenues would have been 0.7 percent higher for the period.
June
Pro forma (assuming that all properties presently owned were owned in both periods) newspaper advertising revenues in June increased 1.0 percent compared with the sixth period in 2005. If the exchange rate had remained constant year-over-year, total pro forma newspaper advertising revenues would have been up 0.6 percent.
Pro forma local advertising revenues were 4.0 percent higher on a 1.4 percent increase in ROP ad volume in June. The performance of the company's small and medium-sized advertisers in its domestic newspapers outpaced the revenue performance of its largest advertisers. In the U.S., across all products, local ad revenue gains were achieved in the financial, home improvement and office supplies categories while the department stores, consumer electronics, grocery and telecommunication categories lagged last year's comparable period. On a constant currency basis, pro forma local advertising would have been 3.8 percent higher.
Pro forma classified revenues decreased 0.6 percent in the sixth period on a 2.0 percent decline in ROP ad volume. On a constant currency basis, pro forma classified revenues would have been 1.3 percent lower for June. Real estate revenues were up 13.4 percent while employment and automotive revenues declined 4.6 percent and 15.4 percent, respectively. On a constant currency basis, real estate would have been 12.5 percent higher, employment would have been down 5.2 percent and automotive revenues would have been 15.8 percent lower. Classified results in our domestic community newspapers were better than in the UK. In the U.S., pro forma classified revenues increased 1.2 percent in the sixth period comprised of an 18.6 percent increase in real estate revenues and a 1.0 percent decline in employment revenues, while automotive was 14.6 percent lower.
Pro forma national advertising revenues in June were 2.3 percent lower on a
7.0 percent decline in ad volume. National volume at the company's local
domestic newspapers was down
7.1 percent in the period. At USA TODAY, advertising revenues were 1.2 percent
lower on a decline in paid ad pages to 309 from 363. For the sixth period, at
USA TODAY, strong growth in the
(more)
financial, telecommunications, home and building, advocacy and real estate categories was offset by weakness in the automotive, technology, travel, retail and packaged goods categories.
Pro forma broadcasting revenues, which include Captivate, increased 3.3
percent in the period buoyed by politically-related ad demand. Television
revenues were up 3.8 percent for the sixth period. Local revenues increased 3.1
percent while national revenues were 3.4 percent higher.
Second Quarter
For the second quarter of 2006, total pro forma operating revenues were up 0.5 percent but would have been 0.8 percent higher on a constant currency basis.
Newspaper advertising revenues, on a pro forma basis, for the second quarter were up 0.3 percent and would have been up 0.6 percent on a constant currency basis. The company's U.S. results were stronger than its UK results as domestic newspaper advertising increased 2.2 percent.
For the second quarter, pro forma local advertising was 2.8 percent higher and would have been up 3.0 percent on a constant currency basis. Local advertising in the U.S. for the quarter was up 3.4 percent.
Pro forma classified revenues for the quarter decreased 1.7 percent and on a constant currency basis would have been 1.2 percent lower. Real estate revenues were 10.7 percent higher, while employment was down 5.1 percent and auto was 15.3 percent lower. On a constant currency basis for the quarter, real estate would have been up 11.4 percent while employment and auto would have been down 4.6 percent and 14.9 percent, respectively. For the quarter, classified revenues were up 1.9 percent at our domestic community newspapers with increases in real estate and employment revenues of 16.7 percent and 0.9 percent, respectively. Automotive revenues were 12.7 percent lower.
Pro forma national advertising was down 0.8 percent for the second quarter. If the exchange rate had remained constant year-over-year, national advertising would have been 0.6 percent lower. At USA TODAY advertising revenues were 0.7 percent higher in the quarter while paid advertising pages were 1,107 compared to 1,191 in the year-ago period.
Pro forma broadcasting revenues for the quarter increased 3.8 percent and television revenues were 3.2 percent higher reflecting stronger political advertising. Based on current pacings, television revenues for the third quarter of 2006 would be ahead of last year's third quarter in the low single digits.
In addition to the revenue and statistical summary, attached is a chart which shows the consolidated Gannett Online audience share for June from Nielson//Net Ratings. In June, Gannett's domestic Websites had approximately 22.2 million unique visitors reaching over 14 percent of the Internet audience.
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The pro forma advertising and circulation revenue statistics include the results for Exchange & Mart and Auto Exchange (acquired in September 2005), Tallahassee (acquired August 29, 2005), 100 percent of the Detroit Newspaper Partnership (established August 2005), Mint Magazine (acquired in July 2005) and Hometown Communications (acquired March 31, 2005). The pro forma other revenue statistics include the results for PointRoll, Inc. (acquired in June 2005). Ad linage for Newsquest, Clipper and Nursing Spectrum/NurseWeek are not included in the ad volume statistics. Circulation volume numbers for Newsquest's paid daily newspapers are included in the enclosed statistics, but volume from unpaid daily and non-daily publications is not included in the circulation volume statistics. The revenue and statistical data related to the former Gannett owned newspapers in Bellingham (WA), Olympia (WA) and Boise (ID) as well as the Muskogee (OK) Phoenix, which was contributed to the Gannett Foundation in April 2006, has been excluded from all periods presented.
Gannett Co., Inc. is a leading international news and information company that publishes 90 daily newspapers in the USA, including USA TODAY, the nation's largest-selling daily newspaper. The company also owns nearly 1,000 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 more than 300 titles, including 17 daily newspapers, and a network of prize-winning Web sites. Gannett also operates 22 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.
Contact: Jeff Heinz
Director, Investor Relations
703-854-6917
jheinz@gannett.com
GANNETT CO., INC. REVENUE & STATISTICAL SUMMARY
Period 6 (May 29, 2006 - June 25, 2006)
%
2006 2005 CHANGE CHANGE
REVENUES:
Advertising:
Local $ 188,422,000 $ 181,153,000 $ 7,269,000 4.0
National 68,114,000 69,747,000 (1,633,000) (2.3)
Classified 196,442,000 197,649,000 (1,207,000) (0.6)
------------- ------------- ----------- ----
Total Advertising $ 452,978,000 $ 448,549,000 $ 4,429,000 1.0
============= ============= =========== ====
Circulation 101,605,000 104,764,000 (3,159,000) (3.0)
Other revenue 40,546,000 36,650,000 3,896,000 10.6
Broadcasting 60,266,000 58,332,000 1,934,000 3.3
------------- ------------- ----------- ----
Total Revenue $ 655,395,000 $ 648,295,000 $ 7,100,000 1.1
============= ============= =========== ====
VOLUME:
Newspaper Inches:
Local 2,732,469 2,694,682 37,787 1.4
National 310,557 333,986 (23,429) (7.0)
Classified 4,552,495 4,644,381 (91,886) (2.0)
------------- ------------- ----------- ----
Total ROP 7,595,521 7,673,049 (77,528) (1.0)
============= ============= =========== ====
Preprint Distribution
(in thousands) 934,991 991,102 (56,111) (5.7)
============= ============= =========== ====
NET PAID CIRCULATION:
Morning (w/USAT) 6,786,687 6,933,312 (146,625) (2.1)
Evening 864,360 903,148 (38,788) (4.3)
------------- ------------- ----------- ----
Total Daily 7,651,047 7,836,460 (185,413) (2.4)
============= ============= =========== ====
Sunday 6,177,065 6,329,203 (152,138) (2.4)
============= ============= =========== ====
Year-to-Date through June 25, 2006
%
2006 2005 CHANGE CHANGE
REVENUES:
Advertising:
Local $ 1,110,485,000 $ 1,103,217,000 $ 7,268,000 0.7
National 418,600,000 423,738,000 (5,138,000) (1.2)
Classified 1,113,129,000 1,134,495,000 (21,366,000) (1.9)
------------- ------------- ----------- ----
Total Advertising $ 2,642,214,000 $ 2,661,450,000 $ (19,236,000) (0.7)
============= ============= =========== ====
Circulation 644,764,000 663,775,000 (19,011,000) (2.9)
Other revenue 233,183,000 219,840,000 13,343,000 6.1
Broadcasting 387,995,000 362,445,000 25,550,000 7.0
------------- ------------- ----------- ----
Total Revenue $ 3,908,156,000 $ 3,907,510,000 $ 646,000 0.0
============= ============= =========== ====
VOLUME:
Newspaper Inches:
Local 16,952,704 17,078,082 (125,378) (0.7)
National 1,990,464 2,082,413 (91,949) (4.4)
Classified 27,696,080 28,159,595 (463,515) (1.6)
------------- ------------- ----------- ----
Total ROP 46,639,248 47,320,090 (680,842) (1.4)
============= ============= =========== ====
Preprint Distribution
(in thousands) 5,913,703 6,044,081 (130,378) (2.2)
============= ============= =========== ====
NET PAID CIRCULATION:
Morning (w/USAT) 7,046,609 7,157,560 (110,951) (1.6)
Evening 895,400 933,402 (38,002) (4.1)
------------- ------------- ----------- ----
Total Daily 7,942,009 8,090,962 (148,953) (1.8)
============= ============= =========== ====
Sunday 6,337,080 6,482,042 (144,962) (2.2)
============= ============= =========== ====
Note: The above revenue amounts and statistics have been restated to
include all companies presently owned, including the Exchange & Mart
and Auto Exchange (non-daily publications acquired in September 2005)
, the Tallahassee Democrat (acquired August 29, 2005), 100% of the
Detroit Newspaper Partnership (established August 2005), Mint
Magazine (acquired in July 2005), PointRoll, Inc. (acquired in June
2005) and Hometown Communications (acquired in late March 2005).
PointRoll is a marketing services company with a suite of media
products that delivers enhanced online marketing opportunities for
advertisers, agencies and online publishers. PointRoll is included
above in Other revenue. Hometown is a community publishing company
with one daily newspaper, 62 non-daily community newspapers, 24
community telephone directories and other specialty and niche
publications. The revenue and statistical data related to the former
Gannett owned newspapers in Bellingham (WA), Olympia (WA) and Boise
(ID) as well as the Muskogee (OK) Phoenix which was contributed to
the Gannett Foundation in April 2006, has been excluded from all
periods presented.
Operating results from the company's newspaper in Tucson, which
participates in a joint operating agency, are accounted for under the
equity method of accounting and are reported as a single amount in
other operating revenues. Advertising linage statistics from this
newspaper are not included above, however, circulation volume
statistics are included.
Newsquest is a regional newspaper publisher in the United Kingdom
with more than 300 titles, including paid and unpaid daily and
non-daily products. Circulation volume statistics for Newsquest's 17
paid daily newspapers are included above. Circulation volume
statistics for Sunday Herald are included above in the Sunday
statistics. Circulation volume statistics for Newsquest's unpaid
daily and non-daily publications are not reflected above.
Advertising linage for Newsquest publications is not reflected above.
Circulation volume statistics for Detroit Free Press, a morning
newspaper, are reflected above. Circulation volume statistics for
The Detroit News, an evening newspaper, are not reflected above.
Circulation volume and advertising linage statistics for non-daily
products, including Nursing Spectrum/NurseWeek and Clipper Magazine
are not reflected above.
GANNETT CO., INC. REVENUE & STATISTICAL SUMMARY
2nd Quarter 2006 (Mar. 27, 2006 - June 25, 2006)
2006 2005 CHANGE CHANGE
REVENUES:
Advertising:
Local $ 587,565,000 $ 571,816,000 $ 15,749,000 2.8
National 216,277,000 217,934,000 (1,657,000) (0.8)
Classified 573,042,000 583,097,000 (10,055,000) (1.7)
------------- ------------- ----------- ----
Total Advertising $ 1,376,884,000 $ 1,372,847,000 $ 4,037,000 0.3
============= ============= =========== ====
Circulation 321,173,000 331,873,000 (10,700,000) (3.2)
Other revenue 124,255,000 114,704,000 9,551,000 8.3
Broadcasting 205,420,000 197,888,000 7,532,000 3.8
------------- ------------- ----------- ----
Total Revenue $ 2,027,732,000 $ 2,017,312,000 $ 10,420,000 0.5
============= ============= =========== ====
VOLUME:
Newspaper Inches:
Local 8,859,660 8,779,044 80,616 0.9
National 1,029,986 1,067,802 (37,816) (3.5)
Classified 14,340,866 14,547,091 (206,225) (1.4)
------------- ------------- ----------- ----
Total ROP 24,230,512 24,393,937 (163,425) (0.7)
============= ============= =========== ====
Preprint Distribution
(in thousands) 3,009,473 3,089,609 (80,136) (2.6)
============= ============= =========== ====
NET PAID CIRCULATION:
Morning (w/USAT) 7,001,220 7,130,126 (128,906) (1.8)
Evening 884,842 924,525 (39,684) (4.3)
------------- ------------- ----------- ----
Total Daily 7,886,062 8,054,651 (168,590) (2.1)
============= ============= =========== ====
Sunday 6,266,183 6,426,758 (160,575) (2.5)
============= ============= =========== ====
Note: The above revenue amounts and statistics have been restated to
include all companies presently owned, including the Exchange & Mart
and Auto Exchange (non-daily publications acquired in September 2005)
, the Tallahassee Democrat (acquired August 29, 2005), 100% of the
Detroit Newspaper Partnership (established August 2005), Mint
Magazine (acquired in July 2005), PointRoll, Inc. (acquired in June
2005) and Hometown Communications (acquired in late March 2005).
PointRoll is a marketing services company with a suite of media
products that delivers enhanced online marketing opportunities for
advertisers, agencies and online publishers. PointRoll is included
above in Other revenue. Hometown is a community publishing company
with one daily newspaper, 62 non-daily community newspapers, 24
community telephone directories and other specialty and niche
publications. The revenue and statistical data related to the former
Gannett owned newspapers in Bellingham (WA), Olympia (WA) and Boise
(ID) as well as the Muskogee (OK) Phoenix which was contributed to
the Gannett Foundation in April 2006, has been excluded from all
periods presented.
Operating results from the company's newspaper in Tucson, which
participates in a joint operating agency, are accounted for under the
equity method of accounting and are reported as a single amount in
other operating revenues. Advertising linage statistics from this
newspaper are not included above, however, circulation volume
statistics are included.
Newsquest is a regional newspaper publisher in the United Kingdom
with more than 300 titles, including paid and unpaid daily and
non-daily products. Circulation volume statistics for Newsquest's 17
paid daily newspapers are included above. Circulation volume
statistics for Sunday Herald are included above in the Sunday
statistics. Circulation volume statistics for Newsquest's unpaid
daily and non-daily publications are not reflected above.
Advertising linage for Newsquest publications is not reflected above.
Circulation volume statistics for Detroit Free Press, a morning
newspaper, are reflected above. Circulation volume statistics for
The Detroit News, an evening newspaper, are not reflected above.
Circulation volume and advertising linage statistics for non-daily
products, including Nursing Spectrum/NurseWeek and Clipper Magazine
are not reflected above.
Gannett Online Internet Audience June 2006
Nielsen//Net Ratings
Home/Work Panel Combined
Unique Visitors Percentage Reach of Per Month Internet Audience
Gannett Online 22,238,000 14.2%