UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 30, 2009
GANNETT CO., INC.
(Exact name of registrant as specified in its charter)
| Delaware | 1-6961 | 16-0442930 | ||
| (State or other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
| 7950 Jones Branch Drive, McLean, Virginia |
22107-0910 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (703) 854-6000
| Not Applicable |
| (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:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o 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 January 30, 2009, Gannett Co., Inc. reported its preliminary consolidated financial results for the fourth quarter ended December 28, 2008. A copy of this press release is furnished with this report as an exhibit.
The preliminary results, however, do not include non-cash charges to be recorded in the quarter, which have not yet been finalized, for the impairment of goodwill, other intangible assets and certain other assets. The non-cash charges are expected to total in the range of $5.1 billion to $5.9 billion on a pre-tax basis and $4.5 billion to $5.2 billion on an after-tax basis. Earnings per share will be reduced in the quarter due to the charges but the charges will not impact the company’s operating cash flow.
Item 9.01. Financial Statements and Exhibits.
(d) 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.
| Gannett Co., Inc. | ||||
Date: January 30, 2009
|
By: | /s/George R. Gavagan | ||
| George R. Gavagan | ||||
| Vice President and Controller |
INDEX TO EXHIBITS
| Exhibit No. | Description | |
99.1
|
Gannett Co., Inc. Earnings Press Release dated January 30, 2009. |
Exhibit 99.1
News Release
|
 |
| FOR IMMEDIATE RELEASE | Friday, January 30, 2009 |
Gannett Co., Inc. Reports Preliminary Fourth Quarter and Full-Year Results
McLEAN, VA — Gannett Co., Inc. (NYSE: GCI) reported today that preliminary 2008 fourth
quarter earnings per diluted share from continuing operations were $0.69 compared with $1.06 per
share in the fourth quarter of 2007.
The preliminary results for the quarter include $56 million in pre-tax severance expenses
($36.1 million after tax or $0.16 per share) related to restructuring and efficiency efforts in the
U.S. and the UK. Absent severance expenses in the quarter, the company’s preliminary earnings would
have been $0.85 per share. Pre-tax severance expenses and facility consolidation costs totaled
approximately $38 million in the fourth quarter of 2007 ($24.4 million after-tax or $0.11 per share).
The preliminary results, however, do not include non-cash charges expected to be recorded in
the quarter, which have not yet been finalized, for the impairment of goodwill, other intangible
assets and certain other assets. The non-cash charges are expected to total in the range of $5.1
billion to $5.9 billion on a pre-tax basis and $4.5 billion to $5.2 billion on an after-tax basis.
In the fourth quarter a year ago, the company recognized a pre-tax, non-cash impairment charge of
$72.0 million ($50.8 million after-tax or $0.22 per share).
Commenting
on the fourth quarter results, Craig Dubow, chairman, president and chief executive
officer, said: “Our results for the quarter reflect the unprecedented turmoil in the economies of
both the U.S. and the UK and in the financial markets. Our anticipated non-cash impairment charges
stem from recessions in the U.S. and UK and the resultant impact on business conditions and the
broad-based downward pressure on equity share values. The impairment charges, while significant,
will not impact operating cash flow, our ability to pay down debt or the way we will operate the
company going forward. Despite economic conditions, we pressed forward to transform Gannett and
position it for the future and more favorable business conditions. To that end, some tough
decisions were made during the quarter regarding the size and structure of our operations, and
these actions resulted in significant severance expenses.
“The ongoing weakness in advertising demand had a significant impact on our results in both
publishing and broadcasting this quarter. However, we benefited from substantially higher
politically related advertising revenue in broadcasting as well as solid results in the digital
segment. Lower interest expense and taxes also had a positive impact in the quarter while higher
newsprint expense moderated results,” Dubow said.
In accordance with the Statement of Financial Accounting Standards No. 142, the company’s
annual impairment test of goodwill and other intangible assets is being completed as of December 28, 2008. Due to the challenges facing the company’s publishing businesses, including
recessions in both the U.S. and the UK and their impact on advertising demand, and the decline
generally in equity values and specifically its stock price, the company expects to incur non-cash
impairment charges in the quarter to reduce the book value of newspaper publishing goodwill, other
intangible assets
(more)
including mastheads, certain property, plant and equipment, newspaper publishing partnership
investments and certain other assets. The final amount of the charges will be included in earnings
and disclosed in our Form 10-K, which will be filed with the Securities and Exchange Commission on
or before February 26, 2009.
Total reported operating revenues for the company were $1.7 billion in the fourth quarter
compared to $1.9 billion in the fourth quarter of 2007. A significant pullback in advertising
demand as the quarter progressed across our publishing and broadcast businesses, driven by the
recessionary economic environment, was offset in part by strong political advertising in the
broadcasting segment. Digital segment revenues were higher for the quarter reflecting the
consolidation of CareerBuilder and ShopLocal for the full quarter in 2008.
Reported operating expenses totaled $1.5 billion and were down slightly compared to the fourth
quarter of 2007, reflecting continued cost containment efforts in publishing and broadcasting
offset by higher severance expenses as well as incremental costs from the consolidation of
CareerBuilder and ShopLocal. Excluding severance costs in both years and the impairment charge in
the fourth quarter of 2007, pro forma operating expenses declined 6.3 percent for the quarter.
Corporate expenses excluding severance were 7.6 percent lower than the year ago quarter.
Reported operating cash flow (defined as operating income plus depreciation and amortization)
was $327.6 million. Preliminary net income in the quarter was $158.0 million, before anticipated
non-cash impairment charges.
Average diluted shares outstanding in the fourth quarter totaled 229,336,000 compared with
231,877,000 in 2007’s fourth quarter.
For the full year, total operating revenues were $6.8 billion, a decline of 9.0 percent
compared to 2007. Advertising revenue related to politics and the Olympics that totaled $94 million
and $24 million, respectively, and incremental digital segment revenue from the consolidation of
CareerBuilder and ShopLocal was more than offset by softer advertising demand overall due to
economic and business conditions that deteriorated during the year. Pro forma operating expenses,
excluding severance and impairment charges declined 5.7 percent. Operating cash flow was $1.5
billion. Preliminary results for the full year of 2008 (including impairment charges in the second
quarter of $11.08 per share) reflect a loss of $7.81 per share. Excluding impairment charges and
restructuring expense, preliminary earnings per share were $3.61.
PUBLISHING
Publishing segment operating revenues were $1.4 billion for the quarter compared to $1.7
billion in the fourth quarter of 2007, an 18.6 percent decline. Advertising revenues were $963.4
million compared to $1.2 billion in the fourth quarter of 2007. This advertising revenue decline of
22.7 percent for the publishing segment was driven by a 17.7 percent decline in the U.S. and a 29.3
percent decline in pounds at Newsquest, our operations in the UK. Retail advertising revenues were
13.9 percent lower, national revenues declined 18.2 percent and classified revenues were down 36.7
percent. For comparison purposes, the exchange rate of the British pound declined over 22 percent
year-over-year. If the exchange rate had remained constant, total advertising revenues would have
been 19.3 percent lower including declines of 11.9 percent in retail, 16.8 percent in national and
31.8 percent in classified.
(more)
Lower classified revenues were driven by declines of 45.7 percent in real estate, 47.5 percent
in employment and 30.4 percent in automotive. For U.S. Community Publishing, classified revenues
were down 30.7 percent comprised of declines of 32.9 percent in real estate, 46.5 percent in
employment and 25.7 percent in automotive. In the UK, classified revenues were 35.3 percent lower,
in pounds, reflecting declines of 57.7 percent in real estate, 35.2 percent in employment and 31.2
percent in automotive.
At USA TODAY, advertising revenues were 18.5 percent lower in the fourth quarter compared to
the fourth quarter in 2007. Paid advertising pages totaled 788 compared with 1,045 in the same
quarter of 2007. The telecommunications, financial and advocacy revenue categories grew compared to
the fourth quarter last year but these gains were more than offset by losses in the entertainment,
automotive, retail and travel categories.
Total publishing operating expenses were $1.2 billion, a 10.9 percent decline from the same
quarter a year ago reflecting cost control efforts, offset, in part, by severance expenses.
Publishing expenses, excluding severance expenses and the impairment charge in the year ago
quarter, were 6.8 percent lower. Newsprint expenses were 2.0 percent higher for the quarter reflecting a 26.2
percent increase in usage prices which more than offset a 19.2 percent decline in consumption.
Operating cash flow in the fourth quarter for the total publishing segment, which includes USA
TODAY and Newsquest, was $209.9 million.
BROADCASTING
Broadcasting revenues (which include Captivate) were $212.8 million in the quarter, about even
with $212.0 million in the fourth quarter of 2007. Politically related advertising demand of $58.1
million was offset by softness in other categories, primarily automotive and retail.
Operating expenses in the broadcasting segment totaled $120.6 million, relatively unchanged
from the fourth quarter a year ago reflecting significant cost control efforts and higher
severance. Broadcasting expenses excluding severance were down 4.0 percent. Operating cash flow was $100.7 million in the fourth quarter. Television revenues were 1.7 percent higher and totaled $205.6 million. Based on where we are today, we would expect television revenues to be down in the
mid-teens for the first quarter of 2009 compared to the first quarter of 2008.
DIGITAL
The digital segment for the quarter includes results for CareerBuilder, PointRoll, ShopLocal,
Planet Discover, Schedule Star and Ripple6 (from the date of its acquisition in November, 2008).
Results for CareerBuilder and ShopLocal were initially consolidated in the third quarter of 2008
when the company acquired controlling interest. Results for PointRoll, Planet Discover and Schedule
Star, which had been reflected previously in the publishing segment, have been reclassified to the
digital segment.
Digital operating revenues totaled $169.9 million in the quarter driven by the consolidation
of CareerBuilder, ShopLocal and Ripple6. Operating expenses were $145.8 million. Operating cash
flow was $34.2 million reflecting positive results for CareerBuilder, PointRoll and ShopLocal
(more)
partially offset by investment in other digital properties. On a pro forma basis, operating
revenues were 1.4 percent higher while operating expenses excluding severance were 6.3 percent
lower. Operating cash flow on a pro forma basis increased
63.5 percent.
NON-OPERATING ITEMS
The company’s equity earnings include its share of operating earnings or losses from
unconsolidated investees including the California Newspapers Partnership, Texas-New Mexico
Newspapers Partnership, Tucson newspaper partnership and other online/new technology businesses.
These amounts included the company’s equity share of results for CareerBuilder and ShopLocal for
periods prior to September 3, 2008 and June 30, 2008, respectively, when the company acquired
controlling interest.
Preliminary equity income from unconsolidated investees (excluding anticipated non-cash
impairment charges) for the fourth quarter of 2008 was $3.6 million compared to $9.4 million for
the fourth quarter of 2007. The decline primarily reflects: lower results from our newspaper
publishing partnerships; the absence in the 2008 quarter of CareerBuilder earnings which are now
consolidated; and increased investments in new businesses including Metromix, Mogulus and Cozi.
Other non-operating items reflect a loss of $7.7 million in 2008 compared with income of $2.7 million in 2007. The decline in non-operating items primarily reflects inclusion of minority
interest charges for CareerBuilder for the full quarter, foreign currency translation losses and
lower investment income, partially offset by a gain on the redemption of a portion of the company’s
notes due in May, 2009, and other asset sale gains.
Interest expense for the fourth quarter was $51.5 million, 10.3 percent lower compared to $57.5 million for the fourth quarter in 2007. The decline was due to lower interest rates and
average debt balances.
The company’s effective tax rate on its preliminary earnings for the fourth quarter of 2008
was 22.6 percent compared with 33.1 percent for the fourth quarter of 2007. The 2008 rate benefited
from several favorable state tax settlements, the release of certain state tax reserves upon the
expiration of statutes of limitation, and from a lower UK statutory tax rate.
In January, the company announced it was offering to sell certain assets of the Tucson (AZ)
Citizen. If, however, a sale is not completed by March 21, 2009, the newspaper will be closed. It
is one of the two newspapers produced by TNI Partners as part of a joint operating arrangement
(JOA) under the Newspaper Preservation Act. The Arizona Daily Star, which is owned by a subsidiary
of Lee Enterprises Incorporated, is the second newspaper in the JOA. TNI Partners provides the
production, distribution, sales and other non-editorial business functions for both the Citizen and
The Star.
* * * *
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 December, Gannett’s consolidated domestic Internet
audience
(more)
share was 24.4 million unique visitors reaching 14.7 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 68 million monthly page impressions from approximately 5.5 million unique
users. CareerBuilder’s unique visitors in December totaled 17.9 million, an increase of 24 percent
compared to last year.
All references in this release to “comparable” revenue results and “operating cash flow” are
to non-GAAP financial measures. Management believes that this use allows management and investors
to analyze and compare the Company’s results in a more meaningful and consistent manner. A
reconciliation of the non-GAAP operating cash flow amounts to the Company’s consolidated statements
of income is attached.
As previously announced, the company will hold an earnings conference call at 10:00 a.m. ET
today. The call can be accessed via a live Webcast through the Investor Relations section of the
company’s Web site, www.gannett.com, or listen-only conference lines. U.S. callers should dial 1-888-599-8693 and international callers should dial 913-312-0717 at least 10 minutes prior to the
scheduled start of the call. The confirmation code for the conference call is 8694836. 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 8694836. Materials related to the call will
be available through the Investor Relations section of the company’s Web site Friday morning.
Gannett Co., Inc. is a leading international news and information company that publishes 85
daily newspapers in the USA, including USA TODAY, the nation’s largest-selling daily newspaper. The
company also owns nearly 900 non-daily publications in the USA and USA WEEKEND, a weekly newspaper
magazine. Gannett subsidiary Newsquest is the United Kingdom’s second largest regional newspaper
company. Newsquest publishes 17 daily paid-for titles, more than 200 weekly newspapers, magazines
and trade publications, and a network of award-winning Web sites. Gannett also operates 23
television stations in the United States and is an Internet leader with sites sponsored by its TV
stations and newspapers including USATODAY.com, one of the most popular news sites on the Web.
Certain statements in this press release may be forward looking in nature or “forward looking
statements” as defined in the Private Securities Litigation Reform Act of 1995. The forward
looking statements contained in this press release are subject to a number of risks, trends and
uncertainties that could cause actual performance to differ materially from these forward looking
statements. A number of those risks, trends and uncertainties are discussed in the company’s SEC
reports, including the company’s annual report on Form 10-K and quarterly reports on Form 10-Q.
Any forward looking statements in this press release should be evaluated in light of these
important risk factors.
Gannett is not responsible for updating the information contained in this press release beyond
the published date, or for changes made to this press release by wire services, Internet service
providers or other media.
For investor inquiries, contact:
|
For media inquiries, contact: | |
Jeffrey Heinz
|
Tara Connell | |
Director, Investor Relations
|
Vice President of Corporate Communications | |
703-854-6917
|
703-854-6049 | |
jheinz@gannett.com
|
tjconnel@gannett.com |
# # #
PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
| Thirteen weeks | Thirteen weeks | |||||||||||
| ended | ended | % Inc | ||||||||||
| Dec. 28, 2008 | Dec. 30, 2007 | (Dec) | ||||||||||
Net Operating Revenues: |
||||||||||||
Publishing advertising |
$ | 963,398 | $ | 1,246,233 | (22.7 | ) | ||||||
Publishing circulation |
302,487 | 313,172 | (3.4 | ) | ||||||||
Digital |
169,883 | 23,733 | *** | |||||||||
Broadcasting |
212,785 | 212,032 | 0.4 | |||||||||
All other |
86,929 | 101,748 | (14.6 | ) | ||||||||
Total |
1,735,482 | 1,896,918 | (8.5 | ) | ||||||||
Operating Expenses: |
||||||||||||
Cost of sales and operating expenses, exclusive of depreciation |
1,052,685 | 1,027,630 | 2.4 | |||||||||
Selling, general and administrative expenses, exclusive of depreciation |
355,207 | 315,279 | 12.7 | |||||||||
Depreciation |
58,594 | 60,396 | (3.0 | ) | ||||||||
Amortization of intangible assets |
9,373 | 9,524 | (1.6 | ) | ||||||||
Goodwill and other asset impairments |
— | 72,030 | *** | |||||||||
Total |
1,475,859 | 1,484,859 | (0.6 | ) | ||||||||
Operating income |
259,623 | 412,059 | (37.0 | ) | ||||||||
Non-operating (expense) income: |
||||||||||||
Equity income in unconsolidated investees, net |
3,584 | 9,371 | (61.8 | ) | ||||||||
Interest expense |
(51,537 | ) | (57,470 | ) | (10.3 | ) | ||||||
Other non-operating items |
(7,699 | ) | 2,654 | *** | ||||||||
Total |
(55,652 | ) | (45,445 | ) | 22.5 | |||||||
Income before income taxes |
203,971 | 366,614 | (44.4 | ) | ||||||||
Provision for income taxes |
46,000 | 121,300 | (62.1 | ) | ||||||||
Net Income |
$ | 157,971 | $ | 245,314 | (35.6 | ) | ||||||
Earnings per share — basic |
$ | 0.69 | $ | 1.06 | (34.9 | ) | ||||||
Earnings per share — diluted |
$ | 0.69 | $ | 1.06 | (34.9 | ) | ||||||
Dividends per share |
$ | 0.40 | $ | 0.40 | *** | |||||||
In period 9, 2008, the company increased its ownership in CareerBuilder to 50.8% from 40.8%, and
in connection therewith the results of CareerBuilder beginning with period 9 are now fully
consolidated. In period 7, 2008, the company increased its ownership in ShopLocal to 100% from
42.5%, and in connection therewith the results of ShopLocal beginning with period 7 are now fully
consolidated. Prior to these acquisitions, the equity share of CareerBuilder and ShopLocal
results were reported as equity earnings. Beginning with the third quarter, a new “Digital”
business segment is being reported, which includes CareerBuilder and ShopLocal from the date of
full consolidation as well as PointRoll , Planet Discover, Schedule Star and Ripple6 (from the
date of acquisition in period 11, 2008) . Prior period revenues for PointRoll, Planet Discover
and Schedule Star have been reclassified from “All other” to “Digital”.
PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
| Fifty-two | Fifty-two | |||||||||||
| weeks ended | weeks ended | % Inc | ||||||||||
| Dec. 28, 2008 | Dec. 30, 2007 | (Dec) | ||||||||||
Net Operating Revenues: |
||||||||||||
Publishing advertising |
$ | 4,145,592 | $ | 4,937,159 | (16.0 | ) | ||||||
Publishing circulation |
1,216,637 | 1,252,356 | (2.9 | ) | ||||||||
Digital |
281,378 | 70,347 | *** | |||||||||
Broadcasting |
772,533 | 789,297 | (2.1 | ) | ||||||||
All other |
351,510 | 390,301 | (9.9 | ) | ||||||||
Total |
6,767,650 | 7,439,460 | (9.0 | ) | ||||||||
Operating Expenses: |
||||||||||||
Cost of sales and operating expenses, exclusive of depreciation |
4,012,727 | 4,164,083 | (3.6 | ) | ||||||||
Selling, general and administrative expenses, exclusive of depreciation |
1,277,962 | 1,270,090 | 0.6 | |||||||||
Depreciation |
241,496 | 246,275 | (1.9 | ) | ||||||||
Amortization of intangible assets |
31,211 | 36,086 | (13.5 | ) | ||||||||
Goodwill and other asset impairments |
2,491,365 | 72,030 | *** | |||||||||
Total |
8,054,761 | 5,788,564 | 39.1 | |||||||||
Operating income (loss) |
(1,287,111 | ) | 1,650,896 | *** | ||||||||
Non-operating (expense) income: |
||||||||||||
Equity income (losses) in unconsolidated investees, net |
(255,253 | ) | 40,693 | *** | ||||||||
Interest expense |
(190,845 | ) | (259,825 | ) | (26.5 | ) | ||||||
Other non-operating items |
18,459 | 17,113 | 7.9 | |||||||||
Total |
(427,639 | ) | (202,019 | ) | *** | |||||||
Income (loss) before income taxes |
(1,714,750 | ) | 1,448,877 | *** | ||||||||
Provision for income taxes |
68,200 | 473,300 | (85.6 | ) | ||||||||
Income (losses) from continuing operations |
(1,782,950 | ) | 975,577 | *** | ||||||||
Income from the operation of discontinued operations, net of tax |
— | 6,221 | *** | |||||||||
Gain on disposal of newspaper businesses, net of tax |
— | 73,814 | *** | |||||||||
Net Income (loss) |
$ | (1,782,950 | ) | $ | 1,055,612 | *** | ||||||
Earnings (loss) from continuing operations per share — basic |
$ | (7.81 | ) | $ | 4.18 | *** | ||||||
Discontinued operations per share — basic |
— | 0.03 | *** | |||||||||
Gain on disposal of newspaper businesses per share — basic |
— | 0.32 | *** | |||||||||
Net Income (loss) per share — basic |
$ | (7.81 | ) | $ | 4.53 | *** | ||||||
Earnings (loss) from continuing operations per share — diluted |
$ | (7.81 | ) | $ | 4.17 | *** | ||||||
Discontinued operations per share — diluted |
— | 0.03 | *** | |||||||||
Gain on disposal of newspaper businesses per share — diluted |
— | 0.32 | *** | |||||||||
Net Income (loss) per share — diluted |
$ | (7.81 | ) | $ | 4.52 | *** | ||||||
Dividends per share |
$ | 1.60 | $ | 1.42 | 12.7 | |||||||
In period 9, 2008, the company increased its ownership in CareerBuilder to 50.8% from 40.8%, and
in connection therewith the results of CareerBuilder beginning with period 9 are now fully
consolidated. In period 7, 2008, the company increased its ownership in ShopLocal to 100% from
42.5%, and in connection therewith the results of ShopLocal beginning with period 7 are now fully
consolidated. Prior to these acquisitions, the equity share of CareerBuilder and ShopLocal
results were reported as equity earnings.
Beginning with the third quarter, a new “Digital” business segment is being reported, which
includes CareerBuilder and ShopLocal from the date of full consolidation as well as PointRoll,
Planet Discover, Schedule Star and Ripple6 (from the date of acquisition in period 11, 2008).
Prior period revenues for PointRoll, Planet Discover and Schedule Star have been reclassified from
“All other” to “Digital”.
PRELIMINARY BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Excluding discontinued operations
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Excluding discontinued operations
| Thirteen weeks ended | Thirteen weeks ended | % Inc | ||||||||||
| December 28, 2008 | December 30, 2007 | (Dec) | ||||||||||
Net Operating Revenues: |
||||||||||||
Publishing |
$ | 1,352,814 | $ | 1,661,153 | (18.6 | ) | ||||||
Digital |
169,883 | 23,733 | *** | |||||||||
Broadcasting |
212,785 | 212,032 | 0.4 | |||||||||
Total |
$ | 1,735,482 | $ | 1,896,918 | (8.5 | ) | ||||||
Operating Income (net of depreciation, amortization and intangible asset impairment): |
||||||||||||
Publishing |
$ | 164,555 | $ | 326,902 | (49.7 | ) | ||||||
Digital |
24,127 | 11,174 | *** | |||||||||
Broadcasting |
92,159 | 91,847 | 0.3 | |||||||||
Corporate |
(21,218 | ) | (17,864 | ) | 18.8 | |||||||
Total |
$ | 259,623 | $ | 412,059 | (37.0 | ) | ||||||
Depreciation, amortization and intangible asset impairment: |
||||||||||||
Publishing |
$ | 45,309 | $ | 128,805 | (64.8 | ) | ||||||
Digital |
10,097 | 1,308 | *** | |||||||||
Broadcasting |
8,551 | 8,101 | 5.6 | |||||||||
Corporate |
4,010 | 3,736 | 7.3 | |||||||||
Total |
$ | 67,967 | $ | 141,950 | (52.1 | ) | ||||||
Operating Cash Flow: |
||||||||||||
Publishing |
$ | 209,864 | $ | 455,707 | (53.9 | ) | ||||||
Digital |
34,224 | 12,482 | *** | |||||||||
Broadcasting |
100,710 | 99,948 | 0.8 | |||||||||
Corporate |
(17,208 | ) | (14,128 | ) | 21.8 | |||||||
Total |
$ | 327,590 | $ | 554,009 | (40.9 | ) | ||||||
| The segment information above includes the following severance expenses and intangible asset impairment: | ||||||||||||
Severance expense and intangible asset impairment |
||||||||||||
Publishing |
$ | 43,164 | $ | 105,130 | (58.9 | ) | ||||||
Digital |
1,969 | — | *** | |||||||||
Broadcasting |
5,849 | 600 | *** | |||||||||
Corporate |
4,985 | 300 | *** | |||||||||
Total |
$ | 55,967 | $ | 106,030 | (47.2 | ) | ||||||
In period 9, 2008, the company increased its ownership in CareerBuilder to 50.8% from 40.8%, and
in connection therewith the results
of CareerBuilder beginning with period 9 are now fully consolidated. In period 7, 2008, the
company increased its ownership in ShopLocal
to 100% from 42.5%, and in connection therewith the results of ShopLocal beginning with period 7
are now fully consolidated. Prior to
these acquisitions, the equity share of CareerBuilder and ShopLocal results were reported as
equity earnings. Beginning with the
third quarter, a new “Digital” business segment is being reported, which includes CareerBuilder
and ShopLocal from the date of full
consolidation as well as PointRoll, Planet Discover, Schedule Star and Ripple6 (from date of
acquisition in period 11, 2008). Prior period
results for PointRoll, Planet Discover and Schedule Star have been reclassified from the
“Publishing” segment to the “Digital” segment.
Broadcasting includes results from the company’s 23 television stations and Captivate Network.
Captivate is a national news
and entertainment network which delivers programming and full motion video advertising through
wireless digital video screens
in elevators of office towers and select hotels across North America.
Operating Cash Flow represents operating income for each of the company’s business segments plus
related depreciation,
amortization and intangible asset impairment. See attachment for reconciliation of amounts to the
Consolidated Statements of Income.
PRELIMINARY BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Excluding discontinued operations
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Excluding discontinued operations
| Fifty-two weeks ended | Fifty-two weeks ended | % Inc | ||||||||||
| December 28, 2008 | December 30, 2007 | (Dec) | ||||||||||
Net Operating Revenues: |
||||||||||||
Publishing |
$ | 5,713,739 | $ | 6,579,816 | (13.2 | ) | ||||||
Digital |
281,378 | 70,347 | *** | |||||||||
Broadcasting |
772,533 | 789,297 | (2.1 | ) | ||||||||
Total |
$ | 6,767,650 | $ | 7,439,460 | (9.0 | ) | ||||||
Operating Income (Loss) (net of depreciation, amortization and intangible asset impairment): |
||||||||||||
Publishing |
$ | (1,572,915 | ) | $ | 1,390,170 | *** | ||||||
Digital |
33,911 | 23,201 | 46.2 | |||||||||
Broadcasting |
313,155 | 314,900 | (0.6 | ) | ||||||||
Corporate |
(61,262 | ) | (77,375 | ) | (20.8 | ) | ||||||
Total |
$ | (1,287,111 | ) | $ | 1,650,896 | *** | ||||||
Depreciation, amortization and intangible asset impairment: |
||||||||||||
Publishing |
$ | 2,694,252 | $ | 299,921 | *** | |||||||
Digital |
16,973 | 5,260 | *** | |||||||||
Broadcasting |
35,719 | 33,553 | 6.5 | |||||||||
Corporate |
17,128 | 15,657 | 9.4 | |||||||||
Total |
$ | 2,764,072 | $ | 354,391 | *** | |||||||
Operating Cash Flow: |
||||||||||||
Publishing |
$ | 1,121,337 | $ | 1,690,091 | (33.7 | ) | ||||||
Digital |
50,884 | 28,461 | 78.8 | |||||||||
Broadcasting |
348,874 | 348,453 | 0.1 | |||||||||
Corporate |
(44,134 | ) | (61,718 | ) | (28.5 | ) | ||||||
Total |
$ | 1,476,961 | $ | 2,005,287 | (26.3 | ) | ||||||
| The segment information above includes the following severance expenses and intangible asset impairment: | ||||||||||||
Severance expense and intangible asset impairment |
||||||||||||
Publishing |
$ | 2,601,523 | $ | 124,230 | *** | |||||||
Digital |
1,969 | — | *** | |||||||||
Broadcasting |
10,778 | 600 | *** | |||||||||
Corporate |
6,952 | 300 | *** | |||||||||
Total |
$ | 2,621,222 | $ | 125,130 | *** | |||||||
In period 9, 2008, the company increased its ownership in CareerBuilder to 50.8% from 40.8%, and
in connection therewith the results
of CareerBuilder beginning with period 9 are now fully consolidated. In period 7, 2008, the
company increased its ownership in ShopLocal
to 100% from 42.5%, and in connection therewith the results of ShopLocal beginning with period 7
are now fully consolidated. Prior to
these acquisitions, the equity share of CareerBuilder and ShopLocal results were reported as
equity earnings. Beginning with the
third quarter, a new “Digital” business segment is being reported, which includes CareerBuilder
and ShopLocal from the date of full
consolidation as well as PointRoll, Planet Discover, Schedule Star and Ripple6 (from date of
acquisition in period 11, 2008). Prior period
results for PointRoll, Planet Discover and Schedule Star have been reclassified from the
“Publishing” segment to the “Digital” segment.
Broadcasting includes results from the company’s 23 television stations and Captivate Network.
Captivate is a national news
and entertainment network which delivers programming and full motion video advertising through
wireless digital video screens
in elevators of office towers and select hotels across North America.
Operating Cash Flow represents operating income for each of the company’s business segments plus
related depreciation,
amortization and intangible asset impairment. See attachment for reconciliation of amounts to the
Consolidated Statements of Income.
PRELIMINARY NON-GAAP FINANCIAL INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
“Operating cash flow”, a non-GAAP measure, is defined as operating income plus depreciation and
amortization. Management believes that use of this measure allows investors and management to
measure, analyze and compare the performance of its business segment operations at a more detailed
level and in a meaningful and consistent manner.
A reconciliation of these preliminary non-GAAP amounts to the company’s preliminary 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 December 28, 2008
| Consolidated | ||||||||||||||||||||
| Publishing | Digital | Broadcasting | Corporate | Total | ||||||||||||||||
Operating cash flow |
$ | 209,864 | $ | 34,224 | $ | 100,710 | $ | (17,208 | ) | $ | 327,590 | |||||||||
Less: |
||||||||||||||||||||
Depreciation |
(41,040 | ) | (5,359 | ) | (8,185 | ) | (4,010 | ) | (58,594 | ) | ||||||||||
Amortization |
(4,269 | ) | (4,738 | ) | (366 | ) | — | (9,373 | ) | |||||||||||
Operating income |
$ | 164,555 | $ | 24,127 | $ | 92,159 | $ | (21,218 | ) | $ | 259,623 | |||||||||
Thirteen weeks ended December 30, 2007
| Consolidated | ||||||||||||||||||||
| Publishing | Digital | Broadcasting | Corporate | Total | ||||||||||||||||
Operating cash flow |
$ | 455,707 | $ | 12,482 | $ | 99,948 | $ | (14,128 | ) | $ | 554,009 | |||||||||
Less: |
||||||||||||||||||||
Depreciation |
(48,890 | ) | (34 | ) | (7,736 | ) | (3,736 | ) | (60,396 | ) | ||||||||||
Amortization |
(7,885 | ) | (1,274 | ) | (365 | ) | — | (9,524 | ) | |||||||||||
Asset impairments |
(72,030 | ) | — | — | — | (72,030 | ) | |||||||||||||
Operating income |
$ | 326,902 | $ | 11,174 | $ | 91,847 | $ | (17,864 | ) | $ | 412,059 | |||||||||
Fifty-two weeks ended December 28, 2008
| Consolidated | ||||||||||||||||||||
| Publishing | Digital | Broadcasting | Corporate | Total | ||||||||||||||||
Operating cash flow |
$ | 1,121,337 | $ | 50,884 | $ | 348,874 | $ | (44,134 | ) | $ | 1,476,961 | |||||||||
Less: |
||||||||||||||||||||
Depreciation |
(182,559 | ) | (7,551 | ) | (34,258 | ) | (17,128 | ) | (241,496 | ) | ||||||||||
Amortization |
(20,328 | ) | (9,422 | ) | (1,461 | ) | — | (31,211 | ) | |||||||||||
Asset impairments |
(2,491,365 | ) | — | — | — | (2,491,365 | ) | |||||||||||||
Operating income |
$ | (1,572,915 | ) | $ | 33,911 | $ | 313,155 | $ | (61,262 | ) | $ | (1,287,111 | ) | |||||||
Fifty-two weeks ended December 30, 2007
| Consolidated | ||||||||||||||||||||
| Publishing | Digital | Broadcasting | Corporate | Total | ||||||||||||||||
Operating cash flow |
$ | 1,690,091 | $ | 28,461 | $ | 348,453 | $ | (61,718 | ) | $ | 2,005,287 | |||||||||
Less: |
||||||||||||||||||||
Depreciation |
(198,294 | ) | (239 | ) | (32,085 | ) | (15,657 | ) | (246,275 | ) | ||||||||||
Amortization |
(29,597 | ) | (5,021 | ) | (1,468 | ) | — | (36,086 | ) | |||||||||||
Asset impairments |
(72,030 | ) | — | — | — | (72,030 | ) | |||||||||||||
Operating income |
$ | 1,390,170 | $ | 23,201 | $ | 314,900 | $ | (77,375 | ) | $ | 1,650,896 | |||||||||
In addition to the preliminary results reported in accordance with accounting principles generally
accepted in the United States (“GAAP”) included in this press release, the company has provided
information regarding preliminary diluted earnings per share (“EPS”) from continuing operations
excluding severance expenses and impairment charges. Management believes EPS excluding severance
expenses and impairment charges better reflect the ongoing performance of the company and enables
management and investors to meaningfully trend, analyze and benchmark the performance of the
company’s operations. This measure is also more comparable to financial measures reported by our
competitors. EPS excluding
severance expenses and impairment charges should not be considered a substitute for EPS calculated
in accordance with GAAP.
The table below reconciles earnings per share prepared in accordance with GAAP to earnings per
share excluding severance expenses and impairment charges:
| Thirteen | Thirteen | |||||||
| weeks ended | weeks ended | |||||||
| Dec. 28, 2008 | Dec. 30, 2007 | |||||||
Preliminary Diluted Earnings from
Continuing Operations per Share: |
||||||||
Earnings per Share (GAAP basis) |
$ | 0.69 | $ | 1.06 | ||||
Severance and related expenses |
0.16 | 0.11 | ||||||
Non-cash impairment charge |
— | 0.22 | ||||||
Adjusted Earnings per Share (Non-GAAP basis) |
$ | 0.85 | $ | 1.39 | ||||
| Fifty-two | Fifty-two | |||||||
| weeks ended | weeks ended | |||||||
| Dec. 28, 2008 | Dec. 30, 2007 | |||||||
Preliminary Diluted Earnings from
Continuing Operations per Share: |
||||||||
Earnings per Share (GAAP basis) |
$ | (7.81 | ) | $ | 4.17 | |||
Severance and related expenses |
0.34 | 0.18 | ||||||
Non-cash impairment charges |
11.08 | 0.22 | ||||||
Adjusted Earnings per Share (Non-GAAP basis) |
$ | 3.61 | $ | 4.57 | ||||