UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 16, 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 April 16, 2009, Gannett Co., Inc. reported its consolidated financial results for the
first quarter ended March 29, 2009. A copy of this press release is furnished with this report as
an exhibit.
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: April 16, 2009
|
By: | /s/ George R. Gavagan
|
||||
| Vice President and Controller | ||||||
INDEX TO EXHIBITS
| Exhibit No. | Description | |||
| 99.1 | Gannett Co., Inc. Earnings Press Release dated April 16, 2009. |
|||
| News Release |  |
| FOR IMMEDIATE RELEASE | Thursday, April 16, 2009 |
Gannett Co., Inc. Reports First Quarter Results
McLEAN, VA — Gannett Co., Inc. (NYSE: GCI) reported today that 2009 first quarter earnings per
diluted share were $0.34 compared with $0.84 per share in the first quarter of 2008.
The results for the first quarter of 2009 include a $39.8 million pre-tax settlement gain
related to one of the company’s union pension plans ($24.7 million after-tax or $0.11 per share)
and $6.6 million in pre-tax severance and facility-related consolidation costs ($4.3 million
after-tax or $0.02 per share). Results for the first quarter of 2008 included a $25.5 million
pre-tax gain on the sale of land
($15.8 million after-tax or $0.07 per share). Excluding these one-time items, the company earned
$0.25 per diluted share in 2009’s first quarter compared to $0.77 per diluted share in the first
quarter a year ago.
“While revenue in the quarter benefited from growth in our digital segment and significantly
higher retransmission fees for our television stations, our results reflect the pressure on
advertising demand across all of our business segments due to continuing recessions in the U.S. and
the UK. Our results, however, highlight the positive impact of the company’s efforts to operate its
businesses as cost efficiently as possible in light of the revenue realities we are facing in this
extraordinary time,” said Chairman, President and Chief Executive Officer Craig Dubow.
“Although business conditions remain very challenging, we continue to transform all facets of
the company as we position it for a more favorable economic environment and the opportunities we
see in the changing media landscape,” Dubow said.
Total reported operating revenues for the company were $1.4 billion in the first quarter
compared to $1.7 billion in the first quarter of 2008. The revenue decline reflects primarily the
impact on advertising demand of the ongoing weakness in the economies of both the U.S. and the UK.
Digital segment revenues increased significantly due to the consolidation of CareerBuilder and
ShopLocal for the full quarter in 2009.
Reported operating expenses were $1.2 billion, a 10.2 percent decline from $1.3 billion in the
first quarter of 2008, reflecting cost containment efforts including the impact of headcount
reductions in previous periods, furloughs in the current quarter and the pension settlement gain.
The effect of these cost savings initiatives was offset partially by restructuring expense. As
well, the full consolidation of CareerBuilder and ShopLocal impacted reported expenses. Excluding
one time items in both years, pro forma operating expenses were 17.7 percent lower for the quarter.
Corporate expenses declined
11.4 percent during the quarter compared to the first quarter in 2008.
Reported operating cash flow (defined as operating income plus depreciation and amortization)
was $230.1 million for the quarter and net income was $77.4 million.
Average diluted shares outstanding in the first quarter totaled 230,951,000 compared with
229,661,000 in 2008’s first quarter.
(more)
PUBLISHING
Publishing segment operating revenues were $1.1 billion for the quarter, a 26.9 percent
decline from the same quarter a year ago. Advertising revenues were $722.8 million or 34.1 percent
lower than the first quarter of 2008. Advertising revenues in the U.S. were 28.2 percent lower
while at Newsquest, our operations in the UK, ad revenues declined 38.7 percent, in pounds. The
retail, national and classified categories for the publishing segment were 23.4 percent, 30.8
percent and 46.5 percent lower, respectively. The exchange rate of the British pound declined over
27 percent year-over-year. Excluding the impact of the exchange rate, total advertising revenues
would have been 29.8 percent lower including declines of 20.9 percent in retail, 29.2 percent in
national and 40.7 percent in classified. Circulation revenue was 3.1 percent lower in the quarter.
Domestic circulation revenue increased 1.0 percent reflecting recent single copy and home delivery
price increases in several markets and at USA TODAY.
Lower classified revenues reflect declines of 50.6 percent in real estate, 62.0 percent in
employment and 39.2 percent in automotive. On a constant currency basis, real estate, employment,
and automotive would have been down 44.3 percent, 57.2 percent and 34.8 percent, respectively. For
U.S. Community Publishing, classified revenues were 39.0 percent lower reflecting declines of 36.6
percent in real estate, 60.2 percent in employment and 32.8 percent in automotive. In the UK,
classified revenues were down 45.1 percent, in pounds, comprised of declines of 60.0 percent in
real estate, 51.4 percent in employment and 43.2 percent in automotive.
At USA TODAY, advertising revenues were 33.5 percent lower in the first quarter compared to
the first quarter in 2008. Paid advertising pages totaled 527 compared with 826 in the same
quarter of 2008. The telecommunications, pharmaceutical, and advocacy categories grew but the gains
were more than offset by losses in the entertainment, travel and financial categories.
Total publishing operating expenses declined 20.9 percent in the quarter to $954.7 million
from $1.21 billion in the first quarter of 2008. The decline was driven by continued cost
containment efforts including the impact of headcount reductions in previous periods, furloughs in
the current quarter and the pension settlement gain. These savings were offset, in part, by higher
severance and facility-related consolidation costs. Publishing expenses, excluding severance
expenses and facility consolidation costs as well as the pension settlement gain, were 18.1 percent
lower. Newsprint expenses were down
15.6 percent for the quarter reflecting an increase in usage prices of 20.4 percent which was more
than offset by a 29.9 percent decline in consumption. Operating cash flow in the first quarter for
the publishing segment, which includes USA TODAY and Newsquest, was $179.3 million.
BROADCASTING
Broadcasting revenues (which include Captivate) totaled $143.5 million in the quarter compared
to $170.2 million in the first quarter of 2008. The decline was due to softer advertising demand,
particularly in the automotive and retail categories, and the near absence of politically related
advertising which totaled approximately $5 million in the first quarter of 2008, partially offset
by a significant increase in retransmission revenues, Super Bowl related advertising that benefited
our NBC affiliates, and higher online revenue.
Operating expenses for the broadcasting segment were $99.3 million or 11.6 percent lower than
the first quarter last year reflecting ongoing efficiency efforts. Operating cash flow was $52.7
million in
the first quarter. Television revenues were 14.9 percent lower and totaled $139.6 million. Based on
current
trends, we would expect television revenues to be down in the high teens for the second quarter of
2009 compared to the second quarter of 2008.
(more)
DIGITAL
The digital segment for the quarter includes results for CareerBuilder, PointRoll, ShopLocal,
Planet Discover, Schedule Star and Ripple6. Results for CareerBuilder and ShopLocal were initially
consolidated in the third quarter of 2008 when the company acquired controlling interest. Ripple6
was acquired in November 2008. Results for PointRoll, Planet Discover and Schedule Star, which had
been previously included in the publishing segment, have been reclassified to the digital segment
for the prior period.
Digital operating revenues totaled $143.2 million in the quarter compared with $13.9 million
in 2008, reflecting primarily the consolidation of CareerBuilder and ShopLocal. Operating expenses
were $144.4 million. Operating cash flow was $7.9 million reflecting positive results for
CareerBuilder, PointRoll and ShopLocal, partially offset by investment in other digital properties.
On a pro forma basis, operating revenues were 13.1 percent lower but operating expenses were down
21.5 percent resulting in a $20.0 million increase in operating cash flow.
NON-OPERATING ITEMS
The company’s equity earnings include its share of operating results from unconsolidated
investees including the California Newspapers Partnership, Texas-New Mexico Newspapers Partnership,
Tucson newspaper partnership and other online/new technology businesses. These amounts included the
company’s equity share of results for CareerBuilder and ShopLocal for the first quarter of 2008
which was before the company acquired controlling interests in these businesses.
The equity loss in unconsolidated investees for the first quarter of 2009 was $2.7 million
compared to $11.8 million for the first quarter of 2008. This improvement reflects primarily the
absence of the company’s equity share of losses related to CareerBuilder and ShopLocal which are
now consolidated, partially offset by lower results from our newspaper publishing partnerships.
The $21.7 million decline in other non-operating items to $2.5 million in the first quarter of
2009 was due primarily to the $25.5 million pre-tax gain on the sale of land reported in the first
quarter of 2008.
Interest expense for the first quarter was $48.9 million, a slight increase from $48.5 million
in the first quarter last year reflecting lower average debt balances offset by slightly higher
interest rates.
(more)
In the first quarter of 2009, Gannett adopted Statement of Financial Accounting Standards No.
160 (FAS 160), “Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB
No. 51.” FAS 160 affects primarily the company’s reporting of the 49.2 percent noncontrolling
interest in CareerBuilder. Previously the company presented this minority interest in “Other
non-operating items” in the Condensed Consolidated Statements of Income. Under FAS 160, “Net
income” in the
Condensed Consolidated Statements of Income reflects 100 percent of CareerBuilder results as the
company holds the controlling interest. “Net income” is subsequently adjusted to remove the
noncontrolling (minority) interest to arrive at “Net income attributable to Gannett Co., Inc.”
While this
presentation is different than previously required by GAAP, the final net income results
attributable to the company are the same under FAS 160 and the previous reporting method.
* * * *
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 March, Gannett’s consolidated domestic Internet audience
share was 24.8 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 83.5 million monthly page impressions from approximately 6.9 million unique users.
CareerBuilder’s unique visitors in March totaled 22.7 million, unchanged 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
1-800-822-4794 and international callers should dial 913-312-0690 at least 10 minutes prior to the
scheduled start of the call. The confirmation code for the conference call is 9412955. 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 9412955. Materials related to the call will
be available through the Investor Relations section of the company’s Web site Thursday morning.
Gannett Co., Inc. is an international news and information company operating on multiple
platforms including the Internet, mobile, newspapers, magazines and TV stations. Gannett is an
Internet leader with hundreds of newspaper and TV Web sites; CareerBuilder.com, the nation’s top
employment site; USATODAY.com; and more than 80 local MomsLikeMe.com sites. Gannett publishes 85
daily U.S. newspapers, including USA TODAY, the nation’s largest-selling daily newspaper, and more
than 850 magazines and other non-dailies including USA WEEKEND. Gannett also operates 23 television
stations in 19 U.S. markets. Gannett subsidiary Newsquest is the United Kingdom’s second largest
regional newspaper company with 17 daily paid-for titles, more than 200 weekly newspapers,
magazines and trade publications, and a network of Web sites.
(more)
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
|
703-854-6049 | |
703-854-6917
|
tjconnel@gannett.com | |
jheinz@gannett.com |
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 ended | Thirteen weeks ended | % Inc | ||||||||||
| March 29, 2009 | March 30, 2008 | (Dec) | ||||||||||
Net Operating Revenues: |
||||||||||||
Publishing advertising |
$ | 722,755 | $ | 1,096,894 | (34.1 | ) | ||||||
Publishing circulation |
299,683 | 309,178 | (3.1 | ) | ||||||||
Digital |
143,160 | 13,893 | *** | |||||||||
Broadcasting |
143,490 | 170,180 | (15.7 | ) | ||||||||
All other |
69,390 | 86,724 | (20.0 | ) | ||||||||
Total |
1,378,478 | 1,676,869 | (17.8 | ) | ||||||||
Operating Expenses: |
||||||||||||
Cost of sales and operating expenses, exclusive of depreciation |
839,004 | 986,500 | (15.0 | ) | ||||||||
Selling, general and administrative expenses, exclusive of
depreciation |
309,380 | 294,896 | 4.9 | |||||||||
Depreciation |
55,736 | 59,602 | (6.5 | ) | ||||||||
Amortization of intangible assets |
8,165 | 8,240 | (0.9 | ) | ||||||||
Total |
1,212,285 | 1,349,238 | (10.2 | ) | ||||||||
Operating income |
166,193 | 327,631 | (49.3 | ) | ||||||||
Non-operating (expense) income: |
||||||||||||
Equity loss in unconsolidated investees, net |
(2,689 | ) | (11,755 | ) | (77.1 | ) | ||||||
Interest expense |
(48,912 | ) | (48,549 | ) | 0.7 | |||||||
Other non-operating items |
2,457 | 24,172 | (89.8 | ) | ||||||||
Total |
(49,144 | ) | (36,132 | ) | 36.0 | |||||||
Income before income taxes |
117,049 | 291,499 | (59.8 | ) | ||||||||
Provision for income taxes |
39,300 | 99,700 | (60.6 | ) | ||||||||
Net income |
77,749 | 191,799 | (59.5 | ) | ||||||||
Net income attributable to noncontrolling interest |
(314 | ) | (21 | ) | *** | |||||||
Net income attributable to Gannett Co., Inc. |
$ | 77,435 | $ | 191,778 | (59.6 | ) | ||||||
Earnings per share — basic |
$ | 0.34 | $ | 0.84 | (59.5 | ) | ||||||
Earnings per share — diluted |
$ | 0.34 | $ | 0.84 | (59.5 | ) | ||||||
Dividends per share |
$ | 0.04 | $ | 0.40 | (90.0 | ) | ||||||
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 of 2008, a new “Digital”
business segment was 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”.
BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
| Thirteen weeks ended | Thirteen weeks ended | % Inc | ||||||||||
| March 29, 2009 | March 30, 2008 | (Dec) | ||||||||||
Net Operating Revenues: |
||||||||||||
Publishing |
$ | 1,091,828 | $ | 1,492,796 | (26.9 | ) | ||||||
Digital |
143,160 | 13,893 | *** | |||||||||
Broadcasting |
143,490 | 170,180 | (15.7 | ) | ||||||||
Total |
$ | 1,378,478 | $ | 1,676,869 | (17.8 | ) | ||||||
Operating Income (net of
depreciation and
amortization): |
||||||||||||
Publishing |
$ | 137,163 | $ | 286,394 | (52.1 | ) | ||||||
Digital |
(1,200 | ) | (862 | ) | 39.2 | |||||||
Broadcasting |
44,146 | 57,805 | (23.6 | ) | ||||||||
Corporate |
(13,916 | ) | (15,706 | ) | (11.4 | ) | ||||||
Total |
$ | 166,193 | $ | 327,631 | (49.3 | ) | ||||||
Depreciation and amortization: |
||||||||||||
Publishing |
$ | 42,155 | $ | 54,002 | (21.9 | ) | ||||||
Digital |
9,091 | 1,377 | *** | |||||||||
Broadcasting |
8,603 | 8,495 | 1.3 | |||||||||
Corporate |
4,052 | 3,968 | 2.1 | |||||||||
Total |
$ | 63,901 | $ | 67,842 | (5.8 | ) | ||||||
Operating Cash Flow: |
||||||||||||
Publishing |
$ | 179,318 | $ | 340,396 | (47.3 | ) | ||||||
Digital |
7,891 | 515 | *** | |||||||||
Broadcasting |
52,749 | 66,300 | (20.4 | ) | ||||||||
Corporate |
(9,864 | ) | (11,738 | ) | (16.0 | ) | ||||||
Total |
$ | 230,094 | $ | 395,473 | (41.8 | ) | ||||||
In period 9, 2008, the company increased its ownership in CareerBuilder to 50.8% from 40.8%, and in
connection therewith the results of CareerBuilder beginning with period 9 are now fully
consolidated. In period 7, 2008, the company increased its ownership in ShopLocal to 100% from
42.5%, and in connection therewith the results of ShopLocal beginning with period 7 are now fully
consolidated. Prior to these acquisitions, the equity share of CareerBuilder and ShopLocal results
were reported as equity earnings. Beginning with the third quarter of 2008 a new “Digital”
business segment was 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 delivers news, information and advertising to a highly desirable audience demographic
through its video screens located in elevators of office towers and select hotel lobbies across
North America.
Operating Cash Flow represents operating income for each of the company’s business segments plus
related depreciation and amortization. See attachment for reconciliation of amounts to the
Consolidated Statements of Income.
NON-GAAP FINANCIAL INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
“Operating cash flow”, a non-GAAP measure, is defined as operating income plus depreciation and
amortization. Management believes that use of this measure allows investors and management to
measure, analyze and compare the performance of its business segment operations at a more detailed
level and in a meaningful and consistent manner.
A reconciliation of these non-GAAP amounts to the company’s operating income, which the company
believes is the most directly comparable financial measure calculated and presented in accordance
with GAAP on the company’s consolidated statements of income, follows:
Thirteen weeks ended March 29, 2009
| Consolidated | ||||||||||||||||||||
| Publishing | Digital | Broadcasting | Corporate | Total | ||||||||||||||||
Operating cash flow |
$ | 179,318 | $ | 7,891 | $ | 52,749 | $ | (9,864 | ) | $ | 230,094 | |||||||||
Less: |
||||||||||||||||||||
Depreciation |
(38,588 | ) | (4,707 | ) | (8,389 | ) | (4,052 | ) | (55,736 | ) | ||||||||||
Amortization |
(3,567 | ) | (4,384 | ) | (214 | ) | — | (8,165 | ) | |||||||||||
Operating income |
$ | 137,163 | $ | (1,200 | ) | $ | 44,146 | $ | (13,916 | ) | $ | 166,193 | ||||||||
Thirteen weeks ended March 30, 2008
| Consolidated | ||||||||||||||||||||
| Publishing | Digital | Broadcasting | Corporate | Total | ||||||||||||||||
Operating cash flow |
$ | 340,396 | $ | 515 | $ | 66,300 | $ | (11,738 | ) | $ | 395,473 | |||||||||
Less: |
||||||||||||||||||||
Depreciation |
(47,408 | ) | (96 | ) | (8,130 | ) | (3,968 | ) | (59,602 | ) | ||||||||||
Amortization |
(6,594 | ) | (1,281 | ) | (365 | ) | — | (8,240 | ) | |||||||||||
Operating income |
$ | 286,394 | $ | (862 | ) | $ | 57,805 | $ | (15,706 | ) | $ | 327,631 | ||||||||
In addition to the results reported in accordance with accounting principles generally accepted in
the United States (“GAAP”) included in this press release, the company has provided information
regarding diluted earnings per share (“EPS”) excluding severance expenses, pension settlement gain
and the gain on the sale of land. Management believes EPS excluding severance expenses, pension
settlement gain and the gain on the sale of land 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, pension settlement gain
and the gain on the sale of land 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, pension settlement gain and the gain on the sale of land:
| Thirteen weeks ended | Thirteen weeks ended | |||||||
| Mar. 29, 2009 | Mar. 30, 2008 | |||||||
Diluted earnings per share: |
||||||||
Earnings per share (GAAP basis) |
$ | 0.34 | $ | 0.84 | ||||
Severance and related expenses |
0.02 | — | ||||||
Pension settlement gain |
(0.11 | ) | — | |||||
Gain on sale of land |
— | (0.07 | ) | |||||
Adjusted earnings per share
(Non-GAAP basis) |
$ | 0.25 | $ | 0.77 | ||||