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: August 22, 1996
GANNETT CO., INC.
(Exact name of registrant as specified in its charter)
Delaware 1-6961 16-0442930
(State or other (Commission (IRS Employer
jurisdiction File Number) Identification No.)
of incorporation)
1100 Wilson Boulevard, Arlington, Virginia 22234
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code (703) 284-6000
ITEM 2. DISPOSITION OF ASSETS
Pursuant to an Asset Purchase Agreement dated July 9, 1996 among
Gannett Co., Inc., Combined Communications Corporation, Gannett Transit, Inc.,
Shelter Media Communications, Inc., Gannett International Communications, Inc.,
and Outdoor Systems, Inc., on August 22, 1996 Gannett Co., Inc. and its
affiliates sold substantially all of the assets of its Outdoor Division to
Outdoor Systems, Inc. Outdoor Systems, Inc. also exercised an option to buy
Gannett Outdoor's operations in Houston, Texas, subject to obtaining applicable
governmental approvals. The purchase price for the Outdoor Division, including
the Houston operations, is approximately $710 million in cash. The purchase
price, subject to a working capital adjustment, was arrived at through
negotiations between Gannett Co., Inc. and Outdoor Systems, Inc.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Pro forma financial information.
(1) Unaudited pro forma consolidated condensed balance sheet as of
June 30, 1996 and the unaudited pro forma consolidated condensed statements
of operations for the year ended December 31, 1995 and the six months ended
June 30, 1996 (filed as an exhibit hereto).
(c) Exhibits.
See Exhibit Index for list of exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
GANNETT CO., INC.
Dated: August 22, 1996
By: /s/Thomas L. Chapple
-----------------------
Thomas L. Chapple,
Senior Vice President,
General Counsel and Secretary
Exhibit Index
Exhibit
Number Title or Description Location
- ----- -------------------- ----------------
2 Asset Purchase Agreement among Gannett Incorporated by
Co., Inc., Combined Communications reference to
Corporation, Gannett Transit, Inc., Shelter Exhibit 99-3 to
Media Communications, Inc., Gannett Form 8-K filed
International Communications, Inc., and July 10, 1996.
Outdoor Systems, Inc.
99-1 Unaudited pro forma consolidated condensed Attached.
balance sheet as of June 30, 1996 and the
unaudited pro forma consolidated condensed
statements of earnings for the year ended
December 31, 1995 and the six month period
ended June 30, 1996.
Exhibit 99-1
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma financial statements give effect to the
exchange of approximately $700 million in cash by Outdoor Systems, Inc. for
substantially all of Gannett Co., Inc.'s outdoor advertising business. The
transaction involves the sale of assets of certain of the Company's outdoor
subsidiaries and the sale of stock of certain other outdoor subsidiaries.
In addition, Outdoor Systems, Inc. has an option to purchase the Company's
remaining outdoor business in Houston, TX for approximately $10 million.
The unaudited pro forma balance sheet presents the financial position of
Gannett as of June 30, 1996, assuming that the sale had occurred as
of that date. Such pro forma information is based on the historical balance
sheet of the Company at June 30, 1996.
As required by rule 11-02 of regulation S-X, the unaudited pro forma
statements of income have been prepared assuming that the sale
occurred as of the beginning of the earliest period presented. The unaudited
pro forma statements of income reflect the historical results of operations for
Gannett for its fiscal year ended 1995 and the first six months of 1996. The
1995 statement also includes the eleven month pro forma effect of the Company's
1995 acquisition of Multimedia, as discussed in note 2 to the financial
statements filed with the Company's 1995 Annual Report on Form 10-K.
The unaudited pro forma financial statements give effect to certain pro
forma adjustments which are described in the notes to these statements.
Nonrecurring charges related to the transaction are not reflected in the
unaudited pro forma financial statements because they are insignificant.
The unaudited pro forma data is presented for informational purposes only
and is not necessarily indicative of the results of operations or financial
position which would have been achieved had this transaction been completed as
of the date indicated, nor is it necessarily indicative of Gannett's future
results of operations or financial position.
The unaudited pro forma financial statements should be read in conjunction
with the historical financial statements of the Company, including the related
notes thereto.
GANNETT CO., INC.
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
JUNE 30, 1996
Sale of
Outdoor Pro Forma Pro Forma
(In thousands) Gannett Business Adjustments Balance Sheet
ASSETS
Cash and marketable securities $ 33,325 $ (517) $ 32,808
Accounts receivable, net 569,604 (56,435) 513,169
Inventories 105,957 (1,410) 104,547
Prepaid expenses and other current assets 113,955 (25,400) 88,555
--------- ------- ------- ---------
Total Current Assets 822,841 (83,762) 739,079
Property, plant and equipment, net 2,066,505 (136,338) 1,930,167
Other assets 3,548,134 (19,671) 3,528,463
--------- ------- ------- ---------
Total Assets $6,437,480 $(239,771) $6,197,709
========= ======= ======= =========
LIABILITIES & SHAREHOLDERS EQUITY
Current maturities of Long-term debt $ 281 $ 0 $ 281
Accounts payable and current portion of
film contracts payable 212,429 (13,652) 198,777
Accrued expenses and other current liabilities 343,589 (10,590) 332,999
Dividends payable 50,781 0 50,781
Income taxes 57,034 0 57,034
--------- ------- ------- ---------
Total Current Liabilities 664,114 (24,242) 639,872
Deferred income taxes 319,120 (6,856) (14,500)(2) 297,764
Long-term debt, less current portion 2,703,891 0 $(493,000)(1) 2,210,891
Postretirement medical and life
insurance liabilities 307,729 0 307,729
Other long-term liabilities 140,522 (349) 140,173
Total Shareholders' equity 2,302,104 (208,324) 507,500 (1) 2,601,280
--------- ------- ------- ---------
Total Liabilities and Shareholders' Equity $6,437,480 $(239,771) $ 0 $6,197,709
========= ======= ======= =========
See accompanying notes to Unaudited Pro Forma Financial Statements.
GANNETT CO., INC.
UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME
SIX MONTHS ENDED JUNE 30, 1996
Sale of Pro Forma
(In thousands except Outdoor Pro Forma Statement
per share data) Gannett Business Adjustments of Income
NET OPERATING REVENUES:
Newspapers $1,618,542 $1,618,542
Broadcasting 317,994 317,994
Cable 95,246 95,246
Other 281,038 $(120,947) 160,091
--------- ------- ---------
Total Operating Revenues 2,312,820 (120,947) 2,191,873
--------- ------- ---------
OPERATING COSTS:
Total operating expenses, exclusive of
depreciation & amortization 1,657,945 (101,519) 1,556,426
Depreciation 106,193 (8,115) 98,078
Amortization of intangible assets 48,520 (388) 48,132
--------- ------- ---------
Total Operating Expenses 1,812,658 (110,022) 1,702,636
--------- ------- ---------
Total Operating Income/Loss 500,162 (10,925) 489,237
--------- ------- ---------
NON-OPERATING INCOME (EXPENSE):
Interest expense (77,931) $13,568 (1) (64,363)
Other income (expense) (2,240) (2,240)
--------- ------- ------ ---------
Total Non-operating (80,171) 13,568 (66,603)
--------- ------- ------ ---------
Income Before Income Taxes 419,991 (10,925) 13,568 422,634
Provision for/benefit of Income Taxes (180,625) 4,261 (5,292)(2) (181,656)
--------- ------- ------ ---------
Net Income $ 239,366 $ (6,664) $ 8,276 $ 240,978
========= ======= ====== =========
Net Income Per Share $1.70 ($0.05) $0.06 $1.71
Average Number of Outstanding Shares 140,763 140,763 140,763 140,763
See accompanying notes to Unaudited Pro Forma Financial Statements.
GANNETT CO., INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1995
Sale of Pro Forma
(In thousands except Multimedia Outdoor Pro Forma Statement
per share data) Gannett Pro Forma (*) Subtotal Business Adjustments of Income
NET OPERATING REVENUES:
Newspapers $3,088,423 $150,684 $3,239,107 $3,239,107
Broadcasting 466,187 144,412 610,599 610,599
Cable 15,061 159,581 174,642 174,642
Other 437,065 153,832 590,897 $(253,841) 337,056
--------- ------- --------- ------- ---------
Total Operating Revenues 4,006,736 608,509 4,615,245 (253,841) 4,361,404
--------- ------- --------- ------- ---------
OPERATING COSTS:
Total operating expenses, exclusive of
depreciation & amortization 2,944,898 374,623 3,319,521 (209,201) 3,110,320
Depreciation 159,657 53,473 213,130 (15,900) 197,230
Amortization of intangible assets 50,298 48,059 98,357 (776) 97,581
--------- ------- --------- ------- ---------
Total Operating Expenses 3,154,853 476,155 3,631,008 (225,877) 3,405,131
--------- ------- --------- ------- ---------
Total Operating Income 851,883 132,354 984,237 (27,964) 956,273
--------- ------- --------- ------- ---------
NON-OPERATING INCOME (EXPENSE):
Interest expense (52,175) (154,570) (206,745) $29,486 (1) (177,259)
Other income (expense) 3,754 417 4,171 4,171
--------- ------- --------- ------- ------ ---------
Total Non-operating (48,421) (154,153) (202,574) 29,486 (173,088)
--------- ------- --------- ------- ------ ---------
Income Before Income Taxes 803,462 (21,799) 781,663 (27,964) 29,486 783,185
Provision for/benefit of Income Taxes (326,200) (7,600) (333,800) 10,906 (11,500)(2) (334,394)
--------- ------- --------- ------- ------ ---------
Net Income $ 477,262 $(29,399) $ 447,863 $ (17,058) $17,986 $ 448,791
========= ======= ========= ======= ====== =========
Net Income Per Share $3.41 ($0.21) $3.20 ($0.12) $0.13 $3.21
Average Number of Outstanding Shares 139,968 139,968 139,968 139,968 139,968 139,968
* In December, 1995, the Company completed the acquisition of Multimedia, Inc
("Multimedia"). The amounts in this column reflect the estimated results of
operations of the Company and its subsidiaries as though the Multimedia
acquisition was made at the beginning of the year in which the transaction was
consummated along with the related costs of financing the acquisition and the
additional goodwill and depreciation expense associated with the purchase.
Refer to note 2 of the Company's financial statements filed with its 1995
Annual Report on Form 10-K for more information concerning this acquisition.
See accompanying notes to Unaudited Pro Forma Financial Statements.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
The unaudited pro forma balance sheet has been prepared to reflect the sale
of the Company's outdoor advertising business for an aggregate price of
approximately $700 million in cash.
The unaudited pro forma balance sheet presents the financial position
of the Company as of June 30, 1996 assuming that the transaction occurred as of
that date. Such pro forma information is based on the historical balance sheet
of Gannett as of June 30, 1996, adjusted for the effects of the sale.
As required by rule 11-02 of regulation S-X, the unaudited pro forma statements
of income have been prepared assuming that the sale occurred as of the
beginning of the earliest period presented. The unaudited pro forma statements
of income reflect the historical results of operations for Gannett for its
fiscal year ended 1995 and first six months of 1996. The 1995 pro forma
statement of income also includes the eleven month pro forma effect of the
Company's 1995 acquisition of Multimedia, as presented in note 2 to the
financial statements filed with the Company's 1995 Annual Report on Form 10-K.
The Company believes that the assumptions used in preparing the unaudited pro
forma financial statements provide a reasonable basis for presenting all of the
significant effects of the sale and that the pro forma adjustments give effect
to those assumptions in the unaudited pro forma financial statements.
Note 2 - Pro forma Adjustments
A. Pro forma adjustments to the unaudited condensed balance sheet are made to
reflect the following:
(1) Adjustment to reflect the pay down of long-term debt from the after-tax
proceeds of the sale. The proceeds are reduced by the tax on the estimated
gain on sale of the business, using a combined federal and state tax rate
of 39%
(2) Adjustment to reflect payment of net deferred taxes related to the outdoor
advertising business.
B. Pro forma adjustments to the June 30, 1996 unaudited condensed statement of
income are made to reflect the following:
(1) Reduction in interest expense due to pay down of long-term debt from the
after-tax proceeds of the sale. The rate used to calculate the reduction
in interest expense is based on the weighted average rate paid by Gannett
for commercial paper during the six-month period ended June 30, 1996.
(2) Record income tax effect of pro forma adjustments described in item 1.
C. Pro forma adjustments to the December 31, 1995 unaudited condensed combined
statement of income are made to reflect the following:
(1) Reduction in interest expense due to pay down of long-term debt from net
proceeds of the sale. The rate used to calculate the reduction in interest
expense is based on the weighted average rate paid by Gannett for
commercial paper during the Company's fiscal year ended December 31, 1995.
(2) Record income tax effect of pro forma adjustment in item 1.
