SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended
June 27, 1999 or
_ Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from
_______ to _________
Commission file number 1-6961
GANNETT CO., INC.
(Exact name of registrant as specified in its charter)
Delaware 16-0442930
(state or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1100 Wilson Boulevard, Arlington, Virginia 22234
(Address of principal executive offices) (Zip Code)
(703) 284-6000
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No __
The number of shares outstanding of the issuer's Common Stock,
Par Value $1.00, as of June 27, 1999 was 279,719,243.
PART I. FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS
ACQUISITIONS/DISPOSITIONS/EXCHANGES
On June 24, 1999, Gannett U.K. Limited ("Gannett UK"), a newly formed
wholly-owned subsidiary of Gannett Co., Inc. ("Gannett"), made a cash
offer to acquire the entire issued and to be issued share capital of
Newsquest plc ("Newsquest"). Pursuant to the Offer, Newsquest
shareholders may elect to receive 460 pence (U.S. $7.26) in cash or Loan
Notes for each of 200.4 million fully diluted shares, for a total price of
approximately 922 million pounds sterling (US $1.5 billion). Gannett UK
will also finance the repayment of Newsquest's existing debt. Share
purchases commenced in the third quarter of 1999 and are being financed
principally by commercial paper borrowings and operating cash flow. On
July 26, 1999, pursuant to the Offer Document, Gannett UK declared the
Offer unconditional in all respects and assumed ownership of more than 95%
of Newsquest shares. The acquisition will be recorded under the purchase
method of accounting and Newsquest's results of operation will be included
in the company's financial statements beginning in the third quarter.
Newsquest's principal activities are publishing and printing regional and
local newspapers in the United Kingdom with a portfolio that includes 63
paid-for daily and weekly newspapers and 120 free weekly newspapers. For
the 53 weeks ended January 3, 1999, Newsquest reported revenues of 305.8
million pounds sterling (US $507.6 million) and operating income of 81.4
million pounds sterling (US $135.0 million).
On July 27, 1999, the company announced an agreement to sell the assets of
its cable division to Cox Communications, Inc. of Atlanta, Georgia. for
approximately $2.7 billion in cash. Closing is expected to occur as soon
as regulatory approvals are obtained, near the end of 1999 or early 2000.
Upon closing, a gain will be recognized which, along with cable operating
results, will be reported as discontinued operations in the company's
financial statements.
The company completed the acquisition of KXTV-TV, the ABC affiliate in
Sacramento-Stockton-Modesto, California, and received other consideration
in exchange for KVUE-TV, the ABC affiliate in Austin, Texas on June 1,
1999. The gain on this exchange is reflected in the net non-operating
after-tax gain of $33 million discussed below.
EARNINGS SUMMARY
Quarter
Operating income for the second quarter of 1999 rose $29.4 million or 8%.
Newspaper publishing earnings were up $32.9 million or 11% for the
quarter, reflecting continued strong advertising demand, very strong
operating results at USA TODAY, USA WEEKEND and our recently acquired New
Jersey properties, and a 9% decline in newsprint expense. Television
earnings declined $5.6 million or 5% for the quarter reflecting the
absence of political advertising and the Seinfeld finale on our
NBC-affiliated stations which bolstered results in the second quarter of
1998. Cable earnings rose $1.5 million or 11% for the quarter.
Pro forma operating results for each business segment are discussed in the
following sections of this report.
Non-operating income for the second quarter of 1999 included a net pre-tax
gain of $55 million ($33 million after-tax) principally from the exchange
of KVUE-TV in Austin, Texas for KXTV-TV in Sacramento, California.
Excluding this gain, net income rose $21.4 million or 10% for the second
quarter of 1999 and diluted earnings per share increased 12% to $0.87.
A presentation of second quarter earnings excluding the net non-operating
gain follows:
Earnings Summary Excluding
1999 Net Non-operating Gain
(dollars in thousands,
except per share amounts)
Quarter Ended
June 27, June 28, % Inc
1999 1998 (Dec)
-------- -------- -----
Operating income $419,217 $389,859 7.5
Non-operating income (expense):
Interest expense (13,852) (20,348) (31.9)
Other 775 2,498 (69.0)
--------- --------- ------
Total (13,077) (17,850) (26.7)
--------- --------- ------
Income before income taxes 406,140 372,009 9.2
Provision for income taxes 161,950 149,200 8.5
--------- --------- ------
Net income $244,190 $222,809 9.6
========= ========= ======
Net income per share-basic $0.87 $0.78 11.5
===== ===== ====
Net income per share-diluted $0.87 $0.78 11.5
===== ===== ====
Year-to-Date
Operating income for the first six months of 1999 rose $53.0 million or
8%. Non-operating income for the first six months of 1998 included a
first quarter net pre-tax gain of $306.5 million ($183.6 million after-
tax) primarily from the disposition of the company's five remaining radio
stations and its alarm security business. Net income for the first six
months of 1999, excluding the 1999 and 1998 gains referred to above,
advanced $41.0 million or 11%.
A presentation of year-to-date earnings excluding the net non-operating
gains follows:
Earnings Summary Excluding
1999 and 1998 Net Non-operating Gains
(dollars in thousands,
except per share amounts)
Year-to-Date Ended
June 27, June 28, % Inc
1999 1998 (Dec)
-------- -------- -----
Operating income $731,134 $678,102 7.8
Non-operating income (expense):
Interest expense (30,444) (43,577) (30.1)
Other 3,143 3,327 (5.5)
--------- --------- ------
Total (27,301) (40,250) (32.2)
--------- --------- ------
Income before income taxes 703,833 637,852 10.3
Provision for income taxes 280,750 255,800 9.8
--------- --------- ------
Net income $423,083 $382,052 10.7
========= ========= ======
Net income per share-basic $1.51 $1.34 12.7
===== ===== ====
Net income per share-diluted $1.50 $1.33 12.8
===== ===== ====
NEWSPAPERS
Reported newspaper publishing revenues rose $37.0 million or 4% in the
second quarter of 1999, which included a $41.6 million or 6% gain in
advertising revenues. Newspaper publishing revenues were up $86.6 million
or 4% for the year-to-date, including advertising gains of $92.2 million
or 7%. Note that Newsquest's results of operations will be included in the
company's financial statements beginning in the third quarter.
The tables below provide, on a pro forma basis, details of newspaper ad
revenue and linage and preprint distribution for the second quarter and
year-to-date periods of 1999 and 1998:
Advertising revenue, in thousands of dollars (pro forma)
Second Quarter
- --------------
1999 1998 % Change
---- ---- --------
Local $226,307 $231,540 (2)
National 157,464 135,966 16
Classified 291,389 270,248 8
-------- -------- ----
Total Run-of-Press 675,160 637,754 6
Preprint and
other advertising 111,634 107,877 3
-------- -------- ----
Total ad revenue $786,794 $745,631 6
======== ======== ====
Advertising linage, in thousands of inches, and preprint distribution, in
millions (pro forma)
Second Quarter
- --------------
1999 1998 % Change
---- ---- --------
Local 8,503 8,578 (1)
National 846 760 11
Classified 11,579 10,676 8
------ ------ ----
Total Run-of-Press linage 20,928 20,014 5
====== ====== ====
Preprint distribution 1,763 1,747 1
====== ====== ====
Advertising revenue, in thousands of dollars (pro forma)
Year-to-Date
- ------------
1999 1998 % Change
---- ---- --------
Local $437,944 $436,647 0
National 293,772 253,202 16
Classified 554,542 519,932 7
---------- ---------- ----
Total Run-of-Press 1,286,258 1,209,781 6
Preprint and
other advertising 214,058 204,181 5
---------- ---------- ----
Total ad revenue $1,500,316 $1,413,962 6
========== ========== ====
Advertising linage, in thousands of inches, and preprint distribution, in
millions (pro forma)
Year-to-Date
- ------------
1999 1998 % Change
---- ---- --------
Local 16,636 16,439 1
National 1,652 1,430 16
Classified 22,165 20,552 8
------ ------ ----
Total Run-of-Press linage 40,453 38,421 5
====== ====== ====
Preprint distribution 3,503 3,422 2
====== ====== ====
Pro forma newspaper advertising revenues rose 6% for the quarter and for
the year-to-date. Local ad revenues declined 2% for the quarter and volume
decreased 1%. Year-to-date, local ad revenues were flat and volume
increased 1%. National ad revenues rose 16% for the quarter and the year-
to-date on a volume increase of 11% for the quarter and 16% for the year-
to-date. Classified ad revenues increased 8% for the quarter and 7% for
the year-to-date on a volume increase of 8% for the quarter and the year-
to-date. Most of the company's newspapers, including USA TODAY and USA
WEEKEND , recorded solid gains in advertising revenue. Classified gains
were strongest in the employment and automotive categories.
Reported newspaper circulation revenues declined 2% for the quarter and
less than 1% for the year-to-date. Pro forma net paid daily circulation
for the company's local newspapers was lower by 1% for the quarter and for
the year-to-date. Sunday circulation was lower by 2% for the quarter and
for the year-to-date. USA TODAY reported an average daily paid circulation
of 2,248,813 in the ABC Publisher's statement for the 26 weeks ended March
28, 1999, a 1% increase over the comparable period a year ago.
Operating costs for the newspaper segment increased $4.1 million or less
than 1% for the quarter and $31.9 million or 2% for the year-to-date. In
total, newsprint expense decreased 9% for the quarter and 4% for the year-
to-date. Newsprint consumption rose 2% for the quarter and year-to-date,
while newsprint prices continued to decline. The company expects
newsprint prices to be lower for the remainder of the year as compared to
1998.
Newspaper operating income increased $32.9 million or 11% for the quarter
and $54.7 million or 11% for the year-to-date, reflecting strong
advertising gains throughout the group particularly in classified and
national advertising, very strong operating results at USA TODAY, USA
WEEKEND, and our recently acquired New Jersey properties and an overall
decrease in newsprint expense.
Early in the second quarter of 1999, the company contributed The San
Bernardino County Sun to a partnership that includes 21 daily California
newspapers in exchange for a partnership interest.
TELEVISION
Reported results include the impact of WLTX-TV (CBS) in Columbia, South
Carolina, purchased in late April of 1998 and the impact of the exchange
of KVUE-TV (ABC) in Austin, Texas for KXTV-TV (ABC) in Sacramento,
California on June 1, 1999. Gannett Television now consists of 21
television stations reaching 17.3 percent of the U.S. television market.
Reported television revenues decreased $4.3 million or 2% for the second
quarter and $3.8 million or 1% for the year-to-date, while operating costs
increased $1.3 million or 1% for the quarter and $2 million or 1% for the
year-to-date. On a pro forma basis, television station revenues declined
4% for the quarter and 3% for the year-to-date. Pro forma local
television ad revenues increased by 3% for the quarter and for the year-
to-date, while national ad revenues decreased by 11% for the quarter and
9% for the year-to-date.
Reported television operating income declined $5.6 million or 5% for the
quarter and $5.8 million or 3% for the year-to-date. Lower television
earnings reflect the absence of advertising related to the broadcast of
the Super Bowl on the company's NBC-affiliated stations and the Winter
Olympics on its CBS-affiliated stations, which buoyed results in the first
quarter of 1998 and the absence of political advertising and the Seinfeld
finale broadcast on the company's NBC-affiliated stations in the second
quarter of 1998.
CABLE AND SECURITY
Reported operating revenues for the cable and security segment increased
$6.5 million or 11% for the second quarter and $4.6 million or 4% for the
year-to-date, while operating income rose $1.5 million or 11% for the
quarter and $3.0 million or 10% for the year-to-date. In early March
1998, the company sold its alarm security business, previously reported
with this segment. On a pro forma basis for the year-to-date, excluding
the 1998 alarm security results, cable revenues rose $13.2 million or 12%
and operating income increased $3.6 million or 13%.
In late August 1998, the company completed an exchange of its subscribers
and certain cable system assets in the Chicago area (93,000 subscribers)
for subscribers and certain cable systems assets of TCI Communications,
Inc. in Kansas (128,000 subscribers). At the end of the second quarter of
1999, the cable television business served 509,000 subscribers in three
states or 61% of homes passed.
The increases in cable operating revenues and operating income for the
second quarter and year-to-date reflect the increased subscriber base from
the asset exchange, higher subscription rates and significant increases in
advertising and pay-per-view revenues.
As discussed above in the opening section of this report, the company has
announced an agreement to sell the assets of its cable division. Upon
closing of this transaction, a gain on the disposal of the cable division
assets, along with the cable segment operating results, will be reported
as discontinued operations in the company's financial statements.
NON-OPERATING INCOME AND EXPENSE/PROVISION FOR INCOME TAXES
Interest expense decreased $6.5 million or 32% for the quarter and $13.1
million or 30% for the year-to-date, reflecting the pay-down of long-term
debt from operating cash flow and the proceeds from the disposal of
certain businesses in 1998 and 1999.
Non-operating income in the second quarter of 1999 included a net pre-tax
gain of $55 million ($33 million after-tax) and in the first quarter of
1998 included a net pre-tax gain of $307 million ($184 million after-tax)
as discussed in the Earnings Summary above.
The company's effective income tax rate was 39.9% for the quarter and
year-to-date periods of 1999 versus 40.1% for the same periods last year.
NET INCOME
Net income, excluding the $33 million net non-operating after-tax gain in
1999 discussed above, increased $21.4 million or 10% for the quarter. For
the year-to-date, excluding the $33 million and $184 million net
non-operating after-tax gains in 1999 and 1998, net income rose $41.0
million or 11%. Diluted earnings per share, excluding the 1999 and 1998
net non-operating gains, rose to $0.87 from $0.78, an increase of 12% for
the quarter, and rose to $1.50 from $1.33, an increase of 13% for the
year-to-date.
The weighted average number of diluted shares outstanding in the quarter
totaled 282,212,000, compared to 287,447,000 for the second quarter of
1998. Year-to-date, the weighted average number of diluted shares
outstanding totaled 281,949,000, compared to 287,127,000 in the same
period last year. In the last half of 1998, the company repurchased
approximately six million shares of common stock at a cost of $329
million. These stock repurchases were partially offset by shares issued
upon the exercise of stock options and the settlement of stock incentive
rights. Exhibit 11 of this Form 10-Q presents the weighted average number
of basic and diluted shares outstanding and the earnings per share for
each period.
LIQUIDITY AND CAPITAL RESOURCES
The company's consolidated operating cash flow (defined as operating
income plus depreciation and amortization of intangible assets) as
reported in the accompanying Business Segment Information totaled $888.6
million for the first half of 1999, compared with $834.2 million for the
same period of 1998, a 7% increase.
Capital expenditures for the year-to-date totaled $104 million, compared
to $90 million in 1998. The company's long-term debt was reduced by $358
million in the first half of 1999 from operating cash flow. The company's
regular quarterly dividend of $0.20 per share was declared in the first
and second quarter of 1999 and totaled $112 million.
YEAR 2000
General
The "Year 2000 Issue" is the result of computer programs that were written
using two digits rather than four to define the applicable year. If the
company's computer programs with date-sensitive functions are not Year
2000 compliant, they may recognize a date using "00" as the Year 1900
rather than the Year 2000. This could result in a system failure or
miscalculations causing disruptions of operations, including, among other
things, temporary stoppage of newspaper, broadcast and/or cable operations
and the inability to process transactions, send invoices or engage in
similar normal business activities.
Project
The company has developed a plan to ensure that all of its key computer
systems will be Year 2000 compliant in advance of December 31, 1999. The
plan encompasses all operating properties, corporate headquarters and,
where necessary, computer applications that directly interface elements of
the company's business with business partners, customers, suppliers and
service providers.
The plan structure includes several phases: inventory, assessment,
detailed analysis, implementation/ remediation, audit and contingency
planning. The first three phases of inventory, assessment and detailed
analysis are complete. The implementation/remediation phase is
substantially complete. Audit and contingency planning efforts are also
underway and are substantially complete, but will continue to be refined
and implemented up to the Year 2000.
The company has more than 125 business units which generally operate
independently and therefore have separate computer systems and various
production and administrative equipment with embedded computer systems.
Much of the hardware and software used at the business unit level is
standardized and supported centrally. For these systems, Year 2000 issues
are being addressed by a centrally managed Information Technology Group.
Other Year 2000 issues are being addressed by local personnel at the
individual business units with guidance where necessary from headquarters
staff or consulting specialists.
At the end of the second quarter of 1999, the company has achieved Year
2000 compliance in many critical systems areas.
The company's business systems (i.e., marketing, sales support, customer
billing and accounts receivable, accounting, accounts payable and payroll)
at the majority of its local operating properties and at its headquarters
are already Year 2000 compliant. This has been achieved through a
systematic roll-out of Year 2000 compliant software where it was
necessary. By the end of the second quarter of 1999, more than 97% of
these business applications were Year 2000 compliant. For those few
properties which still operate business systems that are not Year 2000
compliant, the company has already purchased or developed the necessary
software and will be installing it during the third quarter of 1999
according to plan.
For newspaper operations, critical systems also include publishing systems
(i.e., front-end editorial and classified, networks, press and
mailroom/distribution systems) and other facility/administrative systems.
At the end of the second quarter of 1999, more than 94% of such newspaper
publishing systems were Year 2000 compliant. The company expects to
complete installation of compliant publishing systems by early in the
fourth quarter of 1999. All facility/administrative systems for the
newspaper group are Year 2000 compliant.
The company's 21 television stations generally use standard purchased
software and systems for production and broadcasting. Each station
operates these systems independently on separate hardware platforms.
Nearly all critical television station systems have been modified or
upgraded as necessary for Year 2000 compliance. For the few remaining
systems, compliance will be achieved at various points through the third
quarter of 1999 when the desired technology becomes available for purchase
and installation.
For the cable television business, all business applications and other
critical systems for production, distribution and administration are now
Year 2000 compliant.
The company has requested confirmation of compliance from its third party
vendors and, in important cases, has or will run tests to verify
compliance.
Costs
The company's efforts to address potential Year 2000 problems began within
its central Information Technology Group in 1995 and were broadened to
include all departments/operations in 1997. The costs specifically
associated with efforts to achieve Year 2000 compliance are expected to be
less than $25 million in the aggregate (exclusive of software and hardware
that has been or will be replaced or upgraded in the normal course of
business), and more than 90% of such costs were incurred and reported
through the end of the first half of 1999. Year 2000 compliance costs are
not material to the company's financial position or to operating results
for any of the years involved and compliance efforts have not
significantly affected progress of other information technology plans or
programs.
Risks
The business risks the company would face if it were unable to achieve
Year 2000 compliance for its critical systems could vary significantly in
degree of seriousness, depending on the system and the business unit
affected. The company may be unable to publish certain of its newspapers,
broadcast from certain of its television stations and/or deliver
programming in certain cable markets. If this occurred, it would most
likely be due to Year 2000 related failure
of the company's utility, telecommunications or content service providers,
not from internal company system failure. The company continues to work
directly with these vendors to evaluate risk levels.
If the company's operations were affected in this manner, revenue losses
would result which would not be fully recovered when normal operations
resumed. Incremental repair and start up costs might also be incurred.
Given the present state of its Year 2000 compliance program and its plans
to complete it as described above, the company does not expect that a
significant portion of its operations would be adversely impacted, and
even if certain operations were so impacted, it would be only for a
limited time. Consequently, management does not believe possible
disruptions of this nature would have a material effect on the company's
financial condition or results of operations.
While the company believes its Year 2000 plan will ensure functionality of
all key systems, each business unit and corporate headquarters are also
preparing contingency plans.
Newsquest
Newsquest, which was acquired by Gannett UK on July 26, 1999, also has a
formal plan to achieve Year 2000 compliance for all of its key computer
systems. The company is in the process of evaluating the effectiveness
of Newsquest's Year 2000 plan.
CERTAIN FACTORS AFFECTING FORWARD LOOKING STATEMENTS
Certain statements in the company's 1998 Annual Report to Shareholders,
its Annual Report on Form 10-K, and in this Quarterly Report contain
forward-looking information. The words "expect," "intend," "believe,"
"anticipate," "likely," "will," and similar expressions generally identify
forward-looking statements. These forward-looking statements are subject
to certain risks and uncertainties which could cause actual results and
events to differ materially from those anticipated in the forward-looking
statements.
Potential risks and uncertainties which could adversely affect the
company's ability to obtain these results include, without limitation, the
following factors: (a) increased consolidation among major retailers or
other events which may adversely affect business operations of major
customers and depress the level of local and national advertising; (b) an
economic downturn in some or all of the company's principal newspaper or
television markets leading to decreased circulation or local or national
advertising; (c) a decline in general newspaper readership patterns as a
result of competitive alternative media or other factors; (d) an increase
in newsprint or syndication programming costs over the levels anticipated;
(e) labor disputes which may cause revenue declines or increased labor
costs; (f) acquisitions of new businesses or dispositions of existing
businesses; (g) a decline in viewership of major networks and local news
programming; and (h) rapid technological changes and frequent new product
introductions prevalent in electronic publishing; and (i) the uncertainty
associated with the impact of Year 2000 issues on the company, its
customers, its vendors and others with whom it does business.
CONSOLIDATED BALANCE SHEETS
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
June 27, 1999 Dec. 27, 1998
--------------- ---------------
ASSETS
Cash $ 44,041 $ 60,103
Marketable securities 37,794 6,084
Trade receivables, less allowance
(1999 - $17,812; 1998 - $19,143) 664,813 664,540
Inventories 82,206 87,176
Prepaid expenses and other receivables 56,879 88,482
--------------- ---------------
Total current assets 885,733 906,385
--------------- ---------------
Property, plant and equipment
Cost 3,698,315 3,666,743
Less accumulated depreciation (1,650,402) (1,602,960)
--------------- ---------------
Net property, plant and equipment 2,047,913 2,063,783
--------------- ---------------
Intangible and other assets
Excess of acquisition cost over the value of
assets acquired, less amortization 3,797,738 3,794,601
Investments and other assets 272,604 214,711
--------------- ---------------
Total intangible and other assets 4,070,342 4,009,312
--------------- ---------------
Total assets $ 7,003,988 $ 6,979,480
=============== ===============
LIABILITIES & SHAREHOLDERS' EQUITY
Current maturities of long-term debt $ $ 7,812
Accounts payable and current portion of film
contracts payable 239,193 312,283
Compensation, interest and other accruals 250,261 228,222
Dividend payable 56,000 55,790
Income taxes 32,871 6,395
Deferred income 128,261 117,465
--------------- ---------------
Total current liabilities 706,586 727,967
--------------- ---------------
Deferred income taxes 467,273 442,359
Long-term debt, less current portion 957,152 1,306,859
Postretirement, medical and life insurance liabilities 307,092 308,145
Other long-term liabilities 222,444 214,326
--------------- ---------------
Total liabilities 2,660,547 2,999,656
--------------- ---------------
Shareholders' Equity
Preferred stock of $1 par value per share. Authorized
2,000,000 shares; issued - none.
Common stock of $1 par value per share. Authorized
400,000,000; issued, 324,420,732 shares. 324,421 324,421
Additional paid-in capital 128,403 126,045
Retained earnings 5,119,313 4,775,313
--------------- ---------------
Total 5,572,137 5,225,779
--------------- ---------------
Less treasury stock - 44,701,489 shares and
45,419,437 shares respectively, at cost (1,208,227) (1,223,077)
Deferred compensation related to ESOP (20,469) (22,878)
--------------- ---------------
Total shareholders' equity 4,343,441 3,979,824
--------------- ---------------
Total liabilities and shareholders' equity $ 7,003,988 $ 6,979,480
=============== ===============
CONSOLIDATED STATEMENTS OF INCOME
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
Thirteen weeks ended % Inc
June 27, 1999 June 28, 1998 (Dec)
------------- ------------- -----
Net Operating Revenues:
Newspaper advertising $ 788,274 $ 746,675 5.6
Newspaper circulation 248,812 252,762 (1.6)
Television 194,480 198,799 (2.2)
Cable 63,727 57,228 11.4
Other 48,052 48,673 (1.3)
------------ ------------ -----
Total 1,343,345 1,304,137 3.0
------------ ------------ -----
Operating Expenses:
Cost of sales and operating expenses,
exclusive of depreciation 646,222 646,755 (0.1)
Selling, general and administrative
expenses, exclusive of depreciation 199,346 190,905 4.4
Depreciation 50,499 50,365 0.3
Amortization of intangible assets 28,061 26,253 6.9
------------ ------------ -----
Total 924,128 914,278 1.1
------------ ------------ -----
Operating income 419,217 389,859 7.5
------------ ------------ -----
Non-operating income (expense):
Interest expense (13,852) (20,348) (31.9)
Other* 55,305 2,498 ----
------------ ------------ -----
Total 41,453 (17,850) ----
------------ ------------ -----
Income before income taxes 460,670 372,009 23.8
Provision for income taxes 183,700 149,200 23.1
------------ ------------ -----
Net income $ 276,970 $ 222,809 24.3
============ ============ =====
Net income per share - basic $0.99 $0.78 26.9
===== ===== =====
Net income per share - diluted $0.98 $0.78 25.6
===== ===== =====
Dividends per share $0.20 $0.19 5.3
===== ===== =====
* 1999 results include a net non-operating gain principally from the
exchange of KVUE-TV in Austin, Texas for KXTV-TV in Sacramento, California.
See Management's Discussion and Analysis of Operations for earnings summary
excluding net non-operating gain.
CONSOLIDATED STATEMENTS OF INCOME
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
Twenty-six weeks ended % Inc
June 27, 1999 June 28, 1998 (Dec)
------------- ------------- -----
Net Operating Revenues:
Newspaper advertising $ 1,508,825 $ 1,416,669 6.5
Newspaper circulation 502,169 506,841 (0.9)
Television 355,674 359,491 (1.1)
Cable and Security 125,853 121,290 3.8
Other 98,889 99,756 (0.9)
------------ ------------ -----
Total 2,591,410 2,504,047 3.5
------------ ------------ -----
Operating Expenses:
Cost of sales and operating expenses,
exclusive of depreciation 1,307,576 1,289,735 1.4
Selling, general and administrative
expenses, exclusive of depreciation 395,232 380,111 4.0
Depreciation 101,601 103,395 (1.7)
Amortization of intangible assets 55,867 52,704 6.0
------------ ------------ -----
Total 1,860,276 1,825,945 1.9
------------ ------------ -----
Operating income 731,134 678,102 7.8
------------ ------------ -----
Non-operating income (expense):
Interest expense (30,444) (43,577) (30.1)
Other* 57,673 309,854 (81.4)
------------ ------------ -----
Total 27,229 266,277 (89.8)
------------ ------------ -----
Income before income taxes 758,363 944,379 (19.7)
Provision for income taxes 302,500 378,720 (20.1)
------------ ------------ -----
Net income $ 455,863 $ 565,659 (19.4)
============ ============ ======
Net income per share - basic $1.63 $1.99 (18.1)
===== ===== ======
Net income per share - diluted $1.62 $1.97 (17.8)
===== ===== ======
Dividends per share $0.40 $0.38 5.3
===== ===== ======
* 1999 results include a net non-operating gain principally from the
exchange of KVUE-TV in Austin, Texas for KXTV-TV in Sacramento, California.
1998 results include a net non-operating gain principally from the
disposition of several businesses including Radio and Alarm Security.
See Management's Discussion and Analysis of Operations for earnings summary
excluding net non-operating gains.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Twenty-six weeks ended
June 27, 1999 June 28, 1998
-------------- --------------
Cash flows from operating activities
Net income $ 455,863 $ 565,659
Adjustments to reconcile net income to
operating cash flows:
Depreciation 101,601 103,395
Amortization of intangibles 55,867 52,704
Deferred income taxes 24,914 52,398
Other, net (71,658) (380,011)
--------- ---------
Net cash flow from operating activities 566,587 394,145
--------- ---------
Cash flows from investing activities
Purchase of property, plant and equipment (103,680) (89,743)
Payments for acquisitions, net of cash acquired (30,915) (203,812)
Change in other investments (9,444) (1,291)
Proceeds from disposal of certain assets 38,450 567,556
Collection of long-term receivables 8,178 14,110
--------- ---------
Net cash (used for) provided by investing activities (97,411) 286,820
--------- ---------
Cash flows from financing activities
Payments of long-term debt (357,519) (584,660)
Dividends paid (111,654) (107,937)
Proceeds from issuance of common stock 15,645 14,787
--------- ---------
Net cash used for financing activities (453,528) (677,810)
--------- ---------
Net increase in cash and cash equivalents 15,648 3,155
Balance of cash and cash equivalents at
beginning of year 66,187 52,778
--------- ---------
Balance of cash and cash equivalents at
end of second quarter $ 81,835 $ 55,933
========= =========
BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Thirteen weeks ended % Inc
June 27, 1999 June 28, 1998 (Dec)
------------- ------------- -----
Operating Revenues:
Newspaper publishing $ 1,085,138 $ 1,048,110 3.5
Television 194,480 198,799 (2.2)
Cable 63,727 57,228 11.4
------------- ------------- -----
Total $ 1,343,345 $ 1,304,137 3.0
============= ============= =====
Operating Income (net of depreciation
and amortization):
Newspaper publishing $ 320,502 $ 287,570 11.5
Television 99,035 104,630 (5.3)
Cable 16,106 14,563 10.6
Corporate (16,426) (16,904) 2.8
------------- ------------- -----
Total $ 419,217 $ 389,859 7.5
============= ============= =====
Depreciation and Amortization:
Newspaper publishing $ 46,682 $ 46,113 1.2
Television 16,068 15,038 6.8
Cable 13,260 13,245 0.1
Corporate 2,550 2,222 14.8
------------- ------------- -----
Total $ 78,560 $ 76,618 2.5
============= ============= =====
Operating Cash Flow:
Newspaper publishing $ 367,184 $ 333,683 10.0
Television 115,103 119,668 (3.8)
Cable 29,366 27,808 5.6
Corporate (13,876) (14,682) 5.5
------------- ------------- -----
Total $ 497,777 $ 466,477 6.7
============= ============= =====
NOTES:
Operating Cash Flow represents operating income for each of the Company's
business segments plus related depreciation and amortization expense.
In April 1998, the Company purchased a television station in Columbia,
South Carolina. In June 1999, the Company exchanged its station in Austin,
Texas, for a station in Sacramento, California, plus other consideration.
On a pro forma basis for the quarter, giving effect to these purchases,
television operations reported declines in revenues of 4%, operating income
of 5% and operating cash flow of 4%.
BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Twenty-six weeks ended % Inc
June 27, 1999 June 28, 1998 (Dec)
------------- ------------- -----
Operating Revenues:
Newspaper publishing $ 2,109,883 $ 2,023,266 4.3
Television 355,674 359,491 (1.1)
Cable and Security 125,853 121,290 3.8
------------ ------------ -----
Total $ 2,591,410 $ 2,504,047 3.5
============ ============ =====
Operating Income (net of depreciation
and amortization):
Newspaper publishing $ 568,177 $ 513,489 10.7
Television 164,752 170,597 (3.4)
Cable and Security 31,431 28,479 10.4
Corporate (33,226) (34,463) 3.6
------------ ------------ -----
Total $ 731,134 $ 678,102 7.8
============ ============ =====
Depreciation and Amortization:
Newspaper publishing $ 94,379 $ 92,270 2.3
Television 31,776 29,993 5.9
Cable and Security 26,539 29,399 (9.7)
Corporate 4,774 4,437 7.6
------------ ------------ -----
Total $ 157,468 $ 156,099 0.9
============ ============ =====
Operating Cash Flow:
Newspaper publishing $ 662,556 $ 605,759 9.4
Television 196,528 200,590 (2.0)
Cable and Security 57,970 57,878 0.2
Corporate (28,452) (30,026) 5.2
------------ ------------ -----
Total $ 888,602 $ 834,201 6.5
============ ============ =====
NOTES:
Operating Cash Flow represents operating income for each of the Company's
business segments plus related depreciation and amortization expense.
In the first quarter of 1998, the Company sold its Alarm Security Business,
which had been reported in the Cable and Security business segment.
On a pro forma basis for the year-to-date, giving effect to the sale of the
Alarm Security Business, cable operations reported gains in revenues of 12%,
operating income of 13% and operating cash flow of 7%.
In April 1998, the Company purchased a television station in Columbia, South
Carolina. In June 1999, the Company exchanged its station in Austin, Texas,
for a station in Sacramento, California, plus other consideration. On a pro
forma basis for the year-to-date, giving effect to these purchases, television
operations reported declines in revenues of 3%, operating income of 4% and
operating cash flow of 3%.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
June 27, 1999
1. Basis of Presentation
The accompanying unaudited consolidated condensed financial
statements have been prepared in accordance with the instructions
for Form 10-Q and, therefore, do not include all information and
footnotes which are normally included in the Form 10-K and annual
report to shareholders. The financial statements covering the 13 and
26-week periods ended June 27, 1999, and the comparative period of
1998, reflect all adjustments which, in the opinion of the company,
are necessary for a fair statement of results for the interim periods.
2. Accounting Standards
In June 1998, SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities" was issued. This standard is effective
for fiscal periods beginning after June 15, 2000. The adoption
of this standard is not expected to have a material effect on the
company's results of operations or financial position.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The company is not subject to market risk associated with derivative
financial instruments or derivative commodity instruments, as the
company is not a party to any such instruments. The company
believes that its market risk from other financial instruments,
such as accounts receivable, accounts payable and debt, is not material.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Securityholders
(a) The Annual Meeting of Shareholders of Gannett Co., Inc.
was held on May 4, 1999.
(b) The following directors were elected at the meeting:
Meredith A. Brokaw Samuel J. Palmisano
John J. Curley
The following directors' term of office continued
after the meeting:
H. Jesse Arnelle Josephine P. Louis
Stuart T.K. Ho Douglas H. McCorkindale
Drew Lewis Karen Hastie Williams
(c) (i) Three directors were re-elected to the Board of
Directors. Tabulation of votes for each of the nominees
is as follows:
For Withhold Authority
Meredith A. Brokaw 232,436,919 1,446,228
John J. Curley 232,642,435 1,240,713
Samuel J. Palmisano 232,621,303 1,261,845
(ii) The proposal to elect PricewaterhouseCoopers LLP as the
company's independent auditors was approved. Tabulation
of votes for the proposal is as follows:
For Against Abstain
Election of Independent
Auditors 232,777,289 438,081 667,778
(iii) The shareholder proposal concerning stock options was
defeated. Tabulation of votes for the proposal is as
follows:
For Against Abstain
Shareholder Proposal 61,706,507 141,476,507 7,412,389
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
See Exhibit Index for list of exhibits filed with this
report.
(b) (i) Current Report on Form 8-K dated July 2, 1999, in
connection with the company's cash offer to acquire shares
of Newsquest plc.
(ii) Current Report on Form 8K dated July 27, 1999, in
connection with the company's acquisition of Newsquest
plc and the sale of the company's cable business.
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 11, 1999 /s/George R. Gavagan
----------------------------------------
George R. Gavagan
Vice President and Controller
Dated: August 11, 1999 /s/Thomas L. Chapple
----------------------------------------
Thomas L. Chapple
Senior Vice President, General
Counsel and Secretary
EXHIBIT INDEX
Exhibit
Number Exhibit Location
3-1 Second Restated Certificate Incorporated by reference to Exhibit
of Incorporation of Gannett Co., 3-1 to Gannett Co., Inc.'s Form 10-K
Inc. for the fiscal year ended December 26,
1993 ("1993 Form 10-K"). Amendment
incorporated by reference to Exhibit
3-1 to the 1993 Form 10-K.
3-2 By-laws of Gannett Co., Inc. Incorporated by reference to Exhibit
(reflects all amendments 3-1 to Gannett Co., Inc.'s Form 10-Q
through September 24, 1997) for the fiscal quarter ended
September 28, 1997.
4-1 $1,000,000,000 Revolving Incorporated by reference to Exhibit
Credit Agreement among 4-1 to the 1993 Form 10-K.
Gannett Co., Inc. and the
Banks named therein.
4-2 Amendment Number One Incorporated by reference to Exhibit
to $1,000,000,000 Revolving 4-2 to Gannett Co., Inc.'s Form 10-Q
Credit Agreement among for the fiscal quarter ended June 26,
Gannett Co., Inc. and the 1994.
Banks named therein.
4-3 Amendment Number Two to Incorporated by reference to Exhibit
$1,500,000,000 Revolving 4-3 to Gannett Co., Inc.'s Form 10-K
Credit Agreement among for the fiscal year ended
Gannett Co., Inc. and the December 31, 1995.
Banks named therein.
4-4 Amendment Number Three to Incorporated by reference to Exhibit
$3,000,000,000 Revolving 4-4 to Gannett Co., Inc.'s Form 10-Q
Credit Agreement among for the fiscal quarter ended
Gannett Co., Inc. and the Banks September 29, 1996.
named therein.
4-5 Indenture dated as of March 1, Incorporated by reference to Exhibit
1983 between Gannett Co., Inc. 4-2 to Gannett Co., Inc.'s Form 10-K
and Citibank, N.A., as Trustee. for the fiscal year ended
December 29, 1985.
4-6 First Supplemental Indenture Incorporated by reference to Exhibit
dated as of November 5, 1986 4 to Gannett Co., Inc.'s Form 8-K
among Gannett Co., Inc., filed on November 9, 1986.
Citibank, N.A., as Trustee, and
Sovran Bank, N.A., as Successor
Trustee.
4-7 Second Supplemental Indenture Incorporated by reference to
dated as of June 1, 1995, Exhibit 4 to Gannett Co., Inc.'s
among Gannett Co., Inc., Form 8-K filed on June 15, 1995.
NationsBank, N.A., as Trustee,
and Crestar Bank, as Trustee.
4-8 Rights Plan. Incorporated by reference to
Exhibit 1 to Gannett Co., Inc.'s
Form 8-K filed on May 23, 1990.
4-9 Amendment Number Four to Incorporated by reference to
$3,000,000,000 Revolving Exhibit 4-9 to Gannett Co., Inc.'s
Credit Agreement among Form 10-Q filed on August 12, 1998.
Gannett Co., Inc. and the
Banks named therein.
10-1 Employment Agreement dated Incorporated by reference to Gannett
December 7, 1992 between Co., Inc.'s Form 10-K for the fiscal
Gannett Co., Inc. and John J. year ended December 27, 1992 ("1992
Curley.* Form 10-K").
10-2 Employment Agreement dated Incorporated by reference to the 1992
December 7, 1992 between Form 10-K.
Gannett Co., Inc. and Douglas H.
McCorkindale.*
10-3 Gannett Co., Inc. 1978 Incorporated by reference to Exhibit
Executive Long-Term Incentive 10-3 to Gannett Co., Inc.'s Form 10-K
Plan* for the fiscal year ended
December 28, 1980. Amendment No. 1
incorporated by reference to
Exhibit 20-1 to Gannett Co., Inc.'s
Form 10-K for the fiscal year ended
December 27, 1981. Amendment No. 2
incorporated by reference to
Exhibit 10-2 to Gannett Co., Inc.'s
Form 10-K for the fiscal year ended
December 25, 1983. Amendments Nos. 3
and 4 incorporated by reference to
Exhibit 4-6 to Gannett Co., Inc.'s
Form S-8 Registration Statement
No. 33-28413 filed on May 1, 1989.
Amendments Nos. 5 and 6 incorporated
by reference to Exhibit 10-8 to
Gannett Co., Inc.'s Form 10-K for the
fiscal year ended December 31, 1989.
Amendment No. 7 incorporated by
reference to Gannett Co., Inc.'s
Form S-8 Registration Statement
No. 333-04459 filed on May 24, 1996.
Amendment No. 8 incorporated by
reference to Exhibit 10-3 to Gannett
Co., Inc.'s Form 10-Q for the quarter
ended September 28, 1997. Amendment
dated December 9, 1997, incorporated
by reference to Gannett Co., Inc.'s
1997 Form 10-K. Amendment No. 9
attached.
10-4 Description of supplemental Incorporated by reference to Exhibit
insurance benefits.* 10-4 to the 1993 Form 10-K.
10-5 Gannett Co., Inc. Supplemental Incorporated by reference to Exhibit
Retirement Plan, as amended.* 10-8 to Gannett Co., Inc.'s Form 10-K
for the fiscal year ended
December 27, 1986 ("1986 Form 10-K").
10-6 Gannett Co., Inc. Retirement Incorporated by reference to Exhibit
Plan for Directors.* 10-10 to the 1986 Form 10-K. 1991
Amendment incorporated by reference
to Exhibit 10-2 to Gannett Co.,
Inc.'s Form 10-Q for the quarter
ended September 29, 1991. Amendment
to Gannett Co., Inc. Retirement
Plan for Directors dated October 31,
1996, incorporated by reference to
Exhibit 10-6 to the 1996 Form 10K.
10-7 Amended and Restated Incorporated by reference to Exhibit
Gannett Co., Inc. 1987 10-1 to Gannett Co., Inc.'s Form 10-Q
Deferred Compensation Plan.* for the fiscal quarter ended
September 29, 1996. Amendment No. 5
incorporated by reference to Exhibit
10-2 to Gannett Co., Inc.'s Form 10-Q
for the quarter ended September 28,
1997. Amendment No. 2 to January 1,
1997 Restatement attached.
10-8 Gannett Co., Inc. Transitional Incorporated by reference to Exhibit
Compensation Plan.* 10-13 to Gannett Co., Inc.'s Form
10-K for the fiscal year ended
December 30, 1990.
11 Statement re computation of Attached.
earnings per share.
27 Financial Data Schedules. Attached.
The Company agrees to furnish to the Commission, upon request, a copy
of each agreement with respect to long-term debt not filed herewith
in reliance upon the exemption from filing applicable to any series
of debt which does not exceed 10% of the total consolidated assets of
the Company.
* Asterisks identify management contracts and compensatory plans
or arrangements.
GANNETT CO., INC.
1978 EXECUTIVE LONG-TERM INCENTIVE PLAN
AMENDMENT NO. 9
This amendment to the Gannett Co., Inc. 1978 Executive Long-Term
Incentive Plan (the "Plan") is adopted pursuant to resolutions of the
Executive Compensation Committee of the Board of Directors of the
Company on July 26, 1999, and is effective on that date.
Section 6.2 of the Plan is hereby amended as follows:
6.2 Assignability
No award under the Plan shall be assignable or transferable,
voluntarily or involuntarily, except (i) by will or the laws of descent
and distribution or (ii) with the consent of the participant, by
authorization of, or pursuant to procedures established by, the
Committee to a member of a participant's family and/or a trust whose
beneficiaries are members of the participant's family or to such other
persons or entities as may be approved by the Committee. During the
life of the participant, awards shall be exercisable only by the
participant or by the participant's guardian, legal representative or,
following a transfer pursuant to (ii) above, by the approved transferee.
The rights of an approved transferee are only those that the participant
would have had under the Plan if the participant had retained the
options. Notwithstanding the foregoing, in no event may ISOs be
transferable or assignable other than by will or the laws of descent and
distribution.
IN WITNESS THEREOF, Gannett Co., Inc. has caused this Amendment
to be executed by its duly authorized officer as of July 26, 1999.
GANNETT CO., INC.
/s/Richard L. Clapp
By:_________________________________
Name: Richard L. Clapp
Title: Senior Vice President/Human
Resources
GANNETT CO., INC. DEFERRED COMPENSATION PLAN
Amendment No. 2 to January 1, 1997 Restatement
This Amendment No. 2 to the Restated Gannett Co., Inc. 1987
Deferred Compensation Plan (the "Plan") is adopted pursuant to the
action of the Executive Compensation Committee of the Board of
Directors of the Company on July 26, 1999, and is effective on that date.
1. Section 1.1 is amended by adding the following new sentence
immediately after the first sentence thereof:
The term "Compensation" also shall include (1) ordinary income
that arises upon the exercise of a stock option as more fully
described in Section 2.11; and (2) such other forms of taxable
income derived from the performance of services for the Company
as may be designated by the Deferred Compensation Committee
and which may be deferred pursuant to such special terms and
conditions as the Committee may establish.
2. Section 2.5(a) is amended by adding the following new
paragraph at the end:
Notwithstanding the foregoing, in his or her first year of eligibility
an employee or Director may make a deferral election within 30
days of first becoming eligible. This initial deferral may relate only
to Compensation attributable to the period following the deferral
election.
3. Section 2.9(g) is amended by adding the following new
paragraph:
A Participant with a financial need that fails to meet the
unforeseeable emergency standard may elect to withdraw funds
from the Participant's Deferred Compensation Account prior to the
date specified in the Participant's election form subject to the
following conditions: (1) premature withdrawals may be made only
in a lump sum and only in an amount in excess of $10,000; (2) only
one premature withdrawal may be made in a calendar year; (3) the
Participant must suspend further deferrals for the remainder of the
calendar year of the withdrawal; and (4) ten percent of the amount
withdrawn shall be irrevocably forfeited to the Company.
4. Article 2.0 is amended by adding the following new Section 2.11:
2.11 Deferrals of Stock Option Compensation
A Participant, by authorization of, or pursuant to procedures
established by, the Committee, may elect to defer ordinary
income imputed to the Participant upon the exercise of a
stock option issued pursuant to any Company-sponsored
stock option plan in accordance with guidelines established
by the Committee and the general terms of this Plan except
as such general terms are modified as follows:
an election to defer stock option income shall be
effective only if made at least six months prior to the
exercise date of the option and in the calendar year
preceding the year of the exercise date. An election
to defer stock option income shall constitute an
amendment of the exercise date of the option so that
the option may not be exercised prior to the date six
months subsequent to the date of the notice of
deferral. Notwithstanding the foregoing, a Participant
may elect to defer income on the exercise of any
option in calendar year 1999 provided that such
election is made within 30 days after the adoption of
this Section 2.11 and is effective only with respect to
option exercises that are made at least four months
after the date of a participant's deferral election. An
election to defer option income in 1999 shall
constitute an amendment of the Stock Option
Agreement related to such option so that the option
may not be exercised prior to the date four months
subsequent to the date of the notice of deferral.
a deferral election with respect to any shares
received upon a stock option exercise shall require
the deferral of all income with respect to that
exercise.
an election to defer stock option income shall be
deemed to constitute a direction by the Participant to
have the Company defer to this Plan the number of
shares (carried to the nearest one ten thousandth of
a share) equal in value to the income that would
otherwise have been realized by the Participant
pursuant to his stock option exercise with the ultimate
payment of such deferred shares to be made in
accordance with the terms of this Plan. All such
deferrals shall be invested in the Gannett stock fund
during the entire deferral period and shall be paid out
in kind on the Payment Commencement Date.
if payments of deferred shares are made in
installments, each installment payment shall be
rounded as necessary to provide payment only of a
whole number of shares except that any
fractional shares payable in the final installment shall
be paid in cash.
5. Article 3.0 is amended by adding to the end thereof the following new
Section 3.7:
3.7 Change in Control
(a) Legal Expense. If, with respect to any alleged failure by the
Company to comply with any of the terms of this Plan
subsequent to a change in control, a Participant or
beneficiary hires legal counsel or institutes any negotiations
or institutes or responds to legal action to assert or defend
the validity of, enforce his rights under, obtain benefits
promised under or recover damages for breach of the terms
of this Plan, the Company shall pay, as they are incurred, a
Participant's or beneficiary's actual expenses for attorneys'
fees and disbursements, together with such additional
payments, if any, as may be necessary so that the net after-
tax payments to the Participant or beneficiary equal such
fees and disbursements.
(b) Appointment of Independent Fiduciary. Following a change
in control, the Board may appoint an independent fiduciary
which, upon appointment, shall assume and have sole
responsibility and discretion to act on the following matters
in lieu of action by the Company, Committee or trustee (but
not in lieu of participant elections) as may otherwise be
assigned to such parties under other provisions of the Plan:
(1) determination of eligibility for benefit entitlement; (2)
determination of the amount, timing and form of benefit
payment; (3) direction of any trustee of assets held with
respect to the Plan on matters relating to benefit entitlement
and payment and on matters relating to the investment of
plan assets.
(c) Change in Control Definition.
(1) As used in this Plan, a "change in control"
shall be deemed to have occurred under any one or more of
the following conditions:
(i) if, within three years of any merger,
consolidation, sale of a substantial part of the
Company's assets, or contested election, or
any combination of the foregoing transactions
(a "Transaction"), the persons who were
directors of the Company immediately before
the Transaction shall cease to constitute a
majority of the Board of Directors (x) of the
Company or (y) of any successor to the
Company, or (z) if the Company becomes a
subsidiary of or is merged into or consolidated
with another corporation, of such corporation.
(The Company shall be deemed a subsidiary
of such other corporation if such other
corporation owns or controls, directly or
indirectly, a majority of the combined voting
power of the outstanding shares of the capital
stock of the Company entitled to vote generally
in the election of directors ("Voting Stock"));
(ii) if, as a result of a Transaction, the Company
does not survive as an entity, or its shares are
changed into the shares of another
corporation;
(iii) if any "person" (as that term is used in Section
13(d) or 14(d)(2) of the Securities Exchange
Act of 1934) becomes a beneficial owner
directly or indirectly of securities of the
Company representing 20% or more of the
combined voting power of the Company's
Voting Stock;
(iv) if three or more persons are elected directors
of the Company despite the opposition of a
majority of the directors of the Company then
in office; or
(v) upon determination by the Executive
Compensation Committee that a change in
control has occurred, if such a person as
defined in subparagraph (iii) above becomes
the beneficial owner directly or indirectly of
securities of the Company representing from
12% up to 20% of the combined voting power
of the Company's Voting Stock.
GANNETT CO., INC.
/s/Richard L. Clapp
By: _____________________
Name: Richard L. Clapp
Title: Senior Vice President/
Human Resources
CALCULATION OF EARNINGS PER SHARE
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
Thirteen weeks ended Twenty-six weeks ended
June 27, June 28 June 27, June 28
1999* 1998* 1999* 1998*
------------ ----------- ------------ -----------
Basic earnings:
Net income $276,970 $222,809 $455,863 $565,659
Weighted average number of
common shares outstanding 279,619 284,561 279,466 284,388
Basic earnings per share $0.99 $0.78 $1.63 $1.99
Diluted earnings:
Net income $276,970 $222,809 $455,863 $565,659
Weighted average number of
common shares outstanding 279,619 284,561 279,466 284,388
Dilutive effect of out-
standing stock options and
stock incentive rights 2,593 2,886 2,483 2,739
Weighted average number of
shares outstanding, as
adjusted 282,212 287,447 281,949 287,127
Diluted earnings per share $0.98 $0.78 $1.62 $1.97
* 1999 results include a net non-operating gain principally from the
exchange of KVUE-TV in Austin, Texas for KXTV-TV in Sacramento, California.
1998 results include a net non-operating gain principally from the
disposition of several businesses including Radio and Alarm Security.
See Management's Discussion and Analysis of Operations for earnings summary
excluding net non-operating gains.
5
1,000
6-MOS
DEC-26-1999
DEC-28-1998
JUN-27-1999
44,041
37,794
682,625
17,812
82,206
885,733
3,698,315
1,650,402
7,003,988
706,586
0
324,421
0
0
4,019,020
7,003,988
2,591,410
2,591,410
1,307,576
1,860,276
(57,673)
0
30,444
758,363
302,500
455,863
0
0
0
455,863
1.63
1.62
