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SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: October 4, 1999 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) (703) 284-6000 (Registrant's telephone number, including area code)

Amendment No. 1 The company's current report on Form 8-K dated July 27, 1999, is hereby amended and supplemented as follows. ITEM 7. FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL INFORMATION The following financial statements and pro forma financial information are hereby filed as part of this report. (a) Financial Statements of Businesses Acquired (1) Audited financial statements of Newsquest plc as of and for the 53 weeks ended January 3, 1999. (b) Pro Forma Financial Information The following pro forma combining financial statements of Gannett Co., Inc., and Newsquest plc are included in this report: (1) Unaudited pro forma condensed combined balance sheet as of and unaudited pro forma condensed combined statement of income for the year ended December 27, 1998. (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: October 4, 1999 By: /s/ George R. Gavagan ------------------------- George R. Gavagan Vice President and Controller

EXHIBIT INDEX Exhibit Number Title or Description - ------- ---------------------- 23-1 Consent of Deloitte & Touche. 99-1 Audited consolidated balance sheet of Newsquest plc as of January 3, 1999 and the related consolidated statements of profit and loss, reconciliation of movements in shareholders' funds, and cash flows for the 53 weeks ended January 3, 1999 (pages 21-45 of Newsquest's Annual Report for the 53 weeks ended January 3, 1999). 99-2 Unaudited pro forma condensed combined balance sheet as of December 27, 1998 and the unaudited pro forma condensed combined statement of income for the year ended December 27, 1998.

Exhibit 23-1 INDEPENDENT AUDITORS' CONSENT ----------------------------- We consent to the incorporation by reference in the Prospectuses constituting part of the Registration Statements on Form S-3 (Nos. 33-63673, 33-58686 and 33-53159) and in the Registration Statements on Form S-8 (Nos. 2-63038, 2-84088, 33-15319, 33-16790, 33-28413, 3-35305, 33-50813, 33-64959, 333-04459 and 333-03941) of Gannett Co., Inc. of our report dated March 19, 1999, with respect to the financial statements of Newsquest plc as of January 3, 1999 and for the fifty-three weeks then ended, which report appears in the Form 8-K/A of Gannett Co., Inc. dated October 4, 1999. /s/ Deloitte & Touche - ---------------------- Deloitte & Touche London, United Kingdom October 4, 1999

Exhibit 99-1 PORTIONS OF NEWSQUEST PLC ANNUAL REPORT REPORT OF THE AUDITORS To the members of Newsquest plc We have audited the financial statements on pages 22 to 45 which have been prepared under the accounting policies set out on page 27. We have also audited the information which is specified by the London Stock Exchange to be audited in respect of Directors' remuneration, share options and pension entitlements and which is set out in the paragraphs headed Directors' emoluments, Directors' share options and Directors' pension arrangements on pages 18 and 19 of the report to shareholders by the Board on Directors' remuneration. Respective responsibilities of Directors and auditors The Directors are responsible for preparing the Annual Report, including, as described on pages 16 and 17, the financial statements. Our responsibilities, as independent auditors, are established by statute, the Auditing Practices Board, the Listing Rules of the London Stock Exchange, and by our profession's ethical guidance. We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Companies Act 1985. We also report to you if, in our opinion, the Directors' Report is not consistent with the financial statements, if the Company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law or the Listing Rules regarding Directors' remuneration and transactions with the Company and other members of the group is not disclosed. We review whether the statement on page 15 reflects the compliance with those provisions of the Combined Code specified for our review by the Stock Exchange, and we report if it does not. We are not required to form an opinion on the effectiveness of the corporate governance procedures or the group's internal controls. We read the other information contained in the Annual Report, including the corporate governance statement, and consider whether it is consistent with the audited financial statements. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements.

Basis of audit opinion We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the circumstances of the Company and the group, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall presentation of information in the financial statements. Opinion In our opinion the financial statements give a true and fair view of the state of affairs of the Company and the group as at 3 January 1999 and of the profit of the group for the fifty-three weeks then ended and have been properly prepared in accordance with the Companies Act 1985. Deloitte & Touche Chartered Accountants and Registered Auditors, Hill House, 1 Little New Street, London EC4A 3TR 19 March 1999 -21-

CONSOLIDATED PROFIT AND LOSS ACCOUNT For the 53 weeks ended 3 January 1999 (note 1) 1998 1997 British British Pounds Pounds Notes 000's 000's Turnover Continuing operations 1,3 300,829 285,577 Acquisitions 4,967 - --------- --------- 305,796 285,577 Cost of sales (70,407) (67,870) --------- --------- Gross profit 235,389 217,707 Non-recurring costs 4 - (8,502) Other operating expenses (154,039) (146,212) --------- --------- Operating expenses 5 (154,039) (154,714) --------- --------- Operating profit Continuing operations 80,467 62,993 Acquisitions 883 - --------- --------- 6 81,350 62,993 Profit on sale of business - 17,729 --------- --------- Profit on ordinary activities before interest 81,350 80,722 Refinancing costs (4,793) (16,648) Other net interest payable (15,586) (32,465) --------- --------- Net interest payable 9 (20,379) (49,113) --------- --------- Profit before taxation on ordinary activities 60,971 31,609 Tax charge on profit on ordinary activities 10 (19,206) (11,914) --------- --------- Profit for the financial year 41,765 19,695 Dividends 11 (11,788) - --------- --------- Retained profit 29,977 19,695 ========= =========

Basic earnings per share (pence) 13 21.2 11.9 --------- --------- Diluted earnings per share (pence) 13 20.9 11.7 --------- --------- Adjusted diluted earnings per share (pence) 13 22.5 17.7 --------- --------- There were no recognised gains or losses other than those included in the profit and loss account above and therefore no separate statement of total recognised gains and losses has been presented. -22-

CONSOLIDATED BALANCE SHEET At 3 January 1999 (note 1) 1998 1998 1997 1997 British British British British Pounds Pounds Pounds Pounds Notes 000's 000's 000's 000's Fixed assets Intangible assets 14 329,634 319,962 Tangible assets 15 67,304 66,578 Investments 16 302 221 --------- --------- 397,240 386,761 Current assets Stocks 17 1,854 2,099 Debtors 18 40,766 45,056 Pension prepayment due after one year 27 1,579 2,759 Cash at bank and in hand 59 3,484 --------- --------- 44,258 53,398 Creditors Amounts falling due within one year 19 (79,898) (53,936) --------- --------- Net current liabilities (35,640) (538) --------- --------- Total assets less current liabilities 361,600 386,223 Creditors Amounts falling due after more than one year 20 (129,968) (177,461) Provisions for liabilities and charges 22 (5,241) (4,539) --------- --------- Net assets 226,391 204,223 ========= ========= Capital and reserves Called up share capital 23 1,964 2,000 Share premium 24 249,826 249,572 Capital redemption reserve 24 831 794 Profit and loss account 24 (26,230) (48,143) --------- --------- Equity shareholders' funds 226,391 204,223 ========= ========= The financial statements on pages 22 to 45 were approved by the Board of Directors on 19 March 1999 and were signed on its behalf by J T Brown J C Pfeil -23-

COMPANY BALANCE SHEET At 3 January 1999 (note 1) 1998 1998 1997 1997 British British British British Pounds Pounds Pounds Pounds Notes 000's 000's 000's 000's Fixed assets Investments 16 205,892 205,922 Current assets Debtors 18 101,234 61,665 Cash at bank and in hand 9 - --------- --------- 101,243 61,665 Creditors Amounts falling due within one year 19 (9,366) (221) --------- --------- Net current assets 91,877 61,444 --------- --------- Net assets 297,769 267,366 ========= ========= Capital and reserves Called up share capital 23 1,964 2,000 Share premium 24 249,826 249,572 Capital redemption reserve 24 831 794 Profit and loss account 24 45,148 15,000 --------- --------- Equity shareholders' funds 297,769 267,366 ========= ========= The financial statements on pages 22 to 45 were approved by the Board of Directors on 19 March 1999 and were signed on its behalf by J T Brown J C Pfeil -24-

CONSOLIDATED CASH FLOW STATEMENT For the 53 weeks ended 3 January 1999 (note 1) 1998 1997 British British Pounds Pounds Notes 000's 000's Cash flow from operating activities 28 99,193 76,068 Returns on investments and servicing of finance 29A (18,292) (45,852) Taxation paid 29B (4,821) (1,704) Capital expenditure and financial investment 29C (12,573) (8,417) Acquisitions and disposals 29D (6,975) 41,497 Equity dividends paid (3,946) - --------- --------- Net cash inflow before use of liquid resources and financing 52,586 61,592 Management of liquid resources 29E 2,000 (2,000) Financing 29F (57,733) (68,415) --------- --------- Decrease in cash (3,147) (8,823) ========= =========

RECONCILIATION OF NET CASH FLOW TO MOVEMENTS IN NET DEBT 1998 1997 British British Pounds Pounds Notes 000's 000's Decrease in cash (3,147) (8,823) Cash outflow from reduction in debt 49,924 164,915 Loan Notes issued as settlement for acquisitions (2,400) - Movements in liquid resources (2,000) 2,000 --------- --------- Change in net debt resulting from cash flows 42,377 158,092 Exchange movements - 3,567 --------- --------- Decrease in net debt 42,377 161,659 Net debt at 28 December 1997 (177,430) (339,089) --------- --------- Net debt at 3 January 1999 31 (135,053) (177,430) ========= ========= Net debt is stated gross of deferred financing fees (note 20). -25-

CONSOLIDATED RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS For the 53 weeks ended 3 January 1999 (note 1) 1998 1997 British British Pounds Pounds 000's 000's Profit for the financial year 41,765 19,695 Dividends (11,788) - Repurchases of share capital (8,064) - Net proceeds from shares issued 255 96,500 Goodwill arising on acquisition of Newsquest Capital plc and Westminster Press - (4,359) Goodwill written back on disposal of Newsquest (Wessex) - 2,477 --------- --------- Net additions to shareholders' funds 22,168 114,313 Opening shareholders' funds 204,223 89,910 --------- --------- Closing shareholders' funds 226,391 204,223 ========= ========= -26-

NOTES TO THE ACCOUNTS 53 weeks ended 3 January 1999 1. ACCOUNTING POLICIES The consolidated financial statements of Newsquest plc and its subsidiaries have been prepared in accordance with Accounting Standards currently applicable in the United Kingdom. The significant accounting policies adopted are as follows: Basis of Accounting The accounts have been prepared under the historical cost convention. Consolidation and accounting period The consolidated accounts consolidate the financial statements of Newsquest plc and all of its subsidiaries. The profit and loss accounts cover the 53 weeks from 29 December 1997 to 3 January 1999 and the 52 weeks from 30 December 1996 to 28 December 1997. The balance sheets for 1998 and 1997 have been drawn up at 3 January 1999 and 28 December 1997 respectively. Turnover Turnover represents the invoiced value of sales, excluding Value Added Tax. Advertising revenues are recognised upon publication of the relevant newspaper. Circulation revenues, for paid-for newspapers, are recognised upon sale or distribution. All turnover is derived from the Group's principal activity being printing and publishing. All turnover arises in the United Kingdom. Development expenditure Development expenditure incurred on the launch of new titles and the establishment of Internet sites is expensed to the profit and loss account as incurred. Investments Investments held as fixed assets are stated at cost, less provision, if appropriate, for any diminution in value other than a temporary diminution in value.

Goodwill On the acquisition of a subsidiary company or associated company, the purchase consideration is allocated between the underlying net tangible and intangible assets on a fair value basis. Goodwill on acquisitions after 29 December 1997 is included on the balance sheet and amortised over its expected useful economic life, up to a maximum of 20 years. Goodwill on acquisitions prior to 29 December 1997 has been written off against profit and loss reserve as a matter of accounting policy and the comparative figures in the accounts have been revised to reflect this. This goodwill will be charged to the profit and loss account in the event of the disposal of the business to which it relates. Cash Cash consists of cash in hand and deposits repayable on demand with a period of maturity of not more than one working day. Intangible fixed assets Publishing rights and titles are stated at fair value on acquisition, based on the operating profits derived from them, and are not subsequently revalued. Publishing rights or titles have historically had lives in excess of 20 years and the Directors do not foresee the end of their economic life, and, consequently, are treated as having an indefinite economic life. Having an indefinite economic life, no systematic amortisation is applied. Intangible assets are reviewed for impairment annually, and provision is made for any impairment in value. Internally developed intangibles are not carried on the balance sheet. Tangible fixed assets Land and buildings, plant and equipment are stated in the balance sheet at cost less accumulated depreciation. No depreciation is provided on land. Freehold buildings, long leases and plant and equipment are depreciated over their estimated future useful lives, on a straight line basis at rates from 2%-50%. Short leases are written off over the duration of the lease. Operating leases Operating lease rentals are charged to the profit and loss account on a straight line basis over the term of the lease. Stocks Stocks are stated at the lower of cost, on a first in first out basis, and estimated net realisable value.

Taxation Deferred taxation is provided on timing differences, arising from the different treatment of items for accounting and taxation purposes, which are expected to reverse in the future, calculated at the rates at which it is expected that tax will arise. No provision is made for tax which would become payable on the sale of intangible assets at stated amounts as there is no present intention to sell these intangible assets. Pensions The group operates a defined benefit pension scheme. The expected costs of pensions in respect of the Scheme are charged to the profit and loss account so as to spread the costs over the service lives of employees in the Scheme. Actuarial surpluses and deficits are allocated over the average expected remaining service lives of employees. Pension costs are assessed in accordance with the advice of qualified actuaries. Vacant property An accrual is made at the balance sheet date for the net present value of net future rentals on vacant and surplus property assets. Foreign exchange Transactions denominated in foreign currencies are translated into sterling at the rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the rates ruling at the date or, where appropriate, at the rate of exchange specified in a matching forward contract or currency swap. Any translation differences arising are dealt with in the profit and loss account. -27-

2. ACQUISITIONS AND DISPOSALS Acquisitions During 1998 Newsquest purchased Kinsman Reeds Limited (May 1998), Property Weekly Limited (March 1998), Review Free Newspapers Limited (July 1998) and publishing rights, all of which have been accounted for using acquisition accounting. The book and fair values of these businesses were as follows: Fair Book value Fair value adjustment value British British British Pounds Pounds Pounds 000's 000's 000's Fixed assets: Intangible assets 2,521 7,151 9,672 Tangible assets 126 - 126 --------- --------- --------- 2,647 7,151 9,798 Debtors 1,152 - 1,152 Cash at bank and in hand 33 - 33 Loans and overdrafts (626) - (626) Trade and other creditors (1,475) (68) (1,543) Corporation Tax 14 (46) (32) --------- --------- --------- Net assets acquired 1,745 7,037 8,782 ========= ========= ========= Consideration: Cash 6,382 Loan Notes 2,400 --------- 8,782 ========= The principal fair value adjustments were to reflect the valuation of publishing rights acquired and property and taxation liabilities. Cost of sales includes GBP 2,856,000 and operating expenses GBP 1,228,000 in respect of these acquisitions. Disposals In 1997 the group disposed of Newsquest (Wessex). The results for 1997 include turnover of GBP 6,628,000 and operating profit of GBP 1,466,000 in respect of Newsquest (Wessex).

3. TURNOVER Set out below is an analysis of turnover by type of revenue, showing separately the effect of acquisitions and disposals. 1998 1997 53 weeks 52 weeks British British Pounds Pounds 000's 000's Display advertising: National 19,871 18,649 Local 55,398 52,418 --------- --------- 75,269 71,067 --------- --------- Classified advertising: Motors 35,653 32,813 Property 36,054 33,049 Recruitment 60,068 52,222 Other 37,413 35,682 --------- --------- 169,188 153,766 --------- --------- -28-

3. TURNOVER (continued) 1998 1997 53 weeks 52 weeks British British Pounds Pounds 000's 000's Total advertising 244,457 224,833 Circulation 37,698 36,693 Direct marketing 11,545 10,211 Contract printing 1,193 2,287 Other, including Internet revenues 5,936 4,925 --------- --------- 300,829 278,949 Acquisitions 4,967 - Disposals - 6,628 --------- --------- Turnover 305,796 285,577 ========= ========= 4. NON-RECURRING COSTS 1998 1997 British British Pounds Pounds 000's 000's Monitoring fees - 344 Costs associated with listing on the London Stock Exchange - 7,135 Non-recurring pensions charge - 1,023 --------- --------- - 8,502 ========= ========= 5. OPERATING EXPENSES 1998 1997 British British Pounds Pounds 000's 000's Distribution costs 48,211 45,602 Administrative expenses 105,828 109,112 --------- --------- 154,039 154,714 ========= ========= Administrative expenses include non-recurring costs (note 4).

6. OPERATING PROFIT 1998 1997 British British Pounds Pounds 000's 000's Operating profit is arrived at after charging/(crediting): Depreciation of tangible fixed assets: Owned assets 12,086 12,271 Profit on disposal of tangible fixed assets (501) (180) Operating lease rentals: Land and buildings 2,764 3,042 Plant and equipment 281 404 Restructuring costs 993 1,016 Audit fees 190 180 Auditors' remuneration - non-audit services 259 386 Exceptional pension charge - 1,023 ========= ========= Other amounts payable to auditors not included above were GBP 132,400 (1997 - GBP 624,700). -29-

7. STAFF COSTS 1998 1997 British British Pounds Pounds 000's 000's Wages and salaries 85,433 81,447 Social security costs 8,193 6,918 Other pension costs 3,429 3,932 --------- --------- 97,055 92,297 ========= ========= The average monthly number of employees, including Directors, during the period was as follows: 1998 1997 Number Number --------- --------- Pre-press and printing 1,146 1,266 Editorial 1,427 1,436 Marketing and sales 1,905 1,854 Distribution 681 690 Finance and management 584 582 --------- --------- 5,743 5,828 ========= ========= 8. DIRECTORS' REMUNERATION The emoluments of the Directors are given in the Report of the Board on Remuneration on pages 18 to 19. 9. INTEREST 1998 1997 British British Pounds Pounds 000's 000's Refinancing costs comprise of: Premium on redemption of US$ Loan Notes 4,024 4,550 Deferred financing fees written off 1,093 8,408 Swap termination costs net of related gains (324) 3,690 --------- --------- 4,793 16,648 ========= =========

Other net interest costs comprise: Interest receivable (200) (1,108) Interest payable and similar charges: Bank loans 8,372 17,114 Amortisation of deferred financing fees 838 2,287 Other loans and similar charges 6,576 14,172 --------- --------- 15,586 32,465 ========= ========= Amortisation of deferred financing fees relates to professional costs and finance fees incurred on the issue of the US$ Loan Notes and establishment of long-term bank loans. -30-

10. TAXATION 1998 1997 British British Pounds Pounds 000's 000's UK Corporation Tax at 31% (1997 - 31.5%) Current 20,053 13,719 Deferred taxation credit (549) (737) Adjustment to prior years Corporation Tax (1,549) (773) Adjustment to prior years deferred taxation 1,251 (295) --------- --------- 19,206 11,914 ========= ========= The adjustment to prior years deferred taxation for the 53 weeks ended 3 January 1999 includes a credit of GBP 147,000 arising as a result of the change in the Corporation Tax rate from 31% to 30%. 11. DIVIDENDS 1998 1997 British British Pounds Pounds 000's 000's Interim dividend of 2p per share paid 3,952 - Proposed final dividend of 4p per share 7,836 - --------- --------- 11,788 - ========= ========= Dividends are stated net of dividends receivable of GBP 28,000 on shares held by Newsquest Employee Trustees Limited where the relevant incentive scheme does not entitle the participant to dividends. 12. PROFIT FOR THE FINANCIAL YEAR As permitted by section 230 of the Companies Act 1985, the profit and loss account of the Company is not presented as part of these financial statements. The parent Company profit for the financial year was GBP 50,000,000 (1997 - GBP 15,000,000). -31-

13. EARNINGS PER SHARE 1998 1997 Pence Pence Basic earnings per share 21.2 11.9 Diluted earnings per share 20.9 11.7 Adjusted diluted earnings per share 22.5 17.7 Earnings per share information has been restated in accordance with FRS 14, "Earnings Per Share". The weighted average number of ordinary shares in issue in 1997 for the period prior to Listing is based on the number of shares the A, B, C, D and E ordinary shares respectively were converted into immediately prior to Listing. Adjusted diluted earnings per share is calculated using the adjusted profits set out below, and is provided to give a more meaningful measure of performance. This adjusts 1998's results for the refinancing costs incurred on redeeming US$ Loan Notes. It adjusts 1997's results for the disposal of Newsquest (Wessex), the proceeds of Listing and the changes in the group's capital structure from new banking arrangements and the repurchase of US$ Loan Notes as if they had occurred on 1 January 1997. Therefore adjusted diluted earnings per share assumes that all shares issued for the Listing were in issue for a full year. The numbers of shares and earnings used to calculate earnings per share information is set out below: 1998 1997 Number Number of shares of shares Basic weighted average number of shares 197,120,481 165,809,893 Diluted weighted average number of shares 200,241,167 168,240,819 Adjusted earnings per share weighted average number of shares 200,241,167 200,548,511 1998 1997 British British Pounds Pounds 000's 000's Profit after taxation (used to calculate earnings per share and diluted earnings per share) 41,765 19,695 Refinancing costs net of taxation 3,307 11,404 Disposal of Newsquest (Wessex) net of taxation - (11,550) Non-recurring costs, Listing and capital structure net of taxation - 15,997 --------- --------- Earnings used to calculate adjusted diluted earnings per share 45,072 35,546 ========= =========

14. INTANGIBLE FIXED ASSETS 1998 1997 British British Pounds Pounds 000's 000's Publishing rights and titles Cost At beginning of year 319,962 332,376 Acquisitions (note 2) 9,672 - Divestments - (12,414) --------- --------- At end of year 329,634 319,962 ========= ========= -32-

15. TANGIBLE FIXED ASSETS Land and Plant and buildings equipment British British Pounds Pounds Total 000's 000's 000's Cost At 29 December 1997 32,328 112,036 144,364 Additions 20 13,521 13,541 Transfers (510) 510 - Acquisitions 14 228 242 Disposals (220) (6,997) (7,217) --------- --------- --------- At 3 January 1999 31,632 119,298 150,930 --------- --------- --------- Accumulated depreciation At 29 December 1997 7,335 70,451 77,786 Charge for the year 892 11,194 12,086 Transfers (110) 110 - Acquisitions 2 114 116 Disposals (67) (6,295) (6,362) --------- --------- --------- At 3 January 1999 8,052 75,574 83,626 --------- --------- --------- Net book value At 3 January 1999 23,580 43,724 67,304 ========= ========= ========= At 28 December 1997 24,993 41,585 66,578 ========= ========= ========= The net book value of land and buildings stated at cost comprises: 1998 1997 British British Pounds Pounds 000's 000's Freehold property 14,200 15,767 Leasehold property, more than 50 years unexpired 7,588 7,821 Leasehold property, less than 50 years unexpired 1,792 1,405 --------- --------- 23,580 24,993 ========= ========= Included in land and buildings is land with a cost of GBP 2,508,000 (1997 - GBP 2,908,000), which is not depreciated. -33-

16. INVESTMENTS Group Other Own investments shares British British Pounds Pounds Total 000's 000's 000's Cost At 29 December 1997 110 221 331 Additions 201 - 201 Disposals - (30) (30) --------- --------- --------- At 3 January 1999 311 191 502 ========= ========= ========= Provisions At 29 December 1997 110 - 110 Charge in year 90 - 90 --------- --------- --------- At 3 January 1999 200 - 200 ========= ========= ========= Net book value At 3 January 1999 111 191 302 ========= ========= ========= At 28 December 1997 - 221 221 ========= ========= ========= Investments in Own Company subsidiaries shares British British Pounds Pounds Total 000's 000's 000's Cost and net book value At 29 December 1997 205,701 221 205,922 Disposals - (30) (30) --------- --------- --------- At 3 January 1999 205,701 191 205,892 ========= ========= ========= Other investments comprise investments in unlisted companies. The investments in own shares relates to 1,882,357 (1997 - 1,882,357) ordinary shares held to satisfy obligations under employee share ownership schemes. At 3 January 1999 beneficial ownership had been conditionally granted over 1,862,028 (1997 - 1,862,028) shares, of which beneficial owners of 1,410,906 (1997 - 1,410,906) shares were entitled to dividends. The shares, whilst legally not the property of the Company, have been included within investments.

The major subsidiary companies of Newsquest plc (all of which are incorporated in Great Britain and registered in England and Wales and were wholly owned) at 3 January 1999 were: Name of Company Nature of business Newsquest Capital plc* Holding Company Newsquest Media Group Limited Printing and publishing Newsquest (Bradford) Limited Printing and publishing Newsquest (Cheshire/Merseyside) Limited Publishing Newsquest (Essex) Limited Publishing Newsquest (Kendal) Publishing Newsquest (Lancashire) Limited Publishing Newsquest (London) Limited Publishing Newsquest (Midlands South) Limited Publishing Newsquest (North East) Limited Publishing Newsquest (Oxford) Limited Printing and publishing Newsquest (Sussex) Limited Printing and publishing Newsquest (Wiltshire) Limited Printing and publishing Newsquest (York) Limited Printing and publishing *Only Newsquest Capital plc is owned directly by the Company. -34-

17. STOCKS 1998 1997 British British Pounds Pounds 000's 000's Raw materials and consumables 1,854 2,099 ========= ========= 18. DEBTORS Group Company --------------------- --------------------- 1998 1997 1998 1997 British British British British Pounds Pounds Pounds Pounds 000's 000's 000's 000's Trade debtors 37,158 40,293 - - Amounts owed by group companies - - 99,364 61,665 Corporation Tax - - 1,870 - Other debtors 788 1,855 - - Prepayments and accrued income 2,820 2,908 - - --------- --------- --------- --------- 40,766 45,056 101,234 61,665 ========= ========= ========= ========= 19. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR Group Company --------------------- --------------------- 1998 1997 1998 1997 British British British British Pounds Pounds Pounds Pounds 000's 000's 000's 000's Bank overdrafts 1,722 - - - Other loans 1,900 - - - Trade creditors 5,515 5,129 - - Amounts owed to group companies - - 196 221 Corporation Tax payable 30,414 16,699 1,328 - Other taxation and social security 7,389 7,906 - - Other creditors 8,205 7,183 6 - Accruals and deferred income 16,917 17,019 - - Proposed final dividend 7,836 - 7,836 - --------- --------- --------- --------- 79,898 53,936 9,366 221 ========= ========= ========= =========

20. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR 1998 1997 British British Pounds Pounds Currency 000's 000's Bank loans Revolving credit facility Sterling 101,000 120,000 Loan Notes US$ Loan Notes Dollars 30,490 60,914 --------- --------- Total bank loans and loan notes 131,490 180,914 Less: deferred financing fees (1,522) (3,453) --------- --------- 129,968 177,461 ========= ========= Bank loans and committed facilities The Revolving Credit Facility is a five year GBP 250 million facility guaranteed by the principal subsidiaries of the group that expires in 2002. Interest is payable at rates based on LIBOR. At 3 January 1999 there were undrawn committed borrowing facilities of GBP 145.4 million, which expire in more than 2 years. -35-

20. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR (continued) US$ Loan Notes The US$ Loan Notes are issued by Newsquest Capital plc and guaranteed by Newsquest Media Group Limited. At the end of the year the aggregate indebtedness for the US$ Loan Notes was US$51.055 million (1997 - US$102 million). During 1998 $50.945 million of the US$ Loan Notes were repurchased. Newsquest Capital plc has the option to redeem the US$ Loan Notes on 1 May 2001 at a 5.5% premium. The group has a hedge related to its foreign currency exposure arising from the US dollar denominated loan notes. The cross currency swap exchanges the principal and interest arising on the US$ Loan Notes to 2001 into sterling. The resulting effective interest rate is 12%. The currency swap acts as a hedge in respect of US$ Loan Notes. Consequently the interest rate differential is accrued as a net interest expense. No unrealised gains or losses on these swaps are recognised separately as they are offset by the complementary gains or losses on the underlying transactions hedged by the swap. On termination of a swap any gain or loss arising is expensed in the profit and loss account. Deferred Analysis by year of Bank US$ Loan financing repayment as at borrowings Notes costs Total 3 January 1999 British British British British Pounds Pounds Pounds Pounds 000's 000's 000's 000's Between 2 and 3 years - 30,490* (941) 29,549 Between 3 and 4 years 101,000 - (581) 100,419 --------- --------- --------- --------- 101,000 30,490 (1,522) 129,968 ========= ========= ========= ========= * Redemption in 2001 is at the Company's option. The final redemption date of the US$ Loan Notes is in 2006. 21. FINANCIAL INSTRUMENTS Details of the group's policy for managing currency, liquidity and interest rate risk are set out in the Operating and Financial Review on pages 9 to 12. In the following numerical disclosures short-term debtors and creditors are excluded.

Interest rate risk profile In addition to the cross currency swap referred to above, Newsquest has entered into four interest rate swaps which convert floating rate debt to fixed rate debt. The interest rate swaps affect GBP 40 million of debt, although GBP 10 million does not come into effect until March 1999. After taking account of these instruments, the interest rate profile of the group's financial liabilities, all of which are effectively in sterling, at 3 January 1999, was: Floating Fixed Financial Weighted Weighted rate rate liabilities average average financial financial on which interest period liabilities liabilities no interest rate for which Total is paid rate is British British British British fixed Pounds Pounds Pounds Pounds % Years 000's 000's 000's 000's ------ ------ ------- ------- ------- ------- US$ Loan Notes 12.0 2.3 30,490 - 30,490 - Swapped debt 6.9 3.8 40,000 10,000 30,000 - Fixed rate debt 7.1 0.5 1,200 - 1,200 - Floating rate debt 6.9 N/A 63,422 63,422 - - ------- ------- ------- ------- 135,112 73,422 61,690 - Other financial liabilities 6,806 - - 6,806 ------- ------- ------- ------- 141,918 73,422 61,690 6,806 ======= ======= ======= ======= Floating rate financial liabilities comprise sterling bank borrowings that bear interest at rates linked to LIBOR. The group has no financial assets other than short-term debtors, and immaterial amounts of cash at bank and unquoted trade related investments. -36-

21. FINANCIAL INSTRUMENTS (continued) Fair values Set out below is a comparison of book values and fair values of the group's financial assets and liabilities as at 3 January 1999. Fair values have been derived from market values: Book Fair value value British British Pounds Pounds 000's 000's Primary financial instruments held or issued to finance the group's operations: Short-term financial liabilities and current portion of long-term borrowings 3,622 3,622 Long-term borrowings 129,968 134,843 Financial (assets) and liabilities 6,636 6,636 Derivative financial instruments held to manage the interest rate and currency profile: Interest rate swap liabilities - 1,077 Cross currency contract liabilities - 129 Gains and losses on hedges The group uses interest rate swaps and a cross currency swap to reduce its financial risks. Changes in the fair value of instruments used as hedges are not recognised in the financial statements until the hedged position matures. Set out below is an analysis of these unrecognised gains and losses: Total net gains/ Gains Losses (losses) British British British Pounds Pounds Pounds 000's 000's 000's Unrecognised gains and losses on hedges at 29 December 1997 784 - 784 Gains and losses arising in previous years that were recognised in 1998 - - - -------- -------- -------- Gains and losses arising before 29 December 1997 that were not recognised in 1998 784 - 784 Gains and losses arising in 1998 that were not recognised in 1998 (784) (1,206) (1,990) -------- -------- -------- Unrecognised gains and losses on hedges at 3 January 1999 - (1,206) (1,206) ======== ======== ========

Of which: Gains and losses expected to be recognised in 1999 - (344) (344) Gains and losses expected to be recognised in 2000 or later - (862) (862) ======== ======== ======== 22. PROVISIONS FOR LIABILITIES AND CHARGES 1998 1997 British British Pounds Pounds Deferred taxation liability 000's 000's At 29 December 1997 4,539 5,573 Disposals - (2) Provided/(released) in the year 702 (1,032) ------- ------- At 3 January 1999 5,241 4,539 ======= ======= The deferred taxation balance can be analysed as follows: 1998 1997 British British Pounds Pounds 000's 000's Capital allowances in excess of depreciation 5,948 5,901 Other timing differences (707) (1,362) ------- ------- 5,241 4,539 ======= ======= The amount of deferred taxation not provided at 3 January 1999 in respect of tax rolled-over on capital gains was GBP 2,760,000 (1997 - GBP 2,995,000). -37-

23. SHARE CAPITAL The share capital of the Company comprises: 1998 1997 British British 1998 Pounds 1997 Pounds Number 000's Number 000's Authorised Ordinary shares of GBP 0.01 each 270,000,000 2,700 270,000,000 2,700 Issued and fully paid Ordinary shares of GBP 0.01 each 196,372,957 1,964 200,000,000 2,000 During the year the Company issued 107,957 shares (with a nominal value of GBP 1,080) to satisfy the exercise of options for a total consideration of GBP 255,000. During the year the Company repurchased and cancelled 3,735,000 shares at prices ranging from GBP 2.07 to GBP 2.20. The weighted average cost of the purchases including expenses was GBP 2.16 per share and the total cost was GBP 8,064,000. At 3 January 1999 the Company had a remaining authority from shareholders to make open market purchases of 16,265,000 shares. At 3 January 1999 options were exercisable over shares as follows: Number Exercise of shares price Exercise period GBP Newsquest Employee Savings and Share Option Scheme 1,986,523 1.244 June 2000 to June 2007 Executive Share Option Scheme: 932,680 2.50 October 2000 to October 2007 18,964 2.90 March 2001 to March 2008 1,186,123 2.24 August 2001 to August 2008 Parties associated with Glenisla (see note 32) 119,601 2.50 October 1997 to October 2004

24. STATEMENT OF MOVEMENTS ON RESERVES Group Capital Share Profit redemption premium and loss reserve account account British British British Pounds Pounds Pounds 000's 000's 000's At 29 December 1997 794 249,572 (48,143) Issue of shares net of expenses - 254 - Repurchase of shares 37 - (8,064) Retained profit - - 29,977 --------- --------- --------- At 3 January 1999 831 249,826 (26,230) ========= ========= ========= Included in the profit and loss account is GBP 65,428,000 in respect of goodwill arising on acquisitions prior to 28 December 1997 that has been written off as a matter of accounting policy. Company Capital Share Profit redemption premium and loss reserve account account British British British Pounds Pounds Pounds 000's 000's 000's At 29 December 1997 794 249,572 15,000 Issue of shares net of expenses - 254 - Repurchase of shares 37 - (8,064) Retained profit - - 38,212 --------- --------- --------- At 3 January 1999 831 249,826 45,148 ========= ========= ========= -38-

25. LEASING COMMITMENTS At 3 January 1999 the group had annual commitments under non-cancellable operating leases as follows: 1998 1997 Land and Land and buildings Other buildings Other British British British British Pounds Pounds Pounds Pounds 000's 000's 000's 000's Expiry of operating leases Falling due within one year 44 62 122 72 Falling due within two to five years 506 227 381 220 Falling due after five years 2,066 4 2,435 - --------- --------- --------- --------- 2,616 293 2,938 292 ========= ========= ========= ========= At 3 January 1999 and 28 December 1997 the Company had no leasing commitments. 26. CAPITAL COMMITMENTS 1998 1997 British British Pounds Pounds 000's 000's Contracted but not provided for 645 1,801 ========= ========= At 3 January 1999 and 28 December 1997 the Company had no capital commitments. 27. PENSION SCHEMES A funded defined benefits pension scheme, the Newsquest Pension Scheme ("the Scheme"), is operated for all permanent employees over age 16. The trustees of the scheme are responsible for the investment of the Scheme's assets which are held separately from the group. Contributions by members who transferred from the Reed Elsevier scheme are at the rate of 4% of salary and by new members at the rate of 6% of their salary. Pension costs are assessed with the advice of a qualified actuary and are recognised over the working lives of the members. An actuarial valuation was undertaken as at 6 April 1998 using the projected unit method. The main actuarial assumptions were that real salary growth (relative to price inflation) will be 2% per annum and real investment returns (relative to price inflation) will average 1% per annum above the index-linked gilt yield. Based on the valuation the funding level of the scheme was 137% as at 6 April 1998. The market value of the Scheme's assets at 6 April 1998 was approximately GBP 59.2 million. The pension cost for the year was GBP 3,429,000 (1997 - GBP 3,925,000). The prepayment as at 3 January 1999 was GBP 1,579,000 (1997 - GBP 2,759,000).

28. NET CASH INFLOW FROM OPERATING ACTIVITIES 1998 1997 British British Pounds Pounds 000's 000's Operating profit 81,350 62,993 Profit from sale of tangible fixed assets (501) (180) Depreciation 12,086 12,271 Provisions against investments 90 110 Decrease in stock 245 804 Decrease/(increase) in debtors 5,442 (939) Decrease in creditors 481 1,009 --------- --------- Net cash inflow from operating activities 99,193 76,068 ========= ========= -39-

29. ANALYSIS OF CASH FLOWS IN THE CASH FLOW STATEMENT 1998 1997 British British Pounds Pounds 000's 000's 29A Returns on investments and servicing of finance Interest received 235 1,032 Interest paid (14,827) (36,183) Refinancing costs (3,700) (8,240) Financing fees and expenses - (2,461) --------- --------- Net cash outflow from returns on investments and servicing of finance (18,292) (45,852) ========= ========= 29B Taxation paid UK Corporation Tax paid (4,821) (1,704) ========= ========= 29C Capital expenditure and financial investment Payments to acquire investments (201) - Payments to acquire tangible fixed assets (13,728) (9,785) Receipts from sale of tangible fixed assets 1,356 1,368 --------- --------- Net cash outflow from capital expenditure and financial investment (12,573) (8,417) ========= ========= 29D Acquisitions and disposals Purchase of subsidiary undertakings (6,382) - Receipts from sales of investments in subsidiaries - 17,869 Net indebtedness (acquired)/disposed of with businesses (593) 16,456 Receipt of cash relating to post completion accounts adjustment - 8,863 Payment of accrued fees on acquisition - (1,691) --------- --------- Net cash (outflow)/inflow from acquisitions and disposals (6,975) 41,497 ========= ========= 29E Management of liquid resources Cash withdrawn from/(placed on) short-term deposit 2,000 (2,000) ========= =========

29F Financing Issue of ordinary shares 255 96,500 Repurchase of ordinary shares (8,064) - New bank borrowings - 120,000 Bank loans repaid (19,000) (240,340) Other loans repaid (500) - Purchase of US$ Loan Notes (30,424) (44,575) --------- --------- Net cash outflow from financing (57,733) (68,415) ========= ========= Reclassifications have been made to the previously reported figures for "Financing" and "Returns on investments and servicing of finance" for comparability. -40-

30. PURCHASE OF SUBSIDIARY UNDERTAKINGS 1998 British Pounds 000's Intangible fixed assets 9,672 Tangible fixed assets 126 Debtors 1,152 Cash 33 Bank loans and overdrafts (626) Trade and other creditors (1,543) Corporation Tax (32) --------- 8,782 ========= Satisfied by: Loan Notes 2,400 Cash 6,382 --------- 8,782 ========= Further details on the group's acquisitions are set out in note 2. 31. ANALYSIS OF NET DEBT At 28 Acquisitions At 3 December (excluding January 1997 cash and Cash flow 1999 GBP 000's overdrafts) GBP 000's GBP 000's Cash at bank and in hand 3,484 - (3,425) 59 Less deposits treated as liquid resources (2,000) - 2,000 - --------- --------- --------- --------- 1,484 - (1,425) 59 Bank overdrafts - - (1,722) (1,722) --------- --------- --------- --------- Net cash per cash flow statement 1,484 - (3,147) (1,663) --------- --------- --------- --------- Other loans - (2,400) 500 (1,900) Bank loans (120,000) - 19,000 (101,000) US$ Loan Notes (60,914) - 30,424 (30,490) --------- --------- --------- --------- Debt financing (180,914) (2,400) 49,924 (133,390) --------- --------- --------- --------- Liquid resources 2,000 - (2,000) - --------- --------- --------- --------- Net debt (177,430) (2,400) 44,777 (135,053) ========= ========= ========= ========= Net debt is stated gross of deferred financing fees (note 20). -41-

32. RELATED PARTIES Messrs. Gilhuly, Kravis, Navab, Robbins and Stuart are either partners or associates of Kohlberg, Kravis and Roberts ("KKR"), the US venture capital firm. They are Directors of the Company nominated by RRN Associates, Limited Partnership ("RRN"), which held some 36.88% of the issued share capital of the Company at 3 January 1999. They receive fees for acting as Directors as set out in the Report of the Board on Remuneration, and reimbursement of expenses incurred in the performance of the duties as Directors. There is a Relationship Agreement between the Company, RRN and KKR that sets out certain arrangements to ensure the Company can operate independently. Generally these obligations (other than the non-compete undertaking from KKR) under the agreement terminate if RRN holds less than 30% of the Company's issued share capital. Mr. Richard Munton is a Director of Cinven Limited, and serves as the Director of the Company nominated by them. At 3 January 1999 entities whose funds are managed by Cinven Limited held 12.97% of the issued share capital of the Company. He receives fees for acting as a Director as set out in the Report of the Board on Remuneration, and reimbursement of expenses incurred in the performance of his duties as a Director. Monitoring fees for management, consulting and certain other services of GBP nil (1997 - GBP 313,074) were paid to KKR and a monitoring fee of GBP nil (1997 - GBP 81,849) was paid to Cinven. These services were terminated in 1997 as the Company engaged new suppliers of these services. A final payment of GBP 1.5 million was paid to KKR and GBP 0.5 million paid to Cinven in respect of these services in 1997. Glenisla Group Limited ("Glenisla") is an English private limited company linked to KKR. Directors and parties associated with Glenisla hold options over 119,601 shares (1997 - 215,369 shares) at an exercise price of GBP 2.50. Options over 95,768 shares held by these parties were exercised during 1998. In September 1997 a Shareholders' Agreement was entered into between the Company, RRN, RRN Employee Trustees Limited, certain other parties and six of the group's executive managers. This agreement covers certain aspects of their share ownership and future sales of shares in the Company. A second Shareholders' Agreement was entered into on the same date between the Company, RRN, KKR, Cinven and certain other parties. This agreement sets out certain matters regarding dealings in shares of the Company by the parties to the agreement. At 3 January 1999 no balances were due to KKR and Cinven (1997 - nil).

33. SUMMARY OF DIFFERENCES BETWEEN UK GAAP AND US GAAP The consolidated financial statements are prepared in accordance with UK GAAP, which differs in certain significant respects from US GAAP. These differences relate principally to the following items and the approximate effect on profit for the financial year and shareholders' equity is shown in the tables on pages 44 and 45. While this is not a comprehensive summary of all differences between UK GAAP and US GAAP, other differences are considered unlikely to have a significant effect on the consolidated profit for the financial year and shareholders' equity of the Company. Goodwill and other intangible assets Under UK GAAP, goodwill arising on business combinations treated as acquisitions prior to 1 January 1998 may be written off against retained earnings. Intangible assets, representing publishing rights and titles, are carried at fair value on acquisition with no systematic amortisation, if they have no definite economic life. The carrying value of these intangible assets is evaluated periodically to determine whether there has been a loss in value, by reviewing current and estimated future earnings and cash flows on an undiscounted basis. Under US GAAP, the cost of intangible assets acquired after 31 October 1970 is required to be amortised over the period of their estimated useful lives, to a maximum of 40 years. The amortisation periods for goodwill and the other intangible assets are over their estimated useful life up to a maximum of 40 years. The amortisation periods for publishing rights and titles range from five to 40 years. The gross cost under US GAAP, as at 3 January 1999, of goodwill is GBP 65,428,000 (1997 - GBP 65,428,000) and of other intangibles GBP 329,634,000 (1997 - GBP 319,962,000). Accumulated amortisation under US GAAP, as at 3 January 1999 of goodwill is GBP 3,906,000 (1997 - GBP 2,270,000) and of other intangibles is GBP 19,603,000 (1997 - GBP 11,465,000). -42-

33. SUMMARY OF DIFFERENCES BETWEEN UK GAAP AND US GAAP (continued) The Company's management assesses the recoverability of its long-lived assets by determining whether the net book value of the asset can be recovered through projected discounted future cash flows from operations. When future operating cash flows generated are determined not to be sufficient to cover tangible and intangible assets, an impairment charge may need to be recorded. The Company's management continually evaluates the existence of potential impairment by analysing operating results, trends and prospects. Management also takes into consideration any other events or circumstances that might indicate potential impairment. If an impairment charge is required, it is measured based on discounted cash flows of the business being evaluated or fair value, if available. Based upon these evaluations, Newsquest has determined that no impairment of recorded long-lived assets has occurred. Pensions The group accounts for pension costs under the rules set out in SSAP 24. The objectives and principles of SSAP 24 are broadly in line with those set out in the US accounting standard for pensions, SFAS 87, "Employers' Accounting for Pensions". However, SSAP 24 is less prescriptive in the application of the actuarial method and assumptions to be applied in the calculation of pension costs. Deferred taxation Under UK GAAP, in accordance with Statement of Standard Accounting Practice No. 15, "Accounting for Deferred Tax" deferred taxation is provided at the rates at which tax is expected to become payable. No provision is made for amounts which are not expected to become payable in the foreseeable future. Under US GAAP, deferred taxation is provided on all temporary differences under the liability method, subject to a valuation allowance where applicable in respect of deferred tax assets, in accordance with SFAS 109, "Accounting for Income Taxes". The principal adjustment to apply US GAAP is to provide deferred taxation on temporary differences arising from the amortisation under US GAAP of intangible assets. Foreign currency Certain borrowings are denominated in US dollars (note 20). Under UK GAAP, these borrowings have been translated into pounds sterling at the exchange rates fixed under foreign currency swaps. Under US GAAP, these borrowings would be translated at the year end exchange rate.

Exceptional items Under US GAAP the costs of Listing (principally fees paid to professional advisors), but excluding the costs of termination of certain contracts and the costs of the employee offer included within costs associated with the Listing, are treated as a reduction of the Listing proceeds and cannot be charged to the profit and loss account. Included in exceptional interest costs is GBP 4,793,000 (1997 - GBP 14,590,000) related to the early repayment of debt which under US GAAP is treated as an extraordinary item. -43-

33. SUMMARY OF DIFFERENCES BETWEEN UK GAAP AND US GAAP (continued) Approximate effects on profit for the financial year of differences between UK GAAP and US GAAP: 1998 1997 British British Pounds Pounds 000's 000's Profit for the financial year under UK GAAP 41,765 19,695 US GAAP adjustments: Costs associated with Listing - 3,736 Amortisation of goodwill and other intangibles (9,774) (9,697) Pensions (1,400) 1,061 Deferred taxation 2,753 1,961 --------- --------- Profit for the financial year under US GAAP 33,344 16,756 ========= ========= Comprising: Profit before extraordinary items 36,651 26,750 Extraordinary item under US GAAP, net of applicable tax (3,307) (9,994) --------- --------- 33,344 16,756 ========= ========= Approximate effects on shareholders' equity of differences between UK GAAP and US GAAP: 1998 1997 British British Pounds Pounds 000's 000's Shareholders' equity under UK GAAP 226,391 204,223 US GAAP adjustments: Net book value of goodwill 61,522 63,158 Accumulated amortisation on intangibles (19,603) (11,465) Pensions (800) 600 Deferred taxation 6,121 3,368 --------- --------- Shareholders' equity under US GAAP 273,631 259,884 ========= =========

Cash flow information Cash flows under UK GAAP differ in certain presentational respects from the format required under SFAS 95. Under UK GAAP, cash paid or received for interest and Corporation Tax are presented separately from operating activities and dividends paid are presented separately from financing activities. Under SFAS 95, cash flows from operating activities are based on the net income, which includes interest and income taxes, whilst dividends paid would be included within financing activities. Under US GAAP, the following amounts would be reported: 1998 1997 British British Pounds Pounds 000's 000's Net cash provided by operating activities 76,080 28,512 Net cash (used in)/provided by investing activities (19,548) 33,080 Net cash used in financing activities (61,679) (68,415) --------- --------- Net decrease in cash and cash equivalents (5,147) (6,823) ========= ========= Net cash and cash equivalents under US GAAP (1,663) 3,484 ========= ========= -44-

33. SUMMARY OF DIFFERENCES BETWEEN UK GAAP AND US GAAP (continued) Pensions The following table sets out the funded status of the Newsquest Pension Scheme under SFAS 87: 1998 1997 British British Pounds Pounds 000's 000's Total accumulated and vested benefit obligation (54,300) (48,970) ========= ========= Projected benefit obligation (64,200) (52,328) Plan assets at fair value 60,700 52,440 --------- --------- Plan assets in excess of projected benefit obligation (3,500) 112 Unrecognised net losses 4,300 3,267 --------- --------- Prepaid pension cost 800 3,379 ========= ========= The principal assumptions used to determine the funded status were: 1998 1997 Discount rate 4.75% 6.5% Salary increases 4.25% 5.5% Investment return 7.00% 8.0% -45-

Exhibit 99-2 UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION 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 were offered 460 pence (US $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). Additionally, Gannett agreed to assume or retire Newsquest's existing debt. On July 26, 1999, pursuant to the Offer Document, Gannett UK declared the Offer unconditional in all respects. As of October 4, 1999, Gannett UK effectively owns 100% of Newsquest shares. The acquisition will be recorded under the purchase method of accounting and Newsquest's results of operations will be included in the company's financial statements beginning in the third quarter. The accompanying unaudited pro forma condensed combined balance sheet presents the financial position of Gannett Co., Inc. and Newsquest as of December 27, 1998, assuming that the acquisition of Newsquest occurred as of that date. Such pro forma information is based on the historical balance sheets of Gannett at December 27, 1998 and of Newsquest at January 3, 1999. As required by Rule 11-02 of Regulation S-X, the unaudited pro forma condensed combined statement of income has been prepared assuming that the proposed merger occurred as of the beginning of the period presented. The unaudited condensed combined statement of income reflects the historical results of operations for Gannett and Newsquest for their respective 1998 fiscal years. The unaudited pro forma condensed combined financial statements give effect to certain pro forma adjustments which are described in the notes to these statements. The unaudited pro forma condensed combined financial statements do not reflect any operating synergies anticipated by Gannett as a result of the acquisition. The unaudited pro forma condensed combined results are presented for informational purposes only and are not necessarily indicative of the results of operations or financial position which would have been achieved had the transaction been completed as of the beginning of the period presented, nor is it necessarily indicative of Gannett's future results of operations or financial position. The unaudited pro forma condensed combined financial statements should be read in conjunction with the historical financial statements of Gannett and Newsquest, including the related notes thereto.

EXHIBIT 99-2 Gannett Co., Inc. Unaudited Pro Forma Condensed Combined Balance Sheet December 27, 1998 (in thousands of dollars) Pro forma Pro forma Gannett Newsquest adjustments combined -------- ---------- ---------- ---------- ASSETS Current assets Cash and marketable securities $ 66,187 $ 98 $ $ 66,285 Accounts receivable, net 717,159 67,594 784,753 Inventories 87,176 3,074 90,250 Prepaid expenses and other current assets 35,863 2,618 38,481 ---------- ---------- ---------- ---------- Total current assets 906,385 73,384 979,769 Property, plant and equipment, net 2,063,783 111,597 2,175,380 Excess of acquisition cost over the value of assets acquired, net 3,794,601 546,566 1,196,852 (1) 5,538,019 Other assets 214,711 501 215,212 ---------- ---------- ---------- ---------- Total assets $6,979,480 $ 732,048 $1,196,852 $8,908,380 ========== ========== ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Current maturities of long-term debt $ 7,812 $ 3,150 $ $ 10,962 Accounts payable and current portion of film contracts payable 312,283 37,856 350,139 Accrued expenses and other current liabilities 345,687 28,050 70,969 (2) 444,706 Dividends payable 55,790 12,994 68,784 Income taxes 6,395 50,429 56,824 ---------- ---------- ---------- ---------- Total current liabilities 727,967 132,479 70,969 931,415

Deferred income taxes 442,359 8,690 (1,492) (3) 449,557 Long-term debt, less current portion 1,306,859 215,500 1,502,754 (4) 3,025,113 Postretirement medical and life insurance liabilities 308,145 308,145 Other long-term liabilities 214,326 214,326 Total shareholders' equity 3,979,824 375,379 (375,379) (5) 3,979,824 ---------- ---------- ---------- ---------- Total liabilities and shareholders' equity $6,979,480 $ 732,048 $1,196,852 $8,908,380 ========== ========== ========== ========== (A) This pro forma balance sheet includes Gannett's historical balances at December 27, 1998, and Newsquest's historical balances at January 3, 1999. (B) For comparability, Newsquest results have been reclassified to conform with Gannett's presentation. See accompanying notes to Unaudited Pro Forma Condensed Combined Financial Statements.

Gannett Co., Inc. Unaudited Pro Forma Condensed Combined Statement of Income Year-to-date ended December 27, 1998 (in thousands of dollars, except per share data) Pro forma Pro forma Gannett Newsquest adjustments combined ---------- ---------- ---------- ---------- Revenues Newspapers advertising $2,942,995 $ 433,886 $ $3,376,881 Newspaper circulation 1,010,238 62,310 1,072,548 Television 721,298 721,298 Cable and security 240,600 240,600 All other 206,160 10,592 216,752 ---------- ---------- ---------- ---------- Total revenues 5,121,291 506,788 5,628,079 Operating expenses Cost of sales and operating expenses, exclusive of depreciation 2,593,982 229,123 2,823,105 Selling, general and administrative expenses, exclusive of depreciation 773,601 123,804 2,320 (1) 899,725 Depreciation 201,683 19,042 220,725 Amortization of intangible assets 108,523 42,052 (2) 150,575 ---------- ---------- ---------- ---------- Total operating expenses 3,677,789 371,969 44,372 4,094,130 ---------- ---------- ---------- ---------- Operating income 1,443,502 134,819 (44,372) 1,533,949 Non-operating income (expense) Interest (expense), net of interest income (60,094) (33,774) 33,774 (3) (161,167) (101,073) (4) Other 286,005 286,005 ---------- ---------- ---------- ---------- Total 225,911 (33,774) (67,299) 124,838 Income before income taxes 1,669,413 101,045 (111,671) 1,658,787 Provision for income taxes 669,500 31,830 (36,330) (5) 665,000 ---------- ---------- ---------- ---------- Net income $ 999,913 $ 69,215 $ (75,341) $ 993,787 ========== ========== ========== ========== Net income per share-basic $3.53 $3.51 ======= ======== Net income per share-diluted $3.50 $3.48 ======= ======== Average outstanding shares: Basic 283,097 283,097 Diluted 285,711 285,711

(A) This pro forma income statement includes Gannett's results for the 52-week period ended December 27, 1998, and Newsquest results for the 53-week period ended January 3, 1999. (B) For comparability, Newsquest results have been reclassified to conform with Gannett's presentation. (C) Newsquest results are as reported in U.K. GAAP. U.S. GAAP adjustments are included with the pro forma adjustments. See accompanying notes to Unaudited Pro Forma Condensed Combined Financial Statements.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS Note 1 - Basis of Presentation The unaudited pro forma condensed combined balance sheet has been prepared to reflect the acquisition of Newsquest for an aggregate price of approximately $1.45 billion plus the assumption of approximately $250 million of liabilities and transaction-related costs, including $181 million of Newsquest's long-term debt. The unaudited pro forma condensed combined balance sheet presents the financial position of Gannett and Newsquest as of December 27, 1998, assuming that the transaction occurred as of December 27, 1998. Such pro forma information is based on the historical balance sheets of Gannett as of December 27, 1998, and of Newsquest as of January 3, 1999. As required by Rule 11-02 of Regulation S-X, the unaudited pro forma condensed combined statement of income assumes that the transaction occurred as of the beginning of the period presented. The unaudited pro forma condensed combined statement of income reflects Gannett's historical results of operations for the 52 weeks ended December 27, 1998, and Newsquest's historical results of operations for the 53 weeks ended January 3, 1999. The company believes that the assumptions used in preparing the unaudited pro forma condensed combined financial statements provide a reasonable basis for presenting all of the significant effects of the merger (other than any operating synergies anticipated by Gannett) and that the pro forma adjustments give effect to those assumptions in the unaudited pro forma condensed combined financial statements. Note 2 - Pro Forma Adjustments A. Pro forma adjustments to the unaudited condensed combined balance sheet at December 27, 1998 are made to reflect the following: (1) Adjustment to record the excess of acquisition cost over the fair value of net assets acquired (goodwill). For purposes of the unaudited pro forma condensed combined statement of income, goodwill is being amortized over forty years. (2) Accrual for estimated acquisition-related expenses incurred by Gannett and Newsquest. (3) Deferred tax adjustments in respect of acquisition expenses (see #2), net of an adjustment in respect of tax deferred on real property sales. (4) The issuance of commercial paper by Gannett to finance the purchase price. (5) The elimination of the shareholders' equity accounts of Newsquest.

B. Pro forma adjustments to the December 27, 1998 unaudited condensed combined income statement are made to reflect the following: (1) Newsquest excess pension amount, which is required to be reflected under United States GAAP. (2) Amortization expense on the estimated excess of acquisition cost over fair value of assets, assuming a life of forty years. (3) The elimination of Newsquest's interest expense. (See (4) below.) (4) Gannett's pro forma interest expense on amount assumed borrowed for consideration paid ($1.58 billion, translated from British pounds at the beginning of 1998) and Newsquest average 1998 debt ($0.26 billion). The rate used to calculate interest expense, 5.5%, is based on the weighted average rate paid by Gannett for commercial paper in 1998. (5) To adjust consolidated tax provisions for U.S. and U.K. tax effects of acquisition.