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Gannett Announces Earnings. Ad Revenue Down 20%

Sunday, April 22, 2001

Press release from the issuing company

Tuesday, April 17, 2001 ARLINGTON, Va. – Gannett Co., Inc. announced today that diluted earnings per share from continuing operations were 66 cents for the first-quarter of 2001. In the year earlier quarter, diluted earnings per share from continuing operations, which excludes the after-tax gain from the sale of the assets of Multimedia Cablevision, Inc., were 74 cents. After-tax cash flow per diluted share (defined as after-tax income from continuing operations plus depreciation and amortization expense, per diluted share) was $1.08 in the first quarter of 2001, up from $1.03 in the prior year quarter. Results for the quarter include the operations of: News Communications & Media PLC acquired in June 2000; 19 daily newspapers along with numerous weekly and niche publications acquired from Thomson Newspapers Inc. in July 2000; and Central Newspapers, Inc. acquired in August 2000. Operating revenues from continuing operations gained 19 percent to $1,574,948,000 in the first quarter. If Gannett had owned the same complement of properties in both quarters, revenues from continuing operations would have declined 3 percent. During the quarter, reported revenues from our United Kingdom operations were unfavorably impacted by the decline in the exchange rate for Sterling. If the exchange rate had remained constant year-over-year, pro forma revenues would have declined 2 percent. Operating cash flow from continuing operations increased 10 percent to $480,663,000 in the quarter from $437,892,00 in the year earlier interval. Operating income from continuing operations advanced 3 percent in the first quarter to $368,039,000 from $357,518,000 in the prior year period. Average diluted shares outstanding in the quarter totaled 266,415,000 compared to 276,207,000 in 2000’s first quarter. During the first half of 2000, the company repurchased approximately 14.7 million shares of common stock. In a statement, the company said that its domestic newspaper advertising revenues, particularly in the help wanted classified category, and its television business revenues were impacted in the quarter by the reluctance of advertisers to spend in a softening and uncertain economic environment. The newspaper segment also was affected by the absence of millennium-related ad spending, significantly lower dot-com advertising spending, especially at USA TODAY and substantially higher newsprint expense. The company’s Newsquest properties, benefiting from strong advertising demand in the U.K., made solid contributions to cash flow and earnings per share. Acquisitions completed in 2000 boosted cash flow and after-tax cash flow per share, while incremental interest expense and goodwill amortization associated with these properties tempered reported earnings per share. Operating cash flow from newspapers grew 14 percent in the first quarter to $422,928,000 and revenues rose 23 percent over the same period last year. If the same group of newspapers had been held in both quarters, pro forma advertising revenues would have declined 3 percent in the quarter. While local advertising was flat, there was a 3 percent decline in classified and an 11 percent decline in national. Pro forma newspaper advertising volume declined 4 percent. Newsprint expense rose 35 percent for the quarter as a result of higher usage related to recent acquisitions and substantially higher year-over-year prices. On a pro forma basis, newsprint expense would have risen 9 percent in the first quarter. At USA TODAY, advertising revenues declined 20 percent in the first quarter. Paid advertising pages totaled 1,332 in the quarter compared with 1,684 in the same period of 2000.




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