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Gannett Announces 2Q Earnings, Ad Revenues at USAToday Down 19%

Press release from the issuing company

ARLINGTON, Va.--July 17, 2001--Gannett Co., Inc. announced today that diluted earnings per share from continuing operations were 88 cents for the second quarter of 2001. In the year earlier quarter, diluted earnings per share from continuing operations were $1.00. After-tax cash flow per diluted share (defined as after-tax income from continuing operations plus depreciation and amortization expense, per diluted share) was $1.29 in the second quarter of 2001 versus $1.31 in 2000's second 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 12 percent to $1,627,232,000 in the second quarter. If Gannett had owned the same complement of properties in both quarters, revenues from continuing operations would have declined 7 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 6 percent. Operating cash flow from continuing operations increased 4 percent to $556,878,000 in the quarter from $537,130,000 in the year earlier interval. Operating income from continuing operations was $446,362,000 in the second quarter compared to $454,681,000 in the same quarter of 2000. Average diluted shares outstanding in the quarter totaled 266,754,000 compared to 266,294,000 in 2000's second quarter. For the first six months of 2001, operating revenues from continuing operations increased 16 percent to $3,202,180,000. Operating cash flow from continuing operations increased 6 percent from $975,022,000 to $1,037,541,000. Operating income from continuing operations advanced to $814,401,000 from $812,199,000. Diluted earnings per share from continuing operations were $1.53 for the first six months of 2001. In the same period in 2000, diluted earnings per share from continuing operations were $1.73. After-tax cash flow per diluted share from continuing operations was $2.37 for the first half of 2001 versus $2.33 for the same interval in 2000. In a statement, Douglas H. McCorkindale, chairman, president and chief executive officer said: "The continuing economic downturn, which has affected advertising spending disproportionately, impacted revenues at most domestic Gannett operations. The newspaper segment also was affected by substantially higher newsprint expense. "However, stringent cost controls and the hard work and dedication of Gannett employees continued to enable the company to achieve one of the best year-over-year earnings performances in the industry. Our Newsquest properties, benefiting from strong advertising demand particularly in employment classified, made solid contributions to cash flow and earnings per share.'' Operating cash flow from newspapers grew 10 percent in the second quarter to $476,067,000 and revenues rose 17 percent over the same period last year. If the same group of newspapers had been owned in both quarters, pro forma advertising revenues would have declined 7 percent in the quarter. Local advertising revenues declined 3 percent, classified fell 9 percent and national decreased 11 percent. Pro forma newspaper advertising volume declined 4 percent. Newsprint expense rose 27 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 4 percent in the second quarter. Total pro forma newspaper segment expense declined 5 percent in the quarter. At USA TODAY, paid advertising pages declined 21 percent to 1,445 compared to 1,833 in the second quarter of 2000. Advertising revenues declined 19 percent. For the year-to-date, USA TODAY's advertising revenues decreased 19 percent and paid pages numbered 2,777 compared to 3,517 last year, a 21 percent decline. Television revenues declined 13 percent to $178,692,000 in the second quarter from $205,413,000 in the same interval last year. Operating cash flow decreased to $94,103,000 from $118,779,000 in the second quarter. Television operating expenses declined 2 percent in the quarter. At the end of the second quarter, Gannett had more than 100 domestic publishing related Web sites, including USATODAY.com, one of the most popular newspaper sites on the Web. The company also has Web sites in all of its 19 television markets. In June, Gannett's consolidated domestic Internet audience share was 9 million unique visitors reaching 8 percent of the Internetaudience, according to Nielsen/Net Ratings. In the first half of 2001, the company generated about $35 million in revenues from Internet activities. Gannett Co., Inc. is an international news and information company that publishes 98 daily newspapers in the USA, including USA TODAY, the nation's largest-selling daily newspaper. The company also owns in excess of 300 non-daily publications in the USA and USA WEEKEND, a weekly newspaper magazine. In the United Kingdom, Gannett subsidiary Newsquest plc publishes nearly 300 titles, including 15 daily newspapers. Gannett also operates 22 television stations in the United States and is an Internet leader with sites sponsored by most of its TV stations and newspapers.