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Gannett Reports First Quarter Results, Revenue of $1.52 Billion

Press release from the issuing company

MCLEAN, Va.--April 16, 2002--Gannett Co., Inc. reported today that 2002 first quarter earnings per diluted share were 91 cents versus 85 cents per share on a comparable basis for the first quarter of 2001, a 7 percent increase, despite continued challenging operating conditions. After-tax cash flow per share (defined as after-tax income plus depreciation and amortization) was $1.11, up from $1.05 in 2001's first quarter on a comparable basis. At the beginning of 2002, Gannett adopted Statement of Financial Accounting Standards (SFAS) No. 142, which changes the accounting rules for goodwill and intangible assets. The previously reported earnings per share of 66 cents for the first quarter of 2001 included 19 cents for goodwill amortization expense, net of tax, that would not have been required had the new Statement been in effect. Included in this press release are pro forma schedules detailing first quarter 2001 results as if SFAS No. 142 had been adopted at the beginning of 2001. Operating revenues for the company declined 3 percent to $1.52 billion in the first quarter from $1.57 billion in the similar interval of 2001. Operating cash flow (defined as operating income plus depreciation and amortization) was $457.7 million in 2002's first quarter compared with $480.7 million in the year earlier quarter, reflecting a decline in newspaper segment advertising revenues, partially mitigated by lower expenses. Net income increased 8 percent to $243.6 million versus $225.5 million on a comparable basis in the first quarter of 2001 assuming the previously noted change in accounting rules was in effect in both years. After-tax cash flow increased 6 percent to $298.8 million in the first quarter from $280.6 million on a comparable basis in 2001. Both net income and after-tax cash flow improved year-over-year primarily reflecting significantly lower interest expense in the period versus the same quarter in 2001. Average diluted shares outstanding in the quarter totaled 268,546,000 compared with 266,415,000 in 2001's first quarter. Commenting on the company's results, Douglas H. McCorkindale, Chairman, President and CEO said, "Gannett achieved higher net income and after-tax cash flow despite a continued difficult advertising environment in the first quarter. "Newspaper operating results trailed our year ago performance but recent trends suggest a more encouraging economic environment. Advertising shortfalls, especially in help-wanted, were mitigated in part by significantly lower newsprint expense, which declined 18 percent for the quarter, and continued tight cost controls. In the UK, our Newsquest properties made a solid contribution to cash flow and earnings despite a more subdued advertising climate. Our broadcast properties achieved year-over-year gains benefiting from Winter Olympics-related advertising on our thirteen NBC-affiliated stations. Substantially lower interest expense also contributed to the rise in first quarter income." NEWSPAPERS Total newspaper segment operating cash flow, which includes USA TODAY and our UK properties, was $389.9 million in the first quarter, versus $422.9 million in the same quarter of 2001. Operating revenues were $1.36 billion for the quarter. Newsprint expense declined 18 percent reflecting substantially lower year-over-year prices and reduced consumption. At USA TODAY, advertising revenues declined 9 percent in the first quarter. Paid advertising pages totaled 1,178 compared with 1,332 in the same quarter of 2001, a 12 percent decline. USA TODAY's results in the quarter continued to reflect diminished demand for travel-related advertising. TELEVISION In the first quarter, television operating cash flow advanced 11 percent to $79.2 million from $71.2 million in the corresponding interval in 2001. Television revenues increased 7 percent to $167.2 million reflecting solid Winter Olympics-related advertising. INTERNET At the end of the first 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 had Web sites in all of its 19 television markets. In February, Gannett's consolidated domestic Internet audience share was 11.2 million unique visitors reaching 9.4 percent of the Internet audience according to Nielsen/NetRatings. USA TODAY Careers Network, the company's national online recruitment site, had over 1 million unique visitors and more than 440,000 registered users in March. In the first quarter, the company generated approximately $20 million in revenues from all Internet activities.