-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, I9ErZHJSHYP1cECarQIt0ByKNtW6mkF6H58cCiM7CSRBhVHNhVxGqiWXF9jwuFSs rcwORfjBjgD2MohHXmsYyA== 0000039899-94-000009.txt : 19940511 0000039899-94-000009.hdr.sgml : 19940511 ACCESSION NUMBER: 0000039899-94-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940327 FILED AS OF DATE: 19940510 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GANNETT CO INC /DE/ CENTRAL INDEX KEY: 0000039899 STANDARD INDUSTRIAL CLASSIFICATION: 2711 IRS NUMBER: 160442930 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06961 FILM NUMBER: 94526956 BUSINESS ADDRESS: STREET 1: 1100 WILSON BLVD CITY: ARLINGTON STATE: VA ZIP: 22234 BUSINESS PHONE: 7032846000 MAIL ADDRESS: STREET 1: 1100 WILSON BLVD. , 28TH FLOOR CITY: ARLINGTON STATE: VA ZIP: 22234 10-Q 1 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 March 27, 1994 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 March 27, 1994 was 147,170,645. PART I. FINANCIAL INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS Operating Summary Income from operations for the first quarter of 1994 rose $22.3 million or 19%, reflecting significant performance gains by the Company's newspaper and broadcast divisions. For newspapers, stronger demand for classified advertising contributed to a 9% earnings gain. Improved broadcast earnings, which rose 134%, resulted principally from radio and television advertising revenue growth and lower costs. Broadcast earnings comparisons with 1993 were also favorably affected by the recent sale of four radio stations and the Company's television station in Boston. Newspapers Newspaper publishing revenues rose $31.7 million or 4% in the first quarter of 1994. Newspaper advertising revenue rose $27.2 million or 6% in the quarter, reflecting continued gains in classified, particularly in the employment category. Pro forma advertising linage rose 4%. "Run-of-press" (ROP) advertising rose 3%, as classified and national linage each rose 7%. Local linage declined 2%, as demand by major retailers continued soft. Preprint linage rose 6% for the quarter. The tables below provide, on a pro forma basis, further details of newspaper ad revenue and linage for the first quarters of 1994 and 1993: Advertising revenue, in thousands of dollars (Pro Forma) First quarter 1994 1993 % Change Local $181,339 $179,117 1 National 74,493 70,594 6 Classified 160,244 143,786 11 Total Run- of-Press 416,076 393,497 6 Preprint and other advertising 76,168 72,434 5 Total ad revenue $492,244 $465,931 6 Advertising linage, in thousands of inches (Pro Forma) First quarter 1994 1993 % Change Local 7,228 7,340 (2) National 501 468 7 Classified 7,285 6,790 7 Total Run- of-Press 15,014 14,598 3 Preprint 13,756 13,020 6 Total ad linage 28,770 27,618 4 Newspaper circulation revenues for the quarter rose $2.1 million or 1%. Net paid daily and Sunday circulation for the Company's local newspapers fell slightly for the quarter. USA TODAY reported an average daily paid circulation of 2,025,250 in the ABC Publisher's statement for the six months ended March 27, 1994, which, subject to audit, was down less than 1% from the comparable period a year ago. Operating costs in total for the newspaper segment rose $20.1 million or 3% for the quarter. Newsprint costs declined slightly, reflecting lower prices from a year ago, partly offset by higher consumption. The Company expects newsprint prices to rise later in 1994. Payroll costs rose 2%. Other production related costs rose from prior year levels, and employee benefit costs were also higher, particularly for health care and pensions. Newspaper operating income rose $11.6 million or 9% for the first quarter, due principally to the improved ad revenue environment. Most of the Company's local newspapers reported improved ad revenues and operating income results, with the larger papers posting the strongest gains. At USA Today, operating results were lower for the quarter. Revenues were even while operating costs rose slightly. Broadcast Broadcast revenues rose $1.1 million or 1% for the quarter, while operating costs declined $11 million or 15%. On a pro forma basis, broadcast revenues increased 14% and operating costs declined 1%. On a pro forma basis, local television revenues increased 12% while national revenues increased 15%. Winter Olympics advertising at the Company's two CBS affiliates contributed to the overall growth in television revenues. Pro forma radio revenues increased 27%. Operating income rose $12.1 million or 134%, reflecting strong gains at most of the Company's television stations and all of the Company's radio stations. Broadcast earnings were also favorably affected by the recent sale of four radio stations in Kansas City and St. Louis, Missouri and the Company's television station in Boston. Outdoor Outdoor revenues declined $0.9 million or 2% for the quarter, while operating costs were down slightly. The Outdoor group reported a seasonal operating loss of $4.7 million in the first quarter, compared to a loss of $4.1 million in the first quarter of 1993. Non-operating income and expense Interest expense was up slightly for the first quarter, reflecting higher average interest rates, partially offset by lower average borrowings. Net Income Net income rose $12.4 million or 19% for the quarter. Net income per share rose to $0.54 from $0.46 in 1993, an increase of 17%. The weighted average number of shares outstanding totaled 147,123,000 for the first quarter of 1994 compared with 145,789,000 for 1993. The increase in shares outstanding is due principally to the effect of shares issued in connection with the acquisition of the Honolulu Advertiser in 1993 and shares issued in connection with employee stock awards. Liquidity and capital resources Cash flow from operating activities totaled $142 million for the first quarter of 1994 compared with $164.8 million a year ago. Working capital at the end of the first quarter totaled $169.3 million, down from $302.8 million at the end of 1993, due mainly to payment of long-term debt, pension funding and expenditures for capital equipment and other investments. Capital expenditures for the quarter totaled $28.1 million, compared with $32 million in 1993. The Company's long-term debt (commercial paper obligations) was reduced by $109 million from operating cash flows in the first quarter of 1994. The Company's regular quarterly dividend of $0.33 per share, totaling $48.6 million, was declared in the first quarter and paid on April 1, 1994. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) ASSETS March 27, 1994 Dec. 26, 1993 ------ -------------- -------------- Current Assets: Cash............................... $ 16,716,000 $ 32,461,000 Marketable securities.............. 12,721,000 43,034,000 Trade receivables, less allowance (1994 - $15,539,000; 1993 - $13,915,000)....................... 403,568,000 449,063,000 Other receivables.................. 110,274,000 135,036,000 Inventories (materials and supplies) 46,903,000 53,094,000 Prepaid expenses................... 48,926,000 45,269,000 ------------- ------------- Total current assets............. 639,108,000 757,957,000 ------------- ------------- Property, plant and equipment: Cost............................... 2,817,436,000 2,794,610,000 Less accumulated depreciation...... (1,354,086,000) (1,316,341,000) ------------- ------------- Net property, plant and equipment.. 1,463,350,000 1,478,269,000 ------------- ------------- Intangible and other assets: Excess of cost of subsidiaries over net tangible assets acquired, less amortization (1994 - $408,228,000; 1993 - $396,915,000).............. 1,489,530,000 1,501,102,000 Other assets....................... 159,235,000 86,470,000 ------------- ------------- Total intangible and other assets 1,648,765,000 1,587,572,000 ------------- ------------- Total assets..................... $ 3,751,223,000 $ 3,823,798,000 ============= ============= LIABILITIES & SHAREHOLDERS' EQUITY ---------------------------------- Current Liabilities: Current portion of long-term debt.. $ 117,000 $ 164,000 Accounts payable and current portion of film contracts payable......... 159,994,000 187,208,000 Compensation, interest and other accruals.......................... 136,240,000 140,457,000 Dividend payable................... 48,506,000 48,399,000 Income taxes....................... 48,196,000 5,760,000 Deferred income.................... 76,769,000 73,151,000 ------------- ------------- Total current liabilities....... 469,822,000 455,139,000 Deferred income taxes.............. 197,180,000 205,314,000 Long-term debt, less current portion 741,748,000 850,686,000 Retiree medical and life insurance. 310,647,000 308,024,000 Other long-term liabilities........ 87,090,000 96,715,000 ------------- ------------- Total liabilities.................. 1,806,487,000 1,915,878,000 ------------- ------------- 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 shares; issued 162,211,590 shares.. 162,212,000 162,212,000 Additional paid-in capital......... 69,616,000 70,938,000 Retained earnings.................. 2,395,344,000 2,366,246,000 Foreign currency translation adjustment....................... (12,590,000) (9,442,000) ------------- ------------- Total.............................. 2,614,582,000 2,589,954,000 Less treasury stock - 15,040,945 shares and 15,244,733 shares, respectively, at cost............. (632,340,000) (643,787,000) Deferred compensation related to ESOP.............................. (37,506,000) (38,247,000) ------------- ------------- Total shareholders' equity...... 1,944,736,000 1,907,920,000 Total liabilities and ------------- ------------- shareholders' equity........... $ 3,751,223,000 $ 3,823,798,000 ============= ============= CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Thirteen weeks ended March 27, 1994 March 28, 1993 -------------- -------------- Net Operating Revenues: Newspaper advertising............... $492,244,000 $465,072,000 Newspaper circulation............... 212,140,000 210,053,000 Broadcasting........................ 84,007,000 82,876,000 Outdoor advertising................. 46,921,000 47,825,000 Other............................... 41,313,000 38,904,000 ------------ ------------ Total............................... 876,625,000 844,730,000 ------------ ------------ Operating Expenses: Cost of sales and operating expenses, exclusive of depreciation.......... 516,424,000 509,377,000 Selling, general and administrative expenses, exclusive of depreciation 165,945,000 163,007,000 Depreciation........................ 40,490,000 40,947,000 Amortization of intangible assets... 11,310,000 11,279,000 ------------ ------------ Total............................... 734,169,000 724,610,000 ------------ ------------ Operating income.................... 142,456,000 120,120,000 ------------ ------------ Non-operating income (expense): Interest expense.................... (11,168,000) (11,045,000) Other............................... 1,023,000 1,492,000 ------------ ------------ Total............................... (10,145,000) (9,553,000) ------------ ------------ Income before income taxes.......... 132,311,000 110,567,000 Provision for income taxes.......... 53,600,000 44,225,000 ------------ ------------ Net income.......................... $ 78,711,000 $ 66,342,000 ============ ============ Net income per share................ $0.54 $0.46 ============ ============ Dividends per share................. $0.33 $0.32 ============ ============ CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Thirteen Weeks Ended March 27, 1994 March 28, 1993 Cash Flows From Operating Activities: Net income ................................ $78,711,000 $66,342,000 Adjustments to reconcile net income to operating cash flows: Depreciation............................. 40,490,000 40,947,000 Amortization of intangibles.............. 11,310,000 11,279,000 Deferred income taxes.................... (4,134,000) (1,418,000) Gain on sale of assets ................. (56,000) (479,000) Changes in assets and liabilities, net of acquisitions: Decrease in receivables................. 40,499,000 56,036,000 (Increase) decrease in inventories...... 6,191,000 (13,824,000) Increase in film broadcast rights, net of liabilities............. (1,052,000) (30,000) Decrease in accounts payable............ (22,785,000) (10,957,000) Increase in interest and taxes payable.......................... 35,228,000 22,023,000 Change in pension asset................. (45,900,000) Other changes, net...................... 3,804,000 (5,070,000) ----------- ----------- Net cash flow from operating activities.... 142,306,000 164,849,000 ----------- ----------- Cash Flows From Investing Activities: Purchase of property, plant and equipment.. (28,082,000) (31,995,000) Increase in other investments.............. (23,529,000) Proceeds from sale of assets............... 18,121,000 10,664,000 ----------- ----------- Net cash used by investing activities...... (33,490,000) (21,331,000) ----------- ----------- Cash Flows From Financing Activities: Proceeds from long-term debt............... 274,125,000 Payments of long-term debt................. (108,985,000) (379,635,000) Dividends paid............................. (48,457,000) (46,202,000) Proceeds from issuance of common shares.... 2,298,000 3,488,000 ----------- ----------- Net cash used for financing activities..... (155,144,000) (148,224,000) ----------- ----------- Effect of currency exchange rate change.... 270,000 956,000 ----------- ----------- Net decrease in cash and cash equivalents.. (46,058,000) (3,750,000) Balance of cash and cash equivalents at beginning of year...................... 75,495,000 73,329,000 ------------ ----------- Balance of cash and cash equivalents at end of first quarter................... $29,437,000 $69,579,000 ============ =========== BUSINESS SEGMENT INFORMATION Thirteen weeks ended March 27, 1994 March 28, 1993 --------------- --------------- OPERATING REVENUES ------------------ NEWSPAPER PUBLISHING $ 745,697,000 $ 714,029,000 BROADCASTING 84,007,000 82,876,000 OUTDOOR ADVERTISING 46,921,000 47,825,000 --------------- --------------- $ 876,625,000 $ 844,730,000 =============== =============== OPERATING INCOME (NET OF DEPRECIATION AND AMORTIZATION) ------------------------------------------------------- NEWSPAPER PUBLISHING $ 142,660,000 $ 131,054,000 BROADCASTING 21,173,000 9,036,000 OUTDOOR ADVERTISING (4,729,000) (4,061,000) CORPORATE (16,648,000) (15,909,000) --------------- --------------- $ 142,456,000 $ 120,120,000 =============== =============== DEPRECIATION & AMORTIZATION --------------------------- NEWSPAPER PUBLISHING $ 37,573,000 $ 36,733,000 BROADCASTING 7,081,000 7,898,000 OUTDOOR ADVERTISING 4,572,000 4,731,000 CORPORATE 2,574,000 2,864,000 --------------- --------------- $ 51,800,000 $ 52,226,000 =============== =============== PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. See Exhibit Index for list of exhibits filed with this report. Management contracts and compensatory plans or arrangements are identified with asterisks on the Exhibit Index. (b) Reports on Form 8-K. None. 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: May 10, 1994 s/ Larry F. Miller ------------------------------ Larry F. Miller Senior Vice President/Financial Planning and Controller Dated: May 10, 1994 s/ Thomas L. Chapple ------------------------------ Thomas L. Chapple General Counsel and Secretary EXHIBIT INDEX Exhibit Number Title or Description Location 4-1 $1,000,000,000 Revolving Incorporated by reference to Credit Agreement among Exhibit 4-1 to Gannett Co., Gannett Co., Inc. and the Inc.'s Form 10-K for the fiscal Banks named therein. year ended December 26, 1993. 4-2 $500,000,000 Revolving Incorporated by reference to Credit Agreement among Exhibit 4-2 to Gannett Co., Gannett Co., Inc. and the Inc.'s Form 10-K for the fiscal Banks named therein. year ended December 26, 1993. 4-3 Indenture dated as of March 1, Incorporated by reference to 1983 between Gannett Co., Inc. Exhibit 4-2 to Gannett Co., and Citibank, N.A., as Trustee. Inc.'s Form 10-K for the fiscal year ended December 29, 1985. 4-4 First Supplemental Indenture Incorporated by reference to dated as of November 5, 1986 Exhibit 4 to Gannett Co., Inc.'s among Gannett Co., Inc., Form 8-K filed on November 9, Citibank, N.A., as Trustee, and 1986. Sovran Bank, N.A., as Successor Trustee. 4-5 Rights Plan. Incorporated by reference to Exhibit 1 to Gannett Co., Inc.'s Form 8-K filed on May 23, 1990. 11 Statement re computation of earnings per share. Attached. Gannett Co., Inc. agrees to furnish to the Securities and Exchange 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 registrant. EX-11 2 EXHIBIT 11 GANNETT CO., INC. Calculation of Earnings per Share Thirteen Weeks Ended March 27, 1994 March 28, 1993 Net Income .................... $ 78,711,000 $ 66,342,000 Weighted average number of common shares outstanding.... 147,123,000 145,789,000 Net income per share.......... $0.54 $0.46 -----END PRIVACY-ENHANCED MESSAGE-----