-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NMSXzeInZYy017UEL5daiOxUk3viWqXVc+3ifyx9O8zk57OdFOtLr6/82EzQfJEq QxHENpkGxMYD18H+eajW0w== 0000039899-01-500015.txt : 20010816 0000039899-01-500015.hdr.sgml : 20010816 ACCESSION NUMBER: 0000039899-01-500015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20010701 FILED AS OF DATE: 20010815 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GANNETT CO INC /DE/ CENTRAL INDEX KEY: 0000039899 STANDARD INDUSTRIAL CLASSIFICATION: NEWSPAPERS: PUBLISHING OR PUBLISHING & PRINTING [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: 1715243 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 form_10q.txt GANNETT CO., INC. FORM 10-Q FOR 2ND QUARTER 2001 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 July 1, 2001 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 July 1, 2001 was 264,772,128. PART I. FINANCIAL INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS OPERATING SUMMARY Recent acquisitions continued to have a significant impact on operating results comparisons for the second quarter of 2001 versus the second quarter of 2000. The company completed the Newscom acquisition in June 2000; the Thomson acquisition in July 2000; and the Central acquisition in August 2000. Operating revenues rose by $179.4 million or 12% for the second quarter and $433.1 million or 16% for the year-to-date . Operating income from continuing operations fell by $8.3 million or 2% for the second quarter and increased by $2.2 million, less than 1%, for the year-to-date. Newspaper publishing earnings were up $14.9 million or 4% for the quarter and $36.3 million or 5% for the year-to-date, reflecting the positive impact from the recently acquired Newscom, Thomson and Central operations, tempered by lower ad revenues in U.S. markets and higher newsprint prices. Television earnings were down $24.9 million or 24% for the quarter and were down $36.7 million or 22% for the year-to-date due to advertising revenue declines. Income from continuing operations declined by $32.3 million or 12% for the quarter and $60.8 million or 13% for the year-to-date. Earnings per share (diluted) from continuing operations were $0.88 for the second quarter and $1.53 for the year-to-date, down 12% for each period. Income from continuing operations for the second quarter and year-to-date was adversely impacted by the softening of newspaper and television advertising revenue. As noted in the pro forma newspaper revenue discussions below, all major ad categories were down for the quarter and the year-to-date. Classified revenues (principally employment) show the sharpest decline. The company does not foresee changes in the general economic environment that are likely to lead to an improvement in the newspaper revenue outlook for the coming months. Likewise, television revenue comparisons have suffered because of weak demand. For the balance of 2001, television revenue comparisons are expected to deteriorate further as the second half of 2000 benefited from strong political advertising and the Olympics. Because of the current revenue outlook, the company does not expect to reach the earnings level reported for the third and fourth quarters of 2000. NEWSPAPERS Reported newspaper publishing revenues rose $206.1 million or 17% for the quarter and $471.0 million or 20% for the year-to-date, reflecting increased revenues from the newly acquired properties, tempered by softer domestic advertising demand. Newspaper advertising revenues increased $146.0 million or 16% for the quarter and $336.6 million or 19% for the year-to-date. Refer to Note 6 for Business Segment Information. The tables below provide, on a pro forma basis, details of newspaper ad revenue, including revenues from the Newscom, Thomson and Central properties, for the second quarter and the first six months of 2001 and 2000. Advertising linage and preprint distribution details are also provided below; however, linage and preprint distribution for the U.K. publications are not included. Advertising revenue, in thousands of dollars (pro forma) Second Quarter 2001 2000 % Change -------- ------- -------- Local $ 463,421 $ 478,591 (3) National 189,241 212,433 (11) Classified 454,318 498,865 (9) -------- -------- ----- Total ad revenue $1,106,980 $1,189,889 (7) ========= ======== ===== Advertising linage, in thousands of inches, and preprint distribution, in millions (pro forma) Second Quarter 2001 2000 % Change -------- -------- -------- Local 9,996 10,394 (4) National 1,036 1,171 (12) Classified 13,987 14,542 (4) -------- -------- ----- Total Run-of-Press linage 25,019 26,107 (4) ======== ======== ===== Preprint distribution 2,482 2,565 (3) ======== ======== ===== Advertising revenue, in thousands of dollars (pro forma) Year-to-date 2001 2000 % Change -------- ------- -------- Local $ 899,132 $ 915,270 (2) National 364,669 408,472 (11) Classified 913,317 974,423 (6) -------- -------- ----- Total ad revenue $2,177,118 $2,298,165 (5) ========= ======== ===== Advertising linage, in thousands of inches, and preprint distribution, in millions (pro forma) Year-to-date 2001 2000 % Change -------- -------- -------- Local 19,284 20,275 (5) National 1,947 2,239 (13) Classified 27,293 28,189 (3) -------- -------- ----- Total Run-of-Press linage 48,524 50,703 (4) ======== ======== ===== Preprint distribution 4,905 4,957 (1) ======== ======== ===== Pro forma newspaper advertising revenues decreased 7% for the quarter and 5% for the year-to-date. Local ad revenues decreased 3% on a 4% decrease in volume for the quarter and decreased 2% on a 5% decline in volume for the year-to-date. National ad revenues decreased 11% for the quarter on a volume decrease of 12%, with year-to-date revenues down by 11% on a volume decrease of 13%. Classified ad revenues decreased 9% for the quarter on a volume decrease of 4%, with year-to-date revenues down by 6% on a volume decrease of 3%. Advertising results reflect advertiser reluctance to spend in an uncertain economic environment, and the continuing economic downturn adversely impacted revenues at most domestic Gannett operations, particularly in the classified employment category. USA TODAY advertising revenues declined 19% for the quarter and for the year-to-date. Reported revenues from the company's U.K. operations benefited from strong advertising demand, but were unfavorably impacted by a decline in the exchange rate for Sterling. If the exchange rate had remained constant year-over-year, total company pro forma advertising revenues would have declined 6% for the quarter and 4% for the year-to-date. Reported newspaper circulation revenues increased $54.5 million or 22% for the quarter and $113.4 million or 22% for the year-to-date, reflecting the impact of the acquisitions. On a pro forma basis, newspaper circulation revenues decreased 1% for the quarter and for the year-to-date. Pro forma net paid daily circulation for the company's local domestic newspapers decreased 2% for the second quarter and 1% for the first half of the year, with Sunday circulation down 2% for both the quarter and the year-to-date. USA TODAY reported an average daily paid circulation of 2,291,297 in the ABC Publisher's statement for the 27 weeks ended April 1, 2001, a 0.4% increase over the comparable period a year ago. Operating costs for the newspaper segment increased $191.2 million or 22% for the quarter and $434.7 million or 25% for the year-to-date, largely due to the added costs from the new properties and higher newsprint prices, offset by tight cost controls. Total pro forma newspaper segment expense, excluding newsprint, declined approximately 7% for the quarter and 6% for the year-to-date. In total, newsprint expense increased by 27% for the quarter and 31% for the year-to-date due to a 6% and 9% increase in consumption for the quarter and year-to-date, respectively, reflecting usage by the new properties, and substantially higher year-over-year prices. The company expects newsprint prices to remain higher for the rest of 2001 as compared to the prior year, but the year-over-year increases are expected to be at a reduced level. Newspaper operating income increased $14.9 million or 4% for the second quarter and $36.3 million or 5% for the year-to-date, reflecting the positive impact of earnings from recently acquired properties, partially offset by softer domestic advertising demand and higher newsprint prices. TELEVISION Reported television revenues decreased $26.7 million or 13% for the second quarter and $37.9 million or 10% for the year-to-date, mainly due to the reluctance of advertisers, principally national advertisers, to spend in this uncertain economic environment. National advertising revenues decreased 21% for the quarter and 18% for the year-to-date, while local advertising revenues decreased 8% for the quarter and 6% for the year-to- date. Television operating costs for the quarter decreased $1.9 million or 2% and decreased $1.2 million or 1% for the year-to-date. Reported television operating income declined by $24.9 million or 24% for the quarter and $36.7 million or 22% for the year-to-date. NON-OPERATING INCOME AND EXPENSE/PROVISION FOR INCOME TAXES Interest expense was $61.7 million in the second quarter of 2001 versus $22.7 million in the second quarter of 2000 and was $142.2 million for the first half of 2001 versus $42.8 million for the first half of 2000 due to increased commercial paper borrowings for the 2000 acquisitions and share repurchases, tempered by lower interest rates. The daily average commercial paper outstanding balance was $5.31 billion during the second quarter of 2001 and $1.25 billion during the second quarter of 2000. For the first half of 2001 and 2000, the daily average commercial paper outstanding balance was $5.36 billion and $1.18 billion, respectively. The weighted average interest rate was 4.4% for the second quarter of 2001 and 6.4% for the second quarter of 2000. For the first half of 2001 and 2000, the weighted average interest rate was 5.16% and 6.13%, respectively. The company's effective income tax rate was 39.4% for the second quarter of 2001 versus 39.6% for the same period last year, reflecting lower state taxes and lower taxes on foreign operations. NET INCOME Income from continuing operations was down $32.3 million or 12% for the quarter and $60.8 million or 13% for the first half of 2001. Diluted earnings per share from continuing operations decreased to $0.88 from $1.00 for the second quarter and to $1.53 from $1.73 for the first half of the year, both 12% declines. In the first half of 2000, after-tax income from the operation of the discontinued cable business of $2.4 million and an after-tax gain from the sale of the cable business of $744.7 million contributed $2.75 per share (diluted). The weighted average number of diluted shares outstanding in the second quarter of 2001 totaled 266,754,000, compared to 266,294,000 for the second quarter of 2000. The weighted average number of diluted shares outstanding in the first half of 2001 totaled 266,585,000, compared to 271,234,000 for the first half of 2000. In February 2000, the company announced authorizations to repurchase up to $1 billion of its common stock and during the first six months of 2000, the company repurchased approximately 14.7 million shares of common stock at a cost of approximately $967.2 million. There were no stock repurchases during the first half of 2001. Exhibit 11 of this Form 10-Q presents the weighted average number of basic and diluted shares outstanding and the earnings per share for each period. LIQUIDITY AND CAPITAL RESOURCES The company's consolidated operating cash flow (defined as operating income plus depreciation and amortization of intangible assets), as reported in the accompanying Business Segment Information, totaled $556.9 million for the second quarter of 2001, compared with $537.1 million for the same period of 2000, a 4% increase. The company's consolidated operating cash flow for the year-to-date totaled $1,037.5 million for the first half of 2001, compared with $975.0 million for the first half of 2000, a 6% increase. The increase in cash flow reflects the solid operating cash flow contributions from the recently acquired properties and lower interest rates on related borrowings. Capital expenditures totaled $146.4 million for the first half of 2001, compared to $122.2 million for the first half of 2000. During the first half of 2001, the company made payments of $133.0 million related to several small acquisitions and additional share purchases of WKYC-TV. The company's debt decreased by $330.7 million during the first six months of 2001, reflecting the pay-down of commercial paper borrowings from operating cash flow. The company's foreign currency translation adjustment, included in accumulated other comprehensive income and reported as part of shareholders' equity, totaled ($134.5 million) at the end of the second quarter versus ($66.4 million) at the end of 2000, reflecting a weakening of Sterling against the U.S. dollar since the end of the year 2000. Newsquest's assets and liabilities at July 1, 2001 were translated from Sterling to U.S. dollars at an exchange rate of $1.42 versus $1.49 at the end of 2000. Newsquest's financial results were translated at an average rate of $1.42 for the second quarter of 2001 versus $1.54 for the second quarter of 2000, and at an average rate of $1.44 for the first half of 2001 versus $1.57 for the first half of 2000. The company's regular quarterly dividend of $0.22 per share was declared in the second quarter of 2001, totaling $58.2 million. OTHER MATTERS Refer to Note 2 for a discussion of new accounting standards. CERTAIN FACTORS AFFECTING FORWARD-LOOKING STATEMENTS Certain statements in the company's 2000 Annual Report to Shareholders, its Annual Report on Form 10-K, and in this Quarterly Report contain forward-looking information. The words "expect", "intend", "believe", "anticipate", "likely", "will" and similar expressions generally identify forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results and events to differ materially from those anticipated in the forward-looking statements. Potential risks and uncertainties which could adversely affect the company's ability to obtain these results include, without limitation, the following factors: (a) increased consolidation among major retailers or other events which may adversely affect business operations of major customers and depress the level of local and national advertising; (b) a continued economic downturn in some or all of the company's principal newspaper or television markets leading to decreased circulation or local, national or classified advertising; (c) a decline in general newspaper readership patterns as a result of competitive alternative media or other factors; (d) an increase in newsprint or syndication programming costs over the levels anticipated; (e) labor disputes which may cause revenue declines or increased labor costs; (f) acquisitions of new businesses or dispositions of existing businesses; (g) a decline in viewership of major networks and local news programming; (h) rapid technological changes and frequent new product introductions prevalent in electronic publishing; (i) an increase in interest rates; (j) a weakening in the Sterling to U.S. dollar exchange rate; and (k) general economic and business conditions. CONSOLIDATED BALANCE SHEETS Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars
July 1, 2001 Dec. 31, 2000 ---------------- --------------- ASSETS Cash $ 72,648 $ 69,954 Marketable securities 78,010 123,242 Trade receivables, less allowance 802,318 875,363 (2001 - $33,569; 2000 - $37,465) Inventories 138,883 128,321 Prepaid expenses and other receivables 93,236 105,456 ---------------- --------------- Total current assets 1,185,095 1,302,336 ---------------- --------------- Property, plant and equipment Cost 4,264,050 4,135,201 Less accumulated depreciation (1,773,173) (1,673,802) ---------------- --------------- Net property, plant and equipment 2,490,877 2,461,399 ---------------- --------------- Intangible and other assets Excess of acquisition cost over the value of assets acquired, less amortization 8,634,739 8,740,804 Investments and other assets 483,475 475,872 ---------------- --------------- Total intangible and other assets 9,118,214 9,216,676 ---------------- --------------- Total assets $ 12,794,186 $ 12,980,411 ================ =============== LIABILITIES & SHAREHOLDERS' EQUITY Accounts payable and current portion of film contracts payable $ 316,132 $ 493,243 Compensation, interest and other accruals 273,317 325,904 Dividend payable 58,294 58,118 Income taxes 296,351 144,599 Deferred income 149,521 152,137 ---------------- --------------- Total current liabilities 1,093,615 1,174,001 ---------------- --------------- Deferred income taxes 268,046 274,829 Long-term debt 5,417,192 5,747,856 Postretirement medical and life insurance liabilities 403,241 403,528 Other long-term liabilities 265,499 276,787 ---------------- --------------- Total liabilities 7,447,593 7,877,001 ---------------- --------------- 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; issued, 324,420,732 shares. 324,421 324,421 Additional paid-in capital 176,123 170,715 Retained earnings 7,287,524 6,995,965 Accumulated other comprehensive loss (132,940) (66,274) ---------------- --------------- Total 7,655,128 7,424,827 ---------------- --------------- Less treasury stock - 59,648,604 shares and 60,148,871 shares respectively, at cost (2,297,279) (2,307,793) Deferred compensation related to ESOP (11,256) (13,624) ---------------- --------------- Total shareholders' equity 5,346,593 5,103,410 ---------------- --------------- Total liabilities and shareholders' equity $ 12,794,186 $ 12,980,411 ================ ===============
CONSOLIDATED STATEMENTS OF INCOME Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars (except per share amounts)
Thirteen weeks ended % Inc July 1, 2001 June 25, 2000 (Dec) Net Operating Revenues: Newspaper advertising $ 1,057,899 $ 911,949 16.0 Newspaper circulation 306,019 251,524 21.7 Television 178,692 205,413 (13.0) Other 84,622 78,921 7.2 ------------- ------------- ------ Total 1,627,232 1,447,807 12.4 ------------- ------------- ------ Operating Expenses: Cost of sales and operating expenses, exclusive of depreciation 824,030 683,084 20.6 Selling, general and administrative expenses, exclusive of depreciation 246,324 227,593 8.2 Depreciation 51,059 47,070 8.5 Amortization of intangible assets 59,457 35,379 68.1 ------------- ------------- ------ Total 1,180,870 993,126 18.9 ------------- ------------- ------ Operating income 446,362 454,681 (1.8) ------------- ------------- ------ Non-operating income (expense): Interest expense (61,728) (22,666) 172.3 Other 528 7,947 (93.4) ------------- ------------- ------ Total (61,200) (14,719) 315.8 ------------- ------------- ------ Income before income taxes 385,162 439,962 (12.5) Provision for income taxes 151,700 174,200 (12.9) ------------- ------------- ------ Net income $ 233,462 $ 265,762 (12.2) ============= ============= ====== Net income per share-basic $0.88 $1.01 (12.9) ===== ===== ====== Net income per share-diluted $0.88 $1.00 (12.0) ===== ===== ====== Dividends per share $0.22 $0.21 4.8 ===== ===== ======
CONSOLIDATED STATEMENTS OF INCOME Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars (except per share amounts)
Twenty-six weeks ended % Inc July 1, 2001 June 25, 2000 (Dec) Net Operating Revenues: Newspaper advertising $ 2,078,833 $ 1,742,199 19.3 Newspaper circulation 619,028 505,670 22.4 Television 334,305 372,202 (10.2) Other 170,014 149,056 14.1 ------------- ------------- ------ Total 3,202,180 2,769,127 15.6 ------------- ------------- ------ Operating Expenses: Cost of sales and operating expenses, exclusive of depreciation 1,663,577 1,350,570 23.2 Selling, general and administrative expenses, exclusive of depreciation 501,062 443,535 13.0 Depreciation 104,340 93,678 11.4 Amortization of intangible assets 118,800 69,145 71.8 ------------- ------------- ------ Total 2,387,779 1,956,928 22.0 ------------- ------------- ------ Operating income 814,401 812,199 0.3 ------------- ------------- ------ Non-operating income (expense): Interest expense (142,170) (42,841) 231.9 Other 976 6,621 (85.3) ------------- ------------- ------ Total (141,194) (36,220) 289.8 ------------- ------------- ------ Income before income taxes 673,207 775,979 (13.2) Provision for income taxes 265,200 307,200 (13.7) ------------- ------------- ------ Income from continuing operations 408,007 468,779 (13.0) ------------- ------------- ------ Discontinued Operations: Income from the operation of discontinued operations, net of tax 2,437 -- Gain on sale of cable business, net of tax 744,700 -- ------------- ------------- ------ Net income $ 408,007 $ 1,215,916 (66.4) ============= ============= ====== Earnings from continuing operations per share-basic $1.54 $1.74 (11.5) Earnings from discontinued operations: Discontinued operations per share-basic $0.01 -- Gain on sale of cable business per share-basic $2.77 -- ----- ----- ------- Net income per share-basic $1.54 $4.52 (65.9) ===== ===== ======= Earnings from continuing operations per share-diluted $1.53 $1.73 (11.6) Earnings from discontinued operations: Discontinued operations per share-diluted $0.01 -- Gain on sale of cable business per share-diluted $2.74 -- ----- ----- ------- Net income per share-diluted $1.53 $4.48 (65.8) ===== ===== ======= Dividends per share $0.44 $0.42 4.8 ===== ===== =======
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars
Twenty-six weeks ended July 1, 2001 June 25, 2000 -------------- -------------- Cash flows from operating activities Net income $ 408,007 $ 1,215,916 Adjustments to reconcile net income to operating cash flows: Discontinued operations 0 (747,137) Income taxes on sale of cable division 0 (889,301) Depreciation 104,340 93,678 Amortization of intangibles 118,800 69,145 Deferred income taxes (6,783) (165,565) Other, net 56,876 153,822 --------- --------- Net cash flow provided by (used for) operating activities 681,240 (269,442) --------- --------- Cash flows from investing activities Purchase of property, plant and equipment (146,443) (122,206) Payments for acquisitions, net of cash acquired (133,041) (543,110) Change in other investments (8,564) (42,969) Proceeds from sale of certain assets 0 2,714,362 Collection of long-term receivables 0 1,900 --------- --------- Net cash (used for) provided by investing activities (288,048) 2,007,977 --------- --------- Cash flows from financing activities Payment of long-term debt (330,664) (392,588) Dividends paid (116,271) (114,913) Cost of common shares repurchased 0 (967,242) Proceeds from issuance of common stock 15,922 8,697 --------- --------- Net cash used for financing activities (431,013) (1,466,046) --------- --------- Effect of currency exchange rate change (4,717) (994) --------- --------- Net (decrease) increase in cash and cash equivalents (42,538) 271,495 Balance of cash and cash equivalents at beginning of year 193,196 46,160 --------- --------- Balance of cash and cash equivalents at end of second quarter $ 150,658 317,655 ========= =========
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS July 1, 2001 1. Basis of Presentation The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with the instructions for Form 10-Q and, therefore, do not include all information and footnotes which are normally included in the Form 10-K and annual report to shareholders. The financial statements covering the 13-week and 26-week periods ended July 1, 2001, and the comparative periods of 2000, reflect all adjustments which, in the opinion of the company, are necessary for a fair statement of results for the interim periods and reflect all normal and recurring adjustments which are necessary for a fair presentation of the company's financial position, results of operations and cash flows as of the dates and for the periods presented. 2. Accounting Standards In July 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards No. 141 (SFAS No. 141), "Business Combinations", and No. 142 (SFAS No. 142), "Goodwill and Other Intangible Assets." SFAS No. 141 addresses financial accounting and reporting for goodwill and other intangible assets acquired in a business combination. SFAS No. 141 requires the purchase method of accounting to be used for all business combinations initiated after June 30, 2001, and establishes specific criteria for the recognition of intangible assets separately from goodwill. SFAS No. 141 is effective for all business combinations initiated after June 30, 2001, and for all business combinations accounted for by the purchase method for which the date of acquisition is after June 30, 2001. SFAS No. 142 addresses financial accounting and reporting for goodwill and other intangible assets subsequent to their acquisition. SFAS No. 142 provides that goodwill and intangible assets which have indefinite useful lives will not be amortized but rather will be tested at least annually for impairment. The company will adopt SFAS No. 142 effective December 31, 2001, the first day of its fiscal year 2002. The company is currently evaluating the provisions of this standard and has not yet determined the effects of these changes on the company's financial position or results of operations but expects a substantial reduction to its amortization expense beginning in 2002. 3. Comprehensive Income Comprehensive income for the company includes net income, foreign currency translation adjustments and unrealized gains or losses on available- for-sale securities, as defined under SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities." Comprehensive income totaled $234.4 million for the second quarter of 2001 and $201.7 million for the second quarter of 2000. Other comprehensive income and losses relate to foreign currency translation adjustments and unrealized gains or losses on available-for-sale securities, net of tax. The accumulated other comprehensive income and losses were net of a deferred income tax liability of $0.6 million for the second quarter of 2001 and a deferred tax asset of $41.0 million for the second quarter of 2000. Comprehensive income totaled $341.3 million for the first half of 2001 and $1,136.4 million for the first half of 2000. The accumulated other comprehensive losses were net of a deferred income tax asset of $40.9 million for the first half of 2001 and $50.9 million for the first half of 2000. 4. Acquisitions and Dispositions The company completed the Thomson acquisition in July 2000 and the Central acquisition in August 2000. The purchase price allocations for these acquisitions are preliminary. The final allocations will be based on a complete evaluation of assets acquired and liabilities assumed. The sale of the assets of the company's cable business for $2.7 billion was completed on January 31, 2000. Upon closing, an after-tax gain of approximately $745 million was recognized which, along with the cable segment operating results, are reported as discontinued operations in the company's financial statements. The following table summarizes, on an unaudited, pro forma basis, the estimated combined results of operations of the company and its subsidiaries as though the 2000 acquisitions (Newscom, Thomson and Central) and disposition (cable business) were all made at the beginning of 2000. However, this pro forma combined statement does not necessarily reflect the results of operations as they would have been if the combined companies had constituted a single entity during those years. In millions, except per share amounts (pro forma and unaudited) Quarter-to-date - --------------- 2001 2000 -------- -------- Operating revenues $ 1,627 $ 1,744 Income before income taxes $ 385 $ 423 Income from continuing operations $ 233 $ 256 Income per share from continuing operations - basic $ 0.88 $ 0.97 Income per share from continuing operations - diluted $ 0.88 $ 0.96 Year-to-date - --------------- 2001 2000 -------- -------- Operating revenues $ 3,202 $ 3,374 Income before income taxes $ 673 $ 738 Income from continuing operations $ 408 $ 446 Income per share from continuing operations - basic $ 1.54 $ 1.66 Income per share from continuing operations - diluted $ 1.53 $ 1.64 5. Outstanding Shares The weighted average number of common shares outstanding (basic) in the second quarter totaled 264,685,000 compared to 264,410,000 for the second quarter of 2000. The weighted average number of diluted shares outstanding in the second quarter totaled 266,754,000 compared to 266,294,000 for the second quarter of 2000. The weighted average number of common shares outstanding (basic) in the first half of 2001 totaled 264,576,000 compared to 269,184,000 for the first half of 2000. The weighted average number of diluted shares outstanding in the first half of 2001 totaled 266,585,000 compared to 271,234,000 for the first half of 2000. 6. Business Segment Information BUSINESS SEGMENT INFORMATION Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars
Thirteen weeks ended % Inc July 1, 2001 June 25, 2000 (Dec) Operating Revenues: Newspaper publishing $ 1,448,540 $ 1,242,394 16.6 Television 178,692 205,413 (13.0) ------------- ------------- ----- Total $ 1,627,232 $ 1,447,807 12.4 ============= ============= ===== Operating Income (net of depreciation and amortization): Newspaper publishing $ 384,142 $ 369,231 4.0 Television 77,003 101,870 (24.4) Corporate (14,783) (16,420) 10.0 ------------- ------------- ----- Total $ 446,362 $ 454,681 (1.8) ============= ============= ===== Depreciation and Amortization: Newspaper publishing $ 91,925 $ 63,243 45.4 Television 17,100 16,909 1.1 Corporate 1,491 2,297 (35.1) ------------- ------------- ----- Total $ 110,516 $ 82,449 34.0 ============= ============= ===== Operating Cash Flow: Newspaper publishing $ 476,067 $ 432,474 10.1 Television 94,103 118,779 (20.8) Corporate (13,292) (14,123) 5.9 ------------- ------------- ----- Total $ 556,878 $ 537,130 3.7 ============= ============= ===== NOTE: Operating Cash Flow represents operating income for each of the company's business segments plus related depreciation and amortization expense.
BUSINESS SEGMENT INFORMATION Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars
Twenty-six weeks ended % Inc July 1, 2001 June 25, 2000 (Dec) Operating Revenues: Newspaper publishing $ 2,867,875 $ 2,396,925 19.6 Television 334,305 372,202 (10.2) ------------- ------------- ----- Total $ 3,202,180 $ 2,769,127 15.6 ============= ============= ===== Operating Income (net of depreciation and amortization): Newspaper publishing $ 712,927 $ 676,666 5.4 Television 131,269 167,997 (21.9) Corporate (29,795) (32,464) 8.2 ------------- ------------- ----- Total $ 814,401 $ 812,199 0.3 ============= ============= ===== Depreciation and Amortization: Newspaper publishing $ 186,068 $ 125,532 48.2 Television 34,083 33,035 3.2 Corporate 2,989 4,256 (29.8) ------------- ------------- ----- Total $ 223,140 $ 162,823 37.0 ============= ============= ===== Operating Cash Flow: Newspaper publishing $ 898,995 $ 802,198 12.1 Television 165,352 201,032 (17.7) Corporate (26,806) (28,208) 5.0 ------------- ------------- ----- Total $ 1,037,541 $ 975,022 6.4 ============= ============= ===== NOTE: Operating Cash Flow represents operating income for each of the company's business segments plus related depreciation and amortization expense.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The company is not subject to market risk associated with derivative commodity instruments, as the company is not a party to any such instruments. The company believes that its market risk from financial instruments, such as accounts receivable, accounts payable and debt, is not material. The company is exposed to foreign exchange rate risk primarily due to its operations in the United Kingdom, which use Sterling as their functional currency, which is then translated into U.S. dollars. PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Securityholders (a) The Annual Meeting of Shareholders of Gannett Co., Inc. was held on May 8, 2001. (b) The following directors were elected at the meeting: James A. Johnson Douglas H. McCorkindale Stephen P. Munn The following directors' terms of office continued after the meeting: H. Jesse Arnelle Meredith A. Brokaw Samuel J. Palmisano Karen Hastie Williams (c) (i) Three directors were re-elected to the Board of Directors. Tabulation of votes for each of the nominees is as follows: For Withhold Authority James A. Johnson 213,039,732 9,665,969 Douglas H. McCorkindale 185,300,114 37,405,587 Stephen P. Munn 213,059,326 9,646,375 (ii) The proposal to elect PricewaterhouseCoopers LLP as the company's independent auditor was approved. Tabulation of votes for the proposal is as follows. For Against Abstain Election of independent auditors 220,875,192 1,021,219 809,290 (iii) The proposal to approve the Omnibus Incentive Plan was passed. Tabulation of votes for the proposal is as follows: For Against Abstain Approval of Omnibus Incentive Plan 196,863,861 24,184,216 1,654,624 (iv) The shareholder proposal concerning EEO policy and American Indians was defeated. Tabulation of votes for the proposal is as follows: For Against Abstain Shareholder proposal 20,130,489 172,146,030 6,624,732 (v) The shareholder proposal concerning the nomination of additional director candidates was defeated. Tabulation of votes for the proposal is as follows: Shareholder proposal 6,110,239 190,453,035 2,337,977 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. See Exhibit Index for list of exhibits filed with this report. (b) 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: August 15, 2001 By:/s/George R. Gavagan ------------------------------ George R. Gavagan Vice President and Controller Dated: August 15, 2001 By:/s/Thomas L. Chapple ------------------------------ Thomas L. Chapple Senior Vice President, General Counsel and Secretary EXHIBIT INDEX Exhibit Number Exhibit Location 3-1 Second Restated Certificate Incorporated by reference to Exhibit of Incorporation of Gannett Co., 3-1 to Gannett Co., Inc.'s Form 10-K Inc. for the fiscal year ended December 26, 1993 ("1993 Form 10-K"). Amendment incorporated by reference to Exhibit 3-1 to the 1993 Form 10-K. Amendment dated May 2, 2000, incorporated by reference to Gannett Co., Inc.'s Form 10-Q for the fiscal quarter ended March 26, 2000. 3-2 By-laws of Gannett Co., Inc. Incorporated by reference to (reflects all amendments Exhibit 3-2 to Gannett Co., Inc.'s through February 1, 2001) Form 10-K for the fiscal year ended December 31, 2000. 4-1 $1,000,000,000 Revolving Incorporated by reference to Exhibit Credit Agreement among 4-1 to the 1993 Form 10-K. Gannett Co., Inc. and the Banks named therein. 4-2 Amendment Number One Incorporated by reference to Exhibit to $1,000,000,000 Revolving 4-2 to Gannett Co., Inc.'s Form 10-Q Credit Agreement among for the fiscal quarter ended June 26, Gannett Co., Inc. and the 1994. Banks named therein. 4-3 Amendment Number Two to Incorporated by reference to Exhibit $1,500,000,000 Revolving 4-3 to Gannett Co., Inc.'s Form 10-K Credit Agreement among for the fiscal year ended Gannett Co., Inc. and the December 31, 1995. Banks named therein. 4-4 Amendment Number Three to Incorporated by reference to Exhibit $3,000,000,000 Revolving 4-4 to Gannett Co., Inc.'s Form 10-Q Credit Agreement among for the fiscal quarter ended Gannett Co., Inc. and the Banks September 29, 1996. named therein. 4-5 Indenture dated as of March 1, Incorporated by reference to Exhibit 1983 between Gannett Co., Inc. 4-2 to Gannett Co., Inc.'s Form 10-K and Citibank, N.A., as Trustee. for the fiscal year ended December 29, 1985. 4-6 First Supplemental Indenture Incorporated by reference to Exhibit dated as of November 5, 1986 4 to Gannett Co., Inc.'s Form 8-K among Gannett Co., Inc., filed on November 9, 1986. Citibank, N.A., as Trustee, and Sovran Bank, N.A., as Successor Trustee. 4-7 Second Supplemental Indenture Incorporated by reference to dated as of June 1, 1995, Exhibit 4 to Gannett Co., Inc.'s among Gannett Co., Inc., Form 8-K filed on June 15, 1995. NationsBank, N.A., as Trustee, and Crestar Bank, as Trustee. 4-8 Rights Plan. Incorporated by reference to Exhibit 1 to Gannett Co., Inc.'s Form 8-K filed on May 23, 1990. Amendment incorporated by reference to Gannett Co., Inc.'s Form 8-K filed on May 2, 2000. 4-9 Amendment Number Four to Incorporated by reference to $3,000,000,000 Revolving Exhibit 4-9 to Gannett Co., Inc.'s Credit Agreement among Form 10-Q filed on August 12, 1998. Gannett Co., Inc. and the Banks named therein. 4-10 $3,000,000,000 Competitive Incorporated by reference to Exhibit Advance and Revolving Credit 4-10 to Gannett Co., Inc.'s Form 10-Q Agreement among Gannett Co., filed on August 9, 2000. Inc. and the Banks named therein. 4-11 Amendment Number One to Incorporated by reference to Exhibit $3,000,000,000 Competitive 4-11 to Gannett Co., Inc.'s Form 10-K Advance and Revolving Credit for the fiscal year ended December 31, Agreement among Gannett Co., 2000. Inc. and the Banks named therein. 4-12 Amendment Number Two Attached. to $3,000,000,000 Competitive Advance and Revolving Credit Agreement among Gannett Co., Inc. and the Banks named therein. 10-3 Gannett Co., Inc. 1978 Incorporated by reference to Exhibit Executive Long-Term Incentive 10-3 to Gannett Co., Inc.'s Form 10-K Plan* for the fiscal year ended December 28, 1980. Amendment No. 1 incorporated by reference to Exhibit 20-1 to Gannett Co., Inc.'s Form 10-K for the fiscal year ended December 27, 1981. Amendment No. 2 incorporated by reference to Exhibit 10-2 to Gannett Co., Inc.'s Form 10-K for the fiscal year ended December 25, 1983. Amendments Nos. 3 and 4 incorporated by reference to Exhibit 4-6 to Gannett Co., Inc.'s Form S-8 Registration Statement No. 33-28413 filed on May 1, 1989. Amendments Nos. 5 and 6 incorporated by reference to Exhibit 10-8 to Gannett Co., Inc.'s Form 10-K for the fiscal year ended December 31, 1989. Amendment No. 7 incorporated by reference to Gannett Co., Inc.'s Form S-8 Registration Statement No. 333-04459 filed on May 24, 1996. Amendment No. 8 incorporated by reference to Exhibit 10-3 to Gannett Co., Inc.'s Form 10-Q for the quarter ended September 28, 1997. Amendment dated December 9, 1997, incorporated by reference to Gannett Co., Inc.'s 1997 Form 10-K. Amendment No. 9 incorporated by reference to Exhibit 10-3 to Gannett Co., Inc.'s Form 10-Q for the quarter ended June 27, 1999. Amendment No. 10 incorporated by reference to Exhibit 10-3 to Gannett Co., Inc's Form 10-Q for the quarter ended June 25, 2000. Amendment No. 11 incorporated by reference to Exhibit 10-3 to Gannett Co., Inc.'s Form 10-K for the fiscal year ended December 31, 2000. 10-4 Description of supplemental Incorporated by reference to Exhibit insurance benefits.* 10-4 to the 1993 Form 10-K. 10-5 Gannett Co., Inc. Supplemental Incorporated by reference to Exhibit Retirement Plan, as amended.* 10-5 to Gannett Co., Inc.'s Form 10-K for the fiscal year ended December 26, 1999. 10-6 Gannett Co., Inc. Retirement Incorporated by reference to Exhibit Plan for Directors.* 10-10 to the 1986 Form 10-K. 1991 Amendment incorporated by reference to Exhibit 10-2 to Gannett Co., Inc.'s Form 10-Q for the quarter ended September 29, 1991. Amendment to Gannett Co., Inc. Retirement Plan for Directors dated October 31, 1996, incorporated by reference to Exhibit 10-6 to the 1996 Form 10K. 10-7 Amended and Restated Incorporated by reference to Exhibit Gannett Co., Inc. 1987 10-1 to Gannett Co., Inc.'s Form 10-Q Deferred Compensation Plan.* for the fiscal quarter ended September 29, 1996. Amendment No. 5 incorporated by reference to Exhibit 10-2 to Gannett Co., Inc.'s Form 10-Q for the quarter ended September 28, 1997. Amendment No. 2 to January 1, 1997 Restatement incorporated by reference to Exhibit 10-7 to Gannett Co., Inc.'s Form 10-Q for the quarter ended June 27, 1999. Amendments Nos. 3 and 4 incorporated by reference to Exhibit 10-7 to Gannett Co., Inc.'s Form 10-K for the fiscal year ended December 31, 2000. Amendment No. 5 attached. 10-8 Gannett Co., Inc. Transitional Incorporated by reference to Exhibit Compensation Plan.* 10-13 to Gannett Co., Inc.'s Form 10-K for the fiscal year ended December 30, 1990. 10-9 Employment Agreement dated Incorporated by reference to Exhibit January 1, 2001 between 10-9 to Gannett Co., Inc.'s Form 10-K Gannett Co., Inc. and Douglas for the fiscal year ended December 31, H. McCorkindale.* 2000. 10-10 2001 Omnibus Incentive Incorporated by reference to Compensation Plan* Exhibit No. 4 to the Company's Registration Statement on Form S-8 (Registration No. 333-60402). 11 Statement re computation of Attached. earnings per share. The company agrees to furnish to the 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 company. * Asterisks identify management contracts and compensatory plans or arrangements. EX-4 3 exhibit_4.txt EXHIBIT 4 - AMENDMENT TO CREDIT AGREEMENT SECOND AMENDMENT SECOND AMENDMENT, dated as of July 2, 2001 (this "Amendment"), to the Competitive Advance and Revolving Credit Agreement, dated as of July 28, 2000 (as amended by the First Amendment thereto, dated as of October 6, 2000, and as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among GANNETT CO., INC., a Delaware corporation ("Gannett"), the several banks and other financial institutions parties to the Credit Agreement prior to the date hereof (the "Existing Lenders"), the several banks and other financial institutions parties to this Amendment but not parties to the Credit Agreement prior to the date hereof (the "New Lenders" and, together with the Existing Lenders, the "Lenders"), BANK OF AMERICA, N.A., as administrative agent (in such capacity, the "Administrative Agent"), and THE CHASE MANHATTAN BANK, as syndication agent. W I T N E S S E T H: WHEREAS, Gannett has requested certain amendments to the Credit Agreement; WHEREAS, the parties are willing to consent to the requested amendments on the terms and conditions contained herein; NOW THEREFORE, the parties hereto hereby agree as follows: 1. Defined Terms. Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement. 2. Amendments to Section 1.1. Section 1.1 of the Credit Agreement is hereby amended by amending the definition of "Applicable Margin" by (a) deleting the words "15 basis points" where they appear in the column entitled "Credit Status I" and substituting in lieu thereof the words "20 basis points" and (b) deleting the words "19 basis points" where they appear in the column entitled "Credit Status 2" and substituting in lieu thereof the words "24 basis points". 3. Amendment to Section 1.1. Section 1.1 of the Credit Agreement is hereby further amended by deleting therefrom the definition of "364-Day Termination Date" and substituting in lieu thereof the following definition: "364-Day Termination Date": July 1, 2002. 4. Amendment to Schedule 1.1. Schedule 1.1 to the Credit Agreement is hereby amended by deleting the columns entitled "Lender" and "364-Day Commitment" where they appear in such Schedule and substituting in lieu thereof the columns entitled "Lender" and "364-Day Commitment" set forth on Schedule 1.1 attached hereto. 5. Effectiveness. This Amendment shall become effective as of the date on which all of the following conditions precedent have been satisfied: (a) The Administrative Agent shall have received (i) counterparts hereof duly executed by Gannett and the Administrative Agent and (ii) an executed consent letter from each Existing Lender (other than any Existing Lender which is an Exiting Lender) and each New Lender authorizing the Administrative Agent to enter into this Amendment; (b) The Lenders shall have received (i) audited consolidated financial statements (the "Annual Financials") of Gannett for the most recent fiscal year ended prior to the date hereof as to which such financial statements are available and (ii) unaudited interim consolidated financial statements (the "Quarterly Financials") of Gannett for each quarterly period ended subsequent to the date of the latest financial statements delivered pursuant to clause (i) of this paragraph (b) as to which such financial statements are available; and (c) Each Lender shall have received a certificate from the Secretary of Gannett certifying, as of the date of this Amendment, to resolutions duly adopted by the Board of Directors of Gannett or a duly authorized committee thereof authorizing Gannett's execution and delivery of this Amendment and the making of the Borrowings. (d) The Lenders and the Administrative Agent shall have received all fees required to be paid on or before the date hereof in connection with this Amendment or the Credit Agreement. 6. Representations and Warranties. Gannett hereby represents and warrants on and as of the date hereof that, after giving effect to this Amendment: (a) No Default or Event of Default has occurred and is continuing; (b) Each of the representations and warranties of Gannett in the Credit Agreement and this Amendment is true and correct in all material respects, as if made on and as of the date hereof, except that (i) no representation or warranty is hereby made with respect to Section 3.2 of the Credit Agreement and (ii) all references in Article III of the Credit Agreement (other than in Section 3.2 thereof) to "March 26, 2000" shall be deemed for purposes of this paragraph (b) to be references to "April 1, 2001"; and (c) The Annual Financials and the Quarterly Financials (including the related notes) fairly present Gannett's consolidated financial condition as of their respective dates and the consolidated results of the operations of Gannett and its Subsidiaries for the periods then ended, and have been prepared in accordance with GAAP. Gannett and its Subsidiaries have no Material liabilities as of April 1, 2001 not reflected in the consolidated balance sheet as of April 1, 2001 or the related notes as of said date, and from that date to the date hereof there has been no Material change in the business or financial condition of Gannett and its Subsidiaries taken as a whole which has not been publicly disclosed. 7. New Lenders. By executing this Amendment, each New Lender: (a) Agrees to be bound by the provisions of the Credit Agreement, and agrees that it shall, on the date of this Amendment, become a "Lender" (as defined in the Credit Agreement) for all purposes of the Credit Agreement to the same extent as if originally a party thereto; and (b)(i) Represents and warrants that it is legally authorized to enter into this Amendment; (ii) confirms that it has received a copy of the Credit Agreement, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Amendment; (iii) agrees that it has made and will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement or any instrument or document furnished pursuant hereto or thereto; (iv) appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Credit Agreement or any instrument or document furnished pursuant hereto or thereto as are delegated to the Administrative Agent by the terms thereof, together with such powers as are incidental thereto; and (v) agrees that it will be bound by the provisions of the Credit Agreement and will perform in accordance with its terms all the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender including, without limitation, if it is organized under the laws of a jurisdiction outside the United States, its obligation pursuant to Section 2.15(d) of the Credit Agreement. 8. Exiting 364-Day Lenders. The 364-Day Commitment of each Lender whose name does not appear on Schedule 1.1 attached hereto (the "Exiting Lender") will terminate on the date hereof upon repayment in full of all amounts, if any, owing to it under the Credit Agreement on the date hereof. On the date hereof, if necessary, Gannett shall effect such borrowings and repayments among the 364-Day Lenders (which, notwithstanding the provisions of subsection 2.13 of the Credit Agreement, need not be pro rata among the 364-Day Lenders) so that, after giving effect thereto, the respective principal amounts of the 364-Day Loans held by the 364-Day Lenders shall be pro rata according to their respective 364-Day Commitment Percentages, as amended hereby (Gannett being obligated to pay the amounts, if any, due pursuant to subsection 2.16 of the Credit Agreement in connection with such prepayments). 9. Continuing Effect. Except as expressly amended hereby, the Credit Agreement shall continue to be and shall remain in full force and effect in accordance with its terms. From and after the date hereof, all references in the Credit Agreement thereto shall be to the Credit Agreement as amended hereby. 10. Counterparts. This Amendment may be executed by one or more of the parties hereto on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page of this Amendment by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof. 11. Headings. Section headings used in this Amendment are for convenience of reference only, are not part of this Amendment and are not to affect the constructions of, or to be taken into consideration in interpreting, this Amendment. 12. GOVERNING LAW. THIS AMENDMENT AND THE RIGHT AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 13. Expenses. Gannett agrees to pay or reimburse the Administrative Agent for all of its reasonable out-of-pocket costs and expenses incurred in connection with the preparation, negotiation and execution of this Amendment, including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their duly authorized officers as of the date first written above. GANNETT CO., INC. By: /s/ Gracia C. Martore ------------------------------------- Name: Gracia C. Martore Title: Treasurer and Vice President/ Investor Relations BANK OF AMERICA, N.A., as Administrative Agent By: /s/ Pamela S. Kurtzman ------------------------------------- Name: Pamela S. Kurtzman Title: Principal EX-10 4 exhibit_10.txt EXHIBIT 10 - AMENDMENT TO DEFERRED COMPENSATION PLAN GANNETT CO., INC. DEFERRED COMPENSATION PLAN Amendment No. 5 to the January 1, 1997 Restatement Pursuant to Section 3.5 of the Plan, the Committee hereby amends the Plan, effective December 1, 2000: 1. The following Section 1.2 is hereby added following Section 1.1 of the Plan: 1.2 Certain Definitions This Plan shall apply to compensation earned under the 1978 Long-Term Incentive Plan, the 2001 Omnibus Incentive Compensation Plan, and successor plans. The term "SIRs" used in this Plan also includes restricted stock awards issued under any such plan. The phrases "Committee" or "Deferred Compensation Committee" used in this Plan mean the Benefit Plans Committee. 2. The last sentence of Section 2.3 is hereby deleted in its entirety. 3. Section 3.3 is hereby deleted in its entirety and replaced with the following: 3.3 Business Days In the event any date specified herein falls on a Saturday, Sunday, or legal holiday, such date shall be deemed to refer to the next business day thereafter or such other date as may be determined by the Committee in the reasonable exercise of its discretion. 4. Section 3.4 is hereby deleted in its entirety and replaced with the following: 3.4 Administration This Plan shall be administered by the Committee, which shall consist of employees of the Company appointed by the Chief Executive Officer. The Committee has sole discretion to interpret the Plan and to determine all questions arising in the administration, interpretation, and application of the Plan. The Committee's powers include the power, in its sole discretion and consistent with the terms of the Plan, to determine who is eligible to participate in this Plan, to determine the eligibility for and the amount of benefits payable under the Plan, to determine when and how amounts are allocated to a Participant's Deferred Compensation Account, to establish rules for determining when and how elections can be made, to adopt any rules relating to administering the Plan and to take any other action it deems appropriate to administer the Plan. The Committee may delegate its authority hereunder to one or more persons. Whenever the value of a Deferred Compensation Account is to be determined under this Plan as of a particular date, the Committee may determine such value using any method that is reasonable, in its discretion. Whenever payments are to be made under this Plan, such payments shall begin within a reasonable period of time, as determined by the Committee, and no interest shall be paid on such amounts for any reasonable delay in making the payments. 5. Section 3.7(b) is hereby amended by replacing "may" with "shall" in the first sentence and the following is added at the end of such Section: "Notwithstanding any provision in the Plan to the contrary, following a change of control, any act, determination or decision of the Company, Committee or independent fiduciary, as applicable, with regard to the administration, interpretation and application of the Plan must be reasonable, as viewed from the perspective of an unrelated party and with no deference paid to the actual act, determination or decision of the Company, Committee or independent fiduciary. Furthermore, following a change in control, any decision by the Company, Committee, or independent fiduciary, as applicable, shall not be final and binding on a Participant. Instead, following a change in control, if a Participant disputes a decision of the Company, Committee or independent fiduciary relating to the Plan and pursues legal action, the court shall review the decision under a "de novo" standard of review." 6. The following Section 3.8 is hereby added following Section 3.7 of the Plan: 3.8 Claims The Committee shall maintain a procedure under which any Participant (hereinafter called "claimant") whose claim for benefits under the Plan has been denied will receive written notice which clearly sets forth the specific reason or reasons for such denial, the specific plan provision or provisions on which the denial is based, any additional information necessary for the claimant to perfect the claim, if possible, and an explanation of why such additional information is needed, and any explanation of the Plan's claims review procedure. Such procedure shall allow a claimant 60 days after receipt of the written notice of denial to request a review of such denied claim, and the Committee shall make its decision based on such review within 60 days (120 days if special circumstances require more time) of its receipt of the request for review. The decision on review shall be in writing and shall clearly describe the reasons for the Committee's decision. The decisions of the Committee shall be final and binding on the Participant. 7. The following Article 4.0 is hereby added following Section 3.8 of the Plan. 4.0 EMPLOYEES OF PARTICIPATING AFFILIATES. 4.1 Eligibility of Employees of Affiliated Companies If the Committee allows it in any individual case, this Plan is also available to officers and employees of a corporation, partnership or other entity that is directly or indirectly controlled by the Company, provided that such officer or employee resides in the United States and is specifically designated as eligible by the Committee. An entity that is directly or indirectly controlled by the Company and employs an individual who is a Participant is hereinafter referred to as a "Participating Affiliate". 4.2 Compensation from Participating Affiliates With respect to Participants who are employed by Participating Affiliates, "Compensation" as used in this Plan shall include all or part of their salary, bonus and/or shares of Gannett common stock issued pursuant to "SIRs", ordinary income that arises upon the exercise of a stock option as more fully described in Section 2.12, and such other forms of taxable income derived from the performance of services for the Company or any Participating Affiliate (as defined in Section 4.1) as may be designated by the Committee and which may be deferred pursuant to such special terms and conditions as the Committee may establish. 4.3 Rights Subject to Creditors The right of any Participant who is employed by a Participating Affiliate to receive future payments under the provisions of the Plan shall be a contractual obligation of the Company and the Participating Affiliate at the time the Participant elects to defer compensation. Such a Participant's right to receive future payments is subject to the claims of the creditors of the Company and the Participating Affiliates in the event of the Company's or any Participating Affiliate's insolvency or bankruptcy as provided in the trust agreement. Plan assets may, in the Committee's discretion, be placed in a trust but will nevertheless continue to be subject to the claims of the Company's and the Participating Affiliates' creditors in the event of the Company's or any Participating Affiliate's insolvency or bankruptcy as provided in the trust agreement. In any event, the Plan is intended to be unfunded under Title I of ERISA. If the Committee so permits, Participating Affiliates may also contribute assets to the Rabbi Trust in connection with their Plan obligations under this Article. If, at the election of the Committee, such contributions are not separately accounted for through subtrusts, segregated accounts, or similar arrangements, Plan assets held by the Rabbi Trust will be subject to the claims of the Participating Affiliates' creditors in the event of any Participating Affiliate's insolvency or bankruptcy as provided in the trust agreement. 4.4 Certain Distributions Notwithstanding any Payment Commencement Date or Method of Payment selected by a Participant employed by a Participating Affiliate, if such a Participant ceases to be employed by the Company or a Participating Affiliate other than (i) at or after early or normal retirement pursuant to a retirement plan of the Company, (ii) by reason of the Participant's death, or (iii) by reason of the Participant's total disability the Committee, in its sole discretion, shall determine whether to distribute such Participant's benefits in the form of five annual installment payments, or as a lump sum. In either case, such payment shall begin within a reasonable period of time following the termination of employment. 4.5 Assignability The benefits payable under this Plan to an employee of a Participating Affiliate shall not revert to the Company or Participating Affiliate or be subject to the Company's or Participating Affiliate's creditors prior to the Company's or Participating Affiliate's insolvency or bankruptcy, nor, except pursuant to will or the laws of descent and distribution, shall they be subject in any way to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution or levy of any kind by the Participant, the Participant's beneficiary or the creditors of either, including such liability as may arise from the Participant's bankruptcy. IN WITNESS WHEREOF, Gannett Co., Inc. has caused this Amendment to be executed by its duly authorized officer as of July 24, 2001. GANNETT CO., INC. /s/ Richard L. Clapp _____________________________________ By: Richard L. Clapp Senior Vice President Human Resources EX-11 5 exhibit_11.txt EARNINGS PER SHARE CALCULATION OF EARNINGS PER SHARE Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars (except per share amounts) Thirteen weeks ended Twenty-six weeks ended July 1, June 25, July 1, June 25, 2001 2000 2001 2000 ------------ ----------- ----------- ----------- Basic earnings: Income from continuing operations $ 233,462 $ 265,762 $ 408,007 $ 468,779 Discontinued operations: Earnings from operation of cable business $ 0 $ 0 $ 0 $ 2,437 Gain on sale of cable business $ 0 $ 0 $ 0 $ 744,700 Net income $ 233,462 $ 265,762 $ 408,007 $1,215,916 Weighted average number of common shares outstanding 264,685 264,410 264,576 269,184 Earnings from continuing operations per share-basic $0.88 $1.01 $1.54 $1.74 Earnings from the operation of cable business per share-basic $0.00 $0.00 $0.00 $0.01 Gains on sale of cable business per share-basic $0.00 $0.00 $0.00 $2.77 Basic earnings per share $0.88 $1.01 $1.54 $4.52 Diluted earnings: Income from continuing operations $ 233,462 $ 265,762 $ 408,007 $ 468,779 Discontinued operations: Earnings from operation of cable business $ 0 $ 0 $ 0 $ 2,437 Gain on sale of cable business $ 0 $ 0 $ 0 $ 744,700 Net income $ 233,462 $ 265,762 $ 408,007 $1,215,916 Weighted average number of common shares outstanding 264,685 264,410 264,576 269,184 Dilutive effect of outstanding stock options and stock incentive rights 2,069 1,884 2,009 2,050 Weighted average number of shares outstanding, as adjusted 266,754 266,294 266,585 271,234 Earnings from continuing operations per share-diluted $0.88 $1.00 $1.53 $1.73 Earnings from the operation of cable business per share-diluted $0.00 $0.00 $0.00 $0.01 Gains on sale of cable business per share-diluted $0.00 $0.00 $0.00 $2.74 Diluted earnings per share $0.88 $1.00 $1.53 $4.48
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