-----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, Whgunjz7fJzkR5tzCjXaJMdI+9LxI0QsGPodz1/P6RBSuR16uGlx1uuV2IJ83CVO pCP9gKjPSzFxpFZpuhnXJQ== 0000039899-02-000007.txt : 20020515 0000039899-02-000007.hdr.sgml : 20020515 20020515163134 ACCESSION NUMBER: 0000039899-02-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20020331 FILED AS OF DATE: 20020515 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: 02652952 BUSINESS ADDRESS: STREET 1: 7950 JONES BRANCH DRIVE CITY: MCLEAN STATE: VA ZIP: 22107-0910 BUSINESS PHONE: 7038546000 MAIL ADDRESS: STREET 1: 7950 JONES BRANCH DRIVE CITY: MCLEAN STATE: VA ZIP: 22107-0910 10-Q 1 form_10q.txt 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 31, 2002 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.) 7950 Jones Branch Drive, McLean, VA 22107 (Address of principal executive offices) (Zip Code) (703) 854-6000 (Registrant's telephone number, including area code) Former address: n/a (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 31, 2002, was 266,617,545. PART I. FINANCIAL INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS OPERATING SUMMARY Earnings per diluted share were 91 cents for the first quarter of 2002 versus 85 cents per share on a comparable basis for the first quarter of 2001, a 7% increase, despite continued challenging operating conditions. At the beginning of 2002, the company adopted Statement of Financial Accounting Standards (SFAS) No. 142 ("Statement"), which changed the accounting rules for goodwill and intangible assets. The previously reported diluted earnings per share of 66 cents for the first quarter of 2001 included $0.19 per share for goodwill amortization expense, net of tax, that would not have been required had the new Statement been in effect. Note 2 to the Condensed Consolidated Financial Statements provides additional information on the impact of this new Statement. Operating revenues declined by $50.3 million or 3% for the first quarter mainly due to a decline in newspaper advertising revenues. Operating income decreased by $23.0 million or 5%, on a comparable basis for the first quarter. Newspaper publishing earnings decreased by $31.2 million or 8% for the quarter, on a comparable basis, resulting from a continued decline in advertising revenues partially offset by stringent cost controls and significantly lower newsprint expense. Television earnings, on a comparable basis, were up $8.1 million or 12% for the quarter benefiting from Winter Olympics-related advertising. Net income increased by $18.1 million or 8%, on a comparable basis, reflecting significantly lower interest expense in the period versus the same quarter in 2001. As noted in the pro forma newspaper revenue discussions below, all major ad categories were lower for the quarter. Domestic classified revenues, especially employment advertising, experienced the sharpest decline, although the rate of decline for many of the U.S. newspapers narrowed in the first quarter of 2002. Television revenue comparisons for the first quarter were favorable reflecting solid Winter Olympics-related advertising on the company's NBC-affiliated stations. NEWSPAPERS Reported newspaper publishing revenues declined $61.9 million or 4% for the quarter. Newspaper advertising revenues decreased $51.1 million or 5% for the quarter reflecting generally soft domestic advertising demand. Refer to Note 6 of the Condensed Consolidated Financial Statements for Business Segment Information. The tables below provide, on a pro forma basis, details of newspaper ad revenue for the first quarter of 2002 and 2001. Advertising linage and preprint distribution details are also provided below; however, linage and preprint distribution for U.K. publications are not included. This pro forma presentation is defined as operating results as if all properties owned at the end of the first quarter of 2002 were owned throughout the periods presented. The tables and related commentary also include the portion of revenue and linage data for the company's newspapers participating in joint operating agencies. Advertising revenue, in thousands of dollars (pro forma) First Quarter 2002 2001 % Change ----------- ----------- -------- Local $ 428,499 $ 434,841 (1) National 167,056 175,313 (5) Classified 419,663 457,953 (8) ----------- ----------- ----- Total ad revenue $ 1,015,218 $ 1,068,107 (5) =========== =========== ===== Advertising linage, in thousands of inches, and preprint distribution, in millions (pro forma) First Quarter 2002 2001 % Change ----------- ----------- -------- Local 9,049 9,130 (1) National 920 906 1 Classified 13,331 13,138 1 ----------- ----------- -------- Total Run-of-Press linage 23,300 23,174 1 =========== =========== ======== Preprint distribution 2,475 2,436 2 =========== =========== ======== Pro forma newspaper advertising revenues decreased 5% for the quarter. Local ad revenues decreased 1% on a 1% decrease in volume for the quarter. National ad revenues decreased 5% for the quarter on a volume increase of 1%. Classified ad revenues decreased 8% for the quarter on a volume increase of 1%. Revenue results reflect a continuing challenging advertising environment, particularly in the employment advertising category. The company's U.K. operations also experienced softer help-wanted advertising in the first quarter of 2002; however, overall classified results for U.K. properties continue to be stronger than domestic results. USA TODAY advertising revenues declined 9% for the quarter primarily reflecting the continued diminished demand for travel-related advertising. Reported newspaper circulation revenues decreased $2.3 million or less than 1% for the quarter. Pro forma newspaper circulation revenues also decreased less than 1% for the quarter. Pro forma net paid daily circulation for the company's local domestic newspapers was flat for the first quarter, while Sunday circulation was down 1%. USA TODAY reported an average daily paid circulation of 2,209,813 in the ABC Publisher's Statement for the 26 weeks ended March 31, 2002, a 3% decrease over the comparable period a year ago. The decline is primarily due to reduced travel in the U.S. after the events of September 11th. Operating costs for the newspaper segment declined $30.7 million or 3% for the quarter, on a comparable basis, largely due to lower newsprint expense and tight cost controls. Reported newsprint expense decreased by 18% for the quarter as a result of significantly lower prices and a 3% decline in consumption. Newsprint prices for the remainder of 2002 are expected to be significantly lower on average than in 2001. Recent employee count reductions are also expected to benefit cost comparisons in 2002. Excluding the positive impact of SFAS No. 142, newspaper operating income declined $31.2 million or 8% resulting from a continued decline in advertising revenues partially offset by stringent cost controls and significantly lower newsprint expense. The impact of SFAS No. 142 on the newspaper segment was to improve operating income by $47.1 million. TELEVISION Reported television revenues increased $11.6 million or 7% for the first quarter. Television revenues benefited from Winter Olympics- related advertising on our thirteen NBC-affiliated stations. National advertising revenues increased 9% for the quarter while local advertising revenues increased 8%. Operating costs increased $3.5 million or 4% on a comparable basis for the quarter. Excluding the positive impact of SFAS No. 142, television operating income increased by $8.1 million or 12% for the quarter. The impact of SFAS No. 142 on the television segment was to improve operating income by $10.4 million. NON-OPERATING INCOME AND EXPENSE/PROVISION FOR INCOME TAXES Interest expense was $28.8 million in the first quarter of 2002 versus $80.4 million in the first quarter of 2001 due to significantly lower interest rates and lower debt levels. The daily average commercial paper balance outstanding was $4.5 billion during the first quarter of 2002 and $5.4 billion during the first quarter of 2001. The weighted average interest rate on commercial paper was 1.8% for the first quarter of 2002 and 5.9% for the first quarter of 2001. In March 2002, the company issued $1.8 billion aggregate principal amount of unsecured global notes. These notes consist of $600 million aggregate principal amount of 4.95% notes due 2005, $700 million aggregate principal amount of 5.50% notes due 2007 and $500 million aggregate principal amount of 6.375% notes due 2012. The net proceeds of the offering were used to pay-down commercial paper borrowings. The company's average borrowing rates are expected to be higher for the remainder of 2002 over the first quarter average due to the fixed rate notes. However, overall interest expense for the second and third quarters of 2002 is expected to be below prior year levels because of the favorable spread in commercial paper borrowing rates and lower debt levels. The company's effective income tax rate was 34.4% for the first quarter of 2002 versus 39.4% for the same period last year, reflecting the adoption of SFAS No. 142 and lower state taxes. On a comparable basis, the effective tax rate for the first quarter of 2001 would have been 34.8%. NET INCOME Net income, on a comparable basis, increased $18.1 million or 8% for the quarter, while diluted earnings per share increased to $0.91 from $0.85, a 7% increase. The earnings for the first quarter of 2001 used in these comparisons includes a positive adjustment of $0.19 per share (diluted) for goodwill amortization expense, net of tax, that would not have been required had SFAS No. 142 been in effect that year. The weighted average number of diluted shares outstanding for the first quarter of 2002 totaled 268,546,000, compared to 266,415,000 for the first quarter 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 $457.7 million for the first quarter of 2002, compared with $480.7 million for the same period of 2001, a 5% decrease. The operating cash flow results reflect lower newspaper advertising revenues, partially offset by reduced newspaper expenses and an increase in the television segment advertising revenues and earnings. The company's consolidated after-tax cash flow (defined as after-tax income plus depreciation and amortization) increased $11.6 million or 4% reflecting the operating factors discussed above, along with significantly lower interest expense. Capital expenditures totaled $57.8 million for the first three months of 2002, compared to $64.1 million for the first three months of 2001. In March 2002, as discussed above, the company issued $1.8 billion aggregate principal amount of unsecured global notes in an underwritten public offering. The net proceeds of the offering were used to repay outstanding commercial paper obligations. In total, the company's long term debt decreased by $230.5 million during the first quarter of 2002, reflecting the pay-down of commercial paper borrowings from operating cash flows. Significantly lower interest rates on commercial paper borrowings contributed favorably to first quarter cash flows. Also in March 2002, the company entered into a $2.775 billion revolving credit agreement providing for up to $1.41 billion in 364-day revolving credit loans and up to $1.365 billion in 5-year revolving credit loans. The company terminated its $3.0 billion revolving credit agreement, and its $1.53 billion revolving credit facility which was due to expire in July 2002. At March 31, 2002, the company had $4.3 billion of credit available under two revolving credit agreements. Under a shelf registration that became effective with the Securities and Exchange Commission in April 2002, an additional $2.5 billion of unsecured debt securities can be issued. Any proceeds from the sale of such securities could be used for general corporate purposes, including capital expenditures, working capital, securities repurchase programs, repayment of long term and short term debt and the financing of future acquisitions. The company may also invest funds that are not required immediately in short term marketable securities. The company's foreign currency translation adjustment, included in accumulated other comprehensive income and reported as part of shareholders' equity, totaled ($126.4 million) at the end of the first quarter versus ($104.9 million) at the end of 2001, reflecting a weakening of Sterling against the U.S. dollar since the end of the year 2001. Newsquest's assets and liabilities at March 31, 2002 were translated from Sterling to U.S. dollars at an exchange rate of $1.43 versus $1.45 at the end of 2001. Newsquest's financial results were translated at an average rate of $1.43 for the first quarter of 2002 versus $1.46 for the first quarter of 2001. The company's regular quarterly dividend of $0.23 per share was declared in the first quarter of 2002, totaling $61.5 million and paid on April 1, 2002. In May 2002, the company also declared a quarterly dividend of $0.23 per share payable on July 1, 2002. OTHER MATTERS Refer to Note 2 of the Condensed Consolidated Financial Statements for further discussion of new accounting standards and their impact on reporting of earnings beginning in 2002. CERTAIN FACTORS AFFECTING FORWARD-LOOKING STATEMENTS Certain statements in the company's 2001 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, political and business conditions. CONDENSED CONSOLIDATED BALANCE SHEETS Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars
March 31, 2002 Dec. 30, 2001 ---------------- --------------- ASSETS Cash $ 66,195 $ 73,905 Marketable securities 44,035 66,724 Trade receivables, less allowance (2002 - $39,927; 2001 - $39,138) 729,190 805,746 Inventories 87,519 104,848 Prepaid expenses and other receivables 109,348 126,975 ---------------- --------------- Total current assets 1,036,287 1,178,198 ---------------- --------------- Property, plant and equipment Cost 4,254,651 4,207,074 Less accumulated depreciation (1,792,164) (1,741,604) ---------------- --------------- Net property, plant and equipment 2,462,487 2,465,470 ---------------- --------------- Other assets Goodwill, less amortization 8,546,838 8,578,025 Other intangible assets, less amortization 104,501 106,334 Investments and other assets 743,935 768,074 ---------------- --------------- Total other assets 9,395,274 9,452,433 ---------------- --------------- Total assets $ 12,894,048 $ 13,096,101 ================ =============== LIABILITIES & SHAREHOLDERS' EQUITY Accounts payable and current portion of film contracts payable $ 305,175 $ 354,622 Compensation, interest and other accruals 237,058 235,093 Dividend payable 61,569 60,947 Income taxes 192,786 323,481 Deferred income 161,142 153,594 ---------------- --------------- Total current liabilities 957,730 1,127,737 ---------------- --------------- Deferred income taxes 526,696 503,397 Long-term debt 4,849,563 5,080,025 Postretirement medical and life insurance liabilities 404,016 409,052 Other long-term liabilities 223,175 239,968 ---------------- --------------- Total liabilities 6,961,180 7,360,179 ---------------- --------------- 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 800,000,000; issued, 324,420,732 shares. 324,421 324,421 Additional paid-in capital 228,678 210,256 Retained earnings 7,771,108 7,589,069 Accumulated other comprehensive loss (125,187) (103,287) ---------------- --------------- Total 8,199,020 8,020,459 ---------------- --------------- Less treasury stock - 57,803,187 shares and 58,623,520 shares respectively, at cost (2,258,496) (2,275,737) Deferred compensation related to ESOP (7,656) (8,800) ---------------- --------------- Total shareholders' equity 5,932,868 5,735,922 ---------------- --------------- Total liabilities and shareholders' equity $ 12,894,048 $ 13,096,101 ================ =============== The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars (except per share amounts)
Thirteen weeks ended % Inc March 31, 2002 April 1, 2001 (Dec) -------------- ------------- Net Operating Revenues: Newspaper advertising $ 969,803 $ 1,020,934 (5.0) Newspaper circulation 310,712 313,009 (0.7) Television 167,186 155,613 7.4 Other 76,907 85,392 (9.9) ------------- ------------- ------ Total 1,524,608 1,574,948 (3.2) ------------- ------------- ------ Operating Expenses: Cost of sales and operating expenses, exclusive of depreciation 818,566 839,547 (2.5) Selling, general and administrative expenses, exclusive of depreciation 248,331 254,738 (2.5) Depreciation 53,369 53,281 0.2 Amortization of intangible assets 1,833 59,343 (96.9) ------------- ------------- ------ Total 1,122,099 1,206,909 (7.0) ------------- ------------- ------ Operating income 402,509 368,039 9.4 ------------- ------------- ------ Non-operating income (expense): Interest expense (28,754) (80,442) (64.3) Other (2,292) 448 (611.6) ------------- ------------- ------ Total (31,046) (79,994) (61.2) ------------- ------------- ------ Income before income taxes 371,463 288,045 29.0 Provision for income taxes 127,900 113,500 12.7 ------------- ------------- ------ Net income $ 243,563 $ 174,545 39.5 ============= ============= ====== Net income per share-basic $0.92 $0.66 39.4 ===== ===== ====== Net income per share-diluted $0.91 $0.66 37.9 ===== ===== ====== Dividends per share $0.23 $0.22 4.5 ===== ===== ====== The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars
Thirteen weeks ended March 31, 2002 April 1, 2001 -------------- -------------- Cash flows from operating activities Net income $ 243,563 $ 174,545 Adjustments to reconcile net income to operating cash flows: Depreciation 53,369 53,281 Amortization of intangibles 1,833 59,343 Deferred income taxes 23,299 (16,876) Other, net (62,052) 36,913 --------- --------- Net cash flow from operating activities 260,012 307,206 --------- --------- Cash flows from investing activities Purchase of property, plant and equipment (57,755) (64,076) Payments for acquisitions, net of cash acquired (3,200) (17,775) Change in other investments 31,523 (3,086) Proceeds from sale of certain assets 2,243 0 --------- --------- Net cash used for investing activities (27,189) (84,937) --------- --------- Cash flows from financing activities Payment of long-term debt and debt issuance costs (236,928) (217,030) Dividends paid (60,903) (58,062) Proceeds from issuance of common stock 35,635 8,801 --------- --------- Net cash used for financing activities (262,196) (266,291) --------- --------- Effect of currency exchange rate change (1,026) (4,256) --------- --------- Net decrease in cash and cash equivalents (30,399) (48,278) Balance of cash and cash equivalents at beginning of year 140,629 193,196 --------- --------- Balance of cash and cash equivalents at end of first quarter $ 110,230 $ 144,918 ========= ========= The accompanying notes are an integral part of these condensed consolidated financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2002 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 period ended March 31, 2002, and the comparative period of 2001, 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 On the first day of its fiscal year, December 31, 2001, the company adopted Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 144 did not have a material impact on the company's financial position or results of operations. On December 31, 2001, the company adopted SFAS No. 142, "Goodwill and Other Intangible Assets", which eliminated the amortization of goodwill and other intangibles with indefinite useful lives. The company performed an impairment test of its goodwill and determined that no impairment of the recorded goodwill existed. SFAS No. 142 requires that goodwill be tested for impairment at least annually and more frequently if an event occurs which indicates the goodwill may be impaired. The company expects to perform its impairment testing during the fourth quarter on an annual basis. Goodwill and other intangible assets are as follows: (in thousands of dollars) March 31, 2002 Dec. 30, 2001 -------------- ------------- Accumulated Accumulated Cost Amortization Cost Amortization ---------- ------------ ---------- ------------ Amortized intangible assets: Subscriber lists $ 110,000 $ 5,499 $ 110,000 $ 3,666 Unamortized intangible assets: Goodwill 9,724,952 1,178,114 9,758,081 1,180,056 ---------- ---------- ---------- ---------- Total $9,834,952 $1,183,613 $9,868,081 $1,183,722 ========== ========== ========== ========== As of March 31, 2002, Newspaper goodwill, net of amortization, was $7.0 billion and Television goodwill, net of amortization, was $1.5 billion. Amortization expense for subscriber lists was $1.8 million in the quarter ended March 31, 2002. Subscriber lists are amortized on a straight-line basis over 15 years. For each of the next five years, amortization expense relating to the identified intangibles is expected to be $7.3 million. As required by SFAS 142, the results for the first quarter of 2001 have not been restated. A reconciliation of net income for that period and a comparison to the first quarter of 2002, as if SFAS 142 had been adopted at the beginning of 2001, is presented below. Thirteen weeks ended (dollars in thousands) March 31, 2002 April 1, 2001 -------------- ------------- Reported net income $243,563 $174,545 Add back: goodwill amortization, net of tax 50,910 -------- -------- Adjusted net income $243,563 $225,455 ======== ======== Basic earnings per share: Reported net income $0.92 $0.66 Goodwill amortization, net of tax 0.19 ----- ----- Adjusted net income $0.92 $0.85 ===== ===== Diluted earnings per share: Reported net income $0.91 $0.66 Goodwill amortization, net of tax 0.19 ----- ----- Adjusted net income $0.91 $0.85 ===== ===== 3. Long-term debt In March 2002, the company issued $1.8 billion aggregate principal amount of unsecured global notes in an underwritten public offering. These notes consist of $600 million aggregate principal amount of 4.95% notes due 2005, $700 million aggregate principal amount of 5.50% notes due 2007 and $500 million aggregate principal amount of 6.375% notes due 2012. The net proceeds of the offering were used to pay- down commercial paper borrowings. The company also entered into a $2.775 billion revolving credit agreement in March 2002 which consists of a $1.41 billion 364-day facility which extends to March 2003 and a $1.365 billion 5-year facility which extends to March 2007. At the end of the 364-day period, any borrowings outstanding under the 364- day credit facility are convertible into a one-year term loan at the company's option. During the first quarter of 2002, the company terminated its $3.0 billion revolving credit agreement. The company also terminated its $1.53 billion 364-day revolving credit facility which was due to expire in July 2002 and under which any outstanding borrowings were convertible into a two-year term loan. At December 30, 2001, the company had $6.06 billion of credit available under two revolving credit agreements. At March 31, 2002, the company had $4.3 billion of credit available under two revolving credit agreements. Under a shelf registration that became effective with the Securities and Exchange Commission in April 2002, an additional $2.5 billion of unsecured debt securities can be issued. Any proceeds from the sale of such securities could be used for general corporate purposes, including capital expenditures, working capital, securities repurchase programs, repayment of long term and short term debt and the financing of future acquisitions. The company may also invest funds that are not required immediately in short term marketable securities. Approximate annual maturities of long-term debt, assuming that the company had used the $4.3 billion revolving credit agreements to refinance existing unsecured promissory notes on a long-term basis and assuming the company's other indebtedness was paid on its scheduled pay dates, are as follows: In thousands March 31, 2002 -------------- 2003 $ 0 2004 36,096 2005 2,128,944 2006 21,442 2007 2,060,016 Later years 603,065 -------------- Total $ 4,849,563 ============== 4. 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 $221.7 million for the first quarter of 2002 and $107.0 million for the first quarter of 2001. Net income totaled $243.6 million and other comprehensive losses totaled $21.9 million for the first quarter of 2002. Net income totaled $174.5 million and other comprehensive losses totaled $67.5 million for the first quarter of 2001. 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 other comprehensive losses were net of deferred income tax benefits of $13.4 million for the first quarter of 2002 and $41.4 million for the first quarter of 2001. 5. Outstanding Shares The weighted average number of common shares outstanding (basic) in the first quarter totaled 266,182,000 compared to 264,468,000 for the first quarter of 2001. The weighted average number of diluted shares outstanding in the first quarter totaled 268,546,000 compared to 266,415,000 for the first quarter of 2001. 6. Business Segment Information BUSINESS SEGMENT INFORMATION Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars
Thirteen weeks ended % Inc March 31, 2002 April 1, 2001 (Dec) -------------- ------------- ----- Net Operating Revenues: Newspaper publishing $ 1,357,422 $ 1,419,335 (4.4) Television 167,186 155,613 7.4 ------------- ------------- ----- Total $ 1,524,608 $ 1,574,948 (3.2) ============= ============= ===== Operating Income (net of depreciation and amortization): Newspaper publishing $ 344,703 $ 328,785 4.8 Television 72,769 54,266 34.1 Corporate (14,963) (15,012) 0.3 ------------- ------------- ----- Total $ 402,509 $ 368,039 9.4 ============= ============= ===== Depreciation and Amortization: Newspaper publishing $ 45,235 $ 94,143 (52.0) Television 6,417 16,983 (62.2) Corporate 3,550 1,498 137.0 ------------- ------------- ----- Total $ 55,202 $ 112,624 (51.0) ============= ============= ===== Operating Cash Flow (1): Newspaper publishing $ 389,938 $ 422,928 (7.8) Television 79,186 71,249 11.1 Corporate (11,413) (13,514) 15.5 ------------- ------------- ----- Total $ 457,711 $ 480,663 (4.8) ============= ============= ===== (1) Operating Cash Flow represents operating income for each of the company's business segments plus related depreciation and amortization expense. This measure varies from the Condensed Consolidated Statements of Cash Flows.
PRO FORMA BUSINESS SEGMENT INFORMATION (1) Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars
Thirteen weeks ended % Inc March 31, 2002 April 1, 2001 (Dec) -------------- ------------- ----- Net Operating Revenues: Newspaper publishing $ 1,357,422 $ 1,419,335 (4.4) Television 167,186 155,613 7.4 ------------- ------------- ----- Total $ 1,524,608 $ 1,574,948 (3.2) ============= ============= ===== Operating Income (net of depreciation and amortization): Newspaper publishing $ 344,703 $ 375,856 (8.3) Television 72,769 64,705 12.5 Corporate (14,963) (15,012) 0.3 ------------- ------------- ----- Total $ 402,509 $ 425,549 (5.4) ============= ============= ===== Depreciation and Amortization: Newspaper publishing $ 45,235 $ 47,072 (3.9) Television 6,417 6,544 (1.9) Corporate 3,550 1,498 137.0 ------------- ------------- ----- Total $ 55,202 $ 55,114 0.2 ============= ============= ===== Operating Cash Flow (2): Newspaper publishing $ 389,938 $ 422,928 (7.8) Television 79,186 71,249 11.1 Corporate (11,413) (13,514) 15.5 ------------- ------------- ----- Total $ 457,711 $ 480,663 (4.8) ============= ============= ===== (1) As if Statement of Financial Accounting Standards No. 142 (SFAS No. 142) had been adopted at the beginning of 2001. (2) Operating Cash Flow represents operating income for each of the company's business segments plus related depreciation and amortization expense. This measure varies from the Condensed Consolidated Statements of Cash Flows.
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 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 (1) Current Report on Form 8-K filed March 11, 2002, in connection with a new revolving credit agreement. (2) Current Report on Form 8-K filed March 14, 2002, in connection with the sale of debt securities. 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 15, 2002 By:/s/George R. Gavagan ------------------------------ George R. Gavagan Vice President and Controller Dated: May 15, 2002 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 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. 4-2 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. 4-3 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. 4-4 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. 4-5 $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. 4-6 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. 4-7 Amendment Number Two Incorporated by reference to to $3,000,000,000 Competitive Exhibit 4-12 to Gannett Co., Inc.'s Advance and Revolving Credit Form 10-Q for the quarter ended Agreement among Gannett Co., July 1, 2001. Inc. and the Banks named therein. 4-8 Form of 4.950% Note due Incorporated by reference to Exhibit 2005. 4.13 to Gannett Co., Inc.'s Form 8-K filed on March 14, 2002. 4-9 Form of 5.500% Note due 2007. Incorporated by reference to Exhibit 4.14 to Gannett Co., Inc.'s Form 8-K filed on March 14, 2002. 4-10 Form of 6.375% Note due 2012. Incorporated by reference to Exhibit 4.15 to Gannett Co., Inc.'s Form 8-K filed on March 14, 2002. 4-11 Third Supplemental Indenture, Incorporated by reference to Exhibit dated as of March 14, 2002, 4.16 to Gannett Co., Inc.'s Form 8-K between Gannett Co., Inc. and filed on March 14, 2002. Wells Fargo Bank Minnesota, N.A., as Trustee. 4-12 Competitive Advance and Incorporated by reference Revolving Credit Agreement to Exhibit 10.11 to Gannett dated as of March 11, 2002 Co., Inc.'s Form 8-K filed on among Gannett Co., Inc., the March 14, 2002. several lenders from time to time parties thereto, Bank of America, N.A., as Administrative Agent, JP Morgan Chase Bank and Bank One NA, as Co-Syndication Agents, and Barclays Bank PLC, as Documentation Agent. 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. Amendments No. 1 and 2 incorporated by reference to Exhibit 10-5 to Gannett Co., Inc.'s Form 10-K for the fiscal year ended December 30, 2001. 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 incorporated by reference to Exhibit 10-7 to Gannett Co., Inc.'s Form 10-Q for the quarter ended July 1, 2001. 10-8 Gannett Co., Inc. Transitional Incorporated by reference to Exhibit Compensation Plan, as amended 10-8 to Gannett Co., Inc.'s Form and restated October 22, 2001, 10-K for the fiscal year ended and as further amended on December 30, 2001. December 4, 2001.* 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 Omnibus Incentive Compensation Incorporated by reference to Exhibit Plan No. 4 to the Company's Registration Statement on Form S-8 (Registration No. 333-60402). Amendment No. 1 incorporated by reference to Exhibit No. 10-10 to Gannett Co., Inc.'s Form 10-K for the fiscal year ended December 30, 2001. 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-11 2 exhibit_11.txt CALCULATION OF EARNINGS PER SHARE Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of dollars (except per share amounts) Thirteen weeks ended March 31, April 1, 2002 2001 ------------ ----------- Basic earnings: Net income $ 243,563 $ 174,545 Weighted average number of common shares outstanding 266,182 264,468 Basic earnings per share $0.92 $0.66 Diluted earnings: Net income $ 243,563 $ 174,545 Weighted average number of common shares outstanding 266,182 264,468 Dilutive effect of outstanding stock options and stock incentive rights 2,364 1,947 Weighted average number of shares outstanding, as adjusted 268,546 266,415 Diluted earnings per share $0.91 $0.66
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