-----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, HCGjlB2txPwtYFzNCsI6U1GszZ2m2BEup6kMHNn7V/l4kGb10y/sK52dLHn6xpYB 2LJJSkfHg5u4Vh7lM8J7og== 0000039899-96-000006.txt : 19960517 0000039899-96-000006.hdr.sgml : 19960517 ACCESSION NUMBER: 0000039899-96-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NYSE 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: 96567566 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 10-Q REPORT 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, 1996 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 Identification No.) incorporation or organization) 1100 Wilson Boulevard, Arlington, Virginia 22234 (Address of principal executive offices) (Zip Code) (703) 284-6000 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ____ The number of shares outstanding of the issuer's Common Stock, Par Value $1.00, as of March 31, 1996 was 140,797,505. PART I. FINANCIAL INFORMATION OPERATING SUMMARY Income from operations for the first quarter of 1996 rose $40.7 million or 26% reflecting in part earnings from Multimedia properties acquired in December, 1995. Earnings from broadcasting rose sharply, up $23.8 million or 91%. Multimedia television stations contributed to this growth along with significant earnings gains from the Company's other stations as a group. The Company's new cable business reported operating income of $10.9 million. Newspaper publishing earnings were down slightly for the quarter. Incremental earnings from the Multimedia newspaper group were offset by the effects of higher newsprint costs and a loss at The Detroit News, where six unions have been on strike since July 1995. Income from the Company's other businesses was $8.8 million greater than a year ago, reflecting the results of the alarm security and entertainment businesses acquired with the Multimedia purchase. NEWSPAPERS Newspaper publishing revenues rose $60.7 million or 8% in the first quarter of 1996 reflecting in part revenues reported by Multimedia newspapers. Newspaper advertising revenue rose $40.1 million or 8%. The tables below provide, on a pro forma basis, further details of newspaper ad revenue and linage for the first quarters of 1996 and 1995: Advertising revenue, in thousands of dollars (pro forma) First quarter 1996 1995 % Change Local $ 190,561 $ 194,047 (2) National 90,507 80,835 12 Classified 192,870 186,762 3 Total Run-of-Press 473,938 461,644 3 Preprint and Other advertising 82,947 82,071 1 Total ad revenue $ 556,885 $ 543,715 2 Advertising linage, in thousands of inches (pro forma) First Quarter 1996 1995 % Change Local 7,395 7,844 (6) National 532 528 1 Classified 8,392 8,393 - Total Run-of-Press 16,319 16,765 (3) Preprint 14,124 14,273 (1) Total ad linage 30,443 31,038 (2) In the pro forma presentation above, total advertising revenues for the Company's newspapers rose 2% for the first quarter. Local ad revenues declined due to the effects of the strike in Detroit and because revenue from certain of the Company's larger retail customers was soft in the quarter. National ad revenue rose 12%, reflecting a 26% gain by USA TODAY. Gains in classified advertising, up 3%, were experienced across the newspaper group (except Detroit), with improvement in the employment, auto and real estate categories. Reported newspaper circulation revenues for the quarter rose 8%. On a pro forma basis, circulation revenues were up 4% from 1995. Net paid daily circulation for the Company's local newspapers was down 4%, while Sunday circulation declined 5%. The decline in local daily and Sunday circulation was due principally to the effect of the strike in Detroit. USA TODAY reported an average daily paid circulation of 2,113,881 in the ABC Publisher's statement for the six months ended March 31, 1996, which, subject to audit, is a 3% increase over the comparable period a year ago. Operating costs in total for the newspaper segment rose $64.0 million or 11% for the quarter, reflecting added costs from the Multimedia newspapers. Higher newsprint prices again had a significant effect on costs. In total, reported newsprint expense rose more than 50% due to higher prices. Consumption was even with 1995, including the added usage of Multimedia newspapers. Pro forma consumption was down 2%. Newsprint prices have softened slightly in 1996. It's not certain at this time what changes may occur in newsprint prices in the coming months. However, because of the carryover effect of price increases over the last year, newsprint expense comparisons with 1995 are likely to be adversely affected through much of this year. Newspaper operating income declined $3.3 million or 2% for the quarter reflecting higher newsprint costs and the impact of the strike in Detroit. BROADCASTING Broadcast revenues increased $44.7 million or 46% for the quarter, while operating costs were up $20.9 million or 30%. Results for the first quarter of 1996 include 5 televisions stations and 1 radio station included in the Multimedia purchase. On a pro forma basis, broadcast revenues increased 8%, reflecting a continuation of a strong growth pattern by the Company's television group. Pro forma local television ad revenues grew 10% while national revenues increased 11%. Radio revenues were even for the quarter. Operating income rose $23.8 million or 91%. Earnings from the new Multimedia stations were supplemented by improved results from the Company's other television stations. The Company's nine NBC affiliates reported substantial year-over-year earnings gains. CABLE The Company's cable television business, acquired as part of the Multimedia purchase, serves approximately 461,000 basic subscribers, representing 62% of homes passed. Pay subscribers totaled 334,000. Cable revenue totaled $47.2 million and on a pro forma basis rose 13% for the quarter. Operating income from cable totaled $10.9 million and operating cash flow was nearly $24.0 million. OTHER BUSINESSES The principal businesses included in this segment are outdoor advertising, and the television entertainment programming and alarm security businesses acquired in the Multimedia purchase. The entertainment programming business and the alarm security business were both profitable for the quarter. The revenue and earnings for the alarm security business are growing, however, competition in the entertainment business continues to adversely affect its revenue and earnings levels. NON-OPERATING INCOME AND EXPENSES Interest expense rose $27.8 million or 237%, reflecting interest on commercial paper borrowings to finance the Multimedia acquisition in December 1995. PROVISION FOR INCOME TAXES The Company's effective income tax rate was 43.0% in 1996 and 40.5% in 1995. The increase in the effective tax rate for 1996 is attributable to amortization of non-deductible intangible assets recorded in connection with the Multimedia acquisition. NET INCOME Net income rose $3.1 million, or 4%, for the quarter. Net income per share rose to $0.64 from $0.62, a 3% increase. The weighted average number of shares outstanding totaled 140,680,000 for the first quarter of 1996, compared with 140,011,000 for the first quarter of 1995. The increase in the number of shares outstanding is due mainly to the exercise of stock options. LIQUIDITY AND CAPITAL RESOURCES Cash flow from operating activities as reported in the accompanying Consolidated Statements of Cash Flow, totaled $190.1 million for the first quarter of 1996 and $124.1 million for the first quarter of 1995. Principal uses of cash flow in the first quarter were capital expenditures, reduction of debt and dividends. Capital expenditures for the quarter totaled $53.2 million, compared with $26.6 million in 1995. The increase reflects capital spending for the newly acquired Multimedia businesses, particularly cable and alarm security. The Company's long-term debt was reduced by $89 million from operating cash flow in the first quarter of 1996. The Company's regular quarterly dividend of $0.35 per share, totaling $49.3 million was declared in the first quarter and paid on April 1, 1996. CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Mar. 31, 1996 Dec. 31, 1995 ASSETS Cash $ 50,851,000 $ 46,962,000 Marketable securities 25,000 23,000 Trade receivables, less allowance (1996 - $22,032,000 ; 1995 - $22,182,000) 518,173,000 587,896,000 Other receivables 41,003,000 33,663,000 Inventories 119,162,000 111,653,000 Prepaid expenses 69,626,000 73,887,000 Total current assets 798,840,000 854,084,000 Property, plant and equipment: Cost 3,601,677,000 3,559,666,000 Less accumulated depreciation (1,534,868,000) (1,488,979,000) Net property, plant and equipment 2,066,809,000 2,070,687,000 Intangible and other assets: Excess of acquisition cost over the value of assets acquired, less amortization (1996 - $539,902,000; 1995 - $491,743,000) 3,361,793,000 3,386,600,000 Investments and other assets 211,253,000 192,429,000 Total intangible and other assets 3,573,046,000 3,579,029,000 Total assets $ 6,438,695,000 $ 6,503,800,000 LIABILITIES & SHAREHOLDERS' EQUITY Current maturities of long-term debt $ 123,000 $ 90,751,000 Accounts payable and current portion of film contracts payable 231,019,000 279,594,000 Compensation, interest and other accruals 231,722,000 276,295,000 Dividend payable 49,222,000 49,208,000 Income taxes 83,909,000 15,071,000 Deferred income 109,300,000 101,853,000 Total current liabilities 705,295,000 812,772,000 Deferred income taxes 322,244,000 327,916,000 Long-term debt, less current portion 2,769,474,000 2,767,880,000 Postretirement medical and life insurance liabilities 306,710,000 305,700,000 Other long-term liabilities 138,640,000 143,884,000 Total liabilities 4,242,363,000 4,358,152,000 Shareholders' Equity: Preferred stock of $1 par value per share. Authorized 2,000,000 shares, issued - none Common stock of $1 par value per share. Authorized 400,000,000, issued 162,210,366 shares 162,210,000 162,210,000 Additional paid-in capital 77,268,000 76,811,000 Retained earnings 2,963,843,000 2,923,752,000 Foreign currency translation adjustment (12,148,000) (12,258,000) Total 3,191,173,000 3,150,515,000 Less treasury stock - 21,412,861 shares and 21,645,721 shares respectively, at cost (963,933,000) (973,272,000) Deferred compensation related to ESOP (30,908,000) (31,595,000) Total shareholders' equity 2,196,332,000 2,145,648,000 Total liabilities and shareholders' equity $ 6,438,695,000 $ 6,503,800,000
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Quarter ended Mar. 31, 1996 Mar. 26, 1995 Net Operating Revenues: Newspaper advertising $ 556,885,000 $ 516,742,000 Newspaper circulation 229,417,000 211,964,000 Broadcasting 141,688,000 96,983,000 Cable 47,208,000 0 Other 128,962,000 88,131,000 Total 1,104,160,000 913,820,000 Operating Expenses: Cost of sales and operating expenses exclusive of depreciation 641,209,000 534,222,000 Selling, general and administrative expenses, exclusive of depreciation 187,628,000 171,777,000 Depreciation 53,135,000 39,259,000 Amortization of intangible assets 24,277,000 11,395,000 Total 906,249,000 756,653,000 Operating income 197,911,000 157,167,000 Non-operating income (expense): Interest expense (39,528,000) (11,732,000) Other (1,583,000) (529,000) Total (41,111,000) (12,261,000) Income before income taxes 156,800,000 144,906,000 Provision for income taxes 67,450,000 58,700,000 Net income $ 89,350,000 $ 86,206,000 Net income per share $0.64 $0.62 Dividends per share $0.35 $0.34 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Quarter ended Mar. 31, 1996 Mar. 26, 1995 Cash flows from operating activities: Net income $89,350,000 $86,206,000 Adjustments to reconcile net income to operating cash flows: Depreciation 53,135,000 39,259,000 Amortization of intangibles 24,277,000 11,395,000 Deferred income taxes (5,672,000) (4,483,000) (Gain) loss on sale of assets (227,000) 121,000 Other, net (9,749,000) 21,119,000 Changes in other assets & liabilities, net 38,973,000 (29,529,000) ----------- ----------- Net cash flow from operating activities 190,087,000 124,088,000 ----------- ----------- Cash flows from investing activities: Purchase of property, plant and equipment (53,180,000) (26,630,000) Change in other investments (8,500,000) 0 Proceeds from sale of certain assets 3,907,000 1,279,000 Collection of long-term receivables 425,000 0 ----------- ----------- Net cash used by investing activities (57,348,000) (25,351,000) ----------- ----------- Cash flows from financing activities: Payments of long-term debt (89,033,000) (82,106,000) Dividends paid (49,246,000) (48,023,000) Common stock transactions, net 9,431,000 3,136,000 ----------- ----------- Net cash used for financing activities (128,848,000) (126,993,000) ----------- ----------- Effect Of Currency Exchange Rate Change 0 (29,000) ----------- ----------- Net Increase (Decrease) in Cash and Cash Equivalents 3,891,000 (28,285,000) Balance of Cash and Cash Equivalents at Beginning of Year 46,985,000 44,252,000 ----------- ----------- Balance of Cash and Cash Equivalents at End of First Quarter $50,876,000 $15,967,000 =========== =========== BUSINESS SEGMENT INFORMATION Quarter ended Mar. 31, 1996 Mar. 26, 1995 Operating Revenues: Newspaper publishing $ 820,372,000 $759,636,000 Broadcasting 141,688,000 96,983,000 Cable 47,208,000 0 Other businesses 94,892,000 57,201,000 ------------- ----------- $1,104,160,000 $913,820,000 ============= =========== Operating Income: (Net of depreciation and amortization) Newspaper publishing $147,551,000 $150,856,000 Broadcasting 50,039,000 26,240,000 Cable 10,909,000 0 Other businesses 5,830,000 (2,943,000) Corporate (16,418,000) (16,986,000) ----------- ----------- $197,911,000 $157,167,000 =========== =========== Depreciation & Amortization: Newspaper publishing $40,538,000 $36,450,000 Broadcasting 15,698,000 7,064,000 Cable 13,054,000 0 Other businesses 5,566,000 4,479,000 Corporate 2,556,000 2,661,000 ----------- ----------- $77,412,000 $50,654,000 =========== =========== Operating Cash Flow: Newspaper publishing $188,089,000 $187,306,000 Broadcasting 65,737,000 33,304,000 Cable 23,963,000 0 Other businesses 11,396,000 1,536,000 Corporate (13,862,000) (14,325,000) ------------ ------------ $275,323,000 $207,821,000 ============ ============ NOTES: (1) For financial reporting purposes, at the end of 1995, the Company established four separate segments: newspapers; broadcasting (television and radio); cable television; and a segment for all other business operations. Previously, the Company's operations were reported in three segments: newspapers; broadcasting; and outdoor advertising. Upon the completion of the Multimedia acquisition, the Company established a separate business segment for the acquired cable television division. At the same time, the Company elected to group its outdoor advertising business along with security alarm and entertainment businesses acquired from Multimedia in its fourth "Other Businesses" reporting segment. Additionally, certain businesses previously reported in the newspaper segment are now reflected in the "Other Businesses" segment. Prior year segment data has been restated to reflect this reporting change. (2) Operating Cash Flow represents operating income for each of the Company's business segments plus related depreciation and amortization expense. NOTE TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS March 31, 1996 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 Form 10-K and annual report to shareholders. The financial statements covering the 13 week period ended March 31, 1996, and the comparative period of 1995, reflect all adjustments which, in the opinion of the Company, are necessary for a fair statement of results for the interim periods. 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) Reports on Form 8-K. None. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GANNETT CO., INC. Dated: May 14, 1996 /s/Larry F. Miller ------------------ Larry F. Miller Senior Vice President/Financial Planning and Controller Dated: May 14, 1996 /s/Thomas L. Chapple -------------------- Thomas L. Chapple Senior Vice President, General Counsel and Secretary EXHIBIT INDEX Exhibit Number Title or Description Location - ------- -------------------- --------------- 4-1 $1,000,000,000 Revolving Incorporated by reference Credit Agreement among to Exhibit 4-1 to Gannett Gannett Co., Inc. and the Co., Inc.'s Form 10-K for Banks named therein. the fiscal year ended December 26, 1993. 4-2 Amendment Number One to Incorporated by reference $1,000,000,000 Revolving to Exhibit 4-2 to Gannett Credit Agreement among Co., Inc.'s Form 10-Q for Gannett Co., Inc. and the the fiscal quarter ended Banks named therein. June 26, 1994. 4-3 Amendment Number Two to Incorporated by reference $1,500,000,000 Revolving to Exhibit 4-3 to Gannett Credit Agreement among Co., Inc.'s Form 10-K for Gannett Co., Inc. and the the fiscal year ended Banks named therein. December 31, 1995. 4-4 Indenture dated as of Incorporated by reference March 1, 1983 between to Exhibit 4-2 to Gannett Gannett Co., Inc. and Co., Inc.'s Form 10-K for Citibank, N.A., as the fiscal year ended Trustee. December 29, 1985. 4-5 First Supplemental Incorporated by reference Indenture to Exhibit 4 to Gannett dated as of November 5, Co., Inc.'s Form 8-K filed 1986 on November 9, 1986. among Gannett Co., Inc., Citibank, N.A., as Trustee, and Sovran Bank, N.A., as Successor Trustee. 4-6 Second Supplemental Incorporated by reference Indenture dated as of to Exhibit 4 to Gannett June 1, 1995 among Co., Inc's Form 8-K filed Gannett Co., Inc., June 15, 1995 NationsBank, N.A., as Trustee, and Crestar Bank, as Trustee. 4-7 Rights Plan. Incorporated by reference to Exhibit 1 to Gannett Co., Inc.'s Form 8-K filed on May 23, 1990. 11 Statement re computation Attached. of earnings per share. 27 Financial Data Schedule Attached. Gannett Co., Inc. agrees to furnish to the Securities and Exchange Commission, upon request, a copy of each agreement with respect to long-term debt not filed herewith in reliance upon the exemption from filing applicable to any series of debt which does not exceed 10% of the total consolidated assets of the registrant. EX-11 2 EARNINGS PER SHARE GANNETT CO., INC. Calculation of Earnings Per Share Quarter ended March 31, 1996 March 26, 1995 -------------- -------------- Net Income $89,350,000 $86,206,000 ============== ============== Weighted average number of common shares outstanding 140,680,000 140,011,000 ============== ============== Net income per share $0.64 $0.62 ===== ===== EX-27 3 ART. 5 FDS FOR 1ST QUARTER 1996 10-Q
5 This schedule contains summary financial information extracted from the consolidated balance sheets and statements of income for Gannett Co., Inc. and is qualified in its entirety by reference to such financial statements. 3-MOS DEC-29-1996 JAN-1-1996 MAR-31-1996 50,851,000 25,000 540,205,000 22,032,000 119,162,000 798,840,000 3,601,677,000 1,534,868,000 6,438,695,000 705,295,000 0 162,210,000 0 0 2,034,122,000 6,438,695,000 1,104,160,000 1,104,160,000 641,209,000 906,249,000 0 0 39,528,000 156,800,000 67,450,000 89,350,000 0 0 0 89,350,000 0.64 0
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