Exhibit Index begins
on page 11
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X Annual report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 [Fee Required] for the fiscal
year ended December 31, 1995 or
Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 [No Fee Required] 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 Iden-
incorporation or organization) tification No.)
1100 Wilson Boulevard, Arlington, Virginia 22234
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (703) 284-6000
Securities registered pursuant to
Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, Par Value $1.00 New York Stock Exchange
Securities registered pursuant
to Section 12(g) of the Act:
None
(Title of Class)
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 ____
- 1 -
<PAGE>
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
The aggregate market value of the voting stock held by
non-affiliates of the registrant as of March 8, 1996 was in excess of
$9,121,771,826.
The number of shares outstanding of the registrant's Common
Stock, Par Value $1.00, as of March 8, 1996 was 140,753,924.
Documents incorporated by reference.
(1) Portions of the registrant's Annual Report to
Shareholders for the fiscal year ended December 31, 1995 in Parts
I, II and III.
(2) Portions of the registrant's Proxy Statement issued in
connection with its Annual Meeting of Shareholders to be held on
May 7, 1996.
- 2 -
<PAGE>
CROSS REFERENCE SHEET
The information required in Parts I, II and III of the Form
10-K is incorporated by reference to sections of the Company's
1995 Annual Report to Shareholders ("Annual Report") and its
definitive Proxy Statement for the Annual Meeting of Shareholders
to be held May 7, 1996 ("Proxy Statement") as described below:
Part I
Item 1. Business. Form 10-K Information (Annual
Report pp. 49-59); Note 10 -
Business Segment Information
(Annual Report pp. 44-45).
Item 2. Properties. Properties (Annual Report pp.
53, 54, 56, 58 and 59);
Corporate Facilities (Annual
Report p. 59); Markets We
Serve (Annual Report
pp. 64-66).
Item 3. Legal Proceedings. Note 9 - Commitments,
Contingent Liabilities and
Other Matters (Annual Report
pp. 43-44); Regulation (Annual
Report p. 53).
Item 4. Submission of Matters Not Applicable.
to a Vote of Security
Holders.
Part II
Item 5. Market for Registrant's Gannett Shareholder Services
Common Equity and (Annual Report, inside back cover);
Company Profile (Annual Report, inside
Related Stockholder front cover);
Matters Gannett Common Stock Prices
(Annual Report p. 22);
Dividends (Annual Report
p. 31).
Item 6. Selected Financial Eleven-Year Summary and Notes
Data. to Eleven-Year Summary (Annual
Report pp. 46-48).
Item 7. Management's Discussion Management's Discussion and
and Analysis of Analysis
Financial Condition and of Results of Operations and
Results of Operations. Financial
Position (Annual Report
pp. 23-31).
- 3 -
<PAGE>
Item 8. Financial Statements Consolidated Financial
and Supplementary Data. Statements and
Notes to Consolidated
Financial State-
ments (Annual Report
pp. 32-45). Effects of
Inflation and changing prices
(Annual Report p. 31);
Quarterly Statements of
Income (Annual Report p. 61).
Item 9. Changes in and None.
Disagreements
with Accountants
on Accounting and
Financial Disclosure.
Part III
Item 10. Directors and Executive Executive Officers of the
Officers of the Company are listed
Registrant. below:
Denise H. Bannister - Group President, Gannett Gulf
Coast Newspaper Group, and President and Publisher,
Pensacola News Journal.
Sara M. Bentley - Group President, Gannett Northwest
Newspaper Group, and President and Publisher, Statesman
Journal.
Thomas L. Chapple - Senior Vice President, General
Counsel, and Secretary.
Richard L. Clapp - Senior Vice President, Personnel.
Susan Clark-Johnson - Senior Group President, Gannett
Pacific Newspaper Group, and President and
Publisher, Reno (Nev.) Gazette-Journal.
Michael J. Coleman - Senior Group President, Gannett
South Newspaper Group, and President
and Publisher, FLORIDA TODAY at Brevard County.
John J. Curley - Chairman, President, and Chief Executive Officer.
Thomas Curley - President and Publisher, USA TODAY.
Philip R. Currie - Senior Vice President, News, Gannett
Newspaper Division.
Donald W. Davidson - President, Gannett Outdoor Group.
Gerard R. DeFrancesco - President, Gannett Radio.
Millicent A. Feller - Senior Vice President, Public
Affairs and Government Relations.
Lawrence P. Gasho - Vice President, Financial Analysis.
George R. Gavagan - Vice President, Corporate Accounting Services.
John B. Jaske - Senior Vice President, Labor Relations and
Assistant General Counsel.
Bern Mebane - Senior Group President, Gannett Piedmont
Newspaper Group.
Douglas H. McCorkindale - Vice Chairman, and Chief Financial
and Administrative Officer.
Larry F. Miller - Senior Vice President, Financial Planning,
and Controller.
W. Curtis Riddle - Senior Group President, Gannett East
Newspaper Group, and President and Publisher,
Wilmington (Delaware) News Journal.
- 4 -
<PAGE>
Carleton F. Rosenburgh - Senior Vice President, Gannett
Newspaper Division.
Gary F. Sherlock - Group President, Gannett Atlantic Newspaper Group,
and President and Publisher, Gannett Suburban Newspapers.
Mary P. Stier - Group President, Gannett Midwest Newspaper Group,
and President and Publisher, Rockford Register Star.
Jimmy L. Thomas - Senior Vice President, Financial Services
and Treasurer.
Ronald Townsend - President, Gannett Television.
Cecil L. Walker - President, Gannett Broadcasting.
Gary L. Watson - President, Gannett Newspaper Division.
Susan V. Watson - Vice President, Investor Relations.
Information concerning the Executive Officers of the
Company is included in the Annual Report on pages 18
through 20. Information concerning the Board of
Directors of the Company is incorporated by reference
to the Company's Proxy Statement pursuant to General
Instruction G(3) to Form 10-K.
Item 11. Executive Compensation. Incorporated by reference to the Company's
Proxy Statement pursuant to General
Instruction G(3) to Form 10-K.
Item 12. Security Ownership of Incorporated by
Certain reference to the
Beneficial Owners and Company's Proxy Statement
Management. pursuant to
General Instruction G(3) to
Form 10-K.
Item 13. Certain Relationships Incorporated by
and reference to the
Related Transactions. Company's Proxy Statement
pursuant to
General Instruction G(3) to
Form 10-K.
- 5 -
<PAGE>
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K.
(a) Financial Statements, Financial Statement Schedules
and Exhibits.
(1) Financial Statements.
The following financial statements of the Company and
the accountants' report thereon are included on pages
32 through 45 of the Company's 1995 Annual Report to
Shareholders and are incorporated herein by reference:
Consolidated Balance Sheets as of December 31, 1995
and December 25, 1994.
Consolidated Statements of Income - Fiscal Years
Ended December 31, 1995, December 25, 1994, and
December 26, 1993.
Consolidated Statements of Cash Flows - Fiscal
Years Ended December 31, 1995, December 25, 1994,
and December 26, 1993.
Consolidated Statements of Changes in Shareholders'
Equity - Fiscal Years Ended December 31, 1995,
December 25, 1994, and December 26, 1993.
Notes to Consolidated Financial Statements.
Report of Independent Accountants.
(2) Financial Statement Schedules.
The following financial statement schedules are
incorporated by reference to "Schedules to Form 10-K
Information" appearing on pages 62 through 63 of the
Company's 1995 Annual Report to Shareholders:
Schedule V - Property, Plant and Equipment.
Schedule VI - Accumulated Depreciation and
Amortization of Property, Plant and Equipment.
- 6 -
<PAGE>
Schedule VIII - Valuation and Qualifying Accounts.
Schedule X - Supplementary Income Statement
Information.
The Report of Independent Accountants on Financial
Statement Schedules appears on page 8 of this Annual
Report on Form 10-K.
Note: Financial statements of the registrant are omitted as the
registrant is primarily an operating company and the
aggregate of the minority interest in and the debt of
consolidated subsidiaries is not material in relation to
total consolidated assets. All other schedules are
omitted as the required information is not applicable
or the information is presented in the consolidated
financial statements or related notes.
(3) Pro Forma Financial Information.
Not Applicable.
(4) Exhibits.
See Exhibit Index for list of exhibits filed with this
Annual Report on Form 10-K. Management contracts and
compensatory plans or arrangements are identified with
asterisks on the Exhibit Index.
(b) Reports on Form 8-K.
A Current Report on Form 8-K dated December 5, 1995 was
filed in connection with the acquisition of Multimedia,
Inc.
- 7 -
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES
To the Board of Directors and Shareholders
of Gannett Co., Inc.
Our audits of the consolidated financial statements referred to
in our report dated February 6, 1996 appearing on page 45 of the
1995 Annual Report to Shareholders of Gannett Co., Inc. (which
report and consolidated financial statements are incorporated by
reference in this Annual Report on Form 10-K) also included an
audit of the Financial Statement Schedules listed in Item 14(a)
of this Form 10-K. In our opinion, these Financial Statement
Schedules present fairly, in all material respects, the
information set forth therein when read in conjunction with the
related consolidated financial statements.
/s/Price Waterhouse LLP
- --------------------------------
PRICE WATERHOUSE LLP
Washington, D.C.
February 6, 1996
- 8 -
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: February 20, 1996 GANNETT CO., INC.
(Registrant)
By /s/Douglas H. McCorkindale
--------------------------
Douglas H. McCorkindale,
Vice Chairman, and Chief Financial
and Administrative Officer
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the registrant in the capacities and on the
dates indicated.
Dated: February 20, 1996 /s/John J. Curley
-----------------
John J. Curley,
Director, and Chairman,
President and Chief Executive
Officer
Dated: February 20, 1996 /s/Douglas H. McCorkindale
--------------------------
Douglas H. McCorkindale,
Director, and Vice Chairman,
and Chief Financial and
Administrative Officer
Dated: February 20, 1996 /s/Larry F. Miller
------------------
Larry F. Miller,
Senior Vice President,
Financial Planning, and
Controller
Dated: February 20, 1996 /s/Andrew F. Brimmer
--------------------
Andrew F. Brimmer, Director
- 9 -
<PAGE>
Dated: February 20, 1996 /s/Meredith A. Brokaw
---------------------
Meredith A. Brokaw, Director
Dated: February 20, 1996 /s/Rosalynn Carter
------------------
Rosalynn Carter, Director
Dated: February 20, 1996 /s/Peter B. Clark
-----------------
Peter B. Clark, Director
Dated: February 20, 1996 /s/Stuart T.K. Ho
-----------------
Stuart T.K. Ho, Director
Dated: February 20, 1996 /s/Drew Lewis
-------------
Drew Lewis, Director
Dated: February 20, 1996 /s/Josephine P. Louis
---------------------
Josephine P. Louis, Director
Dated: February 20, 1996 /s/Rollan D. Melton
-------------------
Rollan D. Melton, Director
Dated: February 20, 1996 /s/Thomas A. Reynolds, Jr.
--------------------------
Thomas A. Reynolds, Jr., Director
Dated: February 20, 1996
---------------------------
Carl T. Rowan, Director
Dated: February 20, 1996 /s/Dolores D. Wharton
---------------------
Dolores D. Wharton, Director
- 10 -
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit Location
- ------- ----------------------------- ----------------------------------
2-1 Agreement and Plan of Incorporated by reference to
Merger dated as of July 24, Exhibit 99 to
1995 between Gannett Co., Gannett Co., Inc.'s Form 8-K
and Multimedia, Inc. filed on July 26, 1995.
3-1 Second Restated Certificate Incorporated by reference to
of Incorporation of Gannett Exhibit 3-1 to
Co., Inc. Gannett Co., Inc's Form 10-K for
the fiscal year ended December 26, 1993
("1993 Form 10-K").
Amendment to Restated Incorporated by reference to
Exhibit 3-1 the 1993 Form 10-K.
Certificate of Incorporation.
3-2 By-laws of Gannett Co., Inc. Incorporated by reference to
Exhibit 3-2 to the 1993 Form
10-K.
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
to $1,000,000 Revolving Exhibit 4-2
Credit Agreement among to Gannett Co., Inc.'s Form 10-Q
Gannett Co., Inc. and the for the fiscal quarter ended
Banks named therein. June 26, 1994.
4-3 Amendment Number Two to Attached.
$1,500,000,000 Revolving
Credit Agreement among
Gannett Co., Inc. and the
Banks named therein.
- 11 -
<PAGE>
4-4 Indenture dated as of March 1, Incorporated by reference to Exhibit 4-2
1983 between Gannett Co., Inc. to Gannett Co., Inc.'s Form 10-K for the
and Citibank, N.A., as Trustee. fiscal year ended December 29, 1985.
4-5 First Supplemental Indenture Incorporated by reference to
dated as of November 5, 1986 Exhibit 4 to
among Gannett Co., Inc., Gannett Co., Inc.'s Form 8-K filed on
Citibank, N.A., as Trustee, and November 9, 1986.
Sovran Bank, N.A., as Successor
Trustee.
4-6 Rights Plan. Incorporated by reference to
Exhibit 1 to Gannett Co.,Inc.'s
Form 8-K filed on May 23, 1990.
10-1 Employment Agreement dated Incorporated by reference to Gannett
December 7, 1992 between Co., Inc.'s Form 10-K for the fiscal
Gannett Co., Inc. and John J. year ended December 27, 1992
Curley.* ("1992 Form 10-K").
10-2 Employment Agreement dated Incorporated by reference to the 1992
December 7, 1992 between Form 10-K.
Gannett Co., Inc.and Douglas H.
McCorkindale.*
10-3 Agreement dated January 5, Incorporated by reference to
1995 between Gannett Tele- Gannett Co., Inc.'s Form 10-K
vision and CTR Productions. for the fiscal year
ended December 25, 1994.
10-4 Gannett Co., Inc. 1978 Incorporated by reference to
Executive Long-Term Incentive Exhibit 10-3 to
Plan.* Gannett Co., Inc.'s Form 10-K 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.
- 12 -
<PAGE>
10-5 Description of supplemental Incorporated by reference to
insurance benefits.* Exhibit 10-4 to the 1993
Form 10-K.
10-6 Gannett Co., Inc. Supplemental Incorporated by reference to Exhibit
Retirement Plan, as amended.* 10-8 to Gannett Co., Inc's Form 10-K
for the fiscal year ended
December 27,1986 ("1986 Form 10-K").
10-7 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. 1995 Amendments
attached in Exhibit 10-7.
10-8 Gannett Co., Inc. 1987 Incorporated by reference to
Deferred Compensation Plan, Exhibit 10-8
as restated.* to the 1993 Form 10-K.
10-9 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.
11 Statement re computation of Attached.
earnings per share.
13 Portions of 1995 Annual Report Attached.
to Shareholders incorporated
by reference.
21 Subsidiaries of Gannett Co., Attached.
Inc.
23 Consent of Independent Attached.
Accountants.
27 Financial Data Schedule. Attached.
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.
- 13 -
AMENDMENT TO
GANNETT CO., INC.
RETIREMENT PLAN FOR DIRECTORS
GANNETT CO., INC. ("Gannett") hereby amends its Retirement
Plan for Directors ("Plan") to provide a lump sum payment to a
Director's beneficiaries whether death occurs prior to or
following retirement.
Section 5 of the Plan is amended to read as follows:
Section 5. Death Benefits: In the event of the death of a
Director, either prior to or following retirement, the present
value of the benefit to which the Director would have been
entitled had retirement occurred the day before death shall be
paid in a single sum to the Beneficiary designated by the
Director or to the Director's estate in the event the Beneficiary
is no longer living or has not been designated.
IN WITNESS WHEREOF, the Company has caused its duly
authorized officer to execute this Amendment, which shall be
effective as of May 2, 1995.
GANNETT CO., INC.
By: /s/Thomas L. Chapple
--------------------------
Thomas L. Chapple
Secretary
<PAGE>
AMENDMENT TO
GANNETT CO., INC.
RETIREMENT PLAN FOR DIRECTORS
GANNETT CO., INC. ("Gannett") hereby amends its Retirement
Plan for Directors ("Plan") to provide that retirement
compensation will be based on the highest compensation earned by
a director during his or her last ten years of Board service.
Section 2 of the Plan is amended to read as follows:
Section 2. Benefit: The annual benefit payable pursuant to
this Plan shall be computed by multiplying the highest annual
Director's Compensation paid by Gannett during the ten years
preceding the Director's retirement from the Board by the
appropriate percentage in the table shown below.
The term "Compensation" as used in this Plan shall include
annual retainer, committee chair retainer, board and committee
meeting fees, and such types of cash payments as may be provided
as director compensation in the future.
Years of Service
As Director Percentage
------------------- -------------
10 or more 100%
9 90%
8 80%
7 70%
6 60%
5 50%
Less than 5 -0-
IN WITNESS WHEREOF, the Company has caused its duly
authorized officer to execute this Amendment, which shall be
effective as of June 20, 1995.
GANNETT CO., INC.
By: /s/Thomas L. Chapple
--------------------------
Thomas L. Chapple
Secretary
<TABLE>
Calculation of Earnings Per Share
<CAPTION>
Fiscal Year Ended
------------------------------------------
December 31, December 25, December 26,
1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
Net Income $477,262,000 $465,399,000 $397,752,000
Net income per share $3.41 $3.23 $2.72
Weighted average number of common
shares outstanding 140,156,000 144,276,000 146,474,000
</TABLE>
- Front Cover -
Company Profile
Gannett Co., Inc. is a diversified news and information company that
publishes newspapers, operates broadcasting stations, cable television
systems, a television entertainment programming unit
and outdoor advertising businesses, and is engaged in
marketing, commercial printing, a newswire service, data services,
news programming and alarm security services. The company has
operations in 44 states, the District of Columbia, Canada, Guam and
the U.S. Virgin Islands.
Gannett is the largest U.S. newspaper group in terms of
circulation, with 92 daily newspapers, including USA TODAY, a variety
of non-daily publications and USA WEEKEND, a weekly newspaper
magazine. Total average paid daily circulationof Gannett's daily
newspapers is approximately 6.6 million.
Gannett owns and operates 15 television stations and seven FM and
six AM radio stations in major markets. Gannett's cable division
serves 458,000 subscribers in five states. Gannett Outdoor Group is
the largest outdoor advertising group in North America, with
operations in 19 major markets in the U.S., and in most markets in
Canada.
Gannett was founded by Frank E. Gannett in 1906 and incorporated in
1923. The company went public in 1967. Its more than 140 million
shares of common stock are held by more than 14,000 shareholders of
record in all 50 states and abroad. The company has 39,100 employees.
Corporate headquarters is located at Arlington, Va.
<PAGE>
-16-
Board of Directors
John J. Curley
Chairman, president and chief executive officer, Gannett Co., Inc.
Formerly: President and chief executive officer, Gannett Co., Inc.
(1986-89); president and chief operating officer (1984-86). Other
directorships: Dickinson College Board of Trustees. Age 57. Term
expires in 1996. (b,d,g,h)
Andrew F. Brimmer
President, Brimmer & Company, Inc., and chairman, District of Columbia
Financial Responsibility and Management Assistance Authority. Other
directorships: Airborne Express; BankAmerica Corporation and Bank of
America NT&SA; BlackRock Investment Income Trust, Inc. (and other
Funds); Brimmer & Company, Inc.; Carr Realty Corporation; Connecticut
Mutual Life Insurance Company; E.I. duPont de Nemours & Company;
Navistar International Corporation; PHH Corporation; and trustee of
the College Retirement Equities Fund. Age 69. Dr. Brimmer will retire
from the Board on May 6, 1997. (a,f)
Meredith A. Brokaw
President, Penny Whistle Toys, Inc., New York City, and author of
seven children's books. Other directorships: Conservation
International, Washington, D.C. Age 55. Term expires in 1996. (b,d,f)
Rosalynn Carter
Author and businesswoman. Formerly: First Lady (1977-81). Other
directorships: Carter Presidential Center; RosalynnCarter
Institute of Georgia Southwestern College; Friendship Force
International; adviser, Habitat for Humanity, Inc.; trustee, The
Menninger Foundation. Age 68. Term expires in 1997. (b,e,h)
Peter B. Clark
Former chairman, president and chief executive officer, The Evening
News Association (1969-86). Formerly: Regents professor, Graduate
School of Management, University of California at Los Angeles (1987).
Other directorships: Trustee, Harper-Grace Hospital. Age 67. Term
expires in 1996. (c,f)
Stuart T.K. Ho
Chairman of the board and president, Capital Investment of Hawaii,
Inc. Other directorships: Aloha Airgroup, Inc.; Bancorp Hawaii, Inc.;
College Retirement Equities Fund; Capital Investment of Hawaii, Inc.
Age 60. Term expires in 1998. (a,b,e)
Drew Lewis
Chairman and chief executive officer, Union Pacific Corporation.
Other directorships: American Express Co.; AT&T; Ford Motor Co.;FPL Group,
Inc.; Union Pacific Corporation; Union Pacific Resources Group Inc.
Age 64. Term expires in 1997. (a,d)
<PAGE>
-17-
Josephine P. Louis
Chairman and chief executive officer, Eximious Inc., and Eximious Ltd.
Other directorships: HDO Productions, Inc.; trustee, Chicago
Horticultural Society; trustee, Chicago Historical Society. Age 65.
Term expires in 1996. (a,b,f)
Douglas H. McCorkindale
Vice chairman and chief financial and administrative officer, Gannett
Co., Inc. Formerly: Vice chairman and chief financial officer, Gannett
Co., Inc. (1984-85). Other directorships: Continental Airlines, Inc.;
Frontier Corporation; and seven funds which are part of the Prudential
group of mutual funds. Age 56. Term expires in 1998. (b,g,h)
Rollan D. Melton
Chairman and chief executive officer, Speidel Newspapers Inc., and
columnist, Reno (Nev.) Gazette-Journal. Other directorships: National
Judicial College; John Ben Snow Trust and Foundation. Age 64. Mr.
Melton will retire from the Board on May 6, 1997. (e,h)
Thomas A. Reynolds Jr.
Chairman emeritus of Chicago law firm of Winston & Strawn. Other
directorships: Jefferson Smurfit Group; Union Pacific Corporation. Age
67. Term expires in 1997. (a,b,c)
Carl T. Rowan
President, CTR Productions Inc.; author and lecturer; columnist, King
Features and the Chicago Sun-Times; television and radio commentator.
Age 70. Mr. Rowan will retire from the Board on May 7, 1996. (d,e)
Dolores D. Wharton
Chairman and CEO, Fund for Corporate Initiatives, Inc. Other
directorships: COMSAT Corporation; Kellogg Company. Age 68. Term
expires in 1997. (c,h)
(a) Member of Audit Committee.
(b) Member of Executive Committee.
(c) Member of Executive Compensation Committee.
(d) Member of Management Continuity Committee.
(e) Member of Public Responsibility Committee.
(f) Member of Personnel Practices Committee.
(g) Member of Gannett Management Committee.
(h) Member of Contributions Committee.
<PAGE>
-18-
Company and Divisional Officers
Gannett's principal management group is the Gannett Management
Committee, which coordinates overall management policies for the
Company. The members are identified below and on the previous pages.
The managers of the Company's various local operating units enjoy
substantial autonomy in local policy, operational details, news
content and political endorsements.
The Company's corporate headquarters staff includes specialists who
provide advice and assistance to the Company's operating units in
various phases of the Company's operations.
Below are brief descriptions of the business experience during the
last five years of the officers of the Company and the heads of its
national and regional divisions. Officers serve for a term of one year
and may be re-elected. Information about the two officers who serve as
directors (John J. Curley and Douglas H. McCorkindale) can be found on
pages 16-17.
Christopher W. Baldwin, Vice president, taxes. Formerly: Director,
taxes (1979-1993). Age 52.
Denise H. Bannister, President, Gannett Gulf Coast Newspaper Group,
and president and publisher, Pensacola (Fla.) News Journal. Formerly:
Vice president, Gannett South Newspaper Group, and president and
publisher, Pensacola News Journal (1991-1994); vice president, Gannett
East Newspaper Group (1990-1991), and president and publisher, The
Herald-Dispatch, Huntington, W. Va. (1989-1991). Age 45.
Sara M. Bentley, President, Gannett Northwest Newspaper Group, and
president and publisher, Statesman Journal, Salem, Ore. Formerly:
President and publisher, Statesman Journal (1988-1994). Age 44.
Thomas L. Chapple, Senior vice president, general counsel and
secretary. Formerly: Vice president, general counsel and secretary
(1991-1995); vice president, associate general counsel and secretary
(1981-1991). Age 48.*
Richard L. Clapp, Senior vice president/personnel. Formerly: Vice
president, compensation and benefits (1983-1995). Age 55.*
Susan Clark-Johnson, Senior group president, Gannett Pacific Newspaper
Group, and president and publisher, Reno (Nev.) Gazette-Journal.
Formerly: President, Gannett West Newspaper Group, and president and
publisher, Reno Gazette-Journal (1985-1994). Age 49.
Michael J. Coleman, Senior group president, Gannett South Newspaper
Group, and president and publisher, FLORIDA TODAY at Brevard County.
Formerly: President, Gannett South Newspaper Group, and president and
publisher, FLORIDA TODAY (1991-1994); president, Gannett Central
Newspaper Group, and president and publisher, Rockford (Ill.) Register
Star (1986-1991). Age 52.
<PAGE>
-19-
Thomas Curley, President and publisher, USA TODAY. Formerly: President
and chief operating officer, USA TODAY (1986-1991). Thomas Curley is
the brother of John J. Curley. Age 47.*
Philip R. Currie, Senior vice president, news, Newspaper Division.
Formerly: Vice president, news, Newspaper Division (1982-1995). Age
54.
Donald W. Davidson, President, Gannett Outdoor Group. Age 57.*
Gerry DeFrancesco, President, Gannett Radio. Formerly: President and
general manager, KIIS/KIIS-FM at Los Angeles (1991-1992); executive
vice president, Gannett Radio, and vice president and station manager,
KIIS/KIIS-FM (1991); vice president and operations manager, Pyramid
Broadcasting, Philadelphia, Pa. (1990-1991); vice president and
station manager, KIIS/KIIS-FM (1989-1990). Age 41.
Millicent A. Feller, Senior vice president, public affairs and
government relations. Formerly: Vice president, public affairs and
government relations (1986-1991). Age 48.*
Lawrence P. Gasho, Vice president, financial analysis. Age 53.
George R. Gavagan, Vice president, corporate accounting services.
Formerly: Assistant controller (1986-1993). Age 49.
Dale Henn, Assistant treasurer. Formerly: Director, capital
appropriations (1987-1994). Age 44.
John B. Jaske, Senior vice president, labor relations and assistant
general counsel. Formerly: Vice president, labor relations and
assistant general counsel (1980-1991). Age 51.*
Madelyn P. Jennings, Senior vice president, personnel. Age 61. Ms.
Jennings retired July 1, 1995.
Kristin H. Kent, Vice president, senior legal counsel and assistant
secretary. Formerly: Vice president, senior legal counsel (1993-1995);
senior legal counsel (1986-1993). Age 45.
Gracia C. Martore, Vice president, treasury services. Formerly:
Assistant treasurer (1985-1993). Age 44.
Myron Maslowsky, Vice president, internal audit. Formerly: Director,
internal audit (1989-1995). Age 41.
Bern Mebane, Senior group president, Gannett Piedmont Newspaper Group.
Formerly: President, Multimedia Newspaper Company (1989-1995). Age 46.
William Metzfield, President, Gannett Supply Corp., and vice
president, purchasing, Gannett Co., Inc. Age 54.
<PAGE>
-20-
Larry F. Miller, Senior vice president, financial planning and
controller. Formerly: Vice president, financial planning and
controller (1986-1991). Age 57.*
W. Curtis Riddle, Senior group president, Gannett East Newspaper
Group, and president and publisher, The News Journal, Wilmington, Del.
Formerly: President, East Newspaper Group, and president and
publisher, Lansing (Mich.) State Journal (1993-1994); president,
Gannett Central Newspaper Group (1991-1993), and president and
publisher, Lansing State Journal (1990-1993); vice president, Gannett
Central Newspaper Group (1989-1991); president and publisher,
Lafayette (Ind.) Journal and Courier (1988-1990). Age 44.
Carleton F. Rosenburgh, Senior vice president, Gannett Newspaper
Division. Formerly: Vice president, circulation (1986-1991). Age 56.
Gary F. Sherlock, President, Gannett Atlantic Newspaper Group, and
president and publisher, Gannett Suburban Newspapers. Formerly: Vice
president, Gannett Metro Newspaper Group, and president and publisher,
Gannett Suburban Newspapers (1990-1994); executive vice president,
advertising, Newspaper Division (1988-90); president, Gannett National
Newspaper Sales (1986-90). Age 50.
Mary P. Stier, President, Gannett Midwest Newspaper Group, and
president and publisher, Rockford (Ill.) Register Star. Formerly: Vice
president, Gannett Central Newspaper Group (1990-1993), and president
and publisher, Rockford Register Star (1991- 1993); publisher, Iowa
City Press-Citizen (1987-1991). Age 38.
Jimmy L. Thomas, Senior vice president, financial services and
treasurer. Formerly: Vice president, financial services and treasurer
(1980-1991). Age 54.*
Ronald Townsend, President, Gannett Television. Age 54.*
Wendell J. Van Lare, Vice president, senior labor counsel. Formerly:
Director, labor relations (1980-1993). Age 50.
Cecil L. Walker, President, Gannett Broadcasting Division. Age 59.*
Barbara W. Wall, Vice president, senior legal counsel. Formerly:
Senior legal counsel (1990-1993); assistant general counsel
(1985-1990). Age 41.
Gary L. Watson, President, Gannett Newspaper Division. Formerly:
President, Gannett Community Newspaper Group (1985-1990). Age 50.*
Susan V. Watson, Vice president, investor relations. Age 43.
* Member of the Gannett Management Committee.
<PAGE>
-22-
Gannett common stock prices
Restated to reflect the 2-for-1 stock split effective
January 6, 1987. High-low range by quarters based
on NYSE-composite closing prices.
Year Quarter Low High
- ------ --------- --------- ---------
1985 first $23.57 $29.38
second $27.38 $31.50
third $27.25 $32.88
fourth $26.63 $31.25
1986 first $29.63 $37.00
second $34.25 $43.56
third $33.19 $42.75
fourth $33.88 $38.25
1987 first $35.94 $49.63
second $43.75 $54.88
third $48.50 $55.25
fourth $31.75 $52.75
1988 first $33.75 $39.50
second $29.38 $35.63
third $30.50 $34.25
fourth $32.38 $35.00
1989 first $34.63 $38.25
second $36.63 $48.50
third $43.64 $49.88
fourth $39.50 $45.25
1990 first $39.50 $44.38
second $35.50 $42.25
third $29.88 $37.50
fourth $30.63 $37.75
1991 first $35.75 $42.63
second $39.75 $44.38
third $39.38 $46.63
fourth $35.88 $42.25
1992 first $42.25 $47.88
second $41.50 $49.13
third $43.88 $48.25
fourth $46.00 $53.63
1993 first $50.63 $55.38
second $47.50 $54.75
third $47.75 $51.38
fourth $47.50 $58.13
1994 first $53.38 $58.38
second $50.63 $54.88
third $48.38 $51.63
fourth $46.75 $53.38
1995 first $50.13 $55.00
second $52.00 $55.75
third $53.00 $55.50
fourth $52.88 $64.38
1996 first $59.25 $69.25 *
* through March 5, 1996
<PAGE>
-23-
Management's responsibility for financial statements
The management of the Company has prepared and is responsible
for the consolidated financial statements and related financial
information included in this report. These financial statements
were prepared in accordance with generally accepted accounting
principles. These financial statements necessarily include
amounts determined using management's best judgments and
estimates.
The Company's accounting and other control systems provide
reasonable assurance that assets are safeguarded and that the books
and records reflect the authorized transactions of the Company.
Underlying the concept of reasonable assurance is the premise that
the cost of control not exceed the benefit derived.
Management believes that the Company's accounting and other control
systems appropriately recognize this cost/benefit relationship.
The Company's independent accountants, Price Waterhouse LLP, provide
an independent assessment of the degree to which management meets its
responsibility for fairness in financial reporting. They regularly
evaluate the Company's system of internal accounting control and
perform such tests and other procedures as they deem necessary to
reach and express an opinion on the financial statements. The Price
Waterhouse LLP report appears on page 45.
The Audit Committee of the Board of Directors is responsible for
reviewing and monitoring the Company's financial reports and
accounting practices to ascertain that they are appropriate in the
circumstances. The Audit Committee consists of five non-management
directors, and meets to discuss audit and financial reporting matters
with representatives of financial management, the internal auditors
and the independent accountants. The internal auditors and the
independent accountants have direct access to the Audit Committee to
review the results of their examinations, the adequacy of internal
accounting controls and the quality of financial reporting.
John J. Curley Douglas H. McCorkindale
Chairman, President and Vice Chairman, Chief Financial
Chief Executive Officer and Administrative Officer
Management's discussion and analysis of results of operations
and financial position
Basis of reporting
Following is a discussion of the key factors which have affected the
Company's business over the last three years. This commentary should
be read in conjunction with the Company's financial statements, the
11-year summary of operations and the Form 10-K information that
appear in the following sections of this report.
The Company's fiscal year ends on the last Sunday of the calendar
year. The Company's 1995 fiscal year ended on December 31, 1995, and
encompassed a 53-week period. The Company's 1994 and 1993 fiscal years
each encompassed a 52-week period.
Acquisitions and dispositions
On December 4, 1995, the Company completed the acquisition of
Multimedia, Inc. ("Multimedia"). Multimedia's principal business
operations include 10 local daily newspapers, five
television stations, two radio stations, a cable television division,
television entertainment programming and an alarm security company.
Further information concerning Multimedia
businesses is presented in the 10-Ksection of this report beginning on
page 49.
The consideration paid for Multimedia included $45.25 per common
share, totaling $1.8 billion, and the assumption of Multimedia
liabilities of approximately $0.5 billion. This
acquisition was accounted for under the purchase method of accounting
and Multimedia's results of operations are included in the Company's
financial statements from the date of acquisition. The acquisition of
Multimedia did not materially affect the Company's consolidated
results of operations for 1995.
The Company financed the acquisition of Multimedia with the issuance
of unsecured promissory notes (commercial paper). The Financial
Position section of this report on page 30 contains further
information on this and other financing activities of the Company.
In May 1994, the Company purchased Nursing Spectrum, which publishes
a group of biweekly periodicals specializing in advertising for
nursing employment. In December 1994, the Company purchased television
station KTHV-TV in Little Rock, a CBSaffiliate. These acquisitions
were accounted for under the purchase method of accounting, and
consideration paid included cash and shares of the Company's common
stock. The acquisitions were not material to the Company's financial
position or results of operations.
In November 1994, the Company sold its newspaper in Stockton,
Calif., and realized a gain which is reflected in non-operating
income.
<PAGE>
-24-
Results of operations
Consolidated summary
In millions of dollars
1995 Change 1994 Change 1993 Change
--------- --------- --------- -------- --------- --------
Operating revenues $4,007 5% $3,825 5% $3,642 5%
Operating income $852 5% $813 14% $714 16%
Net income $477 3% $465 17% $398 15%
Business segment reporting
For financial reporting purposes, the Company has established four
separate business segments: newspapers; broadcasting (television and
radio); cable television; and a segment for all other business
operations. In prior years, 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
because of the relative significance of the operations of this
business and the amount of the Company's investment therein. At the
same time, the Company elected to group its outdoor advertising along
with the alarm security 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.
A discussion of the operating results of each of the Company's
principal business segments and other factors affecting financial
results follows. Operating cash flow amounts presented with business
segment information represent operating income plus depreciation and
amortization of intangible assets. Such cash flow amounts vary from
net cash flow from operating activities presented in the Consolidated
Statements of Cash Flows, because cash payments for interest and taxes
are not reflected therein, nor are the cash flow effects of
non-operating items or changes in certain operations-related balance
sheet accounts.
Newspapers
In addition to its local newspapers, the Company's newspaper
publishing operations include USA TODAY, USA WEEKEND and Gannett
Offset commercial printing. The financial results of the newspaper
segment for 1995 were materially impacted by sharply higher newsprint
prices and by the effects of a strike by members of six unions against
The Detroit News and the Detroit Newspaper Agency, which began on July
13, 1995 and continues. Newspaper publishing operating results were as
follows:
In millions of dollars
1995 Change 1994 Change 1993 Change
--------- --------- ------- -------- ------- --------
Revenues $3,229 3% $3,137 6% $2,969 6%
Expenses $2,527 5% $2,402 5% $2,293 4%
--------- --------- ------- -------- ------- -------
Operating income $702 -5% $735 9% $676 12%
========= ========= ======= ======== ======= =======
Operating cash flow $849 -4% $884 8% $822 11%
Newspaper operating revenues: Newspaper operating revenues are
derived principally from advertising and circulation sales, which
accounted for 69% and 27%, respectively, of total newspaper revenue in
1995. Other newspaper publishing revenues are mainly from commercial
printing businesses. The table below presents these components of
reported revenue for the last three years:
Newspaper publishing revenues, in millions of dollars
1995 Change 1994 Change 1993 Change
--------- --------- --------- -------- --------- --------
Advertising $2,219 3% $2,153 7% $2,005 7%
Circulation $869 2% $849 1% $839 4%
Commercial printing
and other $141 4% $135 8% $125 2%
--------- --------- --------- -------- --------- --------
Total $3,229 3% $3,137 6% $2,969 6%
========= ========= ========= ======== ========= ========
In the tables that follow, newspaper advertising linage, circulation
volume statistics and related revenue results are presented on a pro
forma basis for newspapers owned at the end of 1995. The Multimedia
newspapers acquired in December 1995 are included as if they were
owned throughout the period covered by these comparisons.
Advertising revenue, in millions of dollars (pro forma)
1995 Change 1994 Change 1993 Change
--------- --------- --------- -------- --------- --------
Local $846 0% $844 2% $826 1%
National $342 5% $324 11% $293 4%
Classified $774 7% $720 14% $633 6%
--------- --------- --------- -------- --------- --------
Total Run-of-Press $1,962 4% $1,888 8% $1,752 3%
Preprint and other
advertising $366 3% $355 4% $342 9%
--------- --------- --------- -------- --------- --------
Total ad revenue $2,328 4% $2,243 7% $2,094 4%
========= ========= ========= ======== ========= ========
Advertising linage, in millions of inches (pro forma)
1995 Change 1994 Change 1993 Change
--------- --------- --------- -------- --------- --------
Local 35.5 -1% 36.0 0% 36.1 -2%
National 2.3 1% 2.3 8% 2.1 -1%
Classified 36.1 5% 34.5 8% 32.0 6%
--------- --------- --------- -------- --------- --------
Total Run-of-Press 73.9 2% 72.8 4% 70.2 1%
Preprint 70.3 4% 67.9 4% 65.1 9%
--------- --------- --------- -------- --------- --------
Total ad linage 144.2 3% 140.7 4% 135.3 5%
========= ========= ========= ======== ========= ========
<PAGE>
-25-
Reported advertising revenues were $66.6 million greater than 1994,
a 3% increase, while pro forma advertising revenues reflect a 4%
increase.
Of the principal advertising categories presented in the pro forma
table above, the strongest growth in 1995 was in classified,
reflecting gains in employment and automotive advertising, which were
experienced at most of the Company's local newspapers. National
advertising revenues reflect significant improvement also, principally
from gains at USA TODAY. USA TODAY advertising linage grew 3% and
advertising revenues rose 7%.
Local advertising linage was down slightly in 1995, reflecting the
impact of the strike in Detroit and generally soft conditions for the
retail industry.
The Company increased advertising rates at certain of its newspapers
in 1995 and advertising revenue was also favorably impacted by the
additional week in the 1995 fiscal year. Advertising revenue growth
was adversely impacted by the strike in Detroit.
Looking to 1996, the Company expects further advertising revenue
growth at most of its newspaper properties. Advertising associated
with the Summer Olympics in Atlanta and political contests will
contribute to this growth. The effects of the strike in Detroit are
expected to diminish in 1996 and further advertising rate increases
are planned at many newspapers. Changes in national economic factors
such as interest rates, employment levels and the rate of general
economic growth will have an impact on revenues at all of the
Company's newspaper operations.
Newspaper circulation revenues rose 2% or $19.7 million in 1995,
reflecting added revenues in December from Multimedia newspapers, the
favorable impact of the 53rd week in fiscal year 1995 and circulation
price increases at certain newspapers. Circulation revenues were
adversely affected by the strike in Detroit. On a pro forma basis,
morning circulation rose 0.3%, reflecting gains at 17 of 57
newspapers. Evening newspaper circulation continued to decline,
reflecting the national trend. In total, evening circulation was off
nearly 6%, as 29 of 35 newspapers reported lower volume. For the
Company's Sunday newspapers, total circulation was down 3%. Most of
the evening and Sunday circulation volume loss was attributable to the
strike in Detroit.
USA TODAY reported an average daily paid circulation of 2,059,017 in
the ABCPublisher's statement for the six months ended September 24,
1995, which, subject to audit, is a 2% increase from the comparable
period a year ago. For the full year, USA TODAY circulation volume and
revenue rose 2% and 3%, respectively.
Circulation volume at certain of the Company's newspapers was
affected by management efforts to reduce less valuable outstate or
fringe circulation, which is costly to deliver.
In 1996, efforts will be continued to better manage the quality of
the circulation base and related costs. Management also plans further
circulation price increases. Over the two-year period 1995-1996, price
increases will have been implemented at most of the Company's
newspapers. Circulation volume and revenues at Detroit are recovering
from the impact of the strike and are expected to continue to do so.
At USA TODAY, single-copy prices at selected outlets are being raised.
The Company expects further circulation revenue growth at most of its
newspaper properties.
Pro forma circulation volume for the Company's local newspapers is
summarized in the table below:
Average net paid circulation, in thousands
1995 Change 1994 Change 1993 Change
--------- --------- --------- -------- --------- --------
Local Newspaper
Morning 3,361 -1% 3,389 1% 3,363 1%
Evening 1,125 -6% 1,192 -5% 1,248 -4%
--------- --------- --------- -------- --------- --------
Total daily 4,486 -2% 4,581 -1% 4,611 -1%
Sunday 6,195 -3% 6,394 -1% 6,462 -
In 1994, newspaper advertising revenues rose $148 million or 7%.
Classified linage growth of 8% was broad-based and translated to
a 13% increase in revenues. In the classified category,
gains in employment advertising were strongest, followed by
significant improvement in automotive.
National ROP advertising volume rose 8% in 1994 and related revenues
increased 11%, reflecting gains at USA TODAY, USA WEEKEND and at most
of the Company's local newspapers, with strong improvement in the
South and Gulf Coast groups, which benefited from advertising related
to new casino operations.
For local ROP advertising, 1994 linage was even with 1993, while
revenues rose 2%. Business conditions for local retail advertisers
improved in 1994 in much of the country, offsetting
lagging demand in the East and Atlantic groups. Preprint linage, which
includes local and national supplements inserted into the Company's
newspapers, rose 5% for the year.
In millions, as reported
Newspaper
advertising
Year revenues
- --------------------
1986 $1,589
1987 $1,787
1988 $1,909
1989 $2,018
1990 $1,917
1991 $1,853
1992 $1,882
1993 $2,005
1994 $2,153
1995 $2,219
Newspaper circulation revenues rose $11 million or 1% in 1994.
Morning newspaper circulation in total rose 1% for the year,
reflecting gains at 28 of 49 newspapers. Evening circulation was off
2% as 19 of 32 newspapers reported lower volume. For the Company's 66
Sunday newspapers, total circulation was 1% lower compared to 1993, as
25 newspapers reported gains and 41 reported lower volume.
<PAGE>
-26-
USA TODAY reported an average daily paid circulation of 2,009,523 in
the ABC Publisher's statement for the six months ended September 25,
1994. For the full year 1994, USA TODAY circulation volume and revenue
increased 1%.
Newspaper advertising revenues increased $123 million or 7% in 1993.
On a pro forma basis, which reflects the purchase of The Honolulu
Advertiser as if it occurred at the beginning of 1992,
newspaper ad revenues rose $82 million or 4%. Total advertising linage
rose 5% for the year. ROP advertising linage was 1% higher than 1992.
ROP classified increased 5%, while local and national linage declined
2% and 1%, respectively. Preprint linage rose 8% for the year. At USA
TODAY, ad revenues and linage rose 9%.
Newspaper circulation revenues rose $32 million or 4% for 1993. On a
pro forma basis, circulation revenues rose 2%. The Company continued
its efforts to increase circulation and household penetration at all
of its local daily and Sunday newspapers. Average paid circulation
grew at 49% of the Company's daily newspapers and 57% of its Sunday
newspapers in 1993.
The decline in overall daily circulation in 1993 was principally
among the Company's afternoon newspapers, including The Detroit News.
USA TODAY reported an average daily paid circulation of 1,973,296 in
the ABC Publisher's statement for the six months ended September 26,
1993, a 2.5% increase over the prior year. For the full year, USA
TODAY circulation volume and circulation revenues grew 2%.
In millions, as reported
Newspaper
circulation
Year revenues
- --------------------
1986 $576
1987 $645
1988 $686
1989 $718
1990 $730
1991 $777
1992 $807
1993 $839
1994 $849
1995 $869
Newspaper operating expenses: Newspaper operating expenses rose $125
million or 5% in 1995. The impact of newsprint price increases had a
dramatic effect on costs. In total, newsprint expense rose 33%. The
average cost per ton of newsprint consumed in 1995 rose more than 40%
from 1994's average cost. In response to these price increases, the
Company began taking steps in 1994 to reduce consumption. These
efforts have been and will continue to be a principal focus of
newspaper management. For 1995, the Company's newsprint consumption
declined nearly 5%.
Suppliers have announced plans for further newsprint price increases
in 1996, however, it is not certain at this time if market conditions
will support these plans. In the absence of further newsprint price
changes, the Company's average cost per ton will be approximately 20%
greater than in 1995 because of the carryover effect of 1995 price
increases.
Payroll costs for newspaper operations rose 2% in 1995. Year-end
employment levels were down slightly, principally because of reduced
staffing requirements at the Detroit operations, reflecting
efficiencies of the replacement worker group. Salary and wage
increases for 1996 are expected to be modest and employment levels are
expected to decline slightly.
Newspaper costs were also affected significantly by incremental
costs in Detroit related to the strike, including security costs,
repair costs from strike-related damage and costs for employees
"loaned" to Detroit from other Gannett and Knight-Ridder (our agency
partner in Detroit)newspapers to assist in publishing operations.
These strike-related costs have been diminishing and the Company
expects them to diminish further in 1996.
Newspaper operating expenses rose $107 million or 5% in 1994.
Newsprint costs rose 1%, which reflected increased consumption
and slightly lower average prices.
Payroll costs for newspaper operations rose 3% in 1994. Employment
levels were down slightly, due in part to the sale of the
Company's newspaper in Stockton, Calif. Newspaper payroll costs
included increased sales costs associated with the growth in
advertising revenues.
Newspaper operating expenses rose $86 million or 4% in 1993.
Newsprint costs rose 3% for the year, reflecting higher prices and
higher consumption. Payroll costs for the newspaper segment rose 3%
for the year. Employment levels declined
slightly from 1992.
Newspaper operating income: Operating income for the newspaper
segment declined $33 million in 1995, primarily because of sharply
higher newsprint costs and the effect of the strike in Detroit. With
the principal exception of Detroit, most of the Company's other local
newspapers reported improved operating income, as advertising and
circulation revenue gains, coupled with cost controls, more than
offset the impact of newsprint price increases. At USA TODAY, earnings
declined as newsprint expense increased more than 40%.
For 1996, the Company expects growth in advertising revenues from
improved volume and price increases, and circulation revenue growth
principally from pricing initiatives. The improved revenue and cost
outlook for Detroit also will have a positive impact on newspaper
operating earnings comparisons for 1996.
The inclusion for the full year in 1996 of the results of newspapers
purchased in connection with the Multimedia acquisition will have a
significant impact on operating results comparisons.
Operating income for the newspaper segment rose $57 million or 8% in
1994. Advertising revenue gains at virtually all of the Company's
newspaper operations, led principally by classified advertising,
provided the impetus for the profit gains. Most of the Company's local
newspapers reported higher earnings in 1994. USA TODAY earnings rose
on an advertising revenue increase of 7%.
<PAGE>
-27-
Operating income for newspapers rose $70 million or 11% in 1993.
Revenue gains at most local newspapers, led by classified advertising,
coupled with modest growth in costs, anchored the strong performance.
Most of the Company's local newspapers reported higher earnings in
1993, with the larger newspapers posting the strongest gains.
USA TODAY recorded its first annual profit in 1993, fueled by a 9%
increase in advertising revenues and effective controls over costs.
Broadcasting
Broadcasting operations at the end of the Company's 1995 fiscal year
included 15 television stations and 13 radio stations. This includes
five television and two radio stations acquired in the Multimedia
purchase.
Over the last three years, the Company's broadcasting revenues,
expenses, operating income and operating cash flows were as follows:
In millions of dollars
1995 Change 1994 Change 1993 Change
--------- --------- --------- -------- --------- --------
Revenues $466 15% $407 2% $397 7%
Expenses $283 2% $278 -11% $310 2%
--------- --------- --------- -------- --------- --------
Operating income $183 42% $129 49% $87 31%
========= ========= ========= ======== ========= ========
Operating cash flow $213 35% $158 34% $118 21%
Total reported broadcasting revenues rose $60 million or 15% in
1995. Contributing to this increase are the results of the Multimedia
stations from the date of acquisition, and results from KTHV-TV in
Little Rock, which was owned for only one month in 1994. On a pro
forma basis, broadcasting revenues rose 9% for the year.
For television, pro forma local and national advertising revenues
rose 13% and 6%, respectively. Demand for television advertising was
particularly strong in 1995 as most of the Company's stations reported
higher revenues. Revenues were favorably impacted by the strength of
NBC programming and improved late local news ratings in a number of
markets. The stations in Atlanta and Phoenix reported the strongest
revenue growth. Gains were achieved in many categories, including
automotive, fast food and telecommunications.
Pro forma radio station revenues rose 8%, reflecting generally
strong advertising demand. All but two of the Company's radio stations
reported revenue gains. Revenue improved sharply at the Dallas and
Houston stations.
Reported operating costs for broadcast rose just $6 million or 2% in
1995. Programming and promotion costs were down for the year.
Operating income from broadcasting reached a record high of $183
million, which was $54 million or 42% better than 1994. Most of the
revenue gains in broadcasting translated directly to earnings. All but
two television stations and two radio stations reported improved
results. Earnings were also favorably affected by the additional week
in fiscal 1995 and by operating results from Multimedia stations for
the month of December 1995.
For 1996, the Company expects to post new revenue and earnings
records in broadcasting. The Summer Olympics in Atlanta and political
contests are expected to give rise to further demand for television
advertising at the Company's stations. The Summer Olympics will be
carried by NBC and the Company now has nine NBC affiliates, including
WXIA-TVin Atlanta, site of the Games, KUSA-TVin Denver, which switched
affiliation in September 1995 to NBC from ABC, and four new NBC
affiliates acquired in the Multimedia purchase.
The addition of the Multimedia television stations will have a
significant effect on year-to-year comparisons of revenues, expenses
and earnings for 1996.
Total broadcasting revenues rose $10 million or 2% in 1994, which
reflects the sale of four radio stations and the Company's television
station in Boston in 1993. On a pro forma basis, broadcasting revenues
rose 14%.
For television, pro forma local and national ad revenues rose 12%
and 16%, respectively. Television revenues were favorably affected in
1994 by the Winter Olympics, political advertising and a stronger
economy. Pro forma radio station revenues improved 20%, reflecting
generally improved ratings and a stronger economy.
Reported operating costs for broadcast reflect a decline of $33
million or 11%, due to the sale of stations in 1993. On a pro forma
basis, costs for broadcasting rose 4%, reflecting higher selling and
promotion costs.
The improvement in broadcast earnings for 1994 reflects earnings
gains at all but one of the Company's smaller broadcast markets, as
well as the positive effect of stations sold in 1993.
Total broadcasting revenues rose $27 million or 7% for 1993.
Television revenues rose 7% and radio revenues rose 8%. On a pro forma
basis, radio station revenues rose 15%. For television, local and
national ad revenues rose 11% and 3%, respectively. Television revenue
results for 1993 were particularly strong in light of 1992's election
year and Olympics advertising. The sharp improvement in operating
earnings for broadcasting in 1993 reflected gains in nearly all of the
Company's television and radio station markets.
In millions, as reported
Broadcasting
Year revenues
- ----- -------------
1986 $351
1987 $357
1988 $391
1989 $408
1990 $397
1991 $357
1992 $371
1993 $397
1994 $407
1995 $466
<PAGE>
-28-
Cable
As part of the Multimedia purchase, the Company acquired a cable
television business headquartered in Wichita, Kan., which serves
458,000 subscribers in five states. Operating results from the cable
system business for the period it was owned by the Company (December
1995) were as follows:
In millions of dollars
1995
---------
Revenues $15
Expenses $11
---------
Operating income $4
=========
Operating Cash Flow $8
The cable business traditionally has generated exceptionally strong
operating cash flow. For 1996, the Company expects growth in cable
subscribers and revenues.
Other businesses
As discussed on page 24 of this report, certain of the Company's
businesses have been grouped for business segment reporting purposes.
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 group
also includes certain businesses previously reported within the
newspaper publishing segment. These include Telematch, Gannett Direct
Marketing Services and Gannett TeleMarketing, among others. Prior-year
segment data has been restated to reflect the reporting change for
these businesses. Aggregate revenues, expenses, operating income and
operating cash flows for this group over the last three years were as
follows:
In millions of dollars
1995 Change 1994 Change 1993 Change
--------- --------- ------- -------- ------- -------
Revenues $296 5% $281 2% $276 -4%
Expenses $265 - $265 2% $260 -6%
--------- --------- ------- -------- ------- -------
Operating income $31 88% $16 4% $16 51%
========= ========= ======= ======== ======= =======
Operating cash flow $49 35% $37 1% $36 13%
For 1995, the outdoor advertising business comprises the majority of
the revenue, expense and operating profit reported for this segment.
The Company's outdoor advertising group includes operations in 19
major markets in the U.S. and most major markets in Canada. Outdoor
advertising results were strong in 1995 as revenue rose 5%, while
costs were held to an increase of just 1%. Operating profit rose
significantly. Overall revenue gains were achieved in the face of a
decline in revenues from the tobacco industry in the U.S. Revenue
gains in Canada and Southern California were strongest and all but one
of the Company's outdoor markets reported higher revenues.
Outdoor revenues rose 4% in 1994. Despite further losses of ad
revenues from the tobacco industry and difficult operating conditions
in the earthquake-stricken areas of Southern California, domestic
revenues rose 5%. Outdoor operating costs rose just 4% in 1994 and
operating profit growth was strong, as all markets, except Southern
California, showed improvement.
Outdoor revenues declined 4% in 1993. U.S. operations experienced a
loss in revenues from the tobacco industry, and revenues from Southern
California operations were lower. Outdoor operating costs were 7%
below 1992 levels. Because of cost reductions, operating profit for
outdoor rose dramatically in 1993. All of the larger outdoor markets
reported improved results except Southern California.
In recent years, outdoor revenues and operating income have been
adversely affected by reduced ad expenditures by the
tobacco industry, which is among the principal sources of national
revenues. The Company believes further, but smaller, reductions in ad
spending by this industry in 1996 are possible. Revenues from the
tobacco industry have become a far less
significant part of the outdoor business over recent years. The
Company expects that further reductions in ad spending by this
industry are not likely to be significant to the business.
Operating results from the television entertainment programming and
alarm security businesses are reflected in the segment results above
for only the month of December 1995, and as such are not of major
significance to aggregate 1995 results.
The TV entertainment programming business is headquartered in New
York City and its principal activities involve production of
syndicated talk shows for television markets in the U.S. and abroad.
The alarm security business, Multimedia Security Service, is
headquartered in Wichita, Kan., and serves approximately 101,000
customers primarily in eight states.
Both of these businesses operate profitably and are expected to
continue to do so. However, there has been a significant increase in
competition in the talk show business in recent years. An increase in
the number of shows has resulted in greater fragmentation of the
viewing audience and advertising revenues. The Company expects the
competitive pressure in this business to continue, which is likely to
adversely affect prospects for revenue and earnings growth.
Consolidated operating expenses
Over the last three years, the Company's consolidated operating
expenses were as follows:
In millions of dollars
1995 Change 1994 Change 1993 Change
--------- --------- ------- -------- ------- -------
Cost of sales $2,253 7% $2,107 2% $2,067 2%
Selling, general
and admin. expenses $692 -1% $696 7% $650 3%
Depreciation $160 -2% $163 -1% $164 5%
Amortization of
intangible assets $50 10% $46 1% $45 11%
<PAGE>
-29-
Cost of sales for 1995 rose $146 million or 7%. The principal factor
contributing to this increase was the dramatic rise in newsprint
prices, which began in 1994. Newsprint expense rose 33% for the year
as the average cost per ton consumed was 40% higher than in 1994.
Newsprint consumption in 1995 was reduced by 5%.
Other factors contributing to the increase in cost of goods sold
include strike-related costs in Detroit, the additional week
in the 1995 fiscal year and the operating results for Multimedia
businesses for December 1995.
Selling, general and administrative costs (SG&A) declined $4 million
or 1% in 1995, principally because reduced charitable contributions
($20 million lower than in 1994) more than offset modest increases in
other SG&A costs. Promotion costs were also lower in 1995,
particularly for broadcasting.
Depreciation expense declined nearly $4 million or 2% in 1995,
principally because certain assets from previous acquisitions became
fully depreciated. Amortization of intangible assets was $5 million or
10% higher in 1995 because of amortization for December of the
intangible assets recorded in connection with the Multimedia
acquisition.
For 1996, newsprint consumption costs will increase approximately
20% in the absence of any change in prices, because of the carryover
effect of 1995 price increases. The Company's pension expense will
also increase significantly in 1996 because of the use of a lower
discount rate assumption. Cost of goods sold for 1996 is expected to
be favorably affected by diminishing strike-related costs in Detroit.
Consolidated operating expense comparisons for 1996 will be materially
affected by the inclusion of Multimedia properties for the full year.
Cost of sales for 1994 rose $40 million or 2%, reflecting increases
in newsprint and payroll expenses for newspapers and lower television
programming costs (due principally to the sale at the end of 1993 of
the Company's station in Boston). The increase in SG&A costs of $46
million or 7% is attributed to generally higher sales and promotion
costs and higher charitable contributions.
Cost of sales for 1993 rose $43 million or 2%, reflecting modest
increases in newsprint and payroll costs for newspapers, lower
television programming costs and broad reductions in outdoor costs.
The increase in SG&A costs in 1993 of $21 million or 3% related to
generally higher sales activity for newspapers and broadcasting and
savings in outdoor from restructuring.
The increase in depreciation and amortization of intangible assets
in 1993 reflects the acquisition of The Honolulu Advertiser.
Payroll and newsprint costs, the largest elements of the Company's
operating expenses, are presented below, expressed as a percentage
of total pre-tax operating expenses.
1995 1994 1993
------- ------- -------
Payroll and employee benefits 42.9% 44.2% 44.0%
Newsprint and other
production material 21.9% 17.3% 17.4%
Non-operating income and expense
Interest expense for the full year of 1995 rose $7 million or 14%. For
the period prior to the Multimedia acquisition, the Company's interest
expense was below year-ago levels as outstanding debt had been reduced
substantially. For December, interest expense rose sharply because of
commercial paper borrowings to finance the acquisition. The Company's
financing activities are discussed further in the Financial Position
section of this report.
Interest expense declined $6 million or 11% in 1994, reflecting
lower average borrowings, partially offset by higher average borrowing
rates.
Other non-operating income for 1995 was below 1994. Amounts reported
for 1994 reflect a gain on the sale of the Company's newspaper in
Stockton, Calif., partially offset by costs associated with
non-operating assets and minority investments in developing
businesses.
Interest expense for 1993 was even with 1992 as higher average
interest rates resulting from new fixed rate debt were offset by lower
average borrowings.
Provision for income taxes
The Company's effective income tax rate was 40.6% in 1995 and 40.5% in
1994 and 1993.
The increase in the effective tax rate for 1995 is attributable to
amortization of non-deductible intangible assets recorded in
connection with the Multimedia acquisition. The Company expects its
effective tax rate to increase further in 1996 because of this factor.
Net income and income before cumulative effect of accounting principle
changes
In millions
Net
Year income
- ------ ----------
1986 $276
1987 $319
1988 $364
1989 $398
1990 $377
1991 $302
1992 $200 *
1993 $398
1994 $465
1995 $477
* Income before accounting principle changes was $346
The Company reported record net income and earnings per share in 1995.
Net income rose $12 million or 3% to $477 million and earnings per
share reached $3.41, up 6% from $3.23 in 1994. Earnings progress was
fueled by the strong improvement in broadcast earnings, which helped
offset the impact of higher newsprint prices and the strike in
Detroit.
<PAGE>
-30-
The average number of shares outstanding for 1995 totaled
140,156,000, nearly 3% lower than in 1994, reflecting the Company's
purchase of 8 million of its shares in the third quarter of 1994,
partially offset by shares issued for stock options since then. Shares
outstanding at the end of 1995 totaled 140,564,645.
Net income rose $68 million or 17% in 1994. On a per share basis,
net income reached $3.23, up 19% from $2.72 in 1993. Significant
earnings progress from newspaper and outdoor operations and a dramatic
improvement in broadcast earnings contributed to the gain.
The average number of shares outstanding for 1994 totaled
144,276,000, 1.5% lower than in 1993, reflecting the purchase of 8
million shares in the third quarter of 1994. Shares outstanding at the
end of 1994 totaled 139,767,110.
Net income rose $52 million or 15% in 1993, excluding the cumulative
effect of accounting principle changes recognized in 1992. On a per
share basis, net income reached $2.72, up 13% from $2.40 in 1992
before accounting changes. Profit gains from the newspaper, broadcast
and outdoor businesses contributed to 1993's earnings performance.
The average number of shares outstanding for 1993 totaled
146,474,000, 1.6% higher than in 1992, reflecting the shares issued in
connection with the acquisition of The Honolulu Advertiser.
The table below presents net income expressed as a percent of sales
over the last 10 years.
In percentages
Return on
sales
(before cumulative
effect of
accounting
Year changes)
- ------ -------------------
1986 9.9
1987 10.4
1988 11.0
1989 11.3
1990 11.0
1991 8.9
1992 10.0 *
1993 10.9
1994 12.2
1995 11.9
* Before accounting principle changes
Other matters
Federal Communications Commission Rules restrict ownership of
newspapers, broadcast and cable businesses in the same market. In
conjunction with the Multimedia acquisition, the Company obtained
temporary waivers with respect to these rules. Prior to the expiration
of these waivers, the Company may be required to alter its ownership
interests in certain businesses. This and other regulatory matters are
more fully discussed in the 10-K section of this report on pages
55-57.
Financial Position
Liquidity and capital resources
The Company's financial position changed dramatically in 1995 upon the
acquisition of Multimedia on December 4. This acquisition was for cash
and required payments for the outstanding shares of Multimedia, the
retirement of Multimedia debt and certain transaction costs. The cost
of the acquisition was $2.3 billion and was financed through the
issuance of commercial paper. The principal effects of this
acquisition on the Company's financial position were to increase
property, plant and equipment ($0.6 billion), intangible assets ($2
billion)and long-term debt ($2.3 billion). All working capital
accounts also reflect increases because of the acquisition, as do
certain non-current asset and liability accounts. The increase in the
Company's newsprint inventory also reflects sharply higher newsprint
prices and greater quantities on hand at year-end.
Other principal changes in financial position during 1995 include an
increase in "Other Assets,"which reflects a $45 million contribution
to the Gannett Retirement Plan in early 1995. The
increase in property, plant and equipment in 1995 reflects capital
spending of $184 million, and long-term debt reflects repayments
totaling $465 million from cash flow during the year.
Cash flow from operating activities as reported in the accompanying
consolidated statements of cash flows totaled $603 million in
1995 and $714 million in 1994. Working capital, or the
excess of current assets over current liabilities, totaled $41.3
million at the end of 1995 and $124 million at the end of 1994.
Certain key measurements of the elements of working capital for the
last three years are presented in the following chart:
1995 1994 1993
-------- --------- ---------
Current ratio 1.1-to-1 1.2-to-1 1.7-to-1
Accounts receivable turnover 7.2 7.9 8.0
Newsprint inventory turnover 7.6 9.6 9.9
A summary of debt transactions in 1995 follows:
In millions of dollars
Long-term debt at end of 1994 $768
Increase in commercial paper obligations 2,054
Debt assumed in connection with acquisition 502
Pay-down of long-term debt (465)
---------
Long-term debt at end of 1995 $2,859
=========
The increase in commercial paper obligations during 1995 was
primarily to finance the acquisition of Multimedia. In 1996, the
Company has already repaid approximately $90 million in matured
fixed-rate debt and, in the absence of major cash outlays for further
acquisitions, expects to repay a significant portion of its commercial
paper obligations from operating cash flows.
The Company's operations have historically generated strong positive
cash flow, which, along with the Company's program
<PAGE>
-31-
of issuing commercial paper and maintaining bank revolving credit agreements,
has provided adequate liquidity to meet the Company's requirements,
including requirements for acquisitions.
The Company regularly issues commercial paper for cash requirements
and maintains a revolving credit agreement equal to or in excess
of any commercial paper outstanding. The Company's
commercial paper has been rated A-1 and P-1 by Standard & Poor's
Corporation and Moody's Investors Service, Inc., respectively.
Further, the Company has filed a shelf
registration statement with the Securities and Exchange Commission
under which up to $1.5 billion of additional debt securities may be
issued. The Company's Board of Directors has established a maximum
aggregate level of $3.5 billion for amounts which may be raised
through borrowings or the issuance of equity securities.
Note 4 to the Company's financial statements on page 39 of this
report provides further information concerning commercial paper
transactions and the Company's revolving credit agreements.
The Company has a capital expenditure program (not including
business acquisitions) of approximately $284 million planned for 1996,
including approximately $30 million for land and buildings or
renovation of existing facilities, $237 million for machinery and
equipment and cable and alarm security systems, and $17 million for
vehicles and other assets. Management reviews the capital expenditure
program periodically and modifies it as required to meet current
business needs. It is expected that the 1996 capital program will be
funded from operating cash flow.
Capital stock
In 1988, the Company's Board of Directors authorized the repurchase of
up to 7.5 million shares of its outstanding common stock. During the
period 1988-1991 the Company purchased 4.5 million shares of its
common stock under this program at a cost of $158 million. In 1994,
the Company purchased the remaining 3 million shares, and the program was
expanded by an additional 5 million shares, which also were purchased.
The total cost of the share repurchase program in 1994 was $399 million.
No share repurchases were made in 1995.
Certain of the shares acquired by the Company have been reissued for
acquisitions or in settlement of employee stock
awards. The remaining shares are held as treasury stock.
An employee 401(k) Savings Plan was established in 1990 which
includes a Company matching contribution in the form of Gannett
stock. To fund the Company's matching contribution, an
Employee Stock Ownership Plan (ESOP) was formed which acquired
1,250,000 shares of Gannett stock from the Company for $50 million.
The stock purchase was financed with a loan from the Company.
The Company's common stock outstanding at December 31, 1995 totaled
140,564,645 shares, compared with 139,767,110 shares at December 25,
1994.
The Company's return on shareholders' equity is presented in the
table below.
In percentages
Return on
shareholders'
equity
(before cumulative
effect of
Year accounting changes)
- ----- -------------------
1986 20.4
1987 21.0
1988 21.5
1989 21.0
1990 18.6
1991 16.7
1992 21.2
1993 21.9
1994 25.0
1995 24.1
Dividends
Dividends declared on common stock amounted to $193.4 million in 1995,
compared with $192.7 million in 1994,
reflecting an increase in the dividend rate partially offset by lower
shares outstanding.
Dividends
declared
Year per share
- ------ -------------
1986 $0.86
1987 $0.94
1988 $1.02
1989 $1.11
1990 $1.21
1991 $1.24
1992 $1.26
1993 $1.30
1994 $1.34
1995 $1.38
In October 1995, the quarterly dividend was increased from $.34
to $.35 per share.
Cash Dividends Quarter Payment date Per share
- --------------- -------------- -------------- -----------
1995 4th Quarter Jan. 2, 1996 $0.35
3rd Quarter Oct. 2, 1995 $0.35
2nd Quarter July 1, 1995 $0.34
1st Quarter April 1, 1995 $0.34
1994 4th Quarter Jan. 3, 1995 $0.34
3rd Quarter Oct. 1, 1994 $0.34
2nd Quarter July 1, 1994 $0.33
1st Quarter April 1, 1994 $0.33
Effects of inflation and changing prices
The Company's results of operations and financial condition have not
been significantly affected by inflation and changing prices. In all
of its principal businesses, subject to normal competitive conditions,
the Company generally has been able to pass along rising costs through
increased selling prices. Further, the effects of inflation and
changing prices on the Company's
property, plant and equipment and related depreciation expense have
been reduced as a result of an ongoing capital expenditure program and
because of the availability of replacement assets with improved
technology and efficiency.
<PAGE>
-32-
<TABLE>
CONSOLIDATED BALANCE SHEETS
In thousands of dollars
<CAPTION>
Dec. 31, 1995 Dec. 25, 1994
--------------- ---------------
<S> <C> <C>
ASSETS
Current assets:
Cash $46,962 $44,229
Marketable securities, at cost, which
approximates market 23 23
Trade receivables (less allowance for
doubtful receivables of $22,182 and
$15,846, respectively) 587,896 487,615
Other receivables 33,663 29,745
Inventories 111,653 53,047
Prepaid expenses 73,887 36,178
--------------- ---------------
Total current assets 854,084 650,837
--------------- ---------------
Property, plant and equipment:
Land 138,601 130,166
Buildings and improvements 739,510 690,589
Cable and security systems
and outdoor advertising structures 665,471 259,532
Machinery, equipment and fixtures 1,894,893 1,669,192
Construction in progress 121,191 64,977
--------------- ---------------
Total 3,559,666 2,814,456
Less accumulated depreciation (1,488,979) (1,386,312)
--------------- ---------------
Net property, plant and equipment 2,070,687 1,428,144
--------------- ---------------
Intangible and other assets:
Excess of acquisition cost over the
value of assets acquired (less amortization
of $491,743 and $442,166, respectively) 3,386,600 1,472,002
Investments and other assets (Note 5) 192,429 156,069
--------------- ---------------
Total intangible and other assets 3,579,029 1,628,071
--------------- ---------------
Total assets $6,503,800 $3,707,052
=============== ===============
</TABLE>
<PAGE>
-33-
<TABLE>
CONSOLIDATED BALANCE SHEETS
In thousands of dollars
<CAPTION>
Dec. 31, 1995 Dec. 25, 1994
--------------- ---------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt (Note 4) $90,751 $1,026
Accounts payable
Trade 255,864 202,550
Other 23,730 13,335
Accrued liabilities
Compensation 80,554 60,574
Interest 13,355 11,658
Other 182,386 76,274
Dividend payable 49,208 47,739
Income taxes (Note 7) 15,071 37,618
Deferred income 101,853 76,280
--------------- ---------------
Total current liabilities 812,772 527,054
--------------- ---------------
Deferred income taxes (Note 7) 327,916 164,691
Long-term debt (Note 4) 2,767,880 767,270
Postretirement medical and life insurance
liabilities (Note 6) 305,700 306,863
Other long-term liabilities 143,884 118,936
--------------- ---------------
Total liabilities 4,358,152 1,884,814
--------------- ---------------
Shareholders' equity (Notes 4 and 8):
Preferred stock, par value $1: Authorized,
2,000,000 shares: Issued, none
Common stock, par value $1: Authorized,
400,000,000 shares: Issued, 162,210,366 shares
and 162,211,590 shares, respectively 162,210 162,212
Additional paid-in capital 76,811 76,604
Retained earnings 2,923,752 2,639,440
Foreign currency translation adjustment (12,258) (12,894)
--------------- ---------------
3,150,515 2,865,362
Less Treasury stock, 21,645,721 shares and
22,444,480 shares, respectively, at cost (973,272) (1,008,199)
Deferred compensation related to ESOP (Note 8) (31,595) (34,925)
--------------- ---------------
Total shareholders' equity 2,145,648 1,822,238
--------------- ---------------
Commitments and contingent liabilities (Note 9)
--------------- ---------------
Total liabilities and shareholders' equity $6,503,800 $3,707,052
=============== ===============
</TABLE>
<PAGE>
-34
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
In thousands of dollars
<CAPTION>
Fiscal year ended Dec. 31, 1995 Dec. 25, 1994 Dec. 26, 1993
--------------- -------------- ---------------
<S> <C> <C> <C>
Net operating revenues:
Newspaper advertising $2,219,250 $2,152,671 $2,005,037
Newspaper circulation 869,173 849,461 838,706
Broadcasting 466,187 406,608 397,204
Cable 15,061 - -
All Other 437,065 415,783 400,674
--------------- -------------- ---------------
Total 4,006,736 3,824,523 3,641,621
--------------- -------------- ---------------
Operating Expenses:
Cost of sales and operating expenses,
exclusive of depreciation 2,252,540 2,106,810 2,067,244
Selling, general and administrative expenses,
exclusive of depreciation 692,358 696,139 650,390
Depreciation 159,657 163,242 164,420
Amortization of intangible assets 50,298 45,554 45,215
--------------- -------------- ---------------
Total 3,154,853 3,011,745 2,927,269
--------------- -------------- ---------------
Operating Income 851,883 812,778 714,352
--------------- -------------- ---------------
Non-operating income (expense):
Interest expense (52,175) (45,624) (51,250)
Interest income 7,514 3,239 4,493
Other (3,760) 11,706 857
--------------- -------------- ---------------
Total (48,421) (30,679) (45,900)
--------------- -------------- ---------------
Income before income taxes 803,462 782,099 668,452
Provision for income taxes (Note 7) 326,200 316,700 270,700
--------------- -------------- ---------------
Net income $477,262 $465,399 $397,752
=============== ============== ===============
Net income per share $3.41 $3.23 $2.72
=============== ============== ===============
</TABLE>
<PAGE>
-35-
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands of dollars
<CAPTION>
Fiscal year ended Dec. 31, 1995 Dec. 25, 1994 Dec. 26, 1993
--------------- -------------- ---------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $477,262 $465,399 $397,752
Adjustments to reconcile net income to
operating cash flows:
Depreciation 159,657 163,242 164,420
Amortization of intangibles 50,298 45,554 45,215
Deferred income taxes 23,636 (40,623) 20,315
Other, net 40,775 42,933 36,032
Changes in assets and liabilities, net of
effect of acquisitions:
Increase in receivables (23,093) (49,978) (18,273)
Increase in inventories (46,998) (140) (1,709)
Decrease (increase) in film broadcast rights, net of liabilities 5,910 (1,008) 51
Increase (decrease) in accounts payable 33,561 29,368 (3,270)
Increase (decrease) in interest and taxes payable (14,053) 35,374 16,117
Change in other assets and liabilities, net (103,494) 24,176 13,610
--------------- -------------- ---------------
Net cash provided by operating activities 603,461 714,297 670,260
--------------- -------------- ---------------
Cash flows from investing activities:
Purchase of property, plant and equipment (183,536) (144,854) (132,122)
Payments for acquisitions, net of cash acquired (1,834,862) (28,258) (5,291)
Increase in partnership and other investments (3,326) (23,500) (167)
Proceeds from sale of assets 2,324 130,387 20,531
Collection of long-term receivables 5,030 1,658 2,998
--------------- -------------- ---------------
Net cash used for investing activities (2,014,370) (64,567) (114,051)
--------------- -------------- ---------------
Cash flows from financing activities:
Proceeds from long-term debt 2,054,000 525,000
Payments of long-term debt (464,973) (85,265) (897,942)
Dividends paid (191,947) (194,465) (188,425)
Proceeds from issuance of common stock 16,200 4,219 9,899
Cost of common shares repurchased (399,336)
--------------- -------------- ---------------
Net cash used for financing activities 1,413,280 (674,847) (551,468)
--------------- -------------- ---------------
Effect of currency exchange rate change 362 (6,126) (2,575)
Net increase (decrease) in cash and cash equivalents 2,733 (31,243) 2,166
Cash and cash equivalents at beginning of year 44,252 75,495 73,329
--------------- -------------- ---------------
Cash and cash equivalents at end of year $46,985 $44,252 $75,495
=============== ============== ===============
</TABLE>
<PAGE>
-36-
<TABLE>
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
In thousands of dollars
Fiscal years ended
December 26, 1993,
December 25, 1994
and December 31, 1995
<CAPTION>
Foreign Deferred
Common stock Additional currency compensation
$1 par paid-in Retained translation Treasury related
value capital earnings adjustment stock to ESOP Total
------------ ------------ ------------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance: Dec. 27, 1992 $162,212 $40,506 $2,158,583 $(6,548) $(733,196) $(41,456) $1,580,101
------------ ------------ ------------- ----------- ------------ ------------ ------------
Net income, 1993 397,752 397,752
Dividends declared, 1993:
$1.30 per share (190,604) (190,604)
Stock options exercised (2,967) 15,412 12,445
Stock issued under
incentive plan (1,463) 5,586 4,123
Tax benefit derived from
stock incentive plans 3,767 3,767
Stock issued in connection
with acquisition 31,095 68,411 99,506
Compensation expense
related to ESOP 3,209 3,209
Tax benefit from ESOP 515 515
Foreign currency
translation adjustment (2,894) (2,894)
------------ ------------ ------------- ----------- ------------ ------------ ------------
Balance: Dec. 26, 1993 $162,212 $70,938 $2,366,246 $(9,442) $(643,787) $(38,247) $1,907,920
------------ ------------ ------------- ----------- ------------ ------------ ------------
Net income, 1994 465,399 465,399
Dividends declared, 1994:
$1.34 per share (192,696) (192,696)
Treasury stock acquired (399,336) (399,336)
Stock options exercised (924) 8,014 7,090
Stock issued under
incentive plan (692) 5,636 4,944
Tax benefit derived from
stock incentive plans 2,996 2,996
Stock issued in connection
with acquisition 4,286 21,274 25,560
Compensation expense
related to ESOP 3,322 3,322
Tax benefit from ESOP 491 491
Foreign currency
translation adjustment (3,452) (3,452)
------------ ------------ ------------- ----------- ------------ ------------ ------------
Balance: Dec. 25, 1994 $162,212 $76,604 $2,639,440 ($12,894) ($1,008,199) ($34,925) $1,822,238
------------ ------------ ------------- ----------- ------------ ------------ ------------
Net income, 1995 477,262 477,262
Dividends declared, 1995:
$1.38 per share (193,415) (193,415)
Stock options exercised (2,042) 21,931 19,889
Stock issued under
incentive plan (2,380) 12,996 10,616
Tax benefit derived from
stock incentive plans 4,629 4,629
Compensation expense
related to ESOP 3,330 3,330
Tax benefit from ESOP 465 465
Foreign currency
translation adj./other (2) 636 634
------------ ------------ ------------- ----------- ------------ ------------ ------------
Balance: Dec. 31, 1995 $162,210 $76,811 $2,923,752 ($12,258) ($973,272) ($31,595) $2,145,648
------------ ------------ ------------- ----------- ------------ ------------ ------------
</TABLE>
<PAGE>
-37-
Notes to consolidated financial statements
Note 1
Summary of significant accounting policies
Fiscal year: The Company's fiscal year ends on the last Sunday of the
calendar year. The Company's 1995 fiscal year ended on December 31,
1995, and encompassed a 53-week period. The Company's 1994 and 1993
fiscal years each encompassed a 52-week period.
Consolidation: The consolidated financial statements include the
accounts of the Company and its subsidiaries after elimination of all
significant intercompany transactions and profits.
Operating agencies: Six of the Company's subsidiaries are
participants in joint operating agencies. Each joint operating agency
performs the production, sales and distribution functions for the
subsidiary and another newspaper publishing company under a joint
operating agreement. The Company includes its appropriate portion of
the revenues and expenses generated by the operation of the agencies
on a line-by-line basis in its statement of income.
Inventories: Inventories, which consist principally of newsprint,
printing ink, plate material and production film for the Company's
newspaper publishing operations, are valued at the lower of cost
(first-in, first-out) or market.
Property and depreciation: Property, plant and equipment is
recorded at cost, and depreciation is provided generally on a
straight-line basis over the estimated useful lives of the assets. The
principal estimated useful lives are: buildings and improvements, 10
to 40 years; machinery, equipment and fixtures, cable and alarm
systems, four to 30 years; outdoor advertising display structures,
five to 30 years. Major renewals and improvements and interest
incurred during the construction period of major additions are
capitalized. Expenditures for maintenance, repairs and minor renewals
are charged to expense as incurred.
Excess of acquisition cost over fair value of assets acquired: The
excess of acquisition cost over the fair value of assets acquired
represents the cost of intangible assets at the time the subsidiaries
were purchased. In accordance with Opinion 17 of the Accounting
Principles Board of the American Institute of Certified Public
Accountants, the excess acquisition cost of subsidiaries
arising from acquisitions accounted for as purchases
since October 31, 1970 ($3.81 billion at December 31, 1995) is being
amortized over periods ranging from 10 to 40 years on a straight-line
basis. Management continually reviews the appropriateness of the
carrying value of the excess acquisition cost of its subsidiaries and
the related amortization periods.
Other assets: The Company's television stations are parties to
program broadcast contracts. These contracts are recorded at the gross
amount of the related liability when the programs are available for
telecasting. Program assets are classified as current (as a prepaid
expense) or noncurrent (as an other asset) in the consolidated balance
sheet, based upon the expected use of the programs in succeeding
years. The amount charged to expense appropriately matches the cost of
the programs with the revenues associated with them. The liability for
these contracts is classified as current or noncurrent in accordance
with the payment terms of the contracts. The payment period generally
coincides with the period of telecast for the programs, but may be
shorter.
Retirement plans: Pension costs under the Company's retirement plans
are actuarially computed. It is the policy of the Company to fund
costs accrued under its qualified pension plans.
Postretirement benefits other than pensions: The Company
recognizes the cost of postretirement medical and life insurance
benefits on an accrual basis over the working lives of employees
expected to receive such benefits.
Income taxes: The Company accounts for certain income and expense
items differently for financial reporting purposes than for income tax
reporting purposes. Deferred income taxes are provided in recognition
of these temporary differences.
Per share amounts: All income per share amounts are based on the
weighted average number of common shares outstanding during the year.
Foreign currency translation: The income statement of Mediacom, the
Company's Canadian outdoor advertising operation, has been
translated to U.S. dollars using the average
currency exchange rates in effect during each year. Mediacom's balance
sheet has been translated using the currency exchange rate as of the
end of the accounting period. The impact of currency exchange rate
changes on the translation of Mediacom's balance sheet has been
charged directly to shareholders' equity.
Minority interest: The Company owns a 51% interest in WKYC-TV in
Cleveland, Ohio, and NBC owns a 49% interest. The financial statements
of WKYC-TV are included in the Company's financial statements. The
minority interest in operating results is reflected as an element of
non-operating expense in the Consolidated Statement of Income and the
minority interest in the equity of WKYC-TV is reflected with other
long-term liabilities on the Consolidated Balance Sheet.
Use of estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires the
use of estimates and assumptions that affect the reported amount of
assets, liabilities, revenues and expenses. Actual results could
differ from these estimates.
<PAGE>
-38-
Note 2
Acquisitions and dispositions
1995: In December 1995, the Company completed the acquisition of
Multimedia, Inc. ("Multimedia"). Multimedia's principal business
operations include 10 local daily newspapers, five television
stations, two radio stations, a cable television division, television
entertainment programming and an alarm security company. The
acquisition was accounted for under the purchase method of accounting,
and consideration paid included $45.25 per common share, totaling $1.8
billion, and the assumption of Multimedia liabilities of approximately
$0.5 billion.
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 acquisition was made at the beginning of
the year previous to the year in which the transaction was
consummated. On this basis, the acquisition would have resulted in a
pro forma decrease in net income per share of $0.21 in 1995, and would
have had no impact on per share earnings in 1994 (principally because
of a significant non-operating gain recorded by Multimedia in that
year). 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)
Fiscal Year 1995 1994
- ------------------ ------ ------
Operating revenues $4,615 $4,455
Income before taxes $ 782 $ 814
Net income $ 448 $ 466
Net income per share $3.20 $3.23
1994: In May 1994, the Company purchased Nursing Spectrum, which
publishes a group of biweekly periodicals specializing in advertising
for nursing employment. In December 1994, the Company purchased
television station KTHV-TV in Little Rock, a CBS affiliate.
These acquisitions were accounted for under the purchase method of
accounting, and consideration paid included cash and shares
of the Company's common stock. The acquisitions were not
material to the Company's financial position or results of operations.
In November 1994, the Company sold its newspaper in Stockton,
Calif., and realized a gain which is reflected in non-operating income.
1993: In January 1993, the Company completed the acquisition of The
Honolulu Advertiser and the sale of the Honolulu Star-Bulletin.
Consideration for this purchase was approximately $250 million and
included the issuance of 1,980,000 shares of the Company's common
stock from treasury valued at approximately $100 million and the
assumption of certain liabilities of the acquired business. Concurrent
with these transactions, the Honolulu joint operating agreement was
amended to provide the Company with a greater share of profits from
the operation. Proceeds from the sale of the Honolulu Star-Bulletin in
excess of carrying value were accounted for as a reduction in the
acquisition cost of The Honolulu Advertiser.
The Company sold its radio stations in Kansas City and St. Louis,
Mo., in 1993 and also provided for the sale of its television station
in Boston, which was completed in early 1994. The Company recognized a
minor net gain on these transactions in 1993 which is reflected in
non-operating income.
During 1994 and 1993, the Company also purchased certain other
publications which are included in the newspaper publishing segment.
All acquisitions discussed above were accounted for by the purchase
method and, accordingly, operations for the
purchased companies are included in the financial statements from the
dates of acquisition. For the 1994 and 1993 acquisitions, pro forma
results of operations, assuming these acquisitions were made at the
beginning of the year previous to the year in which the transactions
were consummated, are not materially different from reported results
of operations.
Note 3
Statement of cash flows
For purposes of this statement, the Company considers its marketable
securities, which are readily convertible into cash (with original
maturity dates of less than 90 days) and consist of short-term
investments in government securities, commercial paper and money
market funds, as cash equivalents.
Cash paid in 1995, 1994 and 1993 for income taxes and for
interest (net of amounts capitalized) was as follows:
In thousands of dollars
1995 1994 1993
-------- -------- --------
Income taxes $316,698 $264,601 $249,858
Interest $52,094 $45,740 $43,967
In 1995, the Company assumed net liabilities of approximately $0.5
billion in connection with the Multimedia acquisition.
In 1994, the Company issued 506,000 shares of its common stock from
treasury valued at approximately $26 million in connection with the
acquisition of KTHV-TV in Little Rock.
In 1993, the Company issued 1,980,000 shares of its common stock
from treasury valued at approximately $100 million in connection with
the acquisition of The Honolulu Advertiser and assumed net liabilities
totaling approximately $150 million.
In 1995, 1994 and 1993, the Company issued 297,201 shares, 134,243
shares and 146,371 shares, respectively, in settlement of
previously granted stock incentive rights. The
compensation liability for these rights of $17 million in 1995,
$8 million in 1994 and $7 million in 1993 was transferred to
shareholders' equity at the time the shares were issued.
<PAGE>
-39-
Note 4
Long-term debt
The long-term debt of the Company is summarized below.
In thousands of dollars
Dec. 25, 1995 Dec. 25, 1994
-------------- --------------
Unsecured promissory notes $2,197,358 $156,136
Notes due 2/1/96, interest at 9.55% 17,260 17,260
Notes due 3/12/96, interest at 9.5% 42,200 42,200
Notes due 12/26/97, interest at 10% 29,890
Notes due 3/1/98, interest at 5.25% 273,883 273,354
Notes due 5/1/00, interest at 5.85% 249,603 249,509
Series Notes 31,000
Secured obligations due through 2011,
interest averaging 7.6% in 1994 12,062
Unsecured obligations 16,725 17,351
Other indebtedness 712 424
-------------- --------------
2,858,631 768,296
Less amount included in
current liabilities (90,751) (1,026)
-------------- --------------
Total long-term debt $2,767,880 $767,270
============== ==============
The unsecured promissory notes at December 31, 1995 were due from
January 2, 1996 to January 26, 1996 with rates varying from 5.65% to
5.95%. The increase in unsecured promissory notes is attributed to the
financing of the Multimedia acquisition (see Note 2).
The unsecured promissory notes at December 25, 1994 were due from
December 27, 1994 to January 13, 1995 with rates varying from 5.89% to
6.0%.
The maximum amount of such promissory notes outstanding at the end
of any period during 1995 was $2.2 billion and during 1994 was $305
million. The daily average outstanding balance was $228 million during
1995 and $165 million during 1994. The weighted average interest rate
was 5.9% for 1995 and 4.2% for 1994.
The series notes were assumed in connection with the acquisition of
Multimedia as discussed in Note 2. These notes, which were due in
varying annual installments from June 1996 to June 2005 with interest
rates ranging from 10.36% to 10.92%, were prepaid by the Company in
January 1996 and, accordingly, are reflected as current liabilities in
the accompanying consolidated balance sheet.
The unsecured obligations are due from 2008 to 2009 and bear
interest at varying rates. At December 31, 1995 and December 25, 1994,
the weighted average interest rates were 5.3% and 5.9%, respectively.
At December 31, 1995, the Company had $3.0 billion of credit
available under a revolving credit agreement. The agreement provides
for a revolving credit period which permits borrowing from time to
time up to the maximum commitment. The revolving credit period extends
to November 12, 2000.
The commitment fee rate may range from 0.07% to 0.175%, depending on
Standard & Poor's or Moody's credit rating of the Company's senior
unsecured long-term debt. The rate in effect at December 31, 1995 was
0.09%. At the option of the Company, the interest rate on borrowings
under the agreement may be at the prime rate, at rates ranging from
0.13% to 0.35% above the London Interbank Offered Rate or at rates
ranging from 0.255% to 0.50% above a certificate of deposit-based
rate. The prime rate was 8.5% at the end of 1995 and 1994. The
percentages that will apply will be dependent on Standard & Poor's or
Moody's credit rating of the Company's senior unsecured long-term
debt.
The revolving credit agreement contains restrictive provisions that
relate primarily to the maintenance of net worth of $1.2 billion. At
December 31, 1995 and December 25, 1994, net worth was $2.1 billion
and $1.8 billion, respectively.
At December 31, 1995, the unsecured promissory notes are supported
by the $3.0 billion revolving credit agreement and, therefore, are
classified as long-term debt.
Approximate annual maturities of long-term debt, assuming that the
Company had used the $3.0 billion revolving credit agreement as of the
balance sheet date to refinance existing unsecured promissory notes on
a long-term basis, are as follows:
In thousands of dollars
1996 90,751
1997 29,916
1998 273,895
1999 0
2000 2,446,961
Later years 17,108
-----------
Total $2,858,631
==========
Note 5
Retirement plans
The Company and its subsidiaries have various retirement and profit
sharing plans, including plans established under collective bargaining
agreements and separate plans for joint operating agencies, under
which substantially all full-time employees are covered. The Gannett
Retirement Plan is the Company's principal retirement plan and covers
most of the employees of the Company and its subsidiaries. Benefits
under the Gannett Retirement Plan are based on years of service and
final average pay. The Company's pension plan assets include insurance
contracts, marketable securities including common stocks, bonds and
U.S. government obligations and interest-bearing deposits.
The Company's pension cost for 1995, 1994 and 1993 is presented in
the table on the following page:
<PAGE>
-40-
In thousands of dollars
1995 1994 1993
--------- ---------- -----------
Service cost-benefits earned
during the period $32,003 $42,070 $33,627
Interest cost on projected
benefit obligation 67,882 65,365 63,067
Actual return on plan assets (204,239) 41,287 (98,622)
Net amortization and
deferral of actuarial gains 117,967 (127,176) 19,473
--------- ---------- -----------
Net pension expense for
Company-sponsored
retirement plans 13,613 21,546 17,545
Union and other
pension cost 6,550 7,061 7,399
--------- ---------- -----------
Net pension cost $20,163 $28,607 $24,944
========= ========== ===========
The majority of the Company's pension plans, including the Gannett
Retirement Plan, have plan assets that exceed accumulated benefit
obligations. There are certain plans, however, with accumulated
benefit obligations which exceed plan assets. The following tables
summarize the funded status of the Company's pension plans and the
related amounts that are recognized in the consolidated balance sheet:
In thousands of dollars
Dec. 31, 1995 Plans for which Plans for which
assets exceed accumulated
accumulated benefits
benefits exceed assets
------------------ ------------------
Actuarial present value
of benefit obligations:
Vested benefit obligation $726,834 $34,777
================== ==================
Accumulated benefit obligation $774,928 $36,438
================== ==================
Projected benefit obligation ($995,182) ($61,011)
Plan assets at market value 961,492 -
------------------ ------------------
Projected benefit obligation
greater than plan assets (33,690) (61,011)
Unrecognized net loss 150,630 14,291
Unrecognized prior service cost 9,989 1,433
Unrecognized net (asset)
obligation at year-end (22,768) 1,024
------------------ ------------------
Pension asset (liability)
reflected in consolidated
balance sheet $104,161 ($44,263)
================== ==================
In thousands of dollars
Dec. 25, 1994 Plans for which Plans for which
assets exceed accumulated
accumulated benefits
benefits exceed assets
------------------ ------------------
Actuarial present value
of benefit obligations:
Vested benefit obligation $575,129 $25,672
================== ==================
Accumulated benefit obligation $611,023 $26,504
================== ==================
Projected benefit obligation ($753,403) ($42,287)
Plan assets at market value 754,454 -
------------------ ------------------
Projected benefit obligation
less than (in excess of) plan as 1,051 (42,287)
Unrecognized net (gain) or loss 86,612 (62)
Unrecognized prior service cost 12,829 1,323
Unrecognized net (asset)
obligation at year-end (34,123) 1,585
------------------ ------------------
Pension asset (liability)
reflected in consolidated
balance sheet $66,369 ($39,441)
================== ==================
The projected benefit obligation was determined using an assumed
discount rate of 7.125% and 8.5% at the end of 1995 and 1994,
respectively. The assumed rate of compensation increase was 5% at the
end of 1995 and 1994. The assumed long-term rate of return on plan
assets used in determining pension cost was 10%. Pension plan assets
include 700,700 shares of the Company's common stock valued at $43
million at the end of 1995 and 700,700 shares valued at $37 million at
the end of 1994. The Company made contributions to the Gannett
Retirement Plan of $45 million in 1995 and $46 million in 1994.
Note 6
Postretirement benefits other than pensions
The Company provides health care and life insurance benefits to
certain retired employees. Employees become eligible for benefits
after meeting certain age and service requirements.
The cost of providing retiree health care and life insurance
benefits is actuarially determined and accrued over the service period
of the active employee group.
The table on the following page sets forth the amounts included in
the Consolidated Balance Sheet at December 31, 1995 and December 25,
1994 for postretirement medical and life insurance liabilities:
<PAGE>
-41-
In thousands of dollars
Accumulated postretirement
benefit obligation Dec. 31, 1995 Dec. 25, 1994
--------------- ---------------
Retirees ($162,654) ($156,416)
Fully eligible active plan participants (17,517) (11,016)
Other active plan participants (70,066) (52,872)
--------------- ---------------
(250,237) (220,304)
Unrecognized net loss (gain) 3,590 (14,336)
Unrecognized prior service credit (59,053) (72,223)
--------------- ---------------
Accrued postretirement benefit cost ($305,700) ($306,863)
=============== ===============
Postretirement benefit cost for health care and life insurance for
the years ended December 31, 1995, December 25, 1994 and December 26,
1993 included the following components:
In thousands of dollars
1995 1994 1993
--------- ---------- ----------
Service costs-benefits earned
during the period $2,567 $4,125 $4,055
Interest cost on accumulated postretirement
benefit obligation 15,722 16,133 18,997
Net amortization and deferral (6,118) (4,818) (4,768)
--------- ---------- ----------
Net periodic postretirement benefit cost $12,171 $15,440 $18,284
========= ========== ==========
At December 31, 1995, the accumulated postretirement benefit
obligation was determined using a discount rate of 7.125%
and a health care cost trend rate of 11.5% for pre-age 65
benefits, decreasing to 5.5% in the year 2007 and thereafter. For
post-age 65 benefits, the health care cost trend rate used was 9.5%,
declining to 5.5% in the year 2003 and thereafter.
At December 25, 1994, the accumulated postretirement benefit
obligation was determined using a discount rate of 8.5% and a health
care cost trend rate of 12% for pre-age 65 benefits, decreasing to
5.5% in the year 2007 and thereafter. For post-age 65 benefits, the
health care cost trend rate used was 10%, declining to 5.5% in the
year 2003 and thereafter.
The Company's policy is to fund the above-mentioned benefits as
claims and premiums are paid.
The effect of a 1% increase in the health care cost trend rate used
would result in increases of approximately $17 million in the 1995
accumulated postretirement benefit obligation and $2 million in the
aggregate service and interest components of the 1995 expense.
The Company's retiree medical insurance plan provides limits on the
Company's share of the cost of such benefits it will pay to future
retirees. The Company's share of these benefit costs also depends on
employee retirement age and length of service.
Note 7
Income taxes
The sources of income before income taxes consist of the following:
In thousands of dollars
1995 1994 1993
--------- ---------- ----------
Domestic $797,640 $765,576 $650,896
Foreign 5,822 16,523 17,556
--------- ---------- ----------
Total $803,462 $782,099 $668,452
========= ========== ==========
The provision for income taxes on income consists of the following:
In thousands of dollars
1995 Current Deferred Total
---------- ---------- -----------
Federal $254,292 $19,809 $274,101
State 45,845 3,711 49,556
Foreign 2,427 116 2,543
---------- ---------- -----------
Total $302,564 $23,636 $326,200
========== ========== ===========
In thousands of dollars
1994 Current Deferred Total
---------- ---------- -----------
Federal $302,379 ($33,652) $268,727
State 47,578 (6,305) 41,273
Foreign 7,366 (666) 6,700
---------- ---------- -----------
Total $357,323 ($40,623) $316,700
========== ========== ===========
In thousands of dollars
1993 Current Deferred Total
---------- ---------- -----------
Federal $204,733 $19,333 $224,066
State 38,750 1,232 39,982
Foreign 6,902 (250) 6,652
---------- ---------- -----------
Total $250,385 $20,315 $270,700
========== ========== ===========
The provision for income taxes exceeds the U.S. federal statutory
tax rate as a result of the following differences:
Fiscal year 1995 1994 1993
---------- ---------- ----------
U.S. statutory tax rate 35.0% 35.0% 35.0%
Increase (decrease) in
taxes resulting from:
State income taxes net of
federal income tax benefit 3.9% 3.4% 3.9%
Goodwill amortization not
deductible for tax purposes 1.7% 1.5% 1.6%
Other, net - 0.6% -
---------- ---------- ----------
Effective tax rate 40.6% 40.5% 40.5%
========== ========== ==========
<PAGE>
-42-
Deferred income taxes reflect temporary differences in the
recognition of revenue and expense for tax reporting and financial
statement purposes.
Deferred tax liabilities and assets were composed of the following
at the end of 1995 and 1994:
In thousands of dollars
Dec. 31, 1995 Dec. 25, 1994
-------------- --------------
Liabilities:
Accelerated depreciation $404,560 $230,813
Accelerated amortization of
deductible intangibles 100,735 91,991
Pension 23,148 10,783
Other 32,351 21,397
-------------- --------------
Total deferred tax liabilities 560,794 354,984
-------------- --------------
Assets:
Accrued compensation costs (36,725) (23,262)
Postretirement medical and life (119,449) (118,965)
Other (76,704) (48,066)
-------------- --------------
Total deferred tax assets (232,878) (190,293)
-------------- --------------
Net deferred tax liabilities $327,916 $164,691
============== ==============
Note 8
Capital stock, stock options, incentive plans
During 1988, the Company's Board of Directors authorized the
repurchase of up to 7.5 million shares of its outstanding
common stock. During the period 1988-1991, the Company purchased 4.5
million shares of its common stock under this program at a
cost of $158 million. In 1994, the Company purchased the
remaining 3 million shares, and the program was expanded by an
additional 5 million shares, which were also purchased. The total cost
of the share repurchase program in 1994 was $399 million.
In December 1994, the Company issued 506,000 shares of its common
stock from treasury as consideration for the purchase of KTHV-TVin
Little Rock. In January 1993, the Company issued 1,980,000 shares of
its common stock from treasury as partial consideration for the
purchase of The Honolulu Advertiser.
Certain of the shares acquired by the Company have been reissued in
settlement of employee stock awards or were sold to an Employee Stock
Ownership Plan which was established in 1990. The remaining shares are
held as treasury stock.
The weighted average number of common shares outstanding used in the
computation of earnings per share was 140,156,000 in 1995, 144,276,000
in 1994 and 146,474,000 in 1993.
The Company's 1978 Executive Long-term Incentive Plan (the 1978
Plan) provides for the granting of stock options, stock incentive
rights and option surrender rights to executive officers and other key
employees.
Stock options are granted to purchase common stock of the Company at
not less than 100% of the fair market value on the day the option is
granted. The exercise period is eight years with the options becoming
exercisable at 25% per year after a one-year waiting period.
Stock incentive rights entitle the employee to receive for each such
right, without payment, one share of common stock at the end of an
incentive period, conditioned upon the employee's continued employment
throughout the incentive period. The incentive period is normally four
years. During the incentive period, the employee receives cash
payments for each incentive right equivalent to the cash dividend the
Company would have paid had the employee owned the shares of common
stock issuable under the incentive rights.
In July 1989, the Board of Directors approved an amendment to the
1978 Plan to provide that all outstanding awards will be vested if
there is a change in control of the Company. Under the amendment,
stock options become 100% exercisable immediately upon a change in
control. Option surrender rights related one-for-one to all
outstanding stock options have been awarded, which are effective only
in the event of a change in control and entitle the employee to
receive cash for option surrender rights equal to 100% of the
difference between the exercise price of the related stock option and
the change-in-control price (which is the highest price paid for a
share of stock as part of the change in control). The amendment also
provides for the payment in cash of the value of stock incentive
rights based on the change-in-control price.
Awards made under the 1978 Plan were as follows:
1995 1994 1993
---------- --------- ---------
Stock options 1,032,540 726,450 761,910
Stock incentive rights 152,610 177,975 163,702
Awards for 1993 are for the four-year employment period 1994-1997.
Awards for 1994 are for the four-year period 1995-1998. Awards for
1995 are for the four-year period 1996-1999.
In January and December 1995, shares of common stock totaling
168,150 and 129,051, respectively, were issued in settlement of stock
incentive rights whose incentive periods ended in those months.
With respect to awards under the 1978 Plan, the Company has recorded
as compensation expense $10 million for 1995, $13 million for 1994 and
$11 million for 1993. Under the 1978 Plan, the Company has accrued
liabilities aggregating $20 million at December 31, 1995 and $28
million at December 25, 1994.
<PAGE>
-43-
A summary of the Company's stock option activity appears below:
Number Option price
Stock options of shares per share
- ------------------------- ------------ --------------
Balance outstanding
Dec. 27, 1992 2,774,351 30.88-51.38
Granted 761,910 49.00-55.50
Exercised (421,458) 30.88-47.38
Expired or canceled (73,411) 36.13-51.38
------------ --------------
Balance outstanding
Dec. 26, 1993 3,041,392 $30.88-55.50
Granted 726,450 49.75-54.75
Exercised (235,884) 30.88-51.38
Expired or canceled (10,084) 36.13-55.50
------------ --------------
Balance outstanding
Dec. 25, 1994 3,521,874 $32.00-55.50
Granted 1,032,540 52.88-64.00
Exercised (519,945) 32.00-55.50
Expired or canceled (68,427) 34.88-55.50
------------ --------------
Balance outstanding
Dec. 31, 1995 3,966,042 $34.88-64.00
============ ==============
Options were exercisable for 1,829,229 shares at December 31,
1995 and 1,690,704 shares at December 25, 1994. Shares available for
future grants under the 1978 Plan totaled 1,177,212 at December 31,
1995.
On July 1, 1990, the Company established a 401(k) Savings Plan.
Most employees of the Company (other than those covered by a
collective bargaining agreement) who are scheduled to work at least
1,000 hours during each year of employment are eligible to participate
in the Plan.
Employees may elect to save up to 10% of compensation on a pre-tax
basis subject to certain limits. The Company matches, with Company
common stock, 25% of the first 4% of employee contributions. To fund
the Company's matching contribution, an Employee Stock Ownership Plan
(ESOP) was formed which acquired 1,250,000 shares of Gannett stock
from the Company for $50 million. The stock purchase was financed with
a loan from the Company and the shares are pledged as collateral for
the loan. The Company makes monthly contributions to the ESOP equal to
the ESOP's debt service requirements less dividends. All dividends
received by the ESOP are used to pay debt service. As the debt is
paid, shares are released as collateral and are available for
allocation to participants.
The Company follows the shares allocated method in accounting for
its ESOP. The cost of shares allocated to match employee contributions
or to replace dividends that are used for debt service are accounted
for as compensation expense. The cost of unallocated shares is
reported as deferred compensation in the financial statements. The
Company may, at its option, repurchase shares from employees who leave
the Plan. The shares are purchased at fair market value and the
difference between the original cost of the shares and fair market
value is expensed at the time of purchase. All of the shares initially
purchased by the ESOP are considered outstanding for earnings per
share calculations. Dividends on allocated and unallocated shares are
recorded as reductions of retained earnings.
Compensation expense for the 401(k) match and repurchased shares was
$2.8 million in 1995, $2.6 million in 1994 and $2.2 million in 1993.
The ESOP shares as of the end of 1995 and 1994 were as follows:
1995 1994
----------- -----------
Allocated shares 459,919 376,680
Shares released for allocation 7,325 7,570
Unreleased shares 782,756 865,750
Shares distributed to (6,192) (3,706)
terminated participants ----------- -----------
ESOP shares 1,243,808 1,246,294
=========== ===========
In May 1990, the Board of Directors declared a dividend
distribution of one Preferred Share Purchase Right ("Right'')
for each common share held, payable to shareholders of record on June
8, 1990. The Rights become exercisable when a person or group of
persons acquires or announces an intention to acquire ownership of 15%
or more of the Company's common shares. Holders of the Rights may
acquire an interest in a new series of junior participating preferred
stock, or they may acquire an additional interest in the Company's
common shares at 50% of the market value of the shares at the time the
Rights are exercised. The Rights are redeemable by the Company at any
time prior to the time they become exercisable, at a price of $.01 per
Right.
Note 9
Commitments, contingent liabilities and other matters
Litigation: The Company and a number of its subsidiaries are
defendants in judicial and administrative proceedings involving
matters incidental to their business. The Company's management does
not believe that any material liability will be imposed as a result of
these matters.
Leases: Approximate future minimum annual rentals payable under
non-cancelable operating leases are as follows:
In thousands of dollars
1996 41,231
1997 36,077
1998 29,924
1999 27,634
2000 25,455
Later years 73,335
---------
Total $233,656
=========
<PAGE>
-44-
Total minimum annual rentals have not been reduced for future
minimum sublease rentals aggregating approximately
$3 million. Total rental costs were $104 million for 1995, $107
million for 1994 and $103 million for 1993.
In December 1990, the Company adopted a Transitional Compensation
Plan ("Plan") which provides termination benefits to key
executives whose employment is terminated under certain
circumstances within two years following a change in control
of the Company. Benefits under the Plan include a severance payment of
up to three years' compensation and continued life and medical
insurance coverage.
Other matters: Statement of Financial Accounting Standards No. 107,
"Disclosures About Fair Value of Financial Instruments," requires the
Company to disclose the estimated fair value of its financial
instruments.
For financial instruments other than long-term debt, including cash
and cash equivalents, trade and other receivables, current maturities
of long-term debt and other long-term liabilities, the amounts
reported on the balance sheet approximate fair value.
The Company estimates the fair value of its long-term debt, based on
borrowing rates available at December 31, 1995, to be $2.774 billion,
compared with the carrying amount of $2.768 billion.
Statement of Financial Accounting Standards No. 121, "Impairment of
Long-lived Assets" (SFAS 121), will require the Company to review for
possible impairment, assets to be held for use and assets held for
disposal, whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable, and in such event, to
record an impairment loss. The Company will adopt SFAS 121 in 1996 and
is evaluating the recoverability of long-lived assets at its
properties. Adoption of SFAS 121 in 1996 is not expected to have a
material impact on the Company's financial condition or results of
operations.
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" (SFAS 123),establishes a fair
value-based method of accounting for employee stock-based
compensation plans, and encourages companies to adopt that
method. However, it also allows companies to continue to apply the
intrinsic value-based method currently prescribed under Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" (APB 25). The Company has chosen to continue to report
stock-based compensation in accordance with APB 25, and beginning in
year 1996 will provide pro forma disclosure of the effects of applying
the fair value method to all applicable awards granted.
Note 10
Business operations and segment information
The Company's primary business activities include newspaper publishing
(including 92 daily newspapers), which is the largest segment of its
operations; television and radio broadcasting (15 television stations
and 13 radio stations), the second-largest component; cable
television; outdoor advertising; alarm security business; and
television entertainment programming. Newsprint, which is the
principal product used in the newspaper publishing business, may be
subject to significant price changes from time to time. The Company's
operations are carried out primarily in the U.S. Its foreign
operations are mainly in Canada.
For financial reporting purposes, the Company has established four
separate business segments: newspapers; broadcasting (television and
radio); cable television; and a segment for all other business
operations. In prior years, 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 along with the alarm security and television entertainment
programming 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.
The newspaper segment consists of 92 daily newspapers in 38 states
and two U.S. territories, including USA TODAY, a national,
general-interest daily newspaper; and USA WEEKEND, a magazine
supplement for newspapers. The newspaper segment also includes
non-daily publications and a nationwide network of offset presses for
commercial printing.
The broadcasting segment's principal activities include the
operation of television and radio stations. At the end of 1995,
the Company owned 15 television stations and 13 radio stations.
The cable segment, which was acquired in connection with the
Multimedia purchase, is headquartered in Wichita, Kan., and serves
458,000 cable television subscribers in five states.
The principal operations included in the other businesses segment
are outdoor advertising, and the television entertainment programming
and alarm security businesses acquired in the Multimedia purchase. The
group also includes certain businesses previously reported within the
newspaper publishing segment. These include Telematch, Gannett Direct
Marketing Services and Gannett TeleMarketing, among others.
<PAGE>
-45-
Separate financial data for each of the Company's four business
segments is presented on page 50. Operating income represents total
revenue less operating expenses, depreciation and amortization of
intangibles. In determining operating income by industry segment,
general corporate expenses, interest expense and other income and
expense items of a non-operating nature are not considered. Corporate
assets include cash and marketable securities, certain investments,
long-term receivables and plant and equipment primarily used for
corporate purposes. Interest capitalized has been included as a
corporate capital expenditure for purposes of segment reporting.
Report of independent accountants
To the Board of Directors and
Shareholders of Gannett Co., Inc.
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of income, of cash flows and of
changes in shareholders' equity present fairly, in all material
respects, the financial position of Gannett Co., Inc. and its
subsidiaries at December 31, 1995 and December 25, 1994, and the results
of their operations and their cash flows for each of the three years
in the period ended December 31, 1995, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
the Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of
these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Washington, D.C.
February 6, 1996
<PAGE>
-46, 47-
<TABLE>
11-YEAR SUMMARY
In thousands of dollars except per share amounts
<CAPTION>
1995 1994 1993 1992 1991 1990
----------- ----------- ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net operating revenues:
Newspaper advertising $2,219,250 $2,152,671 $2,005,037 $1,882,114 $1,852,591 $1,917,477
Newspaper circulation 869,173 849,461 838,706 807,093 777,221 730,426
Broadcasting 466,187 406,608 397,204 370,613 357,383 396,693
Cable 15,061
All other 437,065 415,783 400,674 409,137 394,840 397,025
----------- ----------- ------------ ------------ ------------- ------------
Total (Notes a and b, see page 48) 4,006,736 3,824,523 3,641,621 3,468,957 3,382,035 3,441,621
----------- ----------- ------------ ------------ ------------- ------------
Operating Expenses:
Costs and expenses 2,944,898 2,802,949 2,717,634 2,653,803 2,623,335 2,568,744
Depreciation 159,657 163,242 164,420 157,242 158,389 153,211
Amortization of intangible assets 50,298 45,554 45,215 40,629 41,364 40,825
----------- ----------- ------------ ------------ ------------- ------------
Total 3,154,853 3,011,745 2,927,269 2,851,674 2,823,088 2,762,780
----------- ----------- ------------ ------------ ------------- ------------
Operating Income 851,883 812,778 714,352 617,283 558,947 678,841
Non-operating income (expense):
Interest expense (52,175) (45,624) (51,250) (50,817) (71,057) (71,567)
Other 3,754 14,945 5,350 7,814 14,859 10,689
----------- ----------- ------------ ------------ ------------- ------------
Income before income taxes 803,462 782,099 668,452 574,280 502,749 617,963
Provision for income taxes 326,200 316,700 270,700 228,600 201,100 241,000
----------- ----------- ------------ ------------ ------------- ------------
Income before cumulative effect of accounting
principle changes 477,262 465,399 397,752 345,680 301,649 376,963
Cumulative effect on prior years of accounting
principle changes for:
Income taxes 34,000
Retiree health and life insurance benefits (180,000)
----------- ----------- ------------ ------------ ------------- ------------
Net Income $477,262 $465,399 $397,752 $199,680 $301,649 $376,963
=========== =========== ============ ============ ============= ============
Operating cash flow (5) $1,061,838 $1,021,574 $923,987 $815,154 $758,700 $872,877
----------- ----------- ------------ ------------ ------------- ------------
Per share amounts (1)
Income before cumulative effect of accounting
principle changes $3.41 $3.23 $2.72 $2.40 $2.00 $2.36
Net income $3.41 $3.23 $2.72 $1.39 $2.00 $2.36
Dividends declared 1.38 1.34 1.30 1.26 1.24 1.21
Shareholders' equity (3) 15.26 13.04 12.98 10.94 10.71 12.98
Weighted average number of common and common
equivalent shares outstanding in thousands (2) 140,156 144,276 146,474 144,148 150,783 160,047
Financial position:
Current assets $854,084 $650,837 $757,957 $631,447 $636,101 $668,690
Current Liabilities 812,772 527,054 455,139 431,551 443,835 500,203
Working capital 41,312 123,783 302,818 199,896 192,266 168,487
Long-term debt excluding current maturities 2,767,880 767,270 850,686 1,080,756 1,335,394 848,633
Shareholders' equity 2,145,648 1,822,238 1,907,920 1,580,101 1,539,487 2,063,077
Total assets 6,503,800 3,707,052 3,823,798 3,609,009 3,684,080 3,826,145
Selected financial percentages and ratios
Percentage increase (decrease):
Earnings after tax (4) 2.5% 17.0% 15.1% 14.6% -20.0% -5.2%
Earnings per share (4) 5.6% 18.8% 13.3% 20.0% -15.3% -4.5%
Dividends declared per share 3.0% 3.1% 3.2% 1.6% 2.5% 9.0%
Book value per share 17.0% 0.5% 18.6% 2.1% -17.5% 4.7%
Credit ratios
Long-term debt to shareholders' equity 129.0% 42.1% 44.6% 68.4% 86.7% 41.1%
Times interest expense earned 16.4X 18.1X 14.0X 12.3X 8.1X 9.6X
1989 1988 1987 1986 1985
----------- ----------- ------------ ------------ -------------
Net operating revenues:
Newspaper advertising $2,018,076 $1,908,566 $1,787,077 $1,588,985 $1,213,577
Newspaper circulation 718,087 685,663 645,356 575,806 464,976
Broadcasting 408,363 390,507 356,815 351,133 265,480
Cable
All other 373,663 329,749 290,199 285,573 265,388
----------- ----------- ------------ ------------ -------------
Total (Notes a and b, see page 48) 3,518,189 3,314,485 3,079,447 2,801,497 2,209,421
----------- ----------- ------------ ------------ -------------
Operating Expenses:
Costs and expenses 2,571,617 2,449,587 2,257,304 2,061,789 1,601,372
Depreciation 149,893 136,861 124,485 111,229 85,512
Amortization of intangible assets 40,168 40,312 36,595 31,980 18,017
----------- ----------- ------------ ------------ -------------
Total 2,761,678 2,626,760 2,418,384 2,204,998 1,704,901
----------- ----------- ------------ ------------ -------------
Operating Income 756,511 687,725 661,063 596,499 504,520
Non-operating income (expense):
Interest expense (90,638) (88,557) (85,681) (79,371) (25,926)
Other (18,364) 8,292 15,013 23,076 6,183
----------- ----------- ------------ ------------ -------------
Income before income taxes 647,509 607,460 590,395 540,204 484,777
Provision for income taxes 250,000 243,000 271,000 263,800 231,500
----------- ----------- ------------ ------------ -------------
Income before cumulative effect of accounting
principle changes 397,509 364,460 319,395 276,404 253,277
Cumulative effect on prior years of accounting
principle changes for:
Income taxes
Retiree health and life insurance benefits
----------- ----------- ------------ ------------ -------------
Net Income $397,509 $364,460 $319,395 $276,404 $253,277
=========== =========== ============ ============ =============
Operating cash flow (5) $946,572 $864,898 $822,143 $739,708 $608,049
----------- ----------- ------------ ------------ -------------
Per share amounts (1)
Income before cumulative effect of accounting
principle changes $2.47 $2.26 $1.98 $1.71 $1.58
Net income $2.47 $2.26 $1.98 $1.71 $1.58
Dividends declared 1.11 1.02 0.94 0.86 0.765
Shareholders' equity (3) 12.40 11.09 9.94 8.88 7.93
Weighted average number of common and common
equivalent shares outstanding in thousands (2) 161,253 161,622 161,704 161,380 160,466
Financial position:
Current assets $671,030 $665,031 $601,220 $570,589 $473,394
Current Liabilities 477,822 500,835 474,775 432,327 303,142
Working capital 193,208 164,196 126,445 138,262 170,252
Long-term debt excluding current maturities 922,470 1,134,737 1,094,321 1,201,370 491,565
Shareholders' equity 1,995,791 1,786,441 1,609,394 1,433,781 1,275,213
Total assets 3,782,848 3,792,820 3,510,259 3,365,903 2,313,218
Selected financial percentages and ratios
Percentage increase (decrease):
Earnings after tax (4) 9.1% 14.1% 15.6% 9.1% 13.1%
Earnings per share (4) 9.3% 14.1% 15.8% 8.2% 12.9%
Dividends declared per share 8.8% 8.5% 9.3% 12.4% 15.0%
Book value per share 11.8% 11.6% 11.9% 11.7% 11.5%
Credit ratios
Long-term debt to shareholders' equity 46.2% 63.5% 68.0% 83.8% 38.6%
Times interest expense earned 8.1X 7.9X 7.9X 7.8X 19.7X
(1) Per share amounts have been based upon average number of shares
outstanding during each year, giving retroactive effect to adjustment in (2).
(2) Shares outstanding have been converted to a comparable basis by
reflecting retroactively shares issued for a 2-for-1 stock split effective
January 6, 1987.
(3) Based upon year-end shareholders' equity and shares outstanding.
(4) Before cumulative effect of accounting principle changes .
(5) Operating cash flow represents operating income plus depreciation and
amortization of intangible assets.
</TABLE>
<PAGE>
-48-
Notes to 11-year summary
(a) The Company and its subsidiaries made the acquisitions listed at
right during the period. The results of operations of these acquired
businesses are included in the accompanying financial information from
the date of purchase. Note 2 of the consolidated financial statements
on page 38 contains further information concerning certain of these
acquisitions.
(b) During the period, the Company sold substantially all of the
assets or capital stock of certain other subsidiaries and divisions of other
subsidiaries for which the revenues and
contributions to consolidated net income were not material. Note 2 of
the consolidated financial statements on page 38 contains further
information concerning certain of these dispositions.
Acquisitions 1985-1995
1985
March 15 Triangle Sign Company
March 29 Family Weekly magazine, now USA WEEKEND
July 1 The Des Moines Register and The Jackson Sun
Nov. 27 Peekskill Star Corporation
1986
Jan. 3 KTKS-FM now KHKS-FM, Dallas
Feb. 18 The Evening News Association
July 14 The Courier-Journal and Louisville Times Company
July 29 KCMO-AM and KBKC-FM, Kansas City
Sept. 16 KHIT-FM, Seattle
Dec. 1 Arkansas Gazette Company
1987
July 15 Gannett Direct Marketing Services, Inc.
1988
Feb. 1 WFMY-TV, Greensboro, N.C.
WTLV-TV, Jacksonville, Fla.
July 1 New York Subways Advertising Co., Inc.
and related companies
1989
Oct. 31 Rockford Magazine
Nov. 6 Outdoor advertising displays merged
into New Jersey Outdoor
1990
March 28 Great Falls (Mont.) Tribune
May 17 Ye Olde Fishwrapper
June 18 The Shopper Advertising, Inc.
Sept. 7 Desert Community Newspapers
Dec. 27 North Santiam Newspapers
Dec. 28 Pensacola Engraving Co.
1991
Feb. 11 The Add Sheet
April 3 New Jersey Publishing Co.
Aug. 30 The Times Journal Co., including The Journal Newspapers,
The Journal Printing Co. (now Springfield Offset)
and Telematch
Oct. 3 Gulf Breeze Publishing Co.
1992
April 24 Graphic Publications, Inc.
1993
Jan. 30 The Honolulu Advertiser
April 24 Tulare Advance-Register
1994
May 2 Nursing Spectrum
June 9 Altoona Herald-Mitchellville Index and the
Eastern ADvantage
Dec. 1 KTHV-TV, Little Rock
1995
Dec. 4 Multimedia, Inc.
-49-
Form 10-K information
Business of the company
Gannett Co., Inc. is a diversified information company that operates
primarily in the U.S. Approximately 98% of its revenues are from
domestic operations. Its foreign operations are primarily in Canada,
but it also has business interests in certain European, Asian and
other foreign markets. Its corporate headquarters is in Arlington,
Va., near Washington, D.C. It was incorporated in New York in 1923 and
was reincorporated in Delaware in 1972.
On December 4, 1995, the Company completed the acquisition of
Multimedia, Inc. ("Multimedia"). Multimedia's principal business
operations include 10 local daily newspapers, five television
stations, two radio stations, a cable television division,
television entertainment programming and an alarm security company.
The consideration paid for Multimedia included $45.25 per common
share, totaling $1.8 billion, and the assumption of Multimedia
liabilities of approximately $0.5 billion. This acquisition was
accounted for under the purchase method of accounting and Multimedia's
results of operations are included in the Company's financial
statements from the date of acquisition. The acquisition of Multimedia
did not materially affect the Company's consolidated results of
operations for 1995. The Company financed the acquisition of
Multimedia with the issuance of unsecured promissory notes (commercial
paper).
The Company's principal business segments are newspaper publishing,
broadcasting, cable and an other businesses segment, which includes
outdoor advertising, the alarm security business and the television
entertainment programming business.
The Company's newspapers make up the largest newspaper group in the
U.S. in circulation. The Company operates 92 daily newspapers,
with a total average daily circulation of approximately
6.6 million for 1995, including USA TODAY. The Company
also publishes USA WEEKEND, a weekend newspaper magazine, and a number
of non-daily publications.
On December 31, 1995, the broadcasting division included 15
television stations in markets with almost 14 million households and
13 radio stations in markets with a listening population of more than
36 million.
The cable business serves 458,000 subscribers in five states.
The outdoor advertising business is the largest in North America,
with operations in 11 states and Canada. It includes 12
outdoor advertising companies, transit and transit shelter
advertising operations, and a printing division.
The alarm security business, Multimedia Security Service, provides
alarm services to 101,000 customers primarily in eight states. The
Company's entertainment programming business, Multimedia
Entertainment, produces syndicated talk shows for U.S. and foreign
television markets.
The Company also owns the following: Gannett News Service, which
provides news services for its newspaper operations; Gannett National
Newspaper Sales, which markets the Company's nationwide newspaper
advertising resources; Gannett Offset, which coordinates the sale,
marketing and production of commercial offset printing done for
national and regional customers at many of Gannett's newspapers with
offset presses and at the Company's offset printing facilities in
Chandler, Ariz., Miramar, Fla., Nashville, Tenn., Atlanta, Ga., St.
Louis, Mo., Norwood, Mass., and Springfield, Va.; electronic
information services, including the USA TODAY Information Network;
Gannett Media Technologies International, which develops and markets
software and other products for the publishing industry; Gannett
Direct Marketing Services, a direct marketing company with operations
in Louisville, Ky.; Telematch, a telephone database service; Nursing
Spectrum, publisher of biweekly periodicals specializing in
advertising for nursing employment; Gannett Community Directories of
New Jersey, yellow-pages publishing; Gannett Digital Xpress, a
personalized audio, fax and text information service; and Gannett
TeleMarketing, a telephone sales and marketing business.
Business segment financial information
Selected financial information for the Company's business segments is
presented on the following page. For a description of the accounting
policies related to this information, see Note 10 to the Company's
Consolidated Financial Statements. Operating cash flow amounts
represent operating income plus depreciation and amortization of
intangible assets.
<PAGE>
-50-
In thousands of dollars
Business segment financial information
1995 1994 1993
------------ ------------ ------------
Operating revenues:
Newspaper publishing $3,229,121 $3,136,816 $2,968,713
Broadcasting 466,187 406,608 397,204
Cable 15,061 0 0
Other businesses 296,367 281,099 275,704
------------ ------------ ------------
$4,006,736 $3,824,523 $3,641,621
------------ ------------ ------------
Operating income:
Newspaper publishing $701,568 $734,717 $676,346
Broadcasting 182,865 128,863 86,686
Cable 4,065 0 0
Other businesses 30,688 16,311 15,738
Corporate (67,303) (67,113) (64,418)
------------ ------------ ------------
$851,883 $812,778 $714,352
------------ ------------ ------------
Depreciation and amortization:
Newspaper publishing $147,711 $149,063 $145,742
Broadcasting 30,107 29,089 31,449
Cable 3,798 0 0
Other businesses 18,718 20,245 20,398
Corporate 9,621 10,399 12,046
------------ ------------ ------------
$209,955 $208,796 $209,635
------------ ------------ ------------
Operating cash flow:
Newspaper publishing $849,279 $883,780 $822,088
Broadcasting 212,972 157,952 118,135
Cable 7,863 0 0
Other businesses 49,406 36,556 36,136
Corporate (57,682) (56,714) (52,372)
------------ ------------ ------------
$1,061,838 $1,021,574 $923,987
------------ ------------ ------------
Identifiable assets:
Newspaper publishing $3,198,382 $2,561,225 $2,528,671
Broadcasting 1,502,342 643,157 685,230
Cable 1,080,565 0 0
Other businesses 397,377 246,414 282,758
Corporate 325,134 256,256 327,139
------------ ------------ ------------
$6,503,800 $3,707,052 $3,823,798
------------ ------------ ------------
Capital expenditures:
Newspaper publishing $128,107 $108,633 $110,409
Broadcasting 19,923 11,673 9,144
Cable 2,029 0 0
Other businesses 26,153 7,156 8,230
Corporate 7,324 17,392 4,339
------------ ------------ ------------
$183,536 $144,854 $132,122
------------ ------------ ------------
Newspaper publishing
On December 31, 1995, the Company operated 92 daily newspapers,
including USA TODAY, and a number of non-daily local publications, in
38 states, Guam and the U.S. Virgin Islands. The Newspaper Division is
headquartered in Arlington, Va., and on December 31, 1995, it had
approximately 32,400 full-time and part-time employees. Newspaper
operating revenues accounted for approximately 83% of the Company's
net operating revenues in 1993 and 1994 and 81% in 1995.
USA TODAY was introduced in 1982 as the country's first national,
general-interest daily newspaper. It is available in all 50 states and
is available to readers on the day of publication in the top 100
metropolitan markets in the U.S.
USA TODAY is produced at facilities in Arlington, Va., and is
transmitted via satellite to offset printing plants around the
country. It is printed at Gannett plants in 21 U.S. markets and under
contract at offset plants in 12 other U.S. markets. It is sold at
newsstands and vending machines generally at 50 cents a copy. Mail
subscriptions are available nationwide and abroad, and home and office
delivery is offered in many markets. Approximately 63% of its net paid
circulation results from single-copy sales at newsstands or vending
machines and the remainder is from home and office delivery, mail and
other sales.
For 1995, USA TODAY's advertising revenues and volume rose 7% and
3%, respectively, and circulation revenues and volume rose 3% and 2%,
respectively. Because of dramatically higher newsprint costs, which
were up 40%, USA TODAY's operating income was lower than in 1994.
USA TODAY International, published separately from USA TODAY, is
printed from satellite transmission under contract in London, Zurich,
Frankfurt and Hong Kong, and is distributed in Europe, the Middle
East, Africa and Asia. It is available in more than 90 foreign
countries.
The Gannett News Service is headquartered in Arlington, Va., and has
bureaus in nine other states (see page 67 for more information).
Gannett News Service provides national and regional news coverage and
sports, features, photo and graphic services to Gannett newspapers.
The newspaper publishing segment also includes USA WEEKEND, which is
distributed as a weekend newspaper supplement in 452 newspapers
throughout the country, with a total circulation of 19.2 million at
the end of 1995.
At the end of 1995, 57 of the Company's daily newspapers, including
USA TODAY, were published in the morning and 35 were published in the
evening.
As part of the Multimedia purchase in December 1995, the Company
acquired 10 daily newspapers with a combined daily circulation of
approximately 300,000. The larger newspapers in this group are in
Asheville, N.C., Greenville, S.C., and Montgomery, Ala.
Individually, Gannett newspapers are the dominant news and
information source with strong brand recognition in their market.
Their durability lies in the quality of their management, their
flexibility, their focus on customer-directed programs like NEWS 2000,
ADvance and ADQ, and their capacity to invest in new technology.
Collectively, they form a network of powerful franchises across the
nation.
Faced with increased newsprint prices, Gannett editors tightened
writing and presentation in 1995 and took a fresh look at all features
to see which best served readers. These efforts were made in keeping
with the principles of NEWS 2000, a program launched in 1991 to
improve news-content quality.
In 1995, the Company continued to refine ADvance strategies that
focus on attracting more dollars from medium and small advertisers.
Revenue from this segment grew 6% in 1995. Introduced in June 1992,
ADvance is a program to develop marketing partnerships with
advertisers and enhance the skills of newspaper sales and marketing
staffs. The Company will continue to undertake significant efforts to
implement ADvance concepts in 1996 through training and results
assessment.
The Company introduced ADQ, a divisionwide initiative to improve
advertising quality, advertiser satisfaction and newspaper
profitability. A quality measurement tool was developed that measures
effectiveness of newspaper service and quality.
All of the Company's daily newspapers receive the Gannett News
Service. In addition, all subscribe to The Associated Press, and some
receive various supplemental news and syndicated features services.
The senior executive of each newspaper is the publisher, and the
newspapers have advertising, business, circulation, news, market
development and production departments.
Technological advances in recent years have had an impact on the way
newspapers are produced. Computer-based text editing systems capture
drafts of reporters' stories and are then used to edit and produce
type for transfer by a photographic process to printing plates. All of
the Company's daily newspapers are produced by this method.
"Pagination" enables editors to create a newspaper page by computer,
avoiding all or part of the manual "paste-up'' of the page before it
can be converted into a printing plate. The Company uses pagination
systems at 65 newspaper plants.
During 1995, the Mobile Advertising Sales System (MASS), a sales
"tool-kit" on laptop personal computers that was developed by the
Company in 1993, was installed at 28 additional newspapers. There are
now 36 Gannett newspapers and approximately 500 account
representatives using MASS. Installation at other Company newspapers
will continue in 1996.
AdLink, a computer software application developed by the Company in
1994 that allows real estate advertisers to track properties and to
facilitate the make-up of complex newspaper advertisements, has been
installed at 14 newspapers. Real estate advertisers have increased the
number of advertising pages given this new resource. During 1995, an
Internet linkage capability was developed and will be installed at
selected newspapers in 1996.
Gannett newspapers explored and tested business opportunities that
the Internet and other electronic delivery might create. Web sites are
up at nine newspapers, including USA TODAY, with expanded information
from that published in their newspapers. Available via commercial
online services are USA WEEKEND, Gannett Suburban Newspapers and
FLORIDA TODAY. The Star-Gazette in Elmira, N.Y., is delivering online
service via special cable modems in its market. With the Pulitzer Co.,
our joint operating agreement partner in Tucson, Ariz., we are
operating STARNET, a full-service newspaper Internet site. The Company
also is a partner in the New Century Network with eight other major
media companies, exploring how newspaper electronic services can work
cooperatively to better serve customers.
The Company's integrated text/photo archive system, DiGiCol, is now
installed at 14 Gannett newspapers, including those in Rochester, Des
Moines and Louisville. This system stores, retrieves and distributes
text, photos and full-page images of the newspaper in a digital form
that can be searched using an easy-to-use interface. Expansion of
DiGiCol to additional Gannett sites will continue in 1996.
In early 1996, the Company joined a partnership with Knight-Ridder
and Landmark Communications called InfiNet. Headquartered in Norfolk,
Va., InfiNet provides various electronic publishing and information
services using the Internet and provides Internet access to individual
consumers and businesses. InfiNet's principal customer group is newspapers,
including those owned by the partners. The Company expects 20 to 30 of
its newspapers will contract with InfiNet for Web site services and
for Internet access capabilities, which will be sold in their local
communities.
Sixty daily newspaper plants print by the offset process, and 19
plants print using various letterpress processes.
In recent years, improved technology for all of the newspapers has
resulted in greater speed and accuracy and in a reduction in the
number of production hours worked per page.
The principal sources of newspaper revenues are circulation and
advertising.
Circulation: The table on the following page summarizes the
circulation volume and revenues of the newspapers owned by the Company
at the end of 1995. USA TODAY circulation is included in this table.
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This table assumes that all newspapers owned by the Company at the
end of 1995 were owned during all years shown:
Circulation: newspapers owned on Dec. 31, 1995
Circulation Daily Sunday
revenues net paid net paid
in thousands circulation circulation
-------------- ------------- ------------
1995 $901,537 6,559,000 6,195,000
1994 $877,684 6,607,000 6,394,000
1993 $863,927 6,610,000 6,462,000
1992 $840,817 6,605,000 6,438,000
1991 $802,570 6,539,000 6,388,000
Faced with dramatically higher newsprint prices, the Company began
taking steps in 1994 to reduce consumption, including the elimination
of less valuable and costly distant outstate circulation. In addition,
the strike in Detroit (discussed further on page 59) resulted in a
loss of circulation volume and revenues during the last half of 1995.
Twenty-two of the Company's local newspapers reported gains in daily
circulation during 1995, and 19 increased Sunday circulation.
Home delivery prices for the Company's newspapers are established
individually for each newspaper and range from $1.25 to $3.60 per
week in the case of daily newspapers and from $.59 to $2.05
per copy for Sunday newspapers. The Company implemented a number of
circulation price increases in 1995 and more are planned for 1996.
Additional information about the circulation of the Company's
newspapers may be found on pages 25-26 and 64-66 of this annual
report.
Advertising: Advertising revenues are generated through the sale of
retail (local), classified, national and preprint advertising. A
detailed analysis of newspaper advertising revenues is presented below
and on page 24 of this report.
Retail advertising is display advertising associated with local
merchants, such as department and grocery stores. Classified
advertising includes the ads listed together in sequence by the nature
of the ads, such as automobile sales, real estate sales and "help
wanted." National advertising is display advertising principally from
advertisers who are promoting products or brand names on a nationwide
basis. Retail and national advertising may appear in the newspaper
itself or in preprinted sections. Generally there are different rates
for each category of advertising, and the rates for each newspaper are
set independently, varying from city to city. The newspapers have
advertising departments that solicit retail, classified and national
advertising.
Gannett National Newspaper Sales also solicits national advertisers
and certain national and regional retail advertisers. The
newspapers have made continuing efforts to serve their readers and
advertisers by introducing total market coverage programs and
by targeting specific market segments desired by many advertisers through
the use of specially zoned editions and other special publications.
Total newspaper ad revenues on a pro forma basis rose 4%. This
increase was favorably affected by the additional week in the
Company's 1995 fiscal year, but it was adversely affected to a greater
degree by the strike in Detroit.
Classified business was again strong in 1995, particularly in the
employment and automotive categories. There was also consistent growth
of medium and small retail advertisers throughout the year. The
department store category represented the biggest retail growth
category, followed by appliance/electronic and entertainment.
For 1996, the Company expects further ad revenue growth at most of
its newspaper properties. Advertising associated with the Summer
Olympics in Atlanta and political contests will contribute to this
growth. The effects of the strike in Detroit are expected to diminish
in 1996 and further advertising rate increases are planned at many
newspapers. Changes in national economic factors such as interest
rates, employment levels and the rate of general economic growth will
have an impact on revenues at all of the Company's newspaper
operations.
The following chart summarizes the advertising linage (in six-column
inches) and advertising revenues of the newspapers owned by the
Company at the end of 1995. Again, this chart assumes that all of the
newspapers owned at the end of 1995 were owned throughout the years
shown:
Advertising: newspapers owned on Dec. 31, 1995
Advertising
revenues Inches of
in thousands advertising
-------------- -------------
1995 $2,327,574 144,176,000
1994 $2,242,977 140,593,000
1993 $2,094,122 135,252,000
1992 $2,009,663 129,212,000
1991 $1,958,574 124,446,000
Competition: The Company's newspapers compete with other media for
advertising principally on the basis of their advertising rates and
their performance in helping sell the advertisers' products or
services. They compete for circulation principally on the basis of
their content and their price. While most of the Company's newspapers
do not have daily newspaper competitors that are published in the same
city, in certain of the Company's larger markets, there is such direct
competition. Most of the Company's newspapers compete with other
newspapers published in nearby cities and towns and with free
distribution and paid advertising weeklies.
At the end of 1995, The Cincinnati Enquirer, The Detroit News, the
El Paso (Texas) Times, The Honolulu Advertiser, The Tennessean at
Nashville and the Tucson (Ariz.) Citizen were published under joint
operating agreements with non-Gannett newspapers located in the same
cities. All of these agreements provide for joint business,
advertising, production and circulation operations and a contractual
division of profits. The editorial and
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reporting staffs of the Company's newspapers, however, are separate and
autonomous from those of the non-Gannett newspapers.
The rate of development of opportunities in and competition from
emerging electronic communications services, including those related
to the Internet and the World Wide Web, is increasing. Through
internal development programs, acquisitions and partnerships, the
Company's efforts to explore new opportunities in news, information
and communications businesses have been expanded. Recent business
developments include USA TODAY Online, which was launched in April
1995 as the electronic complement to the newspaper; the InfiNet
partnership, which provides Web site services and Internet access;
Telematch, a telephone database service; and Gannett Media
Technologies International, a division designed to market products
developed by Gannett's Advanced Systems Lab and which are currently in
use at Gannett newspapers.
Nine of the Company's newspapers now maintain a commercial site on
the World Wide Web for the delivery of news, information and advertising.
Plans for 1996 call for 20 to 30 additional newspapers to establish
a Web site.
Properties: Generally, the Company owns the plants that house all
aspects of the newspaper publication process. In the
case of USA TODAY, at December 31, 1995, 12 non-Gannett printers were
used to print the newspaper in the U.S. in markets where there are no
Company newspapers with appropriate facilities. Four non-Gannett
printers in foreign countries are used to print USA TODAY
International. USA WEEKEND and Nursing Spectrum are also printed under
contracts with commercial printing companies. Many of the Company's
newspapers also have outside news bureaus and sales offices, which
generally are leased. In a few cities, two or more of the Company's
newspapers share combined facilities; and in two locations, facilities
are shared with other newspaper properties under joint operating
agreements. The Company's newspaper properties have rail siding
facilities or access to main roads for newsprint delivery purposes and
are conveniently located for distribution purposes.
During the past five years, new or substantial additions or
remodeling of existing newspaper facilities have been completed or are
at some stage of construction at nine of the Company's newspaper
operations. During 1995, facility expansion in Jackson, Miss., was
completed. As part of the Company's annual capital expenditure
program, its properties are improved or upgraded on a regular basis.
The Company's facilities are adequate for present operations.
Raw materials: Newsprint is the basic raw material used to publish
newspapers. During 1995, the Company's newsprint
consumption was approximately 796,000 metric tons, including the
Company's portion of newsprint consumed at joint operating agencies,
consumption by USA WEEKEND, USA TODAY tonnage consumed at non-Gannett
print sites, and newsprint consumed by Multimedia newspapers for
December 1995. Newsprint consumption was down 5% from 1994. The
Company purchases newsprint from 29 North American and offshore
suppliers under contracts which expire at various times through 2010.
During 1995, all of the Company's newspapers used some recycled
newsprint. For the year, approximately 81% of the Company's newsprint
consumption contained recycled content.
In 1995, newsprint supplies were adequate. The Company believes that
the available sources of newsprint, together with present inventories,
will continue to be adequate to supply the needs of its newspapers.
The average cost per ton of newsprint consumed in 1995 rose more
than 40% from 1994's average cost. Suppliers have announced plans for
further newsprint price increases in 1996, however, it is not certain
at this time if market conditions will support these plans. In the
absence of further newsprint price changes, the Company's average cost
per ton will be approximately 20% greater than in 1995 because of the
carryover effect of 1995 price increases.
Regulation: Gannett is committed to protecting the environment. Our
goal is to ensure that Gannett facilities are in compliance with
federal, state and local environmental laws and to incorporate
appropriate environmental practices and standards in our newspaper,
broadcast and outdoor advertising operations. The Company employs a
corporate environmental manager responsible for oversight not only of
regulatory compliance but also of preventive measures. The Company is
one of the industry leaders in the use of recycled newsprint. The
Company increased usage of newsprint containing recycled content from
42,000 metric tons in 1989 to more than 645,000 metric tons in 1995.
The Company's newspapers use inks, photographic chemicals, solvents
and fuels. The use and disposal of these substances may be regulated
by federal, state and local agencies. Through its Environmental
Compliance Plan, the Company believes it is taking effective measures
to maintain compliance with environmental laws. Any release into the
environment may create obligations to private and governmental
entities under a variety of statutes and rules regulating the
environment, including the issuance of permits.
Several of the Company's newspaper subsidiaries have been included
among the potentially responsible parties in connection with the
alleged disposal of ink or other chemical wastes at disposal sites
which have been subsequently identified as inactive hazardous waste
sites by the U.S. Environmental Protection Agency or comparable state
agencies. The Company provides for costs associated with these matters
in accordance with generally accepted accounting principles. The
Company does not believe that these matters will have any significant
impact on its financial condition or results of operations.
Additional information about the Company's newspapers may be found
on pages 64-67 of this report.
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Broadcasting
On December 31, 1995, the Company's television division, headquartered
in Arlington, Va., included 15 television stations, in markets with a
total of almost 14 million households. The Company's radio division
includes 13 radio stations in seven markets with a listening
population of more than 36 million. As part of the Multimedia purchase
in December 1995, five television stations and two radio stations were
added to the Company's broadcasting group.
At the end of 1995, the broadcasting division had approximately
2,900 full-time and part-time employees. Broadcasting revenues
accounted for approximately 12% of the Company's reported operating
revenues in 1995 and 11% in 1993 and 1994.
The principal sources of the Company's broadcasting revenues are: 1)
local advertising focusing on the immediate geographic area of the
stations; 2) national advertising; 3) compensation paid by the
networks for carrying commercial network programs; and 4) payments by
advertisers to television stations for other services, such as the
production of advertising material. The advertising revenues derived
from a station's local news programs make up a significant part of its
total revenues.
Advertising rates charged by a television station are based
primarily upon the station's ability to attract viewers,
demographics and the number of television households in the area
served by the station. Practically all national advertising is placed
through independent advertising representatives. Local advertising
time is sold by each station's own sales force.
Generally, a network provides programs to its affiliated television
stations, sells commercial advertising announcements within the
network programs and compensates the local stations by paying an
amount based on the television station's network affiliation
agreement.
Each radio station with a network affiliation generally is paid a
flat annual fee under its affiliation agreement. Local programming
quality and the geographic coverage of its signal are key factors in a
radio station's competitive position within the market. Since most
radio programming originates locally, network affiliation has little
effect on a radio station's competitive position.
Programming: The costs of locally produced and purchased syndicated
programming are a significant portion of television operating
expenses. Syndicated programming costs are determined based upon
largely uncontrollable market factors, including demand from the
independent and affiliated stations within the market and in some
cases from cable operations. In recent years, the Company's television
stations have increased their locally produced news and entertainment
programming in an effort to provide programs that distinguish the
stations from the competition and to better control costs.
Properties: The Company's broadcasting facilities are adequately
equipped with the necessary television and radio broadcasting
equipment. The Company owns transmitter sites in 19 locations and
leases sites in 13 others.
During the past five years, new broadcasting facilities have been
built in Denver, Los Angeles and Washington, D.C. Substantial
additions or improvements were completed in Austin and Dallas, Texas,
Greensboro, N.C., and Little Rock. Substan-tial remodeling is underway
in Atlanta and is being planned for Jacksonville. The Company's
broadcast facilities are adequate for present purposes.
Competition: In each of its broadcasting markets, the Company's
stations compete for revenues with other network-affiliated and
independent television and radio broadcasters and with other
advertising media, such as cable television, newspapers,
magazines and outdoor advertising. The Company's broadcasting stations
compete principally on the basis of their market share, advertising
rates and audience composition.
Network programming constitutes a substantial part of the programs
broadcast on the Company's television stations, and the Company's
competitive position is directly affected by viewer acceptance of
network programming. Local news has been most important to a station's
success and there is a growing emphasis on other forms of local
programming as well as continuing involvement in the local community.
Other sources of present and potential competition for the Company's
broadcasting properties include pay cable, home video and audio
recorders and video disc players, direct broadcast satellite and low
power television. Some of these competing services have the potential
of providing improved signal reception or increased home entertainment
selection, and they are continuing development and expansion.
Regulation: The Company's television and radio stations are operated
under the authority of the Federal Communications Commission (FCC)
under the Communications Act of 1934, as amended (Communications Act),
and the rules and policies of the FCC (FCC Regulations).
Under amendments to the Communications Act effected by the
Telecommunications Act of 1996 (the 1996 Act), television and radio
broadcast licenses will be granted for a maximum period of eight
years. (The periods were formerly five years and seven years,
respectively.) Television and radio broadcast licenses are renewable
upon application to the FCC and in the past usually have been renewed
except in rare cases in which a conflicting application, a petition to
deny, a complaint or an adverse finding as to the licensee's
qualifications has resulted in loss of the license. No petitions to
deny or competing applications are pending with respect to any of the
Company's stations. The Company believes it is in substantial
compliance with all applicable provisions of the Communications Act
and FCC Regulations.
<PAGE>
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FCC Regulations also prohibit concentrations of broadcasting control
and regulate network programming. FCC Regulations governing multiple
ownership prohibit the common ownership or control of most
communications media serving common market areas (for example,
television and radio; television and daily newspapers; radio and daily
newspapers; or television and cable television). Pursuant to the 1996
Act, permanent waivers can be sought for television and radio
ownership in the top 50 markets, however. Also, the 1996 Act limits
the television broadcast interests held by any person to assure
that stations under common control do not exceed an aggregate national
audience reach of 35 percent. (Prior to enactment of the 1996 Act,
the cap on audience reach was 25 percent and no single party could
own more than 12 stations.)
The FCC's consent to the Company's December 1995 acquisition of
control of five television stations and two radio stations owned by
Multimedia, Inc. was conditioned on the Company's compliance (within
12 months) with FCC "one-to-a-market" rules affecting (1)
cross-ownership of TV and cable systems in the area of Oklahoma City,
Okla.; (2) cross-ownership of a daily newspaper and a TV station in
Cincinnati, Ohio; (3) common ownership of TV stations in Atlanta and
Macon, Ga.; and (4) cross-ownership of TV and radio stations in Macon,
Ga.
The 1996 Act deregulated radio and television ownership rules so as
to permit larger ownership groups and, in the top 50 television
markets, more TV-radio combinations than were permitted under prior
FCC rules. Limits on the number of radio stations commonly owned on a
national basis were eliminated, and local radio ownership limits were
expanded, depending on the number of stations operating in the local
radio market. Also, competing applications will not be accepted at the
time of license renewal, and will not be entertained at all unless the
FCC first concludes that license renewal would not serve the public
interest. It will be necessary for the FCC to amend many existing
FCC Regulations to implement the 1996 Act, and this process has not yet
been completed.
Other matters: Gannett Broadcasting, along with CBS Radio and
Westinghouse Electric subsidiaries Group W Radio and Xetron
Corporation, have formed a partnership, USA Digital Radio, to develop
in-band on-channel AM and FM digital audio broadcasting (DAB) systems.
During 1994, the partnership substantially completed prototypes of AM
and FM DAB. USA Digital Radio's systems, along with those of competing
developers, have been submitted for testing and evaluation by the
National Radio Systems Committee. Additionally, USA Digital Radio's
success is dependent on FCC approval of its techniques for
broadcasting DAB within the AM and FM radio bands.
Additional information about the Company's television and radio
stations may be found on page 68 of this annual report.
Cable
On December 31, 1995, the Company's cable division, headquartered in
Wichita, Kan., operated cable television systems serving 458,000
subscribers in Kansas, Oklahoma, Illinois, Indiana and North Carolina.
The cable division was acquired on December 4, 1995 as part of the
Multimedia purchase. At the end of 1995, the cable division had
approximately 960 full-time and part-time employees.
Cable television is the distribution of a wide variety of television
and special information programs to subscribers within a community
over a network of fiber-optic and coaxial cable.
The principal sources of the Company's cable division revenues are:
1) monthly fees paid by subscribers for primary
services generally consisting of local and distant broadcast stations
and public, educational and governmental channels required by local
franchising authorities and a variety of satellite-delivered
entertainment and information channels; 2) monthly and per-event fees
paid by subscribers for premium television services which provide
special programs such as recently released movies, entertainment
programs or selected sports events. Subscribers can receive these
programs on a designated channel of the cable system which is
restricted with electronic security devices to isolate the pay
television signal so that only subscribers to the service can receive
it; 3) local advertising revenues; 4) a share of revenues from sales
of products on home shopping services offered by the Company to its
subscribers; and 5) in the case of its Wichita system, revenues from
the lease of certain fiber-optic capacity to a partnership engaged in
competitive access telephone services.
The Company holds approximately 160 franchises from local governing
authorities which permit the Company to operate a cable television
system in the granting community. These franchises, which expire at
varying dates ranging from one to 20 years, are generally
non-exclusive and may be terminated for failure to comply with
specified conditions. In most cases, the Company is required to pay
fees generally ranging from 3% to 5% of a system's revenues, to the
local governing authority granting a franchise. At the end of 1995,
approximately 115 systems, which account for more than 81% of the
Company's subscribers, have franchise agreements expiring in the year
2000 and beyond.
The following table shows certain cable division information as of
the end of 1995, 1994 and 1993.
1995 1994 1993
--------- --------- ---------
Homes passed 738,000 710,000 694,000
Basic subscribers 458,000 432,000 417,000
Pay subscribers 336,000 339,000 323,000
Basic penetration 62.1% 60.8% 60.1%
Pay-to-basic ratio 73.4% 78.5% 77.5%
Average monthly revenue
per cable subscriber $32.29 $32.56 $33.29
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The Company's strategy is to develop clusters of cable television
systems in suburban communities of major metropolitan markets and
other areas with favorable demographics. Management believes that the
clustering of cable systems produces
operating, marketing and servicing efficiencies. Management believes
that clustering will also enable the Company to achieve efficiencies
in the future deployment of new services such as video-on-demand,
interactive multimedia, competitive access and telephony.
Properties: The Company's cable systems and facilities are
adequately equipped with the necessary cable equipment. Prior to
acquisition, the cable division began a major rebuild program to
install fiber-optic cable and upgrade the technical capabilities of
its cable systems. The rebuild program, which will extend for
approximately two more years, will enhance services through improved
picture quality and reliability, and will provide the ability to offer
additional services to subscribers.
At December 31, 1995, 51% of the Company's cable subscribers had
advanced technical facilities (550MHz to 750MHz) capable of 80 and 110
channel capacity, respectively. During 1996 the Company expects to
increase this penetration to 79% and by the end of 1997 expects to
have approximately 95% of its subscribers on systems with a capacity
of 80 channels or more. The rebuild plans include the future
integration of digital compression and the installation of interactive
converter boxes in the homes of approximately 50% of the Company's
subscribers. The Company believes its technological upgrades will
prepare it for new competitors and potential revenue opportunities.
Competition: The Company's cable division competes with other
companies and individuals in the submission of applications for
additional franchises, in the renewal of existing franchises and in
seeking to acquire operating cable systems and under-developed
franchises. Since most franchises are granted on a
non-exclusive basis, other applicants may obtain franchises in areas
where the Company presently operates systems or holds
franchises.
The cable division competes with over-the-air television and radio
broadcasting, newspapers, movie theaters, live entertainment and
sporting events and home video products.
Subscription television competition also includes direct broadcast
satellite services, multichannel, multipoint distribution services and
private satellite master antenna television systems serving
condominiums, apartment complexes and other private residential
developments. The Company's cable division competes for revenues
principally on the basis of quality of service, programming options
and pricing.
Other matters: The Company entered into a partnership with Hyperion
Telecommunications, Inc., a subsidiary of Adelphia Cable, to construct
and operate competitive access telephone services in its Wichita
franchise area. The construction of the network is complete and the
partnership has begun operations.
Regulation: The cable television industry is subject to extensive
federal, local, and in some cases, state regulation. The Cable
Communications Policy Act of 1984 (the 1984 Act) and its amendment
(the 1992 Act) govern cable television. The FCC has the principal
federal responsibility for regulating cable matters, including rates,
customer service, ownership, carriage of broadcast signals and other
programming, technical matters, leased access, franchises and consumer
equipment standards.
FCC Regulations prohibit common ownership or control of a television
station and a cable system in the station's Grade B signal coverage
area. As noted above, the Company received a 12-month period to comply
with this limit as it affects the Company's television station and
cable systems in the Oklahoma City area.
The 1992 Act requires mandatory carriage of certain local
over-the-air television stations ("must-carry" rules) and allows
television stations to prohibit the carriage of their programs by
cable systems absent consent ("retransmission consent"). Television
stations may elect either must-carry or retransmission consent on
local cable systems. The Company's cable systems have accommodated
those stations electing mandatory carriage, and have entered into
retransmission consent agreements with others.
The 1992 Act rate regulations apply to basic service (which includes
broadcast signals) unless a cable system is subject to "effective
competition." Virtually all cable systems are subject to rate
regulation. To regulate rates for basic service, local officials must
follow detailed FCC guidelines and procedures. The 1992 Act also
regulates non-basic (cable programming)rates. FCC rules also limit
rates for consumer equipment. The rules permit cable companies
periodic rate increases for inflation and certain external costs.
The 1984 Act requires a cable operator to obtain a franchise prior
to instituting service, and state and local officials become involved
in cable operator selection, system design and construction, safety,
rates, consumer services and community programming issues. Franchising
authorities may not award an exclusive franchise or unreasonably deny
a competitive franchise. Local authorities may operate their own cable
system, though, notwithstanding the existence of a cable franchise.
The 1984 Act permits local authorities to charge up to 5% of revenues
per year as a franchising fee, and to require certain public cable
channels.
The 1992 Act provides an incumbent cable operator with protections
against denial of its franchise renewal, including the right
to a fair hearing and a right of appeal. Nevertheless,
franchise renewal is not assured. Upon renewal, new or more onerous
requirements, such as upgrading of facilities and services or higher
franchising fees, may occur.
Cable systems are subject to federal copyright licensing in
connection with the carriage of television signals, and receive
blanket permission to retransmit copyrighted material in exchange for
royalty payments. The amount of the royalty payments varies.
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The 1996 Act will change cable television regulation in several
respects. It eliminates the ban on telephone companies offering video
services. In some cases, telephone video services will be exempt from
the local franchising requirement, from rate regulation, and from
customer service and other FCC Regulations. Subject to adoption of FCC
Regulations, the 1996 Act also will permit cable operators to provide
telephone services, without the requirement of a local franchise.
Network/cable cross-ownership now will be permitted, and the statutory
prohibition on broadcast/cable cross-ownership has been repealed, and
the FCC is expected to review its own broadcast/cable cross-ownership
rule.
While the present rate structure for basic tiers has been retained,
the 1996 Act deregulates rates for non-basic services over 3 1/2 years
for major cable systems, and immediately for certain small cable
systems. Deregulation of rates also will occur immediately where a
telephone company enters the cable franchising area and offers
comparable video programming.
Telephone companies and cable operators in the same market are
prohibited from entering into joint ventures to provide programming or
telecommunication services directly to subscribers. Telephone
companies and cable operators each are prohibited from acquiring more
than a 10% financial interest, or any management interest, in the
other's operations in its service area. For certain small and/or
rural service areas, telephone or cable companies may acquire an
interest in the other in its service area, however.
Other businesses
Outdoor advertising
At the end of 1995, the Company's outdoor advertising business,
headquartered in New York City, included 12 outdoor
advertising companies operating in 19 major markets in the U.S. and
most major markets in Canada, and a printing division. The outdoor
business had approximately 1,500 full-time and part-time employees at
the end of 1995.
The Company derives its outdoor advertising revenues from leasing
space on its approximately 44,000 advertising displays, which fall
into four major groups:
Poster panels (28% of outdoor revenues): Poster panels include
standardized posters, which are approximately 12 feet high and 25 feet
long, eight-sheet posters, which are 6 feet high and 12 feet long
(also known as junior posters) and smaller posters displayed in
shopping centers and airports. Posters are sold in packages based on
daily exposure opportunities, usually for four-week increments. They
feature lithographed or silk-screened advertising copy, posted on the
surface of the board.
Bulletins (41% of outdoor revenues): Bulletins typically are 14 feet
high and 48 feet long. They are sold on a unit basis, typically for
four to 12 months. Most are rotated to a different location every 60
days. "Permanent'' bulletins, however, do not rotate. They tend to
have more viewers and are higher priced than rotating bulletins. The
surface of the board is usually hand painted, computer painted or
covered with lithographed paper. The Company pioneered the use of
Superflex and Uniface, flexible vinyl faces for bulletins, which
provide a more attractive advertising surface. The flexible vinyl
faces also are compatible with new computer printing technology.
Additionally, the Company offers backlights, which are
rear-illuminated units on major arterial highways with the advertising
message air-brushed, computer-painted or silk-screened on translucent
plastic. These are available in both the U.S. and Canada.
Transit shelter displays (20% of outdoor revenues): These primarily
include internally illuminated 4-foot-by-5-foot posters displayed on
public transit shelters in several major cities in the U.S. and
Canada.
Other displays (11% of outdoor revenues): This category includes
poster advertising throughout the New York City subway system and on
buses in Detroit, Grand Rapids and Rochester, N.Y. Printing division
revenues also are categorized here.
Monthly advertising rates for each of these outdoor advertising
media are based on such factors as the size of the advertising
display, visibility, cost of leasing, construction and maintenance and
the number of people who have the opportunity to see the advertising
message. The latter is measured by the Traffic Audit Bureau (U.S.) or
the Canadian Outdoor Measurement Bureau.
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Revenues: Outdoor advertising results were strong in 1995 as revenue
rose 5%, while costs were held to an increase of just 1%. Operating
profit rose significantly. Overall revenue gains were achieved in the
face of a decline in revenues from the tobacco industry in the U.S.
In recent years, as in 1995, outdoor revenues and operating income
have been adversely affected by reduced ad expenditures by the tobacco
industry, which is among the principal sources of national revenues.
The Company believes that further, but smaller, reductions in ad
spending by this industry in 1996 are possible. Since revenues from
the tobacco industry have become a far less significant part of the
outdoor business, the Company expects that further reductions in ad
spending by this industry are not likely to have a material impact.
To replace lost tobacco business, the Company has obtained
additional advertising from packaged-goods
advertisers, as well as the more traditional sources of automotive,
supermarkets, media, financial, fashion, entertainment and
issue-oriented advertising.
The Company also formed and operates Outdoor Network, USA, which
includes 50 independent outdoor companies operating in 90 of the
top 100 markets. Gannett Outdoor develops advertising nationally
on behalf of the group, providing a central source to clients for
market information and research, and providing
single-invoice billing. The network's benefits are
simplicity in planning and buying the medium, proof of performance
audits, creative assistance and strengthened client service. The
objective is to bring these benefits to bear in developing new and
lasting sources of national business for network members.
Properties: In the conduct of its outdoor business, the Company
constructs advertising display structures on land or buildings owned
by the Company or leased from others. These leases are for varying
terms and generally have renewal options. At the end of 1995, the
Company leased approximately 20,000 sign locations. The Company owns
approximately 600 parcels of varying sizes on which it maintains sign
structures.
Advertising displays placed in public transit areas are subject to
the terms of separate contracts with various municipal authorities.
These contracts are for varying periods and require
payments to the municipalities which are generally based on a
percentage of the Company's revenue from the displays. The Company's
outdoor facilities and displays are adequate for present operations.
Competition: The Company encounters direct competition in all of its
principal outdoor advertising market areas. In most of its markets,
the Company is among the larger competitors in terms of the number of
advertising displays. The Company's outdoor operations also compete
for revenues with newspapers, magazines, television, radio and other
advertising media.
Regulation: Federal agencies from time to time propose restrictions
upon the tobacco industry and other businesses
that use outdoor advertising, which affect the outdoor industry.
A prohibition of advertising for tobacco products in Canada, which was
phased in over the years 1988-1990, was overturned near the end of
1995 by the Canadian courts. Effective January 1, 1993, New York City
regulations prohibit the advertising of tobacco products on the city's
subway system.
In many localities in which the Company operates, outdoor
advertising is the object of restrictive, and in some cases
prohibitive, zoning regulations. Management expects federal, state and
local regulations to continue to be a significant factor in the
operation of the Company's outdoor advertising business. It is not
possible to predict the extent to which such regulations could affect
future earnings.
Additional information about the Company's outdoor division can be
found on page 67 of this report.
Alarm security business
The Company's alarm security business, Multimedia Security Service,
provides alarm monitoring services for residential and commercial
customers. Multimedia Security Service is headquartered in Wichita,
Kan. Monitoring equipment located on the customer's premises transmits
a signal by telephone and radio to a central monitoring station at the
Company's headquarters whenever the customer's alarm is triggered. At
the end of 1995, Multimedia Security Service employed approximately
450 full-time and part-time employees.
At the end of 1995, the Company serviced approximately 101,000
customers in a number of states, but with a concentration of accounts
in eight states, where it maintains full-service offices: Kansas,
Oklahoma, California, Texas, Florida, Arizona, Missouri and Illinois.
The year-end customer base includes approximately 18,000 accounts
purchased on December 28, 1995 from PremiTech, a subsidiary of
Electronic Data Systems (EDS).
The Company's efforts to expand its customer base include the
acquisition of accounts from dealers or other security service
businesses, and to a lesser degree through internal sales efforts.
Generally, monitoring contracts are for three years. To maximize
growth potential and retention of customers, the Company strives to be
a leader in the industry in alarm response time and reliability.
Properties: The Company owns its security service headquarters and
central monitoring station facility in Wichita, Kan.,
construction of which was completed in 1994. The Company leases office
space for its service and sales offices. The Company's properties are
adequate for present operations and its central monitoring facility
and equipment are technologically advanced and can accommodate a
significant increase in the customer base.
<PAGE>
-59-
Competition: The Company competes with other alarm security
businesses in its markets on the basis of the quality and reliability
of its service, and on pricing. The Company also competes with other
alarm security businesses for the acquisition of existing security
accounts.
Television entertainment programming
The Company's television entertainment programming business,
Multimedia Entertainment, produces programming for distribution in the
U.S. and foreign television markets, and participates in joint
ventures for program production in certain foreign countries. Its
primary business is the production of talk shows for syndication. At
the end of 1995, five talk shows were in production: "Donahue," "Sally
Jessy Raphael," "Jerry Springer," "Crook & Chase" and "Rush Limbaugh:
The Television Show." The Company also produces "NewsTalk Television,"
a 24-hour cable channel in the news-talk format.
The Company contracts with television stations for exclusive rights
to air these programs in their respective markets. The length of these
contracts generally range from one to three years. Fees from sales to
stations and from the sale of advertising within the programs are the
principal sources of revenue for this business. Multimedia
Entertainment is headquartered in New York City and at the end of
1995, employed approximately 244 full-time and part-time employees.
Properties: Multimedia Entertainment owns its production equipment,
and leases studio and administrative facilities in New York
City and Los Angeles. The Company believes its equipment and
facilities are adequate for present purposes.
Competition: There has been a significant increase in competition in
the talk show business. The growth in the number of shows in the
marketplace has increased competition for revenues, advertising
spending, station clearances, guests and production talent. The
Company expects the competitive pressures in the entertainment
programming business to continue, which is likely to adversely affect
prospects for revenue and earnings growth.
Corporate facilities
The Company leases office space for its headquarters in Arlington,
Va., and also owns data processing facilities in
nearby Maryland. The capital expenditure program for 1993, 1994 and
1995 included amounts for leasehold improvements, land, building,
furniture, equipment and fixtures for headquarters operations.
Headquarters facilities are adequate for present operations.
In March 1994, the Company signed an agreement to purchase
30 acres of land in Fairfax County, Va., for possible use as a future
site for corporate headquarters and perhaps other operations. This
transaction has not yet been completed.
Employee relations
On December 31, 1995, the Company and its subsidiaries had 39,100
full-time and part-time employees. On the basis of hours
worked, the Company employed the equivalent of 35,300
full-time employees. Six of the Company's newspapers are published
together with non-Company newspapers pursuant to joint operating
agreements, and the employment numbers above include the Company's
pro-rata share of employees at those operations.
Approximately 20% of those employed by the Company and its
subsidiaries are represented by labor unions. They are
represented by 162 local bargaining units affiliated with 18
international unions under collective bargaining agreements.
These agreements conform generally with the pattern of labor
agreements in the newspaper, broadcasting and outdoor
advertising industries. The Company does not engage in industrywide or
companywide bargaining. The Company strives to maintain good
relationships with its employees.
On July 13, 1995, approximately 2,500 workers from six unions began
a strike against the Company's largest local newspaper, The
Detroit News, the Detroit Newspaper Agency and the
Detroit Free Press, its agency partner. The strike was precipitated by
unrealistic and excessive demands by the unions for wage increases and
position levels. The strike continues.
Throughout the strike and despite union efforts at stopping
delivery, intimidation and frequent violence, the newspapers have
published every day. Managers from The News, the Free Press and the
agency, working with employees from other Gannett and Knight-Ridder
newspapers, have maintained successful operations. More than 400
employees have returned to work and approximately 1,400 replacement
workers have been employed to fill all other necessary positions.
The Company provides competitive group life and medical insurance
programs for full-time employees at each location. The Company pays a
substantial portion of these costs and employees contribute the
balance. Virtually all of the Company's units provide retirement or
profit-sharing plans which cover eligible full-time employees.
In 1990, the Company established a 401(k) Savings Plan which is
available to most of its employees.
<PAGE>
-60-
Acquisitions and dispositions 1991-1995
The growth of the Company has resulted from acquisitions of
businesses, as well as from internal expansion. Its significant
acquisitions since the beginning of 1991 are shown below. The Company
has disposed of several businesses during this period, which also are
presented.
<TABLE>
Acquisitions 1991-1995
<CAPTION>
Year acquired Name Location Publication times or business
- --------------- ----------------------------------- ------------------------------- ------------------------------------
<S> <C> <C> <C>
1991 The Add Sheet Columbia, Mo. Weekly advertising shopper
New Jersey Publishing Co. Paramus, N.J. Yellow-page directories
The Times Journal Co. Springfield, Va. Daily newspapers, commercial
printing and telephone data service
Gulf Breeze Publishing Gulf Breeze, Fla. Weekly
1992 Graphic Publications, Inc. Richmond, Ind. Weekly
1993 Honolulu Advertiser Honolulu, Hawaii Daily
Tulare Advance-Register Tulare, Calif. Daily
1994 Nursing Spectrum Various Biweekly periodicals
Altoona Herald-Mitchellville Index Altoona, Iowa Weekly; Weekly advertising shopper
and the Eastern ADvantage
KTHV-TV Little Rock, Ark. Television station
1995 Multimedia, Inc. Greenville, S.C. Ten daily newspapers, various non-dailies
five television stations, two radio stations,
cable television franchises in five states,
alarm security business, television
entertainment programming
</TABLE>
<TABLE>
Dispositions 1991-1995
<CAPTION>
Year sold Name Location Publication times or business
- --------------- ----------------------------------- ------------------------------- ------------------------------------
<S> <C> <C> <C>
1991 Arkansas Gazette Company Little Rock, Ark. Daily and Sunday
Journal Newspapers Springfield, Va. Daily
1992 Phoenix Outdoor Phoenix, Ariz. Outdoor advertising
1993 Honolulu Star-Bulletin Honolulu, Hawaii Daily
KCMO/KCMO-FM Kansas City, Mo. Radio stations
KUSA/KSD-FM St. Louis, Mo. Radio stations
WLVI-TV Boston, Mass. Television station
1994 The Stockton Record Stockton, Calif. Daily and Sunday
1995 The Add Sheet Columbia, Mo. Weekly advertising shopper
</TABLE>
<PAGE>
-61-
<TABLE>
QUARTERLY STATEMENTS OF INCOME
In thousands of dollars
<CAPTION>
Fiscal year ended December 31, 1995 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total
--------------- --------------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Net operating revenues:
Newspaper advertising $516,742 $567,134 $508,821 $626,553 $2,219,250
Newspaper circulation 211,964 214,045 209,445 233,719 869,173
Broadcasting 96,983 120,880 104,787 143,537 466,187
Cable - - - 15,061 15,061
All other 88,131 111,862 109,208 127,864 437,065
--------------- --------------- --------------- -------------- --------------
Total 913,820 1,013,921 932,261 1,146,734 4,006,736
--------------- --------------- --------------- -------------- --------------
Operating expenses:
Cost of sales and operating
expenses, exclusive of depreciation 534,222 542,372 546,196 629,750 2,252,540
Selling, general and administrative
expenses, exclusive of depreciation 171,777 174,806 166,953 178,822 692,358
Depreciation 39,259 38,983 38,336 43,079 159,657
Amortization of intangible assets 11,395 11,361 11,362 16,180 50,298
--------------- --------------- --------------- -------------- --------------
Total 756,653 767,522 762,847 867,831 3,154,853
--------------- --------------- --------------- -------------- --------------
Operating Income 157,167 246,399 169,414 278,903 851,883
Non-operating income (expense):
Interest expense (11,732) (10,878) (9,113) (20,452) (52,175)
Other (529) (1,198) 1,100 4,381 3,754
--------------- --------------- --------------- -------------- --------------
Total (12,261) (12,076) (8,013) (16,071) (48,421)
--------------- --------------- --------------- -------------- --------------
Income before income taxes 144,906 234,323 161,401 262,832 803,462
Provision for income taxes 58,700 94,900 65,300 107,300 326,200
--------------- --------------- --------------- -------------- --------------
Net income $86,206 $139,423 $96,101 $155,532 $477,262
=============== =============== =============== ============== ==============
Net income per share (1) $0.62 $1.00 $0.69 $1.11 $3.41
=============== =============== =============== ============== ==============
(1) As a result of rounding, the total of the four quarters' earnings per share does not equal the earnings per share
for the year.
</TABLE>
<TABLE>
QUARTERLY STATEMENTS OF INCOME
In thousands of dollars
<CAPTION>
Fiscal year ended December 25, 1994 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total
--------------- --------------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Net operating revenues:
Newspaper advertising $492,244 $540,150 $521,938 $598,339 $2,152,671
Newspaper circulation 212,140 212,945 210,724 213,652 849,461
Broadcasting 84,007 107,493 95,189 119,919 406,608
Cable - - - - 0
All other 88,234 106,293 104,576 116,680 415,783
--------------- --------------- --------------- -------------- --------------
Total 876,625 966,881 932,427 1,048,590 3,824,523
--------------- --------------- --------------- -------------- --------------
Operating expenses:
Cost of sales and operating
expenses, exclusive of depreciation 516,424 516,083 524,016 550,287 2,106,810
Selling, general and administrative
expenses, exclusive of depreciation 165,945 168,458 167,447 194,289 696,139
Depreciation 40,490 40,511 42,203 40,038 163,242
Amortization of intangible assets 11,310 11,145 11,506 11,593 45,554
--------------- --------------- --------------- -------------- --------------
Total 734,169 736,197 745,172 796,207 3,011,745
--------------- --------------- --------------- -------------- --------------
Operating Income 142,456 230,684 187,255 252,383 812,778
Non-operating income (expense):
Interest expense (11,168) (10,729) (10,307) (13,420) (45,624)
Other 1,023 1,418 (217) 12,721 14,945
--------------- --------------- --------------- -------------- --------------
Total (10,145) (9,311) (10,524) (699) (30,679)
--------------- --------------- --------------- -------------- --------------
Income before income taxes 132,311 221,373 176,731 251,684 782,099
Provision for income taxes 53,600 89,600 71,200 102,300 316,700
--------------- --------------- --------------- -------------- --------------
Net income $78,711 $131,773 $105,531 $149,384 $465,399
=============== =============== =============== ============== ==============
Net income per share (1) $0.54 $0.90 $0.74 $1.07 $3.23
=============== =============== =============== ============== ==============
(1) As a result of rounding, the total of the four quarters' earnings per share does not equal the earnings per share
for the year.
</TABLE>
<PAGE>
-62-
<TABLE>
SCHEDULES TO FORM 10-K INFORMATION
In thousands of dollars
Property, plant & equipment
<CAPTION>
Balance at
beginning Additions Retirements Other Balance at end
Classification of period at cost or sales Changes of period
- -------------------------------- -------------- ------------------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
Dec. 26, 1993
Land $101,313 $31,647 $1,284 $0 $131,676
Buildings & improvements 661,337 34,823 6,778 (279) 689,103
Advertising display structures 262,145 5,454 3,696 (1,758) 262,145
Machinery, equipment & fixtures 1,618,776 118,924 65,651 1,188 1,673,237
Construction in progress and
deposits on contracts 49,771 (9,193) 485 (1,644) 38,449
-------------- ------------------------- -------------- ---------------- --------------
$2,693,342 $181,655 (A)(E) $77,894 ($2,493) (D) $2,794,610
============== ========================= ============== ================ ==============
Dec. 25, 1994
Land $131,676 $878 $687 ($1,701) $130,166
Buildings & improvements 689,103 9,216 7,356 (374) 690,589
Advertising display structures 262,145 3,031 3,067 (2,577) 259,532
Machinery, equipment & fixtures 1,673,237 100,145 105,368 1,178 1,669,192
Construction in progress and
deposits on contracts 38,449 37,998 11,457 (13) 64,977
-------------- ------------------------- -------------- ---------------- --------------
$2,794,610 $151,268 (B)(E) $127,935 ($3,487) (D) $2,814,456
============== ========================= ============== ================ ==============
Dec. 31, 1995
Land $130,166 $11,328 $2,943 $50 $138,601
Buildings & improvements 690,589 56,301 7,501 121 739,510
Cable and security systems and
advertising display structures 259,532 407,832 2,979 1,086 665,471
Machinery, equipment & fixtures 1,669,192 272,112 46,828 417 1,894,893
Construction in progress and
deposits on contracts 64,977 56,211 0 3 121,191
-------------- ------------------------- -------------- ---------------- --------------
$2,814,456 $803,784 (C)(E) $60,251 $1,677 (D) $3,559,666
============== ========================= ============== ================ ==============
Notes
(A) Includes assets at acquisition net of adjustments for prior years' acquisitions $49,533
(B) Includes assets at acquisition net of adjustments for prior years' acquisitions $6,414
(C) Includes assets at acquisition net of adjustments for prior years' acquisitions $620,248
(D) Net effect of current foreign currency translation adjustment.
(E) Includes capitalized interest of $268 in 1993, $563 in 1994 and $2,529 in 1995.
(F) Generally the rates of depreciation range from 2.5% to 10% for buildings and improvements,
3.3% to 20% for cable and security systems and advertising display structures
and 4% to 30% for machinery, equipment and fixtures.
</TABLE>
<PAGE>
-63-
<TABLE>
SCHEDULES TO FORM 10-K INFORMATION
In thousands of dollars
Accumulated depreciation and
amortization of property,
plant and equipment
<CAPTION>
Balance at Additions charged
beginning to costs Retirements Other Balance at end
Classification of period and expenses or sales Changes of period
- -------------------------------- -------------- ------------------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
Dec. 26, 1993
Buildings & improvements $227,520 $26,617 $3,310 $24 $250,851
Advertising display structures 130,473 13,039 3,067 (920) 139,525
Machinery, equipment & fixtures 860,058 124,764 58,474 (383) 925,965
-------------- ------------------------- -------------- ---------------- --------------
$1,218,051 $164,420 (F) $64,851 ($1,279) (D) $1,316,341
============== ========================= ============== ================ ==============
Dec. 25, 1994
Buildings & improvements $250,851 $26,643 $5,431 ($534) $271,529
Advertising display structures 139,525 13,150 2,273 (1,422) 148,980
Machinery, equipment & fixtures 925,965 123,449 83,748 137 965,803
-------------- ------------------------- -------------- ---------------- --------------
$1,316,341 $163,242 (F) $91,452 ($1,819) (D) $1,386,312
============== ========================= ============== ================ ==============
Dec. 31, 1995
Buildings & improvements $271,529 $25,818 $2,422 $308 $295,233
Cable and security systems and
advertising display structures 148,980 14,488 2,046 524 161,946
Machinery, equipment & fixtures 965,803 119,351 53,420 66 1,031,800
-------------- ------------------------- -------------- ---------------- --------------
$1,386,312 $159,657 (F) $57,888 $898 (D) $1,488,979
============== ========================= ============== ================ ==============
(D)(F) See page 62
</TABLE>
<TABLE>
Valuation and qualifying accounts
Allowance for doubtful receivables
<CAPTION>
Balance at Additions charged Additions
beginning to costs recorded upon Deductions Balance at end
of period and expenses acquisitions from reserves of period
-------------- ------------------ --------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
Year ended Dec. 26, 1993 $12,241 $20,505 $473 $19,304 $13,915
Year ended Dec. 25, 1994 $13,915 $20,139 $33 $18,241 $15,846
Year ended Dec. 31, 1995 $15,846 $19,101 $6,394 $19,159 $22,182
</TABLE>
<TABLE>
Supplementary income statement information
<CAPTION>
Fiscal year ended Dec. 31, 1995 Dec. 25, 1994 Dec. 26, 1993
------------------ --------------- ----------------
<S> <C> <C> <C>
Maintenance and repairs $50,880 $55,131 $45,004
Taxes other than payroll and income tax:
Property $19,151 $20,522 $20,855
Other 11,167 10,747 9,157
------------------ --------------- ----------------
$30,318 $31,269 $30,012
------------------ --------------- ----------------
</TABLE>
<PAGE>
-64, 65, 66-
<TABLE>
MARKETS WE SERVE
<CAPTION>
Daily newspapers
State Circulation Circulation Circulation Joined
Territory City Newspaper Morning Afternoon Sunday Founded Gannett *
- -------------- --------------------- ------------------------------- ----------- ------------ ----------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Alabama Montgomery The Montgomery Advertiser 61,408 74,938 1829 1995 (83)
Arizona Tucson Tucson Citizen 47,194 1870 1976 (46)
Arkansas Mountain Home The Baxter Bulletin 9,777 1901 1995 (84)
California Marin County Marin Independent Journal 42,160 43,600 1861 1980 (66)
Palm Springs The Desert Sun 48,144 50,402 1927 1986 (77)
Salinas The Californian 21,759 1871 1977 (52)
San Bernardino The San Bernardino County Sun 81,934 95,178 1894 1969 (23)
Tulare Tulare Advance-Register 8,666 1882 1993 (82)
Visalia Visalia Times-Delta 22,313 1859 1977 (53)
Colorado Fort Collins Fort Collins Coloradoan 27,845 34,636 1873 1977 (54)
Connecticut Norwich Norwich Bulletin 32,248 37,935 1791 1981 (69)
Delaware Wilmington The News Journal 126,004 150,245 1871 1978 (60)
Florida Brevard County FLORIDA TODAY 84,372 112,438 1966 1966 (21)
Fort Myers News-Press 95,172 104,962 1884 1971 (37)
Pensacola Pensacola News Journal 62,036 83,486 1889 1969 (24)
Georgia Gainesville The Times 23,063 27,330 1947 1981 (68)
Moultrie The Observer 7,483 1894 1995 (85)
Guam Agana Pacific Daily News 25,231 22,981 1944 1971 (36)
Hawaii Honolulu Honolulu Advertiser 107,083 194,997 1856 1993 (81)
Idaho Boise The Idaho Statesman 66,730 88,542 1864 1971 (29)
Illinois Danville Commercial-News 20,215 22,685 1866 1934 (7)
Rockford Rockford Register Star 75,635 88,144 1855 1967 (22)
Indiana Lafayette Journal and Courier 37,681 45,067 1829 1971 (30)
Marion Chronicle-Tribune 20,547 24,047 1867 1971 (33)
Richmond Palladium-Item 19,427 24,314 1831 1976 (45)
Iowa Des Moines The Des Moines Register 178,330 302,770 1849 1985 (73)
Iowa City Iowa City Press-Citizen 16,062 1860 1977 (56)
Kentucky Louisville The Courier-Journal 238,515 326,578 1868 1986 (79)
Louisiana Monroe The News-Star 39,009 45,603 1890 1977 (59)
Shreveport The Times 79,900 99,795 1871 1977 (58)
Michigan Battle Creek Battle Creek Enquirer 27,821 36,716 1900 1971 (31)
Detroit The Detroit News 312,093 1873 1986 (76)
The Detroit News and Free Press 1,015,146
Lansing Lansing State Journal 71,777 94,708 1855 1971 (28)
Port Huron Times Herald 31,411 41,192 1900 1970 (25)
Minnesota St. Cloud St. Cloud Times 28,872 37,750 1861 1977 (51)
Mississippi Hattiesburg Hattiesburg American 26,161 29,735 1897 1982 (71)
Jackson The Clarion-Ledger 110,355 128,552 1837 1982 (70)
Missouri Springfield Springfield News-Leader 64,217 103,064 1893 1977 (50)
Montana Great Falls Great Falls Tribune 34,145 40,599 1885 1990 (80)
Nevada Reno Reno Gazette-Journal 68,279 85,598 1870 1977 (47)
New Jersey Bridgewater The Courier-News 50,100 52,718 1884 1927 (5)
Cherry Hill Courier-Post 89,412 98,742 1875 1959 (11)
Vineland The Daily Journal 18,149 1864 1986 (78)
New York Binghamton Press & Sun-Bulletin 68,355 88,482 1904 1943 (9)
Elmira Star-Gazette 34,361 47,984 1828 1906 (1)
Ithaca The Ithaca Journal 19,607 1815 1912 (2)
Niagara Falls Niagara Gazette 26,419 27,756 1854 1954 (10)
Poughkeepsie Poughkeepsie Journal 42,757 59,439 1785 1977 (49)
Rochester Democrat and Chronicle 142,894 252,219 1833 1928 (6)
Times-Union 53,602 1918 1918 (3)
Saratoga Springs The Saratogian 12,613 14,436 1855 1934 (8)
Utica Observer-Dispatch 50,478 65,197 1817 1922 (4)
Gannett Suburban Newspapers:
Mamaroneck The Daily Times 5,259 5,439 1879 1964 (18)
Mount Vernon The Daily Argus 6,514 8,285 1892 1964 (17)
New Rochelle The Standard-Star 10,332 11,234 1908 1964 (15)
Ossining The Citizen-Register 5,923 7,226 1847 1964 (19)
Peekskill The Star 6,289 8,598 1922 1985 (75)
Port Chester The Daily Item 8,742 9,698 1885 1964 (16)
Tarrytown The Daily News 3,304 4,036 1897 1964 (20)
West Nyack-Rockland Rockland Journal-News 41,001 51,237 1850 1964 (13)
White Plains The Reporter Dispatch 46,392 57,642 1829 1964 (12)
Yonkers The Herald Statesman 22,386 29,411 1852 1964 (14)
North Carolina Asheville Asheville Citizen-Times 65,804 76,472 1870 1995 (86)
Ohio Chillicothe Chillicothe Gazette 16,971 1800 1977 (57)
Cincinnati The Cincinnati Enquirer 204,924 353,132 1841 1979 (62)
Fremont The News-Messenger 13,926 1856 1975 (41)
Gallipolis Gallipolis Daily Tribune 5,735 11,323 1893 1995 (87)
Marietta The Marietta Times 13,080 1864 1974 (40)
Pomeroy The Daily Sentinel 5,002 1941 1995 (88)
Port Clinton News Herald 6,016 1864 1975 (42)
Oklahoma Muskogee Muskogee Daily Phoenix
and Times-Democrat 19,273 20,568 1888 1977 (55)
Oregon Salem Statesman Journal 61,931 70,725 1851 1974 (39)
Pennsylvania Chambersburg Public Opinion 21,832 1869 1971 (27)
Lansdale The Reporter 19,456 1870 1980 (67)
North Hills North Hills News Record 21,246 20,342 1962 1976 (44)
Tarentum Valley News Dispatch 34,361 33,777 1891 1976 (43)
South Carolina Greenville The Greenville News 99,637 141,344 1874 1995 (89)
South Dakota Sioux Falls Argus Leader 51,346 73,363 1881 1977 (48)
Tennessee Clarksville The Leaf-Chronicle 21,180 23,859 1808 1995 (90)
Jackson The Jackson Sun 40,210 45,039 1848 1985 (74)
Nashville The Tennessean 148,856 283,887 1812 1979 (63)
Texas El Paso El Paso Times 67,087 99,828 1879 1972 (38)
Vermont Burlington The Burlington Free Press 53,528 67,901 1827 1971 (26)
Virgin Islands St. Thomas The Virgin Islands Daily News 16,157 1930 1978 (61)
Virginia Arlington USA TODAY 2,072,973 1982 1982 (72)
Staunton The Daily News-Leader 18,764 22,983 1904 1995 (91)
Washington Bellingham The Bellingham Herald 26,804 34,326 1890 1971 (34)
Olympia The Olympian 37,261 46,791 1889 1971 (32)
West Virginia Huntington The Herald-Dispatch 39,311 47,208 1909 1971 (35)
Point Pleasant Point Pleasant Register 5,528 1862 1995 (92)
Wisconsin Green Bay Green Bay Press-Gazette 59,089 87,704 1915 1980 (64)
Wausau Wausau Daily Herald 25,337 32,082 1903 1980 (65)
* Number in parentheses notes chronological order in which existing newspapers joined Gannett.
<PAGE>
-67, 68 -
</TABLE>
<TABLE>
MARKETS WE SERVE
<CAPTION>
Operation Location and other information
- ---------------------------------------- -------------------------------------------------------------------------------------------
<S> <C>
Non-daily publications Weekly, semi-weekly or monthly publications in Alabama,Arizona, Arkansas,
California, Delaware, District of Columbia, Florida, Georgia,Guam, Illinois, Indiana,
Iowa, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri,Nevada,
New Jersey, New York, North Carolina,Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina
Tennessee, Texas, Vermont, Virginia, Washington, West Virginia, Wisconsin
USA TODAY Headquarters: Arlington, Va.
Print sites Arlington, Texas; Atlanta; Batavia, N.Y.; Brevard County, Fla.;
Chandler, Ariz.; Chicago; Columbia, S.C.; Fort Collins, Colo.;
Fort Myers, Fla.; Gainesville, Ga.; Greensboro, N.C.; Hattiesburg,
Miss.; Kankakee, Ill.; Lawrence, Kan.; Mansfield, Ohio; Marin
County, Calif.; Miramar, Fla.; Nashville, Tenn.;Newark, Ohio; Norwood, Mass.;
Olympia, Wash.; Pasadena, Texas; Port Huron, Mich.; Richmond, Ind.;
Rockaway, N.J.; St. Cloud, Minn.; St. Louis; Salt Lake City; San Bernardino, Calif.;
Springfield, Va.; Tarentum, Pa.; White Plains, N.Y.; Wilmington, Del.
International print sites Frankfurt, Germany; Hong Kong; London, England; Lucerne, Switzerland
Regional offices Atlanta; Boston; Buffalo, N.Y.; Charlotte, N.C.; Chicago; Cincinnati;
Cleveland; Columbus, Ohio; Dallas; Denver; Detroit; Houston; Indianapolis;
Kansas City, Mo.; Los Angeles; Milwaukee; Minneapolis-St. Paul; Miramar, Fla.;
Mountainside, N.J.; Nashville, Tenn.; New Orleans; Orlando, Fla.; Philadelphia;
Phoenix, Ariz.; Pittsburgh; Port Washington, N.Y.; St. Louis; San Francisco; Seattle;
Springfield, Va.
International offices Hong Kong; London, England; Singapore
Advertising offices Arlington, Va.; Atlanta; Chicago; Dallas; Detroit; Hong Kong;
London, England; Los Angeles; New York, N.Y.; San Francisco
USA TODAY Baseball Weekly Circulation 240,000
Editorial and advertising offices Arlington, Va.
USA TODAY Information Network Arlington, Va.
USA WEEKEND Circulation 19.2 million in 452 newspapers
Advertising offices Chicago; Detroit; Los Angeles; New York, N.Y.
Editorial and production offices Arlington, Va.
Gannett Direct Marketing Services, Inc. Louisville, Ky.
Gannett Media Technologies International Cincinnati, Ohio
Gannett National Newspaper Sales Headquarters: New York, N.Y.
Regional offices Chicago; Detroit; Los Angeles
Gannett New Media Arlington, Va.
Functions New business opportunity review and product development
Gannett Digital Xpress Arlington, Va.
Functions Editorial, broadcast and recording services; Fax on Demand; personalized audio,
fax text information
Products Gannett Digital Xpress; PI - Personalized Information
Gannett News Service Headquarters: Arlington, Va.
Bureaus Albany, N.Y.; Baton Rouge, La.; Columbus, Ohio; Harrisburg, Pa.;
Indianapolis, Ind.; Olympia, Wash.; Sacramento, Calif.; Springfield, Ill.;
Tallahassee, Fla.
Gannett Offset Headquarters: Springfield, Va.
Offset sites Atlanta; Chandler, Ariz.; Miramar, Fla.; Nashville, Tenn.;
Norwood, Mass.; Olivette, Mo.; Springfield, Va.
Gannett Outdoor Group Headquarters: New York, N.Y.
Outdoor and Transit operations Berkeley, Calif.; Chicago; Denver; Detroit; Fairfield, N.J.;
Flint, Mich.; Grand Rapids, Mich.; Houston; New Haven, Conn.;
Kansas City, Mo.; Lakewood, N.J.; Los Angeles; New York, N.Y.;
Philadelphia; Rochester, N.Y.; St. Louis; Sacramento, Calif.;
San Diego; San Francisco
Outdoor Network, USA Headquarters: New York, N.Y.
Sales offices Chicago; Detroit; Los Angeles; New York, N.Y.; San Francisco
Mediacom, Inc. Headquarters: Toronto, Ontario
Mediacom operations Mississauga, Montreal, Quebec City, Toronto, Winnipeg
and other Canadian markets
Gannett Satellite Information Network Arlington, Va.
Gannett TeleMarketing, Inc. Headquarters: Springfield, Va.
Operations Cincinnati; Nashville, Tenn.; Silver Spring, Md.
GANNETTWORK Headquarters: New York, N.Y.
Sales offices Chicago; New York, N.Y.
Multimedia Cablevision Co. Headquarters: Wichita, Kan.
Regional offices Edmond, Okla.; Oak Lawn, Ill.; Rocky Mount, N.C.;
Wichita, Kan.
Multimedia Entertainment Co. Headquarters: New York, N.Y.
Products Syndicated TV programming and NewsTalk Television
Multimedia Security Service Headquarters: Wichita, Kan.
Offices Anaheim, Calif.; Chicago; Concord, Calif.; Dallas;
Houston; Miami; Oklahoma City, Okla.; Phoenix, Ariz.;
St. Louis; Tulsa, Okla.; Wichita, Kan.
Telematch Springfield, Va.
</TABLE>
<TABLE>
MARKETS WE SERVE
<CAPTION>
**
Television Weekly Joined
State City Station Channel/Network Audience Founded Gannett *
- ---------------- --------------------- ------------ ----------------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Arizona Phoenix KPNX-TV Channel 12/NBC 1,021,000 1953 1979 (3)
Arkansas Little Rock KTHV-TV Channel 11/CBS 425,000 1955 1994 (10)
Colorado Denver KUSA-TV Channel 9/NBC 1,311,000 1952 1979 (2)
District of
Columbia Washington WUSA-TV Channel 9/CBS 1,961,000 1949 1986 (6)
Florida Jacksonville WTLV-TV Channel 12/NBC 425,000 1957 1988 (8)
Georgia Atlanta WXIA-TV Channel 11/NBC 1,595,000 1948 1979 (1)
Macon WMAZ-TV Channel 13/CBS 208,000 1953 1995 (11)
Minnesota Minneapolis-St. Paul KARE-TV Channel 11/NBC 1,293,000 1953 1983 (5)
Missouri St. Louis KSDK-TV Channel 5/NBC 1,095,000 1947 1995 (12)
North Carolina Greensboro WFMY-TV Channel 2/CBS 569,000 1949 1988 (9)
Ohio Cincinnati WLWT-TV Channel 5/NBC 752,000 1948 1995 (13)
Cleveland WKYC-TV Channel 3/NBC 1,402,000 1948 1995 (14)
Oklahoma Oklahoma City KOCO-TV Channel 5/ABC 552,000 1956 1979 (4)
Tennessee Knoxville WBIR-TV Channel 10/NBC 466,000 1956 1995 (15)
Texas Austin KVUE-TV Channel 24/ABC 371,000 1971 1986 (7)
**
Radio Weekly Joined
State City Station Channel Audience Founded Gannett *
- ---------------- --------------------- ------------ ----------------- ----------- -------- -------------
California Los Angeles KIIS 1150 Khz 42,900 1927 1979 (3)
KIIS-FM 102.7 Mhz 1,618,600 1961 1979 (1)
San Diego KSDO 1130 Khz 212,600 1947 1979 (5)
KKBH-FM 102.9 Mhz 152,400 1963 1979 (4)
Florida Tampa-St. Petersburg WDAE 1250 Khz 3,000 1922 1984 (8)
WUSA-FM 100.7 Mhz 234,300 1951 1980 (7)
Georgia Macon WMAZ 940 Khz 44,100 1922 1995 (12)
WAYS-FM 99.1 Mhz 82,200 1947 1995 (13)
Illinois Chicago WGCI 1390 Khz 265,000 1923 1979 (6)
WGCI-FM 107.5 Mhz 894,700 1959 1979 (2)
Texas Dallas KHKS-FM 106.1 Mhz 665,000 1950 1986 (11)
Houston KKBQ 790 Khz (See Note 1)1944 1984 (10)
KKBQ-FM 92.9 Mhz 464,700 1962 1984 (9)
* Number in parentheses notes chronological order in which existing stations joined Gannett.
** Weekly audience for television stations is number of TV households reached, according
to the November 1995 Nielsen book.
Weekly audience for radio stations is number of different listeners age 12 and up
reached, according to the Fall 1995 Arbitron book.
(1) KKBQ-AM reported in combination with KKBQ-FM.
</TABLE>
<PAGE>
-Back Inside Cover-
This annual report was written and produced by employees of
Gannett.
Senior Vice President/Public Affairs and Government Relations Mimi
Feller
Vice President/Investor Relations Susan Watson
Vice President/ Corporate Accounting Services George Gavagan
Director/Consolidation Accounting Julie Valpey
Manager/Publications Ashley Weissenburger
Art Director Michael Abernethy
Corporate Writers Laura Dalton, Mary Hardie
Printing Monroe Litho, Rochester, N.Y.
Printed on Recycled Paper. The cover and pages 1-20 of this annual report are
printed on Gleneagle Osprey (GEO), an acid-free paper with a minimum of 50%
recycled fiber, including 10% deinked post-consumer waste. Its virgin
pulp content is produced without chlorine bleaching. No optical
brightening agents (fluorescent dyes) have been used.
Pages 21-68 are printed on Rockland Opaque, which is an acid-free
paper with a minimum of 20% post-consumer waste.
Photo Credits
Dave Leonard, Gannett (pp.3,9,10, 11,16-19); L.E. Baskow, Rockford
Register Star (p.6); Steve Rockstein, The Virgin Islands Daily News
(p.7);
Malcolm Denemark, FLORIDA TODAY (p.8); Anne Ryan, USA TODAY (p.12);
Per Matthews, Mediacom (p.14); Davis Barber (p.14); Paul Goldberg,
Gannett (p.15); Paul Whyte, USA TODAY (pp.18-20); Fred Rollison, The
Greenville News (p.20).
GANNETT ON THE NET
News and information about Gannett is available on the Internet's
World Wide Web at http://www.gannett.com or [email protected]
via electronic mail. The following Gannett properties also offer
online services or informational sites on the Web:
USA TODAY http://www.usatoday.com
FLORIDA TODAY, Brevard County http://www.flatoday.com/space
The Detroit News http://www.detnews.com
Journal and Courier, Lafayette, Ind. http://www.mdn.com/jconline
The Tennessean, Nashville http://www.tennessean.com/schools
North Hills (Pa.) News Record http://www.nauticom.net/users/nhnr
Reno Gazette-Journal http://www.nevadanet.com
Democrat and Chronicle/Times-Union, Rochester, N.Y.
http://www.rochesterdandc.com
Gannett Suburban Newspapers, Westchester County, N.Y.
http://www.nynews.com/nynews
Gannett Outdoor Group http://www.gannettoutdoor.com
Gannett Media Technologies International http://www.gmti.com
KIIS/KIIS-FM, Los Angeles http://www.gointeract.com/radio/kiis
KSDO-AM, San Diego, Roger Hedgecock Show
http://www.rogerhedgecock.com
WUSA-FM, Tampa-St. Petersburg, Fla. http://www.321.com/101/index.html
KOCO-TV, Oklahoma City http://www.ionet.net/koco
KUSA-TV, Denver http://www.aaco.com/9news
WLWT-TV, Cincinnati http://www.wlwt.com
WXIA-TV, Atlanta http://www.atlanta.olympic.org (click on "Welcome")
WUSA-TV, Washington, D.C. http://www.wusatv.com
USA WEEKEND is available via America Online; Gannett Suburban
Newspapers and FLORIDA TODAY are on CompuServe.
Gannett Shareholder Services
Gannett Stock
Gannett Co., Inc. shares are traded on the New York Stock Exchange
with the symbol GCI.
The Company's transfer agent and registrar is Norwest Bank Minnesota,
N.A. General inquiries and requests for enrollment materials for the
programs described below should be directed to Norwest's Stock
Transfer Department, P.O. Box 64854, South St. Paul, MN 55164-0854 or by
telephone at 1-800-778-3299.
Gannett is pleased to offer the following shareholder services:
Dividend Reinvestment Plan
The Dividend Reinvestment Plan (DRP) provides Gannett shareholders
the opportunity to purchase additional shares of the Company's common stock
free of brokerage fees or service charges through automatic reinvestment
of dividends and optional cash payments. Cash payments may range from a
minimum of $10 to a maximum of $5,000 per month.
Automatic Cash Investment Service for the DRP
This service provides a convenient, no-cost method of having money
automatically withdrawn from your checking or savings account each
month and invested in Gannett stock through your DRP account.
Direct Deposit Service
Gannett shareholders may have their quarterly dividends electronically
credited to their checking or savings accounts on the payment date at
no additional cost.
Form 10-K
Information provided by Gannett in its Form 10-K annual report to the
Securities and Exchange Commission has been incorporated in this report.
Copies of the complete Form 10-K annual report may be obtained by writing
the Secretary, Gannett Co., Inc., 1100 Wilson Blvd., Arlington, VA 22234.
Annual Meeting
The annual meeting of shareholders will be held at 10 a.m. Tuesday, May 7, 1996
at Gannett headquarters.
For More Information
News and information about Gannett is available on the Internet's World
Wide Web (see list at left) or by calling our toll-free information line
at 1-800-356-1713. Quarterly earnings information will be available around
the middle of April, July and October 1996.
Shareholders who wish to contact the Company directly about their Gannett
stock should call Shareholder Services at Gannett headquarters, 703-284-6960.
Gannett Headquarters
1100 Wilson Boulevard
Arlington, VA 22234
703-284-6000
SUBSIDIARY LIST
STATE OF
UNIT INCORPORATION
- ---- -----------------
ADVANCED MEDIA SOLUTIONS DELAWARE
THE ADVERTISER COMPANY ALABAMA
ARKANSAS TELEVISION COMPANY ARKANSAS
BAXTER COUNTY NEWSPAPERS, INC. ARKANSAS
BETWEEN FRIENDS, INC. SOUTH CAROLINA
CALIFORNIA NEWSPAPERS, INC. CALIFORNIA
CAPE PUBLICATIONS, INC. FLORIDA
CHILDREN'S EDITION, INC. KENTUCKY
CITIZEN PUBLISHING COMPANY ARIZONA
COMBINED COMMUNICATIONS CORPORATION ARIZONA
COMBINED COMMUNICATIONS CORPORATION
OF OKLAHOMA, INC. OKLAHOMA
CONSPIRACY PRODUCTIONS, INC. SOUTH CAROLINA
COURIER BROADWAY CORP. KENTUCKY
COURIER-JOURNAL AND LOUISVILLE TIMES
COMPANY KENTUCKY
DAILY NEWS PUBLISHING CO., INC. VIRGIN ISLANDS
DAZZLE, INC. SOUTH CAROLINA
DES MOINES REGISTER AND TRIBUNE CO. IOWA
THE DESERT SUN PUBLISHING COMPANY CALIFORNIA
THE DETROIT NEWS, INC. MICHIGAN
DETROIT NEWSPAPER AGENCY MICHIGAN
DIGICOL, INC. DELAWARE
EL PASO TIMES, INC. DELAWARE
ELEVEN-FIFTY CORP. DELAWARE
FEDERATED PUBLICATIONS, INC. DELAWARE
FORT COLLINS NEWSPAPERS INC. COLORADO
GANNETT ACQUISITION SUBSIDIARY, INC. DELAWARE
GANNETT COLORADO BROADCASTING, INC. DELAWARE
GANNETT DIRECT MARKETING SERVICES, INC. KENTUCKY
GANNETT FLORIDA BROADCASTING, INC. DELAWARE
GANNETT HAWAII, INC. HAWAII
GANNETT INTERNATIONAL COMMUNICATIONS, INC. DELAWARE
GANNETT LHA, INC. DELAWARE
GANNETT LHA INTERNATIONAL, INC. DELAWARE
GANNETT MASSACHUSETTS SUPPLY CORP. MASSACHUSETTS
GANNETT MINNESOTA BROADCASTING, INC. DELAWARE
GANNETT NATIONAL NEWSPAPER SALES, INC. DELAWARE
GANNETT ON-LINE INVESTOR, INC. DELAWARE
GANNETT ON-LINE PARTNER, LLC DELAWARE
GANNETT OUTDOOR CO. OF TEXAS TEXAS
GANNETT PACIFIC CORPORATION HAWAII
GANNETT RIVER STATES PUBLISHING CORPORATION ARKANSAS
GANNETT SATELLITE INFORMATION NETWORK, INC. DELAWARE
GANNETT SUPPLY CORPORATION DELAWARE
GANNETT T/G SUBSIDIARY, INC. CALIFORNIA
GANNETT TELEMARKETING, INC. DELAWARE
GANNETT TEXAS BROADCASTING, INC. TEXAS
GANNETT TRANSIT, INC. DELAWARE
GUAM PUBLICATIONS, INCORPORATED HAWAII
HAWAII NEWSPAPER AGENCY LIMITED PARTNERSHIP DELAWARE
KPNX BROADCASTING COMPANY ARIZONA
KVUE-TV, INC. MICHIGAN
LEAF CHRONICLE COMPANY, INC. TENNESSEE
MACON RADIO CORPORATION DELAWARE
MCCLURE NEWSPAPERS, INC. DELAWARE
MEDIACOM INC. CANADA
MNC DIRECT, INC. SOUTH CAROLINA
MOW PRODUCTIONS, INC. SOUTH CAROLINA
MPPI, INC. SOUTH CAROLINA
MULTIMEDIA, INC. SOUTH CAROLINA
MULTIMEDIA CABLEVISION, INC. SOUTH CAROLINA
MULTIMEDIA CABLEVISION OF BATAVIA, INC. ILLINOIS
MULTIMEDIA CABLEVISION OF CHICAGO RIDGE, INC. ILLINOIS
MULTIMEDIA CABLEVISION OF EVERGREEN
PARK, INC. ILLINOIS
MULTIMEDIA CABLEVISION OF HOMETOWN, INC. ILLINOIS
MULTIMEDIA CABLEVISION OF ILLINOIS, INC. ILLINOIS
MULTIMEDIA CABLEVISION OF MIDWEST CITY, INC. OKLAHOMA
MULTIMEDIA OF CINCINNATI, INC. OHIO
MULTIMEDIA DEVELOPMENT, INC. SOUTH CAROLINA
MULTIMEDIA ENTERPRISE, INC. SOUTH CAROLINA
MULTIMEDIA ENTERTAINMENT, INC. SOUTH CAROLINA
MULTIMEDIA ENTERTAINMENT PRODUCTIONS, INC. SOUTH CAROLINA
MULTIMEDIA FILMS, INC. SOUTH CAROLINA
MULTIMEDIA HOME VIDEO, INC. DELAWARE
MULTIMEDIA KSDK, INC. SOUTH CAROLINA
MULTIMEDIA MOTION PICTURES, INC. SOUTH CAROLINA
MULTIMEDIA PRODUCTIONS, INC. OHIO
MULTIMEDIA PROGRAMS, INC. OHIO
MULTIMEDIA PUBLISHING OF NORTH CAROLINA,
INC. SOUTH CAROLINA
MULTIMEDIA PUBLISHING OF SOUTH CAROLINA,
INC. SOUTH CAROLINA
MULTIMEDIA RADIO, INC. SOUTH CAROLINA
MULTIMEDIA SECURITY SERVICE, INC. SOUTH CAROLINA
MULTIMEDIA SERVICE, INC. DELAWARE
MULTIMEDIA SPECIALS, INC. SOUTH CAROLINA
MULTIMEDIA TALK TELEVISION, INC. SOUTH CAROLINA
MULTIMEDIA TELECOMMUNICATIONS, INC. SOUTH CAROLINA
MULTIMEDIA WBIR, INC. SOUTH CAROLINA
MULTIMEDIA WMAZ, INC. SOUTH CAROLINA
MUSIC CITY NEWS PUBLISHING CO., INC. TENNESSEE
NEW YORK SUBWAYS ADVERTISING CO., INC. ARIZONA
NEWS-PRESS PUBLISHING COMPANY FLORIDA
THE OHIO VALLEY PUBLISHING COMPANY OHIO
OKLAHOMA PRESS PUBLISHING COMPANY OKLAHOMA
PACIFIC MEDIA, INC. DELAWARE
PACIFIC AND SOUTHERN COMPANY, INC. DELAWARE
PENSACOLA NEWS-JOURNAL INC. FLORIDA
POINT PLEASANT REGISTER COMPANY WEST VIRGINIA
PRESS-CITIZEN COMPANY INC. IOWA
RED CARPET CABLE, INC. OKLAHOMA
RENO NEWSPAPERS, INC. NEVADA
ST. CLOUD NEWSPAPERS INC. MINNESOTA
SALEM COUNTY SAMPLER, INC. NEW JERSEY
SALINAS NEWSPAPERS INC. CALIFORNIA
SHELTER MEDIA COMMUNICATIONS, INC. CALIFORNIA
SHINY ROCK MINING CORPORATION OREGON
SIOUX FALLS NEWSPAPERS INC. SOUTH DAKOTA
SOUTHLAND PUBLISHING COMPANY DELAWARE
SPEIDEL NEWSPAPERS INC. DELAWARE
THE STATESMAN-JOURNAL COMPANY OREGON
SUMNER TIMES, INC. TENNESSEE
THE SUN COMPANY OF SAN BERNARDINO,
CALIFORNIA CALIFORNIA
TAR RIVER COMMUNICATIONS, INC. NORTH CAROLINA
TELEPRODUCTIONS CORPORATION SOUTH CAROLINA
TELEVISION 12 OF JACKSONVILLE, INC. FLORIDA
THE TIMES HERALD COMPANY MICHIGAN
TNI PARTNERS ARIZONA
USA DIGITAL RADIO PARTNERS, L.P. NEW YORK
USA TODAY INTERNATIONAL CORPORATION DELAWARE
USA WEEKEND, INC. DELAWARE
VISALIA NEWSPAPERS INC. CALIFORNIA
VISIONS, INC. SOUTH CAROLINA
WFMY TELEVISION CORP. NORTH CAROLINA
WKYC HOLDINGS, INC. DELAWARE
WKYC-TV, INC. DELAWARE
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectuses constituting part of the Registration Statements on
Form S-3 (Nos. 33-63673, 33-58686 and 33-53159) and in the
Registration Statements on Form S-8 (Nos. 2-63038, 2-84088,
33-15319, 33-16790, 33-28413, 33-35305 and 33-50813) of Gannett
Co., Inc. of our report dated February 6, 1996 appearing on page 45
of the Annual Report to Shareholders which is incorporated in this
Annual Report on Form 10-K. We also consent to the incorporation
by reference of our report on the Financial Statement Schedules,
which appears on page 8 of this Form 10-K.
/s/Price Waterhouse LLP
- --------------------------------
PRICE WATERHOUSE LLP
Washington, D.C.
March 29, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
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.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> DEC-26-1994
<PERIOD-END> DEC-31-1995
<CASH> 46,962,000
<SECURITIES> 23,000
<RECEIVABLES> 610,078,000
<ALLOWANCES> 22,182,000
<INVENTORY> 111,653,000
<CURRENT-ASSETS> 854,084,000
<PP&E> 3,559,666,000
<DEPRECIATION> 1,488,979,000
<TOTAL-ASSETS> 6,503,800,000
<CURRENT-LIABILITIES> 812,772,000
<BONDS> 0
<COMMON> 162,210,000
0
0
<OTHER-SE> 1,983,438,000
<TOTAL-LIABILITY-AND-EQUITY> 6,503,800,000
<SALES> 4,006,736,000
<TOTAL-REVENUES> 4,006,736,000
<CGS> 2,252,540,000
<TOTAL-COSTS> 3,154,853,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 52,175,000
<INCOME-PRETAX> 803,462,000
<INCOME-TAX> 326,200,000
<INCOME-CONTINUING> 477,262,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 477,262,000
<EPS-PRIMARY> 3.41
<EPS-DILUTED> 0
</TABLE>
Exhibit 4-3
AMENDMENT NUMBER TWO
to
$1,500,000,000
REVOLVING CREDIT AGREEMENT
dated as of December 1, 1993
between
GANNETT CO., INC.
and
BANK OF AMERICA NT&SA, CHEMICAL BANK,
MORGAN GUARANTY TRUST COMPANY,
NATIONSBANK N.A. (CAROLINAS), THE FIRST NATIONAL BANK OF CHICAGO,
CITIBANK, N.A., THE FUJI BANK, LIMITED, TORONTO DOMINION (TEXAS),
INC.,
WACHOVIA BANK OF GEORGIA, N.A., BANK OF HAWAII,
FIRST INTERSTATE BANK OF CALIFORNIA,
THE BANK OF NOVA SCOTIA, THE CHASE MANHATTAN BANK, N.A.,
DEUTSCHE BANK AG, MARINE MIDLAND BANK,
PNC BANK, NATIONAL ASSOCIATION,
ROYAL BANK OF CANADA, THE SANWA BANK, LIMITED,
CRESTAR BANK, THE NORTHERN TRUST COMPANY, and
THE FIRST NATIONAL BANK OF MARYLAND,
as amended
<PAGE>
GANNETT CO., INC.
Amendment Number Two
to
$1,500,000,000
Revolving Credit Agreement
This Amendment Number Two is made as of November 13, 1995
between Gannett Co., Inc., a Delaware corporation ("Gannett") and
the Banks signatory hereto (each called a "Bank" and collectively
the "Banks").
Gannett entered into a $1,000,000,000 Revolving Credit
Agreement with the Banks dated December 1, 1993 (the
"Agreement"). On August 1, 1994, pursuant to Amendment
Number One to the Agreement, the Agreement was amended to
increase the aggregate commitment to $1,500,000,000, extend the
Expiration Date and modify the Facility Fee.
Gannett and the Banks wish to further amend the Agreement to
increase the aggregate commitment to $3,000,000,000, extend the
Expiration Date, modify the Facility Fee, adjust the Applicable
Margin in effect with respect to the Money Market Rate and the
Eurodollar Rate, and amend Schedule 1 to the Agreement as
provided herein.
The parties hereby agree as follows:
1. The terms "this Agreement," "hereunder," "herein" and
similar references in the Agreement shall be deemed to refer to
the Agreement as amended hereby.
2. Section 1 of the Agreement shall be amended as follows:
(i) The definition of "Applicable Margin" shall be
amended to read in its entirety as follows:
"Applicable Margin" for an Advance shall be the
appropriate rate per annum set forth below
opposite the interest rate applicable to such
Advance.
Interest Credit Credit Credit Credit
Rate Status 1 Status 2 Status 3 Status 4
- ---------- -------- -------- -------- --------
Alternate
Rate 0% 0% 0% 0%
Eurodollar 13 Basis 17 Basis 27.5 Basis 35 Basis
Rate Points Points Points Points
Money Market 25.5 Basis 29.5 Basis 40 Basis 50 Basis
Rate Points Points Points Points
Competitive
Bid Rate 0% 0% 0% 0%
(ii) The definitions of "Credit Rating Adjustment A" and
"Credit Rating Adjustment B" shall be deleted in their entirety, and in
their place shall be inserted the following definitions:
"Credit Status 1" shall exist upon the occurrence of
the higher of a rating by Standard & Poor's
Corporation of Gannett's senior unsecured long-term
debt of at least AA- or a rating by Moody's Investors
Service, Inc. of Gannett's senior unsecured long-term
debt of at least Aa3. Credit Status 1 shall exist
upon the satisfaction of one or the other of the
foregoing minimum rating thresholds and no other
Credit Status shall be deemed to coexist,
notwithstanding that the lower of the two ratings may
fall within the range of ratings specified in Credit
Status 2, Credit Status 3 or Credit Status 4.
"Credit Status 2" shall exist upon the occurrence of
the higher of a rating by Standard & Poor's
Corporation of Gannett's senior unsecured long-term
debt of at least A- or a rating by Moody's Investors
Service, Inc. of Gannett's senior unsecured long-term
debt of at least A3. Credit Status 2 shall exist
upon the satisfaction of one or the other of the
foregoing minimum rating thresholds and no other
Credit Status shall be deemed to coexist,
notwithstanding that the lower of the two ratings may
fall within the range of ratings specified in Credit
Status 3 or Credit Status 4.
"Credit Status 3" shall exist upon the occurrence of
the higher of a rating by Standard & Poor's
Corporation of Gannett's senior unsecured long-term
debt of at least BBB or a rating by Moody's Investors
Service, Inc. of Gannett's senior unsecured long-term
debt of at least Baa2. Credit Status 3 shall exist
upon the satisfaction of one or the other of the
foregoing minimum rating thresholds and no other
Credit Status shall be deemed to coexist,
notwithstanding that the lower of the two ratings may
fall within the range of ratings specified in Credit
Status 4.
"Credit Status 4" shall exist only upon the
occurrence of a rating by Standard & Poor's
Corporation of Gannett's senior unsecured long-term
debt of BBB- or below and a rating by Moody's
Investors Service, Inc. of Gannett's senior unsecured
long-term debt of Baa3 or below. Credit Status 1,
Credit Status 2 or Credit Status 3 shall be deemed to
exist in accordance with the definitions thereof if
either the rating of Gannett's senior unsecured long-term debt
by Standard & Poor's Corporation exceeds BBB- or the rating by
Moody's Investors Service, Inc. exceeds Baa3.
(iii) The definition of "Expiration Date" shall be amended in
its entirety to read as follows:
"Expiration Date" shall mean November 13, 2000.
3. Section 2(a) shall be amended to read in its entirety as
follows:
2(a). Facility Fee. Gannett will pay to each Bank pro
rata, as consideration for the Bank's Commitment hereunder, a
facility fee (the "Facility Fee") calculated at the rate of: (i)
seven (7) Basis Points per annum if Credit Status 1 shall be in
effect; or (ii) nine (9) Basis Points per annum if Credit Status
2 shall be in effect; or (iii) twelve and one half (12.5) Basis
Points per annum if Credit Status 3 shall be in effect; or (iv)
seventeen and one half (17.5) Basis Points per annum if Credit
Status 4 shall be in effect. The Facility Fee shall be computed
pursuant to Section 3(g) from (and including) November 13, 1995,
payable quarterly on each February 1, May 1, August 1 and
November 1 after the date of Amendment Number Two, commencing
with the first payment due on February 1, 1996, and ending on
(but excluding for purposes of calculating the Facility Fee) the
Expiration Date, for the preceding period for which such Facility
Fee has not been paid.
4. Schedule 1 shall be amended to read in its entirety as
set forth in Schedule 1 hereto, and all references in the
Agreement (including the cover page) to the aggregate Commitment
Amount shall be increased to $3,000,000,000.
5. The terms of this Agreement shall be in addition to and
shall in no way impair the full force and effect of the Agreement
(except as specifically amended herein). The Facility Fee
accrued under the Agreement for the period prior to the date
hereof shall be paid on the date hereof.
6. This Amendment may be executed by the parties in as many
counterparts as may be deemed necessary and convenient, and by
the different parties on separate counterparts, each of which,
when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same instrument.
7. THIS AMENDMENT NUMBER TWO SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties have executed this
Amendment Number Two as of the date first written above.
GANNETT CO., INC.
By: /s/ Gracia C. Martore
Name: Gracia C. Martore
Title: Vice President/Treasury
Services
BANK OF AMERICA NT&SA
By: /s/ Amy Trapp
Name: Amy Trapp
Title: Vice President
CHEMICAL BANK
By: /s/ John J. Huber
Name: John J. Huber
Title: Managing Director
MORGAN GUARANTY TRUST COMPANY
By: /s/ Eugenia Wilds
Name: Eugenia Wilds
Title: Vice President
NATIONSBANK N.A. (CAROLINAS)
By: /s/ Penn Wells
Name: Penn Wells
Title: Senior Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Ted Wozniak/Authorized Agent
Name: Ted Wozniak
Title: Managing Director
CITIBANK, N.A.
By: /s/ Eric Huttner
Name: Eric Huttner
Title: Vice President
As Attorney-in-Fact
THE FUJI BANK, LIMITED
By: /s/ Gina M. Kearns
Name: Gina M. Kearns
Title: Vice President & Manager
TORONTO DOMINION (TEXAS), INC.
By: /s/ C. A. Clause
Name: Carole A. Clause
Title:Vice President
WACHOVIA BANK OF GEORGIA, N.A.
By: /s/ Mark S. Rogos
Name: Mark S. Rogos
Title: Senior Vice President
BANK OF HAWAII
By: /s/ Elizabeth O. MacLean
Name: Elizabeth O. MacLean
Title: Vice President
FIRST INTERSTATE BANK OF CALIFORNIA
By: /s/ Daniel H. Hom
/s/ Judy A. Maahs
Name: Daniel H. Hom
Judy A. Maahs
Title: Vice President
Asst. Vice President
THE BANK OF NOVA SCOTIA
By: /s/ Vincent J. Fitzgerald, Jr.
Name: Vincent J. Fitzgerald, Jr.
Title: Authorized Signatory
THE CHASE MANHATTAN BANK, N.A.
By: /s/ Diana Lauria
Name: Diana Lauria
Title: Vice-President
DEUTSCHE BANK AG, NEW YORK AND/OR
CAYMAN ISLANDS BRANCH
By: /s/ Elizabeth Tallmadge
Name: Elizabeth Hope Tallmadge
Title: Vice President
By: /s/ Bina R. Dabbah
Name: Bina R. Dabbah
Title: Vice President
MARINE MIDLAND BANK
By: /s/ Guy R. Nudd
Name: Guy R. Nudd
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Scott C. Meves
Name: Scott C. Meves
Title: Vice President
ROYAL BANK OF CANADA
By: /s/ Barbara Meijer
Name: Barbara Meijer
Title: Manager
THE SANWA BANK, LIMITED
By: /s/ P. J. Pawlak
Name: P. J. Pawlak
Title: Vice President & Senior Manager
CRESTAR BANK
By: /s/ Daniel J. O'Neill, Jr.
Name: Daniel J. O'Neill, Jr.
Title: Vice President
THE NORTHERN TRUST COMPANY
By: /s/ David L. Love
Name: David L. Love
Title: Commercial Banking Officer
THE FIRST NATIONAL BANK OF MARYLAND
By: /s/ Mary Ann Facente
Name: Mary Ann Facente
Title: Vice President
<PAGE>
SCHEDULE 1
COMMITMENTS OF THE BANKS
NAME, ADDRESS AND TELECOPY
NUMBER OF BANK COMMITMENT AMOUNT
- -------------------------- ------------------
CO-ARRANGERS
------------
Bank of America NT&SA $250,000,000
1850 Gateway Blvd.
Concord, CA 94520
Telecopy: 510-675-7531 or 7532
With a copy to:
Bank of America NT&SA
335 Madison Avenue
New York, NY 10017
Telecopy: 212-270-2056
Chemical Bank $250,000,000
270 Park AvenueNew York, NY 10017
Telecopy: 212-270-2056
Morgan Guaranty Trust Company $250,000,000
60 Wall Street, 22nd FloorNew York, NY 10260-0060
Telecopy: 212-648-5018
NationsBank N.A. (Carolinas) $250,000,000
Communications Finance Division
901 Main Street, 64th Floor
Dallas, TX 75202-3748
The First National Bank of Chicago $250,000,000
One First National Plaza
Mail Suite 0374
Chicago, Il 60670-0083
Telecopy: 312-732-3885
CO-AGENTS
---------
Citibank, N.A. $150,000,000
399 Park AvenueNew York, NY 10043
Telecopy: 212-793-6873
The Fuji Bank, Limited $150,000,000
Two World Trade Center, 79th Floor
New York, NY 10048
Telecopy: 212-912-9407
Toronto Dominion (Texas), Inc. $150,000,000
909 Fannin, Suite 1700
Houston, TX 77010
Telecopy: 713-951-9921
With a copy to:
The Toronto-Dominion Bank
31 West 52nd Street
New York, NY 10019-6101
Telecopy: 212-262-1926
Wachovia Bank of Georgia, N.A. $150,000,000
191 Peachtree Street, N.E.
Atlanta, GA 30303
Telecopy: 404-332-6898
LEAD MANAGERS
-------------
Bank of Hawaii $125,000,000
130 Merchant Street, 20th Floor
Honolulu, HI 96813
Telecopy: 602-752-8007
With a copy to:
Bank of Hawaii
1839 S. Alma School Board
Suite 150
Mesa, Arizona 85210
Telecopy: 602-752-8007
First Interstate Bank of California $125,000,000
885 Third AvenueNew York, NY 10022-4802
Telecopy: 212-593-5238
The Bank of Nova Scotia $100,000,000
New York Agency1 Liberty Plaza, 26th Floor
New York, NY 10006
Telecopy: 212-225-5090 or 5091
The Chase Manhattan Bank, N.A. $100,000,000
One Chase SquareCorp. Industries Dept.
Tower 9
Rochester, NY 14643
Telecopy: 716-258-4258
Deutsche Bank AG $100,000,000
New York Branch and/or
Cayman Islands Branch
31 West 52nd Street
New York, N.Y. 10019
Telecopy: 212-474-7936
Marine Midland Bank $100,000,000
One Marine Midland Plaza
Rochester, New York 14639
Telecopy: 716-238-7140
PNC Bank, National Association $100,000,000
Communications Banking Division
MS 12-09-01
Land Title Building
100 South Broad Street
Philadelphia, PA 19110
Attn: Scott C. Meves
Telecopy: 215-585-6680
Royal Bank of Canada $100,000,000
c/o Grand Cayman (North America #1) Branch
Financial Square
New York, N.Y. 10005-3531
Telecopy: 212-428-2372
The Sanwa Bank, Limited $100,000,000
Atlanta AgencyGeorgia-Pacific Center
Suite 4750
133 Peachtree Street, N.E.
Atlanta, GA 30303
Telecopy: 404-589-1629
LENDERS
-------
Crestar Bank $ 75,000,000
1445 New York Avenue, N.W.
Corporate Division - Third Floor
Washington, DC 20005
Telecopy: 202-879-6137
The Northern Trust Company $ 75,000,000
50 South LaSalle Street - B11
Chicago, IL 60675
Telecopy: 312-444-3508
The First National Bank of Maryland $ 50,000,000
1800 K Street, N.W., Suite 1010
Washington, DC 20006
Telecopy: 202-775-4838
TOTAL $3,000,000,000
