SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended
March 28, 1999 or
_ Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from
_______ to _________
Commission file number 1-6961
GANNETT CO., INC.
(Exact name of registrant as specified in its charter)
Delaware 16-0442930
(state or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1100 Wilson Boulevard, Arlington, Virginia 22234
(Address of principal executive offices) (Zip Code)
(703) 284-6000
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No __
The number of shares outstanding of the issuer's Common Stock,
Par Value $1.00, as of March 28, 1999 was 279,386,406.
<PAGE>
PART I. FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS
EARNINGS SUMMARY
Operating income for the first quarter of 1999 rose $23.7 million
or 8%. Newspaper publishing earnings were up $21.8 million or
10% for the quarter, reflecting continued strong advertising
demand, very strong operating results at USA TODAY and USA
WEEKEND, and a favorable comparison year-over-year at The
Detroit News. Television earnings declined $0.3 million or less
than 1% for the quarter primarily due to the absence of
advertising related to the broadcast of the Super Bowl on our
NBC-affiliated stations and the Winter Olympics on our CBS-
affiliated stations, which buoyed results in the first quarter of
1998. Cable and security segment earnings rose $1.4 million or
10%, but comparisons with last year are tempered by the sale in
March 1998 of the alarm security business which was previously
reported in this segment.
Pro forma operating results for each business segment are
discussed in the following sections of this report.
Non-operating income for the first quarter of 1998 included a net
pre-tax gain of $306.5 million ($183.6 million after-tax)
primarily from the disposition of the company's five remaining
radio stations and its alarm security business. Excluding this
gain, net income rose $19.7 million or 12% for the first quarter
of 1999 and diluted earnings per share increased 14% to $0.64.
A presentation of first quarter earnings excluding the net
non-operating gain follows:
Earnings Summary Excluding
1998 Net Non-operating Gain
---------------------------
Quarter Ended
March 28, March 29, % Inc
1999 1998 (Dec)
Operating income $311,917 $288,243 8.2
Non-operating income (expense):
Interest expense (16,592) (23,229) (28.6)
Other 2,368 829 ---
------- ------- ------
Total (14,224) (22,400) (36.5)
Income before income taxes 297,693 265,843 12.0
Provision for income taxes 118,800 106,600 11.4
------- ------- ------
Net income $178,893 $159,243 12.3
======= ======= ======
Net income per share-basic $0.64 $0.56 14.3
===== ===== ======
Net income per share-diluted $0.64 $0.56 14.3
===== ===== ======
NEWSPAPERS
Reported newspaper publishing revenues rose $49.6 million or
5% in the first quarter of 1999, which included a $50.6 million
or 8% gain in advertising revenues. These revenue increases
include the impact of newspaper publishing acquisitions in 1998.
The tables below provide, on a pro forma basis, details of
newspaper ad revenue and linage and preprint distribution for the
first quarter of 1999 and 1998:
Advertising revenue, in thousands of dollars (pro forma)
First Quarter
1999 1998 % Change
---- ---- --------
Local $214,818 $208,115 3
National 135,565 116,717 16
Classified 266,465 252,844 5
-------- -------- --
Total Run-of-Press 616,848 577,676 7
Preprint and
Other advertising 103,703 97,552 6
-------- -------- --
Total Ad Revenue $720,551 $675,228 7
======== ======== ==
Advertising linage, in thousands of inches, and preprint
distribution, in millions (pro forma)
First Quarter
1999 1998 % Change
---- ---- --------
Local 8,133 7,861 3
National 806 670 20
Classified 10,586 9,876 7
------ ----- --
Total Run-of-Press linage 19,525 18,407 6
====== ====== ==
Preprint distribution 1,740 1,675 4
===== ===== ==
Pro forma newspaper advertising revenues rose 7% for the
quarter. Local ad revenues and volume increased 3%, and
national ad revenues rose 16% on a volume increase of 20%.
Classified ad revenues increased 5% on a volume increase of 7%.
Most of the company's newspapers, including The Detroit News
and USA TODAY, recorded solid gains in advertising revenue.
Classified gains were strongest in the employment category.
Reported newspaper circulation revenues declined less than 1%
for the quarter. Pro forma net paid daily circulation for the
company's local newspapers declined 1%, while Sunday
circulation was lower by 2%. USA TODAY reported an average
daily paid circulation of 2,248,813 in the ABC Publisher's
statement for the 26 weeks ended March 28, 1999, a 1% increase
over the comparable period a year ago.
Operating costs for the newspaper segment increased $27.8
million or 4% for the quarter due to higher newsprint expense
and generally higher operating costs. In total, newsprint expense
increased 3% due to increased newsprint consumption. Newsprint
prices were flat compared to the first quarter of 1998. The
company expects newsprint prices to be lower for the remainder
of the year as compared to 1998.
Newspaper operating income increased $21.8 million or 10% for
the quarter, reflecting strong advertising gains throughout the
group, a favorable comparison year to year at The Detroit News,
strong growth at USA TODAY and USA WEEKEND, and the
impact of 1998 acquisitions.
Early in the second quarter of 1999, the company contributed
The San Bernardino County Sun to a partnership that includes 21
daily California newspapers in exchange for a partnership
interest.
TELEVISION
Reported television revenues increased $0.5 million or less than
1% for the quarter. Operating costs increased $0.8 million or
1%. Reported television operating income declined $0.3 million
or less than 1%. These results were tempered by the absence of
advertising related to the broadcast of the Super Bowl on the
company's NBC-affiliated stations and the Winter Olympics on
its CBS-affiliated stations, which buoyed results in the first
quarter of 1998.
Reported results include the impact of WLTX-TV (CBS) in
Columbia, South Carolina, which was purchased in late April of
1998. On a pro forma basis, television station revenues declined
1% for the quarter. Pro forma local television ad revenues
increased by 2%, while national ad revenues decreased by 6%.
In February 1999, the company announced an agreement to
exchange KVUE-TV (ABC) in Austin, Texas for KXTV (ABC)
in Sacramento/Stockton/Modesto, California, plus other
consideration. This transaction is expected to close later in the
second quarter and when completed, Gannett Television will
consist of 21 television stations reaching 17.3 percent of the U.S.
television market.
CABLE AND SECURITY
Reported operating revenues for the cable and security segment
declined $1.9 million or 3% for the quarter while operating
income rose $1.4 million or 10%. In early March 1998, the
company sold its alarm security business, previously reported
with this segment. On a pro forma basis, excluding the 1998
alarm security results, cable revenues rose $6.5 million or 12%
and operating income rose $2.0 million or 15%.
In late August 1998, the company completed an exchange of its
subscribers and certain cable system assets in the suburban
Chicago area (93,000 subscribers) for the TCI Communications,
Inc. subscribers and certain cable system assets in Kansas
(128,000 subscribers). At the end of the first quarter of 1999,
the cable television business served 517,000 subscribers in three
states or 63% of homes passed.
The increases in cable operating revenues and operating income
reflect the increased subscriber base from the asset exchange,
higher subscription rates and significant increases in advertising
and pay-per-view revenues.
NON-OPERATING INCOME AND EXPENSE/PROVISION
FOR INCOME TAXES
Interest expense decreased $6.6 million or 29% for the quarter,
reflecting the pay-down of long-term debt from operating cash
flow and the proceeds from the sale of certain businesses in 1998.
Non-operating income in the first quarter of 1998 included a net
pre-tax gain of $306.5 million ($183.6 million after-tax) as
discussed in the Earnings Summary above.
The company's effective income tax rate was 39.9% for the
quarter versus 40.1% for the same quarter last year.
NET INCOME
Net income, excluding the $183.6 million net non-operating
after-tax gain in 1998 discussed above, rose $19.7 million or
12%. Diluted earnings per share, excluding the net
non-operating gain, rose to $0.64 from $0.56, an increase of
14%.
The weighted average number of diluted shares outstanding
totaled 281,677,000 for the first quarter of 1999, compared to
286,874,000 for the first quarter of 1998. In the last half of
1998, the company repurchased approximately six million shares
of common stock at a cost of $329 million. These stock
repurchases were partially offset by shares issued upon the
exercise of stock options and the settlement of stock incentive
rights. Exhibit 11 of this Form 10-Q presents the weighted
average number of basic and diluted shares outstanding and the
earnings per share for each period.
LIQUIDITY AND CAPITAL RESOURCES
The company's consolidated operating cash flow (defined as
operating income plus depreciation and amortization of intangible
assets) as reported in the accompanying Business Segment
Information totaled $390.8 million for the first quarter of 1999,
compared with $367.7 million for the same period of 1998, a 6%
increase.
Capital expenditures for the quarter totaled $40.9 million,
compared to $33.4 million in 1998. The company's long-term
debt was reduced by $315.7 million in the quarter from operating
cash flow. In February 1999, the company declared a quarterly
dividend of $0.20 per share or $55.9 million, which was paid on
April 1, 1999. In May 1999, the company also declared a
quarterly dividend of $0.20 per share payable on July 1, 1999.
YEAR 2000
General
The "Year 2000 Issue" is the result of computer programs that
were written using two digits rather than four to define the
applicable year. If the company's computer programs with
date-sensitive functions are not Year 2000 compliant, they may
recognize a date using "00" as the Year 1900 rather than the Year
2000. This could result in a system failure or miscalculations
causing disruptions of operations, including, among other things,
temporary stoppage of newspaper, broadcast and/or cable
operations and the inability to process transactions, send invoices
or engage in similar normal business activities.
Project
The company has developed a plan to ensure that all of its key
computer systems will be Year 2000 compliant in advance of
December 31, 1999. The plan encompasses all operating
properties, corporate headquarters and, where necessary,
computer applications that directly interface elements of the
company's business with business partners, customers, suppliers
and service providers.
The plan structure includes several phases: inventory, assessment,
detailed analysis, implementation/remediation, audit and
contingency planning. The first three phases of inventory,
assessment and detailed analysis are complete. The
implementation/remediation phase is substantially complete.
Audit and contingency planning efforts are also underway and are
substantially complete, but will continue to be refined and
implemented up to the Year 2000.
The company has more than 125 business units which generally
operate independently and therefore have separate computer
systems and various production and administrative equipment
with embedded computer systems. Much of the hardware and
software used at the business unit level is standardized and
supported centrally. For these systems, Year 2000 issues are
being addressed by a centrally managed Information Technology
Group. Other Year 2000 issues are being addressed by local
personnel at the individual business units with guidance where
necessary from headquarters staff or consulting specialists.
At the end of the first quarter of 1999, the company has achieved
Year 2000 compliance in many critical systems areas.
The company's business systems (i.e., marketing, sales support,
customer billing and accounts receivable, accounting, accounts
payable and payroll) at the majority of its local operating
properties and at its headquarters are already Year 2000
compliant. This has been achieved through a systematic roll-out
of Year 2000 compliant software where it was necessary. By the
end of the first quarter of 1999, more than 90% of these business
applications were Year 2000 compliant. For those few properties
which still operate business systems that are not Year 2000
compliant, the company has already purchased or developed the
necessary software and will be installing it during the second and
third quarters of 1999 according to plan.
For newspaper operations, critical systems also include
publishing systems (i.e., front-end editorial and classified,
networks, press and mailroom/distribution systems) and other
facility/administrative systems. At the end of the first quarter of
1999, more than 90% of such newspaper publishing systems
were Year 2000 compliant. The remaining few newspapers are
expected to complete installation of publishing systems by the end
of the third quarter of 1999. All facility/administrative systems
for the newspaper group are Year 2000 compliant.
The company's 21 television stations generally use standard
purchased software and systems for production and broadcasting.
Each station operates these systems independently on separate
hardware platforms. Nearly all critical television station systems
have been modified or upgraded as necessary for Year 2000
compliance. For the few remaining systems, compliance will be
achieved at various points through the third quarter of 1999 when
the desired technology becomes available for purchase and
installation.
For the cable television business, all business applications and
other critical systems for production, distribution and
administration are now Year 2000 compliant.
The company has requested confirmation of compliance from its
third party vendors and, in important cases, has or will run tests
to verify compliance.
Costs
The company's efforts to address potential Year 2000 problems
began within its central Information Technology Group in 1995
and were broadened to include all departments/operations in
1997. The costs specifically associated with efforts to achieve
Year 2000 compliance are expected to be less than $25 million in
the aggregate (exclusive of software and hardware that has been
or will be replaced or upgraded in the normal course of
business), and more than 90% of such costs were incurred and
reported through the end of the first quarter of 1999. Year 2000
compliance costs are not material to the company's financial
position or to operating results for any of the years involved and
compliance efforts have not significantly affected progress of
other information technology plans or programs.
Risks
The business risks the company would face if it were unable to
achieve Year 2000 compliance for its critical systems could vary
significantly in degree of seriousness, depending on the system
and the business unit affected. The company may be unable to
publish certain of its newspapers, broadcast from certain of its
television stations and/or deliver programming in certain cable
markets. If this occurred, it would most likely be due to Year
2000 related failure of the company's utility, telecommunications
or content service providers, not from internal company system
failure. The company continues to work directly with these
vendors to evaluate risk levels.
If the company's operations were affected in this manner,
revenue losses would result which would not be fully recovered
when normal operations resumed. Incremental repair and start up
costs might also be incurred. Given the present state of its Year
2000 compliance program and its plans to complete it as
described above, the company does not expect that a significant
portion of its operations would be adversely impacted, and even
if certain operations were so impacted, it would be only for a
limited time. Consequently, management does not believe
possible disruptions of this nature would have a material effect on
the company's financial condition or results of operations.
While the company believes its Year 2000 plan will ensure
functionality of all key systems, each business unit and corporate
headquarters are also preparing contingency plans.
CERTAIN FACTORS AFFECTING FORWARD LOOKING
STATEMENTS
Certain statements in the company's 1998 Annual Report to
Shareholders, its Annual Report on Form 10-K, and in this
Quarterly Report contain forward-looking information. The
words "expect," "intend," "believe," "anticipate," "likely,"
"will," and similar expressions generally identify forward-looking
statements. These forward-looking statements are subject to
certain risks and uncertainties which could cause actual results
and events to differ materially from those anticipated in the
forward-looking statements.
Potential risks and uncertainties which could adversely affect the
company's ability to obtain these results include, without
limitation, the following factors: (a) increased consolidation
among major retailers or other events which may adversely affect
business operations of major customers and depress the level of
local and national advertising; (b) an economic downturn in some
or all of the company's principal newspaper or television markets
leading to decreased circulation or local or national advertising;
(c) a decline in general newspaper readership patterns as a result
of competitive alternative media or other factors; (d) an increase
in newsprint or syndication programming costs over the levels
anticipated; (e) labor disputes which may cause revenue declines
or increased labor costs; (f) acquisitions of new businesses or
dispositions of existing businesses; (g) a decline in viewership of
major networks and local news programming; and (h) rapid
technological changes and frequent new product introductions
prevalent in electronic publishing; and (i) the uncertainty
associated with the impact of Year 2000 issues on the company,
its customers, its vendors and others with whom it does business.
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
<CAPTION>
March 28, 1999 Dec. 27, 1998
---------------- ----------------
<S> <C> <C>
ASSETS
Cash $ 37,224 $ 60,103
Marketable securities 12 6,084
Trade receivables, less allowance
(1999 - $18,003; 1998 - $19,143) 609,438 664,540
Inventories 87,603 87,176
Prepaid expenses and other receivables 71,928 88,482
--------------- ---------------
Total current assets 806,205 906,385
--------------- ---------------
Property, plant and equipment
Cost 3,705,766 3,666,743
Less accumulated depreciation (1,652,178) (1,602,960)
--------------- ---------------
Net property, plant and equipment 2,053,588 2,063,783
--------------- ---------------
Intangible and other assets
Excess of acquisition cost over the value of
assets acquired, less amortization 3,767,250 3,794,601
Investments and other assets 220,219 214,711
--------------- ---------------
Total intangible and other assets 3,987,469 4,009,312
--------------- ---------------
Total assets $ 6,847,262 $ 6,979,480
=============== ===============
LIABILITIES & SHAREHOLDERS' EQUITY
Current maturities of long-term debt $ $ 7,812
Accounts payable and current portion of film
contracts payable 250,315 312,283
Compensation, interest and other accruals 211,897 228,222
Dividend payable 55,937 55,790
Income taxes 113,450 6,395
Deferred income 130,220 117,465
--------------- ---------------
Total current liabilities 761,819 727,967
--------------- ---------------
Deferred income taxes 445,857 442,359
Long-term debt, less current portion 998,954 1,306,859
Postretirement, medical and life insurance liabilities 308,079 308,145
Other long-term liabilities 221,146 214,326
--------------- ---------------
Total liabilities 2,735,855 2,999,656
--------------- ---------------
Shareholders' Equity
Preferred stock of $1 par value per share. Authorized
2,000,000 shares; issued - none.
Common stock of $1 par value per share. Authorized
400,000,000; issued, 324,420,732 shares. 324,421 324,421
Additional paid-in capital 125,460 126,045
Retained earnings 4,898,280 4,775,313
--------------- ---------------
Total 5,348,161 5,225,779
--------------- ---------------
Less treasury stock - 45,034,326 shares and
45,419,437 shares respectively, at cost (1,215,220) (1,223,077)
Deferred compensation related to ESOP (21,534) (22,878)
--------------- ---------------
Total shareholders' equity 4,111,407 3,979,824
--------------- ---------------
Total liabilities and shareholders' equity $ 6,847,262 $ 6,979,480
=============== ===============
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
<CAPTION>
Thirteen weeks ended % Inc
March 28, 1999 March 29, 1998 (Dec)
-------------- -------------- -----
<S> <C> <C> <C>
Net Operating Revenues:
Newspaper advertising $ 720,551 $ 669,994 7.5
Newspaper circulation 253,357 254,079 (0.3)
Television 161,194 160,692 0.3
Cable and Security 62,126 64,062 (3.0)
Other 50,837 51,083 (0.5)
--------- --------- -----
Total 1,248,065 1,199,910 4.0
Operating Expenses:
Cost of sales and operating expenses,
exclusive of depreciation 661,354 642,980 2.9
Selling, general and administrative
expenses, exclusive of depreciation 195,886 189,206 3.5
Depreciation 51,102 53,030 (3.6)
Amortization of intangible assets 27,806 26,451 5.1
--------- --------- -----
Total 936,148 911,667 2.7
--------- --------- -----
Operating income 311,917 288,243 8.2
Non-operating income (expense):
Interest expense (16,592) (23,229) (28.6)
Other* 2,368 307,356 ****
--------- --------- -----
Total (14,224) 284,127 ****
Income before income taxes 297,693 572,370 (48.0)
Provision for income taxes 118,800 229,520 (48.2)
--------- --------- -----
Net income $ 178,893 $ 342,850 (47.8)
========= ========= =====
Net income per share - basic $0.64 $1.21 (47.1)
===== ===== =====
Net income per share - diluted $0.64 $1.20 (46.7)
===== ===== =====
Dividends per share $0.20 $0.19 5.3
===== ===== =====
* 1998 results include a net non-operating gain principally from the disposition
of several businesses including Radio and Alarm Security. See Management's
Discussion and Analysis of Operations for earnings summary excluding net
non-operating gain.
</TABLE>
<PAGE>
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
<CAPTION>
Thirteen weeks ended
March 28, 1999 March 29, 1998
-------------- --------------
<S> <C> <C>
Cash flows from operating activities
Net income $ 178,893 $ 342,850
Adjustments to reconcile net income to
operating cash flows:
Depreciation 51,102 53,030
Amortization of intangibles 27,806 26,451
Deferred income taxes 3,498 56,122
Other, net 119,963 (248,416)
--------- ---------
Net cash flow from operating activities 381,262 230,037
--------- ---------
Cash flows from investing activities
Purchase of property, plant and equipment (40,918) (33,446)
Payments for acquisitions, net of cash acquired (500) (113,160)
Change in other investments (5,666) (101,103)
Proceeds from sale of certain assets 2,500 567,556
Collection of long-term receivables 13,873
--------- ---------
Net cash (used for) provided by investing activities (44,584) 333,720
--------- ---------
Cash flows from financing activities
Payments of long-term debt (315,717) (382,605)
Dividends paid (55,694) (53,899)
Proceeds from issuance of common stock 5,782 11,319
--------- ---------
Net cash used for financing activities (365,629) (425,185)
--------- ---------
Net (decrease) increase in cash and cash equivalents (28,951) 138,572
Balance of cash and cash equivalents at
beginning of year 66,187 52,778
--------- ---------
Balance of cash and cash equivalents at
end of first quarter $ 37,236 $ 191,350
========= =========
</TABLE>
<PAGE>
<TABLE>
BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
<CAPTION>
Thirteen weeks ended % Inc
March 28, 1999 March 29, 1998 (Dec)
-------------- -------------- -----
<S> <C> <C> <C>
Operating Revenues:
Newspaper publishing $1,024,745 $975,156 5.1
Television 161,194 160,692 0.3
Cable and Security 62,126 64,062 (3.0)
---------- ---------- -----
Total $1,248,065 $1,199,910 4.0
========== ========== =====
Operating Income (net of depreciation
and amortization):
Newspaper publishing $247,675 $225,919 9.6
Television 65,717 65,967 (0.4)
Cable and Security 15,325 13,916 10.1
Corporate (16,800) (17,559) 4.3
---------- ---------- -----
Total $311,917 $288,243 8.2
========== ========== =====
Depreciation and Amortization:
Newspaper publishing $47,697 $46,157 3.3
Television 15,708 14,955 5.0
Cable and Security 13,279 16,154 (17.8)
Corporate 2,224 2,215 0.4
---------- ---------- -----
Total $78,908 $79,481 (0.7)
========== ========== =====
Operating Cash Flow:
Newspaper publishing $295,372 $272,076 8.6
Television 81,425 80,922 0.6
Cable and Security 28,604 30,070 (4.9)
Corporate (14,576) (15,344) 5.0
---------- ---------- -----
Total $390,825 $367,724 6.3
========== ========== =====
NOTES:
Operating Cash Flow represents operating income for each of the
Company's business segments plus related depreciation and
amortization expense.
In the first quarter of 1998, the Company sold its Alarm Security
Business, which had been reported in the Cable and Security business
segment. On a pro forma basis for the first quarter, giving effect
to the sale of the Alarm Security Business, cable operations reported
gains in revenues of 12%, operating income of 15% and operating cash
flow of 8%.
In late April 1998, the Company purchased a television station in Columbia,
South Carolina. On a pro forma basis for the first quarter, giving
effect to this purchase, television operations reported a 1% decline
in revenues, operating income and operating cash flow.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 28, 1999
1. Basis of Presentation
The accompanying unaudited consolidated condensed financial
statements have been prepared in accordance with the instructions
for Form 10-Q and, therefore, do not include all information and
footnotes which are normally included in Form 10-K and annual
report to shareholders. The financial statements covering the 13-week
period ended March 28, 1999, and the comparative period of
1998, reflect all adjustments which, in the opinion of the company,
are necessary for a fair statement of results for the interim periods.
2. Accounting Standards
In June 1998, SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities" was issued. This standard is effective
for fiscal periods beginning after June 15, 1999. The adoption
of this standard is not expected to have a material effect on the
company's results of operations or financial position.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The company is not subject to market risk associated with derivative
financial instruments or derivative commodity instruments, as the
company is not a party to any such instruments. The company
believes that its market risk from other financial instruments,
such as accounts receivable, accounts payable and debt, is not material.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
See Exhibit Index for list of exhibits filed with this
report.
(b) Reports on Form 8-K.
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
GANNETT CO., INC.
Dated: May 7, 1999 /s/George R. Gavagan
----------------------------------------
George R. Gavagan
Vice President and Controller
Dated: May 7, 1999 /s/Thomas L. Chapple
----------------------------------------
Thomas L. Chapple
Senior Vice President, General
Counsel and Secretary
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit Location
3-1 Second Restated Certificate Incorporated by reference to Exhibit
of Incorporation of Gannett Co., 3-1 to Gannett Co., Inc.'s Form 10-K
Inc. for the fiscal year ended December 26,
1993 ("1993 Form 10-K"). Amendment
incorporated by reference to Exhibit
3-1 to the 1993 Form 10-K.
3-2 By-laws of Gannett Co., Inc. Incorporated by reference to Exhibit
(reflects all amendments 3-1 to Gannett Co., Inc.'s Form 10-Q
through September 24, 1997) for the fiscal quarter ended
September 28, 1997.
4-1 $1,000,000,000 Revolving Incorporated by reference to Exhibit
Credit Agreement among 4-1 to the 1993 Form 10-K.
Gannett Co., Inc. and the
Banks named therein.
4-2 Amendment Number One Incorporated by reference to Exhibit
to $1,000,000,000 Revolving 4-2 to Gannett Co., Inc.'s Form 10-Q
Credit Agreement among for the fiscal quarter ended June 26,
Gannett Co., Inc. and the 1994.
Banks named therein.
4-3 Amendment Number Two to Incorporated by reference to Exhibit
$1,500,000,000 Revolving 4-3 to Gannett Co., Inc.'s Form 10-K
Credit Agreement among for the fiscal year ended
Gannett Co., Inc. and the December 31, 1995.
Banks named therein.
4-4 Amendment Number Three to Incorporated by reference to Exhibit
$3,000,000,000 Revolving 4-4 to Gannett Co., Inc.'s Form 10-Q
Credit Agreement among for the fiscal quarter ended
Gannett Co., Inc. and the Banks September 29, 1996.
named therein.
4-5 Indenture dated as of March 1, Incorporated by reference to Exhibit
1983 between Gannett Co., Inc. 4-2 to Gannett Co., Inc.'s Form 10-K
and Citibank, N.A., as Trustee. for the fiscal year ended
December 29, 1985.
4-6 First Supplemental Indenture Incorporated by reference to Exhibit
dated as of November 5, 1986 4 to Gannett Co., Inc.'s Form 8-K
among Gannett Co., Inc., filed on November 9, 1986.
Citibank, N.A., as Trustee, and
Sovran Bank, N.A., as Successor
Trustee.
4-7 Second Supplemental Indenture Incorporated by reference to
dated as of June 1, 1995, Exhibit 4 to Gannett Co., Inc.'s
among Gannett Co., Inc., Form 8-K filed on June 15, 1995.
NationsBank, N.A., as Trustee,
and Crestar Bank, as Trustee.
4-8 Rights Plan. Incorporated by reference to
Exhibit 1 to Gannett Co., Inc.'s
Form 8-K filed on May 23, 1990.
4-9 Amendment Number Four to Incorporated by reference to
$3,000,000,000 Revolving Exhibit 4-9 to Gannett Co., Inc.'s
Credit Agreement among Form 10-Q filed on August 12, 1998.
Gannett Co., Inc. and the
Banks named therein.
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 ("1992
Curley.* 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 Gannett Co., Inc. 1978 Incorporated by reference to Exhibit
Executive Long-Term Incentive 10-3 to Gannett Co., Inc.'s Form 10-K
Plan* for the fiscal year ended
December 28, 1980. Amendment No. 1
incorporated by reference to
Exhibit 20-1 to Gannett Co., Inc.'s
Form 10-K for the fiscal year ended
December 27, 1981. Amendment No. 2
incorporated by reference to
Exhibit 10-2 to Gannett Co., Inc.'s
Form 10-K for the fiscal year ended
December 25, 1983. Amendments Nos. 3
and 4 incorporated by reference to
Exhibit 4-6 to Gannett Co., Inc.'s
Form S-8 Registration Statement
No. 33-28413 filed on May 1, 1989.
Amendments Nos. 5 and 6 incorporated
by reference to Exhibit 10-8 to
Gannett Co., Inc.'s Form 10-K for the
fiscal year ended December 31, 1989.
Amendment No. 7 incorporated by
reference to Gannett Co., Inc.'s
Form S-8 Registration Statement
No. 333-04459 filed on May 24, 1996.
Amendment No. 8 incorporated by
reference to Exhibit 10-3 to Gannett
Co., Inc.'s Form 10-Q for the quarter
ended September 28, 1997. Amendment
dated December 9, 1997, incorporated
by reference to Gannett Co., Inc.'s
1997 Form 10-K.
10-4 Description of supplemental Incorporated by reference to Exhibit
insurance benefits.* 10-4 to the 1993 Form 10-K.
10-5 Gannett Co., Inc. Supplemental Incorporated by reference to Exhibit
Retirement Plan, as amended.* 10-8 to Gannett Co., Inc.'s Form 10-K
for the fiscal year ended
December 27, 1986 ("1986 Form 10-K").
10-6 Gannett Co., Inc. Retirement Incorporated by reference to Exhibit
Plan for Directors.* 10-10 to the 1986 Form 10-K. 1991
Amendment incorporated by reference
to Exhibit 10-2 to Gannett Co.,
Inc.'s Form 10-Q for the quarter
ended September 29, 1991. Amendment
to Gannett Co., Inc. Retirement
Plan for Directors dated October 31,
1996, incorporated by reference to
Exhibit 10-6 to the 1996 Form 10K.
10-7 Amended and Restated Incorporated by reference to Exhibit
Gannett Co., Inc. 1987 10-1 to Gannett Co., Inc.'s Form 10-Q
Deferred Compensation Plan.* for the fiscal quarter ended
September 29, 1996. Amendment No. 5
incorporated by reference to Exhibit
10-2 to Gannett Co., Inc.'s Form 10-Q
for the quarter ended September 28,
1997.
10-8 Gannett Co., Inc. Transitional Incorporated by reference to Exhibit
Compensation Plan.* 10-13 to Gannett Co., Inc.'s Form
10-K for the fiscal year ended
December 30, 1990.
11 Statement re computation of Attached.
earnings per share.
27 Financial Data Schedules. 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.
CALCULATION OF EARNINGS PER SHARE
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except per share amounts)
<TABLE>
Thirteen weeks ended
----------------------
March 28, March 29
1999 1998*
------------ -----------
<S> <C> <C>
Basic earnings:
Net income $178,893 $342,850
Weighted average number of
common shares outstanding 279,314 284,215
Basic earnings per share $0.64 $1.21
Diluted earnings:
Net income $178,893 $342,850
Weighted average number of
common shares outstanding 279,314 284,215
Dilutive effect of out-
standing stock options and
stock incentive rights 2,363 2,659
Weighted average number of
shares outstanding, as
adjusted 281,677 286,874
Diluted earnings per share $0.64 $1.20
</TABLE>
* 1998 results include a net non-operating gain principally from
the disposition of several businesses including Radio and Alarm
Security. Se Management's Discussion and Analysis of Operations
for earnings summary excluding net non-operating gain.
<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>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-26-1999
<PERIOD-START> DEC-28-1998
<PERIOD-END> MAR-28-1999
<CASH> 37,224
<SECURITIES> 12
<RECEIVABLES> 627,441
<ALLOWANCES> 18,003
<INVENTORY> 87,603
<CURRENT-ASSETS> 806,205
<PP&E> 3,705,766
<DEPRECIATION> 1,652,178
<TOTAL-ASSETS> 6,847,262
<CURRENT-LIABILITIES> 765,317
<BONDS> 0
<COMMON> 324,421
0
0
<OTHER-SE> 3,786,986
<TOTAL-LIABILITY-AND-EQUITY> 6,847,262
<SALES> 1,248,065
<TOTAL-REVENUES> 1,248,065
<CGS> 661,354
<TOTAL-COSTS> 936,148
<OTHER-EXPENSES> (2,368)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,592
<INCOME-PRETAX> 297,693
<INCOME-TAX> 118,800
<INCOME-CONTINUING> 178,893
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 178,893
<EPS-PRIMARY> 0.64
<EPS-DILUTED> 0.64
</TABLE>
