Exhibit 99-3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Gannett Co., Inc. ("Gannett") previously reported in its Form 8-K
dated July 3, 2000, that it had entered into an agreement and plan of
merger to acquire Central Newspapers, Inc. ("Central"). On August 1,
2000, Gannett announced that it had completed its cash tender offer for
the outstanding Class A Common Stock and Class B Common Stock of Central
and had assumed control of Central's operations.
The accompanying unaudited pro forma condensed combined balance sheet
presents the financial position of Gannett and Central as of
June 25, 2000, assuming that the acquisition of Central occurred as of
that date. Such pro forma information is based on the historical balance
sheets of Gannett and Central at June 25, 2000.
As required by Rule 11-02 of Regulation S-X, the unaudited pro forma
condensed combined statements of income have been prepared assuming that the
proposed merger occurred as of the beginning of the period presented. The
unaudited condensed combined statements of income reflect the historical
results of operations for Gannett and Central for their 52 week periods
ended December 26, 1999, and 26 week periods ended June 25, 2000.
The unaudited pro forma condensed combined financial statements give
effect to certain pro forma adjustments which are described in the notes to
these statements. The unaudited pro forma condensed combined financial
statements do not reflect any operating synergies anticipated by Gannett as
a result of the acquisition.
The unaudited pro forma condensed combined results are presented for
informational purposes only and are not necessarily indicative of the results
of operations or financial position which would have been achieved had the
transaction been completed as of the beginning of the period presented, nor is
it necessarily indicative of Gannett's future results of operations or
financial position.
The purchase method of accounting has been used in the preparation of the
unaudited pro forma financial information and the purchase price allocation is
preliminary. The final allocation will be based on a complete evaluation of
the assets acquired and liabilities assumed. Accordingly, the information
presented herein may differ from the final purchase price allocation.
The unaudited pro forma condensed combined financial statements should be
read in conjunction with the historical financial statements of Gannett and
Central, including the related notes thereto.
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EXHIBIT 99-3
Gannett Co., Inc.
Unaudited Pro Forma Condensed Combined Balance Sheet
June 25, 2000
(in thousands of dollars)
<CAPTION>
Central Pro forma Pro forma
Gannett Co., Inc. Newspapers, Inc. adjustments combined
<S> <C> <C> <C> <C>
ASSETS
Current assets
Cash and marketable securities $ 317,655 $ 21,912 $ 339,567
Accounts receivable, net 779,393 81,819 861,212
Inventories 102,325 9,525 111,850
Prepaid expenses and other
current assets 84,316 16,024 100,340
----------- ----------- ----------- -----------
Total current assets 1,283,689 129,280 1,412,969
Property, plant and equipment, net 2,029,106 278,306 2,307,412
Excess of acquisition cost over the
value of assets acquired, net,
and other assets 5,611,373 228,572 $ 2,595,118 (1) 8,435,063
----------- ----------- ----------- -----------
Total assets $ 8,924,168 $ 636,158 $ 2,595,118 $12,155,444
=========== =========== =========== ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities
Short-term bank debt and notes payable $ 209,233 $ (209,233)(2)
Accounts payable and current portion of
film contracts payable $ 390,125 27,169 $ 417,294
Accrued expenses and other current
liabilities 364,753 63,920 72,927 (3) 506,574
4,974 (4)
Dividends payable 55,560 4,974 (4,974)(4) 55,560
Income taxes 178,796 2,293 (20,747)(5) 160,342
----------- ----------- ----------- -----------
Total current liabilities 989,234 307,589 (157,053) 1,139,770
Deferred income taxes 326,932 29,489 356,421
Long-term debt 2,350,107 2,932,589 (6) 5,282,696
Postretirement and other long-term
liabilities 558,465 99,742 658,207
Redeemable preferred stock issued by
subsidiary 18,920 18,920
Total shareholders' equity 4,699,430 180,418 (180,418)(7) 4,699,430
----------- ----------- ----------- -----------
Total liabilities and shareholders'
equity $ 8,924,168 $ 636,158 $ 2,595,118 $12,155,444
=========== =========== =========== ===========
For comparability, Central Newspaper, Inc.'s results have been reclassified to conform with
Gannett's presentation.
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial Statements.
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<TABLE>
Gannett Co., Inc.
Unaudited Pro Forma Condensed Combined Statement of Income
Twenty-six weeks ended June 25, 2000
(in thousands of dollars, except per share data)
<CAPTION>
Central Pro forma Pro forma
Gannett Co., Inc. Newspapers, Inc. adjustments combined
<S> <C> <C> <C> <C>
Revenues
Newspapers advertising $ 1,830,684 $ 294,334 $ 2,125,018
Newspaper circulation 531,227 77,784 609,011
Television 372,202 372,202
All other 120,530 28,336 148,866
------------- ------------- ------------ ------------
Total revenues 2,854,643 400,454 3,255,097
Operating expenses
Cost of sales and operating expenses,
exclusive of depreciation 1,416,351 237,077 1,653,428
Selling, general and administrative
expenses, exclusive of depreciation 463,270 59,269 522,539
Depreciation 93,678 22,925 116,603
Amortization of intangible assets 69,145 3,044 $ 30,387 (1) 102,576
Gain on sale of subsidiary (34,154) (34,154)
------------- ------------- ------------ ------------
Total operating expenses 2,042,444 288,161 30,387 2,360,992
------------- ------------- ------------ ------------
Operating income 812,199 112,293 (30,387) 894,105
Non-operating income (expense)
Interest (expense), net of
interest income (42,841) (8,260) 8,260 (2) (130,744)
(87,903)(3)
Other 6,621 (6,094) 527
------------- ------------- ------------ ------------
Total (36,220) (14,354) (79,643) (130,217)
------------- ------------- ------------ ------------
Income before income taxes 775,979 97,939 (110,030) 763,888
Provision for income taxes 307,200 37,865 (31,061)(4) 314,004
------------- ------------- ------------ ------------
Income from continuing operations $ 468,779 $ 60,074 $ (78,969) $ 449,884
============= ============= ============ ============
Income from continuing
operations per share - basic $1.74 $1.67
===== =====
Income from continuing
operations per share - diluted $1.73 $1.66
===== =====
For comparability, Central Newspapers, Inc.'s results have been reclassified to conform with
Gannett's presentation.
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial Statements.
</TABLE>
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<TABLE>
Gannett Co., Inc.
Unaudited Pro Forma Condensed Combined Statement of Income
Year ended December 26, 1999
(in thousands of dollars, except per share data)
<CAPTION>
Central Pro forma Pro forma
Gannett Co., Inc. Newspapers, Inc. adjustments combined
<S> <C> <C> <C> <C>
Revenues
Newspapers advertising $ 3,292,894 $ 599,087 $ 3,891,981
Newspaper circulation 1,022,520 153,451 1,175,971
Television 728,642 728,642
All other 216,134 51,552 267,686
------------- ------------- ------------- --------------
Total revenues 5,260,190 804,090 6,064,280
Operating expenses
Cost of sales and operating expenses,
exclusive of depreciation 2,608,469 465,754 3,074,223
Selling, general and administrative
expenses, exclusive of depreciation 808,529 116,438 924,967
Depreciation 169,460 44,746 214,206
Amortization of intangible assets 110,631 6,424 $ 60,439 (1) 177,494
Gain on sale of subsidiary (32,718) (32,718)
------------- ------------- ------------- --------------
Total operating expenses 3,697,089 600,644 60,439 4,358,172
------------- ------------- ------------- --------------
Operating income 1,563,101 203,446 (60,439) 1,706,108
------------- ------------- ------------- --------------
Non-operating income (expense)
Interest (expense), net of
interest income (88,880) (15,312) 15,312 (2) (239,128)
(150,248)(3)
Other 52,966 4,604 57,570
------------- ------------- ------------ --------------
Total (35,914) (10,708) (134,936) (181,558)
------------- ------------- ------------ --------------
Income before income taxes 1,527,187 192,738 (195,375) 1,524,550
Provision for income taxes 607,800 77,095 (52,625)(4) 632,270
------------- ------------- ------------ --------------
Income from continuing operations $ 919,387 $ 115,643 $ (142,750) $ 892,280
============= ============= ============ ==============
Income from continuing
operations per share - basic $3.29 $3.20
===== =====
Income from continuing
operations per share - diluted $3.26 $3.17
===== =====
For comparability, Central Newspapers, Inc.'s results have been reclassified to conform
with Gannett's presentation.
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial Statements.
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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
STATEMENTS
Note 1 - Basis of Presentation
The unaudited pro forma condensed combined balance sheet has been prepared to
reflect the acquisition of Central for an aggregate price of approximately
$2.6 billion plus the assumption of approximately $394 million of liabilities
and transaction-related costs, including $206 million of Central's long-term
debt.
The unaudited pro forma condensed combined balance sheet presents the financial
position of Gannett and Central as of June 25, 2000, assuming that the
transaction occurred as of that date. Such pro forma information is based
on the historical balance sheets of Gannett and Central as of June 25, 2000.
As required by Rule 11-02 of Regulation S-X, the unaudited pro forma condensed
combined statements of income assumes that the transaction occurred as of the
beginning of the period presented. The unaudited pro forma condensed combined
statements of income reflects Gannett and Central's historical results of
operations for the 52 weeks ended December 26, 1999, and the 26 weeks ended
June 25, 2000.
The company believes that the assumptions used in preparing the unaudited pro
forma condensed combined financial statements provide a reasonable basis for
presenting all of the significant effects of the acquisition (other than any
operating synergies anticipated by Gannett) and that the pro forma adjustments
give effect to those assumptions in the unaudited pro forma condensed combined
financial statements.
Note 2 - Pro Forma Adjustments
A. Pro forma adjustments to the unaudited condensed combined balance sheet
at June 25, 2000, are made to reflect the following:
(1) Adjustment to record the excess of acquisition cost over the fair value
of net assets acquired (goodwill). For purposes of the unaudited pro
forma condensed combined statement of income, goodwill is being amortized
over forty years.
(2) The refinancing of Central's current debt with long-term debt by Gannett.
(3) The accrual of estimated acquisition-related expenses incurred by Gannett
and Central.
(4) The reclassification of Central's dividends payable to accrued expenses.
(5) Income tax adjustments in respect of transaction related costs (see #3
above) that are tax-deductible.
(6) The issuance of commercial paper by Gannett to finance the purchase price,
including the refinancing of Central's current debt (see #2 above).
(7) The elimination of the shareholders' equity accounts of Central.
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B. Pro forma adjustments to the December 26, 1999, unaudited condensed
combined income statement are made to reflect the following:
(1) Amortization expense on the estimated excess of acquisition cost over fair
value of assets, assuming a useful life of forty years.
(2) The elimination of Central's interest expense (see #3 below).
(3) Gannett's pro forma interest expense on amount assumed borrowed for
consideration paid ($2.70 billion) and Central average 1999 debt
($0.24 billion). The rate used to calculate interest expense, 5.2%,
is based on the weighted average rate paid by Gannett for commercial
paper in 1999.
(4) To adjust consolidated tax provisions for tax effects of the acquisition,
taking into account non-deductible goodwill amortization.
C. Pro forma adjustments to the June 25, 2000, unaudited condensed
combined income statement are made to reflect the following:
(1) Amortization expense on the estimated excess of acquisition cost over fair
value of assets, assuming a useful life of forty years.
(2) The elimination of Central's interest expense (see #3 below).
(3) Gannett's pro forma interest expense on amount assumed borrowed for
consideration paid ($2.70 billion) and Central average 2000 debt ($0.22
billion). The rate used to calculate interest expense, 6.13%, is based
on the weighted average rate paid by Gannett for commercial paper in the
twenty-six week period ended June 25, 2000.
(4) To adjust consolidated tax provisions for tax effects of the acquisition,
taking into account the non-deductible goodwill amortization.
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