SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date of Report: February 15, 2000
GANNETT CO., INC.
(Exact name of registrant as specified in its charter)
Delaware 1-6961 16-0442930
(State or other (Commission (IRS Employer
jurisdiction File Number) Identification No.)
of incorporation)
1100 Wilson Boulevard, Arlington, Virginia 22234
(Address of principal executive offices)(Zip Code)
(703) 284-6000
(Registrant's telephone number, including area code)
<PAGE>
ITEM 2. DISPOSITION OF ASSETS
Pursuant to an Asset Purchase Agreement dated July 22, 1999 between
Multimedia Cablevision, Inc. and Cox Communications, Inc., on January 31, 2000
Gannett Co., Inc. sold substantially all of the assets of its cable division
for approximately $2.7 billion in cash. Upon closing, an after-tax gain of
approximately $740 million was recognized which, along with the cable and
security segment operating results, will be reported as discontinued operations
in the company's financial statements. The company has used the proceeds from
this transaction to pay down its commercial paper borrowings.
Included in this filing is pro forma financial information for 1999 and
1998 as detailed in Exhibit 99-1.
EARNINGS SUMMARY OF INCOME FROM CONTINUING AND DISCONTINUED OPERATIONS
After giving effect to the discontinued operations reporting discussed
above, the company's earnings, excluding nonrecurring net non-operating gains
principally from the sales/exchanges of various businesses in 1999 and 1998,
are as follows.
<PAGE>
Unaudited, in thousands of dollars (except per share amounts)
Earnings summary
Excluding net non-operating gains
Fifty-two weeks ended
Dec. 26, 1999 Dec. 27, 1998 Dec. 28, 1997
------------- ------------- -------------
Operating income $ 1,563,101 $ 1,385,814 $ 1,262,242
Non-operating income (expense)
Interest expense (94,619) (79,412) (91,725)
Other 4,175 (1,204) (15,564)
------------- ------------- -------------
Total (90,444) (80,616) (107,289)
Income before income taxes 1,472,657 1,305,198 1,154,953
Provision for income taxes 586,050 522,380 473,600
------------- ------------- -------------
Income from continuing operations 886,607 782,818 681,353
Discontinued operations:
Income from the operation of
discontinued operations,
net of tax 38,541 33,488 31,326
------------- ------------- -------------
Net income $ 925,148 $ 816,306 $ 712,679
============= ============= =============
Earnings per share - basic
Earnings from continuing
operations $3.18 $2.76 $2.41
Earnings from discontinued
operations:
Discontinued operations, net
of tax $0.14 $0.12 $0.11
----- ----- -----
Net income per share - basic $3.32 $2.88 $2.52
===== ===== =====
Earnings per share - diluted
Earnings from continuing
operations $3.15 $2.74 $2.39
Earnings from discontinued
operations:
Discontinued operations, net
of tax $0.14 $0.12 $0.11
----- ----- -----
Net income per share - diluted $3.29 $2.86 $2.50
===== ===== =====
<PAGE>
Unaudited, in thousands of dollars (except per share amounts)
Earnings summary
Excluding net non-operating gains
Thirteen weeks ended % Inc
March 28, 1999 March 29, 1998 (Dec)
Operating income $ 296,592 $ 274,327 8.1
Non-operating income (expense)
Interest expense (16,592) (23,229) (28.6)
Other 2,368 829 185.6
----------- ----------- ------
Total (14,224) (22,400) (36.5)
Income before income taxes 282,368 251,927 12.1
Provision for income taxes 112,400 100,800 11.5
----------- ----------- ------
Income from continuing operations 169,968 151,127 12.5
Discontinued operations:
Income from the operation of
discontinued operations, net of tax 8,925 8,116 10.0
----------- ----------- ------
Net income $ 178,893 $ 159,243 12.3
=========== =========== ======
Earnings per share - basic
Earnings from continuing operations $0.61 $0.53 15.1
Earnings from discontinued operations:
Discontinued operations, net of tax $0.03 $0.03 --
----- ----- ----
Net income per share - basic $0.64 $0.56 14.3
===== ===== ====
Earnings per share - diluted
Earnings from continuing operations $0.61 $0.53 15.1
Earnings from discontinued operations:
Discontinued operations, net of tax $0.03 $0.03 --
----- ----- ----
Net income per share - diluted $0.64 $0.56 14.3
===== ===== ====
<PAGE>
Unaudited, in thousands of dollars (except per share amounts)
Earnings summary
Excluding net non-operating gains
Thirteen weeks ended % Inc
June 27, 1999 June 28, 1998 (Dec)
Operating income $ 403,111 $ 375,296 7.4
Non-operating income (expense)
Interest expense (13,852) (20,348) (31.9)
Other 775 2,498 (69.0)
----------- ----------- ------
Total (13,077) (17,850) (26.7)
Income before income taxes 390,034 357,446 9.1
Provision for income taxes 155,200 143,100 8.5
----------- ----------- ------
Income from continuing operations 234,834 214,346 9.6
Discontinued operations:
Income from the operation of
discontinued operations, net of tax 9,356 8,463 10.6
----------- ----------- ------
Net income $ 244,190 $ 222,809 9.6
=========== =========== ======
Earnings per share - basic
Earnings from continuing operations $0.84 $0.75 12.0
Earnings from discontinued operations:
Discontinued operations, net of tax $0.03 $0.03 --
----- ----- ----
Net income per share - basic $0.87 $0.78 11.5
===== ===== ====
Earnings per share - diluted
Earnings from continuing operations $0.84 $0.75 12.0
Earnings from discontinued operations:
Discontinued operations, net of tax $0.03 $0.03 --
----- ----- ----
Net income per share - diluted $0.87 $0.78 11.5
===== ===== ====
<PAGE>
Unaudited, in thousands of dollars (except per share amounts)
Earnings summary
Excluding net non-operating gains
Thirteen weeks ended % Inc
Sept. 26, 1999 Sept. 27, 1998 (Dec)
Operating income $ 353,366 $ 298,783 18.3
Non-operating income (expense)
Interest expense (26,474) (17,190) 54.0
Other 1,588 (877) (281.1)
----------- ------------ -------
Total (24,886) (18,067) 37.7
Income before income taxes 328,480 280,716 17.0
Provision for income taxes 130,700 112,250 16.4
----------- ------------ -------
Income from continuing operations 197,780 168,466 17.4
Discontinued operations:
Income from the operation of
discontinued operations, net of tax 9,699 8,053 20.4
----------- ------------ -------
Net income $ 207,479 $ 176,519 17.5
=========== ============ =======
Earnings per share - basic
Earnings from continuing operations $0.70 $0.59 18.6
Earnings from discontinued operations
Discontinued operations, net of tax $0.04 $0.03 33.3
----- ----- ----
Net income per share - basic $0.74 $0.62 19.4
===== ===== ====
Earnings per share - diluted
Earnings from continuing operations $0.70 $0.59 18.6
Earnings from discontinued operations
Discontinued operations, net of tax $0.04 $0.03 33.3
----- ----- ----
Net income per share - diluted $0.74 $0.62 19.4
===== ===== ====
<PAGE>
Unaudited, in thousands of dollars (except per share amounts)
Earnings Summary
Excluding net non-operating gains
Thirteen weeks ended % Inc
Dec. 26, 1999 Dec. 27, 1998 (Dec)
Operating income $ 510,032 $ 437,408 16.6
Non-operating income (expense)
Interest expense (37,701) (18,645) 102.2
Other (556) (3,654) (84.8)
----------- ----------- ------
Total (38,257) (22,299) 71.6
Income before income taxes 471,775 415,109 13.7
Provision for income taxes 187,750 166,230 12.9
----------- ----------- ------
Income from continuing operations 284,025 248,879 14.1
Discontinued operations:
Income from the operation of
discontinued operations, net of tax 10,561 8,856 19.3
----------- ----------- ------
Net income $ 294,586 $ 257,735 14.3
=========== =========== ======
Earnings per share - basic
Earnings from continuing operations $1.02 $0.89 14.8
Earnings from discontinued operations:
Discontinued operations, net of tax $0.04 $0.03 19.9
----- ----- ------
Net income per share - basic $1.06 $0.92 14.9
===== ===== ======
Earnings per share - diluted
Earnings from continuing operations $1.01 $0.89 14.7
Earnings from discontinued operations:
Discontinued operations, net of tax $0.04 $0.03 19.8
----- ----- ------
Net income per share - diluted $1.05 $0.92 14.8
===== ===== ======
<PAGE>
The earnings summaries above exclude the following:
- The second quarter of 1999 net pre-tax gain of $55 million ($33 million
after-tax or $0.11 per share-basic and $0.11 per share-diluted) principally
from the exchange of KVUE-TV in Austin, Texas for KXTV-TV in Sacramento,
California.
- The first quarter of 1998 net pre-tax gain of $306.5 million ($184 million
after-tax or $0.65 per share-basic and $0.64 per share diluted) principally
from the disposition of the company's five remaining radio stations and its
alarm security business.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
See exhibit index for list of exhibits.
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: February 15, 2000 By: /s/George R. Gavagan
-------------------------
George R. Gavagan
Vice President and Controller
EXHIBIT INDEX
Exhibit
Number Title or Description
- ------- ----------------------
99-1 Unaudited pro forma condensed balance sheet as of
December 26, 1999 and the unaudited pro forma
condensed combined statements of income for the
years ended December 26, 1999 and
December 27, 1998 and the quarters ended
March 28, 1999 and March 29, 1998; June 27, 1999
and June 28, 1998; September 26, 1999 and
September 27, 1998; December 26, 1999 and
December 27, 1998.
<PAGE>
Exhibit 99-1
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial statements
give effect to the exchange of approximately $2.7 billion in cash by Cox
Communications, Inc. for substantially all of Gannett Co., Inc.'s cable
business.
The unaudited pro forma condensed combined balance sheet presents the
financial position of Gannett as of December 26, 1999, assuming that the sale
had occurred as of that date. Such pro forma information is based on the
historical balance sheet of the company at December 26, 1999.
The unaudited pro forma condensed combined statements of income reflect
the historical results of continuing operations for Gannett for the periods
presented. 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 sale occurred as of the beginning of the period presented. The 1999 and
1998 statements also include the pro forma effect of the company's 1999
acquisition of Newsquest plc, as discussed in the company's 8-K filings dated
October 5, 1999 and December 7, 1999.
The unaudited pro forma financial statements give effect to certain pro
forma adjustments which are described in the notes to these statements.
The unaudited pro forma financial information is presented for
informational purposes only and is not necessarily indicative of the results
of operations or financial position which would have been achieved had this
transaction been completed as of the date indicated, nor is it necessarily
indicative of Gannett's future results of operations or financial position.
The unaudited pro forma condensed combined financial statements should be
read in conjunction with the historical financial statements of the company,
including the related notes thereto.
<PAGE>
<TABLE>
Gannett Co., Inc.
Unaudited Pro Forma Condensed Balance Sheet
December 26, 1999
(in thousands)
<CAPTION>
Sale of
Cable Pro Forma Pro Forma
Gannett Business Adjustments Balance Sheet
<S> <C> <C> <C> <C>
ASSETS
Current assets
Cash and marketable securities $ 46,160 $ 46,160
Accounts receivable, net 881,435 (54,835) 826,600
Inventories 95,014 (10) 95,004
Prepaid expenses and other current assets 52,613 (17,605) 35,008
----------- ------------ ------------ -----------
Total current assets 1,075,222 (72,450) 1,002,772
Property, plant and equipment, net 2,223,852 (345,150) 1,878,702
Excess of acquisition cost over the
value of assets acquired, net 5,398,227 (704,678) 4,693,549
Other assets 309,145 (4,577) 304,568
----------- ------------ ------------ -----------
Total assets $9,006,446 $(1,126,855) $7,879,591
=========== ============ ============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and current portion of
film contracts payable $ 348,589 $ (4,764) $ 343,825
Accrued expenses and other current liabilities 399,339 (32,453) 366,886
Dividends payable 58,297 58,297
Income taxes 77,553 77,553
----------- ------------ ------------ -----------
Total current liabilities 883,778 (37,217) 846,561
Deferred income taxes 479,547 (102,100) 377,447
Long-term debt, less current portion 2,463,250 (1,727,742) (1) 735,508
Postretirement medical and life insurance
liabilities 304,400 304,400
Other long-term liabilities 245,825 245,825
Total shareholders' equity 4,629,646 (987,538) 1,727,742 5,369,850
----------- ------------ ------------ -----------
Total liabilities and shareholders' equity $9,006,446 $(1,126,855) $7,879,591
=========== ============ ============ ===========
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial Information.
</TABLE>
<PAGE>
<TABLE>
Gannett Co., Inc. and subsidiaries
Unaudited Pro Forma Condensed Combined Statement of Income
Fifty-two weeks ended December 26, 1999
Unaudited, in thousands of dollars (except per share amounts)
<CAPTION>
Pro Forma
Newsquest Pro Forma Statement
Gannett Pro Forma Subtotal Adjustments of Income
<S> <C> <C> <C> <C> <C>
Net operating revenues
Newspaper advertising $ 3,292,894 $ 249,707 $ 3,542,601 $ 3,542,601
Newspaper circulation 1,022,520 33,930 1,056,450 1,056,450
Broadcasting 728,642 728,642 728,642
All other 216,134 7,619 223,753 223,753
------------ ----------- ------------ ----------- ------------
Total 5,260,190 291,256 5,551,446 5,551,446
Operating expenses
Cost of sales and operating expenses,
exclusive of depreciation 2,608,469 142,391 2,750,860 2,750,860
Selling, general and administrative
expenses, exclusive of depreciation 808,529 52,665 861,194 861,194
Depreciation 169,460 11,181 180,641 180,641
Amortization of intangible assets 110,631 23,010 133,641 133,641
------------ ----------- ------------ ----------- ------------
Total 3,697,089 229,247 3,926,336 3,926,336
------------ ----------- ------------ ----------- ------------
Operating income 1,563,101 62,009 1,625,110 1,625,110
Non-operating income (expense)
Interest expense (94,619) (45,367) (139,986) 89,408 (1) (50,578)
Other 58,705 (634) 58,071 58,071
------------ ----------- ------------ ----------- ------------
Total (35,914) (46,001) (81,915) 89,408 7,493
Income before income taxes 1,527,187 16,008 1,543,195 89,408 1,632,603
Provision for income taxes 607,800 6,475 614,275 33,974 (2) 648,249
------------ ----------- ------------ ----------- ------------
Income from continuing operations $ 919,387 $ 9,533 $ 928,920 $ 55,434 $ 984,354
============ =========== ============ =========== ============
Earnings per share from continuing
operations - basic $ 3.29 $ 3.53
====== ======
Earnings per share from continuing
operations - diluted $ 3.26 $ 3.50
====== ======
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial Information.
</TABLE>
<PAGE>
<TABLE>
Gannett Co., Inc. and subsidiaries
Unaudited Pro Forma Condensed Combined Statement of Income
Fifty-two weeks ended December 27, 1998
(in thousands of dollars, except per share amounts)
<CAPTION>
Pro Forma
Newsquest Pro Forma Statement
Gannett Pro Forma Subtotal Adjustments of Income
<S> <C> <C> <C> <C> <C>
Net operating revenues
Newspaper advertising $ 2,942,995 $ 433,886 $ 3,376,881 $ 3,376,881
Newspaper circulation 1,010,238 62,310 1,072,548 1,072,548
Broadcasting 721,298 721,298 721,298
All other 206,160 10,592 216,752 216,752
------------ ----------- ------------ ----------- ------------
Total 4,880,691 506,788 5,387,479 5,387,479
Operating expenses
Cost of sales and operating expenses,
exclusive of depreciation 2,498,876 229,123 2,727,999 2,727,999
Selling, general and administrative
expenses, exclusive of depreciation 742,538 126,124 868,662 868,662
Depreciation 163,776 19,042 182,818 182,818
Amortization of intangible assets 89,687 42,052 131,739 131,739
------------ ----------- ------------ ----------- ------------
Total 3,494,877 416,341 3,911,218 3,911,218
------------ ----------- ------------ ----------- ------------
Operating income 1,385,814 90,447 1,476,261 1,476,261
Non-operating income (expense)
Interest (expense) income, net (60,094) (101,073) (161,167) 94,568 (1) (66,599)
Other 286,005 286,005 286,005
------------ ----------- ------------ ----------- ------------
Total 225,911 (101,073) 124,838 94,568 219,406
Income before income taxes 1,611,725 (10,626) 1,601,099 94,568 1,695,667
Provision for income taxes 645,300 (4,500) 640,800 35,936 (2) 676,736
------------ ----------- ------------ ----------- ------------
Income from continuing operations $ 966,425 $ (6,126) $ 960,299 $ 58,632 $ 1,018,931
============ =========== ============ =========== ============
Earnings per share from continuing
operations - basic $ 3.41 $ 3.60
====== ======
Earnings per share from continuing
operations - diluted $ 3.38 $ 3.57
====== ======
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial Information.
</TABLE>
<PAGE>
<TABLE>
Gannett Co., Inc. and subsidiaries
Unaudited Pro Forma Condensed Combined Statement of Income
Thirteen weeks ended March 28, 1999
Unaudited, in thousands of dollars (except per share amounts)
<CAPTION>
Pro Forma
Newsquest Pro Forma Statement
Gannett Pro Forma Subtotal Adjustments of Income
<S> <C> <C> <C> <C> <C>
Net operating revenues
Newspaper advertising $ 720,551 $ 113,852 $ 834,403 $ 834,403
Newspaper circulation 253,357 15,513 268,870 268,870
Broadcasting 161,194 161,194 161,194
All other 50,837 3,088 53,925 53,925
------------ ----------- ------------ ----------- ------------
Total 1,185,939 132,453 1,318,392 1,318,392
Operating expenses
Cost of sales and operating expenses,
exclusive of depreciation 635,732 63,815 699,547 699,547
Selling, general and administrative
expenses, exclusive of depreciation 187,986 23,603 211,589 211,589
Depreciation 42,715 4,933 47,648 47,648
Amortization of intangible assets 22,914 10,315 33,229 33,229
------------ ----------- ------------ ----------- ------------
Total 889,347 102,666 992,013 992,013
------------ ----------- ------------ ----------- ------------
Operating income 296,592 29,787 326,379 326,379
Non-operating income (expense)
Interest (expense) income (16,592) (20,337) (36,929) 20,633 (1) (16,296)
Other 2,368 (317) 2,051 2,051
------------ ----------- ------------ ----------- ------------
Total (14,224) (20,654) (34,878) 20,633 (14,245)
Income before income taxes 282,368 9,133 291,501 20,633 312,134
Provision for income taxes 112,400 3,582 115,982 7,840 (2) 123,822
------------ ----------- ------------ ----------- ------------
Income from continuing operations $ 169,968 $ 5,551 $ 175,519 $ 12,793 $ 188,312
============ =========== ============ =========== ============
Earnings per share from continuing
operations - basic $ 0.61 $ 0.67
====== ======
Earnings per share from continuing
operations - diluted $ 0.61 $ 0.67
====== ======
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial Information.
</TABLE>
<PAGE>
<TABLE>
Gannett Co., Inc. and subsidiaries
Unaudited Pro Forma Condensed Combined Statement of Income
Thirteen weeks ended June 27, 1999
Unaudited, in thousands of dollars (except per share amounts)
<CAPTION>
Pro Forma
Newsquest Pro Forma Statement
Gannett Pro Forma Subtotal Adjustments of Income
<S> <C> <C> <C> <C> <C>
Net operating revenues
Newspaper advertising $ 788,274 $ 111,400 $ 899,674 $ 899,674
Newspaper circulation 248,812 15,043 263,855 263,855
Broadcasting 194,480 194,480 194,480
All other 48,052 3,646 51,698 51,698
------------ ----------- ------------ ----------- ------------
Total 1,279,618 130,089 1,409,707 1,409,707
Operating expenses
Cost of sales and operating expenses,
exclusive of depreciation 620,682 63,660 684,342 684,342
Selling, general and administrative
expenses, exclusive of depreciation 190,525 23,545 214,070 214,070
Depreciation 42,130 5,038 47,168 47,168
Amortization of intangible assets 23,170 10,315 33,485 33,485
------------ ----------- ------------ ----------- ------------
Total 876,507 102,558 979,065 979,065
------------ ----------- ------------ ----------- ------------
Operating income 403,111 27,531 430,642 430,642
Non-operating income (expense)
Interest (expense) income (13,852) (20,337) (34,189) 20,633 (1) (13,556)
Other 55,305 (317) 54,988 54,988
------------ ----------- ------------ ----------- ------------
Total 41,453 (20,654) 20,799 20,633 41,432
Income before income taxes 444,564 6,877 451,441 20,633 472,074
Provision for income taxes 176,950 2,894 179,844 7,840 (2) 187,684
------------ ----------- ------------ ----------- ------------
Income from continuing operations $ 267,614 $ 3,983 $ 271,597 $ 12,793 $ 284,390
============ =========== ============ =========== ============
Earnings per share from continuing
operations - basic $ 0.96 $ 1.02
====== ======
Earnings per share from continuing
operations - diluted $ 0.95 $ 1.01
====== ======
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial Information.
</TABLE>
<PAGE>
<TABLE>
Gannett Co., Inc. and subsidiaries
Unaudited Pro Forma Condensed Combined Statement of Income
Thirteen weeks ended September 26, 1999
Unaudited, in thousands of dollars (except per share amounts)
<CAPTION>
Pro Forma
Newsquest Pro Forma Statement
Gannett Pro Forma Subtotal Adjustments of Income
<S> <C> <C> <C> <C> <C>
Net operating revenues
Newspaper advertising $ 817,844 $ 24,455 $ 842,299 $ 842,299
Newspaper circulation 255,754 3,374 259,128 259,128
Broadcasting 166,770 166,770 166,770
All other 53,193 885 54,078 54,078
------------ ----------- ------------ ----------- ------------
Total 1,293,561 28,714 1,322,275 1,322,275
Operating expenses
Cost of sales and operating expenses,
exclusive of depreciation 659,654 14,916 674,570 674,570
Selling, general and administrative
expenses, exclusive of depreciation 205,716 5,517 211,233 211,233
Depreciation 44,325 1,210 45,535 45,535
Amortization of intangible assets 30,500 2,380 32,880 32,880
------------ ----------- ------------ ----------- ------------
Total 940,195 24,023 964,218 964,218
------------ ----------- ------------ ----------- ------------
Operating income 353,366 4,691 358,057 358,057
Non-operating income (expense)
Interest (expense) income (26,474) (4,693) (31,167) 24,071 (1) (7,096)
Other 1,588 1,588 1,588
------------ ----------- ------------ ----------- ------------
Total (24,886) (4,693) (29,579) 24,071 (5,508)
Income before income taxes 328,480 (2) 328,478 24,071 352,549
Provision for income taxes 130,700 (1) 130,699 9,147 (2) 139,846
------------ ----------- ------------ ----------- ------------
Income from continuing operations $ 197,780 $ (1) $ 197,779 $ 14,924 $ 212,703
============ =========== ============ =========== ============
Earnings per share from continuing
operations - basic $ 0.70 $ 0.76
====== ======
Earnings per share from continuing
operations - diluted $ 0.70 $ 0.75
====== ======
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial Information.
</TABLE>
<PAGE>
<TABLE>
Gannett Co., Inc. and subsidiaries
Unaudited Pro Forma Condensed Combined Statement of Income
Thirteen weeks ended December 26, 1999
Unaudited, in thousands of dollars (except per share amounts)
<CAPTION>
Pro Forma
Pro Forma Statement
Gannett Adjustments of Income
<S> <C> <C> <C>
Net operating revenues
Newspaper advertising $ 966,225 $ 966,225
Newspaper circulation 264,597 264,597
Broadcasting 206,198 206,198
All other 64,052 64,052
------------ ------------ -----------
Total 1,501,072 1,501,072
Operating expenses
Cost of sales and operating expenses,
exclusive of depreciation 692,401 692,401
Selling, general and administrative
expenses, exclusive of depreciation 224,302 224,302
Depreciation 40,290 40,290
Amortization of intangible assets 34,047 34,047
------------ ------------ -----------
Total 991,040 991,040
------------ ------------ -----------
Operating income 510,032 510,032
Non-operating income (expense)
Interest expense (37,701) 24,071 (1) (13,630)
Other (556) (556)
------------ ------------ -----------
Total (38,257) 24,071 (14,186)
Income before income taxes 471,775 24,071 495,846
Provision for income taxes 187,750 9,147 (2) 196,897
------------ ------------ -----------
Income from continuing operations $ 284,025 $ 14,924 $ 298,949
============ ============ ===========
Earnings per share from continuing
operations - basic $ 1.02 $ 1.08
====== ======
Earnings per share from continuing
operations - diluted $ 1.01 $ 1.07
====== ======
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial Information.
</TABLE>
<PAGE>
<TABLE>
Gannett Co., Inc. and subsidiaries
Unaudited Pro Forma Condensed Combined Statement of Income
Thirteen weeks ended March 29, 1998
(in thousands of dollars, except per share amounts)
<CAPTION>
Pro Forma
Newsquest Pro Forma Statement
Gannett Pro Forma Subtotal Adjustments of Income
<S> <C> <C> <C> <C> <C>
Net operating revenues
Newspaper advertising $ 669,994 $ 111,812 $ 781,806 $ 781,806
Newspaper circulation 254,079 16,634 270,713 270,713
Broadcasting 160,692 160,692 160,692
All other 51,083 2,612 53,695 53,695
------------ ----------- ------------ ----------- ------------
Total 1,135,848 131,058 1,266,906 1,266,906
Operating expenses
Cost of sales and operating expenses,
exclusive of depreciation 617,556 58,665 676,221 676,221
Selling, general and administrative
expenses, exclusive of depreciation 180,638 32,043 212,681 212,681
Depreciation 41,596 4,955 46,551 46,551
Amortization of intangible assets 21,731 10,513 32,244 32,244
------------ ----------- ------------ ----------- ------------
Total 861,521 106,176 967,697 967,697
------------ ----------- ------------ ----------- ------------
Operating income 274,327 24,882 299,209 299,209
Non-operating income (expense)
Interest (expense) income, net (18,772) (25,268) (44,040) 23,642 (1) (20,398)
Other 302,899 302,899 302,899
------------ ----------- ------------ ----------- ------------
Total 284,127 (25,268) 258,859 23,642 282,501
Income before income taxes 558,454 (386) 558,068 23,642 581,710
Provision for income taxes 223,720 (164) 223,556 8,984 (2) 232,540
------------ ----------- ------------ ----------- ------------
Income from continuing operations $ 334,734 $ (222) $ 334,512 $ 14,658 $ 349,170
============ =========== ============ =========== ============
Earnings per share from continuing
operations - basic $ 1.18 $ 1.23
====== ======
Earnings per share from continuing
operations - diluted $ 1.17 $ 1.22
====== ======
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial Information.
</TABLE>
<PAGE>
<TABLE>
Gannett Co., Inc. and subsidiaries
Unaudited Pro Forma Condensed Combined Statement of Income
Thirteen weeks ended June 28, 1998
(in thousands of dollars, except per share amounts)
<CAPTION>
Pro Forma
Newsquest Pro Forma Statement
Gannett Pro Forma Subtotal Adjustments of Income
<S> <C> <C> <C> <C> <C>
Net operating revenues
Newspaper advertising $ 746,675 $ 110,404 $ 857,079 $ 857,079
Newspaper circulation 252,762 15,371 268,133 268,133
Broadcasting 198,799 198,799 198,799
All other 48,673 2,420 51,093 51,093
------------ ----------- ------------ ----------- ------------
Total 1,246,909 128,195 1,375,104 1,375,104
Operating expenses
Cost of sales and operating expenses,
exclusive of depreciation 624,414 55,466 679,880 679,880
Selling, general and administrative
expenses, exclusive of depreciation 183,826 30,860 214,686 214,686
Depreciation 41,640 4,883 46,523 46,523
Amortization of intangible assets 21,733 10,513 32,246 32,246
------------ ----------- ------------ ----------- ------------
Total 871,613 101,722 973,335 973,335
------------ ----------- ------------ ----------- ------------
Operating income 375,296 26,473 401,769 401,769
Non-operating income (expense)
Interest (expense) income, net (16,265) (25,268) (41,533) 23,642 (1) (17,891)
Other (1,585) (1,585) (1,585)
------------ ----------- ------------ ----------- ------------
Total (17,850) (25,268) (43,118) 23,642 (19,476)
Income before income taxes 357,446 1,205 358,651 23,642 382,293
Provision for income taxes 143,100 512 143,612 8,984 (2) 152,596
------------ ----------- ------------ ----------- ------------
Income from continuing operations $ 214,346 $ 693 $ 215,039 $ 14,658 $ 229,697
============ =========== ============ =========== ============
Earnings per share from continuing
operations - basic $ 0.75 $ 0.81
====== ======
Earnings per share from continuing
operations - diluted $ 0.75 $ 0.80
====== ======
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial Information.
</TABLE>
<PAGE>
<TABLE>
Gannett Co., Inc. and subsidiaries
Unaudited Pro Forma Condensed Combined Statement of Income
Thirteen weeks ended September 27, 1998
(in thousands of dollars, except per share amounts)
<CAPTION>
Pro Forma
Newsquest Pro Forma Statement
Gannett Pro Forma Subtotal Adjustments of Income
<S> <C> <C> <C> <C> <C>
Net operating revenues
Newspaper advertising $ 707,347 $ 111,477 $ 818,824 $ 818,824
Newspaper circulation 251,534 15,141 266,675 266,675
Broadcasting 159,125 159,125 159,125
All other 49,825 2,681 52,506 52,506
------------ ----------- ------------ ----------- ------------
Total 1,167,831 129,299 1,297,130 1,297,130
Operating expenses
Cost of sales and operating expenses,
exclusive of depreciation 625,258 58,120 683,378 683,378
Selling, general and administrative
expenses, exclusive of depreciation 180,548 31,841 212,389 212,389
Depreciation 40,760 4,483 45,243 45,243
Amortization of intangible assets 22,482 10,513 32,995 32,995
------------ ----------- ------------ ----------- ------------
Total 869,048 104,957 974,005 974,005
------------ ----------- ------------ ----------- ------------
Operating income 298,783 24,342 323,125 323,125
Non-operating income (expense)
Interest (expense) income, net (11,228) (25,268) (36,496) 23,642 (1) (12,854)
Other (6,839) (6,839) (6,839)
------------ ----------- ------------ ----------- ------------
Total (18,067) (25,268) (43,335) 23,642 (19,693)
Income before income taxes 280,716 (926) 279,790 23,642 303,432
Provision for income taxes 112,250 (393) 111,857 8,984 (2) 120,841
------------ ----------- ------------ ----------- ------------
Income from continuing operations $ 168,466 $ (533) $ 167,933 $ 14,658 $ 182,591
============ =========== ============ =========== ============
Earnings per share from continuing
operations - basic $ 0.59 $ 0.64
====== ======
Earnings per share from continuing
operations $ 0.59 $ 0.64
====== ======
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial Information.
</TABLE>
<PAGE>
<TABLE>
Gannett Co., Inc. and subsidiaries
Unaudited Pro Forma Condensed Combined Statement of Income
Thirteen weeks ended December 27, 1998
(in thousands of dollars, except per share amounts)
<CAPTION>
Pro Forma
Newsquest Pro Forma Statement
Gannett Pro Forma Subtotal Adjustments of Income
<S> <C> <C> <C> <C> <C>
Net operating revenues
Newspaper advertising $ 818,979 $ 100,193 $ 919,172 $ 919,172
Newspaper circulation 251,863 15,164 267,027 267,027
Broadcasting 202,682 202,682 202,682
All other 56,579 2,879 59,458 59,458
------------ ----------- ------------ ----------- ------------
Total 1,330,103 118,236 1,448,339 1,448,339
Operating expenses
Cost of sales and operating expenses,
exclusive of depreciation 631,648 56,872 688,520 688,520
Selling, general and administrative
expenses, exclusive of depreciation 197,526 31,380 228,906 228,906
Depreciation 39,780 4,721 44,501 44,501
Amortization of intangible assets 23,741 10,513 34,254 34,254
------------ ----------- ------------ ----------- ------------
Total 892,695 103,486 996,181 996,181
------------ ----------- ------------ ----------- ------------
Operating income 437,408 14,750 452,158 452,158
Non-operating income (expense)
Interest (expense) income, net (13,829) (25,269) (39,098) 23,642 (1) (15,456)
Other (8,470) (8,470) (8,470)
------------ ----------- ------------ ----------- ------------
Total (22,299) (25,269) (47,568) 23,642 (23,926)
Income before income taxes 415,109 (10,519) 404,590 23,642 428,232
Provision for income taxes 166,230 (4,455) 161,775 8,984 (2) 170,759
------------ ----------- ------------ ----------- ------------
Income from continuing operations $ 248,879 $ (6,064) $ 242,815 $ 14,658 $ 257,473
============ =========== ============ =========== ============
Earnings per share from continuing
operations - basic $ 0.89 $ 0.92
====== ======
Earnings per share from continuing
operations - diluted $ 0.89 $ 0.91
====== ======
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial Information.
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Note 1 - Basis of Presentation
The unaudited pro forma balance sheet has been prepared to reflect the sale of
the company's cable business for an aggregate price of approximately
$2.7 billion in cash. After-tax proceeds from the sale are approximately
$1.7 billion.
The unaudited pro forma balance sheet presents the financial position of the
company as of December 26, 1999 assuming that the transaction occurred as of
that date. Such pro forma information is based on the historical balance sheet
of Gannett as of December 26, 1999 adjusted for the effects of the sale.
The unaudited pro forma condensed combined statements of income reflect the
historical results of continuing operations for Gannett for the periods
presented. 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 sale occurred as of the period presented. The 1999 and 1998 pro forma
statements of income also include the pro forma effect of the company's 1999
acquisition of Newsquest, as discussed in Note 4.
The company believes that the assumptions used in preparing the unaudited pro
forma financial statements provide a reasonable basis for presenting all of the
significant effects of the sale 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 balance sheet are made to
reflect the following:
(1) Adjustment to reflect the pay down of long-term debt from the after-tax
proceeds of the sale. The proceeds are reduced by the tax on the estimated
gain on sale of the business, using a combined federal and state tax rate
of 39%, net of deferred taxes.
B. Pro forma adjustments to the unaudited condensed combined statements of
income are made to reflect the following:
(1) Reduction in interest expense due to pay down of long-term debt from the
after-tax proceeds of the sale. The rate used to calculate the reduction
in interest expense is based on the weighted average rate paid by Gannett
for commercial paper during the relevant period.
(2) Record income tax effect of pro forma adjustments described in item 1,
using a combined federal and state tax rate of 38%, which differs from the
tax rate discussed above due to characteristics of the cable division sale.
Note 3 - Pro Forma Adjustments for 1997
If the cable business had been sold at the beginning of the company's 1997
fiscal year, the pro forma interest expense reduction adjustment would be
$94.6 million, along with a pro forma income tax increase adjustment of
$35.9 million. In 1997, income from continuing operations and diluted earnings
per share from continuing operations were $681 million and $2.39, respectively.
On a pro forma basis, taking into account the adjustments described above,
income from continuing operations and diluted earnings per share from
continuing operations for 1997 would have been $740 million and $2.59,
respectively.
Note 4 - Other
On July 26, 1999, the company completed the acquisition of Newsquest plc
("Newsquest"). The amounts in the Newsquest pro forma column reflect the
estimated results of operations of the company and its subsidiaries as though
the Newsquest acquisition was made at the beginning of the period presented
along with the related costs of financing the acquisition and the additional
amortization expense associated with the purchase. Refer to the company's
8-K filings dated October 5, 1999 and December 7, 1999 for additional
information regarding this acquisition.
<PAGE>
