Highlights for the quarter include the following:
- Earnings totaled $2.92 per diluted
share, $1.02 per diluted share on non-GAAP basis
- Overall company revenue growth of 24
percent, pro forma revenue growth of 4 percent, driven by strong
Broadcast and Digital Segment results
- Record Broadcasting Segment revenue
increased 117 percent, a 25 percent increase on a pro forma
basis
- Record Digital Segment revenue
increased 77 percent, a 10 percent increase on a pro forma
basis
- Adjusted EBITDA rose 57 percent to $511
million also driven by strong Broadcasting and Digital Segment
results
- Free Cash Flow grew to $203 million, a
32 percent year-over-year increase
Gannett Co., Inc. (NYSE: GCI) today reported non-GAAP earnings
per diluted share of $1.02 for the fourth quarter compared to $0.66
for the fourth quarter of 2013, an increase of 54.5 percent. Strong
results for the company's expanded television station portfolio in
the Broadcasting Segment and a strong performance by the Cars.com
acquisition in the Digital Segment fueled the 55 percent gain.
Gracia Martore, president and chief executive officer, said,
“Our strong fourth quarter results cap a milestone year for Gannett
- reflecting our bold strategy and continued focus on reshaping and
reinventing the company to accelerate growth in today’s
multi-platform media landscape. Based on our strong operating
performance and balance sheet strength, we are resuming our share
buyback program, well ahead of the timeline we had previously
anticipated. Our broader and more diverse footprint drove record
revenue in Broadcasting for the fourth consecutive quarter and
resulted in our highest political revenues ever in a
non-presidential election year. We also posted record-breaking
Digital Segment revenues, driven by our full ownership of Cars.com,
which had a terrific quarter, as well as continued growth at
CareerBuilder. On the Publishing side, we continue to innovate and
find ways to deepen our connections with our audiences and
advertisers through initiatives like USA TODAY local content
editions, which have delighted customers and substantially exceeded
our revenue expectations. Even as we achieved this tremendous
revenue growth, we remain committed to operating as efficiently as
possible, which has continued to improve profitability, including a
57 percent increase in Adjusted EBITDA as compared to the fourth
quarter last year.”
Martore continued, “The terrific progress we’ve made across each
of our businesses since the launch of our transformation plan three
years ago culminated in our biggest news of 2014 - the announcement
of our plan to separate into two highly focused public companies.
Each company will be a leader in its respective industry with
impressive scale and greater freedom to focus its strategy and
resources on the most promising, value-enhancing areas of the
business. We are on track with the separation and will share more
details of our plans for the Publishing and Broadcasting/Digital
companies in the coming months.”
On October 1, 2014, the company completed the acquisition of the
73 percent interest it did not already own in Classified Ventures
LLC, which owns Cars.com. Results for the fourth quarter of 2014
include the impact of the acquisition.
Gannett also announced that the company is resuming its share
buyback program authorized in June 2013 and suspended in August
2014. There is approximately $150 million remaining under the
current authorization. The buyback is consistent with Gannett’s
commitment to return capital to its shareholders while continuing
to reinvest in the business.
CONTINUING
OPERATIONS
Operating revenues in the fourth quarter were up 24.3 percent
compared to the fourth quarter of 2013 and totaled $1.7 billion.
The substantial increase was driven by record revenues in the
Broadcasting and Digital Segments. Broadcasting Segment revenues
grew 117.0 percent reflecting higher political spending and
retransmission revenue and the acquisition of Belo Corp. Digital
Segment revenues were up 76.6 percent due principally to the
acquisition of Classified Ventures. Publishing Segment revenues
declined 6.2 percent in the quarter. On a pro forma basis (had
Gannett owned the Belo and London television stations and Cars.com
during the same quarter last year and excluding the impact of the
sale of a print business and Apartments.com), total company
revenues were 4.2 percent higher in the quarter due primarily to
substantial revenue growth at the expanded television station
portfolio and strong growth at Cars.com.
Net income attributable to Gannett on a non-GAAP basis was 54.0
percent higher in the quarter compared to the fourth quarter in
2013 and totaled $234.8 million. Operating income on the same basis
increased 53.9 percent and totaled $428.2 million,
reflecting substantially higher profitability in Broadcasting and
Digital due, in part, to the expansion of the company's television
station portfolio and the acquisition of Classified Ventures.
Adjusted EBITDA (a non-GAAP term detailed in Table 5) was
substantially higher in the quarter, up 56.8 percent to
$510.5 million compared to $325.7 million in the fourth
quarter last year. The Adjusted EBITDA margin in the fourth quarter
was 30.0 percent, an increase of 620 basis points from 23.8 percent
in the fourth quarter last year.
Special items in the fourth quarter of 2014 resulted in a gain
of $441.2 million, net of taxes, ($1.90 per share) and include:
non-operating income of $439.2 million pre-tax ($1.13 per
share) reflecting primarily the write-up of the company's equity
investment in Classified Ventures offset partially by transaction
related costs; a tax benefit of $236.6 million ($1.02 per share)
related to portfolio restructuring and the sale of a non-strategic
investment; and operating charges of $87.2 million pre-tax ($0.25
per share) representing primarily non-cash asset impairment
charges, transformation costs and workforce restructuring. Special
items in the fourth quarter of 2013 totaled $85.6 million ($61.7
million after tax or $0.27 per share) reflecting charges associated
with facility consolidations, non-cash asset impairments, workforce
restructuring and transaction-related fees.
The table below details fourth quarter results on a GAAP and
non-GAAP basis.
Dollars in thousands, except per share amounts
GAAP Measure Special Items Non-GAAP Measure Thirteen
Other Asset Non- Thirteen weeks ended
Workforce transformation impairment operating Special tax weeks
ended Dec. 28, 2014 restructuring costs charges items benefits Dec.
28, 2014 Operating income $ 341,018 $ 11,079 $ 40,935 $ 35,192 $ —
$ — $ 428,224
Equity income in unconsolidated investees,
net
532 — — — 4,805 — 5,337 Other non-operating items 445,134 — — —
(444,045 ) — 1,089 Income before income taxes 713,167 11,079 40,935
35,192 (439,240 ) — 361,133 Provision for income taxes 18,200 3,800
21,300 4,400 (176,900 ) 236,600 107,400 Net income 694,967 7,279
19,635 30,792 (262,340 ) (236,600 ) 253,733 Net income attributable
to Gannett Co., Inc. 676,029 7,279 19,635 30,792 (262,340 )
(236,600 ) 234,795 Net income per share - diluted (a) $ 2.92 $ 0.03
$ 0.08 $ 0.13 $ (1.13 ) $ (1.02 ) $ 1.02 (a) total per share
does not sum due to rounding.
Operating expenses including special charges noted above totaled
$1.36 billion in the quarter, up 17.8 percent compared to
$1.15 billion in the fourth quarter a year ago. The increase was
due primarily to the Belo and Classified Ventures acquisitions. On
a non-GAAP basis, operating expenses were $1.27 billion. Pro
forma non-GAAP operating expenses were 2.8 percent lower compared
to the fourth quarter in 2013 reflecting lower Publishing and
Digital Segment expenses partially offset by higher expenses in the
Broadcasting Segment associated with higher revenue growth.
Total operating revenues for the full year were 16.4 percent
higher compared to 2013 and totaled $6.01 billion. The
increase reflects substantially higher revenue growth in the
Broadcasting and Digital Segments to record levels partially offset
by a decline in the Publishing Segment. Broadcasting Segment
revenues were 102.6 percent higher due to the Belo acquisition and
significant increases in Olympic and political spending as well as
retransmission revenue. Digital Segment revenues in 2014 were up
22.8 percent reflecting the acquisition of Classified Ventures
including strong growth at Cars.com and solid revenue growth at
CareerBuilder. Company-wide digital revenues totaled
$2.05 billion, an increase of 7.4 percent on a pro forma
basis compared to 2013. Publishing Segment revenues were 4.4
percent lower as advertising revenues declined 5.8 percent and
circulation revenues were down 0.9 percent.
Operating expenses in 2014 were $4.95 billion. On a non-GAAP
basis, operating expenses totaled $4.78 billion, an increase
of 11.0 percent compared to 2013. The increase was due primarily to
the previously mentioned acquisitions offset, in part, by
continuing efficiency efforts company-wide. Operating income on the
same basis was $1.23 billion, 43.7 percent higher while net income
attributable to Gannett was up 34.0 percent to $634.2 million.
Adjusted EBITDA was $1.49 billion in 2014 compared to $1.04 billion
in 2013, an increase of 42.6 percent. Adjusted EBITDA margins were
significantly higher in 2014 compared to 2013 and reached
25 percent. Earnings per diluted share were $4.58 on a GAAP
basis and $2.73 per diluted share on a non-GAAP basis. Free cash
flow generated in 2014 was $844.6 million.
BROADCASTING
Broadcasting Segment revenues were 117.0 percent higher in the
quarter compared to the fourth quarter last year and totaled a
highest ever $495.3 million. The increase was fueled by the
expansion of the TV station portfolio, as well as significant
increases in politically related advertising and retransmission
revenues.
The following table summarizes the year-over-year changes in
select Broadcasting Segment revenue categories. Digital revenues
are included in the “Other” category.
Broadcasting Revenue Detail Dollars in thousands
Thirteenweeks endedDec. 28, 2014
Percentage change from thirteen weeksended
Dec. 29, 2013
Reported Pro Forma (a) Core (Local & National) $ 275,945
63 % (7 %) Political 92,433 *** *** Retransmission (b) 94,323 142 %
56 % Other 32,568 123 % 13 % Total $ 495,269 117 % 25 %
(a)
The pro forma amounts are presented as if
the acquisitions of Belo Corp. and the London Broadcasting TV
stations occurred at the beginning of 2013.
(b)
Reverse compensation to networks is
included as part of programming costs and therefore not included in
this line.
On a pro forma basis, Broadcasting Segment revenues were up 25.0
percent compared to the fourth quarter in 2013. Substantially
higher retransmission revenue that totaled $94.3 million, a 56.3
percent increase, as well as $92.4 million of political advertising
drove the increase. Pro forma digital revenues in the Broadcasting
Segment were 16.5 percent higher reflecting primarily growth in
digital marketing services products.
Non-GAAP operating expenses in the Broadcasting Segment on a pro
forma basis totaled $248.3 million in the quarter, up 2.8
percent compared to the fourth quarter a year ago and reflect
primarily an increase in reverse network compensation. On a pro
forma basis, non-GAAP operating income was substantially higher
than the fourth quarter of 2013 and totaled $247.0 million, an
increase of 59.6 percent. Adjusted EBITDA on the same basis was
$268.9 million, up 54.7 percent compared to the fourth quarter in
2013. As a result, Adjusted EBITDA margins were up substantially to
54.3 percent in the fourth quarter.
Based on current trends, we expect the percentage increase in
total television revenues for the first quarter of 2015 compared to
the same quarter in 2014 to be up in the low to mid-single digits
despite very difficult year-over-year comparisons. First quarter
2014 Broadcasting revenue benefited from $41.3 million related to
the Winter Olympic Games and approximately $10.0 million of
politically related ad demand. The challenge of overcoming these
even-year revenue contributions will be partially offset in the
first quarter of 2015 by Super Bowl advertising on the company's
NBC stations.
PUBLISHING
Publishing Segment revenues in the quarter totaled $885.5
million, down 6.2 percent. Publishing Segment revenues on a pro
forma basis declined 5.9 percent reflecting primarily softer
display advertising partially offset by an increase in digital
marketing solutions revenue and digital advertising.
Advertising revenues declined 7.8 percent to $543.8 million. Pro
forma advertising revenues declined 8.3 percent
year-over-year. On the same basis all domestic classified
advertising category comparisons in the fourth quarter were better
than third quarter comparisons. Employment advertising was up 1.5
percent in the quarter maintaining its positive trend with growth
domestically and at Newsquest in the UK.
A summary of the year-over-year percentage change for each of
the company's advertising categories can be found on Table 3.
Circulation revenues totaled $282.0 million, a decline of 2.2
percent compared to the fourth quarter of 2013. An increase in
circulation revenue at local domestic publishing sites reflecting
the beneficial impact of pricing strategies as well as continued
strength of the All Access Content Subscription Model was offset by
circulation revenue declines at Newsquest, due to the cycling of
cover price increases, and USA TODAY.
Pro forma Publishing Segment digital revenues increased 2.9
percent in the quarter reflecting continued growth in digital
marketing solutions and digital advertising. Digital revenues at
Newsquest were up 20.4 percent in local currency while digital
revenues at USA TODAY and its associated businesses increased 8.4
percent. Pro forma digital advertising revenues at local domestic
publishing operations were up 6.6 percent.
Pro forma non-GAAP Publishing Segment operating expenses were
$760.9 million, a decline of 4.6 percent compared to the
fourth quarter of 2013 due primarily to continuing cost efficiency
efforts.
Non-GAAP operating income was $124.6 million in the quarter
while Adjusted EBITDA on the same basis totaled $150.6 million.
Changes in the Cars.com affiliate agreements and the absence of
Apartments.com revenues unfavorably impacted these results by
approximately $8.8 million.
DIGITAL
Digital Segment operating revenues totaled a record $345.4
million, an increase of 76.6 percent compared to the fourth quarter
of 2013. The substantial increase reflects primarily the impact of
the Classified Ventures acquisition and strong results at Cars.com.
Revenues on a pro forma basis in the Digital Segment were up 9.7
percent driven in large part by revenue growth of 24.8 percent at
Cars.com and 3.8 percent at CareerBuilder. The revenue increase at
Cars.com reflects principally new affiliation agreements as of
October 1st that resulted in higher wholesale rates charged to its
affiliate newspaper and broadcasting markets as well as rate and
unit growth in direct markets. A significant increase in its
digital software-as-a-service products drove the revenue increase
at CareerBuilder.
Non-GAAP pro forma operating expenses were down 1.2 percent
driven by lower expenses at Cars.com and CareerBuilder. On the same
basis, Digital Segment operating income was 82.4 percent higher and
totaled $74.4 million while Adjusted EBITDA was $104.9 million, an
increase of 51.6 percent.
Pro forma digital revenues company-wide, including the Digital
Segment and all digital revenues generated by the other business
segments, totaled $538.9 million, an increase of 6.6 percent. The
increase reflects higher affiliate fees at Classified Ventures a
well as higher revenue associated with CareerBuilder, digital
marketing solutions products and digital advertising.
In December, Gannett's consolidated domestic Internet audience
was 115 million unique visitors reaching 46 percent of the
Internet audience, according to comScore Media Metrix
Multi-platform. USATODAY.com is one of the most popular news sites
and the USA TODAY app is a top news app with 21.2 million downloads
across iPad, iPhone, Android, Windows and Kindle Fire. USA TODAY
mobile visitors continued to grow in December up from December
a year ago to approximately 44.8 million with a 33 percent
increase in mobile visitor reach to 25 percent, according to
comScore Mobile Metrix. Newsquest is also an Internet leader in the
UK where its network of web sites attracted 122.2 million monthly
page impressions from approximately 18.7 million unique users
in December 2014.
NON-OPERATING
ITEMS
The company's equity earnings include its share of operating
results from unconsolidated investees including the California
Newspapers Partnership, Texas-New Mexico Newspapers Partnership,
Tucson newspaper partnership and other online/digital businesses
including Classified Ventures prior to its acquisition on October
1st.
Equity income in unconsolidated investees declined $14.4 million
in the quarter compared to the fourth quarter of 2013. The decline
reflects the absence of equity income from Classified Ventures in
addition to lower results for newspaper partnerships. Excluding
special items, equity income totaled $5.3 million in the quarter, a
decline of $9.6 million compared to $14.9 million in the
fourth quarter a year ago.
Interest expense totaled $73.5 million in the quarter compared
to $62.9 million in the fourth quarter a year ago reflecting debt
associated with the Belo and Cars.com acquisitions partially offset
by a lower average interest rate.
Other non-operating items totaled $445.1 million in the quarter,
an increase of $464.1 million. The increase reflects the write up
of the prior investment in Classified Ventures post acquisition.
Excluding special items, income from other non-operating items in
the quarter would have been $1.1 million compared to income of $2.0
million in the fourth quarter of 2013.
The company's taxes for the quarter reflect a special $236.6
million benefit (or $1.02 per share) primarily triggered by a
restructuring of the portfolio, including the sale of a
non-strategic equity investment, which offset prior tax gains
related to the sale of several TV stations, our interest in
Apartments.com and other properties.
Net cash flow from operating activities was $248.6 million in
the quarter. Free cash flow (a non-GAAP measure) totaled $202.7
million, a 32.1 percent increase from the fourth quarter of 2013.
The balance of long-term debt was $4.49 billion and total cash was
$118.5 million at quarter end.
****
As previously announced, the company will hold an earnings
conference call at 10:00 a.m. ET today. The call can be accessed
via a live webcast through the company's web site, www.gannett.com, or listen-only conference lines.
U.S. callers should dial 1-888-516-2377 and international callers
should dial 1-719-457-2615 at least 10 minutes prior to the
scheduled start of the call. The confirmation code for the
conference call is 6069916. To access the replay, dial
1-888-203-1112 in the U.S. International callers should use the
number 1-719-457-0820. The confirmation code for the replay is
6069916. Materials related to the call will be available through
the Investor Relations section of the company's web site Tuesday
morning.
About Gannett
Gannett Co., Inc. is an international media and marketing
solutions company that informs and engages more than 110 million
people every month through its powerful network of broadcast,
digital, mobile and publishing properties. Our portfolio of trusted
brands offers marketers unmatched local-to-national reach and
customizable, innovative marketing solutions across any platform.
Gannett is committed to connecting people - and the companies who
want to reach them - with their interests and communities. For more
information, visit www.gannett.com.
Certain statements in this press release may be forward looking
in nature or “forward looking statements” as defined in the Private
Securities Litigation Reform Act of 1995. The forward looking
statements contained in this press release are subject to a number
of risks, trends and uncertainties that could cause actual
performance to differ materially from these forward looking
statements. A number of those risks, trends and uncertainties are
discussed in the company's SEC reports, including the company's
annual report on Form 10-K and quarterly reports on Form 10-Q. Any
forward looking statements in this press release should be
evaluated in light of these important risk factors.
Gannett is not responsible for updating the information
contained in this press release beyond the published date, or for
changes made to this press release by wire services, Internet
service providers or other media.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands (except per share
amounts)
Table No. 1 Thirteen Thirteen weeks
ended weeks ended % Increase Dec. 28, 2014 Dec. 29, 2013 (Decrease)
Net operating revenues: Broadcasting $ 495,269 $ 228,207
117.0 Publishing advertising 543,795 589,555 (7.8 ) Publishing
circulation 281,997 288,434 (2.2 ) All other Publishing 59,683
66,272 (9.9 ) Digital 345,352 195,570 76.6 Intersegment
eliminations (25,129 ) — ***
Total 1,700,967 1,368,038 24.3
Operating expenses: Cost of sales and
operating expenses, exclusive of depreciation 748,119 722,487 3.5
Selling, general and administrative expenses, exclusive of
depreciation 483,361 341,451 41.6 Depreciation 49,573 37,615 31.8
Amortization of intangible assets 32,748 9,802 *** Facility
consolidation and asset impairment charges 46,148
43,077 7.1
Total 1,359,949
1,154,432 17.8
Operating income
341,018 213,606 59.6
Non-operating (expense) income: Equity income in
unconsolidated investees, net 532 14,895 (96.4 ) Interest expense
(73,517 ) (62,857 ) 17.0 Other non-operating items 445,134
(18,936 ) ***
Total 372,149
(66,898 ) ***
Income before income
taxes 713,167 146,708 *** Provision for income taxes
18,200 41,500 (56.1 )
Net income
694,967 105,208 *** Net income attributable to noncontrolling
interests (18,938 ) (14,461 ) 31.0
Net
income attributable to Gannett Co., Inc. $ 676,029 $
90,747 ***
Net income per share - basic
$ 2.99 $ 0.40 ***
Net income per share - diluted $ 2.92 $
0.39 ***
Weighted average number of common shares
outstanding: Basic 226,046 227,343 (0.6 ) Diluted 231,157
232,585 (0.6 )
Dividends declared per share $ 0.20 $
0.20 —
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands (except per share
amounts)
Table No. 1 (continued) Fifty-two
Fifty-two weeks ended weeks ended % Increase Dec. 28, 2014 Dec. 29,
2013 (Decrease)
Net operating revenues: Broadcasting $
1,692,304 $ 835,113 102.6 Publishing advertising 2,070,177
2,198,719 (5.8 ) Publishing circulation 1,118,753 1,129,060 (0.9 )
All other Publishing 232,799 250,025 (6.9 ) Digital 919,270 748,445
22.8 Intersegment eliminations (25,129 ) — ***
Total 6,008,174 5,161,362
16.4
Operating expenses: Cost of sales and
operating expenses, exclusive of depreciation 3,048,579 2,882,449
5.8 Selling, general and administrative expenses, exclusive of
depreciation 1,539,476 1,291,858 19.2 Depreciation 185,868 153,203
21.3 Amortization of intangible assets 79,856 36,369 *** Facility
consolidation and asset impairment charges 96,364
58,240 65.5
Total 4,950,143
4,422,119 11.9
Operating income
1,058,031 739,243 43.1
Non-operating (expense) income: Equity income in
unconsolidated investees, net 167,319 43,824 *** Interest expense
(273,244 ) (176,064 ) 55.2 Other non-operating items 403,954
(47,890 ) ***
Total 298,029
(180,130 ) ***
Income before income
taxes 1,356,060 559,113 *** Provision for income taxes
225,600 113,200 99.3
Net income
1,130,460 445,913 *** Net income attributable to noncontrolling
interests (68,289 ) (57,233 ) 19.3
Net
income attributable to Gannett Co., Inc. $ 1,062,171 $
388,680 ***
Net income per share -
basic $ 4.69 $ 1.70 ***
Net income per share - diluted $
4.58 $ 1.66 ***
Weighted average number of common shares
outstanding: Basic 226,292 228,541 (1.0 ) Diluted 231,907
234,189 (1.0 )
Dividends declared per share $ 0.80 $
0.80 —
BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Table No. 2
Thirteen
Thirteen
weeks ended
weeks ended % Increase Dec. 28, 2014 Dec. 29, 2013 (Decrease)
Net operating revenues: Broadcasting $ 495,269 $ 228,207
117.0 Publishing 885,475 944,261 (6.2 ) Digital 345,352 195,570
76.6 Intersegment eliminations (25,129 ) — ***
Total $ 1,700,967 $ 1,368,038 24.3
Operating income (net of depreciation,
amortization and facility consolidation charges): Broadcasting
$ 241,542 $ 96,337 150.7 Publishing 69,656 105,624 (34.1 ) Digital
47,621 27,333 74.2 Corporate (17,801 ) (15,688 ) 13.5
Total $ 341,018 $ 213,606 59.6
Depreciation, amortization and facility consolidation
charges: Broadcasting $ 26,003 $ 8,657 *** Publishing 44,380
57,546 (22.9 ) Digital 54,197 19,616 *** Corporate 3,889
4,675 (16.8 )
Total $ 128,469 $
90,494 42.0
Adjusted EBITDA (a):
Broadcasting $ 268,895 $ 118,723 126.5 Publishing 150,633 170,607
(11.7 ) Digital 104,929 46,949 *** Corporate (13,912 )
(10,610 ) 31.1
Total $ 510,545 $
325,669 56.8
(a)
"Adjusted EBITDA" is a non-GAAP measure
used by management to measure, analyze and compare the performance
of its business segment operations at a more detailed level and in
a meaningful and consistent manner. The definition of "Adjusted
EBITDA" is provided in Table No. 5, along with reconciliations to
the most directly comparable financial measure calculated and
presented in accordance with GAAP on the company's condensed
consolidated statements of income.
BUSINESS SEGMENT INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Table No. 2 (continued) Fifty-two
Fifty-two weeks ended weeks ended % Increase Dec. 28, 2014 Dec. 29,
2013 (Decrease)
Net operating revenues: Broadcasting $
1,692,304 $ 835,113 102.6 Publishing 3,421,729 3,577,804 (4.4 )
Digital 919,270 748,445 22.8 Intersegment eliminations
(25,129 ) — ***
Total $ 6,008,174
$ 5,161,362 16.4
Operating income
(net of depreciation, amortization and facility consolidation and
asset impairment charges): Broadcasting $ 745,383 $ 361,915
106.0 Publishing 228,307 313,697 (27.2 ) Digital 155,482 128,264
21.2 Corporate (71,141 ) (64,633 ) 10.1
Total $ 1,058,031 $ 739,243 43.1
Depreciation, amortization and facility consolidation and asset
impairment charges: Broadcasting $ 94,125 $ 29,625 ***
Publishing 167,134 153,380 9.0 Digital 81,974 46,415 76.6 Corporate
18,855 18,392 2.5
Total $
362,088 $ 247,812 46.1
Adjusted
EBITDA (a): Broadcasting $ 843,198 $ 405,908 107.7 Publishing
459,084 510,214 (10.0 ) Digital 240,567 174,679 37.7 Corporate
(52,286 ) (45,838 ) 14.1
Total $
1,490,563 $ 1,044,963 42.6 (a)
"Adjusted EBITDA" is a non-GAAP measure
used by management to measure, analyze and compare the performance
of its business segment operations at a more detailed level and in
a meaningful and consistent manner. The definition of "Adjusted
EBITDA" is provided in Table No. 5, along with reconciliations to
the most directly comparable financial measure calculated and
presented in accordance with GAAP on the company's condensed
consolidated statements of income.
PUBLISHING SEGMENT REVENUE COMPARISONS
Gannett Co., Inc. and Subsidiaries
Unaudited
Table No. 3 The following percentage changes
for the Publishing Segment advertising and classified revenue
categories are presented on a pro forma basis. See Table No. 8 for
more information.
Fourth quarter 2014 year-over-year
comparisons: U.S. Total Publishing Newsquest
Publishing (including USA TODAY) (in pounds) Segment Retail
(7.7 %) (1.9 %) (7.4 %) National (20.8 %) (5.2 %) (19.8 %)
Classified: Automotive (0.4 %) (5.6 %) (1.2 %) Employment 0.8 % 5.0
% 1.5 % Real Estate (2.3 %) (8.6 %) (5.3 %) Legal 1.1 % — % 1.1 %
Other (5.2 %) (7.6 %) (6.5 %) Total classified (1.5 %) (4.0 %) (2.5
%) Total advertising (8.7 %) (3.3 %) (8.3 %)
Year-to-date 2014 year-over-year comparisons: U.S. Total
Publishing Newsquest Publishing (including USA TODAY) (in pounds)
Segment Retail (6.3 %) (2.1 %) (5.4 %) National (14.3 %)
(4.2 %) (13.2 %) Classified: Automotive (1.7 %) (5.7 %) (1.6 %)
Employment (3.8 %) 7.3 % 0.8 % Real Estate (4.2 %) (9.0 %) (3.9 %)
Legal (3.8 %) — % (3.8 %) Other (7.7 %) (6.4 %) (5.6 %) Total
classified (4.0 %) (3.1 %) (2.5 %) Total advertising (7.1 %) (2.8
%) (5.8 %)
USE OF NON-GAAP
INFORMATION
The company uses non-GAAP financial performance and liquidity
measures to supplement the financial information presented on a
GAAP basis. These non-GAAP financial measures should not be
considered in isolation from or as a substitute for the related
GAAP measures, and should be read together with financial
information presented on a GAAP basis.
The company discusses in this report non-GAAP financial
performance measures that exclude from its reported GAAP results
the impact of special items consisting of workforce restructuring
charges, transformation costs, non-cash asset impairment charges,
certain gains and expenses recognized in non-operating categories
and certain credits and charges to its income tax provision. The
company believes that such expenses, charges, gains and credits are
not indicative of normal, ongoing operations and their inclusion in
results makes for more difficult comparisons between years and with
peer group companies.
The company also discusses Adjusted EBITDA, a non-GAAP financial
performance measure that it believes offers a useful view of the
overall operation of its businesses. Adjusted EBITDA is defined as
net income attributable to Gannett before (1) net income
attributable to noncontrolling interests, (2) income taxes, (3)
interest expense, (4) equity income, (5) other non-operating items,
(6) workforce restructuring, (7) other transformation costs, (8)
asset impairment charges, (9) depreciation and (10) amortization.
When Adjusted EBITDA is discussed in reference to performance on a
consolidated basis, the most directly comparable GAAP financial
measure is Net income attributable to Gannett. Management does not
analyze non-operating items such as interest expense and income
taxes on a segment level; therefore, the most directly comparable
GAAP financial measure to Adjusted EBITDA when performance is
discussed on a segment level is Operating income. This earnings
report also discusses free cash flow, a non-GAAP liquidity measure.
Free cash flow is defined as “net cash flow from operating
activities” as reported on the statement of cash flows reduced by
“purchase of property, plant and equipment” as well as “payments
for investments” and increased by “proceeds from investments.” The
company believes that free cash flow is a useful measure for
management and investors to evaluate the level of cash generated by
operations and the ability of its operations to fund investments in
new and existing businesses, return cash to shareholders under the
company’s capital program, repay indebtedness, add to the company’s
cash balance, or use in other discretionary activities. Management
uses free cash flow to monitor cash available for repayment of
indebtedness and in its discussions with the investment
community.
Management uses non-GAAP financial performance measures for
purposes of evaluating business unit and consolidated company
performance. The company therefore believes that each of the
non-GAAP measures presented provides useful information to
investors by allowing them to view the company’s businesses through
the eyes of management and the Board of Directors, facilitating
comparison of results across historical periods and providing a
focus on the underlying ongoing operating performance of its
businesses. In addition, many of the company’s peer group companies
present similar non-GAAP measures so the presentation of such
measures facilitates industry comparisons. Tabular reconciliations
for the non-GAAP financial measures are contained in Tables 4
through 8 attached to this news release.
NON-GAAP FINANCIAL INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except
per share amounts)
The company uses non-GAAP financial performance and
liquidity measures to supplement the financial information
presented on a GAAP basis. These non-GAAP financial measures are
not to be considered in isolation from or as a substitute for the
related GAAP measures and should be read only in conjunction with
financial information presented on a GAAP basis. Tables No.
4 through No. 8 reconcile these non-GAAP measures to the most
directly comparable GAAP measure.
Table No. 4 GAAPMeasure
Special Items
Non-GAAPMeasure
Thirteen Other Asset
Thirteen weeks ended Workforce transformation impairment
Non-operating
Special tax
weeks ended Dec. 28, 2014 restructuring costs charges items
benefits Dec. 28, 2014 Cost of sales and operating expenses,
exclusive of depreciation $ 748,119 $ (8,820 ) $ (1,459 ) $ — $ — $
— $ 737,840 Selling, general and administrative expenses, exclusive
of depreciation 483,361 (2,259 ) (28,520 ) — — — 452,582 Facility
consolidation and asset impairment charges 46,148 — (10,956 )
(35,192 ) — — — Operating expenses 1,359,949 (11,079 ) (40,935 )
(35,192 ) — — 1,272,743 Operating income 341,018 11,079 40,935
35,192 — — 428,224 Equity income in unconsolidated investees, net
532 — — — 4,805 — 5,337 Other non-operating items 445,134 — — —
(444,045 ) — 1,089 Total non-operating (expense) income 372,149 — —
— (439,240 ) — (67,091 ) Income before income taxes 713,167 11,079
40,935 35,192 (439,240 ) — 361,133 Provision for income taxes
18,200 3,800 21,300 4,400 (176,900 ) 236,600 107,400 Net income
694,967 7,279 19,635 30,792 (262,340 ) (236,600 ) 253,733 Net
income attributable to Gannett Co., Inc. 676,029 7,279 19,635
30,792 (262,340 ) (236,600 ) 234,795 Net income per share - diluted
(a) $ 2.92 $ 0.03 $ 0.08 $ 0.13 $ (1.13 ) $ (1.02 ) $ 1.02
GAAP
Measure
Special Items Non-GAAP
Measure
Thirteen Other Asset Thirteen weeks ended Workforce transformation
impairment Non-operating weeks ended Dec. 29, 2013 restructuring
costs charges items Dec. 29, 2013 Cost of sales and operating
expenses, exclusive of depreciation $ 722,487 $ (7,164 ) $ — $ — $
— $ 715,323 Selling, general and administrative expenses, exclusive
of depreciation 341,451 (14,405 ) — — — 327,046 Facility
consolidation and asset impairment charges 43,077 — (10,081 )
(32,996 ) — — Operating expenses 1,154,432 (21,569 ) (10,081 )
(32,996 ) — 1,089,786 Operating income 213,606 21,569 10,081 32,996
— 278,252 Other non-operating items (18,936 ) — — — 20,985 2,049
Total non-operating (expense) income (66,898 ) — — — 20,985 (45,913
) Income before income taxes 146,708 21,569 10,081 32,996 20,985
232,339 Provision for income taxes 41,500 6,400 4,100 13,300 100
65,400 Net income 105,208 15,169 5,981 19,696 20,885 166,939 Net
income attributable to Gannett Co., Inc. 90,747 15,169 5,981 19,696
20,885 152,478 Net income per share - diluted $ 0.39 $ 0.07 $ 0.03
$ 0.08 $ 0.09 $ 0.66 (a) Total per share amount does not sum
due to rounding.
NON-GAAP FINANCIAL INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars (except
per share amounts)
Table No. 4
(continued)
GAAPMeasure
Special Items
Non-GAAPMeasure
Fifty-twoweeks endedDec. 28, 2014
Workforcerestructuring
Othertransformationcosts
Assetimpairmentcharges
Non-operatingitems
Special taxbenefits
Fifty-two
weeks ended
Dec. 28, 2014
Cost of sales and operating expenses, exclusive of depreciation $
3,048,579 $ (34,975 ) $ (1,459 ) $ — $ — $ — $ 3,012,145 Selling,
general and administrative expenses, exclusive of depreciation
1,539,476 (5,490 ) (28,520 ) — — — 1,505,466 Amortization of
intangible assets 79,856 — (4,480 ) — — — 75,376 Facility
consolidation and asset impairment charges 96,364 — (44,985 )
(51,379 ) — — — Operating expenses 4,950,143 (40,465 ) (79,444 )
(51,379 ) — — 4,778,855 Operating income 1,058,031 40,465 79,444
51,379 — — 1,229,319 Equity income in unconsolidated investees, net
167,319 — — — (137,198 ) — 30,121 Other non-operating items 403,954
— — — (404,674 ) — (720 ) Total non-operating (expense) income
298,029 — — — (541,872 ) — (243,843 ) Income before income taxes
1,356,060 40,465 79,444 51,379 (541,872 ) — 985,476 Provision for
income taxes 225,600 14,600 35,800 5,200 (216,600 ) 218,400 283,000
Net income 1,130,460 25,865 43,644 46,179 (325,272 ) (218,400 )
702,476 Net income attributable to Gannett Co., Inc. 1,062,171
25,865 43,644 46,179 (325,272 ) (218,400 ) 634,187 Net income per
share - diluted (a) $ 4.58 $ 0.11 $ 0.19 $ 0.20 $ (1.40 ) $ (0.94 )
$ 2.73
GAAPMeasure
Special Items
Non-GAAPMeasure
Fifty-twoweeks endedDec. 29, 2013
Workforcerestructuring
Othertransformationcosts
Assetimpairmentcharges
Non-operatingitems
Special taxbenefits
Fifty-twoweeks endedDec. 29, 2013
Cost of sales and operating expenses, exclusive of depreciation $
2,882,449 $ (36,856 ) $ — $ — $ — $ — $ 2,845,593 Selling, general
and administrative expenses, exclusive of depreciation 1,291,858
(21,052 ) — — — — 1,270,806 Facility consolidation and asset
impairment charges 58,240 — (25,244 ) (32,996 ) — — — Operating
expenses 4,422,119 (57,908 ) (25,244 ) (32,996 ) — — 4,305,971
Operating income 739,243 57,908 25,244 32,996 — — 855,391 Equity
income in unconsolidated investees, net 43,824 — — — 731 — 44,555
Other non-operating items (47,890 ) — — — 54,486 — 6,596 Total
non-operating (expense) income (180,130 ) — — — 55,217 — (124,913 )
Income before income taxes 559,113 57,908 25,244 32,996 55,217 —
730,478 Provision for income taxes 113,200 20,700 10,100 13,300
14,700 27,800 199,800 Net income 445,913 37,208 15,144 19,696
40,517 (27,800 ) 530,678 Net income attributable to Gannett Co.,
Inc. 388,680 37,208 15,144 19,696 40,517 (27,800 ) 473,445 Net
income per share - diluted (a) $ 1.66 $ 0.16 $ 0.06 $ 0.08 $ 0.17 $
(0.12 ) $ 2.02 (a) Total per share amount does not sum due
to rounding.
NON-GAAP FINANCIAL INFORMATION
Gannett Co., Inc. and Subsidiaries Unaudited, in thousands of
dollars
Table No. 5
"Adjusted EBITDA", a non-GAAP measure, is defined as net
income attributable to Gannett before (1) net income attributable
to noncontrolling interests, (2) income taxes, (3) interest
expense, (4) equity income, (5) other non-operating items, (6)
workforce restructuring, (7) other transformation costs, (8) asset
impairment charges (9) depreciation and (10) amortization. When
Adjusted EBITDA is discussed in reference to performance on a
consolidated basis, the most directly comparable GAAP financial
measure to Adjusted EBITDA is Net income. Management does not
analyze non-operating items such as interest expense and income
taxes on a segment level; therefore, the most directly comparable
GAAP financial measure to Adjusted EBITDA when performance is
discussed on a segment level is Operating income. Management
believes that use of this measure allows investors and management
to measure, analyze and compare the performance of its business
segment operations at a more detailed level and in a meaningful and
consistent manner. Reconciliations of Adjusted EBITDA to the
most directly comparable financial measure calculated and presented
in accordance with GAAP on the company's condensed consolidated
statements of income, follow:
Thirteen weeks ended Dec. 28, 2014: Consolidated
Broadcasting Publishing Digital Corporate Total
Net income attributable to Gannett Co.,
Inc. (GAAP basis)
$ 676,029 Net income attributable to noncontrolling interests
18,938 Provision for income taxes 18,200 Interest expense 73,517
Equity income in unconsolidated investees, net (532 ) Other
non-operating items (445,134 ) Operating income (GAAP basis) $
241,542 $ 69,656 $ 47,621 $ (17,801 ) $ 341,018 Workforce
restructuring 1,350 6,618 3,111 — 11,079 Other transformation costs
4,105 36,830 — — 40,935 Asset impairment charges — 11,492
23,700 — 35,192 Adjusted operating
income (non-GAAP basis) 246,997 124,596 74,432 (17,801 ) 428,224
Depreciation 15,858 22,312 7,514 3,889 49,573 Amortization 6,040
3,725 22,983 — 32,748 Adjusted
EBITDA (non-GAAP basis) $ 268,895 $ 150,633 $ 104,929
$ (13,912 ) $ 510,545
Thirteen weeks ended
Dec. 29, 2013: Consolidated Broadcasting Publishing Digital
Corporate Total
Net income attributable to Gannett Co.,
Inc. (GAAP basis)
$ 90,747 Net income attributable to noncontrolling interests 14,461
Provision for income taxes 41,500 Interest expense 62,857 Equity
income in unconsolidated investees, net (14,895 ) Other
non-operating items 18,936 Operating income (GAAP basis) $
96,337 $ 105,624 $ 27,333 $ (15,688 ) $ 213,606 Workforce
restructuring 13,729 7,437 — 403 21,569 Other transformation costs
894 9,187 — — 10,081 Asset impairment charges — 21,382
11,614 — 32,996 Adjusted operating
income (non-GAAP basis) 110,960 143,630 38,947 (15,285 ) 278,252
Depreciation 5,836 22,821 4,283 4,675 37,615 Amortization 1,927
4,156 3,719 — 9,802 Adjusted
EBITDA (non-GAAP basis) $ 118,723 $ 170,607 $ 46,949
$ (10,610 ) $ 325,669
NON-GAAP
FINANCIAL INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Table No. 5 (continued)
Fifty-two weeks ended Dec. 28, 2014: Consolidated
Broadcasting Publishing Digital Corporate Total
Net income attributable to Gannett Co.,
Inc. (GAAP basis)
$ 1,062,171 Net income attributable to noncontrolling interests
68,289 Provision for income taxes 225,600 Interest expense 273,244
Equity income in unconsolidated investees, net (167,319 ) Other
non-operating items (403,954 ) Operating income (GAAP basis) $
745,383 $ 228,307 $ 155,482 $ (71,141 ) $ 1,058,031 Workforce
restructuring 3,690 33,664 3,111 — 40,465 Other transformation
costs 18,200 61,244 — — 79,444 Asset impairment charges —
27,679 23,700 — 51,379 Adjusted
operating income (non-GAAP basis) 767,273 350,894 182,293 (71,141 )
1,229,319 Depreciation 51,811 92,946 22,256 18,855 185,868 Adjusted
amortization (non-GAAP basis) 24,114 15,244 36,018
— 75,376 Adjusted EBITDA (non-GAAP basis) $
843,198 $ 459,084 $ 240,567 $ (52,286 ) $
1,490,563
Fifty-two weeks ended Dec. 29, 2013:
Consolidated Broadcasting Publishing Digital Corporate Total
Net income attributable to Gannett Co.,
Inc. (GAAP basis)
$ 388,680 Net income attributable to noncontrolling interests
57,233 Provision for income taxes 113,200 Interest expense 176,064
Equity income in unconsolidated investees, net (43,824 ) Other
non-operating items 47,890 Operating income (GAAP basis) $
361,915 $ 313,697 $ 128,264 $ (64,633 ) $ 739,243 Workforce
restructuring 14,368 43,137 — 403 57,908 Other transformation costs
1,033 24,211 — — 25,244 Asset impairment charges — 21,382
11,614 — 32,996 Adjusted operating
income (non-GAAP basis) 377,316 402,427 139,878 (64,230 ) 855,391
Depreciation 26,130 91,122 17,559 18,392 153,203 Amortization 2,462
16,665 17,242 — 36,369 Adjusted
EBITDA (non-GAAP basis) $ 405,908 $ 510,214 $ 174,679
$ (45,838 ) $ 1,044,963
NON-GAAP
FINANCIAL INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Table No. 6 "Free cash flow" is a non-GAAP
liquidity measure used in addition to and in conjunction with
results presented in accordance with GAAP. Free cash flow should
not be relied upon to the exclusion of GAAP financial measures.
Free cash flow is defined as "Net cash flow from operating
activities" as reported on the statement of cash flows reduced by
"Purchase of property, plant and equipment" as well as "Payments
for investments" and increased by "Proceeds from investments." The
company believes that free cash flow is a useful measure for
management and investors to evaluate the level of cash generated by
operations and the ability of its operations to fund investments in
new and existing businesses, return cash to shareholders under the
company's capital program, repay indebtedness, add to the company's
cash balance, or to use in other discretionary activities.
Management uses free cash flow to monitor cash available for
repayment of indebtedness and in its discussions with the
investment community. Thirteen Fifty-two weeks
ended weeks ended Dec. 28, 2014 Dec. 28, 2014 Net cash flow
from operating activities $ 248,598 $ 821,199 Purchase of property,
plant and equipment (58,795 ) (150,354 ) Payments for investments
(1,708 ) (7,026 ) Proceeds from investments 14,558 180,809
Free cash flow $ 202,653 $ 844,628
TAX RATE CALCULATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Table No. 7 The calculations of the company's
effective tax rate on a GAAP and non-GAAP basis are below:
GAAP Non-GAAP Thirteenweeks endedDec. 28, 2014
Thirteenweeks endedDec. 29, 2013 Thirteenweeks endedDec. 28, 2014
Thirteenweeks endedDec. 29, 2013 Income before taxes
(per Table 4) $ 713,167 $ 146,708 $ 361,133 $ 232,339
Noncontrolling interests (per Table 1) (18,938 )
(14,461 ) (18,938 ) (14,461 ) Income before taxes
attributable to Gannett Co., Inc. $ 694,229 $ 132,247
$ 342,195 $ 217,878 Provision for income taxes
(per Table 4) $ 18,200 $ 41,500 $ 107,400 $ 65,400 Effective
tax rate 2.6 % 31.4 % 31.4 % 30.0 % GAAP Non-GAAP
Fifty-twoweeks endedDec. 28, 2014 Fifty-twoweeks endedDec. 29, 2013
Fifty-twoweeks endedDec. 28, 2014 Fifty-twoweeks endedDec. 29, 2013
Income before taxes (per Table 4) $ 1,356,060 $ 559,113 $
985,476 $ 730,478 Noncontrolling interests (per Table 1)
(68,289 ) (57,233 ) (68,289 ) (57,233 ) Income
before taxes attributable to Gannett Co., Inc. $ 1,287,771 $
501,880 $ 917,187 $ 673,245 Provision
for income taxes (per Table 4) $ 225,600 $ 113,200 $ 283,000 $
199,800 Effective tax rate 17.5 % 22.6 % 30.9 % 29.7 %
NON-GAAP FINANCIAL INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Table No. 8 A reconciliation of the company's
revenues and expenses on an as reported basis to a pro forma basis
is below:
Thirteen weeks ended Dec. 29, 2013:
Gannett(as reported)
Specialitems (a)
Pro formaadjustments (b)
Gannettpro forma
Broadcasting operating revenue: Local/national $
169,273 $ — $ 127,112 $ 296,385 Political 5,375 — 5,567 10,942
Retransmission 38,933 — 21,413 60,346 Other 14,626 —
14,070 28,696
Total
broadcasting operating revenue 228,207 — 168,162 396,369
Broadcasting operating expenses 131,870
(14,623 ) 124,376 241,623
Broadcasting operating income $ 96,337 $ 14,623 $
43,786 $ 154,746
Gannett(as reported)
Specialitems (a)
Pro formaadjustments (c)
Gannettpro forma
Publishing operating revenue: Advertising $ 589,555 $
— $ 2,851 $ 592,406 Circulation 288,434 — — 288,434 Other
66,272 — (6,165 ) 60,107
Total publishing operating revenue 944,261 — (3,314 )
940,947
Publishing operating expenses 838,637
(38,006 ) (3,144 ) 797,487
Publishing operating income $ 105,624 $ 38,006 $ (170
) $ 143,460
Gannett(as reported)
Specialitems (a)
Pro formaadjustments (d)
Gannettpro forma
Digital operating revenue $ 195,570 $ — $ 119,317 $
314,887
Digital operating expenses 168,237
(11,614 ) 117,468 274,091
Digital
operating income $ 27,333 $ 11,614 $ 1,849 $
40,796
Gannett(as reported)
Specialitems (a)
Pro formaadjustments (e)
Gannettpro forma
Intersegment elimination operating revenue $ — $ — $
(19,096 ) $ (19,096 )
Intersegment elimination operating
expenses — — (19,096 )
(19,096 )
Intersegment elimination operating income $ — $ —
$ — $ —
NON-GAAP FINANCIAL
INFORMATION
Gannett Co., Inc. and Subsidiaries
Unaudited, in thousands of dollars
Table No. 8 (continued)
Gannett(as reported)
Specialitems (a)
Pro formaadjustments (f)
Gannettpro forma
Company-wide operating revenue $
1,368,038 $ — $ 265,069 $ 1,633,107
Company-wide operating
expenses 1,154,432 (64,646 ) 219,604
1,309,390
Company-wide operating income $ 213,606 $
64,646 $ 45,465 $ 323,717 (a) See
reconciliation of special items in Table 5. (b) The pro forma
adjustments include additions to revenues and expenses for the
former Belo stations of $155 million and $110 million,
respectively. It does not include revenues and expenses for the
former Belo stations in Phoenix, AZ and St. Louis, MO totaling $26
million and $20 million, respectively. Subsidiaries of Gannett and
Sander Media, a holding company that has a station-operation
agreement with Gannett, agreed to sell these stations upon
receiving government approval. KMOV-TV, the television station in
St. Louis, was sold in February 2014 and the two television
stations in Phoenix were sold in June 2014. Revenue and expense
adjustments totaling $13 million and $10 million, respectively,
were added as if the third quarter 2014 acquisition of six London
Broadcasting Television stations had occurred on the first day of
2013. The pro forma adjustment for broadcasting expense reflects
the $5 million addition of amortization for definite-lived
intangible assets as if the acquisitions of Belo and London had
occurred on the first day of 2013. (c) The pro forma adjustments
include a reduction of $4 million in revenue and $1 million in
expense for Apartments.com, which was sold by Classified Ventures
in the second quarter of 2014. Pro forma adjustments also include a
$6 million reduction of revenue and $7 million of expense related
to the sale of a printing press in the second quarter of 2014. In
2014, a small online business was moved from the Digital segment to
the Publishing segment as a result of continued integration with
other Publishing businesses. Publishing revenues and expenses were
both increased by $2 million in the Publishing segment as a result.
Beginning in the fourth quarter of 2014, the company began
reporting an intersegment elimination with the acquisition of
Classified Ventures. In addition, prior quarter intersegment
eliminations that were previously reported within the Publishing
and Digital segments were adjusted on a pro forma basis to the new
intersegment elimination line. Publishing revenues increased $5
million and expenses increased $4 million as a result of this pro
forma adjustment. (d) The pro forma adjustments include additions
to revenue and expenses for the acquisition of Classified Ventures
on October 1, 2014 of $112 million and $96 million, respectively.
The pro forma adjustment reflects the $6 million addition of
revenue amortization for an unfavorable contract and $18 million of
amortization for definite-lived intangible assets as if the
acquisition of Classified Ventures had occurred on the first day of
2013. In 2014, a small online business was moved from the Digital
segment to the Publishing segment as a result of continued
integration with other Publishing businesses. Digital revenues and
expenses were both decreased by $2 million in the Digital segment
as a result. Beginning in the fourth quarter of 2014, the company
began reporting an intersegment elimination with the acquisition of
Classified Ventures. In addition, prior quarter intersegment
eliminations that were previously reported within the Publishing
and Digital segments were adjusted on a pro forma basis to the new
intersegment elimination line. Digital revenues increased $4
million and expenses increased $5 million as a result of this pro
forma adjustment. (e) Beginning in the fourth quarter of 2014, the
company began reporting an intersegment elimination with the
acquisition of Classified Ventures. Intersegment eliminations
between Classified Ventures and the company's newspapers and TV
stations totaled $11 million of revenue and expense in the fourth
quarter of 2013. In addition, prior quarter intersegment
eliminations that were previously reported within the Publishing
and Digital segments were adjusted on a pro forma basis to the new
intersegment and totaled $8 million of revenue and expense. (f) The
pro forma adjustments include all the pro forma adjustments
discussed above.
Gannett Co., Inc.For investor inquiries, contact:Jeffrey
HeinzVice President, Investor
Relations703-854-6917jheinz@gannett.comorFor
media inquiries, contact:Jeremy GainesVice President, Corporate
Communications703-854-6049jmgaines@gannett.com