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Gannett Co., Inc. (GCI) Message Board

  • bluecheese4u bluecheese4u Oct 15, 2012 8:45 AM Flag

    Gannett Co., Inc. Reports Third Quarter Results Including Total Revenue Growth of 3 Percent and Net Income Growth of 33 Percent

    Gannett Co., Inc. Reports Third Quarter Results Including Total Revenue Growth of 3 Percent and Net Income Growth of 33 Percent
    Reported and Non-GAAP Earnings per Diluted Share of $0.56

    Operating Cash Flow Totaled $280 million Excluding Special Items

    Free Cash Flow Totaled $162 million
    MCLEAN, Va., Oct. 15, 2012 /PRNewswire/ -- Gannett Co., Inc. (NYSE: GCI), a leading international media and marketing solutions company, today reported strong third quarter financial results. Earnings per diluted share, on a GAAP (generally accepted accounting principles) basis were $0.56 for the third quarter of 2012 compared to $0.41 for the third quarter last year. Excluding special items in 2012 and 2011, third quarter earnings per diluted share were $0.56 this year compared to $0.44 for the third quarter of 2011.

    Gracia Martore, president and chief executive officer, said, "We are extremely pleased to report strong results and a return to revenue growth. We achieved record third quarter results in our Broadcasting segment. Our TV stations leveraged top 10 ratings positions and a more locally focused sales effort to generate substantially higher Olympic spending. Through strong ratings and a great footprint, they also maximized the opportunity to attract political spending. The early success of our new, all access content subscription model resulted in significant growth in company-wide circulation revenue, the first increase since early 2007. CareerBuilder once again delivered outstanding results that in turn enhanced Digital segment performance. Our digital strategies are working and company-wide digital revenue now represents more than 25 percent of total revenues. Finally, our continuing focus on creating efficiencies played an important role in delivering higher profitability and operating cash flow this quarter."

    Martore went on to say, "Our results this quarter demonstrate that the growth strategy we announced in February is gaining traction. Our all access content subscription model has been rolled out in 71 markets and is delivering the circulation revenue gains we anticipated. Our digital marketing services business is operational in all markets and we are excited by its long term prospects. In September, we re-launched our flagship USA TODAY brand, which has been re-imagined and redesigned for today's consumers and advertisers. We are seeing early successes and making great progress in positioning Gannett for growth in the digital era."

    Results for the third quarter of 2012 include $14.7 million of special charges affecting operating income in addition to $10 million of strategic investments. Non-cash facility consolidation charges totaled $4.2 million ($2.4 million after tax or $0.01 per share) reflecting primarily accelerated depreciation costs primarily associated with the transfer of production activities. Workforce restructuring charges in our Publishing segment of $7.9 million ($4.9 million after tax or $0.02 per share) reflect principally the impact of employee acceptances of an early retirement plan during the third quarter. Results for the third quarter of 2012 also include a pension settlement termination charge totaling $2.5 million ($1.5 million after tax or $0.01 per share). Non-operating items included $3.2 million ($2.0 million after tax or $0.01 per share) of non-cash charges for a newspaper partnership investment. Offsetting these was a tax benefit of $13.1 million ($0.06 per share) related primarily to a tax settlement covering multiple years.

    Results for the third quarter of 2011 included special charges affecting operating income related to workforce restructuring which totaled $8.7 million ($5.3 million after-tax or $0.02 per share). A non-cash impairment for an investment in an online business of $1.9 million ($1.1 million after-tax) was also recorded in that quarter which affected non-operating items.

    Amounts reported in accordance with GAAP are contained in Tables 1 through 4. Certain amounts and comparisons included in the following discussion of GAAP results are supplemented by discussions which exclude the effect of special items. Details of these special items and their effect on GAAP results are included on the Non-GAAP Financial Information Tables 5 through 10 attached to this release. The company's basis for providing discussions of non-GAAP results is detailed below.

    CONTINUING OPERATIONS

    Net income attributable to Gannett totaled $133.1 million in the third quarter of 2012. Net income attributable to Gannett on a non-GAAP basis was $130.9 million, an increase of 23.3 percent from 2011. Reported operating income was $217.2 million in the third quarter of 2012. Non-GAAP operating income totaled $231.9 million, 12.1 percent higher than the third quarter last year. Operating cash flow in the quarter (a non-GAAP term defined as operating income plus special items, depreciation and amortization) was $280.4 million compared to $255.8 million in the third quarter a year ago.

    Total operating revenues for the company in the third quarter were 3.4 percent higher than the prior year and totaled $1.31 billion. Broadcasting revenues were substantially higher in the quarter increasing 36.0 percent driven by significantly higher ad demand associated with the Olympics and political spending. Digital segment revenues were up 4.7 percent due primarily to revenue growth at CareerBuilder. Publishing segment revenues were 3.0 percent lower reflecting softer advertising demand partially offset by a 5.6 percent increase in circulation revenue due to the positive impact of the all access content subscription model.

    Operating expenses including the special charges noted above were $1.09 billion in the quarter, 2.3 percent higher than the third quarter in 2011. Higher costs associated with revenue growth drove the increases in the Broadcasting and Digital segment operating expenses. Strategic initiative investments that totaled approximately $10 million and a $5 million increase in pension expense were partially offset by continued cost reduction and cost efficiency efforts company-wide. Operating expenses on a non-GAAP basis, which exclude special items but include the impact of the investment in strategic initiatives and pension expense, were up just 1.7 percent from the third quarter last year and totaled $1.08 billion.

    In the first quarter, the company announced a new capital allocation plan that included a 150 percent increase in the annual dividend to $0.80 per share and a $300 million share repurchase program targeted to be completed over the next two years. During the third quarter the company purchased approximately 2.4 million shares for $35.5 million. Year-to-date, shares repurchased totaled 8.2 million shares for $116.5 million.

    PUBLISHING

    Publishing segment operating revenues in the quarter were $890.2 million compared to $917.8 million in the third quarter in 2011, a 3.0 percent decline as the slow pace of the economic recovery resulted in soft advertising demand. Publishing revenue year-over-year comparisons improved sequentially within the quarter and third quarter comparisons were better than first and second quarter comparisons.

    Advertising revenues totaled $552.7 million, a 6.6 percent decline compared to the third quarter last year. Third quarter year-over-year comparisons were better than first and second quarter comparisons this year. Advertising revenues declined 7.0 percent in July, were down 6.8 percent in August, and were 5.9 percent lower in September. In the U.S., advertising revenues decreased 6.0 percent in the quarter while at Newsquest, the company's operations in the UK, ad revenues declined 7.4 percent, in pounds. The percentage changes for the Publishing segment advertising revenue categories for the quarter were as follows:

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