Gannett Has Record First Quarter
Gannett reported today that 2005 first quarter earnings per diluted share, on a GAAP (generally accepted accounting principles) basis increased 5.0 percent to $1.05, a new record.
In 2004’s first quarter, Gannett earned $1.00 per diluted share on a GAAP basis.
Total operating revenues for the company increased 3.6 percent to $1.79 billion in the quarter from $1.73 billion in the similar interval in 2004. Operating cash flow (defined as operating income plus depreciation and amortization) rose 2.6 percent to $520.2 million from $507.2 million in the year earlier quarter. Net income was $265.7 million in the first quarter of 2005 versus $274.4 million in the same quarter of last year.
Average diluted shares outstanding in the first quarter totaled 254,270,000 compared with 275,507,000 in 2004’s first quarter. Approximately 5.3 million shares were repurchased during the quarter.
Commenting on the company’s performance, Douglas H. McCorkindale, Chairman, President and CEO said: “We are pleased to announce another quarter of operating revenue, cash flow and earnings per share growth. Our newspaper segment generated solid revenue growth for the full quarter despite much softer advertising demand at the end of March reflecting, in part, the impact of an earlier Easter this year and tougher comparisons as the quarter progressed. USA TODAY posted strong results in both print and online. Our broadcasting segment results were affected by a substantially lower level of political advertising and the absence of the Super Bowl on our six CBS affiliates. Higher newsprint and interest expense and certain employee benefit costs also tempered the company’s results.”
Newspaper results in the quarter include NurseWeek acquired in February 2004. Total newspaper segment operating cash flow increased 5.4 percent to $466.6 million in the first quarter, versus $442.8 million in the same quarter of 2004. Operating revenues were $1.63 billion for the quarter, a 4.3 percent increase year-over-year. Assuming Gannett had owned the same group of newspapers in both the full first quarter of 2005 and 2004, advertising revenues would have increased 4.9 percent. On a comparable basis, local advertising revenues were 6.1 percent higher, and both classified and national ad revenues advanced 4.1 percent. Reported newsprint expense increased 4.3 percent in the quarter reflecting higher prices mitigated by lower usage.
At USA TODAY, advertising revenues increased 4.8 percent in the first quarter. Paid advertising pages totaled 1,101 compared with 1,099 in 2004’s first quarter.
Broadcasting segment results in the quarter include Captivate Network Inc. acquired in April 2004. Broadcasting revenues totaled $164.6 million for the quarter, a 2.9 percent decline from the first quarter in 2004. Broadcasting operating cash flow declined 13.8 percent to $66.4 million from $77.0 million in the year ago quarter.
Excluding Captivate, in the first quarter of 2005, television operating cash flow declined 12.7 percent and revenues fell 5.1 percent. The television group’s performance reflected, in part, the absence of political and Super Bowl advertising.
Interest expense for the first quarter was $44.9 million compared to $31.8 million in the same quarter of 2004. The increase is due to both higher short-term interest rates, and higher debt balances related to share repurchase activity and acquisitions. Other non-operating expense in both 2004 and 2005 primarily reflects non-operating charges for minority interest and Internet investments in part offset by investment income. In addition, in the first quarter of 2004, the company recorded a non-monetary gain from a newspaper exchange which was reflected in non-operating income.
During the first quarter, the company announced that it had acquired a 25 percent equity interest in Topix.net, a content aggregation service that continuously monitors breaking news and categorizes daily news content.
Subsequent to the end of the quarter, the company completed the acquisition of the assets of HomeTown Communications Network, Inc., a community publishing company with publications in Michigan, Ohio and Kentucky.
At the end of the quarter, Gannett had more than 100 domestic publishing Web sites, including USATODAY.com, one of the most popular newspaper sites on the Web. The company also had Web sites in all of its 19 television markets. In February, Gannett’s consolidated domestic Internet audience share was 18.7 million unique visitors reaching about 12.7 percent of the Internet audience according to Nielsen//NetRatings. Newsquest is also an Internet leader in the UK where its network of Web sites attracts more than 38.0 million monthly page impressions from more than 3.6 million unique users.
All references in this release to “comparable” revenue results and “operating cash flow” are to non-GAAP financial measures. Management believes that this use allows management and investors to analyze and compare the Company’s results in a more meaningful and consistent manner. A reconciliation of the non-GAAP operating cash flow amounts to the Company’s consolidated statements of income is attached.
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