UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________

FORM 10-Q

_______________________

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2021~~2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-36097

___________________________

GANNETT CO., INC.
(Exact name of registrant as specified in its charter)

___________________________

Delaware

38-3910250

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

7950 Jones Branch Drive,

McLean,

Virginia

22107-0910

(Address of principal executive offices)

(Zip Code)

Registrant's telephone number, including area code: (703) 854-6000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common Stock, par value $0.01 per share

GCI

The New York Stock Exchange

Preferred Stock Purchase Rights

N/A

The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☐☒	Accelerated Filer	☒☐

Non-Accelerated Filer	☐	Smaller Reporting Company	☐

		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

As of ~~November 2, 2021, 142,327,552~~August 1, 2022, 146,677,527 shares of the registrant's Common Stock were outstanding.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Quarterly Report on Form 10-Q may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect our current views regarding, among other things, our future growth, results of operations, performance, ~~and~~ business prospects and opportunities, and our environmental, social and governance goals, and are not statements of historical fact. Words such as "anticipate(s)," "expect(s)," "intend(s)," "plan(s)," ~~"target(s),"~~ "project(s)," "believe(s)," "forecast," "will," "aim," "would," "may," "seek(s)," "estimate(s)" and similar expressions are intended to identify such forward-looking statements.

Forward-looking statements are based on management’s current expectations and beliefs and are subject to a number of known and unknown risks, uncertainties, and other factors that could lead to actual results materially different from those described in the forward-looking statements. We can give no assurance our expectations will be attained. Our actual results, liquidity, and financial condition may differ from the anticipated results, liquidity, and financial condition indicated in ~~these~~the forward-looking statements. ~~These forward-looking~~Forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, and there are certain important factors that could cause our actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements, including, among others:

•General economic and market ~~conditions;~~conditions, including inflation and interest rates;

•Global hostilities and any resulting effects and uncertainties;

•The competitive environment in which we operate;

•Risks and uncertainties associated with the ~~ongoing~~ COVID-19 pandemic;

•Economic conditions in the various regions of the United States, the United Kingdom, and other regions in which we operate our business;

•The shift within the publishing industry from traditional print media to digital forms of publication;

•Risks and uncertainties associated with our Digital Marketing Solutions segment, including its significant reliance on Google for media purchases, its international operations, and its ability to develop and gain market acceptance for new products or services;

•Declining print advertising revenue and circulation subscribers;

•Our ability to grow our digital marketing services initiatives, digital audience, and advertiser base;

•Our ability to grow our business organically;

•Variability in the exchange rate relative to the U.S. dollar of currencies in foreign jurisdictions in which we operate;

•~~The risk that we may not~~Our ability to realize the anticipated benefits of our acquisitions;

•The availability and cost of capital for future investments;

•Our indebtedness may restrict our operations and/or require us to dedicate a portion of cash flow from operations to payments associated with our debt;

•Our current intention not to pay dividends and our ability to pay dividends ~~consistent with prior practice or~~in the future, if at all;

•Our ability to reduce costs and expenses;

•Our ability to ~~remediate a material weakness in our~~maintain proper and effective internal control over financial reporting; ~~and~~

•Our ability to recruit and retain key ~~personnel, as well as any~~personnel; and

•Any shortage of skilled or experienced employees ~~including journalists.~~with the capabilities necessary to support our business strategies, or our inability to retain such employees.

Additional risk factors that could cause actual results to differ materially from our expectations include, but are not limited to, the risks identified by us under the heading "Risk Factors" in this Quarterly Report on Form 10-Q, under the heading "Risk Factors" in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020,~~2021, filed with the Securities and Exchange Commission (the "SEC") on February ~~26, 2021,~~24, 2022, and the statements made in subsequent filings. Such forward-looking statements speak only as of the date they are made. Except to the extent required by law, we expressly disclaim any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or change in events, conditions, or circumstances on which any statement is based.

INDEX TO GANNETT CO., INC.

~~Q3 2021~~Q2 2022 FORM 10-Q


Item No.	Item No.		Page	Item No.		Page
		Part I. Financial Information			Part I. Financial Information
1	1	Financial Statements	2	1	Financial Statements	2
2	2	Management's Discussion and Analysis of Financial Condition and Results of Operations	26	2	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
3	3	Quantitative and Qualitative Disclosures About Market Risk	48	3	Quantitative and Qualitative Disclosures About Market Risk	45
4	4	Controls and Procedures	48	4	Controls and Procedures	45

		Part II. Other Information			Part II. Other Information
1	1	Legal Proceedings	49	1	Legal Proceedings	46
1A	1A	Risk Factors	49	1A	Risk Factors	46
2	2	Unregistered Sales of Equity Securities and Use of Proceeds	52	2	Unregistered Sales of Equity Securities and Use of Proceeds	46
3	3	Defaults Upon Senior Securities	52	3	Defaults Upon Senior Securities	46
4	4	Mine Safety Disclosures	52	4	Mine Safety Disclosures	46
5	5	Other Information	52	5	Other Information	46
6	6	Exhibits	52	6	Exhibits	48
		Signatures	54		Signatures	49

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GANNETT CO., INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


In thousands, except share data	In thousands, except share data	September 30, 2021		December 31, 2020		In thousands, except share data	June 30, 2022		December 31, 2021
Assets	Assets	(Unaudited)				Assets	(Unaudited)
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	141,302	$	170,725	Cash and cash equivalents	$	87,331	$	130,756
Accounts receivable, net of allowance for doubtful accounts of $16,411 and $20,843 as of September 30, 2021 and December 31, 2020, respectively		301,016		314,305
Accounts receivable, net of allowance for doubtful accounts of $11,967 and $16,470 as of June 30, 2022 and December 31, 2021, respectively						Accounts receivable, net of allowance for doubtful accounts of $11,967 and $16,470 as of June 30, 2022 and December 31, 2021, respectively	289,813		328,733
Inventories	Inventories	33,492		35,075		Inventories	34,981		37,662
Prepaid expenses and other current assets	Prepaid expenses and other current assets	111,689		116,581		Prepaid expenses and other current assets	75,392		80,110
Total current assets	Total current assets	587,499		636,686		Total current assets	487,517		577,261
Property, plant and equipment, net of accumulated depreciation of $363,200 and $362,029 as of September 30, 2021 and December 31, 2020, respectively		461,923		590,272
Property, plant and equipment, net of accumulated depreciation of $359,248 and $336,500 as of June 30, 2022 and December 31, 2021, respectively						Property, plant and equipment, net of accumulated depreciation of $359,248 and $336,500 as of June 30, 2022 and December 31, 2021, respectively	372,375		415,384
Operating lease assets	Operating lease assets	279,353		289,504		Operating lease assets	257,361		271,935
Goodwill	Goodwill	533,797		534,088		Goodwill	540,491		533,709
Intangible assets, net	Intangible assets, net	741,591		824,650		Intangible assets, net	666,678		713,153
Deferred tax assets	Deferred tax assets	63,136		90,240		Deferred tax assets	—		32,399
Other assets		242,704		143,474
Pension and other assets						Pension and other assets	329,228		284,228
Total assets	Total assets	$	2,910,003	$	3,108,914	Total assets	$	2,653,650	$	2,828,069

Liabilities and equity	Liabilities and equity					Liabilities and equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	$	357,324	$	378,246	Accounts payable and accrued liabilities	$	320,699	$	357,014
Deferred revenue	Deferred revenue	196,259		186,007		Deferred revenue	174,112		184,838
Current portion of long-term debt	Current portion of long-term debt	104,948		128,445		Current portion of long-term debt	60,846		69,456
Other current liabilities	Other current liabilities	54,753		48,602		Other current liabilities	49,699		51,218
Total current liabilities	Total current liabilities	713,284		741,300		Total current liabilities	605,356		662,526
Long-term debt	Long-term debt	741,636		890,323		Long-term debt	760,954		769,446
Convertible debt	Convertible debt	399,875		581,405		Convertible debt	399,319		393,354
Deferred tax liabilities	Deferred tax liabilities	21,419		6,855		Deferred tax liabilities	10,702		28,812
Pension and other postretirement benefit obligations	Pension and other postretirement benefit obligations	88,149		99,765		Pension and other postretirement benefit obligations	67,554		71,937
Long-term operating lease liabilities	Long-term operating lease liabilities	261,429		274,460		Long-term operating lease liabilities	242,262		254,969
Other long-term liabilities	Other long-term liabilities	141,577		151,847		Other long-term liabilities	109,595		117,410
Total noncurrent liabilities	Total noncurrent liabilities	1,654,085		2,004,655		Total noncurrent liabilities	1,590,386		1,635,928
Total liabilities	Total liabilities	2,367,369		2,745,955		Total liabilities	2,195,742		2,298,454
Redeemable noncontrolling interests		(2,209)		(1,150)
Commitments and contingent liabilities (See Note 12)		0		0

Commitments and contingent liabilities (See Note 11)						Commitments and contingent liabilities (See Note 11)	0		0
Equity	Equity					Equity
Preferred stock, $0.01 par value, 300,000 shares authorized, of which 150,000 shares are designated as Series A Junior Participating Preferred Stock, none of which were issued and outstanding at September 30, 2021 and December 31, 2020		—		—
Common stock of $0.01 par value per share, 2,000,000,000 shares authorized, 144,653,850 shares issued and 142,519,768 shares outstanding at September 30, 2021; 139,494,741 shares issued and 138,102,993 shares outstanding at December 31, 2020		1,446		1,395
Treasury stock at cost, 2,134,082 shares and 1,391,748 shares at September 30, 2021 and December 31, 2020, respectively		(6,940)		(4,903)
Preferred stock, $0.01 par value per share, 300,000 shares authorized, of which 150,000 shares are designated as Series A Junior Participating Preferred Stock, none of which were issued and outstanding at June 30, 2022 and December 31, 2021						Preferred stock, $0.01 par value per share, 300,000 shares authorized, of which 150,000 shares are designated as Series A Junior Participating Preferred Stock, none of which were issued and outstanding at June 30, 2022 and December 31, 2021	—		—
Common stock, $0.01 par value per share, 2,000,000,000 shares authorized, 152,597,534 shares issued and 146,787,563 shares outstanding at June 30, 2022; 144,667,389 shares issued and 142,299,399 shares outstanding at December 31, 2021						Common stock, $0.01 par value per share, 2,000,000,000 shares authorized, 152,597,534 shares issued and 146,787,563 shares outstanding at June 30, 2022; 144,667,389 shares issued and 142,299,399 shares outstanding at December 31, 2021	1,526		1,446
Treasury stock, at cost, 5,809,971 shares and 2,367,990 shares at June 30, 2022 and December 31, 2021, respectively						Treasury stock, at cost, 5,809,971 shares and 2,367,990 shares at June 30, 2022 and December 31, 2021, respectively	(14,700)		(8,151)
Additional paid-in capital	Additional paid-in capital	1,399,693		1,103,881		Additional paid-in capital	1,402,652		1,400,206
Accumulated deficit	Accumulated deficit	(898,951)		(786,437)		Accumulated deficit	(978,054)		(921,399)
Accumulated other comprehensive income	Accumulated other comprehensive income	49,595		50,173		Accumulated other comprehensive income	46,747		59,998
Total Gannett stockholders equity						Total Gannett stockholders equity	458,171		532,100
Noncontrolling interests						Noncontrolling interests	(263)		(2,485)
Total equity	Total equity	544,843		364,109		Total equity	457,908		529,615
Total liabilities and equity	Total liabilities and equity	$	2,910,003	$	3,108,914	Total liabilities and equity	$	2,653,650	$	2,828,069

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

GANNETT CO., INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)


		Three months ended September 30,				Nine months ended September 30,					Three months ended June 30,				Six months ended June 30,
In thousands, except per share amounts	In thousands, except per share amounts	2021		2020		2021		2020		In thousands, except per share amounts	2022		2021		2022		2021
Advertising and marketing services	Advertising and marketing services	$	412,020	$	405,227	$	1,220,487	$	1,249,156	Advertising and marketing services	$	383,609	$	420,110	$	758,723	$	808,467
Circulation	Circulation	306,702		336,158		942,398		1,053,528		Circulation	274,624		310,259		563,226		635,696
Other	Other	81,463		73,154		218,659		227,539		Other	90,427		73,906		174,788		137,196
Total operating revenues	Total operating revenues	800,185		814,539		2,381,544		2,530,223		Total operating revenues	748,660		804,275		1,496,737		1,581,359
Operating costs	Operating costs	480,289		492,342		1,431,259		1,535,539		Operating costs	476,002		473,172		945,887		950,970
Selling, general and administrative expenses	Selling, general and administrative expenses	225,596		241,652		652,184		767,275		Selling, general and administrative expenses	227,836		222,904		449,673		426,588
Depreciation and amortization	Depreciation and amortization	48,107		61,355		154,452		205,706		Depreciation and amortization	49,530		48,242		97,313		106,345
Integration and reorganization costs	Integration and reorganization costs	13,619		13,417		35,467		73,978		Integration and reorganization costs	15,745		8,444		27,143		21,848
Asset impairments	Asset impairments	2,301		1,585		3,134		8,444		Asset impairments	85		—		939		833
Goodwill and intangible impairments		—		—		—		393,446
(Gain) loss on sale or disposal of assets, net		(833)		795		9,206		1,540

Loss (gain) on sale or disposal of assets, net										Loss (gain) on sale or disposal of assets, net	372		5,294		(2,432)		10,039
Other operating expenses	Other operating expenses	4		1,913		11,354		10,261		Other operating expenses	314		774		1,416		11,350
Total operating expenses	Total operating expenses	769,083		813,059		2,297,056		2,996,189		Total operating expenses	769,884		758,830		1,519,939		1,527,973
Operating income (loss)	Operating income (loss)	31,102		1,480		84,488		(465,966)		Operating income (loss)	(21,224)		45,445		(23,202)		53,386
Interest expense	Interest expense	34,603		58,063		109,370		173,890		Interest expense	26,084		35,264		52,090		74,767
Loss on early extinguishment of debt	Loss on early extinguishment of debt	3,761		476		25,996		1,650		Loss on early extinguishment of debt	749		2,834		3,492		22,235
Non-operating pension income	Non-operating pension income	(23,860)		(18,334)		(71,644)		(54,433)		Non-operating pension income	(18,160)		(23,906)		(36,373)		(47,784)
Loss on convertible notes derivative	Loss on convertible notes derivative	—		—		126,600		—		Loss on convertible notes derivative	—		—		—		126,600
Other income, net		(931)		(10,375)		(3,954)		(14,988)
Non-operating expense		13,573		29,830		186,368		106,119
Other non-operating expense (income), net										Other non-operating expense (income), net	1,645		(1,148)		(160)		(3,023)
Non-operating expenses										Non-operating expenses	10,318		13,044		19,049		172,795
Income (loss) before income taxes	Income (loss) before income taxes	17,529		(28,350)		(101,880)		(572,085)		Income (loss) before income taxes	(31,542)		32,401		(42,251)		(119,409)
Provision (benefit) for income taxes		2,984		3,098		11,567		(22,200)
Provision for income taxes										Provision for income taxes	22,158		17,692		14,551		8,583
Net income (loss)	Net income (loss)	14,545		(31,448)		(113,447)		(549,885)		Net income (loss)	(53,700)		14,709		(56,802)		(127,992)
Net loss attributable to redeemable noncontrolling interests		(142)		(188)		(933)		(1,580)
Net loss attributable to noncontrolling interests(a)										Net loss attributable to noncontrolling interests(a)	(12)		(406)		(147)		(791)
Net income (loss) attributable to Gannett	Net income (loss) attributable to Gannett	$	14,687	$	(31,260)	$	(112,514)	$	(548,305)	Net income (loss) attributable to Gannett	$	(53,688)	$	15,115	$	(56,655)	$	(127,201)

Income (loss) per share attributable to Gannett - basic	Income (loss) per share attributable to Gannett - basic	$	0.11	$	(0.24)	$	(0.84)	$	(4.17)	Income (loss) per share attributable to Gannett - basic	$	(0.39)	$	0.11	$	(0.41)	$	(0.95)
Income (loss) per share attributable to Gannett - diluted	Income (loss) per share attributable to Gannett - diluted	$	0.09	$	(0.24)	$	(0.84)	$	(4.17)	Income (loss) per share attributable to Gannett - diluted	$	(0.39)	$	0.10	$	(0.41)	$	(0.95)

Other comprehensive income (loss):	Other comprehensive income (loss):									Other comprehensive income (loss):
Foreign currency translation adjustments	Foreign currency translation adjustments	$	(5,487)	$	7,677	$	(700)	$	(8,908)	Foreign currency translation adjustments	$	(15,648)	$	1,750	$	(23,204)	$	4,787
Pension and other postretirement benefit items:	Pension and other postretirement benefit items:									Pension and other postretirement benefit items:
Net actuarial loss		—		—		(300)		(8,078)
Amortization of net actuarial loss (gain)		25		(11)		40		(36)
Net actuarial gain (loss)										Net actuarial gain (loss)	12,786		(1,426)		10,990		(300)
Amortization of net actuarial (gain) loss										Amortization of net actuarial (gain) loss	(217)		(5)		(249)		15

Other	Other	1,051		(714)		205		347		Other	1,469		(292)		2,005		(846)
Total pension and other postretirement benefit items	Total pension and other postretirement benefit items	1,076		(725)		(55)		(7,767)		Total pension and other postretirement benefit items	14,038		(1,723)		12,746		(1,131)
Other comprehensive income (loss) before tax	Other comprehensive income (loss) before tax	(4,411)		6,952		(755)		(16,675)		Other comprehensive income (loss) before tax	(1,610)		27		(10,458)		3,656
Income tax expense (benefit) related to components of other comprehensive income (loss)	Income tax expense (benefit) related to components of other comprehensive income (loss)	7		1		(177)		(2,062)		Income tax expense (benefit) related to components of other comprehensive income (loss)	3,250		(390)		2,793		(184)
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	(4,418)		6,951		(578)		(14,613)		Other comprehensive income (loss), net of tax	(4,860)		417		(13,251)		3,840
Comprehensive income (loss)	Comprehensive income (loss)	10,127		(24,497)		(114,025)		(564,498)		Comprehensive income (loss)	(58,560)		15,126		(70,053)		(124,152)
Comprehensive loss attributable to redeemable noncontrolling interests		(142)		(188)		(933)		(1,580)
Comprehensive loss attributable to noncontrolling interests(a)										Comprehensive loss attributable to noncontrolling interests(a)	(12)		(406)		(147)		(791)
Comprehensive income (loss) attributable to Gannett	Comprehensive income (loss) attributable to Gannett	$	10,269	$	(24,309)	$	(113,092)	$	(562,918)	Comprehensive income (loss) attributable to Gannett	$	(58,548)	$	15,532	$	(69,906)	$	(123,361)

(a) For the three and six months ended June 30, 2022, there were no redeemable noncontrolling interests included in Net loss attributable to noncontrolling interests. For the three and six months ended June 30, 2021, Net loss attributable to noncontrolling interests included $0.4 million and $0.8 million, respectively, relating to redeemable noncontrolling interests.

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

GANNETT CO., INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


		Nine months ended September 30,					Six months ended June 30,
In thousands	In thousands	2021		2020		In thousands	2022		2021
Operating activities	Operating activities					Operating activities
Net loss	Net loss	$	(113,447)	$	(549,885)	Net loss	$	(56,802)	$	(127,992)
Adjustments to reconcile net loss to operating cash flows:	Adjustments to reconcile net loss to operating cash flows:					Adjustments to reconcile net loss to operating cash flows:
Depreciation and amortization	Depreciation and amortization	154,452		205,706		Depreciation and amortization	97,313		106,345
Share-based compensation expense	Share-based compensation expense	13,804		22,812		Share-based compensation expense	8,778		9,202
Non-cash interest expense	Non-cash interest expense	18,719		17,813		Non-cash interest expense	10,641		11,531
Loss on sale or disposal of assets, net		9,206		1,540
Loss (gain) on sale or disposal of assets, net						Loss (gain) on sale or disposal of assets, net	(2,432)		10,039
Loss on convertible notes derivative	Loss on convertible notes derivative	126,600		—		Loss on convertible notes derivative	—		126,600
Loss on early extinguishment of debt	Loss on early extinguishment of debt	25,996		1,650		Loss on early extinguishment of debt	3,492		22,235
Goodwill and intangible impairments		—		393,446

Asset impairments	Asset impairments	3,134		8,444		Asset impairments	939		833
Pension and other postretirement benefit obligations	Pension and other postretirement benefit obligations	(114,663)		(77,274)		Pension and other postretirement benefit obligations	(51,353)		(78,038)
Change in other assets and liabilities, net	Change in other assets and liabilities, net	9,546		50,028		Change in other assets and liabilities, net	(8,888)		11,832

Net cash provided by operating activities		133,347		74,280
Cash provided by operating activities						Cash provided by operating activities	1,688		92,587
Investing activities	Investing activities					Investing activities

Acquisitions, net of cash acquired						Acquisitions, net of cash acquired	(15,432)		—
Purchase of property, plant and equipment	Purchase of property, plant and equipment	(27,265)		(28,944)		Purchase of property, plant and equipment	(23,292)		(15,821)
Proceeds from sale of real estate and other assets	Proceeds from sale of real estate and other assets	67,434		26,186		Proceeds from sale of real estate and other assets	29,623		23,341

Change in other investing activities	Change in other investing activities	(933)		779		Change in other investing activities	(548)		(335)
Net cash provided by (used for) investing activities		39,236		(1,979)
Cash provided by (used for) investing activities						Cash provided by (used for) investing activities	(9,649)		7,185
Financing activities	Financing activities					Financing activities
Payments of debt issuance costs		(33,921)		—
Payments of deferred financing costs						Payments of deferred financing costs	(957)		(33,921)
Borrowings under term loans	Borrowings under term loans	1,045,000		—		Borrowings under term loans	80,000		1,045,000
Repayments under term loans	Repayments under term loans	(1,220,751)		(27,619)		Repayments under term loans	(74,879)		(1,129,605)

Repayments of long-term debt						Repayments of long-term debt	(30,000)		—
Acquisition of noncontrolling interests						Acquisition of noncontrolling interests	(2,050)		—

Deferred payments for acquisitions		—		(7,544)
Payments for employee taxes withheld from stock awards		(2,034)		(1,960)

Treasury stock						Treasury stock	(6,529)		(2,030)

Changes in other financing activities	Changes in other financing activities	(578)		(348)		Changes in other financing activities	(632)		(423)
Net cash used for financing activities		(212,284)		(37,471)
Cash used for financing activities						Cash used for financing activities	(35,047)		(120,979)
Effect of currency exchange rate change on cash	Effect of currency exchange rate change on cash	389		439		Effect of currency exchange rate change on cash	(1,140)		625
(Decrease) increase in cash, cash equivalents and restricted cash		(39,312)		35,269
Balance of cash, cash equivalents and restricted cash at beginning of period		206,726		188,664
Balance of cash, cash equivalents and restricted cash at end of period		$	167,414	$	223,933
Decrease in cash, cash equivalents and restricted cash						Decrease in cash, cash equivalents and restricted cash	(44,148)		(20,582)
Cash, cash equivalents and restricted cash at beginning of period						Cash, cash equivalents and restricted cash at beginning of period	143,619		206,726
Cash, cash equivalents and restricted cash at end of period						Cash, cash equivalents and restricted cash at end of period	$	99,471	$	186,144

The accompanying notes are an integral part of these condensed consolidated financial statements.

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GANNETT CO., INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)


		Three months ended September 30, 2021															Three months ended June 30, 2022
		Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated deficit		Treasury stock						Common stock				Additional paid-in capital				Accumulated other comprehensive income (loss)		Accumulated deficit		Treasury stock			Non-controlling interest(a)
In thousands, except share data		Shares	Amount								Shares	Amount		Total
Balance at June 30, 2021		144,638,938	$	1,446	$	1,395,191	$	54,013	$	(913,638)	2,014,664	$	(6,935)	$	530,077
Net income attributable to Gannett		—	—		—		—		14,687		—	—		14,687
In thousands																In thousands	Shares	Amount											Additional paid-in capital	Accumulated other comprehensive income (loss)		Accumulated deficit		Shares		Amount	Non-controlling interest(a)	Total
Balance at March 31, 2022																Balance at March 31, 2022	151,017	$	1,510	3,188			$	(11,290)			$	514,726
Net loss attributable to Gannett																Net loss attributable to Gannett	—	—			—				—		(53,688)		—	—		(12)		(53,700)

Restricted stock awards settled, net of withholdings	Restricted stock awards settled, net of withholdings	2,857	—		(6)		—		—		—	—		(6)		Restricted stock awards settled, net of withholdings	—	—			(18)				—		—		—	—		—		(18)
Restricted share grants	Restricted share grants	5,226	—		—		—		—		—	—		—		Restricted share grants	1,303	13			(13)				—		—		—	—		—		—

Other comprehensive loss, net of income tax expense of $7		—	—		—		(4,418)				—	—		(4,418)
Other comprehensive loss, net(b)																Other comprehensive loss, net(b)	—	—			—				(4,860)		—		—	—		—		(4,860)
Share-based compensation expense	Share-based compensation expense	—	—		4,602		—		—		—	—		4,602		Share-based compensation expense	—	—			5,385				—		—		—	—		—		5,385
Issuance of common stock	Issuance of common stock	6,829	—		38		—		—		—	—		38		Issuance of common stock	278	3			23				—		—		—	—		—		26
Treasury stock	Treasury stock	—	—		—		—		—		118,675	(4)		(4)		Treasury stock	—	—			—				—		—		863	(3,391)		—		(3,391)
Restricted share forfeiture	Restricted share forfeiture	—	—		—		—		—		743	(1)		(1)		Restricted share forfeiture	—	—			—				—		—		1,759	(19)		—		(19)
Other activity	Other activity	—	—		(132)		—		—		—	—		(132)		Other activity	—	—			(241)				—		—		—	—		—		(241)
Balance at September 30, 2021		144,653,850	$	1,446	$	1,399,693	$	49,595	$	(898,951)	2,134,082	$	(6,940)	$	544,843
Balance at June 30, 2022																Balance at June 30, 2022	152,598	$	1,526		$	1,402,652			$	46,747	$	(978,054)	5,810	$	(14,700)	$	(263)	$	457,908


		Three months ended September 30, 2020															Three months ended June 30, 2021
		Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated deficit		Treasury stock						Common stock				Additional paid-in capital				Accumulated other comprehensive income (loss)		Accumulated deficit		Treasury stock			Non-controlling interest(a)
In thousands, except share data		Shares	Amount								Shares	Amount		Total
Balance at June 30, 2020		136,885,320	$	1,369	$	1,101,899	$	(13,362)	$	(633,003)	770,973	$	(4,818)	$	452,085
Net loss attributable to Gannett		—	—		—		—		(31,260)		—	—		(31,260)
In thousands																In thousands	Shares	Amount											Additional paid-in capital	Accumulated other comprehensive income (loss)		Accumulated deficit		Shares		Amount	Non-controlling interest(a)	Total
Balance at March 31, 2021																Balance at March 31, 2021	144,444	$	1,444	1,902			$	(6,612)			$	541,652
Net income attributable to Gannett																Net income attributable to Gannett	—	—			—				—		15,115		—	—		—		15,115
Restricted stock awards settled, net of withholdings	Restricted stock awards settled, net of withholdings	564,406	6		(866)		—		—		—	—		(860)		Restricted stock awards settled, net of withholdings	5	—			(11)				—		—		—	—		—		(11)

Other comprehensive income, net of income tax expense of $1		—	—		—		6,951		—		—	—		6,951
Equity component - 2027 Notes																Equity component - 2027 Notes	—	—			(32,534)				—		—		—	—		—		(32,534)
Other comprehensive income, net(b)																Other comprehensive income, net(b)	—	—			—				417		—		—	—		—		417
Share-based compensation expense	Share-based compensation expense	—	—		3,844		—		—		—	—		3,844		Share-based compensation expense	—	—			5,779				—		—		—	—		—		5,779
Issuance of common stock	Issuance of common stock	28,970	—		(961)		—		—		—	—		(961)		Issuance of common stock	190	2			—				—		—		—	—		—		2
Remeasurement of redeemable noncontrolling interests		—	—		(3,878)		—		—		—	—		(3,878)

Treasury stock	Treasury stock	—	—		—		—		—		4,837	(19)		(19)		Treasury stock	—	—			—				—		—		63	(323)		—		(323)
Restricted share forfeiture	Restricted share forfeiture	—	—		—		—		—		397,166	(4)		(4)		Restricted share forfeiture	—	—			—				—		—		50	—		—		—
Other activity	Other activity	—	—		231		—		—		—	—		231		Other activity	—	—			(20)				—		—		—	—		—		(20)
Balance at September 30, 2020		137,478,696	$	1,375	$	1,100,269	$	(6,411)	$	(664,263)	1,172,976	$	(4,841)	$	426,129
Balance at June 30, 2021																Balance at June 30, 2021	144,639	$	1,446		$	1,395,191			$	54,013	$	(913,638)	2,015	$	(6,935)	$	—	$	530,077

(a) Excludes Redeemable noncontrolling interests which are reflected in temporary equity.

(b)For the three months ended June 30, 2022 and 2021, Other comprehensive income is net of income tax provision of $3.3 million and income tax benefit of $0.4 million, respectively.

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GANNETT CO., INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY ~~[CONTINUED]~~- CONTINUED

(Unaudited)


		Nine months ended September 30, 2021															Six months ended June 30, 2022
		Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated deficit		Treasury stock						Common stock				Additional paid-in capital				Accumulated other comprehensive income (loss)		Accumulated deficit		Treasury stock			Non-controlling interest(a)
In thousands, except share data		Shares	Amount								Shares	Amount		Total
Balance as of December 31, 2020		139,494,741	$	1,395	$	1,103,881	$	50,173	$	(786,437)	1,391,748	$	(4,903)	$	364,109
In thousands																In thousands	Shares	Amount											Additional paid-in capital	Accumulated other comprehensive income (loss)		Accumulated deficit		Shares		Amount	Non-controlling interest(a)	Total
Balance at December 31, 2021																Balance at December 31, 2021	144,667	$	1,446	2,368			$	(8,151)			$	529,615
Net loss attributable to Gannett	Net loss attributable to Gannett	—	—		—		—		(112,514)		—	—		(112,514)		Net loss attributable to Gannett	—	—			—				—		(56,655)		—	—		(147)		(56,802)
Acquisition of noncontrolling interests																Acquisition of noncontrolling interests	—	—			(4,419)				—		—		—	—		2,369		(2,050)
Restricted stock awards settled, net of withholdings	Restricted stock awards settled, net of withholdings	1,064,697	10		(1,912)		—		—		—	—		(1,902)		Restricted stock awards settled, net of withholdings	615	7			(1,559)				—		—		—	—		—		(1,552)
Restricted share grants	Restricted share grants	3,883,062	39		(39)		—		—		—	—		—		Restricted share grants	7,031	70			(70)				—		—		—	—		—		—
Equity component of the 2027 Notes		—	—		283,718		—		—		—	—		283,718
Other comprehensive loss, net of income tax benefit of $177		—	—		—		(578)		—		—	—		(578)

Other comprehensive loss, net(c)																Other comprehensive loss, net(c)	—	—			—				(13,251)		—		—	—		—		(13,251)
Share-based compensation expense	Share-based compensation expense	—	—		13,804		—		—		—	—		13,804		Share-based compensation expense	—	—			8,778				—		—		—	—		—		8,778
Issuance of common stock	Issuance of common stock	211,350	2		99		—		—		—	—		101		Issuance of common stock	285	3			85				—		—		—	—		—		88
Remeasurement of redeemable noncontrolling interests		—	—		126		—		—		—	—		126

Treasury stock	Treasury stock	—	—		—		—		—		511,828	(2,034)		(2,034)		Treasury stock	—	—			—				—		—		1,555	(6,529)		—		(6,529)
Restricted share forfeiture	Restricted share forfeiture	—	—		—		—		—		230,506	(3)		(3)		Restricted share forfeiture	—	—			—				—		—		1,887	(20)		—		(20)
Other activity	Other activity	—	—		16		—		—		—	—		16		Other activity	—	—			(369)				—		—		—	—		—		(369)
Balance at September 30, 2021		144,653,850	$	1,446	$	1,399,693	$	49,595	$	(898,951)	2,134,082	$	(6,940)	$	544,843
Balance at June 30, 2022																Balance at June 30, 2022	152,598	$	1,526		$	1,402,652			$	46,747	$	(978,054)	5,810	$	(14,700)	$	(263)	$	457,908


		Nine months ended September 30, 2020															Six months ended June 30, 2021
		Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated deficit		Treasury stock						Common stock				Additional paid-in capital				Accumulated other comprehensive income (loss)		Accumulated deficit		Treasury stock			Non-controlling interest(a)
In thousands, except share data		Shares	Amount								Shares	Amount		Total
Balance as of December 31, 2019		129,386,258	$	1,294	$	1,090,694	$	8,202	$	(115,958)	394,714	$	(2,876)	$	981,356
In thousands																In thousands	Shares	Amount											Additional paid-in capital	Accumulated other comprehensive income (loss)		Accumulated deficit		Shares		Amount	Non-controlling interest(a)	Total
Balance at December 30, 2020																Balance at December 30, 2020	139,495	$	1,395	1,392			$	(4,903)			$	364,109
Net loss attributable to Gannett	Net loss attributable to Gannett	—	—		—		—		(548,305)		—	—		(548,305)		Net loss attributable to Gannett	—	—			—				—		(127,201)		—	—		—		(127,201)
Restricted stock awards settled, net of withholdings	Restricted stock awards settled, net of withholdings	3,072,991	31		(10,819)		—		—		—	—		(10,788)		Restricted stock awards settled, net of withholdings	1,062	10			(1,906)				—		—		—	—		—		(1,896)
Restricted share grants	Restricted share grants	4,346,313	44		(44)		—		—		—	—		—		Restricted share grants	3,878	39			(39)				—		—		—	—		—		—
Other comprehensive loss, net of income tax benefit of $2,062		—	—		—		(14,613)		—		—	—		(14,613)
Equity component - 2027 Notes																Equity component - 2027 Notes	—	—			283,718				—		—		—	—		—		283,718
Other comprehensive income, net(c)																Other comprehensive income, net(c)	—	—			—				3,840		—		—	—		—		3,840
Share-based compensation expense	Share-based compensation expense	—	—		22,812		—		—		—	—		22,812		Share-based compensation expense	—	—			9,202				—		—		—	—		—		9,202
Issuance of common stock	Issuance of common stock	673,134	6		1,609		—		—		—	—		1,615		Issuance of common stock	204	2			61				—		—		—	—		—		63
Remeasurement of redeemable noncontrolling interests	Remeasurement of redeemable noncontrolling interests	—	—		(3,878)		—		—		—	—		(3,878)		Remeasurement of redeemable noncontrolling interests	—	—			126				—		—		—	—		—		126
Treasury stock	Treasury stock	—	—		—		—		—		322,524	(1,960)		(1,960)		Treasury stock	—	—			—				—		—		393	(2,030)		—		(2,030)
Restricted share forfeiture	Restricted share forfeiture	—	—		—		—		—		455,738	(5)		(5)		Restricted share forfeiture	—	—			—				—		—		230	(2)		—		(2)
Other activity	Other activity	—	—		(105)		—		—		—	—		(105)		Other activity	—	—			148				—		—		—	—		—		148
Balance at September 30, 2020		137,478,696	$	1,375	$	1,100,269	$	(6,411)	$	(664,263)	1,172,976	$	(4,841)	$	426,129
Balance at June 30, 2021																Balance at June 30, 2021	144,639	$	1,446		$	1,395,191			$	54,013	$	(913,638)	2,015	$	(6,935)	$	—	$	530,077

(a) Excludes Redeemable noncontrolling interests which are reflected in temporary equity.

(c)For the six months ended June 30, 2022 and 2021, Other comprehensive income is net of income tax provision of $2.8 million and income tax benefit of $0.2 million, respectively.

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — Description of ~~Business~~business and basis of presentation

Description of ~~Business~~business

Gannett Co., Inc. ("Gannett", "we", "us", "our", or the "Company") is a subscription-led and digitally-focused media and marketing solutions company committed to empowering communities to thrive. Gannett operates a scalable, data-driven media platform that aligns with consumer and digital marketing trends. We aim to be the premier source for clarity, connections and solutions within our communities. Our strategy is focused on driving audience growth and engagement by delivering deeper content experiences to our consumers, while offering the products and marketing expertise our advertisers desire. ~~The~~We expect the execution of this strategy ~~is expected~~ to ~~allow the Company~~enable us to continue ~~its~~our evolution from a more traditional print media business to a digitally-focused content platform.

On June 1, 2022, the Company announced a strategic organizational restructuring, which centralized the operations within each of its U.S. operating business units, Gannett Media and Digital Marketing Solutions ("DMS"). This change did not have any impact on segment reporting. However, the Company's historical Publishing segment will be referred to as Gannett Media moving forward. The Gannett Media reportable segment is an aggregation of 2 operating segments: Domestic Gannett Media (formerly referred to as Domestic Publishing) and Newsquest (formerly referred to as U.K. Publishing).

Our current portfolio of media assets includes USA TODAY, local media organizations in 4645 states in the U.S., and Newsquest, a wholly-owned subsidiary operating in the United Kingdom (the "U.K.") with more than ~~120~~150 local media brands. ~~Gannett~~We also ~~owns the~~operate a digital marketing ~~services companies ReachLocal, Inc. ("ReachLocal"), UpCurve, Inc. ("UpCurve"),~~solutions company, branded LOCALiQ, which provides a cloud-based platform of products to enable small and ~~WordStream, Inc. ("WordStream"), which are marketed under the LOCALiQ brand, and runs~~medium-sized businesses to accomplish their marketing goals. In addition, we run what we believe is the largest media-owned events business in the U.S., USA TODAY NETWORK Ventures.

Through USA TODAY, our local property network, and Newsquest, ~~Gannett delivers~~we deliver high-quality, trusted content with a commitment to balanced, unbiased journalism, where and when consumers want to engage with it on virtually any device or platform. Additionally, the Company has strong relationships with hundreds of thousands of local and national businesses in both our U.S. and U.K. markets due to our large local and national sales forces and a robust advertising and marketing solutions product suite. The Company reports in 2 ~~segments: Publishing~~segments, Gannett Media and ~~Digital Marketing Solutions ("DMS").~~DMS. We also have a Corporate and other category that includes activities not directly attributable to a specific reportable segment and includes broad corporate functions such as legal, human resources, accounting, analytics, finance, and marketing. A full description of our reportable segments is included in Note 1312 — Segment reporting in the notes to the condensed consolidated financial statements.

Impacts of the COVID-19 pandemic

As a result of the COVID-19 pandemic, we initially experienced a significant decline in Advertising and marketing services revenues, which accelerated the secular declines that we continue to experience. ~~In addition, we~~We continue to experience constraints on the sales of single copy newspapers, largely tied to reduced business ~~travel and in-person events.~~travel. While ~~we have seen~~COVID-19 related operating trends ~~improve~~have improved since the second quarter of 2020, which represents the quarter that was most significantly impacted by the pandemic, we expect that the COVID-19 pandemic, and the resulting changes in consumer behavior, will continue to have a negative impact on our business and results of operations in the near-term, including lower revenues and attendance associated with events as compared to pre-COVID-19 pandemic levels and lower sales of single copy ~~newspapers, largely as a result of reduced business travel.~~newspapers. If the COVID-19 pandemic were to revert to conditions that existed during 2020, including measures to help mitigate and control the spread of the virus, we would expect to experience further negative impacts in Advertising and marketing services revenues and Circulation revenues.

We have implemented, and continue to implement, measures to reduce costs and preserve cash flow. These measures include, evaluating and applying for all governmental relief programs for which we are eligible, including the Paycheck Protection Program ("PPP"), suspending our quarterly dividend, and debt refinancing, as well as reducing discretionary spending. In addition, we are continuing with our previously-disclosed plan to monetize non-core assets.

In connection with the CARES Act, the Company received PPP funding in support of certain of our locations that were meaningfully affected by the COVID-19 pandemic totaling $16.4 million, which was included in Operating activities in the condensed consolidated statements of cash flows for the nine months ended September 30, 2021. As permitted under the CARES Act, during the third quarter of 2021, the Company received forgiveness of such loans totaling $15.1 million, which was recognized in earnings in the condensed consolidated statements of operations and comprehensive income (loss) as an offset to Operating costs of $11.1 million and Selling, general, and administrative expenses of $4.0 million. As of September 30, 2021, the remaining PPP loans of $1.3 million were included in Other long-term liabilities in the condensed consolidated balance sheets. Management has applied for forgiveness of the remaining PPP loans in accordance with applicable guidelines. Interest expense related to PPP funding was immaterial for the three and nine months ended September 30, 2021.

Basis of presentation

~~Our~~The condensed consolidated financial statements included in this report are unaudited; however, in the opinion of management, they contain all of the adjustments (consisting of those of a normal, recurring nature) considered necessary to present fairly the financial position, results of operations, and cash flows for the periods presented in conformity with U.S. generally accepted accounting principles

~~Table of Contents~~

(" ("U.S. GAAP") applicable to interim periods. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company consolidates entities that it controls due to ownership of a majority voting interest. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Table of Contents

Use of estimates

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and footnotes thereto. Actual results could differ materially from those estimates.

Significant estimates inherent in the preparation of the condensed consolidated financial statements include pension and postretirement benefit obligation assumptions, income taxes, goodwill and intangible asset impairment analysis, valuation of property, plant and equipment and intangible ~~assets and the mark to market of the conversion feature associated with the convertible debt.~~assets.

Recent accounting pronouncements ~~adopted~~

~~Simplifying the Accounting for Income Taxes~~

In December 2019, the Financial Accounting Standards Board (the "FASB") issued new guidance that simplifies the accounting for income taxes. The guidance amends the rules for recognizing deferred taxes for investments, performing intraperiod tax allocations and calculating income taxes in interim periods. It also reduces complexity in certain areas, including accounting for transactions that result in a step-up in the tax basis of goodwill and allocating taxes to members of a consolidated group. This guidance is effective for fiscal years beginning after December 15, 2020, with early adoption permitted. Adopting this guidance allowed the Company to record a tax benefit for the first quarter of 2021 because year-to-date losses on interim periods are no longer limited to losses annually forecasted, but did not have a material impact on the Company's condensed consolidated financial statements in subsequent quarters.

~~Recent accounting pronouncements not yet~~ adopted

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity

In August 2020, the ~~FASB~~Financial Accounting Standards Board (the "FASB") issued new guidance, ("ASU ~~2020-06")~~2020-06, that simplifies the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. In addition to eliminating certain accounting models, the guidance amends the disclosures for convertible instruments and earnings-per-share guidance. It also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. This guidance is effective for fiscal years beginning after December 15, ~~2023, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020,~~2021, including interim periods within those fiscal years. The ~~Company does not expect the~~ adoption of this guidance did not have a material impact on the accounting for the Company's $497.1 million in aggregate principal amount of 6.0% Senior Secured Convertible Notes due 2027 issued by the Company on November 17, 2020 (the "2027 Notes"), or the condensed consolidated financial statements.

Reference Rate Reform

In March 2020, the FASB issued guidance, ASU 2020-04, that provides optional expedients and exceptions for contracts, hedging relationships, and other transactions that reference the London Inter-bank Offered Rate ("LIBOR"). ASU 2020-04 is effective prospectively for all entities through December 31, 2022, when the reference rate replacement activity is expected to have been completed. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During Q1 2022, the Company applied the optional expedient for contract modifications to the amendment of its five-year senior secured term loan facility in an aggregate principal amount of $516.0 million (the "New Senior Secured Term Loan") with Citibank N.A., as collateral agent and administrative agent for the lenders. The adoption of this guidance did not have a material impact on the condensed consolidated financial statements.

Disclosures by Business Entities about Government Assistance

In November 2021, the FASB issued new guidance, ASU 2021-10, that requires annual disclosures for transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy, including: (i) information about the nature of the transactions and related accounting policy used to account for the transactions; (ii) the line items on the condensed consolidated balance sheets and condensed consolidated statements of operations and comprehensive income (loss) affected by these transactions, including amounts applicable to each line; and (iii) significant terms and conditions of the transactions, including commitments and contingencies. The adoption of this guidance did not have a material impact on the condensed consolidated financial statements.

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers in a Business Combination

In October 2021, the FASB issued new guidance, ASU 2021-08, that requires an acquirer to recognize and measure certain contract assets and contract liabilities in a business combination in accordance with ASC 606, "Revenue from Contracts with Customers", rather than at fair value on the acquisition date as required under current U.S. GAAP. This guidance is effective for fiscal years beginning after December 15, 2022, with early adoption permitted, including interim periods within those fiscal years. The early adoption of this guidance effective January 1, 2022 did not have a material impact on the condensed consolidated financial statements.

NOTE 2 — Revenues

Revenues are recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

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The Company’s condensed consolidated statements of operations and comprehensive income (loss) present revenues disaggregated by revenue type. Sales taxes and other usage-based taxes are excluded from revenues. The following table presents our revenues disaggregated by source:

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		Three months ended September 30,				Nine months ended September 30,					Three months ended June 30,				Six months ended June 30,
In thousands	In thousands	2021		2020		2021		2020		In thousands	2022		2021		2022		2021
Print advertising	Print advertising	$	190,044	$	208,047	$	584,165	$	664,047	Print advertising	$	173,453	$	200,925	$	346,971	$	394,121
Digital advertising and marketing services	Digital advertising and marketing services	221,976		197,180		636,322		585,109		Digital advertising and marketing services	210,156		219,185		411,752		414,346
Total advertising and marketing services	Total advertising and marketing services	412,020		405,227		1,220,487		1,249,156		Total advertising and marketing services	383,609		420,110		758,723		808,467
Circulation	Circulation	306,702		336,158		942,398		1,053,528		Circulation	274,624		310,259		563,226		635,696
Other	Other	81,463		73,154		218,659		227,539		Other	90,427		73,906		174,788		137,196
Total revenues	Total revenues	$	800,185	$	814,539	$	2,381,544	$	2,530,223	Total revenues	$	748,660	$	804,275	$	1,496,737	$	1,581,359

~~Revenues~~For the three and six months ended June 30, 2022, revenues generated from international locations were approximately ~~8% for both~~9.8% and 9.3% of total revenues, respectively. For the three and ~~nine~~six months ended ~~September~~June 30, 2021, revenues generated from international locations were approximately 7.9% and ~~approximately 7% for both the three and nine months ended September 30, 2020.~~7.7% of total revenues, respectively.

Deferred revenues

The Company records deferred revenues when cash payments are received in advance of the Company’s performance obligation. The Company's primary source of deferred revenues is from circulation subscriptions paid in advance of the service provided, which represents future delivery of publications (the performance obligation) to subscription customers. The Company expects to recognize the revenue related to unsatisfied performance obligations over the next one to twelve months in accordance with the terms of the subscriptions.

The Company's payment terms vary by the type and location of the customer and the products or services offered. The period between invoicing and when payment is due is not significant. For certain products or services and customer types, the Company requires payment before the products or services are delivered to the customer. The majority of our subscription customers are billed and pay on monthly terms.

The following table presents changes in the deferred revenues balance by type of revenues:


		Nine months ended September 30, 2021						Nine months ended September 30, 2020						Six months ended June 30, 2022				Six months ended June 30, 2021
In thousands	In thousands	Advertising, Marketing Services, and Other		Circulation		Total		Advertising, Marketing Services, and Other		Circulation		Total			In thousands	Advertising, marketing services, and other		Circulation		Total		Advertising, marketing services, and other		Circulation		Total
Beginning balance	Beginning balance	$	51,686	$	134,321	$	186,007	$	67,543	$	151,280	$	218,823		Beginning balance	$	60,665	$	124,173	$	184,838	$	51,686	$	134,321	$	186,007
Acquisition															Acquisition	—		2,388		2,388		—		—		—
Cash receipts	Cash receipts	226,214		738,366		964,580		215,050		878,856		1,093,906			Cash receipts	140,331		489,333		629,664		132,167		512,262		644,429
Revenue recognized	Revenue recognized	(206,203)		(748,125)		(954,328)		(221,052)		(884,080)		(1,105,132)			Revenue recognized	(149,353)		(493,425)		(642,778)		(130,545)		(515,272)		(645,817)
Ending balance	Ending balance	$	71,697	$	124,562	$	196,259	$	61,541	$	146,056	$	207,597		Ending balance	$	51,643	$	122,469	$	174,112	$	53,308	$	131,311	$	184,619

NOTE 3 ~~— Leases~~

~~We lease certain real estate, vehicles, and equipment. Our leases have remaining lease terms of~~ ~~one~~ to fifteen years, some of which may include options to extend the leases, and some of which may include options to terminate the leases. The exercise of lease renewal options is at our sole discretion. The depreciable lives of assets and leasehold improvements are limited by the expected lease term unless there is a transfer of title or purchase option reasonably certain of exercise.

~~As of September 30, 2021, our condensed consolidated balance sheets included $279.4 million of operating lease right-to-use assets, $48.3 million of short-term operating lease liabilities included in~~ ~~Other current liabilities, and $261.4 million of long-term operating lease liabilities.~~

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~~The components of lease expense are as follows:~~

Three months ended September 30, Nine months ended September 30,
In thousands 2021 2020 2021 2020
Operating lease cost (a)
$ 19,977 $ 20,924 $ 60,626 $ 62,429
Short-term lease cost (b)
133 828 698 5,315
Variable lease cost 2,963 2,897 8,685 9,713
Net lease cost $ 23,073 $ 24,649 $ 70,009 $ 77,457

~~(a)~~Includes sublease income of $1.7 million and $0.9 million for the three months ended September 30, 2021 and 2020, respectively, and $4.7 million and $2.9 million for the nine months ended September 30, 2021 and 2020, respectively.

~~(b)Excluding expenses relating to leases with a lease term of 12 months or less.~~

~~Future minimum lease payments under non-cancellable leases are as follows:~~

In thousands
Year ended
December 31, (a)
2021 (excluding the nine months ended September 30, 2021) $ 18,625
2022 81,364
2023 68,607
2024 60,380
2025 51,315
Thereafter 213,647
Total future minimum lease payments 493,938
Less: Imputed interest (184,245)
Total $ 309,693

~~(a)Operating lease payments exclude $0.9 million of legally binding minimum lease payments for leases signed but not yet commenced.~~

~~Supplemental information related to leases is as follows:~~

Nine months ended September 30,
In thousands, except lease term and discount rate 2021 2020
Cash paid for amounts included in the measurement of operating lease liabilities $ 59,989 $ 61,508
Right-of-use assets obtained in exchange for operating lease obligations 31,014 25,562
Gain on sale and leaseback transactions, net (1,568) —
As of September 30,
2021 2020
Weighted-average remaining lease term (in years) 7.3 7.7
Weighted-average discount rate 12.81 % 12.66 %

~~NOTE 4~~ — Accounts receivable, net

The Company performs its evaluation of the collectability of trade receivables based on customer category. For example, trade receivables from individual subscribers to our publications are evaluated separately from trade receivables related to advertising customers. For advertising trade receivables, the Company applies a "black motor formula" methodology as the baseline to calculate the allowance for doubtful accounts. The reserve percentage is calculated as a ratio of total net bad debts (less write-offs and recoveries) for the prior three-year period to total outstanding trade accounts receivable for the same three-year period. The calculated reserve percentage by customer category is applied to the consolidated gross advertising receivable balance, irrespective of aging. In addition, each category has specific reserves for at risk accounts that vary based on the nature of the underlying trade receivables. Due to the short-term nature of our circulation receivables, the Company reserves all receivables aged over 90 days.

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The following table presents changes in the allowance for doubtful ~~accounts for the nine months ended September 30, 2021 and 2020:~~accounts:


		Nine months ended September 30,					Six months ended June 30,
In thousands	In thousands	2021		2020		In thousands	2022		2021
Beginning balance	Beginning balance	$	20,843	$	19,923	Beginning balance	$	16,470	$	20,843
Current period provision	Current period provision	3,478		23,075		Current period provision	1,629		681
Write-offs charged against the allowance	Write-offs charged against the allowance	(10,998)		(21,139)		Write-offs charged against the allowance	(8,503)		(5,943)
Recoveries of amounts previously written-off	Recoveries of amounts previously written-off	3,076		2,230		Recoveries of amounts previously written-off	1,994		2,296
Disposition		—		(351)
Foreign currency		12		11
Other						Other	377		78

Ending balance	Ending balance	$	16,411	$	23,749	Ending balance	$	11,967	$	17,955

The calculation of the allowance considers current economic, industry and customer-specific conditions relative to their respective operating environments in the incremental allowances recorded related to high-risk accounts, bankruptcies, receivables in repayment plan and other aging specific reserves. As a result of this analysis, the Company adjusts specific reserves and the amount of allowable credit as appropriate. The collectability of trade receivables related to advertising, marketing services and other customers depends on a variety of factors, including trends in local, regional or national economic conditions that affect our customers' ability to pay. The advertisers in our newspapers and other publications and related websites are primarily retail businesses that can be significantly affected by regional or national economic downturns and other developments that may impact our ability to collect on the related receivables. Similarly, while circulation revenues related to individual subscribers are primarily prepaid, changes in economic conditions may also affect our ability to collect on amounts owed from single copy circulation customers.

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, the Company recorded ~~$2.8~~$4.0 million and ~~$3.5~~$1.6 million in bad debt expense, respectively. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, the Company recorded ~~$5.7~~$2.9 million and ~~$23.1~~$0.7 million in bad debt expense, respectively. Bad debt expense is included in Selling, general and administrative expenses on the condensed consolidated statements of operations and comprehensive income (loss). For both the three months and six months ended ~~September~~June 30, ~~2021,~~2022, the ~~decrease compared to the prior year period was driven by lower write-offs, as the prior year reflected the impact of the COVID-19 pandemic which resulted~~Company recorded an increase in ~~higher~~ bad debt expense ~~and allowance for doubtful accounts. For the nine months ended September 30, 2021, the decrease compared to the prior year period was~~ due to ~~lower~~increased write-offs ~~compared to the same period~~and reserves associated with circulation revenue in the ~~prior year, as the prior year reflected the impact~~second quarter of ~~the COVID-19 pandemic.~~2022.

NOTE 54 — Goodwill and intangible assets

Goodwill and intangible assets consisted of the following:


		September 30, 2021						December 31, 2020							June 30, 2022						December 31, 2021
In thousands	In thousands	Gross carrying amount		Accumulated amortization		Net carrying amount		Gross carrying amount		Accumulated amortization		Net carrying amount		In thousands	Gross carrying amount		Accumulated amortization		Net carrying amount		Gross carrying amount		Accumulated amortization		Net carrying amount
Finite-lived intangible assets:	Finite-lived intangible assets:													Finite-lived intangible assets:
Advertiser relationships	Advertiser relationships	$	456,141	$	144,326	$	311,815	$	460,331	$	112,468	$	347,863	Advertiser relationships	$	453,993	$	174,834	$	279,159	$	453,038	$	153,988	$	299,050
Other customer relationships	Other customer relationships	102,685		32,439		70,246		102,925		23,682		79,243		Other customer relationships	102,437		40,662		61,775		102,486		35,237		67,249
Subscriber relationships	Subscriber relationships	254,972		92,953		162,019		255,702		71,271		184,431		Subscriber relationships	253,798		114,555		139,243		254,162		99,905		154,257
Other intangible assets	Other intangible assets	68,590		41,021		27,569		68,687		26,982		41,705		Other intangible assets	68,780		50,752		18,028		68,690		44,291		24,399
Sub-total	Sub-total	$	882,388	$	310,739	$	571,649	$	887,645	$	234,403	$	653,242	Sub-total	$	879,008	$	380,803	$	498,205	$	878,376	$	333,421	$	544,955
Indefinite-lived intangible assets:	Indefinite-lived intangible assets:													Indefinite-lived intangible assets:
Mastheads	Mastheads					169,942						171,408		Mastheads					168,473						168,198
Total intangible assets	Total intangible assets					$	741,591					$	824,650	Total intangible assets					$	666,678					$	713,153

Goodwill	Goodwill					$	533,797					$	534,088	Goodwill					$	540,491					$	533,709

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Consistent with the Company’s past practice, the Company performed its annual goodwill and indefinite-lived intangible impairment assessment in the second quarter of ~~2021~~2022 with the assistance of third-party valuation specialists. Within the impairment analyses performed, the Company considered the current and expected future economic and market conditions and the impact on the fair value of each of the reporting units. The most significant assumptions utilized in the determination of the estimated fair values ~~include~~included revenue and cash flow projections, discount rates and long-term growth rates. The long-term growth rates are dependent on various factors and could be adversely impacted by a sustained decrease in overall market growth rates, the competitive environment, ~~inflation~~ and relative currency exchange rates, and could be adversely impacted by a sustained ~~decrease~~increase in ~~any of these measures,~~inflation, all of which the Company considered in determining the long-term growth rates used in the analysis, which ranged from ~~negative 0.5%~~0.0% to ~~positive~~ 3.0%. The discount rate, which is consistent with a weighted average cost of capital that is likely to be expected by a market participant, is based upon industry required rates of return, including consideration of both debt and equity components of the capital structure. The discount rate may be impacted by adverse changes in the macroeconomic environment and volatility in the equity and debt markets. The Company considered these factors in determining the discount rates used in the analysis, which ranged from ~~11.0%~~13.0% to ~~15.0%~~17.0%.

For goodwill, the Company determined the fair value of each reporting unit using a combination of a discounted cash flow analysis and a market-based approach. During the second quarter of ~~2021,~~2022, the Company compared the fair value of each reporting unit to its carrying amount, which resulted in the fair value of all the reporting ~~groups~~units being in excess of their carrying values. While the fair value of all reporting units exceeded their respective carrying values at June 30, 2022, the excess amount of fair value over carrying value for our Domestic Gannett Media reporting unit decreased from 126% during the 2021 annual impairment test to 22% during the 2022 annual impairment test.

For mastheads, the Company applied a "relief from royalty" approach, a discounted cash flow model, reflecting current assumptions, to fair value of the indefinite-lived intangible assets. During the second quarter of ~~2021,~~2022, the Company compared the fair value of each indefinite-lived intangible asset to its carrying amount, which resulted in the fair value of each indefinite-lived intangible asset being in excess of its carrying value.

In addition to the annual impairment test, the Company is required to regularly assess whether a triggering event has occurred under ASC ~~360, which would require interim impairment testing.~~360. As of ~~September~~June 30, ~~2021,~~2022, the Company performed aan interim review of ~~potential impairment indicators~~its long-lived asset groups under ASC 360 and it was determined that no ~~indicators of~~ impairment ~~were~~was present.

During the second quarter of 2020, the Company recorded goodwill impairment charges of $256.5 million, $65.4 million and $40.5 million in our Domestic Publishing, Newsquest and Marketing Solutions reporting units, respectively, and recorded indefinite-lived asset impairments of $4.0 million in both our Domestic Publishing and Newsquest reporting units, as a result of the annual impairment assessment. During the second quarter of 2020, the Company considered the impact of the COVID-19 pandemic on the Company’s operations to be an indicator of impairment under ASC 360, and as such, the Company recorded an intangible asset impairment of $23.0 million related to advertiser and other customer relationships.

NOTE 65 — Integration and reorganization costs and asset impairments

Over the past several years, the Company has engaged in a series of individual restructuring programs, designed primarily to right-size the Company’s employee base, consolidate facilities and improve operations, including those of recently acquired entities. These initiatives impact all the Company’s operations and can be influenced by the terms of union contracts. Costs related to these programs, which primarily include severance expense, facility consolidation and other restructuring-related expenses, are accrued when probable and reasonably estimable or at the time of program announcement.

Severance-related expenses

WeThe Company recorded severance-related expenses by segment as follows:


		Three months ended September 30,				Nine months ended September 30,					Three months ended June 30,				Six months ended June 30,
In thousands	In thousands	2021		2020		2021		2020		In thousands	2022		2021		2022		2021
Publishing		$	1,941	$	3,983	$	10,125	$	35,401
Gannett Media										Gannett Media	$	10,595	$	1,405	$	15,772	$	8,184
Digital Marketing Solutions	Digital Marketing Solutions	402		1,196		321		5,333		Digital Marketing Solutions	140		(24)		149		(81)
Corporate and other	Corporate and other	317		2,103		440		14,069		Corporate and other	902		(252)		1,076		123
Total	Total	$	2,660	$	7,282	$	10,886	$	54,803	Total	$	11,637	$	1,129	$	16,997	$	8,226

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A rollforward of the accrued severance and related costs included in Accounts payable and accrued expenses on the condensed consolidated balance sheets for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 is as follows:


In thousands	Severance and ~~Related Costs~~related costs
Beginning balance	$	~~30,943~~12,558
Restructuring provision included in integration and reorganization costs	~~10,886~~16,997
Cash payments	~~(31,869)~~(13,124)
Ending balance	$	~~9,960~~16,431

The restructuring reserve balance is expected to be paid out over the next twelve months.

Facility consolidation and other restructuring-related expenses

Facility consolidation and other restructuring-related expenses represent costs for consolidating operations, systems implementation, and outsourcing of corporate functions. WeThe Company recorded facility consolidation charges and other restructuring-related costs by segment as follows:

Three months ended September 30, Nine months ended September 30,
In thousands 2021 2020 2021 2020
Publishing $ 1,571 $ 1,137 $ 516 $ 3,648
Digital Marketing Solutions 529 41 980 254
Corporate and other 8,859 4,957 23,085 15,273
Total $ 10,959 $ 6,135 $ 24,581 $ 19,175


	Three months ended June 30,				Six months ended June 30,
In thousands	2022		2021		2022		2021
Gannett Media	$	446	$	(1,602)	$	990	$	(1,055)
Digital Marketing Solutions	153		228		295		451
Corporate and other	3,509		8,689		8,861		14,226
Total	$	4,108	$	7,315	$	10,146	$	13,622

~~Asset impairments~~

For the three and nine months ended September 30, 2021, the Company recorded Asset impairment charges of $2.3 million and $3.1 million, respectively, at the Publishing segment primarily due to the impairment of real estate held for sale. For the three months ended September 30, 2020, the Company recorded Asset impairment charges at the Publishing segment of $0.9 million as a result of the Company's fixed asset disposals related to the continued consolidation of operations and recorded $7.7 million for the nine months ended September 30, 2020 as a result of a recoverability test for long-lived assets and fixed asset disposals during the period. For both the three and nine months ended September 30, 2020, the Company recorded $0.7 million of Asset impairment charges at the DMS segment as a result of fixed asset disposals related to the continued consolidation of operations.

~~Accelerated~~0Accelerated depreciation

The Company incurred accelerated depreciation, a component of ~~$1.1 million~~Depreciation and ~~$9.3 million for~~amortization expense in the ~~three months ended September 30, 2021~~condensed consolidated statements of operations and ~~2020, respectively, and $11.4 million and $45.0 million for the nine months ended September 30, 2021 and 2020, respectively,~~comprehensive income (loss) related to the shortened useful life of assets due to the closing of print facilities and sale of property primarily at the ~~Publishing~~Gannett Media segment, of $5.5 million and ~~included within Depreciation~~$1.1 million for the three months ended June 30, 2022 and ~~amortization expense on~~2021, respectively, and $10.2 million and $10.3 million for the ~~condensed consolidated statements of operations~~six months ended June 30, 2022 and ~~comprehensive income (loss).~~2021, respectively.

NOTE 76 — Debt

~~5-Year~~The Company's debt consisted of the following:


	June 30, 2022								December 31, 2021
(in millions)	Principal balance		Unamortized original issue discount		Unamortized deferred financing costs		Carrying value		Principal balance		Unamortized original issue discount		Unamortized deferred financing costs		Carrying value
New Senior Secured Term Loan	$	485.2	$	(10.9)	$	(2.3)	$	472.0	$	480.1	$	(14.1)	$	(2.7)	$	463.3
2026 Senior Notes	370.0		(11.3)		(8.9)		349.8		400.0		(13.7)		(10.7)		375.6
2027 Notes	485.3		(87.4)		(1.9)		396.0		485.3		(93.2)		(2.0)		390.1
2024 Notes	3.3		—		—		3.3		3.3		—		—		3.3
Total debt	$	1,343.8	$	(109.6)	$	(13.1)	$	1,221.1	$	1,368.7	$	(121.0)	$	(15.4)	$	1,232.3
Less: Current portion of long-term debt	$	(60.8)	$	—	$	—	$	(60.8)	$	(69.5)	$	—	$	—	$	(69.5)
Non-current portion of long-term debt	$	1,283.0	$	(109.6)	$	(13.1)	$	1,160.3	$	1,299.2	$	(121.0)	$	(15.4)	$	1,162.8

New Senior Secured Term Loan

On ~~February 9,~~October 15, 2021, Gannett Holdings LLC ("Gannett Holdings"), a wholly-owned subsidiary of the Company, entered

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into ~~a five-year, senior-secured term loan facility~~the New Senior Secured Term Loan with ~~the lenders from time to time party thereto and~~ Citibank N.A., as collateral agent and administrative agent for the ~~lenders,~~lenders. On January 31, 2022, Gannett Holdings entered into an amendment (the "Term Loan Amendment") to its New Senior Secured Term Loan to provide for new incremental senior secured term loans (the "Incremental Term Loans") in an aggregate principal amount of ~~$1.045 billion (the "5-Year~~$50 million. The Incremental Term ~~Loan"). The 5-Year~~Loans have substantially identical terms as the New Senior Secured Term Loan ~~was~~and are treated as a single tranche with the New Senior Secured Term Loan. The Term Loan Amendment also amended the New Senior Secured Term Loan to ~~mature on February 9, 2026~~transition the interest rate base from LIBOR to Adjusted Term SOFR and atto permit the repurchase of up to $50 million of the Company's ~~option, bore~~common stock, par value $0.01 per share ("Common Stock") under the Stock Repurchase Program (defined below in Note 10 — Supplemental equity information) consummated on or prior to December 31, 2022, in addition to capacity for Gannett Holdings to make restricted payments, including stock repurchases, currently permitted under other provisions of the New Senior Secured Term Loan and our other debt facilities, including the 2026 Senior Secured Notes Indenture and the 2027 Notes Indenture (terms defined below). On March 21, 2022 and April 8, 2022, Gannett Holdings entered into amendments to its New Senior Secured Term Loan to provide for incremental senior secured term loans in an aggregate principal amount of $22.5 million and $7.5 million, respectively.

The New Senior Secured Term Loan bears interest at a per annum rate equal to ~~LIBOR~~Adjusted Term SOFR (which shall not be less than 0.50% per annum) plus a margin of 5.00% or an alternate base rate (which shall not be less than 1.50% per annum) plus a margin equal to ~~7.00% per annum or an alternate base rate plus~~4.00%.Loans under the New Senior Secured Term Loan may be prepaid, at the option of Gannett Holdings, at any time without premium, except a ~~margin~~premium equal to ~~6.00% per annum. Interest on the 5-Year Term Loan was payable at least every three months in arrears, beginning in May 2021.~~

The proceeds from the 5-Year Term Loan were used to repay the remaining principal balance and accrued interest of $1.043 billion and $13.3 million, respectively, (the "Payoff") on the Company's five-year, senior-secured 11.5% term loan

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~~facility with Apollo Capital Management, L.P. (the "Acquisition Term Loan") and to pay fees and expenses incurred to obtain the 5-Year Term Loan.~~

There were certain lenders that participated in both the Acquisition Term Loan and the 5-Year Term Loan and their balances in the Acquisition Term Loan were deemed to be modified. The Company continued to defer, over the term, the deferred financing fees and original issue discount from the Acquisition Term Loan of $1.5 million and $34.7 million, respectively, related to those lenders. Further, certain lenders in the Acquisition Term Loan did not participate in the 5-Year Term Loan and their balances in the Acquisition Term Loan were deemed to be extinguished. The Company recognized a Loss on early extinguishment of debt of $17.2 million in the first quarter of 2021 as a result1.00% of the ~~write-off~~aggregate principal amount of the ~~remaining original issue discount and deferred financing fees related to those lenders. Third-party fees of approximately $13.0 million were allocated~~loans being repaid in connection with certain refinancing or repricing events that reduce the all-in yield applicable to the ~~new lenders in the 5-Year Term Loan~~loans and occur on a pro-rata basis, and $20.9 million of original issue discount were capitalized and amortized over the term of the 5-Year Term Loan using the effective interest method. For the nine months ended September 30, 2021, third-party fees of $10.9 million, which were allocated to the lenders whose balances were deemed to be modified, were expensed and recorded in Other operating expenses in the condensed consolidated statements of operations and comprehensive income (loss). No third-party fees were incurred during the three months ended September 30, 2021.

The 5-Year Term Loan amortized in equal quarterly installments at a rate of 10% per annum (or, if the ratio of Total Indebtedness secured on an equal priority basis with the 5-Year Term Loan (net of Unrestricted Cash) to Consolidated EBITDA (as such terms are defined in the 5-Year Term Loan) was equal to or ~~less than a specified ratio, 5% per annum) (the "Quarterly Amortization Installment"), beginning September 30, 2021.~~before October 15, 2022. In addition, we ~~were~~are required to repay the ~~5-Year~~New Senior Secured Term Loan from time to time with (i) the proceeds of non-ordinary course asset sales and casualty and condemnation events, (ii) the proceeds of indebtedness ~~that was~~ not ~~otherwise~~ permitted under the ~~5-Year~~New Senior Secured Term Loan, and (iii) the aggregate amount of cash and cash equivalents on hand at the Company and its restricted subsidiaries in excess of $100 million at the end of each fiscal ~~year.~~year of the Company. The ~~5-Year~~New Senior Secured Term Loan ~~was subject~~amortizes in equal quarterly installments, beginning June 30, 2022, at a rate equal to 10.00% per annum (or, if the ratio of debt secured on an equal basis with the New Senior Secured Term Loan less unrestricted cash of the Company and its restricted subsidiaries to Consolidated EBITDA (as such terms are defined in the New Senior Secured Term Loan ) (such ratio, the "First Lien Net Leverage Ratio"), for the most recently ended period of four consecutive fiscal quarters is equal to or less than 1.20 to 1.00, 5.00% per annum). All obligations under the New Senior Secured Term Loan are secured by all or substantially all of the assets of the Company and the wholly-owned domestic subsidiaries of the Company (the "New Senior Secured Term Loan Guarantors"). The obligations of Gannett Holdings under the New Senior Secured Term Loan are guaranteed on a senior secured basis by the Company and the New Senior Secured Term Loan Guarantors.

The New Senior Secured Term Loan contains usual and customary covenants for credit facilities of this type, including a requirement to have minimum unrestricted cash of $30 million as of the last day of each fiscal ~~quarter.~~quarter, and restricts, among other things, our ability to incur debt, grant liens, sell assets, and make investments and pay dividends, in each case with customary exceptions, including an exception that permits dividends and repurchases of outstanding junior debt or equity in (i) an amount of up to $25 million per fiscal quarter if the First Lien Net Leverage Ratio for such fiscal quarter is equal to or less than 2.00 to 1.00, (ii) an amount of up to $50 million per fiscal quarter if the First Lien Net Leverage Ratio for such fiscal quarter is equal to or less than 1.50 to 1.00, and (iii) an unlimited amount if First Lien Net Leverage Ratio for such fiscal quarter is equal to or less than 1.00 to 1.00. As of ~~September~~June 30, ~~2021,~~2022, the Company was in compliance with all of the covenants and obligations under the ~~5-Year~~New Senior Secured Term Loan.

~~As of September~~The New Senior Secured Term Loan was recorded at carrying value, which approximates fair value in the condensed consolidated balance sheets and was classified as Level 2.

For the three and six months ended June 30, ~~2021,~~2022, the Company had $899.4 million in aggregate principal outstanding under the 5-Year Term Loan, $11.5 million of unamortized deferred financing costs, and $41.4 million of unamortized original issue discount and an effective interest rate of 9.5%. During the three months ended September 30, 2021, the Company recordedrecognized interest expense of ~~$19.2~~$7.5 million and ~~paid $30.3~~$14.4 million, for interest expense related to the 5-Year Term Loan. During the nine months ended September 30, 2021, the Company recorded interest expense of $50.5 million and $13.4 million for the 5-Year Term Loan and the Acquisition Term Loan, respectively, and paid interest expense of ~~$50.5~~$7.5 million and ~~$13.4~~$14.4 million, ~~for~~respectively. For the ~~5-Year Term Loan~~three and six months ended June 30, 2022, the ~~Acquisition Term Loan,~~Company recognized amortization of original issue discount of $0.9 million and $1.8 million, respectively, and amortization of deferred financing costs of $0.2 million and $0.4 million, respectively. Additionally, during the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, the Company ~~had $3.8 million and $26.0 million, respectively, related to Loss~~recognized losses on early extinguishment of debt ~~which~~of approximately $0.4 million and $1.8 million, respectively, related to the write-off of original issue discount and deferred financing ~~fees~~costs as a result of early prepayments on the 5-Year Term Loan and Acquisition Term Loan. Included in the Loss on early extinguishment of debt for the nine months ended September 30, 2021, was $17.2 million related to the write-off of the remaining original issue discount and deferred financing fees from the Acquisition Term Loan and approximately $2.2 million related to the write-off of original issue discount and deferred financing fees as a result of early prepayments on the Acquisition Term Loan prior to the Payoff. For the three and nine months ended September 30, 2021, the Company recorded $0.9 million and $2.4 million, respectively, of amortization of deferred financing costs, and $3.4 million and $8.7 million, respectively, of amortization of original issue discount, for the 5-Year Term Loan. For the three and nine months ended September 30, 2020, the Company recorded $0.2 million and $0.7 million, respectively, of amortization of deferred financing costs, and $5.6 million and $17.0 million, respectively, of amortization of original issue discount for the AcquisitionNew Senior Secured Term Loan.

Under the 5-Year Term Loan, the Company was contractually obligated to make prepayments with the proceeds from asset sales and could have elected to make optional payments with excess free cash flow from operations. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2021, we~~2022, the Company made prepayments, inclusive of both mandatory and optional prepayments, totaling ~~$91.1~~$26.9 million and ~~$145.6~~$74.9 million, respectively, which were classified as financing activities in the condensed consolidated statements of cash flows. ~~These amounts are inclusive~~As of ~~both mandatory and optional prepayments. The 5-Year~~June 30, 2022, the effective interest rate for the New Senior Secured Term Loan was ~~repaid in full on~~6.3%.

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Senior Secured Notes due 2026

On October 15, ~~2021. Refer~~2021, Gannett Holdings completed a private offering of $400 million aggregate principal amount of 6.00% first lien notes due November 1, 2026 (the "2026 Senior Notes"). The 2026 Senior Notes were issued pursuant to ~~Note~~an indenture, dated October 15, ~~— Subsequent events for further information regarding~~2021 (the "2026 Senior Notes Indenture") among Gannett Holdings, the ~~debt refinancing.~~Company, the guarantors from time to time party thereto (the "2026 Senior Notes Guarantors"), U.S. Bank National Association, as trustee, and U.S. Bank National Association, as collateral agent, registrar, paying agent and authenticating agent.

Interest on the 2026 Senior Notes is payable semi-annually in arrears, beginning on May 1, 2022. The 2026 Senior Notes mature on November 1, 2026, unless redeemed or repurchased earlier pursuant to the 2026 Senior Notes Indenture. The 2026 Senior Notes may be redeemed at the option of Gannett Holdings, in whole or in part, at any time and from time to time after November 1, 2023, at the redemption prices set forth in the 2026 Senior Notes Indenture. At any time prior to such date, Gannett Holdings will be entitled at its option to redeem all, but not less than all, of the 2026 Senior Notes at the "make-whole" redemption price set forth in the 2026 Senior Notes Indenture. Additionally, at any time prior to November 1, 2023, Gannett Holdings may, on one or more occasions, redeem up to 40% of the aggregate principal amount of the 2026 Senior Notes at the redemption price set forth in the 2026 Senior Notes Indenture with the net cash proceeds of certain equity offerings. If certain changes of control with respect to Gannett Holdings or the Company occur, Gannett Holdings must offer to purchase the 2026 Senior Notes at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase, plus accrued and unpaid interest to, but excluding, the date of purchase. In addition, during any twelve-month period commencing on or after October 15, 2021 and ending prior to November 1, 2023, up to 10% of the aggregate principal amount of the 2026 Senior Notes issued under the 2026 Senior Notes Indenture may be redeemed at a purchase price equal to 103% of the aggregate principal amount of the 2026 Senior Notes to be redeemed, plus accrued and unpaid interest, if any, to but excluding, the redemption date.

The 2026 Senior Notes are unconditionally guaranteed, jointly and severally, on a senior secured basis by the 2026 Senior Notes Guarantors. The 2026 Senior Notes and such guarantees are secured on a first-priority basis by the collateral, consisting of substantially all of the assets of Gannett Holdings and the 2026 Senior Notes Guarantors, subject to certain intercreditor arrangements.

The 2026 Senior Notes Indenture limits the Company and its restricted subsidiaries’ ability to, among other things, make investments, loans, advances, guarantees and acquisitions; incur or guarantee additional debt and issue certain disqualified equity interests and preferred stock; make certain restricted payments, including a limit on dividends on equity securities or payments to redeem, repurchase or retire equity securities or other indebtedness; dispose of assets; create liens on assets to secure debt; engage in transactions with affiliates; enter into certain restrictive agreements; and consolidate, merge, sell or otherwise dispose of all or substantially all of their or a 2026 Senior Notes Guarantor’s assets. These covenants are subject to a number of limitations and exceptions. The 2026 Senior Notes Indenture also contains customary events of default.

The 2026 Senior Notes are classified as Level 2 because it is measured at fair value using commonly accepted valuation methodologies and indirectly observable, market-based risk measurements and historical data, and a review of prices and terms available for similar debt instruments.

The unamortized deferred financing costs will be amortized over the remaining contractual life of the 2026 Senior Notes. For the three and six months ended June 30, 2022, the Company recognized interest expense of $5.5 million and $11.5 million, respectively, and paid interest expense of $12.3 million and $12.9 million, respectively. For the three and six months ended June 30, 2022, the Company recognized amortization of original issue discount of $0.7 million and $1.4 million, respectively, and amortization of deferred financing costs of $0.5 million and $1.1 million, respectively, in connection with the 2026 Senior Notes. As of June 30, 2022, the effective interest rate on the 2026 Senior Notes was 7.3%.

In March and April 2022, the Company entered into privately negotiated agreements with certain holders of our 2026 Senior Notes and repurchased $22.5 million and $7.5 million, respectively, of principal of our outstanding 2026 Senior Notes in exchange for $22.5 million and $7.5 million, respectively, of New Senior Secured Term Loans (discussed above). The repurchases were treated as an extinguishment of a portion of the 2026 Senior Notes and as a result, for the three and six months ended June 30, 2022, the Company recognized losses on early extinguishment of debt of approximately $0.4 million and $1.7 million, respectively, related to the write-off of deferred financing costs.

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Senior Secured Convertible Notes due 2027

~~On November 17, 2020, the Company issued $497.1 million in aggregate principal amount of the Company’s 6.0% Senior Secured Convertible Notes due 2027 (the "2027 Notes").~~ The 2027 Notes were issued pursuant to an Indenture dated as of November 17, 2020, as amended by the First Supplemental Indenture dated as of December 21, 2020 and the Second

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Supplemental Indenture dated as of February 9, 2021 (collectively, the "2027 Notes Indenture"), between the Company and U.S. Bank National Association, as trustee.

In connection with the issuance of the 2027 Notes, the Company entered into an Investor Agreement (the "Investor Agreement") with the holders of the 2027 Notes (the "Holders") establishing certain terms and conditions concerning the rights and restrictions on the Holders with respect to the Holders' ownership of the 2027 Notes. The Company also entered into an amendment to the Registration Rights Agreement dated November 19, 2019, between the Company and FIG ~~LLC.~~LLC, the Company's former manager.

Interest on the 2027 Notes is payable semi-annually in arrears. The 2027 Notes mature on December 1, 2027, unless earlier repurchased or converted. The 2027 Notes may be converted at any time by the holders into cash, shares of the Company’s ~~common stock, par value $0.01 per share (“~~Common ~~Stock”)~~Stock or any combination of cash and Common Stock, at the Company's election. The initial conversion rate is 200 shares of Common Stock per $1,000 principal amount of the 2027 Notes, which is equal to a conversion price of $5.00 per share of Common Stock (the "Conversion Price").

The conversion rate is subject to customary adjustment provisions as provided in the 2027 Notes Indenture. In addition, the conversion rate will be subject to adjustment in the event of any issuance or sale of Common Stock (or securities convertible into Common Stock) at a price equal to or less than the Conversion Price in order to ensure that following such issuance or sale, the 2027 Notes would be convertible into approximately 42% (adjusted for repurchases and certain other events that reduce the outstanding amount of the 2027 Notes) of the Common Stock after giving effect to such issuance or sale ~~assuming~~(assuming the initial principal amount of the 2027 Notes remains ~~outstanding.~~outstanding). After giving effect to the repurchase of $11.8 million in aggregate principal outstanding of the 2027 Notes during the year ended December 31, 2021, such percentage is approximately 41%.

Upon the occurrence of a "Make-Whole Fundamental Change" (as defined in the 2027 Notes Indenture), the Company will in certain circumstances increase the conversion rate for a specified period of time. If a "Fundamental Change" (as defined in the 2027 Notes Indenture) occurs, the Company will be required to offer to repurchase the 2027 Notes at a repurchase price of 110% of the principal amount thereof.

Holders of the 2027 Notes will have the right to put up to approximately $100 million of the 2027 Notes at par on or after the date that is 91 days after the maturity date of the ~~5-Year~~New Senior Secured Term ~~Loan or any Refinancing Facilities (as defined in the 2027 Notes Indenture) in respect thereof.~~Loan.

Under the 2027 Notes Indenture, the Company can only pay cash dividends up to an agreed-upon amount, provided the ratio of consolidated debt to EBITDA (as such terms are defined in the 2027 Notes Indenture) does not exceed a specified ratio. In addition, the 2027 Notes Indenture provides that, at any time that the Company’s Total Gross Leverage Ratio (as defined in the 2027 Notes Indenture) exceeds 1.5 and the Company approves the declaration of a dividend, the Company must offer to purchase a principal amount of 2027 Notes equal to the proposed amount of the dividend.

Until the four-year anniversary of the issuance date, the Company will have the right to redeem for cash up to approximately $99.4 million of the 2027 Notes at a redemption price of 130% of the principal amount thereof, with such amount reduced ratably by any principal amount of 2027 Notes that has been converted by the holders or redeemed or purchased by the Company.

The 2027 Notes are guaranteed by Gannett Holdings ~~LLC ("Gannett Holdings")~~ and any subsidiaries of the Company that ~~guaranteed~~guarantee the ~~5-Year~~New Senior Secured Term Loan. The 2027 Notes are secured by the same collateral that ~~secured~~secures the ~~5-Year~~New Senior Secured Term Loan. The 2027 Notes rank as senior secured debt of the Company and are secured by a second priority lien on the same collateral package that secured the indebtedness incurred in connection with the ~~5-Year~~New Senior Secured Term Loan.

The 2027 Notes Indenture includes affirmative and negative covenants, including limitations on liens, indebtedness, dispositions, loan, advances and investors, sale and leaseback transactions, restricted payments, transactions with affiliates, restrictions on dividends and other payment restrictions affecting restricted subsidiaries, negative pledges and modifications to certain agreements.The 2027 Notes Indenture also requires that the Company maintain, as of the last day of each fiscal quarter, at least $30.0 million of Qualified Cash (as defined in the 2027 Notes Indenture).The 2027 Notes Indenture includes customary events of default.

Upon issuance, the $497.1 million principal value of the 2027 Notes was separated into two components: (i) a debt component and (ii) a derivative component. At that time, we determined that the conversion option was not clearly and closely related to the economic characteristics of the 2027 Notes, nor did the conversion option meet the scope exception related to contracts in an entity’s own equity, as we did not have the ability to control whether the settlement of the conversion feature, if settled in full, would be in cash or shares due to the approval requirement to issue those shares. As a result, we concluded that the embedded conversion option must be separated from the debt liability, separately valued, and accounted for as a derivative

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~~liability.~~ The initial value allocated to the derivative liability was $115.3 million, with a corresponding reduction in the carrying value of the 2027 Notes. The derivative liability was reported within Convertible debt in the condensed consolidated balance sheets at December 31, 2020 and was marked to fair value through earnings.

~~The $389.1 million debt liability component of the~~ 2027 Notes ~~was initially measured at fair value using the present value of its cash flows at~~has two components: (i) a ~~discount rate of 10.7%~~debt component, and ~~is reported as Convertible debt in the condensed consolidated balance sheets.~~(ii) an equity component. The debt ~~liability~~ component of the 2027 Notes is classified as Level 2 because it is measured at fair value using commonly accepted valuation methodologies and indirectly observable, market-based risk measurements and historical data, and a review of prices and terms available for similar debt instruments that do not contain a conversion feature.

At the Special Meeting of stockholders of the Company, held on February 26, 2021 (the "Special Meeting"), our stockholders approved the issuance of the maximum number of shares of Common Stock issuable upon conversion of the 2027 Notes. As a result, the conversion option can be share-settled in full. The Company concluded that as of February 26, 2021, the conversion option qualified for equity classification and the bifurcated derivative liability no longer needed to be accounted for as a separate derivative on a prospective basis from the date of reassessment. As of February 26, 2021, the fair value of the conversion option of $316.2 million was reclassified to Equity as Additional paid-in capital. Any remaining debt discount that arose at the date of debt issuance from the original bifurcation will continue to be amortized through interest expense. During the nine months ended September 30, 2021, the deferred tax asset related to the embedded conversion feature of the 2027 Notes was reclassified to Equity as a reduction to Additional paid-in-capital and reduced the carrying amount of the equity component ~~of the 2027 Notes to $283.7 million.~~

As of February 26, 2021, the date of reassessment, and December 31, 2020, the estimated fair value of the derivative liability for the embedded conversion feature was $316.2 million and $189.6 million, respectively. At December 31, 2020, the derivative liability was reported within Convertible debt in the condensed consolidated balance sheets. The derivative liability wasis classified as Level 3 because it is measured at fair value ~~on a recurring basis~~ using a binomial lattice model using assumptions based on market information and historical data, and significant unobservable inputs. ~~The increase in the fair value~~As of the derivative liability of $126.6 million at the date of reassessment and reclassification to Equity was due to the increase in our stock price, partially offset by the increase in the discount rate, and was recorded in Non-Operating Other (income) expense, net in the condensed consolidated statements of operations and comprehensive income (loss) for the nine months ended SeptemberJune 30, ~~2021. The loss due to the revaluation of the derivative is not deductible for tax purposes. The assumptions used to determine the fair value as of February 26, 2021~~2022 and December 31, ~~2020 were:~~2021, the amount of the conversion feature recorded in Additional paid-in capital was $279.6 million.

February 26, 2021 December 31, 2020
Annual volatility 70.0 % 70.0 %
Discount rate 12.2 % 9.3 %
Stock price $ 4.95 $ 3.36

Total debt issuance costs of $2.3 million will be amortized over the 7-year contractual life of the 2027 Notes. The unamortized discount will be amortized over the remaining contractual life of the 2027 Notes. For the three and ~~nine~~six months ended ~~September~~June 30, 2022, the Company recognized interest expense of $7.3 million and $14.5 million, respectively, and paid interest expense of $14.6 million for both the three and six months ended June 30, 2022. For the three and six months ended June 30, 2021, the Company recognized interest expense onof $7.4 million and $14.9 million, respectively, and paid interest expense of $16.1 million for both the three and six months ended June 30, 2021. In addition, during the three and six months ended June 30, 2022, the Company recognized amortization of the original issue discount of $2.9 million and $5.8 million, respectively, and amortization of deferred financing costs related to the 2027 Notes ~~totaled $7.5 million and $22.4 million, respectively. Amortization of the discount~~ was ~~$2.9 million and $7.9 million~~immaterial for the three and ~~nine~~six months ended ~~September~~June 30, 2022. For the three and six months ended June 30, 2021, ~~respectively. Amortization~~the Company recognized amortization of ~~debt issuance~~original issue discount of $2.8 million and $5.1 million, respectively, and amortization of deferred financing costs ~~were~~related to the 2027 Notes was immaterial ~~and $0.2 million~~ for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021, respectively.~~2021. The effective interest rate on the liability component of the 2027 Notes was 10.5% as of ~~September~~both June 30, 2022 and 2021. ~~Additional information related to the liability component of the 2027 Notes includes the following:~~

In thousands September 30, 2021 December 31, 2020
Net carrying value of liability component $ 396.6 $ 388.4
Unamortized discount of liability component $ 100.5 $ 108.7

For the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, no shares were issued upon conversion, exercise, or satisfaction of the required conditions. Refer to Note 10 — Supplemental equity information for details on the convertible debt's impact to diluted earnings per share under the if-converted method.

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Senior Convertible Notes due 2024

The $3.3 million principal value of the remaining 4.75% convertible senior notes due 2024 (the "2024 Notes") outstanding is reported as convertible debt in the condensed consolidated balance sheets. ~~The~~As of June 30, 2022, the effective interest rate on the 2024 Notes was 6.05% ~~as of September 30, 2021.~~.

NOTE 87 — Pensions and other postretirement benefit plans

We, along with our subsidiaries, sponsor various defined benefit retirement plans, including plans established under collective bargaining agreements. Our retirement plans include the Gannett Retirement Plan (the "GR Plan"), the Newsquest and Romanes Pension Schemes in the U.K. ~~(the "U.K. Pension Plans")~~, and other defined benefit and defined contribution plans. We also provide health care and life insurance benefits to certain retired employees who meet age and service requirements.

Retirement plan costs include the following components:


		Pension Benefits				Postretirement Benefits					Pension benefits				Postretirement benefits
		Three months ended September 30,				Three months ended September 30,					Three months ended June 30,				Three months ended June 30,
In thousands	In thousands	2021		2020		2021		2020		In thousands	2022		2021		2022		2021
Operating expenses:	Operating expenses:									Operating expenses:
Service cost - benefits earned during the period	Service cost - benefits earned during the period	$	490	$	693	$	23	$	27	Service cost - benefits earned during the period	$	434	$	469	$	23	$	13
Non-operating expenses:	Non-operating expenses:									Non-operating expenses:
Interest cost on benefit obligation	Interest cost on benefit obligation	17,042		20,670		428		580		Interest cost on benefit obligation	18,132		17,106		434		401
Expected return on plan assets	Expected return on plan assets	(41,355)		(39,573)		—		—		Expected return on plan assets	(36,509)		(41,408)		—		—

Amortization of actuarial loss (gain)	Amortization of actuarial loss (gain)	38		(26)		(13)		15		Amortization of actuarial loss (gain)	25		42		(242)		(47)

Total non-operating (benefit) expenses	Total non-operating (benefit) expenses	$	(24,275)	$	(18,929)	$	415	$	595	Total non-operating (benefit) expenses	$	(18,352)	$	(24,260)	$	192	$	354
Total expense (benefit) for retirement plans	Total expense (benefit) for retirement plans	$	(23,785)	$	(18,236)	$	438	$	622	Total expense (benefit) for retirement plans	$	(17,918)	$	(23,791)	$	215	$	367

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		Pension Benefits				Postretirement Benefits					Pension benefits				Postretirement benefits
		Nine months ended September 30,				Nine months ended September 30,					Six months ended June 30,				Six months ended June 30,
In thousands	In thousands	2021		2020		2021		2020		In thousands	2022		2021		2022		2021
Operating expenses:	Operating expenses:									Operating expenses:
Service cost - benefits earned during the period	Service cost - benefits earned during the period	$	1,470	$	2,078	$	67	$	79	Service cost - benefits earned during the period	$	909	$	980	$	38	$	44
Non-operating expenses:	Non-operating expenses:									Non-operating expenses:
Interest cost on benefit obligation	Interest cost on benefit obligation	51,179		61,803		1,330		1,740		Interest cost on benefit obligation	36,781		34,137		885		902
Expected return on plan assets	Expected return on plan assets	(124,193)		(117,940)		—		—		Expected return on plan assets	(73,790)		(82,838)		—		—

Amortization of actuarial loss (gain)	Amortization of actuarial loss (gain)	115		(80)		(75)		44		Amortization of actuarial loss (gain)	45		77		(294)		(62)

Total non-operating (benefit) expenses	Total non-operating (benefit) expenses	$	(72,899)	$	(56,217)	$	1,255	$	1,784	Total non-operating (benefit) expenses	$	(36,964)	$	(48,624)	$	591	$	840
Total expense (benefit) for retirement plans	Total expense (benefit) for retirement plans	$	(71,429)	$	(54,139)	$	1,322	$	1,863	Total expense (benefit) for retirement plans	$	(36,055)	$	(47,644)	$	629	$	884

During the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, we contributed ~~$40.2~~$13.0 million and ~~$4.4~~$2.9 million to our pension and other postretirement plans, respectively, including $11 million in minimum required contributions for the GR Plan attributable to the 2019 plan year, as required by the Employee Retirement Income Security Act of 1974 ("ERISA"), which were deferred until January 4, 2021.respectively. Additionally, in response to the COVID-19 pandemic, our GR Plan in the U.S. has deferred certain contractual contributions and negotiated a contribution payment plan of $5.0 million per quarter starting December 31, 2020 through the end of September 30, 2022.

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NOTE ~~9 — Income taxes~~

~~The following table outlines our pre-tax net income (loss) and income tax amounts:~~

Three months ended September 30, Nine months ended September 30,
In thousands 2021 2020 2021 2020
Income (loss) before income taxes $ 17,529 $ (28,350) $ (101,880) $ (572,085)
Provision (benefit) for income taxes 2,984 3,098 11,567 (22,200)
Effective tax rate 17.0 % *** (11.4) % 3.9 %

*** Indicates an absolute value percentage change greater than 100.

The provision for income taxes for the three months ended September 30, 2021 was mainly driven by pre-tax income and is impacted by forgiveness of PPP loans during the quarter. For federal tax purposes, book income from forgiven loans is not included in taxable income, and expenses paid utilizing the loan proceeds can be deducted. The impact of PPP loan forgiveness is partially offset by the creation of valuation allowances on non-deductible interest expense carryforwards. The provision was calculated using the estimated annual effective tax rate of 77.7%. The annual effective tax rate is principally impacted by the derivative revaluation, which is non-deductible for federal tax purposes, and the creation of valuation allowances on non-deductible interest expense carryforwards. T~~he estimated annual effective tax rate is based on a projected tax expense for the full year.~~

The tax provision for the nine months ended September 30, 2021 was mainly driven by the pre-tax net loss generated during the first quarter of 2021. The tax provision is impacted by the derivative revaluation, which is nondeductible for federal tax purposes, the creation of valuation allowances on non-deductible interest expense carryforwards, and PPP loan forgiveness, in combination with state income tax and foreign tax expense.

During the nine months ended September 30, 2021, we reclassified $32.5 million (tax effected) in connection with the retirement of the deferred tax asset related to the embedded conversion feature associated with the Company’s 2027 Notes. The retirement of the deferred tax asset resulted from the reclassification of the embedded conversion feature from a derivative liability to Equity as a reduction to Additional paid-in-capital during the first quarter of 2021. See Note 7 - Debt for additional information about the Company's 2027 Notes.

The total amount of unrecognized tax benefits that, if recognized, may impact the effective tax rate was approximately $42.8 million as of September 30, 2021 and $39.5 million as of December 31, 2020. The amount of accrued interest and penalties payable related to unrecognized tax benefits was $3.4 million as of September 30, 2021 and $2.6 million as of December 31, 2020.

It is reasonably possible that further adjustments to our unrecognized tax benefits may be made within the next twelve months due to audit settlements and regulatory interpretations of existing tax laws. At this time, an estimate of potential change to the amount of unrecognized tax benefits cannot be made.

The provision for income taxes for the three months ended September 30, 2020 was mainly impacted by a reduction in the year to date tax benefit as a result of a lower projected annualized effective tax rate. The provision for income taxes for the three months ended September 30, 2020 was calculated using the estimated annual effective tax rate of 6.2%. The estimated annual effective tax rate is based on a projected tax benefit for the full year. The tax benefit for the nine months ended September 30, 2020 is lower than the 21% statutory federal rate due to the impact of non-deductible asset impairments, non-deductible officers’ compensation and the creation of valuation allowances on non-deductible interest expense carryforwards and capital losses.

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~~NOTE 10 — Supplemental equity information~~

~~Income (loss) per share~~

~~The following table sets forth the information used to compute basic and diluted income (loss) per share:~~

Three months ended September 30, Nine months ended September 30,
In thousands, except per share data 2021 2020 2021 2020
Net income (loss) attributable to Gannett $ 14,687 $ (31,260) $ (112,514) $ (548,305)
Interest adjustment to Net income (loss) attributable to Gannett related to assumed conversions of the 2027 Notes, net of taxes 7,598 — — —
Net income (loss) attributable to Gannett for diluted earnings per share $ 22,285 $ (31,260) $ (112,514) $ (548,305)
Basic weighted average shares outstanding 135,002 132,223 134,610 131,425
Effect of dilutive securities:
Restricted stock grants 5,032 — — —
2027 Notes 99,419 — — —
Diluted weighted average shares outstanding 239,453 132,223 134,610 131,425
Income (loss) per share attributable to Gannett - basic $ 0.11 $ (0.24) $ (0.84) $ (4.17)
Income (loss) per share attributable to Gannett - diluted $ 0.09 $ (0.24) $ (0.84) $ (4.17)

~~The Company excluded the following securities from the computation of diluted income per share because their effect would have been antidilutive:~~

Three months ended September 30, Nine months ended September 30,
In thousands 2021 2020 2021 2020
Warrants 845 1,362 845 1,362
Stock options 6,068 6,068 6,068 6,068
Restricted stock grants (a)
42 7,130 10,442 7,130
2027 Notes (b)
— — 99,419 —

~~(a)Includes Restricted stock awards ("RSAs"), Restricted stock units ("RSUs") and Performance stock units ("PSUs").~~

~~(b)Represents the total number of shares that would be convertible at September 30, 2021 as stipulated in the 2027 Notes Indenture.~~

The 2027 Notes may be converted at any time by the holders into cash, shares of the Company’s Common Stock or any combination of cash and Common Stock, at the Company’s election. Conversion of all of the 2027 Notes into Common Stock (assuming the maximum increase in the conversion rate as a result of a Make-Whole Fundamental Change but no other adjustments to the conversion rate), would result in the issuance of an aggregate of 294.2 million shares of Common Stock. The Company has excluded approximately 194.8 million shares from the loss per share calculation, representing the difference between the total number of shares that would be convertible at September 30, 2021 and the total number of shares issuable assuming the maximum increase in the conversion rate.

~~Share-based compensation~~

The Company recognized compensation cost for share-based payments of $4.6 million and $13.8 million for the three and nine months ended September 30, 2021, respectively, and $3.8 million and $22.8 million for the three and nine months ended September 30, 2020, respectively.

The total compensation cost not yet recognized related to non-vested awards as of September 30, 2021 was $29.6 million, which is expected to be recognized over a weighted-average period of 2.1 years through October 2023.

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~~Restricted stock awards~~

During the nine months ended September 30, 2021, a total of 4.1 million RSAs were granted. RSAs generally vest in equal annual installments over a three-year period subject to the participants' continued employment with the Company. The weighted average grant date fair value of RSAs granted during the nine months ended September 30, 2021 was $5.29.

~~Rights Agreement~~

On April 6, 2020, the Company's board of directors (the "Board") adopted a stockholder rights plan in the form of a Section 382 Rights Agreement ("Rights Agreement") to preserve and protect the Company's income tax net operating loss carryforwards ("NOLs") and other tax assets. The Rights Agreement was approved by the Company's stockholders on June 7, 2021 at the 2021 annual meeting of stockholders. As of December 31, 2020, the Company had approximately $543.5 million of NOLs available which could be used in certain circumstances to offset future federal taxable income.

Under the Rights Agreement, the Board declared a non-taxable dividend of 1 preferred share purchase right for each outstanding share of Common Stock. The rights will be exercisable only if a person or group acquires 4.99% or more of Gannett’s Common Stock. Gannett’s existing stockholders that beneficially own in excess of 4.99% of the Common Stock are "grandfathered in" at their current ownership level and the rights then become exercisable if any of those stockholders acquire an additional 0.5% or more of Common Stock of the Company. If the rights become exercisable, all holders of rights, other than the person or group triggering the rights, will be entitled to purchase Gannett Common Stock at a 50% discount or Gannett may exchange each right held by such holders for 1 share of Common Stock. Rights held by the person or group triggering the rights will become void and will not be exercisable. The Board has the discretion to exempt any person or group from the provisions of the Rights Agreement.

The Rights Agreement will continue in effect until April 5, 2023. The Board has the ability to terminate the plan if it determines that doing so would be in the best interest of the Company’s stockholders. The rights may also expire at an earlier date if certain events occur, as described more fully in the Rights Agreement filed by the Company with the Securities and Exchange Commission.

~~Preferred stock~~

The Company has authorized 300,000 shares of preferred stock, par value $0.01 per share, issuable in one or more series designated by the Board, of which 150,000 shares have been designated as Series A Junior Participating Preferred Stock, none of which are outstanding. There were no issuances of preferred stock during the nine months ended September 30, 2021.

~~Accumulated other comprehensive income (loss)~~

~~The following tables summarize the components of, and the changes in, Accumulated other comprehensive income (loss), net of tax for the nine months ended September 30, 2021 and 2020:~~

Nine months ended September 30, 2021 Nine months ended September 30, 2020
In thousands Pension and Postretirement Plans Foreign Currency Translation

Total Pension and Postretirement Plans Foreign Currency Translation Total
Beginning balance $ 40,441 $ 9,732 $ 50,173 $ 936 $ 7,266 $ 8,202
Other comprehensive income (loss) before reclassifications 93 (700) (607) (5,675) (8,908) (14,583)
Amounts reclassified from accumulated other comprehensive income (loss)(a)(b)
29 — 29 (30) — (30)
Net current period other comprehensive income (loss), net of taxes 122 (700) (578) (5,705) (8,908) (14,613)
Ending balance $ 40,563 $ 9,032 $ 49,595 $ (4,769) $ (1,642) $ (6,411)

~~(a)This accumulated other comprehensive income (loss) component is included in the computation of net periodic benefit cost. See Note~~ 8 ~~— Pensions and other postretirement benefit plans.~~

~~(b)Amounts reclassified from accumulated other comprehensive loss are recorded net of tax impacts of $11 thousand and $6 thousand for the nine months ended September 30, 2021 and 2020, respectively.~~

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~~NOTE 11~~ — Fair value measurement

In accordance with ASC 820, "Fair Value Measurement," fair value measurements are required to be disclosed using a three-tiered fair value hierarchy which distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Level 1 refers to fair values determined based on quoted prices in active markets for identical assets or liabilities, Level 2 refers to fair values estimated using significant other observable inputs and Level 3 includes fair values estimated using significant unobservable inputs.

As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, assets and liabilities recorded at fair value and measured on a recurring basis primarily consist of pension plan assets. As permitted by U.S. GAAP, we use net asset values ("NAV") as a practical expedient to determine the fair value of certain investments. These investments measured at NAV have not been classified in the fair value hierarchy.

~~The 5-Year Term Loan was recorded at carrying value, which approximates fair value in the condensed consolidated balance sheets and was classified as Level 2.~~ Refer to Note 6 — Debt for additional discussion regarding fair value of the New Senior Secured Term Loan, the 2026 Senior Notes, the 2027 Notes ~~in Note 7 — Debt.~~and the 2024 Notes.

Certain assets are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). Assets held for sale (Level 3) are measured on a nonrecurring basis and are evaluated using executed purchase agreements, letters of intent or third-party valuation analyses when certain circumstances arise. Assets held for sale totaled ~~$21.7~~$1.1 million and $3.5 million as of ~~September~~June 30, ~~2021~~2022 and ~~$14.7 million as of~~ December 31, ~~2020.~~2021, respectively. The Company performs its annual goodwill and indefinite-lived intangible impairment assessment during the second quarter of the year. Any resulting asset impairment would require that the asset be recorded at its fair value. The resulting fair value measurements of the assets are considered to be Level 3 measurements. Refer to Note 54 — Goodwill and intangible assets for additional discussion regarding the annual impairment assessment.

NOTE 129 — Income taxes

The following table outlines our pre-tax net loss and income tax amounts:


	Three months ended June 30,						Six months ended June 30,
In thousands	2022			2021			2022			2021
Income (loss) before income taxes	$	(31,542)		$	32,401		$	(42,251)		$	(119,409)
Provision for income taxes	22,158			17,692			14,551			8,583
Effective tax rate	(70.3)		%	54.6		%	(34.4)		%	(7.2)		%

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The provision for income taxes for the three months ended June 30, 2022 was mainly driven by the valuation allowances on non-deductible interest expense carryforwards, the change in the estimated annual effective tax rate as a result of the change in the net income before tax forecast in the second quarter of 2022, and the global intangible low taxed income inclusion from our wholly owned U.K subsidiary. The provision was calculated using an estimated annual effective tax rate of negative 43.30%. The estimated annual effective tax rate is principally impacted by the valuation allowances on non-deductible interest expense carryforwards, the pre-tax book loss benefit, the global intangible low taxed income inclusion, and state and foreign income tax expense.

The provision for income taxes for the six months ended June 30, 2022 was mainly driven by the valuation allowances on non-deductible interest expense carryforwards, pre-tax loss benefit, and the global intangible low taxed income inclusion.

The total amount of unrecognized tax benefits that, if recognized, may impact the effective tax rate was approximately $46.5 million and $45.0 million as of June 30, 2022 and December 31, 2021, respectively. The amount of accrued interest and penalties payable related to unrecognized tax benefits was $4.0 million and $3.7 million as of June 30, 2022 and December 31, 2021, respectively.

The provision for income taxes for the three months ended June 30, 2021 was mainly driven by the pre-tax income and was impacted by the creation of valuation allowances on non-deductible interest expense carryforwards in combination with the U.K. enacted legislation to increase the statutory tax rate from 19% to 25%, effective April 1, 2023. While the U.K. corporate tax rate change does not impact 2021 or 2022 tax filings, the rate change impacts the tax effected value of the U.K. deferred tax liabilities. The provision was calculated using the estimated annual effective tax rate of 49.6%. The estimated annual effective tax rate is based on a projected tax expense for the full year.

The provision for income taxes for the six months ended June 30, 2021 was mainly driven by the pre-tax net loss generated during the first quarter of 2021. The tax provision was also impacted by the derivative revaluation, which is nondeductible for tax purposes, partially offset by the creation of valuation allowances on non-deductible interest expense carryforwards as well as state income tax and foreign tax expense.

NOTE 10 — Supplemental equity information

Income (loss) per share

The following table sets forth the information to compute basic and diluted income (loss) per share:


	Three months ended June 30,				Six months ended June 30,
In thousands, except per share data	2022		2021		2022		2021
Net income (loss) attributable to Gannett	$	(53,688)	$	15,115	$	(56,655)	$	(127,201)
Interest adjustment to Net income (loss) attributable to Gannett related to assumed conversions of the 2027 Notes, net of taxes	—		7,470		—		—
Net income (loss) attributable to Gannett for diluted earnings per share	$	(53,688)	$	22,585	$	(56,655)	$	(127,201)

Basic weighted average shares outstanding	137,132		134,744		136,781		134,411
Effect of dilutive securities:
Restricted stock grants	—		3,350		—		—
2027 Notes	—		99,419		—		—
Diluted weighted average shares outstanding	137,132		237,513		136,781		134,411

Income (loss) per share attributable to Gannett - basic	$	(0.39)	$	0.11	$	(0.41)	$	(0.95)
Income (loss) per share attributable to Gannett - diluted	$	(0.39)	$	0.10	$	(0.41)	$	(0.95)

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The Company excluded the following securities from the computation of diluted income (loss) per share because their effect would have been antidilutive:


	Three months ended June 30,		Six months ended June 30,
In thousands	2022	2021	2022	2021
Warrants	845	845	845	845
Stock options	6,068	6,068	6,068	6,068
Restricted stock grants (a)	11,789	46	11,789	10,577
2027 Notes (b)	97,057	—	97,057	99,419

(a)Includes Restricted stock awards ("RSAs"), Restricted stock units ("RSUs") and Performance stock units ("PSUs").

(b)Represents the total number of shares that would be convertible at June 30, 2022 and 2021 as stipulated in the 2027 Notes Indenture.

The 2027 Notes may be converted at any time by the holders into cash, shares of the Company’s Common Stock or any combination of cash and Common Stock, at the Company’s election. Conversion of all of the 2027 Notes into Common Stock (assuming the maximum increase in the conversion rate as a result of a Make-Whole Fundamental Change but no other adjustments to the conversion rate), would result in the issuance of an aggregate of 287.2 million shares of Common Stock. The Company has excluded approximately 190.1 million shares from the income (loss) per share calculation, representing the difference between the total number of shares that would be convertible at June 30, 2022 and the total number of shares issuable assuming the maximum increase in the conversion rate.

Share-based compensation

The Company recognized compensation cost for share-based payments of $5.4 million and $8.8 million for the three and six months ended June 30, 2022, respectively, and $5.8 million and $9.2 million for the three and six months ended June 30, 2021, respectively.

The total compensation cost not yet recognized related to non-vested awards as of June 30, 2022 was $41.5 million, which is expected to be recognized over a weighted-average period of 2.3 years through October 2024.

Equity awards

During the six months ended June 30, 2022, a total of 7.3 million RSAs were granted. RSAs generally vest 33.3% on the first and second anniversary of the date of grant, and 33.4% on the third anniversary of the date of grant, subject to the participants' continued employment with the Company and the terms of the applicable award agreement. The weighted average grant date fair value of RSAs granted during the six months ended June 30, 2022 was $4.32.

During the six months ended June 30, 2022, a total of 0.3 million PSUs were granted. PSUs are subject to the achievement of certain performance goals over the eligible period. Compensation cost ultimately recognized for these PSUs will equal the grant-date fair market value of the unit that coincides with the actual outcome of the performance conditions. On an interim basis, we record compensation cost based on the expected level of achievement of the performance conditions.

Preferred stock

Stock Repurchase Program

On February 1, 2022, the Board of Directors authorized the repurchase of up to $100 million of the Company's Common Stock (the "Stock Repurchase Program"). Repurchases may be made from time to time through open market purchases or privately negotiated transactions, pursuant to one or more plans established pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934 or by means of one or more tender offers, in each case, as permitted by securities laws and other legal requirements. The amount and timing of the purchases will depend on a number of factors including, but not limited to, the price and availability of the Company’s shares, trading volume, capital availability, Company performance and general economic and market conditions. The Stock Repurchase Program may be suspended or discontinued at any time.

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For both the three and six months ended June 30, 2022, the Company repurchased 800 thousand shares of Common Stock under the Stock Repurchase Program for approximately $3.1 million, excluding commissions. As of June 30, 2022, the remaining authorized amount under the Stock Repurchase Program was approximately $96.9 million.

Accumulated other comprehensive income (loss)

The following tables summarize the components of, and the changes in, Accumulated other comprehensive income (loss), net of tax for the six months ended June 30, 2022 and 2021:


	Six months ended June 30, 2022						Six months ended June 30, 2021
In thousands	Pension and postretirement plans		Foreign currency translation		Total		Pension and postretirement plans		Foreign currency translation		Total
Beginning balance	$	50,870	$	9,128	$	59,998	$	40,441	$	9,732	$	50,173
Other comprehensive income (loss) before reclassifications	10,138		(23,204)		(13,066)		(958)		4,787		3,829
Amounts reclassified from accumulated other comprehensive income (loss)(a)(b)	(185)		—		(185)		11		—		11
Net current period other comprehensive income (loss), net of taxes	9,953		(23,204)		(13,251)		(947)		4,787		3,840
Ending balance	$	60,823	$	(14,076)	$	46,747	$	39,494	$	14,519	$	54,013

(a)This accumulated other comprehensive income (loss) component is included in the computation of net periodic benefit cost. See Note 7 — Pensions and other postretirement benefit plans.

(b)Amounts reclassified from accumulated other comprehensive loss are recorded net of tax impacts of $64 thousand and $4 thousand for the six months ended June 30, 2022 and 2021, respectively.

NOTE 11 — Commitments, contingencies and other matters

Legal Proceedings

The Company is and may become involved from time to time in legal proceedings in the ordinary course of its business, including but not limited to matters such as libel, invasion of privacy, intellectual property infringement, wrongful termination actions, complaints alleging employment discrimination, and regulatory investigations and inquiries. In addition, the Company is involved from time to time in governmental and administrative proceedings concerning employment, labor, environmental, and other claims. Insurance coverage mitigates potential loss for certain of these matters. Historically, such claims and proceedings have not had a material adverse effect on the Company’s consolidated results of operations or financial position.

We are also defendants in judicial and administrative proceedings involving matters incidental to our business. Although the Company is unable to predict with certainty the eventual outcome of any litigation, regulatory investigation or inquiry, in the opinion of management, the Company does not expect its current and any threatened legal proceedings to have a material adverse effect on the Company’s business, financial position or consolidated results of operations. Given the inherent unpredictability of these types of proceedings, however, it is possible that future adverse outcomes could have a material effect on the Company’s financial results.

~~Other~~

~~Redeemable noncontrolling interests~~

Equity purchase arrangements that are exercisable by the counterparty to the agreement and that are outside the sole control of the Company are accounted for in accordance with ASC 480-10-S99-3A and are classified as Redeemable noncontrolling interests in the condensed consolidated balance sheets.

2120

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NOTE 1312 — Segment reporting

We define our reportable segments based on the way the Chief Operating Decision Maker ("CODM"), which is our Chief Executive Officer, manages the operations for purposes of allocating resources and assessing performance. Our reportable segments include the following:

•~~Publishing~~Gannett Media is comprised of our portfolio of local, regional, national, and international newspaper publishers. The results of this segment include Advertising and marketing services revenues from local, classified, and national advertising across multiple platforms, including print, online, mobile, and tablet as well as niche publications, Circulation revenues from home delivery, digital distribution and single copy sales of our publications, and Other revenues, mainly from commercial printing, distribution arrangements, revenues from our events business, digital content syndication and affiliate revenues, and third-party newsprint sales. The ~~Publishing~~Gannett Media reportable segment is an aggregation of 2 operating segments: Domestic ~~Publishing~~Gannett Media and ~~U.K. Publishing.~~Newsquest.

•Digital Marketing Solutions is comprised of our digital marketing solutions subsidiary, ~~ReachLocal.~~branded LOCALiQ. The results of this segment include Advertising and marketing services revenues through multiple services, including search advertising, display advertising, search optimization, social media, website development, web presence products, customer relationship management, and software-as-a-service solutions.

In addition to the reportable segments above, ~~operating segments,~~ we have a Corporate and other category that includes activities not directly attributable to a specific segment. This category primarily consists of broad corporate functions, including legal, human resources, accounting, finance and marketing as well as other general business costs.

In the ordinary course of business, our reportable segments enter into transactions with one another. While intersegment transactions are treated like third-party transactions to determine segment performance, the revenues and expenses recognized by the segment that is the counterparty to the transaction are eliminated in consolidation and do not affect consolidated results.

The CODM uses Adjusted EBITDA and Adjusted EBITDA margin ~~and Adjusted Net income (loss) attributable to Gannett~~ to evaluate the performance of the segments and allocate resources. Adjusted EBITDA and Adjusted EBITDA margin ~~and Adjusted Net income (loss) attributable to Gannett~~ are non-GAAP financial performance measures we believe offer a useful view of the overall operation of our businesses and may be different than similarly-titled measures used by other companies. We define Adjusted EBITDA as Net income (loss) attributable to Gannett before (1) Income tax expense (benefit), (2) Interest expense, (3) Gains or losses on the early extinguishment of debt, (4) Non-operating pension income, ~~(expense),~~ (5) Loss on convertible notes derivative, (6) Depreciation and amortization, (7) Integration and reorganization costs, (8) Other operating expenses, including third-party debt expenses and acquisition costs, (9) Asset impairments, (10) Goodwill and intangible impairments, (11) Gains or losses on the sale or disposal of assets, (12) Share-based compensation, and (13) certain other non-recurring ~~charges, including gains or losses on the sale of investments.~~charges. We define Adjusted EBITDA margin as Adjusted EBITDA divided by total Operating revenues. We define Adjusted Net income (loss) attributable to Gannett before (1) Gains or losses on the early extinguishment of debt, (2) Loss on convertible notes derivative, (3) Integration and reorganization costs, (4) Other operating expenses, including third-party debt expenses and acquisition costs, (5) Asset impairments, (6) Goodwill and intangibles impairments, (7) Gains or losses on the sale or disposal of assets, (8) Gains or losses on the sale of investments, and (9) the tax impact of the above items.

Management considers Adjusted EBITDA and Adjusted EBITDA margin ~~and Adjusted Net income (loss) attributable to Gannett~~ to be ~~the appropriate~~important metrics to evaluate and compare the ongoing operating performance of our segments on a consistent basis across reporting periods as ~~it eliminates~~they eliminate the effect of items ~~which~~that we do not believe are indicative of each segment's core operating performance.

The following tables present our segment information:


	Three months ended June 30, 2022
In thousands	Gannett Media			Digital Marketing Solutions			Corporate and other		Intersegment Eliminations		Consolidated
Advertising and marketing services - external sales	$	265,596		$	118,013		$	—	$	—	$	383,609
Advertising and marketing services - intersegment sales	35,605			—			—		(35,605)		—
Circulation	274,624			—			—		—		274,624
Other	89,019			—			1,408		—		90,427
Total operating revenues	$	664,844		$	118,013		$	1,408	$	(35,605)	$	748,660

Adjusted EBITDA (non-GAAP basis)	$	50,856		$	14,306		$	(14,311)	$	—	$	50,851
Adjusted EBITDA margin (non-GAAP basis)	7.6		%	12.1		%	NM		NM		6.8		%

NM indicates not meaningful.

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	Three months ended June 30, 2021
In thousands	Gannett Media			Digital Marketing Solutions			Corporate and other		Intersegment Eliminations		Consolidated
Advertising and marketing services - external sales	$	309,469		$	110,037		$	604	$	—	$	420,110
Advertising and marketing services - intersegment sales	32,012			—			—		(32,012)		—
Circulation	310,258			—			1		—		310,259
Other	72,806			—			1,100		—		73,906
Total operating revenues	$	724,545		$	110,037		$	1,705	$	(32,012)	$	804,275

Adjusted EBITDA (non-GAAP basis)	$	114,189		$	12,529		$	(10,949)	$	—	$	115,769
Adjusted EBITDA margin (non-GAAP basis)	15.8		%	11.4		%	NM		NM		14.4		%

NM indicates not meaningful.


	Six months ended June 30, 2022
In thousands	Gannett Media			Digital Marketing Solutions			Corporate and other		Intersegment Eliminations		Consolidated
Advertising and marketing services - external sales	$	531,001		$	227,722		$	—	$	—	$	758,723
Advertising and marketing services - intersegment sales	68,962			—			—		(68,962)		—
Circulation	563,226			—			—		—		563,226
Other	172,074			—			2,714		—		174,788
Total operating revenues	$	1,335,263		$	227,722		$	2,714	$	(68,962)	$	1,496,737

Adjusted EBITDA (non-GAAP basis)	$	119,504		$	25,486		$	(29,968)	$	—	$	115,022
Adjusted EBITDA margin (non-GAAP basis)	8.9		%	11.2		%	NM		NM		7.7		%

NM indicates not meaningful.


	Six months ended June 30, 2021
In thousands	Gannett Media			Digital Marketing Solutions			Corporate and other		Intersegment Eliminations		Consolidated
Advertising and marketing services - external sales	$	595,923		$	211,413		$	1,131	$	—	$	808,467
Advertising and marketing services - intersegment sales	59,868			—			—		(59,868)		—
Circulation	635,694			—			2		—		635,696
Other	132,645			905			3,646		—		137,196
Total operating revenues	$	1,424,130		$	212,318		$	4,779	$	(59,868)	$	1,581,359

Adjusted EBITDA (non-GAAP basis)	$	216,397		$	21,701		$	(21,864)	$	—	$	216,234
Adjusted EBITDA margin (non-GAAP basis)	15.2		%	10.2		%	NM		NM		13.7		%

NM indicates not meaningful.

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~~The following tables present our segment information:~~

Three months ended September 30, 2021
In thousands Publishing Digital Marketing Solutions Corporate and other Intersegment Eliminations Consolidated
Advertising and marketing services - external sales $ 294,742 $ 116,771 $ 507 $ — $ 412,020
Advertising and marketing services - intersegment sales 34,042 — — (34,042) —
Circulation 306,698 — 4 — 306,702
Other 80,325 — 1,138 — 81,463
Total operating revenues $ 715,807 $ 116,771 $ 1,649 $ (34,042) $ 800,185
Adjusted EBITDA (non-GAAP basis) $ 101,001 $ 15,024 $ (13,958) $ — $ 102,067

Three months ended September 30, 2020
In thousands Publishing Digital Marketing Solutions Corporate and other Intersegment Eliminations Consolidated
Advertising and marketing services - external sales $ 303,646 $ 100,807 $ 774 $ — $ 405,227
Advertising and marketing services - intersegment sales 25,862 — — (25,862) —
Circulation 336,152 — 6 — 336,158
Other 66,566 4,636 1,952 — 73,154
Total operating revenues $ 732,226 $ 105,443 $ 2,732 $ (25,862) $ 814,539
Adjusted EBITDA (non-GAAP basis) $ 108,752 $ 4,177 $ (24,949) $ — $ 87,980

Nine months ended September 30, 2021
In thousands Publishing Digital Marketing Solutions Corporate and other Intersegment Eliminations Consolidated
Advertising and marketing services - external sales $ 890,665 $ 328,184 $ 1,638 $ — $ 1,220,487
Advertising and marketing services - intersegment sales 93,910 — — (93,910) —
Circulation 942,392 — 6 — 942,398
Other 212,970 905 4,784 — 218,659
Total operating revenues $ 2,139,937 $ 329,089 $ 6,428 $ (93,910) $ 2,381,544
Adjusted EBITDA (non-GAAP basis) $ 317,398 $ 36,725 $ (35,822) $ — $ 318,301

Nine months ended September 30, 2020
In thousands Publishing Digital Marketing Solutions Corporate and other Intersegment Eliminations Consolidated
Advertising and marketing services - external sales $ 939,923 $ 306,899 $ 2,334 $ — $ 1,249,156
Advertising and marketing services - intersegment sales 85,472 — — (85,472) —
Circulation 1,053,518 — 10 — 1,053,528
Other 207,355 14,388 5,796 — 227,539
Total operating revenues $ 2,286,268 $ 321,287 $ 8,140 $ (85,472) $ 2,530,223
Adjusted EBITDA (non-GAAP basis) $ 311,767 $ 14,847 $ (61,548) $ — $ 265,066

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The table below shows the reconciliation of Net income (loss) attributable to Gannett to Adjusted EBITDA and Net income (loss) attributable to Gannett margin to Adjusted EBITDA margin:

Three months ended September 30, Nine months ended September 30,
In thousands 2021 2020 2021 2020
Net income (loss) attributable to Gannett $ 14,687 $ (31,260) $ (112,514) $ (548,305)
Provision (benefit) for income taxes 2,984 3,098 11,567 (22,200)
Interest expense 34,603 58,063 109,370 173,890
Loss on early extinguishment of debt 3,761 476 25,996 1,650
Non-operating pension income (23,860) (18,334) (71,644) (54,433)
Loss on convertible notes derivative — — 126,600 —
Depreciation and amortization 48,107 61,355 154,452 205,706
Integration and reorganization costs 13,619 13,417 35,467 73,978
Other operating expenses 4 1,913 11,354 10,261
Asset impairments 2,301 1,585 3,134 8,444
Goodwill and intangible impairments — — — 393,446
(Gain) loss on sale or disposal of assets, net (833) 795 9,206 1,540
Share-based compensation expense 4,602 3,844 13,804 22,812
Other items 2,092 (6,972) 1,509 (1,723)
Adjusted EBITDA (non-GAAP basis) $ 102,067 $ 87,980 $ 318,301 $ 265,066
Net income (loss) attributable to Gannett margin 1.8 % (3.8) % (4.7) % (21.7) %
Adjusted EBITDA margin (non-GAAP basis) 12.8 % 10.8 % 13.4 % 10.5 %

~~The table below shows the reconciliation of Net income (loss) attributable to Gannett to Adjusted Net income (loss) attributable to Gannett:~~


		Three months ended September 30,				Nine months ended September 30,					Three months ended June 30,						Six months ended June 30,
In thousands	In thousands	2021		2020		2021		2020		In thousands	2022			2021			2022			2021
Net income (loss) attributable to Gannett	Net income (loss) attributable to Gannett	$	14,687	$	(31,260)	$	(112,514)	$	(548,305)	Net income (loss) attributable to Gannett	$	(53,688)		$	15,115		$	(56,655)		$	(127,201)
Provision for income taxes										Provision for income taxes	22,158			17,692			14,551			8,583
Interest expense										Interest expense	26,084			35,264			52,090			74,767
Loss on early extinguishment of debt	Loss on early extinguishment of debt	3,761		476		25,996		1,650		Loss on early extinguishment of debt	749			2,834			3,492			22,235
Non-operating pension income										Non-operating pension income	(18,160)			(23,906)			(36,373)			(47,784)
Loss on convertible notes derivative	Loss on convertible notes derivative	—		—		126,600		—		Loss on convertible notes derivative	—			—			—			126,600
Depreciation and amortization										Depreciation and amortization	49,530			48,242			97,313			106,345
Integration and reorganization costs	Integration and reorganization costs	13,619		13,417		35,467		73,978		Integration and reorganization costs	15,745			8,444			27,143			21,848
Other operating expenses	Other operating expenses	4		1,913		11,354		10,261		Other operating expenses	314			774			1,416			11,350
Asset impairments	Asset impairments	2,301		1,585		3,134		8,444		Asset impairments	85			—			939			833
Goodwill and intangible impairments		—		—		—		393,446
(Gain) loss on sale or disposal of assets, net		(833)		795		9,206		1,540
Gain on sale of investments		—		(7,800)		—		(7,995)
Subtotal		33,539		(20,874)		99,243		(66,981)
Tax impact of above items		(7,033)		(25,449)		(28,042)		(61,364)
Adjusted Net income (loss) attributable to Gannett (non-GAAP basis)		$	26,506	$	(46,323)	$	71,201	$	(128,345)

Loss (gain) on sale or disposal of assets, net										Loss (gain) on sale or disposal of assets, net	372			5,294			(2,432)			10,039
Share-based compensation expense										Share-based compensation expense	5,385			5,779			8,778			9,202
Other Items										Other Items	2,277			237			4,760			(583)
Adjusted EBITDA (non-GAAP basis)										Adjusted EBITDA (non-GAAP basis)	$	50,851		$	115,769		$	115,022		$	216,234
Net income (loss) attributable to Gannett margin										Net income (loss) attributable to Gannett margin	(7.2)		%	1.9		%	(3.8)		%	(8.0)		%
Adjusted EBITDA margin (non-GAAP basis)										Adjusted EBITDA margin (non-GAAP basis)	6.8		%	14.4		%	7.7		%	13.7		%

Asset information by segment is not a key measure of performance used by the CODM function. Accordingly, we have not disclosed asset information by segment. Additionally, equity income in unconsolidated investees, net, interest expense, other non-operating items, net, and ~~benefit~~provision (benefit) for income taxes, as reported in the condensed consolidated financial statements, are not part of operating income and are primarily recorded at the corporate level.

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NOTE 1413 — Other supplemental information

Cash and cash equivalents, including restricted cash

Cash equivalents represent highly liquid certificates of deposit which have original maturities of three months or less. Restricted cash is held as cash collateral for certain business operations. Restricted cash primarily consists of funding for letters of credit and cash held in an irrevocable grantor trust for our deferred compensation plans. The restrictions will lapse when benefits are paid to plan participants and their beneficiaries as specified in the plans.

The following table presents a reconciliation of cash, cash equivalents and restricted cash:


		September 30,					June 30,
In thousands	In thousands	2021		2020		In thousands	2022		2021
Cash and cash equivalents	Cash and cash equivalents	$	141,302	$	188,960	Cash and cash equivalents	$	87,331	$	158,563
Restricted cash included in other current assets		4,845		10,796
Restricted cash included in investments and other assets		21,267		24,177
Restricted cash included in prepaid expenses and other current assets						Restricted cash included in prepaid expenses and other current assets	1,117		4,879
Restricted cash included in other assets (a)						Restricted cash included in other assets (a)	11,023		22,702
Total cash, cash equivalents and restricted cash	Total cash, cash equivalents and restricted cash	$	167,414	$	223,933	Total cash, cash equivalents and restricted cash	$	99,471	$	186,144

(a) The decrease in Restricted cash included in other assets from June 30, 2021 to June 30, 2022 was mainly driven by the reclassification of amounts from Restricted cash to Deposits as the cash was not separately identifiable.

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Supplemental cash flow information

The following table presents supplemental cash flow information, including non-cash investing and financing activities:


		Nine months ended September 30,					Six months ended June 30,
In thousands	In thousands	2021		2020		In thousands	2022		2021
Net cash refund for taxes		$	(9,031)	$	(4,510)
Cash paid for taxes, net of refunds						Cash paid for taxes, net of refunds	$	2,396	$	(8,703)
Cash paid for interest	Cash paid for interest	80,280		176,402		Cash paid for interest	41,898		49,902
Non-cash investing and financing activities:	Non-cash investing and financing activities:					Non-cash investing and financing activities:
Accrued capital expenditures	Accrued capital expenditures	$	2,836	$	758	Accrued capital expenditures	$	1,406	$	924

Accounts payable and accrued liabilities

A breakout of Accounts payable and accrued liabilities is presented below:


In thousands	In thousands	September 30, 2021		December 31, 2020		In thousands	June 30, 2022		December 31, 2021
Accounts payable	Accounts payable	$	134,805	$	131,797	Accounts payable	$	138,923	$	157,257
Compensation	Compensation	108,444		115,061		Compensation	99,152		107,585
Taxes (primarily property and sales taxes)		29,104		30,834
Taxes (primarily property, sales, and payroll taxes)						Taxes (primarily property, sales, and payroll taxes)	16,969		26,042
Benefits	Benefits	23,031		22,821		Benefits	19,992		21,056
Interest	Interest	10,012		3,676		Interest	6,118		7,577
Other	Other	51,928		74,057		Other	39,545		37,497
Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	$	357,324	$	378,246	Accounts payable and accrued liabilities	$	320,699	$	357,014

~~NOTE 15 — Subsequent events~~

~~Debt Refinancing~~

On October 15, 2021, Gannett Holdings, a wholly-owned subsidiary of the Company, entered into a five-year senior secured term loan facility in an aggregate principal amount of $516 million (the "New Senior Secured Term Loan"). Also, on October 15, 2021, Gannett Holdings completed a private offering of $400 million aggregate principal amount of 6.00% first

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lien notes due November 1, 2026 (the "2026 Senior Notes"). The proceeds of the New Senior Secured Term Loan, together with the net proceeds from the 2026 Senior Notes were applied towards the full repayment of the 5-Year Term Loan.

The 2026 Senior Notes were issued pursuant to an Indenture, dated October 15, 2021 (the "2026 Senior Notes Indenture"), among Gannett Holdings, the Company, the guarantors party thereto, U.S. Bank National Association, as trustee, U.S. Bank National Association, as collateral agent, and U.S. Bank National Association, as registrar, paying agent and authenticating agent. Interest on the 2026 Senior Notes is payable semi-annually.

~~Loans under the New Senior Secured Term Loan~~ bear interest at a per annum rate equal to LIBOR (which shall not be less than 0.50% per annum) plus a margin of 5.00% or an alternate base rate plus a margin equal to 4.00% per annum (which shall not be less than 1.50% per annum). The New Senior Secured Term Loan contains usual and customary covenants for credit facilities of this type that restrict, among other things, our ability to incur debt, grant liens, sell assets, and make investments and pay dividends, in each case with customary exceptions, including an exception that permits dividends and repurchases of outstanding junior debt or equity in (i) an amount of up to $25 million per fiscal quarter if the ratio of debt secured on an equal basis with the New Senior Secured Term Loan to EBITDA (as defined in the New Senior Secured Term Loan) of the Company and its restricted subsidiaries (the "First Lien Net Leverage Ratio") for such fiscal quarter is equal to or less than 2.00 to 1.00, (ii) an amount of up to $50 million per fiscal quarter if the First Lien Net Leverage Ratio for such fiscal quarter is equal to or less than 1.50 to 1.00 and (iii) an unlimited amount if First Lien Net Leverage Ratio for such fiscal quarter is equal to or less than 1.00 to 1.00. All obligations under the New Senior Secured Term Loan are secured by all or substantially all of the assets of the Company and the wholly-owned domestic subsidiaries of the Company (the "Guarantors"). The obligations of Gannett Holdings under the New Senior Secured Term Loan are guaranteed on a senior secured basis by the Company and the Guarantors.

As of the closing of these transactions on October 15, 2021, total debt outstanding was $1.416 billion, which included the (i) $516 million New Senior Secured Term Loan, (ii) $400 million of 2026 Senior Notes, (iii) $497.1 million of 2027 Notes and (iv) $3.3 million of 2024 Notes.

The 5-Year Term Loan was repaid using the proceeds from the 2026 Senior Notes and the New Senior Secured Term Loan. As a result of the debt refinancing in October 2021, we estimate that we will recognize a loss on the early extinguishment of the 5-Year Term Loan and other fees of approximately $31.2 million during the fourth quarter of 2021.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations and quantitative and qualitative disclosures should be read in conjunction with our unaudited condensed consolidated financial statements and related notes and with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, as filed with the Securities and Exchange Commission. Management's Discussion and Analysis of Financial Condition and Results of Operations contains a number of forward-looking statements that reflect our plans, estimates, and beliefs, all of which are based on our current expectations and could be affected by certain uncertainties, risks, and other factors described under Cautionary Note Regarding Forward-Looking Statements, Risk Factors, and elsewhere throughout this Quarterly Report, as well as the factors described in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, and subsequent periodic reports filed with the Securities and Exchange Commission, particularly under "Risk Factors." Our actual results could differ materially from those discussed in the forward-looking statements.

OVERVIEW

We are a subscription-led and digitally-focused media and marketing solutions company committed to empowering communities to thrive. We operate a scalable, data-driven media platform that aligns with consumer and digital marketing trends. We aim to be the premier source for clarity, connections, and solutions within our communities. Our strategy is focused on driving audience growth and engagement by delivering deeper content experiences to our consumers, while offering the products and marketing expertise our advertisers desire. ~~The~~We expect the execution of this strategy ~~is expected~~ to ~~allow~~enable us to continue our evolution from a more traditional print media business to a digitally-focused content platform.

On June 1, 2022, we announced a strategic organizational restructuring, which centralized the operations within each of our U.S. operating business units, Gannett Media and Digital Marketing Solutions (“DMS”). This change did not have any impact on segment reporting. However, our historical Publishing segment will be referred to as Gannett Media moving forward. The Gannett Media reportable segment is an aggregation of two operating segments: Domestic Gannett Media (formerly referred to as Domestic Publishing) and Newsquest (formerly referred to as U.K. Publishing).

Our current portfolio of media assets includes USA TODAY, local media organizations in 4645 states in the U.S., and Newsquest, a wholly-owned subsidiary operating in the United Kingdom ("U.K.") with more than ~~120~~150 local media brands. We also ~~own the~~operate a digital marketing ~~services companies ReachLocal, Inc.~~solutions company, branded LOCALiQ, which provides a cloud-based platform of products to enable small and medium-sized businesses ("~~ReachLocal"), UpCurve, Inc. ("UpCurve"), and WordStream, Inc. ("WordStream"~~SMBs") ~~which are marketed under the LOCALiQ brand, and~~to accomplish their marketing goals. In addition, we run what we believe is the largest media-owned events business in the U.S., USA TODAY NETWORK Ventures.

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Through USA TODAY, our local property network, and Newsquest, we deliver high-quality, trusted content with a commitment to balanced, unbiased journalism, where and when consumers want to engage with it on virtually any device or platform. Additionally, we have strong relationships with hundreds of thousands of local and national businesses in both our U.S. and U.K. markets due to our large local and national sales forces and a robust advertising and digital marketing solutions product suite.

Business Trends

We have considered several industry trends when assessing our business strategy:

•Print advertising and circulation continues to decline as ~~the~~our audience increasingly moves to digital platforms. During the second quarter of 2022, we saw an acceleration in the rate of decline of our print advertising and circulation revenues as a result of macro-economic factors and consumer price sensitivity. We ~~look~~seek to optimize our print operations to efficiently manage for this declining print audience. We are focused on converting ~~the~~a growing ~~digital~~digitally-focused audience into digital-only subscribers to our publications.

•~~Small and medium-sized businesses ("SMBs")~~SMBs are facing an increasingly complex marketing environment and need to create digital presence to capture audience online. We offer a broad suite of ~~DMS~~digital marketing services products that offer a single, unified solution to meet their digital marketing needs.

•Consumers are looking for experience-based, emotional connections and communities. USA TODAY NETWORK Ventures was designed to celebrate local communities and create opportunities for meaningful in-person and virtual experiences. ~~However, the COVID-19 pandemic has temporarily negatively impacted our ability to secure necessary permitting for in-person events and consumers' desire to attend or participate in live events.~~

•~~Digital consumer engagement has declined in comparison to such engagement at the height of the COVID-19 pandemic in~~While operating trends have improved since the second quarter of 2020, which represents the quarter that was most significantly impacted by the COVID-19 pandemic, we have experienced and expect to continue to

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experience a negative impact on our business and results of operations in the near-term, including lower revenues and attendance associated with events as ~~consumers have resumed certain pre-pandemic activities. In addition, the overall news cycle, specifically political coverage, has also slowed, driving less consumer engagement~~compared to ~~our sites.~~pre-COVID-19 pandemic levels.

•Newsprint availability isremains constrained globally due to manufacturing facility closures and ~~conversions to~~ongoing capacity shifts between newsprint and specialty paper ~~and packaging~~ grades. Further, ~~transportation~~supply chain issues have challenged and ~~other issues~~continue to challenge deliveries, resulting in significant delays, although we do not anticipate that this will impact our print operations.

•Inflationary prices across a number of categories such as labor, fuel, delivery costs, newsprint, ink, and printing plates are challenging supplier deliveries, including delays, and are expected to worsen with increased seasonal demand associated with the holidays in the fourth quarter. Additionally, inflationary pressures are impacting thehaving a negative impact on our overall cost ~~of newsprint and delivery services.~~structure.

Recent Developments

~~Debt Refinancing~~Stock Repurchase Program

On ~~October 15, 2021, Gannett Holdings LLC ("Gannett Holdings"),~~February 1, 2022, our ~~wholly-owned subsidiary, entered into a five-year senior secured term loan facility in an aggregate principal amount~~Board of ~~$516~~Directors authorized the repurchase of up to $100 million (the ~~"New Senior Secured Term Loan"~~"Stock Repurchase Program") of our common stock, par value $0.01 per share ("Common Stock"). ~~Also on October 15, 2021, Gannett Holdings completed a private offering~~Repurchases may be made from time to time through open market purchases or privately negotiated transactions, pursuant to one or more plans established pursuant to Rule 10b5-1 under the Securities Exchange Act of ~~$400 million aggregate principal~~1934, as amended, or by means of one or more tender offers, in each case, as permitted by securities laws and other legal requirements. The amount ~~of 6.00% first lien notes due November 1, 2026 (the "2026 Senior Notes"). The proceeds~~and timing of the ~~New Senior Secured Term Loan, together with~~purchases will depend on a number of factors including, but not limited to, the ~~net proceeds from the 2026 Senior Notes were applied towards the full repayment~~price and availability of shares of Common Stock, trading volume, capital availability, our ~~five-year, senior-secured term loan facility (the "5-Year Term Loan"). Please see the disclosure below under "Liquidity~~performance and ~~Capital Resources - Debt Refinancing"~~general economic and ~~Note 15 — Subsequent events for further information regarding the debt refinancing.~~market conditions. The Stock Repurchase Program may be suspended or discontinued at any time.

For both the three and six months ended June 30, 2022, we repurchased 800 thousand shares of Common Stock under the Stock Repurchase Program for approximately $3.1 million, excluding commissions. As of June 30, 2022, the remaining authorized amount under the Stock Repurchase Program was approximately $96.9 million.

Environmental, Social and Governance Initiatives

As a leading media organization, our longstanding corporate social responsibility position is driven by our deep commitment to our communities. We are dedicated to ensuring that we have mindful and ethical business practices that positively impact our world. In 2021, we formed an executive-led, cross-functional committee to help deepen our commitment to people, planet, and communities through the formalization of an environmental, social and governance ("ESG") strategy. In early 2022, we published our inaugural 2022 ESG report detailing the alignment of our efforts across our company's corporate social responsibility pillars which are people, planet, and communities, with the U.N. Sustainable Development Goals ("SDG"). The 2022 ESG report reflects an important initial step towards providing increased transparency of Gannett's priorities and measured progress.

We selected Reduced Inequalities, Climate Action, and Peace, Justice & Strong Institutions as our key priorities. We aim to contribute to all 17 U.N. SDGs, but have chosen these three as our key priorities for sustainability where we believe we can help make the most significant impact. Each year we plan to update our progress and share more details about how we are working to achieve our goals.

Certain matters affecting comparability

The following items affect period-over-period comparisons ~~from 2020~~ and will continue to affect period-over-period comparisons for future results:

~~Reclassifications~~

Certain amounts in the prior period condensed consolidated financial statements have been reclassified to conform to the current year presentation. In the fourth quarter of 2020, we re-aligned the breakout of the Publishing segment's Circulation revenues related to Digital-only circulation. As a result of this updated presentation, Print circulation revenues increased and Digital-only circulation revenues decreased $3.2 million and $10.7 million for the three and nine months ended September 30, 2020, respectively. There was no impact on reported total Publishing segment or consolidated Circulation revenues.

~~2027 Notes~~

At the Special Meeting of stockholders of the Company held on February 26, 2021 (the "Special Meeting"), our stockholders approved the issuance of the maximum number of shares of Common Stock issuable upon conversion of the 6.0%

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Senior Secured Convertible Notes due 2027 (the "2027 Notes"). As a result, the conversion option can be share-settled in full and qualified for equity classification. Upon reclassification, the conversion feature was adjusted to fair value as of the stockholder approval date and the increase in the fair value resulted in a non-cash loss of $126.6 million due primarily to an increase in our stock price from December 31, 2020. The non-cash loss was recorded in Non-operating expense in the condensed consolidated statements of operations and comprehensive income (loss) for the nine months ended September 30, 2021. As of September 30, 2021, the deferred tax asset related to the embedded conversion feature of the 2027 Notes was reclassified to Equity as a reduction to Additional paid-in-capital and reduced the carrying amount of the equity component of the 2027 Notes to $283.7 million.

Integration and reorganization costs

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, we incurred Integration and reorganization costs of ~~$13.6~~$15.7 million and ~~$35.5~~$27.1 million, respectively. Of the total costs incurred, $11.6 million and $17.0 million, respectively, ~~including $2.7 million and $10.9 million, respectively,~~were related to severance activities and ~~$11.0~~$4.1 million and ~~$24.6~~$10.1 million, respectively, were related to other costs, including those for the purpose of consolidating operations, mainly related to systems implementation and outsourcing of corporate functions. For the three and six months ended June 30, 2021, we incurred Integration and reorganization costs of $8.4 million and $21.8 million, respectively. Of the total costs incurred, $1.1 million and $8.2 million, respectively, were related to severance activities and $7.3 million and $13.6 million, respectively, were related to other costs, including those for the purpose of consolidating operations, mainly related to outsourcing of corporate functions and systems implementation.

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For the three ~~and nine~~ months ended ~~September~~June 30, 2022, we did not cease any printing operations, and for the six months ended June 30, 2022 we ceased four printing operations as part of the synergy and ongoing cost reduction programs. As a result, we recognized accelerated depreciation of $5.5 million and $10.2 million during the three and six months ended June 30, 2022, respectively, driven primarily by the closure of a local printing facility in the first quarter of 2022, for which we incurred costs during the three months ended June 30, 2022. For the three and six months ended June 30, 2021, we ceased operations of ~~four~~two and 14ten printing operations, respectively, as part of the synergy and ongoing cost reduction programs. As a result, we recognized accelerated depreciation of $1.1 million and ~~$11.4~~$10.3 million during the three and ~~nine~~six months ended ~~September~~June 30, 2021, respectively.

For the three and nine months ended September 30, 2020, we incurred Integration and reorganization costs of $13.4 million and $74.0 million, respectively, including $7.3 million and $54.8 million, respectively, related to severance activities and $6.1 million and $19.2 million, respectively, related to other costs, including those for the purpose of consolidating operations.

For the three and nine months ended September 30, 2020, we ceased operations of 11 and 35 printing operations, respectively, as part of the ongoing cost reduction programs. As a result, we recognized accelerated depreciation of $9.3 million and $45.0 million during the three and nine months ended September 30, 2020, respectively.

~~Goodwill and intangible impairment~~

~~There were no goodwill and intangible impairments incurred for the three and nine months ended September 30, 2021.~~

There were no goodwill and intangible impairments incurred for the three months ended September 30, 2020. For the nine months ended September 30, 2020, we incurred goodwill and intangible impairments of $393.4 million, primarily due to the impact of the COVID-19 pandemic on our operations.

Foreign currency

Our U.K. ~~publishing~~media operations are conducted through our Newsquest subsidiary. In addition, ~~our ReachLocal subsidiary has~~we have foreign operations in regions such as Canada, ~~Australia/~~Australia, New Zealand and India. Earnings from operations in foreign regions are translated into U.S. dollars at average exchange rates prevailing during the period, and assets and liabilities are translated at exchange rates in effect at the balance sheet date. ~~Translation~~Currency translation fluctuations may impact revenue, expense, and operating income results for our international operations.

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Outlook for ~~2021~~2022

Strategy

On June 1, 2022, we announced a strategic organizational restructuring, which centralized the operations within each of our U.S. operating business units, Gannett Media and DMS. This structure was designed to align with our long-term strategic pillars and our commitment to becoming a subscription-led and digitally-focused media and marketing solutions company that is committed to empowering communities to thrive. Our areas of strategic focus ~~for 2021~~continue to include:

Accelerating digital subscriber growth

The broad reach of our newsroom network, linking leading national journalism at USA TODAY, our local property network in 4645 states in the U.S., and Newsquest in the U.K. with more than ~~120~~150 local media brands, gives us the ability to deepen our relationships with consumers at both the national and local levels. We bring consumers local news and information that impacts their day-to-day lives while keeping them informed of the national events that impact their country. We believe this local content is not readily obtainable elsewhere, and we are able to deliver that content to our customers across multiple print and digital platforms. As such, a key element of our consumer strategy is growing our paid digital-only subscriber ~~base to 10 million subscribers over the next five years. We~~base. As part of our digital subscriber growth strategy, we expect to ~~do this through expansion of our current subscription products as well as through the~~continue to develop and launch of new digital subscription offerings tailored to specific ~~users.~~topics and audiences and expand the penetration of newer subscription products.

Driving digital marketing services growth by engaging more clients in a subscriber relationship

We ~~have~~are now ~~achieved~~of significant digital scale, with unique reach at both the national and local community levels. We expect to leverage our integrated sales structure and lead generation strategy to continue to aggressively expand our digital marketing services business into our local markets, both domestically and internationally. Given our extensive client base and volume of digital campaigns, we ~~will also~~plan to use data and insights to inform new and dynamic advertising products, ~~that~~such as our "freemium" offering to complement our sales structures, which we believe will deliver superior results.

Optimizing our traditional businesses across print and advertising

We ~~will~~plan to continue to drive the profitability of our traditional print operations through the continued evolution of the core print product, economies of scale, process improvements, and ~~optimizations.~~operational focus. We ~~are focused on optimizing~~will continue to evolve our ~~pricing and improving customer service for~~business model, evaluating our print ~~subscribers.~~portfolio and frequencies in alignment with consumer's habits and moving toward a portfolio of products that are in line with our long-term digital subscription strategies. Print advertising continues to offer a compelling branding opportunity across our network due to our scale and unique reach at both the national and local community ~~levels.~~levels and we will continue to provide products that best serve our readers' and advertisers' needs. The Company is responding to the recent increased rate of revenue decline in the traditional print business with operational changes designed to mitigate the rate of volume decline in the future.

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Prioritizing investments into growth businesses that have significant potential and support our vision

By leveraging our unique footprint, trusted brands, and media reach, we identify, experiment, and invest in potential growth businesses. USA TODAY NETWORK Ventures is a strong example of one such experiment that has grown significantly since its founding in 2015. ~~During 2020,~~For the three and six months ended June 30, 2022, USA TODAY NETWORK Ventures hosted 62 and 87 events, respectively, and revenues increased 33.8% and 49.9%, respectively, compared to the same period in the prior year.

Building on our inclusive and diverse culture to center around meaningful purpose, individual growth and customer focus

Inclusion, Diversity and Equity are core pillars of our organization and influence all that we do, from recruiting, development and retention, to day-to-day operations including hiring, onboarding, education, leadership training and professional development. We have published our inclusion goals for 2025 and our ongoing efforts to progress toward them, including an annual workforce diversity report, which was ~~able to successfully pivot to holding its events virtually, hosting over 250 events. This success has continued~~released for the first time in ~~2021, with over 160 events held through~~ the ~~end of the third~~first quarter of 2021. ~~While live events have resumed in 2021,~~We believe aligning our culture around empowering our communities to thrive and putting our customers at the ~~majority~~center of ~~events remain virtual. In addition, in connection with~~everything we do will provide the foundation for our company-wide priority to explore online gaming, in July 2021, we entered into an exclusive agreement with Tipico USA Technology, Inc. ("Tipico"), a U.S.-based subsidiary of European-based Tipico Group of Companies, the leading sports betting provider in Germany, utilizing their Tipico Sportsbook brand.broader strategic efforts.

Impacts of the COVID-19 pandemic

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Protection Program ("PPP"), suspending our quarterly dividend, and debt refinancing, as well as reducing discretionary spending. In addition, we are continuing with our previously-disclosed plan to monetize non-core assets.

Seasonality

Our revenues are subject to moderate seasonality, due primarily to fluctuations in advertising volumes. Advertising and marketing services revenues for our ~~Publishing~~Gannett Media segment are typically highest in the fourth quarter, primarily due to ~~holiday~~fluctuations in advertising volumes tied to the holidays, regional weather and levels of activity in our various markets, some of which have a high degree of seasonal ~~advertising,~~residents and ~~lowest in the first quarter, following the holiday season.~~tourists. The volume of advertising sales in any period is also impacted by other external factors such as competitors' pricing, advertisers' decisions to increase or decrease their advertising expenditures in response to anticipated consumer demand, and general economic conditions.

~~RESULTS OF OPERATIONS~~

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RESULTS OF OPERATIONS

Consolidated Summary

A summary of our ~~segment~~consolidated results is presented below:
Three months ended September 30, Nine months ended September 30,
In thousands, except per share amounts Change Change
2021 2020 $ % 2021 2020 $ %
Operating revenues:
Publishing $ 715,807 $ 732,226 $ (16,419) (2) % $ 2,139,937 $ 2,286,268 $ (146,331) (6) %
Digital Marketing Solutions 116,771 105,443 11,328 11 % 329,089 321,287 7,802 2 %
Corporate and other 1,649 2,732 (1,083) (40) % 6,428 8,140 (1,712) (21) %
Intersegment eliminations (34,042) (25,862) (8,180) 32 % (93,910) (85,472) (8,438) 10 %
Total operating revenues 800,185 814,539 (14,354) (2) % 2,381,544 2,530,223 (148,679) (6) %
Operating expenses:
Publishing 657,561 684,788 (27,227) (4) % 1,969,046 2,560,811 (591,765) (23) %
Digital Marketing Solutions 110,573 109,209 1,364 1 % 316,712 372,341 (55,629) (15) %
Corporate and other 34,991 44,924 (9,933) (22) % 105,208 148,509 (43,301) (29) %
Intersegment eliminations (34,042) (25,862) (8,180) 32 % (93,910) (85,472) (8,438) 10 %
Total operating expenses 769,083 813,059 (43,976) (5) % 2,297,056 2,996,189 (699,133) (23) %
Operating income (loss) 31,102 1,480 29,622 *** 84,488 (465,966) 550,454 ***
Non-operating expenses, net 13,573 29,830 (16,257) (54) % 186,368 106,119 80,249 76 %
Income (loss) before income taxes 17,529 (28,350) 45,879 *** (101,880) (572,085) 470,205 (82) %
Provision (benefit) for income taxes 2,984 3,098 (114) (4) % 11,567 (22,200) 33,767 ***
Net income (loss) 14,545 (31,448) 45,993 *** (113,447) (549,885) 436,438 (79) %
Net loss attributable to redeemable noncontrolling interests (142) (188) 46 (24) % (933) (1,580) 647 (41) %
Net income (loss) attributable to Gannett $ 14,687 $ (31,260) $ 45,947 *** $ (112,514) $ (548,305) $ 435,791 (79) %
Income (loss) per share attributable to Gannett - basic $ 0.11 $ (0.24) $ 0.35 *** $ (0.84) $ (4.17) $ 3.33 (80) %
Income (loss) per share attributable to Gannett - diluted $ 0.09 $ (0.24) $ 0.33 *** $ (0.84) $ (4.17) $ 3.33 (80) %

*** Indicates an absolute value percentage change greater than 100.


	Three months ended June 30,								Six months ended June 30,
In thousands, except per share amounts					Change								Change
	2022		2021		$		%		2022		2021		$		%
Operating revenues:
Local and national print	$	105,721	$	127,600	(21,879)		(17)	%	$	208,465	$	244,999	(36,534)		(15)	%
Classified print	67,732		73,325		(5,593)		(8)	%	138,506		149,122		(10,616)		(7)	%
Print advertising	173,453		200,925		(27,472)		(14)	%	346,971		394,121		(47,150)		(12)	%

Digital media	77,259		94,991		(17,732)		(19)	%	156,030		175,479		(19,449)		(11)	%
Digital marketing services (a)	117,465		111,392		6,073		5	%	226,456		212,856		13,600		6	%
Digital classified	15,432		12,802		2,630		21	%	29,266		26,011		3,255		13	%
Digital advertising and marketing services	210,156		219,185		(9,029)		(4)	%	411,752		414,346		(2,594)		(1)	%

Advertising and marketing services	383,609		420,110		(36,501)		(9)	%	758,723		808,467		(49,744)		(6)	%

Print circulation	242,151		286,253		(44,102)		(15)	%	500,627		588,511		(87,884)		(15)	%
Digital-only circulation	32,473		24,006		8,467		35	%	62,599		47,185		15,414		33	%
Circulation	274,624		310,259		(35,635)		(11)	%	563,226		635,696		(72,470)		(11)	%

Other	90,427		73,906		16,521		22	%	174,788		137,196		37,592		27	%

Total operating revenues	748,660		804,275		(55,615)		(7)	%	1,496,737		1,581,359		(84,622)		(5)	%

Total operating expenses (a)	769,884		758,830		11,054		1	%	1,519,939		1,527,973		(8,034)		(1)	%
Operating income (loss)	(21,224)		45,445		(66,669)		***		(23,202)		53,386		(76,588)		***
Non-operating expenses	10,318		13,044		(2,726)		(21)	%	19,049		172,795		(153,746)		(89)	%
Income (loss) before income taxes	(31,542)		32,401		(63,943)		***		(42,251)		(119,409)		77,158		(65)	%
Provision for income taxes	22,158		17,692		4,466		25	%	14,551		8,583		5,968		70	%
Net income (loss)	(53,700)		14,709		(68,409)		***		(56,802)		(127,992)		71,190		(56)	%
Net loss attributable to noncontrolling interests	(12)		(406)		394		(97)	%	(147)		(791)		644		(81)	%
Net income (loss) attributable to Gannett	$	(53,688)	$	15,115	$	(68,803)	***		$	(56,655)	$	(127,201)	$	70,546	(55)	%

Income (loss) per share attributable to Gannett - basic	$	(0.39)	$	0.11	$	(0.50)	***		$	(0.41)	$	(0.95)	$	0.54	(57)	%
Income (loss) per share attributable to Gannett - diluted	$	(0.39)	$	0.10	$	(0.49)	***		$	(0.41)	$	(0.95)	$	0.54	(57)	%

(a)

~~Intersegment~~ Amounts are net of intersegment eliminations inof $35.6 million and $32.0 million for the ~~preceding table~~three months ended June 30, 2022 and 2021, respectively, and $69.0 million and $59.9 million for the six months ended June 30, 2022 and 2021, respectively, that represent digital advertising marketing services revenues and expenses associated with products sold by our U.S. local ~~publishing~~Gannett Media sales teams but fulfilled by our DMS segment. When discussing segment results, these revenues and expenses are presented gross but are eliminated in consolidation.

*** Indicates an absolute value percentage change greater than 100.

Operating revenues

Total Operating revenues were $800.2 million and $2.382 billion for three and nine months ended September 30, 2021, respectively, a decrease of $14.4 million and $148.7 million, respectively, compared to the three and nine months ended September 30, 2020, for the reasons described below.

For the Publishing segment, Operating revenues decreased $16.4 million for the three months ended September 30, 2021 compared to the three months ended September 30, 2020, reflecting lower Circulation revenues of $29.5 million offset by higher Other revenues of $13.8 million. Advertising and marketing services revenues ~~remained essentially flat for~~are generated by both the ~~three months ended September 30, 2021 compared to~~Gannett Media and DMS segments. At the three months ended September 30, 2020, reflecting lower print revenues offset by higher digital revenues. For the nine months ended September 30, 2021, Operating revenues decreased $146.3 million compared to the nine months ended September 30, 2020 due to lower Circulation revenues of $111.1 million and lower Advertising and marketing services revenues of $40.8 million, partially offset by higher Other revenues of $5.6 million.Gannett Media segment, Advertising and marketing services revenues are generated by the sale of local, national, and classified print advertising products, digital advertising offerings such as digital classified advertisements, digital media such as display advertisements run on our platforms as well as third-party sites, and digital marketing services delivered by our DMS segment. At the DMS segment, Advertising and marketing services revenues are generated through multiple services, including search

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advertising, display advertising, search optimization, social media, website development, web presence products, customer relationship management, and software-as-a-service solutions.

Circulation revenues, which are generated at the Gannett Media segment, are derived from home delivery, digital distribution and single copy sales of our publications.

Other revenues, which are

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primarily generated at the Gannett Media segment, are derived mainly from commercial printing, distribution arrangements, revenues from our events business, digital content syndication and affiliate revenues and third-party newsprint ~~sales.~~

~~For the DMS segment, Operating revenues increased $11.3 million~~sales, and ~~$7.8 million for the three~~to a lesser extent generated at our Corporate and ~~nine months ended September 30, 2021, respectively, compared to the three~~other category, mainly driven by sales of cloud-based products with expert guidance and nine months ended September 30, 2020, reflecting higher Advertising and marketing services revenues of $16.0 million and $21.3 million, respectively, partially offset by lower Other revenues of $4.6 million and $13.5 million, respectively. Our DMS segment generates Advertising and marketing services revenues through multiple services, including search advertising, display advertising, search optimization, social media, website development, web presence products, customer relationship management, and software-as-a-service solutions.support.

Operating expenses

Total Operating expenses were $769.1 million and $2.297 billion for the three and nine months ended September 30, 2021, respectively, a decrease of $44.0 million and $699.1 million compared to the three and nine months ended September 30, 2020, respectively. Operating expenses consist primarily of the following:

•Operating costs at the Gannett Media segment include labor, newsprint and delivery costs ~~for~~and at the ~~Publishing~~DMS segment ~~and~~include the cost of online media acquired from third parties and costs to manage and operate our marketing solutions and technology ~~infrastructure for the DMS segment;~~infrastructure;

•Selling, general and administrative expenses include labor, payroll, outside services, benefits costs and bad debt expense;

•Depreciation and amortization;

•Integration and reorganization costs include severance charges and other costs, including those for the purpose of consolidating our operations (i.e., facility consolidation expenses and integration-related costs);

•~~Other operating expenses include third-party debt expenses as well as acquisition-related costs;~~Impairment charges, including costs incurred related to goodwill, intangible assets and property, plant and equipment;

•Gains or losses on the sale or disposal of assets; and

•~~Impairment charges, including costs incurred related to goodwill, intangible assets and property, plant and equipment.~~

For the three months ended September 30, 2021, Operating expenses at our Publishing segment decreased $27.2 million compared to the three months ended September 30, 2020, reflecting a decrease in Operating costs of $10.7 million, a decrease in Depreciation and amortization of $16.6 million, a decrease in Integration and reorganization costs of $1.6 million and a decrease in Loss on the sale or disposal of assets of $2.8 million, partially offset by an increase in Selling, general and administrative expenses of $3.0 million and an increase in Asset impairments of $1.4 million. For the nine months ended September 30, 2021, Operating expenses at our Publishing segment decreased $591.8 million compared to the nine months ended September 30, 2020, reflecting a decrease in Operating costs of $104.5 million, a decrease in Selling, general and administrative expenses of $51.7 million, a decrease in Depreciation and amortization of $57.3 million, a decrease in Integration and reorganization costs of $28.4 million, a decrease in Asset impairments of $4.6 million and a decrease in Goodwill and intangible impairments of $352.9 million, partially offset by an increase in Loss on the sale or disposal of assets of $7.7 million.

For the three months ended September 30, 2021, Operating expenses at our DMS segment increased $1.4 million compared to the three months ended September 30, 2020, reflecting an increase in Operating costs of $9.2 million and an increase in Depreciation and amortization of $1.2 million, partially offset by a decrease in Selling, general and administrative expenses of $8.9 million. For the nine months ended September 30, 2021, Operating expenses at our DMS segment decreased $55.6 million compared to the nine months ended September 30, 2020, reflecting a decrease in Selling, general and administrative expenses of $31.9 million, a decrease in Goodwill and intangible impairments of $40.5 million and a decrease in Integration and reorganization costs of $4.3 million, partially offset by an increase in Operating costs of $16.4 million and an increase in Depreciation and amortization of $5.6 million.

For the three months ended September 30, 2021, Operating expenses at Corporate and other decreased $9.9 million compared to the three months ended September 30, 2020, reflecting a decrease in Selling, general and administrative expenses of $11.2 million, a decrease in Other operating expenses, of $1.9 million and a decrease in Operating costs of $1.4 million, partially offset by an increase in Depreciation and amortization of $2.2 million and an increase Integration and reorganization costs of $2.1 million. For the nine months ended September 30, 2021, Operatingincluding third-party debt expenses at Corporate and other decreased $43.3 million compared to the nine months ended September 30, 2020, due to a decrease in Selling, general and administrative expenses of $36.0 million, a decrease in Integration and reorganization costs of $5.8 million and a decrease in Operating costs of $3.3 million, partially offset by an increase in Other operating expenses of $1.1 million and an increase in Depreciation and amortization of $0.5 million.

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Refer to ~~the discussion of segment~~Segment results below for ~~further information.~~a discussion of the results of operations by segment.

Non-operating (income) expense

Interest expense: For the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, Interest expense was ~~$34.6~~$26.1 million and ~~$109.4~~$52.1 million, respectively, compared to ~~$58.1~~$35.3 million and ~~$173.9~~$74.8 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, respectively. The decrease in interest expense for the three and ~~nine~~six months ended ~~September~~June 30, 2022 compared to the same periods in 2021 was mainly due to a lower ~~effective~~debt balance and the impact of lower interest ~~rate driven by~~rates on our outstanding fixed-rate debt. The impact of the ~~refinancing of~~increase in interest rates on our five-year ~~senior-secured 11.5%~~senior secured term loan facility ~~with Apollo Capital Management, L.P.~~in an aggregate principal amount of $516.0 million (the ~~"Acquisition~~"New Senior Secured Term Loan") ~~in the first quarter of 2021 and~~was offset by a lower ~~debt~~ balance ~~compared~~due to ~~the same period in 2020.~~payments of quarterly amortization and required prepayments.

Loss on early extinguishment of debt: For the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, Loss on early extinguishment of debt was ~~$3.8~~$0.7 million and ~~$26.0~~$3.5 million, ~~respectively. For~~respectively, compared to $2.8 million and $22.2 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020, Loss~~2021, respectively. The decrease in the loss on early extinguishment of debt ~~was $0.5 million and $1.7 million, respectively. The increase in loss~~ for the three and six months ended ~~September~~June 30, 2022 compared to the same periods in 2021 was ~~mainly~~ due to a lower amount of early prepayments made in the second quarter of 2022 compared to the same period in the prior year on ~~the 5-Year Term Loan. The increase in loss~~our term loan facilities, and for the ~~nine~~six months ended ~~September~~June 30, ~~2021 was mainly due to~~2022 the decrease also reflected the payoff of ~~the Acquisition Term Loan~~our five-year, senior-secured 11.5% term loan facility with Apollo Capital Management, L.P., in the first quarter of 2021.

Non-operating pension income: For the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, Non-operating pension income was ~~$23.9~~$18.2 million and ~~$71.6~~$36.4 million, respectively, compared to ~~$18.3~~$23.9 million and ~~$54.4~~$47.8 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, respectively. The ~~increase~~decrease in non-operating pension income for the three and ~~nine~~six months ended ~~September~~June 30, 2022 compared to the same periods in 2021 was primarily due to ~~an increase~~a decrease in the expected return on plan assets held by the Gannett Retirement Plan ~~and lower interest costs on benefit obligations.~~(the "GR Plan"), mainly driven by a more conservative asset allocation.

Loss on convertible notes derivative: For the ~~nine~~three and six months ended ~~September~~June 30, 2022, we had no Loss on convertible notes derivative. For the three months ended June 30, 2021, we had no Loss on convertible notes derivative and for the six months ended June 30, 2021, Loss on convertible notes derivative was $126.6 million, ~~due to~~reflecting the increase in the fair value of the derivative liability as a result of the increase in ~~the Company's~~our stock price.

Other non-operating ~~income,~~expense (income), net: Other non-operating ~~income,~~expense (income), net consisted of certain items that fall outside of our normal business operations. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, we recorded Other non-operating

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expense, net of $1.6 million and Other non-operating income, net ~~was $0.9 million and $4.0~~of $0.2 million, respectively, compared to ~~$10.4~~Other non-operating income, net of $1.1 million and ~~$15.0~~$3.0 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, respectively. The decrease in Other non-operating ~~income,~~expense (income), net for the three and ~~nine~~six months ended ~~September~~June 30, 2022 compared to the same periods in 2021 was primarily due to ~~a gain on disposal of a cost method investment held by the DMS segment during the third quarter of 2020.~~foreign currency losses.

Provision ~~(benefit)~~ for income taxes

The following table summarizes our pre-tax net ~~income (loss)~~loss before income taxes and income tax accounts:

*** Indicates an absolute value percentage change greater than 100.


	Three months ended June 30,						Six months ended June 30,
In thousands	2022			2021			2022			2021
Income (loss) before income taxes	$	(31,542)		$	32,401		$	(42,251)		$	(119,409)
Provision for income taxes	22,158			17,692			14,551			8,583
Effective tax rate	(70.3)		%	54.6		%	(34.4)		%	(7.2)		%

The provision for income taxes is calculated by applying the estimated annual effective tax rate for the year to the current period income or loss before tax plus the tax effect of any significant or unusual items, discrete events, or changes in tax law. The provision for income taxes for the three months ended ~~September~~June 30, 2022 was mainly driven by the valuation allowances on non-deductible interest expense carryforwards, the change in the estimated annual effective tax rate as a result of the change in the net income before tax forecast in the second quarter of 2022, and the global intangible low taxed income inclusion from our wholly owned U.K subsidiary. The provision was calculated using an estimated annual effective tax rate of negative 43.30%. The estimated annual effective tax rate isprincipally impacted by the valuation allowances on non-deductible interest expense carryforwards, pre-tax book loss benefit, the global intangible low taxed income inclusion, and state and foreign income tax expense.

The provision for income taxes for the three months ended June 30, 2021 was mainly driven by pre-tax income and iswas impacted by forgiveness of PPP loans during the quarter. For federal tax purposes, book income from forgiven loans is not included in taxable income, and expenses paid utilizing the loan proceeds can be deducted. The impact of PPP loan forgiveness is partially offset by the creation of valuation allowances on non-deductible interest expense ~~carryforwards.~~carryforwards in combination with the U.K. enacted legislation to increase the statutory tax rate from 19% to 25%, effective April 1, 2023. While the U.K. corporate tax rate change does not impact 2021 or 2022 tax filings, the rate change impacts the tax effected value of the U.K. deferred tax liabilities. The provision was calculated using the estimated annual effective tax rate of ~~77.7%~~49.6%. The annual effective tax rate is principally impacted by the derivative revaluation, which is non-deductible for federal tax purposes, and the creation of valuation allowances on non-deductible interest expense carryforwards. The estimated annual effective tax rate is based on a projected tax expense for the full year.

The ~~tax~~ provision for income taxes for the ~~nine~~six months ended ~~September~~June 30, 2021 was mainly ~~driven~~impacted by the pre-tax net loss generated during the first quarter of 2021. The tax provision iswas also impacted by the derivative revaluation, which is nondeductible for ~~federal~~

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tax purposes, partially offset by the creation of valuation allowances on non-deductible interest expense carryforwards ~~and PPP loan forgiveness, in combination with~~as well as state income tax and foreign tax expense.

During the three months ended June 30, 2021, we reclassified $32.5 million (tax effected) in connection with the retirement of the deferred tax asset related to the embedded conversion feature associated with the 2027 Notes. The retirement of the deferred tax asset resulted from the reclassification of the embedded conversion feature from a derivative liability to Equity as a reduction to Additional paid-in-capital during the first quarter of 2021. See Note 7 - Debt for additional information about the 2027 Notes.

The provision for income taxes for the three months ended September 30, 2020 was mainly impacted by a reduction in the year to date tax benefit as a result of a lower projected annualized effected tax rate. The provision for income taxes for the three months ended September 30, 2020 was calculated using the estimated annual effective tax rate of 6.2%. The estimated annual effective tax rate is based on a projected tax benefit for the full year. The tax benefit for the nine months ended September 30, 2020 is lower than the 21% statutory federal rate due to the impact of non-deductible asset impairments, non-deductible officers’ compensation, and the creation of valuation allowances on non-deductible interest expense carryforwards and capital losses.

~~Several economic relief bills have been enacted into law in response to the COVID-19 pandemic. We continue to monitor the applicability of federal and state legislation to the Company, as well asregulatory interpretations of enacted legislation that provide economic relief in response to the pandemic, and expect to utilize these provisions as we determine necessary or desirable.~~

Net income (loss) attributable to Gannett and diluted income (loss) per share attributable to Gannett

For the three months ended ~~September~~June 30, 2021, Net income attributable to Gannett and diluted income per share attributable to Gannett were $14.7 million and $0.09, respectively, compared to Net loss attributable to Gannett and diluted loss per share attributable to Gannett of $31.3 million and $0.24, respectively, for the three months ended September 30, 2020. For the nine months ended September 30, 2021,2022, Net loss attributable to Gannett and diluted loss per share attributable to Gannett were ~~$112.5~~$53.7 million and ~~$0.84,~~$0.39, respectively, compared to ~~$548.3~~Net income attributable to Gannett and diluted income per share attributable to Gannett of $15.1 million and ~~$4.17,~~$0.10, respectively, for the ~~nine~~three months ended ~~September~~June 30, ~~2020.~~2021. For the six months ended June 30, 2022, Net loss attributable to Gannett and diluted loss per share attributable to Gannett were $56.7 million and $0.41, respectively, compared to $127.2 million and $0.95, respectively, for the six months ended June 30, 2021. The change for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 compared to the same period in the prior year reflects the various items discussed above.

~~Publishing segment~~

~~A summary of our Publishing segment results is presented below:~~

Three months ended September 30, Nine months ended September 30,
Change Change
In thousands 2021 2020 $ % 2021 2020 $ %
Operating revenues:
Advertising and marketing services $ 328,784 $ 329,508 $ (724) — % $ 984,575 $ 1,025,396 $ (40,821) (4) %
Circulation 306,698 336,152 (29,454) (9) % 942,392 1,053,517 (111,125) (11) %
Other 80,325 66,566 13,759 21 % 212,970 207,355 5,615 3 %
Total operating revenues 715,807 732,226 (16,419) (2) % 2,139,937 2,286,268 (146,331) (6) %
Operating expenses:
Operating costs 427,887 438,588 (10,701) (2) % 1,285,904 1,390,366 (104,462) (8) %
Selling, general and administrative expenses 189,032 186,000 3,032 2 % 541,165 592,856 (51,691) (9) %
Depreciation and amortization 35,861 52,481 (16,620) (32) % 118,664 175,990 (57,326) (33) %
Integration and reorganization costs 3,512 5,120 (1,608) (31) % 10,641 39,049 (28,408) (73) %
Asset impairments 2,301 868 1,433 *** 3,134 7,727 (4,593) (59) %
Goodwill and intangible impairments — — — — % — 352,947 (352,947) (100) %
(Gain) loss on sale or disposal of assets, net (1,032) 1,731 (2,763) *** 9,538 1,876 7,662 ***
Total operating expenses 657,561 684,788 (27,227) (4) % 1,969,046 2,560,811 (591,765) (23) %
Operating income (loss) $ 58,246 $ 47,438 $ 10,808 23 % $ 170,891 $ (274,543) $ 445,434 ***

*** Indicates an absolute value percentage change greater than 100.

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~~Operating revenues~~

~~The following table provides the breakout of Operating revenues by category:~~
Three months ended September 30, Nine months ended September 30,
Change Change
In thousands 2021 2020 $ % 2021 2020 $ %
Local and national print $ 118,292 $ 132,013 $ (13,721) (10) % $ 363,291 $ 422,849 $ (59,558) (14) %
Classified print 71,752 76,210 (4,458) (6) % 220,874 240,888 (20,014) (8) %
Print advertising 190,044 208,223 (18,179) (9) % 584,165 663,737 (79,572) (12) %
Digital media 91,344 84,054 7,290 9 % 265,450 235,865 29,585 13 %
Digital marketing services 34,078 25,498 8,580 34 % 95,652 79,677 15,975 20 %
Digital classified 13,318 11,733 1,585 14 % 39,308 46,117 (6,809) (15) %
Digital advertising and marketing services 138,740 121,285 17,455 14 % 400,410 361,659 38,751 11 %
Advertising and marketing services 328,784 329,508 (724) — % 984,575 1,025,396 (40,821) (4) %
Print circulation 280,980 315,833 (34,853) (11) % 869,489 1,000,210 (130,721) (13) %
Digital-only circulation 25,718 20,319 5,399 27 % 72,903 53,307 19,596 37 %
Circulation 306,698 336,152 (29,454) (9) % 942,392 1,053,517 (111,125) (11) %
Other 80,325 66,566 13,759 21 % 212,970 207,355 5,615 3 %
Total operating revenues $ 715,807 $ 732,226 $ (16,419) (2) % $ 2,139,937 $ 2,286,268 $ (146,331) (6) %

For the three and nine months ended September 30, 2021, the overall decline in Print advertising revenues of $18.2 million and $79.6 million, respectively, was driven by secular industry trends impacting all categories and the absence of revenues related to a business we divested in the fourth quarter of 2020. For the three and nine months ended September 30, 2021, Local and national print advertising revenues decreased $13.7 million and $59.6 million, respectively, compared to the three and nine months ended September 30, 2020, primarily due to lower advertising volumes, including a decrease in advertiser inserts. For the three and nine months ended September 30, 2021, Classified print advertising revenues decreased $4.5 million and $20.0 million, respectively, compared to the three and nine months ended September 30, 2020, due to decreased spend in classified advertisements, including legal, real estate, and obituaries.

For the three months ended September 30, 2021, Digital advertising and marketing services revenues increased $17.5 million, due to an increase of $7.3 million in Digital media revenues, an increase of $8.6 million in Digital marketing services revenues, and an increase of $1.6 million in Digital classified revenues, compared to the three months ended September 30, 2020. For the nine months ended September 30, 2021, Digital advertising and marketing services revenues increased $38.8 million, due to an increase of $29.6 million in Digital media revenues and an increase of $16.0 million in Digital marketing services revenues, offset by a decrease of $6.8 million in Digital classified revenues compared to the nine months ended September 30, 2020. For the three and nine months ended September 30, 2021, the overall increase in Digital advertising and marketing services revenues was due to an increase in Digital media spend and Digital marketing services revenues as well as continued improvement in operating trends since the prior year impacts of the COVID-19 pandemic. The increase in Digital media revenues for the three and nine months ended September 30, 2021 was driven by a higher mix of premium media sold, including premium sports products, as well as an overall increase in rate across both owned and operated sites as well as third-party sites. The increase in Digital marketing services revenues for the three and nine months ended September 30, 2021 was due to higher average revenue per customer for digital marketing services sold primarily as a result of focusing on strategic initiatives across our local marketing sales force. The increase in Digital classified revenues for the three months ended September 30, 2021 was due to increased spend in obituaries, legal and employment advertisements. The decrease in Digital classified revenues for the nine months ended September 30, 2021 was due to reduced spend in automotive advertisements, partially offset by increased spend in employment advertisements.

~~Table of Contents~~

For the three and nine months ended September 30, 2021, Print circulation revenues decreased $34.9 million and $130.7 million, respectively, compared to the three and nine months ended September 30, 2020, driven by a reduction in the volume of home delivery subscribers, a decline in single copy sales reflecting the overall secular trends impacting the industry, and the absence of revenues related to a business we divested in the fourth quarter of 2020, as well as the impact of the COVID-19 pandemic on business travel and overall consumer activity, partially offset by an increase in rate. For the three and nine months ended September 30, 2021, Digital-only circulation revenues increased $5.4 million and $19.6 million, respectively, compared to the three and nine months ended September 30, 2020, driven by an increase of 46% in paid digital-only subscribers, including those subscribers on introductory subscription offers, to approximately 1.543 million compared to the prior year.

For the three and nine months ended September 30, 2021, Other revenues increased $13.8 million and $5.6 million, respectively, compared to the three and nine months ended September 30, 2020, primarily due to an increase in digital content syndication volume, as well as commercial print growth in local markets driven by continued improvement in operating trends since the prior year impacts of the COVID-19 pandemic and customer retention, partially offset by the absence of revenues related to a business we divested in the fourth quarter of 2020. The growth in Other revenues for the nine months ended September 30, 2021 was negatively impacted by a decline in event revenues driven by the shift from in person events to virtual events as a result of the COVID-19 pandemic.

~~Operating expenses~~

For the three and nine months ended September 30, 2021, Operating costs decreased $10.7 million and $104.5 million, respectively, compared to the three and nine months ended September 30, 2020. The following table provides the breakout of the decrease in Operating costs:

Three months ended September 30, Nine months ended September 30,
Change Change
In thousands 2021 2020 $ % 2021 2020 $ %
Newsprint and ink $ 26,176 $ 31,250 $ (5,074) (16) % $ 78,160 $ 101,097 $ (22,937) (23) %
Distribution 112,884 99,189 13,695 14 % 321,435 306,768 14,667 5 %
Compensation and benefits 129,620 153,643 (24,023) (16) % 414,513 478,996 (64,483) (13) %
Outside services 90,428 87,574 2,854 3 % 248,110 252,046 (3,936) (2) %
Other 68,779 66,932 1,847 3 % 223,686 251,459 (27,773) (11) %
Total operating costs $ 427,887 $ 438,588 $ (10,701) (2) % $ 1,285,904 $ 1,390,366 $ (104,462) (8) %

For the three and nine months ended September 30, 2021, Newsprint and ink costs decreased $5.1 million and $22.9 million, respectively, compared to the three and nine months ended September 30, 2020, mainly due to lower print circulation driven by the decline in volume of home delivery and single copy sales. In addition, the decrease in Newsprint and ink costs for the nine months ended September 30, 2021 was also impacted by declines in print advertising volumes.

For the three and nine months ended September 30, 2021, Distribution costs increased $13.7 million and $14.7 million, respectively, compared to the three and nine months ended September 30, 2020, primarily driven by an increase in distribution postage, as well as activity in our commercial print business. In addition, the increase in Distribution costs for the nine months ended September 30, 2021 was offset by the decline in print circulation and print advertising volumes incurred in the first quarter of 2021.

For the three and nine months ended September 30, 2021, Compensation and benefits costs decreased $24.0 million and $64.5 million, respectively, compared to the three and nine months ended September 30, 2020, primarily due to a reduction in costs associated with ongoing integration efforts, including headcount reductions, as well as the benefit in 2021 of cost containment initiatives implemented in 2020 in connection with the COVID-19 pandemic and $11.1 million of PPP loan forgiveness, offset by the absence of the temporary reduction of expenses in the prior year, such as furloughs and wage reductions in response to the COVID-19 pandemic.

~~Table of Contents~~

For the three months ended September 30, 2021, Outside services costs, which includes outside printing, professional services fulfilled by third parties, paid search and ad serving, feature services, and credit card fees, increased $2.9 million compared to the three months ended September 30, 2020, due to higher costs associated with the increase in Digital media and Digital marketing services revenues, including paid search fees and affiliate revenue share as well as other related costs, offset by a reduction in costs associated with ongoing integration efforts. For the nine months ended September 30, 2021, Outside services costs decreased $3.9 million compared to the nine months ended September 30, 2020, due to a reduction in costs associated with ongoing integration efforts and the benefit in 2021 of cost containment initiatives implemented in 2020 in connection with the COVID-19 pandemic, offset by higher costs associated with the increase in Digital media and Digital marketing services revenues.

For the three months ended September 30, 2021, Other costs, which primarily includes travel, and facility and equipment costs, increased $1.8 million compared to the three months ended September 30, 2020, due to an increase in travel costs in the period as travel began to resume after the height of the COVID-19 pandemic travel restrictions. For the nine months ended September 30, 2021, Other costs decreased $27.8 million compared to the nine months ended September 30, 2020, due to a reduction in costs associated with ongoing integration efforts and cost containment initiatives, including the consolidation of print facilities.

For the three and nine months ended September 30, 2021, Selling, general and administrative expenses increased $3.0 million and decreased $51.7 million, respectively, compared to the three and nine months ended September 30, 2020. The following table provides the breakout of Selling, general and administrative expenses:

Three months ended September 30, Nine months ended September 30,
Change Change
In thousands 2021 2020 $ % 2021 2020 $ %
Compensation and benefits $ 93,762 $ 93,619 $ 143 — % $ 283,875 $ 295,569 $ (11,694) (4) %
Outside services and other 95,270 92,381 2,889 3 % 257,290 297,287 (39,997) (13) %
Total Selling, general and administrative expenses $ 189,032 $ 186,000 $ 3,032 2 % $ 541,165 $ 592,856 $ (51,691) (9) %

For the three months ended September 30, 2021, Compensation and benefits remained essentially flat compared to the three months ended September 30, 2020, due to an increase in costs associated with employee insurance benefits and the absence of the temporary reduction of expenses in the prior year period, such as furloughs and wage reductions, offset by PPP loan forgiveness of $4.0 million. For the nine months ended September 30, 2021, Compensation and benefits costs decreased ~~$11.7 million~~ compared to the nine months ended September 30, 2020, due to a reduction in costs associated with ongoing integration efforts, including headcount reductions, the benefit in 2021 of cost containment initiatives implemented in 2020 in connection with the COVID-19 pandemic, and PPP loan forgiveness of $4.0 million, partially offset by the impact of higher payroll and commission expenses driven by the growth in Advertising and marketing services revenues, an increase in costs associated with employee insurance benefits and the absence of the temporary reduction of expenses in the prior year, such as furloughs and wage reductions.

~~For the~~ ~~three months ended September 30, 2021~~, ~~Outside services and other~~ ~~costs, which includes services fulfilled by third parties, increased~~ ~~$2.9 million~~compared to the three months ended September 30, 2020, due to an increase in promotion fees, offset by decreases in legal fees, facility related costs and bad debt expense. For the nine months ended September 30, 2021, Outside services and other costs decreased~~$40.0 million~~ ~~compared to the~~ ~~nine months ended September 30, 2020, due to lower facility related costs, lower bad debt expense,~~ ~~a reduction in costs associated with ongoing integration efforts,~~ ~~and~~ ~~the~~ ~~benefit in 2021 of cost containment initiatives implemented in 2020 in connection with the COVID-19 pandemic, partially offset by an increase in promotion fees.~~

For the three and nine months ended September 30, 2021, Depreciation and amortization expenses decreased $16.6 million and $57.3 million, respectively, compared to the three and nine months ended September 30, 2020, due to a decrease in accelerated depreciation of $8.2 million and $33.6 million, respectively, as a result of fewer print facility shutdowns and strategic dispositions of real estate during the period related to ongoing cost reduction programs.

For the three months ended September 30, 2021, Integration and reorganization costs decreased $1.6 million compared to the three months ended September 30, 2020, due to a decrease in severance costs of $2.0 million, partially offset by an increase in other costs, including those for the consolidation of operations of $0.4 million. For the nine months ended September 30, 2021, Integration and reorganization costs decreased $28.4 million compared to the nine months ended September 30, 2020,

~~Table of Contents~~

due to a decrease in severance costs of $25.3 million, as well as a decrease in other costs, including those for the consolidation of operations of $3.1 million. For the three and nine months ended September 30, 2021, severance costs were primarily related to facility consolidation and ongoing integration activities. For the three and nine months ended September 30, 2020, severance costs were related to acquisition-related synergies and the consolidation of the business due to our acquisition of Gannett Co., Inc. (which was renamed Gannett Media Corp. and is referred to as "Legacy Gannett") in the fourth quarter of 2019.

For the three and nine months ended September 30, 2021, we recorded Asset impairment charges of $2.3 million and $3.1 million, respectively, in the Publishing segment due primarily to the impairment of real estate held for sale. For the three months ended September 30, 2020, we recorded $0.9 million of Assets impairment charges as a result of fixed asset disposals related to the continued consolidation of operations. For the nine months ended September 30, 2020, we recorded $7.7 million of Assets impairment charges as a result of the Company’s recoverability test for long-lived assets, as well as fixed asset disposals related to the continued consolidation of operations.

For the nine months ended September 30, 2020, we recorded a goodwill and intangible impairment charge of $352.9 million at the Publishing segment, primarily due to the impact of the COVID-19 pandemic on our operations.

For the three months ended September 30, 2021, we recorded a Gain on the sale or disposal of assets, net of $1.0 million due to a gain on sale of real estate at Newsquest, offset by the loss on the sale of assets as part of our plan to monetize non-core assets, compared to a Loss on the sale or disposal of assets, net of $1.7 million for the three months ended September 30, 2020. For the nine months ended September 30, 2021, Loss on sale or disposal of assets increased $7.7 million compared to the nine months ended September 30, 2020, driven by the loss on the sale of assets in 2021 as part of our plan to monetize non-core assets, offset by a gain on sale of real estate at Newsquest.

~~Publishing segment Adjusted EBITDA~~

Three months ended September 30, Nine months ended September 30,
Change Change
In thousands 2021 2020 $ % 2021 2020 $ %
Net income (loss) attributable to Gannett $ 84,137 $ 67,726 $ 16,411 24 % $ 246,792 $ (213,490) $ 460,282 ***
Interest expense — 17 (17) (100) % — 127 (127) (100) %
Non-operating pension income (23,860) (18,262) (5,598) 31 % (71,644) (54,215) (17,429) 32 %
Depreciation and amortization 35,861 52,481 (16,620) (32) % 118,664 175,990 (57,326) (33) %
Integration and reorganization costs 3,512 5,120 (1,608) (31) % 10,641 39,049 (28,408) (73) %
Asset impairments 2,301 868 1,433 *** 3,134 7,727 (4,593) (59) %
Goodwill and intangible impairments — — — — % — 352,947 (352,947) (100) %
(Gain) loss on sale or disposal of assets, net (1,032) 1,731 (2,763) *** 9,538 1,876 7,662 ***
Other items 82 (929) 1,011 *** 273 1,756 (1,483) (84) %
Adjusted EBITDA (non-GAAP basis) $ 101,001 $ 108,752 $ (7,751) (7) % $ 317,398 $ 311,767 $ 5,631 2 %
Net income (loss) attributable to Gannett margin 11.8 % 9.2 % 11.5 % (9.3) %
Adjusted EBITDA margin (non-GAAP basis)(a)
14.1 % 14.9 % 14.8 % 13.6 %

*** Indicates an absolute value percentage change greater than 100.

~~(a)We define Adjusted EBITDA margin as Adjusted EBITDA divided by total Operating revenues.~~

Adjusted EBITDA for our Publishing segment was $101.0 million and $317.4 million for the three and nine months ended September 30, 2021, respectively, a decrease of $7.8 million and an increase of $5.6 million compared to the three and nine months ended September 30, 2020, respectively. The change for the three and nine months ended September 30, 2021 was primarily attributable to the changes discussed above.

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~~Digital Marketing Solutions~~Segment Results

Gannett Media segment

A summary of our ~~Digital Marketing Solutions~~Gannett Media segment results is presented below:


		Three months ended September 30,								Nine months ended September 30,									Three months ended June 30,								Six months ended June 30,
						Change								Change									Change								Change
In thousands	In thousands	2021		2020		$		%		2021		2020		$		%		In thousands	2022		2021		$		%		2022		2021		$		%
Operating revenues:	Operating revenues:																	Operating revenues:
Advertising and marketing services	Advertising and marketing services	$	116,771	$	100,807	$	15,964	16	%	$	328,184	$	306,899	$	21,285	7	%	Advertising and marketing services	$	301,201	$	341,481	$	(40,280)	(12)	%	$	599,963	$	655,791	$	(55,828)	(9)	%
Circulation																		Circulation	274,624		310,258		(35,634)		(11)	%	563,226		635,694		(72,468)		(11)	%
Other	Other	—		4,636		(4,636)		(100)	%	905		14,388		(13,483)		(94)	%	Other	89,019		72,806		16,213		22	%	172,074		132,645		39,429		30	%
Total operating revenues	Total operating revenues	116,771		105,443		11,328		11	%	329,089		321,287		7,802		2	%	Total operating revenues	664,844		724,545		(59,701)		(8)	%	1,335,263		1,424,130		(88,867)		(6)	%
Operating expenses:	Operating expenses:																	Operating expenses:
Operating costs	Operating costs	80,405		71,223		9,182		13	%	224,112		207,741		16,371		8	%	Operating costs	431,075		426,216		4,859		1	%	857,191		858,017		(826)		—	%
Selling, general and administrative expenses	Selling, general and administrative expenses	21,342		30,228		(8,886)		(29)	%	68,252		100,120		(31,868)		(32)	%	Selling, general and administrative expenses	183,732		185,930		(2,198)		(1)	%	360,664		352,133		8,531		2	%
Depreciation and amortization	Depreciation and amortization	7,986		6,768		1,218		18	%	23,665		18,103		5,562		31	%	Depreciation and amortization	38,558		36,416		2,142		6	%	75,989		82,803		(6,814)		(8)	%
Integration and reorganization costs	Integration and reorganization costs	931		1,237		(306)		(25)	%	1,301		5,587		(4,286)		(77)	%	Integration and reorganization costs	11,041		(197)		11,238		***		16,762		7,129		9,633		***
Asset impairments	Asset impairments	—		717		(717)		***		—		717		(717)		***		Asset impairments	85		—		85		***		939		833		106		13	%
Goodwill and intangible impairments		—		—		—		—	%	—		40,499		(40,499)		***
Gain on sale or disposal of assets, net		(91)		(964)		873		(91)	%	(618)		(426)		(192)		45	%

Loss (gain) on sale or disposal of assets, net																		Loss (gain) on sale or disposal of assets, net	353		5,890		(5,537)		(94)	%	(2,615)		10,570		(13,185)		***
Other operating expenses																		Other operating expenses	34		—		34		***		775		—		775		***
Total operating expenses	Total operating expenses	110,573		109,209		1,364		1	%	316,712		372,341		(55,629)		(15)	%	Total operating expenses	664,878		654,255		10,589		2	%	1,309,705		1,311,485		(1,780)		—	%
Operating income (loss)	Operating income (loss)	$	6,198	$	(3,766)	$	9,964	***		$	12,377	$	(51,054)	$	63,431	***		Operating income (loss)	$	(34)	$	70,290	$	(70,290)	***		$	25,558	$	112,645	$	(87,087)	(77)	%

*** Indicates an absolute value percentage change greater than 100.

Operating revenues

~~For~~The following table provides the breakout of Operating revenues by category:


	Three months ended June 30,								Six months ended June 30,
					Change								Change
In thousands	2022		2021		$		%		2022		2021		$		%
Local and national print	$	105,721	$	127,600	$	(21,879)	(17)	%	$	208,465	$	244,999	$	(36,534)	(15)	%
Classified print	67,732		73,325		(5,593)		(8)	%	138,506		149,122		(10,616)		(7)	%
Print advertising	173,453		200,925		(27,472)		(14)	%	346,971		394,121		(47,150)		(12)	%

Digital media	77,259		94,549		(17,290)		(18)	%	156,030		174,106		(18,076)		(10)	%
Digital marketing services	35,057		33,221		1,836		6	%	67,696		61,574		6,122		10	%
Digital classified	15,432		12,786		2,646		21	%	29,266		25,990		3,276		13	%
Digital advertising and marketing services	127,748		140,556		(12,808)		(9)	%	252,992		261,670		(8,678)		(3)	%

Advertising and marketing services	301,201		341,481		(40,280)		(12)	%	599,963		655,791		(55,828)		(9)	%

Print circulation	242,151		286,252		(44,101)		(15)	%	500,627		588,509		(87,882)		(15)	%
Digital-only circulation	32,473		24,006		8,467		35	%	62,599		47,185		15,414		33	%
Circulation	274,624		310,258		(35,634)		(11)	%	563,226		635,694		(72,468)		(11)	%

Other	89,019		72,806		16,213		22	%	172,074		132,645		39,429		30	%

Total operating revenues	$	664,844	$	724,545	$	(59,701)	(8)	%	$	1,335,263	$	1,424,130	$	(88,867)	(6)	%

The overall decline in Print advertising revenues for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021, Advertising and marketing services revenues increased $16.0 million and $21.3 million, respectively,~~2022 compared to the three and ~~nine~~six months ended September 30, 2020, primarily driven by growth in the core ReachLocal business and a continued improvement in operating trends since the prior year impacts of the COVID-19 pandemic. The increase for the nine months ended SeptemberJune 30, 2021 was ~~partially offset~~driven by secular industry trends impacting all categories. For the ~~absence~~three and six

Table of ~~$11.7 million of~~Contents

months ended June 30, 2022, Local and national print advertising revenues decreased compared to the three and six months ended June 30, 2021, primarily due to a decrease in ~~2021 as a result of the change in media rebate programs,~~advertiser inserts as well as the absence of $9.3 million and $15.0 million of revenues for the three and six months ended June 30, 2022, respectively, associated with ~~a business we~~both businesses divested and non-core products which were sunset in 2022 and 2021. For the ~~third quarter of 2020.~~three and six months ended June 30, 2022, Classified print advertising revenues decreased compared to the three and six months ended June 30, 2021, due to lower spend on classified advertisements, including obituaries, real estate, and automotive.

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2021, Other~~2022, Digital media revenues decreased ~~$4.6 million and $13.5 million, respectively,~~ compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, driven by changes in monetization with our sports affiliates as well as lower page views related to increased subscriber-only content, secular trends in news consumption and lower overall digital advertising spend, as well as divestitures. For the three and six months ended June 30, 2022, Digital marketing services revenues increased compared to the three and six months ended June 30, 2021 due to an increase in client counts as well as an increase in client spend. For the three and six months ended June 30, 2022, Digital classified revenues increased compared to the three and six months ended June 30, 2021 due to higher client spend, mainly driven by automotive advertisements.

For the three and six months ended June 30, 2022, Print circulation revenues decreased compared to the three and six months ended June 30, 2021, due to a reduction in the volume of home delivery subscribers and a decline in single copy sales reflecting the overall secular trends impacting the industry and increasing sensitivity from customers related to price increases and product changes. In addition, during 2022, and specifically during the three months ended June 30, 2022, the decline in print circulation accelerated as compared to the same period in the prior year as our audience increasingly moves to digital platforms. For the three and six months ended June 30, 2022, Digital-only circulation revenues increased compared to the three and six months ended June 30, 2021, driven by an increase of 35% in paid digital-only subscribers, including those subscribers on introductory subscription offers, to approximately 1.87 million as of June 30, 2022. In addition, for the six months ended June 30, 2022, the increase in Digital-only circulation revenues compared to the same period in the prior year was offset by lower average revenue per user, which we define as monthly revenue divided by average client count within the period.

For the three and six months ended June 30, 2022, Other revenues increased compared to the three and six months ended June 30, 2021, primarily due to commercial print growth in local markets, an increase in digital content syndication volume and other digital revenues, and an increase in event revenues (though not to pre-pandemic levels) as we hosted more in-person events with higher attendance as compared to the ~~absence of revenues related to a business we divested~~same periods in the ~~fourth quarter of 2020.~~prior year, where our ability to host in-person events was more significantly impacted by the COVID-19 pandemic.

Operating expenses

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, Operating costs increased ~~$9.2~~$4.9 million and ~~$16.4~~decreased $0.8 million, respectively, compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. The following table provides the breakout of Operating costs:


		Three months ended September 30,								Nine months ended September 30,									Three months ended June 30,								Six months ended June 30,
						Change								Change									Change								Change
In thousands	In thousands	2021		2020		$		%		2021		2020		$		%		In thousands	2022		2021		$		%		2022		2021		$		%
Newsprint and ink																		Newsprint and ink	$	37,075	$	23,713	$	13,362	56	%	$	71,707	$	51,984	$	19,723	38	%
Distribution																		Distribution	99,720		112,446		(12,726)		(11)	%	202,118		208,551		(6,433)		(3)	%
Compensation and benefits	Compensation and benefits	$	7,593	$	10,809	$	(3,216)	(30)	%	$	23,408	$	35,031	$	(11,623)	(33)	%	Compensation and benefits	140,430		137,775		2,655		2	%	280,559		284,893		(4,334)		(2)	%
Outside services	Outside services	70,332		56,787		13,545		24	%	193,423		160,722		32,701		20	%	Outside services	89,113		88,918		195		—	%	171,897		157,682		14,215		9	%
Other	Other	2,480		3,627		(1,147)		(32)	%	7,281		11,988		(4,707)		(39)	%	Other	64,737		63,364		1,373		2	%	130,910		154,907		(23,997)		(15)	%
Total operating costs	Total operating costs	$	80,405	$	71,223	$	9,182	13	%	$	224,112	$	207,741	$	16,371	8	%	Total operating costs	$	431,075	$	426,216	$	4,859	1	%	$	857,191	$	858,017	$	(826)	—	%

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2021, Compensation~~2022, Newsprint and ~~benefits~~ink costs ~~decreased $3.2 million and $11.6 million, respectively,~~increased compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, primarily due to ~~a reduction~~an increase in ~~costs associated with ongoing integration efforts, including headcount reductions,~~newsprint prices driven by inflationary pressures and supply chain issues impacting the industry, as well as growth in our commercial print business, partially offset by the ~~benefit~~decline in ~~2021~~volume of ~~cost containment~~home delivery and single copy sales.

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~~initiatives implemented in 2020 in connection~~

For the three and six months ended June 30, 2022, Distribution costs decreased compared to the three and six months ended June 30, 2021, primarily due to reduced volume of home delivery and single copy sales, cost savings driven by a reduction of print offerings, lower delivery and postage costs associated with ~~the COVID-19 pandemic,~~lower volumes, partially offset by higher rate per copy, as well as the absence of expenses associated with both businesses divested and non-core products which were sunset in 2022 and 2021, partially offset by an increase in commercial delivery activity and an increase in third party distribution costs.

For the ~~temporary~~three months ended June 30, 2022, Compensation and benefits costs increased compared to the three months ended June 30, 2021, primarily due to higher payroll expense at Newsquest driven by a recent acquisition and an increase in employer 401(k) matching contributions, which were reinstated during the third quarter of 2021, partially offset by lower domestic payroll expense driven by headcount reductions. For the six months ended June 30, 2022, Compensation and benefits costs decreased compared to the six months ended June 30, 2021, primarily due to lower benefit costs, including medical, partially offset by higher payroll expense at Newsquest driven by a recent acquisition and an increase in employer 401(k) matching contributions, which were reinstated during the third quarter of 2021.

For the three months ended June 30, 2022, Outside services costs, which include outside printing, professional services fulfilled by third parties, paid search and ad serving, feature services, and credit card fees, remained relatively flat compared to the three months ended June 30, 2021. For the six months ended June 30, 2022, Outside services increased compared to the six months ended June 30, 2021, primarily due to higher costs associated with the increase in Digital marketing services revenues, including paid search and email fees, as well as an increase in costs related to events, mainly related to the number and mix of live versus virtual events compared to the prior year.

For the three months ended June 30, 2022, Other costs, which primarily include travel and facility and equipment costs, increased compared to the three months ended June 30, 2021, primarily due to an increase in business travel as well as an increase in lease costs driven by the sale of property and facilities consolidation activities, partially offset by a decrease in commercial print expenses. For the six months ended June 30, 2022, Other costs decreased compared to the six months ended June 30, 2021, due primarily to a reduction in costs associated with cost containment initiatives as well as the absence of expenses associated with both businesses divested and non-core products which were sunset in ~~the prior year, such as furloughs~~2022 and ~~wage reductions.~~2021, partially offset by increases in business travel and lease costs.

For the three and ~~nine~~six months ended ~~September~~June 30, 2022, Selling, general and administrative expenses decreased $2.2 million and increased $8.5 million, respectively, compared to the three and six months ended June 30, 2021. The following table provides the breakout of Selling, general and administrative expenses:


	Three months ended June 30,								Six months ended June 30,
					Change								Change
In thousands	2022		2021		$		%		2022		2021		$		%
Compensation and benefits	$	91,477	$	100,403	$	(8,926)	(9)	%	$	178,343	$	190,113	$	(11,770)	(6)	%
Outside services and other	92,255		85,527		6,728		8	%	182,321		162,020		20,301		13	%
Total Selling, general and administrative expenses	$	183,732	$	185,930	$	(2,198)	(1)	%	$	360,664	$	352,133	$	8,531	2	%

For the three and six months ended June 30, 2022, Compensation and benefits costs decreased compared to the three and six months ended June 30, 2021, primarily due to lower incentive pay and lower domestic payroll expense driven by headcount savings as well as lower benefit costs, including medical, partially offset by higher payroll expense at Newsquest driven by a recent acquisition and an increase in employer 401(k) matching contributions, which were reinstated during the third quarter of 2021.

For the three and six months ended June 30, 2022, Outside services and other costs, which include services fulfilled by third parties, increased compared to the three and six months ended June 30, 2021, due to higher professional services costs associated with advertising operations and client success as well as marketing and acquisition costs associated with growing subscribers.

For the three months ended June 30, 2022, Depreciation and amortization expenses increased compared to the three months ended June 30, 2021, driven by higher accelerated depreciation due to the closing of a local print facility in the first quarter of 2022, for which we incurred costs during the three months ended June 30, 2022, partially offset by a decrease in depreciation expense driven by the impact of fewer print facilities in the current period. For the six months ended June 30, 2022, Depreciation and amortization expenses decreased compared to the six months ended June 30, 2021, reflecting the impact of fewer print facilities in the current period. Accelerated depreciation remained essentially flat for the six months ended June 30,

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2022 compared to the same period in the prior year.

For the three and six months ended June 30, 2022, Integration and reorganization costs increased compared to the three and six months ended June 30, 2021, mainly due to an increase in severance costs of $9.2 million and $7.6 million, respectively, driven by ongoing integration and restructuring activities.

For the three and six months ended June 30, 2022, the change in the Loss (gain) on sale or disposal of assets, net compared to the three and six months ended June 30, 2021 was due to net gains recognized on the sale of various assets in connection with our plan to monetize non-core assets in the current periods compared to net losses in the same periods in the prior year.

Gannett Media segment Adjusted EBITDA


	Three months ended June 30,										Six months ended June 30,
							Change										Change
In thousands	2022			2021			$		%		2022			2021			$		%
Net income attributable to Gannett	$	19,145		$	96,431		$	(77,286)	(80)	%	$	61,959		$	162,655		$	(100,696)	(62)	%


Non-operating pension income	(18,160)			(23,906)			5,746		(24)	%	(36,373)			(47,784)			11,411		(24)	%
Depreciation and amortization	38,558			36,416			2,142		6	%	75,989			82,803			(6,814)		(8)	%
Integration and reorganization costs	11,041			(197)			11,238		***		16,762			7,129			9,633		***
Other operating expenses	34			—			34		***		775			—			775		***
Asset impairments	85			—			85		***		939			833			106		13	%

Loss (gain) on sale or disposal of assets, net	353			5,890			(5,537)		(94)	%	(2,615)			10,570			(13,185)		***
Other items	(200)			(445)			245		(55)	%	2,068			191			1,877		***
Adjusted EBITDA (non-GAAP basis)	$	50,856		$	114,189		$	(63,333)	(55)	%	$	119,504		$	216,397		$	(96,893)	(45)	%
Net income attributable to Gannett margin	2.9		%	13.3		%					4.6		%	11.4		%
Adjusted EBITDA margin (non-GAAP basis)(a)(b)	7.6		%	15.8		%					8.9		%	15.2		%

*** Indicates an absolute value percentage change greater than 100.

(a)See "Non-GAAP Financial Measures" below for additional information about non-GAAP measures.

(b)We define Adjusted EBITDA margin as Adjusted EBITDA divided by total Operating revenues.

For the three and six months ended June 30, 2022, the decrease in Adjusted EBITDA compared to the three and six months ended June 30, 2021 was primarily attributable to the changes discussed above.

Digital Marketing Solutions segment

A summary of our DMS segment results is presented below:


	Three months ended June 30,								Six months ended June 30,
					Change								Change
In thousands	2022		2021		$		%		2022		2021		$		%
Operating revenues:
Advertising and marketing services	$	118,013	$	110,037	$	7,976	7	%	$	227,722	$	211,413	$	16,309	8	%
Other	—		—		—		—	%	—		905		(905)		(100)	%
Total operating revenues	118,013		110,037		7,976		7	%	227,722		212,318		15,404		7	%
Operating expenses:
Operating costs	81,110		74,429		6,681		9	%	157,441		143,707		13,734		10	%
Selling, general and administrative expenses	22,597		23,079		(482)		(2)	%	44,795		46,910		(2,115)		(5)	%
Depreciation and amortization	6,829		7,850		(1,021)		(13)	%	13,287		15,679		(2,392)		(15)	%
Integration and reorganization costs	293		204		89		44	%	444		370		74		20	%


Loss (gain) on sale or disposal of assets, net	19		(527)		546		***		176		(527)		703		***
Total operating expenses	110,848		105,035		5,813		6	%	216,143		206,139		10,004		5	%
Operating income	$	7,165	$	5,002	$	2,163	43	%	$	11,579	$	6,179	$	5,400	87	%

*** Indicates an absolute value percentage change greater than 100.

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Operating revenues

For the three and six months ended June 30, 2022, Advertising and marketing services revenues increased compared to the three and six months ended June 30, 2021, primarily driven by growth in the core direct business as well as a growth in revenues associated with local markets, partially offset by the impact of the sunset of non-core products.

Operating expenses

For the three and six months ended June 30, 2022, Operating costs increased $6.7 million and $13.7 million compared to the three and six months ended June 30, 2021. The following table provides the breakout of Operating costs:


	Three months ended June 30,								Six months ended June 30,
					Change								Change
In thousands	2022		2021		$		%		2022		2021		$		%
Outside services	$	71,038	$	64,400	$	6,638	10	%	$	137,265	$	123,091	$	14,174	12	%
Compensation and benefits	7,928		7,680		248		3	%	15,803		15,815		(12)		—	%
Other	2,144		2,349		(205)		(9)	%	4,373		4,801		(428)		(9)	%
Total operating costs	$	81,110	$	74,429	$	6,681	9	%	$	157,441	$	143,707	$	13,734	10	%

For the three and six months ended June 30, 2022, Outside services costs, which includes professional services fulfilled by third parties, media fees and other digital costs, ~~increased $13.5 million~~paid search and ~~$32.7 million, respectively,~~ad serving and feature services, increased compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, due to an increase in expenses associated with third-party media fees, driven by a corresponding increase in ~~revenues, partially offset by the absence of costs associated with a business we divested in the fourth quarter of 2020.~~revenues.

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, Selling, general and administrative expenses decreased ~~$8.9~~$0.5 million and ~~$31.9~~$2.1 million ~~respectively,~~ compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. The following table provides the breakout of Selling, general and administrative ~~expenses by category:~~expenses:

Three months ended September 30, Nine months ended September 30,
Change Change
In thousands 2021 2020 $ % 2021 2020 $ %
Compensation and benefits $ 17,046 $ 28,426 $ (11,380) (40) % $ 52,283 $ 92,145 $ (39,862) (43) %
Outside services and other 4,296 1,802 2,494 *** 15,969 7,975 7,994 ***
Total Selling, general and administrative expenses $ 21,342 $ 30,228 $ (8,886) (29) % $ 68,252 $ 100,120 $ (31,868) (32) %

*** Indicates an absolute value percentage change greater than 100.


	Three months ended June 30,								Six months ended June 30,
					Change								Change
In thousands	2022		2021		$		%		2022		2021		$		%
Compensation and benefits	$	18,835	$	17,175	$	1,660	10	%	$	37,433	$	35,237	$	2,196	6	%
Outside services and other	3,762		5,904		(2,142)		(36)	%	7,362		11,673		(4,311)		(37)	%
Total Selling, general and administrative expenses	$	22,597	$	23,079	$	(482)	(2)	%	$	44,795	$	46,910	$	(2,115)	(5)	%

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, Compensation and benefits costs ~~decreased $11.4 million and $39.9 million, respectively,~~increased compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2020, primarily~~2021, due to an increase in headcount and incentive pay, driven by a ~~reduction~~corresponding increase in costs associated with ongoing integration efforts, including headcount reductions, as well as the benefit in 2021 of cost containment initiatives implemented in 2020 in connection with the COVID-19 pandemic, offset by the absence of the temporary reduction of expenses in the prior year, such as furloughs and wage reductions.revenues.

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, Outside services and other costs ~~increased $2.5 million and $8.0 million, respectively,~~decreased compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, due to ~~an increase~~a decrease in various miscellaneous expenses, including ~~higher technology~~lower software costs and ~~marketing expenses.~~lower bad debt expense.

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2021, Integration~~2022, Depreciation and ~~reorganization costs~~amortization expense decreased ~~$0.3 million and $4.3 million, respectively,~~ compared to the three and ~~nine~~six months ended ~~September~~June 30, 2020 due to lower severance costs of $0.8 million and $5.0 million, respectively, offset by higher facility consolidation and other restructuring related expenses of $0.5 million and $0.7 million, respectively. For the three and nine months ended September 30, 2020, severance costs were related to acquisition-related synergies and the consolidation of the business due to our acquisition of Legacy Gannett in the fourth quarter of 2019.

~~For the three and nine months ended September 30, 2020, we recorded $0.7 million of Asset impairment charges as a result of ongoing cost efficiency programs.~~

~~For the nine months ended September 30, 2020, we recorded a goodwill and intangible impairment charge of $40.5 million at the DMS segment,~~2021, primarily due to the impact of capitalized software fully amortized in the ~~COVID-19 pandemic on our operations.~~third quarter of 2021.

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~~Digital Marketing Solutions~~DMS segment Adjusted EBITDA


		Three months ended September 30,										Nine months ended September 30,											Three months ended June 30,										Six months ended June 30,
								Change										Change											Change										Change
In thousands	In thousands	2021			2020			$		%		2021			2020			$		%		In thousands	2022			2021			$		%		2022			2021			$		%
Net income (loss) attributable to Gannett		$	5,005		$	5,223		$	(218)	(4)	%	$	10,990		$	(43,076)		$	54,066	***
Net income attributable to Gannett																						Net income attributable to Gannett	$	4,306		$	4,904		$	(598)	(12)	%	$	9,563		$	5,985		$	3,578	60	%
Depreciation and amortization	Depreciation and amortization	7,986			6,768			1,218		18	%	23,665			18,103			5,562		31	%	Depreciation and amortization	6,829			7,850			(1,021)		(13)	%	13,287			15,679			(2,392)		(15)	%
Integration and reorganization costs	Integration and reorganization costs	931			1,237			(306)		(25)	%	1,301			5,587			(4,286)		(77)	%	Integration and reorganization costs	293			204			89		44	%	444			370			74		20	%
Asset impairments		—			717			(717)		(100)	%	—			717			(717)		(100)	%
Goodwill and intangible impairments		—			—			—		—	%	—			40,499			(40,499)		(100)	%
Gain on sale or disposal of assets, net		(91)			(964)			873		(91)	%	(618)			(426)			(192)		45	%

Loss (gain) on sale or disposal of assets, net																						Loss (gain) on sale or disposal of assets, net	19			(527)			546		***		176			(527)			703		***
Other items	Other items	1,193			(8,804)			9,997		***		1,387			(6,557)			7,944		***		Other items	2,859			98			2,761		***		2,016			194			1,822		***
Adjusted EBITDA (non-GAAP basis)	Adjusted EBITDA (non-GAAP basis)	$	15,024		$	4,177		$	10,847	***		$	36,725		$	14,847		$	21,878	***		Adjusted EBITDA (non-GAAP basis)	$	14,306		$	12,529		$	1,777	14	%	$	25,486		$	21,701		$	3,785	17	%
Net income (loss) attributable to Gannett margin		4.3		%	5.0		%					3.3		%	(13.4)		%
Net income attributable to Gannett margin																						Net income attributable to Gannett margin	3.6		%	4.5		%					4.2		%	2.8		%
Adjusted EBITDA margin (non-GAAP basis)~~(a)~~(b)	Adjusted EBITDA margin (non-GAAP basis)~~(a)~~(b)	12.9		%	4.0		%					11.2		%	4.6		%					Adjusted EBITDA margin (non-GAAP basis)~~(a)~~(b)	12.1		%	11.4		%					11.2		%	10.2		%

*** Indicates an absolute value percentage change greater than 100.

(a)See "Non-GAAP Financial Measures" below for additional information about non-GAAP measures.

(b)We define Adjusted EBITDA margin as Adjusted EBITDA divided by total Operating revenues.

~~Adjusted EBITDA for our Digital Marketing Solutions segment was $15.0 million and $36.7 million for~~For the three and ~~nine~~six months ended ~~September~~June 30, ~~2021, respectively, an~~2022, the increase ~~of $10.8 million and $21.9 million~~in Adjusted EBITDA compared to the three and ~~nine~~six months ended ~~September 30, 2020, respectively. The change for the three and nine months ended September~~June 30, 2021 was primarily attributable to the changes discussed above.

Corporate and other category

For the three months ended ~~September~~June 30, ~~2021,~~2022, Corporate and other operating revenues were ~~$1.6~~$1.4 million compared to ~~$2.7~~$1.7 million for the three months ended ~~September~~June 30, ~~2020.~~2021. For the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, Corporate and other operating revenues were ~~$6.4~~$2.7 million compared to ~~$8.1~~$4.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021.

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, Corporate and other operating expenses decreased ~~$9.9~~$1.8 million and ~~$43.3~~$7.2 million ~~respectively,~~ compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. The following table provides the breakout of the decrease in Corporate and other operating expenses:


		Three months ended September 30,								Nine months ended September 30,									Three months ended June 30,								Six months ended June 30,
						Change								Change									Change								Change
In thousands	In thousands	2021		2020		$		%		2021		2020		$		%		In thousands	2022		2021		$		%		2022		2021		$		%
Operating expenses:
Operating costs	Operating costs	$	6,039	$	7,424	$	(1,385)	(19)	%	$	14,534	$	17,864	$	(3,330)	(19)	%	Operating costs	$	(578)	$	4,539	$	(5,117)	***		$	217	$	8,495	$	(8,278)	(97)	%
Selling, general and administrative expenses	Selling, general and administrative expenses	15,222		26,393		(11,171)		(42)	%	43,386		79,339		(35,953)		(45)	%	Selling, general and administrative expenses	21,507		13,895		7,612		55	%	44,214		28,164		16,050		57	%
Depreciation and amortization	Depreciation and amortization	4,260		2,106		2,154		***		12,123		11,613		510		4	%	Depreciation and amortization	4,143		3,976		167		4	%	8,037		7,863		174		2	%
Integration and reorganization costs	Integration and reorganization costs	9,176		7,060		2,116		30	%	23,525		29,342		(5,817)		(20)	%	Integration and reorganization costs	4,411		8,437		(4,026)		(48)	%	9,937		14,349		(4,412)		(31)	%
Loss on sale or disposal of assets, net		290		28		262		***		286		90		196		***
(Gain) loss on sale or disposal of assets, net																		(Gain) loss on sale or disposal of assets, net	—		(69)		69		(100)	%	7		(4)		11		***
Other operating expenses	Other operating expenses	4		1,913		(1,909)		(100)	%	11,354		10,261		1,093		11	%	Other operating expenses	280		774		(494)		(64)	%	641		11,350		(10,709)		(94)	%
Total operating expenses	Total operating expenses	$	34,991	$	44,924	$	(9,933)	(22)	%	$	105,208	$	148,509	$	(43,301)	(29)	%	Total operating expenses	$	29,763	$	31,552	$	(1,789)	(6)	%	$	63,053	$	70,217	$	(7,164)	(10)	%

*** Indicates an absolute value percentage change greater than 100.

For the three and six months ended ~~September~~June 30, ~~2021,~~2022, Corporate and other operating expenses decreased ~~$9.9 million~~ compared to the three and six months ended ~~September~~June 30, ~~2020~~2021, primarily due to a decrease in ~~Selling, general and administrative expenses of $11.2 million,~~Operating costs, mainly ~~consisting of cost containment initiatives, a decrease in Other operating expenses of $1.9 million, which was~~ due to ~~the absence of $1.9 million of Acquisition~~lower compensation costs, ~~incurred during the three months ended September 30, 2020, and~~ a

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decrease in Operating costs of $1.4 million due to the decline in revenues. The decreases for the three months were partially offset by an increase in Depreciation and amortization of $2.2 million and an increase in Integration and reorganization costs, ~~of $2.1 million,~~ driven by ~~an increase of $3.9 million~~a decrease in costs ~~associated with~~related to systems implementation and outsourcing of corporate functions, partially offset by ~~a decrease in severance of $1.8 million.~~

~~For the nine months ended September 30, 2021, Corporate and other operating expenses decreased $43.3 million due to a decrease~~an increase in Selling, general and administrative expenses, ~~of $36.0 million, mainly consisting of cost containment initiatives, offset~~primarily driven by higher outside services and compensation and benefits costs. The decrease in Corporate and other operating expenses for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 was further impacted by a decrease in Other operating expenses, driven by the absence of the temporary reduction of expenses in the prior year, such as furloughs and wage reductions, a decrease in Integration and reorganization costs of $5.8 million, driven by a decrease in severance of $13.6 million, offset by an increase of $7.8 million in costs associated with systems implementation and outsourcing of corporate functions. The decreases for the nine months were offset by an increase in Other operating expenses of $1.1 million, which was primarily due to $10.9$10.2 million of third-party fees related to ~~the 5-Year Term Loan~~our previous five-year, senior-secured term loan facility which were expensed during the ~~nine~~six months ended ~~September~~June 30, ~~2021, compared to $10.3 million of Acquisition costs incurred during the nine months ended September 30, 2020.~~2021.

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LIQUIDITY AND CAPITAL RESOURCES

Our primary cash requirements are for working capital, debt obligations, and capital expenditures.

We expect to fund our operations through cash provided by operating activities. We expect we will have adequate capital resources and liquidity to meet our ongoing working capital needs, borrowing obligations, and all required capital ~~expenditures.~~expenditures for at least the next twelve months. However, a further economic downturn or an increased rate of revenue declines would negatively impact the Company’s revenue, cash provided by operating activities and liquidity. The Company has implemented a cost reduction program to reduce its ongoing level of operating expense.

Details of our cash flows are included in the table below:

Nine months ended September 30,
In thousands 2021 2020
Net cash provided by operating activities $ 133,347 $ 74,280
Net cash provided by (used for) investing activities 39,236 (1,979)
Net cash used for financing activities (212,284) (37,471)
Effect of currency exchange rate change on cash 389 439
(Decrease) increase in cash, cash equivalents and restricted cash $ (39,312) $ 35,269


	Six months ended June 30,
In thousands	2022		2021
Cash provided by operating activities	$	1,688	$	92,587
Cash provided by (used for) investing activities	(9,649)		7,185
Cash used for financing activities	(35,047)		(120,979)
Effect of currency exchange rate change on cash	(1,140)		625
Decrease in cash, cash equivalents and restricted cash	$	(44,148)	$	(20,582)

Cash flows provided by operating activities: Our largest source of cash provided by our operations is Advertising revenues, primarily generated from Local and national advertising and marketing services revenues (retail, classified, and online). Additionally, we generate cash through circulation subscribers, commercial printing and delivery services to third parties, and events. Our primary uses of cash from our operating activities include compensation, newsprint, delivery, and outside services.

Our ~~net~~ cash flow provided by operating activities was ~~$133.3~~$1.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, compared to ~~$74.3~~$92.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. The ~~increase~~decrease in ~~net~~ cash flow provided by operating activities was primarily due to lower cash receipts related to deferred revenues of $14.8 million, a decrease in accounts payable of $33.1 million, an increase in taxes paid, net of refunds, of $11.1 million and $16.4 million in Paycheck Protection Program funding received during the six months ended June 30, 2021 that was not received in 2022, partially offset by lower severance payments of $12.4 million, a decrease in interest paid on debt of ~~$96.1~~$8.0 million and a decrease in severance payments of $40.1 million, $16.4 million in PPP funding received in support of certain of our locations that were meaningfully affected by the COVID-19 pandemic and an increase in tax refunds, net of $4.5 million. These increases were partially offset by a decrease in working capital of $70.9 million due to the overall timing of payments, including accrued compensation and accounts receivable collections, and an increase in contributions to our pension and other postretirement benefit plans of ~~$19.2~~$15.4 million.

Cash flows provided by (used for) investing activities: Cash flows used for investing activities was $9.6 million for the six months ended June 30, 2022, compared to cash flows provided by investing activities ~~totaled $39.2~~of $7.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021 compared to $2.0 million used for investing activities in the nine months ended September 30, 2020. This increase~~2021. The change was primarily due to payments for acquisitions, net of cash acquired, of $15.4 million and an increase in purchases of property, plant and equipment of $7.5 million, offset by an increase in proceeds from the sale of real estate and other assets of ~~$41.2 million and a decrease in purchases of property, plant and equipment of $1.7~~$6.3 million.

Cash flows used for financing activities: Cash flows used for financing activities ~~totaled $212.3~~was $35.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022, compared to ~~$37.5~~$121.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020. This increase~~2021. The decrease was primarily due to ~~an increase in~~lower repayments, net ~~repayments~~ under term loans of ~~$148.1~~$89.7 million and a $33.0 million decrease in payments related to deferred financing costs, partially offset by repayments of ~~debt issuance costs~~$30.0 million related to the 2026 Senior Notes and payments related to treasury stock of ~~$33.9 million.~~$4.5 million, including $3.1 million related to the Stock Repurchase Program.

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Debt

~~5-Year~~New Senior Secured Term Loan

On ~~February 9,~~October 15, 2021, weGannett Holdings LLC ("Gannett Holdings"), our wholly-owned subsidiary, entered into ~~a five-year, senior-secured term loan facility~~the New Senior Secured Term Loan with ~~the lenders from time to time party thereto and~~ Citibank N.A., as collateral agent and administrative agent for the ~~lenders,~~lenders. On January 31, 2022, Gannett Holdings entered into an amendment (the "Term Loan Amendment") to its New Senior Secured Term Loan to provide for new incremental senior secured term loans (the "Incremental Term Loans") in an aggregate principal amount of ~~$1.045 billion (the "5-Year~~$50 million. The Incremental Term ~~Loan"). The 5-Year~~Loans have substantially identical terms as the New Senior Secured Term Loan ~~was~~and are treated as a single tranche with the New Senior Secured Term Loan. The Term Loan Amendment also amended the New Senior Secured Term Loan to ~~mature on February 9, 2026~~transition the interest rate base from LIBOR to Adjusted Term SOFR and atto permit the repurchase of up to $50 million of the Company's ~~option, bore~~Common Stock under the Stock Repurchase Program consummated on or prior to December 31, 2022, in addition to capacity for Gannett Holdings to make restricted payments, including stock repurchases, currently permitted under other provisions of the New Senior Secured Term Loan and our other debt facilities, including the 2026 Senior Secured Notes Indenture and the 2027 Notes Indenture (terms defined below). On March 21, 2022 and April 8, 2022, Gannett Holdings entered into amendments to its New Senior Secured Term Loan to provide for incremental senior secured term loans in an aggregate principal amount of $22.5 million and $7.5 million, respectively.

The proceeds from the 5-Year Term Loan were used to repay the remaining principal balance and accrued interest of $1.043 billion and $13.3 million, respectively, on the Acquisition Term Loan (the "Payoff") and to pay fees and expenses incurred to obtain the 5-Year Term Loan.

The 5-Year Term Loan amortized in equal quarterly installments at a rate of 10% per annum (or, if the ratio of Total Indebtedness secured on an equal priority basis with the 5-Year Term Loan (net of Unrestricted Cash) to Consolidated EBITDA (as such terms are defined in the 5-Year Term Loan) was equal to or ~~less than a specified ratio, 5% per annum) (the "Quarterly Amortization Installment"), beginning September 30, 2021.~~before October 15, 2022. In addition, we ~~were~~are required to repay the ~~5-Year~~New Senior Secured Term Loan from time to time with (i) the proceeds of non-ordinary course asset sales and casualty and condemnation events, (ii) the proceeds of indebtedness ~~that was~~ not ~~otherwise~~ permitted under the ~~5-Year~~New Senior Secured Term Loan, and (iii) the aggregate amount of cash and cash equivalents on hand at the Company and its restricted subsidiaries in excess of $100 million at the end of each fiscal year. The ~~5-Year~~New Senior Secured Term Loan ~~was subject~~amortizes in equal quarterly installments, beginning June 30, 2022, at a rate equal to 10.00% per annum (or, if the ratio of debt secured on an equal basis with the New Senior Secured Term Loan less unrestricted cash of the Company and its restricted subsidiaries to Consolidated EBITDA (as such terms are defined in the New Senior Secured Term Loan ) (such ratio, the "First Lien Net Leverage Ratio"), for the most recently ended period of four consecutive fiscal quarters is equal to or less than 1.20 to 1.00, 5.00% per annum). All obligations under the New Senior Secured Term Loan are secured by all or substantially all of the assets of the Company and the wholly-owned domestic subsidiaries of the Company (the "New Senior Secured Term Loan Guarantors"). The obligations of Gannett Holdings under the New Senior Secured Term Loan are guaranteed on a senior secured basis by the Company and the New Senior Secured Term Loan Guarantors.

The New Senior Secured Term Loan contains usual and customary covenants for credit facilities of this type, including a requirement to have minimum unrestricted cash of $30 million as of the last day of each fiscal ~~quarter.~~quarter, and restricts, among other things, our ability to incur debt, grant liens, sell assets, and make investments and pay dividends, in each case with customary exceptions, including an exception that permits dividends and repurchases of outstanding junior debt or equity in (i) an amount of up to $25 million per fiscal quarter if the First Lien Net Leverage Ratio for such fiscal quarter is equal to or less than 2.00 to 1.00, (ii) an amount of up to $50 million per fiscal quarter if the First Lien Net Leverage Ratio for such fiscal quarter is equal to or less than 1.50 to 1.00, and (iii) an unlimited amount if First Lien Net Leverage Ratio for such fiscal quarter is equal to or less than 1.00 to 1.00. As of ~~September~~June 30, ~~2021,~~2022, we were in compliance with all of the covenants and obligations under the ~~5-Year~~New Senior Secured Term Loan.

~~As of September 30, 2021, we had $899.4 million in aggregate principal outstanding under the 5-Year Term Loan with an effective interest rate of 9.5%.~~

Under the 5-Year Term Loan, the Company was contractually obligated to make prepayments with the proceeds from asset sales and could have elected to make optional payments with excess free cash flow from operations. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, we recognized interest expense of $7.5 million and $14.4 million, respectively, and paid interest expense of $7.5 million and $14.4 million, respectively. For the three and six months ended June 30, 2022, we recognized amortization of original issue discount of $0.9 million and $1.8 million, respectively, and amortization of deferred financing costs of $0.2 million and $0.4 million, respectively. Additionally, during the three and six months ended June 30, 2022, we recognized losses on early extinguishment of debt of approximately $0.4 million and $1.8 million, respectively, related to the write-off of original issue discount and deferred financing costs as a result of early prepayments on the New Senior Secured Term Loan.

For the three and six months ended June 30, 2022, we made prepayments, inclusive of both mandatory and optional prepayments, totaling ~~$91.1~~$26.9 million and ~~$145.6~~$74.9 million, respectively, which were classified as financing activities in the condensed consolidated statements of cash flows. ~~These amounts are inclusive~~As of ~~both mandatory~~June 30, 2022, the effective interest rate for the New Senior Secured Term Loan was 6.3%.

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Senior Secured Notes due 2026

On October 15, 2021, Gannett Holdings completed a private offering of $400 million aggregate principal amount of 6.00% first lien notes due November 1, 2026 (the "2026 Senior Notes"). The 2026 Senior Notes were issued pursuant to an indenture, dated October 15, 2021 (the "2026 Senior Notes Indenture") among Gannett Holdings, the Company, the guarantors from time to time party thereto (the "2026 Senior Notes Guarantors"), U.S. Bank National Association, as trustee, and ~~optional prepayments.~~U.S. Bank National Association, as collateral agent, registrar, paying agent and authenticating agent.

The ~~5-Year~~2026 Senior Notes are unconditionally guaranteed, jointly and severally, on a senior secured basis by the 2026 Senior Notes Guarantors. The 2026 Senior Notes and such guarantees are secured on a first-priority basis by the collateral, consisting of substantially all of the assets of Gannett Holdings and the 2026 Senior Notes Guarantors, subject to certain intercreditor arrangements.

The 2026 Senior Notes Indenture limits our and our restricted subsidiaries’ ability to, among other things, make investments, loans, advances, guarantees and acquisitions; incur or guarantee additional debt and issue certain disqualified equity interests and preferred stock; make certain restricted payments, including a limit on dividends on equity securities or payments to redeem, repurchase or retire equity securities or other indebtedness; dispose of assets; create liens on assets to secure debt; engage in transactions with affiliates; enter into certain restrictive agreements; and consolidate, merge, sell or otherwise dispose of all or substantially all of their or a 2026 Senior Notes Guarantor’s assets. These covenants are subject to a number of limitations and exceptions. The 2026 Senior Notes Indenture also contains customary events of default.

The unamortized deferred financing costs will be amortized over the remaining contractual life of the 2026 Senior Notes. For the three and six months ended June 30, 2022, we recognized interest expense of $5.5 million and $11.5 million, respectively, and paid interest expense of $12.3 million and $12.9 million, respectively. For the three and six months ended June 30, 2022, we recognized amortization of original issue discount of $0.7 million and $1.4 million, respectively, and amortization of deferred financing costs of $0.5 million and $1.1 million, respectively, in connection with the 2026 Senior Notes. As of June 30, 2022, the effective interest rate on the 2026 Senior Notes was 7.3%.

In March and April 2022, we entered into privately negotiated agreements with certain holders of our 2026 Senior Notes and repurchased $22.5 million and $7.5 million, respectively, of principal of our outstanding 2026 Senior Notes in exchange for $22.5 million and $7.5 million, respectively, of New Senior Secured Term ~~Loan was repaid using the proceeds from~~Loans (discussed above). The repurchases were treated as an extinguishment of a portion of the 2026 Senior Notes and ~~the New Senior Secured Term Loan. As~~as a result, offor the ~~debt refinancing in October 2021,~~three and six months ended June 30, 2022, we ~~estimate that we will recognize a loss~~recognized losses on ~~the~~ early extinguishment of ~~the 5-Year Term Loan and other fees~~debt of approximately ~~$31.2~~$0.4 million ~~during~~and $1.7 million, respectively, related to the ~~fourth quarter~~write-off of ~~2021.~~deferred financing costs.

Senior Secured Convertible Notes due 2027

~~On November 17, 2020, the Company~~We issued $497.1 million in aggregate principal amount of ~~the Company’s~~ 6.0% Senior Secured Convertible Notes due 2027 (the "2027 Notes")~~. The 2027 Notes were issued~~ pursuant to an Indenture dated as of November 17, 2020, as amended by the First Supplemental Indenture dated as of ~~December 21, 2020 and the Second~~

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December 21, 2020 and the Second Supplemental Indenture dated as of February 9, 2021 (collectively, the "2027 Notes Indenture"), between the Company and U.S. Bank National Association, as trustee.

In connection with the issuance of the 2027 Notes, ~~the Company~~we entered into an Investor Agreement (the "Investor Agreement") with the holders of the 2027 Notes (the "Holders") establishing certain terms and conditions concerning the rights and restrictions on the Holders with respect to the Holders' ownership of the 2027 Notes. ~~The Company~~We also entered into an amendment to the Registration Rights Agreement dated November 19, 2019, ~~between the Company and~~with FIG ~~LLC.~~LLC, our former manager.

Interest on the 2027 Notes is payable semi-annually in arrears. The 2027 Notes mature on December 1, 2027, unless earlier repurchased or converted. The 2027 Notes may be converted at any time by the holders into cash, shares of ~~the Company’s~~ Common Stock or any combination of cash and Common Stock, at ~~the Company's~~our election. The initial conversion rate is 200 shares of Common Stock per $1,000 principal amount of the 2027 Notes, which is equal to a conversion price of $5.00 per share of Common Stock (the "Conversion Price").

Upon the occurrence of a "Make-Whole Fundamental Change" (as defined in the 2027 Notes Indenture), ~~the Company~~we will in certain circumstances increase the conversion rate for a specified period of time. If a "Fundamental Change" (as defined in the 2027 Notes Indenture) occurs, ~~the Company~~we will be required to offer to repurchase the 2027 Notes at a repurchase price of 110% of the principal amount thereof.

Under the 2027 Notes Indenture, ~~the Company~~we can only pay cash dividends up to an agreed-upon amount, provided the ratio of consolidated debt to EBITDA (as such terms are defined in the 2027 Notes Indenture) does not exceed a specified ratio. In addition, the 2027 Notes Indenture provides that, at any time that ~~the Company’s~~our Total Gross Leverage Ratio (as defined in the 2027 Notes Indenture) exceeds 1.5 and ~~the Company approves~~we approve the declaration of a dividend, ~~the Company~~we must offer to purchase a principal amount of 2027 Notes equal to the proposed amount of the dividend.

Until the four-year anniversary of the issuance date, ~~the Company~~we will have the right to redeem for cash up to approximately $99.4 million of the 2027 Notes at a redemption price of 130% of the principal amount thereof, with such amount reduced ratably by any principal amount of 2027 Notes that has been converted by the holders or redeemed or purchased by ~~the Company.~~us.

The 2027 Notes are guaranteed by Gannett Holdings and any subsidiaries of the Company that ~~guaranteed~~guarantee the ~~5-Year~~New Senior Secured Term Loan. The 2027 Notes are secured by the same collateral that ~~secured~~secures the ~~5-Year~~New Senior Secured Term Loan. The 2027 Notes rank as senior secured debt of the Company and are secured by a second priority lien on the same collateral package that secured the indebtedness incurred in connection with the ~~5-Year~~New Senior Secured Term Loan.

The 2027 Notes Indenture includes affirmative and negative covenants, including limitations on liens, indebtedness, dispositions, loan, advances and investors, sale and leaseback transactions, restricted payments, transactions with affiliates, restrictions on dividends and other payment restrictions affecting restricted subsidiaries, negative pledges and modifications to certain agreements. The 2027 Notes Indenture also requires that ~~the Company~~we maintain, as of the last day of each fiscal quarter, at least $30.0 million of Qualified Cash (as defined in the 2027 Notes Indenture).The 2027 Notes Indenture includes customary events of default.

For the ~~nine~~three and six months ended ~~September~~June 30, 2022, we recognized interest expense of $7.3 million and $14.5 million, respectively, and paid interest expense of $14.6 million for both the three and six months ended June 30, 2022. For the three and six months ended June 30, 2021, we recognized interest expense of $7.4 million and $14.9 million, respectively, and paid interest expense of $16.1 million for both the three and six months ended June 30, 2021. In addition, during the three and six months ended June 30, 2022, we recognized amortization of the original issue discount of $2.9 million and $5.8 million, respectively, and amortization of deferred financing costs related to the 2027 Notes was immaterial for the three and six months

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ended June 30, 2022. For the three and six months ended June 30, 2021, we recognized amortization of original issue discount of $2.8 million and $5.1 million, respectively, and amortization of deferred financing costs related to the 2027 Notes was immaterial for the three and six months ended June 30, 2021. The effective interest rate on the liability component of the 2027 Notes was 10.5% as of both June 30, 2022 and 2021.

For the six months ended June 30, 2022, no shares were issued upon conversion, exercise, or satisfaction of the required conditions. Refer to Note 10 — Supplemental equity information ~~to the condensed consolidated financial statements~~ for details on the convertible debt's impact to diluted earnings per share under the if-converted method.

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Senior Convertible Notes due 2024

~~Debt Refinancing~~

On October 15, 2021, Gannett Holdings entered into the New Senior Secured Term Loan. Also, on October 15, 2021, Gannett Holdings completed a private offering of the 2026 Senior Notes. The proceeds of the New Senior Secured Term Loan, together with the net proceeds from the 2026 Senior Notes were applied towards the full repayment of the 5-Year Term Loan.

~~Loans under the New Senior Secured Term Loan~~ bear interest at a per annum rate equal to LIBOR (which shall not be less than 0.50% per annum) plus a margin of 5.00% or an alternate base rate plus a margin equal to 4.00% per annum (which shall not be less than 1.50% per annum). The New Senior Secured Term Loan contains usual and customary covenants for credit facilities of this type that restrict, among other things, our ability to incur debt, grant liens, sell assets, and make investments and pay dividends, in each case with customary exceptions, including an exception that permits dividends and repurchases of outstanding junior debt or equity in (i) an amount of up to $25 million per fiscal quarter if the ratio of debt secured on an equal basis with the New Senior Secured Term Loan to EBITDA (as defined in the New Senior Secured Term Loan) of the Company and its restricted subsidiaries (the "First Lien Net Leverage Ratio") for such fiscal quarter is equal to or less than 2.00 to 1.00, (ii) an amount of up to $50 million per fiscal quarter if the First Lien Net Leverage Ratio for such fiscal quarter is equal to or less than 1.50 to 1.00, and (iii) an unlimited amount if First Lien Net Leverage Ratio for such fiscal quarter is equal to or less than 1.00 to 1.00. All obligations under the New Senior Secured Term Loan are secured by all or substantially all of the assets of the Company and the wholly-owned domestic subsidiaries of the Company (the "Guarantors"). The obligations of Gannett Holdings under the New Senior Secured Term Loan are guaranteed on a senior secured basis by the Company and the Guarantors.

Additional information

We continue to evaluate our results of operations, liquidity and cash flows, and as part of these measures, we have taken steps to manage cash outflow by rationalizing expenses and implementing various cost containment initiatives. We do not presently pay a quarterly dividend and have no current intention to reinstate the dividend. In addition, the terms of our indebtedness, including our credit facility, the New Senior Secured Term Loan, ~~and~~ the 2026 Senior Secured Notes Indenture and the 2027 Notes Indenture have terms that restrict our ability to pay dividends.

The CARES Act, enacted March 27, 2020, provided various forms of relief to companies impacted by the COVID-19 pandemic. As part of the relief available under the CARES Act, we deferred remittance of our 2020 Federal Insurance Contributions Act ("FICA") taxes as allowed by the legislation. We deferred $41.6 million of the employer portion of FICA taxes for payroll paid between March 27, 2020 and December 31, 2020. We ~~have until December 31, 2021, to pay~~paid 50% of the FICA deferral during the year ended December 31, 2021 with the remaining 50% to be remitted on ~~or before December 31, 2022.~~January 3, 2023.

For the ~~Gannett Retirement~~GR Plan in the U.S., we have deferred our contractual contribution and negotiated a contribution payment plan of $5.0 million per quarter through September 30, 2022.

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We expect our capital expenditures for the remainder of ~~2021~~2022 to total approximately ~~$13.9~~$21.0 million. These capital expenditures are anticipated to be primarily comprised of projects related to digital product development, costs associated with our print and technology systems, and system upgrades.

Our leverage may adversely affect our business and financial performance and restricts our operating flexibility. The level of our indebtedness and our ongoing cash flow requirements may expose us to a risk that a substantial decrease in operating cash flows due to, among other things, continued or additional adverse economic developments or adverse developments in our business, could make it difficult for us to meet the financial and operating covenants contained in our New Senior Secured Term Loan, the 2026 Senior ~~Secured~~ Notes, and the 2027 Notes. In addition, our leverage may limit cash flow available for general corporate purposes such as capital expenditures as well as share repurchases and acquisitions and our flexibility to react to competitive, technological, and other changes in our industry and economic conditions generally.

Although we currently forecast sufficient liquidity, a resurgence of the COVID-19 pandemic and related counter-measures could have a material ~~negative~~adverse impact on our liquidity and our ability to meet our ongoing obligations, including obligations under the New Senior Secured Term Loan, the 2026 Senior ~~Secured~~ Notes, and the 2027 Notes. ~~The Company continues~~We continue to closely monitor the COVID-19 pandemic and other economic factors, including but not limited to the current inflationary market and rising interest rates, and will continue to take the steps necessary to appropriately manage liquidity.

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CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES

See our most recent Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~2021 for a discussion of our critical accounting policies and use of estimates. There have been no material changes to our critical accounting policies and use of estimates discussed in such report.

NON-GAAP FINANCIAL MEASURES

A non-GAAP financial measure is generally defined as one that purports to measure historical or future financial performance, financial position, or cash flows, but excludes or includes amounts that would not be so excluded or included in the most comparable U.S generally accepted accounting principles ("U.S. ~~GAAP~~GAAP") measure.

Adjusted EBITDA and Adjusted EBITDA margin ~~and Adjusted Net income (loss) attributable to Gannett~~ are non-GAAP financial measures we believe offer a useful view of the overall operation of our businesses and may be different than similarly-titled measures used by other companies. We define Adjusted EBITDA as Net income (loss) attributable to Gannett before (1) Income tax expense (benefit), (2) Interest expense, (3) Gains or losses on the early extinguishment of debt, (4) Non-operating pension income, ~~(expense),~~ (5) Loss on convertible notes derivative, (6) Depreciation and amortization, (7) Integration and reorganization costs, (8) Other operating expenses, including third-party debt expenses and acquisition costs, (9) Asset impairments, (10) Goodwill and intangible impairments, (11) Gains or losses on the sale or disposal of assets, (12) Share-based compensation, and (13) certain other non-recurring ~~charges, including gains or losses on the sale of investments.~~charges. We define Adjusted EBITDA margin as Adjusted EBITDA divided by total Operating revenues. We define Adjusted Net income (loss) attributable to Gannett before (1) Gains or losses on the early extinguishment of debt, (2) Loss on convertible notes derivative, (3) Integration and reorganization costs, (4) Other operating expenses, including third-party debt expenses and acquisition costs, (5) Asset impairments, (6) Goodwill and intangibles impairments, (7) Gains or losses on the sale or disposal of assets, (8) Gains or losses on the sale of investments, and (9) the tax impact of the above items.

Management’s use of Adjusted EBITDA and Adjusted EBITDA margin ~~and Adjusted Net income (loss) attributable to Gannett~~

Adjusted EBITDA and Adjusted EBITDA margin ~~and Adjusted Net income (loss) attributable to Gannett~~ are not measurements of financial performance under GAAP and should not be considered in isolation or as an alternative to income from operations, net income (loss), or any other measure of performance or liquidity derived in accordance with U.S. GAAP. We believe these non-GAAP financial measures, as we have defined them, are helpful in identifying trends in our day-to-day performance because the items excluded have little or no significance on our day-to-day operations. These measures provide an assessment of controllable expenses and afford management the ability to make decisions which are expected to facilitate meeting current financial goals as well as achieve optimal financial performance.

Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net income (loss) attributable to Gannett provide us with measures of financial performance, independent of items that are beyond the control of management in the short-term, such as depreciation and amortization, taxation, non-cash impairments, and interest expense associated with our capital structure. These metrics measure our financial performance based on operational factors that management can impact in the short-term, namely

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the cost structure or expenses of the organization. Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net income (loss) attributable to Gannett are metrics we use to review the financial performance of our business on a monthly basis.

We use Adjusted EBITDA and Adjusted EBITDA margin ~~and Adjusted Net income (loss) attributable to Gannett~~ as measures of our day-to-day operating performance, which is evidenced by the publishing and delivery of news and other media and excludes certain expenses that may not be indicative of our day-to-day business operating results.

Limitations of Adjusted EBITDA and Adjusted EBITDA margin ~~and Adjusted Net income (loss) attributable to Gannett~~

Adjusted EBITDA and Adjusted EBITDA margin ~~and Adjusted Net income (loss) attributable to Gannett~~ have limitations as analytical tools. They should not be viewed in isolation or as a substitute for U.S. GAAP measures of earnings or cash flows. Material limitations in making the adjustments to our earnings to calculate Adjusted EBITDA and Adjusted EBITDA margin ~~and Adjusted Net income (loss) attributable to Gannett~~ and using these non-GAAP financial measures as compared to U.S. GAAP net income (loss) include: the cash portion of interest/financing expense, income tax (benefit) provision, and charges related to asset impairments, which may significantly affect our financial results.

Management believes these items are important in evaluating our performance, results of operations, and financial position. We use non-GAAP financial measures to supplement our U.S. GAAP results in order to provide a more complete understanding of the factors and trends affecting our business.

Adjusted EBITDA and Adjusted EBITDA margin ~~and Adjusted Net income (loss) attributable to Gannett~~ are not alternatives to net income (loss) and margin as calculated and presented in accordance with U.S. GAAP. As such, they should not be considered or relied upon as substitutes or alternatives for any such U.S. GAAP financial measures. We strongly urge you to review the reconciliation of Net income (loss) attributable to Gannett to Adjusted EBITDA and Adjusted EBITDA margin ~~and Adjusted Net income (loss) attributable to Gannett~~ along with our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. We also strongly urge you not to rely on any single financial measure to evaluate our business. In addition, because Adjusted EBITDA and Adjusted EBITDA margin ~~and Adjusted Net income (loss) attributable to Gannett~~ are not measures of financial performance under U.S. GAAP and are susceptible to varying calculations, the Adjusted EBITDA and Adjusted EBITDA margin ~~and Adjusted Net income (loss) attributable to Gannett~~ measures as presented in this report may differ from and may not be comparable to similarly titled measures used by other companies.

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The table below shows the reconciliation of Net income (loss) attributable to Gannett to Adjusted EBITDA and Net income (loss) attributable to Gannett margin to Adjusted EBITDA margin:


		Three months ended September 30,						Nine months ended September 30,							Three months ended June 30,						Six months ended June 30,
In thousands	In thousands	2021			2020			2021			2020			In thousands	2022			2021			2022			2021
Net income (loss) attributable to Gannett	Net income (loss) attributable to Gannett	$	14,687		$	(31,260)		$	(112,514)		$	(548,305)		Net income (loss) attributable to Gannett	$	(53,688)		$	15,115		$	(56,655)		$	(127,201)
Provision (benefit) for income taxes		2,984			3,098			11,567			(22,200)
Provision for income taxes														Provision for income taxes	22,158			17,692			14,551			8,583
Interest expense	Interest expense	34,603			58,063			109,370			173,890			Interest expense	26,084			35,264			52,090			74,767
Loss on early extinguishment of debt	Loss on early extinguishment of debt	3,761			476			25,996			1,650			Loss on early extinguishment of debt	749			2,834			3,492			22,235
Non-operating pension income	Non-operating pension income	(23,860)			(18,334)			(71,644)			(54,433)			Non-operating pension income	(18,160)			(23,906)			(36,373)			(47,784)
Loss on convertible notes derivative	Loss on convertible notes derivative	—			—			126,600			—			Loss on convertible notes derivative	—			—			—			126,600
Depreciation and amortization	Depreciation and amortization	48,107			61,355			154,452			205,706			Depreciation and amortization	49,530			48,242			97,313			106,345
Integration and reorganization costs	Integration and reorganization costs	13,619			13,417			35,467			73,978			Integration and reorganization costs	15,745			8,444			27,143			21,848
Other operating expenses	Other operating expenses	4			1,913			11,354			10,261			Other operating expenses	314			774			1,416			11,350
Asset impairments	Asset impairments	2,301			1,585			3,134			8,444			Asset impairments	85			—			939			833
Goodwill and intangible impairments		—			—			—			393,446
(Gain) loss on sale or disposal of assets, net		(833)			795			9,206			1,540

Loss (gain) on sale or disposal of assets, net														Loss (gain) on sale or disposal of assets, net	372			5,294			(2,432)			10,039
Share-based compensation expense	Share-based compensation expense	4,602			3,844			13,804			22,812			Share-based compensation expense	5,385			5,779			8,778			9,202
Other items		2,092			(6,972)			1,509			(1,723)
Other Items														Other Items	2,277			237			4,760			(583)
Adjusted EBITDA (non-GAAP basis)	Adjusted EBITDA (non-GAAP basis)	$	102,067		$	87,980		$	318,301		$	265,066		Adjusted EBITDA (non-GAAP basis)	$	50,851		$	115,769		$	115,022		$	216,234
Net income (loss) attributable to Gannett margin	Net income (loss) attributable to Gannett margin	1.8		%	(3.8)		%	(4.7)		%	(21.7)		%	Net income (loss) attributable to Gannett margin	(7.2)		%	1.9		%	(3.8)		%	(8.0)		%
Adjusted EBITDA margin (non-GAAP basis)	Adjusted EBITDA margin (non-GAAP basis)	12.8		%	10.8		%	13.4		%	10.5		%	Adjusted EBITDA margin (non-GAAP basis)	6.8		%	14.4		%	7.7		%	13.7		%

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~~The table below shows the reconciliation of Net income (loss) attributable to Gannett to Adjusted Net income (loss) attributable to Gannett:~~

Three months ended September 30, Nine months ended September 30,
In thousands 2021 2020 2021 2020
Net income (loss) attributable to Gannett $ 14,687 $ (31,260) $ (112,514) $ (548,305)
Loss on early extinguishment of debt 3,761 476 25,996 1,650
Loss on convertible notes derivative — — 126,600 —
Integration and reorganization costs 13,619 13,417 35,467 73,978
Other operating expenses 4 1,913 11,354 10,261
Asset impairments 2,301 1,585 3,134 8,444
Goodwill and intangible impairments — — — 393,446
(Gain) loss on sale or disposal of assets, net (833) 795 9,206 1,540
Gain on sale of investments — (7,800) — (7,995)
Subtotal 33,539 (20,874) 99,243 (66,981)
Tax impact of above items (7,033) (25,449) (28,042) (61,364)
Adjusted Net income (loss) attributable to Gannett (non-GAAP basis) $ 26,506 $ (46,323) $ 71,201 $ (128,345)

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~There~~We are exposed to market risk, including from changes in interest rates and foreign currency exchange rates. Changes in these factors could cause fluctuations in earnings and cash flow. In the normal course of business, exposure to certain of these market risks is managed as described below.

Interest Rates

We generally manage our risk associated with changes in interest rates through the use of a combination of variable and fixed-rate debt. As of June 30, 2022, we had variable and fixed-rate debt totaling $485.2 million and $858.6 million, respectively. Our variable-rate debt consisted of the New Senior Secured Term Loan, which bears interest at the Adjusted Term SOFR which was 1.53% at June 30, 2022. A hypothetical interest rate increase of 150 basis points would not have materially impacted our interest expense for the three and six months ended June 30, 2022 or cash flows for the six months ended June 30, 2022 related to our variable-rate debt. See Note 6 — Debt to our condensed consolidated financial statements for further discussion of our debt.

Foreign Currency

We are exposed to foreign exchange rate risk due to our operations in the U.K., for which the British pound sterling is the functional currency. We are also exposed to foreign exchange rate risk due to our DMS segment which has operating activities denominated in currencies other than the U.S. dollar, including the Australian dollar, Canadian dollar, Indian rupee, and New Zealand dollar.

Translation gains or losses affecting the condensed consolidated statements of operations and comprehensive income (loss) have not been ~~no material changes during~~significant in the ~~quarter ended September~~past. Cumulative foreign currency translation gains and losses reported as part of equity equated to a loss of $14.1 million at June 30, ~~2021,~~2022, primarily due to the ~~information disclosed in Part II, Item 7A, Quantitative~~strengthening of the U.S. dollar compared to the British pound sterling.

Newsquest's assets and ~~Qualitative Disclosures About Market Risks~~liabilities were translated from British pounds sterling to U.S. dollars at the June 30, 2022 exchange rate of ~~our Form 10-K~~1.22. Newsquest's financial results were translated at an average rate of 1.30 for the ~~fiscal year~~six months ended ~~December 31, 2020.~~June 30, 2022. A hypothetical 10% fluctuation of the price of the British pound sterling and the currencies in our DMS segment against the U.S. dollar would not have materially impacted operating income for the three and six months ended June 30, 2022.

ITEM 4. CONTROLS AND PROCEDURES

~~Based on their evaluation, our principal executive officer~~Disclosure Controls and ~~principal financial officer have concluded that~~Procedures

We evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in ~~Rule~~Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the ~~“Exchange Act”~~"Exchange Act")) ~~were not effective because~~as of the ~~previously reported material weakness in internal control over financial reporting, which we describe in Part II, Item 9A, Controls~~end of the period covered by this Quarterly Report under the supervision and ~~Procedures~~with the participation of our ~~Form 10-K for~~management, including our Chief Executive Officer and Chief Financial Officer. Based on such evaluation, the ~~fiscal year ended December 31, 2020.~~

~~Remediation~~Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of ~~Material Weakness~~

~~We continue~~the end of such period, the Company’s disclosure controls and procedures were effective in recording, processing, summarizing and reporting on a timely basis, information required to ~~implement our remediation plan for~~be disclosed by the ~~previously reported material weakness~~Company in ~~internal control over financial reporting, described~~the reports that it files or submits under the Exchange Act and were effective in ~~Part II, Item 9A of our Form 10-K for~~ensuring that information required to be disclosed by the ~~fiscal year ended December 31, 2020, which includes organizational enhancements, design enhancements, training, utilizing external resources~~Company in the reports that it files or submits under the Exchange Act is accumulated and integration of related supporting technology. We are committed to maintaining a strong internal control environment and implementing measures designed to help ensure that control deficiencies contributingcommunicated to the ~~material weakness are remediated~~Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, as soon as possible. We will consider the material weakness remediated after the applicable controls operate for a sufficient period of time, and management has concluded, through testing, that the controls are operating effectively.appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

~~Other than changes made in connection with our implementation of the remediation efforts mentioned above, there have been~~There were no changes in ~~our~~the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the ~~fiscal~~ quarter ended ~~September~~June 30, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, ~~our~~the Company's internal control over financial reporting.

As a result of the COVID-19 pandemic, most of our workforce has shifted to a primarily work-from-home environment since March 2020. The change to remote working was rapid and while pre-existing controls were not specifically designed to operate in our current work-from-home operating environment, we believe that our internal control over financial reporting was not materially impacted. We are continually monitoring and assessing the COVID-19 pandemic's effect on our internal controls to minimize the impact on their design and effectiveness.

~~PART II. OTHER INFORMATION~~

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

~~Please refer to~~Information regarding legal proceedings may be found in Note 1211 — Commitments, contingencies and other matters, ~~for disclosures regarding material legal proceedings. There have been no material developments with respect~~of the notes to ~~our potential liability for legal and environmental matters previously reported in our Form 10-K for~~ the ~~fiscal year ended December 31, 2020 and our quarterly reports on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021.~~condensed consolidated financial statements, which is incorporated herein by reference.

ITEM 1A. RISK FACTORS

~~In addition~~There have been no material changes to the ~~other information set forth in this Quarterly Report on Form 10-Q, you should consider the risks~~risk factors described in Part I, Item 1A, ~~“Risk Factors”~~Risk Factors of our Form 10-K for the fiscal year ended December 31, 2020. Except as set forth below, there have been no material changes from the risk factors previously disclosed in the Form 10-K for the year ended December 31, 2020. All of these risks and uncertainties, including those discussed below, could materially and adversely affect our business, results of operations, financial ~~condition~~, our ability to make distributions on our Common Stock and/or the market price of our Common Stock. The risks described below and in our Annual Report on Form 10-K for the year ended December 31, 2020, are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our financial condition and/or operating results.

~~Risks Related to our Indebtedness~~

~~Our substantial indebtedness could materially and adversely affect our business or financial condition.~~

On October 15, 2021, we issued the 2026 Senior Notes. Also as of such date, we entered into the New Senior Secured Term Loan in a principal amount up to $516 million. The net proceeds of the issuance of the 2026 Senior Notes, together with the proceeds of the New Senior Secured Term Loan, and real estate and asset sales, were used to prepay in full the obligations outstanding under the 5-Year Term Loan. We may incur additional indebtedness in the future.

~~The New Senior Secured Term Loan matures on October 15, 2026, and bears interest at the rate of LIBOR (which shall not be less than~~ ~~0.50%~~ ~~per annum) plus a margin equal to~~ ~~5.00%~~ ~~per annum or an alternate base rate plus a margin equal to~~ ~~4.00%~~ ~~per annum (which shall not be less than~~ ~~1.50%~~ per annum). Accordingly, we are required to dedicate a substantial portion of cash flow from operations to fund interest payments. The New Senior Secured Term Loan amortizes at a rate equal to 10% per annum (or, if the ratio of Total Indebtedness secured on an equal priority basis with the New Senior Secured Term Loan (net of Unrestricted Cash) to Consolidated EBITDA (as such terms are defined in the New Senior Secured Term Loan) is equal to or less than a specified ratio, 5% per annum) payable in equal quarterly installments. In addition, we are required to repay the New Senior Secured Term Loan from time to time with (i) the proceeds of non-ordinary course asset sales and casualty and condemnation events, (ii) the proceeds of indebtedness that is not otherwise permitted under the New Senior Secured Term Loan and (iii) the aggregate amount of cash and cash equivalents on hand at the Company and its restricted subsidiaries in excess of $100 million as of the last day of any fiscal year of the Company (beginning with the fiscal year ending December 31, 2021). Our debt service obligations reduce the amount of cash flow available to fund our working capital, capital expenditures, investments and potential distributions to stockholders. Moreover, there can be no assurance that we will be able to generate sufficient cash flow to satisfy our debt service obligations. Our ability to satisfy our debt service obligations depends on our ability to generate cash flow from operations, which is subject to a variety of risks, including general economic conditions and the strength of our competitors, which are outside our control.

The terms of our indebtedness impose significant operating and financial restrictions on us. The New Senior Secured Term Loan, the 2026 Senior Notes, and the 2027 Notes require us to comply with numerous affirmative and negative covenants, including, in the case of the 2027 Notes, a requirement to maintain minimum liquidity of $30 million, and include restrictions limiting our ability to, among other things, incur additional indebtedness, make investments and acquisitions, pay certain dividends, sell assets, merge, incur certain liens, enter into agreements with our affiliates, change our business, engage in sale/leaseback transactions, and modify our organizational documents. These requirements may make it impractical to declare and pay dividends at any time that the requirements are in effect. Stockholders also should be aware that they have no contractual or other legal right to dividends that have not been declared. See also "~~Risks Related to our Common Stock"~~ ~~below.~~

A failure to satisfy our debt service obligations on the New Senior Secured Term Loan, a breach of a covenant in our credit facility, or a material breach of a representation or warranty in our credit facility, among other events specified in the credit facility, could give rise to a default, which could give rise to the right of our lenders to declare our indebtedness, together with accrued interest and other fees, to be immediately due and payable. A failure to satisfy our debt service or conversion obligations on the 2026 Senior Notes or the 2027 Notes, among other events specified in the 2026 Senior Notes Indenture or the

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2027 Notes Indenture, could also give rise to a default, which could give rise to the right of noteholders to declare the principal of the 2026 Senior Notes and/or the 2027 Notes, together with accrued and unpaid interest, to be immediately due and payable. An acceleration of our indebtedness would have a material adverse effect on our business, financial condition, results of operations, cash flows and stock price.

Our inability to raise funds necessary to settle conversions of, or to repurchase, the 2026 Senior Notes or the 2027 Notes, when required by the indentures governing the respective notes, may lead to defaults under such indenture and under agreements governing our existing or future indebtedness.

Upon a "change of control" as described in the 2026 Senior Notes Indenture, we will be required to offer to repurchase any outstanding 2026 Senior Notes. Similarly, if we settle the 2027 Notes by cash, or by a combination of cash and shares of our Common Stock,upon a fundamental change as described in the 2027 Notes Indenture, we will be required to make cash payments with respect to the 2027 Notes being converted. However, we may not have enough available cash or be able to obtain financing at the time we are required to make purchases of the notes being surrendered or converted. In addition, our ability to repurchase the 2026 Senior Notes or the 2027 Notes or to pay cash upon conversion of the 2027 Notes is limited by the agreements governing our existing indebtedness (including the New Senior Secured Term Loan) and may also be limited by law, regulation, or by agreements that will govern our future indebtedness. Our failure to repurchase the 2026 Senior Notes or the 2027 Notes at a time when the repurchase is required by the governing indenture, or to pay cash payable on future conversions of the 2027 Notes as required by the 2027 Notes Indenture, would constitute a default under the respective indenture. A default under either indenture, or the change in control or fundamental change itself, could also lead to a default under agreements governing our existing or future indebtedness (including the New Senior Secured Term Loan).

Certain actions, including our ability to incur additional indebtedness, require the consent of our lenders and note holders which, if not provided, would limit our ability to take advantage of future opportunities.

Our loan agreements, including the New Senior Secured Term Loan, the 2026 Senior Notes and the 2027 Notes, contain restrictions and covenants that limit our ability to take certain actions without lender approval, approval of the holders of a majority in principal amount of the notes then outstanding, or modification of the loan agreements. These limitations include restrictions on our ability to incur additional indebtedness or refinance our existing debt, make certain investments and acquisitions, pay certain dividends, sell assets, merge, incur certain liens, enter into agreements with our affiliates, change our business, engage in sale/leaseback transactions, and modify our organizational documents. While we have historically partnered with lenders that we have established relationships with and whose priorities and interests are familiar to us, many of the lenders or holders under the New Senior Secured Term Loan and the holders of the 2026 Senior Notes are not historic relationships. There is no assurance that these lenders will approve or consent to our activities, even if the activities are in the best interests of our stockholders. If we are unable to secure the required consent of our lenders or noteholders, our ability to take advantage of future opportunities, including acquisition or financing opportunities, could be restricted.

~~Risks Related to the 2026 Senior Notes and the 2027 Notes~~

Our inability to raise funds necessary to repurchase the 2026 Senior Notes or the 2027 Notes, upon a change of control as described in the 2026 Senior Notes Indenture or fundamental change as described in the 2027 Notes Indenture, may lead to defaults under such indentures and under agreements governing our existing or future indebtedness. In addition, a change of control may constitute a default under the New Senior Secured Term Loan, the 2026 Senior Notes or the 2027 Notes.

Upon the occurrence of a change of control, as defined in the 2026 Senior Notes Indenture, we must, if certain other conditions are met, make an offer to repurchase the 2026 Senior Notes at a price equal to 101% of the principal amount thereof, together with any accrued and unpaid interest, if any, to, but excluding, the date of the repurchase. Similarly, upon the occurrence of a fundamental change, as defined in the 2027 Note Indenture, we must, if certain other conditions are met, make an offer to repurchase the 2027 Notes at a price equal to 110% of the principal amount thereof, together with any accrued and unpaid interest, if any, to, but excluding, the date of the repurchase. If we become obligated to repurchase the 2026 Senior Notes or 2027 Notes upon a change of control, we may not have enough available cash or may be unable to obtain financing at the time we are required to make purchases of the notes being surrendered. In addition, our ability to repurchase the notes is limited by the agreements governing our existing indebtedness (including the New Senior Secured Term Loan) and may also be limited by law or regulation, or by agreements that will govern our future indebtedness. Our failure to repurchase the 2026 Senior Notes or 2027 Notes at a time when the repurchase is required by the 2026 Senior Notes Indenture or the 2027 Notes Indenture, respectively, would constitute a default under the respective indenture. A default under the governing indenture or

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~~the change of control itself could also lead to a default under agreements governing our existing or future indebtedness (including the New Senior Secured Term Loan).~~

The New Senior Secured Term Loan provides, and future credit agreements or other agreements relating to indebtedness to which we become a party may provide, that the occurrence of certain change of control events with respect to Gannett would constitute a default thereunder. If we experience a change of control event that triggers a default under our New Senior Secured Term Loan, we may seek a waiver of such default or may attempt to refinance the New Senior Secured Term Loan. In the event we do not obtain such a waiver or refinance the New Senior Secured Term Loan, such default could result in amounts outstanding under our New Senior Secured Term Loan being declared due and payable.

The New Senior Secured Term Loan, the 2026 Senior Notes, and the 2027 Notes contain, and future indebtedness that we may incur may contain, prohibitions on the occurrence of certain events that would constitute a change of control or, in the case of the 2026 Senior Notes and the 2027 Notes, require the repurchase of such indebtedness upon a change of control. Moreover, the exercise by the holders of their right to require us to repurchase their 2026 Senior Notes or the 2027 Notes could cause a default under such indebtedness, even if the change of control itself does not, due to the financial effect of such repurchase on us. Finally, the ability to pay cash to the holders of 2026 Senior Notes or the 2027 Notes following the occurrence of a change of control may be limited by our then existing financial resources. There can be no assurance that sufficient funds will be available when necessary to make any required repurchases.

The definition of “change of control” includes a disposition of all or substantially all of the assets of Gannett to any person. Although there is a limited body of case law interpreting the phrase "substantially all," there is no precise established definition of the phrase under applicable law. Accordingly, in certain circumstances there may be a degree of uncertainty as to whether a particular transaction would involve a disposition of "all or substantially all" of the assets of Gannett or would otherwise constitute a change of control under the governing indenture. As a result, it may be unclear as to whether a change of control has occurred and whether a holder of 2026 Senior Notes or 2027 Notes may require us to make an offer to repurchase such notes as described above, and we could, in the future, enter into certain transactions, including acquisitions, refinancings or other recapitalizations that would not constitute a change of control under the governing indenture but that could increase the amount of indebtedness outstanding at such time or otherwise affect our capital structure or our credit ratings or the 2026 Senior Notes or 2027 Notes. As a result, our obligation to repurchase the 2026 Senior Notes or the 2027 Notes upon the occurrence of a change of control may not preserve the value of the 2026 Senior Notes or the 2027 Notes, respectively, in the event of a highly leveraged transaction, reorganization, merger or similar transaction.

~~Risks Related to our Business~~

~~Government imposed COVID-19 vaccine mandates could have a material adverse impact on our business and results of operations.~~

The Department of Labor’s Occupational Safety and Health Administration ("OSHA") issued an Emergency Temporary Standard ("ETS") requiring that most employers with at least 100 employees ensure that their employees are fully vaccinated for COVID-19 or require employees to obtain a negative COVID-19 test at least once a week. As a company with more than 100 employees, the ETS will require us to mandate COVID-19 vaccination of our workforce or have our unvaccinated employees undergo required weekly COVID-19 testing, which could be difficult and costly. Further, additional vaccine and testing mandates may be announced in jurisdictions in which we operate our business, and there could be potential conflict with actions by certain states that are in conflict with the federal mandate, the impacts of which remain uncertain. Requirements to mandate COVID-19 vaccination of our workforce or require our unvaccinated employees to be tested weekly could result in labor disruptions, employee attrition and difficulty securing future labor needs, and could have a material adverse effect on our revenues, costs, financial condition and results of operations.

~~Risks Related to our Common Stock~~

Future offerings of debt securities, which would rank senior to our Common Stock upon our liquidation, and future offerings of equity securities, may be senior to our Common Stock for the purposes of dividend and liquidating distributions, may adversely affect the market price of our Common Stock.

We may raise additional capital through the issuance of debt or equity securities (including preferred stock) from time to time. Upon liquidation, holders of our debt securities (including holders of our 2026 Senior Notes and 2027 Notes) and preferred stock, if any, and lenders with respect to other borrowings (including the lenders under the New Senior Secured Term Loan) will be entitled to our available assets prior to the holders of our Common Stock. Preferred stock could have a preference

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on liquidating distributions or a preference on dividend payments that could limit our ability to pay dividends to the holders of our Common Stock. Because our decision to issue debt or equity securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, holders of our Common Stock bear the risk of our future offerings reducing the market price of our Common Stock and diluting the value of their holdings in our stock.

~~We presently have no intention to declare or pay a dividend and we may not be able to pay dividends in the future or at all.~~

On April 1, 2020, we announced that our Board of Directors determined that it is in the best interests of our stockholders for the Company to preserve liquidity by suspending our quarterly dividend. We presently have no intention to reinstate the dividend, and there can be no assurance that we will resume paying dividends on a regular basis.

Our credit facility contains terms that restrict our ability to pay dividends or other distributions. Under the New Senior Secured Term Loan, we can only pay cash dividends up to an agreed-upon amount and provided that the ratio of Total Indebtedness secured on an equal priority basis with the New Senior Secured Term Loan (net of Unrestricted Cash) to Consolidated EBITDA (as such terms are defined in the New Senior Secured Term Loan) does not exceed a specified ratio. The 2026 Senior Notes Indenture and the 2027 Notes Indenture contain similar dividend restrictions. The 2027 Notes Indenture also provides that, at any time that the Company’s Total Gross Leverage Ratio (as defined in the 2027 Notes Indenture) exceeds 1.5 and we approve the declaration of a dividend, we must offer to purchase a principal amount of 2027 Notes equal to the proposed amount of the dividend. This repurchase offer requirement may make it impractical to declare and pay dividends at any time that the requirement is in effect. Stockholders also should be aware that they have no contractual or other legal right to dividends that have not been declared.

Any determination by our Board of Directors regarding dividends will depend on a variety of factors, including the Company’s GAAP net income, free cash flow generated from operations or other sources, liquidity position and potential alternative uses of cash, such as acquisitions, as well as economic conditions and expected future financial results. There can be no guarantee regarding the timing and amount of any dividends. Our ability to resume payment of dividends in the future will depend on our future financial performance, which, in turn, depends on the successful implementation of our strategy and on financial, competitive, regulatory, technical and other factors, general economic conditions, demand and selling prices for our products, and other factors specific to our industry or specific projects, many of which are beyond our control. Therefore, our ability to generate free cash flow depends on the performance of our operations and could be limited by decreases in our profitability or increases in costs, capital expenditures, or debt servicing requirements.2021.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~None.~~(c) Issuer Purchases of Equity Securities

In February 2022, the Company's Board of Directors authorized the repurchase of up to $100 million of the Company's Common Stock (the "Stock Repurchase Program"). Repurchases may be made from time to time through open market purchases or privately negotiated transactions, pursuant to one or more plans established pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, or by means of one or more tender offers, in each case, as permitted by securities laws and other legal requirements. The amount and timing of the purchases will depend on a number of factors including, but not limited to, the price and availability of the Company's shares, trading volume, capital availability, Company performance and general economic and market conditions. The Stock Repurchase Program may be suspended or discontinued at any time. For both the three and six months ended June 30, 2022, the Company repurchased 800 thousand shares of Common Stock under the Stock Repurchase Program for approximately $3.1 million, excluding commissions. As of June 30, 2022, the remaining authorized amount under the Stock Repurchase Program was approximately $96.9 million.

The following table details our monthly share repurchases of Common Stock during the three months ended June 30, 2022:


In thousands, except per share amounts	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced program	Maximum approximate dollar value that may yet be purchased under the Stock Repurchase Program
Period
April 1, 2022 - April 30, 2022	9	$	4.24	—	$	100,000
May 1, 2022 - May 31, 2022	800	$	3.83	800	$	96,940
June 1, 2022 - June 30, 2022	55	$	3.93	—	$	96,940
Total	864	$	3.84	800	$	96,940

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

This item is not applicable.

ITEM 5. OTHER INFORMATION

~~None.~~As previously disclosed, we, through our subsidiary Gannett Media Corp. ("Gannett Media"), entered into a strategic alliance with Tipico USA Technology, Inc. ("Tipico"). In connection with the alliance, we entered into a Strategic Alliance Agreement, dated as of July 26, 2021 (the "Original Agreement"). On July 29, 2022, we entered into a Binding Term Sheet (the "Term Sheet") pursuant to which, as of August 1, 2022 (the "Effective Date"), (a) we mutually terminated the Original Agreement, (b) Tipico repurchased the warrant issued to us under the Original Agreement, representing a minority interest in Tipico US Group Corp., parent company of Tipico, and (c) we agreed to new terms for a media partnership for an initial term of four years from the Effective Date. Pursuant to the Term Sheet, Gannett Media will provide Tipico, subject to applicable laws, advertising, marketing, promotions, events and services that are crafted to promote Tipico, Tipico's brand and the Tipico gambling services within the United States, on an exclusive basis in certain states (non-exclusive elsewhere) subject to certain

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minimum payment requirements. Tipico will pay media fees and a warrant repurchase price in the aggregate of approximately $14.7 million over the initial term of the new media partnership. In addition, Tipico will continue to pay Gannett Media for certain qualified player referrals over the term of the new media partnership.

We have also agreed to use commercially reasonable efforts to promptly negotiate and execute a long-form agreement and other documentation that will contain, among other things, customary representations, warranties and indemnities. Until such time as the Term Sheet is replaced by any such further documentation, the Term Sheet will remain binding.

The foregoing summary of the Term Sheet does not purport to be complete and is qualified in its entirety by reference to the full text of the Term Sheet intended to be filed with the Company's Quarterly Report on Form 10-Q for the quarter ending September 30, 2022.

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ITEM 6. EXHIBITS

~~Table of Contents~~

Exhibit Number

Description

Location

~~4.1~~10.1

~~Indenture,~~Amendment No. 2, dated as of March 21, 2022, to the First Lien Credit Agreement dated as of October 15, 2021, as amended, by and among Gannett Co., Inc., Gannett Holdings LLC, the Guarantors from time to time party ~~hereto, U.S. Bank National Association,~~thereto, the Lenders from time to time party thereto, and Citibank N.A., as ~~trustee and U.S. Bank National Association, as collateral agent, registrar, paying~~administrative agent and ~~authenticating~~collateral agent.

~~Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed October 18, 2021.~~Filed herewith.

~~10.1~~10.2

Amendment No. 3, dated as of April 8, 2022, to the First Lien Credit Agreement dated as of October 15, 2021, as amended, by and among Gannett Co., Inc., Gannett Holdings LLC, ~~each Person listed as a “Guarantor” on~~ the ~~signature pages hereto, the lenders~~Guarantors from time to time party ~~hereto,~~thereto, the Lenders from time to time party thereto, and Citibank N.A., as ~~collateral~~administrative agent and ~~administrative agent for the Lenders.~~

~~Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed October 18, 2021.~~collateral agent.

~~10.2~~

~~Strategic Alliance Agreement, dated as of July 26, 2021, by and between Tipico USA Technology, Inc. and Gannett Media Corp.~~

Filed ~~herewith~~herewith..*

31.1

~~Rule 13a-14(a)~~ Certification of ~~CEO~~Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(d) of the Securities Exchange Act of 1934.

Filed ~~herewith~~herewith..

31.2

~~Rule 13a-14(a)~~ Certification of ~~CFO~~Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(d) of the Securities Exchange Act of 1934.

Filed ~~herewith~~herewith..

32.1

Section 1350 Certification of ~~CEO~~Principal Executive Officer.

Furnished ~~herewith~~herewith..

32.2

Section 1350 Certification of ~~CFO~~Principal Financial Officer.

Furnished herewith.

101

The following financial information from Gannett Co., Inc. Quarterly Report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2021,~~2022, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Operations and Comprehensive Income; (iii) Condensed Consolidated Statements of Cash Flow; (iv) Condensed Consolidated Statements of Equity; and (v) Notes to Condensed Consolidated Financial Statements

Attached.

104

Cover Page Interactive Data File (formatted as Inline XBRL and embedded within the Inline XBRL document)

Attached.

* Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant agrees to furnish supplementally a copy of any omitted schedule or exhibit to the U.S. Securities and Exchange Commission upon request.

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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.


Date: ~~November 5, 2021~~August 4, 2022			GANNETT CO., INC.

			/s/ Douglas E. Horne
			Douglas E. Horne
			Chief Financial Officer and Chief Accounting Officer
			(On behalf of the Registrant and as principal financial and principal accounting officer)

5449


In thousands	Year ended December 31, (a)
2021 (excluding the nine months ended September 30, 2021)	$	18,625
2022	81,364
2023	68,607
2024	60,380
2025	51,315
Thereafter	213,647
Total future minimum lease payments	493,938
Less: Imputed interest	(184,245)
Total	$	309,693


	Nine months ended September 30,
In thousands, except lease term and discount rate	2021			2020
Cash paid for amounts included in the measurement of operating lease liabilities	$	59,989		$	61,508
Right-of-use assets obtained in exchange for operating lease obligations	31,014			25,562
Gain on sale and leaseback transactions, net	(1,568)			—

	As of September 30,
	2021			2020
Weighted-average remaining lease term (in years)	7.3			7.7
Weighted-average discount rate	12.81		%	12.66		%


	February 26, 2021			December 31, 2020
Annual volatility	70.0		%	70.0		%
Discount rate	12.2		%	9.3		%
Stock price	$	4.95		$	3.36