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 ~~March 31,~~June 30, 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 ~~May 2,~~August 1, 2022, ~~146,591,116~~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, 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)," "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 the forward-looking statements. 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;

•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 in the future, if at all;

•Our ability to reduce costs and expenses;

•Our ability to maintain proper and effective internal control over financial reporting;

•Our ability to recruit and retain key personnel; and

•Any shortage of skilled or experienced employees 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, 2021, filed with the Securities and Exchange Commission (the "SEC") on February 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.

Q1Q2 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	22	2	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
3	3	Quantitative and Qualitative Disclosures About Market Risk	40	3	Quantitative and Qualitative Disclosures About Market Risk	45
4	4	Controls and Procedures	40	4	Controls and Procedures	45

		Part II. Other Information			Part II. Other Information
1	1	Legal Proceedings	41	1	Legal Proceedings	46
1A	1A	Risk Factors	41	1A	Risk Factors	46
2	2	Unregistered Sales of Equity Securities and Use of Proceeds	41	2	Unregistered Sales of Equity Securities and Use of Proceeds	46
3	3	Defaults Upon Senior Securities	41	3	Defaults Upon Senior Securities	46
4	4	Mine Safety Disclosures	41	4	Mine Safety Disclosures	46
5	5	Other Information	41	5	Other Information	46
6	6	Exhibits	42	6	Exhibits	48
		Signatures	43		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	March 31, 2022		December 31, 2021		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	$	152,191	$	130,756	Cash and cash equivalents	$	87,331	$	130,756
Accounts receivable, net of allowance for doubtful accounts of $11,566 and $16,470 as of March 31, 2022 and December 31, 2021, respectively		293,462		328,733
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	37,144		37,662		Inventories	34,981		37,662
Prepaid expenses and other current assets	Prepaid expenses and other current assets	79,548		80,110		Prepaid expenses and other current assets	75,392		80,110
Total current assets	Total current assets	562,345		577,261		Total current assets	487,517		577,261
Property, plant and equipment, net of accumulated depreciation of $346,271 and $336,500 as of March 31, 2022 and December 31, 2021, respectively		388,367		415,384
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	263,980		271,935		Operating lease assets	257,361		271,935
Goodwill	Goodwill	540,894		533,709		Goodwill	540,491		533,709
Intangible assets, net	Intangible assets, net	694,521		713,153		Intangible assets, net	666,678		713,153
Deferred tax assets	Deferred tax assets	25,802		32,399		Deferred tax assets	—		32,399
Pension and other assets	Pension and other assets	307,534		284,228		Pension and other assets	329,228		284,228
Total assets	Total assets	$	2,783,443	$	2,828,069	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	$	346,368	$	357,014	Accounts payable and accrued liabilities	$	320,699	$	357,014
Deferred revenue	Deferred revenue	185,579		184,838		Deferred revenue	174,112		184,838
Current portion of long-term debt	Current portion of long-term debt	62,860		69,456		Current portion of long-term debt	60,846		69,456
Other current liabilities	Other current liabilities	46,997		51,218		Other current liabilities	49,699		51,218
Total current liabilities	Total current liabilities	641,804		662,526		Total current liabilities	605,356		662,526
Long-term debt	Long-term debt	783,010		769,446		Long-term debt	760,954		769,446
Convertible debt	Convertible debt	396,297		393,354		Convertible debt	399,319		393,354
Deferred tax liabilities	Deferred tax liabilities	11,711		28,812		Deferred tax liabilities	10,702		28,812
Pension and other postretirement benefit obligations	Pension and other postretirement benefit obligations	69,687		71,937		Pension and other postretirement benefit obligations	67,554		71,937
Long-term operating lease liabilities	Long-term operating lease liabilities	247,487		254,969		Long-term operating lease liabilities	242,262		254,969
Other long-term liabilities	Other long-term liabilities	118,721		117,410		Other long-term liabilities	109,595		117,410
Total noncurrent liabilities	Total noncurrent liabilities	1,626,913		1,635,928		Total noncurrent liabilities	1,590,386		1,635,928
Total liabilities	Total liabilities	2,268,717		2,298,454		Total liabilities	2,195,742		2,298,454
Commitments and contingent liabilities (See Note 11)	Commitments and contingent liabilities (See Note 11)	0		0		Commitments and contingent liabilities (See Note 11)	0		0
Equity	Equity					Equity
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 March 31, 2022 and December 31, 2021		—		—
Common stock, $0.01 par value per share, 2,000,000,000 shares authorized, 151,016,595 shares issued and 147,828,491 shares outstanding at March 31, 2022; 144,667,389 shares issued and 142,299,399 shares outstanding at December 31, 2021		1,510		1,446
Treasury stock, at cost, 3,188,104 shares and 2,367,990 shares at March 31, 2022 and December 31, 2021, respectively		(11,290)		(8,151)
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	1,397,516		1,400,206		Additional paid-in capital	1,402,652		1,400,206
Accumulated deficit	Accumulated deficit	(924,366)		(921,399)		Accumulated deficit	(978,054)		(921,399)
Accumulated other comprehensive income	Accumulated other comprehensive income	51,607		59,998		Accumulated other comprehensive income	46,747		59,998
Total Gannett stockholders equity	Total Gannett stockholders equity	514,977		532,100		Total Gannett stockholders equity	458,171		532,100
Noncontrolling interests	Noncontrolling interests	(251)		(2,485)		Noncontrolling interests	(263)		(2,485)
Total equity	Total equity	514,726		529,615		Total equity	457,908		529,615
Total liabilities and equity	Total liabilities and equity	$	2,783,443	$	2,828,069	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 March 31,			Three months ended June 30,						Six months ended June 30,
In thousands, except per share amounts	In thousands, except per share amounts		2022			2021		In thousands, except per share amounts	2022		2021		2022		2021
Advertising and marketing services	Advertising and marketing services		$	375,114		$	388,357	Advertising and marketing services	$	383,609	$	420,110	$	758,723	$	808,467
Circulation	Circulation		288,602			325,437		Circulation	274,624		310,259		563,226		635,696
Other	Other		84,361			63,290		Other	90,427		73,906		174,788		137,196
Total operating revenues	Total operating revenues		748,077			777,084		Total operating revenues	748,660		804,275		1,496,737		1,581,359
Operating costs	Operating costs		469,885			477,798		Operating costs	476,002		473,172		945,887		950,970
Selling, general and administrative expenses	Selling, general and administrative expenses		221,837			203,684		Selling, general and administrative expenses	227,836		222,904		449,673		426,588
Depreciation and amortization	Depreciation and amortization		47,783			58,103		Depreciation and amortization	49,530		48,242		97,313		106,345
Integration and reorganization costs	Integration and reorganization costs		11,398			13,404		Integration and reorganization costs	15,745		8,444		27,143		21,848
Asset impairments	Asset impairments		854			833		Asset impairments	85		—		939		833

(Gain) loss on sale or disposal of assets, net			(2,804)			4,745
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		1,102			10,576		Other operating expenses	314		774		1,416		11,350
Total operating expenses	Total operating expenses		750,055			769,143		Total operating expenses	769,884		758,830		1,519,939		1,527,973
Operating income (loss)	Operating income (loss)		(1,978)			7,941		Operating income (loss)	(21,224)		45,445		(23,202)		53,386
Interest expense	Interest expense		26,006			39,503		Interest expense	26,084		35,264		52,090		74,767
Loss on early extinguishment of debt	Loss on early extinguishment of debt		2,743			19,401		Loss on early extinguishment of debt	749		2,834		3,492		22,235
Non-operating pension income	Non-operating pension income		(18,213)			(23,878)		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 non-operating income, net			(1,805)			(1,875)
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		8,731			159,751		Non-operating expenses	10,318		13,044		19,049		172,795
Loss before income taxes			(10,709)			(151,810)
Benefit for income taxes			(7,607)			(9,109)
Net loss			(3,102)			(142,701)
Income (loss) before income taxes								Income (loss) before income taxes	(31,542)		32,401		(42,251)		(119,409)
Provision for income taxes								Provision for income taxes	22,158		17,692		14,551		8,583
Net income (loss)								Net income (loss)	(53,700)		14,709		(56,802)		(127,992)
Net loss attributable to noncontrolling interests(a)	Net loss attributable to noncontrolling interests(a)		(135)			(385)		Net loss attributable to noncontrolling interests(a)	(12)		(406)		(147)		(791)
Net loss attributable to Gannett			$	(2,967)		$	(142,316)
Net income (loss) attributable to Gannett								Net income (loss) attributable to Gannett	$	(53,688)	$	15,115	$	(56,655)	$	(127,201)

Loss per share attributable to Gannett - basic			$	(0.02)		$	(1.06)
Loss per share attributable to Gannett - diluted			$	(0.02)		$	(1.06)
Income (loss) per share attributable to Gannett - basic								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	$	(0.39)	$	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		$	(7,556)		$	3,037	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 gain (loss)	Net actuarial gain (loss)		(1,796)			1,126		Net actuarial gain (loss)	12,786		(1,426)		10,990		(300)
Amortization of net actuarial (gain) loss	Amortization of net actuarial (gain) loss		(32)			20		Amortization of net actuarial (gain) loss	(217)		(5)		(249)		15

Other	Other		536			(554)		Other	1,469		(292)		2,005		(846)
Total pension and other postretirement benefit items	Total pension and other postretirement benefit items		(1,292)			592		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		(8,848)			3,629		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)		(457)			206		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		(8,391)			3,423		Other comprehensive income (loss), net of tax	(4,860)		417		(13,251)		3,840
Comprehensive loss			(11,493)			(139,278)
Comprehensive income (loss)								Comprehensive income (loss)	(58,560)		15,126		(70,053)		(124,152)
Comprehensive loss attributable to noncontrolling interests(a)	Comprehensive loss attributable to noncontrolling interests(a)		(135)			(385)		Comprehensive loss attributable to noncontrolling interests(a)	(12)		(406)		(147)		(791)
Comprehensive loss attributable to Gannett			$	(11,358)		$	(138,893)
Comprehensive income (loss) attributable to Gannett								Comprehensive income (loss) attributable to Gannett	$	(58,548)	$	15,532	$	(69,906)	$	(123,361)

(a) For the three and six months ended ~~March 31,~~June 30, 2022, there were no redeemable noncontrolling interests included in Net loss attributable to noncontrolling interests. For the three and six months ended ~~March 31,~~June 30, 2021, Net loss attributable to noncontrolling interests included ~~$385 thousand~~$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)


		Three months ended March 31,					Six months ended June 30,
In thousands	In thousands	2022		2021		In thousands	2022		2021
Operating activities	Operating activities					Operating activities
Net loss	Net loss	$	(3,102)	$	(142,701)	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	47,783		58,103		Depreciation and amortization	97,313		106,345
Share-based compensation expense	Share-based compensation expense	3,393		3,423		Share-based compensation expense	8,778		9,202
Non-cash interest expense	Non-cash interest expense	5,316		6,118		Non-cash interest expense	10,641		11,531
(Gain) loss on sale or disposal of assets, net		(2,804)		4,745
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	2,743		19,401		Loss on early extinguishment of debt	3,492		22,235

Asset impairments	Asset impairments	854		833		Asset impairments	939		833
Pension and other postretirement benefit obligations	Pension and other postretirement benefit obligations	(27,291)		(48,538)		Pension and other postretirement benefit obligations	(51,353)		(78,038)
Change in other assets and liabilities, net	Change in other assets and liabilities, net	5,537		33,332		Change in other assets and liabilities, net	(8,888)		11,832

Cash provided by operating activities	Cash provided by operating activities	32,429		61,316		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	(15,427)		—		Acquisitions, net of cash acquired	(15,432)		—
Purchase of property, plant and equipment	Purchase of property, plant and equipment	(10,764)		(7,607)		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	20,471		10,123		Proceeds from sale of real estate and other assets	29,623		23,341
Change in other investing activities	Change in other investing activities	(500)		—		Change in other investing activities	(548)		(335)
Cash provided by (used for) investing activities	Cash provided by (used for) investing activities	(6,220)		2,516		Cash provided by (used for) investing activities	(9,649)		7,185
Financing activities	Financing activities					Financing activities
Payments of deferred financing costs	Payments of deferred financing costs	(423)		(33,921)		Payments of deferred financing costs	(957)		(33,921)
Borrowings under term loans	Borrowings under term loans	72,500		1,045,000		Borrowings under term loans	80,000		1,045,000
Repayments under term loans	Repayments under term loans	(47,976)		(1,083,791)		Repayments under term loans	(74,879)		(1,129,605)

Repayments of long-term debt	Repayments of long-term debt	(22,500)		—		Repayments of long-term debt	(30,000)		—
Acquisition of noncontrolling interests	Acquisition of noncontrolling interests	(2,050)		—		Acquisition of noncontrolling interests	(2,050)		—

Payments for employee taxes withheld from stock awards		(3,138)		(1,707)

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

Changes in other financing activities	Changes in other financing activities	(231)		(280)		Changes in other financing activities	(632)		(423)
Cash used for financing activities	Cash used for financing activities	(3,818)		(74,699)		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	(992)		314		Effect of currency exchange rate change on cash	(1,140)		625
Increase (decrease) in cash, cash equivalents and restricted cash		21,399		(10,553)
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 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	$	165,018	$	196,173	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 March 31, 2022																				Three months ended June 30, 2022
		Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated deficit		Treasury stock			Non-controlling interest								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 December 31, 2021		144,667	$	1,446	$	1,400,206	$	59,998	$	(921,399)	2,368	$	(8,151)			$	(2,485)			$	529,615
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	—	—		—		—		(2,967)		—	—		(135)				(3,102)		Net loss attributable to Gannett		—	—			—				—		(53,688)			—		—			(12)				(53,700)
Acquisition of noncontrolling interests		—	—		(4,419)		—		—		—	—		2,369				(2,050)

Restricted stock awards settled, net of withholdings	Restricted stock awards settled, net of withholdings	615	7		(1,541)		—		—		—	—		—				(1,534)		Restricted stock awards settled, net of withholdings		—	—			(18)				—		—			—		—			—				(18)
Restricted share grants	Restricted share grants	5,728	57		(57)		—		—		—	—		—				—		Restricted share grants		1,303	13			(13)				—		—			—		—			—				—

Other comprehensive loss, net(b)	Other comprehensive loss, net(b)	—	—		—		(8,391)				—	—		—				(8,391)		Other comprehensive loss, net(b)		—	—			—				(4,860)		—			—		—			—				(4,860)
Share-based compensation expense	Share-based compensation expense	—	—		3,393		—		—		—	—		—				3,393		Share-based compensation expense		—	—			5,385				—		—			—		—			—				5,385
Issuance of common stock	Issuance of common stock	7	—		62		—		—		—	—		—				62		Issuance of common stock		278	3			23				—		—			—		—			—				26
Treasury stock	Treasury stock	—	—		—		—		—		692	(3,138)		—				(3,138)		Treasury stock		—	—			—				—		—			863		(3,391)			—				(3,391)
Restricted share forfeiture	Restricted share forfeiture	—	—		—		—		—		128	(1)		—				(1)		Restricted share forfeiture		—	—			—				—		—			1,759		(19)			—				(19)
Other activity	Other activity	—	—		(128)		—		—		—	—		—				(128)		Other activity		—	—			(241)				—		—			—		—			—				(241)
Balance at March 31, 2022		151,017	$	1,510	$	1,397,516	$	51,607	$	(924,366)	3,188	$	(11,290)	$	(251)			$	514,726
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 March 31, 2021																				Three months ended June 30, 2021
		Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated deficit		Treasury stock			Non-controlling interest(a)								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 December 31, 2020		139,495	$	1,395	$	1,103,881	$	50,173	$	(786,437)	1,392	$	(4,903)			$	—			$	364,109
Net loss attributable to Gannett		—	—		—		—		(142,316)		—	—		—				(142,316)
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	1,057	10		(1,895)		—		—		—	—		—				(1,885)		Restricted stock awards settled, net of withholdings		5	—			(11)				—		—			—		—			—				(11)
Restricted share grants		3,878	39		(39)		—		—		—	—		—				—

Equity component - 2027 Notes	Equity component - 2027 Notes	—	—		316,252		—		—		—	—		—				316,252		Equity component - 2027 Notes		—	—			(32,534)				—		—			—		—			—				(32,534)
Other comprehensive income, net(b)	Other comprehensive income, net(b)	—	—		—		3,423		—		—	—		—				3,423		Other comprehensive income, net(b)		—	—			—				417		—			—		—			—				417
Share-based compensation expense	Share-based compensation expense	—	—		3,423		—		—		—	—		—				3,423		Share-based compensation expense		—	—			5,779				—		—			—		—			—				5,779
Issuance of common stock	Issuance of common stock	14	—		61		—		—		—	—		—				61		Issuance of common stock		190	2			—				—		—			—		—			—				2
Remeasurement of redeemable noncontrolling interests		—	—		126		—		—		—	—		—				126

Treasury stock	Treasury stock	—	—		—		—		—		330	(1,707)		—				(1,707)		Treasury stock		—	—			—				—		—			63		(323)			—				(323)
Restricted share forfeiture	Restricted share forfeiture	—	—		—		—		—		180	(2)		—				(2)		Restricted share forfeiture		—	—			—				—		—			50		—			—				—
Other activity	Other activity	—	—		168		—		—		—	—		—				168		Other activity		—	—			(20)				—		—			—		—			—				(20)
Balance at March 31, 2021		144,444	$	1,444	$	1,421,977	$	53,596	$	(928,753)	1,902	$	(6,612)	$	—			$	541,652
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 ~~March 31,~~June 30, 2022 and 2021, Other comprehensive income is net of income tax ~~benefit~~provision of ~~$0.5~~$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

(Unaudited)


	Six months ended June 30, 2022
	Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated deficit		Treasury stock			Non-controlling interest(a)
In thousands	Shares	Amount								Shares	Amount				Total
Balance at December 31, 2021	144,667	$	1,446	$	1,400,206	$	59,998	$	(921,399)	2,368	$	(8,151)	$	(2,485)	$	529,615
Net loss attributable to Gannett	—	—		—		—		(56,655)		—	—		(147)		(56,802)
Acquisition of noncontrolling interests	—	—		(4,419)		—		—		—	—		2,369		(2,050)
Restricted stock awards settled, net of withholdings	615	7		(1,559)		—		—		—	—		—		(1,552)
Restricted share grants	7,031	70		(70)		—		—		—	—		—		—

Other comprehensive loss, net(c)	—	—		—		(13,251)		—		—	—		—		(13,251)
Share-based compensation expense	—	—		8,778		—		—		—	—		—		8,778
Issuance of common stock	285	3		85		—		—		—	—		—		88

Treasury stock	—	—		—		—		—		1,555	(6,529)		—		(6,529)
Restricted share forfeiture	—	—		—		—		—		1,887	(20)		—		(20)
Other activity	—	—		(369)		—		—		—	—		—		(369)
Balance at June 30, 2022	152,598	$	1,526	$	1,402,652	$	46,747	$	(978,054)	5,810	$	(14,700)	$	(263)	$	457,908


	Six months ended June 30, 2021
	Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated deficit		Treasury stock			Non-controlling interest(a)
In thousands	Shares	Amount								Shares	Amount				Total
Balance at December 30, 2020	139,495	$	1,395	$	1,103,881	$	50,173	$	(786,437)	1,392	$	(4,903)	$	—	$	364,109
Net loss attributable to Gannett	—	—		—		—		(127,201)		—	—		—		(127,201)
Restricted stock awards settled, net of withholdings	1,062	10		(1,906)		—		—		—	—		—		(1,896)
Restricted share grants	3,878	39		(39)		—		—		—	—		—		—
Equity component - 2027 Notes	—	—		283,718		—		—		—	—		—		283,718
Other comprehensive income, net(c)	—	—		—		3,840		—		—	—		—		3,840
Share-based compensation expense	—	—		9,202		—		—		—	—		—		9,202
Issuance of common stock	204	2		61		—		—		—	—		—		63
Remeasurement of redeemable noncontrolling interests	—	—		126		—		—		—	—		—		126
Treasury stock	—	—		—		—		—		393	(2,030)		—		(2,030)
Restricted share forfeiture	—	—		—		—		—		230	(2)		—		(2)
Other activity	—	—		148		—		—		—	—		—		148
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.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — Description of business and basis of presentation

Description of 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. We expect the execution of this strategy to enable us to continue 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 45 states in the U.S., and Newsquest, a wholly-owned subsidiary operating in the United Kingdom (the "U.K.") with more than 150 local media brands. We also operate a digital marketing solutions company, branded LOCALiQ, which provides a cloud-based platform of products to enable small and 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, 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~~Gannett Media and ~~Digital Marketing Solutions.~~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 12 — 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. We continue to experience constraints on the sales of single copy newspapers, largely tied to reduced business ~~travel and challenges in permitting and attendance at 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 ~~slight~~ 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. 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.

Basis of presentation

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 ("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, 2021.

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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.

~~Table of Contents~~

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.

Recent accounting pronouncements adopted

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

In August 2020, the 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, 2021, including interim periods within those fiscal years. 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"),~~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")~~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")~~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:

~~Table of Contents~~


		Three months ended March 31,			Three months ended June 30,						Six months ended June 30,
In thousands	In thousands		2022			2021		In thousands	2022		2021		2022		2021
Print advertising	Print advertising		$	173,518		$	193,196	Print advertising	$	173,453	$	200,925	$	346,971	$	394,121
Digital advertising and marketing services	Digital advertising and marketing services		201,596			195,161		Digital advertising and marketing services	210,156		219,185		411,752		414,346
Total advertising and marketing services	Total advertising and marketing services		375,114			388,357		Total advertising and marketing services	383,609		420,110		758,723		808,467
Circulation	Circulation		288,602			325,437		Circulation	274,624		310,259		563,226		635,696
Other	Other		84,361			63,290		Other	90,427		73,906		174,788		137,196
Total revenues	Total revenues		$	748,077		$	777,084	Total revenues	$	748,660	$	804,275	$	1,496,737	$	1,581,359

For the three and six months ended ~~March 31,~~June 30, 2022, revenues generated from international locations were approximately 9.8% and 9.3% of total revenues, respectively. For the three and six months ended June 30, 2021, revenues generated from international locations were approximately ~~8.9%~~7.9% and ~~7.5%~~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:


		Three months ended March 31, 2022						Three months ended March 31, 2021						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	$	60,665	$	124,173	$	184,838	$	51,686	$	134,321	$	186,007		Beginning balance	$	60,665	$	124,173	$	184,838	$	51,686	$	134,321	$	186,007
Acquisition	Acquisition	—		2,388		2,388		—		—		—			Acquisition	—		2,388		2,388		—		—		—
Cash receipts	Cash receipts	76,125		237,860		313,985		60,117		284,175		344,292			Cash receipts	140,331		489,333		629,664		132,167		512,262		644,429
Revenue recognized	Revenue recognized	(75,463)		(240,169)		(315,632)		(58,953)		(280,647)		(339,600)			Revenue recognized	(149,353)		(493,425)		(642,778)		(130,545)		(515,272)		(645,817)
Ending balance	Ending balance	$	61,327	$	124,252	$	185,579	$	52,850	$	137,849	$	190,699		Ending balance	$	51,643	$	122,469	$	174,112	$	53,308	$	131,311	$	184,619

NOTE 3 — 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:


		Three months ended March 31,					Six months ended June 30,
In thousands	In thousands	2022		2021		In thousands	2022		2021
Beginning balance	Beginning balance	$	16,470	$	20,843	Beginning balance	$	16,470	$	20,843
Current period provision	Current period provision	(2,403)		(2,171)		Current period provision	1,629		681
Write-offs charged against the allowance	Write-offs charged against the allowance	(3,868)		(2,805)		Write-offs charged against the allowance	(8,503)		(5,943)
Recoveries of amounts previously written-off	Recoveries of amounts previously written-off	942		1,206		Recoveries of amounts previously written-off	1,994		2,296
Other	Other	425		51		Other	377		78

Ending balance	Ending balance	$	11,566	$	17,124	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 six months ended ~~March 31,~~June 30, 2022, the Company recorded $4.0 million and $1.6 million in bad debt expense, respectively. For the three and six months ended June 30, 2021, the Company recorded ~~a benefit of $2.4~~$2.9 million and ~~$2.2~~$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 ~~March 31,~~June 30, 2022, ~~and 2021,~~ the Company recorded ~~reductions to~~an increase in bad debt expense due to ~~a decrease~~increased write-offs and reserves associated with circulation revenue in ~~required reserves due to lower receivable balances.~~the second quarter of 2022.

NOTE 4 — Goodwill and intangible assets

Goodwill and intangible assets consisted of the following:


		March 31, 2022						December 31, 2021							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	$	455,522	$	163,594	$	291,928	$	453,038	$	153,988	$	299,050	Advertiser relationships	$	453,993	$	174,834	$	279,159	$	453,038	$	153,988	$	299,050
Other customer relationships	Other customer relationships	102,798		37,920		64,878		102,486		35,237		67,249		Other customer relationships	102,437		40,662		61,775		102,486		35,237		67,249
Subscriber relationships	Subscriber relationships	253,890		106,986		146,904		254,162		99,905		154,257		Subscriber relationships	253,798		114,555		139,243		254,162		99,905		154,257
Other intangible assets	Other intangible assets	68,780		47,519		21,261		68,690		44,291		24,399		Other intangible assets	68,780		50,752		18,028		68,690		44,291		24,399
Sub-total	Sub-total	$	880,990	$	356,019	$	524,971	$	878,376	$	333,421	$	544,955	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					169,550						168,198		Mastheads					168,473						168,198
Total intangible assets	Total intangible assets					$	694,521					$	713,153	Total intangible assets					$	666,678					$	713,153

Goodwill	Goodwill					$	540,894					$	533,709	Goodwill					$	540,491					$	533,709

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Consistent with the Company’s past practice, the Company ~~performs~~performed its annual goodwill and indefinite-lived intangible impairment assessment in the second quarter of 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 ~~last day~~fair value of each of the reporting units. The most significant assumptions utilized in the determination of the estimated fair values 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, and relative currency exchange rates, and could be adversely impacted by a sustained increase in inflation, all of which the Company considered in determining the long-term growth rates used in the analysis, which ranged from 0.0% to 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 13.0% to 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 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 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 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 ~~fiscal second quarter.~~ carrying value.

In addition to the annual impairment test, the Company is required to regularly assess whether a triggering event has occurred under ~~both~~ ASC ~~350 and/or ASC 360, which would require interim impairment testing.~~

360. As of ~~March 31,~~June 30, 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.

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NOTE 5 — 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 March 31,			Three months ended June 30,						Six months ended June 30,
In thousands	In thousands		2022			2021		In thousands	2022		2021		2022		2021
Publishing			$	5,177		$	6,779
Gannett Media								Gannett Media	$	10,595	$	1,405	$	15,772	$	8,184
Digital Marketing Solutions	Digital Marketing Solutions		9			(57)		Digital Marketing Solutions	140		(24)		149		(81)
Corporate and other	Corporate and other		174			375		Corporate and other	902		(252)		1,076		123
Total	Total		$	5,360		$	7,097	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 ~~three~~six months ended ~~March 31,~~June 30, 2022 is as follows:


In thousands	Severance and related costs
Beginning balance	$	12,558
Restructuring provision included in integration and reorganization costs	~~5,360~~16,997
Cash payments	~~(5,430)~~(13,124)
Ending balance	$	~~12,488~~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 March 31,
In thousands 2022 2021
Publishing $ 544 $ 547
Digital Marketing Solutions 142 223
Corporate and other 5,352 5,537
Total $ 6,038 $ 6,307


	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

~~Accelerated~~0Accelerated depreciation

~~For the three months ended March 31, 2022 and 2021, the~~The Company incurred accelerated depreciation, a component of Depreciation and amortization expense in the condensed consolidated statements of operations and comprehensive income (loss)~~, of $4.7 million and $9.2 million, respectively,~~ related to the shortened useful life of assets due to the closing of print facilities and sale of property primarily at the ~~Publishing segment.~~Gannett Media segment, of $5.5 million and $1.1 million for the three months ended June 30, 2022 and 2021, respectively, and $10.2 million and $10.3 million for the six months ended June 30, 2022 and 2021, respectively.

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NOTE 6 — Debt

The Company's debt consisted of the following:


		March 31, 2022								December 31, 2021									June 30, 2022								December 31, 2021
(in millions)	(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		(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	New Senior Secured Term Loan	$	504.6	$	(12.0)	$	(2.4)	$	490.2	$	480.1	$	(14.1)	$	(2.7)	$	463.3	New Senior Secured Term Loan	$	485.2	$	(10.9)	$	(2.3)	$	472.0	$	480.1	$	(14.1)	$	(2.7)	$	463.3
2026 Senior Notes	2026 Senior Notes	377.5		(12.2)		(9.6)		355.7		400.0		(13.7)		(10.7)		375.6		2026 Senior Notes	370.0		(11.3)		(8.9)		349.8		400.0		(13.7)		(10.7)		375.6
2027 Notes	2027 Notes	485.3		(90.4)		(1.9)		393.0		485.3		(93.2)		(2.0)		390.1		2027 Notes	485.3		(87.4)		(1.9)		396.0		485.3		(93.2)		(2.0)		390.1
2024 Notes	2024 Notes	3.3		—		—		3.3		3.3		—		—		3.3		2024 Notes	3.3		—		—		3.3		3.3		—		—		3.3
Total debt	Total debt	$	1,370.7	$	(114.6)	$	(13.9)	$	1,242.2	$	1,368.7	$	(121.0)	$	(15.4)	$	1,232.3	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	Less: Current portion of long-term debt	$	(62.9)	$	—	$	—	$	(62.9)	$	(69.5)	$	—	$	—	$	(69.5)	Less: Current portion of long-term debt	$	(60.8)	$	—	$	—	$	(60.8)	$	(69.5)	$	—	$	—	$	(69.5)
Non-current portion of long-term debt	Non-current portion of long-term debt	$	1,307.8	$	(114.6)	$	(13.9)	$	1,179.3	$	1,299.2	$	(121.0)	$	(15.4)	$	1,162.8	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 October 15, 2021, Gannett Holdings LLC ("Gannett Holdings"), a wholly-owned subsidiary of the Company, entered

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into the New Senior Secured Term Loan with Citibank N.A., as collateral agent and administrative agent for the 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 $50 million. The Incremental Term Loans have substantially identical terms as the New Senior Secured Term Loan 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 transition the interest rate base from LIBOR to Adjusted Term SOFR and to permit the repurchase of up to $50 million of the Company's 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 ~~an amendment (the "Second Term Loan Amendment")~~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.~~million and $7.5 million, respectively.

The New Senior Secured Term Loan bears interest at a per annum rate equal to 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 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 premium equal to 1.00% of the aggregate principal amount of the loans being repaid in connection with certain refinancing or repricing events that reduce the all-in yield applicable to the loans and occur on or before October 15, 2022. 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 not 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 at the end of each fiscal year of the Company. The New Senior Secured Term Loan 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.

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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 ~~March 31,~~June 30, 2022, the Company was in compliance with all of the covenants and obligations under the New Senior Secured Term Loan.

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 ~~March 31,~~June 30, 2022, the Company recognized interest expense of ~~$6.9~~$7.5 million and $14.4 million, respectively, and paid interest expense of ~~$6.9~~$7.5 million and $14.4 million, respectively. For the three and six months ended June 30, 2022, the Company recognized amortization of original issue discount of $0.9 million and $1.8 million, respectively, and amortization of deferred financing costs of ~~$0.9~~$0.2 million and ~~$0.2~~$0.4 million, ~~respectively, under the New Senior Secured Term Loan.~~respectively. Additionally, during the three and six months ended ~~March 31,~~June 30, 2022, the Company recognized losses on early extinguishment of debt of approximately ~~$1.4~~$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 ~~March 31,~~June 30, 2022, the Company made prepayments, inclusive of both mandatory and optional prepayments, totaling ~~$48.0~~$26.9 million and $74.9 million, respectively, which were classified as financing activities in the condensed consolidated statements of cash flows. As of ~~March 31,~~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 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.

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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 ~~original issue discount and unamortized~~ deferred financing costs will be amortized over the remaining contractual life of the 2026 Senior Notes. For the three and six months ended ~~March 31,~~June 30, 2022, the Company recognized interest expense of ~~$6.0~~$5.5 million and $11.5 million, respectively, and paid interest expense of ~~$0.6~~$12.3 million and $12.9 million, respectively. For the three and six months ended June 30, 2022, the Company recognized amortization of ~~$1.3~~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 ~~March 31,~~June 30, 2022, the effective interest rate on the 2026 Senior Notes was 7.3%.

In March and April 2022, the Company entered into a privately negotiated ~~agreement~~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 ~~repurchase was~~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 ~~March 31,~~June 30, 2022, the Company recognized losses on early extinguishment of debt of approximately ~~$1.3~~$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

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 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, 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 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 the initial principal amount of the 2027 Notes remains 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 New Senior Secured Term 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

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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 and any subsidiaries of the Company that guarantee the New Senior Secured Term Loan. The 2027 Notes are secured by the same collateral that secures the 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 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.

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The 2027 Notes has two components: (i) a debt component, and (ii) an equity component. The debt 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. The fair value of the equity component is classified as Level 3 because it is measured at fair value using a binomial lattice model using assumptions based on market information and historical data, and significant unobservable inputs. As of ~~March 31,~~June 30, 2022 and December 31, 2021, the amount of the conversion feature recorded in Additional paid-in capital was $279.6 million.

For the three and six months ended ~~March 31,~~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 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, the Company recognized amortization of the original issue discount of $2.9 million and ~~$2.3~~$5.8 million, respectively, and ~~for the three months ended March 31, 2022, recorded~~ amortization ~~of deferred financing costs of $0.1 million in connection with the 2027 Notes. Amortization~~ of deferred financing costs related to the 2027 Notes was immaterial for the three and six months ended ~~March 31, 2021. In addition, for~~June 30, 2022. For the three and six months ended ~~March 31, 2022 and~~June 30, 2021, the Company recognized ~~interest expense~~amortization of ~~$7.2~~original issue discount of $2.8 million and ~~$7.5~~$5.1 million, respectively, ~~in connection with~~and amortization of deferred financing costs related to the 2027 ~~Notes.~~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 ~~March 31,~~June 30, 2022 and 2021.

For the ~~three~~six months ended ~~March 31,~~June 30, 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.

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. As of ~~March 31,~~June 30, 2022, the effective interest rate on the 2024 Notes was 6.05%.

NOTE 7 — 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., 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
	Three months ended June 30,				Three months ended June 30,
In thousands	2022		2021		2022		2021
Operating expenses:
Service cost - benefits earned during the period	$	434	$	469	$	23	$	13
Non-operating expenses:
Interest cost on benefit obligation	18,132		17,106		434		401
Expected return on plan assets	(36,509)		(41,408)		—		—

Amortization of actuarial loss (gain)	25		42		(242)		(47)


Total non-operating (benefit) expenses	$	(18,352)	$	(24,260)	$	192	$	354
Total expense (benefit) for retirement plans	$	(17,918)	$	(23,791)	$	215	$	367

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~~Retirement plan costs include the following components:~~


		Pension benefits				Postretirement benefits					Pension benefits				Postretirement benefits
		Three months ended March 31,				Three months ended March 31,					Six months ended June 30,				Six months ended June 30,
In thousands	In thousands	2022		2021		2022		2021		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	$	475	$	511	$	15	$	31	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	18,649		17,031		451		501		Interest cost on benefit obligation	36,781		34,137		885		902
Expected return on plan assets	Expected return on plan assets	(37,281)		(41,430)		—		—		Expected return on plan assets	(73,790)		(82,838)		—		—

Amortization of actuarial loss (gain)	Amortization of actuarial loss (gain)	20		35		(52)		(15)		Amortization of actuarial loss (gain)	45		77		(294)		(62)

Total non-operating (benefit) expenses	Total non-operating (benefit) expenses	$	(18,612)	$	(24,364)	$	399	$	486	Total non-operating (benefit) expenses	$	(36,964)	$	(48,624)	$	591	$	840
Total expense (benefit) for retirement plans	Total expense (benefit) for retirement plans	$	(18,137)	$	(23,853)	$	414	$	517	Total expense (benefit) for retirement plans	$	(36,055)	$	(47,644)	$	629	$	884

During the ~~three~~six months ended ~~March 31,~~June 30, 2022, we contributed ~~$7.6~~$13.0 million and ~~$2.0~~$2.9 million to our pension and other postretirement plans, 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.

NOTE 8 — 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 ~~March 31,~~June 30, 2022 and December 31, 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.

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 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 ~~$5.9~~$1.1 million and $3.5 million as of ~~March 31,~~June 30, 2022 and December 31, 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 4 — Goodwill and intangible assets for additional discussion regarding the annual impairment assessment.

NOTE 9 — Income taxes

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


		Three months ended March 31,				Three months ended June 30,								Six months ended June 30,
In thousands	In thousands		2022				2021			In thousands	2022			2021			2022			2021
Loss before income taxes			$	(10,709)			$	(151,810)
Benefit for income taxes			(7,607)				(9,109)
Income (loss) before income taxes										Income (loss) before income taxes	$	(31,542)		$	32,401		$	(42,251)		$	(119,409)
Provision for income taxes										Provision for income taxes	22,158			17,692			14,551			8,583
Effective tax rate	Effective tax rate		71.0		%		6.0		%	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.

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The ~~benefit~~provision for income taxes for the three months ended ~~March 31,~~June 30, 2022 was mainly driven by ~~pre-tax loss and~~ the ~~current year tax benefit from the release of tax reserves, partially offset by the creation of~~ valuation allowances on non-deductible interest expense ~~carryforwards.~~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 ~~41.25%~~negative 43.30%. The estimated annual effective tax rate is ~~based on the projected tax expense for the full year. The estimated annual effective tax rate is~~principally impacted by the ~~creation of~~ valuation allowances on non-deductible interest expense carryforwards, the pre-tax book loss benefit, the global intangible low taxed income inclusion, ~~from our wholly-owned U.K. subsidiary,~~ 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 ~~$49.0~~$46.5 million and $45.0 million as of ~~March 31,~~June 30, 2022 and December 31, 2021, respectively. The amount of accrued interest and penalties payable related to unrecognized tax benefits was ~~$3.8~~$4.0 million and $3.7 million as of ~~March 31,~~June 30, 2022 and December 31, 2021, respectively.

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 ~~benefit~~provision for income taxes for the three months ended ~~March 31,~~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 ~~and was calculated using the estimated annual effective tax rate~~ of ~~43.4%. The estimated annual effective tax rate is based on the projected tax expense for the full year.~~2021. The tax ~~benefit for the three months ended March 31, 2021 is lower than the 21% statutory federal rate due to the impact of~~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

~~Loss~~Income (loss) per share

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


		Three months ended March 31,			Three months ended June 30,						Six months ended June 30,
In thousands, except per share data	In thousands, except per share data		2022			2021		In thousands, except per share data	2022		2021		2022		2021
Net loss attributable to Gannett			$	(2,967)		$	(142,316)

Net income (loss) attributable to Gannett								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								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								Net income (loss) attributable to Gannett for diluted earnings per share	$	(53,688)	$	22,585	$	(56,655)	$	(127,201)

Basic weighted average shares outstanding	Basic weighted average shares outstanding		136,425			134,075		Basic weighted average shares outstanding	137,132		134,744		136,781		134,411

Effect of dilutive securities:								Effect of dilutive securities:
Restricted stock grants								Restricted stock grants	—		3,350		—		—
2027 Notes								2027 Notes	—		99,419		—		—
Diluted weighted average shares outstanding	Diluted weighted average shares outstanding		136,425			134,075		Diluted weighted average shares outstanding	137,132		237,513		136,781		134,411

Loss per share attributable to Gannett - basic			$	(0.02)		$	(1.06)
Loss per share attributable to Gannett - diluted			$	(0.02)		$	(1.06)
Income (loss) per share attributable to Gannett - basic								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	$	(0.39)	$	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 March 31,		Three months ended June 30,				Six months ended June 30,
In thousands	In thousands		2022		2021	In thousands	2022	2021	2022	2021
Warrants	Warrants		845		845	Warrants	845	845	845	845
Stock options	Stock options		6,068		6,068	Stock options	6,068	6,068	6,068	6,068
Restricted stock grants (a)	Restricted stock grants (a)		12,403		10,811	Restricted stock grants (a)	11,789	46	11,789	10,577
2027 Notes (b)	2027 Notes (b)		97,057		99,419	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 ~~March 31,~~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 ~~loss~~income (loss) per share calculation, representing the difference

~~Table of Contents~~

between the total number of shares that would be convertible at ~~March 31,~~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 ~~$3.4~~$5.4 million and $8.8 million for ~~each of~~ the three and six months ended ~~March 31,~~June 30, 2022, respectively, and ~~2021.~~$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 ~~March 31,~~June 30, 2022 was ~~$48.7~~$41.5 million, which is expected to be recognized over a weighted-average period of ~~2.4~~2.3 years through ~~September~~October 2024.

Equity awards

During the ~~three~~six months ended ~~March 31,~~June 30, 2022, a total of ~~5.7~~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 ~~three~~six months ended ~~March 31,~~June 30, 2022 was ~~$4.63.~~$4.32.

During the ~~three~~six months ended ~~March 31,~~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

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 ~~three~~six months ended ~~March 31,~~June 30, 2022.

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. ~~As of March 31, 2022, there were no repurchases of Common Stock under the Stock Repurchase Program.~~

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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 ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021:


		Three months ended March 31, 2022						Three months ended March 31, 2021							Six months ended June 30, 2022						Six months ended June 30, 2021
In thousands	In thousands	Pension and postretirement plans		Foreign currency translation		Total		Pension and postretirement plans		Foreign currency translation		Total		In thousands	Pension and postretirement plans		Foreign currency translation		Total		Pension and postretirement plans		Foreign currency translation		Total
Beginning balance	Beginning balance	$	50,870	$	9,128	$	59,998	$	40,441	$	9,732	$	50,173	Beginning balance	$	50,870	$	9,128	$	59,998	$	40,441	$	9,732	$	50,173
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	(811)		(7,556)		(8,367)		371		3,037		3,408		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)	Amounts reclassified from accumulated other comprehensive income (loss)(a)(b)	(24)		—		(24)		15		—		15		Amounts reclassified from accumulated other comprehensive income (loss)(a)(b)	(185)		—		(185)		11		—		11
Net current period other comprehensive income (loss), net of taxes	Net current period other comprehensive income (loss), net of taxes	(835)		(7,556)		(8,391)		386		3,037		3,423		Net current period other comprehensive income (loss), net of taxes	9,953		(23,204)		(13,251)		(947)		4,787		3,840
Ending balance	Ending balance	$	50,035	$	1,572	$	51,607	$	40,827	$	12,769	$	53,596	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 $8$64 thousand and $5$4 thousand for the ~~three~~six months ended ~~March 31,~~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.

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NOTE 12 — 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, 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, 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 to evaluate the performance of the segments and allocate resources. Adjusted EBITDA and Adjusted EBITDA margin 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, (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. We define Adjusted EBITDA margin as Adjusted EBITDA divided by total Operating revenues.

Management considers Adjusted EBITDA and Adjusted EBITDA margin to be important metrics to evaluate and compare the ongoing operating performance of our segments on a consistent basis across reporting periods as they eliminate the effect of items that we do not believe are indicative of each segment's core operating performance.

The following tables present our segment information:


		Three months ended March 31, 2022														Three months ended June 30, 2022
In thousands	In thousands	Publishing			Digital Marketing Solutions			Corporate and other		Intersegment Eliminations		Consolidated			In thousands	Gannett Media			Digital Marketing Solutions			Corporate and other		Intersegment Eliminations		Consolidated
Advertising and marketing services - external sales	Advertising and marketing services - external sales	$	265,405		$	109,709		$	—	$	—	$	375,114		Advertising and marketing services - external sales	$	265,596		$	118,013		$	—	$	—	$	383,609
Advertising and marketing services - intersegment sales	Advertising and marketing services - intersegment sales	33,357			—			—		(33,357)		—			Advertising and marketing services - intersegment sales	35,605			—			—		(35,605)		—
Circulation	Circulation	288,602			—			—		—		288,602			Circulation	274,624			—			—		—		274,624
Other	Other	83,055			—			1,306		—		84,361			Other	89,019			—			1,408		—		90,427
Total operating revenues	Total operating revenues	$	670,419		$	109,709		$	1,306	$	(33,357)	$	748,077		Total operating revenues	$	664,844		$	118,013		$	1,408	$	(35,605)	$	748,660

Adjusted EBITDA (non-GAAP basis)	Adjusted EBITDA (non-GAAP basis)	$	68,648		$	11,180		$	(15,657)	$	—	$	64,171		Adjusted EBITDA (non-GAAP basis)	$	50,856		$	14,306		$	(14,311)	$	—	$	50,851
Adjusted EBITDA margin (non-GAAP basis)	Adjusted EBITDA margin (non-GAAP basis)	10.2		%	10.2		%	NM		NM		8.6		%	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 March 31, 2021														Three months ended June 30, 2021
In thousands	In thousands	Publishing			Digital Marketing Solutions			Corporate and other		Intersegment Eliminations		Consolidated			In thousands	Gannett Media			Digital Marketing Solutions			Corporate and other		Intersegment Eliminations		Consolidated
Advertising and marketing services - external sales	Advertising and marketing services - external sales	$	286,454		$	101,376		$	527	$	—	$	388,357		Advertising and marketing services - external sales	$	309,469		$	110,037		$	604	$	—	$	420,110
Advertising and marketing services - intersegment sales	Advertising and marketing services - intersegment sales	27,856			—			—		(27,856)		—			Advertising and marketing services - intersegment sales	32,012			—			—		(32,012)		—
Circulation	Circulation	325,436			—			1		—		325,437			Circulation	310,258			—			1		—		310,259
Other	Other	59,839			905			2,546		—		63,290			Other	72,806			—			1,100		—		73,906
Total operating revenues	Total operating revenues	$	699,585		$	102,281		$	3,074	$	(27,856)	$	777,084		Total operating revenues	$	724,545		$	110,037		$	1,705	$	(32,012)	$	804,275

Adjusted EBITDA (non-GAAP basis)	Adjusted EBITDA (non-GAAP basis)	$	102,208		$	9,172		$	(10,915)	$	—	$	100,465		Adjusted EBITDA (non-GAAP basis)	$	114,189		$	12,529		$	(10,949)	$	—	$	115,769
Adjusted EBITDA margin (non-GAAP basis)	Adjusted EBITDA margin (non-GAAP basis)	14.6		%	9.0		%	NM		NM		12.9		%	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 table below shows the reconciliation of Net ~~loss~~income (loss) attributable to Gannett to Adjusted EBITDA and Net ~~loss~~income (loss) attributable to Gannett margin to Adjusted EBITDA margin:


		Three months ended March 31,				Three months ended June 30,								Six months ended June 30,
In thousands	In thousands		2022				2021			In thousands	2022			2021			2022			2021
Net loss attributable to Gannett			$	(2,967)			$	(142,316)
Benefit for income taxes			(7,607)				(9,109)
Net income (loss) attributable to Gannett										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		26,006				39,503			Interest expense	26,084			35,264			52,090			74,767
Loss on early extinguishment of debt	Loss on early extinguishment of debt		2,743				19,401			Loss on early extinguishment of debt	749			2,834			3,492			22,235
Non-operating pension income	Non-operating pension income		(18,213)				(23,878)			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		47,783				58,103			Depreciation and amortization	49,530			48,242			97,313			106,345
Integration and reorganization costs	Integration and reorganization costs		11,398				13,404			Integration and reorganization costs	15,745			8,444			27,143			21,848
Other operating expenses	Other operating expenses		1,102				10,576			Other operating expenses	314			774			1,416			11,350
Asset impairments	Asset impairments		854				833			Asset impairments	85			—			939			833

(Gain) loss on sale or disposal of assets, net			(2,804)				4,745
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		3,393				3,423			Share-based compensation expense	5,385			5,779			8,778			9,202
Other Items	Other Items		2,483				(820)			Other Items	2,277			237			4,760			(583)
Adjusted EBITDA (non-GAAP basis)	Adjusted EBITDA (non-GAAP basis)		$	64,171			$	100,465		Adjusted EBITDA (non-GAAP basis)	$	50,851		$	115,769		$	115,022		$	216,234
Net loss attributable to Gannett margin			(0.4)		%		(18.3)		%
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)		8.6		%		12.9		%	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 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.

NOTE 13 — 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.

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


		March 31,					June 30,
In thousands	In thousands	2022		2021		In thousands	2022		2021
Cash and cash equivalents	Cash and cash equivalents	$	152,191	$	163,505	Cash and cash equivalents	$	87,331	$	158,563
Restricted cash included in prepaid expenses and other current assets	Restricted cash included in prepaid expenses and other current assets	1,105		8,999		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)	11,722		23,669		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	$	165,018	$	196,173	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:


		Three months ended March 31,					Six months ended June 30,
In thousands	In thousands	2022		2021		In thousands	2022		2021
Cash paid for taxes, net of refunds	Cash paid for taxes, net of refunds	$	846	$	(997)	Cash paid for taxes, net of refunds	$	2,396	$	(8,703)
Cash paid for interest	Cash paid for interest	7,531		13,528		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	$	1,160	$	627	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	March 31, 2022		December 31, 2021		In thousands	June 30, 2022		December 31, 2021
Accounts payable	Accounts payable	$	138,045	$	157,257	Accounts payable	$	138,923	$	157,257
Compensation	Compensation	106,611		107,585		Compensation	99,152		107,585
Taxes (primarily property and sales taxes)		19,887		26,042
Taxes (primarily property, sales, and payroll taxes)						Taxes (primarily property, sales, and payroll taxes)	16,969		26,042
Benefits	Benefits	21,052		21,056		Benefits	19,992		21,056
Interest	Interest	20,193		7,577		Interest	6,118		7,577
Other	Other	40,580		37,497		Other	39,545		37,497
Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	$	346,368	$	357,014	Accounts payable and accrued liabilities	$	320,699	$	357,014

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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, 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, 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. ~~Gannett operates~~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. We expect the execution of this strategy to 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 45 states in the U.S., and Newsquest, a wholly-owned subsidiary operating in the United Kingdom ("U.K.") with more than 150 local media brands. We also operate a digital marketing solutions company, branded LOCALiQ, which provides a cloud-based platform of products to enable small and medium-sized businesses ("SMBs") 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.

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 seek to optimize our print operations to efficiently manage for this declining print audience. We are focused on converting a growing digitally-focused audience into digital-only subscribers to our publications.

•SMBs are facing an increasingly complex marketing environment and need to create digital presence to capture audience online. We offer a broad suite of 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,~~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, ~~continues~~we have experienced and expect to ~~negatively~~continue to

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experience a negative impact on our ~~ability~~business and results of operations in the near-term, including lower revenues and attendance associated with events as compared to ~~secure necessary permitting for in-person events and consumers' desire to attend or participate in live events.~~pre-COVID-19 pandemic levels.

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

•Inflationary ~~pressures, in particular energy~~prices across a number of categories such as labor, fuel, delivery costs, newsprint, ink, and ~~fuel,~~printing plates are ~~increasing the~~having a negative impact on our overall cost ~~of newsprint.~~structure.

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Recent Developments

Stock Repurchase Program

On February 1, 2022, our Board of Directors authorized the repurchase of up to $100 million (the "Stock Repurchase Program") of our common stock, par value $0.01 per share ("Common Stock"). 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 shares of Common Stock, trading volume, capital availability, our 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, 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 ~~Gannett~~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 and will continue to affect period-over-period comparisons for future results:

Integration and reorganization costs

For the three and six months ended ~~March 31,~~June 30, 2022, we incurred Integration and reorganization costs of ~~$11.4 million.~~$15.7 million and $27.1 million, respectively. Of the total costs incurred, ~~$5.4~~$11.6 million and $17.0 million, respectively, were related to severance activities and ~~$6.0~~$4.1 million and $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 ~~March 31,~~June 30, 2021, we incurred Integration and reorganization costs of ~~$13.4 million.~~$8.4 million and $21.8 million, respectively. Of the total costs incurred, ~~$7.1~~$1.1 million and $8.2 million, respectively, were related to severance activities and ~~$6.3~~$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 months ended ~~March 31,~~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 ~~eight~~ten printing operations, respectively, as part of the synergy and ongoing cost reduction programs. As a result, we recognized accelerated depreciation of ~~$4.7~~$1.1 million and ~~$9.2~~$10.3 million during the three and six months ended ~~March 31, 2022 and~~June 30, 2021, respectively.

Foreign currency

Our U.K. ~~publishing~~media operations are conducted through our Newsquest subsidiary. In addition, we have foreign operations in regions such as Canada, 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. Currency translation fluctuations may impact revenue, expense, and operating income results for our international operations.

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Outlook for 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 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 45 states in the U.S., and Newsquest in the U.K. with more than 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. As part of our digital subscriber growth strategy, we expect to continue to develop and launch new digital subscription offerings tailored to specific 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 are now 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 plan to use data and insights to inform new and dynamic advertising products, 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 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 operational focus. We will continue to evolve our business model, evaluating our print 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 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. ~~Through~~For the ~~end of the first quarter of~~three and six months ended June 30, 2022, USA TODAY NETWORK Ventures hosted 2562 and 87 events, respectively, and revenues increased ~~83%~~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 released for the first time in the first quarter of 2021. We believe aligning our culture around empowering our communities to thrive and putting our customers at the center of everything we do will provide the foundation for our broader strategic efforts.

Impacts of the COVID-19 pandemic

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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.

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 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 residents and 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.

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RESULTS OF OPERATIONS

Consolidated Summary

A summary of our consolidated results is presented below:


		Three months ended March 31,			Three months ended June 30,											Six months ended June 30,
In thousands, except per share amounts	In thousands, except per share amounts					Change				In thousands, except per share amounts						Change								Change
			2022			2021		$			%		In thousands, except per share amounts	2022		2021		$		%		2022		2021		$		%
Operating revenues:	Operating revenues:
Local and national print	Local and national print		$	102,744		$	117,399	(14,655)			(12)	%	Local and national print	$	105,721	$	127,600	(21,879)		(17)	%	$	208,465	$	244,999	(36,534)		(15)	%
Classified print	Classified print		70,774			75,797		(5,023)			(7)	%	Classified print	67,732		73,325		(5,593)		(8)	%	138,506		149,122		(10,616)		(7)	%
Print advertising	Print advertising		173,518			193,196		(19,678)			(10)	%	Print advertising	173,453		200,925		(27,472)		(14)	%	346,971		394,121		(47,150)		(12)	%

Digital media	Digital media		78,771			80,488		(1,717)			(2)	%	Digital media	77,259		94,991		(17,732)		(19)	%	156,030		175,479		(19,449)		(11)	%
Digital marketing services (a)	Digital marketing services (a)		108,991			101,464		7,527			7	%	Digital marketing services (a)	117,465		111,392		6,073		5	%	226,456		212,856		13,600		6	%
Digital classified	Digital classified		13,834			13,209		625			5	%	Digital classified	15,432		12,802		2,630		21	%	29,266		26,011		3,255		13	%
Digital advertising and marketing services	Digital advertising and marketing services		201,596			195,161		6,435			3	%	Digital advertising and marketing services	210,156		219,185		(9,029)		(4)	%	411,752		414,346		(2,594)		(1)	%

Advertising and marketing services	Advertising and marketing services		375,114			388,357		(13,243)			(3)	%	Advertising and marketing services	383,609		420,110		(36,501)		(9)	%	758,723		808,467		(49,744)		(6)	%

Print circulation	Print circulation		258,476			302,258		(43,782)			(14)	%	Print circulation	242,151		286,253		(44,102)		(15)	%	500,627		588,511		(87,884)		(15)	%
Digital-only circulation	Digital-only circulation		30,126			23,179		6,947			30	%	Digital-only circulation	32,473		24,006		8,467		35	%	62,599		47,185		15,414		33	%
Circulation	Circulation		288,602			325,437		(36,835)			(11)	%	Circulation	274,624		310,259		(35,635)		(11)	%	563,226		635,696		(72,470)		(11)	%

Other	Other		84,361			63,290		21,071			33	%	Other	90,427		73,906		16,521		22	%	174,788		137,196		37,592		27	%

Total operating revenues	Total operating revenues		748,077			777,084		(29,007)			(4)	%	Total operating revenues	748,660		804,275		(55,615)		(7)	%	1,496,737		1,581,359		(84,622)		(5)	%

Total operating expenses (a)	Total operating expenses (a)		750,055			769,143		(19,088)			(2)	%	Total operating expenses (a)	769,884		758,830		11,054		1	%	1,519,939		1,527,973		(8,034)		(1)	%
Operating income (loss)	Operating income (loss)		(1,978)			7,941		(9,919)			***		Operating income (loss)	(21,224)		45,445		(66,669)		***		(23,202)		53,386		(76,588)		***
Non-operating expenses	Non-operating expenses		8,731			159,751		(151,020)			(95)	%	Non-operating expenses	10,318		13,044		(2,726)		(21)	%	19,049		172,795		(153,746)		(89)	%
Loss before income taxes			(10,709)			(151,810)		141,101			(93)	%
Benefit for income taxes			(7,607)			(9,109)		1,502			(16)	%
Net loss			(3,102)			(142,701)		139,599			(98)	%
Income (loss) before income taxes													Income (loss) before income taxes	(31,542)		32,401		(63,943)		***		(42,251)		(119,409)		77,158		(65)	%
Provision for income taxes													Provision for income taxes	22,158		17,692		4,466		25	%	14,551		8,583		5,968		70	%
Net income (loss)													Net income (loss)	(53,700)		14,709		(68,409)		***		(56,802)		(127,992)		71,190		(56)	%
Net loss attributable to noncontrolling interests	Net loss attributable to noncontrolling interests		(135)			(385)		250			(65)	%	Net loss attributable to noncontrolling interests	(12)		(406)		394		(97)	%	(147)		(791)		644		(81)	%
Net loss attributable to Gannett			$	(2,967)		$	(142,316)	$	139,349		(98)	%
Net income (loss) attributable to Gannett													Net income (loss) attributable to Gannett	$	(53,688)	$	15,115	$	(68,803)	***		$	(56,655)	$	(127,201)	$	70,546	(55)	%

Loss per share attributable to Gannett - basic			$	(0.02)		$	(1.06)	$	1.04		(98)	%
Loss per share attributable to Gannett - diluted			$	(0.02)		$	(1.06)	$	1.04		(98)	%
Income (loss) per share attributable to Gannett - basic													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													Income (loss) per share attributable to Gannett - diluted	$	(0.39)	$	0.10	$	(0.49)	***		$	(0.41)	$	(0.95)	$	0.54	(57)	%

(a) ~~For the three months ended March 31, 2022 and 2021, amounts~~Amounts are net of intersegment eliminations of ~~$33.4~~$35.6 million and ~~$27.9~~$32.0 million for the 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

Advertising and marketing services revenues are generated by both the ~~Publishing~~Gannett Media and ~~Digital Marketing Solutions ("DMS")~~DMS segments. At the ~~Publishing~~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 ~~Publishing~~Gannett Media segment, are derived from home delivery, digital distribution and single copy sales of our publications.

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Other revenues, which are primarily generated at the ~~Publishing~~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, and to a lesser extent generated at our Corporate and other category, mainly driven by sales of cloud-based products with expert guidance and support.

Operating expenses

Operating expenses consist primarily of the following:

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

•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

•Other operating expenses, including third-party debt expenses as well as acquisition-related costs.

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

Non-operating (income) expense

Interest expense: For the three and six months ended ~~March 31,~~June 30, 2022, Interest expense was ~~$26.0~~$26.1 million and $52.1 million, respectively, compared to ~~$39.5~~$35.3 million and $74.8 million for the three and six months ended ~~March 31, 2021.~~June 30, 2021, respectively. The decrease in interest expense for the three and six months ended ~~March 31,~~June 30, 2022 compared to the same ~~period~~periods in 2021 was mainly due to a lower debt balance and the impact of lower interest rates on our outstanding fixed-rate debt. The impact of the increase in interest rates on our five-year senior secured term loan facility in an aggregate principal amount of $516.0 million (the "New Senior Secured Term Loan") was offset by a lower balance due to payments of quarterly amortization and required prepayments.

Loss on early extinguishment of debt: For the three and six months ended ~~March 31,~~June 30, 2022, Loss on early extinguishment of debt was ~~$2.7~~$0.7 million and $3.5 million, respectively, compared to ~~$19.4~~$2.8 million and $22.2 million for the three and six months ended ~~March 31, 2021.~~June 30, 2021, respectively. The decrease in the loss on early extinguishment of debt for the three and six months ended ~~March 31,~~June 30, 2022 compared to the same periods in 2021 was due to a lower amount of early prepayments made in the second quarter of 2022 compared to the same period in ~~2021 was mainly due to~~the prior year on our term loan facilities, and for the six months ended June 30, 2022 the decrease also reflected the payoff of 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 six months ended ~~March 31,~~June 30, 2022, Non-operating pension income was $18.2 million and $36.4 million, respectively, compared to $23.9 million and $47.8 million for the three and six months ended ~~March 31, 2021.~~June 30, 2021, respectively. The decrease in non-operating pension income for the three and six months ended ~~March 31,~~June 30, 2022 compared to the same ~~period~~periods in 2021 was primarily due to a decrease in the expected return on plan assets held by the Gannett Retirement Plan (the "GR Plan"), mainly driven by a more conservative asset allocation.

Loss on convertible notes derivative: For the three and six months ended ~~March 31,~~June 30, 2022, we had no Loss on convertible notes derivative. For the three months ended ~~March 31,~~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, reflecting the increase in the fair value of the derivative liability as a result of the increase in 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 six months ended ~~March 31,~~June 30, 2022, we recorded Other non-operating

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expense, net of $1.6 million and Other non-operating income, net ~~was $1.8~~of $0.2 million, respectively, compared to ~~$1.9~~Other non-operating income, net of $1.1 million and $3.0 million for the three and six months ended ~~March 31, 2021.~~June 30, 2021, respectively. The decrease in Other non-operating expense (income), net for the three and six months ended June 30, 2022 compared to the same periods in 2021 was primarily due to foreign currency losses.

~~Benefit~~Provision for income taxes

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


		Three months ended March 31,				Three months ended June 30,								Six months ended June 30,
In thousands	In thousands		2022				2021			In thousands	2022			2021			2022			2021
Loss before income taxes			$	(10,709)			$	(151,810)
Benefit for income taxes			(7,607)				(9,109)
Income (loss) before income taxes										Income (loss) before income taxes	$	(31,542)		$	32,401		$	(42,251)		$	(119,409)
Provision for income taxes										Provision for income taxes	22,158			17,692			14,551			8,583
Effective tax rate	Effective tax rate		71.0		%		6.0		%	Effective tax rate	(70.3)		%	54.6		%	(34.4)		%	(7.2)		%

~~Table~~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 ~~Contents~~

any significant or unusual items, discrete events, or changes in tax law. The ~~benefit~~provision for income taxes for the three months ended ~~March 31,~~June 30, 2022 was mainly driven by ~~pre-tax loss and~~ the ~~current year tax benefit from the release of tax reserves, partially offset by the creation of~~ valuation allowances on non-deductible interest expense ~~carryforwards.~~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 ~~41.25%~~negative 43.30%. ~~The estimated annual effective tax rate is based on the projected tax expense for the full year.~~ The estimated annual effective tax rate is principally impacted by the ~~creation of~~ valuation allowances on non-deductible interest expense carryforwards, pre-tax book loss benefit, the global intangible low taxed income inclusion, ~~from our wholly-owned U.K. subsidiary,~~ and state and foreign income tax expense.

The provision for income taxes for the three months ended ~~March 31,~~June 30, 2021 was mainly driven by pre-tax income and was impacted by the ~~pre-tax net loss generated during~~creation of valuation allowances on non-deductible interest expense carryforwards in combination with the ~~quarter and~~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 ~~43.4%~~49.6%. The estimated annual effective tax rate is based on ~~the~~a projected tax expense for the full year.

The provision for income taxes for the six months ended June 30, 2021 was mainly impacted by the pre-tax net loss generated during the first quarter of 2021. The tax ~~benefit for the three months ended March 31, 2021 is lower than the 21% statutory federal rate due to the impact of~~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.

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

For the three months ended ~~March 31,~~June 30, 2022, Net loss attributable to Gannett and diluted loss per share attributable to Gannett were ~~$3.0~~$53.7 million and ~~$0.02,~~$0.39, respectively, compared to ~~$142.3~~Net income attributable to Gannett and diluted income per share attributable to Gannett of $15.1 million and ~~$1.06,~~$0.10, respectively, for the three months ended ~~March 31,~~June 30, 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 six months ended ~~March 31,~~June 30, 2022 compared to the same period in the prior year reflects the various items discussed above.

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Segment Results

~~Publishing~~Gannett Media segment

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


		Three months ended March 31,			Three months ended June 30,										Six months ended June 30,
						Change									Change								Change
In thousands	In thousands		2022			2021		$		%		In thousands	2022		2021		$		%		2022		2021		$		%
Operating revenues:	Operating revenues:											Operating revenues:
Advertising and marketing services	Advertising and marketing services		$	298,762		$	314,310	$	(15,548)	(5)	%	Advertising and marketing services	$	301,201	$	341,481	$	(40,280)	(12)	%	$	599,963	$	655,791	$	(55,828)	(9)	%
Circulation	Circulation		288,602			325,436		(36,834)		(11)	%	Circulation	274,624		310,258		(35,634)		(11)	%	563,226		635,694		(72,468)		(11)	%
Other	Other		83,055			59,839		23,216		39	%	Other	89,019		72,806		16,213		22	%	172,074		132,645		39,429		30	%
Total operating revenues	Total operating revenues		670,419			699,585		(29,166)		(4)	%	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		426,116			431,801		(5,685)		(1)	%	Operating costs	431,075		426,216		4,859		1	%	857,191		858,017		(826)		—	%
Selling, general and administrative expenses	Selling, general and administrative expenses		176,932			166,203		10,729		6	%	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		37,431			46,387		(8,956)		(19)	%	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		5,721			7,326		(1,605)		(22)	%	Integration and reorganization costs	11,041		(197)		11,238		***		16,762		7,129		9,633		***
Asset impairments	Asset impairments		854			833		21		3	%	Asset impairments	85		—		85		***		939		833		106		13	%

(Gain) loss on sale or disposal of assets, net			(2,968)			4,680		(7,648)		***
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		741			—		741		***		Other operating expenses	34		—		34		***		775		—		775		***
Total operating expenses	Total operating expenses		644,827			657,230		(12,403)		(2)	%	Total operating expenses	664,878		654,255		10,589		2	%	1,309,705		1,311,485		(1,780)		—	%
Operating income			$	25,592		$	42,355	$	(16,763)	(40)	%
Operating income (loss)												Operating income (loss)	$	(34)	$	70,290	$	(70,290)	***		$	25,558	$	112,645	$	(87,087)	(77)	%

*** 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 March 31,			Three months ended June 30,										Six months ended June 30,
						Change									Change								Change
In thousands	In thousands		2022			2021		$		%		In thousands	2022		2021		$		%		2022		2021		$		%
Local and national print	Local and national print		$	102,744		$	117,399	$	(14,655)	(12)	%	Local and national print	$	105,721	$	127,600	$	(21,879)	(17)	%	$	208,465	$	244,999	$	(36,534)	(15)	%
Classified print	Classified print		70,774			75,797		(5,023)		(7)	%	Classified print	67,732		73,325		(5,593)		(8)	%	138,506		149,122		(10,616)		(7)	%
Print advertising	Print advertising		173,518			193,196		(19,678)		(10)	%	Print advertising	173,453		200,925		(27,472)		(14)	%	346,971		394,121		(47,150)		(12)	%

Digital media	Digital media		78,771			79,557		(786)		(1)	%	Digital media	77,259		94,549		(17,290)		(18)	%	156,030		174,106		(18,076)		(10)	%
Digital marketing services	Digital marketing services		32,639			28,353		4,286		15	%	Digital marketing services	35,057		33,221		1,836		6	%	67,696		61,574		6,122		10	%
Digital classified	Digital classified		13,834			13,204		630		5	%	Digital classified	15,432		12,786		2,646		21	%	29,266		25,990		3,276		13	%
Digital advertising and marketing services	Digital advertising and marketing services		125,244			121,114		4,130		3	%	Digital advertising and marketing services	127,748		140,556		(12,808)		(9)	%	252,992		261,670		(8,678)		(3)	%

Advertising and marketing services	Advertising and marketing services		298,762			314,310		(15,548)		(5)	%	Advertising and marketing services	301,201		341,481		(40,280)		(12)	%	599,963		655,791		(55,828)		(9)	%

Print circulation	Print circulation		258,476			302,257		(43,781)		(14)	%	Print circulation	242,151		286,252		(44,101)		(15)	%	500,627		588,509		(87,882)		(15)	%
Digital-only circulation	Digital-only circulation		30,126			23,179		6,947		30	%	Digital-only circulation	32,473		24,006		8,467		35	%	62,599		47,185		15,414		33	%
Circulation	Circulation		288,602			325,436		(36,834)		(11)	%	Circulation	274,624		310,258		(35,634)		(11)	%	563,226		635,694		(72,468)		(11)	%

Other	Other		83,055			59,839		23,216		39	%	Other	89,019		72,806		16,213		22	%	172,074		132,645		39,429		30	%

Total operating revenues	Total operating revenues		$	670,419		$	699,585	$	(29,166)	(4)	%	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 six months ended ~~March 31,~~June 30, 2022 compared to the three and six months ended ~~March 31,~~June 30, 2021 was driven by secular industry trends impacting all categories. For the three and six

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months ended ~~March 31,~~June 30, 2022, Local and national print advertising revenues decreased compared to the three and six months ended ~~March 31,~~June 30, 2021, primarily due to a decrease in advertiser inserts as well as the absence of ~~$5.7~~$9.3 million and $15.0 million of revenues infor the ~~first quarter of~~three and six months ended June 30, 2022, respectively, associated with both businesses divested and non-core products which were sunset in 2022 and 2021. For the three and six months ended ~~March 31,~~June 30, 2022, Classified print advertising revenues decreased compared to the three and six months ended ~~March 31,~~June 30, 2021, due to lower spend on classified advertisements, including obituaries, real estate, and automotive.

~~The increase in Digital marketing services revenues for~~For the three and six months ended ~~March 31,~~June 30, 2022, Digital media revenues decreased compared to the three and six months ended ~~March 31,~~June 30, 2021, was due to an increase client counts as well as an increase in client spend. The increase in Digital classified revenues for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 was due to higher client spend, mainly driven by automotive and employment advertisements. These increases were partially offset by a decrease in Digital media revenues for the three months ended March 31, 2022 compared to the three months ended March 31, 2021, due to 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 ~~March 31,~~June 30, 2022, Print circulation revenues decreased compared to the three and six months ended ~~March 31,~~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. For~~industry and increasing sensitivity from customers related to price increases and product changes. In addition, during 2022, and specifically during the three months ended ~~March 31,~~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 ~~March 31,~~June 30, 2021, driven by an increase of ~~44%~~35% in paid digital-only subscribers, including those subscribers on introductory subscription offers, to approximately ~~1.75~~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 ~~partially~~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 ~~March 31,~~June 30, 2022, Other revenues increased compared to the three and six months ended ~~March 31,~~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 ~~increased~~higher attendance as compared to the same ~~period~~periods in the prior year, where our ability to host in-person events was more significantly impacted by the COVID-19 pandemic.

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Operating expenses

For the three and six months ended ~~March 31,~~June 30, 2022, Operating costs increased $4.9 million and decreased ~~$5.7~~$0.8 million, respectively, compared to the three and six months ended ~~March 31,~~June 30, 2021. The following table provides the breakout of ~~the decrease in~~ Operating costs:


		Three months ended March 31,			Three months ended June 30,										Six months ended June 30,
						Change									Change								Change
In thousands	In thousands		2022			2021		$		%		In thousands	2022		2021		$		%		2022		2021		$		%
Newsprint and ink	Newsprint and ink		$	34,632		$	28,271	$	6,361	23	%	Newsprint and ink	$	37,075	$	23,713	$	13,362	56	%	$	71,707	$	51,984	$	19,723	38	%
Distribution	Distribution		102,398			96,105		6,293		7	%	Distribution	99,720		112,446		(12,726)		(11)	%	202,118		208,551		(6,433)		(3)	%
Compensation and benefits	Compensation and benefits		140,129			147,118		(6,989)		(5)	%	Compensation and benefits	140,430		137,775		2,655		2	%	280,559		284,893		(4,334)		(2)	%
Outside services	Outside services		82,784			68,764		14,020		20	%	Outside services	89,113		88,918		195		—	%	171,897		157,682		14,215		9	%
Other	Other		66,173			91,543		(25,370)		(28)	%	Other	64,737		63,364		1,373		2	%	130,910		154,907		(23,997)		(15)	%
Total operating costs	Total operating costs		$	426,116		$	431,801	$	(5,685)	(1)	%	Total operating costs	$	431,075	$	426,216	$	4,859	1	%	$	857,191	$	858,017	$	(826)	—	%

For the three and six months ended ~~March 31,~~June 30, 2022, Newsprint and ink costs increased compared to the three and six months ended ~~March 31,~~June 30, 2021, primarily due to an increase in 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 decline in volume of home delivery and single copy sales.

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For the three and six months ended ~~March 31,~~June 30, 2022, Distribution costs ~~increased~~decreased compared to the three and six months ended ~~March 31,~~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 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 ~~print and~~ delivery activity and an increase in third party distribution ~~costs, partially offset by lower delivery and postage costs, primarily related to the decline in volume of home delivery and single copy sales.~~costs.

For the three months ended ~~March 31,~~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 ~~three~~six months ended ~~March 31,~~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 ~~March 31,~~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, ~~increased~~remained relatively flat compared to the three months ended ~~March 31,~~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.~~events, mainly related to the number and mix of live versus virtual events compared to the prior year.

For the three months ended ~~March 31,~~June 30, 2022, Other costs, which primarily include travel and facility and equipment costs, ~~decreased~~increased compared to the three months ended ~~March 31,~~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.~~initiatives 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 increases in business travel and lease costs.

For the three and six months ended ~~March 31,~~June 30, 2022, Selling, general and administrative expenses decreased $2.2 million and increased ~~by $10.7~~$8.5 million, respectively, compared to the three and six months ended ~~March 31,~~June 30, 2021. The following table provides the breakout of ~~the increase in~~ Selling, general and administrative expenses:

Three months ended March 31,
Change
In thousands 2022 2021 $ %
Compensation and benefits $ 86,866 $ 89,710 $ (2,844) (3) %
Outside services and other 90,066 76,493 13,573 18 %
Total Selling, general and administrative expenses $ 176,932 $ 166,203 $ 10,729 6 %


	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 ~~March 31,~~June 30, 2022, Compensation and benefits costs decreased compared to the three and six months ended ~~March 31,~~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 ~~March 31,~~June 30, 2022, Outside services and other costs, which include services fulfilled by third parties, increased compared to the three and six months ended ~~March 31,~~June 30, 2021, due to ~~an increase in marketing and acquisition costs associated with growing subscribers, as well as~~ higher professional services costs associated with advertising operations and client ~~success.~~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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For the three months ended March 31, 2022, Depreciation and amortization expenses decreased compared to the three months ended March 31, 2021, reflecting the impact of the closure and consolidation of print facilities, as well as lower accelerated depreciation due to a decrease in the number of print facilities closed in the first quarter of 2022 compared to the same period in the prior year.

For the three and six months ended ~~March 31,~~June 30, 2022, Integration and reorganization costs ~~decreased~~increased compared to the three and six months ended ~~March 31,~~June 30, 2021, mainly due to ~~a decrease~~an increase in severance costs of ~~$1.6~~$9.2 million and $7.6 million, respectively, driven by ~~a decline in facility consolidation activities compared to the same period in the prior year.~~ongoing integration and restructuring activities.

For the three and six months ended ~~March 31,~~June 30, 2022, the ~~increase~~change in the ~~Gain~~Loss (gain) on sale or disposal of assets, net compared to the three and six months ended ~~March 31,~~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 ~~period~~periods compared to net losses in the same ~~period~~periods in the prior year.

~~Publishing~~Gannett Media segment Adjusted EBITDA


		Three months ended March 31,				Three months ended June 30,												Six months ended June 30,
							Change											Change										Change
In thousands	In thousands		2022				2021			$		%		In thousands	2022			2021			$		%		2022			2021			$		%
Net income attributable to Gannett	Net income attributable to Gannett		$	42,814			$	66,224		$	(23,410)	(35)	%	Net income attributable to Gannett	$	19,145		$	96,431		$	(77,286)	(80)	%	$	61,959		$	162,655		$	(100,696)	(62)	%

Non-operating pension income	Non-operating pension income		(18,213)				(23,878)			5,665		(24)	%	Non-operating pension income	(18,160)			(23,906)			5,746		(24)	%	(36,373)			(47,784)			11,411		(24)	%
Depreciation and amortization	Depreciation and amortization		37,431				46,387			(8,956)		(19)	%	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		5,721				7,326			(1,605)		(22)	%	Integration and reorganization costs	11,041			(197)			11,238		***		16,762			7,129			9,633		***
Other operating expenses	Other operating expenses		741				—			741		***		Other operating expenses	34			—			34		***		775			—			775		***
Asset impairments	Asset impairments		854				833			21		3	%	Asset impairments	85			—			85		***		939			833			106		13	%

(Gain) loss on sale or disposal of assets, net			(2,968)				4,680			(7,648)		***
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 items	Other items		2,268				636			1,632		***		Other items	(200)			(445)			245		(55)	%	2,068			191			1,877		***
Adjusted EBITDA (non-GAAP basis)	Adjusted EBITDA (non-GAAP basis)		$	68,648			$	102,208		$	(33,560)	(33)	%	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	Net income attributable to Gannett margin		6.4		%		9.5		%					Net income attributable to Gannett margin	2.9		%	13.3		%					4.6		%	11.4		%
Adjusted EBITDA margin (non-GAAP basis)(a)(b)	Adjusted EBITDA margin (non-GAAP basis)(a)(b)		10.2		%		14.6		%					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 ~~March 31,~~June 30, 2022, the decrease in Adjusted EBITDA compared to the three and six months ended ~~March 31,~~June 30, 2021 was primarily attributable to the changes discussed above.

Digital Marketing Solutions segment

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


		Three months ended March 31,			Three months ended June 30,										Six months ended June 30,
						Change									Change								Change
In thousands	In thousands		2022			2021		$		%		In thousands	2022		2021		$		%		2022		2021		$		%
Operating revenues:	Operating revenues:											Operating revenues:
Advertising and marketing services	Advertising and marketing services		$	109,709		$	101,376	$	8,333	8	%	Advertising and marketing services	$	118,013	$	110,037	$	7,976	7	%	$	227,722	$	211,413	$	16,309	8	%
Other	Other		—			905		(905)		(100)	%	Other	—		—		—		—	%	—		905		(905)		(100)	%
Total operating revenues	Total operating revenues		109,709			102,281		7,428		7	%	Total operating revenues	118,013		110,037		7,976		7	%	227,722		212,318		15,404		7	%
Operating expenses:	Operating expenses:											Operating expenses:
Operating costs	Operating costs		76,331			69,278		7,053		10	%	Operating costs	81,110		74,429		6,681		9	%	157,441		143,707		13,734		10	%
Selling, general and administrative expenses	Selling, general and administrative expenses		22,198			23,831		(1,633)		(7)	%	Selling, general and administrative expenses	22,597		23,079		(482)		(2)	%	44,795		46,910		(2,115)		(5)	%
Depreciation and amortization	Depreciation and amortization		6,458			7,829		(1,371)		(18)	%	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		151			166		(15)		(9)	%	Integration and reorganization costs	293		204		89		44	%	444		370		74		20	%

Loss on sale or disposal of assets, net			157			—		157		***
Loss (gain) on sale or disposal of assets, net												Loss (gain) on sale or disposal of assets, net	19		(527)		546		***		176		(527)		703		***
Total operating expenses	Total operating expenses		105,295			101,104		4,191		4	%	Total operating expenses	110,848		105,035		5,813		6	%	216,143		206,139		10,004		5	%
Operating income	Operating income		$	4,414		$	1,177	$	3,237	***		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 ~~March 31,~~June 30, 2022, Advertising and marketing services revenues increased compared to the three and six months ended ~~March 31,~~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 ~~March 31,~~June 30, 2022, Operating costs increased ~~$7.1~~$6.7 million and $13.7 million compared to the three and six months ended ~~March 31,~~June 30, 2021. The following table provides the breakout of ~~the increase in~~ Operating costs:


		Three months ended March 31,			Three months ended June 30,										Six months ended June 30,
						Change									Change								Change
In thousands	In thousands		2022			2021		$		%		In thousands	2022		2021		$		%		2022		2021		$		%
Outside services	Outside services		$	66,227		$	58,691	$	7,536	13	%	Outside services	$	71,038	$	64,400	$	6,638	10	%	$	137,265	$	123,091	$	14,174	12	%
Compensation and benefits	Compensation and benefits		7,875			8,135		(260)		(3)	%	Compensation and benefits	7,928		7,680		248		3	%	15,803		15,815		(12)		—	%
Other	Other		2,229			2,452		(223)		(9)	%	Other	2,144		2,349		(205)		(9)	%	4,373		4,801		(428)		(9)	%
Total operating costs	Total operating costs		$	76,331		$	69,278	$	7,053	10	%	Total operating costs	$	81,110	$	74,429	$	6,681	9	%	$	157,441	$	143,707	$	13,734	10	%

For the three and six months ended ~~March 31,~~June 30, 2022, Outside services costs, which includes professional services fulfilled by third parties, media fees and other digital costs, paid search and ad serving and feature services, increased compared to the three and six months ended ~~March 31,~~June 30, 2021, due to an increase in expenses associated with third-party media fees, driven by a corresponding increase in revenues.

For the three and six months ended ~~March 31,~~June 30, 2022, Selling, general and administrative expenses decreased ~~$1.6~~$0.5 million and $2.1 million compared to the three and six months ended ~~March 31,~~June 30, 2021. The following table provides the breakout of ~~the decrease in~~ Selling, general and administrative expenses:


		Three months ended March 31,			Three months ended June 30,										Six months ended June 30,
						Change									Change								Change
In thousands	In thousands		2022			2021		$		%		In thousands	2022		2021		$		%		2022		2021		$		%
Compensation and benefits	Compensation and benefits		$	18,598		$	18,062	$	536	3	%	Compensation and benefits	$	18,835	$	17,175	$	1,660	10	%	$	37,433	$	35,237	$	2,196	6	%
Outside services and other	Outside services and other		3,600			5,769		(2,169)		(38)	%	Outside services and other	3,762		5,904		(2,142)		(36)	%	7,362		11,673		(4,311)		(37)	%
Total Selling, general and administrative expenses	Total Selling, general and administrative expenses		$	22,198		$	23,831	$	(1,633)	(7)	%	Total Selling, general and administrative expenses	$	22,597	$	23,079	$	(482)	(2)	%	$	44,795	$	46,910	$	(2,115)	(5)	%

For the three and six months ended ~~March 31,~~June 30, 2022, Compensation and benefits costs increased compared to the three and six months ended June 30, 2021, due to an increase in headcount and incentive pay, driven by a corresponding increase in revenues.

For the three and six months ended June 30, 2022, Outside services and other costs decreased compared to the three and six months ended ~~March 31,~~June 30, 2021, due to a decrease in various miscellaneous expenses, including lower software costs and lower bad debt expense.

For the three and six months ended ~~March 31,~~June 30, 2022, Depreciation and amortization expense decreased compared to the three and six months ended ~~March 31,~~June 30, 2021, primarily due to the impact of capitalized software fully amortized in the third quarter of 2021.

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~~Digital Marketing Solutions~~DMS segment Adjusted EBITDA


		Three months ended March 31,				Three months ended June 30,												Six months ended June 30,
							Change											Change										Change
In thousands	In thousands		2022				2021			$		%		In thousands	2022			2021			$		%		2022			2021			$		%
Net income attributable to Gannett	Net income attributable to Gannett		$	5,257			$	1,081		$	4,176	***		Net income attributable to Gannett	$	4,306		$	4,904		$	(598)	(12)	%	$	9,563		$	5,985		$	3,578	60	%
Depreciation and amortization	Depreciation and amortization		6,458				7,829			(1,371)		(18)	%	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		151				166			(15)		(9)	%	Integration and reorganization costs	293			204			89		44	%	444			370			74		20	%

Loss on sale or disposal of assets, net			157				—			157		***
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		(843)				96			(939)		***		Other items	2,859			98			2,761		***		2,016			194			1,822		***
Adjusted EBITDA (non-GAAP basis)	Adjusted EBITDA (non-GAAP basis)		$	11,180			$	9,172		$	2,008	22	%	Adjusted EBITDA (non-GAAP basis)	$	14,306		$	12,529		$	1,777	14	%	$	25,486		$	21,701		$	3,785	17	%
Net income attributable to Gannett margin	Net income attributable to Gannett margin		4.8		%		1.1		%					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)		10.2		%		9.0		%					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.

For the three and six months ended ~~March 31,~~June 30, 2022, the increase in Adjusted EBITDA compared to the three and six months ended ~~March 31,~~June 30, 2021 was primarily attributable to the changes discussed above.

Corporate and other category

For the three months ended ~~March 31,~~June 30, 2022, Corporate and other operating revenues were ~~$1.3~~$1.4 million compared to ~~$3.1~~$1.7 million for the three months ended ~~March 31,~~June 30, 2021. For the six months ended June 30, 2022, Corporate and other operating revenues were $2.7 million compared to $4.8 million for the six months ended June 30, 2021.

For the three and six months ended ~~March 31,~~June 30, 2022, Corporate and other operating expenses decreased ~~$5.4~~$1.8 million and $7.2 million compared to the three and six months ended ~~March 31,~~June 30, 2021. The following table provides the breakout of the decrease in Corporate and other operating expenses:


		Three months ended March 31,			Three months ended June 30,										Six months ended June 30,
						Change									Change								Change
In thousands	In thousands		2022			2021		$		%		In thousands	2022		2021		$		%		2022		2021		$		%
Operating costs	Operating costs		$	795		$	3,956	$	(3,161)	(80)	%	Operating costs	$	(578)	$	4,539	$	(5,117)	***		$	217	$	8,495	$	(8,278)	(97)	%
Selling, general and administrative expenses	Selling, general and administrative expenses		22,707			14,269		8,438		59	%	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		3,894			3,887		7		—	%	Depreciation and amortization	4,143		3,976		167		4	%	8,037		7,863		174		2	%
Integration and reorganization costs	Integration and reorganization costs		5,526			5,912		(386)		(7)	%	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			7			65		(58)		(89)	%
(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		361			10,576		(10,215)		(97)	%	Other operating expenses	280		774		(494)		(64)	%	641		11,350		(10,709)		(94)	%
Total operating expenses	Total operating expenses		$	33,290		$	38,665	$	(5,375)	(14)	%	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 ~~March 31,~~June 30, 2022, Corporate and other operating expenses decreased compared to the three and six months ended ~~March 31,~~June 30, 2021, primarily due to a decrease in Operating costs, mainly due to lower compensation costs, a decrease in Integration and reorganization costs, driven by a decrease in costs related to systems implementation and outsourcing of corporate functions, partially offset by an increase in Selling, general and administrative expenses, 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 $10.2 million of third-party fees related to our previous five-year, senior-secured term loan facility which were expensed during the ~~three~~six months ended March 31, 2021 and a decrease in Operating costs, mainly due to lower compensation costs, partially offset by an increase in Selling, general and administrative expenses as the prior period was positively impacted by cost containment initiatives and a decrease in discretionary spending.June 30, 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 and available financing capacity under our credit facility.~~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 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.

~~Table of Contents~~

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


		Three months ended March 31,					Six months ended June 30,
In thousands	In thousands	2022		2021		In thousands	2022		2021
Cash provided by operating activities	Cash provided by operating activities	$	32,429	$	61,316	Cash provided by operating activities	$	1,688	$	92,587
Cash provided by (used for) investing activities	Cash provided by (used for) investing activities	(6,220)		2,516		Cash provided by (used for) investing activities	(9,649)		7,185
Cash used for financing activities	Cash used for financing activities	(3,818)		(74,699)		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	(992)		314		Effect of currency exchange rate change on cash	(1,140)		625
Increase (decrease) in cash, cash equivalents and restricted cash		$	21,399	$	(10,553)
Decrease in cash, cash equivalents and restricted cash						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 cash flow provided by operating activities was ~~$32.4~~$1.7 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022, compared to ~~$61.3~~$92.6 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021. The decrease in cash flow provided by operating activities was primarily due to lower cash receipts related to deferred revenues of ~~$30.3~~$14.8 million, a decrease in accounts payable of ~~$29.2~~$33.1 million, ~~and~~ an increase in taxes paid, net of refunds, of ~~$1.8~~$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 ~~$10.3~~$12.4 million, a decrease in interest paid on debt of ~~$6.0~~$8.0 million and a decrease in contributions to our pension and other postretirement benefit plans of ~~$15.6~~$15.4 million.

Cash flows provided by (used for) investing activities: Cash flows used for investing activities was ~~$6.2~~$9.6 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022, compared to cash flows provided by investing activities of ~~$2.5~~$7.2 million for the ~~three~~six months ended ~~March 31,~~June 30, 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 ~~$3.2~~$7.5 million, offset by an increase in proceeds from the sale of real estate and other assets of ~~$10.3~~$6.3 million.

Cash flows used for financing activities: Cash flows used for financing activities was ~~$3.8~~$35.0 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022, compared to ~~$74.7~~$121.0 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021. The decrease was primarily due to lower repayments, net under term loans of ~~$63.3~~$89.7 million and a ~~$33.5~~$33.0 million decrease in payments related to deferred financing costs, partially offset by repayments of ~~$22.5~~$30.0 million related to the 2026 Senior ~~Notes.~~Notes and payments related to treasury stock of $4.5 million, including $3.1 million related to the Stock Repurchase Program.

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Debt

New Senior Secured Term Loan

On October 15, 2021, Gannett Holdings LLC ("Gannett Holdings"), our wholly-owned subsidiary, entered into ~~a five-year senior secured term loan facility in an aggregate principal amount of $516.0 million (the "New~~the New Senior Secured Term ~~Loan")~~Loan with Citibank N.A., as collateral agent and administrative agent for the 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 $50 million. The Incremental Term Loans have substantially identical terms as the New Senior Secured Term Loan 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 transition the interest rate base from LIBOR to Adjusted Term SOFR and to permit the repurchase of up to $50 million of the Company's ~~common stock, par value $0.01 per share ("~~Common ~~Stock")~~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 ~~an amendment (the "Second Term Loan Amendment")~~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.~~million and $7.5 million, respectively.

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Holdings, at any time without premium, except a premium equal to 1.00% of the aggregate principal amount of the loans being repaid in connection with certain refinancing or repricing events that reduce the all-in yield applicable to the loans and occur on or before October 15, 2022. 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 not 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 at the end of each fiscal year. The New Senior Secured Term Loan 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, 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 ~~March 31,~~June 30, 2022, we were in compliance with all of the covenants and obligations under the New Senior Secured Term Loan.

For the three and six months ended ~~March 31,~~June 30, 2022, we recognized interest expense of ~~$6.9~~$7.5 million and $14.4 million, respectively, and paid interest expense of ~~$6.9~~$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 ~~$0.9~~$0.2 million and ~~$0.2~~$0.4 million, ~~respectively, under the New Senior Secured Term Loan.~~respectively. Additionally, during the three and six months ended ~~March 31,~~June 30, 2022, we recognized losses on early extinguishment of debt of approximately ~~$1.4~~$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 ~~March 31,~~June 30, 2022, we made prepayments, inclusive of both mandatory and optional prepayments, totaling ~~$48.0~~$26.9 million and $74.9 million, respectively, which were classified as financing activities in the condensed consolidated statements of cash flows. As of ~~March 31,~~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

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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 ~~original issue discount and unamortized~~ deferred financing costs will be amortized over the remaining contractual life of the 2026 Senior Notes. For the three and six months ended ~~March 31,~~June 30, 2022, ~~the Company~~we recognized interest expense of ~~$6.0~~$5.5 million and $11.5 million, respectively, and paid interest expense of ~~$0.6~~$12.3 million and $12.9 million, respectively. For the three and six months ended June 30, 2022, we recognized amortization of ~~$1.3~~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 ~~March 31,~~June 30, 2022, the effective interest rate on the 2026 Senior Notes was 7.3%.

In March and April 2022, we entered into a privately negotiated ~~agreement~~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 ~~repurchase was~~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 ~~March 31,~~June 30, 2022, ~~the Company~~we recognized losses on early extinguishment of debt of approximately ~~$1.3~~$0.4 million and $1.7 million, respectively, related to the write-off of deferred financing costs.

Senior Secured Convertible Notes due 2027

We issued $497.1 million in aggregate principal amount of 6.0% Senior Secured Convertible Notes due 2027 (the "2027 Notes") pursuant to an Indenture dated as of November 17, 2020, as amended by the First Supplemental Indenture dated as of

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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, 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. We also entered into an amendment to the Registration Rights Agreement dated November 19, 2019, with FIG 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 Common Stock or any combination of cash and Common Stock, at 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), 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, we will be required to offer to repurchase the 2027 Notes at a repurchase price of 110% of the principal amount thereof.

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Under the 2027 Notes Indenture, 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 our 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.

Until the four-year anniversary of the issuance date, 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 us.

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 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 three and six months ended ~~March 31,~~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 ~~Company~~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 ~~$2.3~~$5.8 million, respectively, and ~~for the three months ended March 31, 2022, recorded~~ amortization ~~of deferred financing costs of $0.1 million in connection with the 2027 Notes. 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 ~~March 31, 2021. In addition,~~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 ~~March 31, 2022 and 2021, the Company recognized interest expense of $7.2 million and $7.5 million, respectively, in connection with the 2027 Notes.~~June 30, 2021. The effective interest rate on the liability component of the 2027 Notes was 10.5% as of both ~~March 31,~~June 30, 2022 and 2021.

Senior Convertible Notes due 2024

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, 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 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.

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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.

We expect our capital expenditures for the remainder of 2022 to total approximately ~~$35.5~~$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 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 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 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, 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 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, (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. We define Adjusted EBITDA margin as Adjusted EBITDA divided by total Operating revenues.

Management’s use of Adjusted EBITDA and Adjusted EBITDA margin

Adjusted EBITDA and Adjusted EBITDA margin 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.

We use Adjusted EBITDA and Adjusted EBITDA margin 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.

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Limitations of Adjusted EBITDA and Adjusted EBITDA margin

Adjusted EBITDA and Adjusted EBITDA margin 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 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 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 ~~loss~~income (loss) attributable to Gannett to Adjusted EBITDA and Adjusted EBITDA margin 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 are not measures of financial performance under U.S. GAAP and are susceptible to varying calculations, the Adjusted EBITDA and Adjusted EBITDA margin 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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		Three months ended March 31,				Three months ended June 30,								Six months ended June 30,
In thousands	In thousands		2022				2021			In thousands	2022			2021			2022			2021
Net loss attributable to Gannett			$	(2,967)			$	(142,316)
Benefit for income taxes			(7,607)				(9,109)
Net income (loss) attributable to Gannett										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		26,006				39,503			Interest expense	26,084			35,264			52,090			74,767
Loss on early extinguishment of debt	Loss on early extinguishment of debt		2,743				19,401			Loss on early extinguishment of debt	749			2,834			3,492			22,235
Non-operating pension income	Non-operating pension income		(18,213)				(23,878)			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		47,783				58,103			Depreciation and amortization	49,530			48,242			97,313			106,345
Integration and reorganization costs	Integration and reorganization costs		11,398				13,404			Integration and reorganization costs	15,745			8,444			27,143			21,848
Other operating expenses	Other operating expenses		1,102				10,576			Other operating expenses	314			774			1,416			11,350
Asset impairments	Asset impairments		854				833			Asset impairments	85			—			939			833

(Gain) loss on sale or disposal of assets, net			(2,804)				4,745
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		3,393				3,423			Share-based compensation expense	5,385			5,779			8,778			9,202
Other Items	Other Items		2,483				(820)			Other Items	2,277			237			4,760			(583)
Adjusted EBITDA (non-GAAP basis)	Adjusted EBITDA (non-GAAP basis)		$	64,171			$	100,465		Adjusted EBITDA (non-GAAP basis)	$	50,851		$	115,769		$	115,022		$	216,234
Net loss attributable to Gannett margin			(0.4)		%		(18.3)		%
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)		8.6		%		12.9		%	Adjusted EBITDA margin (non-GAAP basis)	6.8		%	14.4		%	7.7		%	13.7		%

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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 March 31,~~past. Cumulative foreign currency translation gains and losses reported as part of equity equated to a loss of $14.1 million at June 30, 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, 2021.~~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

Disclosure Controls and Procedures

We evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this Quarterly Report under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based on such evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of 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 be disclosed by the Company in the reports that it files or submits under the Exchange Act and were effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in 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 ~~first~~the quarter ended ~~March 31,~~June 30, 2022 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Information regarding legal proceedings may be found in Note 11 — Commitments, contingencies and other matters, of the notes to the ~~Condensed~~condensed consolidated financial statements, which is incorporated herein by reference.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors described in Part I, Item 1A, Risk Factors of our Form 10-K for the fiscal year ended December 31, 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

Exhibit Number

Description

Location

~~4.1~~

~~Fourth Supplemental Indenture, dated as of January 31, 2022, by and among Gannett Co., Inc., the Subsidiary Guarantors party thereto, U.S. Bank National Association, as trustee.~~

~~Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed February 4, 2022.~~

10.1

Amendment No. 1,2, dated as of ~~January 31,~~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 thereto, the ~~lenders~~Lenders from time to time party thereto, and Citibank N.A., as ~~collateral~~administrative agent and ~~administrative~~collateral agent.

~~Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed February 4, 2022.~~Filed herewith.

10.2

~~Form~~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. Employee Performance Restricted Stock Unit Grant Agreement.*, Gannett Holdings LLC, the Guarantors from time to time party thereto, the Lenders from time to time party thereto, and Citibank N.A., as administrative agent and collateral agent.

Filed herewith.

31.1

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

Filed ~~herewith~~.herewith.

31.2

Certification of 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 Principal Executive Officer.

Furnished ~~herewith~~.herewith.

32.2

Section 1350 Certification of Principal Financial Officer.

Furnished herewith.

101

The following financial information from Gannett Co., Inc. Quarterly Report on Form 10-Q for the quarter ended ~~March 31,~~June 30, 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.

* Management contract or compensatory plan or arrangement.

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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: ~~May 5,~~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)

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