EXHIBIT 13
Page 1
Company Profile
Gannett Co., Inc. is a diversified news and information company that
publishes newspapers, operates broadcasting stations and outdoor
advertising businesses, and is engaged in research, marketing, commercial
printing, a newswire service, data services and news programming. The
company has facilities in 41 states, the District of Columbia, Canada, Guam,
the U.S. Virgin Islands, Great Britain, France, Switzerland, Hong Kong and
Singapore.
Gannett's is the largest U.S. newspaper group, with 83 daily newspapers,
including USA TODAY, more than 50 non-daily publications and USA WEEKEND,
a weekly newspaper magazine. Total average paid daily circulation of
Gannett's daily newspapers in 1993 exceeded 6.3 million, more than any other
newspaper group.
Gannett owns and operates 10 television stations, six FM radio stations
and five AM radio stations in major markets. Gannett Outdoor Group is the
largest outdoor advertising group in North America, with operations in 11
states and Canada.
Gannett was founded by Frank E. Gannett in 1906 and incorporated in 1923.
The company went public in 1967. Its nearly 147 million shares of common
stock are held by more than 14,000 shareholders of record in all 50 states
and abroad. The company has 36,500 employees. Corporate headquarters is
located at Arlington, Va.
Page 20
Board of Directors - 1993
John J. Curley
Chairman, president and chief executive officer, Gannett Co., Inc. Formerly:
President and chief executive officer, Gannett Co., Inc. (1986-89); president
and chief operating officer (1984-86). Other directorships: Dickinson
College and Columbia University Boards of Trustees. Age 55. Term expires in
1996. (b,d,g,h)
Andrew F. Brimmer
President, Brimmer & Company, Inc. Other directorships: BankAmerica
Corporation and Bank of America NT&SA; BellSouth Corporation; BlackRock
Investment Income Trust, Inc.; Brimmer & Company, Inc.; Connecticut Mutual
Life Insurance Company; E.I. duPont de Nemours & Company; Navistar
International Corporation; PHH Corporation; UAL Corporation, Inc.; public
governor and vice chairman, Commodity Exchange, Inc.; and trustee of the
College Retirement Equities Fund. Age 67. Term expires in 1995. (a,f)
Meredith A. Brokaw
President, Penny Whistle Toys, Inc., New York City, and author. Other
directorships: National Home Library Board; Coro Foundation, New York City;
Conservation International, Washington, D.C. Age 53. Term expires in 1996.
(b,d,f)
Rosalynn Carter
Author and businesswoman; distinguished lecturer, Agnes Scott College,
Atlanta; fellow, Women's Studies Institute, Emory University, Atlanta.
Formerly: First Lady (1977-81). Other directorships: Carter Presidential
Center; Friendship Force International; adviser, Habitat for Humanity, Inc.;
trustee, The Menninger Foundation. Age 66. Term expires in 1994. (b,e,h)
Page 21
Peter B. Clark
Former chairman, president and chief executive officer, The Evening News
Association (1969-86). Formerly: Regents professor, Graduate School of
Management, University of California at Los Angeles (1987). Other
directorships: Trustee, Harper-Grace Hospital. Age 65. Term expires in
1996. (c,f)
Stuart T.K. Ho
Chairman of the board and president, Capital Investment of Hawaii, Inc., and
chairman of the board of Gannett Pacific Corporation, publisher of the
Company's Honolulu Advertiser and the Pacific Daily News at Agana, Guam.
Other directorships: Aloha Airgroup, Inc.; Bancorp Hawaii, Inc.; College
Retirement Equities Fund; Capital Investment of Hawaii, Inc. Age 58. Term
expires in 1995. (a,b,e)
John J. Louis Jr.
Founder of Combined Communications Corporation and chairman (1968-81).
Formerly: U.S. Ambassador to the United Kingdom of Great Britain and
Northern Ireland (1981-83). Other directorships: S.C. Johnson & Son, Inc.
Age 68. Term expires in 1996. (a,b,d)
Douglas H. McCorkindale
Vice chairman and chief financial and administrative officer, Gannett Co.,
Inc. Formerly: Vice chairman and chief financial officer, Gannett Co., Inc.
(1984-85). Other directorships: Rochester Telephone Corporation;
Continental Airlines, Inc.; and seven funds which are part of the Prudential
complex of mutual funds. Age 54. Term expires in 1995. (b,g,h)
Rollan D. Melton
Chairman and chief executive officer of Speidel Newspapers Inc., and
columnist, Reno (Nev.) Gazette-Journal. Other directorships: National
Judicial College; John Ben Snow Trust and Foundation. Age 61. Term expires
in 1995. (e,h)
Thomas A. Reynolds Jr.
Chairman emeritus of Chicago law firm of Winston & Strawn. Other
directorships: Jefferson Smurfit Group; Union Pacific Corp. Age 65. Term
expires in 1994. (a,b,c)
Carl T. Rowan
President, CTR Productions Inc.; author and lecturer; columnist, King
Features and the Chicago Sun-Times; television commentator,
Post-Newsweek Broadcasting; radio commentator, CTR Productions. Age 68.
Term expires in 1994. (d,e)
Dolores D. Wharton
Chairman and CEO, Fund for Corporate Initiatives, Inc. Other directorships:
COMSAT Corporation; Kellogg Company. Age 66. Term expires in 1994. (c,h)
(a) Member of Audit Committee.
(b) Member of Executive Committee.
(c) Member of Executive Compensation Committee.
(d) Member of Management Continuity Committee.
(e) Member of Public Responsibility Committee.
(f) Member of Personnel Practices Committee.
(g) Member of Gannett Management Committee.
(h) Member of Contributions Committee.
Page 22
Company and Divisional Officers
Gannett's principal management group is the Gannett Management Committee,
which coordinates overall management policies for the Company. The
members are identified below and on the previous pages.
The managers of the Company's various local operating units enjoy
substantial autonomy in local policy, operational details, news content and
political endorsements.
The Company's corporate headquarters staff includes specialists who
provide advice and assistance to the Company's operating units in various
phases of the Company's operations.
Below are brief descriptions of the business experience during the
last five years of the officers of the Company and the heads of its
national and regional divisions. Officers serve for a term of one year and
may be re-elected. Information about the two officers who serve as
directors (John J. Curley and Douglas H. McCorkindale) can be found on pages
20-21.
Christopher W. Baldwin, Vice president, taxes. Formerly: Director, taxes
(1979-1993). Age 50.
Thomas L. Chapple, General counsel and secretary. Formerly: Vice president,
associate general counsel and secretary (1981-1991). Age 46.
Richard L. Clapp, Vice president, compensation and benefits. Age 53.
Susan Clark-Jackson, President, Gannett West Newspaper Group, and
president and publisher, Reno (Nev.) Gazette-Journal. Age 47.
Michael J. Coleman, President, Gannett South Newspaper Group, and
president and publisher, FLORIDA TODAY at Brevard County. Formerly:
President, Gannett Central Newspaper Group, and president and publisher,
Rockford (Ill.) Register Star (1986-1991). Age 50.
Thomas Curley, President and publisher, USA TODAY. Formerly: President and
chief operating officer, USA TODAY (1986-1991). Thomas Curley is the brother
of John J. Curley. Age 45.*
Philip R. Currie, Vice president, news, Newspaper Division. Formerly: Vice
president, news, Gannett Community Newspapers (1986-89). Age 52.
Donald W. Davidson, President, Gannett Outdoor Group. Age 55.*
Gerry DeFrancesco, President, Gannett Radio. Formerly: President and
general manager, KIIS/KIIS-FM at Los Angeles (1991-1992); executive vice
president, Gannett Radio, and vice president and station manager,
KIIS/KIIS-FM (1991); vice president and operations manager, Pyramid
Broadcasting, Philadelphia, Pa. (1990-1991); vice president and station
manager, KIIS/KIIS-FM (1989-1990); vice president and general manager,
WDAE/WUSA-FM at Tampa, Fla. (1988-1989). Age 39.
Thomas J. Farrell, President, Gannett New Media Group. Formerly: Executive
vice president, general manager, USA TODAY (1986-1992); publisher, Baseball
Weekly, and chairman, USA TODAY Sky Radio (1991-1992); president, Gannett
New Media Group (1990-1992). Age 49.*
Millicent A. Feller, Senior vice president, public affairs and government
relations. Formerly: Vice president, public affairs and government
relations (1986-1991). Age 46.*
Lawrence P. Gasho, Vice president, financial analysis. Age 51.
George R. Gavagan, Vice president/corporate accounting services.
Formerly: Assistant controller (1986-1993). Age 47.
George N. Gill, Vice president, Gannett Metro Newspaper Group, and
president and publisher, The Courier-Journal at Louisville, Ky. Formerly:
President and publisher, The Courier-Journal. Age 59. He retired August 1,
1993.
Page 23
John B. Jaske, Senior vice president, labor relations and assistant general
counsel. Formerly: Vice president, labor relations and assistant general
counsel (1980-1991). Age 49.
Madelyn P. Jennings, Senior vice president, personnel. Age 59.*
Kristin H. Kent, Vice president, senior legal counsel. Formerly: Senior legal
counsel (1986-1993). Age 43.
Gracia C. Martore, Vice president, treasury services. Formerly: Assistant
treasurer (1985-1993). Age 42.
William Metzfield, President, Gannett Supply Corp., and vice president,
purchasing, Gannett Co., Inc. Age 52.
Larry F. Miller, Senior vice president, financial planning and controller.
Formerly: Vice president, financial planning and controller (1986-1991). Age
55.*
Peter S. Prichard, Senior vice president, news/chief news executive,
Gannett, and editor, USA TODAY. Formerly: Senior editor, News, USA TODAY
(1988); managing editor, special projects, USA TODAY (1987-1988). Age 49.*
W. Curtis Riddle, President, Gannett East Newspaper Group, and president
and publisher, Lansing (Mich.) State Journal. Formerly: President, Gannett
Central Newspaper Group (1991-1993), and president and publisher, Lansing
(Mich.) State Journal (1990-1993); vice president, Gannett Central Newspaper
Group (1989-1991); president and publisher, Lafayette (Ind.) Journal and
Courier (1988-1990); assistant to the publisher, The Cincinnati Enquirer
(1987-1988). Age 42.
Carleton F. Rosenburgh, Senior vice president, Gannett Newspaper Division.
Formerly: Vice president/circulation (1986-1991). Age 54.
Gary F. Sherlock, Vice president, Gannett Metro Newspaper Group, and
president and publisher, Gannett Suburban Newspapers. Formerly: Executive
vice president, advertising, Newspaper Division (1988-90); president,
Gannett National Newspaper Sales (1986-90). Age 48.
Mary P. Stier, President, Gannett Central Newspaper Group, and president
and publisher, Rockford (Ill.) Register Star. Formerly: Vice president,
Gannett Central Newspaper Group (1990-1993), and president and publisher,
Rockford (Ill.) Register Star (1991-1993); publisher, Iowa City Press-Citizen
(1987-1991). Age 36.
Jimmy L. Thomas, Senior vice president, financial services and treasurer.
Formerly: Vice president, financial services and treasurer (1980-1991). Age
52.*
Ronald Townsend, President, Gannett Television. Formerly: President and
general manager, WUSA-TV at Washington, D.C. (1987-89). Age 52.*
Wendell J. Van Lare, Vice president, labor counsel. Formerly: Director, labor
relations (1980-1993). Age 48.
Frank J. Vega, President and chief executive officer, Detroit Newspaper
Agency. Formerly: President, Gannett South Newspaper Group, and publisher
and CEO, FLORIDA TODAY at Brevard County, Fla. (1985-1991). Age 45.
Cecil L. Walker, President, Gannett Broadcasting Division. Formerly: Acting
president, Gannett Television (1986). Age 57.*
Barbara W. Wall, Vice president, senior legal counsel. Formerly: Senior legal
counsel (1990-1993); assistant general counsel (1985-1990). Age 39.
Gary L. Watson, President, Gannett Newspaper Division. Formerly: President,
Gannett Community Newspaper Group (1985-1990). Age 48.*
Susan V. Watson, Vice president, investor relations. Age 41.
* Member of the Gannett Management Committee.
Page 25
Gannett common stock prices
Restated to reflect the 2-for-1 stock split effective January 6, 1987, and
the 3-for-2 stock split effective January 5, 1984. High-low range by
quarters based on NYSE-composite closing prices.
Year Quarter Low High
- ------- --------- --------- ---------
1983 first $17.13 $21.92
second $21.09 $24.00
third $19.75 $23.17
fourth $18.75 $21.59
1984 first $16.88 $21.69
second $18.13 $21.63
third $19.44 $23.69
fourth $21.38 $25.25
1985 first $23.57 $29.38
second $27.38 $31.50
third $27.25 $32.88
fourth $26.63 $31.25
1986 first $29.63 $37.00
second $34.25 $43.56
third $33.19 $42.75
fourth $33.88 $38.25
1987 first $35.94 $49.63
second $43.75 $54.88
third $48.50 $55.25
fourth $31.75 $52.75
1988 first $33.75 $39.50
second $29.38 $35.63
third $30.50 $34.25
fourth $32.38 $35.00
1989 first $34.63 $38.25
second $36.63 $48.50
third $43.64 $49.88
fourth $39.50 $45.25
1990 first $39.50 $44.38
second $35.50 $42.25
third $29.88 $37.50
fourth $30.63 $37.75
1991 first $35.75 $42.63
second $39.75 $44.38
third $39.38 $46.63
fourth $35.88 $42.25
1992 first $42.25 $47.88
second $41.50 $49.13
third $43.88 $48.25
fourth $46.00 $53.63
1993 first $50.63 $55.38
second $47.50 $54.75
third $47.75 $51.38
fourth $47.50 $58.13
1994 first $54.00 $58.38 *
* Through February 22, 1994
Page 26
Management's responsibility for financial statements
The management of the Company has prepared and is responsible for the
consolidated financial statements and related financial information
included in this report. These financial statements were prepared in
accordance with generally accepted accounting principles. These financial
statements necessarily include amounts determined using management's
best judgments and estimates.
The Company's accounting and other control systems provide
reasonable assurance that assets are safeguarded and that the books and
records reflect the authorized transactions of the Company. Underlying the
concept of reasonable assurance is the premise that the cost of control
not exceed the benefit derived. Management believes that the Company's
accounting and other control systems appropriately recognize this
cost/benefit relationship.
The Company's independent accountants, Price Waterhouse, provide an
independent assessment of the degree to which management meets its
responsibility for fairness in financial reporting. They regularly evaluate
the Company's system of internal accounting control and perform such tests
and other procedures as they deem necessary to reach and express an
opinion on the financial statements. The Price Waterhouse report appears
on page 47.
The Audit Committee of the Board of Directors is responsible for
reviewing and monitoring the Company's financial reports and accounting
practices to ascertain that they are appropriate in the circumstances. The
Audit Committee consists of four non-management directors, and meets
regularly to discuss audit and financial reporting matters with
representatives of financial management, the internal auditors and the
independent accountants. The internal auditors and the independent
accountants have direct access to the Audit Committee to review the
results of their examinations, the adequacy of internal accounting
controls and the quality of financial reporting.
By s/ John J. Curley By s/ Douglas H. McCorkindale
----------------------- ------------------------------
John J. Curley Douglas H. McCorkindale
Chairman, President and Vice Chairman, Chief Financial
Chief Executive Officer and Administrative Officer
Management's discussion and analysis of results of operations and
financial position
Basis of reporting
Following is a discussion of the key factors which have affected the
Company's business over the last three years. This commentary should be
read in conjunction with the Company's financial statements, the 11-year
summary of operations and the Form 10-K information that appear in the
following sections of this report.
The Company's fiscal year ends on the last Sunday of the
calendar year. Each of its fiscal years 1991-1993 encompasses a 52-week
period.
Acquisitions and dispositions
On January 30, 1993, the Company completed the acquisition of the Honolulu
Advertiser and the sale of the Honolulu Star-Bulletin. The acquisition of
the morning publication Advertiser was for approximately $250 million.
Consideration for this purchase included the issuance of approximately
1,980,000 shares of the Company's common stock and the assumption of
certain liabilities of the acquired business. Concurrent with these
transactions, the Honolulu joint operating agreement was amended to
provide the Company with a greater share of profits from the operation.
This acquisition is reflected in the 1993 financial statements under
the purchase method of accounting.
In the fourth quarter of 1993, the Company sold its radio stations in
Kansas City and St. Louis, Mo. The Company also provided for the pending
sale of its television station in Boston, which is expected to be completed
in early 1994. The Company recognized a minor net gain on these
transactions which is reflected in non-operating income.
Changes in accounting principles
In 1992, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions" (SFAS 106), and Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109).
Under the provisions of SFAS 106, the Company is required to
recognize the cost of postretirement medical and life insurance benefits on
an accrual basis over the working lives of employees expected to receive
such benefits. Prior to the adoption of SFAS 106, the Company recognized
the cost of these benefits as payments were made on behalf of retirees.
As permitted under SFAS 106, the Company recognized the Accumulated
Postretirement Benefit Obligation as of the beginning of fiscal 1992 of
$295 million as a change in accounting principle. On an after-tax basis, this
non-cash charge was $180 million or $1.25 per share.
Page 27
Ongoing operating costs for 1992 under SFAS 106 were $6 million
greater than under the previous cash basis method. On an after-tax basis,
these charges totaled $4 million or $.03 per share. Further information
concerning SFAS 106 can be found in Note 6 to the Consolidated Financial
Statements.
Under the provisions of SFAS 109, the Company adjusted previously
recorded deferred taxes to reflect currently enacted statutory tax rates.
The Company has reflected the cumulative effect of adopting SFAS 109 as a
change in accounting principle at the beginning of fiscal 1992. This
adjustment was recorded as a non-cash credit to earnings of $34 million or
$.24 per share. Prior years' financial statements were not restated. The
adoption of SFAS 109 had no effect on the provision for income taxes for
1992.
Results of operations
Consolidated summary
In millions of dollars
1993 Change 1992 Change 1991 Change
------- ------- ------- ------- ------- -------
Operating revenues $3,642 5% $3,469 3% $3,382 -2%
Operating income $714 16% $617 10% $559 -18%
Income before
cumulative effect
of accounting changes $398 15% $346 15% $302 -20%
Net income $398 99% $200 -34% $302 -20%
A discussion of the operating results of each of the Company's principal
business segments and other factors affecting financial results follows.
Newspapers
In addition to its local newspapers, the Company's newspaper publishing
operations include USA TODAY, USA WEEKEND and Gannett Offset commercial
printing. Newspaper publishing operating results for the last three years
were as follows:
In millions of dollars
1993 Change 1992 Change 1991 Change
------- ------- ------- ------- ------- -------
Revenues $3,014 5% $2,858 3% $2,767 -
Expenses $2,337 4% $2,250 1% $2,222 3%
------- ------- ------- ------- ------- -------
Operating income $677 11% $608 12% $545 -12%
======= ======= ======= ======= ======= =======
Newspaper operating revenues: Newspaper operating revenues are
derived principally from advertising and circulation sales, which accounted
for 67% and 28%, respectively, of total newspaper revenue in 1993. Other
newspaper publishing revenues are mainly from commercial printing
business.
The table below presents these revenue components for the last
three years:
Newspaper publishing revenues, in millions of dollars
1993 Change 1992 Change 1991 Change
-------- ------- ------- ------- ------- -------
Advertising $2,005 7% $1,882 2% $1,853 -3%
Circulation $839 4% $807 4% $777 6%
Commercial printing
and other $170 1% $169 23% $137 7%
-------- ------- ------- ------- ------- -------
Total $3,014 5% $2,858 3% $2,767 -
======== ======= ======= ======= ======= =======
In the tables that follow, newspaper advertising linage, circulation
volume statistics and related revenue results are presented on a pro
forma basis for newspapers owned at the end of 1993.
Advertising revenue, in millions of dollars (pro forma)
1993 Change 1992 Change 1991 Change
-------- ------- ------- ------- ------- -------
Local $779 1% $770 - $774 -
National $290 4% $279 8% $259 -11%
Classified $612 6% $575 3% $561 -9%
-------- ------- ------- ------- ------- -------
Total Run-of-Press $1,681 3% $1,624 2% $1,594 -5%
Preprint and other
advertising $324 9% $299 8% $277 6%
-------- ------- ------- ------- ------- -------
Total ad revenue $2,005 4% $1,923 3% $1,871 -4%
======== ======= ======= ======= ======= =======
Advertising linage, in millions of inches (pro forma)
1993 Change 1992 Change 1991 Change
-------- ------- ------- ------- ------- -------
Local 32.1 -2% 32.6 -2% 33.4 -9%
National 2.0 -1% 2.0 -7% 2.2 -13%
Classified 28.9 5% 27.5 5% 26.3 -6%
-------- ------- ------- ------- ------- -------
Total Run-of-Press 63.0 1% 62.1 - 61.9 -8%
Preprint 64.3 8% 59.4 8% 55.0 2%
-------- ------- ------- ------- ------- -------
Total ad linage 127.3 5% 121.5 4% 116.9 -4%
======== ======= ======= ======= ======= =======
Newspaper advertising revenues increased $123 million or 7% in 1993.
On a pro forma basis, which reflects the purchase of the Honolulu
Advertiser as if it occurred at the beginning of 1992, newspaper ad
revenues rose $82 million or 4% for 1993. Total advertising linage rose 5%
for the year.
Page 28
"Run-of-press" (ROP) advertising linage, which appears within
the bodies of the Company's newspapers, was 1% higher than 1992. ROP
classified linage increased 5%, while local linage and national linage
declined 2% and 1%, respectively. Preprint linage, which includes local and
national supplements that are inserted into the Company's newspapers,
rose 8% for the year. At USA TODAY, ad revenues and linage rose 9%.
The growth in newspaper ad revenues in 1993 reflects the improved
national economic climate. Business trends for important retail
advertisers improved. In classified, improving trends continued in the
automotive and employment categories. The Company remains cautious about
the direction of general economic conditions in 1994, but expects a modest
increase in overall ad revenue.
Newspaper circulation revenues rose $32 million or 4% for 1993. On a
pro forma basis, circulation revenues rose 2%. The Company continued its
efforts to increase circulation and household penetration at all of its
local daily and Sunday newspapers. Average paid circulation grew at 49% of
the Company's daily newspapers and 57% of its Sunday newspapers in 1993.
Pro forma circulation volume for the Company's local newspapers is
summarized in the table below:
Average net paid circulation, in thousands
1993 Change 1992 Change 1991 Change
-------- ------- ------- ------- ------- -------
Local Newspaper
Morning 3,089 0.4% 3,077 0.6% 3,058 0.3%
Evening 1,250 -3.4% 1,295 -3.2% 1,338 -2.6%
-------- ------- ------- ------- ------- -------
Total daily 4,339 -0.8% 4,372 -0.6% 4,396 -0.6%
Sunday 6,165 0.3% 6,143 0.7% 6,100 0.3%
While overall daily circulation for the Company's local newspapers
declined 0.8%, that decline was principally among the Company's afternoon
newspapers, including The Detroit News, for which circulation declined 7%.
The Company increased circulation prices at certain of its local
newspapers during 1993. The Company expects further circulation growth
for its morning newspapers and plans circulation price increases at certain
newspapers in 1994.
USA TODAY reported an average daily paid circulation of 1,973,296 in
the ABC Publisher's statement for the six months ended September 26, 1993,
which, subject to audit, is a 2.5% increase over the year-ago period. For
the full year, USA TODAY circulation volume increased nearly 2% and
circulation revenues grew 2%.
Newspaper advertising revenues increased $29 million or 2% in 1992.
On a pro forma basis, which excludes 1991 revenues from the Arkansas
Gazette in Little Rock which was sold that year, newspaper advertising
revenues rose $52 million or 3% in 1992. Total advertising linage rose 4%
for the year. "Run-of-press" (ROP) advertising linage was even with 1991.
ROP local linage declined 3% and national linage declined 9%, while
classified linage increased 4%. Preprint linage rose 9% for the year. At USA
TODAY, ad revenues rose 5% and linage rose 4%. At USA WEEKEND, ad revenues
rose 16%.
The growth in newspaper ad revenues in 1992 reflected slightly
improved economic conditions and positive trends for classified ads.
Newspaper circulation revenues rose $30 million or 4% for 1992. On a
pro forma basis, circulation revenues rose 5%. The Company increased
circulation at 53% of its local daily newspapers and 66% of its Sunday
newspapers.
Excluding The Detroit News, overall daily and Sunday circulation for
the Company's local newspapers rose slightly less than 1% in 1992. USA
TODAY reported an average daily paid circulation of 1,924,958 in the ABC
Publisher's Statement for the six months ended September 27, 1992, a 6%
increase over the comparable period of 1991. Circulation revenues at USA
TODAY rose 6% for the year.
Newspaper advertising revenues declined $65 million or 3% in 1991.
Total advertising linage declined 4% for the year. ROP advertising declined
8% as classified linage was 7% lower, local linage declined 9% and national
linage was off 13%. Preprint linage rose 2% for the year. At USA TODAY,ad
revenues and linage declined 4% in 1991.
Demand for newspaper advertising in 1991 was affected by the
recession in the national economy. Customers in retail businesses
curtailed spending on newspaper advertising. Classified ads declined in all
important categories. The decline in revenues and linage was most
pronounced for newspapers in the Northeast and Mid-Atlantic areas.
Newspaper circulation revenues rose $47 million or 6% in 1991.
Sixty-three percent of the Company's local daily newspapers and 74% of its
Sunday newspapers increased average paid circulation for the full year,
compared with 1990. Excluding The Detroit News, overall daily and Sunday
circulation for the Company's local newspapers rose 1% in 1991.
USA TODAY reported an average daily paid circulation of 1,812,395 in
the ABC Publisher's Statement for the six months ended September 29, 1991,
a 1% decrease from the comparable period of 1990. USA TODAY's average
daily paid circulation for the full year 1991, however, rose nearly 2%.
Circulation revenues also rose 2% in 1991.
Newspaper advertising revenues in millions
Newspaper
advertising
Year revenues
- ------ ------------
1984 $1,064
1985 $1,214
1986 $1,589
1987 $1,787
1988 $1,909
1989 $2,018
1990 $1,917
1991 $1,853
1992 $1,882
1993 $2,005
Page 29
Newspaper circulation revenues in millions
Newspaper
circulation
Year revenues
- ------ ------------
1984 $419
1985 $465
1986 $576
1987 $645
1988 $686
1989 $718
1990 $730
1991 $777
1992 $807
1993 $839
Newspaper operating expenses: Newspaper operating expenses rose
$86 million or 4% in 1993. On a pro forma basis, operating expenses rose 3%.
Newsprint costs rose 3% for the year, reflecting higher prices and higher
consumption. The Company expects newsprint prices to rise in 1994.
Payroll costs for the newspaper segment rose 3% for the year.
Year-end employment levels declined slightly from 1992. Employment levels
are not expected to change significantly in 1994.
Newspaper operating expenses rose $28 million or 1% in 1992.
Newsprint costs declined 15%, reflecting significantly lower average prices
for the year, and slightly higher consumption. Payroll costs for the
newspaper segment rose 5% for 1992. Year-end employment levels were up
slightly.
Operating cost comparisons for 1992 were favorably affected by the
sale of the Arkansas Gazette in 1991, however, costs from new commercial
printing business and other new business activities were offsetting.
Newspaper operating costs in 1991 rose $63 million or 3% from 1990.
Operating expenses of new businesses in the newspaper segment were the
principal factors for the increase in costs. Newsprint costs declined 4%
for the year, reflecting lower prices and consumption. Payroll costs for
the newspaper segment rose 4% for the year. Employment levels increased
slightly.
Newspaper operating income: Operating income for the newspaper
segment rose $70 million or 11% in 1993. Revenue gains at most of the
Company's local newspapers, led by classified advertising, coupled with only
modest growth in costs, anchored the strong performance. Most of the
Company's local newspapers reported higher earnings in 1993, with the
larger newspapers posting the strongest gains.
USA TODAY recorded its first annual profit in 1993, fueled by a 9%
increase in advertising revenues and effective controls over costs, which
declined slightly.
Operating income for the newspaper segment for 1992 increased $63
million or 12% over 1991. Lower newsprint costs and the favorable effects of
the sale of the Arkansas Gazette in 1991 contributed to the improvement.
Many of the Company's local newspapers reported profit gains in 1992. USA
TODAY, USA WEEKEND and Gannett Offset also reported improved financial
results for the year.
Operating income for the newspaper segment declined $72 million or
12% for 1991. Soft demand for advertising led to lower results at most of
the Company's newspapers, including USA TODAY.
Other developments: On August 30, 1991, the Company acquired the
Times Journal Company located in Springfield, Va., which included a
commercial printing operation, The Journal Newspapers and a telephone
database service. On December 26, 1991, the Company sold The Journal
Newspapers. Consideration for this purchase (net of the proceeds from the
sale of The Journal Newspapers) totaled $35 million and included shares of
the Company's common stock and the assumption of certain obligations of
the acquired businesses.
On October 18, 1991, the Company sold its newspaper in Little Rock,
Ark., for $69 million in cash. Operating results for 1991 were not materially
affected by this sale transaction, however, operating income comparisons
for the fourth quarter of 1991 and the first three quarters of 1992 were
favorably affected because of losses of this newspaper.
During 1993, 1992 and 1991, the Company also purchased certain other
publications which are included in the newspaper publishing segment. These
purchases in the aggregate were not material.
In April 1991, the Company successfully launched USA TODAY Baseball
Weekly, which in 1993 achieved an average paid circulation of more than
280,000.
Broadcasting
Broadcasting operations at the end of the Company's 1993 fiscal year
included 10 television stations and 11 radio stations. The Company's radio
stations in Kansas City and St. Louis were sold in the fourth quarter of
1993. Also in 1993, the Company provided for the sale of its television
station in Boston, which is expected to close in early 1994.
Over the last three years, the Company's broadcasting revenues,
expenses and operating income were as follows:
In millions of dollars
1993 Change 1992 Change 1991 Change
-------- ------- ------- ------- ------- -------
Revenues $397 7% $371 4% $357 -10%
Expenses $310 2% $305 3% $295 -5%
-------- ------- ------- ------- ------- -------
Operating income $87 31% $66 7% $62 -29%
======== ======= ======= ======= ======= =======
Total broadcasting revenues rose $27 million or 7% for 1993.
Television revenues rose 7% and radio revenues rose 8%. On a pro forma
basis, radio station revenues rose 15%.
For television, local and national ad revenues rose 11% and 3%,
respectively. Television revenue results for 1993 were particularly strong
in light of 1992's election year and Olympics advertising. Both television
and radio revenue
Page 30
gains reflect generally improved ratings for the
Company's stations and stronger demand for advertising time.
The sharp improvement in operating earnings for broadcasting
reflects gains in nearly all of the Company's television and radio station
markets.
Total broadcasting revenues rose $13 million or 4% for 1992.
Television revenues rose 6%, while radio revenues declined 5%. For
television, local and national revenues grew 7% and 5%, respectively.
Political advertising and advertising associated with the Winter and
Summer Olympics contributed to television's revenue growth for the year.
For radio, continued softness in demand for advertising, along with format
changes at certain stations, were the principal factors in the revenue
decline. Operating income for broadcast in 1992 reflects gains in earnings
at most of the Company's television stations, while earnings were lower at
most of the Company's radio stations.
Revenues from broadcasting declined $40 million or 10% in 1991;
television and radio revenues were down 9% and 13%, respectively. For
television, local revenues declined 7%, while national revenues were 13%
below 1990. Operating costs for television declined in 1991. Operating
income results from television were significantly lower in 1991, reflecting
the difficult revenue environment. Most of the Company's television
stations reported lower earnings in 1991. Operating income from radio also
declined in 1991, reflecting lower results in both Los Angeles and Chicago,
the Company's largest markets.
Broadcasting revenues in millions
Broadcasting
Year revenues
- ------ ------------
1984 $233
1985 $265
1986 $351
1987 $357
1988 $391
1989 $408
1990 $397
1991 $357
1992 $371
1993 $397
Outdoor advertising
The Company's outdoor advertising business includes operations in 17 major
market areas in the U.S. and most major markets in Canada.
Over the last three years, the revenues, expenses and operating
income for outdoor advertising were as follows:
In millions of dollars
1993 Change 1992 Change 1991 Change
-------- ------- ------- ------- ------- -------
Revenues $231 -4% $241 -7% $260 -4%
Expenses $216 -7% $233 -5% $244 4%
-------- ------- ------- ------- ------- -------
Operating income $15 81% $8 -48% $16 -57%
======== ======= ======= ======= ======= =======
Outdoor revenues declined $11 million or 4% in 1993. U.S. operations
again experienced a significant loss in revenues from the tobacco industry,
and revenues from Southern California operations were lower because of
continuing economic difficulties. Revenue comparisons are also affected by
the sale in August 1992 of the Company's outdoor business in Phoenix. On a
pro forma basis, outdoor ad revenues declined 2%.
Outdoor operating costs were 7% below 1992 levels, reflecting
benefits of a restructuring at the end of 1992. For transit operations,
certain franchise costs were renegotiated and lowered significantly for
1993.
Because of cost reductions, operating profit for Outdoor rose $7
million or 81% in 1993. All of the larger outdoor markets reported improved
results except Southern California.
Outdoor revenues declined $19 million or 7% in 1992. Revenues from
operations in California were lower because of poor economic conditions,
and U.S. operations experienced a significant loss in advertising by the
tobacco industry. The decline in revenue also reflects the sale of the
Phoenix outdoor operation. Operating profit for outdoor declined 48% in
1992 as most major U.S. operations reported lower earnings. Financial
results from the Company's Canadian subsidiary improved in 1992.
Outdoor revenues declined $11 million or 4% in 1991. Revenue losses
were centered in Canadian operations, where recessionary conditions were
severe and a goods and services tax disrupted advertising spending
patterns. Outdoor operating costs rose 4% in 1991. Operating profit for
outdoor declined 57% as most of the Company's outdoor businesses reported
lower earnings. Sharply lower results in Canada, however, were the
principal cause of the earnings decline.
Outdoor advertising revenues in millions
Outdoor
advertising
Year revenues
- ------ ------------
1984 $200
1985 $208
1986 $211
1987 $202
1988 $227
1989 $258
1990 $271
1991 $260
1992 $241
1993 $231
Page 31
In recent years, outdoor revenues and operating income have been
adversely affected by reduced ad expenditures by the tobacco industry,
which is among the principal sources of national revenues. The Company
expects further, but smaller, reductions in ad spending by this industry in
1994.
Consolidated operating expenses
Over the last three years, the Company's consolidated operating expenses
were as follows:
In millions of dollars
1993 Change 1992 Change 1991 Change
------- ------- ------- ------- ------- -------
Cost of sales $2,067 2% $2,025 - $2,022 2%
Selling, general
and admin. expenses $650 3% $629 5% $601 3%
Depreciation $164 5% $157 -1% $158 3%
Amortization of
intangible assets $45 11% $41 - $41 -
Cost of sales for 1993 rose $43 million or 2%, reflecting modest
increases in newsprint and payroll costs for newspapers, lower television
programming costs and broad reductions in outdoor costs. The increase in
selling, general and administrative (SG&A) costs in 1993 of $21 million or 3%
relates to generally higher sales activity for newspapers and broadcasting
and savings in outdoor from restructuring.
The increase in depreciation in 1993 reflects recent capital
expenditures and the acquisition of the Honolulu Advertiser. The increase
in the amortization of intangible assets in 1993 reflects the acquisition of
the Honolulu Advertiser.
At the end of 1993, the Company lowered the discount rate used in the
valuation of the Gannett Retirement Plan from 8.5% to 7%. As a result,
pension expense will increase significantly in 1994. In early 1994, the
Company contributed $46 million to the Gannett Retirement Plan. Pension
matters are discussed further in Note 5 to the financial statements.
Cost of sales for 1992 was favorably affected by lower newsprint
costs and the sale of the Arkansas Gazette in 1991. Greater sales and
promotion costs and costs of new businesses contributed to the increase
in SG&A expenses for 1992.
For 1991, cost of goods sold and SG&A expenses rose due principally
to operating expenses of new businesses.
Payroll and newsprint costs, the largest elements of the Company's
operating expenses, are presented below, expressed as a percentage of
total pre-tax operating expenses.
1993 1992 1991
------- ------- -------
Payroll and employee benefits 44.0% 43.8% 42.0%
Newsprint and other
production material 17.4% 17.3% 19.1%
Non-operating income and expense
Interest expense for 1993 was even with last year. Higher average interest
rates resulting from new fixed rate debt were offset by lower average
borrowings. The Company's financing activities are discussed in further
detail in the Financial Position section of this report.
Interest expense was sharply lower for 1992, declining $20 million or
28%. Average borrowings were slightly above 1991 levels, but average
interest rates were significantly lower. Non-operating income was down
from 1991 because of a gain recognized that year on the sale of The Culver
Studios.
Interest expense declined slightly in 1991. While the Company
increased its borrowings to finance the purchase of its shares from the
former Gannett Foundation, average interest rates were significantly
lower than in 1990.
Provision for income taxes
The Company's effective income tax rate was 40.5% in 1993, 39.8% in 1992 and
40.0% in 1991.
In August 1993, the statutory federal corporate income tax rate was
raised from 34% to 35%. The provision for income taxes for 1993 includes
the effect of this higher rate on pre-tax income for 1993 as well as an
adjustment to the Company's deferred tax liabilities.
Net income and income before cumulative effect of accounting principle
changes
In millions
Net
Year income
- ------ --------
1984 $224
1985 $253
1986 $276
1987 $319
1988 $364
1989 $398
1990 $377
1991 $302
1992 $200 *
1993 $398
* Income before accounting principle changes was $346
Net income rose $52 million or 15% in 1993, excluding the cumulative effect
of accounting principle changes recognized in 1992 (discussed on page 26).
On a per share basis, net income reached $2.72, up 13% from $2.40 in 1992
before accounting changes. Solid profit gains from the newspaper,
broadcast and outdoor business segments contributed to 1993's record
earnings performance.
The average number of shares outstanding for 1993 totaled
146,474,000, 1.6% higher than in 1992, reflecting the shares issued in
connection with the acquisition of the Honolulu Advertiser.
Income before the non-recurring charge for accounting principle
changes rose $44 million to $346 million in 1992, a 15% increase, reflecting
improved newspaper and broadcast
Page 32
earnings, and lower interest expense. On
a per share basis before the cumulative effect of accounting changes, the
Company earned $2.40, up 20% from $2.00 in 1991. In addition, ongoing
operating costs for 1992 under SFAS 106 for retiree benefits were $6
million greater than under the previous cash basis method. On an after-tax
basis, these charges totaled $4 million or $.03 per share.
The average number of shares outstanding for 1992 totaled
144,148,000, down 4% from 1991, reflecting the purchase of shares from the
former Gannett Foundation in June 1991.
Net income for 1992 was $200 million or $1.39 per share, which
reflected the non-recurring charge of $146 million or $1.01 per share for
the aforementioned accounting principle changes.
Net income for 1991 was $302 million, 20% below the prior year,
reflecting lower operating earnings in all three business segments. Net
income per share fell 15% to $2.00 in 1991, down from $2.36 in 1990. The
average number of common shares outstanding for 1991 totaled 150,783,000,
down 6% from 1990, reflecting the purchase of shares from the former
Gannett Foundation.
In percentages
Return on
sales
(before cumulative
effect of
accounting
Year changes)
- ------ ------------------
1984 11.4
1985 11.5
1986 9.9
1987 10.4
1988 11.0
1989 11.3
1990 11.0
1991 8.9
1992 10.0
1993 10.9
Financial Position
Liquidity and capital resources
The principal change in the Company's financial position during 1993 was the
net pay-down of long-term debt of $230 million from year-ago levels from
operating cash flow.
During the last two years, the Company has reduced its long-term
debt by $485 million.
The increase in property, plant and equipment in 1993 reflects capital
spending of $132 million and the acquisition of the Honolulu Advertiser. The
increase in intangible assets also reflects this acquisition.
Cash flow from operating activities totaled $670 million in 1993 and
$545 million in 1992. Working capital, or the excess of current assets over
current liabilities, totaled $303 million at the end of 1993, compared with
$200 million at the end of 1992. Certain key measurements of the elements
of working capital for the last three years are presented in the following
chart:
1993 1992 1991
--------- -------- ----------
Current ratio 1.7-to-1 1.5-to-1 1.4-to-1
Accounts receivable turnover 8.0 7.9 7.6
Newsprint inventory turnover 9.9 10.6 9.3
A summary of debt transactions in 1993 follows:
In millions
Long-term debt at end of 1992 $1,081
Debt assumed in connection with acquisition 142
New fixed-rate borrowings 525
Pay-down of long-term debt (897)
--------
Long-term debt at end of 1993 $851
========
The fixed-rate borrowings include $275 million in long-term notes
issued in March 1993 at 5.25%, which are repayable in full on March 1, 1998,
and $250 million in long-term notes issued in April 1993 at 5.85%, which are
repayable in full on May 1, 2000. These notes were issued under
registration statements with the Securities and Exchange Commission.
Proceeds were used to repay commercial paper obligations.
The Company's operations have historically generated strong
positive cash flow, which, along with the Company's program of issuing
commercial paper and maintaining bank revolving credit agreements, has
provided adequate liquidity to meet the Company's requirements, including
requirements for acquisitions.
Commercial paper obligations were reduced by $752 million in 1993 and
$253 million in 1992.
During 1991, commercial paper obligations increased by $695 million
mainly to finance the purchase of common shares from the former Gannett
Foundation and the retirement of $200 million of long-term notes.
The Company regularly issues commercial paper for cash requirements
and maintains revolving credit agreements equal to or in excess of any
commercial paper outstanding. The Company's commercial paper has been
rated A-1+ and P-1 by Standard and Poor's Corporation and Moody's
Investors Service, Inc., respectively. Further, the Company has filed a
shelf registration statement with the Securities and Exchange Commission
under which up to $500 million of additional debt securities may be issued.
The Company's Board of Directors has established a maximum aggregate
level of $1.85 billion for amounts which may be raised through borrowings or
the issuance of equity securities.
Note 4 to the Company's financial statements on page 41 of this
report provides further information concerning commercial paper
transactions and the Company's revolving credit agreements.
Page 33
The Company has a capital expenditure program (not including business
acquisitions) of approximately $150 million planned for 1994, including
approximately $25 million for land and buildings or renovation of existing
facilities, $112 million for machinery and equipment, $6 million for vehicles
and $7 million for outdoor advertising structures or improvements to
existing structures. Management reviews the capital expenditure program
periodically and modifies it as required to meet current business needs. It
is expected that the 1994 capital program will be funded from operating
cash flow.
Capital stock
During 1993, the Company issued 1,980,000 shares of its common stock as
partial consideration for the acquisition of the Honolulu Advertiser.
During 1991, the Company issued 399,137 shares of common stock in
connection with the acquisition of the Times Journal Company. The shares
issued for these acquisitions were formerly held as treasury stock.
In June 1991, the Company acquired 15,940,679 shares, or
approximately 10% of its common stock, held by the former Gannett
Foundation, for $670 million in cash. These shares were recorded as
treasury stock.
In 1988, the Company's Board of Directors authorized the repurchase
of up to 7.5 million shares of its outstanding common stock. During the
period 1988-1991 the Company purchased 4,530,200 shares of its common
stock under this program at a cost of $158 million. No purchases were made
under this program during 1992 or 1993.
Certain of the shares acquired by the Company have been reissued for
acquisitions or in settlement of employee stock awards. The remaining
shares are held as treasury stock. The Company may purchase additional
shares from time to time.
An employee 401(k) Savings Plan was established in 1990 which includes
a Company matching contribution in the form of Gannett stock. To fund the
Company's matching contribution, an Employee Stock Ownership Plan (ESOP)
was formed which acquired 1,250,000 shares of Gannett stock from the
Company for $50 million. The stock purchase was financed with a loan from
the Company.
Before cumulative effect of accounting changes, in percentages
Return on
shareholders'
Year equity
- ------- ----------------
1984 20.7
1985 21.0
1986 20.4
1987 21.0
1988 21.5
1989 21.0
1990 18.6
1991 16.7
1992 21.2
1993 21.9
The Company's common stock outstanding at December 26, 1993 totaled
146,966,857 shares, compared with 144,401,718 shares at December 27, 1992.
The increase is due to shares issued for the acquisition of the Honolulu
Advertiser, stock options and stock incentive rights.
Dividends
Dividends declared on common stock amounted to $191 million in 1993,
compared with $182 million in 1992, reflecting increased shares outstanding
and an increase in the dividend rate.
Dividends
declared
Year per share
- ------- ----------
1984 $0.665
1985 $0.765
1986 $0.860
1987 $0.940
1988 $1.020
1989 $1.110
1990 $1.210
1991 $1.240
1992 $1.260
1993 $1.300
In October 1993, the quarterly dividend was increased from $.32 to
$.33 per share.
Cash Dividends Quarter Payment date Per share
- -------------- ----------- -------------- ---------
1993 4th Quarter Jan. 3, 1994 $0.33
3rd Quarter Oct. 1, 1993 $0.33
2nd Quarter July 1, 1993 $0.32
1st Quarter April 1, 1993 $0.32
1992 4th Quarter Jan. 4, 1993 $0.32
3rd Quarter Oct. 1, 1992 $0.32
2nd Quarter July 1, 1992 $0.31
1st Quarter April 1, 1992 $0.31
Effects of inflation and changing prices
The Company's results of operations and financial condition
have not been significantly affected by inflation and changing prices. In
all three of its business segments, subject to normal competitive
conditions, the Company generally has been able to pass along rising costs
through increased selling prices. Further, the effects of inflation and
changing prices on the Company's property, plant and equipment and related
depreciation expense have been reduced as a result of an ongoing capital
expenditure program and because of the availability of replacement assets
with improved technology and efficiency.
Page 34
CONSOLIDATED BALANCE SHEETS
In thousands of dollars
Dec., 26, 1993 Dec., 27, 1992
--------------- ---------------
ASSETS
Current assets:
Cash $32,461 $31,672
Marketable securities, at cost, which
approximates market 43,034 41,657
Trade receivables (less allowance for
doubtful receivables of $13,915 and $12,241,
respectively) 449,063 431,293
Other receivables 135,036 23,008
Inventories 53,094 48,087
Prepaid expenses 45,269 55,730
--------------- ---------------
Total current assets 757,957 631,447
--------------- ---------------
Property, plant and equipment:
Land 131,676 101,313
Buildings and improvements 689,103 661,337
Advertising display structures 262,145 262,145
Machinery, equipment and fixtures 1,673,237 1,618,776
Construction in progress 38,449 49,771
--------------- ---------------
Total 2,794,610 2,693,342
Less accumulated depreciation (1,316,341) (1,218,051)
--------------- ---------------
Net property, plant and equipment 1,478,269 1,475,291
--------------- ---------------
Intangible and other assets:
Excess of acquisition cost over the
value of assets acquired (less amortization
of $396,915 and $361,204, respectively) 1,501,102 1,364,883
Investments and other assets (Note 5) 86,470 137,388
--------------- ---------------
Total intangible and other assets 1,587,572 1,502,271
--------------- ---------------
Total assets $3,823,798 $3,609,009
=============== ===============
Page 35
CONSOLIDATED BALANCE SHEETS
In thousands of dollars
Dec., 26, 1993 Dec., 27, 1992
--------------- ---------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt (Note 4) $164 $267
Accounts payable
Trade 169,425 153,484
Other 17,783 30,102
Accrued liabilities
Compensation 53,922 46,746
Interest 11,774 4,491
Other 74,761 56,681
Dividend payable 48,399 46,221
Income taxes (Note 7) 5,760 25,837
Deferred income 73,151 67,722
--------------- ---------------
Total current liabilities 455,139 431,551
--------------- ---------------
Deferred income taxes (Note 7) 205,314 93,439
Long-term debt (Note 4) 850,686 1,080,756
Postretirement medical and life insurance
liabilities (Note 6) 308,024 304,863
Other long-term liabilities 96,715 118,299
--------------- ---------------
Total liabilities 1,915,878 2,028,908
--------------- ---------------
Shareholders' equity (Notes 4 and 8):
Preferred stock, par value $1: Authorized,
2,000,000 shares: Issued, none
Common stock, par value $1: Authorized,
400,000,000 shares: Issued, 162,211,590 shares 162,212 162,212
Additional paid-in capital 70,938 40,506
Retained earnings 2,366,246 2,158,583
Foreign currency translation adjustment (9,442) (6,548)
--------------- ---------------
2,589,954 2,354,753
Less Treasury stock, 15,244,733 shares and
17,809,872 shares, respectively, at cost (643,787) (733,196)
Deferred compensation related to ESOP (Note 8) (38,247) (41,456)
--------------- ---------------
Total shareholders' equity 1,907,920 1,580,101
--------------- ---------------
Commitments and contingent liabilities (Note 9)
--------------- ---------------
Total liabilities and shareholders' equity $3,823,798 $3,609,009
=============== ===============
Page 36
CONSOLIDATED STATEMENTS OF INCOME
In thousands of dollars
Fiscal year ended
Dec. 26, 1993 Dec. 27, 1992 Dec. 29, 1991
-------------- -------------- ---------------
Net operating revenues:
Newspaper advertising $2,005,037 $1,882,114 $1,852,591
Newspaper circulation 838,706 807,093 777,221
Broadcasting 397,204 370,613 357,383
Outdoor advertising 230,771 241,313 260,120
Other 169,903 167,824 134,720
-------------- -------------- ---------------
Total 3,641,621 3,468,957 3,382,035
-------------- -------------- ---------------
Operating Expenses:
Cost of sales and operating expenses,
exclusive of depreciation 2,067,244 2,024,601 2,022,389
Selling, general and administrative expenses,
exclusive of depreciation 650,390 629,202 600,946
Depreciation 164,420 157,242 158,389
Amortization of intangible assets 45,215 40,629 41,364
-------------- -------------- ---------------
Total 2,927,269 2,851,674 2,823,088
-------------- -------------- ---------------
Operating Income 714,352 617,283 558,947
-------------- -------------- ---------------
Non-operating income (expense):
Interest expense (51,250) (50,817) (71,057)
Interest income 4,493 5,430 8,443
Other 857 2,384 6,416
-------------- -------------- ---------------
Total (45,900) (43,003) (56,198)
-------------- -------------- ---------------
Income before income taxes 668,452 574,280 502,749
Provision for income taxes (Note 7) 270,700 228,600 201,100
-------------- -------------- ---------------
Income before cumulative effect of accounting
principle changes 397,752 345,680 301,649
-------------- -------------- ---------------
Cumulative effect on prior years of accounting
principle changes for:
Income taxes (Note 7) 34,000
Retiree health and life insurance
benefits (Note 6) (180,000)
-------------- -------------- ---------------
Total (146,000)
-------------- -------------- ---------------
Net Income $397,752 $199,680 $301,649
============== ============== ===============
Earnings per share:
Before cumulative effect of accounting
principle changes $2.72 $2.40 $2.00
Cumulative effect of accounting principle changes (1.01)
-------------- -------------- ---------------
Net income per share $2.72 $1.39 $2.00
============== ============== ===============
Page 37
CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands of dollars
Fiscal year ended
Dec. 26, 1993 Dec. 27, 1992 Dec. 29, 1991
-------------- -------------- ---------------
Cash flows from operating activities:
Net income $397,752 $199,680 $301,649
Adjustments to reconcile net income to
operating cash flows:
Cumulative effect on prior years of accounting
principle changes (Notes 6 and 7) 146,000
Depreciation 164,420 157,242 158,389
Amortization of intangibles 45,215 40,629 41,364
Deferred income taxes 20,315 (17,227) (10,800)
Loss (gain) on sale of assets (8,307) 2,172 (20,035)
Other, net 44,339 23,186 14,762
Changes in assets and liabilities, net of
effect of acquisitions:
Decrease (increase) in receivables (18,273) (12,607) 19,548
Decrease (increase) in inventories (1,709) 3,405 13,858
Decrease in film broadcast rights, net of liabilities 51 12,696 151
Increase (decrease) in accounts payable (3,270) (5,418) 5,368
Increase (decrease) in interest and taxes payable 16,117 (23,025) (59,849)
Change in other assets and liabilities, net 13,610 18,222 (3,201)
-------------- -------------- --------------
Net cash provided by operating activities 670,260 544,955 461,204
-------------- -------------- --------------
Cash flows from investing activities:
Purchase of property, plant and equipment (132,122) (154,072) (192,392)
Payments for acquisitions, net of cash acquired (5,291) (591) (3,491)
Decrease (increase) in partnership and other investments (167) (5,000) 64,806
Proceeds from sale of assets 20,531 28,535 71,236
Collection of long-term receivables 2,998 6,880 793
-------------- -------------- --------------
Net cash used for investing activities (114,051) (124,248) (59,048)
-------------- -------------- --------------
Cash flows from financing activities:
Proceeds from long-term debt 525,000 737,922
Payments of long-term debt (897,942) (254,731) (271,727)
Dividends paid (188,425) (180,029) (192,530)
Common stock transactions, net 9,899 21,227 (662,368)
-------------- -------------- --------------
Net cash used for financing activities (551,468) (413,533) (388,703)
-------------- -------------- --------------
Effect of currency exchange rate change (2,575) (4,518) 982
Net increase in cash and cash equivalents 2,166 2,656 14,435
Cash and cash equivalents at beginning of year 73,329 70,673 56,238
-------------- -------------- --------------
Cash and cash equivalents at end of year $75,495 $73,329 $70,673
============== ============== ==============
Page 38
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
In thousands of dollars
Fiscal years ended
December 29, 1991,
December 27, 1992,
and December 26, 1993
Foreign Deferred
Common stock Additional currency compensation
$1 par paid-in Retained translation Treasury related
value capital earnings adjustment stock to ESOP Total
------------- ------------- -------------- ----------- ----------- ------------ ------------
Balance: Dec. 30, 1990 $162,212 $39,748 $2,025,503 $33 ($116,440) ($47,979) $2,063,077
Net income, 1991 301,649 301,649
Dividends declared, 1991:
$1.24 per share (187,088) (187,088)
Treasury stock acquired (671,833) (671,833)
Stock options exercised (3,964) 8,846 4,882
Stock issued under
incentive plan (473) 5,055 4,582
Stock issued in connection
with acquisition 2,274 15,726 18,000
Tax benefit derived from
stock incentive plans 2,183 2,183
Compensation expense
related to ESOP 3,235 3,235
Tax benefit from ESOP 589 589
Foreign currency
translation adjustment 211 211
------------- ------------- -------------- ----------- ----------- ------------ ------------
Balance: Dec. 29, 1991 162,212 40,357 2,140,064 244 (758,646) (44,744) 1,539,487
------------- ------------- -------------- ----------- ----------- ------------ ------------
Net income, 1992 199,680 199,680
Dividends declared, 1992:
$1.26 per share (181,697) (181,697)
Stock options exercised (3,198) 19,813 16,615
Stock issued under
incentive plan (1,025) 5,637 4,612
Tax benefit derived from
stock incentive plans 4,372 4,372
Compensation expense
related to ESOP 3,288 3,288
Tax benefit from ESOP 536 536
Foreign currency
translation adjustment (6,792) (6,792)
------------- ------------- -------------- ----------- ----------- ------------ ------------
Balance: Dec. 27, 1992 162,212 40,506 2,158,583 (6,548) (733,196) (41,456) 1,580,101
------------- ------------- -------------- ----------- ----------- ------------ ------------
Net income, 1993 397,752 397,752
Dividends declared, 1993:
$1.30 per share (190,604) (190,604)
Stock options exercised (2,967) 15,412 12,445
Stock issued under
incentive plan (1,463) 5,586 4,123
Tax benefit derived from
stock incentive plans 3,767 3,767
Stock issued in connection
with acquisition 31,095 68,411 99,506
Compensation expense
related to ESOP 3,209 3,209
Tax benefit from ESOP 515 515
Foreign currency
translation adjustment (2,894) (2,894)
------------- ------------- -------------- ----------- ----------- ------------ ------------
Balance: Dec. 26, 1993 $162,212 $70,938 $2,366,246 ($9,442) ($643,787) ($38,247) $1,907,920
------------- ------------- -------------- ----------- ----------- ------------ ------------
Page 39
Notes to consolidated financial statements
Note 1
Summary of significant accounting policies
Fiscal year: The Company's fiscal year ends on the last Sunday of the
calendar year. Each of the fiscal years 1991-1993 encompasses a 52-week
period.
Consolidation: The consolidated financial statements include the
accounts of the Company and its subsidiaries after elimination of all
significant intercompany transactions and profits.
Operating agencies: Six of the Company's subsidiaries are
participants in joint operating agencies. Each joint operating agency
performs the production, sales and distribution functions for the
subsidiary and another newspaper publishing company under a joint
operating agreement. The Company includes its appropriate portion of the
revenues and expenses generated by the operation of the agencies on a
line-by-line basis in its statement of income.
Inventories: Inventories, which consist principally of newsprint,
printing ink, plate material and production film for the Company's newspaper
publishing operations, are valued at the lower of cost (first-in, first-out)
or market.
Property and depreciation: Property, plant and equipment is recorded
at cost, and depreciation is provided generally on a straight-line basis
over the estimated useful lives of the assets. The principal estimated
useful lives are: buildings and improvements, 10 to 40 years; machinery,
equipment and fixtures, four to 25 years; outdoor advertising display
structures, five to 30 years. Major renewals, improvements, relocation of
outdoor advertising structures and interest incurred during the
construction period of major additions are capitalized. Expenditures for
the removal of outdoor advertising structures, maintenance, repairs and
minor renewals are charged to expense as incurred.
Excess of acquisition cost over fair value of assets acquired: The
excess of acquisition cost over the fair value of assets acquired
represents the cost of intangible assets at the time the subsidiaries were
purchased. In accordance with Opinion 17 of the Accounting Principles Board
of the American Institute of Certified Public Accountants, the excess
acquisition cost of subsidiaries arising from acquisitions accounted for as
purchases since October 31, 1970 ($1.82 billion at December 26, 1993) is
being amortized over a 40-year period on a straight-line basis. Management
continually reviews the appropriateness of the carrying value of the
excess acquisition cost of its subsidiaries and the related amortization
periods.
Other assets: The Company's television stations are parties to
program broadcast contracts. These contracts are recorded at the gross
amount of the related liability when the programs are available for
telecasting. Program assets are classified as current (as a prepaid
expense) or noncurrent (as an other asset) in the consolidated balance
sheet, based upon the expected use of the programs in succeeding years.
The amount charged to expense appropriately matches the cost of the
programs with the revenues associated with them. The liability for these
contracts is classified as current or noncurrent in accordance with the
payment terms of the contracts. The payment period generally coincides
with the period of telecast for the programs, but may be shorter.
Retirement plans: Pension costs under the Company's retirement plans
are actuarially computed. It is the policy of the Company to fund costs
accrued under its qualified pension plans.
Postretirement benefits other than pensions: In 1992, the Company
adopted the provisions of Statement of Financial Accounting Standards No.
106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions" (SFAS 106).
Under the provisions of SFAS 106, the Company recognizes the cost of
postretirement medical and life insurance benefits on an accrual basis
over the working lives of employees expected to receive such benefits.
Prior to the adoption of SFAS 106, the Company recognized the cost of
these benefits as payments were made on behalf of retirees.
As permitted under SFAS 106, the Company recognized the Accumulated
Postretirement Benefit Obligation as of the beginning of fiscal 1992.
Income taxes: The Company accounts for certain income and expense
items differently for financial reporting purposes than for income tax
reporting purposes. Deferred income taxes are provided in recognition of
these temporary differences.
In 1992, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109), and
adjusted previously recorded deferred taxes to reflect then-enacted tax
rates. The Company has reflected the effect of adopting SFAS 109 as a
change in accounting principle at the beginning of fiscal 1992.
Per share amounts: All income per share amounts are based on the
weighted average number of common shares outstanding during the year.
Foreign currency translation: The income statement of Mediacom, the
Company's Canadian outdoor advertising operation, has been translated to
U.S. dollars using the average currency exchange rates in effect during the
year. Mediacom's balance sheet has been translated using the currency
exchange rate as of the end of the accounting period. The impact of
currency exchange rate changes on the translation of Mediacom's balance
sheet has been charged directly to shareholders' equity.
Page 40
Note 2
Acquisitions and dispositions
1993: In January 1993, the Company completed the acquisition of the
Honolulu Advertiser and the sale of the Honolulu Star-Bulletin.
Consideration for this purchase was approximately $250 million and
included the issuance of 1,980,000 shares of the Company's common stock
from treasury valued at approximately $100 million and the assumption of
certain liabilities of the acquired business. Concurrent with these
transactions, the Honolulu joint operating agreement was amended to
provide the Company with a greater share of profits from the operation.
Proceeds from the sale of the Honolulu Star-Bulletin in excess of carrying
value were accounted for as a reduction in the acquisition cost of the
Honolulu Advertiser.
In the fourth quarter of 1993, the Company sold its radio stations in
Kansas City and St. Louis, Mo. The Company also provided for the pending
sale of its television station in Boston, which is expected to be completed
in early 1994. The Company recognized a minor net gain on these
transactions which is reflected in non-operating income.
1992: In August 1992, the Company sold its outdoor operation in
Phoenix, Ariz. Operating results for 1992 were not materially affected by
this transaction.
1991: On August 30, 1991, the Company acquired the Times Journal
Company located in Springfield, Va., which included a commercial printing
operation, The Journal Newspapers and a telephone database service. On
December 26, 1991, the Company sold The Journal Newspapers. Consideration
for this purchase (net of the proceeds from the sale of The Journal
Newspapers) totaled $35 million and included shares of the Company's
common stock and the assumption of certain obligations of the acquired
businesses.
On October 18, 1991, the Company sold its newspaper in Little Rock,
Ark., for $69 million in cash. Operating results for 1991 were not materially
affected by this transaction.
During 1993, 1992 and 1991, the Company also purchased certain other
publications which are included in the newspaper publishing segment.
All acquisitions discussed above were accounted for by the purchase
method and, accordingly, operations for the purchased companies are
included in the financial statements from the dates of acquisition. Pro
forma results of operations, assuming these acquisitions were made at the
beginning of the year previous to the year in which the transactions were
consummated, are not materially different from reported results of
operations.
Note 3
Statement of cash flows
For purposes of this statement, the Company considers its
marketable securities, which are readily convertible into cash (with
original maturity dates of less than 90 days) and consist of short-term
investments in government securities, commercial paper and money market
funds, as cash equivalents.
Cash paid in 1993, 1992 and 1991 for income taxes and for
interest (net of amounts capitalized) was as follows:
In thousands of dollars
1993 1992 1991
--------- --------- ----------
Income taxes $249,858 $274,741 $271,188
Interest $43,967 $50,871 $73,394
In 1993, the Company issued 1,980,000 shares of its common stock from
treasury valued at approximately $100 million in connection with the
acquisition of the Honolulu Advertiser and assumed net liabilities totaling
approximately $150 million. Refer to Note 2 for more information on this
transaction.
In 1993, 1992 and 1991, the Company issued 146,371 shares, 142,383
shares and 126,789 shares, respectively, in settlement of previously
granted stock incentive rights. The compensation liability for these rights
of $7 million for 1993 and 1992 and $6 million for 1991 was transferred to
shareholders' equity at the time the shares were issued.
In 1991, the Company issued 399,137 shares of its common stock with a
value of $18 million in connection with the acquisition of the Times Journal
Company. The Company assumed net liabilities totaling $17 million in
connection with this and other acquisitions in 1991. Refer to Note 2 for
more information concerning this transaction.
Page 41
Note 4
Long-term debt
The long-term debt of the Company is summarized below.
In thousands of dollars
Dec. 26, 1993 Dec. 27, 1992
-------------- --------------
Unsecured promissory notes $239,118 $991,211
Notes due 2/1/96, interest at 9.55% 17,260 17,260
Notes due 3/12/96, interest at 9.5% 42,200 42,200
Notes due 3/1/98, interest at 5.25% 272,836 -
Notes due 5/1/00, interest at 5.85% 249,418 -
Secured obligations due through
2011, interest averaging 6.3% at
Dec. 26, 1993 and Dec. 27, 1992,
varying annual installments 12,196 12,366
Unsecured obligations 17,427 17,500
Other indebtedness 395 486
--------------- --------------
850,850 1,081,023
Less amount included in
current liabilities (164) (267)
--------------- --------------
Total long-term debt $850,686 $1,080,756
=============== ==============
The unsecured promissory notes at December 26, 1993 were due from
December 27, 1993 to January 24, 1994 with rates varying from 3.1% to 3.23%.
The unsecured promissory notes at December 27, 1992 were due from
January 5, 1993 to January 28, 1993 with interest rates varying from 3.35%
to 3.75%.
The maximum amount of such promissory notes outstanding at the end
of any period during 1993 was $1.071 billion and during 1992 was $1.219
billion. The daily average outstanding balance was $584 million during 1993
and $1.124 billion during 1992. The weighted average interest rate was 3.17%
for 1993 and 3.75% for 1992.
The unsecured obligations are due from 1994 to 2009 and bear
interest at varying rates. At December 26, 1993 and December 27, 1992, the
weighted average interest rates were 4.5% and 4.6%, respectively.
At December 26, 1993, the Company had a total of $1.5 billion of credit
available under two revolving credit agreements. One agreement for $1
billion provides for a revolving credit period which permits borrowings up
to the maximum commitment from time to time. The revolving credit period
extends to December 1, 1998.
The second agreement is a 364-day revolving credit agreement which
provides for borrowings up to $500 million. This agreement extends to
December 1, 1994.
Commitment fee rates are 0.125% for the $1 billion agreement and
0.09% for the $500 million agreement. At the option of the Company, the
interest rate on borrowings under the agreements may be at the prime rate,
at 0.165% above the London Interbank Offered Rate or at 0.29% above a
certificate of deposit-based rate. The prime rate was 6.0% at December 26,
1993 and December 27, 1992.
The revolving credit agreements contain restrictive provisions that
relate primarily to the maintenance of net worth of $1.2 billion. At
December 26, 1993 and December 27, 1992, net worth was $1.9 billion and $1.58
billion, respectively.
At December 26, 1993, the unsecured promissory notes are supported
by the $1 billion revolving credit agreement and, therefore, are classified
as long-term debt.
Approximate annual maturities of long-term debt, assuming that the
Company had used the $1 billion revolving credit agreement as of the
balance sheet date to refinance existing unsecured promissory notes on a
long-term basis, are:
In thousands of dollars
1994 $164
1995 91
1996 59,542
1997 90
1998 512,661
Later years 278,302
---------
Total $850,850
=========
Note 5
Retirement plans
The Company and its subsidiaries have various retirement and profit
sharing plans, including plans established under collective bargaining
agreements and separate plans for joint operating agencies, under which
substantially all full-time employees are covered. The Gannett Retirement
Plan is the Company's principal retirement plan and covers most of the
employees of the Company and its subsidiaries. Benefits under the Gannett
Retirement Plan are based on years of service and final average pay. The
Company's pension plan assets include insurance contracts, marketable
securities including common stocks, bonds and U.S. government obligations
and interest-bearing deposits.
The Company's pension cost for 1993, 1992 and 1991 consists of the
following:
In thousands of dollars
1993 1992 1991
--------- ---------- ---------
Service cost-benefits earned
during the period $33,627 $31,230 $24,971
Interest cost on projected
benefit obligation 63,067 58,220 48,838
Actual return on plan assets (98,622) (25,656) (147,855)
Net amortization and
deferral of actuarial gains 19,473 (54,469) 80,288
--------- ---------- ---------
Net pension expense for
Company-sponsored
retirement plans 17,545 9,325 6,242
Union and other
pension cost 7,399 8,582 6,999
--------- ---------- ---------
Net pension cost $24,944 $17,907 $13,241
========= ========== =========
Page 42
The majority of the Company's pension plans, including the Gannett
Retirement Plan, have plan assets that exceed accumulated benefit
obligations. There are certain plans, however, with accumulated benefit
obligations which exceed plan assets. The following tables summarize the
funded status of the Company's pension plans and the related amounts that
are recognized in the consolidated balance sheet:
In thousands of dollars
Dec. 26, 1993 Plans for which Plans for which
assets exceed accumulated
accumulated benefits
benefits exceed assets
----------------- -----------------
Actuarial present value
of benefit obligations:
Vested benefit obligation $655,550 $21,616
================= =================
Accumulated benefit obligation $706,654 $22,493
================= =================
Projected benefit obligation ($918,059) ($33,940)
Plan assets at market value 789,534 -
----------------- -----------------
Projected benefit obligation
in excess of plan assets (128,525) (33,940)
Unrecognized net loss 183,177 7,026
Unrecognized prior service cost 15,197 1,530
Unrecognized net (asset)
obligation at year-end (46,176) 2,844
----------------- -----------------
Pension asset (liability)
reflected in consolidated
balance sheet $23,673 ($22,540)
================= =================
In thousands of dollars
Dec. 27, 1992 Plans for which Plans for which
assets exceed accumulated
accumulated benefits
benefits exceed assets
----------------- -----------------
Actuarial present value
of benefit obligations:
Vested benefit obligation $494,461 $19,156
================= =================
Accumulated benefit obligation $531,655 $19,776
================= =================
Projected benefit obligation ($711,906) ($26,991)
Plan assets at market value 724,977 -
----------------- -----------------
Projected benefit obligation
less than (in excess of)
plan assets 13,071 (26,991)
Unrecognized net loss 64,066 1,993
Unrecognized prior service cost 17,565 1,737
Unrecognized net (asset)
obligation at year-end (57,706) 3,579
----------------- -----------------
Pension asset (liability)
reflected in consolidated
balance sheet $36,996 ($19,682)
================= =================
The projected benefit obligation was determined using an assumed
discount rate of 7% at the end of 1993 and 8.5% at the end of 1992. The
assumed rate of compensation increase was 5% at the end of 1993 and 6% at
the end of 1992. The assumed long-term rate of return on plan assets used
in determining pension cost was 10%. Pension plan assets include 590,700
shares of the Company's common stock valued at $34 million at the end of
1993 and 1,090,700 shares valued at $56 million at the end of 1992.
Note 6
Postretirement benefits other than pensions
The Company provides health care and life insurance benefits to certain
retired employees. Employees become eligible for benefits after meeting
certain age and service requirements.
In 1992, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions" (SFAS 106). Under SFAS 106, the cost of
providing retiree health care and life insurance benefits is actuarially
determined and accrued over the service period of the active employee
group. Prior to 1992, retiree health care and life insurance benefits were
expensed as claims and premiums were paid.
As permitted by SFAS 106, the Company elected to fully recognize the
Accumulated Postretirement Benefit Obligation as of the beginning of fiscal
1992 of $295 million as a change in accounting principle. On an after-tax
basis, this non-cash charge was $180 million, or $1.25 per share. In addition,
operating results for 1992 reflect incremental after-tax costs of $4
million or 3 cents per share for postretirement benefit costs recorded
under the new accounting rule.
The following table sets forth the amounts included in the
Consolidated Balance Sheet at December 26, 1993 and December 27, 1992 for
postretirement medical and life insurance liabilities:
In thousands of dollars
Accumulated postretirement
benefit obligation Dec. 26, 1993 Dec. 27, 1992
--------------- --------------
Retirees ($168,190) ($137,383)
Fully eligible active plan participants (32,553) (45,777)
Other active plan participants (70,531) (57,823)
--------------- --------------
(271,274) (240,983)
Unrecognized net loss 22,294 -
Unrecognized prior service credit (59,044) (63,880)
--------------- --------------
Accrued postretirement benefit cost ($308,024) ($304,863)
=============== ==============
Page 43
Postretirement benefit cost for health care and life insurance for
the years ended December 26, 1993 and December 27, 1992 included the
following components:
In thousands of dollars
1993 1992
---------- ----------
Service costs-benefits earned during the period $4,055 $4,553
Interest cost on accumulated postretirement
benefit obligation 18,997 17,732
Net amortization and deferral (4,768) (4,261)
---------- ----------
Net periodic postretirement benefit cost $18,284 $18,024
========== ==========
For 1991, the cost of postretirement medical and life insurance
benefits recognized on a cash basis was $7 million.
At December 26, 1993, the accumulated postretirement benefit
obligation was determined using a discount rate of 7% and a health care
cost trend rate of 12.9% for pre-age 65 benefits, decreasing to 5.5% in the
year 2007 and thereafter. For post-age 65 benefits, the health care cost
trend rate used was 12.1%, declining to 5.5% in the year 2003 and
thereafter.
The accumulated postretirement benefit obligation at December 27,
1992 was determined using a discount rate of 8.5% and a health care cost
trend rate of 14% for pre-age 65 benefits, decreasing to 6.5% in the year
2007 and thereafter. For post-age 65 benefits, the health care cost trend
rate used was 13%, declining to 6.5% in the year 2003 and thereafter.
The Company's policy is to fund the above-mentioned benefits as
claims and premiums are paid.
The effect of a 1% increase each year in the health care cost trend
rate used would result in increases of approximately $19 million in the 1993
accumulated postretirement benefit obligation and $2 million in the
aggregate service and interest components of the 1993 expense.
During 1992, the Company amended its retiree medical insurance plan
to provide limits on the Company's share of the cost of such benefits it will
pay to future retirees. Amendments were also made which related the
Company's share of retiree cost to employee retirement age and length of
service.
Note 7
Income taxes
The sources of income before income taxes consist of the following:
In thousands of dollars
1993 1992 1991
---------- --------- ---------
Domestic $650,896 $559,971 $489,928
Foreign 17,556 14,309 12,821
---------- --------- ---------
Total $668,452 $574,280 $502,749
========== ========= =========
The provision for income taxes on income before the cumulative
effects of accounting principle changes consists of the following:
In thousands of dollars
1993 Current Deferred Total
---------- --------- ----------
Federal $204,733 $19,333 $224,066
State 38,750 1,232 39,982
Foreign 6,902 (250) 6,652
---------- --------- ----------
Total $250,385 $20,315 $270,700
========== ========= ==========
In thousands of dollars
1992 Current Deferred Total
---------- --------- ----------
Federal $200,192 ($14,381) $185,811
State 40,343 (2,846) 37,497
Foreign 5,292 - 5,292
---------- --------- ----------
Total $245,827 ($17,227) $228,600
========== ========= ==========
In thousands of dollars
1991 Current Deferred Total
---------- --------- ----------
Federal $179,042 ($8,635) $170,407
State 33,342 (2,027) 31,315
Foreign (484) (138) (622)
---------- --------- ----------
Total $211,900 ($10,800) $201,100
========== ========= ==========
The provision for income taxes exceeds the U.S. federal statutory tax
rate as a result of the following differences:
Fiscal year 1993 1992 1991
---------- --------- --------
U.S. statutory tax rate 35.0% 34.0% 34.0%
Increase (decrease) in
taxes resulting from:
State income taxes net of
federal income tax benefit 3.9% 4.3% 4.2%
Goodwill amortization not
deductible for tax purposes 1.6% 2.0% 2.4%
Other, net 0.0% -0.5% -0.6%
---------- --------- --------
Effective tax rate 40.5% 39.8% 40.0%
========== ========= ========
Page 44
In 1992, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109).
Under the provisions of SFAS 109, the Company adjusted previously
recorded deferred taxes to reflect then-enacted statutory rates. The
Company has reflected the cumulative effect of adopting SFAS 109 as a
change in accounting principle at the beginning of 1992. This adjustment was
recorded as a non-cash credit to earnings of $34 million or $.24 per share.
Prior years' financial statements were not restated; however, previously
reported first quarter 1992 results have been restated to reflect this
adjustment. The adoption of SFAS 109 had no effect on the provision for
income taxes for 1992.
Deferred income taxes reflect temporary differences in the
recognition of revenue and expense for tax reporting and financial
statement purposes.
Deferred tax liabilities and assets were comprised of the following at
the end of 1993 and 1992:
In thousands of dollars
Dec. 26, 1993 Dec. 27, 1992
-------------- -------------
Liabilities:
Accelerated depreciation $223,000 $239,000
Accelerated amortization of
deductible intangibles 88,000 -
Pension 20,000 15,000
Other 39,512 23,100
-------------- -------------
Total deferred tax liabilities 370,512 277,100
-------------- -------------
Assets:
Accrued compensation costs (18,000) (26,000)
Postretirement medical and life (119,000) (122,000)
Other (28,198) (35,661)
-------------- -------------
Total deferred tax assets (165,198) (183,661)
-------------- -------------
Net deferred tax liabilities $205,314 $93,439
============== =============
Note 8
Capital stock, stock options, incentive plans
During 1988, the Company's Board of Directors authorized the repurchase of
up to 7.5 million shares of its outstanding common stock. During the period
1988-1991 the Company purchased 4,530,200 shares of its common stock
under this program at a cost of $158 million. No shares were purchased
under this program in 1992 or 1993. In June 1991, the Company acquired
15,940,679 shares, or approximately 10% of its common stock, held by the
former Gannett Foundation, for $670 million in cash. These share purchases
were recorded as treasury stock.
In January 1993, the Company issued 1,980,000 shares of its common
stock from treasury as partial consideration for the purchase of the
Honolulu Advertiser. The Company issued 399,137 shares of treasury stock
in connection with the acquisition of the Times Journal Company in 1991.
(Refer to Note 2 for further information concerning these transactions.)
Certain of the shares acquired by the Company have been reissued in
settlement of employee stock awards or were sold to an Employee Stock
Ownership Plan which was established in 1990. The remaining shares are held
as treasury stock.
The weighted average number of common shares outstanding used in
the computation of earnings per share was 146,474,000 in 1993, 144,148,000
in 1992 and 150,783,000 in 1991.
The Company's 1978 Executive Long-term Incentive Plan (the 1978 Plan)
provides for the granting of stock options, stock incentive rights and
option surrender rights to executive officers and other key employees.
Stock options are granted to purchase common stock of the Company
at not less than 100% of the fair market value on the day the option is
granted. The exercise period is eight years with the options becoming
exercisable at 25% per year after a one-year waiting period.
Stock incentive rights entitle the employee to receive for each such
right, without payment, one share of common stock at the end of an
incentive period, conditioned upon the employee's continued employment
throughout the incentive period. The incentive period, which is determined
by the Committee, is normally four years. During the incentive period, the
employee receives cash payments for each incentive right equivalent to the
cash dividend the Company would have paid had the employee owned the
shares of common stock issuable under the incentive rights.
Page 45
In July 1989, the Board of Directors approved an amendment to the
1978 Plan to provide that all outstanding awards will be vested if there is
a change in control of the Company. Under the amendment, stock options
become 100% exercisable immediately upon a change in control. Option
surrender rights related one-for-one to all outstanding stock options
have been awarded, which are effective only in the event of a change in
control and entitle the employee to receive cash for option surrender
rights equal to 100% of the difference between the exercise price of the
related stock option and the change-in-control price (which is the highest
price paid for a share of stock as part of the change in control). The
amendment also provides for the payment in cash of the value of stock
incentive rights based on the change-in-control price.
Awards made under the 1978 Plan were as follows:
1993 1992 1991
--------- -------- --------
Stock options 761,910 957,675 547,815
Stock incentive rights 163,702 484,295 319,715
Awards reflected above for 1991 relate to the four-year employment
period 1991-1994. Awards for 1992 include 505,665 stock options and 244,730
stock incentive rights that relate to the four-year period 1993-1996, and
452,010 stock options and 239,565 stock incentive rights that relate to the
four-year period 1992-1995. Awards for 1993 are for the four-year
employment period 1994-1997.
At the beginning of the Company's 1994 fiscal year, 131,655 shares of
common stock were issued in settlement of previously granted stock
incentive rights.
With respect to awards under the 1978 Plan, the Company has recorded
as compensation expense $11 million for 1993, $10 million for 1992 and $4
million for 1991. Under the 1978 Plan, the Company has accrued liabilities
aggregating $24 million at December 26, 1993 and $22 million at December 27,
1992.
A summary of the Company's stock option activity appears below:
Number Option price
Stock options of shares per share
- -------------------- ------------ -------------
Balance outstanding
Dec. 30, 1990 2,172,685 $18.00-54.63
Granted 547,815 36.13-46.13
Exercised (249,816) 18.00-43.75
Expired or canceled (63,562) 30.88-54.63
------------ -------------
Balance outstanding
Dec. 29, 1991 2,407,122 19.54-47.00
Granted 957,675 43.88-51.38
Exercised (549,740) 19.54-43.75
Expired or canceled (40,706) 34.88-44.75
------------ -------------
Balance outstanding
Dec. 27, 1992 2,774,351 30.88-51.38
Granted 761,910 49.00-55.50
Exercised (421,458) 30.88-47.38
Expired or canceled (73,411) 36.13-51.38
------------ -------------
Balance outstanding
Dec. 26, 1993 3,041,392 $30.88-55.50
============ =============
Options were exercisable for 1,299,908 shares at December 26, 1993
and 1,133,077 shares at December 27, 1992. Shares available for future
grants under the 1978 Plan totaled 2,805,985 at December 26, 1993.
On July 1, 1990, the Company established a 401(k) Savings Plan, which
includes a Company matching contribution in the form of Gannett stock. To
fund the Company's matching contribution, an Employee Stock Ownership Plan
(ESOP) was formed which acquired 1,250,000 shares of Gannett stock from the
Company for $50 million. The stock purchase was financed with a loan from
the Company. Compensation expense related to the ESOP, based on the
number of common shares allocated to employee 401(k) accounts and cash
contributed for withdrawals, was $2.2 million in 1993 and 1992, and $1.8
million in 1991.
In May 1990, the Board of Directors declared a dividend distribution
of one Preferred Share Purchase Right ("Right") for each common share held,
payable to shareholders of record on June 8, 1990. The Rights become
exercisable when a person or group of persons acquires or announces an
intention to acquire ownership of 15% or more of the Company's common
shares. Holders of the Rights may acquire an interest in a new series of
junior participating preferred stock, or they may acquire an additional
interest in the Company's common shares at 50% of the market value of the
shares at the time the Rights are exercised. The Rights are redeemable by
the Company at any time prior to the time they become exercisable, at a
price of $.01 per Right.
Page 46
Note 9
Commitments, contingent liabilities and other matters
Litigation: The Company and a number of its subsidiaries are defendants in
judicial and administrative proceedings involving matters incidental to
their business. The Company's management does not believe that any
material liability will be imposed as a result of these matters.
Leases: Approximate future minimum annual rentals payable under
non-cancelable operating leases are as follows:
In thousands of dollars
1994 $39,170
1995 38,286
1996 37,182
1997 35,272
1998 30,401
Later years 112,012
---------
Total $292,323
=========
Total minimum annual rentals have not been reduced for future
minimum sublease rentals aggregating approximately $4 million. Total rental
costs were $100 million for 1993, $109 million for 1992 and $111 million for
1991.
In December 1990, the Company adopted a Transitional Compensation
Plan ("Plan") which provides termination benefits to key executives whose
employment is terminated under certain circumstances within two years
following a change in control of the Company. Benefits under the Plan
include a severance payment of up to three years' compensation and
continued life and medical insurance coverage.
Other matters: Statement of Financial Accounting Standards No. 107,
"Disclosures About Fair Value of Financial Instruments," requires the
Company to disclose the estimated fair value of its financial instruments.
For financial instruments other than long-term debt, including cash
and cash equivalents, trade and other receivables, current maturities of
long-term debt and other long-term liabilities, the amounts reported on the
balance sheet approximate fair value.
The Company estimates the fair value of its long-term debt, based on
borrowing rates currently available, to be $862 million, compared with the
carrying amount of $851 million.
Statement of Financial Accounting Standards No. 112, "Employer's
Accounting for Postemployment Benefits," requires the accrual method of
accounting to be adopted for such benefits no later than the Company's
1994 fiscal year. The Company is currently evaluating this Statement and
does not believe its adoption will have a material effect on its financial
position or results of operations.
Note 10
Business segment information
The Company is a diversified information company with three principal
business segments in 41 states and the District of Columbia, two U.S.
territories, Canada, Great Britain, France, Hong Kong, Singapore and
Switzerland. The newspaper segment consists of 83 daily newspapers in 34
states and two U.S. territories, including USA TODAY, a national,
general-interest daily newspaper; and USA WEEKEND, a magazine supplement
for newspapers. The newspaper segment also includes non-daily
publications, an international survey firm and a nationwide network of
offset presses for commercial printing.
The broadcasting segment's principal activities include the operation
of television and radio stations. At the end of 1993 the Company owned 10
television stations and 11 radio stations. Refer to Note 2 for a discussion
of the sale of certain broadcast stations.
The outdoor advertising segment involves the selling of advertising
space on outdoor advertising structures and transit and transit shelter
advertising operations in 11 states and Canada.
Separate financial data for each of the Company's three business
segments is presented on page 51. In that presentation, operating revenues
by industry segment include both sales to unaffiliated customers, as
reported in the Company's consolidated statements of income, and
intersegment sales, which are accounted for at prices charged unaffiliated
customers. Operating income represents total revenue less operating
expenses, depreciation and amortization of intangibles. In determining
operating income by industry segment, general corporate expenses,
interest expense and other income and expense items of a non-operating
nature are not considered. Corporate assets include cash and marketable
securities, certain investments, long-term receivables and plant and
equipment primarily used for corporate purposes. Interest capitalized has
been included as a corporate capital expenditure for purposes of segment
reporting.
Page 47
Report of independent accountants
To the Board of Directors and
Shareholders of Gannett Co., Inc.
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of income, changes in shareholders' equity
and cash flows present fairly, in all material respects, the financial
position of Gannett Co., Inc., and its subsidiaries at December 26, 1993 and
December 27, 1992, and the results of their operations and their cash flows
for each of the three years in the period ended December 26, 1993, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
As discussed in Notes 6 and 7 to the financial statements,
the Company adopted Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions,"
and Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes," in 1992.
By s/ Price Waterhouse
-------------------
Price Waterhouse
Washington, D.C.
January 27, 1994
Pages 48 and 49
11-YEAR SUMMARY
In thousands of dollars except per share amounts
1993 1992 1991 1990 1989 1988
----------- ------------ ------------ ------------- ------------ -----------
Net operating revenues:
Newspaper advertising $2,005,037 $1,882,114 $1,852,591 $1,917,477 $2,018,076 $1,908,566
Newspaper circulation 838,706 807,093 777,221 730,426 718,087 685,663
Broadcasting 397,204 370,613 357,383 396,693 408,363 390,507
Outdoor advertising 230,771 241,313 260,120 271,366 257,890 226,532
Other 169,903 167,824 134,720 125,659 115,773 103,217
----------- ------------ ------------ ------------- ------------ -----------
Total (Notes a and b, see page 50) 3,641,621 3,468,957 3,382,035 3,441,621 3,518,189 3,314,485
----------- ------------ ------------ ------------- ------------ -----------
Operating Expenses:
Costs and expenses 2,717,634 2,653,803 2,623,335 2,568,744 2,571,617 2,449,587
Depreciation 164,420 157,242 158,389 153,211 149,893 136,861
Amortization of intangible assets 45,215 40,629 41,364 40,825 40,168 40,312
----------- ------------ ------------ ------------- ------------ -----------
Total 2,927,269 2,851,674 2,823,088 2,762,780 2,761,678 2,626,760
----------- ------------ ------------ ------------- ------------ -----------
Operating Income 714,352 617,283 558,947 678,841 756,511 687,725
Non-operating income (expense):
Interest expense (51,250) (50,817) (71,057) (71,567) (90,638) (88,557)
Other 5,350 7,814 14,859 10,689 (18,364) 8,292
----------- ------------ ------------ ------------- ------------ -----------
Income before income taxes 668,452 574,280 502,749 617,963 647,509 607,460
Provision for income taxes 270,700 228,600 201,100 241,000 250,000 243,000
----------- ------------ ------------ ------------- ------------ -----------
Income before cumulative effect of accounting
principle changes 397,752 345,680 301,649 376,963 397,509 364,460
Cumulative effect on prior years of accounting
principle changes for:
Income taxes 34,000
Retiree health and life insurance benefits (180,000)
----------- ------------ ------------ ------------- ------------ -----------
Net Income $397,752 $199,680 $301,649 $376,963 $397,509 $364,460
=========== ============ ============ ============= ============ ===========
Per share amounts (1)
Income before cumulative effect of accounting
principle changes $2.72 $2.40 $2.00 $2.36 $2.47 $2.26
Net income $2.72 $1.39 $2.00 $2.36 $2.47 $2.26
Dividends declared 1.30 1.26 1.24 1.21 1.11 1.02
Shareholders' equity (3) 12.98 10.94 10.71 12.98 12.40 11.09
Weighted average number of common and common
equivalent shares outstanding in thousands (2) 146,474 144,148 150,783 160,047 161,253 161,622
Financial position:
Current assets $757,957 $631,447 $636,101 $668,690 $671,030 $665,031
Current Liabilities 455,139 431,551 443,835 500,203 477,822 500,835
Working capital 302,818 199,896 192,266 168,487 193,208 164,196
Long-term debt excluding current maturities 850,686 1,080,756 1,335,394 848,633 922,470 1,134,737
Shareholders' equity 1,907,920 1,580,101 1,539,487 2,063,077 1,995,791 1,786,441
Total assets 3,823,798 3,609,009 3,684,080 3,826,145 3,782,848 3,792,820
Selected financial percentages and ratios
Percentage increase (decrease):
Earnings after tax (4) 15.1% 14.6% -20.0% -5.2% 9.1% 14.1%
Earnings per share (4) 13.3% 20.0% -15.3% -4.5% 9.3% 14.1%
Dividends declared per share 3.2% 1.6% 2.5% 9.0% 8.8% 8.5%
Book value per share 18.6% 2.1% -17.5% 4.7% 11.8% 11.6%
Credit ratios
Long-term debt to shareholders' equity 44.6% 68.4% 86.7% 41.1% 46.2% 63.5%
Times interest expense earned 14.0X 12.3X 8.1X 9.6X 8.1X 7.9X
1987 1986 1985 1984 1983
----------- ------------ ------------ ------------- ------------
Net operating revenues:
Newspaper advertising $1,787,077 $1,588,985 $1,213,577 $1,064,056 $933,432
Newspaper circulation 645,356 575,806 464,976 418,552 361,135
Broadcasting 356,815 351,133 265,480 232,748 192,874
Outdoor advertising 201,771 210,572 207,572 199,570 183,795
Other 88,428 75,001 57,816 45,271 32,410
----------- ------------ ------------ ------------- ------------
Total (Notes a and b, see page 50) 3,079,447 2,801,497 2,209,421 1,960,197 1,703,646
----------- ------------ ------------ ------------- ------------
Operating Expenses:
Costs and expenses 2,257,304 2,061,789 1,601,372 1,423,088 1,246,554
Depreciation 124,485 111,229 85,512 75,922 67,012
Amortization of intangible assets 36,595 31,980 18,017 14,591 14,392
----------- ------------ ------------ ------------- ------------
Total 2,418,384 2,204,998 1,704,901 1,513,601 1,327,958
----------- ------------ ------------ ------------- ------------
Operating Income 661,063 596,499 504,520 446,596 375,688
Non-operating income (expense):
Interest expense (85,681) (79,371) (25,926) (24,190) (26,331)
Other 15,013 23,076 6,183 8,428 18,908
----------- ------------ ------------ ------------- ------------
Income before income taxes 590,395 540,204 484,777 430,834 368,265
Provision for income taxes 271,000 263,800 231,500 206,900 176,600
----------- ------------ ------------ ------------- ------------
Income before cumulative effect of accounting
principle changes 319,395 276,404 253,277 223,934 191,665
Cumulative effect on prior years of accounting
principle changes for:
Income taxes
Retiree health and life insurance benefits
----------- ------------ ------------ ------------- ------------
Net Income $319,395 $276,404 $253,277 $223,934 $191,665
=========== ============ ============ ============= ============
Per share amounts (1)
Income before cumulative effect of accounting
principle changes $1.98 $1.71 $1.58 $1.40 $1.20
Net income $1.98 $1.71 $1.58 $1.40 $1.20
Dividends declared 0.94 0.86 0.765 0.665 0.61
Shareholders' equity (3) 9.94 8.88 7.93 7.13 6.39
Weighted average number of common and common
equivalent shares outstanding in thousands (2) 161,704 161,380 160,466 160,224 159,942
Financial position:
Current assets $601,220 $570,589 $473,394 $394,222 $334,991
Current Liabilities 474,775 432,327 303,142 293,423 231,612
Working capital 126,445 138,262 170,252 100,799 103,379
Long-term debt excluding current maturities 1,094,321 1,201,370 491,565 188,724 294,853
Shareholders' equity 1,609,394 1,433,781 1,275,213 1,141,964 1,022,289
Total assets 3,510,259 3,365,903 2,313,218 1,812,200 1,689,556
Selected financial percentages and ratios
Percentage increase (decrease):
Earnings after tax (4) 15.6% 9.1% 13.1% 16.8% 6.2%
Earnings per share (4) 15.8% 8.2% 12.9% 16.7% 6.2%
Dividends declared per share 9.3% 12.4% 15.0% 9.0% 5.2%
Book value per share 11.9% 11.7% 11.5% 11.5% 9.6%
Credit ratios
Long-term debt to shareholders' equity 68.0% 83.8% 38.6% 16.6% 29.0%
Times interest expense earned 7.9X 7.8X 19.7X 18.8X 15.0X
(1) Per share amounts have been based upon average number of shares
outstanding during each year, giving retroactive effect to adjustments in (2).
(2) Shares outstanding have been converted to a comparable basis by
reflecting retroactively shares issued for a 2-for-1 stock split effective
January 6, 1987 and a 3-for-2 stock split effective January 5, 1984.
(3) Based upon year-end shareholders' equity and shares outstanding.
(4) Before cumulative effect of accounting principle changes (refer to
Notes 6 and 7 to the consolidated financial statements).
Page 50
Notes to 11-year summary
(a) The Company and its subsidiaries made the acquisitions listed at
right during the period. The results of operations of these acquired
businesses are included in the accompanying financial information from the
date of purchase. Note 2 of the consolidated financial statements on page
40 contains further information concerning certain of these acquisitions.
(b) During the period, the Company sold substantially all of the
assets or capital stock of certain other subsidiaries and divisions of
other subsidiaries for which the revenues and contributions to
consolidated net income were not material. Note 2 of the consolidated
financial statements on page 40 contains further information concerning
certain of these dispositions.
1983
April 13 WTCN-TV now KARE-TV, Minneapolis-St.Paul
June 23 WLVI-TV, Boston
1984
June 27 WDAE-AM, Tampa
Dec. 3 KKBQ/KKBQ-FM, Houston
1985
March 15 Triangle Sign Company
March 29 Family Weekly magazine, now USA WEEKEND
July 1 The Des Moines Register and The Jackson Sun
Nov. 27 Peekskill Star Corporation
1986
Jan. 3 KTKS-FM now KHKS-FM, Dallas
Feb. 18 The Evening News Association
July 14 The Courier-Journal and Louisville Times Company
July 29 KCMO-AM and KBKC-FM now KCMO-FM, Kansas City
Sept. 16 KHIT-FM, Seattle
Dec. 1 Arkansas Gazette Company
1987
July 15 Gannett Direct Marketing Services, Inc.
1988
Feb. 1 WFMY-TV, Greensboro, N.C.
WTLV-TV, Jacksonville, Fla.
July 1 New York Subways Advertising Co., Inc.
and related companies
1989
Oct. 31 Rockford Magazine
Nov. 6 Outdoor advertising displays merged into New Jersey Outdoor
1990
March 28 Great Falls (Mont.) Tribune
May 17 Ye Olde Fishwrapper
June 18 The Shopper Advertising, Inc.
Sept. 7 Desert Community Newspapers
Dec. 27 North Santiam Newspapers
Dec. 28 Pensacola Engraving Co.
1991
Feb. 11 The Add Sheet
April 3 New Jersey Publishing Co.
Aug. 30 The Times Journal Co., including The Journal Newspapers,
The Journal Printing Co. (now Springfield Offset)
and Telematch
Oct. 3 Gulf Breeze Publishing Co.
1992
April 24 Graphic Publications, Inc.
1993
Jan. 30 Honolulu Advertiser
April 24 Tulare Advance-Register
Page 51
Form 10-K information
Business of the company
Gannett Co., Inc. is a diversified information company that operates
primarily in the U.S. Approximately 98% of its revenues are from domestic
operations. Its foreign operations are primarily in Canada, but it also
conducts business in certain European, Asian and other foreign markets.
Its corporate headquarters is in Arlington, Va., near Washington, D.C. It was
incorporated in New York in 1923 and was reincorporated in Delaware in
1972.
The Company's principal business segments are newspaper publishing,
broadcasting and outdoor advertising.
The Company's newspapers make up the largest newspaper group in the
U.S. in circulation. The Company operates 83 daily newspapers, with a total
average daily circulation of more than 6.3 million for 1993, including USA
TODAY. The Company also publishes USA WEEKEND, a weekend newspaper
magazine, and a number of non-daily publications.
On December 26, 1993, the broadcasting division included 10 television
stations in markets with more than 11 million households and 11 radio
stations in markets with a listening population of more than 36 million.
The outdoor division is the largest in North America, with operations
in 11 states and Canada. It includes 12 outdoor advertising companies,
transit and transit shelter advertising operations, and a printing division.
The Company also owns the following: Gannett News Service, which
provides news services for its newspaper operations; Gannett National
Newspaper Sales, which markets the Company's nationwide newspaper
advertising resources; Gannett Offset, which coordinates the sale,
marketing and production of commercial offset printing done for national
and regional customers at many of Gannett's newspapers with offset
presses and at the Company's offset printing facilities in Chandler, Ariz.,
Miramar, Fla., Nashville, Tenn., Atlanta, Ga., St. Louis, Mo., Norwood, Mass.,
and Springfield, Va.; Louis Harris & Associates, the international opinion
research firm; electronic information services, including USA TODAY Hot
Lines and USA TODAY Sports and Information Center; USA TODAY Sky Radio, an
audio news and entertainment service for commercial airlines; Gannett
Direct Marketing Services, a direct marketing company with operations in
Louisville, Ky.; Telematch, a telephone database service; Gannett Community
Directories of New Jersey, yellow-pages publishing; The Add Sheet, a group
of weekly advertising shoppers; and Gannett TeleMarketing, a telephone
sales and marketing business.
Business segment financial information
Selected financial information for the Company's three business segments
is presented below. For a description of the accounting policies related
to this information, see Note 10 to the Company's Consolidated Financial
Statements. The Company's business segments have seasonal aspects with
peak revenue generally occurring in the fourth and, to a lesser extent, the
second fiscal quarters.
In thousands of dollars
Business segment financial information
1993 1992 1991
------------ ----------- -----------
Operating revenues:
Newspaper publishing $3,013,646 $2,857,839 $2,766,564
Broadcasting 397,204 370,613 357,383
Outdoor advertising 230,771 241,313 260,120
Intersegment items - (808) (2,032)
------------ ----------- -----------
$3,641,621 $3,468,957 $3,382,035
------------ ----------- -----------
Operating income:
Newspaper publishing $677,285 $607,637 $544,660
Broadcasting 86,686 66,181 61,666
Outdoor advertising 14,799 8,191 15,851
Corporate (64,418) (64,726) (63,230)
------------ ----------- -----------
$714,352 $617,283 $558,947
------------ ----------- -----------
Identifiable assets:
Newspaper publishing $2,548,143 $2,360,546 $2,388,965
Broadcasting 685,230 721,675 746,859
Outdoor advertising 263,286 279,236 313,868
Corporate 327,139 247,552 234,388
------------ ----------- -----------
$3,823,798 $3,609,009 $3,684,080
------------ ----------- -----------
Depreciation and amortization:
Newspaper publishing $147,524 $135,076 $138,897
Broadcasting 31,449 31,249 28,408
Outdoor advertising 18,616 19,594 20,864
Corporate 12,046 11,952 11,584
------------ ----------- -----------
$209,635 $197,871 $199,753
------------ ----------- -----------
Capital expenditures:
Newspaper publishing $111,111 $122,684 $134,507
Broadcasting 9,144 17,606 36,439
Outdoor advertising 7,528 8,473 13,242
Corporate 4,339 5,309 8,204
------------ ----------- -----------
$132,122 $154,072 $192,392
------------ ----------- -----------
Page 52
Newspaper publishing
On December 26, 1993, the Company operated 83 daily newspapers, including
USA TODAY, and a number of non-daily local publications, in 34 states, Guam
and the U.S. Virgin Islands. The Newspaper Division is headquartered in
Arlington, Va., and on December 26, 1993, it had approximately 32,300
full-time and part-time employees. Newspaper operating revenues
accounted for approximately 82% of the Company's net operating revenues
in 1991 and 1992, and 83% in 1993.
The Company's newspaper operations include the Metro Group,
composed of newspapers serving larger metropolitan areas; four regional
groups (East, South, Central and West) made up of newspapers in
medium-sized and smaller markets; and USA TODAY.
USA TODAY was introduced on September 15, 1982, as the country's
first national, general-interest daily newspaper. It is available in all
50 states and is available to readers on the day of publication in the
top 100 metropolitan markets in the U.S.
USA TODAY is produced at facilities in Arlington, Va., and is
transmitted via satellite to offset printing plants around the country. It
is printed at Gannett plants in 21 U.S. markets and under contract at offset
plants in 11 other U.S. markets.
USA TODAY is sold at newsstands and vending machines, Monday through
Friday, at 50 cents a copy. Mail subscriptions are available nationwide and
abroad, and home and office delivery is offered in many markets.
Approximately 61% of its net paid circulation results from single-copy
sales at newsstands or vending machines and the remainder is from home and
office delivery, mail and other sales.
USA TODAY's financial results improved in 1993, as advertising and
circulation revenues rose 9% and 2%, respectively, and costs declined
slightly. As a result, the paper reported its first profitable year in 1993.
USA TODAY International, published separately from USA TODAY, is
printed from satellite transmission under contract in London, Zurich and
Hong Kong, and operates in Europe, the Middle East, Africa and Asia. It is
available in more than 90 foreign countries.
The Gannett News Service is headquartered in Arlington, Va., and has
bureaus in nine other states (see page 67 for more information). Gannett
News Service provides national and regional news coverage and sports,
features, photo and graphic services to Gannett newspapers.
The newspaper publishing segment also includes USA WEEKEND, which is
distributed as a weekend newspaper supplement in 401 newspapers
throughout the country, with a total circulation of 17.9 million at the end
of 1993.
At the end of 1993, 50 of the Company's daily newspapers, including
USA TODAY, were published in the morning and 33 were published in the
evening.
At all of its newspaper operations, the Company is striving to
improve customer service and product quality with a view toward better
serving readers and advertisers. New products are being developed at
several of the Company's newspapers, including zoned community editions,
new monthly and weekly editions and special niche publications. Gannett
Community Directories of New Jersey published 37 separate yellow-page
directories with added features, including coupons, maps and expanded use
of color. The yellow-page directories published in Binghamton and Elmira,
N.Y., produced increased advertising and market share along with greater
popularity among users.
In 1993, the Company's newspapers refined strategies to improve
editorial quality and focus content on the needs of the individual
communities they serve. They updated their approaches to NEWS 2000, a
program launched in 1991 to help each newspaper better address community
interests, and increased training for newsroom managers and
professionals.
In June 1992, the Company introduced ADvance, a program to develop
marketing partnerships with advertisers and enhance the skills of
newspaper sales and marketing staffs. ADvance is designed to expand and
diversify the base of newspaper advertisers. Its premise is a better
understanding of advertisers' businesses and objectives and the
development of programs responsive to advertisers' needs. The Company has
undertaken significant training efforts to implement ADvance concepts and
will continue to do so in 1994.
All of the Company's daily newspapers receive the Gannett News
Service. In addition, all subscribe to The Associated Press, and some
receive various supplemental news and syndicated features services.
The senior executive of each newspaper is the publisher, and the
newspapers have advertising, business, circulation, editorial, market
development and production departments.
Technological advances in recent years have had an impact on the way
newspapers are produced. Computer-based text editing systems capture
drafts of reporters' stories and are then used to edit and produce type
for transfer by a photographic process to printing plates. All of the
Company's daily newspapers are produced by this method. "Pagination"
enables editors to create a newspaper page by computer, avoiding all or
part of the manual "paste-up" of the page before it can be converted into a
printing plate. The Company uses pagination systems at 44 newspaper
plants.
Page 53
Gannett began to install production versions of a voice-activated
system which can substitute for traditional keyboard text entry. Five
newsrooms now have 12 systems in use and more are planned. NEWSworks, the
newsroom story planning system that is designed to add functionality to
existing newsroom systems, is being tested in Poughkeepsie, N.Y. Gannett
began to test a multi-media archive system late in 1993 and also an
investigative reporting program to help reporters analyze public records.
The Mobile Advertising Sales System, a lap-top personal computer for our
advertising sales staffs, was successfully tested in Rochester and installation
is planned at additional newspapers in 1994.
Fifty-one daily newspaper plants print by the offset process, and 20
plants print using various letterpress processes.
Improved technology for all of the newspapers has resulted in
greater speed and accuracy and in a reduction in the number of production
hours worked per page. In 1993, the production hours worked per page were
reduced by 5%.
The principal sources of newspaper revenues are circulation and
advertising.
Circulation: The following table summarizes the circulation volume
and revenues of the newspapers owned by the Company at the end of 1993.
USA TODAY circulation is included in this table.
This table assumes that all newspapers owned by the Company at the
end of 1993 were owned during all years shown:
Circulation: newspapers owned on Dec. 26, 1993
Circulation Daily Sunday
revenues net paid net paid
in thousands circulation circulation
-------------- ------------ ------------
1993 $838,706 6,338,000 6,165,000
1992 $818,260 6,339,000 6,143,000
1991 $782,435 6,272,000 6,100,000
1990 $735,368 6,267,000 6,082,000
1989 $725,584 6,340,000 5,583,000
The Company emphasized improving customer service and increasing
circulation and household penetration at all of its newspaper operations in
1993 and will continue to do so in 1994.
Forty of the Company's local newspapers reported gains in daily
circulation during 1993, and 38 increased Sunday circulation.
Home delivery prices for the Company's newspapers are established
individually for each newspaper and range from $1.25 to $3.00 per week in
the case of daily newspapers and from $.57 to $2.00 per copy for Sunday
newspapers.
Additional information about the circulation of the Company's
newspapers may be found on page 28 and on pages 64-66 of this annual
report.
Advertising: Advertising revenues are generated through the sale of
retail (local), classified and national advertising. A detailed analysis of
newspaper advertising revenues is presented on pages 27 and 54 of this
report.
Retail advertising is display advertising associated with local
merchants, such as department and grocery stores. Classified advertising
includes the ads listed together in sequence by the nature of the ads, such
as automobile sales, real estate sales and "help wanted." National
advertising is display advertising principally from advertisers who are
promoting products or brand names on a nationwide basis. Retail and
national advertising may appear in the newspaper itself or in preprinted
sections. Generally there are different rates for each category of
advertising, and the rates for each newspaper are set independently,
varying from city to city. The newspapers have advertising departments
that solicit retail, classified and national advertising.
Gannett National Newspaper Sales also solicits national advertisers
and certain national and regional retail advertisers. The newspapers have
made continuing efforts to serve their readers and advertisers by
introducing total market coverage programs and by targeting specific
market segments desired by many advertisers through the use of specially
zoned editions and other special publications.
Classified revenue rose for the year, reflecting continued growth in
the employment and automotive categories. Real estate advertising was
down slightly, reflecting the slow recovery of home sales. Retail (local)
run-of-press advertising (ROP) improved slightly for the year. There was
consistent growth of medium and small advertisers throughout the year.
Preprint revenues grew as well in 1993, as certain multi-market
advertisers continued to convert their ad spending from ROP to preprint.
Overall, general economic conditions for newspaper advertising
improved. Metro newspapers, which were hardest hit by the recession,
experienced the greatest turnaround in advertising revenues. Regionally,
the Central region performed the strongest for the second consecutive
year. While overall advertising revenue was up in the West, California
newspapers for much of the year lagged the rest of the country because of
difficult economic conditions there. For 1994, Gannett anticipates modest
overall advertising revenue growth to result from the expected
continuation of the national economic recovery.
The following chart summarizes the advertising linage (in six-column
inches) and advertising revenues of the newspapers owned by the Company
at the end of 1993. Again, this chart assumes that all of the newspapers
owned at the end of 1993 were owned throughout the years shown:
Page 54
Advertising: newspapers owned on Dec. 26, 1993
Advertising
revenues Inches of
in thousands advertising
-------------- ------------
1993 $2,004,939 127,322,000
1992 $1,923,153 121,578,000
1991 $1,870,682 116,906,000
1990 $1,940,440 121,196,000
1989 $2,032,458 126,299,000
Competition: The Company's newspapers compete with other media for
advertising principally on the basis of their advertising rates and their
performance in helping sell the advertisers' products or services. They
compete for circulation principally on the basis of their content and their
price. While most of the Company's newspapers do not have daily newspaper
competitors that are published in the same city, in certain of the Company's
larger markets, there is such direct competition. Most of the Company's
newspapers compete with other newspapers published in nearby cities and
towns and with free distribution and paid advertising weeklies.
At the end of 1993, The Cincinnati Enquirer, The Detroit News, the El
Paso (Texas) Times, the Honolulu Advertiser, The Tennessean at Nashville and
the Tucson (Ariz.) Citizen were published under joint operating agreements
with non-Gannett newspapers located in the same cities. All of these
agreements provide for joint business, advertising, production and
circulation operations and a contractual division of profits. The editorial
and reporting staffs of the Company's newspapers, however, are separate
and autonomous from those of the non-Gannett newspapers.
On January 30, 1993, the Company completed the acquisition of the
Honolulu Advertiser and the sale of the Honolulu Star-Bulletin. The
acquisition of the morning publication Advertiser was for approximately
$250 million. Concurrent with these transactions, the Honolulu joint
operating agreement was amended to provide the Company with a greater
share of profits from the operation.
On March 31, 1991, the Shreveport, La., joint operating agreement was
terminated and the Shreveport Journal, the non-Gannett newspaper in the
agreement, ceased publication. The partners in this agreement will continue
their contractual division of profits through December 25, 1994.
Through internal development programs and acquisitions, the Company
continues to explore new opportunities in news, information and
communications businesses. Recent business developments include USA
TODAY Baseball Weekly, which was successfully launched in 1991; USA TODAY
Sky Radio, which began satellite distribution of news and entertainment
programming to commercial airlines in 1992; Telematch, a telephone database
service; as well as publishing and electronic information services.
Properties: Generally, the Company owns the plants that house all
aspects of the newspaper publication process. In the case of USA TODAY, at
December 26, 1993, 11 non-Gannett printers were used to print the
newspaper in the U.S. in markets where there are no Company newspapers
with appropriate facilities. Three non-Gannett printers in foreign
countries are used to print USA TODAY International. USA WEEKEND is also
printed under contract with a commercial printing company. Many of the
Company's newspapers also have outside news bureaus and sales offices,
which generally are leased. In a few cities, two or more of the Company's
newspapers share combined facilities; and in two locations, facilities are
shared with other newspaper properties under joint operating agreements.
The Company's newspaper properties have rail siding facilities or access to
main roads for newsprint delivery purposes and are conveniently located
for distribution purposes.
During the past five years, new or substantial additions or
remodeling of existing newspaper facilities have been completed or are at
some stage of construction at 12 of the Company's newspaper operations.
During 1993, facility expansion and renovations in Detroit, Fort Myers and
Gainesville were completed. As part of the Company's annual capital
expenditure program, its properties are improved or upgraded on a regular
basis. The Company's facilities are adequate for present operations.
Raw materials: Newsprint is the basic raw material used to
publish newspapers. During 1993, the Company's newsprint consumption was
approximately 894,000 short-tons, including the Company's portion of
newsprint consumed at joint operating agencies, consumption by USA
WEEKEND, and USA TODAY tonnage consumed at non-Gannett print sites. The
Company purchases newsprint from 29 North American and offshore
suppliers under contracts which expire at various times through 2010.
During 1993, all of the Company's newspapers used some recycled
newsprint. For the year, approximately 68% of the Company's newsprint
consumption contained recycled content. The Company expects to further
increase its newsprint consumption from recycled sources.
In 1993, newsprint supplies were ample and the weighted average
newsprint price was slightly higher than in 1992. The Company believes the
available sources of newsprint, together with present inventories, will
continue to be adequate to supply the needs of its newspapers. The
Company expects newsprint prices to rise in 1994.
Regulation: Gannett is committed to protecting the environment. Our
goal is to ensure that Gannett facilities are in compliance with federal,
state and local environmental laws and to incorporate appropriate
environmental practices and standards in our newspaper, broadcast and
outdoor advertising operations. The Company employs a corporate
environmental manager responsible not only for regulatory compli-
Page 55
ance but also for preventive measures. The Company is one of the industry lead-
ers in the use of recycled newsprint. From 1989 to 1993, the Company increased
usage of newsprint containing recycled content from 42,000 tons in 1989
to more than 600,000 tons in 1993. The Company's newspapers use inks,
photographic chemicals, solvents and fuels. The use and disposal of these
substances may be regulated by federal, state and local agencies. The
Company believes it is taking effective measures regarding the disposal of
these compounds, including returning material to manufacturers for
recycling. Any release into the environment may create obligations to
private and governmental entities under a variety of statutes and rules
regulating the environment, including the issuance of permits.
Several of the Company's newspaper subsidiaries have been included
among the potentially responsible parties in connection with the alleged
disposal of ink or other chemical wastes at disposal sites which have been
subsequently identified as inactive hazardous waste sites by the U.S.
Environmental Protection Agency or comparable state agencies. The
Company does not believe that these matters will have any significant
impact on its financial condition.
Broadcasting
On December 26, 1993, the Company's television division, headquartered in
Arlington, Va., included 10 television stations, in markets with a total of
more than 11 million households. The Company's radio division now includes 11
radio stations in eight markets with a listening population of more than 36
million.
The Company's radio stations in Kansas City and St. Louis were sold in
the fourth quarter of 1993. Also in 1993, the Company provided for the sale
of its television station in Boston, which is expected to close in early
1994.
Exclusive rights to market and distribute USA TODAY Radio, a news and
information script service, were licensed to ABC Radio Networks. ABC Radio
Networks began broadcast and delivery of the USA TODAY service to
approximately 2,000 radio affiliates in 1987.
At the end of 1993, the broadcasting division had approximately 2,000
full-time and part-time employees. Broadcasting revenues accounted for
approximately 11% of the Company's net operating revenues in 1991, 1992 and
1993.
The principal sources of the Company's broadcasting revenues are: 1)
local advertising focusing on the immediate geographic area of the
stations; 2) national advertising; 3) compensation paid by the networks for
carrying commercial network programs; and 4) payments by advertisers to
television stations for other services, such as the production of
advertising material. The advertising revenues derived from a station's
local news programs make up a significant part of its total revenues.
Advertising rates charged by a television station are based
primarily upon the station's ability to attract viewers, demographics and
the number of television households in the area served by the station.
Practically all national advertising is placed through advertising
representatives. Local advertising time is sold by each station's own sales
force.
Generally, a network provides programs to its affiliated television
stations, sells commercial advertising announcements within the network
programs and compensates the local stations by paying an amount based on
the television station's network affiliation agreement. Each radio station
with a network affiliation is paid a flat annual fee under its affiliation
agreement. Local programming quality and the geographic coverage of its
signal are key factors in a radio station's competitive position within the
market. Since most radio programming originates locally, network affiliation
has little effect on a radio station's competitive position.
Programming: The costs of locally produced and purchased syndicated
programming are a significant portion of television operating expenses.
Syndicated programming costs are determined based upon largely
uncontrollable market factors, including demand from the independent and
affiliated stations within the market and in some cases from cable
operations. In recent years, the Company's television stations have
increased their locally produced news and entertainment programming in an
effort to provide programs that distinguish the stations from the
competition and to better control costs.
Properties: The Company's broadcasting facilities are
adequately equipped with the necessary television and radio broadcasting
equipment. The Company owns transmitter sites in 13 locations and leases
sites in nine others.
During the past five years, new broadcasting facilities
have been built in Denver and Washington, D.C. Substantial additions or
remodelings were completed in Austin, Texas, Greensboro, N.C., and
Jacksonville, Fla. The Company's broadcast facilities are adequate for
present purposes.
Competition: In each of its broadcasting markets, the Company's
stations compete for revenues with other network-affiliated and
independent television and radio broadcasters and with other advertising
media, such as cable television, newspapers, magazines and outdoor
advertising. The Company's broadcasting stations compete principally on
the basis of their market share, advertising rates and audience
composition.
Network programming constitutes a substantial part of the programs
broadcast on the Company's network-affiliated television stations, and the
Company's competitive position is directly affected by viewer acceptance
of network programming. Local news has been most important to a station's
success and there is a growing emphasis on other forms of local
programming as well as continuing involvement in the local community.
Page 56
Other sources of present and potential competition for the Company's
broadcasting properties include pay cable, home video and audio recorders
and video disc players, direct broadcast satellite and low-power
television. Some of these competing services have the potential of
providing improved signal reception or increased home entertainment
selection, and they are continuing development and expansion.
Regulation: The Company's television and radio stations are operated
under the authority of the Federal Communications Commission (FCC) under
the Communications Act of 1934, as amended (Communications Act), and the
rules and policies of the FCC (FCC Regulations).
Under the Communications Act, television broadcast licenses are
granted for a maximum period of five years and radio licenses are granted
for a maximum period of seven years. Television and radio broadcast
licenses are renewable upon application to the FCC and in the past usually
have been renewed except in rare cases in which a conflicting application,
a petition to deny, a complaint or an adverse finding as to the licensee's
qualifications has resulted in loss of the license. Petitions to deny
license renewal are currently pending against two of the Company's radio
facilities and two television stations, but in the Company's judgment none
of the petitions has merit. No competing applications are pending with
respect to any of the Company's stations. The Company believes it is in
substantial compliance with all applicable provisions of the
Communications Act and FCC Regulations.
FCC Regulations also prohibit concentrations of broadcasting control
and regulate network programming and syndication of programs. FCC
Regulations governing multiple ownership prohibit the common ownership or
control of most communications media serving common market areas (for
example, television and radio, except that waivers can be sought for
television and radio ownership in the top 25 markets; television and daily
newspapers; radio and daily newspapers; or television and cable television)
and limit the number of broadcast interests held by any person to a
maximum of 12 television stations (subject to certain restrictions with
respect to the size of the audience reached by the stations), 18 AM radio
stations and 18 FM radio stations.
Other matters: Gannett Broadcasting, along with CBS Radio and
Westinghouse Electric subsidiaries Group W Radio and Xetron Corporation,
have formed a partnership, USA Digital Radio, to develop in-band on-channel
AM and FM digital audio broadcasting (DAB) systems. During 1993, the
partnership substantially completed prototypes of AM and FM DAB. USA
Digital Radio's systems, along with those of competing developers, have
been submitted for testing and evaluation by the National Radio Systems
Committee. Additionally, USA Digital Radio's success is dependent on FCC
approval of its techniques for broadcasting DAB within the AM and FM radio
bands.
Additional information about the Company's television and radio
stations may be found on page 68 of this annual report.
Outdoor advertising
At the end of 1993, the Company's outdoor advertising division,
headquartered in New York City, included 12 outdoor advertising companies
operating in 17 major markets in the U.S. and most major markets in Canada,
and a printing division. The outdoor division had approximately 1,600
full-time and part-time employees at the end of 1993. The group accounted
for approximately 8% of the Company's net operating revenues in 1991, 7% in
1992 and 6% in 1993.
The Company derives its outdoor advertising revenues from leasing
space on its approximately 44,000 advertising displays. These displays fall
into four major groups: poster panels, bulletins, transit shelter displays
and other displays.
Poster panels (28% of outdoor revenues): Poster panels include
standardized posters, which are approximately 12 feet high and 25 feet
long, eight-sheet posters, which are 6 feet high and 12 feet long (also
known as junior posters) and smaller posters displayed in shopping centers
and airports. Posters are sold in packages based on daily exposure
opportunities, usually for 30-day increments. They feature lithographed
or silk-screened advertising copy, posted on the surface of the board.
Bulletins (41% of outdoor revenues): Bulletins typically are 14 feet
high and 48 feet long. They are sold on a unit basis, typically for four to 12
months. Most are rotated to a different location every 60 days.
"Permanent" bulletins, however, do not rotate. They tend to have more
viewers and are higher priced than rotating bulletins. The surface of the
board is usually hand painted by skilled company artists, computer painted
or covered with lithographed paper. The Company pioneered the use of
Superflex and Uniface, flexible vinyl faces for bulletins, which provide a
more attractive advertising surface. The flexible vinyl faces also are
compatible with new computer printing technology. Additionally, the Company
offers backlights, which are rear-illuminated units on major arterial
highways with the advertising message air-brushed, computer-painted or
silk-screened on translucent plastic. These are available in both the USA
and Canada.
Transit shelter displays (19% of outdoor revenues): These primarily
include internally illuminated 4-foot-by-5-foot posters displayed on
public transit shelters in several major cities in the U.S. and Canada.
Page 57
Other displays (12% of outdoor revenues): This category includes
poster advertising throughout the New York City subway system and on
buses in Detroit and Rochester, N.Y. Printing division revenues also are
categorized here.
Monthly advertising rates for each of these outdoor advertising
media are based on such factors as the size of the advertising display,
visibility, cost of leasing, construction and maintenance and the number of
people who have the opportunity to see the advertising message. The latter
is measured by the Traffic Audit Bureau (USA) or the Canadian Outdoor
Measurement Bureau.
Revenues: The principal source of national outdoor advertising
revenues has been the tobacco industry. In recent years, the tobacco
industry has reduced its advertising expenditures significantly. To
partially replace this business, the Company has obtained additional
advertising from packaged-goods advertisers, as well as the more
traditional sources of automotive, supermarkets, media, financial, fashion,
entertainment and issue-oriented advertising. Outdoor revenues declined
$11 million or 4% in 1993. U.S. operations again experienced a significant
loss in revenues from advertising by the tobacco industry and revenues
from Southern California operations were lower because of continuing
economic difficulties. Revenue comparisons are also affected by the sale in
August 1992 of the Company's outdoor business in Phoenix. On a pro forma
basis, outdoor ad revenues declined 2%.
The Company also formed and operates Outdoor Network, USA, which
includes 52 independent outdoor companies operating in 91 of the top 100
markets. Gannett Outdoor develops advertising nationally on behalf of the
group, providing a central source to clients for market information and
research, and providing single-invoice billing. The network's benefits are
simplicity in planning and buying the medium, proof of performance audits,
creative assistance and strengthened client service. The objective is to
bring these benefits to bear in developing new and lasting sources of
national business for network members.
Properties: In the conduct of its outdoor business, the Company
constructs advertising display structures on land or buildings owned by
the Company or leased from others. These leases are for varying terms and
generally have renewal options. At the end of 1993, the Company leased
approximately 21,000 sign locations. The Company owns approximately 600
parcels of varying sizes on which it maintains sign structures.
Advertising displays placed in public transit areas are subject to
the terms of separate contracts with various municipal authorities. These
contracts are for varying periods and require payments to the
municipalities which are generally based on a percentage of the Company's
revenue from the displays. The Company's outdoor facilities and displays
are adequate for present operations.
Competition: The Company encounters direct competition in all of its
principal outdoor advertising market areas. In most of its markets, the
Company is among the larger competitors in terms of the number of
advertising displays. The Company's outdoor operations also compete for
revenues with newspapers, magazines, television, radio and other
advertising media.
Regulation: Federal agencies from time to time propose restrictions
upon the tobacco industry and other businesses that use outdoor
advertising, which could affect the outdoor industry. A prohibition of
advertising for tobacco products in Canada was phased in over the years
1988-1990. Effective January 1, 1993, New York City regulations prohibit the
advertising of tobacco products on the city's subway system.
In many localities in which the Company operates, outdoor advertising is
the object of restrictive, and in some cases prohibitive, zoning
regulations. Management expects federal, state and local regulations to
continue to be a significant factor in the operation of the Company's
outdoor advertising business. It is not possible to predict the extent to
which such regulations could affect future earnings.
Corporate facilities
The Company leases office space for its headquarters in Arlington, Va., and
also owns data processing facilities in nearby Maryland. The capital
expenditure program for 1991, 1992 and 1993 included amounts for leasehold
improvements, land, building, furniture, equipment and fixtures for
headquarters operations. Headquarters facilities are adequate for
present operations. In early March 1994, the Company signed an agreement to
purchase 30 acres of land in Fairfax County, Va., for possible use as a
future site for corporate headquarters and perhaps other operations.
Page 58
Employee relations
On December 26, 1993, the Company and its subsidiaries had 36,500 full-time
and part-time employees. On the basis of hours worked, the Company
employed the equivalent of 32,600 full-time employees. Six of the Company's
newspapers are published together with non-Company newspapers pursuant
to joint operating agreements, and the employment numbers above include
the Company's pro-rata share of employees at those operations.
Approximately 20% of those employed by the Company and its
subsidiaries are represented by labor unions. They are represented by 162
local bargaining units affiliated with 18 international unions under
collective bargaining agreements. These agreements conform generally with
the pattern of labor agreements in the newspaper, broadcasting and
outdoor advertising industries. The Company does not engage in
industrywide or companywide bargaining. From time to time, the Company has
had strikes involving its operations, but the strikes have not significantly
affected its operations. The Company strives to maintain good
relationships with its employees and has been successful in doing so.
The Company provides competitive group life and medical insurance
programs for full-time employees at each location. The Company pays a
substantial portion of these costs. Beginning in 1990, however, most
employees began making contributions to cover a portion of the annual
increase in medical insurance cost. Virtually all of the Company's units
provide retirement or profit-sharing plans which cover eligible full-time
employees.
In 1990, the Company established a 401(k) Savings Plan
which is available to most of its employees.
Acquisitions and dispositions 1989-1993
The growth of the Company has resulted from acquisitions of
businesses, as well as from internal expansion. Its significant
acquisitions since the beginning of 1989 are shown on the next page. The
Company has disposed of several businesses during this period, which also
are listed on the next page.
Page 59
Acquisitions 1989-1993
Year acquired Name Location Publication times or business
- --------------- --------------------------------- ------------------------------- -----------------------------------
1989 Rockford Magazine Rockford, Ill. Local monthly magazine
Outdoor advertising displays New Jersey Outdoor advertising
merged into New Jersey Outdoor
1990 Great Falls Tribune Great Falls, Mont. Daily and Sunday
Ye Olde Fishwrapper Port Clinton, Ohio Monthly
The Shopper Advertising, Inc. Port Huron, Mich. Weekly
Desert Community Newspapers Palm Springs, Calif. Weeklies
North Santiam Newspapers Salem, Ore. Weeklies
Pensacola Engraving Co. Pensacola, Fla. Commercial printing
1991 The Add Sheet Columbia, Mo. Weekly advertising shopper
New Jersey Publishing Co. Paramus, N.J. Yellow-page directories
The Times Journal Co. Springfield, Va. Daily newspapers, commercial
printing and telephone data service
Gulf Breeze Publishing Gulf Breeze, Fla. Weekly
USA TODAY Sky Radio (1) Arlington, Va. Live news programming for
commercial airlines
1992 Graphic Publications, Inc. Richmond, Ind. Weekly
1993 Honolulu Advertiser Honolulu, Hawaii Daily
Tulare Advance-Register Tulare, Calif. Daily
(1) Business formed in 1991 under a partnership agreement in which Gannett Co., Inc. holds a majority interest.
Dispositions 1989-1993
Year sold Name Location Publication times or business
- --------------- --------------------------------- ------------------------------- ---------------------------------
1989 Fremont Tribune Fremont, Neb. Daily
Sturgis Journal Sturgis, Mich. Daily
El Diario-La Prensa New York, N.Y. Daily and Sunday
The New Mexican Santa Fe, N.M. Daily and Sunday
1990 KNUA-FM Seattle, Wash. Radio station
1991 Arkansas Gazette Company Little Rock, Ark. Daily and Sunday
Journal Newspapers Springfield, Va. Daily
1992 Phoenix Outdoor Phoenix, Ariz. Outdoor advertising
1993 Honolulu Star-Bulletin Honolulu, Hawaii Daily
KCMO/KCMO-FM Kansas City, Mo. Radio stations
KUSA/KSD-FM St. Louis, Mo. Radio stations
WLVI-TV (2) Boston, Mass. Television station
(2) Sale pending and expected to be completed in early 1994.
Page 60
QUARTERLY STATEMENTS OF INCOME
In thousands of dollars
Fiscal year ended December 26, 1993
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total
--------------- -------------- -------------- ------------- -------------
Net operating revenues:
Newspaper advertising $465,072 $513,226 $475,509 $551,230 $2,005,037
Newspaper circulation 210,053 210,124 207,558 210,971 838,706
Broadcasting 82,876 109,017 92,207 113,104 397,204
Outdoor advertising 47,825 63,987 60,063 58,896 230,771
Other 38,904 41,415 41,195 48,389 169,903
--------------- -------------- -------------- ------------- -------------
Total 844,730 937,769 876,532 982,590 3,641,621
--------------- -------------- -------------- ------------- -------------
Operating expenses:
Cost of sales and operating
expenses, exclusive of depreciation 509,377 517,941 507,291 532,635 2,067,244
Selling, general and administrative
expenses, exclusive of depreciation 163,007 166,242 154,499 166,642 650,390
Depreciation 40,947 41,098 40,687 41,688 164,420
Amortization of intangible assets 11,279 11,404 11,114 11,418 45,215
--------------- -------------- -------------- ------------- -------------
Total 724,610 736,685 713,591 752,383 2,927,269
--------------- -------------- -------------- ------------- -------------
Operating Income 120,120 201,084 162,941 230,207 714,352
Non-operating income (expense):
Interest expense (11,045) (13,504) (13,590) (13,111) (51,250)
Other 1,492 1,848 3,429 (1,419) 5,350
--------------- -------------- -------------- ------------- -------------
Total (9,553) (11,656) (10,161) (14,530) (45,900)
--------------- -------------- -------------- ------------- -------------
Income before income taxes 110,567 189,428 152,780 215,677 668,452
Provision for income taxes 44,225 75,775 64,000 86,700 270,700
--------------- -------------- -------------- ------------- -------------
Net income $66,342 $113,653 $88,780 $128,977 $397,752
=============== ============== ============== ============= =============
Net income per share (1) $0.46 $0.78 $0.61 $0.88 $2.72
=============== ============== ============== ============= =============
(1) As a result of rounding, the total of the four quarters' earnings per share does not equal the earnings per share
for the year.
Page 61
QUARTERLY STATEMENTS OF INCOME
In thousands of dollars
Fiscal year ended December 27, 1992
1st Quarter(1) 2nd Quarter(1) 3rd Quarter(1) 4th Quarter Total
--------------- -------------- --------------- ------------- -------------
Net operating revenues:
Newspaper advertising $426,789 $487,063 $453,512 $514,750 $1,882,114
Newspaper circulation 199,193 201,296 200,739 205,865 807,093
Broadcasting 78,849 97,528 89,353 104,883 370,613
Outdoor advertising 52,059 66,770 62,485 59,999 241,313
Other 36,231 39,482 42,520 49,591 167,824
--------------- -------------- --------------- ------------- -------------
Total 793,121 892,139 848,609 935,088 3,468,957
Operating expenses:
Cost of sales and operating
expenses, exclusive of depreciation 488,961 503,876 506,568 525,196 2,024,601
Selling, general and administrative
expenses, exclusive of depreciation 149,925 163,108 151,574 164,595 629,202
Depreciation 40,484 39,851 39,940 36,967 157,242
Amortization of intangible assets 10,140 10,138 10,110 10,241 40,629
--------------- -------------- --------------- ------------- -------------
Total 689,510 716,973 708,192 736,999 2,851,674
--------------- -------------- --------------- ------------- -------------
Operating Income 103,611 175,166 140,417 198,089 617,283
Non-operating income(expense):
Interest expense (14,450) (14,009) (11,424) (10,934) (50,817)
Other 1,580 1,899 2,513 1,822 7,814
--------------- -------------- --------------- ------------- -------------
Total (12,870) (12,110) (8,911) (9,112) (43,003)
--------------- -------------- --------------- ------------- -------------
Income before income taxes 90,741 163,056 131,506 188,977 574,280
Provision for income taxes 36,190 65,220 52,390 74,800 228,600
--------------- -------------- --------------- ------------- -------------
Income before cumulative effect of
accounting principle changes 54,551 97,836 79,116 114,177 345,680
Cumulative effect on prior years of
accounting principle changes for:
Income taxes 34,000 - - - 34,000
Retiree health and life insurance benefits (180,000) - - - (180,000)
--------------- -------------- --------------- ------------- -------------
Total (146,000) - - - (146,000)
--------------- -------------- --------------- ------------- -------------
Net income (loss) ($91,449) $97,836 $79,116 $114,177 $199,680
=============== ============== =============== ============= =============
Earnings per share:
Before cumulative effect of
accounting principle changes $0.38 $0.68 $0.55 $0.79 $2.40
Cumulative effect of accounting
principle changes (1.01) - - - (1.01)
--------------- -------------- --------------- ------------- -------------
Net income (loss) per share ($0.63) $0.68 $0.55 $0.79 $1.39
=============== ============== =============== ============= =============
(1) Restated from previously issued quarterly statements to reflect changes in accounting
principles retroactive to the first quarter of 1992.
Refer to Notes 6 and 7 of the financial statements for further discussion of these
accounting principle changes.
Page 62
SCHEDULES TO FORM 10-K INFORMATION
In thousands of dollars
Balance at
beginning Additions Retirements Other Balance at end
Property, plant & equipment of period at cost or sales Changes of period
- -------------------------------- -------------- ------------------ -------------- ------------ --------------
Dec. 29, 1991
Land $92,561 $3,624 $1,970 $402 $94,617
Buildings & improvements 559,642 69,640 14,595 (1,143) 613,544
Advertising display structures 277,380 1,657 7,256 346 272,127
Machinery, equipment & fixtures 1,475,721 106,090 69,162 868 1,513,517
Construction in progress and
deposits on contracts 67,659 32,277 3 (220) 99,713
-------------- ------------------ -------------- ------------ --------------
$2,472,963 $213,288 (A)(E) $92,986 $253 (D) $2,593,518
============== ================== ============== ============ ==============
Dec. 27, 1992
Land $94,617 $8,069 $809 ($564) $101,313
Buildings & improvements 613,544 51,631 3,502 (336) 661,337
Advertising display structures 272,127 6,602 12,575 (4,009) 262,145
Machinery, equipment & fixtures 1,513,517 155,442 50,012 (171) 1,618,776
Construction in progress and
deposits on contracts 99,713 (49,212) (384) (1,114) 49,771
-------------- ------------------ -------------- ------------ --------------
$2,593,518 $172,532 (B)(E) $66,514 ($6,194) (D) $2,693,342
============== ================== ============== ============ ==============
Dec. 26, 1993
Land $101,313 $31,647 $1,284 $0 $131,676
Buildings & improvements 661,337 34,823 6,778 (279) 689,103
Advertising display structures 262,145 5,454 3,696 (1,758) 262,145
Machinery, equipment & fixtures 1,618,776 118,924 65,651 1,188 1,673,237
Construction in progress and
deposits on contracts 49,771 (9,193) 485 (1,644) 38,449
-------------- ------------------ -------------- ------------ --------------
$2,693,342 $181,655 (C)(E) $77,894 ($2,493) (D) $2,794,610
============== ================== ============== ============ ==============
Page 63
Accumulated depreciation and Balance at Additions charged
amortization of property, beginning to costs Retirements Other Balance at end
plant and equipment of period and expenses or sales Changes of period
- -------------------------------- -------------- ------------------ -------------- ------------ --------------
Dec. 29, 1991
Buildings & improvements $183,155 $25,640 $4,198 ($3,527) $201,070
Advertising display structures 112,694 14,282 4,082 187 123,081
Machinery, equipment & fixtures 704,991 118,467 42,424 3,423 784,457
-------------- ------------------ -------------- ------------ --------------
$1,000,840 $158,389 (F) $50,704 $83 (D) $1,108,608
============== ================== ============== ============ ==============
Dec. 27, 1992
Buildings & improvements $201,070 $25,793 $1,447 $2,104 $227,520
Advertising display structures 123,081 13,404 3,969 (2,043) 130,473
Machinery, equipment & fixtures 784,457 118,045 39,420 (3,024) 860,058
-------------- ------------------ -------------- ------------ --------------
$1,108,608 $157,242 (F) $44,836 ($2,963) (D) $1,218,051
============== ================== ============== ============ ==============
Dec. 26, 1993
Buildings & improvements $227,520 $26,617 $3,310 $24 $250,851
Advertising display structures 130,473 13,039 3,067 (920) 139,525
Machinery, equipment & fixtures 860,058 124,764 58,474 (383) 925,965
-------------- ------------------ -------------- ------------ --------------
$1,218,051 $164,420 (F) $64,851 ($1,279) (D) $1,316,341
============== ================== ============== ============ ==============
Notes
(A) Includes assets at acquisition net of adjustments for prior years' acquisitions $20,896
(B) Includes assets at acquisition net of adjustments for prior years' acquisitions $18,460
(C) Includes assets at acquisition net of adjustments for prior years' acquisitions $49,533
(D) Net effect of current foreign currency translation adjustment.
(E) Includes capitalized interest of $4,951 in 1992, $2,440 in 1992 and $268 in 1993.
(F) Generally the rates of depreciation range from 2.5% to 10% for buildings and improvements,
3.3% to 20% for advertising display structures and 4% to 25% for machinery, equipment and fixtures.
Valuation and qualifying accounts
Allowance for doubtful receivables
Balance at beginning Additions charged to Additions recorded Deductions Balance at end
of period costs and expenses upon acquisitions from reserves of period
-------------------- -------------------- ------------------ ---------------- --------------
Year ended Dec. 29, 1991 $10,698 $26,122 $24,351 $12,469
Year ended Dec. 27, 1992 $12,469 $22,010 $22,238 $12,241
Year ended Dec. 26, 1993 $12,241 $20,505 $473 $19,304 $13,915
Supplementary income statement information
Fiscal year ended
Dec. 26, 1993 Dec. 27, 1992 Dec. 29, 1991
-------------------- ------------------ ----------------
Maintenance and repairs $45,004 $44,555 $38,851
Taxes other than payroll and income tax:
Property $20,855 $18,313 $16,365
Other 9,157 7,699 7,961
-------------------- ------------------ ----------------
$30,012 $26,012 $24,326
-------------------- ------------------ ----------------
Pages 64 - 66
MARKETS WE SERVE - 1993
Daily newspapers
State Circulation Circulation Circulation Joined
Territory City Newspaper Morning Afternoon Sunday Founded Gannett *
- -------------- --------------------- ------------------------------- ----------- ------------ ----------- ------- -------------
Arizona Tucson Tucson Citizen 49,570 1870 1976 (46)
California Marin County Marin Independent Journal 41,382 43,015 1861 1980 (67)
Palm Springs The Desert Sun 48,237 50,253 1927 1986 (78)
Salinas The Californian 23,333 1871 1977 (53)
San Bernardino The San Bernardino County Sun 85,623 97,961 1894 1969 (23)
Stockton The Stockton Record 54,631 60,207 1895 1977 (48)
Tulare Tulare Advance-Register 8,771 1882 1993 (83)
Visalia Visalia Times-Delta 22,772 1859 1977 (54)
Colorado Fort Collins Fort Collins Coloradoan 26,126 32,437 1873 1977 (55)
Connecticut Norwich Norwich Bulletin 33,478 38,206 1791 1981 (70)
Delaware Wilmington The News Journal 126,540 148,545 1871 1978 (61)
Florida Brevard County FLORIDA TODAY 86,138 113,355 1966 1966 (21)
Fort Myers News-Press 95,400 116,589 1884 1971 (37)
Pensacola Pensacola News Journal 63,117 84,096 1889 1969 (24)
Georgia Gainesville The Times 22,908 27,020 1947 1981 (69)
Guam Agana Pacific Daily News 25,107 22,989 1944 1971 (36)
Hawaii Honolulu Honolulu Advertiser 104,188 195,777 1856 1993 (82)
Idaho Boise The Idaho Statesman 64,291 85,685 1864 1971 (29)
Illinois Danville Commercial-News 22,539 24,997 1866 1934 (7)
Rockford Rockford Register Star 77,679 90,478 1855 1967 (22)
Indiana Lafayette Journal and Courier 38,307 44,901 1829 1971 (30)
Marion Chronicle-Tribune 20,720 25,043 1867 1971 (33)
Richmond Palladium-Item 19,687 24,988 1831 1976 (45)
Iowa Des Moines The Des Moines Register 187,294 323,235 1849 1985 (74)
Iowa City Iowa City Press-Citizen 16,310 1860 1977 (57)
Kentucky Louisville The Courier-Journal 238,079 328,472 1868 1986 (80)
Louisiana Monroe The News-Star 39,148 46,818 1890 1977 (60)
Shreveport The Times 82,244 102,923 1871 1977 (59)
Michigan Battle Creek Battle Creek Enquirer 28,185 38,011 1900 1971 (31)
Detroit The Detroit News 370,184 1873 1986 (77)
The Detroit News and Free Press 1,181,213
Lansing Lansing State Journal 70,985 95,034 1855 1971 (28)
Port Huron Times Herald 31,169 39,412 1900 1970 (25)
Minnesota St. Cloud St. Cloud Times 28,531 36,544 1861 1977 (52)
Mississippi Hattiesburg Hattiesburg American 26,254 29,195 1897 1982 (72)
Jackson The Clarion-Ledger 110,364 129,009 1837 1982 (71)
Missouri Springfield Springfield News-Leader 62,139 103,249 1893 1977 (51)
Montana Great Falls Great Falls Tribune 34,275 41,210 1885 1990 (81)
Nevada Reno Reno Gazette-Journal 66,813 84,891 1870 1977 (47)
New Jersey Bridgewater The Courier-News 49,761 54,369 1884 1927 (5)
Camden Courier-Post 87,984 98,626 1875 1959 (11)
Vineland The Daily Journal 19,275 1864 1986 (79)
New York Binghamton Press & Sun-Bulletin 70,815 91,910 1904 1943 (9)
Elmira Star-Gazette 35,654 50,383 1828 1906 (1)
Ithaca The Ithaca Journal 19,444 1815 1912 (2)
Niagara Falls Niagara Gazette 26,686 28,965 1854 1954 (10)
Poughkeepsie Poughkeepsie Journal 44,399 62,082 1785 1977 (50)
Rochester Democrat and Chronicle 137,578 258,389 1833 1928 (6)
Times-Union 67,394 1918 1918 (3)
Saratoga Springs The Saratogian 12,651 14,429 1855 1934 (8)
Utica Observer-Dispatch 53,740 67,668 1817 1922 (4)
Gannett Suburban Newspapers:
Mamaroneck The Daily Times 5,714 5,759 1879 1964 (18)
Mount Vernon The Daily Argus 7,298 9,535 1892 1964 (17)
New Rochelle The Standard-Star 11,124 12,205 1908 1964 (15)
Ossining The Citizen-Register 6,156 7,614 1847 1964 (19)
Peekskill The Star 6,414 9,117 1922 1985 (76)
Port Chester The Daily Item 9,289 10,370 1885 1964 (16)
Tarrytown The Daily News 3,668 4,399 1897 1964 (20)
West Nyack-Rockland Rockland Journal-News 41,928 53,082 1850 1964 (13)
White Plains The Reporter Dispatch 47,536 59,189 1829 1964 (12)
Yonkers The Herald Statesman 24,847 33,812 1852 1964 (14)
Ohio Chillicothe Chillicothe Gazette 16,394 1800 1977 (58)
Cincinnati The Cincinnati Enquirer 203,222 356,948 1841 1979 (63)
Fremont The News-Messenger 13,620 1856 1975 (41)
Marietta The Marietta Times 13,418 1864 1974 (40)
Port Clinton News Herald 6,183 1864 1975 (42)
Oklahoma Muskogee Muskogee Daily Phoenix
and Times-Democrat 19,139 20,686 1888 1977 (56)
Oregon Salem Statesman Journal 61,946 71,310 1851 1974 (39)
Pennsylvania Chambersburg Public Opinion 21,283 1869 1971 (27)
Lansdale The Reporter 19,005 1870 1980 (68)
North Hills North Hills News Record 27,663 27,094 1962 1976 (44)
Tarentum Valley News Dispatch 36,519 35,138 1891 1976 (43)
South Dakota Sioux Falls Argus Leader 50,707 74,477 1881 1977 (49)
Tennessee Jackson The Jackson Sun 38,899 44,187 1848 1985 (75)
Nashville The Tennessean 144,067 281,023 1812 1979 (64)
Texas El Paso El Paso Times 67,154 101,643 1879 1972 (38)
Vermont Burlington The Burlington Free Press 53,870 68,012 1827 1971 (26)
Virgin Islands St. Thomas The Virgin Islands Daily News 15,826 1930 1978 (62)
Virginia Arlington USA TODAY 2,000,821 1982 1982 (73)
Washington Bellingham The Bellingham Herald 26,994 34,484 1890 1971 (34)
Olympia The Olympian 35,357 44,248 1889 1971 (32)
West Virginia Huntington The Herald-Dispatch 41,796 49,675 1909 1971 (35)
Wisconsin Green Bay Green Bay Press-Gazette 60,964 87,265 1915 1980 (65)
Wausau Wausau Daily Herald 25,487 30,662 1903 1980 (66)
* Number in parentheses notes chronological order in which existing newspapers joined Gannett.
Pages 67 and 68
MARKETS WE SERVE - 1993
Operation Location and other information
- ---------------------------------------- -------------------------------------------------------------------------------
Non-daily publications Weekly, semi-weekly or monthly publications in Arizona, Arkansas,
California, Colorado, Florida, Georgia, Illinois, Indiana, Iowa,
Kentucky, Michigan, Minnesota, Mississippi, Missouri, New Jersey,
New York, Ohio, Oklahoma, Oregon, Pennsylvania, Vermont, Virginia,
Washington, West Virginia and Wisconsin
USA TODAY Headquarters: Arlington, Va.
Print sites Arlington, Texas; Atlanta; Batavia, N.Y.; Brevard County, Fla.;
Chandler, Ariz.; Chicago; Columbia, S.C.; Fort Collins, Colo.;
Fort Myers, Fla.; Gainesville, Ga.; Greensboro, N.C.; Hattiesburg,
Miss.; Kankakee, Ill.; Lansdale, Pa.; Lawrence, Kan.; Mansfield, Ohio; Marin
County, Calif.; Miramar, Fla.; Nashville, Tenn.; Norwood, Mass.; Olympia,
Wash.; Pasadena, Texas; Port Huron, Mich.; Richmond, Ind.;
Rockaway, N.J.; St. Cloud, Minn.; St. Louis; Salt Lake City; San
Bernardino, Calif.; Springfield, Va.; Tarentum, Pa.; White Plains, N.Y.
International print sites Hong Kong; London, England; Lucerne, Switzerland
Regional offices Atlanta; Boston; Buffalo, N.Y.; Charlotte, N.C.; Chicago; Cincinnati;
Cleveland; Columbus, Ohio; Dallas; Denver; Detroit; Houston; Indianapolis;
Kansas City, Mo.; Los Angeles; Milwaukee; Minneapolis-St. Paul; Miramar, Fla.;
Nashville, Tenn.; New Orleans; Orlando, Fla.; Philadelphia; Phoenix,
Ariz.; Pittsburgh; Port Washington, N.Y.; St. Louis; San Francisco; Seattle;
Springfield, Va.; Union, N.J.
Advertising offices Arlington, Va.; Atlanta; Boston; Chicago; Dallas; Detroit; Hong Kong;
London, England; Los Angeles; New York, N.Y.
USA TODAY Baseball Weekly Circulation 280,000
Editorial and advertising offices Arlington, Va.
USA WEEKEND Circulation 17.9 million in 401 newspapers
Advertising offices Chicago; Detroit; Los Angeles; New York, N.Y.
Editorial and production offices Arlington, Va.
USA TODAY Sky Radio
Broadcast studios, business/
operations offices Arlington, Va.
Advertising offices Arlington, Va.; Chicago; Los Angeles; New York, N.Y.
Gannett Direct Marketing Services, Inc. Headquarters: Louisville, Ky.
Gannett International Headquarters: New York, N.Y.
International offices Hong Kong; London, England; Singapore; Zurich, Switzerland
Products USA TODAY International Edition; USA TODAY
International/Gannett News Service
Gannett National Newspaper Sales Headquarters: New York, N.Y.
Regional offices Chicago; Dallas; Detroit; Los Angeles; Melbourne, Fla.
Gannett New Business and
Product Development Headquarters: Arlington, Va.
Gannett/USA TODAY Sports
and Information Center Headquarters: Greensboro, N.C.
Products Radio and on-line computer information services
Gannett/USA TODAY
Information Center Headquarters: Arlington, Va.
Products Telephonic information services
Gannett News Service Headquarters: Arlington, Va.
Bureaus Albany, N.Y.; Baton Rouge, La.; Columbus, Ohio; Harrisburg, Pa.;
Indianapolis; Olympia, Wash.; Sacramento, Calif; Springfield, Ill.;
Tallahassee, Fla.
Gannett Offset Headquarters: Springfield, Va.
Offset sites Atlanta; Chandler, Ariz.; Miramar, Fla.; Nashville, Tenn.;
Norwood, Mass.; Olivette, Mo.; Springfield, Va.
Gannett Outdoor Group Headquarters: New York, N.Y.
Outdoor and Transit operations Berkeley, Calif.; Chicago; Denver; Detroit; Fairfield, N.J.;
Flint, Mich.; Grand Rapids, Mich.; Houston; New Haven, Conn.;
Kansas City, Mo.; Lakewood, N.J.; Los Angeles; New York, N.Y.;
Philadelphia; Rochester, N.Y.; St. Louis; Sacramento, Calif.;
San Diego; San Francisco
Outdoor Network, USA Headquarters: New York, N.Y.
Sales offices Chicago; Detroit; Los Angeles; New York, N.Y.; San Francisco
Mediacom, Inc. Headquarters: Toronto, Ontario
Mediacom operations Mississauga, Montreal, Quebec City, Toronto, Winnipeg
and 26 other Canadian cities
Gannett Satellite Information Network Headquarters: Arlington, Va.
Gannett TeleMarketing, Inc. Headquarters: Arlington, Va.
Operations Cincinnati; Nashville, Tenn.; Silver Spring, Md.
GANNETTWORK Headquarters: New York, N.Y.
Sales offices Chicago; New York, N.Y.; San Francisco
Louis Harris & Associates
Offices New York, N.Y.; London, England; Paris, France
Telematch Headquarters: Springfield, Va.
MARKETS WE SERVE - 1993
**
Television Weekly Joined
State City Station Channel/Network Audience Founded Gannett *
- ---------------- --------------------- ------------ ------------------ ----------- -------- --------------
Arizona Phoenix KPNX-TV Channel 12/NBC 972,000 1953 1979 (3)
Colorado Denver KUSA-TV Channel 9/ABC 1,249,000 1952 1979 (2)
District of
Columbia Washington WUSA-TV Channel 9/CBS 1,922,000 1949 1986 (7)
Florida Jacksonville WTLV-TV Channel 12/NBC 466,000 1957 1988 (9)
Georgia Atlanta WXIA-TV Channel 11/NBC 1,630,000 1948 1979 (1)
Massachusetts Boston WLVI-TV *** Channel 56/Ind. 1,565,000 1953 1983 (6)
Minnesota Minneapolis-St. Paul KARE-TV Channel 11/NBC 1,312,000 1953 1983 (5)
North Carolina Greensboro WFMY-TV Channel 2/CBS 594,000 1949 1988 (10)
Oklahoma Oklahoma City KOCO-TV Channel 5/ABC 542,000 1956 1979 (4)
Texas Austin KVUE-TV Channel 24/ABC 348,000 1971 1986 (8)
**
Radio Weekly Joined
State City Station Channel/Network Audience Founded Gannett *
- ---------------- --------------------- ------------ ------------------ ----------- -------- --------------
California Los Angeles KIIS 1150 Khz 30,600 1927 1979 (3)
KIIS-FM 102.7 Mhz 1,917,600 1961 1979 (1)
San Diego KSDO 1130 Khz 308,000 1947 1979 (5)
KCLX-FM 102.9 Mhz 191,300 1963 1979 (4)
Florida Tampa-St. Petersburg WDAE 1250 Khz 27,500 1922 1984 (8)
WUSA-FM 100.7 Mhz 275,400 1951 1980 (7)
Illinois Chicago WGCI 1390 Khz 280,000 1923 1979 (6)
WGCI-FM 107.5 Mhz 953,100 1959 1979 (2)
Texas Dallas KHKS-FM 106.1 Mhz 573,800 1950 1986 (11)
Houston KKBQ 790 Khz 8,000 1944 1984 (10)
KKBQ-FM 92.9 Mhz 411,900 1962 1984 (9)
* Number in parentheses notes chronological order in which existing stations joined Gannett.
** Weekly audience for television stations is number of TV households reached, according
to the November 1993 Nielsen book.
Weekly audience for radio stations is number of different listeners age 12 and up
reached, according to the Fall 1993 Arbitron book.
*** Sale pending.
INFORMATION ON BACK COVER
GCI
Gannett Co., Inc. shares are traded on the New York Stock Exchange with the
symbol GCI.
The Annual Meeting
The annual meeting of shareholders will be held at 10 a.m., Tuesday,
May 3,1994, at Gannett headquarters, 1100 Wilson Boulevard, Arlington, Va.
Form 10-K
Information provided by Gannett in its Form 10-K annual report to the
Securities and Exchange Commission has been incorporated in this report.
Copies of the complete 1993 Form 10-K annual report may be obtained by writing
the Secretary, Gannett Co., Inc., 1100 Wilson Boulevard, Arlington, Va. 22234.
Transfer Agent and Registrar
Norwest Bank Minnesota, N.A.
Gannett Co., Inc. Headquarters
1100 Wilson Boulevard
Arlington, Va. 22234
703-284-6000
This annual report was written and produced by employees of Gannett.
Senior Vice President/Public Affairs and Government Relations
Mimi Feller
Director/Public Affairs and Editor/Annual Report
Sheila Gibbons
Vice President/Investor Relations
Susan Watson
Vice President/Corporate Accounting Services
George Gavagan
Manager/Consolidation Accounting
Julie Valpey
Manager/Publications
Ashley Weissenburger
Art Director
Michael Abernethy
Printing
Monroe Litho Rochester, N.Y.