SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date of Report: January 14, 1997
GANNETT CO., INC.
(Exact name of registrant as specified in its charter)
Delaware 1-6961 16-0442930
(State or other (Commission (IRS Employer
jurisdiction File Number) Identification No.)
of incorporation)
1100 Wilson Boulevard, Arlington, Virginia 22234
(Address of principal executive offices)(Zip Code)
(703) 284-6000
(Registrant's telephone number, including area code)
ITEM 5. OTHER EVENTS
EXCHANGE OF RADIO STATIONS FOR TELEVISION STATIONS
On December 9, 1996, the Company concluded a transaction with Jacor
Communications, Inc. to acquire WTSP-TV, the CBS affiliate in Tampa, in
exchange for radio stations KIIS AM/FM, Los Angeles, KSDO-AM/KKBH-FM,
San Diego, and WDAE-AM/WUSA-FM, Tampa.
This transaction was completed under the terms of an asset exchange
agreement between the parties. For income tax purposes, the transaction
will be treated as a tax free exchange with only minimal income tax due
as a result.
In the Company's opinion (with which the Company's independent accountants,
Price Waterhouse, LLP, concur), for financial reporting purposes, the
transaction should be accounted for under Accounting Principles Board
Opinion No. 29, Accounting for Non-Monetary Transactions, under
which the exchange of similar assets (in this case, broadcast stations) is
accounted for as a non-monetary transaction for which no gain or loss is
recognized.
Because of the unique nature of the transaction, the Company sought to
obtain the concurrence of the Securities and Exchange Commission
("SEC") with respect to its proposed accounting treatment. Several
discussions involving the Company, Price Waterhouse representatives
and the SEC staff were held for this purpose prior to the closing of the
transaction.
The SEC staff, however, disagreed with the accounting treatment proposed
by the Company and Price Waterhouse, and instead concluded that the
Company should record the transaction as two simultaneous but separate
events; that is, a sale of radio stations for which a non-cash gain must
be recognized, and the acquisition of the television station to be
accounted for under the purchase method. The gain to be reported on the
exchange of radio stations is to be measured by the difference between
the estimated fair value of the assets exchanged over the Company's
carrying value or basis in the properties it exchanged. Under this
approach, the Company has estimated the fair value of the assets exchanged
to be $170,000,000, while its carrying value or basis in the radio stations
is approximately $12 million. In the fourth quarter of 1996,
therefore, for financial reporting purposes, the Company is required to
report a pre-tax, non-cash, non-operating gain of $158 million on this
transaction. The television station acquired in the exchange is to be
recorded at estimated fair value or $170,000,000.
On an after-tax basis, this accounting treatment will result in a non-cash
increase in earnings per share for the fourth quarter of 1996 of $.66.
Further, the purchase accounting required for the television station
obtained in the transaction results in the recording of $158,000,000 in
additional tangible and intangible asset value which will be charged against
broadcast earnings over periods up to 40 years.
SALE OF MULTIMEDIA ENTERTAINMENT AND RESTATEMENT OF FINANCIAL STATEMENTS
In December, 1996, the Company sold its television entertainment programming
business, Multimedia Entertainment, which had been acquired in December 1995
as part of the acquisition of Multimedia, Inc. Because of the proliferation
of talk shows which made this niche of the television syndication business
extremely competitive and because of reduced advertiser acceptance of certain
of these programs, Multimedia Entertainment's revenues and earnings continued
a long pattern of decline through the date of the sale. The "Donohue" show
had been its most successful program and it ceased airing in September of
1996. The Company therefore decided to exit the business. The selling price
for this transaction approximated the value assigned to it by the Company
upon acquisition. Therefore, no gain was recognized on the sale.
The operating results for Multimedia Entertainment during the period it was
owned by the Company will be reported as a discontinued operation in the
Company's financial statements (along with the results of the Company's
Outdoor business, which was sold in the third quarter of 1996). The
Company's previously issued financial statements for 1996 and 1995 have
been restated to reflect this classification change. Accordingly, earnings
from continuing operations previously reported for the nine months ended
September 1996 have been reduced from $2.47 per share to $2.38 per share.
For the year ended December 31, 1995, previously reported earnings per share
from continuing operations have been reduced from $3.29 to $3.28
(Multimedia Entertainment was owned for only one month in 1995). These
restated financial statements are included in this filing.
SUMMARY OF INCOME FROM CONTINUING AND DISCONTINUED OPERATIONS
After giving effect to the restatement discussed above, the Company's
earnings per share data are as follows.
Earnings Per Share Nine Months Ended Year Ended
- ------------------ September December
--------- --------
1996 1995 1995
---- ---- ----
Earnings from continuing
operations $ 2.38 $ 2.22 $ 3.28
Earnings from discontinued
operations .17 .08 .13
Gain on sale of Outdoor 2.09
---- ---- ----
Net income per share $ 4.64 $ 2.30 $ 3.41
==== ==== ====
CHANGE IN BUSINESS SEGMENT REPORTING AND RESTATEMENT OF SEGMENT
INFORMATION
Prior to sale, the operating results of the Outdoor and Entertainment
businesses were reported within the Company's "Other Businesses" segment.
These two businesses were the largest within that segment and are now
reported as discontinued operations and therefore are no longer reported
with business segment information.
The "Other Businesses" segment also included the Alarm Security business,
acquired in the Multimedia, Inc. purchase, and certain other smaller
businesses, including Telematch, Gannett Direct Marketing Services and
Gannett Telemarketing. In the aggregate, these remaining businesses are
not material in relation to the Company's consolidated operating results or
financial condition (less than 1%). Accordingly, the Company has elected to
change its business segment resporting to eliminate this "Other Businesses"
segment. The Alarm Security business is now reported with the Cable business
(Cable and security segment) with which it is headquartered and managed.
The other smaller businesses mentioned above are now reported in the
Newspaper Publishing segment with which they are managed. The accompanying
Business Segment Information for 1995 and 1996 has been restated to reflect
these changes.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
See Exhibit list.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
GANNETT CO., INC.
Dated: January 14, 1997 By: /s/
-----------------------
Larry F. Miller
Senior Vice President,
Financial Planning
and Controller
Exhibit Index
Exhibit
Number Title or Description Location
- ----- -------------------- ----------------
99-1 Restated unaudited statements of income for Attached
the quarters ended March 31, 1996 and
March 26, 1995; June 30, 1996 and June 25,
1995; September 29, 1996 and September 24,
1995; and December 31, 1995; for the
three quarters ended September 29, 1996 and
September 24, 1995; and for the year ended
December 31, 1995.
Restated unaudited business segment
information for the quarters ended March 31,
1996 and March 26, 1995; June 30, 1996 and
June 25, 1995; September 29, 1996 and
September 24,1995; and December 31, 1995; for
the three quarters ended September 29, 1996
and September 24, 1995; and for the year
ended December 31, 1995.