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Share Name | Share Symbol | Market | Type |
---|---|---|---|
New Gannett Co Inc | NYSE:GCI | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.11 | 3.59% | 3.17 | 3.2199 | 3.03 | 3.13 | 3,085,614 | 01:00:00 |
|
ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
47-2390983
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
7950 Jones Branch Drive, McLean, Virginia
|
|
22107-0910
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large Accelerated Filer
|
ý
|
Accelerated Filer
|
¨
|
|
|
|
|
Non-Accelerated Filer
|
¨
|
Smaller Reporting Company
|
¨
|
|
Item No.
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|
Page
|
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1
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2
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3
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4
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||
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1
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||
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1A
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||
|
|
|
2
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||
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|
|
3
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||
|
|
|
4
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||
|
|
|
5
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||
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|
|
6
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|
Jun. 26, 2016
|
|
Dec. 27, 2015
|
||||
|
(Unaudited)
|
|
|
||||
ASSETS
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
144,126
|
|
|
$
|
196,696
|
|
Accounts receivable, less allowance for doubtful accounts of $9,111 and $8,836, respectively
|
302,492
|
|
|
330,473
|
|
||
Other receivables
|
20,417
|
|
|
36,114
|
|
||
Inventories
|
34,314
|
|
|
25,777
|
|
||
Assets held for sale
|
7,535
|
|
|
12,288
|
|
||
Prepaid expenses and other current assets
|
47,633
|
|
|
28,188
|
|
||
Total current assets
|
556,517
|
|
|
629,536
|
|
||
Property, plant and equipment, at cost less accumulated depreciation of $1,620,944 and $1,645,984, respectively
|
1,124,819
|
|
|
896,585
|
|
||
Goodwill
|
583,595
|
|
|
575,685
|
|
||
Intangible assets, net
|
97,422
|
|
|
59,713
|
|
||
Deferred income taxes (see Note 1)
|
135,188
|
|
|
201,991
|
|
||
Investments and other assets
|
70,693
|
|
|
64,289
|
|
||
Total assets
|
$
|
2,568,234
|
|
|
$
|
2,427,799
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable and accrued liabilities
|
$
|
377,819
|
|
|
$
|
393,026
|
|
Dividends payable
|
—
|
|
|
18,501
|
|
||
Deferred income
|
115,972
|
|
|
78,967
|
|
||
Total current liabilities
|
493,791
|
|
|
490,494
|
|
||
Income taxes
|
21,347
|
|
|
22,221
|
|
||
Postretirement medical and life insurance liabilities (see Note 1)
|
88,573
|
|
|
87,594
|
|
||
Pension liabilities (see Note 1)
|
508,515
|
|
|
612,443
|
|
||
Long-term portion of revolving credit facility
|
200,000
|
|
|
—
|
|
||
Other noncurrent liabilities
|
158,980
|
|
|
156,471
|
|
||
Total liabilities
|
1,471,206
|
|
|
1,369,223
|
|
||
Equity
|
|
|
|
||||
Preferred stock of $0.01 par value per share, 5,000,000 shares authorized, none issued
|
—
|
|
|
—
|
|
||
Common stock of $0.01 par value per share, 500,000,000 shares authorized, 116,535,299 and 115,668,957 shares issued and outstanding, respectively
|
1,165
|
|
|
1,156
|
|
||
Additional paid-in capital (see Note 1)
|
1,733,717
|
|
|
1,708,291
|
|
||
Retained earnings
|
28,836
|
|
|
22,553
|
|
||
Accumulated other comprehensive loss (see Note 1)
|
(666,690
|
)
|
|
(673,424
|
)
|
||
Total equity
|
1,097,028
|
|
|
1,058,576
|
|
||
Total liabilities and equity
|
$
|
2,568,234
|
|
|
$
|
2,427,799
|
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
Jun. 26, 2016
|
|
Jun. 28, 2015
|
|
Jun. 26, 2016
|
|
Jun. 28, 2015
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Operating revenues:
|
|
|
|
|
|
|
|
|
|
||||||
Advertising
|
$
|
409,834
|
|
|
$
|
410,487
|
|
|
$
|
761,055
|
|
|
$
|
807,753
|
|
Circulation
|
287,586
|
|
|
265,904
|
|
|
550,289
|
|
|
537,162
|
|
||||
Other
|
51,371
|
|
|
50,681
|
|
|
96,815
|
|
|
99,517
|
|
||||
Total operating revenues
|
748,791
|
|
|
727,072
|
|
|
1,408,159
|
|
|
1,444,432
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of sales and operating expenses
|
486,647
|
|
|
468,531
|
|
|
906,410
|
|
|
948,375
|
|
||||
Selling, general and administrative expenses
|
203,236
|
|
|
176,884
|
|
|
369,561
|
|
|
355,213
|
|
||||
Depreciation
|
29,292
|
|
|
23,958
|
|
|
53,251
|
|
|
48,386
|
|
||||
Amortization
|
1,640
|
|
|
3,608
|
|
|
2,958
|
|
|
7,007
|
|
||||
Facility consolidation and asset impairment charges
|
3,943
|
|
|
5,097
|
|
|
4,487
|
|
|
6,646
|
|
||||
Total operating expenses
|
724,758
|
|
|
678,078
|
|
|
1,336,667
|
|
|
1,365,627
|
|
||||
Operating income
|
24,033
|
|
|
48,994
|
|
|
71,492
|
|
|
78,805
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Non-operating income:
|
|
|
|
|
|
|
|
||||||||
Equity income in unconsolidated investees, net
|
469
|
|
|
4,495
|
|
|
1,610
|
|
|
10,802
|
|
||||
Interest expense
|
(3,001
|
)
|
|
(89
|
)
|
|
(4,857
|
)
|
|
(178
|
)
|
||||
Other non-operating items, net
|
(421
|
)
|
|
22,984
|
|
|
(2,788
|
)
|
|
21,615
|
|
||||
Total non-operating income (expense)
|
(2,953
|
)
|
|
27,390
|
|
|
(6,035
|
)
|
|
32,239
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income before income taxes
|
21,080
|
|
|
76,384
|
|
|
65,457
|
|
|
111,044
|
|
||||
Provision for income taxes
|
8,806
|
|
|
23,057
|
|
|
21,891
|
|
|
24,470
|
|
||||
Net income
|
$
|
12,274
|
|
|
$
|
53,327
|
|
|
$
|
43,566
|
|
|
$
|
86,574
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share – basic
|
$
|
0.11
|
|
|
$
|
0.46
|
|
|
$
|
0.37
|
|
|
$
|
0.75
|
|
Earnings per share – diluted
|
$
|
0.10
|
|
|
$
|
0.46
|
|
|
$
|
0.37
|
|
|
$
|
0.75
|
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
Jun. 26, 2016
|
|
Jun. 28, 2015
|
|
Jun. 26, 2016
|
|
Jun. 28, 2015
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
12,274
|
|
|
$
|
53,327
|
|
|
$
|
43,566
|
|
|
$
|
86,574
|
|
Other comprehensive income, before tax:
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
(16,024
|
)
|
|
25,568
|
|
|
(39,073
|
)
|
|
5,075
|
|
||||
Pension and other postretirement benefit items:
|
|
|
|
|
|
|
|
|
|
||||||
Amortization of prior service credit, net
|
675
|
|
|
(731
|
)
|
|
1,069
|
|
|
(1,454
|
)
|
||||
Amortization of actuarial loss
|
15,775
|
|
|
14,240
|
|
|
31,187
|
|
|
28,460
|
|
||||
Other
|
9,215
|
|
|
(22,935
|
)
|
|
30,523
|
|
|
(4,396
|
)
|
||||
Pension and other postretirement benefit items
|
25,665
|
|
|
(9,426
|
)
|
|
62,779
|
|
|
22,610
|
|
||||
Other comprehensive income, before tax
|
9,641
|
|
|
16,142
|
|
|
23,706
|
|
|
27,685
|
|
||||
Income tax effect related to components of other comprehensive income
|
(7,081
|
)
|
|
(229
|
)
|
|
(16,972
|
)
|
|
(8,753
|
)
|
||||
Other comprehensive income, net of tax
|
2,560
|
|
|
15,913
|
|
|
6,734
|
|
|
18,932
|
|
||||
Comprehensive income
|
$
|
14,834
|
|
|
$
|
69,240
|
|
|
$
|
50,300
|
|
|
$
|
105,506
|
|
|
Six months ended
|
||||||
|
Jun. 26, 2016
|
|
Jun. 28, 2015
|
||||
|
|
|
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
43,566
|
|
|
$
|
86,574
|
|
Adjustments to reconcile net income to net cash flow from operating activities:
|
|
|
|
||||
Gain on acquisition
|
—
|
|
|
(21,799
|
)
|
||
Depreciation and amortization
|
56,209
|
|
|
55,393
|
|
||
Facility consolidation and asset impairment charges
|
4,487
|
|
|
6,646
|
|
||
Pension and other postretirement expenses, net of contributions
|
(40,548
|
)
|
|
(119,502
|
)
|
||
Equity income in unconsolidated investees, net
|
(1,610
|
)
|
|
(10,802
|
)
|
||
Stock-based compensation
|
10,071
|
|
|
6,516
|
|
||
Change in accounts receivable
|
68,071
|
|
|
55,975
|
|
||
Change in accounts payable and accrued liabilities
|
(58,372
|
)
|
|
(13,609
|
)
|
||
Change in other assets and liabilities, net
|
(727
|
)
|
|
(18,697
|
)
|
||
Net cash flow from operating activities
|
81,147
|
|
|
26,695
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(26,136
|
)
|
|
(20,617
|
)
|
||
Payments for acquisitions, net of cash acquired
|
(260,529
|
)
|
|
(28,668
|
)
|
||
Payments for investments
|
(8,652
|
)
|
|
(2,000
|
)
|
||
Proceeds from investments
|
—
|
|
|
12,402
|
|
||
Proceeds from sale of certain assets
|
10,418
|
|
|
11,841
|
|
||
Net cash flow used for investing activities
|
(284,899
|
)
|
|
(27,042
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Dividends paid
|
(55,784
|
)
|
|
—
|
|
||
Deferred payments for acquisitions
|
—
|
|
|
(1,218
|
)
|
||
Proceeds from issuance of common stock upon settlement of stock awards
|
9,270
|
|
|
—
|
|
||
Proceeds from borrowings under revolving credit agreement
|
250,000
|
|
|
—
|
|
||
Repayments of borrowings under revolving credit agreement
|
(50,000
|
)
|
|
—
|
|
||
Transactions with former parent, net
|
—
|
|
|
(8,156
|
)
|
||
Net cash flow from (used for) financing activities
|
153,486
|
|
|
(9,374
|
)
|
||
Effect of currency exchange rate change on cash
|
(2,304
|
)
|
|
66
|
|
||
Decrease in cash and cash equivalents
|
(52,570
|
)
|
|
(9,655
|
)
|
||
Balance of cash and cash equivalents at beginning of period
|
196,696
|
|
|
71,947
|
|
||
Balance of cash and cash equivalents at end of period
|
$
|
144,126
|
|
|
$
|
62,292
|
|
|
|
|
|
||||
Supplemental cash flow information:
|
|
|
|
||||
Cash paid for taxes, net of refunds
|
$
|
22,809
|
|
|
$
|
—
|
|
Cash paid for interest
|
$
|
4,242
|
|
|
$
|
178
|
|
Non-cash investing and financing activities:
|
|
|
|
||||
Accrued capital expenditures
|
$
|
7,141
|
|
|
$
|
513
|
|
In thousands
|
|
||
Cash acquired
|
$
|
36,825
|
|
Other current assets
|
54,571
|
|
|
Property, plant and equipment
|
265,641
|
|
|
Intangible assets
|
42,880
|
|
|
Goodwill
|
22,955
|
|
|
Other noncurrent assets
|
3,825
|
|
|
Total assets acquired
|
426,697
|
|
|
Current liabilities
|
76,709
|
|
|
Noncurrent liabilities
|
54,942
|
|
|
Total liabilities assumed
|
131,651
|
|
|
Net assets acquired
|
$
|
295,046
|
|
In thousands
|
|
||
Current assets
|
$
|
12,310
|
|
Property, plant and equipment
|
20,672
|
|
|
Intangible assets
|
28,440
|
|
|
Goodwill
|
30,703
|
|
|
Total assets acquired
|
92,125
|
|
|
Current liabilities
|
10,860
|
|
|
Noncurrent liabilities
|
14,211
|
|
|
Total liabilities assumed
|
25,071
|
|
|
Net assets acquired
|
$
|
67,054
|
|
In thousands
|
USA TODAY 2015 EROP
|
|
August 2015 EROP
|
|
Various One-Time Actions
|
|
Ongoing Severance Plan
|
||||||||
Balance at Dec. 27, 2015
|
$
|
3,337
|
|
|
$
|
28,393
|
|
|
$
|
9,818
|
|
|
$
|
4,035
|
|
Expense
|
—
|
|
|
1,079
|
|
|
19,162
|
|
|
1,704
|
|
||||
Payments
|
(2,401
|
)
|
|
(19,864
|
)
|
|
(10,804
|
)
|
|
(1,585
|
)
|
||||
Adjustments
|
(936
|
)
|
|
622
|
|
|
(1,663
|
)
|
|
—
|
|
||||
Balance at Jun. 26, 2016
|
$
|
—
|
|
|
$
|
10,230
|
|
|
$
|
16,513
|
|
|
$
|
4,154
|
|
In thousands
|
Jun. 26, 2016
|
|
Dec. 27, 2015
|
||||||||||||
|
Gross
|
|
Accumulated Amortization
|
|
Gross
|
|
Accumulated Amortization
|
||||||||
Goodwill
|
$
|
583,595
|
|
|
$
|
—
|
|
|
$
|
575,685
|
|
|
$
|
—
|
|
Indefinite-lived intangibles:
|
|
|
|
|
|
|
|
||||||||
Mastheads and trade names
|
60,671
|
|
|
—
|
|
|
31,521
|
|
|
—
|
|
||||
Amortizable intangible assets:
|
|
|
|
|
|
|
|
||||||||
Customer relationships
|
79,615
|
|
|
(42,864
|
)
|
|
68,005
|
|
|
(39,813
|
)
|
||||
Other
|
11,982
|
|
|
(11,982
|
)
|
|
11,478
|
|
|
(11,478
|
)
|
In thousands
|
|
||
Balance at Dec. 27, 2015:
|
|
||
Goodwill
|
$
|
7,297,752
|
|
Accumulated impairment losses
|
(6,722,067
|
)
|
|
Net balance at Dec. 27, 2015
|
575,685
|
|
|
Activity during the period:
|
|
||
Acquisitions and adjustments (see Note 2)
|
23,928
|
|
|
Foreign currency exchange rate changes
|
(16,018
|
)
|
|
Total
|
7,910
|
|
|
Balance at Jun. 26, 2016:
|
|
||
Goodwill
|
7,125,021
|
|
|
Accumulated impairment losses
|
(6,541,426
|
)
|
|
Net balance at Jun. 26, 2016
|
$
|
583,595
|
|
In thousands
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
Jun. 26, 2016
|
|
Jun. 28, 2015
|
|
Jun. 26, 2016
|
|
Jun. 28, 2015
|
||||||||
Service cost-benefits earned during the period
|
$
|
34
|
|
|
$
|
99
|
|
|
$
|
97
|
|
|
$
|
197
|
|
Interest cost on net benefit obligation
|
887
|
|
|
986
|
|
|
1,874
|
|
|
1,972
|
|
||||
Amortization of prior service credit
|
(1,010
|
)
|
|
(2,465
|
)
|
|
(2,260
|
)
|
|
(4,922
|
)
|
||||
Amortization of actuarial loss
|
(186
|
)
|
|
394
|
|
|
64
|
|
|
787
|
|
||||
Net periodic postretirement benefit credit
|
$
|
(275
|
)
|
|
$
|
(986
|
)
|
|
$
|
(225
|
)
|
|
$
|
(1,966
|
)
|
In thousands
|
2016
|
|
2015
|
||||
Balance at beginning of period
|
$
|
1,058,576
|
|
|
$
|
937,472
|
|
Comprehensive income:
|
|
|
|
||||
Net income
|
43,566
|
|
|
86,574
|
|
||
Other comprehensive income (see Note 1)
|
6,734
|
|
|
18,932
|
|
||
Total comprehensive income
|
50,300
|
|
|
105,506
|
|
||
Dividends declared
|
(37,283
|
)
|
|
—
|
|
||
Stock-based compensation
|
10,071
|
|
|
—
|
|
||
Other activity (see Note 1)
|
15,364
|
|
|
—
|
|
||
Transactions with our former parent, net
|
—
|
|
|
(1,640
|
)
|
||
Balance at end of period
|
$
|
1,097,028
|
|
|
$
|
1,041,338
|
|
In thousands
|
Retirement Plans
|
|
Foreign Currency Translation
|
|
Total
|
||||||
Balance at Dec. 27, 2015
|
$
|
(1,058,234
|
)
|
|
$
|
384,810
|
|
|
$
|
(673,424
|
)
|
Other comprehensive income (loss) before reclassifications
|
25,057
|
|
|
(39,073
|
)
|
|
(14,016
|
)
|
|||
Amounts reclassified from accumulated other comprehensive loss
|
20,750
|
|
|
—
|
|
|
20,750
|
|
|||
Other comprehensive income (loss)
|
45,807
|
|
|
(39,073
|
)
|
|
6,734
|
|
|||
Balance at Jun. 26, 2016
|
$
|
(1,012,427
|
)
|
|
$
|
345,737
|
|
|
$
|
(666,690
|
)
|
|
|
|
|
|
|
||||||
Balance at Dec. 28, 2014
|
$
|
(1,082,312
|
)
|
|
$
|
404,200
|
|
|
$
|
(678,112
|
)
|
Other comprehensive income (loss) before reclassifications
|
(3,517
|
)
|
|
5,075
|
|
|
1,558
|
|
|||
Amounts reclassified from accumulated other comprehensive loss
|
17,374
|
|
|
—
|
|
|
17,374
|
|
|||
Other comprehensive income (loss)
|
13,857
|
|
|
5,075
|
|
|
18,932
|
|
|||
Balance at Jun. 28, 2015
|
$
|
(1,068,455
|
)
|
|
$
|
409,275
|
|
|
$
|
(659,180
|
)
|
In thousands
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
Jun. 26, 2016
|
|
Jun. 28, 2015
|
|
Jun. 26, 2016
|
|
Jun. 28, 2015
|
||||||||
Amortization of prior service credit, net
|
$
|
675
|
|
|
$
|
(731
|
)
|
|
$
|
1,069
|
|
|
$
|
(1,454
|
)
|
Amortization of actuarial loss
|
15,775
|
|
|
14,240
|
|
|
31,187
|
|
|
28,460
|
|
||||
Total reclassifications, before tax
|
16,450
|
|
|
13,509
|
|
|
32,256
|
|
|
27,006
|
|
||||
Income tax effect
|
(5,876
|
)
|
|
(4,816
|
)
|
|
(11,506
|
)
|
|
(9,632
|
)
|
||||
Total reclassifications, net of tax
|
$
|
10,574
|
|
|
$
|
8,693
|
|
|
$
|
20,750
|
|
|
$
|
17,374
|
|
In thousands, except per share data
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
Jun. 26, 2016
|
|
Jun. 28, 2015
|
|
Jun. 26, 2016
|
|
Jun. 28, 2015
|
||||||||
Net income
|
$
|
12,274
|
|
|
$
|
53,327
|
|
|
$
|
43,566
|
|
|
$
|
86,574
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of shares outstanding - basic
|
116,516
|
|
|
114,959
|
|
|
116,414
|
|
|
114,959
|
|
||||
Effect of dilutive securities
|
|
|
|
|
|
|
|
||||||||
Restricted stock units
|
1,420
|
|
|
—
|
|
|
1,320
|
|
|
—
|
|
||||
Performance share units
|
781
|
|
|
—
|
|
|
821
|
|
|
—
|
|
||||
Stock options
|
238
|
|
|
—
|
|
|
250
|
|
|
—
|
|
||||
Weighted average number of shares outstanding - diluted
|
118,955
|
|
|
114,959
|
|
|
118,805
|
|
|
114,959
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Earnings per share - basic
|
$
|
0.11
|
|
|
$
|
0.46
|
|
|
$
|
0.37
|
|
|
$
|
0.75
|
|
Earnings per share - diluted
|
$
|
0.10
|
|
|
$
|
0.46
|
|
|
$
|
0.37
|
|
|
$
|
0.75
|
|
|
Three months ended
|
|
Six months ended
|
||||
In thousands
|
Jun. 28, 2015
|
|
Jun. 28, 2015
|
||||
Corporate allocations
(a)
|
$
|
13,199
|
|
|
$
|
25,832
|
|
Occupancy
(b)
|
1,470
|
|
|
2,884
|
|
||
Depreciation
(c)
|
2,208
|
|
|
4,067
|
|
||
Other support costs
(d)
|
2,591
|
|
|
6,249
|
|
||
Cost recoveries
(e)
|
(3,404
|
)
|
|
(6,055
|
)
|
||
Total
|
$
|
16,064
|
|
|
$
|
32,977
|
|
•
|
Acquisition of Journal Media Group (“JMG”)
– On April 8, 2016, we completed the acquisition of 100% of the outstanding common stock of JMG, a media company with print and digital publishing operations serving
15
U.S. markets in
9
states. Our results reflect an increase in total revenues of
$92.6 million
in the second quarter of 2016 as a result of the acquisition.
|
•
|
Acquisition of Texas-New Mexico Newspaper Partnership (“TNP”) and Romanes Media Group (“RMG”)
– On June 1, 2015, we completed the acquisition of the remaining 59.4% interest in the TNP that we did not own from Digital First Media. We completed the acquisition through the assignment of our 19.5% interest in the California Newspapers Partnership (“CNP”) and additional cash consideration. As a result, we own 100% of TNP and no longer have any ownership interest in CNP. Our results reflect an increase in total revenues of
$11.5 million
in the second quarter of 2016 and
$29.6 million
year-to-date 2016 as a result of consolidating TNP and a decrease in “Equity income in unconsolidated investees, net” of
$0.9 million
in the second quarter of 2016 and
$0.4 million
year-to-date 2016.
|
•
|
Facility Consolidation and Asset Impairment Charges
– We evaluated the carrying values of property, plant and equipment at certain sites because of facility consolidation efforts. We revised the useful lives of certain assets to reflect the use of those assets over a shortened period as a result. We recorded pre-tax charges for facility consolidations and asset impairments of
$3.9 million
and
$5.1 million
in the second quarter of 2016 and 2015, respectively, and
$4.5 million
and
$6.6 million
year-to-date 2016 and 2015, respectively.
|
•
|
Severance-related Expenses
– We initiated various cost reducing, severance-related actions. In August 2015, we announced an EROP for employees in certain corporate departments and publishing sites. We recorded no severance-related expenses in the second quarter of 2016 and
$1.1 million
year-to-date 2016 related to this action. Further, we also had other employee termination actions associated with our facility consolidation and other cost reduction efforts. We recorded severance-related expenses of
$18.2 million
and
$7.6 million
for the second quarter of 2016 and 2015, respectively, and
$20.9 million
and
$19.5 million
year-to-date 2016 and 2015, respectively, related to this action.
|
•
|
New Digital Agreements
– Beginning in the third quarter of 2015 and in conjunction with the execution of new agreements with businesses owned by our former parent following the separation (principally Cars.com and CareerBuilder), we began reporting wholesale fees associated with sales of certain third party digital advertising products and services on a net basis as a reduction of the associated digital advertising revenues rather than in operating expenses in our unaudited consolidated and combined statements of income. There is no impact on operating income, operating cash flows, net income, or earnings per share. For the second quarter of and year-to-date 2016, revenue comparisons to the same period in the prior year were negatively impacted by
$15.6 million
and
$30.2 million
, respectively.
|
•
|
Foreign Currency
– Our U.K. publishing operations are conducted through our Newsquest subsidiary. Our U.K. earnings are translated at the average British pound sterling-to-U.S. dollar exchange rate. Therefore, a strengthening in that exchange rate will improve our U.K. revenue and earnings contributions to consolidated results, and a weakening of that exchange rate will have a negative impact. Results for the second quarter of 2016 were translated from the British pound sterling to U.S. dollars at an average rate of
1.44
compared to
1.53
for the comparable period last year. This
6%
decline in the exchange rate unfavorably impacted 2016 revenue comparisons by approximately
$5.7 million
.
|
In thousands
|
Quarter-to-Date
|
|
Year-to-Date
|
||||||||||||||||||
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
||||||||||
Operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Advertising
|
$
|
409,834
|
|
|
$
|
410,487
|
|
|
—
|
%
|
|
$
|
761,055
|
|
|
$
|
807,753
|
|
|
(6
|
%)
|
Circulation
|
287,586
|
|
|
265,904
|
|
|
8
|
%
|
|
550,289
|
|
|
537,162
|
|
|
2
|
%
|
||||
Other
|
51,371
|
|
|
50,681
|
|
|
1
|
%
|
|
96,815
|
|
|
99,517
|
|
|
(3
|
%)
|
||||
Total operating revenues
|
748,791
|
|
|
727,072
|
|
|
3
|
%
|
|
1,408,159
|
|
|
1,444,432
|
|
|
(3
|
%)
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating expenses
|
689,883
|
|
|
645,415
|
|
|
7
|
%
|
|
1,275,971
|
|
|
1,303,588
|
|
|
(2
|
%)
|
||||
Depreciation
|
29,292
|
|
|
23,958
|
|
|
22
|
%
|
|
53,251
|
|
|
48,386
|
|
|
10
|
%
|
||||
Amortization
|
1,640
|
|
|
3,608
|
|
|
(55
|
%)
|
|
2,958
|
|
|
7,007
|
|
|
(58
|
%)
|
||||
Facility consolidation and asset impairment charges
|
3,943
|
|
|
5,097
|
|
|
(23
|
%)
|
|
4,487
|
|
|
6,646
|
|
|
(32
|
%)
|
||||
Total operating expenses
|
724,758
|
|
|
678,078
|
|
|
7
|
%
|
|
1,336,667
|
|
|
1,365,627
|
|
|
(2
|
%)
|
||||
Operating income
|
24,033
|
|
|
48,994
|
|
|
(51
|
%)
|
|
71,492
|
|
|
78,805
|
|
|
(9
|
%)
|
||||
Non-operating (expense) income, net
|
(2,953
|
)
|
|
27,390
|
|
|
***
|
|
|
(6,035
|
)
|
|
32,239
|
|
|
***
|
|
||||
Income before income taxes
|
21,080
|
|
|
76,384
|
|
|
(72
|
%)
|
|
65,457
|
|
|
111,044
|
|
|
(41
|
%)
|
||||
Provision for income taxes
|
8,806
|
|
|
23,057
|
|
|
(62
|
%)
|
|
21,891
|
|
|
24,470
|
|
|
(11
|
%)
|
||||
Net income
|
$
|
12,274
|
|
|
$
|
53,327
|
|
|
(77
|
%)
|
|
$
|
43,566
|
|
|
$
|
86,574
|
|
|
(50
|
%)
|
In thousands
|
Year-to-date
|
||||||
|
2016
|
|
2015
|
||||
Net cash flow from operating activities
|
$
|
81,147
|
|
|
$
|
26,695
|
|
Net cash flow used for investing activities
|
(284,899
|
)
|
|
(27,042
|
)
|
||
Net cash flow from (used for) financing activities
|
153,486
|
|
|
(9,374
|
)
|
||
Effect of currency exchange rate change
|
(2,304
|
)
|
|
66
|
|
||
Net decrease in cash
|
$
|
(52,570
|
)
|
|
$
|
(9,655
|
)
|
In thousands
|
Quarter-to-Date
|
|
Year-to-Date
|
||||||||||||||||||
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
||||||||||
Net income (GAAP basis)
|
$
|
12,274
|
|
|
$
|
53,327
|
|
|
(77
|
%)
|
|
$
|
43,566
|
|
|
$
|
86,574
|
|
|
(50
|
%)
|
Provision for income taxes
|
8,806
|
|
|
23,057
|
|
|
(62
|
%)
|
|
21,891
|
|
|
24,470
|
|
|
(11
|
%)
|
||||
Equity income in unconsolidated investees, net
|
(469
|
)
|
|
(4,495
|
)
|
|
(90
|
%)
|
|
(1,610
|
)
|
|
(10,802
|
)
|
|
(85
|
%)
|
||||
Other non-operating items, net
|
3,422
|
|
|
(22,895
|
)
|
|
***
|
|
|
7,645
|
|
|
(21,437
|
)
|
|
***
|
|
||||
Operating income (GAAP basis)
|
24,033
|
|
|
48,994
|
|
|
(51
|
%)
|
|
71,492
|
|
|
78,805
|
|
|
(9
|
%)
|
||||
Early retirement program
|
(244
|
)
|
|
7,801
|
|
|
***
|
|
|
835
|
|
|
7,801
|
|
|
(89
|
%)
|
||||
Severance related charges
|
18,242
|
|
|
7,568
|
|
|
***
|
|
|
20,859
|
|
|
19,513
|
|
|
7
|
%
|
||||
Acquisition related expenses
|
12,788
|
|
|
—
|
|
|
***
|
|
|
14,639
|
|
|
—
|
|
|
***
|
|
||||
Other transformation items
|
223
|
|
|
1,479
|
|
|
(85
|
%)
|
|
(419
|
)
|
|
3,028
|
|
|
***
|
|
||||
Asset impairment charges
|
3,720
|
|
|
3,618
|
|
|
3
|
%
|
|
3,706
|
|
|
3,618
|
|
|
2
|
%
|
||||
Depreciation
|
29,292
|
|
|
23,958
|
|
|
22
|
%
|
|
53,251
|
|
|
48,386
|
|
|
10
|
%
|
||||
Amortization
|
1,640
|
|
|
3,608
|
|
|
(55
|
%)
|
|
2,958
|
|
|
7,007
|
|
|
(58
|
%)
|
||||
Adjusted EBITDA (non-GAAP basis)
|
$
|
89,694
|
|
|
$
|
97,026
|
|
|
(8
|
%)
|
|
$
|
167,321
|
|
|
$
|
168,158
|
|
|
—
|
%
|
In thousands, except per share data
|
Quarter-to-Date
|
|
Year-to-Date
|
||||||||||||||||||
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
||||||||||
Early retirement program
|
$
|
(244
|
)
|
|
$
|
7,801
|
|
|
***
|
|
|
$
|
835
|
|
|
$
|
7,801
|
|
|
(89
|
%)
|
Severance-related charges
|
18,242
|
|
|
7,568
|
|
|
***
|
|
|
20,859
|
|
|
19,513
|
|
|
7
|
%
|
||||
Acquisition related expenses
|
12,788
|
|
|
(20,621
|
)
|
|
***
|
|
|
14,639
|
|
|
(20,621
|
)
|
|
***
|
|
||||
Other transformation items
|
223
|
|
|
1,479
|
|
|
(85
|
%)
|
|
(419
|
)
|
|
3,028
|
|
|
***
|
|
||||
Asset impairment charges
|
3,720
|
|
|
3,618
|
|
|
3
|
%
|
|
3,769
|
|
|
3,618
|
|
|
4
|
%
|
||||
Pre-tax impact
|
34,729
|
|
|
(155
|
)
|
|
***
|
|
|
39,683
|
|
|
13,339
|
|
|
***
|
|
||||
Income tax impact of above items
|
(10,864
|
)
|
|
775
|
|
|
***
|
|
|
(12,657
|
)
|
|
(3,964
|
)
|
|
***
|
|
||||
Impact of items affecting comparability on net income
|
$
|
23,865
|
|
|
$
|
620
|
|
|
***
|
|
|
$
|
27,026
|
|
|
$
|
9,375
|
|
|
***
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (GAAP basis)
|
$
|
12,274
|
|
|
$
|
53,327
|
|
|
(77
|
%)
|
|
$
|
43,566
|
|
|
$
|
86,574
|
|
|
(50
|
%)
|
Impact of items affecting comparability on net income
|
23,865
|
|
|
620
|
|
|
***
|
|
|
27,026
|
|
|
9,375
|
|
|
***
|
|
||||
Adjusted net income (non-GAAP basis)
|
$
|
36,139
|
|
|
$
|
53,947
|
|
|
(33
|
%)
|
|
$
|
70,592
|
|
|
$
|
95,949
|
|
|
(26
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings per share - diluted (GAAP basis)
|
$
|
0.10
|
|
|
$
|
0.46
|
|
|
(78
|
%)
|
|
$
|
0.37
|
|
|
$
|
0.75
|
|
|
(51
|
%)
|
Impact of items affecting comparability on net income
|
0.20
|
|
|
0.01
|
|
|
***
|
|
|
0.22
|
|
|
0.08
|
|
|
***
|
|
||||
Adjusted earnings per share - diluted (non-GAAP basis)
|
$
|
0.30
|
|
|
$
|
0.47
|
|
|
(36
|
%)
|
|
$
|
0.59
|
|
|
$
|
0.83
|
|
|
(29
|
%)
|
Diluted weighted average number of common shares outstanding
|
118,955
|
|
|
114,959
|
|
|
3
|
%
|
|
118,805
|
|
|
114,959
|
|
|
3
|
%
|
In thousands
|
Year-to-Date
|
||||||
|
2016
|
|
2015
|
||||
Net cash flow from operating activities (GAAP basis)
|
$
|
81,147
|
|
|
$
|
26,695
|
|
Capital expenditures
|
(26,136
|
)
|
|
(20,617
|
)
|
||
Free cash flow (non-GAAP basis)
|
$
|
55,011
|
|
|
$
|
6,078
|
|
•
|
Competitive pressures in the markets in which we operate;
|
•
|
Increased consolidation among major retailers or other events which may adversely affect business operations of major customers and depress the level of local and national advertising;
|
•
|
Macroeconomic trends and conditions;
|
•
|
Economic downturns leading to a continuing or accelerated decrease in circulation or local, national, or classified advertising;
|
•
|
Potential disruption or interruption of our operations due to accidents, extraordinary weather events, civil unrest, political events, terrorism, or cybersecurity attacks;
|
•
|
An accelerated decline in general print readership and/or advertiser patterns as a result of competitive alternative media or other factors;
|
•
|
Our inability to adapt to technological changes or grow our online business;
|
•
|
An increase in newsprint costs over the levels anticipated;
|
•
|
Labor relations including, but not limited to, labor disputes which may cause revenue declines or increased labor costs;
|
•
|
Risks and uncertainties related to our ability to successfully integrate JMG’s operations and employees with our existing business;
|
•
|
Risks and uncertainties related to the satisfaction of the conditions of our merger agreement with ReachLocal and the consummation of the transactions contemplated by the merger agreement on a timely basis;
|
•
|
Our ability to successfully integrate ReachLocal's operations and employees with our existing business following the closing of the transactions contemplated by the merger agreement;
|
•
|
Our ability to identify and complete future acquisitions on favorable terms and to realize benefits or synergies from acquisitions of new businesses or dispositions of existing businesses or to operate businesses effectively following acquisitions or divestitures;
|
•
|
Our ability to attract and retain key employees;
|
•
|
Rapid technological changes and frequent new product introductions prevalent in electronic publishing and online business;
|
•
|
An increase in interest rates;
|
•
|
A weakening in the British pound sterling to U.S. dollar exchange rate;
|
•
|
Volatility in financial and credit markets, which could affect our ability to raise funds through debt or equity issuances and otherwise affect our ability to access the credit and capital markets at the times and in the amounts needed and on acceptable terms;
|
•
|
Changes in the regulatory environment, which could encumber or impede our efforts to improve operating results or the value of assets;
|
•
|
Unfavorable credit rating actions, which could affect the availability and cost of future financing;
|
•
|
Adverse outcomes in proceedings with governmental authorities or administrative agencies;
|
•
|
An other than temporary decline in operating results and enterprise value that could lead to non-cash goodwill, other intangible asset, investment, or property, plant, and equipment impairment charges;
|
•
|
Our dependence on our former parent and other third parties to perform important services for us following the separation;
|
•
|
Our inability to engage in certain actions that could cause the separation from our former parent to fail to qualify as a tax free reorganization;
|
•
|
Any failure to realize expected benefits from, or the possibility that we may be required to incur unexpected costs as a result of, the separation; and
|
•
|
Other uncertainties relating to general economic, political, business, industry, regulatory, and market conditions.
|
Date: August 3, 2016
|
GANNETT CO., INC.
|
|
|
|
/s/ Alison K. Engel
|
|
Alison K. Engel
|
|
Senior Vice President, Chief Financial Officer and Treasurer
|
|
(on behalf of Registrant and as Principal Financial Officer)
|
Exhibit
Number
|
|
Exhibit
|
|
Location
|
2-1
|
|
Amendment and Plan of Merger, dated as of June 27, 2016, by and among Gannett Co., Inc., Raptor Merger Sub, Inc. and ReachLocal, Inc.
|
|
Incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed by the Company with the SEC on June 27, 2016
|
|
|
|
|
|
2-2
|
|
Tender and Support Agreement, dated as of June 27, 2016, by and among Gannett Co., Inc., Raptor Merger Sub, Inc. and each of the stockholders named therein
|
|
Incorporated by reference to Exhibit 2.2 to the Company's Current Report on Form 8-K filed by the Company with the SEC on June 27, 2016
|
|
|
|
|
|
3-1
|
|
Amended and Restated Certificate of Incorporation of the Company
|
|
Attached
|
|
|
|
|
|
10-1
|
|
Master Transaction Agreement, dated as of July 30, 2014, by and among The E. W. Scripps Company, Scripps Media, Inc., Desk Spinco, Inc., Scripps NP Operating, LLC (f/k/a Desk NP Operating, LLC), Desk NP Merger Co., Desk BC Merger, LLC, Journal Communications, Inc., Boat Spinco, Inc., Boat NP Merger Co., and Journal Media Group, Inc. (f/k/a Boat NP Newco, Inc.)
|
|
Incorporated by reference to Exhibit 2.1 to the Registration Statement on Form S-4, SEC File No. 333-200388, filed by The E.W. Scripps Company on November 20, 2014
|
|
|
|
|
|
10-2
|
|
Scripps Tax Matters Agreement, dated July 30, 2014, by and among The E. W. Scripps Company, Desk Spinco, Inc. and Journal Media Group, Inc. (f/k/a Boat NP Newco, Inc.)
|
|
Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by Journal Communications, Inc. on July 30, 2014
|
|
|
|
|
|
10-3
|
|
Journal Tax Matters Agreement, dated July 30, 2014, by and among Desk BC Merger, LLC, Journal Communications, Inc., Boat Spinco, Inc. and Journal Media Group, Inc. (f/k/a Boat NP Newco, Inc.)
|
|
Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed by Journal Communications, Inc. on July 30, 2014
|
|
|
|
|
|
31-1
|
|
Rule 13a-14(a) Certification of CEO
|
|
Attached.
|
|
|
|
|
|
31-2
|
|
Rule 13a-14(a) Certification of CFO
|
|
Attached.
|
|
|
|
|
|
32-1
|
|
Section 1350 Certification of CEO
|
|
Attached.
|
|
|
|
|
|
32-2
|
|
Section 1350 Certification of CFO
|
|
Attached.
|
|
|
|
|
|
101
|
|
The following financial information from Gannett Co., Inc. Quarterly Report on Form 10-Q for the quarter ended June 26, 2016, formatted in XBRL includes: (i) Unaudited Condensed Consolidated Balance Sheets at June 26, 2016 and December 27, 2015, (ii) Unaudited Condensed Consolidated and Combined Statements of Income for the fiscal quarters and six months ended June 26, 2016 and June 28, 2015, (iii) Unaudited Condensed Consolidated and Combined Statements of Comprehensive Income for the fiscal quarters and six months ended June 26, 2016 and June 28, 2015, (iv) Unaudited Condensed Consolidated and Combined Cash Flow Statements for the fiscal quarters and six months ended June 26, 2016 and June 28, 2015, and (v) Unaudited Notes to Condensed Consolidated and Combined Financial Statements
|
|
Attached.
|
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1 Month New Gannett Chart |
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