2014 ANNUAL REPORT GANNETT CO., INC. GANNETT CO., INC. 2014 ANNUAL REPORT GANNETT CO., INC. 7950 JONES BRANCH DR., MCLEAN, VA 22107 Creating a New Future WWW.GANNETT.COM 2014 ANNUAL REPORT TABLE OF CONTENTS FINANCIAL SUMMARY 2014 Financial Summary ...................................................... 1 Operating revenues, in millions Letter to Shareholders ......................................................... 2 12 $5353 Board of Directors ................................................................ 7 13 $5161 14 $6008 Company and Divisional Officers ......................................... 8 Net income attributable to Gannett Co., Inc. before asset impairment and other special items, in millions 12 $551 (1) Form 10-K 13 $473 (1) 14 $634 (1) Net income per diluted share before asset impairment and other special items 12 $2.33 (1) 13 $2.02 (1) 14 $2.73 (1) In thousands, except per share amounts 2014 2013 Change Operating revenues ......................... $ 6,008,174 $ 5,161,362 16% Operating income .......................... $ 1,058,031 $ 739,243 43% Adjusted EBITDA (1) ................... $ 1,490,563 $ 1,044,963 43% Net income attributable to Gannett Co., Inc. ............................. $ 1,062,171 $ 388,680 173% Net income per share – diluted ..... $ 4.58 $ 1.66 176% Net income attributable to Gannett Co., Inc. before asset impairment and other special items (2) .......................................... $ 634,187 $ 473,445 34% Net income per diluted share before asset impairment and other charges (2) ............................. $ 2.73 $ 2.02 35% Free cash flow (3) ............................ $ 844,628 $ 470,491 80% Working capital ............................... $ 352,529 $ 916,293 (62%) Long-term debt .............................. $ 4,488,028 $ 3,707,010 21% Total assets ...................................... $ 11,205,455 $ 9,240,706 21% Capital expenditures ...................... $ 161,874 $ 110,407 47% Shareholders’ equity........................ $ 3,254,914 $ 2,693,098 21% Dividends declared per share ......... $ 0.80 $ 0.80 — Weighted average common shares outstanding – diluted ............ 231,907 234,189 (1%) (1) See page 37 of Gannett’s Form 10-K for reconciliation of Adjusted EBITDA, a non-GAAP financial measure, to net income attributable to Gannett. (2) Results for 2014 exclude special items benefits of $428 million after tax or $1.85 per share. Results for 2013 exclude asset impairment and other special items charges of $85 million after tax or $.36 per share. Results for 2012 exclude asset impairment and other special items charges of $127 million after tax or $.54 per share. These special items are more fully discussed in the Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statement sections of this report. (3) See page 79 of Gannett’s Form 10-K for a reconciliation of free cash flow, a non-GAAP financial measure, to net cash flow from operating activities. ANNUAL REPORT 1 LETTER TO SHAREHOLDERS Dear Fellow Shareholders: reflecting our unwavering diligence Gannett plans to accelerate this in maximizing efficiency across each extraordinary growth and leverage 2014: A BANNER YEAR and every corner of our business. As all assets as we maximize the tight- 2014 was without a doubt one of the a result, profitability improved dra- knit relationships Gannett has been most exceptional years in Gannett’s matically. We achieved a 43 percent building in local communities for 108-year history. We achieved a jump in our Adjusted EBITDA to over a century. number of milestones, enhanced the $1.5 billion, expanded our Adjusted We see many avenues for offerings we provide to our audi- EBITDA margin by approximately Cars.com and the rest of the dig- ences and clients, and successfully 460 basis points and reported free ital portfolio to drive shareholder executed several important strate- cash flow of $845 million in 2014. value in 2015 and beyond. Not only gic acquisitions. But perhaps most As we write this letter, our stock has does full ownership of Cars.com importantly, 2014 was the year that nearly tripled since we launched our provide strong financial returns, it all of our hard work to transform transformation journey and our per- gives Gannett an increased focus on our business over the past three formance handily beat the S&P 500 two of the most crucial advertising years came to fruition and the “New and our peer group in the aggregate verticals – automotive and talent Gannett” – a higher margin, higher over the past three years. management solutions. Recent growth, and more diversified busi- growth for CareerBuilder has been ness positioned to compete fiercely MAJOR STEPS FORWARD driven primarily by innovation and in today’s multi-platform landscape ON DIGITAL FRONT the diversification of its products – fully emerged. Our exciting news on the digital and services. In 2014, it acquired One of our top headlines of the front is clearly the acquisition of the BroadBean, a leader in job distribu- year was our decision to create two remaining 73 percent interest that we tion, candidate sourcing and big data publicly traded companies: one didn’t already own in Cars.com. It is analytics software. This is the latest exclusively focused on our Broad- experiencing robust growth as mar- step in CareerBuilder’s evolution as cast and Digital businesses, and the keters and advertisers continue to the premier human resources Soft- second focused on our Publishing shift more of their spending toward ware as a Service (SaaS) provider, and affiliated digital businesses. Our digital solutions. This acquisition which enables CareerBuilder to give overarching goal in separating our doubled the size of our digital port- recruiters and human resources businesses is to have even sharper folio and provides us with a highly managers a faster, more convenient management focus on and dedicate strategic position within the ever and more cost-effective way to capital and other resources to what important automotive vertical. With acquire talent. matters most to each of those busi- Cars.com in a position of strength in As we continue to connect with nesses. By separating our businesses, an industry anticipating significant our local audiences in increasingly each company will be better posi- tailwinds, there has never been a meaningful ways, we expect the tioned both financially and strategi- better time in Cars.com’s history for digital portfolio will provide even cally to grow and develop with fewer Gannett to take full ownership. greater value for shareholders. regulatory obstacles and to unlock Cars.com has progressed from more value for our shareholders. a startup that supported the publish- BROADCASTING’S As you’ve seen in our quarterly ing businesses of its founding own- EXPANDED PORTFOLIO earnings reports, Gannett had an ers in 1998 into a widely-respected, STRENGTHENS COMPANY outstanding year, fueled by the industry-leading digital company Our Broadcasting segment had an exceptional work of our employees. serving approximately 20,000 deal- outstanding year in 2014, achieving Company-wide revenue increased ers. From 2006 to 2013, revenue grew revenue of $1.7 billion – a historic by more than 16 percent driven by at a compound annual growth rate high for Gannett. It was our first full growth in our Broadcasting and (CAGR) of almost 20 percent and year operating with our significantly Digital segments. The revenue EBITDA increased at a CAGR of expanded Broadcasting portfolio. growth far outpaced expense growth almost 40 percent. As sole owner, We’ve added geographic and 2 ANNUAL REPORT GANNETT IN THE DRIVER’S SEAT As a minority owner for years before the recent acquisition, Gannett knew exactly what it was getting when it purchased the remaining interest in Cars.com it didn’t already own. With approximately 30 million monthly visits, Cars.com is a leading independent research site for car shoppers, providing credible and easy-to-understand information from consumers and experts. Car buyers love going to Cars.com because the site provides them with the information they need in an easily digestible way that makes shopping for cars much less stressful. As auto marketers and advertisers rapidly shift their spending to digital solutions, Cars.com, a top choice for consumers, is poised to take a larger piece of an expanding pie. The potential for growth is truly incredible. ALL DRIVE. NO DRAMA. ANNUAL REPORT 3 LETTER TO SHAREHOLDERS network diversity, propelling us to NATIONAL-TO-LOCAL STRATEGY with daily circulation increasing over an industry-leading position where DRIVES PUBLISHING SEGMENT 40 percent compared to 2013, to more we reach approximately one-third In Publishing, our U.S. Community than 4.1 million for the six months of all television households in the Publishing (USCP) All Access ending September 30, 2014. country. We continued to strengthen Content Subscription model – now In January 2015, we began our portfolio throughout 2014, add- in its third year – has been tremen- syndicating the USA TODAY Local ing six stations in Texas. With this dously successful and continues to Edition to non-Gannett newspapers, acquisition, Gannett now reaches be a driving force behind positive with several newspapers taking the 83% of all Texas households. momentum in that segment, includ- Weekend Life product. We’ve also The astounding growth in our ing the growth of digital subscribers. created a Personal Finance product Broadcasting segment was driven In fact, what we’ve learned from that newspapers across the U.S. by several factors, including the implementing our All Access Model have begun including. This is just the strength of our stations, their ability has been the inspiration for our first step in USA TODAY’s content to amplify every content and sales latest initiative: inserting national syndication strategy with its Local opportunity, the addition of the USA TODAY content editions into Edition product. new TV stations which further 35 of our local USCP publications, In November, Gannett’s U.K.- expanded our footprint across the which has been a huge hit with based Newsquest launched a market U.S., and the exceptional advertising audiences.