GANNETT CO., INC. (Exact Name of Registrant As Specified in Charter)
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UNITED STATES 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 (date of earliest event reported): October 11, 2006 GANNETT CO., INC. (Exact name of registrant as specified in charter) Delaware 1-6961 16-0442930 (State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer Identification No.) Incorporation or Organization of Registrant) 7950 Jones Branch Drive, McLean, 22107-0910 Virginia (Address of principal executive (Zip Code) offices) (703) 854-6000 (Registrant's telephone number, including area code) Not Applicable (Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition. On October 11, 2006, Gannett Co., Inc. reported its consolidated financial results for the third quarter ended September 24, 2006. On October 11, 2006, the company also issued a press release announcing the company's statistical report for the period and quarter ended September 24, 2006. Copies of these press releases are furnished with this report as exhibits. Item 9.01. Financial Statements and Exhibits. (c) Exhibits See Index to Exhibits attached hereto. SIGNATURE Pursuant to requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Gannett Co., Inc. Date: October 11, 2006 By: /s/George R. Gavagan George R. Gavagan Vice President and Controller INDEX TO EXHIBITS Exhibit No. Description 99.1 Gannett Co., Inc. Earnings Press Release dated October 11, 2006. 99.2 Gannett Co., Inc. Statistical Report Press Release dated October 11, 2006. News Release FOR IMMEDIATE RELEASE Wednesday, October 11, 2006 Gannett Co., Inc. Reports Third Quarter Results McLEAN, VA - Gannett Co., Inc. (NYSE: GCI) reported today that 2006 third quarter earnings per diluted share from continuing operations were $1.11 compared with $1.13 per share in the third quarter of 2005. Excluding stock compensation expense this quarter of $10.3 million ($6.4 million after tax or $0.03 per share), diluted earnings per share would have been above last year's third quarter result. "Our performance this quarter was led by top-of-the-industry television results, fueled by strong political advertising demand. Our online and non- daily efforts again contributed positively. All of this was achieved despite the challenging advertising environment, uncertain economic outlook, higher interest and newsprint costs, and stock compensation expense," said Craig Dubow, chairman, president and CEO of Gannett. "As always," Dubow added, "I am proud of the disciplined financial management shown throughout the company which, coupled with our strategies to grow the many facets of our news and information business, are keys to our future growth." Reported results for the quarter and year-to-date include KTVD-TV in Denver and WATL-TV in Atlanta which the company acquired during the third quarter, creating Gannett's second and third duopolies. As previously reported, the company completed the expansion and reorganization, with MediaNews Group, of the Texas-New Mexico Newspapers Partnership on December 25, 2005. Results for the partnership are no longer consolidated in the company's financial statements. The company's 40.6 percent interest in the partnership results is now included in other operating revenues. Gannett also completed an exchange of properties with Knight Ridder, Inc. in August 2005. Operating results for 2005 exclude contributions from the former Gannett properties which have been reclassified to income from discontinued operations. The Detroit Newspaper Partnership, L.P. has been fully consolidated in the financial statements of Gannett along with a minority interest charge for MediaNews Group's interest since August 1, 2005. CONTINUING OPERATIONS Total operating revenues for the company were $1.91 billion in the third quarter a 2.7 percent increase from the third quarter of 2005. The increase reflected higher politically related advertising demand, the acquisitions of KTVD-TV and WATL-TV and the full consolidation of Detroit newspaper operations. On a pro forma basis, assuming Gannett owned the same complement of properties in the third quarters of 2006 and 2005, total operating revenues would have been up slightly. Operating cash flow (defined as operating income plus depreciation and amortization) was $524.3 million compared with (more) $540.9 million in the same quarter of last year. However, excluding stock compensation expense, operating cash flow was $534.6 million, a decline of 1.2 percent. Income from continuing operations was $261.4 million in the third quarter of 2006 compared with $274.6 million in the year- ago quarter. Income from continuing operations for the third quarter of 2006 excluding stock based compensation expense was $267.8 million. Reported operating expenses were 4.9 percent higher in the quarter resulting principally from the full consolidation of Detroit newspaper operations, newsprint expense, stock compensation expense and the acquisitions of KTVD and WATL. On a pro forma basis and excluding stock-based compensation, total operating expenses increased 1.2 percent reflecting primarily higher newsprint expense. Corporate expenses increased $2.7 million to $19.4 million compared with the third quarter of 2005 reflecting stock- based compensation attributed to the corporate segment. Corporate expenses, excluding stock compensation expense, were 3.6 percent lower for the quarter. Average diluted shares outstanding in the third quarter totaled 236,234,000 compared with 244,013,000 in 2005's third quarter. Approximately 2.6 million shares were repurchased during the current quarter. NEWSPAPERS Newspaper results in the quarter include Exchange & Mart and Auto Exchange (acquired in September 2005), the Tallahassee, FL, newspaper (acquired in August 2005) and 100 percent of the Detroit Newspaper Partnership (established in August 2005). Operating revenues totaled $1.7 billion for the third quarter, a 1.2 percent increase from the same interval in 2005. Reported advertising revenues were up slightly for the quarter. Assuming Gannett had owned the same group of newspapers in both the third quarters of 2006 and 2005, advertising revenues would have been 1.2 percent lower. On a comparable basis, local advertising revenues were almost 1 percent higher, national ad revenues decreased 3.4 percent and classified revenues were down 2.3 percent. Total advertising revenues on a constant currency basis would have been down 2.0 percent as local would have been up 0.4 percent and national and classified would have been 3.7 percent and 3.6 percent lower, respectively. In the U.S., pro forma advertising revenues were 1.0 percent lower in the quarter. Total newspaper segment operating cash flow, which includes USA TODAY and our UK properties, was $451.5 million in the third quarter. Total newspaper operating expenses increased 4.2 percent, reflecting primarily the full consolidation of the Detroit newspaper operations and higher newsprint expense. Pro forma newspaper expenses - assuming Gannett had owned the same group of properties for the third quarters of 2006 and 2005 - would have been up 1.3 percent. On a pro forma basis and excluding stock-based compensation expense, newspaper segment costs increased less than 1 percent including higher newsprint expense. Reported newsprint expense, which was impacted by the consolidation of Detroit, increased 6.6 percent reflecting higher newsprint prices offset by lower usage. On a pro forma basis, however, newsprint expense was 4.4 percent higher for the quarter. At USA TODAY, advertising revenues were up 1.0 percent in the third quarter. Paid advertising pages totaled 912 compared with 981 in the year- ago quarter. (more) BROADCASTING Broadcasting segment results for the quarter include WATL-TV (acquired in August 2006) and KTVD-TV (acquired in June 2006). Broadcasting revenues advanced 17.9 percent to $196.2 million for the quarter due to a significant increase in politically related advertising demand and the television station acquisitions. In the third quarter, television revenues increased 18.5 percent to $191.5 million compared to $161.5 million in the same quarter a year ago. Assuming Gannett had owned the same group of stations in both the third quarters of 2006 and 2005, broadcasting revenues would have been 11.1 percent higher. Reported broadcasting expenses were 10.9 percent higher in the quarter. Excluding stock-based compensation, and on a pro forma basis, broadcasting costs would have been 5.8 percent higher. Operating cash flow jumped 27.6 percent to $88.1 million, compared to $69.0 million in the third quarter of 2005. NON-OPERATING ITEMS Interest expense for the third quarter was $75 million versus $55 million for the same quarter of 2005. The increase is attributable to higher short- term interest rates and higher debt outstanding. Other non operating income reflects higher investment income, substantially lower losses from our digital investments and the absence in 2006 of the minority interest charge for the Texas-New Mexico Newspapers Partnership. During the quarter, the company increased its equity stakes in CareerBuilder and ShopLocal.com to 42.5 percent and in Topix.net to 31.9 percent. At the end of the quarter, Gannett had more than 100 domestic publishing Web sites, including USATODAY.com, one of the most popular newspaper sites on the Web.