Gannett Co Inc/DE · 10-Q · For 9/26/99 · EX-99.2

Filed On 11/9/99   ·   SEC File 1-06961   ·   Accession Number 39899-99-29

Quarterly Report   —   Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        10-Q Report                                           27    109K 
 2: EX-11       Earnings Per Share                                     1      6K 
 3: EX-27       Financial Data Schedule                                2      7K 
 4: EX-99.1     Newsquest July Financials                              4     12K 
 5: EX-99.2     Pro Forma Financial Statements                         6     25K 

EX-99.2   —   Pro Forma Financial Statements

EX-99.2
1st Page of 6
TOC
Top
Previous
Next
Bottom
Just 1st
 

                                                      Exhibit 99-2

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION  

On June 24, 1999, Gannett U.K. Limited ("Gannett UK"), a newly formed 
wholly-owned subsidiary of Gannett Co., Inc. ("Gannett"), made a cash offer to  
acquire the entire issued and to be issued share capital of Newsquest plc       
("Newsquest").  Pursuant to the Offer, Newsquest shareholders were offered      
460 pence (US $7.26) in cash or Loan Notes for each of 200.4 million fully      
diluted shares, for a total price of approximately 922 million pounds sterling  
(US $1.5 billion).  Additionally, Gannett agreed to assume or retire            
Newsquest's existing debt.  On July 26, 1999, pursuant to the Offer Document,   
Gannett UK declared the Offer unconditional in all respects.  Gannett UK        
effectively owns 100% of Newsquest shares.  The acquisition has been recorded   
under the purchase method of accounting and Newsquest's results of operations   
are included in the company's financial statements beginning in the             
third quarter.                                                                  

The accompanying unaudited pro forma condensed combined balance sheet 
presents the financial position of Gannett Co., Inc. and Newsquest as of        
June 27, 1999, assuming that the acquisition of Newsquest occurred as of        
that date.  Such pro forma information is based on the historical balance       
sheets of Gannett at June 27, 1999 and of Newsquest at July 4, 1999.            

As required by Rule 11-02 of Regulation S-X, the unaudited pro forma  
condensed combined statement of income has been prepared assuming that the      
acquisition occurred as of the beginning of the fiscal period presented.  The   
unaudited condensed combined statement of income, therefore, reflects the       
historical results of operations for Gannett and Newsquest for the first half   
of their respective 1999 fiscal periods.                                        

The unaudited pro forma condensed combined financial statements give  
effect to certain pro forma adjustments which are described in the notes to     
these statements.  The unaudited pro forma condensed combined financial         
statements do not reflect any operating synergies anticipated by Gannett as     
a result of the acquisition.                                                    

The unaudited pro forma condensed combined results are presented for  
informational purposes only and are not necessarily indicative of the results   
of operations or financial position which would have been achieved had the      
transaction been completed as of the beginning of the period presented, nor is  
it necessarily indicative of Gannett's future results of operations or          
financial position.                                                             

   The unaudited pro forma condensed combined financial statements should be
read in conjunction with the historical financial statements of Gannett and     
Newsquest, including the related notes thereto.                                 

EX-99.2
2nd Page of 6
TOC
1st
Previous
Next
Bottom
Just 2nd

                                                                [Download Table]
                                                                   EXHIBIT 99-2     

Gannett Co., Inc.                                                                   
Unaudited Pro Forma Condensed Combined Balance Sheet                                
June 27, 1999                                                                       
(in thousands of dollars)                                                           

                                                           Pro forma       Pro forma
                                   Gannett    Newsquest  adjustments        combined
                                  --------   ----------   ----------      ----------
                                                                                    
ASSETS                                                                              
 Current assets                                                                     
   Cash and marketable                                                              
     securities                 $   81,835   $    5,343   $               $   87,178
   Accounts receivable, net        664,813       70,011                      734,824
   Inventories                      82,206        2,610                       84,816
   Prepaid expenses and                                                             
     other current assets           56,879        9,029                       65,908
                                ----------   ----------   ----------      ----------
 Total current assets              885,733       86,993                      972,726

 Property, plant and                                                                
   equipment, net                2,047,913      106,326                    2,154,239
 Excess of acquisition                                                              
   cost over the                                                                    
   value of assets                                                                  
   acquired, net                 3,797,738      521,552    1,094,983  (1)  5,414,273
 Other assets                      272,604          647                      273,251
                                ----------   ----------   ----------      ----------
Total assets                    $7,003,988   $  715,518   $1,094,983      $8,814,489
                                ==========   ==========   ==========      ==========

EX-99.2
3rd Page of 6
TOC
1st
Previous
Next
Bottom
Just 3rd

LIABILITIES AND SHAREHOLDERS' EQUITY                                                
 Current liabilities                                                                
   Accounts payable and                                                             
     current portion of                                                             
     film contracts payable        239,193       20,111                      259,304
   Accrued expenses                                                                 
     and other current                                                              
     liabilities                   378,522       31,871       70,680  (2)    481,073
   Dividends payable                56,000                                    56,000
   Income taxes                     32,871       66,598                       99,469
                                ----------   ----------   ----------      ----------
 Total current liabilities         706,586      118,580       70,680         895,846

 Deferred income taxes             467,273        8,270       (1,420) (3)    474,123
 Long-term debt,                                                                    
   less current portion            957,152      173,714    1,430,186  (4)  2,561,052
 Postretirement medical                                                             
   and life insurance                                                               
   liabilities                     307,092                                   307,092
 Other long-term                                                                    
   liabilities                     222,444       10,491                      232,935
 Total shareholders'                                                                
   equity                        4,343,441      404,463     (404,463) (5)  4,343,441
                                ----------   ----------   ----------      ----------
Total liabilities and                                                               
  shareholders' equity          $7,003,988   $  715,518   $1,094,983      $8,814,489
                                ==========   ==========   ==========      ==========

(A) This pro forma balance sheet includes Gannett's historical balances as of       
    June 27, 1999, and Newsquest's historical balances as of July 4, 1999.          

(B) For comparability, Newsquest results have been reclassified to conform          
    with Gannett's presentation.                                                    

See accompanying notes to Unaudited Pro Forma Condensed Combined Financial          
Statements.                                                                         


EX-99.2
4th Page of 6
TOC
1st
Previous
Next
Bottom
Just 4th

                                                        [Enlarge/Download Table]

Gannett Co., Inc.                                                                     
Unaudited Pro Forma Condensed Combined Statement of Income                            
Twenty-six weeks ended June 27, 1999                                                  
(in thousands of dollars, except per share data)                                      

                                                            Pro forma       Pro forma 
                                   Gannett    Newsquest   adjustments        combined 
                                ----------   ----------    ----------      ---------- 
                                                                                      
Revenues                                                                              
  Newspaper advertising         $1,508,825   $  225,252    $               $1,734,077 
  Newspaper circulation            502,169       30,556                       532,725 
  Television                       355,674                                    355,674 
  Cable and security               125,853                                    125,853 
  All other                         98,889        6,734                       105,623 
                                ----------   ----------    ----------      ---------- 
Total revenues                   2,591,410      262,542                     2,853,952 

Operating expenses                                                                    
  Cost of sales and                                                                   
    operating expenses,                                                               
    exclusive of depreciation    1,307,576      127,475                     1,435,051 
  Selling, general and                                                                
    administrative expenses,                                                          
    exclusive of depreciation      395,232       47,148                       442,380 
  Depreciation                     101,601        9,971                       111,572 
  Amortization of                                                                     
    intangible assets               55,867                     20,630  (1)     76,497 
                                ----------   ----------    ----------      ---------- 
Total operating expenses         1,860,276      184,594        20,630       2,065,500 
                                ----------   ----------    ----------      ---------- 
Operating income                   731,134       77,948       (20,630)        788,452 

Non-operating income (expense)                                                        
  Interest (expense), net of                                                          
    interest income                (30,444)      (7,906)        7,906  (2)    (71,117)
                                                              (40,673) (3)            
  Other                             57,673         (634)                       57,039 
                                ----------   ----------    ----------      ---------- 
Total                               27,229       (8,540)      (32,767)        (14,078)

Income before income taxes         758,363       69,408       (53,397)        774,374 
Provision for income taxes         302,500       21,169       (14,694) (4)    308,975 
                                ----------   ----------    ----------      ---------- 
Net income                      $  455,863   $   48,239    $  (38,703)     $  465,399 
                                ==========   ==========    ==========      ========== 

Net income per share-basic           $1.63                                      $1.67 
                                   =======                                   ======== 
Net income per share-diluted         $1.62                                      $1.65 
                                   =======                                   ======== 

Average outstanding shares:                                                           
   Basic                           279,466                                    279,466 
   Diluted                         281,949                                    281,949 


EX-99.2
5th Page of 6
TOC
1st
Previous
Next
Bottom
Just 5th

(A) This pro forma income statement includes Gannett's results for the 26-week  
period ended June 27, 1999, and Newsquest results for the 26-week       
period ended July 4, 1999.                                              

(B) For comparability, Newsquest results have been reclassified to conform with 
Gannett's presentation.                                                 

See accompanying notes to Unaudited Pro Forma Condensed Combined Financial      
Statements.                                                                     

EX-99.2
Last Page of 6
TOC
1st
Previous
Next
Bottom
Just 6th

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL                       
STATEMENTS                                                                      

Note 1 - Basis of Presentation                                                  

The unaudited pro forma condensed combined balance sheet has been prepared to   
reflect the acquisition of Newsquest for an aggregate price of approximately    
$1.5 billion plus the assumption of approximately $250 million of liabilities   
and transaction-related costs, including $181 million of Newsquest's long-term  
debt.                                                                           

The company believes that the assumptions used in preparing the unaudited pro   
forma condensed combined financial statements provide a reasonable basis for    
presenting all of the significant effects of the merger (other than any         
operating synergies anticipated by Gannett) and that the pro forma adjustments  
give effect to those assumptions in the unaudited pro forma condensed combined  
financial statements.                                                           

Note 2 - Pro Forma Adjustments                                                  

A.   Pro forma adjustments to the unaudited condensed combined balance sheet    
are made to reflect the following:                                    

(1)  Adjustment to record the excess of acquisition cost over the fair value    
of net assets acquired (goodwill).  For purposes of the unaudited pro 
   forma condensed combined statement of income, goodwill is being amortized
over forty years.                                                     

(2)  Accrual for estimated acquisition-related expenses incurred by Gannett     
and Newsquest.                                                        

(3)  Deferred tax adjustments in respect of acquisition expenses (see #2), net  
of an adjustment in respect of tax deferred on real property sales.   

(4)  The issuance of commercial paper by Gannett to finance the purchase        
price.                                                                

(5)  The elimination of the shareholders' equity accounts of Newsquest.         

B.   Pro forma adjustments to the June 27, 1999 unaudited condensed             
combined income statement are made to reflect the following:          

(1)  Amortization expense on the estimated excess of acquisition cost over fair 
value of assets, assuming a life of forty years.                      

(2)  The elimination of Newsquest's interest expense.  (See (3) below.)         

(3)  Gannett's pro forma interest expense on the amount assumed borrowed for    
 consideration paid and acquisition-related expenses ($1.51 billion) and
Newsquest debt ($0.18 billion).  The rate used to calculate interest  
   expense, 4.88%, is based on the weighted average rate paid by Gannett for
commercial paper in the first half of 1999.                           

(4)  To adjust consolidated tax provisions for U.S. and U.K. tax effects of     
acquisition.                                                          

Dates Referenced Herein   and   Documents Incorporated By Reference

				Referenced-On Page
This 10-Q Filing		Date		First		Last			Other Filings
		6/24/99		1
		6/27/99		1		6			10-Q
		7/4/99		1		5
		7/26/99		1
For The Period Ended		9/26/99
Filed On / Filed As Of		11/9/99
Top									List All Filings