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

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

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  As Of                Filer                Filing    For/On/As Docs:Size

11/09/99  Gannett Co Inc/DE                 10-Q        9/26/99    5:63K

Quarterly Report   —   Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        10-Q Report                                           27     99K 
 2: EX-11       Earnings Per Share                                     1      6K 
 3: EX-27       Financial Data Schedule                                2      6K 
 4: EX-99.1     Newsquest July Financials                              4     10K 
 5: EX-99.2     Pro Forma Financial Statements                         6     22K 


EX-99.2   —   Pro Forma Financial Statements

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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.
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[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 ========== ========== ========== ==========
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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.
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[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
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(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.
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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
6/24/991
6/27/991610-Q
7/4/9915
7/26/991
For The Period Ended9/26/99
Filed On / Filed As Of11/9/99
 
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Filing Submission 0000039899-99-000029   –   Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

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