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In an October 19 release, Gannett reported that results for both quarters included the special items noted below. Earnings per diluted share for the third quarter of 2009, excluding special items, were $0.44. On a comparable basis, earnings per diluted share for the third quarter of 2008 were $0.76.
Results for the third quarter of 2009 include $44.7 million of pre-tax non-cash charges associated primarily with facility consolidations and asset impairments ($28.9 million after-tax or $0.12 per share) and $2.3 million in pre-tax costs covering workforce restructuring ($1.4 million after-tax or $0.01 per share). Results for the third quarter of 2008 included $23.0 million in pre-tax workforce restructuring expenses ($14.4 million after-tax or $0.07 per share).
"We finished the quarter on a stronger note with better than anticipated results due primarily to better trends in advertising and greater efficiencies across all of our business segments," said Craig Dubow, Gannett chairman, president and CEO. "Our results for the quarter exceeded the high end of previously announced estimate ranges for revenue, operating cash flow, and earnings per share. Although recessions in the U.S. and UK continued to temper ad demand and revenue growth during the quarter, we are encouraged by the revenue trends. Third quarter year-over-year comparisons of publishing advertising revenue were a few percentage points better than year-over-year comparisons for the second quarter and September was our best comparison month of the year. We've seen improvements in our Broadcasting segment as well. Excluding Olympic and political ad spending, core revenue comparisons were better in the third quarter than the second quarter. Operating profits in our digital segment, on a pro forma basis, were substantially higher this quarter relative to the third quarter last year."
The weak economies in the U.S. and UK continued to pressure advertising demand. Total reported operating revenues for the company were $1.3 billion in the third quarter compared to $1.6 billion in the third quarter of 2008. Digital segment revenues were 84.2 percent higher driven by the consolidation of CareerBuilder for the full quarter in 2009. On a pro forma basis, total revenue comparisons year-over-year in the third quarter, while down, improved relative to year-over-year comparisons for the first quarter and the second quarter. The exit of a commercial printing business announced last quarter resulted in the absence of about $21 million of revenues for our Publishing segment compared to the third quarter last year.
Reported operating expenses were 14.4 percent lower in the quarter and totaled $1.2 billion. The lower expense level reflects efficiency efforts that resulted in workforce restructuring and facility consolidations in the current period and prior periods, in addition to sharply lower newsprint expense. The decline in expense was partially offset by the consolidation of CareerBuilder for the full quarter this year. On a pro forma basis, operating expenses, excluding special items in both quarters, were 20.2 percent lower.
Operating cash flow (defined as operating income plus depreciation, amortization and non-cash asset impairment and other charges) was $255.5 million for the quarter. Net income was $73.8 million.
Year-over-year classified comparisons in the third quarter were the best thus far this year. The year-over-year comparisons in U.S. Community Publishing were better than second quarter comparisons by almost 5 percentage points while the comparisons at Newsquest, in pounds, were approximately 10 percentage points better than second quarter comparisons.
The soft economy continued to negatively impact national advertising company-wide. Ad demand at USA Today was particularly affected by the slowdown in the travel industry. The travel, automotive and entertainment categories were all down significantly in the quarter. Paid advertising pages totaled 493 compared with 713 in the third quarter last year.
Reported publishing expenses were $939.7 million, a 20.3 percent decline due primarily to cost control and efficiency efforts including facility consolidations and workforce restructuring in this and prior periods as well as significantly lower newsprint expenses. Operating expenses excluding special charges from both quarters would have been down 21.9 percent. Newsprint expense was 43.4 percent lower in the quarter. Newsprint prices continued to fall during the third quarter. We expect more favorable price comparisons in the fourth quarter.
((Comments on this story may be sent to newsdesk@closeupmedia.com))
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