This summary is based on the first quarter fiscal 2007 earnings call conducted by Gannett Company Inc. (GCI: chart) on April 19, 2007.

Chairman, President and CEO: Craig Dubow
Chief Financial Officer: Gracia Martore

Key Investors Issues

- The earnings per share fell to 90 cents from 99 cents in prior year.
- Quarterly revenue dropped from $1.88 billion in last year to $1.87 billion.
- During the quarter, Gannett repurchased roughly 177,600 shares.

First Quarter Fiscal 2007 Financial Highlights

Net income was $210.6 million in the first quarter of 2007 compared with $235.3 million in the year-ago quarter.

Total operating revenues were $1.87 billion compared to $1.88 billion in the first quarter of 2006.

This reflects the absence of revenue associated with the Olympics in 2006’s first quarter, softer advertising demand at domestic newspaper properties and tough year-over-year comparisons. Total operating revenues would have been 1.2% lower on a pro forma basis, assuming Gannett owned the same complement of properties in the first quarters of 2007 and 2006.

Reported operating expenses totaled $1.47 billion for the quarter, an increase of less than 1% from prior year.

This reflects the continuing strong cost controls, a slight increase in newsprint expense, the impact of the television station acquisitions and a higher exchange rate for the British pound. On a pro forma basis, total operating expenses were 0.2% higher. Corporate expenses increased 12.6% to $23.1 million compared to $20.5 million in the first quarter of 2006 due entirely to the timing of stock-based compensation awards.

- Operating cash flow was $471.6 million compared to $488.2 million in the same quarter a year ago.
- Average diluted shares outstanding in the first quarter totaled 235,005,000 compared with 238,375,000 in 2006’s first quarter.
- During the quarter, approximately 177,600 shares were repurchased.

Interest expense was $72.9 million in the first quarter compared to $64.7 million for the same quarter a year ago due to higher interest rates. The increase in other non-operating expense primarily reflects the absence of the gain on the sale of our small ownership interest in the Cincinnati Reds in the first quarter of 2006.

Total debt at quarter end stood at $5.5 billion and cash and marketable securities were $644 million.

On April 2, the firm had $700 million of long-term debt maturity. The firm prefunded a substantial portion of that payment by borrowing in the commercial paper markets in the last two weeks of March and invested those borrowings at a positive spread, which resulted in $525 million of marketable securities on the balance sheet at quarter end. On April 2, the firm liquidated the marketable securities, paid the $700 million maturity, and total debt was reduced from $5.5 billion to $5 billion where it stands today. At this point, the firm’s all-in cost of debt is 5.42% with commercial paper at 5.39%.

Capital expenditures totaled approximately $29 million and the firm believes that it is on track to be within the budget of $200 million for the year.

Subsequent to the end of the quarter, the company announced the sale of four newspapers.

They were Norwich (CT) Bulletin; the Rockford (IL) Register Star; the Observer-Dispatch in Utica, NY; and The Herald-Dispatch in Huntington, WV for $410 million. The transaction is expected to close in the second quarter of 2007.

On March 3, Gannett relaunched the USA Today.com site.

The firm saw a substantial increase in traffic and registered users. The site saw a 380% increase in registrations. Readers are also spending more time per visit on the site as well. Unique visitors on the sites were up 21% for February.

The company is very focused on the digital side of its business and continues to drive gains across its segments.