HispanicBusiness

Amounts reported in accordance with GAAP are contained in Tables 1 through 4. Certain amounts and comparisons included in the following discussion of GAAP results are supplemented by discussions which exclude the effect of special items. Details of these special items and their effect on GAAP results are included on the Non-GAAP Financial Information Tables 5 through 10 attached to this release. The company's basis for providing discussions of non-GAAP results is detailed below.

CONTINUING OPERATIONS

Net income attributable to Gannett totaled $133.1 million in the third quarter of 2012. Net income attributable to Gannett on a non-GAAP basis was $130.9 million, an increase of 23.3 percent from 2011. Reported operating income was $217.2 million in the third quarter of 2012. Non-GAAP operating income totaled $231.9 million, 12.1 percent higher than the third quarter last year. Operating cash flow in the quarter (a non-GAAP term defined as operating income plus special items, depreciation and amortization) was $280.4 million compared to $255.8 million in the third quarter a year ago.

Total operating revenues for the company in the third quarter were 3.4 percent higher than the prior year and totaled $1.31 billion. Broadcasting revenues were substantially higher in the quarter increasing 36.0 percent driven by significantly higher ad demand associated with the Olympics and political spending. Digital segment revenues were up 4.7 percent due primarily to revenue growth at CareerBuilder. Publishing segment revenues were 3.0 percent lower reflecting softer advertising demand partially offset by a 5.6 percent increase in circulation revenue due to the positive impact of the all access content subscription model.

Operating expenses including the special charges noted above were $1.09 billion in the quarter, 2.3 percent higher than the third quarter in 2011. Higher costs associated with revenue growth drove the increases in the Broadcasting and Digital segment operating expenses. Strategic initiative investments that totaled approximately $10 million and a $5 million increase in pension expense were partially offset by continued cost reduction and cost efficiency efforts company-wide. Operating expenses on a non-GAAP basis, which exclude special items but include the impact of the investment in strategic initiatives and pension expense, were up just 1.7 percent from the third quarter last year and totaled $1.08 billion.

In the first quarter, the company announced a new capital allocation plan that included a 150 percent increase in the annual dividend to $0.80 per share and a $300 million share repurchase program targeted to be completed over the next two years. During the third quarter the company purchased approximately 2.4 million shares for $35.5 million. Year-to-date, shares repurchased totaled 8.2 million shares for $116.5 million.

PUBLISHING

Publishing segment operating revenues in the quarter were $890.2 million compared to $917.8 million in the third quarter in 2011, a 3.0 percent decline as the slow pace of the economic recovery resulted in soft advertising demand. Publishing revenue year-over-year comparisons improved sequentially within the quarter and third quarter comparisons were better than first and second quarter comparisons.

Advertising revenues totaled $552.7 million, a 6.6 percent decline compared to the third quarter last year. Third quarter year-over-year comparisons were better than first and second quarter comparisons this year. Advertising revenues declined 7.0 percent in July, were down 6.8 percent in August, and were 5.9 percent lower in September. In the U.S., advertising revenues decreased 6.0 percent in the quarter while at Newsquest, the company's operations in the UK, ad revenues declined 7.4 percent, in pounds. The percentage changes for the Publishing segment advertising revenue categories for the quarter were as follows: