Electronic sell

GANNETT CO., INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-Q)

The following discussion and analysis of our financial condition and results of
operations and quantitative and qualitative disclosures should be read in
conjunction with our unaudited condensed consolidated financial statements and
related notes and with our audited consolidated financial statements and related
notes included in our Annual Report on Form 10-K for the year ended December 31,
2020, as filed with the Securities and Exchange Commission. Management's
Discussion and Analysis of Financial Condition and Results of Operations
contains a number of forward-looking statements that reflect our plans,
estimates, and beliefs, all of which are based on our current expectations and
could be affected by certain uncertainties, risks, and other factors described
under Cautionary Note Regarding Forward-Looking Statements, Risk Factors, and
elsewhere throughout this Quarterly Report, as well as the factors described in
our Annual Report on Form 10-K for the year ended December 31, 2020, and
subsequent periodic reports filed with the Securities and Exchange Commission,
particularly under "Risk Factors." Our actual results could differ materially
from those discussed in the forward-looking statements.

PREVIEW

We are a subscription-led and digitally-focused media and marketing solutions
company committed to empowering communities to thrive. We aim to be the premier
source for clarity, connections and solutions within our communities. Our
strategy is focused on driving audience growth and engagement by delivering
deeper content experiences to our consumers, while offering the products and
marketing expertise our advertisers desire. The execution of this strategy is
expected to allow us to continue our evolution from a more traditional print
media business to a digitally-focused content platform.

Our current portfolio of media assets includes USA TODAY, local media
organizations in 46 states in the U.S., and Newsquest, a wholly-owned subsidiary
operating in the United Kingdom ("U.K.") with more than 120 local media brands.
We also own the digital marketing services companies ReachLocal, Inc.
("ReachLocal"), UpCurve, Inc. ("UpCurve"), and WordStream, Inc. ("WordStream")
which are marketed under the LOCALiQ brand, and run the largest media-owned
events business in the U.S., USA TODAY NETWORK Ventures.
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Through USA TODAY, our local property network, and Newsquest, we deliver
high-quality, trusted content where and when consumers want to engage with it on
virtually any device or platform. Additionally, we have strong relationships
with hundreds of thousands of local and national businesses in both our U.S. and
U.K. markets due to our large local and national sales forces and a robust
advertising and digital marketing solutions product suite.

Trade trends

We took into account several industry trends when evaluating our business strategy:

•Print advertising continues to decline as the audience increasingly moves to
digital platforms. We look to optimize our print operations to efficiently
manage for this declining print audience. We are focused on converting the
growing digital audience into digital-only subscribers to our publications.
•Small and medium-sized businesses ("SMBs") are facing an increasingly complex
marketing environment and need to create digital presence to capture audience
online. We offer a broad suite of DMS products that offer a single, unified
solution to meet their digital marketing needs.
•Consumers are looking for experience-based, emotional connections and
communities. USA TODAY NETWORK Ventures was designed to celebrate local
communities and create opportunities for meaningful in-person and virtual
experiences. However, the COVID-19 pandemic has temporarily negatively impacted
our ability to secure necessary permitting for in-person events and consumers'
desire to attend or participate in live events.
•Digital consumer engagement has declined in comparison to such engagement at
the height of the COVID-19 pandemic in the second quarter of 2020, as consumers
have resumed certain pre-pandemic activities. In addition, the overall news
cycle, specifically political coverage, has also slowed, driving less consumer
engagement to our sites.
•Newsprint availability is constrained due to manufacturing facility closures
and conversions to specialty paper and packaging grades. Further, transportation
and other issues are challenging supplier deliveries, including delays, and are
expected to worsen with increased seasonal demand associated with the holidays
in the fourth quarter. Additionally, inflationary pressures are impacting the
overall cost of newsprint and delivery services.

Recent developments

Debt refinancing

On October 15, 2021, Gannett Holdings LLC ("Gannett Holdings"), our wholly-owned
subsidiary, entered into a five-year senior secured term loan facility in an
aggregate principal amount of $516 million (the "New Senior Secured Term Loan").
Also on October 15, 2021, Gannett Holdings completed a private offering of
$400 million aggregate principal amount of 6.00% first lien notes due November
1, 2026 (the "2026 Senior Notes"). The proceeds of the New Senior Secured Term
Loan, together with the net proceeds from the 2026 Senior Notes were applied
towards the full repayment of our five-year, senior-secured term loan facility
(the "5-Year Term Loan"). Please see the disclosure below under "Liquidity and
Capital Resources - Debt Refinancing" and Note 15 - Subsequent events for
further information regarding the debt refinancing.


Some issues affecting comparability

The following will affect period-to-period comparisons beginning in 2020 and will continue to affect period-to-period comparisons for future results:

Reclassifications

Certain amounts in the prior period condensed consolidated financial statements
have been reclassified to conform to the current year presentation. In the
fourth quarter of 2020, we re-aligned the breakout of the Publishing segment's
Circulation revenues related to Digital-only circulation. As a result of this
updated presentation, Print circulation revenues increased and Digital-only
circulation revenues decreased $3.2 million and $10.7 million for the three and
nine months ended September 30, 2020, respectively. There was no impact on
reported total Publishing segment or consolidated Circulation revenues.

Ticket 2027

At the Special Meeting of stockholders of the Company held on February 26, 2021
(the "Special Meeting"), our stockholders approved the issuance of the maximum
number of shares of Common Stock issuable upon conversion of the 6.0%
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Senior Secured Convertible Notes due 2027 (the "2027 Notes"). As a result, the
conversion option can be share-settled in full and qualified for equity
classification. Upon reclassification, the conversion feature was adjusted to
fair value as of the stockholder approval date and the increase in the fair
value resulted in a non-cash loss of $126.6 million due primarily to an increase
in our stock price from December 31, 2020. The non-cash loss was recorded in
Non-operating expense in the condensed consolidated statements of operations and
comprehensive income (loss) for the nine months ended September 30, 2021. As of
September 30, 2021, the deferred tax asset related to the embedded conversion
feature of the 2027 Notes was reclassified to Equity as a reduction to
Additional paid-in-capital and reduced the carrying amount of the equity
component of the 2027 Notes to $283.7 million.

Integration and reorganization costs

For the three and nine months ended September 30, 2021, we incurred Integration
and reorganization costs of $13.6 million and $35.5 million, respectively,
including $2.7 million and $10.9 million, respectively, related to severance
activities and $11.0 million and $24.6 million, respectively, related to other
costs, including those for the purpose of consolidating operations, systems
implementation, and outsourcing of corporate functions.

For the three and nine months ended September 30, 2021, we ceased operations of
four and 14 printing operations, respectively, as part of the synergy and
ongoing cost reduction programs. As a result, we recognized accelerated
depreciation of $1.1 million and $11.4 million during the three and nine months
ended September 30, 2021, respectively.

For the three and nine months ended September 30, 2020, we incurred Integration
and reorganization costs of $13.4 million and $74.0 million, respectively,
including $7.3 million and $54.8 million, respectively, related to severance
activities and $6.1 million and $19.2 million, respectively, related to other
costs, including those for the purpose of consolidating operations.

For the three and nine months ended September 30, 2020, we ceased operations of
11 and 35 printing operations, respectively, as part of the ongoing cost
reduction programs. As a result, we recognized accelerated depreciation of $9.3
million and $45.0 million during the three and nine months ended September 30,
2020, respectively.

Good will and intangible depreciation

There was no goodwill and intangible impairment incurred for the three and nine months ended. September 30, 2021.

There were no goodwill and intangible impairments incurred for the three months
ended September 30, 2020. For the nine months ended September 30, 2020, we
incurred goodwill and intangible impairments of $393.4 million, primarily due to
the impact of the COVID-19 pandemic on our operations.

Foreign currency

Our U.K. publishing operations are conducted through our Newsquest subsidiary.
In addition, our ReachLocal subsidiary has foreign operations in regions such as
Canada, Australia/New Zealand and India. Earnings from operations in foreign
regions are translated into U.S. dollars at average exchange rates prevailing
during the period, and assets and liabilities are translated at exchange rates
in effect at the balance sheet date. Translation fluctuations impact revenue,
expense, and operating income results for international operations.

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Outlook for 2021

Strategy

Our strategic focus areas for 2021 include:

Accelerate the growth of the number of digital subscribers

The broad reach of our newsroom network, linking leading national journalism at
USA TODAY, our local property network in 46 states in the U.S., and Newsquest in
the U.K. with more than 120 local media brands, gives us the ability to deepen
our relationships with consumers at both the national and local levels. We bring
consumers local news and information that impacts their day-to-day lives while
keeping them informed of the national events that impact their country. We
believe this local content is not readily obtainable elsewhere, and we are able
to deliver that content to our customers across multiple print and digital
platforms. As such, a key element of our consumer strategy is growing our paid
digital-only subscriber base to 10 million subscribers over the next five years.
We expect to do this through expansion of our current subscription products as
well as through the launch of new digital subscription offerings tailored to
specific users.

Drive the growth of digital marketing services by engaging more customers in a subscriber relationship

We have now achieved significant digital scale, with unique reach at both the
national and local community levels. We expect to leverage our integrated sales
structure and lead generation strategy to continue to aggressively expand our
digital marketing services business into our local markets, both domestically
and internationally. Given our extensive client base and volume of digital
campaigns, we will also use data and insights to inform new and dynamic
advertising products that we believe will deliver superior results.

Optimizing our traditional activities in print and advertising

We will continue to drive the profitability of our traditional print operations
through economies of scale, process improvements, and optimizations. We are
focused on optimizing our pricing and improving customer service for our print
subscribers. Print advertising continues to offer a compelling branding
opportunity across our network due to our scale and unique reach at both the
national and local community levels.

Prioritize investments in growth companies that have significant potential and support our vision

By leveraging our unique footprint, trusted brands, and media reach, we
identify, experiment, and invest in potential growth businesses. USA TODAY
NETWORK Ventures is a strong example of one such experiment that has grown
significantly since its founding in 2015. During 2020, USA TODAY NETWORK
Ventures was able to successfully pivot to holding its events virtually, hosting
over 250 events. This success has continued in 2021, with over 160 events held
through the end of the third quarter of 2021. While live events have resumed in
2021, the majority of events remain virtual. In addition, in connection with our
company-wide priority to explore online gaming, in July 2021, we entered into an
exclusive agreement with Tipico USA Technology, Inc. ("Tipico"), a U.S.-based
subsidiary of European-based Tipico Group of Companies, the leading sports
betting provider in Germany, utilizing their Tipico Sportsbook brand.

Impacts of the COVID-19 pandemic

As a result of the COVID-19 pandemic, we experienced a significant decline in
Advertising and marketing services revenues, which accelerated the secular
declines that we continue to experience. In addition, we continue to experience
constraints on the sales of single copy newspapers, largely tied to business
travel and in-person events. While we have seen operating trends improve since
the second quarter of 2020, which represents the quarter that was most
significantly impacted by the pandemic, we expect that the COVID-19 pandemic
will continue to have a negative impact on our business and results of
operations in the near-term, including lower revenues associated with events and
lower sales of single copy newspapers, largely as a result of reduced business
travel. If the COVID-19 pandemic were to revert to conditions that existed
during 2020, including measures to help mitigate and control the spread of the
virus, we would expect to experience further negative impacts in Advertising and
marketing services revenues and Circulation revenues.

We have implemented and continue to implement measures to reduce costs and preserve cash flow. These measures include, evaluating and applying for all government assistance programs to which we are eligible, including the paycheck

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Protection Program ("PPP"), suspending our quarterly dividend, and debt
refinancing, as well as reducing discretionary spending. In addition, we are
continuing with our previously-disclosed plan to monetize non-core assets.

In connection with the CARES Act, the Company received PPP funding in support of
certain of our locations that were meaningfully affected by the COVID-19
pandemic totaling $16.4 million, which was included in Operating activities in
the condensed consolidated statements of cash flows for the nine months ended
September 30, 2021. As permitted under the CARES Act, during the third quarter
of 2021, the Company received forgiveness of such loans totaling $15.1 million,
which was recognized in earnings in the condensed consolidated statements of
operations and comprehensive income (loss) as an offset to Operating costs of
$11.1 million and Selling, general, and administrative expenses of $4.0 million.
As of September 30, 2021, the remaining PPP loans of $1.3 million were included
in Other long-term liabilities in the condensed consolidated balance sheets.
Management has applied for forgiveness of the remaining PPP loans in accordance
with applicable guidelines. Interest expense related to PPP funding was
immaterial for the three and nine months ended September 30, 2021.
Seasonality

Our revenues are subject to moderate seasonality, due primarily to fluctuations
in advertising volumes. Advertising and marketing services revenues for our
Publishing segment are typically highest in the fourth quarter, due to holiday
and seasonal advertising, and lowest in the first quarter, following the holiday
season. The volume of advertising sales in any period is also impacted by other
external factors such as competitors' pricing, advertisers' decisions to
increase or decrease their advertising expenditures in response to anticipated
consumer demand, and general economic conditions.

RESULTS OF OPERATIONS

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Consolidated Summary

A summary of our segment results is presented below:

                                                     Three months ended September 30,                                              Nine months ended September 30,
In thousands, except per share                                                          Change                                                                       Change
amounts                                 2021                  2020                $                 %                2021                 2020                  $                %
Operating revenues:
Publishing                       $    715,807             $ 732,226          $ (16,419)             (2) %       $ 2,139,937          $ 2,286,268          $ (146,331)            (6) %
Digital Marketing Solutions           116,771               105,443             11,328              11  %           329,089              321,287               7,802              2  %
Corporate and other                     1,649                 2,732             (1,083)            (40) %             6,428                8,140              (1,712)           (21) %
Intersegment eliminations             (34,042)              (25,862)            (8,180)             32  %           (93,910)             (85,472)             (8,438)            10  %
Total operating revenues              800,185               814,539            (14,354)             (2) %         2,381,544            2,530,223            (148,679)            (6) %
Operating expenses:
Publishing                            657,561               684,788            (27,227)             (4) %         1,969,046            2,560,811            (591,765)           (23) %
Digital Marketing Solutions           110,573               109,209              1,364               1  %           316,712              372,341             (55,629)           (15) %
Corporate and other                    34,991                44,924             (9,933)            (22) %           105,208              148,509             (43,301)           (29) %
Intersegment eliminations             (34,042)              (25,862)            (8,180)             32  %           (93,910)             (85,472)             (8,438)            10  %
Total operating expenses              769,083               813,059            (43,976)             (5) %         2,297,056            2,996,189            (699,133)           (23) %
Operating income (loss)                31,102                 1,480             29,622                ***            84,488             (465,966)            550,454               ***
Non-operating expenses, net            13,573                29,830            (16,257)            (54) %           186,368              106,119              80,249             76  %
Income (loss) before income
taxes                                  17,529               (28,350)            45,879                ***          (101,880)            (572,085)            470,205            (82) %
Provision (benefit) for income
taxes                                   2,984                 3,098               (114)             (4) %            11,567              (22,200)             33,767               ***
Net income (loss)                      14,545               (31,448)            45,993                ***          (113,447)            (549,885)            436,438            (79) %
Net loss attributable to
redeemable noncontrolling
interests                                (142)                 (188)                46             (24) %              (933)              (1,580)                647            (41) %
Net income (loss) attributable
to Gannett                       $     14,687             $ (31,260)         $  45,947                ***       $  (112,514)         $  (548,305)         $  435,791            (79) %
Income (loss) per share
attributable to Gannett - basic  $       0.11             $   (0.24)         $    0.35                ***       $     (0.84)         $     (4.17)         $     3.33            (80) %
Income (loss) per share
attributable to Gannett -
diluted                          $       0.09             $   (0.24)         $    0.33                ***       $     (0.84)         $     (4.17)         $     3.33            (80) %

*** Indicates a percentage change in absolute value greater than 100.

Intersegment eliminations in the preceding table represent digital advertising
marketing services revenues and expenses associated with products sold by our
U.S. local publishing sales teams but fulfilled by our DMS segment. When
discussing segment results, these revenues and expenses are presented gross but
are eliminated in consolidation.

Operating income

Total Operating revenues were $800.2 million and $2.382 billion for three and
nine months ended September 30, 2021, respectively, a decrease of $14.4 million
and $148.7 million, respectively, compared to the three and nine months ended
September 30, 2020, for the reasons described below.

For the Publishing segment, Operating revenues decreased $16.4 million for the
three months ended September 30, 2021 compared to the three months ended
September 30, 2020, reflecting lower Circulation revenues of $29.5 million
offset by higher Other revenues of $13.8 million. Advertising and marketing
services revenues remained essentially flat for the three months ended September
30, 2021 compared to the three months ended September 30, 2020, reflecting lower
print revenues offset by higher digital revenues. For the nine months ended
September 30, 2021, Operating revenues decreased $146.3 million compared to the
nine months ended September 30, 2020 due to lower Circulation revenues of $111.1
million and lower Advertising and marketing services revenues of $40.8 million,
partially offset by higher Other revenues of $5.6 million. Advertising and
marketing services revenues are generated by the sale of local, national, and
classified print advertising products, digital advertising offerings such as
digital classified advertisements, digital media such as display advertisements
run on our platforms as well as third-party sites, and digital marketing
services delivered by our DMS segment. Circulation revenues are derived from
home delivery, digital distribution and single copy sales of our publications.
Other revenues are
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derived mainly from commercial printing, distribution arrangements, revenues
from our events business, digital content syndication and affiliate revenues and
third-party newsprint sales.

For the DMS segment, Operating revenues increased $11.3 million and $7.8 million
for the three and nine months ended September 30, 2021, respectively, compared
to the three and nine months ended September 30, 2020, reflecting higher
Advertising and marketing services revenues of $16.0 million and $21.3 million,
respectively, partially offset by lower Other revenues of $4.6 million and $13.5
million, respectively. Our DMS segment generates Advertising and marketing
services revenues through multiple services, including search advertising,
display advertising, search optimization, social media, website development, web
presence products, customer relationship management, and software-as-a-service
solutions.

Operating expenses

Total Operating expenses were $769.1 million and $2.297 billion for the three
and nine months ended September 30, 2021, respectively, a decrease of $44.0
million and $699.1 million compared to the three and nine months ended September
30, 2020, respectively. Operating expenses consist primarily of the following:

•Operating costs include labor, newsprint and delivery costs for the Publishing
segment and the cost of online media acquired from third parties and costs to
manage and operate our marketing solutions and technology infrastructure for the
DMS segment;
•Selling, general and administrative expenses include labor, payroll, outside
services, benefits costs and bad debt expense;
•Depreciation and amortization;
•Integration and reorganization costs include severance charges and other costs,
including those for the purpose of consolidating our operations (i.e., facility
consolidation expenses and integration-related costs);
•Other operating expenses include third-party debt expenses as well as
acquisition-related costs;
•Gains or losses on the sale or disposal of assets; and
•Impairment charges, including costs incurred related to goodwill, intangible
assets and property, plant and equipment.

For the three months ended September 30, 2021, Operating expenses at our
Publishing segment decreased $27.2 million compared to the three months ended
September 30, 2020, reflecting a decrease in Operating costs of $10.7 million, a
decrease in Depreciation and amortization of $16.6 million, a decrease in
Integration and reorganization costs of $1.6 million and a decrease in Loss on
the sale or disposal of assets of $2.8 million, partially offset by an increase
in Selling, general and administrative expenses of $3.0 million and an increase
in Asset impairments of $1.4 million. For the nine months ended September 30,
2021, Operating expenses at our Publishing segment decreased $591.8 million
compared to the nine months ended September 30, 2020, reflecting a decrease in
Operating costs of $104.5 million, a decrease in Selling, general and
administrative expenses of $51.7 million, a decrease in Depreciation and
amortization of $57.3 million, a decrease in Integration and reorganization
costs of $28.4 million, a decrease in Asset impairments of $4.6 million and a
decrease in Goodwill and intangible impairments of $352.9 million, partially
offset by an increase in Loss on the sale or disposal of assets of $7.7 million.

For the three months ended September 30, 2021, Operating expenses at our DMS
segment increased $1.4 million compared to the three months ended September 30,
2020, reflecting an increase in Operating costs of $9.2 million and an increase
in Depreciation and amortization of $1.2 million, partially offset by a decrease
in Selling, general and administrative expenses of $8.9 million. For the nine
months ended September 30, 2021, Operating expenses at our DMS segment decreased
$55.6 million compared to the nine months ended September 30, 2020, reflecting a
decrease in Selling, general and administrative expenses of $31.9 million, a
decrease in Goodwill and intangible impairments of $40.5 million and a decrease
in Integration and reorganization costs of $4.3 million, partially offset by an
increase in Operating costs of $16.4 million and an increase in Depreciation and
amortization of $5.6 million.

For the three months ended September 30, 2021, Operating expenses at Corporate
and other decreased $9.9 million compared to the three months ended September
30, 2020, reflecting a decrease in Selling, general and administrative expenses
of $11.2 million, a decrease in Other operating expenses of $1.9 million and a
decrease in Operating costs of $1.4 million, partially offset by an increase in
Depreciation and amortization of $2.2 million and an increase Integration and
reorganization costs of $2.1 million. For the nine months ended September 30,
2021, Operating expenses at Corporate and other decreased $43.3 million compared
to the nine months ended September 30, 2020, due to a decrease in Selling,
general and administrative expenses of $36.0 million, a decrease in Integration
and reorganization costs of $5.8 million and a decrease in Operating costs of
$3.3 million, partially offset by an increase in Other operating expenses of
$1.1 million and an increase in Depreciation and amortization of $0.5 million.
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Refer to the segment results discussion below for more information.

Non-operating expenses (income)

Interest expense: For the three and nine months ended September 30, 2021,
Interest expense was $34.6 million and $109.4 million, respectively, compared to
$58.1 million and $173.9 million for the three and nine months ended September
30, 2020, respectively. The decrease in interest expense for the three and nine
months ended September 30, 2021 was mainly due to a lower effective interest
rate driven by the refinancing of our five-year, senior-secured 11.5% term loan
facility with Apollo Capital Management, L.P. (the "Acquisition Term Loan") in
the first quarter of 2021 and a lower debt balance compared to the same period
in 2020.

Loss on early extinguishment of debt: For the three and nine months ended
September 30, 2021, Loss on early extinguishment of debt was $3.8 million and
$26.0 million, respectively. For the three and nine months ended September 30,
2020, Loss on early extinguishment of debt was $0.5 million and $1.7 million,
respectively. The increase in loss for the three months ended September 30, 2021
was mainly due to early prepayments on the 5-Year Term Loan. The increase in
loss for the nine months ended September 30, 2021 was mainly due to the payoff
of the Acquisition Term Loan in the first quarter of 2021.

Non-operating pension income: For the three and nine months ended September 30,
2021, Non-operating pension income was $23.9 million and $71.6 million,
respectively, compared to $18.3 million and $54.4 million for the three and nine
months ended September 30, 2020, respectively. The increase in non-operating
pension income for the three and nine months ended September 30, 2021 was
primarily due to an increase in the expected return on plan assets held by the
Gannett Retirement Plan and lower interest costs on benefit obligations.

Loss on convertible note derivative: For the nine months ended September 30, 2021, The loss on the convertible note derivative was $ 126.6 million, due to the increase in the fair value of the derivative liability due to the increase in the price of the Company’s shares.

Other non-operating income, net: Other non-operating income, net consisted of
certain items that fall outside of our normal business operations. For the three
and nine months ended September 30, 2021, Other non-operating income, net was
$0.9 million and $4.0 million, respectively, compared to $10.4 million and $15.0
million for the three and nine months ended September 30, 2020, respectively.
The decrease in Other non-operating income, net for the three and nine months
ended September 30, 2021 was primarily due to a gain on disposal of a cost
method investment held by the DMS segment during the third quarter of 2020.

Provision (benefit) for income taxes

The following table summarizes our net income (loss) before income taxes and income taxes:

                                          Three months ended September 30,              Nine months ended September 30,
In thousands                                  2021                   2020                  2021                   2020
Income (loss) before income taxes      $        17,529           $ (28,350)         $      (101,880)          $ (572,085)
Provision (benefit) for income taxes             2,984               3,098                   11,567              (22,200)
Effective tax rate                                17.0   %                ***                 (11.4)  %              3.9  %

*** Indicates a percentage change in absolute value greater than 100.

The provision for income taxes for the three months ended September 30, 2021 was
mainly driven by pre-tax income and is impacted by forgiveness of PPP loans
during the quarter. For federal tax purposes, book income from forgiven loans is
not included in taxable income, and expenses paid utilizing the loan proceeds
can be deducted. The impact of PPP loan forgiveness is partially offset by the
creation of valuation allowances on non-deductible interest expense
carryforwards. The provision was calculated using the estimated annual effective
tax rate of 77.7%. The annual effective tax rate is principally impacted by the
derivative revaluation, which is non-deductible for federal tax purposes, and
the creation of valuation allowances on non-deductible interest expense
carryforwards. The estimated annual effective tax rate is based on a projected
tax expense for the full year.

The tax provision for the nine months ended September 30, 2021 was mainly driven
by the pre-tax net loss generated during the first quarter of 2021. The tax
provision is impacted by the derivative revaluation, which is nondeductible for
federal
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tax purposes, the creation of valuation allowances on non-deductible interest
expense carryforwards, and PPP loan forgiveness, in combination with state
income tax and foreign tax expense.

During the three months ended June 30, 2021, we reclassified $32.5 million (tax
effected) in connection with the retirement of the deferred tax asset related to
the embedded conversion feature associated with the 2027 Notes. The retirement
of the deferred tax asset resulted from the reclassification of the embedded
conversion feature from a derivative liability to Equity as a reduction to
Additional paid-in-capital during the first quarter of 2021. See Note 7 - Debt
for additional information about the 2027 Notes.

The provision for income taxes for the three months ended September 30, 2020 was
mainly impacted by a reduction in the year to date tax benefit as a result of a
lower projected annualized effected tax rate. The provision for income taxes for
the three months ended September 30, 2020 was calculated using the estimated
annual effective tax rate of 6.2%. The estimated annual effective tax rate is
based on a projected tax benefit for the full year. The tax benefit for the nine
months ended September 30, 2020 is lower than the 21% statutory federal rate due
to the impact of non-deductible asset impairments, non-deductible officers'
compensation, and the creation of valuation allowances on non-deductible
interest expense carryforwards and capital losses.

Several economic relief bills have been enacted into law in response to the
COVID-19 pandemic. We continue to monitor the applicability of federal and state
legislation to the Company, as well as regulatory interpretations of enacted
legislation that provide economic relief in response to the pandemic, and expect
to utilize these provisions as we determine necessary or desirable.
Net income (loss) attributable to Gannett and diluted income (loss) per share
attributable to Gannett

For the three months ended September 30, 2021, Net income attributable to
Gannett and diluted income per share attributable to Gannett were $14.7 million
and $0.09, respectively, compared to Net loss attributable to Gannett and
diluted loss per share attributable to Gannett of $31.3 million and $0.24,
respectively, for the three months ended September 30, 2020. For the nine months
ended September 30, 2021, Net loss attributable to Gannett and diluted loss per
share attributable to Gannett were $112.5 million and $0.84, respectively,
compared to $548.3 million and $4.17, respectively, for the nine months ended
September 30, 2020. The change for the three and nine months ended September 30,
2021 reflects the various items discussed above.

Edit segment

Below is a summary of our Publishing segment results:

                                                 Three months ended September 30,                                              Nine months ended September 30,
                                                                                    Change                                                                      Change
In thousands                        2021                   2020                $                %               2021                 2020                 $                 %
Operating revenues:
Advertising and marketing
services                     $    328,784              $ 329,508          $   (724)              -  %       $  984,575          $ 1,025,396          $ (40,821)             (4) %
Circulation                       306,698                336,152           (29,454)             (9) %          942,392            1,053,517           (111,125)            (11) %
Other                              80,325                 66,566            13,759              21  %          212,970              207,355              5,615               3  %
Total operating revenues          715,807                732,226           (16,419)             (2) %        2,139,937            2,286,268           (146,331)             (6) %
Operating expenses:
Operating costs                   427,887                438,588           (10,701)             (2) %        1,285,904            1,390,366           (104,462)             (8) %
Selling, general and
administrative expenses           189,032                186,000             3,032               2  %          541,165              592,856            (51,691)             (9) %
Depreciation and
amortization                       35,861                 52,481           (16,620)            (32) %          118,664              175,990            (57,326)            (33) %
Integration and
reorganization costs                3,512                  5,120            (1,608)            (31) %           10,641               39,049            (28,408)            (73) %
Asset impairments                   2,301                    868             1,433                ***            3,134                7,727             (4,593)            (59) %
Goodwill and intangible
impairments                             -                      -                 -               -  %                -              352,947           (352,947)           (100) %
(Gain) loss on sale or
disposal of assets, net            (1,032)                 1,731            (2,763)               ***            9,538                1,876              7,662                ***
Total operating expenses          657,561                684,788           (27,227)             (4) %        1,969,046            2,560,811           (591,765)            (23) %
Operating income (loss)      $     58,246              $  47,438          $ 10,808              23  %       $  170,891          $  (274,543)         $ 445,434                ***


*** Indicates a percentage change in absolute value greater than 100.

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Operating revenues

The following table provides the breakout of Operating revenues by category:
                                               Three months ended September 30,                                              Nine months ended September 30,
                                                                                  Change                                                                       Change
In thousands                       2021                  2020                $                %                2021                 2020                  $                %
Local and national print    $    118,292             $ 132,013          $ (13,721)           (10) %       $   363,291          $   422,849          $  (59,558)           (14) %
Classified print                  71,752                76,210             (4,458)            (6) %           220,874              240,888             (20,014)            (8) %
Print advertising                190,044               208,223            (18,179)            (9) %           584,165              663,737             (79,572)           (12) %

Digital media                     91,344                84,054              7,290              9  %           265,450              235,865              29,585             13  %
Digital marketing services        34,078                25,498              8,580             34  %            95,652               79,677              15,975             20  %
Digital classified                13,318                11,733              1,585             14  %            39,308               46,117              (6,809)           (15) %
Digital advertising and
marketing services               138,740               121,285             17,455             14  %           400,410              361,659              38,751             11  %

Advertising and marketing
services                         328,784               329,508               (724)             -  %           984,575            1,025,396             (40,821)            (4) %

Print circulation                280,980               315,833            (34,853)           (11) %           869,489            1,000,210            (130,721)           (13) %
Digital-only circulation          25,718                20,319              5,399             27  %            72,903               53,307              19,596             37  %
Circulation                      306,698               336,152            (29,454)            (9) %           942,392            1,053,517            (111,125)           (11) %

Other                             80,325                66,566             13,759             21  %           212,970              207,355               5,615              3  %

Total operating revenues    $    715,807             $ 732,226          $ (16,419)            (2) %       $ 2,139,937          $ 2,286,268          $ (146,331)            (6) %



For the three and nine months ended September 30, 2021, the overall decline in
Print advertising revenues of $18.2 million and $79.6 million, respectively, was
driven by secular industry trends impacting all categories and the absence of
revenues related to a business we divested in the fourth quarter of 2020. For
the three and nine months ended September 30, 2021, Local and national print
advertising revenues decreased $13.7 million and $59.6 million, respectively,
compared to the three and nine months ended September 30, 2020, primarily due to
lower advertising volumes, including a decrease in advertiser inserts. For the
three and nine months ended September 30, 2021, Classified print advertising
revenues decreased $4.5 million and $20.0 million, respectively, compared to the
three and nine months ended September 30, 2020, due to decreased spend in
classified advertisements, including legal, real estate, and obituaries.

For the three months ended September 30, 2021, Digital advertising and marketing
services revenues increased $17.5 million, due to an increase of $7.3 million in
Digital media revenues, an increase of $8.6 million in Digital marketing
services revenues, and an increase of $1.6 million in Digital classified
revenues, compared to the three months ended September 30, 2020. For the nine
months ended September 30, 2021, Digital advertising and marketing services
revenues increased $38.8 million, due to an increase of $29.6 million in Digital
media revenues and an increase of $16.0 million in Digital marketing services
revenues, offset by a decrease of $6.8 million in Digital classified revenues
compared to the nine months ended September 30, 2020. For the three and nine
months ended September 30, 2021, the overall increase in Digital advertising and
marketing services revenues was due to an increase in Digital media spend and
Digital marketing services revenues as well as continued improvement in
operating trends since the prior year impacts of the COVID-19 pandemic. The
increase in Digital media revenues for the three and nine months ended September
30, 2021 was driven by a higher mix of premium media sold, including premium
sports products, as well as an overall increase in rate across both owned and
operated sites as well as third-party sites. The increase in Digital marketing
services revenues for the three and nine months ended September 30, 2021 was due
to higher average revenue per customer for digital marketing services sold
primarily as a result of focusing on strategic initiatives across our local
marketing sales force. The increase in Digital classified revenues for the three
months ended September 30, 2021 was due to increased spend in obituaries, legal
and employment advertisements. The decrease in Digital classified revenues for
the nine months ended September 30, 2021 was due to reduced spend in automotive
advertisements, partially offset by increased spend in employment
advertisements.

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For the three and nine months ended September 30, 2021, Print circulation
revenues decreased $34.9 million and $130.7 million, respectively, compared to
the three and nine months ended September 30, 2020, driven by a reduction in the
volume of home delivery subscribers, a decline in single copy sales reflecting
the overall secular trends impacting the industry, and the absence of revenues
related to a business we divested in the fourth quarter of 2020, as well as the
impact of the COVID-19 pandemic on business travel and overall consumer
activity, partially offset by an increase in rate. For the three and nine months
ended September 30, 2021, Digital-only circulation revenues increased $5.4
million and $19.6 million, respectively, compared to the three and nine months
ended September 30, 2020, driven by an increase of 46% in paid digital-only
subscribers, including those subscribers on introductory subscription offers, to
approximately 1.543 million compared to the prior year.

For the three and nine months ended September 30, 2021, Other revenues increased
$13.8 million and $5.6 million, respectively, compared to the three and nine
months ended September 30, 2020, primarily due to an increase in digital content
syndication volume, as well as commercial print growth in local markets driven
by continued improvement in operating trends since the prior year impacts of the
COVID-19 pandemic and customer retention, partially offset by the absence of
revenues related to a business we divested in the fourth quarter of 2020. The
growth in Other revenues for the nine months ended September 30, 2021 was
negatively impacted by a decline in event revenues driven by the shift from in
person events to virtual events as a result of the COVID-19 pandemic.

Operating Expenses

For the three and nine months ended September 30, 2021, Operating costs have decreased $ 10.7 million and $ 104.5 million, respectively, compared to the three and nine months ended September 30, 2020. The following table shows the breakdown of the reduction in operating costs:

                                                        Three months ended September 30,                                              Nine months ended September 30,
                                                                                           Change                                                                       Change
In thousands                                2021                  2020                $                %                2021                 2020                  $                %
Newsprint and ink                    $     26,176             $  31,250          $  (5,074)           (16) %       $    78,160          $   101,097          $  (22,937)           (23) %
Distribution                              112,884                99,189             13,695             14  %           321,435              306,768              14,667              5  %
Compensation and benefits                 129,620               153,643            (24,023)           (16) %           414,513              478,996             (64,483)           (13) %
Outside services                           90,428                87,574              2,854              3  %           248,110              252,046              (3,936)            (2) %
Other                                      68,779                66,932              1,847              3  %           223,686              251,459             (27,773)           (11) %
Total operating costs                $    427,887             $ 438,588          $ (10,701)            (2) %       $ 1,285,904          $ 1,390,366          $ (104,462)            (8) %



For the three and nine months ended September 30, 2021, Newsprint and ink costs
decreased $5.1 million and $22.9 million, respectively, compared to the three
and nine months ended September 30, 2020, mainly due to lower print circulation
driven by the decline in volume of home delivery and single copy sales. In
addition, the decrease in Newsprint and ink costs for the nine months ended
September 30, 2021 was also impacted by declines in print advertising volumes.

For the three and nine months ended September 30, 2021, Distribution costs
increased $13.7 million and $14.7 million, respectively, compared to the three
and nine months ended September 30, 2020, primarily driven by an increase in
distribution postage, as well as activity in our commercial print business. In
addition, the increase in Distribution costs for the nine months ended September
30, 2021 was offset by the decline in print circulation and print advertising
volumes incurred in the first quarter of 2021.

For the three and nine months ended September 30, 2021, Compensation and
benefits costs decreased $24.0 million and $64.5 million, respectively, compared
to the three and nine months ended September 30, 2020, primarily due to a
reduction in costs associated with ongoing integration efforts, including
headcount reductions, as well as the benefit in 2021 of cost containment
initiatives implemented in 2020 in connection with the COVID-19 pandemic and
$11.1 million of PPP loan forgiveness, offset by the absence of the temporary
reduction of expenses in the prior year, such as furloughs and wage reductions
in response to the COVID-19 pandemic.
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For the three months ended September 30, 2021, Outside services costs, which
includes outside printing, professional services fulfilled by third parties,
paid search and ad serving, feature services, and credit card fees, increased
$2.9 million compared to the three months ended September 30, 2020, due to
higher costs associated with the increase in Digital media and Digital marketing
services revenues, including paid search fees and affiliate revenue share as
well as other related costs, offset by a reduction in costs associated with
ongoing integration efforts. For the nine months ended September 30, 2021,
Outside services costs decreased $3.9 million compared to the nine months ended
September 30, 2020, due to a reduction in costs associated with ongoing
integration efforts and the benefit in 2021 of cost containment initiatives
implemented in 2020 in connection with the COVID-19 pandemic, offset by higher
costs associated with the increase in Digital media and Digital marketing
services revenues.

For the three months ended September 30, 2021, Other costs, which primarily
includes travel, and facility and equipment costs, increased $1.8 million
compared to the three months ended September 30, 2020, due to an increase in
travel costs in the period as travel began to resume after the height of the
COVID-19 pandemic travel restrictions. For the nine months ended September 30,
2021, Other costs decreased $27.8 million compared to the nine months ended
September 30, 2020, due to a reduction in costs associated with ongoing
integration efforts and cost containment initiatives, including the
consolidation of print facilities.

For the three and nine months ended September 30, 2021, Selling, general and
administrative expenses increased $3.0 million and decreased $51.7 million,
respectively, compared to the three and nine months ended September 30, 2020.
The following table provides the breakout of Selling, general and administrative
expenses:
                                                Three months ended September 30,                                             Nine months ended September 30,
                                                                                    Change                                                                    Change
In thousands                         2021                   2020               $               %                2021                 2020                $                %
Compensation and benefits    $     93,762               $  93,619          $   143             -  %       $   283,875            $ 295,569          $ (11,694)            (4) %
Outside services and other         95,270                  92,381            2,889             3  %           257,290              297,287            (39,997)           (13) %
Total Selling, general and
administrative expenses      $    189,032               $ 186,000          $ 3,032             2  %       $   541,165            $ 592,856          $ (51,691)            (9) %



For the three months ended September 30, 2021, Compensation and benefits
remained essentially flat compared to the three months ended September 30, 2020,
due to an increase in costs associated with employee insurance benefits and the
absence of the temporary reduction of expenses in the prior year period, such as
furloughs and wage reductions, offset by PPP loan forgiveness of $4.0 million.
For the nine months ended September 30, 2021, Compensation and benefits costs
decreased $11.7 million compared to the nine months ended September 30, 2020,
due to a reduction in costs associated with ongoing integration efforts,
including headcount reductions, the benefit in 2021 of cost containment
initiatives implemented in 2020 in connection with the COVID-19 pandemic, and
PPP loan forgiveness of $4.0 million, partially offset by the impact of higher
payroll and commission expenses driven by the growth in Advertising and
marketing services revenues, an increase in costs associated with employee
insurance benefits and the absence of the temporary reduction of expenses in the
prior year, such as furloughs and wage reductions.

For the three months ended September 30, 2021, Outside services and other costs,
which includes services fulfilled by third parties, increased $2.9 million
compared to the three months ended September 30, 2020, due to an increase in
promotion fees, offset by decreases in legal fees, facility related costs and
bad debt expense. For the nine months ended September 30, 2021, Outside services
and other costs decreased $40.0 million compared to the nine months ended
September 30, 2020, due to lower facility related costs, lower bad debt expense,
a reduction in costs associated with ongoing integration efforts, and the
benefit in 2021 of cost containment initiatives implemented in 2020 in
connection with the COVID-19 pandemic, partially offset by an increase in
promotion fees.

For the three and nine months ended September 30, 2021, Depreciation and
amortization expenses decreased $16.6 million and $57.3 million, respectively,
compared to the three and nine months ended September 30, 2020, due to a
decrease in accelerated depreciation of $8.2 million and $33.6 million,
respectively, as a result of fewer print facility shutdowns and strategic
dispositions of real estate during the period related to ongoing cost reduction
programs.

For the three months ended September 30, 2021, Integration and reorganization
costs decreased $1.6 million compared to the three months ended September 30,
2020, due to a decrease in severance costs of $2.0 million, partially offset by
an increase in other costs, including those for the consolidation of operations
of $0.4 million. For the nine months ended September 30, 2021, Integration and
reorganization costs decreased $28.4 million compared to the nine months ended
September 30, 2020,
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due to a decrease in severance costs of $25.3 million, as well as a decrease in
other costs, including those for the consolidation of operations of $3.1
million. For the three and nine months ended September 30, 2021, severance costs
were primarily related to facility consolidation and ongoing integration
activities. For the three and nine months ended September 30, 2020, severance
costs were related to acquisition-related synergies and the consolidation of the
business due to our acquisition of Gannett Co., Inc. (which was renamed Gannett
Media Corp. and is referred to as "Legacy Gannett") in the fourth quarter of
2019.

For the three and nine months ended September 30, 2021, we recorded Asset
impairment charges of $2.3 million and $3.1 million, respectively, in the
Publishing segment due primarily to the impairment of real estate held for sale.
For the three months ended September 30, 2020, we recorded $0.9 million of
Assets impairment charges as a result of fixed asset disposals related to the
continued consolidation of operations. For the nine months ended September 30,
2020, we recorded $7.7 million of Assets impairment charges as a result of the
Company's recoverability test for long-lived assets, as well as fixed asset
disposals related to the continued consolidation of operations.

For the nine months ended September 30, 2020, we recorded goodwill and intangible impairment of $ 352.9 million in the Publishing segment, mainly due to the impact of the COVID-19 pandemic on our operations.

For the three months ended September 30, 2021, we recorded a Gain on the sale or
disposal of assets, net of $1.0 million due to a gain on sale of real estate at
Newsquest, offset by the loss on the sale of assets as part of our plan to
monetize non-core assets, compared to a Loss on the sale or disposal of assets,
net of $1.7 million for the three months ended September 30, 2020. For the nine
months ended September 30, 2021, Loss on sale or disposal of assets increased
$7.7 million compared to the nine months ended September 30, 2020, driven by the
loss on the sale of assets in 2021 as part of our plan to monetize non-core
assets, offset by a gain on sale of real estate at Newsquest.

Publishing segment Adjusted EBITDA

                                                Three months ended September 30,                                            Nine months ended September 30,
                                                                                 Change                                                                     Change
In thousands                       2021                 2020                $                %               2021               2020                 $                  %
Net income (loss)
attributable to Gannett       $    84,137           $  67,726          $ 16,411              24  %       $ 246,792          $ (213,490)         $ 460,282                  ***
Interest expense                        -                  17               (17)           (100) %               -                 127               (127)             (100) %

Non-operating pension income      (23,860)              (18,262)         (5,598)             31  %         (71,644)            (54,215)           (17,429)               32  %
Depreciation and amortization      35,861              52,481           (16,620)            (32) %         118,664             175,990            (57,326)              (33) %
Integration and
reorganization costs                3,512               5,120            (1,608)            (31) %          10,641              39,049            (28,408)              (73) %
Asset impairments                   2,301                 868             1,433                ***           3,134               7,727             (4,593)              (59) %
Goodwill and intangible
impairments                             -                   -                 -               -  %               -             352,947           (352,947)             (100) %
(Gain) loss on sale or
disposal of assets, net            (1,032)              1,731            (2,763)               ***           9,538               1,876              7,662                  ***
Other items                            82                (929)            1,011                ***             273               1,756             (1,483)              (84) %
Adjusted EBITDA (non-GAAP
basis)                        $   101,001           $ 108,752          $ (7,751)             (7) %       $ 317,398          $  311,767          $   5,631                 2  %
Net income (loss)
attributable to Gannett
margin                               11.8   %             9.2  %                                              11.5  %             (9.3) %
Adjusted EBITDA margin
(non-GAAP basis)(a)                  14.1   %            14.9  %                                              14.8  %             13.6  %


*** Indicates an absolute percentage change greater than 100. (a) We define Adjusted EBITDA margin as Adjusted EBITDA divided by total operating income.

Adjusted EBITDA for our Publishing segment was $101.0 million and $317.4 million
for the three and nine months ended September 30, 2021, respectively, a decrease
of $7.8 million and an increase of $5.6 million compared to the three and nine
months ended September 30, 2020, respectively. The change for the three and nine
months ended September 30, 2021 was primarily attributable to the changes
discussed above.

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Digital Marketing Solutions segment

A summary of our Digital Marketing Solutions segment results is presented below:
                                                Three months ended September 30,                                              Nine months ended September 30,
                                                                                   Change                                                                        Change
In thousands                       2021                   2020                $                %                  2021                  2020                $               %
Operating revenues:
Advertising and marketing
services                    $    116,771              $ 100,807          $ 15,964              16  %       $    328,184             $ 306,899          $ 21,285              7  %
Other                                  -                  4,636            (4,636)           (100) %                905                14,388           (13,483)           (94) %
Total operating revenues         116,771                105,443            11,328              11  %            329,089               321,287             7,802              2  %
Operating expenses:
Operating costs                   80,405                 71,223             9,182              13  %            224,112               207,741            16,371              8  %
Selling, general and
administrative expenses           21,342                 30,228            (8,886)            (29) %             68,252               100,120           (31,868)           (32) %
Depreciation and
amortization                       7,986                  6,768             1,218              18  %             23,665                18,103             5,562             31  %
Integration and
reorganization costs                 931                  1,237              (306)            (25) %              1,301                 5,587            (4,286)           (77) %
Asset impairments                      -                    717              (717)               ***                  -                   717              (717)              ***
Goodwill and intangible
impairments                            -                      -                 -               -  %                  -                40,499           (40,499)              ***
Gain on sale or disposal of
assets, net                          (91)                  (964)              873             (91) %               (618)                 (426)             (192)            45  %
Total operating expenses         110,573                109,209             1,364               1  %            316,712               372,341           (55,629)           (15) %
Operating income (loss)     $      6,198              $  (3,766)         $  9,964                ***       $     12,377             $ (51,054)         $ 63,431               ***

*** Indicates a percentage change in absolute value greater than 100.

Operating income

For the three and nine months ended September 30, 2021, Advertising and
marketing services revenues increased $16.0 million and $21.3 million,
respectively, compared to the three and nine months ended September 30, 2020,
primarily driven by growth in the core ReachLocal business and a continued
improvement in operating trends since the prior year impacts of the COVID-19
pandemic. The increase for the nine months ended September 30, 2021 was
partially offset by the absence of $11.7 million of revenues in 2021 as a result
of the change in media rebate programs, as well as the absence of revenues
associated with a business we divested in the third quarter of 2020.

For the three and nine months ended September 30, 2021, Other revenues decreased
$4.6 million and $13.5 million, respectively, compared to the three and nine
months ended September 30, 2020, primarily due to the absence of revenues
related to a business we divested in the fourth quarter of 2020.

Operating Expenses

For the three and nine months ended September 30, 2021, Operating costs increased $ 9.2 million and $ 16.4 million, respectively, compared to the three and nine months ended September 30, 2020. The following table shows the breakdown of operating costs:

                                                      Three months ended September 30,                                           Nine months ended September 30,
                                                                                       Change                                                                     Change
In thousands                               2021               2020                $               %                 2021                 2020                $                %
Compensation and benefits             $     7,593          $ 10,809          $ (3,216)           (30) %       $    23,408            $  35,031          $ (11,623)           (33) %
Outside services                           70,332            56,787            13,545             24  %           193,423              160,722             32,701             20  %
Other                                       2,480             3,627            (1,147)           (32) %             7,281               11,988             (4,707)           (39) %
Total operating costs                 $    80,405          $ 71,223          $  9,182             13  %       $   224,112            $ 207,741          $  16,371              8  %



For the three and nine months ended September 30, 2021, Compensation and
benefits costs decreased $3.2 million and $11.6 million, respectively, compared
to the three and nine months ended September 30, 2020, due to a reduction in
costs associated with ongoing integration efforts, including headcount
reductions, as well as the benefit in 2021 of cost containment
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initiatives implemented in 2020 in connection with the COVID-19 pandemic, offset
by the absence of the temporary reduction of expenses in the prior year, such as
furloughs and wage reductions.

For the three and nine months ended September 30, 2021, Outside services costs,
which includes professional services fulfilled by third parties, media fees and
other digital costs, increased $13.5 million and $32.7 million, respectively,
compared to the three and nine months ended September 30, 2020, due to an
increase in expenses associated with third-party media fees driven by a
corresponding increase in revenues, partially offset by the absence of costs
associated with a business we divested in the fourth quarter of 2020.

For the three and nine months ended September 30, 2021, Selling, general and
administrative expenses decreased $8.9 million and $31.9 million, respectively,
compared to the three and nine months ended September 30, 2020. The following
table provides the breakout of Selling, general and administrative expenses by
category:

                                                Three months ended September 30,                                              Nine months ended September 30,
                                                                                   Change                                                                       Change
In thousands                        2021                  2020                $                %                 2021                  2020                $                %
Compensation and benefits    $    17,046               $ 28,426          $ (11,380)           (40) %       $    52,283             $  92,145          $ (39,862)           (43) %
Outside services and other         4,296                  1,802              2,494               ***            15,969                 7,975              7,994               ***
Total Selling, general and
administrative expenses      $    21,342               $ 30,228          $  (8,886)           (29) %       $    68,252             $ 100,120          $ (31,868)           (32) %


*** Indicates a percentage change in absolute value greater than 100.

For the three and nine months ended September 30, 2021, Compensation and
benefits costs decreased $11.4 million and $39.9 million, respectively, compared
to the three and nine months ended September 30, 2020, primarily due to a
reduction in costs associated with ongoing integration efforts, including
headcount reductions, as well as the benefit in 2021 of cost containment
initiatives implemented in 2020 in connection with the COVID-19 pandemic, offset
by the absence of the temporary reduction of expenses in the prior year, such as
furloughs and wage reductions.

For the three and nine months ended September 30, 2021, Outside services and
other costs increased $2.5 million and $8.0 million, respectively, compared to
the three and nine months ended September 30, 2020, due to an increase in
various miscellaneous expenses, including higher technology and marketing
expenses.

For the three and nine months ended September 30, 2021, Integration and
reorganization costs decreased $0.3 million and $4.3 million, respectively,
compared to the three and nine months ended September 30, 2020 due to lower
severance costs of $0.8 million and $5.0 million, respectively, offset by higher
facility consolidation and other restructuring related expenses of $0.5 million
and $0.7 million, respectively. For the three and nine months ended September
30, 2020, severance costs were related to acquisition-related synergies and the
consolidation of the business due to our acquisition of Legacy Gannett in the
fourth quarter of 2019.

For the three and nine months ended September 30, 2020, we have registered $ 0.7 million
asset impairment charges due to ongoing cost efficiency programs.

For the nine months ended September 30, 2020, we recorded goodwill and intangible impairment of $ 40.5 million in the DMS segment, mainly due to the impact of the COVID-19 pandemic on our operations.

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Digital Marketing Solutions segment Adjusted EBITDA

                                               Three months ended September 30,                                              Nine months ended September 30,
                                                                                  Change                                                                     Change
In thousands                     2021                     2020               $                %                2021                2020                $                 %
Net income (loss)
attributable to Gannett     $     5,005                $ 5,223          $   (218)             (4) %       $   10,990           $ (43,076)         $ 54,066                  ***
Depreciation and
amortization                      7,986                  6,768             1,218              18  %           23,665              18,103             5,562                31  %
Integration and
reorganization costs                931                  1,237              (306)            (25) %            1,301               5,587            (4,286)              (77) %
Asset impairments                     -                    717              (717)           (100) %                -                 717              (717)             (100) %
Goodwill and intangible
impairments                           -                      -                 -               -  %                -              40,499           (40,499)             (100) %
Gain on sale or disposal of
assets, net                         (91)                  (964)              873             (91) %             (618)               (426)             (192)               45  %
Other items                       1,193                 (8,804)            9,997                ***            1,387              (6,557)            7,944                  ***
Adjusted EBITDA (non-GAAP
basis)                      $    15,024                $ 4,177          $ 10,847                ***       $   36,725           $  14,847          $ 21,878                  ***
Net income (loss)
attributable to Gannett
margin                              4.3   %                5.0  %                                                3.3   %           (13.4) %
Adjusted EBITDA margin
(non-GAAP basis)(a)                12.9   %                4.0  %                                               11.2   %             4.6  %


*** Indicates an absolute percentage change greater than 100. (a) We define Adjusted EBITDA margin as Adjusted EBITDA divided by total operating income.

Adjusted EBITDA for our Digital Marketing Solutions segment was $15.0 million
and $36.7 million for the three and nine months ended September 30, 2021,
respectively, an increase of $10.8 million and $21.9 million compared to the
three and nine months ended September 30, 2020, respectively. The change for the
three and nine months ended September 30, 2021 was primarily attributable to the
changes discussed above.

Corporate and other category

For the three months ended September 30, 2021, Corporate and other operating
revenues were $1.6 million compared to $2.7 million for the three months ended
September 30, 2020. For the nine months ended September 30, 2021, Corporate and
other operating revenues were $6.4 million compared to $8.1 million for the nine
months ended September 30, 2020.

For the three and nine months ended September 30, 2021, Corporate and other
operating expenses decreased $9.9 million and $43.3 million, respectively,
compared to the three and nine months ended September 30, 2020. The following
table provides the breakout of the decrease in Corporate and other operating
expenses:

                                               Three months ended September 30,                                           Nine months ended September 30,
                                                                               Change                                                                      Change
In thousands                       2021               2020                $                %                 2021                 2020                $                %
Operating expenses:
Operating costs               $     6,039          $  7,424          $ (1,385)            (19) %       $    14,534            $  17,864          $  (3,330)           (19) %
Selling, general and
administrative expenses            15,222            26,393           (11,171)            (42) %            43,386               79,339            (35,953)           (45) %
Depreciation and amortization       4,260             2,106             2,154                ***            12,123               11,613                510              4  %
Integration and
reorganization costs                9,176             7,060             2,116              30  %            23,525               29,342             (5,817)           (20) %
Loss on sale or disposal of
assets, net                           290                28               262                ***               286                   90                196               ***
Other operating expenses                4             1,913            (1,909)           (100) %            11,354               10,261              1,093             11  %
Total operating expenses      $    34,991          $ 44,924          $ (9,933)            (22) %       $   105,208            $ 148,509          $ (43,301)           (29) %

*** Indicates a percentage change in absolute value greater than 100.

For the three months ended September 30, 2021, Corporate and other operating
expenses decreased $9.9 million compared to the three months ended September 30,
2020 due to a decrease in Selling, general and administrative expenses of $11.2
million, mainly consisting of cost containment initiatives, a decrease in Other
operating expenses of $1.9 million, which was due to the absence of $1.9 million
of Acquisition costs incurred during the three months ended September 30, 2020,
and a
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decrease in Operating costs of $1.4 million due to the decline in revenues. The
decreases for the three months were partially offset by an increase in
Depreciation and amortization of $2.2 million and an increase in Integration and
reorganization costs of $2.1 million, driven by an increase of $3.9 million in
costs associated with systems implementation and outsourcing of corporate
functions, partially offset by a decrease in severance of $1.8 million.

For the nine months ended September 30, 2021, Corporate and other operating
expenses decreased $43.3 million due to a decrease in Selling, general and
administrative expenses of $36.0 million, mainly consisting of cost containment
initiatives, offset by the absence of the temporary reduction of expenses in the
prior year, such as furloughs and wage reductions, a decrease in Integration and
reorganization costs of $5.8 million, driven by a decrease in severance of $13.6
million, offset by an increase of $7.8 million in costs associated with systems
implementation and outsourcing of corporate functions. The decreases for the
nine months were offset by an increase in Other operating expenses of $1.1
million, which was primarily due to $10.9 million of third-party fees related to
the 5-Year Term Loan expensed during the nine months ended September 30, 2021,
compared to $10.3 million of Acquisition costs incurred during the nine months
ended September 30, 2020.

LIQUIDITY AND CAPITAL RESOURCES

Our primary cash requirements are for working capital, debt securities and capital expenditures.

We expect to fund our operations through cash provided by operating activities.
We expect we will have adequate capital resources and liquidity to meet our
ongoing working capital needs, borrowing obligations, and all required capital
expenditures.

Details of our cash flow are included in the table below:

                                                                  Nine months ended September 30,
In thousands                                                         2021                    2020
Net cash provided by operating activities                    $         133,347          $    74,280
Net cash provided by (used for) investing activities                    39,236               (1,979)
Net cash used for financing activities                                (212,284)             (37,471)
Effect of currency exchange rate change on cash                            389                  439
(Decrease) increase in cash, cash equivalents and restricted
cash                                                         $         (39,312)         $    35,269



Cash flows provided by operating activities: Our largest source of cash provided
by our operations is Advertising revenues, primarily generated from Local and
national advertising and marketing services revenues (retail, classified, and
online). Additionally, we generate cash through circulation subscribers,
commercial printing and delivery services to third parties, and events. Our
primary uses of cash from our operating activities include compensation,
newsprint, delivery, and outside services.

Our net cash flow provided by operating activities was $133.3 million for the
nine months ended September 30, 2021, compared to $74.3 million for the nine
months ended September 30, 2020. The increase in net cash flow provided by
operating activities was primarily due to a decrease in interest paid on debt of
$96.1 million, a decrease in severance payments of $40.1 million, $16.4 million
in PPP funding received in support of certain of our locations that were
meaningfully affected by the COVID-19 pandemic and an increase in tax refunds,
net of $4.5 million. These increases were partially offset by a decrease in
working capital of $70.9 million due to the overall timing of payments,
including accrued compensation and accounts receivable collections, and an
increase in contributions to our pension and other postretirement benefit plans
of $19.2 million.

Cash flows provided by (used for) investing activities: Cash flows provided by
investing activities totaled $39.2 million for the nine months ended September
30, 2021 compared to $2.0 million used for investing activities in the nine
months ended September 30, 2020. This increase was primarily due to an increase
in proceeds from the sale of real estate and other assets of $41.2 million and a
decrease in purchases of property, plant and equipment of $1.7 million.

Cash flows used for financing activities: Cash flows used for financing
activities totaled $212.3 million for the nine months ended September 30, 2021
compared to $37.5 million for the nine months ended September 30, 2020. This
increase was primarily due to an increase in net repayments under term loans of
$148.1 million and payments of debt issuance costs of $33.9 million.

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Debt

5-Year Term Loan

On February 9, 2021, we entered into a five-year, senior-secured term loan
facility with the lenders from time to time party thereto and Citibank, N.A., as
collateral agent and administrative agent for the lenders, in an aggregate
principal amount of $1.045 billion (the "5-Year Term Loan"). The 5-Year Term
Loan was to mature on February 9, 2026 and, at the Company's option, bore
interest at a rate equal to LIBOR plus a margin equal to 7.00% per annum or an
alternate base rate plus a margin equal to 6.00% per annum. Interest on the
5-Year Term Loan was payable at least every three months in arrears, beginning
in May 2021.

The proceeds of the 5-year term loan were used to repay the principal balance and accrued interest of $ 1.043 billion and $ 13.3 million, respectively, on the acquisition term loan (the “repayment”) and to pay the fees and expenses incurred in obtaining the 5-year term loan.

There were certain lenders that participated in both the Acquisition Term Loan
and the 5-Year Term Loan and their balances in the Acquisition Term Loan were
deemed to be modified. The Company continued to defer, over the term, the
deferred financing fees and original issue discount from the Acquisition Term
Loan of $1.5 million and $34.7 million, respectively, related to those lenders.
Further, certain lenders in the Acquisition Term Loan did not participate in the
5-Year Term Loan and their balances in the Acquisition Term Loan were deemed to
be extinguished. The Company recognized a Loss on early extinguishment of debt
of $17.2 million in the first quarter of 2021 as a result of the write-off of
the remaining original issue discount and deferred financing fees related to
those lenders. Third-party fees of approximately $13.0 million were allocated to
the new lenders in the 5-Year Term Loan on a pro-rata basis, and $20.9 million
of original issue discount were capitalized and amortized over the term of the
5-Year Term Loan using the effective interest method. For the nine months ended
September 30, 2021, third-party fees of $10.9 million, which were allocated to
the lenders whose balances were deemed to be modified, were expensed and
recorded in Other operating expenses in the condensed consolidated statements of
operations and comprehensive income (loss). No third-party fees were incurred
during the three months ended September 30, 2021.

The 5-Year Term Loan amortized in equal quarterly installments at a rate of 10%
per annum (or, if the ratio of Total Indebtedness secured on an equal priority
basis with the 5-Year Term Loan (net of Unrestricted Cash) to Consolidated
EBITDA (as such terms are defined in the 5-Year Term Loan) was equal to or less
than a specified ratio, 5% per annum) (the "Quarterly Amortization
Installment"), beginning September 30, 2021. In addition, we were required to
repay the 5-Year Term Loan from time to time with (i) the proceeds of
non-ordinary course asset sales and casualty and condemnation events, (ii) the
proceeds of indebtedness that was not otherwise permitted under the 5-Year Term
Loan and (iii) the aggregate amount of cash and cash equivalents on hand in
excess of $100 million at the end of each fiscal year. The 5-Year Term Loan was
subject to a requirement to have minimum unrestricted cash of $30 million as of
the last day of each fiscal quarter. As of September 30, 2021, we were in
compliance with all of the covenants and obligations under the 5-Year Term Loan.

From September 30, 2021, we have had $ 899.4 million in total capital outstanding under the 5-year term loan with an effective interest rate of 9.5%.

Under the 5-Year Term Loan, the Company was contractually obligated to make
prepayments with the proceeds from asset sales and could have elected to make
optional payments with excess free cash flow from operations. For the three and
nine months ended September 30, 2021, we made prepayments totaling $91.1 million
and $145.6 million, respectively, which were classified as financing activities
in the condensed consolidated statements of cash flows. These amounts are
inclusive of both mandatory and optional prepayments.

The 5-Year Term Loan was repaid using the proceeds from the 2026 Senior Notes
and the New Senior Secured Term Loan. As a result of the debt refinancing in
October 2021, we estimate that we will recognize a loss on the early
extinguishment of the 5-Year Term Loan and other fees of approximately $31.2
million during the fourth quarter of 2021.

Senior covered convertible bonds due 2027

On November 17, 2020, the Company issued $497.1 million in aggregate principal
amount of the Company's 6.0% Senior Secured Convertible Notes due 2027 (the
"2027 Notes"). The 2027 Notes were issued pursuant to an Indenture dated as of
November 17, 2020, as amended by the First Supplemental Indenture dated as of
December 21, 2020 and the Second
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Supplemental Indenture dated as of February 9, 2021 (collectively, the "2027
Notes Indenture"), between the Company and U.S. Bank National Association, as
trustee.

In connection with the issuance of the 2027 Notes, the Company entered into an
Investor Agreement (the "Investor Agreement") with the holders of the 2027 Notes
(the "Holders") establishing certain terms and conditions concerning the rights
and restrictions on the Holders with respect to the Holders' ownership of the
2027 Notes. The Company also entered into an amendment to the Registration
Rights Agreement dated November 19, 2019, between the Company and FIG LLC.

Interest on the 2027 Notes is payable semi-annually in arrears. The 2027 Notes
mature on December 1, 2027, unless earlier repurchased or converted. The 2027
Notes may be converted at any time by the holders into cash, shares of the
Company's Common Stock or any combination of cash and Common Stock, at the
Company's election. The initial conversion rate is 200 shares of Common Stock
per $1,000 principal amount of the 2027 Notes, which is equal to a conversion
price of $5.00 per share of Common Stock (the "Conversion Price").

The conversion rate is subject to customary adjustment provisions as provided in
the 2027 Notes Indenture. In addition, the conversion rate will be subject to
adjustment in the event of any issuance or sale of Common Stock (or securities
convertible into Common Stock) at a price equal to or less than the Conversion
Price in order to ensure that following such issuance or sale, the 2027 Notes
would be convertible into approximately 42% of the Common Stock after giving
effect to such issuance or sale assuming the initial principal amount of the
2027 Notes remains outstanding.

Upon the occurrence of a "Make-Whole Fundamental Change" (as defined in the 2027
Notes Indenture), the Company will in certain circumstances increase the
conversion rate for a specified period of time. If a "Fundamental Change" (as
defined in the 2027 Notes Indenture) occurs, the Company will be required to
offer to repurchase the 2027 Notes at a repurchase price of 110% of the
principal amount thereof.

Holders of the 2027 Notes will have the right to put up to approximately $100
million of the 2027 Notes at par on or after the date that is 91 days after the
maturity date of the 5-Year Term Loan or any Refinancing Facilities (as defined
in the 2027 Notes Indenture) in respect thereof.

Under the 2027 Notes Indenture, the Company can only pay cash dividends up to an
agreed-upon amount, provided the ratio of consolidated debt to EBITDA (as such
terms are defined in the 2027 Notes Indenture) does not exceed a specified
ratio. In addition, the 2027 Notes Indenture provides that, at any time that the
Company's Total Gross Leverage Ratio (as defined in the 2027 Notes Indenture)
exceeds 1.5 and the Company approves the declaration of a dividend, the Company
must offer to purchase a principal amount of 2027 Notes equal to the proposed
amount of the dividend.

Until the four-year anniversary of the issuance date, the Company will have the
right to redeem for cash up to approximately $99.4 million of the 2027 Notes at
a redemption price of 130% of the principal amount thereof, with such amount
reduced ratably by any principal amount of 2027 Notes that has been converted by
the holders or redeemed or purchased by the Company.

The 2027 Notes are guaranteed by Gannett Holdings and any subsidiaries of the
Company that guaranteed the 5-Year Term Loan. The 2027 Notes are secured by the
same collateral that secured the 5-Year Term Loan. The 2027 Notes rank as senior
secured debt of the Company and are secured by a second priority lien on the
same collateral package that secured the indebtedness incurred in connection
with the 5-Year Term Loan.

The 2027 Notes Indenture includes affirmative and negative covenants, including
limitations on liens, indebtedness, dispositions, loan, advances and investors,
sale and leaseback transactions, restricted payments, transactions with
affiliates, restrictions on dividends and other payment restrictions affecting
restricted subsidiaries, negative pledges and modifications to certain
agreements. The 2027 Notes Indenture also requires that the Company maintain, as
of the last day of each fiscal quarter, at least $30.0 million of Qualified Cash
(as defined in the 2027 Notes Indenture). The 2027 Notes Indenture includes
customary events of default.

For the nine months ended September 30, 2021, no shares were issued upon
conversion, exercise, or satisfaction of the required conditions. Refer to Note
10 - Supplemental equity information to the condensed consolidated financial
statements for details on the convertible debt's impact to diluted earnings per
share under the if-converted method.
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Contents

Senior convertible bonds maturing in 2024

The $3.3 million principal value of the remaining 4.75% convertible senior notes
due 2024 (the "2024 Notes") outstanding is reported as convertible debt in the
condensed consolidated balance sheets. The effective interest rate on the 2024
Notes was 6.05% as of September 30, 2021.

Debt refinancing

On October 15, 2021, Gannett Holdings entered into the New Senior Secured Term
Loan. Also, on October 15, 2021, Gannett Holdings completed a private offering
of the 2026 Senior Notes. The proceeds of the New Senior Secured Term Loan,
together with the net proceeds from the 2026 Senior Notes were applied towards
the full repayment of the 5-Year Term Loan.

The 2026 Senior Notes were issued pursuant to an Indenture, dated October 15,
2021 (the "2026 Senior Notes Indenture"), among Gannett Holdings, the Company,
the guarantors party thereto, U.S. Bank National Association, as trustee, U.S.
Bank National Association, as collateral agent, and U.S. Bank National
Association, as registrar, paying agent and authenticating agent. Interest on
the 2026 Senior Notes is payable semi-annually.

Loans under the New Senior Secured Term Loan bear interest at a per annum rate
equal to LIBOR (which shall not be less than 0.50% per annum) plus a margin of
5.00% or an alternate base rate plus a margin equal to 4.00% per annum (which
shall not be less than 1.50% per annum). The New Senior Secured Term Loan
contains usual and customary covenants for credit facilities of this type that
restrict, among other things, our ability to incur debt, grant liens, sell
assets, and make investments and pay dividends, in each case with customary
exceptions, including an exception that permits dividends and repurchases of
outstanding junior debt or equity in (i) an amount of up to $25 million per
fiscal quarter if the ratio of debt secured on an equal basis with the New
Senior Secured Term Loan to EBITDA (as defined in the New Senior Secured Term
Loan) of the Company and its restricted subsidiaries (the "First Lien Net
Leverage Ratio") for such fiscal quarter is equal to or less than 2.00 to 1.00,
(ii) an amount of up to $50 million per fiscal quarter if the First Lien Net
Leverage Ratio for such fiscal quarter is equal to or less than 1.50 to 1.00,
and (iii) an unlimited amount if First Lien Net Leverage Ratio for such fiscal
quarter is equal to or less than 1.00 to 1.00. All obligations under the New
Senior Secured Term Loan are secured by all or substantially all of the assets
of the Company and the wholly-owned domestic subsidiaries of the Company (the
"Guarantors"). The obligations of Gannett Holdings under the New Senior Secured
Term Loan are guaranteed on a senior secured basis by the Company and the
Guarantors.

As of the closing of these transactions on October 15, 2021, total debt
outstanding was $1.416 billion, which included the (i) $516 million New Senior
Secured Term Loan, (ii) $400 million of 2026 Senior Notes, (iii) $497.1 million
of 2027 Notes and (iv) $3.3 million of 2024 Notes.

The 5-Year Term Loan was repaid using the proceeds from the 2026 Senior Notes
and the New Senior Secured Term Loan. As a result of the debt refinancing in
October 2021, we estimate that we will recognize a loss on the early
extinguishment of the 5-Year Term Loan and other fees of approximately $31.2
million during the fourth quarter of 2021.

Additional information

We continue to evaluate our results of operations, liquidity and cash flows, and
as part of these measures, we have taken steps to manage cash outflow by
rationalizing expenses and implementing various cost containment initiatives. We
do not presently pay a quarterly dividend and have no current intention to
reinstate the dividend. In addition, the terms of our indebtedness, including
our credit facility, the New Senior Secured Term Loan, and the 2026 Senior
Secured Notes Indenture and the 2027 Notes Indenture have terms that restrict
our ability to pay dividends.

The CARES Act, enacted March 27, 2020, provided various forms of relief to
companies impacted by the COVID-19 pandemic. As part of the relief available
under the CARES Act, we deferred remittance of our 2020 Federal Insurance
Contributions Act taxes as allowed by the legislation. We deferred $41.6 million
of the employer portion of FICA taxes for payroll paid between March 27, 2020
and December 31, 2020. We have until December 31, 2021, to pay 50% of the FICA
deferral with the remaining 50% to be remitted on or before December 31, 2022.

For the Gannett pension plan in the we, we postponed our contractual contribution and negotiated a payment plan for the $ 5.0 million per quarter at September 30, 2022.

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We expect our capital expenditures for the remainder of 2021 to total
approximately $13.9 million. These capital expenditures are anticipated to be
primarily comprised of projects related to digital product development, costs
associated with our print and technology systems, and system upgrades.

Our leverage may adversely affect our business and financial performance and
restricts our operating flexibility. The level of our indebtedness and our
ongoing cash flow requirements may expose us to a risk that a substantial
decrease in operating cash flows due to, among other things, continued or
additional adverse economic developments or adverse developments in our
business, could make it difficult for us to meet the financial and operating
covenants contained in our New Senior Secured Term Loan, the 2026 Senior Secured
Notes, and the 2027 Notes. In addition, our leverage may limit cash flow
available for general corporate purposes such as capital expenditures and our
flexibility to react to competitive, technological, and other changes in our
industry and economic conditions generally.

Although we currently forecast sufficient liquidity, a resurgence of the
COVID-19 pandemic and related counter-measures could have a material negative
impact on our liquidity and our ability to meet our ongoing obligations,
including obligations under the New Senior Secured Term Loan, the 2026 Senior
Secured Notes, and the 2027 Notes. The Company continues to closely monitor the
COVID-19 pandemic and will continue to take the steps necessary to appropriately
manage liquidity.

CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES

See our most recent Annual Report on Form 10-K for the fiscal year ended
December 31, 2020 for a discussion of our critical accounting policies and use
of estimates. There have been no material changes to our critical accounting
policies and use of estimates discussed in such report.

NON-GAAP FINANCIAL MEASURES

A non-GAAP financial measure is generally defined as a measure that aims to measure historical or future financial performance, financial position or cash flows, but excludes or includes amounts that would not be so excluded or included in the measure. the most comparable. we GAAP measure.

Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net income (loss)
attributable to Gannett are non-GAAP financial measures we believe offer a
useful view of the overall operation of our businesses and may be different than
similarly-titled measures used by other companies. We define Adjusted EBITDA as
Net income (loss) attributable to Gannett before (1) Income tax expense
(benefit), (2) Interest expense, (3) Gains or losses on the early extinguishment
of debt, (4) Non-operating pension income (expense), (5) Loss on convertible
notes derivative, (6) Depreciation and amortization, (7) Integration and
reorganization costs, (8) Other operating expenses, including third-party debt
expenses and acquisition costs, (9) Asset impairments, (10) Goodwill and
intangible impairments, (11) Gains or losses on the sale or disposal of assets,
(12) Share-based compensation, and (13) certain other non-recurring charges,
including gains or losses on the sale of investments. We define Adjusted EBITDA
margin as Adjusted EBITDA divided by total Operating revenues. We define
Adjusted Net income (loss) attributable to Gannett before (1) Gains or losses on
the early extinguishment of debt, (2) Loss on convertible notes derivative, (3)
Integration and reorganization costs, (4) Other operating expenses, including
third-party debt expenses and acquisition costs, (5) Asset impairments, (6)
Goodwill and intangibles impairments, (7) Gains or losses on the sale or
disposal of assets, (8) Gains or losses on the sale of investments, and (9) the
tax impact of the above items.

Management’s Use of Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Net Income (Loss) Attributable to Gannett

Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net income (loss)
attributable to Gannett are not measurements of financial performance under GAAP
and should not be considered in isolation or as an alternative to income from
operations, net income (loss), or any other measure of performance or liquidity
derived in accordance with U.S. GAAP. We believe these non-GAAP financial
measures, as we have defined them, are helpful in identifying trends in our
day-to-day performance because the items excluded have little or no significance
on our day-to-day operations. These measures provide an assessment of
controllable expenses and afford management the ability to make decisions which
are expected to facilitate meeting current financial goals as well as achieve
optimal financial performance.

Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Net Income (Loss) attributable to Gannett provide us with measures of financial performance, independent of items beyond management’s control in the short term, such as impairment. and amortization, taxation, cash flow write-downs and interest charges associated with our capital structure. These measures measure our financial performance based on operational factors that management can impact in the short term, namely

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the cost structure or expenses of the organization. Adjusted EBITDA, Adjusted
EBITDA margin, and Adjusted Net income (loss) attributable to Gannett are
metrics we use to review the financial performance of our business on a monthly
basis.

We use Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net income (loss)
attributable to Gannett as measures of our day-to-day operating performance,
which is evidenced by the publishing and delivery of news and other media and
excludes certain expenses that may not be indicative of our day-to-day business
operating results.

Limits on Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Net Income (Loss) Attributable to Gannett

Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net income (loss)
attributable to Gannett have limitations as analytical tools. They should not be
viewed in isolation or as a substitute for U.S. GAAP measures of earnings or
cash flows. Material limitations in making the adjustments to our earnings to
calculate Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net income
(loss) attributable to Gannett and using these non-GAAP financial measures as
compared to U.S. GAAP net income (loss) include: the cash portion of
interest/financing expense, income tax (benefit) provision, and charges related
to asset impairments, which may significantly affect our financial results.

Management believes these items are important in evaluating our performance,
results of operations, and financial position. We use non-GAAP financial
measures to supplement our U.S. GAAP results in order to provide a more complete
understanding of the factors and trends affecting our business.

Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net income (loss)
attributable to Gannett are not alternatives to net income and margin as
calculated and presented in accordance with U.S. GAAP. As such, they should not
be considered or relied upon as substitutes or alternatives for any such U.S.
GAAP financial measures. We strongly urge you to review the reconciliation of
Net income (loss) attributable to Gannett to Adjusted EBITDA, Adjusted EBITDA
margin, and Adjusted Net income (loss) attributable to Gannett along with our
condensed consolidated financial statements included elsewhere in this Quarterly
Report on Form 10-Q. We also strongly urge you not to rely on any single
financial measure to evaluate our business. In addition, because Adjusted
EBITDA, Adjusted EBITDA margin, and Adjusted Net income (loss) attributable to
Gannett are not measures of financial performance under U.S. GAAP and are
susceptible to varying calculations, the Adjusted EBITDA, Adjusted EBITDA
margin, and Adjusted Net income (loss) attributable to Gannett measures as
presented in this report may differ from and may not be comparable to similarly
titled measures used by other companies.

The table below shows the reconciliation of Net income (loss) attributable to
Gannett to Adjusted EBITDA and Net income (loss) attributable to Gannett margin
to Adjusted EBITDA margin:
                                             Three months ended September 30,              Nine months ended September 30,
In thousands                                     2021                   2020                  2021                   2020
Net income (loss) attributable to Gannett $        14,687           $ 

(31 260) $ 112,514 $ (548,305)
Provision (benefit) for income taxes

                2,984               3,098                   11,567              (22,200)
Interest expense                                   34,603              58,063                  109,370              173,890
Loss on early extinguishment of debt                3,761                 476                   25,996                1,650
Non-operating pension income                      (23,860)            (18,334)                 (71,644)             (54,433)
Loss on convertible notes derivative                    -                   -                  126,600                    -
Depreciation and amortization                      48,107              61,355                  154,452              205,706
Integration and reorganization costs               13,619              13,417                   35,467               73,978
Other operating expenses                                4               1,913                   11,354               10,261
Asset impairments                                   2,301               1,585                    3,134                8,444
Goodwill and intangible impairments                     -                   -                        -              393,446
(Gain) loss on sale or disposal of
assets, net                                          (833)                795                    9,206                1,540
Share-based compensation expense                    4,602               3,844                   13,804               22,812
Other items                                         2,092              (6,972)                   1,509               (1,723)
Adjusted EBITDA (non-GAAP basis)          $       102,067           $  87,980          $       318,301           $  265,066
Net income (loss) attributable to Gannett
margin                                                1.8   %            (3.8) %                  (4.7)  %            (21.7) %
Adjusted EBITDA margin (non-GAAP basis)              12.8   %            10.8  %                  13.4   %             10.5  %



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The table below shows the reconciliation of Net income (loss) attributable to
Gannett to Adjusted Net income (loss) attributable to Gannett:
                                          Three months ended September 30,           Nine months ended September 30,
In thousands                                  2021                2020                  2021                   2020

Net income (loss) attributable to Gannett $ 14,687 $ (31,260)

      $       (112,514)         $ (548,305)
Loss on early extinguishment of debt           3,761                476                    25,996               1,650
Loss on convertible notes derivative               -                  -                   126,600                   -
Integration and reorganization costs          13,619             13,417                    35,467              73,978
Other operating expenses                           4              1,913                    11,354              10,261
Asset impairments                              2,301              1,585                     3,134               8,444
Goodwill and intangible impairments                -                  -                         -             393,446
(Gain) loss on sale or disposal of
assets, net                                     (833)               795                     9,206               1,540
Gain on sale of investments                        -             (7,800)                        -              (7,995)
Subtotal                                      33,539            (20,874)                   99,243             (66,981)
Tax impact of above items                     (7,033)           (25,449)                  (28,042)            (61,364)
Adjusted Net income (loss) attributable
to Gannett (non-GAAP basis)               $   26,506          $ (46,323)    

$ 71,201 $ (128,345)

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