GLOSSARY OF FINANCIAL TERMS 72 operations over periods of up to 40 years. The company adopted a new accounting standard on Dec. 31, 2001, the first day of fiscal 2002, under which goodwill is only written off if it is considered to be impaired. (Also see “Purchase.”) INVENTORIES – Raw materials, principally newsprint, used in the business. Presented below are definitions of certain key financial and operational terms that we hope will enhance your reading and understanding of Gannett’s 2001 Annual Report. ADVERTISING LINAGE – Measurement term for the volume of space sold as advertising in the company’s newspapers; refers to number of column inches, with each newspaper page composed of six columns. NEWSPAPER ADVERTISING REVENUES – Amounts charged to  customers for space (“advertising linage”) purchased in the  company’s newspapers. There are three major types of advertising revenue: retail ads from local merchants, such as department stores; classified ads, which include automotive, real estate and “help  wanted”; and national ads, which promote products or brand names on a nationwide basis. BALANCE SHEET – A summary statement that reflects the  company’s assets, liabilities and shareholders’ equity at a particular point in time. BROADCASTING REVENUES – Primarily amounts charged to  customers for commercial advertising aired on the company’s  television stations as well as radio stations prior to 1998. OPERATING CASH FLOW – Operating income adjusted for major non-cash expenses, depreciation and amortization of intangible assets. CIRCULATION – The number of newspapers sold to customers each day (“paid circulation”). The company keeps separate records of morning, evening and Sunday circulation. PRO FORMA – A manner of presentation intended to improve comparability of financial results; it assumes business purchases/ dispositions were completed at the beginning of the earliest period discussed (i.e., results are compared for all periods but only for businesses presently owned). CIRCULATION REVENUES – Amounts charged to newspaper read- ers or distributors. Charges vary from city to city and depend on the type of sale (i.e., subscription or single copy) and distributor arrangements. COMPREHENSIVE INCOME – The change in equity (net assets) of the company from transactions and other events from non-owner sources. Comprehensive income comprises net income and other items previously reported directly in shareholders’ equity, principally  foreign currency translation adjustment. PURCHASE – A business acquisition. The acquiring company records at its cost the acquired assets less liabilities assumed. The reported income of an acquiring company includes the operations of the acquired company from the date of acquisition. RESULTS OF CONTINUING OPERATIONS – A key section of the statement of income which presents operating results for the com- pany’s principal ongoing businesses (newspaper and broadcasting). CURRENT ASSETS – Cash and other assets that are expected to be converted to cash within one year. CURRENT LIABILITIES – Amounts owed that will be paid within one year. RETAINED EARNINGS – The earnings of the company not paid out as dividends to shareholders. DEPRECIATION – A charge against the company’s earnings that allocates the cost of property, plant and equipment over the  estimated useful lives of the assets. STATEMENT OF CASH FLOWS – A financial statement that reflects cash flows from operating, investing and financing activities,  providing a comprehensive view of changes in the company’s cash and cash equivalents. STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY – A statement that reflects changes in the common stock, retained earnings and other equity accounts. DISCONTINUED OPERATION – A principal business that has been sold and is reported separately from continuing operations in the statement of income. DIVIDEND – Payment by the company to its shareholders of a  portion of its earnings. STATEMENT OF INCOME – A financial statement that reflects the company’s profit by measuring revenues and expenses. EARNINGS PER SHARE  (BASIC) – The company’s earnings divided by the average number of shares outstanding for the period. EARNINGS PER SHARE  (DILUTED) – The company’s earnings divided by the average number of shares outstanding for the period, giving effect to assumed dilution from outstanding stock options and stock incentive rights. STOCK INCENTIVE RIGHTS – An award that gives key employees the right to receive shares of the company’s stock without payment at the end of an incentive period, conditioned on their continued employment throughout the incentive period. STOCK OPTION – An award that gives key employees the right to buy shares of the company’s stock, pursuant to a vesting schedule, at the market price of the stock on the date of the award. EXCESS OF ACQUISITION COST OVER FAIR VALUE OF ASSETS ACQUIRED – In a business purchase, this represents the excess of amounts paid over fair value of tangible assets acquired (also referred to as goodwill). Generally this cost is written off against