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## MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL STATEMENTS 

The management of the company has prepared and is responsi- ble for the consolidated financial statements and related financial information included in this report. These financial statements were prepared in accordance with accounting principles generally accepted in the United States of America. These financial state- ments necessarily include amounts determined using manage- ment’s best judgments and estimates. 

The company’s accounting and other control systems provide reasonable assurance that assets are safeguarded and that the books and records reflect the authorized transactions of the company. Underlying the concept of reasonable assurance is the premise that the cost of control not exceed the benefit derived. Management believes that the company’s accounting and other control systems appropriately recognize this cost/benefit relationship. 

The company’s independent accountants, Pricewaterhouse- Coopers LLP, provide an independent assessment of the degree to which management meets its responsibility for fairness in financial reporting. They regularly evaluate the company’s system of internal accounting controls and perform such tests and other procedures as they deem necessary to reach and express an opin- ion on the financial statements. The PricewaterhouseCoopers LLP report appears on page 47. 

The Audit Committee of the Board of Directors is responsi- ble for reviewing and monitoring the company’s financial reports and accounting practices to ascertain that they are appropriate in the circumstances. The Audit Committee consists of four non- management directors, and meets to discuss audit and financial reporting matters with representatives of financial management, the internal auditors and the independent accountants. The internal auditors and the independent accountants have direct access to the Audit Committee to review the results of their examinations, the adequacy of internal accounting controls and the quality of financial reporting. 

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## MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION 

## Basis of reporting 

Following is a discussion of the key factors that have affected the company’s business over the last three fiscal years. This commentary should be read in conjunction with the company’s financial state- ments, the 11-year summary of operations and the Form 10-K information that appear in the following sections of this report. 

Critical accounting policies and the use of estimates: The com- pany prepares its financial statements in accordance with generally accepted accounting principles which require the use of estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses and related disclosure of contingent matters. The company bases its estimates on historical experience, actuarial studies and other assumptions, as appropriate, concerning the car- rying values of its assets and liabilities and disclosure of contingent matters. The company re-evaluates its estimates on an ongoing basis. Actual results could differ from these estimates. 

Critical accounting policies for the company involve its assess- ment of the recoverability of its long-lived assets, including goodwill and other intangible assets, which are based on such factors as esti- mated future cash flows and current fair value estimates of business units. The company’s accounting for pension and retiree medical benefits requires the use of various estimates concerning the work force, interest rates, plan investment return, and involves the use of advice from consulting actuaries. The company’s accounting for income taxes in the U.S. and foreign jurisdictions is sensitive to interpretation of various laws and regulations therein, and to company policy and expectations as to the repatriation of earnings from foreign sources. 

Please refer to page 35 of this report for a more complete discussion of all of the company’s significant accounting policies. 

The company’s fiscal year ends on the last Sunday of the calendar year. The company’s 2001 fiscal year ended on Dec. 30, 2001, and encompassed a 52-week period. The company’s 2000 fiscal year encompassed a 53-week period and its 1999 fiscal year covered a 52-week period. 

## Business acquisitions, exchanges and dispositions 

## 2001 

During 2001, the company purchased the remaining 36% interest in WKYC-TV, Cleveland, that it did not previously own. Additionally, the company purchased several small non-daily publications in the U.S. and in the U.K. These acquisitions, which had an aggregate purchase price of approximately $186 million, were accounted for under the purchase method of accounting. The company contributed its Marietta (Ohio) Times newspaper to the Gannett Foundation in May 2001. The Gannett Foundation is a not-for- profit, private foundation that makes charitable awards in the com- munities in which Gannett operates its newspapers and television stations. The company sold its daily newspaper in Lansdale, Pa., in September 2001. These business acquisitions and dispositions did not materially affect the company’s financial position or results of operations. 

