Advertising revenue gains at Better Homes and Gardens, Family
Circle drive increase in National Media Group operating profit DES
MOINES, Iowa, Oct. 29 /PRNewswire-FirstCall/ -- Meredith
Corporation (NYSE:MDP), the leading media and marketing company
serving American women, today reported fiscal 2010 first quarter
earnings per share of $0.40, compared to $0.41 in the year-ago
period. Revenues were $332 million, compared to $364 million in the
prior-year period. Fiscal 2010 first quarter results included a
benefit of $0.06 per share reflecting a favorable adjustment to
deferred income tax liabilities as a result of state and local
legislation enacted during the quarter. Excluding the tax benefit,
first quarter earnings per share were $0.34, in-line with
previously stated expectations. In the first quarter of fiscal
2010, Meredith recorded $5 million less ($0.07 per share) in net
political advertising revenues when compared to the prior-year
period. "We continued to make meaningful progress on the key
elements of our performance improvement plan," said Meredith
President and Chief Executive Officer Stephen M. Lacy. "Advertising
revenues across our core businesses outperformed both the magazine
and television industries in the quarter. Of note, our two
largest-circulation magazines - Better Homes and Gardens and Family
Circle - grew advertising revenues 3 percent and 13 percent,
respectively, during the quarter compared to the prior-year
period." Key elements of Meredith's performance improvement plan -
which the company has been executing for the last five quarters -
include (1) gaining market share; (2) increasing consumer
connections; (3) growing new revenues; and (4) prudently managing
expenses and reducing debt. Lacy pointed to these fiscal 2010 first
quarter highlights as evidence of Meredith's progress: --
Sequential quarterly improvement in advertising performance in both
Meredith's National (formerly Publishing) and Local (formerly
Broadcasting) media groups -- Significant advertising revenue share
gains by many of Meredith's major consumer magazines -- Increases
in online traffic at Meredith Web sites and in news viewership in
key television markets -- Double-digit revenue growth in new
revenue streams such as brand licensing, retransmission fees and
video content creation -- An 8 percent decline in total company
operating expenses and a $20 million reduction in debt OPERATING
DETAIL National Media Group Fiscal 2010 first quarter National
Media Group operating profit was $39 million, a 14 percent increase
over the $34 million earned in the prior-year period. Revenues were
$272 million versus $294 million. Advertising revenues were $137
million - a decline of 5 percent versus the prior-year quarter -
but the third consecutive quarter of advertising performance
improvement. Meredith's share of overall magazine industry
advertising revenues increased to 12.2 percent during the first
quarter of fiscal 2010 from 8.7 percent in the prior-year period,
according to the latest data from the Publishers Information
Bureau. Eleven of Meredith's 14 measured titles increased share of
advertising revenues during the quarter, according to PIB. Profit
and related margin in Meredith's circulation activities increased
in the first quarter of fiscal 2010 compared to the prior-year
period, driven by efficiencies in both subscription and newsstand
operations. Total circulation revenues declined 2 percent,
primarily as a result of fewer Special Interest Media titles
published and soft retail sales. Monthly average unique visitors
across Meredith's National Media Web sites rose more than 30
percent to nearly 17 million in the first quarter of fiscal 2010
from the prior-year period, and page views averaged nearly 190
million per month. The total number of videos viewed per month rose
to 1.4 million. Meredith generated 855,000 online subscriptions
during the quarter. Other revenues within the National Media Group
declined in the first quarter of fiscal 2010 compared to the
prior-year period as reductions in Meredith Integrated Marketing
and Meredith Book revenues were partially offset by higher revenues
in Brand Licensing. Meredith Integrated Marketing was impacted by
recession-related cutbacks in existing programs, primarily in the
automotive and retail sectors, as well as fewer new programs
launched compared to the prior-year period. Revenues at Meredith
Books declined and operating profit increased, as planned, due to
implementation of the previously announced licensing agreement with
John Wiley and Sons Inc. Brand Licensing benefitted primarily from
the expansion of Meredith's relationship with Walmart, including a
tripling of Better Homes and Gardens-branded SKUs to 1,500 from the
prior-year period. National Media Group operating expenses declined
10 percent to $233 million in the first quarter of fiscal 2010
compared to the prior-year period, including a 9 percent decrease
in paper prices. "While we are still operating in a difficult
environment, national media advertising revenues are trending in
the right direction, and we continue to outperform our major peers
and gain share," Lacy said. "Additionally, our efforts to manage
expenses are having a meaningful impact as National Media Group
operating margins increased to 14.2 percent in the quarter from
11.5 percent in the prior-year period." Local Media Group Fiscal
2010 first quarter Local Media Group operating profit was $2
million, compared to $11 million in the prior-year period,
primarily due to $5 million less in net political advertising
revenues and continued weakness in automotive advertising across
the industry. Total revenues were $61 million, compared to $70
million last year. Non-political revenues were $60 million - a
decline of 7 percent in the first quarter of fiscal 2010 versus the
prior-year period - but an improvement over the 20 percent decline
reported in the fourth quarter of fiscal 2009. Non-political
results were also significantly better than the industry as a
whole, according to the most recent data available from the
Television Bureau of Advertising. Automotive-related advertising
accounted for more than half of the decline during the first
quarter of fiscal 2010. During the July sweeps, several Meredith
stations increased viewership in key day parts. Stations in
Portland, Hartford and Las Vegas captured a larger share of morning
news viewers and maintained their #1 positions. Additionally,
Atlanta doubled its morning news viewership. In late news, where ad
rates are the highest, Hartford's viewership rose 25 percent,
Atlanta rose 22 percent, and Phoenix rose 14 percent. Revenues from
retransmission fees nearly doubled in the first quarter of fiscal
2010 from the prior-year period, reflecting Meredith's successful
renegotiation of retransmission agreements with all seven of the
major cable operators in its markets. Revenues at Meredith Video
Solutions, Meredith's in-house video production group, grew
strongly. The gains were driven primarily by growth in custom video
projects for corporate clients, as well as continued expansion of
the daily Better television show - now carried in more than 50
markets reaching more than 40 percent of U.S. households. Local
Media Group operating expenses declined 2 percent in the first
quarter of fiscal 2010, compared to the prior-year period. Meredith
continued to implement its plan to reduce expenses and improve
efficiency by centralizing certain functions - including master
control, traffic and research - across its television stations. The
benefits from these activities are expected to be realized starting
in the second half of fiscal 2010. "We're encouraged by the
progress made by our Local Media Group in the first quarter of
fiscal 2010," Lacy said. "Advertising continued to improve as the
quarter progressed, and we grew other sources of revenue, including
retransmission fees and video production activities." OTHER
FINANCIAL INFORMATION Meredith generated nearly $30 million in cash
flow from operations during the first quarter of fiscal 2010.
Meredith's total debt was $360 million at Sept. 30, 2009, $20
million less than at the prior fiscal year end. Meredith's
debt-to-EBITDA ratio was well under existing debt covenants at 1.7
to 1. All earnings per share figures in the text of this release
are diluted. Both basic and diluted earnings per share can be found
in the attached condensed consolidated statements of earnings.
OUTLOOK Looking at the second quarter of fiscal 2010, with two of
three magazine issues closed in the National Media Group,
advertising revenues are currently down in the mid single-digit
range. Local Media Group non-political advertising pacings are
currently down 8 percent. The Local Media Group will be cycling
against $17 million of net political advertising revenues recorded
in the second quarter of fiscal 2009. Meredith currently expects
fiscal 2010 second quarter earnings per share to range from $0.33
to $0.38. Looking to the remainder of fiscal 2010, there is limited
visibility into customers' advertising budgets, which generally
reset effective January 1. Meredith continues to expect fiscal 2010
earnings per share to range from $1.60 to $2.00, excluding the
impact of the previously mentioned deferred income tax liability
adjustment. Meredith expects its effective tax rate to be
approximately 40 percent in both the second quarter and for the
full fiscal year, excluding the impact of the previously mentioned
deferred income tax liability adjustment. A number of uncertainties
remain that may affect Meredith's outlook as stated in this press
release for the second fiscal quarter and full year of 2010. These
uncertainties are referenced below under "Safe Harbor" and in
certain SEC filings. CONFERENCE CALL WEBCAST Meredith will host a
conference call on Oct. 29, 2009, at 11:00 a.m. EDT (10:00 a.m.
CDT) to discuss fiscal 2010 first quarter results. A live webcast
will be accessible to the public on the company's Web site,
http://www.meredith.com/, and a replay will be available for one
week after the call. A transcript will be available within 48 hours
following the conference call at http://www.meredith.com/.
RATIONALE FOR USE AND ACCESS TO NON-GAAP MEASURES Management uses
and presents GAAP and non-GAAP results to evaluate and communicate
the performance of the company. Non-GAAP measures should not be
construed as alternatives to GAAP measures. EBITDA is a common
supplemental measure of performance used by investors and financial
analysts. Management believes that EBITDA provides an additional
analytical tool to clarify the company's results from core
operations and delineate underlying trends. Meredith does not use
EBITDA as a measure of liquidity or funds available for
management's discretionary use because it includes certain
contractual and non-discretionary expenditures. Results excluding
the adjustment to deferred income tax liabilities is also a
supplemental non-GAAP financial measure. Management believes this
adjustment is not reflective of Meredith's ongoing business
activities. While results excluding the tax adjustment are not a
substitute for reported earnings results under GAAP, management
believes this information is useful as an aid in better
understanding Meredith's current performance, performance trends
and financial condition. Reconciliations of non-GAAP to GAAP
measures are included in the attached tables. The attached
consolidated financial statements and reconciliation tables will be
made available at http://www.meredith.com/. SAFE HARBOR This
release contains certain forward-looking statements that are
subject to risks and uncertainties. These statements are based on
management's current knowledge and estimates of factors affecting
the company and its operations. Statements in this announcement
that are forward-looking include, but are not limited to, the
statements regarding broadcasting pacings and publishing
advertising revenues, along with the company's earnings per share
outlook for the second fiscal quarter and rest of fiscal 2010.
Actual results may differ materially from those currently
anticipated. Factors that could adversely affect future results
include, but are not limited to, downturns in national and/or local
economies; a softening of the domestic advertising market; world,
national or local events that could disrupt broadcast television;
increased consolidation among major advertisers or other events
depressing the level of advertising spending; the unexpected loss
or insolvency of one or more major clients; the integration of
acquired businesses; changes in consumer reading, purchasing and/or
television viewing patterns; increases in paper, postage, printing
or syndicated programming costs; changes in television network
affiliation agreements; technological developments affecting
products or methods of distribution; changes in government
regulations affecting the company's industries; unexpected changes
in interest rates; and the consequences of acquisitions and/or
dispositions. The company undertakes no obligation to update any
forward-looking statement, whether as a result of new information,
future events or otherwise. ABOUT MEREDITH CORPORATION Meredith
Corporation (NYSE:MDP; http://www.meredith.com/) is the leading
media and marketing company serving American women. Meredith
combines well-known national brands - including Better Homes and
Gardens, Parents, Ladies' Home Journal, Family Circle, American
Baby, Fitness and More - with local television brands in
fast-growing markets. Meredith is the industry leader in creating
content in key consumer interest areas such as home, family, health
and wellness and self-development. Meredith uses multiple
distribution platforms - including print, television, online,
mobile and video - to give consumers content they desire and to
deliver the messages of its marketing partners. Additionally,
Meredith uses its many assets to create powerful custom marketing
solutions for many of the nation's top brands and companies.
Meredith has significantly added to its capabilities in this area
through the acquisition of cutting-edge companies in areas such as
online, word-of-mouth and database marketing. Meredith Corporation
and Subsidiaries Condensed Consolidated Statements of Earnings
(Unaudited) -------------------------------- ---- ---- Three Months
Ended September 30, 2009 2008 -------------------------------- ----
---- (In thousands except per share data) Revenues Advertising
$191,816 $211,826 Circulation 69,879 71,413 All other 70,720 80,831
--------- ------ ------ Total revenues 332,415 364,070
-------------- ------- ------- Operating expenses Production,
distribution, and editorial 151,093 170,111 Selling, general, and
administrative 139,637 144,952 Depreciation and amortization 10,103
10,856 ----------------------------- ------ ------ Total operating
expenses 300,833 325,919 ------------------------ ------- -------
Earnings from operations 31,582 38,151 Interest income 10 120
Interest expense (5,041) (5,434) ---------------- ------ ------
Earnings from continuing operations before income taxes 26,551
32,837 Income taxes 8,210 13,769 ------------ ----- ------ Earnings
from continuing operations 18,341 19,068 Loss from discontinued
operations, net of taxes - (431)
----------------------------------------------- --- ---- Net
earnings $18,341 $18,637 ------------ ------- ------- Basic
earnings per share Earnings from continuing operations $0.41 $0.42
Discontinued operations - (0.01) ----------------------- --- -----
Basic earnings per share $0.41 $0.41 ------------------------ -----
----- Basic average shares outstanding 45,158 45,241
-------------------------------- ------ ------ Diluted earnings per
share Earnings from continuing operations $0.40 $0.42 Discontinued
operations - (0.01) ----------------------- --- ----- Diluted
earnings per share $0.40 $0.41 -------------------------- -----
----- Diluted average shares outstanding 45,317 45,368
---------------------------------- ------ ------ Dividends paid per
share $0.225 $0.215 ------------------------ ------ ------ Meredith
Corporation and Subsidiaries Segment Information (Unaudited)
--------------------------------- ---- ---- Three Months Ended
September 30, 2009 2008 --------------------------------- ---- ----
(In thousands) Revenues National media group $271,604 $293,667
Local media group Non-political advertising 53,671 61,648 Political
advertising 943 5,871 Other revenues 6,197 2,884 -----------------
----- ----- Total local media group 60,811 70,403
----------------------- ------ ------ Total revenues $332,415
$364,070 -------------- -------- -------- Operating profit National
media group $38,593 $33,890 Local media group 2,400 10,696
Unallocated corporate (9,411) (6,435) ---------------------- ------
------ Income from operations $31,582 $38,151
---------------------- ------- ------- Depreciation and
amortization National media group $3,507 $3,826 Local media group
6,122 6,069 Unallocated corporate 474 961 ----------------------
--- --- Total depreciation and amortization $10,103 $10,856
----------------------------------- ------- ------- EBITDA(1)
National media group $42,100 $37,716 Local media group 8,522 16,765
Unallocated corporate (8,937) (5,474) ---------------------- ------
------ Total EBITDA(1) $41,685 $49,007 ------------- -------
------- (1) EBITDA is earnings from continuing operations before
interest, taxes, depreciation, and amortization. Meredith
Corporation and Subsidiaries Condensed Consolidated Balance Sheets
(Unaudited) September 30, June 30, Assets 2009 2009 ------ ----
---- (In thousands) Current assets Cash and cash equivalents
$14,259 $27,910 Accounts receivable, net 211,802 192,367
Inventories 29,592 28,151 Current portion of subscription
acquisition costs 54,466 60,017 Current portion of broadcast rights
17,014 8,297 Other current assets 19,293 23,398
-------------------- ------ ------ Total current assets 346,426
340,140 -------------------- ------- ------- Property, plant, and
equipment 449,892 444,904 Less accumulated depreciation (257,277)
(253,597) ----------------------------- -------- -------- Net
property, plant, and equipment 192,615 191,307 Subscription
acquisition costs 64,274 63,444 Broadcast rights 5,429 4,545 Other
assets 46,269 45,907 Intangible assets, net 559,233 561,581
Goodwill 462,379 462,379 -------- ------- ------- Total assets
$1,676,625 $1,669,303 ------------ ---------- ----------
Liabilities and Shareholders' Equity
------------------------------------ Current liabilities Current
portion of long-term debt $75,000 $- Current portion of long-term
broadcast rights payable 19,615 10,560 Accounts payable 84,455
86,381 Accrued expenses and other liabilities 90,439 81,544 Current
portion of unearned subscription revenues 162,640 170,731
---------------------------------------- ------- ------- Total
current liabilities 432,149 349,216 Long-term debt 285,000 380,000
Long-term broadcast rights payable 12,956 11,851 Unearned
subscription revenues 146,092 148,393 Deferred income taxes 69,273
64,322 Other noncurrent liabilities 108,992 106,138
---------------------------- ------- ------- Total liabilities
1,054,462 1,059,920 ----------------- --------- ---------
Shareholders' equity Common stock 36,144 35,934 Class B stock 9,130
9,133 Additional paid-in capital 57,812 53,938 Retained earnings
550,138 542,006 Accumulated other comprehensive loss (31,061)
(31,628) ------------------------------------ ------- ------- Total
shareholders' equity 622,163 609,383 --------------------------
------- ------- Total liabilities and shareholders' equity
$1,676,625 $1,669,303 ------------------------------------------
---------- ---------- Meredith Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
-------------------------------- ---- ---- Three Months Ended
September 30, 2009 2008 -------------------------------- ---- ----
(In thousands) Net cash provided by operating activities $29,043
$44,549 ----------------------------------------- ------- -------
Cash flows from investing activities Acquisitions of businesses
(5,124) (726) Additions to property, plant, and equipment (8,101)
(9,608) Proceeds from dispositions of assets - 636
------------------------------------ --- --- Net cash used in
investing activities (13,225) (9,698)
-------------------------------------- ------- ------ Cash flows
from financing activities Proceeds from issuance of long-term debt
75,000 100,000 Repayments of long-term debt (95,000) (120,000)
Purchases of Company stock (18) (15,791) Dividends paid (10,209)
(9,747) Proceeds from common stock issued 713 860 Excess tax
benefits from share-based payments 67 853 Other (22) - ----- ---
--- Net cash used in financing activities (29,469) (43,825)
-------------------------------------- ------- ------- Net decrease
in cash and cash equivalents (13,651) (8,974) Cash and cash
equivalents at beginning of period 27,910 37,644
------------------------------------------------ ------ ------ Cash
and cash equivalents at end of period $14,259 $28,670
------------------------------------------ ------- ------- Meredith
Corporation and Subsidiaries Table 1 Supplemental Disclosures
Regarding Non-GAAP Financial Measures EBITDA Consolidated EBITDA,
which is reconciled to earnings from continuing operations in the
following tables, is defined as earnings from continuing operations
before interest, taxes, depreciation, and amortization. Segment
EBITDA is a measure of segment earnings before depreciation and
amortization. Segment EBITDA margin is defined as segment EBITDA
divided by segment revenues. Three Months Ended September 30, 2009
------------------------------------- National Local Media Media
Unallocated Group Group Corporate Total ------------- --------
------ ----------- ----- (In thousands) Revenues $271,604 $60,811
$- $332,415 -------- ------- --- -------- Operating profit $38,593
$2,400 $(9,411) $31,582 Depreciation and amortization 3,507 6,122
474 10,103 ----- ----- --- ------ EBITDA $42,100 $8,522 $(8,937)
41,685 ------- ------ ------- Less: Depreciation and amortization
(10,103) Net interest expense (5,031) Income taxes (8,210) ------
Earnings from continuing operations $18,341 ------- Segment EBITDA
margin 15.5% 14.0% ---- ---- Three Months Ended September 30, 2008
------------------------------------- National Local Media Media
Unallocated Group Group Corporate Total ------------- --------
------ ----------- ----- (In thousands) Revenues $293,667 $70,403
$- $364,070 -------- ------- --- -------- Operating profit $33,890
$10,696 $(6,435) $38,151 Depreciation and amortization 3,826 6,069
961 10,856 ----- ----- --- ------ EBITDA $37,716 $16,765 $(5,474)
49,007 ------- ------- ------- Less: Depreciation and amortization
(10,856) Net interest expense (5,314) Income taxes (13,769) -------
Earnings from continuing operations $19,068 ------- Segment EBITDA
margin 12.8% 23.8% --------------------- ---- ---- DATASOURCE:
Meredith Corporation CONTACT: Shareholder/Financial Analyst
Contact, Mike Lovell, Director of Investor Relations,
+1-515-284-3622, , or Media Contact, Art Slusark, VP/Corporate
Communications, +1-515-284-3404, , both of Meredith Corporation Web
Site: http://www.meredith.com/
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