MARTHA STEWART LIVING OMNIMEDIA, INC.
ANNOUNCES FOURTH QUARTER and FULL-YEAR 2006 RESULTS
ANNOUNCES FOURTH QUARTER and FULL-YEAR 2006 RESULTS
2006 Revenues Grow 36%;
Broad-Based Growth in All Business Segments;
Full-Year Results Exceed Guidance;
2006 Operating Loss Improves to $(2.8) Million from $(78.3) Million in 2005
Broad-Based Growth in All Business Segments;
Full-Year Results Exceed Guidance;
2006 Operating Loss Improves to $(2.8) Million from $(78.3) Million in 2005
NEW YORK, New York, February 28, 2006— Martha Stewart Living Omnimedia, Inc. (NYSE: MSO) today announced its results for the fourth quarter and for the year, showing significant gains in revenue, operating income and adjusted EBITDA as the company enters a new phase of growth.
President and Chief Executive Officer Susan Lyne said: “The final quarter of 2006 caps what has been a year of robust and steady growth for our company. With 36 percent growth in revenue, driven by increases across all business segments, our 2006 results came in ahead of our guidance even with additional investment in key initiatives likeBlueprintand our marthastewart.com website.
“We are on track to deliver another strong performance in 2007. This is an important year for us as we continue executing on our strategy to diversify our revenue streams and broaden our channels of distribution. In the coming months, we will be launching many of the new Merchandising initiatives announced in 2006, including ourMartha Stewart Collectionof home products at Macy’s and on macys.com in late summer; ourMartha Stewart Craftsline at Michaels’ more than 900 arts & crafts stores in May; and ourMartha Stewart Colorspaint program with Lowe’s beginning in March. We are also introducing our new website — offering a rich multimedia experience, with enhanced search and guided navigation to expose the most relevant content from our site and the web; our digital offerings will continue to evolve throughout 2007 with features that allow for greater personalization as well as social networking and community.
1
“We head into 2007 with tremendous confidence in our strategic direction, creative vitality, and ability to execute on plan. We have moved from a period of recovery to one of expansive growth, and remain focused on investing and delivering for our shareholders.”
Fourth Quarter 2006 Summary
Revenuesrose 15% to $97.0 million, compared to $84.6 million for the fourth quarter of 2005, driven by broad-based growth across all business segments. The fourth-quarter results benefited from an increase in high-margin advertising revenue across Publishing and Internet along with the contractual minimum royalty guarantees from our program with Kmart.
Operating incomefor the fourth quarter improved to $14.6 million, compared to $2.5 million for the fourth quarter of 2005. Operating income for the quarter included a onetime $2.8 million gain related to the successful termination of our DVD agreement with Warner Home Video.
Adjusted EBITDAfor the fourth quarter of 2006 was $21.5 million, compared to adjusted EBITDA of $11.7 million for the fourth quarter of 2005.
Earnings per share from continuing operationswas $0.31 for the fourth quarter of 2006, compared to $0.06 for the fourth quarter of 2005.
Full-Year 2006 Summary
Full-year revenuesrose 36% to $288.3 million, compared to $212.4 million in 2005. The increase was driven by strong ad sales growth in Publishing and Internet, a full year ofThe Martha Stewart ShowandMartha Stewart Living Radio, as well as new Merchandising programs and an increase in contractual minimum royalty guarantees from our program with Kmart.
2
Full-year operating lossimproved to $(2.8) million, compared to $(78.3) million for 2005. 2006 results benefited from the increase in high-margin advertising revenue and royalty payments. 2005 results included higher levels of non-cash compensation associated with the vesting of a portion of a warrant granted in connection with the production of the syndicated TV program.
Full-year adjusted EBITDAwas $19.6 million, compared to a $(25.9) million adjusted EBITDA loss in 2005.
Full-year earnings per share loss from continuing operationswas $(0.32), compared to a loss of $(1.48) for 2005. Excluding the legal settlement, full-year 2006 earnings per share from continuing operations would have been $0.01.
Fourth Quarter 2006 Results by Segment
Publishing
Revenuesin the fourth quarter of 2006 rose 5% to $43.1 million from $41.1 million, driven by higher advertising pages and rates, led by an 11% increase in ad pages atMartha Stewart Livingand a 36% increase in pages atEveryday Food. Results from the prior year include revenue of $2.0 million fromThe Martha Rulesbook and $1.6 million from ourKidsmagazine.
Operating losswas $(2.2) million for the fourth quarter of 2006, compared to an operating loss of $(1.0) million in the fourth quarter of 2005. Results include our ongoing investment inBlueprint,which totaled $2.1 million for the quarter and $6.0 million for the year, as we develop the magazine and build our staff.
Adjusted EBITDA losswas $(1.3) million, compared to an adjusted EBITDA loss of $(0.3) million in the fourth quarter of 2005.
3
Highlights
• | Ad revenue rose 26 percent to $23.9 million, driven by growth across all titles, especially our flagship magazine,Martha Stewart Living. | ||
• | Our magazines continue to enjoy rate base increases:Martha Stewart Livingis currently at 1,950,000, up from 1,900,000 at year-end 2006;Everyday Foodis currently at 875,000, up from 850,000 at year-end 2006;Body + Soulis currently at 450,000, up from 400,000 at year-end 2006; andBlueprintis currently at 350,000, up from 250,000 at year-end 2006. | ||
• | We publishedMartha Stewart’s Homekeeping Handbook(Clarkson Potter, 2006), which hit the bestseller lists immediately after its publication in November.The Washington Post described it as “the ultimate housekeeping resource.” | ||
• | Everyday Foodachieved profitability in 2006, a year ahead of schedule. | ||
• | The Publishing segment announced two important new hires. Michael Boodro joined the company as the new editor ofMartha Stewart Living, our flagship magazine. Amy Wilkins is the new Senior Vice President, Publisher forBlueprintandMartha Stewart Weddings. |
Broadcasting
Revenuesin the fourth quarter of 2006 were $13.4 million, up from $11.0 million in the fourth quarter of 2005. The current year period included a full quarter of revenue from theMartha Stewart Living Radiochannel on SIRIUS Satellite Radio, which debuted near the end of the quarter in the prior year period.
4
Operating incomewas break even for the fourth quarter of 2006, compared to an operating loss of $(1.0) million in the fourth quarter of 2005. Fourth quarter results include a one-time $2.8-million gain related to the successful termination of our DVD agreement with Warner Home Video.
Adjusted EBITDAwas $3.1 million for the fourth quarter of 2006, compared to an adjusted EBITDA loss of $(0.1) million in the prior year’s fourth quarter.
Highlights
• | We sold out our ad inventory for the second season ofThe Martha Stewart Showat above-market increases. The show has been renewed for a third season in more than 85 percent of markets, an early endorsement of the show that serves as a vibrant platform for all our business segments. | ||
• | Ratings forThe Martha Stewart Showhave grown to 1.5 from 1.3 earlier this season, and hit a season high 1.6 last week. In contrast to last year, we have maintained our holiday-season spike in ratings through the post-holiday season. | ||
• | We hired Bernie Young, the Emmy-winning executive producer of “The Rosie O’Donnell Show,” to be the co-executive producer ofThe Martha Stewart Show. | ||
• | We kicked off the third season of our profitableEveryday FoodTV series with strong ratings that continue to rise. The show airs on PBS stations nationwide and is sold out for the entire season. |
Merchandising
Revenueswere $35.2 million for the fourth quarter of 2006, as compared to $28.1 million in the prior year’s fourth quarter. The current quarter included the contractual minimum royalty guarantees from our program with Kmart. Actual sales forMartha Stewart Everyday products declined in the quarter, with weakness in the soft home category; we are refreshing that category in 2007.
5
Operating incomewas $29.5 million for the fourth quarter of 2006, compared to $23.0 million in the fourth quarter of 2005.
Adjusted EBITDAwas $30.1 million for the fourth quarter of 2006, compared to $23.4 million in the fourth quarter of 2005.
Highlights
• | We delivered the inaugural line of approximately 1,500 SKUs for theMartha Stewart Collectionat Macy’s. The reception from Macy’s buyers has been positive and we are on track for a late summer launch. | ||
• | Our two existing Martha Stewart-created KB Home communities continue to sell in a softened residential real estate market. Two additional communities opened in Katy, TX, and Perris, CA, in early 2007; we expect to break ground on four more in the coming months. | ||
• | We have completed our introductoryMartha Stewart Craftsline of paper-based crafting and storage products. The line, which features nearly 675 SKUs, will launch exclusively in more than 900 Michaels arts & crafts stores in the United States and Canada in May, with independent retailers to follow later in the year. | ||
• | We introduced the Katonah Collection, the fifth furniture line fromMartha Stewart Furniturewith Bernhardt. The new collection features 45 SKUs of quality furniture for all areas of the home and is available to customers at furniture retailers nationwide as of February 2007. | ||
• | We began offering ourMartha Stewart Furniturewith Bernhardt in approximately 60 Macy’s stores; sales have been robust. |
6
• | We hired Elizabeth Talerman to serve as Vice President, Senior Director of Marketing for our Merchandising business segment. |
Internet
Revenuesrose 24% year-over-year to $5.4 million in the fourth quarter of 2006 from $4.3 million in the fourth quarter of 2005, driven by higher ad sales resulting from increases in CPMs and sell-through rates. In addition, results benefited from the recognition of a portion of a guaranteed payment associated with our Kodak agreement.
Operating incomewas $0.2 million in the fourth quarter of 2006, compared with operating income of $0.1 million in the fourth quarter of 2005. Increased revenue was offset by higher expenses as we invest in staff and technology in advance of the website’s relaunch in first quarter 2007.
Adjusted EBITDAwas $0.3 million in the fourth quarter of 2006, compared to adjusted EBITDA of $0.3 million in the fourth quarter of 2005.
Highlights
• | Advertising revenue for 2006 was $8.2 million, up from $2.4 million in 2005. | ||
• | We completed the development of our new website and are in the final testing phase prior to the relaunch in the first quarter of 2007. | ||
• | We hired Beth-Ann Eason as Senior Vice President for the Internet division. In this newly created position, Ms. Eason oversees all advertising, marketing and business operations for the Internet. She previously served as Vice President, Category Development at Yahoo! Inc. |
Corporate Expenses
Corporate expenses, including depreciation and amortization and non-cash equity compensation, were $(13.0) million, compared to $(18.6) million in the prior year’s
7
quarter, which included higher levels of non-cash compensation related to certain warrants granted in connection with the airing of “The Apprentice: Martha Stewart.” Excluding depreciation and amortization and non-cash equity compensation, corporate expenses decreased to $(10.6) million from $(11.6) million in the prior year period.
Trends and Outlook
Howard Hochhauser, Chief Financial Officer, commented: “We are encouraged by the considerable improvement in our business in 2006 and look forward to delivering increased value to our shareholders in 2007. We expect to generate meaningful free cash flow and positive net income in 2007 while continuing to invest in initiatives such asBlueprintmagazine and our website relaunch. These investments will allow us to diversify our revenue streams and increase returns.
“For the full-year 2007, we are expecting revenue in the range of $330 - $340 million, operating income in the range of $5.5 - $8.5 million and adjusted EBITDA in the range of $32 - $35 million, including an investment of $8 million inBlueprintmagazine.
“For the first quarter of 2007, we are expecting revenue in the range of $62 - $66 million, operating loss in the range of $18 - $19 million and adjusted EBITDA loss in the range of $6 - $7 million, including an investment of $2.5 million inBlueprintmagazine, and a loss in our Internet segment of $3.0 million as we support our infrastructure in advance of the launch.”
Stock-Based Compensation
In accordance with a new accounting rule, FASB Staff Accounting Bulletin No. 107, stock-based compensation is no longer presented as a separate line on our income statement. The stock-based compensation is now presented in the same line as cash compensation paid to the same individuals. Stock-based compensation recognized in prior periods has been reclassified to conform to the presentation in the current period. In
8
the fourth quarter, the charge related to stock-based compensation was $5.1 million as compared to $6.8 million in the prior year period.
Use of Non-GAAP Financial Information
In addition to using net income to assess the organization’s overall financial health, Company management uses net income before interest, taxes, depreciation, amortization and non-cash equity compensation (“adjusted EBITDA”), a non-GAAP financial measure, to evaluate the performance of our businesses on a real-time basis. Adjusted EBITDA is considered an important indicator of operational strength, is a direct component of the Company’s annual compensation program, and is a significant factor in helping our management determine how to allocate resources and capital. Adjusted EBITDA is used in addition to and in conjunction with results presented in accordance with GAAP. Management considers adjusted EBITDA to be a critical measure of operational health because it captures all of the revenue and ongoing operating expenses of our businesses without the influence of (i) interest charges, which result from our capital structure, not our ongoing business efforts, (ii) taxes, which relate to the overall organizational financial return, not that of any one business, (iii) the capital expenditure costs associated with depreciation and amortization, which are a function of historical decisions on infrastructure and capacity, and (iv) the cost of non-cash equity compensation which, as a function of our stock price, can be highly variable, is not necessarily an indicator of current operating performance for any individual business unit, and is amortized over the appropriate period.
Adjusted EBITDA provides a means to directly evaluate the ability of our business operations to generate returns on a real-time basis. We provide disclosure of adjusted EBITDA because we believe it is useful for investors to have means to assess our performance as we do. While adjusted EBITDA is a customized non-GAAP measure, it also provides a means to analyze, value and compare our operating capabilities to those of companies with whom we compete, many of which have different compensation plans, depreciation and amortization costs, capital structures and tax burdens. But please note
9
that our non-GAAP results may differ from similar measures used by other companies, even if similar terms are used to identify such measures.
A limitation of adjusted EBITDA is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues for our overall organization. Management evaluates the costs of such tangible and intangible assets through other financial measures such as capital expenditures. Management also evaluates the cost of capitalized tangible and intangible assets by analyzing returns provided on the capital dollars deployed. A further limitation of adjusted EBITDA is that it does not include stock compensation expense related to our workforce. Adjusted EBITDA should be considered in addition to, and not as a substitute for, net income or other measures of financial performance reported in accordance with GAAP.
Martha Stewart Living Omnimedia, Inc. (MSLO) is a leading provider of original “how-to” information, inspiring and engaging consumers with unique lifestyle content and high-quality products. MSLO is organized into four business segments: Publishing, Broadcasting, Merchandising, and Internet. Martha Stewart Living Omnimedia, Inc. is listed on the New York Stock Exchange under the ticker symbol MSO.
The Company will host a conference call with analysts and investors on February 28th, at 10:00 a.m. ET that will be broadcast live over the Internet at www.marthastewart.com/ir.
###
We have included in this press release certain “forward-looking statements,” as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not historical facts but instead represent only our current beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of our control. These statements can be identified by terminology such as “may,” “will,” “should,” “could,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “potential” or “continue” or the negative of these terms or other comparable
10
terminology. The Company’s actual results may differ materially from those projected in these statements, and factors that could cause such differences include: adverse reactions to publicity relating to Martha Stewart by consumers, advertisers and business partners; adverse resolution of some or all of the Company’s ongoing litigation, including without limitation any resolution ofIn re MSO Securities Litigationthat is inconsistent with the charge taken in this quarter; downturns in national and/or local economies; shifts in our business strategies; a loss of the services of Ms. Stewart; a loss of the services of other key personnel; a softening of the domestic advertising market; changes in consumer reading, purchasing and/or television viewing patterns; unanticipated increases in paper, postage or printing costs; operational or financial problems at any of our contractual business partners; the receptivity of consumers to our new product introductions; and changes in government regulations affecting the Company’s industries. Certain of these and other factors are discussed in more detail in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission, especially under the heading “Risk Factors”, which may be accessed through the SEC’s World Wide Web site at http://www.sec.gov. The Company is under no obligation to update any forward-looking statements after the date of this release.
CONTACT: Investors — Howard Hochhauser, Chief Financial Officer, of Martha Stewart Living Omnimedia, Inc., 212-827-8530; Media — Diana Pearson, SVP, Corporate Communications and Media Relations, of Martha Stewart Living Omnimedia, Inc., 212-827-8915.
11
Martha Stewart Living Omnimedia, Inc.
Consolidated Statements of Operations
Three Months Ended, December 31,
(unaudited, in thousands, except per share amounts)
Consolidated Statements of Operations
Three Months Ended, December 31,
(unaudited, in thousands, except per share amounts)
2006 | 2005 | % change | ||||||||||
REVENUES | ||||||||||||
Publishing | $ | 43,124 | $ | 41,140 | 4.8 | % | ||||||
Broadcasting | 13,356 | 11,022 | nm | |||||||||
Merchandising | 35,192 | 28,129 | 25.1 | % | ||||||||
Internet | 5,367 | 4,346 | 23.5 | % | ||||||||
Total revenues | 97,039 | 84,637 | 14.7 | % | ||||||||
OPERATING COSTS AND EXPENSES | ||||||||||||
Production, distribution and editorial | 37,638 | 35,636 | -5.6 | % | ||||||||
Selling and promotion | 25,911 | 21,492 | -20.6 | % | ||||||||
General and administrative | 17,033 | 22,659 | 24.8 | % | ||||||||
Depreciation and amortization | 1,882 | 2,315 | 18.7 | % | ||||||||
Total operating costs and expenses | 82,464 | 82,102 | -0.4 | % | ||||||||
OPERATING INCOME | 14,575 | 2,535 | nm | |||||||||
Interest income, net | 916 | 731 | 25.3 | % | ||||||||
Legal settlement | 1,110 | — | ||||||||||
INCOME BEFORE INCOME TAXES | 16,601 | 3,266 | nm | |||||||||
Income tax provision | (387 | ) | (200 | ) | nm | |||||||
INCOME FROM CONTINUING OPERATIONS BEFORE LOSS FROM DISCONTINUED OPERATIONS | 16,214 | 3,066 | nm | |||||||||
Loss from discontinued operations | — | (120 | ) | nm | ||||||||
NET INCOME | $ | 16,214 | $ | 2,946 | nm | |||||||
INCOME PER SHARE — BASIC AND DILUTED | ||||||||||||
Income from continuing operations | $ | 0.31 | $ | 0.06 | ||||||||
Loss from discontinued operations | (0.00 | ) | (0.00 | ) | ||||||||
Net income | $ | 0.31 | $ | 0.06 | ||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | ||||||||||||
Basic | 51,641 | 51,112 | ||||||||||
Diluted | 52,560 | 52,154 |
Page 1 of 9
Martha Stewart Living Omnimedia, Inc.
Consolidated Statements of Operations
Twelve Months Ended December 31,
(unaudited, in thousands, except per share amounts)
Consolidated Statements of Operations
Twelve Months Ended December 31,
(unaudited, in thousands, except per share amounts)
2006 | 2005 | % change | ||||||||||
REVENUES Publishing | $ | 156,559 | $ | 125,765 | 24.5 | % | ||||||
Broadcasting | 46,503 | 16,591 | nm | |||||||||
Merchandising | 69,504 | 58,819 | 18.2 | % | ||||||||
Internet | 15,775 | 11,258 | 40.1 | % | ||||||||
Total revenues | 288,341 | 212,433 | 35.7 | % | ||||||||
OPERATING COSTS AND EXPENSES | ||||||||||||
Production, distribution and editorial | 138,213 | 126,320 | -9.4 | % | ||||||||
Selling and promotion | 74,190 | 71,123 | -4.3 | % | ||||||||
General and administrative | 70,173 | 85,504 | 17.9 | % | ||||||||
Depreciation and amortization | 8,598 | 7,797 | -10.3 | % | ||||||||
Total operating costs and expenses | 291,174 | 290,744 | — | |||||||||
OPERATING LOSS | (2,833 | ) | (78,311 | ) | nm | |||||||
Interest income, net | 4,511 | 3,423 | 31.8 | % | ||||||||
Legal settlement | (17,090 | ) | — | nm | ||||||||
LOSS BEFORE INCOME TAXES | (15,412 | ) | (74,888 | ) | nm | |||||||
Income tax provision | (838 | ) | (407 | ) | nm | |||||||
LOSS FROM CONTINUING OPERATIONS BEFORE LOSS FROM DISCONTINUED OPERATIONS | (16,250 | ) | (75,295 | ) | nm | |||||||
Loss from discontinued operations | (745 | ) | (494 | ) | nm | |||||||
NET LOSS | $ | (16,995 | ) | $ | (75,789 | ) | nm | |||||
LOSS PER SHARE — BASIC AND DILUTED | ||||||||||||
Loss from continuing operations | $ | (0.32 | ) | $ | (1.48 | ) | ||||||
Loss from discontinued operations | (0.01 | ) | (0.01 | ) | ||||||||
Net loss | $ | (0.33 | ) | $ | (1.49 | ) | ||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | ||||||||||||
Basic | 51,312 | 50,991 | ||||||||||
DIVIDENDS PER COMMON SHARE | $ | 0.50 | n/a |
Page 2 of 9
Martha Stewart Living Omnimedia, Inc.
Consolidated Balance Sheets
(in thousands, except per share amounts)
Consolidated Balance Sheets
(in thousands, except per share amounts)
December 31, | December 31, | |||||||
2006 | 2005 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | $ | 28,528 | $ | 20,249 | ||||
Short-term investments | 35,321 | 83,788 | ||||||
Accounts receivable, net | 70,319 | 55,381 | ||||||
Inventories, net | 4,448 | 3,910 | ||||||
Deferred television production costs | 4,609 | 6,507 | ||||||
Income taxes receivable | 482 | 519 | ||||||
Other current assets | 3,857 | 4,366 | ||||||
Total current assets | 147,564 | 174,720 | ||||||
PROPERTY, PLANT, AND EQUIPMENT, net | 19,616 | 19,797 | ||||||
INTANGIBLE ASSETS, net | 53,605 | 53,680 | ||||||
OTHER NONCURRENT ASSETS | 7,262 | 5,631 | ||||||
Total assets | $ | 228,047 | $ | 253,828 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES | ||||||||
Accounts payable and accrued liabilities | $ | 28,053 | $ | 28,545 | ||||
Accrued payroll and related costs | 13,646 | 7,488 | ||||||
Income taxes payable | 1,011 | 476 | ||||||
Current portion of deferred subscription income | 28,884 | 31,060 | ||||||
Current portion of deferred royalty revenue | 3,159 | 6,578 | ||||||
Total current liabilities | 74,753 | 74,147 | ||||||
DEFERRED SUBSCRIPTION REVENUE | 10,032 | 8,688 | ||||||
DEFERRED REVENUE | 9,845 | 7,321 | ||||||
OTHER NONCURRENT LIABILITIES | 2,460 | 3,041 | ||||||
Total liabilities | 97,090 | 93,197 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
SHAREHOLDERS’ EQUITY | ||||||||
Class A common stock, $0.01 par value, 350,000 shares authorized: 26,109 and 24,882 shares issued in 2006 and 2005, respectively | 261 | 249 | ||||||
Class B common stock, $0.01 par value, 150,000 shares authorized: 26,791 and 26,873 shares outstanding in 2006 and 2005, respectively | 268 | 269 | ||||||
Capital in excess of par value | 257,014 | 242,770 | ||||||
Accumulated deficit | (125,811 | ) | (81,882 | ) | ||||
131,732 | 161,406 |
Page 3 of 9
Less class A treasury stock — 59 shares at cost | (775 | ) | (775 | ) | ||||
Total shareholders’ equity | 130,957 | 160,631 | ||||||
Total liabilities and shareholders’ equity | $ | 228,047 | $ | 253,828 | ||||
Page 4 of 9
Martha Stewart Living Omnimedia, Inc.
Supplemental Disclosures Regarding Non-GAAP Financial Information
Three Months Ended December 31,
(unaudited, in thousands)
Supplemental Disclosures Regarding Non-GAAP Financial Information
Three Months Ended December 31,
(unaudited, in thousands)
The following table presents segment and consolidated financial information, including a reconciliation of operating income/(loss), a GAAP measure, and adjusted EBITDA, a non-GAAP measure. In order to reconcile adjusted EBITDA to operating income, depreciation and amortization and non-cash equity compensation are added back to operating income/(loss).
2006 | 2005 | |||||||
ADJUSTED EBITDA | ||||||||
Publishing | $ | (1,345 | ) | $ | (342 | ) | ||
Broadcasting | 3,077 | (134 | ) | |||||
Merchandising | 30,089 | 23,405 | ||||||
Internet | 269 | 320 | ||||||
Adjusted EBITDA before Corporate Expenses | 32,090 | 23,249 | ||||||
Corporate Expenses | (10,556 | ) | (11,589 | ) | ||||
Adjusted EBITDA | 21,534 | 11,660 | ||||||
NON-CASH EQUITY COMPENSATION | ||||||||
Publishing | 715 | 458 | ||||||
Broadcasting | 2,262 | 131 | ||||||
Merchandising | 283 | 144 | ||||||
Internet | 109 | 9 | ||||||
Corporate Expenses | 1,708 | 6,068 | ||||||
Total Non-Cash Equity Compensation | 5,077 | 6,810 | ||||||
DEPRECIATION AND AMORTIZATION | ||||||||
Publishing | 142 | 245 | ||||||
Broadcasting | 768 | 712 | ||||||
Merchandising | 257 | 216 | ||||||
Internet | (59 | ) | 230 | |||||
Corporate Expenses | 774 | 912 | ||||||
Total Depreciation and Amortization | 1,882 | 2,315 | ||||||
OPERATING INCOME (LOSS) | ||||||||
Publishing | (2,202 | ) | (1,045 | ) | ||||
Broadcasting | 47 | (977 | ) | |||||
Merchandising | 29,549 | 23,045 | ||||||
Internet | 219 | 81 | ||||||
Operating Income before Corporate Expenses | 27,613 | 21,104 | ||||||
Corporate Expenses | (13,038 | ) | (18,569 | ) | ||||
Total Operating Income | 14,575 | 2,535 | ||||||
Interest income, net | 916 | 731 | ||||||
Legal settlement | 1,110 | — | ||||||
INCOME BEFORE INCOME TAXES | 16,601 | 3,266 | ||||||
Income tax benefit/ (provision) | (387 | ) | (200 | ) |
Page 5 of 9
INCOME FROM CONTINUING OPERATIONS BEFORE LOSS FROM DISCONTINUED OPERATIONS | 16,214 | 3,066 | ||||||
Loss from discontinued operations | — | (120 | ) | |||||
NET INCOME | $ | 16,214 | $ | 2,946 | ||||
Page 6 of 9
Martha Stewart Living Omnimedia, Inc.
Supplemental Disclosures Regarding Non-GAAP Financial Information
Twelve Months Ended December 31,
(unaudited, in thousands)
Supplemental Disclosures Regarding Non-GAAP Financial Information
Twelve Months Ended December 31,
(unaudited, in thousands)
The following table presents segment and consolidated financial information, including a reconciliation of operating income/(loss), a GAAP measure, and adjusted EBITDA, a non-GAAP measure. In order to reconcile adjusted EBITDA to operating income, depreciation and amortization and non-cash equity compensation are added back to operating income/(loss).
2006 | 2005 | |||||||
ADJUSTED EBITDA | ||||||||
Publishing | $ | 9,341 | $ | (12,194 | ) | |||
Broadcasting | 4,416 | (8,318 | ) | |||||
Merchandising | 48,517 | 40,123 | ||||||
Internet | (206 | ) | (2,547 | ) | ||||
Adjusted EBITDA before Corporate Expenses | 62,068 | 17,064 | ||||||
Corporate Expenses | (42,492 | ) | (42,997 | ) | ||||
Adjusted EBITDA | 19,576 | (25,933 | ) | |||||
NON-CASH EQUITY COMPENSATION | ||||||||
Publishing | 2,715 | 2,154 | ||||||
Broadcasting | 3,006 | 17,562 | ||||||
Merchandising | 967 | 569 | ||||||
Internet | 208 | 38 | ||||||
Corporate Expenses | 6,915 | 24,257 | ||||||
Total Non-Cash Equity Compensation | 13,811 | 44,580 | ||||||
DEPRECIATION AND AMORTIZATION | ||||||||
Publishing | 600 | 987 | ||||||
Broadcasting | 3,026 | 1,321 | ||||||
Merchandising | 1,021 | 845 | ||||||
Internet | 117 | 952 | ||||||
Corporate Expenses | 3,834 | 3,693 | ||||||
Total Depreciation and Amortization | 8,598 | 7,798 | ||||||
OPERATING INCOME (LOSS) | ||||||||
Publishing | 6,026 | (15,335 | ) | |||||
Broadcasting | (1,616 | ) | (27,201 | ) | ||||
Merchandising | 46,529 | 38,709 | ||||||
Internet | (531 | ) | (3,537 | ) | ||||
Operating Income/(Loss) before Corporate Expenses | 50,408 | (7,364 | ) | |||||
Corporate Expenses | (53,241 | ) | (70,947 | ) | ||||
Total Operating Loss | (2,833 | ) | (78,311 | ) | ||||
Interest income, net | 4,511 | 3,423 | ||||||
Legal settlement | (17,090 | ) | — | |||||
LOSS BEFORE INCOME TAXES | (15,412 | ) | (74,888 | ) | ||||
Income tax provision | (838 | ) | (407 | ) | ||||
Page 7 of 9
LOSS FROM CONTINUING OPERATIONS BEFORE LOSS FROM DISCONTINUED OPERATIONS | (16,250 | ) | (75,295 | ) | ||||
Loss from discontinued operations | (745 | ) | (494 | ) | ||||
NET LOSS | $ | (16,995 | ) | $ | (75,789 | ) | ||
Page 8 of 9
Martha Stewart Living Omnimedia, Inc.
Supplemental Disclosures Regarding Non-GAAP Financial Information
Guidance Reconciliation
(in millions)
Supplemental Disclosures Regarding Non-GAAP Financial Information
Guidance Reconciliation
(in millions)
The following table presents segment and consolidated financial information, including a reconciliation of operating income/(loss), a GAAP measure, and adjusted EBITDA, a non-GAAP measure. In order to reconcile adjusted EBITDA to operating income, depreciation and amortization and non-cash equity compensation are added back to operating income/(loss).
Full Year 2007 Guidance Reconciliation
Guidance Range | ||||||||||||
Adjusted EBITDA | $ | 32.0 | $ | 35.0 | ||||||||
Depreciation and Amortization | (6.5 | ) | (6.5 | ) | ||||||||
Non-Cash Equity Compensation | (20.0 | ) | (20.0 | ) | ||||||||
Operating Income | 5.5 | 8.5 | ||||||||||
Interest Income | 4.0 | 4.0 | ||||||||||
Pre-tax Income | 9.5 | — | 12.5 | |||||||||
Income Taxes | — | — | ||||||||||
Net Income | 9.5 | — | 12.5 | |||||||||
Earnings Per Share | $ | 0.18 | — | $ | 0.24 | |||||||
Avg. Diluted Shares Outstanding | 52.0 | 52.0 |
First Quarter Guidance Reconciliation
Guidance Range | ||||||||||||
Adjusted EBITDA | $ | (7.0 | ) | — | $ | (6.0 | ) | |||||
Depreciation and Amortization | (2.0 | ) | (2.0 | ) | ||||||||
Non-Cash Equity Compensation | (10.0 | ) | (10.0 | ) | ||||||||
Operating Loss | (19.0 | ) | — | (18.0 | ) | |||||||
Interest Income | 0.8 | 0.8 | ||||||||||
Pre-tax Loss | (18.2 | ) | — | (17.2 | ) | |||||||
Income Taxes | — | — | ||||||||||
Net Loss | (18.2 | ) | — | (17.2 | ) | |||||||
Loss Per Share | $ | (0.35 | ) | — | $ | (0.33 | ) | |||||
Avg. Diluted Shares Outstanding | 52.0 | 52.0 |
Page 9 of 9