Exhibit 99
Shareholder and Financial Analyst Contact: |
Jim Jacobson |
Media Contact: |
Art Slusark |
MEREDITH CORPORATION
REPORTS RESULTS FOR THE SECOND QUARTER
AND FIRST SIX MONTHS OF FISCAL 2004
Earnings Exceed First Call Consensus
DES MOINES, Iowa, January 27, 2004-Meredith Corporation (NYSE:MDP) today reported results for the second quarter of fiscal 2004 ended December 31, 2003. Net earnings were $20.2 million, or $0.39 per share, compared with $19.3 million, or $0.38 per share, in the comparable quarter of fiscal 2003. Total Company revenues rose 11 percent to $280.4 million and total advertising revenues were up 9 percent to $164.5 million.
For the first six months of fiscal 2004, net earnings were $40 million, or $0.78 per share, up 12 percent from $35.8 million, or $0.70 per share, before the cumulative effect of a change in accounting principle related to SFAS No. 142. Total Company revenues rose 10 percent to $553 million and total advertising revenues increased 10 percent to $329.4 million.
William T. Kerr, Meredith's Chairman and Chief Executive Officer, stated, "We are pleased that, despite having to replace $14.1 million of net political advertising from the second quarter of the prior year, we reported a quarter of improved consolidated results and earnings per share that exceeded the First Call consensus estimate of $0.37 per share."
Results reflected strong overall revenue growth, the Company's December 2002 acquisition of the American Baby Group, and a cyclical shift in the revenue mix between the Company's two business units. Publishing represented 74 percent of total Company revenues in the second quarter of fiscal 2004 versus 68 percent in the comparable quarter. Kerr said, "Publishing delivered an excellent quarter, increasing operating profit 31 percent on 21 percent revenue growth. Broadcasting's improved fundamentals were masked by the difficult political advertising comparisons."
Operating Highlights
Publishing
In the second quarter of fiscal 2004, operating profit increased to $22.8 million from $17.4 million in the comparable quarter. Total publishing revenues rose 21 percent to $206.9 million from $170.9 million. Excluding the American Baby Group, publishing revenues increased 15 percent.
Meredith's magazines gained market share and grew advertising pages 22 percent in the second quarter while the industry declined 3 percent, according to Publishers Information Bureau (PIB).
The Company's two largest titles,Better Homes and Gardensand Ladies' Home Journal, grew combined advertising pages 17 percent in the second quarter.Better Homes and Gardens set a fiscal second quarter record for advertising pages. According to PIB,Better Homes and Gardens andLadies' Home Journal increased their combined share of advertising revenues in the women's service field to 44 percent for the 12 months ended with the December issues.
The American Baby Group's financial performance continues to exceed the Company's initial expectations. Kerr stated, "American Baby is a great fit for our magazine portfolio, extending our reach to a younger, more culturally diverse audience. Several Meredith clients have expanded their advertising to the Group's titles."
The Company renewed its brand licensing relationship with Wal-Mart to support the sales ofBetter Homes and Gardens-branded products in Wal-Mart Garden Centers. The direct sales force of Home Interiors and Gifts is now selling theBetter Homes and Gardens Collection of home décor accessories.
The Company's mid-size titles-MORE, Midwest Living, Traditional Homeand Country Home-continued to perform well. In the second quarter, advertising pages increased more than 30 percent in each of the four magazines.
The Company's integrated marketing operation grew revenues and profits significantly in the second quarter. Larger programs included the monthly program guide for DIRECTV, customer loyalty magazines for DaimlerChrysler and Carnival Cruise lines, and an annual campground guide for KOA.
Meredith's book operation continued its momentum in the second quarter. Top sellers were the 12th edition ofThe Better Homes and Gardens New Cook Book,Inside Monster Garage and theHome Improvement 1-2-3 series. Strong demand continued for books based on the hit decorating showTrading Spaces.
Broadcasting
In the second quarter, broadcasting operating profit declined to $21.3 million from $27.1 million in the comparable quarter. Total broadcasting revenues decreased 9 percent to $73.5 million from $80.8 million, reflecting the expected cyclical decline in political advertising. Non-political advertising revenues increased 10 percent to $71.5 million from $65.2 million.
Broadcasting achieved audience share and rating improvements in the November book for the key 25-54 age demographic. Kerr commented, "We improved sign-on to sign-off share at five of our stations by an average of 16 percent." KCTV in Kansas City, KPTV in Portland and WNEM in Saginaw each gained two share points while WGCL in Atlanta and WHNS in Greenville each gained one share point.
Revenues from Meredith's Cornerstone programs grew more than 50 percent in the second quarter. These programs combine content from the Company's leading magazines with local advertising.
On January 1, 2004, the Company began broadcasting on WSHM, its new CBS affiliate in Springfield, MA. Kerr said, "WSHM will generate a profit in its first month, largely due to the efficiencies gained by operating the station from our nearby CBS affiliate in Hartford. WSHM provides local advertisers and viewers another choice and creates the opportunity for us to build another market-leading news presence."
For the first six months of fiscal 2004, broadcasting operating profit declined to $32.9 million from $38.5 million in the comparable period. Total broadcasting revenues declined 4 percent to $139.5 million from $145 million, reflecting the expected cyclical decline in political advertising. Non-political advertising revenues increased 12 percent to $135.4 million from $121.4 million.
Other Financial Information
Net interest expense declined to $5.7 million in the second quarter of fiscal 2004 from $6.5 million in the comparable quarter due in part to a favorable mark-to-market adjustment on the Company's interest rate swaps. Total debt decreased to $330 million as of December 31, 2003 from $355 million as of September 30, 2003. For purposes of debt compliance, the debt to trailing 12-month EBITDA ratio, as defined in the Company's debt covenants, was 1.6x at December 31, 2003 compared with 2.2x a year earlier. During the quarter, the Company repurchased approximately 200,000 shares of its stock as part of Meredith's ongoing share repurchase program.
In the first quarter of fiscal 2003, the Company recorded an after-tax charge of $85.7 million, or $1.68 per share, in connection with its adoption of SFAS No. 142, which relates to the accounting for goodwill and other intangible assets. Including this charge, the Company reported a net loss of $50 million, or $0.98 per share, for the first six months of fiscal 2003.
Outlook
Publishing advertising revenues currently are running up in the low-to-mid-single digits for the third quarter of fiscal 2004. Broadcast pacings, which are a snapshot in time and change frequently, are running up in the mid-teens.
Given the Company's year-to-date performance and its current outlook, management believes the current First Call consensus estimates of $0.61 and $2.07 per share for the third fiscal quarter and all of fiscal 2004, respectively, are achievable.
Conference Call Webcast
Meredith will host a conference call on January 27, 2004 at 11:00 a.m. EST (10 a.m. CST) to discuss second fiscal quarter results. A live webcast will be accessible to the public on the Company's web site www.meredith.com. The webcast will remain available until February 3, 2004.
Rationale for Use of and Access to Non-GAAP Measures
Non-GAAP measures such as EBITDA should be construed not as alternative measures of, but as supplemental information to, the Company's net earnings and income from operations as defined under GAAP.
Management uses and presents EBITDA and GAAP results to evaluate and communicate the performance of the Company. Because of EBITDA's focus on the Company's results from operations before depreciation and amortization, management believes that EBITDA provides an additional analytical tool to clarify the Company's results from core operations and delineate underlying trends. EBITDA is a common alternative measure of performance used by investors and financial analysts. Meredith does not use EBITDA as a measure of liquidity, nor is EBITDA necessarily indicative of funds available for management's discretionary use. Reconciliations of GAAP to non-GAAP measures are included in Table 1. The attached financial statements and reconciliation tables will be made available on the Company's web site. Interested parties should go to http://www.meredith.com/investors/index.html and click on "Regulation G Data" in the navigation bar on the left side of the page.
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's operations. 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 of one or more major clients; changes in consumer reading, purchase, and/or television viewing patterns; unanticipated 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 any acquisitions and/or dispositions. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise.
Note All earnings per share figures in the text of this release are diluted. Basic and diluted earnings per share can be found in the attached income statements.
About Meredith Corporation
Meredith Corporation (www.meredith.com) is one of the nation's leading media and marketing companies with businesses centering on magazine and book publishing, television broadcasting, integrated marketing, and interactive media. The Meredith Publishing Group, the country's foremost home and family authority, features 17 magazine brands, includingBetter Homes and Gardens,Ladies' Home JournalandAmerican Baby, and more than 160 special interest publications. Meredith owns 12 television stations, including properties in top-25 markets such as Atlanta, Phoenix and Portland.
Meredith has nearly 300 books in print and has established marketing relationships with some of America's leading companies, including The Home Depot, DIRECTV, DaimlerChrysler, Wal-Mart and Carnival Cruise Lines. Meredith's consumer database, which contains approximately 75 million names, is the largest domestic database among media companies and enables magazine and television advertisers to target marketing campaigns precisely. Additionally, Meredith has an extensive Internet presence that includes 26 web sites and strategic alliances with leading Internet destinations.
Meredith Corporation and Subsidiaries | |||||||||||||||
Consolidated Statements of Earnings (Loss) - Unaudited | |||||||||||||||
Three Months | Six Months | ||||||||||||||
Ended December 31 | Percent | Ended December 31 | Percent | ||||||||||||
2003 | 2002 | 2003 | 2002 | ||||||||||||
(In thousands except per share data) | |||||||||||||||
Revenues | |||||||||||||||
Advertising | $ | 164,532 | $ | 151,227 | 8.8 % | $ | 329,399 | $ | 300,298 | 9.7 % | |||||
Circulation | 59,520 | 60,316 | (1.3)% | 120,151 | 123,154 | (2.4)% | |||||||||
All other | 56,327 | 40,168 | 40.2 % | 103,499 | 78,321 | 32.1 % | |||||||||
Total revenues | 280,379 | 251,711 | 11.4 % | 553,049 | 501,773 | 10.2 % | |||||||||
Operating costs and expenses | |||||||||||||||
Production, distribution and editorial | 121,719 | 104,246 | 16.8 % | 244,770 | 214,481 | 14.1 % | |||||||||
Selling, general and administrative | 112,421 | 102,098 | 10.1 % | 216,459 | 199,612 | 8.4 % | |||||||||
Depreciation and amortization | 7,625 | 7,074 | 7.8 % | 15,104 | 14,229 | 6.1 % | |||||||||
Total operating costs and expenses | 241,765 | 213,418 | 13.3 % | 476,333 | 428,322 | 11.2 % | |||||||||
Income from operations | 38,614 | 38,293 | 0.8 % | 76,716 | 73,451 | 4.4 % | |||||||||
Nonoperating expense | - | (297 | ) | (100.0)% | - | (297 | ) | (100.0)% | |||||||
Interest income | 35 | 123 | (71.5)% | 84 | 321 | (73.8)% | |||||||||
Interest expense | (5,713 | ) | (6,592 | ) | (13.3)% | (11,561 | ) | (15,096 | ) | (23.4)% | |||||
Earnings before income taxes and cumulative | |||||||||||||||
effect of change in accounting principle | 32,936 | 31,527 | 4.5 % | 65,239 | 58,379 | 11.8 % | |||||||||
Income taxes | 12,749 | 12,206 | 4.4 % | 25,251 | 22,598 | 11.7 % | |||||||||
Earnings before cumulative effect of | |||||||||||||||
change in accounting principle | $ | 20,187 | $ | 19,321 | 4.5 % | $ | 39,988 | $ | 35,781 | 11.8 % | |||||
Cumulative effect of change in accounting | |||||||||||||||
principle, net of taxes | - | - | - | - | (85,749) | (100.0)% | |||||||||
Net earnings (loss) | $ | 20,187 | $ | 19,321 | 4.5 % | $ | 39,988 | $ | (49,968) | (180.0)% | |||||
Basic earnings (loss) per share | |||||||||||||||
Before cumulative effect of change in | $ | 0.40 | $ | 0.39 | 2.6 % | $ | 0.80 | $ | 0.72 | 11.1 % | |||||
Cumulative effect of change in accounting | - | - | - | - | (1.73 | ) | (100.0)% | ||||||||
Net basic earnings (loss) per share | $ | 0.40 | $ | 0.39 | 2.6 % | $ | 0.80 | $ | (1.01 | ) | NM | ||||
Basic average shares outstanding | 50,137 | 49,652 | 1.0 % | 50,158 | 49,573 | 1.2 % | |||||||||
Diluted earnings (loss) per share | |||||||||||||||
Before cumulative effect of change in | $ | 0.39 | $ | 0.38 | 2.6 % | $ | 0.78 | $ | 0.70 | 11.4 % | |||||
Cumulative effect of change in accounting | - | - | - | - | (1.68 | ) | (100.0)% | ||||||||
Net diluted earnings (loss) per share | $ | 0.39 | $ | 0.38 | 2.6 % | $ | 0.78 | $ | (0.98 | ) | NM | ||||
Diluted average shares outstanding | 51,609 | 51,247 | 0.7 % | 51,583 | 51,069 | 1.0 % | |||||||||
Dividends paid per share | $ | 0.095 | $ | 0.090 | 5.6 % | $ | 0.190 | $ | 0.180 | 5.6 % | |||||
NM-Not meaningful | |||||||||||||||
Meredith Corporation and Subsidiaries | |||||||||||||||
Segment Information (Unaudited) | |||||||||||||||
Three Months | Percent | Six Months | Percent | ||||||||||||
|
| 2003 |
|
| 2002 |
|
|
| 2003 |
|
| 2002 |
| ||
(In thousands) | |||||||||||||||
Revenues | |||||||||||||||
Publishing | $ | 206,855 | $ | 170,927 | 21.0 % | $ | 413,526 | $ | 356,795 | 15.9 % | |||||
Broadcasting: | |||||||||||||||
Non-political advertising | 71,539 | 65,247 | 9.6 % | 135,446 | 121,438 | 11.5 % | |||||||||
Political advertising | 445 | 14,075 | (96.8)% | 794 | 20,347 | (96.1)% | |||||||||
Other revenues | 1,540 | 1,462 | 5.3 % | 3,283 | 3,193 | 2.8 % | |||||||||
Total broadcasting |
| 73,524 |
|
| 80,784 |
| (9.0)% |
|
| 139,523 |
|
| 144,978 |
| (3.8)% |
Total revenues | $ | 280,379 |
| $ | 251,711 |
| 11.4 % |
| $ | 553,049 |
| $ | 501,773 |
| 10.2 % |
Operating Profit | |||||||||||||||
Publishing | $ | 22,824 | $ | 17,402 | 31.2 % | $ | 55,824 | $ | 46,340 | 20.5 % | |||||
Broadcasting | 21,284 | 27,143 | (21.6)% | 32,933 | 38,463 | (14.4)% | |||||||||
Unallocated corporate | (5,494 | ) |
| (6,252 | ) | 12.1 % |
|
| (12,041 | ) |
| (11,352 | ) | (6.1)% | |
Income from operations |
| 38,614 |
|
| 38,293 |
| 0.8 % |
|
| 76,716 |
|
| 73,451 |
| 4.4 % |
Depreciation & amortization | |||||||||||||||
Publishing | $ | 2,588 | $ | 2,533 | 2.2 % | $ | 5,107 | $ | 5,062 | 0.9 % | |||||
Broadcasting | 4,384 | 3,994 | 9.8 % | 8,672 | 8,114 | 6.9 % | |||||||||
Unallocated corporate | 653 | 547 | 19.4 % | 1,325 | 1,053 | 25.8 % | |||||||||
Total depreciation & amortization | $ | 7,625 |
| $ | 7,074 |
| 7.8 % |
| $ | 15,104 |
| $ | 14,229 |
| 6.1 % |
EBITDA | |||||||||||||||
Publishing | $ | 25,412 | $ | 19,935 | 27.5 % | $ | 60,931 | $ | 51,402 | 18.5 % | |||||
Broadcasting | 25,668 | 31,137 | (17.6%) | 41,605 | 46,577 | (10.7)% | |||||||||
Unallocated corporate | (4,841 | ) | (5,705 | ) | 15.1 % | (10,716 | ) | (10,299 | ) | (4.0)% | |||||
Total EBITDA | $ | 46,239 |
| $ | 45,367 |
| 1.9 % |
| $ | 91,820 |
| $ | 87,680 |
| 4.7 % |
Meredith Corporation and Subsidiaries | |||||||||
Condensed Consolidated Balance Sheets | |||||||||
(Unaudited) | |||||||||
December 31 | June 30 | ||||||||
Assets | 2003 | 2003 | |||||||
(In thousands) | |||||||||
Current assets | |||||||||
Cash and cash equivalents | $ | 9,693 | $ | 22,294 | |||||
Accounts receivable, net | 155,096 | 144,717 | |||||||
Other current assets | 110,410 | 101,418 | |||||||
Total current assets | 275,199 | 268,429 | |||||||
Property, plant and equipment, net | 197,999 | 201,484 | |||||||
Other assets | 95,528 | 91,754 | |||||||
Intangibles, net | 683,089 | 683,223 | |||||||
Goodwill | 191,303 | 191,831 | |||||||
Total assets | $ | 1,443,118 | $ | 1,436,721 | |||||
(Unaudited) | |||||||||
December 31 | June 30 | ||||||||
Liabilities and Shareholders' Equity | 2003 | 2003 | |||||||
(In thousands) | |||||||||
Current liabilities | |||||||||
Accounts payable and accruals | $ | 130,803 | $ | 135,512 | |||||
Other current liabilities | 175,996 | 161,687 | |||||||
Total current liabilities | 306,799 | 297,199 | |||||||
Long-term debt | 330,000 | 375,000 | |||||||
Other noncurrent liabilities | 280,521 | 263,757 | |||||||
Total liabilities | 917,320 | 935,956 | |||||||
Shareholders' equity | |||||||||
Common stock | 40,185 | 40,181 | |||||||
Class B stock | 9,898 | 9,969 | |||||||
Other shareholders' equity | 475,715 | 450,615 | |||||||
Total shareholders' equity | 525,798 | 500,765 | |||||||
Total liabilities and shareholders' equity | $ | 1,443,118 | $ | 1,436,721 | |||||
Meredith Corporation and Subsidiaries | Table 1 |
Supplemental Disclosures Regarding Non-GAAP Financial Measures |
Consolidated EBITDA, which is reconciled to net earnings (loss) in the following tables, is defined as net earnings before interest, taxes, depreciation and amortization and also excludes nonoperating expenses. 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 December 31 | |||||||||||||
2003 | |||||||||||||
Publishing | Broadcasting | Unallocated Corporate | Total | ||||||||||
(In thousands) | |||||||||||||
Revenues | $ | 206,855 | $ | 73,524 |
| $ | - |
| $ | 280,379 | |||
Operating profit | $ | 22,824 | $ | 21,284 |
| $ | (5,494 | ) | $ | 38,614 | |||
Depreciation and amortization | 2,588 | 4,384 |
| 653 |
|
| 7,625 | ||||||
EBITDA | $ | 25,412 | $ | 25,668 |
| $ | (4,841 | ) |
| 46,239 | |||
Less: |
| ||||||||||||
Depreciation and amortization |
| (7,625 | ) | ||||||||||
Net interest expense |
| (5,678 | ) | ||||||||||
Income taxes |
| (12,749 | ) | ||||||||||
Net earnings |
|
|
|
|
|
|
|
| $ | 20,187 | |||
Segment EBITDA margin |
| 12.3 % |
| 34.9 % |
|
|
|
|
|
| |||
Three Months ended December 31 | |||||||||||||
2002 | |||||||||||||
Publishing | Broadcasting | Unallocated Corporate | Total | ||||||||||
(In thousands) |
|
| |||||||||||
Revenues | $ | 170,927 | $ | 80,784 |
| $ | - |
| $ | 251,711 | |||
Operating profit | $ | 17,402 | $ | 27,143 |
| $ | (6,252 | ) | $ | 38,293 | |||
Depreciation and amortization |
| 2,533 |
| 3,994 |
|
| 547 |
|
| 7,074 | |||
EBITDA | $ | 19,935 | $ | 31,137 |
| $ | (5,705 | ) |
| 45,367 | |||
Less: |
|
| |||||||||||
Depreciation and amortization |
|
|
|
|
| (7,074 | ) | ||||||
Nonoperating expense |
|
| (297 | ) | |||||||||
Net interest expense |
|
| (6,469 | ) | |||||||||
Income taxes |
|
| (12,206 | ) | |||||||||
Net earnings |
|
|
|
|
|
|
|
| $ | 19,321 | |||
Segment EBITDA margin |
| 11.7 % |
| 38.5 % |
|
|
|
|
|
|
| ||
Meredith Corporation and Subsidiaries | Table 1(continued) |
Supplemental Disclosures Regarding Non-GAAP Financial Measures |
Six Months ended December 31 | |||||||||||||
2003 | |||||||||||||
Publishing | Broadcasting | Unallocated Corporate | Total | ||||||||||
(In thousands) |
|
| |||||||||||
Revenues | $ | 413,526 | $ | 139,523 |
| $ | - |
| $ | 553,049 | |||
Operating profit | $ | 55,824 | $ | 32,933 |
| $ | (12,041 | ) | $ | 76,716 | |||
Depreciation and amortization | 5,107 |
| 8,672 |
|
| 1,325 |
|
| 15,104 | ||||
EBITDA | $ | 60,931 | $ | 41,605 |
|
| (10,716 | ) |
| 91,820 | |||
Less: |
|
|
| ||||||||||
Depreciation and amortization |
|
|
| (15,104 | ) | ||||||||
Net interest expense |
|
|
| (11,477 | ) | ||||||||
Income taxes |
|
|
| (25,251 | ) | ||||||||
Net earnings |
|
|
|
|
|
|
|
| $ | 39,988 | |||
Segment EBITDA margin |
| 14.7 % |
| 29.8 % |
|
|
|
|
|
|
| ||
Six Months ended December 31 | |||||||||||||
2002 | |||||||||||||
Publishing | Broadcasting | Unallocated Corporate | Total | ||||||||||
(In thousands) |
|
|
|
|
| ||||||||
Revenues | $ | 356,795 | $ | 144,978 |
| $ | - |
| $ | 501,773 | |||
Operating profit | $ | 46,340 | $ | 38,463 |
| $ | (11,352 | ) | $ | 73,451 | |||
Depreciation and amortization |
| 5,062 |
| 8,114 |
| 1,053 |
|
| 14,229 | ||||
EBITDA | $ | 51,402 | $ | 46,577 |
| $ | (10,299 | ) |
| 87,680 | |||
Less: |
|
|
|
|
| ||||||||
Depreciation and amortization |
|
|
|
|
| (14,229 | ) | ||||||
Nonoperating expense |
|
|
|
|
| (297 | ) | ||||||
Net interest expense |
|
|
|
|
| (14,775 | ) | ||||||
Income taxes |
|
|
|
|
|
|
|
|
| (22,598 | ) | ||
Earnings before cumulative effect |
|
|
|
|
| 35,781 | |||||||
Cumulative effect of change in |
|
|
|
|
| (85,749 | ) | ||||||
Net loss |
|
|
|
|
|
|
|
| $ | (49,968 | ) | ||
Segment EBITDA margin |
| 14.4 % |
| 32.1 % |
|
|
|
|
|
| |||
