Exhibit 99
MEREDITH THIRD QUARTER EARNINGS PER SHARE UP 15 PERCENT
Core earnings per share grow 10 percent
DES MOINES, IA (April 25, 2007)-- Meredith Corporation(NYSE: MDP), one of America's leading media and marketing companies, today announced third quarter fiscal 2007 results. Earnings per share grew 15 percent to $0.92, and net earnings increased to $45 million. Total revenues increased 4 percent to $410 million, including 7 percent growth in advertising revenues.
Core earnings per share for the third quarter grew 10 percent to $0.88 from $0.80, and core earnings grew to $44 million from $41 million. Core earnings for fiscal 2007 exclude a one-time tax benefit partially offset by restructuring charges. These are described in a press release issued on March 27, 2007, and in the attached Table 1 which reconciles core earnings to net earnings. For fiscal 2006, net and core earnings are the same.
"The highlights for the quarter were the very strong advertising performance of our Publishing Group properties and the outstanding growth in online revenues across the company," said Stephen M. Lacy, Meredith's President and Chief Executive Officer. "Our ongoing efforts to aggressively build our online presence and capabilities enabled us to double online revenues compared to the prior year quarter. Going forward, we will further expand these initiatives to serve increasing consumer demand for content delivered across multiple media platforms."
For the nine months, earnings per share grew 19 percent to $2.26, and net earnings increased to $111 million. Core earnings per share grew 17 percent to $2.22 from $1.90 a year ago, and core earnings increased to $109 million from $96 million a year ago. In the second quarter, the Company reported a $0.04 per share charge related to a bankruptcy of a book distributor, which is included in core earnings per share.(See Table 1 for a reconciliation of core earnings to net earnings.)Total revenues increased 3 percent to $1.2 billion, and advertising revenues increased 7 percent to $740 million.
OPERATING HIGHLIGHTS
Publishing Results
Publishing operating profit increased to $64 million in the third quarter of fiscal 2007, up from $61 million in the prior year quarter. Revenues increased to $330 million, up from $319 million in the prior year quarter.
Publishing advertising revenues grew 7 percent, including a mid-single digit increase in magazine advertising revenue.Better Homes and Gardens,More,Family Circle and Meredith's Special Interest Publications all delivered solid growth in advertising revenues and net advertising revenue per page in the quarter.
"The creative and sales enhancements made atBetter Homes and Gardens are resonating with consumers and marketers alike," Lacy said. "Family Circle andMore continued the success they have enjoyed all fiscal year, with advertising revenues up more than 25 percent at each title in the quarter. Additionally, our special interest publications reported solid advertising revenue growth, up in the high-single digits for the quarter."
Meredith's women's service titles increased share in the quarter with 11 percent growth in advertising pages compared to a 5 percent increase for the women's service field category as a whole, according to the latest data from the Publishers Information Bureau.
Meredith's magazine-branded web sites posted excellent growth in the quarter as well. Advertising revenues were up more than 50 percent. Traffic increased significantly with unique visitors and page views both up more than 10 percent. Online subscription orders also increased. Meredith secured more than 2 million online subscriptions through the first nine months of fiscal 2007, already surpassing total orders for all of fiscal 2006.
On March 29, Meredith unveiled a new Web 2.0 enhanced version of its highly popularBetter Homes and Gardensweb site (www.BHG.com). The redesigned portal features a host of new, highly interactive experiences - such as blogs, desktop widgets and wikis - and community sharing applications.
For the first nine months of fiscal 2007, Publishing operating profit was $146 million, flat compared to the prior-year period. Total Publishing revenues were up slightly to $944 million. Advertising revenues increased 2 percent to $476 million.
Broadcasting Results
Broadcasting operating profit was $20 million in the third quarter of fiscal 2007, up slightly from the year-ago period. Earnings before interest, taxes, depreciation and amortization (EBITDA) were $27 million, up 2 percent over the prior-year period. Revenues increased 5 percent to $79 million, with both local and national advertising revenues increasing. During the quarter, Meredith Broadcasting invested a total of more than $1.7 million in news expansions, online enhancements and video initiatives.
Looking at the February 2007 rating book, Meredith Broadcasting continued to enhance its news position with the important adults ages 25-54 demographic:
- Five stations - Atlanta, Portland, Kansas City, Greenville and Las Vegas - posted gains for late newscasts, with Kansas City up 46 percent, Atlanta up 29 percent and Greenville up 26 percent;
- Four stations - Phoenix, Portland, Hartford and Las Vegas - posted gains for morning newscasts, with Las Vegas up 85 percent and Phoenix up 50 percent; and
- Six stations - Atlanta, Phoenix, Portland, Kansas City, Greenville and Las Vegas - increased sign-on to sign-off ratings, with Atlanta and Kansas City both up more than 30 percent.
"The results of the February book reflect growth in our local station brands and news programming, which are the keys to attaining higher ratings, increasing market share and generating more revenues," said Lacy. "This combination of strong local brand franchises and solid execution of our news content strategies is reflected in the growth we are experiencing in both late and morning news at many of our stations."
For the first nine months of fiscal 2007, Broadcasting operating profit grew 33 percent to $79 million. EBITDA was up 26 percent to $97 million, while EBITDA margin was 36.3 percent compared to 33.3 percent in the prior-year period.(See Table 2 for areconciliation.) Revenues increased 15 percent to $267 million. Meredith generated a record $33 million in net political advertising revenues through the first nine months of fiscal 2007.
Broadband Initiative
Concurrent with the relaunch of BHG.com, Meredith introduced its first-ever broadband network -Better.tv.It features more than 20 channels of original video content and programming on subjects such as cooking, decorating and health. The network draws on the assets of Meredith's extensive portfolio of magazines, television stations, books, special interest publications, websites and live events.
Better.tv's original programming is created in New York, Des Moines, and Portland, OR, by Meredith Video Solutions, the Company's in-house production unit. Programs and videos featured onBetter.tv range in length from 2 to 30 minutes. Meredith is monetizingBetter.tv through advertising revenues from video commercials, sponsorships, banner advertisements and product integration.
"Better.tv is an excellent example of how we are combining the brands and content of our Publishing Group with the production capabilities and expertise of our Broadcasting Group," Lacy said. "We will continue to be very active in the online and broadband space. In early fiscal 2008, we will launch a new parenthood portal under theParents.combrand and also unveil a new multi-platform broadband channel,ParentsTV."
OTHER FINANCIAL INFORMATION
Net interest expense decreased to $6 million in the third quarter of fiscal 2007 from $7 million in the prior-year period. The Company has retired $65 million of debt in the first three quarters of fiscal 2007.
Unallocated corporate expenses were lower in the quarter due primarily to timing issues. Meredith expects unallocated corporate expenses to approximate $35 million for the full fiscal year.
For the nine months of fiscal 2007, capital expenditures were $29 million, up $8 million compared to the year-ago period, primarily due to the new station facility in Hartford.
Meredith increased free cash flow 14 percent to $125 million in the first nine months of fiscal 2007, compared to $110 million for the year-ago period. The Company defines free cash flow as net earnings, plus depreciation, amortization and non-cash special items, less capital expenditures.(Refer to Table 2 for a reconciliation.)
Meredith repurchased approximately 950,000 shares in the first nine months of fiscal 2007 as part of its ongoing share repurchase program. In the prior year period, the Company repurchased approximately 920,000 shares.
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 statement of earnings.
OUTLOOK
At this time, Meredith expects to grow earnings per share approximately 14 percent to $3.26 in fiscal 2007, consistent with guidance provided throughout the fiscal year. Fourth quarter earnings per share from continuing operations are expected to approximate $1.04.
Publishing advertising revenues for the fourth fiscal quarter are currently up in the low single-digits led byBetter Homes and Gardens, Family Circle andMore partially offset by continued weakness at Meredith's parenthood titles. Broadcast pacings, which are a snapshot in time and change frequently, are currently running down in the mid to high single-digits.
A number of uncertainties remain that may affect our outlook as stated in this press release for results in the fourth fiscal quarter. These include overall advertising volatility, the performance of the Company's retail businesses, paper prices, and postal rates. These and other uncertainties are referenced below under "Safe Harbor" and in certain of the Company's SEC filings.
Meredith plans to provide fiscal 2008 guidance concurrent with its presentation at the Mid-Year Media Review in June 2007.
CONFERENCE CALL WEBCAST
Meredith will host a conference call on April 25, 2007, at 11:00 a.m. ET (10:00 a.m. CT) to discuss fiscal third quarter results. A live webcast will be accessible to the public on the Company's website www.meredith.com, and a replay will be available for one week after the conference call. A transcript of the conference call will be available within 48 hours following the conference call on thewww.meredith.com, and will be available for at least 12 months following the conference call.
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 and free cash flow are common supplemental measures of performance used by investors and financial analysts. Management believes that EBITDA and free cash flow provide additional analytical tools to clarify the Company's results from core operations and delineate underlying trends. Meredith does not use EBITDA or free cash flow as a measure of liquidity or funds available for management's discretionary use because they include certain contractual and non-discretionary expenditures.
Core earnings and core earnings per share are supplemental non-GAAP financial measures that exclude one-time items that are not expected to recur and are not reflective of the Company's core business activities. While core earnings and core earnings per share are not a substitute for reported earnings results under GAAP, Management believes this information is useful as an aid in better understanding the Company's current performance, performance trends, and financial condition.
Reconciliations of non-GAAP to GAAP measures are included in Table 1 and Table 2. The attached financial statements and reconciliation tables will be made available on the Company's web site (www.meredith.com/investors/index.html). Please click on "GAAP-Non-GAAP Reconciliation" 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. Statements in this announcement that are forward-looking include, but are not limited to, the statements regarding broadcast pacings, and publishing advertising revenues, along with the Company's earnings per share outlook for the fourth quarter of fiscal 2007 and the full fiscal year.
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 consequence of acquisitions and/or dispositions. The Company undertakes no obligation to pu blicly update any forward-looking statement, whether as a result of new information, future events, or otherwise.
ABOUT MEREDITH CORPORATION
Meredith (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 features 25 subscription magazines - includingBetter Homes and Gardens, Ladies' Home Journal, Family Circle, Parents, American Baby, Fitness, andMore- and publishes over 200 special interest publications under approximately 80 titles. Meredith owns 14 television stations, including properties in top-25 markets Atlanta, Phoenix, and Portland.
Meredith has more than 400 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 85 million names, is one of the largest domestic databases among media companies and enables magazine and television advertisers to target marketing campaigns precisely. Additionally, Meredith has an extensive Internet presence that includes more than 30 web sites and strategic alliances with leading Internet destinations. Meredith Hispanic Ventures publishes five Spanish-language titles, making Meredith the leading publisher serving Hispanic women in the United States.
Shareholder and Financial Analyst Contact
Suku Radia, Chief Financial Officer, 515.284.3603; suku.radia@meredith.com
Media Contact
Art Slusark, Vice President - Corporate Communications, 515.284.3404; art.slusark@meredith.com
Meredith Corporation and Subsidiaries | | | | | | | | | | | | | |
Consolidated Statements of Earnings - Unaudited | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Three Months | | Nine Months |
Period ended March 31, | | 2007 | | 2006 | | Change | | | 2007 | | 2006 | | Change |
(In thousands except per share data) | | | | | | | | | | | | | |
Revenues | | | | | | | | | | | | | |
Advertising | $ | 244,374 | $ | 227,843 | | 7.3 % | | $ | 740,435 | $ | 693,214 | | 6.8 % |
Circulation | | 93,614 | | 95,888 | | (2.4)% | | | 260,207 | | 278,468 | | (6.6)% |
All other | | 71,845 | | 71,193 | | 0.9 % | | | 211,009 | | 199,490 | | 5.8 % |
Total revenues | | 409,833 | | 394,924 | | 3.8 % | | | 1,211,651 | | 1,171,172 | | 3.5 % |
Operating expenses | | | | | | | | | | | | | |
Production, distribution and editorial | | 167,364 | | 157,908 | | 6.0 % | | | 503,213 | | 499,062 | | 0.8 % |
Selling, general and administrative | | 153,065 | | 152,081 | | 0.6 % | | | 474,530 | | 457,571 | | 3.7 % |
Depreciation and amortization | | 11,481 | | 11,290 | | 1.7 % | | | 33,939 | | 34,202 | | (0.8)% |
Special items | | 12,706 | | - | | - | | | 12,706 | | - | | - |
Total operating expenses | | 344,616 | | 321,279 | | 7.3 % | | | 1,024,388 | | 990,835 | | 3.4 % |
Income from operations | | 65,217 | | 73,645 | | (11.4)% | | | 187,263 | | 180,337 | | 3.8 % |
Interest income | | 502 | | 412 | | 21.8 % | | | 1,172 | | 779 | | 50.4 % |
Interest expense | | (6,561) | | (7,437) | | (11.8)% | | | (21,333) | | (23,361) | | (8.7)% |
Earnings before income taxes | | 59,158 | | 66,620 | | (11.2)% | | | 167,102 | | 157,755 | | 5.9 % |
Income taxes | | 13,849 | | 25,979 | | (46.7)% | | | 56,270 | | 61,524 | | (8.5)% |
Net earnings | $ | 45,309 | $ | 40,641 | | 11.5 % | | $ | 110,832 | $ | 96,231 | | 15.2 % |
| | | | | | | | | | | | | |
Basic earnings per share | $ | 0.94 | $ | 0.82 | | 14.6 % | | $ | 2.31 | $ | 1.95 | | 18.5 % |
Basic average shares outstanding | | 48,170 | | 49,524 | | (2.7)% | | | 48,024 | | 49,361 | | (2.7)% |
| | | | | | | | | | | | | |
Diluted earnings per share | $ | 0.92 | $ | 0.80 | | 15.0 % | | $ | 2.26 | $ | 1.90 | | 18.9 % |
Diluted average shares outstanding | | 49,300 | | 50,852 | | (3.1)% | | | 49,055 | | 50,747 | | (3.3)% |
| | | | | | | | | | | | | |
Dividends paid per share | $ | 0.185 | $ | 0.160 | | 15.6 % | | $ | 0.505 | $ | 0.440 | | 14.8 % |
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Meredith Corporation and Subsidiaries | | | | | | | | | | | | |
Segment Information - Unaudited | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Three Months | | Nine Months |
Period ended March 31, | | 2007 | | 2006 | | Change | | | 2007 | | 2006 | | Change |
(In thousands) | | | | | | | | | | | | | |
Revenues | | | | | | | | | | | | | |
Publishing | $ | 330,398 | $ | 319,011 | | 3.6 % | | $ | 944,215 | $ | 938,954 | | 0.6 % |
Broadcasting | | | | | | | | | | | | | |
Non-political advertising | | 78,035 | | 72,200 | | 8.1 % | | | 231,360 | | 225,607 | | 2.6 % |
Political advertising | | 436 | | 664 | | (34.3)% | | | 33,041 | | 828 | | NM |
Other revenues | | 964 | | 3,049 | | (68.4)% | | | 3,035 | | 5,783 | | (47.5)% |
Total broadcasting | | 79,435 | | 75,913 | | 4.6 % | | | 267,436 | | 232,218 | | 15.2 % |
Total revenues | $ | 409,833 | $ | 394,924 | | 3.8 % | | $ | 1,211,651 | $ | 1,171,172 | | 3.5 % |
| | | | | | | | | | | | | |
Operating profit | | | | | | | | | | | | | |
Publishing | $ | 64,417 | $ | 61,366 | | 5.0 % | | $ | 146,111 | $ | 146,289 | | (0.1)% |
Broadcasting | | 20,292 | | 20,073 | | 1.1 % | | | 78,516 | | 59,141 | | 32.8 % |
Unallocated corporate | | (6,786) | | (7,794) | | 12.9 % | | | (24,658) | | (25,093) | | 1.7 % |
Special items | | (12,706) | | - | | - | | | (12,706) | | - | | - |
Income from operations | $ | 65,217 | $ | 73,645 | | (11.4)% | | $ | 187,263 | $ | 180,337 | | 3.8 % |
| | | | | | | | | | | | | |
Depreciation and amortization | | | | | | | | | | | | | |
Publishing | $ | 4,701 | $ | 4,637 | | 1.4 % | | $ | 13,869 | $ | 14,120 | | (1.8)% |
Broadcasting | | 6,324 | | 6,036 | | 4.8 % | | | 18,608 | | 18,197 | | 2.3 % |
Unallocated corporate | | 456 | | 617 | | (26.1)% | | | 1,462 | | 1,885 | | (22.4)% |
Total depreciation and amortization | $ | 11,481 | $ | 11,290 | | 1.7 % | | $ | 33,939 | $ | 34,202 | | (0.8)% |
| | | | | | | | | | | | | |
EBITDA1 | | | | | | | | | | | | | |
Publishing | $ | 69,118 | $ | 66,003 | | 4.7 % | | $ | 159,980 | $ | 160,409 | | (0.3)% |
Broadcasting | | 26,616 | | 26,109 | | 1.9 % | | | 97,124 | | 77,338 | | 25.6 % |
Unallocated corporate | | (6,330) | | (7,177) | | 11.8 % | | | (23,196) | | (23,208) | | 0.1 % |
Total EBITDA | $ | 89,404 | $ | 84,935 | | 5.3 % | | $ | 233,908 | $ | 214,539 | | 9.0 % |
| | | | | | | | | | | | | |
1 EBITDA is earnings before interest, taxes, depreciation, and amortization and excludes special items. | | | | |
NM - Not meaningful | | | | | | | | | | | | | |
Meredith Corporation and Subsidiaries | | |
Condensed Consolidated Balance Sheets | | |
| | | | | |
(In thousands) | | (Unaudited)
March 31,
2007 | | June 30,
2006 |
Assets | | | | | | |
Current assets | | | | | | |
Cash and cash equivalents | $ | 50,759 | | $ | 30,713 | |
Accounts receivable, net | | 270,841 | | | 239,368 | |
Inventories | | 58,951 | | | 52,032 | |
Current portion of subscription acquisition costs | | 78,647 | | | 79,565 | |
Current portion of broadcast rights | | 16,045 | | | 12,498 | |
Other current assets | | 14,991 | | | 17,344 | |
Total current assets | | 490,234 | | | 431,520 | |
Property, plant, and equipment | | 442,040 | | | 417,831 | |
Less accumulated depreciation | | (241,045 | ) | | (223,033 | ) |
Net property, plant, and equipment | | 200,995 | | | 194,798 | |
Subscription acquisition costs | | 68,114 | | | 74,538 | |
Broadcast rights | | 11,307 | | | 13,412 | |
Other assets | | 80,921 | | | 81,218 | |
Intangible assets, net | | 796,193 | | | 806,264 | |
Goodwill | | 459,766 | | | 438,925 | |
Total assets | $ | 2,107,530 | | $ | 2,040,675 | |
| | | | | | |
Liabilities and Shareholders' Equity | | | | |
Current liabilities | | | | | | |
Current portion of long-term debt | $ | 100,000 | | $ | 50,000 | |
Current portion of long-term broadcast rights payable | | 16,952 | | | 14,744 | |
Accounts payable | | 76,621 | | | 79,892 | |
Accrued expenses and other liabilities | | 151,812 | | | 118,972 | |
Current portion of unearned subscription revenues | | 199,913 | | | 200,338 | |
Total current liabilities | | 545,298 | | | 463,946 | |
Long-term debt | | 400,000 | | | 515,000 | |
Long-term broadcast rights payable | | 20,597 | | | 21,755 | |
Unearned subscription revenues | | 173,547 | | | 169,494 | |
Deferred income taxes | | 147,639 | | | 125,049 | |
Other noncurrent liabilities | | 43,532 | | | 47,327 | |
Total liabilities | | 1,330,613 | | | 1,342,571 | |
Shareholders' equity | | | | | | |
Common stock | | 38,786 | | | 38,774 | |
Class B stock | | 9,308 | | | 9,417 | |
Additional paid-in capital | | 56,994 | | | 56,012 | |
Retained earnings | | 678,332 | | | 599,413 | |
Accumulated other comprehensive loss | | (1,818 | ) | | (2,077 | ) |
Unearned compensation | | (4,685 | ) | | (3,435 | ) |
Total shareholders' equity | | 776,917 | | | 698,104 | |
Total liabilities and shareholders' equity | $ | 2,107,530 | | $ | 2,040,675 | |
Meredith Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows - Unaudited | | | | |
| | | | | | |
| | | | | |
Nine Months ended March 31, | | 2007 | | | 2006 |
(In thousands) | | | | | |
Net cash provided by operating activities | $ | 170,450 | | $ | 116,545 |
| | | | | | |
Cash flows from investing activities | | | | | |
| Acquisitions of businesses | | (15,456) | | | (359,465) |
| Additions to property, plant and equipment | | (29,014) | | | (20,829) |
| Proceeds from disposition of assets | | - | | | 2,500 |
Net cash used in investing activities | | (44,470) | | | (377,794) |
| | | | | | |
Cash flows from financing activities | | | | | |
| Proceeds from issuance of long-term debt | | 115,000 | | | 490,000 |
| Repayments of long-term debt | | (180,000) | | | (220,000) |
| Purchases of Company stock | | (48,372) | | | (47,233) |
| Proceeds from common stock issued | | 29,486 | | | 27,895 |
| Dividends paid | | (24,312) | | | (21,758) |
| Excess tax benefits from share-based payments | | 2,264 | | | 18,804 |
| Other | | - | | | (703) |
Net cash provided by (used in) financing activities | | (105,934) | | | 247,005 |
| | | | | | |
Net increase (decrease) in cash and cash equivalents | | 20,046 | | | (14,244) |
Cash and cash equivalents at beginning of period | | 30,713 | | | 29,788 |
Cash and cash equivalents at end of period | $ | 50,759 | | $ | 15,544 |
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Meredith Corporation and Subsidiaries | | | | | |
Supplemental Disclosures Regarding Non-GAAP Financial Measures | | | | | Table 1 |
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CORE EARNINGS | | | | | | | | |
Core earnings, which is reconciled to net earnings in the following tables, is defined as net earnings adjusted for certain one time items. |
| | | | | | | | | |
| Three Months | | | Nine Months | | |
Period ended March 31, | | 2007 | | 2006 | | | | | 2007 | | 2006 | | | |
(In thousands) | | | | | | | | | | | | | | |
Core earnings | $ | 43,621 | $ | 40,641 | | | | $ | 109,144 | $ | 96,231 | | | |
Special items, net of tax1 | | (7,713) | | - | | | | | (7,713) | | - | | | |
Tax settlement2 | | 9,401 | | - | | | | | 9,401 | | - | | | |
Net earnings | $ | 45,309 | $ | 40,641 | | | | $ | 110,832 | $ | 96,231 | | | |
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| | | | | | | | | | | | | | |
CORE EARNINGS PER SHARE | | | | | | | | |
Core earnings per share, which is reconciled to diluted earnings per share in the following tables, is defined as diluted earnings per share adjusted for certain one time items. |
| | | | | | | | | |
| Three Months | | | Nine Months | | |
Period ended March 31, | | 2007 | | 2006 | | | | | 2007 | | 2006 | | | |
(In thousands) | | | | | | | | | | | | | | |
Core earnings per share | $ | 0.88 | $ | 0.80 | | | | $ | 2.22 | $ | 1.90 | | | |
Special items, net of tax1 | | (0.15) | | - | | | | | (0.15) | | - | | | |
Tax settlement2 | | 0.19 | | - | | | | | 0.19 | | - | | | |
Diluted earnings per share | $ | 0.92 | $ | 0.80 | | | | $ | 2.26 | $ | 1.90 | | | |
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1 Special items consist of a restructuring charge of $9.9 million ($6.0 million after tax) and a non-cash impairment charge of $2.8 million ($1.7 million after tax). The restructuring charge includes the write-down of various assets ofChild magazine of $6.2 million, severance and benefit costs of $3.4 million, and other accruals of $0.3 million. The non-cash impairment charge reduced goodwill and other identifiable intangible assets of our broadcast station in Chattanooga, TN, to their fair value less cost to sell. |
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2 An income tax benefit of $9.4 million was recognized in the third quarter of fiscal 2007 related to the reversal of previously recorded taxes resulting from the resolution of a tax contingency related to a loss on the sale of stock in Craftways, a business sold in fiscal 2003. Recognition of the benefit was deferred until tax-related contingencies were resolved. |
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Meredith Corporation and Subsidiaries | | | | | | | | |
Supplemental Disclosures Regarding Non-GAAP Financial Measures | | | | | Table 2 |
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EBITDA | | | | | | | | | |
Consolidated EBITDA, which is reconciled to net earnings in the following tables, is defined as earnings before interest, taxes, depreciation and amortization and does not include special items. |
Segment EBITDA is a measure of segment earnings before depreciation and amortization. | | | | |
Segment EBITDA margin is defined as segment EBITDA divided by segment revenues. | | | | |
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| Three months ended March 31, 2007 | | Nine months ended March 31, 2007 |
| | | Unallocated | | | | | Unallocated | |
| Publishing | Broadcasting | Corporate | Total | | Publishing | Broadcasting | Corporate | Total |
(In thousands) | | | | | | | | | |
Revenues | $ 330,398 | $ 79,435 | $ - | $ 409,833 | | $ 944,215 | $ 267,436 | $ - | $1,211,651 |
| | | | | | | | | |
Operating profit excluding special items | $ 64,417 | $ 20,292 | $ (6,786) | $ 77,923 | | $ 146,111 | $ 78,516 | $ (24,658) | $ 199,969 |
Depreciation and amortization | 4,701 | 6,324 | 456 | 11,481 | | 13,869 | 18,608 | 1,462 | 33,939 |
EBITDA | $ 69,118 | $ 26,616 | $ (6,330) | 89,404 | | $ 159,980 | $ 97,124 | $ (23,196) | 233,908 |
Less: | | | | | | | | | |
Depreciation and amortization | | | | (11,481) | | | | | (33,939) |
Special items | | | | (12,706) | | | | | (12,706) |
Net interest expense | | | | (6,059) | | | | | (20,161) |
Income taxes | | | | (13,849) | | | | | (56,270) |
Net earnings | | | | $ 45,309 | | | | | $ 110,832 |
| | | | | | | | | |
Segment EBITDA margin | 20.9 % | 33.5 % | | | | 16.9 % | 36.3 % | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Three months ended March 31, 2006 | | Nine months ended March 31, 2006 |
| | | Unallocated | | | | | Unallocated | |
| Publishing | Broadcasting | Corporate | Total | | Publishing | Broadcasting | Corporate | Total |
(In thousands) | | | | | | | | | |
Revenues | $ 319,011 | $ 75,913 | $ - | $ 394,924 | | $ 938,954 | $ 232,218 | $ - | $1,171,172 |
| | | | | | | | | |
Operating profit | $ 61,366 | $ 20,073 | $ (7,794) | $ 73,645 | | $ 146,289 | $ 59,141 | $ (25,093) | $ 180,337 |
Depreciation and amortization | 4,637 | 6,036 | 617 | 11,290 | | 14,120 | 18,197 | 1,885 | 34,202 |
EBITDA | $ 66,003 | $ 26,109 | $ (7,177) | 84,935 | | $ 160,409 | $ 77,338 | $ (23,208) | 214,539 |
Less: | | | | | | | | | |
Depreciation and amortization | | | | (11,290) | | | | | (34,202) |
Net interest expense | | | | (7,025) | | | | | (22,582) |
Income taxes | | | | (25,979) | | | | | (61,524) |
Net earnings | | | | $ 40,641 | | | | | $ 96,231 |
| | | | | | | | | |
Segment EBITDA margin | 20.7 % | 34.4 % | | | | 17.1 % | 33.3 % | | |
| | | | | | | | | |
| | | | | | | | Table 2 continued |
FREE CASH FLOW | | | | | | | | | |
Free cash flow, which is reconciled to net earnings in the following tables, is defined as net earnings plus depreciation, amortization, and non-cash special items less capital expenditures. |
| | | | | | | | | |
| Three Months | | | Nine Months | | |
Period ended March 31, | | 2007 | | 2006 | | | | | 2007 | | 2006 | | | |
(In thousands) | | | | | | | | | | | | | | |
Free cash flow | $ | 56,048 | $ | 46,107 | | | | $ | 124,760 | $ | 109,604 | | | |
Depreciation and amortization | | (11,481) | | (11,290) | | | | | (33,939) | | (34,202) | | | |
Non-cash special items | | (9,003) | | - | | | | | (9,003) | | - | | | |
Capital expenditures | | 9,745 | | 5,824 | | | | | 29,014 | | 20,829 | | | |
Net earnings | $ | 45,309 | $ | 40,641 | | | | $ | 110,832 | $ | 96,231 | | | |
| | | | | | | | | | | | | | |
