Exhibit 99.1
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MEREDITH CORPORATION REPORTS
FOURTH QUARTER AND FISCAL YEAR 2001 RESULTS
Publishing Group Fourth-Quarter Profit Rises Despite Difficult Market
DES MOINES, Iowa - (Aug 2, 2001) - Meredith Corporation (NYSE: MDP) today
reported pro forma earnings of $20.3 million, or 40 cents per share, for the
fiscal year 2001 fourth quarter ended June 30. These results were in line with
the guidance the company has provided, and ahead of the First Call consensus
estimate. Pro forma earnings in the fourth quarter of fiscal 2000 were $22.1
million, or 43 cents per share.
For the entire 2001 fiscal year, Meredith pro forma earnings were $79.7
million, or $1.55 per share, also in line with the guidance the company has
provided. This compares to pro forma earnings of $90.8 million, or $1.72 per
share, in fiscal 2000.
Pro forma earnings in the fiscal 2001 fourth quarter and year exclude several
one-time items. On a pre-tax basis, they are:
- Charges of $25.3 million, primarily for employment reduction programs and
the write-down of certain Internet investments;
- Charges of $9.9 million for the write-down of broadcast film rights; and
- A $21.5 million gain from the sale of Golf for Women magazine.
The net effect of these items was an after-tax charge of $8.4 million or 16
cents per share.
Pro forma earnings in fiscal 2000 exclude a nonrecurring charge of $23.1
million for the write-down of nondeductible intangibles, severance payments and
other charges related to the closing of certain magazines; and a charge of $1.0
million for the write-down of broadcast film rights. The net effect of these
items was an after-tax charge of $19.7 million, or 37 cents per share.
Revenues adjusted for discontinued magazine titles were $270.0 million in the
fourth quarter of fiscal 2001, versus $276.1 million for the previous year.
Reported revenues for the fourth quarter of fiscal 2001 were $270.0 million,
versus revenues of $283.7 million for the prior-year quarter.
Revenues adjusted for discontinued magazine titles were $1,039.1 million for
fiscal 2001, versus $1,049.9 million for the previous year. For fiscal 2001,
Meredith reported revenues were $1,053.2 million, versus revenues of $1,097.2
million for the previous year.
Reported and pro forma results for the 2000 and 2001 fourth quarters and fiscal
years were as follows:
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Pro Forma Results Reported Results
2001 2000 2001 2000
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3 months ended 6/30
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Income from operations $40,554 $44,751 $ 5,316 $21,257
Net earnings 20,272 22,053 11,878 2,732
Diluted earnings per share $ 0.40 $ 0.43 $ 0.23 $ 0.06
12 months ended 6/30
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Income from operations $161,862 $185,485 $126,624 $161,337
Net earnings 79,666 90,750 71,272 71,030
Diluted earnings per share $ 1.55 $ 1.72 $ 1.39 $ 1.35
In thousands, expect per share data
"Our results in the fourth quarter and the fiscal year reflect the weakness in
advertising demand that has affected the media industry," said Meredith
Corporation Chairman and Chief Executive Officer William T. Kerr. "We have not
seen any indications of a turnaround in the near future. In response, we are
aggressively reducing costs and building our competitive position as we work to
meet the expectations of our shareholders."
Kerr noted that Meredith's operating costs excluding nonrecurring charges and
the film write-down were 4 percent lower for the fiscal fourth quarter,
compared to the prior-year period. For fiscal 2001 the company's pro forma
costs were down 2 percent compared to fiscal 2000, despite higher paper prices,
a January postal increase, continued investments in interactive media, and
broadcasting sales and news investments.
Meredith completed its previously announced voluntary early retirement program
during the fourth quarter. In addition, the company has instituted an
involuntary employment reduction program. Since December 31, 2000, staffing has
been by reduced by 7 percent. At December 31, 2001, staffing is expected to be
down 10 percent versus the prior-year period.
OPERATING RESULTS
PUBLISHING
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Fourth quarter publishing operating profit was $34.9 million, compared to $31.1
million in the prior-year quarter. Higher circulation margins, improved
integrated marketing income and expense reductions contributed to the higher
quarterly operating profit in publishing. Publishing revenues were $202.4
million, versus $210.7 million in the fourth quarter of fiscal 2000. Revenues
adjusted for discontinued magazine titles were $202.4 million in the fourth
quarter of fiscal 2001, versus $203.2 million for the previous year.
For fiscal 2001, publishing operating profit was $132.8 million, compared to
$139.0 million for the previous year. Publishing revenues for the fiscal year
were $782.9 million, versus $818.8 million for fiscal 2000. Revenues adjusted
for discontinued magazine titles were $768.8 million in fiscal 2001, versus
$771.5 million for the previous year.
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Publishing revenues were impacted by a continued reduction in advertising
spending in most categories. "In the fourth quarter our strongest performances
were reported by Meredith Integrated Marketing and our lineup of Better Homes
and Gardens Special Interest Publications, both of which are not heavily
dependent on advertising revenues," Kerr said. "Our newsstand sales continue
to rise at a time when sales have been down for the overall magazine industry.
We have made a concerted effort over the last several years to build sources of
revenue not dependent on swings in the advertising cycle."
Interactive Media (Results reported in the Publishing Segment)
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Fiscal 2001 fourth quarter Interactive Media revenues were $1.3 million versus
$1.2 million in the prior-year quarter. Interactive Media operating losses
were $2.5 million, versus $3.0 million in same period of fiscal 2000. For the
entire 2001 fiscal year, Interactive revenues were $5.8 million versus $3.5
million for fiscal 2000. Operating losses were $7.7 million for the 2001
fiscal year, compared to $6.3 million for fiscal 2000.
In the fourth quarter, Meredith's online subscriptions grew nearly five fold
compared to the prior-year period. Meredith finished the fiscal year with
290,000 online subscription orders, well above its goal of 250,000.
"Obtaining magazine subscriptions through the Internet is a priority for
Meredith because of the potential for significant savings in the cost of
subscription acquisitions," Kerr said. "To date, we are exceeding our targets
for online subscriptions, and we are well on our way to achieving our goal of
acquiring 1.5 million subscriptions over the Internet by the end of fiscal
2003."
BROADCASTING
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Broadcasting Group operating profit excluding broadcast film write-downs was
$9.7 million for the fiscal 2001 fourth quarter, versus $17.5 million in the
prior-year fourth quarter. Fourth quarter Broadcasting Group revenues were
$67.6 million, compared to $72.9 million in same period of fiscal 2000.
For fiscal 2001, Broadcasting operating profit excluding broadcast film
write-downs was $44.6 million, compared to $61.5 million for the prior-year
period. Broadcasting revenues for fiscal 2001 were $270.3 million, compared to
$278.3 million for the prior-year period.
Meredith is still experiencing a slowdown in demand for television advertising,
consistent with other television broadcasting companies, Kerr said. National
revenues continue to be weak, with the largest declines in automobiles,
restaurants and retail, while local revenues are up slightly. "We have some 80
initiatives in place, driving our efforts to attract local advertising from
clients new to television," Kerr said. "As a result, local advertising has
increased in each of the last two quarters, even in the face of a down
advertising market."
OTHER
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Meredith repurchased 231,000 shares of stock in the fourth quarter in
conjunction with the company's ongoing share repurchase program. This compares
to purchases of 423,000 shares in the prior-year fourth quarter. In fiscal
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2001, the company repurchased 1.3 million shares, compared to 1.7 million
shares in fiscal 2000 and 1.1 million shares in fiscal 1999.
FISCAL 2002 OUTLOOK
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In addition to the down advertising environment, Kerr said there are three
specific considerations that will impact Meredith's fiscal 2002 first and
second quarters.
First, the company will be without $14 million in net political advertising it
booked in fiscal 2001. That added 4 cents to earnings in the first quarter and
13 cents in the second quarter of our fiscal 2001.
Second, while Meredith's overall level of circulation mailings in fiscal 2002
will be about equal with 2001, the company currently expects it will mail more
heavily in the first half of the year than in the second half. This should
impact earnings by about 4 cents in the first quarter and 5 cents in the second
quarter.
Third, Kerr stated Meredith is concerned about rising trends in external costs,
including healthcare, pension, postal and programming increases. These cost
increases will somewhat offset the savings from reduced employment levels.
"As a result of these factors, we expect earnings in the first half of fiscal
2002 to be well below those in the first half of 2001," Kerr said.
"As we look at the full 2002 fiscal year, we have very little visibility at
this time," Kerr continued. "Analyst estimates for the year fall in a broad
range of $1.41 to $1.70 per share, with a consensus number of $1.60. As of
now, we are uncomfortable with most of these estimates, especially given the
lack of political advertising in fiscal 2002, which contributed 17 cents to
fiscal 2001 earnings. We do not believe that the current advertising
environment will allow us to offset the loss of these political advertising
revenues."
Kerr said the company will update this assessment at its next earnings call in
October.
ABOUT MEREDITH CORPORATION
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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, and interactive and integrated marketing.
The Meredith Publishing Group includes 16 magazine brands, including Better
Homes and Gardens and Ladies' Home Journal, and approximately 120 special
interest publications. Meredith owns 12 television stations -- including
properties in top 25 markets such as Atlanta, Phoenix, Orlando and Portland --
and produces original television programming based on its strong brands.
Meredith has nearly 300 books in print and has established marketing
relationships with some of America's leading companies, including The Home
Depot, Kraft Foods and Nestle USA. Meredith's consumer database, which
contains more than 60 million names, is the largest domestic database among
media companies and enables magazine and television advertisers to precisely
target marketing campaigns. Additionally, Meredith has an extensive Internet
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presence, including 23 web sites, strategic alliances with leading specialty
Internet destinations and branded anchor tenant positions on America Online.
Note: All earnings per share figures in the text of this release are diluted.
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Meredith Corporation will host a conference call at 11:00 a.m. eastern time
today. Chairman and Chief Executive Officer William Kerr, Chief Financial
Officer Suku Radia and Controller Tom Ferree will discuss fourth-quarter
results and respond to questions. A live Webcast of the call and a copy of the
text will be accessible to the public on the company's web site,
www.meredith.com. The Webcast will remain there through August 9, 2001.
INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS
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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; 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, order 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 such as the Internet or e-commerce; changes in
government regulations affecting the company's industries; unexpected changes
in interest rates; and any acquisitions and/or dispositions.
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Meredith Corporation and Subsidiaries
Consolidated Statements of Earnings (Unaudited)
Three Months Twelve Months
Ended June 30 Ended June 30
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2001 2000 2001 2000
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(In thousands except per share)
Revenues (less returns and allowances):
Advertising $156,069 $170,918 $615,722 $658,049
Circulation 66,703 67,552 263,659 275,642
All other 47,224 45,219 173,832 163,474
-------- -------- -------- --------
Total revenues 269,996 283,689 1,053,213 1,097,165
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Operating costs and expenses:
Production, distribution and edit 121,477 116,027 462,441 455,647
Selling, general & administrative 104,794 109,981 387,268 404,736
Depreciation and amortization 13,101 13,328 51,572 52,349
Nonrecurring items 25,308 23,096 25,308 23,096
-------- -------- -------- --------
Total operating costs and expenses 264,680 262,432 926,589 935,828
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Income from operations 5,316 21,257 126,624 161,337
Gain from dispositions 21,477 -- 21,477 --
Interest income 351 359 1,028 1,195
Interest expense (7,837) (8,240) (32,929) (34,946)
-------- -------- -------- --------
Earnings before income taxes 19,307 13,376 116,200 127,586
Income taxes 7,429 10,644 44,928 56,556
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Net earnings $ 11,878 $ 2,732 $ 71,272 $ 71,030
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Basic earnings per share $ 0.24 $ 0.06 $ 1.43 $ 1.38
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Basic average shares outstanding 49,737 50,606 49,977 51,313
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Diluted earnings per share $ 0.23 $ 0.06 $ 1.39 $ 1.35
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Diluted average shares outstanding 51,250 51,801 51,354 52,774
======== ======== ======== ========
Dividends paid per share $ 0.085 $ 0.080 $ 0.330 $ 0.310
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Meredith Corporation and Subsidiaries
Segment Information (Unaudited)
Three Months Twelve Months
Ended June 30 Ended June 30
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2001 2000 2001 2000
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(In thousands)
Revenues
Publishing $202,408 $210,749 $782,937 $818,826
Broadcasting 67,588 72,940 270,276 278,339
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Total revenues $269,996 $283,689 $1,053,213 $1,097,165
======== ======== ========== ==========
Operating Profit
Publishing $ 34,860 $ 31,087 $ 132,815 $ 139,045
Broadcasting (185) 17,096 34,683 60,454
Unallocated corporate expense (4,051) (3,830) (15,566) (15,066)
-------- -------- ---------- ----------
Segment operating profit $ 30,624 $ 44,353 $ 151,932 $ 184,433
Nonrecurring items (25,308) (23,096) (25,308) (23,096)
-------- -------- ---------- ----------
Income from operations $ 5,316 $ 21,257 $ 126,624 $ 161,337
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Meredith Corporation and Subsidiaries
Segment Information (Unaudited)- continued -
Three Months Twelve Months
Ended June 30 Ended June 30
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2001 2000 2001 2000
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(In thousands)
Pro Forma Operating Profit
Publishing $ 34,860 $ 31,087 $132,815 $139,045
Broadcasting 9,745 17,494 44,613 61,506
Unallocated corporate expense (4,051) (3,830) (15,566) (15,066)
-------- -------- -------- --------
Segment operating profit 40,554 44,751 161,862 185,485
Nonrecurring items (35,238) (23,494) (35,238) (24,148)
-------- -------- -------- --------
Income from operations $ 5,316 $ 21,257 $126,624 $161,337
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Broadcasting segment operating profit for the years ended June 30, 2001 and
2000 include charges of $9.9 million and $1.0 million, respectively, for the
write-down of certain programming rights. Pro Forma segment results with the
programming write-downs shown in nonrecurring items are shown above.
Depreciation & Amortization
Publishing $ 2,304 $ 2,923 $ 8,983 $ 11,561
Broadcasting 10,145 9,927 40,034 38,705
Unallocated corporate 652 478 2,555 2,083
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Total depreciation & amortization $ 13,101 $ 13,328 $ 51,572 $ 52,349
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EBITDA
Publishing $ 37,164 $ 34,010 $141,798 $150,606
Broadcasting 19,890 27,421 84,647 100,211
Unallocated corporate (3,399) (3,352) (13,011) (12,983)
-------- -------- -------- --------
Total EBITDA $ 53,655 $ 58,079 $213,434 $237,834
======== ======== ======== ========
Note: EBITDA is earnings before interest, taxes, depreciation and amortization
and it excludes the following one-time items:
Broadcasting programming write-down ($9,930) ($398) ($9,930) ($1,052)
Nonrecurring charges ($25,308) ($23,096) ($25,308) ($23,096)
Gain from dispositions $21,477 -- $21,477 --
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Meredith Corporation and Subsidiaries
Pro Forma Earnings per Share Calculation (Unaudited)
Three Months Twelve Months
Ended June 30 Ended June 30
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2001 2000 2001 2000
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(Share data in thousands)
Basic earnings
per share as reported $ 0.24 $ 0.06 $ 1.43 $ 1.38
Pro Forma Adjustments:
Add:
Nonrecurring charges 0.31 0.38 0.31 0.38
Film write-down* 0.12 -- 0.12 0.01
Less:
Gain from dispositions* (0.26) -- (0.27) --
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Pro Forma Basic earnings per share $ 0.41 $ 0.44 $ 1.59 $ 1.77
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Basic average shares outstanding 49,737 50,606 49,977 51,313
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Diluted earnings
per share as reported $ 0.23 $ 0.06 $ 1.39 $ 1.35
Pro Forma Adjustments:
Add:
Nonrecurring charges 0.30 0.37 0.30 0.36
Film write-down* 0.12 -- 0.12 0.01
Less:
Gain from dispositions* (0.25) -- (0.26) --
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Pro Forma Diluted earnings per share $ 0.40 $ 0.43 $ 1.55 $ 1.72
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Diluted average shares outstanding 51,250 51,801 51,354 52,774
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* The changes in basic and diluted earnings per share between the fourth
quarter and the fiscal year are due to the difference in the average number
of shares outstanding for the two periods.
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