Exhibit 99.1
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MEREDITH CORPORATION REPORTS
FISCAL 2002 FIRST-QUARTER RESULTS
DES MOINES, Iowa - (October 29, 2001) - Meredith Corporation (NYSE: MDP) today
reported earnings of $8.7 million, or 17 cents per share, for the fiscal year
2002 first quarter ended September 30. These results were in line with the
guidance the company provided in a September 25th earnings update prompted by
the terrorist attacks on September 11. Earnings in the first quarter of fiscal
2001 were $16.5 million, or 32 cents per share.
Revenues were $238.8 million in the first quarter of fiscal 2002, versus
comparable revenue of $244.1 million for the prior-year first quarter and
reported revenue of $250.0 million for the same period. Comparable revenues are
adjusted for discontinued magazine titles.
"Our first-quarter results reflect the overall weakness in our nation's
economy, particularly in advertising sales, and the effects of the terrorist
attacks of September 11," said Meredith Corporation Chairman and Chief
Executive Officer William T. Kerr. "As we stated in our earnings update,
first-quarter earnings were adversely affected by the absence of television
advertising during uninterrupted news coverage of the tragedies as our stations
focused on serving viewers by keeping them informed of unfolding events; the
postponement of National Football League games on September 16; and a dramatic
slowdown in the television broadcasting business following the attacks."
Kerr noted that comparable first-quarter publishing advertising revenues were
up 2 percent. All first-quarter magazine issues were finalized before September
11.
"In spite of the challenging business climate, we were beginning to see some
traction in our businesses prior to the terrorist attacks," Kerr said. "In
addition to the advertising gains on the publishing side, broadcast advertising
was pacing flat for the month. Like the rest of the world, that all changed on
September 11."
To address the difficult advertising climate and the effect of the terrorist
attacks, Kerr said Meredith continues to carefully monitor costs, while making
strategic investments to strengthen its competitive position.
"We've had a disciplined cost reduction program underway for five quarters,"
Kerr noted. "Our headcount as of September 30, 2001, was down approximately 8
percent since the beginning of the calendar year. At the same time, we continue
to take steps to grow our business, such as recent investments in circulation
mailings and marketing and promotion activities."
Kerr also highlighted Meredith's strong financial position. "We have a solid
balance sheet and a very manageable debt level," he said. "We have maintained
this financial strength over the years, but this has become even more important
in this period of economic uncertainty."
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OPERATING RESULTS
PUBLISHING
First-quarter publishing operating profit was $25.5 million, compared to $28.4
million in the prior-year quarter. Publishing revenues were $182.4 million,
versus $184.9 million in the first quarter of fiscal 2001. Revenues adjusted
for discontinued magazine titles were $182.4 million in the first quarter,
versus $179.0 million for the previous year.
"Comparable revenues in publishing rose slightly because of stronger
advertising sales at our flagship magazine, Better Homes and Gardens," Kerr
said. "Better Homes and Gardens and Ladies' Home Journal magazines maintained
their commanding share of women's service field advertising revenue at a
combined 39 percent for the 12 months ending with the September 2001 issue.
Both magazines, with their strong home and family focus and enduring brand
identities, are especially valuable in a difficult economic climate."
BROADCASTING
Broadcasting Group operating profit for the fiscal 2002 first quarter was
$59,000, versus a $10.1 million operating profit in the prior-year first
quarter. First-quarter Broadcasting Group revenues were $56.4 million, compared
to $65.1 million in same period of fiscal 2001. In the first fiscal quarter of
2001, political advertising contributed $3.4 million to revenues.
Demand for local advertising at Meredith stations was flat - in a down economy
- thanks to initiatives the company has launched to increase local revenues,
particularly from new business. This is in contrast to the industry as a whole,
which is experiencing declines in local revenues. National advertising
continued to be weak, with the largest declines in automobiles, restaurants and
retail.
"We have more than 80 programs in place to drive local advertising revenue, and
they have been effective," Kerr said. "But we cannot escape the fact that the
broadcasting industry is dealing with a sharp slowdown in demand for television
advertising that has been exacerbated by the terrorist attacks of September 11.
This is probably the most difficult economic period faced by the broadcast
industry. Still, we remain confident that our efforts to strengthen our sales
and news organizations while upgrading syndicated programming will position our
Broadcasting Group for long-term growth."
OTHER
Meredith repurchased approximately 500,000 shares of stock in the first quarter
in conjunction with the company's ongoing share repurchase program. The company
repurchased 330,000 of those shares after the New York Stock Exchange re-opened
on September 17. This compares to purchases of 448,000 shares in the prior-year
first quarter.
The company reduced its outstanding debt by $15 million, from $470 million to
$455 million, during the first quarter of fiscal 2002.
SECOND QUARTER AND FISCAL 2002 OUTLOOK
"It is difficult at this time to project earnings for the second quarter and
the rest of fiscal 2002," Kerr said. "The advertising recession continues and
the events of September 11 have added to the impact for the second quarter -
and likely the rest of the fiscal year."
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For the second fiscal quarter, magazine advertising pages are down in the
mid-single digits and revenues are down in the low-double digits.
Second-quarter broadcasting pacings are down in the mid-teens reflecting, in
part, the absence of political advertising booked in the second quarter of
fiscal 2001, which added 13 cents to earnings per share.
Meredith's overall circulation mailings for fiscal 2002 will be about equal
with the previous year, but mailings in the first half will be heavier when
compared to the same period of fiscal 2001. This should reduce earnings per
share by 2 cents in the second quarter
"As a result of these factors, we expect second-quarter earnings will be in a
range of 13 to 17 cents per share," Kerr said. "That could change if events
again interrupt our regular broadcasting programming.
"Looking at the full 2002 fiscal year, we do not have enough visibility to
comment due to current political and economic uncertainties, but we see no
clear signals of a near-term rebound in advertising sales," said Kerr.
In closing, Kerr said, "While we face a difficult period, we do know that
Meredith Corporation has survived wars, civil unrest, economic downturns and
natural disasters in the past. We have never faced anything quite like what is
facing our country right now. The Meredith focus on service journalism, news
programming, advertising reach and marketing solutions provides the
fundamentals for a strong future."
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, 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 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.
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 first-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 November 5, 2001.
INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS
This release contains certain forward-looking statements that are subject to
risks and uncertainties. These statements are based on management's current
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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; political events
that could interrupt broadcast television; 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
FISCAL 2002 FIRST QUARTER
EARNINGS PER SHARE AT A GLANCE
(Note: All figures are adjusted for stock splits)
The chart below depicts comparable quarterly and fiscal year diluted earnings
per share before nonrecurring items and discontinued operations.
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. Fiscal Year
-------- -------- -------- -------- -----------
F1996 .17 .22 .24 .28 .91
F1997 .22 .31 .33 .36 1.22
F1998 .27 .40 .37 .42 1.46
F1999 .32 .47 .41 .44 1.64
F2000 .34 .48 .47 .42 1.71
F2001 .32 .47 .37 .23 1.39
F2002 .17
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Meredith Corporation and Subsidiaries
Consolidated Statements of Earnings (Unaudited)
Three Months
Ended September 30
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2001 2000
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(In thousands except per share)
Revenues (less returns and allowances):
Advertising $138,841 $149,025
Circulation 63,477 64,514
All other 36,445 36,483
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Total revenues 238,763 250,022
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Operating costs and expenses:
Production, distribution and edit 108,248 110,545
Selling, general & administrative 95,652 91,460
Depreciation and amortization 13,577 12,839
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Total operating costs and expenses 217,477 214,844
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Income from operations 21,286 35,178
Interest income 160 209
Interest expense (7,313) (8,520)
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Earnings before income taxes 14,133 26,867
Income taxes 5,470 10,398
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Net earnings $ 8,663 $ 16,469
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Basic earnings per share $ 0.17 $ 0.33
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Basic average shares outstanding 49,723 50,272
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Diluted earnings per share $ 0.17 $ 0.32
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Diluted average shares outstanding 51,004 51,522
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Dividends paid per share $ 0.085 $ 0.080
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Meredith Corporation and Subsidiaries
Segment Information (Unaudited)
Three Months
Ended September 30
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2001 2000
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(In thousands)
Revenues
Publishing $182,409 $184,885
Broadcasting 56,354 65,137
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Total revenues $238,763 $250,022
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Operating Profit
Publishing $ 25,536 $ 28,410
Broadcasting 59 10,143
Unallocated corporate expense (4,309) (3,375)
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Income from operations $ 21,286 $ 35,178
Interest income 160 209
Interest expense (7,313) (8,520)
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Earnings before income taxes 14,133 26,867
Income taxes 5,470 10,398
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Net earnings $ 8,663 $ 16,469
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Depreciation & Amortization
Publishing $ 2,763 $ 2,209
Broadcasting 10,133 9,948
Unallocated corporate 681 682
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Total depreciation & amortization $ 13,577 $ 12,839
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EBITDA
Publishing $ 28,299 $ 30,619
Broadcasting 10,192 20,091
Unallocated corporate (3,628) (2,693)
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Total EBITDA $ 34,863 $ 48,017
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