Exhibit 99.1
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MEREDITH CORPORATION REPORTS
FISCAL 2002 THIRD-QUARTER RESULTS
DES MOINES, Iowa - (May 1, 2002) - Meredith Corporation (NYSE: MDP) today
reported earnings for the fiscal 2002 third quarter ended March 31, 2002, of
$17.9 million, or $0.35 per share, exceeding the First Call consensus estimate
of $0.34 per share. This compares to earnings of $18.9 million, or $0.37 per
share, in the third quarter of fiscal 2001.
For the first three quarters of fiscal 2002, Meredith earnings were $35.3
million, or $0.69 per share. Excluding a nonrecurring gain of $0.02 per share
from the proceeds of the demutualization of an insurance company in which
Meredith holds policies, earnings were $34.0 million or $0.67 per share. This
compares to net earnings of $59.4 million, or $1.16 per share, in the first
three quarters of fiscal 2001.
"Our performance during the third quarter was encouraging," said Meredith
Corporation Chairman and Chief Executive Officer William T. Kerr. "Our ongoing
efforts to build share in our publishing and broadcasting markets, and to
reduce costs, are paying off."
Company-wide fiscal third quarter advertising revenues, when adjusted for
discontinued titles, were down 3.6 percent from a year earlier. By comparison,
comparable second fiscal quarter advertising revenues declined 12.9 percent
from the prior-year quarter.
Revenues for the third quarter of fiscal 2002 were $258.4 million, versus
comparable revenues of $263.8 million and reported revenues of $272.3 million
for the prior-year third quarter. Comparable revenues are adjusted for
discontinued magazine titles.
For the first three quarters of fiscal 2002, revenues were $727.0 million,
versus comparable revenues of $760.8 million for the same period of the
previous year. For the first three quarters of fiscal 2001, reported revenues
were $783.2 million.
Third quarter results also reflected the company's continued cost control
efforts, Kerr said. Company-wide costs were down 5 percent during the third
quarter, compared to the same period a year earlier. Company-wide costs were
down more than 2 percent when taking into account a timing shift in circulation
mailings, which moved mailing costs to the first two quarters of fiscal 2002.
Kerr also highlighted the strength of Meredith's balance sheet. During the
third quarter, the company reduced its debt outstanding by $15 million to a
level of $410 million, and in early April refinanced its debt to take advantage
of favorable long-term interest rates.
In March Meredith announced it had agreed to exchange its Orlando and Ocala,
FL, television stations with News Corporation and FOX Television Stations,
Inc., for KPTV in Portland, OR, and signed new affiliation agreements for all
of its FOX-affiliated stations. The proposed transaction, which is subject to
regulatory approval, creates a Meredith duopoly (FOX/UPN) in Portland.
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OPERATING RESULTS
PUBLISHING
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Third-quarter publishing operating profit was $40.7 million, up 2 percent from
the $39.9 million recorded for the prior-year quarter. Publishing revenues
were $199.6 million, versus comparable revenues of $204.9 million in the third
quarter of fiscal 2001. Reported prior-year third quarter publishing revenues
were $213.4 million.
For the first three quarters of fiscal 2002, publishing operating profit was
$80.0 million, compared to $98.0 million for the prior-year period. Publishing
revenues for the first three quarters of 2002 were $542.8 million, versus
comparable revenues of $558.1 million for the prior-year period. Reported
revenues for the first three quarters of fiscal 2001 were $580.5 million.
"Better Homes and Gardens and Ladies' Home Journal increased their share of
women's service advertising revenues, with a combined total of 40 percent for
the 12-month period ending with the April 2002 issues. That's up two
percentage points from the same period a year earlier," Kerr said. "We also
gained share in several of our other titles, including Country Home and
Traditional Home."
BROADCASTING
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Broadcasting Group operating profit for the fiscal 2002 third quarter was
$781,000, versus $3.3 million in the prior-year third quarter. Third-quarter
Broadcasting Group revenues were $58.8 million, compared to $58.9 million in
fiscal 2001. The reduced operating profit was primarily due to higher film
amortization and increased benefit costs.
For the first three quarters of fiscal 2002, broadcasting operating profit was
$11.2 million, compared to $34.9 million for the prior-year period.
Broadcasting revenues for the first three quarters of 2002 were $184.2 million,
compared to $202.7 million for the prior-year period.
"We are strengthening our broadcasting management team and are improving the
sales and news operations at all of our stations," Kerr said. "We are
particularly pleased with the progress we have made in Atlanta, our largest
market. Every newscast at WGCL showed ratings gains in the key demographic of
adults 25 to 54 during the February sweeps period."
OUTLOOK
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Looking ahead to the full 2002 fiscal year, Kerr said fourth quarter publishing
advertising pages and revenues, as well as broadcasting pacings, are all up in
the mid-single digits. Kerr noted that broadcast pacings are a snapshot in
time and change frequently.
"We are encouraged by these signs. The advertising recession appears to have
bottomed out, but it is still too early to predict a sustained recovery. We
continue to see a lot of variability in the advertising markets for both
publishing and broadcasting. In addition, June is typically a volatile month
in broadcast advertising, coming off the May sweeps and entering the summer,"
Kerr said. "The First Call earnings estimates for our fourth fiscal quarter
range from $0.33 to $0.37 per share. At this time, we believe the upper end
of that range is achievable."
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Looking ahead to fiscal 2003, the continued uncertainty of the economic climate
makes precise guidance difficult, Kerr said. "At this time, we foresee a
gradual recovery during the first half of the fiscal year, with further
strengthening in the second half. If this pattern is correct, we would expect
earnings per share growth of 10 to 20 percent in fiscal 2003, excluding any
impact due to the adoption of FAS 142, which we will adopt in the first quarter
of fiscal 2003.
"We plan to offer further guidance on our fiscal 2002 fourth quarter and the
full 2003 fiscal year at the Mid-Year Media review in June," he said.
ABOUT MEREDITH CORPORATION
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Meredith Corporation (http://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, the country's foremost home and family
authority, includes 16 magazine brands, including Better Homes and Gardens and
Ladies' Home Journal, and approximately 140 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, Daimler/Chrysler, 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 26 web sites, strategic alliances with
leading specialty Internet destinations such as the Microsoft Network (MSN) and
branded anchor tenant positions on America Online.
Note: All earnings per share figures in the text of this release are diluted.
Basic and diluted earnings per share can be found on the attached income
statement.
Meredith Corporation will host a conference call at 11:00 a.m. eastern time
today. Chairman and Chief Executive Officer William Kerr, Publishing Group
President Steve Lacy, Broadcasting Group President Kevin O'Brien, Chief
Financial Officer Suku Radia, and Controller Tom Ferree will discuss
third-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,
http://www.meredith.com. The webcast will remain there until May 8, 2002.
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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; 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 and Subsidiaries
Consolidated Statements of Earnings (Unaudited)
Three Months Nine Months
Ended March 31 Ended March 31
------------------- -------------------
2002 2001 2002 2001
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(In thousands except per share)
Revenues (less returns and allowances):
Advertising $145,951 $157,459 $414,373 $459,653
Circulation 68,628 69,106 195,288 196,956
All other 43,798 45,742 117,294 126,608
-------- -------- -------- --------
Total revenues 258,377 272,307 726,955 783,217
-------- -------- -------- --------
Operating costs and expenses:
Production, distribution and edit 114,331 122,843 320,846 340,964
Selling, general & administrative 94,874 97,905 289,089 282,474
Depreciation and amortization 13,494 12,847 40,544 38,471
-------- -------- -------- --------
Total operating costs and expenses 222,699 233,595 650,479 661,909
-------- -------- -------- --------
Income from operations 35,678 38,712 76,476 121,308
Other nonoperating income -- -- 2,030 --
Interest income 102 199 375 677
Interest expense (6,606) (8,103) (21,376) (25,092)
-------- -------- -------- --------
Earnings before income taxes 29,174 30,808 57,505 96,893
Income taxes 11,290 11,924 22,254 37,499
-------- -------- -------- --------
Net earnings $ 17,884 $ 18,884 $ 35,251 $ 59,394
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Basic earnings per share $ 0.36 $ 0.38 $ 0.71 $ 1.19
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Basic average shares outstanding 49,428 49,881 49,502 50,058
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Diluted earnings per share $ 0.35 $ 0.37 $ 0.69 $ 1.16
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Diluted average shares outstanding 50,885 51,369 50,834 51,389
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Dividends paid per share $ 0.090 $ 0.085 $ 0.260 $ 0.245
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Meredith Corporation and Subsidiaries
Segment Information (Unaudited)
Three Months Nine Months
Ended March 31 Ended March 31
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2002 2001 2002 2001
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(In thousands)
Revenues
Publishing $199,576 $213,385 $542,789 $580,529
Broadcasting 58,801 58,922 184,166 202,688
-------- -------- -------- --------
Total revenues $258,377 $272,307 $726,955 $783,217
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Operating Profit
Publishing $ 40,700 $ 39,879 $ 80,004 $ 97,955
Broadcasting 781 3,272 11,197 34,868
Unallocated corporate expense (5,803) (4,439) (14,725) (11,515)
-------- -------- -------- --------
Income from operations $ 35,678 $ 38,712 $ 76,476 $121,308
Other nonoperating income -- -- 2,030 --
Interest income 102 199 375 677
Interest expense (6,606) (8,103) (21,376) (25,092)
-------- -------- -------- --------
Earnings before income taxes 29,174 30,808 57,505 96,893
Income taxes 11,290 11,924 22,254 37,499
-------- -------- -------- --------
Net earnings $ 17,884 $ 18,884 $ 35,251 $ 59,394
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Depreciation & amortization
Publishing $ 2,949 $ 2,247 $ 8,509 $ 6,679
Broadcasting 9,932 10,038 30,123 29,889
Unallocated corporate 613 562 1,912 1,903
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Total depreciation & amortization $ 13,494 $ 12,847 $ 40,544 $ 38,471
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EBITDA
Publishing $ 43,649 $ 42,126 $ 88,513 $104,634
Broadcasting 10,713 13,310 41,320 64,757
Unallocated corporate (5,190) (3,877) (12,813) (9,612)
-------- -------- -------- --------
Total EBITDA $ 49,172 $ 51,559 $117,020 $159,779
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