Exhibit 99.1
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MEREDITH CORPORATION REPORTS
FOURTH QUARTER AND FISCAL YEAR 2002 RESULTS
DES MOINES, Iowa - (August 1, 2002) - Meredith Corporation (NYSE: MDP) today
reported net earnings of $56.1 million, or $1.10 per share, for the fourth
quarter ended June 30, 2002. Reported net earnings for the fourth quarter and
fiscal 2002 include several special items, which are described later. Excluding
special items, fourth-quarter net earnings were $22.6 million, or $0.44 per
share.
For the fourth quarter of fiscal 2001, reported net earnings were $11.9
million, or $0.23 per share. Reported net earnings for the fourth quarter and
full 2001 fiscal year also included several special items. Excluding those
special items, net earnings for the fourth quarter of 2001 were $20.3 million,
or $0.40 per share.
For the fiscal year ended June 30, 2002, Meredith's reported net earnings were
$91.4 million, or $1.79 per share. Fiscal 2002 net earnings excluding special
items were $56.7 million, or $1.11 per share.
Reported net earnings for fiscal 2001 were $71.3 million, or $1.39 per share.
Fiscal 2001 net earnings excluding special items were $79.7 million, or $1.55
per share.
"We are encouraged by the performance of our operations during the fourth
quarter, with net earnings before special items rising 11 percent and
comparable advertising revenues up 4 percent," said Meredith Chairman and Chief
Executive Officer William T. Kerr. "This is noteworthy given the advertising
downturn the industry has experienced over the last year-and-a-half. Our
performance reflects both a strengthening of the advertising market, as well as
our concerted and successful efforts to build share in our markets."
The special items for fiscal 2002 on an after-tax basis were:
- -- Nonoperating income of $37.9 million in the fourth quarter representing a
noncash gain from the exchange of our television stations in Orlando and
Ocala, FL, for a station in Portland, OR.
- -- Second quarter nonoperating income of $1.2 million from the demutualization
of an insurance company with which Meredith holds policies.
- -- A charge in the fourth quarter of $2.3 million for the write-down of
broadcast film rights.
- -- A fourth-quarter noncash charge of $2.1 million, included in interest
expense, for the write-off of the fair market value of interest rate hedge
agreements that, due to debt refinancing, no longer hedge variable rate
debt.
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The special items for fiscal 2001 on an after-tax basis were:
- -- Nonoperating income of $13.1 million in the fourth quarter representing a
gain from the sale of Golf For Women magazine;
- -- A fourth-quarter nonrecurring charge of $15.4 million, primarily for
employment reduction programs; and
- -- A $6.1 million fourth-quarter charge for the write-down of broadcast film
rights.
Reported and adjusted results for the 2002 and 2001 fourth quarters and fiscal
years were as follows:
Three Months Twelve Months
Ended June 30 Ended June 30
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2002 2001 2002 2001
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(In millions)
Reported net earnings $ 56.1 $ 11.9 $ 91.4 $ 71.3
Special items (net of taxes)
Orlando/Ocala gain (37.9) -- (37.9) --
Demutualization income -- -- (1.2) --
Golf For Women gain -- (13.1) -- (13.1)
Employment reduction program -- 15.4 -- 15.4
Broadcasting programming write-down 2.3 6.1 2.3 6.1
Interest rate hedge write-down 2.1 -- 2.1 --
------- ------- ------- -------
Adjusted net earnings $ 22.6 $ 20.3 $ 56.7 $ 79.7
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The effects of these special items on a per share basis are outlined below:
Three Months Twelve Months
Ended June 30 Ended June 30
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2002 2001 2002 2001
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(Earnings per share in dollars)
Reported diluted earnings per share $ 1.10 $ 0.23 $ 1.79 $ 1.39
Special items (net of taxes)
Orlando/Ocala gain (0.74) -- (0.74) --
Demutualization income -- -- (0.02) --
Golf For Women gain -- (0.25) -- (0.26)
Employment reduction program -- 0.30 -- 0.30
Broadcasting programming write-down 0.04 0.12 0.04 0.12
Interest rate hedge write-down 0.04 -- 0.04 --
------- ------- ------- -------
Adjusted diluted earnings per share $ 0.44 $ 0.40 $ 1.11 $ 1.55
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Revenues for the fourth quarter of fiscal 2002 were $267.2 million, versus
comparable revenues of $259.9 million and reported revenues of $265.9 million
for the prior-year fourth quarter. Comparable revenues are adjusted for
discontinued publishing operations.
For the fiscal year ended June 30, 2002, revenues were $987.8 million, versus
comparable revenues of $1,014.9 million for the previous year. For fiscal
2001, reported revenues were $1,043.5 million.
As a result of implementing the provisions of Emerging Issues Task Force (EITF)
Issue No. 01-09 -- which requires classification of certain cooperative
advertising and product placement costs previously classified as selling
expenses to be reflected as reductions in revenue -- the company's revenues and
selling costs each were reduced by an equal amount of $4.6 million for the
fourth quarter and $10.9 million for the full year, respectively. In fiscal
2001, which was also restated, the impact was $4.1 million in the fourth
quarter and $9.7 million for the full fiscal year. Both circulation and other
revenues were affected by this change, and these adjustments had no impact on
earnings in either period.
During the fourth quarter, Meredith completed the exchange of its Orlando
(WOFL) and Ocala, (WOGX) FL, television stations with News Corporation and FOX
Television Stations, Inc., for KPTV in Portland, OR. The transaction created a
Meredith duopoly (FOX/UPN) in Portland. Meredith also entered into new
affiliation agreements for all of its FOX-affiliated stations.
OPERATING RESULTS
PUBLISHING
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Fourth quarter Publishing Group operating profit was $37.0 million, compared to
$34.9 million in the prior-year quarter. For the fiscal year ended June 30,
2002, publishing operating profit was $117.0 million, compared to $132.8
million for the prior year.
Publishing revenues in the fourth quarter of fiscal 2002 were $196.7 million,
versus comparable revenues of $192.3 million. Reported prior-year fourth
quarter publishing revenues were $198.4 million.
Publishing revenues for fiscal 2002 were $733.3 million, versus comparable
revenues of $744.7 million for the prior-year period. Fiscal 2001 reported
revenues were $773.2 million.
"We are particularly pleased that we were able to report increased operating
profit and comparable revenues in the fourth quarter of fiscal 2002, a period
in which the magazine industry as a whole experienced declines," said Kerr.
"It is a tribute to our strong brands, our solid circulation dynamics and our
focused program to gain market share.
"For example, Better Homes and Gardens and Ladies' Home Journal increased their
strong share of women's service advertising revenues, with a combined total of
40 percent for the 12-month period ending with the July 2002 issues, up 2.5
percentage points from the prior year," Kerr continued. "Additionally, we
gained market share at our next two largest magazines, with Country Home up 3
percentage points and Traditional Home up 2 percentage points. Several of our
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titles also posted advertising revenue gains during the fourth quarter,
including Better Homes and Gardens, Country Home, Traditional Home, Midwest
Living, and MORE magazines."
BROADCASTING
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Reported Broadcasting Group operating profit was $9.0 million for the fourth
quarter, compared to a loss of $0.2 million in the prior-year quarter. Reported
fiscal 2002 broadcasting operating profit was $20.2 million, compared to $34.7
million in fiscal 2001.
Broadcasting Group operating profit, excluding the write-down of film, was
$12.7 million in the fourth quarter of fiscal 2002, versus $9.7 million in the
prior-year fourth quarter. Fiscal 2002 broadcasting operating profit,
excluding the write-down of film was $23.9 million, compared to $44.6 million
for the prior-year period.
Fourth quarter Broadcasting Group revenues were $70.4 million, compared to
$67.6 million in fiscal 2001. Broadcasting revenues for fiscal 2002 were
$254.6 million, compared to $270.3 million for the prior-year period.
"The initiatives we have put in place to improve the performance of our
Broadcasting Group -- including a number of management changes -- are
delivering results," said Kerr. "For example, renewed sales efforts have
contributed to increased demand for broadcast advertising, resulting in a 4
percent increase in revenues in the fourth quarter.
"Additionally, we posted ratings gains at many of our stations in the May
sweeps period, especially for our news programming. Atlanta posted ratings
gains for its 5, 6 and 11 p.m. newscasts, while Hartford, Kansas City,
Greenville and Saginaw had increases ranging from 9 to 15 percent for their
late newscasts."
OTHER
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Meredith will adopt SFAS No. 142, "Accounting for Goodwill and Other Intangible
Assets" in the first quarter of fiscal 2003 and expects the adoption to benefit
fiscal 2003 earnings by $0.08 per share in the first quarter and $0.30 per
share for the full year. Amortization charges reduced earnings per share by
$0.08 in the first quarter of fiscal 2002 and by $0.31 for all of fiscal 2002.
Fiscal 2003 results will also reflect an impairment provision pursuant to SFAS
No. 142, which will result in an after-tax noncash charge of $85.7 million. The
charge will pertain to the write-down of intangible assets primarily related to
the acquisition of WGCL in Atlanta. It will be recorded as a cumulative effect
of a change in accounting principle in the first quarter of fiscal 2003.
OUTLOOK
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Kerr said publishing advertising revenues and pages are both currently up in
the low-single digits for the first quarter of fiscal 2003. Broadcast pacings
are up in the low-double digits on a same-station basis (which includes KPTV
but excludes WOFL and WOGX in both periods). Kerr noted that broadcast pacings
are a snapshot in time and change frequently.
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"Looking ahead to fiscal 2003 and its first fiscal quarter, the continued
uncertainty of the economic climate makes precise guidance difficult," Kerr
said.
"At this time, we estimate earnings per share for the full fiscal year to be
approximately 10 to 20 percent higher than the $1.11 per share before special
items reported for fiscal 2002," he said. "Earnings per share in the first
quarter of fiscal 2003 are expected to be approximately 20 to 30 percent higher
than the 17 cents per share reported in the prior year quarter, in part,
because we will be cycling against lost television revenues caused by the
tragedies on Sept. 11, 2001. In addition, first quarter earnings will be aided
by political television advertising.
"With the benefit of SFAS No. 142 added, we estimate that our earnings for the
first quarter of fiscal 2003 will range from 28 to 30 cents per share. For the
full 2003 fiscal year, we estimate that earnings will range from $1.55 to $1.65
per share," Kerr said.
ABOUT MEREDITH CORPORATION
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Meredith Corporation (http://www.meredith) 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 11 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, DaimlerChrysler, and Kraft Foods. 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.
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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
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.
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.
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Meredith Corporation and Subsidiaries
Consolidated Statements of Earnings (Unaudited)
Three Months Twelve Months
Ended June 30 Ended June 30
------------------- -------------------
2002 2001 2002 2001
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(In thousands except per share)
Revenues (less returns and allowances):
Advertising $158,318 $156,069 $572,691 $615,722
Circulation 70,485 64,221 261,640 257,410
All other 38,357 45,649 153,498 170,319
-------- -------- -------- --------
Total revenues 267,160 265,939 987,829 1,043,451
-------- -------- -------- --------
Operating costs and expenses:
Production, distribution and edit 112,799 121,195 433,645 462,159
Selling, general & administrative 99,892 101,019 382,695 377,788
Depreciation and amortization 13,096 13,101 53,640 51,572
Nonrecurring items -- 25,308 -- 25,308
-------- -------- -------- --------
Total operating costs and expenses 225,787 260,623 869,980 916,827
-------- -------- -------- --------
Income from operations 41,373 5,316 117,849 126,624
Other nonoperating income 61,782 21,477 63,812 21,477
Interest income 246 351 621 1,028
Interest expense (11,834) (7,837) (33,210) (32,929)
-------- -------- -------- --------
Earnings before income taxes 91,567 19,307 149,072 116,200
Income taxes 35,437 7,429 57,691 44,928
-------- -------- -------- --------
Net earnings $ 56,130 $ 11,878 $ 91,381 $ 71,272
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Basic earnings per share $ 1.13 $ 0.24 $ 1.85 $ 1.43
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Basic average shares outstanding 49,606 49,737 49,528 49,977
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Diluted earnings per share $ 1.10 $ 0.23 $ 1.79 $ 1.39
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Diluted average shares outstanding 51,182 51,250 50,921 51,354
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Dividends paid per share $ 0.090 $ 0.085 $ 0.350 $ 0.330
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Meredith Corporation and Subsidiaries
Segment Information (Unaudited)
Three Months Twelve Months
Ended June 30 Ended June 30
------------------- -------------------
2002 2001 2002 2001
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(In thousands)
Revenues
Publishing $196,748 $198,351 $733,251 $773,175
Broadcasting 70,412 67,588 254,578 270,276
-------- -------- -------- --------
Total revenues $267,160 $265,939 $987,829 $1,043,451
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Operating Profit
Publishing $ 37,019 $ 34,860 $117,023 $132,815
Broadcasting 8,989 (185) 20,186 34,683
Unallocated corporate expense (4,635) (4,051) (19,360) (15,566)
-------- -------- -------- --------
Segment operating profit 41,373 30,624 117,849 151,932
Nonrecurring items -- (25,308) -- (25,308)
-------- -------- -------- --------
Income from operations $ 41,373 $ 5,316 $117,849 $126,624
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Depreciation & amortization
Publishing $ 2,932 $ 2,304 $ 11,441 $ 8,983
Broadcasting 9,516 10,145 39,639 40,034
Unallocated corporate 648 652 2,560 2,555
-------- -------- -------- --------
Total depreciation & amortization $ 13,096 $ 13,101 $ 53,640 $ 51,572
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EBITDA
Publishing $ 39,951 $ 37,164 $128,464 $141,798
Broadcasting 22,200 19,890 63,520 84,647
Unallocated corporate (3,987) (3,399) (16,800) (13,011)
-------- -------- -------- --------
Total EBITDA $ 58,164 $ 53,655 $175,184 $213,434
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Note: EBITDA is earnings before interest, taxes, depreciation and amortization
and excludes the following special items:
Broadcasting
programming write-down $ (3,695) $ (9,930) $ (3,695) $ (9,930)
Nonrecurring items $ -- $(25,308) $ -- $(25,308)
Nonoperating income $ 61,782 $ 21,477 $ 63,812 $ 21,477
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Meredith Corporation and Subsidiaries
Segment Information (Unaudited)
Three Months Twelve Months
Ended June 30 Ended June 30
------------------- -------------------
2002 2001 2002 2001
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(In thousands)
Adjusted Operating Profit
Publishing $ 37,019 $ 34,860 $117,023 $132,815
Broadcasting 12,684 9,745 23,881 44,613
Unallocated corporate expense (4,635) (4,051) (19,360) (15,566)
-------- -------- -------- --------
Segment operating profit 45,068 40,554 121,544 161,862
Employment reduction programs -- (25,308) -- (25,308)
Broadcasting
programming write-down (3,695) (9,930) (3,695) (9,930)
-------- -------- -------- --------
Income from operations $ 41,373 $ 5,316 $117,849 $126,624
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Broadcasting segment operating profit for the years ended June 30, 2002 and
2001 include charges of $3.7 million and $9.9 million, respectively, for the
write-down of certain programming rights. Adjusted segment results excluding
the programming write-downs are shown above.
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Meredith Corporation and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
June 30 June 30
Assets 2002 2001
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(In thousands)
Current assets:
Cash and cash equivalents $ 28,225 $ 36,254
Accounts receivable, net 128,204 137,384
Other current assets 115,782 117,444
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Total current assets 272,211 291,082
Property, plant and equipment, net 211,250 203,798
Other assets 83,186 72,896
Goodwill and other intangibles, net 893,617 869,971
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Total assets $1,460,264 $1,437,747
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June 30 June 30
Liabilities and Shareholders' Equity 2002 2001
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(In thousands)
Current liabilities:
Current portion of long-term debt $ -- $ 70,000
Accounts payable and accruals 146,333 151,109
Other current liabilities 161,073 150,297
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Total current liabilities 307,406 371,406
Long-term debt 385,000 400,000
Other noncurrent liabilities 260,141 218,433
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Total liabilities 952,547 989,839
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Shareholders' equity:
Common stock 39,256 39,248
Class B stock 10,320 10,544
Other shareholders' equity 458,141 398,116
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Total shareholders' equity 507,717 447,908
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Total liabilities and shareholders' equity $1,460,264 $1,437,747
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