EXHIBIT 99.1
FOR IMMEDIATE RELEASE
- ---------------------
MARTHA STEWART LIVING OMNIMEDIA, INC.
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ANNOUNCES FOURTH QUARTER AND FULL-YEAR RESULTS
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NEW YORK, NEW YORK, MARCH 4, 2004 --- Martha Stewart Living Omnimedia,
Inc. (NYSE: MSO) today announced its results for the fourth quarter and
full-year periods ended December 31, 2003.
Revenues for the fourth quarter of 2003 were $70.9 million, compared to
$77.6 million in the prior year's quarter. Operating income for the fourth
quarter was $5.8 million, compared to an operating loss of $3.4 million for
the fourth quarter of 2002. Operating income before depreciation and
amortization and restructuring charges ("OIDA") for the fourth quarter of
2003 was $9.4 million, compared to $7.0 million in the same period last
year. Earnings per share from continuing operations were $0.10 for the
fourth quarter of 2003, compared to a loss of $0.03 in the 2002 quarter.
The fourth quarter of 2002 and full-year results included restructuring
charges of $7.7 million, or $0.09 per share net of tax. Excluding the
restructuring charges, operating income would have been $4.3 million in the
fourth quarter of 2002 and earnings per share would have been $0.06.
For the year ended December 31, 2003, revenues were $245.8 million compared
to $295.0 million in 2002. Operating income (loss) was $(6.4) million in
2003, compared to $20.0 million in 2002, and diluted loss per share from
continuing operations was $(0.04) in 2003, compared to earnings per share
of $0.27 in the prior year, including the impact of the restructuring
charges. Excluding the impact of the restructuring charges, operating
income would have been $27.7 million, and diluted earnings per share from
continuing operations would have been $0.36 in 2002.
Sharon L. Patrick, President and Chief Executive Officer, said, "We are
pleased that fourth quarter results are better than expected. Nevertheless,
we continued to feel the negative impact of the events surrounding Martha
Stewart's personal legal situation. Our improved fourth quarter results are
principally due to: recognition in the quarter of the aggregate minimum
guarantees under the Kmart licensing agreement and continuing success of
the Martha Stewart Signature furniture with Bernhardt collections in the
Merchandising segment; better than expected circulation results and
increased productivity from our Publishing segment; and the improved
performance of our now smaller, more niche-focused catalog, Martha Stewart:
The Catalog For Living, from our Internet/Direct Commerce segment.
Moreover, shoppers' response to our expanded collection of Martha Stewart
Everyday Holiday products was enthusiastic, underscoring once again that
consumer demand for our high value products remains stable under difficult
circumstances. Our large and loyal core base of readers, viewers, and
customers continues to seek the unique blend of "how-to" expertise,
quality, affordability and style that defines our brand, and MSO continues
to deliver.
"During this time of uncertainty, we continued to manage MSO for the
long-term, investing to grow our core brand equity, controlling costs
wherever so doing does not conflict with our overriding goals. As such, we
will continue to invest in new brands and brand labels like Everyday Food
and Petkeeping with Marc Morrone, both successfully launched in 2003. Our
financial condition remains strong, with $169 million in cash and
short-term investments and no debt, which gives us the ability to continue
our long-term management philosophy and investment strategy. As the trial
approaches conclusion, we have prepared for the various possible outcomes
and are focused on strategies to grow the value of the business and improve
the future financial performance."
FOURTH QUARTER 2003 RESULTS BY SEGMENT
- --------------------------------------
PUBLISHING
- ----------
Revenues in the quarter were $33.1 million, compared to $45.7 million in
the year-ago period. Operating income and OIDA were each $3.9 million for
the quarter, compared to $15.5 million for each in the year-ago period. The
results reflect lower advertising and circulation revenue from Martha
Stewart Living magazine in the quarter, investment spending in Everyday
Food, and a decline in profitability of our Special Interest Publications.
The publication schedule was consistent with last year with the exception
of our new magazine, Everyday Food, which published two issues in the
current period. During the quarter, Everyday Food, which recently was named
Launch of the Year in Folio: magazine, completed its first major subscriber
acquisition effort. As a result of the strong consumer response, we now
expect the circulation of Everyday Food in the first half of 2004 to well
exceed our stated rate base of 500,000.
TELEVISION
- ----------
Revenues in the fourth quarter of 2003 were $5.9 million, compared to $6.4
million in the prior year's quarter. Operating income for the fourth
quarter of 2003 was a loss of $(2.8) million, compared to $0.2 million in
the fourth quarter of 2002. The current quarter operating income includes
$1.7 million of accelerated depreciation related to the write-down to
fair-value of certain television studio assets. OIDA was a loss of $(0.9)
million for this year's fourth quarter, compared to $0.6 million in the
prior year's fourth quarter. The decline in profitability was due primarily
to the combined impact of lower license fee revenue with higher production
costs, as well as increased marketing expenses related to the Company's
nationally syndicated daily show.
MERCHANDISING
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Revenues in the fourth quarter of 2003 were $22.5 million, compared to
$11.8 million in the prior year quarter. Revenues in the 2003 quarter
reflect the recognition of the aggregate minimum royalties due under our
agreement with Kmart, but not category minimum amounts. The amount of
royalties recognized under minimum guarantee provisions in the agreement
was $10.2 million in the period. The quarter also benefited from the
positive consumer acceptance of the Martha Stewart Signature furniture with
Bernhardt collections. Fourth quarter 2003 operating income was $18.3
million, compared to $7.1 million in the fourth quarter of 2002. OIDA was
$18.5 million, compared to $7.3 million in the prior year's quarter. During
the quarter we also successfully expanded the Martha Stewart Everyday
Holiday collection at Kmart. This collection expansion was well received by
shoppers decorating for the holidays.
The results for the quarter exclude royalties of $3.3 million ($4.5 million
as of January 31, 2004) related to guarantees for certain product
categories as provided for in our agreement with Kmart. As previously
disclosed, Kmart recently filed an action against the company in which it
asserts that it is required to pay only certain royalties, which exclude
royalties resulting from the category minimum guarantee. As a result of the
litigation, we have not recognized the category minimums in our current
year revenue. The company believes that the license agreement is
unambiguous and that Kmart's interpretation is inconsistent with the
agreement, and MSO intends to vigorously defend this action and enforce the
terms of the agreement.
INTERNET/DIRECT COMMERCE
- ------------------------
Revenues were $9.4 million, compared to $13.7 million in the same period a
year ago. The lower revenues in the quarter were due to lower product sales
and lower advertising revenues. The lower product sales were primarily a
result of our efforts to circulate fewer catalogs and focus on more
efficient circulation levels. Operating loss was $(1.2) million for the
fourth quarter of 2003, compared to $(8.1) million in the fourth quarter of
2002, excluding restructuring charges. OIDA was $(1.0) million in the 2003
quarter, compared to $(7.3) million in the year-ago period, excluding
restructuring charges. The reduced loss is primarily a result of more
efficient catalog circulation, the favorable results of inventory
disposition programs, and more efficient fulfillment operations. The
segment also continues to benefit from cost savings initiatives begun in
the early part of 2003. Depreciation and amortization in the fourth quarter
of 2003 was $0.2 million, compared to $0.7 million in the fourth quarter of
2002, primarily as a result of a write down of costs associated with the
Company's website taken in the fourth quarter of 2002.
CORPORATE OVERHEAD
- -------------------
Corporate overhead, including depreciation and amortization, was $12.3
million, compared to $10.4 million in the prior year's quarter. Corporate
overhead, before depreciation and amortization, was $11.2 million for the
fourth quarter of 2003, compared to $9.1 million in the fourth quarter of
2002. The current quarter includes $1.3 million of expense resulting from a
November 2003 stock option exchange program. The principal component of the
expense is the non-cash amortization of the value of restricted stock units
issued in exchange for employee stock options.
DEPRECIATION AND AMORTIZATION
- -----------------------------
Depreciation and amortization of $3.6 million in the fourth quarter of 2003
compares to $2.7 million for the fourth quarter 2002. The current quarter
includes $1.7 million of accelerated depreciation related to the impairment
of certain long-lived assets related to our television studio resulting
from the application of FAS 144 "Accounting for the Impairment or Disposal
of Long-Lived Assets". Offsetting the increase was lower depreciation in
the 2003 quarter resulting from a write down of costs associated with the
Company's website taken in the fourth quarter of 2002.
FULL-YEAR 2003 OPERATING RESULTS
- --------------------------------
Revenues for the year ended December 31, 2003, were $245.8 million,
compared to $295.0 million for the year ended December 31, 2002. Operating
income (loss) was $(6.4) million for the year ended December 31, 2003,
compared to $20.0 million for the year ended December 31, 2002, while OIDA
for the year ended December 31, 2003, was $3.3 million, compared to $39.3
million in the same period one year ago. Prior period operating income
includes the impact of the fourth quarter restructuring charge of $7.7
million related to the Internet/Direct Commerce segment. Excluding the
charge, operating income would have been $27.7 million for the year ended
December 31, 2002. For the year ended December 31, 2003, net loss from
continuing operations was $(1.9) million or $(0.04) per share, this
compares to net income from continuing operations of $13.3 million, or
$0.27 per share, in the year ending December 31, 2002.
The results for the year ended December 31, 2002, included the cumulative
effect of an accounting change resulting from the adoption of FAS 142 that
resulted in the reduction to the carrying value of the Company's goodwill
by $5.0 million ($3.1 million after tax).
TRENDS AND OUTLOOK
- ------------------
James Follo, Chief Financial and Administrative Officer, commented, "The
results for the fourth quarter reflect our disciplined strategy, which
allows us to reduce operating costs where appropriate, while making
investment decisions that will create long-term value. During the year, we
significantly reduced the operating losses of our Internet/Direct Commerce
business, while investing in new growth opportunities.
First quarter 2004 results will reflect increased pressure on advertising
revenues resulting primarily from the ongoing trial of Martha Stewart.
Accordingly, our current expectation for this quarter is for a loss per
share of approximately $(0.20). Nevertheless, the strength of our balance
sheet, with no debt and a large cash balance, means we are well provisioned
to continue to manage the business with a long-term view."
BASIS OF PRESENTATION
- ---------------------
The Company believes OIDA is an appropriate measure when evaluating the
operating performance of its business segments and the Company on a
consolidated basis. OIDA is used externally by the Company's investors,
analysts, and industry peers. OIDA is among the primary metrics used by
management for planning and forecasting of future periods, and is
considered an important indicator of the operational strength of the
Company's businesses. The Company believes the presentation of this measure
is relevant and useful for investors because it allows investors to view
performance in a manner similar to the method used by the Company's
management and makes it easier to compare the Company's results with other
companies that have different capital structures or tax rates. The Company
believes OIDA should be considered in addition to, not as a substitute for,
operating income (loss), net income (loss), cash flows, and other measures
of financial performance prepared in accordance with generally accepted
accounting principles ("GAAP"). As OIDA is not a measure of performance
calculated in accordance with GAAP, this measure may not be comparable to
similarly titled measures employed by other companies. A reconciliation of
OIDA to operating income (loss) is provided in the financial statements
included with this release.
Martha Stewart Living Omnimedia, Inc. (MSO) is a leading provider of
original how-to information that turns dreamers into doers, inspiring and
engaging consumers with unique content and high-quality products for the
home. MSO's creative experts develop content within eight core areas -
Home, Cooking and Entertaining, Gardening, Crafts, Holiday, Keeping,
Weddings, and Baby and Kids - that provide consumers with ideas and
products to celebrate their homes and the domestic arts. MSO is organized
into four business segments - Publishing, Television, Merchandising and
Internet/Direct Commerce.
The Company will host a conference call with analysts and investors at
12:00 pm ET that will be broadcast live over the Internet at
www.marthastewart.com.
###
This press release contains certain "forward-looking statements," as that
term is defined in the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are not historical facts and can be
identified by the use of terminology such as "may," "will," "should,"
"could", "expects," "plans," and "intends." The Company's actual results
may differ materially from those projected in these statements, and factors
that could cause such differences include further adverse reaction to the
prolonged and continued negative publicity relating to Martha Stewart by
consumers, advertisers and business partners; a loss of the services, or
diminution in the reputation, of Ms. Stewart; further adverse reaction by
the Company's consumers, advertisers and business partners to the
uncertainty relating to the nature of the resolution of the criminal and
civil proceedings currently underway against Ms. Stewart concerning a sale
of non-Company stock by Ms. Stewart and any adverse resolution of such
proceedings; adverse resolution of some or all of the Company's ongoing
litigation; any loss of the services of the Company's key personnel;
downturns in national and/or local economies; shifts in our business
strategies; a softening of the domestic advertising market; changes in
consumer reading, purchasing and/or television viewing patterns;
unanticipated increases in paper, postage or printing costs; operational or
financial problems at any of our contractual business partners; the
receptivity of consumers to our new product introductions; and changes in
government regulations affecting the Company's industries. Certain of these
and other factors are discussed in more detail in the Company's filings
with the Securities and Exchange Commission, especially under the heading
"Management's Discussion and Analysis", which may be accessed through the
SEC's World Wide Web site at http://www.sec.gov. The Company is under no
obligation to update any forward-looking statements after the date of this
release.
CONTACT: Investors - James Follo, Chief Financial and Administrative
Officer of Martha Stewart Living Omnimedia, Inc., 212-827-8218; Media -
Elizabeth Estroff, Corporate Communications, of Martha Stewart Living
Omnimedia, Inc., 212-827-8281.
Martha Stewart Living Omnimedia, Inc.
Consolidated Statements of Operations
Three Months Ended December 31,
(in thousands, except per share amounts)
2003 2002 % change
------------ ------------ ------------
REVENUES
Publishing $ 33,111 $ 45,668 -27.5%
Television 5,922 6,357 -6.8%
Merchandising 22,452 11,786 90.5%
Internet/Direct Commerce 9,377 13,746 -31.8%
------------ ------------ ------------
Total revenues 70,862 77,557 -8.6%
------------ ------------ ------------
OPERATING COSTS AND EXPENSES
Production, distribution and editorial 33,802 46,502 -27.3%
Selling and promotion 13,388 11,149 20.1%
General and administrative 14,274 12,951 10.2%
Depreciation and amortization 3,589 2,655 35.2%
Restructuring charge(a) - 7,692 nm
------------ ------------ ------------
Total operating costs and expenses 65,053 80,949 -19.6%
------------ ------------ ------------
OPERATING INCOME (LOSS) 5,809 (3,392) nm
Interest income, net 349 517 -32.5%
------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES 6,158 (2,875) nm
Income tax benefit (provision) (1,310) 1,446 nm
------------ ------------ ------------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE LOSS
FROM DISCONTINUED OPERATIONS 4,848 (1,429) nm
------------ ------------ ------------
Loss from discontinued operations, net of tax benefit (204) (573) 64.4%
------------ ------------ ------------
NET INCOME (LOSS) $ 4,644 $ (2,002) nm
============ ============ ============
EARNINGS (LOSS) PER SHARE - BASIC AND DILUTED
Income (Loss) from continuing operations $ 0.10 $ (0.03)
Loss from discontinued operations (0.00) (0.01)
------------ ------------
Net Income (Loss) $ 0.09 $ (0.04)
============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 49,451 49,446
Diluted 49,581 49,446
Martha Stewart Living Omnimedia, Inc.
Segment Information
Three Months Ended December 31,
(in thousands)
2003 2002 % change
------------ ------------- -------------
REVENUES
Publishing $ 33,111 $ 45,668 -27.5%
Television 5,922 6,357 -6.8%
Merchandising 22,452 11,786 90.5%
Internet/Direct Commerce 9,377 13,746 -31.8%
------------ ------------- -------------
Total revenues 70,862 77,557 -8.6%
------------ ------------- -------------
OPERATING INCOME (LOSS) BEFORE DEPRECIATION AND
AMORTIZATION
Publishing 3,937 15,518 -74.6%
Television (852) 586 nm
Merchandising 18,478 7,304 153.0%
Internet/Direct Commerce (1,005) (7,326) 86.3%
------------ ------------- -------------
Operating Income before Depreciation and Amortization
before Corporate Overhead 20,558 16,082 27.8%
Corporate Overhead (11,160) (9,127) -22.3%
------------ ------------- -------------
Operating Income before Depreciation and Amortization 9,398 6,955 35.1%
Depreciation and amortization (3,589) (2,655) -35.2%
Restructuring charge(a) - (7,692) nm
------------ ------------- -------------
OPERATING INCOME (LOSS) 5,809 (3,392) nm
Interest income, net 349 517 -32.5%
------------ ------------- -------------
INCOME (LOSS) BEFORE INCOME TAXES 6,158 (2,875) nm
Income tax benefit (provision) (1,310) 1,446 nm
------------ ------------- -------------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE LOSS
FROM DISCONTINUED OPERATIONS 4,848 (1,429) nm
------------ ------------- -------------
Loss from discontinued operations, net of tax benefit (204) (573) 64.4%
------------ ------------- -------------
NET INCOME (LOSS) $ 4,644 $ (2,002) nm
============ ============= =============
Martha Stewart Living Omnimedia, Inc.
Consolidated Statements of Operations
Year Ended December 31,
(in thousands, except per share amounts)
2003 2002 % change
------------ ------------ ------------
REVENUES
Publishing $ 135,936 $ 182,600 -25.6%
Television 25,704 26,680 -3.7%
Merchandising 53,395 48,896 9.2%
Internet/Direct Commerce 30,813 36,873 -16.4%
------------ ------------ ------------
Total revenues 245,848 295,049 -16.7%
------------ ------------ ------------
OPERATING COSTS AND EXPENSES
Production, distribution and editorial 136,370 161,644 -15.6%
Selling and promotion 51,722 44,423 16.4%
General and administrative 54,492 49,666 9.7%
Depreciation and amortization 9,669 11,631 -16.9%
Restructuring charge(b) - 7,692 nm
------------ ------------ ------------
Total operating costs and expenses 252,253 275,056 -8.3%
------------ ------------ ------------
OPERATING INCOME (LOSS) (6,405) 19,993 nm
Interest income, net 1,439 2,120 -32.1%
------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES (4,966) 22,113 nm
Income tax benefit (provision) 3,043 (8,799) nm
------------ ------------ ------------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE LOSS
FROM DISCONTINUED OPERATIONS AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGE (1,923) 13,314 nm
------------ ------------ ------------
Loss from discontinued operations, net of tax benefit (848) (2,909) 70.8%
------------ ------------ ------------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE (2,771) 10,405 nm
Cumulative effect of accounting change, net of tax
benefit - (3,137) nm
------------ ------------ ------------
NET INCOME (LOSS) $ (2,771) $ 7,268 nm
============ ============ ============
EARNINGS (LOSS) PER SHARE - BASIC AND DILUTED
Income (Loss) from continuing operations $ (0.04) $ 0.27
Loss from discontinued operations (0.02) (0.06)
Cumulative effect of accounting change - (0.06)
------------ ------------
Net Income (Loss) $ (0.06) $ 0.15
============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 49,389 49,250
Diluted 49,389 49,343
Martha Stewart Living Omnimedia, Inc.
Segment Information
Year Ended December 31,
(in thousands)
2003 2002 % change
------------ ------------- -------------
REVENUES
Publishing $ 135,936 $ 182,600 -25.6%
Television 25,704 26,680 -3.7%
Merchandising 53,395 48,896 9.2%
Internet/Direct Commerce 30,813 36,873 -16.4%
------------ ------------- -------------
Total revenues 245,848 295,049 -16.7%
------------ ------------- -------------
OPERATING INCOME (LOSS) BEFORE DEPRECIATION AND
AMORTIZATION
Publishing 19,762 62,675 -68.5%
Television 358 4,282 -91.6%
Merchandising 38,387 33,605 14.2%
Internet/Direct Commerce (15,053) (26,683) 43.6%
------------ ------------- -------------
Operating Income before Depreciation and
Amortization before Corporate Overhead 43,454 73,879 -41.2%
Corporate Overhead (40,190) (34,563) -16.3%
------------ ------------- -------------
Operating Income (Loss) before Depreciation and 3,264 39,316 -91.7%
Amortization
Depreciation and amortization (9,669) (11,631) 16.9%
Restructuring charge(b) - (7,692) nm
------------ ------------- -------------
OPERATING INCOME (LOSS) (6,405) 19,993 nm
Interest income, net 1,439 2,120 -32.1%
------------ ------------- -------------
INCOME (LOSS) BEFORE INCOME TAXES (4,966) 22,113 nm
Income tax benefit (provision) 3,043 (8,799) nm
------------ ------------- -------------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE LOSS
FROM DISCONTINUED OPERATIONS AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGE (1,923) 13,314 nm
------------ ------------- -------------
Loss from discontinued operations, net of tax benefit (848) (2,909) 70.8%
------------ ------------- -------------
(2,771) 10,405 nm
INCOME (LOSS) BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE
Cumulative effect of accounting change, net of tax
benefit - (3,137) nm
------------ ------------- -------------
NET INCOME (LOSS) $ (2,771) $ 7,268 nm
============ ============= =============
Martha Stewart Living Omnimedia, Inc.
Consolidated Balance Sheets
(in thousands, except per share amounts)
December 31, December 31,
2003 2002
------------- ---------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 165,566 $ 158,840
Short-term investments 3,100 20,110
Accounts receivable, net 39,758 37,796
Inventories, net 7,485 8,654
Deferred television production costs 3,465 4,179
Deferred income taxes 10,682 7,028
Other current assets 4,422 4,756
------------- ---------------
TOTAL CURRENT ASSETS 234,478 241,363
------------- ---------------
PROPERTY, PLANT, AND EQUIPMENT, net 22,673 31,288
------------- ---------------
INTANGIBLE ASSETS, net 44,257 44,257
------------- ---------------
DEFERRED INCOME TAXES 3,224 2,827
------------- ---------------
OTHER NONCURRENT ASSETS 4,470 4,807
------------- ---------------
TOTAL ASSETS $ 309,102 $ 324,542
============= ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 26,628 $ 40,517
Accrued payroll and related costs 10,360 9,385
Income taxes payable 167 323
Current portion of deferred subscription income 23,833 24,932
------------- ---------------
TOTAL CURRENT LIABILITIES 60,988 75,157
------------- ---------------
DEFERRED SUBSCRIPTION INCOME 7,133 7,715
OTHER NONCURRENT LIABILITIES 4,316 5,035
------------- ---------------
TOTAL LIABILITIES 72,437 87,907
------------ --------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Class A common stock, $0.01 par value, 350,000 shares
authorized: 19,628 and 19,342 shares issued in 2003 and
2002, respectively 196 194
Class B common stock, $0.01 par value, 150,000 shares
authorized: 30,059 and 30,295 shares outstanding in
2003 and 2002, respectively 301 303
Capital in excess of par value 183,744 181,629
Unamortized restricted stock (307) (993)
Retained earnings 53,506 56,277
------------- ---------------
237,440 237,410
Less class A treasury stock - 59 shares at cost (775) (775)
------------- ---------------
TOTAL SHAREHOLDERS' EQUITY 236,665 236,635
------------ --------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 309,102 $ 324,542
============ ==============
Martha Stewart Living Omnimedia, Inc.
Supplemental Disclosures Regarding Non- GAAP Financial Information
Three Months Ended December 31,
(in thousands)
The following table presents segment and consolidated financial
information, including a reconciliation of operating income, a GAAP
measure, and Operating Income before Depreciation and Amortization (OIDA),
a non-GAAP measure. In order to reconcile OIDA to operating income,
depreciation and amortization are added back to operating income.
2003 2002 % change
--------------- --------------- ----------------
REVENUES
Publishing $ 33,111 $ 45,668 -27.5%
Television 5,922 6,357 -6.8%
Merchandising 22,452 11,786 90.5%
Internet/Direct Commerce 9,377 13,746 -31.8%
--------------- --------------- ----------------
TOTAL REVENUES 70,862 77,557 -8.6%
=============== =============== ================
OPERATING INCOME (LOSS)
Publishing 3,895 15,479 -74.8%
Television (2,811) 180 nm
Merchandising 18,310 7,146 156.2%
Internet/ Direct Commerce (1,238) (8,072) 84.7%
--------------- --------------- ----------------
Operating Income before Corporate
Overhead 18,156 14,733 23.2%
Corporate Overhead (12,347) (10,433) -18.3%
Restructuring Charge - (7,692) nm
--------------- --------------- ----------------
TOTAL OPERATING INCOME 5,809 (3,392) nm
=============== =============== ================
DEPRECIATION AND AMORTIZATION
Publishing 42 39 7.7%
Television 1,959 406 382.5%
Merchandising 168 158 6.3%
Internet/ Direct Commerce 233 746 -68.8%
Corporate Overhead 1,187 1,306 -9.1%
--------------- --------------- ----------------
TOTAL DEPRECIATION AND AMORTIZATION 3,589 2,655 35.2%
=============== =============== ================
OPERATING INCOME (LOSS) BEFORE DEPRECIATION AND AMORTIZATION AND RESTRUCTURING CHARGE
Publishing 3,937 15,518 -74.6%
Television (852) 586 nm
Merchandising 18,478 7,304 153.0%
Internet/ Direct Commerce (1,005) (7,326) 86.3%
--------------- --------------- ----------------
Operating Income before Depreciation
and Amortization and before Corporate
Overhead 20,558 16,082 27.8%
--------------- --------------- ----------------
Corporate Overhead (11,160) (9,127) -22.3%
--------------- --------------- ----------------
OPERATING INCOME (LOSS) BEFORE
DEPRECIATION AND AMORTIZATION AND
RESTRUCTURING CHARGE $ 9,398 $ 6,955 35.1%
=============== =============== ================
Martha Stewart Living Omnimedia, Inc.
Supplemental Disclosures Regarding Non- GAAP Financial Information
Year Ended December 31,
(in thousands)
The following table presents segment and consolidated financial
information, including a reconciliation of operating income, a GAAP
measure, and Operating Income before Depreciation and Amortization (OIDA),
a non-GAAP measure. In order to reconcile OIDA to operating income,
depreciation and amortization are added back to operating income.
2003 2002 % change
--------------- --------------- ----------------
REVENUES
Publishing $ 135,936 $ 182,600 -25.6%
Television 25,704 26,680 -3.7%
Merchandising 53,395 48,896 9.2%
Internet/Direct Commerce 30,813 36,873 -16.4%
--------------- --------------- ----------------
TOTAL REVENUES 245,848 295,049 -16.7%
=============== =============== ================
OPERATING INCOME (LOSS)
Publishing 19,597 62,517 -68.7%
Television (2,616) 2,589 nm
Merchandising 37,716 32,972 14.4%
Internet/ Direct Commerce (16,013) (29,550) 45.8%
--------------- --------------- ----------------
Operating Income before Corporate
Overhead 38,684 68,528 -43.6%
Corporate Overhead (45,089) (40,843) -10.4%
Restructuring Charge - (7,692) nm
--------------- --------------- ----------------
TOTAL OPERATING INCOME (6,405) 19,993 nm
=============== =============== ================
DEPRECIATION AND AMORTIZATION
Publishing 165 158 4.4%
Television 2,974 1,693 75.7%
Merchandising 671 633 6.0%
Internet/ Direct Commerce 960 2,867 -66.5%
Corporate Overhead 4,899 6,280 -22.0%
--------------- --------------- ----------------
TOTAL DEPRECIATION AND AMORTIZATION 9,669 11,631 -16.9%
=============== =============== ================
OPERATING INCOME (LOSS) BEFORE DEPRECIATION AND AMORTIZATION AND RESTRUCTURING CHARGE
Publishing 19,762 62,675 -68.5%
Television 358 4,282 -91.6%
Merchandising 38,387 33,605 14.2%
Internet/ Direct Commerce (15,053) (26,683) 43.6%
--------------- --------------- ----------------
Operating Income before Depreciation
and Amortization and before Corporate
Overhead 43,454 73,879 -41.2%
--------------- --------------- ----------------
Corporate Overhead (40,190) (34,563) -16.3%
--------------- --------------- ----------------
TOTAL OPERATING INCOME (LOSS) BEFORE
DEPRECIATION AND AMORTIZATION AND
RESTRUCTURING CHARGE $ 3,264 $ 39,316 -91.7%
=============== =============== ================
Martha Stewart Living Omnimedia, Inc.
Endnotes
(a) The fourth quarter of 2002 operating results include the following
restructuring charges:
Net loss from Net income from
Pre-tax After-tax continuing continuing
restructuring restructuring Diluted operations, operations,
charge charge EPS including excluding
restructuring restructuring
charge charge
----------- ------------ ------- ------------------- ------------------
Inventory write-down(1) $ (1,605) $ (963) $(0.02) $ -
Fixed asset write-down(2) (6,087) (3,652) (0.07) -
----------- ------------ ------- ------------------- ------------------
Total restructuring
charges $ (7,692) $ (4,615) $(0.09) $ (0.03) $ 0.06
=========== ============ ======= =================== ==================
(b) The full year of 2002 operating results include the following
restructuring charges:
Net income from
Net income from continuing
continuing operations,
Pre-tax After-tax operations, excluding
restructuring restructuring Diluted including restructuring
charge charge EPS restructuring charge charge
----------- ------------ ------- ------------------- ------------------
Inventory write-down(1) $ (1,605) $ (963) $(0.02) $ -
Fixed asset write-down(2) (6,087) (3,652) (0.07) -
----------- ------------ ------- ------------------- ------------------
Total restructuring
charges $ (7,692) $ (4,615) $(0.09) $ 0.27 $ 0.36
=========== ============ ======= =================== ==================
<FN>
(1) Inventory write-down reduces the carrying value of inventory held
by the Company's commerce operation to an estimated recoverable
amount.
(2) Asset impairment write-down reduces the carrying value of the
commerce portion of the Company's website, to net realizable
value.
</FN>