EXHIBIT 99.1
MARTHA STEWART LIVING OMNIMEDIA, INC.
ANNOUNCES SECOND QUARTER 2005 RESULTS
NEW YORK, NEW YORK, JULY 27, 2005 -- Martha Stewart Living Omnimedia, Inc.
(NYSE: MSO) announced its results today for the second quarter of 2005.
Revenues for the second quarter of 2005 were $46.0 million, compared to $44.1
million in the prior year's quarter. Operating income before depreciation and
amortization, and non-cash equity compensation ("OIDA") for the second quarter
of 2005 was a loss of $(11.2) million, compared to an OIDA loss of $(15.2)
million in the same period last year. Operating loss for the second quarter was
$(34.2) million, compared to an operating loss of $(17.8) million for the second
quarter of 2004. Loss per share from continuing operations was $(0.65) for the
second quarter of 2005, compared to a loss per share from continuing operations
of $(0.36) in the second quarter of 2004. The current period results include a
$16.8 million ($0.33 per share) non-cash charge related to the vesting of
certain warrants granted in connection with the production of our new syndicated
television show and certain other employee-related charges of $3.2 million
($0.06 per share).
Susan Lyne, President and Chief Executive Officer, said: "The momentum we began
to build early in 2005 is starting to deliver a quantifiable improvement in
performance. We have exceeded our own plan both in terms of results and in the
success of our efforts to leverage the consumer connection with Martha and the
brand. We expect to achieve breakeven OIDA in the second half of 2005, an
improvement of approximately $15 million over the second half of 2004.
"In Publishing, our flagship magazine, Martha Stewart Living, continues to
achieve solid increases in advertising. At this point in the selling cycle, we
are feeling very good about indicators for 2006 advertising page growth.
Everyday Food continues to please readers and win new advertisers. Importantly,
we are working on numerous multi-platform opportunities that allow us to offer
advertisers access to a common, loyal and engaged audience across print,
broadcast and Internet.
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"We are now hard at work readying the first season of our new daily syndicated
television show, 'Martha'. All business segments stand to benefit from increased
brand visibility as we return to television this fall with both our new daytime
show and 'The Apprentice: Martha Stewart'. Our recently announced partnership
with Discovery Communications will give us a platform to create new lifestyle
programming, while expanding the audience for our current product.
"We are actively pursuing opportunities to capitalize on our libraries and
expertise by developing products that will enrich the daily lives of women while
generating cash flow for the Company. We are all mindful of the standard our
customers expect from us and we are focused on execution as we look for new
opportunities to inspire them."
SECOND QUARTER 2005 RESULTS BY SEGMENT
PUBLISHING
Revenues in the second quarter of 2005 were $31.7 million, compared to $23.7
million in the second quarter of 2004, up 34%. Adjusting for Body + Soul, which
was acquired in August 2004, revenue increased 24%. The revenue growth was
driven by higher advertising revenue in both Everyday Food and Martha Stewart
Living. Advertising pages in Martha Stewart Living increased 42% in the quarter,
while Everyday Food increased advertising pages by 65%. Advertising revenue in
both publications increased ahead of page growth. We are currently focused on
2006 advertising revenue growth and we are working on numerous multi-platform
opportunities that allow us to offer a common brand with loyal audiences across
print, broadcast and Internet. Building on our strong circulation trends, we
will be raising the rate base of Martha Stewart Living to 1.9 million copies per
issue effective with the January 2006 issue, up from 1.8 million. OIDA was a
loss of $(2.6) million, compared to a loss of $(3.7) million in the second
quarter of 2004. Operating loss was $(3.3) million for the second quarter of
2005, compared to an operating loss of $(3.9) million in the second quarter of
2004. The improved operating results are principally due to higher advertising
revenue in both Martha Stewart Living and Everyday Food. The 2005 quarter
includes losses related to Body + Soul magazine of $2.1 million.
TELEVISION
Revenues in the second quarter of 2005 were $1.8 million, compared to $3.1
million in the second quarter of 2004. The decline in revenue was primarily
related to the absence of our daily syndicated show, which stopped airing in
syndication in September 2004. During the quarter we have begun pre-production
activities for our new nationally syndicated program, entitled 'Martha', which
is expected to
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begin airing on September 12th. The program has been cleared in more than 96% of
the country and sold in all top 20 U.S. television markets. OIDA was a loss of
$(2.7) million for the second quarter of 2005, compared to a loss of $(3.5)
million in the prior year's second quarter. Operating loss for the second
quarter of 2005 was $(20.0) million, compared to an operating loss of $(3.5)
million in the second quarter of 2004. The second quarter of 2005 results were
also impacted by severance costs of approximately $0.7 million, while the prior
year quarter was impacted by the write-down of deferred television production
costs of $1.5 million, resulting from the early termination of a cable
television licensing agreement. The current quarter operating loss includes a
non-cash charge of $16.8 million associated with the vesting of certain warrants
granted in connection with the production of the syndicated program.
MERCHANDISING
Revenues in the second quarter of 2005 were $10.2 million, compared to $10.9
million in the second quarter of 2004. The lower revenue was principally due to
lower sales of our Martha Stewart Everyday products at Kmart, with relative
strength in garden and housewares, offsetting weakness in soft home. The decline
in royalty revenue from sales at Kmart in the quarter will not impact full year
results from operations, as we are paid based on guaranteed annual amounts. OIDA
was $6.3 million in the current period, compared to $5.5 million in the prior
year's quarter. Second-quarter 2005 operating income was $6.0 million, compared
to $5.3 million in the second quarter of 2004. We recently launched Everyday
Rooms, an assortment of affordable, stylish, easy-to-assemble furniture,
available exclusively at Kmart stores nationwide. These new products, which
include 20 pieces for the bedroom, kitchen, and living room, have been well
received by consumers. During the quarter we also previewed the fourth
collection of Martha Stewart Signature Furniture - Opal Point. This line of
furniture will officially launch at the October furniture market and hit retail
floors in early January. The prior year quarter included $1.5 million of
non-recurring professional fees.
INTERNET/DIRECT COMMERCE
Revenues in the second quarter of 2005 were $2.2 million, compared to $6.4
million in the same period a year ago. Revenue in the current quarter
principally reflects our online flower business. Advertising revenue also
increased in the quarter, although small in absolute terms. Total revenue would
have increased 18% in the quarter excluding the results of the catalog
operation, which was discontinued earlier this year. OIDA was a loss of $(0.9)
million in the second quarter of 2005, compared to a loss of $(2.2) million in
the second quarter of 2004. Operating loss was $(1.1) million for the second
quarter of 2005, compared to an operating loss of $(2.4) million in the second
quarter of 2004. As advertising
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revenue continues to strengthen, and costs continue to moderate throughout the
remainder of the year, we expect to further reduce our losses in this segment.
CORPORATE EXPENSES
Corporate overhead, before depreciation and amortization and non-cash equity
compensation, was $11.3 million in second quarter of both 2005 and 2004. The
current quarter includes certain non-recurring employee-related costs of $1.5
million. Corporate expenses, including depreciation and amortization and
non-cash equity compensation, was $15.8 million, compared to $13.3 million in
the prior year's quarter. Higher levels of non-cash equity compensation in the
current year's quarter principally resulted from director compensation and
accelerated vesting of equity associated with employee severance.
TRENDS AND OUTLOOK
James Follo, Chief Financial and Administrative Officer, commented: "We expect
to report significant year-over-year improvements in the second half of 2005
operating results, reflecting continued improvements in circulation and
advertising revenues, the September launch of new television and radio programs,
as well as the benefits associated with our Kmart contract whereby we record the
minimum payments due to MSLO in our fourth quarter. Accordingly, we expect to
report an OIDA loss in the third quarter of approximately $12-$13 million,
followed by fourth quarter OIDA profit of $11-$12 million. We expect to report a
third quarter operating loss in the range of $25-$26 million and a fourth
quarter operating loss in the range of $1-$2 million. Both quarters will include
non-cash charges estimated at approximately $13 million, principally reflecting
charges related to the vesting of warrants granted in connection with certain
television programs.
USE OF NON-GAAP FINANCIAL INFORMATION
The Company believes OIDA, a non-GAAP financial measure, 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,
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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 supplementary in the financial statements included
with this release.
Martha Stewart Living Omnimedia, Inc. (MSLO) is a leading provider of original
"how-to" information, inspiring and engaging consumers with unique lifestyle
content and high-quality products. MSLO is organized into four business
segments: Publishing, Television, Merchandising, and Internet/Direct Commerce.
Martha Stewart Living Omnimedia, Inc. is listed on the New York Stock Exchange
under the ticker symbol MSO.
The Company will host a conference call with analysts and investors at 11:30
a.m. EDT that will be broadcast live over the Internet at
www.marthastewart.com/ir.
###
We have included in this press release 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 but instead represent
only our current beliefs regarding future events, many of which, by their
nature, are inherently uncertain and outside of our control. These statements
can be identified by terminology such as "may," "will," "should," "could",
"expects," "intends," "plans," "anticipates," "believes," "estimates,"
"potential" or "continue" or the negative of these terms or other comparable
terminology. The Company's actual results may differ materially from those
projected in these statements, and factors that could cause such differences
include: adverse reactions to publicity relating to Martha Stewart by consumers,
advertisers and business partners; an adverse resolution to the pending SEC
enforcement proceeding against Ms. Stewart arising from her personal sale of
non-Company stock; adverse resolution of some or all of the Company's ongoing
litigation; downturns in national and/or local economies; shifts in our business
strategies; a loss of the services of Ms. Stewart; a loss of the services of
other key personnel; 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
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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 of Financial Condition and Results of Operations", 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 - Howard Hochhauser, VP Finance and Investor Relations of
Martha Stewart Living Omnimedia, Inc., 212-827-8530; Media - Elizabeth Estroff,
AVP, Corporate Communications, of Martha Stewart Living Omnimedia, Inc.,
212-827-8281.
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Martha Stewart Living Omnimedia, Inc.
Consolidated Statements of Operations
Three Months Ended June 30,
(in thousands, except per share amounts)
<Table>
<Caption>
2005 2004 % change
-------- -------- --------
REVENUES
Publishing $ 31,707 $ 23,748 33.5%
Television 1,847 3,056 -39.6%
Merchandising 10,162 10,903 -6.8%
Internet/Direct Commerce 2,235 6,365 -64.9%
-------- -------- --------
45,951 44,072 4.3%
-------- -------- --------
OPERATING COSTS AND EXPENSES
Production, distribution and editorial 24,872 30,412 18.2%
Selling and promotion 16,148 12,924 -24.9%
General and administrative 16,145 15,903 -1.5%
Non-cash equity compensation 21,276 1,025 nm
Depreciation and amortization 1,720 1,635 -5.2%
-------- -------- --------
Total operating costs and expenses 80,161 61,899 -29.6%
-------- -------- --------
(34,210) (17,827) -91.9%
OPERATING LOSS
Interest income, net 890 319 179.0%
-------- -------- --------
LOSS BEFORE INCOME TAXES (33,320) (17,508) -90.3%
Income tax provision
(59) (189) 68.8%
-------- -------- --------
LOSS FROM CONTINUING OPERATIONS BEFORE LOSS
FROM DISCONTINUED OPERATIONS (33,379) (17,697) -88.6%
-------- -------- --------
Loss from discontinued operations (120) (127) 5.5%
-------- -------- --------
NET LOSS $(33,499) $(17,824) -87.9%
======== ======== ========
LOSS PER SHARE - BASIC AND DILUTED
Loss from continuing operations $ (0.65) $ (0.36)
Loss from discontinued operations (0.00) (0.00)
-------- --------
Net loss $ (0.65) $ (0.36)
======== ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic and Diluted 51,166 49,572
</Table>
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Martha Stewart Living Omnimedia, Inc.
Segment Information
Three Months Ended June 30,
(in thousands)
<Table>
<Caption>
2005 2004 % change
-------- -------- --------
REVENUES
Publishing $ 31,707 $ 23,748 33.5%
Television 1,847 3,056 -39.6%
Merchandising 10,162 10,903 -6.8%
Internet/Direct Commerce 2,235 6,365 -64.9%
-------- -------- --------
Total revenues 45,951 44,072 4.3%
-------- -------- --------
OPERATING INCOME (LOSS) BEFORE DEPRECIATION AND AMORTIZATION
AND NON-CASH EQUITY COMPENSATION
Publishing (2,595) (3,743) 30.7%
Television (2,663) (3,472) 23.3%
Merchandising 6,274 5,517 13.7%
Internet/Direct Commerce (897) (2,177) 58.8%
-------- -------- --------
Operating Income (Loss) before Depreciation and Amortization
and Corporate Expense and Non-Cash Equity Compensation 119 (3,875) nm
Corporate Expense (11,333) (11,292) -0.4%
-------- -------- --------
Operating Loss before Depreciation and Amortization and
Corporate Expense and Non-Cash Equity Compensation (11,214) (15,167) 26.1%
Non-cash equity compensation (21,276) (1,025) nm
Depreciation and amortization (1,720) (1,635) -5.2%
-------- -------- --------
OPERATING LOSS (34,210) (17,827) -91.9%
Interest income, net 890 319 179.0%
-------- -------- --------
LOSS BEFORE INCOME TAXES (33,320) (17,508) -90.3%
Income tax provision (59) (189) 68.8%
-------- -------- --------
LOSS FROM CONTINUING OPERATIONS BEFORE LOSS FROM DISCONTINUED
OPERATIONS (33,379) (17,697) -88.6%
-------- -------- --------
Loss from discontinued operations (120) (127) 5.5%
-------- -------- --------
NET LOSS $(33,499) $(17,824) -87.9%
======== ======== ========
</Table>
8
Martha Stewart Living Omnimedia, Inc.
Consolidated Statements of Operations
Six Months Ended June 30,
(in thousands, except per share amounts)
<Table>
<Caption>
2005 2004 % change
--------- --------- ---------
REVENUES
Publishing $ 57,062 $ 47,670 19.7%
Television 2,644 7,233 -63.4%
Merchandising 19,554 21,692 -9.9%
Internet/Direct Commerce 5,357 11,978 -55.3%
--------- --------- ---------
84,617 88,573 -4.5%
--------- --------- ---------
OPERATING COSTS AND EXPENSES
Production, distribution and editorial 48,368 59,352 18.5%
Selling and promotion 32,744 26,372 -24.2%
General and administrative 29,595 31,426 5.7%
Non-cash equity compensation 24,495 2,480 nm
Depreciation and amortization 3,407 3,309 -3.0%
--------- --------- ---------
Total operating costs and expenses 138,609 122,939 -12.7%
--------- --------- ---------
OPERATING LOSS (53,992) (34,366) -57.1%
Interest income, net 1,659 681 143.6%
--------- --------- ---------
LOSS BEFORE INCOME TAXES (52,333) (33,685) -55.4%
Income tax provision
(82) (3,332) nm
--------- --------- ---------
(52,415) (37,017) -41.6%
LOSS FROM CONTINUING OPERATIONS BEFORE LOSS FROM DISCONTINUED
OPERATIONS
--------- --------- ---------
Loss from discontinued operations (252) (288) 12.5%
--------- --------- ---------
NET LOSS $ (52,667) $ (37,305) -41.2%
========= ========= =========
LOSS PER SHARE - BASIC AND DILUTED
Loss from continuing operations $ (1.03) $ (0.75)
Loss from discontinued operations (0.00) (0.01)
--------- ---------
Net loss $ (1.03) $ (0.75)
========= =========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic and Diluted 51,015 49,518
</Table>
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Martha Stewart Living Omnimedia, Inc.
Segment Information
Six Months Ended June 30,
(in thousands except per share amounts)
<Table>
<Caption>
2005 2004 % change
-------- -------- --------
REVENUES
Publishing $ 57,062 $ 47,670 19.7%
Television 2,644 7,233 -63.4%
Merchandising 19,554 21,692 -9.9%
Internet/Direct Commerce 5,357 11,978 -55.3%
-------- -------- --------
Total revenues 84,617 88,573 -4.5%
-------- -------- --------
OPERATING INCOME (LOSS) BEFORE DEPRECIATION AND AMORTIZATION
AND NON-CASH EQUITY COMPENSATION
Publishing (10,287) (7,478) -37.6%
Television (4,825) (5,362) 97%
Merchandising 12,375 12,209 1.4%
Internet/Direct Commerce (2,145) (4,613) 53.5%
-------- -------- --------
Operating Loss before Depreciation and Amortization (4,882) (5,244) 6.5%
and Corporate Expense and Non-Cash Equity Compensation
Corporate Expense (21,208) (23,333) 6.2%
-------- -------- --------
Operating Loss before Depreciation and Amortization and Non-Cash (26,090) (28,577) 8.7%
Equity Compensation
Non-cash equity compensation (24,495) (2,480) nm
Depreciation and amortization (3,407) (3,309) -3.0%
-------- -------- --------
OPERATING LOSS (53,992) (34,366) -57.1%
Interest income, net 1,659 681 143.6%
-------- -------- --------
LOSS BEFORE INCOME TAXES (52,333) (33,685) -55.4%
Income tax provision (82) (3,332) nm
-------- -------- --------
LOSS FROM CONTINUING OPERATIONS BEFORE LOSS FROM DISCONTINUED
OPERATIONS (52,415) (37,017) -41.6%
-------- -------- --------
Loss from discontinued operations (252) (288)
-------- -------- --------
NET LOSS $(52,667) $(37,305) -41.2%
======== ======== ========
</Table>
10
Martha Stewart Living Omnimedia, Inc.
Consolidated Balance Sheets
(in thousands, except per share amounts)
<Table>
<Caption>
June 30, December 31,
2005 2004
--------- ------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 28,203 $ 104,647
Short-term investments 107,352 35,309
Accounts receivable, net 21,520 31,332
Inventories, net 3,787 5,229
Deferred television production costs 1,997 --
Income taxes receivable 5,107 6,321
Other current assets 5,432 3,573
--------- ------------
TOTAL CURRENT ASSETS 173,398 186,411
PROPERTY, PLANT, AND EQUIPMENT, net 16,091 17,175
INTANGIBLE ASSETS, net 53,973 54,264
OTHER NONCURRENT ASSETS 5,755 6,828
--------- ------------
TOTAL ASSETS $ 249,217 $ 264,678
========= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 23,596 $ 25,604
Accrued payroll and related costs 10,658 9,407
Income taxes payable 394 412
Current portion of deferred subscription income 32,005 27,160
--------- ------------
TOTAL CURRENT LIABILITIES 66,653 62,583
--------- ------------
DEFERRED SUBSCRIPTION INCOME 6,697 7,668
DEFERRED ROYALTY REVENUE 5,423 3,438
OTHER NONCURRENT LIABILITIES 3,135 3,361
--------- ------------
TOTAL LIABILITIES 81,908 77,050
--------- ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Class A common stock, $0.01 par value, 350,000 shares authorized:
22,731 and 21,660 shares issued in 2005 and 2004, respectively 227 217
Class B common stock, $0.01 par value, 150,000 shares authorized:
28,701 and 29,123 shares outstanding in 2005 and 2004, respectively 287 291
Capital in excess of par value 237,771 196,781
Unamortized restricted stock (11,441) (2,793)
Accumulated deficit (58,760) (6,093)
--------- ------------
168,084 188,403
Less class A treasury stock - 59 shares at cost (775) (775)
--------- ------------
TOTAL SHAREHOLDERS' EQUITY 167,309 187,628
--------- ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 249,217 $ 264,678
========= ============
</Table>
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Martha Stewart Living Omnimedia, Inc.
Supplemental Disclosures Regarding Non-GAAP Financial Information
Three Months Ended June 30,
(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, including the
amortization of non-cash equity compensation, (OIDA), a non-GAAP measure. In
order to reconcile OIDA to operating income, depreciation and amortization and
non-cash equity compensation are added back to operating income.
<Table>
<Caption>
2005 2004
-------- --------
OPERATING INCOME (LOSS)
Publishing $ (3,264) $ (3,852)
Television (20,027) (3,531)
Merchandising 5,988 5,314
Internet/ Direct Commerce (1,146) (2,426)
-------- --------
Operating Loss before Corporate Expenses (18,449) (4,495)
Corporate Expenses (15,761) (13,332)
-------- --------
TOTAL OPERATING LOSS (34,210) (17,827)
-------- --------
DEPRECIATION AND AMORTIZATION
Publishing 248 58
Television 101 59
Merchandising 209 191
Internet/ Direct Commerce 239 249
Corporate Expenses 923 1,078
-------- --------
TOTAL DEPRECIATION AND AMORTIZATION 1,720 1,635
-------- --------
NON-CASH EQUITY COMPENSATION
Publishing 421 51
Television 17,263 --
Merchandising 77 12
Internet/ Direct Commerce 10 --
Corporate Expenses 3,505 962
-------- --------
TOTAL NON-CASH EQUITY COMPENSATION 21,276 1,025
-------- --------
OPERATING INCOME (LOSS) BEFORE DEPRECIATION AND AMORTIZATION
AND NON-CASH EQUITY COMPENSATION
Publishing (2,595) (3,743)
Television (2,663) (3,472)
Merchandising 6,274 5,517
Internet/ Direct Commerce (897) (2,177)
-------- --------
Operating Income (Loss) before Depreciation and
Amortization, Non-Cash Equity Compensation, and
Corporate Expenses 119 (3,875)
Corporate Expenses (11,333) (11,292)
-------- --------
OPERATING LOSS BEFORE DEPRECIATION AND AMORTIZATION AND
NON-CASH EQUITY COMPENSATION $(11,214) $(15,167)
======== ========
</Table>
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Martha Stewart Living Omnimedia, Inc.
Supplemental Disclosures Regarding Non-GAAP Financial Information
Six Months Ended June 30,
(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, including the
amortization of non-cash equity compensation, (OIDA), a non-GAAP measure. In
order to reconcile OIDA to operating income, depreciation and amortization and
non-cash equity compensation are added back to operating income.
<Table>
<Caption>
2005 2004
-------- --------
OPERATING INCOME (LOSS)
Publishing $(11,982) $ (7,700)
Television (22,299) (5,478)
Merchandising 11,803 11,803
Internet/ Direct Commerce (2,655) (5,105)
-------- --------
Operating Loss before Corporate Expenses (25,133) (6,480)
Corporate Expenses (28,859) (27,886)
-------- --------
TOTAL OPERATING LOSS (53,992) (34,366)
-------- --------
DEPRECIATION AND AMORTIZATION
Publishing 495 120
Television 147 116
Merchandising 418 381
Internet/ Direct Commerce 491 492
Corporate Expenses 1,856 2,200
-------- --------
TOTAL DEPRECIATION AND AMORTIZATION 3,407 3,309
-------- --------
NON-CASH EQUITY COMPENSATION
Publishing 1,200 102
Television 17,327 --
Merchandising 154 25
Internet/ Direct Commerce 19 --
Corporate Expenses 5,795 2,353
-------- --------
TOTAL NON-CASH EQUITY COMPENSATION 24,495 2,480
-------- --------
OPERATING INCOME (LOSS) BEFORE DEPRECIATION AND AMORTIZATION
AND NON-CASH EQUITY COMPENSATION
Publishing (10,287) (7,478)
Television (4,825) (5,362)
Merchandising 12,375 12,209
Internet/ Direct Commerce (2,145) (4,613)
-------- --------
Operating Loss before Depreciation and Amortization,
Non-Cash Equity Compensation, and Corporate Expenses (4,882) (5,244)
Corporate Expenses (21,208) (23,333)
-------- --------
OPERATING LOSS BEFORE DEPRECIATION AND AMORTIZATION AND
NON-CASH EQUITY COMPENSATION $(26,090) $(28,577)
======== ========
</Table>
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