News Releases
DES MOINES, Iowa, April 25 /PRNewswire-FirstCall/ -- Meredith Corporation (NYSE: MDP) today reported that third quarter earnings per share increased 16 percent to $0.80 from $0.69 in the prior-year. Income from operations grew 18 percent to $73.6 million and earnings before interest, taxes, depreciation and amortization (EBITDA) rose 19 percent to $84.9 million.
Revenues rose 29 percent to $394.9 million in the third quarter and advertising revenues increased 27 percent to $227.8 million. On a comparable basis (excluding Parents, Family Circle, Fitness, Child and Ser Padres magazines, which were acquired on July 1, 2005), Meredith's revenues grew 6 percent to $324.4 million and advertising revenues rose 4 percent to $185.7 million.
"In Publishing, we continued to benefit from the new magazines and strong performance in our book and integrated marketing operations," stated William T. Kerr, Meredith's Chairman and Chief Executive Officer. "Advertising revenues increased. While results varied by magazine, Internet advertising was strong once again.
"In Broadcasting, we continued to monetize our ratings gains and increased EBITDA margin nearly three percentage points," Kerr stated. "In particular, our stations in our three largest markets-Atlanta, Phoenix and Portland- produced outstanding profit growth."
For the first nine months of fiscal 2006, earnings per share increased 14 percent to $1.90 from $1.67 before the cumulative benefit of a change in accounting principle in 2005 related to option expensing. Income from operations grew 16 percent to $180.3 million and EBITDA rose 19 percent to $214.5 million. Revenues increased 32 percent to $1.2 billion. On a comparable basis, revenues rose 5 percent to $936.7 million and advertising revenues grew 3 percent to $554.3 million.
OPERATING HIGHLIGHTS Publishing
Publishing operating profit increased 12 percent to $61.4 million and revenues grew 35 percent to $319 million in the third quarter. On a comparable basis, publishing operating profit declined 2 percent and revenues grew 5 percent.
Third quarter Publishing results benefited from strong operating profit gains at the Company's book, integrated marketing and interactive media operations and the inclusion of the magazines acquired from Gruner + Jahr. These results were partially offset by a number of industry-wide factors including a slower magazine advertising environment, weak newsstand results, and higher paper and postal costs.
Advertising revenues grew 40 percent in the quarter primarily due to the addition of the new magazines. On a comparable basis, Publishing advertising revenues increased 2 percent. Internet growth continued to be strong and the mid-size magazines posted solid gains, which were partially offset by weakness in the Company's women's service field titles.
The Company continued to grow its diversified publishing businesses in the third quarter. Meredith Books grew revenues in the high teens and Meredith Integrated Marketing increased revenues in the low-double digits. The Company enhanced its integrated marketing capabilities to deliver custom marketing programs via the Internet with its recently announced April 2006 acquisition of O'Grady Meyers, a Los Angeles-based interactive marketing services firm. Meredith expects the acquisition to be modestly accretive to earnings in fiscal 2007.
For the first nine months of fiscal 2006, Publishing operating profit grew 24 percent to $146.3 million and revenues rose 43 percent to $939 million. On a comparable basis, operating profit grew 8 percent and revenues increased 7 percent.
Broadcasting
Broadcasting operating profit increased 24 percent to $20.1 million in the third quarter. EBITDA grew 18 percent to $26.1 million and EBITDA margin increased from 31.7 to 34.4 percent. Total revenues grew 9 percent to $75.9 million in the quarter, including a 10 percent gain in local advertising revenues.
Meredith improved ratings and audience share in certain key markets in the February 2006 book and continued to do an outstanding job of monetizing its ratings growth. The Company increased average revenue share in 5 of its 6 largest markets in the second half of calendar 2005, which is the most current market data available. On average, Meredith grew revenue share more than one percentage point in these markets, according to local market audits.
In March, the Company formed Meredith Video Solutions, which will utilize magazine content and brand strength as well as Broadcasting's production capabilities to develop video content. It will also secure distribution outlets across multiple media platforms, including the Internet, mobile devices, cable, satellite, network and syndicated television.
For the first nine months of fiscal 2006, Broadcasting operating profit declined to $59.1 million from $62.7 million and revenues declined slightly to $232.2 million from $233 million. These results reflect the cyclical decline in political advertising, partially offset by 8 percent growth in non- political advertising.
OTHER FINANCIAL INFORMATION
Net interest expense increased to $22.6 million in the first nine months of fiscal 2006 from $14.7 million in the prior-year period, primarily reflecting a higher average debt balance. Total debt was $520 million at March 31, 2006 versus $600 million at the closing of the new magazine acquisition on July 1, 2005. The weighted average interest rate was 5.12 percent on March 31, 2006 compared with 6.19 percent on March 31, 2005.
Capital expenditures were $5.8 million in the third quarter and $20.8 million in the first nine months of fiscal 2006. Meredith repurchased 918,000 shares in the first nine months of fiscal 2006 and more than 1.1 million shares to date in fiscal 2006 as part of its ongoing share repurchase program.
All earnings per share figures in the text of this release are diluted. Both basic and diluted earnings per share can be found in the attached statements of earnings.
OUTLOOK
Broadcast pacings, which are a snapshot in time and change frequently, are currently running up in the high-single digits for the fourth quarter. Publishing advertising revenues are expected to be flat to up slightly on a comparable basis.
The Company continues to believe that earnings per share will approximate $0.96 for the fourth quarter and $2.86 for fiscal 2006, which would be a 14 percent increase from the $2.50 Meredith earned in fiscal 2005 (before the cumulative effect of a change in accounting principle).
CONFERENCE CALL WEBCAST
Meredith will host a conference call on April 25, 2006 at 11:00 a.m. EDT (10:00 a.m. CDT) to discuss results for the third quarter and first nine months of fiscal 2006. A live webcast will be accessible to the public on the Company's website http://www.meredith.com/ .
RATIONALE FOR USE AND ACCESS TO NON-GAAP MEASURES
Non-GAAP measures such as EBITDA should be construed not as alternative measures to the Company's net earnings and income from operations as defined under GAAP, but as supplemental information.
Management uses and presents GAAP and non-GAAP results to evaluate and communicate the performance of the Company. Because of EBITDA's focus on results from operations before depreciation and amortization, management believes that EBITDA provides an additional analytical tool to clarify the Company's results from core operations and delineate underlying trends. EBITDA is a common supplemental measure of performance used by investors and financial analysts. Meredith does not use EBITDA as a measure of liquidity, nor is EBITDA necessarily indicative of funds available for management's discretionary use.
Reconciliations of GAAP to non-GAAP measures are included in Table 1. The attached financial statements and reconciliation tables will be made available on the Company's web site. Interested parties should go to http://www.meredith.com/investors/index.html and click on "GAAP-Non-GAAP Reconciliation" in the navigation bar on the left side of the page.
SAFE HARBOR
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. Statements in this announcement that are forward-looking include, but are not limited to, the statements regarding broadcast pacings, publishing advertising revenues, along with the Company's earnings per share outlook for the fourth quarter of fiscal 2006, as well as Meredith's earnings per share outlook for all of fiscal 2006.
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; world, national, or local events that could disrupt broadcast television; increased consolidation among major advertisers or other events depressing the level of advertising spending; the unexpected loss of one or more major clients; the integration of the newly acquired businesses; changes in consumer reading, purchase, 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; changes in government regulations affecting the Company's industries; unexpected changes in interest rates; and any acquisitions and/or dispositions. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise.
ABOUT MEREDITH CORPORATION
Meredith ( 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, integrated marketing and interactive media. The Meredith Publishing Group features 25 subscription magazines - including Better Homes and Gardens, Ladies' Home Journal, Family Circle, Parents, American Baby, Fitness, and Child - and approximately 200 special interest publications. Meredith owns 14 television stations, including properties in top-25 markets Atlanta, Phoenix and Portland, and an AM radio station.
Meredith has approximately 350 books in print and has established marketing relationships with some of America's leading companies including The Home Depot, DIRECTV, DaimlerChrysler, Wal-Mart and Carnival Cruise Lines. Meredith's consumer database, which contains approximately 85 million names, is one of the largest domestic databases among media companies and enables magazine and television advertisers to target marketing campaigns precisely. Additionally, Meredith has an extensive Internet presence that includes 32 web sites and strategic alliances with leading Internet destinations. Meredith Hispanic Ventures publishes five Spanish-language titles, making Meredith the largest Hispanic publisher in the United States.
Meredith Corporation and Subsidiaries
Consolidated Statements of Earnings - Unaudited
Three Months Nine Months
Period Ended Percent Percent
March 31, 2006 2005 Change 2006 2005 Change
(In thousands
except per
share data)
Revenues
Advertising $227,843 $178,785 27.4 % $693,214 $535,960 29.3 %
Circulation 95,888 64,962 47.6 % 278,468 179,049 55.5 %
All other 71,193 61,770 15.3 % 199,490 173,924 14.7 %
Total revenues 394,924 305,517 29.3 % 1,171,172 888,933 31.8 %
Operating costs
and expenses
Production,
distribution
and editorial 157,908 136,699 15.5 % 499,062 389,275 28.2 %
Selling, general
and
administrative 152,081 97,685 55.7 % 457,571 318,674 43.6 %
Depreciation and
amortization 11,290 8,831 27.8 % 34,202 26,008 31.5 %
Total operating
costs and
expenses 321,279 243,215 32.1 % 990,835 733,957 35.0 %
Income from
operations 73,645 62,302 18.2 % 180,337 154,976 16.4 %
Interest income 412 259 59.1 % 779 699 11.4 %
Interest expense (7,437) (5,094) 46.0 % (23,361) (15,436) 51.3 %
Earnings before
income taxes and
cumulative effect
of change in
accounting
principle 66,620 57,467 15.9 % 157,755 140,239 12.5 %
Income taxes 25,979 22,239 16.8 % 61,524 54,272 13.4 %
Earnings before
cumulative effect
of change
in accounting
principle 40,641 35,228 15.4 % 96,231 85,967 11.9 %
Cumulative effect
of change in
accounting
principle, net
of tax - - - - 893 (100.0)%
Net earnings $40,641 $35,228 15.4 % $96,231 $86,860 10.8 %
Basic earnings
per share
Before cumulative
effect of change
in accounting
principle $0.82 $0.71 15.5 % $1.95 $1.72 13.4 %
Cumulative effect
of change in
accounting
principle - - - - 0.02 (100.0)%
Net basic earnings
per share $0.82 $0.71 15.5 % $1.95 $1.74 12.1 %
Basic average shares
outstanding 49,524 49,649 (0.3)% 49,361 49,943 (1.2)%
Diluted earnings
per share
Before cumulative
effect of change
in accounting
principle $0.80 $0.69 15.9 % $1.90 $1.67 13.8 %
Cumulative effect
of change in
accounting
principle - - - - 0.02 (100.0)%
Net diluted earnings
per share $0.80 $0.69 15.9 % $1.90 $1.69 12.4 %
Diluted average
shares
outstanding 50,852 50,990 (0.3)% 50,747 51,441 (1.3)%
Dividends paid
per share $0.160 $0.140 14.3 % $0.440 $0.380 15.8 %
Meredith Corporation and Subsidiaries
Segment Information - Unaudited
Three Months Nine Months
Period ended Percent Percent
March 31, 2006 2005 Change 2006 2005 Change
(In thousands)
Revenues
Publishing $319,011 $235,730 35.3 % $938,954 $655,971 43.1 %
Broadcasting
Non-political
advertising 72,200 68,216 5.8 % 225,607 209,799 7.5 %
Political
advertising 664 104 538.5 % 828 18,683 (95.6)%
Other revenues 3,049 1,467 107.8 % 5,783 4,480 29.1 %
Total
broadcasting 75,913 69,787 8.8 % 232,218 232,962 (0.3)%
Total
revenues $394,924 $305,517 29.3 % $1,171,172 $888,933 31.8 %
Operating profit
Publishing $61,366 $54,996 11.6 % $146,289 $117,636 24.4 %
Broadcasting 20,073 16,220 23.8 % 59,141 62,659 (5.6)%
Unallocated
corporate (7,794) (8,914)(12.6)% (25,093) (25,319) (0.9)%
Income from
operations $73,645 $62,302 18.2 % $180,337 $154,976 16.4 %
Depreciation and
amortization
Publishing $4,637 $2,270 104.3 % $14,120 $7,031 100.8 %
Broadcasting 6,036 5,886 2.5 % 18,197 17,201 5.8 %
Unallocated
corporate 617 675 (8.6)% 1,885 1,776 6.1 %
Total depreciation
and
amortization $11,290 $8,831 27.8 % $34,202 $26,008 31.5 %
EBITDA
Publishing $66,003 $57,266 15.3 % $160,409 $124,667 28.7 %
Broadcasting 26,109 22,106 18.1 % 77,338 79,860 (3.2)%
Unallocated
corporate (7,177) (8,239)(12.9)% (23,208) (23,543) (1.4)%
Total EBITDA $84,935 $71,133 19.4 % $214,539 $180,984 18.5 %
Meredith Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
March 31, June 30,
(In thousands) 2006 2005
Assets
Current assets
Cash and cash equivalents $15,544 $29,788
Accounts receivable, net 233,371 176,669
Inventories 59,342 41,562
Current portion of subscription
acquisition costs 85,080 27,777
Current portion of broadcast rights 14,352 13,539
Other current assets 13,540 15,160
Total current assets 421,229 304,495
Property, plant and equipment, net 420,263 398,882
Less accumulated depreciation (225,775) (205,926)
Net property, plant and equipment 194,488 192,956
Subscription acquisition costs 73,108 24,722
Broadcast rights 8,843 7,096
Other assets 68,338 58,589
Intangibles, net 809,675 707,068
Goodwill 431,434 196,382
Total assets $2,007,115 $1,491,308
Liabilities and Shareholders' Equity
Current liabilities
Current portion of long-term debt $-- $125,000
Current portion of broadcast rights
payable 18,178 18,676
Accounts payable 47,210 48,462
Accrued expenses and other liabilities 125,432 119,526
Current portion of unearned
subscription revenues 209,524 127,416
Total current liabilities 400,344 439,080
Long-term debt 520,000 125,000
Long-term broadcast rights payable 16,608 17,208
Unearned subscription revenues 169,088 112,358
Deferred income taxes 115,533 93,929
Other noncurrent liabilities 47,687 51,906
Total liabilities 1,269,260 839,481
Shareholders' equity
Common stock 40,310 39,700
Class B stock 9,429 9,596
Additional paid-in capital 68,530 55,346
Retained earnings 624,588 550,115
Accumulated other comprehensive loss (1,025) (1,025)
Unearned compensation (3,977) (1,905)
Total shareholders' equity 737,855 651,827
Total liabilities and shareholders'
equity $2,007,115 $1,491,308
Meredith Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows - Unaudited
Nine months ended March 31, 2006 2005
(In thousands)
Net cash provided by operating activities $116,545 $104,247
Cash flows from investing activities
Acquisitions of businesses (359,465) (35,262)
Additions to property, plant and
equipment (20,829) (17,408)
Proceeds from disposals of assets 2,500 2,050
Other - 3,205
Net cash used in investing activities (377,794) (47,415)
Cash flows from financing activities
Proceeds from issuance of long-
term debt 490,000 60,000
Repayment of long-term debt (220,000) (90,000)
Excess tax benefits from share-
based payments 18,804 2,491
Proceeds from common stock issued 27,895 18,928
Purchases of Company stock (47,233) (85,173)
Dividends paid (21,758) (18,931)
Other financing activities (703) (256)
Net cash provided by (used in)
financing activities 247,005 (112,941)
Net decrease in cash and cash equivalents (14,244) (56,109)
Cash and cash equivalents at
beginning of period 29,788 58,723
Cash and cash equivalents at end of period $15,544 $2,614
Meredith Corporation and Subsidiaries
Supplemental Disclosures Regarding Non-GAAP Financial Measures Table 1
Consolidated EBITDA, which is reconciled to net earnings in the following
tables, is defined as earnings before interest, taxes, depreciation and
amortization.
Segment EBITDA is a measure of segment earnings before depreciation and
amortization.
Segment EBITDA margin is defined as segment EBITDA divided by segment
revenues.
Three months ended March 31, 2006
Unallocated
Publishing Broadcasting Corporate Total
(In thousands)
Revenues $319,011 $75,913 $- $394,924
Operating profit $61,366 $20,073 $(7,794) $73,645
Depreciation and amortization 4,637 6,036 617 11,290
EBITDA $66,003 $26,109 $(7,177) 84,935
Less:
Depreciation and amortization (11,290)
Net interest expense (7,025)
Income taxes (25,979)
Net earnings $40,641
Segment EBITDA margin 20.7% 34.4%
Three months ended March 31, 2005
Unallocated
Publishing Broadcasting Corporate Total
(In thousands)
Revenues $235,730 $69,787 $- $305,517
Operating profit $54,996 $16,220 $(8,914) $62,302
Depreciation and amortization 2,270 5,886 675 8,831
EBITDA $57,266 $22,106 $(8,239) 71,133
Less:
Depreciation and amortization (8,831)
Net interest expense (4,835)
Income taxes (22,239)
Net earnings before cumulative
effect of change in accounting
principle $35,228
Segment EBITDA margin 24.3% 31.7%
Meredith Corporation and Subsidiaries
Supplemental Disclosures Regarding Non-GAAP Financial Measures Table 1
Consolidated EBITDA, which is reconciled to net earnings in the following
tables, is defined as earnings before interest, taxes, depreciation and
amortization.
Segment EBITDA is a measure of segment earnings before depreciation and
amortization.
Segment EBITDA margin is defined as segment EBITDA divided by segment
revenues.
Nine months ended March 31, 2006
Unallocated
Publishing Broadcasting Corporate Total
(In thousands)
Revenues $938,954 $232,218 $- $1,171,172
Operating profit $146,289 $59,141 $(25,093) $180,337
Depreciation and
amortization 14,120 18,197 1,885 34,202
EBITDA $160,409 $77,338 $(23,208) 214,539
Less:
Depreciation and
amortization (34,202)
Net interest expense (22,582)
Income taxes (61,524)
Net earnings $96,231
Segment EBITDA margin 17.1% 33.3%
Nine months ended March 31, 2005
Unallocated
Publishing Broadcasting Corporate Total
(In thousands)
Revenues $655,971 $232,962 $- $888,933
Operating profit $117,636 $62,659 $(25,319) $154,976
Depreciation and
amortization 7,031 17,201 1,776 26,008
EBITDA $124,667 $79,860 $(23,543) 180,984
Less:
Depreciation and
amortization (26,008)
Net interest expense (14,737)
Income taxes (54,272)
Net earnings before
cumulative effect of
change in accounting
principle $85,967
Segment EBITDA margin 19.0% 34.3%
SOURCE: Meredith Corporation
CONTACT: Shareholder and Financial Analyst Contact, Jim Jacobson,
Director of Investor Relations, +1-515-284-2633, jim.jacobson@meredith.com ,
or Media Contact, Art Slusark, Vice President-Corporate Communications,
+1-515-284-3404, art.slusark@meredith.com , both of Meredith Corporation
Web site: http://www.meredith.com/