MEREDITH CORP - FORM 8-K - EX-99 - EX-99 123109 PRESS RELEASE SECOND QUARTER - January 21, 2010

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Exhibit 99
 
MEREDITH REPORTS FISCAL 2010 SECOND QUARTER RESULTS
 
Ad gains at Better Homes and Gardens help drive National Media profit growth
 
 Local Media delivers growth in non-political advertising revenues
 
DES MOINES, IA (January 21, 2010) - Meredith Corporation (NYSE: MDP), the leading media and marketing company serving American women, today reported fiscal 2010 second quarter earnings per share of $0.42, including a previously announced special charge of $0.07 per share related to the repositioning of its Special Interest Media business. Excluding the special charge, earnings per share were $0.49 - slightly ahead of expectations. 
 
In comparison, fiscal 2009 second quarter earnings per share were $0.28, including a special charge of $0.21. Excluding the special charge, fiscal 2009 second quarter earnings per share were $0.49. 
 
Fiscal 2010 second quarter revenues were $337 million, compared to $361 million in fiscal 2009. Meredith recorded $14 million less ($0.19 per share) in net political advertising revenues during the second quarter of fiscal 2010 (a non-political year) compared to fiscal 2009. 
 
Additional information on the special charges can be found in Tables 1-4 and in Meredith's press releases dated January 14, 2010, and January 8, 2009. 
 
"In the second quarter of fiscal 2010, we delivered higher operating profit in our National Media business; increased non-political advertising revenues 4 percent in our Local Media business; and continued to reduce total company expenses," said Meredith President and Chief Executive Officer Stephen M. Lacy. "These achievements speak to the strength of our brands on both the national and local levels, as well as our efficiency initiatives."
 
During the second quarter of fiscal 2010, Meredith delivered: 
 
  		•
    Sequential quarterly improvement in advertising performance in the National and Local media groups. Both groups outperformed their respective industries and gained advertising market share. 
     
  		•
    Growth in its connection to the consumer, as measured by magazine readership, television viewership and online traffic. 
     
  		•
    Double-digit growth in new revenue streams including brand licensing, retransmission fees and video content creation. 
     
  		•
    A reduction of 8 percent in total company operating expenses. 
     
    For the first six months of fiscal 2010, earnings per share were $0.82, compared to $0.69 in the prior year period. Revenues were $669 million, compared to $725 million in the prior year. Excluding special items in both periods (see Tables 1-4), earnings per share were $0.83 for the first six months of fiscal 2010, compared to $0.90 in the prior year. Meredith recorded $19 million less ($0.26 per share) in net political advertising in the first half of fiscal 2010 (a non-political year) compared to the prior year.




     
    OPERATING DETAIL 
     
    National Media Group
     
    Fiscal 2010 second quarter National Media Group operating profit was $32 million, compared to $23 million in the prior year. Excluding special charges in both periods, fiscal 2010 second quarter operating profit was $37 million, a 27 percent increase over the $29 million in the prior year. 
     
    Revenues were $261 million in the second quarter of fiscal 2010, compared to $277 million in the prior year. Advertising revenues were $117 million - a decline of 2 percent compared to the prior year - but the fourth consecutive quarter of advertising performance improvement. Better Homes and Gardens grew advertising revenues 7 percent in the second quarter of fiscal 2010. More and Fitness also grew advertising revenues. 
     
    National Media Group operating expenses declined 10 percent in the second quarter of fiscal 2010 compared to the prior year, including a 15 percent decrease in paper prices. 
     
    Meredith's share of overall magazine industry advertising revenues increased to 11.7 percent during the second quarter of fiscal 2010 from 9.4 percent in the prior year, according to the latest data from the Publishers Information Bureau. Additionally, Meredith's market share grew to 37.2 percent from 34.9 percent as measured against its 28-title competitive set.
     
    Looking at several key measurements of the National Media Group's strong connection to consumers:
     
                                   
  		•
    Readership for Meredith's major subscription magazines increased in the fall of 2009 compared to the spring of 2009, according to Mediamark Research and Intelligence. 
     
  		•
    Revenues, profit and related margin in Meredith's circulation activities increased in the second quarter of fiscal 2010 compared to the prior year, driven in part by efficiencies in subscription operations.
     
  		•
    Monthly average unique visitors across Meredith's National Media Group Web sites rose more than 35 percent to more than 20 million in the second quarter of fiscal 2010 compared to the prior year, and monthly page views averaged more than 260 million. The total number of videos viewed per month quadrupled to more than 6 million. 
     
    National Media Group "Other Revenues" declined in the second quarter of fiscal 2010 compared to the prior year. Reductions in revenues at Meredith Books - expected due to the implementation of the previously announced licensing agreement with John Wiley and Sons Inc. - and at Meredith Integrated Marketing - due to cutbacks in existing programs primarily in the automotive and retail sectors - were partially offset by higher Brand Licensing revenues. 
     
    Meredith Integrated Marketing won a major new assignment to develop and manage Chrysler Group's customer relationship management initiatives in the United States and Canada. Additionally, Meredith Integrated Marketing saw a marked increase in the pipeline of new business activity during the quarter. 
     
    Brand Licensing revenues increased due primarily to an expansion of Meredith's relationship with Walmart. The number of Better Homes and Gardens-branded SKUs nearly tripled to 1,500 compared to the prior year.




     
    "Our National Media Group continued to gain share, execute multi-platform sales programs and develop its non-advertising based businesses," Lacy said. "Additionally, I am particularly pleased with the strong consumer connection metrics we continue to deliver, be it magazine readership, online traffic or the performance of our branded products for sale at retail."
     
    For the first six months of fiscal 2010, operating profit was $70 million, compared to $57 million in the prior year. Excluding special charges in both periods operating profit was $76 million, compared to $63 million in the prior year. Advertising revenues were $255 million, compared to $264 million in the prior year.
     
    Local Media Group
     
    Fiscal 2010 second quarter Local Media Group operating profit was $17 million, compared to $22 million in the prior year, primarily due to $14 million less in net political advertising revenues. Total revenues were $76 million, compared to $84 million in the prior year. Non-political advertising revenues grew 4 percent, led by improved performance in professional services and retail-related advertising. 
     
    The Local Media Group outperformed the industry as a whole by approximately 3 percentage points in non-political advertising revenues during the quarter, according to the most recently available data from the Television Bureau of Advertising. Meredith stations in nine of its 10 television markets posted growth in non-political advertising revenues. 
     
    Local Media Group operating expenses declined 6 percent in the second quarter of fiscal 2010, compared to the prior year. Operating expenses were down 2 percent excluding the prior-year special charge. Meredith is centralizing certain functions across its television stations - including master control, traffic and research - to improve efficiency and lower costs. 
     
    Looking at several key measurements of the Local Media Group's connection to consumers:
     
  		•
    Many Meredith stations increased viewership in key day parts during the November sweeps, particularly in Atlanta where morning ratings more than doubled and late news ratings grew nearly 30 percent. Las Vegas grew ratings in both the morning and evening news, and Hartford maintained its No. 1 position in all newscasts. 
     
  		•
    The daily Better television show, produced by Meredith Video Studios, is now carried in more than 55 markets reaching more than 45 percent of U.S. households, including half of the nation's top 10.
     
    Revenues from retransmission fees nearly doubled in the second quarter of fiscal 2010 from the prior-year period, reflecting Meredith's successful renegotiation of retransmission agreements with the cable and satellite operators in its markets. Revenues also grew at Meredith Video Studios, Meredith's in-house video production group, driven primarily by growth in custom video projects for corporate clients. 
     
    "We're encouraged by the strength of our connection with viewers, which has helped us grow non-political advertising revenues," Lacy said. "We're working to build upon this foundation and continuing to develop other sources of revenue, including retransmission fees and our video production activities."
     
    For the first six months of fiscal 2010, operating profit was $19 million, compared to $33 million in the prior year period, primarily due to $19 million less in net political advertising revenues. Revenues were $136 million, compared to $155 million. 




     
    OTHER FINANCIAL INFORMATION 
     
    Meredith generated more than $76 million in cash flow from operations during the first six months of fiscal 2010. Meredith's total debt was $350 million at Dec. 31, 2009, $30 million less than at the prior fiscal year end. Meredith's debt-to-EBITDA ratio was well under existing debt covenants at 1.7 to 1. 
     
    Unallocated corporate expenses rose approximately $2 million in the second quarter of fiscal 2010 compared to the prior year due primarily to third party consulting fees and higher retirement plan costs. 
     
    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 condensed consolidated statements of earnings. 
     
    OUTLOOK
     
    Looking at the third quarter of fiscal 2010, with two of three magazine issues closed in the National Media Group, advertising revenues are currently flat to up slightly. Local Media Group non-political advertising pacings, which are a snapshot in time and change frequently, are currently up in the mid teens. 
     
    Meredith currently expects fiscal 2010 third quarter earnings per share to range from $0.55 to $0.60. 
     
    Looking to the remainder of the fiscal year, with limited visibility into customers' 2010 advertising and marketing budgets, Meredith currently expects full year earnings per share to range from $1.90 to $2.05, excluding the special items reported in the first half of fiscal 2010.
     
    A number of uncertainties remain that may affect Meredith's outlook as stated in this press release for the second fiscal quarter and full year of 2010. These uncertainties are referenced below under "Safe Harbor" and in certain SEC filings.
     
    CONFERENCE CALL WEBCAST
     
    Meredith will host a conference call on January 21, 2010, at 11:00 a.m. EST to discuss fiscal 2010 second quarter results. A live webcast will be accessible to the public on the company's Web site, www.meredith.com, and a replay will be available for one week. A transcript will be available within 48 hours after the call at www.meredith.com.
     
    RATIONALE FOR USE AND ACCESS TO NON-GAAP MEASURES
     
    Management uses and presents GAAP and non-GAAP results to evaluate and communicate the performance of the company. Non-GAAP measures should not be construed as alternatives to GAAP measures. EBITDA is a common supplemental measure of performance used by investors and financial analysts. Management believes that EBITDA provides an additional analytical tool to clarify the company's results from core operations and delineate underlying trends. Meredith does not use EBITDA as a measure of liquidity or funds available for management's discretionary use because it includes certain contractual and non-discretionary expenditures.




     
     
     
    Results excluding the special charges recorded in the second quarter of fiscal 2010 and 2009, and the adjustment to deferred income tax liabilities recorded in the first quarter of fiscal 2010, are also supplemental non-GAAP financial measures. Management believes these items are not reflective of Meredith's ongoing business activities. While results excluding the special charge and tax adjustment are not a substitute for reported earnings results under GAAP, management believes this information is useful as an aid in better understanding Meredith's current performance, performance trends and financial condition. Reconciliations of non-GAAP to GAAP measures are included in the attached tables. The attached consolidated financial statements and reconciliation tables will be made available at www.meredith.com.
     
    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 and its operations. Statements in this announcement that are forward-looking include, but are not limited to, the statements regarding broadcasting pacings and publishing advertising revenues, along with the company's earnings per share outlook for the third fiscal quarter and rest of fiscal 2010.
     
    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 or insolvency of one or more major clients; the integration of acquired businesses; changes in consumer reading, purchasing and/or television viewing patterns; 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 the consequences of acquisitions and/or dispositions. The company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.
     
    ABOUT MEREDITH CORPORATION
     
    Meredith Corporation (NYSE:MDP; www.meredith.com) is the leading media and marketing company serving American women. Meredith combines well-known national brands - including Better Homes and Gardens, Parents, Ladies' Home Journal, Family Circle, American Baby, Fitness and More - with local television brands in fast-growing markets. Meredith is the industry leader in creating content in key consumer interest areas such as home, family, health and wellness and self-development. Meredith uses multiple distribution platforms - including print, television, online, mobile and video - to give consumers content they desire and to deliver the messages of its marketing partners. Additionally, Meredith uses its many assets to create powerful custom marketing solutions for many of the nation's top brands and companies. Meredith has significantly added to its capabilities in this area through the acquisition of cutting-edge companies in areas such as online, word-of-mouth and database marketing.
     
    Shareholder/Financial Analyst Contact:
    Media Contact:
    Mike Lovell
    Art Slusark
    Director of Investor Relations
    VP/Corporate Communications
    Phone: (515) 284-3622
    Phone: (515) 284-3404
    E-mail: Mike.Lovell@Meredith.com
    E-mail: Art.Slusark@Meredith.com




    Meredith Corporation and Subsidiaries
    Condensed Consolidated Statements of Earnings (Unaudited)
     
     
    Three Months
     
    Six Months
    Period Ended December 31,
    2009
     
    2008
     
    2009
     
    2008
    (In thousands except per share data)
     
     
     
     
     
     
     
    Revenues
     
     
     
     
     
     
     
    Advertising
    $
    187,868
     
     
    $
    201,800
     
     
    $
    379,684
     
     
    $
    413,626
     
    Circulation
    67,209
     
     
    66,804
     
     
    137,088
     
     
    138,217
     
    All other
    81,778
     
     
    92,680
     
     
    152,498
     
     
    173,511
     
    Total revenues
    336,855
     
     
    361,284
     
     
    669,270
     
     
    725,354
     
    Operating expenses
     
     
     
     
     
     
     
    Production, distribution, and editorial
    142,911
     
     
    162,310
     
     
    294,004
     
     
    332,421
     
    Selling, general, and administrative
    146,617
     
     
    152,248
     
     
    286,254
     
     
    297,200
     
    Depreciation and amortization
    10,117
     
     
    10,776
     
     
    20,220
     
     
    21,632
     
    Total operating expenses
    299,645
     
     
    325,334
     
     
    600,478
     
     
    651,253
     
    Income from operations
    37,210
     
     
    35,950
     
     
    68,792
     
     
    74,101
     
    Interest income
    9
     
     
    107
     
     
    19
     
     
    227
     
    Interest expense
    (5,744
    )
     
    (5,353
    )
     
    (10,785
    )
     
    (10,787
    )
    Earnings from continuing operations before income taxes
    31,475
     
     
    30,704
     
     
    58,026
     
     
    63,541
     
    Income taxes
    12,521
     
     
    13,301
     
     
    20,731
     
     
    27,070
     
    Earnings from continuing operations
    18,954
     
     
    17,403
     
     
    37,295
     
     
    36,471
     
    Loss from discontinued operations, net of taxes
    —
     
     
    (4,860
    )
     
    —
     
     
    (5,291
    )
    Net earnings
    $
    18,954
     
     
    $
    12,543
     
     
    $
    37,295
     
     
    $
    31,180
     
     
     
     
     
     
     
     
     
    Basic earnings per share
     
     
     
     
     
     
     
    Earnings from continuing operations
    $
    0.42
     
     
    $
    0.39
     
     
    $
    0.82
     
     
    $
    0.81
     
    Discontinued operations
    —
     
     
    (0.11
    )
     
    —
     
     
    (0.12
    )
    Basic earnings per share
    $
    0.42
     
     
    $
    0.28
     
     
    $
    0.82
     
     
    $
    0.69
     
    Basic average shares outstanding
    45,288
     
     
    44,951
     
     
    45,223
     
     
    45,096
     
     
     
     
     
     
     
     
     
    Diluted earnings per share
     
     
     
     
     
     
     
    Earnings from continuing operations
    $
    0.42
     
     
    $
    0.39
     
     
    $
    0.82
     
     
    $
    0.81
     
    Discontinued operations
    —
     
     
    (0.11
    )
     
    —
     
     
    (0.12
    )
    Diluted earnings per share
    $
    0.42
     
     
    $
    0.28
     
     
    $
    0.82
     
     
    $
    0.69
     
    Diluted average shares outstanding
    45,547
     
     
    45,072
     
     
    45,432
     
     
    45,219
     
     
     
     
     
     
     
     
     
    Dividends paid per share
    $
    0.225
     
     
    $
    0.215
     
     
    $
    0.450
     
     
    $
    0.430
     




    Meredith Corporation and Subsidiaries
    Segment Information (Unaudited)
     
     
    Three Months
     
    Six Months
    Period Ended December 31,
    2009
     
    2008
     
    2009
     
    2008
    (In thousands)
     
     
     
     
     
     
     
    Revenues
     
     
     
     
     
     
     
    National media group
     
     
     
     
     
     
     
    Advertising
    $
    117,431
     
     
    $
    120,078
     
     
    $
    254,633
     
     
    $
    264,385
     
    Circulation
    67,209
     
     
    66,804
     
     
    137,088
     
     
    138,217
     
    Other revenues
    76,535
     
     
    90,026
     
     
    141,058
     
     
    167,973
     
    Total national media group
    261,175
     
     
    276,908
     
     
    532,779
     
     
    570,575
     
    Local media group
     
     
     
     
     
     
     
    Non-political advertising
    67,549
     
     
    64,717
     
     
    121,220
     
     
    126,365
     
    Political advertising
    2,888
     
     
    17,005
     
     
    3,831
     
     
    22,876
     
    Other revenues
    5,243
     
     
    2,654
     
     
    11,440
     
     
    5,538
     
    Total local media group
    75,680
     
     
    84,376
     
     
    136,491
     
     
    154,779
     
    Total revenues
    $
    336,855
     
     
    $
    361,284
     
     
    $
    669,270
     
     
    $
    725,354
     
     
     
     
     
     
     
     
     
    Operating profit
     
     
     
     
     
     
     
    National media group
    $
    31,774
     
     
    $
    23,208
     
     
    $
    70,367
     
     
    $
    57,098
     
    Local media group
    17,063
     
     
    22,329
     
     
    19,463
     
     
    33,025
     
    Unallocated corporate
    (11,627
    )
     
    (9,587
    )
     
    (21,038
    )
     
    (16,022
    )
    Income from operations
    $
    37,210
     
     
    $
    35,950
     
     
    $
    68,792
     
     
    $
    74,101
     
     
     
     
     
     
     
     
     
    Depreciation and amortization
     
     
     
     
     
     
     
    National media group
    $
    3,642
     
     
    $
    4,228
     
     
    $
    7,149
     
     
    $
    8,054
     
    Local media group
    5,960
     
     
    6,448
     
     
    12,082
     
     
    12,517
     
    Unallocated corporate
    515
     
     
    100
     
     
    989
     
     
    1,061
     
    Total depreciation and amortization
    $
    10,117
     
     
    $
    10,776
     
     
    $
    20,220
     
     
    $
    21,632
     
     
     
     
     
     
     
     
     
    EBITDA1
     
     
     
     
     
     
     
    National media group
    $
    35,416
     
     
    $
    27,436
     
     
    $
    77,516
     
     
    $
    65,152
     
    Local media group
    23,023
     
     
    28,777
     
     
    31,545
     
     
    45,542
     
    Unallocated corporate
    (11,112
    )
     
    (9,487
    )
     
    (20,049
    )
     
    (14,961
    )
    Total EBITDA
    $
    47,327
     
     
    $
    46,726
     
     
    $
    89,012
     
     
    $
    95,733
     
     
    1 EBITDA is earnings from continuing operations before interest, taxes, depreciation, and amortization.
     




    Meredith Corporation and Subsidiaries
    Condensed Consolidated Balance Sheets (Unaudited)
     
    Assets
    December 31,
    2009
     
    June 30,
    2009
    (In thousands)
     
     
     
     
    Current assets
     
     
     
     
    Cash and cash equivalents
     
    $
    23,882
     
     
    $
    27,910
     
    Accounts receivable, net
     
    216,234
     
     
    192,367
     
    Inventories
     
    25,028
     
     
    28,151
     
    Current portion of subscription acquisition costs
     
    59,268
     
     
    60,017
     
    Current portion of broadcast rights
     
    13,820
     
     
    8,297
     
    Other current assets
     
    18,653
     
     
    23,398
     
    Total current assets
     
    356,885
     
     
    340,140
     
    Property, plant, and equipment
     
    452,037
     
     
    444,904
     
    Less accumulated depreciation
     
    (259,378
    )
     
    (253,597
    )
    Net property, plant, and equipment
     
    192,659
     
     
    191,307
     
    Subscription acquisition costs
     
    57,732
     
     
    63,444
     
    Broadcast rights
     
    4,476
     
     
    4,545
     
    Other assets
     
    53,515
     
     
    45,907
     
    Intangible assets, net
     
    556,892
     
     
    561,581
     
    Goodwill
     
    487,416
     
     
    462,379
     
    Total assets
     
    $
    1,709,575
     
     
    $
    1,669,303
     
     
     
     
     
     
    Liabilities and Shareholders' Equity
     
     
     
     
    Current liabilities
     
     
     
     
    Current portion of long-term debt
     
    $
    175,000
     
     
    $
    —
     
    Current portion of long-term broadcast rights payable
     
    15,940
     
     
    10,560
     
    Accounts payable
     
    101,154
     
     
    86,381
     
    Accrued expenses and other liabilities
     
    102,338
     
     
    81,544
     
    Current portion of unearned subscription revenues
     
    170,261
     
     
    170,731
     
    Total current liabilities
     
    564,693
     
     
    349,216
     
    Long-term debt
     
    175,000
     
     
    380,000
     
    Long-term broadcast rights payable
     
    11,762
     
     
    11,851
     
    Unearned subscription revenues
     
    140,548
     
     
    148,393
     
    Deferred income taxes
     
    76,547
     
     
    64,322
     
    Other noncurrent liabilities
     
    106,265
     
     
    106,138
     
    Total liabilities
     
    1,074,815
     
     
    1,059,920
     
    Shareholders' equity
     
     
     
     
    Common stock
     
    36,199
     
     
    35,934
     
    Class B stock
     
    9,125
     
     
    9,133
     
    Additional paid-in capital
     
    60,937
     
     
    53,938
     
    Retained earnings
     
    558,874
     
     
    542,006
     
    Accumulated other comprehensive loss
     
    (30,375
    )
     
    (31,628
    )
    Total shareholders' equity
     
    634,760
     
     
    609,383
     
    Total liabilities and shareholders' equity
     
    $
    1,709,575
     
     
    $
    1,669,303
     




    Meredith Corporation and Subsidiaries
    Condensed Consolidated Statements of Cash Flows (Unaudited) 
     
    Six Months Ended December 31,
    2009
     
    2008
    (In thousands)
     
     
     
    Net cash provided by operating activities
    $
    76,032
     
     
    $
    83,028
     
     
     
     
     
    Cash flows from investing activities
     
     
     
    Acquisitions of businesses
    (16,304
    )
     
    (5,195
    )
    Additions to property, plant, and equipment
    (14,938
    )
     
    (15,185
    )
    Proceeds from dispositions of assets
    —
     
     
    636
     
    Net cash used in investing activities
    (31,242
    )
     
    (19,744
    )
    Cash flows from financing activities
     
     
     
    Proceeds from issuance of long-term debt
    85,000
     
     
    120,000
     
    Repayments of long-term debt
    (115,000
    )
     
    (150,000
    )
    Purchases of Company stock
    (195
    )
     
    (21,562
    )
    Dividends paid
    (20,427
    )
     
    (19,430
    )
    Proceeds from common stock issued
    1,718
     
     
    2,457
     
    Excess tax benefits from share-based payments
    131
     
     
    966
     
    Other
    (45
    )
     
    —
     
    Net cash used in financing activities
    (48,818
    )
     
    (67,569
    )
    Net decrease in cash and cash equivalents
    (4,028
    )
     
    (4,285
    )
    Cash and cash equivalents at beginning of period
    27,910
     
     
    37,644
     
    Cash and cash equivalents at end of period
    $
    23,882
     
     
    $
    33,359
     




     
    Meredith Corporation and Subsidiaries
     
    Supplemental Disclosures Regarding Non-GAAP Financial Measures
    Table 1
     
     
    Special Items - During the second quarter of fiscal 2010, Meredith recorded a special charge which relates primarily to the cost of a repositioning of our Special Interest Media operations. Please see Meredith's press release dated January 14, 2010, for additional information relating to this special charge. In the first quarter of fiscal 2010, Meredith recorded an income tax benefit. This benefit is reflected in the special items for the six months ended December 31, 2009.
     
    The following table shows results of operations excluding the special items and as reported with the difference being the special items. Results of operations excluding the special items are non-GAAP measures. Management's rationale for presenting non-GAAP measures is included in the text of this earnings release.
     
     
     
     
     
     
     
     
     
     
     
     
    Period Ended December 31, 2009
    Three Months
     
    Six Months
     
    Excluding
    Special
    Items
     
    Special
    Items
     
    As
    Reported
     
    Excluding
    Special
    Items
     
    Special
    Items
     
    As Reported
    (In thousands except per share data)
     
     
     
     
     
     
     
     
     
     
     
    Revenues
     
     
     
     
     
     
     
     
     
     
     
    Advertising
    $
    187,868
     
     
    $
    —
     
     
    $
    187,868
     
     
    $
    379,684
     
     
    $
    —
     
     
    $
    379,684
     
    Circulation
    67,209
     
     
    —
     
     
    67,209
     
     
    137,088
     
     
    —
     
     
    137,088
     
    All other
    81,778
     
     
    —
     
     
    81,778
     
     
    152,498
     
     
    —
     
     
    152,498
     
    Total revenues
    336,855
     
     
    —
     
     
    336,855
     
     
    669,270
     
     
    —
     
     
    669,270
     
    Operating expenses
     
     
     
     
     
     
     
     
     
     
     
    Production, distribution, and editorial
    141,464
     
     
    1,447
     
    (a)
    142,911
     
     
    292,557
     
     
    1,447
     
    (a)
    294,004
     
    Selling, general, and administrative
    142,594
     
     
    4,023
     
    (b)
    146,617
     
     
    282,231
     
     
    4,023
     
    (b)
    286,254
     
    Depreciation and amortization
    10,117
     
     
    —
     
     
    10,117
     
     
    20,220
     
     
    —
     
     
    20,220
     
    Total operating expenses
    294,175
     
     
    5,470
     
     
    299,645
     
     
    595,008
     
     
    5,470
     
     
    600,478
     
    Income from operations
    42,680
     
     
    (5,470
    )
     
    37,210
     
     
    74,262
     
     
    (5,470
    )
     
    68,792
     
    Interest income
    9
     
     
    —
     
     
    9
     
     
    19
     
     
    —
     
     
    19
     
    Interest expense
    (5,744
    )
     
    —
     
     
    (5,744
    )
     
    (10,785
    )
     
    —
     
     
    (10,785
    )
    Earnings before income taxes
    36,945
     
     
    (5,470
    )
     
    31,475
     
     
    63,496
     
     
    (5,470
    )
     
    58,026
     
    Income taxes
    14,627
     
     
    (2,106
    )
    (c)
    12,521
     
     
    25,813
     
     
    (5,082
    )
    (c)
    20,731
     
    Net earnings
    $
    22,318
     
     
    $
    (3,364
    )
     
    $
    18,954
     
     
    $
    37,683
     
     
    $
    (388
    )
     
    $
    37,295
     
     
     
     
     
     
     
     
     
     
     
     
     
    Basic earnings per share
    $
    0.49
     
     
    $
    (0.07
    )
     
    $
    0.42
     
     
    $
    0.83
     
     
    $
    (0.01
    )
     
    $
    0.82
     
    Basic average shares outstanding
    45,288
     
     
    45,288
     
     
    45,288
     
     
    45,223
     
     
    45,223
     
     
    45,223
     
     
     
     
     
     
     
     
     
     
     
     
     
    Diluted earnings per share
    $
    0.49
     
     
    $
    (0.07
    )
     
    $
    0.42
     
     
    $
    0.83
     
     
    $
    (0.01
    )
     
    $
    0.82
     
    Diluted average shares outstanding
    45,547
     
     
    45,547
     
     
    45,547
     
     
    45,432
     
     
    45,432
     
     
    45,432
     
     
     
     (a)
    Write-off of art and manuscript inventory
     (b)
    Severance expense and write-off of subscription acquisition costs
     (c)
    Tax benefit on the write-off of art and manuscript inventory and subscription acquisition costs, severance expense, and a favorable adjustment made to deferred income tax liabilities as a result of state and local legislation enacted during the first fiscal quarter.
     
     




    Meredith Corporation and Subsidiaries
     
    Supplemental Disclosures Regarding Non-GAAP Financial Measures
    Table 2
     
    The following table shows results of operations excluding the special items and as reported with the difference being the special items discussed in Table 1.
     
     
     
     
     
     
     
     
     
     
     
     
    Period Ended December 31, 2009
    Three Months
     
    Six Months
     
    Excluding
    Special
    Items
     
    Special
    Items
     
    As
    Reported
     
    Excluding
    Special
    Items
     
    Special
    Items
     
    As
    Reported
    (In thousands)
     
     
     
     
     
     
     
     
     
     
     
    Revenues
     
     
     
     
     
     
     
     
     
     
     
    National media group
     
     
     
     
     
     
     
     
     
     
     
    Advertising
    $
    117,431
     
     
    $
    —
     
     
    $
    117,431
     
     
    $
    254,633
     
     
    $
    —
     
     
    $
    254,633
     
    Circulation
    67,209
     
     
    —
     
     
    67,209
     
     
    137,088
     
     
    —
     
     
    137,088
     
    Other revenues
    76,535
     
     
    —
     
     
    76,535
     
     
    141,058
     
     
    —
     
     
    141,058
     
    Total national media group
    261,175
     
     
    —
     
     
    261,175
     
     
    532,779
     
     
    —
     
     
    532,779
     
    Local media group
     
     
     
     
     
     
     
     
     
     
     
    Non-political advertising
    67,549
     
     
    —
     
     
    67,549
     
     
    121,220
     
     
    —
     
     
    121,220
     
    Political advertising
    2,888
     
     
    —
     
     
    2,888
     
     
    3,831
     
     
    —
     
     
    3,831
     
    Other revenues
    5,243
     
     
    —
     
     
    5,243
     
     
    11,440
     
     
    —
     
     
    11,440
     
    Total local media group
    75,680
     
     
    —
     
     
    75,680
     
     
    136,491
     
     
    —
     
     
    136,491
     
    Total revenues
    $
    336,855
     
     
    $
    —
     
     
    $
    336,855
     
     
    $
    669,270
     
     
    $
    —
     
     
    $
    669,270
     
     
     
     
     
     
     
     
     
     
     
     
     
    Operating profit
     
     
     
     
     
     
     
     
     
     
     
    National media group
    $
    37,244
     
     
    $
    (5,470
    )
    (a)
    $
    31,774
     
     
    $
    75,837
     
     
    $
    (5,470
    )
    (a)
    $
    70,367
     
    Local media group
    17,063
     
     
    —
     
     
    17,063
     
     
    19,463
     
     
    —
     
     
    19,463
     
    Unallocated corporate
    (11,627
    )
     
    —
     
     
    (11,627
    )
     
    (21,038
    )
     
    —
     
     
    (21,038
    )
    Income from operations
    $
    42,680
     
     
    $
    (5,470
    )
     
    $
    37,210
     
     
    $
    74,262
     
     
    $
    (5,470
    )
     
    $
    68,792
     
     
     
     
     
     
     
     
     
     
     
     
     
    Depreciation and amortization
     
     
     
     
     
     
     
     
     
     
     
    National media group
    $
    3,642
     
     
    $
    —
     
     
    $
    3,642
     
     
    $
    7,149
     
     
    $
    —
     
     
    $
    7,149
     
    Local media group
    5,960
     
     
    —
     
     
    5,960
     
     
    12,082
     
     
    —
     
     
    12,082
     
    Unallocated corporate
    515
     
     
    —
     
     
    515
     
     
    989
     
     
    —
     
     
    989
     
    Total depreciation and amortization
    $
    10,117
     
     
    $
    —
     
     
    $
    10,117
     
     
    $
    20,220
     
     
    $
    —
     
     
    $
    20,220
     
     
     
     
     
     
     
     
     
     
     
     
     
    EBITDA1
     
     
     
     
     
     
     
     
     
     
     
    National media group
    $
    40,886
     
     
    $
    (5,470
    )
    (a)
    $
    35,416
     
     
    $
    82,986
     
     
    $
    (5,470
    )
    (a)
    $
    77,516
     
    Local media group
    23,023
     
     
    —
     
     
    23,023
     
     
    31,545
     
     
    —
     
     
    31,545
     
    Unallocated corporate
    (11,112
    )
     
    —
     
     
    (11,112
    )
     
    (20,049
    )
     
    —
     
     
    (20,049
    )
    Total EBITDA
    $
    52,797
     
     
    $
    (5,470
    )
     
    $
    47,327
     
     
    $
    94,482
     
     
    $
    (5,470
    )
     
    $
    89,012
     
     
     
    1
    EBITDA is earnings from continuing operations before interest, taxes, depreciation, and amortization.
     
     (a)
    Write-off of art and manuscript inventory and subscription acquisition costs and severance expense.
     
     




    Meredith Corporation and Subsidiaries
     
    Supplemental Disclosures Regarding Non-GAAP Financial Measures
    Table 3
     
    Special Items - During the second quarter of fiscal 2009, Meredith recorded a special charge which relates primarily to the cost of a companywide workforce reduction of approximately 250 employees; the closure of Country Home magazine, effective with the March 2009 issue; and the relocation of the creative functions of the ReadyMade brand and Parents.com to Des Moines. Please see Meredith's press release dated January 8, 2009, for additional information relating to the special charge.

    The following table shows results of operations excluding the special items and as reported with the difference being the special items. Results of operations excluding the special items are non-GAAP measures. Management's rationale for presenting non-GAAP measures is included in the text of this earnings release.
     
     
     
     
     
     
     
     
     
     
     
     
    Period Ended December 31, 2008
    Three Months
     
    Six Months
     
    Excluding
    Special
    Items
     
    Special
    Items
     
    As
    Reported
     
    Excluding
    Special
    Items
     
    Special
    Items
     
    As
    Reported
    (In thousands except per share data)
     
     
     
     
     
     
     
     
     
     
     
    Revenues
     
     
     
     
     
     
     
     
     
     
     
    Advertising
    $
    201,800
     
     
    $
    —
     
     
    $
    201,800
     
     
    $
    413,626
     
     
    $
    —
     
     
    $
    413,626
     
    Circulation
    66,804
     
     
    —
     
     
    66,804
     
     
    138,217
     
     
    —
     
     
    138,217
     
    All other
    92,680
     
     
    —
     
     
    92,680
     
     
    173,511
     
     
    —
     
     
    173,511
     
    Total revenues
    361,284
     
     
    —
     
     
    361,284
     
     
    725,354
     
     
    —
     
     
    725,354
     
    Operating expenses
     
     
     
     
     
     
     
     
     
     
     
    Production, distribution, and editorial
    162,310
     
     
    —
     
     
    162,310
     
     
    332,421
     
     
    —
     
     
    332,421
     
    Selling, general, and administrative
    143,215
     
     
    9,033
     
    (a)
    152,248
     
     
    288,167
     
     
    9,033
     
    (a)
    297,200
     
    Depreciation and amortization
    10,776
     
     
    —
     
     
    10,776
     
     
    21,632
     
     
    —
     
     
    21,632
     
    Total operating expenses
    316,301
     
     
    9,033
     
     
    325,334
     
     
    642,220
     
     
    9,033
     
     
    651,253
     
    Income from operations
    44,983
     
     
    (9,033
    )
     
    35,950
     
     
    83,134
     
     
    (9,033
    )
     
    74,101
     
    Interest income
    107
     
     
    —
     
     
    107
     
     
    227
     
     
    —
     
     
    227
     
    Interest expense
    (5,353
    )
     
    —
     
     
    (5,353
    )
     
    (10,787
    )
     
    —
     
     
    (10,787
    )
    Earnings before income taxes
    39,737
     
     
    (9,033
    )
     
    30,704
     
     
    72,574
     
     
    (9,033
    )
     
    63,541
     
    Income taxes
    16,823
     
     
    (3,522
    )
     
    13,301
     
     
    30,592
     
     
    (3,522
    )
     
    27,070
     
    Earnings from continuing operations
    22,914
     
     
    (5,511
    )
     
    17,403
     
     
    41,982
     
     
    (5,511
    )
     
    36,471
     
    Loss from discontinued operations, net of taxes
    (736
    )
     
    (4,124
    )
    (b)
    (4,860
    )
     
    (1,167
    )
     
    (4,124
    )
    (b)
    (5,291
    )
    Net earnings
    $
    22,178
     
     
    $
    (9,635
    )
     
    $
    12,543
     
     
    $
    40,815
     
     
    $
    (9,635
    )
     
    $
    31,180
     
     
     
     
     
     
     
     
     
     
     
     
     
    Basic earnings per share
     
     
     
     
     
     
     
     
     
     
     
    Earnings from continuing operations
    $
    0.51
     
     
    $
    (0.12
    )
     
    $
    0.39
     
     
    $
    0.93
     
     
    $
    (0.12
    )
     
    $
    0.81
     
    Discontinued operations
    (0.02
    )
     
    (0.09
    )
     
    (0.11
    )
     
    (0.03
    )
     
    (0.09
    )
     
    (0.12
    )
    Basic earnings per share
    $
    0.49
     
     
    $
    (0.21
    )
     
    $
    0.28
     
     
    $
    0.90
     
     
    $
    (0.21
    )
     
    $
    0.69
     
    Basic average shares outstanding
    44,951
     
     
    44,951
     
     
    44,951
     
     
    45,096
     
     
    45,096
     
     
    45,096
     
     
     
     
     
     
     
     
     
     
     
     
     
    Diluted earnings per share
     
     
     
     
     
     
     
     
     
     
     
    Earnings from continuing operations
    $
    0.51
     
     
    $
    (0.12
    )
     
    $
    0.39
     
     
    $
    0.93
     
     
    $
    (0.12
    )
     
    $
    0.81
     
    Discontinued operations
    (0.02
    )
     
    (0.09
    )
     
    (0.11
    )
     
    (0.03
    )
     
    (0.09
    )
     
    (0.12
    )
    Diluted earnings per share
    $
    0.49
     
     
    $
    (0.21
    )
     
    $
    0.28
     
     
    $
    0.90
     
     
    $
    (0.21
    )
     
    $
    0.69
     
    Diluted average shares outstanding
    45,072
     
     
    45,072
     
     
    45,072
     
     
    45,219
     
     
    45,219
     
     
    45,219
     
     
     
     (a)
    Severance expense
     (b)
    Severance expense and the write-down of art and manuscript inventory and subscription acquisition costs, net of taxes




    Meredith Corporation and Subsidiaries
     
    Supplemental Disclosures Regarding Non-GAAP Financial Measures
    Table 4
     
     
    The following table shows results of operations excluding the special items and as reported with the difference being the special items discussed in Table 3.
     
     
     
     
     
     
     
     
     
     
     
     
    Period Ended December 31, 2008
    Three Months
     
    Six Months
     
    Excluding
    Special
    Items
     
    Special
    Items
     
    As
    Reported
     
    Excluding
    Special
    Items
     
    Special
    Items
     
    As
    Reported
    (In thousands)
     
     
     
     
     
     
     
     
     
     
     
    Revenues
     
     
     
     
     
     
     
     
     
     
     
    National media group
     
     
     
     
     
     
     
     
     
     
     
    Advertising
    $
    120,078
     
     
    $
    —
     
     
    $
    120,078
     
     
    $
    264,385
     
     
    $
    —
     
     
    $
    264,385
     
    Circulation
    66,804
     
     
    —
     
     
    66,804
     
     
    138,217
     
     
    —
     
     
    138,217
     
    Other revenues
    90,026
     
     
    —
     
     
    90,026
     
     
    167,973
     
     
    —
     
     
    167,973
     
    Total national media group
    276,908
     
     
    —
     
     
    276,908
     
     
    570,575
     
     
    —
     
     
    570,575
     
    Local media group
     
     
     
     
     
     
     
     
     
     
     
    Non-political advertising
    64,717
     
     
    —
     
     
    64,717
     
     
    126,365
     
     
    —
     
     
    126,365
     
    Political advertising
    17,005
     
     
    —
     
     
    17,005
     
     
    22,876
     
     
    —
     
     
    22,876
     
    Other revenues
    2,654
     
     
    —
     
     
    2,654
     
     
    5,538
     
     
    —
     
     
    5,538
     
    Total local media group
    84,376
     
     
    —
     
     
    84,376
     
     
    154,779
     
     
    —
     
     
    154,779
     
    Total revenues
    $
    361,284
     
     
    $
    —
     
     
    $
    361,284
     
     
    $
    725,354
     
     
    $
    —
     
     
    $
    725,354
     
     
     
     
     
     
     
     
     
     
     
     
     
    Operating profit
     
     
     
     
     
     
     
     
     
     
     
    National media group
    $
    29,248
     
     
    $
    (6,040
    )
    (a)
    $
    23,208
     
     
    $
    63,138
     
     
    $
    (6,040
    )
    (a)
    $
    57,098
     
    Local media group
    $
    24,342
     
     
    (2,013
    )
    (b)
    22,329
     
     
    $
    35,038
     
     
    (2,013
    )
    (b)
    33,025
     
    Unallocated corporate
    (8,607
    )
     
    (980
    )
    (c)
    (9,587
    )
     
    (15,042
    )
     
    (980
    )
    (c)
    (16,022
    )
    Income from operations
    $
    44,983
     
     
    $
    (9,033
    )
     
    $
    35,950
     
     
    $
    83,134
     
     
    $
    (9,033
    )
     
    $
    74,101
     
     
     
     
     
     
     
     
     
     
     
     
     
    Depreciation and amortization
     
     
     
     
     
     
     
     
     
     
     
    National media group
    $
    4,228
     
     
    $
    —
     
     
    $
    4,228
     
     
    $
    8,054
     
     
    $
    —
     
     
    $
    8,054
     
    Local media group
    6,448
     
     
    —
     
     
    6,448
     
     
    12,517
     
     
    —
     
     
    12,517
     
    Unallocated corporate
    100
     
     
    —
     
     
    100
     
     
    1,061
     
     
    —
     
     
    1,061
     
    Total depreciation and amortization
    $
    10,776
     
     
    $
    —
     
     
    $
    10,776
     
     
    $
    21,632
     
     
    $
    —
     
     
    $
    21,632
     
     
     
     
     
     
     
     
     
     
     
     
     
    EBITDA1
     
     
     
     
     
     
     
     
     
     
     
    National media group
    $
    33,476
     
     
    $
    (6,040
    )
    (a)
    $
    27,436
     
     
    $
    71,192
     
     
    $
    (6,040
    )
    (a)
    $
    65,152
     
    Local media group
    30,790
     
     
    (2,013
    )
    (b)
    28,777
     
     
    47,555
     
     
    (2,013
    )
    (b)
    45,542
     
    Unallocated corporate
    (8,507
    )
     
    (980
    )
    (c)
    (9,487
    )
     
    (13,981
    )
     
    (980
    )
    (c)
    (14,961
    )
    Total EBITDA
    $
    55,759
     
     
    $
    (9,033
    )
     
    $
    46,726
     
     
    $
    104,766
     
     
    $
    (9,033
    )
     
    $
    95,733
     
     
     
    1
    EBITDA is earnings from continuing operations before interest, taxes, depreciation, and amortization.
     
     
     (a)
    Severance expense for national media group
     (b)
    Severance expense for local media group
     (c)
    Severance expense for Corporate personnel
     
     




    Meredith Corporation and Subsidiaries
     
    Supplemental Disclosures Regarding Non-GAAP Financial Measures
    Table 5
     
    EBITDA
     
     
     
     
    Consolidated EBITDA, which is reconciled to earnings from continuing operations in the following tables, is defined as earnings from continuing operations 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 December 31, 2009
     
    National
    Media Group
     
    Local Media
    Group
     
    Unallocated
    Corporate
     
    Total
    (In thousands)
     
     
     
     
     
     
     
    Revenues
    $
    261,175
     
     
    $
    75,680
     
     
    $
    —
     
     
    $
    336,855
     
     
     
     
     
     
     
     
     
    Operating profit
    $
    31,774
     
     
    $
    17,063
     
     
    $
    (11,627
    )
     
    $
    37,210
     
    Depreciation and amortization
    3,642
     
     
    5,960
     
     
    515
     
     
    10,117
     
    EBITDA
    $
    35,416
     
     
    $
    23,023
     
     
    $
    (11,112
    )
     
    47,327
     
    Less:
     
     
     
     
     
     
     
    Depreciation and amortization
     
     
     
     
     
     
    (10,117
    )
    Net interest expense
     
     
     
     
     
     
    (5,735
    )
    Income taxes
     
     
     
     
     
     
    (12,521
    )
    Earnings from continuing operations
     
     
     
     
     
     
    $
    18,954
     
     
     
     
     
     
     
     
     
    Segment EBITDA margin
    13.6
    %
     
    30.4
    %
     
     
     
     
     
     
    Three Months Ended December 31, 2008
     
    National
    Media Group
     
    Local Media
    Group
     
    Unallocated
    Corporate
     
    Total
    (In thousands)
     
     
     
     
     
     
     
    Revenues
    $
    276,908
     
     
    $
    84,376
     
     
    $
    —
     
     
    $
    361,284
     
     
     
     
     
     
     
     
     
    Operating profit
    $
    23,208
     
     
    $
    22,329
     
     
    $
    (9,587
    )
     
    $
    35,950
     
    Depreciation and amortization
    4,228
     
     
    6,448
     
     
    100
     
     
    10,776
     
    EBITDA
    $
    27,436
     
     
    $
    28,777
     
     
    $
    (9,487
    )
     
    46,726
     
    Less:
     
     
     
     
     
     
     
    Depreciation and amortization
     
     
     
     
     
     
    (10,776
    )
    Net interest expense
     
     
     
     
     
     
    (5,246
    )
    Income taxes
     
     
     
     
     
     
    (13,301
    )
    Earnings from continuing operations
     
     
     
     
     
     
    $
    17,403
     
     
     
     
     
     
     
     
     
    Segment EBITDA margin
    9.9
    %
     
    34.1
    %
     
     
     
     
     
     
    Six Months Ended December 31, 2009
     
    National
    Media Group
     
    Local Media
    Group
     
    Unallocated
    Corporate
     
    Total
    (In thousands)
     
     
     
     
     
     
     
    Revenues
    $
    532,779
     
     
    $
    136,491
     
     
    $
    —
     
     
    $
    669,270
     
     
     
     
     
     
     
     
     
    Operating profit
    $
    70,367
     
     
    $
    19,463
     
     
    $
    (21,038
    )
     
    $
    68,792
     
    Depreciation and amortization
    7,149
     
     
    12,082
     
     
    989
     
     
    20,220
     
    EBITDA
    $
    77,516
     
     
    $
    31,545
     
     
    $
    (20,049
    )
     
    89,012
     
    Less:
     
     
     
     
     
     
     
    Depreciation and amortization
     
     
     
     
     
     
    (20,220
    )
    Net interest expense
     
     
     
     
     
     
    (10,766
    )
    Income taxes
     
     
     
     
     
     
    (20,731
    )
    Earnings from continuing operations
     
     
     
     
     
     
    $
    37,295
     
     
     
     
     
     
     
     
     
    Segment EBITDA margin
    14.5
    %
     
    23.1
    %
     
     
     
     
     
     
    Six Months Ended December 31, 2008
     
    National Media Group
     
    Local Media Group
     
    Unallocated Corporate
     
    Total
    (In thousands)
     
     
     
     
     
     
     
    Revenues
    $
    570,575
     
     
    $
    154,779
     
     
    $
    —
     
     
    $
    725,354
     
     
     
     
     
     
     
     
     
    Operating profit
    $
    57,098
     
     
    $
    33,025
     
     
    $
    (16,022
    )
     
    $
    74,101
     
    Depreciation and amortization
    8,054
     
     
    12,517
     
     
    1,061
     
     
    21,632
     
    EBITDA
    $
    65,152
     
     
    $
    45,542
     
     
    $
    (14,961
    )
     
    95,733
     
    Less:
     
     
     
     
     
     
     
    Depreciation and amortization
     
     
     
     
     
     
    (21,632
    )
    Net interest expense
     
     
     
     
     
     
    (10,560
    )
    Income taxes
     
     
     
     
     
     
    (27,070
    )
    Earnings from continuing operations
     
     
     
     
     
     
    $
    36,471
     
     
     
     
     
     
     
     
     
    Segment EBITDA margin
    11.4
    %
     
    29.4
    %
     
     
     
     


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