Martha Stewart Living Omnimedia Reports Fourth Quarter and Full-Year 2009 Results - Improved Overall Performance in the Quarter with Significant Gains in Internet; Revenue Growth in Broadcasting and Signs of Recovery in Print

- Positive Year-Over-Year Sales Growth in Key Merchandising Partnerships

NEW YORK, Feb. 17 /PRNewswire-FirstCall/ -- Martha Stewart Living Omnimedia, Inc. (NYSE: MSO) today announced its results for the fourth quarter and for the year ended December 31, 2009. The company reported revenue for the fourth quarter and full year of $87.6 million and $244.8 million, respectively.

Charles Koppelman, Executive Chairman and Principal Executive Officer, said, "In 2009, we continued to execute on our strategic goal of diversifying and expanding our Merchandising business with the addition of The Home Depot and other best-in-class partnerships. We are focused on strengthening our Broadcasting presence as evidenced by our recent announcement to offer a range of Martha Stewart-branded programming on Hallmark Channel and the addition of 'The Emeril Lagasse Show' in primetime on Ion Television. We're very pleased with these exciting new developments and the significant year-over-year growth in our Internet segment this year. We see many opportunities before us as we focus on building on our strong foundation and taking our Company into a new era."

Addressing Merchandising performance, Robin Marino, President and Chief Executive Officer of Merchandising, stated, "Our Merchandising business had a strong quarter and a solid year with notably positive year-over-year retail sales of the Martha Stewart Collection at Macy's and Martha Stewart Crafts at Michaels. We're excited about our relationship with The Home Depot, where our Martha Stewart Living line of outdoor furniture and our Martha Stewart Clean line began rolling out in stores in January 2010. We're also looking forward to the launch of our paint program at The Home Depot next month followed by the introduction of products in additional categories. With these businesses, along with our forthcoming Martha Stewart Pets line at PetSmart, we believe we are further strengthening our position in key categories where we have strong brand equity and see potential for growth."

Fourth Quarter 2009 Summary

Revenues rose 20% to $87.6 million in the fourth quarter of 2009, compared to $72.9 million in the fourth quarter of 2008. The fourth quarter of 2009 included the expected recognition of $10 million of previously deferred Kmart royalties as non-cash revenue as well as the minimum guarantee true-up and earned royalties from Kmart.

Adjusted EBITDA was $23.1 million for the fourth quarter of 2009, an improvement from $10.4 million in the prior-year period. The fourth quarter of 2009 included the $10 million non-cash Kmart revenue described above, the minimum guarantee true-up and earned royalties, as well as a $3 million cash make-whole payment partially offset by the 2009 bonus expense. The fourth quarter of 2008 benefited from a reversal of a significant portion of the year's bonus accrual.  

Operating income for the fourth quarter of 2009 was $21.3 million, compared to an operating loss of $(4.5) million for the fourth quarter of 2008. The fourth quarter of 2009 included an impairment charge adjustment of $1.2 million recorded in the Merchandising segment. The fourth quarter of 2008 included an impairment charge of $(9.3) million in the Publishing segment.

Basic and diluted net income per share were $0.38 and $0.37, respectively, for the fourth quarter of 2009, compared to basic and diluted net loss per share of $(0.15) for the fourth quarter of 2008.  The fourth quarter of 2009 included an impairment charge adjustment of $1.2 million recorded in the Merchandising segment. Net loss in the 2008 quarter was impacted by an impairment charge of $(9.3) million in the Publishing segment.

Full-Year 2009 Summary

Revenues were $244.8 million in 2009, compared to $284.3 million in 2008.

Adjusted EBITDA for full-year 2009 was $15.3 million, compared to $15.0 million in the prior-year period.  

Operating loss for the full-year 2009 was $(12.0) million, compared to an operating loss of $(10.9) million for the full-year 2008. Included in the 2009 results is an impairment charge of $(11.4) million in the Merchandising segment, and included in the 2008 results is an impairment charge of $(9.3) million in the Publishing segment. When excluding the impairment charges recorded in both years, operating loss for the full-year 2009 was $(0.5) million, compared to an operating loss of $(1.5) million for the full-year 2008.

Net loss per share was $(0.27) for the full-year 2009, compared to a net loss per share of $(0.29) for the full-year 2008. Included in the 2009 results is an impairment charge of $(11.4) million or $(0.21) per share in the Merchandising segment, and included in the 2008 results is an impairment charge of $(9.3) million or $(0.18) per share in the Publishing segment. When excluding the impairment charges recorded in both years, net loss per share was $(0.06) for the full-year 2009, compared to a net loss per share of $(0.12) for the full-year 2008.

    
    
    Fourth Quarter 2009 Results by Segment 
    
                                    Three Months Ended, December 31
                                       (unaudited, in thousands)
    
                                       2009                2008
                                    -------             -------
    REVENUES
      Publishing                    $40,043             $41,938
      Broadcasting                   14,252              11,092
      Internet                        7,576               5,889
      Merchandising                  25,700              13,935
                                    -------             -------
      Total Revenues                $87,571             $72,854
                                    =======             =======
    
    ADJUSTED EBITDA
      Publishing                     $3,497              $5,585
      Broadcasting                    3,612               1,286
      Internet                        2,587               1,420
      Merchandising                  23,783               9,421
      Corporate                     (10,388)             (7,349)
                                    -------              ------
      Total Adjusted EBITDA         $23,091             $10,363
                                    =======             =======
    
    OPERATING INCOME/(LOSS)
      Publishing                     $3,578             $(4,498)
      Broadcasting                    2,871                (795)
      Internet                        2,181                 928
      Merchandising                  24,594               9,262
      Corporate                     (11,923)             (9,410)
                                    -------              ------
      Total Operating Income/(Loss) $21,301             $(4,513)
                                    =======             =======

Publishing

Revenues in the fourth quarter of 2009 were $40.0 million, compared to $41.9 million in the prior year's fourth quarter, driven mainly by a decrease in subscription revenues that was offset partially by ad page growth at Martha Stewart Living and the timing of special issues.

Adjusted EBITDA was $3.5 million in the fourth quarter of 2009, compared to $5.6 million in the prior year's quarter.

Operating income was $3.6 million for the fourth quarter of 2009, compared to an operating loss of $(4.5) million in the fourth quarter of 2008. Included in the 2008 results is an impairment charge of $(9.3) million.  

Highlights

  • Ad revenue increased for the first time since the second quarter of 2008.
  • Emeril 20-40-60: Fresh Food Fast hit The New York Times bestseller list shortly after publication in late October.
  • A new Everyday Food cookbook, Everyday Food: Fresh Flavor Fast, is slated for publication on February 23.

Broadcasting

Revenues in the fourth quarter of 2009 were $14.3 million, compared to $11.1 million in the fourth quarter of 2008, primarily due to increased integration revenue.

Adjusted EBITDA was $3.6 million for the fourth quarter of 2009, up from $1.3 million in the prior year's fourth quarter.

Operating income was $2.9 million for the fourth quarter of 2009, compared to a loss of $(0.8) million in the fourth quarter of 2008.

Highlights

  • The company announced a new, multi-year strategic partnership to develop a range of new and original series and primetime specials to air on Hallmark Channel. As part of the agreement, the Emmy-winning daily television series The Martha Stewart Show will move to Hallmark Channel beginning in September 2010.
  • Last month, MSLO announced that Chef Emeril Lagasse will be hosting a new weekly, primetime entertainment series, The Emeril Lagasse Show, on ION Television, one of the fastest growing U.S. television networks. The show will debut in Spring 2010.
  • On Martha Stewart Living Radio, Chef Emeril Lagasse introduced his first live call-in radio show, "Cooking with Emeril," and Martha expanded the frequency of her weekly, live call-in show "Ask Martha" to two days a week.
  • The sixth season of Everyday Food premiered on PBS on January 9th. Everyday Food has been the No. 1 cooking show on PBS for the last five years.

Internet

Revenues increased to $7.6 million in the fourth quarter of 2009, compared to $5.9 million in the fourth quarter of 2008. Ad revenue was up 31% in the quarter versus the prior year's quarter.

Adjusted EBITDA was $2.6 million in the fourth quarter of 2009, an improvement from $1.4 million in the fourth quarter of 2008.

Operating income was $2.2 million in the fourth quarter of 2009, compared with $0.9 million in the fourth quarter of 2008.

Highlights

  • MSLO's digital properties had record traffic growth in December with 85 million page views and 5 million unique visitors, according to comScore.
  • For the quarter, consumer engagement across MSLO's websites showed continued strength with page views up 85% year-over-year and monthly unique visitors up 73% in the same period.
  • The Company introduced an e-commerce channel on marthastewart.com, showcasing and promoting products while also providing access to more than 1,400 Martha Stewart-branded products in a single, virtual location.
  • Earlier this week, MSLO launched "Martha's Everyday Food™," a recipe-and-shopping-list iPhone and iPod touch application powered by ZipList, Inc., a customizable multiplatform digital grocery and shopping service.

Merchandising

Revenues were $25.7 million for the fourth quarter of 2009, as compared to $13.9 million in the prior year's fourth quarter. The fourth quarter of 2009 included the $10 million non-cash Kmart revenue previously described as well as the minimum guarantee true-up and earned royalties.

Adjusted EBITDA was $23.8 million for the fourth quarter of 2009, compared to $9.4 million in the prior year's fourth quarter. This year's fourth quarter included a $3 million cash make-whole payment.

Operating income was $24.6 million for the fourth quarter of 2009, compared to $9.3 million in the fourth quarter of 2008.

Highlights

  • In December, MSLO announced plans to introduce an exclusive Martha Stewart Living brand of interior and exterior paint at The Home Depot Stores across the United States and Canada beginning in March 2010.
  • The Martha Stewart Living brand of Outdoor Living products and Martha Stewart Clean, a branded line of all-natural cleaning solutions that launched in the quarter, began rolling out in The Home Depot stores in January 2010.
  • The Martha Stewart Collection exclusively at Macy's had positive year-over-year sales growth with strong performance in textiles, food preparation and decorative housewares.
  • Martha Stewart Crafts continued to deliver a strong performance at Michaels with double-digit sales growth year-over-year.
  • Product assortment for Martha Stewart Pets has been finalized and manufacturing is underway in anticipation of the Spring 2010 launch at PetSmart stores.

Corporate  

Total Corporate expenses were $(11.9) million in the fourth quarter of 2009, compared to $(9.4) million in the prior year's quarter. Adjusted EBITDA loss was $(10.4) million in the current quarter, compared to a loss of $(7.3) million in the prior-year period. The increased loss was primarily due to a combination of the impact of the bonus expense and increased severance in the fourth quarter of 2009 and the positive impact of the reversal of the bonus accrual last year.

The Company will host a conference call with analysts and investors on February 17 at 11:00 a.m. EST that will be broadcast live over the Internet at www.marthastewart.com/ir.

Use of Non-GAAP Financial Information

In addition to using net income to assess the organization's overall financial health, Company management uses net income before interest, taxes, depreciation, amortization non-cash equity compensation and impairment charges ("adjusted EBITDA"), a non-GAAP financial measure, to evaluate the performance of our businesses on a real-time basis. Adjusted EBITDA is considered an important indicator of operational strength, is a direct component of the Company's annual compensation program, and is a significant factor in helping our management determine how to allocate resources and capital. Adjusted EBITDA is used in addition to and in conjunction with results presented in accordance with GAAP. Management considers adjusted EBITDA to be a critical measure of operational health because it captures all of the revenue and ongoing operating expenses of our businesses without the influence of (i) interest charges, which result from our capital structure, not our ongoing business efforts, (ii) taxes, which relate to the overall organizational financial return, not that of any one business, (iii) the capital expenditure costs associated with depreciation and amortization, which are a function of historical decisions on infrastructure and capacity, (iv) the cost of non-cash equity compensation which, as a function of our stock price, can be highly variable, is not necessarily an indicator of current operating performance for any individual business unit, and is amortized over the appropriate period, and (v) non-cash impairment charges, which are impacted by macro-economic conditions and do not necessarily reflect operating performance.

Adjusted EBITDA provides a means to directly evaluate the ability of our business operations to generate returns on a real-time basis. We provide disclosure of adjusted EBITDA because we believe it is useful for investors to have means to assess our performance as we do. While adjusted EBITDA is a customized non-GAAP measure, it also provides a means to analyze value and compare our operating capabilities to those of companies with which we compete, many of which have different compensation plans, depreciation and amortization costs, capital structures and tax burdens. But please note that our non-GAAP results may differ from similar measures used by other companies, even if similar terms are used to identify such measures.

A limitation of adjusted EBITDA is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues for our overall organization. Management evaluates the costs of such tangible and intangible assets through other financial measures such as capital expenditures. Management also evaluates the cost of capitalized tangible and intangible assets by analyzing returns provided on the capital dollars deployed. A further limitation of adjusted EBITDA is that it does not include stock compensation expense related to our workforce. Adjusted EBITDA should be considered in addition to, and not as a substitute for, net income or other measures of financial performance reported in accordance with GAAP.

About Martha Stewart Living Omnimedia, Inc.

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, Broadcasting, Internet, and Merchandising. MSLO is listed on the New York Stock Exchange under the ticker symbol MSO.

Forward-Looking Statements

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 include estimates of future financial performance, potential opportunities, expected product line expansions and additions, future acceptability of our content and our businesses and other statements that 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 or Emeril Lagasse by consumers, advertisers and business partners; further downturns in national and/or local economies; shifts in our business strategies; a loss of the services of Ms. Stewart or Mr. Lagasse; a loss of the services of other key personnel; a further 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; the inability to add to our partnerships or capitalize on existing partnerships; and changes in government regulations affecting the Company's industries.

Certain of these and other factors are discussed in more detail in the Company's most recent Annual Report on Form 10-K and Quarterly Report on Form 10Q filed with the Securities and Exchange Commission, especially under the heading "Risk Factors," 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.

    
    
    
    
                       Martha Stewart Living Omnimedia, Inc.
                        Consolidated Statements of Operations
                          Three Months Ended December 31,
                (unaudited, in thousands, except per share amounts)
    
                                                  2009     2008
                                               -------  -------
    REVENUES
      Publishing                               $40,043  $41,938
      Broadcasting                              14,252   11,092
      Internet                                   7,576    5,889
      Merchandising                             25,700   13,935
                                               -------  -------
        Total revenues                          87,571   72,854
                                               -------  -------
    
    OPERATING COSTS AND EXPENSES
      Production, distribution and editorial    34,310   31,619
      Selling and promotion                     17,762   19,545
      General and administrative                13,485   13,303
      Depreciation and amortization              1,881    3,551
      Impairment charge                         (1,168)   9,349
                                               -------  -------
        Total operating costs and expenses      66,270   77,367
                                               -------  -------
    OPERATING INCOME/(LOSS)                     21,301   (4,513)
    
    OTHER INCOME/(EXPENSE)
      Interest expense, net                        (11)     (49)
      Loss on equity securities                      -   (1,456)
      Other expense                                  -     (277)
                                               -------  -------
             Total other income/(expense)          (11)  (1,782)
                                     
    INCOME/(LOSS) BEFORE INCOME TAXES           21,290   (6,295)
    
           Income tax provision                   (537)  (1,717)
                                               -------  -------
    
    
    NET INCOME/(LOSS)                          $20,753  $(8,012)
                                               =======  =======
    
    INCOME/(LOSS) PER SHARE – 
     BASIC AND DILUTED
      Net income/(loss) - Basic                  $0.38   $(0.15)
                                               =======  =======
      Net income/(loss) - Diluted                $0.37   $(0.15)
                                               =======  =======
    
    WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
           Basic                                54,065   53,668
           Diluted                              55,620   53,668
    
    
    
                       Martha Stewart Living Omnimedia, Inc.
                       Consolidated Statements of Operations
                        Twelve Months Ended December 31,
               (unaudited, in thousands, except per share amounts)
    
                                                     2009      2008
                                                 --------  --------
    REVENUES
      Publishing                                 $128,981  $163,540
      Broadcasting                                 46,111    47,328
      Internet                                     17,119    15,576
      Merchandising                                52,566    57,866
                                                 --------  --------
        Total  revenues                           244,777   284,310
                                                 --------  --------
    
    OPERATING COSTS AND EXPENSES
      Production, distribution and editorial      121,522   136,709
      Selling and promotion                        59,333    71,504
      General and administrative                   56,584    69,632
      Depreciation and amortization                 7,874     7,973
      Impairment charge                            11,432     9,349
                                                 --------  --------
        Total operating costs and expenses        256,745   295,167
                                                 --------  --------
    OPERATING LOSS                                (11,968)  (10,857)
    
    OTHER (EXPENSE) / INCOME
      Interest (expense) / income, net               (101)      490
      Loss on equity securities                      (547)   (2,221)
      Other expense                                  (236)     (763)
                                                 --------  --------
             Total other expense                     (884)   (2,494)
    
                                                  
    LOSS BEFORE INCOME TAXES                      (12,852)  (13,351)
    
           Income tax provision                    (1,726)   (2,314)
                                                 --------  --------
    
    
    NET LOSS                                     $(14,578) $(15,665)
                                                 ========  ========
    
    LOSS PER SHARE – BASIC AND DILUTED
      Net Loss                                     $(0.27)   $(0.29)
                                                 ========  ========
    
    WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
      Basic and diluted                            53,880    53,360
    
    
    
                        Martha Stewart Living Omnimedia, Inc.
                            Consolidated Balance Sheets
                     (in thousands, except per share amounts)
    
                                              December 31,  December 31,
                                                  2009         2008
                                              (unaudited)
                                              -----------   -----------
    ASSETS
    CURRENT ASSETS
      Cash and cash equivalents                   $25,384       $50,204
      Short-term investments                       13,085         9,915
      Accounts receivable, net                     56,364        52,500
      Inventory                                     5,166         6,053
      Deferred television production
       costs                                        3,788         4,076
      Other current assets                          5,709         3,752
                                                 --------      --------
              Total current assets                109,496       126,500
                                                 --------      --------
    
    PROPERTY, PLANT AND EQUIPMENT, net             17,268        14,422
    GOODWILL, net                                  45,107        45,107
    OTHER INTANGIBLE ASSETS, net                   47,070        48,205
    OTHER NONCURRENT ASSETS, net                   10,850        27,051
                                                 --------      --------
              Total assets                       $229,791      $261,285
                                                 ========      ========
    LIABILITIES AND SHAREHOLDERS' EQUITY
    CURRENT LIABILITIES
      Accounts payable and accrued
       liabilities                                $26,752       $28,019
      Accrued payroll and related costs             7,495         7,525
      Current portion of deferred
       subscription income                         18,587        22,597
      Current portion of other deferred
       revenue                                      4,716         7,582
                                                 --------      --------
              Total current liabilities            57,550        65,723
                                                 --------      --------
    
    DEFERRED SUBSCRIPTION REVENUE                   5,672         6,874
    OTHER DEFERRED REVENUE                          2,759        13,334
    LOAN PAYABLE                                   13,500        19,500
    DEFERRED INCOME TAX LIABILITY                   3,200         1,854
    OTHER NONCURRENT LIABILITIES                    3,290         3,005
                                                 --------      --------
              Total liabilities                    85,971       110,290
                                                 --------      --------
    
    COMMITMENTS AND CONTINGENCIES
    SHAREHOLDERS' EQUITY
       Class A common stock, $0.01 par
        value, 350,000 shares authorized:
        28,313 and 28,204 shares
        outstanding in 2009 and 2008,
        respectively                                  283           282
       Class B common stock, $0.01 par
        value, 150,000 shares authorized:
        26,690 shares outstanding in 2009
        and 2008                                      267           267
       Capital in excess of par value             290,387       283,248
       Accumulated deficit                       (146,605)     (132,027)
       Accumulated other comprehensive
        income                                        263             -
                                                 --------      --------
                                                  144,595       151,770
                                                 --------      --------
    Less class A treasury stock – 
     59 shares at cost                               (775)         (775)
                                                 --------      --------
              Total shareholders' equity          143,820       150,995
                                                 --------      --------
              Total liabilities and 
              shareholders' equity               $229,791      $261,285
                                                 ========      ========
    
    
    
                       Martha Stewart Living Omnimedia, Inc.
        Supplemental Disclosures Regarding Non-GAAP Financial Information
                          Three Months Ended December 31,
                            (unaudited, in thousands)
    
        The following table presents segment and consolidated financial
    information, including a reconciliation of net income/(loss), a GAAP
    measure, and adjusted EBITDA, a non-GAAP measure.  In order to reconcile
    adjusted EBITDA to net income/(loss), depreciation and amortization, non-
    cash equity compensation, and non-cash impairment charges are added back
    to net income/(loss).  
    
                                                       2009              2008
                                                    -------           -------
    
    
    ADJUSTED EBITDA
      Publishing                                     $3,497            $5,585
      Broadcasting                                    3,612             1,286
      Internet                                        2,587             1,420
      Merchandising                                  23,783             9,421
      Corporate                                     (10,388)           (7,349)
                                                    -------           -------
    Adjusted EBITDA                                  23,091            10,363
                                                    -------           -------
      Publishing                                       (136)              641
      Broadcasting                                      188               203
      Internet                                          (83)               57
      Merchandising                                     344               141
      Corporate                                         764               934
                                                    -------           -------
        Total Non-Cash Equity Compensation            1,077             1,976
                                                    -------           -------
    DEPRECIATION AND AMORTIZATION
      Publishing                                         55                93
      Broadcasting                                      553             1,878
      Internet                                          489               435
      Merchandising                                      13                18
      Corporate                                         771             1,127
                                                    -------           -------
        Total Depreciation and Amortization           1,881             3,551
                                                    -------           -------
    
    IMPAIRMENT CHARGE
      Publishing                                          -             9,349
      Merchandising                                  (1,168)                -
                                                    -------           -------
        Total Impairment Charge                      (1,168)            9,349
                                                    -------           -------
    
    OPERATING INCOME/(LOSS)
      Publishing                                      3,578            (4,498)
      Broadcasting                                    2,871              (795)
      Internet                                        2,181               928
      Merchandising                                  24,594             9,262
      Corporate                                     (11,923)           (9,410)
                                                    -------           -------
         Total Operating Income/(Loss)               21,301            (4,513)
                                                    -------           -------
    
    OTHER INCOME/(EXPENSE)
      Interest expense, net                             (11)              (49)
      Income on equity securities                         -            (1,456)
      Other expense                                       -              (277)
                                                    -------           -------
      Total other income/(expense)                      (11)           (1,782)
                                                     
    INCOME/(LOSS) BEFORE INCOME TAXES                21,290            (6,295)
    
      Income tax provision                             (537)           (1,717)
                                                    -------           -------
    
    NET INCOME/(LOSS)                               $20,753           $(8,012)
                                                    =======           =======
    
     
    
    
                       Martha Stewart Living Omnimedia, Inc.
        Supplemental Disclosures Regarding Non-GAAP Financial Information
                        Twelve Months Ended December 31,
                            (unaudited, in thousands)
    
        The following table presents segment and consolidated financial 
    information, including a reconciliation of net income/(loss), a GAAP
    measure, and adjusted EBITDA, a non-GAAP measure.  In order to reconcile
    adjusted EBITDA to net income/(loss), depreciation and amortization, non-
    cash equity compensation, and non-cash impairment charges are added back
    to net income/(loss).  
    
                                                       2009              2008
                                                   --------          --------
    ADJUSTED EBITDA
      Publishing                                     $3,547           $19,007
      Broadcasting                                    8,418             6,165
      Internet                                         (292)           (2,829)
      Merchandising                                  38,613            33,986
      Corporate                                     (35,001)          (41,338)
                                                   --------          --------
    Adjusted EBITDA                                  15,285            14,991
                                                   --------          --------
      Publishing                                      1,083             2,855
      Broadcasting                                      889               807
      Internet                                          150               230
      Merchandising                                   1,468             1,038
      Corporate                                       4,357             3,596
                                                   --------          --------
        Total Non-Cash Equity Compensation            7,947             8,526
                                                   --------          --------
    
    DEPRECIATION AND AMORTIZATION
      Publishing                                        241               379
      Broadcasting                                    1,389             2,578
      Internet                                        1,950             1,737
      Merchandising                                      62                90
      Corporate                                       4,232             3,189
                                                   --------          --------
        Total Depreciation and Amortization           7,874             7,973
                                                   --------          --------
    
    IMPAIRMENT CHARGE
      Publishing                                          -             9,349
      Merchandising                                  11,432                 -
                                                   --------          --------
        Total Impairment Charge                      11,432             9,349
                                                   --------          --------
    
    OPERATING (LOSS) / INCOME
      Publishing                                      2,223             6,424
      Broadcasting                                    6,140             2,780
      Internet                                       (2,392)           (4,796)
      Merchandising                                  25,651            32,858
      Corporate                                     (43,590)          (48,123)
                                                   --------          --------
         Total Operating Loss                       (11,968)          (10,857)
                                                   --------          --------
    
    OTHER (EXPENSE) / INCOME
      Interest (expense) / income, net                 (101)              490
      Loss on equity securities                        (547)           (2,221)
      Other expense                                    (236)             (763)
                                                   --------          --------
      Total other expense                              (884)           (2,494)
                                                    
    LOSS BEFORE INCOME TAXES                        (12,852)          (13,351)
    
      Income tax provision                           (1,726)           (2,314)
                                                   --------          --------
    
    NET LOSS                                       $(14,578)         $(15,665)
                                                   ========          ========

SOURCE Martha Stewart Living Omnimedia, Inc.



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