Meredith Delivers 20% Growth In Fiscal 2014 Fourth Quarter Net Earnings

Fiscal 2014 Featured Television Station Expansions in Phoenix, St. Louis and Springfield Markets

Continued Successful Execution of Total Shareholder Return Strategy including 6% Dividend Increase

Jul 31, 2014, 08:00 ET from Meredith Corporation

DES MOINES, Iowa, July 31, 2014 /PRNewswire/ -- Meredith Corporation (NYSE: MDP; www.meredith.com) today reported fiscal 2014 fourth quarter net earnings increased 20 percent, and earnings per share rose 19 percent to $0.89 from $0.75 in the prior-year period.  Excluding special items, fiscal 2014 fourth quarter earnings per share were $0.88 (See Tables 1-4).  Revenues increased to $391 million.

"Our Local Media Group delivered another quarter of record performance," said Meredith Chairman and Chief Executive Officer Stephen M. Lacy.  "We were particularly pleased with the performance of KMOV in St. Louis in its first full quarter under Meredith's ownership.  We also completed the acquisition of KTVK in Phoenix, and announced an agreement to purchase WGGB, the ABC affiliate in Springfield, Mass.

Lacy noted the following business highlights during the fourth quarter of fiscal 2014 when compared to the prior-year period:

  • Local Media Group revenues increased 20 percent to $111 million, and EBITDA grew 20 percent to $41 million (excluding special items), both records for a fiscal fourth quarter. Growth was driven by strong performance from Meredith television stations in Phoenix, Las Vegas and Greenville; the addition of KMOV in St. Louis; record digital/mobile advertising revenues; and higher retransmission-related revenues and profit.
  • National Media Group operating profit margins strengthened, driven by higher magazine advertising rates, increased contribution from circulation activities, and a 6 percent decrease in operating expenses. Operating profit was even with the prior year.
  • Consumer engagement grew across all of Meredith's media platforms. Total traffic to Company websites grew to an average of more than 60 million unique visitors per month, a record high. Meredith magazine readership stands at an impressive 110 million. Also, Meredith's television stations increased local programming hours and delivered a strong May ratings book.

FISCAL 2014 REVIEW

Fiscal 2014 earnings per share were $2.50, compared to $2.74 in the prior year.  Excluding special items in both years, fiscal 2014 earnings per share were $2.80, compared to $2.91 (See Tables 1-4).  Meredith recorded $34 million less of political advertising revenues in fiscal 2014 than in the prior year, as expected in an off-election year.  Total revenues were $1.5 billion, even with the prior year.

"In fiscal 2014, we added great new television stations to our Local Media Group portfolio; executed a number of initiatives to strengthen and grow our National Media Group including the launch of Allrecipes magazine; and increased our dividend and expanded our share repurchase program," Lacy said.  "We aggressively executed on our Total Shareholder Return Strategy by deploying capital in high cash flow businesses and grew the amount of cash returned to our shareholders."

Fiscal 2014 highlights included:

  • Significant expansion of Meredith's television footprint including:
    • KTVK, an independent station in Phoenix, the nation's 12th largest television market.  This transaction closed on June 19, 2014.  KTVK produces more hours of local news than any station in the market.  Meredith now has a duopoly in Phoenix as it also owns KPHO, the CBS affiliate.
    • KMOV, the CBS affiliate in St. Louis, the nation's 21st largest television market.  This transaction closed on February 28, 2014, and the station has been successfully integrated into Meredith's operations.  KMOV consistently wins the important late news rating book. Meredith now operates the two largest CBS affiliates in Missouri, the other being KCTV in Kansas City.
    • WGGB, the ABC affiliate in Springfield, Mass.  This transaction is expected to close in the first quarter of fiscal 2015.  WGGB is also the Fox affiliate, airing it on a digital tier. This would be another duopoly for Meredith, as it currently owns WSHM, the CBS affiliate.
  • Portfolio and marketplace enhancements by Meredith's National Media Group – Meredith successfully extended the Allrecipes brand to the magazine platform in what Media Industry Newsletter called the "Hottest Launch of the Year."  It also successfully integrated the Parenting and Baby Talk brands it acquired from Bonnier in late fiscal 2013.  Meredith announced the Spring 2015 launch of Parents Latina, a magazine designed to serve English-speaking Hispanic moms.  Additionally, Meredith was named "Advertisers' Favorite Media Company" for the second time in four years by Advertiser Perceptions, which annually surveys thousands of leading advertising agencies and marketers.  Google won in the prior year.
  • Rapid growth in Meredith's digital, mobile, video and social platforms – Meredith grew its digital audience to more than 60 million monthly unique visitors, according to the most recent data from comScore.  Highlights included expansion of its video library to more than 15,000 searchable videos; and strengthening the presence of Meredith brands across social media platforms such as Facebook and Pinterest.  Better Homes and Gardens achieved 2 million followers on Facebook, making it the most popular brand among its peers on that platform.
  • Strong performance from Meredith's non-advertising-related activities:
    • Meredith's Local Media Group delivered significant growth in retransmission-related revenues, and has contractual agreements for its network affiliations in place through the next two to four years.
    • In Meredith's National Media Group, brand licensing delivered excellent performance driven by strong sales of Better Homes and Gardens branded products at Walmart stores across the U.S., along with expansion of the Better Homes and Gardens real estate network.  Meredith Xcelerated Marketing grew operating profit (excluding special items) by solidifying business with its Top 10 clients, including expansions with Chrysler, Mercer, Allergan and Kia.
  • Successful execution of Meredith's Total Shareholder Return strategy – Meredith increased its dividend 6 percent to $1.73 on an annualized basis, a yield of approximately 4 percent.  The Company repurchased 1.6 million shares of its stock and authorized an additional $100 million for its share repurchase program.

LOCAL MEDIA GROUP OPERATING DETAIL

Meredith's Local Media Group includes 15 owned or operated television stations reaching 10 percent of U.S. households.  Meredith's portfolio is concentrated in large, fast-growing markets, including seven stations among the nation's Top 25 and 13 in the Top 50. Meredith's stations produce approximately 525 hours of local news and entertainment content each week. Meredith expects to continue to grow its Local Media Group both organically and through strategic acquisitions.

Fiscal 2014 fourth quarter Local Media Group operating profit was $25 million ($32 million excluding special items, a record for a fiscal fourth quarter), compared to $28 million in the prior-year period (See Tables 1-4).  Revenues rose 20 percent to $111 million

Fiscal 2014 Local Media Group operating profit was $113 million ($122 million excluding special items, a record for a non-political year), compared to $124 million ($126 million excluding special items) in the prior year (See Tables 1-4).  Total Local Media Group revenues rose 7 percent to a record $403 million

Looking more closely at fiscal 2014 performance before special items:

  • Non-political advertising revenues grew 8 percent to $291 million.  Digital advertising revenues grew more than 15 percent to record levels, driven by increased traffic across the desktop and video platforms, the launch of new mobile apps, and the addition of KMOV.
  • Other revenues and operating expenses both increased, due primarily to growth in retransmission revenues from cable and satellite television operators, and higher programming fees paid to affiliated networks.
  • EBITDA grew to a record $151 million, and EBITDA margin was 38 percent. 

Meredith's connection with viewers also strengthened in fiscal 2014.  Looking at the May 2014 rating book for the key 25-54 age group, Meredith stations in:

  • Portland, St. Louis and Las Vegas were ranked #1 in late news, while Nashville, Greenville and Saginaw were ranked second;
  • Portland, Hartford and Las Vegas were #1 in morning news, and Saginaw was ranked second;
  • Hartford and Las Vegas were #1 in evening news, and St. Louis and Saginaw were second; and
  • Nashville was #1 in sign-on to sign-off; and St. Louis, Kansas City and Saginaw were second.

Daytime Emmy Award-nominated The Better Show, the daily syndicated program produced by Meredith Video Studios, was renewed for an eighth season.  It's currently available in 80 percent of U.S. television households.

"We delivered record revenues and operating profit for a non-political year," said Local Media Group President Paul Karpowicz.  "We're excited to add KTVK in Phoenix and KMOV in St. Louis to the Meredith portfolio, and look forward to having WGGB in Springfield join our group.  The addition of these stations – along with increasing retransmission revenues, growing non-political advertising, rising digital advertising and the upcoming political advertising cycle – point to a strong fiscal 2015 for our business."

NATIONAL MEDIA GROUP OPERATING DETAIL

Meredith's National Media Group reaches 100 million unduplicated American women, including 60 percent of millennial women.  Meredith is a leader at creating content across media platforms and life stages in key consumer interest areas such as food, home, parenthood and health.  The National Media Group also features robust brand licensing activities and innovative business-to-business marketing services.  Meredith expects to continue to grow its National Media Group organically and through strategic acquisitions.

Fiscal 2014 fourth quarter National Media Group operating profit was $43 million, even with the prior-year period.  Revenues were $280 million.  Fiscal 2014 National Media Group operating profit was $113 million ($133 million excluding special items), compared to $138 million ($144 million excluding special items) in the prior-year period (See Tables 1-4).  Revenues were $1.1 billion.

Looking more closely at fiscal 2014 performance:

  • Total advertising revenues were $483 million. Weighted average net revenue per magazine page increased approximately 2 percent. Meredith grew its share of magazine advertising revenues in its competitive set to more than 38 percent, according to the most recent data from Publishers Information Bureau. Digital advertising revenues accounted for 16 percent of total National Media Group advertising revenues.
  • Circulation revenues grew 2 percent to $327 million, driven by the launch of Allrecipes magazine and initiatives to grow the new title's rate base, along with strong performance from Meredith's parenthood and Hispanic brands. In addition, Meredith continued to develop its digital consumer marketing activities, increasing digital orders for print magazine subscriptions nearly 20 percent to 7 million. Digital orders now account for 40 percent of all Meredith magazine subscriptions.
  • Brand Licensing revenues increased 10 percent, led by continued strong sales of more than 3,000 SKUs of Better Homes and Gardens licensed products at more than 4,000 Walmart stores nationwide. The Better Homes and Gardens-branded real estate program with Realogy now features 8,300 agents in 26 states. Meredith's brand licensing activities were recently ranked No. 3 in the world based on sales transactions by Global License! alongside licensing giants Disney and Hasbro.
  • Meredith Xcelerated Marketing grew operating profit (excluding special items) by solidifying business with its Top 10 clients, including significant expansions with Chrysler, Mercer, Allergan and Kia.

Meredith's consumer engagement continued to grow in fiscal 2014.  Readership for Meredith's subscription titles grew 5 percent in fiscal 2014 and median reader income rose, according to the most recent data from Mediamark Research and Intelligence.  Digital traffic averaged more than 50 million unique visitors in Fiscal 2014, according to comScore, and Allrecipes.com continues to lead in the Food category. 

"We are pleased to have successfully grown non-advertising sources of revenue in fiscal 2014, particularly our very robust brand licensing arrangements," said National Media Group President Tom Harty.  "While the advertising environment is challenging, we are increasing our share of magazine advertising revenues; strengthening our digital business; and proving that advertising in Meredith brands delivers exceptional returns through our Meredith Sales Guarantee program."

OTHER FINANCIAL INFORMATION

Consistent with its Total Shareholder Return (TSR) strategy, Meredith repurchased 1.6 million shares of its stock in fiscal 2014.  At June 30, 2014, $108 million remained under the current repurchase authorization.  Total debt was $715 million at June 30, 2014, and the weighted average interest rate was 2.3 percent.  Meredith's debt-to-EBITDA ratio for the 12 months ended June 30, 2014, was 2.7 to 1.

Key elements of Meredith's TSR strategy are (1) An annual dividend of $1.73 per share, which reflects a 6 percent increase in the annual dividend over the prior year and a 70 percent increase since Meredith launched its TSR strategy in October 2011; (2) A renewed $100 million share repurchase program; and (3) Ongoing investments to scale the business and increase shareholder value.

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.  All fiscal 2014 and fourth quarter comparisons are against the comparable prior-year periods.

OUTLOOK

Meredith expects full year fiscal 2015 earnings per share to range from $3.00 to $3.25.  In fiscal 2015, Meredith expects a total of $28 million to $33 million of political advertising revenues at its television stations, with the majority being booked in the second fiscal quarter.

Looking more closely at the first quarter of fiscal 2015 compared to the prior-year period:

  • Total company revenues are expected to be up mid-single digits.
  • Total Local Media Group revenues are expected to be up 35 to 40 percent.  Approximately one-third of total fiscal 2015 political advertising revenues are expected to be recorded in the first fiscal quarter.
  • Total National Media Group revenues are expected to be down mid-single digits.
  • Meredith expects fiscal 2015 first quarter earnings per share to range from $0.60 to $0.65, compared to $0.53 in the prior-year period.

A number of uncertainties remain that may affect Meredith's outlook as stated in this press release for the first quarter and full year fiscal 2015.  These and other uncertainties are referenced below under "Safe Harbor" and in certain filings with the U.S. Securities and Exchange Commission. 

CONFERENCE CALL WEBCAST

Meredith will host a conference call on July 31, 2014 at 11 a.m. EDT to discuss fiscal 2014 fourth quarter and full year results.  A live webcast will be accessible to the public on the Company's website, www.meredith.com, and a replay will be available for two weeks.  A transcript will be available within 48 hours of the call at www.meredith.com.

RATIONALE FOR USE AND ACCESS TO NON-GAAP RESULTS

Management uses and presents GAAP and non-GAAP results to evaluate and communicate its performance. Non-GAAP measures should not be construed as alternatives to GAAP measures. EBITDA and EBITDA margin are common supplemental measures 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. Management 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 items are supplemental non-GAAP financial measures.  While these adjusted results are not a substitute for reported 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 attached to this press release and 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 release that are forward-looking include, but are not limited to, the Company's revenue and earnings per share outlook for first quarter and full year fiscal 2015.

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 or vendors; the integration of acquired businesses; changes in consumer reading, purchasing and/or television viewing patterns; increases in paper, postage, printing, syndicated programming or other costs; changes in television network affiliation agreements; technological developments affecting products or methods of distribution; changes in government regulations affecting the Company's industries; increases 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) has been committed to service journalism for more than 110 years.  Today, Meredith uses multiple distribution platforms – including broadcast television, print, digital, mobile, tablets and video – to provide consumers with content they desire and to deliver the messages of its advertising and marketing partners. 

Meredith's Local Media Group includes 15 owned or operated television stations reaching 10 percent of U.S. households.  Meredith's portfolio is concentrated in large, fast-growing markets, with seven stations in the nation's Top 25 – including Atlanta, Phoenix and Portland – and 13 in Top 50 markets. Meredith's stations produce approximately 525 hours of local news and entertainment content each week, and operate leading local digital destinations.  Additionally, Meredith Video Studios produces The Better Show, a syndicated daily lifestyle television program reaching 80 percent of U.S. TV households.

Meredith's National Media Group reaches 100 million unduplicated American women, including 60 percent of millennial women.  Meredith is the leader in creating content across media platforms in key consumer interest areas such as food, home, parenthood and health through well-known brands such as Better Homes and Gardens, Parents and Allrecipes.  The National Media Group features robust brand licensing activities, including over 3,000 SKUs of branded products at 4,000 Walmart stores across the U.S.  Meredith Xcelerated Marketing is a leader at developing and delivering custom content and customer relationship marketing programs for many of the world's top brands, including Kraft, Lowe's and Chrysler.

Meredith's balanced portfolio consistently generates substantial free cash flow, and the Company is committed to growing Total Shareholder Return through dividend payments, share repurchases and strategic business investments.  Meredith's current annualized dividend of $1.73 per share yields approximately 4 percent.  Meredith has paid a dividend for 67 straight years and increased it for 21 consecutive years.

Meredith Corporation and Subsidiaries

Condensed Consolidated Statements of Earnings (Unaudited)

Three Months

Twelve Months

Periods ended June 30,

2014

2013

2014

2013

(In thousands except per share data)

Revenues

Advertising

$

204,138

$

204,231

$

778,391

$

823,690

Circulation

87,669

87,878

327,214

322,223

All other

98,987

94,864

363,103

325,427

Total revenues

390,794

386,973

1,468,708

1,471,340

Operating expenses

Production, distribution, and editorial

149,265

144,725

567,024

561,058

Selling, general, and administrative

167,442

172,853

655,241

654,098

Depreciation and amortization

13,510

11,365

59,928

45,350

Total operating expenses

330,217

328,943

1,282,193

1,260,506

Income from operations

60,577

58,030

186,515

210,834

Interest expense, net

(3,500)

(3,200)

(12,176)

(13,430)

Earnings before income taxes

57,077

54,830

174,339

197,404

Income taxes

(16,632)

(21,027)

(60,798)

(73,754)

Net earnings

$

40,445

$

33,803

$

113,541

$

123,650

Basic earnings per share

$

0.91

$

0.76

$

2.54

$

2.78

Basic average shares outstanding

44,551

44,512

44,636

44,455

Diluted earnings per share

$

0.89

$

0.75

$

2.50

$

2.74

Diluted average shares outstanding

45,250

45,193

45,410

45,085

Dividends paid per share

$

0.4325

$

0.4075

$

1.6800

$

1.5800

 

Meredith Corporation and Subsidiaries

Segment Information (Unaudited)

Three Months

Twelve Months

Periods ended June 30,

2014

2013

2014

2013

(In thousands)

Revenues

National media

Advertising

$

122,734

$

134,264

$

482,808

$

515,831

Circulation

87,669

87,878

327,214

322,223

Other revenues

69,222

72,419

255,876

257,141

Total national media

279,625

294,561

1,065,898

1,095,195

Local media

Non-political advertising

78,280

69,242

290,698

268,861

Political advertising

3,124

725

4,885

38,998

Other revenues

29,765

22,445

107,227

68,286

Total local media

111,169

92,412

402,810

376,145

Total revenues

$

390,794

$

386,973

$

1,468,708

$

1,471,340

Operating profit

National media

$

43,353

$

43,393

$

113,113

$

137,985

Local media

25,463

27,676

113,060

124,116

Unallocated corporate

(8,239)

(13,039)

(39,658)

(51,267)

Income from operations

$

60,577

$

58,030

$

186,515

$

210,834

Depreciation and amortization

National media

$

4,100

$

4,741

$

29,455

$

19,199

Local media

8,974

6,206

28,815

24,471

Unallocated corporate

436

418

1,658

1,680

Total depreciation and amortization

$

13,510

$

11,365

$

59,928

$

45,350

EBITDA 1

National media

$

47,453

$

48,134

$

142,568

$

157,184

Local media

34,437

33,882

141,875

148,587

Unallocated corporate

(7,803)

(12,621)

(38,000)

(49,587)

Total EBITDA 1

$

74,087

$

69,395

$

246,443

$

256,184

 

1 EBITDA is net earnings before interest, taxes, depreciation, and amortization.

 

Meredith Corporation and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

Assets

June 30,

2014

June 30,

2013

(In thousands)

Current assets

Cash and cash equivalents

$

36,587

$

27,674

Accounts receivable, net

257,644

232,305

Inventories

24,008

28,386

Current portion of subscription acquisition costs

96,893

97,982

Current portion of broadcast rights

4,551

2,831

Assets held for sale

32,900

Other current assets

17,429

18,514

Total current assets

470,012

407,692

Property, plant, and equipment

501,216

464,255

Less accumulated depreciation

(296,168)

(277,938)

Net property, plant, and equipment

205,048

186,317

Subscription acquisition costs

101,533

99,433

Broadcast rights

3,114

3,634

Other assets

86,935

69,848

Intangible assets, net

835,531

584,281

Goodwill

841,627

788,854

Total assets

$

2,543,800

$

2,140,059

Liabilities and Shareholders' Equity

Current liabilities

Current portion of long-term debt

$

87,500

$

50,000

Current portion of long-term broadcast rights payable

4,511

4,089

Accounts payable

81,402

78,458

Accrued expenses and other liabilities

136,047

132,676

Current portion of unearned subscription revenues

173,643

191,448

Total current liabilities

483,103

456,671

Long-term debt

627,500

300,000

Long-term broadcast rights payable

4,327

5,096

Unearned subscription revenues

151,533

163,809

Deferred income taxes

277,477

247,487

Other noncurrent liabilities

108,208

112,700

Total liabilities

1,652,148

1,285,763

Shareholders' equity

Common stock

36,776

36,242

Class B stock

7,700

8,324

Additional paid-in capital

41,884

50,170

Retained earnings

814,050

775,901

Accumulated other comprehensive loss

(8,758)

(16,341)

Total shareholders' equity

891,652

854,296

Total liabilities and shareholders' equity

$

2,543,800

$

2,140,059

 

Meredith Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

Years ended June 30,

2014

2013

(In thousands)

Net cash provided by operating activities

$

178,090

$

189,087

Cash flows from investing activities

Acquisitions of and investments in businesses

(417,461)

(50,190)

Additions to property, plant, and equipment

(24,822)

(25,969)

Net cash used in investing activities

(442,283)

(76,159)

Cash flows from financing activities

Proceeds from issuance of long-term debt

666,000

175,000

Repayments of long-term debt

(301,000)

(205,000)

Purchases of Company stock

(78,226)

(54,734)

Dividends paid

(75,392)

(70,527)

Proceeds from common stock issued

58,885

39,519

Excess tax benefits from share-based payments

4,855

5,438

Other

(2,016)

(770)

Net cash provided by (used in) financing activities

273,106

(111,074)

Net increase in cash and cash equivalents

8,913

1,854

Cash and cash equivalents at beginning of year

27,674

25,820

Cash and cash equivalents at end of year

$

36,587

$

27,674

 

Table 1

Meredith Corporation and Subsidiaries

Supplemental Disclosures Regarding Non-GAAP Financial Measures

Special Items - The following table shows results of operations excluding special items and as reported with the difference being the special items. Results of operations excluding special items are non-GAAP measures. Management's rationale for presenting non-GAAP measures is included in the text of this earnings release.

Periods Ended June 30, 2014

Three Months

Twelve Months

Excluding Special Items

Special Items

As Reported

Excluding

Special Items

Special Items

As Reported

(In thousands except per share data)

Revenues

Advertising

$

204,138

$

$

204,138

$

778,391

$

$

778,391

Circulation

87,669

87,669

327,214

327,214

All other

98,987

98,987

363,103

363,103

Total revenues

390,794

390,794

1,468,708

1,468,708

Operating expenses

Production, distribution, and editorial

149,265

149,265

566,779

245

(c)

567,024

Selling, general, and administrative

161,347

6,095

(a)

167,442

638,057

17,184

(d)

655,241

Depreciation and amortization

13,510

13,510

48,726

11,202

(e)

59,928

Total operating expenses

324,122

6,095

330,217

1,253,562

28,631

1,282,193

Income from operations

66,672

(6,095)

60,577

215,146

(28,631)

186,515

Interest expense, net

(3,500)

(3,500)

(11,540)

(636)

(f)

(12,176)

Earnings before income taxes

63,172

(6,095)

57,077

203,606

(29,267)

174,339

Income taxes

(23,269)

6,637

(b)

(16,632)

(76,357)

15,559

(g)

(60,798)

Net earnings

$

39,903

$

542

$

40,445

$

127,249

$

(13,708)

$

113,541

Basic earnings per share

$

0.90

$

0.01

$

0.91

$

2.85

$

(0.31)

$

2.54

Basic average shares outstanding

44,551

44,551

44,551

44,636

44,636

44,636

Diluted earnings per share

$

0.88

$

0.01

$

0.89

$

2.80

$

(0.30)

$

2.50

Diluted average shares outstanding

45,250

45,250

45,250

45,410

45,410

45,410

 

(a) Severance costs of $3.4 million, acquisition transaction costs of $2.4 million and other accruals of $0.3 million

(b) Tax benefit from realignment of international operations of $4.3 million and tax benefit on restructuring and acquisition transaction charges of

$2.3 million

(c) Write-down of art and manuscript inventory

(d) Severance costs of $11.9 million, acquisition transaction costs of $5.5 million, and accrued costs of $1.1 million partially offset by a $1.3 million

reduction in previously accrued restructuring charges

(e) Write-down of Ladies' Home Journal trademark of $9.3 million and write-down of medical sales force training business assets of $1.9 million

(f) Write-off of deferred financing costs related to refinancing of revolving credit agreement

(g) Tax benefit on restructuring and acquisition transaction charges of $11.3 million and tax benefit from realignment of international operations of

$4.3 million

 

Table 2

Meredith Corporation and Subsidiaries

Supplemental Disclosures Regarding Non-GAAP Financial Measures

Special Items - The following table shows results of operations excluding special items and as reported with the difference being the special items. Results of operations excluding special items are non-GAAP measures. Management's rationale for presenting non-GAAP measures is included in the text of this earnings release.

Periods Ended June 30, 2014

Three Months

Twelve Months

Excluding Special Items

Special Items

As Reported

Excluding

Special Items

Special Items

As Reported

(In thousands)

Revenues

National media

Advertising

$

122,734

$

$

122,734

$

482,808

$

$

482,808

Circulation

87,669

87,669

327,214

327,214

Other revenues

69,222

69,222

255,876

255,876

Total national media

279,625

279,625

1,065,898

1,065,898

Local media

Non-political advertising

78,280

78,280

290,698

290,698

Political advertising

3,124

3,124

4,885

4,885

Other revenues

29,765

29,765

107,227

107,227

Total local media

111,169

111,169

402,810

402,810

Total revenues

$

390,794

$

$

390,794

$

1,468,708

$

$

1,468,708

Operating profit

National media

$

43,353

$

$

43,353

$

132,880

$

(19,767)

(b)

$

113,113

Local media

31,558

(6,095)

(a)

25,463

122,230

(9,170)

(c)

113,060

Unallocated corporate

(8,239)

(8,239)

(39,964)

306

(d)

(39,658)

Income from operations

$

66,672

$

(6,095)

$

60,577

$

215,146

$

(28,631)

$

186,515

Depreciation and amortization

National media

$

4,100

$

$

4,100

$

18,253

$

11,202

(e)

$

29,455

Local media

8,974

8,974

28,815

28,815

Unallocated corporate

436

436

1,658

1,658

Total depreciation and amortization

$

13,510

$

$

13,510

$

48,726

$

11,202

$

59,928

EBITDA1

National media

$

47,453

$

$

47,453

$

151,133

$

(8,565)

$

142,568

Local media

40,532

(6,095)

34,437

151,045

(9,170)

141,875

Unallocated corporate

(7,803)

(7,803)

(38,306)

306

(38,000)

Total EBITDA1

$

80,182

$

(6,095)

$

74,087

$

263,872

$

(17,429)

$

246,443

 

1 EBITDA is net earnings before interest, taxes, depreciation, and amortization.

(a) Severance costs of $3.4 million, acquisition transaction costs of $2.4 million, and other accruals of $0.3 million

(b) Write-down of Ladies' Home Journal trademark of $9.3 million, severance costs of $8.5 million, write-down of other assets of $2.1 million, and

accrued costs of $0.8 million partially offset by a $1.0 million reduction in previously accrued restructuring charges

(c) Severance costs of $3.4 million, acquisition transaction costs of $5.5 million, and other accruals of $0.3 million

(d) Reversal of previously accrued restructuring charges

(e) Write-down of Ladies' Home Journal trademark of $9.3 million and write-down of medical sales force training business assets of $1.9 million

 

Table 3

Meredith Corporation and Subsidiaries

Supplemental Disclosures Regarding Non-GAAP Financial Measures

Special Items - The following table shows results of operations excluding special items and as reported with the difference being the special items. Results of operations excluding special items are non-GAAP measures. Management's rationale for presenting non-GAAP measures is included in the text of this earnings release.

Periods Ended June 30, 2013

Three Months

Twelve Months

Excluding Special Items

Special Items

As Reported

Excluding

Special Items

Special Items

As Reported

(In thousands except per share data)

Revenues

Advertising

$

204,231

$

$

204,231

$

823,690

$

$

823,690

Circulation

87,878

87,878

322,223

322,223

All other

94,864

94,864

325,427

325,427

Total revenues

386,973

386,973

1,471,340

1,471,340

Operating expenses

Production, distribution, and editorial

144,725

144,725

561,058

561,058

Selling, general, and administrative

172,853

172,853

641,960

12,138

(a)

654,098

Depreciation and amortization

11,365

11,365

45,350

45,350

Total operating expenses

328,943

328,943

1,248,368

12,138

1,260,506

Income from operations

58,030

58,030

222,972

(12,138)

210,834

Interest expense, net

(3,200)

(3,200)

(13,430)

(13,430)

Earnings before income taxes

54,830

54,830

209,542

(12,138)

197,404

Income taxes

(21,027)

(21,027)

(78,428)

4,674

(73,754)

Net earnings

$

33,803

$

$

33,803

$

131,114

$

(7,464)

$

123,650

Basic earnings per share

$

0.76

$

$

0.76

$

2.95

$

(0.17)

$

2.78

Basic average shares outstanding

44,512

44,512

44,512

44,455

44,455

44,455

Diluted earnings per share

$

0.75

$

$

0.75

$

2.91

$

(0.17)

$

2.74

Diluted average shares outstanding

45,193

45,193

45,193

45,085

45,085

45,085

 

(a) Professional fees and expenses related to a transaction that did not materialize of $5.1 million, severance costs of $7.4 million, and vacated lease

accruals of $0.4 million partially offset by a $0.8 million reduction in previously accrued restructuring charges

 

Table 4

Meredith Corporation and Subsidiaries

Supplemental Disclosures Regarding Non-GAAP Financial Measures

Special Items - The following table shows results of operations excluding special items and as reported with the difference being the special items. Results of operations excluding special items are non-GAAP measures. Management's rationale for presenting non-GAAP measures is included in the text of this earnings release.

Periods Ended June 30, 2013

Three Months

Twelve Months

Excluding Special Items

Special Items

As Reported

Excluding

Special Items

Special Items

As Reported

(In thousands)

Revenues

National media

Advertising

$

134,264

$

$

134,264

$

515,831

$

$

515,831

Circulation

87,878

87,878

322,223

322,223

Other revenues

72,419

72,419

257,141

257,141

Total national media

294,561

294,561

1,095,195

1,095,195

Local media

Non-political advertising

69,242

69,242

268,861

268,861

Political advertising

725

725

38,998

38,998

Other revenues

22,445

22,445

68,286

68,286

Total local media

92,412

92,412

376,145

376,145

Total revenues

$

386,973

$

$

386,973

$

1,471,340

$

$

1,471,340

Operating profit

National media

$

43,393

$

$

43,393

$

143,533

$

(5,548)

(a)

$

137,985

Local media

27,676

27,676

125,611

(1,495)

(b)

124,116

Unallocated corporate

(13,039)

(13,039)

(46,172)

(5,095)

(c)

(51,267)

Income from operations

$

58,030

$

$

58,030

$

222,972

$

(12,138)

$

210,834

Depreciation and amortization

National media

$

4,741

$

$

4,741

$

19,199

$

$

19,199

Local media

6,206

6,206

24,471

24,471

Unallocated corporate

418

418

1,680

1,680

Total depreciation and amortization

$

11,365

$

$

11,365

$

45,350

$

$

45,350

EBITDA1

National media

$

48,134

$

$

48,134

$

162,732

$

(5,548)

(a)

$

157,184

Local media

33,882

33,882

150,082

(1,495)

(b)

148,587

Unallocated corporate

(12,621)

(12,621)

(44,492)

(5,095)

(c)

(49,587)

Total EBITDA1

$

69,395

$

$

69,395

$

268,322

$

(12,138)

$

256,184

 

1 EBITDA is net earnings before interest, taxes, depreciation, and amortization.

(a) Severance costs of $5.9 million and a vacated lease accrual of $0.4 million partially offset by a $0.8 million reduction in previously accrued

restructuring charges

(b) Severance costs

(c) Professional fees and expenses related to a transaction that did not materialize

 

Table 5

Meredith Corporation and Subsidiaries

Supplemental Disclosures Regarding Non-GAAP Financial Measures

EBITDA

Consolidated EBITDA, which is reconciled to net earnings in the following tables, is defined as net earnings before interest, taxes, depreciation, and amortization.

Segment EBITDA is a measure of segment earnings before depreciation and amortization.

Segment EBITDA margin is defined as segment EBITDA divided by segment revenues.

Three months ended June 30, 2014

National Media

Local

Media

Unallocated Corporate

Total

(In thousands)

Revenues

$

279,625

$

111,169

$

$

390,794

Operating profit

$

43,353

$

25,463

$

(8,239)

$

60,577

Depreciation and amortization

4,100

8,974

436

13,510

EBITDA

$

47,453

$

34,437

$

(7,803)

74,087

Less:

Depreciation and amortization

(13,510)

Net interest expense

(3,500)

Income taxes

(16,632)

Net earnings

$

40,445

Segment EBITDA margin

17.0

%

31.0

%

Three months ended June 30, 2013

National Media

Local

Media

Unallocated Corporate

Total

(In thousands)

Revenues

$

294,561

$

92,412

$

$

386,973

Operating profit

$

43,393

$

27,676

$

(13,039)

$

58,030

Depreciation and amortization

4,741

6,206

418

11,365

EBITDA

$

48,134

$

33,882

$

(12,621)

69,395

Less:

Depreciation and amortization

(11,365)

Net interest expense

(3,200)

Income taxes

(21,027)

Net earnings

$

33,803

Segment EBITDA margin

16.3

%

36.7

%

Twelve months ended June 30, 2014

National Media

Local

Media

Unallocated Corporate

Total

(In thousands)

Revenues

$

1,065,898

$

402,810

$

$

1,468,708

Operating profit

$

113,113

$

113,060

$

(39,658)

$

186,515

Depreciation and amortization

29,455

28,815

1,658

59,928

EBITDA

$

142,568

$

141,875

$

(38,000)

246,443

Less:

Depreciation and amortization

(59,928)

Net interest expense

(12,176)

Income taxes

(60,798)

Net earnings

$

113,541

Segment EBITDA margin

13.4

%

35.2

%

Twelve months ended June 30, 2013

National Media

Local

Media

Unallocated Corporate

Total

(In thousands)

Revenues

$

1,095,195

$

376,145

$

$

1,471,340

Operating profit

$

137,985

$

124,116

$

(51,267)

$

210,834

Depreciation and amortization

19,199

24,471

1,680

45,350

EBITDA

$

157,184

$

148,587

$

(49,587)

256,184

Less:

Depreciation and amortization

(45,350)

Net interest expense

(13,430)

Income taxes

(73,754)

Net earnings

$

123,650

Segment EBITDA margin

14.4

%

39.5

%

 

SOURCE Meredith Corporation



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