July 26, 2012

Meredith Reports Fiscal 2012 Fourth Quarter And Full Year Results

Fourth Quarter Revenues and Earnings Per Share Grow; Magazine & Digital Audiences Hit New Highs
Fiscal 2012 Featured 50% Dividend Increase; Investments in New Digital, Parenthood and Food Brands

DES MOINES, Iowa, July 26, 2012 /PRNewswire/ -- Meredith Corporation (NYSE: MDP;www.meredith.com), the leading media and marketing company serving American women, today reported fiscal 2012 fourth quarter revenues grew 6 percent to $375 million, and earnings per share grew 2 percent to $0.67, both from the prior-year period.

(Logo: http://photos.prnewswire.com/prnh/20090810/CG58830LOGO)

Meredith achieved the following business highlights during the fourth quarter of fiscal 2012 when compared to the prior-year period:

  • Consumer engagement strengthened across all of Meredith's media platforms.  Magazine readership rose to a record 116 million.  Meredith's local television station group delivered a strong May ratings book.  Also, total traffic to Company websites approximately doubled to an average of nearly 40 million unique visitors per month, a record high.
  • Local Media Group revenues grew 9 percent, driven by gains in both non-political and political advertising revenues.  Operating profit rose 42 percent, which included a 2 percent decline in expenses, and produced a strong EBITDA margin of 40 percent.
  • National Media Group revenues grew 5 percent.  Advertising revenues increased 12 percent, fueled by the recent acquisitions of the Allrecipes.com, EveryDay with Rachael Ray and FamilyFun brands.  Absent the recent acquisitions, advertising revenues were down 3 percent. Circulation revenues increased 20 percent, and were up 5 percent excluding the recent acquisitions.
  • Total Company digital advertising revenues increased 95 percent, as National Media Group digital advertising revenues doubled, and Local Media Group digital advertising revenues increased more than 70 percent.

"It was a solid quarter highlighted by the strengthening of important consumer touchpoints; continued excellent television advertising performance; and strong circulation metrics along with improving advertising in the National Media Group," said Meredith Chairman and CEO Stephen M. Lacy.

FISCAL 2012 REVIEW

Fiscal 2012 earnings per share were $2.31, including a special charge of $0.19 per share recorded in the fiscal third quarter.  Excluding the special charge, earnings per share were $2.50, in-line with Meredith's previously stated expectations.  These results compare to earnings per share of $2.78 in fiscal 2011, when Meredith recorded $0.38 per share, or $28 million, more political advertising revenues.  Total revenues were $1.4 billion in both years.

"In fiscal 2012 we acquired Allrecipes.com — the world's largest digital food brand — and implemented our Total Shareholder Return strategy, which is delivering a dividend yield of approximately 5 percent," Lacy said. "Additionally, we launched new tablet and mobile platforms, and acquired leading consumer brands that increased our presence in the important parenthood and food verticals.  We also enhanced our brand licensing, video content creation, marketing services and e-commerce businesses."

Lacy noted Meredith continues to aggressively execute a series of well-defined strategic initiatives to generate growth in revenue, operating profit and free cash flow, and increase shareholder value over time.  As detailed below and in the operating sections, fiscal 2012 actions included:

  • Implementation of a Total Shareholder Return (TSR) strategy.  Key elements of the strategy include: (1) A current annual dividend of $1.53 per share; (2) A $100 million share repurchase program; and (3) Ongoing strategic investments to scale the business and increase shareholder value over time.  Since the launch of Meredith's TSR strategy on October 25, 2011 through June 30, 2012, Meredith's stock price increased 28 percent, and its dividend yielded approximately 5 percent.  That equates to a total return of 33 percent to shareholders.
  • Acquisition of Allrecipes.com, doubling Meredith's digital presence. The acquisition makes Meredith the No. 1 digital food media company, and moves it into the Top 3 in the digital women's lifestyle category.
  • Launch of tablet editions and mobile platforms.  Meredith currently has 20 of its national brands available across the iPad, NOOK Tablet/NOOK Color, Kindle Fire, Samsung Galaxy and Google Play platforms. Meredith's National Media Group now has nearly 20 apps focused on food, parenthood and health.  Meredith's Local Media Group has over 30 apps focused on news, sports and weather. 
  • Purchase of the EveryDay with Rachael Ray and FamilyFun brands. These acquisitions helped increase Meredith's share of the U.S. magazine industry advertising revenues to 11.8 percent, according to the most recent data from Publishers Information Bureau
  • Extension of Meredith's very successful brand licensing arrangement with Walmart for the Better Homes and Gardens line of home and garden products through 2016.  There are currently more than 3,000 SKUs of BHG branded products available at Walmart stores across the United States.
  • Expansion and monetization of Local Media Group video content through an increase in local news programming, along with more national video content creation.

"We have a clear strategic growth plan in place and are executing initiatives that extend across all of our businesses, have significant digital components, and capitalize on the broad content creation and marketing capabilities we possess," Lacy said. 

OPERATING DETAIL

LOCAL MEDIA GROUP

Meredith's Local Media Group — which consists of local television affiliates in mostly fast-growing markets and a national video content creation unit — delivered another strong quarter, and an outstanding fiscal 2012.

"Our results represent successful execution of our strategy to (1) Maximize advertising revenues; (2) Develop non-traditional revenue streams, including digital, mobile and custom video production; and (3) Expand retransmission-related revenues," said Meredith Local Media Group President Paul Karpowicz.  "Our aggressive pursuit of this strategy has delivered strong results, including nearly three years of consecutive quarterly growth in non-political advertising revenues."

Fiscal 2012 fourth quarter Local Media Group operating profit increased 42 percent to $27 million, and total revenues grew 9 percent to $85 million.

Non-political advertising revenues grew 6 percent to $69 million, the 11th-straight quarter of year-over-year improvement.  Political advertising revenues were $3 million, compared to $1 million in the prior-year period.

Fiscal 2012 full-year Local Media Group operating profit was $88 million, including a special charge of $1 million recorded in the third quarter.  Excluding that special charge, operating profit was $89 million, up 2 percent from the prior-year period — quite an achievement since fiscal 2011 benefitted from $28 million more of political advertising revenues.  Fiscal 2012 revenues were $316 million compared to $322 million.  Fiscal 2012's EBITDA margin was 36 percent, the highest since fiscal 2007.

Karpowicz noted several business highlights in fiscal 2012, including:

  • Non-political advertising revenues grew 6 percent to $271 million.  The important automotive and professional services categories were particularly strong.  Nine of Meredith's 12 stations posted higher non-political advertising revenues, led by Las Vegas, Phoenix and Hartford. 
  • Digital advertising revenues increased more than 55 percent, boosted by enhancements to the station's websites and the launch of new mobile apps.
  • Other revenues grew more than 25 percent to $39 million.  This was driven primarily by Meredith's management of Peachtree-TV (WPCH-TV) in Atlanta, which began on March 28, 2011. 
  • Operating expenses declined 3 percent, driven primarily by savings in programming and video production costs.

Meredith's connection with viewers also increased in fiscal 2012 as witnessed by (1) Expansion of local news hours; (2) Growth of The Better Show, its national daily women's lifestyle program that was recently renewed for a sixth season; and (3) Launch of the Digs Channel on YouTube, where Meredith Video Studios is producing original short-form video content focused on home and garden-related topics.

"As we look ahead, we've focused on driving continued growth in non-political advertising revenues; maximizing political advertising revenues; and protecting and growing retransmission-related revenues," Karpowicz said. "We will also continue to produce original programming and extend and monetize that content to digital and mobile platforms."

NATIONAL MEDIA GROUP

Meredith's National Media Group — which includes leading national consumer media brands delivered over multiple platforms, brand licensing activities, and business-to-business marketing products and services — executed a series of strategic initiatives in fiscal 2012 designed to position the business for long-term growth in revenue and operating profit.

"We faced a challenging magazine advertising marketplace that impacted results, but I'm confident the strategic steps taken to broaden and deepen our scale with consumers and advertisers alike will lead to growth and margin improvement over time," said Meredith National Media Group President Tom Harty.

Fiscal 2012 fourth quarter National Media Group operating profit was $38 million, and revenues were $290 million.  That compares operating profit of $49 million and revenues of $275 million in the prior-year period.

Advertising revenues grew 12 percent compared to the prior-year period.  Excluding recent acquisitions, advertising revenues declined 3 percent.  The retail, over-the-counter drug and financial services categories were stronger, while the prescription drug category, which has been challenged due to fewer new drug launches, was significantly weaker.

Circulation revenues increased 20 percent compared to the prior-year period, and grew 5 percent excluding the recent acquisitions.  Meredith generated approximately 1.1 million digital orders for print magazine subscriptions during the fourth quarter, quadruple the prior-year period. 

Meredith's connection to consumers continued to strengthen, demonstrating the vitality and appeal of its brands and content.  Readership of Meredith magazines increased to a record 116 million, according to the most recent data from Mediamark Research and Intelligence.  Digital traffic increased as monthly unique visitors and page views each more than doubled to record levels, driven primarily by the acquisition of Allrecipes.com, new digital consumer marketing initiatives and creative enhancements to existing websites.

Other revenues were $74 million, compared to $87 million in the prior-year period.  This was due primarily to select clients of Meredith Xcelerated Marketing (MXM), the Company's business-to-business marketing services agency, scaling back programs in response to current economic conditions.   However, the new business pipeline improved during the quarter.

Fiscal 2012 full year National Media Group operating profit was $133 million, including a special charge taken in the third quarter of $13 million.  Excluding the special charge, operating profit was $147 million.  Fiscal 2011 operating profit was $179 million, excluding a special benefit of $1 million.  Revenues were $1.1 billion in both periods.  Operating expenses rose 3 percent due to the recent acquisitions, but were down 3 percent excluding them.

Harty singled out several strategic initiatives executed by the National Media Group in fiscal 2012 that will help drive long-term growth including:

  • Expansion in the food category highlighted by the acquisition of Allrecipes.com, the world's No. 1 digital food brand, and EveryDay with Rachael Ray magazine and its related digital assets.
  • Growth in the parenthood category including the acquisition of the FamilyFun brand, editorial enhancements to Parents and American Baby magazines, and the relaunch of Parents.com.
  • Introduction of the Meredith Sales Guarantee, an innovative program proving that advertising in Meredith titles increases retail sales.  Currently, more than a dozen brands are participating in the program including ones from Johnson & Johnson, Kimberly-Clark and Tyson Foods.
  • Acceleration of online consumer marketing activities, including tripling digital orders for print magazine subscriptions to 3.2 million.  Meredith is particularly focused on driving digital subscriptions and paperless transactions because of cost-savings and up-selling opportunities.  Meredith realizes approximately $5 in incremental profit per digital order over the average life of a subscription, compared to an order generated by direct mail.
  • Investment in Iris Worldwide, a leading global marketing company, and the creation of the Meredith-Iris Global Network to serve the increasing global needs of domestic clients, and open doors to international clients.

"Going forward, we are focused on leveraging our enhanced scale to (1) Maximize advertising revenues, especially in the digital arena; (2) Move more consumer transactions online, particularly magazine subscription orders; (3) Drive growth in our non-advertising related activities, such as brand licensing, marketing services and e-commerce; and (4) Continue to achieve operational efficiencies," Harty concluded.

OTHER FINANCIAL INFORMATION

On Oct. 25, 2011, Meredith initiated its Total Shareholder Return strategy.  Key elements include: (1) A 50 percent annual dividend increase to $1.53; (2) A $100 million share repurchase program; and (3) Ongoing strategic investments to generate growth in revenue, operating profit and free cash flow, and increase shareholder value over time.     

Consistent with this strategy, Meredith repurchased approximately 1 million shares of Company stock, or 2 percent of its outstanding shares in fiscal 2012, at an average price of $27.55.  At June 30, 2012, $87 million remained under the current repurchase authorization.

Total debt was $380 million at June 30, 2012, reflecting the addition of $175 million for the acquisition of Allrecipes.com.  Meredith's debt-to-EBITDA ratio was 1.6 to 1, and the weighted average interest rate was 3.8 percent at June 30, 2012. 

Fiscal 2012 corporate expenses declined 16 percent from the prior-year period, due primarily to lower expenses related to incentive compensation, consulting and development of the tablet platform.

During fiscal 2012, Meredith generated approximately $182 million in cash flow from operations.  

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.  Information on the special items in both fiscal 2012 and fiscal 2011 is available in Tables 1-4 and in certain previously communicated press releases.

OUTLOOK

Meredith expects fiscal 2013 full year earnings per share will range from $2.60 to $2.95.  Looking more closely at full year fiscal 2013:

  • Meredith continues to face limited visibility due to an ongoing uncertain domestic and international economic climate; the potential impact of the U.S. Presidential election; and other factors. 
  • The Company expects a total of $25 to $30 million of political advertising revenues at its television stations, with the majority being booked in the second fiscal quarter.

Meredith expects fiscal 2013 first quarter earnings per share will range from $0.50 to $0.55.  Looking more closely at the first quarter of fiscal 2013:

  • National Media Group advertising revenues are expected to be up in the high-single digits including recent acquisitions, and down in the high-single digits excluding recent acquisitions.
  • Local Media Group non-political advertising revenues are expected to be up in the low-single digits.  Approximately one-third of the total fiscal 2013 political advertising revenue is expected to be recorded in the first fiscal quarter. 

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 2013.  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 26, 2012 at 11 a.m. EDT to discuss fiscal 2012 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 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 they include certain contractual and non-discretionary expenditures.

Results excluding recent acquisitions (Allrecipes.com, EveryDay with Rachael Ray and FamilyFun) and results excluding special items are also 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.  Management believes special items are not reflective of Meredith's ongoing business activities.  Reconciliations of non-GAAP to GAAP measures are attached to this press release and 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 advertising revenues, along with the Company's revenue and earnings per share outlook for the first quarter and full year fiscal 2013.

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, 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; 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 features multiple well-known national brands — including Better Homes and Gardens, Parents, Family Circle, Allrecipes.com, Ladies' Home Journal, Fitness, More, American Baby, EveryDay with Rachael Ray and FamilyFun — along 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, food, health and wellness and self-development. Meredith uses multiple distribution platforms — including print, television, digital, mobile, tablets, and video — to give consumers content they desire and to deliver the messages of its advertising and 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 Xcelerated Marketing has significantly added to its capabilities in recent years through the acquisition of cutting-edge companies in digital, mobile, social, healthcare, database, and international marketing. 

A hallmark of Meredith's business model and financial profile is its ability to consistently generate substantial free cash flow by leveraging the strength of its multi-platform portfolio.  Meredith is committed to increasing Total Shareholder Return through dividend payments, share repurchases and strategic business investments.  Meredith has paid a dividend for 65 straight years and increased its dividend for 19 consecutive years.  Meredith currently pays an annual dividend of $1.53 per share, resulting in a dividend yield of approximately 5 percent.

 

Meredith Corporation and Subsidiaries

Consolidated Statements of Earnings (Unaudited)










Three Months 


Twelve Months 

Period Ended June 30,

2012


2011


2012


2011

(In thousands except per share data)








Revenues








Advertising 

$   210,390


$   189,002


$   769,815


$   792,792

Circulation

78,432


65,328


285,254


261,458

All other

85,726


98,596


321,618


346,230

Total revenues

374,548


352,926


1,376,687


1,400,480

Operating expenses








Production, distribution, and editorial

142,395


140,465


547,564


556,780

Selling, general, and administrative

165,181


148,082


599,026


578,864

Depreciation and amortization

12,582


10,132


44,326


39,545

Total operating expenses

320,158


298,679


1,190,916


1,175,189

Earnings from operations

54,390


54,247


185,771


225,291

Interest income

2


3


8


31

Interest expense

(3,999)


(2,932)


(12,904)


(12,969)

Earnings from continuing operations before income taxes

50,393


51,318


172,875


212,353

Income taxes

(20,411)


(18,043)


(68,503)


(80,743)

Earnings from continuing operations

29,982


33,275


104,372


131,610

Loss from discontinued operations, net of taxes

-


(2,944)


-


(4,178)

Net earnings

$     29,982


$     30,331


$   104,372


$   127,432









Basic earnings per share








Earnings from continuing operations

$        0.67


$        0.73


$        2.33


$        2.89

Discontinued operations

-


(0.06)


-


(0.09)

Basic earnings per share

$        0.67


$        0.67


$        2.33


$        2.80

Basic average shares outstanding

44,652


45,339


44,825


45,497









Diluted earnings per share








Earnings from continuing operations

$        0.67


$        0.73


$        2.31


$        2.87

Discontinued operations

-


(0.07)


-


(0.09)

Diluted earnings per share

$        0.67


$        0.66


$        2.31


$        2.78

Diluted average shares outstanding

45,044


45,666


45,100


45,832









Dividends paid per share

$     0.3825


$     0.2550


$     1.4025


$     0.9700









 

 

Meredith Corporation and Subsidiaries 

Segment Information (Unaudited)












Three Months


Twelve Months

Period Ended June 30, 

2012


2011


2012


2011

(In thousands)








Revenues








National media group








Advertising

$   137,699


$   122,531


$    492,313


$    501,382

Circulation

78,432


65,328


285,254


261,458

Other revenues

73,724


87,279


282,818


315,382


Total national media group

289,855


275,138


1,060,385


1,078,222

Local media group








Non-political advertising

69,420


65,733


270,731


256,388

Political advertising

3,271


738


6,771


35,022

Other revenues

12,002


11,317


38,800


30,848


Total local media group

84,693


77,788


316,302


322,258

Total revenues

$   374,548


$   352,926


$  1,376,687


$  1,400,480










Operating profit








National media group

$    37,889


$    49,331


$    133,020


$    179,628

Local media group

27,424


19,294


88,291


87,852

Unallocated corporate 

(10,923)


(14,378)


(35,540)


(42,189)

Income from operations

$    54,390


$    54,247


$    185,771


$    225,291










Depreciation and amortization








National media group

$      5,809


$      3,481


$      17,617


$      13,516

Local media group

6,269


6,150


24,732


24,003

Unallocated corporate 

504


501


1,977


2,026

Total depreciation and amortization

$    12,582


$    10,132


$      44,326


$      39,545










EBITDA(1)








National media group

$    43,698


$    52,812


$    150,637


$    193,144

Local media group

33,693


25,444


113,023


111,855

Unallocated corporate 

(10,419)


(13,877)


(33,563)


(40,163)

Total EBITDA(1)

$    66,972


$    64,379


$    230,097


$    264,836










(1) EBITDA is earnings from continuing operations before interest, taxes, depreciation, and amortization.










 

Meredith Corporation and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)






 June 30, 


 June 30, 

Assets

2012


2011

(In thousands)




Current assets




Cash and cash equivalents

$            25,820


$            27,721

Accounts receivable, net

215,526


212,365

Inventories

22,559


21,529

Current portion of subscription acquisition costs

75,446


54,581

Current portion of broadcast rights

3,408


3,974

Other current assets

16,677


13,568

Total current assets

359,436


333,738

Property, plant, and equipment

455,271


459,257

Less accumulated depreciation

(260,967)


(272,819)

Net property, plant, and equipment

194,304


186,438

Subscription acquisition costs

75,368


54,286

Broadcast rights

943


1,292

Other assets

66,858


66,940

Intangible assets, net

586,263


545,101

Goodwill

733,127


525,034

Total assets

$        2,016,299


$        1,712,829





Liabilities and Shareholders' Equity




Current liabilities




Current portion of long-term debt

$          105,000


$            50,000

Current portion of long-term broadcast rights payable

6,752


8,548

Accounts payable

72,911


82,878

Accrued expenses and other liabilities

117,071


115,735

Current portion of unearned subscription revenues

180,852


151,831

Total current liabilities

482,586


408,992

Long-term debt

275,000


145,000

Long-term broadcast rights payable

3,695


5,431

Unearned subscription revenues

141,408


120,024

Deferred income taxes

204,054


160,709

Other noncurrent liabilities

112,111


97,688

Total liabilities

1,218,854


937,844

Shareholders' equity




Common stock

35,791


36,282

Class B stock

8,716


8,776

Additional paid-in capital

53,275


58,274

Retained earnings

722,778


687,816

Accumulated other comprehensive loss

(23,115)


(16,163)

Total shareholders' equity

797,445


774,985

Total liabilities and shareholders' equity

$        2,016,299


$        1,712,829





 

 

Meredith Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)





Years ended June 30, 

2012


2011

(In thousands)




Cash flows from operating activities




Net earnings

$   104,372


$   127,432

Adjustments to reconcile net earnings to net cash provided by operating activities




Depreciation

31,989


29,684

Amortization

12,337


9,871

Share-based compensation

10,459


8,940

Deferred income taxes

58,025


38,176

Amortization of broadcast rights

11,869


17,098

Payments for broadcast rights

(14,487)


(18,837)

Provision for write-down of impaired assets

946


4,345

Fair value adjustment to contingent consideration

(1,018)


(6,310)

Excess tax benefits for share-based payments

(495)


(509)

Changes in assets and liabilities

(32,067)


4,645

Net cash provided by operating activities

181,930


214,535





Cash flows from investing activities




Acquisitions of businesses 

(248,964)


(40,141)

Additions to property, plant, and equipment 

(35,718)


(29,906)

Net cash used in investing activities 

(284,682)


(70,047)





Cash flows from financing activities




Proceeds from issuance of long-term debt

355,000


62,500

Repayments of long-term debt 

(170,000)


(167,500)

Purchases of Company stock 

(26,881)


(24,895)

Dividends paid 

(62,994)


(44,240)

Proceeds from common stock issued 

5,908


8,676

Excess tax benefits from share-based payments 

495


509

Other

(677)


(391)

Net cash provided by (used in) financing activities 

100,851


(165,341)

Net decrease in cash and cash equivalents 

(1,901)


(20,853)

Cash and cash equivalents at beginning of period

27,721


48,574

Cash and cash equivalents at end of period

$     25,820


$     27,721





 

Meredith Corporation and Subsidiaries

Table 1

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.













Period Ended June 30, 2012

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 

$  210,390


$             -


$   210,390


$   769,815


$             -


$   769,815

Circulation

78,432


-


78,432


285,254


-


285,254

All other

85,726


-


85,726


321,618


-


321,618

Total revenues

374,548


-


374,548


1,376,687


-


1,376,687

Operating expenses












Production, distribution, and editorial

142,395


-


142,395


547,539


25

(a)

547,564

Selling, general, and administrative

165,181




165,181


584,381


14,645

(b)

599,026

Depreciation and amortization

12,582


-


12,582


44,326


-


44,326

Total operating expenses

320,158


-


320,158


1,176,246


14,670


1,190,916

Income from operations

54,390


-


54,390


200,441


(14,670)


185,771

Interest income

2


-


2


8


-


8

Interest expense

(3,999)


-


(3,999)


(12,904)


-


(12,904)

Earnings before income taxes

50,393


-


50,393


187,545


(14,670)


172,875

Income taxes

(20,411)




(20,411)


(74,543)


6,040


(68,503)

Net earnings

$    29,982


$             -


$     29,982


$   113,002


$     (8,630)


$   104,372













Basic earnings per share

$       0.67


$           -


$        0.67


$        2.52


$       (0.19)


$        2.33

Basic average shares outstanding

44,652


44,652


44,652


44,825


44,825


44,825













Diluted earnings per share

$       0.67


$           -


$        0.67


$        2.50


$       (0.19)


$        2.31

Diluted average shares outstanding

45,044


45,044


45,044


45,100


45,100


45,100













(a) Write-down of art and manuscript inventory

(b) Severance costs of $10.0 million, Allrecipes.com acquisition costs of $2.5 million, vacated lease accruals of $2.7 million, and other net miscellaneous write-downs and accruals of $0.5 million partially offset by a $1.0 million reduction in contingent consideration payable














 

Meredith Corporation and Subsidiaries 

Table 2

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.













Period Ended June 30, 2012

Three Months 


Twelve Months 


Excluding Special Items


Special Items


As Reported


Excluding
Special Items


Special Items


As Reported

(In thousands)












Revenues












National media group












Advertising

$   137,699


$             -


$   137,699


$     492,313


$              -


$     492,313

Circulation

78,432


-


78,432


285,254


-


285,254

Other revenues

73,724


-


73,724


282,818


-


282,818

Total national media group

289,855


-


289,855


1,060,385


-


1,060,385

Local media group












Non-political advertising

69,420


-


69,420


270,731


-


270,731

Political advertising

3,271


-


3,271


6,771


-


6,771

Other revenues

12,002


-


12,002


38,800


-


38,800

Total local media group

84,693


-


84,693


316,302


-


316,302

Total revenues

$   374,548


$             -


$   374,548


$  1,376,687


$              -


$  1,376,687













Operating profit












National media group

$     37,889


$             -


$     37,889


$     146,501


$    (13,481)

(a)

$     133,020

Local media group

27,424


-


27,424


89,480


(1,189)

(b)

88,291

Unallocated corporate 

(10,923)


-


(10,923)


(35,540)


-


(35,540)

Income from operations

$     54,390


$             -


$     54,390


$     200,441


$    (14,670)


$     185,771













Depreciation and amortization












National media group

$      5,809


$             -


$      5,809


$      17,617


$              -


$      17,617

Local media group

6,269


-


6,269


24,732


-


24,732

Unallocated corporate 

504


-


504


1,977


-


1,977

Total depreciation and amortization

$     12,582


$             -


$     12,582


$      44,326


$              -


$      44,326













EBITDA(1)












National media group

$     43,698


$             -


$     43,698


$     164,118


$    (13,481)

(a)

$     150,637

Local media group

33,693


-


33,693


114,212


(1,189)

(b)

113,023

Unallocated corporate 

(10,419)


-


(10,419)


(33,563)


-


(33,563)

Total EBITDA(1)

$     66,972


$             -


$     66,972


$     244,767


$    (14,670)


$     230,097













(1)EBITDA is earnings from continuing operations before interest, taxes, depreciation, and amortization.













(a) Severance costs of $9.9 million, Allrecipes.com acquisition costs of $2.5 million, vacated lease accrual of $1.6 million, and other net miscellaneous write-downs and accruals of $0.5 million partially offset by a $1.0 million reduction in contingent consideration payable

(b) Severance costs of $0.1 million and a vacated lease accrual of $1.1 million


 

Meredith Corporation and Subsidiaries

Table 3

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.













Period Ended June 30, 2011

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 

$  189,002


$             -


$   189,002


$   792,792


$             -


$   792,792

Circulation

65,328


-


65,328


261,458


-


261,458

All other

98,596


-


98,596


346,230


-


346,230

Total revenues

352,926


-


352,926


1,400,480


-


1,400,480

Operating expenses












Production, distribution, and editorial

140,465


-


140,465


556,780


-


556,780

Selling, general, and administrative

148,269


(187)

(a)

148,082


579,051


(187)

(a)

578,864

Depreciation and amortization

10,132


-


10,132


39,545


-


39,545

Total operating expenses

298,866


(187)


298,679


1,175,376


(187)


1,175,189

Income from operations

54,060


187


54,247


225,104


187


225,291

Interest income

3


-


3


31


-


31

Interest expense

(2,932)


-


(2,932)


(12,969)


-


(12,969)

Earnings before income taxes

51,131


187


51,318


212,166


187


212,353

Income taxes

(20,401)


2,358


(18,043)


(83,101)


2,358


(80,743)

Earnings from continuing operations

30,730


2,545


33,275


129,065


2,545


131,610

Loss from discontinued operations, net of taxes

(365)


(2,579)

(b)

(2,944)


(1,599)


(2,579)

(b)

(4,178)

Net earnings

$    30,365


$         (34)


$     30,331


$   127,466


$         (34)


$   127,432













Basic earnings per share












Earnings from continuing operations

$        0.67


$        0.06


$        0.73


$        2.83


$        0.06


$        2.89

Discontinued operations

-


(0.06)


(0.06)


(0.03)


(0.06)


(0.09)

Basic earnings per share

$        0.67


$              -


$        0.67


$        2.80


$              -


$        2.80

Basic average shares outstanding

45,339


45,339


45,339


45,497


45,497


45,497













Diluted earnings per share












Earnings from continuing operations

$        0.67


$        0.06


$        0.73


$        2.81


$        0.06


$        2.87

Discontinued operations

(0.01)


(0.06)


(0.07)


(0.03)


(0.06)


(0.09)

Diluted earnings per share

$        0.66


$              -


$        0.66


$        2.78


$              -


$        2.78

Diluted average shares outstanding

45,666


45,666


45,666


45,832


45,832


45,832














(a) Reduction in contingent consideration payable of $6.3 million and the reversal of previously accrued restructuring charges of $1.2 million partially offset by current year severance costs of $6.4 million and the write-down of certain identifiable intangibles of $0.9 million

(b) Write-down of subscription acquisition costs and art and manuscript inventory


 

 

Meredith Corporation and Subsidiaries 

Table 4

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.













Period Ended June 30, 2011

Three Months 


Twelve Months 


Excluding Special Items


Special Items


As Reported


Excluding
Special Items


Special Items


As Reported

(In thousands)












Revenues












National media group












Advertising

$   122,531


$             -


$   122,531


$     501,382


$              -


$     501,382

Circulation

65,328


-


65,328


261,458


-


261,458

Other revenues

87,279


-


87,279


315,382


-


315,382

Total national media group

275,138


-


275,138


1,078,222


-


1,078,222

Local media group












Non-political advertising

65,733


-


65,733


256,388


-


256,388

Political advertising

738


-


738


35,022


-


35,022

Other revenues

11,317


-


11,317


30,848


-


30,848

Total local media group

77,788


-


77,788


322,258


-


322,258

Total revenues

$   352,926


$              -


$   352,926


$  1,400,480


$              -


$  1,400,480













Operating profit












National media group

$     48,346


$         985

(a)

$     49,331


$     178,643


$          985

(a)

$     179,628

Local media group

19,254


40

(b)

19,294


87,812


40

(b)

87,852

Unallocated corporate 

(13,540)


(838)

(c)

(14,378)


(41,351)


(838)

(c)

(42,189)

Income from operations

$     54,060


$         187


$     54,247


$     225,104


$          187


$     225,291













Depreciation and amortization












National media group

$      3,481


$             -


$      3,481


$      13,516


$              -


$      13,516

Local media group

6,150


-


6,150


24,003


-


24,003

Unallocated corporate 

501


-


501


2,026


-


2,026

Total depreciation and amortization

$     10,132


$             -


$     10,132


$      39,545


$              -


$      39,545













EBITDA(1)












National media group

$     51,827


$         985

(a)

$     52,812


$     192,159


$          985

(a)

$     193,144

Local media group

25,404


40

(b)

25,444


111,815


40

(b)

111,855

Unallocated corporate 

(13,039)


(838)

(c)

(13,877)


(39,325)


(838)

(c)

(40,163)

Total EBITDA(1)

$     64,192


$         187


$     64,379


$     264,649


$          187


$     264,836













(1)EBITDA is earnings from continuing operations before interest, taxes, depreciation, and amortization.













(a) Reduction in contingent consideration payable of $6.3 million and the reversal of previously accrued restructuring charges of $0.9 million partially offset by current year severance costs of $5.4 million and the write-down of certain identifiable intangibles of $0.9 million

(b) Reversal of previously accrued restructuring charges partially offset by current year severance costs

(c) Severance costs













 

 

Meredith Corporation and Subsidiaries

Table 5

Supplemental Disclosures Regarding Non-GAAP Financial Measures











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.
















Three Months Ended June 30, 2012


Twelve Months Ended June 30, 2012


National
Media

Local
Media

Unallocated Corporate

Total


National
Media

Local
Media

Unallocated Corporate

Total

(In thousands)










Revenues

$     289,855

$         84,693

$               -

$     374,548


$    1,060,385

$       316,302

$                -

$    1,376,687











Operating profit

$       37,889

$         27,424

$      (10,923)

$       54,390


$       133,020

$         88,291

$     (35,540)

$       185,771

Depreciation and amortization

5,809

6,269

504

12,582


17,617

24,732

1,977

44,326

EBITDA

$       43,698

$         33,693

$      (10,419)

66,972


$       150,637

$       113,023

$     (33,563)

230,097

Less:










Depreciation and amortization




(12,582)





(44,326)

Net interest expense




(3,997)





(12,896)

Income taxes




(20,411)





(68,503)

Earnings from continuing operations




$       29,982





$       104,372











Segment EBITDA margin

15.1%

39.8%




14.2%

35.7%














Three Months Ended June 30, 2011


Twelve Months Ended June 30, 2011


National
Media

Local
Media

Unallocated Corporate

Total


National
Media

Local
Media

Unallocated Corporate

Total

(In thousands)










Revenues

$     275,138

$         77,788

$               -

$     352,926


$    1,078,222

$       322,258

$              -

$    1,400,480











Operating profit

$       49,331

$         19,294

$      (14,378)

$       54,247


$       179,628

$         87,852

$     (42,189)

$       225,291

Depreciation and amortization

3,481

6,150

501

10,132


13,516

24,003

2,026

39,545

EBITDA

$       52,812

$         25,444

$      (13,877)

64,379


$       193,144

$       111,855

$     (40,163)

264,836

Less:










Depreciation and amortization




(10,132)





(39,545)

Net interest expense




(2,929)





(12,938)

Income taxes




(18,043)





(80,743)

Earnings from continuing operations




$       33,275





$       131,610











Segment EBITDA margin

19.2%

32.7%




17.9%

34.7%













 

Meredith Corporation and Subsidiaries 

Table 6

Supplemental Disclosures Regarding Non-GAAP Financial Measures














Three Months 

Periods Ended June 30,

2012


2011


Change







National Media Advertising Revenues






Excluding recent acquisitions (1)

$    118,712


$    122,531


(3)%

Recent acquisitions (1)

18,987


-



Total 

$    137,699


$    122,531


12 %













National Media Circulation Revenues






Excluding recent acquisitions (1)

$     68,714


$     65,328


5 %

Recent acquisitions (1)

9,718


-



Total 

$     78,432


$     65,328


20 %













(1) Recent acquisitions represent EveryDay with Rachael Ray, FamilyFun, and Allrecipes.com





















Meredith Corporation and Subsidiaries 

Table 7

Supplemental Disclosures Regarding Non-GAAP Financial Measures














Twelve Months 

Periods Ended June 30,

2012


2011


Change







National Media Operating Expenses






Excluding recent acquisitions (1)

$    875,184


$    898,594


(3)%

Recent acquisitions (1)

52,181


-



Total 

$    927,365


$    898,594


3 %













(1) Recent acquisitions represent EveryDay with Rachael Ray, FamilyFun, and Allrecipes.com









 

SOURCE Meredith Corporation

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