DES MOINES, Iowa, July 30 /PRNewswire-FirstCall/ -- Meredith Corporation
(NYSE: MDP), the leading media and marketing company serving American women,
today reported fiscal 2008 earnings per share of $2.83, including a special
charge of $0.34. Excluding the special charge, Meredith's earnings per share
were $3.17, in-line with prior company estimates. Fiscal 2007 earnings per
share were $3.31. Revenues in fiscal 2008 and fiscal 2007 were $1.6 billion.
Fourth quarter fiscal 2008 earnings per share were $0.41. Excluding the
special charge, earnings per share were $0.76. Fiscal 2007 fourth-quarter
earnings per share were $1.05. Fiscal 2008 fourth-quarter revenues were $385
million, compared to $428 million in the prior-year quarter.
Meredith recorded an after-tax special charge of $16 million in the
fourth fiscal quarter, related primarily to the further repositioning of its
book publishing business and selected reductions in force. Additional
information on the special charge is available in Tables 1 and 2, and in
Meredith's press release dated June 5, 2008.
After strong performance in the first half of fiscal 2008, the economic
slowdown impacted Meredith's full-year performance, most notably in the fourth
quarter. Meredith experienced lower advertising demand; a soft retail
marketplace resulting in weaker sales and higher-than-expected returns in its
book operation; and higher input costs, particularly for paper.
"We believe current economic trends are cyclical in nature and not
structural as they pertain to our industry or Meredith in particular," said
Stephen M. Lacy, Meredith's President and CEO, citing recently released data
detailing audience measurement gains for the magazine and television
industries. "We possess great brands, sound growth strategies, strong
management and a committed and talented workforce. I'm confident we will
emerge from this cycle in an even stronger and more competitive position."
Meredith is executing a three-pronged performance improvement plan to
address the current environment. Meredith's strategies include:
1. Special sales incentives and new marketing programs to maximize market
share in its core publishing and broadcasting businesses;
2. Aggressive expense management, including tight control of labor and
vendor costs; and
3. Revenue diversification initiatives to accelerate growth of new revenue
streams, many of which are not dependent on traditional advertising.
For example, in fiscal 2008 Meredith:
- Acquired two leading-edge companies -- Big Communications and
Directive -- that further expand the capabilities of Meredith
Integrated Marketing. Big Communications is a leader in business-
to-business healthcare marketing. Directive possesses expertise in
the sought-after field of database marketing.
- Expanded its brand licensing activities through an agreement with
Wal-Mart for a line of more than 500 home products that will be
available in Wal-Mart stores across the country beginning this fall.
Meredith also entered into a licensing agreement with Realogy for a
nationwide real estate franchise system that launched this month,
and expanded its successful licensing agreement with Universal
Furniture. All three programs leverage the tremendous power and
versatility of the Better Homes and Gardens brand.
- Invested in new tools and platforms across its 40+ Web sites,
including the launch of the Parents.com super-portal.
- Broadened the reach of Meredith Video Solutions -- its in-house
video creation unit -- by distributing the Better daily lifestyle
television show. Meredith also created a Parents-branded video on
demand channel for Comcast and launched Parents.tv, a broadband
- Renegotiated several retransmission agreements for Meredith
television stations, increasing fees 50 percent over the prior year.
Additionally, Meredith returned capital to shareholders in fiscal 2008 by
repurchasing 3.2 million shares, nearly triple the amount repurchased in
fiscal 2007. Meredith also increased its quarterly dividend rate by 16
percent -- its 15th consecutive annual dividend increase.
Fiscal 2008 Publishing operating profit was $190 million. Excluding the
special charge, operating profit was $215 million. Fiscal 2007 operating
profit was $216 million. Total revenues were $1.3 billion and advertising
revenues were $641 million, both comparable with the prior fiscal year.
Fourth quarter operating profit was $26 million. Excluding the special
charge, operating profit was $50 million. Fiscal 2007 operating profit was
$70 million. Total revenues were $306 million and advertising revenues were
$153 million, compared to $345 million and $178 million, respectively, in
While overall fiscal 2008 Publishing advertising performance was
comparable to the prior fiscal year, there was a marked contrast between the
first half, when Meredith posted strong 11 percent growth, and weaker results
in the second half, particularly in the fourth quarter.
This shift was attributed to the challenging economic environment faced by
companies that operate in Meredith's largest advertising categories - food,
prescription and non-prescription drugs, and home. Combined, advertising
pages in these categories declined more than 20 percent, accounting for about
75 percent of total fourth-quarter advertising page declines.
"These categories are staples of the American economy, and have
consistently outpaced advertising industry growth rates," Lacy said, noting
the 15 percent overall gain for Meredith in the food category in fiscal 2008.
"We're confident they will serve us well in the long-term. In addition, we
increased net advertising revenue per page in fiscal 2008, due to a very
detailed and aggressive pricing strategy."
Meredith's growing consumer connection was confirmed in the Spring 2008
Mediamark Research and Intelligence report, which is heavily used by
advertisers. Meredith titles increased their total audience by more than 4
percent. And eight of the 10 Meredith magazines measured gained total
audience, including Better Homes and Gardens, Ladies' Home Journal and
Meredith's circulation profit contribution and related margin in its
subscription activities increased in both fiscal 2008 and the fourth quarter,
reflecting the strength of Meredith's consumer appeal. Circulation revenues
declined, as expected, due primarily to the ongoing transition of Parents,
Family Circle and Fitness magazines away from third-party sources to
Meredith's more profitable direct-to-publisher model.
Meredith Integrated Marketing delivered another outstanding year as
operating profit rose almost 75 percent to $30 million and revenues rose
nearly 50 percent to $156 million. Results included increased contributions
from three acquisitions in the last two years: Genex, New Media Strategies and
Directive. On a comparable basis, Meredith Integrated Marketing revenues rose
25 percent and operating profit rose 30 percent, due to continued growth in
custom publishing activities and strong performance from online agency O'Grady
Myers, acquired in April 2006.
Publishing's retail book operations experienced softer retail sales and
higher-than-expected returns during fiscal 2008. Meredith has taken a number
of actions to reposition its book operations, including focusing on titles
with the Better Homes and Gardens imprint and certain other licensed brands.
These steps are expected to improve financial performance going forward.
Fiscal 2008 Broadcasting operating profit was $78 million. Excluding the
special charge, operating profit was $79 million. Fiscal 2007 operating
profit was $107 million, which included $33 million in net political
advertising revenues. EBITDA was $105 million, compared to $131 million in
fiscal 2007. Revenues were $319 million, compared to $348 million in fiscal
For the fourth quarter, operating profit was $18 million. Excluding the
special charge, operating profit was $19 million. Fiscal 2007 operating profit
was $28 million. EBITDA was $26 million, compared to $34 million in fiscal
2007. Revenues were $79 million, compared to $84 million in fiscal 2007.
In the first half of the fiscal year, non-political advertising revenues
increased 4 percent, driven by growth in online advertising and the categories
of professional services and telecommunications. In the second half, a
decline in automotive advertising, along with weaker performance in retail and
movies, led to a decline in non-political advertising revenues.
"In fiscal 2008 we increased our emphasis on developing non-traditional
sources of revenues such as unique sales initiatives, our station Web sites,
retransmission fees and our video creation business," Lacy said.
For example, Broadcasting online and video-related revenues increased more
than 80 percent in fiscal 2008. Average unique visitors increased more than
300 percent and page views doubled. More than 1.3 million videos were
streamed each month during the year.
Meredith Video Solutions is growing rapidly. The Better show, which
features content inspired by Meredith's publishing brands, will be carried in
more than 35 markets beginning this fall. Additionally, Comcast video on
demand customers downloaded more than 600,000 Parents TV videos in fiscal
OTHER FINANCIAL INFORMATION
Meredith generated more than $150 million in free cash flow during fiscal
2008, including nearly $20 million in the fourth quarter. Meredith
repurchased approximately 3.2 million shares in fiscal 2008, nearly triple the
1.1 million shares repurchased in fiscal 2007. Meredith has 2.7 million
shares remaining under current share repurchase authorizations.
Meredith increased its quarterly dividend rate 16 percent to 21-1/2 cents
per share in January. Meredith has paid a dividend for 61 consecutive years
and has increased its dividend for 15 consecutive years.
Despite significant increases in paper and postage costs and the special
charge, Meredith limited its increase in expenses to just 1 percent in fiscal
2008, reflecting disciplined expense management. Unallocated corporate
expenses decreased during the year, primarily due to lower employee benefit
costs and management incentives accruals.
Total debt was $485 million and the weighted average interest rate was
approximately 4.7 percent as of June 30, 2008. Meredith's debt-to-EBITDA ratio
is a conservative 1.5-to-1.
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
consolidated statements of earnings.
Many of Meredith's largest advertisers continue to face a challenging
economic environment and the resulting advertising weakness -- along with
increased paper costs -- will impact the company's performance at least
through the first half of fiscal 2009.
Currently, fiscal 2009 first-quarter Publishing advertising revenues are
down in the high-teens compared to the first quarter of fiscal 2008, when
Meredith posted 11 percent growth in Publishing advertising revenues.
Broadcasting advertising pacings are currently down in the mid-teens.
Meredith expects approximately $20 to $25 million in political advertising
revenues at its television stations in fiscal 2009, with the majority coming
in the second fiscal quarter.
Meredith expects fiscal 2009 paper prices will average approximately 25
percent higher than fiscal 2008. Meredith expects its average tax rate will
be approximately 43.5 percent in the first quarter, and 39.5 percent for full
Currently, Meredith expects full-year fiscal 2009 earnings per share to be
in the $2.50 to $3.00 range, and first quarter earnings per share to be in the
$0.40 to $0.45 range.
A number of uncertainties remain that may affect Meredith's outlook as
stated in this press release for fiscal 2009 and the first quarter. These
include overall advertising volatility; the amount of political advertising
revenues generated at its broadcast television stations, particularly in the
first and second quarters; the performance of Meredith's retail businesses;
and paper prices and postal rates. These and other uncertainties are
referenced below under "Safe Harbor" and in certain SEC filings.
CONFERENCE CALL WEBCAST
Meredith will host a conference call on July 30, 2008, at 11 a.m. EDT (10
a.m. CDT) to discuss fiscal 2008 results. A live webcast will be accessible
to the public on http://www.meredith.com, and a replay will be available for
one week after the call. A transcript will be available within 48 hours
following the call on http://www.meredith.com.
RATIONALE FOR USE AND ACCESS TO NON-GAAP MEASURES
Management uses and presents GAAP and non-GAAP results to evaluate and
communicate Meredith's performance. Non-GAAP measures should not be construed
as alternatives to GAAP measures. EBITDA and free cash flow are common
supplemental measures of performance used by investors and financial analysts.
Management believes that EBITDA and free cash flow provide additional
analytical tools to clarify Meredith's results from core operations and
delineate underlying trends. Meredith does not use EBITDA or free cash flow as
a measure of liquidity or funds available for management's discretionary use
as they include certain contractual and non-discretionary expenditures.
Results excluding the special charge recorded in the fourth quarter of
fiscal 2008 are also supplemental non-GAAP financial measures. Management
believes the special charge is not reflective of Meredith's ongoing business
activities. While results excluding the special charge are not a substitute
for reported earnings results under GAAP, management believes this information
is useful as an aid in better understanding Meredith's current performance,
performance trends and financial condition. Reconciliations of non-GAAP to
GAAP measures are included in the attached tables. The attached consolidated
financial statements and reconciliation tables will be made available at
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 Meredith's operations. Statements
in this announcement that are forward-looking include, but are not limited to,
the statements regarding broadcasting pacings and publishing advertising
revenues, along with Meredith's earnings per share outlook. Actual results may
differ materially from those currently anticipated. Factors that could
adversely affect future results include, but are not limited to, downturns in
national and/or local economies; a softening of the domestic advertising
market; world, national or local events that could disrupt broadcast
television; increased consolidation among major advertisers or other events
depressing the level of advertising spending; the unexpected loss or
insolvency of one or more major clients; the integration of acquired
businesses; changes in consumer reading, purchasing and/or television viewing
patterns; increases in paper, postage, printing or syndicated programming
costs; changes in television network affiliation agreements; technological
developments affecting products or methods of distribution; changes in
government regulations affecting Meredith's industries; unexpected changes in
interest rates; and the consequences of acquisitions and/or dispositions.
Meredith 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: http://www.meredith.com) is the leading
media and marketing company serving American women. Meredith combines well-
known national brands -- including Better Homes and Gardens, Parents, Ladies'
Home Journal, Family Circle, American Baby, Fitness and More -- with local
television brands in fast growing markets. Meredith is the industry leader in
creating content in key consumer interest areas such as home, family, health
and wellness and self-development. Meredith then uses multiple distribution
platforms -- including print, television, online, mobile and video -- to give
consumers content they desire and to deliver the messages of its marketing
partners. Additionally, Meredith uses its many assets to create powerful
custom marketing solutions for many of the nation's top brands and companies.
The goals of these programs are to increase consumer loyalty and produce
repeated consumer interaction. In the last two years, Meredith has
significantly added to its capabilities in this area through the acquisition
of cutting-edge companies in areas such as online, word-of-mouth and database
marketing. Meredith employs approximately 3,500 people throughout the United
States. Meredith's 2008 annual revenues were $1.6 billion.
Shareholder/Financial Analyst Contact: M
SOURCE Meredith Corporation