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Meredith Delivers Over 20 Percent Growth in Fiscal 2011 Earnings Per Share


Increases operating profit margin to 16 percent and cash flow by 12 percent
Generates record revenue performance in Integrated Marketing, Brand Licensing and Political Advertising

DES MOINES, Iowa, July 28, 2011 /PRNewswire via COMTEX/ -- Meredith Corporation (NYSE: MDP;www.meredith.com), the leading media and marketing company serving American women, today reported that fiscal 2011 earnings per share increased 22 percent to $2.78, compared to $2.28 in the prior-year period. Excluding special items in both periods, fiscal 2011 earnings per share from continuing operations increased 24 percent to $2.81, compared to $2.27 in the prior-year period. Total Company revenues rose to $1.4 billion and advertising revenues increased to $793 million. In addition, Meredith's cash flow from operations grew 12 percent to $215 million.

"Fiscal 2011 was a year of revenue gains and strong growth in profit and cash flow generation," said Meredith Chairman and Chief Executive Officer Stephen M. Lacy. "We delivered record revenues at Meredith Integrated Marketing and Brand Licensing, and also set record highs for political and digital advertising. We strengthened our connection to consumers by launching new tablet editions and mobile apps, along with creative enhancements to existing products. Plus, we returned nearly 40 percent of our free cash flow to shareholders and reduced our debt by a third."

Fiscal 2011 results included the following financial highlights:

  • Operating profit grew 22 percent and operating profit margin increased 270 basis points. These gains were primarily driven by higher advertising revenues and rates, along with a 2 percent decrease in operating expenses;
  • Local Media Group political advertising revenues were a record $35 million, and non-political advertising revenues increased 4 percent, the second consecutive year of growth;
  • Meredith Integrated Marketing and Brand Licensing each delivered record revenues along with strong profit growth; and
  • Meredith returned nearly $70 million to shareholders through dividends and its share repurchase program, a 45 percent increase over the prior-year period.

Fiscal 2011 fourth quarter earnings per share were $0.66, compared to $0.73 in the prior-year period. Excluding special items, fiscal 2011 fourth quarter earnings per share from continuing operations were $0.67, compared to $0.71. Fiscal 2011 fourth quarter revenues were $353 million, compared to $364 million.

In the fourth quarter of fiscal 2011, Meredith recorded special items related to the closure of the ReadyMade brand, selected workforce reductions, and a favorable adjustment related to the estimated fair value of the contingent consideration related to an acquisition. The net effect of these special items was a nominal charge of $34,000. Information on the special items recorded in fiscal 2011 and fiscal 2010 is available in Tables 1-4 of this press release. Results from ReadyMade have been reclassified to discontinued operations.

Meredith continues to execute a series of well-defined strategic initiatives to accelerate profit and free cash flow growth. These include:

  • Increasing its already strong consumer connection - Enhancing its leadership position with the 75 million American women Meredith reaches every month remains a top priority. In fiscal 2011 Meredith redesigned several of its leading magazines, and has more planned for fiscal 2012. The Company also increased unique visitors and page views across its 60 websites by approximately 10 percent and 20 percent, respectively, and increased viewership for its television stations across the country.
  • Strengthening its core magazine and television businesses - Advertising rates grew in both businesses from the prior year, and Meredith completed a number of initiatives to improve efficiencies and reduce costs now and going forward. As a result, operating profit margins improved in both the National and Local media groups.
  • Aggressively expanding digital activities - Meredith relaunched key websites, including BHG.com and Recipe.com in the fourth quarter of fiscal 2011, and in fiscal 2012 will continue rapid expansion of its mobile apps and launch more interactive tablet editions of its consumer brands. The percentage of Meredith's revenues generated from digital sources continues to grow, reaching an all-time high of approximately 10 percent in fiscal 2011.
  • Extending key brands to new products and services - The highly successful Better Homes and Gardens brand licensing program continues to grow at Walmart stores, reaching 3,000 SKUs, a six-fold increase since the program launched less than three years ago. Fiscal 2012 plans include emphasizing recent product extensions including paint, bath dĂ©cor, and ceiling fans and lighting. Additionally, the Better syndicated daily lifestyle television show created by Meredith Video Studios will broaden its reach to more than 80 percent of American households this fall by adding New York City, the nation's largest market.
  • Significantly growing Meredith Integrated Marketing - Meredith's objective is to grow Meredith Integrated Marketing (MIM) into a third major business unit by the end of fiscal 2014. Cross-selling new services to existing clients and winning new business are the pillars of MIM's growth strategy. In fiscal 2011, MIM made major progress toward this goal by securing key contact renewals with clients such as Kraft and Chrysler, and significantly expanding programs with Lowe's and Ford.
  • Making select acquisitions and investments to increase scale and capabilities - Meredith positioned itself for future growth by entering into an agreement with the Turner Broadcasting System to run the day-to-day operations of its Peachtree TV (WPCH-TV) station, extending Meredith's presence in the attractive Atlanta market. It also completed the acquisitions of multi-channel food brand EatingWell; women's lifestyle digital brand Real Girls Media; and mobile marketing agency The Hyperfactory. Each of these opportunities possesses significant upside potential.
  • Increasing cash flow and return a meaningful portion to shareholders - Over the last decade, Meredith has generated nearly $2 billion in cash flow from operations. Over that time, Meredith has returned about half to shareholders through dividends and share repurchases.

"We have a clear plan in place and are executing against a number of research-based initiatives we believe will accelerate revenue growth and increase operating profit margins and cash flow over time," Lacy said. "These strategies extend across all of our businesses, have significant digital components, and capitalize on the broad content creation and marketing capabilities we possess. We continue to look to invest in new capabilities to further maximizepotential growth opportunities."

OPERATING DETAIL

LOCAL MEDIA GROUP

Fiscal 2011 Local Media Group operating profit grew more than 65 percent from the prior year to $88 million, and revenues were $322 million, up 14 percent. Both marked the Local Media Group's best performance since pre-recession fiscal 2007. EBITDA margin increased to 35 percent.

Looking more closely at fiscal 2011, Meredith again outperformed the industry as:

  • Non-political advertising revenues grew 4 percent to $256 million.
  • Eight of Meredith's 10 largest advertising categories grew revenues, led by Automotive, Retail and Media.
  • Political advertising revenues were a record $35 million, led by strong spending at Meredith stations in Hartford, Las Vegas, Portland and Kansas City.

"For the second consecutive year, strong advertising revenue performance was broad-based across our largest categories and markets, once again proving local television's unique power to drive consumers to retail," said Lacy. "We were able to secure higher ad rates and use our strong news ratings to drive political advertising."

Meredith delivered strong ratings in fiscal 2011. Of note:

  • Meredith's CBS affiliates in Hartford and Flint/Saginaw continue to lead their markets. In Hartford, the local Better Connecticut daily show grew considerably at 3 p.m.
  • In morning news, Meredith's CBS affiliates in Hartford and Flint/Saginaw and its FOX affiliate in Las Vegas were No. 1 in their markets. News viewership at Meredith's CBS affiliates in Atlanta and Kansas City also grew.
  • In late night news, Meredith's stations in Portland, Hartford, Nashville, Kansas City, Las Vegas, and Flint/Saginaw were either No. 1 or 2 in their markets.

Fiscal 2011 fourth quarter Local Media Group operating profit was $19 million and revenues were $78 million. This compares to fiscal 2010 fourth quarter operating profit of $21 million and revenues of $77 million. Meredith recorded $3.2 million less in political advertising in the fourth quarter of fiscal 2011 compared to fiscal 2010.

Fiscal 2011 fourth quarter non-political advertising revenues grew 3 percent to $66 million. Results were impacted by the natural disasters in Japan and the related shortage of newly manufactured Japanese automobiles available for sale.

Looking ahead, the Local Media Group is executing a series of strategic growth initiatives, including continued emphasis on its largest markets with the most upside potential such as Atlanta and Phoenix; redesigns of its station websites; creation of a number of new mobile apps; and expansion of Meredith Video Studios and the reach of its Better show.

NATIONAL MEDIA GROUP

Fiscal 2011 National Media Group operating profit margin improved to 17 percent as operating profit grew 6 percent from the prior year to $180 million. The National Media Group delivered its best operating profit and margin performance since pre-recession fiscal 2008. Revenues were $1.08 billion, compared to $1.10 billion in fiscal 2010. Advertising revenues were $501 million, compared to $525 million in the prior year. Average advertising revenue per magazine page grew more than 5 percent.

Meredith's national media brands once again enhanced their connections to individual consumers across media platforms in fiscal 2011. Examples included:

  • Readership of Meredith magazines increased to 111 million, according to the most recent data from Mediamark Research and Intelligence.
  • Unique visitors and page views to Meredith's consumer websites each grew by double digits, buoyed by creative enhancements and the acquisition of the Real Girls Media Network.
  • Meredith launched tablet editions of many of its popular brands - including Better Homes and Gardens, Parents, Family Circle, Fitness and More - across the leading electronic tablet formats, including the Apple iPad and Barnes & Noble's Nook. Additionally, Meredith introduced a variety of mobile apps for smartphones that are increasing consumer interaction with its brands.

Fiscal 2011 fourth quarter National Media Group operating profit increased 5 percent to $49 million. Revenues were $275 million, compared to $287 million in the prior year. Advertising revenues were $123 million, compared to $134 million in the prior year. Both Meredith Integrated Marketing and Brand Licensing increased revenues and operating profit in the fourth quarter.

"While I am encouraged by the very strong connections our brands continue to have with consumers, our national advertising customers have been challenged by high commodity and fuel costs and a weak economy which are impacting their advertising and marketing budgets," Lacy said. "In response, we are focusing on content, media platforms and advertising categories that are larger and where growth prospects are better."

To improve performance, the National Media Group is executing a series of strategic initiatives including:

  • Proving the effectiveness of print advertising. Meredith recently launched a new research-driven product that provides marketers a guaranteed return on their advertising investment in Meredith magazines. An industry first, the Meredith Engagement Dividend© uses The Nielsen Company's highly regarded Homescan data and Meredith's 85 million consumer database to prove increased product sales at retail as a result of print advertising in Meredith brands.
  • Expanding the food category. Already the National Media Group's largest category, it has proven to be a leading growth category over time. To bolster its food presence, Meredith recently acquired the multiplatform EatingWell Media Group and launched Recipe.com, which combines trusted recipes with instant in-store savings and manufacturer's coupons.
  • Diversifying advertising revenue streams. This strategy includes increased focus on digital and multi-platform advertising programs, as well as the fast growing retail, beauty and health categories.
  • Accelerating online consumer marketing initiatives to connect with younger audiences and increase circulation profit by moving more subscription acquisition, renewal and customer service activities online.
  • Increasing revenues from sources other than advertising. This includes continuing to grow Meredith Integrated Marketing and Brand Licensing.

OTHER FINANCIAL INFORMATION

In fiscal 2011, Meredith grew free cash flow 11 percent to $185 million from $167 million. During the year, Meredith raised its dividend by 11 percent, its 18th consecutive annual increase, and repurchased approximately 770,000 shares. At June 30, 2011, approximately 550,000 shares remained under current repurchase authorization.

Additionally during fiscal 2011, Meredith reduced its debt by $105 million to $195 million. The weighted average interest rate on Meredith's debt was 4.9 percent, and its debt-to-EBITDA ratio was less than 1 to 1 at June 30, 2011.

Unallocated corporate expenses grew by approximately $4 million in fiscal 2011, due in part to higher investment spending on Next Issue Media and related Tablet development.

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 2011 and fiscal 2010 is available in Tables 1-4 and in certain previously communicated press releases.

OUTLOOK

Looking at fiscal 2012, Meredith expects continued improvements in National Media Group advertising revenues, with moderating declines in the first half of the fiscal year turning to modest growth in the second half. With two of three issues closed, fiscal 2012 first quarter magazine advertising revenues are expected to be down in the mid-single digits, compared to the prior-year period.

In Local Media, Meredith will be cycling against $34 million of net political advertising revenues recorded in the first half of fiscal 2011. With nine weeks left in the first quarter of fiscal 2012, non-political television advertising pacings are down in the low-single digits, compared to the prior-year period.

Meredith currently expects fiscal 2012 first quarter earnings per share to range from $0.45 to $0.50 and full-year fiscal 2012 earnings per share to range from $2.40 to $2.80.

CONFERENCE CALL WEBCAST

Meredith will host a conference call on July 28, 2011, at 11 a.m. EDT to discuss fiscal 2011 results. A live webcast will be accessible to the public on the Company's website, http://www.meredith.com/, and a replay will be available for one week. A transcript will be available within 48 hours of the call at http://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 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 the Company'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 because they include certain contractual and non-discretionary expenditures.

Results excluding special items recorded in fiscal 2011 and fiscal 2010 are also supplemental non-GAAP financial measures. Management believes these items are not reflective of Meredith's ongoing business activities. While results excluding special items 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 included in the attached tables. The attached condensed consolidated financial statements and reconciliation tables will be made available at http://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 and investment spending, along with the Company's revenue and earnings per share outlook for the first fiscal quarter and full year fiscal 2012.

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; http://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, Ladies' Home Journal, Fitness, More and American Baby - 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, health and wellness and self-development. Meredith uses multiple distribution platforms - including print, television, online, mobile, tablets, and video - to give consumers content they desire and to deliver the messages of its advertising and marketing partners. According to the Advertising Industry Reports (AIR) survey of over 1,500 agency and marketing professionals, Meredith is the nation's "Highest Rated Media Company." Additionally, Meredith uses its many assets to create powerful custom marketing solutions for many of the nation's top brands and companies. Meredith has significantly added to its marketing solution capabilities in recent years through the acquisition of cutting-edge companies in areas such as digital, mobile, word-of-mouth, social and database marketing.

Meredith Corporation and Subsidiaries








Consolidated Statements of Earnings (Unaudited)

















Three Months


Twelve Months

Period Ended June 30,

2011


2010


2011


2010

(In thousands except per share data)








Revenues








Advertising

$ 189,002


$ 201,976


$ 792,792


$ 779,359

Circulation

65,328


70,248


261,458


279,636

All other

98,596


91,835


346,230


323,836

Total revenues

352,926


364,059


1,400,480


1,382,831

Operating expenses








Production, distribution, and editorial

139,572


135,789


554,101


572,292

Selling, general, and administrative

148,975


160,002


581,543


584,528

Depreciation and amortization

10,132


10,362


39,545


40,889

Total operating expenses

298,679


306,153


1,175,189


1,197,709

Earnings from operations

54,247


57,906


225,291


185,122

Interest income

3


26


31


51

Interest expense

(2,932)


(3,847)


(12,969)


(18,584)

Earnings from continuing operations before income taxes

51,318


54,085


212,353


166,589

Income taxes

(18,043)


(20,238)


(80,743)


(60,955)

Earnings from continuing operations

33,275


33,847


131,610


105,634

Loss from discontinued operations, net of taxes

(2,944)


(478)


(4,178)


(1,671)

Net earnings

$ 30,331


$ 33,369


$ 127,432


$ 103,963









Basic earnings per share








Earnings from continuing operations

$ 0.73


$ 0.75


$ 2.89


$ 2.34

Discontinued operations

(0.06)


(0.01)


(0.09)


(0.04)

Basic earnings per share

$ 0.67


$ 0.74


$ 2.80


$ 2.30

Basic average shares outstanding

45,339


45,381


45,497


45,289









Diluted earnings per share








Earnings from continuing operations

$ 0.73


$ 0.74


$ 2.87


$ 2.32

Discontinued operations

(0.07)


(0.01)


(0.09)


(0.04)

Diluted earnings per share

$ 0.66


$ 0.73


$ 2.78


$ 2.28

Diluted average shares outstanding

45,666


45,774


45,832


45,544









Dividends paid per share

$ 0.255


$ 0.230


$ 0.970


$ 0.910

Meredith Corporation and Subsidiaries









Segment Information (Unaudited)





















Three Months


Twelve Months

Period Ended June 30,

2011


2010


2011


2010

(In thousands)








Revenues








National media group








Advertising

$ 122,531


$ 134,114


$ 501,382


$ 524,613

Circulation

65,328


70,248


261,458


279,636

Other revenues

87,279


82,584


315,382


296,220


Total national media group

275,138


286,946


1,078,222


1,100,469

Local media group








Non-political advertising

65,733


63,969


256,388


245,501

Political advertising

738


3,893


35,022


9,245

Other revenues

11,317


9,251


30,848


27,616


Total local media group

77,788


77,113


322,258


282,362

Total revenues

$ 352,926


$ 364,059


$ 1,400,480


$ 1,382,831










Operating profit








National media group

$ 49,331


$ 46,974


$ 179,628


$ 170,161

Local media group

19,294


20,619


87,852


52,910

Unallocated corporate

(14,378)


(9,687)


(42,189)


(37,949)

Income from operations

$ 54,247


$ 57,906


$ 225,291


$ 185,122










Depreciation and amortization








National media group

$ 3,481


$ 3,560


$ 13,516


$ 14,397

Local media group

6,150


6,257


24,003


24,417

Unallocated corporate

501


545


2,026


2,075

Total depreciation and amortization

$ 10,132


$ 10,362


$ 39,545


$ 40,889










EBITDA1








National media group

$ 52,812


$ 50,534


$ 193,144


$ 184,558

Local media group

25,444


26,876


111,855


77,327

Unallocated corporate

(13,877)


(9,142)


(40,163)


(35,874)

Total EBITDA1

$ 64,379


$ 68,268


$ 264,836


$ 226,011











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

2011


2010

(In thousands)




Current assets




Cash and cash equivalents

$ 27,721


$ 48,574

Accounts receivable, net

212,365


223,630

Inventories

21,529


26,807

Current portion of subscription acquisition costs

54,581


57,917

Current portion of broadcast rights

3,974


5,423

Other current assets

13,568


19,076

Total current assets

333,738


381,427

Property, plant, and equipment

459,257


450,966

Less accumulated depreciation

(272,819)


(263,964)

Net property, plant, and equipment

186,438


187,002

Subscription acquisition costs

54,286


55,228

Broadcast rights

1,292


2,977

Other assets

66,940


59,138

Intangible assets, net

545,101


552,210

Goodwill

525,034


489,334

Total assets

$ 1,712,829


$ 1,727,316





Liabilities and Shareholders' Equity




Current liabilities




Current portion of long-term debt

$ 50,000


$ 50,000

Current portion of long-term broadcast rights payable

8,548


9,892

Accounts payable

82,878


109,897

Accrued expenses and other liabilities

115,735


109,225

Current portion of unearned subscription revenues

151,831


159,292

Total current liabilities

408,992


438,306

Long-term debt

145,000


250,000

Long-term broadcast rights payable

5,431


8,961

Unearned subscription revenues

120,024


130,699

Deferred income taxes

160,709


114,240

Other noncurrent liabilities

97,688


96,765

Total liabilities

937,844


1,038,971

Shareholders' equity




Common stock

36,282


36,329

Class B stock

8,776


9,086

Additional paid-in capital

58,274


66,311

Retained earnings

687,816


604,624

Accumulated other comprehensive loss

(16,163)


(28,005)

Total shareholders' equity

774,985


688,345

Total liabilities and shareholders' equity

$ 1,712,829


$ 1,727,316

Meredith Corporation and Subsidiaries




Condensed Consolidated Statements of Cash Flows (Unaudited)












Twelve Months Ended June 30,

2011


2010

(In thousands)




Net cash provided by operating activities

$ 214,535


$ 191,651





Cash flows from investing activities




Acquisitions of businesses

(40,141)


(27,505)

Additions to property, plant, and equipment

(29,906)


(24,721)

Net cash used in investing activities

(70,047)


(52,226)





Cash flows from financing activities




Proceeds from issuance of long-term debt

62,500


160,000

Repayments of long-term debt

(167,500)


(240,000)

Purchases of Company stock

(24,896)


(6,274)

Dividends paid

(44,240)


(41,345)

Proceeds from common stock issued

8,676


9,573

Excess tax benefits from share-based payments

509


606

Other

(390)


(1,321)

Net cash used in financing activities

(165,341)


(118,761)

Net increase (decrease) in cash and cash equivalents

(20,853)


20,664

Cash and cash equivalents at beginning of year

48,574


27,910

Cash and cash equivalents at end of year

$ 27,721


$ 48,574

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, 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

139,572


-


139,572


554,101


-


554,101

Selling, general, and administrative

149,162


(187)

(a)

148,975


581,730


(187)

(a)

581,543

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 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, 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













EBITDA1












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 EBITDA1

$ 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 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, 2010

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

$ 201,976


$ -


$ 201,976


$ 779,359


$ -


$ 779,359

Circulation

70,248


-


70,248


279,636


-


279,636

All other

91,835


-


91,835


323,836


-


323,836

Total revenues

364,059


-


364,059


1,382,831


-


1,382,831

Operating expenses












Production, distribution, and editorial

135,789


-


135,789


570,845


1,447

(a)

572,292

Selling, general, and administrative

159,114


888

(b)

160,002


579,255


5,273

(c)

584,528

Depreciation and amortization

10,362


-


10,362


40,889


-


40,889

Total operating expenses

305,265


888


306,153


1,190,989


6,720


1,197,709

Income from operations

58,794


(888)


57,906


191,842


(6,720)


185,122

Interest income

26


-


26


51


-


51

Interest expense

(3,847)


-


(3,847)


(18,584)


-


(18,584)

Earnings before income taxes

54,973


(888)


54,085


173,309


(6,720)


166,589

Income taxes

(22,261)


2,023

(d)

(20,238)


(70,146)


9,191

(e)

(60,955)

Earnings from continuing operations

32,712


1,135


33,847


103,163


2,471


105,634

Loss from discontinued operations, net of taxes

(478)


-


(478)


(1,671)


-


(1,671)

Net earnings

$ 32,234


$ 1,135


$ 33,369


$ 101,492


$ 2,471


$ 103,963













Basic earnings per share












Earnings from continuing operations

$ 0.72


$ 0.03


$ 0.75


$ 2.28


$ 0.06


$ 2.34

Discontinued operations

(0.01)


-


(0.01)


(0.04)


-


(0.04)

Basic earnings per share

$ 0.71


$ 0.03


$ 0.74


$ 2.24


$ 0.06


$ 2.30

Basic average shares outstanding

45,381


45,381


45,381


45,289


45,289


45,289













Diluted earnings per share












Earnings from continuing operations

$ 0.71


$ 0.03


$ 0.74


$ 2.27


$ 0.05


$ 2.32

Discontinued operations

(0.01)


-


(0.01)


(0.04)


-


(0.04)

Diluted earnings per share

$ 0.70


$ 0.03


$ 0.73


$ 2.23


$ 0.05


$ 2.28

Diluted average shares outstanding

45,774


45,774


45,774


45,544


45,544


45,544













(a) Write-down of art and manuscript inventory resulting from the repositioning of certain national media group operations

(b) Reversal of restructuring charges for severance costs offset by the impairment of an investment

(c) Net severance costs, write-down of subscription acquisition costs, and the impairment of an investment offset by the reversal of restructuring charges

(d) Resolution of tax contingencies net of additional tax expense related to the reversal of restructuring charges

(e) Tax benefit as a result of state and local legislation, the resolution of tax contingencies, and the tax benefit of net restructuring charges

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, 2010

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

$ 134,114


$ -


$ 134,114


$ 524,613


$ -


$ 524,613

Circulation

70,248


-


70,248


279,636


-


279,636

Other revenues

82,584


-


82,584


296,220


-


296,220

Total national media group

286,946


-


286,946


1,100,469


-


1,100,469

Local media group












Non-political advertising

63,969


-


63,969


245,501


-


245,501

Political advertising

3,893


-


3,893


9,245


-


9,245

Other revenues

9,251


-


9,251


27,616


-


27,616

Total local media group

77,113


-


77,113


282,362


-


282,362

Total revenues

$ 364,059


$ -


$ 364,059


$ 1,382,831


$ -


$ 1,382,831













Operating profit












National media group

$ 48,325


$ (1,351)

(a)

$ 46,974


$ 177,344


$ (7,183)

(b)

$ 170,161

Local media group

20,156


463

(c)

20,619


52,447


463

(c)

52,910

Unallocated corporate

(9,687)


-


(9,687)


(37,949)


-


(37,949)

Income from operations

$ 58,794


$ (888)


$ 57,906


$ 191,842


$ (6,720)


$ 185,122













Depreciation and amortization












National media group

$ 3,560


$ -


$ 3,560


$ 14,397


$ -


$ 14,397

Local media group

6,257


-


6,257


24,417


-


24,417

Unallocated corporate

545


-


545


2,075


-


2,075

Total depreciation and amortization

$ 10,362


$ -


$ 10,362


$ 40,889


$ -


$ 40,889













EBITDA1












National media group

$ 51,885


$ (1,351)

(a)

$ 50,534


$ 191,741


$ (7,183)

(b)

$ 184,558

Local media group

26,413


463

(c)

26,876


76,864


463

(c)

77,327

Unallocated corporate

(9,142)


-


(9,142)


(35,874)


-


(35,874)

Total EBITDA1

$ 69,156


$ (888)


$ 68,268


$ 232,731


$ (6,720)


$ 226,011













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













(a) Reversal of restructuring charges for severance costs offset by the impairment of an investment

(b) Net severance costs, write-down of art and manuscript inventory and subscription acquisition costs, and the impairment of an investment partially
offset by the reversal of restructuring charges

(c) Reversal of restructuring charges for 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, 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%














Three Months Ended June 30, 2010


Twelve Months Ended June 30, 2010


National
Media

Local
Media

Unallocated Corporate

Total


National
Media

Local
Media

Unallocated Corporate

Total

(In thousands)










Revenues

$ 286,946

$ 77,113

$ -

$ 364,059


$ 1,100,469

$ 282,362

$ -

$ 1,382,831











Operating profit

$ 46,974

$ 20,619

$ (9,687)

$ 57,906


$ 170,161

$ 52,910

$ (37,949)

$ 185,122

Depreciation and amortization

3,560

6,257

545

10,362


14,397

24,417

2,075

40,889

EBITDA

$ 50,534

$ 26,876

$ (9,142)

68,268


$ 184,558

$ 77,327

$ (35,874)

226,011

Less:










Depreciation and amortization




(10,362)





(40,889)

Net interest expense




(3,821)





(18,533)

Income taxes




(20,238)





(60,955)

Earnings from continuing operations




$ 33,847





$ 105,634











Segment EBITDA margin

17.6%

34.9%




16.8%

27.4%



Meredith Corporation and Subsidiaries



Table 6

Supplemental Disclosures Regarding Non-GAAP Financial Measures








FREE CASH FLOW




Free cash flow, which is reconciled to operating cash flow in the following table, is defined as operating cash flow less capital expenditures.





Twelve Months Ended June 30,

2011

2010


(In thousands)




Free cash flow

$ 184,629

$ 166,930


Capital expenditures

29,906

24,721


Net cash provided by operating activities

$ 214,535

$ 191,651


Meredith Corporation and Subsidiaries









Table 7

Consolidated Statements of Earnings (Unaudited)





















Three Months Ended


Year Ended


September 30,
2010


December 31,
2010


March 31,
2011


June 30,
2011


June 30,
2011

(In thousands except per share data)










Revenues










Advertising

$ 204,825


$ 213,755


$ 185,210


$ 189,002


$ 792,792

Circulation

65,940


63,737


66,453


65,328


261,458

All other

71,975


88,441


87,218


98,596


346,230

Total revenues

342,740


365,933


338,881


352,926


1,400,480

Operating expenses










Production, distribution, and editorial

142,841


137,251


134,437


139,572


554,101

Selling, general, and administrative

141,932


148,506


142,130


148,975


581,543

Depreciation and amortization

9,785


9,663


9,965


10,132


39,545

Total operating expenses

294,558


295,420


286,532


298,679


1,175,189

Earnings from operations

48,182


70,513


52,349


54,247


225,291

Interest income

11


11


6


3


31

Interest expense

(3,522)


(3,362)


(3,153)


(2,932)


(12,969)

Earnings from continuing operations before income taxes

44,671


67,162


49,202


51,318


212,353

Income taxes

(18,609)


(26,065)


(18,026)


(18,043)


(80,743)

Earnings from continuing operations

26,062


41,097


31,176


33,275


131,610

Loss from discontinued operations, net of taxes

(355)


(540)


(339)


(2,944)


(4,178)

Net earnings

$ 25,707


$ 40,557


$ 30,837


$ 30,331


$ 127,432











Basic earnings per share










Earnings from continuing operations

$ 0.58


$ 0.90


$ 0.69


$ 0.73


$ 2.89

Discontinued operations

(0.01)


(0.01)


(0.01)


(0.06)


(0.09)

Basic earnings per share

$ 0.57


$ 0.89


$ 0.68


$ 0.67


$ 2.80

Basic average shares outstanding

45,483


45,571


45,594


45,339


45,497











Diluted earnings per share










Earnings from continuing operations

$ 0.57


$ 0.90


$ 0.68


$ 0.73


$ 2.87

Discontinued operations

(0.01)


(0.01)


(0.01)


(0.07)


(0.09)

Diluted earnings per share

$ 0.56


$ 0.89


$ 0.67


$ 0.66


$ 2.78

Diluted average shares outstanding

45,748


45,912


45,998


45,666


45,832

Meredith Corporation and Subsidiaries









Table 8

Segment Information (Unaudited)























Three Months Ended


Year Ended



September
30, 2010


December 31,
2010


March 31,
2011


June 30,
2011


June 30,
2011

(In thousands)










Revenues










National media group










Advertising

$ 135,502


$ 122,352


$ 120,997


$ 122,531


$ 501,382

Circulation

65,940


63,737


66,453


65,328


261,458

Other revenues

65,273


82,394


80,436


87,279


315,382


Total national media group

266,715


268,483


267,886


275,138


1,078,222

Local media group










Non-political advertising

57,748


69,376


63,531


65,733


256,388

Political advertising

11,575


22,027


682


738


35,022

Other revenues

6,702


6,047


6,782


11,317


30,848


Total local media group

76,025


97,450


70,995


77,788


322,258

Total revenues

$ 342,740


$ 365,933


$ 338,881


$ 352,926


$ 1,400,480












Operating profit










National media group

$ 39,630


$ 42,200


$ 48,467


$ 49,331


$ 179,628

Local media group

16,728


38,549


13,281


19,294


87,852

Unallocated corporate

(8,176)


(10,236)


(9,399)


(14,378)


(42,189)

Income from operations

$ 48,182


$ 70,513


$ 52,349


$ 54,247


$ 225,291












Depreciation and amortization










National media group

$ 3,352


$ 3,337


$ 3,346


$ 3,481


$ 13,516

Local media group

5,928


5,816


6,109


6,150


24,003

Unallocated corporate

505


510


510


501


2,026

Total depreciation and amortization

$ 9,785


$ 9,663


$ 9,965


$ 10,132


$ 39,545












EBITDA1










National media group

$ 42,982


$ 45,537


$ 51,813


$ 52,812


$ 193,144

Local media group

22,656


44,365


19,390


25,444


111,855

Unallocated corporate

(7,671)


(9,726)


(8,889)


(13,877)


(40,163)

Total EBITDA1

$ 57,967


$ 80,176


$ 62,314


$ 64,379


$ 264,836












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

Meredith Corporation and Subsidiaries









Table 9

Consolidated Statements of Earnings (Unaudited)





















Three Months Ended


Year Ended


September 30,
2009


December 31,
2009


March 31,
2010


June 30,
2010


June 30,
2010

(In thousands except per share data)










Revenues










Advertising

$ 191,253


$ 187,570


$ 198,560


$ 201,976


$ 779,359

Circulation

68,971


66,747


73,670


70,248


279,636

All other

70,711


81,721


79,569


91,835


323,836

Total revenues

330,935


336,038


351,799


364,059


1,382,831

Operating expenses










Production, distribution, and editorial

150,304


142,392


143,807


135,789


572,292

Selling, general, and administrative

138,447


145,746


140,333


160,002


584,528

Depreciation and amortization

10,101


10,115


10,311


10,362


40,889

Total operating expenses

298,852


298,253


294,451


306,153


1,197,709

Earnings from operations

32,083


37,785


57,348


57,906


185,122

Interest income

10


9


6


26


51

Interest expense

(5,041)


(5,744)


(3,952)


(3,847)


(18,584)

Earnings from continuing operations before income taxes

27,052


32,050


53,402


54,085


166,589

Income taxes

(8,405)


(12,745)


(19,567)


(20,238)


(60,955)

Earnings from continuing operations

18,647


19,305


33,835


33,847


105,634

Loss from discontinued operations, net of taxes

(306)


(351)


(536)


(478)


(1,671)

Net earnings

$ 18,341


$ 18,954


$ 33,299


$ 33,369


$ 103,963











Basic earnings per share










Earnings from continuing operations

$ 0.42


$ 0.43


$ 0.74


$ 0.75


$ 2.34

Discontinued operations

(0.01)


(0.01)


(0.01)


(0.01)


(0.04)

Basic earnings per share

$ 0.41


$ 0.42


$ 0.73


$ 0.74


$ 2.30

Basic average shares outstanding

45,158


45,288


45,331


45,381


45,289











Diluted earnings per share










Earnings from continuing operations

$ 0.41


$ 0.43


$ 0.74


$ 0.74


$ 2.32

Discontinued operations

(0.01)


(0.01)


(0.01)


(0.01)


(0.04)

Diluted earnings per share

$ 0.40


$ 0.42


$ 0.73


$ 0.73


$ 2.28

Diluted average shares outstanding

45,317


45,547


45,651


45,774


45,544

Meredith Corporation and Subsidiaries









Table 10

Segment Information (Unaudited)























Three Months Ended


Year Ended



September 30,
2009


December 31,
2009


March 31,
2010


June 30,
2010


June 30,
2010

(In thousands)










Revenues










National media group










Advertising

$ 136,639


$ 117,133


$ 136,727


$ 134,114


$ 524,613

Circulation

68,971


66,747


73,670


70,248


279,636

Other revenues

64,514


76,478


72,644


82,584


296,220


Total national media group

270,124


260,358


283,041


286,946


1,100,469

Local media group










Non-political advertising

53,671


67,549


60,312


63,969


245,501

Political advertising

943


2,888


1,521


3,893


9,245

Other revenues

6,197


5,243


6,925


9,251


27,616


Total local media group

60,811


75,680


68,758


77,113


282,362

Total revenues

$ 330,935


$ 336,038


$ 351,799


$ 364,059


$ 1,382,831












Operating profit










National media group

$ 39,094


$ 32,349


$ 51,744


$ 46,974


$ 170,161

Local media group

2,400


17,063


12,828


20,619


52,910

Unallocated corporate

(9,411)


(11,627)


(7,224)


(9,687)


(37,949)

Income from operations

$ 32,083


$ 37,785


$ 57,348


$ 57,906


$ 185,122












Depreciation and amortization










National media group

$ 3,505


$ 3,640


$ 3,692


$ 3,560


$ 14,397

Local media group

6,122


5,960


6,078


6,257


24,417

Unallocated corporate

474


515


541


545


2,075

Total depreciation and amortization

$ 10,101


$ 10,115


$ 10,311


$ 10,362


$ 40,889












EBITDA1










National media group

$ 42,599


$ 35,989


$ 55,436


$ 50,534


$ 184,558

Local media group

8,522


23,023


18,906


26,876


77,327

Unallocated corporate

(8,937)


(11,112)


(6,683)


(9,142)


(35,874)

Total EBITDA1

$ 42,184


$ 47,900


$ 67,659


$ 68,268


$ 226,011












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

SOURCE Meredith Corporation

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