Meredith Corporation Reports Results for the Second Quarter and First Six Months...

Meredith Corporation Reports Results for the Second Quarter and First Six
Months of Fiscal 2008
Publishing quarterly profit grows nearly 30 percent on strong advertising
performance

DES MOINES, Iowa, Jan. 22 /PRNewswire-FirstCall/ -- Meredith Corporation
(NYSE: MDP), one of the nation's leading media and marketing companies, today
reported fiscal 2008 second quarter net earnings of $36 million, or $0.75 per
share, compared to net earnings of $35 million, or $0.72 per share, in the
year ago period. Earnings per share, excluding the $0.02 impact of
discontinued operations, were $0.73, equal to the prior-year quarter. Revenues
were $396 million.
"Our magazine, integrated marketing and online businesses delivered strong
results during the second quarter, as we continued to capitalize on the
strength of our brands and ability to consistently deliver valuable audiences
to our advertising and marketing partners," said Stephen M. Lacy, Meredith's
President and Chief Executive Officer. "Our success at overcoming the dual
challenge of an off-political year at our television stations and higher
postal rates speaks directly to the breadth and strength of our media
properties and marketing capabilities."
For the first six months of 2008, earnings per share were $1.43, up
7 percent from the $1.34 per share earned in first half of fiscal 2007. Net
earnings increased 6 percent to $69 million. Revenues were $800 million.
Strong Publishing Group performance more than offset the cyclical decline in
Broadcasting Group results due to the lack of political advertising.
OPERATING HIGHLIGHTS
Publishing
Publishing operating profit increased nearly 30 percent over the
prior-year quarter to $45 million and operating profit margin increased nearly
3 percentage points. Publishing revenues rose 5 percent to $309 million and
advertising revenues rose 8 percent, led by More (+30%), Parents (+17%),
Better Homes and Gardens (+9%) and Family Circle (+8%) magazines.
"Our core magazine business continued to outperform the industry during
the quarter, highlighting our leadership in the women's service field and the
momentum of our parenthood titles," Lacy said. "Additionally, our custom
marketing and online businesses continue to post impressive revenue growth,
partially offset by continued weakness at Meredith Books."
Circulation contribution and margin increased in the quarter. Circulation
revenues declined, due primarily to the transition of Parents, Family Circle
and Fitness magazines to the Meredith direct-to-publisher model.
For the first six months of fiscal 2008, publishing operating profit grew
22 percent to $100 million and operating profit margin increased 2 percentage
points. Publishing revenues rose 6 percent to $638 million and advertising
revenues grew 11 percent.
Meredith's consumer magazines continue to demonstrate powerful and
enduring consumer appeal. According to recently released data from Mediamark
Research and Intelligence, Meredith's large subscription magazines have a
readership of nearly 100 million consumers, equal to levels five years ago.
This is in sharp contrast to trends in the print industry, particularly
newspapers and news weekly magazines, which have experienced significant
readership declines in recent years.
In October, Better Homes and Gardens was named 2007 Magazine of the Year
by Advertising Age, and More magazine was named runner-up on its 10-title
A-List. Meredith captured the top two spots for the first time in the award's
history.
Second quarter revenues at Meredith Integrated Marketing rose more than 50
percent and operating profit increased more than 60 percent. Results included
increased contributions from three marketing acquisitions over the last year:
Genex, New Media Strategies and Directive. On a comparable basis, revenues and
operating profit each rose 15 percent.
Second quarter revenues at Meredith Interactive Media rose more than 25
percent, benefiting from the redesigns of BHG.com and Parents.com, and strong
performance at Meredith's niche enthusiast sites. The number of unique
visitors averaged 10 million and page views averaged nearly 150 million per
month during the quarter. The average time spent on the sites per visitor grew
5 percent to 12 minutes. The total number of videos viewed rose 75 percent to
2.7 million.
Broadcasting
Broadcasting operating profit declined to $28 million from $40 million,
and revenues decreased 16 percent to $88 million in the second quarter. For
the first six months, operating profit declined to $41 million from $58
million, and revenues decreased 13 percent to $162 million.
These results reflect the cyclical decline in political advertising. Net
political revenues were $22 million less than the prior-year quarter, and $30
million less than the prior-year fiscal first half. Non-political advertising
revenues grew 6 percent in the quarter, and 4 percent in the first six months
of the fiscal year.
"We were particularly pleased to deliver strong non-political advertising
gains," Lacy said. "Our investments in local news and non-traditional sources
of revenue -- including our unique Cornerstone programs, the Internet and our
video initiatives -- are delivering strong growth."
Broadcasting continued to strengthen its news position in the November
ratings book. Highlights included:
-- Meredith's CBS affiliate in Hartford and its Fox affiliate in Portland,
Oregon, had outstanding books. Both were the top-rated stations across
all news time periods.
-- Meredith's Fox affiliates in Greenville, Las Vegas and Portland posted
strong growth in morning news, which is the fastest-growing daypart in
terms of viewers and advertising revenues. Morning news now accounts
for one-third of news revenues across the Broadcasting Group, up from
25 percent three years ago.

Broadcasting online revenues rose 50 percent during the quarter. The
number of average unique visitors rose six-fold to 3 million per month,
reflecting ongoing investments in technology, content, promotions and sales
related activities. The number of videos streamed on Broadcasting's sites
nearly doubled to 1.5 million per month.
Better, Meredith's daily lifestyle television program that runs across the
Company's station group and is in syndication to three non-Meredith stations,
is off to a strong start. It won its time period in Hartford and has strong
ratings in both Greenville and Portland. Content from the Better show is also
available online at http://www.better.tv and http://www.parents.tv, Meredith's
broadband video channels.
Last month, Meredith parenthood video content launched across Comcast
Corp.'s cable systems on a new video on demand channel branded Parents TV. It
reaches more than 12 million households, and Meredith and Comcast share the
advertising revenues.
OTHER FINANCIAL INFORMATION
Meredith generated more than $41 million in free cash flow during the
quarter. The Company repurchased approximately 490,000 shares in the quarter
as part of its ongoing share repurchase program, compared to 88,000 shares in
the prior-year quarter. For the first six months of fiscal 2008, Meredith
repurchased 1.4 million shares, compared to approximately 1.1 million shares
in all of fiscal 2007.
Meredith retired $40 million of debt during the quarter. Total debt was
$420 million as of December 31, 2007, versus $475 million as of June 30, 2007.
The weighted average interest rate was 5 percent on December 31, 2007.
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
statement of earnings.
OUTLOOK
Meredith continues to expect fiscal 2008 earnings per share to range from
$3.50 to $3.55.
Publishing advertising revenues and Broadcast pacings for the fiscal third
quarter are currently down slightly, compared to the prior-year quarter.
Meredith expects to report earnings per share of approximately $0.98 in
the fiscal third quarter. The Company continues to absorb an annualized postal
rate increase of more than $13 million in fiscal 2008.
A number of uncertainties remain that may affect our outlook as stated in
this press release for results in the third quarter and full fiscal year.
These include overall advertising volatility; the performance of the Company's
retail businesses; the amount of political advertising revenues generated at
the Company's broadcast television stations; and paper prices and postal
rates. These and other uncertainties are referenced below under "Safe Harbor"
and in certain of the Company's SEC filings.
CONFERENCE CALL WEBCAST
Meredith will host a conference call on January 22, 2008, at 11 a.m. EST
(10 a.m. CST) to discuss fiscal second quarter results. A live webcast will be
accessible to the public on the Company's web site, 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 conference 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 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.
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 on the Company's web site,
http://www.meredith.com/investors/index.html. Please click on "Non-GAAP/GAAP
Reconciliation."
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'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 the Company's earnings per share outlook for
the third quarter and all of fiscal 2008.
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 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 (http://www.meredith.com) is one of the nation's leading media
and marketing companies with businesses centering on magazine and book
publishing, television broadcasting, integrated marketing and interactive
media. The Meredith Publishing Group features 25 subscription
magazines -- including Better Homes and Gardens, Ladies' Home Journal, Family
Circle, Parents, American Baby, Fitness and More -- and publishes
approximately 180 special interest publications under approximately 80 titles.
Meredith owns 13 television stations, including properties in top-25 markets
Atlanta, Phoenix and Portland, OR. Additionally, Meredith has an extensive
online presence that includes more than 40 web sites and two broadband
channels -- Better.tv and Parents.tv.
Meredith Integrated Marketing has established marketing relationships with
some of America's leading companies. Meredith's consumer database, which
contains approximately 85 million names, is one of the largest domestic
databases among media companies and enables magazine and television
advertisers to conduct precise targeted-marketing campaigns. Meredith
publishes four Spanish-language titles, making Meredith the leading publisher
serving Hispanic women in the United States.

Meredith Corporation and Subsidiaries
Consolidated Statements of Earnings (Unaudited)

Three Months
Period Ended December 31, 2007 2006 Change
(In thousands except per share data)
Revenues
Advertising $239,256 $245,537 (2.6)%
Circulation 72,959 78,837 (7.5)%
All other 84,030 74,972 12.1 %
Total revenues 396,245 399,346 (0.8)%
Operating expenses
Production, distribution, and editorial 166,122 161,353 3.0 %
Selling, general, and administrative 153,046 160,939 (4.9)%
Depreciation and amortization 12,025 11,034 9.0 %
Total operating expenses 331,193 333,326 (0.6)%
Income from operations 65,052 66,020 (1.5)%
Interest income 296 437 (32.3)%
Interest expense (5,734) (7,452) (23.1)%
Earnings from continuing operations
before income taxes 59,614 59,005 1.0 %
Income taxes 24,401 23,188 5.2 %
Earnings from continuing operations 35,213 35,817 (1.7)%
Income (loss) from discontinued
operations, net of taxes 846 (790) NM
Net earnings $36,059 $35,027 2.9 %

Basic earnings per share
Earnings from continuing operations $0.74 $0.75 (1.3)%
Discontinued operations 0.02 (0.02) NM
Basic earnings per share $0.76 $0.73 4.1 %
Basic average shares outstanding 47,287 47,905 (1.3)%

Diluted earnings per share
Earnings from continuing operations $0.73 $0.73 0.0 %
Discontinued operations 0.02 (0.01) NM
Diluted earnings per share $0.75 $0.72 4.2 %
Diluted average shares outstanding 48,325 48,961 (1.3)%

Dividends paid per share $0.185 $0.160 15.6 %

Six Months
Period Ended December 31, 2007 2006 Change
(In thousands except per share data)
Revenues
Advertising $493,591 $484,106 2.0 %
Circulation 153,245 162,598 (5.8)%
All other 153,482 138,993 10.4 %
Total revenues 800,318 785,697 1.9 %
Operating expenses
Production, distribution, and editorial 341,830 328,918 3.9 %
Selling, general, and administrative 308,616 311,879 (1.0)%
Depreciation and amortization 24,143 22,064 9.4 %
Total operating expenses 674,589 662,861 1.8 %
Income from operations 125,729 122,836 2.4 %
Interest income 648 670 (3.3)%
Interest expense (11,897) (14,772) (19.5)%
Earnings from continuing operations
before income taxes 114,480 108,734 5.3 %
Income taxes 45,799 42,731 7.2 %
Earnings from continuing operations 68,681 66,003 4.1 %
Income (loss) from discontinued
operations, net of taxes 748 (480) NM
Net earnings $69,429 $65,523 6.0 %

Basic earnings per share
Earnings from continuing operations $1.44 $1.38 4.3 %
Discontinued operations 0.02 (0.01) NM
Basic earnings per share $1.46 $1.37 6.6 %
Basic average shares outstanding 47,541 47,951 (0.9)%

Diluted earnings per share
Earnings from continuing operations $1.41 $1.35 4.4 %
Discontinued operations 0.02 (0.01) NM
Diluted earnings per share $1.43 $1.34 6.7 %
Diluted average shares outstanding 48,576 48,929 (0.7)%

Dividends paid per share $0.370 $0.320 15.6 %

NM - Not meaningful

Meredith Corporation and Subsidiaries
Segment Information (Unaudited)

Three Months
Period Ended December 31, 2007 2006 Change
(In thousands)
Revenues
Publishing $308,608 $294,666 4.7 %
Broadcasting
Non-political advertising 85,168 80,291 6.1 %
Political advertising 1,436 23,930 (94.0)%
Other revenues 1,033 459 125.1 %
Total broadcasting 87,637 104,680 (16.3)%
Total revenues $396,245 $399,346 (0.8)%

Operating profits
Publishing $44,512 $34,425 29.3 %
Broadcasting 27,564 40,464 (31.9)%
Unallocated corporate (7,024) (8,869) 20.8 %
Income from operations $65,052 $66,020 (1.5)%

Depreciation and amortization
Publishing $5,305 $4,580 15.8 %
Broadcasting 6,329 5,959 6.2 %
Unallocated corporate 391 495 (21.0)%
Total depreciation and amortization $12,025 $11,034 9.0 %

EBITDA(1)
Publishing $49,817 $39,005 27.7 %
Broadcasting 33,893 46,423 (27.0)%
Unallocated corporate (6,633) (8,374) (20.8)%
Total EBITDA(1) $77,077 $77,054 0.0 %

Six Months
Period Ended December 31, 2007 2006 Change
(In thousands)
Revenues
Publishing $638,130 $600,114 6.3 %
Broadcasting
Non-political advertising 157,660 151,025 4.4 %
Political advertising 2,508 32,488 (92.3)%
Other revenues 2,020 2,070 (2.4)%
Total broadcasting 162,188 185,583 (12.6)%
Total revenues $800,318 $785,697 1.9 %

Operating profits
Publishing $99,945 $82,253 21.5 %
Broadcasting 41,141 58,455 (29.6)%
Unallocated corporate (15,357) (17,872) 14.1 %
Income from operations $125,729 $122,836 2.4 %

Depreciation and amortization
Publishing $10,505 $9,168 14.6 %
Broadcasting 12,707 11,890 6.9 %
Unallocated corporate 931 1,006 (7.5)%
Total depreciation and amortization $24,143 $22,064 9.4 %

EBITDA(1)
Publishing $110,450 $91,421 20.8 %
Broadcasting 53,848 70,345 (23.5)%
Unallocated corporate (14,426) (16,866) (14.5)%
Total EBITDA(1) $149,872 $144,900 3.4 %

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

Meredith Corporation and Subsidiaries
Condensed Consolidated Balance Sheets

(Unaudited)
December 31, June 30,
Assets 2007 2007
(In thousands)
Current assets
Cash and cash equivalents $29,722 $39,220
Accounts receivable, net 251,019 267,419
Inventories 56,939 48,836
Current portion of subscription acquisition
costs 66,731 70,553
Current portion of broadcast rights 19,307 11,307
Other current assets 29,667 15,305
Total current assets 453,385 452,640
Property, plant, and equipment 443,221 445,846
Less accumulated depreciation (245,835) (239,820)
Net property, plant, and equipment 197,386 206,026
Subscription acquisition costs 61,633 66,309
Broadcast rights 7,985 9,309
Other assets 96,738 101,178
Intangibles assets, net 788,107 794,996
Goodwill 500,646 459,493
Total assets $2,105,880 $2,089,951

Liabilities and Shareholders' Equity
Current liabilities
Current portion of long-term debt $125,000 $100,000
Current portion of long-term broadcast
rights payable 20,044 12,069
Accounts payable 109,176 78,156
Accrued expenses and other liabilities 122,529 105,359
Current portion of unearned subscription
revenues 187,778 191,445
Total current liabilities 564,527 487,029
Long-term debt 295,000 375,000
Long-term broadcast rights payable 17,213 18,584
Unearned subscription revenues 167,324 167,873
Deferred income taxes 142,039 166,597
Other noncurrent liabilities 97,962 41,667
Total liabilities 1,284,065 1,256,750
Shareholders' equity
Common stock 37,911 38,970
Class B stock 9,229 9,262
Additional paid-in capital 63,545 58,945
Retained earnings 719,414 727,628
Accumulated other comprehensive income 567 2,499
Unearned compensation (8,851) (4,103)
Total shareholders' equity 821,815 833,201
Total liabilities and shareholders' equity $2,105,880 $2,089,951

Meredith Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)

Six Months Ended December 31, 2007 2006
(In thousands)
Net cash provided by operating activities $142,919 $93,299

Cash flows from investing activities
Acquisitions of businesses (1,920) (2,146)
Additions to property, plant, and equipment (10,210) (19,269)
Net cash used in investing activities (12,130) (21,415)

Cash flows from financing activities
Proceeds from issuance of long-term debt 90,000 95,000
Repayments of long-term debt (145,000) (150,000)
Purchases of Company stock (77,482) (32,156)
Proceeds from common stock issued 9,442 17,277
Dividends paid (17,607) (15,367)
Excess tax benefits from share-based payments 360 1,217
Net cash used in financing activities (140,287) (84,029)
Net decrease in cash and cash equivalents (9,498) (12,145)
Cash and cash equivalents at
beginning of period 39,220 30,713
Cash and cash equivalents at end of period $29,722 $18,568

Meredith Corporation and Subsidiaries
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.
Segment EBITDA margin is defined as segment EBITDA divided by segment
revenues.

Three Months Ended December 31, 2007
Unallocated
Publishing Broadcasting Corporate Total
(In thousands)
Revenues $308,608 $87,637 $ - $396,245

Operating profit $44,512 $27,564 $(7,024) $65,052
Depreciation and amortization 5,305 6,329 391 12,025
EBITDA $49,817 $33,893 $(6,633) 77,077
Less:
Depreciation and amortization (12,025)
Net interest expense (5,438)
Income taxes (24,401)
Earnings from continuing operations $35,213

Segment EBITDA margin 16.1% 38.7%

Six Months Ended December 31, 2007
Unallocated
Publishing Broadcasting Corporate Total
(In thousands)
Revenues $638,130 $162,188 $ - $800,318

Operating profit $99,945 $41,141 $(15,357) $125,729
Depreciation and amortization 10,505 12,707 931 24,143
EBITDA $110,450 $53,848 $(14,426) 149,872
Less:
Depreciation and amortization (24,143)
Net interest expense (11,249)
Income taxes (45,799)
Earnings from continuing operations $68,681

Segment EBITDA margin 17.3% 33.2%

Three Months Ended December 31, 2006
Unallocated
Publishing Broadcasting Corporate Total
(In thousands)
Revenues $294,666 $104,680 $ - $399,346

Operating profit $34,425 $40,464 $(8,869) $66,020
Depreciation and amortization 4,580 5,959 495 11,034
EBITDA $39,005 $46,423 $(8,374) 77,054
Less:
Depreciation and amortization (11,034)
Net interest expense (7,015)
Income taxes (23,188)
Earnings from continuing operations $35,817

Segment EBITDA margin 13.2% 44.3%

Six Months Ended December 31, 2006
Unallocated
Publishing Broadcasting Corporate Total
(In thousands)
Revenues $600,114 $185,583 $ - $785,697

Operating profit $82,253 $58,455 $(17,872) $122,836
Depreciation and amortization 9,168 11,890 1,006 22,064
EBITDA $91,421 $70,345 $(16,866) 144,900
Less:
Depreciation and amortization (22,064)
Net interest expense (14,102)
Income taxes (42,731)
Earnings from continuing operations $66,003

Segment EBITDA margin 15.2% 37.9%

FREE CASH FLOW
Free cash flow, which is reconciled to earnings from continuing operations
in the following table, is defined as earnings from continuing operations plus
depreciation and amortization less capital expenditures.
Three Months Six Months
Period Ended December 31, 2007 2006 2007 2006
(In thousands)
Free cash flow $41,301 $33,254 $82,614 $68,798
Depreciation and amortization (12,025) (11,034) (24,143) (22,064)
Capital expenditures 5,937 13,597 10,210 19,269
Earnings from continuing operations $35,213 $35,817 $68,681 $66,003

SOURCE Meredith Corporation

Shareholder-Financial Analysts, Mike Lovell, Director of Investor Relations,
+1-515-284-3622, Mike.Lovell@Meredith.com, or Media, Art Slusark, VP-Corporate
Communications, +1-515-284-3404, Art.Slusark@Meredith.com, both of Meredith
Corporation