DES MOINES, Iowa, July 29 /PRNewswire-FirstCall/ -- Meredith Corporation (NYSE: MDP), the leading media and marketing company serving American women, today reported a loss of $2.28 per share from continuing operations in fiscal 2009, including $4.31 per share resulting from a non-cash impairment charge and other special charges. Excluding these special charges, earnings per share from continuing operations were $2.03, in-line with previously stated expectations. Revenues in fiscal 2009 were $1.41 billion.

These results compare to fiscal 2008 reported earnings per share from continuing operations of $2.79, or $3.13 per share excluding special charges, on revenues of $1.55 billion.

Meredith recorded two special charges in the fourth quarter of fiscal 2009. The first is an impairment charge of $295 million ($185 million after-tax) related to Broadcasting's FCC licenses and goodwill. This impairment charge is a non-cash charge to earnings; does not affect Meredith's liquidity, cash flows from operating activities or debt covenants; and does not have an impact on Meredith's future operations. This charge was determined in connection with Meredith's annual impairment testing of goodwill and other intangible assets.

The second is a special charge of $5.5 million ($3.4 million after-tax) due primarily to employee severance related to previously announced plans to centralize certain functions across Meredith's television stations. Information on the special charges recorded in fiscal 2009 and fiscal 2008 is available in Tables 1-4 of this press release.

Fourth quarter fiscal 2009 loss per share from continuing operations was $3.64 and revenues were $346 million, versus earnings per share from continuing operations of $0.40 and revenues of $376 million a year ago. Excluding special charges, fiscal 2009 fourth quarter earnings per share from continuing operations were $0.55, also in-line with previously stated expectations, versus earnings per share from continuing operations of $0.75 in the prior-year period.

Meredith made a $100 million debt payment on June 30 2009, reducing its total debt balance to $380 million, a 22 percent reduction from the prior year end. Subsequently, on July 13, 2009, Meredith entered into a new $75 million private placement of debt from a leading life insurance company. The proceeds were used to pay down Meredith's revolving credit facilities - thus resulting in no net incremental debt - and provide Meredith with additional liquidity should attractive investment opportunities arise.

"Despite a challenging advertising climate, we made significant progress on the performance improvement plan put in place at this time last year," said Meredith President and Chief Executive Officer Stephen M. Lacy. "We gained market share, grew new revenue sources, prudently managed our costs and cut debt by more than 20 percent."

FISCAL 2009 PERFORMANCE OVERVIEW

The recession significantly impacted advertising spending throughout fiscal 2009. Meredith's total advertising revenues were $787 million in fiscal 2009, compared to $931 million in fiscal 2008.

However, advertising revenues for Meredith's magazines and related Web sites improved in the second half of fiscal 2009 compared to the first half, as performance improvement measures put in place to counter the weak advertising environment began to take effect. Second-half magazine advertising declined 12 percent from the prior-year period, compared to a drop of 18 percent in the first half of fiscal 2009. Total company online advertising increased 7 percent in the second half of fiscal 2009 after declining approximately 14 percent in the first half.

Broadcasting advertising revenues declined 17 percent in fiscal 2009, as $24 million in political advertising wasn't enough to offset lower non-political advertising, particularly in automotive.

Lacy noted the following fiscal 2009 highlights:

• Gaining magazine advertising market share - For the full fiscal year, Meredith's share of magazine advertising increased to 10.5 percent from 9.5 percent, according to the most recent data available from Publishers Information Bureau (PIB). Meredith's share grew to 12.8 percent from 10.1 percent in the fourth fiscal quarter.
• Growing new revenue streams - Revenues from key new revenue sources not dependent on traditional advertising - namely Meredith Integrated Marketing, licensed products, retransmission fees, syndicated programming and video services - increased more than 15 percent.
• Strengthening consumer connection - Readership for Meredith's major subscription magazines held steady at 110 million, according to Mediamark Research and Intelligence, and magazine circulation profitability grew. Most of Meredith's television stations posted higher ratings, particularly during the March and May sweeps periods. Traffic rose across Meredith's more than 60 Web sites, and sales of licensed products increased.
• Reducing operating costs - Meredith's total operating costs declined 7 percent in the fourth quarter and were down 5 percent in fiscal 2009, even with a 10 percent increase in paper prices. Excluding acquisitions, costs declined 9 percent in the fourth quarter and were down 6 percent in fiscal 2009. These cost references exclude special charges.
• Generating strong cash flow - Meredith generated $181 million in cash flow from operations and eliminated $105 million - or 22 percent - of its debt. Meredith also increased its dividend rate by 5 percent to 22 1/2 cents - its 16th consecutive annual dividend increase.
  

Additionally, Meredith completed a number of strategic initiatives and investments to further strengthen its established and emerging media platforms. These included:

• Creative investments such as redesigns of Better Homes and Gardens, Ladies' Home Journal, More, Fitness and ReadyMade magazines.
• The launch of the Meredith Women's Network, one of the largest online networks for women. Central to this strategy were investments in Meredith's flagship Web sites - BHG.com and Parents.com; the Real Girls Media Network, which owns and operates online social communities; and Mixingbowl.com, an online social community targeted at consumers interested in food and cooking. Meredith also completed an online lead-generation agreement with ServiceMagic Inc., a Web site that connects homeowners to contractors.
• Further expansion of Meredith Integrated Marketing's portfolio of services in July 2009 through an investment in The Hyperfactory, which creates, executes and analyzes mobile strategies and programs for top brands world-wide.
• Expansion of the Better show, a Meredith-produced syndicated lifestyle television show, to more than 50 markets, including half of the nation's Top 10.
  

OPERATING DETAIL

Publishing

Fiscal 2009 Publishing operating profit was $151 million, compared to $188 million in the prior-year period. Fiscal 2009 revenues were $1.13 billion versus $1.23 billion, and advertising revenues were $530 million versus $620 million. Fourth quarter fiscal 2009 operating profit was $46 million, compared to operating profit of $25 million. Fourth quarter revenues were $283 million versus $297 million, and advertising revenues were $134 million versus $148 million.

Excluding special charges, fiscal 2009 Publishing operating profit was $159 million, compared to $213 million in the prior-year period, and fourth quarter 2009 operating profit was $48 million versus $50 million.

Advertising performance in the second half of fiscal 2009 improved when compared to the first half due primarily to initiatives to gain market share. Ten of Meredith's 14 measured titles increased their share of advertising revenues in the second half, according to PIB, as Meredith emphasized the broad consumer reach and efficiency of its portfolio. Eight of Meredith's 10 largest advertising categories, including food and beverage, prescription and non-prescription drugs and household supplies, improved in the second half compared to the first half, according to PIB.

Circulation profit and related margin in Meredith's subscription activities increased in fiscal 2009. Total circulation revenues declined 7 percent in fiscal 2009 from a year ago as a result of fewer Special Interest Media titles published and soft retail sales. However, subscription revenues declined just 2 percent during the year. In the fourth quarter, circulation revenues grew slightly, including a gain of 2 percent for subscription revenues.

Interactive advertising revenues declined 5 percent in fiscal 2009; however they rose 17 percent in the fourth quarter. The number of unique visitors to Meredith's Publishing Web sites rose more than 25 percent to 15 million and page views averaged more than 170 million per month in fiscal 2009. The total number of videos viewed per month rose to 1.1 million. Meredith generated 3 million online subscriptions in fiscal 2009, up slightly from fiscal 2008.

"Advertisers and consumers alike recognize the value our brands deliver as exemplified by our advertising market share gains, solid circulation fundamentals and growing online revenue and traffic," Lacy said. "Additionally, we continue to experience growth from businesses that are not based on advertising, including Meredith Integrated Marketing and Brand Licensing."

Meredith Integrated Marketing revenues grew 13 percent in fiscal 2009 compared to the prior-year period. In the fourth quarter, while revenues declined 17 percent, due primarily to certain non-recurring programs recorded in the prior-year period, operating profit grew nearly 15 percent as Meredith Integrated Marketing improved efficiencies. Fiscal 2009 revenue growth was driven by new business won in the past year, including Kraft's Food & Family custom marketing program, and growth from digital acquisitions.

Brand Licensing revenues grew 14 percent in fiscal 2009 from a year ago, driven primarily by the expansion of Meredith's relationship with Walmart. In fiscal 2009, the number of Better Homes and Gardens-branded SKU's doubled to more than 1,000, and the program will expand to Canada in the second half of calendar 2009. In addition, Meredith and Walmart have created the "Editors Choice Paint Colors," a collection of interior paint colors selected by the editors of Better Homes and Gardens, that is being placed in stores now. The paint colors are co-marketed with the Dutch Boy brand at Walmart and coordinate with the home decor products currently available.

Publishing operating costs, excluding special charges, declined 8 percent in the fourth quarter, compared to the prior-year period, and declined 5 percent in fiscal 2009, despite an increase of 10 percent in paper prices.

Broadcasting

Fiscal 2009 Broadcasting operating loss, including special charges, was $258 million, compared to operating profit of $78 million in the prior-year period. Fiscal 2009 revenues were $275 million versus $319 million. Fourth quarter fiscal 2009 operating loss, including special charges, was $292 million, compared to operating profit of $18 million. Fourth quarter revenues were $62 million versus $79 million.

Excluding special charges, fiscal 2009 Broadcasting operating profit was $43 million, compared to $79 million in the prior-year period, and fourth quarter 2009 operating profit was $6 million versus $19 million.

The depressed automotive market significantly impacted Broadcasting's performance. Meredith's automobile advertising revenues declined nearly 45 percent in fiscal 2009, and were down more than 55 percent in the fourth quarter, accounting for approximately half of non-political advertising declines in both periods.

"Despite the current advertising weakness, television remains the most powerful and efficient way for advertisers to reach American consumers," Lacy said. "To combat lower advertising revenues, we are pursuing multi-platform marketing solutions for clients similar to our Publishing business, have reorganized our national sales activities and are centralizing certain functions. We are encouraged by continued growth in our consumer connection, higher revenues at Meredith Video Solutions and increased retransmission fees."

During the May sweeps, several Meredith stations captured a larger share of morning news viewers. Portland, Hartford and Las Vegas continued their #1 positions; Atlanta and Greenville each doubled viewership; and Kansas City increased viewership 24 percent. In late news, where ad rates are the highest, Phoenix's viewership rose 38 percent, Greenville rose 11 percent and Hartford maintained its #1 position. These ratings gains are key to commanding higher revenues for advertising spots into the future.

Revenues at Meredith Video Solutions, Meredith's in-house video production group, rose more than 50 percent in fiscal 2009 from the year-ago period, and were up more than 20 percent in the fiscal fourth quarter. The Better television show, which features content inspired by Meredith's publishing brands, will be carried in more than 50 markets beginning this fall, up from 35 markets in the fall of 2008.

Revenues from retransmission fees more than doubled in fiscal 2009 from the year-ago period, and grew nearly 75 percent in the fiscal fourth quarter. Meredith has successfully negotiated new retransmission agreements with all seven of the major cable operators in its markets.

Meredith continues to implement its plan to reduce expenses and improve efficiency by centralizing certain functions - including master control, traffic and research - across its television stations. Broadcasting operating costs, excluding special charges, declined 5 percent in the fourth quarter, compared to the prior-year period, and were down 3 percent for the full year fiscal 2009.

OTHER FINANCIAL INFORMATION

Meredith generated more than $180 million in cash flow from operations during fiscal 2009, including $42 million in the fourth quarter.

Meredith's total debt was $380 million at June 30, 2009, $105 million less than the prior fiscal year end. Meredith's debt-to-EBITDA ratio was well under existing debt covenants at 1.8 to 1.

On July 13, 2009, Meredith secured a new $75 million private placement of debt from a leading life insurance company. The private placement consists of $50 million due July 2013 and $25 million due July 2014. The proceeds were used to pay down Meredith's revolving credit facilities - thus resulting in no incremental debt. With the new private placement, Meredith's weighted average interest rate on debt is approximately 5.4 percent.

Meredith increased its quarterly dividend rate 5 percent to 22 cents per share in February. Meredith has paid a dividend for 62 consecutive years and has increased its dividend annually for 16 consecutive years. Meredith repurchased approximately 880,000 shares in fiscal 2009 and has 1.5 million shares remaining under current share repurchase authorizations.

Additionally, during the third quarter of fiscal 2009, Meredith reclassified the results of Country Home to discontinued 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 consolidated statements of earnings (loss).

OUTLOOK

Looking at fiscal 2010, Meredith expects that advertising will continue to be impacted by the recession.

In Publishing, with two of three magazine issues closed, fiscal 2010 first quarter advertising revenues are expected to be down in the mid single-digit range. In Broadcasting, with nine weeks left in the first quarter of fiscal 2010, advertising pacings are down 25 percent. By comparison, in the fourth quarter of fiscal 2009, with nine weeks left, pacings were down 32 percent.

Looking at the rest of fiscal 2010, Meredith expects continued improvements in magazine and broadcasting non-political advertising revenues, with moderating declines in the first half of the fiscal year turning to modest growth in the second half. In addition, the company will be cycling against $24 million of net political advertising revenues recorded in the first half of fiscal 2009.

Many of the operating expense savings Meredith accomplished in fiscal 2009 will carry into fiscal 2010, but are expected to be partially offset by approximately $10 million in additional pension expenses due to market performance of pension assets.

Meredith expects its average tax rate to be approximately 43 percent in the first quarter, and 40.5 percent for full fiscal 2010.

Meredith currently expects fiscal first quarter earnings per share to range from $0.30 to $0.35 and full-year fiscal 2010 earnings per share to range from $1.60 to $2.00.

A number of uncertainties remain that may affect Meredith's outlook as stated in this press release for the first fiscal quarter and full year of 2010. These include national economic conditions; overall advertising volatility; the performance of Meredith's retail businesses; 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 29, 2009, at 9:30 a.m. EDT (8:30 a.m. CDT) to discuss fiscal fourth quarter and 2009 results. A live webcast will be accessible to the public on the company's Web site, 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 at 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 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 it includes certain contractual and non-discretionary expenditures.

Results excluding the impairment charge and other special charges are also supplemental non-GAAP financial measures. Management believes the special charges are not reflective of Meredith's ongoing business activities. While results excluding the special charges 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 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'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 first fiscal quarter and all of fiscal 2010.

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 Corporation (NYSE:MDP; 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 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.