2008-08-14 15:57:00
- Revenue Decreases Slightly to $119 Million, Offset by Decline in Expenses
-
NEW YORK, Aug. 14 /EMWNews/ -- American Media, Inc. (AMI), the
leading publisher of celebrity journalism and health and fitness magazines
in the U.S., said that its subsidiary American Media Operations, Inc.
(AMOI) today reported its financial results for the first quarter ended
June 30, 2008.
Revenue
Revenue for the first quarter of fiscal year 2009 was $119 million,
compared to $121 million in the first quarter of fiscal year 2008,
representing a 2% decrease. The decrease in revenue in the first quarter of
fiscal year 2009 primarily reflected the general market weakness for
advertising spending due to the current U.S. economic slowdown, which led
to a decline in the Company's total advertising revenue.
Operating Income
Operating income for the first quarter of fiscal year 2009 was $26
million, or $744,000 lower than the prior year's first quarter. The slight
decrease in operating income in the first quarter ended June 30, 2008 was
primarily due to the above-mentioned decrease in revenue, partially offset
by cost reductions generated by the Company as it implemented its
management action plans.
Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA") and Bank EBITDA
EBITDA for the first quarter of fiscal year 2009 was $32 million,
compared to $34 million in the first quarter of fiscal year 2008,
representing a 6% decrease. Bank EBITDA for the first quarter of fiscal
year 2009 was $33 million, as compared to $36 million in the first quarter
of fiscal year 2008, representing an 8% decrease. The decrease in EBITDA
and Bank EBITDA resulted from the reasons mentioned above.
For a reconciliation of EBITDA and Bank EBITDA to Net Income (Loss),
please refer to the table below.
Cash
At June 30, 2008, the Company had cash and cash equivalents of $20
million, as well as $26 million outstanding on its revolving credit
facility.
Comments By Senior Management
AMOI Chairman and Chief Executive Officer David Pecker said,
"Publishers Information Bureau (PIB) shows that industry advertising pages
were down 8.7% for the period January 1 through July 31, 2008. AMOI's
advertising pages were down only 3.2%, which was the smallest decline of
any publisher with more than 3,000 advertising pages."
"In addition, the Audit Bureau of Circulations (ABC) reported that
industry sales at the newsstand declined 6.3% in the first six months of
calendar 2008, as compared to the same period last year. Despite this,
AMOI's circulation revenue increased by 2% in our fiscal 2009 first
quarter," continued Mr. Pecker. "When our total results are considered in
light of what is occurring in the industry, our Company's unique balance
between advertising and circulation revenue stands out as one of its
greatest strengths."
AMOI Executive Vice President and Chief Financial Officer Dean Durbin
said, "We will continue to operate our business in a disciplined fashion in
fiscal 2009, targeting the opportunities outlined in our management action
plan, and project $21 million of cost savings related to SG&A, staff and
production, as well as revenue enhancements of $5 million."
About American Media, Inc.
American Media, Inc. is the leading publisher of celebrity journalism
and health and fitness magazines in the U.S. These include Star, Shape,
Men's Fitness, Fit Pregnancy, Natural Health, and National Enquirer. In
addition to print properties, AMI owns Distribution Services, Inc., the
country's #1 in-store magazine merchandising company.
This press release contains "forward-looking statements," within the
meaning of the federal securities laws that involve risks and
uncertainties. All statements herein that address activities, events or
developments that the Company expects or anticipates will or may occur in
the future, including the Company's estimates of financial performance and
such things as business strategy, measures to implement strategy,
competitive strengths, goals, references to future success and other
events, are generally forward-looking statements.
The Company's actual results may differ materially from its estimates.
Whether actual results, events and developments will conform to the
Company's expectations is subject to a number of risks and uncertainties
and important factors, many of which are beyond the control of the Company.
Among the risks and uncertainties which could cause the Company's actual
results to differ from those contemplated by its forward-looking statements
are the risk that the Company may not be able to refinance its debt; the
Company may not be able to successfully develop its magazine operations so
that they continue to generate sufficient cash flow to enable the Company
to meet its obligations under its senior credit facility and bond
indentures, including the financial covenants under its senior credit
facility; the Company's ability to comply with covenant requirements in its
agreements with its lenders and in its indentures; the Company's ability to
implement and maintain an effective system of internal controls over
financial reporting; actions of rating agencies; industry and general
economic conditions; the Company's ability to realize its expected benefits
from cost savings and revenue enhancement initiatives; and the risks and
uncertainties contained in the Company's periodic reports filed with the
Securities and Exchange Commission. Consequently, all forward-looking
statements made herein are qualified by these cautionary statements and
there can be no assurance that the results, events or developments
referenced herein will occur or be realized.
Contact: Todd Fogarty
Kekst and Company
212-521-4854
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
The following table reconciles the differences between net income
(loss) as determined under GAAP, EBITDA, and Bank EBITDA.
AMERICAN MEDIA OPERATIONS, INC.
Three Months Ended
June 30, June 30,
2007 2008
(Dollars in Millions)
Net (loss) income $(0.1) $0.4
Add:
Interest expense 24.7 23.5
Benefit for income taxes (0.5) (0.3)
Depreciation and amortization 3.3 2.7
Amortization of deferred debt costs 2.7 2.7
Amortization of deferred rack costs 3.5 3.0
EBITDA $33.6 $32.0
Add:
Investment in launches and re-
launches 0.1 (0.5)
Restructuring costs and severance 0.2 0.3
Professional fees 2.0 0.5
Management fees 0.5 0.5
Other - 0.6
Bank EBITDA $36.4 $33.4
Note:
EBITDA represents the sum of net income or loss, interest expense, income
taxes, depreciation of property and equipment, amortization of intangible
assets, deferred debt costs and deferred rack costs, senior subordinated
notes issued and provision for impairment of intangible assets and
goodwill. Bank EBITDA is used in calculating covenant compliance under
the Company's credit agreement. Bank EBITDA is defined as EBITDA
excluding certain allowable charges. EBITDA and Bank EBITDA are not
measures of financial performance in accordance with GAAP. You should not
consider them as alternatives to net loss as a measure of operating
performance. Our calculation of EBITDA and Bank EBITDA may be different
from the calculations used by other companies and therefore comparability
may be limited. We present EBITDA to provide additional information
regarding our performance and because it is a measure by which we gauge
our profitability. In addition, information concerning Bank EBITDA is
being presented because it reflects important components included in the
financial covenants of the Company's credit agreement.
Condensed Consolidated Balance Sheets
(in thousands)
ASSETS March 31, 2008 June 30, 2008
CURRENT ASSETS:
Cash and cash equivalents $64,166 $19,576
Trade receivables, net 57,074 53,647
Inventories 28,629 29,744
Prepaid expenses and other current assets 14,229 15,041
Total current assets 164,098 118,008
NON-CURRENT ASSETS:
Property and equipment, net 5,097 4,992
Deferred debt costs, net 14,050 11,304
Deferred rack costs, net 7,749 9,064
Other long-term assets 2,750 2,700
Goodwill 359,663 359,663
Other identified intangibles, net 387,752 385,875
TOTAL ASSETS $941,159 $891,606
LIABILITIES AND STOCKHOLDER'S DEFICIT
CURRENT LIABILITIES:
Term loan $12,629 $4,500
Senior subordinated notes, net - 413,393
Accounts payable 42,511 40,022
Accrued expenses and other liabilities 65,210 66,913
Accrued interest 24,247 16,540
Deferred revenues 41,666 43,656
Total current liabilities 186,263 585,024
NON-CURRENT LIABILITIES:
Term loan and revolving credit facility 497,371 462,246
Senior subordinated notes, net 567,681 154,662
Deferred income taxes 88,926 88,359
Total liabilities 1,340,241 1,290,291
STOCKHOLDER'S DEFICIT:
Total stockholder's deficit (399,082) (398,685)
TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT $941,159 $891,606
Consolidated Statements of Income (Loss)
(in thousands)
Fiscal Quarters Ended
June 30, June 30,
2007 2008
OPERATING REVENUES:
Circulation $66,357 $67,709
Advertising 46,503 42,245
Other 8,272 8,868
Total operating revenues 121,132 118,822
OPERATING EXPENSES:
Editorial 12,639 12,697
Production 35,346 33,271
Distribution, circulation and other cost
of sales 20,638 20,970
Selling, general and administrative 22,929 23,620
Depreciation and amortization 3,284 2,712
Total operating expenses 94,836 93,270
OPERATING INCOME 26,296 25,552
OTHER INCOME (EXPENSE):
Interest expense (24,691) (23,493)
Amortization of deferred debt costs (2,686) (2,746)
Other income, net 634 306
Total other expense (26,743) (25,933)
LOSS BEFORE BENEFIT FOR INCOME TAXES
AND (LOSS) INCOME FROM DISCONTINUED OPERATIONS (447) (381)
BENEFIT FOR INCOME TAXES (508) (269)
INCOME (LOSS) FROM CONTINUING OPERATIONS 61 (112)
(LOSS) INCOME FROM DISCONTINUED OPERATIONS,
NET OF INCOME TAXES (184) 500
NET (LOSS) INCOME $(123) $388
Condensed Consolidated Statements of Cash Flows
(in thousands)
Fiscal Quarters Ended
June 30, 2007 June 30, 2008
Cash Flows from Operating Activities:
Net cash used in operating activities $(20,791) $(690)
Cash Flows from Investing Activities:
Purchases of property and
equipment (468) (730)
Proceeds from sale of assets 385 5
Proceeds from sale of discontinued
operations - 500
Investment in Mr. Olympia, LLC (300) (300)
Net cash used in investing activities (383) (525)
Cash Flows from Financing Activities:
Term loan and revolving credit facility
principal repayments - (43,254)
Payment of deferred debt costs (942) (128)
Net cash used in financing activities (942) (43,382)
Effect of exchange rate changes on cash (4) 7
Net Decrease in Cash and Cash Equivalents (22,120) (44,590)
Cash and Cash Equivalents, Beginning of
Period 60,414 64,166
Cash and Cash Equivalents, End of Period $38,294 $19,576
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