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8-K - FORM 8-K - MARTHA STEWART LIVING OMNIMEDIA INCd682076d8k.htm

Exhibit 99.1

Martha Stewart Living Omnimedia Reports Fourth Quarter and Full Year 2013 Results

NEW YORK, Feb. 25, 2014 /PRNewswire/ — Martha Stewart Living Omnimedia, Inc. (NYSE: MSO) today announced its results for the fourth quarter and full year ended December 31, 2013. The Company reported net income for the fourth quarter of $7.0 million and net loss of $(1.8) million.

“We ended the full year with a $54.5 million improvement in Operating Income from the prior year. In the fourth quarter just completed, growth in Merchandising was offset by anticipated lower revenues from Publishing which was expected due to the restructuring that took place in the prior year to reduce our print title count from four to two,” said Dan Dienst, Chief Executive Officer. “As promised, we also took some aggressive and important steps in the last quarter of 2013 to align our cost structure with marketplace realities and more importantly to become nimbler, more efficient, generators of ideas, inspirations, content and product. We also promised to put to bed several pieces of notable and distracting litigation, and we did so.” Mr. Dienst continued, “With some of the best, brightest and most passionate employees in our business lines – all of whom have embraced our new way of chasing opportunities as One Company—we are very excited about the groundwork we will lay in 2014 for tapping our esteemed brand’s fullest potential.”

Fourth Quarter 2013 Summary

Total revenues were $47.4 million in the fourth quarter of 2013, compared to $56.4 million in the fourth quarter of 2012 as the 2012 publishing restructuring resulted in lower revenues partially offset by growth in Merchandising.

Total operating income for the fourth quarter of 2013 was $5.9 million compared with $1.4 million in the prior-year period.

Basic and diluted net income per share was $0.12 for the fourth quarter of 2013, compared to $0.02 for the fourth quarter of 2012.

Full-Year 2013 Summary

Total revenues were $160.7 million in 2013, compared to $197.6 million in 2012.

Total operating loss for the full year 2013 was $(1.9) million compared to an operating loss of $(56.4) million in 2012. Included in 2012 results was a $(44.3) million non-cash impairment charge reflecting the write-down of goodwill related to the Company’s publishing segment.

Net loss per share was $(0.03) for the full year 2013, compared to a net loss per share of $(0.83) in 2012.

Fourth Quarter 2013 Results by Segment

Three Months Ended December 31

(unaudited, in thousands)

 

     2013     2012  

REVENUES

    

Publishing

   $  28,420      $ 35,332   

Merchandising

     18,216        16,219   

Broadcasting

     769        4,812   
  

 

 

   

 

 

 

Total Revenues

   $ 47, 405      $ 56,363   
  

 

 

   

 

 

 

OPERATING (LOSS) / INCOME

    

Publishing

   $ (1,787   $ (2,343

Merchandising

     13,640        11,330   

Broadcasting

     343        2,953   

Corporate

     (6,336     (10,580
  

 

 

   

 

 

 

Total Operating Income

   $ 5,860      $ 1,360   
  

 

 

   

 

 

 


Recent Business Highlights

 

    MSLO continues to engage consumers via social media, demonstrated by almost 9 million fans and followers across all its platforms including 1 million fans on Facebook and almost 3 million followers on Twitter.

 

    In December, Martha Stewart Living won Adweek’s Hot List Award for Hottest Women’s Magazine.

 

    For the second year in a row, Martha Stewart Living was recognized by Apple as one of the best newsstand apps of the year.

 

    After highly popular first and second seasons, the third season of Martha Stewart’s Cooking School started airing on PBS this month and the third season of Martha Bakes is scheduled to air in April.

 

    Unique visitors online and on mobile increased 13% in the fourth quarter over the prior year.

 

    Total digital revenue for the full year 2013 grew 13% over the prior year period.

Publishing

Revenues in the fourth quarter of 2013 were $28.4 million, compared to $35.3 million in the prior year’s fourth quarter. In the 2013 fourth quarter, MSLO published two issues of Martha Stewart Living, compared with three in the prior year period. The two published issues generated improved advertising sales compared with the same 2012 issues. Partially offsetting the decline in print revenue was an increase in digital revenue in the quarter.

Operating loss was $(1.8) million for the fourth quarter of 2013, compared to $(2.3) million in the prior year.

Merchandising

Revenues increased 12% to $18.2 million for the fourth quarter of 2013, as compared to $16.2 million in the prior year’s fourth quarter, benefitting from royalty revenue recognition, new in 2013, from the Company’s relationship with J.C. Penney.

Operating income was $13.6 million for the fourth quarter of 2013 as compared to $11.3 million in the fourth quarter of 2012.

Broadcasting

Revenue in the fourth quarter of 2013 was $0.8 million, compared to $4.8 million in the fourth quarter of 2012, primarily due to non- recurring items in the prior year related to our historical Broadcasting operations.

Operating income was $0.3 million for the fourth quarter of 2013 compared to operating income of $3.0 million in the fourth quarter of 2012.

Corporate

Corporate expenses were $(6.3) million in the fourth quarter of 2013 compared to $(10.6) million in the prior year’s quarter, due to a reimbursement from our insurance carrier related to the Macy’s litigation and lower executive compensation.

The Company will host a conference call with analysts and investors on February 25, 2014 at 8:30am EST that will be broadcast live over the Internet at www.marthastewart.com/ir, and an archived version will be available through March 11, 2014.

About Martha Stewart Living Omnimedia, Inc.

Martha Stewart Living Omnimedia, Inc. (MSLO) is a leading provider of original “how-to” information, inspiring and engaging consumers with unique lifestyle content and high-quality products. MSLO is organized into the following business segments: Publishing, Merchandising and Broadcasting. MSLO is listed on the New York Stock Exchange under the ticker symbol MSO.

Forward-Looking Statements

This press release may contain certain statements that we believe are, or may be considered to be, “forward-looking statements,” as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward -looking statements generally can be identified by the use of statements that include phrases such as we “may,” “will,” “should,” “could,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “potential” or “continue” or other similar references to future periods or the negative of these terms.

Forward-looking statements are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and our actual results may differ materially from those contemplated by the forward -looking statements. Such forward -looking statements include: adverse reactions to publicity relating to Martha Stewart or Emeril Lagasse by consumers, advertisers and business partners; loss of the services of Ms. Stewart or Mr. Lagasse; continued management turnover; inability to successfully capitalize on digital, mobile and video initiatives, including establishing relationships with additional distribution partners; softening of or increased competition in the domestic advertising market; failure by the economy to sustain any meaningful recovery and other economic developments that limit consumers’ discretionary spending or affect the value of our assets or access to credit or other funds; inability to expand merchandising and licensing programs or the loss or failure of existing programs, including as a result of litigation or disputes with merchandising segment partners; inability to grow our online presence; failure to successfully implement our cost savings initiatives; failure to protect our intellectual property; changes in media consumption behavior; increases in paper, postage, freight or printing costs; weakening in circulation, particularly in newsstand sales; operational or financial problems at any of our business partners; our inability to successfully and profitably develop or introduce new products; consolidation of our principal print business vendors, which may lead to increased prices and service delays; and failure to predict, respond to and influence trends in consumer taste and/or shifts in business strategies.

Certain of these and other factors are discussed in more detail in the Company’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission, especially under the heading “Risk Factors,” which may be accessed through the SEC’s website at http://www.sec.gov/.


Martha Stewart Living Omnimedia, Inc.

Consolidated Statements of Operations

Three Months Ended December 31,

(unaudited, in thousands, except share and per share amounts)

 

     2013     2012  

REVENUES

    

Publishing

   $ 28,420      $ 35,332   

Merchandising

     18,216        16,219   

Broadcasting

     769        4,812   
  

 

 

   

 

 

 

Total revenues

     47,405        56,363   
  

 

 

   

 

 

 

Production, distribution and editorial

     (16,789     (24,470

Selling and promotion

     (12,685     (14,499

General and administrative

     (8,489     (11,512

Depreciation and amortization

     (818     (979

Restructuring charges

     (2,764     (3,543
  

 

 

   

 

 

 

OPERATING INCOME

     5,860        1,360   

Interest income, net

     222        294   

Other expense, net

     (97     (150
  

 

 

   

 

 

 

INCOME BEFORE INCOME TAXES

     5,985        1,504   

Income tax benefit / (provision)

     991        (394
  

 

 

   

 

 

 

NET INCOME

   $ 6,976      $ 1,110   
  

 

 

   

 

 

 

INCOME PER SHARE—BASIC AND DILUTED

    

Net income—Basic

   $ 0.12      $ 0.02   
  

 

 

   

 

 

 

Net income—Diluted

   $ 0.12      $ 0.02   
  

 

 

   

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

  

Basic

     57,630,635        67,330,288   

Diluted

     58,011,584        67,621,961   


Martha Stewart Living Omnimedia, Inc.

Consolidated Statements of Operations

Twelve Months Ended December 31,

(unaudited, in thousands, except share and per share amounts)

 

     2013     2012  

REVENUES

    

Publishing

   $ 96,493      $ 122,540   

Merchandising

     59,992        57,574   

Broadcasting

     4,190        17,513   
  

 

 

   

 

 

 

Total revenues

     160,675        197,627   
  

 

 

   

 

 

 

Production, distribution and editorial

     (73,121     (103,347

Selling and promotion

     (45,033     (52,453

General and administrative

     (39,945     (45,148

Depreciation and amortization

     (3,758     (4,007

Restructuring charges

     (3,439     (4,811

Goodwill impairment

     —          (44,257

Gain on sale of subscriber list, net

     2,724        —     
  

 

 

   

 

 

 

OPERATING LOSS

     (1,897     (56,396

Interest income, net

     792        1,202   

Other (expense) / income, net

     (583     711   
  

 

 

   

 

 

 

LOSS BEFORE INCOME TAXES

     (1,688     (54,483

Income tax provision

     (84     (1,602
  

 

 

   

 

 

 

NET LOSS

   $ (1,772   $ (56,085
  

 

 

   

 

 

 

LOSS PER SHARE—BASIC AND DILUTED

    

Net loss

   $ (0.03   $ (0.83
  

 

 

   

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

    

Basic and diluted

     64,912,368        67,231,463   


Martha Stewart Living Omnimedia, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

 

     December 31,        
     2013     December 31,  
     (unaudited)     2012  

ASSETS

    

CURRENT ASSETS

    

Cash and cash equivalents

   $ 21,884      $ 19,925   

Short-term investments

     19,268        29,182   

Restricted cash and investments

     5,072        —     

Accounts receivable, net

     39,694        38,073   

Paper inventory

     2,901        4,580   

Deferred television production costs

     228        434   

Other current assets

     3,648        3,335   
  

 

 

   

 

 

 

Total current assets

     92,695        95,529   
  

 

 

   

 

 

 

PROPERTY AND EQUIPMENT, net

     7,961        10,738   

GOODWILL

     850        850   

OTHER INTANGIBLE ASSETS, net

     45,200        45,203   

OTHER NONCURRENT ASSETS

     1,661        1,940   
  

 

 

   

 

 

 

Total assets

   $ 148,367      $ 154,260   
  

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

    

CURRENT LIABILITIES

    

Accounts payable and accrued liabilities

   $ 12,464      $ 13,132   

Accrued payroll and related costs

     8,665        9,316   

Current portion of deferred subscription revenue

     7,632        13,168   

Current portion of other deferred revenue

     17,227        5,605   
    

 

 

 

Total current liabilities

     45,988        40,859   
    

 

 

 

DEFERRED SUBSCRIPTION REVENUE

     3,587        4,478   

OTHER DEFERRED REVENUE

     17,307        1,113   

DEFERRED INCOME TAX LIABILITY

     7,094        7,117   

OTHER NONCURRENT LIABILITIES

     3,916        4,815   
    

 

 

 

Total liabilities

     77,892        58,744   
    

 

 

 

COMMITMENTS AND CONTINGENCIES

    

SHAREHOLDERS’ EQUITY

    

Series A Preferred Stock, zero issued and outstanding in 2013, 1 share issued and outstanding in 2012

     —          —     

Class A Common Stock, $0.01 par value, 350,000,000 shares authorized: 30,704,491 and 41,220,689 shares issues in 2013 and 2012, respectively; 30,645,091 and 41,161,289 shares outstanding in 2013 and 2012, respectively

     307        412   

Class B Common Stock, $0.01 par value, 150,000,000 shares authorized: 25,984,625 shares issued and outstanding in 2013 and 2012

     260        260   

Capital in excess of par value

     342,213        340,586   

Accumulated deficit

     (271,051     (244,529

Accumulated other comprehensive loss

     (479     (438
  

 

 

   

 

 

 
     71,250        96,291   
  

 

 

   

 

 

 

Less: Class A treasury stock - 59,400 shares at cost

     (775     (775
  

 

 

   

 

 

 

Total shareholders’ equity

     70,475        95,516   
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 148,367      $ 154,260   
  

 

 

   

 

 

 

CONTACT: Katherine Nash, Martha Stewart Living Omnimedia, Inc. Investor Relations, 212-827-8348, knash@marthastewart.com