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8-K - FORM 8-K - MARTHA STEWART LIVING OMNIMEDIA INCd80231d8k.htm

Exhibit 99.1

Martha Stewart Living Omnimedia Reports Third Quarter 2015 Financial Results

Update On MSLO’s Merger With Sequential Brands Group

NEW YORK, Nov. 5, 2015 /PRNewswire/ — Martha Stewart Living Omnimedia, Inc. (NYSE: MSO) today announced its financial results for the third quarter ended September 30, 2015.

Third Quarter 2015 Summary

“Third quarter results came in line with expectations reflecting the continued realization of cost savings initiatives and third-party partnerships put in place at the start of the fiscal year,” said CEO Dan Dienst. “Our planned merger with Sequential Brands Group remains on track and our combined proxy statement/prospectus has been mailed to shareholders and a Special Meeting of Shareholders to approve the merger is scheduled for December 2, 2015 with an effective closing shortly thereafter.”

Dan Dienst added, “As we approach the 25th anniversary of the first issue of Martha Stewart Living magazine, our entire organization looks forward to helping write this next exciting chapter of our Company.”

Revenues totaled $17.5 million in the third quarter of 2015, compared to $29.6 million in the third quarter of 2014. The anticipated decline was primarily due to the Company’s partnership with Meredith Corporation under which we no longer recognize advertising and circulation revenue from Martha Stewart Living and only receive a share of digital revenues (in exchange for licensing out sales, printing, distribution and hosting costs) as well as lower Merchandising revenues.

Total operating loss for the third quarter of 2015 was $(1.3) million, inclusive of $1.1 million in merger transaction costs, compared to total operating loss of $(14.9) million in the third quarter of 2014. The prior -year comparable period included an $(11.4) million non-cash impairment charge recorded in the Company’s merchandising segment.

Basic and diluted net loss per share was $(0.03) for the third quarter of 2015 compared to $(0.19) for the third quarter of 2014.

Third Quarter 2015 Results by Segment

Three Months Ended September 30,

(unaudited, in thousands)

 

     2015     2014  

REVENUES

    

Publishing

   $ 5,323      $ 15,781   

Merchandising

     11,669        13,691   

Broadcasting

     468        139   
  

 

 

   

 

 

 

Total Revenues

   $ 17,460      $ 29,611   
  

 

 

   

 

 

 

OPERATING (LOSS) / INCOME

Publishing

   $ (2,404   $ (6,246

Merchandising

     8,298        (1,548

Broadcasting

     305        (36

Corporate

     (7,478     (7,020
  

 

 

   

 

 

 

Total Operating Loss

   $ (1,279   $ (14,850
  

 

 

   

 

 

 

Publishing

Revenues in the third quarter of 2015 were $5.3 million, compared to $15.8 million in the prior year’s third quarter reflecting our agreement with Meredith Corporation which resulted in the Company’s elimination of recognizing advertising and circulation revenue from Martha Stewart Living and a digital advertising revenue share arrangement.

Operating loss was $(2.4) million for the third quarter of 2015, compared to $(6.2) million in the prior year’s third quarter primarily due to cost reductions from our partnership with Meredith.


Merchandising

Revenues for the third quarter of 2015 were $11.7 million, compared to $13.7 million in the prior year’s third quarter due to the expiration of certain partnerships as well as lower sales at The Home Depot. The decline in revenue was partially offset by increased revenue from our partnership with PetSmart.

Operating income was $8.3 million for the third quarter of 2015 as compared to an operating loss of $(1.5) million in the third quarter of 2014. Last year’s third quarter included a non-cash impairment charge of $(11.4) million.

Broadcasting

Revenues for the third quarter of 2015 were $0.5 million, compared to $0.1 million in the prior year’s third quarter.

Operating income was $0.3 million the third quarter of 2015 compared to an operating loss of $(0.04) million in the third quarter of 2014.

Corporate

Corporate expenses were $(7.5) million in the third quarter of 2015 compared to $(7.0) million in the prior year’s quarter. The increase was primarily due to merger transaction costs of $1.1 million, which was partially offset by reduced headcount.

Sequential Brands Group Transaction Update

On Friday, October 23rd, the registration statement on Form S-4 filed by Singer Madeline Holdings, Inc. (the “Registration Statement”) was declared effective by the Securities and Exchange Commission (the “SEC”) and on October 27th, a combined proxy statement/prospectus filed with the SEC by MSLO on Schedule 14A. The combined proxy statement/prospectus, which contains important information about the proposed merger transaction, including how to vote on the transaction, has been mailed to MSLO stockholders. The MSLO Board of Directors established a record date of October 26, 2015 and has scheduled a special meeting of stockholders for December 2, 2015 at 9:00am in order to obtain the requisite stockholder approval for the transaction. The Company anticipates that the transaction will close shortly after the vote.

Investor Call and Webcast

The Company will host a conference call with analysts and investors on Thursday, November 5, 2015 at 8:30am ET that will be broadcast live over the Internet at www.marthastewart.com/ir, and an archived version will be available through November 20, 2015.

About Martha Stewart Living Omnimedia, Inc.

Martha Stewart Living Omnimedia, Inc. (MSLO) is a globally recognized lifestyle company committed to providing consumers with inspiring content and well-designed, high quality products. 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. Forward-looking statements are based on current expectations and are indicated by words or phrases such as “anticipate,” “estimate,” “expect,” “intend,” “believe,” “continue,” “potential” or similar words or phrases and involve known and unknown risks, uncertainties, and other factors which may cause actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed in or implied by such forward-looking statements.

Such forward-looking statements include: the continued success of our brands and the reputation and popularity of Martha Stewart and Emeril Lagasse; adverse reactions to publicity relating to Ms. Stewart or Mr. Lagasse by consumers, advertisers and business partners; loss of the services of Ms. Stewart or Mr. Lagasse; our ability to successfully implement our growth strategies; our ability to develop new or expand existing merchandising and licensing programs or the loss or failure of existing programs, including as a result of litigation or disputes with our partners; failure to predict, respond to and influence trends in consumer taste; our inability to successfully and profitably develop or introduce new products and services; our inability to predict, respond to or influence trends that are appealing to the public; our dependence on our partnership with Meredith Corporation for ongoing publication, distribution and exploitation of our magazines and continued hosting, advertising and other services related to our websites and a potential disruption in this relationship; increased competition for our print and digital content and our consumer products; continued weak and uncertain worldwide economic conditions; our ability to retain key employees; the cost of defending certain litigations we are party to, which have been and may continue to be significant; our inability to realize the value recorded for intangible assets which could results in impairment charges; and failure to protect our intellectual property.


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/.

Additional Information and Where To Find It

In connection with the proposed merger transaction, on July 29, 2015, Singer Madeline Holdings, Inc. (“TopCo”) filed with the SEC a registration statement, as amended (the “Registration Statement”). The Registration Statement was declared effective by the SEC on October 23, 2015 and includes a combined proxy statement/prospectus filed with the SEC by MSLO on October 27, 2015 on Schedule 14A, which forms a part of the TopCo Registration Statement. The proxy statement/prospectus and other relevant documents have been mailed to MSLO stockholders. The Registration Statement and the proxy statement/prospectus contain important information about the proposed transaction and related matters. BEFORE MAKING ANY VOTING DECISION, MSLO’S STOCKHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS IN THEIR ENTIRETY AND ANY OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED MERGER OR INCORPORATED BY REFERENCE IN THE REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER AND THE PARTIES TO THE MERGER. MSLO’s stockholders may obtain a free copy of the Registration Statement, the proxy statement/prospectus and other relevant documents filed or furnished with the SEC (when they become available) by MSLO, Sequential and TopCo at the SEC’s website at http://www.sec.gov. In addition, MSLO’s stockholders may request a free copy of the proxy statement/prospectus and other of MSLO’s filings with the SEC from MSLO’s website at www.marthastewart.com/IR or by directing a request to: Martha Stewart Living Omnimedia, Inc., Attn: Corporate Secretary, 601 West 26th Street, New York, New York 10001 or knash@marthastewart.com.

Participants in the Solicitation

The directors, executive officers and certain other members of management and employees of MSLO may be deemed “participants” in the solicitation of proxies from stockholders of MSLO in favor of the proposed merger. Information regarding the persons who may, under the rules of the SEC, be considered participants in the solicitation of the stockholders of MSLO in connection with the proposed merger is set forth in the proxy statement/prospectus and the other relevant documents to be filed with the SEC. You can find information about MSLO’s executive officers and directors in its Annual Report on Form 10-K filed with the SEC on March 6, 2015, Amendment No. 1 to the Annual Report on Form 10-K/A filed with the SEC on April 27, 2015 and in its definitive proxy statement filed with the SEC on Schedule 14A on April 7, 2014. Information about Sequential’s directors and executive officers is available in Sequential’s proxy statement for its 2015 Annual Meeting of Stockholders filed with the SEC on April 16, 2015. Additional information regarding the participants in the proxy solicitation, and a description of their direct and indirect interests, is contained in the Registration Statement and the proxy statement/prospectus.

No Offer or Solicitation

This communication and the information contained herein shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.


Martha Stewart Living Omnimedia, Inc.

Consolidated Statements of Operations

Three Months Ended September 30,

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

 

     2015     2014  

REVENUES

    

Publishing

   $ 5,323      $ 15,781   

Merchandising

     11,669        13,691   

Broadcasting

     468        139   
  

 

 

   

 

 

 

Total revenues

     17,460        29,611   
  

 

 

   

 

 

 

Production, distribution and editorial

     (7,271     (13,988

Selling and promotion

     (1,327     (9,081

General and administrative

     (8,532     (9,259

Depreciation and amortization

     (550     (783

Impairment of trademark and goodwill

     —          (11,350

Merger transaction costs

     (1,059     —     
  

 

 

   

 

 

 

OPERATING LOSS

     (1,279     (14,850

Interest income and other, net

     110        52   
  

 

 

   

 

 

 

LOSS BEFORE INCOME TAXES

     (1,169     (14,798

Income tax (provision) / benefit

     (310     3,733   
  

 

 

   

 

 

 

NET LOSS

   $ (1,479   $ (11,065
  

 

 

   

 

 

 

LOSS PER SHARE – BASIC AND DILUTED

    

Net loss

   $ (0.03   $ (0.19
  

 

 

   

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

    

Basic and diluted

     57,476,330        57,074,872   


Martha Stewart Living Omnimedia, Inc.

Consolidated Statements of Operations

Nine Months Ended September 30,

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

 

     2015     2014  

REVENUES

    

Publishing

   $ 17,176      $ 57,516   

Merchandising

     34,650        41,494   

Broadcasting

     930        1,489   
  

 

 

   

 

 

 

Total revenues

     52,756        100,499   
  

 

 

   

 

 

 

Production, distribution and editorial

     (22,104     (44,697

Selling and promotion

     (3,586     (27,343

General and administrative

     (27,559     (27,254

Depreciation and amortization

     (1,458     (4,651

Impairment of trademark and goodwill

     —          (11,350

Merger transaction costs

     (4,129     —     
  

 

 

   

 

 

 

OPERATING LOSS

     (6,080     (14,796

Interest income / (expense) and other, net

     167        (513
  

 

 

   

 

 

 

LOSS BEFORE INCOME TAXES

     (5,913     (15,309

Income tax (provision) / benefit

     (885     3,408   
  

 

 

   

 

 

 

NET LOSS

   $ (6,798   $ (11,901
  

 

 

   

 

 

 

LOSS PER SHARE - BASIC AND DILUTED

    

Net loss

   $ (0.12   $ (0.21
  

 

 

   

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

    

Basic and diluted

     57,365,909        56,908,036   


Martha Stewart Living Omnimedia, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

 

     September 30,
2015
(unaudited)
    December 31,
2014
 

ASSETS

    

CURRENT ASSETS

    

Cash and cash equivalents

   $ 4,680      $ 11,439   

Short-term investments

     37,152        36,816   

Accounts receivable, net

     14,348        30,319   

Other current assets

     2,766        3,108   
  

 

 

   

 

 

 

Total current assets

     58,946        81,682   
  

 

 

   

 

 

 

PROPERTY AND EQUIPMENT, net

     3,898        4,106   

INTANGIBLE ASSET - TRADEMARKS

     34,700        34,700   

OTHER NONCURRENT ASSETS

     976        991   
  

 

 

   

 

 

 

Total assets

   $ 98,520      $ 121,479   
  

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

    

CURRENT LIABILITIES

    

Accounts payable and accrued liabilities

   $ 6,018      $ 14,753   

Accrued payroll and related costs

     1,777        5,706   

Current portion of deferred revenue

     16,515        16,090   
  

 

 

   

 

 

 

Total current liabilities

     24,310        36,549   
  

 

 

   

 

 

 

DEFERRED REVENUE

     5,387        10,119   

DEFERRED INCOME TAX LIABILITY

     4,612        3,755   

OTHER NONCURRENT LIABILITIES

     1,812        2,371   
  

 

 

   

 

 

 

Total liabilities

     36,121        52,794   
  

 

 

   

 

 

 

COMMITMENTS AND CONTINGENCIES

    

SHAREHOLDERS’ EQUITY

    

Class A Common Stock, $0.01 par value, 350,000,000 shares authorized: 32,571,468 and 32,260,936 shares issues in 2015 and 2014, respectively; 32,512,068 and 32,201,536 shares outstanding in 2015 and 2014, respectively

     325        322   

Class B Common Stock, $0.01 par value, 150,000,000 shares authorized: 24,984,625 shares issued and outstanding in 2015 and 2014, respectively

     250        250   

Capital in excess of par value

     345,522        345,021   

Accumulated deficit

     (282,907     (276,109

Accumulated other comprehensive loss

     (16     (24
  

 

 

   

 

 

 
     63,174        69,460   
  

 

 

   

 

 

 

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

     (775     (775
  

 

 

   

 

 

 

Total shareholders’ equity

     62,399        68,685   
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 98,520      $ 121,479   
  

 

 

   

 

 

 

 

 

 

CONTACT: Katherine Nash, Martha Stewart Living Omnimedia, Inc. Investor Relations, 512-757-2566, knash@marthastewart.com