-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IGMmTMFeQu7PY8OLxaVsCTrurT94afzkuiY/7G/k/yJ+zVjM8izDx/EZFNuRRx9Z eWWLA9ydwpJ0Iz+RrXbgig== 0000895345-04-000128.txt : 20040304 0000895345-04-000128.hdr.sgml : 20040304 20040304100448 ACCESSION NUMBER: 0000895345-04-000128 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040304 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040304 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARTHA STEWART LIVING OMNIMEDIA INC CENTRAL INDEX KEY: 0001091801 STANDARD INDUSTRIAL CLASSIFICATION: PERIODICALS: PUBLISHING OR PUBLISHING AND PRINTING [2721] IRS NUMBER: 522187059 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-15395 FILM NUMBER: 04647693 BUSINESS ADDRESS: STREET 1: 20 WEST 43RD STREET CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 2128278000 MAIL ADDRESS: STREET 1: 20 WEST 43RD STREET CITY: NEW YORK STATE: NY ZIP: 10036 8-K 1 wd8k_stewart.txt =============================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 ----------------------------------- DATE OF REPORT: MARCH 4, 2004 DATE OF EARLIEST EVENT REPORTED: MARCH 4, 2004 MARTHA STEWART LIVING OMNIMEDIA, INC. (Exact name of registrant as specified in its charter) DELAWARE 001-15395 52-2187059 (State or other (Commission File Number) (I.R.S. Employer jurisdiction of Identification Number) incorporation or organization) 11 WEST 42ND STREET NEW YORK, NY 10036 (Address of principal executive offices) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 827-8000 Item 7. Financial Statements and Exhibits. --------------------------------- (c) Exhibit Description ------- ----------- 99.1 Martha Stewart Living Omnimedia, Inc. Press Release, dated March 4, 2004. Item 12. Results of Operations and Financial Condition. --------------------------------------------- On March 4, 2004, the Registrant issued a press release relating to its financial results for the fourth quarter of 2003 and the fiscal year ended December 31, 2003. The full text of the press release is attached hereto as Exhibit 99.1 to this report. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf of the undersigned hereunto duly authorized. Dated: March 4, 2004 MARTHA STEWART LIVING OMNIMEDIA, INC. By: /s/ James Follo ---------------------------------- James Follo Executive Vice President, Chief Financial and Administrative Officer Index of Exhibits ----------------- Exhibit No. Description - ----------- ----------- 99.1 Martha Stewart Living Omnimedia, Inc. press release, dated March 4, 2004. EX-99.1 3 exh99_1.txt EXHIBIT 99.1 FOR IMMEDIATE RELEASE - --------------------- MARTHA STEWART LIVING OMNIMEDIA, INC. ------------------------------------- ANNOUNCES FOURTH QUARTER AND FULL-YEAR RESULTS ---------------------------------------------- NEW YORK, NEW YORK, MARCH 4, 2004 --- Martha Stewart Living Omnimedia, Inc. (NYSE: MSO) today announced its results for the fourth quarter and full-year periods ended December 31, 2003. Revenues for the fourth quarter of 2003 were $70.9 million, compared to $77.6 million in the prior year's quarter. Operating income for the fourth quarter was $5.8 million, compared to an operating loss of $3.4 million for the fourth quarter of 2002. Operating income before depreciation and amortization and restructuring charges ("OIDA") for the fourth quarter of 2003 was $9.4 million, compared to $7.0 million in the same period last year. Earnings per share from continuing operations were $0.10 for the fourth quarter of 2003, compared to a loss of $0.03 in the 2002 quarter. The fourth quarter of 2002 and full-year results included restructuring charges of $7.7 million, or $0.09 per share net of tax. Excluding the restructuring charges, operating income would have been $4.3 million in the fourth quarter of 2002 and earnings per share would have been $0.06. For the year ended December 31, 2003, revenues were $245.8 million compared to $295.0 million in 2002. Operating income (loss) was $(6.4) million in 2003, compared to $20.0 million in 2002, and diluted loss per share from continuing operations was $(0.04) in 2003, compared to earnings per share of $0.27 in the prior year, including the impact of the restructuring charges. Excluding the impact of the restructuring charges, operating income would have been $27.7 million, and diluted earnings per share from continuing operations would have been $0.36 in 2002. Sharon L. Patrick, President and Chief Executive Officer, said, "We are pleased that fourth quarter results are better than expected. Nevertheless, we continued to feel the negative impact of the events surrounding Martha Stewart's personal legal situation. Our improved fourth quarter results are principally due to: recognition in the quarter of the aggregate minimum guarantees under the Kmart licensing agreement and continuing success of the Martha Stewart Signature furniture with Bernhardt collections in the Merchandising segment; better than expected circulation results and increased productivity from our Publishing segment; and the improved performance of our now smaller, more niche-focused catalog, Martha Stewart: The Catalog For Living, from our Internet/Direct Commerce segment. Moreover, shoppers' response to our expanded collection of Martha Stewart Everyday Holiday products was enthusiastic, underscoring once again that consumer demand for our high value products remains stable under difficult circumstances. Our large and loyal core base of readers, viewers, and customers continues to seek the unique blend of "how-to" expertise, quality, affordability and style that defines our brand, and MSO continues to deliver. "During this time of uncertainty, we continued to manage MSO for the long-term, investing to grow our core brand equity, controlling costs wherever so doing does not conflict with our overriding goals. As such, we will continue to invest in new brands and brand labels like Everyday Food and Petkeeping with Marc Morrone, both successfully launched in 2003. Our financial condition remains strong, with $169 million in cash and short-term investments and no debt, which gives us the ability to continue our long-term management philosophy and investment strategy. As the trial approaches conclusion, we have prepared for the various possible outcomes and are focused on strategies to grow the value of the business and improve the future financial performance." FOURTH QUARTER 2003 RESULTS BY SEGMENT - -------------------------------------- PUBLISHING - ---------- Revenues in the quarter were $33.1 million, compared to $45.7 million in the year-ago period. Operating income and OIDA were each $3.9 million for the quarter, compared to $15.5 million for each in the year-ago period. The results reflect lower advertising and circulation revenue from Martha Stewart Living magazine in the quarter, investment spending in Everyday Food, and a decline in profitability of our Special Interest Publications. The publication schedule was consistent with last year with the exception of our new magazine, Everyday Food, which published two issues in the current period. During the quarter, Everyday Food, which recently was named Launch of the Year in Folio: magazine, completed its first major subscriber acquisition effort. As a result of the strong consumer response, we now expect the circulation of Everyday Food in the first half of 2004 to well exceed our stated rate base of 500,000. TELEVISION - ---------- Revenues in the fourth quarter of 2003 were $5.9 million, compared to $6.4 million in the prior year's quarter. Operating income for the fourth quarter of 2003 was a loss of $(2.8) million, compared to $0.2 million in the fourth quarter of 2002. The current quarter operating income includes $1.7 million of accelerated depreciation related to the write-down to fair-value of certain television studio assets. OIDA was a loss of $(0.9) million for this year's fourth quarter, compared to $0.6 million in the prior year's fourth quarter. The decline in profitability was due primarily to the combined impact of lower license fee revenue with higher production costs, as well as increased marketing expenses related to the Company's nationally syndicated daily show. MERCHANDISING - ------------- Revenues in the fourth quarter of 2003 were $22.5 million, compared to $11.8 million in the prior year quarter. Revenues in the 2003 quarter reflect the recognition of the aggregate minimum royalties due under our agreement with Kmart, but not category minimum amounts. The amount of royalties recognized under minimum guarantee provisions in the agreement was $10.2 million in the period. The quarter also benefited from the positive consumer acceptance of the Martha Stewart Signature furniture with Bernhardt collections. Fourth quarter 2003 operating income was $18.3 million, compared to $7.1 million in the fourth quarter of 2002. OIDA was $18.5 million, compared to $7.3 million in the prior year's quarter. During the quarter we also successfully expanded the Martha Stewart Everyday Holiday collection at Kmart. This collection expansion was well received by shoppers decorating for the holidays. The results for the quarter exclude royalties of $3.3 million ($4.5 million as of January 31, 2004) related to guarantees for certain product categories as provided for in our agreement with Kmart. As previously disclosed, Kmart recently filed an action against the company in which it asserts that it is required to pay only certain royalties, which exclude royalties resulting from the category minimum guarantee. As a result of the litigation, we have not recognized the category minimums in our current year revenue. The company believes that the license agreement is unambiguous and that Kmart's interpretation is inconsistent with the agreement, and MSO intends to vigorously defend this action and enforce the terms of the agreement. INTERNET/DIRECT COMMERCE - ------------------------ Revenues were $9.4 million, compared to $13.7 million in the same period a year ago. The lower revenues in the quarter were due to lower product sales and lower advertising revenues. The lower product sales were primarily a result of our efforts to circulate fewer catalogs and focus on more efficient circulation levels. Operating loss was $(1.2) million for the fourth quarter of 2003, compared to $(8.1) million in the fourth quarter of 2002, excluding restructuring charges. OIDA was $(1.0) million in the 2003 quarter, compared to $(7.3) million in the year-ago period, excluding restructuring charges. The reduced loss is primarily a result of more efficient catalog circulation, the favorable results of inventory disposition programs, and more efficient fulfillment operations. The segment also continues to benefit from cost savings initiatives begun in the early part of 2003. Depreciation and amortization in the fourth quarter of 2003 was $0.2 million, compared to $0.7 million in the fourth quarter of 2002, primarily as a result of a write down of costs associated with the Company's website taken in the fourth quarter of 2002. CORPORATE OVERHEAD - ------------------- Corporate overhead, including depreciation and amortization, was $12.3 million, compared to $10.4 million in the prior year's quarter. Corporate overhead, before depreciation and amortization, was $11.2 million for the fourth quarter of 2003, compared to $9.1 million in the fourth quarter of 2002. The current quarter includes $1.3 million of expense resulting from a November 2003 stock option exchange program. The principal component of the expense is the non-cash amortization of the value of restricted stock units issued in exchange for employee stock options. DEPRECIATION AND AMORTIZATION - ----------------------------- Depreciation and amortization of $3.6 million in the fourth quarter of 2003 compares to $2.7 million for the fourth quarter 2002. The current quarter includes $1.7 million of accelerated depreciation related to the impairment of certain long-lived assets related to our television studio resulting from the application of FAS 144 "Accounting for the Impairment or Disposal of Long-Lived Assets". Offsetting the increase was lower depreciation in the 2003 quarter resulting from a write down of costs associated with the Company's website taken in the fourth quarter of 2002. FULL-YEAR 2003 OPERATING RESULTS - -------------------------------- Revenues for the year ended December 31, 2003, were $245.8 million, compared to $295.0 million for the year ended December 31, 2002. Operating income (loss) was $(6.4) million for the year ended December 31, 2003, compared to $20.0 million for the year ended December 31, 2002, while OIDA for the year ended December 31, 2003, was $3.3 million, compared to $39.3 million in the same period one year ago. Prior period operating income includes the impact of the fourth quarter restructuring charge of $7.7 million related to the Internet/Direct Commerce segment. Excluding the charge, operating income would have been $27.7 million for the year ended December 31, 2002. For the year ended December 31, 2003, net loss from continuing operations was $(1.9) million or $(0.04) per share, this compares to net income from continuing operations of $13.3 million, or $0.27 per share, in the year ending December 31, 2002. The results for the year ended December 31, 2002, included the cumulative effect of an accounting change resulting from the adoption of FAS 142 that resulted in the reduction to the carrying value of the Company's goodwill by $5.0 million ($3.1 million after tax). TRENDS AND OUTLOOK - ------------------ James Follo, Chief Financial and Administrative Officer, commented, "The results for the fourth quarter reflect our disciplined strategy, which allows us to reduce operating costs where appropriate, while making investment decisions that will create long-term value. During the year, we significantly reduced the operating losses of our Internet/Direct Commerce business, while investing in new growth opportunities. First quarter 2004 results will reflect increased pressure on advertising revenues resulting primarily from the ongoing trial of Martha Stewart. Accordingly, our current expectation for this quarter is for a loss per share of approximately $(0.20). Nevertheless, the strength of our balance sheet, with no debt and a large cash balance, means we are well provisioned to continue to manage the business with a long-term view." BASIS OF PRESENTATION - --------------------- The Company believes OIDA is an appropriate measure when evaluating the operating performance of its business segments and the Company on a consolidated basis. OIDA is used externally by the Company's investors, analysts, and industry peers. OIDA is among the primary metrics used by management for planning and forecasting of future periods, and is considered an important indicator of the operational strength of the Company's businesses. The Company believes the presentation of this measure is relevant and useful for investors because it allows investors to view performance in a manner similar to the method used by the Company's management and makes it easier to compare the Company's results with other companies that have different capital structures or tax rates. The Company believes OIDA should be considered in addition to, not as a substitute for, operating income (loss), net income (loss), cash flows, and other measures of financial performance prepared in accordance with generally accepted accounting principles ("GAAP"). As OIDA is not a measure of performance calculated in accordance with GAAP, this measure may not be comparable to similarly titled measures employed by other companies. A reconciliation of OIDA to operating income (loss) is provided in the financial statements included with this release. Martha Stewart Living Omnimedia, Inc. (MSO) is a leading provider of original how-to information that turns dreamers into doers, inspiring and engaging consumers with unique content and high-quality products for the home. MSO's creative experts develop content within eight core areas - Home, Cooking and Entertaining, Gardening, Crafts, Holiday, Keeping, Weddings, and Baby and Kids - that provide consumers with ideas and products to celebrate their homes and the domestic arts. MSO is organized into four business segments - Publishing, Television, Merchandising and Internet/Direct Commerce. The Company will host a conference call with analysts and investors at 12:00 pm ET that will be broadcast live over the Internet at www.marthastewart.com. ### This press release contains certain "forward-looking statements," as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not historical facts and can be identified by the use of terminology such as "may," "will," "should," "could", "expects," "plans," and "intends." The Company's actual results may differ materially from those projected in these statements, and factors that could cause such differences include further adverse reaction to the prolonged and continued negative publicity relating to Martha Stewart by consumers, advertisers and business partners; a loss of the services, or diminution in the reputation, of Ms. Stewart; further adverse reaction by the Company's consumers, advertisers and business partners to the uncertainty relating to the nature of the resolution of the criminal and civil proceedings currently underway against Ms. Stewart concerning a sale of non-Company stock by Ms. Stewart and any adverse resolution of such proceedings; adverse resolution of some or all of the Company's ongoing litigation; any loss of the services of the Company's key personnel; downturns in national and/or local economies; shifts in our business strategies; a softening of the domestic advertising market; changes in consumer reading, purchasing and/or television viewing patterns; unanticipated increases in paper, postage or printing costs; operational or financial problems at any of our contractual business partners; the receptivity of consumers to our new product introductions; and changes in government regulations affecting the Company's industries. Certain of these and other factors are discussed in more detail in the Company's filings with the Securities and Exchange Commission, especially under the heading "Management's Discussion and Analysis", which may be accessed through the SEC's World Wide Web site at http://www.sec.gov. The Company is under no obligation to update any forward-looking statements after the date of this release. CONTACT: Investors - James Follo, Chief Financial and Administrative Officer of Martha Stewart Living Omnimedia, Inc., 212-827-8218; Media - Elizabeth Estroff, Corporate Communications, of Martha Stewart Living Omnimedia, Inc., 212-827-8281. Martha Stewart Living Omnimedia, Inc. Consolidated Statements of Operations Three Months Ended December 31, (in thousands, except per share amounts)
2003 2002 % change ------------ ------------ ------------ REVENUES Publishing $ 33,111 $ 45,668 -27.5% Television 5,922 6,357 -6.8% Merchandising 22,452 11,786 90.5% Internet/Direct Commerce 9,377 13,746 -31.8% ------------ ------------ ------------ Total revenues 70,862 77,557 -8.6% ------------ ------------ ------------ OPERATING COSTS AND EXPENSES Production, distribution and editorial 33,802 46,502 -27.3% Selling and promotion 13,388 11,149 20.1% General and administrative 14,274 12,951 10.2% Depreciation and amortization 3,589 2,655 35.2% Restructuring charge(a) - 7,692 nm ------------ ------------ ------------ Total operating costs and expenses 65,053 80,949 -19.6% ------------ ------------ ------------ OPERATING INCOME (LOSS) 5,809 (3,392) nm Interest income, net 349 517 -32.5% ------------ ------------ ------------ INCOME (LOSS) BEFORE INCOME TAXES 6,158 (2,875) nm Income tax benefit (provision) (1,310) 1,446 nm ------------ ------------ ------------ INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE LOSS FROM DISCONTINUED OPERATIONS 4,848 (1,429) nm ------------ ------------ ------------ Loss from discontinued operations, net of tax benefit (204) (573) 64.4% ------------ ------------ ------------ NET INCOME (LOSS) $ 4,644 $ (2,002) nm ============ ============ ============ EARNINGS (LOSS) PER SHARE - BASIC AND DILUTED Income (Loss) from continuing operations $ 0.10 $ (0.03) Loss from discontinued operations (0.00) (0.01) ------------ ------------ Net Income (Loss) $ 0.09 $ (0.04) ============ ============ WEIGHTED AVERAGE SHARES OUTSTANDING Basic 49,451 49,446 Diluted 49,581 49,446
Martha Stewart Living Omnimedia, Inc. Segment Information Three Months Ended December 31, (in thousands)
2003 2002 % change ------------ ------------- ------------- REVENUES Publishing $ 33,111 $ 45,668 -27.5% Television 5,922 6,357 -6.8% Merchandising 22,452 11,786 90.5% Internet/Direct Commerce 9,377 13,746 -31.8% ------------ ------------- ------------- Total revenues 70,862 77,557 -8.6% ------------ ------------- ------------- OPERATING INCOME (LOSS) BEFORE DEPRECIATION AND AMORTIZATION Publishing 3,937 15,518 -74.6% Television (852) 586 nm Merchandising 18,478 7,304 153.0% Internet/Direct Commerce (1,005) (7,326) 86.3% ------------ ------------- ------------- Operating Income before Depreciation and Amortization before Corporate Overhead 20,558 16,082 27.8% Corporate Overhead (11,160) (9,127) -22.3% ------------ ------------- ------------- Operating Income before Depreciation and Amortization 9,398 6,955 35.1% Depreciation and amortization (3,589) (2,655) -35.2% Restructuring charge(a) - (7,692) nm ------------ ------------- ------------- OPERATING INCOME (LOSS) 5,809 (3,392) nm Interest income, net 349 517 -32.5% ------------ ------------- ------------- INCOME (LOSS) BEFORE INCOME TAXES 6,158 (2,875) nm Income tax benefit (provision) (1,310) 1,446 nm ------------ ------------- ------------- INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE LOSS FROM DISCONTINUED OPERATIONS 4,848 (1,429) nm ------------ ------------- ------------- Loss from discontinued operations, net of tax benefit (204) (573) 64.4% ------------ ------------- ------------- NET INCOME (LOSS) $ 4,644 $ (2,002) nm ============ ============= =============
Martha Stewart Living Omnimedia, Inc. Consolidated Statements of Operations Year Ended December 31, (in thousands, except per share amounts)
2003 2002 % change ------------ ------------ ------------ REVENUES Publishing $ 135,936 $ 182,600 -25.6% Television 25,704 26,680 -3.7% Merchandising 53,395 48,896 9.2% Internet/Direct Commerce 30,813 36,873 -16.4% ------------ ------------ ------------ Total revenues 245,848 295,049 -16.7% ------------ ------------ ------------ OPERATING COSTS AND EXPENSES Production, distribution and editorial 136,370 161,644 -15.6% Selling and promotion 51,722 44,423 16.4% General and administrative 54,492 49,666 9.7% Depreciation and amortization 9,669 11,631 -16.9% Restructuring charge(b) - 7,692 nm ------------ ------------ ------------ Total operating costs and expenses 252,253 275,056 -8.3% ------------ ------------ ------------ OPERATING INCOME (LOSS) (6,405) 19,993 nm Interest income, net 1,439 2,120 -32.1% ------------ ------------ ------------ INCOME (LOSS) BEFORE INCOME TAXES (4,966) 22,113 nm Income tax benefit (provision) 3,043 (8,799) nm ------------ ------------ ------------ INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE LOSS FROM DISCONTINUED OPERATIONS AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE (1,923) 13,314 nm ------------ ------------ ------------ Loss from discontinued operations, net of tax benefit (848) (2,909) 70.8% ------------ ------------ ------------ INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE (2,771) 10,405 nm Cumulative effect of accounting change, net of tax benefit - (3,137) nm ------------ ------------ ------------ NET INCOME (LOSS) $ (2,771) $ 7,268 nm ============ ============ ============ EARNINGS (LOSS) PER SHARE - BASIC AND DILUTED Income (Loss) from continuing operations $ (0.04) $ 0.27 Loss from discontinued operations (0.02) (0.06) Cumulative effect of accounting change - (0.06) ------------ ------------ Net Income (Loss) $ (0.06) $ 0.15 ============ ============ WEIGHTED AVERAGE SHARES OUTSTANDING Basic 49,389 49,250 Diluted 49,389 49,343
Martha Stewart Living Omnimedia, Inc. Segment Information Year Ended December 31, (in thousands)
2003 2002 % change ------------ ------------- ------------- REVENUES Publishing $ 135,936 $ 182,600 -25.6% Television 25,704 26,680 -3.7% Merchandising 53,395 48,896 9.2% Internet/Direct Commerce 30,813 36,873 -16.4% ------------ ------------- ------------- Total revenues 245,848 295,049 -16.7% ------------ ------------- ------------- OPERATING INCOME (LOSS) BEFORE DEPRECIATION AND AMORTIZATION Publishing 19,762 62,675 -68.5% Television 358 4,282 -91.6% Merchandising 38,387 33,605 14.2% Internet/Direct Commerce (15,053) (26,683) 43.6% ------------ ------------- ------------- Operating Income before Depreciation and Amortization before Corporate Overhead 43,454 73,879 -41.2% Corporate Overhead (40,190) (34,563) -16.3% ------------ ------------- ------------- Operating Income (Loss) before Depreciation and 3,264 39,316 -91.7% Amortization Depreciation and amortization (9,669) (11,631) 16.9% Restructuring charge(b) - (7,692) nm ------------ ------------- ------------- OPERATING INCOME (LOSS) (6,405) 19,993 nm Interest income, net 1,439 2,120 -32.1% ------------ ------------- ------------- INCOME (LOSS) BEFORE INCOME TAXES (4,966) 22,113 nm Income tax benefit (provision) 3,043 (8,799) nm ------------ ------------- ------------- INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE LOSS FROM DISCONTINUED OPERATIONS AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE (1,923) 13,314 nm ------------ ------------- ------------- Loss from discontinued operations, net of tax benefit (848) (2,909) 70.8% ------------ ------------- ------------- (2,771) 10,405 nm INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE Cumulative effect of accounting change, net of tax benefit - (3,137) nm ------------ ------------- ------------- NET INCOME (LOSS) $ (2,771) $ 7,268 nm ============ ============= =============
Martha Stewart Living Omnimedia, Inc. Consolidated Balance Sheets (in thousands, except per share amounts)
December 31, December 31, 2003 2002 ------------- --------------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 165,566 $ 158,840 Short-term investments 3,100 20,110 Accounts receivable, net 39,758 37,796 Inventories, net 7,485 8,654 Deferred television production costs 3,465 4,179 Deferred income taxes 10,682 7,028 Other current assets 4,422 4,756 ------------- --------------- TOTAL CURRENT ASSETS 234,478 241,363 ------------- --------------- PROPERTY, PLANT, AND EQUIPMENT, net 22,673 31,288 ------------- --------------- INTANGIBLE ASSETS, net 44,257 44,257 ------------- --------------- DEFERRED INCOME TAXES 3,224 2,827 ------------- --------------- OTHER NONCURRENT ASSETS 4,470 4,807 ------------- --------------- TOTAL ASSETS $ 309,102 $ 324,542 ============= =============== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued liabilities $ 26,628 $ 40,517 Accrued payroll and related costs 10,360 9,385 Income taxes payable 167 323 Current portion of deferred subscription income 23,833 24,932 ------------- --------------- TOTAL CURRENT LIABILITIES 60,988 75,157 ------------- --------------- DEFERRED SUBSCRIPTION INCOME 7,133 7,715 OTHER NONCURRENT LIABILITIES 4,316 5,035 ------------- --------------- TOTAL LIABILITIES 72,437 87,907 ------------ -------------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY Class A common stock, $0.01 par value, 350,000 shares authorized: 19,628 and 19,342 shares issued in 2003 and 2002, respectively 196 194 Class B common stock, $0.01 par value, 150,000 shares authorized: 30,059 and 30,295 shares outstanding in 2003 and 2002, respectively 301 303 Capital in excess of par value 183,744 181,629 Unamortized restricted stock (307) (993) Retained earnings 53,506 56,277 ------------- --------------- 237,440 237,410 Less class A treasury stock - 59 shares at cost (775) (775) ------------- --------------- TOTAL SHAREHOLDERS' EQUITY 236,665 236,635 ------------ -------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 309,102 $ 324,542 ============ ==============
Martha Stewart Living Omnimedia, Inc. Supplemental Disclosures Regarding Non- GAAP Financial Information Three Months Ended December 31, (in thousands) The following table presents segment and consolidated financial information, including a reconciliation of operating income, a GAAP measure, and Operating Income before Depreciation and Amortization (OIDA), a non-GAAP measure. In order to reconcile OIDA to operating income, depreciation and amortization are added back to operating income.
2003 2002 % change --------------- --------------- ---------------- REVENUES Publishing $ 33,111 $ 45,668 -27.5% Television 5,922 6,357 -6.8% Merchandising 22,452 11,786 90.5% Internet/Direct Commerce 9,377 13,746 -31.8% --------------- --------------- ---------------- TOTAL REVENUES 70,862 77,557 -8.6% =============== =============== ================ OPERATING INCOME (LOSS) Publishing 3,895 15,479 -74.8% Television (2,811) 180 nm Merchandising 18,310 7,146 156.2% Internet/ Direct Commerce (1,238) (8,072) 84.7% --------------- --------------- ---------------- Operating Income before Corporate Overhead 18,156 14,733 23.2% Corporate Overhead (12,347) (10,433) -18.3% Restructuring Charge - (7,692) nm --------------- --------------- ---------------- TOTAL OPERATING INCOME 5,809 (3,392) nm =============== =============== ================ DEPRECIATION AND AMORTIZATION Publishing 42 39 7.7% Television 1,959 406 382.5% Merchandising 168 158 6.3% Internet/ Direct Commerce 233 746 -68.8% Corporate Overhead 1,187 1,306 -9.1% --------------- --------------- ---------------- TOTAL DEPRECIATION AND AMORTIZATION 3,589 2,655 35.2% =============== =============== ================ OPERATING INCOME (LOSS) BEFORE DEPRECIATION AND AMORTIZATION AND RESTRUCTURING CHARGE Publishing 3,937 15,518 -74.6% Television (852) 586 nm Merchandising 18,478 7,304 153.0% Internet/ Direct Commerce (1,005) (7,326) 86.3% --------------- --------------- ---------------- Operating Income before Depreciation and Amortization and before Corporate Overhead 20,558 16,082 27.8% --------------- --------------- ---------------- Corporate Overhead (11,160) (9,127) -22.3% --------------- --------------- ---------------- OPERATING INCOME (LOSS) BEFORE DEPRECIATION AND AMORTIZATION AND RESTRUCTURING CHARGE $ 9,398 $ 6,955 35.1% =============== =============== ================
Martha Stewart Living Omnimedia, Inc. Supplemental Disclosures Regarding Non- GAAP Financial Information Year Ended December 31, (in thousands) The following table presents segment and consolidated financial information, including a reconciliation of operating income, a GAAP measure, and Operating Income before Depreciation and Amortization (OIDA), a non-GAAP measure. In order to reconcile OIDA to operating income, depreciation and amortization are added back to operating income.
2003 2002 % change --------------- --------------- ---------------- REVENUES Publishing $ 135,936 $ 182,600 -25.6% Television 25,704 26,680 -3.7% Merchandising 53,395 48,896 9.2% Internet/Direct Commerce 30,813 36,873 -16.4% --------------- --------------- ---------------- TOTAL REVENUES 245,848 295,049 -16.7% =============== =============== ================ OPERATING INCOME (LOSS) Publishing 19,597 62,517 -68.7% Television (2,616) 2,589 nm Merchandising 37,716 32,972 14.4% Internet/ Direct Commerce (16,013) (29,550) 45.8% --------------- --------------- ---------------- Operating Income before Corporate Overhead 38,684 68,528 -43.6% Corporate Overhead (45,089) (40,843) -10.4% Restructuring Charge - (7,692) nm --------------- --------------- ---------------- TOTAL OPERATING INCOME (6,405) 19,993 nm =============== =============== ================ DEPRECIATION AND AMORTIZATION Publishing 165 158 4.4% Television 2,974 1,693 75.7% Merchandising 671 633 6.0% Internet/ Direct Commerce 960 2,867 -66.5% Corporate Overhead 4,899 6,280 -22.0% --------------- --------------- ---------------- TOTAL DEPRECIATION AND AMORTIZATION 9,669 11,631 -16.9% =============== =============== ================ OPERATING INCOME (LOSS) BEFORE DEPRECIATION AND AMORTIZATION AND RESTRUCTURING CHARGE Publishing 19,762 62,675 -68.5% Television 358 4,282 -91.6% Merchandising 38,387 33,605 14.2% Internet/ Direct Commerce (15,053) (26,683) 43.6% --------------- --------------- ---------------- Operating Income before Depreciation and Amortization and before Corporate Overhead 43,454 73,879 -41.2% --------------- --------------- ---------------- Corporate Overhead (40,190) (34,563) -16.3% --------------- --------------- ---------------- TOTAL OPERATING INCOME (LOSS) BEFORE DEPRECIATION AND AMORTIZATION AND RESTRUCTURING CHARGE $ 3,264 $ 39,316 -91.7% =============== =============== ================
Martha Stewart Living Omnimedia, Inc. Endnotes (a) The fourth quarter of 2002 operating results include the following restructuring charges:
Net loss from Net income from Pre-tax After-tax continuing continuing restructuring restructuring Diluted operations, operations, charge charge EPS including excluding restructuring restructuring charge charge ----------- ------------ ------- ------------------- ------------------ Inventory write-down(1) $ (1,605) $ (963) $(0.02) $ - Fixed asset write-down(2) (6,087) (3,652) (0.07) - ----------- ------------ ------- ------------------- ------------------ Total restructuring charges $ (7,692) $ (4,615) $(0.09) $ (0.03) $ 0.06 =========== ============ ======= =================== ================== (b) The full year of 2002 operating results include the following restructuring charges: Net income from Net income from continuing continuing operations, Pre-tax After-tax operations, excluding restructuring restructuring Diluted including restructuring charge charge EPS restructuring charge charge ----------- ------------ ------- ------------------- ------------------ Inventory write-down(1) $ (1,605) $ (963) $(0.02) $ - Fixed asset write-down(2) (6,087) (3,652) (0.07) - ----------- ------------ ------- ------------------- ------------------ Total restructuring charges $ (7,692) $ (4,615) $(0.09) $ 0.27 $ 0.36 =========== ============ ======= =================== ================== (1) Inventory write-down reduces the carrying value of inventory held by the Company's commerce operation to an estimated recoverable amount. (2) Asset impairment write-down reduces the carrying value of the commerce portion of the Company's website, to net realizable value.
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