-----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, W1z3MclDTibWAtjebWdUss20p7jy8HaYaFSliQkV7KisHqN9hy3byujjpBpN2fnw wi7l5eAtvb2HxMFDJdVy7w== 0000950123-05-004985.txt : 20050426 0000950123-05-004985.hdr.sgml : 20050426 20050426075909 ACCESSION NUMBER: 0000950123-05-004985 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050426 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050426 DATE AS OF CHANGE: 20050426 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: 05771527 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 y08226e8vk.txt MARTHA STEWART LIVING OMNIMEDIA, INC. ================================================================================ 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: APRIL 26, 2005 DATE OF EARLIEST EVENT REPORTED: APRIL 26, 2005 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 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR240.13e-4(c)) ================================================================================ Item 2.02. Results of Operations and Financial Condition. On April 26, 2005, the Registrant issued a press release relating to its financial results for the first quarter of 2005. The full text of the press release is attached hereto as Exhibit 99.1 to this report. Item 9.01. Financial Statements and Exhibits.
(c) Exhibit Description 99.1 Martha Stewart Living Omnimedia, Inc. Press Release, dated April 26, 2005.
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: April 26, 2005 MARTHA STEWART LIVING OMNIMEDIA, INC. By:/s/ James Follo ----------------------------------- James Follo Executive Vice President, Chief Financial and Administrative Officer INDEX OF EXHIBITS Exhibit Description No. ----------- - ------- 99.1 Martha Stewart Living Omnimedia, Inc. press release, dated April 26, 2005. EX-99.1 2 y08226exv99w1.txt PRESS RELEASE EXHIBIT 99.1 MARTHA STEWART LIVING OMNIMEDIA, INC. ANNOUNCES FIRST QUARTER 2005 RESULTS NEW YORK, NEW YORK, APRIL 26, 2005 -- Martha Stewart Living Omnimedia, Inc. (NYSE: MSO) announced its results today for the first quarter of 2005. Revenues for the first quarter of 2005 were $38.7 million, compared to $44.5 million in the prior year's quarter. Operating loss for the first quarter was $(19.8) million, compared to an operating loss of $(16.5) million for the first quarter of 2004. Operating income before depreciation and amortization, and the amortization of non-cash equity compensation ("OIDA") for the first quarter of 2005 was a loss of $(14.9) million, compared to OIDA of $(13.4) million in the same period last year. Loss per share from continuing operations was $(0.37) for the first quarter of 2005, compared to a loss per share from continuing operations of $(0.39) in the first quarter of 2004. Susan Lyne, President and Chief Executive Officer, said: "2005 has started off as we expected with the Company seeing momentum both from the strength of our brand and Martha's return. Importantly, Martha's return has energized the entire Company, and customers have enthusiastically welcomed her home. We thank them, our corporate partners and advertisers for their continued support. "We see early signs of improvement in our core publishing business, and while this will not be an overnight recovery, we believe this trend will continue over the long term. In particular, we are pleased by positive circulation trends and an increase in advertising pages in recent issues of our flagship Martha Stewart Living magazine, which we expect to achieve advertising page growth in excess of 30% in the second quarter. Everyday Food also continues to show strength in advertising and circulation. Station demand and advertiser interest for our new nationally syndicated daily television show is strong, with the show now cleared in 90% of the U.S. markets. Importantly, we have also deepened our management team with the addition of several executives - all of whom bring a high level of industry expertise to the company. 1 "Our recent announcements of exclusive deals with SIRIUS Satellite Radio to launch the first channel dedicated to women's lifestyles and with Warner Home Video to distribute a full line of how-to DVDs demonstrate our ability to leverage the brand, our content, and our strong consumer relationships to create long-term value. Both partnerships present a tremendous opportunity to make our content more accessible to our loyal customer base and reach out to a new audience. "Recent awards for our television shows and magazines validate the consistently high level of quality and creativity MSO brings to all of its products. The National Magazine Awards for Martha Stewart Weddings and Kids: Fun Stuff To Do Together as well as three Daytime Emmy nominations are tremendous accomplishments for our company and represent the extraordinary talent of our employees." FIRST QUARTER 2005 RESULTS BY SEGMENT PUBLISHING Revenues in the first quarter of 2005 were $25.4 million, compared to $23.9 million in the first quarter of 2004. The increase in revenue was driven by higher revenue from Everyday Food due to higher advertising rates and increased circulation, as well as from revenue related to Body + Soul, which was acquired in August 2004. These increases were partially offset by more modest declines in advertising revenue in Martha Stewart Living. We expect Martha Stewart Living to achieve an increase in pages in excess of 30% in the second quarter, with revenue growing at a faster pace. Operating loss was $(8.7) million for the first quarter of 2005, compared to an operating loss of $(3.8) million in the first quarter of 2004. OIDA was a loss of $(7.7) million, compared to a loss of $(3.7) million in the first quarter of 2004. The increased operating loss in the quarter was due principally to losses related to Body + Soul magazine, higher circulation costs in Martha Stewart Living due in part to a change in timing of certain direct mail campaigns and certain non-recurring expenses in the quarter. Having peaked in 2004, losses related to Everyday Food have begun to decline as a result of increasing advertising and circulation revenue as well as lower subscriber acquisition costs. TELEVISION Revenues in the first quarter of 2005 were $0.8 million, compared to $4.2 million in the first quarter of 2004. Operating loss for the first quarter of 2005 was $(2.3) million, compared to an operating loss of $(1.9) million in the first quarter of 2004. OIDA was a loss of $(2.2) million for the first quarter of 2005, compared to a loss of $(1.9) million in the prior year's first quarter. The decline in revenue was 2 primarily related to the absence of our daily syndicated show, which stopped airing in syndication in September 2004. In September 2005, we will begin airing our new nationally syndicated daily show. Production on this new series will commence in the second quarter. The first quarter comparisons were also impacted by the expiration of certain cable television agreements in 2004. MERCHANDISING Revenues in the first quarter of 2005 were $9.4 million, compared to $10.8 million in the first quarter of 2004. The revenue decline was due to lower sales from our Martha Stewart Everyday product line, with sales declines in home and paint product lines partially offset by increases in sales of garden and housewares products. First-quarter 2005 operating income was $5.8 million, compared to $6.5 million in the first quarter of 2004. OIDA was $6.1 million in the current period, compared to $6.7 million in the prior year's quarter. In May, we will be expanding the Martha Stewart Everyday product line to include a new line of ready-to-assemble furniture. This product line will feature 42 new SKU's with furniture for the bedroom, kitchen and living room. INTERNET/DIRECT COMMERCE Revenues in the first quarter of 2005 were $3.1 million, compared to $5.6 million in the same period a year ago. The quarter reflects sales from the wind-down of our catalog-related operations and strong results from our flowers business - marthasflowers.com. Although small, this business represents a profitable growth opportunity for the company. Operating loss was $(1.5) million for the first quarter of 2005, compared to $(2.7) million in the first quarter of 2004. OIDA was a loss of $(1.2) million in the first quarter of 2005, compared to a loss of $(2.4) million in the first quarter of 2004. The quarter reflects continued investment in the content portion of this segment. We expect the losses in the business segment to moderate throughout the year, principally due to a declining cost structure. CORPORATE EXPENSES Corporate expenses, including depreciation and amortization and the amortization of non-cash equity compensation, was $13.1 million, compared to $14.6 million in the prior year's quarter. Corporate overhead, before depreciation and amortization and the amortization of non-cash equity compensation, was $9.9 million for the first quarter of 2005, compared to $12.0 million in the first quarter of 2004. The year-over-year improvement in OIDA was principally driven by lower professional fees in the quarter. 3 TRENDS AND OUTLOOK James Follo, Chief Financial and Administrative Officer, commented: "Trends in our business are expected to improve as the year progresses, reflecting improved advertising revenue and the September 2005 launch of the syndicated television program as well as moderating losses in the Internet/Direct Commerce segment. Our balance sheet remains strong with $147 million in cash and short-term investments. For the second quarter of 2005, we expect to report an operating loss of approximately $31 million, including a non-cash charge of approximately $15 million related to the expected vesting of certain previously issued warrants granted in connection with the production of our syndicated television program. We expect to report an OIDA loss in the second quarter of approximately $12 million, compared to an OIDA loss in the second quarter of 2004 of approximately $15 million." 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, inspiring and engaging consumers with unique lifestyle content and high-quality products. MSO is organized into four business segments: Publishing, Television, Merchandising, and Internet/Direct Commerce. Martha Stewart Living Omnimedia, Inc. is listed on the New York Stock Exchange under the ticker symbol MSO. 4 The Company will host a conference call with analysts and investors at 12:00 p.m. ET that will be broadcast live over the Internet at www.marthastewart.com/ir. ### We have included in this press release 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 but instead represent only our current beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of our control. These statements can be identified by terminology such as "may," "will," "should," "could", "expects," "intends," "plans," "anticipates," "believes," "estimates," "potential" or "continue" or the negative of these terms or other comparable terminology. The Company's actual results may differ materially from those projected in these statements, and factors that could cause such differences include: adverse reactions to publicity relating to Martha Stewart by consumers, advertisers and business partners; an adverse resolution to the pending SEC enforcement proceeding against Ms. Stewart arising from her personal sale of non-Company stock; adverse resolution of some or all of the Company's ongoing litigation; downturns in national and/or local economies; shifts in our business strategies; a loss of the services of Ms. Stewart; a loss of the services of other key personnel; 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 of Financial Condition and Results of Operations", 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 - Howard Hochhauser, VP Finance and Investor Relations of Martha Stewart Living Omnimedia, Inc., 212-827-8530; Media - Elizabeth Estroff, AVP, Corporate Communications, of Martha Stewart Living Omnimedia, Inc., 212-827-8281. 5 Martha Stewart Living Omnimedia, Inc. Consolidated Statements of Operations Three Months Ended March 31, (in thousands, except per share amounts)
2005 2004 % change -------- -------- -------- REVENUES Publishing $ 25,355 $ 23,922 6.0% Television 797 4,177 -80.9% Merchandising 9,392 10,789 -12.9% Internet/Direct Commerce 3,122 5,613 -44.4% -------- -------- -------- Total revenues 38,666 44,501 -13.1% -------- -------- -------- OPERATING COSTS AND EXPENSES Production, distribution and editorial 23,565 28,940 18.6% Selling and promotion 16,579 13,448 -23.3% General and administrative 13,398 15,523 13.7% Amortization of non-cash equity compensation 3,219 1,455 -121.2% Depreciation and amortization 1,687 1,674 -0.8% -------- -------- -------- Total operating costs and expenses 58,448 61,040 4.2% -------- -------- -------- OPERATING LOSS (19,782) (16,539) -19.6% Interest income, net 769 362 nm -------- -------- -------- LOSS BEFORE INCOME TAXES (19,013) (16,177) -17.5% Income tax provision (23) (3,143) 99.3% -------- -------- -------- LOSS FROM CONTINUING OPERATIONS BEFORE LOSS FROM DISCONTINUED OPERATIONS (19,036) (19,320) 1.5% -------- -------- -------- Loss from discontinued operations (132) (161) 18.0% -------- -------- -------- NET LOSS $(19,168) $(19,481) 1.6% ======== ======== ======== LOSS PER SHARE - BASIC AND DILUTED Loss from continuing operations $ (0.37) $ (0.39) Loss from discontinued operations (0.00) (0.00) -------- -------- Net loss $ (0.38) $ (0.39) ======== ======== WEIGHTED AVERAGE SHARES OUTSTANDING Basic 50,863 49,464 Diluted 50,863 49,464
6 Martha Stewart Living Omnimedia, Inc. Segment Information Three Months Ended March 31, (in thousands)
2005 2004 % change -------- -------- -------- REVENUES Publishing $ 25,355 $ 23,922 6.0% Television 797 4,177 -80.9% Merchandising 9,392 10,789 -12.9% Internet/Direct Commerce 3,122 5,613 -44.4% -------- -------- -------- Total revenues 38,666 44,501 -13.1% -------- -------- -------- OPERATING (INCOME) LOSS BEFORE DEPRECIATION AND AMORTIZATION Publishing (7,692) (3,735) -105.9% Television (2,162) (1,890) -14.4% Merchandising 6,101 6,692 -8.8% Internet/Direct Commerce (1,248) (2,436) 48.8% -------- -------- -------- Operating Loss before Depreciation and Amortization (5,001) (1,369) nm and Corporate Expense Corporate Expense (9,875) (12,041) 18.0% -------- -------- -------- Operating Loss before Depreciation and Amortization (14,876) (13,410) -10.9% Amortization of non-cash equity compensation (3,219) (1,455) nm Depreciation and amortization (1,687) (1,674) -0.8% -------- -------- -------- OPERATING LOSS (19,782) (16,539) -19.6% Interest income, net 769 362 112.4% -------- -------- -------- LOSS BEFORE INCOME TAXES (19,013) (16,177) -17.5% Income tax provision (23) (3,143) nm -------- -------- -------- LOSS FROM CONTINUING OPERATIONS BEFORE LOSS FROM DISCONTINUED OPERATIONS (19,036) (19,320) 1.5% -------- -------- -------- Loss from discontinued operations (132) (161) -18.0% -------- -------- -------- NET LOSS $(19,168) $(19,481) 1.6% ======== ======== ========
7 Martha Stewart Living Omnimedia, Inc. Consolidated Balance Sheets (in thousands, except per share amounts)
March 31, December 31, 2005 2004 --------- --------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 85,071 $ 104,647 Short-term investments 61,930 35,309 Accounts receivable, net 13,840 31,332 Inventories, net 3,864 5,229 Income taxes receivable 5,107 6,321 Other current assets 2,867 3,573 --------- --------- TOTAL CURRENT ASSETS 172,679 186,411 PROPERTY, PLANT, AND EQUIPMENT, net 15,966 17,175 INTANGIBLE ASSETS, net 54,130 54,264 OTHER NONCURRENT ASSETS 6,816 6,828 --------- --------- TOTAL ASSETS $ 249,591 $ 264,678 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued liabilities $ 20,337 $ 25,604 Accrued payroll and related costs 5,985 9,407 Income taxes payable 403 412 Current portion of deferred subscription income 29,844 27,160 --------- --------- TOTAL CURRENT LIABILITIES 56,569 62,583 --------- --------- DEFERRED SUBSCRIPTION INCOME 7,797 7,668 DEFERRED ROYALTY REVENUE 3,750 3,438 OTHER NONCURRENT LIABILITIES 3,273 3,361 --------- --------- TOTAL LIABILITIES 71,389 77,050 --------- --------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY Class A common stock, $0.01 par value, 350,000 shares authorized: 22,493 and 21,660 shares issued in 2005 and 2004, respectively 225 217 Class B common stock, $0.01 par value, 150,000 shares authorized: 29,123 shares outstanding in 2005 and 2004 291 291 Capital in excess of par value 214,694 196,781 Unamortized restricted stock (10,972) (2,793) Accumulated deficit (25,261) (6,093) --------- --------- 178,977 188,403 Less class A treasury stock - 59 shares at cost (775) (775) --------- --------- TOTAL SHAREHOLDERS' EQUITY 178,202 187,628 --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 249,591 $ 264,678 ========= =========
8 Martha Stewart Living Omnimedia, Inc. Supplemental Disclosures Regarding Non- GAAP Financial Information Three Months Ended March 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, including the amortization of non-cash equity compensation, (OIDA), a non-GAAP measure. In order to reconcile OIDA to operating income, depreciation and amortization are added back to operating income.
2004 2003 -------- -------- OPERATING INCOME (LOSS) Publishing $ (8,718) $ (3,848) Television (2,272) (1,947) Merchandising 5,815 6,489 Internet/Direct Commerce (1,509) (2,679) -------- -------- Operating Loss before Corporate Expenses (6,684) (1,985) Corporate Expenses (13,098) (14,554) -------- -------- TOTAL OPERATING LOSS (19,782) (16,539) -------- -------- DEPRECIATION AND AMORTIZATION Publishing 247 62 Television 46 57 Merchandising 209 190 Internet/Direct Commerce 252 243 Corporate Expenses 933 1,122 -------- -------- TOTAL DEPRECIATION AND AMORTIZATION 1,687 1,674 -------- -------- AMORTIZATION OF NON-CASH EQUITY COMPENSATION Publishing 779 51 Television 64 -- Merchandising 77 13 Internet/Direct Commerce 9 -- Corporate Expenses 2,290 1,391 -------- -------- TOTAL AMORTIZATION OF NON-CASH EQUITY COMPENSATION 3,219 1,455 -------- -------- OPERATING INCOME (LOSS) BEFORE DEPRECIATION AND AMORTIZATION AND AMORTIZATION OF NON-CASH EQUITY COMPENSATION Publishing (7,692) (3,735) Television (2,162) (1,890) Merchandising 6,101 6,692 Internet/Direct Commerce (1,248) (2,436) -------- -------- Operating Loss before Depreciation and Amortization, Amortization of Non-Cash Equity Compensation and before Corporate Expenses (5,001) (1,369) Corporate Expenses (9,875) (12,041) -------- -------- OPERATING LOSS BEFORE DEPRECIATION AND AMORTIZATION AND AMORTIZATION OF NON-CASH EQUITY COMPENSATION $(14,876) $(13,410) ======== ========
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