Business News
American Media Operations, Inc. Reports Strong Results for Third Quarter of Fiscal Year 2008
Friday 15. February 2008 - Revenues Increase 7% to $115 Million as Expenses Decrease 7%
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) announced today its financial results for the third quarter ended December 31, 2007.
Revenue
Revenue for the third quarter of fiscal year 2008 was $115 million, as compared to $107 million in the third quarter of fiscal year 2007, representing a 7% increase. For the nine months ended December 31, 2007, revenues were $368 million, as compared to $346 million in the prior-year period, representing a 6% increase. The increases in revenue during both the quarter and nine-month periods were primarily attributable to favorable results in advertising and newsstand revenue. The Company’s Shape, Star and Men’s Fitness magazines all delivered strong performances in calendar year 2007 versus calendar year 2006. As measured by Publishers Information Bureau (PIB), an independent organization that tracks advertising carried by consumer magazines, Shape ad pages were up 13%, Star ad pages were up 25% and Men’s Fitness ad pages were up 25%. All three leading AMI titles outperformed their respective categories during calendar year 2007. As compiled by PIB, the category in which Shape is ranked increased 10%; the category in which Star is ranked grew 6%; and, the category in which Men’s Fitness is ranked increased 11%.
Operating Income
Operating income for the third quarter of fiscal year 2008 was $17 million, as compared to a loss of $302 million in the third quarter of fiscal year 2007. For the nine months ended December 31, 2007, operating income was $75 million, as compared to a loss of $275 million in the prior-year period. Excluding a $305 million non-cash provision for impairment of intangible assets and goodwill in the prior-year period, the increase in operating income for the quarter and nine months ended December 31, 2007 would have been 467% and 150%, respectively. These increases were primarily due to the above mentioned increase in revenue and the cost reductions generated by the Company as a result of its implementation of its management action plan.
Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and Bank EBITDA
EBITDA for the third quarter of fiscal year 2008 was $24 million, as compared to $12 million in the third quarter of fiscal year 2007. For the nine months ended December 31, 2007, EBITDA was $95 million, as compared to $56 million in the prior-year period. Bank EBITDA for the third quarter of fiscal year 2008 was $27 million, as compared to $15 million in the third quarter of fiscal year 2007. For the nine months ended December 31, 2007, Bank EBITDA was $103 million, as compared to $72 million in the prior-year period. These favorable results are due to the aforementioned performance in revenue and operating income.
See table below for a reconciliation of EBITDA and Bank EBITDA to Net Loss.
Cash
At December 31, 2007, the Company’s cash and cash equivalent balances were $57 million.
Management Comments
AMOI Chairman and Chief Executive Officer David Pecker said, “In our third quarter of fiscal year 2008, AMOI saw continued strong revenue growth driven by both advertising and circulation gains from our major titles Shape, Star and Men’s Fitness, each of which is experiencing a record advertising year.”
AMOI Executive Vice President and Chief Financial Officer Dean Durbin said, “Over the first three quarters of fiscal year 2008, we made excellent progress towards the cost-reduction and revenue-enhancement goals we outlined in our management action plan in February 2007. This contributed to a 7% decrease in expenses in the third quarter and a 7% decrease in expenses in the first nine months of fiscal year 2008 when the non-cash provision for impairment is excluded. Based on our performance to date, as well as on our projections for the fourth fiscal quarter, we fully expect to achieve the $36 million target contemplated under our management action plan.”
“Looking ahead, we believe AMI is well positioned, despite an increasingly challenging environment,” concluded Mr. Pecker. “We have the leading titles in two of the strongest publishing categories today, health & fitness and celebrity, and their performance continues to be solid in the current quarter.”