Martha Stewart Living Omnimedia Reports Fourth Quarter and Full Year 2012 Results

  Martha Stewart Living Omnimedia Reports Fourth Quarter and Full Year 2012
                                   Results

PR Newswire

NEW YORK, Feb. 26, 2013

NEW YORK, Feb.26, 2013 /PRNewswire/ --Martha Stewart Living Omnimedia, Inc.
(NYSE: MSO) today announced its results for the fourth quarter and full year
ended December 31, 2012. The Company reported revenue for the fourth quarter
and full year of $56.4 million and $197.6 million, respectively.

Dan Taitz, Interim Principal Executive Officer, said, "The Company produced
higher Adjusted EBITDA for both the fourth quarter and full-year compared to
the respective 2011 periods due to important actions taken to lower our cost
structure and align our businesses for the future. Merchandising delivered a
strong holiday season and a good year overall with strong revenue growth and
improved profit margins. MSLO still has much work to do in 2013 as the
Company positions itself to return to sustained profitability."

Fourth Quarter 2012 Summary

Total revenues were $56.4 million in the fourth quarter of 2012, compared to
$61.7 million in the fourth quarter of 2011, due to lower revenues in the
publishing and broadcasting segments, partially off-set by higher
merchandising revenues.

Total operating income for the fourth quarter of 2012 was $1.4 million,
compared with a loss of $(0.04) million in the prior-year period. The fourth
quarter of 2012 included $(3.5) million in charges related to the
restructuring moves in our media business. The fourth quarter of 2011
included a $(1.3) million restructuring charge related to severance costs and
staffing adjustments.

Adjusted EBITDA, which excludes the aforementioned charges, was $6.6 million
for the fourth quarter of 2012, compared to $3.3 million in the prior year
period.

Basic and diluted net income per share was $0.02 for the fourth quarter of
2012, compared to $0.07 for the fourth quarter of 2011. Net income for the
fourth quarter of 2011 benefitted from approximately $4.7 million of other
income, primarily reflecting a gain on the sale of the Company's equity
interest in WeddingWire.

Full-Year 2012 Summary

Total revenues were $197.6 million in 2012, compared to $221.4 million in
2011.

Total operating loss for the full-year 2012 was $(56.4) million, compared to
an operating loss of $(18.6) million in 2011. Included in 2012 results were
restructuring and other non-recurring charges of $(49.1) million, which
included a $(44.3) million non-cash impairment charge reflecting the
write-down of goodwill related to the Company's publishing segment.
Restructuring and other non-recurring charges in 2011 totaled $(5.1) million.

Adjusted EBITDA, which excludes the aforementioned charges, was $0.5 million
for 2012, compared to an adjusted EBITDA loss of $(4.0) million in the prior
year.

Net loss per share was $(0.83) for the full-year 2012, compared to a net loss
per share of $(0.28) in 2011. Excluding the restructuring and other
non-recurring charges, net loss per share was $(0.10) and $(0.19), for 2012
and 2011, respectively.

Fourth Quarter 2012 Results by Segment

Three Months Ended December 31

(unaudited, in thousands)
                                 2012              2011
REVENUES
Publishing                      $  35,332       $  38,798
Merchandising                   16,219            13,130
Broadcasting                    4,812             9,766
Total Revenues                   $  56,363       $  61,694
ADJUSTED EBITDA
Publishing                       $  (663)        $ 1,676
Merchandising                    11,422            8,809
Broadcasting                     3,331             (763)
Corporate                        (7,502)           (6,455)
Total Adjusted EBITDA            $ 6,588          $ 3,267


OPERATING INCOME / (LOSS)
Publishing                       $    (2,343)  $ 886
Merchandising                    11,330            8,776
Broadcasting                     2,953             (1,126)
Corporate                        (10,580)          (8,574)
Total Operating Income / (Loss)  $     1,360  $    (38)

Recent Business Highlights

  oAccording to comScore data, total unique visitors across MSLO's websites
    increased 24% in the quarter compared to the prior-year period.
  oFollowing the expansion of MSLO's content business with new video partners
    Hulu and Hulu Plus and The AOL On Network, online video views ramped up
    across MarthaStewart.com and partner websites, totaling more than 26
    million views inDecember to over 3 million unique users.
  oFollowing the success of Martha Stewart's Cooking School Season 1, one of
    PBS' top watched overall shows, Season 2 of Martha Stewart's Cooking
    School and Season 1 of Martha Bakes are scheduled to launch in April.
  oOn February 19, 2013, Martha Stewart launched a new daily radio show,
    Martha Live, exclusively on SiriusXM.
  oMSLO's latest book, Meatless: More Than 200 of the Very Best Vegetarian
    Recipes, was published by Clarkson Potter on January 8, 2013 and quickly
    became a New York Times bestseller.

Publishing

Revenues in the fourth quarter of 2012 were $35.3 million, compared to $38.8
million in the prior year's fourth quarter, due to lower print and digital
advertising revenues as well as lower circulation revenues.

Operating loss was $(2.3) million for the fourth quarter of 2012, which
included a $(1.4) million charge related to restructuring moves, compared to
operating income of $0.9 million in the prior year's quarter.

Adjusted EBITDA loss was $(0.7) million in the fourth quarter of 2012,
compared to adjusted EBITDA of $1.7 million in the prior year's quarter.

Merchandising

Revenues increased 23.5% to $16.2 million for the fourth quarter of 2012, as
compared to $13.1 million in the prior year's fourth quarter primarily due to
the increase in royalty revenue from Macy's, design fees from J.C. Penney and
revenue from the Martha Stewart Home Office line with Avery.

Operating income was $11.3 million for the fourth quarter of 2012, up from
$8.8 million in the fourth quarter of 2011.

Adjusted EBITDA was $11.4 million for the fourth quarter of 2012, up from $8.8
million in the prior year's fourth quarter.

Broadcasting

Revenue in the fourth quarter of 2012 was $4.8 million, compared to $9.8
million in the fourth quarter of 2011. The overall decline from the
prior-year results reflects the absence of live television programming, as the
Company concluded The Martha Stewart Show in mid-2012.

Operating income was $3.0 million for the fourth quarter of 2012, compared to
an operating loss of $(1.1) million in the fourth quarter of 2011.

Adjusted EBITDA was $3.3 million for the fourth quarter of 2012, compared to
an adjusted EBITDA loss of $(0.8) million in the prior year's fourth quarter.

Corporate

Adjusted EBITDA reflects charges of $(7.5) million in the fourth quarter of
2012 compared to charges of $(6.5) million in the prior year's quarter. Total
Corporate expenses were $(10.6) million, compared to $(8.6) million in the
prior year's fourth quarter. Included in this year's fourth quarter is
approximately $0.8 million in legal expenses related to the Macy's litigation.

The Company will host a conference call with analysts and investors on
February 26, 2013 at 8:30 am EST that will be broadcast live over the Internet
at www.marthastewart.com/ir, and an archived version will be available through
March 11, 2013.

Use of Non-GAAP Financial Information

In addition to using net income to assess the organization's overall financial
health, Company management uses consolidated net income/(loss) before interest
income or expense, taxes, depreciation and amortization, impairment, non-cash
equity compensation expense, restructuring charges and other income/(expense)
("Adjusted EBITDA"), a non-GAAP financial measure, to evaluate the performance
of our businesses on a real-time basis. Adjusted EBITDA is considered an
important indicator of operational strength, is a direct component of the
Company's annual compensation program, and is a significant factor in helping
our management determine how to allocate resources and capital. Adjusted
EBITDA is used in addition to and in conjunction with results presented in
accordance with GAAP. Management considers Adjusted EBITDA to be a critical
measure of operational health because it captures all of the revenue and
ongoing operating expenses of our businesses without the influence of (i)
interest charges, which result from our capital structure, not our ongoing
business efforts, (ii) taxes, which relate to the overall organizational
financial return, not that of any one business, (iii) the capital expenditure
costs associated with depreciation and amortization, which are a function of
historical decisions on infrastructure and capacity, (iv) non-cash impairment
charges, which are impacted by macro-economic conditions and do not
necessarily reflect operating performance,(v) the cost of non-cash equity
compensation which, as a function of our stock price, can be highly variable,
is not necessarily an indicator of current operating performance for any
individual business unit, and is amortized over the various periods(vi)
restructuring charges, which include non-recurring charges such as employee
severance and certain professional fees that do not necessarily reflect
ongoing operating performance and (vii) other income/(expense) which may
include non-operational items.

Adjusted EBITDA provides a means to directly evaluate the ability of our
business operations to generate returns on a real-time basis. We provide
disclosure of Adjusted EBITDA because we believe it is useful for investors to
have means to assess our performance as we do. While Adjusted EBITDA is a
customized non-GAAP measure, it also provides a means to analyze value and
compare our operating capabilities to those of companies with which we
compete, many of which have different compensation plans, depreciation and
amortization costs, capital structures and tax burdens. Please note that our
non-GAAP results may differ from similar measures used by other companies,
even if similar terms are used to identify such measures.

A limitation of Adjusted EBITDA is that it does not reflect the periodic costs
of certain capitalized tangible and intangible assets used in generating
revenues for our overall organization. Management evaluates the costs of such
tangible and intangible assets through other financial measures such as
capital expenditures. Management also evaluates the cost of capitalized
tangible and intangible assets by analyzing returns provided on the capital
dollars deployed. A further limitation of Adjusted EBITDA is that it does not
include non-cash equity compensation expense related to our workforce.
Adjusted EBITDA should be considered in addition to, and not as a substitute
for, net income or other measures of financial performance reported in
accordance with GAAP.

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

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 include estimates of future financial performance, changes to our
cost structure, potential opportunities, expected product line changes, future
acceptability of our content and our businesses, the success of our strategic
initiatives, anticipated growth, including particularly statements with
respect to margins, the success of our alliance with J.C. Penney and benefits
from aligning our sales and marketing team, and other statements that can be
identified by terminology such as "may," "will," "should," "could,"
"position," "expects," "intends," "plans," "thinks," "believes," "estimates,"
"potential," "seem," "counting" 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 or Emeril Lagasse by consumers, advertisers and business
partners; the failure of national and/or local economies to improve or renewed
deterioration of such economies; our failure to successfully implement our
anticipated growth strategies; a loss of the services of Ms. Stewart or Mr.
Lagasse; continued high turnover among our employees; a continuedsoftening of
the domestic advertising market; our inability to expand our merchandising and
licensing programs; changes in consumer reading andpurchasing patterns to
which our offerings are unable to respond; 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; the inability to add to our partnerships or capitalize on
existing partnerships; legal actions taken against us; 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 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 World Wide Web
site at http://www.sec.gov/. The Company is under no obligation to publicly
update or reviseany forward-looking statements after the date of this
release.



Martha Stewart Living Omnimedia, Inc.

Consolidated Statements of Operations

Three Months Ended December 31,

(unaudited, in thousands, except share and per share amounts)
                                               2012             2011
REVENUES
   Publishing                                  $   35,332     $   38,798
   Merchandising                               16,219           13,130
   Broadcasting                                4,812            9,766
           Total revenues                      56,363           61,694
OPERATING COSTS AND EXPENSES
   Production, distribution and editorial      24,470           33,138
   Selling and promotion                       14,499           14,814
   General and administrative                  11,512           11,425
   Depreciation and amortization               979              1,031
   Restructuring charges                       3,543            1,324
           Total operating costs and expenses  55,003           61,732
OPERATING INCOME / (LOSS)                      1,360            (38)
OTHER INCOME / (EXPENSE)
   Interest income / (expense), net            144              (218)
   Gain on sale of cost-based investment       —                7,647
   Other-than-temporary loss on cost-based     —                (2,724)
   investments
           Total other income                  144              4,705
INCOME BEFORE INCOME TAXES                     1,504            4,667
   Income tax provision                        (394)            (470)
NET INCOME                                     $  1,110        $  4,197
INCOME PER SHARE – BASIC AND DILUTED
   Net income - Basic                          $ 0.02           $ 0.07
   Net income - Diluted                        $ 0.02           $ 0.07
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
   Basic                                       67,330,288       59,014,889
   Diluted                                     67,621,961       59,605,829
Martha Stewart Living Omnimedia, Inc.

Consolidated Statements of Operations

Twelve Months Ended December 31 ,

(in thousands, except share and per share amounts)
                                               2012
                                                                2011
                                               (unaudited)
REVENUES
   Publishing                                  $  122,540     $   140,857
   Merchandising                               57,574           48,614
   Broadcasting                                17,513           31,962
           Total revenues                      197,627          221,433
OPERATING COSTS AND EXPENSES
  Production, distribution and editorial       103,347          127,084
  Selling and promotion                        52,453           57,208
  General and administrative                   45,148           46,641
  Depreciation and amortization                4,007            3,978
  Restructuring charges                        4,811            5,116
  Goodwill impairment                          44,257           —
           Total operating costs and expenses  254,023          240,027
OPERATING LOSS                                 (56,396)         (18,594)
OTHER INCOME / (EXPENSE)
  Interest income / (expense), net             836              (283)
  Income on equity securities                  —                15
  Gain on sales of cost-based investments      1,165            7,647
  Other-than-temporary loss on cost-based      (88)             (2,724)
  investments
   Total other income                    1,913            4,655
                                                               
                                               (54,483)
LOSS BEFORE INCOME TAXES                                        (13,939)
 Income tax provision                    (1,602)          (1,580)
NET LOSS                                       $  (56,085)    $  (15,519)
LOSS PER SHARE – BASIC AND DILUTED
  Net Loss                                     $    (0.83)  $    (0.28)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
 Basic and diluted                       67,231,463       55,880,896



Martha Stewart Living Omnimedia, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share amounts)
                                                 December 31,
                                                                 December 31,
                                                 2012            2011

                                                 (unaudited)
ASSETS
CURRENT ASSETS
         Cash and cash equivalents               $    19,925  $   38,453
         Short-term investments                  29,182          11,051
         Accounts receivable, net                38,073          48,237
         Paper inventory                         4,580           7,225
         Deferred television production costs    434             —
         Other current assets                    3,335           4,858
                    Total current assets         95,529          109,824
PROPERTY AND EQUIPMENT, net                      10,738          13,396
GOODWILL, net                                    850             45,107
OTHER INTANGIBLE ASSETS, net                     45,203          45,215
OTHER NONCURRENT ASSETS, net                     1,940           2,578
                    Total assets                 $   154,260   $  216,120
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
   Accounts payable and accrued liabilities      $    12,770  $   23,728
   Accrued payroll and related costs             9,316           7,008
   Current portion of deferred subscription      13,168          16,018
   revenue
   Current portion of other deferred revenue     5,605           5,147
                    Total current liabilities    40,859          51,901
DEFERRED SUBSCRIPTION REVENUE                    4,478           3,975
OTHER DEFERRED REVENUE                           1,113           2,333
DEFERRED INCOME TAX LIABILITY                    7,117           5,874
OTHER NONCURRENT LIABILITIES                     5,177           4,090
                    Total liabilities            58,744          68,173


COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Series A Preferred Stock, 1 share issued and     —               —
outstanding in 2012 and 2011
Class A Common Stock, $0.01 par value,
350,000,000 shares authorized: 41,161,289 and    412             409
40,893,964 shares issued and outstanding in 2012
and 2011, respectively
Class B Common Stock, $0.01 par value,
150,000,000 shares authorized: 25,984,625        260             260
shares issued and outstanding in 2012 and 2011
Capital in excess of par value                   340,586         336,661
Accumulated deficit                              (244,529)       (188,442)
Accumulated other comprehensive loss             (438)           (166)
                                                 96,291          148,722
Less: Class A treasury stock – 59,400 shares at  (775)           (775)
cost
                    Total shareholders' equity   95,516          147,947
                    Total liabilities and        $  154,260    $   216,120
                    shareholders' equity



Martha Stewart Living Omnimedia, Inc.

Supplemental Disclosures Regarding Non-GAAP Financial Information

Three Months Ended December 31,

(unaudited, in thousands)
The following table presents segment and consolidated financial information,
including a reconciliation of net loss, a GAAP measure, and adjusted EBITDA, a
non-GAAP measure. In order to reconcile net loss to adjusted EBITDA, non-cash
equity compensation, depreciation and amortization, restructuring charges,
other income/(expense) and income taxes are added back.
                                                       2012        2011
NET INCOME                                             $ 1,110     $ 4,197
Income tax provision                                   (394)       (470)
INCOME BEFORE INCOME TAXES                             1,504       4,667
OTHER INCOME / (EXPENSE)
Income / (expense), net                                144         (218)
Gain on sale of cost-based investment                  —           7,647
Other-than-temporary loss on cost-based investments    —           (2,724)
Total other income                                     144         4,705
OPERATING INCOME / (LOSS)
Publishing                                             (2,343)     886
Merchandising                                          11,330      8,776
Broadcasting                                           2,953       (1,126)
Corporate                                              (10,580)    (8,574)
Total Operating Income / (Loss)                        1,360       (38)
RESTRUCTURING CHARGES
Publishing                                             1,387       478
Merchandising                                          —           13
Broadcasting                                           287         246
Corporate                                              1,869       587
Total Restructuring Charges                            3,543       1,324
DEPRECIATION AND AMORTIZATION                          190         230
Publishing                                             15          8
Merchandising                                          83          111
Broadcasting                                           691         682
Corporate
Total Depreciation and Amortization                    979         1,031
NON-CASH EQUITY COMPENSATION
Publishing                                             103         82
Merchandising                                          77          12
Broadcasting                                           8           6
Corporate                                              518         850
Total Non-Cash Equity Compensation                     706         950
ADJUSTED EBITDA
Publishing                                             (663)       1,676
Merchandising                                          11,422      8,809
Broadcasting                                           3,331       (763)
Corporate                                              (7,502)     (6,455)
Adjusted EBITDA                                        $  6,588  $ 
                                                                   3,267



Martha Stewart Living Omnimedia, Inc.

Supplemental Disclosures Regarding Non-GAAP Financial Information

Twelve Months Ended December 31,

(unaudited, in thousands)
The following table presents segment and consolidated financial information,
including a reconciliation of net loss, a GAAP measure, and adjusted EBITDA, a
non-GAAP measure. In order to reconcile net loss to adjusted EBITDA, non-cash
equity compensation, depreciation and amortization, restructuring charges,
non-cash impairment charges, other income/(expense) and income taxes are added
back.
                                   2012                2011
NET LOSS                           $ (56,085)          $ (15,519)
Income tax provision               (1,602)             (1,580)
LOSS BEFORE INCOME TAXES           (54,483)            (13,939)
OTHER INCOME / (EXPENSE)
Interest income / (expense), net   836                 (283)
Income on equity securities        —                   15
Gain on sales of cost-based        1,165               7,647
investments
Other-than-temporary loss on       (88)                (2,724)
cost-based investments
Total other income                 1,913               4,655
OPERATING (LOSS) / INCOME
Publishing                         (62,029)            (6,464)
Merchandising                      39,477              29,972
Broadcasting                       2,354               (4,740)
Corporate                          (36,198)            (37,362)
Total Operating Loss               (56,396)            (18,594)
RESTRUCTURING CHARGES
Publishing                         1,971               828
Merchandising                      81                  13
Broadcasting                       816                 600
Corporate                          1,943               3,675
Total Restructuring Charges        4,811               5,116
GOODWILL IMPAIRMENT                44,257              —
DEPRECIATION AND AMORTIZATION
Publishing                         742                 774
Merchandising                      52                  32
Broadcasting                       388                 470
Corporate                          2,825               2,702
Total Depreciation and             4,007               3,978
Amortization
NON-CASH EQUITY COMPENSATION
Publishing                         587                 682
Merchandising                      455                 224
Broadcasting                       50                  67
Corporate                          2,715               4,523
Total Non-Cash Equity Compensation 3,807               5,496
ADJUSTED EBITDA
Publishing                         (14,472)            (4,180)
Merchandising                      40,065              30,241
Broadcasting                       3,608               (3,603)
Corporate                          (28,715)            (26,462)
Adjusted EBITDA                    $ 486               $ (4,004)



SOURCE Martha Stewart Living Omnimedia

Website: http://www.marthastewart.com
Contact: Katherine Nash, Martha Stewart Living Omnimedia, Inc. Corporate
Communications, +1-212-827-8722, knash@marthastewart.com