Martha Stewart Living Omnimedia Reports Fourth Quarter and Full Year 2013 Results

  Martha Stewart Living Omnimedia Reports Fourth Quarter and Full Year 2013                                    Results  PR Newswire  NEW YORK, Feb. 25, 2014  NEW YORK, Feb. 25, 2014 /PRNewswire/ --Martha Stewart Living Omnimedia, Inc. (NYSE: MSO) today announced its results for the fourth quarter and full year ended December 31, 2013. The Company reported net income for the fourth quarter of $7.0 millionand net loss for the full year of $(1.8) million.  "We ended the full year with a $54.5 million improvement in Operating Income from the prior year. In the fourth quarter just completed, growth in Merchandising was offset by anticipated lower revenues from Publishing which was expected due to the restructuring that took place in the prior year to reduce our print title count from four to two," said Dan Dienst, Chief Executive Officer. "As promised, we also took some aggressive and important steps in the last quarter of 2013 to align our cost structure with marketplace realities and more importantly to become nimbler, more efficient, generators of ideas, inspirations, content and product. We also promised to put to bed several pieces of notable and distracting litigation, and we did so." Mr. Dienst continued, "With some of the best, brightest and most passionate employees in our business lines – all of whom have embraced our new way of chasing opportunities as One Company - we are very excited about the groundwork we will lay in 2014 for tapping our esteemed brand's fullest potential."  Fourth Quarter 2013 Summary  Total revenues were $47.4 million in the fourth quarter of 2013, compared to $56.4 million in the fourth quarter of 2012 as the 2012 publishing restructuring resulted in lower revenues partially offset by growth in Merchandising.  Total operating income for the fourth quarter of 2013 was $5.9 million compared with $1.4 million in the prior-year period.   Basic and diluted net income per share was $0.12 for the fourth quarter of 2013, compared to $0.02 for the fourth quarter of 2012.  Full-Year 2013 Summary  Total revenues were $160.7 million in 2013, compared to $197.6 million in 2012.  Total operating loss for the full year 2013 was $(1.9) million compared to an operating loss of $(56.4) million in 2012. Included in 2012 results wasa$(44.3) million non-cash impairment charge reflecting the write-down of goodwill related to the Company's publishing segment.  Net loss per share was $(0.03) for the full year 2013, compared to a net loss per share of $(0.83) in 2012.  Fourth Quarter 2013 Results by Segment  Three Months Ended December 31  (unaudited, in thousands)                               2013        2012 REVENUES Publishing                $ 28,420     $ 35,332 Merchandising             18,216         16,219 Broadcasting              769            4,812 Total Revenues            $ 47, 405    $ 56,363   OPERATING (LOSS) / INCOME Publishing                $ (1,787)    $ (2,343) Merchandising             13,640         11,330 Broadcasting              343            2,953 Corporate                 (6,336)        (10,580) Total Operating Income    $ 5,860     $  1,360  Recent Business Highlights    oMSLO continues to engage consumers via social media, demonstrated by     almost 9 million fans and followers across all its platforms including 1     million fans on Facebook and almost 3 million followers on Twitter.   oIn December, Martha Stewart Living won Adweek's Hot List Award for Hottest     Women's Magazine.   oFor the second year in a row, Martha Stewart Living was recognized by     Apple as one of the best newsstand apps of the year.   oAfter highly popular first and second seasons, the third season of Martha     Stewart's Cooking School started airing on PBS this month and the third     season of Martha Bakes is scheduled to air in April.   oUnique visitors online and on mobile increased 13% in the fourth quarter     over the prior year.   oTotal digital revenue for the full year 2013 grew 13% over the prior year     period.   Publishing  Revenues in the fourth quarter of 2013 were $28.4 million, compared to $35.3 million in the prior year's fourth quarter. In the 2013 fourth quarter, MSLO published two issues of Martha Stewart Living, compared with three in the prior year period. The two published issues generated improved advertising sales compared with the same 2012 issues. Partially offsetting the decline in print revenue was an increase in digital revenue in the quarter.  Operating loss was $(1.8) million for the fourth quarter of 2013, compared to $(2.3) million in the prior year.  Merchandising  Revenues increased 12% to $18.2 million for the fourth quarter of 2013, as compared to $16.2 million in the prior year's fourth quarter, benefitting from royalty revenue recognition, new in 2013, from the Company's relationship with J.C. Penney.  Operating income was $13.6 million for the fourth quarter of 2013 as compared to $11.3 million in the fourth quarter of 2012.  Broadcasting  Revenue in the fourth quarter of 2013 was $0.8 million, compared to $4.8 million in the fourth quarter of 2012, primarily due to non-recurring items in the prior year related to our historical Broadcasting operations.  Operating income was $0.3 million for the fourth quarter of 2013 compared to operating income of $3.0 million in the fourth quarter of 2012.  Corporate  Corporate expenses were $(6.3) million in the fourth quarter of 2013 compared to $(10.6) million in the prior year's quarter, due to a reimbursement from our insurance carrier related to the Macy's litigation and lower executive compensation.  The Company will host a conference call with analysts and investors on February 25, 2014 at 8:30am EST that will be broadcast live over the Internet at www.marthastewart.com/ir, and an archived version will be available through March 11, 2014.  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  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. These forward-looking statements generally can be identified by the use of statements that include phrases such as we "may," "will," "should," "could," "expects," "intends," "plans," "anticipates," "believes," "estimates," "potential" or "continue" or other similar references to future periods or the negative of these terms.  Forward-looking statements are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and our actual results may differ materially from those contemplated by the forward-looking statements. Such forward-looking statements include: adverse reactions to publicity relating to Martha Stewart or Emeril Lagasse by consumers, advertisers and business partners; loss of the services of Ms. Stewart or Mr. Lagasse; continued management turnover; inability to successfully capitalize on digital, mobile and video initiatives, including establishing relationships with additional distribution partners; softening of or increased competition in the domestic advertising market; failure by the economy to sustain any meaningful recovery and other economic developments that limit consumers' discretionary spending or affect the value of our assets or access to credit or other funds; inability to expand merchandising and licensing programs or the loss or failure of existing programs, including as a result of litigation or disputes with merchandising segment partners; inability to grow our online presence; failure to successfully implement our cost savings initiatives; failure to protect our intellectual property; changes in media consumption behavior; increases in paper, postage, freight or printing costs; weakening in circulation, particularly in newsstand sales; operational or financial problems at any of our business partners; our inability to successfully and profitably develop or introduce new products; consolidation of our principal print business vendors, which may lead to increased prices and service delays; and failure to predict, respond to and influence trends in consumer taste and/or shifts in business strategies.  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/.    Martha Stewart Living Omnimedia, Inc. Consolidated Statements of Operations Three Months Ended December 31, (unaudited, in thousands, except share and per share amounts) REVENUES                        2013                  2012 Publishing                      $      28,420   $      35,332 Merchandising                   18,216                16,219 Broadcasting                    769                   4,812 Total revenues                  47,405                56,363 Production, distribution and    (16,789)              (24,470) editorial Selling and promotion           (12,685)              (14,499) General and administrative      (8,489)               (11,512) Depreciation and amortization   (818)                 (979) Restructuring charges           (2,764)               (3,543) OPERATING INCOME                5,860                 1,360 Interest income, net            222                   294 Other expense, net              (97)                  (150) INCOME BEFORE INCOME TAXES      5,985                 1,504 Income tax benefit /            991                   (394) (provision) NET INCOME                      $       6,976  $       1,110 INCOMEPER SHARE - BASIC AND DILUTED Net income- Basic               $              $                                        0.12                 0.02 Net income- Diluted             $              $                                        0.12                 0.02 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING Basic                          57,630,635            67,330,288 Diluted                         58,011,584            67,621,961    Martha Stewart Living Omnimedia, Inc. Consolidated Statements of Operations Twelve Months Ended December 31, (unaudited, in thousands, except share and per share amounts) REVENUES                            2013               2012 Publishing                          $           $    122,540                                     96,493 Merchandising                       59,992             57,574 Broadcasting                        4,190              17,513 Total revenues                      160,675            197,627 Production, distribution and        (73,121)           (103,347) editorial Selling and promotion               (45,033)           (52,453) General and administrative          (39,945)           (45,148) Depreciation and amortization       (3,758)            (4,007) Restructuring charges               (3,439)            (4,811) Goodwill impairment                 —                  (44,257) Gain on sale of subscriber list,    2,724              — net OPERATING LOSS                      (1,897)            (56,396) Interest income, net                792                1,202 Other (expense) / income, net       (583)              711 LOSS BEFORE INCOME TAXES            (1,688)            (54,483) Income tax provision                (84)               (1,602) NET LOSS                            $           $    (56,085)                                     (1,772) LOSS PER SHARE - BASIC AND DILUTED Net loss                            $          $      (0.83)                                     (0.03) WEIGHTED AVERAGE COMMON SHARES OUTSTANDING Basic and diluted                   64,912,368         67,231,463    Martha Stewart Living Omnimedia, Inc. Consolidated Balance Sheets (in thousands, except share and per share amounts)                                                       December 31,   December                                                       2013           31,                                                       (unaudited)    2012 ASSETS CURRENT ASSETS                                                       $        $      Cash and cash equivalents                     21,884                                                                            19,925  Short-term investments                      19,268         29,182  Restricted cash and investments             5,072          —  Accounts receivable, net                    39,694         38,073  Paper inventory                             2,901          4,580  Deferred television production costs        228            434  Other current assets                        3,648          3,335  Total     92,695         95,529 current assets PROPERTY AND EQUIPMENT, net                           7,961          10,738 GOODWILL                                              850            850 OTHER INTANGIBLE ASSETS, net                          45,200         45,203 OTHER NONCURRENT ASSETS                               1,661          1,940  Total    $        $     assets                                                 148,367                                                                            154,260 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES                                                       $        $      Accounts payable and accrued liabilities      12,464                                                                            13,132  Accrued payroll and related costs           8,665          9,316  Current portion of deferred subscription    7,632          13,168 revenue  Current portion of other deferred revenue   17,227         5,605  Total    45,988         40,859 current liabilities DEFERRED SUBSCRIPTION REVENUE                         3,587          4,478 OTHER DEFERRED REVENUE                                17,307         1,113 DEFERRED INCOME TAX LIABILITY                         7,094          7,117 OTHER NONCURRENT LIABILITIES                          3,916          4,815  Total    77,892         58,744 liabilities COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY  Series A Preferred Stock, zero issued and outstanding in 2013,                                  —              —  1 share issued and outstanding in 2012  Class A Common Stock, $0.01 par value, 350,000,000 shares  authorized: 30,704,491 and 41,220,689 shares issues in 2013 and  2012, respectively; 30,645,091 and 41,161,289 shares outstanding  in 2013 and 2012, respectively              307            412  Class B Common Stock, $0.01 par value, 150,000,000 shares  authorized: 25,984,625 shares issued and outstanding in 2013 and                                                       260            260  2012  Capital in excess of par value              342,213        340,586  Accumulated deficit                         (271,051)      (244,529)  Accumulated other comprehensive loss        (479)          (438)                                                       71,250         96,291  Less: Class A treasury stock - 59,400       (775)          (775) shares at cost  Total   70,475         95,516 shareholders' equity  Total   $        $     liabilities and shareholders' equity                   148,367                                                                            154,260    SOURCE Martha Stewart Living Omnimedia, Inc.  Website: http://www.marthastewart.com Contact: Katherine Nash, Martha Stewart Living Omnimedia, Inc. Investor Relations, 212-827-8348, knash@marthastewart.com