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FOREIGN CURRENCY EXCHANGE RATES REDUCE READER'S DIGEST FIRST QUARTER REVENUES AND PROFITS

 Company Announces U.S. Workforce Reduction of About 200 People
 PLEASANTVILLE, N.Y., Nov. 3 /PRNewswire/ -- The Reader's Digest Association, Inc. (NYSE: RDA, RDB) today said that changes in foreign exchange rates caused the company to report revenues below last year and accounted for most of the operating profit decline for the fiscal 1994 first quarter ended September 30, 1993.
 Including the negative effect of foreign exchange, first quarter revenues declined 6 percent and operating profit decreased 23 percent. Excluding the effect of foreign exchange, revenues increased 6 percent and operating profit declined 3 percent. In addition to exchange, profits in the first quarter were below last year because of higher promotional spending in many markets around the world. Higher capital gains taken in the quarter somewhat offset the operating income decline with the result that reported earnings per share (before accounting changes) were 4 percent below last year.
 Following are the company's reported results for the quarter:
 First quarter ended September 30, 1993 1992 %
 Revenues $637.2 $680.0 -6
 Operating profit 68.2 88.1 -23
 Net income 62.8 67.6 -7
 Earnings per common share $.54 $.56 -4
 (All figures are before the cumulative effects of accounting changes, and are in millions of dollars, except per share amounts.)
 "If exchange rates remain at current levels, the adverse effect from exchange will moderate for the balance of the year," Reader's Digest Chairman and Chief Executive Officer George V. Grune said. "However, the exchange effect for all of fiscal 1994 could be about 20 cents per share."
 Grune said the company has "begun to see good progress during the first quarter toward our goal of bringing the U.S. books and home entertainment business back to historic growth levels, and our efforts are on plan. We remain committed to improving our productivity, investing in our long-term growth and satisfying our shareholders' expectations."
 The company today also announced a reduction in its U.S. workforce of about 200 people that Grune said "is designed to bring the overall U.S. company's cost structure in line with revenues, and staffing levels in line with business activities."
 These reductions follow an announcement last June of the reduction of about 250 U.S. company positions which primarily involved outsourcing of customer service and fulfillment operations. Most of today's staff reductions involve elimination of jobs rather than outsourcing.
 Reader's Digest reported the following results for each of its three major business segments during the first quarter ended September 30, 1993:
 - Reader's Digest magazine revenues declined 6 percent to
 $164.9 million and would have risen about 3 percent without
 the impact of changes in foreign currency exchange rates.
 - Revenues for books and home entertainment products
 (Condensed Books, series and general interest books, music
 and video products) declined 7 percent to $439.9 million and
 would have risen about 6 percent without the currency
 effect.
 - Special interest magazine revenues (American Health, New
 Choices for Retirement Living, The Family Handyman and
 Travel Holiday in the United States, and Moneywise in the
 United Kingdom) were up 9 percent to $17.8 million and would
 have risen about 12 percent excluding the currency effect.
 Grune said the company is continuing its strategy of returning cash to shareholders through share repurchase programs and dividend increases. "The recent dividend of 35 cents per share paid on November 1 was triple the dividend paid to shareholders when our company became public in 1990," he noted.
 EFFECTS OF ACCOUNTING CHANGES
 The company has adopted in the first quarter of fiscal 1994 the Statement of Financial Accounting Standards (FAS) No. 112, "Employers' Accounting for Postemployment Benefits," involving the accounting for disability, severance and health insurance benefits provided to former or inactive employees prior to retirement. The financial impact of FAS 112 is reflected in the company's first fiscal 1994 quarter in a non- cash, nonrecurring cumulative effect accounting adjustment of $25.8 million, net of tax, (or 23 cents per share). The one-time costs of the workforce reduction announced today will be charged against this accrual.
 The company previously announced that it adopted (FAS) No. 106, "Employers' Accounting for Postretirement Benefits," and (FAS) No. 109, "Accounting for Income Taxes," retroactive to the first quarter of fiscal 1993. Results for the first quarter of fiscal 1993 have been restated to reflect the adoption of FAS 106 and FAS 109.
 Reader's Digest is a global publisher of magazines, books and home entertainment products, and one of the world's leading direct mail marketers. Global headquarters is in Pleasantville, N.Y.
 The Reader's Digest Association, Inc. and Subsidiaries
 Consolidated Condensed Statements of Income
 First Fiscal Quarters ended September 30, 1993 and 1992
 (In thousands, except per share data)
 Three-month period ended (a)
 September 30,
 1993 (b) 1992 (b)
 (unaudited)
 Revenue $637,237 (c) $679,963
 Cost of sales, fulfillment
 and distribution expense 243,999 258,976
 Promotion, selling and
 administrative expense 324,997 332,861
 568,996 591,837
 Operating profit 68,241 (c) 88,126
 Other income, net 33,822 (d) 21,808
 Income before provision for
 income taxes and cumulative
 effect of accounting changes
 102,063 109,934
 Provision for income taxes 39,294 42,325
 Income before cumulative effect
 of changes in accounting
 principles 62,769 67,609
 Cumulative effect of changes in
 accounting principles net of
 tax benefit (25,830) (50,938)
 Net Income $36,939 $16,671
 Earnings per share before
 cumulative effect of changes
 in accounting principles $0.54 (e) $0.56
 Cumulative effect of changes in
 accounting principles (0.23) (0.42)
 Earnings per share $0.31 $0.14
 Dividends per common share $0.30 $0.25
 Average common shares
 outstanding 116,707 119,677
 (a) The company reports on a fiscal year beginning July 1. The three-month periods ended September 30 are the first quarters of fiscal year 1994 and fiscal year 1993.
 (b) In the first quarter of fiscal 1994 ended September 30, 1993, the company adopted Statement of Financial Accounting Standards No. (SFAS) 112, "Employers' Accounting For Postemployment Benefits." Prior year results for the comparable period have not been restated for SFAS 112. Results for the first quarter of fiscal 1993 ended September 30, 1992, have been restated for the adoption of SFAS 106, "Employers' Accounting For Postretirement Benefits," and SFAS 109, "Accounting For Income Taxes."
 (c) Revenues and operating profit decreased 6% and 23%, respectively, for the quarter ended September 30, 1993. Excluding the effect of changes in foreign currency exchange rates, revenues would have increased about 6% and operating profit would have decreased about 3%.
 (d) Other income, net includes the effect of foreign exchange ($.5 million expense in fiscal 1994 compared with $1.1 million expense in fiscal 1993) and gains on the sales of certain investments ($24.7 million in fiscal 1994 compared with $11.3 million in fiscal 1993).
 (e) Earnings per share before the cumulative effect of changes in accounting principles decreased 4%. Excluding the combined effect of foreign exchange on operating profit and on other income, net, earnings per share before the cumulative effect of changes in accounting principles increased about 11%. Excluding the combined total effect of foreign exchange and gains on the sales of certain investments, earnings per share before the cumulative effect of changes in accounting principles decreased about 2%.
 The Reader's Digest Association, Inc. and Subsidiaries
 Revenues by Business Segments and Geographic Areas
 First Fiscal Quarters ended September 30, 1993 and 1992
 (In thousands)
 Three-month period ended
 September 30, Variance
 1993 1992 Reported Adjusted*
 (unaudited)
 BUSINESS SEGMENTS
 Reader's Digest magazine
 $164,874 $174,906 -6% 3%
 Books and home
 entertainment products
 439,882 475,255 -7% 6%
 Special interest magazines
 17,846 16,301 9% 12%
 Other operations 14,635 13,501 8% 15%
 Total Company $637,237 $679,963 -6% 6%
 GEOGRAPHIC AREAS
 United States $257,402 $254,576 1% 1%
 International 379,835 425,387 -11% 9%
 Total Company $637,237 $679,963 -6% 6%
 * Adjusted to exclude the impact of changes in foreign currency exchange rates.
 -0- 11/3/93
 /CONTACT: David Fluhrer of The Reader's Digest Association, 914-241-5010, or home, 516-379-9454/
 (RDA)


CO: The Reader's Digest Association, Inc. ST: New York IN: PUB SU: ERN

PS -- NY013 -- 9913 11/03/93 07:01 EST
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Date:Nov 3, 1993
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