PRIMEDIA Reports Record 1998 Second Quarter Results EBITDA Increases to $76 Million.NEW YORK--(BUSINESS WIRE)--July 23, 1998--PRIMEDIA Inc.(NYSE NYSE See: New York Stock Exchange :PRM PRM Partner Relationship Management PRM Parameter PRM Bureau of Population, Refugees and Migration (US State Department) PRM Partidul Romania Mare (Romania Mare Party) PRM Professional Risk Manager ) today reported record 1998 second quarter EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become from continuing businesses of $76.0 million on record sales from continuing businesses of $371.0 million. "Particularly robust revenues and earnings in our specialty magazine and information groups helped drive the performance," said William F. Reilly, chairman and chief executive officer. "This growth results from our program of dominating targeted growing media markets with valuable content." PRIMEDIA, as the authoritative source of specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. information for highly targeted audiences, has established an average 60% market share across the Company. Some of its prime media brands are Seventeen, Weekly Reader, Channel One, IntelliChoice and Telephony Meaning "sound over distance," it refers to electronically transmitting the human voice. In the beginning, telephony dealt only with analog signals in the circuit-switched networks of the telephone companies. . "Our second quarter EBITDA was strong despite the fact that Channel One's advertising revenues were reduced by $5 million due principally to the failure of a satellite used to transmit To send data over a communications line. See transfer. its programming," said Mr. Reilly. "Most of this revenue loss drops directly to the bottom line. We expect a very strong second half and are confident that vigorous business conditions and our strategic initiatives will continue to build profits." Results from Continuing Businesses (Excluding businesses held for sale or divested in 1997 or 1998) ($ millions) 2Q 98 % Change 2 Q97 6 mos 98 % Change 6 mos 97 Sales $371.0 28.0% $289.9 $699.5 23.7% $565.6 EBITDA $ 76.0 7.3% $ 70.8 $139.1 9.5% $127.0 Margin 20.5% 24.4% 19.9% 22.5% Since the second quarter of 1997, PRIMEDIA has divested several non-core businesses. The following table sets forth results including businesses sold up to the dates of their disposition or businesses held for sale as they will be reflected in the Company's financial statements ("as reported"). Total Company Results as Reported (Including businesses held for sale or until divested in 1997 or 1998) ($ millions) 2Q 98 % Change 2Q 97 6 mos 98 % Change 6 mos 97 Sales $390.0 5.7% $368.8 $735.0 1.9% $721.1 EBITDA $ 79.7 (3.0)% $ 82.2 $144.6 1.7% $142.2 Margin 20.4% 22.3% 19.7% 19.7% Gain on sale of business and other, net $ 1.8 -- -- $ 1.8 -- -- Operating Income $ 28.4 (28.1%) $39.5 $ 52.7 (12.2%) $ 60.0 Highlights of the Second Quarter "During the second quarter, PRIMEDIA continued to advance our 'twin engine' approach to building our enterprise, both organically and through acquired product lines," said Mr. Reilly. Some highlights include: -- The second quarter saw strong performance from new print products, as well as the aggressive roll out of our profitable presence on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the and promising early results for our international start-up Start-up The earliest stage of a new business venture. activities, particularly in China. PRIMEDIA has 193 targeted media products under development, 98 of which are launching in 1998. Some recent new products include Summer Weekly Reader, the Workplace Training Network (WTN WTN Watertown (Wisconsin) WTN Working Telephone Number WTN World Television Network WTN Wright Technology Network WTN World Timber Network WTN Womens' Television Network (Canada) ), the Soap Opera Digest Soap Opera Digest is a magazine chronicling the stories airing on American soap operas and the off-screen lives of the actors appearing on them. The magazine first debuted in November 1975, with John Aniston, Ron Tomme, Audrey Peters, Birgitta Tolksdorf, Jerry Lacy and Tudi partnership with Yahoo! for a celebrity chat site, two trade magazines entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: Utility Business and Energy Manager, and a Latin American edition of Access Control & Security Systems Integration. -- The second quarter was the first full quarter of ownership of Cowles Enthusiast A person who enjoys using computers and electronic equipment. Enthusiasts like technology and are willing to learn more of the ins and outs of a product than the average consumer, who just wants to use it. An enthusiast is more like a "prosumer." See consumer and prosumer. Media and Cowles Business Media. Cowles is proving to be an excellent addition to our company, and its profit margins are expanding. Since acquisition, Cowles added In Fisherman, making PRIMEDIA the largest publisher of fishing enthusiast magazines in the U.S., and a group of magazines including EQUUS Equus see equus. Equus burchelli common zebra. Equus caballus the modern horse. Equus grevyi Grevyi's zebra. , making us the largest publisher of equine equine Any member of the ungulate family Equidae, which includes the modern horses, zebras, and asses, all in the genus Equus, as well as more than 60 species known only from fossils. Equines descended from the dawn horse (see Eohippus). enthusiast magazines. -- We refined the strategy for our PRIMEDIA Workplace Learning division by focusing on the six highly specialized professional development segments which it dominates and which are experiencing healthy growth. This involves the closure of EXEN EXEN Executive Education Network EXEN Executive Engineer ExEn Executive Energiser (job skill development program) , the Executive Education Network, which faces intense competition and has continued to be unprofitable. EXEN accounts for less than 5% of PRIMEDIA Workplace Learning's revenues and is not the type of highly targeted business on which PRIMEDIA focuses.
Specialty Magazines
(specialty consumer magazines and technical and trade magazines)
Quarterly Results ($ millions)
2Q98 %Change 2Q97 6 mos 98 %Change 6 mos 97
Continuing Businesses
(excluding New Woman, Stagebill and certain enthusiast titles)
Sales $247.1 41.3% $174.9 $440.1 31.0% $336.0
EBITDA $52.7 20.9% $43.6 $86.2 14.2% $ 75.5
Margin 21.3% 24.9% 19.6% 22.5%
Total Segment
as Reported
Sales $247.3 30.6% $189.4 $441.5 21.5% $363.5
EBITDA $52.7 21.7% $43.3 $ 86.4 16.9% $ 73.9
Margin 21.3% 22.9% 19.6% 20.3%
"Second quarter sales and EBITDA from continuing businesses were a record for any quarter," said Mr. Reilly. "Advertising revenues increased 37.5% to $156.4 million while circulation increased 34.8% to $76.5 million. Advertising revenues grew to record levels at Seventeen and were very strong at such enthusiast titles as Sail, Power & Motoryacht and Sport Compact Car. The technical and trade magazine group is having an extremely robust year, with particularly strong advertising revenues in the telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. (Telephony), agribusiness agribusiness Agriculture operated by business; specifically, that part of a modern national economy devoted to the production, processing, and distribution of food and fibre products and byproducts. (Soybean soybean, soya bean, or soy pea, leguminous plant (Glycine max, G. soja, or Soja max) of the family Leguminosae (pulse family), native to tropical and warm temperate regions of Asia, where it has been Digest Digest: see Corpus Juris Civilis. (1) A compilation of all the traffic on a news group or mailing list. Digests can be daily or weekly. (2) Any compilation or summary. ) and financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. (National Real Estate Investor A real estate investor is someone who actively or passively invests in real estate. An active investor may buy a property, make repairs and/or improvements to the property, and sell it later for a profit. ) categories and trade shows. "Cowles accounted for much of the sales and earnings increase, and performance of this recent acquisition is exceeding our pre-acquisition forecast. However, the segment's margin was reduced largely because of the inclusion of Cowles which incurred some integration expenses and has had a somewhat lower EBITDA margin than PRIMEDIA's other specialty magazine businesses. We expect that Cowles' margin will expand over future quarters as the integration is completed. "Circulation revenues for Soap Opera Digest and Soap Opera Weekly Soap Opera Weekly is a soap magazine which features soap operas and soap stars. It launched in November, 1989. In 2000 the magazine expanded its focus to include coverage of prime-time drama and reality series with soapy themes and continuing storylines. declined from year ago levels when they were buoyed short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. by the increase to weekly frequency. We are stepping up our promotional efforts here as well, and will see improving comparisons in the third quarter. We are holding our approximately 70% market share and we continue to dominate this very attractive market. "We expect that the balance of 1998 will prove to be strong for our specialty magazine group as we continue to experience growing circulation, balanced between single copy and subscription sales, and stable production costs. The advertising environment remains extremely robust, particularly for our largest categories technical and trade and enthusiast, or endemic endemic /en·dem·ic/ (en-dem´ik) present or usually prevalent in a population at all times. en·dem·ic adj. 1. , advertising - as well as consumer advertising which is a much smaller category for PRIMEDIA," said Mr. Reilly.
Education (classroom learning and workplace learning)
Quarterly Results ($ millions)
2Q98 %Change 2Q97 6 mos 98 %Change 6 mos 97
Continuing Businesses
(excluding Newbridge, Krames, Katharine Gibbs and Funk & Wagnalls)
Sales $62.4 2.0% $61.2 $140.1 10.4% $126.9
EBITDA $13.5 (32.5)% $20.0 $ 36.9 (9.3%) $ 40.7
Margin 21.6% 32.7% 26.3% 32.1%
Total Segment
as Reported
Sales $65.2 (39.3)% $107.5 $143.5 (35.2)% $221.4
EBITDA $15.1 (44.3)% $27.1 $ 38.3 (24.3)% $ 50.6
Margin 23.2% 25.2% 26.7% 22.9%
"As we announced in May, the education segment was adversely affected by the failure of PanAmSat's Galaxy IV Galaxy IV was a model HS-601 satellite built by Hughes Space and Communications Company (HSC). The satellite, which carried a payload of both C band and Ku band transponders, was launched on June 24, 1993 and operated by PanAmSat Corporation. satellite which prevented our Channel One News from broadcasting its daily program for the last two weeks of the school year," said Mr. Reilly. "This one-time occurrence was principally responsible for a $5 million advertising revenue reduction in the quarter which had a similar effect on profitability. Students and teachers look forward to Channel One's daily news program, and, at considerable cost, we provided continuity to our audience through air courier A monospaced typeface originating from the typewriter that is commonly used for letters. It is still considered by many to be the "appropriate" typeface for business correspondence. overnight delivery of the program on video cassette video cassette Noun a cassette containing video tape video cassette n → videocassette f video cassette n → . Channel One News will be up and running in time for the start of the new school year. The book of advertising for the third and fourth quarters is very strong and profitability should improve dramatically. "In our supplemental education group which serves grade schools and libraries, we saw higher sales and earnings from Films for the Humanities, plus additional revenues from the launch of Summer Weekly Reader, a product line extension mailed to students' homes during the summer months. This product has been well received by both students and parents and is an example of the type of product extensions we are developing across PRIMEDIA. "PRIMEDIA Workplace Learning's EBITDA was below year ago levels as we continued our investment in new products and had significant losses at EXEN (Executive Education Network), which we will close on August 1, 1998. EXEN, which utilizes professors from universities, is in an extremely competitive field where organizations and universities are jockeying jock·ey n. pl. jock·eys 1. Sports One who rides horses in races, especially as a profession. 2. Slang One who operates a specified vehicle, machine, or device: for position with corporate customers. Associated with this closure is a charge of $4.0 million in the quarter which is being more than offset by a gain on the sale of Nelson's (which was in the Information segment). "We feel certain that we have the right strategy, including programming, sales force organization and marketing, that is enabling PRIMEDIA Workplace Learning to show steady growth. The organization focuses on six highly specialized professional development areas, each of which has great opportunities for organic and acquired growth. These areas are: health care, industrial, financial and insurance, law enforcement, automotive and human resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. development. In these areas we offer highly specialized programming that is often accreditation-based. There is strong training demand in each and we already hold leadership positions in each area. "The combination of the satellite problem and losses from EXEN contributed to making the 1998 second quarter our weakest of the year. We are confident that the second half will show significant improvement."
Information (consumer information and business information)
Quarterly Results ($ millions)
2Q98 %Change 2Q97 6 mos 98 %Change 6 mos 97
Continuing Businesses
(excluding Daily Racing Form and Nelson's)
Sales $61.5 14.3% $53.8 $119.3 16.2% $102.7
EBITDA $16.6 26.7% $13.1 $ 29.2 24.3% $ 23.5
Margin 27.0% 24.3% 24.5% 22.9%
Total Segment
as Reported
Sales $77.5 7.8% $71.9 $150.0 10.1% $136.2
EBITDA $18.8 6.2% $17.7 $ 33.1 8.9% $ 30.4
Margin 24.3% 24.6% 22.1% 22.3%
"Information segment sales and EBITDA were records, primarily attributable to strong organic growth at HPC (Handheld PC) A palmtop computer that weighs less than one pound and runs specialized versions of popular applications. Microsoft coined the term for its Windows CE operating system, which is an abbreviated version of Windows. See Pocket PC. Publications, the apartment guides unit, and with Bacon's Information clipping (1) Cutting off the outer edges or boundaries of a word, signal or image. In rendering an image, clipping removes any objects or portions thereof that are not visible on screen. See scissoring. See also WCA. services and MediaSource CD-ROM CD-ROM: see compact disc. CD-ROM in full compact disc read-only memory Type of computer storage medium that is read optically (e.g., by a laser). products," said Mr. Reilly. "HPC apartment guides had its best quarter ever with organic growth in the mid-teens. We expect continued growth at strong levels. Recent start-ups like Salt Lake City have been very successful, and we continue to gain market share from newspaper classified advertising. "We have been the largest advertiser-sponsored apartment guide publisher, and recently became the largest advertiser-sponsored new home guide publisher through the acquisition of 12 guides in such growth markets as Northern and Southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, , Denver, Phoenix, Tampa and Dallas. This action nearly doubles our number of new home guides to 23. We expect to make further acquisitions and roll out new home guides in new markets. We are also continuing to expand our MicroTimes computer buying guides into new regions. "We also sold Nelson Information, Inc., to Thomson Financial Thomson Financial A major provider of information, analytical tools, and consulting services to the financial community. The firm, a division of Thomson Corporation, is best known to investors for its First Call segment, which publishes consensus earnings Services during the quarter," said Mr. Reilly. 1998 Second Half Expectations "The 1998 second half should again produce record results for PRIMEDIA, and we believe that the growth should accelerate from first half levels," said Mr. Reilly. "I am confident that all three segments will post strong results given the underlying business trends, and the execution of our `twin engine' approach to grow both organically and through acquisitions. I am also optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about 1999 as we begin to review plans for that period." PRIMEDIA Inc., with 1997 sales from continuing businesses of $1.2 billion, is the authoritative source of specialized information in specialty magazines, education and information. Some key brands include Seventeen, New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , Chicago, Fly Fisherman one who fishes using natural or artificial flies as bait, especially one who fishes exclusively in that manner. - Walton. See also: Fly , Channel One, Weekly Reader, World Almanac almanac, originally, a calendar with notations of astronomical and other data. Almanacs have been known in simple form almost since the invention of writing, for they served to record religious feasts, seasonal changes, and the like. , Horticulture horticulture [Lat. hortus=garden], science and art of gardening and of cultivating fruits, vegetables, flowers, and ornamental plants. Horticulture generally refers to small-scale gardening, and agriculture to the growing of field crops, usually on a large , Modern Bride This article is about the female participant in a wedding. For other uses, see Bride (disambiguation). A bride is a female participant in a wedding ceremony: a woman about to be married, currently being married, or, in some uses, very recently married. , American Baby and PRIMEDIA Workplace Learning. This release contains certain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. concerning PRIMEDIA's operations, economic performance and financial condition. These statements are based upon a number of assumptions and estimates which are inherently subject to uncertainties and contingencies Contingencies (ISSN 1048-9851) is the bimonthly magazine of the American Academy of Actuaries, providing a large and diverse readership with general interest and technical articles on a wide range of issues related to the actuarial profession. , many of which are beyond the control of the Company, and reflect future business decisions which are subject to change. Some of these assumptions may not materialize ma·te·ri·al·ize v. ma·te·ri·al·ized, ma·te·ri·al·iz·ing, ma·te·ri·al·iz·es v.tr. 1. To cause to become real or actual: By building the house, we materialized a dream. , and unanticipated events will occur which can affect the Company's results.
PRIMEDIA INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
(dollars in millions, except per share amounts)
Three Months
Ended June 30,
----------------------------
1998 1997
---- ----
Sales - Net $390.0 $368.8
Operating Costs and Expenses (310.3) (286.6)
Earnings before Interest, Taxes,
Depreciation, Amortization and
Provision for One-Time Charges (EBITDA) 79.7 82.2
Depreciation and Amortization (53.1) (42.7)
Gain on Sale of Business
and Other, Net 1.8 --
Operating Income 28.4 39.5
Interest Expense (34.4) (34.6)
Other Expense, Net (1.3) (1.2)
Income (Loss) Before Income
Tax Benefit and Extraordinary
Charge (7.3) 3.7
Income Tax Benefit - Carryback
Claim -- --
Income (Loss) Before
Extraordinary Charge (7.3) 3.7
Extraordinary Charge -
Extinguishment of Debt -- (13.8)
Net Loss (7.3) (10.1)
Preferred Stock Dividends (13.2) (12.5)
Preferred Stock
Redemption Premium -- --
Loss Applicable to
Common Shareholders $(20.5) $(22.6)
Basic and Diluted Loss
Applicable to Common
Shareholders per Common Share:
Loss Before Extraordinary Charge $(.14) $(.07)
Extraordinary Charge -- (.11)
Net Loss $(.14) $(.18)
Basic and Diluted Common Shares
Outstanding 145,659,940 129,289,307
Six Months
Ended June 30,
----------------------
1998 1997
---- ----
Sales - Net $735.0 $721.1
Operating Costs and Expenses (590.4) (578.9)
Earnings before Interest, Taxes,
Depreciation, Amortization and
Provision for One-Time Charges (EBITDA) 144.6 142.2
Depreciation and Amortization (93.7) (82.2)
Gain on Sale of Business
and Other, Net 1.8 --
Operating Income 52.7 60.0
Interest Expense (67.8) (68.9)
Other Expense, Net (1.9) (1.6)
Income (Loss) Before Income
Tax Benefit and Extraordinary
Charge (17.0) (10.5)
Income Tax Benefit - Carryback
Claim -- 1.7
Income (Loss) Before
Extraordinary Charge (17.0) (8.8)
Extraordinary Charge -
Extinguishment of Debt -- (15.4)
Net Loss (17.0) (24.2)
Preferred Stock Dividends (27.6) (24.8)
Preferred Stock
Redemption Premium (9.1) --
Loss Applicable to
Common Shareholders $(53.7) $(49.0)
Basic and Diluted Loss
Applicable to Common
Shareholders per Common Share:
Loss Before Extraordinary Charge $ (.38) $ (.26)
Extraordinary Charge -- (.12)
Net Loss $ (.38) $ (.38)
Basic and Diluted Common Shares
Outstanding 140,173,171 129,201,826
SUPPLEMENTAL DISCLOSURE
Diluted Common Shares Outstanding presented below represent the shares
which would have been used in computing diluted earnings per share if
the Company had income in all periods presented:
Three Months
Ended June 30,
----------------------------
1998 1997
---- ----
Diluted Common Shares Outstanding 149,135,697 132,360,826
OTHER DATA
Capital Expenditures, net $11.1 $7.6
Six Months
Ended June 30,
----------------------
1998 1997
---- ----
Diluted Common Shares Outstanding 143,670,039 132,332,989
OTHER DATA
Capital Expenditures, net $17.0 $14.6
At June 30, At December 31,
1998 1997
Cash and cash equivalents $20.9 $23.0
Long-term debt and other,
including current maturities $ 1,767.7 $ 1,721.1
Preferred Stock $ 557.4 $ 470.3
CONTACT: Investors: Warren Bimblick 212.745.0615
Media: Joanne Lasky 212.745.0132
Web-site: www.primediainc.com
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