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READER'S DIGEST FISCAL 1993 REVENUES UP 10 PERCENT, EARNINGS PER SHARE RISE 13 PERCENT

 -- Ninth Consecutive Year of Record Profits --
 PLEASANTVILLE, N.Y., Aug. 25 /PRNewswire/ -- The Reader's Digest


Association, Inc. (NYSE: RDA, RDB) reported today that revenues increased 10 percent and earnings per share were up 13 percent for the fiscal year ended June 30, 1993, before the effects of accounting changes adopted by the company in 1993 for postretirement benefits and income taxes (Financial Accounting Standards 106 and 109).
 Following are the company's results for the fiscal year, excluding the effects of adoption of FAS 106 and 109 in 1993:
 Fiscal year ended June 30, 1993 1992 Percent
 Revenues $2,868.6 $2,614.0 +10
 Operating profit 359.1 330.2 +9
 Net income 262.2 234.4 +12
 Earnings per common share $2.20 $1.95 +13
 (All figures are in millions of dollars, except per share amounts. A discussion of the effects of these accounting changes on fiscal 1993 appears later in this release.)
 "We are pleased to report that fiscal 1993 was our ninth consecutive year of record profits," said Reader's Digest chairman of the board and chief executive officer George V. Grune. In addition, our company paid cash dividends during the year of $1.15 per common share, a 44 percent increase from the 80 cents paid a year earlier. We repurchased a total of 3.4 million shares of Class A nonvoting common stock under two programs authorized by our board since February 1992 to repurchase up to 6 million shares. And our financial position remains strong, with our cash exceeding $700 million at the end of the year.
 "Our two major business segments -- Reader's Digest magazine and books and home entertainment products -- reported gains worldwide in 1993," Grune said. "And our special interest magazine segment made significant progress toward profitability, cutting its operating loss by more than half. In addition, our 1993 results reflect lower corporate expenses."
 International revenues for fiscal 1993 rose 17 percent, with foreign exchange rates having a minimal effect on these results for the year. U.S. revenues increased slightly, reflecting weaker sales in the U.S. Books and Home Entertainment Division.
 "During the fourth quarter," Grune said, "we moved ahead with our plan to return the U.S. Books and Home Entertainment Division to its historic growth.
 "We have strengthened our U.S. operations with seasoned executives as part of the company's recent global reorganization into three operating groups -- U.S.A., Europe, and Pacific -- to better manage all our businesses for the future. We are working to carefully sequence our product offerings and vary our promotional approaches. And we are implementing rigid cost controls, giving us financial leverage as we get the U.S. Books and Home Entertainment Division back on track," he said.
 Grune reiterated his comment from last May that "this is a long lead-time business and our plan could require 12 to 24 months to return the U.S. Books and Home Entertainment Division to its historic growth."
 "The dollar," Grune added, "is now about 15 percent stronger than it was this time last year in the international markets where we operate, and this will negatively affect our fiscal 1994 results. If exchange rates remain at current levels for the balance of fiscal 1994, the dollar will be about 10 percent higher on average for 1994 compared to 1993. This could result in an adverse effect on our earnings per share of about 20 cents for the 1994 fiscal year, with a disproportionate effect on our first quarter results."
 For the fiscal fourth quarter ended June 30, 1993, The Reader's Digest Association reported the following results exclusive of adoption of FAS 106 and 109 in 1993:
 Fourth quarter ended June 30, 1993 1992 Percent
 Revenues $644.4 $605.4 +6
 Operating profit 27.2 30.1 -10
 Net Income 26.8 26.2 +2
 Earnings per common share $ .23 $ .22 +5
 (All figures are in millions of dollars, except per share amounts. A discussion of the effects of these accounting changes on the fourth quarter of fiscal 1993 appears later in this release.)
 International revenues were up 11 percent for the quarter, and would have increased about 17 percent without the adverse effect of the stronger dollar. U.S. revenues for the fourth quarter were equal to last year. Total company operating profit declined 10 percent in the quarter, but would have increased about 11 percent without the adverse currency effect.
 The company reported these business segment results for the fiscal year 1993 versus fiscal 1992:
 Reader's Digest magazine revenues were $720 million, up 5 percent over the previous year's $685 million. About two-thirds of the revenue increase came from higher subscription prices worldwide and the balance from increased advertising revenues. Operating profit exclusive of accounting changes was $99.9 million, an increase of 3 percent over $96.8 million in fiscal 1992.
 In the books and home entertainment products segment (Condensed Books, series and general interest books, music and video products), revenues climbed to almost $2 billion, 12 percent above the $1.7 billion reported last year. Revenues for the U.S. were lower compared with last year. This decrease was more than offset by higher sales in international markets. Total segment revenues increased principally because of higher unit sales. Operating profit exclusive of accounting changes was $312.4 million, 3 percent over $303 million in fiscal 1992.
 Special interest magazines (four publications in the United States and one in the United Kingdom) reported revenues of $84.1 million, an 11 percent increase over the previous year's $75.5 million. This segment generated a lower operating loss of $9.2 million, compared with a loss of $19.5 million in fiscal 1992. The improved performance came from higher subscription rates, increased advertising revenue and lower amortization expenses.
 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.
 EFFECT OF FISCAL 1993 ACCOUNTING CHANGES
 The company announced that in the fourth quarter it adopted two new statements of the Financial Accounting Standards Board retroactive to the first quarter of fiscal 1993. These two accounting standards involve required changes in the accounting for postretirement benefits (FAS 106) and income taxes (FAS 109).
 Following are the company's results for the fiscal year, including the effects of adoption of FAS 106 and 109 in 1993. Results for 1992 have not been restated.
 Fiscal year ended June 30, 1993 1992 Percent
 Revenues $2,868.6 $2,614.0 +10
 Operating profit 352.7 330.2 +7
 Income before cumulative
 effect of accounting changes 258.3 234.4 +10
 Net income 207.3 234.4 -12
 Earnings per common share:
 Income before cumulative
 effect of accounting changes
 $2.16 $1.95 +11
 Net income 1.74 1.95 -11
 (All figures in millions of dollars, except per share amounts)
 Following are the company's results for the fourth quarter including the effects of adoption of FAS 106 and 109 in 1993. Results for 1992 have not been restated.
 Fourth quarter ended June 30, 1993 1992 Percent
 Revenues $644.4 $605.4 +6
 Operating profit 25.6 30.1 -15
 Net Income 25.8 26.2 -2
 Earnings per common share $ .22 $ .22 --
 (All figures in millions of dollars, except per share amounts)
 The financial impact of FAS 106 and FAS 109 is reflected in the company's fiscal 1993 earnings in two non-cash adjustments. The first non-cash adjustment represents an increase in annual operating expense of $6.4 million (or 4 cents per share) related to accruing postretirement benefits which will be paid in future years. This incremental expense is reported within the Promotion, Selling and Administrative Expense category of the company's consolidated income statement.
 The second non-cash adjustment, which is a nonrecurring cumulative effect accounting adjustment, decreased net income by $51 million (or 42 cents per share). This one-time adjustment combines the impact of FAS 106 and FAS 109, and is separately identified in the company's consolidated income statement.
 The adoption of the accounting changes decreased fourth quarter fiscal 1993 operating profit by $1.6 million (or 1 cent per share). Reported earnings for each of the first three quarters of fiscal 1993 will be restated to reflect the impact of these new accounting standards. Amounts for 1992 and prior years will not be restated.
 READER'S DIGEST ASSOCIATION, INC. AND SUBSIDIARIES
 Table 1 of 3
 Consolidated Statements of Income
 (in thousands, except per share data)
 Three - month period
 Ended June 30, 1993 1993 1992 (B)
 After Before
 accounting accounting
 changes (A) changes
 Revenues (C) $644,357 $644,357 $605,402
 Cost of sales, fulfillment
 and distribution expense 267,617 267,617 243,063(E)
 Promotion,
 selling and
 administrative expense 351,184 349,573 332,243(E)
 618,801 617,190 575,306
 Operating profit (C) 25,556 27,167 30,096
 Other income, net(D) 16,336 16,336 12,506
 Income before provision for
 income taxes 41,892 43,503 42,602
 Provision for income taxes 16,128 16,749 16,402
 Net income $25,764 $26,754 $26,200
 Earnings per
 common share $ 0.22 $ 0.23 $ 0.22
 Dividends per common share $ 0.30 $ 0.30 $ 0.25
 Average common
 shares outstanding 117,402 117,402 119,892
 (A) Amounts reported reflect the adoption of FAS 106 and FAS 109.
 (B) Amounts reported have not been restated for FAS 106 and FAS 109.
 (C) Revenues increased 6 percent and operating profit (before accounting changes) decreased 10 percent for the quarter ended June 30, 1993. Without the effect of changes in foreign currency exchange rates, revenues and operating profit (before accounting changes) would have increased about 10 percent and 11 percent, respectively.
 (D) Other income, net includes the effect of foreign exchange ($.7 million income in fiscal 1993 compared to $5.6 million expense in fiscal 1992) and gains on the sales of certain investments ($7.4 million in fiscal 1993 compared to $5.2 million in fiscal 1992). Excluding the combined effect of foreign exchange and gains on the sales of certain investments, earnings per share (before accounting changes) would have been unchanged from last year.
 (E) Amounts have been reclassified to conform to current year presentation.
 THE READER'S DIGEST ASSOCIATION, INC. AND SUBSIDIARIES
 Table 2 of 3
 Consolidated Statements of Income
 (in thousands, except per share data)
 Twelve - month period
 Ended June 30, 1993 1993 1992 (B)
 After Before
 accounting accounting
 changes (A) changes
 Revenues (C) $2,868,637 $2,868,637 $2,613,958
 Cost of sales,
 fulfillment and
 distribution
 expense 1,111,198 1,111,198 1,015,116(E)
 Promotion, selling
 and administrative
 expense 1,404,787 1,398,340 1,268,628(E)
 2,515,985 2,509,538 2,283,744
 Operating profit (C) 352,652 359,099 330,214
 Other income, net (D) 67,267 67,267 50,897
 Income before provision
 for income taxes and
 cumulative effect of
 changes in accounting
 principles 419,919 426,366 381,111
 Provision for income
 taxes 161,669 164,151 146,728
 Income before cumulative
 effect of changes in
 accounting principles 258,250 262,215 234,383
 Cumulative effect of
 changes in accounting
 principles for:
 Income taxes 2,375 -- --
 Postretirement benefits
 (net of tax benefit
 of $33,375) (53,313) -- --
 Net income 207,312 262,215 234,383
 Earnings per common share:
 Before cumulative effect
 of changes in accounting
 principles $2.16 $2.20 $1.95
 Cumulative effect of
 changes in accounting
 principles for:
 Income taxes 0.02 -- --
 Postretirement benefits (0.44) -- --
 Earnings per common share $1.74 $2.20 $1.95
 Dividends per common share $1.15 $1.15 $0.80
 Average common shares
 outstanding 118,702 118,702 119,800
 (A) Amounts reported reflect adoption of FAS 106 and FAS 109.
 (B) Amounts reported have not been restated for FAS 106 and FAS 109.
 (C) Revenues and operating profit (before accounting changes) increased 10 percent and 9 percent, respectively, for the year ended June 30, 1993. The effect of changes in foreign currency exchange rates on revenues and operating profit (before accounting changes) was minimal and did not impact the percentage changes noted above.
 (D) Other income, net includes gains on the sales of certain investments ($29.4 million in fiscal 1993 compared to $20.7 million in fiscal 1992) and the effect of foreign exchange ($.5 million expense in fiscal 1993 compared to $13.0 million expense in fiscal 1992). Excluding the combined effect of foreign exchange and gains on the sales of certain investments, earnings per share (before accounting changes) would have increased about 7 percent.
 (E) Amounts have been reclassified to conform to current year presentation.
 THE READER'S DIGEST ASSOCIATION, INC. AND SUBSIDIARIES
 Table 3 of 3
 Revenues and Operating Profit by Business Segments
 (in thousands)
 Twelve - month period ended
 June 30, 1993 1993
 After Before
 accounting accounting
 changes changes 1992
 BUSINESS SEGMENTS
 Revenues
 Reader's Digest Magazine $720,047 $720,047 $685,044
 Books and home
 entertainment product 1,958,066 1,958,066 1,744,769
 Special interest magazines 84,140 84,140 75,471
 Other operations 106,384 106,384 108,674
 Total Revenues $2,868,637 $2,868,637 $2,613,958
 Operating Profit
 Reader's Digest magazine $97,310 $99,884 $96,839
 Books and home
 entertainment products 307,216 312,364 302,951
 Special interest magazines (9,242) (9,242) (19,468)
 Other operations 20,536 22,080 22,198
 415,820 425,086 402,520
 Corporate Expense (63,168) (65,987) (72,306)
 Total Operating Profit
 $352,652 $359,099 $330,214
 GEOGRAPHIC AREAS
 Revenues
 United States $1,152,181 $1,152,181 $1,143,025
 International 1,716,456 1,716,456 1,470,933
 Total Revenues $2,868.637 $2,868,637 $2,613,958
 THE READER'S DIGEST ASSOCIATION, INC. AND SUBSIDIARIES
 Revenues and Operating Profit by Business Segments
 Twelve - month period ended
 June 30, Variance
 Before Accounting
 Changes
 Reported (A) Adjusted (B)
 BUSINESS SEGMENTS
 Revenues (in percent)
 Reader's Digest Magazine 5 5
 Books and home
 entertainment product 12 13
 Special interest magazines 11 12
 Other operations (2) (2)
 Total Revenues 10 10
 Operating Profit (in percent)
 Reader's Digest magazine 3 4
 Books and home
 entertainment products 3 3
 Special interest magazines 53 52
 Other operations (1) --
 6 6
 Corporate Expense (9) (9)
 Total Operating Profit 9 9
 GEOGRAPHIC AREAS
 Revenues (in percent)
 United States 1 1
 International 17 17
 Total Revenues 10 10
 (A) Variance between 1993 before accounting changes and 1992
 (B) Adjusted to exclude the effect of changes in foreign currency exchange rates
 -0- 8/25/93
 /CONTACT: David R. Fluhrer of Reader's Digest, 914-241-5010, or home 516-379-9454/
 (RDA)


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

LD -- NY006 -- 5675 08/25/93 07:54 EDT
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