Meredith Third Quarter Earnings Per Share Up 15 Percent

Meredith Third Quarter Earnings Per Share Up 15 Percent

Core earnings per share grow 10 percent

DES MOINES, Iowa, April 25 /PRNewswire-FirstCall/ -- Meredith Corporation (NYSE:MDP), one of America's leading media and marketing companies, today announced third quarter fiscal 2007 results. Earnings per share grew 15 percent to $0.92, and net earnings increased to $45 million. Total revenues increased 4 percent to $410 million, including 7 percent growth in advertising revenues.

Core earnings per share for the third quarter grew 10 percent to $0.88 from $0.80, and core earnings grew to $44 million from $41 million. Core earnings for fiscal 2007 exclude a one-time tax benefit partially offset by restructuring charges. These are described in a press release issued on March 27, 2007, and in the attached Table 1 which reconciles core earnings to net earnings. For fiscal 2006, net and core earnings are the same.

"The highlights for the quarter were the very strong advertising performance of our Publishing Group properties and the outstanding growth in online revenues across the company," said Stephen M. Lacy, Meredith's President and Chief Executive Officer. "Our ongoing efforts to aggressively build our online presence and capabilities enabled us to double online revenues compared to the prior year quarter. Going forward, we will further expand these initiatives to serve increasing consumer demand for content delivered across multiple media platforms."

For the nine months, earnings per share grew 19 percent to $2.26, and net earnings increased to $111 million. Core earnings per share grew 17 percent to $2.22 from $1.90 a year ago, and core earnings increased to $109 million from $96 million a year ago. In the second quarter, the Company reported a $0.04 per share charge related to a bankruptcy of a book distributor, which is included in core earnings per share. (See Table 1 for a reconciliation of core earnings to net earnings.) Total revenues increased 3 percent to $1.2 billion, and advertising revenues increased 7 percent to $740 million.

OPERATING HIGHLIGHTS

Publishing Results

Publishing operating profit increased to $64 million in the third quarter of fiscal 2007, up from $61 million in the prior year quarter. Revenues increased to $330 million, up from $319 million in the prior year quarter.

Publishing advertising revenues grew 7 percent, including a mid-single digit increase in magazine advertising revenue. Better Homes and Gardens, More, Family Circle and Meredith's Special Interest Publications all delivered solid growth in advertising revenues and net advertising revenue per page in the quarter.

"The creative and sales enhancements made at Better Homes and Gardens are resonating with consumers and marketers alike," Lacy said. "Family Circle and More continued the success they have enjoyed all fiscal year, with advertising revenues up more than 25 percent at each title in the quarter. Additionally, our special interest publications reported solid advertising revenue growth, up in the high-single digits for the quarter."

Meredith's women's service titles increased share in the quarter with 11 percent growth in advertising pages compared to a 5 percent increase for the women's service field category as a whole, according to the latest data from the Publishers Information Bureau.

Meredith's magazine-branded web sites posted excellent growth in the quarter as well. Advertising revenues were up more than 50 percent. Traffic increased significantly with unique visitors and page views both up more than 10 percent. Online subscription orders also increased. Meredith secured more than 2 million online subscriptions through the first nine months of fiscal 2007, already surpassing total orders for all of fiscal 2006.

On March 29, Meredith unveiled a new Web 2.0 enhanced version of its highly popular Better Homes and Gardens web site ( http://www.bhg.com/ ). The redesigned portal features a host of new, highly interactive experiences - such as blogs, desktop widgets and wikis - and community sharing applications.

For the first nine months of fiscal 2007, Publishing operating profit was $146 million, flat compared to the prior-year period. Total Publishing revenues were up slightly to $944 million. Advertising revenues increased 2 percent to $476 million.

Broadcasting Results

Broadcasting operating profit was $20 million in the third quarter of fiscal 2007, up slightly from the year-ago period. Earnings before interest, taxes, depreciation and amortization (EBITDA) were $27 million, up 2 percent over the prior-year period. Revenues increased 5 percent to $79 million, with both local and national advertising revenues increasing. During the quarter, Meredith Broadcasting invested a total of more than $1.7 million in news expansions, online enhancements and video initiatives.

Looking at the February 2007 rating book, Meredith Broadcasting continued to enhance its news position with the important adults ages 25-54 demographic:

-- Five stations -- Atlanta, Portland, Kansas City, Greenville and Las
Vegas - posted gains for late newscasts, with Kansas City up
46 percent, Atlanta up 29 percent and Greenville up 26 percent;

-- Four stations -- Phoenix, Portland, Hartford and Las Vegas - posted
gains for morning newscasts, with Las Vegas up 85 percent and Phoenix
up 50 percent; and

-- Six stations - Atlanta, Phoenix, Portland, Kansas City, Greenville and
Las Vegas - increased sign-on to sign-off ratings, with Atlanta and
Kansas City both up more than 30 percent.

"The results of the February book reflect growth in our local station brands and news programming, which are the keys to attaining higher ratings, increasing market share and generating more revenues," said Lacy. "This combination of strong local brand franchises and solid execution of our news content strategies is reflected in the growth we are experiencing in both late and morning news at many of our stations."

For the first nine months of fiscal 2007, Broadcasting operating profit grew 33 percent to $79 million. EBITDA was up 26 percent to $97 million, while EBITDA margin was 36.3 percent compared to 33.3 percent in the prior- year period. (See Table 2 for a reconciliation.) Revenues increased 15 percent to $267 million. Meredith generated a record $33 million in net political advertising revenues through the first nine months of fiscal 2007.

Broadband Initiative

Concurrent with the relaunch of BHG.com, Meredith introduced its first- ever broadband network - Better.tv. It features more than 20 channels of original video content and programming on subjects such as cooking, decorating and health. The network draws on the assets of Meredith's extensive portfolio of magazines, television stations, books, special interest publications, websites and live events.

Better.tv's original programming is created in New York, Des Moines, and Portland, OR, by Meredith Video Solutions, the Company's in-house production unit. Programs and videos featured on Better.tv range in length from 2 to 30 minutes. Meredith is monetizing Better.tv through advertising revenues from video commercials, sponsorships, banner advertisements and product integration.

"Better.tv is an excellent example of how we are combining the brands and content of our Publishing Group with the production capabilities and expertise of our Broadcasting Group," Lacy said. "We will continue to be very active in the online and broadband space. In early fiscal 2008, we will launch a new parenthood portal under the Parents.com brand and also unveil a new multi- platform broadband channel, ParentsTV."

OTHER FINANCIAL INFORMATION

Net interest expense decreased to $6 million in the third quarter of fiscal 2007 from $7 million in the prior-year period. The Company has retired $65 million of debt in the first three quarters of fiscal 2007.

Unallocated corporate expenses were lower in the quarter due primarily to timing issues. Meredith expects unallocated corporate expenses to approximate $35 million for the full fiscal year.

For the nine months of fiscal 2007, capital expenditures were $29 million, up $8 million compared to the year-ago period, primarily due to the new station facility in Hartford.

Meredith increased free cash flow 14 percent to $125 million in the first nine months of fiscal 2007, compared to $110 million for the year-ago period. The Company defines free cash flow as net earnings, plus depreciation, amortization and non-cash special items, less capital expenditures. (Refer to Table 2 for a reconciliation.)

Meredith repurchased approximately 950,000 shares in the first nine months of fiscal 2007 as part of its ongoing share repurchase program. In the prior year period, the Company repurchased approximately 920,000 shares.

All earnings per share figures in the text of this release are diluted. Both basic and diluted earnings per share can be found in the attached statement of earnings.

OUTLOOK

At this time, Meredith expects to grow earnings per share approximately 14 percent to $3.26 in fiscal 2007, consistent with guidance provided throughout the fiscal year. Fourth quarter earnings per share from continuing operations are expected to approximate $1.04.

Publishing advertising revenues for the fourth fiscal quarter are currently up in the low single-digits led by Better Homes and Gardens, Family Circle and More partially offset by continued weakness at Meredith's parenthood titles. Broadcast pacings, which are a snapshot in time and change frequently, are currently running down in the mid to high single-digits.

A number of uncertainties remain that may affect our outlook as stated in this press release for results in the fourth fiscal quarter. These include overall advertising volatility, the performance of the Company's retail businesses, paper prices, and postal rates. These and other uncertainties are referenced below under "Safe Harbor" and in certain of the Company's SEC filings.

Meredith plans to provide fiscal 2008 guidance concurrent with its presentation at the Mid-Year Media Review in June 2007.

CONFERENCE CALL WEBCAST

Meredith will host a conference call on April 25, 2007, at 11:00 a.m. ET (10:00 a.m. CT) to discuss fiscal third quarter results. A live webcast will be accessible to the public on the Company's website http://www.meredith.com/ , and a replay will be available for one week after the conference call. A transcript of the conference call will be available within 48 hours following the conference call on the www.meredith.com, and will be available for at least 12 months following the conference call.

RATIONALE FOR USE AND ACCESS TO NON-GAAP MEASURES

Management uses and presents GAAP and non-GAAP results to evaluate and communicate the performance of the Company. Non-GAAP measures should not be construed as alternatives to GAAP measures. EBITDA and free cash flow are common supplemental measures of performance used by investors and financial analysts. Management believes that EBITDA and free cash flow provide additional analytical tools to clarify the Company's results from core operations and delineate underlying trends. Meredith does not use EBITDA or free cash flow as a measure of liquidity or funds available for management's discretionary use because they include certain contractual and non- discretionary expenditures.

Core earnings and core earnings per share are supplemental non-GAAP financial measures that exclude one-time items that are not expected to recur and are not reflective of the Company's core business activities. While core earnings and core earnings per share are not a substitute for reported earnings results under GAAP, Management believes this information is useful as an aid in better understanding the Company's current performance, performance trends, and financial condition.

Reconciliations of non-GAAP to GAAP measures are included in Table 1 and Table 2. The attached financial statements and reconciliation tables will be made available on the Company's web site ( www.meredith.com/investors/index.html ). Please click on "GAAP-Non-GAAP Reconciliation" in the navigation bar on the left side of the page.

SAFE HARBOR

This release contains certain forward-looking statements that are subject to risks and uncertainties. These statements are based on management's current knowledge and estimates of factors affecting the Company's operations. Statements in this announcement that are forward-looking include, but are not limited to, the statements regarding broadcast pacings, and publishing advertising revenues, along with the Company's earnings per share outlook for the fourth quarter of fiscal 2007 and the full fiscal year.

Actual results may differ materially from those currently anticipated. Factors that could adversely affect future results include, but are not limited to, downturns in national and/or local economies; a softening of the domestic advertising market; world, national, or local events that could disrupt broadcast television; increased consolidation among major advertisers or other events depressing the level of advertising spending; the unexpected loss or insolvency of one or more major clients; the integration of acquired businesses; changes in consumer reading, purchasing, and/or television viewing patterns; increases in paper, postage, printing or syndicated programming costs; changes in television network affiliation agreements; technological developments affecting products or methods of distribution; changes in government regulations affecting the Company's industries; unexpected changes in interest rates; and the consequence of acquisitions and/or dispositions. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise.

ABOUT MEREDITH CORPORATION

Meredith ( http://www.meredith.com/ ) is one of the nation's leading media and marketing companies with businesses centering on magazine and book publishing, television broadcasting, integrated marketing, and interactive media. The Meredith Publishing Group features 25 subscription magazines - including Better Homes and Gardens, Ladies' Home Journal, Family Circle, Parents, American Baby, Fitness, and More - and publishes over 200 special interest publications under approximately 80 titles. Meredith owns 14 television stations, including properties in top-25 markets Atlanta, Phoenix, and Portland.

Meredith has more than 400 books in print and has established marketing relationships with some of America's leading companies including The Home Depot, DIRECTV, DaimlerChrysler, Wal-Mart, and Carnival Cruise Lines. Meredith's consumer database, which contains approximately 85 million names, is one of the largest domestic databases among media companies and enables magazine and television advertisers to target marketing campaigns precisely. Additionally, Meredith has an extensive Internet presence that includes more than 30 web sites and strategic alliances with leading Internet destinations. Meredith Hispanic Ventures publishes five Spanish-language titles, making Meredith the leading publisher serving Hispanic women in the United States.

Meredith Corporation and Subsidiaries
Consolidated Statements of Earnings (Unaudited)

Period Ended Three Months Nine Months
March 31, 2007 2006 Change 2007 2006 Change
(In thousands
except per
share data)

Revenues
Advertising $ 244,374 $ 227,843 7.3 % $ 740,435 $ 693,214 6.8 %
Circulation 93,614 95,888 (2.4)% 260,207 278,468 (6.6)%
All other 71,845 71,193 0.9 % 211,009 199,490 5.8 %
Total revenues 409,833 394,924 3.8 % 1,211,651 1,171,172 3.5 %
Operating expenses
Production,
distribution,
and
editorial 167,364 157,908 6.0 % 503,213 499,062 0.8 %
Selling, general,
and
administrative 153,065 152,081 0.6 % 474,530 457,571 3.7 %
Depreciation and
amortization 11,481 11,290 1.7 % 33,939 34,202 (0.8)%
Special items 12,706 -- 0.0 % 12,706 -- 0.0 %
Total operating
expenses 344,616 321,279 7.3 % 1,024,388 990,835 3.4 %
Income from
operations 65,217 73,645 (11.4)% 187,263 180,337 3.8 %
Interest income 502 412 21.8 % 1,172 779 50.4 %
Interest expense (6,561) (7,437)(11.8)% (21,333) (23,361) (8.7)%
Earnings before
income taxes 59,158 66,620 (11.2)% 167,102 157,755 5.9 %
Income taxes 13,849 25,979 (46.7)% 56,270 61,524 (8.5)%
Net earnings $ 45,309 $ 40,641 11.5 % $ 110,832 $ 96,231 15.2 %

Basic earnings per
share $ 0.94 $ 0.82 14.6 % $ 2.31 $ 1.95 18.5 %
Basic average shares
outstanding 48,170 49,524 (2.7)% 48,024 49,361 (2.7)%

Diluted earnings
per share $ 0.92 $ 0.80 15.0 % $ 2.26 $ 1.90 18.9 %
Diluted average
shares
outstanding 49,300 50,852 (3.1)% 49,055 50,747 (3.3)%

Dividends paid
per share $ 0.185 $ 0.160 15.6 % $ 0.505 $ 0.440 14.8 %

Meredith Corporation and Subsidiaries
Segment Information (Unaudited)

Period Ended Three Months Nine Months
March 31, 2007 2006 Change 2007 2006 Change
(In thousands)

Revenues
Publishing $330,398 $319,011 3.6 % $944,215 $938,954 0.6 %
Broadcasting
Non-political
advertising 78,035 72,200 8.1 % 231,360 225,607 2.6 %
Political
advertising 436 664 (34.3)% 33,041 828 NM
Other revenues 964 3,049 (68.4)% 3,035 5,783 (47.5)%
Total
broadcasting 79,435 75,913 4.6 % 267,436 232,218 15.2 %
Total revenues $409,833 $394,924 3.8 % $1,211,651 $1,171,172 3.5 %

Operating profit
Publishing $64,417 $61,366 5.0 % $146,111 $146,289 (0.1)%
Broadcasting 20,292 20,073 1.1 % 78,516 59,141 32.8 %
Unallocated
corporate (6,786) (7,794) 12.9 % (24,658) (25,093) 1.7 %
Special items (12,706) -- -- (12,706) -- --
Income from
operations $65,217 $73,645 (11.4)% $187,263 $180,337 3.8 %

Depreciation and
amortization
Publishing $4,701 $4,637 1.4 % $13,869 $14,120 (1.8)%
Broadcasting 6,324 6,036 4.8 % 18,608 18,197 2.3 %
Unallocated
corporate 456 617 (26.1)% 1,462 1,885 (22.4)%
Total depreciation
and
amortization $11,481 $11,290 1.7 % $33,939 $34,202 (0.8)%

EBITDA(1)
Publishing $69,118 $66,003 4.7 % $159,980 $160,409 (0.3)%
Broadcasting 26,616 26,109 1.9 % 97,124 77,338 25.6 %
Unallocated
corporate (6,330) (7,177) 11.8 % (23,196) (23,208) 0.1 %
Total EBITDA(1) $89,404 $84,935 5.3 % $233,908 $214,539 9.0 %

(1) EBITDA is earnings before interest, taxes, depreciation, and
amortization and excludes special items.

NM - Not meaningful

Meredith Corporation and Subsidiaries
Condensed Consolidated Balance Sheets

(Unaudited)
March 31, June 30,
(In thousands) 2007 2006
Assets
Current assets
Cash and cash equivalents $50,759 $30,713
Accounts receivable, net 270,841 239,368
Inventories 58,951 52,032
Current portion of subscription
acquisition costs 78,647 79,565
Current portion of broadcast rights 16,045 12,498
Other current assets 14,991 17,344
Total current assets 490,234 431,520
Property, plant, and equipment 442,040 417,831
Less accumulated depreciation (241,045) (223,033)
Net property, plant, and equipment 200,995 194,798
Subscription acquisition costs 68,114 74,538
Broadcast rights 11,307 13,412
Other assets 80,921 81,218
Intangibles assets, net 796,193 806,264
Goodwill 459,766 438,925
Total assets $2,107,530 $2,040,675

Liabilities and Shareholders' Equity
Current liabilities
Current portion of long-term debt $100,000 $50,000
Current portion of long-term
broadcast rights payable 16,952 14,744
Accounts payable 76,621 79,892
Accrued expenses and other
liabilities 151,812 118,972
Current portion of unearned
subscription revenues 199,913 200,338
Total current liabilities 545,298 463,946
Long-term debt 400,000 515,000
Long-term broadcast rights payable 20,597 21,755
Unearned subscription revenues 173,547 169,494
Deferred income taxes 147,639 125,049
Other noncurrent liabilities 43,532 47,327
Total liabilities 1,330,613 1,342,571
Shareholders' equity
Common stock 38,786 38,774
Class B stock 9,308 9,417
Additional paid-in capital 56,994 56,012
Retained earnings 678,332 599,413
Accumulated other comprehensive loss (1,818) (2,077)
Unearned compensation (4,685) (3,435)
Total shareholders' equity 776,917 698,104
Total liabilities and shareholders'
equity $2,107,530 $2,040,675

Meredith Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)

Nine Months Ended March 31, 2007 2006
(In thousands)
Net cash provided by operating
activities $170,450 $116,545

Cash flows from investing activities
Acquisitions of businesses (15,456) (359,465)
Additions to property, plant, and
equipment (29,014) (20,829)
Proceeds from disposition of
assets -- 2,500
Net cash used in investing activities (44,470) (377,794)

Cash flows from financing activities
Proceeds from issuance of long-
term debt 115,000 490,000
Repayments of long-term debt (180,000) (220,000)
Purchases of Company stock (48,372) (47,233)
Proceeds from common stock issued 29,486 27,895
Dividends paid (24,312) (21,758)
Excess tax benefits from share-
based payments 2,264 18,804
Other -- (703)
Net cash provided by (used in)
financing activities (105,934) 247,005
Net increase (decrease) in cash and
cash equivalents 20,046 (14,244)
Cash and cash equivalents at
beginning of period 30,713 29,788
Cash and cash equivalents at end of
period $50,759 $15,544

Meredith Corporation and Subsidiaries Table 1
Supplemental Disclosures Regarding Non-GAAP Financial Measures

CORE EARNINGS
Core earnings, which is reconciled to net earnings in the following
tables, is defined as net earnings adjusted for certain one time items.

Three Months Nine Months
Period Ended March 31, 2007 2006 2007 2006
(In thousands)
Core earnings $43,621 $40,641 $109,144 $96,231
Special items, net of tax (1) (7,713) -- (7,713) --
Tax settlement (2) 9,401 -- 9,401 --
Net earnings $45,309 $40,641 $110,832 $96,231

CORE EARNINGS PER SHARE
Core earnings per share, which is reconciled to diluted earnings per
share in the following tables, is defined as diluted earnings per share
adjusted for certain one time items.

Three Months Nine Months
Period Ended March 31, 2007 2006 2007 2006
Core earnings per share $0.88 $0.80 $2.22 $1.90
Special items, net of tax (1) (0.15) -- (0.15) --
Tax settlement (2) 0.19 -- 0.19 --
Diluted earnings per share $0.92 $0.80 $2.26 $1.90

(1) Special items consist of a restructuring charge of $9.9 million
($6.0 million after tax) and a non-cash impairment charge of
$2.8 million ($1.7 million after tax). The restructuring charge
includes the write-down of various assets of Child magazine of
$6.2 million, severance and benefit costs of $3.4 million, and other
accruals of $0.3 million. The non-cash impairment charge reduced
goodwill and other identifiable intangible assets of our broadcast
station in Chattanooga, TN, to their fair value less cost to sell.

(2) An income tax benefit of $9.4 million was recognized in the third
quarter of fiscal 2007 related to the reversal of previously recorded
taxes resulting from the resolution of a tax contingency related to a
loss on the sale of stock in Craftways, a business sold in fiscal
2003. Recognition of the benefit was deferred until tax-related
contingencies were resolved.

Meredith Corporation and Subsidiaries Table 2
Supplemental Disclosures Regarding Non-GAAP Financial Measures

EBITDA
Consolidated EBITDA, which is reconciled to net earnings in the
following tables, is defined as earnings before interest, taxes,
depreciation, and amortization and does not include special items.

Segment EBITDA is a measure of segment earnings before depreciation
and amortization.

Segment EBITDA margin is defined as segment EBITDA divided by
segment revenues.

Three Months Ended March 31, 2007
Unallocated
Publishing Broadcasting Corporate Total

(In thousands)
Revenues $330,398 $79,435 $-- $409,833

Operating profit excluding special
items $64,417 $20,292 $(6,786) $77,923
Depreciation and amortization 4,701 6,324 456 11,481
EBITDA $69,118 $26,616 $(6,330) 89,404
Less:
Depreciation and amortization (11,481)
Special items (12,706)
Net interest expense (6,059)
Income taxes (13,849)
Net earnings $45,309

Segment EBITDA margin 20.9% 33.5%

Nine Months Ended March 31, 2007
Unallocated
Publishing Broadcasting Corporate Total
(In thousands)
Revenues $944,215 $267,436 $-- $1,211,651

Operating profit excluding
special items $146,111 $78,516 $(24,658) $199,969
Depreciation and amortization 13,869 18,608 1,462 33,939
EBITDA $159,980 $97,124 $(23,196) 233,908
Less:
Depreciation and amortization (33,939)
Special items (12,706)
Net interest expense (20,161)
Income taxes (56,270)
Net earnings $110,832

Segment EBITDA margin 16.9% 36.3%

Three Months Ended March 31, 2006
Unallocated
Publishing Broadcasting Corporate Total
(In thousands)
Revenues $319,011 $75,913 $-- $394,924

Operating profit $61,366 $20,073 $(7,794) $73,645
Depreciation and amortization 4,637 6,036 617 11,290
EBITDA $66,003 $26,109 $(7,177) 84,935
Less:
Depreciation and amortization (11,290)
Net interest expense (7,025)
Income taxes (25,979)
Net earnings $40,641

Segment EBITDA margin 20.7% 34.4%

Nine Months Ended March 31, 2006
Unallocated
Publishing Broadcasting Corporate Total
(In thousands)
Revenues $938,954 $232,218 $- $1,171,172

Operating profit $146,289 $59,141 $(25,093) $180,337
Depreciation and amortization 14,120 18,197 1,885 34,202
EBITDA $160,409 $77,338 $(23,208) 214,539
Less:
Depreciation and amortization (34,202)
Net interest expense (22,582)
Income taxes (61,524)
Net earnings $96,231

Segment EBITDA margin 17.1% 33.3%

FREE CASH FLOW
Free cash flow, which is reconciled to net earnings in the following
tables, is defined as net earnings plus depreciation, amortization and
non-cash special items less capital expenditures.

Three Months Nine Months
Period Ended March 31, 2007 2006 2007 2006
(In thousands)
Free cash flow $56,048 $46,107 $124,760 $109,604
Depreciation and amortization (11,481) (11,290) (33,939) (34,202)
Non-cash special items (9,003) -- (9,003) --
Capital expenditures 9,745 5,824 29,014 20,829
Net earnings $45,309 $40,641 $110,832 $96,231

First Call Analyst:
FCMN Contact:

Source: Meredith Corporation

CONTACT: Shareholder and Financial Analyst, Suku Radia, Chief Financial
Officer, +1-515-284-3603, suku.radia@meredith.com, or Media, Art Slusark, Vice
President - Corporate Communications, +1-515-284-3404,
art.slusark@meredith.com, both of Meredith Corporation

Web site:

http://www.meredith.com/

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