|
–
|
Source
Generates $49.7 million of Free Cash Flow in Fiscal 2008
–
|
GAAP
Results ($ in millions)
|
Adjusted
Results* ($ in millions)
|
||||||||||||||||||||||||
4Q08 | 4Q07 |
%
Change
|
4Q08 | 4Q07 |
%
Change
|
||||||||||||||||||||
Revenue
|
$ | 705.6 | $ | 479.6 | 47.1 | % | $ | 706.4 | $ | 479.6 | 47.3 | % | |||||||||||||
Magazine
Fulfillment
|
246.4 | 169.3 | 45.6 | % | 246.4 | 169.3 | 45.6 | % | |||||||||||||||||
DVD/CD
Fulfillment
|
333.9 | 299.4 | 11.5 | % | 333.9 | 299.4 | 11.5 | % | |||||||||||||||||
Source
Interlink Media
|
120.1 | - | - | 120.9 | - | - | |||||||||||||||||||
In-Store
Services
|
11.8 | 10.9 | 8.1 | % | 11.8 | 10.9 | 8.1 | % | |||||||||||||||||
Eliminations
|
(6.6 | ) | - | - | (6.6 | ) | - | - | |||||||||||||||||
Operating
Income
|
$ | (8.2 | ) | $ | (45.0 | ) | (81.8 | )% | $ | 43.6 | $ | 19.7 | 121.7 | % | |||||||||||
Income
from continuing
|
|||||||||||||||||||||||||
operations
|
$ | (27.4 | ) | $ | (36.4 | ) | (24.6 | )% | $ | 10.3 | $ | 9.3 | 10.8 | % | |||||||||||
EPS
- Diluted
|
$ | (0.52 | ) | $ | (0.69 | ) | (24.1 | )% | $ | 0.20 | $ | 0.18 | 12.2 | % | |||||||||||
GAAP
Results ($ in millions)
|
Adjusted
Results* ($ in millions)
|
||||||||||||||||||||||||
YTD
'08
|
YTD
'07
|
%
Change
|
YTD
'08
|
YTD
'07
|
%
Change
|
||||||||||||||||||||
Revenue
|
$ | 2,254.3 | $ | 1,828.7 | 23.3 | % | $ | 2,256.1 | $ | 1,828.7 | 23.4 | % | |||||||||||||
Magazine
Fulfillment
|
950.3 | 809.8 | 17.4 | % | 950.3 | 809.8 | 17.4 | % | |||||||||||||||||
DVD/CD
Fulfillment
|
1,021.0 | 971.5 | 5.1 | % | 1,021.0 | 971.5 | 5.1 | % | |||||||||||||||||
Source
Interlink Media
|
253.0 | - | - | 254.7 | - | - | |||||||||||||||||||
In-Store
Services
|
44.7 | 47.4 | (5.8 | )% | 44.7 | 47.4 | (5.8 | )% | |||||||||||||||||
Eliminations
|
(14.6 | ) | - | - | (14.6 | ) | - | - | |||||||||||||||||
Operating
Income
|
$ | 36.7 | $ | (19.4 | ) | (289.5 | )% | $ | 113.2 | $ | 58.2 | 94.4 | % | ||||||||||||
Income
from continuing
|
|||||||||||||||||||||||||
operations
|
$ | (26.2 | ) | $ | (26.0 | ) | 1.1 | % | $ | 33.8 | $ | 27.4 | 23.5 | % |
Q4 2008 | ||||||||||||||||||||||||||||||
Operating
Income
|
Income
from
|
|||||||||||||||||||||||||||||
CD
and DVD
|
Magazine
|
In-Store
|
Shared
|
Continuing
|
||||||||||||||||||||||||||
(in
thousands)
|
Media
|
Fulfillment
|
Fulfillment
|
Services
|
Services
|
Consolidated
|
Operations
|
|||||||||||||||||||||||
GAAP
|
$ | 7.2 | $ | (20.3 | ) | $ | 7.6 | $ | 2.8 | $ | (5.4 | ) | $ | (8.2 | ) | $ | (27.4 | ) | ||||||||||||
Adjustments:
|
||||||||||||||||||||||||||||||
Amortization
of acquired intangibles
|
9.7 | 2.5 | 1.8 | 0.1 | - | 14.1 | 9.0 | |||||||||||||||||||||||
Stock
compensation expense
|
- | - | - | - | - | - | 0.0 | |||||||||||||||||||||||
Deferred
revenue
|
0.8 | - | - | - | - | 0.8 | 0.5 | |||||||||||||||||||||||
Integration
and relocation expenses
|
- | - | 0.2 | - | 0.5 | 0.6 | 0.4 | |||||||||||||||||||||||
Merger
and acquisition costs
|
0.1 | - | - | - | 0.5 | 0.6 | 0.4 | |||||||||||||||||||||||
Disposal
of land, building and equipment, net
|
- | 0.4 | (0.1 | ) | - | - | 0.3 | 0.2 | ||||||||||||||||||||||
Write
off of customer list intangibles
|
- | 35.3 | - | - | - | 35.3 | 21.7 | |||||||||||||||||||||||
Minority
interest / accretion of A.com liability
|
- | - | - | - | - | - | 0.4 | |||||||||||||||||||||||
Amortization
of Bridge Facility fees
|
- | - | - | - | - | - | 1.5 | |||||||||||||||||||||||
Write
off of deferred financing fees
|
- | - | - | - | - | - | 0.0 | |||||||||||||||||||||||
Difference
between GAAP and Adjusted tax rate
|
- | - | - | - | - | - | 3.5 | |||||||||||||||||||||||
Adjusted
|
$ | 17.8 | $ | 17.9 | $ | 9.5 | $ | 2.9 | $ | (4.4 | ) | $ | 43.6 | $ | 10.3 | |||||||||||||||
CD
and DVD
|
Magazine
|
In-Store
|
Shared
|
|||||||||||||||||||||||||||
(in
thousands)
|
Media
|
Fulfillment
|
Fulfillment
|
Services
|
Services
|
Consolidated
|
||||||||||||||||||||||||
Adjusted
operating income
|
$ | 17.8 | $ | 17.9 | $ | 9.5 | $ | 2.9 | $ | (4.4 | ) | $ | 43.6 | |||||||||||||||||
Depreciation
and other amortization
|
1.9 | 1.7 | 1.0 | 0.1 | 0.5 | 5.2 | ||||||||||||||||||||||||
Other
income (expense)
|
0.0 | - | (0.0 | ) | 0.0 | (0.2 | ) | (0.2 | ) | |||||||||||||||||||||
Adjusted
EBITDA
|
$ | 19.7 | $ | 19.6 | $ | 10.4 | $ | 3.0 | $ | (4.1 | ) | $ | 48.6 |
Q4 2007 | ||||||||||||||||||||||||||||||
Operating
Income
|
Income
from
|
|||||||||||||||||||||||||||||
CD
and DVD
|
Magazine
|
In-Store
|
Shared
|
Continuing
|
||||||||||||||||||||||||||
(in
thousands)
|
Media
|
Fulfillment
|
Fulfillment
|
Services
|
Services
|
Consolidated
|
Operations
|
|||||||||||||||||||||||
GAAP
|
$ | - | $ | 15.2 | $ | (12.1 | ) | $ | (30.4 | ) | $ | (17.7 | ) | $ | (45.0 | ) | $ | (36.4 | ) | |||||||||||
Adjustments:
|
- | - | - | - | - | - | ||||||||||||||||||||||||
Impairment
of goodwill and intangibles
|
- | - | - | 32.7 | - | 32.7 | 27.0 | |||||||||||||||||||||||
Amortization
of acquired intangibles
|
- | 1.9 | 1.9 | - | - | 3.8 | 5.1 | |||||||||||||||||||||||
Conversion
to scan-based trading
|
- | - | 16.2 | - | - | 16.2 | 13.4 | |||||||||||||||||||||||
Stock
compensation expense
|
- | - | - | - | 0.1 | 0.1 | 0.2 | |||||||||||||||||||||||
Relocation,
integration and consolidation expenses
|
- | - | 0.6 | - | (0.2 | ) | 0.4 | 1.0 | ||||||||||||||||||||||
CEO
resignation charges
|
- | - | - | - | 9.6 | 9.6 | 7.9 | |||||||||||||||||||||||
Losses
(gains) on disposal of fixed assets
|
- | - | (0.1 | ) | - | 0.4 | 0.3 | 0.4 | ||||||||||||||||||||||
Other
|
- | - | 0.5 | - | - | 0.5 | 0.4 | |||||||||||||||||||||||
Change
in corporate allocation methodology
|
- | (0.1 | ) | (1.7 | ) | (0.3 | ) | 2.1 | - | - | ||||||||||||||||||||
Strategic
alternatives costs
|
- | - | - | - | 1.1 | 1.1 | 0.9 | |||||||||||||||||||||||
Difference
in GAAP and adjusted tax rate
|
- | - | - | - | - | - | (10.6 | ) | ||||||||||||||||||||||
Adjusted
|
$ | - | $ | 17.0 | $ | 5.3 | $ | 2.0 | $ | (4.6 | ) | $ | 19.7 | $ | 9.3 | |||||||||||||||
CD
and DVD
|
Magazine
|
In-Store
|
Shared
|
|||||||||||||||||||||||||||
(in
thousands)
|
Media
|
Fulfillment
|
Fulfillment
|
Services
|
Services
|
Consolidated
|
||||||||||||||||||||||||
Adjusted
operating income
|
$ | - | $ | 17.0 | $ | 5.3 | $ | 2.0 | $ | (4.6 | ) | $ | 19.7 | |||||||||||||||||
Depreciation
and other amortization
|
- | 2.0 | 0.9 | 0.2 | 0.6 | 3.7 | ||||||||||||||||||||||||
Other
income
|
- | - | (0.2 | ) | (0.0 | ) | (0.1 | ) | (0.3 | ) | ||||||||||||||||||||
Adjusted
EBITDA
|
$ | - | $ | 19.0 | $ | 6.0 | $ | 2.2 | $ | (4.1 | ) | $ | 23.1 |
12
Months 2008
|
||||||||||||||||||||||||||||||||
Operating
Income
|
Income
from
|
|||||||||||||||||||||||||||||||
CD
and DVD
|
Magazine
|
In-Store
|
Shared
|
Continuing
|
||||||||||||||||||||||||||||
(in
thousands)
|
Media
|
Fulfillment
|
Fulfillment
|
Services
|
Services
|
Consolidated
|
Operations
|
|||||||||||||||||||||||||
GAAP
|
$ | 22.7 | $ | (0.7 | ) | $ | 23.0 | $ | 10.8 | $ | (19.1 | ) | $ | 36.7 | $ | (26.2 | ) | |||||||||||||||
Adjustments:
|
||||||||||||||||||||||||||||||||
Amortization
of acquired intangibles
|
19.4 | 9.6 | 6.1 | 0.4 | - | 35.5 | 21.8 | |||||||||||||||||||||||||
Stock
compensation expense
|
- | - | - | - | 0.2 | 0.2 | 0.1 | |||||||||||||||||||||||||
Deferred
revenue
|
1.8 | - | - | - | - | 1.8 | 1.1 | |||||||||||||||||||||||||
Integration
and relocation expenses
|
- | - | 0.7 | - | 0.5 | 1.2 | 0.8 | |||||||||||||||||||||||||
Merger
and acquisition costs
|
0.3 | - | - | - | 0.9 | 1.2 | 0.7 | |||||||||||||||||||||||||
Disposal
of land, building and equipment, net
|
- | 0.4 | - | (0.2 | ) | - | 0.2 | 0.2 | ||||||||||||||||||||||||
Write
off of customer list intangibles
|
- | 35.3 | - | - | - | 35.3 | 21.7 | |||||||||||||||||||||||||
Minority
interest / accretion of A.com liability
|
- | - | - | - | - | - | 0.7 | |||||||||||||||||||||||||
Amortization
of Bridge Facility fees
|
- | - | - | - | - | - | 2.8 | |||||||||||||||||||||||||
Write
off of deferred financing fees
|
- | - | - | - | - | - | 0.8 | |||||||||||||||||||||||||
Difference
between GAAP and Adjusted tax rate
|
- | - | - | - | - | - | 8.3 | |||||||||||||||||||||||||
Adjusted
|
$ | 44.2 | $ | 44.6 | $ | 29.8 | $ | 11.1 | $ | (17.5 | ) | $ | 112.2 | $ | 32.8 | |||||||||||||||||
Conversion
to scan-based trading*
|
- | - | 1.1 | - | - | 1.1 | 1.0 | |||||||||||||||||||||||||
Total
|
$ | 44.2 | $ | 44.6 | $ | 30.8 | $ | 11.1 | $ | (17.5 | ) | $ | 113.2 | # | $ | 33.8 | ||||||||||||||||
CD
and DVD
|
Magazine
|
In-Store
|
Shared
|
|||||||||||||||||||||||||||||
(in
thousands)
|
Media
|
Fulfillment
|
Fulfillment
|
Services
|
Services
|
Consolidated
|
||||||||||||||||||||||||||
Adjusted
operating income
|
$ | 44.2 | $ | 44.6 | $ | 29.8 | $ | 11.1 | $ | (17.5 | ) | $ | 112.2 | |||||||||||||||||||
Depreciation
and other amortization
|
5.4 | 7.2 | 3.8 | 0.4 | 2.2 | 18.9 | ||||||||||||||||||||||||||
Other
income (expense)
|
0.1 | - | 0.2 | (0.1 | ) | (0.3 | ) | (0.0 | ) | |||||||||||||||||||||||
Adjusted
EBITDA
|
$ | 49.7 | $ | 51.8 | $ | 33.9 | $ | 11.3 | $ | (15.6 | ) | $ | 131.0 | |||||||||||||||||||
Conversion
to scan-based trading*
|
- | - | 1.1 | - | - | 1.1 | ||||||||||||||||||||||||||
Total
EBITDA
|
$ | 49.7 | $ | 51.8 | $ | 34.9 | $ | 11.3 | $ | (15.6 | ) | $ | 132.1 |
12
Months 2007
|
||||||||||||||||||||||||||||
Operating
Income
|
Income
from
|
|||||||||||||||||||||||||||
CD
and DVD
|
Magazine
|
In-Store
|
Shared
|
Continuing
|
||||||||||||||||||||||||
(in
thousands)
|
Media
|
Fulfillment
|
Fulfillment
|
Services
|
Services
|
Consolidated
|
Operations
|
|||||||||||||||||||||
GAAP
|
$ | - | $ | 39.1 | $ | (0.5 | ) | $ | (20.3 | ) | $ | (37.6 | ) | $ | (19.4 | ) | $ | (26.0 | ) | |||||||||
Adjustments:
|
||||||||||||||||||||||||||||
Impairment
of goodwill and intangibles
|
- | - | - | 32.7 | - | 32.7 | 27.0 | |||||||||||||||||||||
Amortization
of acquired intangibles
|
- | 7.5 | 4.9 | - | - | 12.4 | 10.2 | |||||||||||||||||||||
Conversion
to scan-based trading
|
- | - | 16.2 | - | - | 16.2 | 13.4 | |||||||||||||||||||||
Stock
compensation expense
|
- | - | - | - | 0.5 | 0.5 | 0.4 | |||||||||||||||||||||
Relocation,
integration and consolidation expenses
|
- | - | 3.6 | - | 0.1 | 3.7 | 3.0 | |||||||||||||||||||||
CEO
resignation charges
|
- | - | - | - | 9.6 | 9.6 | 7.9 | |||||||||||||||||||||
Losses
(gains) on disposal of fixed assets
|
- | 0.3 | (0.2 | ) | (0.1 | ) | 0.9 | 1.0 | 0.8 | |||||||||||||||||||
Other
|
- | - | 0.5 | - | - | 0.5 | 0.4 | |||||||||||||||||||||
Change
in corporate allocation methodology
|
- | - | (5.8 | ) | (0.7 | ) | 6.5 | - | - | |||||||||||||||||||
Strategic
alternatives costs
|
- | - | - | - | 1.1 | 1.1 | 0.9 | |||||||||||||||||||||
Difference
in GAAP and adjusted tax rate
|
- | - | - | - | - | - | (10.8 | ) | ||||||||||||||||||||
Adjusted
|
$ | - | $ | 46.9 | $ | 18.7 | $ | 11.7 | $ | (19.0 | ) | $ | 58.3 | $ | 27.4 | |||||||||||||
CD
and DVD
|
Magazine
|
In-Store
|
Shared
|
|||||||||||||||||||||||||
(in
thousands)
|
Media
|
Fulfillment
|
Fulfillment
|
Services
|
Services
|
Consolidated
|
||||||||||||||||||||||
Adjusted
operating income
|
$ | - | $ | 46.9 | $ | 18.7 | $ | 11.7 | $ | (19.0 | ) | $ | 58.3 | |||||||||||||||
Depreciation
and other amortization
|
- | 7.1 | 3.1 | 1.0 | 2.2 | 13.4 | ||||||||||||||||||||||
Other
income
|
- | - | (0.1 | ) | (0.0 | ) | (0.0 | ) | (0.1 | ) | ||||||||||||||||||
Adjusted
EBITDA
|
$ | - | $ | 54.0 | $ | 21.7 | $ | 12.6 | $ | (16.8 | ) | $ | 71.5 |
Free
Cash Flow
|
||||||||||||||||
Three
Months ended January 31,
|
Twelve
Months ended January 31,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Cash
provided by (used in) operating activities
|
$ | 19,725 | $ | 14,442 | $ | 77,126 | $ | (20,744 | ) | |||||||
Net
claiming activity
|
(3,261 | ) | (4,519 | ) | 2,571 | (7,061 | ) | |||||||||
Capital
expenditures
|
(9,561 | ) | (813 | ) | (30,047 | ) | (13,379 | ) | ||||||||
Free
cash flow
|
$ | 6,903 | $ | 9,110 | $ | 49,650 | $ | (41,184 | ) |
·
|
Publishing
and providing enthusiast media content including more than 75 magazines,
over 65 events, television and radio programs, 90 related Web sites and
400 branded products for automobile, marine, equine, outdoor sports, home
tech and daytime television
|
·
|
Distribution
and fulfillment of entertainment products to major retail chains
throughout North America and directly to consumers of entertainment
products ordered through the
Internet
|
·
|
Import
and export of periodicals to more than 100 markets
worldwide
|
·
|
Managing
product selection and placement of impulse items at checkout
counters
|
·
|
Processing
and collection of rebate claims and management of point-of-purchase sales
data
|
·
|
Design,
manufacture and installation of wire fixtures and displays in major retail
chains
|
·
|
Licensing
of children's and family-friendly home entertainment
products
|
Fiscal
year ended January 31,
|
2008
|
2007
|
||||||
Revenues
|
$ | 2,254,252 | $ | 1,828,653 | ||||
Costs
of revenues
|
1,656,181 | 1,445,924 | ||||||
Gross
profit
|
598,071 | 382,729 | ||||||
Selling,
general and administrative expense
|
272,622 | 161,431 | ||||||
Distribution,
circulation and fulfillment
|
197,017 | 177,953 | ||||||
Depreciation
and amortization
|
53,438 | 25,359 | ||||||
Impairment
of goodwill and intangible assets
|
35,310 | 32,742 | ||||||
Integration
and relocation expenses
|
1,567 | 3,664 | ||||||
Disposal
of land, building and equipment, net
|
243 | 950 | ||||||
Merger
and acquisition costs
|
1,165 | - | ||||||
Operating
(loss) income
|
36,709 | (19,370 | ) | |||||
Other
income (expense)
|
||||||||
Interest
expense, net
|
(76,848 | ) | (12,531 | ) | ||||
Write
off of deferred financing costs
|
(1,313 | ) | - | |||||
Other
|
(49 | ) | (134 | ) | ||||
Total
other income (expense)
|
(78,210 | ) | (12,665 | ) | ||||
(Loss)
income from continuing operations before income taxes and minority
interest
|
(41,501 | ) | (32,035 | ) | ||||
Income
tax (benefit) expense
|
(15,994 | ) | (6,068 | ) | ||||
Minority
interest in income of subsidiary
|
(731 | ) | - | |||||
(Loss)
income from continuing operations
|
(26,238 | ) | (25,967 | ) | ||||
Loss
from discontinued operation, net of tax
|
(1,655 | ) | 1,311 | |||||
Net
(loss) income
|
$ | (27,893 | ) | $ | (24,656 | ) | ||
Earnings
per share – diluted
|
||||||||
Continuing
operations
|
$ | (0.50 | ) | $ | (0.50 | ) | ||
Discontinued
operations
|
(0.03 | ) | 0.02 | |||||
Total
|
$ | (0.53 | ) | $ | (0.48 | ) | ||
Weighted
average of shares outstanding – diluted
|
52,276 | 51,838 |
Quarter
ended January 31,
|
2008
|
2007
|
||||||
Revenues
|
$ | 705,551 | $ | 479,561 | ||||
Costs
of revenues
|
503,579 | 383,753 | ||||||
Gross
profit
|
201,972 | 95,808 | ||||||
Selling,
general and administrative expense
|
95,867 | 48,719 | ||||||
Distribution,
circulation and fulfillment
|
58,185 | 51,307 | ||||||
Depreciation
and amortization
|
19,262 | 7,373 | ||||||
Impairment
of goodwill and intangible assets
|
35,310 | 32,742 | ||||||
Relocation
expenses
|
893 | 367 | ||||||
Disposal
of land, building and equipment, net
|
69 | 269 | ||||||
Merger
and acquisition costs
|
570 | |||||||
Operating
(loss) income
|
(8,184 | ) | (44,969 | ) | ||||
Other
income (expense)
|
||||||||
Interest
expense, net
|
(35,106 | ) | (3,990 | ) | ||||
Other
|
(199 | ) | (201 | ) | ||||
Total
other income (expense)
|
(35,305 | ) | (4,191 | ) | ||||
(Loss)
income from continuing operations before income taxes and minority
interest
|
(43,489 | ) | (49,160 | ) | ||||
Income
tax (benefit) expense
|
(16,789 | ) | (12,759 | ) | ||||
Minority
interest in income of subsidiary
|
(731 | ) | ||||||
(Loss)
income from continuing operations
|
(27,431 | ) | (36,401 | ) | ||||
Loss
from discontinued operation, net of tax
|
(47 | ) | (439 | ) | ||||
Net
(loss) income
|
$ | (27,478 | ) | $ | (36,840 | ) | ||
Earnings
per share – diluted
|
||||||||
Continuing
operations
|
$ | (0.52 | ) | $ | (0.70 | ) | ||
Discontinued
operations
|
0.00 | (0.01 | ) | |||||
Total
|
(0.52 | ) | (0.71 | ) | ||||
Weighted
average of shares outstanding – diluted
|
52,321 | 52,064 |
January
31,
|
2008
|
2007
|
|
||||||||
Cash
|
$ | 35,650 | $ | - | |||||||
Trade
receivables, net
|
183,475 | 102,658 | |||||||||
Purchased
claim receivable
|
14,412 | 16,983 | |||||||||
Inventories
|
290,507 | 248,941 | |||||||||
Income
tax receivable
|
- | 9,932 | |||||||||
Deferred
tax asset
|
23,107 | 29,531 | |||||||||
Other
|
20,679 | 5,440 | |||||||||
Current
Assets
|
567,830 | 413,485 | |||||||||
Property,
Plant and Equipment, net
|
107,904 | 67,915 | |||||||||
Goodwill,
net
|
1,069,835 | 395,902 | |||||||||
Intangibles
|
637,082 | 118,971 | |||||||||
Other
|
53,354 | 13,758 | |||||||||
Total
Assets
|
$ | 2,436,005 | $ | 1,010,031 | |||||||
Checks
issued against future advances on revolving credit
facilities
|
$ | - | $ | 1,465 | |||||||
Accounts
payable and accrued expenses
|
496,402 | 371,022 | |||||||||
Deferred
revenue
|
79,918 | 2,630 | |||||||||
Current
maturities of debt, including capital leases
|
16,775 | 8,845 | |||||||||
593,095 | 383,962 | ||||||||||
Debt,
less current liabilities
|
1,361,036 | 147,603 | |||||||||
Deferred
tax liability
|
8,944 | 32,500 | |||||||||
Other
|
32,429 | 6,519 | |||||||||
Total
Liabilities
|
1,995,504 | 570,584 | |||||||||
Minority
Interest
|
25,978 | - | |||||||||
Equity
|
414,523 | 439,447 | |||||||||
Total
Liabilities and Equity
|
$ | 2,436,005 | $ | 1,010,031 |