Time Inc. Archives
Time Inc.’s Digital Advertising Revenue Increased 63% In The Third Quarter
Time Inc.'s Year-Over-Year Audience Growth Continues to Be Significant with Video UVs up 38% and Social Media Footprint up 45%*
Time Inc.'s Native Advertising is On Pace to Nearly Double in 2016
Time Inc.’s Third Quarter Digital Video Starts Exceeded 1 Billion, Growing Nearly 200% Year-Over-Year
Nov 3, 2016
Results Summary | |||||||||||||
In millions (except per share amounts) |
Three Months Ended |
Nine Months Ended |
|||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||
GAAP Measures | |||||||||||||
Revenues | $ | 750 | $ | 773 | $ | 2,209 | $ | 2,226 | |||||
Asset impairments | 188 | — | 189 | — | |||||||||
Goodwill impairment | — | 952 | — | 952 | |||||||||
Operating income (loss) | (167) | (899) | (120) | (833) | |||||||||
Net income (loss) | (112) | (913) | (104) | (898) | |||||||||
Diluted EPS | (1.13) | (8.30) | (1.05) | (8.17) | |||||||||
Cash provided by (used in) operations | 79 | 84 | 106 | 127 | |||||||||
Non-GAAP Measures | |||||||||||||
Adjusted OIBDA | $ | 100 | $ | 113 | $ | 232 | $ | 281 | |||||
Adjusted Net income (loss) | 33 | 40 | 44 | 63 | |||||||||
Adjusted Diluted EPS | 0.31 | 0.32 | 0.42 | 0.53 | |||||||||
Free Cash Flow | 62 | 15 | 28 | (5) | |||||||||
The Company’s Adjusted OIBDA, Adjusted Net income (loss), Adjusted Diluted EPS and Free Cash Flow are non-GAAP financial measures. See “Use of Non-GAAP Financial Measures” below and the reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures in Schedules I through IV attached hereto.
* Excluding the impact of the closure of All You and the disposition of This Old House
THIRD QUARTER RESULTS
Revenues decreased
Advertising Revenues increased
Circulation Revenues decreased
Other Revenues, which include marketing and support services provided to third parties, branded book publishing, events and licensing, decreased
Revenues Summary | ||||||||||||||||
In millions |
Three Months Ended |
Nine Months Ended |
||||||||||||||
2016 | 2015 | % Change | 2016 | 2015 | % Change | |||||||||||
Print and other advertising | $ | 288 | $ | 319 | (10)% | $ | 857 | $ | 942 | (9)% | ||||||
Digital advertising | 129 | 79 | 63% | 346 | 229 | 51% | ||||||||||
Advertising revenues | 417 | 398 | 5% | 1,203 | 1,171 | 3% | ||||||||||
Subscription | 148 | 168 | (12)% | 463 | 499 | (7)% | ||||||||||
Newsstand | 68 | 86 | (21)% | 210 | 245 | (14)% | ||||||||||
Other circulation | 7 | 7 | —% | 24 | 21 | 14% | ||||||||||
Circulation revenues | 223 | 261 | (15)% | 697 | 765 | (9)% | ||||||||||
Other revenues | 110 | 114 | (4)% | 309 | 290 | 7% | ||||||||||
Revenues | $ | 750 | $ | 773 | (3)% | $ | 2,209 | $ | 2,226 | (1)% | ||||||
Operating Expenses, which consist of Costs of revenues and Selling, general and administrative expenses ("SG&A"), decreased
Restructuring and Severance Costs increased
Operating Income (Loss) was a loss of
Adjusted OIBDA of
Cash Provided By (Used In) Operations was
Free Cash Flow was
During the three months ended
OUTLOOK
Our Outlook for 2016 is as follows: |
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$ in millions | |||||||||||
2015 Actual |
Previous Full Year 2016 |
Current Full Year 2016 |
|||||||||
Revenues | (5%) | —% | to | 1.5% | (1%) | to | —% | ||||
Operating income (loss) | $(823) | $215 | $240 | $15 | $25 | ||||||
Adjusted OIBDA | $440 | $400 | to | $430 | $400 | to | $415 | ||||
Investment spending, net | $(30) |
|
$(20) |
|
($20) |
||||||
Capital expenditures | $166 | $95 | to | $105 | $95 | to | $105 | ||||
Real estate related(2) | $115 |
|
$50 |
|
$50 |
||||||
Core & growth | $51 | $45 | to | $55 | $45 | to | $55 | ||||
|
(1) | The Previous Full Year 2016 Outlook assumed USD to GBP exchange rate of 1.3 for the remainder of the year. The Current Full Year 2016 Outlook assumes USD to GBP exchange rate of 1.2 for the remainder of the year. | ||
(2) | 2015 Actual capital expenditures were offset by $46 million of tenant improvements allowances. | ||
The Company’s Adjusted OIBDA is a non-GAAP financial measure. See “Use of Non-GAAP Financial Measures” below and the reconciliation of this non-GAAP financial measure to the most directly comparable GAAP measure in Schedule V attached hereto.
CONFERENCE CALL WEBCAST
The Company’s conference call can be heard live at
To access a live audio webcast of the conference call, visit the Events and Presentations section of invest.timeinc.com.
The earnings press release and management presentation will be available on our website at invest.timeinc.com.
USE OF NON-GAAP FINANCIAL MEASURES
Some limitations of OIBDA, Adjusted OIBDA, Adjusted Net income (loss), Adjusted Diluted EPS and Free Cash Flow are that they do not reflect certain charges that affect the operating results of the Company’s business and they involve judgment as to whether items affect fundamental operating performance.
A general limitation of these measures is that they are not prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and may not be comparable to similarly titled measures of other companies due to differences in methods of calculation and excluded items. OIBDA, Adjusted OIBDA, Adjusted Net income (loss), Adjusted Diluted EPS and Free Cash Flow should be considered in addition to, not as a substitute for, the Company’s Operating income (loss), Net income (loss), Diluted net income (loss) per common share and various cash flow measures (e.g., Cash provided by (used in) operations), as well as other measures of financial performance and liquidity reported in accordance with GAAP.
ABOUT
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations or beliefs, and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive, technological, strategic and/or regulatory factors and other factors affecting the operation of Time Inc.’s businesses. More detailed information about these factors may be found in filings by
TIME INC. |
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CONSOLIDATED BALANCE SHEETS |
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(Unaudited; in millions, except share amounts) |
||||||
September 30, |
December 31, |
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ASSETS | ||||||
Current assets | ||||||
Cash and cash equivalents | $ | 244 | $ | 651 | ||
Short-term investments | 60 | 60 | ||||
Receivables, less allowances of $183 and $248 at September 30, 2016 and December 31, 2015, respectively | 456 | 484 | ||||
Inventories, net of reserves | 38 | 35 | ||||
Prepaid expenses and other current assets | 140 | 187 | ||||
Total current assets | 938 | 1,417 | ||||
Property, plant and equipment, net | 296 | 267 | ||||
Intangible assets, net | 869 | 1,046 | ||||
Goodwill | 2,075 | 2,038 | ||||
Other assets | 150 | 116 | ||||
Total assets | $ | 4,328 | $ | 4,884 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities | ||||||
Accounts payable and accrued liabilities | $ | 580 | $ | 683 | ||
Deferred revenue | 404 | 436 | ||||
Current portion of long-term debt | 7 | 7 | ||||
Total current liabilities | 991 | 1,126 | ||||
Long-term debt | 1,234 | 1,286 | ||||
Deferred tax liabilities | 175 | 242 | ||||
Deferred revenue | 92 | 89 | ||||
Other noncurrent liabilities | 315 | 332 | ||||
Stockholders' equity | ||||||
Common stock, $0.01 par value, 400 million shares authorized; 99.38 million and 106.03 |
1 | 1 | ||||
Preferred stock, $0.01 par value, 40 million shares authorized; none issued | — | — | ||||
Additional paid-in-capital | 12,558 | 12,604 | ||||
Accumulated deficit | (10,783) | (10,570) | ||||
Accumulated other comprehensive loss, net | (255) | (226) | ||||
Total stockholders' equity | 1,521 | 1,809 | ||||
Total liabilities and stockholders' equity | $ | 4,328 | $ | 4,884 | ||
TIME INC. |
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CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||||
(Unaudited; in millions, except per share amounts) |
||||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
Revenues | ||||||||||||
Advertising | ||||||||||||
Print and other advertising | $ | 288 | $ | 319 | $ | 857 | $ | 942 | ||||
Digital advertising | 129 | 79 | 346 | 229 | ||||||||
Total advertising revenues | 417 | 398 | 1,203 | 1,171 | ||||||||
Circulation | ||||||||||||
Subscription | 148 | 168 | 463 | 499 | ||||||||
Newsstand | 68 | 86 | 210 | 245 | ||||||||
Other circulation | 7 | 7 | 24 | 21 | ||||||||
Total circulation revenues | 223 | 261 | 697 | 765 | ||||||||
Other | 110 | 114 | 309 | 290 | ||||||||
Total revenues | 750 | 773 | 2,209 | 2,226 | ||||||||
Costs of revenues | ||||||||||||
Production costs | 154 | 168 | 478 | 504 | ||||||||
Editorial costs | 101 | 100 | 289 | 282 | ||||||||
Other | 71 | 42 | 185 | 90 | ||||||||
Total costs of revenues | 326 | 310 | 952 | 876 | ||||||||
Selling, general and administrative expenses | 326 | 359 | 1,048 | 1,080 | ||||||||
Amortization of intangible assets | 22 | 21 | 63 | 60 | ||||||||
Depreciation | 14 | 22 | 41 | 69 | ||||||||
Restructuring and severance costs | 43 | 8 | 54 | 22 | ||||||||
Asset impairments | 188 | — | 189 | — | ||||||||
Goodwill impairment | — | 952 | — | 952 | ||||||||
(Gain) loss on operating assets, net | (2) | — | (18) | — | ||||||||
Operating income (loss) | (167) | (899) | (120) | (833) | ||||||||
Bargain purchase (gain) | — | — | (3) | — | ||||||||
Interest expense, net | 16 | 19 | 51 | 58 | ||||||||
Other (income) expense, net | 2 | (2) | 9 | 3 | ||||||||
Income (loss) before income taxes | (185) | (916) | (177) | (894) | ||||||||
Income tax provision (benefit) | (73) | (3) | (73) | 4 | ||||||||
Net income (loss) | $ | (112) | $ | (913) | $ | (104) | $ | (898) | ||||
Per share information attributable to Time Inc. common stockholders: | ||||||||||||
Basic net income (loss) per common share | $ | (1.13) | $ | (8.30) | $ | (1.05) | $ | (8.17) | ||||
Weighted average basic common shares outstanding | 99.64 | 110.00 | 99.43 | 109.80 | ||||||||
Diluted net income (loss) per common share | $ | (1.13) | $ | (8.30) | $ | (1.05) | $ | (8.17) | ||||
Weighted average diluted common shares outstanding | 99.64 | 110.00 | 99.43 | 109.80 | ||||||||
Cash dividends declared per share of common stock | $ | 0.19 | $ | 0.19 | $ | 0.57 | $ | 0.57 | ||||
TIME INC. |
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CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||
(Unaudited; in millions) |
||||||
Nine Months Ended |
||||||
2016 | 2015 | |||||
Cash provided by (used in) operations | $ | 106 | $ | 127 | ||
Cash provided by (used in) investing activities | (276) | (302) | ||||
Cash provided by (used in) financing activities | (229) | (79) | ||||
Effect of exchange rate changes on Cash and cash equivalents | (8) | — | ||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (407) | (254) | ||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 651 | 519 | ||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 244 | $ | 265 | ||
Schedule I |
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TIME INC. |
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RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED OIBDA |
||||||||||||
(Unaudited; in millions) |
||||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
Operating income (loss) | $ | (167) | $ | (899) | $ | (120) | $ | (833) | ||||
Depreciation | 14 | 22 | 41 | 69 | ||||||||
Amortization of intangible assets | 22 | 21 | 63 | 60 | ||||||||
OIBDA(1) | (131) | (856) | (16) | (704) | ||||||||
Asset impairments(2) | 188 | — | 189 | — | ||||||||
Goodwill impairment | — | 952 | — | 952 | ||||||||
Restructuring and severance costs | 43 | 8 | 54 | 22 | ||||||||
(Gain) loss on operating assets, net(3) | (2) | — | (18) | — | ||||||||
Pension settlements/curtailments | — | 6 | — | 6 | ||||||||
Other costs(4) | 2 | 3 | 23 | 5 | ||||||||
Adjusted OIBDA(5) | $ | 100 | $ | 113 | $ | 232 | $ | 281 | ||||
______________ | |||
(1) | OIBDA is defined as Operating income (loss) excluding Depreciation and Amortization of intangible assets. | ||
(2) | Asset impairments primarily related to a definite-lived tradename intangible. | ||
(3) | (Gain) loss on operating assets, net primarily reflects the recognition of a gain on sale of certain of our titles and the deferred gain from the sale-leaseback of the Blue Fin Building in the fourth quarter of 2015. | ||
(4) | Other costs related to mergers, acquisitions, investments and dispositions during the periods presented are included within Selling, general and administrative expenses within the Statements of Operations. | ||
(5) | Adjusted OIBDA is defined as OIBDA adjusted for impairments of Goodwill, intangibles, fixed assets and investments; Restructuring and severance costs; (Gain) loss on operating assets, net; Pension settlements/curtailments; and Other costs related to mergers, acquisitions, investments and dispositions. | ||
Schedule II |
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TIME INC. |
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RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED NET INCOME |
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(Unaudited; in millions) |
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Three Months Ended |
Three Months Ended |
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Gross |
Tax Impact | Net Impact |
Gross |
Tax Impact | Net Impact | |||||||||||||
Net income (loss) | $ | (185) | $ | 73 | $ | (112) | $ | (916) | $ | 3 | $ | (913) | ||||||
Asset impairments(1) | 188 | (72) | 116 | — | — | — | ||||||||||||
Goodwill impairment | — | — | — | 952 | (11) | 941 | ||||||||||||
Restructuring and severance costs | 43 | (14) | 29 | 8 | (2) | 6 | ||||||||||||
(Gain) loss on operating assets, net(2) | (2) | — | (2) | — | — | — | ||||||||||||
Pension settlements/curtailments | — | — | — | 6 | (2) | 4 | ||||||||||||
Other costs | 2 | — | 2 | 3 | (1) | 2 | ||||||||||||
Adjusted Net income (loss)(5) | $ | 46 | $ | (13) | $ | 33 | $ | 53 | $ | (13) | $ | 40 | ||||||
Nine Months Ended |
Nine Months Ended |
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Gross |
Tax Impact | Net Impact |
Gross |
Tax Impact | Net Impact | |||||||||||||
Net income (loss) | $ | (177) | $ | 73 | $ | (104) | $ | (894) | $ | (4) | $ | (898) | ||||||
Asset impairments(1) | 189 | (72) | 117 | — | — | — | ||||||||||||
Goodwill impairment | — | — | — | 952 | (11) | 941 | ||||||||||||
Restructuring and severance costs | 54 | (18) | 36 | 22 | (8) | 14 | ||||||||||||
(Gain) loss on operating assets, net(2) | (18) | 4 | (14) | — | — | — | ||||||||||||
Pension settlements/curtailments | — | — | — | 6 | (2) | 4 | ||||||||||||
Bargain purchase (gain)(3) | (3) | — | (3) | — | — | — | ||||||||||||
(Gain) loss on extinguishment of debt(4) | (4) | 2 | (2) | — | — | — | ||||||||||||
Other costs | 23 | (9) | 14 | 5 | (1) | 4 | ||||||||||||
(Gain) loss on non-operating assets, net | — | — | — | (2) | — | (2) | ||||||||||||
Adjusted Net income (loss)(5) | $ | 64 | $ | (20) | $ | 44 | $ | 89 | $ | (26) | $ | 63 | ||||||
______________ | |||
(1) | Asset impairments primarily related to a definite-lived tradename intangible. | ||
(2) | (Gain) loss on operating assets, net primarily relates to the recognition of a gain on sale of certain of our titles and the deferred gain from the sale-leaseback of the Blue Fin Building in the fourth quarter of 2015. | ||
(3) | Bargain purchase (gain) relates to the acquisition of certain assets of Viant in the first quarter of 2016. | ||
(4) | (Gain) loss on extinguishment of debt in connection with repurchases of our Senior Notes are included within Other (income) expense, net on the Statements of Operations. | ||
(5) | Adjusted Net income (loss) is defined as Net income (loss) adjusted for impairments of Goodwill, intangibles, fixed assets and investments; Restructuring and severance costs; Gain (loss) on operating and/or non-operating assets; Pension settlements/curtailments; Bargain purchase (gain); (Gain) loss on extinguishment of debt; and Other costs related to mergers, acquisitions, investments and dispositions; as well as the impact of income taxes on the above items. | ||
Schedule III |
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TIME INC. |
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RECONCILIATION OF DILUTED EPS TO ADJUSTED DILUTED EPS |
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(Unaudited; all per share amounts are net of tax) |
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Three Months Ended |
Nine Months Ended |
|||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
Basic net income (loss) per common share | $ | (1.13) | $ | (8.30) | $ | (1.05) | $ | (8.17) | ||||
Asset impairments(1) | 1.16 | — | 1.17 | — | ||||||||
Goodwill impairment | — | 8.51 | — | 8.51 | ||||||||
Restructuring and severance costs | 0.28 | 0.05 | 0.35 | 0.13 | ||||||||
(Gain) loss on operating assets, net(2) | (0.02) | — | (0.14) | — | ||||||||
Pension settlements/curtailments | — | 0.04 | — | 0.04 | ||||||||
Bargain purchase (gain)(3) | — | — | (0.03) | — | ||||||||
(Gain) loss on extinguishment of debt(4) | — | — | (0.03) | — | ||||||||
Other costs | 0.02 | 0.02 | 0.15 | 0.04 | ||||||||
(Gain) loss on non-operating assets, net | — | — | — | (0.02) | ||||||||
Adjusted Diluted EPS(5)(6) | $ | 0.31 | $ | 0.32 | $ | 0.42 | $ | 0.53 | ||||
______________ | |||
(1) | Asset impairments primarily related to a definite-lived tradename intangible. | ||
(2) | (Gain) loss on operating assets, net primarily relates to the recognition of a gain on sale of certain of our titles and the deferred gain from the sale-leaseback of the Blue Fin Building in the fourth quarter of 2015. | ||
(3) | Bargain purchase (gain) relates to the acquisition of certain assets of Viant in the first quarter of 2016. | ||
(4) | (Gain) loss on extinguishment of debt in connection with repurchases of our Senior Notes are included within Other (income) expense, net on the Statements of Operations. | ||
(5) | Adjusted Diluted EPS is defined as Diluted EPS adjusted for impairments of Goodwill, intangibles, fixed assets and investments; Restructuring and severance costs; Gain (loss) on operating and/or non-operating assets; Pension settlements/curtailments; Bargain purchase (gain); (Gain) loss on extinguishment of debt; and Other costs related to mergers, acquisitions, investments and dispositions; as well as the impact of income taxes on the above items. | ||
(6) | For periods in which we were in a net loss position, we have used the expected diluted shares in the calculation of Adjusted Diluted EPS as if we were in a net income position, without giving effect to the impact of participating securities. | ||
Schedule IV |
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TIME INC. |
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RECONCILIATION OF CASH PROVIDED BY (USED IN) OPERATIONS TO FREE CASH FLOW |
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(Unaudited; in millions) |
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Three Months Ended |
Nine Months Ended |
|||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
Cash provided by (used in) operations | $ | 79 | $ | 84 | $ | 106 | $ | 127 | ||||
Less: Capital expenditures | (17) | (69) | (78) | (132) | ||||||||
Free Cash Flow(1) | $ | 62 | $ | 15 | $ | 28 | $ | (5) | ||||
______________ | |||
(1) | Free Cash Flow is defined as Cash provided by (used in) operations, less Capital expenditures. Capital expenditures in the three and nine months ended September 30, 2016 reflect lower capital spending due to the completion of the relocation of our corporate headquarters and other properties in 2015. | ||
Schedule V |
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TIME INC. |
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RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED OIBDA - 2016 OUTLOOK |
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(Unaudited; in millions) |
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Previous 2016 Outlook | Current 2016 Outlook | ||||||||||||||
2015 Actual | Low | High | Low | High | |||||||||||
Operating income (loss) | $ | (823) | $ | 215 | $ | 240 | $ | 15 | $ | 25 | |||||
Depreciation | 92 | 60 | 60 | 55 | 55 | ||||||||||
Amortization of intangible assets | 80 | 80 | 80 | 80 | 80 | ||||||||||
OIBDA(1) | $ | (651) | $ | 355 | $ | 380 | $ | 150 | $ | 160 | |||||
Asset impairments, Goodwill |
1,091 | 45 | 50 | 250 | 255 | ||||||||||
Adjusted OIBDA(2) | $ | 440 | $ | 400 | $ | 430 | $ | 400 | $ | 415 | |||||
______________ | |||
(1) | OIBDA is defined as Operating income (loss) excluding Depreciation and Amortization of intangible assets. | ||
(2) | Adjusted OIBDA is defined as OIBDA adjusted for impairments of Goodwill, intangibles, fixed assets and investments; Restructuring and severance costs; (Gain) loss on operating assets, net; Pension settlements/curtailments; and Other costs related to mergers, acquisitions, investments and dispositions. | ||
View source version on businesswire.com: http://www.businesswire.com/news/home/20161103005480/en/
Source:
Time Inc.
Investor Relations
Jaison Blair, 212-522-5952
or
Tanya Levy-Odom, 212-522-9225