Business News

American Media Operations, Inc. Reports Results for Fourth Quarter and Full Fiscal Year 2008

Wednesday 02. July 2008 - Full-Year 2008 Revenue Increases 4% to $491 Million as Expenses Decrease 6%

American Media, Inc. (AMI), the leading publisher of celebrity journalism and health and fitness magazines in the U.S., said that its subsidiary American Media Operations, Inc. (AMOI) today reported its financial results for the fourth quarter and full fiscal year ended March 31, 2008.

Revenue

Revenue for the fourth quarter of fiscal year 2008 was $123 million, compared to $124 million in the fourth quarter of fiscal year 2007, representing a 1% decrease. For the 12-month period ended March 31, 2008, revenue was $491 million, as compared to $471 million in the prior fiscal year period, representing a 4% increase.

The increase in revenue in fiscal 2008 was primarily due to favorable results in advertising revenue. The Company’s Shape, Star and Men’s Fitness magazines all delivered strong performances in fiscal year 2008 versus fiscal year 2007. Shape ad pages increased by 10.5%, Star ad pages by 21.5% and Men’s Fitness ad pages by 13.2% in fiscal year 2008 versus fiscal year 2007.

Operating Income / Loss

Operating loss for the fourth quarter of fiscal year 2008 was $8 million, as compared to operating income of $22 million in the fourth quarter of fiscal year 2007. For the 12 months ended March 31, 2008, operating income was $67 million, as compared to a loss of $254 million in the prior-year period. Excluding non-cash provisions for impairment of intangible assets and goodwill of $31 million during the fourth quarter of fiscal year 2008 and $305 million in the third quarter of fiscal year 2007, operating income for the fourth quarter and 12 months ended March 31, 2008 would have increased 7% and 90%, respectively. The 7% increase in operating income in the fourth quarter ended March 31, 2008 was primarily due to the cost reductions generated by the Company as a result of the implementation of its management action plan which was initiated during the quarter ended March 31, 2007. The 90% increase in operating income during the 12 months ended March 31, 2008 was primarily due to the above-mentioned increase in revenue, as well as the cost reductions generated by the Company as a result of the implementation of its aforementioned management action plan.

Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and Bank EBITDA

EBITDA for the fourth quarter of fiscal year 2008 was $29 million, essentially unchanged compared to the fourth quarter of fiscal year 2007. For the 12 months ended March 31, 2008, EBITDA was $123 million, as compared to $85 million in the prior-year period, representing a 45% increase. Bank EBITDA for the fourth quarter of fiscal year 2008 was $31 million, as compared to $30 million in the fourth quarter of fiscal year 2007. For the 12 months ended March 31, 2008, Bank EBITDA was $132 million, as compared to $102 million in the prior-year period, representing a 30% increase. These favorable results for the fiscal year are due to the increases in revenue and operating income described above.

Please refer to the table below for a reconciliation of EBITDA and Bank EBITDA to Net Loss.

Cash

At March 31, 2008, the Company’s cash and cash equivalents totaled $64 million.

Comments By Senior Management

AMOI Chairman and Chief Executive Officer David Pecker said, “In fiscal year 2008, AMOI saw strong revenue growth driven by our major titles Shape, Star and Men’s Fitness, each of which experienced a record advertising year. We expect that these leading titles in two of the strongest publishing categories today — health & fitness and celebrity — will continue to generate solid performance for the Company in fiscal 2009.”

AMOI Executive Vice President and Chief Financial Officer Dean Durbin said, “Over the course of fiscal year 2008, the Company generated $19 million of cost savings and $16 million of revenue enhancements, nearly reaching the goals outlined in our management action plan in February 2007. This contributed to a 6% decrease in expenses in fiscal year 2008, when the non-cash provision for impairment is excluded.”

“Going forward, we will continue to operate the business in a disciplined fashion,” continued Mr. Durbin. “During the first quarter of fiscal year 2009, we implemented additional initiatives related to cost savings and revenue enhancements that are expected to result in increases in EBITDA of approximately $19 million and $4 million, respectively, during fiscal year 2009.”