Charges Widen Loss at Reader’s Digest
By Jim Milliot -- Publishers Weekly, 10/7/2008 1:55:00 PM
Reader’s Digest posted total revenue of $2.79 billion in the fiscal year ended June 30, 2008 and an operating loss of $337 million, the company reported in its recently filed 10-K report. The loss includes one-time charges of $307 million related to the write-down of goodwill plus other intangible assets. On a pro forma basis--RD was acquired by Ripplewood Holdings in March 2007--the publisher had revenue of $2.69 billion in fiscal 2007 and an operating loss of $147 million. The sales increase came entirely from its International segment, which benefited from favorable changes in exchange rates. Sales fell 2% in the U.S. segment, to $836 million, and dropped 17% in the School & Educational group, to $458.1 million. The steep decline in the School & Education division was attributed to “significant declines” in sales at QSP and Books Are Fun. RD sold QSP in August to Time for $110 million and has been restructuring BAF. The group also had a $14.2 million loss in fiscal 2008 compared to operating profit of $8.3 million in fiscal 2007.
In a breakdown of sales by product line, books accounted for $1.11 billion in revenue last year, followed by $755 million in magazine subscriptions and $202 million in advertising. Music and video sales added $524 million to sales, while food and gift items contributed $179 million.
