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Special Charges Hurt Reader's Digest for Q3

Reader's Digest Association Inc., Pleasantville, NY, announced yesterday an operating loss of $126.1 million for its fiscal third quarter of 2005 compared with a profit of $19.1 million in the year-ago quarter.

Results included non-cash charges totaling $142 million, including $129 million to reduce Books Are Fun goodwill and $13 million for amortization of previously deferred magazine promotion expenses.

The North America division showed an increase in operating profit at $21.9 million versus $14.2 million during the previous year. The International Business section was down for the quarter at $7.3 million from $13.9 million. The Consumer Business Services division posted an operating loss of $4.1 million compared with a profit of $1.2 million in 2004.

Revenue for the third quarter was $544.9 million, down from $561 million in 2004.

“Operating results were a little better than our internal expectations,” Reader's Digest chairman/CEO Thomas O. Ryder said in a statement. “We announced at the beginning of the fiscal year that the third quarter would be down and would be followed by a stronger fourth quarter. Our core businesses in RD North America and RD International were stronger than we expected.”

Kristen Bremner covers list news, insert media, privacy and fundraising for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters

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