The Reader's Digest Association, Pleasantville, NY, lowered its fourth-quarter earnings outlook to 5 cents a share from an earlier forecast of 18 to 21 cents per share expectation.
With 102.5 million shares outstanding, this translates to net earnings of $5.1 million, compared with the $18.5-$21.5 million anticipated earlier. The company also said that it would take a one-time charge of $60 million, relating to severance pay for positions throughout the company, a restructuring of its U.S. Books and Home Entertainment operations and write-downs due to lowered valuations of several investments.
Reader's Digest said that the soft economy, weakness in the direct mail industry and changes related to its sweepstakes mailings as a result of agreements with several states contributed to softer earnings in the second half of fiscal 2001.
