Strategic Acquisitions of Two Magazine and Book Distribution Markets Strengthen National Footprint and Add Approximately $250 Million in Annual
Revenue
BONITA SPRINGS, Fla., March 30 - Source Interlink Companies, Inc. (Nasdaq: SORC), a leading provider of home entertainment products and marketing services, announced today that it has acquired in separate cash transactions magazine and book distribution territories in the Southern California and Washington D.C./Baltimore markets from the Anderson News Company. Together, these acquisitions represent approximately $250 million in additional annual run rate revenue, and increase Source Interlink's annual magazine and book sales to approximately $1.0 billion. The total Company annual run rate revenue now exceeds $2.0 billion.
Southern California: Source Interlink has purchased the membership interests of Anderson SCN Services, LLC for approximately $9 million in cash, plus the assumption of certain liabilities. In 2005, Anderson SCN had magazine and book distribution sales of approximately $170 million. The acquisition consolidates Source Interlink's existing operations in Southern California and solidifies its position in the market.
Washington D.C./Baltimore: Source Interlink has purchased the membership interests of Anderson Mid-Atlantic News, LLC for approximately $4 million, plus the assumption of certain liabilities. In 2005, Anderson Mid-Atlantic had magazine and book distribution sales of approximately $80 million. With this acquisition, Source Interlink expands its role in the Mid-Atlantic region, extending its strong position in the Philadelphia market to become the primary magazine and book distributor in the Philadelphia/Baltimore/Washington D.C. corridor.
"These strategic acquisitions represent a gain of prime magazine and book real estate in major retail markets and add significant revenue as a foundation for future growth and improved profitability," commented Leslie Flegel, Chairman and CEO of Source Interlink. "These transactions add a number of new chains to our distribution universe, increase store counts for chains we currently serve in other markets, and expand existing relationships in West Coast chains where we now distribute DVDs only. An important element of our growth strategy is to maximize store level service efficiencies by supplying and servicing all four of our major product lines to the chains in the new markets. Source Interlink will now be recognized as the leading magazine distributor in five of the nation's top ten advertising markets, providing a stabilizing force in the nationwide distribution of magazines, books, CDs and DVDs. Today's acquisitions are expected to create key efficiencies that we believe will result in improved operating margins. The addition of many high traffic retail stores in both new markets will strengthen our well established front-end management and manufacturing businesses and expand our information network."
About Source Interlink Companies, Inc.
Source Interlink Companies is a leading marketing, merchandising and fulfillment company of entertainment products including DVDs, music CDs, magazines, books and related items. The Company's fully integrated businesses include:
-- Distribution and fulfillment of entertainment products to major retail
chains throughout North America and directly to consumers of
entertainment products ordered through the Internet
-- Import and export of periodicals sold in more than 100 markets
worldwide
-- Coordination of product selection and placement of impulse items sold
at checkout counters
-- Processing and collection of rebate claims as well as management of
sales data obtained at the point-of-purchase
-- Design, manufacture and installation of wire fixtures and custom wood
displays in major retail chains
Source Interlink serves approximately 110,000 retail store locations throughout North America. Supply chain relationships include movie studios, record labels, magazine and newspaper publishers, confectionary companies and manufacturers of general merchandise. For more information, please visit the company's website at http://www.sourceinterlink.com .
This press release contains certain "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934 and the U.S. Private Securities Litigation Reform Act of 1995, including statements relating to, among other things, future business plans, strategies and financial position, working capital and capital expenditure needs, growth opportunities, and any statements of belief and any statements of assumptions underlying any of the foregoing.
These forward-looking statements reflect Source Interlink's current views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause future events, achievements or results to differ materially from those expressed by the forward-looking statements. Factors that could cause actual results to differ include: (i) the challenges and cost of integration and restructuring, and the ability to achieve anticipated synergies associated with the acquisitions of Anderson-SCN Services, LLC and Anderson Mid-Atlantic News, LLC; (ii) an evolving market for single-copy magazines, (iii) the ability to obtain magazines in sufficient quantities; (iv) adverse changes in general economic or market conditions; and (v) other events and other important factors disclosed previously and from time to time in Source Interlink's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 18, 2005.
Source Interlink does not intend to, and disclaims any duty or obligation to, update or revise any forward-looking statements or industry information set forth in this press release to reflect new information, future events or otherwise.
