Reader's Digest Association Completes Financial Restructuring; Emerges as a Stronger, More Competitive Global Company; Poised to Build on Multi-Platform Affinity Model of Powerful Brands; Announces New Board of Directors

PLEASANTVILLE, N.Y., Feb. 22 /PRNewswire/ -- The Reader's Digest Association, Inc. ("RDA") announced today that it has successfully completed its financial restructuring and has emerged from pre-arranged Chapter 11 well capitalized, having reduced its debt by 75 percent and lowered its gross operating leverage from 17.5x to 3.2x.  With a significantly improved capital structure, RDA is positioned to continue its transformation into a multi-platform, multi-brand media and marketing company that educates, entertains and connects 130 million people around the world.

"This is a very important day for our company, and emerging with a de-levered balance sheet and a strong new capital structure is a significant step forward as we continue to transform RDA into a global media and marketing leader," said Mary Berner, President and Chief Executive Officer.  "My sincere thanks go to our employees around the world for their hard work and resilience, and for staying focused and resolutely on plan throughout an incredibly challenging time.  In addition, I want to thank our strategic partners and suppliers for your unwavering support in assisting the company in the delivery of products and services to our customers, which played a vital role in our successful restructuring."

With the restructuring complete, RDA is focusing on driving top-line growth and transformation of its business through its affinity marketing model, which builds communities of like-minded consumers around its brands, reaching them in person, print, and online.

"The new company is committed to maximizing value creation.  Having strengthened our balance sheet and capital structure and having successfully monetized underperforming assets, RDA is focused on free cash flow and return on investment," Berner said. "We expect that the industry and competitive environment will continue to be demanding, but we have the right team, the right model and relevant brands that engage today's consumer."

Tom Williams, Senior Vice President and Chief Financial Officer, said: "The new RDA is focused on maximizing cash EBITDA and ROI.  We are targeting improved performance through continued supply chain and other cost initiatives, expanded use of digital content and promotional channels to reduce customer acquisition costs, centralization of services, and revenue growth through integrated product and service offerings."

The company has $525 million in exit financing as a result of a recently completed bond refinancing that will provide the company with an estimated $30 million in cash interest expense savings annually compared with the credit facility it had pre-arranged at the start of the restructuring process.  Moody's Investors Service assigned RDA and the company's exit financing a B1 Corporate Family Rating (with Stable outlook), and Standard & Poor's issued a B rating to the company's exit financing.  The company also has access to an additional $50 million of revolver credit.

In connection with RDA's restructuring, the company announced a new Board of Directors whose members are:

• Norman Matthews, Chairman of the Board, and former Vice Chairman and President of Federated Department Stores
• Mary Berner, President and Chief Executive Officer of RDA
• James Hawkes, former Chief Executive Officer and Chairman of Eaton Vance Corporation
• Karen Osar, former Executive Vice President and Chief Financial Officer of Chemtura Corporation
• Fredric Reynolds, former Executive Vice President and Chief Financial Officer of CBS Corporation
• Donald Steiner, Managing Partner at Webster Capital
• Peter Stern, Executive Vice President and Chief Strategy Officer of Time Warner Cable
• Carl Wilson, Executive Vice President and Chief Information Officer of Marriott International

About The Reader's Digest Association, Inc.

RDA is a global multi-brand media and marketing company that educates, entertains and connects audiences around the world. The company builds multi-platform communities based on branded content. With offices in 44 countries, it reaches a customer base of 130 million in 78 countries. It publishes 92 magazines, including 50 editions of Reader's Digest, the world's largest-circulation magazine, operates 78 branded websites and sells 40 million books, music and video products across the world each year. Further information about the company can be found at www.rda.com.

Forward-looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and applicable federal securities laws that are based upon our current expectations and assumptions concerning future events, which are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated.  The words "expect," "anticipate," "estimate," "forecast," "initiative," "objective," "plan," "goal," "project," "outlook," "priorities," "target," "intend," "evaluate," "pursue," "commence," "seek," "may," "would," "could," "should," "believe," "potential," "continue," or the negative of any of those words or similar expressions is intended to identify forward-looking statements.  All statements contained in this press release, other than statements of historical fact, including, without limitation, statements about our plans, strategies, prospects and expectations regarding future events and our financial performance, are forward-looking statements that involve certain risks and uncertainties.  While these statements represent RDA's current judgment on what the future may hold, and RDA believe these judgments are based upon reasonable assumptions, these statements are not guarantees of any events or financial results, and RDA's actual results may differ materially.  Important factors that could cause our actual results to be materially different from our expectations include, among others, the risk that RDA continues to be affected by the global economy or subject to liquidity constraints, and the risk that the after-effects of the chapter 11 bankruptcy filing could have adverse impacts on RDA's ability to maintain contracts, trade credit and other customer and vendor relationships.  Accordingly, you should not place undue reliance on the forward-looking statements contained in this press release.  These forward-looking statements speak only as of the date on which the statements were made.  RDA undertakes no obligation to update publicly or otherwise revise any forward-looking statements, except where expressly required by law.

SOURCE The Reader's Digest Association, Inc.

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