Accounting Company #1: Vertis, Inc.

Accounting Company #1: Vertis, Inc. (service company) The first publicly traded company looked at for this paper is Vertis, Inc., a provider of advertising, media and marketing services, headquartered in Baltimore, Maryland. Although Vertis does produce some items, such as newspaper inserts for Sunday newspapers, they are known mostly as a service company. Their services include advertising and creative services, database services, account planning, consumer research, pre-press media services, direct marketing, ad-building software, geo-demographic targeting, online marketing, among other media and digital services.

The annual report for 2004 is not available yet, so this paper will look at the Vertis annual report for 2003. Meantime, the "total current assets" for December 31, 2003 were $266,576 (that does not include "property, plant and equipment, goodwill," and "other long-term assets") and the "total current liabilities (excluding current portion of long-term debt)" were $327,109. Doing the math brings the amount of debt for Vertis at the end of 2003 to $60,533.

"Is the company in trouble or in good shape?" Vertis is a company that is in some trouble, it is clear; they reported net income of $5.9 million in the 4th Quarter of 2003 and a net loss for the year 2003 (ended Dec. 31) of $95.9 million; but the Vertis figures show that as "an improvement" because for the 4th Quarter of 2002 Vertis showed net income of $5.5 million and a net loss of $120.1 million for the year ending Dec. 31, 2002.

How well is the company doing in its operations? The Vertis Annual Report shows a trend that is flat: Dean Durbin, CFO, said "the advertising market conditions were extremely challenging in 2003...[but] excluding the consulting costs associated with the marketing study mentioned earlier and the negative impact of the grocery strike in California, our fourth quarter EBITDA would have exceeded the 2002 fourth quarter results by 6.1%." Even in these difficult economic times, he continued, "we reduced total debt by $41 million and finished the year safely within our debt covenant requirements." The EBITDA for the 12 months ending 2003 was $172,683; for the 12 months ending Dec.

2002, the EBITDA was $100,990. Vertis is a company that is struggling. Company #2: Martha Stewart Living Omnimedia, Inc. (service company) Martha Stewart, as the public is well aware, is serving jail time for her role in a stock scandal. She will be released from prison in Spring, 2005. Meantime, her financial empire is still going strong, and one has the suspicion that Stewart - who is without doubt running her operations from prison - will come out of incarceration with a blast of energy and ideas.

The CEO of Martha Stewart Living Omnimedia, Inc., Sharon L. Patrick, issued a press release in October: "Despite the losses in the quarter, we continue to benefit from strong consumer support for our products, which offer that unique blend of 'Martha Stewart' brand attributes - inspirational 'how-to' ideas translated into products that stand for quality, style, usefulness and affordability," Patrick reported.

During the 3rd Quarter of 2004, Stewart's company purchased "Body and Soul" magazine, and Patrick also announced that Stewart will launch a new television show; and Mark Burnett Productions will "develop and produce a primetime network television series" set to launch in the fall of 2005 (Burnett is the producer of "Survivor"). Current assets for Martha Stewart Living Omnimedia, Inc., as of Sept. 30, 2004, were $179,298. Current Liabilities for the same period, $61,815. That is a plus $117,483. For the year ending 2003, "net cash provided by (used in) operating activities" was $15,956.

The "non-current assets" for 2002 were $324,542; the "non-current assets" for 2003 were $309,102. As to the "cash flow from operating activities on the statement of cash flows," the three-year trend follows: 2001 ($21,906); 2002 ($7,268); 2003 (minus $2,771). So, to answer the question, "how well is the company doing?" - considering the negative publicity Stewart has gone through during her very public legal troubles, and.