Scripps Networks Interactive Reports Double-Digit Revenue Growth in the Fourth Quarter

• Revenues of $553 million, up 10 percent
• Segment profit of $257 million, up 14 percent
• Income from continuing operations of $0.84, compared with $0.73 in the prior year

KNOXVILLE, Tenn.--(BUSINESS WIRE)--Scripps Networks Interactive Inc. (NYSE: SNI) today reported operating results for the fourth quarter 2011.

Consolidated revenues for the quarter increased 10 percent to $553 million from the prior-year period. Results for the three-month period ended Dec. 31 reflect strong double-digit growth in advertising revenue of $394 million, up 11 percent, and affiliate fee revenue of $147 million, up 5.7 percent year-over-year.

Consolidated expenses for the quarter increased 6.1 percent from the prior-year period to $296 million. The increase was attributable to higher programming amortization expense and fees related to the company’s investment in the UKTV partnership.

Fourth-quarter segment profit for the company increased to $257 million, up 14 percent compared with the fourth quarter 2010. (See note 3 for a definition of segment profit).

Fourth-quarter income from continuing operations attributable to Scripps Networks Interactive was $135 million, or $0.84 per share, compared with $123 million, or $0.73 per share, in the fourth quarter 2010.

“The high level of engagement our focused lifestyle networks have created with media consumers, and the value our television and interactive brands deliver to advertisers as preferred marketing platforms, is reflected in the company’s strong fourth-quarter operating results,” said Kenneth W. Lowe, chairman, president and chief executive officer of Scripps Networks Interactive. “Our consistent track record of double-digit revenue and segment profit growth continued during the three-month period, and contributed to a very good 2011.”

Revenues by network are as follows:

• Food Network, $204 million, up 15 percent.
• HGTV, $191 million, up 8.1 percent.
• Travel Channel, $67.2 million, down 1.4 percent.
• DIY Network, $26.9 million up 18 percent.
• Cooking Channel, $17.8 million, up 14 percent.
• Great American Country (GAC), $6.6 million, down 15 percent.

Revenue from the Lifestyle Media segment’s digital businesses, which includes its network-branded Web sites, was $30.4 million, up 4.1 percent.

Full-year Results

Consolidated operating revenue in 2011 was $2.1 billion, up 10 percent from the prior year. Advertising revenue was $1.4 billion, up 11 percent from the prior year. Affiliate fee revenue was $589 million, up 6.1 percent from the prior year.

Segment profit increased to $977 million, up 17 percent from the prior year.

Consolidated income from continuing operations attributable to Scripps Networks Interactive was $473 million, or $2.86 per share compared with $398 million, or $2.37 per share from the prior year.

2012 Full-year Guidance

The company provided the following outlook for 2012.

Total revenue is expected to increase 8 percent to 10 percent.

Programming expenses are expected to increase 13 percent to 15 percent to help drive increased viewership across all of the company’s networks.

Non-programming expenses are expected to increase 10 to 12 percent. This increase is related to the company’s marketing strategy to increase viewership across its networks. It also includes accelerated investments in developing international, interactive and digital businesses.

Other items

• Depreciation and amortization, $100 million to $110 million.
• Interest expense, $45 million to $50 million.
• Effective tax rate, 30 percent to 32 percent.
• Noncontrolling share of net income, $170 million to $180 million.
• Capital expenditures, $60 million to $70 million.

Conference call

The senior management team of Scripps Networks Interactive will discuss the company’s fourth quarter results during a telephone conference call at 10 a.m. EST today. Scripps Networks Interactive will offer a live webcast of the conference call. To access the webcast, visit www.scrippsnetworksinteractive.com and follow the Investor Relations link at the top of the page. The webcast link can be found next to the microphone icon.

To access the conference call by telephone, dial 800-230-1951 (U.S.) or 612-332-0335 (international) approximately ten minutes before the start of the call. Callers will need the name of the call, “Fourth Quarter Earnings Call,” to be granted access. Callers also will be asked to provide their name and company affiliation. The media and general public are granted access to the conference call on a listen-only basis.

A replay line will be open from 12:30 p.m. EST Feb. 9 until 11:59 p.m. EST Feb. 23. The domestic number to access the replay is 800-475-6701 and the international number is 320-365-3844. The access code for both numbers is 233451. A replay of the conference call will also be available online. To access the audio replay, visit www.scrippsnetworksinteractive.com approximately four hours after the call, choose Investor Relations then follow the Audio Archives link on the left side of the page.

Forward-looking statements

This press release contains certain forward-looking statements related to the company’s businesses that are based on management’s current expectations. Forward-looking statements are subject to certain risks, trends and uncertainties, including changes in advertising demand and other economic conditions that could cause actual results to differ materially from the expectations expressed in forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. The company’s written policy on forward-looking statements can be found on page F-3 of its 2010 Form 10-K filed with the Securities and Exchange Commission.

The company undertakes no obligation to publicly update any forward-looking statements to reflect events or circumstances after the date the statement is made.

About Scripps Networks Interactive

Scripps Networks Interactive is one of the leading developers of lifestyle-oriented content for television and the Internet, where on-air programming is complemented with online video, social media areas and e-commerce components on companion websites and broadband vertical channels. The company’s media portfolio includes popular lifestyle television and Internet brands HGTV, Food Network, Travel Channel, DIY Network, Cooking Channel and country music network Great American Country.

CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)		Three months ended				Twelve months ended
		December 31,					December 31,
(in thousands, except per share data)		2011		2010	Change		2011		2010	Change
Operating revenues	$	553,489	$	505,291	9.5 %	$	2,072,048	$	1,882,693	10.1 %
Costs and expenses		(296,030)		(279,073)	6.1 %		(1,094,767)		(1,047,553)	4.5 %
Depreciation and amortization of intangible assets		(23,609)		(21,747)	8.6 %		(90,080)		(91,351)	(1.4)%
Gains (losses) on disposal of property and equipment		(666)		(250)			(603)		(1,511)	(60.1)%
Operating income		233,184		204,221	14.2 %		886,598		742,278	19.4 %
Interest expense		(9,773)		(8,621)	13.4 %		(36,121)		(35,167)	2.7 %
Equity in earnings of affiliates		20,094		8,644			49,811		30,126	65.3 %
Miscellaneous, net		6,316		(922)			(17,188)		(1,576)
Income from continuing operations before income taxes		249,821		203,322	22.9 %		883,100		735,661	20.0 %
Provision for income taxes		(71,586)		(55,388)	29.2 %		(246,452)		(219,427)	12.3 %
Income from continuing operations, net of tax		178,235		147,934	20.5 %		636,648		516,234	23.3 %
Income (loss) from discontinued operations, net of tax	-			7,451			(61,252)		12,775
Net income		178,235		155,385	14.7 %		575,396		529,009	8.8 %
Net income attributable to noncontrolling interests		(43,234)		(24,772)	74.5 %		(163,838)		(118,037)	38.8 %
Net income attributable to SNI	$	135,001	$	130,613	3.4 %	$	411,558	$	410,972	0.1 %
Diluted income per share:
Income from continuing operations attributable to SNI common shareholders	$	0.84	$	0.73		$	2.86	$	2.37
Income (loss) from discontinued operations attributable to SNI common shareholders		0.00		0.04			(0.37)		0.08
Net income attributable to SNI common shareholders per diluted share of common stock	$	0.84	$	0.77		$	2.49	$	2.45
Weighted average diluted shares outstanding		160,399		169,220			165,572		168,009
Net income per share amounts may not foot since each is calculated independently.
See notes to results of operations.

SCRIPPS NETWORKS INTERACTIVE, INC.
CONSOLIDATED BALANCE SHEETS
		As of
		December 31,		December 31,
		2011		2010
(in thousands, except per share data)		(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	760,092	$	549,897
Accounts and notes receivable (less allowances: 2011- $5,000; 2010- $4,788)		553,022		505,392
Programs and program licenses		336,305		271,204
Assets of discontinued operations				262,268
Other current assets		66,549		82,114
Total current assets		1,715,968		1,670,875
Investments		455,267		48,536
Property and equipment, net		219,845		214,131
Goodwill		510,484		510,484
Other intangible assets, net		556,095		598,080
Programs and program licenses (less current portion)		299,089		252,522
Unamortized network distribution incentives		46,239		82,339
Other non-current assets		158,683		11,465
Total Assets	$	3,961,670	$	3,388,432
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	12,482	$	9,672
Program rights payable		50,402		26,256
Customer deposits and unearned revenue		52,814		27,125
Employee compensation and benefits		49,920		47,902
Accrued marketing and advertising costs		6,838		7,277
Liabilities of discontinued operations				44,046
Other accrued liabilities		60,443		61,797
Total current liabilities		232,899		224,075
Deferred income taxes		100,002		81,960
Long-term debt		1,383,945		884,395
Other liabilities (less current portion)		148,429		117,708
Total liabilities		1,865,275		1,308,138
Redeemable noncontrolling interests		162,750		158,148
Equity:
SNI shareholders' equity:
Preferred stock, $.01 par - authorized: 25,000,000 shares; none outstanding Common stock, $.01 par:
Class A - authorized: 240,000,000 shares; issued and outstanding: 2011 - 122,828,359 shares; 2010 - 133,288,144 shares		1,228		1,332
Voting - authorized: 60,000,000 shares; issued and outstanding: 2011 - 34,317,173 shares; 2010 - 34,359,113 shares		343		344
Total		1,571		1,676
Additional paid-in capital		1,346,429		1,371,050
Retained earnings		364,073		414,972
Accumulated other comprehensive income (loss)		(33,347)		(11,525)
Total SNI shareholders' equity		1,678,726		1,776,173
Noncontrolling interest		254,919		145,973
Total equity		1,933,645		1,922,146
Total Liabilities and Equity	$	3,961,670	$	3,388,432

SCRIPPS NETWORKS INTERACTIVE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
	Twelve months ended
	December 31,
		2011		2010
(in thousands)	(unaudited)
Cash Flows from Operating Activities:
Net income	$	575,396	$	529,009
Loss (income) from discontinued operations		61,252		(12,775)
Income from continuing operations, net of tax		636,648		516,234
Depreciation and intangible assets amortization		90,080		91,351
Amortization of network distribution costs		42,353		34,002
Program amortization		429,935		400,835
Equity in earnings of affiliates		(49,811)		(30,126)
Program payments		(521,243)		(393,539)
Capitalized network distribution incentives		(6,872)		(45,881)
Dividends received from equity investments		39,420		29,194
Deferred income taxes		34,300		(14,098)
Stock and deferred compensation plans		26,920		23,556
Changes in certain working capital accounts:
Accounts receivable		(48,029)		(96,974)
Other assets		628		393
Accounts payable		2,806		(16,449)
Accrued employee compensation and benefits		39		9,231
Accrued income taxes		21,497		(70,870)
Other liabilities		23,131		8,493
Other, net		(6,140)		3,227
Cash provided by (used in) continuing operating activities		715,662		448,579
Cash provided by (used in) discontinued operating activities		13,253		38,917
Cash provided (used in) by operating activities		728,915		487,496
Cash Flows from Investing Activities:
Additions to property and equipment		(54,113)		(54,785)
Purchase of long-term investments		(402,217)		(1,225)
Purchase of note receivable due from UKTV		(137,308)
Purchase of noncontrolling interests		(3,400)		(14,400)
Other, net		1,881		1,409
Cash provided by (used in) continuing investing activities		(595,157)		(69,001)
Cash provided by (used in) discontinued investing activities		141,786		(22,176)
Cash provided by (used in) investing activities		(453,371)		(91,177)
Cash Flows from Financing Activities:
Proceeds from long-term debt		599,390
Payments on long-term debt		(100,000)
Dividends paid		(61,788)		(50,080)
Dividends paid to noncontrolling interest		(70,500)		(111,703)
Noncontrolling interest capital contribution		52,804
Repurchase of Class A common stock		(500,048)
Proceeds from stock options		24,491		65,230
Other, net		(10,075)		(4,729)
Cash provided by (used in) financing activities		(65,726)		(101,282)
Effect of exchange rate changes on cash and cash equivalents		377		490
Increase (decrease) in cash and cash equivalents		210,195		295,527
Cash and cash equivalents:
Beginning of year		549,897		254,370
End of period	$	760,092	$	549,897
Supplemental Cash Flow Disclosures:
Interest paid, excluding amounts capitalized	$	32,847	$	20,011
Income taxes paid		184,114		294,702

Notes to Results of Operations

1. OTHER CHARGES AND CREDITS

UKTV - In August 2011, the Company announced that SNI would be acquiring a 50-percent equity interest in UKTV for £239 million and £100 million to acquire the outstanding preferred stock and debt due to Virgin Media, Inc. from UKTV. To minimize the cash flow volatility resulting from British Pound to U.S. dollar currency exchange rate changes, we subsequently entered into foreign currency forward contracts that effectively set the U.S. dollar value for the transaction. We settled these foreign currency exchange forward contracts around the September 30, 2011 closing of the transaction and recognized losses from the contracts totaling $25.3 million. These losses reported within the “Miscellaneous” caption in our consolidated statements of operations reduced year-to-date net income attributable to SNI $15.7 million, $.10 per share.

Operating results in 2011 include transaction related costs of $6.5 million associated with our acquisition of a 50-percent equity interest in UKTV. Net income attributable to SNI was decreased $4.0 million, $.02 per share.

Income Tax Adjustments – Our tax provision in the fourth quarter of 2011 includes a favorable tax adjustment primarily attributed to expiring statutes of limitations in certain tax jurisdictions and the related reduction of our liability for uncertain tax positions. Net income attributable to SNI was increased $10.5 million, $.07 per share. In the third quarter of 2011, we recorded $14.5 million of favorable income tax adjustments attributed to reaching agreements with certain tax authorities for positions taken in prior period returns and adjustments to foreign income items, state apportionment factors and credits reflected in our filed tax returns. These 2011 income tax adjustments increased year-to-date net income attributable to SNI by $25.0 million, $.15 per share.

During the fourth quarter of 2010, we reached agreement with certain state tax authorities on income tax positions taken in our prior period tax returns. The settlements and related reduction of our liability for uncertain tax positions provided an income tax benefit of $15.7 million in the fourth quarter, increasing net income attributable to SNI by $.09 per share. Our third quarter 2010 tax provision also included a favorable $4.3 million adjustment attributed to changes in both estimated foreign tax credits and state apportionment factors reflected in our filed tax returns. These 2010 income tax adjustments increased year-to-date net income attributable to SNI by $20.0 million, $.12 per share.

Food Network Partnership noncontrolling interest – During 2010 we completed the rebranding of the Fine Living Network (“FLN”) to the Cooking Channel and subsequently contributed the membership interest of the Cooking Channel to the Food Network Partnership (the “Partnership”) in August of 2010. In accordance with the terms of the Partnership agreement, the noncontrolling interest owner was required to make a pro-rata capital contribution to maintain its proportionate interest in the Partnership. At the close of our 2010 fiscal year, the noncontrolling owner had not made the required $52.8 million contribution and as a result its ownership interest in the Partnership was diluted from 31 percent to 25 percent. Accordingly, following the Cooking Channel contribution, profits were allocated to the noncontrolling owner at its reduced ownership percentage, reducing net income attributed to noncontrolling interest by $8.0 million in the fourth quarter of 2010. Net income attributable to SNI in 2010 was increased $4.7 million, $.03 per share.

In February 2011, the noncontrolling owner made the $52.8 million pro-rata contribution to the Partnership and its ownership interest was returned to the pre-dilution percentage as if this pro-rata contribution had been made as of the date of the Cooking Channel contribution. The retroactive impact from restoring the noncontrolling owner’s interest in the Partnership increased net income attributed to noncontrolling interest $8.0 million in the first quarter of 2011. Year-to-date net income attributable to SNI in 2011was decreased $4.7 million, $.03 per share.

Travel Channel and other costs – Operating results in the fourth quarter of 2010 include $2.3 million of transition costs following our acquisition of a controlling interest in the Travel Channel in December of 2009. Net income attributable to SNI for the fourth quarter of 2010 was reduced $0.9 million, $.01 per share.

For the year-to-date period of 2010, these Travel Channel transition costs were $29.9 million. Year-to-date operating results in 2010 also include $11.0 million of marketing and legal expenses incurred to support the company’s affiliate agreement renewal negotiations for Food Network and HGTV. These items reduced year-to-date net income attributable to SNI $17.8 million, $.11 per share.

2. DISCONTINUED OPERATIONS

During the second quarter of 2011, our Board of Directors approved the sale of our Shopzilla business and its related online comparison shopping brands. We received consideration totaling approximately $160 million upon finalizing the sale of the business on May 31, 2011. The Shopzilla business’ assets, liabilities and results of operations have been retrospectively presented as discontinued operations within our consolidated financial statements for all periods.

(in thousands)		Three months ended				Twelve months ended
		December 31,				December 31,
		2011		2010		2011			2010
Operating revenues	$	-	$	67,750	$	87,492		$	184,469
Income (loss) from discontinued operations, before tax:
Shopzilla:
Income (loss) from operations	$	-	$	12,120	$	(2,468	)	$	4,243
Loss from divestiture		-		-		(54,827	)		-
Total Shopzilla		-		12,120		(57,295	)		4,243
uSwitch		-		-		-			714
Income (loss) from discontinued operations, before tax		-		12,120		(57,295	)		4,957
Income tax expense (benefit)		-		4,669		3,957			(7,818	)
Income (loss) from discontinued operations, net of tax	$	-	$	7,451	$	(61,252	)	$	12,775

Discontinued operations in 2011 reflect a loss on divestiture of $54.8 million related to the sale of the Shopzilla business. No income tax benefit related to the capital losses attributed to the sale has been recognized. Net income attributable to SNI was decreased $.33 per share. If Shopzilla achieves certain performance targets in 2012, we will receive $5 million in contingent cash consideration.

The income tax benefit recorded in 2010 includes a reduction in the valuation allowance on the deferred tax asset resulting from the sale of our uSwitch business in December of 2009. The reduction in the valuation allowance is attributed to the partial utilization of the uSwitch capital loss against capital gains that were generated in periods prior to the Company’s separation from The E. W. Scripps Company (“E. W. Scripps”). In accordance with the tax allocation agreement with E. W. Scripps, we were notified in the second quarter of 2010 that these capital gains were available for use by SNI. The income tax benefit increased income from discontinued operations $9.3 million. Net income attributable to SNI was increased $.06 per share.

3. SEGMENT INFORMATION

We determine our business segments based upon our management and internal reporting structure. Our reportable segment, Lifestyle Media, is a strategic business that offers different products and services.

Lifestyle Media includes our national television networks, HGTV, Food Network, Travel Channel, DIY Network, Cooking Channel and Great American Country (“GAC”). Lifestyle Media also includes websites that are associated with the aforementioned television brands and other Internet-based businesses serving food, home and travel related categories. The Food Network and Cooking Channel are included in the Food Network Partnership of which we own approximately 69%. We also own 65% of Travel Channel. Each of our networks is distributed by cable and satellite distributors and telecommunication service providers.

Our chief operating decision maker evaluates the operating performance of our business segments and makes decisions about the allocation of resources to our business segments using a measure we call segment profit. Segment profit excludes interest, income taxes, depreciation and amortization, divested operating units, restructuring activities, investment results and certain other items that are included in net income determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Refer to Note 5—Non-GAAP Financial Measures, for reconciliations to GAAP measures.

Items excluded from segment profit generally result from decisions made in prior periods or from decisions made by corporate executives rather than the managers of the business segments. Depreciation and amortization charges are the result of decisions made in prior periods regarding the allocation of resources and are therefore excluded from the measure. Financing, tax structure and divestiture decisions are generally made by corporate executives. Excluding these items from our business segment performance measure enables us to evaluate business segment operating performance for the current period based upon current economic conditions and decisions made by the managers of those business segments in the current period.

Information regarding the operating performance of our business segments and a reconciliation to our results of operations is as follows:

(in thousands)		Three months ended				Twelve months ended
		December 31,						December 31,
		2011		2010	Change			2011		2010	Change
Segment operating revenues:
Lifestyle Media	$	547,867	$	500,981	9.4 %		$	2,045,030	$	1,867,228	9.5 %
Corporate/intersegment eliminations		5,622		4,310	30.4 %			27,018		15,465	74.7 %
Total operating revenues	$	553,489	$	505,291	9.5 %		$	2,072,048	$	1,882,693	10.1 %
Segment profit (loss):
Lifestyle Media	$	280,729	$	247,888	13.2 %		$	1,049,934	$	903,572	16.2 %
Corporate		(23,270)		(21,670)	7.4 %			(72,653)		(68,432)	6.2 %
Total segment profit		257,459		226,218	13.8 %			977,281		835,140	17.0 %
Depreciation and amortization of intangible assets		(23,609)		(21,747)	8.6 %			(90,080)		(91,351)	(1.4)%
Gains (losses) on disposal of property and equipment		(666)		(250)				(603)		(1,511)	(60.1)%
Interest expense		(9,773)		(8,621)	13.4 %			(36,121)		(35,167)	2.7 %
Equity in earnings of affiliates		20,094		8,644				49,811		30,126	65.3 %
Miscellaneous, net		6,316		(922)				(17,188)		(1,576)
Income from continuing operations before income taxes	$	249,821	$	203,322	22.9 %		$	883,100	$	735,661	20.0 %

Corporate includes the results of the lifestyle-oriented channels we operate in Europe, the Middle East, Africa and Asia, operating results from the international licensing of our national networks’ programming, and the costs associated with our international expansion initiatives.

Our continued investment in international expansion initiatives increased the segment loss at corporate by $3.1 million in the fourth quarter of 2011 and $7.4 million for the year-to-date period of 2011 compared with $3.9 million in the fourth quarter of 2010 and $11.3 million for the year-to-date period of 2010.

Corporate costs in 2011 also include transaction related costs of $6.5 million that were associated with our acquisition of a 50-percent equity interest in UKTV.

4. SUPPLEMENTAL FINANCIAL INFORMATION

Our Lifestyle Media division earns revenue primarily from the sale of advertising time on our national television networks, affiliate fees paid by cable and satellite television operators that carry our network programming, the licensing of its content to third parties, the licensing of its brands for consumer products such as books and kitchenware, and from the sale of advertising on our Lifestyle Media affiliated websites.

Supplemental information for Lifestyle Media is as follows:

(in thousands)		Three months ended					Twelve months ended
		December 31,					December 31,
		2011		2010	Change		2011		2010	Change
Operating revenues by brand:
Food Network	$	204,066	$	177,957	14.7 %	$	745,605	$	663,530	12.4 %
HGTV		190,576		176,335	8.1 %		731,769		685,237	6.8 %
Travel Channel		67,174		68,102	(1.4)%		262,055		248,510	5.5 %
DIY		26,915		22,839	17.8 %		102,995		87,140	18.2 %
Cooking Channel/FLN (1)		17,829		15,656	13.9 %		65,610		55,281	18.7 %
GAC		6,581		7,735	(14.9)%		25,004		30,267	(17.4)%
Digital Businesses		30,420		29,223	4.1 %		101,890		90,216	12.9 %
Other		4,416		3,821	15.6 %		10,928		9,133	19.7 %
Intrasegment eliminations		(110)		(687)			(826)		(2,086)
Operating revenues by type:
Advertising	$	392,615	$	352,804	11.3 %	$	1,430,144	$	1,287,956	11.0 %
Network affiliate fees, net		145,361		138,007	5.3 %		582,178		551,424	5.6 %
Other		9,891		10,170	(2.7)%		32,708		27,848	17.5 %
Subscribers (2):
Food Network							99,600		100,100	(0.5)%
HGTV							98,900		99,400	(0.5)%
Travel Channel							94,900		95,600	(0.7)%
DIY							56,500		53,500	5.6 %
Cooking Channel/FLN (1)							58,200		57,100	1.9 %
GAC							62,200		59,300	4.9 %
(1) The Cooking Channel, a replacement for FLN, premiered on May 31, 2010.
(2) Subscriber counts are according to the Nielsen Homevideo Index of homes that receive cable networks.

5. NON-GAAP FINANCIAL MEASURES

In addition to the results prepared in accordance with GAAP provided in this release, the Company has presented segment profit. A reconciliation of segment profit to operating income determined in accordance with GAAP for each business segment is as follows:

(in thousands)		Three months ended				Twelve months ended
		December 31,				December 31,
		2011		2010		2011		2010
Operating income	$	233,184	$	204,221	$	886,598	$	742,278
Depreciation and amortization of intangible assets:
Lifestyle Media		23,099		21,233		88,030		89,469
Corporate		510		514		2,050		1,882
Losses (gains) on disposal of property and equipment:
Lifestyle Media		532		250		469		1,511
Corporate		134				134
Total segment profit	$	257,459	$	226,218	$	977,281	$	835,140

The Company defines free cash flow as cash provided by operating activities less dividends paid to noncontrolling interests and acquisitions of property and equipment. The Company measures free cash flow as it believes it is an important indicator for management and investors as to the Company’s liquidity, including its ability to reduce debt, make strategic investments and return capital to shareholders. A reconciliation of free cash flow is as follows:

(in thousands)		Three months ended				Twelve months ended
		December 31,				December 31,
		2011		2010		2011		2010
Segment profit	$	257,459	$	226,218	$	977,281	$	835,140
Income taxes paid		(46,732)		(81,109)		(184,114)		(294,702)
Interest paid		(158)		(256)		(32,847)		(20,011)
Working capital and other		(27,099)		(7,973)		(44,658)		(71,848)
Cash provided by continuing operating activities		183,470		136,880		715,662		448,579
Dividends paid to noncontrolling interest		(11,824)		(15,047)		(70,500)		(111,703)
Additions to property and equipment		(16,758)		(19,130)		(54,113)		(54,785)
Free cash flow	$	154,888	$	102,703	$	591,049	$	282,091

Since segment profit and free cash flow are non-GAAP measures, they should be considered in addition to, but not as a substitute for, operating income, net income, cash flow provided by operating activities and other measures of financial performance reported in accordance with GAAP.