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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 001-15395
 MARTHA STEWART LIVING OMNIMEDIA, INC.
  Delaware
    
    52-2187059(State or Other Jurisdiction of Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)601  West 26th Street, New York, New York
    
    10001(Address of Principal Executive Offices)
    
    (Zip Code)
 (212) 827-8000
 Securities Registered Pursuant to Section 12(b) of the Act:
 Title of Each Class
    
    Name of Each Exchange on Which RegisteredClass A Common Stock, Par Value $0.01 Per Share
    
    New York Stock Exchange
 Securities Registered Pursuant to Section 12(g) of the Act:
 Yes o No þ
 Yes o No þ
 þ o
 o o
 þ
 Rule 12b-2
 Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
  *
    
    Excludes 2,194,423 shares of our Class A Common Stock, and 26,690,125 shares of our Class B Common
Stock, held by directors, officers and our founder, as of June 30, 2009. Exclusion of shares held
by any person should not be construed to indicate that such person possesses the power, direct or
indirect, to direct or cause the direction of the management or policies of the Company, or that
such person controls, is controlled by or under common control with the Company.
 Number of Shares Outstanding As of March 2, 2010
28,277,599 shares of Class A Common Stock
26,690,125 shares of Class B Common Stock
 Documents Incorporated by Reference.




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##### 



TABLE OF CONTENTS
 PART IItem 1. Business
    
    
    3Overview
    
    
    3History
    
    
    4Publishing
    
    
    4Broadcasting
    
    
    6Internet
    
    
    7Merchandising
    
    
    8Intellectual Property
    
    
    11Available Information
    
    
    11Item 1A. Risk Factors
    
    
    11Item 1B. Unresolved Staff Comments
    
    
    18Item 2. Properties
    
    
    18Item 3. Legal Proceedings
    
    
    18Item 4. Reserved
    
    
    18PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    19Item 6. Selected Financial Data
    
    
    21Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    22Item 7A. Quantitative and Qualitative Disclosure About Market Risk
    
    
    37Item 8. Financial Statements and Supplementary Data
    
    
    38Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    38Item 9A. Controls and Procedures
    
    
    38Item 9B. Other Information
    
    
    41PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    41Item 11. Executive Compensation
    
    
    41Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    41Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    42Item 14. Principal Accountant Fees and Services
    
    
    42PART IVItem 15. Exhibits and Financial Statement Schedules
    
    
    43Signatures
    
    
    47Index to Consolidated Financial Statements, Financial Statement Schedules and Other Financial Information
    
    
    F-1Report of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Statements of Operations for the years ended December 31, 2009, 2008 and 2007
    
    
    F-3Consolidated Balance Sheets at December 31, 2009 and 2008
    
    
    F-4Consolidated Statements of Shareholders Equity and Comprehensive Loss for the years ended December 31, 2009, 2008 and 2007
    
    
    F-5Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7Financial Statement Schedule: II  Valuation and Qualifying Accounts for the years ended December 31, 2009, 2008 and 2007
    
    
    F-28Exhibit IndexExhibit 10.8.2Exhibit 10.9.3Exhibit 10.11.1Exhibit 10.11.2Exhibit 10.22Exhibit 10.26Exhibit 21Exhibit 23.1Exhibit 31.1Exhibit 31.2Exhibit 32
   2




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FORWARD-LOOKING STATEMENTS
  
 PART I
 
 Item 1. Business.
 
 OVERVIEW
   
    
    Strengthen and expand our media business by building new brands, exploring new
distribution opportunities for our assets, and further capitalizing on our ability to offer
cross-platform programs to advertisers
 
    
    Grow our merchandising business by leveraging our brand equity to expand established
businesses and by diversifying into new categories and distribution channels; and
 
    
    Expand internationally
  
    
    Cooking and Entertaining (recipes, techniques, and indoor and outdoor entertaining)
 
    
    Holidays (celebrating special days and special occasions)
 
    
    Crafts (how-to projects)
 
    
    Home (decorating, collecting and renovating)
 
    
    Whole Living (healthy living and sustainable practices)
 
    
    Weddings (all aspects of planning, celebrating and commemorating a wedding)
 
    
    Organizing (homekeeping, petkeeping, clotheskeeping, restoring and other types of
domestic maintenance)
 
    
    Gardening (planting, landscape design and outdoor living)
   3




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HISTORY
 Entertaining Martha Stewart Living Living Martha by Mail
 BUSINESS SEGMENTS
  
 PUBLISHING
  Magazines
 Martha Stewart Living. Martha Stewart Living Martha Stewart Living Martha Stewart Living
 Martha Stewart Weddings. Martha Stewart Weddings Martha
Stewart Weddings Martha Stewart Weddings Martha Stewarts Destination Weddings & Dream Honeymoons
 Everyday Food. Everyday Food Everyday Food
 Body + Soul. Body + Soul Dr. Andrew Weils Self Healing Body + Soul Body + Soul Dr. Andrew Weils Self Healing Body + Soul/Whole Living Whole
Living wholeliving.com
 Blueprint: Design Your Life. Blueprint:
Design Your Life Blueprint
  4




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Magazine Summary
  2008
    
    
    2008
    
    
    2009
    
    
    2009
    
    
    2010Title
    
    Frequency
    
    
    Rate Base *
    
    
    Frequency
    
    
    Rate Base *
    
    
    Rate Base *Martha Stewart Living
    
    
    12
    
    
    
    2,000,000
    
    
    
    12
    
    
    
    2,025,000
    
    
    
    2,025,000Martha Stewart Weddings
    
    
    5
    **
    
    
    N/A
    ***
    
    
    5
    **
    
    
    N/A
    ***
    
    
    N/A
    ***Everyday Food
    
    
    10
    
    
    
    900,000
    
    
    
    10
    
    
    
    1,000,000
    
    
    
    1,000,000Body + Soul
    
    
    10
    
    
    
    550,000
    
    
    
    10
    
    
    
    600,000
    
    
    
    650,000
 *
    
    Rate base increases are effective with the January issues which
typically are on sale in December of the prior fiscal year.**
    
    Includes one special issue of Martha Stewart Weddings***
    
    Does not have a stated rate base. Special Interest Publications. Halloween Holiday Sweets, Body + Soul Body + Soul Body + Soul
 Magazine Production, Distribution and Fulfillment. Martha Stewart Living
 Books
  Martha Stewarts Cupcakes, Martha Stewarts Encyclopedia of Crafts and Martha Stewarts
Dinner at Home The New York Times
 Emeril at the Grill Emeril 20-40-60 The New York Times
  Competition
 Martha
Stewart Living Everyday Food Martha Stewart Weddings Body + Soul
  5




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Seasonality
 Martha Stewart Weddings
 
 BROADCASTING
  The Martha Stewart Show The Martha Stewart Show The Martha Stewart Show Living The Martha Stewart Show
 Martha Stewart On Demand
 Martha Stewart Living Radio Whatever Martha! Living
 Everyday Food The Martha Stewart Show, Everyday Food Everyday Baking from Everyday Food Everyday Baking from Everyday Food
 The Emeril Lagasse Show The Emeril Lagasse Show
 Emeril Green Essence of Emeril Emeril Live
  6




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##### Table of Contents



Martha Stewart Living Radio
 Competition
  Seasonality
  
 INTERNET
 marthastewart.com
 marthastewart.com
 marthastewart.com marthastewart.com marthastewartweddings.com wholeliving.com
 marthastewartweddings.com
 marthastewartweddings.com
 wholeliving.com
 wholeliving.com
 WeddingWire
   7




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pingg
 marthastewart.com
 Ziplist
  Martha Stewart Flowers
 marthasflowers.com marthastewartflowers.com Martha Stewart Flowers
 Competition
 marthastewart.com
 Seasonality
 marthastewart.com
 
 MERCHANDISING
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Select Licensed Retail Partnerships
 Martha Stewart Living at Home Depot
 Martha Stewart Living Martha Stewart Living
 Martha Stewart Collection at Macys
 Martha Stewart Collection Martha
Stewart Collection
 Martha Stewart Flowers with 1-800-Flowers
  Sandals® Weddings by Martha Stewart
 ® Sandals® Weddings
by Martha Stewart
 Martha Stewart Everyday at Kmart and Sears Canada
 Martha Stewart Everyday
 Digital Photography Products
  Select Licensed Martha Stewart Manufacturing Partnerships
 Martha Stewart Crafts
 Martha Stewart Crafts
 Martha Stewart Clean with The Hain Celestial Group
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Martha Stewart Food Programs with The Hain Celestial Group
  Martha Stewart Pets with Age Group
  Martha Stewart Furniture with Bernhardt
  KB Home / Martha Stewart Homes
  Select Licensed Emeril Lagasse Manufacturing Partnerships
  Emerilware by All-Clad
 Emerilware
 Emerilware by T-Fal
 Emerilware
 Emerils Original with B&G Foods
 Emerils Original
 Emerils Gourmet Coffee with Timothys World Coffee
 Emerils Gourmet Coffee with Timothys World Coffee
  10




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Competition
  Seasonality
  
 INTELLECTUAL PROPERTY
 Martha Stewart Living Martha
Stewart Everyday Martha Stewart Collection Everyday Food Martha Stewart Weddings marthastewart.com, Martha Stewart Flowers, Body + Soul, wholeliving.com Emerils Bam!
 
 AVAILABLE INFORMATION
 www.marthastewart.com www.marthastewart.com
 
 Item 1A. Risk Factors
   11




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Our success depends in part on the popularity of our brands and the reputation and popularity
of Martha Stewart, our founder, and Emeril Lagasse. Any adverse reactions to publicity relating to
Ms. Stewart or Mr. Lagasse, or the loss of either of their services, could adversely affect our
revenues, results of operations and our ability to maintain or generate a consumer base.
    The difficulty in the financial markets and sustained weakness in the economy could
significantly impact our business, financial condition, results of operations and cash flows, and
could adversely affect the value of our assets, hamper our ability to refinance our existing debt
or our ability to raise additional funds.
     Our Merchandising business and licensing programs may suffer from the continued downturns in
the health and stability of the general economy and housing market.
   12




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Our business is largely dependent on advertising revenues in our publications, broadcasts, and
online operations. The market for advertising has been adversely affected by the economic downturn.
Our failure to attract or retain advertisers would have a material adverse effect on our business.
  We face significant competition for advertising and consumer demand.
  Acquiring or developing additional brands or businesses, and integrating acquired assets,
poses inherent financial and other risks and challenges.
    Our Merchandising business has relied heavily on revenue from a single source, the reduction
of revenue from which has hurt and continues to hurt our profitability.
   13




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We are expanding our merchandising and licensing programs into new areas and products, the
failure of any of which could diminish the perceived value of our brand, impair our ability to grow
and adversely affect our prospects.
   If The Martha Stewart Show fails to maintain a sufficient audience, if adverse trends continue
or develop in the television production business generally, or if Martha Stewart were to cease to
be able to devote substantial time to our television business, that business could be adversely
affected. We also derive value from Emeril Lagasses television shows, the popularity of which
cannot be assured.
  Failure of our television programming to maintain a sufficient audience
 The Martha Stewart Show The Martha Stewart
Show The Martha
Stewart Show marthastewart.com
   14




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Adverse trends in the television business generally
  We have placed emphasis on building an advertising-revenue-based website, dependent on a large
consumer audience and resulting page views. Failure to fulfill these undertakings could adversely
affect our brand and business prospects.
  
    
    significantly increase our online audience and advertising revenue;
    
    attract and retain a base of frequent visitors to our website;
    
    expand the content, products and interactive experiences we offer on our website;
    
    respond to competitive developments while maintaining a distinct brand identity;
    
    attract and retain talent for critical positions;
    
    maintain and form relationships with strategic partners to attract more consumers;
    
    continue to develop and upgrade our technologies; and
    
    bring innovative product features to market in a timely manner.
  If we are unable to predict, respond to and influence trends in what the public finds
appealing, our business will be adversely affected.
  New product launches may reduce our earnings or generate losses.
 Blueprint
  15




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Our principal Publishing vendors are consolidating and this may adversely affect our business
and operations.
  
    
    decreased competition, which may lead to greater dependence on certain vendors and increased prices; and
    
    interruptions and delays in services provided by such vendors
 We may be adversely affected by fluctuations in paper and postage costs.
   We may face increased costs for distribution of our magazines to newsstands and bookstores.
  We may be adversely affected by a continued weakening of newsstand sales.
  We may be adversely affected by rebranding our Body + Soul publication.
 Body + Soul Whole
Living wholeliving.com
  16




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Our websites and networks may be vulnerable to unauthorized persons accessing our systems,
which could disrupt our operations and result in the theft of our and our users proprietary or
personal information.
  Martha Stewart controls our Company through her stock ownership, enabling her to elect our
board of directors, and potentially to block matters requiring stockholder approval, including any
potential changes of control.
  Our intellectual property may be infringed upon or others may accuse us of infringing on their
intellectual property, either of which could adversely affect our business and result in costly
litigation.
  A loss of the services of other key personnel could have a material adverse effect on our
business.
  We operate in four highly competitive businesses: Publishing, Broadcasting, Internet, and
Merchandising, each of which subjects us to competitive pressures and other uncertainties.
     17




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Item 1B. Unresolved Staff Comments.
  
 Item 2. Properties.
  Approximate AreaLocation
    
    Use
    
    in Square Feet601 West 26th Street 
New York, NY
    
    Product design facilities, photography studio, Merchandising
and Internet offices, test kitchens, and prop storage
    
    
    203,560Principal executive and administrative offices; publishing
offices; and sales offices226 West 26th Street 
New York, NY
    
    Executive and administrative office for television production
    
    
    22,050221 West 26th Street 
New York, NY
    
    Television production facilities
    
    
    25,800Satellite Sales Offices in MI, IL & CA
    
    Advertising sales offices
    
    
    7,904
 th nd th nd
   
 Item 3. Legal Proceedings
  
 Item 4. Reserved
  18




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PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
 Market for the Common Stock
  Q1
    
    
    Q2
    
    
    Q3
    
    
    Q4
    
    
    Q1
    
    
    Q2
    
    
    Q3
    
    
    Q42008
    
    
    2008
    
    
    2008
    
    
    2008
    
    
    2009
    
    
    2009
    
    
    2009
    
    
    2009High Sales Price
    
    $
    9.43
    
    
    $
    9.49
    
    
    $
    9.99
    
    
    $
    8.70
    
    
    $
    3.71
    
    
    $
    4.08
    
    
    $
    8.84
    
    
    $
    6.38Low Sales Price
    
    $
    5.22
    
    
    $
    7.13
    
    
    $
    5.63
    
    
    $
    2.51
    
    
    $
    1.60
    
    
    $
    2.37
    
    
    $
    2.70
    
    
    $
    4.40
  Dividends
   Recent Sales of Unregistered Securities and Use of Proceeds
  Issuer Purchases of Equity Securities
  Maximum Number (orTotal Number of
    
    Approximate DollarShares (or Units)
    
    Value) of Shares (orTotal Number of
    
    
    
    
    
    
    Purchased as Part of
    
    Units) that May Yet BeShares (or Units)
    
    
    Average Price Paid
    
    
    Publicly Announced
    
    Purchased under thePeriod (1)
    
    Purchased
    
    
    per Share (or Unit)
    
    
    Plans or Programs
    
    Plans or ProgramsOctober 2009
    
    
    44,683
    
    
    $
    5.81
    
    
    Not applicable
    
    Not applicableNovember 2009
    
    
    2,530
    
    
    $
    5.25
    
    
    Not applicable
    
    Not applicableDecember 2009
    
    
    217
    
    
    $
    4.59
    
    
    Not applicable
    
    Not applicableTotal for the quarter ended December 31, 2009
    
    
    47,430
    
    
    $
    5.44
 (1)
    
    Represents shares withheld by, or delivered to us pursuant to provisions in agreements
with recipients of restricted stock granted under our stock incentive plans allowing us to
withhold, or the recipient to deliver to us, the number of shares having the fair value
equal to tax withholding due.  19




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Notwithstanding anything to the contrary set forth in any of our filings under the Securities
Act or the Exchange Act, the following performance graph shall not be deemed to be incorporated by
reference into any such filings.
 PERFORMANCE GRAPH
  
 
 *
    
    The Publishing Index consists of companies that are primarily publishers of periodicals, although
many also conduct other businesses, including owning and operating television stations and cable
networks, and is weighted according to market capitalization of the companies in the index. The
hypothetical investment assumes investment in a portfolio of equity securities that mirror the
composition of the Publishing Index.  20




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Item 6. Selected Financial Data.
  2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005INCOME STATEMENT DATAREVENUESPublishing
    
    $
    128,981
    
    
    $
    163,540
    
    
    $
    183,727
    
    
    $
    156,559
    
    
    $
    125,765Broadcasting
    
    
    46,111
    
    
    
    47,328
    
    
    
    40,263
    
    
    
    46,503
    
    
    
    16,591Internet
    
    
    17,119
    
    
    
    15,576
    
    
    
    19,189
    
    
    
    15,775
    
    
    
    11,258Merchandising
    
    
    52,566
    
    
    
    57,866
    
    
    
    84,711
    
    
    
    69,504
    
    
    
    58,819Total revenues
    
    
    244,777
    
    
    
    284,310
    
    
    
    327,890
    
    
    
    288,341
    
    
    
    212,433Operating (loss) income
    
    
    (11,968
    )
    
    
    (10,857
    )
    
    
    7,714
    
    
    
    (2,833
    )
    
    
    (78,311
    )Income (loss) from continuing operations
    
    
    (14,578
    )
    
    
    (15,665
    )
    
    
    10,289
    
    
    
    (16,250
    )
    
    
    (75,295
    )Loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (745
    )
    
    
    (494
    )Net income (loss)
    
    $
    (14,578
    )
    
    $
    (15,665
    )
    
    $
    10,289
    
    
    $
    (16,995
    )
    
    $
    (75,789
    )PER SHARE DATAEarnings/(loss) per share:Basic and
diluted  (Loss) income from continuing operations
    
    $
    (0.27
    )
    
    $
    (0.29
    )
    
    $
    0.20
    
    
    $
    (0.32
    )
    
    $
    (1.48
    )Basic and diluted  Loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.01
    )
    
    
    (0.01
    )Basic and diluted  Net (loss) income
    
    $
    (0.27
    )
    
    $
    (0.29
    )
    
    $
    0.20
    
    
    $
    (0.33
    )
    
    $
    (1.49
    )Weighted average common shares outstanding:Basic
    
    
    53,880
    
    
    
    53,360
    
    
    
    52,449
    
    
    
    51,312
    
    
    
    50,991Diluted
    
    
    53,880
    
    
    
    53,360
    
    
    
    52,696
    
    
    
    51,312
    
    
    
    50,991Dividends per common share
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.50
    
    
    $
    FINANCIAL POSITIONCash and cash equivalents
    
    $
    25,384
    
    
    $
    50,204
    
    
    $
    30,536
    
    
    $
    28,528
    
    
    $
    20,249Short-term investments
    
    
    13,085
    
    
    
    9,915
    
    
    
    26,745
    
    
    
    35,321
    
    
    
    83,788Total assets
    
    
    229,791
    
    
    
    261,285
    
    
    
    255,267
    
    
    
    228,047
    
    
    
    253,828Long-term obligations
    
    
    13,500
    
    
    
    19,500
    
    
    
    
    
    
    
    
    
    
    
    Shareholders equity
    
    
    143,820
    
    
    
    150,995
    
    
    
    155,529
    
    
    
    130,957
    
    
    
    160,631OTHER FINANCIAL DATACash flow (used in) provided by operating activities
    
    $
    (9,273
    )
    
    $
    39,699
    
    
    $
    8,306
    
    
    $
    (6,495
    )
    
    $
    (34,058
    )Cash flow (used in) provided by investing activities
    
    
    (9,617
    )
    
    
    (38,856
    )
    
    
    (6,606
    )
    
    
    40,125
    
    
    
    (58,300
    )Cash flow (used in) provided by financing activities
    
    
    (5,930
    )
    
    
    18,825
    
    
    
    308
    
    
    
    (25,351
    )
    
    
    7,960
 NOTES TO SELECTED FINANCIAL DATA
 (Loss) / income from continuing operations
 2009
 2008
 2007 The
Martha Stewart Show
 2006 The Martha Stewart Show In re Martha Stewart Living Omnimedia Securities Litigation
 2005 The Martha Stewart Show
  21




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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 EXECUTIVE SUMMARY
    Media Update. Martha Stewart Flowers
 Publishing
  Broadcasting
 The Martha Stewart Show
 Internet
  Merchandising Update.
  22




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RESULTS OF OPERATIONS
 Comparison for the Year Ended December 31, 2009 to the Year Ended December 31, 2008.
 PUBLISHING SEGMENT
 (in thousands)
    
    2009
    
    
    2008
    
    
    VariancePublishing Segment RevenuesAdvertising
    
    $
    74,815
    
    
    $
    94,871
    
    
    $
    (20,056
    )Circulation
    
    
    50,506
    
    
    
    62,634
    
    
    
    (12,128
    )Books
    
    
    2,779
    
    
    
    4,676
    
    
    
    (1,897
    )Other
    
    
    881
    
    
    
    1,359
    
    
    
    (478
    )Total Publishing Segment Revenues
    
    
    128,981
    
    
    
    163,540
    
    
    
    (34,559
    )Publishing Segment Operating Costs and ExpensesProduction, distribution and editorial
    
    
    74,431
    
    
    
    86,018
    
    
    
    11,587Selling and promotion
    
    
    45,520
    
    
    
    55,419
    
    
    
    9,899General and administrative
    
    
    6,566
    
    
    
    5,951
    
    
    
    (615
    )Depreciation and amortization
    
    
    241
    
    
    
    379
    
    
    
    138Impairment charge  goodwill and other asset
    
    
    
    
    
    
    9,349
    
    
    
    9,349Total Publishing Segment Operating Costs and Expenses
    
    
    126,758
    
    
    
    157,116
    
    
    
    30,358Publishing Segment Operating Income
    
    $
    2,223
    
    
    $
    6,424
    
    
    $
    (4,201
    )
 Martha Stewart Living Martha Stewart Weddings Everyday Food Body + Soul Martha Stewart Living Martha Stewart Weddings Everyday Food Body + Soul Martha Stewart Living Everyday Food Body + Soul
 Magazine Publication ScheduleYear ended December 31,
    
    2009
    
    2008Martha Stewart Living
    
    12 Issues
    
    12 IssuesMartha Stewart Weddings(a)
    
    5 Issues
    
    5 IssuesEveryday Food
    
    10 Issues
    
    10 IssuesBody + Soul
    
    10 Issues
    
    10 IssuesSpecial Interest Publications
    
    5 Issues
    
    8 Issues
 (a)
    
    In 2009 and 2008, we published one special Martha Stewart Weddings
issue. Martha Stewart Living Everyday Food Martha
Stewart Living Everyday Food
  23




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##### Table of Contents



BROADCASTING SEGMENT
 (in thousands)
    
    2009
    
    
    2008
    
    
    VarianceBroadcasting Segment RevenuesAdvertising
    
    $
    24,454
    
    
    $
    26,666
    
    
    $
    (2,212
    )Radio
    
    
    7,000
    
    
    
    7,500
    
    
    
    (500
    )Licensing and other
    
    
    14,657
    
    
    
    13,162
    
    
    
    1,495Total Broadcasting Segment Revenues
    
    
    46,111
    
    
    
    47,328
    
    
    
    (1,217
    )Broadcasting Segment Operating Costs and ExpensesProduction, distribution and editorial
    
    
    29,669
    
    
    
    31,291
    
    
    
    1,622Selling and promotion
    
    
    3,028
    
    
    
    3,392
    
    
    
    364General and administrative
    
    
    5,885
    
    
    
    7,287
    
    
    
    1,402Depreciation and amortization
    
    
    1,389
    
    
    
    2,578
    
    
    
    1,189Total Broadcasting Segment Operating Costs and Expenses
    
    
    39,971
    
    
    
    44,548
    
    
    
    4,577Broadcasting Segment Operating Income
    
    $
    6,140
    
    
    $
    2,780
    
    
    $
    3,360
 The Martha Stewart Show Everyday Baking from Everyday Food The Martha Stewart Show
 The Martha Stewart Show
  24




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##### Table of Contents



INTERNET SEGMENT
 (in thousands)
    
    2009
    
    
    2008
    
    
    VarianceInternet Segment RevenuesAdvertising and other
    
    $
    17,119
    
    
    $
    14,472
    
    
    $
    2,647Product
    
    
    
    
    
    
    1,104
    
    
    
    (1,104
    )Total Internet Segment Revenues
    
    
    17,119
    
    
    
    15,576
    
    
    
    1,543Internet Segment Operating Costs and ExpensesProduction, distribution and editorial
    
    
    7,873
    
    
    
    8,984
    
    
    
    1,111Selling and promotion
    
    
    7,835
    
    
    
    6,164
    
    
    
    (1,671
    )General and administrative
    
    
    1,853
    
    
    
    3,487
    
    
    
    1,634Depreciation and amortization
    
    
    1,950
    
    
    
    1,737
    
    
    
    (213
    )Total Internet Segment Operating Costs and Expenses
    
    
    19,511
    
    
    
    20,372
    
    
    
    861Internet Segment Operating Loss
    
    $
    (2,392
    )
    
    $
    (4,796
    )
    
    $
    2,404
 Martha Stewart Flowers
   25




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##### Table of Contents



MERCHANDISING SEGMENT
 (in thousands)
    
    2009
    
    
    2008
    
    
    VarianceMerchandising Segment RevenuesKmart earned royalty
    
    $
    7,793
    
    
    $
    18,772
    
    
    $
    (10,979
    )Kmart minimum guarantee true-up
    
    
    6,707
    
    
    
    4,978
    
    
    
    1,729Recognition of previously deferred royalties
    
    
    10,000
    
    
    
    
    
    
    
    10,000Other
    
    
    28,066
    
    
    
    34,116
    
    
    
    (6,050
    )Total Merchandising Segment Revenues
    
    
    52,566
    
    
    
    57,866
    
    
    
    (5,300
    )Merchandising Segment Operating Costs and ExpensesProduction, distribution and editorial
    
    
    9,549
    
    
    
    10,409
    
    
    
    860Selling and promotion
    
    
    2,950
    
    
    
    6,529
    
    
    
    3,579General and administrative
    
    
    2,922
    
    
    
    7,980
    
    
    
    5,058Depreciation and amortization
    
    
    62
    
    
    
    90
    
    
    
    28Impairment charge  other asset
    
    
    11,432
    
    
    
    0
    
    
    
    (11,432
    )Total Merchandising Segment Operating Costs and Expenses
    
    
    26,915
    
    
    
    25,008
    
    
    
    (1,907
    )Merchandising Segment Operating Income
    
    $
    25,651
    
    
    $
    32,858
    
    
    $
    (7,207
    )
    26




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##### Table of Contents



CORPORATE
 (in thousands)
    
    2009
    
    
    2008
    
    
    VarianceCorporate Operating Costs and ExpensesGeneral and administrative
    
    $
    39,358
    
    
    $
    44,934
    
    
    $
    5,576Depreciation and amortization
    
    
    4,232
    
    
    
    3,189
    
    
    
    (1,043
    )Total Corporate Operating Costs and Expenses
    
    
    43,590
    
    
    
    48,123
    
    
    
    4,533Corporate Operating Loss
    
    $
    (43,590
    )
    
    $
    (48,123
    )
    
    $
    4,533
  OTHER ITEMS
 INTEREST (EXPENSE) / INCOME, NET
 OTHER (LOSS)/INCOME
 LOSS ON EQUITY SECURITIES:
 INCOME TAX EXPENSE
 NET LOSS
  27




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##### Table of Contents



RESULTS OF OPERATIONS
 Comparison for the Year Ended December 31, 2008 to the Year Ended December 31, 2007.
 PUBLISHING SEGMENT
 (in thousands)
    
    2008
    
    
    2007
    
    
    VariancePublishing Segment RevenuesAdvertising
    
    $
    94,871
    
    
    $
    106,691
    
    
    $
    (11,820
    )Circulation
    
    
    62,634
    
    
    
    71,707
    
    
    
    (9,073
    )Books
    
    
    4,676
    
    
    
    3,373
    
    
    
    1,303Other
    
    
    1,359
    
    
    
    1,956
    
    
    
    (597
    )Total Publishing Segment Revenues
    
    
    163,540
    
    
    
    183,727
    
    
    
    (20,187
    )Publishing Segment Operating Costs and ExpensesProduction, distribution and editorial
    
    
    86,018
    
    
    
    93,312
    
    
    
    7,294Selling and promotion
    
    
    55,419
    
    
    
    72,655
    
    
    
    17,236General and administrative
    
    
    5,951
    
    
    
    5,034
    
    
    
    (917
    )Depreciation and amortization
    
    
    379
    
    
    
    1,188
    
    
    
    809Impairment   goodwill and other intangibles
    
    
    9,349
    
    
    
    
    
    
    
    (9,349
    )Total Publishing Segment Operating Costs and Expenses
    
    
    157,116
    
    
    
    172,189
    
    
    
    15,073Publishing Segment Operating Income
    
    $
    6,424
    
    
    $
    11,538
    
    
    $
    (5,114
    )
 Martha Stewart Living Everyday Food Martha Stewart Weddings Blueprint Body + Soul Martha Stewart
Living Everyday Food Blueprint Martha
Stewart Living Body + Soul Everyday Food Body + Soul Body + Soul.
 Magazine Publication ScheduleYear ended December 31,
    
    2008
    
    2007Martha Stewart Living
    
    12 Issues
    
    12 IssuesMartha Stewart Weddings(a)
    
    5 Issues
    
    5 IssuesEveryday Food
    
    10 Issues
    
    10 IssuesBody + Soul(b)
    
    10 Issues
    
    8 IssuesSpecial Interest Publications
    
    8 Issues
    
    9 IssuesBlueprint(c)
    
    N/A
    
    6 Issues
 (a)
    
    In 2008 and 2007, we published one special Martha Stewart Weddingsissue.(b)
    
    Frequency switched to 10 issues a year in 2008(c)
    
    Launched in May 2006 and discontinued after the January/February 2008
issue which was accounted for in the year ended December 31, 2007. Blueprint Body + Soul Blueprint Martha Stewart Living Everyday Food Body + Soul
  28




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##### Table of Contents



BROADCASTING SEGMENT
 (in thousands)
    
    2008
    
    
    2007
    
    
    VarianceBroadcasting Segment RevenuesAdvertising
    
    $
    26,666
    
    
    $
    21,078
    
    
    
    5,588Radio
    
    
    7,500
    
    
    
    7,500
    
    
    
    Licensing and other
    
    
    13,162
    
    
    
    11,685
    
    
    
    1,477Total Broadcasting Segment Revenues
    
    
    47,328
    
    
    
    40,263
    
    
    
    7,065Broadcasting Segment Operating Costs and ExpensesProduction, distribution and editorial
    
    
    31,291
    
    
    
    34,099
    
    
    
    2,808Selling and promotion
    
    
    3,392
    
    
    
    4,026
    
    
    
    634General and administrative
    
    
    7,287
    
    
    
    7,456
    
    
    
    169Depreciation and amortization
    
    
    2,578
    
    
    
    2,201
    
    
    
    (377
    )Total Broadcasting Segment Operating Costs and Expenses
    
    
    44,548
    
    
    
    47,782
    
    
    
    3,234Broadcasting Segment Operating Income / (Loss)
    
    $
    2,780
    
    
    $
    (7,519
    )
    
    $
    10,299
 The Martha Stewart Show Essence of Emeril Emeril Live! The Martha Stewart Show, The Martha Stewart Show Whatever Martha! The Martha Stewart Show
 The Martha Stewart Show, The Martha Stewart Show Whatever Martha! The Martha Stewart Show The Martha Stewart Show
  29




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INTERNET SEGMENT
 (in thousands)
    
    2008
    
    
    2007
    
    
    VarianceInternet Segment RevenuesAdvertising and other
    
    $
    14,472
    
    
    $
    11,779
    
    
    $
    2,693Product
    
    
    1,104
    
    
    
    7,410
    
    
    
    (6,306
    )Total Internet Segment Revenues
    
    
    15,576
    
    
    
    19,189
    
    
    
    (3,613
    )Internet Segment Operating Costs and ExpensesProduction, distribution and editorial
    
    
    8,984
    
    
    
    14,092
    
    
    
    5,108Selling and promotion
    
    
    6,164
    
    
    
    6,023
    
    
    
    (141
    )General and administrative
    
    
    3,487
    
    
    
    3,969
    
    
    
    482Depreciation and amortization
    
    
    1,737
    
    
    
    1,242
    
    
    
    (495
    )Total Internet Segment Operating Costs and Expenses
    
    
    20,372
    
    
    
    25,326
    
    
    
    4,954Internet Segment Operating Loss
    
    $
    (4,796
    )
    
    $
    (6,137
    )
    
    $
    1,341
 Martha Stewart Flowers,
 marthastewart.com
  30




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##### Table of Contents



MERCHANDISING SEGMENT
 (in thousands)
    
    2008
    
    
    2007
    
    
    VarianceMerchandising Segment RevenuesKmart earned royalty
    
    $
    18,772
    
    
    $
    25,190
    
    
    
    (6,418
    )Kmart minimum guarantee true-up
    
    
    4,978
    
    
    
    39,102
    
    
    
    (34,124
    )Other
    
    
    34,116
    
    
    
    20,419
    
    
    
    13,697Total Merchandising Segment Revenues
    
    
    57,866
    
    
    
    84,711
    
    
    
    (26,845
    )Merchandising Segment Operating Costs and ExpensesProduction, distribution and editorial
    
    
    10,409
    
    
    
    13,418
    
    
    
    3,009Selling and promotion
    
    
    6,529
    
    
    
    6,475
    
    
    
    (54
    )General and administrative
    
    
    7,980
    
    
    
    7,214
    
    
    
    (766
    )Depreciation and amortization
    
    
    90
    
    
    
    375
    
    
    
    285Total Merchandising Segment Operating Costs and Expenses
    
    
    25,008
    
    
    
    27,482
    
    
    
    2,474Merchandising Segment Operating Income
    
    $
    32,858
    
    
    $
    57,229
    
    
    $
    (24,371
    )
 Martha Stewart Collection Singer Husqvarna Viking Pfaff
   31




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##### Table of Contents



CORPORATE
 (in thousands)
    
    2008
    
    
    2007
    
    
    VarianceCorporate Operating Costs and ExpensesGeneral and administrative
    
    $
    44,934
    
    
    $
    44,841
    
    
    $
    (93
    )Depreciation and amortization
    
    
    3,189
    
    
    
    2,556
    
    
    
    (633
    )Total Corporate Operating Costs and Expenses
    
    
    48,123
    
    
    
    47,397
    
    
    
    726Corporate Operating Loss
    
    $
    (48,123
    )
    
    $
    (47,397
    )
    
    $
    (726
    )
  OTHER ITEMS
 INTEREST INCOME, NET
 OTHER (EXPENSE) / INCOME In re Martha Stewart Living Omnimedia, Inc. Securities Litigation.
 LOSS ON EQUITY SECURITIES:
 INCOME TAX EXPENSE
 NET LOSS
  32




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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
 Overview
   Sources and Uses of Cash
  Operating Activities
   Investing Activities
   Financing Activities
    33




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##### Table of Contents



Debt
      Financial CovenantTangible Net Worth
    
    At least $40.0 millionFunded Debt to EBITDA (a)
    
    Equal to or less than 2.0Parent Guarantor (the Company) Basic Fixed
Charge Coverage Ratio (b)
    
    Equal to or greater than 2.75Quick Ratio
    
    Equal to or greater than 1.0
 (a)
    
    EBITDA is net income before interest, taxes, depreciation, amortization, non-cash equity
compensation and impairment charges as defined in the loan agreement and subsequent waiver and
amendment.(b)
    
    Basic Fixed Charge Coverage is the ratio of EBITDA for the trailing four quarters to the
sum of interest expense for the trailing four quarters and the current portion of long-term debt at
the covenant testing date.   34




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##### Table of Contents



Cash Requirements
  Payments due by period (in thousands)MoreLess than
    
    
    
    
    
    
    
    
    
    
    thanContractual Obligations
    
    Total
    
    
    1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 years
    
    
    OtherLongTerm Debt Obligations *
    
    $
    13,500
    
    
    $
    
    
    
    $
    12,000
    
    
    $
    1,500
    
    
    $
    
    
    
    $
    Operating Lease Obligations **
    
    $
    68,011
    
    
    
    11,456
    
    
    
    16,892
    
    
    
    14,969
    
    
    
    24,694
    
    
    
    Unrecognized Tax Benefits ***
    
    $
    189
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    189Total
    
    $
    81,700
    
    
    $
    11,456
    
    
    $
    28,892
    
    
    $
    16,469
    
    
    $
    24,694
    
    
    $
    189
 *
    
    Long-term debt obligations exclude interest payments. The interest rate on the outstanding
principal balance is equal to a floating rate of 1-month LIBOR plus 2.85%.**
    
    Operating lease obligations include the lease for our television production facility which
will expire in June 2010 and is currently in the process of being negotiated for renewal. Any
potential future obligations related to television production facilities are not included in this
table as they are not contractual at this time.
Operating lease obligations are shown net of sublease income in this table.
See Note 13, Commitments and Contingencies, for further discussion of operating leases.***
    
    These amounts represent expected payments with interest for uncertain tax positions as of
December 31, 2009. We are not able to reasonably estimate the timing of future cash flows related
to $0.2 million of this liability, and therefore have presented this amount as Other in the table
above. See Note 10, Income Taxes, in the Notes to Consolidated Financial Statements, for further
discussion.  OFF-BALANCE SHEET ARRANGEMENTS
  CRITICAL ACCOUNTING POLICIES AND ESTIMATES
 General
   35




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Revenue Recognition
  Revenue Recognition
      Television Production Costs
   36




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##### Table of Contents



Goodwill and Indefinite-Lived Intangible Assets
  Long-Lived and Definite-Lived Intangible Assets
  Deferred Income Tax Asset Valuation Allowance
  Non-Cash Equity Compensation
  
 Item 7A. Quantitative and Qualitative Disclosure about Market Risk.
  Interest Rates
   37




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##### Table of Contents



Stock Prices
  
 Item 8. Financial Statements and Supplementary Data.
  
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
  
 Item 9A. Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures
   38




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##### Table of Contents



Managements Report on Internal Control Over Financial Reporting
   Evaluation of Changes in Internal Control Over Financial Reporting
   39




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
      .
  
  40




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##### Table of Contents



Item 9B. Other Information.
  
 PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance.
 ELECTION OF DIRECTORS INFORMATION CONCERNING EXECUTIVE OFFICERS AND OUR FOUNDER, MEETINGS AND COMMITTEES OF THE BOARD SECTION
1 6(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
 Item 11. Executive Compensation.
 MEETINGS AND COMMITTEES OF THE BOARD COMPENSATION OF OUTSIDE DIRECTORS, DIRECTOR COMPENSATION TABLE, COMPENSATION
COMMITTEE REPORT, COMPENSATION DISCUSSION AND ANALYSIS, SUMMARY COMPENSATION TABLE, GRANTS OF
PLAN-BASED AWARDS IN 2009, EXECUTIVE COMPENSATION AGREEMENTS, OUTSTANDING EQUITY AWARDS AT
FISCAL YEAR-END 2009, OPTION EXERCISES AND STOCK VESTED DURING 2009, POTENTIAL PAYMENTS
UPON TERMINATION OR CHANGE IN CONTROL
 
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
 Equity Compensation Plan Information
  EQUITY COMPENSATION PLAN INFORMATION
 Number of Securities RemainingNumber of Securities to be Issued
    
    
    Weighted-Exercise Price of
    
    
    Available for Future Issuance Underupon Exercise of Outstanding
    
    
    Outstanding Options,
    
    
    Equity Compensation Plans (ExcludingOptions, Warrants and Rights
    
    
    Warrants and Rights
    
    
    Securities Reflected in Column (a)Plan Category
    
    (a)
    
    
    (b)
    
    
    (c)Equity Compensation plans approved by security holders:
    
    
    7,487,491
    (1)
    
    $
    7.70
    
    
    
    4,579,495
    (2)Equity Compensation plans not approved by security
holders:
    
    
    416,667
    (3)
    
    $
    12.59
    
    
    
    n/aTotal
    
    
    7,904,158
    
    
    
    n/a
    
    
    
    n/a
 (1)
    
    Includes 454,125 performance-based restricted stock units and shares. The weighted
average exercise price reported in column (b) does not take these awards into account.(2)
    
    Represents shares available for grant under the Martha Stewart Living Omnimedia
Omnibus Stock and Option Compensation Plan.(3)
    
    Represents the remainder of a warrant to purchase 833,333 shares issued in
connection with a consulting agreement in August 2006, which was exercised in part in
January 2007. The 416,666 shares became fully vested in July 2007. See Note 9 to our
consolidated financial statements.  41




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##### Table of Contents



SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
 
 Item 13. Certain Relationships and Related Transactions, and Director Independence.
 CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS MEETING AND COMMITTEES OF THE BOARD
 
 Item 14. Principal Accountant Fees and Services.
 INDEPENDENT PUBLIC ACCOUNTANTS
  42




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##### Table of Contents



PART IV
 
 Item 15. Exhibits and Financial Statement Schedules.
  Exhibits:
 ExhibitNumber
    
    
    
    Exhibit Title2.1
    
    
    
    
    Asset Purchase Agreement dated as of February 19, 2008 among Emerils Food of Love Productions,
L.L.C., emerils.com, LLC and Emeril J. Lagasse, III, as the Sellers, and Martha Stewart Living
Omnimedia, Inc. and MSLO Shared IP Sub LLC, as the Buyers (incorporated by reference to Exhibit 99.1
to our Current Report on Form 8-K (file number 001-15395) filed on February 19, 2008).3.1
    
    
    
    
    Martha Stewart Living Omnimedia, Inc.s Certificate of Incorporation (incorporated by reference to
Exhibit 3.1 to our Registration Statement on Form S-1, as amended, File Number 333-84001 (the
Registration Statement)).3.2
    
    
    
    
    Martha Stewart Living Omnimedia, Inc.s By-Laws (incorporated by reference to Exhibit 3.2 to our
Quarterly Report on Form 10-Q (file number 001-15395) for the quarter ended June 30, 2008 (June 2008
10-Q)).4.1
    
    
    
    
    Warrant to purchase shares of Class A Common Stock, dated August 11, 2006 (incorporated by reference
to Exhibit 4.2 to our Quarterly Report on Form 10-Q (file number 001-15395) for the quarter ended
September 30, 2006 (September, 2006 10-Q)).10.1
    
    
    
    
    1999 Stock Incentive Plan (incorporated by reference to the Registration Statement), as amended by
Exhibits 10.1.1, 10.1.2 and 10.1.3.10.1.1
    
    
    
    
    Amendment No. 1 to the 1999 Stock Incentive Plan, dated as of March 9, 2000 (incorporated by reference
to our Annual Report on Form 10-K for the year ended December 31, 1999, File Number 001-15395 (the
1999 10-K)).10.1.2
    
    
    
    
    Amendment No. 2 to the Amended and Restated 1999 Stock Incentive Plan, dated as of May 11, 2000
(incorporated by reference to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2000
(the June 2000 10-Q)).10.1.3
    
    
    
    
    Amendment No. 3 to the Amended and Restated 1999 Stock Incentive Plan (incorporated by reference to
our Current Report on Form 8-K filed on May 17, 2005 (the May 17, 2005 8-K)).10.2
    
    
    
    
    1999 Non-Employee Director Stock and Option Compensation Plan (incorporated by reference to the
Registration Statement) as amended by Exhibit 10.2.1.10.2.1
    
    
    
    
    Amendment No. 1 to the Martha Stewart Living Omnimedia, Inc. Non-Employee Director Stock and Option
Compensation Plan (incorporated by reference to the May 17, 2005 8-K).10.3
    
    
    
    
    Form of Intellectual Property License and Preservation Agreement, dated as of October 22, 1999, by and
between Martha Stewart Living Omnimedia, Inc. and Martha Stewart (incorporated by reference to Exhibit
10.8 to the Registration Statement).10.4
    
    
    
    
    Lease, dated as of September 24, 1992, between Tishman Speyer Silverstein Partnership and Time
Publishing Ventures, Inc., as amended by First Amendment of Lease dated as of September 24, 1994
between 11 West 42 Limited Partnership and Time Publishing Ventures, Inc. (incorporated by reference
to Exhibit 10.10 to the Registration Statement).10.5
    
    
    
    
    Lease, dated as of March 31, 1998, between 11 West 42 Limited Partnership and Martha Stewart Living
Omnimedia LLC (incorporated by reference to Exhibit 10.11 to the Registration Statement).10.6
    
    
    
    
    Lease, dated August 20, 1999, between 601 West Associates LLC and Martha Stewart Living Omnimedia LLC
(incorporated by reference to Exhibit 10.12 to the Registration Statement) as amended by Exhibits
10.6.1 and 10.6.2.10.6.1
    
    
    
    
    First Lease Modification Agreement, dated December 24, 1999, between 601 West Associates LLC and
Martha Stewart Living Omnimedia, Inc. (incorporated by reference to Exhibit 10.12.1 to our Annual
Report on Form 10-K (file number 001-15395) for the year ended December 31, 1999).10.6.2
    
    
    
    
    Sixth Lease Modification Agreement, dated as of June 14, 2007, between 601 West Associates LLC and
Martha Stewart Living Omnimedia, Inc (incorporated by reference to Exhibit 10.1 to our Quarterly
Report on Form 10-Q (file number 001-15395) for the quarter ended March 31, 2008 (March 2008 10-Q)).
  43




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##### Table of Contents



ExhibitNumber
    
    
    
    Exhibit Title10.7
    
    
    
    
    Lease, dated as of October 1, 2000, between Newtown Group Properties Limited Partnership and Martha
Stewart Living Omnimedia, Inc. (incorporated by reference to Exhibit 10.1 our Quarterly Report on Form
10-Q (file number 001-15395) for the quarter ended June 30, 2001 (the June 2001 10-Q)).10.8
    
    
    
    
    License Agreement, dated June 21, 2001 by and between Kmart Corporation and MSO IP Holdings, Inc.
(incorporated by reference to Exhibit 10.3 to the June 2001
10-Q) as amended by Exhibit 10.8.1 and 10.8.2.10.8.1
    
    
    
    
    Amendment, dated as of April 22, 2004 to the License Agreement, by and between MSO IP Holdings, Inc.
and Kmart Corporation, dated June 21, 2001 (incorporated by reference to Exhibit 10.1 to our Quarterly
Report on Form 10-Q (file number 001-15395) for the quarter ended June 30, 2004).10.8.2
    *
    
    
    

Amendment,
dated as of July 7, 2009, to the License Agreement, by and between
MSO IP Holdings, Inc. and Kmart Corporation, dated June 21, 2001, as
amended.10.9
    
    
    
    
    Split-Dollar Life Insurance Agreement, dated February 28, 2001, by and among Martha Stewart Living
Omnimedia, Inc., Martha Stewart and The Martha Stewart Family Limited Partnership (incorporated by
reference to Exhibit 10.17 to our Annual Report on Form 10-K (file number 001-15395) for the year
ended December 31, 2000) as amended by Exhibits 10.9.1 and 10.9.2 and terminated by Exhibit 10.9.3.10.9.1
    
    
    
    
    Amendment, dated January 28, 2002, to Split-Dollar Life Insurance Agreement, dated February 28, 2001,
by and between Martha Stewart Living Omnimedia, Inc., Martha Stewart and The Martha Stewart Family
Limited Partnership (incorporated by reference to Exhibit 10.14.2 to our Annual Report on Form 10-K
(file number 001-15395) for the year ended December 31, 2001).10.9.2
    
    
    
    
    Amendment, dated as of January 1, 2003, to Split-Dollar Life Insurance Agreement, dated February 28,
2001, as amended, by and among Martha Stewart Living Omnimedia, Inc., Martha Stewart and The Martha
Stewart Family Limited Partnership (incorporated by reference to Exhibit 10.14.3 to our Annual Report
on Form 10-K (file number 001-15395) for the year ended December 31, 2002).10.9.3
    *
    
    
    

Agreement,
dated November 9, 2009, terminating the Split-Dollar Life Insurance Agreement dated February
28, 2001 by and among Martha Stewart Living Omnimedia, Inc., Martha Stewart and the Martha Stewart
Family Limited Partnership, as amended.10.10
    
    
    
    

Amended
and Restated Employment Agreement, dated as of April 1, 2009, between
Martha Stewart Living Omnimedia, Inc. and Martha Stewart (incorporated
by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q (file
number 001-15395) for the Quarter ended March 31, 2009 (March 2009
10-Q).10.11
    
    
    
    

Intangible
Asset License Agreement, dated as of June 13, 2008, between Martha Stewart Living Omnimedia,
Inc. and MS Real Estate Management Company (incorporated by reference to Exhibit 10.9 to our June 2008
10-Q), as amended by Exhibits 10.11.1 and 10.11.2.10.11.1
    *
    
    
    

First
Amendment, dated as of December, 2008, to the Intangible Asset License Agreement between MS Real
Estate Management Company and Martha Stewart Living Omnimedia, Inc. dated as of June 13, 2008.10.11.2
    *
    
    
    

Second
Amendment, dated as of February 8, 2010, to the Intangible Asset License Agreement between MS
Real Estate Management Company and Martha Stewart Living Omnimedia,
Inc. dated as of June 13, 2008, as
amended.10.12
    
    
    
    

Employment
Agreement, dated as of March 24, 2009, between Martha Stewart Living Omnimedia, Inc. and
Kelli Turner (incorporated by reference to Exhibit 10.1 to our
March 2009 10-Q).10.13
    
    
    
    
    2005 Executive Severance Pay Plan (incorporated by reference to Exhibit 10.1 to our Current Report on
Form 8-K (file number 001-15395) filed on January 6, 2005).10.14
    
    
    
    
    Form of Restricted Stock Award Agreement for use under the Martha Stewart Living Omnimedia, Inc.
Amended and Restated 1999 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to our
Current Report on Form 8-K (file number 001-15395) filed on January 14, 2005).10.15
    
    
    
    
    Registration Rights Agreement between Charles A. Koppelman and Martha Stewart Living Omnimedia, Inc.
dated January 24, 2005 (incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K
(file number 001-15395) filed on October 21, 2005).10.16
    
    
    
    

Separation
Agreement, dated as of April 20, 2009, between Martha Stewart Living Omnimedia, Inc. and
Wenda Harris Millard (incorporated by reference to Exhibit 10.3 to our March 2009 10-Q).10.17
    
    
    
    

Warrant Registration Rights Agreement, dated as of August 11, 2006, between Martha Stewart Living
Omnimedia, Inc. and Mark Burnett (incorporated by reference to Exhibit 10.3 to our September, 2006
10-Q).10.18
    
    
    
    
    Form of Restricted Stock Unit Award Agreement under the Amended and Restated 1999 Stock Incentive Plan
(incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K (file number 001-15395)
filed on February 27, 2007).10.19
    
    
    
    
    2008 Executive Severance Pay Plan (incorporated by reference to Exhibit 10.4 to our Quarterly Report
on Form 10-Q (file number 001-15395) for the quarter ended September 30, 2007 (September 2007
10-Q)).
  44




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##### Table of Contents



ExhibitNumber
    
    
    
    Exhibit Title10.20
    
    
    
    

Publicity
Rights Agreement, dated as of April 2, 2008, by and among Martha Stewart Living Omnimedia,
Inc., MSLO Shared IP Sub LLC and Emeril J. Lagasse, III (incorporated by reference to Exhibit 10.4 to
our March 2008 10-Q).10.21
    
    
    
    

Amended
and Restated Loan Agreement, dated as of August 7, 2009, by and among Bank of America, N.A.,
MSLO Emeril Acquisition Sub LLC and Martha Stewart Living Omnimedia, Inc. (incorporated by reference
to Exhibit 10.1 to our Quarterly Report on Form 10-Q (file number 001-15395) for the quarter ended
September 30, 2009 (September 2009 10-Q)), as
amended by Exhibit 10.22.10.22
    *
    
    
    

Waiver
and Amendment to Loan Documents, dated as of December 18, 2009, to Amended and Restated Loan
Agreement dated as of August 7, 2009 among Bank of America, N.A., MSLO Emeril Acquisition Sub LLC and
Martha Stewart Living Omnimedia, Inc.10.23
    
    
    
    

Security
Agreement, dated as of July 31, 2008, among Martha Stewart Living Omnimedia, Inc., MSLO Emeril
Acquisition Sub LLC, and Bank of America, N.A. (incorporated by reference to Exhibit 10.1 to our
Quarterly Report on Form 10-Q (file number 001-15395) for the quarter ended September 30, 2008
(September 2008 10-Q)) as amended by Exhibits 10.23.1, 10.23.2, and 10.22.10.23.1
    
    
    
    

Waiver
and Omnibus Amendment No. 1, dated as of June 18, 2009, to Loan Agreement dated as of April 4,
2008 by and among Bank of America, N.A., MSLO Emeril Acquisition Sub LLC and Martha Stewart Living
Omnimedia, Inc. (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q (file
number 001-15395) for the quarter ended June 30, 2009).10.23.2
    
    
    
    

Amendment
No. 2, dated as of August 7, 2009, to Security Agreement dated as of July 31, 2008 among
Martha Stewart Living Omnimedia, Inc., Emeril Acquisition Sub LLC and Bank of America, (incorporated
by reference to Exhibit 10.2 to our September 2009 10-Q).10.24
    
    
    
    
    Continuing and Unconditional Guaranty dated as of April 4, 2008 executed by Martha Stewart Living
Omnimedia, Inc., MSO IP Holdings, Inc., Martha Stewart, Inc., Body and Soul Omnimedia, Inc., MSLO
Productions, Inc., MSLO Productions  Home, Inc., MSLO Productions  EDF, Inc. and Flour
Productions, Inc. (incorporated by reference to Exhibit 10.8 to our March 2008 10-Q), as reaffirmed by
Exhibit 10.24.1.10.24.1
    
    
    
    

Reaffirmation
of Guaranty, dated as of August 7, 2009, executed by Martha Stewart Living Omnimedia,
Inc., MSO IP Holdings, Inc., Martha Stewart, Inc., Body and Soul Omnimedia, Inc., MSLO Productions,
Inc. MSLO Productions Home, Inc. MSLO Productions  EDF, Inc and Flour Productions, Inc.
(incorporated by reference to Exhibit 10.3 to our September 2009 10-Q).10.25
    
    
    
    

Registration
Rights Agreement, dated as of April 2, 2008, by and among Martha Stewart Living Omnimedia,
Inc., Emerils Food of Love Productions, L.L.C., emerils.com, LLC and Emeril J. Lagasse, III
(incorporated by reference to Exhibit 10.9 to our March 2008 10-Q).10.26
    *
    
    
    
    Director Compensation Program.10.27
    
    
    
    
    Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan (incorporated by
reference to Exhibit 99.1 to our Current Report on Form 8-K (file number 001-15395) filed on May 20,
2008 (May 20, 2008 8-K)).10.28
    
    
    
    
    Form of Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan Stock Option
Agreement and forms of related Notices (incorporated by reference to Exhibit 99.2 to our May 20, 2008
8-K).10.29
    
    
    
    
    Form of Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan Restricted
Stock Unit Agreement (incorporated by reference to Exhibit 99.3 to our May 20, 2008 8-K).10.30
    
    
    
    
    Form of Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan Restricted
Stock Grant Agreement (incorporated by reference to Exhibit 99.4 to our May 20, 2008 8-K).10.31
    
    
    
    
    Form of Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan Stock
Appreciation Right Agreement and form of related Notice (incorporated by reference to Exhibit 99.5 to
our May 20, 2008 8-K).10.32
    
    
    
    
    Form of Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan Stock Grant
Agreement and form of related Acknowledgement (incorporated by reference to Exhibit 99.6 to our May
20, 2008 8-K).10.33
    
    
    
    
    Form of Performance-Based Restricted Stock Unit Agreement pursuant to the Martha Stewart Living
Omnimedia, Inc. Omnibus Stock and Option Compensation Plan (incorporated by reference to Exhibit 10.1
to our Current Report on Form 8-K (file number 001-15395) filed on February 12, 2009).10.34
    
    
    
    

Employment
Agreement, dated as of September 17, 2008, between Martha Stewart Living Omnimedia, Inc. and
Charles A. Koppelman (incorporated by reference to Exhibit 10.2 to our September 2008
10-Q).
  45




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##### Table of Contents



ExhibitNumber
    
    
    
    Exhibit Title10.35
    
    
    
    

Employment
Agreement, dated as of September 17, 2008, between Martha Stewart Living Omnimedia, Inc. and
Wenda Harris Millard (incorporated by reference to Exhibit 10.3 to our September 2008 10-Q).10.36
    
    
    
    

Employment
Agreement, dated as of September 17, 2008, between Martha Stewart Living Omnimedia, Inc. and
Robin Marino (incorporated by reference to Exhibit 10.4 to our September 2008 10-Q).10.37
    
    
    
    
    Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan Restricted Stock
Grant Agreement dated October 1, 2008 between Martha Stewart Living Omnimedia, Inc. and Charles
Koppelman (incorporated by reference to Exhibit 10.5 to our September 2008 10-Q).10.38
    
    
    
    
    Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan Stock Option Grant
Agreement and form of related Notice dated October 1, 2008 between Martha Stewart Living Omnimedia,
Inc. and Charles Koppelman (incorporated by reference to Exhibit 10.6 to our September 2008 10-Q).10.39
    
    
    
    
    Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan Restricted Stock
Grant Agreement dated October 1, 2008 between Martha Stewart Living Omnimedia, Inc. and Wenda Harris
Millard (incorporated by reference to Exhibit 10.7 to our September 2008 10-Q).10.40
    
    
    
    
    Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan Stock Option Grant
Agreement and form of related Notice dated October 1, 2008 between Martha Stewart Living Omnimedia,
Inc. and Wenda Harris Millard (incorporated by reference to Exhibit 10.8 to our September 2008 10-Q).10.41
    
    
    
    
    Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan Restricted Stock
Grant Agreement dated October 1, 2008 between Martha Stewart Living Omnimedia, Inc. and Robin Marino
(incorporated by reference to Exhibit 10.9 to our September 2008 10-Q).10.42
    
    
    
    
    Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan Stock Option Grant
Agreement and form of related Notice dated October 1, 2008 between Martha Stewart Living Omnimedia,
Inc. and Robin Marino (incorporated by reference to Exhibit 10.10 to our September 2008 10-Q).10.43
    
    
    
    
    Martha Stewart Living Omnimedia, Inc. Director Deferral Plan (incorporated by reference to Exhibit
10.46 to our Annual Report on Form 10-K (file number 001-15395) for the year ended December 31, 2008
(the 2008 10-K)).10.44
    
    
    
    
    Martha Stewart Living Omnimedia, Inc. Non-Employee Director Stock and Option Compensation Plan
Deferral Election Form dated July 1, 2004 and Clarification dated December 23, 2008 between Martha
Stewart Living Omnimedia, Inc. and Michael Goldstein (incorporated by reference to Exhibit 10.47 to
the 2008 Form 10-K).10.45
    
    
    
    
    Martha Stewart Living Omnimedia, Inc. Annual Incentive Plan (incorporated by reference to the
Companys proxy statement filed in respect of its 2005 annual meeting of shareholders, dated as of
April 7, 2005).21
    *
    
    
    
    List of Subsidiaries.23.1
    *
    
    
    
    Consent of Independent Registered Public Accounting Firm.31.1
    *
    
    
    
    Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    *
    
    
    
    Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32
    *
    
    
    
    Certification of Principal Executive Officer and Chief Financial Officer Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
 
 
    
    indicates management contracts and compensatory plans*
    
    indicates filed herewith**
    
    Schedules and exhibits to this Agreement have been omitted. The
Company agrees to furnish a supplemental copy of any omitted schedule
or exhibit to the Securities and Exchange Commission upon request.  46




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##### Table of Contents



MARTHA STEWART LIVING OMNIMEDIA, INC.By:
    /s/  Charles KoppelmanName:
    Charles KoppelmanTitle:
    Principal Executive Officer  Signature
    
    Title/s/ Charles Koppelman
    
    Principal Executive Officer & Executive Chairman of the BoardCharles Koppelman/s/ Kelli Turner
    
    Principal Financial and Accounting OfficerKelli Turner/s/ Charlotte Beers
    
    DirectorCharlotte Beers/s/ Michael Goldstein
    
    DirectorMichael Goldstein/s/ Arlen Kantarian
    
    DirectorArlen Kantarian/s/ William Roskin
    
    DirectorWilliam Roskin/s/ Todd Slotkin
    
    DirectorTodd Slotkin/s/ Frederic Fekkai
    
    DirectorFrederic Fekkai
   47




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##### Table of Contents



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS,
FINANCIAL STATEMENT SCHEDULES AND OTHER
FINANCIAL INFORMATION
 Consolidated Financial Statements:Report of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Statements of Operations for the years ended December 31, 2009, 2008 and 2007
    
    
    F-3Consolidated Balance Sheets at December 31, 2009 and 2008
    
    
    F-4Consolidated Statements of Shareholders Equity and Comprehensive Loss for the
years ended December 31, 2009, 2008, and 2007
    
    
    F-5Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008, and 2007
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7Financial Statement Schedule II 
Valuation and Qualifying Accounts for the years ended December 31, 2009, 2008 and 2007
    
    
    F-28
   F-1




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
      
  F-2




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##### Table of Contents



MARTHA STEWART LIVING OMNIMEDIA, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2009, 2008 and 2007
(in thousands except share and per share data)
 2009
    
    
    2008
    
    
    2007REVENUESPublishing
    
    $
    128,981
    
    
    $
    163,540
    
    
    $
    183,727Broadcasting
    
    
    46,111
    
    
    
    47,328
    
    
    
    40,263Internet
    
    
    17,119
    
    
    
    15,576
    
    
    
    19,189Merchandising
    
    
    52,566
    
    
    
    57,866
    
    
    
    84,711Total revenues
    
    
    244,777
    
    
    
    284,310
    
    
    
    327,890OPERATING COSTS AND EXPENSESProduction, distribution and editorial
    
    
    121,522
    
    
    
    136,709
    
    
    
    154,921Selling and promotion
    
    
    59,333
    
    
    
    71,504
    
    
    
    89,179General and administrative
    
    
    56,584
    
    
    
    69,632
    
    
    
    68,514Depreciation and amortization
    
    
    7,874
    
    
    
    7,973
    
    
    
    7,562Impairment charge  goodwill
    
    
    
    
    
    
    8,849
    
    
    
    Impairment
charge  other asset
    
    
    11,432
    
    
    
    500
    
    
    
    Total operating costs and expenses
    
    
    256,745
    
    
    
    295,167
    
    
    
    320,176OPERATING (LOSS) / INCOME
    
    
    (11,968
    )
    
    
    (10,857
    )
    
    
    7,714OTHER (EXPENSE)/INCOMEInterest (expense)/income, net
    
    
    (101
    )
    
    
    490
    
    
    
    2,771Other (loss)/income
    
    
    (236
    )
    
    
    (763
    )
    
    
    432Loss on equity securities
    
    
    (547
    )
    
    
    (2,221
    )
    
    
    Total other (expense) / income
    
    
    (884
    )
    
    
    (2,494
    )
    
    
    3,203(LOSS)/INCOME BEFORE INCOME TAXES
    
    
    (12,852
    )
    
    
    (13,351
    )
    
    
    10,917Income tax provision
    
    
    (1,726
    )
    
    
    (2,314
    )
    
    
    (628
    )NET (LOSS) / INCOME
    
    $
    (14,578
    )
    
    $
    (15,665
    )
    
    $
    10,289(LOSS) / INCOME PER SHAREBasic and diluted
    
    $
    (0.27
    )
    
    $
    (0.29
    )
    
    $
    0.20WEIGHTED AVERAGE COMMON SHARES OUTSTANDINGBasic
    
    
    53,880
    
    
    
    53,360
    
    
    
    52,449Diluted
    
    
    53,880
    
    
    
    53,360
    
    
    
    52,696
 The accompanying notes are an integral part of these consolidated financial statements.
  F-3




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##### Table of Contents



MARTHA STEWART LIVING OMNIMEDIA, INC.
 
 CONSOLIDATED BALANCE SHEETS
December 31, 2009 and 2008
(in thousands except share and per share data)
 2009
    
    
    2008ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    25,384
    
    
    $
    50,204Short-term investments
    
    
    13,085
    
    
    
    9,915Accounts receivable, net
    
    
    56,364
    
    
    
    52,500Inventory
    
    
    5,166
    
    
    
    6,053Deferred television production costs
    
    
    3,788
    
    
    
    4,076Other current assets
    
    
    5,709
    
    
    
    3,752Total current assets
    
    
    109,496
    
    
    
    126,500PROPERTY, PLANT AND EQUIPMENT,net
    
    
    17,268
    
    
    
    14,422GOODWILL,net
    
    
    45,107
    
    
    
    45,107OTHER INTANGIBLE ASSETS,net
    
    
    47,070
    
    
    
    48,205OTHER NONCURRENT ASSETS,net
    
    
    10,850
    
    
    
    27,051Total assets
    
    $
    229,791
    
    
    $
    261,285LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIESAccounts payable and accrued liabilities
    
    $
    26,752
    
    
    $
    28,019Accrued payroll and related costs
    
    
    7,495
    
    
    
    7,525Current portion of deferred subscription revenue
    
    
    18,587
    
    
    
    22,597Current portion of other deferred revenue
    
    
    4,716
    
    
    
    7,582Total current liabilities
    
    
    57,550
    
    
    
    65,723DEFERRED SUBSCRIPTION REVENUE
    
    
    5,672
    
    
    
    6,874OTHER DEFERRED REVENUE
    
    
    2,759
    
    
    
    13,334LOAN PAYABLE
    
    
    13,500
    
    
    
    19,500DEFERRED INCOME TAX LIABILITY
    
    
    3,200
    
    
    
    1,854OTHER NONCURRENT LIABILITIES
    
    
    3,290
    
    
    
    3,005Total liabilities
    
    
    85,971
    
    
    
    110,290COMMITMENTS AND CONTINGENCIESSHAREHOLDERS EQUITYClass A Common Stock, $.01 par value, 350,000 shares authorized; 28,313 and
28,204 shares outstanding in 2009 and 2008, respectively
    
    
    283
    
    
    
    282Class B Common Stock, $.01 par value, 150,000 shares authorized; 26,690 shares
outstanding in 2009 and 2008
    
    
    267
    
    
    
    267Capital in excess of par value
    
    
    290,387
    
    
    
    283,248Accumulated deficit
    
    
    (146,605
    )
    
    
    (132,027
    )Accumulated other comprehensive income
    
    
    263
    
    
    
    144,595
    
    
    
    151,770Less Class A treasury stock  59 shares at cost
    
    
    (775
    )
    
    
    (775
    )Total shareholders equity
    
    
    143,820
    
    
    
    150,995Total liabilities and shareholders equity
    
    $
    229,791
    
    
    $
    261,285
 The accompanying notes are an integral part of these consolidated financial statements.
  F-4




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##### Table of Contents



MARTHA STEWART LIVING OMNIMEDIA, INC.
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND COMPREHENSIVE LOSS
For the Years Ended December 31, 2009, 2008 and 2007  (in thousands)
 AccumulatedClass A
    
    
    Class B
    
    
    Capital in
    
    
    
    
    
    
    Other
    
    
    Class ACommon Stock
    
    
    Common Stock
    
    
    excess of
    
    
    Accumulated
    
    
    Comprehensive
    
    
    Treasury StockShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    par value
    
    
    Deficit
    
    
    Income/(Loss)
    
    
    Shares
    
    
    Amount
    
    
    TotalBalance at January 1,2007
    
    
    26,109
    
    
    $
    261
    
    
    
    26,791
    
    
    $
    268
    
    
    $
    257,014
    
    
    $
    (125,811
    )
    
    $
    
    
    
    
    (59
    )
    
    $
    (775
    )
    
    $
    130,957Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,289
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,289Cumulative effect of adoption of ASC 740
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (840
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (840
    )Shares returned on net treasury basis
    
    
    
    
    
    
    
    
    
    
    (69
    )
    
    
    (1
    )
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of shares in conjunction with stock options exercises
    
    
    91
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    307
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    308Issuance of shares of stock and restricted stock, net of
cancellations and tax withholdings
    
    
    384
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    (3,434
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,430
    )Issuance of shares in conjunction with warrant exercises
    
    
    154
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Equity charge associated with common stock warrant
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,530
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,530Non-cash equity compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,714
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,714Balance at December 31, 2007
    
    
    26,738
    
    
    
    267
    
    
    
    26,722
    
    
    
    267
    
    
    
    272,132
    
    
    
    (116,362
    )
    
    
    
    
    
    
    (59
    )
    
    
    (775
    )
    
    
    155,529Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,665
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,665
    )Other comprehensive loss:Unrealized loss on investment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,129
    )
    
    
    
    
    
    
    
    
    
    
    (1,129
    )Realized loss on investment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,129
    
    
    
    
    
    
    
    
    
    
    
    1,129Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,665
    )Shares returned on a net treasury basis
    
    
    
    
    
    
    
    
    
    
    (32
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of shares in conjunction with stock options exercises
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44Issuance of shares of stock and restricted stock, net of
cancellations and tax withholdings
    
    
    1,460
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    3,113
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,128Non-cash equity compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,959
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,959Balance at December 31, 2008
    
    
    28,204
    
    
    
    282
    
    
    
    26,690
    
    
    
    267
    
    
    
    283,248
    
    
    
    (132,027
    )
    
    
    
    
    
    
    (59
    )
    
    
    (775
    )
    
    
    150,995Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,578
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,578
    )Other comprehensive income:Unrealized gain on investment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    263
    
    
    
    
    
    
    
    
    
    
    
    263Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,315
    )Issuance of shares in conjunction with stock options exercises
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    70
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    70Issuance of shares of stock and restricted stock, net of
cancellations and tax withholdings
    
    
    99
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    (558
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (557
    )Non-cash equity compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,627
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,627Balance at December 31, 2009
    
    
    28,313
    
    
    $
    283
    
    
    
    26,690
    
    
    $
    267
    
    
    $
    290,387
    
    
    $
    (146,605
    )
    
    $
    263
    
    
    
    (59
    )
    
    $
    (775
    )
    
    $
    143,820
 The accompanying notes are an integral part of these consolidated financial statements.
  F-5




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##### Table of Contents



MARTHA STEWART LIVING OMNIMEDIA, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2009, 2008 and 2007
 (in thousands)
 2009
    
    
    2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIESNet (loss) / income
    
    $
    (14,578
    )
    
    $
    (15,665
    )
    
    $
    10,289Adjustments to reconcile net (loss) / income to net
cash (used in)/provided by operating activities:Non-cash revenue
    
    
    (13,446
    )
    
    
    (2,502
    )
    
    
    Depreciation and amortization
    
    
    7,874
    
    
    
    7,973
    
    
    
    7,562Amortization of deferred television production costs
    
    
    20,651
    
    
    
    21,478
    
    
    
    21,029Impairment charge
    
    
    11,432
    
    
    
    9,349
    
    
    
    Non-cash equity compensation
    
    
    7,947
    
    
    
    8,526
    
    
    
    19,118Deferred income tax expense
    
    
    1,347
    
    
    
    1,854
    
    
    
    Loss on equity securities
    
    
    547
    
    
    
    2,221
    
    
    
    Other non-cash charges, net
    
    
    760
    
    
    
    1,578
    
    
    
    Changes in operating assets and liabilities
    
    
    (31,807
    )
    
    
    4,887
    
    
    
    (49,692
    )Net cash (used in) /provided by operating activities
    
    
    (9,273
    )
    
    
    39,699
    
    
    
    8,306CASH FLOWS FROM INVESTING ACTIVITIESAcquisition of business
    
    
    
    
    
    
    (46,310
    )
    
    
    Investment in other non-current assets
    
    
    (828
    )
    
    
    (6,512
    )
    
    
    (10,150
    )Capital expenditures
    
    
    (8,609
    )
    
    
    (2,864
    )
    
    
    (5,032
    )Purchases of short-term investments
    
    
    (25,010
    )
    
    
    (9,915
    )
    
    
    (186,210
    )Sales of short-term investments
    
    
    24,830
    
    
    
    26,745
    
    
    
    194,786Net cash used in investing activities
    
    
    (9,617
    )
    
    
    (38,856
    )
    
    
    (6,606
    )CASH FLOWS FROM FINANCING ACTIVITIESDebt issuance costs
    
    
    
    
    
    
    (719
    )
    
    
    Proceeds from long-term debt
    
    
    
    
    
    
    30,000
    
    
    
    Repayment of long-term debt
    
    
    (6,000
    )
    
    
    (10,500
    )
    
    
    Proceeds from exercise of stock options
    
    
    70
    
    
    
    44
    
    
    
    308Net cash (used in)/provided by financing activities
    
    
    (5,930
    )
    
    
    18,825
    
    
    
    308Net (decrease)/increase in cash
    
    
    (24,820
    )
    
    
    19,668
    
    
    
    2,008CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
    
    
    50,204
    
    
    
    30,536
    
    
    
    28,528CASH AND CASH EQUIVALENTS, END OF YEAR
    
    $
    25,384
    
    
    $
    50,204
    
    
    $
    30,536SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:Acquisition of business financed by stock issuance
    
    
    
    
    
    $
    5,000
 The accompanying notes are an integral part of these consolidated financial statements.
  F-6




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (in millions except share data and where noted)
 1. THE COMPANY
 marthastewart.com .
 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Recent accounting standards
  Subsequent Events
 Business Combinations Consolidation
 Fair Value Measurements and Disclosures
  F-7




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##### Table of Contents



Principles of Consolidation
  Acquisitions
  Investment in equity securities
     Cash and Cash Equivalents
   F-8




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##### Table of Contents



Short-term Investments
  Revenue Recognition
  Revenue Recognition
     The Martha Stewart Show
    F-9




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##### Table of Contents



Inventories
  Television Production Costs
  Property, Plant and Equipment
   Studio sets
    
    2 yearsFurniture, fixtures and equipment
    
    3  5 yearsComputer hardware and software
    
    3  5 yearsLeasehold improvements
    
    life of lease
 Goodwill and Intangible Assets
 Goodwill
  (In thousands)Publishing
    
    $
    44,257Merchandising
    
    
    850Total
    
    $
    45,107
 Goodwill (and Indefinite-Lived Intangible Assets)
 Body +
Soul $ Body + Soul Body + Soul
  F-10




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##### Table of Contents



Intangible assets
  Balance at
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance at
    
    
    
    
    
    
    Balance atDecember 31,
    
    
    Acquisition
    
    
    Amortization
    
    
    Impairment
    
    
    December 31,
    
    
    Amortization
    
    
    December 31,(In thousands)
    
    2007
    
    
    of business
    
    
    expense
    
    
    Charge
    
    
    2008
    
    
    expense
    
    
    2009Trademarks
    
    $
    500
    
    
    $
    45,200
    
    
    $
    
    
    
    $
    (500
    )
    
    $
    45,200
    
    
    $
    
    
    
    $
    45,200Other intangibles
    
    
    900
    
    
    
    5,260
    
    
    
    
    
    
    
    
    
    
    
    6,160
    
    
    
    
    
    
    
    6,160Accumulated
amortization 
other intangibles
    
    
    (900
    )
    
    
    
    
    
    
    (2,255
    )
    
    
    
    
    
    
    (3,155
    )
    
    
    (1,135
    )
    
    
    (4,290
    )Total
    
    $
    500
    
    
    $
    50,460
    
    
    $
    (2,255
    )
    
    $
    (500
    )
    
    $
    48,205
    
    
    $
    (1,135
    )
    
    $
    47,070
  Impairment or Disposal of Long-lived
Assets.
 Body + Soul
 Investment in Other Non-Current Assets
   Derivatives and Hedging,
  F-11




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##### Table of Contents



Martha Stewart Crafts
   Advertising Costs
  Earnings Per Share
   (in thousands)
    
    SharesWeighted average common shares outstanding for basic earnings
per share
    
    
    52,449Effect of stock options and other dilutive securities
    
    
    247Adjusted weighted average common shares outstanding for
diluted earnings per share
    
    
    52,696
 Use of Estimates
   F-12




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##### Table of Contents



Equity Compensation
  Other
  3. CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
  (in thousands)
    
    2009
    
    
    2008Cash
    
    $
    25,052
    
    
    $
    22,790Money market funds
    
    
    332
    
    
    
    27,414Total cash and cash equivalents
    
    $
    25,384
    
    
    $
    50,204
  (in thousands)
    
    2009
    
    
    2008Four month certificate of deposit(1)
    
    $
    10,948
    
    
    $
    Available-for-sale equity securities(2)
    
    
    2,137
    
    
    
    U.S. government and agency securities (1)
    
    
    
    
    
    
    9,915Total short-term investments
    
    $
    13,085
    
    
    $
    9,915
 (1)
    
    These investments are recorded at cost, which approximates fair market value; therefore the
Company has no unrealized gains or losses from those investments. Income generated from these
investments is recorded as interest income.(2)
    
    These investments are recorded at market value; therefore the Company has recognized $0.3
million in unrealized gains through other comprehensive income. No other income has been
recorded related to these investments. 4. ACCOUNTS RECEIVABLE, NET
  (in thousands)
    
    2009
    
    
    2008Advertising
    
    $
    38,735
    
    
    $
    38,656Licensing
    
    
    17,498
    
    
    
    13,390Other
    
    
    4,339
    
    
    
    3,82560,572
    
    
    
    55,871Less: reserve for credits and uncollectible accounts
    
    
    4,208
    
    
    
    3,371$
    56,364
    
    
    $
    52,500
  5. INVENTORIES
   F-13




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##### Table of Contents



6. PROPERTY, PLANT AND EQUIPMENT, NET
  (in thousands)
    
    2009
    
    
    2008Studios and equipment
    
    $
    4,202
    
    
    $
    4,202Furniture, fixtures and equipment
    
    
    10,207
    
    
    
    10,845Computer hardware and software
    
    
    28,187
    
    
    
    27,090Leasehold improvements
    
    
    35,612
    
    
    
    28,672Total Property, Plant and Equipment
    
    
    78,208
    
    
    
    70,809Less: accumulated depreciation and amortization
    
    
    60,940
    
    
    
    56,387Net Property, Plant and Equipment
    
    $
    17,268
    
    
    $
    14,422
  7. CREDIT FACILITIES
      Financial CovenantTangible Net Worth
    
    At least $40.0 millionFunded Debt to EBITDA (a)
    
    Equal to or less than 2.0Parent Guarantor (the Company) Basic Fixed
Charge Coverage Ratio (b)
    
    Equal to or greater than 2.75Quick Ratio
    
    Equal to or greater than 1.0
 (a)
    
    EBITDA is net income before interest, taxes, depreciation, amortization, non-cash equity
compensation and impairment charges as defined in the loan agreement and subsequent waiver and
amendment.(b)
    
    Basic Fixed Charge Coverage is the ratio of EBITDA for the trailing four quarters to the
sum of interest expense for the trailing four quarters and the current portion of long-term debt at
the covenant testing date.  F-14




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##### Table of Contents



8. SHAREHOLDERS EQUITY
  9. EMPLOYEE AND NON-EMPLOYEE BENEFIT AND COMPENSATION PLANS
 Retirement Plans
   Stock Incentive Plans
   F-15




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##### Table of Contents



Share-Based Payments
  Black-Scholes Assumptions
  Stock Options
   F-16




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##### Table of Contents



,
   2009
    
    2008
    
    2007Risk-free interest rates
    
    0.9%  2.33%
    
    1.2%  2.5%
    
    3.6%  4.9%Dividend yields
    
    Zero
    
    Zero
    
    ZeroExpected volatility
    
    45.1%  64.3%
    
    45.1%  50.3%
    
    33.97%  70.25%Expected option life
    
    2.5   3.7 years
    
    2.5   3.7 years
    
    2.5  6.0 yearsAverage fair market value per option granted
    
    $0.71  $3.29
    
    $1.69  $3.27
    
    $4.37  $11.60
 Note:
    
    This table represents a blend of assumptions including the Companys 2006 updated
volatility.  2008
    
    2007Risk-free interest rates
    
    3.3%  3.7%
    
    3.5%  5.1%Dividend yields
    
    Zero
    
    ZeroExpected volatility
    
    45.5%  47.8%
    
    32.9%  41.5%Expected option life
    
    7.1   7.5 years
    
    4.6   8.4 yearsAverage fair market value per option granted
    
    $2.00  $2.55
    
    $2.89  $13.32
 Note:
    
    This table represents a blend of assumptions including the Companys 2006 updated
volatility. See Black-Scholes Assumptionsabove for discussion of volatility.  Number ofshares
    
    
    Weightedsubject to
    
    
    averageoptions
    
    
    exercise priceOutstanding as of December 31, 2007
    
    
    1,723,200
    
    
    $
    19.01Granted
    
    
    2,750,000
    
    
    
    7.05Exercised
    
    
    (6,425
    )
    
    
    6.78Cancelled
    
    
    (935,384
    )
    
    
    7.71Outstanding as of December 31, 2008
    
    
    3,531,391
    
    
    $
    12.71Granted
    
    
    
    
    
    
    Exercised
    
    
    (9,900
    )
    
    
    7.04Cancelled
    
    
    (688,624
    )
    
    
    10.08Outstanding as of December 31, 2009
    
    
    2,832,867
    
    
    $
    13.37Options exercisable at December 31, 2009
    
    
    1,895,033
    
    
    $
    16.50Equity available for grant at December 31, 2009
    
    
    
  F-17




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##### Table of Contents



Number ofshares
    
    
    Weightedsubject to
    
    
    averageoptions
    
    
    exercise priceOutstanding as of December 31, 2007
    
    
    
    
    
    
    Granted
    
    
    887,234
    
    
    $
    8.48Exercised
    
    
    
    
    
    
    Cancelled
    
    
    (7,500
    )
    
    
    9.09Outstanding as of December 31, 2008
    
    
    879,734
    
    
    $
    8.47Granted
    
    
    3,805,765
    
    
    
    2.78Exercised
    
    
    
    
    
    
    Cancelled
    
    
    (485,000
    )
    
    
    3.70Outstanding as of December 31, 2009
    
    
    4,200,499
    
    
    $
    3.87Options exercisable at December 31, 2009
    
    
    283,234
    
    
    $
    8.33Equity available for grant at December 31, 2009
    
    
    4,579,495
  Weighted
    
    
    Shares Subject to
    
    
    Shares Subject toAverage
    
    
    Options Outstanding
    
    
    Options ExercisableRemaining
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedContractual
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageRange of Exercise Price
    
    Life in
    
    
    Number
    
    
    Exercise
    
    
    Number
    
    
    ExercisePer Share
    
    Years
    
    
    Outstanding
    
    
    Price
    
    
    Exercisable
    
    
    Price$1.96-$10.61
    
    
    2.2
    
    
    
    5,776,641
    
    
    
    4.78
    
    
    
    921,542
    
    
    
    7.70$14.90-$15.75
    
    
    1.1
    
    
    
    12,425
    
    
    
    15.35
    
    
    
    12,425
    
    
    
    15.35$15.90
    
    
    2.1
    
    
    
    150,000
    
    
    
    15.90
    
    
    
    150,000
    
    
    
    15.90$16.45-$18.90
    
    
    4.5
    
    
    
    520,500
    
    
    
    18.44
    
    
    
    520,500
    
    
    
    18.44$19.92-$26.25
    
    
    5.2
    
    
    
    223,800
    
    
    
    20.80
    
    
    
    223,800
    
    
    
    20.80$26.56-$33.75
    
    
    3.0
    
    
    
    350,000
    
    
    
    27.70
    
    
    
    350,000
    
    
    
    27.70$1.96-$33.75
    
    
    2.5
    
    
    
    7,033,366
    
    
    $
    7.70
    
    
    
    2,178,267
    
    
    $
    15.43
 Restricted Stock and Restricted Stock Units
   WeightedAverage Grant(in thousands, except share data)
    
    Shares
    
    
    Date ValueNonvested at December 31, 2008
    
    
    604,681
    
    
    $
    7,412Granted
    
    
    
    
    
    
    Vested(1)
    
    
    (233,302
    )
    
    
    (3,196
    )Forfeitures
    
    
    (152,176
    )
    
    
    (1,896
    )Nonvested at December 31, 2009
    
    
    219,203
    
    
    
    2,320
 (1)
    
    Included in the gross shares vested during the year ended December 31,
2009 are 101,965 shares of Class A Common Stock which were surrendered
by recipients in order to fulfill their tax withholding obligations.   F-18




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##### Table of Contents



WeightedAverage Grant(in thousands, except share data)
    
    Shares
    
    
    Date ValueNonvested at December 31, 2008
    
    
    590,352
    
    
    $
    4,948Granted
    
    
    461,753
    
    
    
    2,122Vested(1)
    
    
    (498,556
    )
    
    
    (2,927
    )Forfeitures
    
    
    (62,428
    )
    
    
    (525
    )Nonvested at December 31, 2009
    
    
    491,121
    
    
    $
    3,618
 (1)
    
    Included in the gross shares vested during the period ended
December 31, 2009 are 48,605 shares of Class A Common Stock which were
surrendered by recipients in order to fulfill their tax withholding
obligations.    WeightedAverage Grant(in thousands, except share data)
    
    Shares
    
    
    Date ValueNonvested at December 31, 2008
    
    
    
    
    
    $
    Granted
    
    
    351,625
    
    
    
    717Forfeitures
    
    
    (91,250
    )
    
    
    (179
    )Nonvested at December 31, 2009
    
    
    260,375
    
    
    $
    538
 Non-Employee Equity Compensation
  The Martha Stewart Show The Martha Stewart Show The Martha Stewart Show
   F-19




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##### Table of Contents



10. INCOME TAXES
 Income Taxes
  (in thousands)
    
    2009
    
    
    2008
    
    
    2007Current Income Tax (Expense)/BenefitFederal
    
    $
    (40
    )
    
    $
    175
    
    
    $
    64State and local
    
    
    (207
    )
    
    
    (80
    )
    
    
    (165
    )Foreign
    
    
    (132
    )
    
    
    (555
    )
    
    
    (527
    )Total current income tax (expense)/benefit
    
    
    (379
    )
    
    
    (460
    )
    
    
    (628
    )Deferred Income Tax ExpenseFederal
    
    
    (1,112
    )
    
    
    (1,582
    )
    
    
    State and local
    
    
    (235
    )
    
    
    (272
    )
    
    
    Total deferred income tax expense
    
    
    (1,347
    )
    
    
    (1,854
    )
    
    
    Income tax provision from continuing
operations
    
    $
    (1,726
    )
    
    $
    (2,314
    )
    
    $
    (628
    )
  F-20




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##### Table of Contents



(in thousands)
    
    2009
    
    
    2008
    
    
    2007Computed tax at the federal statutory rate of 35%
    
    $
    4,499
    
    
    $
    4,673
    
    
    $
    (3,821
    )State income taxes, net of federal benefit
    
    
    (99
    )
    
    
    (51
    )
    
    
    (107
    )Non-deductible compensation
    
    
    (1,414
    )
    
    
    (1,756
    )
    
    
    (1,347
    )Non-deductible expense
    
    
    (153
    )
    
    
    (170
    )
    
    
    (264
    )Non-deductible litigation reserve
    
    
    
    
    
    
    
    
    
    
    Non-taxable foreign income
    
    
    
    
    
    
    
    
    
    
    Tax on foreign income
    
    
    (132
    )
    
    
    (555
    )
    
    
    (527
    )Valuation allowance
    
    
    (4,332
    )
    
    
    (4,629
    )
    
    
    5,438Other
    
    
    (95
    )
    
    
    174
    
    
    
    Provision for income taxes
    
    $
    (1,726
    )
    
    $
    (2,314
    )
    
    $
    (628
    )Effective tax rate
    
    
    13.4
    %
    
    
    17.3
    %
    
    
    5.8
    %
  (in thousands)
    
    2009
    
    
    2008Deferred Tax AssetsProvision for doubtful accounts
    
    $
    781
    
    
    $
    949Accrued rent
    
    
    1,344
    
    
    
    1,131Reserve for newsstand returns
    
    
    590
    
    
    
    308Accrued compensation
    
    
    7,637
    
    
    
    7,067Deferred royalty revenue
    
    
    624
    
    
    
    5,094NOL/credit carryforwards
    
    
    49,722
    
    
    
    44,349Depreciation
    
    
    5,015
    
    
    
    4,113Amortization of intangible assets
    
    
    7,938
    
    
    
    3,149Other
    
    
    1,014
    
    
    
    1,804Total deferred tax assets
    
    
    74,665
    
    
    
    67,964Deferred Tax LiabilitiesPrepaid expenses
    
    
    (1,358
    )
    
    
    39Amortization of intangible assets
    
    
    (3,225
    )
    
    
    (1,854
    )Total deferred tax liabilities
    
    
    (4,583
    )
    
    
    (1,815
    )Valuation allowance
    
    
    (73,282
    )
    
    
    (68,003
    )Net Deferred Tax Asset/(Liability)
    
    $
    (3,200
    )
    
    $
    (1,854
    )
    F-21




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##### Table of Contents



(in thousands)
    
    2009
    
    
    2008Gross balance at January 1
    
    $
    151
    
    
    $
    1,038Additions based on tax positions related to the current
year
    
    
    
    
    
    
    Additions for tax positions of prior years
    
    
    
    
    
    
    Reductions for tax positions of prior years
    
    
    
    
    
    
    (128
    )Settlements
    
    
    (20
    )
    
    
    (759
    )Reductions due to lapse of applicable statute of
limitations
    
    
    
    
    
    
    Gross balance at December 31
    
    
    131
    
    
    
    151Interest and penalties
    
    
    58
    
    
    
    75Balance including interest and penalties at December 31
    
    $
    189
    
    
    $
    226
  11. COMPREHENSIVE LOSS
  12. RELATED PARTY TRANSACTIONS
  Subsequent Events
     F-22




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##### Table of Contents



13. COMMITMENTS AND CONTINGENCIES
 Operating Leases
   F-23




---



##### Table of Contents



Operating
    
    
    Sublease
    
    
    Net Operating(in thousands)
    
    Lease Payments
    
    
    Income
    
    
    Lease Payments2010
    
    $
    13,105
    
    
    $
    1,649
    
    
    $
    11,4562011
    
    
    10,337
    
    
    
    1,698
    
    
    
    8,6392012
    
    
    9,318
    
    
    
    1,065
    
    
    
    8,2532013
    
    
    7,778
    
    
    
    402
    
    
    
    7,3762014
    
    
    8,007
    
    
    
    414
    
    
    
    7,593Thereafter
    
    
    25,559
    
    
    
    865
    
    
    
    24,694Total
    
    $
    74,104
    
    
    $
    6,093
    
    
    $
    68,011
 Legal Matters
  Other
  Credit Facilities,
 14. ACQUISITION OF BUSINESS
     F-24




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##### Table of Contents



Twelve Months EndedDecember 31,(unaudited, in thousands, except per share amounts)
    
    2008
    
    
    2007Net revenues
    
    $
    287,528
    
    
    $
    340,599Net (loss) / income
    
    
    (13,050
    )
    
    
    13,336Net (loss) / income per share  basic and diluted
    
    $
    (0.24
    )
    
    $
    0.25
   15. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
 (in thousands except per share data)
 First
    
    
    Second
    
    
    Third
    
    
    FourthYear ended December 31, 2009
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    TotalRevenues
    
    $
    50,430
    
    
    $
    56,996
    
    
    $
    49,780
    
    
    $
    87,571
    
    
    $
    244,777Operating (loss) / income
    
    
    (15,486
    )
    
    
    (6,102
    )
    
    
    (11,681
    )
    
    
    21,301
    
    
    
    (11,968
    )Net (loss) / income
    
    $
    (16,844
    )
    
    $
    (6,374
    )
    
    $
    (12,113
    )
    
    $
    20,753
    
    
    $
    (14,578
    )(Loss)/earnings per share  basic
    
    $
    (0.31
    )
    
    $
    (0.12
    )
    
    $
    (0.22
    )
    
    $
    0.38
    
    
    $
    (0.27
    )(Loss)/earnings per share  diluted
    
    $
    (0.31
    )
    
    $
    (0.12
    )
    
    $
    (0.22
    )
    
    $
    0.37
    
    
    $
    (0.27
    )Weighted average common shares outstandingBasic
    
    
    53,766
    
    
    
    53,820
    
    
    
    53,865
    
    
    
    54,065
    
    
    
    53,880Diluted
    
    
    53,766
    
    
    
    53,820
    
    
    
    53,865
    
    
    
    55,620
    
    
    
    53,880
 First
    
    
    Second
    
    
    Third
    
    
    FourthYear ended December 31, 2008
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    TotalRevenues
    
    $
    67,834
    
    
    $
    77,110
    
    
    $
    66,512
    
    
    $
    72,854
    
    
    $
    284,310Operating (loss)/income
    
    
    (4,535
    )
    
    
    1,723
    
    
    
    (3,532
    )
    
    
    (4,513
    )
    
    
    (10,857
    )Net (loss)/income
    
    $
    (4,234
    )
    
    $
    328
    
    
    $
    (3,747
    )
    
    $
    (8,012
    )
    
    $
    (15,665
    )(Loss)/earnings per share  basic and diluted
    
    $
    (0.08
    )
    
    $
    0.01
    
    
    $
    (0.07
    )
    
    $
    (0.15
    )
    
    $
    (0.29
    )Weighted average common shares outstandingBasic
    
    
    52,722
    
    
    
    53,476
    
    
    
    53,590
    
    
    
    53,668
    
    
    
    53,360Diluted
    
    
    52,722
    
    
    
    55,588
    
    
    
    53,590
    
    
    
    53,668
    
    
    
    53,360
 Fourth Quarter 2009 Items:
  Fourth Quarter 2008 Items:
   F-25




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##### Table of Contents



16. BUSINESS SEGMENTS
  (in thousands)
    
    Publishing
    
    
    Broadcasting
    
    
    Internet
    
    
    Merchandising
    
    
    Corporate
    
    
    Consolidated2009Revenues
    
    $
    128,981
    
    
    $
    46,111
    
    
    $
    17,119
    
    
    $
    52,566
    
    
    $
    
    
    
    $
    244,777Non-cash equity compensation
    
    
    1,083
    
    
    
    889
    
    
    
    150
    
    
    
    1,468
    
    
    
    4,357
    
    
    
    7,947Depreciation and amortization
    
    
    241
    
    
    
    1,389
    
    
    
    1,950
    
    
    
    62
    
    
    
    4,232
    
    
    
    7,874Impairment charge  other asset
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,432
    
    
    
    
    
    
    
    11,432Operating income/(loss)
    
    
    2,223
    
    
    
    6,140
    
    
    
    (2,392
    )
    
    
    25,651
    
    
    
    (43,590
    )
    
    
    (11,968
    )Total assets
    
    
    76,563
    
    
    
    27,458
    
    
    
    15,830
    
    
    
    75,711
    
    
    
    34,229
    
    
    
    229,791Capital expenditures
    
    
    66
    
    
    
    23
    
    
    
    271
    
    
    
    99
    
    
    
    8,150
    
    
    
    8,6092008Revenues
    
    $
    163,540
    
    
    $
    47,328
    
    
    $
    15,576
    
    
    $
    57,866
    
    
    $
    
    
    
    $
    284,310Non-cash equity compensation
    
    
    2,855
    
    
    
    807
    
    
    
    230
    
    
    
    1,038
    
    
    
    3,596
    
    
    
    8,526Depreciation and amortization
    
    
    379
    
    
    
    2,578
    
    
    
    1,737
    
    
    
    90
    
    
    
    3,189
    
    
    
    7,973Impairment charge  goodwill and other asset
    
    
    9,349
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,349Operating income/(loss)
    
    
    6,424
    
    
    
    2,780
    
    
    
    (4,796
    )
    
    
    32,858
    
    
    
    (48,123
    )
    
    
    (10,857
    )Total assets
    
    
    79,512
    
    
    
    25,608
    
    
    
    15,730
    
    
    
    83,307
    
    
    
    57,128
    
    
    
    261,285Capital expenditures
    
    
    146
    
    
    
    199
    
    
    
    319
    
    
    
    37
    
    
    
    2,163
    
    
    
    2,8642007Revenues
    
    $
    183,727
    
    
    $
    40,263
    
    
    $
    19,189
    
    
    $
    84,711
    
    
    $
    
    
    
    $
    327,890Non-cash equity compensation
    
    
    4,297
    
    
    
    6,866
    
    
    
    501
    
    
    
    1,555
    
    
    
    5,899
    
    
    
    19,118Depreciation and amortization
    
    
    1,188
    
    
    
    2,201
    
    
    
    1,242
    
    
    
    375
    
    
    
    2,556
    
    
    
    7,562Operating income/(loss)
    
    
    11,538
    
    
    
    (7,519
    )
    
    
    (6,137
    )
    
    
    57,229
    
    
    
    (47,397
    )
    
    
    7,714Total assets
    
    
    92,931
    
    
    
    19,960
    
    
    
    9,937
    
    
    
    61,784
    
    
    
    70,655
    
    
    
    255,267Capital expenditures
    
    
    266
    
    
    
    183
    
    
    
    1,344
    
    
    
    64
    
    
    
    3,175
    
    
    
    5,032
 17. OTHER INFORMATION
         F-26




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18. SUBSEQUENT EVENTS
 Related Party Transactions.
    F-27




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##### Table of Contents



MARTHA STEWART LIVING OMNIMEDIA, INC.
 
 SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS
 (in thousands)
 Additions/
    
    
    (Deductions)Additions
    
    
    (Deductions)
    
    
    Charged toBalance,
    
    
    Charged to Revenues,
    
    
    Charged to
    
    
    Revenues,Beginning of
    
    
    Costs and
    
    
    Balance Sheet
    
    
    Costs and
    
    
    Balance,Description
    
    Year
    
    
    Expenses
    
    
    Accounts
    
    
    Expenses
    
    
    End of YearAllowance for doubtful accounts:Year ended December 31,2009
    
    $
    1,502
    
    
    $
    563
    
    
    $
    (714
    )
    
    $
    
    
    
    $
    1,3512008
    
    
    1,247
    
    
    
    399
    
    
    
    (144
    )
    
    
    
    
    
    
    1,5022007
    
    
    1,207
    
    
    
    332
    
    
    
    (292
    )
    
    
    
    
    
    
    1,247Reserve for audience underdelivery:Year ended December 31,2009
    
    $
    1,869
    
    
    $
    2,434
    
    
    $
    (336
    )
    
    $
    (1,110
    )
    
    $
    2,8572008
    
    
    3,542
    
    
    
    1,563
    
    
    
    (125
    )
    
    
    (3,111
    )
    
    
    1,8692007
    
    
    2,554
    
    
    
    2,706
    
    
    
    (423
    )
    
    
    (1,295
    )
    
    
    3,542Reserve for valuation allowance on the deferred tax asset:Year ended December 31,2009
    
    $
    68,003
    
    
    $
    4,332
    
    
    $
    947
    
    
    $
    
    
    
    $
    73,2822008
    
    
    63,277
    
    
    
    4,629
    
    
    
    97
    
    
    
    
    
    
    
    68,0032007
    
    
    62,141
    
    
    
    
    
    
    
    6,575
    
    
    
    (5,439
    )
    
    
    63,277
  F-28




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    
    
    Exhibit Title2.1
    
    
    
    
    Asset Purchase Agreement dated as of February 19, 2008 among Emerils Food of Love Productions,
L.L.C., emerils.com, LLC and Emeril J. Lagasse, III, as the Sellers, and Martha Stewart Living
Omnimedia, Inc. and MSLO Shared IP Sub LLC, as the Buyers (incorporated by reference to Exhibit 99.1
to our Current Report on Form 8-K (file number 001-15395) filed on February 19, 2008).3.1
    
    
    
    
    Martha Stewart Living Omnimedia, Inc.s Certificate of Incorporation (incorporated by reference to
Exhibit 3.1 to our Registration Statement on Form S-1, as amended, File Number 333-84001 (the
Registration Statement)).3.2
    
    
    
    
    Martha Stewart Living Omnimedia, Inc.s By-Laws (incorporated by reference to Exhibit 3.2 to our
Quarterly Report on Form 10-Q (file number 001-15395) for the quarter ended June 30, 2008 (June 2008
10-Q)).4.1
    
    
    
    
    Warrant to purchase shares of Class A Common Stock, dated August 11, 2006 (incorporated by reference
to Exhibit 4.2 to our Quarterly Report on Form 10-Q (file number 001-15395) for the quarter ended
September 30, 2006 (September, 2006 10-Q)).10.1
    
    
    
    
    1999 Stock Incentive Plan (incorporated by reference to the Registration Statement), as amended by
Exhibits 10.1.1, 10.1.2 and 10.1.3.10.1.1
    
    
    
    
    Amendment No. 1 to the 1999 Stock Incentive Plan, dated as of March 9, 2000 (incorporated by reference
to our Annual Report on Form 10-K for the year ended December 31, 1999, File Number 001-15395 (the
1999 10-K)).10.1.2
    
    
    
    
    Amendment No. 2 to the Amended and Restated 1999 Stock Incentive Plan, dated as of May 11, 2000
(incorporated by reference to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2000
(the June 2000 10-Q)).10.1.3
    
    
    
    
    Amendment No. 3 to the Amended and Restated 1999 Stock Incentive Plan (incorporated by reference to
our Current Report on Form 8-K filed on May 17, 2005 (the May 17, 2005 8-K)).10.2
    
    
    
    
    1999 Non-Employee Director Stock and Option Compensation Plan (incorporated by reference to the
Registration Statement) as amended by Exhibit 10.2.1.10.2.1
    
    
    
    
    Amendment No. 1 to the Martha Stewart Living Omnimedia, Inc. Non-Employee Director Stock and Option
Compensation Plan (incorporated by reference to the May 17, 2005 8-K).10.3
    
    
    
    
    Form of Intellectual Property License and Preservation Agreement, dated as of October 22, 1999, by and
between Martha Stewart Living Omnimedia, Inc. and Martha Stewart (incorporated by reference to Exhibit
10.8 to the Registration Statement).10.4
    
    
    
    
    Lease, dated as of September 24, 1992, between Tishman Speyer Silverstein Partnership and Time
Publishing Ventures, Inc., as amended by First Amendment of Lease dated as of September 24, 1994
between 11 West 42 Limited Partnership and Time Publishing Ventures, Inc. (incorporated by reference
to Exhibit 10.10 to the Registration Statement).10.5
    
    
    
    
    Lease, dated as of March 31, 1998, between 11 West 42 Limited Partnership and Martha Stewart Living
Omnimedia LLC (incorporated by reference to Exhibit 10.11 to the Registration Statement).10.6
    
    
    
    
    Lease, dated August 20, 1999, between 601 West Associates LLC and Martha Stewart Living Omnimedia LLC
(incorporated by reference to Exhibit 10.12 to the Registration Statement) as amended by Exhibits
10.6.1 and 10.6.2.10.6.1
    
    
    
    
    First Lease Modification Agreement, dated December 24, 1999, between 601 West Associates LLC and
Martha Stewart Living Omnimedia, Inc. (incorporated by reference to Exhibit 10.12.1 to our Annual
Report on Form 10-K (file number 001-15395) for the year ended December 31, 1999).10.6.2
    
    
    
    
    Sixth Lease Modification Agreement, dated as of June 14, 2007, between 601 West Associates LLC and
Martha Stewart Living Omnimedia, Inc (incorporated by reference to Exhibit 10.1 to our Quarterly
Report on Form 10-Q (file number 001-15395) for the quarter ended March 31, 2008 (March 2008 10-Q)).




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##### Table of Contents



ExhibitNumber
    
    
    
    Exhibit Title10.7
    
    
    
    
    Lease, dated as of October 1, 2000, between Newtown Group Properties Limited Partnership and Martha
Stewart Living Omnimedia, Inc. (incorporated by reference to Exhibit 10.1 our Quarterly Report on Form
10-Q (file number 001-15395) for the quarter ended June 30, 2001 (the June 2001 10-Q)).10.8
    
    
    
    
    License Agreement, dated June 21, 2001 by and between Kmart Corporation and MSO IP Holdings, Inc.
(incorporated by reference to Exhibit 10.3 to the June 2001
10-Q) as amended by Exhibit 10.8.1 and 10.8.2.10.8.1
    
    
    
    
    Amendment, dated as of April 22, 2004 to the License Agreement, by and between MSO IP Holdings, Inc.
and Kmart Corporation, dated June 21, 2001 (incorporated by reference to Exhibit 10.1 to our Quarterly
Report on Form 10-Q (file number 001-15395) for the quarter ended June 30, 2004).10.8.2
    *
    
    
    

Amendment,
dated as of July 7, 2009, to the License Agreement, by and between
MSO IP Holdings, Inc. and Kmart Corporation, dated June 21, 2001, as
amended.10.9
    
    
    
    
    Split-Dollar Life Insurance Agreement, dated February 28, 2001, by and among Martha Stewart Living
Omnimedia, Inc., Martha Stewart and The Martha Stewart Family Limited Partnership (incorporated by
reference to Exhibit 10.17 to our Annual Report on Form 10-K (file number 001-15395) for the year
ended December 31, 2000) as amended by Exhibits 10.9.1 and 10.9.2 and terminated by Exhibit 10.9.3.10.9.1
    
    
    
    
    Amendment, dated January 28, 2002, to Split-Dollar Life Insurance Agreement, dated February 28, 2001,
by and between Martha Stewart Living Omnimedia, Inc., Martha Stewart and The Martha Stewart Family
Limited Partnership (incorporated by reference to Exhibit 10.14.2 to our Annual Report on Form 10-K
(file number 001-15395) for the year ended December 31, 2001).10.9.2
    
    
    
    
    Amendment, dated as of January 1, 2003, to Split-Dollar Life Insurance Agreement, dated February 28,
2001, as amended, by and among Martha Stewart Living Omnimedia, Inc., Martha Stewart and The Martha
Stewart Family Limited Partnership (incorporated by reference to Exhibit 10.14.3 to our Annual Report
on Form 10-K (file number 001-15395) for the year ended December 31, 2002).10.9.3
    *
    
    
    

Agreement,
dated November 9, 2009, terminating the Split-Dollar Life Insurance Agreement dated February
28, 2001 by and among Martha Stewart Living Omnimedia, Inc., Martha Stewart and the Martha Stewart
Family Limited Partnership, as amended.10.10
    
    
    
    

Amended
and Restated Employment Agreement, dated as of April 1, 2009, between
Martha Stewart Living Omnimedia, Inc. and Martha Stewart (incorporated
by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q (file
number 001-15395) for the Quarter ended March 31, 2009 (March 2009
10-Q).10.11
    
    
    
    

Intangible
Asset License Agreement, dated as of June 13, 2008, between Martha Stewart Living Omnimedia,
Inc. and MS Real Estate Management Company (incorporated by reference to Exhibit 10.9 to our June 2008
10-Q), as amended by Exhibits 10.11.1 and 10.11.2.10.11.1
    *
    
    
    

First
Amendment, dated as of December, 2008, to the Intangible Asset License Agreement between MS Real
Estate Management Company and Martha Stewart Living Omnimedia, Inc. dated as of June 13, 2008.10.11.2
    *
    
    
    

Second
Amendment, dated as of February 8, 2010, to the Intangible Asset License Agreement between MS
Real Estate Management Company and Martha Stewart Living Omnimedia,
Inc. dated as of June 13, 2008, as
amended.10.12
    
    
    
    

Employment
Agreement, dated as of March 24, 2009, between Martha Stewart Living Omnimedia, Inc. and
Kelli Turner (incorporated by reference to Exhibit 10.1 to our
March 2009 10-Q).10.13
    
    
    
    
    2005 Executive Severance Pay Plan (incorporated by reference to Exhibit 10.1 to our Current Report on
Form 8-K (file number 001-15395) filed on January 6, 2005).10.14
    
    
    
    
    Form of Restricted Stock Award Agreement for use under the Martha Stewart Living Omnimedia, Inc.
Amended and Restated 1999 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to our
Current Report on Form 8-K (file number 001-15395) filed on January 14, 2005).10.15
    
    
    
    
    Registration Rights Agreement between Charles A. Koppelman and Martha Stewart Living Omnimedia, Inc.
dated January 24, 2005 (incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K
(file number 001-15395) filed on October 21, 2005).10.16
    
    
    
    

Separation
Agreement, dated as of April 20, 2009, between Martha Stewart Living Omnimedia, Inc. and
Wenda Harris Millard (incorporated by reference to Exhibit 10.3 to our March 2009 10-Q).10.17
    
    
    
    

Warrant Registration Rights Agreement, dated as of August 11, 2006, between Martha Stewart Living
Omnimedia, Inc. and Mark Burnett (incorporated by reference to Exhibit 10.3 to our September, 2006
10-Q).10.18
    
    
    
    
    Form of Restricted Stock Unit Award Agreement under the Amended and Restated 1999 Stock Incentive Plan
(incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K (file number 001-15395)
filed on February 27, 2007).10.19
    
    
    
    
    2008 Executive Severance Pay Plan (incorporated by reference to Exhibit 10.4 to our Quarterly Report
on Form 10-Q (file number 001-15395) for the quarter ended September 30, 2007 (September 2007
10-Q)).




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##### Table of Contents



ExhibitNumber
    
    
    
    Exhibit Title10.20
    
    
    
    

Publicity
Rights Agreement, dated as of April 2, 2008, by and among Martha Stewart Living Omnimedia,
Inc., MSLO Shared IP Sub LLC and Emeril J. Lagasse, III (incorporated by reference to Exhibit 10.4 to
our March 2008 10-Q).10.21
    
    
    
    

Amended
and Restated Loan Agreement, dated as of August 7, 2009, by and among Bank of America, N.A.,
MSLO Emeril Acquisition Sub LLC and Martha Stewart Living Omnimedia, Inc. (incorporated by reference
to Exhibit 10.1 to our Quarterly Report on Form 10-Q (file number 001-15395) for the quarter ended
September 30, 2009 (September 2009 10-Q)), as
amended by Exhibit 10.22.10.22
    *
    
    
    

Waiver
and Amendment to Loan Documents, dated as of December 18, 2009, to Amended and Restated Loan
Agreement dated as of August 7, 2009 among Bank of America, N.A., MSLO Emeril Acquisition Sub LLC and
Martha Stewart Living Omnimedia, Inc.10.23
    
    
    
    

Security
Agreement, dated as of July 31, 2008, among Martha Stewart Living Omnimedia, Inc., MSLO Emeril
Acquisition Sub LLC, and Bank of America, N.A. (incorporated by reference to Exhibit 10.1 to our
Quarterly Report on Form 10-Q (file number 001-15395) for the quarter ended September 30, 2008
(September 2008 10-Q)) as amended by Exhibits 10.23.1, 10.23.2, and 10.22.10.23.1
    
    
    
    

Waiver
and Omnibus Amendment No. 1, dated as of June 18, 2009, to Loan Agreement dated as of April 4,
2008 by and among Bank of America, N.A., MSLO Emeril Acquisition Sub LLC and Martha Stewart Living
Omnimedia, Inc. (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q (file
number 001-15395) for the quarter ended June 30, 2009).10.23.2
    
    
    
    

Amendment
No. 2, dated as of August 7, 2009, to Security Agreement dated as of July 31, 2008 among
Martha Stewart Living Omnimedia, Inc., Emeril Acquisition Sub LLC and Bank of America, (incorporated
by reference to Exhibit 10.2 to our September 2009 10-Q).10.24
    
    
    
    
    Continuing and Unconditional Guaranty dated as of April 4, 2008 executed by Martha Stewart Living
Omnimedia, Inc., MSO IP Holdings, Inc., Martha Stewart, Inc., Body and Soul Omnimedia, Inc., MSLO
Productions, Inc., MSLO Productions  Home, Inc., MSLO Productions  EDF, Inc. and Flour
Productions, Inc. (incorporated by reference to Exhibit 10.8 to our March 2008 10-Q), as reaffirmed by
Exhibit 10.24.1.10.24.1
    
    
    
    

Reaffirmation
of Guaranty, dated as of August 7, 2009, executed by Martha Stewart Living Omnimedia,
Inc., MSO IP Holdings, Inc., Martha Stewart, Inc., Body and Soul Omnimedia, Inc., MSLO Productions,
Inc. MSLO Productions Home, Inc. MSLO Productions  EDF, Inc and Flour Productions, Inc.
(incorporated by reference to Exhibit 10.3 to our September 2009 10-Q).10.25
    
    
    
    

Registration
Rights Agreement, dated as of April 2, 2008, by and among Martha Stewart Living Omnimedia,
Inc., Emerils Food of Love Productions, L.L.C., emerils.com, LLC and Emeril J. Lagasse, III
(incorporated by reference to Exhibit 10.9 to our March 2008 10-Q).10.26
    *
    
    
    
    Director Compensation Program.10.27
    
    
    
    
    Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan (incorporated by
reference to Exhibit 99.1 to our Current Report on Form 8-K (file number 001-15395) filed on May 20,
2008 (May 20, 2008 8-K)).10.28
    
    
    
    
    Form of Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan Stock Option
Agreement and forms of related Notices (incorporated by reference to Exhibit 99.2 to our May 20, 2008
8-K).10.29
    
    
    
    
    Form of Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan Restricted
Stock Unit Agreement (incorporated by reference to Exhibit 99.3 to our May 20, 2008 8-K).10.30
    
    
    
    
    Form of Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan Restricted
Stock Grant Agreement (incorporated by reference to Exhibit 99.4 to our May 20, 2008 8-K).10.31
    
    
    
    
    Form of Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan Stock
Appreciation Right Agreement and form of related Notice (incorporated by reference to Exhibit 99.5 to
our May 20, 2008 8-K).10.32
    
    
    
    
    Form of Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan Stock Grant
Agreement and form of related Acknowledgement (incorporated by reference to Exhibit 99.6 to our May
20, 2008 8-K).10.33
    
    
    
    
    Form of Performance-Based Restricted Stock Unit Agreement pursuant to the Martha Stewart Living
Omnimedia, Inc. Omnibus Stock and Option Compensation Plan (incorporated by reference to Exhibit 10.1
to our Current Report on Form 8-K (file number 001-15395) filed on February 12, 2009).10.34
    
    
    
    

Employment
Agreement, dated as of September 17, 2008, between Martha Stewart Living Omnimedia, Inc. and
Charles A. Koppelman (incorporated by reference to Exhibit 10.2 to our September 2008
10-Q).




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##### Table of Contents



ExhibitNumber
    
    
    
    Exhibit Title10.35
    
    
    
    

Employment
Agreement, dated as of September 17, 2008, between Martha Stewart Living Omnimedia, Inc. and
Wenda Harris Millard (incorporated by reference to Exhibit 10.3 to our September 2008 10-Q).10.36
    
    
    
    

Employment
Agreement, dated as of September 17, 2008, between Martha Stewart Living Omnimedia, Inc. and
Robin Marino (incorporated by reference to Exhibit 10.4 to our September 2008 10-Q).10.37
    
    
    
    
    Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan Restricted Stock
Grant Agreement dated October 1, 2008 between Martha Stewart Living Omnimedia, Inc. and Charles
Koppelman (incorporated by reference to Exhibit 10.5 to our September 2008 10-Q).10.38
    
    
    
    
    Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan Stock Option Grant
Agreement and form of related Notice dated October 1, 2008 between Martha Stewart Living Omnimedia,
Inc. and Charles Koppelman (incorporated by reference to Exhibit 10.6 to our September 2008 10-Q).10.39
    
    
    
    
    Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan Restricted Stock
Grant Agreement dated October 1, 2008 between Martha Stewart Living Omnimedia, Inc. and Wenda Harris
Millard (incorporated by reference to Exhibit 10.7 to our September 2008 10-Q).10.40
    
    
    
    
    Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan Stock Option Grant
Agreement and form of related Notice dated October 1, 2008 between Martha Stewart Living Omnimedia,
Inc. and Wenda Harris Millard (incorporated by reference to Exhibit 10.8 to our September 2008 10-Q).10.41
    
    
    
    
    Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan Restricted Stock
Grant Agreement dated October 1, 2008 between Martha Stewart Living Omnimedia, Inc. and Robin Marino
(incorporated by reference to Exhibit 10.9 to our September 2008 10-Q).10.42
    
    
    
    
    Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan Stock Option Grant
Agreement and form of related Notice dated October 1, 2008 between Martha Stewart Living Omnimedia,
Inc. and Robin Marino (incorporated by reference to Exhibit 10.10 to our September 2008 10-Q).10.43
    
    
    
    
    Martha Stewart Living Omnimedia, Inc. Director Deferral Plan (incorporated by reference to Exhibit
10.46 to our Annual Report on Form 10-K (file number 001-15395) for the year ended December 31, 2008
(the 2008 10-K)).10.44
    
    
    
    
    Martha Stewart Living Omnimedia, Inc. Non-Employee Director Stock and Option Compensation Plan
Deferral Election Form dated July 1, 2004 and Clarification dated December 23, 2008 between Martha
Stewart Living Omnimedia, Inc. and Michael Goldstein (incorporated by reference to Exhibit 10.47 to
the 2008 Form 10-K).10.45
    
    
    
    
    Martha Stewart Living Omnimedia, Inc. Annual Incentive Plan (incorporated by reference to the
Companys proxy statement filed in respect of its 2005 annual meeting of shareholders, dated as of
April 7, 2005).21
    *
    
    
    
    List of Subsidiaries.23.1
    *
    
    
    
    Consent of Independent Registered Public Accounting Firm.31.1
    *
    
    
    
    Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    *
    
    
    
    Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32
    *
    
    
    
    Certification of Principal Executive Officer and Chief Financial Officer Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
 
 
    
    indicates management contracts and compensatory plans*
    
    indicates filed herewith**
    
    Schedules and exhibits to this Agreement have been omitted. The
Company agrees to furnish a supplemental copy of any omitted schedule
or exhibit to the Securities and Exchange Commission upon request.