UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended December 31, 1993
Commission file number 1-5128
Meredith Corporation
(Exact name of registrant as specified in its charter)
Iowa 42-0410230
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1716 Locust Street, Des Moines, Iowa 50309-3023
(Address of principal executive offices) (ZIP Code)
515 - 284-3000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at January 31, 1994
Common Stock, $1 par value 10,538,011
Class B Stock, $1 par value 3,644,343
Page 1 of 29
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Part I. FINANCIAL INFORMATION
Item I. Financial Statements
Meredith Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
Assets December 31 June 30
(in thousands) 1993 1993
- ---------------------------------- ---- ----
Current Assets:
Cash and cash equivalents $ 9,212 $ 18,569
Marketable securities 16,532 21,422
Receivables, net 94,923 75,761
Inventories 30,911 32,383
Supplies and prepayments 17,756 18,206
Film rental costs 15,757 15,750
Subscription acquisition costs 103,465 105,342
-------- --------
Total Current Assets 288,556 287,433
-------- --------
Property, Plant and Equipment (at cost) 223,026 238,679
Less accumulated depreciation ( 97,652) (107,792)
-------- --------
Net Property, Plant and Equipment 125,374 130,887
-------- --------
Deferred Film Rental Costs 11,417 12,073
Deferred Subscription Acquisition Costs 71,841 77,091
Other Assets 28,933 23,607
Goodwill and Other Intangibles
(at original cost less accumulated amortization) 350,635 369,677
-------- --------
Total $ 876,756 $ 900,768
======== ========
See accompanying Notes to Interim Consolidated Financial Statements.
Page 2 of 29
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Meredith Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
Liabilities and Stockholders' Equity December 31 June 30
(in thousands) 1993 1993
- ---------------------------------- ---- ----
Current Liabilities:
Current portion of long-term indebtedness 7,667 2,556
Current portion of long-term film rental contracts 10,827 10,229
Accounts payable 27,418 43,368
Accrued taxes and expenses 53,819 55,946
Unearned subscription revenues 144,578 148,556
Deferred income taxes 21,791 21,819
-------- --------
Total Current Liabilities 266,100 282,474
Long-Term Indebtedness 126,737 131,945
Long-Term Film Rental Contracts 5,495 5,638
Unearned Subscription Revenues 98,454 102,107
Deferred Income Taxes 36,819 30,472
Other Deferred Items 28,651 23,876
-------- --------
Total Liabilities 562,256 576,512
-------- --------
Minority Interests 38,966 40,160
-------- --------
Stockholders' Equity:
Series Preferred Stock, par value $1 per share
Authorized 5,000,000 shares; none issued. -- --
Common Stock, par value $1 per share
Authorized 50,000,000 shares; issued and outstanding
10,674,920 shares at December 31 and 11,129,726 at
June 30 (net of treasury shares, 5,154,831 at
December 31 and 4,645,420 shares at June 30). 10,675 11,130
Class B Stock, par value $1 per share
Authorized 10,000,000 shares; issued and outstanding
3,659,309 shares at December 31 and 3,703,519 at
June 30. 3,659 3,704
Retained earnings 264,734 272,090
Unearned compensation (3,534) (2,828)
-------- --------
Total Stockholders' Equity 275,534 284,096
-------- --------
Total $ 876,756 $ 900,768
======== ========
See accompanying Notes to Interim Consolidated Financial Statements.
Page 3 of 29
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Meredith Corporation and Subsidiaries
Consolidated Statements of Earnings (Unaudited)
Three Months Six Months
Ended December 31 Ended December 31
1993 1992 1993 1992
- -------------------------------------------------------------------------------
(Dollar amounts in thousands, except per share)
Revenues (less returns and allowances):
Advertising $ 85,097 $ 79,954 $158,446 $161,133
Circulation 66,222 63,994 127,976 120,413
Consumer book 23,891 20,572 44,148 41,130
All other 29,420 25,600 56,351 44,893
-------- -------- -------- --------
Total Revenues 204,630 190,120 386,921 367,569
-------- -------- -------- --------
Operating Costs and Expenses:
Production, distribution and edit 84,838 78,953 161,445 158,693
Selling, general and administrative 96,441 91,411 181,183 176,505
Depreciation and amortization 9,076 8,810 18,133 14,870
Unusual item (Note 4) 4,800 -- 4,800 --
-------- -------- -------- --------
Total Operating Costs and Expenses 195,155 179,174 365,561 350,068
-------- -------- -------- --------
Income from Operations 9,475 10,946 21,360 17,501
Gain on dispositions (Note 5) 11,997 -- 11,997 --
Interest income 206 484 638 1,275
Interest expense (2,875) (2,729) (5,690) (3,791)
Minority interests 617 552 1,165 810
-------- -------- -------- --------
Earnings before Income Taxes 19,420 9,253 29,470 15,795
Income taxes (Note 2) 7,916 4,544 14,522 7,645
-------- -------- -------- --------
Net Earnings $ 11,504 $ 4,709 $ 14,948 $ 8,150
======== ======== ======== ========
Net Earnings Per Share $ 0.80 $ 0.31 $ 1.04 $ 0.53
======== ======== ======== ========
Dividends Paid Per Share $ 0.16 $ 0.16 $ 0.32 $ 0.32
======== ======== ======== ========
Avg Number of Shares Outstanding 14366000 15363000 14427000 15493000
======== ======== ======== ========
See accompanying Notes to Interim Consolidated Financial Statements.
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Meredith Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
For the Six Months Ended December 31 (in thousands) 1993 1992 *
- ----------------------------------------------------------------------------
Cash Flows from Operating Activities:
Earnings from continuing operations $ 14,948 $ 8,150
Adjustments to Reconcile Net Earnings to
Net Cash Provided by Operating Activities:
Depreciation and amortization 18,133 14,870
Amortization of film contract rights 11,402 13,753
Deferred income taxes 6,756 --
Unusual item (net of taxes) 2,592 --
(Increase) in receivables (19,778) (11,837)
Decrease (increase) in inventories 1,472 (1,874)
Decrease in supplies and prepayments 360 5
Decrease in deferred subscription acquisition costs 7,127 15,263
(Decrease) in accounts payable and accruals (24,718) (10,098)
Gain on dispositions (net of taxes) (8,197) --
(Reductions) to unearned subscription revenues (7,631) (7,645)
Additions (Reductions) to other deferred items 746 (8,277)
-------- --------
Net cash provided by operating activities 3,212 12,310
-------- --------
Cash Flows from Investing Activities:
Investment in cable partnership, less cash acquired -- (32,740)
Redemption of marketable securities 4,890 26,631
Proceedes from dispositions 33,000 --
(Additions) to property, plant, and equipment (10,554) (6,298)
(Additions) to other assets (7,846) (4,093)
-------- --------
Net cash provided (used) by investing activities 19,490 (16,500)
-------- --------
Cash Flows from Financing Activities:
Long-term indebtedness retired (97) (3,894)
Payments for film rental contracts (8,452) (8,334)
Proceeds from common stock issued 1,294 2,004
Purchase of company shares (20,165) (18,187)
Dividends paid (4,639) (4,998)
-------- --------
Net cash (used) by financing activities (32,059) (33,409)
-------- --------
Net (decrease) in cash and cash equivalents (9,357) (37,599)
Cash and cash equivalents at beginning of year 18,569 42,333
------- --------
Cash and Cash Equivalents at End of Period $ 9,212 $ 4,734
======== ========
* Reclassified to conform with current year presentation.
Page 5 of 29
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Supplemental Schedule of Noncash Investing and Financing Activities:
The Company received $2 million of preferred stock in Granite Broadcasting
Corporation in conjunction with the sale of the broadcast stations in
December 1993.
Approximately $139 million in long-term debt was incurred by Meredith/New
Heritage Strategic Partners, L.P. to purchase North Central Cable
Communications Corporation on September 1, 1992.
The Bismarck/Mandan, North Dakota, cable television system, which was
acquired by Meredith/New Heritage Partnership in January 1992, was
contributed to Meredith/New Heritage Strategic Partners, L.P., prior to
September 1, 1992. This transfer reduced the Company's indirect ownership
interest in the system by $12 million, or 27 percent.
See accompanying Notes to Interim Consolidated Financial Statements.
Page 6 of 29
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MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Accounting Policy
The information included in the foregoing interim financial statements is
unaudited. In the opinion of management, all adjustments, which are of a
normal recurring nature and necessary for a fair presentation of the results of
operations for the interim periods presented have been reflected herein. The
results of operations for interim periods are not necessarily indicative of the
results to be expected for the entire year.
2. Income Taxes
On July 1, 1993, the Company adopted SFAS No. 109, "Accounting For Income
Taxes." Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are required, by SFAS No. 109, to
be measured using the tax rate expected to be in effect when the taxes are
actually paid or recovered. Income tax expense will increase or decrease in
the same period in which a change in tax rates is enacted for the effect on
deferred tax assets and liabilities. (The Company previously used the asset
and liability method under Statement 96.)
The effect of the adoption of SFAS No. 109 is immaterial on the financial
statements. Therefore the prior period's financial statements have not been
restated to apply the provisions of SFAS No. 109. The Omnibus Budget
Reconciliation Act of 1993, enacted in the first quarter of fiscal 1994, raised
the basic corporate federal income tax rate from 34 percent to 35 percent. The
effect on the Company's financial statements of that increase for the first six
months was $1,638,000 ($1,238,000 expense for the increase in net deferred tax
liabilities, $118,000 expense due to an additional provision required for six
months of fiscal 1993 and $282,000 expense for the first six months of fiscal
1994).
For the six months
ended December 31
------------------
($ in thousands) 1993 1992
-------------------------------------------------------------------
Currently payable:
Federal $ 7,619 $6,078
State 1,822 1,567
------- ------
9,441 7,645
------- ------
Deferred:
Federal 4,100 -
State 981 -
------- ------
5,081 -
------- ------
Total $14,522 $7,645
======= ======
Page 7 of 29
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MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(Unaudited)
The tax effects of temporary differences that gave rise to the deferred income
tax assets and liabilities at December 31, 1993 and June 30, 1993 are as
follows:
($ in thousands)
December 31 June 30
1993 1993*
- ------------------------------------------------------------------------------
Deferred tax assets:
Accumulated bad debt reserve $ 3,550 $ 3,495
Magazine and book return reserves 4,597 3,940
Reserve for postretirement benefits, other
than pensions 5,582 5,257
All other assets 12,874 12,267
------- -------
Total deferred tax asset 26,603 24,959
------- -------
Deferred tax liabilities:
Deferred subscription acquisition costs 63,804 60,037
Accumulated depreciation and amortization 8,076 8,327
Accumulated trademark amortization 5,712 5,667
All other liabilities 7,621 3,219
------- -------
Total deferred tax liability 85,213 77,250
------- -------
Net deferred tax liability $58,610 $52,291
======= =======
*Reclassified to conform with current year presentation.
Page 8 of 29
<PAGE>
MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(Unaudited)
The effective tax rates for the six months ended December 31, 1993 and 1992
were 49.3 percent and 48.4 percent, respectively. The differences between
these effective tax rates and the basic U. S. federal income tax rate for the
following periods are as follows:
Six Months Ended December 31 1993 1992
-------------------------------------------------------------------
Expected income tax (basic rate) 35.0% 34.0%
Impact of basic rate increase 4.6 -
State income taxes, less federal
income tax benefits 5.8 6.3
Goodwill amortization 3.2 5.7
Non-deductible equity loss -
cable group 3.4 3.1
Sale of television properties (3.1) -
Other .4 ( .7)
----- -----
Effective income tax rate 49.3% 48.4%
===== =====
3. Inventories
Major components of inventories are summarized below. Of total inventory
values shown, approximately 44 and 42 percent respectively are under the LIFO
method at December 31, 1993 and June 30, 1993.
December 31 June 30
1993 1993
-------- --------
($ in thousands)
Raw materials $16,302 $17,894
Work in process 12,602 11,793
Finished goods 12,639 11,978
-------- --------
41,543 41,665
Reserve for LIFO cost valuation (10,632) (9,282)
-------- --------
Total $30,911 $32,383
======== ========
Page 9 of 29
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4. Unusual Item
The Company received tax assessments in the second quarter related to
discontinued operations sold in prior years. An unusual item of $4.8 million
was recognized to establish a reserve for possible liabilities related to these
assessments.
5. Sale of Properties
On December 23, 1993, the Company announced the sale of two broadcast
television properties to Granite Broadcasting Corporation ("Granite") for $33
million, $2 million in preferred stock in Granite and a tax certificate. The
two properties sold were WTVH, a CBS affiliate licensed to serve Syracuse, New
York, and KSEE, an NBC affiliate licensed to serve Fresno, California. The
Company received a tax certificate due to Granite being minority-owned. This
certificate can be used, to the Company's benefit, if another broadcast
property is purchased within two years of this sale. Had this sale occurred on
July 1, 1993, the Company's advertising revenues would have decreased by
approximately six percent for both the six months and three months ended
December 31, 1993. The effect on consolidated net earnings and net earnings
per share would not have been sigificant.
6. Contingencies
Reference is made to Part II - OTHER INFORMATION, Item 1, Legal Proceedings of
this Form 10-Q for the quarterly period ended December 31, 1993.
Page 10 of 29
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Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Second Quarter Fiscal 1993-94 Vs. Second Quarter Fiscal 1992-93
Meredith Corporation net earnings for the quarter ended December 31, 1993 were
$11,504,000, or 80 cents per share. Net earnings included a gain of
$11,997,000 ($8,197,000 after tax or 57 cents per share) on the dispositions of
the Syracuse and Fresno television properties and a charge of $4,800,000
($2,592,000 after tax or a negative 18 cents per share) for an unusual item
related to a reserve for possible tax liabilities on disposed properties.
Excluding the post-tax impact of the gain on dispositions and the unusual item,
earnings for the quarter were $5,899,000, or 41 cents per share, a 32 percent
increase from comparable earnings per share of 31 cents, or $4,709,000, in the
prior year second quarter. Improved results in the Broadcast, Book, Magazine
and Real Estate Groups were the primary factors in the increase in comparable
earnings. Three cents of the increase in comparable earnings per share was due
to shares repurchased by the Company.
The net assets of WTVH, a CBS affiliate licensed to serve Syracuse, New York,
and the common stock of a Company subsidiary that owned KSEE, an NBC affiliate
licensed to serve Fresno, California, were sold to Granite Broadcasting
Corporation effective December 26, 1993. The effect on fiscal 1994 advertising
revenues and profits are expected to be immaterial when compared to the prior
year.
The Company received tax assessments in the second quarter related to
discontinued operations sold in prior years. An unusual item was recognized to
establish a reserve for these possible tax liabilites. At this time, the
Company intends to protest these assessments but has established a reserve
which it believes will be sufficient to cover any potential liabilities.
Revenues for the three months ended December 31, 1993 were $204,630,000, an
eight percent increase from prior year second quarter revenues of $190,120,000.
All categories of revenues increased. Some of the factors contributing to the
total increase were stronger broadcast and magazine advertising revenues,
circulation revenues on new magazines and special issues, and increased book
sales through retail and direct marketing channels.
Income from operations was $9,475,000 in the second quarter compared to
$10,946,000 in the prior year period. The operating margin declined from 5.8
percent of net revenues in the fiscal 1993 second quarter to 4.6 percent in the
current quarter due to the recognition of an unusual item. The operating
margin, excluding the effect of the unusual item, was 7.0 percent. This was an
increase of 21 percent from the comparable prior year quarter. The following
table shows the percentage of revenues each major expense classification
represented in the current and prior year quarters:
Page 11 of 29
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Expense as Percentage of Revenues
Three Months Ended December 31 1993 1992
- ---------------------------------------------------------------------
Production, distribution and editorial (PD&E) 41.5% 41.5%
Selling, general and administrative (SG&A) 47.1% 48.1%
Depreciation and amortization 4.4% 4.6%
Unusual item 2.3% --
PD&E expenses were unchanged as a percentage of revenues as lower programming
expense at the broadcast television stations was offset by increases in
publishing production costs.
SG&A expenses declined one percent of revenues as compared to the prior year
period primarily due to favorable magazine circulation expenses.
A discussion of results by segment follows:
Publishing: Revenues in the Magazine Group increased seven percent from the
prior year second quarter. Total advertising revenues for ongoing titles
increased ten percent, with many titles posting double-digit percentage
increases from the prior-year quarter. Increased net revenue per advertising
page led to revenue increases for Ladies' Home Journal, Country Home,
Successful Farming and Traditional Home. Country America and Golf For Women
reported higher advertising revenues primarily due to increased ad pages.
Better Homes and Gardens ad revenues, that were down in the first quarter
compared to prior year, rebounded in the second quarter to match the prior
year's performance. Revenues from new titles and special issues led to a five
percent increase in Magazine Group circulation revenues compared to the prior-
year quarter.
Second quarter Magazine Group operating profits increased 11 percent over the
prior year quarter. Ladies' Home Journal reported a very strong improvement in
the second quarter. Ad revenues increased 14% and, due to the sale of two
special issues, newsstand profits were up. Improved results were also recorded
by Successful Farming and the custom publishing operation. Increased ad
revenues and favorable production costs led to the improvement in Successful
Farming. Increased revenues and profits from premium sales benefitted custom
publishing. Better Homes and Gardens profits were below the prior year quarter
primarily due to lower contributions from newsstand sales and list rental
revenues. Prior year second quarter results were held down by a loss on
Metropolitan Home magazine that was sold in November 1992.
Book Group revenues increased ten percent from the prior year second quarter
due to increased sales volume in the retail and direct mail operations. Lower
volumes in syndication programs and the Craftways operations, primarily
resulting from planned downsizing, partially offset the increases.
Page 12 of 29
<PAGE>
Book Group operating profit increased significantly from the prior year
quarter. Retail operations reported very strong second quarter results with
profits up more than 80 percent. Increased sales of new and backlist titles
led to the strong performance. The book clubs also reported improved results
for the quarter primarily due to lower promotion expenses. Syndication results
were unfavorable compared to the prior year due to lower volumes in renewal
programs and increased starter programs with higher promotion expenses. List
marketing profits also declined due to lower sales volume and increased
database costs.
Paper is an essential raw material to the Publishing segment and represents a
significant expense. Paper price increases that occurred in the first quarter
of the fiscal year have been largely offset by additional rebates negotiated
from suppliers. The Company does not expect to experience a shortage of paper
in the foreseeable future but does expect a similar price increase in the next
six months.
Broadcast: Increases in both local and national advertising revenues combined
with lower programming expenses to result in a profit increase of more than 45%
for the Broadcast Group. Overall revenues were up seven percent for the Group.
The Company's independent station in Phoenix, KPHO, led the Group in revenue
and profit improvement. All of the stations reported improved operating
results except for KCTV, the Kansas City CBS affiliate, due to lower national
advertising revenues.
Real Estate: Second quarter revenues and profits in the Real Estate Group
increased significantly from the prior year quarter. Transaction fees, the
revenues generated from member firms' home sales activity, increased nine
percent. Revenues and profits from the sale of custom products were also
greater than in the prior year quarter.
Cable Television: Revenues increased two percent in the cable operations due
to increased subscriber counts, additional pay channel subscribers and
increased advertising revenues. These increases were partially offset by a
lower rate per subscriber due to the cable industry re-regulation which took
effect in September 1993. This decline in revenue per subscriber led to lower
operating profits, before interest expense, at the Minnesota system. Higher
interest rates and lower operating results at the Minnesota system led to an
increase in the net loss of the cable operations in the current quarter.
Other: Interest income declined in the current quarter due to lower interest-
earning cash balances that resulted from Company stock repurchases and the
timing of payments to the Company's pension plans. Corporate nonoperating
expenses increased compared to the prior year quarter due to the timing of
spending and increased consulting expense.
The effective tax rate for the second quarter is less than the rate in the
prior year, despite the increase in the federal income tax rate. This is due
to a lower effective tax rate on the gain on the dispositions of the broadcast
stations.
Page 13 of 29
<PAGE>
First Six Months Fiscal 1993-94 Vs. First Six Months Fiscal 1992-93
Meredith Corporation net earnings for the six months ended December 31, 1993
were $14,948,000, or $1.04 per share. Net earnings included a gain of
$11,997,000 ($8,197,000 after tax or 57 cents per share) on the dispositions of
the Syracuse and Fresno television properties and a charge of $4,800,000
($2,592,000 after tax or a negative 18 cents per share) for an unusual item
related to a reserve for possible tax liabilities on disposed properties.
Excluding the post-tax impact of the gain on dispositions and the unusual item,
comparable earnings for the six months were $9,343,000, or 65 cents per share,
a 23 percent increase from prior year-to-date earnings per share of 53 cents or
$8,150,000. Improved results in the Broadcast and Publishing Groups were the
primary factors in the increase in comparable earnings. These improvements
were partially offset by a larger loss on cable operations due to the timing of
the purchase of the Minnesota system and cable industry re-regulation. Five
cents of the increase in comparable earnings per share was due to shares
repurchased by the Company.
The net assets of WTVH, a CBS affiliate licensed to serve Syracuse, New York,
and the common stock of a Company subsidiary that owned KSEE, an NBC affiliate
licensed to serve Fresno, California, were sold to Granite Broadcasting
Corporation effective December 26, 1993. The effect on fiscal 1994 advertising
revenues and profits are expected to be immaterial when compared to the prior
year.
The Company received tax assessments in the second quarter related to
discontinued operations sold in prior years. An unusual item was recognized to
establish a reserve for these possible tax liabilites. At this time, the
Company intends to protest these assessments but has established a reserve
which it believes will be sufficient to cover any potential liabilities.
Revenues for the six months ended December 31, 1993 were $386,921,000, a five
percent increase from prior year revenues of $367,569,000. Factors
contributing to the increase included an additional two months of revenue from
the Minnesota cable television system, increased magazine circulation revenues
and increased retail and direct marketing book sales.
Income from operations was $21,360,000 for the six months compared to
$17,501,000 in the prior year period. The operating margin rose from 4.8
percent of net revenues last year to 5.5 percent, despite the negative effect
of the unusual item, in the current year period. Excluding the effect of the
unusual item, the operating margin was 6.8 percent, an increase of 42 percent
from the comparable prior year period. The following table shows the percentage
of revenues each major expense classification represented in the current and
prior year periods:
Expense as Percentage of Revenues
Six Months Ended December 31 1993 1992
- ---------------------------------------------------------------------
Production, distribution and editorial (PD&E) 41.7% 43.2%
Selling, general and administrative (SG&A) 46.8% 48.0%
Depreciation and amortization 4.7% 4.0%
Unusual item 1.2% --
Page 14 of 29
<PAGE>
PD&E expenses declined as a percentage of revenues primarily due to lower
programming expense at the broadcast television stations. The inclusion of six
months of cable operations versus four months in the prior year also
contributed to the decline as cable has a relatively low PD&E expense ratio.
SG&A expenses also declined as a percentage of revenues compared to the prior
year period. A favorable adjustment to accrued music license fees in the
Broadcast Group, based on an industry settlement with ASCAP (American Society
of Composers, Authors & Publishers) was the biggest single factor. Lower
promotion expenses in the Book Group also contributed.
Depreciation and amortization expense rose as a percentage of net revenues due
to the timing of the Minnesota cable television system acquisition on September
1, 1992.
A discussion of results by segment follows:
Publishing: Revenues in the Magazine Group increased three percent from the
revenues recorded in the six months ended December 31, 1992. Total advertising
revenues declined five percent, primarily due to the sale of Metropolitan Home
magazine in November 1992. Excluding Metropolitan Home, advertising revenues
increased slightly from the prior year period. A first quarter decline in
Better Homes and Gardens advertising revenues was offset by increases in ad
revenues for almost all of the Company's other titles. Increases in excess of
25% were reported by Traditional Home, Country America and Golf For Women,
primarily due to additional ad pages. Each of these titles also reported
higher net revenue per page, in part due to increased rate bases for each of
the titles. Circulation revenues in the Magazine Group increased almost eight
percent compared to the prior-year six month period. An increase in newsstand
sales of the Better Homes and Gardens Special Interest Publications was the
biggest factor in the improvement, followed by increased subscription revenues
from new titles, especially American Patchwork & Quilting.
Magazine Group operating profits for the first six months of fiscal 1994
increased 13 percent over the prior year period. Strong newsstand sales and
profits were reported by Better Homes and Gardens Special Interest
Publications, Ladies Home Journal (including special issues), Country Gardens
and Traditional Home. These titles also benefitted from increased advertising
revenues, as did Country America which reported a 45 percent increase in ad
revenues, primarily due to increased ad pages. Profits in the first six months
of the prior year were held down by a loss on Metropolitan Home magazine (sold
in November 1992). These improvements, when compared to the prior year, were
partially offset by a decline in Better Homes and Gardens profits that resulted
primarily from lower advertising revenues.
Book Group revenues increased two percent from the prior year period due to
increased sales volume in the retail and direct mail operations. Lower volumes
in Craftways, syndication programs and most of the book clubs, primarily a
result of planned downsizing, partially offset the increases.
Page 15 of 29
<PAGE>
Book Group operating results improved significantly from the first six months
of the prior year, primarily due to increased profits from the Group's retail
marketing operations. Strong sales of both new and backlist titles combined
with lower reserves for book returns to result in the profit increase. The book
clubs also reported improved results for the period due to lower merchandise
return rates and lower promotion expenses. Partially offsetting these
improvements were declines in the direct mail and syndication operations.
Direct mail results were unfavorable due to increased product development
costs. The decline in syndication results reflected an increase in lower
margin starter programs due to increased product testing.
Broadcast: Revenues increased almost five percent in the Broadcast Group due
to stronger sales of both local and national advertising. The revenue increase
combined with lower programming expenses and a favorable adjustment to accrued
music license fees to result in a profit increase of more than 60% for the
Broadcast Group. Programming costs have been held down by a combination of
cost saving measures including the purchase of more first run programming.
KPHO, the Company's independent station in Phoenix, reported the most
substantial improvement in operating results. Advertising revenues at the
station have increased 19 percent from the prior year period due to a stronger
sales force and an improving economy in the Phoenix market.
Real Estate: Profits in the Real Estate Group increased significantly from the
first six months of fiscal 1993. Transaction fees, the revenues generated from
member firms' home sales activity, increased seven percent due to continued
strength in the residential housing market. Revenues and profits from the sale
of ancillary products and services also increased.
Cable Television: Increases in revenues and declines in operating results for
the cable television operations reflect the acquisition of the Minnesota system
on September 1, 1992. This system is the larger of two cable television
systems, of which the Company owns approximately 70 percent. Six months'
ownership in the current period, versus four months in the prior year period,
was the primary reason for the revenue growth of approximately 44 percent.
Operating profit, before interest expense, also increased but the profit margin
declined due to the additional amortization of acquisition expenses (associated
with the Minnesota system purchase) and the impact on operations of cable
industry re-regulation. Two additional months of interest expense resulted in
a larger net loss for the cable operations in the current period. The Company
is evaluating its options in relation to continued investment in cable
television.
Other: The increase in interest expense in the current period reflects an
additional two months of debt financing related to the acquisition of the
Minnesota cable television system. Interest income declined in the current
period due to lower interest-earning cash balances that resulted from Company
stock repurchases, timing of payments to the Company's pension plan and the
September 1992 investment in the cable television partnership. Corporate
nonoperating expenses increased compared to the prior year period due to
increased consulting expenses.
Page 16 of 29
<PAGE>
The effective tax rate for the six months ended December 31, 1993 exceeds the
rate in the prior year period primarily due to the increase in the federal
corporate tax rate, that was enacted in August 1993. Accounting rules require
that the effect of a tax rate change on deferred items be reflected in earnings
in the period the change is enacted. To date that increase in the corporate
tax rate has reduced earnings per share by 11 cents. This increase was
partially offset by the favorable effect from the disposition of the broadcast
television stations.
Liquidity and Capital Resources
Net cash provided by operating activities totaled $3,212,000 for the six months
ended December 31, 1993. This was a decrease of $9,098,000 from the comparable
prior year period. The decrease in cash provided was mostly due to a larger
increase in receivables and a smaller decrease in deferred subscription
acquisition costs. Revenue increases in the Broadcast, Book and Magazine
Groups led to increased receivables. The decrease in deferred subscription
acquisition costs was less primarily due to the sale of Metropolitan Home
magazine in the prior year period. The larger decrease in accounts payable and
accruals is primarily a result of reclassifications affecting deferred income
taxes and other deferred items.
Investing activities provided cash of $19,490,000 in the six months ended
December 31, 1993. In the comparable prior year period investing activities
used $16,500,000. The difference resulted primarily from the proceeds received
from the disposition of the two broadcast television stations in the current
period. Also contributing was a prior year investment in the cable partnership
to purchase the Minnesota cable television system. These items are partially
offset by cash provided by a larger redemption of marketable securities in the
prior year.
Net cash used by financing activities declined slightly from $33,409,000 in the
six months ended December 31, 1992 to $32,059,000 in the current period. Less
cash was used by the cable partnership to retire long-term debt in the current
period. This was partially offset by a small increase in the use of cash to
purchase Company common stock. The increase results from a higher average cost
per share. The Company currently has a Board of Directors' authorization to
repurchase up to one million shares of Company stock. Approximately one-fourth
of those shares has been repurchased as of this date.
Capital expenditures in fiscal 1994 are expected to increase by approximately
30% over fiscal 1993 levels. This increase is primarily due to the timing of
the Minnesota cable television system acquisition. All planned expenditures in
the cable television systems occur in the ordinary course of business. No
material commitments for expenditures to upgrade the cable distribution systems
have been made. Most of the Company's other capital spending relates to plans
for new and upgraded computer networks to implement new publishing systems
technology for the pupose of reducing long-term processing costs. However, at
this time, the Company has made no material commitments for capital
expenditures.
At this time, management expects that cash on hand, plus internally-generated
cash flow, will provide funds for capital expenditures, cash dividends and
other operational cash needs for foreseeable periods. Short-term lines of
credit will be used on an as-needed basis for short-term working capital needs.
The Company does not expect the need for any long-term source of cash to meet
operating requirements.
Page 17 of 29
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The Company has received federal income tax deficiency notices relative to its
1986, 1987, 1988, 1989 and 1990 tax years. Generally, the claimed deficiencies
relate to the amortization of intangibles and other matters connected with the
acquisition of Ladies' Home Journal magazine. The issues remaining unresolved
through December 31, 1993, would have an approximate $12 million tax cost if
decided totally adverse to the Company. The Company has contested the
remaining deficiencies in The United States Tax Court in a trial ended October
6, 1992. Management believes that the Company's position was strengthened by
the Supreme Court decision issued April 20, 1993, regarding the Newark Morning
Ledger Company case. The Tax Court decision, involving the Company, is
expected in the first half of calendar 1994. The Company continues to expect
that the ultimate resolution of this matter will not have a material adverse
effect on its financial condition.
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The Annual Meeting of Stockholders was held on November 8, 1993 at the
Company's headquarters in Des Moines, Iowa.
(b) The name of each director elected at the Annual Meeting is shown under
Item 4.(c).
The other directors whose terms of office continued after the meeting
were: Robert A. Burnett, Frederick B. Henry, Richard S. Levitt, E. T.
Meredith III, Nicholas L. Reding, Gerald D. Thornton and Daniel
Yankelovich
(c) Four Class I directors for terms expiring in 1996 were elected at the
annual meeting. The following directors were elected at that meeting in
uncontested elections:
Number of shareholder votes*
----------------------------
For Withhold
---------- --------
Class I directors
Pierson M. Grieve 38,024,378 247,038
Robert E. Lee 38,027,634 243,782
Jack D. Rehm 38,119,999 151,417
Barbara S. Uehling 38,021,243 250,173
*As specified on the proxy card, if no vote For or Withhold was specified,
the vote was voted For the election of the named director.
Page 18 of 29
<PAGE>
Item 4.(c) continued
In addition, stockholders of the Company approved the Meredith Corporation 1993
Stock Option Plan for Non-Employee Directors which was stated as Exhibit A in
the Company's Proxy Statement for the Annual Meeting of Stockholders on
November 8, 1993 and is incorporated herein by reference. The shareholder vote
on the proposal was as follows:
Broker
# For # Against # Abstain # Non-Votes
---------- --------- --------- -----------
36,034,691 1,804,820 431,905 None reported
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit
1) Material contracts: Meredith Corporation Deferred Compensation Plan:
Exhibit 10
2) Statement re computation of per share earnings: Exhibit 11
(b) Reports on Form 8-K
No Form 8-K was filed during the quarter ended December 31, 1993.
Page 19 of 29
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MEREDITH CORPORATION
Registrant
(Larry D. Hartsook)
Larry D. Hartsook
Vice President - Finance
(Principal Financial and
Accounting Officer)
Date: February 10, 1994
Page 20 of 29
Exhibit 10
MEREDITH CORPORATION
____________________________
DEFERRED COMPENSATION PLAN
____________________________
ARTICLE I
Purpose
The purpose of the Deferred Compensation Plan (the "Plan") of Meredith
Corporation (the "Company") is to offer eligible senior officers and other key
employees of the Company who are designated by the Committee (defined below),
the opportunity to defer the receipt of compensation payments they may
otherwise become entitled to, under terms advantageous to such executives, and
the Company, for the periods provided in the Plan.
ARTICLE II
Definitions
For purposes of this Plan, the following terms shall have the following
meanings:
2.1 "Account" shall have the meaning specified in Section 4.1.
2.2 "Annual Compensation" shall mean the aggregate of the Participant's
base salary as in effect on the first day of the calendar year or Short Year,
as the case may be, to which an election under this Plan relates and any
incentive bonuses or other incentive compensation payable in cash to such
Participant during such year.
2.3 "Beneficiary" shall have the meaning specified in Section 7.5.
2.4 "Committee" shall have the meaning specified in Section 6.1.
2.5 "Deferred Amount" shall mean at any time the sum of (i) all of a
Participant's Deferred Compensation attributable to a particular calendar year
or Short Year plus (ii) all Increments credited as of such date to the Account
of such Participant with respect to such year, as provided in Section 4.2.
2.6 "Deferred Compensation" shall mean that portion of Annual
Compensation to which a Participant is entitled, the payment of which the
Participant has elected or is required to defer under this Plan.
2.7 "Designated Deferral Period" shall have the meaning specified in
Section 3.1.
Page 21 of 29
<PAGE>
2.8 "Election Date" shall have the meaning specified in Section 3.2.
2.9 "Eligible Participant" shall mean any employee of the Company who is
a senior officer or other key employee of the Company and who is designated by
the Committee as an eligible Participant in this Plan with respect to any
calendar year or Short Year.
2.10 "Increments" shall have the meaning specified in Section 4.2.
2.11 "Participant" shall mean any employee of the Company who is or will
be an Eligible Participant on any date which is an Election Date.
2.12 "Payout Period" shall have the meaning specified in Section 5.3.
2.13 "Return on Shareholders' Equity" shall mean the amount determined by
dividing the accumulated net after-tax earnings of the Company from continuing
operations before extraordinary items for the applicable fiscal year by the
ending stockholders' equity of the Company for that year.
2.14 "Short Year" shall have the meaning specified in Section 3.2.
2.15 "Specified Amount" shall have the meaning specified in Section 3.1.
ARTICLE III
Deferral Election
3.1 Election.
(a) Subject to the limitations to be prescribed by the Committee pursuant
to Section 3.3, each Participant may elect to have the payment of a Specified
Amount of his or her Annual Compensation deferred pursuant to this Plan for the
Designated Deferral Period. The "Specified Amount" shall mean the portion of
the Participant's Annual Compensation for a particular calendar year or Short
Year which the Participant elects to defer hereunder, provided however that
such amount shall not be less than $15,000.00 and provided further that such
amount shall be specified in increments of $5,000.00.
(b) The "Designated Deferral Period" shall mean one of the following
periods as selected by the Participant with respect to his or her Deferred
Compensation for the particular calendar year or Short Year: (i) until a
specified date in the future, or (ii) until a date which is sixty (60) days
following the Participant's termination of employment with the Company;
provided however that the Committee shall have the authority to require
deferral beyond the expiration of the Designated Deferral Period to the extent
necessary to avoid a limitation on the deductibility by the Company of the
Deferred Amount or any portion thereof pursuant to Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"). For purposes of this
Section 3.1, it shall not be considered a termination of employment when a
Participant is granted a military or personal leave of absence by the Company
or when a Participant is transferred from the Company or a subsidiary of the
Company to another subsidiary or to the Company or to any affiliate as defined
in Section 414 of the Code.
Page 22 of 29
<PAGE>
(c) In addition, in the case of any Participant who, with respect to a
particular calendar year or Short Year during the term of this Plan, is or may
in the judgment of the Committee be a "covered employee" under Section 162(m)
of the Code for such calendar year or Short Year, and who may have "applicable
employee remuneration" (as defined in said Section of the Code) for that year
of more than $1 million, the Committee may in its sole discretion treat the
Participant as having elected to defer that portion of his or her Annual
Compensation for the particular year which is necessary to avoid the
application of Section 162(m) of the Code to such year. Any Annual
Compensation which is deferred as a result of this Section 3.1(c) shall be
deemed to have a Designated Deferral Period which ends on the first date upon
which the Deferred Compensation resulting from this Section 3.1(c) can be paid
without causing or increasing a limitation on the Company's ability to deduct
compensation paid to the Participant pursuant to Section 162(m) of the Code.
3.2 Deferral Election. An election under Section 3.1 shall be in writing
on a form prescribed by the Committee. A separate election shall be made for
each calendar year or Short Year and shall be delivered to the Committee on or
before the Election Date for such calendar year or Short Year. The "Election
Date" for a calendar year for which a deferral election is being made shall be
the last day of the immediately preceding calendar year. The "Election Date"
in the case of (i) an employee who becomes an Eligible Participant for the
first time after the beginning of a calendar year or (ii) in the case of the
first year for which this Plan is effective (items (i) and (ii) each being a
"Short Year"), the "Election Date" shall be 30 days after such employee
receives notice that he or she has become an Eligible Participant for such
Short Year and the election shall be applicable only with respect to the
Participant's Annual Compensation payable by the Company after the Election
Date. Each written election shall set forth the Specified Amount of the
Participant's Annual Compensation for the calendar year covered by the election
(or the remainder thereof in the case of a Short Year) the Participant desires
to have deferred, the Designated Deferral Period, and the Payout Period with
respect to the Deferred Amount for such year. An election, once made, shall be
irrevocable.
3.3 Limitations on Deferral Elections. The Committee shall set, from
time to time, limitations on the amount of or type of Annual Compensation which
may be subject to deferral hereunder, including, but not limited to,
establishing annual limitations relating to grades of employees, and/or
compensation levels. The applicable limitations for a particular calendar year
or Short Year shall be set forth in an attachment to the form of deferral
election relating to such year.
ARTICLE IV
Treatment of Deferred Amounts
4.1 Memorandum Account. The Company shall establish a memorandum account
(the "Account") for each Participant who has Deferred Compensation under this
Plan from time to time during the calendar year or Short Year. The amount of
such Deferred Compensation shall be credited to such Participant's Account on
the date or dates during the calendar year or Short Year on which the Deferred
Compensation would have been payable to the Participant but for the deferral
under this Plan.
Page 23 of 29
<PAGE>
4.2 Increments. Each Participant's Deferred Amount shall be deemed to
earn "interest" at a rate equal to the lower of (i) the base rate charged by
CitiBank N.A. on corporate loans to responsible and substantial borrowers in
effect from time to time, which is also referred to as the "prime rate," or
(ii) the Company's Return on Shareholders' Equity for the immediately preceding
fiscal year of the Company; provided, however, that in the event the Return on
Shareholders' Equity is less than or equal to zero, the Committee shall have
the authority to establish, in its sole discretion, an interest rate in place
of the Return on Shareholders' Equity for the immediately preceding fiscal
year. Any interest deemed to have been earned on the Participant's Deferred
Amount shall be an "Increment" for purposes of this Plan. The Company will
separately record the Increments relating to the Deferred Compensation
attributable to a particular calendar year or Short Year to reflect the fact
that a Participant may have elected a different Designated Deferral Period with
respect to each year in which he or she participates in the Plan.
4.3 Assets. No assets shall be segregated or earmarked in respect of any
Deferred Amount and no Participant shall have any right to assign, transfer,
pledge or hypothecate his or her interest, or any portion thereof, in his or
her Account. The Plan and the crediting of Accounts hereunder shall not
constitute a trust and shall merely be for the purpose of recording an
unsecured contractual obligation. All amounts payable pursuant to the terms of
this Plan shall be paid from the general assets of the Company.
4.4 Reports. Until the entire Deferred Amount in an Account shall have
been paid in full, the Company will furnish to each Participant a report, at
least annually, setting forth transactions in such Account and the status of
his or her Account.
ARTICLE V
Payment of Deferred Amounts
5.1 Amount of Payment. The amount to be paid to a Participant following
the expiration of the Designated Deferral Period with respect to any calendar
year or Short Year shall be an amount equal to the Deferred Amount in respect
of such year.
5.2 Form of Payment. All payments of Deferred Amounts under this Plan
shall be made in cash.
5.3 Payment of Deferred Amount. The Deferred Compensation credited to a
Participant's Account (increased by the Increments attributable thereto) with
respect to a particular calendar year or Short Year shall be payable in a lump
sum or a series of annual installments immediately following the end of the
Designated Deferral Period; provided however that the Committee shall have the
authority to require deferral of amounts otherwise payable in accordance with
this Section 5.3 to the extent necessary to avoid a limitation on the
deductibility by the Company of the Deferred Amount (or a portion thereof)
pursuant to Section 162(m) of the Code. In this regard, each Participant may
elect, at the time of his or her Deferral Election, the number of annual
installments (which shall not be less than 2 nor more than 10) over which the
Deferred Amounts shall be paid (the "Payout Period").
Page 24 of 29
<PAGE>
5.4 Payment Following Death or Permanent Disability. Notwithstanding the
Designated Deferral Period or the Payout Period selected by the Participant, if
the employment of a Participant is terminated as a result of the Participant's
death or permanent disability, the entire Deferred Amount credited to such
Participant's Account shall be payable in a lump sum to such Participant (or,
in the case of death, to his or her Beneficiary) on a date which is sixty (60)
days after the Participant's death or termination of employment due to
permanent disability; provided however that the Committee shall have the
authority to require deferral of amounts otherwise payable in accordance with
this Section 5.4 to the extent necessary to avoid a limitation on the
deductibility by the Company of the Deferred Amount (or a portion thereof)
pursuant to Section 162(m) of the Code. For purposes of this Plan, a
Participant's employment shall be deemed to have been terminated as a result of
permanent disability in the event the Participant suffers a physical illness,
injury or other impairment in respect to which the Participant is entitled to
receive benefits under the long-term disability plan maintained by the Company.
5.5 Acceleration of Payments. Notwithstanding any other provision of
this Plan to the contrary, the Committee, in its sole discretion, is empowered
to accelerate the payment of Deferred Amounts, without a prepayment penalty, to
a Participant for any reason the Committee may determine to be appropriate.
Neither the Company nor the Committee shall have any obligation to make any
such acceleration for any reason whatsoever.
ARTICLE VI
Administration
6.1 Committee. The Plan shall be administered and interpreted by the
Compensation Committee appointed from time to time by the Board of Directors of
the Company (the "Committee"). The Committee shall have full authority to
construe and interpret the terms and provisions of the Plan, to adopt, alter
and repeal such administrative rules, guidelines and practices governing this
Plan and perform all acts, including the delegation of its administrative
responsibilities as it shall, from time to time, deem advisable, and to
otherwise supervise the administration of this Plan. The Committee may correct
any defect, supply any omission or reconcile any inconsistency in the Plan, or
in any election hereunder, in the manner and to the extent it shall deem
necessary to carry the Plan into effect. Any decision, interpretation or other
action made or taken in good faith by or at the direction of the Company, the
Board of Directors of the Company, or the Committee (or any of its members)
arising out of or in connection with the Plan shall be within the absolute
discretion of all and each of them, as the case may be, and shall be final,
binding and conclusive on the Company and all employees and Participants and
their respective heirs, executors, administrators, successors and assigns. Any
actions to be taken by the Committee will require the consent of a majority of
the Committee members.
Page 25 of 29
<PAGE>
6.2 Liability. No member of the Board of Directors of the Company, no
employee of the Company and no member of the Committee (nor the Committee
itself) shall be liable for any act or action hereunder whether of omission or
commission, by any other member or employee or by any agent to whom duties in
connection with the administration of the Plan have been delegated or, except
in circumstances involving his or her bad faith, gross negligence or fraud, for
anything done or omitted to be done by such person. The Company will fully
indemnify and hold the members of the Committee harmless from any liability
hereunder, except in circumstances involving his or her bad faith, gross
negligence or fraud. The Company or the Committee may consult with legal
counsel, who may be counsel for the Company or other counsel, with respect to
its obligations or duties hereunder, or with respect to any action or
proceeding or any question of law, and shall not be liable with respect to any
action taken or omitted by it in good faith pursuant to the advice of such
counsel.
ARTICLE VII
Miscellaneous
7.1 Amendment or Termination. Notwithstanding any other provision of
this Plan, the Board of Directors of the Company may at any time, and from time
to time, amend, in whole or in part, any or all of the provisions of the Plan,
or suspend or terminate it entirely, retroactively or otherwise; provided,
however that any such amendment, suspension or termination may not, without the
Participant's consent, adversely affect any Deferred Amount credited to him or
her for any calendar year or Short Year ended prior to the effective date of
such amendment, suspension or termination. Notwithstanding the foregoing, upon
any termination of this Plan, the Board of Directors of the Company may in its
sole discretion accelerate the payment of all Deferred Amounts credited as of
the date of termination of this Plan without a prepayment penalty. The Plan
shall remain in effect until terminated pursuant to this Section 7.1.
7.2 Expenses. The Company will bear all expenses incurred by it in
administering this Plan.
7.3 Withholding. The Company shall have the right to deduct from any
payment to be made pursuant to this Plan, as well as from any other payments to
be made by the Company to the Participant, any Federal, state or local taxes
required by law to be withheld.
7.4 No Obligation. Neither this Plan nor any elections hereunder shall
create any obligation on the Company to continue any other existing award plans
or policies or to establish or continue any other programs, plans or policies
of any kind. Neither this Plan nor any election made pursuant to this Plan
shall give any Participant or other employee any right with respect to
continuance of employment by the Company or any subsidiary or of any specific
aggregate amount of compensation, nor shall there be a limitation in any way on
the right of the Company or any subsidiary by which an employee is employed to
terminate such employee at any time for any reason whatsoever or for no reason,
nor shall this Plan create a contract of employment.
Page 26 of 29
<PAGE>
7.5. Designation of Beneficiary. In the event of the death of a
Participant, the amount payable under Section 5.1 hereof shall, unless the
Participant shall designate to the contrary as provided below, thereafter be
made to such person or persons who, as of the date payment is to be made under
this Plan, would receive distribution of the Participant's account balance, if
any, under the terms of the Meredith Savings and Investment Plan.
Notwithstanding the preceding sentence, a Participant may specifically
designate the person or persons (who may be designated successively or
contingently) to receive payments under this Plan following the Participant's
death by filing a written beneficiary designation with the Company during the
Participant's lifetime. Such beneficiary designation shall be in such form as
may be prescribed by the Company and may be amended from time to time or may be
revoked by the Participant pursuant to written instruments filed with the
Company during his or her lifetime.
Beneficiaries designated by a Participant may be any natural or legal
person or persons, including a fiduciary, such as a trustee of a trust or the
legal representative of an estate. Unless otherwise provided by the
beneficiary designation filed by a Participant, if all of the persons so
designated die before a Participant on the occurrence of a contingency not
contemplated in such beneficiary designation, then the amount payable under
this Plan shall be paid to the person or persons determined in accordance with
the first sentence of this Section 7.5.
7.6 No Assignment; Resolution of Disputes. Except as provided in Section
7.5 hereof, no right or interest in any Account or Deferred Amount under this
Plan shall be assignable or transferable, and no right or interest of any
Participant in any Account hereunder or to any Deferred Amount shall be subject
to any lien, obligation or liability of such Participant. In the event any
conflicting demands are made upon the Company with respect to any payments due
as a result of this Plan, provided that the Company shall not have received
prior written notice that said conflicting demands have been finally settled by
court adjudication, arbitration, joint order or otherwise, the Company may pay
to the Participant any and all amounts due hereunder and thereupon the Company
shall stand fully relieved and discharged of any further duties or liabilities
under this Plan.
7.7 Applicable Law. This Plan and the obligations of the Company
hereunder shall be subject to all applicable Federal and state laws, rules and
regulations and to such approvals by any governmental or regulatory agency as
may from time to time be required. The Board of Directors of the Company may
make such changes in this Plan as may be necessary or desirable, in the opinion
of the Board of Directors, to comply with the laws, rules and regulations of
any governmental or regulatory authority, or to be eligible for tax benefits
under the Internal Revenue Code of 1986, as amended, or any other laws or
regulations of any Federal, state, or local government.
7.8 Governing Law. This Plan and all actions taken in connection
herewith shall be governed and construed in accordance with the substantive
laws of the State of Iowa (regardless of the law that might otherwise govern
under applicable Iowa principles of conflict of laws).
Page 27 of 29
<PAGE>
7.9 Construction. Wherever any words are used in this Plan in the
singular form they shall be construed as though they were also used in the
plural form in all cases where they would so apply. The titles to sections of
this Plan are intended solely as a convenience and shall not be used as an aid
in construction of any provisions thereof.
7.10 Effective Date. This Plan was adopted by the Board of Directors of
the Company on November 8, 1993.
Page 28 of 29
Exhibit 11
MEREDITH CORPORATION
Computation of Primary and Fully Diluted Per
Common Share Earnings - Treasury Stock Method
For the Six Months Ended December 31, 1993 and 1992
(Unaudited)
Weighted average number of shares
1993 1992
Fully Fully
Primary Diluted Primary Diluted
------- ------- ------- -------
Weighted average number of shares
outstanding in thousands 14,427 14,427 15,493 15,493
Dilutive effect of unexercised
stock options and management
incentive deferred awards in
thousands 90 110 20 20
------ ------ ------ ------
Total 14,517 14,537 15,513 15,513
====== ====== ====== ======
Primary and fully
diluted earnings per common share
1993 1992
Fully Fully
Primary Diluted Primary Diluted
------- ------- ------- -------
Net earnings per share $1.03* $1.03* $ .53 $ .53
===== ===== ===== =====
Note: Primary - Based on average market prices.
Fully Diluted - Based on the higher of the average market price
or the market price at December 31 of each
year.
*Dilution less than three percent from earnings per common share
outstanding and therefore not considered to be material.
Page 29 of 29
