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 September 30, 1996
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 October 31, 1996
Common Stock, $1 par value 20,381,877
Class B Stock, $1 par value 6,444,695
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Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Meredith Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
September 30 June 30
Assets 1996 1996
- ---------------------------------------------------------------------------
(in thousands)
Current assets:
Cash and cash equivalents $ 16,331 $ 13,801
Receivables, net 89,361 89,448
Inventories 26,110 31,185
Supplies and prepayments 12,410 8,104
Film rental costs 15,345 10,321
Deferred income taxes 9,330 8,930
Subscription acquisition costs 49,030 48,887
---------- ----------
Total current assets 217,917 210,676
---------- ----------
Property, plant and equipment 185,837 182,855
Less accumulated depreciation (105,537) (102,856)
---------- ----------
Net property, plant and equipment 80,300 79,999
---------- ----------
Net assets of discontinued operation 88,167 88,051
Subscription acquisition costs 43,295 46,745
Film rental costs 6,836 6,816
Other assets 19,005 19,043
Goodwill and other intangibles
(at original cost less accumulated amortization) 279,860 282,443
---------- ----------
Total assets $735,380 $733,773
========== ==========
See accompanying Notes to Interim Consolidated Financial Statements.
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(Unaudited)
September 30 June 30
Liabilities and Stockholders' Equity 1996 1996
- ---------------------------------------------------------------------------
(in thousands)
Current liabilities:
Current portion of long-term debt $ 15,000 $ 15,000
Current portion of long-term film rental contracts 17,721 13,063
Accounts payable 34,259 42,085
Accrued taxes and expenses 66,664 68,958
Unearned subscription revenues 141,825 140,401
---------- ----------
Total current liabilities 275,469 279,507
---------- ----------
Long-term debt 35,000 35,000
Long-term film rental contracts 8,196 8,419
Unearned subscription revenues 95,469 97,811
Deferred income taxes 25,586 25,510
Other deferred items 29,248 25,962
---------- ----------
Total liabilities 468,968 472,209
---------- ----------
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 80,000,000 shares; issued and
outstanding 20,335,115 at September 30 and
20,380,437 at June 30 (net of treasury shares,
12,351,623 at September 30 and 12,207,776
at June 30.) 20,335 20,380
Class B stock, par value $1 per share,
convertible to common stock
Authorized 15,000,000 shares; issued and
outstanding 6,501,138 at September 30 and
6,568,583 at June 30. 6,501 6,569
Additional paid-in capital -- --
Retained earnings 242,886 236,903
Unearned compensation (3,310) (2,288)
---------- ----------
Total stockholders' equity 266,412 261,564
---------- ----------
Total liabilities and stockholders' equity $735,380 $733,773
========== ==========
See accompanying Notes to Interim Consolidated Financial Statements.
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Meredith Corporation and Subsidiaries
Consolidated Statements of Earnings (Unaudited)
Three Months Ended September 30 1996 1995
- ---------------------------------------------------------------------
(in thousands, except per share)
Revenues (less returns and allowances):
Advertising $104,334 $100,571
Circulation 62,642 66,701
Consumer books 9,798 17,991
All other 22,406 21,310
---------- ----------
Total revenues 199,180 206,573
---------- ----------
Operating costs and expenses:
Production, distribution and editorial 85,331 88,694
Selling, general and administrative 85,879 94,035
Depreciation and amortization 5,640 5,626
---------- ----------
Total operating costs and expenses 176,850 188,355
---------- ----------
Income from operations 22,330 18,218
Interest income 379 662
Interest expense (736) (1,759)
---------- ----------
Earnings from continuing operations
before income taxes 21,973 17,121
Income taxes 9,512 7,612
---------- ----------
Earnings from continuing operations 12,461 9,509
Discontinued operation:
Loss from cable operations -- (717)
---------- ----------
Net earnings $ 12,461 $ 8,792
========== ==========
Net earnings per share:
Earnings from continuing operations $ 0.45 $ 0.34
Discontinued operation -- (0.03)
---------- ----------
Net earnings per share $ 0.45 $ 0.31
========== ==========
Average shares outstanding 27,741 28,082
========== ==========
See accompanying Notes to Interim Consolidated Financial Statements.
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Meredith Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended September 30 1996 1995
- ---------------------------------------------------------------------------
(in thousands)
Cash flows from operating activities:
Net earnings $ 12,461 $ 8,792
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 5,640 5,626
Amortization of film contract rights 4,236 3,453
Loss from discontinued operation -- 717
Changes in assets and liabilities:
Accounts receivable 87 (2,563)
Inventories 5,075 3,303
Supplies and prepayments (4,279) 5,907
Subscription acquisition costs 3,307 4,907
Accounts payable (7,826) (14,231)
Accruals (2,211) 5,804
Unearned subscription revenues (918) (2,872)
Deferred income taxes (324) 1,940
Other deferred items 3,286 540
--------- ---------
Net cash provided by operating activities 18,534 21,323
--------- ---------
Cash flows from investing activities:
Additions to property, plant, and equipment (3,447) (7,730)
Change in other assets 11 (1,432)
--------- ---------
Net cash (used) by investing activities (3,436) (9,162)
--------- ---------
Cash flows from financing activities:
Long-term debt retired -- (10,000)
Payments for film rental contracts (4,955) (3,581)
Proceeds from common stock issued 2,005 1,818
Purchase of Company stock (6,664) --
Dividends paid (2,954) (2,754)
--------- ---------
Net cash (used) by financing activities (12,568) (14,517)
--------- ---------
Net increase (decrease) in cash and cash equivalents 2,530 (2,356)
Cash and cash equivalents at beginning of year 13,801 11,825
--------- ---------
Cash and cash equivalents at end of period $ 16,331 $ 9,469
========= =========
See accompanying Notes to Interim Consolidated Financial Statements.
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MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Accounting Policies
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. Discontinued Operations
On October 25, 1996, the Company sold, effective as of September 30, 1996, all
of its ownership interest in cable television systems. The Meredith/New
Heritage Partnership (MNH Partnership), of which the Company indirectly owned
96 percent, sold its 73 percent ownership interest in Meredith/New Heritage
Strategic Partners, L.P. to Continental Cablevision of Minnesota Subsidiary
Corporation, an affiliate of MNH Partnership's minority partner, Continental
Cablevision of Minnesota, Inc. The total value of the systems was $262.5
million. Meredith Corporation received approximately $116 million in cash (net
of taxes) and will recognize a gain in the fiscal second quarter of
approximately $28 million (net of taxes and deferred net losses) from the sale.
The cable segment was classified as a discontinued operation effective
September 30, 1995. For the three months ending September 30, 1995, cable
operations reported revenues of $12.2 million, income from operations of
$721,000, and a net loss of $717,000 (including an income tax benefit of
$27,000). Cable net losses subsequent to September 30, 1995, the measurement
date, have been deferred since the Company expected to realize a net gain from
the sale. Cable operations reported revenues of $52.9 million, income from
operations of $6.0 million, and a net loss of $189,000 (including income tax
expense of $89,000) for the period October 1, 1995 through September 30, 1996.
Interest expense reflected in the loss from the discontinued cable operation is
based on long-term debt that is specifically attributable to cable operations
and is non-recourse to Meredith Corporation. Net assets of the discontinued
operation at September 30, 1996 consisted of goodwill and other intangibles
$133.7 million, net property, plant and equipment $71.0 million, net of long-
term debt ($84.3 million) and other net liabilities ($32.2 million).
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MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(Unaudited)
3. Inventories
Major components of inventories are summarized below. Of total inventory
values shown, approximately 80 and 67 percent respectively, are under the LIFO
method at September 30, 1996 and June 30, 1996.
(unaudited)
September 30 June 30
1996 1996
------------ --------
(in thousands)
Raw materials $20,141 $28,354
Work in process 13,228 11,907
Finished goods 6,093 4,276
-------- --------
39,462 44,537
Reserve for LIFO cost valuation (13,352) (13,352)
-------- --------
Total $26,110 $31,185
======== ========
4. Revenues, operating profit and depreciation and amortization by industry
segment are shown below:
(unaudited)
Three Months
Ended September 30
-------------------
1996 1995
-------- --------
(in thousands)
Revenues
Publishing $157,086 $166,563
Broadcasting 35,479 34,134
Real Estate 6,628 6,206
Less: Inter-segment revenues (13) (330)
-------- --------
Total revenues $199,180 $206,573
======== ========
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Operating profit
Publishing $ 13,652 $ 9,070
Broadcasting 12,466 12,761
Real Estate 1,543 1,020
Unallocated corporate expense (5,331) (4,633)
-------- --------
Total operating profit $ 22,330 $ 18,218
======== ========
Depreciation and amortization
Publishing $ 2,207 $ 2,520
Broadcasting 2,918 2,623
Real Estate 138 115
Unallocated corporate 377 368
-------- --------
Total depr. and amortization $ 5,640 $ 5,626
======== ========
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations: First Quarter Fiscal 1997 versus First Quarter Fiscal
1996
(Note: All per-share amounts are computed on a post-tax basis.)
Consolidated
- ------------
Quarter ended September 30 1996 1995
-------------------------- -------- --------
(in thousands, except per share)
Total revenues $199,180 $206,573
======== ========
EBITDA $ 27,970 $ 23,844
======== ========
Income from operations $ 22,330 $ 18,218
======== ========
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Earnings from continuing operations $ 12,461 $ 9,509
======== ========
Net earnings $ 12,461 $ 8,792
======== ========
Per Share:
Earnings from continuing operations $ .45 $ .34
======== ========
Net earnings $ .45 $ .31
======== ========
EBITDA is earnings from continuing operations before interest, taxes,
depreciation and amortization.
Net earnings of $12.5 million, or 45 cents per share, were recorded in the
first quarter of fiscal 1997 compared to net earnings of $8.8 million, or 31
cents per share, in the fiscal 1996 first quarter. Earnings per share from
continuing operations increased 32 percent primarily due to improved operating
performance in the publishing segment.
The Company's first quarter revenues declined 4 percent due to lower publishing
revenues. The decline in publishing revenues reflected the elimination of most
direct-response book sales due to the prior-year sale of the Company's book
clubs and the formation of a strategic alliance with The Reader's Digest
Association, Inc. Also contributing to the revenue decline were changes in
magazine operations, including a rate base reduction at Ladies' Home Journal
magazine and the discontinuation of home garden and Weekend Woodworking
magazines. Excluding the effect of these changes, Company revenues increased 5
percent.
EBITDA increased 17 percent and income from operations was up 23 percent.
Operating costs and expenses were $176.9 million in the current period compared
with $188.4 million in the prior-year period. The operating profit margin rose
from 8.8 percent of revenues in the fiscal 1996 first quarter to 11.2 percent
in the current period. Lower selling, general and administrative expenses,
both in total and as a percentage of revenues, were the primary factor in the
margin improvement. Downsizing in the book operations and lower subscription
acquisition costs in magazine operations, resulting from the aforementioned
magazine closings and rate base reduction, led to the decline. The downsizing
of book operations and the previously mentioned magazine changes combined with
a reduction in LIFO inventory expense, due to falling paper prices, to result
in lower production, distribution and editorial expenses in the quarter.
Lower bank debt in the current quarter resulted in net interest expense of $.4
million, down from $1.1 million in the prior-year first quarter.
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The Company's effective tax rate was 43.3 percent compared with 44.5 percent in
the prior-year first quarter. The decline reflected an increase in projected
fiscal year earnings, which lessens the effect of non-deductible items on the
overall tax rate.
Publishing
- ----------
Quarter ended September 30 1996 1995
-------------------------- -------- --------
(in thousands)
Revenues
---------
Magazine advertising $ 70,560 $ 68,487
Magazine circulation 62,642 66,701
Consumer book 9,798 17,991
Other 14,086 13,384
-------- --------
Total revenues $157,086 $166,563
======== ========
Operating profit $ 13,652 $ 9,070
======== ========
Publishing revenues decreased 6 percent primarily due to lower consumer book
revenues. The 46 percent decline in consumer book revenues reflected the
elimination of most direct-response book sales due to the prior-year sale of
the Company's book clubs and formation of a strategic alliance with The
Reader's Digest Association, Inc. Revenues from retail book sales increased 19
percent for the quarter due to higher sales volumes, largely attributed to the
11th edition of the Better Homes and Gardens New Cook Book, introduced in
August. Magazine circulation revenues declined 6 percent primarily due to the
effect of a 10 percent advertising rate base reduction (effective with the
February 1996 issue) at Ladies' Home Journal magazine, the Company's second
largest circulation title, and the closing of home garden and Weekend
Woodworking magazines. Magazine advertising revenues grew 3 percent, largely
due to an 11 percent increase in ad revenues at Better Homes and Gardens, the
Company's largest circulation title. Better Homes and Gardens magazine's ad
revenue growth primarily reflected increased ad pages. Advertising revenues at
Ladies' Home Journal, declined 14 percent due to lower average revenue per page
and fewer ad pages. Both factors contributed almost equally to the decline.
The decline in average revenue per page reflected the advertising rate base
reduction.
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Publishing operating profit was up 51 percent in the fiscal 1997 first quarter.
The improvement was largely a result of increased operating profit from
magazine publishing due to higher ad revenues, improved circulation results and
falling paper prices. Increased revenues and operating profits from retail
book publishing and licensing operations also contributed. In spite of lower
revenues, Ladies' Home Journal reported a substantial increase in operating
profit due to lower production costs (a result of favorable pricing and reduced
volumes) and lower circulation expenses. The decline in circulation expenses
was due to fewer new prospect subscription mailings, resulting in part from the
rate base reduction. Better Homes and Gardens also reported higher operating
profit in the quarter primarily due to increased advertising revenues. The
elimination of an operating loss from home garden magazine, which ceased
publication in the spring of 1996, and improved operating results at Country
America magazine, due to the timing of subscription acquisition mailings, also
contributed.
Paper is a significant expense of the Publishing segment. Paper prices, which
had been escalating in fiscal 1995 and early fiscal 1996, began to moderate in
the second half of fiscal 1996. As of October 1, 1996, the Company's average
price paid for paper was approximately 10 percent lower than the price paid at
June 30, 1996. Declining prices have resulted in lower LIFO inventory expense
in the current period. The price of paper is driven by overall market
conditions and, therefore, is difficult to predict. However, at this time,
management does not anticipate any increases in paper prices until late in this
fiscal year.
Broadcasting
- ------------
Quarter ended September 30 1996 1995
-------------------------- -------- --------
(in thousands)
Revenues
--------
Advertising $ 33,774 $ 32,084
Other 1,705 2,050
-------- --------
Total revenues $ 35,479 $ 34,134
======== ========
Operating profit $ 12,466 $ 12,761
======== ========
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Revenues increased 4 percent in the fiscal 1997 first quarter primarily due to
advertising revenue growth at WSMV-Nashville and the addition of revenues from
WOGX-Ocala/Gainesville, acquired in January 1996. Advertising revenues also
increased at KVVU-Las Vegas and KCTV-Kansas City but declined at the Company's
other three stations. Management believes the advertising revenue results of
the first fiscal quarter were strongly affected by the summer Olympic Games.
WSMV-Nashville, the Company's only NBC affiliate, benefited from the network's
coverage of the Games. Revenues at the Company's CBS and FOX affiliates lagged
as management believes advertisers directed spending to NBC's broadcast of the
Olympics or chose not to advertise at all during the Games. Operating profit
was down 2 percent from the prior-year first quarter. The decline reflected
lower advertising revenues at some stations and increased programming costs.
The expansion of local news programming at WNEM-Flint/Saginaw and KCTV-Kansas
City contributed to the increase in programming costs.
Real Estate
- -----------
Quarter ended September 30 1996 1995
-------------------------- -------- --------
(in thousands)
Total revenues $ 6,628 $ 6,206
======== ========
Operating profit $ 1,543 $ 1,020
======== ========
Revenues increased 7 percent and operating profit was up 51 percent largely due
to growth in transaction fee revenues. These revenues are generated by member
firms' residential home sales. The growth reflected record franchise
membership levels and continued strength in existing home sales.
Discontinued Operation
- ----------------------
The sale of the Company's ownership interest in cable television operations was
completed on October 25, 1996. The Meredith/New Heritage Partnership (MNH
Partnership), of which the Company indirectly owned 96 percent, sold its 73
percent ownership interest in Meredith/New Heritage Strategic Partners, L.P. to
Continental Cablevision of Minnesota Subsidiary Corporation, an affiliate of
MNH Partnership's minority partner, Continental Cablevision of Minnesota, Inc.
The total value of the systems was $262.5 million. Meredith Corporation
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received approximately $116 million in cash (net of taxes) and will record a
gain of approximately $28 million from the sale. The amount of the gain
exceeds previous estimates due to recent strong operating performance and
increased working capital generated by the cable systems. The gain is net of
taxes and deferred cable losses from September 30, 1995 until September 30,
1996, the effective date of the sale. The cable segment was classified as a
discontinued operation on September 30, 1995.
Liquidity and Capital Resources
Cash and cash equivalents increased by $2.5 million in the first quarter of
fiscal 1997 compared to a decrease in cash of $2.4 million in the prior-year
quarter. The change reflected higher spending for capital expenditures and
debt payments in the prior-year quarter, partially offset by the increased use
of cash in the current quarter for Company stock repurchases. The Company's
primary source of cash in both periods was cash provided by operating
activities. That amount was $18.5 million in the current quarter, down 13
percent from the prior-year quarter due to changes in working capital items.
These changes were primarily related to receipt of the Ladies' Home Journal
income tax settlement and downsizing in book operations in the prior-year
quarter. The timing of paper inventory purchases and contributions to Company
pension plans also contributed to the working capital changes.
Company debt associated with continuing operations, incurred for the
acquisition of WSMV-Nashville, totaled $50.0 million at September 30, 1996.
This debt was paid in its entirety in October 1996, using the proceeds from the
cable sale. Interest expense associated with this debt totaled $674,000
(excluding $67,000 in capitalized interest) in the three months ended September
30, 1996.
In the first quarter of fiscal 1997, the Company spent $6.7 million for the
repurchase on the open market of 164,000 shares of Meredith Corporation common
stock. No shares were repurchased in the prior-year first quarter. As of
September 30, 1996, approximately 1,145,000 shares could be repurchased under
existing authorizations by the Board of Directors. The status of the
repurchase program is reviewed at each quarterly Board of Directors meeting.
Management expects that proceeds from the cable sale and/or cash generated by
operating activities will be used to fund future share repurchases.
Dividends paid in the first quarter of fiscal 1997 were $3.0 million (11 cents
per share) compared with $2.8 million (10 cents per share) in the prior-year
period.
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First quarter capital expenditures were $3.4 million compared to spending of
$7.7 million in the prior-year quarter. The decrease reflected prior-year
spending for new office facilities in New York City and higher prior-year
spending for broadcasting technical equipment. Capital expenditures for fiscal
1997 are expected to be approximately equal to fiscal 1996 capital spending of
nearly $30 million. This includes approximately $16 million planned to be
spent in fiscal 1997 for the construction of a new office building and related
improvements in Des Moines. Fiscal 1996 spending for this project totaled $7
million. Total cost of the project is estimated at approximately $40 million.
The balance of the spending will occur in fiscal 1998. Funds for the new Des
Moines building and other capital expenditures are expected to be provided by
available cash, including cash from operating activities. The Company has made
no other material commitments for capital expenditures.
At this time, management expects that cash on hand, internally-generated cash
flow and short-term bank debt under existing bank lines of credit will provide
funds for any additional cash needs (e.g., cash dividends) for foreseeable
periods. At September 30, 1996, Meredith Corporation had unused committed
lines of credit totaling $30 million. The Company does not expect the need for
any long-term source of cash to meet working capital requirements.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
10.1 Meredith Corporation 1990 Restricted Stock Plan for Non-Employee
Directors, as amended
10.2 Meredith Corporation 1993 Stock Option Plan for Non-Employee
Directors, as amended
10.3 Amendment to the 1992 Meredith Corporation Stock Incentive Plan
10.4 1996 Stock Incentive Plan Agreement - Nonqualified Stock Option Award
between Meredith Corporation and Christopher M. Little dated
August 14, 1996
10.5 1992 Stock Incentive Plan Agreement - Nonqualified Stock Option Award
between Meredith Corporation and Philip A. Jones dated August 14,
1996
10.6 Statement re: Meredith Corporation Nonqualified Stock Option Award
Agreements dated August 14, 1996, with named executive officers
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11) Statement re computation of per share earnings
27) Financial Data Schedule
99) Additional financial information from the Company's first quarter
press release dated October 21, 1996
(b) Reports on Form 8-K
No Form 8-K was filed during the quarter ended September 30, 1996.
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 Accounting and
Financial Officer)
Date: November 12, 1996
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Index to Exhibits
Exhibit
Number Item
------- -----------------------------------------------------------
10.1 Meredith Corporation 1990 Restricted Stock Plan for Non-
Employee Directors, as amended
10.2 Meredith Corporation 1993 Stock Option Plan for Non-Employee
Directors, as amended
10.3 Amendment to the 1992 Meredith Corporation Stock Incentive
Plan
10.4 1996 Stock Incentive Plan Agreement - Nonqualified Stock
Option Award between Meredith Corporation and Christopher M.
Little dated August 14, 1996
10.5 1992 Stock Incentive Plan Agreement - Nonqualified Stock
Option Award between Meredith Corporation and Philip A. Jones
dated August 14, 1996
10.6 Statement re: Meredith Corporation Nonqualified Stock Option
Award Agreements dated August 14, 1996, with named executive
officers
11 Statement re computation of per share earnings
27 Financial Data Schedule
99 Additional financial information from the Company's first
quarter press release dated October 21, 1996
Exhibit 10.1
------------
MEREDITH CORPORATION
1990 RESTRICTED STOCK PLAN
FOR NON-EMPLOYEE DIRECTORS, AS AMENDED
1. Purpose. The purpose of the Meredith Corporation 1990 Restricted
Stock Plan for Non-Employee Directors, as Amended (the "Plan") is to aid
Meredith Corporation (the "Company") in attracting and retaining non-employee
directors by encouraging and enabling the acquisition of a financial interest
in the Company by such directors through the issuance of restricted shares of
Common Stock of the Company and stock equivalents. The financial interest in
the Company so acquired will give the non-employee directors a stake in the
growth and profitability of the Company, in order to enable them to represent
the viewpoint of other stockholders of the Company more effectively.
Participation in this Plan is limited to non-employee directors of the
Company. For purposes of the Plan, a non-employee director is any person who
is a member of the Board of Directors of the Company (the "Board") and who is
not a full-time employee of the Company or any of its subsidiaries.
2. Stock Reserved Under Plan. There is hereby reserved for issuance
under the Plan an aggregate of 225,000 shares of Common Stock of the Company.
Shares transferred under the Plan may be either authorized but unissued shares
or issued but not outstanding shares. If any shares issued hereunder are
thereafter acquired by the Company pursuant to rights reserved by the Company
at the time of transfer as hereinafter described, such shares shall be added
back to the number of shares reserved for issuance under the Plan.
3. Initial Awards. Any person who becomes a non-employee director for
the first time on or after November 11, 1996, the date of the 1996 Annual
Meeting of Stockholders, shall receive 600 shares of either restricted stock
or stock equivalents, as the director may elect in writing on or before the
director's first day of service as a member of the Board.
4. Election to Receive Annual Retainer in Shares of Restricted Stock or
Stock Equivalents. Each non-employee director may make an irrevocable
election to receive all or 50% of his or her annual retainer (which shall
include any additional annual retainer paid to a committee chairman) in shares
of restricted stock or stock equivalents. An election pursuant to this
paragraph 4 must be made in writing before the first day of the beginning of
the non-employee director's annual retainer period and will entitle the non-
employee director to a number of shares of restricted stock or stock
equivalents determined by dividing 105% of the portion of the retainer for the
year for which the election is being made by the fair market value of one
share of the Company's Common Stock as of the first day of such annual
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<PAGE>
retainer period and rounded up to the next full number of shares. In the
event any person becomes a non-employee director other than at the beginning
of an annual retainer period, such person may make an election, before the
date on which such person becomes a non-employee director, to receive all or
50% of his retainer for the balance of such annual retainer period in shares
of restricted stock or stock equivalents determined in accordance with the
formula set forth in the preceding sentence and rounded up to the next full
number of shares.
For purposes of this paragraph 4, an annual retainer period shall begin
on the date of an Annual Meeting of the Stockholders of the Company.
5. Conversion of Pension into Stock Equivalents. For each non-employee
director who is not expected to retire from service on the Board of Directors
of the Company on or before February 2, 1998, the amount of each such non-
employee director's accrued pension benefit on the date of stockholder
approval of the increase in shares reserved for issuance under this Plan shall
be converted into stock equivalents. The number of stock equivalents credited
to each non-employee director's account will be determined by dividing the
amount of the director's accrued pension benefit by the fair market value of
one share of the Company's Common Stock on that date. The pension benefit for
those non-employee directors expected to retire on or before February 2, 1998,
shall be paid to those directors in accordance with the terms of the pension
program.
6. Restricted Stock. Shares of restricted stock issued under the Plan
shall be subject to the following terms and conditions:
(a) If, within five years from the date the restricted shares were
issued, the non-employee director's service on the Board is terminated
for any reason other than death, permanent disability or retirement, the
shares of restricted stock issued under the Plan shall be repurchased by
the Company ("Forfeiture Restriction") at a per share price equal to the
lesser of (i) the amount paid, if any, by the non-employee director for
such restricted shares or (ii) the fair market value of such shares on
the date the non-employee director's service on the Board is terminated.
The purchase price shall be paid in cash to the director within five days
after termination of service. The amount paid for restricted shares
issued as a result of an election pursuant to paragraph 4 of this Plan
shall be deemed to be the non-employee director's retainer for the annual
retainer period for which such election was made. For purposes of this
Plan, retirement means the non-employee director's retirement from the
Board at the end of the full term for which the non-employee director was
elected, retirement from the Board at any time at or after age 70, or
retirement at any time with the consent of the Board.
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<PAGE>
(b) Restricted shares shall be free of the Forfeiture Restriction
upon the expiration of a five-year period from the date of issuance or
earlier upon the death, permanent disability or retirement of the
non-employee director or the occurrence of a Change of Control of the
Company as defined in paragraph 6(d) of the Company's 1993 Stock Option
Plan for Non-Employee Directors, as Amended.
(c) Except for the limited transfers that may be permitted under
the immediately following sentence, shares of restricted stock issued
under the Plan shall not be transferable and may not be sold, exchanged,
pledged, hypothecated or otherwise disposed of at any time prior to the
expiration of the Forfeiture Restriction with respect to such shares of
restricted stock. The Board of Directors may permit the transfer of
restricted stock by a non-employee director solely to members of the non-
employee director's immediate family or trusts or family partnerships for
the benefit of such persons but any transferred shares of restricted
stock shall continue to be subject to the Forfeiture Restriction provided
for herein.
(d) non-employee director who receives shares of restricted stock
under the Plan shall have all of the rights of a stockholder with respect
to such stock, including the right to receive dividends or other
distributions in respect of such stock, and to vote such stock as the
record owner thereof, unless and until the director (or a permitted
transferee) ceases to be the record owner of such stock.
(e) The shares of restricted stock received under the Plan shall be
registered on the books of the Company and its transfer agent in the name
of the non-employee director. Certificates evidencing the stock received
under the Plan shall be issued in the name of and delivered to the non-
employee director upon the lapse of the Forfeiture Restriction with
respect to such shares.
(f) Shares of restricted stock subject to the Plan may be subject
to such other provisions, not inconsistent with the provisions of the
Plan, as counsel for the Company shall consider appropriate from time to
time, including such provisions as may be appropriate to comply with
federal and state securities laws and stock exchange requirements.
7. Stock Equivalents. The number of stock equivalents determined under
paragraphs 4 and 5 hereunder for each non-employee director shall be credited
to a bookkeeping account established in the name of that director subject to
the following terms and conditions:
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(a) If the Company pays a cash dividend with respect to the Common
Stock at any time while stock equivalents are credited to a non-employee
director's account, there shall be credited to the non-employee
director's account additional stock equivalents equal to (i) the cash
dividend the director would have received had he or she been the actual
owner of the stock equivalents then credited to the director's account,
divided by (ii) the fair market value of one share of the Company's
Common Stock on the dividend payment date.
(b) Upon the death, permanent disability, retirement or other
termination of the non-employee director's service on the Board, the
Company shall deliver to the non-employee director (or his or her
designated beneficiary or estate) a number of shares of Common Stock
equal to the whole number of stock equivalents then credited to the
director's account together with a cash payment equal to the fair market
value of any fractional stock equivalent.
(c) The Company's obligation with respect to stock equivalents
shall not be funded or secured in any manner, nor shall a participant's
right to receive payment be assignable or transferable, voluntarily or
involuntarily, except as expressly provided herein.
(d) A non-employee director shall not be entitled to any voting or
other stockholder rights as a result of the credit of stock equivalents
to the director's account until certificates representing shares of
Common Stock are delivered to the director (or his or her designated
beneficiary or estate) hereunder.
8. Fair Market Value. For purposes of this Plan, fair market value
shall mean the average of the high and low market prices at which a share of
Company Common Stock shall have traded on the valuation date or on the next
preceding trading day if the valuation date is not a trading day, as reported
in the Midwest Edition of The Wall Street Journal.
9. Adjustments. If there is any change in the Company's Common Stock by
means of a stock dividend or distribution, stock split-up, recapitalization,
combination or exchange of shares, or by means of any merger, consolidation or
other corporate reorganization in which the Company is the surviving
corporation, the number of shares of stock thereafter available for issuance
under the Plan, the number of shares to be subject to each future award and
the number of stock equivalents shall be automatically adjusted on the same
basis to give proper effect to such change. The terms and conditions of this
Plan shall also be applicable to the shares issued to a non-employee director
as a result of a stock dividend, stock split, recapitalization, etc. with
respect to any restricted shares.
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<PAGE>
10. Amendment or Termination. The Board shall have the power to
terminate the Plan at any time and to amend the Plan from time to time as it
may deem proper; provided, however, that no such termination shall adversely
affect any outstanding restricted stock or stock equivalents. No amendment
shall be made without stockholder approval, if such amendment materially
increases the number of shares of Common Stock reserved under the Plan.
11. Stockholder Approval. The Plan has been adopted by the Board in its
amended form on August 15, 1996. The increase in the number of shares
reserved for issuance under the Plan is subject to approval by the
stockholders of the Company.
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Exhibit 10.2
------------
MEREDITH CORPORATION
1993 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS, AS AMENDED
1. Purpose. The purpose of the Meredith Corporation 1993 Stock Option
Plan for Non-Employee Directors, as Amended (the "Plan") is to attract and
retain outstanding individuals to serve as members of the Board of Directors
of Meredith Corporation (the "Company") and to furnish incentives to such
persons by providing such persons opportunities to acquire shares of the
Common Stock of the Company ("Common Stock") on advantageous terms as herein
provided thereby giving them a stake in the growth and profitability of the
Company, in order to enable them to represent the viewpoint of other
stockholders of the Company more effectively.
2. Shares Reserved under the Plan. There is hereby reserved for
issuance under the Plan an aggregate of 275,000 shares of Common Stock, which
may be newly-issued or acquired for the purposes of this Plan. If there is a
lapse, expiration, termination, or cancellation of any option granted under
this Plan, all unissued shares subject to or reserved for such option may
again be used for new options granted under this Plan.
3. Participation. Participation in this Plan is limited to members of
the Board of Directors of the Company who are not salaried officers or
employees of the Company or any of its direct or indirect subsidiaries (a
"Non-Employee Director" or "Participant").
4. Options to be Granted under the Plan. Each Non-Employee Director who
is expected to retire from service on the Board of Directors of the Company on
or before February 2, 1998, shall automatically be granted an option to
purchase 2,000 shares of Common Stock and each other Non-Employee Director
shall automatically be granted an option to purchase 3,000 shares of Common
Stock, subject to the limitations set forth in Section 6 below and at an
exercise price determined in accordance with Section 5 below, on the first
business day following the date of each annual meeting of stockholders of the
Company held during the term of this Plan, provided the Non-Employee Director
is serving as a member of the Board of Directors of the Company on the date of
grant.
5. Option Exercise Price. Each option granted under this Plan shall be
exercisable at an option price equal to the average of the high and low market
prices at which a share of Common Stock shall have traded on the date the
option is granted, or, if there were no sales on such date, the average on the
next preceding trading date, all as reported in the Midwest Edition of The
Wall Street Journal.
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6. Limitations on Exercise. Any option granted under this Plan may be
exercised (in accordance with Section 7 hereof) in whole or in part, from time
to time after the date granted, subject to the following limitations:
(a) No option granted hereunder may be exercised during the first
year following the date such option was granted. Thereafter each option
may be exercised:
(i) by each Non-Employee Director who is expected to retire
from service on the Board of Directors of the Company on or before
February 2, 1998.
(A) on or after the first anniversary of the date the
option was granted, for up to eight hundred (800) shares;
(B) on or after the second anniversary of the date the
option was granted, for an additional six hundred (600) shares
(up to fourteen hundred (1,400) shares on a cumulative basis);
and
(C) on or after the third anniversary of the date the
option was granted, for all two thousand (2,000) shares covered
by the option; and
(ii) by each other Non-Employee Director:
(A) on or after the first anniversary of the date the
option was granted, for up to one thousand (1,000) shares;
(B) on or after the second anniversary of the date the
option was granted, for an additional one thousand (1,000)
shares (up to two thousand (2,000) shares on a cumulative
basis); and
(C) on or after the third anniversary of the date the
option was granted, for all three thousand (3,000) shares
covered by the option.
(b) Notwithstanding the limitations of Section 6(a) above, any
option granted under this Plan shall become fully exercisable for the
total number of shares covered by the option upon the death or permanent
disability of the Director while serving on the Board or upon the
Retirement (as hereafter defined) of the Director if such death,
permanent disability or Retirement occurs on or after the first
anniversary of the date such option was issued. For these purposes,
"Retirement" means a Non-Employee Director's retirement from the Board of
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Directors of the Company at the end of the full term to which such Non-
Employee Director was elected, retirement from the Board at any time at
or after age 70 or retirement at any time with the consent of the Board.
(c) Subject to Section 8 below and the limitations of Section 6(a)
above, any option granted under this Plan (or any unexercised portion
thereof) may be exercised:
(i) not more than 30 days after termination of any Non-Employee
Director's service as a member of the Board of Directors of the
Company for any reason other than death, permanent disability or
Retirement (and then only to the extent that the Non-Employee
Director could have exercised such option on the date service
terminated in accordance with Section 6(a) above); or
(ii) for the remainder of the option term after a Non-Employee
Director's death, permanent disability or Retirement from the Board
of Directors of the Company; but
(iii) not, in any event, more than ten years after the date the
option was granted.
(d) Notwithstanding the limitations in Section 6(a) above, any
option granted under this Plan shall become fully exercisable for the
total number of shares covered by the option upon the occurrence of a
"Change of Control" of the Company. For purposes hereof, a "Change of
Control" of the Company shall be deemed to have occurred on the first to
occur of any of the following dates:
(i) on the date the Board of Directors of the Company votes to
approve and recommends a stockholder vote to approve:
(A) any consolidation or merger of the Company in which
the Company is not the continuing or surviving corporation or
pursuant to which shares of the Common Stock and Class B Stock
would be converted into cash, securities or other property,
other than any consolidation or merger of the Company in which
the holders of the Common Stock and Class B Stock immediately
prior to the consolidation or merger have at least a majority of
the ownership in and voting power of the surviving corporation
immediately after the consolidation or merger; or
(B) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company; or
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<PAGE>
(C) any plan or proposal for the liquidation or
dissolution of the Company; or
(ii) on the date any person (as such term is used in Section
13(d) of the Securities Exchange Act of 1934, hereinafter the "1934
Act"), other than the Company's Savings and Investment Plan or
similar successor plan, shall become the beneficial owner (within the
meaning of Rule 13d-3 under the 1934 Act) of thirty percent (30%) or
more of the outstanding voting power of the Company except as a
result of actions beyond the control of such person, including,
without limitation, as a result of a shift in voting power of the
Company as a result of the conversion by other persons of their Class
B Stock into Common Stock; or
(iii) on the date, during any period of twenty-four (24)
consecutive months on which individuals who at the beginning of such
period constitute the entire Board of Directors of the Company shall
cease for any reason to constitute a majority thereof unless the
election of each new director comprising the majority was approved by
a vote of at least a 2/3 majority of the Directors still in office
who were Directors at the beginning of the period.
Notwithstanding anything to the contrary contained herein, no Change in
Control shall be deemed to have occurred for the purpose of this Plan by
virtue of any combination or agreement among shareholders of the Company
who are descendants of E.T. Meredith, the founder of the Company, or
trusts for the benefit of such persons.
7. Method and Time of Exercise; Delivery of Certificates. Any option
granted under this Plan may only be exercised to purchase a minimum of 100
shares at any one time. Any option granted under this Plan shall be deemed
exercised on the date written notice of exercise of all or part of such option
is received by the Secretary of the Company at the Company's corporate
headquarters. Such notice shall be either: (i) accompanied by a check payable
to the order of the Company for the full purchase price of the shares to be
purchased pursuant to the terms of the option, or the portion thereof so paid;
or (ii) followed by prompt remittance of certificates representing shares of
Common Stock (or certification of ownership of such shares), either duly
endorsed in blank or accompanied by a duly endorsed stock power, representing
a sufficient number of shares of Common Stock whose value, based on the fair
market value of the Common Stock on the date of exercise, equals the full
purchase price of the shares to be purchased, or the portion thereof so paid;
or (iii) any combination of the foregoing. Payment may also be made by
delivering a copy of irrevocable instructions to a broker to deliver promptly
to the Company the amount of sale or loan proceeds to pay the exercise price.
A Non-Employee Director shall have no interest in any shares covered by any
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<PAGE>
option granted under this Plan until certificates for such shares are issued
and any shares surrendered in payment pursuant to subsection (ii) or (iii)
above shall be deemed outstanding until new certificates representing the
shares purchased on the exercise of any option are issued.
8. Nontransferability. Any option granted under this Plan shall not be
transferable other than by will or the laws of descent and distribution, and
shall be exercisable, during the Participant's lifetime, only by the
Participant or the Participant's guardian or legal representative. If a
Participant dies during the option period, any option granted to such
Participant may be exercised by his estate or the person to whom the option
passes by will or the laws of descent and distribution, but only in accordance
with Section 6 above. Notwithstanding the foregoing, an option may be
transferable to the Participant's immediate family or trusts or family
partnerships for the benefit of such persons.
9. Other Provisions; Securities Registration. The grant of any option
under the Plan may also be subject to other provisions as counsel to the
Company deems appropriate, including, without limitation, provisions imposing
restrictions on resale or other disposition of the Common Stock issuable upon
exercise of any option and such provisions as may be appropriate to comply
with federal or state securities laws and stock exchange requirements. The
Company shall not be required to issue or deliver any certificate for Common
Stock purchased upon the exercise of any option granted under this Plan prior
to the admission of such shares to listing on any stock exchange on which
Common Stock of the Company may at that time be listed. If at any time during
the period any option granted under this Plan is outstanding the Company shall
be advised by its counsel that the shares deliverable upon an exercise of such
option are required to be registered under the Securities Act of 1933, as
amended (the "Act"), or any state securities law, or that delivery of such
shares must be accompanied or preceded by a prospectus meeting the
requirements of such Act, the Company will use its best efforts to effect such
registration or provide such prospectus not later than reasonable time
following each exercise of such option, but delivery of shares by the Company
may be deferred until such registration is effected or such prospectus is
available.
10. Term of Plan. No option shall be issued under this Plan after July
31, 2003.
11. Adjustment Provisions. If the Company shall at any time change the
number of issued shares of Common Stock without new consideration to the
Company (such as by stock dividend or stock split), the total number of shares
reserved for issuance under this Plan (Section 2), the number of options to be
granted under this Plan (Section 4), the limitations on exercise (Section 6)
and the number of shares covered by each outstanding option shall be adjusted
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<PAGE>
so that the aggregate consideration payable to the Company and the value of
each option shall not be changed. If, during the term of any option granted
under this Plan, the Common Stock shall be changed into another kind of stock
or into securities of another corporation, whether as a result of
reorganization, sale, merger, consolidation, or other similar transaction, the
Board of Directors of the Company shall cause adequate provision to be made
whereby the Participants shall thereafter be entitled to receive, upon the due
exercise of any outstanding options, the securities the Participants would
have been entitled to receive immediately prior to the effective date of any
such transaction for shares of Common Stock not theretofore purchased which
could have been acquired through the exercise of such options.
12. Amendment and Termination of Plan. The Board of Directors of the
Company may amend the Plan from time to time or terminate the Plan at any
time, but no such action shall reduce the then existing amount of any
Participant's options or adversely change the terms and conditions thereof
without the Participant's consent. No amendment shall be made without
stockholder approval, if such amendment materially increases the number of
shares of Common Stock reserved under the Plan.
13. Stockholder Approval. The Plan was adopted in its amended form by
the Board of Directors of the Company on August 15, 1996, subject to
stockholder approval of the increased number of shares reserved hereunder.
- 6 -
Exhibit 10.3
------------
AMENDMENT TO THE
1992 MEREDITH CORPORATION
STOCK INCENTIVE PLAN
The 1992 Meredith Corporation Stock Incentive Plan (the "Plan") adopted by the
Company on November 9, 1992, is hereby amended pursuant to action of the Board
of Directors of the Company under Article 12 of the Plan as follows:
1) Article 10 of the Plan is amended by adding the following new sentence at
the end of the Article:
Notwithstanding the foregoing, at the discretion of the Committee, a
grant of an option or stock appreciation right may permit the transfer
of the benefit by the participant solely to members of the
participant's immediate family or trusts or family partnerships for the
benefit of such persons, subject to such terms and conditions as may be
established by the Committee.
2) All other terms of the Plan, as amended, remain in full force and effect.
/s/ Jack D. Rehm
----------------------------
Jack D. Rehm
Chairman and Chief Executive
Officer
Meredith Corporation
Dated as of the 15th day
of August, 1996.
Exhibit 10.4
------------
1996 STOCK INCENTIVE PLAN AGREEMENT
NONQUALIFIED
STOCK OPTION AWARD
You have been selected to be a Participant in the Meredith Corporation
1996 Stock Incentive Plan (the "Plan"), as specified below:
OPTIONEE: Christopher M. Little
DATE OF GRANT: August 14, 1996
DATE OF EXPIRATION: August 13, 2006
NUMBER OF SHARES COVERED BY THIS AWARD: 27,300
OPTION PRICE: $40.625
THIS DOCUMENT CONSTITUTES PART OF THE PROSPECTUS COVERING SECURITIES THAT HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
THIS AGREEMENT, effective as of the Date of Grant set forth above, is
between Meredith Corporation, an Iowa corporation (the "Company") and the
Optionee named above pursuant to the provisions of the Plan. The parties
hereto agree as follows:
1. Grant of Stock Option. The Company hereby grants to Optionee the
Option to purchase the number of shares of Common Stock of the Company, $1.00
par value ("Common Stock") set forth above at the stated Option Price, which
is 100% of the Fair Market Value on the Date of Grant, subject to the terms
and conditions of the Plan and this Agreement.
2. Exercise of Stock Option. As long as the vesting requirements
provided herein are met and the Option has not otherwise terminated or
expired, the Optionee may exercise in whole or in part this Option at any time
six months after the Date of Grant. The vesting schedule for the dates on or
after which the Options may be exercised is as set forth below:
August 14, 1997 1/3 - 9,100
August 14, 1998 1/3 - 9,100
August 14, 1999 1/3 - 9,100
3. Procedure for Exercise of Options. This Option may be exercised by
giving written notice to the Company at its executive offices, addressed to
the attention of its Secretary. Such notice (a) shall be signed by the
Optionee, his legal representative or permitted transferee under this
Agreement; (b) shall specify the number of full shares then elected to be
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purchased with respect to the Option; (c) unless a Registration Statement
under the Securities Act of 1933 is in effect with respect to the shares to be
purchased, shall contain a representation of Optionee that the shares of
Common Stock are being acquired by him or her for investment and with no
present intention of selling or transferring them, and that he or she will not
sell or otherwise transfer the shares except in compliance with all applicable
securities laws and requirements of any stock exchange upon which the shares
of Common Stock may then be listed; (d) shall be accompanied by payment in
full of the Option Price of the shares to be purchased; and (e) Optionee's
copy of this Agreement.
The Option Price upon exercise of this Option shall be payable to the
Company in full either (a) in cash or its equivalent (acceptable cash
equivalents shall be determined at the sole discretion of the Committee); (b)
by tendering previously acquired Shares having an aggregate Fair Market Value
at the time of exercise equal to the total price of the shares for which the
Option is being exercised; (c) by a combination of (a) and (b); (d) by
delivery of a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company the amount of sale
proceeds from the option shares or loan proceeds to pay the exercise price and
withholding taxes due to Company; or (e) such other methods of payment as the
Committee at its discretion deems appropriate.
As promptly as practicable after receipt of such notice and payment, the
Company shall cause to be issued and delivered to the Optionee, his or her
legal representative or permitted transferee under this Agreement, as the case
may be, certificates for the shares so purchased, which may, if appropriate,
be endorsed with appropriate restrictive legends as determined by the
Committee. The Company shall maintain a record of all information pertaining
to Optionee's rights under this Agreement, including the number of shares for
which this Option is exercisable. If the Option shall have been exercised in
full, this Agreement shall be returned to the Company and canceled.
4. Termination of Employment by Death. If, without having fully
exercised this Option, Optionee's employment with the Company is terminated by
reason of death, any outstanding Options granted to Participant that are not
exercisable at the date of termination shall become fully exercisable.
Optionee's beneficiary (or such persons that have acquired Optionee's rights
under the Option by will or by the laws of descent and distribution) shall
have the same right to exercise this Option as Optionee had during his or her
lifetime, for a period ending on the Date of Expiration set forth above.
5. Termination of Employment by Disability. If, without having fully
exercised this Option, Optionee's employment with the Company is terminated by
reason of Disability (as defined in the Plan), any outstanding Options granted
to Participant that are not exercisable at the date of termination shall
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<PAGE>
become fully exercisable. Optionee shall have the same right to exercise this
Option as Optionee had during his or her employment for a period ending on the
Date of Expiration set forth above.
6. Termination of Employment by Retirement. If, without having fully
exercised this Option, Optionee's employment with the Company is terminated by
reason of Retirement (as defined under the then established rules of the
Company's tax-qualified retirement plans), any outstanding options granted to
Participant that are not exercisable at the date of termination shall become
fully exercisable. Optionee shall have the same right to exercise this Option
as Optionee had during his or her employment for a period ending on the Date
of Expiration set forth above.
7. Termination of Employment for Other Reasons. If, without having
fully exercised this Option, Optionee's employment with the Company is
terminated for reasons other than his or her death, Disability or Retirement
then Optionee's rights under this Option shall terminate. However, the
Committee, in its sole discretion, shall have the right to allow for an
exercise period of up to 30 days after the date of such termination, provided
that, in no event shall this extension period continue beyond the expiration
of the term of this Option. In addition, any such extension shall be
applicable only to the extent that this Option is exercisable at the date of
termination of employment.
8. Restrictions on Transfer. This Option may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will
or by the laws of descent and distribution. Notwithstanding the foregoing,
Optionee may transfer this Option, in whole or in part, to members of
Optionee's immediate family or trusts or family partnerships for the benefit
of such persons, provided, that Optionee receive the advance written
permission of the Company to make such a transfer and to further notify the
Company upon the completion of the transfer. Further, this Option shall be
exercisable during Optionee's lifetime only by Optionee, Optionee's legal
representative or permitted transferee.
9. Adjustments in Authorized Shares. If the Company shall at any time
change the number of issued shares of Common Stock without new consideration
to the Company (such as by stock dividends or stock splits), the number of
shares to be delivered under this Option and the price of the shares subject
to this Option shall be equitably adjusted so that the aggregate consideration
payable to the Company, if any, shall not be changed. In the case of any
merger, consolidation or combination of the Company with or into another
corporation, other than a merger, consolidation or combination in which the
Company is the continuing corporation and which does not result in the
outstanding Common Stock of the Company being converted into or exchanged for
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different securities, cash or other property, or any combination thereof (an
"Acquisition"), the Option shall have the right to receive upon exercise of
this Option the Acquisition Consideration receivable upon such Acquisition by
a holder of the number of shares of Common Stock which might have been
obtained upon exercise of the Option, as the case may be, immediately prior to
such Acquisition.
The term "Acquisition Consideration" shall mean the kind and amount of shares
of the surviving or new corporation, cash, securities, evidence of indebted-
ness, other property or any combination thereof receivable in respect of one
share of Common Stock of the Company upon consummation of an Acquisition.
10. Change in Control. Immediately upon a change in control of the
Company all outstanding Options shall become exercisable. For purposes
hereof, a change in control of the Company shall be deemed to have occurred on
the first to occur of any of the following dates:
(a) on the date the Board of Directors of the Company votes to
approve and recommends a stockholder vote to approve:
(I) any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant
to which shares of the Common Stock and Class B Stock would be
converted into cash, securities or other property, other than any
consolidation or merger of the Company in which the holders of the
Common Stock and Class B Stock immediately prior to the
consolidation or merger have at least a majority of the ownership in
and voting power of the surviving corporation immediately after the
consolidation or merger; or
(ii) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company; or
(iii) any plan or proposal for the liquidation or dissolution of
the Company; or
(b) on the date any person (as such term is used in Section 13(d)
of the Securities Exchange Act of 1934, hereinafter the "1934 Act"),
other than the Company's Savings and Investment Plan or similar successor
plan, shall become the beneficial owner (within the meaning of Rule 13d3
under the 1934 Act) of thirty percent (30%) or more of the outstanding
voting power of the Company except as a result of actions beyond the
control of such person, including, without limitation, as a result of a
shift in voting power of the Company as a result of the conversion by
other persons of their Class B Stock into Common Stock; or
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<PAGE>
(c) on the date, during any period of twenty-four (24) consecutive
months on which individuals who at the beginning of such period
constitute the entire Board of Directors of the Company shall cease for
any reason to constitute a majority thereof unless the election of each
new director comprising the majority was approved by a vote of at least a
2/3 majority of the Directors still in office who were Directors at the
beginning of the period.
Notwithstanding anything to the contrary contained herein, no change in
control shall be deemed to have occurred for the purpose of this Plan by
virtue of any combination or agreement among shareholders of the Company who
are descendants of E.T. Meredith, the founder of the Company, or trusts for
the benefit of such persons.
11. Rights as a Stockholder. Optionee shall have no rights as a
stockholder of the Company with respect to the shares of Common Stock subject
to this Agreement until such time as the purchase price has been paid and the
shares have been issued and delivered to him or her.
12. Continuation of Employment. This Agreement shall not confer upon
Optionee any right to continuation of employment by the Company, nor shall
this Agreement interfere in any way with the Company's right to terminate his
or her employment at any time.
13. Fair Market Value. For the purposes of this Agreement, Fair Market
Value shall mean the average of the high and low market prices at which a
share of the Company common stock shall have traded on the valuation date or
on the next preceding trading date if the valuation date is not a trading day
as reported in the Midwest edition of The Wall Street Journal.
14. Miscellaneous.
(a) This Agreement and the rights of Optionee hereunder are subject
to all the terms and conditions (including Shareholder approval) of the
Plan, as the same may be amended from time to time, as well as to such
rules and regulations as the Committee may adopt for administration of
the Plan. The Committee shall have the right to impose such restrictions
on any shares acquired pursuant to the exercise of this Option, as it may
deem advisable, including, without limitation, restrictions under
applicable Federal securities laws, under the requirements of any stock
exchange or market upon which such shares are then listed and/or traded,
and under any blue sky or state securities laws applicable to such
shares.
- 5 -
<PAGE>
(b) It is expressly understood that the Committee is authorized to
administer, construe, and make all determinations necessary or
appropriate to the administration of the Plan and this Agreement, all of
which shall be binding upon Optionee. Any inconsistency between this
Agreement and the Plan shall be resolved in favor of the Plan. All terms
used herein shall have the same meaning as in the Plan document.
(c) With the approval of the Board, the Committee may terminate,
amend, or modify the Plan; provided, however, that no such termination,
amendment, or modification of the Plan may in any way adversely affect
Optionee's rights under this Agreement.
(d) (I) The Company shall have the authority to deduct or
withhold, or require Optionee to remit to the Company, an
amount sufficient to satisfy Federal, state, and local taxes
(including Optionee's FICA obligation) required by law to be
withheld with respect to any exercise of Optionee's rights
under this Agreement without Optionee's written consent.
(ii) Optionee may elect, subject to the approval of the
Committee, to satisfy the withholding requirement, in whole or
in part, with respect to a Nonqualified Stock Option, by having
the Company withhold shares of Common Stock having an aggregate
Fair Market Value, on the date the tax is to be determined,
equal to the amount required to be withheld. All elections
shall be irrevocable and in writing, and shall be signed by
Optionee in advance of the day that the transaction becomes
taxable.
(e) Optionee agrees to take all steps necessary to comply with all
applicable provisions of Federal and state securities law in exercising
Optionee's rights under this Agreement.
(f) The Plan and this Agreement are not intended to qualify for
treatment under the provisions of the Employee Retirement Income Security
Act of 1974 ("ERISA").
(g) This Agreement shall be subject to all applicable laws, rules,
and regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required.
(h) To the extent not preempted by Federal law, this Agreement
shall be governed by, and construed in accordance with the laws of the
State of Iowa.
- 6 -
<PAGE>
15. Effectiveness. The effectiveness of this Agreement and the grant of
the Options hereunder is contingent upon the approval of the Plan by the
stockholders of the Company.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the Date of Grant.
MEREDITH CORPORATION
By: /s/ Thomas L. Slaughter
-----------------------
Thomas L. Slaughter
Its: Vice President-General
Counsel and Secretary
/s/ Christopher M. Little
- -------------------------------
Optionee, Christopher M. Little
211 28th Street
Des Moines, IA 50312
Social Security number: ###-##-####
- 7 -
<PAGE>
Exhibit 10.5
------------
1992 MEREDITH CORPORATION
STOCK INCENTIVE PLAN AGREEMENT
NONQUALIFIED
STOCK OPTION AWARD
You have been selected to be a Participant in the 1992 Meredith
Corporation Stock Incentive Plan (the "Plan"), as specified below:
OPTIONEE: Philip A. Jones
DATE OF GRANT: August 14, 1996
DATE OF EXPIRATION: August 13, 2006
NUMBER OF SHARES COVERED BY THIS AWARD: 50,000
OPTION PRICE: $40.625
THIS DOCUMENT CONSTITUTES PART OF THE PROSPECTUS COVERING SECURITIES THAT HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
THIS AGREEMENT, effective as of the Date of Grant set forth above, is
between Meredith Corporation, an Iowa corporation (the "Company") and the
Optionee named above pursuant to the provisions of the Plan. The parties
hereto agree as follows:
1. Grant of Stock Option. The Company hereby grants to Optionee the
Option to purchase the number of shares of Common Stock of the Company, $1.00
par value ("Common Stock") set forth above at the stated Option Price, which
is 100% of the Fair Market Value on the Date of Grant, subject to the terms
and conditions of the Plan and this Agreement.
2. Exercise of Stock Option. As long as the vesting requirements
provided herein are met and the Option has not otherwise terminated or
expired, the Optionee may exercise in whole or in part this Option at any time
six months after the Date of Grant. All Options shall be vested and
exercisable on or after August 14, 2001.
3. Procedure for Exercise of Options. This Option may be exercised by
giving written notice to the Company at its executive offices, addressed to
the attention of its Secretary. Such notice (a) shall be signed by the
Optionee, his legal representative or a permitted transferee under this
Agreement; (b) shall specify the number of full shares then elected to be
purchased with respect to the Option; (c) unless a Registration Statement
under the Securities Act of 1933 is in effect with respect to the shares to be
purchased, shall contain a representation of Optionee that the shares of
Common Stock are being acquired by him or her for investment and with no
- 1 -
<PAGE>
present intention of selling or transferring them, and that he or she will not
sell or otherwise transfer the shares except in compliance with all applicable
securities laws and requirements of any stock exchange upon which the shares
of Common Stock may then be listed; (d) shall be accompanied by payment in
full of the Option Price of the shares to be purchased; and (e) Optionee's
copy of this Agreement.
The Option Price upon exercise of this Option shall be payable to the
Company in full either (a) in cash or its equivalent (acceptable cash
equivalents shall be determined at the sole discretion of the Committee); (b)
by tendering previously acquired Shares having an aggregate Fair Market Value
at the time of exercise equal to the total price of the shares for which the
Option is being exercised; (c) by a combination of (a) and (b); (d) by
delivery of a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company the amount of sale
proceeds from the option shares or loan proceeds to pay the exercise price and
withholding taxes due to Company; or (e) such other methods of payment as the
Committee at its discretion deems appropriate.
As promptly as practicable after receipt of such notice and payment, the
Company shall cause to be issued and delivered to the Optionee, his or her
legal representative or permitted transferee under this Agreement, as the case
may be, certificates for the shares so purchased, which may, if appropriate,
be endorsed with appropriate restrictive legends as determined by the
Committee. The Company shall maintain a record of all information pertaining
to Optionee's rights under this Agreement, including the number of shares for
which this Option is exercisable. If the Option shall have been exercised in
full, this Agreement shall be returned to the Company and canceled.
4. Termination of Employment by Death. If, without having fully
exercised this Option, Optionee's employment with the Company is terminated by
reason of death, any outstanding Options granted to Participant that are not
exercisable at the date of termination shall become fully exercisable, except
for Options granted within six (6) months prior to the date of death, which
Options shall not become fully exercisable until the next business day after
the sixth month anniversary of the Date of Grant. Optionee's beneficiary (or
such persons that have acquired Optionee's rights under the Option by will or
by the laws of descent and distribution) shall have the same right to exercise
this Option as Optionee had during his or her lifetime, for a period ending on
the Date of Expiration set forth above.
5. Termination of Employment by Disability. If, without having fully
exercised this Option, Optionee's employment with the Company is terminated by
reason of Disability (as defined in the Plan), any outstanding Options granted
to Participant that are not exercisable at the date of termination shall
become fully exercisable, except for Options granted within six (6) months
- 2 -
<PAGE>
prior to the date of termination, which Options shall not become fully
exercisable until the next business day after the sixth month anniversary of
the Date of Grant. Optionee shall have the same right to exercise this Option
as Optionee had during his or her employment for a period ending on the Date
of Expiration set forth above.
6.Termination of Employment by Retirement. If Optionee's employment with
the Company is terminated by reason of Retirement (as defined under the then
established rules of the Company's tax-qualified retirement plans), any
outstanding options granted to Participant that are not exercisable at the
date of termination shall be forfeited by Optionee and canceled by the
Company. If Optionee's employment is terminated by reason of Retirement,
Optionee shall have the same right to exercise options that are exercisable on
the date of the termination of employment as Optionee had during his or her
employment for a period ending on the Date of Expiration set forth above.
7. Termination of Employment for Other Reasons. If, without having
fully exercised this Option, Optionee's employment with the Company is
terminated for reasons other than his or her death, Disability or Retirement
then Optionee's rights under this Option shall terminate. However, the
Committee, in its sole discretion, shall have the right to allow for an
exercise period of up to 30 days after the date of such termination, provided
that, in no event shall this extension period continue beyond the expiration
of the term of this Option. In addition, any such extension shall be
applicable only to the extent that this Option is exercisable at the date of
termination of employment.
8. Restrictions on Transfer. This Option may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will
or by the laws of descent and distribution. Notwithstanding the foregoing,
Optionee may transfer this Option, in whole or in part, to members of
Optionee's immediate family or trusts or family partnerships for the benefit
of such persons, provided, that Optionee receive the advance written
permission of the Company to make such a transfer and to further notify the
Company upon the completion of the transfer. Further, this Option shall be
exercisable during Optionee's lifetime only by Optionee, Optionee's legal
representative or permitted transferee, as provided above.
9. Adjustments in Authorized Shares. In the event of any merger,
reorganization, consolidation, recapitalization, separation, liquidation,
stock dividend, split-up, Share combination, or other change in the corporate
structure of the Company affecting the Shares, such adjustment shall be made
in the number and class of Shares which may be delivered under the Plan, and
in the number and class of and/or price of Shares subject to outstanding
Options, granted under the Plan, as may be determined to be appropriate and
equitable by the Committee in its sole discretion, to prevent dilution or
- 3 -
<PAGE>
enlargement of rights; and provided that the number of Shares subject to any
Award shall always be rounded to the nearest whole number. Any adjustment of
an ISO under this paragraph shall be made in such a manner so as not to
constitute a "modification" within the meaning of Section 425(h)(3) of the
Code.
10. Rights as a Stockholder. Optionee shall have no rights as a
stockholder of the Company with respect to the shares of Common Stock subject
to this Agreement until such time as the purchase price has been paid and the
shares have been issued and delivered to him or her.
11. Continuation of Employment. This Agreement shall not confer upon
Optionee any right to continuation of employment by the Company, nor shall
this Agreement interfere in any way with the Company's right to terminate his
or her employment at any time.
12. Miscellaneous.
(a) This Agreement and the rights of Optionee hereunder are subject
to all the terms and conditions (including Shareholder approval) of the
Plan, as the same may be amended from time to time, as well as to such
rules and regulations as the Committee may adopt for administration of
the Plan. The Committee shall have the right to impose such restrictions
on any shares acquired pursuant to the exercise of this Option, as it may
deem advisable, including, without limitation, restrictions under
applicable Federal securities laws, under the requirements of any stock
exchange or market upon which such shares are then listed and/or traded,
and under any blue sky or state securities laws applicable to such
shares.
It is expressly understood that the Committee is authorized to
administer, construe, and make all determinations necessary or
appropriate to the administration of the Plan and this Agreement, all of
which shall be binding upon Optionee. Any inconsistency between this
Agreement and the Plan shall be resolved in favor of the Plan. All terms
used herein shall have the same meaning as in the Plan document.
(b) With the approval of the Board, the Committee may terminate,
amend, or modify the Plan; provided, however, that no such termination,
amendment, or modification of the Plan may in any way adversely affect
Optionee's rights under this Agreement.
(c) The Company shall have the authority to deduct or withhold, or
require Optionee to remit to the Company, an amount sufficient to satisfy
Federal, state, and local taxes (including Optionee's FICA obligation)
required by law to be withheld with respect to any exercise of Optionee's
rights under this Agreement without Optionee's written consent.
- 4 -
<PAGE>
Optionee may elect, subject to the approval of the Committee, to
satisfy the withholding requirement, in whole or in part, with respect to
a Nonqualified Stock Option, by having the Company withhold shares of
Common Stock having an aggregate Fair Market Value, on the date the tax
is to be determined, equal to the amount required to be withheld. All
elections shall be irrevocable and in writing, and shall be signed by
Optionee in advance of the day that the transaction becomes taxable.
(d) Optionee agrees to take all steps necessary to comply with all
applicable provisions of Federal and state securities law in exercising
Optionee's rights under this Agreement.
(e) The Plan and this Agreement are not intended
to qualify for treatment under the provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA").
(f) This Agreement shall be subject to all applicable laws, rules,
and regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required.
(g) To the extent not preempted by Federal law, this Agreement
shall be governed by, and construed in accordance with the laws of the
State of Iowa.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the Date of Grant.
MEREDITH CORPORATION
By: /s/ Thomas L. Slaughter
-----------------------
Thomas L. Slaughter
Its: Vice President-General
Counsel and Secretary
/s/ Philip A. Jones
- ----------------------------
Optionee, Philip A. Jones
300 Walnut, Unit 2105
PO Box 149
Des Moines, IA 50309
Social Security number: ###-##-####
- 5 -
Exhibit 10.6
------------
Statement re: Meredith Corporation Nonqualified Stock Option
Award Agreements with named executive officers
Meredith Corporation has certain nonqualified stock option award agreements
with its named executive officers. Such agreements are not filed herewith
pursuant to Instruction 2. to Item 601 of Regulation S-K as they are
substantially identical in all material respects, except as to the parties
thereto and the number of stock options awarded, to the agreements filed as
Exhibits 10.5 and 10.6 in this Form 10-Q for the period ended September 30,
1996. The named executive officers and the number of stock options awarded in
the agreements not filed with the Commission are as follows:
Named Executive Officer # Stock Options Awarded
----------------------- -----------------------
Larry D. Hartsook 11,700 1)
Philip A. Jones 22,500 1)
Christopher M. Little 50,000 2)
1) Under agreements substantially identical to the agreement filed as Exhibit
10.4 in this Form 10-Q.
2) Under an agreement substantially identical to the agreement filed as
Exhibit 10.5 in this Form 10-Q.
Exhibit 11
----------
MEREDITH CORPORATION
Computation of Primary and Fully Diluted Per
Common Share Earnings - Treasury Stock Method
For the Three Months Ended September 30, 1996 and 1995
(Unaudited)
Weighted average number of shares
(in thousands)
1996 1995
Fully Fully
Primary Diluted Primary Diluted
------- ------- ------- -------
Weighted average number of shares
outstanding in thousands 26,867 26,867 27,511 27,511
Dilutive effect of unexercised
stock options in thousands 874 1,018 571 686
------ ------ ------ ------
Total 27,741 27,885 28,082 28,197
====== ====== ====== ======
Primary and fully
diluted earnings per common share
1996 1995
Fully Fully
Primary Diluted Primary Diluted
------- ------- ------- -------
Earnings per share from
continuing operations $ .45 $ .45 $ .34 $ .34
Discontinued operation - - ( .03) ( .03)
----- ----- ----- -----
Net earnings per share $ .45 $ .45 $ .31 $ .31
===== ===== ===== =====
Note: Primary - Based on average market prices for the period.
Fully Diluted - Based on the higher of the average market price
for the period or the market price at September 30
of each year.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM the
Consolidated Balance Sheet at September 30, 1996 and the Consolidated Statement
of Earnings for the three months ended September 30, 1996 of Meredith
Corporation and Subsidiaries AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000065011
<NAME> MEREDITH CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> SEP-30-1996
<CASH> 16,331
<SECURITIES> 0
<RECEIVABLES> 89,361<F1>
<ALLOWANCES> 0
<INVENTORY> 26,110
<CURRENT-ASSETS> 217,917
<PP&E> 185,837
<DEPRECIATION> 105,537
<TOTAL-ASSETS> 735,380
<CURRENT-LIABILITIES> 275,469
<BONDS> 35,000
0
0
<COMMON> 26,836
<OTHER-SE> 239,576
<TOTAL-LIABILITY-AND-EQUITY> 735,380
<SALES> 199,180
<TOTAL-REVENUES> 199,180
<CGS> 85,331
<TOTAL-COSTS> 85,331
<OTHER-EXPENSES> 5,640
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 736
<INCOME-PRETAX> 21,973
<INCOME-TAX> 9,512
<INCOME-CONTINUING> 12,461
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,461
<EPS-PRIMARY> .45
<EPS-DILUTED> 0
<FN>
<F1>Net of allowances
</FN>
</TABLE>
Exhibit 99
----------
MEREDITH CORPORATION
FISCAL 1997 FIRST QUARTER EARNINGS PER SHARE AT-A-GLANCE
- -- The chart below depicts the comparable quarterly and fiscal-year earnings
per share before special items and discontinued operations:
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. Fiscal Year
-------- -------- -------- -------- -----------
F1993 .12 .18 .21 .19 .70
F1994 .17 .26 .32 .26 1.01
F1995 .27 .38 .38 .39 1.42
F1996 .34 .45 .49 .54 1.82
F1997 .45
- -- Fiscal 1997 first quarter earnings per share from continuing operations
were 45 cents, a 32 percent increase over the prior-year quarter.
- -- Prior-year first quarter earnings from continuing operations were 34 cents
per share.
- -- Fiscal 1997 first quarter net earnings were 45 cents per share, a 45
percent increase over the prior-year quarter.
- -- Prior year first quarter net earnings were 31 cents per share.
