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, 1997
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, 1997
Common Stock, $1 par value 41,095,477
Class B Stock, $1 par value 12,003,943
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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 1997 1997
- -------------------------------------------------------------------------------
(in thousands)
Current assets:
Cash and cash equivalents $ 7,501 $ 74,498
Marketable securities -- 50,382
Receivables, net 117,213 93,395
Inventories 24,659 30,273
Program rights 26,569 7,809
Subscription acquisition costs 55,699 59,444
Other current assets 25,642 21,407
---------- ----------
Total current assets 257,283 337,208
---------- ----------
Property, plant and equipment 235,272 193,270
Less accumulated depreciation (107,015) (103,087)
---------- ----------
Net property, plant and equipment 128,257 90,183
---------- ----------
Subscription acquisition costs 31,743 32,703
Program rights 15,319 5,507
Other assets 23,683 21,951
Goodwill and other intangibles
(at original cost less accumulated amortization) 612,379 273,349
---------- ----------
Total assets $1,068,664 $760,901
========== ==========
See accompanying Notes to Interim Consolidated Financial Statements.
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(Unaudited)
September 30 June 30
Liabilities and Stockholders' Equity 1997 1997
- -----------------------------------------------------------------------------
(in thousands, except share data)
Current liabilities:
Current portion of long-term debt $ 25,000 $ --
Current portion of long-term program rights payable 25,971 11,004
Accounts payable 47,445 48,306
Accrued taxes and expenses 73,689 73,548
Unearned subscription revenues 138,928 145,102
---------- ----------
Total current liabilities 311,033 277,960
---------- ----------
Long-term debt 245,000 --
Long-term program rights payable 20,859 6,028
Unearned subscription revenues 96,099 95,883
Deferred income taxes 23,080 23,051
Other deferred items 39,578 31,049
---------- ----------
Total liabilities 735,649 433,971
---------- ----------
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 41,075,510 at September 30 and
40,921,537 at June 30 (net of treasury shares,
25,811,769 at September 30 and 25,505,186
at June 30.) 41,075 40,922
Class B stock, par value $1 per share,
convertible to common stock
Authorized 15,000,000 shares; issued and
outstanding 12,015,925 at September 30 and
12,335,361 at June 30. 12,016 12,335
Retained earnings 282,521 276,243
Unearned compensation (2,597) (2,570)
---------- ----------
Total stockholders' equity 333,015 326,930
---------- ----------
Total liabilities and stockholders' equity $1,068,664 $ 760,901
========== ==========
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 1997 1996
- ---------------------------------------------------------------------
(in thousands, except per share)
Revenues (less returns and allowances):
Advertising $131,640 $104,334
Circulation 67,172 62,642
Consumer books 7,487 9,798
All other 24,600 22,406
---------- ----------
Total revenues 230,899 199,180
---------- ----------
Operating costs and expenses:
Production, distribution and editorial 92,689 85,331
Selling, general and administrative 101,689 85,879
Depreciation and amortization 8,092 5,640
---------- ----------
Total operating costs and expenses 202,470 176,850
---------- ----------
Income from operations 28,429 22,330
Interest income 468 379
Interest expense (2,467) (736)
---------- ----------
Earnings before income taxes 26,430 21,973
Income taxes 11,339 9,512
---------- ----------
Net earnings $ 15,091 $ 12,461
========== ==========
Net earnings per share $ 0.27 $ 0.22
========== ==========
Dividends paid per share $ 0.065 $ 0.055
========== ==========
Average shares outstanding 55,383 55,481
========== ==========
See accompanying Notes to Interim Consolidated Financial Statement.
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Meredith Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended September 30 1997 1996
- ---------------------------------------------------------------------------
(in thousands)
Cash flows from operating activities:
Net earnings $ 15,091 $ 12,461
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 8,092 5,640
Amortization of program rights 5,828 4,236
Changes in assets and liabilities:
Accounts receivable (23,818) 87
Inventories 5,614 5,075
Supplies and prepayments (4,335) (4,279)
Subscription acquisition costs 4,705 3,307
Accounts payable (861) (7,826)
Accruals 234 (2,211)
Unearned subscription revenues (5,958) (918)
Deferred income taxes 1,882 100
Other deferred items 8,529 3,286
--------- ---------
Net cash provided by operating activities 15,003 18,958
--------- ---------
Cash flows from investing activities:
Redemptions of marketable securities 50,371 --
Acquisitions of businesses (375,000) --
Additions to property, plant, and equipment (8,395) (3,447)
Change in other assets (2,062) 11
--------- ---------
Net cash used by investing activities (335,086) (3,436)
--------- ---------
Cash flows from financing activities:
Long-term debt incurred 270,000 --
Payments for program rights (6,097) (4,955)
Proceeds from common stock issued 2,454 829
Purchases of company stock (10,155) (6,664)
Dividends paid (3,452) (2,954)
Other 336 752
--------- ---------
Net cash provided (used) by financing activities 253,086 (12,992)
--------- ---------
Net (decrease) increase in cash and cash equivalents (66,997) 2,530
Cash and cash equivalents at beginning of year 74,498 13,801
--------- ---------
Cash and cash equivalents at end of period $ 7,501 $ 16,331
========= =========
See accompanying Notes to Interim Consolidated Financial Statements.
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MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Accounting Policies
a. General
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.
b. Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
c. Goodwill and other intangibles
Goodwill and other intangibles represent the excess of the purchase price over
the estimated fair values of tangible assets acquired in the purchases of
businesses. As of September 30, 1997, these assets primarily consist of
television Federal Communications Commission (FCC) licenses ($268.9 million),
goodwill ($173.1 million) and television network affiliation agreements ($138.8
million), and are presented net of related amortization on the balance sheet.
Virtually all of these assets were acquired subsequent to October 31, 1970, and
are being amortized by the straight-line method over the following periods: 40
years for television FCC licenses; 20 to 40 years for goodwill; and 15 to 40
years for network affiliation agreements. The company evaluates the
recoverability of its intangible assets as current events or circumstances
warrant to determine whether adjustments are needed to carrying values. Such
evaluation may be based on projected income and cash flows on an undiscounted
basis from the underlying business or from operations of related businesses.
Other economic and market variables are also considered in any evaluation.
d. Derivative financial instruments
Interest rate swap agreements entered into by the company are held for purposes
other than trading. The company uses the accrual method to account for all
interest rate swap agreements. Amounts due to or from counterparties are
recorded as an adjustment to interest expense in the periods in which they
accrue.
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MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(Unaudited)
e. Other
In February 1997, the Financial Accounting Standards Board (FASB) issued SFAS
No. 128, "Earnings Per Share." SFAS No. 128 replaces the presentation of
primary earnings per share (EPS) with basic EPS and diluted EPS. The
calculation of basic EPS is based on average actual common shares outstanding
and excludes common stock equivalents. Diluted EPS reflects the potential
dilution that could result from the issuance of common stock equivalents using
a different methodology than the current calculation of primary EPS. Diluted
EPS is not expected to be materially different from the primary EPS currently
reported. By applying the provisions of SFAS No. 128, fiscal 1998 first
quarter basic EPS was $ .28 and diluted EPS was $ .27 per share. SFAS No. 128
will be effective for reporting EPS in the second quarter of fiscal 1998.
Earlier application is not permitted and when effective, all prior-period EPS
data presented will be restated.
2. Acquisitions and disposition of broadcast television stations
On July 1, 1997, the company purchased the net assets of three television
stations affiliated with the Fox television network from First Media
Television, L. P. ("First Media"). The three stations were: KPDX-TV serving
the Portland, Ore. market; WHNS-TV serving the Greenville, S.C./Spartansburg,
S.C./Asheville, N.C. market; and KFXO-TV serving the Bend, Ore. market. The
total purchase price of the three stations was $216 million.
On September 4, 1997, the company acquired the net assets of WFSB-TV, a CBS
network-affiliated television station serving the Hartford/New Haven, Conn.
market, through an exchange of the assets of WCPX-TV in Orlando, Fla. The
asset exchange was with Post-Newsweek Stations, Inc. ("Post-Newsweek"), a
wholly-owned subsidiary of the Washington Post Company and included a $60
million cash payment to the company.
WCPX-TV was one of the four television stations which the company agreed in
January 1997 to acquire from First Media. However, in the Orlando, Fla.
market, the company already owned WOFL-TV, a Fox network-affiliated television
station. FCC regulations required the company to dispose of one of these
television stations since the regulations currently prohibit the ownership of
more than one television station in a market. Therefore, for the purposes of
effecting the exchange, the company purchased the net assets of WCPX-TV, a CBS
network-affiliated television station from First Media for $219 million on
September 4, 1997, prior to the exchange for WFSB-TV. The net purchase price
of WFSB-TV to the company was $159 million.
The purchase method of accounting was used to record the acquisitions of the
four television stations in the fiscal 1998 first quarter. Assets acquired in
the purchases of the four television stations included the following
intangibles: FCC licenses of $212.4 million; network affiliation agreements of
$90.7 million; and goodwill of $40.3 million. FCC licenses and goodwill are
being amortized over periods not exceeding 40 years. Network affiliation
contracts are being amortized over periods ranging from 15 to 40 years. The
acquisitions also included property, plant and equipment and film program
rights and payables. (See Note 4 for information on the debt incurred to
finance these acquisitions.)
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MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(Unaudited)
The results of operations for the three First Media stations, purchased on July
1, 1997, and for WFSB-TV, purchased on September 4, 1997, are included in the
company's consolidated operating results from their respective acquisition
dates.
Pro forma results of operations for the quarters ended September 30, 1997, and
September 30, 1996, as if the acquisitions had occurred respectively at the
beginning of each period are as follows:
Three months ended
September 30
------------------
Consolidated 1997 1996
------------ -------- --------
Total revenue $237,055 $217,391
======== ========
Net income $ 15,066 $ 11,227
======== ========
Earnings per share $ .27 $ .20
======== ========
3. Inventories
Major components of inventories are summarized below. Of total inventory
values shown, approximately 63 and 52 percent respectively, are under the LIFO
method at September 30, 1997, and June 30, 1997.
(unaudited)
September 30 June 30
1997 1997
------------ --------
(in thousands)
Raw materials $14,932 $16,787
Work in process 12,078 14,950
Finished goods 6,190 5,874
-------- --------
33,200 37,611
Reserve for LIFO cost valuation (8,541) (7,338)
-------- --------
Total $24,659 $30,273
======== ========
4. Long-term debt and interest rate swap agreements
At September 30, 1997, long-term debt outstanding totaled $270 million under a
credit agreement with a group of seven banks led by Wachovia Bank, N.A. as
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MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(Unaudited)
agent. This debt was incurred in the first quarter of fiscal 1998 to finance
the acquisitions of the four television stations. The credit agreement
consists of a $210 million, 60-month term loan and a $150 million, 60-month
revolving credit facility. On July 1, 1997, $125 million was borrowed under
the revolving credit facility. On September 4, 1997, the company borrowed the
full amount of the term loan ($210 million) and reduced the borrowing under the
revolving credit facility to $60 million, for total debt of $270 million. The
term loan requires the following annual principal payments on May 31, 1998
through 2002, respectively: $25 million, $40 million, $45 million, $50 million
and $50 million. The revolving credit facility is due and payable on July 1,
2002. The credit agreement includes certain financial covenants. These
include requirements that the ratio of consolidated funded debt-to-EBITDA be
less than 3.5 to 1.0 and the fixed-charge-coverage ratio not be less than 2.0
to 1.0. As of September 30, 1997, the company was in compliance with all debt
covenants.
Interest rates under the credit agreement are based on one of the following,
plus applicable margins: adjusted LIBOR; the higher of Wachovia Bank's prime
rate or the overnight federal funds rate; or money market rates. Meredith is
utilizing interest rate swap contracts to manage interest cost and risk
associated with possible increases in variable interest rates. On July 1,
1997, the company entered into two interest rate swap contracts with effective
dates of September 30, 1997, for purposes other than trading. Under these
contracts, Meredith pays fixed rates of interest while receiving floating rates
of interest based on three month LIBOR beginning on September 30, 1997, on $200
million notional amount of indebtedness. The remaining debt of $70 million
currently carries an interest rate of approximately 6.1 percent until January
2, 1998. Then the notional amount under the swap contracts will increase to
cover substantially all of the debt outstanding. As a result, Meredith will
have an effective borrowing cost of approximately 6.75 percent (including
applicable margins and fees) over the entire term of the loan agreement. The
weighted average interest rate at September 30, 1997, was 6.6 percent.
The swap contracts terminate on March 30, 2001, and the notional amount of
indebtedness varies over the terms of the contracts. The average notional
amount of indebtedness outstanding in fiscal 1998 through 2001 is as follows:
$240 million, $220 million, $153 million and $70 million. The company is
exposed to credit-related losses in the event of nonperformance by
counterparties to financial instruments. Management does not expect any
counterparties to fail to meet their obligations given the strong
creditworthiness of the counterparties to the agreements.
The fair value of the interest rate swap agreements is the estimated amount
that the company would pay or receive to terminate the swap agreements. At
September 30, 1997, this value was not material as there has been no
significant change in interest rates or creditworthiness of the swap
counterparties since the swap agreements were entered into.
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MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(Unaudited)
5. Industry segment information
a. Nature of operations
Meredith Corporation is a diversified media company primarily focused on the
home and family marketplace. The company's principal businesses are magazine
publishing and television broadcasting. Operating profits of the publishing
and broadcasting segments were 56 percent and 41 percent, respectively, of
total operating profit before unallocated corporate expenses in fiscal 1997.
Magazine operations accounted for approximately 90 percent of the revenues and
operating profit of the publishing segment, which also includes book publishing
and brand licensing. Better Homes and Gardens is the most significant
trademark to the publishing segment and is used extensively in magazine and
book publishing and licensing operations. The company also operates a
residential real estate marketing and franchising business under the Better
Homes and Gardens trademark. Meredith's operations are diversified
geographically within the United States, and the company has a broad customer
base.
Advertising and magazine circulation revenues accounted for approximately 54
percent and 30 percent, respectively, of the company's revenues in fiscal 1997.
Revenues and operating results can be affected by changes in the demand for
advertising and/or consumer demand for our products. National and local
economic conditions largely affect the overall industry levels of advertising
revenues. Magazine circulation revenues are generally affected by national
and/or regional economic conditions and competition from other forms of media.
b. Revenues, operating profit and depreciation and amortization by industry
segment are shown below:
(unaudited)
Three Months
Ended September 30
-------------------
1997 1996
-------- --------
(in thousands)
Revenues
Publishing $174,301 $157,073
Broadcasting 50,149 35,479
Real Estate 6,449 6,628
-------- --------
Total revenues $230,899 $199,180
======== ========
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MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(Unaudited)
Operating profit
Publishing $ 17,261 $ 13,652
Broadcasting 15,774 12,466
Real Estate 1,550 1,543
Unallocated corporate expense (6,156) (5,331)
-------- --------
Income from operations 28,429 22,330
Interest income 468 379
Interest expense (2,467) (736)
-------- --------
Earnings before income taxes 26,430 21,973
Income taxes 11,339 9,512
-------- --------
Net earnings $ 15,091 $ 12,461
======== ========
Depreciation and amortization
Publishing $ 2,240 $ 2,207
Broadcasting 5,387 2,918
Real Estate 139 138
Unallocated corporate 326 377
-------- --------
Total depreciation
and amortization $ 8,092 $ 5,640
======== ========
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
The following discussion compares the results of operations of Meredith
Corporation and subsidiaries (Meredith or the company) for the first quarter of
fiscal 1998 to the first quarter of fiscal 1997. This commentary should be
read in conjunction with the consolidated financial statements presented
elsewhere in this report and with the company's Form 10-K for the year ended
June 30, 1997. All per-share amounts are computed on a post-tax basis and
reflect a two-for-one stock split in March 1997. All note references are to
the Notes to Consolidated Financial Statements.
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This section contains certain forward-looking statements that are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those anticipated. Readers are referred to Management's
Discussion and Analysis in the company's Form 10-K for the year ended June 30,
1997, for a summary of such risks and uncertainties.
Significant Events
On July 1, 1997, Meredith completed the acquisition of three television
stations from First Media Television, L.P., for $216 million. The stations
are: KPDX-Portland, Ore., KFXO-Bend, Ore. and WHNS-Greenville, S.C./
Spartanburg, S.C./Asheville, N.C. All three stations are affiliates of the FOX
television network. On September 4, 1997, Meredith acquired and then exchanged
the net assets of the fourth First Media station, WCPX-TV in Orlando, for WFSB-
TV, a CBS network-affiliated television station serving the Hartford/New Haven,
Conn. market. WFSB-TV was acquired from Post-Newsweek Stations, Inc. through
an exchange of assets plus a $60 million cash payment to Meredith. The result
was a net cost to the company of $159 million for WFSB. The asset exchange was
necessitated by Federal Communications Commission (FCC) regulations which
prohibit ownership of multiple stations in one market. The company owns WOFL-
TV, a FOX network affiliate serving Orlando.
Consolidated
- ------------
Quarters ended September 30 1997 1996
--------------------------- -------- --------
(in thousands, except per share)
Total revenues $230,899 $199,180
======== ========
Income from operations $ 28,429 $ 22,330
======== ========
Net earnings $ 15,091 $ 12,461
======== ========
Net earnings per share $ .27 $ .22
======== ========
Record first quarter net earnings of $15.1 million, or 27 cents per share, were
recorded in the current period compared to net earnings of $12.5 million, or 22
cents per share, in the fiscal 1997 first quarter. Earnings per share
increased 23 percent due to improved operating performance in our core
businesses, publishing and broadcasting.
The company's first quarter revenues increased 16 percent, including revenues
from the newly-acquired television stations. Comparable revenues, excluding
the new stations and adjusting for changes in the on-sale dates of several
magazine issues, increased 8 percent. The increase in comparable revenues
reflected higher advertising revenues in both magazine and broadcasting and
higher magazine circulation revenues.
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Income from operations was up 27 percent. Operating costs and expenses were
$202.5 million in the current period compared with $176.9 million in the prior-
year period. The increase in expenses was due to the addition of the four
television stations, increased investment in newer magazine titles and
television programming efforts, and higher employee benefits expenses. The
operating profit margin rose from 11.2 percent of revenues in the fiscal 1997
first quarter to 12.3 percent in the current period. The margin improvement
reflected a decline in production, distribution and editorial expenses as a
percentage of revenues due primarily to lower paper prices in the current
quarter.
Debt incurred for the acquisitions of the four television stations resulted in
net interest expense of $2.0 million in the current quarter versus $0.4 million
in the prior-year first quarter. Overall, management estimates that the
acquisitions diluted earnings by one cent per share in the first quarter. This
calculation includes the after-tax effects of the stations' operating profit
after amortization of intangibles, interest expense on debt and estimated
interest income foregone due to cash invested. Management had initially
projected dilution from the acquisitions of 8 to 10 cents per share in fiscal
1998. Current projections indicate there will be only modest dilution in
fiscal 1998. The expected improvement results from a lower than anticipated
interest rate on debt, improved operating performance by the stations and lower
amortization expense based on final appraisals.
The company's effective tax rate was 42.9 percent compared with 43.3 percent in
the prior-year first quarter. The decline reflected an increase in projected
fiscal year earnings, which lessens the effect of nondeductible items on the
overall tax rate.
Publishing
- ----------
Quarters ended September 30 1997 1996
--------------------------- -------- --------
(in thousands)
Revenues
---------
Magazine advertising $ 84,178 $ 70,560
Magazine circulation 67,172 62,642
Consumer book 7,487 9,798
Other 15,464 14,073
-------- --------
Total revenues $174,301 $157,073
======== ========
Operating profit $ 17,261 $ 13,652
======== ========
Publishing revenues increased 11 percent primarily due to higher magazine
advertising revenues. Magazine advertising revenues grew 19 percent due to
increased ad pages across a broad group of titles. Better Homes and Gardens
and Ladies Home Journal magazines, the company's two largest circulation
titles, each reported double-digit increases in ad pages and ad revenues. Other
titles reporting double-digit increases in ad revenues included Traditional
Home, Crayola Kids, Successful Farming and Wood magazines and the company's
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<PAGE>
lineup of Better Homes and Gardens Special Interest Publications. The revenue
increases were primarily due to additional ad pages sold. Magazine
circulation revenues increased 7 percent due to higher subscription revenues
from newer titles (including Country Homes Country Gardens, Crayola Kids and
Family Money magazines), increased newsstand sales of the Better Homes and
Gardens Special Interest Publications, and changes in the on-sale dates of
several magazine issues. The 24 percent decline in consumer book revenues
reflected an expected fall-off in unit sales of the 11th edition of the Better
Homes and Gardens New Cook Book, that was introduced in August 1996.
Publishing operating profit was up 26 percent in the fiscal 1998 first quarter.
The improvement was a result of increased operating profit from magazine
publishing due to higher ad revenues and lower paper costs. Paper costs were
down due to price declines in fiscal 1997. Paper prices from major suppliers
increased an average of 7 percent on July 1, 1997. The full impact of this
increase was not evident in the first quarter due to paper inventories on hand.
The price of paper is driven by overall market conditions and, therefore, is
difficult to predict. However, at this time, management believes another paper
price increase is possible on or before January 1, 1998.
Many titles contributed to the increase in magazine publishing operating
profits. Better Homes and Gardens, Ladies Home Journal, Traditional Home,
Crayola Kids, Successful Farming, and Wood magazines all posted strong
improvements primarily due to higher ad revenues and lower paper costs.
Improvements at the company's lineup of Better Homes and Gardens Special
Interest Publications and Golf for Women magazine reflected those same factors
and additional issues in the current quarter. Custom publishing operations
also reported improved results due to a higher sales volume of custom products.
Operating results declined in the retail book publishing operations due to
lower revenues.
Broadcasting
- ------------
Quarters ended September 30 1997 1996
--------------------------- -------- --------
(in thousands)
Revenues
--------
Advertising $ 47,462 $ 33,774
Other 2,687 1,705
-------- --------
Total revenues $ 50,149 $ 35,479
======== ========
Operating profit $ 15,774 $ 12,466
======== ========
Revenues increased 41 percent in the fiscal 1998 first quarter primarily due to
the acquisition of four television stations. Excluding the revenues of the new
stations, revenues increased to record first quarter levels due to strong
advertising revenue growth at KPHO-Phoenix, KCTV-Kansas City, KVVU-Las Vegas
and WOGX-Ocala/Gainesville. Operating profit increased 27 percent including
results from the new stations. Performance at those stations to date has
exceeded management's expectations. On a comparable basis, broadcasting
reported record first quarter operating profit primarily due to the increase in
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<PAGE>
advertising revenues. All stations reported higher operating profits except
for WNEM-Flint/Saginaw and WOFL-Orlando. The absence of political advertising
revenues led to a slight decline in operating profit at WNEM-Flint/Saginaw
compared to the prior-year quarter. Weak local ad sales and a $0.6 million
write-down of certain syndicated program rights caused the decline at WOFL-
Orlando.
Real Estate
- -----------
Quarters ended September 30 1997 1996
--------------------------- -------- --------
(in thousands)
Total revenues $ 6,449 $ 6,628
======== ========
Operating profit $ 1,550 $ 1,543
======== ========
Revenues declined 3 percent due to a slight decline in sales of products and
services to member firms. Operating profit for the quarter showed little
change as lower administrative costs offset the slight revenue decline.
Liquidity and Capital Resources
Consolidated
- ------------
Quarters ended September 30 1997 1996
--------------------------- --------- --------
(in thousands)
Net earnings $ 15,091 $ 12,461
========= ========
Cash flows from operations $ 15,003 $ 18,958
========= ========
Cash flows from investing $(335,086) $ (3,436)
========= ========
Cash flows from financing $ 253,086 $(12,992)
========= ========
Net (decrease) increase in
cash and cash equivalents $ (66,997) $ 2,530
========= ========
EBITDA $ 36,521 $ 27,970
========= ========
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<PAGE>
Cash and cash equivalents decreased by $67.0 million in the first quarter of
fiscal 1998 compared to an increase in cash of $2.5 million in the prior-year
quarter. The change reflected cash used for the acquisition of four television
stations in the current quarter, net of long-term debt incurred. Cash provided
by operating activities was $15.0 million in the current quarter, down from
$19.0 million in the prior-year quarter due to increases in accounts receivable
related to the new television stations and the increase in publishing revenues.
The acquisitions of the television stations also resulted in substantial
increases in other balance sheet items from June 30, 1997 to September 30,
1997, including: program rights; property, plant and equipment; goodwill and
other intangibles; and program rights payable.
EBITDA is defined as earnings before interest, taxes, depreciation and
amortization. EBITDA is often used to analyze and compare companies on the
basis of operating performance and cash flow. Fiscal 1998 first-quarter EBITDA
increased 31 percent from the prior-year quarter due to improved operating
results and the acquisition of the four television stations. EBITDA is not
adjusted for all noncash expenses or for working capital changes, capital
expenditures or other investment requirements. EBITDA should not be considered
in isolation or as a substitute for measures of performance prepared in
accordance with generally accepted accounting principles.
At September 30, 1997, long-term debt outstanding totaled $270 million under a
credit agreement with a group of seven banks led by Wachovia Bank, N.A. as
agent. This debt was incurred in the first quarter of fiscal 1998 to finance
the acquisitions of the four television stations. The credit agreement
consists of a $210 million, 60-month term loan and a $150 million, 60-month
revolving credit facility. On July 1, 1997, $125 million was borrowed under
the revolving credit facility. On September 4, 1997, the company borrowed the
full amount of the term loan and reduced the borrowing under the revolving
credit facility to $60 million, for total debt of $270 million. The term loan
requires the following annual principal payments on May 31, 1998 through 2002,
respectively: $25 million, $40 million, $45 million, $50 million and $50
million. The revolving credit facility is due and payable on July 1, 2002.
Funds for the payment of interest and principal on the debt are expected to be
provided by cash generated from future operating activities. The credit
agreement includes certain financial covenants. These include requirements
that the ratio of consolidated funded debt-to-EBITDA be less than 3.5 to 1.0
and the fixed-charge-coverage ratio not be less than 2.0 to 1.0. As of
September 30, 1997, the company was in compliance with all debt covenants.
Interest rates under the credit agreement are based on one of the following,
plus applicable margins: adjusted LIBOR; the higher of Wachovia Bank's prime
rate or the overnight federal funds rate; or money market rates. Meredith has
utilized interest rate swap contracts to manage interest cost and risk
associated with possible increases in variable interest rates. The company has
entered into two interest rate swap contracts with effective dates of September
30, 1997, for purposes other than trading. Under these contracts, Meredith
pays fixed rates of interest while receiving floating rates of interest based
on three month LIBOR beginning on September 30, 1997, on $200 million notional
amount of indebtedness. The remaining debt of $70 million currently carries an
interest rate of approximately 6.1 percent until January 2, 1998. Then the
notional amount under the swap contracts will increase to
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cover substantially all of the debt outstanding. As a result, Meredith will
have an effective borrowing cost of approximately 6.75 percent (including
applicable margins and fees) over the entire term of the loan agreement. The
swap contracts terminate on March 30, 2001, and the notional amount of
indebtedness varies over the terms of the contracts. The average notional
amount of indebtedness outstanding in fiscal 1998 through 2001 is as follows:
$240 million, $220 million, $153 million and $70 million. The company records
amounts which are due to or from interest rate swap counterparties in the
period in which they accrue. The company is exposed to credit-related losses
in the event of nonperformance by counterparties to financial instruments.
Management does not expect any counterparties to fail to meet their obligations
given the strong creditworthiness of the counterparties to the agreements.
In the first quarter of fiscal 1998, the company spent $10.2 million for the
repurchase of 346,000 shares of Meredith Corporation common stock at the then
current market price. This compares with spending of $6.7 million for the
repurchase of 327,000 shares in the prior-year first quarter. As of September
30, 1997, approximately 950,000 shares could be repurchased under an existing
authorization by the board of directors. Subsequent to the end of the first
fiscal quarter, the company agreed to repurchase approximately 840,000 shares
under this program. At the company's annual meeting on November 10, 1997, the
board authorized the repurchase of up to 1 million additional shares subject to
market conditions. The status of the repurchase program is reviewed at each
quarterly board of directors meeting. The company expects to continue to
repurchase shares in the foreseeable future, subject to market conditions.
Dividends paid in the first quarter of fiscal 1998 were $3.5 million, or 6.5
cents per share, compared with $3.0 million, or 5.5 cents per share, in the
prior-year period.
First quarter spending for property, plant and equipment increased to $8.4
million from $3.4 million in the fiscal 1997 first quarter. The increase
primarily reflected higher spending for the construction of a new office
building and related improvements in Des Moines. Higher spending for computer
hardware and software and broadcasting technical equipment also contributed.
Capital expenditures for fiscal 1998 are expected to be approximately double
the fiscal 1997 spending level. Fiscal 1998 spending will include
approximately $24 million for the completion of the Des Moines building
project. Fiscal 1997 spending for this project totaled $11 million. Other
significant spending in fiscal 1998 will relate to new computer systems (partly
to address year 2000 issues), the introduction of local news programming at
three television stations and a building remodeling project at one television
station. Funds for the new Des Moines building and other capital expenditures
are expected to be provided by available cash, including cash from operating
activities or, if necessary, borrowings under credit agreements.
At this time, management expects that cash on hand, internally-generated cash
flow and debt from credit agreements will provide funds for any additional
operating and recurring cash needs (e.g., working capital, cash dividends) for
foreseeable periods.
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
3 Bylaws
10.1) Meredith Corporation Nonqualified Stock Option Award Agreement dated
August 13, 1997, between Meredith Corporation and William T. Kerr
10.2) Statement re: Meredith Corporation Nonqualified Stock Option Award
Agreements dated August 13, 1997, between Meredith Corporation and
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, 1997
(b) Reports on Form 8-K
The company filed a report on Form 8-K dated July 1, 1997, reporting
under Item 2 that it had purchased the assets of three television stations
from First Media Television, L.P. for $216 million. Financial statements
of businesses acquired and pro forma financial information related to this
acquisition were filed on September 11, 1997, on Form 8-K/A-1 dated July 1,
1997.
The company filed a report on Form 8-K dated September 4, 1997, reporting
under Item 2 that it had acquired the assets of WFSB-TV from Post-Newsweek
Stations, Inc. through an exchange of the assets of WCPX-TV and a $60
million payment to the company.
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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: November 13, 1997
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Index to Exhibits
Exhibit
Number Item
------- -----------------------------------------------------------
3) Bylaws
10.1) Meredith Corporation Nonqualified Stock Option Award
Agreement dated August 13, 1997, between Meredith Corporation
and William T. Kerr
10.2) Statement re: Meredith Corporation Nonqualified Stock Option
Award Agreements dated August 13, 1997, between Meredith
Corporation and named executive officers
11 Statement re computation of per share earnings
27 Financial Data Schedule
99 Additional financial information from the Company's third
quarter press release dated April 23, 1997
Exhibit 3
---------
BYLAWS
OF
MEREDITH CORPORATION
Effective
August 13, 1997
ARTICLE I. OFFICES
The principal office of the corporation in the State of Iowa shall be
located in the City of Des Moines, County of Polk, or as otherwise or more
particularly identified in the most recently filed (at any time), annual report
of the corporation on file with the Iowa Secretary of State.
ARTICLE II. SHAREHOLDERS
Section 1. ANNUAL MEETING. The annual meeting of the shareholders shall
be held on the second Monday in the month of November in each year, at the hour
of 10:00 a.m., at the principal office of the corporation or at such other
date, time and place as may be fixed from time to time by resolution of the
Board of Directors and set forth in the notice of the meeting, for the purpose
of electing directors and transacting such other business as may properly come
before the meeting.
At an annual meeting of the shareholders, only such business shall be
conducted as shall have been properly brought before an annual meeting. To be
properly brought before an annual meeting, business must be (i) specified in
the notice of the meeting (or any supplement thereto) given by or at the
direction of the Board of Directors, (ii) otherwise properly brought before the
meeting by or at the direction of the Board of Directors or (iii) otherwise
properly brought before the meeting by a shareholder of the corporation who was
a shareholder of record at the time of giving of notice provided for in this
Section, who is entitled to vote at the meeting and who complied with the
notice procedures set forth in this Section. For business to be properly
brought before an annual meeting by a shareholder, the shareholder must have
given timely notice thereof in writing to the Secretary of the corporation at
the principal executive office of the corporation. To be timely, a
shareholder's notice shall be delivered not less than 90 days prior to the
first anniversary of the preceding year's meeting; provided, however, that in
the event that the date of the annual meeting is advanced by more than 30 days
or delayed by more than 60 days from such anniversary date, notice by the
shareholder, to be timely, must be so delivered not later than the 90th day
prior to such annual meeting or the 10th day following the day on which public
announcement (as defined herein) of the date of such meeting is first made.
Such shareholder's notice shall set forth as to each matter the
shareholder proposes to bring before the annual meeting (i) a brief description
of the business desired to be brought before the meeting and the reasons for
conducting such business at the meeting and any material interest in such
business of such shareholder and the beneficial owner, if any, on whose behalf
the proposal is made; and (ii) as to the shareholder giving the notice and the
beneficial owner, if any, on whose behalf the proposal is made (A) the name and
address of such shareholder, as they appear on the corporation's books, and the
name and address of such beneficial owner and (B) the class and number of
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shares of the corporation which are owned beneficially and of record by such
shareholder and such beneficial owner; and (iii) in the event that such
business includes a proposal to amend either the Articles of Incorporation or
the Bylaws of the corporation, the language of the proposed amendment.
Notwithstanding anything in these Bylaws to the contrary, no business shall be
conducted at any annual meeting except in accordance with this paragraph, and
the Chairman of the Board or other person presiding at an annual meeting of
shareholders, may refuse to permit any business to be brought before an annual
meeting without compliance with the foregoing procedures. For the purposes of
this paragraph "public announcement" shall mean disclosure in a press release
reported by the Dow Jones News Service, Associated Press or comparable national
news service or in a document publicly filed by the corporation with the
Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). In addition
to the provisions of this paragraph, a shareholder shall also comply with all
applicable requirements of the Exchange Act and the rules and regulations
thereunder with respect to the matters set forth herein. Nothing in these
Bylaws shall be deemed to affect any rights of shareholders to request
inclusion of proposals in the corporation's proxy statement pursuant to Rule
14a-8 under the Exchange Act.
Section 2. SPECIAL MEETINGS. Special meetings of the shareholders, for
any purpose or purposes, may be called by the Chairman of the Board, the Chief
Executive Officer, the Secretary or the Board of Directors. If the holders of
shares having at least fifty percent of all the votes entitled to be cast on
any issue proposed to be considered at the proposed special meeting sign, date
and deliver to the corporation's Secretary one or more written demands for the
meeting describing the purpose or purposes for which it is to be held, the
Board of Directors, or, at its discretion, the Chairman, shall establish a
reasonable time, date and place for holding such special meeting. Business
transacted at a special meeting of the shareholders shall be confined to the
purpose or purposes of the meeting described in the notice of the meeting.
Section 3. PLACE OF SHAREHOLDERS' MEETING. The Board of Directors may
designate any place, either within or without the State of Iowa as the place of
meeting for any annual meeting or for any special meeting of shareholders. If
no designation is made the place of meeting shall be the principal office of
the corporation in the State of Iowa.
Section 4. NOTICE OF MEETING. Written or printed notice stating the
place, day and hour of the meeting and, in case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not
less than ten days, nor more than sixty days before the date of the meeting,
either personally or by mail, by or at the direction of the Chairman of the
Board, the Chief Executive Officer, the Secretary or the Board of Directors, to
each shareholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States
mail, addressed to the shareholder at the address as it appears on the stock
transfer books of the corporation, with postage thereon prepaid.
Section 5. POSTPONEMENT OF MEETINGS. Any previously scheduled annual or
special meeting of shareholders may be postponed by resolution of the Board of
Directors upon public announcement (as defined in Article II, Section 1 of
these Bylaws) made on or prior to the date previously scheduled for such annual
or special meeting.
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Section 6. FIXING OF RECORD DATE. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or shareholders entitled to receive payment of any
dividend, or in order to make a determination of shareholders for any other
proper purpose, the Board of Directors of the corporation may fix in advance a
date as the record date for any such determination of shareholders, such date
in any case to be not more than seventy days and, in case of a meeting of
shareholders, not less than ten days prior to the date on which the particular
action requiring such determination of shareholders is to be taken. If no
record date is fixed for the determination of shareholders entitled to notice
of or to vote at a meeting of shareholders, or shareholders entitled to receive
payment of a dividend, the day before the first date on which notice of the
meeting is mailed or the day before the date on which the resolution of the
Board of Directors declaring such dividend is adopted, as the case may be,
shall be the record date for such determination of shareholders. In order to
determine the shareholders entitled to demand a special meeting, the record
date shall be the sixtieth day preceding the date of receipt by the corporation
of written demands sufficient to require the calling of such meeting, unless
otherwise fixed by the Board of Directors. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof, unless the Board of Directors selects a new record date or unless a
new record date is required by law.
Section 7. VOTING LISTS. After the record date for a meeting has been
fixed, the officer or agent having charge of the stock transfer books for
shares of the corporation shall make, at least ten days before each meeting of
shareholders, a complete list of the shareholders entitled to vote at such
meeting, or any adjournment thereof, arranged by voting group and within each
voting group, in alphabetical order, with the address of and the number and
class of shares held by each, which list, for a period beginning two business
days after notice of the meeting was first given for which the list was
prepared and continuing through the meeting, shall be kept on file at the
principal office of the corporation or at the place identified in the meeting
notice in the city where the meeting will be held. The list shall be subject
to inspection by any shareholder at any time during usual business hours. Such
list shall also be produced and kept open at the time and place of the meeting
and shall be subject to the inspection of any shareholder during the whole time
of the meeting. The list furnished to the corporation by its stock transfer
agent shall be prima facie evidence as to who are the shareholders entitled to
examine such list or transfer books or to vote at any meeting of shareholders.
Section 8. QUORUM. At any meeting of the shareholders, a majority of the
votes entitled to be cast on the matter by a voting group constitutes a quorum
of that voting group for action on that matter, unless the representation of a
different number is required by law, and in that case, the representation of
the number so required shall constitute a quorum. If a quorum shall fail to
attend any meeting, the chairman of the meeting or a majority of the votes
present may adjourn the meeting to another place, date or time. When a meeting
is adjourned to another place, date or time, notice need not be given of the
adjourned meeting if the place, date and time thereof are announced at the
meeting at which the adjournment is taken; provided, however, that if the date
of any adjourned meeting is more than one hundred twenty (120) days after the
date for which the meeting was originally noticed, or if a new record date is
fixed for the adjourned meeting, notice of the place, date and time of the
adjourned meeting shall be given in conformity herewith. At any adjourned
meeting, any business may be transacted which might have been transacted at the
original meeting.
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<PAGE>
Section 9. PROXIES. At all meetings of shareholders, a shareholder may
vote by proxy executed in writing by the shareholder or by the shareholder's
duly authorized attorney in fact. Such proxy shall be filed with the Secretary
of the corporation before or at the time of the meeting. No proxy shall be
valid after eleven months from the date of its execution, unless otherwise
provided in the proxy. No holder of any share of any class of stock of the
corporation shall sell the vote pertaining to such share or issue a proxy to
vote such share in consideration of any sum of money or anything of value.
Section 10. VOTING OF SHARES. Each outstanding share entitled to vote
shall be entitled to vote as follows:
(a) At each annual or special meeting of shareholders, each holder
of common stock shall be entitled to one [1] vote in person or by proxy
for each share of common stock standing in the holder's name on the stock
transfer records of the corporation, and (except as provided in subsection
[b] of this Section 10) each holder of class B stock shall be entitled to
ten [10] votes in person or by proxy for each share of class B stock
standing in the holder's name on the stock transfer records of the
corporation. Except as required pursuant to the Business Corporation Act
of the State of Iowa, all actions submitted to a vote of shareholders
shall be voted on by the holders of common stock and class B stock voting
together as a single class.
(b) Notwithstanding subsection [a] of this Section 10, each holder
of class B stock shall be entitled to only one [1] vote, in person or by
proxy, for each share of class B stock standing in the holder's name on
the stock transfer records of the corporation with respect to the
following matters:
(i) The removal of any director of the corporation pursuant to
Article IV of the Articles of Incorporation;
(ii) Any amendment to the Articles of Incorporation which would
permit the holders of stock of the corporation to amend, alter,
change or repeal the Bylaws or any part thereof, pursuant to Article
V of the Articles of Incorporation; and
(iii) Any repeal or amendment of Article IV or Article VI of the
Articles of Incorporation.
Section 11. VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in the
name of another corporation may be voted by such officer, agent or proxy as the
Bylaws of such corporation may prescribe, or, in the absence of such provision,
as the board of directors of such corporation may determine.
Shares held by an administrator, executor, guardian or conservator may be
voted, either in person or by proxy, without a transfer of such shares. Shares
standing in the name of a trustee may be voted by the trustee, either in person
or by proxy, but no trustee shall be entitled to vote shares so held without a
transfer of such shares into the name of the trustee.
Shares standing in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof if authority to do so is contained in an
appropriate order of the court by which such receiver was appointed.
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A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Neither treasury shares nor, absent special circumstances, shares held by
another corporation if a majority of the shares entitled to vote for the
election of directors of such other corporation is held by the corporation,
shall be voted at any meeting or counted in determining the total number of
outstanding shares at any given time.
Section 12. VOTING BY BALLOT. Voting by shareholders on any question or
in any election may be viva voce unless the presiding officer shall order or
any shareholder shall demand that voting be by ballot.
ARTICLE III. BOARD OF DIRECTORS
Section 1. GENERAL POWERS. The business and affairs of the corporation
shall be managed by its Board of Directors.
Section 2. NUMBER, TENURE AND QUALIFICATIONS; NOMINATIONS. Within the
limits set forth in Article IV of the Articles of Incorporation, the number of
directors of the corporation shall be as fixed from time to time by resolution
of the Board of Directors. The directors shall be divided into classes, and
hold office for the terms as provided in Article IV of the Articles of
Incorporation. Directors need not be residents of the State of Iowa or
shareholders of the corporation.
Nominations of persons for election as directors may be made by the Board
of Directors or by any shareholder entitled to vote for the election of
directors. Any shareholder entitled to vote for the election of directors may
nominate a person or persons for election as director only if written notice of
such shareholder's intent is delivered to the Secretary of the corporation at
the principal executive office of the corporation (i) with respect to an
election to be held at an annual meeting of shareholders, not later than 90
days prior to the first anniversary of the preceding year's annual meeting, or
as set out below, and (ii) with respect to an election to be held at a special
meeting of shareholders for the election of directors, not later than 10 days
following the date on which public announcement (as defined in Article II,
Section 1 of these Bylaws) of the date of such meeting is first made. In the
event that the date of the annual meeting is advanced by more than 30 days or
delayed by more than 60 days from the anniversary date of the annual meeting,
notice by the shareholder must be delivered not less than 90 days prior to such
annual meeting or the 10th day following the day on which public announcement
of the date of such meeting is first made. Notwithstanding anything in the
foregoing sentence to the contrary, in the event that the number of directors
to be elected to the Board of Directors of the corporation is increased and
there is no public announcement naming all of the nominees for director or
specifying the size of the increased Board of Directors made by the corporation
at least 100 days prior to the first anniversary of the preceding year's annual
meeting, a shareholder's notice required by this Section shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the Secretary of the
corporation not later than the close of business on the 10th day following the
day on which such public announcement is first made.
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<PAGE>
Such shareholder's notice shall set forth: (a) the name and address of the
shareholder who intends to make the nomination and the name, address, age, and
principal occupation or employment of the person or persons to be nominated;
(b) a representation that the shareholder is a holder of record of stock of the
corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to nominate the person or persons specified in the
notice; (c) the number and class of shares of the corporation which are owned
by such shareholder and the beneficial owner, if any, and the number and class
of shares, if any, beneficially owned by the nominee; (d) a description of all
arrangements or understandings between the shareholder and each nominee and any
other person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the shareholder; (e) such other
information regarding each nominee that is required to be disclosed in
connection with the solicitation of proxies for the election of directors, or
as otherwise required, in each case pursuant to Regulation 14A under the
Exchange Act (including, without limitation, such person's written consent to
being named in a proxy statement as a nominee and to serving as a director if
nominated). The Chairman of the Board or other person presiding at a meeting
of shareholders may refuse to acknowledge the nomination of any person not made
in accordance with the procedures prescribed by these Bylaws, and in that event
the defective nomination shall be disregarded.
Section 3. REGULAR MEETINGS. A regular meeting of the Board of Directors
shall be held without other notice than this Bylaw immediately after, and at
the same place as, the annual meeting of shareholders. The Board of Directors
may provide, by resolution, the time and place, either within or without the
State of Iowa, for the holding of additional regular meetings without other
notice than such resolution.
Section 4. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by or at the request of the Chairman of the Board, the Chief
Executive Officer, the Secretary or any two directors. The person or persons
authorized to call special meetings of the Board of Directors may fix any
place, either within or without the State of Iowa, as the place for holding any
special meeting of the Board of Directors called by them.
Section 5. NOTICE. Notice of any special meeting of the Board of
Directors shall be given at least two days previously thereto by written notice
delivered personally or mailed to each director at the director's business
address, or by telephone, cable, telefax, wireless or telegram. If mailed,
such notice shall be deemed to be delivered when deposited in the United States
mail so addressed, with postage thereon prepaid. If notice be given by
telegram such notice shall be deemed to be delivered when the telegram is
delivered to the telegraph company. Any director may waive notice of any
meeting. The attendance of a director at a meeting shall constitute a waiver
of notice of such meeting, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the Board
of Directors need be specified in the notice or waiver of notice of such
meeting.
Section 6. QUORUM. A majority of the number of directors fixed pursuant
to Section 2 of this Article III shall constitute a quorum for the transaction
of business at any meeting of the Board of Directors, but if less than such
majority is present at a meeting, a majority of the directors present may
adjourn the meeting from time to time without further notice.
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Section 7. MANNER OF ACTING. Except as otherwise specified in these
Bylaws, the act of the majority of the directors present at a meeting at which
a quorum is present shall be the act of the Board of Directors.
Section 8. VACANCIES. Any vacancy occurring in the Board of Directors
may be filled by the affirmative vote of a majority of the remaining directors
though less than a quorum of the Board of Directors. A director elected to
fill a vacancy shall be elected for a term which shall expire at the next
election of directors by the shareholders. A director elected by the
shareholders to fill a vacancy shall be elected for the unexpired term of the
director last elected by the shareholders with respect to the position being
filled. Any directorship to be filled by reason of any increase in the number
of directors by not more than thirty percent (30%) of the number of directors
last approved by the shareholders, may be filled by the Board of Directors for
a term of office continuing only until the next election of directors by the
shareholders.
Section 9. COMPENSATION. By resolution of the Board of Directors, those
directors who are not at the time active employees of the corporation may be
paid an annual retainer. All directors may be reimbursed for expenses incurred
in connection with their services. No such payment shall preclude any director
from serving the corporation in any other capacity and receiving compensation
therefor.
Section 10. PRESUMPTION OF ASSENT. A director of the corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
the director's dissent shall be entered in the minutes of the meeting or unless
the director shall file a written dissent to such action with the person acting
as the Secretary of the meeting before the adjournment thereof or shall forward
such dissent by registered or certified mail to the Secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such action.
Section 11. INFORMAL ACTION BY DIRECTORS. Any action required to be
taken at a meeting of the directors, or any other action which may be taken at
a meeting of the directors, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
directors entitled to vote with respect to the subject matter thereof.
Section 12. EXECUTIVE COMMITTEE. An Executive Committee consisting of
two or more members of the Board of Directors may be designated by the Board of
Directors at the time of the annual meeting or at such other time as the Board
of Directors may determine. The chairman of said committee shall be the person
elected by the Board of Directors to the office of Chairman of the Executive
Committee, and such officer shall be designated a member of said committee. If
an Executive Committee is designated, it shall, during the intervals between
the meetings of the Board of Directors and so far as it lawfully may, possess
and exercise all of the authority of the Board of Directors in the management
of the business of the corporation, in all cases in which specific directions
shall not have been given by the Board of Directors, provided that
notwithstanding the foregoing, the Executive Committee shall not have
authority:
(1) to authorize dividends or other distributions;
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(2) to approve or propose to shareholders actions or proposals required
by the Iowa Business Corporation Act to be approved by shareholders;
(3) to fill vacancies on the Board of Directors or any committee thereof;
(4) to amend the Articles of Incorporation of the corporation;
(5) to adopt, amend or repeal Bylaws;
(6) to approve a plan of merger not requiring shareholder approval;
(7) to authorize or approve the reacquisition of shares unless pursuant
to a general formula or method specified by the Board of Directors;
(8) to authorize or approve the issuance or sale of, or any contract for
sale of shares, or determine the designation and relative rights,
preferences and limitations of a class or series of shares; except
that the Board of Directors may authorize a committee or senior
officer to do so within limits specifically prescribed by the Board
of Directors; or
(9) to remove the Chairman of the Board, Chairman of the Executive
Committee, Chief Executive Officer or the President, or to appoint
any person to fill a vacancy in any such office.
Section 13. FINANCE COMMITTEE. A Finance Committee consisting of two or
more members of the Board of Directors may be designated by the Board of
Directors at the time of the annual meeting or at such time as the Board of
Directors may determine. If a Finance Committee is designated, said
committee's duties shall be to:
(1) review corporate financial policies and procedures and make
recommendations to the Board of Directors or the Executive Committee
in regard thereto;
(2) provide financial advice and counsel to management;
(3) formulate dividend policy and make recommendations to the Board of
Directors in regard thereto;
(4) make provisions for the appointment of depositories of funds of the
corporation and the specification of conditions of deposit and
withdrawal of said funds;
(5) review specific corporate financing plans and advise the Board of
Directors or Executive Committee in regard thereto;
(6) supervise corporate investment portfolios;
(7) give consideration and approval or disapproval of capital expenditure
requests by management within limits established by the Board of
Directors;
(8) review annual capital end operating budgets and advise the Board of
Directors or Executive Committee regarding the financial implications
thereof;
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(9) monitor the corporation's financial condition and standing in the
financial and investment communities;
(10) review and make recommendations to the Board of Directors concerning
acquisitions and dispositions;
(11) monitor the risk management activities of the corporation; and
(12) consider any other matters concerning the corporation's financial
structure, condition, financing plans and policies and make
recommendations to the Board of Directors on such matters.
Section 14. COMPENSATION/NOMINATING COMMITTEE. A Compensation/Nominating
Committee consisting of two or more members of the Board of Directors who are
non-employee directors as defined in Rule 16b-3(b)(3)(i) under the Exchange Act
and outside directors as defined in regulations under Section 162(m) of the
Internal Revenue Code may be designated by the Board of Directors at the time
of the annual meeting, or at such other time as the Board of Directors may
determine. If a Compensation/Nominating Committee is designated, said
committee's duties shall be to:
(1) review and approve changes in corporate officers' compensation;
(2) review and make recommendations to the Board of Directors on
directors' compensation;
(3) review the corporation's salary administration programs and make
changes therein as may be required;
(4) approve prior to adoption any management incentive, bonus or stock
plans, all agreements related thereto, and administer and supervise
such plans as the language thereof may require;
(5) review and make recommendations to the Board of Directors on director
stock plans and all agreements related thereto;
(6) review all employee benefit plans, including the levels and types of
benefits provided thereunder, and propose amendments thereto for
approval by the Board of Directors;
(7) recommend to the Board of Directors the appointment of such
management personnel or committees as it deems desirable for the
administration, detailed study, or recommendation of possible changes
in employee benefit plans;
(8) act as a nominating committee to propose and recommend to the
Board of Directors nominees for election or appointment as directors;
and
(9) engage in such additional review and assessment as it may deem
necessary or appropriate to perform the foregoing duties.
Section 15. AUDIT COMMITTEE. An Audit Committee consisting of two or
more members of the Board of Directors who are independent of management within
the meaning of the policy statement on audit committees issued by the New York
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Stock Exchange shall be designated by the Board of Directors at the time of the
annual meeting, or at such other time as the board may determine. The duties
of said committee shall be to:
(1) review and recommend annually to the Board of Directors the
engagement of independent public accountants to audit the books and
records of the corporation and its subsidiaries;
(2) meet prior to the start of any audit by the outside audit firm and
review the scope of the audit to be performed;
(3) meet prior to the publication of the annual report and review results
of the audit by the outside audit firm for the year;
(4) meet with and determine the responsibilities and scope of the
internal audit department and review internal audit reports;
(5) review the corporation's accounting principles and policies and
internal accounting controls;
(6) review the effect of changes in accounting principles or of other
developments emanating from the profession, its standard board or
any governmental authority;
(7) carry on such other activities so as to give additional assurance
regarding the financial information used by the Board of Directors
in making decisions;
(8) carry on such other activities so as to give additional assurance
regarding the financial information distributed to outsiders; and
(9) review the standards and policies of proper business conduct and
practices for the corporation and its employees and monitor the
implementation of, and the compliance with the standards and
policies.
Section 16. PENSION COMMITTEE. A Pension Committee consisting of two or
more members of the Board of Directors may be designated by the Board of
Directors at the time of the annual meeting or at such time as the Board of
Directors may determine. If a Pension Committee is designated, said
committee's duties shall be to:
(1) review the corporation's pension plans and propose amendments thereto
for approval by the Board of Directors;
(2) review the levels and types of benefits provided under the
corporation's pension plans and other features thereof, including
eligibility, vesting and the form of payment of benefits;
(3) recommend to the Board of Directors investment policy and objectives
for all employee pension funds, review the investment performance of
such funds and recommend revision of the policy and objectives as may
be required;
(4) recommend to the Board of Directors the funding policies for all
employee pension funds;
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(5) recommend to the Board of Directors the appointment of such
management personnel or committees as it deems desirable for the
administration, detailed study, or recommendation of possible changes
in the corporation's pension plans; and
(6) engage in such additional review and assessment as it may deem
necessary or appropriate to perform the bargaining duties.
Section 17. LEGAL AFFAIRS COMMITTEE. A Legal Affairs Committee consisting
of two or more members of the Board of Directors may be designated by the Board
of Directors at the time of the annual meeting, or such other time as the board
may determine. If a Legal Affairs Committee is designated, said committee's
duties shall be to:
1. review the structure, functions and personnel of the corporation's
internal legal staff;
2. review the procedures established for the engagement of outside
counsel and the monitoring of their activities;
3. meet with the general counsel of the corporation, and outside counsel
engaged by the corporation, to review all significant threatened,
pending and settled litigation involving the corporation; including
the impact, or potential impact, of such matters upon the policies,
planning, operations or finances of the corporation;
4. receive reports from the general counsel and outside counsel, as to
changes in the law which have or could have an effect upon the
corporation or its policies, planning, operations or finances, and
assist in the development of strategies in response thereto; and
5. inquire into the existence, and encourage the development, of
practices and procedures, including legal audits, which could benefit
the corporation in avoiding litigation or other legal problems.
Section 18. COMMITTEE PROCEDURES. The chairman of each committee, other
than the Executive Committee, shall be selected by the Board of Directors or by
the Executive Committee. In the absence of the chairman of any committee, a
temporary chairman may be appointed from among the members of the committee.
Each committee shall keep minutes of the proceedings of its meetings which
shall be submitted to the Board of Directors at the next meeting of the Board
of Directors. A majority of members of any committee shall constitute a quorum
for the transaction of business. Meetings of any committee shall be called
upon the request of any member of the committee or the Chairman of the Board,
Chief Executive Officer or the Secretary, and notice of such meetings shall in
each instance be given to each member of the committee at least twenty-four
hours before the meeting either orally or in writing. Expenses of attendance,
if any, shall be paid for attendance at each meeting of any committee. Each
director serving on a committee shall hold such office until the annual meeting
held next after such director's designation, or until such director's successor
shall have been designated.
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ARTICLE IV. OFFICERS
Section 1. NUMBER. The officers of the corporation shall be a Chairman
of the Board, a Chairman of the Executive Committee, a Chief Executive Officer,
a President (who, unless otherwise determined by the Board, shall be the Chief
Operating Officer of the corporation), one or more Group Presidents, one or
more Executive Vice Presidents, one or more Senior Vice Presidents or one or
more Vice Presidents (the number thereof to be determined by the Board of
Directors), a Secretary, a Treasurer, and a Controller, and such other officers
as the Board of Directors may from time to time designate by resolution, each
of whom shall be elected by the Board of Directors. Any two or more offices
may be held by the same person. In its discretion, the Board of Directors may
delegate the powers or duties of any officer to any other officer or agents,
notwithstanding any provision of these Bylaws, and the Board of Directors may
leave unfilled for any such period as it may fix, any office except those of
Chairman of the Board, Chief Executive Officer, President (unless the duties of
President are performed by the Chief Executive Officer), Vice President-Finance
and Secretary.
Section 2. ELECTION AND TERM OF OFFICE. The officers of the corporation
to be elected by the Board of Directors shall be elected annually by the Board
of Directors at the meeting of the Board of Directors held after each annual
meeting of the shareholders. If the election of officers shall not be held at
such meeting, such election shall be held as soon thereafter as conveniently
may be. Each officer shall hold office until such officer's successor shall
have been duly elected or until death or until such officer shall resign or
shall have been removed in the manner hereinafter provided.
Section 3. REMOVAL. Any officer or agent elected or appointed by the
Board of Directors may be removed by the Board of Directors whenever in its
judgment the best interests of the corporation would be served thereby, but
such removal shall be without prejudice to the contract rights, if any, of the
person so removed. Any officer or agent elected by the Board of Directors
except the Chairman of the Board, Chairman of the Executive Committee, Chief
Executive Officer and President, may be removed by the Executive Committee.
Any officer or agent elected by the Board of Directors except the Chairman of
the Board and the Chairman of the Executive Committee may be removed by the
Chief Executive Officer.
Section 4. VACANCIES. A vacancy in the office of Chairman of the Board,
Chairman of the Executive Committee, Chief Executive Officer or President
because of death, resignation, removal, disqualification or otherwise, may be
filled only by the Board of Directors for the unexpired portion of the term. A
vacancy in any other office may be filled by the Executive Committee or the
Chief Executive Officer.
Section 5. CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside
at all meetings of the shareholders and of the Board of Directors and shall be
a member of the Executive Committee. The Chairman of the Board shall perform
such other duties as may be prescribed by the Board of Directors from time to
time and shall have the general powers and duties usually vested in the
Chairman of the Board.
Section 6. CHAIRMAN OF THE EXECUTIVE COMMITTEE. The Chairman of the
Executive Committee shall be a member of that committee and preside at all of
its meetings, and in the absence of the Chairman of the Board, shall preside at
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all meetings of the shareholders and the Board of Directors. The Chairman of
the Executive Committee shall perform such other duties as may be prescribed by
the Board of Directors from time to time.
Section 7. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall be
the principal executive officer of the corporation and, in general shall,
subject to the authority of the Board of Directors, supervise and control all
of the business, policies and affairs of the corporation and all other officers
of the corporation except for the Chairman of the Board and the Chairman of the
Executive Committee. The Chief Executive Officer shall have the general powers
and duties usually vested in the principal executive officer of a corporation,
unless the Board of Directors shall elect another person as President and shall
delegate some or all of such powers and duties to the President. The Chief
Executive Officer shall perform such other duties as may be prescribed by the
Board of Directors from time to time.
Section 8. PRESIDENT. The President shall be the Chief Operating Officer
of the corporation (unless otherwise determined by the Board of Directors). As
the Chief Operating Officer, the President shall have the management of and
exercise general supervision over the corporation's operating groups and all
its Group Presidents, subject to the control and supervision of the Chief
Executive Officer. The President shall have such other powers and perform such
other duties as may be prescribed by the Board of Directors or the Chief
Executive Officer from time to time.
Section 9. GROUP PRESIDENTS. Each Group President, within the
limitations placed by the policies adopted by the Board of Directors or the
Chief Executive Officer, shall be a corporate officer and shall be the Chief
Operating Officer of the operating group assigned and shall in general
supervise and control such business and affairs of the group and operations
assigned thereto and perform such other duties as may be prescribed from time
to time by the Board of Directors or the Chief Executive Officer.
Section 10. EXECUTIVE VICE PRESIDENTS, SENIOR VICE PRESIDENTS AND VICE
PRESIDENTS. Each corporate Executive Vice President, Senior Vice President or
Vice President shall perform such duties as may be assigned by the Board of
Directors or the Chief Executive Officer. An Executive Vice President, Senior
Vice President or Vice President may be assigned the operating authority for
managing one or more operating units or service operations of the corporation
as established by the Board of Directors. Upon assignment by the Board of
Directors of operating authority for an operation or service unit, such
Executive Vice President, Senior Vice President or Vice President shall in
general supervise and control all of the business and affairs of such operation
or service unit, subject only to such supervision and direction as the Board of
Directors or the Chief Executive Officer may provide. Each Executive Vice
President, Senior Vice President and Vice President shall be authorized to sign
contracts and other documents related to the corporation or to the operations
under such officer's supervision and control.
Section 11. VICE PRESIDENT FINANCE. The Vice President-Finance shall be
the principal and chief accounting and principal and chief finance officer of
the corporation. In that capacity, the Vice President-Finance shall keep and
maintain, or cause to be kept and maintained accurate, correct books and
records of accounts of the properties and business transactions of the
corporation, including accounts of the assets, liabilities, receipts,
disbursements, gains, losses, capital, retained earnings, and shares. The Vice
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President-Finance shall deposit all monies and other valuables in the name and
to the credit of the corporation with such depositories as may be designated by
the Board of Directors or by the Finance Committee appointed by the Board of
Directors. The Vice President-Finance shall disburse the funds of the
corporation as may be ordered by the Board of Directors, shall render to the
Chairman of the Board, the Chief Executive Officer, the President and the Board
of Directors, upon their request, an account of the financial condition of the
corporation, and shall have such other powers and perform such other duties as
may be prescribed from time to time by the Board of Directors or the Chief
Executive Officer.
Section 12. THE SECRETARY. The Secretary shall: (a) prepare and keep
the minutes of the meetings of the shareholders, the Board of Directors, and
committees of the Board of Directors in one or more books provided for that
purpose; (b) see that all notices are duly given in accordance with the
provisions of these Bylaws or as required by law; (c) be custodian of the
corporate records and of the seal of the corporation and see that the seal of
the corporation is affixed to all documents the execution of which on behalf of
the corporation under its seal is duly authorized; (d) keep a register of the
post office address of each shareholder which shall be furnished to the
Secretary by such shareholder, unless such register is maintained by the
transfer agent or registrar of the corporation; (e) authenticate the records of
the corporation; (f) have general charge of the stock transfer books of the
corporation; and (g) in general perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned by the
Board of Directors or the Chief Executive Officer.
Section 13. THE TREASURER. Subject to the supervision of the Vice
President-Finance, the Treasurer shall: (a) have charge and custody of and be
responsible for all funds and securities of the corporation; receive and give
receipts for monies due and payable to the corporation from any source
whatsoever, and deposit all such monies in the name of the corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with the provisions of Article VI of these Bylaws; (b) be responsible for
filing all required tax returns, and (c) in general perform all of the duties
incident to the office of treasurer and such other duties as from time to time
may be assigned by the Board of Directors, the Chief Executive Officer or the
Vice President-Finance.
Section 14. THE CONTROLLER. The Controller shall maintain adequate
records showing the financial condition of the corporation and the results of
its operations by established accounting periods, and see that adequate audits
thereof are regularly and currently made. The Controller shall perform such
other duties as from time to time may be assigned by the Board of Directors,
the Chief Executive Officer or the Vice President-Finance.
Section 15. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The
Assistant Secretaries, when authorized by the Board of Directors, may sign with
the Chairman of the Board, the Chief Executive Officer, the President or a Vice
President certificates for shares of the corporation, the issuance of which
shall have been authorized by a resolution of the Board of Directors. The
Assistant Secretaries, in general, shall perform such duties as shall be
assigned to them by the Secretary, the Chief Executive Officer or the Board of
Directors. The Assistant Treasurers, in general, shall perform such duties as
shall be assigned to them by the Treasurer, the Chief Executive Officer, the
Board of Directors or the Vice President-Finance.
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Section 16. OTHER ASSISTANT AND ACTING OFFICERS. The Board of Directors
or the Chief Executive Officer shall have the power to appoint any person to
act as assistant to any officer, or to perform the duties of such officer
whenever for any reason it is impracticable for such officer to act personally,
and such assistant or acting officer so appointed by the Board of Directors or
the Chief Executive Officer shall have the power to perform all the duties of
the office to which the person is so appointed to be assistant, or as to which
the person is so appointed to act, except as such power may be otherwise
defined or restricted by the Board of Directors.
Section 17. SALARIES. The salaries of the officers shall be fixed from
time to time by the Compensation/Nominating Committee of the Board of Directors
and no officer shall be prevented from receiving such salary by reason of also
being a director of the corporation.
ARTICLE V. GROUPS AND STAFF
Section 1. ESTABLISHMENT OF GROUPS. The Board of Directors or the Chief
Executive Officer may cause the business to be divided into one or more groups,
based upon product manufactured, geographical territory, character and type of
operations, or upon such other basis as the Board of Directors or the Chief
Executive Officer may from time to time determine to be advisable. The groups
shall operate under the authority and direction of a Group President and may
operate under trade names approved for such purpose as may be authorized by the
Board of Directors or the Chief Executive Officer.
Section 2. GROUP OFFICERS. The Group President of a group may appoint
any number of group officers (who shall not, by virtue of such appointment, be
corporate officers), and may remove any such group officer. Such officers
shall have such authority as may from time to time be assigned by the Group
President.
Section 3. STAFF OFFICERS. The Chief Executive Officer may appoint any
number of staff officers (who shall not, by virtue of such appointment, be
corporate officers), and may remove any such staff officer as the Chief
Executive Officer may deem appropriate from time to time. Such officers shall
have such authority as may from time to time be assigned by the Chief Executive
Officer.
ARTICLE VI. CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. CONTRACTS. The Chairman of the Board, the Chairman of the
Executive Committee, the Chief Executive Officer or the President may at any
time execute and deliver any deeds, mortgages or bonds which the Board of
Directors has authorized to be executed and delivered and may at any time
execute and deliver any lease, bid, application, note, guarantee, consent,
election, notice or other contract, document or instrument as may be required
in the ordinary course and scope of the business of the corporation or as may
be specifically authorized by the Board of Directors. The Chairman of the
Board, the Chairman of the Executive Committee, the Chief Executive Officer or
the President may in writing delegate the foregoing authority, and may delegate
authority to redelegate such authority, to any other officer or officers, agent
or agents, or other persons and the authority so delegated may be general or
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confined to specific instances. The Board of Directors may authorize any other
officer or officers, agent or agents or other persons to execute and deliver
any other contracts, documents or instruments and such authority may be general
or confined to specific instances.
Section 2. LOANS. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
Section 3. EVIDENCES OF INDEBTEDNESS. All checks, drafts or other orders
for the payment of money, notes or other evidences of indebtedness issued in
the name of the corporation, shall be signed by such officer or officers, agent
or agents of the corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
Section 4. DEPOSITS. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies or other depositories as the Board of Directors or the
Finance Committee, or committees or officers to whom the Board of Directors or
the Finance Committee have delegated such authority may select.
ARTICLE VII. CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. CERTIFICATES FOR SHARES. Certificates for shares of capital
stock of the corporation shall be in such form as shall be determined by the
Board of Directors. They shall be issued in consecutive order and shall be
numbered in the order of their issue and shall be signed by the Chairman of the
Board, the Chief Executive Officer, the President or a Vice President and by
the Secretary or an Assistant Secretary, provided, however, that if any stock
certificate is countersigned by a transfer agent, other than the corporation or
its employee, or by a registrar, other than the corporation or its employee,
any other signature, including that of any such officer, on such certificate
may be a facsimile, engraved, stamped or printed. In case any officer or agent
who has signed or whose facsimile signature shall be used on any stock
certificate shall cease to be such officer or agent of the corporation because
of death, resignation or otherwise before such stock certificate shall have
been delivered by the corporation, such stock certificate may nevertheless be
issued and delivered as though the person or agent who signed the certificate
or whose facsimile signature shall have been used thereon had not ceased to be
such officer or agent of the corporation.
Section 2. TRANSFER OF SHARES. Upon surrender to the corporation or its
transfer agent of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction on its books.
Section 3. RESTRICTIONS ON OWNERSHIP, TRANSFER AND VOTING. So long as
the corporation or any of its subsidiaries is subject to any law of the United
States or any state therein which restricts ownership or voting of capital
stock by Aliens (as defined herein), not more than one-fifth of the shares
outstanding shall be owned of record or voted by or for the account of Aliens
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or their representatives or affiliates. The Board of Directors may issue share
certificates representing not more than one-fifth of the shares of the stock of
the corporation at any time outstanding in special form which may be owned or
held by Aliens, such certificates to be known as "Foreign Share Certificates"
and to be so marked, but under no circumstances shall the total amount of
voting stock of any class represented by Foreign Share Certificates, plus the
amount of voting stock of that class owned by or for the account of Aliens and
represented by certificates not so marked, exceed one-fifth of the aggregate
number of outstanding shares of such class.
Shares of stock shall be transferable on the books of the corporation by
the holder thereof, in person or by duly authorized attorney, upon the
surrender of the certificate representing the shares to be transferred,
properly endorsed; provided, however, that shares of stock other than shares
represented by Foreign Share Certificates shall be transferable to Aliens or
any person holding for the account thereof only when the aggregate number of
shares of stock owned by or for the account of Aliens will not then be more
than one-fifth of the number of shares of stock outstanding. The Board of
Directors may direct that, before shares of stock shall be transferred on the
books of the corporation, the corporation may require information as to whether
the proposed transferee is an Alien or will hold the stock for the account of
an Alien.
If the stock records of the corporation shall at any time disclose Alien
ownership of one-fifth or more of the voting stock of any class and it shall be
found by the corporation that any certificate for shares marked "Domestic Share
Certificate" is, in fact, held by or for the account of any Alien, the holder
of the shares represented by that certificate shall not be entitled to vote, to
receive dividends or to have any other rights with respect to such shares,
except the right to transfer the shares to a Non-Alien (as defined herein).
If the stock records of the corporation shall at any time disclose Alien
ownership of one-fifth or more of the voting stock of any class and a request
is made by an Alien to have shares registered in its name or for its account,
the corporation shall be under no obligation to effect the transfer or to issue
or reissue any stock certificates to or for the account of the Alien. In
addition, if a proposed transferee of any shares is an Alien, and the transfer
to such Alien would result in Alien ownership of one-fifth or more of the
voting stock of any class, the corporation shall be under no obligation to
effect the transfer or to issue or reissue any stock certificates to or for the
account of the Alien. Further, if it is determined at any time that a transfer
has resulted in Alien ownership of one-fifth or more of the voting stock of any
class, the holder of the shares which resulted in the Alien ownership of one-
fifth or more of the voting stock shall not be entitled to vote, to receive
dividends or have any other rights with respect to such shares, except the
right to transfer those shares to a Non-Alien.
The Board of Directors shall establish rules, regulations and procedures
to assure compliance with and enforcement of this Article VII, Section 3.
The term "Alien" is defined to mean and include the following:
(1) Any person (including an individual, a partnership, a corporation or
an association or any other entity) who is not a United States
citizen or is the representative of or fiduciary for any person who
is not a United States citizen;
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(2) Any foreign government or the representative thereof;
(3) Any corporation any officer of which is an Alien, or of which more
than 25% of its directors are Aliens;
(4) Any corporation or association organized under the laws of any
foreign government;
(5) Any corporation of which more than 20% of its stock is owned
beneficially or of record or may be voted by Aliens, or which by any
other means whatsoever direct or indirect control of the corporation
is held or permitted to be exercised by Aliens;
(6) Any partnership, association or other entity which is owned or
controlled by Aliens;
(7) Any other person, corporation, trust, partnership or association
deemed by the Board of Directors to be an Alien as to the United
States or the corporation (or any subsidiary of the corporation).
No person, holding shares of class B stock (hereinafter such class B stock
is called "class B stock" and such holder thereof is called a "class B holder")
may transfer, and the corporation shall not register the transfer of, such
shares of class B stock, whether by sale, assignment, gift, bequest,
appointment or otherwise, except to a Permitted Transferee of such class B
holder, which term shall have the following meanings:
(i) In the case of a class B holder who is a natural person and the
holder of record and beneficial owner of the shares of class B stock
subject to said proposed transfer, "Permitted Transferee" means (A)
the spouse of such class B holder, (B) a lineal descendant of a
grandparent of such class B holder or a spouse of any such lineal
descendant, (C) the trustee of a trust (including a voting trust) for
the benefit of one or more class B holders, other lineal descendants
of a grandparent of such class B holder, the spouse of such class B
holder the spouses of such other lineal descendants and an
organization contributions to which are deductible for federal
income, estate or gift tax purposes (hereinafter called a "Charitable
Organization"), and for the benefit of no other person, provided that
such trust may grant a general or special power of appointment to
such class B holder, the spouse of such class B holder, any lineal
descendant of such class B holder or the spouse of any such lineal
descendant, and may permit trust assets to be used to pay taxes,
legacies and other obligations of the trust or the estate of such
class B holder payable by reason of the death of such class B holder
and provided that such trust prohibits transfer of shares of class B
stock to persons other than Permitted Transferees, as defined in
clause (ii) below, (D) the estate of such deceased class B holder,
(E) a Charitable Organization established by such class B holder,
such class B holder's spouse, a lineal descendant of a grandparent of
such class B holder or a spouse of any such lineal descendant, and
(F) a corporation all the outstanding capital stock of which is owned
by, or a partnership all the partners of which are, one or more of
such class B holders, other lineal descendants of a grandparent of
such class B holder or a spouse of any such lineal descendant, and
the spouse of such class B holder provided that if any share of
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capital stock of such a corporation (or of any survivor of a merger
or consolidation of such a corporation), or any partnership interest
in such a partnership, is acquired by any person who is not within
such class of persons, all shares of class B stock then held by such
corporation or partnership, as the case may be, shall be deemed,
without further action, to be automatically converted into shares of
common stock, and stock certificates formerly representing such
shares of class B stock shall thereupon and thereafter be deemed to
represent the like number of shares of common stock.
(ii) In the case of a class B holder holding the shares of class B stock
subject to said proposed transfer as trustee pursuant to a trust
other than a trust described in clause (iii) below, "Permitted
Transferee" means (A) the person who established such trust and (B) a
Permitted Transferee of such person determined pursuant to clause (i)
above.
(iii) In the case of a class B holder holding the shares of class B stock
subject to said proposed transfer as trustee pursuant to a trust
which was irrevocable on the record date for the initial distribution
of shares of class B stock ("Record Date"), "Permitted Transferee"
means any person to whom or for whose benefit principal may be
distributed either during or at the end of the term of such trust
whether by power of appointment or otherwise or any "Permitted
Transferee" of such person determined pursuant to clause (i), (ii),
(iv), (v) or (vi) hereof, as the case may be.
(iv) In the case of a class B holder who is the record (but not
beneficial) owner of the shares of class B stock subject to said
proposed transfer as nominee for the person who was the beneficial
owner thereof on the Record Date, "Permitted Transferee" means such
beneficial owner and a Permitted Transferee of such beneficial owner
determined pursuant to clause (i), (ii), (iii), (v) or (vi) hereof,
as the case may be.
(v) In the case of a class B holder which is a partnership and the holder
of record and beneficial owner of the shares of class B stock subject
to said proposed transfer, "Permitted Transferee" means any partner
of such partnership or any "Permitted Transferee" of such partner
determined pursuant to clause (i), (ii), (iii), (iv) or (vi) hereof,
as the case may be.
(vi) In the case of a class B holder which is a corporation (other than a
Charitable Organization described in subclause (E) of clause (i)
above and the holder of record and beneficial owner of the shares of
class B stock subject to said proposed transfer, "Permitted
Transferee" means any stockholder of such corporation receiving
shares of class B stock through a dividend or through a distribution
made upon liquidation of such corporation or any "Permitted
Transferee" of such stockholder determined pursuant to clause (i),
(ii), (iii), (iv) or (v) hereof, as the case may be.
(vii) In the case of a class B holder which is the estate of a deceased
class B holder, or which is the estate of a bankrupt or insolvent
class B holder, and provided such deceased, bankrupt or insolvent
class B holder, as the case may be, was the record and beneficial
- 19 -
<PAGE>
owner of the shares of class B stock subject to said proposed
transfer, "Permitted Transferee" means a Permitted Transferee of such
deceased, bankrupt or insolvent class B holder as determined pursuant
to clause (i), (v) or (vi) above, as the case may be.
Notwithstanding anything to the contrary set forth herein, any class B
holder may pledge such holder's shares of class B stock to a pledgee pursuant
to a bona fide pledge of such shares as collateral security for indebtedness
due to the pledgee, provided that such shares shall not be transferred to or
registered in the name of the pledgee and shall remain subject to the
provisions of this Article VII, Section 3. In the event of foreclosure or
other similar action by the pledgee, such pledged shares of class B stock may
only be transferred to a Permitted Transferee of the pledgor or converted into
shares of common stock, as the pledgee may elect.
For purposes of this Article VII, Section 3:
(i) The relationship of any person that is derived by or through legal
adoption shall be considered a natural one.
(ii) Each joint owner of shares of class B stock shall be considered a
"class B holder" of such shares.
(iii) A minor for whom shares of class B stock are held pursuant to a
Uniform Gifts or Transfers to Minors Act or similar law shall be
considered a "class B holder" of such shares.
(iv) Unless otherwise specified, the term "person" means both natural
persons and legal entities.
(v) The term "grandparent" means an ancestor in any degree born after
January 1, 1976.
Any purported transfer of shares of class B stock not permitted hereunder
shall result, without further action, in the automatic conversion of the
transferee's shares of class B stock into shares of common stock, effective on
the date of such purported transfer. The corporation may, as a condition to
the transfer or the registration of transfer of shares of class B stock to a
purported Permitted Transferee, require the furnishing of such affidavits or
other proof as it deems necessary to establish that such transferee is a
Permitted Transferee.
Shares of class B stock shall be registered in the name(s) of the
beneficial owner(s) thereof (as hereafter defined) and not in "street" or
"nominee" names; provided, however, certificates representing shares of class B
stock issued as a stock dividend on the corporation's then outstanding common
stock may be registered in the same name and manner as the certificates
representing the shares of common stock with respect to which the shares of
class B stock were issued. For the purposes of this Article VII, Section 3,
the term "beneficial owner(s)" of any shares of class B stock shall mean the
person or persons who possess the power to dispose, or to direct the
disposition, of such shares.
The corporation shall note on the certificates representing the shares of
class B stock that there are restrictions on transfer and registration of
transfer imposed by this Article VII, Section 3.
- 20 -
<PAGE>
Section 4. REGISTERED SHAREHOLDERS. The corporation shall be entitled to
treat the holder of record of any share or shares of stock as the holder in
fact thereof and, accordingly, shall not be bound to recognize any equitable
claim or other interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Iowa.
Section 5. LOST CERTIFICATES. Upon the making of an affidavit that a
certificate has been lost or destroyed, the Board of Directors may direct that
a new certificate be issued to the person alleging the loss or destruction of
such certificate. When authorizing such issuance of a new certificate, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost or destroyed certificate or
such owner's legal representative to give the corporation a bond in such sums
as it may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost or
destroyed.
Section 6. STOCK REGULATIONS. The Board of Directors shall have the
power and authority to make all such further rules and regulations not
inconsistent with the statutes of Iowa as they may deem expedient concerning
the issue, transfer and registration of certificates representing shares of the
corporation.
ARTICLE VIII. FISCAL YEAR
The fiscal year of the corporation shall begin on the first day of July
and end on the thirtieth day of June in each year.
ARTICLE IX. DIVIDENDS
The Board of Directors may from time to time declare, and the corporation
may pay, dividends on its outstanding shares in the manner and upon the terms
and conditions provided by law and its Articles of Incorporation.
ARTICLE X. SEAL
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the corporation
and the state of incorporation and the words, "Corporate Seal."
ARTICLE XI. WAIVER OF NOTICE
Whenever any notice is required to be given to any shareholder or director
of the corporation under the provisions of the Articles of Incorporation or
under the provisions of the Iowa Business Corporations Act, a waiver thereof in
writing, signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed equivalent to the
giving of such notice.
- 21 -
<PAGE>
ARTICLE XII. INDEMNIFICATION OF DIRECTORS, OFFICERS OR EMPLOYEES
Section 1. RIGHT TO INDEMNIFICATION. Each person who was or is a party
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that such person, or a
person of whom such person is the legal representative, is or was a director,
officer or employee of the corporation or is or was serving at the request of
the corporation as director, officer or employee of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, shall be indemnified and held harmless by
the corporation to the fullest extent consistent with the laws of Iowa as the
same now or may hereafter exist (but, in the case of any change, only to the
extent that such change authorizes the corporation to provide broader
indemnification rights than said law permitted the corporation to provide prior
to such change) against all costs, charges, expenses, liabilities and losses
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement) reasonably incurred or suffered
by such person in connection therewith and such indemnification shall continue
as to a person who has ceased to be a director, officer or employee and shall
inure to the benefit of the heirs, executors and administrators of such person;
provided, however, that the right to indemnification conferred in this Section
shall be conditioned upon the corporation being afforded the opportunity to
participate directly on behalf of such person in such proceeding and any
settlement discussions relating thereto. The right to indemnification
conferred in this Section shall be a contract right and shall, except with
respect to an action or proceeding against the corporation by an employee who
is neither a director nor an officer of the corporation, include the right to
be paid by the corporation the expenses incurred in defending any such
proceeding in advance of its final disposition upon receipt by the corporation
of an undertaking, by or on behalf of such director, officer or employee to
repay all amounts so advanced if it shall ultimately be determined that the
director, officer or employee is not entitled to be indemnified under this
Section or otherwise.
Section 2. RIGHT OF CLAIMANT TO BRING SUIT. If a claim under Section I
of this Article is not paid in full by the corporation within thirty days after
a written claim has been received by the corporation, the claimant may at any
time thereafter bring suit against the corporation to recover the unpaid amount
of the claim and, if successful in whole or in part, the claimant shall also be
entitled to be paid the expense of prosecuting such claim. It shall be a
defense to any action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking has been tendered to the
corporation) that the claimant has failed to meet a standard of conduct which
makes it permissible under Iowa law for the corporation to indemnify the
claimant for the amount claimed, but the burden of proving such defense shall
be on the corporation. Neither the failure of the corporation (including its
Board of Directors, independent legal counsel, or its shareholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is permissible in the circumstances because
such person has met such standard of conduct, nor an actual determination by
the corporation (including its Board of Directors, independent legal counsel,
or its shareholders) that the claimant has not met such standard of conduct,
nor the termination of any proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, shall create a
presumption that the claimant has failed to meet the required standard of
conduct.
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<PAGE>
Section 3. NON-EXCLUSIVITY OF RIGHTS. The right to indemnification and
the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the Articles of Incorporation, bylaw, agreement, vote of
shareholders or disinterested directors or otherwise.
Section 4. INSURANCE. The corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against such expense,
liability or loss under Iowa law.
Section 5. EXPENSES AS A WITNESS. To the extent that any director,
officer or employee of the corporation is by reason of such position, or a
position with another entity at the request of the corporation, a witness in
any proceeding, such person shall be reimbursed for all costs and expenses
actually and reasonably incurred in connection therewith.
Section 6. EFFECT OF AMENDMENT. Any amendment, repeal or modification of
any provision of this Article by the shareholders or the directors of the
corporation shall not adversely affect any right or protection of a director,
officer or employee of the corporation existing at the time of such amendment,
repeal or modification.
Section 7. SEVERABILITY. In the event any one or more of the provisions
contained in this Article shall, for any reason, be held to be invalid, illegal
or unenforceable, such invalidity, illegality, or unenforceability shall not
affect any other provisions of this Article.
ARTICLE XIII. AMENDMENTS
These Bylaws may be altered, amended or repealed and new Bylaws may be
adopted by the Board of Directors at any regular or special meeting of the
Board of Directors.
- 23 -
Exhibit 10.1
------------
MEREDITH CORPORATION
NONQUALIFIED
STOCK OPTION AWARD
You have been selected to be a Participant in the 1996 Meredith
Corporation Stock Incentive Plan (the "Plan"), as specified below:
OPTIONEE: William T. Kerr
DATE OF GRANT: August 13, 1997
DATE OF EXPIRATION: August 12, 2007
NUMBER OF SHARES COVERED BY THIS AWARD: 85,000
OPTION PRICE: $29.875
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 Options. 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 after the
passage of six months from the Date of Grant. The Option shall vest with
respect to all shares covered by this award on February 12, 2007, provided,
however, that the Option will vest prior to such date with respect to all or a
portion of the shares covered by this Grant in accordance with the attached
Exhibit A.
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 or
his legal representative; (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 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; and (d) shall be accompanied by
payment in full of the Option Price of the shares to be purchased and
Optionee's copy of this Agreement.
- 1 -
<PAGE>
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 or certifying to the ownership of previously acquired shares held
for at least six (6) months 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) by 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 or his or her
legal representative, as the case may be, certificates for the shares so
purchased. 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. (a) If, without having fully
exercised this Option, Optionee's employment with the Company is terminated by
reason of death prior to August 12, 2000, this Option shall continue to be
subject to the vesting schedule described in Exhibit A, notwithstanding the
termination of employment. In such case, 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 right to exercise this Option
following the death of Optionee for a period ending on the earlier of (i) the
Date of Expiration set forth above, or (ii) four years following the date of
death. (b) If at the date of Optionee's death, this Option is exercisable,
then 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. (a) If, without having fully
exercised this Option, Optionee's employment with the Company is terminated by
reason of Disability (as defined in the Plan) prior to August 12, 2000, this
Option shall continue to be subject to the vesting schedule described in
Exhibit A, notwithstanding the termination of employment. In which event,
Optionee (or Optionee's representative) shall have the right to exercise this
Option following his or her date of employment termination for a period ending
on the earlier of (i) the Date of Expiration set forth above, or (ii) four
years following the employment termination date. (b) If at the effective date
of Optionee's Disability this Option is exercisable, then Optionee (or
Optionee's representative) 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. (a) 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) prior to August 12, 2000, this Option
shall continue to be subject to the vesting schedule described in Exhibit A,
- 2 -
<PAGE>
notwithstanding the termination of employment. In which event, Optionee shall
have the right to exercise this Option following his or her Retirement date for
a period ending on the earlier of (i) the Date of Expiration set forth above,
or (ii) four years following the Retirement date. (b) If at the effective date
of Optionee's Retirement this Option is exercisable, then Optionee (or
Optionee's representative) 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 Date of Expiration set forth above. 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 different
securities, cash or other property, or any combination thereof (an
"Acquisition"), the Optionee 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
indebtedness, 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:
- 3 -
<PAGE>
(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 or 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
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
(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.
- 4 -
<PAGE>
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 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.
(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, 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").
- 5 -
<PAGE>
(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.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the Date of Grant.
MEREDITH CORPORATION
By: /s/ Jack D. Rehm
----------------------
Jack D. Rehm
Its: Chairman of the Board
/s/ William T. Kerr
- -------------------------
Optionee, William T. Kerr
300 Walnut, #2405
Des Moines, IA 50309
Social Security Number: ###-##-####
- 6 -
<PAGE>
EXHIBIT A
The vesting of the Options, or a portion thereof, will accelerate to August 12,
2000, in the event:
A. The compounded annual growth Company's Earnings Per Share (EPS) from the
fiscal year ended June 30, 1997, to the fiscal year ended June 30, 2000, is
at the level identified in the following chart:
EPS GROWTH(1) NUMBER OF VESTED
OPTIONS (2)
------------- ----------------
0 - 12.99% 0
13.0% - 13.99% 28,400
14.0% - 14.99% 56,700
15.0% - 85,000
(1) The Company's EPS compounded annual growth rate over the three-year
period ending June 30, 2000.
The Company's Earnings Per Share is calculated as follows:
Company's Earnings for the fiscal year = Earnings Per Share (EPS)
--------------------------------------
Average outstanding shares (including common,
Class B and dilutive effect of all outstanding options)
The "Company's Earnings" for the fiscal year shall be defined as
net earnings from continuing operations prior to special items.
For example, to achieve a 15.0% compounded annual growth rate of
15%, the Company's EPS for fiscal year 2000 must equal or exceed
$1.86.
(2) The number of Options granted under this Agreement, which vesting
will accelerate to August 12, 2000, if the Company achieves the
corresponding EPS compounded annual growth rate and the other
conditions of this Agreement, including this Exhibit A, are met.
AND
B. The Company maintains an average Return on Equity (ROE) of 15% over the
Company's three fiscal years ending June 30, 2000, as follows:
The Company's ROE for each of the three fiscal years ending June 30, 1998,
June 30, 1999, and June 30, 2000, are calculated by the following formula:
Company's Earnings (as defined above) for the fiscal year = ROE
---------------------------------------------------------
Shareholder's Equity (amount of shareholders'
investment in Company as of the applicable June 30)
The Company's ROE for the three fiscal years are then averaged together to
determine the average ROE for the three-year period ending June 30, 2000.
- 7 -
Exhibit 10.2
------------
Statement re: Meredith Corporation Nonqualified Stock Option
Award Agreements with its named executive officers
Meredith Corporation has certain nonqualified stock option award agreements
with certain of 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 covered under the awards, to the
agreement filed as Exhibit 10.1 in this Form 10-Q for the period ended
September 30, 1997. The named executive officers and the number of stock
options awarded in their respective agreements not filed with the Commission
are as follows:
EPS Growth and Number
of Stock Options Vested
Named Executive ------------------------------------------------
Officer 0-12.99% 13.0%-13.99% 14.0%-14.99% 15.0% +
- --------------------- -------- ------------ ------------ -------
Christopher M. Little 0 13,400 26,700 40,000
Philip A. Jones 0 11,700 23,400 35,000
Leo R. Armatis 0 4,000 8,000 12,000
Page 1 of 1
Exhibit 11
----------
MEREDITH CORPORATION
Computation of Primary and Fully Diluted Per
Common Share Earnings - Treasury Stock Method
For the Three Months Ended September 30, 1997 and 1996
(Unaudited)
Weighted average number of shares
(in thousands)
1997 1996
---------------- ----------------
Fully Fully
Primary Diluted Primary Diluted
------- ------- ------- -------
Weighted average number of shares
outstanding in thousands 53,115 53,115 53,734 53,734
Dilutive effect of unexercised
stock options in thousands 2,268 2,521 1,747 2,036
------ ------ ------ ------
Total 55,383 55,636 55,481 55,770
====== ====== ====== ======
Primary and fully
diluted earnings per common share
1997 1996
---------------- ----------------
Fully Fully
Primary Diluted Primary Diluted
------- ------- ------- -------
Earnings per share from
continuing operations $ .27 $ .27 $ .22 $ .22
Discontinued operation -- -- -- --
----- ----- ----- -----
Net earnings per share $ .27 $ .27 $ .22 $ .22
===== ===== ===== =====
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, 1997 and the Consolidated Statement
of Earnings for the three months ended September 30, 1997 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-30-1998
<PERIOD-END> SEP-30-1997
<CASH> 7,501
<SECURITIES> 0
<RECEIVABLES> 117,213<F1>
<ALLOWANCES> 0
<INVENTORY> 24,659
<CURRENT-ASSETS> 257,283
<PP&E> 235,272
<DEPRECIATION> 107,015
<TOTAL-ASSETS> 1,068,664
<CURRENT-LIABILITIES> 311,033
<BONDS> 245,000
0
0
<COMMON> 53,091
<OTHER-SE> 279,924
<TOTAL-LIABILITY-AND-EQUITY> 1,068,664
<SALES> 230,899
<TOTAL-REVENUES> 230,899
<CGS> 92,689
<TOTAL-COSTS> 92,689
<OTHER-EXPENSES> 8,092
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,467
<INCOME-PRETAX> 26,430
<INCOME-TAX> 11,339
<INCOME-CONTINUING> 15,091
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,091
<EPS-PRIMARY> .27
<EPS-DILUTED> 0
<FN>
<F1>Net of allowances
</FN>
</TABLE>
Exhibit 99
----------
MEREDITH CORPORATION
FISCAL 1998 FIRST QUARTER EARNINGS PER SHARE AT-A-GLANCE
(Note: All per-share figures reflect a 2-for-1 stock split effective
March 18, 1997)
- -- The chart below depicts 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 .06 .09 .10 .10 .35
F1994 .08 .13 .16 .13 .50
F1995 .14 .19 .18 .20 .71
F1996 .17 .22 .24 .28 .91
F1997 .22 .31 .33 .36 1.22
F1998 .27
- -- Fiscal 1998 first quarter net earnings totaled 27 cents per share, compared
to prior-year net earnings of 22 cents per share.
