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 March 31, 1998
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 April 30, 1998
Common Stock, $1 par value 41,318,940
Class B Stock, $1 par value 11,478,695
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Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Meredith Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
March 31 June 30
Assets 1998 1997
- -------------------------------------------------------------------------------
(in thousands, except share data)
Current assets:
Cash and cash equivalents $ 9,496 $ 74,498
Marketable securities -- 50,382
Receivables, net 136,091 93,395
Inventories 30,293 30,273
Supplies and prepayments 7,115 9,491
Program rights 14,797 7,809
Deferred income taxes 5,688 11,916
Subscription acquisition costs 57,522 59,444
---------- -------
Total current assets 261,002 337,208
---------- --------
Property, plant and equipment 260,250 193,270
Less accumulated depreciation (112,972) (103,087)
---------- --------
Net property, plant and equipment 147,278 90,183
---------- --------
Subscription acquisition costs 33,851 32,703
Program rights 6,587 5,507
Other assets 27,438 21,951
Goodwill and other intangibles (at original cost
less accumulated amortization of $92,525
in 1998 and $77,696 in 1997) 602,846 273,349
---------- --------
Total assets $1,079,002 $760,901
========== ========
See accompanying Notes to Interim Consolidated Financial Statements.
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(Unaudited)
March 31 June 30
Liabilities and Stockholders' Equity 1998 1997
- -------------------------------------------------------------------------------
(in thousands, except share data)
Current liabilities:
Current portion of long-term program rights payable $ 19,431 $ 11,004
Accounts payable 44,737 48,306
Accrued taxes and expenses 83,015 73,548
Unearned subscription revenues 148,522 145,102
---------- --------
Total current liabilities 295,705 277,960
---------- --------
Long-term debt 245,000 --
Long-term program rights payable 7,631 6,028
Unearned subscription revenues 101,724 95,883
Deferred income taxes 28,785 23,051
Other deferred items 38,287 31,049
---------- --------
Total liabilities 717,132 433,971
---------- --------
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 41,317,575 at March 31 and
40,921,537 at June 30 (net of treasury shares,
26,127,847 at March 31 and 25,505,186
at June 30.) 41,318 40,922
Class B stock, par value $1 per share,
convertible to common stock
Authorized 15,000,000 shares; issued and
outstanding 11,535,114 at March 31 and
12,335,361 at June 30. 11,535 12,335
Retained earnings 311,621 276,243
Unearned compensation (2,604) (2,570)
---------- --------
Total stockholders' equity 361,870 326,930
---------- --------
Total liabilities and stockholders' equity $1,079,002 $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 Nine Months
Ended March 31 Ended March 31
1998 1997 1998 1997
- -----------------------------------------------------------------------------
(in thousands, except per share)
Revenues (less returns and allowances):
Advertising $151,141 $121,643 $424,332 $337,743
Circulation 68,054 65,648 202,986 192,451
Consumer books 15,077 8,396 36,418 29,182
All other 25,914 27,348 76,233 72,611
-------- -------- -------- --------
Total revenues 260,186 223,035 739,969 631,987
-------- -------- -------- --------
Operating costs and expenses:
Production, distribution and edit 106,744 89,323 301,774 258,221
Selling, general & administrative 105,613 96,682 301,686 273,899
Depreciation and amortization 9,194 6,032 26,580 17,259
-------- -------- -------- --------
Total operating costs and expenses 221,551 192,037 630,040 549,379
-------- -------- -------- --------
Income from operations 38,635 30,998 109,929 82,608
Interest income 277 1,566 1,043 3,120
Interest expense (4,020) (63) (10,737) (1,134)
-------- --------- -------- --------
Earnings from continuing operations
before income taxes 34,892 32,501 100,235 84,594
Income taxes 14,777 14,073 42,697 36,629
-------- -------- -------- --------
Earnings from continuing operations 20,115 18,428 57,538 47,965
Discontinued operation:
Net gain on disposition -- -- -- 27,693
-------- -------- -------- --------
Net earnings $ 20,115 $ 18,428 $ 57,538 $ 75,658
======== ======== ======== ========
See accompanying Notes to Interim Consolidated Financial Statement.
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Meredith Corporation and Subsidiaries
Consolidated Statements of Earnings (Unaudited), continued
Three Months Nine Months
Ended March 31 Ended March 31
1998 1997 1998 1997
- -----------------------------------------------------------------------------
(in thousands, except per share)
Basic earnings per share:
Earnings from continuing operations $0.38 $0.34 $1.09 $0.89
Discontinued operation -- -- -- 0.52
------ ------ ------ ------
Net earnings per share $0.38 $0.34 $1.09 $1.41
====== ====== ====== ======
Average shares outstanding 52,865 53,540 52,987 53,624
====== ====== ====== ======
Diluted earnings per share:
Earnings from continuing operations $0.37 $0.33 $1.04 $0.86
Discontinued operation -- -- -- 0.50
------ ------ ------ ------
Net earnings per share $0.37 $0.33 $1.04 $1.36
====== ====== ====== ======
Average shares and common stock
equivalents outstanding 54,366 55,548 55,129 55,603
====== ====== ====== ======
Dividends paid per share $0.070 $0.065 $0.200 $0.175
====== ====== ====== ======
See accompanying Notes to Interim Consolidated Financial Statement.
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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Meredith Corporation and Subsidiaries
Nine Months Ended March 31 1998 1997
- ---------------------------------------------------------------------------
(in thousands)
Cash flows from operating activities:
Net earnings $ 57,538 $ 75,658
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 26,580 17,259
Amortization of film contract rights 20,050 13,143
Gain on dispositions, net of taxes -- (27,693)
Changes in assets and liabilities:
Accounts receivable (42,696) (3,555)
Inventories (20) 5,215
Supplies and prepayments 3,208 (931)
Subscription acquisition costs 774 (2,212)
Accounts payable (3,569) (12,325)
Accrued taxes and expenses 9,560 (923)
Unearned subscription revenues 9,261 9,741
Deferred income taxes 17,428 (2,720)
Other deferred items 7,238 (2,047)
-------- --------
Net cash provided by operating activities 105,352 68,610
-------- --------
Cash flows from investing activities:
Redemptions of marketable securities 50,371 --
Proceeds from disposition -- 123,275
Acquisitions of businesses (375,000) --
Additions to property, plant, and equipment (36,324) (13,020)
Purchases of marketable securities -- (50,472)
Change in other assets (5,651) (2,325)
-------- --------
Net cash (used) provided by investing activities (366,604) 57,458
-------- --------
Cash flows from financing activities:
Long-term debt incurred 270,000 --
Long-term debt retired (25,000) (50,000)
Payments for film rental contracts (20,687) (14,081)
Proceeds from common stock issued 5,323 4,766
Purchase of company stock (23,570) (19,705)
Dividends paid (10,590) (9,380)
Other 774 1,953
-------- --------
Net cash provided (used) by financing activities 196,250 (86,447)
-------- --------
Net (decrease) increase in cash and cash equivalents (65,002) 39,621
Cash and cash equivalents at beginning of year 74,498 13,801
-------- --------
Cash and cash equivalents at end of period $ 9,496 $ 53,422
======== ========
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. Certain prior-year amounts have
been restated to conform with current-year presentation.
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 March 31, 1998, these assets primarily consist of television
Federal Communications Commission (FCC) licenses ($265.5 million), goodwill
($171.3 million) and television network affiliation agreements ($144.4
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 previous calculations of primary EPS. SFAS No.
128 was adopted for all periods ending December 31, 1997 and after. All prior-
period EPS calculations have been 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-LP 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 Meredith.
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 $40.0 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 nine-month periods ended March 31, 1998
and 1997, as if the acquisitions had occurred respectively at the beginning of
each period are as follows:
Nine months ended
March 31
------------------
Consolidated 1998 1997
------------ -------- --------
Total revenues $746,125 $692,182
======== ========
Earnings from
continuing operations $ 57,513 $ 47,346
======== ========
Net earnings $ 57,513 $ 75,039
======== ========
Earnings per share:
Earnings from
continuing operations
Basic $ 1.09 $ .88
======== ========
Diluted $ 1.04 $ .85
======== ========
Net earnings
Basic $ 1.09 $ 1.40
======== ========
Diluted $ 1.04 $ 1.35
======== ========
3. Inventories
Major components of inventories are summarized below. Of total inventory
values shown, approximately 52 percent are under the LIFO method at March 31,
1998, and June 30, 1997.
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MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(Unaudited)
(unaudited)
March 31 June 30
1998 1997
----------- --------
(in thousands)
Raw materials $16,580 $16,787
Work in process 15,997 14,950
Finished goods 7,507 5,874
-------- --------
40,084 37,611
Reserve for LIFO cost valuation (9,791) (7,338)
-------- --------
Total $30,293 $30,273
======== ========
4. Long-term debt and interest rate swap agreements
At March 31, 1998, long-term debt outstanding totaled $245 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 ($210 million) and reduced the borrowing under the
revolving credit facility to $60 million, for total debt of $270 million. The
first principal payment of $25 million, due under the term loan on May 31,
1998, was prepaid in March 1998. The term loan requires the following annual
principal payments on May 31, 1999 through 2002, respectively: $40 million,
$45 million, $50 million and $50 million. Any amounts owed under the revolving
credit facility are 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 (earnings before interest, taxes,
depreciation and amortization) 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 March 31, 1998, 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. 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. As a result, Meredith expects to 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 March 31, 1998, was 6.75 percent.
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MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(Unaudited)
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 under the
contracts 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 the swap contracts. 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
March 31, 1998, 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.
5. Earnings per share
Reconciliations of the earnings from continuing operations and shares used
in the basic and diluted EPS computations follow:
Three months ended March 31, 1998 March 31, 1997
- ------------------ ------------------------ ------------------------
Per Per
(in thousands except Share Share
per share) Earnings Shares Amount Earnings Shares Amount
-------- ------ ------ -------- ------ ------
Earnings from continuing
operations $20,115 $18,428
Basic EPS
Earnings available to
common stockholders 20,115 52,865 $ .38 18,428 53,540 $ .34
===== =====
Effect of dilutive common
stock equivalents - 1,501 - 2,008
------- ------ ------- ------
Diluted EPS
Income available to
common stockholders
plus assumed
conversions $20,115 54,366 $ .37 $18,428 55,548 $ .33
======= ====== ===== ======= ====== =====
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MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(Unaudited)
Nine months ended March 31, 1998 March 31, 1997
- ----------------- ------------------------ ------------------------
Per Per
(in thousands except Share Share
per share) Earnings Shares Amount Earnings Shares Amount
-------- ------ ------ -------- ------ ------
Earnings from continuing
operations $57,538 $47,965
Basic EPS
Earnings available to
common stockholders 57,538 52,987 $1.09 47,965 53,624 $ .89
===== =====
Effect of dilutive common
stock equivalents - 2,142 - 1,979
------- ------ ------- ------
Diluted EPS
Income available to
common stockholders
plus assumed
conversion $57,538 55,129 $1.04 $47,965 55,603 $ .86
======= ====== ===== ======= ====== =====
Options to purchase 58,400 shares of common stock at $26.37, 58,400 shares at
$25.39, 50,000 shares at $25.84, 233,400 at $26.03 and 116,600 at $32.54 were
outstanding at March 31, 1997, but were not included in the computation of
diluted EPS because the options' exercise prices were greater than the average
market price of $25.17 of the common shares during the latest quarter. There
were no options outstanding at March 31, 1998, that were not included in the
computation of diluted EPS.
Options to purchase 220,720 shares were exercised during the nine months ended
March 31, 1998 (348,000 shares in the nine months ended March 31, 1997).
6. 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 54 percent and 44 percent, respectively, of
total operating profit before unallocated corporate expenses in the nine months
ended March 31, 1998. Magazine operations accounted for more than 90 percent
of the revenues and operating profit of the publishing segment, which also
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MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(Unaudited)
includes book publishing and brand licensing, during that time period. 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 57
percent and 27 percent, respectively, of the company's revenues in the first
nine months of fiscal 1998. 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) (unaudited)
Three Months Nine Months
Ended March 31 Ended March 31
------------------- -------------------
1998 1997 1998 1997
-------- -------- -------- --------
(in thousands)
Revenues
Publishing $197,369 $182,116 $548,088 $499,868
Broadcasting 56,740 34,943 172,944 113,822
Real Estate 6,077 5,976 18,937 18,297
-------- -------- -------- --------
Total revenues $260,186 $223,035 $739,969 $631,987
======== ======== ======== ========
Operating profit
Publishing $ 31,779 $ 28,024 $ 70,322 $ 59,324
Broadcasting 14,564 10,608 56,865 40,809
Real Estate 925 568 3,249 2,580
Unallocated corporate expense (8,633) (8,202) (20,507) (20,105)
-------- -------- -------- --------
Income from operations 38,635 30,998 109,929 82,608
Interest income 277 1,566 1,043 3,120
Interest expense (4,020) (63) (10,737) (1,134)
-------- -------- -------- --------
Earnings from continuing
operations before income
taxes 34,892 32,501 100,235 84,594
Income taxes 14,777 14,073 42,697 36,629
-------- -------- -------- --------
Earnings from
continuing operations $ 20,115 $ 18,428 $ 57,538 $ 47,965
======== ======== ======== ========
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MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(Unaudited)
Depreciation and amortization
Publishing $ 2,454 $ 2,195 $ 7,008 $ 6,574
Broadcasting 6,144 3,318 18,002 9,160
Real Estate 155 128 438 395
Unallocated corporate 441 391 1,132 1,130
-------- -------- -------- --------
Total depreciation
and amortization $ 9,194 $ 6,032 $ 26,580 $ 17,259
======== ======== ======== ========
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 third quarter
and first nine months of fiscal 1998 to the comparable periods in the prior
year. 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.
This section contains certain forward-looking statements that are subject to
certain risks and uncertainties that could cause actual results to differ from
materially from those anticipated. Reader's 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
were: 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 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 television stations in one
market. The company owns WOFL-TV, a FOX network affiliate serving the Orlando
market.
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<PAGE>
Consolidated
- ------------
Three Months Nine Months
Ended March 31 Ended March 31
1998 1997 1998 1997
-------- -------- -------- --------
(in thousands, except per share)
Total revenues $260,186 $223,035 $739,969 $631,987
======== ======== ======== ========
Income from operations $ 38,635 $ 30,998 $109,929 $ 82,608
======== ======== ======== ========
Earnings from continuing
operations $ 20,115 $ 18,428 $ 57,538 $ 47,965
======== ======== ======== ========
Discontinued operation $ -- $ -- $ -- $ 27,693
======== ======== ======== ========
Net earnings $ 20,115 $ 18,428 $ 57,538 $ 75,658
======== ======== ======== ========
Diluted earnings per share:
Earnings from continuing
operations $ 0.37 $ 0.33 $ 1.04 $ 0.86
======== ======== ======== ========
Net earnings $ 0.37 $ 0.33 $ 1.04 $ 1.36
======== ======== ======== ========
Net earnings of $20.1 million, or 37 cents per diluted share, were recorded in
the quarter ended March 31, 1998, compared to net earnings of $18.4 million, or
33 cents per diluted share, in the prior-year third quarter. For the nine
months ended March 31, 1998, net earnings were $57.5 million, or $1.04 per
diluted share, compared to net earnings of $75.7 million, or $1.36 per diluted
share, in the prior-year period. Net earnings for the nine months ended March
31, 1997, included a post-tax gain of $27.7 million, or 50 cents per diluted
share, from the sale of the discontinued cable operations.
Earnings from continuing operations for the comparative nine-month periods were
$57.5 million, or $1.04 per diluted share, in fiscal 1998 and $48.0 million, or
86 cents per diluted share, in the prior-year period. Fiscal 1998 diluted
earnings per share from continuing operations increased 12 percent for the
third quarter and 21 percent for the nine-month period compared to the prior-
year periods.
Diluted earnings per share are calculated based on the average number of common
shares and common stock equivalents outstanding in the period. Common stock
equivalents represent the potential dilution from stock options outstanding.
This calculation is presented in accordance with Statement of Financial
Standards No. 128, "Earnings per Share," which was adopted in the second fiscal
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<PAGE>
quarter ended December 31, 1997. Prior to its adoption, the company reported
primary earnings per share, the calculation of which was not materially
different from the diluted earnings per share currently reported. All prior-
period earnings per share calculations have been restated.
Revenues increased 17 percent in both the quarter and the nine-month period due
to the first quarter acquisition of four television stations and higher
publishing revenues. The increase in publishing revenues reflected higher
magazine advertising and circulation revenues and increased custom publishing
and consumer book revenues. Comparable revenues, excluding the new stations,
increased nearly 10 percent in both periods.
Operating costs increased in both periods due to the addition of the four
television stations, growth in existing magazine titles and custom publishing
volumes, and increased investment in newer magazine titles and television
programming efforts. Income from operations increased 25 percent in the
quarter and 33 percent for the year-to-date period. The operating profit
margin grew from 14 percent in the fiscal 1997 third quarter to 15 percent in
the current quarter. For the nine months ended March 31, 1998, the operating
profit margin was 15 percent compared to 13 percent in the prior-year period.
The margin improvement in both periods reflected increased ad revenues from
publishing and the addition of the four television stations as the company's
television broadcasting business has higher profit margins than the publishing
segment. Depreciation and amortization expenses increased in total and as a
percentage of revenues due to the amortization of intangibles associated with
the acquisition of the four television stations.
Debt incurred for the acquisitions of the four television stations resulted in
net interest expense in the current quarter and year-to-date periods versus net
interest income in the prior-year periods. Overall, management estimates that
the broadcasting acquisitions caused little to no dilution in earnings per
share in the quarter and year-to-date periods. This estimated calculation
includes the after-tax effects of the stations' operating profits after
amortization of intangibles, interest expense on debt and estimated interest
income forgone from cash available for investment. Improvement versus initial
projections results from a lower than anticipated average 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 approximately 42.5 percent in the current
quarter and nine-month period compared with 43.3 percent in the prior-year
periods. The decline reflects an increase in currently estimated fiscal year
earnings, which lessens the effect of nondeductible items on the overall tax
rate.
- 16 -
<PAGE>
Publishing
- ----------
Three Months Nine Months
Ended March 31 Ended March 31
1998 1997 1998 1997
-------- -------- -------- --------
(in thousands)
Revenues
---------
Magazine advertising $ 96,216 $ 88,662 $259,378 $229,723
Magazine circulation 68,054 65,648 202,986 192,451
Consumer book 15,077 8,396 36,418 29,182
Other 18,022 19,410 49,306 48,512
-------- -------- -------- --------
Total revenues $197,369 $182,116 $548,088 $499,868
======== ======== ======== ========
Operating profit $ 31,779 $ 28,024 $ 70,322 $ 59,324
======== ======== ======== ========
Publishing revenues increased 8 percent compared to the prior-year quarter and
10 percent versus the prior-year nine-month period due to increased magazine
advertising and circulation revenues and higher custom publishing and consumer
book revenues. Magazine advertising revenues grew 9 percent in the third
quarter and 13 percent in the nine-month period ended March 31, 1998, as most
titles reported increased ad pages. Ladies' Home Journal, Successful Farming,
Country Home, Traditional Home, Golf for Women and Crayola Kids magazines
reported strong ad revenue growth in both periods primarily due to additional
ad pages sold. Better Homes and Gardens ad revenues were flat for the third
quarter reflecting a small decline in ad pages due to special 75th anniversary
promotions in the prior-year quarter. For the year-to-date period, Better
Homes and Gardens reported increased ad revenues from a combination of
additional ad pages and higher average rates per page.
Magazine circulation revenues increased 4 percent in the quarter and 5 percent
in the fiscal year-to-date period. Increased newsstand sales of the Better
Homes and Gardens Special Interest Publications, newsstand sales of other
special and custom issues, and increased subscription revenues due to new
titles and higher average prices for several existing titles led to the
increases. Consumer book revenues increased in both the quarter and year-to-
date period reflecting increased sales volumes of custom books developed for
The Home Depot (including a new title introduced in the fiscal third quarter),
books sold under the Ortho agreement and the Better Homes and Gardens annuals.
Publishing operating profit was up 13 percent in the fiscal 1998 third quarter
and 19 percent for the fiscal year-to-date. The improvements were largely a
result of increased operating profit from magazine publishing due to higher ad
revenues. Favorable circulation results, due to the aforementioned revenue
increases, and increased contribution from the company's custom publishing and
marketing business also were factors in the improvements. Higher sales volumes
led to increased operating profit from book publishing. Licensing revenues and
operating profit were lower in the current year periods primarily as a result
of a one-time favorable audit adjustment to revenues received from the
company's garden licensing agreement with Wal-Mart Stores, Inc., in the prior-
year third quarter.
- 17 -
<PAGE>
Paper is a significant expense of the Publishing segment. Although major
suppliers have increased paper prices during the fiscal year, total paper costs
for the quarter and year-to-date period have changed little from the respective
prior year periods due to the timing of price decreases in the prior fiscal
year. The price of paper is driven by overall market conditions and, therefore,
is difficult to predict. However, at this time, management does not anticipate
any further increases in paper prices until the first half of fiscal 1999.
Broadcasting
- ------------
Three Months Nine Months
Ended March 31 Ended March 31
1998 1997 1998 1997
-------- -------- -------- --------
(in thousands)
Revenues
---------
Advertising $ 54,925 $ 32,981 $164,954 $108,020
Other 1,815 1,962 7,990 5,802
-------- -------- -------- --------
Total revenues $ 56,740 $ 34,943 $172,944 $113,822
======== ======== ======== ========
Operating profit $ 14,564 $ 10,608 $ 56,865 $ 40,809
======== ======== ======== ========
Revenues increased 62 percent in the fiscal 1998 third quarter and 52 percent
in the nine months ended March 31, 1998, primarily due to the first quarter
acquisition of four television stations. Excluding the new stations,
broadcasting reported record revenues and operating profits in both periods.
Among comparable stations, KPHO-Phoenix, KCTV-Kansas City and KVVU-Las Vegas
reported strong advertising revenue growth in both the quarter and nine-month
period. Operating profit increased 37 percent in the third quarter and 39
percent in the nine-month period including results of the newly-acquired
stations. The improvement in comparable stations' results for the quarter and
nine-month period primarily reflected higher advertising revenues. These
improvements occurred in spite of costs associated with introducing local news
programming at WOFL-Orlando, WOGX-Ocala and KVVU-Las Vegas.
Real Estate
- -----------
Three Months Nine Months
Ended March 31 Ended March 31
1998 1997 1998 1997
-------- -------- -------- --------
(in thousands)
Total revenues $ 6,077 $ 5,976 $ 18,937 $ 18,297
======== ======== ======== ========
Operating profit $ 925 $ 568 $ 3,249 $ 2,580
======== ======== ======== ========
- 18 -
<PAGE>
Revenues and operating profits increased in both the quarter and nine months
ended March 31, 1998, largely due to higher transaction fee revenues, resulting
from strength in the home re-sale market.
Liquidity and Capital Resources
Consolidated
- ------------
Nine months ended March 31 1998 1997
-------------------------- --------- --------
(in thousands)
Net earnings $ 57,538 $ 75,658
========= ========
Cash flows from operations $ 105,352 $ 68,610
========= ========
Cash flows from investing $(366,604) $ 57,458
========= ========
Cash flows from financing $ 196,250 $(86,447)
========= ========
Net cash flows $ (65,002) $ 39,621
========= ========
EBITDA $ 136,509 $ 99,867
========= ========
Cash and cash equivalents decreased by $65.0 million in the first nine months
of fiscal 1998 compared to an increase in cash of $39.6 million in the
comparable prior-year period. The change reflected the acquisition of four
television stations in the current period and the sale of the discontinued
cable operation in the prior-year period. Cash provided by operating
activities increased due to higher earnings before depreciation and
amortization. The acquisition of the television stations resulted in
substantial increases in certain balance sheet items from June 30, 1997 to
March 31, 1998, including: accounts receivable; program rights; property, plant
and equipment; goodwill and other intangibles; program rights payable; and
deferred taxes. Increased publishing revenues also contributed to the increase
in accounts receivable from June 30, 1997. The change in deferred taxes over
the nine-month period also reflected the timing of tax benefits related to
stock options exercised, restricted stock awarded and a tax change related to
the valuation of accounts receivable.
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. EBITDA for the first nine months
of fiscal 1998 increased 37 percent from the prior-year period due to improved
- 19 -
<PAGE>
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 March 31, 1998, long-term debt outstanding totaled $245 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. Currently the company's debt consists of $185
million outstanding under the term loan and $60 million outstanding under the
revolving credit portion of the agreement. The term loan requires the
following annual principal payments on May 31, 1999 through 2002, respectively:
$40 million, $45 million, $50 million and $50 million. The first principal
payment of $25 million, due under the term loan on May 31, 1998, was prepaid in
March 1998. Amounts owed under the revolving credit facility are due and
payable on July 1, 2002. Funds for payments 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 March 31, 1998, 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
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. The current notional amount of indebtedness covers all
of the debt outstanding. The swap contracts terminate on March 30, 2001, and
the notional amount of indebtedness varies over the terms of the contracts.
Meredith expects to have an effective borrowing cost of approximately 6.75
percent (including applicable margins and fees) over the entire term of the
loan agreement. The company is exposed to credit-related losses in the event
of nonperformance by counterparties to the swap contracts. 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 nine months of fiscal 1998, the company spent $23.6 million for
the repurchase of 713,000 shares of Meredith Corporation common stock at then
current market prices. This compares with spending of $19.7 million for the
repurchase of 842,000 shares in the comparable prior-year period. As of March
31, 1998, approximately 1.6 million shares could be repurchased under existing
authorizations by the board of directors. Meredith has entered into an
agreement to repurchase up to 600,000 shares during the next nine months under
these authorizations. 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.
- 20 -
<PAGE>
Dividends paid in the first nine months of fiscal 1998 were $10.6 million, or
20 cents per share, compared with $9.4 million, or 17.5 cents per share, in the
prior-year period. On February 2, 1998, the board of directors increased the
quarterly dividend by 8 percent (one-half cent per share) to 7 cents per share
effective with the dividend payable on March 13, 1998. On an annual basis, the
effect of this quarterly dividend increase would be to increase dividends paid
by approximately $1.1 million at the current number of shares outstanding.
Spending for property, plant and equipment increased to $36.3 million in the
first nine months of fiscal 1998 from $13.0 million in the prior-year period.
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 relates to new computer systems, 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.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
10) Employment agreement dated February 2, 1998 between Meredith
Corporation and E. T. Meredith III
27.1) Financial Data Schedule
27.2) Restated Financial Data Schedule
99) Additional financial information from the Company's third quarter
press release dated April 20, 1998.
(b) Reports on Form 8-K
No Form 8-K was filed during the quarter ended March 31, 1998.
- 21 -
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MEREDITH CORPORATION
Registrant
(Stephen M. Lacy)
Stephen M. Lacy
Vice President - Chief Financial Officer
(Principal Financial and
Accounting Officer)
Date: May 14, 1998
- 22 -
<PAGE>
Index to Exhibits
Exhibit
Number Item
------- -----------------------------------------------------------
10 Employment agreement dated February 2, 1998 between Meredith
Corporation and E. T. Meredith III
27.1 Financial Data Schedule
27.2 Restated Financial Data Schedule
99 Additional financial information from the Company's third
quarter press release dated April 20, 1998.
Exhibit 10
----------
CONSULTANCY AGREEMENT
This Agreement is entered into as of the Second day of February 1998, by and
between Meredith Corporation (the "Company"), an Iowa corporation, and E.T.
Meredith III ("Meredith").
WHEREAS, Meredith is currently employed by the Company and serves as its
Chairman of the Executive Committee of the Board of Directors; and
WHEREAS, the Company and Meredith desire to enter into an agreement to provide
for Meredith's continued employment and the provision of Meredith's services as
a consultant following the termination of his employment with the Company.
NOW, THEREFORE, IT IS HEREBY AGREED by and between the Company and Meredith as
follows:
1. EMPLOYMENT. The Company hereby agrees to employ Meredith through March 1,
1998 ("termination date").
2. BOARD AND COMMITTEE SERVICE. Subject to the authority of the Compensation/
Nominating Committee of its Board of Directors, the Company agrees to nominate
Meredith for reelection as a director of the Company at the Annual Meeting of
Stockholders in 1998 and 2001. Subject to election by the stockholders of the
Company and the Company's director retirement policy, Meredith shall serve as a
non-employee director. Subject to the annual election by the Company's Board
of Directors and the provisions of the Company's Bylaws, Meredith shall serve
as the Chairman of the Executive Committee of the Company's Board of Directors
for a period of time coterminous with his service as a director.
3. ENGAGEMENT AS CONSULTANT. The Company hereby agrees to retain Meredith as
a consultant following the termination date. Meredith hereby accepts such
consultancy and agrees that during the period he is so retained he will render
such consulting services to the Company from time to time as the Chief
Executive Officer or the Board of Directors of the Company may reasonably
request, including but not limited to consulting services related to the
Company's aviation operations.
4. CONSIDERATION. In consideration for the consultancy services provided by
Meredith, Company shall provide Meredith the perquisites that existed during
his employment, including same or equivalent club memberships, reimbursements,
company automobile in accordance with Company policy, office space and support
services, use of the Company aircraft on Company business and use of Company
pilots, use of Company accommodations on Company business, tax and financial
planning from KPMG Peat Marwick and legal services from McDermott, Will &
Emery. Meredith will be reimbursed for all legitimate business expenses
incurred in connection with the provision of consulting services to the
Company.
- 1 -
<PAGE>
5. HEALTH COVERAGE AFTER TERMINATION OF EMPLOYMENT.
(a) As additional consideration for the consultancy services to be
provided by Meredith, the Company agrees to provide at no cost to Meredith and
his spouse (other than any applicable income taxes) the following benefits: (i)
Medicare Supplement coverage for Meredith that is the same coverage as provided
for other retirees of the Company; (ii) Meredith will receive the same dental
and prescription drug coverage as is provided to Company employees; and (iii)
participation by Meredith in the Company's officer medical reimbursement
program.
(b) If the consultancy under this Agreement is terminated by either
party, Meredith will be eligible to continue the Medicare Supplement coverage
at the cost applicable to a retiree from employment with the Company with the
same number of years of continuous active service as an employee as Meredith.
6. TERMINATION. Meredith's consultancy may be terminated by either party at
any time upon 90 days advance written notice.
7. NON-COMPETITION. Meredith agrees that during the period of his employment
by the Company and during the period that he is a consultant to the Company and
for a period of two (2) years following the termination of his consultancy, he
shall not consult with, accept employment with, become or invest in, or in any
way aid or abet any proprietorship, partnership, corporation or other business
entity that is a competitor of the Company in the United States of America,
except with the prior written consent of the Company.
8. INDEPENDENT CONTRACTOR. The parties agree that while acting as a
consultant, Meredith shall at all times be an independent contractor and that
nothing herein shall be construed to cause Meredith to be an employee of the
Company.
9. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and
shall be binding upon the successors and assigns of the Company. Meredith may
not assign this Agreement, in whole or in part.
10. GOVERNING LAW. This Agreement and the validity of its provisions shall be
construed according to the laws of the State of Iowa.
11. ENTIRE AGREEMENT. This Agreement contains all the understandings and
representations between the parties with respect to the subject of this
Agreement.
12. AMENDMENT OR MODIFICATION; WAIVER. No provision of this Agreement may be
amended or modified unless such amendment or modification is agreed to in
writing. No provision to be performed by a party may be waived by the other
except by in writing. No waiver by either party shall be deemed a waiver of a
similar or dissimilar provision.
- 2 -
<PAGE>
13. HEADING. Headings of the sections of this Agreement are intended solely
for convenience and no provision of this Agreement is to be construed by
reference to the title of any section.
IN WITNESS WHEREOF, pursuant to authorization of its Board of Directors, the
Company has caused this Agreement to be signed and Meredith has set his hand.
MEREDITH CORPORATION E.T. MEREDITH III
/s/ William T. Kerr /s/ E. T. Meredith III
- -------------------- ----------------------
William T. Kerr
Chairman and Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM the
Consolidated Balance Sheet at March 31, 1998 and the Consolidated Statement of
Earnings for the nine months ended March 31, 1998 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> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 9,496
<SECURITIES> 0
<RECEIVABLES> 136,091<F1>
<ALLOWANCES> 0
<INVENTORY> 30,293
<CURRENT-ASSETS> 261,002
<PP&E> 260,250
<DEPRECIATION> 112,972
<TOTAL-ASSETS> 1,079,002
<CURRENT-LIABILITIES> 295,705
<BONDS> 245,000
0
0
<COMMON> 52,853
<OTHER-SE> 309,017
<TOTAL-LIABILITY-AND-EQUITY> 1,079,002
<SALES> 739,969
<TOTAL-REVENUES> 739,969
<CGS> 301,774
<TOTAL-COSTS> 301,774
<OTHER-EXPENSES> 26,580
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,737
<INCOME-PRETAX> 100,235
<INCOME-TAX> 42,697
<INCOME-CONTINUING> 57,538
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 57,538
<EPS-PRIMARY> 1.09
<EPS-DILUTED> 1.04
<FN>
<F1>Net of allowances
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS RESTATED SUMMARY FINANCIAL INFORMATION EXTRACTED FROM the
Consolidated Balance Sheet at 12/31/96 and 3/31/97 and the Consolidated
Statement of Earnings for the 6 mos. ended 12/31/96 and the 9 mos. ended 3/31/97
of Meredith Corp. and Subsidiaries AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS. THE RESTATEMENT RELATES TO FASB 128.
</LEGEND>
<RESTATED>
<CIK> 0000065011
<NAME> MEREDITH CORPORATION
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 9-MOS
<FISCAL-YEAR-END> JUN-30-1997 JUN-30-1997
<PERIOD-END> DEC-31-1996 MAR-31-1997
<CASH> 76,135 53,422
<SECURITIES> 20,060 50,472
<RECEIVABLES> 97,530 96,432
<ALLOWANCES> 0 0
<INVENTORY> 24,400 25,970
<CURRENT-ASSETS> 304,035 317,758
<PP&E> 189,564 194,612
<DEPRECIATION> 107,970 110,904
<TOTAL-ASSETS> 731,260 744,944
<CURRENT-LIABILITIES> 267,975 275,022
<BONDS> 0 0
0 0
0 0
<COMMON> 26,754 53,577
<OTHER-SE> 278,270 264,496
<TOTAL-LIABILITY-AND-EQUITY> 731,260 744,944
<SALES> 408,952 631,987
<TOTAL-REVENUES> 408,952 631,987
<CGS> 168,898 258,221
<TOTAL-COSTS> 168,898 258,221
<OTHER-EXPENSES> 11,227 17,259
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,071 1,134
<INCOME-PRETAX> 52,093 84,594
<INCOME-TAX> 22,556 36,629
<INCOME-CONTINUING> 29,537 47,965
<DISCONTINUED> 27,693 27,693
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 57,230 75,658
<EPS-PRIMARY> 1.07 1.41
<EPS-DILUTED> 1.03 1.36
</TABLE>
Exhibit 99
----------
MEREDITH CORPORATION
FISCAL 1998 THIRD QUARTER AND YEAR-TO-DATE
EARNINGS PER SHARE AT-A-GLANCE
(Note: All figures are adjusted for stock splits)
- -- The chart below depicts comparable quarterly and fiscal-year diluted
earnings per share (EPS) 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 .40 .37
- -- Fiscal 1998 third quarter EPS from continuing operations and net EPS
grew 12 percent to a record 37 cents, versus 33 cents in the prior-year
period.
- -- For the nine months ending March 31, 1998, EPS from continuing operations
rose 21 percent to a record $1.04, from 86 cents in the prior year.
- -- Net EPS for the fiscal 1998 year-to-date period was $1.04. Fiscal 1997 net
EPS for the same period was $1.36, including a gain in discontinued
operations of 50 cents per share from the sale of the company's cable
operations.
