Current Report

 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
 
 
Date of Report (Date of earliest event reported): April 25, 2012

 
 
 
MEREDITH CORPORATION
(Exact name of registrant as specified in its charter)
 
 
 
Iowa
1-5128
42-0410230
(State or other jurisdiction of incorporation or organization)
(Commission file number)
(I.R.S. Employer Identification No.)
 
 
 
1716 Locust Street, Des Moines, Iowa
 
50309-3023
(Address of principal executive offices)
 
(Zip Code)
 
 
 
Registrant's telephone number, including area code:   (515) 284-3000
 
 
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[_] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))














 







Item 2.02
Results of Operations and Financial Condition
 

On April 25, 2012, Meredith Corporation issued a news release reporting earnings for the third fiscal quarter and nine months ended March 31, 2012. That news release is attached as an exhibit.



Item 9.01
Financial Statements and Exhibits
 

 
(c)
Exhibits
 
 
 
 
 
 
99
News release issued by Meredith Corporation dated April 25, 2012, reporting financial results for the third fiscal quarter and nine months ended March 31, 2012.






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
 
 
 
 
 
/s/ Joseph Ceryanec
 
 
Joseph Ceryanec
 
 
Vice President - Chief Financial Officer
 
 
(Principal Financial and Accounting Officer)
 
 
 
 
Date: April 25, 2012
 
 






INDEX TO EXHIBITS

 
Exhibit
Number
 
Item
 
 
 
 
 
99
 
News release issued by Meredith Corporation dated April 25, 2012, reporting financial results for the third fiscal quarter and nine months ended March 31, 2012.
 
 
 
 







Exhibit 99
MEREDITH CORPORATION REPORTS FISCAL 2012 THIRD QUARTER RESULTS
Local Media Posts Record 3 rd Quarter Profit; Current Dividend Yield Approximately 5%
DES MOINES, IA (April 25, 2012) - Meredith Corporation (NYSE: MDP) , the leading media and marketing company serving American women, today reported fiscal 2012 third quarter earnings per share of $0.47, including a special charge of $0.19 per share. Excluding the special charge, earnings per share were $0.66, in-line with Meredith's previously stated expectations. Revenues increased to $346 million. These results compare to fiscal 2011 third quarter earnings per share of $0.67 and revenues of $339 million.
“We are very pleased with the ongoing strong performance of our local television business, and encouraged by improving national media advertising trends as calendar 2012 progresses,” said Meredith Chairman and CEO Stephen M. Lacy. “We continue to accelerate the execution of digital and video initiatives across our businesses, including expanding our tablet offerings, introducing new mobile apps, and increasing original video programming.”
Lacy noted several business highlights achieved during the quarter:
•
Local Media Group non-political advertising revenues grew 5 percent, the 10 th consecutive quarter of year-over-year growth. Operating profit grew more than 70 percent to $23 million, a record for a fiscal third quarter and, combined with a 4 percent decrease in expenses, produced a strong 37 percent EBITDA margin.
•
National Media Group advertising revenues grew 2 percent and circulation revenues increased 15 percent. Growth was fueled by the recent acquisitions of Allrecipes.com, EveryDay with Rachael Ray and FamilyFun. Excluding the recent acquisitions, advertising revenues were down 7 percent and circulation revenues grew 3 percent.
•
Digital advertising revenues in both the National and Local media groups rose 70 percent. Growth in the National Media Group was driven equally by existing Meredith Women's Network websites and the addition of Allrecipes.com.
•
Consumer engagement remained strong across the Company. Meredith magazine readership increased to a record 115 million, and Meredith's local television station group produced a strong February ratings book. Additionally, Meredith delivered record website traffic across its digital activities, including more than 40 million unique visitors in March, reflecting the inclusion of Allrecipes.com.
To realize the full value of recent acquisitions and as part of an ongoing process to improve its operations, Meredith recorded a special charge in the third quarter of fiscal 2012 with two primary components:
•
$2.5 million ($1.5 million after tax, or $0.03 per share) related to transaction costs associated with its $175 million acquisition of Allrecipes.com, the world's largest digital food brand.
•
$12.2 million ($7.1 million after tax, or $0.16 per share) related primarily to business realignments in the National Media Group following a series of recent acquisitions, including selected workforce reductions and vacated lease space. The purpose of this realignment is to optimize




performance; achieve cost efficiencies; and accelerate go-to-market strategies across multiple platforms, including print, video, digital, mobile and social.
“The media and marketing landscape continues to evolve, and we are aligning our businesses - which we've substantially augmented through a series of strategic acquisitions and initiatives - to best serve our consumers and customers on whatever platform they choose,” Lacy said. “We've led the way among media companies at creating a true multiplatform business, and we fully intend to realize the maximum financial potential of our expanded portfolio as part of our commitment to Total Shareholder Return.”
Key elements to Meredith's Total Shareholder Return financial strategy include (1) A current annual dividend of $1.53 per share, which is currently yielding approximately 5 percent; (2) A $100 million share repurchase program; and (3) Ongoing strategic investments to drive incremental revenue and profit growth over time.
For the first nine months of fiscal 2012, earnings per share were $1.65. Excluding the special charge recorded in the third quarter, earnings per share were $1.84. These results compare to earnings per share of $2.12 in the first nine months of fiscal 2011, when Meredith recorded $31 million, or $0.42 per share, more political advertising revenues. Total revenues were $1 billion in both periods.
OPERATING DETAIL
LOCAL MEDIA GROUP
Fiscal 2012 third quarter Local Media Group operating profit was a record $23 million, compared to $13 million in the year-ago period, an increase of 71 percent. Total revenues increased 10 percent to $78 million, compared to $71 million. Expenses declined 4 percent, helping drive a group EBITDA margin of 37 percent.
Looking more closely at non-political advertising performance in the third quarter of fiscal 2012 compared to the year-ago period:
•
Revenues rose 5 percent to $67 million, the 10 th -straight quarter of year-over-year improvement. Growth was strongest at Meredith's stations in Las Vegas (FOX), Phoenix (CBS) and Nashville (NBC).
•
Automotive advertising category revenues grew 4 percent, on top of 13 percent growth in the year-ago period. Professional services, the second-largest category, grew 11 percent.
•
Digital advertising revenues increased 70 percent, driven by enhanced sales initiatives and product offerings.
Meredith's television stations delivered very strong year-over-year ratings growth during the most recent February measurement period in the important adults ages 25 to 54 demographic. Of note:
•
WFSB (CBS Hartford) enhanced its No. 1 ranking in all news periods and day parts, and is once again well-positioned to capture substantial political advertising dollars.
•
KCTV (CBS Kansas City) delivered growth in afternoon, evening and late news.
•
KPHO (CBS Phoenix) delivered double-digit ratings growth in morning, afternoon and evening news.




•
KVVU (FOX Las Vegas) and WHNS (FOX Greenville, SC) both delivered double-digit ratings growth in morning and late news.
Other revenues grew nearly 40 percent in the third quarter of fiscal 2012, driven primarily by Meredith's management of Peachtree TV (WPCH-TV) in Atlanta, which began on March 28, 2011. Meredith Video Studios, producer of the nationally-syndicated The Better Show, also contributed to the revenue gains.
“Our Local Media group is doing an excellent job of increasing ratings and translating them into advertising revenues, consistently ranking us among the leading station groups in advertising revenue gains,” said Meredith Local Media Group President Paul Karpowicz. “Additionally, we are augmenting results with revenues from Meredith Video Studios, operation of Turner's Peachtree TV in Atlanta, and retransmission consent fees from subscription television operators.”
For the first nine months of fiscal 2012, Local Media Group operating profit was $61 million and revenues were $232 million. These results compare to operating profit of $69 million and revenues of $244 million in the year-ago period. Meredith recorded $31 million less of political advertising revenues in the first nine months of fiscal 2012 than in the year-ago period, which is expected in an off-election year. Expenses declined 3 percent in the first nine months of fiscal 2012 from the year-ago period, helping drive an overall EBITDA margin of 34 percent.
NATIONAL MEDIA GROUP
Fiscal 2012 third quarter National Media Group operating profit was $23 million, including a special charge of $13 million. Excluding the special charge, operating profit was $37 million. Revenues were $268 million. These results compare to operating profit of $48 million and revenues of $268 million in the year-ago period.
Looking more closely at National Media Group advertising performance in the third quarter of fiscal 2012:
•
Advertising revenues grew 2 percent to $123 million. Excluding the recent acquisitions, advertising revenues were down 7 percent. The over-the-counter drug and media and entertainment categories were stronger, offsetting weak prescription drug and retail advertising. The food and beverage category, which is Meredith's largest, grew during the quarter, bolstered by the acquisitions.
•
Digital advertising revenues grew 70 percent, as the digital food category was particularly strong. Meredith Women's Network properties accounted for approximately half of that growth, with the balance contributed by the addition of Allrecipes.com to Meredith's strong digital portfolio.
•
Meredith began implementing the Meredith Engagement Dividend program during the quarter with several inaugural accounts including Kimberly-Clark, Tyson Foods and Mars Petcare. This innovative program guarantees marketers a return on their advertising investment in Meredith magazines by combining The Nielsen Company's Homescan data with Meredith's 85-million name database to prove advertising in Meredith titles increases retail sales.
Circulation revenues grew 15 percent and circulation contribution grew 12 percent in the third quarter of fiscal 2012, compared to the year-ago period, driven largely by the recent acquisitions. Excluding these acquisitions, circulation revenues grew 3 percent. Meredith generated 2 million digital orders for print magazine subscriptions during the first nine months of fiscal 2012, up 150 percent compared to the year-




ago period. Meredith is particularly focused on driving digital subscriptions and paperless transactions because of cost-saving and up-selling opportunities, and is on pace to generate a record 2.6 million digital orders for full fiscal 2012. Meredith realizes approximately $5 in incremental profit per digital order.
Meredith delivered strong gains in single copy and subscription sales of digital tablet editions, as well as growth in downloads of its mobile apps during the third quarter of fiscal 2012. Currently, 21 of Meredith's subscription brands and many special interest titles are distributed via tablet devices, including iPad, Kindle Fire and Nook Color. To date, Meredith's 20 mobile and tablet apps have generated nearly 20 million downloads, including the Better Homes and Gardens Must-Have Recipes app, which has generated 1 million downloads in its first 4 months.
National Media Group President Tom Harty said Meredith is making significant strides in three key areas:
•
Delivering strengthening advertising revenues in print and digital as calendar 2012 progresses.
•
Successfully executing a selective consolidation strategy in the magazine industry by buying attractive properties at reasonable prices, and subsequently optimizing their performance and cost structure.
•
Growing its digital footprint, as demonstrated by aggressive tablet and mobile expansion, and the acquisition of Allrecipes.com.
“Today, the Meredith Women's Digital Network is the largest premium owned-and-operated property in both the Food and the Women's Lifestyle categories,” Harty said. “There isn't another media company that can provide advertisers with the expert content and extensive female reach that Meredith can offer in the digital space.”
National Media Group other revenues in the fiscal 2012 third quarter were $68 million, compared to $80 million in the year-ago period. This was due primarily to select clients within Meredith Xcelerated Marketing scaling back programs in response to current economic conditions.
For the first nine months of fiscal 2012, National Media Group operating profit was $95 million. Excluding the special charge recorded in the third quarter, operating profit was $109 million. Revenues were $771 million. These results compare to operating profit of $130 million and revenues of $803 million in the first nine months of fiscal 2011. Expenses declined 2 percent, excluding the special charge.
OTHER FINANCIAL INFORMATION
For the trailing 12 month period ending March 31, 2012, Meredith generated nearly $180 million in cash flow from operations and repurchased approximately 1.1 million shares of Company stock.
Total debt was $420 million at March 31, 2012, reflecting the recent addition of $175 million for the acquisition of Allrecipes.com. Meredith's debt-to-EBITDA ratio was 1.8 to 1, and the weighted average interest rate was 3.9 percent at March 31, 2012.
Fiscal 2012 third quarter unallocated corporate expenses declined more than 15 percent compared to the prior-year period, and were down more than 10 percent for the first nine months of fiscal 2012 compared to the prior-year period.
All earnings per share figures in the text of this release are diluted. Both basic and diluted earnings per share can be found in the attached Condensed Consolidated Statements of Earnings.




OUTLOOK
Looking at the fourth quarter of fiscal 2012 compared to the year-ago period:
•
With two of three magazine issues closed, Meredith expects fourth quarter National Media Group advertising revenue to grow in the low teens, down in the mid-single digits excluding the recent acquisitions.
•
With nine weeks remaining in the quarter, Local Media Group non-political advertising revenues are currently pacing up in the mid-single digits.
In Meredith's most recent outlook, released on January 24, the Company estimated fiscal 2012 full-year earnings per share to range between $2.45 to $2.65, including approximately $0.10 per share of dilution related to Allrecipes.com.
With just over two months remaining in fiscal 2012, Meredith expects full year fiscal 2012 earnings per share before the special charge to range from $2.47 to $2.50, in-line with previously stated expectations. This range now includes approximately $0.12 of dilution related to Allrecipes.com.
Looking just at the fourth quarter of fiscal 2012, Meredith expects earnings per share to range from $0.63 to $0.66. This range now includes approximately $0.10 of dilution related to Allrecipes.com.
A number of uncertainties remain that may affect Meredith's outlook as stated in this press release for the fourth fiscal quarter and full year of fiscal 2012. These uncertainties are referenced below under “Safe Harbor” and in certain filings with the U.S. Securities and Exchange Commission.
CONFERENCE CALL WEBCAST
Meredith will host a conference call on April 25, 2012 at 11 a.m. EDT to discuss third quarter fiscal 2012 results. A live webcast will be accessible to the public on the Company's website, www.meredith.com , and a replay will be available for two weeks. A transcript will be available within 48 hours of the call at www.meredith.com .
RATIONALE FOR USE AND ACCESS TO NON-GAAP RESULTS
Management uses and presents GAAP and non-GAAP results to evaluate and communicate the performance of the Company. Non-GAAP measures should not be construed as alternatives to GAAP measures. EBITDA is a common supplemental measure of performance used by investors and financial analysts. Management believes that EBITDA provides an additional analytical tool to clarify the Company's results from core operations and delineate underlying trends. Meredith does not use EBITDA as a measure of liquidity or funds available for management's discretionary use because they include certain contractual and non-discretionary expenditures.
Results excluding the special charge recorded in fiscal 2012 are also supplemental non-GAAP financial measures. Management believes the special charge is not reflective of Meredith's ongoing business activities. While results excluding the special charge are not a substitute for reported results under GAAP, management believes this information is useful as an aid in better understanding Meredith's current performance, performance trends and financial condition. Reconciliations of non-GAAP to GAAP measures are included in the attached tables. The attached condensed consolidated financial statements and reconciliation tables will be made available at www.meredith.com .




SAFE HARBOR
This release contains certain forward-looking statements that are subject to risks and uncertainties. These statements are based on management's current knowledge and estimates of factors affecting the Company and its operations. Statements in this announcement that are forward-looking include, but are not limited to, the statements regarding advertising revenues and investment spending, along with the Company's revenue and earnings per share outlook for the fourth fiscal quarter and full year fiscal 2012.
Actual results may differ materially from those currently anticipated. Factors that could adversely affect future results include, but are not limited to, downturns in national and/or local economies; a softening of the domestic advertising market; world, national or local events that could disrupt broadcast television; increased consolidation among major advertisers or other events depressing the level of advertising spending; the unexpected loss or insolvency of one or more major clients; the integration of acquired businesses; changes in consumer reading, purchasing and/or television viewing patterns; increases in paper, postage, printing, syndicated programming or other costs; changes in television network affiliation agreements; technological developments affecting products or methods of distribution; changes in government regulations affecting the Company's industries; unexpected changes in interest rates; and the consequences of acquisitions and/or dispositions. The Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.
ABOUT MEREDITH CORPORATION
Meredith Corporation (NYSE: MDP; www.meredith.com ) is the leading media and marketing company serving American women. Meredith features multiple well-known national brands - including Better Homes and Gardens, Parents, Family Circle, Allrecipes.com, Ladies' Home Journal, Fitness, More, American Baby, EveryDay with Rachael Ray and FamilyFun - along with local television brands in fast-growing markets. Meredith is the industry leader in creating content in key consumer interest areas such as home, family, food, health and wellness and self-development. Meredith uses multiple distribution platforms - including print, television, digital, mobile, tablets, and video - to give consumers content they desire and to deliver the messages of its advertising and marketing partners.
Additionally, Meredith uses its many assets to create powerful custom marketing solutions for many of the nation's top brands and companies. Meredith Xcelerated Marketing has significantly added to its capabilities in recent years through the acquisition of cutting-edge companies in digital, mobile, social, healthcare, database, and international marketing. Most recently, Meredith made a strategic investment in London-based Iris Worldwide, a leader in experiential marketing.
A hallmark of Meredith's business model and financial profile is its ability to consistently generate substantial free cash flow by leveraging the strength of its multi-platform portfolio. Meredith is committed to increasing Total Shareholder Return through dividend payments, share repurchases and strategic business investments. Meredith has paid a dividend for 65 straight years and increased its dividend for 19 consecutive years. Meredith currently pays an annual dividend of $1.53 per share, resulting in a dividend yield of approximately 5 percent.
-- # # # # --





Shareholder/Financial Analyst Contact:     
 
Media Contact:
 
Mike Lovell     
 
Art Slusark
 
Director of Investor Relations     
 
Vice President/Corporate Communications
 
Phone: (515) 284-3622
 
Phone: (515) 284-3404
 
E-mail: Mike.Lovell@Meredith.com
 
E-mail: Art.Slusark@Meredith.com
 
 
 
 
 







Meredith Corporation and Subsidiaries
Condensed Consolidated Statements of Earnings (Unaudited)

 
Three Months
 
Nine Months
Periods Ended March 31,
2012
 
2011
 
2012
 
2011
(In thousands except per share data)
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
Advertising
$
191,472

 
$
185,210

 
$
559,425

 
$
603,790

Circulation
76,331

 
66,453

 
206,822

 
196,130

All other
77,710

 
87,218

 
235,892

 
247,634

Total revenues
345,513

 
338,881

 
1,002,139

 
1,047,554

Operating expenses
 
 
 
 
 
 
 
Production, distribution, and editorial
136,454

 
134,437

 
401,757

 
414,529

Selling, general, and administrative
159,352

 
142,130

 
437,257

 
432,568

Depreciation and amortization
11,407

 
9,965

 
31,744

 
29,413

Total operating expenses
307,213

 
286,532

 
870,758

 
876,510

Income from operations
38,300

 
52,349

 
131,381

 
171,044

Interest expense
(3,283
)
 
(3,147
)
 
(8,899
)
 
(10,009
)
Earnings from continuing operations before income taxes
35,017

 
49,202

 
122,482

 
161,035

Income taxes
(13,848
)
 
(18,026
)
 
(48,092
)
 
(62,700
)
Earnings from continuing operations
21,169

 
31,176

 
74,390

 
98,335

Loss from discontinued operations, net of taxes
—

 
(339
)
 
—

 
(1,234
)
Net earnings
$
21,169

 
$
30,837

 
$
74,390

 
$
97,101

 
 
 
 
 
 
 
 
Basic earnings per share
 
 
 
 
 
 
 
Earnings from continuing operations
$
0.47

 
$
0.69

 
$
1.66

 
$
2.16

Discontinued operations
—

 
(0.01
)
 
—

 
(0.03
)
Basic earnings per share
$
0.47

 
$
0.68

 
$
1.66

 
$
2.13

Basic average shares outstanding
44,800

 
45,594

 
44,882

 
45,550

 
 
 
 
 
 
 
 
Diluted earnings per share
 
 
 
 
 
 
 
Earnings from continuing operations
$
0.47

 
$
0.68

 
$
1.65

 
$
2.14

Discontinued operations
—

 
(0.01
)
 
—

 
(0.02
)
Diluted earnings per share
$
0.47

 
$
0.67

 
$
1.65

 
$
2.12

Diluted average shares outstanding
45,296

 
45,998

 
45,141

 
45,888

 
 
 
 
 
 
 
 
Dividends paid per share
$
0.3825

 
$
0.2550

 
$
1.0200

 
$
0.7150





Meredith Corporation and Subsidiaries
Segment Information (Unaudited)

 
Three Months
 
Nine Months
Periods Ended March 31,
2012
 
2011
 
2012
 
2011
(In thousands)
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
National media group
 
 
 
 
 
 
 
Advertising
$
122,977

 
$
120,997

 
$
354,614

 
$
378,851

Circulation
76,331

 
66,453

 
206,822

 
196,130

Other revenues
68,295

 
80,436

 
209,094

 
228,103

Total national media group
267,603

 
267,886

 
770,530

 
803,084

Local media group
 
 
 
 
 
 
 
Non-political advertising
66,652

 
63,531

 
201,311

 
190,655

Political advertising
1,843

 
682

 
3,500

 
34,284

Other revenues
9,415

 
6,782

 
26,798

 
19,531

Total local media group
77,910

 
70,995

 
231,609

 
244,470

Total revenues
$
345,513

 
$
338,881

 
$
1,002,139

 
$
1,047,554

 
 
 
 
 
 
 
 
Operating profit
 
 
 
 
 
 
 
National media group
$
23,330

 
$
48,467

 
$
95,131

 
$
130,297

Local media group
22,654

 
13,281

 
60,867

 
68,558

Unallocated corporate
(7,684
)
 
(9,399
)
 
(24,617
)
 
(27,811
)
Income from operations
$
38,300

 
$
52,349

 
$
131,381

 
$
171,044

 
 
 
 
 
 
 
 
Depreciation and amortization
 
 
 
 
 
 
 
National media group
$
4,615

 
$
3,346

 
$
11,808

 
$
10,035

Local media group
6,299

 
6,109

 
18,463

 
17,853

Unallocated corporate
493

 
510

 
1,473

 
1,525

Total depreciation and amortization
$
11,407

 
$
9,965

 
$
31,744

 
$
29,413

 
 
 
 
 
 
 
 
EBITDA 1
 
 
 
 
 
 
 
National media group
$
27,945

 
$
51,813

 
$
106,939

 
$
140,332

Local media group
28,953

 
19,390

 
79,330

 
86,411

Unallocated corporate
(7,191
)
 
(8,889
)
 
(23,144
)
 
(26,286
)
Total EBITDA  
$
49,707

 
$
62,314

 
$
163,125

 
$
200,457

 
 
 
 
 
 
 
 
1 EBITDA is net earnings from continuing operations before interest, taxes, depreciation, and amortization.




Meredith Corporation and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)

Assets
March 31,
2012
 
June 30,
2011
(In thousands)
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
24,674

 
$
27,721

Accounts receivable, net
219,156

 
212,365

Inventories
28,227

 
21,529

Current portion of subscription acquisition costs
69,259

 
54,581

Current portion of broadcast rights
5,666

 
3,974

Other current assets
16,618

 
13,568

Total current assets
363,600

 
333,738

Property, plant, and equipment
462,355

 
459,257

Less accumulated depreciation
(264,892
)
 
(272,819
)
Net property, plant, and equipment
197,463

 
186,438

Subscription acquisition costs
66,295

 
54,286

Broadcast rights
1,327

 
1,292

Other assets
75,880

 
66,940

Intangible assets, net
581,227

 
545,101

Goodwill
730,062

 
525,034

Total assets
$
2,015,854

 
$
1,712,829

 
 
 
 
Liabilities and Shareholders' Equity
 
 
 
Current liabilities
 
 
 
Current portion of long-term debt
$
50,000

 
$
50,000

Current portion of long-term broadcast rights payable
9,864

 
8,548

Accounts payable
56,023

 
82,878

Accrued expenses and other liabilities
109,084

 
115,735

Current portion of unearned subscription revenues
186,529

 
151,831

Total current liabilities
411,500

 
408,992

Long-term debt
370,000

 
145,000

Long-term broadcast rights payable
5,008

 
5,431

Unearned subscription revenues
139,002

 
120,024

Deferred income taxes
185,775

 
160,709

Other noncurrent liabilities
104,293

 
97,688

Total liabilities
1,215,578

 
937,844

Shareholders' equity
 
 
 
Common stock
36,093

 
36,282

Class B stock
8,738

 
8,776

Additional paid-in capital
54,609

 
58,274

Retained earnings
716,314

 
687,816

Accumulated other comprehensive loss
(15,478
)
 
(16,163
)
Total shareholders' equity
800,276

 
774,985

Total liabilities and shareholders' equity
$
2,015,854

 
$
1,712,829






Meredith Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)

Nine Months Ended March 31,
2012
 
2011
(In thousands)
 
 
 
Net cash provided by operating activities
$
105,638

 
$
140,375

 
 
 
 
Cash flows from investing activities
 
 
 
Acquisitions of businesses
(243,897
)
 
(39,141
)
Additions to property, plant, and equipment
(30,739
)
 
(19,625
)
Other
(781
)
 
—

Net cash used in investing activities
(275,417
)
 
(58,766
)
 
 
 
 
Cash flows from financing activities
 
 
 
Proceeds from issuance of long-term debt
295,000

 
12,500

Repayments of long-term debt
(70,000
)
 
(87,500
)
Purchases of Company stock
(16,584
)
 
(9,724
)
Dividends paid
(45,892
)
 
(32,681
)
Proceeds from common stock issued
4,502

 
7,526

Excess tax benefits from share-based payments
346

 
427

Other
(640
)
 
(51
)
Net cash used in financing activities
166,732

 
(109,503
)
Net decrease in cash and cash equivalents
(3,047
)
 
(27,894
)
Cash and cash equivalents at beginning of period
27,721

 
48,574

Cash and cash equivalents at end of period
$
24,674

 
$
20,680






Table 1
Meredith Corporation and Subsidiaries
Supplemental Disclosures Regarding Non-GAAP Financial Measures

Special Items - The following table shows results of operations excluding the special items and as reported with the difference being the special items. Results of operations excluding special items are non-GAAP measures. Management's rationale for presenting non-GAAP measures is included in the text of this earnings release.
Periods Ended March 31, 2012
Three Months
 
Nine Months
 
Excluding Special Items
 
Special Items
 
As Reported
 
Excluding Special Items
 
Special Items
 
As Reported
(In thousands except per share data)
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
 
 
 
Advertising
$
191,472

 
$
—

 
$
191,472

 
$
559,425

 
$
—

 
$
559,425

Circulation
76,331

 
—

 
76,331

 
206,822

 
—

 
206,822

All other
77,710

 
—

 
77,710

 
235,892

 
—

 
235,892

Total revenues
345,513

 
—

 
345,513

 
1,002,139

 
—

 
1,002,139

Operating expenses
 
 
 
 
 
 
 
 
 
 
 
Production, distribution, and editorial
136,429

 
25

(a)
136,454

 
401,732

 
25

(a)
401,757

Selling, general, and administrative
144,707

 
14,645

(b)
159,352

 
422,612

 
14,645

(b)
437,257

Depreciation and amortization
11,407

 
—

 
11,407

 
31,744

 
—

 
31,744

Total operating expenses
292,543

 
14,670

 
307,213

 
856,088

 
14,670

 
870,758

Income from operations
52,970

 
(14,670
)
 
38,300

 
146,051

 
(14,670
)
 
131,381

Interest expense, net
(3,283
)
 
—

 
(3,283
)
 
(8,899
)
 
—

 
(8,899
)
Earnings before income taxes
49,687

 
(14,670
)
 
35,017

 
137,152

 
(14,670
)
 
122,482

Income taxes
(19,888
)
 
6,040

 
(13,848
)
 
(54,132
)
 
6,040

 
(48,092
)
Net earnings
$
29,799

 
$
(8,630
)
 
$
21,169

 
$
83,020

 
$
(8,630
)
 
$
74,390

 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings per share
$
0.66

 
$
(0.19
)
 
$
0.47

 
$
1.85

 
$
(0.19
)
 
$
1.66

Basic average shares outstanding
44,800

 
44,800

 
44,800

 
44,882

 
44,882

 
44,882

 
 
 
 
 
 
 
 
 
 
 
 
Diluted earnings per share
$
0.66

 
$
(0.19
)
 
$
0.47

 
$
1.84

 
$
(0.19
)
 
$
1.65

Diluted average shares outstanding
45,296

 
45,296

 
45,296

 
45,141

 
45,141

 
45,141

 
 
 
 
 
 
 
 
 
 
 
 
(a) Write-down of art and manuscript inventory
(b) Severance costs of $10.0 million, Allrecipes.com acquisition costs of $2.5 million, vacated lease accruals of $2.7 million, and other net
miscellaneous write-downs and accruals of $0.5 million partially offset by a $1.0 million reduction in contingent consideration payable.





Table 2
Meredith Corporation and Subsidiaries
Supplemental Disclosures Regarding Non-GAAP Financial Measures

Special Items - The following table shows results of operations excluding the special items and as reported with the difference being the special items. Results of operations excluding special items are non-GAAP measures. Management's rationale for presenting non-GAAP measures is included in the text of this earnings release.

Periods Ended March 31, 2012
Three Months
 
Nine Months
 
Excluding Special Items
 
Special Items
 
As Reported
 
Excluding
Special Items
 
Special Items
 
As Reported
(In thousands)
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
 
 
 
National media group
 
 
 
 
 
 
 
 
 
 
 
Advertising
$
122,977

 
$
—

 
$
122,977

 
$
354,614

 
$
—

 
$
354,614

Circulation
76,331

 
—

 
76,331

 
206,822

 
—

 
206,822

Other revenues
68,295

 
—

 
68,295

 
209,094

 
—

 
209,094

Total national media group
267,603

 
—

 
267,603

 
770,530

 
—

 
770,530

Local media group
 
 
 
 
 
 
 
 
 
 
 
Non-political advertising
66,652

 
—

 
66,652

 
201,311

 
—

 
201,311

Political advertising
1,843

 
—

 
1,843

 
3,500

 
—

 
3,500

Other revenues
9,415

 
—

 
9,415

 
26,798

 
—

 
26,798

Total local media group
77,910

 
—

 
77,910

 
231,609

 
—

 
231,609

Total revenues
$
345,513

 
$
—

 
$
345,513

 
$
1,002,139

 
$
—

 
$
1,002,139

 
 
 
 
 
 
 
 
 
 
 
 
Operating profit
 
 
 
 
 
 
 
 
 
 
 
National media group
$
36,811

 
$
(13,481
)
(a)
$
23,330

 
$
108,612

 
$
(13,481
)
(a)
$
95,131

Local media group
23,843

 
(1,189
)
(b)
22,654

 
62,056

 
(1,189
)
(b)
60,867

Unallocated corporate
(7,684
)
 
—

 
(7,684
)
 
(24,617
)
 
—

 
(24,617
)
Income from operations
$
52,970

 
$
(14,670
)
 
$
38,300

 
$
146,051

 
$
(14,670
)
 
$
131,381

 
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
 
 
 
 
 
 
 
 
 
 
National media group
$
4,615

 
$
—

 
$
4,615

 
$
11,808

 
$
—

 
$
11,808

Local media group
6,299

 
—

 
6,299

 
18,463

 
—

 
18,463

Unallocated corporate
493

 
—

 
493

 
1,473

 
—

 
1,473

Total depreciation and amortization
$
11,407

 
$
—

 
$
11,407

 
$
31,744

 
$
—

 
$
31,744

 
 
 
 
 
 
 
 
 
 
 
 
EBITDA 1
 
 
 
 
 
 
 
 
 
 
 
National media group
$
41,426

 
$
(13,481
)
 
$
27,945

 
$
120,420

 
$
(13,481
)
 
$
106,939

Local media group
30,142

 
(1,189
)
 
28,953

 
80,519

 
(1,189
)
 
79,330

Unallocated corporate
(7,191
)
 
—

 
(7,191
)
 
(23,144
)
 
—

 
(23,144
)
TOTAL EBITDA
$
64,377

 
$
(14,670
)
 
$
49,707

 
$
177,795

 
$
(14,670
)
 
$
163,125

 
 
 
 
 
 
 
 
 
 
 
 
1  EBITDA is net earnings from continuing operations before interest, taxes, depreciation, and amortization.
 
 
 
 
 
 
 
 
 
 
 
 
(a) Severance costs of $9.9 million, Allrecipes.com acquisition costs of $2.5 million, vacated lease accrual of $1.6 million, and other net
miscellaneous write-downs and accruals of $0.5 million partially offset by a $1.0 million reduction in contingent consideration
      payable
(b) Severance costs of $0.1 million and a vacated lease accrual of $1.1 million





Meredith Corporation and Subsidiaries                                Table 3
Supplemental Disclosures Regarding Non-GAAP Financial Measures

EBITDA
Consolidated EBITDA, which is reconciled to net earnings from continuing operations in the following tables, is defined as net earnings before interest, taxes, depreciation, and amortization.
Segment EBITDA is a measure of segment earnings before depreciation and amortization.
Segment EBITDA margin is defined as segment EBITDA divided by segment revenues.

 
Three Months Ended March 31, 2012
 
National Media
 
Local
Media
 
Unallocated Corporate
 
Total
(In thousands)
 
 
 
 
 
 
 
Revenues
$
267,603

 
$
77,910

 
$
—

 
$
345,513

 
 
 
 
 
 
 
 
Operating profit
$
23,330

 
$
22,654

 
$
(7,684
)
 
$
38,300

Depreciation and amortization
4,615

 
6,299

 
493

 
11,407

EBITDA
$
27,945

 
$
28,953

 
$
(7,191
)
 
49,707

Less:
 
 
 
 
 
 
 
Depreciation and amortization
 
 
 
 
 
 
(11,407
)
Net interest expense
 
 
 
 
 
 
(3,283
)
Income taxes
 
 
 
 
 
 
(13,848
)
Earnings from continuing operations
 
 
 
 
 
 
$
21,169

 
 
 
 
 
 
 
 
Segment EBITDA margin
10.4
%
 
37.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2011
 
National Media
 
Local
Media
 
Unallocated Corporate
 
Total
(In thousands)
 
 
 
 
 
 
 
Revenues
$
267,886

 
$
70,995

 
$
—

 
$
338,881

 
 
 
 
 
 
 
 
Operating profit
$
48,467

 
$
13,281

 
$
(9,399
)
 
$
52,349

Depreciation and amortization
3,346

 
6,109

 
510

 
9,965

EBITDA
$
51,813

 
$
19,390

 
$
(8,889
)
 
62,314

Less:
 
 
 
 
 
 
 
Depreciation and amortization
 
 
 
 
 
 
(9,965
)
Net interest expense
 
 
 
 
 
 
(3,147
)
Income taxes
 
 
 
 
 
 
(18,026
)
Earnings from continuing operations
 
 
 
 
 
 
$
31,176

 
 
 
 
 
 
 
 
Segment EBITDA margin
19.3
%
 
27.3
%
 
 
 
 






 
Nine Months Ended March 31, 2012
 
National Media
 
Local
Media
 
Unallocated Corporate
 
Total
(In thousands)
 
 
 
 
 
 
 
Revenues
$
770,530

 
$
231,609

 
$
—

 
$
1,002,139

 
 
 
 
 
 
 
 
Operating profit
$
95,131

 
$
60,867

 
$
(24,617
)
 
$
131,381

Depreciation and amortization
11,808

 
18,463

 
1,473

 
31,744

EBITDA
$
106,939

 
$
79,330

 
$
(23,144
)
 
163,125

Less:
 
 
 
 
 
 
 
Depreciation and amortization
 
 
 
 
 
 
(31,744
)
Net interest expense
 
 
 
 
 
 
(8,899
)
Income taxes
 
 
 
 
 
 
(48,092
)
Earnings from continuing operations
 
 
 
 
 
 
$
74,390

 
 
 
 
 
 
 
 
Segment EBITDA margin
13.9
%
 
34.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended March 31, 2011
 
National Media
 
Local
Media
 
Unallocated Corporate
 
Total
(In thousands)
 
 
 
 
 
 
 
Revenues
$
803,084

 
$
244,470

 
$
—

 
$
1,047,554

 
 
 
 
 
 
 
 
Operating profit
$
130,297

 
$
68,558

 
$
(27,811
)
 
$
171,044

Depreciation and amortization
10,035

 
17,853

 
1,525

 
29,413

EBITDA
$
140,332

 
$
86,411

 
$
(26,286
)
 
200,457

Less:
 
 
 
 
 
 
 
Depreciation and amortization
 
 
 
 
 
 
(29,413
)
Net interest expense
 
 
 
 
 
 
(10,009
)
Income taxes
 
 
 
 
 
 
(62,700
)
Earnings from continuing operations
 
 
 
 
 
 
$
98,335

 
 
 
 
 
 
 
 
Segment EBITDA margin
17.5
%
 
35.3
%
 
 
 
 




Meredith Corporation and Subsidiaries                                Table 4
Supplemental Disclosures Regarding Non-GAAP Financial Measures
 
 
Three Months
Periods Ended March 31,
2012
 
2011
 
Change
 
 
 
 
 
 
National Media Advertising Revenues
 
 
 
 
 
Excluding recent acquisitions 1
$
112,331

 
$
120,997

 
(7.16
)%
Recent acquisitions 1
10,646

 
—

 
 
Total
$
122,977

 
$
120,997

 
1.64
 %
 
 
 
 
 
 
National Media Circulation Revenues
 
 
 
 
 
Excluding recent acquisitions 1
$
68,635

 
$
66,453

 
3.28
 %
Recent acquisitions 1
7,696

 
—

 
 
Total
$
76,331

 
$
66,453

 
14.86
 %
 
 
 
 
 
 
1  Recent acquisitions represent Everyday with Rachael Ray, FamilyFun, and Allrecipes.com