Details of the severance and related benefit costs by segment for these performance improvement plans are as follows:
The Company guarantees two other leases of entities previously sold, one through January 2023 and another through November 2030. The carrying value of those guarantees, which are recorded in other noncurrent liabilities on the Condensed Consolidated Balance Sheets, was $2.3$2.1 million and $2.2 million at December 31, 2019,September 30, 2020 and
In the ordinary course of business, the Company is a defendant in or party to various legal claims, actions, and proceedings. These claims, actions, and proceedings are at varying stages of investigation, arbitration, or adjudication, and involve a variety of areas of law.
On October 26, 2010, the Canadian Minister of National Revenue denied the claims by Time Inc. Retail (formerly Time/Warner Retail Sales & Marketing, Inc.) (TIR) for input tax credits in respect of goods and services tax that TIR had paid on magazines it imported into and had displayed at retail locations in Canada during the years 2006 to 2008, on the basis that TIR did not own those magazines and issued Notices of Reassessment in the amount of approximately C$52 million. On January 21, 2011, TIR filed an objection to the Notices of Reassessment with the Chief of Appeals of the Canada Revenue Agency (CRA), arguing that TIR claimed input tax credits only in respect of goods and services tax it actually paid and it is entitled to a rebate for such payments. On September 13, 2013, TIR received Notices of Reassessment in the amount of C$26.9 million relating to the same type of situation during the years 2009 to 2010, and TIR filed similar objections as for prior years. By letter dated June 19, 2015, the CRA requested payment of C$89.8 million, which includes interest accrued and stated that failure to pay may result in legal action. TIR responded by stating that collection should remain stayed pending resolution of the issues raised
by TIR’s objection. Including interest accrued, the total of the reassessments claimed by the CRA for the years 2006 to 2010 was C$91 million as of November 30, 2015. The parties are engaged in mediation.
On September 6, 2019, a shareholder filed a putative class action lawsuit in the U.S. District Court for the Southern District of New York against the Company, its Chief Executive Officer, and its Chief Financial Officer, seeking to represent a class of shareholders who acquired securities of the Company between May 10, 2018 and September 4, 2019 (the New York Action). On September 12, 2019, a shareholder filed a putative class action lawsuit in the U.S. District Court for the Southern District of Iowa against the Company, its Chief Executive Officer, its Chief Financial Officer, and its Chairman of the Board seeking to represent a class of shareholders who acquired securities of the Company between January 31, 2018 and September 5, 2019 (the Iowa Action). Both complaints allege that the defendants made materially false and/or misleading statements, and failed to disclose material adverse facts, about the Company’s business, operations, and prospects. Both complaints assert claims under the federal securities laws and seek unspecified monetary damages and other relief. On November 12, 2019, the plaintiff shareholder withdrew the New York Action, and the action has been dismissed. On November 25, 2019, the City of Plantation Police Officers Pension Fund was appointed to serve as lead plaintiff in the Iowa Action. The defendants have not yet responded toOn March 9, 2020, the lead plaintiff filed an amended complaint in the Iowa Action, but intendnow seeking to vigorously oppose it.represent a class of shareholders who acquired securities of the Company between January 31, 2018 and September 30, 2019. On June 22, 2020, the defendants filed a motion to dismiss the Iowa Action. On October 28, 2020, a U.S. District Judge granted defendants’ motion to dismiss, dismissing the Iowa Action with prejudice at plaintiffs’ cost due to plaintiffs’ failure to satisfy applicable pleading requirements. Specifically, the court held that plaintiffs had failed to plead any actionable misstatement or omission, scienter, or loss causation. The Company expresses no opinion ascourt observed that, “[a]s explained in Defendants’ motion [to dismiss] and supporting briefs, this lawsuit is precisely the type of frivolous ‘strike’ suit that Congress directed federal courts to dismiss at the ultimate outcome of this matter.pleading stage.”
The Company establishes an accrued liability for specific matters, such as a legal claim, when the Company determines that a loss is probable and the amount of the loss can be reasonably estimated. Once established, accruals are adjusted, as appropriate, in light of additional information. The amount of any loss ultimately incurred in relation to matters for which an accrual has been established may be higher or lower than the amounts accrued for such matters. In view of the inherent difficulty of predicting the outcome of litigation, claims, and other matters, the Company often cannot predict what the eventual outcome of a pending matter will be, or what the timing or results of the ultimate resolution of a matter will be. Accordingly, for the matters described above, the Company is unable to predict the outcome or reasonably estimate a range of possible loss.
The Company estimates the fair value of financial instruments using available market information and valuation methodologies the Company believes to be appropriate for these purposes. Considerable judgment and a high degree of subjectivity are involved in developing these estimates and, accordingly, they are not necessarily indicative of amounts the Company would realize upon disposition.
The fair value hierarchy consists of three broad levels of inputs that may be used to measure fair value, which are described below:
The following table sets forth the carrying value and the estimated fair value of the Company's financial instruments not measured at fair value on a recurring basis:in the Condensed Consolidated Balance Sheets:
The fair value of broadcast rights payable was determined utilizing Level 3 inputs. The fair value of total long-term debt iswas based on pricing from observable market information obtained from a non-active market, therefore is included as a Level 2 measurement.
Meredith disaggregates revenue from contracts with customers by types of goods and services. A reconciliation of disaggregated revenue to segment revenue (as provided in Note 15)13) is as follows.
During the first quarter of fiscal 2020, management identified certain consumer related revenue that was incorrectly classified as other revenue in the fiscal 2019 consolidated financial statements. As such, management revised the fiscal 2019 condensed consolidated statement of earnings and related revenue note for the three and six months ended December 31, 2019, to report $9.9 million and $21.6 million revenue as consumer related revenue. The Company assessed the materiality of the revision both quantitatively and qualitatively and determined the correction to be immaterial to the Company’s prior period interim and annual consolidated financial statements. | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, 2019 | National
Media | Local
Media | Intersegment
Elimination | Total |
| (In millions) | | | | | |
| Advertising related | | | | | |
| Print | $ | 160.4 | | $ | 0 | | | $ | 0 | | $ | 160.4 | |
| Non-political spot | 0 | | 76.8 | | | 0 | | 76.8 | |
| Political spot | 0 | | 2.6 | | | 0 | | 2.6 | |
| Digital | 91.6 | | 4.2 | | | 0 | | 95.8 | |
| Third party sales | 19.0 | | 25.5 | | | (0.5) | | 44.0 | |
| Total advertising related | 271.0 | | 109.1 | | | (0.5) | | 379.6 | |
| Consumer related | | | | | |
| Subscription | 150.5 | | 0 | | | 0 | | 150.5 | |
| Retransmission | 0 | | 79.6 | | | 0 | | 79.6 | |
| Newsstand | 42.6 | | 0 | | | 0 | | 42.6 | |
| Affinity marketing | 13.9 | | 0 | | | 0 | | 13.9 | |
| Licensing | 20.0 | | 0 | | | 0 | | 20.0 | |
| Digital and other consumer driven | 16.5 | | 0 | | | 0 | | 16.5 | |
| Total consumer related | 243.5 | | 79.6 | | | 0 | | 323.1 | |
| Other | | | | | |
| Projects based | 14.4 | | 0 | | | 0 | | 14.4 | |
| Other | 4.0 | | 4.1 | | | 0 | | 8.1 | |
| Total other | 18.4 | | 4.1 | | | 0 | | 22.5 | |
| Total revenues | $ | 532.9 | | $ | 192.8 | | | $ | (0.5) | | $ | 725.2 | |
Contract Balances
The timing of Meredith’s performance under its various contracts often differs from the timing of the customer’s payment, which results in the recognition of a contract asset or a contract liability. A contract asset is recognized when a good or service is transferred to a customer and the Company does not have the contractual right to bill for the related performance obligations. Due to the nature of its contacts,contracts, the Company does not have any significant contract assets. A contract liability is recognized when consideration is received from the customer prior to the transfer of goods or services. Current portion of contract liabilities were $458.9$413.6 million at September 30, 2020, and $403.2 million at June 30, 2019 and $428.3 million at December 31, 2019,2020, and are presented as current portion of unearned revenues on the Condensed Consolidated Balance Sheets. Noncurrent contract liabilities were $318.6$280.1 million and $299.1$267.5 million at September 30, 2020 and June 30, 2019 and December 31, 2019,2020, respectively, and are reflected as unearned revenues on the Condensed Consolidated Balance Sheets. Revenue of $296.4$137.3 million and $156.0 million recognized in the six-monththree-month period ended December 31,September 30, 2020 and 2019, respectively, was in contract liabilities at the beginningbeginning of the period.
During the second quarter of fiscal 2020, the Company wrote-off $42.7 million of contract liabilities due to the discontinuation of Rachael Ray Every Day and Family Circle as subscription magazines. This amount was composed of balances at June 30, 2019, as well as newly acquired contracts during the first six months of fiscal 2020. In addition, the Company wrote off an offsetting $42.7 million of contract costs associated with the discontinued contracts. The contract liabilities were presented in the current portion of unearned revenues and
unearned revenues lines and the contract costs were presented in the current portion of subscription acquisition costs and subscription acquisition costs lines on the Condensed Consolidated Balance Sheets.
12.11. Pension and Postretirement Benefit Plans
The following table presents the components of net periodic benefit costs for Meredith's pension and postretirement benefit plans:
|
| | | | | | | | | | | | | | | | |
| | Three Months | | | Six Months |
| Periods ended December 31, | 2019 | | 2018 | | | 2019 | | 2018 |
| (In millions) | | | | | | | | |
| Domestic Pension Benefits | | | | | | | | |
| Service cost | $ | 2.5 |
| | $ | 2.9 |
| | | $ | 5.0 |
| | $ | 5.8 |
|
| Interest cost | 1.3 |
| | 1.7 |
| | | 2.7 |
| | 3.3 |
|
| Expected return on plan assets | (2.4 | ) | | (2.5 | ) | | | (4.8 | ) | | (4.9 | ) |
| Prior service cost amortization | 0.2 |
| | 0.2 |
| | | 0.3 |
| | 0.3 |
|
| Actuarial loss amortization | 0.6 |
| | 0.5 |
| | | 1.2 |
| | 1.0 |
|
| Settlement charge | 8.8 |
| | — |
| | | 8.8 |
| | — |
|
| Net periodic benefit costs | $ | 11.0 |
| | $ | 2.8 |
| | | $ | 13.2 |
| | $ | 5.5 |
|
| | | | | | | | | |
| International Pension Benefits | | | | | | | | |
| Service cost | $ | — |
| | $ | 0.1 |
| | | $ | — |
| | $ | 0.1 |
|
| Interest cost | 3.7 |
| | 4.3 |
| | | 7.3 |
| | 8.6 |
|
| Expected return on plan assets | (4.7 | ) | | (8.0 | ) | | | (9.3 | ) | | (16.0 | ) |
| Prior service credit amortization | 0.1 |
| | — |
| | | 0.1 |
| | — |
|
| Net periodic benefit credit | $ | (0.9 | ) | | $ | (3.6 | ) | | | $ | (1.9 | ) | | $ | (7.3 | ) |
| | | | | | | | | |
| Postretirement Benefits | | | | | | | | |
| Interest cost | $ | 0.1 |
| | $ | 0.1 |
| | | $ | 0.1 |
| | $ | 0.2 |
|
| Actuarial gain amortization | (0.2 | ) | | (0.2 | ) | | | (0.3 | ) | | (0.3 | ) |
| Net periodic benefit credit | $ | (0.1 | ) | | $ | (0.1 | ) | | | $ | (0.2 | ) | | $ | (0.1 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
| Three months ended September 30, | 2020 | | 2019 | | | | | |
| (In millions) | | | | | | | | |
| Domestic Pension Benefits | | | | | | | | |
| Service cost | $ | 2.3 | | | $ | 2.5 | | | | | | |
| Interest cost | 0.8 | | | 1.4 | | | | | | |
| Expected return on plan assets | (2.0) | | | (2.4) | | | | | | |
| Prior service cost amortization | 0.1 | | | 0.1 | | | | | | |
| Actuarial loss amortization | 0.7 | | | 0.6 | | | | | | |
| | | | | | | | |
| Net periodic benefit costs | $ | 1.9 | | | $ | 2.2 | | | | | | |
| | | | | | | | |
| International Pension Benefits | | | | | | | | |
| | | | | | | | |
| Interest cost | $ | 2.3 | | | $ | 3.6 | | | | | | |
| Expected return on plan assets | (3.8) | | | (4.6) | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| Net periodic benefit credit | $ | (1.5) | | | $ | (1.0) | | | | | | |
| | | | | | | | |
| Postretirement Benefits | | | | | | | | |
| Interest cost | $ | 0.1 | | | $ | 0 | | | | | | |
| | | | | | | | |
| Actuarial gain amortization | (0.1) | | | (0.1) | | | | | | |
| Net periodic benefit credit | $ | 0 | | | $ | (0.1) | | | | | | |
The pension settlement charge recorded in the second quarter of fiscal 2020 was triggered by lump-sum payments made as a result of an executive's retirement in the prior fiscal year.
The components of net periodic benefit costcosts (credit), other than the service cost component, are included in the non-operating income, (expense), net line inon the accompanying Condensed Consolidated Statements of Earnings.
The amortization of amounts related to unrecognized prior service costs and net actuarial gain/loss was reclassified out of other comprehensive income (loss) as components of net periodic benefit costs.
13. Redeemable Series A Preferred Stock
Meredith has outstanding 650,000 shares of perpetual convertible redeemable non-voting Series A preferred stock (the Series A preferred stock). The Series A preferred stock becomes convertible on January 31, 2025, the seventh anniversary of the issuance date. Therefore, 0 shares were converted in the first six months of fiscal 2020.
14.12. Earnings (Loss) Per Common Share
The following table presents the calculations of basic earnings (loss) per common share:
|
| | | | | | | | | | | | | | | | |
| | Three Months | | | Six Months |
| Periods ended December 31, | 2019 | | 2018 | | | 2019 | | 2018 |
| (In millions except per share data) | | | | | | | | |
| Net earnings | $ | 37.8 |
| | $ | 18.6 |
| | | $ | 43.9 |
| | $ | 35.6 |
|
| Participating warrants dividend | (0.9 | ) | | (0.9 | ) | | | (1.9 | ) | | (1.8 | ) |
| Preferred stock dividend | (14.1 | ) | | (14.4 | ) | | | (28.5 | ) | | (28.4 | ) |
| Accretion of redeemable, convertible Series A preferred stock | (4.5 | ) | | (4.3 | ) | | | (9.0 | ) | | (8.6 | ) |
| Other securities dividends | (0.3 | ) | | (0.6 | ) | | | (0.3 | ) | | (1.0 | ) |
| Earnings (loss) attributable to common shareholders | $ | 18.0 |
| | $ | (1.6 | ) | | | $ | 4.2 |
| | $ | (4.2 | ) |
| | | | | | | | | |
| Basic weighted average common shares outstanding | 45.7 |
| | 45.3 |
| | | 45.7 |
| | 45.2 |
|
| Basic earnings (loss) per common share | $ | 0.39 |
| | $ | (0.03 | ) | | | $ | 0.09 |
| | $ | (0.09 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
| Three months ended September 30, | 2020 | | 2019 | | | | | |
| (In millions except per share data) | | | | | | | | |
| Net earnings | $ | 42.3 | | | $ | 6.1 | | | | | | |
| Participating warrants dividend | 0 | | | (0.9) | | | | | | |
| Series A preferred stock dividend | 0 | | | (14.4) | | | | | | |
| Accretion of Series A preferred stock | 0 | | | (4.5) | | | | | | |
| Other securities dividends | 0 | | | (0.2) | | | | | | |
| Earnings attributable to other participating securities | (2.0) | | | 0 | | | | | | |
| Earnings (loss) attributable to common shareholders | $ | 40.3 | | | $ | (13.9) | | | | | | |
| | | | | | | | |
| Basic weighted average common shares outstanding | 46.0 | | | 45.6 | | | | | | |
| Basic earnings (loss) per common share | $ | 0.88 | | | $ | (0.30) | | | | | | |
Diluted earnings (loss) per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. The dilutive effects of these share-based awards were computed using the two-class method.
|
| | | | | | | | | | | | | | | | |
| | Three Months | | | Six Months |
| Periods ended December 31, | 2019 | | 2018 | | | 2019 | | 2018 |
| (In millions except per share data) | | | | | | | | |
| Basic weighted-average common shares outstanding | 45.7 |
| | 45.3 |
| | | 45.7 |
| | 45.2 |
|
| Dilutive effect of stock options and equivalents | — |
| | 0.4 |
| | | — |
| | 0.5 |
|
| Dilutive effect of participating warrants | 1.6 |
| | 1.6 |
| | | — |
| | 1.6 |
|
| Diluted weighted-average shares outstanding | 47.3 |
| | 47.3 |
| | | 45.7 |
| | 47.3 |
|
| | | | | | | | | |
| Diluted earnings (loss) attributable to common shareholders | $ | 19.0 |
| | $ | (0.5 | ) | | | $ | 4.2 |
| | $ | (2.1 | ) |
| Diluted earnings (loss) per common share | 0.40 |
| | (0.01 | ) | | | 0.09 |
| | (0.05 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
| Three months ended September 30, | 2020 | | 2019 | | | | | |
| (In millions except per share data) | | | | | | | | |
| Basic weighted-average common shares outstanding | 46.0 | | | 45.6 | | | | | | |
| Dilutive effect of stock options and equivalents | 0 | | | 0 | | | | | | |
| | | | | | | | |
| Diluted weighted-average shares outstanding | 46.0 | | 45.6 | | | | | |
| | | | | | | | |
| Diluted earnings (loss) attributable to common shareholders | $ | 40.3 | | | $ | (13.9) | | | | | | |
| Diluted earnings (loss) per common share | 0.88 | | | (0.30) | | | | | | |
For the three months ended December 31, 2019, 1.6September 30, 2020, 1.5 million warrants were included in the computation of diluted earnings per share while being antidilutive (the diluted earnings per common share becoming more than basic earnings per common share). These securities are dilutive (the diluted earnings per common share becoming less than basic earnings per common share) when calculating the diluted earnings per common share for income from continuing operations, which is the control number when determining the dilutive impact of securities in all earnings per common share calculations. Therefore, these securities are included in all diluted earnings per common share calculations for the three months ended December 31, 2019. There were also 0.7 million convertible preferred shares and 0.1 million shares of restricted stock excluded from the computation of diluted earnings per common share due to their antidilutive effect on all earnings per share calculations for the three months ended December 31, 2019.
For the three months ended December 31, 2018, 1.6 million warrants, 0.3 million common stock equivalents, and 0.1 million options were included in the computation of dilutive loss per common share while being antidilutive (the diluted loss per share becoming less negative than basic loss per share). These securities are dilutive (the dilutive earnings per common share becoming less than basic earnings per common share) when calculating the dilutive earnings per common share for income from continuing operations, which is the control number when
determining the dilutive impact of securities in all loss per share calculations. Therefore, these securities are included in all diluted loss per common share calculations for the three months ended December 31, 2018. There were also 0.7 million convertible preferred shares and 0.1 million shares of restricted stock excluded from the computation of diluted loss per common share due to their antidilutive effect on all loss per share calculations for the three months ended December 31, 2018.
For the six months ended December 31, 2019, 1.6 million warrants, 0.7 million convertible preferred shares, and 0.1 million sharesa minimal amount of restricted stock were excluded from the computation of diluted earnings per common share. These securities have an antidilutive effect on the earnings per common share calculation (the diluted earnings per share becoming lessmore than the basic earnings per share). Therefore, these securities are not taken into account in determining the weighted average number of shares for the calculation of diluted earningsloss per share for the sixthree months ended December 31, 2019.September 30, 2020.
For the sixthree months ended December 31, 2018, 1.6 million warrants, 0.3 million common stock equivalents, and 0.2 million options were included in the computation of dilutive loss per common share while being antidilutive due to the securities being dilutive when compared to the control number, income from continuing operations. There were alsoSeptember 30, 2019, 0.7 million convertible preferred shares, 1.6 million warrants, 0.1 million options, and 0.1 million shares of restricted stock that were excluded from the computation of dilutivediluted loss per common share. These securities have an antidilutive effect on the loss per common share due to their antidilutive effect on all(the diluted loss per share calculationsbecoming less negative than the basic loss per share). Therefore, these securities are not taken into account in determining the weighted average number of shares for the sixcalculation of diluted loss per share for the three months ended December 31, 2018.September 30, 2019.
For the three months ended December 31,September 30, 2020 and 2019, and 2018, antidilutive options excluded from the above calculations totaled 3.84.2 million (with a weighted average exercise price of $54.89)$49.67) and 2.53.1 million (with a weighted average exercise price of $60.31), respectively. For the six months ended December 31, 2019 and 2018, antidilutive options excluded from the above calculations totaled 3.6 million (with a weighted average exercise price of $56.48) and 2.5 million (with a weighted average exercise price of $60.51)$59.96), respectively.
In the sixthree months ended December 31,September 30, 2020, 0 options were exercised to purchase common shares. In the three months ended September 30, 2019, a minimal amount of options were exercised to purchase common shares. In the six months ended December 31, 2018, 0.1 million options were exercised to purchase common shares.
15.13. Financial Information about Industry Segments
Meredith is a diversified media company that utilizes multiple platforms, including broadcast television, print, digital, mobile and video, to deliver the content consumers desire and to deliver the messages of advertising and marketing partners.focused primarily on service journalism. On the basis of products and services, the Company has established 2 reportable segments: national media and local media. There have been no changes in the basis of segmentation since June 30, 2019.2020. There have been no material intersegment transactions.
There are 2 principal financial measures reported to the chief executive officer (the chief operating decision maker) for use in assessing segment performance and allocating resources. Those measures are operating profit and earnings before interest expense, income taxes, depreciation, and amortization (EBITDA). Operating profit for segment reporting, disclosed below, is revenues less operating costs excluding unallocated corporate expenses. Segment operating expenses include allocations of certain centrally incurred costs such as employee benefits, occupancy, information systems, accounting services, internal legal staff, and human resources administration. These costs are allocated based on actual usage or other appropriate methods, primarily number of employees. Unallocated corporate expenses are corporate overhead expenses not directly attributable to the operating groups. In accordance with authoritative guidance on disclosures about segments of an enterprise and related information, EBITDA is not presented below.
The following table presents financial information by segment:
|
| | | | | | | | | | | | | | | | |
| | Three Months | | | Six Months |
| Periods ended December 31, | 2019 | | 2018 | | | 2019 | | 2018 |
| (In millions) | | | | | | | | |
| Revenues | | | | | | | | |
| National media | $ | 597.2 |
| | $ | 616.2 |
| | | $ | 1,130.1 |
| | $ | 1,176.8 |
|
| Local media | 214.0 |
| | 262.4 |
| | | 406.8 |
| | 476.8 |
|
| Total revenues, gross | 811.2 |
| | 878.6 |
| | | 1,536.9 |
| | 1,653.6 |
|
| Intersegment revenue elimination | (0.7 | ) | | (0.2 | ) | | | (1.2 | ) | | (0.8 | ) |
| Total revenues | $ | 810.5 |
| | $ | 878.4 |
| | | $ | 1,535.7 |
| | $ | 1,652.8 |
|
| | | | | | | | | |
| Segment profit | | | | | | | | |
| National media | $ | 100.5 |
| | $ | 47.0 |
| | | $ | 128.6 |
| | $ | 65.1 |
|
| Local media | 54.8 |
| | 106.6 |
| | | 93.2 |
| | 174.1 |
|
| Unallocated corporate | (21.4 | ) | | (19.9 | ) | | | (45.0 | ) | | (51.3 | ) |
| Income from operations | 133.9 |
| | 133.7 |
| | | 176.8 |
| | 187.9 |
|
| Non-operating income (expense), net | (7.2 | ) | | 5.9 |
| | | 1.4 |
| | 13.2 |
|
| Interest expense, net | (36.9 | ) | | (50.9 | ) | | | (75.8 | ) | | (92.5 | ) |
| Earnings from continuing operations before income taxes | $ | 89.8 |
| | $ | 88.7 |
| | | $ | 102.4 |
| | $ | 108.6 |
|
| | | | | | | | | |
| Depreciation and amortization | | | | | | | | |
| National media | $ | 47.8 |
| | $ | 55.1 |
| | | $ | 95.2 |
| | $ | 107.4 |
|
| Local media | 9.9 |
| | 9.2 |
| | | 19.5 |
| | 18.3 |
|
| Unallocated corporate | 0.9 |
| | 0.8 |
| | | 2.4 |
| | 3.1 |
|
| Total depreciation and amortization | $ | 58.6 |
| | $ | 65.1 |
| | | $ | 117.1 |
| | $ | 128.8 |
|
| | | | | | | | | | | | | | | | |
| | | | |
| Three months ended September 30, | 2020 | | 2019 | | | | | |
| (In millions) | | | | | | | | |
| Revenues | | | | | | | | |
| National media | $ | 467.7 | | | $ | 532.9 | | | | | | |
| Local media | 226.0 | | | 192.8 | | | | | | |
| Total revenues, gross | 693.7 | | | 725.7 | | | | | | |
| Intersegment revenue elimination | (0.2) | | | (0.5) | | | | | | |
| Total revenues | $ | 693.5 | | | $ | 725.2 | | | | | | |
| | | | | | | | |
| Segment profit | | | | | | | | |
| National media | $ | 31.5 | | | $ | 28.1 | | | | | | |
| Local media | 63.8 | | | 38.4 | | | | | | |
| Unallocated corporate | (17.2) | | | (23.6) | | | | | | |
| Income from operations | 78.1 | | | 42.9 | | | | | | |
| Non-operating income, net | 5.6 | | | 8.6 | | | | | | |
| Interest expense, net | (43.5) | | | (38.9) | | | | | | |
| Earnings from continuing operations before income taxes | $ | 40.2 | | | $ | 12.6 | | | | | | |
| | | | | | | | |
| Depreciation and amortization | | | | | | | | |
| National media | $ | 40.0 | | | $ | 47.4 | | | | | | |
| Local media | 8.6 | | | 9.6 | | | | | | |
| Unallocated corporate | 0.4 | | | 1.5 | | | | | | |
| Total depreciation and amortization | $ | 49.0 | | | $ | 58.5 | | | | | | |
16. Issuer, Guarantor and Non-Guarantor Condensed Consolidating Financial Information
The 2026 Senior Notes are general unsecured senior obligations of Meredith Corporation (Parent Issuer) and are guaranteed on a full, unconditional, joint, and several basis, by the combined “Guarantor Subsidiaries.” Other subsidiaries (the Non-Guarantor Subsidiaries) largely represent the international operations of the Company and subsidiaries that have been disposed of prior to December 31, 2019, which do not guarantee the 2026 Senior Notes. Under the terms of the indenture governing the 2026 Senior Notes, Meredith Corporation and the Guarantor Subsidiaries each fully and unconditionally, jointly and severally, guarantee the payment of interest, principal and premium, if any, on each of the notes included in the 2026 Senior Notes.
The following condensed consolidating financial information presents the condensed consolidated balance sheets as of December 31, 2019 and June 30, 2019, the condensed consolidating statements of comprehensive income (loss) for the three and six months ended December 31, 2019 and 2018, and condensed consolidating statements of cash flows for the six months ended December 31, 2019 and 2018, for Meredith Corporation (Parent Issuer), Guarantor Subsidiaries, and Non-Guarantor Subsidiaries. The condensed consolidating financial information is presented using the equity method of accounting for all periods presented. Elimination entries relate primarily to elimination of investments in subsidiaries and associated intercompany balances and transactions.
Meredith Corporation and Subsidiaries
Condensed Consolidating Balance Sheet
As of December 31, 2019
|
| | | | | | | | | | | | | | | |
| Assets | Meredith Corporation
(Parent Issuer) | Guarantor
Subsidiaries | Non-Guarantor
Subsidiaries | Eliminations | Consolidated |
| (In millions) | | | | | |
| Current assets | | | | | |
| Cash and cash equivalents | $ | 10.7 |
| $ | — |
| $ | 10.5 |
| $ | — |
| $ | 21.2 |
|
| Accounts receivable, net | 325.2 |
| 276.4 |
| 15.0 |
| — |
| 616.6 |
|
| Inventories | 41.0 |
| 8.5 |
| — |
| — |
| 49.5 |
|
| Current portion of subscription acquisition costs | 85.8 |
| 176.7 |
| — |
| (7.0 | ) | 255.5 |
|
| Assets held-for-sale | — |
| 51.8 |
| — |
| — |
| 51.8 |
|
| Other current assets | 53.6 |
| 11.2 |
| 3.0 |
| — |
| 67.8 |
|
| Total current assets | 516.3 |
| 524.6 |
| 28.5 |
| (7.0 | ) | 1,062.4 |
|
| Net property, plant, and equipment | 341.1 |
| 99.3 |
| 1.7 |
| — |
| 442.1 |
|
| Operating lease assets | 65.2 |
| 418.7 |
| 3.8 |
| — |
| 487.7 |
|
| Subscription acquisition costs | 151.2 |
| 91.2 |
| — |
| — |
| 242.4 |
|
| Other assets | 56.4 |
| 6.0 |
| 212.3 |
| — |
| 274.7 |
|
| Intangible assets, net | 634.1 |
| 1,108.6 |
| 11.4 |
| — |
| 1,754.1 |
|
| Goodwill | 614.8 |
| 1,077.6 |
| 277.4 |
| — |
| 1,969.8 |
|
| Intercompany receivable | 875.8 |
| 10,626.0 |
| 8,173.5 |
| (19,675.3 | ) | — |
|
| Intercompany notes receivable | — |
| 72.6 |
| — |
| (72.6 | ) | — |
|
| Investment in subsidiaries | 3,705.3 |
| 987.7 |
| — |
| (4,693.0 | ) | — |
|
| Total assets | $ | 6,960.2 |
| $ | 15,012.3 |
| $ | 8,708.6 |
| $ | (24,447.9 | ) | $ | 6,233.2 |
|
| | | | | | |
| Liabilities, Redeemable Convertible Preferred Stock, and Shareholders’ Equity | | | | | |
| Current liabilities | | | | | |
| Current portion of operating lease liabilities | $ | 8.2 |
| $ | 26.0 |
| $ | 0.7 |
| $ | — |
| $ | 34.9 |
|
| Accounts payable | 107.3 |
| 40.2 |
| 1.9 |
| — |
| 149.4 |
|
| Accrued expenses and other liabilities | 167.4 |
| 104.2 |
| 2.9 |
| — |
| 274.5 |
|
| Current portion of unearned revenues | 141.1 |
| 293.0 |
| 1.2 |
| (7.0 | ) | 428.3 |
|
| Liabilities associated with assets held-for-sale | — |
| 1.8 |
| — |
| — |
| 1.8 |
|
| Total current liabilities | 424.0 |
| 465.2 |
| 6.7 |
| (7.0 | ) | 888.9 |
|
| Long-term debt | 2,355.9 |
| — |
| — |
| — |
| 2,355.9 |
|
| Operating lease liabilities | 57.8 |
| 423.3 |
| 3.1 |
| — |
| 484.2 |
|
| Unearned revenues | 168.1 |
| 131.0 |
| — |
| — |
| 299.1 |
|
| Deferred income taxes | 229.5 |
| 264.6 |
| 26.0 |
| — |
| 520.1 |
|
| Other noncurrent liabilities | 96.7 |
| 83.5 |
| 25.3 |
| — |
| 205.5 |
|
| Investment in subsidiaries | — |
| — |
| 72.2 |
| (72.2 | ) | — |
|
| Intercompany payable | 2,141.8 |
| 9,374.6 |
| 8,149.9 |
| (19,666.3 | ) | — |
|
| Intercompany notes payable | 6.9 |
| — |
| 72.6 |
| (79.5 | ) | — |
|
| Total liabilities | 5,480.7 |
| 10,742.2 |
| 8,355.8 |
| (19,825.0 | ) | 4,753.7 |
|
| | | | | | |
| Redeemable, convertible Series A preferred stock | 549.2 |
| — |
| — |
| — |
| 549.2 |
|
| | | | | | |
| Shareholders’ equity | 930.3 |
| 4,270.1 |
| 352.8 |
| (4,622.9 | ) | 930.3 |
|
| Total liabilities, redeemable convertible preferred stock, and shareholders’ equity | $ | 6,960.2 |
| $ | 15,012.3 |
| $ | 8,708.6 |
| $ | (24,447.9 | ) | $ | 6,233.2 |
|
Meredith Corporation and Subsidiaries
Condensed Consolidating Balance Sheet
As of June 30, 2019
|
| | | | | | | | | | | | | | | |
| Assets | Meredith Corporation (Parent Issuer) | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated |
| (In millions) | | | | | |
| Current assets | | | | | |
| Cash and cash equivalents | $ | 30.3 |
| $ | 3.2 |
| $ | 11.5 |
| $ | — |
| $ | 45.0 |
|
| Accounts receivable, net | 327.5 |
| 267.4 |
| 14.2 |
| — |
| 609.1 |
|
| Inventories | 53.7 |
| 8.9 |
| 0.1 |
| — |
| 62.7 |
|
| Current portion of subscription acquisition costs | 91.5 |
| 156.8 |
| — |
| (6.3 | ) | 242.0 |
|
| Assets held-for-sale | — |
| 208.8 |
| 112.2 |
| — |
| 321.0 |
|
| Other current assets | 51.4 |
| 16.3 |
| 2.6 |
| — |
| 70.3 |
|
| Total current assets | 554.4 |
| 661.4 |
| 140.6 |
| (6.3 | ) | 1,350.1 |
|
| Net property, plant, and equipment | 340.8 |
| 107.8 |
| 1.7 |
| — |
| 450.3 |
|
| Subscription acquisition costs | 152.3 |
| 121.6 |
| — |
| — |
| 273.9 |
|
| Other assets | 60.6 |
| 30.0 |
| 179.0 |
| — |
| 269.6 |
|
| Intangible assets, net | 627.7 |
| 1,181.0 |
| 4.9 |
| — |
| 1,813.6 |
|
| Goodwill | 614.8 |
| 1,317.6 |
| 47.0 |
| — |
| 1,979.4 |
|
| Intercompany receivable | 470.5 |
| 10,352.3 |
| 7,958.6 |
| (18,781.4 | ) | — |
|
| Intercompany notes receivable | — |
| 215.5 |
| 0.2 |
| (215.7 | ) | — |
|
| Investment in subsidiaries | 3,874.5 |
| 983.0 |
| — |
| (4,857.5 | ) | — |
|
| Total assets | $ | 6,695.6 |
| $ | 14,970.2 |
| $ | 8,332.0 |
| $ | (23,860.9 | ) | $ | 6,136.9 |
|
| | | | | | |
| Liabilities, Redeemable Convertible Preferred Stock, and Shareholders’ Equity | | | | | |
| Current liabilities | | | | | |
| Accounts payable | $ | 141.5 |
| $ | 90.4 |
| $ | 10.7 |
| $ | — |
| $ | 242.6 |
|
| Accrued expenses and other liabilities | 195.4 |
| 107.2 |
| 4.6 |
| — |
| 307.2 |
|
| Current portion of unearned revenues | 183.2 |
| 277.7 |
| 3.8 |
| (5.8 | ) | 458.9 |
|
| Liabilities associated with assets held-for-sale | — |
| 190.8 |
| 61.3 |
| — |
| 252.1 |
|
| Total current liabilities | 520.1 |
| 666.1 |
| 80.4 |
| (5.8 | ) | 1,260.8 |
|
| Long-term debt | 2,333.3 |
| — |
| — |
| — |
| 2,333.3 |
|
| Unearned revenues | 155.7 |
| 162.9 |
| — |
| — |
| 318.6 |
|
| Deferred income taxes | 221.8 |
| 266.2 |
| 18.2 |
| — |
| 506.2 |
|
| Other noncurrent liabilities | 97.7 |
| 85.9 |
| 19.6 |
| — |
| 203.2 |
|
| Investment in subsidiaries | — |
| — |
| 74.8 |
| (74.8 | ) | — |
|
| Intercompany payable | 1,852.2 |
| 9,105.0 |
| 7,824.2 |
| (18,781.4 | ) | — |
|
| Intercompany notes payable | — |
| 0.2 |
| 215.5 |
| (215.7 | ) | — |
|
| Total liabilities | 5,180.8 |
| 10,286.3 |
| 8,232.7 |
| (19,077.7 | ) | 4,622.1 |
|
| | | | | | |
| Redeemable, convertible Series A preferred stock | 540.2 |
| — |
| — |
| — |
| 540.2 |
|
| | | | | | |
| Shareholders’ equity | 974.6 |
| 4,683.9 |
| 99.3 |
| (4,783.2 | ) | 974.6 |
|
| Total liabilities, redeemable convertible preferred stock, and shareholders’ equity | $ | 6,695.6 |
| $ | 14,970.2 |
| $ | 8,332.0 |
| $ | (23,860.9 | ) | $ | 6,136.9 |
|
Meredith Corporation and Subsidiaries
Condensed Consolidating Statement of Comprehensive Income
For the Three Months Ended December 31, 2019
|
| | | | | | | | | | | | | | | |
| | Meredith Corporation
(Parent Issuer) | Guarantor
Subsidiaries | Non-Guarantor
Subsidiaries | Eliminations | Consolidated |
| (In millions) | | | | | |
| Revenues | | | | | |
| Advertising related | $ | 153.7 |
| $ | 271.5 |
| $ | 2.5 |
| $ | (0.4 | ) | $ | 427.3 |
|
| Consumer related | 128.0 |
| 205.7 |
| 17.3 |
| (2.1 | ) | 348.9 |
|
| Other | 14.6 |
| 20.7 |
| (1.0 | ) | — |
| 34.3 |
|
| Total revenues | 296.3 |
| 497.9 |
| 18.8 |
| (2.5 | ) | 810.5 |
|
| Operating expenses | | | | | |
| Production, distribution, and editorial | 122.1 |
| 156.3 |
| 2.0 |
| (0.3 | ) | 280.1 |
|
| Selling, general, and administrative | 155.3 |
| 167.6 |
| 17.3 |
| (1.8 | ) | 338.4 |
|
| Acquisition, disposition, and restructuring related activities | 7.9 |
| (8.4 | ) | — |
| — |
| (0.5 | ) |
| Depreciation and amortization | 14.4 |
| 43.1 |
| 1.1 |
| — |
| 58.6 |
|
| Total operating expenses | 299.7 |
| 358.6 |
| 20.4 |
| (2.1 | ) | 676.6 |
|
| Income (loss) from operations | (3.4 | ) | 139.3 |
| (1.6 | ) | (0.4 | ) | 133.9 |
|
| Non-operating income (expense), net | (8.4 | ) | 0.1 |
| 1.1 |
| — |
| (7.2 | ) |
| Interest income (expense), net | (37.1 | ) | 2.8 |
| (2.6 | ) | — |
| (36.9 | ) |
| Earnings (loss) from continuing operations before income taxes | (48.9 | ) | 142.2 |
| (3.1 | ) | (0.4 | ) | 89.8 |
|
| Income tax benefit (expense) | 14.5 |
| (43.9 | ) | 1.6 |
| 0.1 |
| (27.7 | ) |
| Earnings (loss) from continuing operations | (34.4 | ) | 98.3 |
| (1.5 | ) | (0.3 | ) | 62.1 |
|
| Gain (loss) from discontinued operations, net of income taxes | — |
| (25.5 | ) | 1.2 |
| — |
| (24.3 | ) |
| Earnings (loss) before equity earnings | (34.4 | ) | 72.8 |
| (0.3 | ) | (0.3 | ) | 37.8 |
|
| Earnings from equity in subsidiaries | 72.2 |
| (17.3 | ) | — |
| (54.9 | ) | — |
|
| Net earnings (loss) | $ | 37.8 |
| $ | 55.5 |
| $ | (0.3 | ) | $ | (55.2 | ) | $ | 37.8 |
|
| | | | | |
|
| Total comprehensive income | $ | 38.3 |
| $ | 55.5 |
| $ | 8.8 |
| $ | (55.2 | ) | $ | 47.4 |
|
Meredith Corporation and Subsidiaries
Condensed Consolidating Statement of Comprehensive Income (Loss)
For the Three Months Ended December 31, 2018
|
| | | | | | | | | | | | | | | |
| | Meredith Corporation
(Parent Issuer) | Guarantor
Subsidiaries | Non-Guarantor
Subsidiaries | Eliminations | Consolidated |
| (In millions) | | | | | |
| Revenues | | | | | |
| Advertising related | $ | 174.6 |
| $ | 316.2 |
| $ | 1.7 |
| $ | (0.2 | ) | $ | 492.3 |
|
| Consumer related | 128.6 |
| 230.2 |
| 12.1 |
| (2.7 | ) | 368.2 |
|
| Other | 12.6 |
| 43.8 |
| 4.4 |
| (42.9 | ) | 17.9 |
|
| Total revenues | 315.8 |
| 590.2 |
| 18.2 |
| (45.8 | ) | 878.4 |
|
| Operating expenses | | | | | |
| Production, distribution, and editorial | 125.0 |
| 211.3 |
| 12.7 |
| (43.1 | ) | 305.9 |
|
| Selling, general, and administrative | 128.8 |
| 218.8 |
| 0.7 |
| (2.3 | ) | 346.0 |
|
| Acquisition, disposition, and restructuring related activities | 5.1 |
| 16.6 |
| 6.0 |
| — |
| 27.7 |
|
| Depreciation and amortization | 8.1 |
| 56.4 |
| 0.6 |
| — |
| 65.1 |
|
| Total operating expenses | 267.0 |
| 503.1 |
| 20.0 |
| (45.4 | ) | 744.7 |
|
| Income (loss) from operations | 48.8 |
| 87.1 |
| (1.8 | ) | (0.4 | ) | 133.7 |
|
| Non-operating income, net | 0.2 |
| 1.9 |
| 3.8 |
| — |
| 5.9 |
|
| Interest income (expense), net | (50.9 | ) | 3.3 |
| (3.3 | ) | — |
| (50.9 | ) |
| Earnings (loss) from continuing operations before income taxes | (1.9 | ) | 92.3 |
| (1.3 | ) | (0.4 | ) | 88.7 |
|
| Income tax benefit (expense) | 1.4 |
| (3.2 | ) | 0.4 |
| 0.8 |
| (0.6 | ) |
| Earnings (loss) from continuing operations | (0.5 | ) | 89.1 |
| (0.9 | ) | 0.4 |
| 88.1 |
|
| Loss from discontinued operations, net of income taxes | — |
| (65.4 | ) | (4.1 | ) | — |
| (69.5 | ) |
| Earnings (loss) before equity earnings | (0.5 | ) | 23.7 |
| (5.0 | ) | 0.4 |
| 18.6 |
|
| Earnings from equity in subsidiaries | 19.1 |
| (2.1 | ) | (6.6 | ) | (10.4 | ) | — |
|
| Net earnings (loss) | $ | 18.6 |
| $ | 21.6 |
| $ | (11.6 | ) | $ | (10.0 | ) | $ | 18.6 |
|
| | | | | | |
| Total comprehensive income (loss) | $ | 16.0 |
| $ | 21.6 |
| $ | (14.6 | ) | $ | (7.0 | ) | $ | 16.0 |
|
Meredith Corporation and Subsidiaries
Condensed Consolidating Statements of Comprehensive Income (Loss)
For the Six Months Ended December 31, 2019
|
| | | | | | | | | | | | | | | |
| | Meredith Corporation
(Parent Issuer) | Guarantor
Subsidiaries | Non-Guarantor
Subsidiaries | Eliminations | Consolidated |
| (In millions) | | | | | |
| Revenues | | | | | |
| Advertising related | $ | 275.4 |
| $ | 527.7 |
| $ | 4.4 |
| $ | (0.6 | ) | $ | 806.9 |
|
| Consumer related | 249.9 |
| 397.4 |
| 28.8 |
| (4.1 | ) | 672.0 |
|
| Other | 31.1 |
| 23.7 |
| 2.0 |
| — |
| 56.8 |
|
| Total revenues | 556.4 |
| 948.8 |
| 35.2 |
| (4.7 | ) | 1,535.7 |
|
| Operating expenses | | | | | |
| Production, distribution, and editorial | 246.5 |
| 303.9 |
| 4.0 |
| (0.6 | ) | 553.8 |
|
| Selling, general, and administrative | 305.8 |
| 404.9 |
| (37.4 | ) | (4.1 | ) | 669.2 |
|
| Acquisition, disposition, and restructuring related activities | 17.3 |
| (3.7 | ) | — |
| — |
| 13.6 |
|
| Depreciation and amortization | 28.8 |
| 86.8 |
| 1.5 |
| — |
| 117.1 |
|
| Impairment of goodwill and other long-lived assets | 5.2 |
| — |
| — |
| — |
| 5.2 |
|
| Total operating expenses | 603.6 |
| 791.9 |
| (31.9 | ) | (4.7 | ) | 1,358.9 |
|
| Income (loss) from operations | (47.2 | ) | 156.9 |
| 67.1 |
| — |
| 176.8 |
|
| Non-operating income (expense), net | (8.1 | ) | 11.0 |
| (1.5 | ) | — |
| 1.4 |
|
| Interest income (expense), net | (76.0 | ) | 6.1 |
| (5.9 | ) | — |
| (75.8 | ) |
| Earnings (loss) from continuing operations before income taxes | (131.3 | ) | 174.0 |
| 59.7 |
| — |
| 102.4 |
|
| Income tax benefit (expense) | 39.0 |
| (50.4 | ) | (16.8 | ) | — |
| (28.2 | ) |
| Earnings (loss) from continuing operations | (92.3 | ) | 123.6 |
| 42.9 |
| — |
| 74.2 |
|
| Gain (loss) from discontinued operations, net of income taxes | — |
| (30.6 | ) | 0.3 |
| — |
| (30.3 | ) |
| Earnings (loss) before equity earnings | (92.3 | ) | 93.0 |
| 43.2 |
| — |
| 43.9 |
|
| Earnings (loss) from equity in subsidiaries | 136.2 |
| (14.8 | ) | 0.1 |
| (121.5 | ) | — |
|
| Net earnings | $ | 43.9 |
| $ | 78.2 |
| $ | 43.3 |
| $ | (121.5 | ) | $ | 43.9 |
|
| | | | | | |
| Total comprehensive income | $ | 44.9 |
| $ | 78.2 |
| $ | 47.5 |
| $ | (121.5 | ) | $ | 49.1 |
|
Meredith Corporation and Subsidiaries
Condensed Consolidating Statement of Comprehensive Income (Loss)
For the Six Months Ended December 31, 2018
|
| | | | | | | | | | | | | | | |
| | Meredith Corporation
(Parent Issuer) | Guarantor
Subsidiaries | Non-Guarantor
Subsidiaries | Eliminations | Consolidated |
| (In millions) | | | | | |
| Revenues | | | | | |
| Advertising related | $ | 335.0 |
| $ | 580.1 |
| $ | 3.5 |
| $ | (0.8 | ) | $ | 917.8 |
|
| Consumer related | 254.1 |
| 431.1 |
| 21.4 |
| (10.6 | ) | 696.0 |
|
| Other | 20.7 |
| 96.4 |
| 10.7 |
| (88.8 | ) | 39.0 |
|
| Total revenues | 609.8 |
| 1,107.6 |
| 35.6 |
| (100.2 | ) | 1,652.8 |
|
| Operating expenses | | | | | |
| Production, distribution, and editorial | 246.3 |
| 420.6 |
| 17.7 |
| (89.6 | ) | 595.0 |
|
| Selling, general, and administrative | 265.5 |
| 429.9 |
| 8.5 |
| (7.6 | ) | 696.3 |
|
| Acquisition, disposition, and restructuring related activities | (0.7 | ) | 38.2 |
| 7.3 |
| — |
| 44.8 |
|
| Depreciation and amortization | 15.9 |
| 111.6 |
| 1.3 |
| — |
| 128.8 |
|
| Total operating expenses | 527.0 |
| 1,000.3 |
| 34.8 |
| (97.2 | ) | 1,464.9 |
|
| Income from operations | 82.8 |
| 107.3 |
| 0.8 |
| (3.0 | ) | 187.9 |
|
| Non-operating income, net | 4.5 |
| 1.0 |
| 7.7 |
| — |
| 13.2 |
|
| Interest income (expense), net | (93.3 | ) | 7.3 |
| (6.5 | ) | — |
| (92.5 | ) |
| Earnings (loss) from continuing operations before income taxes | (6.0 | ) | 115.6 |
| 2.0 |
| (3.0 | ) | 108.6 |
|
| Income tax benefit (expense) | 3.6 |
| (9.3 | ) | 0.6 |
| 0.8 |
| (4.3 | ) |
| Earnings (loss) from continuing operations | (2.4 | ) | 106.3 |
| 2.6 |
| (2.2 | ) | 104.3 |
|
| Loss from discontinued operations, net of income taxes | — |
| (63.6 | ) | (5.1 | ) | — |
| (68.7 | ) |
| Earnings (loss) before equity earnings | (2.4 | ) | 42.7 |
| (2.5 | ) | (2.2 | ) | 35.6 |
|
| Earnings from equity in subsidiaries | 38.0 |
| (1.0 | ) | (13.4 | ) | (23.6 | ) | — |
|
| Net earnings (loss) | $ | 35.6 |
| $ | 41.7 |
| $ | (15.9 | ) | $ | (25.8 | ) | $ | 35.6 |
|
| | | | | | |
| Total comprehensive income (loss) | $ | 31.1 |
| $ | 41.7 |
| $ | (21.2 | ) | $ | (20.5 | ) | $ | 31.1 |
|
Meredith Corporation and Subsidiaries
Condensed Consolidating Statement of Cash Flows
For the Six Months Ended December 31, 2019
|
| | | | | | | | | | | | | | | |
| | Meredith Corporation
(Parent Issuer) | Guarantor
Subsidiaries | Non-Guarantor
Subsidiaries | Eliminations | Consolidated |
| (In millions) | | | | | |
| Cash flows from operating activities | $ | 211.8 |
| $ | (173.6 | ) | $ | 36.0 |
| $ | (2.1 | ) | $ | 72.1 |
|
| Cash flows from investing activities | | | | | |
| Acquisition of and investments in businesses, net of cash acquired | (23.0 | ) | — |
| — |
| — |
| (23.0 | ) |
| Proceeds from disposition of assets, net of cash sold | — |
| 33.2 |
| 0.6 |
| — |
| 33.8 |
|
| Additions to property, plant, and equipment | (31.6 | ) | (2.4 | ) | (0.5 | ) | — |
| (34.5 | ) |
| Net cash provided by (used in) investing activities | (54.6 | ) | 30.8 |
| 0.1 |
| — |
| (23.7 | ) |
| Cash flows from financing activities | | | | | |
| Proceeds from issuance of long-term debt | 280.0 |
| — |
| — |
| — |
| 280.0 |
|
| Repayments of long-term debt | (260.0 | ) | — |
| — |
| — |
| (260.0 | ) |
| Dividends paid | (83.2 | ) | — |
| — |
| — |
| (83.2 | ) |
| Purchases of Company stock | (4.2 | ) | — |
| — |
| — |
| (4.2 | ) |
| Proceeds from common stock issued | 1.1 |
| — |
| — |
| — |
| 1.1 |
|
| Financing lease payments | (0.7 | ) | — |
| — |
| — |
| (0.7 | ) |
| Net increase (decrease) in intercompany obligations | (109.8 | ) | 139.6 |
| (31.9 | ) | 2.1 |
| — |
|
| Net cash provided by (used in) financing activities | (176.8 | ) | 139.6 |
| (31.9 | ) | 2.1 |
| (67.0 | ) |
| Effect of exchange rate changes on cash and cash equivalents | — |
| — |
| (0.1 | ) | — |
| (0.1 | ) |
| Change in cash in assets held-for-sale | — |
| — |
| (5.1 | ) | — |
| (5.1 | ) |
| Net decrease in cash and cash equivalents | (19.6 | ) | (3.2 | ) | (1.0 | ) | — |
| (23.8 | ) |
| Cash and cash equivalents at beginning of period | 30.3 |
| 3.2 |
| 11.5 |
| — |
| 45.0 |
|
| Cash and cash equivalents at end of period | $ | 10.7 |
| $ | — |
| $ | 10.5 |
| $ | — |
| $ | 21.2 |
|
Meredith Corporation and Subsidiaries
Condensed Consolidating Statement of Cash Flows
For the Six Months Ended December 31, 2018
|
| | | | | | | | | | | | | | | |
| | Meredith Corporation
(Parent Issuer) | Guarantor
Subsidiaries | Non-Guarantor
Subsidiaries | Eliminations | Consolidated |
| (In millions) | | | | | |
| Cash flows from operating activities | $ | 94.0 |
| $ | 103.8 |
| $ | (138.4 | ) | $ | — |
| $ | 59.4 |
|
| Cash flows from investing activities | | | | | |
| Acquisition of and investments in businesses, net of cash acquired | (1.7 | ) | — |
| — |
| — |
| (1.7 | ) |
| Proceeds from disposition of assets, net of cash sold | 13.3 |
| 333.9 |
| 0.6 |
| — |
| 347.8 |
|
| Additions to property, plant, and equipment | (13.4 | ) | (3.5 | ) | (0.1 | ) | — |
| (17.0 | ) |
| Net cash provided by (used in) investing activities | (1.8 | ) | 330.4 |
| 0.5 |
| — |
| 329.1 |
|
| Cash flows from financing activities | | | | | |
| Repayments of long-term debt | (646.9 | ) | — |
| — |
| — |
| (646.9 | ) |
| Dividends paid | (80.1 | ) | — |
| — |
| — |
| (80.1 | ) |
| Purchases of Company stock | (5.0 | ) | — |
| — |
| — |
| (5.0 | ) |
| Proceeds from common stock issued | 2.5 |
| — |
| — |
| — |
| 2.5 |
|
| Payment of acquisition related contingent consideration | (19.3 | ) | — |
| — |
| — |
| (19.3 | ) |
| Net increase (decrease) in intercompany obligations | 491.0 |
| (610.4 | ) | 119.4 |
| — |
| — |
|
| Net cash provided by (used in) financing activities | (257.8 | ) | (610.4 | ) | 119.4 |
| — |
| (748.8 | ) |
| Effect of exchange rate changes on cash and cash equivalents | — |
| (0.6 | ) | — |
| — |
| (0.6 | ) |
| Change in cash in assets held for sale | — |
| 0.4 |
| — |
| — |
| 0.4 |
|
| Net decrease in cash and cash equivalents | (165.6 | ) | (176.4 | ) | (18.5 | ) | — |
| (360.5 | ) |
| Cash and cash equivalents at beginning of period | 195.0 |
| 202.8 |
| 39.8 |
| — |
| 437.6 |
|
| Cash and cash equivalents at end of period | $ | 29.4 |
| $ | 26.4 |
| $ | 21.3 |
| $ | — |
| $ | 77.1 |
|
|
| | | | |
| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
The following discussion of Meredith Corporation's financial condition and results of operations should be read together with Meredith's condensed consolidated financial statements and notes thereto, included elsewhere in this report. When used herein, the terms Meredith, the Company, we, us, and our refer to Meredith Corporation, including its consolidated subsidiaries.
Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based upon management's current expectations and are subject to various uncertainties and changes in circumstances. Important factors that could cause actual results to differ materially from those described in forward-looking statements are set forth below under the headings "Forward Looking Statements" and under the "Risk Factors" heading in our Annual Report on Form 10-K (Form 10-K) for the fiscal year ended June 30, 2019.2020. Such risk factors may be amplified by the COVID-19 pandemic and its potential impact on the Company’s business and the global economy.
EXECUTIVE OVERVIEW
Meredith has been committed to service journalism for over 115119 years. Meredith uses multiple media platforms—including print, digital, mobile, video, and broadcast television—to provide consumers with content they desire and to deliver the messages of its advertising and marketing partners.
Meredith operates two business segments. The national media segment reachesserves more than 180190 million unduplicated American consumers every month, including nearly120 million women and 90 percent of United States (U.S.) millennial women. Meredith is the No. 1 U.S. magazine operator, possessing leading positionsa leader in creating content across media platforms and life stages in key consumer interest areas such as entertainment, food, lifestyle, parenting, and home content creation, as well as enhanced positions in the beauty, fashion, and luxury advertising categories through well-known brands such as People, Better Homes & Gardens, InStyle, Allrecipes, Real Simple, Shape, Southern Living, and Martha Stewart Living. Meredith is also the owner of the largest premium content digital network for American consumers. The national media segment features robust brand licensing activities, including more than 3,000 SKUs of branded products at 4,000 Walmart stores across the U.S. and at Walmart.com. The national media segment also includes leading affinity marketer Synapse and The Foundry, the Company's state-of-the-art creative content studio.
Meredith's local media segment includes 17 television stations reaching 11 percent of U.S. households. Meredith's portfolio is concentrated in large, fast-growing markets, with seven stations in the nation's Top 25 markets—including Atlanta, Phoenix, St. Louis, and Portland—and 13 in Top 50 markets. Meredith's stations produce over 700745 hours of local news and entertainment content each week and operate leading local digital properties. The local media segment also generates revenue through the sale of geographic and demographic-targeted digital and print advertising programs sold to third parties.
Both segments operate primarily in the U.S. and compete against similar and other types of media on both a local and national basis. The national media segment accounted for 7467 percent of the Company's $1.5 billion$693.5 million in revenues in the first sixthree months of fiscal 20202021 while the local media segment contributed 2633 percent.
NATIONAL MEDIA
Advertising related revenues represented 5149 percent of national media's fiscal 2021 first sixthree months' revenues. These revenues were generated from the sale of advertising space in our magazines websites, and appsdigital properties to clients interested in promoting their brands, products, and services to consumers as well as selling advertising space on third-party platforms. Consumer related revenues accounted for 4548 percent of national media's first sixthree months' revenues. Consumer related revenue includes all revenues either driven by or otherwise linked to consumer buying decisions and includes circulation revenues, which result from the sale of magazines to consumers through subscriptions and
by single copysingle-copy sales on newsstands in print form, primarily at major retailers and grocery/drug stores, and in digital form on tablets and other media devices; affinity marketing revenues, which represent agency commissions from the sale of magazines for third-party publishers; licensing revenues; and other digitally generated consumer revenues.ecommerce sales, product sales, and related activities. The remaining 43 percent of national media's revenues came from a variety of activities, which included the sale of customer relationship marketing products and services as well as television and streaming services content production product sales, and other related activities. National media's major expense categories are production and delivery of publications and promotional mailings and employee compensation costs.
LOCAL MEDIA
Local media derives the majority of its revenues—58 percent in the first sixthree months of fiscal 2020—2021—from the sale of advertising, both over the air and on our stations' websitesdigital and appsmobile media properties as well as selling advertising space on third-party platforms. Television retransmission fees accounted for 41 percent of local media's first three months' revenues. The remainder comes from television retransmission fees and other services. Political advertising revenues are cyclical in that they are significantly greater during biennial election campaigns (which take place primarily in odd-numbered fiscal years) than at other times. Local media's major expense categories are employee compensation costs and programming fees paid to the networks.
The COVID-19 pandemic continues to impact our business results, particularly in our print advertising and non-political spot revenue streams. We are seeing continued strong consumer engagement with our brands in both the national and local media groups and across platforms. We are also seeing performance improvement from our brands that focus on food, home, and lifestyle. As public health measures such as travel restrictions and mandated business closures continue to impact consumers and the overall economy, we have seen negative performance trends continue within our brands focused on travel and luxury. While the COVID-19 pandemic continues to depress levels of advertising, starting in the first quarter of fiscal 2021, we are seeing improvement from our platforms that require shorter lead times, particularly in digital advertising.
The Company previously announced that it had temporarily reduced the pay for our Board of Directors, our executives, and approximately 60 percent of our employees. These reductions were lifted, and full pay was reinstated for all parties in early September 2020.
At this time, we have not experienced a net negative impact on our liquidity due to COVID-19, and we believe we have sufficient liquidity to satisfy our cash needs for the foreseeable future.
We continue to monitor the ongoing and evolving situation. There may be developments outside our control requiring us to adjust our operating plan. As such, fiscal 2021 will continue to be a time of uncertainty. While earnings increased in the first quarter of fiscal 2021 as compared to the prior-year period, there remains the risk that COVID-19 could continue to have material adverse impacts on our future revenue growth as well as our overall profitability. We will continue to evaluate the nature and extent of the impact of COVID-19 on our business, consolidated results of operations, financial condition, and liquidity. For additional discussion of the impacts and risks to our business from the COVID-19 pandemic, refer to Item 1- Risk Factors in our most recent Form 10-K and information presented in this Item 2.
FIRST SIX MONTHSQUARTER FISCAL 20202021 FINANCIAL OVERVIEW
•Local media revenues increased 17 percent compared to the prior-year period primarily due to increased political spot advertising revenues and higher retransmission revenues. These increases were partially offset by decreases in non-political spot and third party advertising related revenues. Operating profit grew 66 percent primarily due to the additional high-margin political spot advertising revenues due to the cyclical nature of political advertising.
•National media revenues decreased 412 percent compared to the prior-year period primarily due to declines in print advertising and subscription revenues as a resultresulting from portfolio changes and the impact of portfolio changesCOVID-19. These declines were partially offset by increases in digital advertising, licensing, and digital and other consumer driven revenues. National media operatingOperating profit increased 98grew 12 percent primarily due to previously executed restructuring activities and ongoing cost-savings initiatives reducing operating expenses.
Local media revenues decreased 15 percent as compared to the prior-year period. Operating profit declined 46 percent. These changes were primarily due to declinesgrowth in higher-margin politicaldigital advertising revenues dueand reductions in non-cash expenses such as amortization and the impairment of a long-lived asset. These operating profit gains were partially offset by the negative impacts of COVID-19 on print advertising.
•As discussed above, COVID-19 continues to negatively impact our results, particularly advertising related revenues. As we continue to progress through the cyclical naturepandemic, quantifying the specific impact becomes more challenging. The Company estimates that the COVID-19 impact on total revenues was a net decrease of political advertising.revenues of approximately $45.0 million to $65.0 million.
•Unallocated corporate expenses decreased $6.3 million27 percent primarily due to a decreasedecreases in employee compensation costs which were partially offset by increases in other miscellaneous business expenses.occupancy-related expenses and lower restructuring costs.
•Diluted earnings per common share from continuing operations was $0.75 compared towere $0.88 in the first quarter of fiscal 2021 reflecting increased political spot and digital advertising. In the prior-year period, the Company had a diluted earningsloss per common share from continuing operations of $1.41$0.17. While the Company recorded net earnings of $6.1 million in the prior-year first six months. The decrease in diluted earnings perquarter, due primarily to participating dividends, the Company had a net loss attributable to common share from continuing operations was primarily due to a higher effective tax rateshareholders of $13.9 million in the current-year period. In addition, a reduction in revenues partially offset by lower operating expenses due to previously executed restructuring activities and ongoing cost-savings initiatives contributed to the decrease in diluted earnings per common share from continuing operations.quarter.
RESULTS OF OPERATIONS
| | | | | | | | | | | | | | | | | |
| Three months ended September 30, | 2020 | | 2019 | | Change |
| (In millions except per share data) | | | | | |
| Total revenues | $ | 693.5 | | | $ | 725.2 | | | (4) | % |
| Operating expenses | | | | | |
| Cost and expenses | 615.4 | | | 677.1 | | | (9) | % |
| Impairment of long-lived assets | — | | | 5.2 | | | (100) | % |
| Total operating expenses | 615.4 | | | 682.3 | | | (10) | % |
| Income from operations | $ | 78.1 | | | $ | 42.9 | | | 82 | % |
| Earnings from continuing operations | $ | 42.3 | | | $ | 12.1 | | | n/m |
| Net earnings | 42.3 | | | 6.1 | | | n/m |
| Diluted earnings (loss) per common share from continuing operations | 0.88 | | | (0.17) | | | n/m |
| Diluted earnings (loss) per common share | 0.88 | | | (0.30) | | | n/m |
| n/m - Not meaningful | | | | | |
|
| | | | | | | | | | |
| Three months ended December 31, | 2019 | | 2018 | | Change |
|
| (In millions except per share data) | | | | | |
| Total revenues | $ | 810.5 |
| | $ | 878.4 |
| | (8 | )% |
| Operating expenses | (676.6 | ) | | (744.7 | ) | | (9 | )% |
| Income from operations | $ | 133.9 |
| | $ | 133.7 |
| | 0 | % |
| Net earnings from continuing operations | $ | 62.1 |
| | $ | 88.1 |
| | (30 | )% |
| Net earnings | 37.8 |
| | 18.6 |
| | n/m |
|
| Diluted earnings per common share from continuing operations | 0.91 |
| | 1.46 |
| | (38 | )% |
| Diluted earnings (loss) per common share | 0.40 |
| | (0.01 | ) | | n/m |
|
| | | | | | |
| Six months ended December 31, | 2019 | | 2018 | | Change |
|
| (In millions except per share data) | | | | | |
| Total revenues | $ | 1,535.7 |
| | $ | 1,652.8 |
| | (7 | )% |
| Operating expenses | (1,358.9 | ) | | (1,464.9 | ) | | (7 | )% |
| Income from operations | $ | 176.8 |
| | $ | 187.9 |
| | (6 | )% |
| Net earnings from continuing operations | $ | 74.2 |
| | $ | 104.3 |
| | (29 | )% |
| Net earnings | 43.9 |
| | 35.6 |
| | 23 | % |
| Diluted earnings per common share from continuing operations | 0.75 |
| | 1.41 |
| | (47 | )% |
| Diluted earnings (loss) per common share | 0.09 |
| | (0.05 | ) | | n/m |
|
| n/m - Not meaningful | | | | | |
OVERVIEW
The following sections provide an analysis of the results of operations for the national media and local media segments and an analysis of the consolidated results of operations for the three and six months ended December 31, 2019,September 30, 2020, compared with the prior-year periods.period. This commentary should be read in conjunction with the interim condensed consolidated financial statements presented elsewhere in this report and with our Form 10-K for the year ended June 30, 2019.2020.
NATIONAL MEDIA
National media operating results were as follows:
| | | | | | | | | | | | | | | | | |
| Three months ended September 30, | 2020 | | 2019 | | Change |
| (In millions) | | | | | |
| Advertising related | | | | | |
| Print | $ | 108.5 | | | $ | 160.4 | | | (32) | % |
| Digital | 105.1 | | | 91.6 | | | 15 | % |
| Third party sales | 14.0 | | | 19.0 | | | (26) | % |
| Total advertising related | 227.6 | | | 271.0 | | | (16) | % |
| Consumer related | | | | | |
| Subscription | 133.4 | | | 150.5 | | | (11) | % |
| Newsstand | 35.1 | | | 42.6 | | | (18) | % |
| Affinity marketing | 14.4 | | | 13.9 | | | 4 | % |
| Licensing | 24.1 | | | 20.0 | | | 21 | % |
| Digital and other consumer driven | 20.1 | | | 16.5 | | | 22 | % |
| Total consumer related | 227.1 | | | 243.5 | | | (7) | % |
| Other | | | | | |
| Project based | 9.9 | | | 14.4 | | | (31) | % |
| Other | 3.1 | | | 4.0 | | | (23) | % |
| Total other | 13.0 | | | 18.4 | | | (29) | % |
| Total revenues | 467.7 | | | 532.9 | | | (12) | % |
| Operating expenses | | | | | |
| Costs and expenses | 436.2 | | | 499.6 | | | (13) | % |
| Impairment of long-lived assets | — | | | 5.2 | | | (100) | % |
| Total operating expenses | 436.2 | | | 504.8 | | | (14) | % |
| Operating profit | $ | 31.5 | | | $ | 28.1 | | | 12 | % |
| Operating profit margin | 6.7 | % | | 5.3 | % | | |
| | | | | |
|
| | | | | | | | | | |
| Three months ended December 31, | 2019 | | 2018 | | Change |
|
| (In millions) | | | | | |
| Advertising related | | | | | |
| Print | $ | 149.4 |
| | $ | 167.4 |
| | (11 | )% |
| Digital | 132.2 |
| | 122.9 |
| | 8 | % |
| Third party sales | 20.4 |
| | 16.1 |
| | 27 | % |
| Total advertising related | 302.0 |
| | 306.4 |
| | (1 | )% |
| Consumer related | | | | | |
| Subscription | 159.8 |
| | 192.0 |
| | (17 | )% |
| Newsstand | 37.7 |
| | 43.5 |
| | (13 | )% |
| Affinity marketing | 20.0 |
| | 18.3 |
| | 9 | % |
| Licensing | 24.4 |
| | 23.7 |
| | 3 | % |
| Digital and other consumer driven | 21.9 |
| | 16.6 |
| | 32 | % |
| Total consumer related | 263.8 |
| | 294.1 |
| | (10 | )% |
| Other | | | | |
|
| Project based | 15.1 |
| | 13.5 |
| | 12 | % |
| Other | 16.3 |
| | 2.2 |
| | n/m |
|
| Total other | 31.4 |
| | 15.7 |
| | 100 | % |
| Total revenues | 597.2 |
| | 616.2 |
| | (3 | )% |
| Operating expenses | (496.7 | ) | | (569.2 | ) | | (13 | )% |
| Operating profit | $ | 100.5 |
| | $ | 47.0 |
| | n/m |
|
| Operating profit margin | 16.8 | % | | 7.6 | % | | |
| n/m - Not meaningful | | | | | |
|
| | | | | | | | | | |
| Six months ended December 31, | 2019 | | 2018 | | Change |
|
| (In millions) | | | | | |
| Advertising related | | | | | |
| Print | $ | 309.8 |
| | $ | 352.6 |
| | (12 | )% |
| Digital | 223.8 |
| | 207.8 |
| | 8 | % |
| Third party sales | 39.4 |
| | 33.2 |
| | 19 | % |
| Total advertising related | 573.0 |
| | 593.6 |
| | (3 | )% |
| Consumer related | | | | | |
| Subscription | 310.3 |
| | 352.7 |
| | (12 | )% |
| Newsstand | 80.3 |
| | 82.6 |
| | (3 | )% |
| Affinity marketing | 33.9 |
| | 37.2 |
| | (9 | )% |
| Licensing | 44.4 |
| | 48.5 |
| | (8 | )% |
| Digital and other consumer driven | 38.4 |
| | 27.6 |
| | 39 | % |
| Total consumer related | 507.3 |
| | 548.6 |
| | (8 | )% |
| Other | | | | | |
| Project based | 29.5 |
| | 22.9 |
| | 29 | % |
| Other | 20.3 |
| | 11.7 |
| | 74 | % |
| Total other | 49.8 |
| | 34.6 |
| | 44 | % |
| Total revenues | 1,130.1 |
| | 1,176.8 |
| | (4 | )% |
| Operating expenses | (1,001.5 | ) | | (1,111.7 | ) | | (10 | )% |
| Operating profit | $ | 128.6 |
| | $ | 65.1 |
| | 98 | % |
| Operating profit margin | 11.4 | % | | 5.5 | % | | |
Revenues
National media advertising related revenue includes all advertising in Meredith owned publications and on Meredith owned websites as well as revenue we generate selling advertising space on third-party platforms. Advertising related revenue decreased 1 percent in the second quarter and 316 percent in the first six monthsquarter of fiscal 2020. 2021.
Meredith has made changes to its portfolio of brands and titles intended to enhance the consumer experience, provide more effective and efficient platforms for advertisers, and increase the profitability of the portfolio. These changes included closing the Money, Martha Stewart Weddings, and Family Circle magazines, changing the frequency of Entertainment Weekly to a monthly title,magazine and transitioningCoastal Living and Traditional Home and Rachael Ray Every Day to premium newsstand titles, and merging Cooking Light into Meredith’s popular EatingWell title, which resulted in declines in combined print advertising revenues of $11.2 million in the second quarter and $22.3 million in the first six months of fiscal 2020. For the second quarter of fiscal 2020,2021. Print advertising continues to be negatively impacted by COVID-19 with the remaining change was primarily due toautomotive, media and entertainment, and travel categories being impacted the most. While the majority of our titles experienced print advertising revenue declines totaling $12.3 million in the first quarter of fiscal 2021 as compared to the prior-year period, approximately half of our titles, partially offset byincluding our two largest brands, People and Better Homes and Gardens, experienced improved year-over-year change in print advertising revenue increases of $8.6 million inrevenues as compared to the other half of our titles, including People. For the first six monthsfourth quarter of fiscal 2020,2020. The declines as compared to the remaining change was primarilyprior-year period are due to print advertising revenue declines totaling $26.4 million in approximately 70 percenta mix of our titles partially offset by print advertising revenue increasesthe impact of $8.1 million in approximately 30 percent of our titles, including People. These changes are primarily due toCOVID-19 and changing market demands for print advertising.
In addition, the combined print
Digital advertising revenues in our Better Homes & Gardens, Family Circle, InStyle, Southern Living (one less issue in the quarter), and Shape magazines accounted for declines in print advertising revenues of $7.5 million in the second quarter and $18.4 millionincreased 15 percent in the first six monthsquarter. The launch of Meredith’s Data Studio, which offers advertising solutions that harness the Company's proprietary first-party data and predictive insights to help inform its clients' marketing, product, and business strategies, is one of the features of Meredith’s new digital platform. Use of this new digital platform, which provides for the opportunity to create multi-year, integrated partnerships with our top clients, and other work to improve search engine optimization has driven positive digital advertising results, especially for the People brand.
COVID-19 appears to be positively impacting web traffic, and the Company is seeing positive trends on many of our sites, including Allrecipes.com and people.com. Growth in open programmatic advertising has been driven by the combination of advertisers coming back into the market, increased sessions, and increased impressions per session offset by reduced cost per thousand or CPM’s, which have been suppressed during the pandemic. We expect that these trends will continue for at least a portion of fiscal 2020. These declines were partially offset by increases2021. However, the increased consumer demand may reverse in the combined print advertising revenues of our coming months.
People
and Allrecipes magazines of $5.3 million
The 26 percent decrease in the second quarter and $4.1 million in the first six months of fiscal 2020. Digital advertising increased 8 percent in the second quarter and in the first six months of fiscal 2020third-party sales was primarily due to increased programmatic revenues. The 27 percent and 19 percent increasesreductions in third partycover wrap sales as well as decreases in advertising pages in publications the Company produces on behalf of others. These declines were primarily due to increases in cover wrap sales.lower doctor's office traffic and a reluctance to handle printed material due to COVID-19.
Consumer related revenue includes all revenues either driven by or otherwise linked to consumer buying decisions. Consumer related revenues decreased 10 percent in the second quarter and 87 percent in the first six monthsquarter. For the first quarter of fiscal 2020. For the second quarter and first six months of fiscal 2020, more than half2021, approximately 60 percent of the declinedeclines in subscription revenues waswere due to the portfolio changes detailednoted above. In addition, Southern Living had one less issue in the second quarter which resulted in a decreaseThe remaining decreases in subscription revenues were due primarily to fulfillment of $3.8 million,a larger percentage of subscriptions received directly by the Company, which impacted both the second quarter and the first six months of fiscal 2020, and a trade book line of business was closed, which resulted in a decrease intend to have lower subscription revenues of $3.6 million inand lower acquisition costs compared to subscriptions received from agents. Subscriptions received directly by the second quarter and $4.7 millionCompany tend to have higher renewal rates. Newsstand revenues declined as 10 percent fewer titles were produced by Meredith Premium Publishing compared to the prior-year period primarily due to COVID-19. Licensing revenue increased in the first six monthsquarter of fiscal 2020.2021 primarily due to an increase in royalties from Apple News+ and Walmart Inc. Digital and other consumer driven revenue increased primarily due to an increaseincreases in ecommerce revenues.
Other revenue doubled in the second quarter and increased 44decreased 29 percent in the first six months of fiscal 2020quarter primarily due to declines in revenues from operational support agreements for the deliverysold brands and decreases in other custom publishing projects.
As discussed above, COVID-19 continues to negatively impact our results, particularly print and third party advertising related revenues. As we continue to progress through the pandemic, quantifying the specific impact becomes more challenging. The Company estimates that the COVID-19 impact on national media total revenues was a net decrease of episodesrevenues of a streaming program created by our in-house television production company Four M Studios for a third party.approximately $25.0 million to $40.0 million.
Operating Expenses
InWhile the Company is not able to estimate the impact of the COVID-19 pandemic on revenues into the second quarter of fiscal 2020,2021, the Company saw month-by-month improvement in print advertising revenues during the first quarter of fiscal 2021 and, if the economy continues to recover, the Company expects this trend to continue into the second quarter of fiscal 2021. Future actions such as renewed shelter-in-place or business closing orders could negatively impact these expectations.
Operating Costs and Expenses
In the first quarter of fiscal 2021, national media operating costs and expenses decreased 13 percent primarily due to lower combined production, distribution, and papersubscription acquisition costs of $24.6$17.5 million, a decrease in restructuringemployee compensation cost of $9.1 million, a decline in distribution costs including severance and benefits, of $23.8$8.2 million, lower amortization expense of $7.2 million, a reduction in employee related compensation costs, including incentive basedcustom publishing expenses of $12.8 million, an increase in the gain on the sale of business assets of $8.3 million and a reduction in depreciation expense of $7.8 million. For the first six months of fiscal 2020, national media operating expenses decreased 10 percent primarily due to lower combined production, distribution, and paper costs of $36.3 million, a reduction in employee related compensation costs, including incentive-based expenses, of $31.7$6.5 million, a decrease in restructuringbad debt expense of $5.8 million, a decline in paper expense of $5.3 million, lower occupancy-related costs including severance and benefits, of $31.4$3.6 million, reduced production costs of $2.5 million, and alower non-payroll related editorial costs of $2.2 million. The portfolio changes noted above as well as the impact from COVID-19 contributed to the declines. A portion of the decline in employee compensation costs was due to the temporary reduction in depreciation expensepay that impacted approximately 60 percent of $12.8our employees for July and August 2020. These declines were partially offset by an increase in incentive-based compensation costs of $13.1 million.
While the Company is not able to estimate the impact of COVID-19 on operating costs and expenses into the second quarter of fiscal 2021, the Company expects that to the extent advertising related revenues continue to recover, related direct costs and expenses will also increase.
Impairment of Long-lived Assets
In the first quarter of fiscal 2020, the national media segment recorded a $5.2 million non-cash impairment of a trademark.
Operating Profit
National media operating profit approximately doubledincreased 12 percent in the secondfirst quarter and first six months of fiscal 2021 as growth in the operating profit of our digital operations, reductions in amortization, and lower restructuring expenses more than offset the negative impacts of COVID-19 on our national media operations. In addition, the first quarter of 2020 primarily due to previously executed restructuring activities and ongoing cost-savings initiatives reducing operating expenses partially offset byincluded a reduction in revenues as discussed above.$5.2 million write-down of impaired assets that did not repeat.
LOCAL MEDIA
Local media operating results were as follows:
| | | | | | | | | | | | | | | | | |
| Three months ended September 30, | 2020 | | 2019 | | Change |
| (In millions) | | | | | |
| Advertising related | | | | | |
| Non-political spot | $ | 56.8 | | | $ | 76.8 | | | (26) | % |
| Political spot | 51.7 | | | 2.6 | | | n/m |
| Digital | 4.3 | | | 4.2 | | | 2 | % |
| Third party sales | 18.3 | | | 25.5 | | | (28) | % |
| Total advertising related | 131.1 | | | 109.1 | | | 20 | % |
| Consumer related | | | | | |
| Retransmission | 91.4 | | | 79.6 | | | 15 | % |
| Digital and other consumer driven | 0.2 | | | — | | | n/m |
| Consumer related | 91.6 | | | 79.6 | | | 15 | % |
| Other | 3.3 | | | 4.1 | | | (20) | % |
| Total revenues | 226.0 | | | 192.8 | | | 17 | % |
| Operating costs and expenses | 162.2 | | | 154.4 | | | 5 | % |
| | | | | |
| | | | | |
| | | | | |
| Operating profit | $ | 63.8 | | | $ | 38.4 | | | 66 | % |
| Operating profit margin | 28.2 | % | | 19.9 | % | | |
| n/m - Not meaningful | | | | | |
|
| | | | | | | | | | |
| Three months ended December 31, | 2019 | | 2018 | | Change |
|
| (In millions) | | | | | |
| Advertising related | | | | | |
| Non-political spot | $ | 89.5 |
| | $ | 87.6 |
| | 2 | % |
| Political spot | 4.4 |
| | 65.8 |
| | (93 | )% |
| Digital | 4.9 |
| | 4.0 |
| | 23 | % |
| Third party sales | 27.2 |
| | 28.7 |
| | (5 | )% |
| Total advertising related | 126.0 |
| | 186.1 |
| | (32 | )% |
| Consumer related | 85.1 |
| | 74.1 |
| | 15 | % |
| Other | 2.9 |
| | 2.2 |
| | 32 | % |
| Total revenues | 214.0 |
| | 262.4 |
| | (18 | )% |
| Operating expenses | (159.2 | ) | | (155.8 | ) | | 2 | % |
| Operating profit | $ | 54.8 |
| | $ | 106.6 |
| | (49 | )% |
| Operating profit margin | 25.6 | % | | 40.6 | % | | |
|
| | | | | | | | | | |
| Six months ended December 31, | 2019 | | 2018 |
| Change |
|
| (In millions) | | | | | |
| Advertising related | | | | | |
| Non-political spot | $ | 166.3 |
| | $ | 162.5 |
| | 2 | % |
| Political spot | 7.0 |
| | 101.9 |
| | n/m |
|
| Digital | 9.1 |
| | 7.9 |
| | 15 | % |
| Third party sales | 52.7 |
| | 52.7 |
| | 0 | % |
| Total advertising related | 235.1 |
| | 325.0 |
| | (28 | )% |
| Consumer related | 164.7 |
| | 147.4 |
| | 12 | % |
| Other | 7.0 |
| | 4.4 |
| | 59 | % |
| Total revenues | 406.8 |
| | 476.8 |
| | (15 | )% |
| Operating expenses | (313.6 | ) | | (302.7 | ) | | 4 | % |
| Operating profit | $ | 93.2 |
| | $ | 174.1 |
| | (46 | )% |
| Operating profit margin | 22.9 | % | | 36.5 | % | | |
| n/m - Not meaningful | | | | | |
Revenues
Local media revenues decreased 18 percent in the second quarter and 15increased 17 percent in the first six monthsquarter of fiscal 2020.2021. Advertising related revenues declined 32 percent and 28 percent for these same periods.increased 20 percent. Political spot advertising revenues totaled $4.4 million in the second quarter and $7.0$51.7 million in the first six monthsquarter of the current fiscal year compared with $65.8$2.6 million in the prior-year second quarter and $101.9 million in the prior-year six-month period.first quarter. Fluctuations in political spot advertising revenues at our stations and throughout the broadcasting industry generally follow the biennial cycle of election campaigns. Political spot advertising displaces a certain amount of non-political spot advertising; therefore, the revenues are not entirely incremental.
Non-political spot advertising revenues increased 2decreased 26 percent in the second quarter and in the first sixthree months of fiscal 2020.2021. Local non-political spot advertising revenues declined 1 percent in the second quarter whereas it increased 125 percent in the first six months of fiscal 2020.quarter. National non-political spot advertising revenues increased 7 percent in the second quarter and 4decreased 27 percent in the first six monthsquarter. These declines in non-political spot revenues were caused by both
political crowd-out and the ongoing impact of fiscal 2020. Digital advertising revenues increased 23 percent inCOVID-19. There were several categories that were negatively impacted by COVID-19 with the secondautomotive, restaurants, and retail categories being impacted the most. While these categories continue to be down, they each showed improvement over the prior quarter and 15 percent in the first six months of fiscal 2020 primarily due to increased programmatic ad and video sales. results.
Third party sales, which represent revenue generated through selling advertising space on third-party platforms, declined 528 percent in the second quarterfirst three months of fiscal 2021. The reduction in third party sales is primarily duerelated to decreased coverwrapCOVID-19. There were several categories that were negatively impacted by COVID-19 with the banking and print insert sales.finance, retail, media, building, travel, and consumer packaged goods categories being impacted the most.
Consumer related revenues primarily represent retransmission consent fees from cable, satellite, and telecommunications operators. Consumer related revenues increased primarily due to renegotiated contracts.contracts and annual escalators.
As discussed above, COVID-19 continues to negatively impact our results, particularly non-political spot and third party advertising related revenues. As we continue to progress through the pandemic, quantifying the specific impact becomes more challenging. The Company estimates that the COVID-19 impact on local media total revenues was a net decrease of revenues of approximately $20.0 million to $25.0 million.
While the Company is not able to estimate the impact of the COVID-19 pandemic on revenues into the second quarter of fiscal 2021, the Company saw month-by-month improvement in non-political spot advertising related revenues during the first quarter of fiscal 2021 and, if the economy continues to recover, the Company expects this trend to continue into the second quarter of fiscal 2021. Future actions such as renewed shelter-in-place or business closing orders could negatively impact these expectations.
Operating Costs and Expenses
For the secondfirst quarter and first six months of fiscal 2020,2021, operating costs and expenses increased 25 percent and 4 percent, respectively, primarily due to an increase in severance and related benefit costs of $6.5 million and higher programming fees paid to affiliated networks of $7.8$6.0 million and $15.7 million, respectively. These increases were partially offset by reductions in sellingthird party acquisition costs of $5.9 million. The reduction in third party acquisition costs was primarily due to the corresponding reduction in third party revenues as a result of COVID-19.
While the Company is not able to estimate the impact of the COVID-19 pandemic on operating costs and expenses of $3.5 million forinto the second quarter and $5.8 million for the first six months of fiscal 2020.2021, the Company expects that, to the extent advertising related revenues recover, related direct costs and expenses will also increase.
Operating Profit
Local media operating profit decreased 49 percent in the second quarter of fiscal 2020 and 46grew 66 percent in the first six monthsquarter of fiscal 20202021 primarily due to lowerincreased political spot advertising revenues due toin the cyclical naturequarter partially offset by the negative impacts of political advertising.COVID-19 on our local media operations.
UNALLOCATED CORPORATE EXPENSES
Unallocated corporate expenses are general corporate overhead expenses not attributable to the operating groups. These expenses were as follows:
| | | | | | | | | | | | | | | | | |
| Unallocated Corporate Expenses | 2020 | | 2019 | | Change |
| (In millions) | | | | | |
| Three months ended September 30, | $ | 17.2 | | | $ | 23.6 | | | (27) | % |
| | | | | |
|
| | | | | | | | | | |
| Unallocated Corporate Expenses | 2019 | | 2018 | | Change |
|
| (In millions) | | | | | |
| Three months ended December 31, | $ | 21.4 |
| | $ | 19.9 |
| | 8 | % |
| Six months ended December 31, | 45.0 |
| | 51.3 |
| | (12 | )% |
Unallocated corporate expenses increased 8decreased 27 percent in the first quarter of fiscal 2021 primarily due to reductions in occupancy-related costs of $7.1 million and lower restructuring costs of $2.8 million partially offset by an increase in performance-based compensation expenses of $4.2 million.
The Company estimates that COVID-19 did not have a significant impact on unallocated corporate operating costs and expenses during the first quarter of fiscal 2021, nor does the Company anticipate that COVID-19 will have a significant impact on unallocated corporate operating costs and expenses in the second quarter of fiscal 2020 due to a small increase in severance and related benefit costs and increases in other miscellaneous business expenses were partially offset by a slight decrease in employee compensation costs. Unallocated corporate expenses decreased 12 percent in first six months of fiscal 2020 as a decrease in employee compensation costs of $10.7 million were partially offset by increases in other miscellaneous business expenses.2021.
CONSOLIDATED
Consolidated Operating Expenses
Consolidated operating expenses were as follows:
| | | | | | | | | | | | | | | | | |
| Three months ended September 30, | 2020 | | 2019 | | Change |
| (In millions) | | | | | |
| Production, distribution, and editorial | $ | 241.1 | | | $ | 273.7 | | | (12) | % |
| Selling, general, and administrative | 311.2 | | | 330.8 | | | (6) | % |
| Acquisition, disposition, and restructuring related activities | 14.1 | | | 14.1 | | | 0 | % |
| Depreciation and amortization | 49.0 | | | 58.5 | | | (16) | % |
| Impairment of long-lived assets | — | | | 5.2 | | | (100) | % |
| Operating expenses | $ | 615.4 | | | $ | 682.3 | | | (10) | % |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
|
| | | | | | | | | | |
| Three months ended December 31, | 2019 | | 2018 | | Change |
|
| (In millions) | | | | | |
| Production, distribution, and editorial | $ | 280.1 |
| | $ | 305.9 |
| | (8 | )% |
| Selling, general, and administrative | 338.4 |
| | 346.0 |
| | (2 | )% |
| Acquisition, disposition, and restructuring related activities | (0.5 | ) | | 27.7 |
| | n/m |
|
| Depreciation and amortization | 58.6 |
| | 65.1 |
| | (10 | )% |
| Operating expenses | $ | 676.6 |
| | $ | 744.7 |
| | (9 | )% |
| n/m - Not meaningful | | | | | |
|
| | | | | | | | | | |
| Six months ended December 31, | 2019 | | 2018 | | Change |
|
| (In millions) | | | | | |
| Production, distribution, and editorial | $ | 553.8 |
| | $ | 595.0 |
| | (7 | )% |
| Selling, general, and administrative | 669.2 |
| | 696.3 |
| | (4 | )% |
| Acquisition, disposition, and restructuring related activities | 13.6 |
| | 44.8 |
| | (70 | )% |
| Depreciation and amortization | 117.1 |
| | 128.8 |
| | (9 | )% |
| Impairment of long-lived assets | 5.2 |
| | — |
| | n/m |
|
| Operating expenses | $ | 1,358.9 |
| | $ | 1,464.9 |
| | (7 | )% |
| n/m - Not meaningful | | | | | |
Fiscal 2020 second2021 first quarter production, distribution, and editorial costs decreased 812 percent primarily due to lower combined production,a decline in distribution and paper costs of $24.6$8.2 million, and a reduction in custom publishing expenses of $6.5 million, a decrease in employee compensation cost of $6.3 million, a decline in paper expense of $5.3 million, reduced production costs of $3.3$2.5 million, and lower non-payroll related editorial costs of $2.2 million partially offset by an increase in programming fees paid to affiliated networks of $7.8 million. For the first six months of fiscal 2020, production, distribution, and editorial costs decreased 7 percent primarily due to lower combined production, distribution, and paper costs of $36.3 million and a reduction in employee
compensation costs of $4.3 million partially offset by an increase in programming fees paid to affiliated networks of $15.7$6.0 million.
Selling, general, and administrative expenses decreased 2 percent in the second quarter and 46 percent in the first six monthsquarter of fiscal 20202021 primarily due to lower subscription acquisition costs of $17.5 million, a reduction in occupancy-related costs of $10.7 million, a decrease in employee compensation costs.costs of $6.5 million, and a decrease in bad debt expense of $6.3 million. These declines were partially offset by an increase in incentive-based compensation costs of $19.5 million.
Fiscal 2020 second2021 first quarter acquisition, disposition, and restructuring related activities represented a gain onexpenses were flat as compared to the saleprior-year period. Acquisition, disposition, and restructuring related activities expenses for the first quarter of business assetsfiscal 2021 were primarily made of $8.3 million mostly offset by integration and exit costs of $4.0 million andup severance and related benefit costs while the first quarter of $3.8 million. Fiscal 2019 second quarter acquisition, disposition, and restructuring related activities primarily representedfiscal 2020 expenses were made up of a more even mix of severance and related benefit costs of $16.6 million and integration and exit costs of $11.2 million. The first six months of fiscal 2020 acquisition, disposition, and restructuring related activities represented integration and exit costs of $12.4 million and severance and related benefit costs of $9.9 million partially offset by the gain on the sale of business assets of $8.7 million. The first six months of fiscal 2019 acquisition, disposition, and restructuring related activities primarily represented severance and related benefit costs of $27.2 million and integration and exit costs of $25.6 million partially offset by the gain on the sale of business assets of $6.4 million.costs.
Depreciation and amortization expense decreased 1016 percent in the second quarter and 9 percent in the first six months of fiscal 2020 primarily due to a reduction in depreciation expense in our national media segment.
The impairment of long-lived assets charge recorded in the first quarter of fiscal 2021 primarily due to reductions in customer relationships amortization expense in our national media segment due to such intangibles becoming fully amortized during the prior fiscal year.
In the first quarter of fiscal 2020, related tothe national media segment recorded a pre-tax,$5.2 million non-cash impairment of a trademark in the national media segment.trademark.
Income from Operations
Fiscal 2020 second quarter incomeIncome from operations was $133.9 million comparedincreased 82 percent primarily due to fiscal 2019 second quarter income fromhigher operating profit in our local media operations of $133.7 million asprimarily due to the increase in political spot advertising revenues, an increase in the operating profit of our national media segment of $53.5 milliongroup primarily due to the increase in digital advertising revenues and reductions in employee compensation costs and amortization expense, and a reduction in unallocated corporate costs primarily due to ongoing cost-savings initiatives wasa reduction in occupancy-related costs. These improvements were partially offset by a decline in operating profitincentive-based compensation costs and the adverse impact of COVID-19 on our local media segment of $51.8 million due primarily to the cyclical nature of political revenues. For the first six months of fiscal 2020, income from operations was $176.8 million, a decrease of $11.1 million as compared to the prior-year period as a decline in operating profit of our local media segment of $80.9 million more than offset an increase in the operating profit of our national media segment of $63.5 million.business.
Non-operating Income, (Expense), net
The secondfirst quarter of fiscal 2020 non-operating expense, net related primarily to an $8.8 million pension settlement charge. The second quarter of fiscal 20192021 non-operating income, net related primarily to ourthe gain on the sale of an investment of $3.6 million and a pension and other postretirement plans benefit credit.credit of $2.0 million. For the first sixthree months of fiscal 2020, non-operating income, net related primarily to aan $8.0 million credit for the release of a lease guarantee offset to a pension settlement charge of $8.8 million. First six months of fiscal 2019 non-operating income, net related primarily to a pension and other postretirement plans benefit credit of $8.2 million and a $4.0 million gain on the sale of the Company's interest in Charleston Tennis LLC, which was sold in September 2018.guarantee.
Interest Expense, net
Net interest expense decreasedincreased to $36.9$43.5 million in the fiscal 2020 second2021 first quarter compared with $50.9$38.9 million in the prior-year secondfirst quarter. For the six months ended December 31, 2019, net interest expense was $75.8 million versus $92.5 million in the first six months of fiscal 2019. Average long-term debt outstanding was $3.0 billion in the first quarter of fiscal 2021 compared with $2.4 billion in the second quarter of fiscal 2020 and for the six-month period compared with $2.8 billion in the prior-year second quarter and $3.0 billion in the prior-year six-month period.first quarter. The Company's approximate weighted average interest rate was 6.45.7 percent in the first sixthree months of fiscal 2020 and2021 compared to 6.5 percent for the first sixthree months of fiscal 2019.2020. For the three months ended December 31,September 30, 2019, and 2018, $0.8$1.2 million and $9.3 million, respectively, and for the six months ended December 31, 2019 and 2018, $2.0 million and $15.7 million, respectively, of interest expense was allocated to discontinued operations and was included in the loss from discontinued operations, net of income taxes line on the Condensed Consolidated Statements of Earnings.
Income Taxes
Our effectiveFor the first quarter of fiscal 2021, Meredith recorded a tax rate was 30.8 percentbenefit on earnings from continuing operations of $2.1 million. This compares to a tax expense recorded by the Company of $0.5 million for the first three months of fiscal 2020.
In the third quarter of fiscal 2020, the Federal District Court ruled in the secondCompany’s favor on a disputed Internal Revenue Code Section 199 issue for fiscal years 2006 through fiscal 2012. In the first quarter of fiscal 2021, the Department of Justice waived its right to appeal resulting in the finalization of the Federal District Court decision and 27.5 percentthe release of the associated reserve for uncertain tax positions. As such, a tax benefit of $15.2 million was recorded in the first six months of fiscal 2020 as compared to 0.7 percent in the second quarter and 4.0 percent in the first six months of fiscal 2019. During the second quarter of fiscal 2019, the Company engaged in a restructuring of its international operations for U.S. tax purposes, triggering deductions that resulted in a $23.5 million permanent U.S. tax benefit, which decreased income tax expense in the second quarter and first six months of fiscal 2019.2021.
Earnings from Continuing Operations and Earnings (Loss) per Common Share from Continuing Operations
Earnings from continuing operations were $62.1$42.3 million ($0.91 per diluted share) infor the quarter ended December 31, 2019, downSeptember 30, percent from $88.12020, compared to $12.1 million ($1.46 per diluted share) in the prior-year secondfirst quarter. ForThe increase is primarily due to the six months ended December 31, 2019,increase in political spot advertising revenues, increased digital advertising revenues, reductions in employee compensation costs and amortization expense, and a decrease in occupancy-related costs. These increases were partially offset by incentive-based compensation costs and the adverse impact of COVID-19 on our business. The Company had earnings per common share from continuing operations of $0.88 per diluted common share for the first quarter of fiscal 2021. Tthe Company had earnings from continuing operations were $74.2 million ($0.75in the first quarter of fiscal 2020; however, due primarily to the effects of preferred stock participating dividends, the Company had a loss per diluted share), a decrease of 29 percent from prior-year six months earnings of $104.3 million ($1.41 per diluted share). The decreases in earningscommon share from continuing operations were primarily due to a higher effective tax rate inof $0.17 per diluted common share for the first quarter of fiscal 2020.
Loss from Discontinued Operations, Net of Income Taxes
Loss from discontinued operations, net of income taxes
Loss from discontinued operations, net of income taxes represents the results of operations, and gain/loss on the sales, net of income taxes, of the properties that were held-for-sale during the sixthree months ended December 31, 2019 and 2018.September 30, 2019. The revenue and expenses of FanSided, a Sports Illustrated brand marketed separately from Sports Illustrated, which was held-for-sale as of December 31, 2019, as well as the revenues and expenses of Sports Illustrated and Viant, which were sold in the second quarter of fiscal 2020 andas well as the revenuesrevenue and expenses of FanSided, a Sports Illustrated brand marketed separately from Sports Illustrated, and the TIME and Fortune brands,Company's investment in Xumo, which werewas sold in the secondthird quarter of fiscal 2019,2020, were included in loss from discontinued operations, net of income taxes on the Condensed Consolidated Statements of Earnings for the periods prior to their sales.
The revenues and expenses for each of these properties while owned, along with associated income taxes, have been removed from continuing operations and reclassified into a single line item on the Condensed Consolidated
Statements of Earnings titled loss from discontinued operations, net of income taxes, for the three and six months ended December 31,September 30, 2019, and 2018, as follows:
| | | | | | | | | | | | |
| | | | | | |
| Three months ended September 30, | | | 2019 | | | | | |
| (In millions except per share data) | | | | | | | | |
| Revenues | | | $ | 85.5 | | | | | | |
| Costs and expenses | | | (86.7) | | | | | | |
| Impairment of goodwill | | | (4.2) | | | | | | |
| Interest expense | | | (1.2) | | | | | | |
| | | | | | | | |
| Loss before income taxes | | | (6.6) | | | | | | |
| Income tax benefit | | | 0.6 | | | | | | |
| Loss from discontinued operations, net of income taxes | | | $ | (6.0) | | | | | | |
| Loss per share from discontinued operations | | | | | | | | |
| Basic | | | $ | (0.13) | | | | | | |
| Diluted | | | (0.13) | | | | | | |
|
| | | | | | | | | | | | | | | | |
| | Three Months | | | Six Months |
| Periods ended December 31, | 2019 | | 2018 | | | 2019 | | 2018 |
| (In millions except per share data) | | | | | | | | |
| Revenues | $ | 25.3 |
| | $ | 128.2 |
| | | $ | 110.8 |
| | $ | 251.9 |
|
| Costs and expenses | (20.9 | ) | | (109.6 | ) | | | (107.6 | ) | | (225.9 | ) |
| Impairment of goodwill | (11.8 | ) | | — |
| | | (16.0 | ) | | — |
|
| Interest expense | (0.8 | ) | | (9.3 | ) | | | (2.0 | ) | | (15.7 | ) |
| Gain on disposal | 3.0 |
| | — |
| | | 3.0 |
| | — |
|
| Earnings (loss) before income taxes | (5.2 | ) | | 9.3 |
| | | (11.8 | ) | | 10.3 |
|
| Income tax expense | (19.1 | ) | | (78.8 | ) | | | (18.5 | ) | | (79.0 | ) |
| Loss from discontinued operations, net of income taxes | $ | (24.3 | ) | | $ | (69.5 | ) | | | $ | (30.3 | ) | | $ | (68.7 | ) |
| Loss per share from discontinued operations | | | | | | | | |
| Basic | $ | (0.54 | ) | | $ | (1.53 | ) | | | $ | (0.66 | ) | | $ | (1.52 | ) |
| Diluted | (0.51 | ) | | (1.47 | ) | | | (0.66 | ) | | (1.46 | ) |
Net Earnings and Earnings (Loss) per Common Share
Net earnings were $37.8$42.3 million infor the quarter ended December 31, 2019, up 103 percent from $18.6September 30, 2020, compared to $6.1 million in the prior-year secondfirst quarter. For the six months ended December 31, 2018, net earnings were $43.9 million, an increase of 23 percent from prior-year six months net earnings of $35.6 million. The increase in net earnings was primarily due to a decrease in the loss from discontinued operations partially offset by a reduction in earnings from continuing operations. While the Company had earnings attributable to common shareholders of $19.0 million
($0.40 per diluted common share) for the second quarter of fiscal 2020 and $4.2$40.3 million ($0.090.88 per diluted common share) for the first six monthsquarter of fiscal 2020,2021. The Company had net earnings in the first quarter of fiscal 2020; however, due primarily to the effects of preferred stock participating dividends, the Company had losses attributable to common shareholders of $0.5$13.9 million ($0.01 per diluted common share) for the second quarter of fiscal 2019 and $2.1 million ($0.050.30 per diluted common share) for the first six monthsquarter of fiscal 2019. Average2020. This increase was primarily due to the increase in income from operations discussed above. In addition, the first quarter of 2020 included a loss from discontinued operations that did not repeat. Both basic average common shares outstanding and diluted average common shares outstanding increased slightly in both periods and diluted shares outstanding were flat in the secondfirst quarter and decreased slightly inof fiscal 2021 compared to the six-month period.first quarter of fiscal 2020.
LIQUIDITY AND CAPITAL RESOURCES
| | | | | | | | | | | | | | | | | |
| Three months ended September 30, | 2020 | | 2019 | | Change |
| (In millions) | | | | | |
| Net earnings | $ | 42.3 | | | $ | 6.1 | | | n/m |
| Net cash provided by (used in) operating activities | $ | 78.9 | | | $ | (13.5) | | | n/m |
| Net cash used in investing activities | (9.0) | | | (30.1) | | | (70) | % |
| Net cash provided by (used in) financing activities | (1.6) | | | 16.4 | | | n/m |
| Effect of exchange rate changes | 0.3 | | | 0.3 | | | 0 | % |
| Change in cash in assets held-for-sale | — | | | 9.3 | | | (100) | % |
| Net increase (decrease) in cash and cash equivalents | $ | 68.6 | | | $ | (17.6) | | | n/m |
| n/m - Not meaningful | | | | | |
|
| | | | | | | | | | |
| Six months ended December 31, | 2019 | | 2018 | | Change |
|
| (In millions) | | | | | |
| Net earnings | $ | 43.9 |
| | $ | 35.6 |
| | 23 | % |
| Cash flows provided by operating activities | $ | 72.1 |
| | $ | 59.4 |
| | 21 | % |
| Net cash provided by (used in) investing activities | (23.7 | ) | | 329.1 |
| | n/m |
|
| Net cash used in financing activities | (67.0 | ) | | (748.8 | ) | | n/m |
|
| Effect of exchange rate changes | (0.1 | ) | | (0.6 | ) | | n/m |
|
| Change in cash in assets held-for-sale | (5.1 | ) | | 0.4 |
| | n/m |
|
| Net decrease in cash and cash equivalents | $ | (23.8 | ) | | $ | (360.5 | ) | | (93 | )% |
| n/m - Not meaningful | | | | | |
OVERVIEW
Meredith's primary source of liquidity is cash generated by operating activities. Debt financing is typically used for significant acquisitions. We expect cash on hand, internally generated cash flow, and available credit from financing agreements will provide adequate funds for operating and recurring cash needs (e.g., working capital, capital expenditures, debt repayments, and cash dividends) into the foreseeable future. As of December 31, 2019,September 30, 2020, we had $291.8$346.9 million of additional available borrowings under our revolving credit facility. While there are no guarantees that we will be able to replace our credit agreements when they expire, we expect to be able to do so.
SOURCES AND USES OF CASH
Cash and cash equivalents decreased $23.8increased $68.6 million in the first sixthree months of fiscal 20202021 compared to a decrease of $360.5$17.6 million in the first sixthree months of fiscal 2019.2020.
Operating Activities
The largest single component of operating cash inflows is cash received from advertising customers. Other sources of operating cash inflows include cash received from magazine circulation sales and other revenue generating transactions such as retransmission consent fees, affinity marketing, brand licensing, and product sales. Operating cash outflows include payments to vendors and employees and payments of interest and income taxes. Our most significant vendor payments are for production and delivery of publications and promotional mailings, broadcastingnetwork programming rights,fees, employee benefit plans (including pension plans), broadcast programming rights, and other services and supplies.
Cash provided by operating activities totaled $72.1$78.9 million in the first sixthree months of fiscal 20202021 compared withto cash provided byused in operating activities of $59.4$13.5 million in the first sixthree months of fiscal 2019.2020. The increase in cash provided by operating activitiesflows was the result of increased net earnings and reduced payments for interest, severance and integration costs.costs, partially offset by increased tax and interest payments.
Investing Activities
Investing cash inflows generally include proceeds from the sale of assets or businesses. Investing cash outflows generally include payments for the acquisition of new businesses; investments; and additions to property, plant, and equipment.
Net cash used in investing activities was $23.7$9.0 million in the first sixthree months of fiscal 2020,2021, compared to cash provided by investing activities of $329.1$30.1 million in the prior-year period. The decrease in cash flow related toused in investing activities wasresulted from a result of increasedreduction in asset acquisitions and capital expenditures, and a decrease in proceeds from sales of assets and businesses.expenditures.
Financing Activities
Financing cash inflows generally include borrowings under debt agreements and proceeds from the exercise of common stock options issued under share-based compensation plans. Financing cash outflows generally include repayment of long-term debt, repurchases of Company stock, the payment of dividends, and repurchasesthe payment of Company stock.acquisition-related contingent consideration.
Net cash used in financing activities was $67.0$1.6 million in the sixthree months ended December 31, 2019, asSeptember 30, 2020, compared to $748.8net cash provided by financing activities of $16.4 million in the prior-year period. The decrease in cash flows used inprovided by financing activities was primarily due to a net $20.0debt payments of $1.0 million of debt borrowings in the first sixthree months of fiscal 20202021 compared to $646.9net issuances of $60.0 million of net debt payments and a $19.3 million contingent consideration payment in the first six monthsprior-year period, partially offset by the lack of dividend payments in fiscal 2019.2021 compared to fiscal 2020.
Long-term Debt
At December 31, 2019,September 30, 2020, total long-term debt outstanding totaled $2.4 billion. The balance consistedwas $3.1 billion consisting of $1.1$1.5 billion of term loans under a variable-rate credit facility thatand $1.6 billion in fixed-rate senior notes.
The variable-rate credit facility includes a senior secured term loan (Term Loan B) and a revolving credit facility,an incremental senior secured term loan (Incremental Term Loan) with $1.1 billion and $1.3 billion in fixed rate 2026 Senior Notes.
The variable-rate credit facility includes the Term Loan B with an initial $1.8 billion$409.0 million of aggregate principal outstanding, respectively, and a five-year senior secured revolving credit facility of $350.0 million, of which $175.0 million is available for the issuance of letters of credit and $35.0 million of swingline loans. On December 31, 2019,September 30, 2020, there were $55.0 million ofno borrowings outstanding under the revolving credit facility bearing an interest rate of 4.71 percent.facility. There were $3.2$3.1 million of standby letters of credit issued under the revolving credit facility resulting in availability of $291.8$346.9 million at December 31, 2019.September 30, 2020. The Incremental Term Loan B maturesamortizes at 1.0 percent per annum in equal quarterly installments until the final maturity date, which is in 2025, at which time the remaining principal and interest are due and payable.on the Term Loan B will also mature. The interest rate under the Term Loan B is based on London Interbank Offered Rate (LIBOR) plus 2.50 percent and bore
interest at a rate of 2.65 percent at September 30, 2020. The interest rate under the Incremental Term Loan is based on LIBOR plus 4.25 percent with a spreadfloor of 2.75 percent. When the Company's leverage ratio drops below 2.25 to 1, the spread will decrease to 2.50 percent.
The Term Loan B1.00 percent for LIBOR and bore interest at a rate of 4.555.25 percent at December 31, 2019. The revolving credit facility has a commitment fee ranging from 0.375 percent to 0.500 percent of the unused commitment. All interest rates and commitment fees associated with this variable-rate revolving credit facility are derived from a leverage-based pricing grid. The 2026 Senior Notes with an initial $1.4 billion of aggregate principal mature in 2026 and have an interest rate of 6.875 percent per annum. The remaining outstanding principal is due at the final maturity date.September 30, 2020.
Our credit agreement includes a consolidated net leverage ratio financial covenant that is applicable based on a certain utilization level of the revolving credit line. Failure to comply with this covenant could result in the debt becoming payable on demand. The covenant did not apply at December 31, 2019,September 30, 2020, as we did not reachwere below the specified utilization level on the revolving credit line. The revolving credit facility was amended in June 2020 to increase, during a covenant relief period which is effective until March 31, 2022 if not sooner terminated by the Company (the Covenant Relief Period), the maximum consolidated net leverage ratio. During the Covenant Relief Period, the revolving credit facility bears interest at LIBOR plus a spread ranging from 2.50 percent to 3.50 percent. After the Covenant Relief Period, the revolving credit facility bears interest at LIBOR plus a spread ranging from 2.50 percent to 3.00 percent. It also has a commitment fee ranging from 0.375 percent to 0.500 percent of the unused commitment. All interest rates and commitment fees associated with this variable-rate revolving credit facility are derived from a leverage-based pricing grid. The fixed-rate Senior Notes include the 2026 Unsecured Senior Notes with $1.3 billion of aggregate principal and the 2025 Secured Senior Notes with $300.0 million of aggregate principal. The Senior Unsecured Notes mature in 2026 with an interest rate of 6.875 percent per annum, and the Senior Secured Notes mature in 2025 with an interest rate of 6.500 percent per annum. Total outstanding principal is due at the final maturity dates.
Contractual Obligations
As of December 31, 2019,September 30, 2020, there had been no material changes in our contractual obligations from those disclosed in our Form 10-K for the year ended June 30, 2019.2020.
Share Repurchase Program
As part of our ongoing share repurchase program, we spent $4.2$0.4 million in the first sixthree months of fiscal 20202021 to repurchase 103,00027,000 shares of common stock at then-current market prices. We spent $5.0$1.8 million to repurchase 95,00038,000 shares in the first sixthree months of fiscal 2019.2020. Shares that are deemed to be delivered to us on tender of stock
in payment for the exercise price of options do not reduce the repurchase authority granted by our Board of Directors. Of the 103,00027,000 shares of common stock purchased during the first sixthree months of the current fiscal year, 26,000none were deemed to be delivered to us on tender of stock in payment for the exercise price of options. As of December 31, 2019, $47.1September 30, 2020, $46.1 million remained available under the current authorization for future repurchases. See Part II, Item 2 (c), Issuer Repurchases of Equity Securities, of this Form 10-Q for detailed information on share repurchases during the quarter ended December 31, 2019.September 30, 2020.
Dividends
Meredith had paid quarterly dividends continuously since 1947, and we increased our dividend annually for 27 consecutive years. However, in April 2020, we announced that in response to uncertainties surrounding the COVID‑19 pandemic, Meredith paused the common and class B stock dividends. The Board remains committed to paying a dividend in the future when circumstances permit and will consider the following factors, among others, when evaluating the Company’s dividend policy going forward: seeing a path to economic recovery, including recovery of the advertising market, evaluating the Company’s cash flow needs to support future growth, and ensuring compliance with terms of the Company’s debt agreements.
Dividends paid in the first sixthree months of fiscal 2020 on common and class B stock totaled $54.7$27.2 million, or $1.15$0.575 per share, compared with dividend payments of $51.7 million, or $1.09 per share, in the first six months of fiscal 2019. We expect to continue paying dividends on our common and class B stock.share. Dividends paid in the first sixthree months of fiscal 2020 on Series A preferred stock totaled $28.5$14.4 million or $43.91$22.19 per share compared to $28.4 million or $43.68 per shareshare. As the Series A preferred stock was redeemed in June 2020, there will be no future dividend payments on the first six months of fiscal 2019.Series A preferred stock.
Capital Expenditures
Investment in property, plant, and equipment totaled $34.5$9.3 million in the first sixthree months of fiscal 20202021 compared with prior-year first sixthree months' investment of $17.0$15.9 million. Current year and prior year investment spending primarily relaterelated to assets acquired in the normal course of business. We have no other material commitments for
capital expenditures. We expect funds for future capital expenditures to come from operating activities or, if necessary, borrowings under existing credit agreements.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements.
The following financial information presents summarized balance sheet information as of September 30, 2020 and June 30, 2020, and summarized statement of earnings information for the three months ended September 30, 2020, for Meredith Corporation (Parent Issuer) and Guarantor Subsidiaries on a combined basis.
| | | | | | | | | | | |
| Summarized Balance Sheet | September 30, 2020 | | June 30, 2020 |
| (In millions) | | | |
| Assets | | | |
| Current assets | $ | 982.9 | | | $ | 859.2 | |
| Intercompany receivable due from non-guarantor subsidiaries | 1,624.0 | | | 1,177.8 | |
| Intangible assets, net | 1,607.4 | | | 1,637.4 | |
| Goodwill | 1,691.7 | | | 1,691.7 | |
| Other assets | 1,064.2 | | | 1,077.4 | |
| | | |
| Liabilities | | | |
| Current liabilities | 745.7 | | | 723.5 | |
| Intercompany payable due to non-guarantor subsidiaries | 1,648.6 | | | 1,206.0 | |
| Long-term debt | 2,983.5 | | | 2,981.8 | |
| Other liabilities | 1,380.0 | | | 1,379.0 | |
| | | | | |
| Summarized Statement of Earnings | Three Months Ended September 30, 2020 |
| (In millions) | |
| Revenues | $ | 675.3 | |
| Total operating expenses | 603.7 | |
| |
| Net earnings | 36.5 | |
OTHER MATTERS
CRITICAL ACCOUNTING POLICIES
Meredith's critical accounting policies are summarized in our Form 10-K for the year ended June 30, 2019.2020. As of December 31, 2019,September 30, 2020, the Company's critical accounting policies had not changed from June 30, 2019.2020.
The Company has a significant amount of goodwill and indefinite-lived intangible assets that are reviewed at least annually for impairment. At December 31, 2019,September 30, 2020, goodwill and intangible assets totaled $3.7$3.3 billion with $2.8$2.5 billion in the national media segment and $0.9$0.8 billion in the local media segment. Management is required to evaluate goodwill and intangible assets with indefinite lives for impairment on an annual basis or when events occur or circumstances change that would indicate the carrying value exceeds the fair value. See Item 1A. Risk Factors and Note 56 to the consolidated financial statements in our Form 10-K for the year ended June 30, 2019,2020, for additional information.
ACCOUNTING AND REPORTING DEVELOPMENTS
Accounting Standards Update 2016-02,2016-13, LeasesFinancial Instruments—Credit Losses, became effective for the Company on July 1, 2019.2020. The adoption of the update had a material impact on our consolidated financial position, but did not have a material impact on our results of operations, or cash flows.the Company's condensed consolidated financial statements and related disclosures upon adoption.
There were no other new accounting pronouncements issued or effective during the fiscal year which have had or are expected to have a material impact on the consolidated financial statements during fiscal 2020.2021. See Note 1 to the condensed consolidated financial statements for further detail on applicable accounting pronouncements that were adopted in the first quarter of fiscal 20202021 or will be effective in future periods.
FORWARD LOOKING STATEMENTS
Except for the historical information contained herein, the matters discussed in this Form 10-Q are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those predicted by such forward-looking statements. These statements are based on management's current knowledge and estimates of factors affecting the Company's operations. Readers are cautioned not to place undue reliance on such forward-looking information. Factors that could adversely affect future results include, but are not limited to, the impact of the COVID-19 pandemic on the Company, its customers and its suppliers; downturns in global, 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 or vendors; 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; increases in interest rates; the consequences of acquisitions and/or dispositions; risks associated with the Company's acquisition of Time Inc., includingand the Company's ability to comply with the terms of theits debt and equity financings entered into connection therewith.financings. Additional risks and uncertainties are described in Meredith's Form 10-K for the year ended June 30, 2019,2020, which include a more complete description of the risk factors that may affect our results. Such risk factors may be amplified by the COVID-19 pandemic and its potential impact on the Company’s business and the global economy. The Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise.
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| | | | |
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
Meredith is exposed to certain market risks as a result of our use of financial instruments, in particular the potential market value loss arising from adverse changes in interest rates. The Company does not utilize financial instruments for trading purposes and does not hold any derivative financial instruments that could expose the Company to significant market risk. Readers are referred to Item 7A, Quantitative and Qualitative Disclosures about Market Risk, in the Company's Form 10-K for the year ended June 30, 2019,2020, for a more complete discussion of these risks.
Interest Rates
We generally strive to manage our risk associated with interest rate movements through the use ofby using a combination of variable and fixed ratefixed-rate debt. At December 31, 2019,September 30, 2020, Meredith had $1.3$1.6 billion outstanding in fixed ratefixed-rate long-term debt. There were no earnings or liquidity risks associated with the Company's fixed ratefixed-rate debt. The fair value of the fixed ratefixed-rate debt varies with fluctuations in interest rates. A 100 basis points decrease in interest rates would have changedincreased the fair value of the fixed-rate debt of $1.4 billion by $62.1$58.7 million at December 31, 2019.September 30, 2020.
At December 31, 2019, $1.1September 30, 2020, $1.5 billion of our debt was variable-rate debt. The Company is subject to earnings and liquidity risks for changes in the interest rate on this debt. A 10 percent100-basis point increase in LIBOR would increase annual interest expense by $1.9$11.2 million.
Because the United Kingdom Financial Conduct Authority, which regulates LIBOR, announced the desire to phase out the use of LIBOR by the end of 2021, future borrowings under our credit agreement could be subject to reference rates other than LIBOR.
Broadcast Rights Payable
There has been no material change in the market risk associated with broadcast rights payable since June 30, 2019.2020.
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| | | | |
| Item 4. | Controls and Procedures |
Meredith's Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, that the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) were not effective in ensuring that information required to be disclosed in the reports that Meredith files or submits under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the United States Securities and Exchange Commission's (SEC) rules and forms and (ii) accumulated and communicated to Meredith's management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.
As previously disclosed in Item 9A of our Form 10-K for the year endedJune 30, 2019, management identified the following deficiencies which were determined to be material weaknesses. The deficiencies related to ineffective risk assessment under the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, including the documentation of controls.
The Company did not properly design or maintain effective controls over the completeness, existence, and accuracy of digital advertising revenue, related accounts receivable, and selling expense.
The Company did not property design or maintain effective controls over the completeness, existence, accuracy, and valuation of international pension assets.
The Company and its Board of Directors are committed to maintaining a strong internal control environment. Management, with the oversight of the Audit Committee, have evaluated the material weaknesses described above and designed remediation plans to address the material weaknesses and enhance the Company’s internal control environment. The remediation plans currently being implemented include enhancing risk assessment procedures, improving control documentation, and designing new or modified controls. The Company has engaged external internal control specialists to assist with the remediation plan.
Other than as described above, there There has been no significant change in the Company’s internal control over financial reporting that has materially affected or is reasonably likely to materially affect the Company’s internal control over financial reporting in the quarter ended September 30, 2020.
We have not experienced any material impact to our internal control over financial reporting despite the fact that the majority of our accounting, finance, and legal employees are working remotely due to the COVID-19 pandemic, but we are continually monitoring the COVID-19 pandemic and its effects on the design and operating effectiveness of our internal control over financial reporting.
There have been no material changes to the Company's risk factors as disclosed in Item 1A, Risk Factors, in the Company's Form 10-K for the year endedJune 30, 2019.2020.
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| | | | | | | |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |
|
| | | | | | | |
| (c) | | Issuer Repurchases of Equity Securities |
The following table sets forth information with respect to the Company's repurchases of common stock during the quarter ended December 31, 2019.September 30, 2020.
|
| | | | | | | | | | | | | | | | |
| Period | (a)
Total number of shares purchased 1, 2 | (b) Average price paid
per share | (c)
Total number of shares
purchased as part of publicly announced programs | (d) Approximate dollar value of shares that may yet be purchased under programs |
| | | | | | | | | (in millions) |
October 1 to
October 31, 2019 | 45,718 |
| | | $ | 36.75 |
| | 45,718 |
| | | $ | 47.3 |
| |
November 1 to
November 30, 2019 | 19,410 |
| | | 38.89 |
| | 3,632 |
| | | 47.1 |
| |
December 1 to
December 31, 2019 | — |
| | | — |
| | — |
| | | 47.1 |
| |
| Total | 65,128 |
| | | | | 49,350 |
| | |
|
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Period | (a)
Total number of shares purchased 1 | (b)
Average price
paid
per share | (c)
Total number of shares
purchased as part of publicly
announced programs | (d)
Approximate dollar value
of shares that may yet
be purchased under
programs |
| | | | | | | | (in millions) |
July 1 to
July 31, 2020 | — | | | | $ | — | | | — | | | | $ | 46.6 | | |
August 1 to
August 31, 2020 | 22,127 | | | | 15.50 | | | 22,127 | | | | 46.2 | | |
September 1 to
September 30, 2020 | 5,085 | | | | 13.55 | | | 5,085 | | | | 46.1 | | |
| Total | 27,212 | | | | | | 27,212 | | | | | |
|
| | | | |
1 |
| The number of shares purchased includes 45,71822,127 shares in OctoberAugust and 3,6325,085 shares in November 2019September delivered or deemed to be delivered to us in satisfaction of tax withholding on option exercises and the vesting of restricted shares. These shares are included as part of our repurchase program and reduce the repurchase authority granted by our Board.Board of Directors. |
2
|
| The number of shares purchased includes 15,778 shares in November 2019 deemed to be delivered to us on tender of stock in payment for the exercise price of options. These shares do not reduce the repurchase authority granted by our Board. |
In May 2014, Meredith announced the Board of Directors had authorized the repurchase of up to $100.0 million in additional shares of the Company's common and class B stock through public and private transactions.
For more information on the Company's common and class B share repurchase program, see Part I, Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations, under the heading "Share Repurchase Program."
| | | | | | | | | | | | | | |
| Item 6. | Exhibits |
| | | | |
Item 6. | Exhibits | | | The Company's Restated Articles of Incorporation, as amended, are incorporated herein by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the period ended December 31, 2003. |
| | | | |
| | | | The Restated Bylaws, as amended, are incorporated herein by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2015. |
| | | | |
| | | | List of Guarantor Subsidiaries |
| | | | |
| | | | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended. |
| | | | |
| | | | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended. |
| | | | |
| | | | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| | | | |
| 101.INS | | | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
| | | | |
| 101.SCH | | | Inline XBRL Taxonomy Extension Schema Document |
| | | | |
| 101.CAL | | | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| | | | |
| 101.DEF | | | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| | | | |
| 101.LAB | | | Inline XBRL Taxonomy Extension Label Linkbase Document |
| | | | |
| 101.PRE | | | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| | | | |
| 104 | | | Cover Page Interactive Data File (formatted as Inline XBRL (included in Exhibits 101) |
| | | | |
| * These certifications are being furnished solely to accompany this Quarterly Report pursuant to 18 U.S.C. Section 1350, and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing. |
|
| | | | | | | | | | |
| 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 | |
| MEREDITH CORPORATIONRegistrant | |
| Registrant | |
| /s/ Jason Frierott | |
| /s/ Joseph CeryanecJason Frierott | |
| Joseph Ceryanec | |
| Chief Financial Officer | |
| (Principal Financial and Accounting Officer) | |
|
| | | | |
| Date: | February 10,November 5, 2020 |
