UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) October 25, 1996
Meredith Corporation
(Exact name of registrant as specified in its charter)
Iowa 1-5128 42-0410230
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1716 Locust Street, Des Moines, Iowa 50309-3023
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code 515 - 284-3000
- 1 -
Item 2. Acquisition or Disposition of Assets
On October 25, 1996, Meredith Corporation, through its cable venture,
Meredith/New Heritage Partnership (MNH Partnership), completed the sale of its
ownership interest in Meredith/New Heritage Strategic Partners, L.P. (Strategic
Partners), effective September 30, 1996. Strategic Partners owns and operates
cable television systems with approximately 127,000 subscribers in the
Minneapolis/St. Paul area. The MNH Partnership, of which the Company
indirectly owns 96 percent, sold its 73 percent ownership interest in Strategic
Partners to Continental Cablevision of Minnesota Subsidiary Corporation
(Continental), an affiliate of MNH Partnership's minority partner, Continental
Cablevision of Minnesota, Inc.
The total value of the cable television systems was placed at $262.5 million
based on estimated discounted future cash flows. Meredith Corporation's share
of the proceeds was approximately $116 million in cash (net of taxes).
Continental also paid approximately $85 million in Strategic Partners' debt.
Meredith Corporation will record a gain in the quarter ended December 31, 1996
of approximately $28 million (net of taxes and deferred losses) from the sale.
Item 7. Financial Statements and Exhibits
(b) Pro forma financial information
(1) In regards to the transaction described above, unaudited pro
forma financial information is presented for the following
periods: Statement of Earnings for the year ended June 30,
1996 and Balance Sheet as of June 30, 1996.
The unaudited pro forma Statement of Earnings presents the pro
forma results of operations for Meredith Corporation and its
Subsidiaries as if the Company sold its investment in
Meredith/New Heritage Strategic Partners, L.P. (Strategic
Partners) on July 1, 1995. The unaudited pro forma Balance Sheet
presents the pro forma financial position of Meredith Corporation
and its Subsidiaries as if the Company sold its investment in
Strategic Partners on June 30, 1996.
- 2 -
Meredith Corporation and Subsidiaries
Pro Forma Statement of Earnings
Year (Unaudited)
Ended Pro forma (Unaudited)
June 30, 1996 Adjustments Pro forma
------------- ----------- ---------
(in thousands, except per share)
Revenues $867,137 $ - $867,137
======== ======= ========
Production, distribution and editorial $366,408 $ - $366,408
Selling, general and advertising 378,094 - 378,094
Depreciation and amortization 25,130 - 25,130
-------- ------- --------
Total operating costs 769,632 - 769,632
-------- ------- --------
Income from operations 97,505 - 97,505
Gain on dispositions 5,898 - 5,898
Interest income 2,183 2,680 (a) 4,863
Interest expense (5,530) 5,267 (b) (263)
-------- ------- --------
Income from continuing
operations before taxes 100,056 7,947 108,003
Income taxes (45,399) (3,179)(c) (48,578)
-------- ------- --------
Earnings from continuing
operations 54,657 4,768 59,425
-------- ------- --------
Discontinued operation:
Loss from cable operation (717) 717 (d) -
Gain on disposition - 26,940 (e) 26,940
-------- ------- --------
Total discontinued operation (717) 27,657 26,940
-------- ------- --------
Net earnings $ 53,940 $32,425 $ 86,365
======== ======= ========
Earnings per share from continuing
operations $ 1.94 $ 2.10
Earnings per share from
discontinued operation ( .03) .97
-------- --------
Net earnings per share $ 1.91 $ 3.07
======== ========
Average shares outstanding 28,173 28,173
======== ========
See Notes to Pro forma Statement of Earnings
- 3 -
Notes to Pro forma Statement of Earnings (unaudited)
(a) to record interest income on net cash from cable proceeds after payment of
long-term debt and taxes. Interest income was calculated at an average
rate of approximately 5 percent.
(b) to eliminate interest expense related to long-term debt.
(c) to record tax effect of pro forma changes in interest income and expense
at the statutory rate of 40 percent.
(d) to eliminate losses of discontinued cable operation from July 1, 1995 to
September 30, 1995.
(e) to record pro forma gain on sale of ownership interest in cable operation
at July 1, 1995.
- 4 -
Meredith Corporation and Subsidiaries
Pro Forma Balance Sheet
(Unaudited)
As of Pro forma (Unaudited)
Assets June 30, 1996 Adjustments Pro forma
- ------ ------------- ----------- ---------
(in thousands)
Cash and cash equivalents $ 13,801 $123,278 (a) $ 86,349
(50,730)(b)
Net receivables 89,448 3,429 (a) 92,877
Inventories 31,185 - 31,185
Supplies and prepaids 8,104 - 8,104
Film rental costs 10,321 - 10,321
Deferred income taxes 8,930 - 8,930
Subscription acquisition costs 48,887 - 48,887
-------- -------- --------
Total current assets 210,676 75,977 286,653
Property, plant and equipment 182,855 - 182,855
Less accumulated depreciation (102,856) - (102,856)
-------- -------- --------
Net Property, plant and equipment 79,999 - 79,999
Net assets of discontinued operation 88,051 (88,051)(a) -
Subscription acquisition costs 46,745 46,745
Film rental costs 6,816 6,816
Other assets 19,043 (216)(a) 18,827
Goodwill 282,443 282,443
-------- -------- --------
Total assets $733,773 $(12,290) $721,483
======== ======== ========
- 5 -
(Unaudited)
Liabilities and As of Pro Forma (Unaudited)
Stockholders' Equity June 30, 1996 Adjustments Pro forma
- -------------------- ------------- ----------- ---------
(in thousands)
Current portion of long-term debt $ 15,000 ($15,000)(b) $ -
Current film rental contracts 13,063 - 13,063
Accounts payable 42,085 - 42,085
Accruals and other expenses 68,958 10,747 (a) 78,975
(730)(b)
Unearned subscription revenue 140,401 - 140,401
-------- ------- --------
Total current liabilities 279,507 (4,983) 274,524
Long-term debt 35,000 (35,000)(b) -
Long-term film contracts 8,419 - 8,419
Unearned subscription revenue 97,811 - 97,811
Deferred income taxes 25,510 - 25,510
Other deferred items 25,962 - 25,962
-------- ------- --------
Total liabilities 472,209 (39,983) 432,226
-------- ------- --------
Common stock 20,380 - 20,380
Class B stock 6,569 - 6,569
Retained earnings 236,903 27,693 (a) 264,596
Unearned compensation (2,288) - (2,288)
-------- ------- --------
Total stockholders' equity 261,564 27,693 289,257
-------- ------- --------
Total liabilities/stockholders' equity $733,773 ($12,290) $721,483
======== ======= ========
See Notes to Pro forma Balance Sheet
- 6 -
Notes to Pro forma Balance Sheet
(a) to record the sale of the Company's interest in cable operations as of
June 30, 1996 for cash (less funds held in escrow) net of accrued taxes
and other sales expenses, and deferred losses of the cable operation from
October 1, 1995 through June 30, 1996.
(b) to record use of cable proceeds to pay long-term debt, including accrued
interest.
- 7 -
Item 7 (c) Exhibits:
2.1 Purchase Agreement dated as of March 15, 1996 between
Meredith/New Heritage Partnership and New Heritage Associates
as Sellers and Continental Cablevision, Inc. as Buyer
2.2 Guaranty Agreement effective October 25, 1996, between
Meredith Corporation and Continental Cablevision of Minnesota
Subsidiary Corporation.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MEREDITH CORPORATION
Registrant
(Larry D. Hartsook)
Larry D. Hartsook
Vice President - Finance
(Principal Accounting and
Financial Officer)
Date: November 8, 1996
- 8 -
Index to Exhibits
Exhibit
Number Item
------- -------------------------------------------------------
2.1 Purchase Agreement dated as of March 15, 1996 between
Meredith/New Heritage Partnership and New Heritage
Associates as Sellers and Continental Cablevision, Inc.
as Buyer
2.2 Guaranty Agreement effective October 25, 1996, between
Meredith Corporation and Continental Cablevision of
Minnesota Subsidiary Corporation.
*Supplementary Exhibits and Schedules to the purchase agreement as listed
on pages 5 and 6 of Exhibit 2.1 are not included in this filing except for
Exhibit B, Guaranty Agreement, which is being filed as Exhibit 2.2 in this
Form 8-K. Copies of any of the other exhibits and/or schedules to this
purchase agreement will be furnished supplementally to the Commission upon
request.