Pension and Postretirement Benefit Plans

Savings and Investment Plan

Meredith maintains a 401(k) Savings and Investment Plan that permits eligible employees to contribute funds on a pretax basis. The plan allows employee contributions of up to 50 percent of eligible compensation subject to the maximum allowed under federal tax provisions. The Company matches 100 percent of the first 3 percent and 50 percent of the next 2 percent of employee contributions.

The 401(k) Savings and Investment Plan allows employees to choose among various investment options, including the Company's common stock, for both their contributions and the Company's matching contribution. Company contribution expense under this plan totaled $9.3 million in fiscal 2014, $8.7 million in fiscal 2013, and $8.4 million in fiscal 2012.

Pension and Postretirement Plans

Meredith has noncontributory pension plans covering substantially all employees. These plans include qualified (funded) plans as well as nonqualified (unfunded) plans. These plans provide participating employees with retirement benefits in accordance with benefit provision formulas. The nonqualified plans provide retirement benefits only to certain highly compensated employees. The Company also sponsors defined healthcare and life insurance plans that provide benefits to eligible retirees.

Obligations and Funded Status

The following tables present changes in, and components of, the Company's net assets/liabilities for pension and other postretirement benefits:



	Pension						Postretirement
June 30,	2014			2013			2014			2013
(In thousands)
Change in benefit obligation
Benefit obligation, beginning of year	$	140,549		$	137,287		$	12,302		$	14,975
Service cost	10,196			10,100			170			377
Interest cost	5,604			4,911			480			611
Participant contributions	—			—			842			808
Plan amendments	915			—			(1,732		)	—
Actuarial loss (gain)	4,083			473			(114		)	(2,952		)
Benefits paid (including lump sums)	(8,739		)	(12,222		)	(1,503		)	(1,517		)
Benefit obligation, end of year	$	152,608		$	140,549		$	10,445		$	12,302

Change in plan assets
Fair value of plan assets, beginning of year	$	128,267		$	124,568		$	—		$	—
Actual return on plan assets	25,117			15,329			—			—
Employer contributions	534			592			661			709
Participant contributions	—			—			842			808
Benefits paid (including lump sums)	(8,739		)	(12,222		)	(1,503		)	(1,517		)
Fair value of plan assets, end of year	$	145,179		$	128,267		$	—		$	—

Under funded status, end of year	$	(7,429	)	$	(12,282	)	$	(10,445	)	$	(12,302	)

Benefits paid directly from Meredith assets are included in both employer contributions and benefits paid.

Fair value measurements for pension assets as of June 30, 2014, were as follows:



June 30, 2014	Total Fair Value		Quoted Prices (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
(In thousands)
Investments in registered investment companies	$	144,619		$	85,509		$	59,110		$	—
Pooled separate accounts	560			—			560			—
Total assets at fair value	$	145,179		$	85,509		$	59,670		$	—

Fair value measurements for pension assets as of June 30, 2013, were as follows:



June 30, 2013	Total Fair Value		Quoted Prices (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
(In thousands)
Investments in registered investment companies	$	127,266		$	74,856		$	52,410		$	—
Pooled separate accounts	1,001			—			1,001			—
Total assets at fair value	$	128,267		$	74,856		$	53,411		$	—

Refer to Note 14 for a discussion of the three levels in the hierarchy of fair values.

The following amounts are recognized in the Consolidated Balance Sheets:



	Pension						Postretirement
June 30,	2014			2013				2014			2013
(In thousands)
Other assets
Prepaid benefit cost	$	23,078		$	12,074			$	—		$	—
Accrued expenses-compensation and benefits
Accrued benefit liability	(2,408		)	(1,644		)		(770		)	(837		)
Other noncurrent liabilities
Accrued benefit liability	(28,099		)	(22,712		)		(9,675		)	(11,465		)
Net amount recognized, end of year	$	(7,429	)	$	(12,282	)		$	(10,445	)	$	(12,302	)

The accumulated benefit obligation for all defined benefit pension plans was $138.3 million and $126.7 million at June 30, 2014 and 2013, respectively.

The following table provides information about pension plans with projected benefit obligations and accumulated benefit obligations in excess of plan assets:



June 30,	2014		2013
(In thousands)
Projected benefit obligation	$	30,550	$	24,460
Accumulated benefit obligation	26,379		19,732
Fair value of plan assets	44		104

Costs

The components of net periodic benefit costs recognized in the Consolidated Statements of Earnings were as follows:



	Pension									Postretirement
Years ended June 30,	2014			2013			2012				2014			2013			2012
(In thousands)
Components of net periodic benefit costs
Service cost	$	10,196		$	10,100		$	9,434			$	170		$	377		$	450
Interest cost	5,604			4,911			5,987				480			611			798
Expected return on plan assets	(9,687		)	(9,465		)	(10,014		)		—			—			—
Prior service cost (credit) amortization	391			359			368				(440		)	(537		)	(536		)
Actuarial loss (gain) amortization	2,030			3,250			1,605				(365		)	—			—
Curtailment credit	—			—			—				(1,511		)	—			—
Net periodic benefit costs (credit)	$	8,534		$	9,155		$	7,380			$	(1,666	)	$	451		$	712

Amounts recognized in the accumulated other comprehensive loss component of shareholders' equity for Company-sponsored plans were as follows:



June 30, 2014	Pension		Postretirement				Total
(In thousands)
Unrecognized net actuarial losses (gains), net of taxes	$	9,956		$	(1,716	)	$	8,240
Unrecognized prior service cost (credit), net of taxes	728			(982		)	(254		)
Total	$	10,684		$	(2,698	)	$	7,986

During fiscal 2015, the Company expects to recognize as part of its net periodic benefit costs $0.7 million of net actuarial losses and $0.2 million of prior-service costs for the pension plans, and $0.4 million of net actuarial gains and $0.4 million of prior service credit for the postretirement plan that are included, net of taxes, in the accumulated other comprehensive loss component of shareholders' equity at June 30, 2014.

Assumptions

Benefit obligations were determined using the following weighted average assumptions:



	Pension				Postretirement
June 30,	2014		2013			2014		2013
Weighted average assumptions
Discount rate	3.57	%	3.92	%		4.00	%	4.50	%
Rate of compensation increase	3.50	%	3.50	%		3.50	%	3.50	%
Rate of increase in health care cost levels
Initial level	NA		NA			7.00	%	7.50	%
Ultimate level	NA		NA			5.00	%	5.00	%
Years to ultimate level	NA		NA			4 years		5 years
NA-Not applicable

Net periodic benefit costs were determined using the following weighted average assumptions:



	Pension						Postretirement
Years ended June 30,	2014		2013		2012			2014		2013		2012
Weighted average assumptions
Discount rate	3.92	%	3.50	%	4.65	%		4.50	%	4.10	%	5.25	%
Expected return on plan assets	8.00	%	8.00	%	8.00	%		NA		NA		NA
Rate of compensation increase	3.50	%	3.50	%	4.50	%		3.50	%	3.50	%	4.50	%
Rate of increase in health care cost levels
Initial level	NA		NA		NA			7.50	%	8.00	%	8.50	%
Ultimate level	NA		NA		NA			5.00	%	5.00	%	5.00	%
Years to ultimate level	NA		NA		NA			5 years		6 years		7 years
NA-Not applicable

The expected return on plan assets assumption was determined, with the assistance of the Company's investment consultants, based on a variety of factors. These factors include but are not limited to the plans' asset allocations, review of historical capital market performance, historical plan performance, current market factors such as inflation and interest rates, and a forecast of expected future asset returns. The Company reviews this long-term assumption on a periodic basis.

Assumed rates of increase in healthcare cost have a significant effect on the amounts reported for the healthcare plans. A change of one percentage point in the assumed healthcare cost trend rates would have the following effects:



	One Percentage Point Increase			One Percentage Point Decrease
(In thousands)
Effect on service and interest cost components for fiscal 2014		$	35		$	(28	)
Effect on postretirement benefit obligation as of June 30, 2014		434			(362		)

Plan Assets

The targeted and weighted average asset allocations by asset category for investments held by the Company's pension plans are as follows:



	2014 Allocation				2013 Allocation
June 30,	Target		Actual		Target		Actual
Domestic equity securities	35	%	36	%	35	%	34	%
Fixed income investments	30	%	27	%	30	%	28	%
International equity securities	25	%	26	%	25	%	27	%
Global equity securities	10	%	11	%	10	%	11	%
Fair value of plan assets	100	%	100	%	100	%	100	%

Meredith's investment policy seeks to maximize investment returns while balancing the Company's tolerance for risk. The plan fiduciaries oversee the investment allocation process. This includes selecting investment managers, setting long-term strategic targets, and monitoring asset allocations. Target allocation ranges are guidelines, not limitations, and plan fiduciaries may occasionally approve allocations above or below a target range, or elect to rebalance the portfolio within the targeted range. The investment portfolio contains a diversified blend of equity and fixed-income investments. Furthermore, equity investments are diversified across domestic and international stocks and between growth and value stocks and small and large capitalizations. The primary investment strategy currently employed is a dynamic target allocation method that periodically rebalances among various investment categories depending on the current funded position. This program is designed to actively move from return-seeking investments (such as equities) toward liability-hedging investments (such as long-duration fixed-income) as funding levels improve. The reverse effect occurs when funding levels decrease.

Equity securities did not include any Meredith Corporation common or Class B stock at June 30, 2014 or 2013.

Cash Flows

Although we do not have a minimum funding requirement for the pension plans in fiscal 2015, the Company is currently determining what voluntary pension plan contributions, if any, will be made in fiscal 2015. Actual contributions will be dependent upon investment returns, changes in pension obligations, and other economic and regulatory factors. Meredith expects to contribute $0.8 million to its postretirement plan in fiscal 2015.

The following benefit payments, which reflect expected future service as appropriate, are expected to be paid:



Years ending June 30,	Pension Benefits			Postretirement Benefits
(In thousands)
2015		$	16,799		$	770
2016		23,081			791
2017		15,805			802
2018		15,696			806
2019		14,935			784
2020-2024		84,791			3,508

Other

The Company maintains collateral assignment split-dollar life insurance arrangements on certain key officers and retirees. The net periodic pension cost for fiscal 2014, 2013, and 2012 was $0.3 million, $0.3 million, and $0.2 million, respectively, and the accrued liability at June 30, 2014 and 2013, was $4.1 million and $4.0 million, respectively.