UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2019

Commission file number 1-5128

MEREDITH CORPORATION
(Exact name of registrant as specified in its charter)
Iowa	42-0410230
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

	1716 Locust Street,	Des Moines,	Iowa	50309-3023
(Address of principal executive offices)				(ZIP Code)

Registrant’s telephone number, including area code:	(515)	284-3000
Former name, former address, and former fiscal year, if changed since last report:  Not applicable

Securities registered pursuant to Section 12(b) of the Act:
	Title of each class	Trading Symbol	Name of each exchange on which registered
	Common Stock, par value $1	MDP	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.         Yes x   No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).         Yes x   No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer x     Accelerated filer o     Non-accelerated filer o

Smaller reporting company ☐     Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act     o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ☐   No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Shares of stock outstanding at January 31, 2020
Common shares	40,253,479
Class B shares	5,086,915
Total common and Class B shares	45,340,394

(This page has been left blank intentionally.)

TABLE OF CONTENTS
			Page
	Part I - Financial Information
Item 1.	Financial Statements (Unaudited)
		Condensed Consolidated Balance Sheets as of December 31, 2019 and June 30, 2019	1
		Condensed Consolidated Statements of Earnings for the Three and Six Months Ended December 31, 2019 and 2018	3
		Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended December 31, 2019 and 2018	4
		Condensed Consolidated Statements of Shareholders' Equity for the Three and Six Months Ended December 31, 2019 and 2018	5
		Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2019 and 2018	7
		Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		37
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		50
Item 4.	Controls and Procedures		51
	Part II - Other Information
Item 1A.	Risk Factors		52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		52
Item 6.	Exhibits		53
	Signature		54
Meredith Corporation and its consolidated subsidiaries are referred to in this Quarterly Report  on Form 10-Q (Form 10-Q) as Meredith, the Company, we, our, and us.

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

Meredith Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

Assets	December 31, 2019			June 30, 2019
(In millions)
Current assets
Cash and cash equivalents	$	21.2		$	45.0
Accounts receivable, net	616.6			609.1
Inventories	49.5			62.7
Current portion of subscription acquisition costs	255.5			242.0
Assets held-for-sale	51.8			321.0
Other current assets	67.8			70.3
Total current assets	1,062.4			1,350.1
Property, plant, and equipment	905.7			897.9
Less accumulated depreciation	(463.6		)	(447.6		)
Net property, plant, and equipment	442.1			450.3
Operating lease assets	487.7			—
Subscription acquisition costs	242.4			273.9
Other assets	274.7			269.6
Intangible assets, net	1,754.1			1,813.6
Goodwill	1,969.8			1,979.4
Total assets	$	6,233.2		$	6,136.9

See accompanying Notes to Condensed Consolidated Financial Statements.

1

Meredith Corporation and Subsidiaries

Condensed Consolidated Balance Sheets (continued)

(Unaudited)

Liabilities, Redeemable Convertible Preferred Stock, and Shareholders' Equity	December 31, 2019			June 30, 2019
(In millions except per share data)
Current liabilities
Current portion of operating lease liabilities	$	34.9		$	—
Accounts payable	149.4			242.6
Accrued expenses and other liabilities	274.5			307.2
Current portion of unearned revenues	428.3			458.9
Liabilities associated with assets held-for-sale	1.8			252.1
Total current liabilities	888.9			1,260.8
Long-term debt	2,355.9			2,333.3
Operating lease liabilities	484.2			—
Unearned revenues	299.1			318.6
Deferred income taxes	520.1			506.2
Other noncurrent liabilities	205.5			203.2
Total liabilities	4,753.7			4,622.1
Redeemable, convertible Series A preferred stock, par value $1 per share, $1,000 per share liquidation preference	549.2			540.2
Shareholders' equity
Series preferred stock, par value $1 per share	—			—
Common stock, par value $1 per share	40.2			40.1
Class B stock, par value $1 per share	5.1			5.1
Additional paid-in capital	223.2			216.7
Retained earnings	702.9			759.0
Accumulated other comprehensive loss	(41.1		)	(46.3		)
Total shareholders' equity	930.3			974.6
Total liabilities, redeemable convertible preferred stock, and shareholders' equity	$	6,233.2		$	6,136.9

See accompanying Notes to Condensed Consolidated Financial Statements.

2

Meredith Corporation and Subsidiaries

Condensed Consolidated Statements of Earnings

(Unaudited)

	Three Months						Six Months
Periods ended December 31,	2019			2018			2019			2018
(In millions except per share data)
Revenues
Advertising related	$	427.3		$	492.3		$	806.9		$	917.8
Consumer related	348.9			368.2			672.0			696.0
Other	34.3			17.9			56.8			39.0
Total revenues	810.5			878.4			1,535.7			1,652.8
Operating expenses
Production, distribution, and editorial	280.1			305.9			553.8			595.0
Selling, general, and administrative	338.4			346.0			669.2			696.3
Acquisition, disposition, and restructuring related activities	(0.5		)	27.7			13.6			44.8
Depreciation and amortization	58.6			65.1			117.1			128.8
Impairment of long-lived assets	—			—			5.2			—
Total operating expenses	676.6			744.7			1,358.9			1,464.9
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
Income tax expense	(27.7		)	(0.6		)	(28.2		)	(4.3		)
Earnings from continuing operations	62.1			88.1			74.2			104.3
Loss from discontinued operations, net of income taxes	(24.3		)	(69.5		)	(30.3		)	(68.7		)
Net earnings	$	37.8		$	18.6		$	43.9		$	35.6
Earnings (loss) attributable to common shareholders	$	19.0		$	(0.5	)	$	4.2		$	(2.1	)
Basic earnings (loss) per share attributable to common shareholders
Continuing operations	$	0.93		$	1.50		$	0.75		$	1.43
Discontinued operations	(0.54		)	(1.53		)	(0.66		)	(1.52		)
Basic earnings (loss) per common share	$	0.39		$	(0.03	)	$	0.09		$	(0.09	)
Basic average common shares outstanding	45.7			45.3			45.7			45.2
Diluted earnings (loss) per share attributable to common shareholders
Continuing operations	$	0.91		$	1.46		$	0.75		$	1.41
Discontinued operations	(0.51		)	(1.47		)	(0.66		)	(1.46		)
Diluted earnings (loss) per common share	$	0.40		$	(0.01	)	$	0.09		$	(0.05	)
Diluted average common shares outstanding	47.3			47.3			45.7			47.3

See accompanying Notes to Condensed Consolidated Financial Statements.

3

Meredith Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

	Three Months					Six Months
Periods ended December 31,	2019		2018			2019		2018
(In millions)
Net earnings	$	37.8	$	18.6		$	43.9	$	35.6
Other comprehensive income (loss), net of income taxes
Pension and other postretirement benefit plans activity	0.4		0.4			0.9		0.8
Unrealized foreign currency translation gain (loss), net	9.2		(3.0		)	4.3		(5.3		)
Other comprehensive income (loss), net of income taxes	9.6		(2.6		)	5.2		(4.5		)
Comprehensive income	$	47.4	$	16.0		$	49.1	$	31.1

See accompanying Notes to Condensed Consolidated Financial Statements.

4

Meredith Corporation and Subsidiaries

Condensed Consolidated Statements of Shareholders' Equity

(Unaudited)

(In millions except per share data)	Common Stock - $1 par value			Class B Stock - $1 par value		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss				Total
Balance at June 30, 2019	$	40.1		$	5.1	$	216.7		$	759.0			$	(46.3	)	$	974.6
Net earnings	—			—		—			6.1				—			6.1
Other comprehensive loss, net of income taxes	—			—		—			—				(4.4		)	(4.4		)
Shares issued under incentive plans, net of forfeitures	0.1			—		0.4			—				—			0.5
Purchases of Company stock	(0.1		)	—		(1.7		)	—				—			(1.8		)
Share-based compensation	—			—		7.5			—				—			7.5
Dividends paid
Common stock ($0.575 dividend per share)	—			—		—			(24.3		)		—			(24.3		)
Class B stock ($0.575 dividend per share)	—			—		—			(2.9		)		—			(2.9		)
Series A preferred stock ($22.19 dividend per share)	—			—		—			(14.4		)		—			(14.4		)
Accretion of Series A preferred stock	—			—		—			(4.5		)		—			(4.5		)
Transition adjustment for adoption of Accounting Standards Update 2016-02	—			—		—			(7.8		)		—			(7.8		)
Balance at September 30, 2019	40.1			5.1		222.9			711.2				(50.7		)	928.6
Net earnings	—			—		—			37.8				—			37.8
Other comprehensive income, net of income taxes	—			—		—			—				9.6			9.6
Shares issued under incentive plans, net of forfeitures	0.1			—		0.5			—				—			0.6
Purchases of Company stock	—			—		(2.4		)	—				—			(2.4		)
Share-based compensation	—			—		2.2			—				—			2.2
Dividends paid
Common stock ($0.575 dividend per share)	—			—		—			(24.5		)		—			(24.5		)
Class B stock ($0.575 dividend per share)	—			—		—			(3.0		)		—			(3.0		)
Series A preferred stock ($21.72 dividend per share)	—			—		—			(14.1		)		—			(14.1		)
Accretion of Series A preferred stock	—			—		—			(4.5		)		—			(4.5		)
Balance at December 31, 2019	$	40.2		$	5.1	$	223.2		$	702.9			$	(41.1	)	$	930.3

See accompanying Notes to Condensed Consolidated Financial Statements.

5

Meredith Corporation and Subsidiaries

Condensed Consolidated Statements of Shareholders' Equity (Continued)

(Unaudited)

(In millions except per share data)	Common Stock - $1 par value			Class B Stock - $1 par value		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss				Total
Balance at June 30, 2018	$	39.8		$	5.1	$	199.5		$	889.8			$	(36.7	)	$	1,097.5
Net earnings	—			—		—			17.0				—			17.0
Other comprehensive loss, net of income taxes	—			—		—			—				(1.9		)	(1.9		)
Stock issued under various incentive plans, net of forfeitures	0.2			—		0.9			—				—			1.1
Purchases of Company stock	(0.1		)	—		(3.1		)	—				—			(3.2		)
Share-based compensation	—			—		10.2			—				—			10.2
Dividends paid
Common stock ($0.545 dividend per share)	—			—		—			(23.0		)		—			(23.0		)
Class B stock ($0.545 dividend per share)	—			—		—			(2.8		)		—			(2.8		)
Series A preferred stock ($21.49 dividend per share)	—			—		—			(14.0		)		—			(14.0		)
Accretion of Series A preferred stock									(4.3		)					(4.3		)
Cumulative effect adjustment for adoption of Accounting Standards Update 2016-09	—			—		—			2.4				—			2.4
Balance at September 30, 2018	39.9			5.1		207.5			865.1				(38.6		)	1,079.0
Net earnings	—			—		—			18.6				—			18.6
Other comprehensive loss, net of income taxes	—			—		—			—				(2.6		)	(2.6		)
Stock issued under various incentive plans, net of forfeitures	0.1			—		1.3			—				—			1.4
Purchases of Company stock	—			—		(1.8		)	—				—			(1.8		)
Share-based compensation	—			—		5.7			—				—			5.7
Dividends paid
Common stock ($0.545 dividend per share)	—			—		—			(23.1		)		—			(23.1		)
Class B stock ($0.545 dividend per share)	—			—		—			(2.8		)		—			(2.8		)
Series A preferred stock ($22.19 dividend per share)	—			—		—			(14.4		)		—			(14.4		)
Accretion of Series A preferred stock	—			—		—			(4.3		)		—			(4.3		)
Balance at December 31, 2018	$	40.0		$	5.1	$	212.7		$	839.1			$	(41.2	)	$	1,055.7

See accompanying Notes to Condensed Consolidated Financial Statements.

6

Meredith Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Six months ended December 31,	2019			2018
(In millions)
Cash flows from operating activities
Net earnings	$	43.9		$	35.6
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation	39.4			51.2
Amortization	77.7			77.6
Non-cash lease expense	19.6			—
Share-based compensation	9.7			15.9
Deferred income taxes	6.1			68.5
Amortization of original issue discount and debt issuance costs	3.3			4.4
Amortization of broadcast rights	9.6			10.2
Gain on sale of assets, net	(9.4		)	(12.3		)
Loss on extinguishment of debt	—			15.1
Write-down of impaired assets	21.2			—
Fair value adjustments to contingent consideration	0.3			(0.1		)
Changes in assets and liabilities, net of acquisitions	(149.3		)	(206.7		)
Net cash provided by operating activities	72.1