Pension and Postretirement Benefit Plans

12 Months Ended

Jun. 30, 2021

Retirement Benefits [Abstract]

Pension and Postretirement Benefit Plans

14. Pension and Postretirement Benefit Plans

Defined Contribution Plans

The Company sponsors a defined contribution saving plan for most of its U.S. based employees. Eligible Company employees may participate in the Meredith Savings and Investment Plan, a defined contribution plan that allows eligible employees to contribute a percentage of their salary, commissions, and bonuses in accordance with plan limitations and provisions of Section 401(k) of the Internal Revenue Code and the Company makes matching contributions to the plan subject to the limits of the plan. Until January 1, 2021, the Company matched 100 percent of the first 4 percent and 50 percent of the next 1 percent of employee contributions. Effective January 1, 2021, the Company increased the 401(k) match to 100 percent of the first 5 percent for employees ineligible for Meredith pension plans.

In connection with the Time acquisition, certain employees continued to participate, through December 31, 2018, in the defined contribution savings plan that Time had in place for its employees in the U.S., the Time Inc. Savings Plan. For the Time Inc. Savings Plan, the Company matched 100 percent of the first 4 percent and 50 percent of the next 2 percent of eligible compensation. In addition to the annual employer contribution made to the Time Inc. Savings Plan, following the plan year, the Company made an employer match contribution of up to 5 percent of each participant’s compensation less any employer matching contribution made within the plan year to those participants who contributed up to 6 percent of their compensation for the plan year. The Time Inc. Savings Plan merged into the Meredith Savings and Investment Plan effective for the 2019 calendar plan year.

Employees are allowed to choose among various investment options. The Meredith Savings and Investment Plan included an investment option in the Company’s common stock until December 31, 2018. Matching contributions are invested in the same manner as the participants’ pre-tax contributions. Company contribution expense under these plans totaled $17.6 million in fiscal 2021, $17.9 million in fiscal 2020, and $22.6 million in fiscal 2019.

The Company sponsors the Meredith Corporation Deferred Compensation Plan and also administers The Time Inc. Deferred Compensation Plan, which is a frozen plan (collectively the Deferred Compensation Plans). The Deferred Compensation Plans allow participants to defer certain bonuses and salaries. No actual monies are set aside in respect of the Deferred Compensation Plans, and participants have no rights to Company assets in respect of plan liabilities in excess of general unsecured creditors.

The liabilities associated with the plans fluctuate with hypothetical yields of the underlying investments. Liabilities for the uncollateralized plans were $15.7 million and $16.9 million at June 30, 2021 and 2020, respectively, of which $2.1 million was reflected in the accrued expenses-accrued compensation and benefits line and $13.6 million was reflected in the other noncurrent liabilities line on the Consolidated Balance Sheets at June 30, 2021, and $3.4 million was reflected in the accrued expenses-accrued compensation and benefits line and $13.5 million was reflected in the other noncurrent liabilities line on the Consolidated Balance Sheets at June 30, 2020.

Pension and Postretirement Plans

Meredith has U.S. noncontributory pension plans covering substantially all employees who were employed by Meredith prior to January 1, 2018. The Company also assumed the obligations under Time’s various international pension plans, including plans in the U.K., Netherlands, and Germany. These domestic and international 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
	Domestic				International				Domestic
June 30,	2021		2020		2021		2020		2021		2020
(In millions)
Change in benefit obligation
Benefit obligation, beginning of year	$	169.8	$	187.5	$	815.1	$	725.3	$	8.5	$	8.3
Service cost	9.3		9.7		—		—		—		—
Interest cost	3.3		5.1		10.0		14.4		0.2		0.3
Participant contributions	—		—		—		—		0.8		0.8
Plan amendments	0.1		—		1.5		—		—		—
Net actuarial loss (gain)	—		13.5		(22.2)		124.3		(0.6)		0.1
Benefits paid (including lump sums)	(1.1)		(0.2)		(19.8)		(22.0)		(0.9)		(1.0)
Settlements	(14.6)		(45.8)		—		(4.0)		—		—
Foreign currency exchange rate impact	—		—		101.9		(22.9)		—		—
Benefit obligation, end of year	$	166.8	$	169.8	$	886.5	$	815.1	$	8.0	$	8.5
Change in plan assets
Fair value of plan assets, beginning of year	$	125.8	$	135.4	$	948.9	$	872.1	$	—	$	—
Actual return on plan assets	34.5		6.9		(40.4)		112.7		—		—
Employer contributions	5.8		29.5		14.9		18.2		0.1		0.2
Participant contributions	—		—		—		—		0.8		0.8
Benefits paid (including lump sums)	(1.1)		(0.2)		(19.8)		(22.0)		(0.9)		(1.0)
Settlements	(14.6)		(45.8)		—		(4.0)		—		—
Foreign currency exchange rate impact	—		—		119.3		(28.1)		—		—
Fair value of plan assets, end of year	$	150.4	$	125.8	$	1,022.9	$	948.9	$	—	$	—
Over (under) funded status, end of year	$	(16.4)	$	(44.0)	$	136.4	$	133.8	$	(8.0)	$	(8.5)

The net actuarial loss included in the change in benefit obligation for the domestic pension plan for the year ended June 30, 2020, is primarily the result of a decrease in the discount rate used at June 30, 2020, as compared to June 30, 2019, offset by a very slight gain impacted by a mortality assumption update.

The net actuarial gain included in the change in benefit obligation for the international pension plans for the year ended June 30, 2021, is primarily the result of an increase in the discount rate used at June 30, 2021, as compared to June 30, 2020, partially offset by an increase in inflation. The net actuarial loss included in the change in benefit obligation for the international pension plans for the year ended June 30, 2020, was primarily the result of a significant decrease in the discount rate used at June 30, 2020, as compared to June 30, 2019, partially offset by a decrease in inflation and plan experience.

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

The following amounts are recognized in the Consolidated Balance Sheets:

	Pension								Postretirement
	Domestic				International					Domestic
June 30,	2021		2020		2021		2020			2021		2020
(In millions)
Other assets
Prepaid benefit cost	$	26.5	$	2.3	$	144.2	$	140.9		$	—	$	—
Accrued expenses-compensation and benefits	—
Accrued benefit liability	(3.9)		(6.3)		(0.2)		(0.1)			(0.5)		(0.6)
Other noncurrent liabilities
Accrued benefit liability	(39.0)		(40.0)		(7.6)		(7.0)			(7.5)		(7.9)
Net amount recognized, end of year	$	(16.4)	$	(44.0)	$	136.4	$	133.8		$	(8.0)	$	(8.5)

The accumulated benefit obligation for the domestic defined benefit pension plans was $147.0 million and $150.4 million at June 30, 2021 and 2020, respectively. The accumulated benefit obligation for the international defined

benefit pension plans was $886.5 million and $815.1 million at June 30, 2021 and 2020, respectively.

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

	Domestic				International
June 30,	2021		2020		2021		2020
(In millions)
Projected benefit obligation	$	43.0	$	45.9	$	7.8	$	7.1
Accumulated benefit obligation	34.1		37.9		7.8		7.1

Costs

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

	Pension												Postretirement
	Domestic						International						Domestic
Years ended June 30,	2021		2020		2019		2021		2020		2019		2021		2020		2019
(In millions)
Components of net periodic benefit costs
Service cost	$	9.3	$	9.7	$	11.5	$	—	$	—	$	0.1	$	—	$	—	$	—
Interest cost	3.3		5.1		6.5		10.0		14.4		16.9		0.2		0.3		0.3
Expected return on plan assets	(7.8)		(9.2)		(9.7)		(16.9)		(18.4)		(31.5)		—		—		—
Prior service cost amortization	0.4		0.5		0.5		0.2		0.2		—		—		—		—
Actuarial loss (gain) amortization	2.6		2.8		1.9		—		—		—		(0.3)		(0.5)		(0.6)
Settlement charges (credit)	1.1		13.0		2.7		—		1.2		(4.1)		—		—		—
Contractual termination benefits	—		—		1.3		—		—		—		—		—		—
Net periodic benefit costs (credit)	$	8.9	$	21.9	$	14.7	$	(6.7)	$	(2.6)	$	(18.6)	$	(0.1)	$	(0.2)	$	(0.3)

The pension settlement charges recorded in fiscal 2021 and 2020 related to lump-sum payments as a result of executive retirements and a resignation in the prior fiscal year and cash distributions paid by the pension plan during fiscal 2020 exceeding a prescribed threshold. This required that a portion of pension losses within accumulated

other comprehensive loss be realized in the period that the related pension liabilities were settled. The international settlement charge recorded in fiscal 2020 was related to the final settlement of the Company's German pension plan.

The components of net periodic benefit costs (credit), other than the service cost component, are included in non-operating income (expense), net in the Consolidated Statements of Earnings (Loss). The amortization of amounts related to unrecognized prior service costs/credit and net actuarial gain/loss were reclassified out of other comprehensive income (loss) as components of net periodic benefit costs.

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

	Pension								Postretirement
	Domestic				International				Domestic
June 30,	2021		2020		2021		2020		2021		2020
(In millions)
Unrecognized net actuarial losses (gains), net of taxes	$	2.7	$	25.4	$	66.2	$	27.5	$	(1.6)	$	(1.3)
Unrecognized prior service cost, net of taxes	0.5		0.7		8.7		6.7		—		—
Total	$	3.2	$	26.1	$	74.9	$	34.2	$	(1.6)	$	(1.3)

Assumptions

Benefit obligations were determined using the following weighted average assumptions:

	Pension								Postretirement
	Domestic				International					Domestic
June 30,	2021		2020		2021		2020			2021		2020
Weighted average assumptions
Discount rate	2.55	%	2.43	%	1.57	%	1.17	%		2.75	%	2.65	%
Rate of compensation increase	3.01	%	3.07	%	n/a		n/a			3.50	%	3.50	%
Cash balance interest credit rate	2.14	%	2.08	%	n/a		n/a			n/a		n/a
n/a - Not applicable

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

	Pension													Postretirement
	Domestic						International							Domestic
Years ended June 30,	2021		2020		2019			2021		2020		2019		2021		2020		2019
Weighted average assumptions
Discount rate	2.43	%	3.39	%	4.03	%		1.17	%	2.24	%	2.57	%	2.65	%	3.45	%	4.10	%
Expected return on plan assets	7.00	%	8.00	%	8.00	%		1.70	%	2.20	%	3.89	%	n/a		n/a		n/a
Rate of compensation increase	3.07	%	3.09	%	3.50	%		n/a		n/a		n/a		3.50	%	3.50	%	3.50	%
n/a - Not applicable

The assumed health care cost trend rates used to measure the expected cost of benefits were as follows:

	Postretirement
Assumed healthcare cost trend rates as of June 30,	2021		2020		2019
Rate of increase in health care cost levels
Initial level	6.50	%	5.50	%	6.00	%
Ultimate level	5.00	%	5.00	%	5.00	%
Years to ultimate level	6 years		2 years		3 years

Pension expense is calculated using a number of actuarial assumptions, including an expected long-term rate of return on plan assets and a discount rate. In developing the expected long-term rate of return on plan assets, the Company considered long-term historical rates of return, plan asset allocations as well as the opinions and outlooks of investment professionals and consulting firms. Returns projected by such consultants and economists are based on broad equity and bond indices. The objective is to select an average rate of earnings expected on existing plan assets and expected contributions to the plan during the year. The Company reviews this long-term assumption on a periodic basis.

The value (market-related value) of plan assets is multiplied by the expected long-term rate of return on plan assets to compute the expected return on plan assets, a component of net periodic pension cost. The market-related value of plan assets is a calculated value that recognizes changes in fair value over three years.

Plan Assets

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

	Domestic								International
	2021 Allocation				2020 Allocation				2021 Allocation				2020 Allocation
June 30,	Target		Actual		Target		Actual		Target		Actual		Target		Actual
Equity securities	63	%	66	%	70	%	69	%	2	%	2	%	7	%	6	%
Fixed-income securities	37	%	32	%	30	%	30	%	61	%	62	%	55	%	56	%
Other securities 1	—	%	2	%	—	%	1	%	37	%	36	%	38	%	38	%
Total	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%
1 Other primarily includes pooled investment funds and an insurance buy-in contract.

Meredith’s investment policy for domestic plans 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 fixed-income) as funding levels improve. The reverse effect occurs when funding levels decrease.

The trustees of the IPC Media Pension Scheme (IPC Plan) defined benefit pension plan in the U.K. have delegated the day-to-day investment decisions of the IPC Plan to a large international fiduciary manager and utilize an investment manager to monitor investment performance and the reporting of the fiduciary manager. The investment objective of the IPC Plan is to invest the assets prudently with the intention that the benefits promised to the

members are provided. Funding level based de-risking triggers have been established such that the investment strategy evolves as the funding level moves along an agreed glide path. As the funding level improves, the investment strategy will de-risk. Each trigger level specifies a minimum interest rate and hedge rate ratio and a maximum allocation to growth assets, which target a diversified portfolio using specialist managers and asset classes.

Equity securities did not include any Meredith Corporation common or class B stock at June 30, 2021 or 2020.

Fair value measurements for domestic pension plan assets were as follows:

(In millions)	Total Fair Value		Quoted Prices (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
June 30, 2021
Investments in registered investment companies
Equity	$	99.5		$	75.8		$	23.7		$	—
Fixed Income	48.5			8.3			40.2			—
Pooled separate accounts	2.4			—			2.4			—
Total assets at fair value	$	150.4		$	84.1		$	66.3		$	—
June 30, 2020
Investments in registered investment companies
Equity	$	86.2		$	63.9		$	22.3		$	—
Fixed Income	38.0			—			38.0			—
Pooled separate accounts	1.6			—			1.6			—
Total assets at fair value	$	125.8		$	63.9		$	61.9		$	—

Fair value measurements for international pension plan assets were as follows:

(In millions)	Total Fair Value		Quoted Prices (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
June 30, 2021
Cash and cash equivalents	$	4.8		$	4.8		$	—		$	—
Pooled investments
Equity	12.9			1.1			11.8			—
Fixed Income	55.3			6.8			48.5			—
Other	584.9			—			584.9			—
Insurance buy-in contract	365.0			—			—			365.0
Total assets at fair value	$	1,022.9		$	12.7		$	645.2		$	365.0
June 30, 2020
Cash and cash equivalents	$	10.3		$	8.9		$	1.4		$	—
Pooled investments
Equity	58.8			1.5			57.3			—
Fixed Income	277.2			9.3			267.9			—
Other	253.6			—			253.6			—
Insurance buy-in contract	349.0			—			—			349.0
Total assets at fair value	$	948.9		$	19.7		$	580.2		$	349.0

The international pension plans hold investments in liability matching funds whose objective is to provide leveraged returns equal to that of the liabilities. In order to do so, these funds invest in U.K. Treasury Gilt bonds, Gilt Total Return Swaps, Repurchase Transactions, and cash or money markets to provide liquidity to meet payment obligations or post as collateral in the derivative transactions they enter into. These liability matching funds are included in Other pooled investments in the table above.

The trustees of the IPC Plan implemented a new investment strategy in fiscal 2020 to further reduce risk without adversely affecting return. The trustees entered into an insurance buy-in contract with a private limited life insurance company to insure a portion of the IPC Plan, covering approximately 30 percent of IPC Plan participants, which is intended to provide payments designed to equal all future designated contractual benefit payments to covered participants. The benefit obligation was not transferred to the insurer, and the Company remains responsible for paying pension benefits. The assets and liabilities with respect to insured participants are assumed to match (i.e., the full benefits have been insured). The initial value of the asset associated with this contract was equal to the premium paid to secure the contract and is adjusted each reporting period to reflect the estimated fair value of the premium that would be paid for such a contract at that time. As the valuation of this asset is judgmental, and there are no observable inputs associated with the valuation, the insurance buy-in contract is presented as a Level 3 investment. Refer to Note 12 for a discussion of the three levels in the hierarchy of fair values.

The following table provides a reconciliation of the beginning and ending balances of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

Year ended June 30,	2021		2020
(In millions)
Balance at beginning of year	$	349.0	$	—
Purchases	—		353.6
Settlements	(11.7)		—
Change in fair value	(16.1)		(3.2)
Foreign currency translation	43.8		(1.4)
Balance at end of year	$	365.0	$	349.0

There were no transfers in or out of Level 3 investments for the years ended June 30, 2021 and 2020.

Cash Flows

Although the Company does not have a minimum funding requirement for the domestic pension plans in fiscal 2022, the Company is currently determining what voluntary pension plan contributions, if any, will be made in fiscal 2022 to the domestic plan. Actual contributions will be dependent upon investment returns, changes in pension obligations, and other economic and regulatory factors. Meredith expects to contribute $0.6 million to its postretirement plan in fiscal 2022.

Monthly contributions of £0.9 million are required to be made to the IPC Plan. In the event that on November 25, 2021, the IPC Plan has a funding deficit valuing its liabilities with a gilts plus 50 basis point discount rate, the Company, as the sponsor of the IPC Plan, will make a contribution equal to that funding deficit. In the event that on November 25, 2025, the IPC Plan has a funding deficit valuing its liabilities with a gilts flat discount rate, the Company will make a contribution equal to 50 percent of that funding deficit. In the event that on November 25, 2026, the IPC Plan has a funding deficit valuing its liabilities with a gilts flat discount rate, the Company will make a contribution equal to 50 percent of that funding deficit. In the event that on November 25, 2027, the IPC Plan has a funding deficit valuing its liabilities with a gilts flat discount rate, the Company will make a contribution equal to that funding deficit. Contributions shall cease to be payable from the date that the IPC Plan is confirmed to be fully funded.

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 millions)		Domestic		International			Domestic
2022		$	17.3	$	18.8		$	0.6
2023		16.9		19.4			0.6
2024		16.2		20.4			0.5
2025		19.3		22.7			0.5
2026		18.1		23.0			0.5
2027-2031		74.5		131.4			2.3

Other

The Company maintains collateral assignment split-dollar life insurance arrangements on certain key officers and retirees. The net periodic pension cost for fiscal 2021, 2020, and 2019 was $0.2 million, $0.2 million, and $0.2 million, respectively, and the accrued liability at June 30, 2021 and 2020, was $3.0 million and $3.1 million, respectively.