Meredith
Chairman and Chief Executive Officer William T. Kerr, at right,
is pictured with E.T. Meredith III, Chairman of the Executive
Committee of the Board of Directors, in the Better Homes and
Gardens Test Garden in downtown Des Moines, Iowa.
To Our Shareholders:
Fiscal
2000 was another year of improved financial performance for
Meredith.
•
Earnings per share grew to a record $1.71, marking our eighth
consecutive year of improved earnings from continuing operations.
•
Earnings before interest, taxes, depreciation and amortization
grew 10 percent to a record $236.8 million.
•
Return on equity was 21.3 percent.
These results include the impact of strategic investments in
circulation and the Internet. However, these results exclude
one-time pre-tax charges of $23.1 million, or 36 cents per share,
primarily associated with the closing of certain magazine titles
that no longer fit our business strategies.
As you read this report, you will note that our Publishing Group
recorded an exceptional year of financial growth. Nearly all
of our publications continued to improve their performance.
Our exceptional brands and proven strategies have fueled the
Publishing Group’s history of strong performance and position
us for continued growth.
In fiscal 2000, we made an important strategic move by creating
the Interactive and Integrated Marketing Group. The new group
aligns our interactive media, integrated marketing and database
operations, but also remains closely aligned with our publishing
business. The group provides significant growth opportunities
for Meredith.
Our Broadcasting Group made significant strides in fiscal 2000.
Of particular note were sales, news and programming enhancements
implemented at our CBS affiliate in Atlanta. Additionally, we
continued to expand our news and improve programming and marketing
across the group. However, broadcasting did not meet our performance
expectations in fiscal 2000. We are implementing several initiatives,
discussed later in this report, that focus on revenue and margin
improvement for our television stations, both in the intermediate
term and over time.
We recognize that our acquisition of the Atlanta television
station in March 1999 and our accelerated Internet and circulation
investments have temporarily slowed our rate of very strong
earnings growth. We believe these factors, along with uncertainty
surrounding local television broadcasting and our Broadcasting
Group’s performance in particular, contributed to the volatility
of our stock price in fiscal 2000. Nevertheless, we are confident
that our investments and business strategies will drive significant
long-term financial growth and profitable market share gains,
which are critical for building shareholder value over time.
Reflecting our belief in the company and our strategies, we
have increased our stock repurchase program. We repurchased
1.7 million shares in fiscal 2000, with the majority purchased
in the second half of the year. This compares to the 1.1 million
shares repurchased in the prior year.
Building
shareholder value
Convergence
and consolidation are creating sweeping changes in the marketplace,
and the blending of new and traditional media presents both
challenges and opportunities. Through this transition, our commitment
to serving our customers and building value for our shareholders
remains unchanged.
As we look to the future, Meredith possesses a tremendous and
unique set of assets that will be instrumental in achieving
our growth objectives:
•
We have well-established publishing and broadcasting brands
that have earned the trust of consumers. Our brands go far beyond
product identity – they represent trusted, quality products
that provide a strong bond between our company, our audiences
and our marketing customers. This bond will be the key to building
new brands and extending our existing brands to create successful
new businesses.
Taking a long-term
view of the company, we see Meredith's future predicated on
two broad concepts. First, we will be the leading provider of
home and family content valued by consumers and delivered through
any medium. Second, we will be a leading marketing company,
uniquely positioned to deliver the messages of our customers.
•
With these brands, we create a wealth of content that can be
delivered in many formats. Our history and strong market position
in magazine and book publishing provide a solid foundation for
our home and family content expertise. This content can be distributed
through any medium – whether it’s printed in our magazines and
books, or applied to the Internet or television programming.
The same is true in our broadcasting markets, where we are experts
in local news, weather, sports and other community information.
•
Through our publishing and broadcasting operations, we reach
more than 75 million consumers each month. This provides invaluable
opportunities to promote our own products, in addition to those
of our marketing customers. While many Internet start-ups are
spending millions of dollars each year to market their new brands,
products and Web sites, we already have many promotional vehicles
in place.
•
Our consumer database contains more than 60 million names, with
information on seven out of ten U.S. home-owning households.
Beyond its sheer size, our database represents a deep knowledge
of a very demographically attractive market. The people included
are more than just consumers – they have families, they own
homes, they immerse themselves in a variety of interests and
activities, and they have tremendous disposable income and buying
power. Our sophisticated application of this information makes
the database a valuable marketing tool.
•
Our Internet presence includes 26 sites with a growing number
of unique applications to generate user traffic and registrations
– critical for revenue growth and circulation efficiencies.
The Internet is founded on connectivity, integration and personalization.
These traits complement our existing businesses and result in
exciting new opportunities. Our presence and progress in this
medium provide a catalyst for future growth.
•
Our integrated marketing business provides services that help
our clients strengthen their relationships with consumers. Our
consumer insight, editorial expertise and distribution resources
translate into high-value communications programs for a large
and growing number of well-known companies and brands.
•
Finally, our employees – and their integrity, creativity, initiative,
teamwork and entrepreneurial spirit – are the
company’s most important resource. After all, it is our employees
who build the brands, create and distribute the content, analyze
the consumer database and implement the marketing programs.
A top priority is to continue recruiting, developing and retaining
an exceptionally talented workforce.
A
vision to guide us
We
will use this extensive set of assets and expertise to embrace
evolving market trends and accomplish our strategic objectives.
We recognize what our company must accomplish to create value
for our shareholders over time. Our immediate focus is on several
tasks:
•
Continuing the strong performance of our Publishing Group.
•
Strengthening the performance of our Broadcasting Group.
•
Cycling through our current investment program to ensure strong
earnings growth.
•
Identifying additional ways to accelerate our revenue growth.
•
Building and retaining a superior workforce.
Over the long term, we see Meredith’s future predicated on two
broad concepts.
First, we will be the leading provider of home and family content
valued by consumers and delivered through any medium. This has
been our foundation, and many of our products already provide
market-leading content. Nevertheless, our ability to adapt and
continue creating timely, helpful service journalism, which
inspires our audiences and enables them to take action, will
remain our core.
Second, we will be a leading marketing company, uniquely positioned
to deliver the messages of our advertising and marketing customers.
Through traditional advertising that reaches millions of consumers
at a time, through custom one-to-one programs, and through integrated
programs that involve several media distribution platforms,
we will continue to deliver results that help our clients build
their brands and sell their products and services.
This dual focus will result in exceptional businesses that produce
strong financial results and build value for shareholders for
many years.
We want to thank our shareholders, customers and employees for
their continued support. Meredith is a great company with a
proud tradition and an outstanding record of achievement. Our
best days are yet to come. We look forward to growing and enhancing
Meredith’s leadership position in the media and marketing business.
Sincerely,

William T. Kerr
Chairman of the Board and
Chief Executive Officer

ET Meredith III
Chairman of the Executive Committee
of the Board of Directors
August
30, 2000
MANAGEMENT
& BOARD DEVELOPMENTS
We’re
pleased to welcome Suku V. Radia as our new vice president–chief
financial officer. He has extensive experience counseling
senior management of national and international companies. Suku
replaces Stephen M. Lacy, who became president of the new Interactive
and Integrated Marketing Group. We are confident that this group,
under Steve’s capable leadership, will significantly drive growth
for Meredith.
Additionally, we promoted Cary D. Jones to president of our
Broadcasting Group. Cary’s experience and leadership will play
a vital role in the execution of our broadcasting initiatives.
Richard S. Levitt will retire from our board of directors, effective
with the November 2000 annual shareholder meeting. We have greatly
valued his counsel and service throughout his 30 years as a
director.
Mell Meredith Frazier has been nominated to fill Mr. Levitt’s
position. Mell has worked in a variety of strategic and financial
positions in the company. She currently is director of corporate
planning. Her nomination is part of a long-term transition planned
for Meredith family representation on the board.
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