Transaction Accounting Adjustments – Adjustments that reflect the application of required accounting for the Transactions and other related transactions as follows:

in the pro forma condensed balance sheet, as though they occurred as of March 31, 2021; and

in the pro forma condensed statements of earnings (loss), the effects of the above pro forma balance sheet adjustments assuming those adjustments were made as of July 1, 2019.

Autonomous Entity Adjustments – Adjustments that are necessary to reflect the operations and financial position of NMG SpinCo as an autonomous entity.

(a)

As Originally
Reported

(b)

Separation
Adjustments

(c)

Other

Current assets

Cash and cash equivalents

(854.2)

751.2 

(35.6)

(2)

(3)

(4)

Accounts receivable, net

Inventories

Current portion of subscription acquisition costs

Other current assets

Total current assets

Property, plant, and equipment

Less accumulated depreciation

Net property, plant, and equipment

Operating lease assets

Subscription acquisition costs

Other assets

Intangible assets, net

Goodwill

Total assets

(b)

Separation
Adjustments

(c)

Other

Current liabilities

Current portion of long-term debt

18.1

(3

) 

Current portion of operating lease liabilities

Accounts payable

Accrued expenses and other liabilities

Current portion of unearned revenues

Total current liabilities

Long-term debt

733.1

(3

) 

Operating lease liabilities

Unearned revenues

Deferred income taxes

Other noncurrent liabilities

Total liabilities

Shareholders’ equity

Series preferred stock, par value $1 per share

Common stock, par value $1 per share

Class B stock, par value $1 per share, convertible to common stock

Additional paid-in capital

Retained earnings

983.1

(824.0

(6.3

) 

) 

(4

(6

(7

) 

) 

) 

Accumulated other comprehensive loss

Total shareholders’ equity

Total liabilities and shareholders’ equity

(a)

As Originally
Reported

(b)

Separation
Adjustments

(c)

Other

(d)

Autonomous
Entity
Adjustments

Revenues

Advertising related

Consumer related

Other

Total revenues

Operating expenses

Production, distribution, and editorial

Selling, general, and administrative

Acquisition, disposition, and restructuring related activities

Depreciation and amortization

Total operating expenses

Income from operations

Non-operating income, net

Interest expense, net

Earnings from continuing operations before income taxes

Income tax expense

Earnings from continuing operations

Earnings from continuing operations attributable to common shareholders

11.5

(1

) 

Basic earnings per share attributable to common shareholders

Continuing operations

Basic average common shares outstanding

Diluted earnings per share attributable to common shareholders

Continuing operations

Diluted average common shares outstanding

(e)

As
Originally
Reported

(b)

Separation
Adjustments

(c)

Other

(d)

Autonomous
Entity
Adjustments

Revenues

Advertising related

Consumer related

Other

Total revenues

Operating expenses

Production, distribution, and editorial

Selling, general, and administrative

(6.7

) 

(8)

Acquisition, disposition, and restructuring related activities

Depreciation and amortization

Impairment of goodwill and other long-lived assets

Total operating expenses

Loss from operations

Non-operating income, net

Interest expense, net

Loss from continuing operations before income taxes

Income tax benefit

Loss from continuing operations

Loss from continuing operations attributable to common shareholders

2.9
1.8

(1)

(10)

Basic loss per share attributable to common shareholders

Continuing operations

Basic average common shares outstanding

Diluted loss per share attributable to common shareholders

Continuing operations

Diluted average common shares outstanding

(e)

As Originally
Reported

(f)

Reclassification
Adjustments

Revenues

Advertising related

Consumer related

Other

Total revenues

Operating expenses

Production, distribution, and editorial

Selling, general, and administrative

Acquisition, disposition, and restructuring related activities

Depreciation and amortization

Impairment of goodwill and other long-lived assets

Total operating expenses

Income from operations

Non-operating income, net

Interest expense, net

Income (loss) from continuing operations before income taxes

Income tax benefit (expense)

Earnings (loss) from continuing operations

Earnings (loss) from continuing operations attributable to common shareholders

Basic earnings (loss) per share attributable to common shareholders

Continuing operations

Basic average common shares outstanding

Diluted earnings (loss) per share attributable to common shareholders

Continuing operations

Diluted average common shares outstanding

(e)

As Originally
Reported

(f)

Reclassification
Adjustments

Revenues

Advertising related

Consumer related

Other

Total revenues

Operating expenses

Production, distribution, and editorial

Selling, general, and administrative

Acquisition, disposition, and restructuring related activities

Depreciation and amortization

Impairment of goodwill and other long-lived assets

Total operating expenses

Income (loss) from operations

Non-operating income (expense), net

Interest expense, net

Loss from continuing operations before income taxes

Income tax benefit

Earnings (loss) from continuing operations

Earnings (loss) from continuing operations attributable to common shareholders

Basic earnings (loss) per share attributable to common shareholders

Continuing operations

Basic average common shares outstanding

Diluted earnings (loss) per share attributable to common shareholders

Continuing operations

Diluted average common shares outstanding

Amounts as originally reported by Meredith in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2021.

Represents the elimination of the net assets and results of LMG, net of PeopleTV and MNI, both of which were historically reported under that segment but will be transferred to NMG immediately prior to the Transactions, together with certain other associated net assets that will be transferred in the Transactions.

Other transaction related pro forma adjustments are as follows:

On June 30, 2021, Meredith paid $67.0 million to redeem warrants to purchase up to 1,625,000 shares of Meredith Common Stock. The redemption of the warrants results in a $26.0 million reduction to the cash payment described in note (2) below. Income historically attributable to the redeemed warrants and eliminated in the pro forma condensed statements of earnings (loss) was as follows:

(In millions)

Income attributable to warrants

NMG SpinCo is required to make a cash payment of an amount that will result in the net debt (calculated as outstanding principal plus debt breakage fees minus LMG cash on hand to be transferred in the Transactions to Gray) being equal to $1,975.0 million, as adjusted for Meredith equity awards retired or issued prior to closing and as may be further adjusted downward for unpaid expenses incurred by Meredith. The cash payment depicted in the pro forma condensed financial statements is calculated as set forth below:

Carrying value of long-term debt at March 31, 2021

Current portion of long-term debt

Long-term debt

Total long-term debt

Unamortized discount and debt issuance costs relating to debt repaid in connection with the Transactions

Debt breakage fees

Pro forma closing net debt amount

Adjusted target net debt

Target net debt

Adjustment for warrant redemption – See note (1)

less: Adjusted target net debt

Debt repaid with NMG SpinCo cash

Adjustment for LMG cash on hand at March 31, 2021

Net cash payment required

Represents the impact of new debt facilities entered into by NMG SpinCo, as follows:

$725 million term loan

$200 million revolving credit facility

Total long-term debt

Current portion of long-term debt

Long-term debt

¹L is an abbreviation for London Interbank Offered Rate (“LIBOR”)

²Includes amortization of deferred debt issuance costs

³LIBOR subject to a floor of 0.50%

Debt repaid with NMG SpinCo cash

less: Cash on hand as of March 31, 2021

Other cash expenditures

Warrant redemption

Estimated transaction fees

Settlement of share-based awards

Total other cash payments

Pro forma NMG SpinCo cash balance as of March 31, 2021

Required net borrowing

Debt issuance costs

Required gross borrowing

Term loan proceeds

Funding of revolving credit facility

Interest expense on historical debt facilities

Interest expense on new debt facilities

Debt extinguishment costs

Acceleration of amortization of debt issuance costs relating to debt repaid in connection with the Transactions

Acceleration of amortization of debt issuance costs relating to terminated revolving credit facility ($0 outstanding)

Net interest expense adjustment

$725 million term loan

$200 million revolving credit facility

Total

The gain on disposal is calculated as follows:

Cash consideration of $16.99 per share paid by Gray and distributed to holders of Meredith Common Stock and Meredith Class B Stock

Adjusted target net debt satisfied by Gray

Net consideration

LMG cash on hand sent to Gray in Transactions

Assets and liabilities disposed of

Assets

Liabilities

less: Net assets disposed of

Unamortized discount and debt issuance costs

Debt breakage fees

Other transaction-related expenses

Estimated transaction fees¹

Settlement of share-based awards²

Total other transaction-related expenses

Pro forma gain on disposal

¹   Transaction fees do not include advisor fees that are not contingent upon consummation of the Transactions

²   Amounts paid out for share-based compensation related to unvested NMG SpinCo awards held by LMG employees

Represents the establishment of a $76.2 million deferred tax asset related to NMG SpinCo unearned subscription revenue that is recognized for income tax purposes as a result of the Transactions and results in a corresponding income tax payable.

Represents cash distribution to shareholders of net proceeds from the Transactions.

Represents the effects of acceleration of share-based compensation expense for employees remaining with NMG SpinCo related to Meredith awards being canceled and paid out.

Represents reduction of share-based compensation expense for employees remaining with NMG SpinCo that is expected to result from the modification of awards in connection with the Transactions.

Represents income tax effects of all required adjustments using the Meredith’s statutory rate of 25.5% during the periods presented.

On June 30, 2020, Meredith redeemed all of its outstanding Series A preferred stock. Accordingly, the preferred stock is not contemplated in the Transactions. This adjustment gives effect to the redemption as of July 1, 2019 in the pro forma condensed statements of earnings (loss).

Represents incremental costs that, in the absence of action to avoid such costs (i.e., management’s intent to implement cost-savings initiatives to reduce the corporate burden on the business), would be expected to be incurred by NMG SpinCo as a standalone entity. The expenses include selling, general, and administrative corporate costs of Meredith that were historically allocated to LMG.

Amounts as originally reported by Meredith in its Annual Report on Form 10-K for the year ended June 30, 2020.

Represents the elimination from continuing operations of the results of LMG, net of PeopleTV and MNI, both of which were historically reported under that segment, but will be transferred to NMG immediately prior to the Transactions. As LMG is being disposed of in a spin-off transaction rather than by sale, those operations are not yet required to be presented as discontinued operations in the historical financial statements and accordingly are reclassified herein on a pro forma basis.