-1-

 -2-

The Company was founded by Edwin Thomas Meredith in 1902 as an agricultural publisher and incorporated in Iowa in 1905. Meredith Corporation became public in 1946 and entered the television broadcasting business in 1948. It has been listed on the New York Stock Exchange since 1965 and currently has approximately 50 million shares of common and class B stock outstanding. The Company had 2,706 employees (including 120 part-time employees) at June 30, 2005.

Meredith's annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports are available free of charge on the Company's website at www.meredith.com as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission. Also, copies of the Company's annual report to shareholders, including Form 10-K, will be made available, free of charge, upon written request.

The Company has two operating segments: publishing and broadcasting. Financial information about industry segments can be found in Item 7-Management's Discussion and Analysis of Financial Condition and Results of Operations, and in Item 8-Financial Statements and Supplementary Data under Note 18. These segments had no material expenses for research and development during the past three fiscal years.

The publishing segment focuses on the home and family market. It is a leading publisher of magazines serving women. Twenty subscription magazines, including Better Homes and Gardens, Ladies' Home Journal, and American Baby, and approximately 200 special interest publications were published in fiscal 2005. The publishing segment also consists of book publishing with approximately 350 books in print; integrated marketing relationships with some of America's leading companies; a large consumer database; an extensive Internet presence, including 24 web sites and strategic alliances with leading Internet destinations; brand licensing relationships; and other related operations.

The broadcasting segment includes the operations of 14 network-affiliated television stations located across the continental United States and one AM radio station. The television stations consist of six CBS affiliates, four FOX affiliates, two WB affiliates, one NBC affiliate, and one UPN affiliate.

The Company's largest revenue source is magazine and television advertising. Television advertising is to some extent seasonal, traditionally generating higher revenues in the second and fourth fiscal quarters and during key political contests, major sporting events, etc.

Name recognition and the public image of the Company's trademarks (e.g., Better Homes and Gardens and Ladies' Home Journal) and television station call letters are vital to the success of ongoing operations and to the introduction of new business. The Company protects its brands by aggressively defending its trademarks and call letters.

Compliance with federal, state, and local provisions relating to the discharge of materials into the environment and to the protection of the environment has no material effect on capital expenditures, earnings, or the competitive position of the Company.

In January 2005, Meredith announced the launch of its first lifestyle and shelter publication aimed at the growing marketplace of Hispanic women and homeowners. The magazine will be titled Siempre Mujer and will premiere in fall 2005 on a bi-monthly basis with an initial rate base of 350,000.

In May 2005, the Company announced plans to acquire Parents, Family Circle, Fitness, Child, and Ser Padres magazines from Gruner + Jahr Printing and Publishing Co. for $350 million. The acquisition closed on July 1, 2005.

Parents, founded in 1926, is published 12 times annually with a current rate base of 2.2 million. It generated 1,467 advertising pages in calendar 2004, according to Publishers Information Bureau (PIB). Two special interest publications are also published under the Parents Media Group banner.   

Family Circle, founded in 1932, is published 15 times annually with a current rate base of 4.2 million. It generated 1,372 advertising pages in calendar 2004, according to PIB.

Fitness, launched in 1983, is published 12 times annually with a current rate base of 1.5 million. It generated 1,002 advertising pages in calendar 2004, according to PIB.

Child, started in 1986, is published 10 times annually with a current rate base of approximately 1 million. It generated 1,023 advertising pages in calendar 2004, according to PIB.

Ser Padres is a Spanish-language publication. It is published 6 times annually with a current distribution base of 500,000.

As a result of the acquisition, Meredith titles reach more than 75 million American women according to Mediamark Research Inc. (MRI) and internal Company estimates for special interest publications, giving Meredith the largest female reach in the magazine industry. Meredith titles will have a combined circulation approaching 30 million, making it the second-largest consumer magazine publisher in the United States, according to data gathered from the Audit Bureau of Circulations (ABC) and BPA Worldwide. The acquisition also helps implement Meredith's previously articulated corporate strategies, especially its initiative to attract younger women readers to Meredith magazines. Meredith's advertising pages are expected to increase 60 percent to nearly 13,000 annually, as measured by PIB, and Meredith Publishing Group revenues are expected to increase approximately $300 million to more than $1.2 billion, a gain of 33 percent. The acquisition is expected to be modestly accretive to earnings per share.

Publishing represented 74 percent of the Company's consolidated revenues in fiscal 2005. Better Homes and Gardens magazine, the Company's flagship, accounts for a significant percentage of revenues and operating profit of the publishing segment and the Company.

Information for major subscription magazine titles as of June 30, 2005 follows:

Meredith's other subscription magazines include Successful Farming, WOOD, American Patchwork & Quilting, and Country Gardens.

Additionally the Company publishes a group of Special Interest Publications, primarily under the Better Homes and Gardens and Creative Collection banners, that are issued from one to six times a year and primarily sold on newsstands. A limited number of subscriptions are also sold to certain of our Special Interest Publications. Titles published quarterly or every other month include Beautiful Homes; Bedroom & Bath; Creative Home; Decorating; Diabetic Living; Do It Yourself; Garden, Deck & Landscape; Garden Ideas & Outdoor Living; Kitchen and Bath Ideas; 100 Ideas series; Paint Décor; Remodeling Ideas; Renovation Style; Scrapbooks etc.; Simply Perfect Kids Rooms; and Window & Wall Ideas. The Company also publishes a number of Hispanic special interest titles under the American Baby brand including Espera, 12 Meses, and Healthy Kids En Español. In fiscal 2005, over 200 special interest titles were published.

Meredith Interactive Media has extended many of the Company's magazine brands to the Internet. The flagship home and family site-bhg.com-is a leader in providing unique content and applications in its core content areas of decorating, food, home improvement, and remodeling. The Company has established multi-year alliance agreements with two of the leading Internet providers, driving additional traffic to the Company's sites. These web sites are additional sources of advertising and other revenues; and a means to reduce cost through online magazine subscription orders.

Advertising revenues are generated primarily from sales to clients engaged in consumer marketing. Many of Meredith's larger magazines offer different regional and demographic editions that contain the same basic editorial material but allow advertisers to customize their message to markets or specific audiences. The Company sells two primary types of magazine advertising: display and direct-response. Advertisements are either run-of-press (printed along with the editorial portions of the magazine) or inserts (preprinted pages). Most of the publishing segment's advertising revenues are derived from run-of-press display advertising. Meredith Corporate Sales and Marketing brings together all of the Company's resources to create multi-platform marketing programs that meet each client's unique advertising and promotional requirements.

Subscriptions obtained through direct-mail solicitation, agencies, insert cards, the Internet, and other means are Meredith's largest source of circulation revenues. All of the Company's subscription magazines except Successful Farming and American Baby are also sold by single copy as well. Single copies sold on newsstands are distributed through magazine wholesalers, who have the right to receive credit from the Company for magazines that retailers return to them.

Other revenues are derived from book sales, integrated marketing, other custom publishing projects, ancillary products and services, and brand licensing agreements.

The Company publishes and markets approximately 350 books directed primarily to the home, family and children markets. They are published under the Better Homes and Gardens trademark and under the licensed trademarks such as The Home Depot® books and Scotts Miracle Gro® books. Meredith also published books based on properties of the HGTV Home and Garden Television®, Food Network®, and Discovery Channel® cable networks in fiscal 2005. The Company's books are sold through retail book and specialty stores, mass merchandisers, and other channels. During fiscal 2005, over 150 new or revised titles were published.

Meredith Integrated Marketing, which offers integrated promotional, database management, relationship and direct marketing capabilities for corporate customers, and Meredith's consumer database, which can make approximately 80 million names available to magazine and television advertisers, are important because they provide revenue sources that are independent of advertising and circulation. Fiscal 2005 clients included DIRECTV, Nestlé, DaimlerChrysler, Carnival Cruise Lines, Publix and Hyundai.

The major raw materials essential to the publishing segment are coated publication and book-grade papers. Meredith directly purchases all of the paper for its magazine production and most of the paper for its book production. Average paper prices increased approximately 6 percent in fiscal 2005 from fiscal 2004. The price of paper is driven by overall market conditions and is therefore difficult to predict, but management anticipates paper prices will rise over the next year due to tight supplies and growing demand. The Company has contractual agreements with major paper manufacturers to ensure adequate supplies for planned publishing requirements.

Meredith has printing contracts with several major domestic printers for all of its magazine titles. The Company has a contract with a major U.S. printer for the majority of its book titles. Other titles are manufactured on a title-by-title basis by either domestic or foreign printers.

Because of the large volume of magazine and subscription promotion mailings, postage is a significant expense to the publishing segment. The Company continually seeks the most economical and effective methods for mail delivery, including cost-saving measures such as pre-sorting and drop-shipping to central postal centers. The United States Postal Service has proposed a rate increase that would be effective early in calendar year 2006. If approved, the increase will raise costs between 5 and 6 percent. Meredith continues to work with others in the industry and through trade organizations to encourage the Postal Service to implement efficiencies and contain rate increases. The Company cannot, however, predict future changes in the Postal Service and postal rates or the impact they will have on its publishing business.

Paper, printing, and postage costs accounted for approximately 44 percent of the publishing segment's fiscal 2005 operating expenses.

Fulfillment services for Meredith's publishing segment are provided by a third party. National magazine newsstand distribution services are provided by another third party through a multi-year agreement.

Broadcasting represented 26 percent of Meredith's consolidated revenues in fiscal 2005. Pertinent information about the Company's television stations owned or operated at June 30, 2005 follows:

In August 2004, Meredith acquired WFLI-TV, the WB television affiliate in Chattanooga, TN.

In November 2004, Meredith acquired the non-license assets of KSMO-TV, the WB affiliate in Kansas City, and entered into a joint sales agreement under which the Company manages the sales and certain other operations of KSMO. Meredith also has asked the Federal Communications Commission for a waiver of its duopoly rules to allow Meredith to purchase the station's license assets and acquire the station's license. The Company already owns KCTV, the CBS affiliate in Kansas City.

Advertising is the principal source of revenues for the broadcasting segment. The stations sell commercial time to both local/regional and national advertisers. Rates for spot advertising are influenced primarily by the market size, number of in-market broadcasters, audience share, and audience demographics. The larger a station's share in any particular daypart, the more leverage a station has in setting advertising rates. As the market fluctuates with supply and demand, so do a station's rates. Most national advertising is sold by independent representative firms. The sales staff at each station generates local/regional advertising revenues.

Typically 30 to 40 percent of a market's television advertising revenues is generated by local news on major network-affiliated stations. The Company's stations are continually working to improve their news operations and ratings.

The national network affiliations of Meredith's 14 television stations influence advertising rates. Generally a network affiliation agreement provides a station the exclusive right to broadcast network programming in its local service area. In return, the network has the right to sell most of the commercial advertising aired during network programs. In some instances, the network compensates the local stations in accordance with the television station's network affiliation agreement. Conversely, affiliated stations make payments to the network for certain specified programming such as professional football. As a standard practice, the FOX, UPN and WB networks make no cash payments to affiliates. The Company's FOX affiliates, however, pay the FOX network for additional advertising spots in prime-time programming. Network compensation has declined gradually at most stations over the past several years. This industry trend is expected to result in the eventual elimination of network compensation. Revenues from network affiliation agreements are not material to Meredith.

The Company's six CBS affiliates have agreements that expire from April 2006 to December 2011. Meredith's affiliation agreements for its four FOX-affiliated stations expire in June 2007. The Company's Nashville station has an affiliation agreement with NBC that expires in December 2013, the Portland UPN affiliation agreement expires in August 2010, and the Chattanooga WB affiliation agreement expires in April 2007. While Meredith's relations with the networks historically have been good, the Company can make no assurances these relationships will continue in the same manner over time.

The costs of locally produced and purchased syndicated programming are significant. Syndicated programming costs are based largely on demand from stations in the market and can fluctuate significantly. The Company has been emphasizing its locally produced news and entertainment programming, not only to attract advertisers but also to gain greater control of content and costs. Changes in Federal Communication Commission (FCC) regulations (see "Regulation") may lead to increased ownership consolidation, which in turn could affect local market competition for syndicated programming and lead to higher costs.

Meredith's television and radio stations compete directly for advertising dollars and programming in each of their markets with other television and radio stations and cable television providers. Other mass media providers such as newspapers, web sites, and direct broadcast satellite are also competitors. Advertisers compare market share, audience demographics, and advertising rates and take into account audience acceptance of a station's programming, whether local, network, or syndicated.

Television and radio broadcasting operations and ownership are subject to regulation by the FCC under the Communications Act of 1934 as amended (Communications Act). Among other things, the FCC allots channels for television and radio broadcasting; determines the particular frequencies, locations and operating power of television and radio stations; issues, renews and modifies station licenses; determines whether to approve changes in ownership or control of station licenses; regulates equipment used by stations; adopts and implements regulations and policies that directly or indirectly affect the ownership, operation, program content, employment practices and business of stations; and has the power to impose penalties, including license revocations, for violations of its rules or the Communications Act.

Television broadcast licenses are granted for eight-year periods. The Communications Act directs the FCC to renew a broadcast license if the station has served the public interest and is in substantial compliance with the provisions of the Communications Act and FCC regulations. Management believes the Company is in substantial compliance with all applicable provisions of the Communications Act and FCC regulations and knows of no reason why Meredith's broadcast station licenses will not be renewed.

In early 2003, Congress enacted a national television ownership cap that limits one entity to ownership of an unlimited number of television stations, provided that these stations do not reach more than 39 percent of U.S. television households. As of June 30, 2005, the Company's television household coverage was less than eight percent (per the FCC calculation method).

In June 2003, the FCC adopted several significant changes to its media ownership restrictions. These changes largely eased restrictions on the combination of television stations, radio stations, and newspapers that a single entity can own in a local market. In September 2003, a federal appeals court issued an order staying the effective date of these new media ownership regulations. In June 2004, the same court issued a decision remanding certain aspects of the FCC's June 2003 media ownership decision to the FCC for further proceedings and continuing to stay the effective date of the new regulations. In June 2005, the U.S. Supreme Court declined to review the appellate court's decision. The Company anticipates that the FCC will initiate one or more new proceedings concerning its media ownership restrictions within the next year. The Company cannot predict when or how these matters eventually will be resolved.

The Communications Act and the FCC also regulate relationships between television broadcasters and cable and satellite television providers. Under these provisions, most cable systems must devote a specified portion of their channel capacity to the carriage of the signals of local television stations that elect to exercise this right to mandatory carriage. Alternatively, television stations may elect to restrict cable systems from carrying their signals without their written permission, referred to as "retransmission consent." Congress and the FCC have established and implemented generally similar market-specific requirements for mandatory carriage of local television stations by satellite television providers when those providers choose to provide a market's local television signals.

The FCC is implementing the transition to digital television (DTV) broadcast service and digital radio broadcast service. DTV technology permits television stations to transmit video images with a higher resolution than that of existing analog signals, and it also permits broadcasters to transmit multiple video program streams and ancillary data services. All of the Company's television stations with the exception of WSHM and KFXO, which are low-power stations and therefore not subject to these requirements, are currently transmitting DTV signals on their assigned second channels. The Company's radio station, WNEM-AM, does not transmit a digital radio signal at this time.

At the end of the DTV transition period, television stations will be required to transmit exclusively in the DTV format. The Communications Act directs the FCC to complete the transition to DTV on a market-by-market basis by the end of 2006 or when 85 percent of viewers can receive a DTV signal, whichever is later. The FCC has not yet issued final regulations governing certain aspects of DTV operation, including how cable and satellite television providers should carry DTV signals and to what extent DTV stations should be subject to additional public interest obligations. In addition, Congress is considering altering certain existing transition rules, including the deadline for completion of the DTV transition.

The information given in this section is not intended to be inclusive of all regulatory provisions currently in effect. Statutory provisions and FCC regulations are subject to change, and any such changes could affect future operations and profitability of the Company's broadcasting segment. Management cannot predict what regulations or legislation may be adopted, nor can management estimate the effect any such changes would have on the Company's television and radio broadcasting operations.

Executive officers are elected to one-year terms of office each November and may be re-elected. These are the current executive officers of the Company:

William T. Kerr
Chairman and Chief Executive Officer (1998-present) and a director of the Company since 1994. Formerly President and Chief Executive Officer (1997-1998), President and Chief Operating Officer (1994-1997), President-Magazine Group and Executive Vice President (1991-1994). Age 64.

Stephen M. Lacy
President and Chief Operating Officer (2004-present) and a director of the Company since 2004. Formerly President-Publishing Group (2000-2004), President-Interactive and Integrated Marketing Group (2000), Vice President-Chief Financial Officer (1998-2000). Age 51.

John H. (Jack) Griffin, Jr.
President-Publishing Group (2004-present). Formerly President-Magazine Group (2003-2004). From 1999 to 2003, Mr. Griffin served as President of Parade Publications, Inc. and Publisher of Parade magazine. Mr. Griffin spent five years with Meredith prior to joining Parade Publications. He served in a number of sales and marketing roles, including General Manager of Meredith Integrated Marketing and Meredith Custom Publishing and Vice President of Marketing for the Meredith Broadcasting Group. Age 45.

Paul A. Karpowicz
President-Broadcasting Group (effective February 2005). Prior to joining Meredith, Mr. Karpowicz had worked for LIN Television Corporation for 16 years, most recently serving as Vice President Television for LIN's 23 properties in 14 markets since 1994. Mr. Karpowicz also served on LIN's Board of Directors from 1999 to 2005. Age 52.

Suku V. Radia
Vice President-Chief Financial Officer (2000-present). Age 54.

John S. Zieser
Vice President-Corporate Development/General Counsel and Secretary (2004-present). Formerly Vice President-Corporate and Employee Services/General Counsel and Secretary (2002-2004), Vice President-General Counsel and Secretary (1999-2002). Age 46.

Meredith is headquartered in Des Moines, Iowa. The Company owns buildings at 1716 and 1615 Locust Street and is the sole occupant of these buildings. These facilities are adequate for their intended use.

The publishing segment operates mainly from the Des Moines offices and from leased facilities at 125 Park Avenue in New York City. The New York facility is used primarily as an advertising sales office for all Meredith magazines and as headquarters for Ladies' Home Journal, MORE, and the American Baby Group properties. The publishing segment also maintains leased offices in Chicago, Detroit, Los Angeles and several other cities. These offices are adequate for their intended use.

The broadcasting segment operates from facilities in the following locations: Atlanta, GA; Phoenix, AZ; Portland, OR; Hartford, CT; Nashville, TN; Fairway, KS; Greenville, SC; Asheville, NC; Henderson, NV; Flint, MI; Saginaw, MI; Chattanooga, TN; and Bend, OR. All of these properties are adequate for their intended use. The properties in Asheville, Flint, Chattanooga and Bend are leased while the other properties are owned by the Company. Each of the broadcast stations also maintains an owned or leased transmitter site.

There are various legal proceedings pending against the Company arising from the ordinary course of business. In the opinion of management, liabilities, if any, arising from existing litigation and claims will not have a material effect on the Company's earnings, financial position or liquidity.

No matters have been submitted to a vote of shareholders since the Company's last annual meeting held on November 8, 2004.

The principal market for trading Meredith's common stock is the New York Stock Exchange (trading symbol MDP). There is no separate public trading market for Meredith's class B stock, which is convertible share for share at any time into common stock. Holders of both classes of stock receive equal dividends per share.

The range of trading prices for the Company's common stock and the dividends paid during each quarter of the past two fiscal years are presented below.

Stock of Meredith became publicly traded in 1946, and quarterly dividends have been paid continuously since 1947. Meredith has increased its dividend in each of the last 12 years. It is anticipated that comparable dividends will continue to be paid in the future.

On July 31, 2005, there were approximately 1,500 holders of record of the Company's common stock and 900 holders of record of class B stock.

The following table sets forth information with respect to the Company's repurchases of common and class B stock during the quarter ended June 30, 2005.

In each of February 2004 and January 2005, the Board of Directors authorized the repurchase of up to 2 million additional shares of the Company's stock through public and private transactions.

For more information on the Company's share repurchase program, see Item 7-Management's Discussion and Analysis of Financial Condition and Results of Operations, under the heading "Share repurchase program" on page 31.

Selected financial data for the years 2001 through 2005 is contained under the heading "Eleven-Year Financial History with Selected Financial Data" beginning on page 76 and is derived from consolidated financial statements for those years audited by KPMG LLP, an independent registered public accounting firm. Information contained in that table is not necessarily indicative of the results of operations in future years and should be read in conjunction with Item 7-Management's Discussion and Analysis of Financial Condition and Results of Operations and Item 8-Financial Statements and Supplementary Data of this Form 10-K.

Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) consists of the following sections:

MD&A should be read in conjunction with the other sections of this Annual Report on Form 10-K, including Item 1-Business, Item 6-Selected Financial Data, and Item 8-Financial Statements and Supplementary Data. MD&A contains a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this filing and particularly in the Outlook and Risk Factors section of MD&A.

Meredith operates in two business segments. Publishing consists of magazine and book publishing, integrated marketing, interactive media, database-related activities, brand licensing and other related operations. Broadcasting consists of 13 owned and one operated network-affiliated television stations and one radio station. Both segments operate primarily in the United States and compete against similar media and other types of media on both a local and national basis. Publishing accounted for 74 percent of the Company's $1.2 billion in revenues in fiscal 2005 while broadcasting revenues totaled 26 percent.

Meredith is committed to building value for its shareholders. Over the last several years, we have articulated three primary strategies. The first is to expand our powerful publishing base by broadening our magazine portfolio, extending and developing our brands, capturing the potential in the Hispanic market and expanding our book and custom publishing businesses. The second strategy is to continue to strengthen the broadcasting business by improving ratings and share especially for newscasts, aggressively selling the improved ratings, creating additional revenue sources, and managing costs. The third strategy is to maintain our excellent financial position that allows us to pursue targeted acquisitions and to invest in our businesses. In publishing, our primary focus has been on acquiring properties aimed at women between the ages of 30 and 40. Topics of interest to this age group include fitness, health, and parenting. In broadcasting, we have been targeting the creation of duopolies (the ownership of two stations in a single market) and regional clusters that allow us to generate cost efficiencies by operating multiple stations from one location. We also seek to improve our network diversity and expand our audience reach while maintaining our geographic diversity.

We made significant progress toward these goals in the last year. On July 1, 2005, Meredith acquired Parents, Family Circle, Fitness, Child, and Ser Padres magazines from Gruner + Jahr Printing & Publishing (Gruner + Jahr) for $350 million. These well-known, established consumer magazines have rate bases that currently range from 500,000 to 4.2 million and support Meredith's initiative to attract younger women to its family of readers. The four titles measured by Publishers Information Bureau (PIB) (Parents, Family Circle, Fitness, and Child) generated nearly 4,900 total advertising pages in calendar 2004. (See Business Developments on page 4 of this Form 10-K for further details.) The acquisition is expected to increase publishing revenues about 33% to more than $1.2 billion and to be modestly accretive to earnings per share in fiscal 2006. The transaction was financed through a new $300 million private placement of fixed-rate senior notes. The balance was financed under our existing credit facilities. Adding these five magazines to Meredith's portfolio builds on our December 2002 acquisition of American Baby magazine and related assets (American Baby Group) for $117.9 million.

In broadcasting we acquired WFLI-TV, the WB affiliate serving Chattanooga, TN, and acquired the non-license assets of KSMO-TV, the WB affiliate serving Kansas City. Chattanooga is the 86^th largest television market in the country. The acquisition adds to our presence in the Southeast where we currently own stations in Atlanta, Nashville and Greenville, SC. We have also entered into a joint sales agreement under which we will manage the sales and certain other operations of KSMO. We already own KCTV, the CBS affiliate in Kansas City. We have asked the Federal Communications Commission for a waiver of its duopoly rules to allow us to purchase the license assets of KSMO. While our initial investments in these acquisitions are not material, they increase our network diversity and further our strategy of forming cost effective station clusters.

PUBLISHING
Advertising revenues made up 47 percent of fiscal 2005 publishing revenues. These revenues are generated from the sale of advertising space in the Company's magazines and on web sites to clients interested in promoting their brands, products and services to consumers. Changes in advertising revenues tend to correlate with changes in the level of economic activity in the United States. Indicators of economic activity include changes in the level of gross domestic product, consumer spending, housing starts, unemployment rates, auto sales, and interest rates. Circulation levels of Meredith's magazines, reader demographic data, and the advertising rates charged relative to other available advertising opportunities also affect the level of advertising revenues.

Circulation revenues accounted for 27 percent of fiscal 2005 publishing revenues. Circulation revenues result from the sale of magazines to consumers through subscriptions and by single copy sales on newsstands, primarily at major retailers and grocery/drug stores. In the short term, subscription revenues, which accounted for more than 65 percent of circulation revenues, are less susceptible to economic changes because subscriptions are generally sold for terms of one to three years. However, the same economic factors that affect advertising revenues can influence consumers' response to subscription offers and result in lower revenues and/or higher costs to maintain subscriber levels over time. A key factor in Meredith's subscription success is our industry-leading database. It contains approximately 80 million names, including about three-quarters of American homeowners, with an average of 300 data points on each name. This size and depth is a key to our circulation model and allows more precise consumer targeting. Newsstand revenues are more volatile than subscription revenues and can vary significantly month to month depending on economic and other factors.

The remaining 26 percent of publishing revenues came from a variety of activities that included the sale of books and integrated marketing services as well as brand licensing, product sales and other related activities. Meredith Integrated Marketing offers integrated promotional, database management, relationship and direct marketing capabilities for corporate customers. These revenues generally are affected by the same economic factors that affect advertising revenues.

Publishing's major expense categories are production and delivery of publications and promotional mailings and employee compensation costs. Paper, postage, and production charges represented approximately 44 percent of the segment's operating expenses in fiscal 2005. Paper is a commodity, and pricing can vary significantly year to year. Prices fluctuate based on the worldwide demand and supply for paper in general and for specific types of paper used by Meredith. Postal rates are dependent on the financial condition of the United States Postal Service. A postal rate increase is expected in January 2006, the first since June 2002. Meredith works with others in the industry and through trade organizations to encourage the Postal Service to implement efficiencies and contain rate increases. Our publications are outsourced to printers. We typically have multi-year contracts for the production of our magazines, a practice which reduces price fluctuations over the contract term.

Employee compensation, which includes benefits expense, represented approximately 20 percent of fiscal 2005 publishing operating expenses. Compensation expense is affected by salary and incentive levels, the number of employees, the costs of our various employee benefit plans, and other factors. The remaining 36 percent of fiscal 2005 publishing expenses included costs for magazine newsstand and book distribution, advertising and promotional efforts, and general overhead costs for facilities and technology services.

BROADCASTING
Broadcasting derives almost all of its revenues-98 percent in fiscal 2005-from the sale of advertising. The remainder comes from television rebroadcast rights fees, network compensation, television production services, and other services.

The stations sell both local/regional and national advertising. Political advertising revenues are cyclical in that they are significantly greater during biennial election campaigns (which take place in odd-numbered fiscal years) than at other times. Meredith has also developed the Cornerstone program, which leverages our publishing brands. The program packages material from our national magazines with local advertising to create customized mini-magazines delivered to targeted customers in the markets our television stations serve. We have generated additional revenues from Internet activities and programs focused on local interests such as community events and college and professional sports. Changes in advertising revenues tend to correlate with changes in the level of economic activity in the United States and in the local markets in which we operate stations and with the cyclical changes in political advertising discussed previously. Indicators of economic activity include changes in the level of gross domestic product, consumer spending, unemployment rates, auto sales, and interest rates. Programming content, audience share, audience demographics, and the advertising rates charged relative to other available advertising opportunities also affect advertising revenues. On occasion, unusual events necessitate uninterrupted television coverage and will adversely affect spot advertising revenues.

Broadcasting's major expense categories are employee compensation and programming costs. Employee compensation represented 48 percent of fiscal 2005 broadcasting operating expenses and is affected by the same factors noted for publishing. Programming rights amortization expense represented 14 percent of this segment's fiscal 2005 expenses. Programming expense is affected by the cost of programs available for purchase and the selection of programs aired by our television stations. Sales and promotional activities, costs to produce local news programming and general overhead costs for facilities and technical resources accounted for most of the remaining 38 percent of operating expenses.

• Revenues increased 5 percent from the prior year reflecting higher advertising revenues that included cyclical political advertising at the television stations, and strong growth in revenues from our integrated marketing operations.

• Both segments increased revenues and operating profits and improved their operating profit margins in fiscal 2005.

• We elected to begin expensing share-based compensation and have restated prior periods to include expense previously disclosed on a pro forma basis in the notes to our consolidated financial statements.

• Diluted earnings per share increased 25% to $2.50 before the cumulative effect of a change in accounting principle compared with prior year earnings of $2.00. The increase reflected the improved performance of both operating groups as well as lower interest expense.

• We generated $170.9 million in operating cash flows in fiscal 2005. Our priorities for the use of available cash include investments in the businesses, debt reduction, dividend payments, and share repurchases. We invested $35.4 million to enter a joint sales agreement with and to purchase certain assets of the WB affiliate in Kansas City and to acquire the WB affiliate in Chattanooga, and we spent $23.8 million on capital investments. We reduced long-term debt $50 million and spent $97.5 million to repurchase shares of our common stock. The quarterly dividend was increased 17 percent from 12 cents per share to 14 cents per share effective with the March 2005 payment.

 -18-

OVERVIEW
Following are descriptions of significant acquisitions and accounting changes that have affected the comparability of Meredith's results of operations over the last three fiscal years. Also included is a discussion of our rationale for the use of financial measures that are not in accordance with generally accepted accounting principles, or non-GAAP financial measures, and a discussion of the trends and uncertainties that affect our businesses. Following the Overview is an analysis of the results of operations for the publishing and broadcasting segments and an analysis of the consolidated results of operations for the last three fiscal years.

Acquisitions
In December 2002, Meredith purchased American Baby magazine and related assets (American Baby Group) from Primedia Inc. for $117.9 million. The operations of the American Baby Group have been included in our consolidated operating results since the acquisition date. See Note 5 to the consolidated financial statements for further information.

Accounting Changes
In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (SFAS 123R), which requires public entities to record expense for share-based payments awarded to employees based on the grant-date fair value of the award. We elected to adopt SFAS 123R effective October 1, 2004, in advance of the Company's required adoption date of July 1, 2005. Previously, we valued share-based payments by the intrinsic value method in our consolidated financial statements while providing pro forma disclosure of expense on a fair value basis. Since stock options are typically granted at the current market price of the stock, the intrinsic value method usually resulted in no expense being recorded. SFAS 123R provides various transition methods. We used the modified version of the retrospective application under which financial statements for prior periods are adjusted on a basis consistent with the pro forma disclosures required for those periods under previous accounting standards.

SFAS 123R requires entities to estimate the number of forfeitures expected to occur and record expense based upon the number of awards expected to vest. Previously, we accounted for forfeitures as they occurred as permitted under previous accounting standards. As a result, in the second quarter of fiscal 2005, we recorded the cumulative effect of a change in accounting principle of $1.5 million ($0.9 million after tax), or $0.02 per share, to reduce compensation expense recognized in previous periods for the estimated forfeitures of outstanding awards.

Adoption of SFAS 123R resulted in the recognition of share-based compensation expense in fiscal 2005 and the restatement of prior period results. Selling, general and administrative expenses increased by $10.7 million, $11.0 million and $10.5 million in fiscal 2005, 2004 and 2003, respectively. Adoption of this Statement also resulted in the restatement of certain balance sheet amounts, primarily deferred income taxes and shareholders' equity, and the reclassification of certain cash flows between operating and financing activities.

At the beginning of fiscal 2003, Meredith adopted SFAS 142, Goodwill and Other Intangible Assets.

SFAS 142 requires that goodwill and intangible assets with indefinite lives no longer be amortized to earnings but be reviewed at least annually for impairment. It also required an initial review for impairment as of the beginning of the fiscal year of adoption. Our initial review resulted in transitional impairment losses of $139.9 million ($85.7 million after tax), or $1.67 per diluted share. The charge was recorded net of tax as the cumulative effect of a change in accounting principle in the first quarter of fiscal 2003. No further impairments have been noted as a result of the subsequent annual reviews performed as of May 31, 2003, 2004 and 2005.

Notes 2 and 3 to the consolidated financial statements provide further information about these changes in accounting principles.

We believe the non-GAAP measures used in MD&A contribute to an understanding of our financial performance. These measures should not, however, be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. We use and present non-GAAP financial measures along with GAAP results to evaluate and communicate the performance of the Company and its segments. We believe the non-GAAP financial measures provide an additional analytic tool to understand our results from core operations and to reveal underlying trends.

Trends and Uncertainties
Advertising volume is the Company's key uncertainty, and its fluctuation from period to period can have a material effect on operating results. Advertising revenues accounted for 60 percent of total revenues in fiscal 2005. Other significant uncertainties that can affect operating results include fluctuations in the cost of paper, postage rates and, over time, television programming rights. The Company's cash flow from operating activities, its primary source of liquidity, is adversely affected when the advertising market is weak or when costs rise. One of our priorities is to manage our businesses prudently during expanding and contracting economic cycles to maximize shareholder return over time. To manage the uncertainties inherent in our businesses, we prepare monthly forecasts of anticipated results of operations and monitor the economic indicators mentioned in the Executive Overview. See the Outlook and Risk Factors section of MD&A for further discussion.

The publishing segment achieved record revenues and operating profit in fiscal 2005. Revenues grew 4 percent and operating profit increased 10 percent as a result of higher advertising revenues, improved circulation contribution, and higher revenues and improved operating results from integrated marketing, book, interactive media and licensing operations. Publishing operating results for the last three fiscal years were as follows:

In the following discussion, references to comparable results for fiscal 2004 and fiscal 2003 exclude the impact of the American Baby Group acquisition that occurred in December 2002.

Publishing Revenues
The 4 percent increase in publishing revenues in fiscal 2005 followed an 8 percent increase in fiscal 2004. The table below presents the components of revenues for the last three fiscal years.

Advertising Revenues
The next table presents advertising page information according to PIB for our major subscription-based magazines for the last three fiscal years:

Publishing advertising revenues increased 2 percent in fiscal 2005. Advertising revenues were volatile throughout the fiscal year with growth in the high single digits on a percentage basis in the first and fourth fiscal quarters and declines in the low-to-mid single digit range in the second and third fiscal quarters. Online advertising revenues, while a small percentage of total advertising, increased more than 20 percent.

Advertising pages decreased slightly in fiscal 2005 with declines reported at most titles. Exceptions were More magazine, the American Baby titles and Ladies' Home Journal. Offsetting the decline in advertising pages was a low-to-mid single digit percentage increase in average revenues per page. Most titles reported higher average revenues per page. The growth was particularly strong at our group of mid-sized titles, Country Home, Midwest Living, More and Traditional Home. Advertising categories showing strength in fiscal 2005 included the cosmetics, remedies, apparel, and food categories. Advertising was weaker in the home and building category and the household supplies category.

Publishing advertising revenues increased 10 percent in fiscal 2004. Comparable (excluding American Baby Group) advertising revenues increased in the mid-single digits on a percentage basis. Comparable advertising pages increased 6 percent in fiscal 2004 while average net revenues per page were down slightly. The decline in average net revenues per page reflected slowing advertising demand and our efforts to maintain or improve market share. Combined advertising pages for our two largest circulation titles, Better Homes and Gardens and Ladies' Home Journal, increased nearly 3 percent in fiscal 2004. Advertising pages for our mid-size titles, Country Home, Traditional Home, Midwest Living, and More, increased 14 percent in fiscal 2004. Online advertising revenues increased more than 40 percent in fiscal 2004 due to full-year ownership of American Baby Group and increased market demand. Advertising categories showing strength in fiscal 2004 included the home and building category as well as the food and beverage, retail and technology categories. Advertising was weaker in the pharmaceutical and direct response categories, especially at Ladies' Home Journal.

Other Revenues
Other publishing revenues increased 16 percent in fiscal 2005 reflecting strong new business growth in Meredith Integrated Marketing, which offers integrated promotional, database management, relationship and direct marketing capabilities for corporate customers. Increased revenues from book sales and licensing activities also contributed to the increase in revenue. Higher book revenues resulted from strong fourth quarter sales of new licensed products, including significant growth in children's titles.

Fiscal 2004 other publishing revenues increased 22 percent (20 percent on a comparable basis), primarily reflecting strong new business growth in Meredith Integrated Marketing. One of our larger new contracts in fiscal 2004 was for publication of the monthly programming guide for DIRECTV® satellite television. Book sales also were up because of strong sales of books based on the Discovery Channel® cable network's American Chopper® television series, Scotts Miracle Gro® books and our licensed children's books. The creation of license-branded books was a significant factor in the growth of our book business although we have experienced higher return rates for licensed products than for our internally-developed brands. Released in fiscal 2003, the 12^th edition of the Better Homes and Gardens New Cook Book continued its strong performance in fiscal 2004.

Fiscal 2004 publishing costs increased 6 percent from fiscal 2003. Comparable (excluding American Baby Group) costs were up 5 percent. The higher comparable costs reflected volume-related increases in integrated marketing production and book costs as well as a 2 percent increase in average paper prices. In total, costs for production and delivery of publications and promotional mailings rose 7 percent. Higher employee compensation costs were another contributing factor. Comparable employee compensation costs increased in the mid-single digits on a percentage basis, reflecting higher staff levels primarily to support the growth in integrated marketing business and higher salary levels due to annual merit increases. Partially offsetting these increases were lower magazine subscription acquisition costs.

BROADCASTING
The following discussion reviews operating results for the Company's broadcasting segment, which currently consists of 13 owned and one operated network-affiliated television stations, one radio station, and the related interactive media operations. The broadcasting segment contributed 26 percent of Meredith's revenues and 33 percent of the combined profit from publishing and broadcasting operations in fiscal 2005.

Revenues grew 8 percent in fiscal 2005, leading to a 25 percent increase in operating profit. The revenue increase reflected higher political advertising, revenues from new properties and growth in advertising for comparable stations. Operating costs increased 3 percent. Broadcasting operating results for the last three fiscal years were as follows:

In fiscal 2005, political advertising revenues primarily associated with the November 2004 election campaigns totaled $18.8 million, up from $6.1 million in fiscal 2004. Political advertising displaces a certain amount of non-political advertising, so the revenues are not entirely incremental. Non-political advertising revenues increased 4 percent in fiscal 2005, reflecting the addition of new properties (primarily the WB affiliates in Kansas City and Chattanooga, TN) as well as growth from the comparable stations. In fiscal 2004, political advertising declined 71 percent, or nearly $15 million. Non-political advertising revenues increased 13 percent in fiscal 2004.

Most of our stations have improved their ratings, including ratings for local newscasts, over the last two years. Local newscasts typically account for 30 to 40 percent of a major network-affiliated television station's advertising revenues. Our stations' sales staffs have worked aggressively to translate the improved ratings to higher revenues, and we believe their efforts were a significant factor in the revenue growth. All of our stations have recorded strong growth in advertising revenues from unique direct-to-consumer advertising and marketing programs, some of which use content from our well-known magazine titles.

Over the last several years, we have been working to reduce the cost of broadcasting program rights without sacrificing programming quality, and these efforts have begun to yield financial benefits.

Supplemental Disclosure of Broadcasting EBITDA
Meredith's broadcasting EBITDA is defined as broadcasting segment operating profit plus depreciation and amortization expense. EBITDA is not a GAAP financial measure and should not be considered in isolation or as a substitute for GAAP financial measures. See the discussion of management's rationale for the use of EBITDA in the Overview of this section. Broadcasting EBITDA and EBITDA margin were as follows:

Unallocated corporate expenses declined 7 percent in fiscal 2005, reflecting lower charitable contributions and employee severance costs. These declines were partially offset by higher legal and employee benefit costs.

Unallocated corporate expenses increased 12 percent in fiscal 2004, reflecting increased charitable contributions and higher employee compensation costs. The increase in employee compensation reflected higher performance-based incentives, annual salary merit adjustments and higher employee severance costs resulting from restructuring in certain areas.

Consolidated Operating Costs and Expenses
Consolidated operating costs and expenses for the last three fiscal years were as follows:

Production, distribution and editorial costs
Fiscal 2005 production, distribution and editorial costs increased 4 percent from fiscal 2004 mostly as a result of a volume-related increase in production costs for integrated marketing and book as well as higher paper prices. Average paper prices rose 6 percent. Costs related to the newly acquired broadcast television properties also contributed to the overall increase, but they were partially offset by lower broadcast program rights amortization expense for comparable stations.

Fiscal 2004 production, distribution and editorial costs increased 8 percent from fiscal 2003. Excluding the impact of the December 2002 American Baby Group acquisition, the increase was 7 percent. The increase in comparable costs primarily reflected a volume-related increase in production costs for integrated marketing projects. Also contributing was a 2 percent increase in average paper prices. These cost increases were partially offset by lower broadcast program rights amortization expense.

Selling, general and administrative expenses
Fiscal 2005 selling, general and administrative expenses increased less than 1 percent from the prior year. Higher costs resulting from increased employee compensation and benefits expenses, higher legal fees and the addition of new broadcasting properties were offset by lower magazine subscription acquisition costs and lower charitable contributions.

Fiscal 2004 selling, general and administrative expenses increased 4 percent from fiscal 2003. Comparable expenses (excluding the impact of the American Baby Group acquisition) increased 2 percent. Investments in our sales and promotion efforts, higher charitable contributions, and increased employee compensation costs were partially offset by lower magazine subscription acquisition costs.

Depreciation and amortization expenses
Fiscal 2005 depreciation and amortization expenses were unchanged from the prior year. Fiscal 2004 depreciation and amortization expenses declined 3 percent because fiscal 2003 amortization expense was higher due to certain short-lived intangible assets related to the American Baby Group acquisition. Comparable depreciation and amortization expense increased 2 percent in fiscal 2004, primarily reflecting investments in information technology.

Operating costs and expense
Publishing paper, production and postage costs and employee compensation were the largest components of our operating costs and expenses. They are presented in the following table, expressed as a percentage of total pretax operating costs and expenses:

Income from Operations
Income from operations increased 19 percent in fiscal 2005 and in fiscal 2004. The increases reflected revenue growth and higher operating margins in both of our business segments.

Nonoperating Income and Expense
Nonoperating expense, net totaled $1.6 million in fiscal 2003 and included a loss on the sale of a subsidiary ($2.2 million) and the write-off of an investment in a start-up technology company ($1.6 million). These charges were partially offset by a gain related to final post closing adjustments on the June 2002 exchange of two Florida television stations for KPTV-Portland ($1.3 million) and proceeds from life insurance policies ($0.9 million).

Net Interest Expense
Net interest expense was $19.0 million in fiscal 2005, $22.5 million in fiscal 2004, and $27.2 million in fiscal 2003. Average long-term debt outstanding declined to $280 million in fiscal 2005 from $330 million in fiscal 2004 and $390 million in fiscal 2003. The Company's approximate weighted average interest rate was 6.9 percent in fiscal years 2005 and 2004 and 7.1 percent in fiscal 2003.

Interest expense in fiscal 2004 and 2003 included the effects of interest rate swap contracts. We had entered into interest rate swap contracts to effectively convert a substantial portion of our variable rate debt to fixed rate debt. The net cash disbursements related to these contracts were included in interest expense in all periods. As a result of the April 2002 debt refinancing and subsequent debt repayments, we had interest rate swap contracts that no longer met the qualifications for hedge accounting. Those swap contracts were deemed ineffective and dedesignated as hedge contracts. Subsequent to the discontinuation of hedge accounting, changes in the fair market value were recorded as interest expense. These fair market value adjustments resulted in reductions in interest expense of $3.9 million in fiscal 2004 and $0.9 million in fiscal 2003. All of our interest rate swap contracts expired in June 2004.

Income Taxes
Our effective tax rate was 38.7 percent in each of the past three fiscal years.

Earnings and Earnings per Share
Fiscal 2005 net earnings were $129.0 million ($2.52 per diluted share) including the cumulative effect of a change in accounting principle related to an adjustment for anticipated forfeitures of share-based compensation awards. Earnings before the cumulative effect of a change in accounting principle were $128.1 million ($2.50 per diluted share), an increase of 23 percent from fiscal 2004 net earnings of $104.0 million ($2.00 per diluted share). Average basic and diluted shares outstanding decreased 1 percent as a result of our ongoing share repurchase program.

Fiscal 2004 net earnings were $104.0 million ($2.00 per diluted share), up 27 percent from $81.7 million ($1.59 per diluted share) in fiscal 2003 before the cumulative effect of a change in accounting principle. The improvement reflected higher segment operating profits and lower interest expense. A net loss of $4.1 million ($0.08 per diluted share) was reported in fiscal 2003, including a charge for the cumulative effect of a change in accounting principle related to goodwill and intangible assets. Average diluted shares outstanding increased 1 percent to 51,926,000 in fiscal 2004. Average basic shares outstanding were 50,214,000, also up 1 percent.

OVERVIEW
Meredith's primary source of liquidity is cash generated by operating activities. Debt financing is typically used for acquisitions. Our core businesses-magazine and book publishing and television broadcasting-have been strong cash generators. Despite the introduction of many new technologies such as the Internet and cable and satellite television, we believe these businesses will continue to have strong market appeal for the foreseeable future. As with any business, operating results and cash flows are subject to changes in demand for our products and changes in costs. Changes in the level of demand for magazine and television advertising and/or other products can have a significant effect on cash flows.

Historically, Meredith has been able to absorb normal business downturns without significant increases in debt, and management believes the Company will continue to do so. We expect cash on hand, internally generated cash flow, and available credit from third-party financing agreements will provide funds for operating and recurring cash needs (e.g., working capital, capital expenditures, debt repayments and cash dividends) into the foreseeable future. At June 30, 2005 we had up to $210 million available under current credit agreements. While there are no guarantees that we will be able to replace current credit agreements when they expire, we expect to be able to do so.

Meredith incurred additional debt of $350 million on July 1, 2005 to fund the acquisition of four magazines from Gruner + Jahr. (See Executive Overview section of MD&A for further information on the acquisition.) The debt consists of $300 million in fixed-rate unsecured senior notes and $50 million under the asset-backed commercial paper facility described below under Sources and Uses of Cash - Long-term debt. The notes will mature in staggered terms over the next two to five years. Interest rates range from 4.42 to 4.70 percent with a weighted-average interest rate of 4.56 percent. The debt covenants are similar to those of our existing debt agreements.

Cash provided by operating activities totaled $170.9 million in fiscal 2005 compared with $163.0 million in fiscal 2004. The largest factors in the growth were increased cash received from advertising and integrated marketing sales and lower interest and pension payments. These increases in cash were partially offset by a reduction in cash received from magazine circulation sales as well as increased cash spending for employee compensation costs and income taxes.

Cash provided by operating activities increased 2 percent in fiscal 2004, reflecting increased cash received from advertising offset by a reduction in cash received from magazine newsstand sales as well as increased cash spending for employee compensation costs and paper purchases.

Changes in the Company's cash contributions to qualified defined benefit pension plans can have a significant effect on cash provided by operations. Meredith traditionally contributes the maximum allowable tax-deductible amount to these plans. Contributions totaled $0.2 million in fiscal 2005, $9.0 million in fiscal 2004, and $12.0 million in fiscal 2003. We contributed $6.5 million, the maximum allowable tax-deductible contribution for fiscal 2006, in July 2005. There is no required contribution in fiscal 2006.

Investing activities
Investing cash inflows generally include proceeds from the sale of assets or a business. Investing cash outflows generally include payments for the acquisition of new businesses, investments, and additions to property, plant and equipment.

Net cash used by investing activities increased to $53.8 million in fiscal 2005 from $26.9 million in fiscal 2004 primarily due to the use of cash for the acquisition of two broadcasting television stations in the current year.

Net cash used by investing activities decreased significantly in fiscal 2004 compared with the prior year primarily because of the acquisition of the American Baby Group for $117.6 million in cash in fiscal 2003.

Financing activities
Financing cash inflows generally include borrowings under debt agreements and proceeds from common stock issued under share-based payment plans. Financing cash outflows generally include the repayment of long-term debt, repurchases of Company stock, and the payment of dividends.

Net cash used by financing activities totaled $146.0 million in fiscal 2005 compared with $99.7 million in fiscal 2004. The increased reflected higher spending for repurchases of Company stock and for dividend payments and was partially offset by a reduction in net debt repayments.

Net cash used by financing activities totaled $99.7 million in fiscal 2004, up significantly from $25.5 million in fiscal 2003. The biggest factor in the change was a $75 million net debt reduction in fiscal 2004 compared with a $10 million net debt reduction in fiscal 2003. In fiscal 2003, we incurred $100 million in debt in connection with the American Baby Group acquisition.

Long-term debt
At June 30, 2005, long-term debt outstanding totaled $250 million ($225 million in fixed-rate unsecured senior notes and $25 million under an asset-backed commercial paper facility) of which $125 million of this debt is due in the next 12 months. We expect to repay this debt with cash on hand and credit available under current credit agreements. The asset-backed commercial paper facility has a capacity of up to $100 million. We also have up to $150 million in credit available under a revolving credit facility with an option to request up to another $150 million. Meredith incurred additional debt of $350 million in July 2005 to fund the acquisition of four magazines from Gruner + Jahr. See Overview of Liquidity and Capital Resources section of MD&A for further information. The following discussion relates to the debt outstanding at June 30, 2005.

The fixed-rate notes are repayable in amounts of $50 million and $75 million and are due from September 1, 2005 to April 1, 2008. Interest rates range from 6.39 percent to 6.65 percent with a weighted-average interest rate of 6.57 percent.

In connection with the asset-backed commercial paper facility, we entered into a revolving agreement in April 2002. Under this agreement, we currently sell all of our rights, title, and interest in the majority of our accounts receivable related to advertising, book and miscellaneous revenues to Meredith Funding Corporation, a special-purpose entity established to purchase accounts receivable from Meredith. At June 30, 2005, $161.8 million of accounts receivable, net of reserves, were outstanding under the agreement. Meredith Funding Corporation in turn sells receivable interests to an asset-backed commercial paper conduit administered by a major national bank. In consideration of the sale, Meredith receives cash and a subordinated note that bears interest at the prime rate (6.25 percent at June 30, 2005) from Meredith Funding Corporation.

The revolving agreement is structured as a true sale under which the creditors of Meredith Funding Corporation will be entitled to be satisfied out of the assets of Meredith Funding Corporation prior to any value being returned to Meredith or its creditors. The accounts of Meredith Funding Corporation are fully consolidated in Meredith's consolidated financial statements. The asset-backed commercial paper facility renews annually until April 9, 2007, the facility termination date. The interest rate changes monthly and is based on a fixed spread over the average commercial paper cost to the lender. The interest rate was 3.43 percent in June 2005.

The revolving credit facility expires on November 12, 2009. At June 30, 2005, borrowings made under the revolving credit facility were subject to an interest rate of 3.84 percent. This rate is variable based on LIBOR and Meredith's debt to trailing 12 month EBITDA ratio. No amount was borrowed under this facility at June 30, 2005.

We believe these debt agreements are material to discussions of Meredith's liquidity. All of our debt agreements include financial covenants, and failure to comply with any such covenants could result in the debt becoming payable on demand. A summary of the most significant financial covenants and their status at June 30, 2005 follows:

The Company was in compliance with these and all other debt covenants at June 30, 2005. The debt covenants were also reviewed in July 2005 following the acquisition of the magazine properties from Gruner + Jahr. The Company remained in compliance with all debt covenants and expects to continue to do so in the future.

Interest rate swap contracts
In fiscal 2004 and 2003, Meredith used interest rate swap contracts to effectively convert our variable-rate debt to fixed-rate debt. The average notional amount of indebtedness outstanding under the contracts was $132 million in fiscal 2004 and $166 million in fiscal 2003. All interest rate swap contracts expired in June 2004, and at this time we have no plans to enter into new interest rate swap contracts. These contracts did have a significant effect on interest expense in fiscal 2004 and 2003 as discussed under Net Interest Expense beginning on page 26 of MD&A.

Contractual obligations
The following table summarizes our principal contractual obligations as of June 30, 2005:

Purchase obligations represent legally binding agreements to purchase goods and services that specify all significant terms. Outstanding purchase orders, which represent authorizations to purchase goods and services but are not legally binding, are not included in purchase obligations. We believe current cash balances, cash generated by future operating activities, and cash available under current credit agreements will be sufficient to meet our contractual cash obligations and other operating cash requirements for the foreseeable future. However, projections of future cash flows are subject to substantial uncertainty as discussed throughout MD&A and particularly in the Outlook and Risk Factors section beginning on page 34. Debt agreements may be renewed or refinanced if we determine it is advantageous to do so. We also have commitments in the form of standby letters of credit and other guarantees totaling $1.3 million. Approximately half of the commitments expire within one year; the rest are long-term.

As noted previously, we issued $300 million in fixed-rate unsecured senior notes in July 2005 in connection with the acquisition of four magazine properties. Obligations related to this debt are as follows:

Share repurchase program
We have maintained a program of Company share repurchases for more than fifteen years. In fiscal 2005, we spent $97.5 million to repurchase an aggregate of 1,964,000 shares of Meredith Corporation common stock at then current market prices. We spent $37.4 million to repurchase 747,000 shares in fiscal 2004 and $31.5 million to repurchase 761,000 shares in fiscal 2003. We expect to continue repurchasing shares from time to time in the foreseeable future, subject to market conditions. As of July 31, 2005, approximately 2.1 million shares were authorized for future repurchase, including a 2 million share repurchase authorization approved by the Board of Directors in January 2005. The status of the repurchase program is reviewed at each quarterly Board of Directors meeting. See Part II, Item 5, Issuer Purchases of Equity Securities, of this Form 10-K for detailed information on share repurchases during the quarter ended June 30, 2005.

Dividends
Meredith has paid quarterly dividends continuously since 1947 and we have increased our dividend for 12 consecutive years. The last increase occurred in January 2005 when the Board of Directors increased the quarterly dividend 17 percent, or 2 cents per share, to 14 cents per share effective with the dividend payable on March 15, 2005. Given the current number of shares outstanding, the increase will result in additional dividend payments of approximately $4 million annually. Dividends payments totaled $25.8 million, or 52 cents per share, in fiscal 2005 compared with $21.6 million, or 43 cents per share, in fiscal 2004 and $18.4 million, or 37 cents per share, in fiscal 2003.

Capital expenditures
Spending for property, plant, and equipment totaled $23.8 million in fiscal 2005, $24.5 million in fiscal 2004, and $26.6 million in fiscal 2003. The spending in each year included expenditures for broadcasting technical and news equipment, information technology systems and equipment, and improvements to buildings and office facilities. We expect to spend approximately $20 million in fiscal 2006 and 2007 for a new facility for our television station in Hartford. We have no other material commitments for capital expenditures. We expect funds for future capital expenditures to come from operating activities or, if necessary, borrowings under credit agreements.

Meredith's consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP). Our significant accounting policies are summarized in Note 1 to the consolidated financial statements. The preparation of our consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Some of these estimates and assumptions are inherently difficult to make and subjective in nature. We base our estimates on historical experience, recent trends, our expectations for future performance, and other assumptions as appropriate. We reevaluate our estimates on an ongoing basis; actual results, however, may vary from these estimates.

The following are the accounting policies that management believes are most critical to the preparation of our financial statements and require management's most difficult, subjective, or complex judgments. In addition, there are other items within the financial statements that require estimation but are not deemed to be critical accounting policies. Changes in the estimates used in these and other items could have a material impact on the financial statements.

GOODWILL AND INTANGIBLE ASSETS
Goodwill and intangible assets with indefinite lives are tested for impairment in accordance with SFAS 142. All other intangible assets are tested for impairment in accordance with SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets. Goodwill and intangible assets totaled $903.5 million, or approximately 60 percent of Meredith's total assets, as of June 30, 2005. See Notes 3 and 7 to the consolidated financial statements for additional information. The impairment analysis of these assets is considered critical because of their significance to Meredith and its publishing and broadcasting segments.

Management periodically reviews goodwill and intangible assets with indefinite lives to evaluate whether the carrying value exceeds the fair value. The determination of fair value requires us to estimate the future cash flows expected to result from the use of the assets. These estimates include assumptions about future revenues (including projections of overall market growth and our share of market), estimated costs, and appropriate discount rates where applicable. Our assumptions are based on historical data, various internal estimates, and a variety of external sources and are consistent with the assumptions used in both our short-term financial forecasts and long-term strategic plans. Depending on the assumptions and estimates used, future cash flow projections can vary within a range of outcomes. Changes in key assumptions about the publishing or broadcasting businesses and their prospects or changes in market conditions could result in an impairment charge.

BROADCAST RIGHTS
Broadcast rights, which consist primarily of rights to broadcast syndicated programs and feature films, are recorded at cost when the programs become available for airing. Amortization of broadcast rights is generally recorded on an accelerated basis over the contract period. Broadcast rights valued at $20.6 million were included in the consolidated balance sheet at June 30, 2005. In addition, we had entered into contracts valued at $53.5 million not included in the consolidated balance sheet at June 30, 2005 because the related programming was not yet available for airing. Amortization of broadcast rights accounted for 14 percent of broadcasting segment expenses in fiscal 2005. Valuation of broadcast rights is considered critical to the broadcasting segment because of the significance of the amortization expense to the segment.

Broadcast rights are valued at the lower of unamortized cost or net realizable value in accordance with GAAP. The determination of net realizable value requires us to estimate future net revenues expected to be earned during the airing of the programming. Future revenues can be affected by changes in the level of advertising demand, competition from other television stations or other media, changes in television programming ratings, changes in the planned usage of programming materials, and other factors. Changes in such key assumptions could result in the write-down of broadcast rights.

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

The accounting for pension and postretirement plans is actuarially based and includes assumptions regarding expected returns on plan assets, discount rates, and the rate of increase in healthcare costs. We consider the accounting for pension and postretirement plans critical to Meredith and both of our segments because of the number of significant judgments required. More information on our assumptions and our methodology in arriving at these assumptions can be found in Note 13 to the consolidated financial statements.

Changes in key assumptions could materially affect the associated assets, liabilities, and benefit expenses. Depending on the assumptions and estimates used, these balances could vary within a range of outcomes. We monitor trends in the marketplace and rely on guidance from employee benefit specialists to arrive at reasonable estimates. These estimates are reviewed annually and updated as needed. Nevertheless, the estimates are subjective and may vary from actual results.

Meredith expects to use a long-term rate of return on assets of 8.00 percent in developing the fiscal 2006 pension costs, consistent with the rate used in fiscal 2005. This rate was determined based on a variety of factors. These factors include, but are not limited to, the plans' asset allocations, a review of historic capital market performance, historical plan performance, current market factors such as inflation and interest rates, and a forecast of expected future asset returns. The pension plan assets earned a return of approximately 6 percent in fiscal 2005 and 33 percent in fiscal 2004. If we had decreased our expected long-term rate of return on plan assets by 0.5 percent in fiscal 2005, our pension expense would have increased by $0.4 million.

Meredith expects to use a discount rate of 5.6 percent in developing the fiscal 2006 pension costs, down from a rate of 5.75 percent used in fiscal 2005. If we had decreased the discount rate by 0.5 percent in fiscal 2005, the combined effect on pension and postretirement expenses would have been an increase of $0.1 million.

Assumed rates of increase in healthcare cost levels have a significant effect on postretirement benefit costs. A one-percentage-point increase in the assumed healthcare cost trend rate would have increased postretirement benefit costs by $0.2 million in fiscal 2005.

REVENUE RECOGNITION
Revenues from both the newsstand sale of magazines and the sale of books are recorded net of our best estimate of expected product returns in accordance with GAAP. Net revenues from these sources totaled 13 percent of publishing segment revenues. Allowances for returns are subject to considerable variability. Return allowances may exceed 30% for books and 75% for magazines sold on the newsstand. Estimation of these allowances for future returns is considered critical to the publishing segment and the Company as a whole because of the potential impact on revenues.

Estimates of returns from magazine newsstand and book sales are based on historical experience and more recent marketplace conditions. Allowances for returns are adjusted continually on the basis of actual results. Unexpected changes in return levels may result in adjustments to net revenues.

The valuation of stock options, however, requires numerous assumptions. We currently determine the fair value of each option as of the date of grant using a Black-Scholes option pricing model. This model requires inputs for the expected volatility of our stock price, expected life of the option and expected dividend yield, among others. In addition, we estimate the number of options expected to eventually vest. We base our assumptions on historical data, expected market conditions and other factors. In some instances, a range of assumptions is used to reflect differences in behavior among various groups of employees.

INCOME TAXES
Income taxes are accounted for in accordance with SFAS 109, Accounting for Income Taxes. Income taxes are recorded under this method for the amount of taxes payable for the current year and include deferred tax assets and liabilities for the effect of temporary differences between the financial and tax basis of recorded assets and liabilities using enacted tax rates. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized. Income tax expense was almost 39 percent of earnings before income taxes. Net deferred tax liabilities totaled $92.6 million, or 11 percent of total liabilities, at June 30, 2005. In addition, the Company operates in numerous taxing jurisdictions and is subject to audit in each of these jurisdictions. These audits can involve complex issues that tend to require an  extended period of time to resolve and may eventually result in an increase or decrease to amounts previously paid to the taxing jurisdictions. The completion of these audits is not expected to have a material effect on the Company's consolidated financial statements.

OUTLOOK
Subject to the risk factors discussed below, our current view of fiscal 2006 is as follows:

Consistent with previously issued guidance and the Company's previously stated long-term financial objective for non-political years, Meredith expects fiscal 2006 earnings per share will approximate $2.80, representing 12 percent growth from the $2.50 earned in fiscal 2005.

For the full year, Meredith expects the publishing segment to produce solid growth in advertising revenue and circulation contribution, modest accretion from its newly-acquired magazines, and growth from its book and integrated marketing operations-partially offset by a mid-to-high teen increase in paper prices and a mid-single digit increase in postage rates. The Company anticipates broadcasting results will reflect the absence of political advertising, continued weakness in national advertising, and strength in local advertising.

For the first quarter of fiscal 2006, the Company believes earnings per share of $0.50 are achievable. This compares to $0.46 in the first quarter of fiscal 2005. On a comparable basis, excluding the newly-acquired magazines, Publishing advertising revenues are anticipated to grow in the low-to-mid single digits. Total Publishing advertising revenues are expected to increase significantly primarily due to the addition of the new titles. Broadcast pacings, which are a snapshot in time and change frequently, are currently down slightly, reflecting the absence of political advertising and continued weakness in national advertising, offset by strength in local advertising.

We may update this guidance periodically through our quarterly earnings releases or management presentations to industry, investor, and investment analyst groups. Copies of our quarterly earnings releases are available on our website (www.meredith.com) in the Investor Information section. Copies of the text of management presentations that may contain material non-public information are also posted on our website, typically for one week following the presentation. Quarterly earnings releases and investor-related management presentations are also furnished to the Securities and Exchange Commission on Form 8-K and can be accessed through the SEC website (www.sec.gov). We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise.

RISK FACTORS
Sections of this Form 10-K-and management's public commentary from time to time-may contain certain forward-looking statements that are subject to risks and uncertainties. The words expect, anticipate, believe, likely, will and similar terms generally identify forward-looking statements. These statements are based on management's current knowledge and estimates of factors affecting our operations. Readers are cautioned not to place undue reliance on such forward-looking information; actual results may differ materially from those currently anticipated. The following discussion identifies some of the factors that may cause actual results to differ materially from expectations. In addition, a number of other factors (those identified elsewhere in this document and others) may cause actual results to differ materially from expectations.

Advertising revenues
Advertising is the most significant source of revenue for Meredith and its publishing and broadcasting segments. Advertising revenues accounted for approximately 60 percent of total revenues in each of the last three fiscal years. Competition from other forms of media available in our various markets, including but not limited to other magazines and television stations, cable and satellite television broadcasters, newspapers, radio stations, websites and direct marketing, affects our ability to attract and retain advertisers and to increase advertising rates. Almost a thousand new magazines are launched annually, most with limited success. Channel capacities of both cable and direct broadcast satellites have increased as a result of digital transmission technology and other improvements. These developments and the increasing popularity of the Internet have contributed to the increasing number of options available to advertisers and consumers and may adversely affect our ability to sell advertising.

In general, demand for advertising tends to correlate with changes in the level of economic activity in the United States and in our specific markets. Increased consolidation of major advertisers, changes in marketing strategies of major advertisers or the loss of one or more major advertisers may also affect advertising demand for our products. In addition, world, national and local events may affect advertising demand and may require uninterrupted television coverage that adversely affects revenues at our television stations.

Advertising demand for space in our magazines and airtime on our television stations is dependent on our ability to deliver cost-effective access to targeted consumers. Changes in the size or demographics of our magazine readership and/or television audiences may affect our ability to attract advertisers.

Other revenues
Magazine circulation is another significant source of revenues, accounting for approximately 20 percent of total revenues and more than 25 percent of publishing segment revenues. Competition from other forms of media and changing consumer lifestyles may limit our ability to attract and retain magazine readers and to raise prices. Similar factors affect Meredith's remaining revenues that consist primarily of revenues from the sale of books and integrated marketing programs. Circulation and other revenues are also influenced by economic conditions that alter the level of demand for our services or affect consumers' disposable income.

Operating costs and expenses
Meredith's major expense categories include employee compensation; publishing paper, postage and production; and broadcasting program rights amortization. Some of the factors affecting our costs are beyond our control.

We offer our employees competitive salary and benefit packages in order to attract and retain the quality employees required to grow and expand our businesses. These costs are influenced by general economic factors, including those affecting the cost of health insurance, and any trends specific to the employee skill sets we require or the markets in which we operate. Only a small percentage of our workforce is unionized.

Program rights amortization is affected by the costs of programs purchased by our stations. The costs of programs are influenced by the availability of desirable programming and the demand for programs in general and in our specific markets. Increased consolidation in the broadcasting industry may affect local market competition for syndicated programming and lead to higher costs.

Product portfolio and acquisitions
We continually evaluate the performance of our businesses. These evaluations may lead to the decision to divest or otherwise discontinue certain businesses or products. In addition, we are continually seeking ways to expand and grow our businesses through acquisitions and internally developed products or programs, the implementation of which may affect our future revenues, costs, profitability, and financial position. Other risks include difficulties in integrating acquired properties, diversion of management resources, unforeseen costs or liabilities, and in some cases debt incurred to finance these ventures. A new magazine launch typically will require investment for at least three to five years. Very few magazines launched in the last 10 years have achieved long-term success.

Broadcasting industry
Our broadcasting operations are subject to regulation by the Federal Communication Commission and may also be affected by legislation and judicial developments. Additional detail regarding regulation and its impact on our broadcasting operations is provided in Item 1-Business beginning on page 10. All of our television stations are currently affiliated with national networks. Significant changes in our television network affiliation agreements are not currently anticipated. Any such changes, however, could affect the profitability of our broadcasting operations.

Meredith is exposed to certain market risks as a result of its use of financial instruments, in particular the potential market value loss arising from adverse changes in interest rates. All of the Company's financial instruments subject to market risk are held for purposes other than trading. There have been no significant changes in the market risk exposures since June 30, 2004.

Long-term debt
At June 30, 2005, Meredith had outstanding $225 million in fixed-rate long-term debt. There are no earnings or liquidity risks associated with the Company's fixed-rate debt. The fair market value of the fixed-rate debt (based on discounted cash flows reflecting borrowing rates currently available for debt with similar terms and maturities) varies with fluctuations in interest rates. A 10 percent decrease in interest rates would have changed the fair market value of the fixed-rate debt to $232.8 million at June 30, 2005 from $231.6 million at the previous year-end.

Meredith also had $25 million in variable-rate long-term debt outstanding at June 30, 2005. The Company is subject to earnings and liquidity risks for changes in the interest rate on this debt. A 10 percent increase in interest rates would have resulted in a $0.1 million increase in annual interest expense at June 30, 2005.

Broadcast rights payable
The Company enters into broadcast rights contracts for its television stations. As a rule, these contracts are on a market-by-market basis and subject to terms and conditions of the seller of the broadcast rights. These procured rights generally are sold to the highest bidder in each market, and the process is very competitive. There are no earnings or liquidity risks associated with broadcast rights payable. Fair market values are determined using discounted cash flows. At June 30, 2005, a 10 percent decrease in interest rates would have resulted in a $0.5 million increase in the fair market value of the available broadcast rights payable and the unavailable broadcast rights commitments.

The Board of Directors and Shareholders
Meredith Corporation:

We have audited the accompanying consolidated balance sheets of Meredith Corporation and subsidiaries (the Company) as of June 30, 2005 and 2004, and the related consolidated statements of earnings (loss), shareholders' equity, and cash flows for each of the years in the three-year period ended June 30, 2005. In connection with our audits of the aforementioned financial statements, we also audited the related financial statement schedule (as listed in Part IV, Item 15 (a) 2 herein). These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Meredith Corporation and subsidiaries as of June 30, 2005 and 2004, and the results of their operations and their cash flows for each of the years in the three-year period ended June 30, 2005, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

As discussed in Note 2 to the consolidated financial statements, the Company adopted the provisions of Statement of Financial Accounting Standards No. 123 (Revised 2004), Share-Based Payment, on October 1, 2004. Consequently, the Company's consolidated balance sheet as of June 30, 2004 and the related consolidated statements of earnings (loss), shareholders' equity, and cash flows for the years ended June 30, 2004 and 2003 have been restated.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company's internal control over financial reporting as of June 30, 2005, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated September 8, 2005 expressed an unqualified opinion on management's assessment of, and the effective operation of, internal control over financial reporting.

/s/ KPMG LLP

Des Moines, Iowa
September 8, 2005

To the Shareholders of Meredith Corporation:

Meredith management is responsible for the preparation, integrity and objectivity of the financial information included in this annual report to shareholders. We take this responsibility very seriously as we recognize the importance of having well-informed, confident investors. The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles and include amounts based on our informed judgments and estimates. We have adopted appropriate accounting policies and are fully committed to ensuring that those policies are applied properly and consistently. In addition, we strive to report our financial results in a manner that is relevant, complete and understandable. We welcome any suggestions from those who use our reports.

To meet our responsibility for financial reporting, internal control systems and accounting procedures are designed to provide reasonable assurance as to the reliability of financial records. In addition, the internal audit staff monitors and reports on compliance with Company policies, procedures and internal control systems.

The consolidated financial statements and the effectiveness of the Company's internal control over financial reporting have been audited by an independent registered public accounting firm in accordance with the standards of the Public Company Accounting Oversight Board (United States). The independent registered public accounting firm was given unrestricted access to all financial records and related information, including all Board of Directors and Board committee minutes.

The audit committee of the Board of Directors is responsible for reviewing and monitoring the Company's accounting policies, internal controls and financial reporting practices. The audit committee is also directly responsible for the appointment, compensation and oversight of the Company's independent registered public accounting firm. The audit committee consists of five independent directors who meet with the independent auditors, management and internal auditors to review accounting, auditing and financial reporting matters. To ensure complete independence, the independent registered public accounting firm has direct access to the audit committee without the presence of management representatives.

At Meredith, we have always placed a high priority on good corporate governance. We endorse the ongoing improvements in this area.

/s/ Suku V. Radia

Suku V. Radia
Vice President - Chief Financial Officer