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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2015
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File Number 001-10784
American Media, Inc.
(Exact name of registrant as specified in its charter)

Delaware | 65-0203383
State or other jurisdiction of incorporation or organization | (I.R.S. Employer Identification No.)

1000 American Media Way, Boca Raton, Florida 33464
(Address of principal executive offices) (Zip Code)
(561) 997-7733
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
|  |  | Yes o | No þ
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
|  |  | Yes þ | No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer | o |  | Accelerated filer | o
Non-accelerated filer | þ | (Do not check if a smaller reporting company) | Smaller reporting company | o

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

There is no public market for the registrant’s common stock. The number of shares outstanding of the registrant's common stock, $0.0001 par value, as of July 31, 2015 was 100.

Table of Contents
AMERICAN MEDIA, INC.
QUARTERLY REPORT ON FORM 10-Q
For the Fiscal Quarter Ended June 30, 2015
TABLE OF CONTENTS

|  | Page(s)
Cautionary Statements Regarding Forward-Looking Information | 3
| PART I - FINANCIAL INFORMATION |
Item 1. | Financial Statements. | 4
| Unaudited Condensed Consolidated Balance Sheets as of June 30, 2015 and March 31, 2015 | 4
| Unaudited Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the Three Months Ended June 30, 2015 and 2014 | 5
| Unaudited Condensed Consolidated Statements of Stockholders' Deficit for the Three Months Ended June 30, 2015 and 2014 | 6
| Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2015 and 2014 | 7
| Notes to Unaudited Condensed Consolidated Financial Statements | 8
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations. | 29
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. | 45
Item 4. | Controls and Procedures. | 46
| PART II - OTHER INFORMATION |
Item 1. | Legal Proceedings. | 47
Item 1A. | Risk Factors. | 47
Item 6. | Exhibits. | 47
Signatures |  | 48

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American Media, Inc. and its consolidated subsidiaries are referred to in this Quarterly Report on Form 10-Q (this "Quarterly Report") as American Media, AMI, the Company, we, our and us.
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
This Quarterly Report for the fiscal quarter ended June 30, 2015 contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Securities Exchange Act"). These forward-looking statements relate to our current beliefs regarding future events or our future operating or financial performance. By their nature, forward-looking statements involve risks, trends, and uncertainties that could cause actual results to differ materially from those anticipated in any forward-looking statements.
We have tried, where possible, to identify such statements by using words such as "believes," "expects," "intends," "estimates," "may," "anticipates," "will," "likely," "project," "plans," "should," "could," "potential" or "continue" and similar expressions in connection with any discussion of future operating or financial performance. Any forward-looking statement is and will be based upon our then current expectations, estimates and assumptions regarding future events and is applicable only as of the dates of such statement. We may also make written and oral forward-looking statements in the reports we file from time to time with the Securities and Exchange Commission (the "SEC").
Important factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to, the following:

| • |  | our high degree of leverage and significant debt service obligations;
| • |  | our ability to implement our business strategy;
| • |  | increased competition, including price competition and competition from other publications and other forms of media, such as television, radio and digital concentrating on celebrity news and health and fitness;
| • |  | changes in general economic and business conditions, both nationally and internationally, which can influence the overall demand for our services and products by our customers and advertisers and affect the readership level of our publications as well as our advertising and circulation revenue;
| • |  | changes in discretionary consumer spending patterns;
| • |  | any disruption in the distribution of our magazines through wholesalers;
| • |  | any loss of one or more of our key vendors or key advertisers;
| • |  | changes in the price of fuel, paper, ink and postage;
| • |  | the effects of possible credit losses;
| • |  | whether we decide to engage in acquisitions, enter into partnerships and joint ventures or execute publishing services agreements in the future;
| • |  | our ability to attract and retain experienced and qualified personnel;
| • |  | adverse results in litigation matters or any regulatory proceedings;
| • |  | any future impairment of our goodwill or other identified intangible assets;
| • |  | the potential effects of threatened or actual terrorist attacks or other acts of violence or war;
| • |  | our ability to maintain an effective system of internal controls over financial reporting;
| • |  | unforeseen increases in employee benefit costs; and
| • |  | changes in accounting standards.

These and other factors are discussed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2015 (the “2015 Form 10-K”) under the heading “Part I, Item 1A. Risk Factors.”
We caution you not to place undue reliance on any forward-looking statement, which speaks only as of the date of this Quarterly Report. We undertake no obligation to publicly update or revise any forward-looking statement contained in this Quarterly Report, whether as a result of new information, future events or otherwise, except as required by law.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
AMERICAN MEDIA, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share information)

| June 30, 2015 |  | March 31, 2015
ASSETS |  |  |
CURRENT ASSETS: |  |  |
Cash and cash equivalents ($2,825 and $880 related to VIEs, respectively) | $ | 6,192 |  |  | $ | 3,452 |
Trade receivables, net of allowance for doubtful accounts of $3,455 and $3,281, respectively ($1 related to VIEs) | 28,752 |  |  | 39,412 |
Inventories ($95 related to VIEs) | 354 |  |  | 873 |
Prepaid expenses and other current assets ($415 and $198 related to VIEs, respectively) | 17,179 |  |  | 11,356 |
Total current assets | 52,477 |  |  | 55,093 |
PROPERTY AND EQUIPMENT, NET: |  |  |
Leasehold improvements | 3,801 |  |  | 3,801 |
Furniture, fixtures and equipment | 43,491 |  |  | 43,979 |
Less – accumulated depreciation | (32,068 | ) |  | (30,230 | )
Total property and equipment, net ($21 and $25 related to VIEs, respectively) | 15,224 |  |  | 17,550 |
OTHER ASSETS: |  |  |
Deferred debt costs, net | 5,772 |  |  | 6,383 |
Deferred rack costs, net | 4,377 |  |  | 4,824 |
Investments in affiliates | 806 |  |  | 803 |
Other long-term assets | 3,160 |  |  | 3,193 |
Total other assets | 14,115 |  |  | 15,203 |
GOODWILL AND OTHER IDENTIFIED INTANGIBLE ASSETS: |  |  |
Goodwill | 153,998 |  |  | 153,998 |
Other identified intangibles, net of accumulated amortization of $127,034 and $122,791, respectively ($6,000 related to VIEs) | 220,345 |  |  | 224,181 |
Total goodwill and other identified intangible assets, net | 374,343 |  |  | 378,179 |
TOTAL ASSETS | $ | 456,159 |  |  | $ | 466,025 |
LIABILITIES AND STOCKHOLDERS' DEFICIT |  |  |
CURRENT LIABILITIES: |  |  |
Accounts payable ($0 and $43 related to VIEs, respectively) | $ | 16,410 |  |  | $ | 15,781 |
Accrued expenses and other liabilities ($35 and $194 related to VIEs, respectively) | 32,940 |  |  | 44,015 |
Accrued interest | 2,799 |  |  | 10,075 |
Deferred revenues ($2,808 and $589 related to VIEs, respectively) | 27,437 |  |  | 26,734 |
Total current liabilities | 79,586 |  |  | 96,605 |
NON-CURRENT LIABILITIES: |  |  |
Senior secured notes, net | 307,808 |  |  | 309,569 |
Revolving credit facility | 24,800 |  |  | 14,700 |
Other non-current liabilities | 8,830 |  |  | 8,352 |
Deferred income taxes | 45,014 |  |  | 70,747 |
Total liabilities | 466,038 |  |  | 499,973 |
COMMITMENTS AND CONTINGENCIES (see Note 11) |  |  |  |  |
Redeemable noncontrolling interests (see Note 9) | 3,000 |  |  | 3,000 |
STOCKHOLDERS' DEFICIT: |  |  |
Common stock, $0.0001 par value; 100 shares authorized, issued and outstanding as of June 30, 2015 and March 31, 2015, respectively | — |  |  | — |
Additional paid-in capital | 945,037 |  |  | 945,037 |
Accumulated deficit | (957,523 | ) |  | (981,593 | )
Accumulated other comprehensive loss | (393 | ) |  | (392 | )
Total stockholders' deficit | (12,879 | ) |  | (36,948 | )
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ | 456,159 |  |  | $ | 466,025 |

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.
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AMERICAN MEDIA, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
AND COMPREHENSIVE INCOME (LOSS)
(in thousands)

| Three Months Ended June 30,
| 2015 |  | 2014
OPERATING REVENUES: |  |  |
Circulation | $ | 36,162 |  |  | $ | 44,124 |
Advertising | 17,862 |  |  | 17,351 |
Other | 2,084 |  |  | 1,863 |
Total operating revenues | 56,108 |  |  | 63,338 |
OPERATING EXPENSES: |  |  |
Editorial | 5,920 |  |  | 7,516 |
Production | 13,963 |  |  | 16,349 |
Distribution, circulation and other costs | 9,036 |  |  | 9,821 |
Selling, general and administrative | 15,417 |  |  | 22,375 |
Depreciation and amortization | 6,727 |  |  | 3,121 |
Total operating expenses | 51,063 |  |  | 59,182 |
OPERATING INCOME | 5,045 |  |  | 4,156 |
OTHER EXPENSES: |  |  |
Interest expense | (9,403 | ) |  | (13,987 | )
Amortization of deferred debt costs | (850 | ) |  | (434 | )
Other income | — |  |  | 314 |
Total other expenses, net | (10,253 | ) |  | (14,107 | )
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | (5,208 | ) |  | (9,951 | )
INCOME TAX PROVISION (BENEFIT) | (29,272 | ) |  | 732 |
NET INCOME (LOSS) FROM CONTINUING OPERATIONS | 24,064 |  |  | (10,683 | )
LOSS FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES | — |  |  | (1,355 | )
NET INCOME (LOSS) | 24,064 |  |  | (12,038 | )
LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS | 6 |  |  | 70 |
NET INCOME (LOSS) ATTRIBUTABLE TO AMERICAN MEDIA, INC. AND SUBSIDIARIES | $ | 24,070 |  |  | $ | (11,968 | )
| Three Months Ended June 30,
| 2015 |  | 2014
NET INCOME (LOSS) | $ | 24,064 |  |  | $ | (12,038 | )
Foreign currency translation adjustment | (1 | ) |  | 18 |
Comprehensive income (loss) | 24,063 |  |  | (12,020 | )
Less: comprehensive loss attributable to noncontrolling interests | 6 |  |  | 70 |
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO AMERICAN MEDIA, INC. AND SUBSIDIARIES | $ | 24,069 |  |  | $ | (11,950 | )

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.
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AMERICAN MEDIA, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
(in thousands, except share information)

| Three Months Ended June 30, 2015
|  |  |  |  | Accumulated |
|  |  | Additional |  | other | Total
| Common stock | paid-in | Accumulated | comprehensive | stockholders'
| Shares | Total | capital | deficit | income (loss) | deficit
BALANCE, BEGINNING OF PERIOD | 100 |  | $ | — |  | $ | 945,037 |  | $ | (981,593 | ) | $ | (392 | ) | $ | (36,948 | )
Net income | — |  | — |  | — |  | 24,070 |  | — |  | 24,070 |
Foreign currency translation | — |  | — |  | — |  | — |  | (1 | ) | (1 | )
BALANCE, END OF PERIOD | 100 |  | $ | — |  | $ | 945,037 |  | $ | (957,523 | ) | $ | (393 | ) | $ | (12,879 | )

| Three Months Ended June 30, 2014
|  |  |  |  | Accumulated |
|  |  | Additional |  | other | Total
| Common stock | paid-in | Accumulated | comprehensive | stockholders'
| Shares | Total | capital | deficit | income (loss) | deficit
BALANCE, BEGINNING OF PERIOD | 10,000,000 |  | $ | 1 |  | $ | 822,723 |  | $ | (954,466 | ) | $ | (231 | ) | $ | (131,973 | )
Net loss | — |  | — |  | — |  | (11,968 | ) | — |  | (11,968 | )
Foreign currency translation | — |  | — |  | — |  | — |  | 18 |  | 18 |
BALANCE, END OF PERIOD | 10,000,000 |  | $ | 1 |  | $ | 822,723 |  | $ | (966,434 | ) | $ | (213 | ) | $ | (143,923 | )

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.
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AMERICAN MEDIA, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

| Three Months Ended June 30,
| 2015 |  | 2014
OPERATING ACTIVITIES |  |  |
Net income (loss) | $ | 24,064 |  |  | $ | (12,038 | )
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: |  |  |
Depreciation and amortization | 6,727 |  |  | 3,358 |
Amortization of deferred debt costs | 850 |  |  | 434 |
Amortization of deferred rack costs | 1,475 |  |  | 1,458 |
Deferred income tax (benefit) provision | (29,434 | ) |  | 3,493 |
Non-cash payment-in-kind interest accretion | — |  |  | 4,809 |
Provision for doubtful accounts | 95 |  |  | 4,223 |
Other | (100 | ) |  | (526 | )
Changes in operating assets and liabilities: |  |  |
Trade receivables | 10,565 |  |  | 8,654 |
Inventories | 519 |  |  | 1,801 |
Prepaid expenses and other current assets | (2,123 | ) |  | (1,748 | )
Deferred rack costs | (1,028 | ) |  | (1,650 | )
Other long-term assets | 33 |  |  | 254 |
Accounts payable | 630 |  |  | 4,985 |
Accrued expenses and other liabilities | (11,019 | ) |  | 4,529 |
Accrued interest | (7,276 | ) |  | (13,320 | )
Other non-current liabilities | 478 |  |  | (238 | )
Deferred revenues | 703 |  |  | 463 |
Total changes in operating assets and liabilities | (8,518 | ) |  | 3,730 |
Net cash (used in) provided by operating activities | (4,841 | ) |  | 8,941 |
INVESTING ACTIVITIES |  |  |
Purchases of property and equipment | (147 | ) |  | (2,541 | )
Purchases of intangible assets | (420 | ) |  | (1,077 | )
Other | 2 |  |  | 5 |
Net cash used in investing activities | (565 | ) |  | (3,613 | )
FINANCING ACTIVITIES |  |  |
Proceeds from revolving credit facility | 30,900 |  |  | 28,300 |
Repayments to revolving credit facility | (20,800 | ) |  | (21,700 | )
Senior secured notes repurchases | (2,000 | ) |  | — |
Redemption premium payment | (118 | ) |  | — |
Payments to noncontrolling interest holders of Olympia | (50 | ) |  | — |
Net cash provided by financing activities | 7,932 |  |  | 6,600 |
Effect of exchange rate changes on cash | 214 |  |  | 102 |
Net increase in cash and cash equivalents | 2,740 |  |  | 12,030 |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 3,452 |  |  | 3,030 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 6,192 |  |  | $ | 15,060 |
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Non-cash property and equipment (incurred but not paid) | $ | — |  |  | $ | 360 |

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.
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AMERICAN MEDIA, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015
Note 1 - Nature of the Business
Description of the Business
American Media, Inc. and its subsidiaries (collectively, the "Company", "AMI", "we", "our" or "us") owns and operates the leading celebrity and health and fitness media brands in the United States. AMI was incorporated under the laws of the State of Delaware in 1990 and is headquartered in Boca Raton, Florida. The Company is a wholly-owned subsidiary of AMI Parent Holdings, LLC, a Delaware limited liability company (the "Parent"), which is controlled by certain investors of the Company (collectively, the "Investors") pursuant to the merger consummated in August 2014 (the "Merger"). As a result of the Merger, the Parent acquired 100% of the issued and outstanding shares of common stock of the Company.
In January 2015, we sold our Shape, Fit Pregnancy and Natural Health publications, which comprised our Women's Active Lifestyle segment, for approximately $60 million in cash plus an earnout of up to $60 million. See Note 10, "Dispositions" for further information. After giving effect to the divestiture of our Women's Active Lifestyle segment, the Company operates and reports financial and operating information in the following two segments: Celebrity Brands and Men's Active Lifestyle. The Company also provides general corporate services to its segments which is reported as a third, non-operating segment, Corporate and Other. See Note 12, "Business Segment Information" for further information regarding the Company's reporting segments.
As of June 30, 2015, we own and operate a diversified portfolio of 10 publications; National Enquirer, Star, Globe, National Examiner, OK! and Soap Opera Dige st are published weekly; Men's Fitness, Muscle & Fitness and Flex; are published 10 times per year and Muscle & Fitness Hers is published bi-monthly. Total circulation of these print publications were approximately 3.2 million copies per issue during three months ended June 30, 2015.
Our fiscal year ends on March 31, 2016 and may be referred to herein as fiscal 2016.
Liquidity
The Company is highly leveraged. As of June 30, 2015, the Company had approximately $332.6 million of outstanding indebtedness, consisting of $307.8 million of senior secured notes and $24.8 million under the revolving credit facility.
Over the next year, the cash interest payments due under the Company's debt agreements are approximately $36.8 million and there are no scheduled principal payments due. As of June 30, 2015, the Company has $6.2 million of cash and $5.8 million available for borrowing pursuant to the revolving credit facility. The Company's revolving credit facility matures in December 2016.
Several of our wholesalers, including our former second-largest wholesaler, Source Interlink Companies ("Source"), ceased operations during fiscal 2015. Since then, we have transitioned the newsstand circulation to the two remaining major wholesalers. This transition had an adverse impact on single copy newsstand sales and liquidity during fiscal 2015 and into the first quarter of fiscal 2016.
The Company's substantial indebtedness could adversely affect the business, financial condition and results of operations. Specifically, the Company's level of indebtedness could have important consequences for the business and operations, including the following:

• | requiring the Company to dedicate a substantial portion of its cash flow from operations for payments on indebtedness, thereby reducing the availability of such cash flow to fund working capital, capital expenditures and general corporate requirements or to carry out other aspects of the business;

• | placing the Company at a potential disadvantage compared to its competitors that have less debt;

• | increasing the Company's vulnerability to general adverse economic and industry conditions;

• | limiting the Company's ability to make material acquisitions or take advantage of business opportunities that may arise;

• | limiting the Company's flexibility in planning for, or reacting to, changes in the business industry;

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• | limiting the Company's ability to obtain additional financing to fund future working capital, capital expenditures and other general corporate requirements or to carry out other aspects of the business; and

• | exposing the Company to fluctuations in interest rates as the revolving credit facility has a variable rate of interest.

The Company plans to refinance all or a portion of its indebtedness on or before maturity. The Company cannot assure that it will be able to refinance any of its indebtedness on commercially reasonable terms or at all.
Although the Company is significantly leveraged, it expects that the current cash balances, liquidity provided in connection with the revolving credit facility and cash generated from operations, should be sufficient to meet working capital, capital expenditures, debt service, and other cash needs for the next year.
Note 2 - Summary of Significant Accounting Policies
Basis of Presentation
The information included in the foregoing interim condensed consolidated financial statements is unaudited. In the opinion of management, all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results of operations for the interim periods presented, have been reflected herein. These unaudited condensed consolidated financial statements do not include all disclosures associated with annual financial statements and, accordingly, should be read in conjunction with the audited financial statements and footnotes contained in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") with respect to the Company's fiscal year ended March 31, 2015 (the "2015 Form 10-K"), which may be accessed through the SEC's website at http://www.sec.gov.
The results of operations for interim periods presented herein are not necessarily indicative of the results of operations that may be expected for the full fiscal year or any other subsequent interim period.
Principles of Consolidation
Our consolidated financial statements reflect our financial statements, those of our wholly-owned domestic and foreign subsidiaries and those of certain variable interest entities where we are the primary beneficiary. For consolidated entities where we own less than 100% of the equity, we record net income (loss) attributable to noncontrolling interests in our consolidated statements of income (loss) equal to the percentage of the interests retained in such entities by the respective noncontrolling parties. All material intercompany balances and transactions are eliminated in consolidation.
In determining whether we are the primary beneficiary of an entity and therefore required to consolidate, we apply a qualitative approach that determines whether we have both (1) the power to direct the economically significant activities of the entity and (2) the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to that entity. These considerations impact the way we account for our existing joint ventures. We continually assess whether we are the primary beneficiary of a variable interest entity as changes to existing relationships or future transactions occur.
See Note 9, “Investments in Affiliates and Redeemable Noncontrolling Interests.”
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("US GAAP") requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes. Management's estimates are based on the facts and circumstances available at the time estimates are made, past historical experience, risk of loss, general economic conditions and trends, and management's assessments of the probable future outcome of these matters. As a result, actual results could differ from those estimates.
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Inventories
Inventories are stated at the lower of cost or market. Cost is determined on the first-in, first-out method. The Company writes down inventory for estimated obsolescence and/or excess or damaged inventory. Inventory write-downs during three months ended June 30, 2015 and 2014 were insignificant.
The Company is party to a long-term paper supply and purchasing agreement pursuant to which a third party manages all aspects of the Company's raw material paper inventory. As a result, the Company does not maintain raw material paper inventory. The finished product inventory, comprised of paper, production and distribution costs of future issues totaled $0.4 million and $0.9 million, respectively, at June 30, 2015 and March 31, 2015.
Concentrations
We rely on wholesalers for the retail distribution of our magazines. Several of our wholesalers, including our former second-largest wholesaler, Source Interlink Companies ("Source"), ceased operations during fiscal 2015. A small number of wholesalers are responsible for a substantial percentage of the wholesale magazine distribution business. As of June 30, 2015, single copy revenues consisted of copies distributed to retailers primarily by two major wholesalers.
During three months ended June 30, 2015 and 2014, The News Group accounted for approximately 27% and 15%, respectively, of our total operating revenues and The Hudson Group accounted for approximately 7% and 4%, respectively, of our total operating revenues. We have multi-year service arrangements with our major wholesalers, which provide incentives to maintain certain levels of service.
Recently Adopted Accounting Pronouncements
In April 2014, the FASB issued ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (Topic 205 and Topic 360) ("ASU 2014-08") which raises the threshold for disposals to qualify as discontinued operations. Under this new guidance, a discontinued operation is (1) a component of an entity or group of components that has been disposed of or is classified as held for sale that represents a strategic shift that has or will have a major effect on an entity's operations and financial results or (2) an acquired business that is classified as held for sale on the acquisition date. This guidance also requires expanded or new disclosures for discontinued operations, individually material disposals that do not meet the definition of a discontinued operation, an entity's continuing involvement with a discontinued operation following disposal, and retained equity method investments in a discontinued operation. ASU 2014-08 was effective for the Company on April 1, 2015. The adoption of ASU 2014-08 did not have an impact on the consolidated financial position, results of operations or cash flows.
Recently Issued Accounting Pronouncements
In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties About an Entity's Ability to Continue as a Going Concern (Topic 205) ("ASU 2014-15") which establishes management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and setting rules for how this information should be disclosed in the financial statements. This guidance is effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2016, with early adoption permitted. The Company does not expect the adoption of this guidance to have an impact on the consolidated financial position results of operations or cash flows.
In January 2015, the FASB issued ASU No. 2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic 225-20) ("ASU 2015-01") which simplifies the income statement presentation by eliminating the concept of extraordinary items. The guidance is effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2015, with early adoption permitted. The Company does not expect the adoption of this guidance to have an impact on the consolidated financial position, results of operations or cash flows.
In February 2015, the FASB issued ASU 2015-02, Consolidations, Amendments to the Consolidation Analysis (Topic 810) ("ASU 2015-02"), which changes the identification of variable interests, the variable interest characteristic for a limited partnership or similar entity and the primary beneficiary determination all of which are intended to improve the consolidation guidance as well as increase transparency and consistency of financial reporting. The guidance is effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2015, with early adoption permitted. The Company does not expect the adoption of this guidance to have an impact on the consolidated financial position, results of operations or cash flows.
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In April 2015, the FASB issued a proposal for a one-year deferral of the effective date for ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). Under this proposal, the standard would be effective for public entities for annual reporting periods beginning after December 15, 2017 and interim periods therein. ASU 2014-09 supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. ASU 2014-09 is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. As a result of the one-year deferral, ASU 2014-09 will now be effective for the Company on April 1, 2018 using one of two retrospective application methods. The Company has not determined the potential effects on the consolidated financial position, results of operations or cash flows.
In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest, Simplifying the Presentation of Debt Issuance Costs (Subtopic 835-30) ("ASU 2015-03"), which requires the presentation of debt issuance costs to be reflected as a reduction from the face amount of the related debt, with amortization recorded as interest expense, rather than recording as a deferred asset. The guidance is effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2015, and requires retrospective application. The Company does not expect the adoption of this guidance to have a significant impact on the consolidated financial position, results of operations or cash flows, although it will change the financial statement classification of the deferred debt cost. As of June 30, 2015 and March 31, 2015, the Company had $5.8 million and $6.4 million of net deferred debt costs, respectively, included on the consolidated balance sheets. Under the new guidance, the net deferred debt costs would offset the carrying amount of the respective debt on the consolidated balance sheets.
In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330) ("ASU 2015-11"), which simplifies the measurement of inventory by requiring certain inventory to be subsequently measured at the lower of cost and net realizable value. The guidance is effective for fiscal years, and interim period within those years, beginning on or after December 15, 2016. The Company does not expect the adoption of this guidance to have an impact on the consolidated financial position, results of operations or cash flows.
From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued accounting pronouncements that are not yet effective will not have a material impact on our financial position, results of operations or cash flows upon adoption.
Note 3 - Goodwill and Other Identified Intangible Assets
Goodwill
As of June 30, 2015 and March 31, 2015, the Company had goodwill with a carrying value of $154.0 million. The gross carrying amount and accumulated impairment losses of goodwill, as of June 30, 2015 and March 31, 2015, by reportable segment are as follows (in thousands):

| Celebrity Brands | Men's Active Lifestyle Group | Corporate and Other | Total
Goodwill | $ | 428,518 |  | $ | 112,296 |  | $ | 18,190 |  | $ | 559,004 |
Accumulated impairment losses | (304,595 | ) | (89,336 | ) | (11,075 | ) | (405,006 | )
Goodwill, net of impairment losses | $ | 123,923 |  | $ | 22,960 |  | $ | 7,115 |  | $ | 153,998 |

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Other Identified Intangible Assets
Other identified intangible assets are comprised of the following (in thousands):

| Range of lives (in years) | June 30, 2015 | March 31, 2015
Intangible assets subject to amortization: |  |  |
Tradenames | 15 - 27 | $ | 220,527 |  | $ | 46,166 |
Subscriber lists | 3 - 15 | 32,702 |  | 32,702 |
Customer relationships | 5 - 10 | 2,300 |  | 2,300 |
Other intangible assets | 3 | 8,040 |  | 7,620 |
Total gross intangible assets subject to amortization |  | 263,569 |  | 88,788 |
Accumulated amortization |  | (49,224 | ) | (44,970 | )
Total net intangible assets subject to amortization |  | 214,345 |  | 43,818 |
Intangible assets not subject to amortization | Indefinite | 6,000 |  | 180,363 |
Total other identified intangible assets, net |  | $ | 220,345 |  | $ | 224,181 |

Effective April 1, 2015, certain tradenames with a net carrying value totaling approximately $174.4 million that were previously assigned indefinite lives have been assigned finite lives of 15 years. During three months ended June 30, 2015, the amortization expense of these tradenames totaled approximately $2.9 million.
Amortization expense of intangible assets was $4.3 million and $0.9 million during three months ended June 30, 2015 and 2014, respectively. Based on the carrying value of identified intangible assets recorded at June 30, 2015, and assuming no subsequent impairment of the underlying assets, the amortization expense is expected to be as follows (in thousands):

Fiscal Year |  | Amortization Expense
2016 |  | $ | 12,660 |
2017 |  | 15,865 |
2018 |  | 14,955 |
2019 |  | 14,617 |
2020 |  | 14,501 |
Thereafter |  | 141,747 |
|  | $ | 214,345 |

Impairments
The Company did not record any impairment charges during three months ended June 30, 2015 or 2014. The Company continues to evaluate goodwill and other identified intangible assets for impairment. Goodwill and other identified intangible assets are material components of the Company's financial statements and impairment charges to the Company's goodwill or other identified intangible assets in future periods could be material to the Company's results of operations.
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Note 4 - Revolving Credit Facility
The Company maintains a revolving credit facility which provides for borrowing up to $35.0 million, less outstanding letters of credit, which matures in December 2016 (the "Revolving Credit Facility").
The Company has the option to pay interest based on (i) a floating base rate option equal to the greatest of (x) the prime rate in effect on such day; (y) the federal funds effective rate in effect on such day plus ½ of 1%; and (z) one month LIBOR (but no less than 2%) plus 1%, or (ii) LIBOR, in each case, plus a margin. The interest rate under the Revolving Credit Facility has ranged from 8.00% to 8.25% during the three months ended June 30, 2015 and 2014. In addition, the Company is required to pay a commitment fee ranging from 0.50% to 0.75% on the unused portion of the revolving commitment. Commitment fees paid during the three months ended June 30, 2015 and 2014 were insignificant.
During the three months ended June 30, 2015, the Company borrowed $30.9 million and repaid $20.8 million under the Revolving Credit Facility. At June 30, 2015, the Company has available borrowing capacity of $5.8 million after considering the $24.8 million outstanding balance and the $4.4 million outstanding letter of credit. The outstanding balance at June 30, 2015 of $24.8 million is included in non-current liabilities, as the maturity date of the Revolving Credit Facility is December 2016.
The indebtedness under the Revolving Credit Facility is guaranteed by certain of the domestic subsidiaries of the Company and is secured by liens on substantially all the assets of the Company and certain of its domestic subsidiaries. In addition, the Company’s obligations are secured by a pledge of all the issued and outstanding shares of, or other equity interests in, certain of the Company's existing or subsequently acquired or organized domestic subsidiaries and a percentage of the capital stock of, or other equity interests in, certain of its existing or subsequently acquired or organized foreign subsidiaries.
Covenants
The Revolving Credit Facility includes certain representations and warranties, conditions precedent, affirmative covenants, negative covenants and events of default. The negative covenants in the Revolving Credit Facility include financial maintenance covenants comprised of a first lien leverage ratio, a consolidated leverage ratio and an interest coverage ratio. The Revolving Credit Facility also contains certain covenants that, subject to certain exceptions, restrict paying dividends, incurring additional indebtedness, creating liens, making acquisitions or other investments, entering into certain mergers or consolidations and selling or otherwise disposing of assets. With respect to the dividend restrictions, the Revolving Credit Facility includes a cap on the total amount of cash available for distribution to our common stockholders.
With regard to the financial maintenance covenants, the first lien leverage ratio covenants must be equal to or less than 4.50 to 1.00 from April 1, 2015 through December 2016. The consolidated leverage ratio covenant must be equal to or less than 4.75 to 1.00 from April 1, 2015 through September 30, 2015 and 5.50 to 1.00 from October 1, 2015 through December 2016. The interest coverage ratio must be equal to or greater than 1.50 to 1.00 from April 1, 2015 through December 2016.
As of June 30, 2015, the Company was in compliance with its covenants under the Revolving Credit Facility.
Although there can be no assurances, management believes that, based on current projections (including projected borrowings and repayments under the Revolving Credit Facility), its operating results for fiscal 2016 will be sufficient to satisfy the financial covenants under the Revolving Credit Facility. The Company’s ability to satisfy the financial covenants is dependent on the business performing in accordance with its projections. If the performance of the Company’s business deviates significantly from its projections, the Company may not be able to satisfy such financial covenants. The Company's projections are subject to a number of factors, many of which are events beyond its control, which could cause its actual results to differ materially from its projections. If the Company does not comply with its financial covenants, the Company will be in default under the Revolving Credit Facility.
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Note 5 - Senior Secured Notes
Our senior secured notes are comprised of the first lien notes, the second lien notes and the new second lien notes and are collectively referred to herein as the "Senior Secured Notes" and consisted of the following (in thousands):

|  | June 30, 2015 |  | March 31, 2015
First Lien Notes |  | $ | 273,175 |  |  | $ | 275,175 |
Second Lien Notes |  | 2,198 |  |  | 2,198 |
New Second Lien Notes |  | 39,024 |  |  | 39,024 |
Unamortized discount |  | (6,589 | ) |  | (6,828 | )
Total debt obligations |  | 307,808 |  |  | 309,569 |
Less: current portion of long-term debt |  | — |  |  | — |
Noncurrent debt obligations |  | $ | 307,808 |  |  | $ | 309,569 |

The future maturities of the Senior Secured Notes as of June 30, 2015 are as follows (in thousands):

Fiscal Year |  | Amount
2016 |  | $ | — |
2017 |  | — |
2018 |  | 273,175 |
2019 |  | 2,198 |
2020 |  | — |
Thereafter |  | 39,024 |
Total future maturities |  | 314,397 |
Unamortized discount |  | (6,589 | )
Total debt obligations |  | $ | 307,808 |

First Lien Notes
In December 2010, we issued $385.0 million aggregate principal amount of senior secured notes, which bear interest at a rate of 11.5% per annum and mature in December 2017 (the "First Lien Notes"). Interest on the First Lien Notes is payable semi-annually on June 15th and December 15th of each year and is computed on the basis of a 360-day year comprised of twelve 30 day months.
During fiscal 2012, the Company redeemed $20.0 million in aggregate principal amount of First Lien Notes. During fiscal 2014, the Company repurchased approximately $2.3 million in aggregate principal amount of First Lien Notes. During fiscal 2015, the Company repurchased approximately $55.5 million in aggregate principal amount of First Lien Notes. In addition, during fiscal 2015, the Company exchanged approximately $32.0 million in aggregate principal amount of First Lien Notes, plus accrued and unpaid interest, for approximately $39.0 million aggregate principal amount of new second lien senior secured notes, which bear interest at a rate of 7.0% per annum and mature in July 2020 (the "New Second Lien Notes"), pursuant to an exchange agreement (the "New Second Lien Notes Exchange Agreement"), as further described below. During the first quarter of fiscal 2016, the Company repurchased approximately $2.0 million in aggregate principal amount of First Lien Notes, at a price equal to 105.9% of the aggregate principal amount thereof, plus accrued and unpaid interest in the open market.
The First Lien Notes are guaranteed on a first lien senior secured basis by the same subsidiaries of the Company that guarantee the Revolving Credit Facility. The First Lien Notes and the guarantees thereof are secured by a first-priority lien on substantially all our assets (subject to certain permitted liens and exceptions), pari passu with the liens granted under our Revolving Credit Facility, provided that in the event of a foreclosure on the collateral or insolvency proceedings, obligations under our Revolving Credit Facility will be repaid in full with proceeds from the collateral prior to the obligations under the First Lien Notes.
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Under the First Lien Notes Indenture, the Company has the option to redeem the First Lien Notes on or after December 15, 2014, in whole or in part, at the redemption prices set forth below, plus accrued and unpaid interest through the redemption date, if redeemed during the 12-month period beginning on December 15th of each of the years indicated below:

Year |  | Percentage
2014 |  | 105.75%
2015 |  | 102.875%
2016 and thereafter |  | 100%

Second Lien Notes
In December 2010, we issued $104.9 million aggregate principal amounts of senior secured notes, which bear interest at a rate of 13.5% per annum and mature in June 2018 (the "Second Lien Notes"). Interest on the Second Lien Notes is payable semi-annually on June 15th and December 15th of each year and is computed on the basis of a 360-day year comprised of twelve 30 day months.
In October 2013, we exchanged approximately $94.3 million aggregate principal amount of Second Lien Notes for an equal aggregate principal amount of new second lien senior secured notes, which bear interest at a rate of 10.0% per annum, are payable in kind, and mature in June 2018 (the “Second Lien PIK Notes”), pursuant to an exchange agreement (the “Second Lien PIK Notes Exchange Agreement”).
In September 2014, pursuant to the debt for equity exchange agreement with the Parent and the Investors, the Investors exchanged approximately $7.8 million aggregate principal amount of Second Lien Notes and all of the outstanding Second Lien PIK Notes, plus accrued and unpaid interest, for equity interest in the Parent. As a result, the Company's obligation under the Second Lien PIK Notes were satisfied in full.
During fiscal 2015, the Company repurchased approximately $0.6 million in aggregate principal amount of Second Lien Notes.
The Second Lien Notes are guaranteed on a second lien senior secured basis by the same subsidiaries of the Company that guarantee our Revolving Credit Facility and the First Lien Notes. The Second Lien Notes and the guarantees thereof are secured by a second-priority lien on substantially all our assets (subject to certain permitted liens and exceptions).
Under the Second Lien Notes Indenture, the Company has the option to redeem the Second Lien Notes on or after December 15, 2014, in whole or in part, at the redemption prices set forth below, plus accrued and unpaid interest through the redemption date, if redeemed during the 12-month period beginning on December 15th of each of the years indicated below:

Year |  | Percentage
2014 |  | 106.75%
2015 |  | 103.375%
2016 and thereafter |  | 100%

New Second Lien Notes
In January 2015, we issued approximately $39.0 million aggregate principal amount of New Second Lien Notes, which bear interest at a rate of 7.0% per annum and mature in July 2020. Interest on the New Second Lien Notes is payable semi-annually on July 15th and January 15th of each year and is computed on the basis of a 360-day year comprised of twelve 30 day months. As described above, the New Second Lien Notes were issued in exchange for $32.0 million aggregate principal amount of First Lien Notes pursuant to the New Second Lien Notes Exchange Agreement.
The New Second Lien Notes are guaranteed on a second lien senior secured basis by the same subsidiaries of the Company that guarantee our Revolving Credit Facility, the First Lien Notes and the Second Lien Notes. The New Second Lien Notes and the guarantees thereof are secured by a second-priority lien on substantially all our assets (subject to certain permitted liens and exceptions).
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Under the New Second Lien Notes Indenture, the Company has the option to redeem the New Second Lien Notes at any time prior to January 15, 2018 at a redemption price equal to 100% of the principal amount, plus a “make-whole” premium and accrued and unpaid interest through the redemption date. At any time prior to January 15, 2018, the Company may redeem up to 35% of the New Second Lien Notes from the net cash proceeds of one or more qualified equity offerings at a redemption price of 107% of the principal amount, plus accrued and unpaid interest through the redemption date, provided that at least 65% of the aggregate principal amount of the New Second Lien Notes remains outstanding after the redemption. The Company has the option to redeem the New Second Lien Notes on or after January 15, 2018, in whole or in part, at the redemption prices set forth below, plus accrued and unpaid interest through the redemption date, if redeemed during the 12-month period beginning on January 15th of each of the years indicated below:

Year |  | Percentage
2018 |  | 107%
2019 |  | 103.5%
2020 and thereafter |  | 100%

Note 6 - Fair Value of Financial Instruments
FASB ASC Topic 825, Financial Instruments requires the Company to disclose the fair value of financial instruments that are not measured at fair value in the accompanying financial statements. The fair value of the Company’s financial instruments has been estimated primarily by using inputs, other than quoted prices in active markets, that are observable either directly or indirectly. However, the use of different market assumptions or methods of valuation could result in different fair values.
FASB ASC Topic 820, Fair Value Measurements and Disclosures ("ASC 820"), established a three-tier fair value hierarchy, which prioritizes the use of inputs used in measuring fair value as follows:
Level 1 Observable inputs such as quoted prices in active markets for identical assets and liabilities;
Level 2 Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
Level 3 Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions.
The estimated fair value of the Company’s financial instruments is as follows (in thousands):

|  |  | June 30, 2015 |  | March 31, 2015
|  |  | Carrying Amount |  | Fair Value |  | Carrying Amount |  | Fair Value
First Lien Notes | Level 2 |  | $ | 273,175 |  |  | $ | 283,419 |  |  | $ | 275,175 |  |  | $ | 282,742 |
Second Lien Notes | Level 2 |  | 2,198 |  |  | 2,297 |  |  | 2,198 |  |  | 2,337 |
New Second Lien Notes | Level 2 |  | 32,435 |  |  | 33,773 |  |  | 32,196 |  |  | 33,655 |

The fair value of the First Lien Notes, the Second Lien Notes and the New Second Lien Notes is estimated using quoted market prices for the same or similar issues.
As of June 30, 2015 and March 31, 2015, the Company did not have financial assets or liabilities that would require measurement on a recurring basis, based on the guidance in ASC 820. The Company's financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, and the Revolving Credit Facility. The carrying amount of these accounts approximates fair value.
Assets measured at fair value on a nonrecurring basis
The Company's non-financial assets, such as goodwill, intangible assets and property and equipment, are measured at fair value when there is an indicator of impairment and are recorded at fair value only when an impairment charge is recognized. The Company did not record any impairment charges during three months ended June 30, 2015 or 2014.
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Note 7 - Income Taxes
The asset and liability method of accounting for deferred income taxes requires a valuation allowance against deferred tax assets if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company's valuation allowance related to its deferred tax assets, which was $27.1 million at March 31, 2015, was released during the three months ended June 30, 2015 based on the weight of positive evidence that the deferred tax assets will be realized due to the reclassification of certain tradenames from indefinite lived to finite lived, effective April 1, 2015. In the past, the Company's deferred tax liabilities related to indefinite-lived intangible assets were not considered a future source of income to support the realization of deferred tax assets within the net operating loss carryforward period.
Note 8 - Related Party Transactions
As discussed in Note 5, "Senior Secured Notes," during the first quarter of fiscal 2016, the Company repurchased approximately $2.0 million in aggregate principal amount of First Lien Notes, plus accrued and unpaid interest, in the open market from the Investors.
Mr. Elkins, a former member of our Board of Directors provided certain financial advisory services to the Company through Roxbury Advisory, LLC ("Roxbury"), a company controlled by Mr. Elkins, while he was a member of our Board of Directors. In August 2014, the consulting agreement between Roxbury and the Company was terminated. Payments for the services received from Roxbury totaled $40,000 during three months ended June 30, 2014 and the Company had no outstanding payables to Roxbury at June 30, 2015 or March 31, 2015.
Note 9 - Investments in Affiliates and Redeemable Noncontrolling Interests
Consolidated Joint Ventures
Mr. Olympia, LLC
In April 2005, the Company entered into a limited liability company agreement to form a joint venture, Mr. Olympia, LLC (“Olympia”), to manage and promote the Mr. Olympia fitness events. In September 2011, the Company and the other limited liability company member entered into an amendment to the limited liability company agreement (the "Amendment"), which, among other things, extended the time period that the Company could be required to purchase all the limited liability company units from the other member, from April 2015 to October 2019, for a fixed price of $3.0 million cash (the "Olympia Put Option"). The Amendment also extended the time period that the Company could require the other limited liability company member to sell to the Company all its limited liability company units from April 2015 to April 2020, for $3.0 million cash (the “Olympia Call Option”).
In April 2005, the other limited liability company member licensed certain trademarks related to the Mr. Olympia fitness events (collectively, the “Olympia Trademarks”) to Olympia for $3.0 million, payable by the Company over a 10-year period (the “License Fee”). Upon the exercise of the Olympia Put Option or the Olympia Call Option, the ownership of the Olympia Trademarks will be transferred to Olympia. If the Olympia Put Option or the Olympia Call Option is not exercised, then Olympia will retain the license to the Olympia Trademarks in perpetuity. The License Fee has been recorded as other identified intangibles, and the final payment was made in April 2013.
The Company has a variable interest in the Olympia joint venture, a variable interest entity. The Olympia joint venture is deemed a variable interest entity because there is insufficient equity investment at risk. The Company concluded it is the primary beneficiary because the holder of the Olympia Put Option has the ability to cause the Company to absorb the potential losses of the joint venture and the Company controls the activities that most significantly impact the economic performance of Olympia. As a result, the Company accounts for the Olympia joint venture as a consolidated subsidiary.
The Company follows the accounting for noncontrolling interest in equity that is redeemable at terms other than fair value. Accordingly, the Company has reflected the noncontrolling interest's equity within temporary equity for the Olympia joint venture as the Olympia joint venture’s securities are currently redeemable, pursuant to the terms of the Olympia Put Option. As a result, the Company has recorded the Olympia Put Option, at a minimum, equal to the maximum redemption amount as “Redeemable noncontrolling interests” in the accompanying financial statements.
There was no revenue or net income generated by Olympia during the three months ended June 30, 2015 and 2014.
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Zinczenko-AMI Ventures, LLC
In February 2013, the Company entered into a limited liability company agreement to form a joint venture, Zinczenko-AMI Media Ventures, LLC ("ZAM"), to create a book publishing division. ZAM was initially capitalized by the Company and the other limited liability company member (the "ZAM LLC Member") and the Company and the ZAM LLC Member each received an initial ownership interest of 51% and 49%, respectively, in ZAM. In accordance with the terms of the limited liability company agreement, the Company is responsible for the day-to-day operations and management of ZAM.
The Company has a variable interest in the ZAM joint venture, a variable interest entity. The ZAM joint venture is deemed a variable interest entity because there is insufficient equity investment at risk. The Company concluded it is the primary beneficiary because the Company controls the activities that most significantly impact the economic performance of ZAM as manager of the day-to-day operations. As a result, the Company accounts for the ZAM joint venture as a consolidated subsidiary.
The operating results of ZAM were insignificant to the Company's unaudited condensed consolidated financial statements during the three months ended June 30, 2015 and 2014.
Redeemable Noncontrolling Interests
There have been no changes to the equity attributable to the redeemable noncontrolling interests during three months ended June 30, 2015 and 2014.
Unconsolidated Joint Ventures
We have other joint ventures that we do not consolidate as we lack the power to direct the activities that significantly impact the economic performance of these entities. The Company's investments in affiliates are carried at the fair value of the investment consideration at the date acquired, plus the Company's equity in undistributed earnings from that date. Unless otherwise disclosed below, the operating results of our unconsolidated joint ventures were insignificant to the Company's unaudited condensed consolidated financial statements during three months ended June 30, 2015 and 2014.
Radar Online, LLC
In October 2008, the Company entered into a limited liability company agreement to form Radar Online, LLC, a joint venture ("Radar"), to manage Radar Online, a website focusing on celebrity and entertainment news. Though the Company owns 50% of Radar and can exercise significant influence, it does not control the activities that most significantly impact the economic performance of this joint venture. As a result, the Company accounts for the investment in Radar using the equity method. The operating results of Radar were insignificant to the Company’s unaudited condensed consolidated financial statements for the three months ended June 30, 2015 and 2014. The management fees receivable from Radar totaled $1.9 million as of June 30, 2015 and March 31, 2015 and is presented within other long-term assets in the accompanying consolidated financial statements.
Select Media Services, LLC
In September 2013, the Company contributed substantially all of its assets, comprising the Company's distribution and merchandising businesses operated by In Store Services, Inc., formerly known as Distribution Services, Inc. ("DSI"), a wholly-owned subsidiary of American Media, Inc., and $2.3 million in cash in exchange for a 27.5% membership interest in Select Media Services, LLC, a joint venture ("Select"), which operates as a merchandising and in-store services business. Though the Company can exercise significant influence, it does not control the activities that most significantly impact the economic performance of this joint venture. As a result, the Company accounts for the investment in Select using the equity method.
The membership interest and cash contribution in Select was adjusted in September 2014, pursuant to a one-time retroactive adjustment back to September 2013. The Company's membership interest was replaced with a participation interest in the earnings of Select and the initial capital contribution was refunded to the Company in October 2014 along with the distribution of the Company's participation interest for the twelve months ended August 31, 2014.
In June 2015, the Company's participation interest in Select was modified and Select redeemed the Company's interest in Select for approximately $1.7 million, which is reflected in other revenues in the Company's unaudited condensed consolidated financial statements. The proceeds were received in July 2015.
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Note 10 - Dispositions
Shape, Fit Pregnancy and Natural Health
In January 2015, the Company and Weider Publications, LLC, a wholly-owned subsidiary of the Company, entered into an asset purchase agreement (the "Purchase Agreement") with Meredith Corporation ("Meredith"). The Purchase Agreement provides for the sale of the Company's Shape, Fit Pregnancy and Natural Health brands and magazines, which comprised its Women's Active Lifestyle segment. The Company received the initial cash consideration of $60.0 million on January 30, 2015 when the transaction closed. The Company is further entitled to additional consideration (the "Additional Consideration"), in the form of a one-time payment, following the completion of Meredith's 2018 fiscal year on June 30, 2018. The Additional Consideration, up to $60.0 million, will be based upon 40% of the adjusted operating profit of the combination of the Company's Shape brand and Meredith's Fitness brand.
Pursuant to the Purchase Agreement, the Company continued to publish the Shape, Fit Pregnancy and Natural Health magazines with on-sale dates through March 31, 2015, after which Meredith assumed publishing responsibilities for such titles. Effective as of the closing, Meredith assumed control over the digital assets used with Shape, Fit Pregnancy and Natural Health. The Company will have no continuing involvement in the operations of these publications subsequent to March 31, 2015.
Discontinued Operations
Net revenue, pre-tax income from discontinued operations, income tax provision and loss from discontinued operations, net of income taxes are as follows, in thousands:

| Three Months Ended
| June 30, 2014 |
Net revenue | $ | 14,918 |
Pre-tax income from discontinued operations | 1,533 |
Income tax provision | 2,888 |
Loss from discontinued operations, net of income taxes | $ | (1,355 | )

Note 11 - Commitments and Contingencies
Litigation
On March 10, 2009, Anderson News, L.L.C. and Anderson Services, L.L.C., magazine wholesalers (collectively, “Anderson”), filed a lawsuit against American Media, Inc., DSI (now known as In-Store Services, Inc.), and various magazine publishers, wholesalers and distributors in the Federal District Court for the Southern District of New York (the “Anderson Action”). Anderson's complaint alleged that the defendants violated Section 1 of the Sherman Act by engaging in a purported industry-wide conspiracy to boycott Anderson and drive it out of business. Plaintiffs also purported to assert claims for defamation, tortious interference with contract and civil conspiracy. The complaint did not specify the amount of damages sought. On August 2, 2010, the District Court dismissed the action in its entirety with prejudice and without leave to replead and, on October 25, 2010, denied Anderson's motion for reconsideration of the dismissal decision. Anderson appealed the District Court's decisions.
On April 3, 2012, the Second Circuit issued a decision reversing the dismissal of the lawsuit and reinstating the antitrust and state law claims (except the defamation claim, which Anderson withdrew), and, on January 7, 2013, the United States Supreme Court declined to review the Second Circuit decision. Following the Second Circuit decision, the case has been proceeding in the District Court and the parties engaged in discovery. Fact discovery was completed in May 2014 and expert discovery was completed in October 2014. Anderson submitted an expert report calculating that damages are approximately $470 million, which would be subject to trebling should Anderson prevail against the defendants in the lawsuit. Defendants, including American Media, Inc. and DSI, also have submitted an expert report on damages, which opines that, separate and apart from the question of liability, Anderson has suffered no damages.
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Anderson is in chapter 11 bankruptcy proceedings in Delaware bankruptcy court. On June 10, 2010, American Media, Inc. filed a proof of claim in that proceeding for $5.6 million (which it amended on December 3, 2013 to reflect the counterclaim (described below) it planned to file in the Anderson Action), but Anderson asserts that it has no assets to pay unsecured creditors like American Media, Inc. An independent court-appointed examiner has identified claims that Anderson could assert against Anderson insiders in excess of $340.0 million.
In an order of the Delaware bankruptcy court, entered on November 14, 2011, American Media, Inc. and four other creditors (collectively, the “Creditors”), which also are defendants in the Anderson Action, were granted the right to file lawsuits against Anderson insiders asserting Anderson's claims identified by the examiner. The Creditors' retention of counsel to pursue the claims on a contingency fee basis was also approved. On November 14, 2011, pursuant to this order, a complaint was filed against 10 defendants. After a temporary stay of discovery pending conclusion of fact discovery in the Anderson Action, discovery in the bankruptcy action proceeded. On December 12, 2014, defendants in the adversary action moved for partial summary judgment seeking dismissal of certain of the Creditors’ claims. The motion was fully briefed on April 20, 2015.
By order dated November 6, 2013, the Delaware bankruptcy court granted American Media, Inc. and four of its co-defendants relief from the automatic bankruptcy stay of litigation against Anderson News, L.L.C. so that they could file a counterclaim in the Anderson Action against Anderson News, L.L.C. alleging that Anderson News, L.L.C. had violated the antitrust laws by engaging in a conspiracy to fix prices that wholesalers would pay publishers for their magazines and seeking an unspecified amount of damages to be proved at trial. Permission was obtained on January 23, 2014 from the District Court to file the counterclaim against Charles Anderson, Jr. and Anderson News, L.L.C. American Media, Inc. filed its amended answer and counterclaim in the Anderson Action on February 14, 2014. On December 15, 2014, the parties in the Anderson Action filed motions for summary judgment and to strike certain proposed expert testimony. The briefing on these motions was completed on April 17, 2015 and a hearing regarding these motions was held on July 22, 2015.
While it is not possible to predict the outcome of the Anderson Action or to estimate the impact on American Media, Inc. and DSI of a final judgment against American Media, Inc. and DSI (if that were to occur), American Media, Inc. and DSI believe that the claims asserted by Anderson, in the Anderson Action, are meritless. American Media, Inc. and DSI have antitrust claim insurance that covers defense costs. American Media, Inc. and DSI have filed a claim for insurance coverage with regard to the Anderson Action and certain of their defense costs are being paid by the insurer, and, in the event of a settlement or a damages award by the Court and subject to the applicable policy limits, American Media, Inc. and DSI anticipate seeking reimbursement from the insurer for payment of such settlement or damages. American Media, Inc. and DSI will continue to vigorously defend the case.
In addition, because the focus of some of our publications often involves celebrities and controversial subjects, the risk of defamation or invasion of privacy litigation exists. Our experience indicates that the claims for damages made in celebrity lawsuits are usually inflated and such lawsuits are usually defensible and, in any event, any reasonably foreseeable material liability or settlement would likely be covered by insurance, subject to any applicable deductible. We also periodically evaluate and assess the risks and uncertainties associated with our pending litigation disregarding the existence of insurance that would cover liability for such litigation. At present, in the opinion of management, after consultation with outside legal counsel, the liability resulting from pending litigation, even if insurance were not available, is not expected to have a material effect on our consolidated financial statements.
Note 12 - Business Segment Information
The Company has three reporting segments: Celebrity Brands, Men’s Active Lifestyle and Corporate and Other. The operating segments are based on each having the following characteristics: the operating segments engage in similar business activities from which they earn revenues and incur expenses; the operating results are regularly reviewed by the chief operating decision maker (the "CODM"), and there is discrete financial information. The Company does not aggregate any of its operating segments.
The Celebrity Brands segment includes National Enquirer, Star, Globe, National Examiner, OK! and Soap Opera Digest.
The Men’s Active Lifestyle segment includes Men’s Fitness, Muscle & Fitness, Flex and Muscle & Fitness Hers.
The Corporate and Other segment includes international licensing, photo syndication to third parties and corporate overhead. Corporate overhead expenses are not allocated to other segments and include production, circulation, executive staff, information technology, accounting, legal, human resources and administration department costs. The Corporate and Other segment also includes print and digital advertising sales and strategic management direction in the following areas: manufacturing, subscription circulation, logistics, event marketing and full back office financial functions.
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The Company’s accounting policies for the business segments are the same as those described in Note 2, "Summary of Significant Accounting Policies." The following information includes certain intersegment transactions and is, therefore, not necessarily indicative of the results had the operations existed as stand-alone businesses. Intersegment transactions represent intercompany services, which are billed at what management believes are prevailing market rates. These intersegment transactions, which represent transactions between operating units in different business segments, are eliminated in consolidation.
Segment information for the three months ended June 30, 2015 and 2014 and the assets employed as of June 30, 2015 and March 31, 2015 are as follows (in thousands):

| Three Months Ended June 30,
| 2015 |  | 2014
Operating revenues
Celebrity Brands | $ | 40,901 |  |  | $ | 46,847 |
Men's Active Lifestyle Group | 13,141 |  |  | 15,153 |
Corporate and Other | 2,066 |  |  | 1,338 |
Total operating revenues | $ | 56,108 |  |  | $ | 63,338 |
Operating income (loss)
Celebrity Brands | $ | 13,238 |  |  | $ | 17,893 |
Men's Active Lifestyle Group | 2,827 |  |  | 3,693 |
Corporate and Other | (11,020 | ) |  | (17,430 | )
Total operating income (loss) | $ | 5,045 |  |  | $ | 4,156 |
Depreciation and amortization
Celebrity Brands | $ | 3,282 |  |  | $ | 558 |
Men's Active Lifestyle Group | 963 |  |  | 253 |
Corporate and Other | 2,482 |  |  | 2,310 |
Total depreciation and amortization | $ | 6,727 |  |  | $ | 3,121 |
Amortization of deferred rack costs
Celebrity Brands | $ | 1,469 |  |  | $ | 1,360 |
Men's Active Lifestyle Group | 6 |  |  | 18 |
Total amortization of deferred rack costs | $ | 1,475 |  |  | $ | 1,378 |

Total Assets | June 30, 2015 |  | March 31, 2015
Celebrity Brands | $ | 325,569 |  |  | $ | 330,850 |
Men's Active Lifestyle Group | 88,286 |  |  | 86,775 |
Corporate and Other (1) | 42,304 |  |  | 48,400 |
Total assets | $ | 456,159 |  |  | $ | 466,025 |

(1) Amounts are primarily comprised of inventories, prepaid expenses, property and equipment, deferred debt costs and certain other assets.
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Geographic Data
The Company operates principally in two geographic areas, the United States of America and Europe. There were no significant transfers between geographic areas during three months ended June 30, 2015 and 2014. The following tables present revenue by geographic area for the three months ended June 30, 2015 and 2014 and the assets employed as of June 30, 2015 and March 31, 2015 are as follows (in thousands):

| Three Months Ended June 30,
| 2015 |  | 2014
Operating revenues: |  |  |
United States of America | $ | 54,521 |  |  | $ | 60,307 |
Europe | 1,587 |  |  | 3,031 |
Total operating revenues | $ | 56,108 |  |  | $ | 63,338 |

| June 30, 2015 |  | March 31, 2015
Assets: |  |  |
United States of America | $ | 448,748 |  |  | $ | 458,197 |
Europe | 7,411 |  |  | 7,828 |
Total assets | $ | 456,159 |  |  | $ | 466,025 |

Note 13 - Capital Structure
The Company has authorized 100 shares of $0.0001 par value common stock. At June 30, 2015, there were 100 shares of common stock issued and outstanding. As discussed in Note 1, "Nature of the Business," the Company is a wholly-owned subsidiary of the Parent, which is controlled by the Investors pursuant to the Merger.
We did not make any dividend payments during three months ended June 30, 2015 and 2014, and we do not anticipate paying any dividends on our common stock in the foreseeable future. The terms of our Revolving Credit Facility restrict our ability to pay dividends, and any future indebtedness that we may incur could preclude us from paying dividends. With respect to the dividend restriction, the Revolving Credit Facility and the indentures governing the Senior Secured Notes include a cap on the total amount of cash available for distribution to our common stockholders.
Note 14 - Supplemental Condensed Consolidating Financial Information
The following tables present condensed consolidating financial statements of (a) the parent company, American Media, Inc., as issuer of the Senior Secured Notes; (b) on a combined basis, the subsidiary guarantors of the Senior Secured Notes; and (c) on a combined basis, the subsidiaries that are not guarantors of the Senior Secured Notes. Separate financial statements of the subsidiary guarantors are not presented because the parent company owns all outstanding voting stock of each of the subsidiary guarantors and the guarantee by each subsidiary guarantor is full and unconditional and joint and several. As a result and in accordance with Rule 3-10(f) of Regulation S-X under the Securities Exchange Act of 1934, as amended, the Company includes the following tables in these notes to the condensed consolidated financial statements:
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SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
AS OF JUNE 30, 2015
(in thousands)

| Parent |  | Guarantors |  | Non Guarantors |  | Eliminations |  | Condensed Consolidated
ASSETS
CURRENT ASSETS: |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | — |  |  | $ | 2,791 |  |  | $ | 3,401 |  |  | $ | — |  |  | $ | 6,192 |
Trade receivables, net | — |  |  | 28,009 |  |  | 743 |  |  | — |  |  | 28,752 |
Inventories | — |  |  | 220 |  |  | 134 |  |  | — |  |  | 354 |
Prepaid expenses and other current assets | — |  |  | 21,987 |  |  | 679 |  |  | (5,487 | ) |  | 17,179 |
Total current assets | — |  |  | 53,007 |  |  | 4,957 |  |  | (5,487 | ) |  | 52,477 |
PROPERTY AND EQUIPMENT, NET: |  |  |  |  |  |  |  |  |
Leasehold improvements | — |  |  | 3,801 |  |  | — |  |  | — |  |  | 3,801 |
Furniture, fixtures and equipment | — |  |  | 42,701 |  |  | 790 |  |  | — |  |  | 43,491 |
Less – accumulated depreciation | — |  |  | (31,299 | ) |  | (769 | ) |  | — |  |  | (32,068 | )
Total property and equipment, net | — |  |  | 15,203 |  |  | 21 |  |  | — |  |  | 15,224 |
OTHER ASSETS: |  |  |  |  |  |  |  |  |
Deferred debt costs, net | 5,772 |  |  | — |  |  | — |  |  | — |  |  | 5,772 |
Deferred rack costs, net | — |  |  | 4,377 |  |  | — |  |  | — |  |  | 4,377 |
Investments in affiliates | 621,272 |  |  | (330 | ) |  | — |  |  | (620,136 | ) |  | 806 |
Other long-term assets | — |  |  | 3,160 |  |  | — |  |  | — |  |  | 3,160 |
Due from affiliates | — |  |  | 308,648 |  |  | — |  |  | (308,648 | ) |  | — |
Total other assets | 627,044 |  |  | 315,855 |  |  | — |  |  | (928,784 | ) |  | 14,115 |
GOODWILL AND OTHER IDENTIFIED INTANGIBLE ASSETS: |  |  |  |  |  |
Goodwill | — |  |  | 149,488 |  |  | 4,510 |  |  | — |  |  | 153,998 |
Other identified intangibles, net | — |  |  | 214,345 |  |  | 6,000 |  |  | — |  |  | 220,345 |
Total goodwill and other identified intangible assets | — |  |  | 363,833 |  |  | 10,510 |  |  | — |  |  | 374,343 |
TOTAL ASSETS | $ | 627,044 |  |  | $ | 747,898 |  |  | $ | 15,488 |  |  | $ | (934,271 | ) |  | $ | 456,159 |
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Accounts payable |  |  |  |  |  |  |  |  |
Accounts payable | $ | — |  |  | $ | 16,009 |  |  | $ | 401 |  |  | $ | — |  |  | $ | 16,410 |
Accrued expenses and other liabilities | — |  |  | 32,236 |  |  | 4,138 |  |  | (3,434 | ) |  | 32,940 |
Accrued interest | 2,799 |  |  | — |  |  | — |  |  | — |  |  | 2,799 |
Deferred revenues | — |  |  | 24,194 |  |  | 3,243 |  |  | — |  |  | 27,437 |
Total current liabilities | 2,799 |  |  | 72,439 |  |  | 7,782 |  |  | (3,434 | ) |  | 79,586 |
NON-CURRENT LIABILITIES: |  |  |  |  |  |  |  |  |
Senior secured notes | 307,808 |  |  | — |  |  | — |  |  | — |  |  | 307,808 |
Revolving credit facility | 24,800 |  |  | — |  |  | — |  |  | — |  |  | 24,800 |
Other non-current liabilities | — |  |  | 8,830 |  |  | — |  |  | — |  |  | 8,830 |
Deferred income taxes | — |  |  | 47,041 |  |  | 26 |  |  | (2,053 | ) |  | 45,014 |
Due to affiliates | 304,516 |  |  | — |  |  | 4,132 |  |  | (308,648 | ) |  | — |
Total liabilities | 639,923 |  |  | 128,310 |  |  | 11,940 |  |  | (314,135 | ) |  | 466,038 |
COMMITMENTS AND CONTINGENCIES |  |  |  |  |  |
Redeemable noncontrolling interests | — |  |  | — |  |  | 3,000 |  |  | — |  |  | 3,000 |
STOCKHOLDERS' (DEFICIT) EQUITY: |  |  |  |  |  |  |  |  |
Total stockholders' (deficit) equity | (12,879 | ) |  | 619,588 |  |  | 548 |  |  | (620,136 | ) |  | (12,879 | )
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY | $ | 627,044 |  |  | $ | 747,898 |  |  | $ | 15,488 |  |  | $ | (934,271 | ) |  | $ | 456,159 |

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SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
AS OF MARCH 31, 2015
(in thousands)

| Parent |  | Guarantors |  | Non Guarantors |  | Eliminations |  | Condensed Consolidated
ASSETS
CURRENT ASSETS: |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | — |  |  | $ | 1,040 |  |  | $ | 2,412 |  |  | $ | — |  |  | $ | 3,452 |
Trade receivables, net | — |  |  | 38,058 |  |  | 1,354 |  |  | — |  |  | 39,412 |
Inventories | — |  |  | 739 |  |  | 134 |  |  | — |  |  | 873 |
Prepaid expenses and other current assets | — |  |  | 16,207 |  |  | 636 |  |  | (5,487 | ) |  | 11,356 |
Total current assets | — |  |  | 56,044 |  |  | 4,536 |  |  | (5,487 | ) |  | 55,093 |
PROPERTY AND EQUIPMENT, NET: |  |  |  |  |  |  |  |  |
Leasehold improvements | — |  |  | 3,801 |  |  | — |  |  | — |  |  | 3,801 |
Furniture, fixtures and equipment | — |  |  | 43,189 |  |  | 790 |  |  | — |  |  | 43,979 |
Less – accumulated depreciation | — |  |  | (29,465 | ) |  | (765 | ) |  | — |  |  | (30,230 | )
Total property and equipment, net | — |  |  | 17,525 |  |  | 25 |  |  | — |  |  | 17,550 |
OTHER ASSETS: |  |  |  |  |  |  |  |  |
Deferred debt costs, net | 6,383 |  |  | — |  |  | — |  |  | — |  |  | 6,383 |
Deferred rack costs, net | — |  |  | 4,824 |  |  | — |  |  | — |  |  | 4,824 |
Investments in affiliates | 587,126 |  |  | 224 |  |  | — |  |  | (586,547 | ) |  | 803 |
Other long-term assets | — |  |  | 3,193 |  |  | — |  |  | — |  |  | 3,193 |
Due from affiliates | — |  |  | 300,246 |  |  | — |  |  | (300,246 | ) |  | — |
Total other assets | 593,509 |  |  | 308,487 |  |  | — |  |  | (886,793 | ) |  | 15,203 |
GOODWILL AND OTHER IDENTIFIED INTANGIBLE ASSETS:
Goodwill | — |  |  | 149,488 |  |  | 4,510 |  |  | — |  |  | 153,998 |
Other identified intangibles, net | — |  |  | 218,181 |  |  | 6,000 |  |  | — |  |  | 224,181 |
Total goodwill and other identified intangible assets | — |  |  | 367,669 |  |  | 10,510 |  |  | — |  |  | 378,179 |
TOTAL ASSETS | $ | 593,509 |  |  | $ | 749,725 |  |  | $ | 15,071 |  |  | $ | (892,280 | ) |  | $ | 466,025 |
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
CURRENT LIABILITIES: |  |  |  |  |  |  |  |  |
Accounts payable | $ | — |  |  | $ | 15,434 |  |  | $ | 347 |  |  | $ | — |  |  | $ | 15,781 |
Accrued expenses and other liabilities | — |  |  | 104,580 |  |  | 5,393 |  |  | (65,958 | ) |  | 44,015 |
Accrued interest | 10,075 |  |  | — |  |  | — |  |  | — |  |  | 10,075 |
Deferred revenues | — |  |  | 25,718 |  |  | 1,016 |  |  | — |  |  | 26,734 |
Total current liabilities | 10,075 |  |  | 145,732 |  |  | 6,756 |  |  | (65,958 | ) |  | 96,605 |
NON-CURRENT LIABILITIES: |  |  |  |  |  |  |  |  |
Senior secured notes | 309,569 |  |  | — |  |  | — |  |  | — |  |  | 309,569 |
Revolving credit facility | 14,700 |  |  | — |  |  | — |  |  | — |  |  | 14,700 |
Other non-current liabilities | — |  |  | 8,352 |  |  | — |  |  | — |  |  | 8,352 |
Deferred income taxes | — |  |  | 10,250 |  |  | 26 |  |  | 60,471 |  |  | 70,747 |
Due to affiliates | 296,113 |  |  | — |  |  | 4,133 |  |  | (300,246 | ) |  | — |
Total liabilities | 630,457 |  |  | 164,334 |  |  | 10,915 |  |  | (305,733 | ) |  | 499,973 |
COMMITMENTS AND CONTINGENCIES |  |  |  |  |  |  |  |  |
Redeemable noncontrolling interests | — |  |  | — |  |  | 3,000 |  |  | — |  |  | 3,000 |
STOCKHOLDERS' (DEFICIT) EQUITY: |  |  |  |  |  |  |  |  |
Total stockholders' (deficit) equity | (36,948 | ) |  | 585,391 |  |  | 1,156 |  |  | (586,547 | ) |  | (36,948 | )
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY | $ | 593,509 |  |  | $ | 749,725 |  |  | $ | 15,071 |  |  | $ | (892,280 | ) |  | $ | 466,025 |

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SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME (LOSS)
AND COMPREHENSIVE INCOME (LOSS)
FOR THE THREE MONTHS ENDED JUNE 30, 2015
(in thousands)

| Parent |  | Guarantors |  | Non Guarantors |  | Eliminations |  | Condensed Consolidated
OPERATING REVENUES: |  |  |  |  |  |  |  |  |
Circulation | $ | — |  |  | $ | 36,140 |  |  | $ | 22 |  |  | $ | — |  |  | $ | 36,162 |
Advertising | — |  |  | 17,862 |  |  | — |  |  | — |  |  | 17,862 |
Other | — |  |  | 2,059 |  |  | 25 |  |  | — |  |  | 2,084 |
Total operating revenues | — |  |  | 56,061 |  |  | 47 |  |  | — |  |  | 56,108 |
OPERATING EXPENSES: |  |  |  |  |  |  |  |  |
Editorial | — |  |  | 5,798 |  |  | 122 |  |  | — |  |  | 5,920 |
Production | — |  |  | 13,922 |  |  | 41 |  |  | — |  |  | 13,963 |
Distribution, circulation and other cost of sales | — |  |  | 8,979 |  |  | 57 |  |  | — |  |  | 9,036 |
Selling, general and administrative | — |  |  | 15,181 |  |  | 236 |  |  | — |  |  | 15,417 |
Depreciation and amortization | — |  |  | 6,724 |  |  | 3 |  |  | — |  |  | 6,727 |
Total operating expenses | — |  |  | 50,604 |  |  | 459 |  |  | — |  |  | 51,063 |
OPERATING INCOME | — |  |  | 5,457 |  |  | (412 | ) |  | — |  |  | 5,045 |
OTHER EXPENSES: |  |  |  |  |  |  |  |  |
Interest expense | (9,400 | ) |  | (3 | ) |  | — |  |  | — |  |  | (9,403 | )
Amortization of deferred debt costs | (850 | ) |  | — |  |  | — |  |  | — |  |  | (850 | )
Total other expense, net | (10,250 | ) |  | (3 | ) |  | — |  |  | — |  |  | (10,253 | )
(LOSS) INCOME BEFORE PROVISION (BENEFIT) FOR INCOME TAXES, AND EQUITY IN EARNINGS OF CONSOLIDATED SUBSIDIARIES | (10,250 | ) |  | 5,454 |  |  | (412 | ) |  | — |  |  | (5,208 | )
PROVISION FOR INCOME TAXES | — |  |  | (29,424 | ) |  | 152 |  |  | — |  |  | (29,272 | )
EQUITY (LOSSES) IN EARNINGS OF CONSOLIDATED SUBSIDIARIES | 34,320 |  |  | (558 | ) |  | — |  |  | (33,762 | ) |  | — |
NET INCOME (LOSS) FROM CONTINUING OPERATIONS | 24,070 |  |  | 34,320 |  |  | (564 | ) |  | (33,762 | ) |  | 24,064 |
INCOME FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES | — |  |  | — |  |  | — |  |  | — |  |  | — |
NET INCOME (LOSS) | 24,070 |  |  | 34,320 |  |  | (564 | ) |  | (33,762 | ) |  | 24,064 |
LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS | — |  |  | — |  |  | 6 |  |  | — |  |  | 6 |
NET INCOME (LOSS) ATTRIBUTABLE TO AMERICAN MEDIA, INC AND SUBSIDIARIES | $ | 24,070 |  |  | $ | 34,320 |  |  | $ | (558 | ) |  | $ | (33,762 | ) |  | $ | 24,070 |
| Parent |  | Guarantors |  | Non Guarantors |  | Eliminations |  | Condensed Consolidated
NET INCOME (LOSS) | $ | 24,070 |  |  | $ | 34,320 |  |  | $ | (564 | ) |  | $ | (33,762 | ) |  | $ | 24,064 |
Foreign currency translation adjustment | — |  |  | — |  |  | (1 | ) |  | — |  |  | (1 | )
Comprehensive income (loss) | 24,070 |  |  | 34,320 |  |  | (565 | ) |  | (33,762 | ) |  | 24,063 |
Less: comprehensive loss attributable to noncontrolling interests | — |  |  | — |  |  | 6 |  |  | — |  |  | 6 |
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO AMERICAN MEDIA, INC. AND SUBSIDIARIES | $ | 24,070 |  |  | $ | 34,320 |  |  | $ | (559 | ) |  | $ | (33,762 | ) |  | $ | 24,069 |

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SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME (LOSS)
AND COMPREHENSIVE INCOME (LOSS)
FOR THE THREE MONTHS ENDED JUNE 30, 2014
(in thousands)

| Parent |  | Guarantors |  | Non Guarantors |  | Eliminations |  | Condensed Consolidated
OPERATING REVENUES: |  |  |  |  |  |  |  |  |
Circulation | $ | — |  |  | $ | 42,650 |  |  | $ | 1,474 |  |  | $ | — |  |  | $ | 44,124 |
Advertising | — |  |  | 15,845 |  |  | 1,506 |  |  | — |  |  | 17,351 |
Other | — |  |  | 1,473 |  |  | 390 |  |  | — |  |  | 1,863 |
Total operating revenues | — |  |  | 59,968 |  |  | 3,370 |  |  | — |  |  | 63,338 |
OPERATING EXPENSES: |  |  |  |  |  |  |  |  |
Editorial | — |  |  | 6,915 |  |  | 601 |  |  | — |  |  | 7,516 |
Production | — |  |  | 15,504 |  |  | 845 |  |  | — |  |  | 16,349 |
Distribution, circulation and other cost of sales | — |  |  | 9,102 |  |  | 719 |  |  | — |  |  | 9,821 |
Selling, general and administrative | — |  |  | 21,586 |  |  | 789 |  |  | — |  |  | 22,375 |
Depreciation and amortization | — |  |  | 3,097 |  |  | 24 |  |  | — |  |  | 3,121 |
Total operating expenses | — |  |  | 56,204 |  |  | 2,978 |  |  | — |  |  | 59,182 |
OPERATING INCOME | — |  |  | 3,764 |  |  | 392 |  |  | — |  |  | 4,156 |
OTHER EXPENSES: |  |  |  |  |  |  |  |  |
Interest expense | (13,956 | ) |  | (17 | ) |  | (14 | ) |  | — |  |  | (13,987 | )
Amortization of deferred debt costs | (434 | ) |  | — |  |  | — |  |  | — |  |  | (434 | )
Other income | — |  |  | 314 |  |  | — |  |  | — |  |  | 314 |
Total other income (expenses), net | (14,390 | ) |  | 297 |  |  | (14 | ) |  | — |  |  | (14,107 | )
(LOSS) INCOME BEFORE PROVISION (BENEFIT) FOR INCOME TAXES, AND EQUITY IN EARNINGS OF CONSOLIDATED SUBSIDIARIES | (14,390 | ) |  | 4,061 |  |  | 378 |  |  | — |  |  | (9,951 | )
PROVISION FOR INCOME TAXES | — |  |  | 610 |  |  | 122 |  |  | — |  |  | 732 |
EQUITY IN EARNINGS OF CONSOLIDATED SUBSIDIARIES | 2,422 |  |  | 361 |  |  | — |  |  | (2,783 | ) |  | — |
NET LOSS FROM CONTINUING OPERATIONS | (11,968 | ) |  | 3,812 |  |  | 256 |  |  | (2,783 | ) |  | (10,683 | )
INCOME FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES | — |  |  | (1,355 | ) |  | — |  |  | — |  |  | (1,355 | )
NET (LOSS) INCOME | (11,968 | ) |  | 2,457 |  |  | 256 |  |  | (2,783 | ) |  | (12,038 | )
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | — |  |  | — |  |  | 70 |  |  | — |  |  | 70 |
NET (LOSS) INCOME ATTRIBUTABLE TO AMERICAN MEDIA, INC AND SUBSIDIARIES | $ | (11,968 | ) |  | $ | 2,457 |  |  | $ | 326 |  |  | $ | (2,783 | ) |  | $ | (11,968 | )
| Parent |  | Guarantors |  | Non Guarantors |  | Eliminations |  | Condensed Consolidated
NET (LOSS) INCOME | $ | (11,968 | ) |  | $ | 2,457 |  |  | $ | 256 |  |  | $ | (2,783 | ) |  | $ | (12,038 | )
Foreign currency translation adjustment | — |  |  | — |  |  | 18 |  |  | — |  |  | 18 |
Comprehensive (loss) income | (11,968 | ) |  | 2,457 |  |  | 274 |  |  | (2,783 | ) |  | (12,020 | )
Less: comprehensive income attributable to noncontrolling interests | — |  |  | — |  |  | 70 |  |  | — |  |  | 70 |
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO AMERICAN MEDIA, INC. AND SUBSIDIARIES | $ | (11,968 | ) |  | $ | 2,457 |  |  | $ | 344 |  |  | $ | (2,783 | ) |  | $ | (11,950 | )

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SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 2015
(in thousands)

| Parent |  | Guarantors |  | Non Guarantors |  | Eliminations |  | Condensed Consolidated
Cash Flows from Operating Activities: |  |  |  |  |  |  |  |  |
Net cash provided by (used in) operating activities | $ | (16,384 | ) |  | $ | 10,504 |  |  | $ | 1,039 |  |  | $ | — |  |  | $ | (4,841 | )
Cash Flows from Investing Activities:
Purchases of property and equipment | — |  |  | (147 | ) |  | — |  |  | — |  |  | (147 | )
Purchase of intangible assets | — |  |  | (420 | ) |  | — |  |  | — |  |  | (420 | )
Due from affiliates | — |  |  | (8,402 | ) |  | — |  |  | 8,402 |  |  | — |
Other | — |  |  | 2 |  |  | — |  |  | — |  |  | 2 |
Net cash provided by (used in) investing activities | — |  |  | (8,967 | ) |  | — |  |  | 8,402 |  |  | (565 | )
Cash Flows from Financing Activities:
Proceeds from revolving credit facility | 30,900 |  |  | — |  |  | — |  |  | — |  |  | 30,900 |
Repayment to revolving credit facility | (20,800 | ) |  | — |  |  | — |  |  | — |  |  | (20,800 | )
Senior secured notes repurchases | (2,000 | ) |  | — |  |  | — |  |  | — |  |  | (2,000 | )
Redemption premium payment | (118 | ) |  | — |  |  | — |  |  | — |  |  | (118 | )
Payments to noncontrolling interest holder of Olympia | — |  |  | — |  |  | (50 | ) |  | — |  |  | (50 | )
Due to affiliates | 8,402 |  |  | — |  |  | — |  |  | (8,402 | ) |  | — |
Net cash provided by (used in) financing activities | 16,384 |  |  | — |  |  | (50 | ) |  | (8,402 | ) |  | 7,932 |
Effect of exchange rate changes on cash | — |  |  | 214 |  |  | — |  |  | — |  |  | 214 |
Net increase in cash and cash equivalents | — |  |  | 1,751 |  |  | 989 |  |  | — |  |  | 2,740 |
Cash and cash equivalents, beginning of period | — |  |  | 1,040 |  |  | 2,412 |  |  | — |  |  | 3,452 |
Cash and cash equivalents, end of period | $ | — |  |  | $ | 2,791 |  |  | $ | 3,401 |  |  | $ | — |  |  | $ | 6,192 |

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SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 2014
(in thousands)

| Parent |  | Guarantors |  | Non Guarantors |  | Eliminations |  | Condensed Consolidated
Cash Flows from Operating Activities: |  |  |  |  |  |  |  |  |
Net cash provided by (used in) operating activities | $ | (21,525 | ) |  | $ | 28,603 |  |  | $ | 1,863 |  |  | $ | — |  |  | $ | 8,941 |
Cash Flows from Investing Activities: |  |  |  |  |  |  |  |  |
Purchases of property and equipment | — |  |  | (2,541 | ) |  | — |  |  | — |  |  | (2,541 | )
Purchase of intangible assets | — |  |  | (1,077 | ) |  | — |  |  | — |  |  | (1,077 | )
Due from affiliates | — |  |  | (14,925 | ) |  | — |  |  | 14,925 |  |  | — |
Other | — |  |  | 5 |  |  | — |  |  | — |  |  | 5 |
Net cash provided by (used in) investing activities | — |  |  | (18,538 | ) |  | — |  |  | 14,925 |  |  | (3,613 | )
Cash Flows from Financing Activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Proceeds from revolving credit facility | 28,300 |  |  | — |  |  | — |  |  | — |  |  | 28,300 |
Repayment to revolving credit facility | (21,700 | ) |  | — |  |  | — |  |  | — |  |  | (21,700 | )
Due to affiliates | 14,925 |  |  | — |  |  | — |  |  | (14,925 | ) |  | — |
Net cash provided by (used in) financing activities | 21,525 |  |  | — |  |  | — |  |  | (14,925 | ) |  | 6,600 |
Effect of exchange rate changes on cash | — |  |  | 102 |  |  | — |  |  | — |  |  | 102 |
Net increase (decrease) in cash and cash equivalents | — |  |  | 10,167 |  |  | 1,863 |  |  | — |  |  | 12,030 |
Cash and cash equivalents, beginning of period | — |  |  | 415 |  |  | 2,615 |  |  | — |  |  | 3,030 |
Cash and cash equivalents, end of period | $ | — |  |  | $ | 10,582 |  |  | $ | 4,478 |  |  | $ | — |  |  | $ | 15,060 |

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of financial condition and results of operations was prepared to provide the reader with a view and perspective of our business through the eyes of management and should be read together with our 2015 Form 10-K and the unaudited condensed consolidated financial statements and the accompanying notes included elsewhere in this Quarterly Report. In addition to historical data, this discussion and analysis contains statements that constitute forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including but not limited to those discussed in "Cautionary Statements Regarding Forward-Looking Information" included in this Quarterly Report and "Risk Factors" included in the 2015 Form 10-K.
ORGANIZATION OF INFORMATION
Our discussion is presented in the following sections:

• | Executive Summary

• | Recent Developments and Management Action Plans

• | Results of Operations

• | Operating Segments

• | Liquidity and Capital Resources

• | Contractual Obligations and Other Commitments

• | Seasonality and Quarterly Fluctuations

• | Off-Balance Sheet Financing

• | Application of Critical Accounting Estimates

• | Recently Adopted and Recently Issued Accounting Pronouncements

EXECUTIVE SUMMARY
American Media, Inc., together with its subsidiaries (collectively, the "Company", "AMI", "we", "our" or "us"), is one of the largest publishers of celebrity and health and active lifestyle magazines in the United States, with a diversified portfolio of 10 publications that have a combined monthly print and digital audience of more than 39 million readers and monthly on-line audience of approximately 49 million readers.
In January 2015, we sold our Shape, Fit Pregnancy and Natural Health publications, which comprised our Women's Active Lifestyle segment, for approximately $60 million in cash plus an earnout of up to $60 million. As a result, the operations of the Women's Active Lifestyle segment have been classified as discontinued operations in all periods presented. After giving effect to the divestiture of our Women's Active Lifestyle segment, we report under a new segment structure beginning in the fourth quarter of fiscal 2015 and accordingly have recast prior period segment amounts.
Our remaining well-known publications cover two primary operating segments: Celebrity and Men's Active Lifestyle. Within our Celebrity segment, our portfolio of brands includes: National Enquirer, Star, OK!, Globe, National Examiner and Soap Opera Digest. Within our Men's Active Lifestyle segment, our portfolio of brands include: Men's Fitness, Muscle & Fitness, Muscle & Fitness Hers and Flex. Our third, non-operating segment, Corporate and Other, includes our international licensing of certain health and fitness publications, photo syndication for all our media content platforms and strategic management services for publishers.
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We believe our leadership position in these segments provides us with strong competitive advantages in the publishing market. Our iconic brands have enabled us to build a loyal readership and establish relationships with major advertisers and distributors. We have leveraged the strength of our portfolio of brands through joint ventures, licensing opportunities, and strategic relationships with several national retailers. We believe the combination of our well-known brands, established relationship with advertisers and distributors, and ability to leverage our brands with major retailers and to monetize content across multiple platforms creates a competitive position that is difficult to replicate.
Our largest revenue stream comes from single copy newsstand sales. Our second largest revenue stream comes from multi-platform advertising. Our primary operating expenses consist of production, distribution, circulation and other cost of sales, as well as selling, general and administrative expenses. We incur most of our operating expenses during the production of our printed magazines, which includes costs for printing and paper. Paper is the principal raw material utilized in our publications. We have a long-term paper supply and purchasing agreement with the largest paper supply broker in the United States which manages all aspects of our raw material paper inventory. The price of paper is driven by market conditions and therefore difficult to predict. Changes in paper prices could significantly affect our business.
We are experiencing declines in our circulation revenue and print advertising as a result of market conditions in the magazine publishing industry. These declines are primarily caused by the disruption in our wholesaler distribution channel, the overall decline in the celebrity newsstand market and the decline in the consumer advertising market coupled with the shift in advertising dollars from print to digital. Our financial performance depends, in large part, on varying conditions in the markets we serve. Demand in these markets tends to fluctuate in response to overall economic conditions and current events. Since magazines are generally discretionary purchases for consumers, our circulation revenues are sensitive to current economic conditions. Adverse changes in the markets we serve generally result in reductions in revenue as a result of lower consumer spending, which can lead to a reduction in advertising revenue.
Our fiscal year ends on March 31, 2016 and may be referred to herein as fiscal 2016.
RECENT DEVELOPMENTS AND MANAGEMENT ACTION PLANS
Recent Developments
Digital Initiatives
Our fully integrated print and digital sales team is comprised of more than 60 sales professionals, with a dozen digital brand champion sales staff across all the websites. We believe our structure is highly effective to respond to our advertisers' requests for integrated marketing solutions for combined print and digital, as well as digital-only programs. During the first quarter of fiscal 2016, our digital advertising revenue increased 66% over the comparable prior year period.
We have launched digital editions for all our brands on the following platforms: Next Issue Media, Apple, Google newsstand, Zinio, Amazon Kindle and Barnes & Noble's Nook.
Print Initiatives
The relaunch of Men's Fitness continues to attract new luxury goods advertisers. During the first quarter of fiscal 2016, total advertising revenues increased 26% for Men's Fitness as compared to the prior year period. Men's Fitness continues to attract new lifestyle advertisers in the first quarter of fiscal 2016, including Jeep, Eddie Bauer, LG, Neutrogena, USPS, Givenchy and Minute Rice.
The success of Men's Fitness allowed us to reposition Muscle & Fitness in the marketplace to fill the gap in fitness and training content that was left when Men's Fitness expanded its active lifestyle coverage. In addition to its current readers, the editorial for Muscle & Fitness also targets a new generation of fitness enthusiast by broadening the definition of what "fitness" really means. By expanding the editorial focus to include a wider range of fitness training, Muscle & Fitness attracts a wider audience at the newsstand. In addition, we have been able to capture advertising targeted at the fitness realm, but not limited to weight training, such as Nike and Reebok.
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Wholesaler Disruption
Several of our wholesalers, including our former second-largest wholesaler, Source Interlink Companies ("Source"), ceased operations during fiscal 2015. Since then, we have transitioned the newsstand circulation to the two remaining major wholesalers. Though this transition had an adverse impact on single copy newsstand sales and liquidity during fiscal 2015 and into the first quarter of fiscal 2016, we are beginning to see a stabilization in the newsstand sales.
Management Action Plans for Cost Savings
We have developed and implemented management action plans that we expect will result in $25.5 million of cost savings in fiscal 2016 and $3.0 million of cost savings in fiscal 2017 (the "Management Action Plans"). These expense improvements were primarily from outsourcing technology and operating functions, digital content re-negotiations, print order efficiencies, editorial and advertising sales staff and expense reductions. We will realize the benefits from the Management Action Plans during fiscal 2016 and beyond.
RESULTS OF OPERATIONS
The following table provides a summary of our operating results for the three months ended June 30, 2015 and 2014 on a consolidated basis:

| Three Months Ended June 30, |  |
(dollars in thousands) | 2015 |  | 2014 |  | % Change
Operating revenues: |  |  |  |  |
Circulation | $ | 36,162 |  |  | $ | 44,124 |  |  | (18)%
Advertising | 17,862 |  |  | 17,351 |  |  | 3%
Other | 2,084 |  |  | 1,863 |  |  | 12%
Total operating revenues | 56,108 |  |  | 63,338 |  |  | (11)%
Operating expenses | 51,063 |  |  | 59,182 |  |  | (14)%
Operating income | 5,045 |  |  | 4,156 |  |  | 21%
Other expense, net | (10,253 | ) |  | (14,107 | ) |  | (27)%
Loss from continuing operations before income tax provision (benefit) | (5,208 | ) |  | (9,951 | ) |  | (48)%
Income tax provision (benefit) | (29,272 | ) |  | 732 |  |  | *
Net income (loss) from continuing operations | 24,064 |  |  | (10,683 | ) |  | *
Loss from discontinued operations, net of taxes | — |  |  | (1,355 | ) |  | *
Net income (loss) | 24,064 |  |  | (12,038 | ) |  | *
Less: net loss attributable to the noncontrolling interest | 6 |  |  | 70 |  |  | (91)%
Net income (loss) attributable to American Media, Inc. and subsidiaries | $ | 24,070 |  |  | $ | (11,968 | ) |  | *

* Represents an increase or decrease in excess of 100%.
Operating Revenues
For the three months ended June 30, 2015, total operating revenues decreased $7.2 million compared to the prior period primarily due to reduced circulation ($8.0 million), partially offset by increases in advertising ($0.5 million) and other revenues ($0.2 million). Circulation revenue has declined due to the 12.0% reduction in the celebrity magazine sector coupled with the industry-wide distribution disruption. Advertising revenue increased due to the improvements in digital advertising. Other revenues increased primarily due to certain non-recurring revenue streams related to our investments in affiliates.
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The following table summarizes our operating revenues, by type, as a percentage of total operating revenues:

| Three Months Ended June 30,
| 2015 |  | 2014
Circulation | 64% |  | 70%
Advertising | 32% |  | 27%
Other | 4% |  | 3%
Total | 100% |  | 100%

Circulation Revenue
Total circulation of our print publications with a frequency of six or more times per year, were approximately 3.2 million and 3.4 million copies per issue during the three months ended June 30, 2015 and 2014, respectively. As of June 30, 2015, our print publications comprised approximately 24% of total U.S. and Canadian newsstand circulation for weekly publications that are audited by the Alliance for Audited Media.
Our circulation revenue represented 64% and 70% of our operating revenues during the three months ended June 30, 2015 and 2014, respectively, and is comprised of the following components:

| Three Months Ended June 30,
| 2015 |  | 2014
Single Copy | 77% |  | 78%
Subscription | 23% |  | 22%
Total | 100% |  | 100%

As of June 30, 2015, our digital subscriptions represent 20% of our 2.1 million paid subscriptions, the highest percentage among our competitive set. Digital subscription revenue represented 1% and 3% of our circulation revenue during the three months ended June 30, 2015 and 2014, respectively.
Circulation revenue declined $8.0 million during the three months ended June 30, 2015, compared to the prior period due to the continued softness in the consumer magazine sector, coupled with the decline in the celebrity newsstand magazine market and the discontinuance and reduction of special one-time celebrity publications. Circulation revenue was further impacted during the first quarter of fiscal 2016 by the industry-wide disruption in our wholesaler channel due to the shutdown and bankruptcy of Source.
Advertising Revenue
Our advertising revenue represented 32% and 27% of our operating revenues during the three months ended June 30, 2015 and 2014, respectively. Our advertising revenue is generated from the following components:

| Three Months Ended June 30,
| 2015 |  | 2014
Print | 81% |  | 88%
Digital | 19% |  | 12%
Total | 100% |  | 100%

Advertising revenue increased $0.5 million during the three months ended June 30, 2015, compared to the prior period due to higher digital advertising ($1.4 million), partially offset by lower print advertising revenue ($0.9 million). Print advertising revenue was negatively impacted by the decline in the consumer magazine sector coupled with the reduced frequency of certain publications and the transformation of advertising from print to digital.
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Other Revenue
Our other revenue represented 4% and 3% of our operating revenues during the three months ended June 30, 2015 and 2014, respectively. During the three months ended June 30, 2015, other revenue increased $0.2 million due to certain non-recurring revenue streams related to our investments in affiliates.
Operating Expenses
The following table provides a summary of our operating expenses for the three months ended June 30, 2015 and 2014 on a consolidated basis:

| Three Months Ended June 30, |  | % Change
(dollars in thousands) | 2015 |  | 2014 |
Operating Expenses: |  |  |  |  |
Editorial | $ | 5,920 |  |  | $ | 7,516 |  |  | (21)%
Production | 13,963 |  |  | 16,349 |  |  | (15)%
Distribution, circulation and other costs | 9,036 |  |  | 9,821 |  |  | (8)%
Total cost of sales | 28,919 |  |  | 33,686 |  |  | (14)%
Selling, general and administrative | 15,417 |  |  | 22,375 |  |  | (31)%
Depreciation and amortization | 6,727 |  |  | 3,121 |  |  | *
Total operating expenses | $ | 51,063 |  |  | $ | 59,182 |  |  | (14)%

We incur most of our operating expenses during the production of our printed magazines, which includes costs for printing and paper. Paper is the principal raw material utilized in our publications. We have a long-term paper supply and purchasing agreement with the largest paper supply broker in the United States which manages all aspects of our raw material paper inventory. The price of paper is driven by market conditions and therefore difficult to predict. Changes in paper prices could significantly affect our business. We believe adequate supplies of paper are available to fulfill our planned, as well as future, publishing requirements. We have long-term printing contracts with three major third-party printing companies.
Our production costs, including paper and printing costs, accounted for approximately 27% and 28% of our total operating expenses for the three months ended June 30, 2015 and 2014, respectively.
Distribution, circulation and other costs consist primarily of postage and the cost of freight to our wholesalers and fulfillment companies for newsstand and subscription distribution. Our distribution, circulation and other cost of sales accounted for approximately 18% and 17% of our operating expenses for the three months ended June 30, 2015 and 2014, respectively.
Total Cost of Sales
Total cost of sales decreased during the three months ended June 30, 2015 compared to the prior period primarily due to planned expense reductions pursuant to the Management Action Plans in the following areas: $1.6 million in editorial expenses, $2.4 million in production expenses and $0.8 million in distribution and circulation.
Selling, General and Administrative
Selling, general and administrative costs decreased $7.0 million during the three months ended June 30, 2015 compared to the prior period primarily due to the decreases in wholesaler related bad debt ($4.1 million), the decrease in employee related expenses pursuant to the Management Action Plans ($1.4 million) and the reduction in accounting and legal fees ($0.3 million).
Depreciation and Amortization
Depreciation and amortization expenses, which are non-cash, increased $3.6 million during the three months ended June 30, 2015 compared to the prior period primarily due to the reclassification of certain tradenames from indefinite lived to finite lived.
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Non-Operating Items
Interest Expense
Interest expense decreased $4.6 million during the three months ended June 30, 2015 when compared to the prior year period due to the reduction in the aggregate principal amount of senior secured notes outstanding.
Amortization of Deferred Debt Costs
Amortization of deferred debt costs increased $0.4 million during the three months ended June 30, 2015 when compared to the prior year period due to the additional amortization associated with the reduction of outstanding senior secured notes.
Income Taxes
We recorded an income tax benefit of $29.3 million during the three months ended June 30, 2015 primarily due to the release of the valuation allowance of $27.1 million. This was a direct result of the reclassification of certain tradenames from indefinite lived to finite lived effective April 1, 2015.
Net Income (Loss) Attributable to American Media, Inc.
The $24.1 million of net income attributable to American Media, Inc. for the three months ended June 30, 2015 represents a $36.0 million improvement from the comparable prior year period. This improvement is primarily attributable to the $30.0 million decrease in the provision for income taxes coupled with the $4.6 million decrease in interest expense and the $0.9 million increase in operating income.
OPERATING SEGMENTS
Our operating segments consist of: Celebrity Brands, Men’s Active Lifestyle and Corporate and Other. After the divestiture of our Women's Active Lifestyle segment, we report under a new segment structure beginning in the fourth quarter of fiscal 2015. Given this change, we have restated prior period segment information to correspond to the current segment reporting structure. This reporting structure is organized according to the markets each segment serves and allows management to focus its efforts on providing the best content to a wide range of consumers.
Our operating segments consist of the following brands in print and digital, as of June 30, 2015:
Celebrity Brands Segment

• | National Enquirer, a weekly, hard news, investigating tabloid covering all celebrities, crime, human interest, health, fashion and beauty;

• | Star, a weekly, celebrity-focused, news-based, glossy magazine covering movie, television, reality series and music celebrities. Star's editorial content includes fashion, beauty, accessories and health sections;

• | OK!, a younger weekly, celebrity-friendly, news-based, glossy magazine covering the stars of movies, television, reality and music. OK!’s editorial content has fashion, beauty and accessories sections; OKMagazine.com differentiates itself through its use of online communities and social media to encourage a dialog between users, including their editorial point of view;

• | Globe, a weekly tabloid that focuses on older movie and television celebrities, the royal family, political scandals and investigative crime stories that are less mainstream and more salacious than the National Enquirer;

• | National Examiner, a weekly tabloid (currently only available in print format) consisting of celebrity and human interest stories, differentiating it from the other titles through its upbeat positioning as the source for gossip, contests, women’s service and good news for an older tabloid audience; and

• | Soap Opera Digest, a weekly magazine that provides behind-the-scenes scoop and breaking news to passionate soap opera fans every week; SoapOperaDigest.com is a companion site that mirrors the magazine's editorial point of view.

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Men’s Active Lifestyle Segment

• | Men’s Fitness, an active lifestyle magazine for men 18-34 years old, which positions fitness as the new measure of success, as reflected in its editorial coverage of men’s fashion, grooming, automotive, finance, travel and other lifestyle categories; Men’s Fitness is also home to the latest in exercise techniques, sports training, nutrition and health; Men’sFitness.com provides everything for every man in terms of a healthy and fit lifestyle;

• | Muscle & Fitness, a fitness physique training magazine appealing to exercise enthusiasts and athletes of all ages, especially those focused on resistance training, body fat control, sports nutrition and supplements; MuscleandFitness.com provides workout videos and nutritional advice;

• | Flex, a magazine devoted to professional bodybuilding featuring nutrition, supplement, and performance science content for bodybuilding enthusiasts and coverage of all professional and amateur bodybuilding contests; Flexonline.com features online coverage of all the major bodybuilding competitions, as well as training videos with today’s top bodybuilders;

• | Muscle & Fitness Hers, a fitness physique training magazine designed for the active woman who wants more out of fitness, especially those who work extra hard to achieve a "super-fit" lifestyle and covers training, nutrition, health, beauty and fashion for today's women;

• | Mr. Olympia, a four-day event held annually in September in Las Vegas attracting over 50,000 fans of bodybuilding and fitness experts from around the world; includes a two-day health and fitness expo with 340 exhibitors including physical exercise challenges and merchandising opportunities that culminates with the world's most prestigious and largest event in bodybuilding and fitness, the Mr. Olympia contest; and

• | Weider UK, a wholly-owned subsidiary, publishes Muscle & Fitness and Flex in the United Kingdom, France and Germany and licenses the content in Holland and Australia. Each market edition is in a local language with local content and has its own website. Effective April 1, 2015, we relocated the business activities for these publications from the United Kingdom to our New York offices.

Corporate and Other Segment
This segment includes revenues from international licensing of certain health and fitness publications, photo syndication for all our media content platforms and strategic management services for publishers, including back office functions. Corporate overhead expenses are not allocated to other segments. They are as follows: corporate executive, production, circulation, information technology, accounting, legal, human resources, business development and administrative department costs.
Financial Information Regarding Our Operating Segments
We use operating income (loss) as a primary basis for the chief operating decision maker to evaluate the performance of each of our operating segments and present operating income (loss) before impairment of goodwill and intangible assets, if any, to provide a consistent and comparable measure of our performance between periods. Management uses operating income (loss) before impairment of goodwill and intangible assets, if any, when communicating financial results to the board of directors, stockholders, debt holders and investors as well as when determining performance goals for executive compensation. Management believes this non-GAAP measure, although not a substitute for GAAP, improves comparability. Management also believes our stockholders, debt holders and investors use this measure as a gauge to assess the performance of their investment in the Company.
We prepared the financial results of our operating segments on a basis that is consistent with the manner in which we internally disaggregate financial information to assist in making internal operating decisions. Our calculations of operating income (loss) herein may be different from the calculations used by other companies, therefore comparability may be limited. The accounting policies for the operating segments are the same as those described in the notes to the unaudited condensed consolidated financial statements in this Quarterly Report, specifically Note 2, "Summary of Significant Accounting Policies."
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The following table summarizes our total operating revenues by segment:

| Three Months Ended June 30, |  | % Change
(dollars in thousands) | 2015 |  | 2014 |
Segment operating revenues: |  |  |  |  |
Celebrity Brands | $ | 40,901 |  |  | $ | 46,847 |  |  | (13)%
Men's Active Lifestyle | 13,141 |  |  | 15,153 |  |  | (13)%
Corporate and Other | 2,066 |  |  | 1,338 |  |  | 54%
Total operating revenues | $ | 56,108 |  |  | $ | 63,338 |  |  | (11)%

Total operating revenues decreased $7.2 million, or 11%, during the three months ended June 30, 2015 due to the 12.0% decline in the celebrity magazine sector coupled with the industry-wide distribution disruption. This decline was partially offset by an increase in digital advertising. Other revenues increased primarily due to certain non-recurring revenue streams related to our investments in affiliates.
The following table summarizes the percentage of segment operating revenues:

| Three Months Ended June 30,
| 2015 |  | 2014
Segment operating revenues: |  |  |
Celebrity Brands | 73% |  | 74%
Men's Active Lifestyle | 23% |  | 24%
Corporate and Other | 4% |  | 2%
Total | 100% |  | 100%

The following table summarizes our segment operating income (loss):

| Three Months Ended June 30, |  |
(dollars in thousands) | 2015 |  | 2014 |  | % Change
Operating income (loss): |  |
Celebrity Brands | $ | 13,238 |  |  | $ | 17,893 |  |  | (26)%
Men's Active Lifestyle | 2,827 |  |  | 3,693 |  |  | (23)%
Corporate and Other | (11,020 | ) |  | (17,430 | ) |  | (37)%
Total operating income | $ | 5,045 |  |  | $ | 4,156 |  |  | 21%

Total operating income increased $0.9 million during the three months ended June 30, 2015 primarily due to the $8.1 million decrease in operating expenses, partially offset by the $7.2 million decline in operating revenues previously mentioned.
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Celebrity Brands Segment
The Celebrity Brands segment comprised 73% and 74% of our consolidated operating revenues during the three months ended June 30, 2015 and 2014, respectively.
Operating Revenues
Total operating revenues in the Celebrity Brands segment were $40.9 million for the three months ended June 30, 2015, representing a decrease of $5.9 million, or 13%, over the comparable prior year period. Circulation revenue declined $6.7 million, or 17%, due to a reduction in the celebrity newsstand sales primarily due to the 12% decline in the celebrity newsstand market; coupled with the industry-wide distribution disruption ($6.0 million) and a planned discontinuance of special one-time celebrity publications ($0.7 million). This was partially offset by an increase in digital advertising revenue from OKMagazine.com ($0.7 million).
Operating Income
The Celebrity Brands segment operating income decreased $4.7 million, or 26%, to $13.2 million during the three months ended June 30, 2015, compared to the prior period. This decline was caused by revenue shortfalls described above. Our Management Action Plans reduced costs by $4.0 million during the three months ended June 30, 2015, which was partially offset by an increase in amortization expenses ($2.7 million) due to the classification of certain tradenames from indefinite lived intangibles to finite lives of 15 years, effective April 1, 2015.
Men’s Active Lifestyle Segment
The Men’s Active Lifestyle segment represented 23% and 24% of our consolidated operating revenues during the three months ended June 30, 2015 and 2014, respectively.
Operating Revenues
Total operating revenues in the Men’s Active Lifestyle segment were $13.1 million for the three months ended June 30, 2015, a decrease of $2.0 million, or 13%, over the comparable prior year period. The decline in circulation ($1.0 million) and advertising revenues ($1.2 million) were due to one less issue of Muscle & Fitness published during the three months ended June 30, 2015; coupled with the discontinuance of unprofitable Men's Active Lifestyle titles in Australia, Italy, Holland and France. These declines were partially offset by the increase in digital advertising revenue in Men's Fitness ($0.6 million), due to a 43% increase in page views as of June 30, 2015 compared to prior year.
Operating Income
Operating income in the Men’s Active Lifestyle segment declined during the three months ended June 30, 2015 versus prior year by $0.9 million, or 23%, to $2.8 million. This decline was caused by the revenue shortfalls mentioned above. Our Management Action Plans reduced costs by $1.9 million during the three months ended June 30, 2015, which was partially offset by the increase in amortization expenses ($0.7 million) due to the classification of certain tradenames from indefinite lived intangibles to finite lives of 15 years, effective April 1, 2015.
Corporate and Other Segment
The Corporate and Other segment was 4% and 2% of our consolidated operating revenues during the three months ended June 30, 2015 and 2014, respectively.
Operating Revenues
Total operating revenues in the Corporate and Other segment were $2.1 million for the three months ended June 30, 2015, an increase of $0.7 million, or 54%, from the prior year. This increase was primarily due to certain non-recurring revenue streams related to our investments in affiliates ($1.6 million), partially offset by the decline in publishing services ($0.4 million) and international licensing ($0.3 million).
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Operating Loss
Total operating loss decreased by $6.4 million, or 37%, to $11.0 million during the three months ended June 30, 2015, compared to the prior year period. This decrease was attributable to the reductions in operating expenses primarily due to the non-recurring wholesaler bad debt ($4.1 million), employee related expenses ($1.4 million), accounting and legal fees ($0.3 million); enhanced by a $0.7 million increase in operating revenue.
LIQUIDITY AND CAPITAL RESOURCES
Management’s Assessment of Liquidity
Our operations have historically generated positive net cash flow from operating activities. Our primary sources of liquidity are cash on hand, cash generated from operations, amounts available under our revolving credit facility (the "Revolving Credit Facility") and cash interest savings from our recent debt reduction initiatives.
Our principal uses of cash that affect our liquidity include operational expenditures and debt service costs, including interest payments on and repurchases of our senior secured notes. In addition to the dispositions discussed elsewhere, we expect to continue to evaluate possible acquisitions and dispositions of certain businesses. These transactions, if consummated, could be material and may involve cash or the issuance of additional senior secured notes.
As of June 30, 2015, the Company had $6.2 million of cash, $5.8 million available pursuant to the Revolving Credit Facility, which matures in December 2016, and a working capital deficit of $27.1 million, of which approximately $27.4 million relates to deferred revenues. In addition to outstanding borrowings under the Revolving Credit Facility, there was $307.8 million principal amount of outstanding senior secured debt as of June 30, 2015. Over the next year, the cash interest payments due under these debt agreements are approximately $36.8 million and there are no scheduled principal payments due.
We expect that our current cash balances, cash generated from operating activities, availability under our Revolving Credit Facility and the cash interest savings from the recent debt reduction initiatives, should be sufficient to meet working capital, capital expenditures, debt service, and other cash needs for the next year.
Our level of indebtedness could have important consequences for the business and operations. See Item 1A, "Risk Factors" included in the 2015 Form 10-K, specifically, "Our substantial indebtedness and our ability to incur additional indebtedness could adversely affect our business, financial condition and result of operations."
Wholesaler Disruption
Several of our wholesalers, including our former second-largest wholesaler, Source Interlink Companies ("Source"), ceased operations during fiscal 2015. Since then, we have transitioned the newsstand circulation to the two remaining major wholesalers. Though this transition had an adverse impact on single copy newsstand sales and liquidity during fiscal 2015 and into the first quarter of fiscal 2016, we are beginning to see a stabilization in the newsstand sales. There can be no assurances that our revenue will not be temporarily or permanently reduced if consumers at the impacted retailers do not resume purchasing our publications at the same rate or quantities previously purchased. See Item 1A, "Risk Factors" included in the 2015 Form 10-K, specifically, "Our circulation revenue consists of single copy sales distributed to retailers primarily by two wholesalers and the loss of either of these wholesalers could materially adversely affect our business and results of operations."
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Cash Flow Summary
The following information has been derived from the accompanying unaudited condensed consolidated financial statements for the three months ended June 30, 2015 and 2014. Cash and cash equivalents increased by $2.7 million during the three months ended June 30, 2015. The change in cash and cash equivalents is as follows:

|  | Three Months Ended June 30, |  | Net Change
(in thousands) |  | 2015 |  | 2014 |
Net income (loss) |  | $ | 24,064 |  |  | $ | (12,038 | ) |  | $ | 36,102 |
Non-cash items |  | (20,387 | ) |  | 17,249 |  |  | (37,636 | )
Net change in operating assets and liabilities |  | (8,518 | ) |  | 3,730 |  |  | (12,248 | )
Operating activities |  | (4,841 | ) |  | 8,941 |  |  | (13,782 | )
Investing activities |  | (565 | ) |  | (3,613 | ) |  | 3,048 |
Financing activities |  | 7,932 |  |  | 6,600 |  |  | 1,332 |
Effects of exchange rates |  | 214 |  |  | 102 |  |  | 112 |
Net increase in cash and cash equivalents |  | $ | 2,740 |  |  | $ | 12,030 |  |  | $ | (9,290 | )

Operating Activities
Cash (used in) or provided by operating activities is primarily driven by our non-cash items, changes in working capital and the impact of our results of operations. Non-cash items consist primarily of the provision (benefit) for income taxes, depreciation and amortization, amortization of deferred debt costs and deferred rack costs and provisions for doubtful accounts.
Net cash provided by operating activities decreased $13.8 million during the three months ended June 30, 2015 as compared to the same period in the prior year, primarily due to the $37.6 million net decrease in non-cash items coupled with the $12.2 million net change in operating assets and liabilities, partially offset by the $36.1 million increase in our results of operations.
Non-cash items decreased primarily due to the decrease in provision for income taxes of $32.9 million coupled with the decrease in non-cash payment-in-kind interest accretion of $4.8 million and the decrease in provision for doubtful account of $4.1 million, partially offset by the increase in depreciation and amortization of $3.4 million.
The net change in operating assets and liabilities is primarily due to the $19.9 million net change in accounts payable and accrued expenses and the $1.3 million net change in inventories resulting from our agreement to outsource paper purchases, partially offset by the net change in accrued interest of $6.0 million and the $1.9 million net change in trade receivables.
Investing activities
Net cash used in investing activities was $0.6 million and $3.6 million during the three months ended June 30, 2015 and 2014, respectively, a decline of $3.0 million due primarily to the decrease in purchases of property and equipment and intangible assets.
Financing activities
Net cash provided by financing activities for the three months ended June 30, 2015 was $7.9 million, an increase of $1.3 million, compared to $6.6 million during the three months ended June 30, 2014. The increase is primarily attributable to the $3.5 million increase in net borrowings under the Revolving Credit Facility, partially offset by the $2.1 million repurchase of certain senior secured notes.
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Revolving Credit Facility and Senior Secured Notes
Revolving Credit Facility
The Company maintains a revolving credit facility which provides for borrowing up to $35.0 million, less outstanding letters of credit, which matures in December 2016 (the "Revolving Credit Facility").
The Company has the option to pay interest based on (i) a floating base rate option equal to the greatest of (x) the prime rate in effect on such day; (y) the federal funds effective rate in effect on such day plus ½ of 1%; and (z) one month LIBOR (but no less than 2%) plus 1%, or (ii) LIBOR, in each case, plus a margin. The interest rate under the Revolving Credit Facility has ranged from 8.00% to 8.25% during the three months ended June 30, 2015 and 2014. In addition, the Company is required to pay a commitment fee ranging from 0.50% to 0.75% on the unused portion of the revolving commitment. Commitment fees paid during the three months ended June 30, 2015 and 2014 were insignificant.
During the three months ended June 30, 2015, the Company borrowed $30.9 million and repaid $20.8 million under the Revolving Credit Facility. At June 30, 2015, the Company has available borrowing capacity of $5.8 million after considering the $24.8 million outstanding balance and the $4.4 million outstanding letter of credit. The outstanding balance at June 30, 2015 of $24.8 million is included in non-current liabilities, as the maturity date of the Revolving Credit Facility is December 2016.
The indebtedness under the Revolving Credit Facility is guaranteed by certain of the domestic subsidiaries of the Company and is secured by liens on substantially all the assets of the Company and certain of its domestic subsidiaries. In addition, the Company’s obligations are secured by a pledge of all the issued and outstanding shares of, or other equity interests in, certain of the Company's existing or subsequently acquired or organized domestic subsidiaries and a percentage of the capital stock of, or other equity interests in, certain of its existing or subsequently acquired or organized foreign subsidiaries.
Covenants
Our Revolving Credit Facility includes certain representations and warranties, conditions precedent, affirmative covenants, negative covenants and events of default. The negative covenants in the Revolving Credit Facility includes financial maintenance covenants comprised of a first lien leverage ratio, a consolidated leverage ratio and an interest coverage ratio. The Revolving Credit Facility also contain certain covenants that, subject to certain exceptions, restrict paying dividends, incurring additional indebtedness, creating liens, making acquisitions or other investments, entering into certain mergers or consolidations and selling or otherwise disposing of assets. With respect to the dividend restrictions, the Revolving Credit Facility includes a cap on the total amount of cash available for distribution to our common stockholders.
Senior Secured Notes
First Lien Notes
In December 2010, we issued $385.0 million aggregate principal amount of senior secured notes, which bear interest at a rate of 11.5% per annum, payable semi-annually, and mature in December 2017 (the "First Lien Notes").
During fiscal 2012, we redeemed $20.0 million in aggregate principal amount of First Lien Notes. During fiscal 2014, we repurchased approximately $2.3 million in aggregate principal amount of First Lien Notes. During fiscal 2015, the Company repurchased $55.5 million in aggregate principal amount of First Lien Notes. In addition, during fiscal 2015, the Company exchanged approximately $32.0 million in aggregate principal amount of First Lien Notes, plus accrued and unpaid interest, for approximately $39.0 million aggregate principal amount of new second lien senior secured notes, which bear interest at a rate of 7.0% per annum and mature in July 2020 (the "New Second Lien Notes"), pursuant to an exchange agreement (the "New Second Lien Notes Exchange Agreement"), as further described below. During the three months ended June 30, 2015, the Company repurchased approximately $2.0 million in aggregate principal amount of First Lien Notes, at a price equal to 105.9% of the aggregate principal amount thereof, plus accrued and unpaid interest, in the open market.
At June 30, 2015, the First Lien Notes represented an aggregate of $273.2 million of our indebtedness.
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The indenture governing the First Lien Notes contains certain affirmative covenants, negative covenants and events of default customary for agreements of this type. For example, the indenture governing the First Lien Notes contains covenants that limit our ability and that of our restricted subsidiaries, subject to important exceptions and qualifications, to: borrow money; guarantee other indebtedness; use assets as security in other transactions; pay dividends on stock, redeem stock or redeem subordinated debt; make investments; enter into agreements that restrict the payment of dividends by subsidiaries; sell assets; enter into affiliate transactions; sell capital stock of subsidiaries; enter into new lines of business; and merge or consolidate. In addition, the indenture governing the First Lien Notes imposes certain requirements as to future subsidiary guarantors.
The First Lien Notes are guaranteed on a first lien senior secured basis by the same subsidiaries of the Company that guarantee our Revolving Credit Facility. The First Lien Notes and the guarantees thereof are secured by a first-priority lien on substantially all our assets (subject to certain permitted liens and exceptions), pari passu with the liens granted under our Revolving Credit Facility, provided that in the event of a foreclosure on the collateral or of insolvency proceedings, obligations under our Revolving Credit Facility will be repaid in full with proceeds from the collateral prior to the obligations under the First Lien Notes.
Second Lien Notes
In December 2010, we issued $104.9 million aggregate principal amounts of senior secured notes, which bear interest at a rate of 13.5% per annum, payable semi-annually and mature in June 2018 (the "Second Lien Notes"). In October 2013, we exchanged approximately $94.3 million aggregate principal amount of Second Lien Notes for an equal aggregate principal amount of new second lien senior secured notes, which bear interest at a rate of 10.0% per annum, are payable in kind, and mature in June 2018 (the “Second Lien PIK Notes”), pursuant to an exchange agreement.
In September 2014, pursuant to the debt for equity exchange agreement with the Parent and the Investors, the Investors exchanged approximately $7.8 million aggregate principal amount of Second Lien Notes and all of the outstanding Second Lien PIK Notes, plus accrued and unpaid interest, for equity interest in the Parent. As a result, the Company's obligation under the Second Lien PIK Notes were satisfied in full. During fiscal 2015, the Company repurchased approximately $0.6 million in aggregate principal amount of Second Lien Notes.
At June 30, 2015, the Second Lien Notes represented an aggregate of $2.2 million of our indebtedness.
The indenture governing the Second Lien Notes contains certain affirmative covenants, negative covenants and events of default customary for agreements of this type. For example, the indenture governing the Second Lien Notes contains covenants that limit our ability and that of our restricted subsidiaries, subject to important exceptions and qualifications, to: borrow money; guarantee other indebtedness; use assets as security in other transactions; pay dividends on stock, redeem stock or redeem subordinated debt; make investments; enter into agreements that restrict the payment of dividends by subsidiaries; sell assets; enter into affiliate transactions; sell capital stock of subsidiaries; enter into new lines of business; and merge or consolidate. In addition, the indenture governing the Second Lien Notes imposes certain requirements as to future subsidiary guarantors.
The Second Lien Notes are guaranteed on a second lien senior secured basis by the same subsidiaries of the Company that guarantee our Revolving Credit Facility and the First Lien Notes. The Second Lien Notes and the guarantees thereof are secured by a second-priority lien on substantially all our assets (subject to certain permitted liens and exceptions).
New Second Lien Notes
In January 2015, we issued approximately $39.0 million aggregate principal amount of New Second Lien Notes to the Investors, which bear interest at a rate of 7.0% per annum and mature in July 2020. Interest on the New Second Lien Notes is payable semi-annually on July 15th and January 15th of each year and is computed on the basis of a 360-day year comprised of twelve 30 day months. As described above, the New Second Lien Notes were issued in exchange for $32.0 million aggregate principal amount of First Lien Notes pursuant to the New Second Lien Notes Exchange Agreement. The New Second Lien Notes were issued under a new indenture (the “New Second Lien Notes Indenture”), by and among American Media, Inc., the guarantors parties thereto and the trustee. The New Second Lien Notes were issued through a private offering exempt from the registration requirements of the Securities Act of 1933, as amended.
At June 30, 2015, the New Second Lien Notes represented an aggregate of $32.4 million of our indebtedness.
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The indenture governing the New Second Lien Notes contains certain affirmative covenants, negative covenants and events of default customary for agreements of this type. For example, the indenture governing the New Second Lien Notes contains covenants that limit our ability and that of our restricted subsidiaries, subject to important exceptions and qualifications, to: borrow money; guarantee other indebtedness; use assets as security in other transactions; pay dividends on stock, redeem stock or redeem subordinated debt; make investments; enter into agreements that restrict the payment of dividends by subsidiaries; sell assets; enter into affiliate transactions; sell capital stock of subsidiaries; enter into new lines of business; and merge or consolidate. In addition, the indenture governing the New Second Lien Notes imposes certain requirements as to future subsidiary guarantors.
The New Second Lien Notes are guaranteed on a second lien senior secured basis by the same subsidiaries of the Company that guarantee our Revolving Credit Facility, the First Lien Notes and the Second Lien Notes. The New Second Lien Notes and the guarantees thereof are secured by a second-priority lien on substantially all our assets (subject to certain permitted liens and exceptions).
Covenant Compliance
As discussed above, our Revolving Credit Facility and the indentures governing the First Lien Notes, the Second Lien Notes and the New Second Lien Notes contain various restrictive covenants.
With regard to the financial maintenance covenants, the first lien leverage ratio covenants must be equal to or less than 4.50 to 1.00 from April 1, 2015 through December 2016, the maturity date of the Revolving Credit Facility. The first lien leverage ratio is calculated as the Total First Lien Debt to Consolidated EBITDA (each as defined in the Revolving Credit Facility). The consolidated leverage ratio covenant is calculated as the Total Debt to Consolidated EBITDA (each as defined in the Revolving Credit Facility) and must be equal to or less than 4.75 to 1.00 from April 1, 2015 through September 30, 2015 and 5.50 to 1.00 from October 1, 2015 through December 2016. The interest coverage ratio covenant is calculated as the Consolidated EBITDA to Cash Interest Expense (each as defined in the Revolving Credit Facility) and must be equal to or greater than 1.50 to 1.00 from April 1, 2015 through December 2016.
As of June 30, 2015, the first lien leverage ratio was 4.20 to 1.00, the consolidated leverage ratio was 4.69 to 1.00 and the interest coverage ratio was 1.76 to 1.00 and the Company was in compliance with the covenants under the Revolving Credit Facility and the indentures governing the First Lien Notes, the Second Lien Notes and the New Second Lien Notes.
Although there can be no assurances, management believes that, based on current expectations (including projected borrowings and repayments under the Revolving Credit Facility and our recent debt reductions), our operating results for the next twelve months will be sufficient to satisfy the financial covenants under the Revolving Credit Facility. Our ability to satisfy such financial covenant is dependent on our business performing in accordance with our projections. If the performance of our business deviates from our projections, we may not be able to satisfy such financial covenants. Our projections are subject to a number of factors, many of which are events beyond our control, which could cause our actual results to differ materially from our projections (see "Risk Factors" included in the 2015 Form 10-K). If we do not comply with our financial covenants, we would be in default under the Revolving Credit Facility, which could result in all our debt being accelerated due to cross-default provisions in the indentures governing the First Lien Notes, the Second Lien Notes and the New Second Lien Notes.
We have the ability to incur additional debt, subject to limitations imposed by our Revolving Credit Facility and the indentures governing the First Lien Notes, the Second Lien Notes and the New Second Lien Notes. Under our Revolving Credit Facility and the indentures governing the First Lien Notes, the Second Lien Notes and the New Second Lien Notes, in addition to specified permitted indebtedness, we will be able to incur additional indebtedness as long as on a pro forma basis our consolidated leverage ratio is less than 4.50 to 1.00.
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Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
Adjusted EBITDA, a measure we use to gauge our operating performance, is defined as net income (loss) attributable to the Company plus interest expense, provision (benefit) for income taxes, depreciation and amortization, provision for impairment of intangible assets and goodwill, deferred debt costs and deferred rack costs, adjusted for merger and related transaction(s) costs, restructuring costs and severance, costs related to launches, re-launches or closures of publications and certain other costs. We believe that the inclusion of Adjusted EBITDA is appropriate to evaluate our operating performance compared to our operating plans and/or prior years and to value prospective acquisitions. We also believe that Adjusted EBITDA is helpful in highlighting trends because Adjusted EBITDA excludes the impact of certain items that can differ significantly from company to company, depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments.
Management believes our investors use Adjusted EBITDA as a gauge to measure the performance of their investment in the Company. Management compensates for limitations of using non-GAAP financial measures by using them to supplement GAAP results to provide a more complete understanding of the factors and trends affecting our business than GAAP results alone can provide. Adjusted EBITDA is not a recognized term under GAAP and does not purport to be an alternative to income from continuing operations as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Additionally, Adjusted EBITDA is not intended to be a measure of free cash flow available for management’s discretionary use as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. The presentation of Adjusted EBITDA has limitations as an analytical tool, and it should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Because not all companies use identical calculations, our presentation of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies.
Set forth below is a reconciliation of net income (loss) attributable to American Media, Inc. and subsidiaries to Adjusted EBITDA for the three and twelve month periods ended June 30, 2015 and 2014:

| For the Three Months Ended June 30, |  | For the Twelve Months Ended June 30,
(in thousands) | 2015 |  | 2014 |  | 2015 |  | 2014
Net income (loss) attributable to American Media, Inc. and subsidiaries | $ | 24,070 |  |  | $ | (11,968 | ) |  | $ | 8,911 |  |  | $ | (64,343 | )
Add (deduct): |  |  |  |  |  |  |
Interest expense | 9,403 |  |  | 13,987 |  |  | 46,262 |  |  | 57,663 |
Provision (benefit) for income taxes | (29,272 | ) |  | 3,620 |  |  | (64,160 | ) |  | 33,701 |
Depreciation and amortization | 6,727 |  |  | 3,358 |  |  | 18,289 |  |  | 14,469 |
Impairment of goodwill and intangible assets | — |  |  | — |  |  | 18,458 |  |  | 9,238 |
Amortization of deferred debt costs | 850 |  |  | 434 |  |  | 4,427 |  |  | 1,714 |
Amortization of deferred rack costs | 1,475 |  |  | 1,458 |  |  | 5,886 |  |  | 6,359 |
Amortization of short-term racks | 1,926 |  |  | 2,055 |  |  | 8,453 |  |  | 8,601 |
Merger and related transaction(s) costs | — |  |  | — |  |  | 4,755 |  |  | — |
Restructuring costs and severance | 1,093 |  |  | 471 |  |  | 7,709 |  |  | 3,206 |
Loss on sale of publications | — |  |  | — |  |  | 2,472 |  |  | — |
Costs related to launches and closures of publications | 8 |  |  | 132 |  |  | 1,136 |  |  | 2,337 |
Restructuring costs related to divestiture of DSI | — |  |  | (15 | ) |  | 14 |  |  | 2,761 |
Adjustment for net losses of DSI | — |  |  | — |  |  | — |  |  | 1,716 |
AMI share of costs and bad debt related to wholesaler shutdowns | 523 |  |  | 3,872 |  |  | 5,003 |  |  | 8,924 |
Investment in new digital strategy | — |  |  | — |  |  | — |  |  | 3,979 |
Pro forma adjustment related to investment in affiliates | — |  |  | 312 |  |  | — |  |  | 1,815 |
Other | 440 |  |  | 552 |  |  | 5,790 |  |  | 5,536 |
Adjusted EBITDA | $ | 17,243 |  |  | $ | 18,268 |  |  | $ | 73,405 |  |  | $ | 97,676 |

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CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS
There have been no material changes in our contractual obligations since March 31, 2015.
SEASONALITY AND QUARTERLY FLUCTUATIONS
Our business has always experienced seasonality, which we expect will continue, due to advertising patterns based on consumer reading habits. Fluctuations in quarterly performance are also due to variations in our publication schedule and variability of audience traffic on our websites. Not all of our publications are published on a regular schedule throughout the year. Additionally, the publication schedule for our special interest publications can vary and lead to quarterly fluctuations in our operating results.
Advertising revenue from our magazines and websites is typically highest in our fourth fiscal quarter due to our health and fitness magazines. During our fourth fiscal quarter, which begins on January 1st, advertisers and consumers are focused on the "New Year and New You." Certain newsstand costs vary from quarter to quarter, particularly marketing costs associated with the distribution of our magazines.
OFF-BALANCE SHEET FINANCING
We do not have any off-balance sheet financing arrangements.
APPLICATION OF CRITICAL ACCOUNTING ESTIMATES
Our discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP). Preparing financial statements requires management to make estimates, judgments and assumptions regarding uncertainties that may affect the reported amounts of assets, liabilities, revenue and expenses. We evaluate our estimates on an on-going basis, including those related to revenue, trade receivables and allowance for doubtful accounts, goodwill and other intangible assets, income taxes and contingent liabilities.
We base our estimates, judgments and assumptions on historical experience and other relevant factors that are believed to be reasonable under the circumstances. In any given reporting period, our actual results may differ from the estimates, judgments and assumptions used in preparing our consolidated financial statements.
Goodwill and Intangible Assets
There was no provision for impairment charges during the three months ended June 30, 2015 or 2014. The Company continues to evaluate goodwill and other identified intangible assets for impairment. Goodwill and other identified intangible assets are material components of the Company's financial statements and impairment charges to the Company's goodwill or other identified intangible assets in future periods could be material to the Company's results of operations.
As of June 30, 2015, the reporting units in our Celebrity segment continue to be negatively impacted by the 12% decline in the celebrity newsstand market and the industry-wide disruption in our wholesaler channel coupled with the 12% decline in the consumer advertising market. While our current expectations have resulted in fair values of the reporting units in excess of carrying values, if our assumptions are not realized, it is possible that in the future additional impairment charges may be recorded and could be material to the consolidated financial statements. The Company will continue to monitor the recoverability of its remaining goodwill.
Refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2015 Form 10-K for a discussion of our critical accounting estimates.
RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Refer to Part I, Item 1, Note 2, "Significant Accounting Policies," in the notes to the unaudited condensed consolidated financial statements in this Quarterly Report for a discussion regarding new accounting standards.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to certain financial risks in the ordinary course of our business. These risks primarily result from volatility in interest rates, foreign exchange rates, inflation and other general market risks.
Interest Rate Risk
We are exposed to market risk from fluctuations in interest rates. Our primary interest rate risk exposure relates to: (i) the interest rate risk on long-term borrowings, (ii) the impact of interest rate movements on our ability to meet interest expense requirements and comply with financial covenants, and (iii) the impact of interest rate movements on our ability to obtain adequate financing to fund acquisitions, if any.
We generally manage our exposure to interest rate fluctuations through the use of a combination of fixed and variable rate debt. At June 30, 2015, we had $307.8 million outstanding in fixed rate debt. There are no earnings or liquidity risks associated with the Company’s fixed rate debt. Under the Revolving Credit Facility, we have $24.8 million outstanding in variable rate debt at June 30, 2015. The Company is subject to earnings and liquidity risks associated with the variable rate debt.
To date, we have not entered into any derivative financial instruments, that are designated as hedges, for the purpose of reducing our exposure to adverse fluctuations in interest rates.
Foreign Currency Exchange Risk
We face exposures to adverse movements in foreign currency exchange rates, as a portion of our revenues, expenses, assets and liabilities are denominated in currencies other than the U.S. dollar, primarily the Canadian dollar, the British pound, and the Euro. These exposures may change over time as our international business practices expand.
We do not believe movements in foreign currencies in which we transact business will significantly affect future net earnings or losses. Foreign currency exchange risk can be quantified by estimating the change in operating revenue resulting from a hypothetical 10% adverse change in foreign exchange rates. We believe such an adverse change would not currently have a material impact on our results of operations. However, if our international operations grow, our risk associated with fluctuations in foreign currency exchange rates could increase.
To date, we have not entered into any derivative financial instruments, that are designated as hedges, for the purpose of reducing our exposure to adverse fluctuations in foreign currency exchange rates.
Inflationary Risk
We are exposed to fluctuations in operating expenses due to contractual agreements with printers, paper suppliers and wholesale distributors. In addition, we are also exposed to fluctuations in the cost of fuel, paper and postage and certain product placement related costs.
While we do not believe these inflationary risks have had a material effect on our business, financial condition or results of operations, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could have a material impact on our business, financial condition and results of operations.
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Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive and principal financial officers, we evaluated the effectiveness of our disclosure controls and procedures (as defined in the Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) required by Exchange Act Rules 13a-15(b) or 15d-15(b), as of the end of the period covered by this report. Based upon that evaluation, our principal executive and principal financial officers concluded that our disclosure controls and procedures were effective as of June 30, 2015 to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
Evaluation of Changes in Internal Control Over Financial Reporting
Under the supervision and with the participation of our management, including our principal executive and principal financial officers, we have determined that, during the quarter ended June 30, 2015, there were no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Except as set forth below, there are no material changes to the pending legal proceedings disclosed in our 2015 Form 10-K, under the heading Part I, Item 3, "Legal Proceedings."
Anderson Litigation
A hearing before the Federal District Court for the Southern District of New York was held on July 22, 2015 regarding the pending motions for summary judgment and to strike certain proposed expert testimony.
Item 1A. Risk Factors.
There have been no material changes to the risk factors as previously disclosed in our 2015 Form 10-K, under the heading Part I, Item 1A, "Risk Factors."
Item 6. Exhibits.
See exhibits listed under the Exhibit Index below.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

|  |  |  | AMERICAN MEDIA, INC.
Dated: | August 14, 2015 |  | by: | /s/ David J. Pecker
|  |  |  | David J. Pecker
|  |  |  | Chairman, Chief Executive Officer and President
|  |  |  | (Principal Executive Officer)
Dated: | August 14, 2015 |  | by: | /s/ Christopher V. Polimeni
|  |  |  | Christopher V. Polimeni
|  |  |  | Executive Vice President, Chief Financial Officer and Treasurer
|  |  |  | (Principal Financial and Accounting Officer)

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Exhibit Index

Exhibit Number |  | Description
31.1 | * | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Chief Executive Officer.
31.2 | * | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Chief Financial Officer.
32 | ** | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
101 | * | The following materials from American Media Inc.'s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2015, formatted in XBRL (Extensible Business Reporting Language): (i) the Unaudited Condensed Consolidated Balance Sheets, (ii) the Unaudited Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss), (iii) the Unaudited Condensed Consolidated Statements of Stockholders' Deficit, (iv) the Unaudited Condensed Consolidated Statements of Cash Flows and (v) the Notes to the Unaudited Condensed Consolidated Financial Statements.
* |  | Filed herewith.
** |  | Furnished herewith.

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