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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 18, 2000
ZIFF-DAVIS INC.
(Exact name of registrant as specified in its charter)
STATE OF DELAWARE 001-14055 13-3987754
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
Ziff-Davis Inc.
28 East 28th Street, New York, New York 10016
(Address of principal executive offices)
Registrant's telephone number, including area code: (212) 503-3500
N/A
(Former name or former address, if changed since last report)
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Item 1. Not Applicable.
Item 2. Acquisition or Disposition of Assets.
On August 18, 2000, Ziff-Davis Inc., a Delaware corporation (the
"Company"), completed the recapitalization and spin-off of its trade show and
conference business (now known as Key3Media Group Inc.). Additional information
about this recapitalization and spin-off (the "Key3Media Recapitalization and
Spin-Off") may be found in Key3 Media Group Inc.'s Form S-1 relating to the
spin-off, which is incorporated by reference into this Form 8-K. Additional
information about the prior sales of the Company's market intelligence,
television and education businesses and most of its print publishing business
(the "Prior Sales") may be found in the Company's proxy statement dated February
7, 2000, the Company's Form 10-K for the year ended December 31, 1999 (the "1999
Form 10-K") and the Company's Form 10-Q for the quarter ended June 30, 2000 (the
"Second Quarter Form 10-Q), each of which is incorporated by reference into this
Form 8-K.
Items 3-6. Not Applicable.
Items 7(a). Not applicable.
Item 7(b). Pro Forma Financial Information.
The following unaudited pro forma consolidated financial statements of the
Company are based on its audited consolidated financial statements included in
the 1999 Form 10-K and its unaudited consolidated financial statements included
in the Second Quarter Form 10-Q, adjusted where appropriate to give pro forma
effect to the transactions described below.
The Unaudited Pro Forma Consolidated Balance Sheet gives pro forma effect
to the Key3Media Recapitalization and Spin-Off and the concurrent dividend of
approximately $267 million ($2.50 per share) as if they had occurred as of
June 30, 2000. The Unaudited Pro Forma Consolidated Statement of Operations for
the year ended December 31, 1999 gives pro forma effect to the March 31, 1999
initial public offering of ZDNet common stock described in Note 2 to the audited
consolidated financial statements, the Prior Sales, the Key3Media
Recapitalization and Spin-Off and a concurrent dividend of approximately $267
million ($2.50 per share) as if they had occurred immediately prior to January
1, 1999. The Unaudited Pro Forma Consolidated Statement of Operations for the
six months ended June 30, 2000 gives pro forma effect to the Prior Sales
occurring in 2000, the Key3Media Recapitalization and Spin-Off and a concurrent
dividend of approximately $267 million ($2.50 per share) as if they had occurred
immediately prior to January 1, 2000. Further details about the pro forma
adjustments are set forth in notes appearing at the end of the unaudited pro
forma consolidated financial statements.
These statements are not necessarily indicative of the actual financial
position or results of operations of the Company as of the date or for the
period indicated or the financial position or results of operations that the
Company would have experienced if the transactions for which the statements give
pro forma effect had in fact occurred at the times assumed. Also, the
statements do not purport to represent the Company's future financial position
or results of operations. Moreover, the statements do not reflect the Company's
planned merger with a subsidiary of CNET Networks, Inc., which is described in
detail in a proxy statement/prospectus on file with the SEC.
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These statements should be read in conjunction with Management's Discussion
and Analysis of Financial Condition and Results of Operations and the
Consolidated Financial Statements included in the 1999 Form 10-K and the Second
Quarter Form 10-Q.
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ZIFF-DAVIS INC.
UNAUDITED PRO FORMA
CONSOLIDATED BALANCE SHEET
(dollars in thousands)
<TABLE>
<CAPTION>
June 30, 2000
----------------------------------------
As
Reported Adjustment Pro Forma
------------ ---------- ----------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 63,616 $ 4,000 $ 67,616
Accounts receivable, net 45,906 45,906
Inventories 722 722
Prepaid expenses and other current assets 2,161 2,161
Due from affiliates 2,107 2,107
Securities available for sale 7,653 7,653
Deferred taxes 9,158 9,158
------------ ----------- ------------
Total current assets 131,323 4,000 135,323
Property and equipment, net 9,853 9,853
Intangible assets, net 175,808 175,808
Net assets from discontinued operations 780,150 (780,150) -
Investments at cost 30,668 30,668
Other assets 38,090 38,090
------------ ----------- ------------
Total assets $ 1,165,892 $ (776,150) $ 389,742
------------ ----------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,569 $ $ 3,569
Due to affiliate 13,025 13,025
Accrued expenses 69,739 69,739
Unearned income, net 8,145 8,145
Other current liabilities 11,274 11,274
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Total current liabilities 105,752 105,752
Notes payable, net of unamortized discount 150,500 (150,000) 500
------------ ----------- ------------
Total liabilities 256,252 (150,000) 106,252
Total stockholders' equity 909,640 (626,150) 283,490
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Total liabilities and stockholders' equity $ 1,165,892 $ (776,150) $ 389,742
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Common Stock, par value $0.01 per share
Number of shares of ZD common stock 106,107,420 106,107,420
Number of shares of ZDNet common stock 16,438,320 16,438,320
</TABLE>
The accompanying notes are an integral part of these pro forma financial
statements
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ZIFF-DAVIS INC.
UNAUDITED PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Six Months Ended June 30, 2000 Year Ended December 31, 1999
-------------------------------------------- -------------------------------------------
As Reported Total Adjustments Pro forma As Reported Total Adjustments Pro forma
------------ ----------------- ----------- ------------ ------------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Revenue, net:
Internet $ 75,171 $ $ 75,171 $ 104,178 $ $ 104,178
Publishing 153,969 (128,932) 25,037 598,280 (528,124) 70,156
------------ --------------- ------------ ------------ ------------- ------------
229,140 (128,932) 100,208 702,458 (528,124) 174,334
Cost of operations:
Production and content 50,285 (39,468) 10,817 186,748 (158,040) 28,708
Selling, general and
administrative expenses 161,523 (78,253) 83,270 409,147 (275,476) 133,671
Stock-based compensation 3,811 (809) 3,002 9,916 (5,381) 4,535
Depreciation and amortization of
property and equipment 2,289 (524) 1,765 23,867 (13,461) 10,406
Amortization of intangible assets
10,299 10,299 86,963 (73,955) 13,008
Write-down of intangible assets
Restructuring charge 78,645 (73,098) 5,547 1,048,185 (1,048,185) -
------------ --------------- ------------ ------------ ------------- ------------
Loss from operations (77,712) 63,220 (14,492) (1,062,368) 1,046,374 (15,994)
Interest expense, net - related
party (7,497) 7,497 -
Interest expense, net (12,466) 12,449 (17) (79,451) 79,451 -
Other non-operating income, net 780 780 3,241 (1,769) 1,472
Minority interest - - 117 - 117
------------ --------------- ------------ ------------ ------------- ------------
Loss before taxes, discontinued
operations and extraordinary item (89,398) 75,669 (13,729) (1,145,958) 1,131,553 (14,405)
Income tax benefit 99,784 (96,136) 3,648 131,111 (126,816) 4,295
------------ --------------- ------------ ------------ ------------- ------------
Income (loss) from continuing
operations 10,386 (20,467) (10,081) (1,014,847) 1,004,737 (10,110)
ZD earnings (loss) per basic share
from continuing operations $0.11 $(0.22) $(0.09) $(9.88) $9.78 $(0.10)
ZD weighted average basic shares
outstanding 104,142,325 104,142,325 102,715,875 102,715,875
ZD earnings per diluted
share from continuing operations $0.11 NA NA NA NA NA
ZD weighted average diluted shares
outstanding 106,918,356 106,918,356 NA NA NA
ZDNet earnings (loss) per basic
shares $(0.06) - $(0.06) $0.03 - $0.03
ZDNet weighted average basic shares
outstanding 74,896,249 74,896,249 72,664,270 72,664,270
ZDNet earnings per diluted
share NA NA NA $0.02 - $0.02
ZDNet weighted average diluted
shares outstanding 81,867,721 81,867,721 80,821,191 80,821,191
</TABLE>
The accompanying notes are an integral part of these pro forma financial
statements
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NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENT -- (Continued)
Unaudited Pro Forma Consolidated Balance Sheet Notes
The pro forma adjustments for the unaudited pro forma consolidated balance
sheet as of June 30, 2000 assume that the following had occurred as of that
date:
. the Key3Media Recapitalization and Spin-Off;
. the use of $150,000,000 out of the proceeds of the Key3Media
Recapitalization and Spin-Off to repay in full a $150,000,000 interim
credit facility;
. the payment of $275,000,000 from Key3Media Group to Ziff-Davis Inc.
out of the proceeds from the Key3Media Recapitalization and Spin-Off;
. the payment by Ziff-Davis Inc. of $267,000,000 ($2.50 per share of ZD
common stock) as a dividend on the ZD common stock concurrently with
the Key3Media Recapitalization and Spin-Off; and
. the payment by Ziff-Davis Inc. of approximately $3,500,000 in expenses
related to the Key3Media Recapitalization and Spin-Off.
As a result of the foregoing:
. cash and cash equivalents increase on a pro forma basis by an amount
equal to (a) the $275,000,000 payment from Key3Media Group to
Ziff-Davis Inc. minus (b) the $267,000,000 dividend on the ZD common
stock minus (c) the approximately $3,500,000 in expenses paid by
Ziff-Davis Inc. related to the Key3Media Recapitalization and
Spin-Off;
. net assets of discontinued operations are eliminated on a pro forma
basis; and
. stockholders' equity decreases on a pro forma basis by the difference
between the amount of the net assets of discontinued operations that
were eliminated and the amount of the increase in cash and cash
equivalents.
Unaudited Pro Forma Consolidated Statement of Operations Notes
The pro forma adjustments for the unaudited pro forma consolidated
statement of operations for the year ended December 31, 1999 assume that the
following had occurred immediately prior to January 1, 1999:
. the sale of 11,500,000 shares of ZDNet stock at a public offering
price of $19.00 per share, less underwriting discounts and expenses of
$1.74 per share, pursuant to the initial public offering of ZDNet
common stock described in Note 2 to the Consolidated Financial
Statements included in the 1999 Form 10-K;
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NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENT -- (Continued)
. the $1,048,185,000 write down of intangible assets relating to the
publishing assets that was in fact taken in the fourth quarter of
1999, as further described in Note 7 to the Consolidated Financial
Statements included in the 1999 Form 10-K;
. the completion of each of the Prior Sales;
. the accelerated vesting and exercise of options to purchase 3.8
million shares of ZD common stock for $76.3 million and options to
purchase 1.8 million shares of ZDNet common stock for $27.5 million;
. the unwind of interest rate swaps as further described in Note 11 to
the Consolidated Financial Statements included in the 1999 Form 10-K;
. the Key3Media Recapitalization and Spin-Off; and
. the use of a portion of the net proceeds from the foregoing
transactions to repay in full the Company's remaining debt and to pay
a dividend on the ZD common stock.
The pro forma adjustments for the unaudited pro forma consolidated
statement of operations for the six months ended June 30, 2000 assume that the
following had occurred immediately prior to January 1, 2000:
. the completion of each of the Prior Sales that occurred in 2000;
. the accelerated vesting and exercise of options to purchase 2.6
million shares of ZD common stock for $35.0 million and options to
purchase 1.3 million shares of ZDNet common stock for $11.0 million;
. the unwind of interest rate swaps as further described in Note 11 to
the Consolidated Financial Statements included in the 1999 Form 10-K;
. the Key3Media Recapitalization and Spin-Off; and
. the use of a portion of the net proceeds from the foregoing
transactions to repay in full the Company's remaining debt and to pay
a dividend on the ZD common stock.
As a result of the foregoing, for both periods:
. revenue from the publishing segment, all of the items in cost of
operations and non-operating income reduce on a pro forma basis to
reflect the Prior Sales (and, in the case of amortization of
intangible assets for the year ended December 31, 2000, to reflect
assumed earlier write-down of intangible assets); and
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NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENT -- (Continued)
. interest expense is eliminated on a pro forma basis to reflect
elimination of debt.
In addition, restructuring charge for the six months ended June 30, 2000
reduces on a pro forma basis to reflect completion of the Prior Sales.
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Item 7(c). Exhibits.
99.1 Form 10-K for the fiscal year ended December 31, 1999
(incorporated herein by reference, File No. 001-14055)
99.2 Proxy Statement, dated February 7, 2000 and filed February 9,
2000 (incorporated herein by reference, File No. 001-14055)
99.3 Form 10-Q for the fiscal quarter ended June 30,2000
(incorporated herein by reference, File No. 001-14055)
99.4 Registration Statement on Form S-1 of Key3Media Group Inc.
(incorporated herein by reference, File No. 333-36828)
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SIGNATURE
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 hereunto duly authorized.
ZIFF-DAVIS INC.
By: /s/ Art Fatum
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Name: Art Fatum
Title: Chief Financial Officer, ZDNet
(on behalf of Registrant and
as Principal Financial Officer)
Date: August 31, 2000
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