<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) May 27, 1999
------------
Penton Media, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-14337 36-2875386
- --------------------------------------------------------------------------------
(State or Other (Commission (IRS Employer
jurisdiction of incorporation) File Number) Identification No.)
1100 Superior Avenue, Cleveland, Ohio
- --------------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code (216) 696-7000
------------------------------
Not Applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE> 2
ITEM 2. ACQUISITION OF ASSETS.
----------------------
On May 27, 1999, pursuant to an Asset Purchase Agreement, dated as of
May 18, 1999, by and among Penton Media, Inc., a Delaware corporation
("Penton"), New Hope Communications, Inc., a Colorado corporation ("New Hope"),
and R. Douglas Greene, Penton acquired substantially all of the assets of New
Hope Natural Media, a division of New Hope.
In full consideration for the transfer of the assets, Penton agreed to
pay a total purchase price of up to $97 million to New Hope. The purchase price
was comprised of (a) $41 million in cash and $41 million of Penton common stock,
both of which were paid at the closing on May 27, 1999, and (b) a contingent
payment of up to $15 million to be paid half in cash and half in stock, if
earned, based on the performance of the New Hope business for the fiscal years
1999, 2000 and 2001.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
----------------------------------
(a) Financial statements of business acquired.
(1) Audited financial statements of New Hope Natural Media
(a division of New Hope Communications, Inc.) as of
December 31, 1998, and for the year then ended are
included in this report.
(b) Pro forma financial information.
(1) Pro forma consolidated financial information for Penton
and New Hope Natural Media consisting of a pro forma
consolidated balance sheet as of March 31,1999 and pro
forma consolidated statements of income for the three
months ended March 31, 1999 and the year ended
December 31, 1998 are included in this report.
(c) Exhibits.
(2) Asset Purchase Agreement, dated as of May 18, 1999, by
and among Penton Media, Inc., New Hope Communications,
Inc. and R. Douglas Greene.
(23) Consent of Independent Auditors
<PAGE> 3
PENTON MEDIA, INC.
INDEX TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
NEW HOPE NATURAL MEDIA (A DIVISION OF NEW HOPE COMMUNICATIONS, INC.):
Independent Auditors' Report F-3
Balance Sheets - December 31, 1998 and March 31, 1999 (Unaudited) F-4
Statements of Operations and Owner's Equity (Deficit)
for the year ended December 31, 1998 and for the
three months ended March 31, 1999 and 1998 (Unaudited) F-5
Statements of Cash Flows for the year ended December 31, 1998 and for
the three months ended March 31, 1999 and 1998 (Unaudited) F-6
Notes to Financial Statements F-7
PENTON MEDIA, INC. PRO FORMA - (UNAUDITED)
Consolidated Balance Sheet as of March 31, 1999 F-11
Consolidated Statement of Operations for the three
month period ended March 31, 1999 and for the year
ended December 31, 1998 F-13
</TABLE>
<PAGE> 4
NEW HOPE NATURAL MEDIA
(A Division of New Hope Communications, Inc.)
Financial Statements
December 31, 1998
(With Independent Auditors' Report Thereon)
<PAGE> 5
INDEPENDENT AUDITORS' REPORT
The Board of Directors
New Hope Communications, Inc.:
We have audited the accompanying balance sheet of New Hope Natural Media (a
division of New Hope Communications, Inc.) as of December 31, 1998, and the
related statements of operations and owner's deficit, and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of New Hope Natural Media as of
December 31, 1998, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
/s/ KPMG LLP
Boulder, Colorado
July 28, 1999
F-3
<PAGE> 6
NEW HOPE NATURAL MEDIA
(A Division of New Hope Communications, Inc.)
Balance Sheets
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
ASSETS 1998 1999
------------------- -------------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 428,007 890,618
Receivables:
Trade, net of allowance of $569,213 and $638,780,
respectively 3,455,426 3,977,127
Employees 16,869 13,569
------------------- -------------------
3,472,295 3,990,696
Prepaid expenses and other 272,164 226,150
------------------- -------------------
Total current assets 4,172,466 5,107,464
Equipment and leasehold improvements, net (note 2) 1,190,054 1,195,896
Other assets 1,022 766
------------------- -------------------
Total assets $ 5,363,542 6,304,126
=================== ===================
LIABILITIES AND OWNER'S EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses $ 1,141,735 1,294,888
Deferred revenue 6,843,258 1,053,930
Deferred rent concessions 195,010 312,016
Current portion of obligations under capital leases (note 3) 23,638 14,387
------------------- -------------------
Total current liabilities 8,203,641 2,675,221
Obligations under capital leases, less current portion (note 3) 44,826 37,286
------------------- -------------------
Total liabilities 8,248,467 2,712,507
Owner's equity (deficit) (2,884,925) 3,591,619
------------------- -------------------
Commitments and contingencies (notes 3, 4, and 5)
Total liabilities and owner's equity (deficit) $ 5,363,542 6,304,126
=================== ===================
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE> 7
NEW HOPE NATURAL MEDIA
(A Division of New Hope Communications, Inc.)
Statements of Operations and Owner's Equity (Deficit)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED MARCH 31,
DECEMBER 31, ----------------------------------------
1998 1999 1998
------------------- ------------------- ------------------
(unaudited)
Revenue:
<S> <C> <C> <C>
Advertising $ 13,364,438 4,520,774 3,510,191
Trade shows 11,025,935 8,058,566 6,790,069
Retail sales 2,304,074 638,083 454,339
Other 329,290 224,324 137,904
------------------- ------------------- ------------------
Total revenue 27,023,737 13,441,747 10,892,503
------------------- ------------------- ------------------
Operating expenses:
General and administrative 5,653,823 1,707,832 967,468
Selling 5,668,731 1,219,704 1,271,388
Production 3,905,397 1,223,929 876,146
Editorial 3,274,594 831,424 719,141
Circulation 1,799,948 424,432 280,988
Trade show management 1,856,194 902,550 781,839
Depreciation and amortization 423,671 101,890 93,289
Provision for uncollectible accounts
receivable 360,808 76,242 7,025
Other 205,252 124,458 87,962
------------------- ------------------- ------------------
Total operating expenses 23,148,418 6,612,461 5,085,246
------------------- ------------------- ------------------
Operating income 3,875,319 6,829,286 5,807,257
Other income (expense):
Interest expense (9,777) (157) (1,156)
Other 6,835 8,731 2,222
------------------- ------------------- ------------------
Net earnings 3,872,377 6,837,860 5,808,323
Owner's deficit at beginning of period (700,273) (2,884,925) (1,200,273)
Distributions to owner (6,057,029) (361,316) (2,741,955)
------------------- ------------------- ------------------
Owner's equity (deficit) at end of period $ (2,884,925) 3,591,619 1,866,095
=================== =================== ==================
Pro forma information:
Historical net earnings $ 3,872,377 6,837,860 5,808,323
Pro forma adjustment for income taxes (1,549,000) (2,735,000) (2,323,000)
------------------- ------------------- ------------------
Pro forma net earnings $ 2,323,377 4,102,860 3,485,323
=================== =================== ==================
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE> 8
NEW HOPE NATURAL MEDIA
(A Division of New Hope Communications, Inc.)
Statements of Cash Flows
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED MARCH 31,
DECEMBER 31, -------------------------------------
1998 1999 1998
----------------- ----------------- -----------------
(unaudited)
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 3,872,377 6,837,860 5,808,323
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 423,671 101,890 93,289
Provision for uncollectible accounts receivable 360,808 76,242 7,025
Changes in operating assets and liabilities:
Receivables (560,372) (597,943) 319,828
Prepaid expenses and other (105,845) 46,014 (441)
Accounts payable and accrued expenses (800,484) 153,153 (1,137,189)
Deferred revenue 1,410,094 (5,789,328) (3,801,507)
Deferred rent concessions 195,010 117,006 --
----------------- ----------------- -----------------
Net cash provided by operating activities 4,795,259 944,894 1,289,328
----------------- ----------------- -----------------
Cash flows from investing activities:
Increase in notes receivable from affiliates (6,019) -- --
Payments received on notes receivable from
affiliates 1,150 3,300 --
Purchase of equipment and leasehold improvements (597,229) (107,732) (139,169)
Other 1,021 256 255
----------------- ----------------- -----------------
Net cash used by investing activities (601,077) (104,176) (138,914)
----------------- ----------------- -----------------
Cash flows from financing activities:
Payments on capital lease obligations (68,980) (16,791) (15,678)
Distributions to owner (6,057,029) (361,316) (2,741,955)
----------------- ----------------- -----------------
Net cash used by financing activities (6,126,009) (378,107) (2,757,633)
----------------- ----------------- -----------------
Increase (decrease) in cash and cash
equivalents (1,931,827) 462,611 (1,607,219)
Cash and cash equivalents, beginning of period 2,359,834 428,007 2,359,834
----------------- ----------------- -----------------
Cash and cash equivalents, end of period $ 428,007 890,618 752,615
================= ================= =================
Supplemental disclosure of cash flow information -
cash payments for interest $ 9,444 157 1,006
================= ================= =================
Noncash investing and financing activities:
Acquisition of property and equipment under capital
lease obligation $ 68,404 -- --
================= ================= =================
Note payable issued to shareholder
for retention of cash $ -- 500,000 --
================= ================= =================
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE> 9
NEW HOPE NATURAL MEDIA
(A Division of New Hope Communications, Inc.)
Notes to Financial Statements
December 31, 1998 and March 31, 1999 (unaudited)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) BUSINESS AND BASIS OF PRESENTATION
New Hope Communications, Inc. (New Hope or the Company) was
incorporated in 1980. Effective May 27, 1999, Penton Media, Inc.
(Penton) entered into an Asset Purchase Agreement (the Agreement)
with New Hope to purchase substantially all of the net assets of
the Company's publishing and trade show businesses, which operate
primarily in the natural foods industry (New Hope Natural Media or
the Division). New Hope retained its local newspaper and theater
operations. The accompanying financial statements include the
assets, liabilities and operations of the Division, assuming that
the Division had been operated separately as of January 1, 1998
and thereafter.
The accompanying unaudited financial information as of March 31,
1999 and for the three-month periods ended March 31, 1999 and 1998
has been prepared in accordance with generally accepted accounting
principles for interim financial information. All significant
adjustments, consisting of only normal and recurring adjustments,
which, in the opinion of management, are necessary for a fair
presentation of the results for the three months ended March 31,
1999 and 1998 have been included. Operating results for the
three-month period ending March 31, 1999 are not necessarily
indicative of the results that may be expected for the full year.
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
(b) CASH EQUIVALENTS
The Division considers all highly liquid investments purchased
with an original maturity of three months or less to be cash
equivalents.
(c) EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements, including equipment acquired
under capital leases, are recorded at cost. Depreciation and
amortization is calculated using the straight-line method over the
estimated useful lives of the assets or the lease term for
leasehold improvements, whichever is less, which range from 3 to 7
years for equipment. Repairs and maintenance are charged to
operations and major improvements are capitalized.
(d) REVENUE RECOGNITION
Advertising revenue is recognized upon publication of magazines
including the advertisement. Advance deposits received from
customers for exhibit space and attendance at trade shows
sponsored by the Division are deferred until the trade show
occurs, at which time such amounts are recognized as revenue.
F-7
<PAGE> 10
NEW HOPE NATURAL MEDIA
(A Division of New Hope Communications, Inc.)
Notes to Financial Statements
December 31, 1998 and March 31, 1999 (unaudited)
(e) INCOME TAXES
The operations of the Division are included in the income returns
of New Hope, which has elected S corporation status for income tax
purposes. Accordingly, the results of operations of the Company
and the Division were included in the individual income tax
returns of the shareholders of New Hope, and no provision for
income taxes has been included in the accompanying financial
statements of the Division. However, pro forma information has
been included in the accompanying statement of operations to
reflect a pro forma adjustment for income tax expense as if the
Division had been a separate taxable entity subject to federal and
state income taxes for all periods presented.
(f) CONCENTRATION OF CREDIT RISK AND FINANCIAL INSTRUMENTS
Financial instruments that potentially subject the Division to
concentrations of credit risk consist primarily of cash and cash
equivalents, accounts receivable and accounts payable. As of
December 31, 1998 and March 31, 1999, the Division had no
concentrations of credit risk. Concentrations of credit risk with
respect to trade receivables are limited due to the large number
of customers comprising the Division's customer base and the
relatively minor balances of each individual account. At December
31, 1998 and March 31, 1999, the fair value of the Division's
financial instruments approximate their carrying value, based on
their terms and interest rates.
(2) EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements are comprised of the following:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1998 1999
-------------------- --------------------
(unaudited)
<S> <C> <C>
Computer equipment $ 2,221,479 2,249,985
Office furniture, machinery and equipment 756,642 756,642
Software and other 325,247 404,216
Leasehold improvements 29,106 29,106
-------------------- --------------------
3,332,474 3,439,949
Less accumulated depreciation and amortization (2,142,420) (2,244,053)
-------------------- --------------------
$ 1,190,054 1,195,896
==================== ====================
</TABLE>
(Continued)
F-8
<PAGE> 11
NEW HOPE NATURAL MEDIA
(A Division of New Hope Communications, Inc.)
Notes to Financial Statements
December 31, 1998 and March 31, 1999 (unaudited)
(3) LEASES AND RELATED PARTY TRANSACTIONS
The Division rents its operating and other facilities under leases with
the Chief Executive Officer and majority stockholder of New Hope. A
summary of these lease commitments is as follows:
<TABLE>
<CAPTION>
BUILDING BUILDING BUILDING
------------------ ----------------- -----------------
<S> <C> <C> <C>
Expiration date July 1, 2011 July 1, 2011 June 30, 2000
Monthly payments $ 13,175 7,180 4,000
Rent paid during the year ended
December 31, 1998 $ 158,100 86,160 48,000
</TABLE>
The Division also leases equipment under other operating and capital
lease agreements. Future minimum rental payments required under all
related party and third-party operating and capital leases as of December
31, 1998 are as follows:
<TABLE>
<CAPTION>
CAPITAL LEASES OPERATING LEASES
----------------- -----------------
<S> <C> <C>
1999 $ 28,665 662,027
2000 20,119 694,526
2001 20,119 615,996
2002 9,461 604,332
2003 and thereafter -- 2,459,607
----------------- -----------------
Future minimum lease payments 78,364 $ 5,036,488
=================
Less amount representing interest (9,900)
-----------------
Present value of minimum lease payments 68,464
Less current portion (23,638)
-----------------
$ 44,826
=================
</TABLE>
(Continued)
F-9
<PAGE> 12
NEW HOPE NATURAL MEDIA
(A Division of New Hope Communications, Inc.)
Notes to Financial Statements
December 31, 1998 and March 31, 1999 (unaudited)
Total rent expense, including month-to-month rentals, for the year ended
December 31, 1998 and the three months ended March 31, 1999 and 1998 was
$719,864, $262,534 and $109,218, respectively.
The following is a summary of the net book value of equipment owned under
capital leases at December 31, 1998:
<TABLE>
<S> <C>
Cost of equipment $ 845,803
Less accumulated depreciation (726,565)
------------------
Net book value $ 119,238
==================
</TABLE>
(4) RETIREMENT PLAN
The Division's employees participated in New Hope's retirement plan,
which was established under the requirements of Internal Revenue Code
Section 401(k). Employees could make voluntary contributions and the
Division and New Hope, at the discretion of the Board of Directors of New
Hope, could match a percentage of the employees' contribution. There were
no employer contributions to the Plan for the year ended December 31,
1998 or for the three months ended March 31, 1999 and 1998.
(5) YEAR 2000 ISSUES (UNAUDITED)
The Company has initiated a plan (Plan) to identify, asses and remediate
"Year 2000" issues within each of its significant computer systems and
applications. The Plan is addressing the issue of computer systems being
unable to distinguish between the year 1900 and the year 2000, if a
program uses only two digits rather than four to define the applicable
year. Systems which have been determined not to be Year 2000 compliant
are being either replaced or reprogrammed, and thereafter tested for Year
2000 compliance. The Plan anticipates compliance by September 1, 1999.
The Company is also in the process of identifying and contacting critical
suppliers whose computerized systems are used by the Company and the
Division, regarding their plans and progress in addressing their Year
2000 issues. The Company has received varying information from such third
parties on the state of compliance or expected compliance.
The failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the
Company's and the Division's operations, liquidity and financial
condition. Due to the general uncertainty inherent in the Year 2000
problem, resulting in part from the uncertainty of the Year 2000
readiness of third-party suppliers, the Company and the Division are
unable to determine at this time whether the consequences of Year 2000
failures will have a material impact on the Company's and the Division's
operations, liquidity or financial condition.
F-10
<PAGE> 13
PENTON MEDIA, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1999
- --------------------------------------------------------------------------------
(Unaudited)
The following unaudited pro forma consolidated balance sheet is presented as if
the following had occurred on March 31, 1999: (i) the Company's acquisition of
New Hope Natural Media in May 1999; (ii) the acquisition of Jon Peddie
Associates in May 1999; (iii) the addition of $15 million in term B loans in
April 1999; (iv) the sale by the Company of 6,430,000 common shares completed in
May 1999, and (v) the elimination of deferred finance fees related to the
extinguishment of part of the outstanding senior debt. This pro forma
consolidated balance sheet should be read in conjunction with the pro forma
consolidated statement of income of the Company presented herein and the
historical consolidated financial statements and notes thereto of the Company
included in its Annual Report on Form 10-K for the year ended December 31, 1998
and its report on Form 10-Q for the quarterly period ended March 31, 1999.
All purchase price allocations for the Donohue/Meehan Publishing Company
acquisition (August 1998), the Mecklermedia Corporation acquisition (November
1998), the Jon Peddie Associates acquisition (May 1999), the MFG Publishing Inc.
acquisition (February 1999) and the New Hope Natural Media acquisition (May
1999), are treated as purchase transactions, are preliminary in nature and are
subject to change within the twelve months following each acquisition based on
refinements as actual data becomes available.
The unaudited pro forma consolidated balance sheet does not purport to represent
what the actual financial position of the Company would have been at March 31,
1999, nor does it purport to represent the future financial position of the
Company.
At June 30, 1999, upon the initial public offering of internet.com at $14.00
per share, the Company utilized mark to market accounting to record its
investment at the market value on that date. The Company increased its
investment by $61.0 million and recorded a corresponding increase to deferred
taxes of $24.4 million, and equity of $36.6 million. In July 1999, the Company
sold 510,000 shares of internet.com stock as part of internet.com's offering
overallotment option.
F-11
<PAGE> 14
PENTON MEDIA, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1999
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Adjustments (unaudited)
-----------------------------------------------------------
(a)
-----------------------------------------------------------
COMMON COMPANY
COMPANY STOCK NEW HOPE JON PEDDIE PRO FORMA PRO FORMA
HISTORICAL OFFERING NATURAL MEDIA ASSOCIATES ADJUSTMENTS (Unaudited)
---------- ------------- --------------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash $ 5,805 $ 39,322 $ 891 $ - $ (41,000)(b) $ 18,918
15,000 (c)
(1,100)(g)
Accounts and notes receivable, net 37,199 3,991 33 41,223
Inventories 2,926 - 2,926
Deferred tax assets 13,207 - 13,207
Prepayments, deposits and other 8,616 226 8,842
---------- ------------- --------------- -------------- --------------- --------------
Total current assets 67,753 39,322 5,108 33 (27,100) 85,116
Property, plant and equipment, net 27,987 1,196 86 - 29,269
Other assets
Goodwill, net 336,368 - - 72,482 (d) 409,841
991 (g)
Other intangibles, net 45,689 - 6,176 (d) 48,272
(3,593)(h)
Investment in joint venture 4,472 - 4,472
Other 134 134
---------- ------------- --------------- -------------- --------------- --------------
Total assets $ 482,403 $ 39,322 $ 6,304 $ 119 $ 48,956 $ 577,104
========== ============= =============== ============== =============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Senior debt facility $ 11,250 $ 11,250
Revolving credit facility 19,000 19,000
Notes payable - -
Accounts payable 11,932 1,295 10 13,237
Accrued compensation and benefits 6,714 - 6,714
Other accrued expenses 14,492 - 326 250 (e) 15,068
Unearned income 25,758 1,054 26,812
---------- ------------- --------------- -------------- --------------- --------------
Total current liabilities 89,146 - 2,675 10 250 92,081
Long-term liabilities and deferred credits
Senior debt facility 285,938 (79,322) 15,000 (c) 221,616
Net deferred pension credits 18,007 18,007
Deferred taxes 5,313 5,313
Other 742 37 779
---------- ------------- --------------- -------------- --------------- --------------
Total liabilities 399,146 (79,322) 2,712 10 15,250 337,796
Stockholders' equity
Preferred stock - -
Common stock 228 64 - 21 (b) 313
Capital in excess of par value 55,050 118,580 - 40,979 (b) 214,609
Retained earnings 28,743 3,592 109 (3,701)(f) 25,150
(3,593)(h)
Other comprehensive income (764) (764)
---------- ------------- --------------- -------------- --------------- --------------
Total stockholders' equity 83,257 118,644 3,592 109 33,706 239,308
---------- ------------- --------------- -------------- --------------- --------------
Total liabilities and stockholders'
equity $ 482,403 $ 39,322 $ 6,304 $ 119 $ 48,956 $ 577,104
========== ============= =============== ============== =============== ==============
</TABLE>
F-12
<PAGE> 15
PENTON MEDIA, INC.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1999
AND FOR THE YEAR ENDED DECEMBER 31, 1998
- --------------------------------------------------------------------------------
(Unaudited)
The unaudited pro forma consolidated statement of income for the three month
period ended March 31, 1999 is presented as if each of the following
transactions had occurred on January 1, 1999: (i) the sale by Penton of
6,430,000 common shares in May 1999; (ii) the acquisition of New Hope Natural
Media on May 27, 1999; (iii) the acquisition of MFG Publishing Inc., on February
28, 1999 and (iv) the addition of $15 million in term B loans in April 1999.
The unaudited pro forma consolidated statement of income for the year ended
December 31, 1998 is presented as if each of the following transactions had
occurred on January 1, 1998: (i) the Donohue/Meehan Publishing Company
acquisition, which was completed on August 7, 1998; (ii) the issuance of
1,541,638 shares of common stock for the acquisition of the Donohue/Meehan
Publishing Company; (iii) the acquisition of Mecklermedia Corporation on
November 24, 1998; (iv) the sale of an 80.1% interest in internet.com to Alan M.
Meckler on November 24, 1998; (v) the sale by Penton of 6,430,000 common shares
in May 1999; (vi) the acquisition of New Hope Natural Media on May 27, 1999;
(vii) the acquisition of MFG Publishing Inc. on February 28, 1999; (viii) the
addition of $15 million in term B loans in April 1999 and (ix) other adjustments
required to reflect the combined results of operations of Penton as a separate
public company.
The acquisition of Jon Peddie Associates in May 1999 has not been reflected in
the unaudited pro forma consolidated statements of income as the impact of the
transaction is immaterial to such information.
The following pro forma information is based upon the historical consolidated
results of operations of the Company for the three month period ended March 31,
1999 and the year ended December 31, 1998, giving effect to the transactions
described above. The pro forma consolidated statements of income should be read
in conjunction with the pro forma consolidated balance sheet of the Company
presented herein and the historical consolidated financial statements and notes
thereto of the Company included in its Annual Report on Form 10-K for the year
ended December 31, 1998 and its report on Form 10-Q for the quarterly period
ended March 31, 1999.
The unaudited pro forma consolidated statements of income are not necessarily
indicative of what the actual results of operations of the Company would have
been assuming the transactions had been completed as set forth above, nor do
they purport to represent the company's results of operations for future
periods.
F-13
<PAGE> 16
PENTON MEDIA, INC.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1999
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
- --------------------------------------------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
NEW HOPE COMPANY
PENTON NATURAL MEDIA PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS (UNAUDITED)
--------------- --------------- -------------- ----------------
<S> <C> <C> <C> <C>
REVENUES $ 58,296 $ 13,442 $ 219 (n) $ 71,957
--------------- --------------- ----------------
OPERATING EXPENSES:
Editorial, production and circulation 27,141 3,583 139 (n) 30,863
Selling, general and administrative 26,230 2,928 76 (n) 29,234
Depreciation and amortization 7,233 102 34 (q) 8,181
2 (o)
(138)(l)
948 (p)
--------------- --------------- ----------------
60,604 6,613 68,278
--------------- --------------- ----------------
OPERATING INCOME (Loss) (2,308) 6,829 3,679
OTHER INCOME (EXPENSE):
Interest expense (6,384) - 1,607 (m) (4,777)
Miscellaneous, net 36 9 45
--------------- --------------- ----------------
(6,348) 9 (4,732)
--------------- --------------- ----------------
INCOME (LOSS) BEFORE TAXES (8,656) 6,838 (1,053)
PROVISION FOR (BENEFIT FROM) INCOME TAXES (5,820) 2,735 306 (r) (2,779)
--------------- --------------- ----------------
NET INCOME (LOSS) $ (2,836) $ 4,103 $ 1,726
=============== =============== ================
PER SHARE DATA:
Earnings per share-basic and diluted:
Net income (loss) $ (0.12) $ 0.06
=============== ================
AVERAGE NUMBER OF SHARES OUTSTANDING 22,782 31,314 (s)
=============== ================
</TABLE>
F-14
<PAGE> 17
PENTON MEDIA, INC.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
- --------------------------------------------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
DONOHUE/MEEHAN
PUBLISHING MECKLERMEDIA NEW HOPE MFG
PENTON COMPANY CORPORATION NATURAL MEDIA PUBLISHING INC.
HISTORICAL 1/1/98-8/7/98 1/1/98-11/24/98 HISTORICAL HISTORICAL(n)
---------- ------------- --------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
REVENUES $ 233,118 $ 5,892 $ 63,217 $ 27,024 $ 1,208
---------- ------------- --------------- ----------- --------------
OPERATING EXPENSES:
Editorial, production and circulation 101,793 1,748 34,029 11,402 553
Selling, general and administrative 93,886 1,690 10,004 11,323 425
Depreciation and amortization 10,720 50 3,933 424 -
---------- ------------- --------------- ----------- --------------
206,399 3,488 47,966 23,149 978
---------- ------------- --------------- ----------- --------------
OPERATING INCOME 26,719 2,404 15,251 3,875 230
OTHER INCOME (EXPENSE):
Interest expense (5,558) (15) - (10)
Miscellaneous, net (1,028) 37 2,502 7
---------- ------------- --------------- ----------- --------------
(6,586) 22 2,502 (3) -
---------- ------------- --------------- ----------- --------------
INCOME BEFORE TAXES 20,133 2,426 17,753 3,872 230
PROVISION FOR (BENEFIT FROM) INCOME TAXES 9,243 - 6,795 1,549 92
---------- ------------- --------------- ----------- --------------
NET INCOME $ 10,890 $ 2,426 $ 10,958 $ 2,323 $ 138
========== ============= =============== =========== ==============
PER SHARE DATA:
Earnings per share-basic and diluted:
Net income $ 0.50
=========
AVERAGE NUMBER OF SHARES OUTSTANDING 21,882
=========
</TABLE>
<TABLE>
<CAPTION>
COMPANY
PRO FORMA PRO FORMA
ADJUSTMENTS (UNAUDITED)
----------------- -----------------
<S> <C> <C>
REVENUES $ 970 (a) $ 332,066
4,181 (b)
(3,544) (c)
-----------------
OPERATING EXPENSES:
Editorial, production and circulation 727 (a) 149,209
1,028 (b)
(2,071) (c)
Selling, general and administrative 160 (a) 114,871
397 (b)
(2,502) (c)
900 (d)
(1,412) (e)
Depreciation and amortization (505) (c) 34,722
473 (f)
14,174 (g)
2,072 (h)
(553) (l)
9 (o)
3,791 (p)
134 (q)
-----------------
298,802
-----------------
OPERATING INCOME 33,264
OTHER INCOME (EXPENSE):
Interest expense (341) (i) (17,859)
(24,278) (j)
5,914 (k)
6,429 (m)
Miscellaneous, net 6 (b) 1,524
-----------------
(16,335)
-----------------
INCOME BEFORE TAXES 16,929
PROVISION FOR (BENEFIT FROM) INCOME TAXES (5,189) (r) 12,490
-----------------
NET INCOME $ 4,439
=================
PER SHARE DATA:
Earnings per share-basic and diluted:
Net income $ 0.14
=================
AVERAGE NUMBER OF SHARES OUTSTANDING 31,314 (s)
=================
</TABLE>
F-15
<PAGE> 18
PENTON MEDIA, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
PRO FORMA ADJUSTMENTS:
Balance Sheet Adjustments:
(a) Represents the sale by the Company of 6,430,000 common shares completed in
May 1999 and the use of proceeds thereof. The net proceeds to the Company,
after underwriting discounts and offering costs, were approximately $118.6
million and were used to repay borrowings under the senior debt facility
and for the acquisition of New Hope Natural Media.
(b) On May 27, 1999, the Company paid $41 million in cash and $41 million of
Penton common stock for the acquisition of New Hope Natural Media.
(c) Reflects the addition of $15 million in term B loans in April 1999.
(d) Reflects the excess of the purchase price for New Hope Natural Media over
the fair market value of net assets purchased.
(e) The pro forma adjustment reflects a reserve for preacquisition
contingencies and acquisition-related costs for New Hope Natural Media.
(f) The pro forma adjustment reflects the elimination of New Hope Natural Media
and Jon Peddie Associates retained earnings.
(g) In May 1999, the Company paid $1.1 million in cash for the acquisition of
Jon Peddie Associates which was principally reflected as the excess of the
purchase price over the fair market value of net assets purchased.
(h) Reflects the elimination of deferred finance fees related to the
extinguishment of part of the senior debt with the proceeds from the
offering completed in May 1999.
Statement of Income Adjustments:
(a) Mecklermedia Corporation acquired Boardwatch on May 15, 1998. Reflects the
operations of Boardwatch from January 1, 1998 to May 15, 1998.
(b) Mecklermedia Corporation acquired One, Inc. on May 15, 1998. Reflects the
operations of One, Inc. from January 1, 1998 to May 15, 1998.
(c) Penton sold 80.1% of internet.com on November 24, 1998. Eliminates the
operations of internet.com from January 1, 1998 to November 24, 1998.
(d) Penton was spun off from Pittway Corporation on August 7, 1998. Reflects
estimated additional costs as if Penton had been an independent public
company from January 1, 1998 to August 7, 1998.
F-16
<PAGE> 19
- --------------------------------------------------------------------------------
(e) Penton was spun off from Pittway Corporation on August 7, 1998. Eliminates
non-recurring Pittway allocated costs, including Pittway stock appreciation
rights held by Penton employees, from January 1, 1998 to August 7, 1998.
(f) Penton acquired Donohue/Meehan Publishing Company on August 7, 1998.
Reflects incremental amortization of intangible assets resulting from the
acquisition of Donohue/Meehan Publishing Company as if Penton owned
Donohue/Meehan Publishing Company from January 1, 1998 to August 7, 1998.
Goodwill has been amortized over a period of 40 years and other intangibles
have been amortized over periods ranging from 3-15 years.
(g) Penton acquired Mecklermedia Corporation on November 24, 1998. Reflects
incremental amortization of intangible assets resulting from the
acquisition of Mecklermedia Corporation as if Penton owned Mecklermedia
Corporation from January 1, 1998 to November 24, 1998. Goodwill,
based on a preliminary purchase price allocation, has been amortized over
a period of 20 years and other intangibles have been amortized over
periods ranging from 3-15 years.
(h) The $300 million credit agreement became effective on November 24, 1998.
Reflects incremental amortization of financing fees incurred with the $300
million credit agreement as if it had been effective from January 1, 1998
to November 24, 1998. Amounts are being amortized over a seven-year period,
the life of the agreement.
(i) Penton acquired Donohue/Meehan Publishing Company on August 7, 1998.
Reflects incremental interest expense on debt incurred to fund cash portion
of purchase price as if Penton owned Donohue/Meehan Publishing Company
from January 1, 1998 to August 7, 1998.
(j) The $300 million credit agreement became effective on November 24, 1998.
Reflects incremental interest expense on the $300 million credit agreement
as if it had been effective from January 1, 1998 to November 24, 1998
prior to and giving effect to (m) below. The interest rate used reflects
the rates charged at December 31, 1998 of 7.79% for the $175 million term
loan A and 8.54% for the $125 million term loan B.
(k) Reflects elimination of interest expense on all debt repaid with proceeds
from the $300 million credit agreement.
(l) Reflects the elimination of amortization of finance fees related to the
extinguishment of part of the senior debt with the proceeds from the
offering completed in May 1999.
(m) Reflects the elimination of interest expense on amounts outstanding under
the credit agreement repaid with proceeds from the common stock offering in
May 1999. The interest rate used reflects the weighted average of the rates
charged at December 31, 1998 of 7.79% for the $175 million term loan A and
8.54% for the $125 million term loan B.
(n) Penton acquired MFG Publishing Inc. on February 28, 1999. Reflects the
operations of MFG Publishing Inc. from January 1, 1999 to the date of
acquisition and, in 1998, as if a full year's operation's of MFG
Publishing Inc. were recorded.
(o) Reflects incremental amortization of intangible assets resulting from the
acquisition of MFG Publishing Inc. as if Penton owned MFG Publishing Inc.
on January 1, 1998. Goodwill, based on preliminary purchase price
allocation, has been amortized over a period of 40 years and other
intangibles have been amortized over periods ranging from 3-15 years.
(p) Penton acquired New Hope Natural Media on May 27, 1999. Reflects
incremental amortization of intangible assets resulting from the
acquisition of New Hope Natural Media as if Penton owned New Hope Natural
Media on January 1, 1998. Goodwill, based on preliminary purchase price
allocation, has been amortized over a period ranging from 20 to 40 years
and other intangibles have been amortized over periods ranging from 3-15
years.
(q) Reflects incremental amortization of finance fees incurred with the
addition of the $15 million term loan B. Amounts are being amortized over a
sever-year period, the life of the agreement.
F-17
<PAGE> 20
- --------------------------------------------------------------------------------
(r) Reflects the incremental provision for federal income taxes on the acquired
companies previously taxes as subchapter S corporations or limited
liability companies as well as federal and state income taxes related to
the pro forma income statement adjustments noted above.
(s) Pro forma earnings per share is calculated by dividing net income by the
average number of shares outstanding during the period. The average number
of shares outstanding during the period is calculated as follows:
<TABLE>
<CAPTION>
December 31, March 31,
1998 1999
------------ -----------
(in thousands)
<S> <C> <C>
Basic and Diluted:
Average number of shares outstanding 21,882 22,782
====== ======
Pro forma Basic and Diluted:
Average number of shares outstanding 21,882 22,782
Shares issued in May 1999 offering 6,430 6,430
Shares issued for New Hope Natural Media acquisition 2,102 2,102
To reflect Donohue/Meehan Publishing Company shares as
if issued January 1, 1998 900 --
------ ------
31,314 31,314
====== ======
</TABLE>
F-18
<PAGE> 21
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 hereunto duly authorized.
PENTON MEDIA, INC.
------------------
(Registrant)
By: /s/Joseph G. NeCastro
---------------------
Joseph G. NeCastro
Chief Financial Officer
(Duly authorized officer
and Principal Financial
Officer)
Date: August 10, 1999
<PAGE> 22
EXHIBIT INDEX
-------------
Exhibit
No.
- -------
(2) Asset Purchase Agreement, dated as of May 18, 1999, by and among
Penton Media, Inc., New Hope Communications, Inc. and R. Douglas
Greene (incorporated by reference to Exhibit 99.2 to the Schedule 13D
of New Hope Communications, Inc. and R. Douglas Greene, filed with the
Commission on June 21, 1999). The registrant agrees to furnish
supplementally to the Commission upon request a copy of any omitted
schedule.
(23) Consent of Independent Auditors
<PAGE> 1
Exhibit 23
Consent of Independent Auditors
The Board of Directors
New Hope Communications, Inc.:
We consent to the inclusion of our report dated July 28, 1999, with respect of
the balance sheet of New Hope Natural Media (a division of New Hope
Communications, Inc.) as of December 31, 1998 and the related statements of
operations and owner's deficit, and cash flows for the year then ended, which
report appears in the Form 8-K of Penton Media, Inc. dated August 10, 1999.
/s/ KPMG LLP
KPMG LLP
Denver, Colorado
August 10, 1999
