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As filed with the Securities and Exchange Commission on April 20, 1999
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): April 20, 1999
PENTON MEDIA, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 001-14337 36-2875386
(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
1100 Superior Avenue
Cleveland, Ohio 44114
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 216-696-7000
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Item 5. Other Events
RECENT DEVELOPMENTS
The following reflect recent developments involving Penton Media, Inc.,
a Delaware corporation ("Penton").
Press Release
Penton issued a press release on April 20, 1999 describing its first
quarter results for fiscal 1999. A complete copy of such press release is
attached hereto as exhibit 99.1.
Proposed Acquisition
On March 23, 1999, Penton entered into a non-binding letter of intent
to acquire a business media company. The letter of intent provides for an
aggregate purchase price of $80.0 million, to be paid at closing half in cash
and half in Penton common stock, par value $0.01 per share ("Common Stock"),
based on the price at which Penton sells Common Stock pursuant to its proposed
public offering of Common Stock on a registration statement on Form S-3, as
filed with the Securities and Exchange Commission on April 1, 1999 as amended by
Amendment No. 1 filed on April 19, 1999 (the "Public Offering"), and a
contingent payment of up to $15.0 million. The contingent payment, if earned,
would be paid out over the three years following the closing of the acquisition
and would be earned if the operations of the business exceed specified targets
in each of these years. Penton cannot assure that the proposed acquisition will
be consummated. The proposed transaction is subject to a number of conditions,
including, among others, the satisfactory completion of due diligence,
negotiation of definitive documentation, approval by Penton's Board of
Directors, the completion of Penton's Public Offering and obtaining necessary
consents from Penton's lenders and other third parties.
Ownership Interest
Penton currently owns a 19.0% interest in internet.com LLC, a Delaware
limited liability company ("internet.com"). Penton also owns a warrant to
increase its ownership percentage to 27.4%. The warrant will expire upon
completion of internet.com's initial public offering, but Penton intends to
exercise the warrant prior to its expiration. Internet.com filed a registration
statement with the Securities and Exchange Commission for its proposed initial
public offering on April 15, 1999. If internet.com completes its offering,
Penton's ownership percentage would decrease. However, Penton believes that
after the exercise of the warrant and completion of internet.com's initial
public offering, Penton will own at least 20% of internet.com. If Penton owns
20% or more of internet.com, Penton will be required to include in its results
of operations its proportionate share of internet.com's income or loss.
Internet.com has incurred substantial losses since its inception and expects to
incur losses for the foreseeable future. The inclusion of Penton's
proportionate share of internet.com's losses in Penton's results of operations
could materially adversely affect Penton's future results of operations. Any
losses that Penton would be required to include in Penton's results of
operations would be limited to Penton's approximately $4.5 million investment
in internet.com. If, however, Penton's ownership interest decreases to less
than 20%, Penton would be required to value its investment at the market price.
This would not affect Penton's results of operations because any changes in
market value would be recorded as a component of stockholders' equity. However,
fluctuations in the market price could cause Penton's balance sheet to
fluctuate significantly from period to period.
Legal Matters
A former stockholder of Mecklermedia Corporation, a Delaware
corporation ("Mecklermedia"), Ariff Aldina, filed suit against Penton in the
Federal District Court in the Southern District of New York for an unspecified
amount, as well as other relief. In addition, the plaintiff indicated that he
seeks to represent a class of former Mecklermedia stockholders. The plaintiff
claims that Penton violated the federal securities laws by selling Alan Meckler
an 80.1% interest in internet.com for what the plaintiff alleges was a
below-market price, thereby purportedly giving to Mr. Meckler more consideration
for his common stock in Mecklermedia than was paid to other stockholders of
Mecklermedia, during the tender offer. The defendants filed a motion to dismiss,
which the court indicated orally on April 9, 1999 will be denied. Penton will
answer the complaint by April 30, 1999. Penton believes it has meritorious
defenses to this
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action and intends to vigorously defend it. Penton cannot assure, however, that
the outcome of this suit will be favorable to Penton or that it will not have a
material adverse effect on Penton's business, financial condition or results of
operations.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Businesses Acquired.
Not Applicable.
(b) Pro Forma Financial Information.
Not Applicable.
(c) Exhibits.
99.1 Press release issued by Penton on April 20, 1999.
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SIGNATURES
----------
Pursuant to the requirements of the Securities and Exchange Act of
1934, Penton has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PENTON MEDIA, INC.
By: /s/ Preston L. Vice
-------------------
Preston L. Vice
Senior Vice President
Date: April 20, 1999
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INDEX TO EXHIBITS
Exhibit Description of Exhibit
- ------- ----------------------
99.1 Press release issued by Penton on April 20, 1999
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Exhibit 99.1
------------
PENTON MEDIA REPORTS FIRST QUARTER RESULTS
CLEVELAND, OH --April 20, 1999--Penton Media, Inc. (NYSE:PME) today
announced revenues of $58.3 million for the first quarter ended March 31, 1999,
an 11.0% increase over revenues of $52.5 million in the same period last year.
The revenue improvement was related to recent acquisitions in the Company's
Media Services segment, which publishes specialized business publications and
produces trade shows and conferences.
The Media Services segment accounted for 90.0% of total revenues for the
quarter. Revenues for the segment increased 12.6% over the first quarter of last
year. Publishing revenues grew 5.0% to $45.3 million. Trade shows and
conferences revenues were $7.2 million, a 106.8% increase compared with $3.5
million in the same year-ago period.
EBITDA (earnings before interest, taxes, depreciation and amortization) of
$4.9 million for the quarter represented a 26.4% decrease compared with EBITDA
of $6.7 million in the same 1998 quarter. EBITDA margin was 8.4% for the quarter
compared with 12.8% in the same period last year. The declines were primarily
attributable to period costs associated with trade shows and conferences serving
the Internet industry, which Penton acquired in November 1998. The revenues for
these shows and conferences are not recorded until the events are held later in
the year.
The Company reported a net loss for the quarter of $2.8 million, or a loss
of $0.12 per share, compared with net income of $2.3 million, or $0.11 per
share, in the first quarter of 1998. The lower net income was primarily
attributable to period costs associated with the recently acquired Internet
trade shows and conferences, and increased interest and amortization expense
compared with last year. The interest and amortization increases were related to
acquisitions completed in 1997 and 1998. The amortization increase also was due
to the shortening of the period over which the Company amortizes goodwill
arising from trade show acquisitions, which the Company reported in last
quarter's earnings release.
"We finished the quarter in line with our expectations," said Thomas L.
Kemp, Penton's chief executive officer. "As we have indicated in the past, our
expanded trade show portfolio has altered the seasonality of our business
because of the concentration of shows in the second and fourth quarters.
Accordingly, going forward, we expect those quarters to be our strongest revenue
and profit periods, coinciding with the timing of our largest trade shows."
On April 19, 1999, the Company filed an amended registration
statement with the Securities and Exchange Commission with respect to
an offering of 6,250,000 shares of Penton common stock on behalf of
the Company and 1,528,000 shares being offered by certain selling
shareholders. The offering is being made through an underwriting group
led by Donaldson, Lufkin & Jenrette and Salomon Smith Barney Inc. as
joint book-running managers, and Bear, Stearns & Co. Inc. and Merrill
Lynch & Co. as co-managers.
Penton Media, Inc. is a leading business media company that publishes
magazines and electronic information products, produces trade shows and
conferences, and provides marketing and business
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development products and services, including direct mail lists, research and
custom publishing. Founded in 1892, Penton Media serves the design/engineering;
electronics; Internet; food/retail/hospitality; government/compliance; leisure;
management; manufacturing; mechanical systems/construction; and supply
chain/aviation markets. Penton generated revenues of $233.1 million in 1998.
A registration statement relating to the above-noted securities has been
filed with the Securities and Exchange Commission but has not yet become
effective. These securities may not be sold nor may offers to buy be accepted
prior to the time the registration statement becomes effective. This press
release shall not constitute an offer to sell or the solicitation of an offer to
buy nor shall there be any sale of these securities in any state in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state.
Statements in this document that are not historical in nature are
forward-looking statements. Although the Company believes that its expectations
are based upon reasonable assumptions within the bounds of its knowledge of its
business, there can be no assurance that the Company's financial goals will be
realized. Numerous factors may affect the Company's actual results and may cause
results to differ materially from those expressed in forward-looking statements
made by or on behalf of the Company. Such factors are detailed in reports filed
with the Securities and Exchange Commission.
PENTON MEDIA, INC.
CONSOLIDATED STATEMENT OF INCOME
(All Amounts in thousands except per share amounts)
Three Months Ended
March 31,
1999 1998
-------- --------
REVENUES $58,296 $52,485
-------- --------
OPERATING EXPENSES:
Editorial, production and circulation 27,141 23,322
Selling, general and administrative 26,230 22,471
Depreciation and amortization 7,233 2,027
-------- --------
60,604 47,820
-------- --------
OPERATING INCOME (LOSS) (2,308) 4,665
-------- --------
NON-OPERATING INCOME (EXPENSE)
Interest expense (6,384) (662)
Miscellaneous, net 36 3
-------- --------
(6,348) (659)
-------- --------
INCOME (LOSS) BEFORE INCOME TAXES (8,656) 4,006
Provision (benefit) for Income Taxes (5,820) 1,666
-------- --------
NET INCOME (LOSS) $ (2,836) $ 2,340
======== ========
EBITDA $ 4,925 $ 6,692
======== ========
NET INCOME (LOSS) PER SHARE BASIC AND DILUTED ($0.12) $0.11
======== ========
AVERAGE NUMBER OF SHARES
OUTSTANDING (in thousands) 22,782 21,240
======== ========
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PENTON MEDIA, INC.
SUPPLEMENTAL INFORMATION
REVENUE AND EBITDA - BY BUSINESS SEGMENT
(All Amounts in thousands)
(Unaudited)
Three Months Ended
March 31,
----------------------
1999 1998
----------------------
Gross Revenues
Media Services
Publishing & other $ 45,273 $ 43,127
Trade shows & conferences 7,245 3,503
----------------------
Subtotal - Media Services 52,518 46,630
Printing 9,101 9,694
Direct Mail 2,920 2,866
Intersegment elimination (6,243) (6,705)
----------------------
Total Net Revenues $ 58,296 $ 52,485
======================
EBITDA
Media Services
Publishing & other $ 8,920 $ 9,689
Trade shows & conferences (446) 200
----------------------
Subtotal - Media Services 8,474 9,889
Printing 915 1,027
Direct Mail 49 (80)
Corporate (previously in Media Services)(4,513) (4,144)
----------------------
Total EBITDA $ 4,925 $ 6,692
======================
