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 14, 1998
PRIMEDIA Inc.
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(Exact name of registrant as specified in its charter)
Delaware 1-11106 13-3647573
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
745 Fifth Avenue, New York, New York 10151
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 745-0100
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<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) On August 14, 1998, PRIMEDIA Holdings III Inc. ("Seller"), a
wholly-owned subsidiary of PRIMEDIA Inc. ("Company"), sold the stock of the
Daily Racing Form, Inc. ("DRF"), and its two wholly-owned subsidiaries, DRF
Finance, Inc. and Daily Racing Form of Canada, Ltd. (DRF, together with its
subsidiaries, "The Daily Racing Form") to DRF Acquisition LLC. The total
consideration received by Seller for The Daily Racing Form was $40,125,000.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro forma financial information.
--------------------------------
An introduction to the pro forma consolidated financial statements is attached
as page 3. The unaudited pro forma statements of consolidated operations for the
six months ended June 30, 1998 and for the year ended December 31, 1997 and an
unaudited pro forma consolidated balance sheet at June 30, 1998, along with a
description of all pro forma adjustments, are attached as pages 4 through 7.
<PAGE> 3
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
The unaudited pro forma statements of consolidated operations for the six months
ended June 30, 1998 and for the year ended December 31, 1997 give effect to the
disposition of The Daily Racing Form as if it had occurred on January 1, 1997.
The unaudited pro forma consolidated balance sheet at June 30, 1998 gives effect
to the disposition of The Daily Racing Form as if it had occurred on June 30,
1998.
The Company believes the accounting used for the pro forma adjustments provides
a reasonable basis on which to present the pro forma consolidated financial
data. The pro forma statements of consolidated operations and pro forma
consolidated balance sheet are unaudited and were derived by adjusting the
historical consolidated financial statements of the Company. THE UNAUDITED PRO
FORMA CONSOLIDATED STATEMENTS ARE PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND
SHOULD NOT BE CONSTRUED TO BE INDICATIVE OF THE COMPANY'S CONSOLIDATED RESULTS
OF OPERATIONS OR CONSOLIDATED FINANCIAL POSITION HAD THE TRANSACTION BEEN
CONSUMMATED ON THE DATES ASSUMED AND DO NOT PROJECT THE COMPANY'S CONSOLIDATED
RESULTS OF OPERATIONS OR CONSOLIDATED FINANCIAL POSITION FOR ANY FUTURE DATE OR
PERIOD.
The unaudited pro forma consolidated financial statements and accompanying notes
thereto should be read in conjunction with the historical consolidated financial
statements of the Company and the notes thereto included elsewhere in the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 and
in the Company's Annual Report on Form 10-K for the year ended December 31,
1997.
<PAGE> 4
PRIMEDIA INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA STATEMENT OF CONSOLIDATED OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Historical Adjustments Consolidated
------------ -------------- ----------------
Sales, net:
<S> <C> <C> <C>
Specialty Magazines $ 441,574 $ $ 441,574
Education 143,466 143,466
Information 149,996 (26,557) (1) 123,439
---------- --------- -------------
Total sales, net 735,036 (26,557) 708,479
Operating costs and expenses:
Cost of goods sold 170,624 (7,457) (1) 163,167
Marketing and selling 130,861 (773) (1) 130,088
Distribution, circulation and fulfillment 128,710 (3,761) (1) 124,949
Editorial 70,338 (4,692) (1) 65,646
Other general expenses 76,696 (6,007) (1) 70,689
Corporate administrative expenses 13,222 13,222
Depreciation and amortization of prepublication costs,
property and equipment 19,011 19,011
Gain on the sale of business, net and other (1,849) (1,849)
Amortization of intangible assets, excess of purchase
price over net assets acquired and other 74,727 74,727
---------- --------- -------------
Operating income (loss) 52,696 (3,867) 48,829
Other income (expense):
Interest expense (67,792) 1,431 (2) (66,361)
Amortization of deferred financing costs (1,585) (1,585)
Other, net (276) (276)
---------- --------- -------------
Net loss (16,957) (2,436) (19,393)
Preferred stock dividends:
Cash (27,546) (27,546)
Series B Preferred Stock redemption premium (9,141) (9,141)
---------- --------- -------------
Loss applicable to common shareholders $ (53,644) $ (2,436) $ (56,080)
========== ========= =============
Pro forma basic and diluted loss applicable to common
shareholders per common share $ (.40)
=============
Pro forma basic and diluted common shares outstanding 140,173,171
=============
</TABLE>
See notes to unaudited pro forma consolidated financial data.
<PAGE> 5
PRIMEDIA INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA STATEMENT OF CONSOLIDATED OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Historical Adjustments Consolidated
------------- --------------- ---------------
Sales, net (4):
<S> <C> <C> <C>
Specialty Magazines $ 759,591 $ $ 759,591
Education 434,160 434,160
Information 293,844 (56,399)(1) 237,445
------------- --------------- ---------------
Total sales, net 1,487,595 (56,399) 1,431,196
Operating costs and expenses:
Cost of goods sold 341,879 (15,204) (1) 326,675
Marketing and selling 271,351 (2,182) (1) 269,169
Distribution, circulation and fulfillment 262,151 (7,939) (1) 254,212
Editorial 120,952 (11,713) (1) 109,239
Other general expenses 163,705 (12,725) (1) 150,980
Corporate administrative expenses 25,545 25,545
Depreciation and amortization of prepublication costs,
property and equipment 37,334 (460) (1) 36,874
Provision for loss on the sales of businesses and other,
net 138,640 (122,670) (1) 15,970
Amortization of intangible assets, excess of purchase
price over net assets acquired and other 146,831 (1,247) (1) 145,584
------------- --------------- ---------------
Operating income (loss) (20,793) 117,741 96,948
Other income (expense):
Interest expense (136,625) 3,152 (2) (133,473)
Amortization of deferred financing costs (3,071) (3,071)
Other, net 1,365 1,365
------------- --------------- ---------------
Income (loss) before income tax benefit and extraordinary
charge (159,124) 120,893 (38,231)
Income tax benefit - carryback claim 1,685 1,685
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Income (loss) before extraordinary charge (157,439) 120,893 (36,546)
Extraordinary charge - extinguishment of debt (15,401) 15,401 (3) -
------------- --------------- ---------------
Net income (loss) (172,840) 136,294 (36,546)
Preferred stock dividends:
Cash (45,305) (45,305)
Non-cash dividends in kind (4,451) (4,451)
Senior Preferred Stock redemption premium (5,800) (5,800)
Dividend accrual (9,517) (9,517)
------------- --------------- ---------------
Income (loss) applicable to common shareholders $ (237,913) $ 136,294 $ (101,619)
============= =============== ===============
Pro forma basic and diluted loss applicable to common
shareholders per common share $ (.79)
===============
Pro forma basic and diluted common shares outstanding 129,304,900
===============
</TABLE>
See notes to unaudited pro forma consolidated financial data.
<PAGE> 6
PRIMEDIA INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AT JUNE 30, 1998
(dollars in thousands)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
ASSETS Historical Adjustments Consolidated
------------- ---------------- ---------------
Current assets:
<S> <C> <C> <C>
Cash and cash equivalents $ 20,863 $ $ 20,863
Accounts receivable, net 206,211 206,211
Inventories, net 36,786 36,786
Net assets held for sale 23,900 (23,900) (1) -
Prepaid expenses and other 38,489 38,489
------------- -------------- ---------------
Total current assets 326,249 (23,900) 302,349
Property and equipment, net 121,135 121,135
Other intangible assets, net 781,792 781,792
Excess of purchase price over net assets acquired, net 1,261,008 1,261,008
Deferred income tax asset, net 176,200 176,200
Other non-current assets 112,824 112,824
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$ 2,779,208 $ (23,900) $ 2,755,308
============= ============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Accounts payable $ 76,832 $ $ 76,832
Accrued interest payable 21,462 21,462
Accrued expenses and other 201,615 201,615
Deferred revenues 170,506 170,506
Current maturities of long-term debt 22,167 22,167
------------- ---------------
Total current liabilities 492,582 492,582
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Long-term debt 1,689,526 (40,125) (2) 1,649,401
------------- -------------- ---------------
Other non-current liabilities 61,637 61,637
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Exchangeable preferred stock 557,448 557,448
------------- ---------------
Common stock subject to redemption 4,274 4,274
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Shareholders' equity (deficiency):
Common stock 1,451 1,451
Additional paid-in capital 978,215 978,215
Accumulated deficit (982,655) 16,225 (5) (966,430)
Accumulated other comprehensive loss (1,557) (1,557)
Common stock in treasury, at cost (21,713) (21,713)
------------- -------------- ---------------
Total shareholders' equity (deficiency) (26,259) 16,225 (10,034)
------------- -------------- ---------------
$ 2,779,208 $ (23,900) $ 2,755,308
============= ============== ===============
</TABLE>
See notes to unaudited pro forma consolidated financial data.
<PAGE> 7
Notes to Unaudited Pro Forma Consolidated Financial Data
(dollars in thousands)
(1) Represents the elimination of the results of operations and financial
position of The Daily Racing Form.
(2) Reflects the reduction in long-term debt and related interest expense as a
result of the reduced level of borrowings under the bank credit facilities from
the application of the proceeds on the disposition of The Daily Racing Form. The
adjustments to interest expense reflect weighted average interest rates of 6.83%
and 7.11% for the six months ended June 30, 1998 and for the year ended December
31, 1997, respectively.
(3) Reflects the elimination of the extraordinary charge on the extinguishment
of debt.
(4) In the first quarter of 1998, the Company reclassified certain businesses
from the information segment to the education and specialty magazines segments.
Accordingly, sales for the year ended December 31, 1997 have been restated to
reflect the new classifications.
(5) Reflects the excess of the proceeds over the carrying value of The Daily
Racing Form.
<PAGE> 8
SIGNATURE
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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.
PRIMEDIA Inc.
(Registrant)
Date: August 31, 1998 /s/ Beverly C. Chell
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(Signature)
Vice Chairman, Secretary and Director
