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) November 17, 1999
Commission file number: 1-11106
PRIMEDIA Inc.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3647573
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
745 Fifth Avenue, New York, New York
(Address of principal executive offices)
10151
(Zip Code)
Registrant's telephone number, including area code (212) 745-0100
--------------
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) On November 17, 1999, PRIMEDIA Inc. (the "Company"), completed the sale of
stock of the Supplemental Education Group ("SEG") to WRC Media, Inc. for
$395,000,000 in cash. SEG is comprised of Weekly Reader Corporation ("WRC"),
PRIMEDIA Reference, Inc. ("Reference"), American Guidance Service, Inc.("AGS")
and their respective subsidiaries. The Company retained a 5.1% equity interest
in SEG.
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
nine months ended September 30, 1999 and for the year ended December 31, 1998
and an unaudited pro forma consolidated balance sheet at September 30, 1999,
along with a description of all pro forma adjustments, are attached as pages 4
through 7.
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
The unaudited pro forma statements of consolidated operations for the nine
months ended September 30, 1999 and for the year ended December 31, 1998, give
effect to the disposition of SEG as if it had occurred on January 1, 1998. The
unaudited pro forma consolidated balance sheet at September 30, 1999 gives
effect to the disposition of SEG as if it had occurred on September 30, 1999.
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 September 30, 1999
and in the Company's Annual Report on Form 10-K for the year ended December 31,
1998.
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA STATEMENT OF CONSOLIDATED OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Historical Adjustments Consolidated
----------------- --------------- -------------------
<S> <C> <C> <C>
Sales, net: $ 1,260,454 $ (101,389) (1) $ 1,159,065
Operating costs and expenses:
Cost of goods sold 289,487 (26,633) (1) 262,854
Marketing and selling 232,236 (18,114) (1) 214,122
Distribution, circulation and fulfillment 224,319 (6,625) (1) 217,694
Editorial 108,632 (2,669) (1) 105,963
Other general expenses 139,467 (16,553) (1) 122,914
Corporate administrative expenses 22,101 22,101
Depreciation of property and equipment 36,350 (490) (1) 35,860
Provision for product line closures 22,000 22,000
Amortization of intangible assets, excess of
purchase price over net assets acquired and other 126,676 (7,579) (1) 119,097
-------------------- ----------- --------------------
Operating income 59,186 (22,726) 36,460
Other expenses:
Interest expense (123,965) 20,145 (2) (103,820)
Amortization of deferred financing costs (2,426) (2,426)
Other, net (770) 582 (1) (188)
-------------------- ----------- --------------------
Net loss (67,975) (1,999) (69,974)
Preferred stock dividends:
Cash (39,796) (39,796)
-------------------- ----------- --------------------
Loss applicable to common shareholders $ (107,771) $ (1,999) $ (109,770)
==================== =========== ====================
Basic and diluted loss applicable to common
shareholders per common share $ (0.74) $ (0.76)
==================== ====================
Basic and diluted common shares outstanding 145,008,251 145,008,251
==================== ====================
</TABLE>
See notes to unaudited pro forma consolidated financial data.
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA STATEMENT OF CONSOLIDATED OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Historical Adjustments Consolidated
----------------- ------------------ -------------------
<S> <C> <C> <C>
Sales, net: $ 1,573,573 $ (117,764) (1) $ 1,455,809
Operating costs and expenses:
Cost of goods sold 367,466 (29,900) (1) 337,566
Marketing and selling 280,323 (20,715) (1) 259,608
Distribution, circulation and fulfillment 260,428 (10,871) (1) 249,557
Editorial 145,235 (9,075) (1) 136,160
Other general expenses 161,887 (17,439) (1) 144,448
Corporate administrative expenses 28,324 28,324
Depreciation of property and equipment 42,214 (1,236) (1) 40,978
Gain on the sales of businesses, net and other (7,216) (7,216)
Amortization of intangible assets, excess of
purchase price over net assets acquired and other 176,755 (18,302) (1) 158,453
--------------------- --------------- -----------------
Operating income 118,157 (10,226) 107,931
Other expenses:
Interest expense (144,442) 27,018 (2) (117,424)
Amortization of deferred financing costs (3,046) (3,046)
Other, net (8,405) 184 (1) (8,221)
--------------------- --------------- ------------------
Net loss (37,736) 16,976 (20,760)
Preferred stock dividends:
Cash (54,144) (54,144)
Preferred stock redemption premium (9,141) (9,141)
--------------------- --------------- ------------------
Loss applicable to common shareholders $ (101,021) $ 16,976 $ (84,045)
===================== =============== ==================
Basic and diluted loss applicable to common
shareholders per common share $ (0.71) $ (0.59)
===================== ==================
Basic and diluted common shares outstanding 142,529,024 142,529,024
===================== ==================
</TABLE>
See notes to unaudited pro forma consolidated financial data.
<PAGE>
PRIMEDIA INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AT SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Historical Adjustments Consolidated
-------------- --------------- --------------
ASSETS
Current assets:
<S> <C> <C> <C>
Cash and cash equivalents $ 30,049 $ $ 30,049
Accounts receivable, net 229,718 229,718
Inventories, net 33,256 33,256
Net assets held for sale 161,530 (161,530) (1) -
Prepaid expenses and other 44,202 44,202
----------------- ------------------ ------------------
Total current assets 498,755 (161,530) 337,225
Property and equipment, net 138,702 138,702
Other intangible assets, net 628,060 628,060
Excess of purchase price over net assets acquired, net 1,494,526 1,494,526
Deferred income tax asset, net 176,200 176,200
Other non-current assets 118,281 5,800 (3) 124,081
----------------- ------------------ ------------------
$ 3,054,524 $ (155,730) $ 2,898,794
================= ================== ==================
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Accounts payable $ 78,168 $ $ 78,168
Accrued interest payable 22,437 22,437
Accrued expenses and other 248,862 18,500 (4) 267,362
Deferred revenues 184,720 184,720
Current portion of long-term debt 23,529 23,529
----------------- ------------------ ------------------
Total current liabilities 557,716 18,500 576,216
----------------- ------------------ ------------------
Long-term debt 2,098,888 (395,000) (2) 1,703,888
----------------- ------------------ ------------------
Other non-current liabilities 32,248 32,248
----------------- ------------------ ------------------
Exchangeable preferred stock 558,969 558,969
----------------- ------------------ ------------------
Common stock subject to redemption 1,112 1,112
----------------- ------------------ ------------------
Shareholders' equity (deficiency):
Common stock 1,482 1,482
Additional paid-in capital 986,320 986,320
Accumulated deficit (1,137,803) 220,770 (5) (917,033)
Accumulated other comprehensive loss (1,609) (1,609)
Common stock in treasury, at cost (42,799) (42,799)
----------------- ------------------ ------------------
Total shareholders' equity (deficiency) (194,409) 220,770 26,361
----------------- ------------------ ------------------
$ 3,054,524 $ (155,730) $ 2,898,794
================= ================== ==================
</TABLE>
See notes to unaudited pro forma consolidated financial data.
<PAGE>
PRIMEDIA Inc. and Subsidiaries
Notes to Unaudited Pro Forma Consolidated Financial Data
(dollars in thousands)
(1) Represents the elimination of the results of operations and financial
position of SEG.
(2) Reflects the reduction in long-term debt and related interest expense as a
result of the reduced level of borrowings under the credit facilities from
the application of the cash proceeds from the disposition of SEG. The
adjustments to interest expense reflect weighted average interest rates of
6.80% and 6.84% for the nine months ended September 30, 1999 and for the
year ended December 31, 1998, respectively.
(3) Represents the Company's retained interest in SEG.
(4) Represents accrued estimated selling expenses and current income taxes
associated with the disposition of SEG. It is anticipated that these amounts
will be paid using cash flows from operations.
(5) Reflects the adjustment to accumulated deficit to account for the
disposition of SEG.
<PAGE>
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.
PRIMEDIA Inc.
(Registrant)
Date: December 2 ,1999 /s/ Thomas S. Rogers
--------------------- -------------------------------------------
(Signature)
Chairman and Chief Executive Officer
(Principal Executive Officer)
Date: December 2 ,1999 /s/ Robert J. Sforzo
---------------------- -------------------------------------------
(Signature)
Vice President and Controller
(Principal Accounting Officer)
