Exhibit 99.1
PRIMEDIA Inc. and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Financial Information
On January 31, 2007 PRIMEDIA Inc. (“PRIMEDIA”) completed the sale of its hunting, shooting and fishing titles (“Outdoors” group), part of the Enthusiast Media segment, to Intermedia Outdoor, Inc. for approximately $170.0 million in cash, which will result in an estimated gain of approximately $75.5 million, to be recorded during the first quarter of 2007. Net proceeds from the sale will be used primarily to repay PRIMEDIA’s outstanding indebtedness. The estimated annual reductions in interest expense will be approximately $15.0 million.
In the third quarter of 2006, the Company completed the sale of its Gems group (“Gems”), part of the Enthusiast Media segment.
The following unaudited pro forma condensed consolidated financial information has been prepared based on the historical consolidated financial statements of PRIMEDIA after giving effect to the sales of Outdoors and Gems, and the assumptions and adjustments described in the accompanying notes to these unaudited pro forma condensed consolidated financial information.
PRIMEDIA’s unaudited pro forma statements of condensed consolidated operations give effect to the disposition of Outdoors and Gems as if they had occurred on January 1, 2003, and the unaudited pro forma condensed consolidated balance sheet gives effect to the disposition of Outdoors as if it had occurred on September 30, 2006. PRIMEDIA’s unaudited pro forma statements of condensed consolidated operations for the years ended December 31, 2005, 2004 and 2003 also give effect to the sale of Gems, which was disposed of during the third quarter of 2006. The unaudited pro forma statements of condensed consolidated operations were derived by adjusting the historical statements of consolidated operations of PRIMEDIA for the removal of revenues and expenses associated with Outdoors and Gems and the pro forma adjustments described in the footnotes.
PRIMEDIA will classify the results of operations of Outdoors as a discontinued operation in its Annual Report on Form 10-K for the year ended December 31, 2006, in accordance with Statement of Financial Accounting Standard No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”.
The unaudited pro forma condensed consolidated financial information, including the notes thereto, is qualified in its entirety by reference to, and should be read in conjunction with the audited historical consolidated financial statements and notes thereto included in PRIMEDIA’s Annual Report on Form 10-K for the year ended December 31, 2005 and unaudited Quarterly Report on Form 10-Q for the quarter ended September 30, 2006.
The unaudited pro forma condensed consolidated financial information is provided for illustrative purposes only and is not necessarily indicative of the consolidated financial position or results of consolidated operations that would have actually been reported had the dispositions occurred on January 1, 2003 for statements of condensed consolidated operations purposes and as of September 30, 2006 for condensed consolidated balance sheet purposes, nor is it necessarily indicative of PRIMEDIA’s future consolidated financial position or consolidated results of operations. The unaudited pro forma condensed consolidated financial information is based upon estimates and assumptions. These estimates and assumptions are preliminary and have been made solely for the purposes of developing this pro forma information.
1
PRIMEDIA Inc. and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Balance Sheet
September 30, 2006
(in thousands, except share and per share amounts)
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| Pro Forma |
| Pro Forma |
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| PRIMEDIA Inc. |
| Outdoors |
| Adjustments |
| PRIMEDIA Inc. |
| ||||
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| (h) |
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ASSETS |
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Current assets: |
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|
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|
| ||||
Cash and cash equivalents |
| $ | 71,832 |
| $ | — |
| $ | 170,000 | (a) | $ | 241,832 |
|
Accounts receivable, net |
| 132,358 |
| 12,511 |
| — |
| 119,847 |
| ||||
Inventories |
| 16,013 |
| 1,279 |
| — |
| 14,734 |
| ||||
Prepaid expenses and other |
| 41,520 |
| 1,867 |
| — |
| 39,653 |
| ||||
Total current assets |
| 261,723 |
| 15,657 |
| 170,000 |
| 416,066 |
| ||||
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|
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|
|
|
|
|
| ||||
Property and equipment, net |
| 54,603 |
| 3,185 |
| — |
| 51,418 |
| ||||
Intangible assets, net |
| 224,731 |
| 20,302 |
| — |
| 204,429 |
| ||||
Goodwill |
| 774,101 |
| 95,678 |
| — |
| 678,423 |
| ||||
Other non-current assets |
| 33,053 |
| 2,096 |
| — |
| 30,957 |
| ||||
Total Assets |
| $ | 1,348,211 |
| $ | 136,918 |
| $ | 170,000 |
| $ | 1,381,293 |
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LIABILITIES AND SHAREHOLDERS’ DEFICIENCY |
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Current liabilities: |
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Accounts payable |
| $ | 49,683 |
| $ | 6,105 |
| $ | — |
| $ | 43,578 |
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Accrued expenses and other |
| 141,554 |
| 2,817 |
| 9,186 | (b) |
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| ||||
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|
| 523 | (c) | 148,446 |
| ||||
Deferred revenues |
| 108,274 |
| 26,935 |
| — |
| 81,339 |
| ||||
Current maturities of long-term debt |
| 11,325 |
| — |
| — |
| 11,325 |
| ||||
Total current liabilities |
| 310,836 |
| 35,857 |
| 9,709 |
| 284,688 |
| ||||
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Long-term debt |
| 1,370,339 |
| — |
| — |
| 1,370,339 |
| ||||
Deferred revenues |
| 13,175 |
| — |
| — |
| 13,175 |
| ||||
Deferred income taxes |
| 88,124 |
| 16,223 |
| — |
| 71,901 |
| ||||
Other non-current liabilities |
| 74,809 |
| 2 |
| — |
| 74,807 |
| ||||
Total Liabilities |
| 1,857,283 |
| 52,082 |
| 9,709 |
| 1,814,910 |
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Commitments and contingencies |
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Shareholders’ deficiency: |
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Common stock ($.01 par value, 350,000,000 shares authorized at September 30, 2006; 272,497,779 shares issued and 264,055,370 shares outstanding at September 30, 2006) |
| 2,725 |
| — |
| — |
| 2,725 |
| ||||
Additional paid-in capital (including warrants of $31,690 at September 30, 2006) |
| 2,366,126 |
| — |
| — |
| 2,366,126 |
| ||||
Accumulated deficit |
| (2,802,046 | ) | 84,836 |
| 75,455 | (e) |
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| ||||
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|
| 84,836 | (f) | (2,726,591 | ) | ||||
Common stock in treasury, at cost (8,442,409 shares at September 30, 2006) |
| (75,877 | ) | — |
| — |
| (75,877 | ) | ||||
Total Shareholders’ Deficiency |
| (509,072 | ) | 84,836 |
| 160,291 |
| (433,617 | ) | ||||
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Total Liabilities and Shareholders’ Deficiency |
| $ | 1,348,211 |
| $ | 136,918 |
| $ | 170,000 |
| $ | 1,381,293 |
|
See accompanying notes to unaudited pro forma condensed consolidated financial information.
2
PRIMEDIA Inc. and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Nine Months Ended September 30, 2006
(in thousands, except share and per share amounts)
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| Pro Forma |
| |||
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| PRIMEDIA Inc. |
| Outdoors |
| PRIMEDIA Inc. |
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| (g) |
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Revenues, net: |
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| |||
Advertising |
| $ | 474,786 |
| $ | 34,481 |
| $ | 440,305 |
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Circulation |
| 149,709 |
| 27,286 |
| 122,423 |
| |||
Other |
| 127,552 |
| 11,155 |
| 116,397 |
| |||
Total revenues, net |
| 752,047 |
| 72,922 |
| 679,125 |
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Operating costs and expenses: |
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Cost of goods sold (exclusive of depreciation and amortization of property and equipment) |
| 176,788 |
| 20,617 |
| 156,171 |
| |||
Marketing and selling |
| 140,767 |
| 14,700 |
| 126,067 |
| |||
Distribution, circulation and fulfillment |
| 145,062 |
| 12,622 |
| 132,440 |
| |||
Editorial |
| 51,670 |
| 7,736 |
| 43,934 |
| |||
Other general expenses |
| 94,977 |
| 1,321 |
| 93,656 |
| |||
Corporate administrative expenses (including non-cash compensation) |
| 23,452 |
| — |
| 23,452 |
| |||
Depreciation and amortization of property and equipment |
| 21,840 |
| 535 |
| 21,305 |
| |||
Amortization of intangible assets and other |
| 9,570 |
| 17 |
| 9,553 |
| |||
Provision for severance, closures and restructuring-related costs |
| 2,208 |
| — |
| 2,208 |
| |||
Loss on sale of businesses and other, net |
| 28 |
| — |
| 28 |
| |||
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Operating income |
| 85,685 |
| 15,374 |
| 70,311 |
| |||
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Other income (expense): |
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Interest expense |
| (85,855 | ) | (142 | ) | (85,713 | ) | |||
Amortization of deferred financing costs |
| (1,946 | ) | — |
| (1,946 | ) | |||
Other income, net |
| 1,102 |
| — |
| 1,102 |
| |||
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Income (loss) from continuing operations before provision for income taxes |
| (1,014 | ) | 15,232 |
| (16,246 | ) | |||
(Provision) benefit for income taxes |
| (7,137 | ) | (7,241 | )(d) | 104 |
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Income (loss) from continuing operations |
| $ | (8,151 | ) | $ | 7,991 |
| $ | (16,142 | ) |
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Basic and diluted loss per common share from continuing operations |
| $ | (0.03 | ) |
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| $ | (0.06 | ) | |
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Basic and diluted common shares outstanding (weighted average) |
| 263,923,378 |
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|
| 263,923,378 |
| |||
See accompanying notes to unaudited pro forma condensed consolidated financial information.
3
PRIMEDIA Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 2005
(in thousands, except share and per share amounts)
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| Pro Forma |
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| PRIMEDIA Inc. |
| Gems |
| Outdoors |
| PRIMEDIA Inc. |
| ||||
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| (g) |
| (g) |
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Revenues, net: |
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Advertising |
| $ | 638,241 |
| $ | 2,967 |
| $ | 43,180 |
| $ | 592,094 |
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Circulation |
| 204,429 |
| 2,671 |
| 37,633 |
| 164,125 |
| ||||
Other |
| 147,901 |
| 989 |
| 15,524 |
| 131,388 |
| ||||
Total revenues, net |
| 990,571 |
| 6,627 |
| 96,337 |
| 887,607 |
| ||||
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Operating costs and expenses: |
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|
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Cost of goods sold (exclusive of depreciation and amortization of property and equipment) |
| 217,387 |
| 1,859 |
| 26,556 |
| 188,972 |
| ||||
Marketing and selling |
| 186,352 |
| 1,112 |
| 18,875 |
| 166,365 |
| ||||
Distribution, circulation and fulfillment |
| 189,712 |
| 846 |
| 16,293 |
| 172,573 |
| ||||
Editorial |
| 69,546 |
| 993 |
| 9,917 |
| 58,636 |
| ||||
Other general expenses |
| 123,185 |
| 655 |
| 1,911 |
| 120,619 |
| ||||
Corporate administrative expenses (including non-cash compensation) |
| 33,717 |
| — |
| — |
| 33,717 |
| ||||
Depreciation and amortization of property and equipment |
| 31,810 |
| — |
| 571 |
| 31,239 |
| ||||
Amortization of intangible assets and other |
| 19,194 |
| 22 |
| 33 |
| 19,139 |
| ||||
Severance related to separated senior executives (including non-cash compensation) |
| 1,775 |
| — |
| — |
| 1,775 |
| ||||
Provision for severance, closures and restructuring-related costs |
| 1,815 |
| — |
| — |
| 1,815 |
| ||||
Gain on sale of businesses and other, net |
| (209 | ) | — |
| — |
| (209 | ) | ||||
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| ||||
Operating income |
| 116,287 |
| 1,140 |
| 22,181 |
| 92,966 |
| ||||
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Other expense: |
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Interest expense |
| (130,525 | ) | — |
| (176 | ) | (130,349 | ) | ||||
Interest on shares subject to mandatory redemption |
| (24,203 | ) | — |
| — |
| (24,203 | ) | ||||
Amortization of deferred financing costs |
| (4,291 | ) | — |
| — |
| (4,291 | ) | ||||
Other expense, net |
| (13,564 | ) | — |
| (2 | ) | (13,562 | ) | ||||
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Income (loss) from continuing operations before provision for income taxes |
| (56,296 | ) | 1,140 |
| 22,003 |
| (79,439 | ) | ||||
(Provision) benefit for income taxes |
| (6,744 | ) | (502 | ) | (10,910) | (d) | 4,668 |
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Income (loss) from continuing operations |
| $ | (63,040 | ) | $ | 638 |
| $ | 11,093 |
| $ | (74,771 | ) |
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Basic and diluted loss per common share from continuing operations |
| $ | (0.24 | ) |
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|
|
| $ | (0.28 | ) | ||
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|
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Basic and diluted common shares outstanding (weighted average) |
| 263,031,543 |
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|
|
|
| 263,031,543 |
| ||||
See accompanying notes to unaudited pro forma condensed consolidated financial information.
4
PRIMEDIA Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
Year Ended December 31, 2004
(in thousands, except share and per share amounts)
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|
| Pro Forma |
| ||||
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| PRIMEDIA Inc. |
| Gems |
| Outdoors |
| PRIMEDIA Inc. |
| ||||
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| (g) |
| (g) |
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Revenues, net: |
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Advertising |
| $ | 628,381 |
| $ | 3,056 |
| $ | 43,566 |
| $ | 581,759 |
|
Circulation |
| 215,231 |
| 2,194 |
| 37,260 |
| 175,777 |
| ||||
Other |
| 126,184 |
| 537 |
| 13,443 |
| 112,204 |
| ||||
Total revenues, net |
| 969,796 |
| 5,787 |
| 94,269 |
| 869,740 |
| ||||
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Operating costs and expenses: |
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|
|
|
|
|
|
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Cost of goods sold (exclusive of depreciation and amortization of property and equipment) |
| 209,409 |
| 1,255 |
| 26,015 |
| 182,139 |
| ||||
Marketing and selling |
| 188,408 |
| 1,064 |
| 16,787 |
| 170,557 |
| ||||
Distribution, circulation and fulfillment |
| 176,146 |
| 635 |
| 13,930 |
| 161,581 |
| ||||
Editorial |
| 65,969 |
| 892 |
| 7,607 |
| 57,470 |
| ||||
Other general expenses |
| 112,489 |
| 725 |
| 8,738 |
| 103,026 |
| ||||
Corporate administrative expenses (including non -cash compensation) |
| 33,751 |
| — |
| — |
| 33,751 |
| ||||
Depreciation and amortization of property and equipment |
| 27,777 |
| — |
| 337 |
| 27,440 |
| ||||
Amortization of intangible assets and other |
| 18,752 |
| 32 |
| 704 |
| 18,016 |
| ||||
Severance related to separated senior executives |
| 658 |
| — |
| — |
| 658 |
| ||||
Provision for severance, closures and restructuring-related costs |
| 8,254 |
| — |
| — |
| 8,254 |
| ||||
Provision for unclaimed property |
| 3,439 |
| — |
| — |
| 3,439 |
| ||||
Gain on sale of businesses and other, net |
| (965 | ) | — |
| — |
| (965 | ) | ||||
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|
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|
|
|
|
| ||||
Operating income |
| 125,709 |
| 1,184 |
| 20,150 |
| 104,374 |
| ||||
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Other income (expense): |
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|
|
|
|
|
|
| ||||
Provision for impairment of investments |
| (804 | ) | — |
| — |
| (804 | ) | ||||
Interest expense |
| (123,902 | ) | — |
| (194 | ) | (123,708 | ) | ||||
Interest on shares subject to mandatory redemption |
| (43,780 | ) | — |
| — |
| (43,780 | ) | ||||
Amortization of deferred financing costs |
| (4,986 | ) | — |
| — |
| (4,986 | ) | ||||
Other income, net |
| 1,805 |
| — |
| — |
| 1,805 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income (loss) from continuing operations before provision for income taxes |
| (45,958 | ) | 1,184 |
| 19,957 |
| (67,099 | ) | ||||
Provision for income taxes |
| (13,907 | ) | (75 | ) | (2,177 | )(d) | (11,655 | ) | ||||
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|
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|
|
|
|
|
|
| ||||
Income (loss) from continuing operations |
| (59,865 | ) | 1,109 |
| 17,780 |
| (78,754 | ) | ||||
|
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|
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Preferred stock dividends |
| (13,505 | ) | — |
| — |
| (13,505 | ) | ||||
|
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| ||||
Income (loss) applicable to common shareholders |
| $ | (73,370 | ) | $ | 1,109 |
| $ | 17,780 |
| $ | 92,259 |
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|
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Basic and diluted loss per comon share from continuing operations applicable to common shareholders |
| $ | (0.28 | ) |
|
|
|
| $ | (0.35 | ) | ||
|
|
|
|
|
|
|
|
|
| ||||
Basic and diluted common shares outstanding (weighted average) |
| 260,488,000 |
|
|
|
|
| 260,488,000 |
| ||||
See accompanying notes to unaudited pro forma condensed consolidated financial information.
5
PRIMEDIA Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
Year Ended December 31, 2003
(in thousands, except share and per share amounts)
|
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|
| Pro Forma |
| ||||
|
| PRIMEDIA Inc. |
| Gems |
| Outdoors |
| PRIMEDIA Inc. |
| ||||
|
|
|
| (g) |
| (g) |
|
|
| ||||
Revenues, net: |
|
|
|
|
|
|
|
|
| ||||
Advertising |
| $ | 629,358 |
| $ | 2,844 |
| $ | 42,129 |
| $ | 584,385 |
|
Circulation |
| 225,677 |
| 1,672 |
| 37,524 |
| 186,481 |
| ||||
Other |
| 119,382 |
| 291 |
| 12,133 |
| 106,958 |
| ||||
Total revenues, net |
| 974,417 |
| 4,807 |
| 91,786 |
| 877,824 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating costs and expenses: |
|
|
|
|
|
|
|
|
| ||||
Cost of goods sold (exclusive of depreciation and amortization of property and equipment) |
| 214,495 |
| 954 |
| 24,771 |
| 188,770 |
| ||||
Marketing and selling |
| 179,517 |
| 1,035 |
| 17,850 |
| 160,632 |
| ||||
Distribution, circulation and fulfillment |
| 178,726 |
| 558 |
| 13,506 |
| 164,662 |
| ||||
Editorial |
| 62,553 |
| 802 |
| 7,516 |
| 54,235 |
| ||||
Other general expenses |
| 113,358 |
| 627 |
| 8,127 |
| 104,604 |
| ||||
Corporate administrative expenses (including non -cash compensation) |
| 39,276 |
| — |
| — |
| 39,276 |
| ||||
Depreciation and amortization of property and equipment |
| 29,823 |
| — |
| 240 |
| 29,583 |
| ||||
Amortization of intangible assets and other |
| 36,076 |
| 47 |
| 1,035 |
| 34,994 |
| ||||
Severance related to separated senior executives |
| 9,372 |
| — |
| — |
| 9,372 |
| ||||
Provision for severance, closures and restructuring-related costs |
| 7,124 |
| — |
| — |
| 7,124 |
| ||||
Gain on sale of businesses and other, net |
| (224 | ) | — |
| — |
| (224 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating income |
| 104,321 |
| 784 |
| 18,741 |
| 84,796 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Other income (expense): |
|
|
|
|
|
|
|
|
| ||||
Provision for impairment of investments |
| (8,975 | ) | — |
| — |
| (8,975 | ) | ||||
Interest expense |
| (123,022 | ) | (1 | ) | (315 | ) | (122,706 | ) | ||||
Interest on shares subject to mandatory redemption |
| (21,889 | ) | — |
| — |
| (21,889 | ) | ||||
Amortization of deferred financing costs |
| (3,462 | ) | — |
| — |
| (3,462 | ) | ||||
Other income (expense), net |
| (2,887 | ) | — |
| 18 |
| (2,905 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Income (loss) from continuing operations before provision for income taxes |
| (55,914 | ) | 783 |
| 18,444 |
| (75,141 | ) | ||||
Provision for income taxes |
| (3,370 | ) | (87 | ) | (2,488 | )(d) | (795 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Income (loss) from continuing operations |
| (59,284 | ) | 696 |
| 15,956 |
| (75,936 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Preferred stock dividends |
| (41,853 | ) | — |
| — |
| (41,853 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Income (loss) applicable to common shareholders |
| $ | (101,137 | ) | $ | 696 |
| $ | 15,956 |
| $ | (117,789 | ) |
|
|
|
|
|
|
|
|
|
| ||||
Basic and diluted loss per common share from continuing operations applicable to common shareholders |
| $ | (0.39 | ) |
|
|
|
| $ | (0.45 | ) | ||
|
|
|
|
|
|
|
|
|
| ||||
Basic and diluted common shares outstanding (weighted average) |
| 259,230,001 |
|
|
|
|
| 259,230,001 |
| ||||
See accompanying notes to unaudited pro forma condensed consolidated financial information.
6
PRIMEDIA Inc. and Subsidiaries
Notes to Unaudited Pro Forma Condensed Consolidated Financial Information
(amounts in thousands)
Note 1. Basis of Pro Forma Presentation
The unaudited pro forma condensed consolidated financial information included herein have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission.
The unaudited pro forma condensed consolidated financial information of PRIMEDIA has been prepared based on the historical balance sheets of PRIMEDIA and Outdoors as of September 30, 2006 and the historical statements of operations of PRIMEDIA and Outdoors for the nine months ended September 30, 2006 and the historical statements of operations of PRIMEDIA, Outdoors and Gems for each of the three years in the period ended December 31, 2005, after giving effect to the adjustments and assumptions described below.
PRIMEDIA employs accounting policies that are in accordance with accounting principles generally accepted in the United States of America. In management’s opinion, all material adjustments necessary to reflect fairly the pro forma financial position and unaudited pro forma results of operations of PRIMEDIA have been made.
The ongoing activity presented in this unaudited pro forma consolidated financial information represents PRIMEDIA’s assets, liabilities, revenues and expenses after giving effect to the divestitures of Outdoors and Gems.
Note 2. Disposition of Outdoors
On January 31, 2007 PRIMEDIA Inc. (“PRIMEDIA”) completed the sale of its hunting, shooting and fishing titles (“Outdoors” group), part of the Enthusiast Media segment, to Intermedia Outdoor, Inc. for approximately $170,000 in cash, which will result in an estimated gain of approximately $75,500, to be recorded during the first quarter of 2007. Net proceeds from the sale will be used primarily to repay PRIMEDIA’s outstanding indebtedness. The estimated annual reductions in interest expense will be approximately $15,000.
Note 3. Pro Forma Adjustments
The accompanying unaudited pro forma condensed consolidated financial information has been prepared as if the sale of Outdoors had occurred on September 30, 2006 for consolidated balance sheet purposes, and as if the sales of Outdoors and Gems had occurred on January 1, 2003 for statements of consolidated operations purposes, and reflect the following pro forma adjustments:
(a) To record receipt of $170,000 in cash for sale of Outdoors.
(b) To record the estimated cash taxes to be paid on the estimated gain arising from the sale of Outdoors.
(c) To record the estimated transaction fees payable incurred in connection with the sale of Outdoors, including legal fees and audit and accounting fees.
7
(d) Amount includes the required tax benefit on Pro forma PRIMEDIA loss from continuing operations in accordance with SFAS No. 109, “Accounting for Income Taxes”. PRIMEDIA records a deferred tax liability for the difference between the book and tax basis of indefinite lived intangible assets. The future reversal of these differences cannot be projected and therefore cannot be netted against the entity’s definite-lived deferred tax assets. PRIMEDIA records a provision for income taxes as a result of the change in the deferred tax liability from unamortized book basis of the indefinite lived intangible assets, pursuant to SFAS No. 141, “Business Combinations”, compared to the amortization of these assets for tax purposes.
For the nine months ended September 30, 2006 and the year ended December 31, 2005, pro forma PRIMEDIA has a loss from continuing operations, after consideration of tax permanent items. Pursuant to paragraph 140 of SFAS 109, it is appropriate to consider income from discontinued operations in the current year for purposes of allocating a tax benefit to a current-year loss from continuing operations. Accordingly, a tax benefit is included within the tax provision of Outdoors for these periods as a result of the application of SFAS No. 109, paragraph 140.
(e) To record estimated gain on sale of Outdoors, after transaction-related fees and net of taxes, as follows:
Cash proceeds |
| $ | 170,000 |
|
Less: |
|
|
| |
Net assets of Outdoors |
| (84,836 | ) | |
Estimated transaction-related fees and taxes |
| (9,709 | ) | |
Estimated gain on sale |
| $ | 75,455 |
|
(f) To adjust retained earnings for the removal of the assets and liabilities of Outdoors.
(g) To remove the results of operations of Outdoors for the nine months ended September 30, 2006, and to remove the results of operations of Outdoors and Gems for the years ended December 31, 2005, 2004 and 2003. The results of operations have been adjusted for expenses which were originally allocated to Outdoors and Gems, but will continue to be incurred by PRIMEDIA after the sales of Outdoors and Gems.
(h) To remove the assets, liabilities and retained earnings of Outdoors as of September 30, 2006.
Note 4. Unaudited Pro Forma Loss Per Common Share Data
Basic and diluted pro forma loss per common share were calculated using the weighted average shares outstanding of PRIMEDIA for the nine months ended September 30, 2006 and the years ended December 31, 2005, 2004 and 2003. Potentially dilutive securities were not included in the computation of diluted loss per common share because the effect of their inclusion would be anti-dilutive.
8