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 -------------- 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. 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. 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) Pro Forma Pro Forma Historical Adjustments Consolidated ----------------- --------------- ------------------- 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 ==================== ==================== See notes to unaudited pro forma consolidated financial data. 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) Pro Forma Pro Forma Historical Adjustments Consolidated ----------------- ------------------ ------------------- 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 ===================== ================== See notes to unaudited pro forma consolidated financial data. PRIMEDIA INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 1999 Pro Forma Pro Forma Historical Adjustments Consolidated -------------- --------------- -------------- ASSETS Current assets: 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 ================= ================== ================== See notes to unaudited pro forma consolidated financial data. 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. 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)