As filed with the Securities and Exchange Commission on January 29, 2001
REGISTRATION NO. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
PRIMEDIA INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 2721 13-3647573
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
------------------------
745 FIFTH AVENUE
NEW YORK, NEW YORK 10151
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
------------------------------
BEVERLY C. CHELL, ESQ.
PRIMEDIA INC.
745 FIFTH AVENUE
NEW YORK, NEW YORK 10151
(212) 745-0100
Copies to:
MARNI J. LERNER, ESQ.
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 455-2000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
------------------------
If any of the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
------------------------
CALCULATION OF REGISTRATION FEE
PROPOSED PROPOSED
TITLE OF MAXIMUM MAXIMUM
SECURITIES TO AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
BE REGISTERED BE REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
Common Stock, par value $.01 per share....... 828,878 N/A N/A $2,409.96
(1) Pursuant to Rule 457(c), the price is estimated solely for the purpose of
calculating the registration fee and is based on the average of high and low
reported sales price of the Common Stock of the Registrant on the New York
Stock Exchange on January 25, 2001.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SUBJECT TO COMPLETION, DATED JANUARY 29, 2001
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PROSPECTUS
OFFER TO EXCHANGE SHARES OF PRIMEDIA INC.
COMMON STOCK FOR UP TO 3,764,000 SHARES OF
INTERNET GIFT REGISTRIES, INC.
COMMON STOCK AND UP TO 556,088 SHARES OF
INTERNET GIFT REGISTRIES, INC. SERIES B PREFERRED STOCK
PRIMEDIA INC.
---------------
We are offering to exchange shares of our common stock for up to 3,764,000
shares of Internet Gift Registries, Inc.'s common stock and up to 556,088 shares
of IGR's Series B voting preferred stock. The principal terms of the exchange
offer are:
- The holders of the IGR common stock and Series B preferred stock will
receive a number of shares of PRIMEDIA common stock equal to the exchange
ratio. The exchange ratio is determined by dividing $0.80, in the case of
the IGR common stock, and $8.00, in the case of the Series B preferred
stock, by the average closing price of the PRIMEDIA common stock on the
New York Stock Exchange for the thirty consecutive trading days ending
, 2001;
- If the aggregate number of shares elected to be exchanged exceeds
3,764,000, in the case of the IGR common stock, or 556,088, in the case of
the Series B preferred stock, the number of shares you may be permitted to
exchange for PRIMEDIA common stock will be limited on a PRO-RATA basis
according to a proration formula, see "The Exchange Offer--Number of
Shares of Common Stock and Series B Preferred Stock to be Exchanged;
Proration;" and
- To participate in the exchange offer you must complete and mail the letter
of transmittal, together with the shares of IGR common stock or Series B
preferred stock being tendered, along with any other required documents
before 12:00 a.m., New York City time, on , 2001, see "The Exchange
Offer--Procedures for Tendering."
The exchange offer is subject to customary conditions set forth in this
prospectus and the accompanying letter of transmittal. See "The Exchange Offer."
Our common stock trades on the New York Stock Exchange under the symbol
"PRM."
INVESTMENT IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING
ON PAGE 10.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF OUR COMMON STOCK OFFERED BY THIS
PROSPECTUS OR HAS DETERMINED THAT THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
, 2001
ADDITIONAL INFORMATION
This prospectus incorporates important business and financial information
about PRIMEDIA from other documents that are not included in or delivered with
this prospectus. This information is available to you without charge upon your
written or oral request. You can obtain the documents incorporated by reference
in this prospectus through the Securities and Exchange Commission website at
http://www.sec.gov or by requesting them in writing or by telephone from
PRIMEDIA at the following address:
PRIMEDIA Inc.
745 Fifth Avenue New
York, New York 10151
(212) 745-0100
Attention: Investor Relations
IF YOU WOULD LIKE TO REQUEST DOCUMENTS FROM US, PLEASE DO SO BY , 2001
TO RECEIVE THEM BEFORE THE EXCHANGE OFFER EXPIRES.
TABLE OF CONTENTS
PAGE
--------
Questions and Answers about the Exchange Offer.............. 1
Summary..................................................... 3
The Company............................................... 3
The Exchange Offer........................................ 4
Risk Factors.............................................. 4
Market Prices and Dividends............................... 4
Selected Historical Financial Data of PRIMEDIA............ 5
Unaudited Per Share Data.................................. 8
Risk Factors................................................ 10
Risks Related to PRIMEDIA's Business...................... 10
Risks Related to PRIMEDIA's Common Stock.................. 15
Risks Related to the Failure to Exchange.................. 16
Cautionary Statement Concerning Forward-Looking
Information............................................... 16
Use of Proceeds............................................. 16
Business of IGR............................................. 17
The Exchange Offer.......................................... 18
Number of Shares of Common Stock and Series B Preferred
Stock to be Exchanged; Proration 18
What You Will Receive in the Exchange Offer............... 18
Terms of the Exchange Offer............................... 19
Expiration Date; Extensions; Amendments................... 19
Procedures for Tendering.................................. 20
Withdrawal of Tenders..................................... 21
Conditions of the Exchange Offer.......................... 22
Exchange Agent............................................ 23
Fees and Expenses......................................... 23
Consequences of Failure to Exchange....................... 23
Resales of the PRIMEDIA Common Stock...................... 23
Material United States Federal Income Tax Consequences of
the Exchange Offer...................................... 24
Investment in IGR........................................... 25
Series A Preferred Stock Purchase Agreement............... 25
Series E Preferred Stock Purchase Agreement............... 25
Restated IGR Certificate of Incorporation................. 26
IGR/PRIMEDIA Stockholders Agreement....................... 26
Advertising and Content License Agreement................. 27
Description of PRIMEDIA Capital Stock....................... 28
General................................................... 28
Description of PRIMEDIA Common Stock...................... 28
Description of Series D Exchangeable Preferred Stock...... 29
Description of Series F Exchangeable Preferred Stock...... 30
Description of Series H Exchangeable Preferred Stock...... 32
Comparison of Stockholder Rights............................ 34
Capitalization............................................ 34
i
PAGE
--------
Voting Rights............................................. 34
Number and Election of Directors.......................... 34
Vacancies on the Board of Directors and Removal of
Directors............................................... 35
Amendments to the Certificate of Incorporation............ 35
Amendments to By-Laws..................................... 35
Action by Written Consent................................. 35
Ability to Call Special Meetings.......................... 35
Notice of Stockholder Action.............................. 36
Limitation of Personal Liability of Directors and
Officers................................................ 37
Indemnification of Directors and Officers................. 37
Executives; Executive Compensation; Stock Ownership of
Directors, Executive Officers and Principal
Stockholders.............................................. 39
Legal Matters............................................... 41
Change in Independent Public Accountants.................... 41
Experts..................................................... 41
Where You Can Find More Information......................... 41
ii
QUESTIONS AND ANSWERS ABOUT THE EXCHANGE OFFER
Q: WHY IS PRIMEDIA PROPOSING THE EXCHANGE OFFER?
A: In connection with its investment in the Series E preferred stock of IGR,
PRIMEDIA has agreed to make this exchange offer.
Q: WHAT WILL I RECEIVE IN THE EXCHANGE OFFER?
A: Holders of IGR common stock and Series B preferred stock will receive a
number of shares of PRIMEDIA common stock determined pursuant to an exchange
ratio for each share of IGR common stock or Series B preferred stock they
own. PRIMEDIA will pay cash in lieu of fractional shares of PRIMEDIA common
stock.
IGR COMMON STOCK. IGR common stockholders will receive a number of shares
of PRIMEDIA common stock calculated by dividing $0.80 by the average closing
price of the PRIMEDIA common stock on the New York Stock Exchange for the
thirty consecutive trading days ending , 2001. For example, if the
30 consecutive trading day measuring period had ended on January 18, 2001,
the PRIMEDIA common stock average closing price would have been $11.22.
Therefore, if a holder tendered 1,000 shares of IGR common stock and was not
prorated, the holder would have received 71 shares of PRIMEDIA common stock
and $3.38 in cash in exchange for the IGR shares.
IGR SERIES B PREFERRED STOCK. IGR Series B preferred stockholders will
receive a number of shares of PRIMEDIA common stock calculated by dividing
$8.00 by the average closing price of the PRIMEDIA common stock on the New
York Stock Exchange for the thirty consecutive trading days before the two
trading days before this exchange offer expires. For example, if the 30
consecutive trading day measuring period had ended on January 18, 2001, the
PRIMEDIA common stock average closing price would have been $11.22.
Therefore, if a holder tendered 1,000 shares of IGR Series B preferred stock
and was not prorated, the holder would have received 713 shares of PRIMEDIA
common stock and $0.14 in cash in exchange for the IGR shares.
Q: WILL I BE ABLE TO EXCHANGE ALL THE SHARES OF IGR SERIES B PREFERRED STOCK OR
COMMON STOCK I OWN?
A: Maybe. PRIMEDIA is offering to exchange its common stock for up to
3,764,000 shares of IGR common stock and up to 556,088 shares of IGR
Series B preferred stock. To the extent the aggregate number of shares
elected to be exchanged exceeds 3,764,000, in the case of the IGR common
stock, or 556,088, in the case of the Series B preferred stock, the number
of shares you may be able to exchange will be limited on a PRO-RATA basis
according to a proration formula contained in this prospectus. See "The
Exchange Offer--Number of Shares of Common Stock and Series B Preferred
Stock to be Exchanged; Proration" on page 18 of this prospectus.
Q: WHAT ARE THE TAX CONSEQUENCES OF THE EXCHANGE OFFER TO ME?
A: The exchange will be a taxable transaction for holders of IGR common stock
and Series B preferred stock who elect to participate in the exchange offer.
Participating holders of IGR common stock and Series B preferred stock will
recognize gain or loss equal to the difference between the fair market value
of the PRIMEDIA common stock received in the exchange plus the amount of any
cash received instead of fractional shares and the tax basis of the IGR
common stock or Series B preferred stock exchanged. There will be no tax
consequences for holders of IGR common stock and Series B preferred stock
who do not elect to participate in the exchange offer. See "The Exchange
Offer--Material United States Federal Income Tax Consequences of the
Exchange Offer" on page 24 of this prospectus.
1
Q: WHEN DOES THE EXCHANGE OFFER EXPIRE?
A: The exchange offer will expire at 12:00 a.m., New York City time, on
, 2001 unless the exchange offer is extended by PRIMEDIA.
Q: WHAT DO I NEED TO DO TO PARTICIPATE IN THE EXCHANGE OFFER?
A: You should mail or otherwise deliver the letter of transmittal, together
with the shares of IGR common stock or Series B preferred stock you wish to
exchange to the exchange agent at the address provided in this prospectus
prior to the date the exchange offer expires. See "The Exchange
Offer--Exchange Agent" on page 23 of this prospectus.
Q: WHO CAN HELP ANSWER MY QUESTIONS?
A: If you have any questions about the exchange offer, or if you need
additional copies of this prospectus, you should contact:
PRIMEDIA Inc.
745 Fifth Avenue
New York, New York 10151
Telephone: (212) 745-0100
Attention: Chris Fraser
e-mail: cfraser@primedia.com
2
SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION IN THIS PROSPECTUS AND MAY NOT
CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. YOU SHOULD CAREFULLY
READ THIS ENTIRE PROSPECTUS AND THE OTHER DOCUMENTS WE REFER YOU TO FOR A MORE
COMPLETE UNDERSTANDING OF THE EXCHANGE OFFER. IN ADDITION, WE INCORPORATE BY
REFERENCE IMPORTANT BUSINESS AND FINANCIAL INFORMATION ABOUT PRIMEDIA INTO THIS
PROSPECTUS. YOU MAY OBTAIN THE INFORMATION INCORPORATED BY REFERENCE INTO THIS
PROSPECTUS WITHOUT CHARGE BY FOLLOWING THE INSTRUCTIONS IN THE SECTION ENTITLED
"WHERE YOU CAN FIND MORE INFORMATION" THAT BEGINS ON PAGE 41 OF THIS PROSPECTUS.
THE COMPANY
PRIMEDIA INC.
745 Fifth Avenue
New York, New York 10151
(212) 745-0100
GENERAL. PRIMEDIA is a targeted media company with leading positions in
consumer and business-to-business markets. PRIMEDIA's properties utilize the
"full media arsenal" to deliver content via print (magazines and directories),
video (satellite and cable), live events (trade and consumer shows) and the
Internet (nearly 300 sites). PRIMEDIA's products serve highly specialized niches
and capitalize on the growing trend toward targeted rather than mass information
distribution.
Many of PRIMEDIA's products, such as its enthusiast magazines,
business-to-business products, CHANNEL ONE NEWS and the consumer guides afford
advertisers with an opportunity to directly reach niche market audiences. In
1999, 49% of PRIMEDIA's total revenues were from "lead generation" advertising,
bringing the advertisers and customers together and providing a springboard for
on-line communities.
PRIMEDIA has exploited the Internet to take advantage of the opportunities
that this medium affords its targeted media properties. PRIMEDIA has numerous
Internet initiatives which expand its role in its targeted markets, and provide
sources of additional revenue from content delivery, advertising, subscriptions
and e-commerce. The Internet provides PRIMEDIA with various alternatives to grow
beyond traditional operations. Activities include partnerships with other
Internet businesses and assets for equity transactions. In addition, PRIMEDIA
Ventures, PRIMEDIA's venture capital vehicle, invests in early stage Internet
and other technology opportunities such as e-commerce services, enterprise
software applications and advertising-related technologies.
RECENT DEVELOPMENTS. On October 29, 2000 PRIMEDIA signed an agreement to
merge with About.com, Inc. The merger enhances PRIMEDIA's ability to deliver its
niche content to on-line consumers. The combined entity forms one of the leading
targeted media companies creating a model for the integration of traditional and
new media businesses. About.com is a platform comprised of a network of more
than 700 highly-targeted, topic-specific websites. About's network is
differentiated by the high quality and depth of content it provides users
through the efforts of knowledgeable human guides who manage the sites, the
volume of sites in its network and the consistency of site structure and design
across the network. The About network has been one of the fastest growing
properties among the top 25 Internet properties ranked by Jupiter Media Metrix
since the launch of the About.com brand in May 1999. According to Jupiter Media
Metrix, approximately 21.3 million unique users visited About.com in
December 2000, making About.com the sixth largest Internet property overall. The
consummation of the merger between PRIMEDIA and About is contingent upon the
merger receiving approval of the About shareholders and other customary
conditions.
3
INTERNET GIFT REGISTRIES, INC.
200 Fillmore Street, Suite 400
Denver, Colorado 80206
(303) 329-3010
IGR is a Denver-based full-service online gift registry and retailing
company. IGR's weddingnetwork.com is one of the internet's most comprehensive
online wedding resources, offering creative tools, imaginative ideas and real
answers to help engaged couples plan unique wedding celebrations.
WeddingNetwork.com partners with a broad network of retailers to provide
traditional and unique online gift registry options. IGR is the official online
registry and content partner for Modern Bride magazine, Modern Bride
Connection's 16 regional publications and ModernBride.com.
THE EXCHANGE OFFER
The following are the principal terms of the exchange offer:
- PRIMEDIA will offer to exchange shares of PRIMEDIA common stock for up to
3,764,000 shares of IGR common stock and up to 556,088 shares of IGR
Series B preferred stock;
- If the aggregate number of shares elected to be exchanged exceeds
3,764,000, in the case of the IGR common stock, or 556,088, in the case of
the Series B preferred stock, the number of shares you may be permitted to
exchange for PRIMEDIA common stock will be limited on a PRO-RATA basis
according to a proration formula, see "The Exchange Offer--Number of
Shares of Common Stock and Series B Preferred Stock to be Exchanged;
Proration;"
- The holders of the IGR common stock and Series B preferred stock will
receive a number of shares of PRIMEDIA common stock equal to the exchange
ratio. The exchange ratio is determined by dividing $0.80, in the case of
the IGR common stock, and $8.00, in the case of the Series B preferred
stock, by the average closing price of the PRIMEDIA common stock on the
New York Stock Exchange for the thirty consecutive trading days ending
, 2001; and
- To participate in the exchange offer you must complete and mail the letter
of transmittal, together with the shares of IGR common stock or Series B
preferred stock being tendered, along with any other required documents to
the exchange agent before 12:00 a.m., New York City time, on ,
2001, see "The Exchange Offer--Procedures for Tendering."
RISK FACTORS
Prospective participants in the exchange offer should take into account the
specific considerations set forth under "Risk Factors" as well as the other
information in this prospectus. See "Risk Factors" beginning on page 10.
MARKET PRICES AND DIVIDENDS
PRIMEDIA's common stock trades on the New York Stock Exchange under the
symbol ``PRM". The table below shows the closing prices of the PRIMEDIA common
stock at the close of the regular trading session on October 24, 2000, the last
trading day before the public announcement of our investment in IGR's Series E
preferred stock, and January 26, 2001, the last trading day for which that
information was available before the filing of this prospectus.
DATE PRIMEDIA CLOSING PRICE
---- ----------------------
October 24, 2000............................................ $15.69
January 26, 2001............................................ $11.81
4
The following table sets forth the high and low sale prices for the PRIMEDIA
common stock. PRIMEDIA has not declared any dividends on its common stock. The
prices are as reported on the New York Stock Exchange, based on published
financial sources.
PRIMEDIA
COMMON STOCK
-------------------
CALENDAR QUARTERS HIGH LOW
----------------- -------- --------
(DOLLARS PER SHARE)
1998
First Quarter............................................. $ 14.88 $ 11.81
Second Quarter............................................ $ 15.00 $ 12.81
Third Quarter............................................. $ 13.81 $ 9.25
Fourth Quarter............................................ $ 11.94 $ 9.63
1999
First Quarter............................................. $ 14.00 $ 11.63
Second Quarter............................................ $ 17.75 $ 13.56
Third Quarter............................................. $ 17.19 $ 11.00
Fourth Quarter............................................ $ 16.50 $ 10.88
2000
First Quarter............................................. $ 34.88 $ 15.50
Second Quarter............................................ $ 32.00 $ 18.06
Third Quarter............................................. $ 22.31 $ 16.00
Fourth Quarter............................................ $ 17.00 $ 7.00
2001
First Quarter (Through January 26)........................ $ 12.94 $ 11.31
BECAUSE THE EXCHANGE RATIO IS BASED ON THE AVERAGE CLOSING PRICE OF THE
PRIMEDIA COMMON STOCK FOR THE THIRTY CONSECUTIVE TRADING DAYS ENDING ,
2001, WE URGE HOLDERS OF IGR COMMON STOCK AND SERIES B PREFERRED STOCK TO
CALCULATE THE AVERAGE CLOSING PRICE FOR THE PRIMEDIA COMMON STOCK BY OBTAINING
CURRENT MARKET QUOTATIONS BEFORE MAKING ANY DECISION WITH RESPECT TO THE
EXCHANGE OFFER.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF PRIMEDIA
The following financial information is to aid you in your analysis of the
financial aspects of the exchange offer. The following tables present selected
historical consolidated financial data of PRIMEDIA.
The selected historical consolidated operating and balance sheet data of
PRIMEDIA are derived from the audited historical financial statements of
PRIMEDIA contained in PRIMEDIA's Annual Reports on Form 10-K for each of the
years in the five-year period ended December 31, 1999 and from the unaudited
financial statements of PRIMEDIA contained in PRIMEDIA's Quarterly Report on
Form 10-Q for the period ended September 30, 2000. The historical data are only
a summary, and should be read in conjunction with the historical financial
statements and related notes contained in the Form 10-K for the year ended
December 31, 1999 and the Form 10-Q for the quarter ended September 30, 2000,
which have been incorporated by reference into this prospectus. In the opinion
of management, the unaudited consolidated financial statements have been
prepared on the same basis as the audited consolidated financial statements and
include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the financial position and results of
operations for such periods. The results of operations as of and for the nine
months ended
5
September 30, 2000 are not necessarily indicative of PRIMEDIA's results for any
other interim period or for the full year.
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
------------------------- -------------------------------------------------------------------
1999 2000 1995 1996 1997 1998 1999
----------- ----------- ----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
OPERATING DATA:
Sales, net............ $ 1,260,454 $ 1,231,624 $ 1,046,329 $ 1,374,449 $ 1,487,595 $ 1,573,573 $ 1,716,102
Depreciation.......... 36,350 39,760 25,761 38,233 37,334 42,214 47,653
Amortization.......... 126,676 98,279 166,515 152,469 146,831 176,755 176,361
Other (income)
charges(1).......... 22,000 19,084 50,114 -- 138,640 (7,216) 62,208
Operating income
(loss)(2)........... 59,186 15,201 (26,275) 85,901 (20,793) 118,157 54,332
Interest expense...... 123,965 109,434 105,837 124,601 136,625 144,442 164,909
Income tax benefit
(expense)(3)........ -- -- 59,600 53,300 1,685 -- (6,500)
Income (loss) before
extraordinary
charge.............. (67,975) (89,518) (75,435) 17,597 (157,439) (37,736) (120,113)
Extraordinary charge-
extinguishment of
debt(4)............. -- -- -- (9,553) (15,401) -- --
Net income
(loss)(2)........... (67,975) (89,518) (75,435) 8,044 (172,840) (37,736) (120,113)
Preferred stock
dividends(5)........ 39,796 39,797 28,978 43,526 65,073 63,285 53,062
Loss applicable to
common
shareholders........ (107,771) (129,315) (104,413) (35,482) (237,913) (101,021) (173,175)
Basic and diluted loss
applicable to common
shareholders per
common share(2)(6):
Loss before
extraordinary
charge............ $ (.74) $ (.81) $ (.92) $ (.20) $ (1.72) $ (.71) $ (1.19)
=========== =========== =========== =========== =========== =========== ===========
Net loss.............. $ (.74) $ (.81) $ (.92) $ (.27) $ (1.84) $ (.71) $ (1.19)
=========== =========== =========== =========== =========== =========== ===========
Basic and diluted
common shares
outstanding......... 145,008,251 158,977,115 113,218,711 128,781,518 129,304,900 142,529,024 145,418,441
OTHER DATA:
EBITDA(7)............. $ 244,212 $ 172,324 $ 216,115 $ 276,603 $ 302,012 $ 329,910 $ 340,554
Additions to property,
equipment and other,
net................. 43,198 53,595 23,414 28,790 31,108 55,238 69,488
Net cash provided by
(used in) operating
activities.......... 40,704 (22,009) 64,062 150,192 125,360 140,804 107,298
Net cash provided by
(used in) investing
activities.......... (125,724) (3,412) (318,712) (721,709) (185,725) (609,621) 186,081
Net cash provided by
(used in) financing
activities.......... 90,531 26,421 263,644 580,946 46,688 470,377 (289,256)
6
AT SEPTEMBER 30, AT DECEMBER 31,
------------------------- -------------------------------------------------------------------
1999 2000 1995 1996 1997 1998 1999
----------- ----------- ----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
BALANCE SHEET DATA:
Cash and cash
equivalents......... $ 30,049 $ 29,661 $ 27,226 $ 36,655 $ 22,978 $ 24,538 $ 28,661
Working capital(8).... (58,961) (180,352) (56,560) (44,705) (146,245) (234,045) (200,458)
Intangible assets,
gross............... 3,005,378 2,801,693 1,996,564 2,649,805 2,508,650 3,171,598 3,024,955
Less: accumulated
amortization...... 882,792 1,181,575 762,393 896,824 736,597 914,854 1,189,599
----------- ----------- ----------- ----------- ----------- ----------- -----------
Intangible assets,
net................. 2,122,586 1,620,118 1,234,171 1,752,981 1,772,053 2,256,744 1,835,356
Total assets.......... 3,054,524 2,661,541 1,881,416 2,552,215 2,485,990 3,041,074 2,714,552
Long-term debt(9)..... 2,098,888 1,605,217 1,146,697 1,577,469 1,682,224 1,956,997 1,732,896
Exchangeable preferred
stock............... 558,969 560,916 231,606 442,729 470,280 557,841 559,689
----------- ----------- ----------- ----------- ----------- ----------- -----------
Shareholders' equity
(deficiency):
Common stock........ $ 1,482 $ 1,669 $ 1,259 $ 1,283 $ 1,298 $ 1,470 $ 1,483
Additional paid-in
capital........... 986,320 1,342,626 748,194 772,642 780,191 979,720 986,649
Accumulated
deficit........... (1,137,803) (1,332,522) (655,616) (691,098) (929,011) (1,030,032) (1,203,207)
Accumulated other
comprehensive
income (loss)..... (1,609) (132,619) (1,275) (1,270) (1,543) (1,720) 87,364
Unearned stock grant
compensation...... -- (8,188) -- -- -- -- (15,250)
Common stock in
treasury, at
cost.............. (42,799) (1,663) -- -- (13,158) (33,141) (1,277)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total shareholders'
equity
(deficiency)........ $ (194,409) $ (130,697) $ 92,562 $ 81,557 $ (162,223) $ (83,703) $ (144,238)
=========== =========== =========== =========== =========== =========== ===========
--------------------------
(1) Represents non-cash compensation and non-cash non-recurring charges of
$26,900 for the nine months ended September 30, 2000, a provision for
severance, closures and integration costs of $19,008 and $22,000 for the
nine-months ended September 30, 2000 and 1999, respectively, (gain) loss on
the sales of businesses and other, net of ($26,824), ($235,580), ($7,216),
$138,640 and $35,447 for the nine months ended September 30, 2000, and for
the years ended December 31, 1999, 1998, 1997 and 1995, respectively,
provisions for the impairment of long-lived assets and product-line closures
of $297,788 for the year ended December 31, 1999, and another non-recurring
provision of $14,667 for the year ended December 31, 1995.
(2) The adoption of a change in method of accounting for internal use software
costs effective January 1, 1998, resulted in an increase in operating
income, an equal decrease in net loss and a decrease in basic and diluted
loss per common share of approximately $9,000 ($.06 per share) and $12,450
($.09 per share) for the years ended December 31, 1999 and December 31,
1998, respectively.
(3) At December 31, 1999, 1998 and 1997, PRIMEDIA's management determined that
no adjustment to net deferred income tax assets was required. In prior
years, management determined that a portion of the net deferred income tax
assets would likely be realized and accordingly, PRIMEDIA recorded an income
tax benefit of $53,300 in 1996 and $59,600 in 1995. For the year ended
December 31, 1997, PRIMEDIA recorded an income tax carryback claim of
$1,685. In 1999, PRIMEDIA recorded income tax expense of $6,500 related to a
provision for current state and local taxes incurred as a result of the gain
on the sale of the supplemental education group. At September 30, 2000,
PRIMEDIA had net operating loss and capital loss carryforwards of
approximately $1,057,000 which will be available to reduce future taxable
income. In addition, management estimates that approximately $927,000 of
unamortized goodwill and other intangible assets will be available as
deductions from any future taxable income.
7
(4) Represents the write-off of unamortized deferred financing costs and the
premiums paid on the redemptions of PRIMEDIA's 10 5/8% Senior Notes.
(5) Includes the premiums paid on the redemptions of PRIMEDIA's $11.625
Series B Exchangeable Preferred Stock and PRIMEDIA's $2.875 Senior
Exchangeable Preferred Stock in 1998 and 1997, respectively. In 1997,
PRIMEDIA recorded a preferred stock dividend accrual in the amount of
$9,517. Of the total dividend accrual recorded in 1997, the amounts that
relate to prior periods were not material.
(6) Basic and diluted loss per common share, as well as the basic and diluted
common shares outstanding, were computed as described in Note 15 of the
notes to the audited consolidated financial statements incorporated by
reference in this prospectus.
(7) Represents earnings before interest, taxes, depreciation, amortization and
other (credits) and charges including non-cash compensation and non-cash
non-recurring charges of $26,900, gain on sale of businesses and other, net
of ($26,824) and a provision for severance, closures and integration costs
of $19,008 for the nine months ended September 30, 2000, a provision for
severance, closures and integration costs of $22,000 for the nine months
ended September 30, 1999, an impairment provision for long-lived assets of
$275,788, a provision for severance, closures and integration costs of
$22,000 and gain on the sales of businesses and other, net of ($235,580) for
the year ended December 31, 1999, (gain) loss on the sales of businesses and
other, net of ($7,216), $138,640 and $35,447 in 1998, 1997 and 1995,
respectively, and a provision for non-recurring charges of $14,667 in 1995.
EBITDA is not intended to represent cash flow from operating activities and
should not be considered as an alternative to net income (loss) (as
determined in conformity with generally accepted accounting principles) as
an indicator of PRIMEDIA's operating performance or to cash flows as a
measure of liquidity. PRIMEDIA believes EBITDA is a standard measure
commonly reported and widely used by analysts, investors and other
interested parties in the media industry. Accordingly, this information has
been disclosed herein to permit a more complete comparative analysis of
PRIMEDIA's operating performance relative to other companies in its
industry. EBITDA should not be considered in isolation or as a substitute
for other measures of financial performance or liquidity. The primary
difference between EBITDA and cash flows provided by operating activities
relates to changes in working capital requirements and payments made for
interest and income taxes. EBITDA as presented may not be comparable to
similarly titled measures reported by other companies, since not all
companies necessarily calculate EBITDA in identical manners, and therefore,
are not necessarily accurate measures of comparisons between companies.
(8) Includes current maturities of long-term debt and net assets held for sale,
where applicable. Consolidated working capital reflects certain industry
working capital practices and accounting principles, including the expensing
of certain editorial and product development costs when incurred and the
recording of deferred revenue from subscriptions as a current liability.
Advertising costs are expensed when the promotional activities occur except
for certain direct-response advertising costs which are capitalized and
amortized over the estimated period of future benefit.
(9) Excludes current maturities of long-term debt.
UNAUDITED PER SHARE DATA
The following table summarizes per share information for PRIMEDIA on a
historical basis. The following information should be read in conjunction with
the audited consolidated financial statements of PRIMEDIA, the unaudited interim
consolidated financial statements of PRIMEDIA and the selected historical
consolidated financial data.
The historical book value per share is computed by dividing total
stockholders' equity by the number of common shares outstanding at the end of
the period. You should read the information
8
below in conjunction with the financial statements and accompanying notes that
are incorporated by reference in this prospectus.
FOR THE
NINE MONTHS FOR THE
ENDED YEAR ENDED
SEPTEMBER 30, 2000 DECEMBER 31, 1999
------------------- ------------------
PRIMEDIA COMMON STOCK:
Loss per Share:
Basic and Diluted:
Historical...................................... $(0.81) $(1.19)
Book Value Per Share at Period End
Historical........................................ $(0.78) $(0.97)
9
RISK FACTORS
The exchange offer involves a high degree of risk. By exchanging your shares
in the exchange offer, you will be choosing to invest in PRIMEDIA common stock.
An investment in PRIMEDIA common stock involves a high degree of risk. In
addition to the other information contained or incorporated by reference in this
prospectus, you should carefully consider the following risk factors in deciding
whether to participate in the exchange offer. In addition, if the exchange offer
is not completed, you may face additional risks which are specified below under
"Risks Related to the Failure to Exchange." Any of the following risks could
seriously harm PRIMEDIA's business and financial results and cause the value of
PRIMEDIA's securities to decline which, in turn, could cause you to lose all or
part of your investment.
RISKS RELATED TO PRIMEDIA'S BUSINESS
PRIMEDIA HAS SUBSTANTIAL INDEBTEDNESS WHICH CONSUMES A SUBSTANTIAL PORTION OF
THE CASH FLOW THAT IT GENERATES.
PRIMEDIA has substantial indebtedness and expects to incur additional
indebtedness under its credit facilities. PRIMEDIA had a ratio of consolidated
debt to total equity (including all preferred stock and common stock subject to
redemption) of 4.22 to 1 and 3.78 to 1 as of December 31, 1999 and
September 30, 2000, respectively. The indebtedness of PRIMEDIA requires a
substantial portion of PRIMEDIA's cash flow to be dedicated to the payment of
principal and interest on indebtedness, which reduces funds available for
capital expenditures and future business opportunities. For the fiscal year
ended December 31, 1999, there were $14.3 million of scheduled maturities on
outstanding indebtedness and PRIMEDIA made cash interest payments of
$165.0 million. For the nine months ended September 30, 2000, there were
$58.7 million of scheduled maturities on outstanding indebtedness and PRIMEDIA
made cash interest payments of $108.2 million.
At December 31, 1999 and September 30, 2000, borrowings under PRIMEDIA's
credit facilities were approximately $1,050.5 million and $931.8 million,
respectively. These borrowings bear interest at floating rates based on the
federal funds rate, the prime lending rate or LIBOR. Increases in interest rates
on indebtedness under PRIMEDIA's credit facilities would increase PRIMEDIA's
interest payment obligations and could have an adverse effect on PRIMEDIA. The
weighted average interest rate on PRIMEDIA's credit facilities was 6.92% for the
year ended December 31, 1999 and 8.08% for the nine months ended September 30,
2000.
PRIMEDIA'S SUBSTANTIAL INDEBTEDNESS LIMITS ITS BUSINESS FLEXIBILITY BY IMPOSING
OPERATING AND FINANCIAL RESTRICTIONS ON ITS OPERATIONS.
The agreements governing PRIMEDIA's indebtedness impose specific operating
and financial restrictions on PRIMEDIA. These restrictions prohibit or limit
PRIMEDIA from, among other things:
- changing the nature of its business;
- incurring additional indebtedness;
- creating liens on its assets;
- selling assets;
- engaging in mergers, consolidations or transactions with its affiliates;
- making investments in or loans to specific subsidiaries;
- making guarantees or specific restricted payments; and
- declaring or making dividend payments on its common or preferred stock.
10
Under PRIMEDIA's most restrictive debt covenants, PRIMEDIA must maintain a
minimum interest coverage ratio of 1.8 to 1 and a minimum fixed charge coverage
ratio of 1.05 to 1. For the fiscal year ended December 31, 1999, PRIMEDIA's
interest coverage ratio and fixed charge coverage ratio were 2.25 to 1 and 1.30
to 1, respectively, and for the last 12 months ended September 30, 2000,
PRIMEDIA's interest coverage ratio and fixed charge coverage ratio were 2.27 to
1 and 1.73 to 1, respectively. These restrictions, in combination with the
leveraged nature of PRIMEDIA, could limit the ability of PRIMEDIA to effect
future acquisitions or financings or otherwise restrict corporate activities.
Failure to comply with the terms of these restrictions could result in the
acceleration of the indebtedness governed by these agreements.
PRIMEDIA'S EARNINGS HAVE BEEN INSUFFICIENT TO PAY ITS FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS.
PRIMEDIA's earnings were inadequate to cover fixed charges and fixed charges
plus preferred stock dividends by $113.6 million and $166.7 million,
respectively, for the year ended December 31, 1999 and by $89.5 million and
$129.3 million, respectively, for the nine months ended September 30, 2000.
Fixed charges consist of interest expense on long-term debt and other
non-current obligations (including current maturities on long-term debt) and
amortization of deferred financing costs. Such earnings have been reduced by net
non-cash and non-recurring charges (including depreciation, amortization,
provision for the impairment of long-lived assets, provision for severance,
closures and integration costs, non-cash compensation and non-cash non-recurring
charges, (gain) loss on the sale of businesses and other, net and non-cash
interest expense) of approximately $288.1 million and $160.6 million for the
year ended December 31, 1999 and the nine months ended September 30, 2000,
respectively. Adjusted to eliminate these non-cash charges, earnings would have
exceeded fixed charges and fixed charges plus cash preferred stock dividends, by
approximately $174.5 million and $121.4 million, respectively, for the year
ended December 31, 1999 and $71.1 million and $31.3 million, respectively, for
the nine months ended September 30, 2000. Based on historical evidence of
PRIMEDIA's earnings exceeding fixed charges and fixed charges plus cash
preferred dividends after eliminating non-cash charges, PRIMEDIA believes it
will continue to generate sufficient cash flow to service its interest and
dividend payments.
IT IS UNLIKELY YOU WILL RECEIVE A RETURN ON YOUR PRIMEDIA SHARES THROUGH THE
PAYMENT OF CASH DIVIDENDS.
PRIMEDIA has never declared or paid cash dividends on any of its common
stock and has no intention of doing so in the foreseeable future. As a result,
it is unlikely that you will receive a return on your shares through the payment
of cash dividends.
PRIMEDIA'S INDEBTEDNESS CONTAINS PROVISIONS WHICH MAY REQUIRE PRIMEDIA TO
REPURCHASE ALL OF THE INDEBTEDNESS UPON A CHANGE OF CONTROL. PRIMEDIA MAY NOT
HAVE SUFFICIENT FINANCIAL RESOURCES TO MAKE THOSE REPURCHASES.
The agreements governing PRIMEDIA's indebtedness contain change of control
provisions which, under specified circumstances, may require PRIMEDIA to
repurchase that indebtedness upon a change of control. Because of the
substantial indebtedness of PRIMEDIA, we cannot assure you that PRIMEDIA would
have sufficient financial resources available to repurchase all of that
indebtedness in the event of a change in control.
11
IF PRIMEDIA IS IN DEFAULT IN THE PAYMENT OR OF OTHER COVENANTS OF ITS
INDEBTEDNESS, THE HOLDERS OF THE INDEBTEDNESS MAY CAUSE THE DEBT TO BECOME DUE
IMMEDIATELY AND CAUSE A DEFAULT IN OTHER OUTSTANDING INDEBTEDNESS OF PRIMEDIA.
In the event that PRIMEDIA is unable to generate cash flow sufficient to
meet required payments or does not make required payments of principal and
interest on its indebtedness under its credit facilities or is otherwise in
default with respect to the covenants in its credit facilities or under any
other indebtedness of PRIMEDIA, the holders of indebtedness under PRIMEDIA's
credit facilities could elect to declare all of the funds borrowed under the
credit facilities to be due and payable together with accrued and unpaid
interest and to terminate their commitments under the credit facilities. Neither
the credit facilities nor the other indebtedness are secured by the pledge of
assets, subsidiary securities or any other security. Any default under the
documents governing the indebtedness of PRIMEDIA could have a significant
adverse effect on the market value of the PRIMEDIA common stock.
PRIMEDIA MAY HAVE PROBLEMS RAISING MONEY IT NEEDS IN THE FUTURE. PRIMEDIA CANNOT
GUARANTEE ITS PAST FINANCING SOURCES WILL BE AVAILABLE IN THE FUTURE.
In recent years, PRIMEDIA has financed its acquisitions and new media
investments in part by issuing preferred stock and refinancing and/or extending
maturities on its existing indebtedness and preferred stock. This funding source
may not be sufficient in the future, and PRIMEDIA may need to obtain funding
from other sources. However, PRIMEDIA may not be able to obtain funding from
other sources. PRIMEDIA may also be required to take other actions, which may
lessen the value of its common stock, including borrowing money on terms that
are not favorable to PRIMEDIA.
KKR HAS CONTROL OF PRIMEDIA'S COMMON STOCK AND HAS THE POWER TO ELECT ALL OF
PRIMEDIA'S BOARD OF DIRECTORS AND TO APPROVE ANY ACTION REQUIRING STOCKHOLDER
APPROVAL.
As of November 9, 2000, approximately 74.0% of the shares of PRIMEDIA common
stock are held by investment partnerships, of which KKR Associates, L.P., a New
York limited partnership, or KKR Associates 1996 L.P., a Delaware limited
partnership, both affiliates of Kohlberg Kravis Roberts & Co. L.P., is the
general partner. KKR Associates or KKR Associates 1996 has sole voting and
investment power with respect to these shares. Consequently, KKR Associates and
its general partners, four of whom are also directors of PRIMEDIA and KKR
Associates 1996 and its general partner control PRIMEDIA and have the power to
elect all of its directors and approve any action requiring stockholder
approval, including adopting amendments to PRIMEDIA's certificate of
incorporation and approving mergers or sales of all or substantially all of
PRIMEDIA's assets. KKR Associates and KKR Associates 1996 will also be able to
prevent or cause a change of control of PRIMEDIA at any time. PRIMEDIA cannot
assure you that the interest of KKR Associates, KKR Associates 1996 and their
affiliates will not conflict with the interest of the other holders of PRIMEDIA
common stock.
INCREASES IN PAPER AND POSTAGE COSTS MAY HAVE AN ADVERSE IMPACT ON PRIMEDIA'S
FUTURE FINANCIAL RESULTS.
The price of paper is a significant expense of PRIMEDIA relating to its
print products and direct mail solicitations. Paper price increases may have an
adverse effect on PRIMEDIA's future results. Postage for product distribution
and direct mail solicitations is also a significant expense of PRIMEDIA.
PRIMEDIA uses the U.S. Postal Service for distribution of many of its products
and marketing materials. Postage costs increase periodically and can be expected
to increase in the future. PRIMEDIA cannot assure you that PRIMEDIA can pass
these cost increases through to its customers.
12
PRIMEDIA DEPENDS ON SOME IMPORTANT EMPLOYEES, AND THE LOSS OF ANY OF THOSE
EMPLOYEES MAY HARM ITS BUSINESS.
PRIMEDIA's performance is substantially dependent on the performance of its
executive officers and other key employees. In addition, PRIMEDIA's success is
dependent on its ability to attract, train, retain and motivate high quality
personnel, especially for its management team. The loss of the services of any
of PRIMEDIA's executive officers or key employees may harm its business.
PRIMEDIA's success also depends on its continuing ability to attract, train,
retain and motivate other highly qualified technical and managerial personnel.
Competition for these personnel is intense.
PRIMEDIA'S STRATEGY OF EXPANDING ITS BUSINESS THROUGH ACQUISITIONS OF AND
INVESTMENTS IN OTHER BUSINESSES PRESENTS SPECIAL RISKS.
PRIMEDIA intends to continue to expand through the acquisition of and
investment in businesses, technologies, products and services from other
businesses. Acquisitions and investments involve a number of special problems,
including:
- difficulty integrating acquired technologies, operations, and personnel
with PRIMEDIA's existing businesses;
- diversion of management attention in connection with both negotiating the
acquisitions and integrating the assets;
- strain on managerial and operational resources as management tries to
oversee larger operations;
- exposure to unforeseen liabilities of acquired companies;
- potential issuance of securities in connection with an acquisition with
rights that are superior to the rights of holders of PRIMEDIA's currently
outstanding securities;
- the need to incur additional debt; and
- the requirement to record potentially significant additional future
operating costs for the amortization of goodwill and other intangible
assets.
PRIMEDIA may not be able to successfully address these problems. Moreover,
PRIMEDIA's future operating results will depend to a significant degree on its
ability to successfully manage growth and integrate acquisitions. In addition,
many of PRIMEDIA's investments are in early-stage companies with limited
operating histories and limited or no revenues. PRIMEDIA may not be able to
successfully develop these young companies.
PRIMEDIA'S GROWTH PLACES STRAIN ON ITS MANAGERIAL, OPERATIONAL AND FINANCIAL
RESOURCES.
PRIMEDIA's growth has placed, and is expected to continue to place, a
significant strain on its managerial, operational and financial resources.
Further, as the number of its customers, advertisers and other business partners
grows, PRIMEDIA will be required to manage multiple relationships with various
customers, strategic partners and other third parties. PRIMEDIA's further growth
or an increase in the number of its strategic relationships will increase this
strain on its managerial, operational and financial resources, inhibiting its
ability to achieve the rapid execution necessary to successfully implement its
business plan.
PRIMEDIA MUST DEVELOP AND MAINTAIN POSITIVE BRAND NAME AWARENESS FOR ITS NEW
MEDIA VENTURES.
PRIMEDIA believes that establishing and maintaining its brand names are
essential to expanding its new media business and attracting new customers.
PRIMEDIA also believes that the importance of brand name recognition will
increase in the future because of the growing number of Internet
13
companies that will need to differentiate themselves. Promotion and enhancement
of PRIMEDIA's brand names will depend largely on its ability to provide
consistently high-quality products and services. If PRIMEDIA is unable to
provide high-quality products and services, the value of its brand names may
suffer.
IF THE UNITED STATES OR OTHER GOVERNMENTS REGULATE THE INTERNET MORE CLOSELY,
THE NEW MEDIA BUSINESSES OF PRIMEDIA MAY BE HARMED.
Because of the Internet's popularity and increasing use, new laws and
regulations may be adopted. These laws and regulations may cover issues such as
privacy, pricing, taxation and content. The enactment of any additional laws or
regulations may impede the growth of the new media businesses of PRIMEDIA and
could place additional financial burdens on those businesses.
IN ORDER FOR ITS NEW MEDIA BUSINESSES TO SUCCEED, PRIMEDIA MUST RESPOND TO THE
RAPID CHANGES IN TECHNOLOGY AND DISTRIBUTION CHANNELS RELATED TO THE INTERNET.
The markets for Internet products and services are characterized by:
- rapidly changing technology;
- evolving industry standards;
- frequent new product and service introductions;
- shifting distribution channels; and
- changing customer demands.
The success of the new media businesses of PRIMEDIA will depend on
PRIMEDIA's ability to adapt to this rapidly evolving marketplace. PRIMEDIA may
not be able to adequately adapt its products and services or to acquire new
products and services that can compete successfully. In addition, PRIMEDIA may
not be able to establish and maintain effective distribution channels on the
Internet.
THE SUCCESS OF PRIMEDIA'S NEW MEDIA BUSINESSES DEPENDS ON INCREASED USE OF THE
INTERNET BY BUSINESSES AND INDIVIDUALS.
The success of PRIMEDIA's new media businesses depends on increased use of
the Internet for advertising, marketing, providing services and conducting
business. Commercial use of the Internet is currently at an early stage of
development and the future of the Internet is not clear. In addition, it is not
clear how effective advertising on the Internet is in generating business as
compared to more traditional types of advertising such as print, television and
radio. PRIMEDIA's new media businesses may suffer if commercial use of the
Internet fails to grow in the future.
PRIMEDIA FACES SPECIFIC SECURITY RISKS REGARDING THE TRANSMISSION OF
CONFIDENTIAL INFORMATION.
Consumer concerns about the security of transmissions of confidential
information over public telecommunications facilities is a significant barrier
to electronic commerce and communications. Many factors may cause compromises or
breaches of PRIMEDIA's security systems or other Internet sites used to protect
proprietary information, including advances in computer and software
functionality or new discoveries in the field of cryptography. A compromise of
security on the Internet would have a negative effect on the use of the Internet
for commerce and communications and negatively impact PRIMEDIA's businesses.
Security breaches of its activities or the activities of its customers and
sponsors involving the storage and transmission of proprietary information, such
as credit card numbers, may expose PRIMEDIA to a risk of loss or litigation and
possible liability. PRIMEDIA cannot assure that the security measures of
PRIMEDIA will prevent security breaches or that insurance
14
programs obtained by PRIMEDIA intended to address the potential loses or
liabilities will be sufficient to cover any such losses or liabilities.
PRIMEDIA MAY HAVE LIABILITY FOR INFORMATION RETRIEVED FROM THE INTERNET.
Because materials may be downloaded from the Internet and subsequently
distributed to others, PRIMEDIA may be subject to claims for defamation,
negligence, copyright or trademark infringement, personal injury or other
theories based on the nature, content, publication and distribution of those
materials.
RISKS RELATED TO PRIMEDIA'S COMMON STOCK
THE PRICE OF PRIMEDIA'S COMMON STOCK HAS FLUCTUATED.
The market price of PRIMEDIA's common stock has been, and is likely to
continue to be, variable, experiencing fluctuations. In recent years, the stock
market has experienced significant price and volume fluctuations. Future market
movements may adversely affect the market price of PRIMEDIA common stock. The
market price of PRIMEDIA's common stock may continue to fluctuate significantly
in response to various factors, including:
- actual and anticipated operating results;
- the introduction of new products;
- changes in estimates by securities analysts;
- market conditions in the industry;
- announcements of mergers, acquisitions, alliances and joint ventures by
PRIMEDIA;
- announcements of mergers and acquisitions and other actions by
competitors;
- regulatory and judicial actions; and
- general economic conditions.
FUTURE SALES OF PRIMEDIA COMMON STOCK THAT ARE CURRENTLY RESTRICTED MAY
ADVERSELY AFFECT THE MARKET PRICE OF PRIMEDIA'S COMMON STOCK.
140,352,932 shares of PRIMEDIA common stock held by some investment
partnerships, of which KKR Associates is general partner, and others, including
CMGI, Inc., Liberty Digital, Inc., Liberty Prime, Inc. and Paul Kagan Associates
and certain of its affiliates, may not be resold in the absence of registration
under the Securities Act, or pursuant to exemptions from that registration. KKR
Associates has demand registration rights with respect to all of the 123,552,932
shares owned by them, and management has been granted incidental registration
rights, which in the case of senior management may only be exercised without
PRIMEDIA's consent if KKR Associates registers any of their shares or at least
40% of the PRIMEDIA common stock is held by the public. Liberty Digital and
Liberty Media each has two demand registration rights as well as incidental
registration rights, and the Kagan stockholders have incidental registration
rights.
Approximately 8,481,000 shares issuable upon the exercise of stock options
and approximately 27,380,670 shares of PRIMEDIA common stock outstanding as of
November 9, 2000 are eligible for sale by holders without restrictions under the
Securities Act.
PRIMEDIA cannot predict the effect, if any, that future sales of shares, or
the availability of shares for future sale, will have on the market price of
PRIMEDIA common stock prevailing from time to time. Sales of substantial amounts
of PRIMEDIA common stock (including shares issued upon the exercise of stock
options), or the perception that sales could occur, could adversely affect
prevailing
15
market prices for the common stock. If these sales reduce the market price of
the PRIMEDIA common stock, PRIMEDIA's ability to raise additional capital in
equity markets could be adversely affected.
RISKS RELATED TO THE FAILURE TO EXCHANGE
CONSEQUENCES OF FAILURE TO TENDER
The shares of IGR common stock and Series B preferred stock which are not
exchanged for shares of PRIMEDIA common stock pursuant to the exchange offer
will remain restricted securities within the meaning of Rule 144 of the
Securities Act. Accordingly, these shares of IGR stock may be resold only
pursuant to an effective registration statement under the Securities Act or
pursuant to an applicable exemption from registration, as discussed in "The
Exchange Offer--Consequences of Failure to Exchange."
In addition, IGR is not a publicly traded company. As a result, there is no
public market for IGR's common stock or Series B preferred stock. We cannot
predict the extent to which there will ever be an active trading market in these
IGR securities or how liquid that market might become. Therefore, we cannot
assure you that you will be able to sell in the future any shares of IGR stock
not exchanged in this offer.
PRIMEDIA CAN MAKE NO REPRESENTATIONS ABOUT IGR'S FUTURE PROFITABILITY
If IGR's revenues do not increase substantially, IGR may never become
profitable. IGR has not generated enough revenues to exceed the substantial
amounts it has spent to create, launch, enhance and to grow its business. Even
if IGR does achieve profitability, it may not sustain or increase profitability
on a quarterly or annual basis in the future.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
This prospectus contains or incorporates by reference some forward-looking
statements within the meaning of federal securities laws concerning PRIMEDIA's
operations, economic performance, and financial condition. These statements are
based upon a number of assumptions and estimates which are inherently subject to
uncertainties and contingencies, many of which are beyond PRIMEDIA's control,
and reflect future business decisions which are subject to change. Some of these
assumptions may not materialize and unanticipated events may occur which can
affect PRIMEDIA's results. Important factors that could cause PRIMEDIA's actual
results to differ from PRIMEDIA's expectations are discussed in more detail in
this prospectus under the caption "Risk Factors" and in the documents
incorporated by reference in this prospectus. When considering these
forward-looking statements you should keep in mind the risk factors and other
cautionary statements contained or incorporated by reference in this prospectus.
These forward-looking statements are made as of the date of this prospectus or
the documents incorporated by reference in this prospectus and PRIMEDIA assumes
no obligation to update them.
USE OF PROCEEDS
There will be no cash proceeds to PRIMEDIA from the exchange offer.
16
BUSINESS OF IGR
IGR is a Denver-based full-service online gift registry and retailing
company. Major investors include Primedia Ventures, Commonwealth Associates,
Winfield Capital and The May Department Stores Company. IGR operates a flagship
site, www.weddingnetwork.com, which provides online wedding planning, content,
and tools, as well as gift registry services for both consumers and wedding-
related vendors. IGR's weddingnetwork.com is one of the internet's most
comprehensive online wedding resources, offering creative tools, imaginative
ideas and real answers to help engaged couples plan unique wedding celebrations.
Wedding Network is also the exclusive online partner for Modern Bride magazine,
Modern Bride Connection (a chain of 15 regional bridal magazines) and
www.modernbride.com. Through its relationship with Modern Bride, IGR hosts, and
has exclusive use of Modernbride.com's online content via contractual agreement.
In the last twelve months IGR has successfully marketed and developed a new
business: private label gift registry solutions. Today, it has a number of these
retail partner relationships either in place or soon to be under agreement. One
such example is with the May Company.
IGR's revenue goals stem from two distinct activities. First, IGR is focused
on monetizing the wedding process, helping engaged couples and their guests with
information and resources in connection with wedding-related, honeymoon and
post-wedding activities. Second, IGR is focused on helping vendors seek easier
and more effective ways to establish and maintain relationships with engaged
couples and their guests. IGR faces competition from various companies including
The Knot and The Wedding Channel.com. IGR competes with and differentiates
itself from these competitors on the basis of its unique private label solution
focus, its exclusive relationship with Modern Bride, the quality of its
management, and its plans for developing local services in partnership with
Modern Bride Connection, another division of Primedia Magazines Inc.
17
THE EXCHANGE OFFER
THIS SECTION OF THE PROSPECTUS DESCRIBES MATERIAL ASPECTS OF THE PROPOSED
EXCHANGE OFFER. WHILE WE BELIEVE THAT THE DESCRIPTION COVERS THE MATERIAL TERMS
OF THE EXCHANGE OFFER, THIS SUMMARY MAY NOT CONTAIN ALL OF THE INFORMATION THAT
IS IMPORTANT TO YOU. YOU SHOULD CAREFULLY READ THIS ENTIRE PROSPECTUS AND THE
OTHER DOCUMENTS WE REFER YOU TO FOR A MORE COMPLETE UNDERSTANDING OF THE
EXCHANGE OFFER. IN ADDITION, WE INCORPORATE IMPORTANT BUSINESS AND FINANCIAL
INFORMATION ABOUT PRIMEDIA INTO THIS PROSPECTUS BY REFERENCE. YOU MAY OBTAIN THE
INFORMATION INCORPORATED BY REFERENCE INTO THIS PROSPECTUS WITHOUT CHARGE BY
FOLLOWING THE INSTRUCTIONS IN THE SECTION ENTITLED "WHERE YOU CAN FIND MORE
INFORMATION" THAT BEGINS ON PAGE 41 OF THIS PROSPECTUS.
NUMBER OF SHARES OF COMMON STOCK AND SERIES B PREFERRED STOCK TO BE EXCHANGED;
PRORATION
In connection with PRIMEDIA's investment in the Series E preferred stock of
IGR, PRIMEDIA agreed to make the exchange offer. PRIMEDIA is offering to
exchange shares of its common stock for up to 3,764,000 shares of IGR common
stock and up to 556,088 shares of IGR Series B preferred stock. As of the date
of this prospectus, 8,366,698 shares of IGR common stock and 1,235,791 shares of
Series B preferred stock were outstanding. PRIMEDIA has fixed the close of
business on , 2001 as the record date for the exchange offer for
purposes of determining the persons to whom this prospectus and the letter of
transmittal will be mailed initially. Only a registered holder of the IGR common
stock or Series B preferred stock (or the holder's legal representative or
attorney-in-fact) as reflected on IGR's records may participate in the exchange
offer. PRIMEDIA will not tender any shares of IGR common stock or Series B
preferred stock it owns in the exchange offer.
If the aggregate number of shares elected to be exchanged exceeds 3,764,000,
in the case of the IGR common stock, or 556,088, in the case of the Series B
preferred stock, the number of shares you will be permitted to exchange for
PRIMEDIA common stock will be limited on a PRO-RATA basis according to the
proration formulas below:
- IGR COMMON STOCK: Multiply the total number of shares of IGR common stock
you have elected to exchange by a proration factor determined by dividing
3,764,000 by the total number of shares of common stock elected to be
exchanged in the exchange offer. For example, if you elected to exchange
100,000 shares of IGR common stock and the total number of shares of IGR
common stock elected to be exchanged by your fellow stockholders is
5,000,000 shares, you would only be allowed to exchange 75,280 shares of
common stock in the exchange offer.
- IGR SERIES B PREFERRED STOCK: Multiply the total number of shares of IGR
Series B preferred stock you have elected to exchange by a proration
factor determined by dividing 556,088 by the total number of shares of
Series B preferred stock elected to be exchanged in the exchange offer.
For example, if you elected to exchange 100,000 shares of IGR Series B
preferred stock and the total number of shares of IGR Series B preferred
stock elected to be exchanged by your fellow stockholders is 800,000
shares, you would only be allowed to exchange 69,511 shares of Series B
preferred stock in the exchange offer.
WHAT YOU WILL RECEIVE IN THE EXCHANGE OFFER
In the exchange offer, holders of IGR common stock and Series B preferred
stock will receive a number of shares of PRIMEDIA common stock determined
pursuant to an exchange ratio for each share of IGR stock they own.
- IGR COMMON STOCK: If you hold shares of IGR common stock, the exchange
ratio will be calculated by dividing $0.80 by the average closing price of
the PRIMEDIA common stock on the New York Stock Exchange for the thirty
consecutive trading days ending , 2001. For example, if the 30
consecutive trading day measuring period had ended on January 18,
18
2001, the PRIMEDIA common stock average closing price would have been
$11.22. Therefore, if you tendered 1,000 shares of IGR common stock and
were not prorated, you would have received 71 shares of PRIMEDIA common
stock and $3.38 in cash in exchange for the IGR shares.
- IGR SERIES B PREFERRED Stock: If you hold shares of IGR Series B preferred
stock, the exchange ratio will be calculated by dividing $8.00 by the
average closing price of the PRIMEDIA common stock on the New York Stock
Exchange for the thirty consecutive trading days ending , 2001. For
example, if the 30 consecutive trading day measuring period had ended on
January 18, 2001, the PRIMEDIA common stock average closing price would
have been $11.22. Therefore, if you tendered 1,000 shares of IGR Series B
preferred stock and were not prorated, you would have received 713 shares
of PRIMEDIA common stock and $0.14 in cash.
PRIMEDIA will not issue fractional shares of PRIMEDIA common stock. You will
be entitled to receive cash instead of fractional shares in an amount equal to
the product of any fractional share amount and the average closing price of the
PRIMEDIA common stock as calculated above.
WE URGE HOLDERS OF IGR COMMON STOCK AND SERIES B PREFERRED STOCK TO
CALCULATE THE AVERAGE CLOSING PRICE FOR PRIMEDIA COMMON STOCK BY OBTAINING
CURRENT MARKET QUOTATIONS BEFORE MAKING ANY DECISION WITH RESPECT TO THE
EXCHANGE OFFER.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, PRIMEDIA will accept any and all shares of IGR
common stock or Series B preferred stock validly tendered and not withdrawn
prior to the expiration date. PRIMEDIA will issue a number of shares of its
common stock, as determined by the exchange ratio, for each share of IGR common
stock or Series B preferred stock accepted in the exchange offer. Holders may
tender some or all of their shares of IGR common stock or Series B preferred
stock pursuant to the exchange offer. PRIMEDIA intends to conduct the exchange
offer in accordance with the applicable requirements of the Securities Exchange
Act of 1934 and the rules and regulations of the SEC thereunder.
PRIMEDIA will be deemed to have accepted validly tendered shares of IGR
common stock or Series B preferred stock when PRIMEDIA has given oral or written
notice of acceptance to the exchange agent. The exchange agent will act as agent
for the tendering holders of the IGR common stock or Series B preferred stock
for the purposes of receiving the PRIMEDIA common stock from PRIMEDIA.
If any tendered shares of IGR common stock or Series B preferred stock are
not accepted for exchange because of an invalid tender, proration or the
occurrence of certain other events set forth in this prospectus, the letter of
transmittal or otherwise, certificates for those unaccepted shares of IGR common
stock or Series B preferred stock will be returned to the tendering holder as
promptly as practicable after the expiration date.
Holders who tender shares of IGR common stock or Series B preferred stock in
the exchange offer will be required to pay any applicable transfer taxes with
respect to the exchange of shares of IGR common stock or Series B preferred
stock pursuant to the exchange offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The expiration date will be 12:00 a.m., New York City time, on
, 2001 unless PRIMEDIA, in its sole discretion extends the exchange offer, in
which case the expiration date will be 12:00 a.m., New York City time, on the
last day of the last extension.
19
In order to extend the exchange offer, PRIMEDIA will notify the exchange
agent of any extension by oral or written notice and will make a public
announcement, each before 9:00 a.m., New York City time, on the next business
day after the previously scheduled expiration date.
PRIMEDIA reserves the right:
- to delay accepting any shares of IGR common stock or Series B preferred
stock;
- to extend the exchange offer;
- if any of the conditions set forth below under "--Conditions of the
Exchange Offer" have not been satisfied, to terminate the exchange offer;
or
- to amend the terms of the exchange offer in any manner.
PRIMEDIA may delay, extend, terminate or change the exchange offer by giving
notice to the exchange agent. PRIMEDIA will publicly announce any delay,
termination, extension or change in the exchange offer. If PRIMEDIA materially
changes the exchange offer, PRIMEDIA will promptly disclose the changes by means
of a prospectus supplement that will be sent to the registered holders of IGR
common stock and Series B preferred stock. In the case of any material changes
to the exchange offer, PRIMEDIA will extend the exchange offer, if the exchange
offer would have otherwise expired during five to ten business days after the
change, for a period of five to ten business days, depending upon the
significance of the changes and the manner by which the registered holders were
informed of the change.
Without limiting the manner in which PRIMEDIA may choose to make a public
announcement of any delay, extension, termination or change of the exchange
offer, PRIMEDIA will not have an obligation to publish, advertise, or otherwise
communicate any public announcement, other than by making a timely release to
the DOW Jones New Service.
PROCEDURES FOR TENDERING
Only a registered holder of shares of IGR common stock or Series B preferred
stock may tender shares in the exchange offer. To tender in the exchange offer a
holder must complete, sign and date the letter of transmittal, or a facsimile,
have the signatures guaranteed (if required by the letter of transmittal) and
mail or otherwise deliver the letter of transmittal or the facsimile, together
with the shares of IGR common stock or Series B preferred stock, as applicable,
and any other required documents, to the exchange agent at the address set forth
below under "--Exchange Agent" for receipt before the expiration date.
The tender by a holder will constitute an agreement between the holder and
PRIMEDIA in accordance with the terms and subject to the conditions set forth in
this prospectus and in the letter of transmittal.
EACH HOLDER MAY ELECT THE METHOD OF DELIVERY OF THE SHARES OF IGR COMMON
STOCK OR SERIES B PREFERRED STOCK, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT, BUT THE HOLDER WILL BEAR THE RISK THAT
THESE ITEMS ARE NOT RECEIVED. INSTEAD OF DELIVERY BY MAIL, WE RECOMMEND THAT
HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, YOU SHOULD
ALLOW SUFFICIENT TIME TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE
EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR SHARES OF IGR COMMON STOCK OR
SERIES B PREFERRED STOCK SHOULD BE SENT TO PRIMEDIA.
If a person other than the registered holder of any shares of IGR common
stock or Series B preferred stock signs the letter of transmittal, the shares of
IGR common stock or Series B preferred stock, as applicable, must be endorsed or
accompanied by a properly completed stock power, signed by the registered holder
as that registered holder's name appears on the shares of IGR common stock or
Series B preferred stock, as applicable.
20
If any trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity sign the letter of transmittal or any shares of IGR common stock or
Series B preferred stock or stock powers, the fiduciary or representative should
indicate that fact when signing, and evidence satisfactory to PRIMEDIA of their
authority to act must be submitted with the letter of transmittal.
PRIMEDIA will determine in its sole discretion all questions as to the
validity, form, eligibility (including time of receipt), acceptance and
withdrawal of tendered shares of IGR common stock or Series B preferred stock,
which determination will be final and binding. PRIMEDIA reserves the absolute
right to reject any and all shares of IGR common stock or Series B preferred
stock not properly tendered or any shares of IGR common stock or Series B
preferred stock PRIMEDIA's acceptance of which would, in the opinion of counsel
for PRIMEDIA, be unlawful. PRIMEDIA also reserves the right to waive any
defects, irregularities or conditions of tender as to particular shares of IGR
common stock or Series B preferred stock. PRIMEDIA's interpretation of the terms
and conditions of the exchange offer (including the instructions in the letter
of transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of the shares of IGR common
stock or Series B preferred stock must be cured within the time PRIMEDIA
determines. Although PRIMEDIA intends to notify holders of defects or
irregularities with respect to tenders of the shares of IGR common stock or
Series B preferred stock, neither PRIMEDIA, the exchange agent nor any other
person will be liable for failure to give such notification. Tenders of the
shares of IGR common stock or Series B preferred stock by IGR stockholders will
not be deemed to have been made until any defects regarding the IGR common stock
or Series B preferred stock tendered have been cured or waived. If the exchange
agent receives any shares of IGR common stock or Series B preferred stock that
are not validly tendered, the exchange agent will return those shares to the
tendering holders, unless otherwise provided in the letter of transmittal, as
soon as practicable following the expiration date.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus or the letter of
transmittal, tenders of the shares of IGR common stock or Series B preferred
stock may be withdrawn at any time before the expiration date or, if tendered
shares have not yet been accepted for exchange, after the expiration of forty
business days from the commencement of the exchange offer.
To withdraw a tender of shares of IGR common stock or Series B preferred
stock in the exchange offer, the exchange agent must receive at its address set
forth in this prospectus before the expiration date a written or facsimile
transmission notice of withdrawal. Any notice of withdrawal must:
- specify the name of the person having deposited the shares of IGR common
stock or Series B preferred stock to be withdrawn;
- identify the shares of IGR common stock or Series B preferred stock to be
withdrawn (including the certificate number or numbers and number of
shares); and
- be signed by the holder in the same manner as the original signature on
the letter of transmittal by which the shares of IGR common stock or
Series B preferred stock were tendered.
PRIMEDIA will determine in its sole discretion all questions as to the
validity, form and eligibility (including time of receipt) of such notice, which
determination will be final and binding on all parties. Any shares of IGR common
stock or Series B preferred stock withdrawn will be deemed not to have been
validly tendered for purposes of the exchange offer and PRIMEDIA will not issue
shares of common stock with respect to the withdrawn shares unless the withdrawn
shares are validly tendered. Properly withdrawn shares of IGR common stock or
Series B preferred stock may be tendered by
21
following one of the procedures described above under "--Procedures for
Tendering" at any time before the expiration date.
Any shares of IGR common stock or Series B preferred stock which have been
tendered but which are not accepted for exchange due to rejection of tender,
termination of the exchange offer, proration or which have been validly
withdrawn will be returned as soon as practicable to the holder without cost to
such holder.
CONDITIONS OF THE EXCHANGE OFFER
Notwithstanding any other term of the exchange offer, PRIMEDIA is not
required to accept for exchange, or exchange shares of PRIMEDIA common stock
for, any shares of IGR common stock or Series B preferred stock, and may
terminate the exchange offer before the acceptance of any shares of IGR common
stock or Series B preferred stock, if:
- any action or proceeding is instituted or threatened in any court or by or
before any governmental agency with respect to the exchange offer which,
in the sole judgment of PRIMEDIA, might materially impair the ability of
PRIMEDIA to proceed with the exchange offer; or
- any law, statute, rule or regulation is proposed, adopted or enacted,
which, in the sole judgment of PRIMEDIA might materially impair the
ability of PRIMEDIA, to proceed with the exchange offer.
If PRIMEDIA determines in its sole discretion that any of the conditions are
not satisfied, PRIMEDIA may:
- refuse to accept any shares of IGR common stock or Series B preferred
stock and return all tendered shares of IGR common stock or Series B
preferred stock, as applicable, to the tendering holders;
- extend the exchange offer and retain all shares of IGR common stock or
Series B preferred stock tendered prior to the expiration date, subject,
however, to the rights of holders to withdraw their previously tendered
shares of IGR common stock or Series B preferred stock, as applicable, see
"--Withdrawal of Tenders;" or
- waive the unsatisfied conditions with respect to the exchange offer and
accept all validly tendered shares of IGR common stock or Series B
preferred stock which have not been withdrawn.
If any determination or waiver constitutes a material change to the exchange
offer, PRIMEDIA will promptly disclose the determination or waiver by means of a
prospectus supplement that will be distributed to the registered holders, and
PRIMEDIA will extend the exchange offer for a period of five to ten business
days, depending upon the significance of the waiver and the manner of disclosure
to the registered holders, if the exchange offer would otherwise have expired
during that five to ten business day period.
22
EXCHANGE AGENT
The Bank of New York has been appointed as exchange agent for the exchange
offer. Questions and requests for assistance, request for additional copies of
this prospectus or of the letter of transmittal should be directed to the
exchange agent addressed as follows:
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER:
Tender & Exchange Department (For Eligible Institutions Tender & Exchange Department
Only)
P.O. Box 11248 (212) 815-6213 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, New York 10286-1248 New York, New York 10286
CONFIRM FACSIMILE BY TELEPHONE:
(212) 815-6173
FEES AND EXPENSES
PRIMEDIA will bear the expenses of soliciting tenders. The principal
solicitation is being made by mail; however, additional solicitation may be made
by telecopy, telephone or in person by officers and regular employees of
PRIMEDIA and its affiliates.
PRIMEDIA has not retained any dealer-manager in connection the exchange
offer and will not make any payments to brokers, dealers or others soliciting
acceptance of the exchange offer. PRIMEDIA, however, will pay the exchange agent
reasonable and customary fees for its services and will reimburse it for
reasonable out-of-pocket expenses in connection with the exchange offer.
The holders of IGR common stock or Series B preferred stock, as applicable,
will pay all transfer taxes, if any, applicable to the exchange of the IGR
common stock or Series B preferred stock pursuant to the exchange offer. If
satisfactory evidence of payment or exemption from these taxes is not submitted
with the letter of transmittal, the amount of the transfer taxes will be
directly billed to the tendering holder.
CONSEQUENCES OF FAILURE TO EXCHANGE
The shares of IGR common stock or Series B preferred stock which are not
exchanged for shares of PRIMEDIA common stock pursuant to the exchange offer
will remain restricted securities of IGR. Accordingly, shares of IGR common
stock or Series B preferred stock that are not exchanged may be resold only
pursuant to an effective registration statement under the Securities Act or an
available exemption from registration, if any. There is no public market for the
shares of IGR common stock or Series B preferred stock and we cannot assure you
that any public market for your shares will exist in the future. Therefore, if
you do not elect to exchange your shares in the exchange offer, your liquidity
options will be limited.
Any transfer must be in accordance with any applicable securities laws of
any state of the United States and subject to certain requirements of the
transfer agent and registrar being met.
RESALES OF THE PRIMEDIA COMMON STOCK
The shares of PRIMEDIA common stock received in exchange for your shares of
IGR common stock or Series B preferred stock will be freely tradeable, subject
to the following restrictions:
- holders may only sell 10% of the total number of shares of PRIMEDIA common
stock received in the exchange offer each week commencing the first week
after the closing date of the exchange offer, with all the shares of the
PRIMEDIA common stock becoming freely tradeable 10 weeks after the closing
date of the exchange offer; and
23
- the five largest holders of IGR common stock must provide PRIMEDIA with
24 hours written notice prior to any sale, transfer or disposition of
shares of PRIMEDIA common stock received in the exchange offer with all
the shares of PRIMEDIA common stock becoming freely tradeable 10 weeks
after the closing date of the exchange offer.
By completing and signing the letter of transmittal, all holders are
electing to participate in the exchange offer on the terms and conditions
contained in the letter of transmittal and this prospectus and agreeing to be
bound by these transfer restrictions.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER
The following summary describes the material United States federal income
tax consequences of the exchange offer to holders of IGR common stock and
Series B preferred stock that are United States persons. This discussion is
necessarily general and does not deal with special situations. PERSONS
CONSIDERING PARTICIPATING IN THE EXCHANGE OFFER SHOULD CONSULT THEIR OWN TAX
ADVISORS CONCERNING THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES IN LIGHT
OF THEIR PARTICULAR SITUATIONS, AS WELL AS ANY CONSEQUENCES ARISING UNDER THE
LAWS OF ANY OTHER TAXING JURISDICTION.
The exchange will be a taxable transaction for holders of IGR common stock
and Series B preferred stock who elect to participate in the exchange offer.
Participating holders of IGR common stock and Series B preferred stock will
recognize gain or loss equal to the difference between the fair market value of
the PRIMEDIA common stock received in the exchange plus the amount of any cash
received instead of fractional shares and the tax basis of the IGR common stock
or Series B preferred stock exchanged therefor. Such gain or loss will generally
be a capital gain or loss for holders that hold their shares of IGR common stock
or Series B preferred stock as capital assets. Capital gains of individuals
derived with respect to capital assets held for more than one year are eligible
for reduced rates of taxation. The deductibility of capital losses is subject to
limitations.
There will be no United States federal income tax consequences for holders
of IGR common stock and Series B preferred stock who do not elect to participate
in the exchange offer.
HOLDERS OF IGR COMMON STOCK AND SERIES B PREFERRED STOCK THAT ARE NOT UNITED
STATES PERSONS SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE TAX
CONSEQUENCES OF THE EXCHANGE OFFER TO THEM.
24
INVESTMENT IN IGR
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
On March 17, 1998 PRIMEDIA Magazines Inc., a subsidiary of PRIMEDIA, made an
initial investment in IGR. Pursuant to the terms of the initial investment,
PRIMEDIA Magazines purchased 2,100,000 shares of IGR's Series A Convertible
Preferred Stock for an aggregate consideration of $2,331,000. As a result of the
investment in the Series A preferred stock, PRIMEDIA and its affiliates owned
20.1% of the voting power outstanding of the IGR common stock and were entitled
to designate one member to IGR's board of directors.
SERIES E PREFERRED STOCK PURCHASE AGREEMENT
On October 24, 2000 PRIMEDIANET Inc., a subsidiary of PRIMEDIA, entered into
a preferred stock purchase agreement for the acquisition of 39,151,000 shares of
Series E preferred stock from IGR for an aggregate consideration of $41,500,000.
The $41,500,000 purchase price paid by PRIMEDIANET for the Series E preferred
stock was comprised of cash and other consideration, including certain
intellectual property and the services provided pursuant to the Advertising and
Content License Agreement described below, see "--Advertising and Content
License Agreement."
In addition, under the purchase agreement as long as PRIMEDIANET and its
affiliates maintain the ownership interests specified below in the voting stock
of IGR, PRIMEDIANET has certain protective rights relating to specified IGR
actions, such as:
PRIMEDIA OWNERSHIP INTEREST 10%
- entering into any sale, lease or other disposition of substantially all
the assets of IGR;
- declaring or paying of any dividend on IGR securities junior to its
preferred stock; or
- modifying or amending IGR's charter or bylaws.
PRIMEDIA OWNERSHIP INTEREST 15%
- making capital expenditures in excess of $400,000;
- incurring indebtedness in excess of $500,000;
- selling equity interests in IGR for gross proceeds in excess of $2,000,000
in any six month period; or
- changing the scope or nature of IGR's existing businesses.
PRIMEDIA OWNERSHIP INTEREST 25%
- entering into transactions by which a third party acquires more than 50%
of the voting rights of IGR.
Following the purchase of the Series E preferred stock and the subsequent
restatement of the IGR certificate of incorporation, PRIMEDIA and its affiliates
own, in addition to the IGR securities previously owned, 21,590,134 shares of
Series E voting preferred stock and 17,560,866 shares of IGR Series E non-voting
preferred stock. As a result, PRIMEDIA and its affiliates own 49.9% of the
outstanding voting power of the IGR stock and are entitled to appoint 40% of the
directors constituting the board of directors of IGR. Holders of the Series E
voting preferred stock and the Series E non-voting preferred stock have similar
rights, except that holders of the Series E non-voting preferred stock may not
vote on an as converted basis with the common stock and the Series E non-voting
preferred stock ranks subordinate to the existing IGR preferred stock, including
the Series E
25
voting preferred stock. For a description of the rights of the Series E voting
preferred stock and the Series E non-voting preferred stock, see "--Restated IGR
Certificate of Incorporation."
Upon completion of PRIMEDIA's exchange offer, PRIMEDIA intends to convert a
sufficient number of shares of Series E voting preferred stock to Series E
non-voting preferred stock so that PRIMEDIA and its affiliates will maintain
their 49.9% ownership of the outstanding voting power of the IGR stock.
RESTATED IGR CERTIFICATE OF INCORPORATION
Some of the significant provisions of the certificate of incorporation of
IGR as currently in effect include the following:
- The Series E Preferred Stock is divided into two classes, one voting and
one non-voting. The Series E voting preferred stock is convertible into
IGR common stock at a conversion ratio of one share of common stock for
each share of Series E voting preferred stock. The Series E non-voting
preferred stock is convertible into IGR Class A non-voting common stock at
a conversion ratio of one share of non-voting common stock for each share
of Series E non-voting preferred stock. The Series E voting stock ranks on
parity with the existing IGR preferred stock with respect to rights to
future dividends, rights on liquidation and winding-up. The Series E
non-voting stock is subordinate to the existing preferred stock and senior
to the common stock of IGR with respect to rights to future dividends,
rights on liquidation and winding up and does not vote with the common
stock on an as converted basis;
- PRIMEDIA, as a holder of IGR's Series E voting preferred stock, may
nominate a majority of IGR's board of directors as long as PRIMEDIA or any
of its affiliates owns at least 50% of IGR's voting stock. If PRIMEDIA's
ownership of voting stock of IGR declines in the future, through sale or
dilution, PRIMEDIA's board representation will decline as follows:
PRIMEDIA OWNERSHIP PERCENTAGE OF BOARD
------------------ -------------------
Less than 50% but greater than or equal to 40% 40%
Less than 40% but greater than or equal to 30% 30%
Less than 30% but greater than or equal to 20% 20%
Less than 20% but greater than or equal to 10% 10%
Less than 10% but greater than or equal to 5% 5%
- PRIMEDIA has certain protective rights of approval involving various
corporate activities of IGR, including any amendment to the certificate of
incorporation or the creation of any series of stock on parity with or
senior to the Series E preferred stock. The restated certificate of
incorporation also contains protective provisions similar to those
contained in the Series E Purchase Agreement so long as PRIMEDIA maintains
ownership interests, ranging from 10%-25%, in the IGR voting stock, see
"--Series E Preferred Stock Purchase Agreement."
The IGR board of directors has also approved an amendment to the restated
certificate of incorporation which provides that PRIMEDIA may nominate 50% of
IGR's board of directors if PRIMEDIA and its affiliates own less than 50% but
greater than 49% of the voting power of IGR. The amendment is subject to the
approval of the IGR shareholders prior to becoming effective.
IGR/PRIMEDIA STOCKHOLDERS AGREEMENT
In connection with the execution and delivery of the Series E purchase
agreement, PRIMEDIANET and PRIMEDIA Magazines entered into a stockholders
agreement with IGR. The stockholders agreement provides that PRIMEDIA and its
affiliates will have the right to appoint the number of directors to the IGR
board of directors permitted, based on PRIMEDIA's percentage
26
ownership of the voting stock of IGR, by IGR's restated certificate of
incorporation. See "--Restated Certificate of Incorporation."
ADVERTISING AND CONTENT LICENSE AGREEMENT
In connection with the execution and delivery of the Series E purchase
agreement, PRIMEDIA Magazines also entered into an advertising and content
license agreement with IGR. The advertising and content license agreement
provides that PRIMEDIA Magazines will grant to IGR:
- a five year license for all past and future editorial content from certain
print consumer magazines of PRIMEDIA Magazines;
- a five year license for certain registered trademarks, trademark
applications and URL's; and
- advertisements in selected magazines of PRIMEDIA Magazines.
Pursuant to the advertising and content license agreement, IGR's wedding
related website located at www.weddingnetwork.com will be rebranded as
www.modernbride.com and PRIMEDIA Magazines must use IGR as its platform for
future growth in the online wedding related market for the term of the
agreement. The advertising and content license agreement also subjects both IGR
and PRIMEDIA Magazines to certain non-compete provisions for the five-year term
of the agreement. Specifically, IGR may not incorporate any content or branding
elements of certain direct competitors of PRIMEDIA Magazines into
www.weddingnetwork.com, www.modernbride.com or any of the URLs licensed pursuant
to the advertising and content license agreement and PRIMEDIA Magazines agrees
not to provide or license past or future editorial content of certain of
PRIMEDIA Magazine's print consumer magazines to direct competitors of
www.weddingnetwork.com, www.modernbride.com or any of the URLs transferred
pursuant to the agreement.
27
DESCRIPTION OF PRIMEDIA CAPITAL STOCK
GENERAL
As of September 30, 2000, PRIMEDIA had 300,000,000 shares of authorized
capital stock. Those shares consisted of:
- 250,000,000 shares of common stock, of which 166,765,849 shares were
outstanding; and
- 50,000,000 shares of preferred stock, of which:
- 2,000,000 shares were designated Series D Exchangeable Preferred Stock,
all which were outstanding;
- 1,250,000 shares were designated Series F Exchangeable Preferred Stock,
all which were outstanding; and
- 2,500,000 shares were designated Series H Exchangeable Preferred Stock,
all which were outstanding.
DESCRIPTION OF PRIMEDIA COMMON STOCK
The rights of IGR stockholders who acquire shares of PRIMEDIA common stock
offered by this prospectus will be governed by PRIMEDIA's certificate of
incorporation and by-laws and Delaware corporate law. We have summarized below
provisions of our certificate of incorporation. This summary does not contain
all of the provisions that you may want to consider as an investor in PRIMEDIA's
securities. You may wish to review our certificate of incorporation and by-laws.
PRIMEDIA has filed a copy of its certificate of incorporation and by-laws with
the SEC. See "Where You Can Find More Information."
DIVIDENDS. The owners of PRIMEDIA common stock may receive dividends when
declared by the board of directors out of funds legally available for the
payment of dividends. PRIMEDIA has no present intention of declaring and paying
cash dividends on the common stock at any time in the foreseeable future. The
terms of PRIMEDIA's credit agreements, indentures and preferred stocks restrict
PRIMEDIA from declaring and paying cash dividends on the common stock. See "Risk
Factors."
VOTING RIGHTS. Each share of common stock is entitled to one vote in the
election of directors and all other matters submitted to stockholder vote. There
are no cumulative voting rights.
LIQUIDATION RIGHTS. If PRIMEDIA liquidates, dissolves or winds-up its
business, whether voluntarily or not, PRIMEDIA's common stockholders will share
equally in the distribution of all assets remaining after payment to creditors
and preferred stockholders.
PREEMPTIVE RIGHTS. The common stock has no preemptive or similar rights.
LISTING. PRIMEDIA's common stock is listed on the New York Stock Exchange
under the symbol "PRM."
ANTI-TAKEOVER PROVISIONS. PRIMEDIA is subject to the provisions of Delaware
law described below regarding business combinations with interested
stockholders.
Section 203 of the Delaware General Corporation Law applies to a broad range
of business combinations between a Delaware corporation and an interested
stockholder. The Delaware law definition of "business combination" includes
mergers, sales of assets, issuances of voting stock and certain other
transactions. An "interested stockholder" is defined as any person who owns,
directly or indirectly, 15% or more of the outstanding voting stock of a
corporation.
28
Section 203 prohibits a corporation from engaging in a business combination
with an interested stockholder for a period of three years following the date on
which the stockholder became an interested stockholder, unless:
- the board of directors approved the business combination before the
stockholder became an interested stockholder, or the board of directors
approved the transaction that resulted in the stockholder becoming an
interested stockholder;
- upon completion of the transaction which resulted in the stockholder
becoming an interested stockholder, such stockholder owned at least 85% of
the voting stock outstanding when the transaction began other than shares
held by directors who are also officers and other than shares held by
certain employee stock plans; or
- the board of directors approved the business combination after the
stockholder became an interested stockholder and the business combination
was approved at a meeting by at least two-thirds of the outstanding voting
stock not owned by such stockholder.
These limitations on business combinations with interested stockholders do
not apply to a corporation that does not have a class of stock listed on a
national securities exchange, authorized for quotation on an interdealer
quotation system of a registered national securities association or held of
record by more than 2,000 stockholders.
DESCRIPTION OF SERIES D EXCHANGEABLE PREFERRED STOCK
RANK. The Series D Preferred Stock ranks as to dividend rights and rights
on liquidation, winding-up or dissolution:
- senior to all classes of common stock and all classes of capital stock or
other series of preferred stock which does not expressly provide that it
ranks senior to or on parity with the Series D Preferred Stock;
- on a parity with the Series F Preferred Stock, the Series H Preferred
Stock, and all classes of capital stock or other series of preferred stock
which expressly provides that it ranks on parity with the Series D
Preferred Stock; and
- junior to each class of capital stock or other series of preferred stock
which expressly provides that it ranks senior to the Series D Preferred
Stock.
DIVIDENDS. Holders of the Series D Preferred Stock are entitled to receive,
when as and if declared by the board of directors of PRIMEDIA, out of funds
legally available for the payment of dividends, dividends in cash at an annual
rate equal to 10% of the liquidation preference. Dividends on the Series D
Preferred Stock are payable quarterly in arrears on February 1, May 1, August 1
and November 1 of each year. Dividends will cumulate without interest until
declared and paid. As of the date of this prospectus, PRIMEDIA has paid all such
dividends.
OPTIONAL REDEMPTION. Subject to contractual and other restrictions and the
existence of legally available funds, PRIMEDIA, at its option, may at any time
on or after February 1, 2001, redeem the Series D Preferred Stock in whole or in
part, at redemption prices declining ratably from $105 beginning on February 1,
2001, to $100 on and after February 1, 2006, plus accrued and unpaid dividends.
MANDATORY REDEMPTION. Subject to contractual and other restrictions and to
the existence of legally available funds, on February 1, 2008, PRIMEDIA will be
required to redeem all outstanding shares of Series D Preferred Stock at a price
equal to $100 per share plus all accumulated and unpaid dividends to the date of
redemption.
29
LIQUIDATION PREFERENCE. Upon any voluntary or involuntary liquidation,
dissolution or winding up of PRIMEDIA, holders of Series D Preferred Stock will
be entitled to be paid out of the assets of PRIMEDIA available for distribution
to its shareholders $100 per share, plus any accrued and unpaid dividends to the
date of liquidation, dissolution or winding up.
VOTING RIGHTS. Holders of the Series D Preferred Stock have no voting
rights, except as provided by law or as set forth in the certificate of
designations for the Series D Preferred Stock. Also, when dividends on the
Series D Preferred Stock are in arrears and unpaid for six consecutive quarterly
periods, the board of directors of PRIMEDIA will be increased by two directors
and the holders of a majority of the Series D Preferred Stock, voting as a
class, will be entitled to elect two additional directors of the expanded board
of directors. These voting rights will continue until such time as all dividends
in arrears on the Series D Preferred Stock have been paid in full.
Pursuant to the certificate of designations for the Series D Preferred
Stock, PRIMEDIA may not merge, consolidate with or into, or transfer all or
substantially all of its assets, in one transaction or in a series of related
transactions, to any person without the consent of the holders of a majority of
the issued and outstanding Series D Preferred Stock, voting together with the
holders of all capital stock ranking on parity with the Series D Preferred Stock
issued after the date of issuance of the Series D Preferred Stock, unless:
- PRIMEDIA will be the continuing person, or the person, if other than
PRIMEDIA, formed by the merger or consolidation, or the person to which
the properties and assets of PRIMEDIA are transferred, is a corporation
organized and existing under the laws of the United States or any state in
the United States or the District of Columbia, and the Series D Preferred
Stock will be converted into or exchanged for shares of the successor or
resulting company having substantially the same powers, preferences and
relative participating, optional or other special rights and the same
qualifications, limitations or restrictions that the Series D Preferred
Stock had immediately before the conversion; and
- immediately after giving effect to the transaction on a pro forma basis,
the consolidated net worth of the surviving entity is at least equal to
the lesser of the consolidated net worth of PRIMEDIA immediately before
the transaction and the consolidated net worth of PRIMEDIA on the first
date any Series D Preferred Stock was issued.
The consent of the holders of the Series D Preferred Stock will not be
required if the requisite holders of preferred stock senior to the Series D
Preferred Stock or any indebtedness of PRIMEDIA have consented or granted a
waiver with respect to the transaction in question.
EXCHANGE. PRIMEDIA may, at its option, on any scheduled dividend payment
date, issue 10% Subordinated Debentures due 2008 in exchange for the Series D
Preferred Stock, in whole but not in part. Holders of Series D Preferred Stock
so exchanged will be entitled to receive the principal amount of 10%
Subordinated Debentures equal to $100 for each $100 of liquidation preference of
Series D Preferred Stock held at the time of the exchange plus an amount per
share in cash equal to all accrued but unpaid dividends to the date of the
exchange.
DESCRIPTION OF SERIES F EXCHANGEABLE PREFERRED STOCK
RANK. The Series F Preferred Stock ranks as to dividend rights and rights
on liquidation, winding-up or dissolution:
- senior to all classes of common stock and senior to all classes of capital
stock or other series of preferred stock which does not expressly provide
that it ranks senior to or on parity with the Series F Preferred Stock;
30
- on a parity with the Series D Preferred Stock, the Series H Preferred
Stock, and all classes of capital stock or other series of preferred stock
which expressly provides that it ranks on parity with the Series F
Preferred Stock; and
- junior to each class of capital stock or other series of preferred stock
which expressly provides that it ranks senior to the Series F Preferred
Stock.
DIVIDENDS. Holders of the Series F Preferred Stock are entitled to receive,
when, as and if declared by the board of directors of PRIMEDIA, out of funds
legally available for the payment of dividends, dividends in cash at an annual
amount equal to $9.20 per share. Dividends on the Series F Preferred Stock are
payable quarterly in arrears on February 1, May 1, August 1 and November 1 of
each year. Dividends will cumulate without interest until declared and paid. As
of the date of this prospectus, PRIMEDIA has paid all such dividends.
OPTIONAL REDEMPTION. Subject to contractual and other restrictions and to
the existence of legally available funds, prior to November 1, 2002, PRIMEDIA
can redeem the Series F Preferred Stock at its option, in whole or in part, at
any time or from time to time, at a redemption price equal to the amount of the
aggregate liquidation preference of the Series F Preferred Stock plus all
accrued and unpaid dividends plus a specified make-whole premium at the time of
redemption.
Subject to contractual and other restrictions and to the existence of
legally available funds, PRIMEDIA, at its option, may at any time on or after
November 1, 2002, redeem the Series F Preferred Stock, in whole or in part at
redemption prices declining ratably from $104.60 beginning on November 1, 2002
to $100 on and after November 1, 2004, plus accrued and unpaid dividends.
MANDATORY REDEMPTIONS. Subject to contractual and other restrictions and to
the existence of legally available funds, on November 1, 2009, PRIMEDIA will be
required to redeem all outstanding shares of Series F Preferred Stock at a price
equal to $100 per share plus all accumulated and unpaid dividends to the date of
redemption.
LIQUIDATION PREFERENCE. Upon any voluntary or involuntary liquidation,
dissolution or winding-up of PRIMEDIA, holders of Series F Preferred Stock will
be entitled to be paid out of the assets of PRIMEDIA available for distribution
to its shareholders $100 per share per share, plus any accrued and unpaid
dividends to the date of liquidation, dissolution or winding-up.
VOTING RIGHTS. Holders of the Series F Preferred Stock have no voting
rights, except as provided by law or as set forth in the certificate of
designations for the Series F Preferred Stock. Also, when dividends on the
Series F Preferred Stock are in arrears and unpaid for six consecutive quarterly
periods, the board of directors of PRIMEDIA will be increased by two directors
and the holders of a majority of the Series F Preferred Stock, voting as a
class, will be entitled to elect two additional directors of the expanded board
of directors.
Without the affirmative vote or consent of the holders of a majority of the
then outstanding shares of Series F Preferred Stock, voting together with the
holders of any capital stock ranking on parity with the Series F Preferred
Stock, PRIMEDIA cannot issue any class of capital stock or series of preferred
stock ranking senior to the Series F Preferred Stock unless PRIMEDIA uses the
proceeds from that issuance to redeem all of the then outstanding shares of
Series F Preferred Stock and any other securities ranking on parity with the
Series F Preferred Stock and entitled to vote on this matter.
Pursuant to the certificate of designations for the Senior F Preferred
Stock, PRIMEDIA may not merge, consolidate with or into, or transfer all or
substantially all of its assets, in one transaction or in a series of related
transactions to any person without the consent of the holders of a majority of
the outstanding Series F Preferred Stock, voting together with the holders of
all capital stock ranking on parity with the Series F Preferred Stock, unless:
PRIMEDIA will be the continuing person, or the person, if other than PRIMEDIA,
formed by the merger or consolidation, or the person to which the
31
properties and assets of PRIMEDIA are transferred, is a corporation organized
and existing under the laws of the United States or any state in the United
States or the District of Columbia, and the Series F Preferred Stock will be
converted into or exchanged for shares of the successor or resulting company
having substantially the same powers, preferences and relative participating,
optional or other special rights and the same qualifications, limitations or
restrictions that the Series F Preferred Stock had immediately before the
conversion; and
- immediately after giving effect to the transaction on a pro forma basis,
the consolidated net worth of the surviving entity is at least equal to
the lesser of the consolidated net worth of PRIMEDIA immediately prior to
such transaction and the consolidated net worth of PRIMEDIA on the first
date any Series F Preferred Stock was issued.
The consent of the holders of the Series F Preferred Stock will not be
required if the requisite holders of preferred stock senior to the Series F
Preferred Stock or any indebtedness of PRIMEDIA have consented or granted a
waiver with respect to the transaction in question.
EXCHANGE. PRIMEDIA may, at its option, on any scheduled dividend payment
date, issue 8 5/8% Subordinated Debentures due 2009 in exchange for the
Series F Preferred Stock, in whole but not in part. Holders of Series F
Preferred Stock so exchanged will be entitled to receive the principal amount of
8 5/8% Subordinated Debentures equal to $100 for each $100 of liquidation
preference of Series F Preferred Stock held at the time of the exchange plus an
amount per share in cash equal to all accrued but unpaid dividends to the date
of the exchange.
DESCRIPTION OF SERIES H EXCHANGEABLE PREFERRED STOCK
RANK. The Series H Preferred Stock ranks as to dividend rights and rights
on liquidation, winding-up or dissolution:
- senior to all classes of common stock and senior to all classes of capital
stock or other series of preferred stock which does not expressly provide
that it ranks senior to or on parity with the Series H Preferred Stock,
- on a parity with the Series D Preferred Stock, the Series F Preferred
Stock, and all classes of capital stock or other series of preferred stock
which expressly provides that it ranks on parity with the Series H
Preferred Stock; and
- junior to each class of capital stock or other series of preferred stock
which expressly provides that it ranks senior to the Series H Preferred
Stock.
DIVIDENDS. Holders of the Series H Preferred Stock are entitled to receive
when, as and if declared by the board of directors of PRIMEDIA, out of funds
legally available for the payment of dividends, dividends in cash at an annual
amount equal to $8.625 per share. Dividends on the Series H Preferred Stock are
payable quarterly in arrears on February 1, May 1, August 1 and November 1 of
each year. Dividends will cumulate without interest until declared and paid. As
of the date of this prospectus, PRIMEDIA has paid all such dividends.
OPTIONAL REDEMPTION. PRIMEDIA cannot redeem the Series H Preferred Stock
before April 1, 2003. After April 1, 2003, subject to contractual and other
restrictions and the existence of legally available funds, PRIMEDIA, at its
option, may redeem the Series H Preferred Stock, in whole or in part, at
redemption prices declining ratably from $104.313 beginning on April 1, 2003 to
$100 on and after April 1, 2006, plus accrued and unpaid dividends to the date
of redemption.
In addition, if PRIMEDIA consummates a public equity offering prior to
April 1, 2001, it may redeem at its option up to $125 million of the aggregate
liquidation preference of the Series H Preferred Stock at a price per share of
$108.625 plus accrued and unpaid dividends to the redemption
32
date out of the net proceeds of the offering. The redemption must occur within
180 days of the public equity offering.
MANDATORY REDEMPTION. Subject to contractual and other restrictions and to
the existence of legally available funds, on April 1, 2010, PRIMEDIA will be
required to redeem all outstanding shares of Series H Preferred Stock at a price
equal to $100 per share plus all accumulated and unpaid dividends to the date of
redemption.
LIQUIDATION PREFERENCES. Upon any voluntary or involuntary liquidation,
dissolution or winding-up of PRIMEDIA, holders of Series H Preferred Stock will
be entitled to be paid out of the assets of PRIMEDIA available for distribution
to its shareholders $100 per share, plus any unpaid dividends accrued to the
date of liquidation, dissolution or winding-up.
VOTING RIGHTS. Holders of the Series H Preferred Stock have no voting
rights, except as provided by law or as set forth in the certificate of
designations for the Series H Preferred Stock. Also, when dividends on the
Series H Preferred Stock are in arrears and unpaid for six consecutive quarterly
periods, the board of directors of PRIMEDIA will be increased by two directors
and the holders of a majority of the Series H Preferred Stock, voting as a
class, will be entitled to elect two additional directors of the expanded board
of directors.
Without the affirmative vote or consent of the holders of a majority of the
then outstanding Series H Preferred Stock holders, voting together with the
holders of any capital stock ranking on parity with the Series H Preferred
Stock, PRIMEDIA cannot issue any class of capital stock or series of preferred
stock ranking senior to the Series H Preferred Stock unless PRIMEDIA uses the
proceeds from that issuance to redeem all of the then outstanding shares of
Series H Preferred Stock and any other securities ranking on parity with the
Series H Preferred Stock and entitled to vote on this matter.
Pursuant to the certificate of designations for the Series H Preferred
Stock, PRIMEDIA may not merge, consolidate with or into, or transfer all or
substantially all of its assets, in one transaction or in a series of related
transactions, to any person without the consent of the holders of a majority of
the issued and outstanding Series H Preferred Stock, voting together with the
holders of all capital stock ranking on parity with the Series H Preferred
Stock, unless PRIMEDIA will be the continuing person, or the person, if other
than PRIMEDIA, formed by the merger or consolidation, or the person to which the
properties and assets of PRIMEDIA are transferred, is a corporation organized
and existing under the laws of the United States or any state in the United
States or the District of Columbia, and the Series H Preferred Stock will be
converted into or exchanged for shares of the successor or resulting company
having substantially the same powers, preferences and relative participating,
optional or other special rights and the same qualifications, limitations or
restrictions that the Series H Preferred Stock had immediately before the
conversion.
The consent of the holders of the Series H Preferred Stock will not be
required if the requisite holders of preferred stock senior to the Series H
Preferred Stock or any indebtedness of PRIMEDIA have consented or granted a
waiver with respect to the transaction in question.
EXCHANGE. PRIMEDIA may, at its option, on any scheduled dividend payment
date, issue 8 5/8% Subordinated Debentures due 2010 in exchange for the
Series H Preferred Stock, in whole but not in part. Holders of Series H
Preferred Stock so exchanged will be entitled to receive the principal amount of
8 5/8% Subordinated Debentures equal to $100 for each $100 of liquidation
preference of Series H Preferred Stock held at the time of the exchange plus an
amount per share in cash equal to all accrued but unpaid dividends to the date
of the exchange.
33
COMPARISON OF STOCKHOLDER RIGHTS
PRIMEDIA and IGR are both organized under the laws of the State of Delaware.
Any differences, therefore, in the rights of holders of PRIMEDIA capital stock
and IGR capital stock arise primarily from differences in their respective
certificates of incorporation and by-laws. After the expiration of the exchange
offer and the acceptance of the tendered shares by PRIMEDIA, the rights of
holders of IGR common stock and Series B preferred stock who have successfully
tendered their shares will be determined by reference to the PRIMEDIA
certificate of incorporation and by-laws.
CAPITALIZATION
PRIMEDIA. The authorized capital stock of PRIMEDIA consists of:
- 250,000,000 shares of PRIMEDIA common stock, par value $.01 per share; and
- 50,000,000 shares of preferred stock, par value $.01 per share.
IGR. The authorized capital stock of IGR consists of:
- 150,000,000 shares of common stock, par value $0.001 per share;
- 39,151,000 shares of Class A common stock, par value $0.001 per share; and
- 114,151,000 shares of preferred stock, par value $0.001 per share.
VOTING RIGHTS
In the case of both PRIMEDIA and IGR, each holder of common stock has the
right to cast one vote for each share of common stock held of record on all
matters submitted to a vote of stockholders, including the election of
directors. Holders of common stock have no cumulative voting rights. Holders of
IGR Class A common stock have no voting rights with respect to their shares of
Class A common stock, except as required by law.
For a description of the voting rights of the PRIMEDIA preferred stock, see
"Description of PRIMEDIA Capital Stock--Description of Series D Exchangeable
Preferred Stock," "--Description of Series F Exchangeable Preferred Stock," and
"--Description of Series H Exchangeable Preferred Stock." IGR Series B preferred
stock holders are entitled to vote on any matter required or permitted by
Delaware law to be voted on by the holders of common stock of IGR. For each
share of Series B preferred stock held, the holder is entitled to cast eight
votes. The Series B preferred stock holders are also entitled to elect one
director to IGR's board of directors as long the Series B preferred stock
represents in excess of 5% of the issued and outstanding common stock of IGR,
assuming conversion of all voting preferred stock of IGR into common stock.
NUMBER AND ELECTION OF DIRECTORS
PRIMEDIA. The board of directors of PRIMEDIA currently has nine members.
The amended and restated by-laws provide that the PRIMEDIA board of directors
will consist of not less than one or more than fifteen directors, the number to
be fixed from time to time by the PRIMEDIA board of directors or the
stockholders.
PRIMEDIA's certificate of incorporation and amended and restated by-laws do
not provide for a staggered board of directors.
IGR. The board of directors of IGR currently has six members. IGR's third
amended and restated certificate of incorporation and IGR's amended and restated
by-laws state that the number of directors will be fixed by the board of
directors from time to time.
34
IGR's third amended and restated certificate of incorporation and amended
and restated by-laws do not provide for a staggered board of directors.
VACANCIES ON THE BOARD OF DIRECTORS AND REMOVAL OF DIRECTORS
PRIMEDIA. The amended and restated by-laws provide that vacancies and newly
created directorships resulting from any increase in the number of directors may
be filled by a vote of the majority of the board of directors then in office or
by the stockholders. A director may be removed with or without cause by the
stockholders.
IGR. The amended and restated by-laws provide that vacancies and newly
created directorships are filled by the affirmative vote of a majority of the
directors then in office (unless the board of directors determines that the
vacancy or newly created directorship should be filled by the stockholders), for
the remainder of the full term of the director for which the vacancy was created
or occurred and until the director's successor is elected and qualified. Any
director or the entire board of directors may be removed with cause by the
affirmative vote of the holders of a majority of the outstanding shares of IGR
capital stock entitled to vote in the election of directors. Any director or the
entire board of directors may be removed without cause by the affirmative vote
of 66 2/3% of the outstanding shares of IGR capital stock entitled to vote in
the election of directors.
AMENDMENTS TO THE CERTIFICATE OF INCORPORATION
PRIMEDIA AND IGR. The provisions of Delaware law regarding amendments to
the certificate of incorporation govern the amendment of certificates of
incorporation of both PRIMEDIA and IGR. Under Delaware law, an amendment to the
certificate of incorporation of a corporation requires the approval of the
corporation's board of directors and the approval of holders of a majority of
the outstanding stock entitled to vote upon the proposed amendment, unless a
higher vote is required by the corporation's certificate of incorporation.
AMENDMENTS TO BY-LAWS
PRIMEDIA. The PRIMEDIA certificate of incorporation, as amended, authorizes
the board of directors to adopt, amend or repeal any provision of PRIMEDIA's
by-laws by majority vote.
IGR. The third amended and restated certificate of incorporation of IGR
authorizes the board of directors to adopt, amend or repeal any provision of
IGR's by-laws, provided that the stockholders may change or repeal any by-law
adopted by the board of directors by the affirmative vote of the holders of a
majority of the voting power of the outstanding shares of common stock.
ACTION BY WRITTEN CONSENT
PRIMEDIA AND IGR. The provisions of Delaware law regarding actions by
written consent govern actions by written consent of PRIMEDIA and IGR
stockholders. Under Delaware law, any action which may be taken at an annual
meeting or special meeting of stockholders may be taken without a meeting, if a
consent in writing is signed by the holders of the outstanding stock having the
minimum number of votes necessary to authorize the action at a meeting of the
stockholders.
ABILITY TO CALL SPECIAL MEETINGS
PRIMEDIA. Under the amended and restated by-laws, special meetings of
PRIMEDIA stockholders may be called by the president of PRIMEDIA for any purpose
and shall be called by the president or secretary if directed by the board of
directors or requested in writing by the holders of not less than 25% of
PRIMEDIA's capital stock. A stockholder request must state the purpose of the
proposed meeting.
35
IGR. Under the amended and restated by-laws, special meetings of IGR
stockholders may be called by the chairman of the board of directors, the chief
executive officer, a majority of the total number of authorized directors or the
holders of shares entitled to cast not less than 10% of the votes at the
meeting. Business transacted at any special meting will be limited to the
purposes stated in the notice.
NOTICE OF STOCKHOLDER ACTION
PRIMEDIA. Under PRIMEDIA's amended and restated by-laws, in order for a
stockholder to nominate candidates for election to PRIMEDIA's board of directors
at any meeting of the stockholders, timely written notice must be given to the
secretary of PRIMEDIA. To be timely, a stockholder's notice must be received at
the principal executive offices of PRIMEDIA not less than 60 days nor more than
90 days prior to the meeting at which directors are to be elected. In the event
that less than 70 days' notice of the date of the meeting is given to
stockholders, to be timely, notice by a stockholder must be received by the
secretary no later than the close of business on the tenth day following the day
on which the notice of the meeting was given.
A stockholder's notice to PRIMEDIA must set forth all of the following:
- for each person whom the stockholder wishes to nominate for election or
re-election as a director: the nominee's name, age, business address,
residence address, principal occupation or employment, the class and
number of shares of stock of PRIMEDIA beneficially owned by the nominee,
and all information required to be disclosed in solicitations of proxies
for election of directors, or otherwise required by applicable law; and
- the stockholder's name, record address, and the class and number of shares
of PRIMEDIA which are beneficially owned by the stockholder.
IGR. Under IGR's amended and restated by-laws in order for a stockholder to
take any action at an annual meeting, timely notice must be given to the
secretary of IGR. To be timely, a stockholder's notice must be received at the
principal executive offices of IGR no later than 60 days nor earlier than
90 days before the first anniversary of the preceding year's annual meeting. In
the event that no annual meeting was held in the previous year or the date of
the annual meeting has been changed by more than 30 days from the date
contemplated at the time of the previous year's proxy statement, notice must be
received no later than 60 days nor earlier than 90 days prior to the date of the
meeting. If less than 70 days' notice of the date of the meeting is given to
stockholder's, to be timely, notice by a stockholder must be received by the
secretary no later than close of business on the tenth day following the day on
which the notice of the meeting was given.
A stockholder's notice to IGR must set forth all of the following:
- a brief description of the business desired to be brought before the
annual meeting and the reasons for conducting the business at the annual
meeting;
- the name and address, as they appear on IGR's books, of the stockholder
proposing the business;
- the class and number of shares of IGR that are beneficially owned by the
stockholder;
- any material interest of the stockholder in the business; and
- all information required to be disclosed in solicitations of proxies, or
otherwise required by applicable law.
36
LIMITATION OF PERSONAL LIABILITY OF DIRECTORS AND OFFICERS
Delaware law provides that a corporation may include in its certificate of
incorporation a provision limiting or eliminating the liability of its directors
to the corporation and its stockholders for monetary damages arising from a
breach of fiduciary duty, except for:
- a breach of the duty of loyalty to the corporation or its stockholders;
- acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- payment of a dividend or the repurchase or redemption of stock in
violation of Delaware law; or
- any transaction from which the director derived an improper personal
benefit.
The certificate of incorporation, as amended, of PRIMEDIA and the third
amended and restated certificate of incorporation of IGR provide that, to the
fullest extent Delaware law permits the limitation or elimination of the
liability of directors, no director will be liable to PRIMEDIA or IGR, as the
case may be, or their respective stockholders for monetary damages for breach of
fiduciary duty as a director.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Delaware law, a corporation generally may indemnify directors and
officers:
- for actions taken in good faith and in a manner they reasonably believed
to be in, or not opposed to, the best interests of the corporation; and
- with respect to any criminal proceeding, if they had no reasonable cause
to believe that their conduct was unlawful.
In addition, Delaware law provides that a corporation may advance to a
director or officer expenses incurred in defending any action upon receipt of an
undertaking by the director or officer to repay the amount advanced if it is
ultimately determined that he or she is not entitled to indemnification.
PRIMEDIA. The amended and restated by-laws of PRIMEDIA provide that
PRIMEDIA will indemnify to the fullest extent permitted by Delaware law any
current or former director or officer of the corporation, and may, at the
discretion of the board of directors, indemnify any current or former employee
or agent of PRIMEDIA against all expenses, judgments, fines and amounts paid in
settlement in connection with any threatened, pending or completed action, suit
or proceeding in which the person was involved because of that person's service,
at the request of PRIMEDIA, as a director, officer, partner, trustee, employee
or agent of another corporation, partnership, joint venture, trust, or other
enterprise.
In addition, the amended and restated by-laws provide that the expenses
incurred by a person who is or was a director or officer in connection with any
action, suit or proceeding will be advanced to the director or officer by
PRIMEDIA upon receipt of an undertaking by or on behalf of the director or
officer to repay the amounts advanced if ultimately it is determined that the
director or officer was not entitled to be indemnified against the expenses.
IGR. The amended and restated by-laws of IGR provide that IGR will
indemnify its directors and executive officers to the fullest extent permitted
by Delaware law. IGR may modify the extent of indemnification by individual
contracts with its directors and executive officers. IGR will not be required to
indemnify the director or executive officer in connection with a proceeding
initiated by that person unless it is required by law, the proceeding was
authorized by IGR's board of directors or IGR decides, in its sole discretion,
to do so.
37
Additionally, the amended and restated by-laws provide that the expenses
incurred by a person who is or was a director or officer in connection with any
action, suit or proceeding will be advanced to the director or officer by IGR
upon receipt of an undertaking by or on behalf of the director or officer to
repay the amounts advanced if ultimately it is determined that the director or
officer was not entitled to be indemnified against the expenses. No expenses
will be advanced, however, if a majority of a quorum of the board of directors
who are not parties to the proceeding or, if a quorum of disinterested directors
directs, by a written opinion of independent legal counsel that the known facts
demonstrate clearly and convincingly that the person seeking the advance acted
in bad faith or in a manner that the person did not believe to be in the best
interests of IGR.
38
EXECUTIVES; EXECUTIVE COMPENSATION; STOCK OWNERSHIP OF DIRECTORS,
EXECUTIVE OFFICERS AND PRINCIPAL STOCKHOLDERS
For information regarding existing material relationships between PRIMEDIA
and IGR, see "Investment In IGR."
Information concerning current directors and officers of PRIMEDIA, executive
compensation and ownership of PRIMEDIA stock by management and principal
stockholders is contained in PRIMEDIA's proxy statement for its 2000 annual
meeting of stockholders dated April 19, 2000, and is incorporated herein by
reference.
The following table sets forth, as of January 16, 2001, based on information
provided to PRIMEDIA by IGR, the number and percentage of outstanding shares of
IGR common stock and preferred stock beneficially owned by:
- each person known by IGR to beneficially own more than 5% of their stock;
- each director of IGR;
- each executive officer of IGR required to be disclosed; and
- all executive officers and directors of IGR as a group.
SHARES OF
SHARES OF COMMON PERCENT OF PREFERRED STOCK PERCENT OF
NAME AND ADDRESS STOCK BENEFICIALLY COMMON BENEFICIALLY PREFERRED
OF BENEFICIAL OWNER OWNED STOCK(1) OWNED STOCK(2)
------------------- ------------------ ---------- --------------- ----------
PRIMEDIA Inc.(3) ........................... 24,016,134(4) 74.2% 23,720,134(5) 59.9%
745 Fifth Avenue
New York, New York 10151
The May Department Store Company ........... 7,777,592(6) 48.2% 7,621,592(7) 18.5%
611 Olive Street, Suite 1200
St. Louis, Missouri 63101-1756
Commonwealth Associates .................... 1,468,152(8) 15.8% 22,653(9) *
830 Third Avenue (4th Floor)
New York, New York 10022
Charles G. McCurdy(10)...................... -- -- -- --
Carolyn Everson............................. -- -- -- --
John Loughlin............................... -- -- -- --
Keith Rosenbloom............................ 150,239(11) 1.8% 2,516(12) *
Margery Gladstone........................... -- -- -- --
Stephen Cunningham.......................... 2,801,083(13) 31.6% 5,000(14) *
William Edkins.............................. -- -- -- --
Carole Couture.............................. 91,666(15) 1.1% -- --
Marc Wheeler................................ 75,000(16) * -- --
Stephen Portnoy............................. 75,000(17) * -- --
Thomas Villani.............................. -- -- -- --
Don Fuqua................................... 36,333(18) * -- --
All directors and executive officers as a 3,229,321 35.2% 7,516 *
group.....................................
------------------------
* Represents less than 1.0%.
(1) Percentage of common stock ownership is based on 8,366,698 shares of IGR
common stock outstanding as of January 16, 2001.
(2) Percentage of preferred stock ownership is based on 39,598,054 shares of IGR
preferred stock outstanding as of January 16, 2001.
39
(3) These shares are owned by PRIMEDIA Inc. through its subsidiaries, PRIMEDIA
Magazines and PRIMEDIANET.
(4) Comprised of 2,100,000 shares of IGR common stock issuable upon conversion
of 2,100,000 shares of IGR Series A preferred stock, 21,590,134 shares of
IGR common stock issuable upon conversion of 21,590,134 shares of IGR
Series E voting preferred stock, 240,000 shares of IGR common stock issuable
upon conversion of 30,000 shares of IGR Series B preferred stock and
currently exercisable warrants to purchase 86,000 shares of IGR common
stock.
(5) Comprised of 2,100,000 shares of IGR Series A preferred stock, 21,590,134
shares of IGR Series E voting preferred stock and 30,000 shares of IGR
Series B preferred stock.
(6) Comprised of 1,040,000 shares of IGR common stock issuable upon conversion
of 1,040,000 shares of IGR Series C preferred stock, 4,981,592 shares of IGR
common stock issuable upon conversion of 4,981,592 shares of IGR Series D
preferred stock, 1,600,000 shares of IGR common stock issuable upon exercise
of a currently exercisable warrant owned by May Co. and 156,000 shares of
IGR common stock issuable upon exercise of a currently exercisable warrant
owned by May Co.
(7) Comprised of 1,040,000 shares of IGR Series C preferred stock, 4,981,592
shares of IGR Series D preferred stock and 1,600,000 shares of IGR Series C
preferred stock issuable upon exercise of a currently exercisable warrant
owned by May Co.
(8) Comprised of 560,375 shares of IGR common stock, currently exercisable
warrants to purchase 726,553 shares of IGR common stock and 181,224 shares
of IGR common stock issuable upon conversion of 22,653 shares of IGR
Series B preferred stock.
(9) Comprised of 22,653 shares of IGR Series B preferred stock.
(10) Shares of Series A preferred stock, Series B preferred stock and Series E
voting preferred stock as owned by PRIMEDIA are owned of record by PRIMEDIA
Magazines and PRIMEDIANET, respectively, of which PRIMEDIA is the
controlling parent, possessing sole voting and investment power in both.
Mr. McCurdy, as an executive officer and director of PRIMEDIA, may be deemed
to share beneficial ownership of the shares shown as beneficially owned by
PRIMEDIA. Mr. McCurdy disclaims beneficial ownership of those shares.
(11) Comprised of 102,092 shares of IGR common stock, currently exercisable
options to purchase 25,000 shares of IGR common stock, currently exercisable
warrants to purchase 3,019 shares of IGR common stock and 20,128 shares of
IGR common stock issuable upon conversion of 2,516 shares of Series B
preferred stock.
(12) Comprised of 2,516 shares of Series B preferred stock.
(13) Comprised of 2,317,583 shares of IGR common stock, currently exercisable
options to purchase 400,000 shares of IGR common stock, currently
exercisable warrants to purchase 43,500 shares of IGR common stock and
40,000 shares of IGR common stock issuable upon conversion of 5,000 shares
of IGR Series B preferred stock.
(14) Comprised of 5,000 shares of Series B preferred stock.
(15) Comprised of currently exercisable options to purchase 91,666 shares of IGR
common stock.
(16) Comprised of currently exercisable options to purchase 75,000 shares of IGR
common stock.
(17) Comprised of currently exercisable options to purchase 75,000 shares of IGR
common stock.
(18) Comprised of currently exercisable options to purchase 36,333 shares of IGR
common stock.
There are 17,560,866 shares of Series E non-voting preferred stock
outstanding. PRIMEDIA owns all of these outstanding Series E non-voting
preferred shares.
See "Where You Can Find More Information."
40
LEGAL MATTERS
Simpson Thacher & Bartlett, New York, New York, will provide an opinion for
PRIMEDIA regarding the validity of the shares of PRIMEDIA offered by this
prospectus.
CHANGE IN INDEPENDENT PUBLIC ACCOUNTANTS
In June 2000, About decided to replace KPMG LLP as its independent
accountants, and retained Ernst & Young LLP as its new independent accountants.
The decision to change About's accountants was recommended by the audit
committee of About's board of directors and approved by About's board of
directors. KPMG LLP's reports on About's financial statements for the two most
recent fiscal years (i.e., the fiscal years ended December 31, 1998 and
December 31, 1999) contained no adverse opinion or a disclaimer of opinion, and
were not qualified or modified as to uncertainty, audit scope or accounting
principles.
During About's last two fiscal years and the subsequent interim period to
the date hereof, there were no disagreements between About and KPMG LLP on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of KPMG LLP, would have caused it to make reference to the subject
matter of the disagreements in connection with its reports. Prior to retaining
Ernst & Young LLP, About had not consulted with Ernst & Young LLP regarding
accounting principles.
EXPERTS
PRIMEDIA. The consolidated financial statements as of December 31, 1998 and
1999 and for each of the three years in the period ended December 31, 1999 and
the related financial statement schedule incorporated in this prospectus by
reference from the PRIMEDIA Annual Report on Form 10-K for the year ended
December 31, 1999 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports (which report on the consolidated financial
statements expresses an unqualified opinion and includes an explanatory
paragraph referring to PRIMEDIA's change in 1998 in the method of accounting for
internal use software costs to conform with Statement of Position 98-1
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use" of the American Institute of Certified Public Accountants), which
are incorporated herein by reference, and have been so incorporated in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.
ABOUT. The consolidated financial statements and the related financial
statement schedule of About, as of December 31, 1998 and 1999 and for each of
the three years in the period ended December 31, 1999, incorporated in this
prospectus by reference from About's Annual Report on Form 10-K for the year
ended December 31, 1999, have been audited by KPMG LLP, independent auditors, as
stated in their report, which is incorporated herein by reference, and has been
so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
PRIMEDIA files annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
at the SEC's website at http://www.sec.gov. Copies of documents filed by
PRIMEDIA with the SEC are also available at the offices of The New York Stock
Exchange, 20 Broad Street, New York, New York 10005.
PRIMEDIA has filed a registration statement on Form S-4 under the Securities
Act with the SEC with respect to PRIMEDIA's common stock to be issued in the
exchange offer. This prospectus
41
constitutes the prospectus of PRIMEDIA filed as part of the registration
statement. This prospectus does not contain all of the information set forth in
the registration statement because certain parts of the registration statement
are omitted in accordance with the rules and regulations of the SEC. The
registration statement and its exhibits are available for inspection and copying
as set forth above.
The SEC allows us to "incorporate by reference," into this prospectus
documents filed with the SEC by PRIMEDIA. This means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is considered to be a part of this
prospectus, and later information that we file with the SEC will update and
supersede that information. We incorporate by reference the documents listed
below and any documents filed by PRIMEDIA pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this prospectus and before the
date of each company's special meeting:
PRIMEDIA FILINGS (SEC FILE NUMBER 1-5805): PERIODS
--------------------------------------------- ---------------------------------------------
Annual Report on Form 10-K................... Year ended December 31, 1999
Quarterly Reports on Form 10-Q............... Quarters ended March 31, 2000, June 30, 2000
and September 30, 2000
Current Reports on Form 8-K.................. Filed April 14, 2000, May 15, 2000,
October 30, 2000 and November 13, 2000
The description of PRIMEDIA's common stock
and preferred stock contained in PRIMEDIA's
registration statements filed under
Section 12 of the Securities Exchange Act
PRIMEDIA's proxy statement for its 2000
annual meeting of stockholders............... April 19, 2000
Unaudited Pro Forma Consolidated Financial
Statements contained in pages 76-82 included
in Amendment No. 1 to PRIMEDIA's registration
statement on Form S-4 (File
No. 333-51432)............................... Filed January 17, 2001
Consolidated Financial statements and reports
included in About's Annual Report on
Form 10-K.................................... Year ended December 31, 1999
Interim Financial statements included on
About's Quarterly Report on Form 10-Q........ Quarters ended March 31, 2000, June 30, 2000
and September 30, 2000
You may request a copy of the documents incorporated by reference into this
prospectus by writing to or telephoning PRIMEDIA.
Requests for documents should be directed to:
Investor Relations
PRIMEDIA Inc.
745 Fifth Avenue
New York, New York 10151
(212) 745-0100
This prospectus does not constitute an offer to sell, or a solicitation of
an offer to purchase, the securities offered by this prospectus, in any
jurisdiction to or from any person to whom or from whom it is unlawful to make
such offer or solicitation of an offer in such jurisdiction. Neither the
delivery of this prospectus nor any distribution of securities pursuant to this
prospectus shall, under any circumstances, create any implication that there has
been no change in the information set forth or incorporated into this prospectus
by reference or in our affairs since the date of this prospectus.
42
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
PRIMEDIA is a Delaware Corporation. Reference is made to Section 102(b)(7)
of the Delaware General Corporation Law (the "DGCL"), which enables a
corporation in its original certificate of incorporation or an amendment thereto
to eliminate or limit the personal liability of a director for violations of the
director's fiduciary duty, except (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (ii) pursuant to Section 174 of the DGCL (providing for liability of
directors for unlawful payment of dividends or unlawful stock purchase or
redemptions) or (iv) for any transaction from which a director derived an
improper personal benefit.
Reference also is made to Section 145 of the DGCL, which provides that a
corporation may indemnify any persons, including officers and directors, who
are, or are threatened to be made, parties to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person was an officer, director,
employee or agent of such corporation or is or was serving at the request of
such corporation as a director, officer, employee or agent of another
corporation or enterprise. The indemnity may include expenses (including
attorney's fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding, provided such officer, director, employee or agent acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
corporation's best interest and, for criminal proceedings, had no reasonable
cause to believe that his conduct was unlawful. A Delaware corporation may
indemnify officers and directors in an action by or in the right of the
corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation. Where an officer or director is successful on the
merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses that such officer or
director actually and reasonably incurred.
Article 8 of the Certificate of Incorporation of PRIMEDIA provides that
except as provided under the Delaware General Corporation Law, directors of
PRIMEDIA shall not be personally liable to the corporation or its stockholders
for monetary damages for breach of fiduciary duties as a director. Article 3 of
the by-laws of PRIMEDIA provides for indemnification of the officers and
directors of PRIMEDIA to the full extent permitted by applicable law and
provides for the advancement of expenses.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
--------------------- ------------------------
3.1 Certificate of Incorporation of K-III Communications
Corporation (Incorporated by reference to K-III
Communications Corporation's Registration Statement on
Form S-1, File No. 33-96516).
3.2 Certificate of Amendment to Certificate of Incorporation of
K-III Communications Corporation (changing name from K-III
Communications Corporation to PRIMEDIA Inc.) (Incorporated
by reference to K-III Communications Corporation's Annual
Report on Form 10-K for the year ended December 31, 1997,
File No. 1-11106).
II-1
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
--------------------- ------------------------
3.3 Certificate of Designations of the Series D Preferred Stock
(Incorporated by reference to K-III Communications
Corporation's Registration Statement on Form S-4, File
No. 333-03691).
3.4 Certificate of Designations of the Series F Preferred Stock
(Incorporated by reference to K-III Communications
Corporation's Registration Statement on Form S-4, File
No. 333-38451).
3.5 Certificate of Designations of the Series H Preferred Stock
(Incorporated by reference to PRIMEDIA Inc.'s Registration
Statement on Form S-4, File No. 333-51891).
3.6 Amended and Restated By-Laws of K-III Communications
Corporation (Incorporated by reference to K-III
Communications Corporation's Registration Statement on
Form S-1, File No. 33-96516).
4.1 10 1/4% Senior Note Indenture (including form of note and
form of guarantee) (Incorporated by reference to K-III
Communications Corporation's Annual Report filed on
Form 10-K for the year ended December 31, 1994, File
No. 1-11106).
4.2 8 1/2% Senior Note Indenture (including form of note and
form of guarantee) (Incorporated by reference to K-III
Communications Corporation's Annual Report filed on
Form 10-K for the year ended December 31, 1995, File
No. 1-11106).
4.3 Form of Class D Subordinated Debenture (including form of
debenture) (Incorporated by reference to K-III
Communications Corporation's Registration Statement on
Form S-4, File No. 333-03691).
4.4 Form of Class F Subordinated Debenture (including form of
debenture) (Incorporated by reference to K-III
Communications Corporation's Registration Statement on
Form S-4, File No. 333-38451).
4.5 Form of Class H Subordinated Debenture (including form of
debenture) (Incorporated by reference to PRIMEDIA Inc.'s
Registration Statement on Form S-4, File No. 333-51891).
4.6 7 5/6% Senior Note Indenture (including form of note and
form of guarantee) (Incorporated by reference to
PRIMEDIA Inc.'s Registration Statement on Form S-4, File
No. 333-51891).
5.1 Opinion of Simpson Thacher & Bartlett (to be filed by
amendment).
16.1 Letter from KPMG LLP (Incorporated by reference to
About.com, Inc.'s Current Report on Form 8-K filed on
June 21, 2000).
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Simpson Thacher & Bartlett (included in
Exhibit 5.1).
23.3 Consent of KPMG LLP.
24.1 Power of Attorney of certain officers and directors of
PRIMEDIA (included on signature page II-5).
99.1 Letter of Transmittal.
99.2 Related Tax Guidelines.
II-2
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made,
a post-effective amendment or prospectus supplement to this registration
statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
(2) that, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof;
(3) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering; and
(4) that, for purposes of determining any liability under the Securities
Act, each filing of Registrant's annual report pursuant to Section 13(a) or
15(d) of the Securities Exchange Act that is incorporated by reference in
this registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(5) to respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this
Form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding
to the request.
(6) to supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
(7) that prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other Items
of the applicable form.
(8) that every prospectus (i) that is filed pursuant to paragraph (7)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act and is used in
II-3
connection with an offering of securities subject to Rule 415, will be filed
as a part of an amendment to the registration statement and will not be used
until such amendment is effective, and that, for purposes of determining any
liability under the Securities Act, each such post-effective amendment shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 26th of January, 2001.
PRIMEDIA INC.
By: /s/ BEVERLY C. CHELL
-----------------------------------------
Beverly C. Chell
VICE CHAIRMAN AND SECRETARY
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned does hereby constitute
and appoint Thomas S. Rogers, Charles G. McCurdy and Beverly C. Chell, or any of
them acting alone, his true and lawful attorney-in-fact and agent, with full
power of substitution and revocation for him or her and in his or her name,
place and stead, in any and all capacities, to sign this Registration Statement
on Form S-4 of PRIMEDIA Inc. and any and all amendments (including
post-effective amendments) to the Registration Statement and to file the same
with all exhibits thereto, and other documents in connection therewith,
including any registration statement and all amendments (including
post-effective amendments) thereto filed pursuant to Rule 462(b) under the
Securities Act, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done as fully to all intents
and purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or his, her or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
NAME TITLE DATE
---- ----- ----
/s/ THOMAS S. ROGERS
------------------------------------------- Chairman, Chief Executive January 26, 2001
(Thomas S. Rogers)
/s/ CHARLES G. MCCURDY
------------------------------------------- President and Director January 26, 2001
(Charles G. McCurdy)
/s/ BEVERLY C. CHELL
------------------------------------------- Vice Chairman, Secretary January 26, 2001
(Beverly C. Chell)
------------------------------------------- Director
(Meyer Feldberg)
/s/ PERRY GOLKIN
------------------------------------------- Director January 26, 2001
(Perry Golkin)
II-5
NAME TITLE DATE
---- ----- ----
------------------------------------------- Director
(H. John Greeniaus)
/s/ HENRY KRAVIS
------------------------------------------- Director January 26, 2001
(Henry Kravis)
------------------------------------------- Director
(George R. Roberts)
/s/ MICHAEL T. TOKARZ
------------------------------------------- Director January 26, 2001
(Michael T. Tokarz)
Executive Vice President,
/s/ LAWRENCE R. RUTKOWSKI Chief Financial Officer and
------------------------------------------- Principal Accounting January 26, 2001
(Lawrence R. Rutkowski) Officer
II-6
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
------- ------------------------
3.1 Certificate of Incorporation of K-III Communications
Corporation (Incorporated by reference to K-III
Communications Corporation's Registration Statement on
Form S-1, File No. 33-96516).
3.2 Certificate of Amendment to Certificate of Incorporation of
K-III Communications Corporation (changing name from K-III
Communications Corporation to PRIMEDIA Inc.) (Incorporated
by reference to K-III Communications Corporation's Annual
Report on Form 10-K for the year ended December 31, 1997,
File No. 1-11106).
3.3 Certificate of Designations of the Series D Preferred Stock
(Incorporated by reference to K-III Communications
Corporation's Registration Statement on Form S-4, File
No. 333-03691).
3.4 Certificate of Designations of the Series F Preferred Stock
(Incorporated by reference to K-III Communications
Corporation's Registration Statement on Form S-4, File
No. 333-38451).
3.5 Certificate of Designations of the Series H Preferred Stock
(Incorporated by reference to PRIMEDIA Inc.'s Registration
Statement on Form S-4, File No. 333-51891).
3.6 Amended and Restated By-Laws of K-III Communications
Corporation (Incorporated by reference to K-III
Communications Corporation's Registration Statement on
Form S-1, File No. 33-96516).
4.1 10 1/4% Senior Note Indenture (including form of note and
form of guarantee) (Incorporated by reference to K-III
Communications Corporation's Annual Report filed on
Form 10-K for the year ended December 31, 1994, File
No. 1-11106).
4.2 8 1/2% Senior Note Indenture (including form of note and
form of guarantee) (Incorporated by reference to K-III
Communications Corporation's Annual Report filed on
Form 10-K for the year ended December 31, 1995, File
No. 1-11106).
4.3 Form of Class D Subordinated Debenture (including form of
debenture) (Incorporated by reference to K-III
Communications Corporation's Registration Statement on
Form S-4, File No. 333-03691).
4.4 Form of Class F Subordinated Debenture (including form of
debenture) (Incorporated by reference to K-III
Communications Corporation's Registration Statement on
Form S-4, File No. 333-38451).
4.5 Form of Class H Subordinated Debenture (including form of
debenture) (Incorporated by reference to PRIMEDIA Inc.'s
Registration Statement on Form S-4, File No. 333-51891).
4.6 7 5/6% Senior Note Indenture (including form of note and
form of guarantee) (Incorporated by reference to
PRIMEDIA Inc.'s Registration Statement on Form S-4, File
No. 333-51891).
5.1 Opinion of Simpson Thacher & Bartlett (to be filed by
amendment).
16.1 Letter from KPMG LLP (Incorporated by reference to
About.com, Inc.'s Current Report on Form 8-K filed on
June 21, 2000).
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Simpson Thacher & Bartlett (included in
Exhibit 5.1).
23.3 Consent of KPMG LLP.
24.1 Power of Attorney of certain officers and directors of
PRIMEDIA (included on signature page II-5).
99.1 Letter of Transmittal.
99.2 Related Tax Guidelines.