UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x                               ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended: December 31, 2005

OR

o                                  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File number: 1-11106

PRIMEDIA Inc.

(Exact name of registrant as specified in its charter)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o    No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o    No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x    No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. (as defined in Exchange Act Rule 12b-2). Large accelerated filer o   Accelerated filer x   Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company Yes o    No x

The aggregate market value of the voting common equity of PRIMEDIA Inc. (“PRIMEDIA”) which is held by non-affiliates of PRIMEDIA, computed by reference to the closing price as of the last business day of the registrant’s most recently completed second fiscal quarter, June 30, 2005, was approximately $414 million. The registrant has no non-voting common stock.

As of February 28, 2006, 263,888,027 shares of PRIMEDIA’s Common Stock were outstanding.

The following documents are incorporated into this Form 10-K by reference: Part III of this Report on Form 10-K incorporates information by reference from the registrant’s Proxy Statement for its 2006 Annual Meeting of shareholders to be held on May 17, 2006. The definitive Proxy Statement will be filed within 120 days of the end of the fiscal year ended December 31, 2005.

TABLE OF GUARANTORS

The address, including zip code, and telephone number, including area code, of each additional registrant’s principal executive office is 745 Fifth Avenue, New York, New York 10151 (212-745-0100).

These companies are listed as guarantors of the debt securities of the registrant. The consolidating financial statements of the Company depicting separately its guarantor and non-guarantor subsidiaries are presented as Note 27 of the notes to the consolidated financial statements. All of the equity securities of each of the guarantors set forth in the table above are owned, either directly or indirectly, by PRIMEDIA Inc., and there has been no default during the preceding 36 calendar months with respect to any indebtedness or material long-term leases of PRIMEDIA Inc. or any of the guarantors.

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PRIMEDIA Inc.

Annual Report on Form 10-K

December 31, 2005

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PART I

ITEM 1.                BUSINESS.

General

PRIMEDIA Inc. (“PRIMEDIA” or the “Company”) is a leading targeted media company in the United States. The Company’s properties comprise more than 100 brands that connect buyers and sellers in more markets than any other media company through print publications, Internet, events, licensing, merchandising and TV video programs in three market segments.

The Company’s segments are: Enthusiast Media, Consumer Guides and Education. The results of these segments, consistent with past practice, are regularly reviewed by the Company’s chief operating decision makers and the executive team to assess the performance of each segment and to determine resource allocations among the segments. During 2005, the Company sold its Business Information segment.

Enthusiast Media Segment

PRIMEDIA Enthusiast Media   encompasses the Company’s consumer magazines, the Internet, events, licensing and merchandising. Enthusiast Media is the fourth largest overall producer of magazine advertising pages in the U.S., according to Media Industry Newsletter, February 13, 2006, and has leading market positions in the categories it serves.

Enthusiast Media Products

For the year ended December 31, 2005, in the Enthusiast Media segment, 56% of revenues were from advertising, 34% from circulation and 10% from other sources. Circulation revenue is divided between newsstand sales and subscriptions, at 53% and 47%, respectively.

Readers value enthusiast magazines for their targeted editorial content and also rely on them as primary sources of information in their topic areas. This aspect makes the enthusiast properties important media buys for advertisers. Advertising sales for the Company’s enthusiast magazines are generated largely by in-house sales forces. The magazines compete for advertising on the basis of circulation and the niche markets they serve. Each of the Company’s enthusiast magazines faces competition in its subject area from a variety of publishers and competes for readers on the basis of the high quality of its targeted editorial, which is provided by in-house and freelance writers.

Brands

The Company publishes 53 automotive magazines, including consumer automotive titles such as Automobile and Motor Trend which cater to the high-end and new car automotive market, as well as highly

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specialized enthusiast titles such as Hot Rod, Truckin’, Super Street, Lowrider, Motorcyclist, 4Wheel & Off-Road and Four Wheeler. The Company’s automotive magazines represent the largest portfolio of magazines in the automotive category. Supplementing the automotive print publications, PRIMEDIA has a strong presence on the Internet with each of its related websites to each publication. During the fourth quarter of 2005, the Company acquired Automotive.com, Inc. (“Automotive.com”), a leader in new car sales online lead generation, which averages 34 million page views and 12 million visitors per month. In the high-end and new car markets, PRIMEDIA’s publications compete primarily against Car and Driver and Road and Track, both owned by Hachette Filipacchi Media U.S. Inc.

The Company is a leading publisher of magazines for outdoor, marine and other enthusiast markets with such titles as Fly Fisherman, Power & Motoryacht and EQUUS. The Company also publishes numerous magazines targeting action sports enthusiasts such as Surfing, Skateboarder and Snowboarder. The Company’s major competition in the enthusiast market includes the Time4Media division of Time Warner Inc.. The Company also competes in individual enthusiast markets with a number of smaller, privately-owned or regionally-based magazine publishers. PRIMEDIA publishes two leading soap opera magazines, Soap Opera Digest and Soap Opera Weekly, which compete with Bauer Publishing.

The Company is focused on building multiple online revenue streams, including subscriber acquisition, transactions that connect buyers and sellers, lead generation and pay-per-click and other online advertising. During 2005, the Company took a major step forward with its Internet strategy with the acquisitions of Automotive.com and Equine.com.

In the fourth quarter of 2005, the Company acquired Automotive.com, a highly profitable Internet company founded in 1999 by two entrepreneurs, which has proven expertise in car sales lead generation, search engine marketing, search engine optimization and a technology platform that can drive increased traffic and ultimately monetize that traffic into high quality lead generation. To obtain full advantage from this acquisition, PRIMEDIA has contributed the valuable assets associated with its 55 automotive Internet sites to Automotive.com, creating new revenue opportunities for its portfolio of established automotive brands. As automakers divert marketing dollars to the Internet and as auto dealers seek increased car sale leads, the combination of Automotive.com and the auto Internet sites provides a platform for maximizing advertising and lead generation revenues across all those sites.

In the fourth quarter of 2005, the Company acquired Equine.com, the world’s largest online marketplace for equine enthusiasts. A main benefit of this acquisition was the opportunity to extend Equine.com’s proprietary technology and unique marketing to the Company’s other industry categories such as Outdoors and Marine where in 2006 it plans to develop new transactional marketplaces for buyers and sellers.

The Company also operates Retailvision, a specialty magazine distribution company, which distributes over 700 titles, including the titles of 100 other publishers, to over 50,000 independent niche retail locations such as auto parts retailers, craft shops, tackle shops, and music stores.

The Company decided to actively pursue the sale of its Crafts and History groups during the fourth quarter of 2005. These divisions have been classified as discontinued operations for all periods presented.

Recent Developments

Sale of History Group

During February 2006, the Company completed the sale of the History group within the Enthusiast Media segment. The operations of this group are classified as discontinued operations for all periods presented. The net proceeds from this sale are subject to routine post-closing adjustments.

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Consumer Guides Segment

Consumer Guides Products

PRIMEDIA Consumer Guides is the leading publisher and distributor of free guides in the United States with Apartment Guide/ApartmentGuide.com, New Home Guide/ NewHomeGuide.com and Auto Guide/AutoGuide.com. All of Consumer Guides’ products are free, dedicated directories of category specific content that attract consumers who are actively in the market to rent an apartment or buy a new home or a pre-owned automobile. The Company believes that the targeted nature of its integrated media products provides its advertising customers with some of the most cost-effective channels available to reach their customers. The Company distributes approximately 32 million print guides annually through its proprietary distribution network, DistribuTech, the leading national distributor of free publications with over 50,000 distribution locations. The Company’s online guides are visited by approximately 22 million users annually and are marketed to these end customers through print guides, search engine optimization, email marketing, and partnerships with leading online companies such as Google, Yahoo and Advertising.com.

Apartments

PRIMEDIA Consumer Guides is the largest publisher and distributor of rental apartment guides in the U.S. with Apartment Guide publications in 74 regional markets with a combined monthly circulation of 1.5 million. Most of the Company’s Apartment Guide publications are distributed monthly to primary retail locations where they are available free to the consumer. Virtually 100% of Apartment Guide advertising revenue is generated by large apartment community managers who need to fill vacant apartments. The Company is a leading provider of apartment listings due to its strong market reputation, unparalleled retail distribution and leading national web site ApartmentGuide.com. These competitive advantages allow the company to demonstrate the cost effectiveness of its products as measured by a favorable cost per lease to the advertiser.

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The year 2005 provided significant challenges to this business, including unprecedented levels of condominium conversions that limited existing and potential customers from Apartment Guide markets and decreased vacancy rates in markets with higher condominium conversions, and in markets with significant levels of temporary residents caused by Hurricane Katrina. The Company attributes Apartment Guide’s relative stability in adverse conditions to its brand leadership, both in print and online.

Advertisers in Apartment Guide receive an integrated media program that includes advertising in their local Apartment Guide magazine as well as a listing on ApartmentGuide.com. ApartmentGuide.com attracts approximately 1.3 million unique visitors per month and had 19,685 apartment property listings as of December 31, 2005. The website offers many premium features not provided by its print products including virtual tours and flexible search functionality. Through the Apartment Guide publications and Apartmentguide.com, the Company generated approximately 5 million leads for apartment property managers in 2005.

The majority of Apartment Guide customers purchase 12-month contracts, and, in 2005, approximately 90% of standard listing contracts were renewed when they expired. In 2005, Apartment Guide had approximately 22,000 advertisers. Advertising in the apartment publications is generated by a 300 person sales force located throughout the United States. The Company’s national competitors, both print and online or online only, include Trader Publishing Company (publishers of For Rent), Network Communications Inc. (publishers of Apartment Finder), Classified Media Ventures (publisher of Apartments.com), EBAY (publishers of Rent.com) and Homestore, Inc. (publishers of Rent.net).

New Homes

The Company is the leading publisher of new home guides with 31 publications in 25 major markets including Denver, Phoenix, Dallas-Fort Worth, Philadelphia, Orlando and Houston. In 2005, the Company launched a new guide in the Washington, DC market and purchased new home publications in Charlotte, Atlanta, Jacksonville, Nashville, Seattle and Portland, OR.

The New Home Guide publications provide informational listings about featured new home communities with the majority of advertising revenue contributed by builders and developers. Most of the Company’s New Home Guide publications are published bi-monthly with a combined monthly circulation of approximately 600,000. The New Home Guide is available free to consumers at leading retailers in each market through the Company’s proprietary DistribuTech distribution network. New Home Guide advertisers purchase an integrated media package that includes advertising in their local print guide as well as a listing on Newhomeguide.com, which received over 4.9 million unique users in 2005 and featured over 5,000 total communities as of December 31, 2005. In 2005, the Company acquired the American Home Guide family of web sites that include 350 specific web sites that showcase new homes, including AmericanHomeGuides.com, FloridaGuide.com and ClickNewHomes.com. The Company’s New Home Guide clients are also listed on the American Home Guide family of sites, providing its advertisers with maximum exposure to potential new home buyers. Over 8 million visitors used the Company’s New Home websites in 2005. The Company competes primarily with local newspapers and national competitors such as Network Communications, Inc. (publishers of New Home Finder), and Homestore, Inc. (publisher of HomeBuilder.com)

Autos

The Company’s newest guide roll-out is Auto Guide and AutoGuide.com. Consumer Guides launched its first Auto Guide in Charlotte, North Carolina in March 2004 and rapidly expanded its presence in 2005 to a total of 14 automotive publications in North Carolina, Georgia, Florida, Southern California, Wisconsin and New England. The Company believes that the auto sector represents an attractive opportunity for growth with an addressable advertising market that is greater than that of its core

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apartment advertising market. The Company attributes its success in rapidly expanding into this space to the availability of its proprietary distribution channels, successful direct media sales experience and results-driven business model that proves the value of its advertising to its clients.

Auto Guide markets an integrated media program to auto dealers that advertises their pre-owned auto inventory in high quality local publications available free to consumers at leading local retailers as well as on the national web site AutoGuide.com. AutoGuide.com, which was launched in the third quarter of 2005, will be expanded in 2006 to include comprehensive technical information on all auto listings, flexible search functionality and several advanced listing features that will allow dealers to highlight certain portions of their auto inventory.

Auto Guide competes in each local market with traditional mass media, including local television, radio, newspaper and outdoor. On a national basis, the Company’s main competitors are Trader Publishing Company (publisher of Auto Trader and Auto Mart), Classified Media Ventures (publisher of Cars.com) and EBAY(publisher of EBAY Automotive).

DistribuTech

DistribuTech is the nation’s largest distributor of free publications, and distributes PRIMEDIA’s consumer guides and over 1,600 third-party titles. In 2005, publications were distributed to more than 50,000 leading grocery, convenience, video and drug stores, universities, military bases, major employers and other locations in 73 metropolitan areas. Approximately one-third of these locations have exclusive distribution agreements with DistribuTech. The guides are typically displayed in free-standing, multi-pocket racks located in high-visibility, high traffic locations at the entrance or exit of major retailers. DistribuTech generates revenues by leasing rack pockets to other publications and providing warehousing and delivery distribution services to these publications. DistribuTech stocks the racks at each location an average of two to three times per week. DistribuTech competes for third-party publication distribution primarily on the basis of its prime retail locations and its service. DistribuTech’s principal competitor is Trader Distribution Services, a division of Trader Publishing Company.

Recent Developments

Acquisition of Rentclicks

On January 31, 2006, the Company announced the acquisition of RentClicks.com, the largest online marketplace for small unit rental properties, which is the largest segment of the rental market. RentClicks provides landlords, investors, and property managers with an efficient, easy to use Web-based tool to advertise rental properties to qualified and informed rental customers. Consumer Guides plans to leverage its operating experience, financial strength and reach of its proven guides business to capitalize on RentClicks’ significant position in this large segment of the rental market. The cost of this acquisition was $12,500.

Education Segment

PRIMEDIA Education is comprised of Channel One, a proprietary network to secondary schools, Films Media Group, a leading source of educational videos available in multiple formats, and PRIMEDIA Healthcare, a continuing medical education business.

Education Products

Channel One News is the highest rated teen television program, reaching over 7 million teens in over 300,000 classrooms across the U.S. and is a daily, closed circuit television news program delivered to secondary school students in their classrooms. Channel One News’ average teen audience is ten times larger

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than the average teen audience of the five cable news networks and the evening newscasts of ABC, CBS, and NBC combined, and is twenty times larger than MTV’s average weekly teen audience.

Channel One generates the majority of its revenue by selling two minutes of advertising shown during each 12-minute Channel One News daily newscast. Channel One News airs only during the school year, typically middle of August through early June. Since Channel One News program does not air during the summer months, Channel One sees a seasonal revenue drop in the Company’s third quarter each year.

The Films Media Group is a leading distributor of videos, DVDs, and CD-ROMs to schools, colleges, and libraries in North America. Its products are sold mostly by direct mail to teachers, instructors and librarians and primarily serve students in grades 8 to 12 and in college. Films Media Group has seen the demand for VHS formats decline in favor of DVD, and developed a platform for the digital distribution of its content library suited to the technology structure at learning institutions. The major competitors are Discovery Communications, Inc., PBS Video and Schlessinger Media, a division of Library Video Company.

PRIMEDIA Healthcare, previously part of Workplace Learning, which was discontinued, provides continuing medical education principally dealing with the central nervous system.

Divestitures

The Company has traditionally managed its portfolio of media assets by opportunistically divesting assets no longer core to the Company’s overall strategy. In 2005, PRIMEDIA continued to focus on reducing the amount of debt and preferred stock on its balance sheet.

In the first quarter of 2005, the Company completed the sale of About.com for approximately $410.6 million, which was part of the Enthusiast Media segment. During the first half of 2005, the Company completed the sale of its Workplace Learning division for approximately $21,300. In the third quarter of 2005, the Company sold its Business Information Segment for approximately $385 million and subsequently sold Ward’s Automotive Group (“Ward’s”) in the fourth quarter for $5.75 million. Also in the third quarter, the Company discontinued the operations of two magazines in the Enthusiast Media segment. During the fourth quarter of 2005, the Company decided to pursue the sales of its Crafts and History groups, part of the Enthusiast Media segment. The Company also discontinued the operations of its Software on Demand division, part of the Education segment. At December 31, 2005 the assets and liabilities of the Crafts and History groups are classified as held for sale on the accompanying consolidated balance sheet. In February 2006, the Company completed the sale of the History group.

Financial results for these divestitures and planned divestitures are reported in discontinued operations on the statements of consolidated operations for all periods presented.

Production and Fulfillment

Virtually all the Company’s print products are printed and bound by independent printers. The Company believes that because of its buying power, outside printing services have been and can be purchased at favorable prices. The Company provides most of the content for its Web sites but outsources technology and production.

The principal raw material used in the Company’s products is paper which is purchased directly from several paper mills, including three of the industry’s largest paper mills, and from merchants. Paper prices increased 7.2% in 2005.

The Company uses the U.S. Postal Service for distribution of many of its products and marketing materials and is therefore subject to postal rate changes. Many of the Company’s products are packaged and delivered to the U.S. Postal Service directly by the printers. Other products are sent from warehouses

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and other facilities operated by the Company. Postal rates did not increase in 2005, however in early 2006 postal rates increased by approximately 5.4%.

In the future, the Company may be affected by cost increases driven by inflation or market conditions.

Company Explores Separation of its Businesses

In the fourth quarter 2005, the Company announced that its Board of Directors authorized management, assisted by outside advisors, to explore the separation of its businesses via a tax-free spin-off into two separate publicly-traded companies. The plan being contemplated would separate Primedia’s Consumer Guides Segment from Primedia’s Enthusiast Media and Education Segments. The transaction is anticipated to take the form of a tax-free dividend of shares in the spun-off company that would be distributed pro rata to all Primedia shareholders. The Company’s management continues to examine all of the relevant issues before making a recommendation to the Board of Directors. The outside (non-KKR) directors are also meeting independently with their advisors to consider the possible spin transaction. The Company will make an announcement when any determinations are made by its Board of Directors.

Employees

During 2005, the Company’s headcount declined primarily due to divestitures and consolidation of certain functions. As of December 31, 2005, the Company had approximately 3,200 full time equivalent employees compared to approximately 4,500 at the end of 2004. None of its employees are union members. Management considers its relations with its employees to be good.

Company Organization

PRIMEDIA was incorporated on November 22, 1991 in the State of Delaware. The principal executive office of the Company is located at 745 Fifth Avenue, New York, New York, 10151; telephone number (212) 745-0100.

The Company holds regular conference calls to inform investors about the Company. To obtain information on these calls or to learn more about the Company please contact:

The 2006 PRIMEDIA Annual Meeting of Shareholders will be held on Wednesday, May 17, 2006 at 10 a.m, at the Peninsula Hotel, 700 Fifth Avenue, New York, NY.

Available Information

The Company’s Internet address is: www.primedia.com. The Company makes available free of charge through its Web site its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after such documents are electronically filed with, or furnished to, the Securities and Exchange Commission.

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ITEM 1A.        RISK FACTORS

Set forth below are risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements contained in this Annual Report.

General economic trends, as well as trends in advertising spending and competition, may reduce our advertising and circulation revenues.

Our advertising revenues are subject to the risks arising from adverse changes in domestic and global economic conditions and possible shifting of advertising spending amongst media. A decline in the level of business activity of certain of our advertisers, including U.S. and non-U.S. automobile manufacturers, has had an adverse effect on our revenues and profit margins. Additionally, high levels of condominium conversions limited existing and potential customers from Apartment Guide markets and decreased vacancy rates in markets with higher condominium conversions and in markets with significant levels of temporary residents caused by Hurricane Katrina, constraining growth in one of our segments. Extraordinary weather conditions, like Hurricane Katrina, can impact newsstand sales, advertising revenues and other revenues like distribution. Any adverse impact of economic conditions on the Company is difficult to predict but it may result in reductions in advertising revenue. Additionally, if geopolitical events negatively impact the economy or advertising spending patterns change, our results of operations may be adversely affected.

Our circulation revenues are subject to the risks arising from our ability to institute price increases for our print products and are affected by: competition from other publications and other forms of media available in the Company’s various markets; changing consumer lifestyles resulting in decreasing amounts of free time; declining frequency of regular magazine buying among young people and increasing costs of circulation acquisition.

We have substantial indebtedness and other monetary obligations, which consume a substantial portion of the cash flow that we generate.

A substantial portion of our cash flow is dedicated to the payment of interest on indebtedness which reduces funds available for capital expenditures and business opportunities and may limit our ability to respond to adverse developments in our business or in the economy.

Our debt instruments limit our business flexibility by imposing operating and financial restrictions on our operations.

The agreements and indentures governing our indebtedness impose specific operating and financial restrictions on us. These restrictions impose limitations on our ability to, among other things:

·       change the nature of our business;

·       incur additional indebtedness;

·       create liens on our assets;

·       sell assets;

·       issue stock;

·       engage in mergers, consolidations or transactions with our affiliates;

·       make investments in or loans to specific subsidiaries;

·       make guarantees or specific restricted payments; and

·       declare or make dividend payments on our common stock.

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Our failure to comply with the terms and covenants in our indebtedness could lead to a default under the terms of those documents, which would entitle the lenders to accelerate the indebtedness and declare all amounts owed due and payable. Moreover, the instruments governing almost all of our indebtedness contain cross-default provisions so that a default under any of our indebtedness may result in a default under our other indebtedness. If a cross-default occurs, the maturity of almost all of our indebtedness could be accelerated and become immediately due and payable. If that happens, we would not be able to satisfy our debt obligations, which would have a substantial adverse effect on our ability to continue as a going concern. We may not be able to comply with these restrictions in the future, or in order to comply with these restrictions we may have to forgo opportunities that might otherwise be beneficial to us.

Kohlberg Kravis Roberts & Co. L.P., or KKR, has control of our common stock and has the power to elect all the members of our board of directors and to approve any action requiring stockholder approval.

As of December 31, 2005, approximately 60% of the shares of our common stock were held by investment partnerships, of which KKR Associates, L.P., a New York limited partnership (“KKR Associates”), and KKR GP 1996 LLC, a Delaware limited liability company (“KKR GP 1996”), each an affiliate of KKR, are the general partners. KKR Associates and KKR GP 1996 have sole voting and investment power with respect to these shares. Consequently, KKR Associates and KKR GP 1996 and their respective general partners and members, three of whom are also our directors, control us and have the power to elect all of our directors and approve any action requiring stockholder approval, including adopting amendments to our certificate of incorporation and approving mergers or sales of all or substantially all of our assets. KKR Associates and KKR GP 1996 will also be able to prevent or cause a change of control at any time.

Increases in paper and postage costs may have an adverse impact on our future financial results.

The price of paper is a significant expense relating to our print products and direct mail solicitations. The Company incurred paper price increases in both 2004 and 2005 after many years of stable or lower prices, and anticipates additional modest increases for 2006. However, worldwide demand, strikes and extraordinary weather conditions could result in higher prices in 2006. We use the U.S. Postal Service for distribution of many of our products and marketing materials. Postal rates increased in 2006 by approximately 5.4%. Paper and postage cost increases may have an adverse effect on our future results. We may not be able to pass these cost increases through to our customers.

We depend on some important employees, and the loss of any of those employees may harm our business.

Our performance is substantially dependent on the performance of our key employees. In addition, our success is dependent on our ability to attract, train, retain and motivate high quality personnel, especially for our management, sales and editorial teams. The loss of the services of any of our key employees may harm our business.

The Company’s management also is concerned about the intense competition in this economy for the hiring and retention of qualified financial personnel and the demands surrounding increased financial disclosure.

ITEM 1B.       UNRESOLVED STAFF COMMENTS

None.

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ITEM 2.                PROPERTIES.

The following table sets forth certain information with respect to the Company’s principal locations as of December 31, 2005. These properties were leased by the Company initially for use in its operations but as a result of divestitures and consolidations, certain of these properties are now leased to third party tenants. Of the total of approximately 1.8 million rentable square feet currently under lease, approximately 482,000 rentable square feet are fully subleased to third parties. The locations presently used by the Company for its operations are considered adequate by the Company for its present needs.

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ITEM 3.                LEGAL PROCEEDINGS.

The Company is involved in ordinary and routine litigation incidental to its business. In the opinion of management, there is no pending legal proceeding that would have a material adverse effect on the consolidated financial statements of the Company.

ITEM 4.                SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

There were no matters submitted to a vote of security holders during the fourth quarter of 2005.

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PART II

ITEM 5.                MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Market Information

PRIMEDIA Common Stock is listed on the New York Stock Exchange, under the ticker symbol “PRM”. As of February 28, 2006, there were 885 holders of record of PRIMEDIA Common Stock. The Company has not paid and has no present intention to pay dividends on its Common Stock. In addition, the Company’s bank credit facilities and Senior Notes impose certain limitations on the amount of dividends permitted to be paid on the Company’s Common Stock. See Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity, Capital and Other Resources-Financing Arrangements.” High and low sales prices for 2005 and 2004, as well as close prices on the last day of the quarter were as follows:

The closing stock price decreased 58% from December 31, 2004 to December 31, 2005. From January 1, 2006 through February 28, 2006, the high price for the stock was $2.40, the low price was $1.48 and the closing price on February 28, 2006 was $2.26.

Equity Compensation Plan Information

Information required by this item with respect to equity compensation plans of the Company is incorporated by reference to the Company’s Proxy Statement for its 2006 Annual Meeting of shareholders. The definitive Proxy Statement will be filed within 120 days of the end of the fiscal year ended December 31, 2005.

Recent Sales of Unregistered Securities

In June 2004, the Company issued to George Roberts, a former director of the Company, 90,082 shares of the Company’s unregistered Common Stock as compensation for his services as a director from March 1992 to May 2004. Mr. Roberts was permitted to defer payment of his director’s fees and receive the fees in the form of Common Stock pursuant to the Directors’ Deferred Compensation Plan. Mr. Roberts deferred the payment of an aggregate of $385,975 of directors’ fees that he would have otherwise received in cash at the time the services were provided. The issuance to Mr. Roberts was made by the Company in reliance on the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended.

During the three months ended December 31, 2003, the Company issued 832,627 shares of its unregistered Common Stock in exchange for outstanding preferred stock of the Company in reliance on

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Section 3(a)(9) of the Securities Act of 1933, as amended. The Company subsequently repurchased these 832,627 shares of Common Stock for $2.95 per share or approximately $2,456,250.

In February 2003, the Company issued to Michael Tokarz, a former Director of the Company, 29,284 shares of the Company’s unregistered Common Stock as compensation for his services as a director from October 1998 to May 2002. Mr. Tokarz, was permitted to defer the payment of his director’s fees and receive the fees in the form of Common Stock pursuant to the Directors’ Deferred Compensation Plan. Mr. Tokarz deferred the payment of an aggregate of $186,367 of directors’ fees that he would have otherwise received in cash at the time the services were provided. The issuance to Mr. Roberts was made by the Company in reliance on the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended.

ITEM 6.                SELECTED FINANCIAL DATA.

The selected consolidated financial data were derived from the audited consolidated financial statements. The data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the related notes thereto included elsewhere herein.

During 2005, the Company completed the sales of its Workplace Learning division and About.com, sold its Business Information Segment, shut down two magazines within the Enthusiast Media segment, sold Ward’s Automotive Group and discontinued its Software on Demand division. In addition, the Company has decided to sell the Crafts and History groups within the Enthusiast Media segment. In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”), the Company has classified the results of these entities as discontinued operations for all periods presented.

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PRIMEDIA INC. AND SUBSIDIARIES

Notes to Selected Financial Data (dollars in thousands)

(1)    As a result of divestitures made in 2005 and the related requirements of SFAS 144, the Company reclassified amounts from revenues, net, to discontinued operations for the years ended December 31, 2004, 2003, 2002, and 2001 as follows:

(2)    Includes an impairment of property and equipment of $4,440 and $8,657 for the years ended December 31, 2005 and 2002, respectively.

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(3)    Includes an impairment of intangible assets, goodwill and other, of $8,888, $6,700, $13,780, $33,543, and $14,005 for the years ended December 31, 2005, 2004, 2003, 2002 and 2001, respectively.

(4)    In connection with the adoption of Statement of Financial Accounting Standard (“SFAS”) No. 142 “Goodwill and Other Intangible Assets,” (“SFAS 142”),  on January 1, 2002, the Company recorded an impairment charge related to its goodwill and certain indefinite lived intangible assets as a cumulative effect of a change in accounting principle. Additionally, SFAS 142 prohibited the amortization of goodwill and indefinite lived intangible assets, effective January 1, 2002. Amortization expense for goodwill and certain trademarks which ceased being amortized under SFAS 142 (excluding provisions for impairment) was $36,876 for the year ended December 31, 2001.

(5)    Basic and diluted income (loss) per common share, as well as the basic and diluted common shares outstanding, were computed as described in Note 16 of the notes to the consolidated financial statements included elsewhere in this Annual Report.

(6)    Excludes current maturities of long-term debt.

(7)    The Company adopted SFAS No. 150 “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity”, (“SFAS 150”), prospectively, effective July 1, 2003, which requires the Company to classify as long-term liabilities its Series D Exchangeable Preferred Stock, Series F Exchangeable Preferred Stock and Series H Exchangeable Preferred Stock and to classify dividends from preferred stock as interest expense. Such stock is described as shares subject to mandatory redemption and dividends on these shares are now described as interest on shares subject to mandatory redemption, whereas previously they were presented below net income (loss) as preferred stock dividends. The adoption of SFAS 150 increased the loss from continuing operations for the years ended December 31, 2005, 2004 and 2003 by $24,956, $45,124 and $22,547, respectively, which represents interest on shares subject to mandatory redemption of $24,203, $43,780 and $21,889 and amortization of issuance costs of $753, $1,344 and $658 which are included in the amortization of deferred financing costs on the accompanying statements of consolidated operations. If SFAS 150 was adopted on January 1, 2001, loss from continuing operations would have increased by $22,670, $18,431 and $54,692 for the years ended December 31, 2003, 2002 and 2001, respectively. The 2003 and 2002 increase to loss from continuing operations has been reduced by a net gain of $944 and $32,788, respectively, on exchanges of the shares subject to mandatory redemption. During 2005, the Company redeemed all of its outstanding shares subject to mandatory redemption.

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Item 7.                        MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS).

Introduction

The following discussion and analysis summarizes the financial condition and operating performance of the Company and its business segments and should be read in conjunction with the Company’s historical consolidated financial statements and notes thereto included elsewhere in this Annual Report.

Executive Summary

Our Business

The Company’s revenues are generated from advertising (print and online), circulation (subscriptions and newsstand sales) and other sources including online lead generation, events, third party distribution, television and video programs, list rental, brand licensing and merchandising. PRIMEDIA’s Operating Expenses, for segment EBITDA purposes, include cost of goods sold, exclusive of depreciation of property and equipment (paper and printing); marketing and selling; distribution, circulation and fulfillment; editorial; and other general and corporate administrative expenses (collectively referred to as “Operating Expenses.” See Why We Use the Term Segment EBITDA).

The Company has three reportable segments which best enable it to execute key investment and organic growth initiatives. Those segments are Enthusiast Media, Consumer Guides and Education.

Background

Historically, PRIMEDIA was a broad based media enterprise resulting from a series of acquisitions and comprised of numerous disparate assets. Since 2000, the Company has been opportunistically divesting selective properties in order to better focus on its core businesses and reduce debt and shares subject to mandatory redemption. The Company has been positioning itself as a highly focused targeted media company which is investing in its businesses to drive growth.

Additionally, to counter the effects of the weakness in the overall advertising environment, the Company aggressively attacked its cost structure. The Company also realigned and reorganized its management structure to better reflect its emphasis on delivering exceptional products and brands to the marketplace to achieve organic growth. These initiatives have resulted in charges for severance, closures and restructuring related costs to integrate Company operations and consolidate many back office functions and facilities, resulting in a significant reduction in the number of employees and office space, creating operational and financial efficiencies.

Overall, these actions have made the Company a more efficient organization with a strengthened balance sheet and improved liquidity.

Business Trends

The media industry continues to be adversely affected by an overall advertising environment that is softer than historical norms, declining newsstand sales of consumer magazines and budgetary constraints in the education markets. Additionally, recent high levels of condominium conversions limited existing and potential customers from Apartment Guide markets and decreased vacancy rates affected.

In 2005, revenue growth was driven by the rapid expansion of the Consumer Guide Segment’s Auto Guide division, organic growth and acquisitions in the Segment’s New Home Guide business, and the expansion of its retail distribution program in DistribuTech.

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Company Strategy

The Company’s strategy is to focus on its core targeted media businesses and grow by leveraging and expanding its market-leading brands. During 2005, the Company made organic growth its top priority. PRIMEDIA is well positioned to capitalize on the shift away from mass advertising to targeted media.

The Company is implementing its organic growth strategy through various actions, including:

·       expanding the Internet, particularly in developing new transactional marketplaces,

·       introducing new products, such as merchandise, videos and dvds,

·       improving and upgrading existing products,

·       expanding into new markets,

·       broadening its advertiser base to include non-endemic national advertisers, and corporate sponsorships of public affair topics relevant to teens (in the Education segment),

·       optimizing distribution, and

·       leveraging its well known brands through extensions including events, television, radio, licensing and merchandising.

The Company’s business segments are highlighted in the segment discussions below and in the Results of Operations section.

2005 Summary Consolidated Results

In 2005, revenues were $990,571, up 2.1% as compared to $969,796 in 2004. Revenue increased at the Company’s Consumer Guides segment, while revenues at the Enthusiast Media and Education segments decreased $9,519. In 2005, Operating Expenses were $813,810 up 4.3% compared to 2004. In 2005, operating income was $116,287 from $125,709 in 2004 due mainly to the planned impact of $19,500 of investments in the Consumer Guide segment. This investment in the Consumer Guide segment was partially offset by a provision for unclaimed property in 2004. Net income was $564,618 in 2005 compared to $35,470 in 2004, as 2005 included gains on the sales of the Business Information Segment of $221,978, About, Inc. of $378,930, PRIMEDIA Workplace Learning of $2,806 and Ward’s of $501.

Segment Strategy

·       Enthusiast Media—The Company is focusing on investing in expanding non-print revenue verticals, principally the Internet, to offset the Company’s difficult advertising and newsstand sales environment, redesigning and reinvigorating products, upgrading staffing, managing newsstand draw and reducing raw material and distribution costs for print publications.

·       Consumer Guides—The Company is focusing on bringing the recent Auto Guide launches to profitability, and expanding its presence in the online marketplace for small unit rental properties with the acquisition of Rentclicks.com in early 2006. This segment of the market, which consists of rental houses, town homes, condos and single unit apartment accounts for approximately 70% of the total rental market. The Company believes that it can capture a new segment of the rental marketplace as well as recapture a portion of the Apartment Guide revenue lost to condominium conversion.

·       Education—New management at Channel One is focused on broadening the revenue base while controlling costs. Films Media Group is focused on the rollout of its digital platform of titles in 2006. The PRIMEDIA Healthcare focus is to expand into disciplines other than

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psychopharmacology. PRIMEDIA Healthcare increased revenue and Segment EBITDA in 2005 and has already secured 2006 revenue in excess of 2005 revenue.

Enthusiast Media

Enthusiast Media

The Enthusiast Media segment produces and distributes content through magazines and via the Internet to consumers in various niche and enthusiast markets. It includes the Company’s Automotive, Outdoors and Marine, Action Sports, Equine, Soaps and Home Technology magazine groups, the Internet, events, and licensing and merchandising. In 2005, revenues for the Enthusiast Media segment were $608,032, down 1.5%, and Segment EBITDA (as defined below) was $122,504, down 5.8%, compared to 2004.

The Company’s strategy for this segment is to drive growth through:

·       expanding the Internet business,

·       improving product quality,

·       improving circulation management, and

·       attracting non-endemic, national advertisers.

Expanding the Internet Business

PRIMEDIA sees a significant growth opportunity through building multiple online revenue streams, including subscriber acquisition, transactions, lead generation and online advertising. During 2005, the Company took a major step forward with its Internet strategy with the additions of Automotive.com and Equine.com. The combination of Automotive.com with the Company’s automotive Internet sites provides a platform for maximizing advertising and lead generation revenues across all those sites. As automakers divert marketing dollars to the Internet and as auto dealers seek increased car sale leads, the combination of Automotive.com with the auto Internet sites provides a platform for maximizing advertising and lead generation revenues among those sites. Equine.com is the world’s largest online marketplace for equine enthusiasts. The Company intends to extend Equine.com’s proprietary technology and unique marketing to its other industry categories such as Marine and Outdoors where it plans to develop new transactional marketplaces in 2006.

Improving Product Quality

The Company has instituted a multi-faceted program to improve circulation economics. Building on the Company’s redesign program, PRIMEDIA has established a more coordinated effort to leverage advertising, content and design expertise to increase efficiencies, manage costs and appropriately utilize talent. PRIMEDIA has expanded its cover testing program to encompass both cover testing and reader feedback on future content, is in the process of upgrading talent at key positions and is implementing content testing to secure additional advertising revenue and ultimately increase newsstand sales.

Improving Circulation Management

PRIMEDIA’s focus in 2006 is to resolve circulation problems by improving the products; upgrading talent in key positions; reducing draw (number of copies printed for sale) and reinvesting resulting savings into higher quality newsstand copies. By cutting newsstand draw surgically and reinvesting those savings in bigger package size, better paper stock and editorial and art upgrades, the Company believes both

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circulation and advertising revenue will increase. Results for Motor Trend and Hot Rod redesigns in 2004 have shown that the strategy works when properly applied and monitored.

Attracting Non-Endemic, National Advertisers

PRIMEDIA continues to make progress in attracting non-endemic national advertisers, particularly those aiming to reach the valuable 18-34 male demographic. Non-endemic advertising represents 15% of total print advertising for this segment. Well recognized brands such as McDonald’s and Procter and Gamble continue to seize advertising opportunities across PRIMEDIA’s print, Internet and event properties.

Consumer Guides

Consumer Guides

Revenues for the Consumer Guides segment were $317,134, up 10.5%, and Segment EBITDA was $74,921, down 8.0% compared to 2004. As expected, 2005 profitability was adversely impacted by several investments totaling approximately $19,500, comprised of:

·       Launch of 6 Auto Guide publications and continued investment in 2004 launches

·       Launch of one New Home Guide publication

·       Additional retail distribution for DistribuTech

Apartment Guide

The Segment’s largest business, Apartment Guide and its online property ApartmentGuide.com, continued its market leadership in the most difficult market conditions in the business’s 31 year history. The year presented significant challenges, including unprecedented levels of condominium conversions that eliminated existing and potential customers from Apartment Guide markets and decreased vacancy rates in markets with high condominium conversion. Apartment Guide revenue was down slightly in 2005. The Company attributes Apartment Guide’s relative stability in these adverse market conditions to its brand leadership both in print and online.

The Company continues to capitalize on the online potential of the Apartment business. ApartmentGuide.com grew unique users 8.8% in 2005, and continues to be the most recognized brand in the apartment rental industry. “Apartment Guide Printernet”, Apartment Guide’s combined offering of best-in-class print and Internet media provided approximately 8 million leads to customers in 2005.

Auto Guide

With a potential advertising market that is larger than that of the apartment industry, the Company believes that Auto Guide represents a very attractive long-term opportunity that is at least comparable to its 31-year old Apartment Guide business. In 2005, the Company launched 6 Auto Guide publications and acquired 7 other auto publications, bringing the total Auto Guide publications to 14.

New Home Guide

In 2005, the New Home Guide business and its online property, NewHomeGuide.com enjoyed the best year in its history with annual revenue growth of 60% in 2005. The Company grew its New Home Guide presence through organic growth of 31% in its existing markets, through the launch of a new magazine in the Washington, DC market and the acquisition of new print guides in the Atlanta, Charlotte, Jacksonville, Nashville, Seattle and Portland markets, bringing its total markets served to 25. The Company also significantly expanded its new homes Internet presence with the acquisition of americanhomeguides.com.

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The acquisition provides new home advertisers with millions of additional potential customers and provides consumers with access to more new home listings across the country.

DistribuTech

In 2005, DistribuTech made significant investments in its expansive nationwide distribution network of leading retailers. The Company renewed existing agreements and entered new agreements to both maintain its existing locations and expand its distribution to new locations and new retail chains. These investments insure continued top quality placement for Consumer Guide’s existing publications and provide the Company with the platform to rapidly roll out its new market publications, and to continue to grow its third party distribution business. This expanded capacity led to DistribuTech’s strong 17.5% revenue growth in 2005.

Education

The Education segment is comprised of the businesses that provide content to schools, universities, and medical professionals. It includes Channel One, Films Media Group and PRIMEDIA Healthcare. In 2005, revenues for the Education segment were $65,903, down 0.7%, and Segment EBITDA was $7,012, up 16.3% compared to 2004.

Changes in management in the Education businesses enabled the segment to stem the large revenue declines of prior year and contribute to Segment EBITDA growth. To improve Channel One advertising, the division has begun to broaden its revenue base and is developing partnership and sponsorship opportunities with corporations and organizations regarding public affair topics that are relevant to teens. PRIMEDIA Healthcare has already secured bookings for 2006 in excess of its total revenue for 2005. Films Media Group experienced revenue growth for the year and is focusing on the rollout of its digital platform in 2006 to make its extensive library of titles available in various digital formats.

Forward-Looking Information

PRIMEDIA, in its fourth quarter 2005 earnings conference call with investors and related earnings release on February 21, 2005, indicated that, using 2005 reported results as the base, it expected, on a consolidated basis, year-over-year mid single digit percentage revenue growth and low-to-mid single digit percentage Segment EBITDA growth, after corporate overhead. The Company expects that most of its 2006 revenue and Segment EBITDA growth will occur in the second half of the year.

For the full year 2006, the Company expects its Enthusiast Media segment to deliver year-over-year mid single digit percentage revenue growth and low-to-mid single digit percentage Segment EBITDA growth. Adversely impacting Enthusiast Media’s Segment EBITDA in 2006 are expected cost increases for paper and ink; and the United States Postal Service’s 2006 postage rate increase, totaling approximately $10 million.

For the full year 2006, the Company expects its Consumer Guides segment to deliver year-over-year mid single digit percentage revenue and Segment EBITDA growth. This growth is expected to be led by strong gains in New Home Guide and Auto Guide, expected growth in the RentClicks.com business, offset by flat to modest declines in the Company’s Apartment Guide business.

This Annual Report contains forward-looking statements as that term is used under the Private Securities Litigation Act of 1995 and are based on the current assumptions, expectations and projections of the Company’s management about future events. Although the assumptions, expectations and projections reflected in these forward-looking statements represent management’s best judgment at the time, the Company can give no assurance that they will prove to be correct. Numerous factors, including those related to market conditions and those detailed from time-to-time in the Company’s filings with the

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Securities and Exchange Commission, may cause results of the Company to differ materially from those anticipated in these forward-looking statements. Many of the factors that will determine the Company’s future results are beyond the ability of the Company to control or predict. These forward-looking statements are subject to risks and uncertainties and, therefore, actual results may differ materially. The Company cautions you not to place undue reliance on these forward-looking statements. The Company undertakes no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise. All references to “Company” and “PRIMEDIA” as used throughout this presentation refer to PRIMEDIA Inc. and its subsidiaries.

Why We Use the Term Segment EBITDA

Segment EBITDA represents each segment’s earnings before interest, taxes, depreciation, amortization and other charges (income) (“Segment EBITDA”). Other charges (income) include severance related to separated senior executives, non-cash compensation, provision for severance, closures and restructuring related costs, provision for unclaimed property and (gain) loss on sale of businesses and other, net. PRIMEDIA believes that Segment EBITDA is an accurate indicator of its segments’ results, because it focuses on revenue and operating cost items driven by operating managers’ performance, and excludes items largely outside of operating managers’ control. Internally, the Company’s chief operating decision maker, its Chairman, President and CEO, and the executive team measure performance primarily based on Segment EBITDA.

Segment EBITDA is not intended to be and should not be considered as an alternative to net income or loss, as determined in conformity with accounting principles generally accepted in the United States of America, as an indicator of the Company’s operating performance. Segment EBITDA may not be available for the Company’s discretionary use as there are requirements to repay debt, among other payments. Segment EBITDA as presented may not be comparable to similarly titled measures reported by other companies since not all companies necessarily calculate Segment EBITDA in an identical manner, and therefore, it is not necessarily an accurate measure of comparison between companies. See reconciliation of Segment EBITDA to net income for the Company’s three segments in their respective segment discussions below.

Why We Use the Term Free Cash Flow

Free Cash Flow is defined as net cash provided by operating activities adjusted for additions to property, equipment and other, net and capital lease obligations (“Free Cash Flow”).

The Company believes that the use of Free Cash Flow enables the Company’s chief operating decision maker, its Chairman, President and CEO, and the executive team to make decisions based on the Company’s cash resources. Free Cash Flow also is considered to be an indicator of the Company’s liquidity, including its ability to reduce debt and shares subject to mandatory redemption and make strategic investments.

Free Cash Flow is not intended to represent cash flows from operating activities as determined in conformity with accounting principles generally accepted in the United States of America. Free Cash Flow as presented may not be comparable to similarly titled measures reported by other companies since not all companies necessarily calculate Free Cash Flow in an identical manner, and therefore, is not necessarily an accurate measure of comparison between companies.

Intersegment Transactions

The information presented below includes certain intersegment transactions and is, therefore, not necessarily indicative of the results had the operations existed as stand-alone businesses. Intersegment

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transactions represent intercompany advertising and other services which are billed at what management believes are prevailing market rates. These intersegment transactions, which represent transactions between operating units in different business segments, are eliminated in consolidation.

Discontinued Operations

In the first quarter of 2005, the Company completed the sale of About.com for approximately $410.6 million, which was part of the Enthusiast Media segment. During the first half of 2005 the Company completed the sale of its Workplace Learning division for approximately $21,300. In the third quarter of 2005, the Company sold its Business Information Segment for approximately $385 million and subsequently sold Ward’s Automotive Group (“Ward’s”) in the fourth quarter for $5.75 million. Also in the third quarter, the Company discontinued the operations of two magazines in the Enthusiast Media segment. During the fourth quarter of 2005, the Company decided to pursue the sales of its Crafts and History groups, part of the Enthusiast Media segment. The Company also discontinued the operations of its Software on Demand division, part of the Education segment. In February 2006, the Company completed the sale of the History group.

Financial results for these divestitures and planned divestitures are reported in discontinued operations on the statements of consolidated operations for all periods presented.

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Segment Data

The following table presents the results of the Company’s three operating segments and Corporate for the years ended December 31, 2005, 2004 and 2003, respectively:

(1)          Segment EBITDA represents the segments’ earnings before interest, taxes, depreciation, amortization and other charges (income) (see Note 2 below). Segment EBITDA is not intended to be and should not be considered as an alternative to net income or loss (as determined in conformity with generally accepted accounting principles), as an indicator of the Company’s operating performance. Segment

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EBITDA is presented herein because the Company’s chief operating decision maker evaluates and measures each business unit’s performance based on its Segment EBITDA results. PRIMEDIA believes that Segment EBITDA is an accurate indicator of its segments’ results, because it focuses on revenue and operating cost items driven by operating managers’ performance, and excludes items largely outside of operating managers’ control. Segment EBITDA may not be available for the Company’s discretionary use as there are requirements to repay debt, among other payments. Segment EBITDA as presented may not be comparable to similarly titled measures reported by other companies since not all companies necessarily calculate Segment EBITDA in an identical manner, and therefore, is not necessarily an accurate measure of comparison between companies. See reconciliation of Segment EBITDA to net income for the years ended December 31, 2005, 2004 and 2003 for each of the Company’s segments in their respective segment discussions below.

(2)          Depreciation for the years ended December 31, 2005, 2004 and 2003 was $31,810, $27,777 and $29,823, respectively, and includes an impairment for property and equipment of $4,440 for the year ended December 31, 2005. Amortization for the years ended December 31, 2005, 2004 and 2003 was $19,194, $18,752 and $36,076, respectively. Amortization includes an impairment of intangible assets, goodwill and other of $8,888, $6,700, $13,780 for the years ended December 31, 2005, 2004 and 2003, respectively. Other charges (income) include severance related to separated senior executives of $1,775 (including non-cash compensation of $146), $658 and $9,372 for the years ended December 31, 2005, 2004 and 2003, respectively, non-cash compensation of $6,089, $6,097 and $11,184 for the years ended December 31, 2005, 2004 and 2003, respectively, provision for severance, closures and restructuring related costs of $1,815, $8,254 and $7,124 for the years ended December 31, 2005, 2004 and 2003, respectively, a provision for unclaimed property of $3,439 for the year ended December 31, 2004 and gain on sale of businesses and other, net, of $209, $965 and $224 for the years ended December 31, 2005, 2004 and 2003, respectively.

(3)          Effective July 1, 2003, the Company prospectively adopted SFAS 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity,” which requires the Company to classify as long term liabilities its Series D Exchangeable Preferred Stock, Series F Exchangeable Preferred Stock and Series H Exchangeable Preferred Stock and to classify dividends from this preferred stock as interest expense. Such stock is collectively described as shares subject to mandatory redemption and dividends on these shares are now included in loss from continuing operations and described as interest on shares subject to mandatory redemption, whereas previously they were presented below net income (loss) as preferred stock dividends. The adoption of SFAS 150 increased the loss from continuing operations for the years ended December 31, 2005, 2004 and 2003 by $24,956, $45,124 and $22,547, respectively, which represents primarily interest on shares subject to mandatory redemption of $24,203, $43,780 and $21,889 and amortization of issuance costs of $753, $1,344 and $658, respectively, which are included in the amortization of deferred financing costs on the accompanying statement of consolidated operations. If SFAS 150 was adopted on January 1, 2003 loss from continuing operations, would have increased by $22,670 for the year ended December 31, 2003. The 2003 increase to loss from continuing operations has been reduced by a net gain of $944 on exchanges of shares subject to mandatory redemption. During 2005, the Company redeemed all of its outstanding shares subject to mandatory redemption.

(4)          Discontinued operations includes gains on sale of businesses, net of tax, of $604,215, $43,535 and $124,426 in 2005, 2004 and 2003, respectively.

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Results of Operations

2005 Compared to 2004

Consolidated Results:

Revenues, Net

Consolidated revenues were $990,571 in 2005 compared to $969,796 in 2004:

Advertising revenues increased by $9,860 in 2005 compared to 2004 due to an increases of $21,654 in the Consumer Guides segment, partially offset by decreases of $7,092 and $4,702 in the Enthusiast Media and Education segments, respectively. Circulation revenues decreased $10,802 in 2005 in the Enthusiast Media segment. Other revenues increased $21,717 in 2005 compared to 2004 due to increases in the Enthusiast Media segment of $8,936, Consumer Guides of $8,387 and the Education segment of $4,394. Revenue trends within each segment are further detailed in the segment discussions below.

Operating Income (Loss)

Operating income was $116,287 in 2005 compared to $125,709 in 2004. The improvement in operating income in 2005 was primarily due to the increase in revenues of $20,775 partially offset by anticipated investments, mainly in Consumer Guides for new product launches and renewals and expansions of distribution agreements for DistribuTech. Amortization and depreciation expenses increased $442 and $4,033, respectively, in 2005 compared to 2004 primarily due to impairment provisions recorded for certain long-lived and intangible assets during 2005, offset by lower depreciation and amortization expense related to assets that became fully amortized during the year. In addition, severance related to separated senior executives increased $1,117 to $1,775 in 2005 compared to $658 in 2004.

Net Income (Loss)

The Company had net income in 2005 of $564,618 compared to $35,470 in 2004. In 2005, the Company recorded gains on the sales of its Business Information Segment, of $221,978, About, Inc. of $378,930, PRIMEDIA Workplace Learning of $2,806 and Ward’s of $501, included in discontinued operations.

Interest expense increased $6,623, or 5.3% in 2005 to $130,525 from $123,902 in 2004. The increase in interest expense was due to increases on interest rates on floating rate debt during 2005.

Interest on shares subject to mandatory redemption was $24,203 for the year ended December 31, 2005 compared to $43,780 for the year ended December 31, 2004, as the company redeemed its Series D, F and H Exchangeable Preferred Stock during 2005. Amortization of issuance costs of $753 and $1,344 is included in the amortization of deferred financing costs on the accompanying statements of consolidated operations for the years ended December 31, 2005 and 2004, respectively. The Company redeemed all of its outstanding shares subject to mandatory redemption during 2005.

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SFAS 144 requires sales or disposals of long-lived assets that meet certain criteria to be classified on the statement of consolidated operations as discontinued operations and to reclassify prior periods accordingly. During 2005, the Company sold About.com, part of the Enthusiast Media segment and sold its Business Information Segment, as well as Ward’s. Also during 2005, the Company discontinued the operations of two magazines in the Enthusiast Media segment, and decided to pursue the sales of its Crafts and History groups, part of the Enthusiast Media segment. The Company discontinued the operations of Software on Demand, part of the Education segment.

During 2004, the Company completed the sale of Seventeen, Simba Information, Federal Sources, CableWorld, Sprinks and RealEstate.com, New York magazine, Kagan World Media, American Demographics and About Web Services, About.com’s consumer Web hosting business. Additionally, in August 2004, Folio and Circulation Management were contributed to a venture with a third party, under which the Company does not have a significant continuing involvement in the operations and the Company’s share of associated cash flows is not significant. In September 2004, the Company announced that it would explore strategic options regarding its Workplace Learning division and actively pursue the sale of this division, excluding PRIMEDIA Healthcare. As a result, the Company’s Education and Training segment has been renamed the Education segment. The Company subsequently sold its Workplace Learning division during 2005. During the fourth quarter of 2004, the Company decided to shut down six magazines in the Enthusiast Media segment.

In accordance with SFAS 144, the financial results of all of these operations have been classified as discontinued operations on the statements of consolidated operations for all periods presented. For the years ended December 31, 2005 and 2004, discontinued operations include a net gain on sale of businesses of $604,215 and $43,535, respectively.

Segment Results:

The results of the Company’s reportable segments are discussed below. All amounts are from Continuing Businesses unless otherwise specified.

Enthusiast Media Segment (includes Automotive, Outdoors, Marine, Equine, Action Sports, Soaps, Home Technology, Internet, events, licensing and merchandising)

Revenues, Net

Revenues, Net

Enthusiast Media revenues were $608,032 or 61.4% and $617,058 or 63.6% of the Company’s consolidated revenues for 2005 and 2004, respectively. Enthusiast Media revenues decreased $9,026 or 1.5% in 2005 compared to 2004 as follows:

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Advertising Revenues

Advertising revenues decreased $7,092 or 2.0% in 2005 driven mainly by declines in the International Automotive, American Motorcycle and Consumer Automotive Groups.

International Automotive continued to experience a market correction that began in 2004, after several years of significant growth. This market correction led to an 11% decline in total advertising pages in the category, and a 21% decline in PRIMEDIA’s advertising pages in the category, according to Inquiry Management Systems/The Auditor (“IMS”). While PRIMEDIA maintains a leadership position with almost 60% of total ad pages, the Company is aggressively addressing the challenges of declining circulation, strong competitors with lower profit expectations, migration of customers away from the sector, fewer parts and accessories entrants into market than those leaving, migration of Lowrider wheel business to urban lifestyle titles, and the lack of a new tuner platform for a number of years. At the end of 2005, Honda introduced a redesigned Civic, which has been very well received and is expected to help the International Automotive category over time.

In the American Motorcycle Group, 2005 was plagued by poor performance in ad revenue and newsstand sales relative to the competition. According to IMS, PRIMEDIA’s advertising pages in the category declined 9% while total advertising pages in the category grew 7%. The Company believes that this underperformance was largely driven by staffing issues that are being resolved in 2006.

Consumer Automotive advertising was negatively impacted by reduced U.S. automaker advertising. In 2005, over 90% of Enthusiast Media’s advertising revenue was print advertising. Five percent of Enthusiast Media’s 2005 print advertising revenue came from U.S. automakers, 7% from non-U.S. automakers, 53% from automotive advertisers that are not automakers (aftermarket parts and accessories, as examples), and 35% from non-automotive advertisers. In 2005, U.S. automaker advertising declined 20% from 2004, while non-U.S. automaker advertising was flat year-over-year.

Advertising revenue declines described above were partially offset by strong growth in the Action Sports and Outdoors groups. According to IMS, advertising pages in Action Sports increased 6% lead by increases in non-endemic advertising, with the addition of key advertisers such as Gillette, Sony Music and Taco Bell. In the Outdoor group, Power & Motoryacht had a great year with over 7% increase in advertising revenue.

Circulation Revenues

Circulation revenues at Enthusiast Media declined $10,802 or 5.0% for the year ended December 31, 2005 due mainly to continued softness in newsstand sales for the Soap Opera and International Automotive titles, with revenue declines of 11% and 21%, respectively, in 2005 compared to 2004. These declines were partially offset by increases mainly in Outdoor and Marine.

Other Revenues

Other revenues for Enthusiast Media, which include events, licensing and merchandising, TV/Radio and list rental and lead generation increased $8,936, or 17.4%, in 2005 compared to 2004. The increase was led primarily by growth in licensing and merchandising, events and TV/Radio. Strong revenue growth of 34% in licensing was a result of new licensees signed across all categories, additional success with existing licensees, the increased availability of PRIMEDIA licensed products at retailers, and growth in video continuity programs. PRIMEDIA’s licensed products grew to approximately 650, up from 330 in 2004, and the Company’s products were available at approximately 65 retail chains and in nearly 1000 independent retailers. In the Outdoor category, TV revenue grew almost 44% mainly through the Company’s launch of two new television shows for a total of nine shows for which virtually all advertising was sold out in 2005.

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Segment EBITDA

Enthusiast Media Segment EBITDA decreased 5.8% to $122,504 in 2005 from $130,001 in 2004. This decrease was due predominantly to the decrease in advertising and circulation revenues and an increase in paper costs. Segment EBITDA margin decreased to 20.1% in 2005 from 21.1% in 2004.

Below is a reconciliation of Enthusiast Media Segment EBITDA to operating income for the years ended December 31, 2005 and 2004:

Operating Income (Loss)

Operating income was $104,046 in 2005 compared to $108,052 in 2004, a decrease of $4,006, which was principally driven by the decrease in Segment EBITDA, partially offset by a provision for unclaimed property recorded in 2004 (see Note 20 of the notes to the consolidated financial statements).

Consumer Guides Segment (includes Apartment Guide, New Home Guide, Auto Guide, ApartmentGuide.com, NewHomeGuide.com, Rentclicks.com, Autoguide.com, AmericanHomeGuides.com, Rentals.com, and the DistribuTech distribution business)

Revenues, Net

Consumer Guides revenues were $317,134 or 32.0% and $287,093 or 29.6% of the Company’s consolidated revenues for 2005 and 2004, respectively. Consumer Guides revenues increased $30,041 or 10.5% in 2005 compared to 2004 as follows: