##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q







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

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2009

OR



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

FOR THE TRANSITION PERIOD FROM  TO

Commission File number: 1-11106





LOGO

PRIMEDIA Inc.

(Exact name of registrant as specified in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 13-3647573                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|3585 Engineering Drive, Norcross, Georgia                      |  | 30092                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

Registrants telephone number, including area code (678) 421-3000





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   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



|                           |  |                      |  |                                                                        |  |                             
|-------------------------- |  | -------------------- |  | ---------------------------------------------------------------------- |  | ----------------------------
|Large accelerated filer   ̈ |  | Accelerated filer  x |  | Non-accelerated filer   ̈ (Do not check if a smaller reporting company) |  | Smaller reporting company   ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).    Yes   ̈    No  x

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.



|                                        |  |                                       
|--------------------------------------- |  | --------------------------------------
|Common Stock                            |  | Outstanding Shares at October 30, 2009
|Common Stock, par value $0.01 per share |  | 44,146,959                            









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##### Table of Contents

PRIMEDIA Inc.

INDEX



|                               |  |                                                                                                                       |  |   
|------------------------------ |  | --------------------------------------------------------------------------------------------------------------------- |  | --
|Part I. Financial Information: |  |                                                                                                                      
|                               |  |                                                                                                                      
|Item 1.                        |  | Financial Statements (Unaudited)                                                                                      |  |   
|                               |  |                                                                                                                      
|                               |  | Condensed Consolidated Balance Sheet as of September 30, 2009 and December 31, 2008                                   |  | 1 
|                               |  |                                                                                                                      
|                               |  | Condensed Consolidated Statement of Operations for the Three Months Ended September 30, 2009 and 2008                 |  | 2 
|                               |  |                                                                                                                      
|                               |  | Condensed Consolidated Statement of Operations for the Nine Months Ended September 30, 2009 and 2008                  |  | 3 
|                               |  |                                                                                                                      
|                               |  | Condensed Consolidated Statement of Changes in Stockholders Deficiency for the Nine Months Ended September
 30, 2009 |  | 4 
|                               |  |                                                                                                                      
|                               |  | Condensed Consolidated Statement of Cash Flows for the Nine Months Ended September 30, 2009 and 2008 (restated)       |  | 5 
|                               |  |                                                                                                                      
|                               |  | Notes to Condensed Consolidated Financial Statements                                                                  |  | 6 
|                               |  |                                                                                                                      
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of
Operations                                 |  | 24
|                               |  |                                                                                                                      
|Item 3.                        |  | Quantitative and Qualitative Disclosures about Market Risk                                                            |  | 36
|                               |  |                                                                                                                      
|Item 4.                        |  | Controls and Procedures                                                                                               |  | 36
|                               | 
|Part II. Other Information:    |  |                                                                                                                      
|                               |  |                                                                                                                      
|Item 1A.                       |  | Risk Factors                                                                                                          |  | 38
|                               |  |                                                                                                                      
|Item 2.                        |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                           |  | 38
|                               |  |                                                                                                                      
|Item 6.                        |  | Exhibits                                                                                                              |  | 38
|                               |  |                                                                                                                      
|                               |  | Signatures                                                                                                            |  | 39



i



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PRIMEDIA INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheet (Unaudited)



|                                                                                                                                                                                 |  |                                               |            |   |                   |   |            |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------- | ---------- | - | ----------------- | - | ---------- | -
|                                                                                                                                                                                 |  | September 30, 2009                            |            |   | December 31, 2008 |  
|                                                                                                                                                                                 |  | (Dollars in thousands, except per share data) |           
|Assets                                                                                                                                                                           |  |                                               |            |   |                   |   |            |  
|Current assets:                                                                                                                                                                  |  |                                               |            |   |                   |   |            |  
|Cash and cash equivalents                                                                                                                                                        |  | $                                             | 7,955      |   |                   | $ | 31,470     |  
|Accounts receivable (net of allowance for doubtful accounts of $1,396 and $1,528, respectively)                                                                                  |  |                                               | 26,423     |   |                   |   | 27,983     |  
|Inventories                                                                                                                                                                      |  |                                               | 654        |   |                   |   | 936        |  
|Prepaid expenses and other                                                                                                                                                       |  |                                               | 9,860      |   |                   |   | 26,545     |  
|Deferred tax asset, net                                                                                                                                                          |  |                                               | 3,285      |   |                   |   | 2,102      |  
|                                                                                                                                                                                 |  |                                               |            |   |                   |   |            |  
|Total current assets                                                                                                                                                             |  |                                               | 48,177     |   |                   |   | 89,036     |  
|                                                                                                                                                                                 |  |                                              
|Property and equipment (net of accumulated depreciation and amortization of $81,157 and $83,203, respectively)                                                                   |  |                                               | 16,988     |   |                   |   | 18,765     |  
|Intangible assets, net                                                                                                                                                           |  |                                               | 21,784     |   |                   |   | 23,637     |  
|Goodwill                                                                                                                                                                         |  |                                               | 129,305    |   |                   |   | 129,305    |  
|Deferred tax asset - non-current, net                                                                                                                                            |  |                                               | 13,619     |   |                   |   | 12,867     |  
|Other non-current assets                                                                                                                                                         |  |                                               | 11,216     |   |                   |   | 12,544     |  
|                                                                                                                                                                                 |  |                                               |            |   |                   |   |            |  
|Total assets                                                                                                                                                                     |  | $                                             | 241,089    |   |                   | $ | 286,154    |  
|                                                                                                                                                                                 |  |                                               |            |   |                   |   |            |  
|                                                                                                                                                                                 |  |                                              
|Liabilities and stockholders deficiency                                                                                                                                         |  |                                               |            |   |                   |   |            |  
|Current liabilities:                                                                                                                                                             |  |                                               |            |   |                   |   |            |  
|Accounts payable                                                                                                                                                                 |  | $                                             | 10,135     |   |                   | $ | 14,792     |  
|Accrued expenses and other                                                                                                                                                       |  |                                               | 47,526     |   |                   |   | 44,491     |  
|Deferred revenue                                                                                                                                                                 |  |                                               | 1,914      |   |                   |   | 1,990      |  
|Revolving credit facility                                                                                                                                                        |  |                                               |           |   |                   |   | 13,200     |  
|Current maturities of long-term debt and capital lease obligations                                                                                                               |  |                                               | 2,964      |   |                   |   | 3,045      |  
|                                                                                                                                                                                 |  |                                               |            |   |                   |   |            |  
|Total current liabilities                                                                                                                                                        |  |                                               | 62,539     |   |                   |   | 77,518     |  
|                                                                                                                                                                                 |  |                                              
|Long-term debt                                                                                                                                                                   |  |                                               | 229,362    |   |                   |   | 245,531    |  
|Deferred revenue                                                                                                                                                                 |  |                                               | 8,075      |   |                   |   | 9,350      |  
|Other non-current liabilities                                                                                                                                                    |  |                                               | 51,836     |   |                   |   | 51,043     |  
|                                                                                                                                                                                 |  |                                               |            |   |                   |   |            |  
|Total liabilities                                                                                                                                                                |  |                                               | 351,812    |   |                   |   | 383,442    |  
|                                                                                                                                                                                 |  |                                              
|Commitments and contingencies (Note 16)                                                                                                                                          |  |                                               |            |   |                   |   |            |  
|                                                                                                                                                                                 |  |                                              
|Stockholders deficiency:                                                                                                                                                        |  |                                               |            |   |                   |   |            |  
|Common stock - par value $0.01; 350,000,000 shares authorized; 45,793,697 and 45,595,618 shares issued, respectively; 44,146,959
and 44,188,550 shares outstanding, respectively |  |                                               | 457        |   |                   |   | 455        |  
|Additional paid-in capital (including warrants of $31,690 at September 30, 2009 and December 31, 2008)                                                                           |  |                                               | 2,373,634  |   |                   |   | 2,372,578  |  
|Accumulated deficit                                                                                                                                                              |  |                                               | (2,406,530 | ) |                   |   | (2,389,610 | )
|Common stock in treasury, at cost (1,646,738 and 1,407,068 shares, respectively)                                                                                                 |  |                                               | (76,304    | ) |                   |   | (75,877    | )
|Accumulated other comprehensive loss                                                                                                                                             |  |                                               | (1,980     | ) |                   |   | (4,834     | )
|                                                                                                                                                                                 |  |                                               |            |   |                   |   |            |  
|Total stockholders deficiency                                                                                                                                                   |  |                                               | (110,723   | ) |                   |   | (97,288    | )
|                                                                                                                                                                                 |  |                                               |            |   |                   |   |            |  
|                                                                                                                                                                                 |  |                                              
|Total liabilities and stockholders deficiency                                                                                                                                   |  | $                                             | 241,089    |   |                   | $ | 286,154    |  
|                                                                                                                                                                                 |  |                                               |            |   |                   |   |            |  

The accompanying notes are an integral part of these condensed consolidated financial
statements.



1



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##### Table of Contents

PRIMEDIA INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Operations (Unaudited)



|                                                                                                                     |  |                                               |            |   |      |   |            |  
|-------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------- | ---------- | - | ---- | - | ---------- | -
|                                                                                                                     |  | Three Months Ended September 30,              |           
|                                                                                                                     |  | 2009                                          |            |   | 2008 |  
|                                                                                                                     |  | (Dollars in thousands, except per share data) |           
|Revenue, net:                                                                                                        |  |                                               |            |   |      |   |            |  
|Advertising                                                                                                          |  | $                                             | 55,774     |   |      | $ | 62,932     |  
|Distribution                                                                                                         |  |                                               | 7,240      |   |      |   | 13,482     |  
|                                                                                                                     |  |                                               |            |   |      |   |            |  
|Total revenue, net                                                                                                   |  |                                               | 63,014     |   |      |   | 76,414     |  
|                                                                                                                     |  |                                              
|Costs and expenses:                                                                                                  |  |                                               |            |   |      |   |            |  
|Cost of goods sold (exclusive of depreciation and amortization of property and equipment)                            |  |                                               | 5,645      |   |      |   | 7,994      |  
|Marketing and selling                                                                                                |  |                                               | 18,832     |   |      |   | 17,926     |  
|Distribution and circulation                                                                                         |  |                                               | 12,971     |   |      |   | 21,491     |  
|General and administrative expenses                                                                                  |  |                                               | 8,873      |   |      |   | 10,964     |  
|Depreciation and amortization of property and equipment                                                              |  |                                               | 3,130      |   |      |   | 3,774      |  
|Amortization of intangible assets                                                                                    |  |                                               | 617        |   |      |   | 636        |  
|Provision for restructuring costs                                                                                    |  |                                               | (156       | ) |      |   | 202        |  
|Interest expense                                                                                                     |  |                                               | 3,897      |   |      |   | 4,741      |  
|Amortization of deferred financing costs                                                                             |  |                                               | 233        |   |      |   | 224        |  
|Other expense (income), net                                                                                          |  |                                               | 1,173      |   |      |   | (314       | )
|                                                                                                                     |  |                                               |            |   |      |   |            |  
|Total costs and expenses                                                                                             |  |                                               | 55,215     |   |      |   | 67,638     |  
|                                                                                                                     |  |                                              
|Income from continuing operations before benefit (provision) for income taxes                                        |  |                                               | 7,799      |   |      |   | 8,776      |  
|Provision for income taxes                                                                                           |  |                                               | (2,103     | ) |      |   | (128       | )
|                                                                                                                     |  |                                               |            |   |      |   |            |  
|                                                                                                                     |  |                                              
|Income from continuing operations                                                                                    |  |                                               | 5,696      |   |      |   | 8,648      |  
|                                                                                                                     |  |                                              
|Discontinued operations, net of tax (including gain on sale of businesses, net of tax, of $0 and $588,
respectively) |  |                                               | (1,957     | ) |      |   | 3,312      |  
|                                                                                                                     |  |                                               |            |   |      |   |            |  
|Net income                                                                                                           |  | $                                             | 3,739      |   |      | $ | 11,960     |  
|                                                                                                                     |  |                                               |            |   |      |   |            |  
|                                                                                                                     |  |                                              
|Basic and diluted earnings (loss) per common share:                                                                  |  |                                               |            |   |      |   |            |  
|Continuing operations                                                                                                |  | $                                             | 0.13       |   |      | $ | 0.20       |  
|Discontinued operations                                                                                              |  |                                               | (0.05      | ) |      |   | 0.07       |  
|                                                                                                                     |  |                                               |            |   |      |   |            |  
|Net income                                                                                                           |  | $                                             | 0.08       |   |      | $ | 0.27       |  
|                                                                                                                     |  |                                               |            |   |      |   |            |  
|                                                                                                                     |  |                                              
|Dividends declared per share of common stock outstanding                                                             |  | $                                             | 0.07       |   |      | $ | 0.07       |  
|                                                                                                                     |  |                                               |            |   |      |   |            |  
|                                                                                                                     |  |                                              
|Weighted-average basic shares of common stock outstanding                                                            |  |                                               | 44,146,959 |   |      |   | 44,175,009 |  
|                                                                                                                     |  |                                               |            |   |      |   |            |  
|                                                                                                                     |  |                                              
|Weighted-average diluted shares of common stock outstanding                                                          |  |                                               | 44,167,675 |   |      |   | 44,188,562 |  
|                                                                                                                     |  |                                               |            |   |      |   |            |  

The accompanying notes are an integral part of these condensed consolidated financial
statements.



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##### Table of Contents

PRIMEDIA INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Operations (Unaudited)



|                                                                                                                       |  |                                               |            |   |      |   |            |  
|---------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------- | ---------- | - | ---- | - | ---------- | -
|                                                                                                                       |  | Nine Months Ended September 30,               |           
|                                                                                                                       |  | 2009                                          |            |   | 2008 |  
|                                                                                                                       |  | (Dollars in thousands, except per share data) |           
|Revenue, net:                                                                                                          |  |                                               |            |   |      |   |            |  
|Advertising                                                                                                            |  | $                                             | 170,373    |   |      | $ | 189,481    |  
|Distribution                                                                                                           |  |                                               | 26,305     |   |      |   | 41,215     |  
|                                                                                                                       |  |                                               |            |   |      |   |            |  
|Total revenue, net                                                                                                     |  |                                               | 196,678    |   |      |   | 230,696    |  
|                                                                                                                       |  |                                              
|Costs and expenses:                                                                                                    |  |                                               |            |   |      |   |            |  
|Cost of goods sold (exclusive of depreciation and amortization of property and equipment)                              |  |                                               | 18,128     |   |      |   | 25,005     |  
|Marketing and selling                                                                                                  |  |                                               | 59,344     |   |      |   | 57,543     |  
|Distribution and circulation                                                                                           |  |                                               | 48,031     |   |      |   | 64,106     |  
|General and administrative expenses                                                                                    |  |                                               | 30,306     |   |      |   | 38,526     |  
|Depreciation and amortization of property and equipment                                                                |  |                                               | 9,998      |   |      |   | 10,389     |  
|Amortization of intangible assets                                                                                      |  |                                               | 1,853      |   |      |   | 2,043      |  
|Provision for restructuring costs                                                                                      |  |                                               | 25,643     |   |      |   | 1,898      |  
|Interest expense                                                                                                       |  |                                               | 12,353     |   |      |   | 14,599     |  
|Amortization of deferred financing costs                                                                               |  |                                               | 682        |   |      |   | 697        |  
|Other income, net                                                                                                      |  |                                               | (5,289     | ) |      |   | (843       | )
|                                                                                                                       |  |                                               |            |   |      |   |            |  
|Total costs and expenses                                                                                               |  |                                               | 201,049    |   |      |   | 213,963    |  
|                                                                                                                       |  |                                              
|(Loss) income from continuing operations before benefit (provision) for income taxes                                   |  |                                               | (4,371     | ) |      |   | 16,733     |  
|Benefit (provision) for income taxes                                                                                   |  |                                               | 1,438      |   |      |   | (2,397     | )
|                                                                                                                       |  |                                               |            |   |      |   |            |  
|                                                                                                                       |  |                                              
|(Loss) income from continuing operations                                                                               |  |                                               | (2,933     | ) |      |   | 14,336     |  
|                                                                                                                       |  |                                              
|Discontinued operations, net of tax (including gain on sale of businesses, net of tax, of $0 and $2,052,
respectively) |  |                                               | (4,730     | ) |      |   | 13,151     |  
|                                                                                                                       |  |                                               |            |   |      |   |            |  
|Net (loss) income                                                                                                      |  | $                                             | (7,663     | ) |      | $ | 27,487     |  
|                                                                                                                       |  |                                               |            |   |      |   |            |  
|                                                                                                                       |  |                                              
|Basic and diluted (loss) earnings per common share:                                                                    |  |                                               |            |   |      |   |            |  
|Continuing operations                                                                                                  |  | $                                             | (0.07      | ) |      | $ | 0.32       |  
|Discontinued operations                                                                                                |  |                                               | (0.10      | ) |      |   | 0.30       |  
|                                                                                                                       |  |                                               |            |   |      |   |            |  
|Net (loss) income                                                                                                      |  | $                                             | (0.17      | ) |      | $ | 0.62       |  
|                                                                                                                       |  |                                               |            |   |      |   |            |  
|                                                                                                                       |  |                                              
|Dividends declared per share of common stock outstanding                                                               |  | $                                             | 0.21       |   |      | $ | 0.21       |  
|                                                                                                                       |  |                                               |            |   |      |   |            |  
|                                                                                                                       |  |                                              
|Weighted-average basic shares of common stock outstanding                                                              |  |                                               | 44,117,064 |   |      |   | 44,173,820 |  
|                                                                                                                       |  |                                               |            |   |      |   |            |  
|                                                                                                                       |  |                                              
|Weighted-average diluted shares of common stock outstanding                                                            |  |                                               | 44,117,064 |   |      |   | 44,193,870 |  
|                                                                                                                       |  |                                               |            |   |      |   |            |  

The accompanying notes are an integral part of these condensed consolidated financial
statements.



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##### Table of Contents

PRIMEDIA INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Changes in Stockholders Deficiency (Unaudited)

Nine Months Ended September 30, 2009



|                                                                               |  |                                               |  |                          |     |  |                    |           |   |                        |   |            |                                           |  |   |                              |   |  |   |        |   |  |   |          |  
|------------------------------------------------------------------------------ |  | --------------------------------------------- |  | ------------------------ | --- |  | ------------------ | --------- | - | ---------------------- | - | ---------- | ----------------------------------------- |  | - | ---------------------------- | - |  | - | ------ | - |  | - | -------- | -
|                                                                               |  | Common Stock                                  |  | AdditionalPaid-inCapital |     |  |                    |           |   | CommonStock inTreasury |   |            | Accumulated OtherComprehensive(Loss) Gain |  |   | TotalStockholdersDeficiency |  
|                                                                               |  | Shares                                        |  | ParValue                 |     |  | AccumulatedDeficit |           |   |                        |  
|                                                                               |  | (Dollars in thousands, except per share data) | 
|Balance at December 31, 2008                                                   |  | 45,595,618                                    |  | $                        | 455 |  | $                  | 2,372,578 |   |                        | $ | (2,389,610 | )                                         |  | $ | (75,877                      | ) |  | $ | (4,834 | ) |  | $ | (97,288  | )
|Comprehensive income:                                                          |  |                                               |  |                          |     |  |                    |           |   |                        |   |            |                                           |  |   |                              |   |  |   |        |   |  |   |          |  
|Net loss                                                                       |  |                                              |  |                          |    |  |                    |          |   |                        |   | (7,663     | )                                         |  |   |                             |   |  |   |       |   |  |   | (7,663   | )
|Other comprehensive income                                                     |  |                                               |  |                          |     |  |                    |           |   |                        |   |            |                                           |  |   |                              |   |  |   |        |   |  |   |          |  
|Unrealized gains on cash flow hedges, net                                      |  |                                              |  |                          |    |  |                    |          |   |                        |   |           |                                           |  |   |                             |   |  |   | 2,854  |   |  |   | 2,854    |  
|                                                                               |  |                                               |  |                          |     |  |                    |           |   |                        |   |            |                                           |  |   |                              |   |  |   |        |   |  |   |          |  
|Total comprehensive loss                                                       |  |                                               |  |                          |     |  |                    |           |   |                        |   |            |                                           |  |   |                              |   |  |   |        |   |  |   | (4,809   | )
|Non-cash charges for stock-based compensation                                  |  |                                              |  |                          |    |  |                    | 1,231     |   |                        |   |           |                                           |  |   |                             |   |  |   |       |   |  |   | 1,231    |  
|Issuances of common stock, net of shares withheld for employee taxes and other |  | 198,079                                       |  |                          | 2   |  |                    | (175      | ) |                        |   |           |                                           |  |   |                             |   |  |   |       |   |  |   | (173     | )
|Repurchases of common stock                                                    |  |                                              |  |                          |    |  |                    |          |   |                        |   |           |                                           |  |   | (427                         | ) |  |   |       |   |  |   | (427     | )
|Cash dividends declared on common stock ($0.21 per share)                      |  |                                              |  |                          |    |  |                    |          |   |                        |   | (9,257     | )                                         |  |   |                             |   |  |   |       |   |  |   | (9,257   | )
|                                                                               |  |                                               |  |                          |     |  |                    |           |   |                        |   |            |                                           |  |   |                              |   |  |   |        |   |  |   |          |  
|Balance at September 30, 2009                                                  |  | 45,793,697                                    |  | $                        | 457 |  | $                  | 2,373,634 |   |                        | $ | (2,406,530 | )                                         |  | $ | (76,304                      | ) |  | $ | (1,980 | ) |  | $ | (110,723 | )
|                                                                               |  |                                               |  |                          |     |  |                    |           |   |                        |   |            |                                           |  |   |                              |   |  |   |        |   |  |   |          |  

Total comprehensive income for the three months ended September 30, 2009 and 2008 was $5.3
million and $12.9 million, respectively.

Total comprehensive income for the nine months ended September 30, 2008 was $27.7 million.

The accompanying notes are an integral part of these condensed consolidated financial statements.



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##### Table of Contents

PRIMEDIA INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Cash Flows (Unaudited)



|                                                                                                             |  |                                 |         |   |                          |   |         |  
|------------------------------------------------------------------------------------------------------------ |  | ------------------------------- | ------- | - | ------------------------ | - | ------- | -
|                                                                                                             |  | Nine Months Ended September 30, |        
|                                                                                                             |  | 2009                            |         |   | 2008                     |  
|                                                                                                             |  | (Dollars in thousands)          |        
|                                                                                                             |  |                                 |         |   | (As restated;see Note 1) |  
|Operating activities:                                                                                        |  |                                 |         |   |                          |   |         |  
|Net (loss) income                                                                                            |  | $                               | (7,663  | ) |                          | $ | 27,487  |  
|Adjustments to reconcile net (loss) income to net cash provided by operating activities:                     |  |                                 |         |   |                          |   |         |  
|Depreciation and amortization                                                                                |  |                                 | 12,533  |   |                          |   | 13,332  |  
|Impairment of cost-method investment                                                                         |  |                                 | 1,500   |   |                          |   |        |  
|Gain on sale of cost-method investments                                                                      |  |                                 | (2,260  | ) |                          |   |        |  
|Gain on sale of businesses, net                                                                              |  |                                 |        |   |                          |   | (2,052  | )
|(Gain) loss on repurchase and redemption of debt                                                             |  |                                 | (3,635  | ) |                          |   | 103     |  
|Stock-based compensation                                                                                     |  |                                 | 1,231   |   |                          |   | 1,350   |  
|Deferred income taxes                                                                                        |  |                                 | (1,632  | ) |                          |   | 1,589   |  
|Bad debt expense                                                                                             |  |                                 | 3,589   |   |                          |   | 2,814   |  
|Loss on disposal of property and equipment                                                                   |  |                                 | 15      |   |                          |   | 1,321   |  
|(Increase) decrease in:                                                                                      |  |                                 |         |   |                          |   |         |  
|Accounts receivable, net                                                                                     |  |                                 | (2,029  | ) |                          |   | (1,885  | )
|Inventories                                                                                                  |  |                                 | 282     |   |                          |   | (819    | )
|Prepaid expenses and other                                                                                   |  |                                 | 16,011  |   |                          |   | (26,123 | )
|(Decrease) increase in:                                                                                      |  |                                 |         |   |                          |   |         |  
|Accounts payable                                                                                             |  |                                 | (4,971  | ) |                          |   | (3,639  | )
|Accrued expenses and other                                                                                   |  |                                 | 6,194   |   |                          |   | (8,599  | )
|Deferred revenue                                                                                             |  |                                 | (1,275  | ) |                          |   | (1,299  | )
|Other non-current liabilities                                                                                |  |                                 | 3       |   |                          |   | 450     |  
|Other, net                                                                                                   |  |                                 |        |   |                          |   | 5       |  
|                                                                                                             |  |                                 |         |   |                          |   |         |  
|Net cash provided by operating activities                                                                    |  |                                 | 17,893  |   |                          |   | 4,035   |  
|                                                                                                             |  |                                 |         |   |                          |   |         |  
|Investing activities:                                                                                        |  |                                 |         |   |                          |   |         |  
|Proceeds from sales of available for sale securities                                                         |  |                                 |        |   |                          |   | 15,425  |  
|Payments for investments                                                                                     |  |                                 |        |   |                          |   | (14     | )
|Proceeds from sale of cost-method investments                                                                |  |                                 | 2,260   |   |                          |   |        |  
|Additions to property and equipment                                                                          |  |                                 | (7,667  | ) |                          |   | (7,884  | )
|Payments related to the sale of businesses                                                                   |  |                                 |        |   |                          |   | (4,355  | )
|Proceeds from sale of businesses                                                                             |  |                                 |        |   |                          |   | 2,369   |  
|                                                                                                             |  |                                 |         |   |                          |   |         |  
|Net cash (used in) provided by investing activities                                                          |  |                                 | (5,407  | ) |                          |   | 5,541   |  
|                                                                                                             |  |                                 |         |   |                          |   |         |  
|Financing activities:                                                                                        |  |                                 |         |   |                          |   |         |  
|Payment of dividends on common stock                                                                         |  |                                 | (9,257  | ) |                          |   | (9,266  | )
|Net (repayments) borrowings under revolving credit facility                                                  |  |                                 | (13,200 | ) |                          |   | 13,200  |  
|Payments for deferred and other financing fees                                                               |  |                                 | (512    | ) |                          |   |        |  
|Payments for repurchase and redemption of debt                                                               |  |                                 | (10,080 | ) |                          |   | (2,679  | )
|Repayments of borrowings under credit agreements                                                             |  |                                 | (1,875  | ) |                          |   | (1,875  | )
|Capital lease payments                                                                                       |  |                                 | (477    | ) |                          |   | (338    | )
|(Payments) proceeds related to issuances of common stock, net of value of shares withheld for employee taxes |  |                                 | (173    | ) |                          |   | 43      |  
|Repurchases of common stock                                                                                  |  |                                 | (427    | ) |                          |   |        |  
|                                                                                                             |  |                                 |         |   |                          |   |         |  
|Net cash used in financing activities                                                                        |  |                                 | (36,001 | ) |                          |   | (915    | )
|                                                                                                             |  |                                 |         |   |                          |   |         |  
|(Decrease) increase in cash and cash equivalents                                                             |  |                                 | (23,515 | ) |                          |   | 8,661   |  
|Cash and cash equivalents, beginning of period                                                               |  |                                 | 31,470  |   |                          |   | 14,709  |  
|                                                                                                             |  |                                 |         |   |                          |   |         |  
|Cash and cash equivalents, end of period                                                                     |  | $                               | 7,955   |   |                          | $ | 23,370  |  
|                                                                                                             |  |                                 |         |   |                          |   |         |  
|Supplemental information:                                                                                    |  |                                 |         |   |                          |   |         |  
|Cash paid for interest, including interest on capital leases and restructuring liabilities                   |  | $                               | 12,691  |   |                          | $ | 14,594  |  
|                                                                                                             |  |                                 |         |   |                          |   |         |  
|Cash (refunded) paid for income taxes, net                                                                   |  | $                               | (19,558 | ) |                          | $ | 11,383  |  
|                                                                                                             |  |                                 |         |   |                          |   |         |  
|Noncash investing and financing activities:                                                                  |  |                                 |         |   |                          |   |         |  
|Equipment acquisitions under capital leases                                                                  |  | $                               | 102     |   |                          | $ | 1,321   |  
|                                                                                                             |  |                                 |         |   |                          |   |         |  

The accompanying notes are an integral part of these condensed consolidated financial
statements.



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##### Table of Contents

PRIMEDIA INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1. Summary of Significant Accounting Policies

Basis of Presentation

PRIMEDIA Inc., together with its subsidiaries, is herein referred to as either PRIMEDIA or the Company unless the
context implies otherwise. In the opinion of the Companys management, the condensed consolidated financial statements present fairly the consolidated financial position of the Company as of September 30, 2009 and December 31, 2008,
the results of consolidated operations of the Company for the three and nine months ended September 30, 2009 and 2008, consolidated changes in stockholders deficiency of the Company for the nine months ended September 30, 2009, and
consolidated cash flows of the Company for the nine months ended September 30, 2009 and 2008. The adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included. The condensed consolidated
balance sheet as of December 31, 2008 has been derived from the Companys audited consolidated balance sheet included in the Companys Annual Report on Form 10-K for the year ended December 31, 2008 (the 10-K).
All intercompany accounts and transactions have been eliminated in consolidation. These statements should be read in conjunction with the Companys annual consolidated financial statements and related notes for the year ended December 31,
2008, which are included in the 10-K. The operating results for the three and nine months ended September 30, 2009 are not necessarily indicative of the results that may be expected for a full year. Prior year editorial costs have been
reclassified to cost of goods sold in order to conform to the current year presentation.

Correction of Cash Flows from Operating and
Investing Activities

During the preparation of the Companys Annual Report on Form 10-K for the year ended December 31,
2008, the Company discovered an error in its reporting of cash flows from operating and investing activities in its condensed consolidated statement of cash flows in its Quarterly Report on Form 10-Q for the nine months ended September 30,
2008. The Company improperly included the final adjustment to the net proceeds from the sale of its Enthusiast Media (PEM) segment as an operating activity rather than an investing activity. This error had no impact on the Companys
consolidated balance sheet, consolidated statement of operations or cash flows from financing activities for any period.

The error resulted
in an understatement of cash flows from operating activities and a corresponding overstatement of cash flows from investing activities for the nine months ended September 30, 2008.

A summary of the effects of the correction of this error is as follows (dollars in thousands):



|                                                    |  |            |         |   |                      |   |        |             |  |   |         |  
|--------------------------------------------------- |  | ---------- | ------- | - | -------------------- | - | ------ | ----------- |  | - | ------- | -
|For the Nine Months Ended September 30, 2008        |  | AsReported |         |   | CorrectionAdjustment |   |        | AsCorrected | 
|CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS      |  |            |         |   |                      |   |        |             |  |   |         |  
|Changes in operating assets and liabilities         |  | $          | (46,269 | ) |                      | $ | 4,355  |             |  | $ | (41,914 | )
|Net cash (used in) provided by operating activities |  |            | (320    | ) |                      |   | 4,355  |             |  |   | 4,035   |  
|Payments related to the sale of businesses          |  |            |        |   |                      |   | (4,355 | )           |  |   | (4,355  | )
|Net cash provided by investing activities           |  |            | 9,896   |   |                      |   | (4,355 | )           |  |   | 5,541   |  

The amounts included in the condensed consolidated statement of cash flows for the nine months ended
September 30, 2008 are consistent with the As Corrected amounts above.

Recent Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards
(SFAS) No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles,a replacement of FASB Statement No. 162 (the Codification). The Codification,
effective for financial statements issued for interim and annual periods ending after September 15, 2009, became the single source of authoritative accounting principles generally accepted in the United States (GAAP), superseding
various existing authoritative accounting pronouncements. The Codification eliminates the GAAP hierarchy contained in SFAS No. 162 and establishes one level of authoritative GAAP. All other literature is considered non-authoritative. The
Company adopted the Codification in the third quarter of 2009, and the adoption had no impact on the Companys condensed consolidated financial statements other than changes in reference to various authoritative accounting pronouncements in the
notes to the condensed consolidated financial statements.



6



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##### Table of Contents

Fair Value Measurements

In February 2008, the FASB issued new GAAP, which delayed the effective date of previously issued GAAP on fair value measurements to fiscal years beginning after November 15, 2008, and interim
periods within those fiscal years, for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). Examples of items to which
the deferral applied include, but are not limited to:



| |  |  | Nonfinancial assets and nonfinancial liabilities initially measured at fair value in a business combination or other new basis event, but not measured
at fair value in subsequent periods (nonrecurring fair value measurements);
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Reporting units measured at fair value in the first step of a goodwill impairment test and nonfinancial assets and nonfinancial liabilities measured at
fair value in the second step of a goodwill impairment test (measured at fair value on a recurring basis, but not necessarily recognized or disclosed in the financial statements at fair value);
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Indefinite-lived intangible assets measured at fair value for impairment assessment (measured at fair value on a recurring basis, but not necessarily
recognized or disclosed in the financial statements at fair value);
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Long-lived assets (asset groups) measured at fair value for an impairment assessment (nonrecurring fair value measurements); and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



| |  |  | Liabilities for exit or disposal activities initially measured at fair value (nonrecurring fair value measurements).
| | - |  | --------------------------------------------------------------------------------------------------------------------

The Company adopted the new GAAP effective January 1, 2009 for its nonfinancial assets and liabilities, and the adoption did not have a material impact
on the Companys financial condition, results of operations or cash flows (see Note 6).

Business Combinations

In December 2007, the FASB established new GAAP and disclosure requirements pertaining to business combinations. Primary changes to existing accounting
include requirements for the acquirer to recognize:



| |  |  | Assets acquired, liabilities assumed and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that
date;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Identifiable assets and liabilities, as well as the noncontrolling interest in the acquiree, at the full amounts of their fair values, in a step
acquisition;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Assets acquired and liabilities assumed arising from contractual contingencies as of the acquisition date, measured at their acquisition-date fair
values;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Goodwill as of the acquisition date, measured as a residual, which in most types of business combinations will result in measuring goodwill as the
excess of the consideration transferred plus the fair value of any noncontrolling interest in the acquiree at the acquisition date over the fair values of the identifiable net assets acquired;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Contingent consideration at the acquisition date, measured at its fair value at that date;
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | The effect of a bargain purchase in earnings; and
| | - |  | -------------------------------------------------



| |  |  | Changes in the amount of its deferred tax benefits that are recognizable because of a business combination either in income from continuing operations
in the period of the combination or directly in contributed capital, depending on the circumstances.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In April 2009, the
FASB issued additional GAAP requiring an asset or a liability arising from a contingency in a business combination to be recognized at fair value if fair value can be reasonably determined and provides additional guidance on how to make that
determination. If the fair value of an asset or liability cannot be reasonably determined, the new GAAP requires that an asset or liability be recognized at the amount that would be recognized in accordance with other applicable GAAP, for
liabilities, and an amount using similar criteria for assets. The new GAAP also amends the subsequent measurement and accounting guidance and the disclosure requirements for assets and liabilities arising from contingencies in a business
combination.This new GAAP is effective for assets or liabilities arising from contingencies in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after
December 15, 2008.

The Company adopted the new GAAP related to business combinations effective January 1, 2009, and the adoption
did not have a material impact on its financial condition, results of operations or cash flows.

Noncontrolling Interests in Consolidated
Financial Statements

In December 2007, the FASB also issued new related GAAP regarding noncontrolling interests in consolidated financial
statements. This new GAAP requires:



| |  |  | Ownership interests in subsidiaries held by parties other than the parent to be clearly identified, labeled and presented in the consolidated balance
sheet within equity, but separate from the parents equity;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The amount of consolidated net income attributable to the parent and to the noncontrolling interest to be clearly identified and presented on the face
of the consolidated statement of operations;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Changes in a parents ownership interest while the parent retains its controlling financial interest in its subsidiary to be accounted for
consistently;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | When a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be initially measured at fair value;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| |  |  | Gains or losses on the deconsolidation of a subsidiary to be measured using the fair value of any noncontrolling equity investment rather than the
carrying amount of the retained investment; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Entities to provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the
noncontrolling owners.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Company adopted the new GAAP effective January 1, 2009, and the adoption did not have a
material impact on its financial condition, results of operations or cash flows.

Disclosures about Derivative Instruments and Hedging
Activities

In March 2008, the FASB issued new GAAP intended to improve financial reporting about derivative financial instruments and
hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entitys financial condition, results of operations and cash flows.

It amends existing disclosure requirements to provide users of financial statements with an enhanced understanding of:



| |  |  | How and why an entity uses derivative financial instruments;
| | - |  | ------------------------------------------------------------



| |  |  | How derivative financial instruments and related hedged items are accounted for; and
| | - |  | ------------------------------------------------------------------------------------



| |  |  | How derivative financial instruments and related hedged items affect an entitys financial position, financial performance and cash flows.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------

To meet those objectives, the new GAAP requires qualitative disclosures about objectives and strategies for using
derivative financial instruments, quantitative disclosures about fair value amounts of and gains and losses on derivative financial instruments, and disclosures about credit-risk-related contingent features in derivative agreements. Comparative
disclosures are required only for periods subsequent to initial adoption.

The Company adopted the new GAAP effective January 1, 2009
(see Note 6).

Useful Life of Intangible Assets

In April 2008, the FASB issued new GAAP on the determination of the useful life of intangible assets, which amends the factors that should be considered in developing renewal or extension assumptions used
to determine the useful life of a recognized intangible asset with a finite useful life. Rather than considering legal, regulatory or contractual provisions that enable renewal or extension of the assets legal or contractual life without
substantial cost, an entity is required to use, among other factors, its own historical experience in renewing or extending similar arrangements, regardless of whether those arrangements have explicit renewal or extension provisions, in determining
the useful life of the asset. If an entity does not have its own historical experience, it should consider the assumptions that market participants would use about renewal or extension (consistent with the highest and best use of the asset by market
participants), adjusted for any identified entity-specific factors.

The Company adopted the new GAAP effective January 1, 2009, and the
adoption did not have a material impact on its financial condition, results of operations or cash flows.

Disclosures about Fair Value of
Financial Instruments

In April 2009, the FASB issued new GAAP enhancing consistency in financial reporting by increasing the frequency of
fair value disclosures under the scope of GAAP on fair value measurements. This new GAAP is effective for interim and annual periods ending after June 15, 2009.

The Company adopted the new GAAP effective June 30, 2009 (see Note 6).

Subsequent Events

In May 2009, the FASB established new GAAP for the accounting and disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. The new GAAP also requires an entity to disclose the date through which subsequent events have been evaluated. This new GAAP is effective for interim or annual financial periods ending
after June 15, 2009 and must be applied prospectively.

The Company adopted the new GAAP effective June 30, 2009, and the adoption
did not have a material impact on its financial condition, results of operations or cash flows (see Note 17).

Note 2. Discontinued
Operations

The Company has classified the results of divested entities as discontinued operations in accordance with GAAP.

In July 2007, the Company sold its PEM segment. In connection with the sale, the Company entered into a sublease agreement with the buyer for
office space where PEM was headquartered. On April 27, 2009, the buyer filed a petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. In the bankruptcy



8



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##### Table of Contents

proceedings, the sublease was rejected, a new sublease was entered into with the buyer at a reduced rate, and the buyer put certain of the space back to the Company. As a result, during the
second quarter of 2009, the Company recorded a charge of $2.7 million, which is included in discontinued operations, to adjust the remaining liability under the lease for all of the office space, to record brokerage fees related to the new sublease
and to write off certain amounts receivable from the buyer.

During the three months ended September 30, 2008, the final adjustment to
the net proceeds from the sale of PEM was recorded and resulted in an additional gain on sale of business of $0.6 million, net of tax benefits.

In the fourth quarter of 2007, the Company classified the results of operations of its Auto Guides division as discontinued operations, due to its intent to sell or shut down the operations of the Auto Guides division in 2008. During the
second quarter of 2008, the Company sold certain assets and liabilities of its Auto Guides division for approximately $2.1 million, resulting in a $1.3 million gain, net of tax benefits, and shut down the remaining operations.

During the first quarter of 2008, the Company sold certain assets and liabilities of PRIMEDIA Healthcare for approximately $0.2 million, resulting in a gain
of $0.1 million, net of tax benefits, and shut down the remaining operations.

During the first nine months of 2008, the Company recognized a
tax benefit of $14.8 million in discontinued operations as a result of its ability to carry back a projected 2008 net operating loss (NOL) against taxes paid on a portion of the 2007 gain on divestitures of certain subsidiaries. The 2008
NOL arose primarily from the reversal of differences between the carrying value and tax basis in a group of PRIMEDIA Healthcare intangible assets triggered by the sale of those assets during the first quarter of 2008.

The components of discontinued operations for the three and nine months ended September 30, 2009 and 2008 included in the condensed consolidated
statement of operations are as follows:



|                                                                           |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|-------------------------------------------------------------------------- |  | -------------------------------- | ------ | - | ------------------------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                           |  | Three Months Ended September 30, |        |   | Nine Months Ended September 30, |  
|                                                                           |  | 2009                             |        |   | 2008                            |   |        | 2009 |  |   | 2008   |  
|                                                                           |  | (Dollars in thousands)           |       
|Total revenue, net                                                         |  | $                                |       |   |                                 | $ |       |      |  | $ |       |   |  | $ | 3,353  |  
|                                                                           |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|                                                                           |  |                                  |        |  
|Loss from operations of Auto Guides division                               |  | $                                |       |   |                                 | $ |       |      |  | $ |       |   |  | $ | (1,668 | )
|Income from operations of PRIMEDIA Healthcare                              |  |                                  |       |   |                                 |   |       |      |  |   |       |   |  |   | 132    |  
|Provision for litigation reserves and settlements                          |  |                                  | (1,500 | ) |                                 |   |       |      |  |   | (1,500 | ) |  |   |       |  
|Professional fees                                                          |  |                                  | (387   | ) |                                 |   | (639   | )    |  |   | (1,067 | ) |  |   | (1,817 | )
|Adjustments to accrued operating lease liabilities                         |  |                                  | (193   | ) |                                 |   | 106    |      |  |   | (2,595 | ) |  |   | 1,874  |  
|Insurance-related expenses                                                 |  |                                  | 28     |   |                                 |   | (21    | )    |  |   | (203   | ) |  |   | (885   | )
|Write-off of receivables and other assets                                  |  |                                  |       |   |                                 |   | (772   | )    |  |   | (259   | ) |  |   | (1,150 | )
|Other                                                                      |  |                                  | (225   | ) |                                 |   | (327   | )    |  |   | 334    |   |  |   | (999   | )
|                                                                           |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|Loss before benefit for income taxes and gain on sale of businesses        |  |                                  | (2,277 | ) |                                 |   | (1,653 | )    |  |   | (5,290 | ) |  |   | (4,513 | )
|Gain on sale of businesses before income taxes                             |  |                                  |       |   |                                 |   | 588    |      |  |   |       |   |  |   | 825    |  
|Benefit for income taxes                                                   |  |                                  | 320    |   |                                 |   | 4,377  |      |  |   | 560    |   |  |   | 16,839 |  
|                                                                           |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  
|Discontinued operations, net of tax (including gain on sale of businesses) |  | $                                | (1,957 | ) |                                 | $ | 3,312  |      |  | $ | (4,730 | ) |  | $ | 13,151 |  
|                                                                           |  |                                  |        |   |                                 |   |        |      |  |   |        |   |  |   |        |  



9



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##### Table of Contents

The components of the benefit for income taxes included in discontinued operations for the three and nine
months ended September 30, 2009 and 2008 are as follows:



|                                                          |  |                                  |     |      |                                 |        |      |  |   |      |   |  |   |        |  
|--------------------------------------------------------- |  | -------------------------------- | --- | ---- | ------------------------------- | ------ | ---- |  | - | ---- | - |  | - | ------ | -
|                                                          |  | Three Months Ended September 30, |     |      | Nine Months Ended September 30, |       
|                                                          |  | 2009                             |     | 2008 |                                 |        | 2009 |  |   | 2008 |  
|                                                          |  | (Dollars in thousands)           |    
|Provision for tax benefit on pre-tax losses               |  | $                                | 134 |      | $                               | 2,980  |      |  | $ | 271  |   |  | $ | 13,614 |  
|Provision for tax benefit on gain on sale of businesses   |  |                                  |    |      |                                 |       |      |  |   |     |   |  |   | 1,227  |  
|Change in liability for uncertain tax positions           |  |                                  | 120 |      |                                 | (3,826 | )    |  |   | (13  | ) |  |   | (3,068 | )
|Changes in estimates included in prior year tax provision |  |                                  | 66  |      |                                 | 5,223  |      |  |   | 302  |   |  |   | 5,066  |  
|                                                          |  |                                  |     |      |                                 |        |      |  |   |      |   |  |   |        |  
|Total benefit for income taxes                            |  | $                                | 320 |      | $                               | 4,377  |      |  | $ | 560  |   |  | $ | 16,839 |  
|                                                          |  |                                  |     |      |                                 |        |      |  |   |      |   |  |   |        |  

Note 3. Available for Sale Securities

As of September 30, 2009, the Company had no available for sale securities. During the first quarter of 2008, the Company sold all $15.4 million of its
available for sale securities, resulting in no realized gain or loss.

Note 4. Intangible Assets

Intangible assets subject to amortization consist of the following:



|                 |  |                                           |  |                         |         |                   |   |                     |  |                         |        |                   |   |         |  |   |        |  |   |       
|---------------- |  | ----------------------------------------- |  | ----------------------- | ------- | ----------------- | - | ------------------- |  | ----------------------- | ------ | ----------------- | - | ------- |  | - | ------ |  | - | ------
|                 |  | Weighted-AverageAmortizationPeriod(Years) |  | September 30, 2009      |         | December 31, 2008
|                 |  | GrossCarryingAmount                       |  | AccumulatedAmortization |         | NetCarryingAmount |   | GrossCarryingAmount |  | AccumulatedAmortization |        | NetCarryingAmount
|                 |  | (Dollars in thousands)                   
|Advertiser lists |  | 13                                        |  | $                       | 94,454  |                   | $ | 79,311              |  | $                       | 15,143 |                   | $ | 94,454  |  | $ | 77,767 |  | $ | 16,687
|Other            |  | 6                                         |  |                         | 5,905   |                   |   | 5,542               |  |                         | 363    |                   |   | 5,905   |  |   | 5,233  |  |   | 672   
|                 |  |                                           |  |                         |         |                   |   |                     |  |                         |        |                   |   |         |  |   |        |  |   |       
|                 |  |                                           |  | $                       | 100,359 |                   | $ | 84,853              |  | $                       | 15,506 |                   | $ | 100,359 |  | $ | 83,000 |  | $ | 17,359
|                 |  |                                           |  |                         |         |                   |   |                     |  |                         |        |                   |   |         |  |   |        |  |   |       

Intangible assets not subject to amortization had a carrying value of $6.3 million as of
September 30, 2009 and December 31, 2008 and consisted of trademarks. Amortization expense for other intangible assets subject to amortization was $0.6 million for both the three months ended September 30, 2009 and 2008 and $1.9
million and $2.0 million for the nine months ended September 30, 2009 and 2008, respectively.

Note 5. Cost-Method Investments

During 2001, the Company recorded a charge of $4.5 million to write down the value of certain cost-method investments to their estimated fair
value of $0.0 million. During the nine months ended September 30, 2009, the Company sold certain of these investments for cash and recorded a corresponding gain of $2.3 million to other income, net in the condensed consolidated statement of
operations. During the three months ended September 30, 2009, there were no sales of cost-method investments.

As is further discussed in
Note 6, the Company recorded an other-than-temporary impairment charge of approximately $1.5 million during the three months ended September 30, 2009 related to one of its cost-method investments.

Note 6. Fair Value

The table below
presents the Companys liabilities measured at fair value on a recurring basis as of September 30, 2009:



|                                            |  |                                |       |                                                             |   |                                            |  |                                        |       |  |   |  
|------------------------------------------- |  | ------------------------------ | ----- | ----------------------------------------------------------- | - | ------------------------------------------ |  | -------------------------------------- | ----- |  | - | -
|                                            |  |                                |       | Fair Value Measurements Using                              
|Liability Description                       |  | Fair Value atSeptember 30,2009 |       | Quoted Prices in ActiveMarkets for IdenticalAssets(Level
1) |   | Significant OtherObservableInputs(Level 2) |  | SignificantUnobservableInputs(Level 3)
|                                            |  | (Dollars in thousands)        
|Derivative financial instrument liabilities |  | $                              | 2,282 |                                                             | $ |                                           |  | $                                      | 2,282 |  | $ | 
|                                            |  |                                |       |                                                             |   |                                            |  |                                        |       |  |   |  
|                                            |  | $                              | 2,282 |                                                             | $ |                                           |  | $                                      | 2,282 |  | $ | 
|                                            |  |                                |       |                                                             |   |                                            |  |                                        |       |  |   |  



10



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##### Table of Contents

The table below presents the Companys liabilities measured at fair value on a recurring basis as of
December 31, 2008:



|                                            |  |                               |       |                                                             |   |                                            |  |                                        |       |  |   |  
|------------------------------------------- |  | ----------------------------- | ----- | ----------------------------------------------------------- | - | ------------------------------------------ |  | -------------------------------------- | ----- |  | - | -
|                                            |  |                               |       | Fair Value Measurements Using                              
|Liability Description                       |  | Fair Value atDecember 31,2008 |       | Quoted Prices in ActiveMarkets for IdenticalAssets(Level 1) |   | Significant OtherObservableInputs(Level 2) |  | SignificantUnobservableInputs(Level 3)
|                                            |  | (Dollars in thousands)       
|Derivative financial instrument liabilities |  | $                             | 5,149 |                                                             | $ |                                           |  | $                                      | 5,149 |  | $ | 
|                                            |  |                               |       |                                                             |   |                                            |  |                                        |       |  |   |  
|                                            |  | $                             | 5,149 |                                                             | $ |                                           |  | $                                      | 5,149 |  | $ | 
|                                            |  |                               |       |                                                             |   |                                            |  |                                        |       |  |   |  

The table below presents the Companys assets measured at fair value on a non-recurring basis as
of September 30, 2009:



|                            |  |                                   |   |                                                             |   |                                            |  |                                        |   |              |   |   |  |   |      
|--------------------------- |  | --------------------------------- | - | ----------------------------------------------------------- | - | ------------------------------------------ |  | -------------------------------------- | - | ------------ | - | - |  | - | -----
|                            |  |                                   |   | Fair Value Measurements Using                               |   |                                           
|Asset Description           |  | CarryingValue atSeptember 30,2009 |   | Quoted Prices in ActiveMarkets for IdenticalAssets(Level 1) |   | Significant OtherObservableInputs(Level 2) |  | SignificantUnobservableInputs(Level 3) |   | Total Losses
|                            |  | (Dollars in thousands)           
|Cost-method investments (1) |  | $                                 |  |                                                             | $ |                                           |  | $                                      |  |              | $ |  |  | $ | 1,500
|                            |  |                                   |   |                                                             |   |                                            |  |                                        |   |              |   |   |  |   |      
|                            |  | $                                 |  |                                                             | $ |                                           |  | $                                      |  |              | $ |  |  | $ | 1,500
|                            |  |                                   |   |                                                             |   |                                            |  |                                        |   |              |   |   |  |   |      

The table below presents the Companys assets measured at fair value on a non-recurring basis as
of December 31, 2008:



|                            |  |                                  |       |                                                             |   |                                            |  |                                        |   |              |   |       |  |   |    
|--------------------------- |  | -------------------------------- | ----- | ----------------------------------------------------------- | - | ------------------------------------------ |  | -------------------------------------- | - | ------------ | - | ----- |  | - | ---
|                            |  |                                  |       | Fair Value Measurements Using                               |   |                                           
|Asset Description           |  | CarryingValue atDecember 31,2008 |       | Quoted Prices in ActiveMarkets for IdenticalAssets(Level 1) |   | Significant OtherObservableInputs(Level 2) |  | SignificantUnobservableInputs(Level 3) |   | Total Losses
|                            |  | (Dollars in thousands)          
|Cost-method investments (1) |  | $                                | 1,500 |                                                             | $ |                                           |  | $                                      |  |              | $ | 1,500 |  | $ | 914
|                            |  |                                  |       |                                                             |   |                                            |  |                                        |   |              |   |       |  |   |    
|                            |  | $                                | 1,500 |                                                             | $ |                                           |  | $                                      |  |              | $ | 1,500 |  | $ | 914
|                            |  |                                  |       |                                                             |   |                                            |  |                                        |   |              |   |       |  |   |    



|(1) | The cost-method investments were measured at fair value as of December 31, 2008 because the Company identified events and changes in circumstances that had a
potential significant adverse effect on the fair value of the investments. The Company estimated the fair value was less than the cost for one of its investments and recorded an other-than-temporary impairment charge of approximately $0.9 million
during the fourth quarter of 2008. During the third quarter of 2009, that same investee was included in a bankruptcy petition filing, which the Company believed had a significant adverse effect on the fair value of the investment. As a result, the
Company recorded an other-than-temporary impairment charge of approximately $1.5 million during the third quarter of 2009.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The
carrying values and fair values of the Companys financial assets and liabilities are summarized as follows:



|                                        |  |                        |         |                   |          |               |   |           |  |   |         |  | 
|--------------------------------------- |  | ---------------------- | ------- | ----------------- | -------- | ------------- | - | --------- |  | - | ------- |  | 
|                                        |  | September 30, 2009     |         | December 31, 2008
|                                        |  | CarryingValue          |         | FairValue         |          | CarryingValue |   | FairValue
|                                        |  | (Dollars in thousands)
|Borrowings under bank credit facilities |  | $                      | 231,625 |                   | $194,565 |               | $ | 247,500   |  | $ | 155,925
|Derivative financial instruments        |  |                        | 2,282   |                   | 2,282    |               |   | 5,149     |  |   | 5,149  

The fair value of borrowings under bank credit facilities was determined based on recently completed
market transactions and the current rates that would be offered to the Company for debt of the same remaining maturity.

The valuation of the
derivative financial instruments, comprised of interest rate swaps, was determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the
contractual terms of the interest rate swaps, including the period to maturity, and uses observable market-based inputs, including interest rate curves. The fair values of interest rate swaps were determined using the market standard methodology of
netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) were based on an expectation of future interest rates (forward curves)
derived from observable market interest rate curves.



11



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##### Table of Contents

The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance
risk and the respective counterpartys nonperformance risk in the fair value measurements. In adjusting the fair value of its interest rate swap contracts for the effect of nonperformance risk, the Company has considered the impact of netting
and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees.

Although the Company has
determined that many of the inputs used to value its derivative financial instruments fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivative financial instruments utilize Level 3 inputs, such
as estimates of current credit spreads, to evaluate the likelihood of default by itself and its counterparties. However, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its
derivative financial instrument positions and has determined that the credit valuation adjustments, which amount to less than $0.1 million in the aggregate for all periods, are not significant to the overall valuation. As a result, the Company has
classified its derivative financial instrument valuations, in their entirety, in Level 2 of the fair value hierarchy.

For certain assets and
liabilities, including cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and borrowings under the Companys revolving credit facility, the carrying amount approximates fair value because of the short maturity of
these instruments.

Note 7. Accrued Expenses and Other

Accrued expenses and other current liabilities consisted of the following:



|                                                   |  |                        |        |                  |   |       
|-------------------------------------------------- |  | ---------------------- | ------ | ---------------- | - | ------
|                                                   |  | September 30,2009      |        | December 31,2008
|                                                   |  | (Dollars in thousands)
|Payroll, commissions and related employee benefits |  | $                      | 9,086  |                  | $ | 8,278 
|Tax-related liabilities                            |  |                        | 11,017 |                  |   | 11,560
|Derivative financial instrument liabilities        |  |                        | 595    |                  |   | 4,253 
|Reserves for litigation                            |  |                        | 4,500  |                  |   | 8,000 
|Restructuring liabilities                          |  |                        | 13,714 |                  |   | 3,466 
|Other                                              |  |                        | 8,614  |                  |   | 8,934 
|                                                   |  |                        |        |                  |   |       
|                                                   |  | $                      | 47,526 |                  | $ | 44,491
|                                                   |  |                        |        |                  |   |       

Note 8. Borrowings

Long-term debt consisted of the following:



|                                           |  |                        |         |                  |   |        
|------------------------------------------ |  | ---------------------- | ------- | ---------------- | - | -------
|                                           |  | September 30,2009      |         | December 31,2008
|                                           |  | (Dollars in thousands)
|Borrowings under bank credit facilities    |  | $                      | 231,625 |                  | $ | 247,500
|Obligation under capital leases            |  |                        | 701     |                  |   | 1,076  
|                                           |  |                        |         |                  |   |        
|                                           |  |                        | 232,326 |                  |   | 248,576
|Less: Current maturities of long-term debt |  |                        | 2,964   |                  |   | 3,045  
|                                           |  |                        |         |                  |   |        
|                                           |  | $                      | 229,362 |                  | $ | 245,531
|                                           |  |                        |         |                  |   |        

Bank Credit Facilities

The bank credit facilities consisted of the following as of September 30, 2009:



|                              |  |                        |        |   |            |   |          |       |  |   |          |  
|----------------------------- |  | ---------------------- | ------ | - | ---------- | - | -------- | ----- |  | - | -------- | -
|                              |  | RevolvingFacility      |        |   | TermLoan B |   |          | Total | 
|                              |  | (Dollars in thousands) |       
|Bank credit facilities        |  | $                      | 88,000 |   |            | $ | 231,625  |       |  | $ | 319,625  |  
|Borrowings outstanding        |  |                        |       |   |            |   | (231,625 | )     |  |   | (231,625 | )
|Letters of credit outstanding |  |                        | (2,826 | ) |            |   |         |       |  |   | (2,826   | )
|                              |  |                        |        |   |            |   |          |       |  |   |          |  
|Unused bank commitments       |  | $                      | 85,174 |   |            | $ |         |       |  | $ | 85,174   |  
|                              |  |                        |        |   |            |   |          |       |  |   |          |  

On June 30, 2009, the Companys bank credit facility was amended (the
Amendment). Among other things, the Amendment gives the Company the right, subject to the conditions set forth therein, to prepay or otherwise acquire with or for cash, on either a pro rata or non-pro rata basis, loans outstanding under
the Term Loan B Facility and held by lenders who consent to such prepayment or acquisition, at a discount to the par value of such principal at any time and from time to time on and after June 30, 2009 and on or prior to June 30, 2011;
provided that the aggregate amounts expended by the Company in connection with all such prepayments or acquisitions do not exceed $35.0 million. All such loans prepaid or acquired will be retired and extinguished and deemed paid effective upon such
prepayment or acquisition.



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##### Table of Contents

The Amendment also memorializes the reduction of the Revolving Facility commitment of Lehman Commercial
Paper Inc., a subsidiary of Lehman Brothers Inc. (Lehman) to $0.0 million and, as a consequence thereof, the total capacity under the Revolving Facility has now been confirmed to have been reduced by $12.0 million to $88.0 million. The
Company believed and had previously disclosed that the total capacity under the Revolving Facility had been effectively reduced by $12.0 million as a result of bankruptcy proceedings related to Lehman Brothers Holdings Inc., the parent company of
Lehman. The commitment under the Revolving Facility for each other lender remains unchanged from each such lenders commitment immediately prior to such reduction. Additionally, effective June 30, 2009, Lehman ceased to be a
co-documentation agent under the bank credit facility.

In connection with the Amendment, the Company incurred approximately $0.5 million in
modification fees, which were paid to the creditors and will be expensed over the remaining term of the loan.

There are no scheduled
commitment reductions under the Revolving Facility. The loans under the Term Loan B Facility are subject to scheduled repayment in quarterly installments of $0.6 million each payable on March 31, June 30, September 30 and
December 31 of each year through June 30, 2014, followed by a final repayment on the Term Loan B Maturity Date of $219.8 million, which reflects the Term Loan B Facility repurchase discussed below.

Term Loan B Facility Repurchase

On
June 30, 2009, the Company repurchased and retired $14.0 million in principal of its Term Loan B Facility for $10.1 million. In connection with the repurchase, the Company also wrote off $0.3 million in deferred financing fees, resulting in a
net gain of $3.6 million during the nine months ended September 30, 2009, which is included in other income, net in the condensed consolidated statement of operations.

Revolving Facility Borrowings

In September 2008, the Company borrowed $13.2 million
against its Revolving Facility. In March 2009, the Company repaid $8.8 million of the amount outstanding and the remaining $4.4 million in June 2009. In early July 2009, the Company borrowed $5.0 million against its Revolving Facility and repaid the
entire amount borrowed in late July 2009.

8% Senior Notes

On May 15, 2008, the Company redeemed all $2.6 million of its outstanding 8% Senior Notes. The Notes were redeemed at a 4% premium of the aggregate outstanding principal amount, which was
approximately $0.1 million and is included in other income, net in the condensed consolidated statement of operations. The Company did not incur any early termination penalties in connection with the redemption of the 8% Senior Notes beyond the 4%
redemption premium.

Covenant Compliance

Under the most restrictive covenants contained in the bank credit facilities agreement, the maximum allowable total leverage ratio, as defined in the agreement, is 5.25 to 1. As of September 30,
2009, this leverage ratio was approximately 3.0 to 1.

Note 9. Income Taxes

Income tax expense for the three months ended September 30, 2009 was $2.1 million, compared to income tax expense of $0.1 million for the same period in
2008, reflecting effective tax rates of 27.0% and 1.5%, respectively. The effective tax rates are computed based on consolidated income or loss before income taxes, and the change in the effective rate is primarily due to the following:



| |  |  | An expense of $2.8 million due to the utilization of net deferred tax assets related to pre-tax income from continuing operations for the three months
ended September 30, 2009, compared to an expense of $0.5 million related to amortization of certain indefinite lived intangible assets for the three months ended September 30, 2008.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A benefit of $(0.7) million due to a decrease in recorded reserves related to prior years uncertain tax positions for the three months ended
September 30, 2009, compared to a corresponding benefit of $(0.4) million for the three months ended September 30, 2008.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Income tax benefit for the nine months ended September 30, 2009 was $(1.4) million, compared to income tax expense of $2.4 million for the same period in 2008, reflecting effective tax rates of (32.9)% and 14.3%, respectively. The
change in the effective rate is primarily due to the following:



| |  |  | A benefit of $(1.1) million due to the establishment of net deferred tax assets related to pre-tax loss from continuing operations for the nine months
ended September 30, 2009, compared to an expense of $1.9 million related to amortization of certain indefinite lived intangible assets and state income tax expense for the nine months ended September 30, 2008.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| |  |  | A benefit of $(0.4) million due to a decrease in recorded reserves related to prior years uncertain tax positions for the nine months ended
September 30, 2009, compared to a corresponding expense of $0.4 million for the nine months ended September 30, 2008.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | An expense of $0.1 million related to differences between income tax returns that were filed and estimates that were made at the time the tax provision
was recorded related to prior years for the nine months ended September 30, 2009, compared to a corresponding expense of $0.1 million for the nine months ended September 30, 2008.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Company has used its year-to-date effective tax rate to determine the appropriate amount of tax benefit to record for the three months ended
September 30, 2009. The Company did not use its estimated annual effective tax rate because it cannot reliably estimate its annual effective tax rate due to a material effect that small changes to income would have on the annual effective tax
rate.

During the three and nine months ended September 30, 2009, the Company received net refunds for income taxes of $1.4 million and
$19.6 million, respectively. During the three months ended September 30, 2008, the Company received net refunds for income taxes of $5.5 million, and during the nine months ended September 30, 2008, the Company paid income taxes, net of
refunds, of $11.4 million.

At September 30, 2009, the Company has included a current tax receivable of $2.7 million in prepaid expenses
and other on the condensed consolidated balance sheet. The majority of this balance is comprised of expected federal and state income tax refunds.

The total amount of unrecognized tax benefits as of September 30, 2009 was approximately $87.1 million. Approximately $18.7 million of this amount would, if recognized, have an impact on the effective income tax rate, while
approximately $68.4 million would not. As of September 30, 2009, the Companys recorded liability for uncertain tax positions was $22.4 million, which includes $3.7 million of interest.

The Company recorded charges for interest related to the unrecognized tax benefits of $0.0 and $0.1 million during the three months ended September 30,
2009 and 2008, respectively. Additionally, during the third quarter of 2009, the Company increased its liability for unrecognized tax benefits by $1.5 million, which if recognized would not have an effect on the effective income tax rate. This
increase primarily relates to the uncertainty of realizing the benefit from a change to the utilization of certain prior period tax benefits. The change in tax benefit utilization resulted from the Companys carryback of its 2008 federal income
tax NOL to 2007. The increase in the liability had no impact on earnings because a valuation allowance was previously recorded against the net deferred tax asset.

The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions, and the Company is routinely under audit by multiple tax
authorities. The Company is currently under audit by the Internal Revenue Service for its 2005 and 2006 federal consolidated income tax filings and other material state taxing jurisdictions for income tax filings for the years 2005 through 2007. The
Company reported NOL carryforwards from tax years back to 1992 on federal and state tax returns currently under, or open to, examination. The Company believes that its accrual for tax liabilities is adequate for all open audit years based on its
assessment of many factors, including past experience and interpretations of tax law. This assessment relies on estimates and assumptions and involves a series of complex judgments about future events.

Due to the uncertainty regarding the timing of the resolution of federal and certain state income tax examinations of open statutory periods, the Company
has concluded it is not reasonably possible that there will be significant changes to the unrecognized tax benefit within 12 months of September 30, 2009. However, the statute of limitations in certain other state and local jurisdictions is
expected to expire within the next 12 months and may result in a decrease of unrecognized tax benefits and accrued interest of approximately $1.3 million.

Note 10. Stockholders Equity

Stock Repurchase Plan

The Companys Board of Directors has authorized a program (the Repurchase Program) to repurchase up to $5.0 million of the Companys
common stock through December 31, 2010. Under the terms of the Repurchase Program, the Company may repurchase shares in open market purchases or through privately negotiated transactions. The Company has used cash on hand to fund repurchases of
its common stock and expects to use cash on hand to fund any additional stock repurchases under the Repurchase Program. As of December 31, 2008, the Company had not repurchased any shares under the Repurchase Program. During the nine months
ended September 30, 2009, the Company repurchased 0.2 million shares of its common stock for approximately $0.4 million at a weighted-average price (including brokerage commissions) of $1.79 per share. The reacquired shares have been
designated as treasury shares. As of September 30, 2009, the Company had $4.6 million available for further share repurchases. The Company may make additional stock repurchases in 2009 and 2010 pursuant to the Repurchase Program.



14



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##### Table of Contents

Note 11. Stock-Based Compensation

Stock Options

During the second quarter of 2008, the Compensation Committee of the Board
of Directors (the Compensation Committee) approved awards of options to purchase 0.8 million shares of common stock, at an exercise price of $6.42 per share, granted under the PRIMEDIA Inc. Stock Purchase and Option Plan, as amended
(the Stock Option Plan), to certain of its employees and directors that vest with respect to one-third of the shares underlying such options on each of December 31, 2008, 2009 and 2010. During 2009, awards of options to purchase
less than 0.1 million shares of common stock at a weighted-average exercise price of $2.11 were granted under the Stock Option Plan, to certain of its employees that vest with respect to one-third of the shares underlying such options on each
anniversary date during 2010, 2011 and 2012. The per share weighted-average fair value of stock options granted during the nine months ended September 30, 2009 was $1.22. The fair value of each option grant was estimated on the date of grant
with the following weighted-average assumptions:



|                         |  |        |  
|------------------------ |  | ------ | -
|                         |  | 2009   |  
|Volatility               |  | 109.60 | %
|Dividend yield           |  | 12.71  | %
|Expected term (in years) |  | 5      |  
|Risk-free rate           |  | 2.98   | %

Restricted Stock

Performance Share Plan

During 2008 and 2009, the Compensation Committee approved awards of
performance-based restricted stock for 2008, 2009 and 2010, to be granted under the Stock Option Plan, to certain employees of the Company. The extent to which an award vests is based on the Companys level of performance during the year in
which the grant is made. Under the terms of each grant, the restricted stock is forfeited if less than 90% of the applicable performance goal is achieved and fully vests if at least 100% of the applicable performance goal is achieved. If at least
90%, but less than 100%, of the applicable performance goal is achieved, a portion of the restricted stock vests pursuant to a predetermined formula. Restricted stock vests on the date of determination by the Compensation Committee of the extent to
which the applicable performance goal is achieved, provided the grantee is employed by the Company at such time. At that time, restrictions on the vested portion of the award lapse, and the corresponding shares are distributed to the grantee.
Restricted stock for 2008, targeted at 0.2 million shares, has vested or been forfeited based on the Companys level of achievement of performance goals for the year ended December 31, 2008. Vested shares were distributed during the
first quarter of 2009.

The performance targets for the 2009 awards were set during the first quarter of 2009, at which time approximately
0.3 million shares were granted. It is expected that the performance targets for the 2010 awards will be set during the first quarter of 2010, at which time approximately 0.2 million shares will be considered granted. No expense for the
2010 awards will be recorded prior to the grant date. Performance-based restricted stock is expensed based on the likelihood of the Company achieving the performance targets.

Service Plan

During 2008 and 2009, the Compensation Committee approved awards that totaled
approximately 0.4 million shares of service-based restricted stock granted under the Stock Option Plan to the Companys Chief Executive Officer (CEO). The restricted stock includes tandem dividend rights and will vest at 100%
as long as the CEO remains employed with the Company through specified vesting dates in 2009, 2010 and 2012. During the nine months ended September 30, 2009, approximately 0.1 million shares vested and were distributed.

A summary of the Companys restricted stock award activity during the nine months ended September 30, 2009 is presented below:



|                                   |  |                 |   |  |                                      |     
|---------------------------------- |  | --------------- | - |  | ------------------------------------ | ----
|                                   |  | Number ofShares |   |  | Weighted-AverageGrant-DateFair Value
|Outstanding at beginning of period |  | 415,634         |   |  | $                                    | 5.49
|Granted                            |  | 433,326         |   |  |                                      | 1.80
|Vested and distributed             |  | (197,194        | ) |  |                                      | 5.49
|Vested and surrendered (1)         |  | (84,135         | ) |  |                                      | 5.48
|Forfeited                          |  | (53,863         | ) |  |                                      | 5.02
|                                   |  |                 |   |  |                                      |     
|Outstanding at end of period       |  | 513,768         |   |  | $                                    | 2.45
|                                   |  |                 |   |  |                                      |     



| | (1) | Shares of common stock were surrendered to the Company by certain employees to satisfy the employees tax withholding obligations upon the vesting of the
restricted stock.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

All stock-based compensation is expensed over the vesting period, and the expense for all awards amounted to
$0.3 million and $1.2 million for the three and nine months ended September 30, 2009, respectively, and $1.1 million and $1.4 million for the three and nine months ended September 30, 2008, respectively. Stock-based compensation is
included within costs of goods sold, marketing and selling, distribution and circulation, and general and administrative expenses in the condensed consolidated statement of operations.

Note 12. Provision for Restructuring Costs

During 2007, the Companys management
approved a plan to reduce its annual corporate overhead expenses to an amount appropriate to service its continuing Consumer Guides operations and relocate its corporate headquarters from New York to Norcross, Georgia, where its Consumer Guides
business is located. The Company completed this plan during the second quarter of 2008. The total cost of the plan was $6.2 million.

During
2008, the Companys management implemented a plan to streamline its expense structure through the elimination of certain jobs, consolidation of office space and the vacating of certain leased properties and termination of certain other
contracts. Charges for costs associated with the termination of certain contracts were paid in 2008. Charges under the plan also included employee-related termination costs expected to be paid through 2009 and the Companys obligations for
certain leased properties, which continue through 2015 and which have been reduced for anticipated sublease income. The total expected cost of the plan is approximately $8.7 million, and through September 30, 2009, $8.1 million has been
recorded. This plan resulted in a charge of approximately $0.6 million and $1.0 million for the three months ended September 30, 2009 and 2008, respectively, and $2.7 million and $2.1 million for the nine months ended September 30, 2009
and 2008, respectively.

As part of its distribution business, the Company has entered into contracts with various retail chains, including
grocery, drug, convenience, video, fitness and mass merchandise retailers for exclusive rights for distribution related to the Companys and third-

party free publications, which the Company refers to as RDAs. During 2009, the Companys management implemented a plan to further reduce the Companys ongoing cost structure. The most
significant component of the 2009 plan involves the reduction of ongoing distribution costs arising from RDAs that are underperforming either through:



| |  |  | terminating the Companys distribution rights for some or all locations covered by certain RDAs at a negotiated price;
| | - |  | ----------------------------------------------------------------------------------------------------------------------

| |  |  | discontinuing service for and vacating some locations covered by certain RDAs; or
| | - |  | ---------------------------------------------------------------------------------

| |  |  | determining to forego distribution rights for certain locations that are not currently being serviced.
| | - |  | ------------------------------------------------------------------------------------------------------

In the last two cases, the timing and amount of the Companys future cash obligations, most of which continue through 2011, are not impacted. The 2009
plan also includes further real estate consolidation, resulting in vacating certain leased office space, and the elimination of certain positions. The obligations associated with the termination of RDAs and employee-related termination costs are
expected to be paid through 2009, while the obligations for the leased properties continue through 2015. This plan resulted in a charge of approximately $(1.3) million and $22.1 million for the three and nine months ended September 30, 2009,
respectively. The total cost of the 2009 plan was originally expected to be between $24.0 million and $27.0 million. As a result of the Companys ongoing efforts to reduce the costs associated with RDAs, it reached an agreement to modify the
terms of previously restructured RDAs with certain retailers that resulted in a reduction of restructuring expense of $4.7 million during the three months ended September 30, 2009. Consequently, the total expected cost of the 2009 plan is now
expected to approximately be $22.0 million to $23.0 million. Details of all restructuring plans that have been implemented and the related payments during the nine months ended September 30, 2009 and 2008 are presented in the following tables:



|                                                           |  |                                |        |                                                          |   |                                                            |  |   |                                   |   |  |   |       
|---------------------------------------------------------- |  | ------------------------------ | ------ | -------------------------------------------------------- | - | ---------------------------------------------------------- |  | - | --------------------------------- | - |  | - | ------
|                                                           |  | Liability as ofJanuary 1, 2009 |        | Net Provision for theNine Months EndedSeptember 30, 2009 |   | Payments During theNine Months EndedSeptember 30, 2009 (1) |  |   | Liability as ofSeptember 30, 2009
|                                                           |  | (Dollars in thousands)        
|Employee-related termination costs                         |  | $                              | 490    |                                                          | $ | 282                                                        |  | $ | (725                              | ) |  | $ | 47    
|Termination or modification of existing RDA contracts      |  |                                |       |                                                          |   | 20,752                                                     |  |   | (10,084                           | ) |  |   | 10,668
|Termination of leases related to office closures and other |  |                                | 21,163 |                                                          |   | 4,609                                                      |  |   | (4,202                            | ) |  |   | 21,570
|                                                           |  |                                |        |                                                          |   |                                                            |  |   |                                   |   |  |   |       
|Total                                                      |  | $                              | 21,653 |                                                          | $ | 25,643                                                     |  | $ | (15,011                           | ) |  | $ | 32,285
|                                                           |  |                                |        |                                                          |   |                                                            |  |   |                                   |   |  |   |       
|                                                           |  |                                |        |                                                         
|                                                           |  | Liability as ofJanuary 1, 2008 |        | Net Provision for theNine Months EndedSeptember 30, 2008 |   | Payments During theNine Months EndedSeptember 30, 2008     |  |   | Liability as ofSeptember 30, 2008
|                                                           |  | (Dollars in thousands)        
|Employee-related termination costs                         |  | $                              | 4,905  |                                                          | $ | 1,184                                                      |  | $ | (5,435                            | ) |  | $ | 654   
|Termination of leases related to office closures and other |  |                                | 20,441 |                                                          |   | 714                                                        |  |   | (530                              | ) |  |   | 20,625
|                                                           |  |                                |        |                                                          |   |                                                            |  |   |                                   |   |  |   |       
|Total                                                      |  | $                              | 25,346 |                                                          | $ | 1,898                                                      |  | $ | (5,965                            | ) |  | $ | 21,279
|                                                           |  |                                |        |                                                          |   |                                                            |  |   |                                   |   |  |   |       



|(1) | Termination or modification of existing RDA contracts includes the write-off of $5.7 million of prepaid assets, most of which were paid during 2009 prior to the
implementation of the 2009 plan.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



16



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##### Table of Contents

In addition to the plans implemented in 2009, 2008 and 2007, the amounts in termination of leases related to
office closures and other include the Companys remaining liability, pertaining to various restructuring plans initiated in 2006 and prior, associated with real estate lease commitments for space that it no longer occupies. To reduce the
lease-related costs, the Company has pursued subleases of its available office space. These leases have been recorded at their net present value amounts and are net of anticipated sublease income. The liability related to those plans is expected to
be paid through 2015. The only remaining expenses related to those plans are the imputed interest related to the rental payments and changes in the amounts and timing of estimated cash flows, primarily anticipated sublease income. As a result of
lower future anticipated sublease income on seven leased properties, the Company expensed $0.6 million and $0.8 million during the three and nine months ended September 30, 2009, respectively.

Liabilities of $13.7 million and $3.5 million, representing the current portion of the provision for restructuring costs, are included in accrued expenses
and other on the condensed consolidated balance sheet as of September 30, 2009 and December 31, 2008, respectively. Liabilities of $18.6 million and $18.2 million, representing the non-current portion of the provision for restructuring
costs, are included in other non-current liabilities on the condensed consolidated balance sheet as of September 30, 2009 and December 31, 2008, respectively.

Interest expense related to the restructured liabilities was $0.5 million and $1.5 million for the three and nine months ended September 30, 2009, respectively, and $0.5 million and $1.6 million for
the three and nine months ended September 30, 2008, respectively. The Company includes imputed interest associated with restructuring liabilities in interest expense in the condensed consolidated statement of operations.

The following table details the restructuring liability by plan:



|                          |  |                        |        |                   |   |       
|------------------------- |  | ---------------------- | ------ | ----------------- | - | ------
|                          |  | September 30, 2009     |        | December 31, 2008
|                          |  | (Dollars in thousands)
|2009 plan                 |  | $                      | 11,599 |                   | $ |      
|2008 plan                 |  |                        | 3,348  |                   |   | 3,762 
|2006 plan and prior plans |  |                        | 17,338 |                   |   | 17,891
|                          |  |                        |        |                   |   |       
|                          |  | $                      | 32,285 |                   | $ | 21,653
|                          |  |                        |        |                   |   |       

Note 13. Income (Loss) per Common Share

Income (loss) per common share for the three and nine months ended September 30, 2009 and 2008 has been determined based on income (loss) applicable to
common stockholders, divided by the weighted-average number of common shares outstanding for all periods presented.



|                                                    |  |                                               |            |                                 |      |   |            |  |   |            |   |  |   |           
|--------------------------------------------------- |  | --------------------------------------------- | ---------- | ------------------------------- | ---- | - | ---------- |  | - | ---------- | - |  | - | ----------
|                                                    |  | Three Months Ended September 30,              |            | Nine Months Ended September 30,
|                                                    |  | 2009                                          |            |                                 | 2008 |   | 2009       |  |   | 2008      
|                                                    |  | (Dollars in thousands, except per share data)
|Income (loss) from continuing operations            |  | $                                             | 5,696      |                                 |      | $ | 8,648      |  | $ | (2,933     | ) |  | $ | 14,336    
|Discontinued operations, net of tax                 |  |                                               | (1,957     | )                               |      |   | 3,312      |  |   | (4,730     | ) |  |   | 13,151    
|                                                    |  |                                               |            |                                 |      |   |            |  |   |            |   |  |   |           
|Net income (loss)                                   |  | $                                             | 3,739      |                                 |      | $ | 11,960     |  | $ | (7,663     | ) |  | $ | 27,487    
|Shares of common stock and common stock equivalents |  |                                               |            |                                 |      |   |            |  |   |            |   |  |   |           
|Weighted-average shares used in basic computation   |  |                                               | 44,146,959 |                                 |      |   | 44,175,009 |  |   | 44,117,064 |   |  |   | 44,173,820
|Dilutive effect of:                                 |  |                                               |            |                                 |      |   |            |  |   |            |   |  |   |           
|Restricted stock                                    |  |                                               | 20,716     |                                 |      |   | 13,553     |  |   |           |   |  |   | 15,937    
|Warrants                                            |  |                                               |           |                                 |      |   |           |  |   |           |   |  |   | 4,113     
|                                                    |  |                                               |            |                                 |      |   |            |  |   |            |   |  |   |           
|Weighted-average shares used in diluted computation |  |                                               | 44,167,675 |                                 |      |   | 44,188,562 |  |   | 44,117,064 |   |  |   | 44,193,870
|Basic and diluted earnings (loss) per common share: |  |                                               |            |                                 |      |   |            |  |   |            |   |  |   |           
|Continuing operations                               |  | $                                             | 0.13       |                                 |      | $ | 0.20       |  | $ | (0.07      | ) |  | $ | 0.32      
|Discontinued operations                             |  |                                               | (0.05      | )                               |      |   | 0.07       |  |   | (0.10      | ) |  |   | 0.30      
|                                                    |  |                                               |            |                                 |      |   |            |  |   |            |   |  |   |           
|Net income (loss)                                   |  | $                                             | 0.08       |                                 |      | $ | 0.27       |  | $ | (0.17      | ) |  | $ | 0.62      
|                                                    |  |                                               |            |                                 |      |   |            |  |   |            |   |  |   |           



17



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##### Table of Contents

As of September 30, 2009, the securities that could potentially dilute basic income per share in the
future consist of approximately 1.6 million warrants, 2.7 million stock options and 0.5 million shares of restricted stock. As of September 30, 2008, securities that could potentially dilute basic income per share were
approximately 1.6 million warrants, 3.9 million stock options and 0.4 million shares of restricted stock.

For the three months
ended September 30, 2009, potentially dilutive securities, including 2.7 million stock options and 1.6 million warrants to purchase common stock, were not included in the computation of diluted income per common share. These
potentially dilutive securities were excluded because their strike price was greater than the average market price of the Companys common stock during the period, and their inclusion would be anti-dilutive. An additional 0.5 million
shares of restricted stock were excluded from diluted income per share for the three months ended September 30, 2009 because the performance criteria had not been met as of September 30, 2009 or the calculation under the treasury stock
method resulted in no additional diluted shares.

For the three months ended September 30, 2008, potentially dilutive securities,
including 3.9 million stock options and 1.6 million warrants to purchase common stock, were not included in the computation of diluted income per common share. These potentially dilutive securities were excluded because their strike price
was greater than the average market price of the Companys common stock during the period, and their inclusion would be anti-dilutive. An additional 0.4 million shares of restricted stock were excluded from diluted income per share for the
three months ended September 30, 2008 because the performance criteria had not been met as of September 30, 2008 or the calculation under the treasury stock method resulted in no additional diluted shares.

For the nine months ended September 30, 2009, potentially dilutive securities, including 2.7 million stock options, 0.6 million shares of
restricted stock and 1.6 million warrants to purchase common stock, were not included in the computation of diluted income per common share because the effect of their inclusion would be anti-dilutive due to the Companys loss from
continuing operations.

For the nine months ended September 30, 2008, potentially dilutive securities, including 3.6 million stock
options and 1.6 million warrants to purchase common stock, were not included in the computation of diluted income per common share because their strike price was greater than the average market price of the Companys common stock during
the period, and their inclusion would be anti-dilutive. An additional 0.4 million shares of restricted stock were excluded from diluted income per share for the nine months ended September 30, 2008 because the performance criteria had not
been met as of September 30, 2008 or the calculation under the treasury stock method resulted in no additional diluted shares.

Note
14. Other Comprehensive Income (Loss)

Other comprehensive income (loss) (OCI) was represented by unrealized gains and losses
on cash flow hedges as follows:



|                                         |  |                        |       |                       |   |                 |  |   |      
|---------------------------------------- |  | ---------------------- | ----- | --------------------- | - | --------------- |  | - | -----
|                                         |  | Before-TaxAmount       |       | TaxBenefit(Provision) |   | Net ofTaxAmount
|                                         |  | (Dollars in thousands)
|Three Months Ended September 30, 2009    |  |                        |       |                       |   |                 |  |   |      
|                                         |  |                        |      
|Net unrealized gains on cash flow hedges |  | $                      | 406   |                       | $ | 1,118           |  | $ | 1,524
|                                         |  |                        |       |                       |   |                 |  |   |      
|Other comprehensive income, net of tax   |  | $                      | 406   |                       | $ | 1,118           |  | $ | 1,524
|                                         |  |                        |       |                       |   |                 |  |   |      
|                                         |  |                        |      
|                                         |  | Before-TaxAmount       |       | TaxBenefit(Provision) |   | Net ofTaxAmount
|                                         |  | (Dollars in thousands)
|Three Months Ended September 30, 2008    |  |                        |       |                       |   |                 |  |   |      
|                                         |  |                        |      
|Net unrealized gains on cash flow hedges |  | $                      | 933   |                       | $ |                |  | $ | 933  
|                                         |  |                        |       |                       |   |                 |  |   |      
|Other comprehensive income, net of tax   |  | $                      | 933   |                       | $ |                |  | $ | 933  
|                                         |  |                        |       |                       |   |                 |  |   |      
|                                         |  |                        |      
|                                         |  | Before-TaxAmount       |       | TaxBenefit(Provision) |   | Net ofTaxAmount
|                                         |  | (Dollars in thousands)
|Nine Months Ended September 30, 2009     |  |                        |       |                       |   |                 |  |   |      
|                                         |  |                        |      
|Net unrealized gains on cash flow hedges |  | $                      | 2,552 |                       | $ | 302             |  | $ | 2,854
|                                         |  |                        |       |                       |   |                 |  |   |      
|Other comprehensive income, net of tax   |  | $                      | 2,552 |                       | $ | 302             |  | $ | 2,854
|                                         |  |                        |       |                       |   |                 |  |   |      



18



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##### Table of Contents

|                                         |  |                        |     |                       |   |                 |  |   |    
|---------------------------------------- |  | ---------------------- | --- | --------------------- | - | --------------- |  | - | ---
|                                         |  | Before-TaxAmount       |     | TaxBenefit(Provision) |   | Net ofTaxAmount
|                                         |  | (Dollars in thousands)
|Nine Months Ended September 30, 2008     |  |                        |     |                       |   |                 |  |   |    
|                                         |  |                        |    
|Net unrealized gains on cash flow hedges |  | $                      | 261 |                       | $ |                |  | $ | 261
|                                         |  |                        |     |                       |   |                 |  |   |    
|Other comprehensive income, net of tax   |  | $                      | 261 |                       | $ |                |  | $ | 261
|                                         |  |                        |     |                       |   |                 |  |   |    

Subsequent to the partial release of the valuation allowance against the Companys net deferred
tax asset at December 31, 2008, it became appropriate to include the deferred tax consequences of changes in unrealized gains and losses on the cash flow hedges in OCI. Prior to the partial release of the valuation allowance against the
Companys net deferred tax asset at December 31, 2008, the net tax impact was $0.0 million because the tax benefit was offset by an adjustment to the deferred tax asset valuation allowance.

Note 15. Derivative Financial Instruments

Risk Management Objective of Using Derivative Financial Instruments

The Company is exposed to certain risks arising from both
its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including
interest rate, liquidity and credit risk primarily by managing the amount, sources and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage
exposures that arise from business activities that result in the payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Companys derivative financial instruments are used to manage
differences in the amount, timing and duration of the Companys known or expected cash payments related to its borrowings. The Company does not use derivative financial instruments for speculative purposes.

The Companys objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate
movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a
counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

Cash Flow Hedges of Interest Rate Risk

The effective portion of changes in the fair value
of derivative financial instruments that are designated in qualifying cash flow hedging relationships is recorded in accumulated other comprehensive income (AOCI) on the condensed consolidated balance sheet and is subsequently
reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the nine months ending September 30, 2009, these derivative financial instruments were used to hedge the variability in cash flows arising
from changes in the benchmark interest rate on the Companys Term Loan B Facility. The ineffective portion of the change in fair value of the derivative financial instruments is recognized directly in earnings through interest expense. During
the three and nine months ending September 30, 2009 and 2008, the Company recorded less than $0.1 million of hedge ineffectiveness in earnings attributable to off-market terms present in two of the Companys interest rate swaps.

Amounts reported in AOCI related to derivative financial instruments in designated hedging relationships will be reclassified to interest
expense as interest payments are made on the Companys Term Loan B Facility. During the twelve months ending September 30, 2010, the Company estimates that $2.8 million will be reclassified from AOCI into earnings as an increase to
interest expense.



19



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##### Table of Contents

As of September 30, 2009 and December 31, 2008, the Company had the following outstanding
derivative financial instruments that were designated as cash flow hedges of interest rate risk (dollars in thousands):



|                                                         |  |                    |         |     |                   |   |        
|-------------------------------------------------------- |  | ------------------ | ------- | --- | ----------------- | - | -------
|                                                         |  | Notional Amount at
|Interest Rate Derivatives                                |  | September 30, 2009 |         |     | December 31, 2008
|Interest rate swaps                                      |  | $                  | 175,000 | (1) |                   | $ | 225,000
|Interest rate swaps (forward starting December 31, 2009) |  | $                  | 100,000 |     |                   | $ |       



| | (1) | Two of the interest rate swaps with an aggregate notional amount of $75.0 million mature on December 31, 2009; one interest rate swap with a notional amount of
$50.0 million matures on December 31, 2010; and one interest rate swap with a notional amount of $50.0 million matures on September 30, 2011.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Tabular Disclosure of Fair Values of Derivative Financial Instruments on the Condensed Consolidated Balance Sheet

The following table presents the fair value of the Companys derivative financial instruments as well as their classification on the condensed consolidated balance sheet as of September 30, 2009
(dollars in thousands):



|                                                                           |  |                           |  |                        |   |                       |                              |            |   |      
|-------------------------------------------------------------------------- |  | ------------------------- |  | ---------------------- | - | --------------------- | ---------------------------- | ---------- | - | -----
|                                                                           |  | Derivative Assets         |  | Derivative Liabilities
|                                                                           |  | Balance SheetLocation     |  | Fair Value             |   | Balance SheetLocation |                              | Fair Value
|Derivative financial instruments designated in hedging relationships       |  |                           |  |                        |   |                       |                              |            |   |      
|                                                                           |  |                           |  |                       
|Interest rate swaps                                                        |  | Prepaid expensesand other |  | $                      |  |                       | Accrued expensesand other    |            | $ | 595  
|                                                                           |  |                           |  |                       
|Interest rate swaps                                                        |  | Other non-current assets  |  |                        |  |                       | Other non-currentliabilities |            |   | 1,687
|                                                                           |  |                           |  |                        |   |                       |                              |            |   |      
|Total derivative financial instruments designated in hedging relationships |  |                           |  | $                      |  |                       |                              |            | $ | 2,282
|                                                                           |  |                           |  |                        |   |                       |                              |            |   |      

The following table presents the fair value of the Companys derivative financial instruments as
well as their classification on the condensed consolidated balance sheet as of December 31, 2008 (dollars in thousands):



|                                                                           |  |                           |  |                        |   |                       |                              |            |   |      
|-------------------------------------------------------------------------- |  | ------------------------- |  | ---------------------- | - | --------------------- | ---------------------------- | ---------- | - | -----
|                                                                           |  | Derivative Assets         |  | Derivative Liabilities
|                                                                           |  | Balance SheetLocation     |  | Fair Value             |   | Balance SheetLocation |                              | Fair Value
|Derivative financial instruments designated in hedging relationships       |  |                           |  |                        |   |                       |                              |            |   |      
|                                                                           |  |                           |  |                       
|Interest rate swaps                                                        |  | Prepaid expensesand other |  | $                      |  |                       | Accrued expensesand other    |            | $ | 4,253
|                                                                           |  |                           |  |                       
|Interest rate swaps                                                        |  | Other non-current assets  |  |                        |  |                       | Other non-currentliabilities |            |   | 896  
|                                                                           |  |                           |  |                        |   |                       |                              |            |   |      
|Total derivative financial instruments designated in hedging relationships |  |                           |  | $                      |  |                       |                              |            | $ | 5,149
|                                                                           |  |                           |  |                        |   |                       |                              |            |   |      

Tabular Disclosure of the Effect of Derivative Financial Instruments on the Condensed Consolidated
Statement of Operations

The following table presents the effect of the Companys derivative financial instruments on the condensed
consolidated statement of operations for the three months ended September 30, 2009 (dollars in thousands):



|                                                                 |  |                                                                                                           |  |                                                                                  |  |                                                                                |  |                                                                                                                                                    |  |                                                                                                                                                 
|---------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------
|Derivative FinancialInstruments in CashFlow HedgingRelationships |  | Amount of Gain or(Loss) Recognized inOCI on
DerivativeFinancial Instruments(Effective Portion),Net of Tax |  | Location of Gain or (Loss)Reclassified from AOCI into Income (Effective Portion) |  | Amount of Gain or (Loss)Reclassified from AOCI into Income (Effective Portion) |  | Location of Gain
or(Loss) Recognized inIncome on DerivativeFinancial Instruments(Ineffective Portion andAmount Excluded fromEffectiveness Testing) |  | Amount of Gain or(Loss) Recognized inIncome on
DerivativeFinancial Instruments(Ineffective Portion andAmount Excluded fromEffectiveness Testing)
|Interest rate swaps                                              |  | $1,524                                                                                                    |  | Interest expense                                                                 |  | $1,523                                                                         |  | Interest expense                                                                                                                                   |  | $(22)                                                                                                                                           



20



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##### Table of Contents

The following table presents the effect of the Companys derivative financial instruments on the
condensed consolidated statement of operations for the nine months ended September 30, 2009 (dollars in thousands):



|                                                                 |  |                                                                                                           |  |                                                                                  |  |                                                                                |  |                                                                                                                                                    |  |                                                                                                                                                 
|---------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------
|Derivative FinancialInstruments in CashFlow HedgingRelationships |  | Amount of Gain or(Loss) Recognized inOCI on
DerivativeFinancial Instruments(Effective Portion),Net of Tax |  | Location of Gain or (Loss)Reclassified from AOCI into Income (Effective Portion) |  | Amount of Gain or (Loss)Reclassified from AOCI into Income (Effective Portion) |  | Location of Gain or(Loss) Recognized inIncome on
DerivativeFinancial Instruments(Ineffective Portion andAmount Excluded fromEffectiveness Testing) |  | Amount of Gain or(Loss) Recognized inIncome on
DerivativeFinancial Instruments(Ineffective Portion andAmount Excluded fromEffectiveness Testing)
|Interest rate swaps                                              |  | $2,854                                                                                                    |  | Interest expense                                                                 |  | $4,320                                                                         |  | Interest expense                                                                                                                                   |  | $(70)                                                                                                                                           

Credit-risk-related Contingent Features

The Company has agreements with each of its derivative financial instrument counterparties that contain a provision by which the Company could be declared in
default on its derivative financial instrument obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Companys default on the indebtedness.

As of September 30, 2009, the termination value of derivative financial instruments in a net liability position, which includes accrued interest but
excludes any adjustment for nonperformance risk, related to these agreements was $2.3 million. As of September 30, 2009, the Company has not posted any collateral related to these agreements. If the Company breached any of these provisions, it
would be required to settle its obligations under the agreements at their termination value of $2.3 million.

Note 16. Commitments and
Contingencies

Litigation-Related Matters

The Company is involved in lawsuits and claims, both actual and potential, including some that it has asserted against others, in which substantial monetary damages are sought. Although the result of any
future litigation of such lawsuits and claims is inherently unpredictable, the Company believes that, in the aggregate, the outcome of all such lawsuits and claims will not have a material effect on its long-term consolidated financial position or
liquidity; however, any such outcome could be material to the results of operations of any particular period in which costs, if any, are recognized.

During 2008, the Company recorded a charge of $4.5 million related to settlement of litigation involving the divestiture of the Companys Crafts Group and $0.5 million related to the settlement of an unrelated case. The Company paid
the total settlements of $5.0 million in March 2009. There were no additional payments made during the nine months ended September 30, 2009. During the three and nine months ended September 30, 2009, the Company recorded an increase in
reserves for litigation-related losses of $1.5 million, which is included in discontinued operations. As of September 30, 2009 and December 31, 2008, the Company had established reserves for litigation-related losses of $4.5 million and
$8.0 million, respectively.

Derivative Litigation

The Company is named as a nominal defendant in a consolidated stockholder derivative action pending in the Court of Chancery of the State of Delaware under the caption In re PRIMEDIA Inc. Derivative
Litigation, Consolidated C.A. No. 1808-N. Kohlberg Kravis Roberts & Co. L.P., and certain present and former members of the Companys Board of Directors are also named as defendants. Plaintiffs allege that Kohlberg Kravis
Roberts & Co. L.P. (KKR) and the Companys Board of Directors breached their fiduciary duties to the Company in connection with PRIMEDIAs redemption of certain shares of its preferred stock in 2004 and 2005. On
November 15, 2006, the Court denied separate motions to dismiss filed by the director defendants and KKR, and, on January 18, 2007, all defendants answered the then operative complaint. On May 23, 2007, the Companys Board of
Directors formed a Special Litigation Committee (SLC) of independent, non-defendant directors with full and sole authority to investigate, review and take action with respect to the plaintiffs claims in the derivative litigation.
On September 7, 2007, plaintiffs filed a Second Amended and Consolidated Derivative Complaint (SAC), which, in addition to the allegations discussed above, further alleges that KKR usurped a corporate opportunity of the Company in
2002 by purchasing shares of PRIMEDIA preferred stock at discounts on the open market while causing the Company to refrain from doing the same. On February 28, 2008, the SLC filed a motion to dismiss the SAC and, in support of the motion, its
report (filed under seal) concluding that the pursuit of the claims asserted by plaintiffs does not make legal, practical or business sense. Briefing in connection with the SLCs motion to dismiss the SAC is scheduled to be completed in
December 2009.



21



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##### Table of Contents

Workplace Learning

In 2005, the Company sold substantially all of the assets of its Workplace Learning segment for the assumption of ongoing liabilities, while retaining a secondary liability as the assignor of the building
and satellite time leases. As of December 31, 2007, the satellite time lease had expired. The Company received a third-party guaranty of up to $10.0 million against those lease obligations to reimburse the Company for lease payments made (the
Guaranty). During 2006, the Company made payments on behalf of Workplace Learning pursuant to its secondary liability and recorded a liability for the fair value of the lease payments, net of anticipated sublease income, related to its
secondary liability on the lease payments. Furthermore, the Company determined that it was not probable that the third party would remit payment, as required under the Guaranty, and fully reserved the $10.0 million receivable from the third-party
guarantor and commenced a lawsuit to collect on the Guaranty.

On October 19, 2008, the assignee of the building lease and a related
entity filed petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Texas. Thereafter, the assignee stopped making payments under the building lease. On
October 14, 2008, the Companys motion for summary judgment against the third-party guarantor was granted unopposed. Thereafter, the Company obtained a judgment against the third-party guarantor and had been taking steps to enforce that
judgment when, on April 21, 2009, the third-party guarantor filed a petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Central District of California. The third-party guarantor
has reported substantial liabilities and minimal unsecured assets in its bankruptcy filings. If those filings are accurate, then the Company may recover little or no money from the third-party guarantor on the Companys judgment.

During the fourth quarter of 2009, the Company reassumed the building lease on behalf of Workplace Learning and entered into a sublease with the current
tenant for a period of 51 months, with an early termination option, which would reduce the term of the sublease to 17 months. The sublease provides for a monthly rent payment and a set reimbursement percentage for operating expenses. The Company is
currently undertaking efforts to sublease additional vacant space in the building to further offset its obligations under the building lease. This transaction did not have a material impact on the Companys recorded liability.

As of September 30, 2009, the Company has recorded a total liability of $9.2 million, for the fair value of the future lease payments, net of estimated
sublease income, on the condensed consolidated balance sheet. Approximately $2.0 million of this liability is included within accrued expenses and other, and the remaining $7.2 million is included within other non-current liabilities on the
condensed consolidated balance sheet.

Further changes in the Companys recorded liability and discontinued operations could result if it
becomes necessary to change the Companys assumptions about future sublease income. Historically, each month, the Companys liability has been reduced either by fulfilling its liability as lessee under the building lease or due to a
sub-lessees or successor-in-interests performance under the terms of the sublease, which results in income for the Company. During the three months ended September 30, 2009 and 2008, the Company recorded $0.0 million and $0.7
million in income, respectively, which is included in discontinued operations. During the nine months ended September 30, 2009 and 2008, the Company recorded $0.3 million and $2.6 million in income, respectively, which is included in
discontinued operations.

About.com

Plaintiffs commenced this action in 2002 on behalf of a putative class of current and former guides for About.com, a former subsidiary of the Company. The plaintiffs asserted a variety of claims, primarily that guides were
employees who were misclassified as independent contractors (and therefore were entitled to be paid minimum wage and overtime under federal and state wage laws), and that the guides were underpaid according to the terms of their contracts.
Throughout proceedings and in settlement discussions, plaintiffs counsel has made clear that the breach of contract claim was their principal focus. In November 2005, the Company moved for summary judgment on that claim and certain others. The
basis of the motion was that About.com compensated the guides properly (i.e., it paid them the contractually required percentage of net advertising revenues generated by the About.com website, and in some years paid them more).

In August 2007, the Court denied the Companys motion as to the contract claim, finding disputed issues of fact about the amounts, if
any, owed to the guides. The Court granted the Companys motion as to certain procedural issues. The Court also granted summary judgment to the plaintiffs on one issue, holding that all page-views must be counted equally for purposes of
calculating any individual guides relative share of the guide revenue pool. In January 2008, plaintiffs moved for class certification with respect to the breach of contract claim. The Court granted that motion in April 2009, but it also
indicated a willingness to reconsider its earlier grant of partial summary judgment on the page-view issue. In July 2009, plaintiffs moved for partial summary judgment with respect to the amount of damages allegedly owed under the contracts with
respect to calendar year 2000. The Company has opposed the motion, which is now pending.

Indemnifications and Other Contingencies

The Company is a party to contracts in which it is common for it to agree to indemnify third parties for certain liabilities that
arise out of or relate to the subject matter of the contract. In some cases, this indemnity extends to related liabilities arising from the negligence



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of the indemnified parties but usually excludes any liabilities caused by gross negligence or willful misconduct. The Company cannot estimate the potential amount of future payments under these
indemnities until events arise that would trigger a liability under the indemnities.

Additionally, in connection with the sale of assets and
the divestiture of businesses, the Company may agree to indemnify the buyer and related parties for certain losses or liabilities incurred by the buyer with respect to: (i) the representations and warranties made by the Company to the buyer in
connection with the sale and (ii) liabilities related to the pre-closing operations of the assets sold. Indemnities related to pre-closing operations generally include tax liabilities and other liabilities not assumed by the buyer in the
transaction.

Indemnities related to the pre-closing operations of sold assets normally do not represent additional liabilities to the Company
but simply serve to protect the buyer from potential liability associated with the Companys obligations existing at the time of the sale. As with any liability, the Company has previously accrued for those pre-closing obligations that are
considered probable and reasonably estimable. Should circumstances change, increasing the likelihood of payments related to a specific indemnity, the Company will accrue a liability when future payment is probable and the amount is reasonably
estimable.

The Company also has other contingent tax-related liabilities arising from positions taken with the filing of certain sales and
use and property tax returns. The Company has recorded reserves, included in accrued expenses and other on the condensed consolidated balance sheet, of $11.3 million and $12.7 million at September 30, 2009 and December 31, 2008,
respectively, for all of its tax-related contingencies. During the three and nine months ended September 30, 2009, the Company recorded reductions in its estimated liability for tax-related contingencies attributable to continuing operations of
$0.5 million and less than $0.1 million, respectively, and during the three and nine months ended September 30, 2008, the Company recorded a charge for its estimated liability for tax-related contingencies attributable to continuing operations
of $0.1 million and $0.2 million, respectively, which is included in other expense (income), net on the condensed consolidated statement of operations.

During the three and nine months ended September 30, 2009, the Company recorded reductions in its estimated liability for tax-related contingencies attributable to discontinued operations of less
than $0.1 million and $0.7 million, respectively, and during the three and nine months ended September 30, 2008, the Company recorded a charge for its estimated liability for tax-related contingencies attributable to discontinued operations of
$0.3 million and $0.6 million, respectively, which is included in discontinued operations on the condensed consolidated statement of operations. During the nine months ended September 30, 2009 and 2008, the Company paid $0.7 million and $0.2
million, respectively, in settlement of certain of its liabilities. The Company anticipates that certain tax-related contingent liability obligations will be reduced in the fourth quarter of 2009, while others may ultimately lapse due to the passage
of time, and will result in the reduction of a significant portion of the recorded liability, which will be recorded as a benefit to earnings in discontinued operations.

PRIMEDIA Enthusiast Media

In August 2007, the Company sold its PEM segment. In connection
with the sale, the Company entered into a sublease agreement with the buyer for office space where PEM was headquartered. On April 27, 2009, the buyer filed a petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the
United States Bankruptcy Court for the District of Delaware. In the bankruptcy proceedings, the sublease was rejected, a new sublease was entered into with the buyer at a reduced rate, and the buyer put certain of the space back to the Company. As a
result, during the second quarter of 2009, the Company recorded a charge of $2.7 million, which is included in discontinued operations, to adjust its remaining liability under its lease for all of the office space, to record brokerage fees related
to the new sublease and to write off certain amounts receivable from the buyer.

Note 17. Subsequent Event

Cash Dividend Declared

On November 3,
2009, the Companys Board of Directors declared a cash dividend of $0.07 per share of the Companys its common stock, payable on or about December 2, 2009, to stockholders of record on November 16, 2009.

Also on November 3, 2009, the Companys Board of Directors extended the Companys authorization to repurchase shares of its common stock
under the Repurchase Program from December 31, 2009 to December 31, 2010.

The Company has evaluated subsequent events through
November 9, 2009, the date its condensed consolidated financial statements were issued via their inclusion in the Companys periodic report on Form 10-Q for the Quarter Ended September 30, 2009.



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|Item 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

Introduction

In this Form 10-Q, which we
refer to as this Report the words PRIMEDIA, Company, we, us and our mean PRIMEDIA Inc., including its subsidiaries, unless the context otherwise specifies or requires.

This document contains forward-looking statementsthat is, statements related to future, not past, events. In this context,
forward-looking statements often address our expected future business and financial performance and often contain words such as expects, anticipates, intends, plans, believes,
seeks or will. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties which could adversely or positively affect our future results include,
among others: general economic trends and conditions and, in particular, related adverse trends and conditions in the apartment leasing and new home sales sectors of the residential real estate industry; changes in technology and competition; the
implementation and results of our ongoing strategic and cost-cutting initiatives; the demand by customers for our premium products and services; expenses of or adverse results from litigation; increases in fuel and paper costs; and numerous other
matters of national, regional and local market scale, including those of a political, economic, business, competitive and regulatory nature. These uncertainties may cause our actual future results to be materially different than those expressed in
our forward-looking statements. We do not undertake to update our forward-looking statements.

The following discussion and analysis
summarizes our financial condition and results of operations during the three and nine months ended September 30, 2009 and 2008 and should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto
included elsewhere in this Report.

Executive Summary

Our Business

We generate quality leads for our advertiser clients through publishing and
distributing print and online guides, primarily for the apartment and other residential rental property sectors of the residential real estate industry. Our print and online guides are provided free of charge to end users. We distribute our print
guides through our proprietary distribution network, DistribuTech. Our principal digital assets are the websites associated with our print publications and Internet-only offerings, including ApartmentGuide.com, Rentals.com, RentalHouses.com,
NewHomeGuide.com and AmericanHomeGuide.com.

Fiscal 2009 Third Quarter Results

We had total revenue of $63.0 million, representing a $13.4 million year-over-year decrease, primarily due to a $5.2 million decrease in New Homes
advertising revenue and a $6.2 million decrease in distribution revenue. We had income from continuing operations of $5.7 million, or $0.13 per diluted common share, for the quarter ended September 30, 2009, compared to income from continuing
operations of $8.6 million, or $0.20 per diluted common share, for the quarter ended September 30, 3008. The change was primarily due to lower revenue of $13.4 million, a $1.5 million other-than-temporary impairment charge on a cost-method
investment, and an increase in provision for income taxes of $2.0 million, partially offset by a $13.9 million net reduction in other costs and expenses. Net income decreased by $8.2 million to $3.7 million, or $0.08 per diluted common share, due to
the factors above as well as a $5.3 million decrease from discontinued operations, net of tax, primarily related to a tax benefit from our ability to carry back and utilize net operating losses (NOLs) during the third quarter of 2008.

2009 Business Trends and Outlook

During the remainder of 2009, we intend to continue to grow our customer count in our largest division, Apartments, as we enhance our product portfolio. We will continue to increase our investment in search engine optimization and marketing
over the prior year. We currently anticipate that Apartments division revenue for full year 2009 is likely to be down 2% to 3% year over year.

We anticipate continued pressure on our New Homes and DistribuTech businesses during the remainder of 2009, with full year levels of percentage decline in revenue for these businesses to be approximately 53% to 54% and 37% to 38%,
respectively, compared to 2008. We remain focused on reducing costs for these businesses and managing our client relationships to best position us for opportunities as macroeconomic conditions improve. Since June 30, 2008, we have suspended 11
New Home Guide print publications and currently publish New Home Guides in 21 markets. We may suspend publication of additional, less effective print publications as we manage the cost structure of this business to offset revenue losses and increase
our focus on Internet offerings.



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DistribuTech continues to be impacted by lower revenue from customers that publish free publications,
particularly those within the resale home, automobile sales and employment classifieds sectors, and are scaling back or ceasing operations or providing an Internet-only product. For the remainder of the year, we intend to continue to reduce the cost
structure of this business to offset, in part, revenue losses. Our overall goal is to create a more efficient distribution network for the longer term by streamlining the expense structure of this business through real estate consolidation, process
automation and, as is further discussed in Note 12 to the condensed consolidated financial statements contained elsewhere in this Report, optimizing the distribution footprint by eliminating less effective locations.

We now expect to reduce our 2009 annual operating expense base, which is comprised of cost of goods sold, marketing and selling, distribution and
circulation, and general and administrative expenses, by at least $25.0 million compared to our 2008 operating expense base. Managements discussion and analysis of our Costs and Expenses for the nine months ended September 30, 2009
compared to the nine months ended September 30, 2008, below, includes more detail on numerous reductions in various cost and expense components.

Transition Plan

We completed the relocation of our corporate headquarters from New York to Norcross, Georgia during the second
quarter of 2008. We continued to utilize certain of our New York based functions through the first half of 2008 and incurred their associated costs.

Results of Operations

Three Months Ended September 30, 2009 Compared to Three Months Ended September 30, 2008

Consolidated Results

Revenue, Net



|                          |  |                                 |        |                                 |   |        |                                 |   |         |   |  |       |   
|------------------------- |  | ------------------------------- | ------ | ------------------------------- | - | ------ | ------------------------------- | - | ------- | - |  | ----- | --
|                          |  | Three Months EndedSeptember 30, |        | $ ChangeFavorable/(Unfavorable) |   |        | % ChangeFavorable/(Unfavorable) |  
|Revenue Component         |  | 2009                            |        | 2008                            |   |       
|                          |  | (Dollars in thousands)          |        |                                 |   |       
|Apartments                |  | $                               | 51,674 |                                 | $ | 53,621 |                                 | $ | (1,947  | ) |  | (3.6  | )%
|New Homes                 |  |                                 | 4,100  |                                 |   | 9,311  |                                 |   | (5,211  | ) |  | (56.0 | ) 
|                          |  |                                 |        |                                 |   |        |                                 |   |         |   |  |       |   
|Total advertising revenue |  |                                 | 55,774 |                                 |   | 62,932 |                                 |   | (7,158  | ) |  | (11.4 | ) 
|Distribution              |  |                                 | 7,240  |                                 |   | 13,482 |                                 |   | (6,242  | ) |  | (46.3 | ) 
|                          |  |                                 |        |                                 |   |        |                                 |   |         |   |  |       |   
|Total revenue, net        |  | $                               | 63,014 |                                 | $ | 76,414 |                                 | $ | (13,400 | ) |  | (17.5 | ) 
|                          |  |                                 |        |                                 |   |        |                                 |   |         |   |  |       |   

Apartments

Apartment Guide, ApartmentGuide.com, Rentals.com and RentalHouses.com, representing approximately 93% of advertising revenue during the three months ended September 30, 2009, experienced a decrease
in revenue of 3.6% compared to the same period in 2008, primarily due to a 7.0% decrease in revenue per community served, which was partially offset by a 4.3% increase in apartment communities served.

During the three months ended September 30, 2009, the number of communities served by Apartment Guide increased as a result of expanding our product
offerings to appeal to new categories of advertisers that have not historically been part of our customer base. However, lower occupancy rates and effective rent levels have led apartment owners to reduce spending on our premium print products.

Generally, premium print advertising spending by property management company advertisers is driven by local market factors outside our
control, including occupancy rates and effective rent levels. For example, as occupancy rates increase beyond 95%, apartment communities tend to reduce their advertising spend because they require fewer prospective tenants. As occupancy rates
fall below 90%, apartment communities tend to cut back on all discretionary spending, including advertising. For these reasons, occupancy rates in excess of 95% or below 90% ordinarily result in a decrease in revenue per community served. However,
the effects of occupancy rates can be mitigated or exacerbated by effective rent levels, which are essentially average rent amounts after giving effect to free months of rent and other incentives.

During the third quarter of 2009, occupancy rates in Apartment Guide markets ranged from 86% to 96%, with an average of 92.1%, compared to 93.6% in 2008,
with the majority of markets experiencing occupancy levels between 88% and 95%. In our print markets, effective rents were down 5.5% for the third quarter of 2009 compared to the same period in 2008.

Rentals.com revenue declined by 5.2% during the third quarter of 2009 compared to the same period in 2008. The decline in Rentals.com revenue was primarily
due to a decrease in new paid listings through the self-provisioning feature of its websites, partially offset by an increase in the number of listings generated from property managers.



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New Homes

The New Home Guide, NewHomeGuide.com and AmericanHomeGuides.com business, representing approximately 7% of advertising revenue during the three months ended September 30, 2009, decreased 56.0%
compared to the same period in 2008. The decrease in revenue was primarily due to a 42.2% decrease in new home communities served and a 24.0% decrease in revenue per community served. These resulted from declines in standard and premium advertising
spending by many new home builders, driven by continued weakness in the new home sales sector.

The difficult conditions for new home builders
persisted in the third quarter of 2009. We believe pressure in this business will continue over the near term and remain challenging for the foreseeable future. Since June 30, 2008, we suspended 11 print publications that were considered less
effective, and, as of September 30, 2009, we published New Home Guides in 21 markets. We may suspend additional New Home Guide print publications. We continue to focus on Internet offerings across all markets.

Distribution Revenue

Distribution revenue
decreased by 46.3% during the three months ended September 30, 2009 compared to the same period in 2008. We realized a 28.8% decrease in the number of pockets sold in our display racks and a 24.6% decrease in the average revenue per pocket due
to softness in demand as well as a reduction in the number of retail locations serviced due to restructuring activities further discussed in Note 12 to the condensed consolidated financial statements contained elsewhere in this Report. Our
distribution revenue continues to be adversely impacted by the loss of business from publishers within the resale home, automobile sales and employment classifieds sectors scaling back or ceasing operations or providing an Internet-only product.

Costs and Expenses



|                                                                                          |  |                                 |        |   |                                 |   |        |                                 |  |   |         |   |  |        |   
|----------------------------------------------------------------------------------------- |  | ------------------------------- | ------ | - | ------------------------------- | - | ------ | ------------------------------- |  | - | ------- | - |  | ------ | --
|                                                                                          |  | Three Months EndedSeptember 30, |        |   | $ Change(Favorable)/Unfavorable |   |        | % Change(Favorable)/Unfavorable | 
|Costs and Expenses Component                                                              |  | 2009                            |        |   | 2008                            |   |        |                                
|                                                                                          |  | (Dollars in thousands)          |        |   |                                 |  
|Cost of goods sold (exclusive of depreciation and amortization of property and equipment) |  | $                               | 5,645  |   |                                 | $ | 7,994  |                                 |  | $ | (2,349  | ) |  | (29.4  | )%
|Marketing and selling                                                                     |  |                                 | 18,832 |   |                                 |   | 17,926 |                                 |  |   | 906     |   |  | 5.1    |   
|Distribution and circulation                                                              |  |                                 | 12,971 |   |                                 |   | 21,491 |                                 |  |   | (8,520  | ) |  | (39.6  | ) 
|General and administrative expenses                                                       |  |                                 | 8,873  |   |                                 |   | 10,964 |                                 |  |   | (2,091  | ) |  | (19.1  | ) 
|Depreciation and amortization of property and equipment                                   |  |                                 | 3,130  |   |                                 |   | 3,774  |                                 |  |   | (644    | ) |  | (17.1  | ) 
|Amortization of intangible assets                                                         |  |                                 | 617    |   |                                 |   | 636    |                                 |  |   | (19     | ) |  | (3.0   | ) 
|Provision for restructuring costs                                                         |  |                                 | (156   | ) |                                 |   | 202    |                                 |  |   | (358    | ) |  | (177.2 | ) 
|Interest expense                                                                          |  |                                 | 3,897  |   |                                 |   | 4,741  |                                 |  |   | (844    | ) |  | (17.8  | ) 
|Amortization of deferred financing costs                                                  |  |                                 | 233    |   |                                 |   | 224    |                                 |  |   | 9       |   |  | 4.0    |   
|Other expense (income), net                                                               |  |                                 | 1,173  |   |                                 |   | (314   | )                               |  |   | 1,487   |   |  | 473.6  |   
|                                                                                          |  |                                 |        |   |                                 |   |        |                                 |  |   |         |   |  |        |   
|                                                                                          |  |                                 |        |  
|Total cost and expenses                                                                   |  | $                               | 55,215 |   |                                 | $ | 67,638 |                                 |  | $ | (12,423 | ) |  | (18.4  | ) 
|                                                                                          |  |                                 |        |   |                                 |   |        |                                 |  |   |         |   |  |        |   

The decrease in cost of goods sold was due to the reformatting of our printed guides, including
reductions in paper size and weight, as well as distribution optimization.

The increase in marketing and selling was primarily due to
increased spending related to search engine marketing.

Our distribution and circulation costs decreased as a result of ongoing action with
certain of our retail display allowances (RDAs) since the third quarter of 2008. As is more fully discussed in Note 12 to the condensed consolidated financial statements, other of our RDAs are part of a restructuring charge we incurred
in the first nine months of 2009 related to actions we took to reduce our ongoing distribution costs.

General and administrative expenses
declined, primarily due to a $0.3 million reduction in costs associated with the hiring of a new Chief Executive Officer (CEO) in 2008; a decrease of $0.6 million in stock-based compensation; $0.7 million resulting from position
eliminations, insurance premium reductions and lower facilities costs attributable to our cost-cutting initiatives; and $0.7 million resulting from reductions in franchise tax and sales and use tax. These decreases were partially offset by
additional legal expenses of $0.2 million.

Depreciation and amortization of property and equipment decreased primarily as a result of certain
internal-use software becoming fully depreciated during the past twelve months, partially offset by new internal-use software being placed in service during that same period.



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As a result of our ongoing efforts to reduce the costs associated with RDAs, we reached an agreement to
modify the terms of previously restructured RDAs with certain retailers that resulted in a reduction of restructuring expense of $4.7 million. This decrease was partially offset by other RDA-related expenses related to our 2009 restructuring plan of
$3.4 million. The RDA-related charges included the costs associated with discontinuing service to and vacating some locations covered and determining to forego distribution rights in certain locations that are not currently being serviced. In
addition, there was an increase of $1.5 million in expense related to revised estimates of our liability for previously restructured properties, partially offset by lower severance of $0.5 million.

The change in interest expense is primarily related to principal reductions in long-term debt and overall lower interest rates, slightly offset by
additional interest on restructuring liabilities.

The change in other expense (income), net is due to an other-than-temporary impairment
charge of $1.5 million in 2009 related to a cost-method investment.

Income Taxes

Our effective tax rate on income from continuing operations for the three months ended September 30, 2009 was 27.0%, compared to 1.5% for the three
months ended September 30, 2008.

We have used our year-to-date effective tax rate to determine the appropriate amount of tax benefit to
record for the three months ended September 30, 2009. We did not use our estimated annual effective tax rate because we cannot reliably estimate our annual effective tax rate due to the effect that small changes to income would have on the
annual effective tax rate.

The total tax expense from continuing operations for the three months ended September 30, 2009 was $2.1
million, which was comprised of approximately $2.8 million federal and state tax income tax reduction of previously recorded tax benefit on pre-tax income from continuing operations and $(0.7) million related to reserves for prior years
uncertain tax positions.

Discontinued Operations

In accordance with generally accepted accounting principles, we have classified the results of our divested entities as discontinued operations in the consolidated statement of operations for all periods
presented.

The components of discontinued operations for the three months ended September 30, 2009 and 2008 included in the condensed
consolidated statement of operations are as follows:



|                                                                           |  |                                  |        |   |      |   |        |  
|-------------------------------------------------------------------------- |  | -------------------------------- | ------ | - | ---- | - | ------ | -
|                                                                           |  | Three Months Ended September 30, |       
|                                                                           |  | 2009                             |        |   | 2008 |  
|                                                                           |  | (Dollars in thousands)           |       
|Total revenue, net                                                         |  | $                                |       |   |      | $ |       |  
|                                                                           |  |                                  |        |   |      |   |        |  
|                                                                           |  |                                 
|Provision for litigation reserves and settlements                          |  | $                                | (1,500 | ) |      | $ |       |  
|Professional fees                                                          |  |                                  | (387   | ) |      |   | (639   | )
|Adjustments to accrued operating lease liabilities                         |  |                                  | (193   | ) |      |   | 106    |  
|Insurance-related expenses                                                 |  |                                  | 28     |   |      |   | (21    | )
|Write-off of receivables and other assets                                  |  |                                  |       |   |      |   | (772   | )
|Other                                                                      |  |                                  | (225   | ) |      |   | (327   | )
|                                                                           |  |                                  |        |   |      |   |        |  
|Loss before benefit for income taxes and gain on sale of businesses        |  |                                  | (2,277 | ) |      |   | (1,653 | )
|Gain on sale of businesses before income taxes                             |  |                                  |       |   |      |   | 588    |  
|Benefit for income taxes                                                   |  |                                  | 320    |   |      |   | 4,377  |  
|                                                                           |  |                                  |        |   |      |   |        |  
|Discontinued operations, net of tax (including gain on sale of businesses) |  | $                                | (1,957 | ) |      | $ | 3,312  |  
|                                                                           |  |                                  |        |   |      |   |        |  



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The components of the benefit for income taxes included in discontinued operations for the three months
ended September 30, 2009 and 2008 are as follows:



|                                                          |  |                                  |     |      |   |        |  
|--------------------------------------------------------- |  | -------------------------------- | --- | ---- | - | ------ | -
|                                                          |  | Three Months Ended September 30, |    
|                                                          |  | 2009                             |     | 2008 |  
|                                                          |  | (Dollars in thousands)           |    
|Provision for tax benefit on pre-tax losses               |  | $                                | 134 |      | $ | 2,980  |  
|Change in liability for uncertain tax positions           |  |                                  | 120 |      |   | (3,826 | )
|Changes in estimates included in prior year tax provision |  |                                  | 66  |      |   | 5,223  |  
|                                                          |  |                                  |     |      |   |        |  
|Total benefit for income taxes                            |  | $                                | 320 |      | $ | 4,377  |  
|                                                          |  |                                  |     |      |   |        |  

During the three months ended September 30, 2008, the final adjustment to the net proceeds from
the sale of PEM was recorded and resulted in an additional gain on sale of business of $0.6 million, net of tax benefits.

As is more fully
discussed in Note 16 to our condensed consolidated financial statements, in 2005, we sold substantially all of the assets of Workplace Learning for the assumption of ongoing liabilities, while retaining a secondary liability as the assignor of the
building and satellite time leases. During the fourth quarter of 2009, we reassumed the building lease on behalf of Workplace Learning and entered into a sublease with the current tenant for a period of 51 months, with an early termination option,
which would reduce the term of the sublease to 17 months. The sublease provides for a monthly rent payment and a set reimbursement percentage for operating expenses. We are currently undertaking efforts to sublease additional vacant space in the
building to further offset our obligations under the lease. This transaction did not have a material impact on our recorded liability. Historically, each month, our liability has been reduced either by fulfilling our liability as lessee under the
building lease or due to a sub-lessees or successor-in-interests performance under the terms of the sublease, which results in income for us. During the three months ended September 30, 2009 and 2008, as a result of the
assignees or the successor in interests performance, we recorded $0.0 million and $0.7 million in income, respectively, which is included in discontinued operations.

During the three months ended September 30, 2008, we recognized a tax benefit of $3.0 million in discontinued operations, primarily as a result of our ability to carry back a projected 2008 NOL
against taxes paid on a portion of the 2007 gain on divestitures of certain subsidiaries. The 2008 NOL arose primarily from the reversal of differences between the carrying value and tax basis in a group of PRIMEDIA Healthcare intangible assets
triggered by the sale of those assets during the nine months ended September 30, 2008. We also recognized a tax benefit of $5.2 million in discontinued operations during the three months ended September 30, 2008, primarily as a result of
changes in our estimate of our ability to utilize certain NOLs to offset 2007 taxable income.

Nine Months Ended September 30, 2009
Compared to Nine Months Ended September 30, 2008

Consolidated Results

Revenue, Net



|                          |  |                                |         |                                 |   |         |                                 |   |         |   |  |       |   
|------------------------- |  | ------------------------------ | ------- | ------------------------------- | - | ------- | ------------------------------- | - | ------- | - |  | ----- | --
|                          |  | Nine Months EndedSeptember 30, |         | $ ChangeFavorable/(Unfavorable) |   |         | % ChangeFavorable/(Unfavorable) |  
|Revenue Component         |  | 2009                           |         | 2008                            |   |        
|                          |  | (Dollars in thousands)         |         |                                 |   |        
|Apartments                |  | $                              | 155,609 |                                 | $ | 157,986 |                                 | $ | (2,377  | ) |  | (1.5  | )%
|New Homes                 |  |                                | 14,764  |                                 |   | 31,495  |                                 |   | (16,731 | ) |  | (53.1 | ) 
|                          |  |                                |         |                                 |   |         |                                 |   |         |   |  |       |   
|Total advertising revenue |  |                                | 170,373 |                                 |   | 189,481 |                                 |   | (19,108 | ) |  | (10.1 | ) 
|Distribution              |  |                                | 26,305  |                                 |   | 41,215  |                                 |   | (14,910 | ) |  | (36.2 | ) 
|                          |  |                                |         |                                 |   |         |                                 |   |         |   |  |       |   
|Total revenue, net        |  | $                              | 196,678 |                                 | $ | 230,696 |                                 | $ | (34,018 | ) |  | (14.7 | ) 
|                          |  |                                |         |                                 |   |         |                                 |   |         |   |  |       |   

Apartments

Apartment Guide, ApartmentGuide.com, Rentals.com and RentalHouses.com, representing approximately 91% of advertising revenue during the nine months ended September 30, 2009, experienced a decrease in
revenue of 1.5% compared to the same period in 2008, primarily due to a 4.6% decrease in revenue per community served, which was partially offset by a 3.8% increase in apartment communities served.

During the nine months ended September 30, 2009, the number of communities served by Apartment Guide increased as a result of expanding our product
offerings to appeal to new categories of advertisers that have not historically been part of our customer base. However, lower occupancy rates and effective rent levels have led apartment owners to reduce spending on our premium print products.

Generally, premium print advertising spending by property management company advertisers is driven by local market factors outside our
control, including occupancy rates and effective rent levels. For example, as occupancy rates increase beyond 95%, apartment communities tend to reduce their advertising spend because they require fewer prospective tenants. As occupancy rates
fall below 90%, apartment communities tend to cut back on all discretionary spending, including advertising. For these reasons, occupancy rates



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in excess of 95% or below 90% ordinarily result in a decrease in revenue per community served. However, the effects of occupancy rates can be mitigated or exacerbated by effective rent levels,
which are essentially average rent amounts after giving effect to free months of rent and other incentives.

During the first nine months of
2009, occupancy rates in Apartment Guide markets ranged from 83% to 99%, with an average of 92.0%, compared to 93.1% during the first nine months of 2008, and with the majority of markets experiencing occupancy levels between 88% and 95%. In
our print markets, effective rents were down 4.3% for the first nine months of 2009 compared to the same period in 2008.

Rentals.com revenue
grew by 0.7% during the first nine months of 2009 compared to the same period in 2008. The growth in Rentals.com revenue was primarily due to an increase in the number of listings generated from property managers, significantly offset by a decrease
in new paid listings through the self-provisioning feature of its websites.

New Homes

The New Home Guide, NewHomeGuide.com and AmericanHomeGuides.com business, representing approximately 9% of advertising revenue during the nine months ended
September 30, 2009, decreased 53.1% compared to the same period in 2008. The decrease in revenue was primarily due to a 41.6% decrease in new home communities served and a 20.1% decrease in revenue per community served. These resulted from
declines in standard and premium advertising spending by many new home builders, driven by continued weakness in the new home sales sector.

The difficult conditions for new home builders persisted in the first nine months of 2009. We believe pressure in this business will continue over the near term and remain challenging for the foreseeable future. Since June 30, 2008, we
suspended 11 print publications that were considered less effective, and, as of September 30, 2009, we published New Home Guides in 21 markets. We may suspend additional New Home Guide print publications. We continue to focus on Internet
offerings across all markets.

Distribution Revenue

Distribution revenue decreased by 36.2% during the nine months ended September 30, 2009 compared to the same period in 2008. We realized a 20.5% decrease in the number of pockets sold in our display
racks and a 19.7% decrease in the average revenue per pocket due to softness in demand as well as a reduction in the number of retail locations serviced due to restructuring activities further discussed in Note 12 to the condensed consolidated
financial statements contained elsewhere in this Report. Our distribution revenue continues to be adversely impacted by the loss of business from publishers within the resale home, automobile sales and employment classifieds sectors scaling back or
ceasing operations or providing an Internet-only product.

Costs and Expenses



|                                                                                          |  |                                |         |   |                                 |   |         |                                 |  |   |         |   |  |         |   
|----------------------------------------------------------------------------------------- |  | ------------------------------ | ------- | - | ------------------------------- | - | ------- | ------------------------------- |  | - | ------- | - |  | ------- | --
|                                                                                          |  | Nine Months EndedSeptember 30, |         |   | $ Change(Favorable)/Unfavorable |   |         | % Change(Favorable)/Unfavorable | 
|Costs and Expenses Component                                                              |  | 2009                           |         |   | 2008                            |   |         |                                
|                                                                                          |  | (Dollars in thousands)         |         |   |                                 |  
|Cost of goods sold (exclusive of depreciation and amortization of property and equipment) |  | $                              | 18,128  |   |                                 | $ | 25,005  |                                 |  | $ | (6,877  | ) |  | (27.5   | )%
|Marketing and selling                                                                     |  |                                | 59,344  |   |                                 |   | 57,543  |                                 |  |   | 1,801   |   |  | 3.1     |   
|Distribution and circulation                                                              |  |                                | 48,031  |   |                                 |   | 64,106  |                                 |  |   | (16,075 | ) |  | (25.1   | ) 
|General and administrative expenses                                                       |  |                                | 30,306  |   |                                 |   | 38,526  |                                 |  |   | (8,220  | ) |  | (21.3   | ) 
|Depreciation and amortization of property and equipment                                   |  |                                | 9,998   |   |                                 |   | 10,389  |                                 |  |   | (391    | ) |  | (3.8    | ) 
|Amortization of intangible assets                                                         |  |                                | 1,853   |   |                                 |   | 2,043   |                                 |  |   | (190    | ) |  | (9.3    | ) 
|Provision for restructuring costs                                                         |  |                                | 25,643  |   |                                 |   | 1,898   |                                 |  |   | 23,745  |   |  | 1,251.1 |   
|Interest expense                                                                          |  |                                | 12,353  |   |                                 |   | 14,599  |                                 |  |   | (2,246  | ) |  | (15.4   | ) 
|Amortization of deferred financing costs                                                  |  |                                | 682     |   |                                 |   | 697     |                                 |  |   | (15     | ) |  | (2.2    | ) 
|Other income, net                                                                         |  |                                | (5,289  | ) |                                 |   | (843    | )                               |  |   | (4,446  | ) |  | (527.4  | ) 
|                                                                                          |  |                                |         |   |                                 |   |         |                                 |  |   |         |   |  |         |   
|                                                                                          |  |                                |         |  
|Total cost and expenses                                                                   |  | $                              | 201,049 |   |                                 | $ | 213,963 |                                 |  | $ | (12,914 | ) |  | (6.0    | ) 
|                                                                                          |  |                                |         |   |                                 |   |         |                                 |  |   |         |   |  |         |   

The decrease in cost of goods sold was due to the reformatting of our printed guides, including
reductions in paper size and weight, as well as distribution optimization.

The increase in marketing and selling was primarily due to
increased spending related to search engine marketing.



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Our distribution and circulation costs decreased as a result of ongoing actions with respect to certain of
our RDAs since the third quarter of 2008. As is more fully discussed in Note 12 to the condensed consolidated financial statements, other of our RDAs are part of a restructuring charge we incurred in the first nine months of 2009 related to actions
we took to reduce our ongoing distribution costs.

General and administrative expenses declined, primarily due to decreases in corporate
overhead of $1.3 million, resulting from the relocation of our headquarters from New York to Norcross; a $2.1 million reduction in costs associated with the hiring of a new CEO in 2008; a decrease of $0.1 million in stock-based compensation; $5.4
million resulting from position eliminations, insurance premium reductions and lower facilities costs attributable to our cost-cutting initiatives; and $0.3 million resulting from reductions in franchise tax and sales and use tax. These decreases
were partially offset by an increase of $0.8 million in bad debt expense and an increase of $0.2 million in professional fees and legal expenses.

Depreciation and amortization of property and equipment decreased primarily as a result of certain internal-use software becoming fully depreciated during the past twelve months, partially offset by new internal-use software being placed in
service during that same period.

The provision for restructuring costs increased due to an additional $20.8 million in RDA-related expenses
for certain of our RDAs that were underperforming. The charge included costs associated with the termination or modification of the agreements; discontinuing service to and vacating some locations covered; and determining to forego distribution
rights in certain locations that are not currently being serviced. There was also an increase of $3.9 million in charges related to vacated office space, from an additional 11 properties that were restructured in 2009. This increase in expense was
partially offset by lower severance of $0.9 million.

The change in interest expense is primarily related to principal reductions in long-term
debt and overall lower interest rates, slightly offset by additional interest on restructuring liabilities.

Other income, net increased due
to a gain on the repurchase of debt of $3.6 million and a gain on sale of cost-method investments of $2.3 million, partially offset by an other-than-temporary impairment charge of $1.5 million related to a cost-method investment.

Income Taxes

Our effective tax rate on
income from continuing operations for the nine months ended September 30, 2009 was (32.9)%, compared to 14.3% for the nine months ended September 30, 2008.

We have used our year-to-date effective tax rate to determine the appropriate amount of tax benefit to record for the nine months ended September 30, 2009. We did not use our estimated annual
effective tax rate because we cannot reliably estimate our annual effective tax rate due to the effect that small changes to income would have on the annual effective tax rate.

The total tax benefit from continuing operations for the nine months ended September 30, 2009 was $(1.4) million, which was comprised of approximately $(1.6) million federal and state tax income tax
benefit recorded on pre-tax income from continuing operations, $(0.4) million related to reserves for prior years uncertain tax positions, $0.4 million related to the reversal of deferred tax assets for stock-based compensation that was
distributed to the award recipients, and $0.2 million due to differences between income tax returns that were filed and estimates that were made at the time the tax provision was recorded.

Discontinued Operations

In accordance with
generally accepted accounting principles, we have classified the results of our divested entities as discontinued operations in the consolidated statement of operations for all periods presented.



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##### Table of Contents

The components of discontinued operations for the nine months ended September 30, 2009 and 2008
included in the condensed consolidated statement of operations are as follows:



|                                                                           |  |                                 |        |   |      |   |        |  
|-------------------------------------------------------------------------- |  | ------------------------------- | ------ | - | ---- | - | ------ | -
|                                                                           |  | Nine Months Ended September 30, |       
|                                                                           |  | 2009                            |        |   | 2008 |  
|                                                                           |  | (Dollars in thousands)          |       
|Total revenue, net                                                         |  | $                               |       |   |      | $ | 3,353  |  
|                                                                           |  |                                 |        |   |      |   |        |  
|                                                                           |  |                                
|Loss from operations of Auto Guides division                               |  | $                               |       |   |      | $ | (1,668 | )
|Income from operations of PRIMEDIA Healthcare                              |  |                                 |       |   |      |   | 132    |  
|Provision for litigation reserves and settlements                          |  |                                 | (1,500 | ) |      |   |       |  
|Professional fees                                                          |  |                                 | (1,067 | ) |      |   | (1,817 | )
|Adjustments to accrued operating lease liabilities                         |  |                                 | (2,595 | ) |      |   | 1,874  |  
|Insurance-related expenses                                                 |  |                                 | (203   | ) |      |   | (885   | )
|Write-off of receivables and other assets                                  |  |                                 | (259   | ) |      |   | (1,150 | )
|Other                                                                      |  |                                 | 334    |   |      |   | (999   | )
|                                                                           |  |                                 |        |   |      |   |        |  
|Loss before benefit for income taxes and gain on sale of businesses        |  |                                 | (5,290 | ) |      |   | (4,513 | )
|Gain on sale of businesses before income taxes                             |  |                                 |       |   |      |   | 825    |  
|Benefit for income taxes                                                   |  |                                 | 560    |   |      |   | 16,839 |  
|                                                                           |  |                                 |        |   |      |   |        |  
|Discontinued operations, net of tax (including gain on sale of businesses) |  | $                               | (4,730 | ) |      | $ | 13,151 |  
|                                                                           |  |                                 |        |   |      |   |        |  

The components of the benefit for income taxes included in discontinued operations for the nine
months ended September 30, 2009 and 2008 are as follows:



|                                                          |  |                                 |     |   |      |   |        |  
|--------------------------------------------------------- |  | ------------------------------- | --- | - | ---- | - | ------ | -
|                                                          |  | Nine Months Ended September 30, |    
|                                                          |  | 2009                            |     |   | 2008 |  
|                                                          |  | (Dollars in thousands)          |    
|Provision for tax benefit on pre-tax losses               |  | $                               | 271 |   |      | $ | 13,614 |  
|Provision for tax benefit on gain on sale of businesses   |  |                                 |    |   |      |   | 1,227  |  
|Change in liability for uncertain tax positions           |  |                                 | (13 | ) |      |   | (3,068 | )
|Changes in estimates included in prior year tax provision |  |                                 | 302 |   |      |   | 5,066  |  
|                                                          |  |                                 |     |   |      |   |        |  
|Total benefit for income taxes                            |  | $                               | 560 |   |      | $ | 16,839 |  
|                                                          |  |                                 |     |   |      |   |        |  

During the first quarter of 2008, we sold certain assets and liabilities of PRIMEDIA Healthcare,
resulting in a gain of $0.1 million, and shut down the remaining operations.

In the fourth quarter of 2007, we classified the results of
operations of our Auto Guides division as discontinued operations due to our intent to dispose of the Auto Guides division. During the first nine months of 2008, we sold certain assets and liabilities related to our Auto Guides division, resulting
in a gain of $1.3 million, net of tax benefits, and shut down the remaining operations.

As is more fully discussed in Note 16 to our
condensed consolidated financial statements, in 2005, we sold substantially all of the assets of Workplace Learning for the assumption of ongoing liabilities, while retaining a secondary liability as the assignor of the building and satellite time
leases. During the fourth quarter of 2009, we reassumed the building lease on behalf of Workplace Learning and entered into a sublease with the current tenant for a period of 51 months, with an early termination option, which would reduce the term
of the sublease to 17 months. The sublease provides for a monthly rent payment and a set reimbursement percentage for operating expenses. We are currently undertaking efforts to sublease additional vacant space in the building to further offset our
obligations under the lease. This transaction did not have a material impact on our recorded liability. Historically, each month, our liability has been reduced either by fulfilling our liability as lessee under the building lease or due to a
sub-lessees or successor-in-interests performance under the terms of the sublease, which results in income for us. During the nine months ended September 30, 2009 and 2008, as a result of the assignees or successor in
interests performance, we recorded $0.3 million and $2.6 million in income, respectively, which is included in discontinued operations.

In July 2007, we sold our PEM segment. In connection with the sale, we entered into a sublease agreement with the buyer for office space where PEM was headquartered. On April 27, 2009, the buyer filed a petition for reorganization
under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. In the bankruptcy proceedings, the sublease was rejected, a new sublease was entered into with the buyer at a reduced rate, and the
buyer put certain of the space back to us. As a result, during the second quarter of 2009, we recorded a charge of $2.7 million, which is included in discontinued operations, to adjust our remaining liability under our lease for all of the office
space, to record brokerage fees related to the new sublease and to write off certain amounts receivable from the buyer.

During the three
months ended September 30, 2008, the final adjustment to the net proceeds from the sale of PEM was recorded and resulted in an additional gain on sale of business of $0.6 million, net of tax benefits.



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During the nine months ended September 30, 2008, we recognized a tax benefit of $14.8 million in
discontinued operations, primarily as a result of our ability to carry back a projected 2008 NOL against taxes paid on a portion of the 2007 gain on divestitures of certain subsidiaries. The 2008 NOL arose primarily from the reversal of differences
between the carrying value and tax basis in a group of PRIMEDIA Healthcare intangible assets triggered by the sale of those assets during the nine months ended September 30, 2008. Further adjustments to the tax benefit reported in discontinued
operations related to the NOL carry back, and adjustments to our valuation allowance, are possible as estimations regarding 2008 taxable income change. We also recognized a tax benefit of $5.1 million in discontinued operations during the first nine
months of 2008, primarily as a result of changes in our estimate of our ability to utilize certain NOLs to offset 2007 taxable income.

Liquidity, Capital and Other Resources

During the first nine months of 2009, we reduced long-term debt by $15.9 million
through the repurchase and retirement of $14.0 million in outstanding principal of our Term Loan B Facility for $10.1 million, as well as $1.9 million in scheduled principal repayments. As of September 30, 2009, we had cash and cash equivalents
and unused credit facilities of $93.1 million.

In September 2008, we borrowed $13.2 million against our revolving credit facility.
We repaid $8.8 million of the amount outstanding in March 2009 and the remaining $4.4 million in June 2009. In early July 2009, we borrowed $5.0 million against our revolving credit facility and repaid the entire amount borrowed in late July 2009.
As is more fully explained under Financing Arrangements below, as of September 30, 2009, the remaining availability under our revolving credit facility is approximately $85.2 million, which gives effect to letters of credit outstanding.

We have required debt repayments, including capital leases, of $3.0 million during the next 12 months. We believe our liquidity, capital
resources and cash flows from operations are sufficient to fund planned capital expenditures, working capital requirements, interest and principal payments on our debt, dividend payments, and other anticipated expenditures, including obligations
that may arise from our efforts to terminate or modify certain of our RDAs and repayments of principal under our Term Loan B Facility and purchases of our common stock, if any, for the foreseeable future. We have no significant required debt
repayments until 2014.

Working Capital

Consolidated working capital, which includes current maturities of long-term debt, was $(14.4) million as of September 30, 2009, compared to $11.5 million as of December 31, 2008. The change was
primarily attributable to additional restructuring liabilities related to the restructuring of certain of our RDAs. See Note 12 to the condensed consolidated financial statements for more information.

Cash FlowNine Months Ended September 30, 2009 Compared to Nine Months Ended September 30, 2008

Net cash provided by operating activities was $17.9 million during the nine months ended September 30, 2009, compared to $4.0 million during the nine
months ended September 30, 2008. The increase was primarily due to the receipt of net income tax refunds of $19.6 million, partially offset by payments related to the settlement of lawsuits of $5.0 million, restructuring payments, RDA payments
as well as lower revenues during the first nine months of 2009. The difference is also attributable to the $11.4 million in payments made for income taxes during the first nine months of 2008.

Cash Flows from Investing Activities

Our
cash (used in) provided by investing activities is summarized as follows:



|                                                     |  |                                 |        |   |      |   |        |          |  |   |         |  
|---------------------------------------------------- |  | ------------------------------- | ------ | - | ---- | - | ------ | -------- |  | - | ------- | -
|                                                     |  | Nine Months Ended September 30, |        |   |      |  
|                                                     |  | 2009                            |        |   | 2008 |   |        | $ Change | 
|Proceeds from sales of available for sale securities |  | $                               |       |   |      | $ | 15,425 |          |  | $ | (15,425 | )
|Payments for investments                             |  |                                 |       |   |      |   | (14    | )        |  |   | 14      |  
|Proceeds from sale of cost-method investments        |  |                                 | 2,260  |   |      |   |       |          |  |   | 2,260   |  
|Additions to property and equipment                  |  |                                 | (7,667 | ) |      |   | (7,884 | )        |  |   | 217     |  
|Payments related to the sale of businesses           |  |                                 |       |   |      |   | (4,355 | )        |  |   | 4,355   |  
|Proceeds from sale of businesses                     |  |                                 |       |   |      |   | 2,369  |          |  |   | (2,369  | )
|                                                     |  |                                 |        |   |      |   |        |          |  |   |         |  
|Net cash (used in) provided by investing activities  |  | $                               | (5,407 | ) |      | $ | 5,541  |          |  | $ | (10,948 | )
|                                                     |  |                                 |        |   |      |   |        |          |  |   |         |  

The change in net cash used in investing activities was primarily due to the proceeds from the sale
of available for sale securities, partially offset by net payments related to the sale of businesses in the first nine months of 2008, proceeds from the sale of cost-method investments in the first nine months of 2009 and lower capital expenditures
during the nine months ended September 30, 2009.



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Cash Flows from Financing Activities

Our cash used in financing activities is summarized as follows:



|                                                                                                             |  |                                 |         |   |      |   |        |          |  |   |         |  
|------------------------------------------------------------------------------------------------------------ |  | ------------------------------- | ------- | - | ---- | - | ------ | -------- |  | - | ------- | -
|                                                                                                             |  | Nine Months Ended September 30, |         |   |      |  
|                                                                                                             |  | 2009                            |         |   | 2008 |   |        | $ Change | 
|                                                                                                             |  | (Dollars in thousands)          |        
|Payment of dividends on common stock                                                                         |  | $                               | (9,257  | ) |      | $ | (9,266 | )        |  | $ | 9       |  
|Net (repayments) borrowings under revolving credit facility                                                  |  |                                 | (13,200 | ) |      |   | 13,200 |          |  |   | (26,400 | )
|Payments for deferred and other financing fees                                                               |  |                                 | (512    | ) |      |   |       |          |  |   | (512    | )
|Payments for repurchase and redemption of debt                                                               |  |                                 | (10,080 | ) |      |   | (2,679 | )        |  |   | (7,401  | )
|Repayments of borrowings under credit agreements                                                             |  |                                 | (1,875  | ) |      |   | (1,875 | )        |  |   |        |  
|Capital lease payments                                                                                       |  |                                 | (477    | ) |      |   | (338   | )        |  |   | (139    | )
|(Payments) proceeds related to issuances of common stock, net of value of shares withheld for employee taxes |  |                                 | (173    | ) |      |   | 43     |          |  |   | (216    | )
|Repurchases of common stock                                                                                  |  |                                 | (427    | ) |      |   |       |          |  |   | (427    | )
|                                                                                                             |  |                                 |         |   |      |   |        |          |  |   |         |  
|Net cash used in financing activities                                                                        |  | $                               | (36,001 | ) |      | $ | (915   | )        |  | $ | (35,086 | )
|                                                                                                             |  |                                 |         |   |      |   |        |          |  |   |         |  

The increase in net cash used in financing activities was primarily attributable to net repayments
under our revolving credit facility of $13.2 million in the first nine months of 2009 compared to net borrowings under our revolving credit facility of $13.2 in the first nine months of 2008. In addition, net cash used in financing activities
increased due to a $7.4 million increase in payments for repurchase and redemption of long-term debt, $0.5 million in deferred and other financing fees, and $0.4 million in repurchases of common stock.

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 and equipment, net, exclusive of acquisitions, and capital lease payments.

We believe that the use of free cash flow enables our chief operating decision maker, our President and CEO, to make decisions based on our cash resources. We also believe that free cash flow provides
useful information to investors as it is considered to be an indicator of our liquidity, including our ability to reduce debt and make strategic investments.

Free cash flow is not intended to represent cash flows from operating activities as determined in conformity with generally accepted accounting principles. 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, it is not necessarily an accurate measure of comparison between companies.

The following table presents our free cash flow:



|                                          |  |                                |        |   |      |   |        |  
|----------------------------------------- |  | ------------------------------ | ------ | - | ---- | - | ------ | -
|                                          |  | Nine Months EndedSeptember 30, |       
|                                          |  | 2009                           |        |   | 2008 |  
|                                          |  | (Dollars in thousands)         |       
|Net cash provided by operating activities |  | $                              | 17,893 |   |      | $ | 4,035  |  
|Additions to property and equipment       |  |                                | (7,667 | ) |      |   | (7,884 | )
|Capital lease payments                    |  |                                | (477   | ) |      |   | (338   | )
|                                          |  |                                |        |   |      |   |        |  
|Free cash flow                            |  | $                              | 9,749  |   |      | $ | (4,187 | )
|                                          |  |                                |        |   |      |   |        |  

The improvement in free cash flow was primarily due to the settlement of post-Enthusiast Media sale
obligations of approximately $14.4 million in the first quarter of 2008. During the nine months ended September 30, 2009, we received net income tax refunds of $19.6 million. This was partially offset by a payment of $5.0 million in legal
settlements and overall lower revenue during 2009. We invested $7.7 million in capital expenditures in the first nine months of 2009, compared to $7.9 million in the first nine months of 2008. For purposes of calculating cash provided by or used in
operating activities, discontinued operations are included until sold or shut down; therefore, these discontinued operations did not contribute to operating activities for the full year in which the sale occurred.

Financing Arrangements

Bank Credit
Facilities

Our bank credit facility provides for two loan facilities: (1) a revolving credit facility with aggregate commitments of
$88.0 million (the Revolving Facility), which matures on August 1, 2013, and (2) a Term Loan B credit facility (the Term Loan B Facility), which matures on August 1, 2014 (the Term Loan B Maturity
Date).



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Amounts borrowed under the Revolving Facility bear interest, at our option, at an annual rate of either the
base rate plus an applicable margin ranging from 0.625% to 1.00% or the eurodollar rate plus an applicable margin ranging from 1.625% to 2.00%. The interest rate on the Revolving Facility at September 30, 2009 was 2.00%. The Term Loan B
Facility bears interest, at our option, at an annual rate of either the base rate plus an applicable margin ranging from 1.00% to 1.25% or the eurodollar rate plus an applicable margin ranging from 2.00% to 2.25%. Approximately $200.0 million of the
outstanding balance of the Term Loan B Facility is based on the three-month eurodollar rate plus the applicable margin. The remaining $31.6 million outstanding balance is based on the one-month eurodollar rate plus the applicable margin. The
weighted-average interest rate on the Term Loan B Facility at September 30, 2009 was 2.53%.

On June 30, 2009, our bank credit
facility was amended (the Amendment). Among other things, the Amendment gives us the right, subject to the conditions set forth therein, to prepay or otherwise acquire with or for cash, on either a pro rata or non-pro rata basis,
principal outstanding under the Term Loan B Facility and held by lenders who consent to such prepayment or acquisition, at a discount to the par value of such principal at any time and from time to time on and after June 30, 2009 and on or
prior to the second anniversary of such date; provided that the aggregate amounts we expend in connection with all such prepayments or acquisitions do not exceed $35 million. All such principal prepaid or acquired will be retired and extinguished
and deemed paid effective upon such prepayment or acquisition.

The Amendment also memorializes the reduction of the Revolving Facility
commitment of Lehman Commercial Paper Inc., a subsidiary of Lehman Brothers Inc. (Lehman) to $0.0 million and, as a consequence thereof, the total capacity under the Revolving Facility has now been confirmed to have been reduced by $12.0
million to $88.0 million. We believed and have previously disclosed that the total capacity under the Revolving Facility had been effectively reduced by $12.0 million as a result of bankruptcy proceedings related to Lehman Brothers Holdings Inc.,
the parent company of Lehman. The commitment under the Revolving Facility for each other lender remains unchanged from each such lenders commitment immediately prior to such reduction. Additionally, effective June 30, 2009, Lehman ceased
to be a co-documentation agent under the bank credit facility.

In connection with the Amendment, we incurred approximately $0.5 million in
modification fees, which were paid to the creditors and will be expensed over the remaining term of the loan.

There are no scheduled
commitment reductions under the Revolving Facility. The loan under the Term Loan B Facility is subject to scheduled repayment in quarterly installments of $0.6 million payable on March 31, June 30, September 30 and December 31 of
each year. The final quarterly installment is scheduled to be paid on June 30, 2014, followed by a final repayment of $219.8 million on the Term Loan B Maturity Date. Additionally, through August 1, 2009, we were required to manage our
interest rate risk arising from the Term Loan B Facility through the utilization of derivative financial instruments in a notional amount equal to at least 35% of the Term Loan B Facility principal outstanding.

The bank credit facilities consisted of the following as of September 30, 2009:



|                              |  |                        |        |   |            |   |          |       |  |   |          |  
|----------------------------- |  | ---------------------- | ------ | - | ---------- | - | -------- | ----- |  | - | -------- | -
|                              |  | RevolvingFacility      |        |   | TermLoan B |   |          | Total | 
|                              |  | (Dollars in thousands) |       
|Bank credit facilities        |  | $                      | 88,000 |   |            | $ | 231,625  |       |  | $ | 319,625  |  
|Borrowings outstanding        |  |                        |       |   |            |   | (231,625 | )     |  |   | (231,625 | )
|Letters of credit outstanding |  |                        | (2,826 | ) |            |   |         |       |  |   | (2,826   | )
|                              |  |                        |        |   |            |   |          |       |  |   |          |  
|Unused bank commitments       |  | $                      | 85,174 |   |            | $ |         |       |  | $ | 85,174   |  
|                              |  |                        |        |   |            |   |          |       |  |   |          |  

The weighted-average of our commitment fees under the bank credit facilities during the three months
ended September 30, 2009 was 0.34%.

The bank credit facilities agreement, among other things, limits our ability to change the nature of
our businesses, incur indebtedness, create liens, sell assets, engage in mergers, consolidations or transactions with affiliates, make investments in or loans to certain subsidiaries, issue guarantees and make certain restricted payments, including
dividend payments on or repurchases of our common stock.

Term Loan B Facility Repurchase. On June 30, 2009, we repurchased and
retired $14.0 million in principal of our Term Loan B Facility for $10.1 million. In connection with the repurchase, we also wrote off $0.3 million in deferred financing fees, resulting in a net gain of $3.6 million, which is included in other
income, net in the condensed consolidated statement of operations.

Revolving Facility Borrowings. In September 2008, we borrowed $13.2
million against our Revolving Facility. We repaid $8.8 million of the outstanding balance in March 2009 and the remaining $4.4 million in June 2009. In early July 2009, we borrowed $5.0 million against our Revolving Facility and repaid the entire
amount borrowed in late July 2009.



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Contractual Obligations

Our contractual obligations as of September 30, 2009 are as follows:



|                                                          |  |                        |         |                        |   |           |  |               |        |  |   |         |  |   |       
|--------------------------------------------------------- |  | ---------------------- | ------- | ---------------------- | - | --------- |  | ------------- | ------ |  | - | ------- |  | - | ------
|Contractual Obligations                                   |  | Total                  |         | Payments Due by Period
|                                                          |  | Less than 1year        |         | 1-3 years              |   | 4-5 years |  | After 5 years
|                                                          |  | (Dollars in thousands)
|Long-term debt obligations, including current portion (1) |  | $                      | 231,625 |                        | $ | 2,500     |  | $             | 5,000  |  | $ | 224,125 |  | $ |      
|Capital lease obligations, including current portion      |  |                        | 701     |                        |   | 464       |  |               | 237    |  |   |        |  |   |      
|Interest on capital lease obligations                     |  |                        | 127     |                        |   | 109       |  |               | 18     |  |   |        |  |   |      
|Operating lease obligations (2)                           |  |                        | 113,479 |                        |   | 19,872    |  |               | 36,791 |  |   | 32,817  |  |   | 23,999
|Retail display allowances (3)                             |  |                        | 31,614  |                        |   | 27,393    |  |               | 4,221  |  |   |        |  |   |      
|Workplace Learning operating lease obligations (4)        |  |                        | 9,233   |                        |   | 2,059     |  |               | 3,834  |  |   | 3,340   |  |   |      
|                                                          |  |                        |         |                        |   |           |  |               |        |  |   |         |  |   |       
|Total                                                     |  | $                      | 386,779 |                        | $ | 52,397    |  | $             | 50,101 |  | $ | 260,282 |  | $ | 23,999
|                                                          |  |                        |         |                        |   |           |  |               |        |  |   |         |  |   |       



|(1) | Interest related to our long-term debt obligations are variable in nature, and interest payments have been excluded from this table. The interest rate on these
obligations resets quarterly and had a weighted-average rate of 2.53% at September 30, 2009. See the discussion above under Bank Credit Facilities. Liabilities for interest rate swaps designated in cash flow hedging relationships against
changes in the benchmark interest rate of our long-term debt have also been excluded from this table because the quarterly fixed-rate payments due to the counterparty are settled net of the variable-rate payments due to us by the counterparty.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Future rental commitments for operating leases have not been reduced by minimum noncancelable sublease income aggregating $51.1 million as of September 30, 2009.
Operating lease obligations include restructuring liabilities.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Retail display allowances include restructuring liabilities.
|--- | ------------------------------------------------------------



|(4) | Amounts represent the present value of expected future net payments related to Workplace Learning office lease obligations. See Note 16 to the condensed
consolidated financial statements for further detail.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The contractual obligations table above does not reflect any of our $87.1
million in unrecognized tax benefits at September 30, 2009, which resulted in a recorded liability of $22.4 million that has been accrued in accordance with GAAP related to accounting for uncertainty in income taxes, because we are unable to
determine when, or if, payment of these amounts will be made.

The bank credit facilities rank senior in right of payment to all subordinated
obligations which PRIMEDIA Inc. (a holding company) may incur.

We have no balance outstanding at September 30, 2009 under our Revolving
Facility, and we have other commitments in the form of letters of credit of $2.8 million aggregate face value, which expire on or before September 30, 2010.

A change in the rating of our debt instruments by outside rating agencies does not negatively impact our ability to use our available lines of credit or the borrowing rate under our bank credit
facilities. As of June 2009, our senior debt ratings from Moodys and Standard and Poors were Ba3 and B+, respectively.

We
announced on November 5, 2009 that our Board of Directors had authorized a cash dividend of $0.07 per share of common stock, payable on or about December 2, 2009, to stockholders of record on November 16, 2009. We expect to pay this
dividend out of our existing cash balance. Additionally, we currently expect that we will continue to pay a regular quarterly dividend for the foreseeable future, at the discretion of our Board of Directors, dependent on factors, including but not
limited to, available cash, anticipated cash needs, overall financial and market conditions, future prospects for cash flow and such other factors as are deemed relevant by our Board of Directors.

Off Balance Sheet Arrangements

We have no
variable interest entities or off balance sheet debt other than as related to operating leases in the ordinary course of business.

Covenant Compliance

Under the most restrictive covenants contained in our bank credit facilities agreement, the maximum
allowable total leverage ratio, as defined in the agreement, is 5.25 to 1 and was approximately 3.0 to 1 at September 30, 2009.



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Contingencies and Other

We are involved in lawsuits and claims, both actual and potential, including some that we have asserted against others, in which substantial monetary damages are sought. See Note 16, Commitments and
Contingencies, to the condensed consolidated financial statements in Item 1 of this Report for a description of certain of these lawsuits and payments made in settlement of certain lawsuits. As discussed in Note 16, although the result of
any future litigation of such lawsuits and claims is inherently unpredictable, management believes that, in the aggregate, the outcome of all such lawsuits and claims will not have a material effect on our consolidated financial position or
liquidity; however, any such outcome could be material to the results of operations of any particular period in which costs, if any, are recognized.

Critical Accounting Policies and Estimates

There have been no changes in our Critical Accounting Polices and Estimates
since December 31, 2008.

Recent Accounting Developments

See Note 1, Summary of Significant Accounting Policies  Recent Accounting Pronouncements, to the condensed consolidated financial statements, contained elsewhere in this Report.

Seasonality

Our operations
are minimally seasonal in nature.



| |  |  | The majority of our advertising and distribution revenue is comprised of contracts with a duration of 12 months or longer.
| | - |  | --------------------------------------------------------------------------------------------------------------------------



| |  |  | We experience modest seasonality in our single-unit real estate listings as that business declines in the winter months. This business represents a
relatively small part of our total operations.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Item 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------

Interest Rate Risk

We are exposed to the impact of changes in interest rates,
primarily through our Term Loan B Facility, which is variable-rate debt that had an outstanding balance of $231.6 million as of September 30, 2009. As part of our management of interest rate risk, we have designated derivative financial
instruments in hedging relationships against the variability in cash flows due to changes in the benchmark interest rate on our Term Loan B Facility. The table below shows the change in interest expense we estimate would occur over the next 12
months from 50 and 100 basis point increases and decreases in interest rates based upon our current Term Loan B Facility balance and derivative financial instrument positions as of September 30, 2009. Such potential increases or decreases are
based on certain simplifying assumptions, including a constant level of debt and an immediate, across-the-board increase or decrease in the level of interest rates with no other subsequent changes for one year.



|                                       |  |                           |      |  
|-------------------------------------- |  | ------------------------- | ---- | -
|Interest Rate Change (in Basis Points) |  | Change in InterestExpense |     
|(Dollars in thousands)                 | 
|+100                                   |  | $                         | 369  |  
|+50                                    |  |                           | 185  |  
|-50                                    |  |                           | (185 | )
|-100                                   |  |                           | (369 | )

Credit Risk

Our hedging transactions using derivative financial instruments also involve certain additional risks, such as counterparty credit risk. The counterparties to our derivative financial instruments are
major financial institutions and securities dealers, which we believe are well capitalized with investment grade credit ratings and with which we may have other financial relationships. While we do not anticipate nonperformance by any counterparty,
we are exposed to potential credit losses in the event the counterparty fails to perform. Our exposure to credit risk in the event of default by a counterparty is the difference between the value of the contract and the current market price at the
time of the default. There can be no assurance that we will be able to adequately protect against the foregoing risks and will ultimately realize an economic benefit that exceeds the related expenses incurred in connection with engaging in such
hedging strategies.



|Item 4. | CONTROLS AND PROCEDURES
|------- | -----------------------

We maintain
disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934 (the Exchange Act) is recorded, processed,
summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer
(principal executive officer) and Chief



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##### Table of Contents

Financial Officer (principal financial officer), to allow timely decisions regarding required disclosure. We have established a Disclosure Committee, consisting of certain members of management,
to assist in this evaluation. The Disclosure Committee meets on a regular quarterly basis and as needed.

Our management, including our Chief
Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) as of September 30, 2009. Based
on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2009, our disclosure controls and procedures were effective.

There was no change in internal control over financial reporting during the quarter ended September 30, 2009 that has materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.



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##### Table of Contents

PART II. OTHER INFORMATION



|Item 1A. | RISK FACTORS
|-------- | ------------

There have been no material
changes to the Companys risk factors during the nine months ended September 30, 2009.



|Item 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|------- | -----------------------------------------------------------

Issuer Purchases of Equity Securities

Our Board of Directors has authorized a program (the
Repurchase Program) to repurchase up to $5.0 million of our common stock through December 31, 2010. Under the terms of the Repurchase Program, we may repurchase shares in open market purchases or through privately negotiated
transactions. We expect to use cash on hand to fund repurchases of our common stock. As of December 31, 2008, we had not repurchased any shares under the Repurchase Program. During the three months ended March 31, 2009, we repurchased
0.2 million shares of our common stock for approximately $0.4 million at a weighted-average price (including brokerage commissions) of $1.79 per share. We did not repurchase any additional shares of our common stock during the nine months ended
September 30, 2009. The reacquired shares have been designated as treasury shares. As of September 30, 2009, we had $4.6 million available under the Repurchase Program for further share repurchases, which we may make.



|Item 6. | EXHIBITS
|------- | --------

(a)



|              |  |                                                                                                                                               
|------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                   
|              | 
|31.1          |  | Certification by Charles J. Stubbs Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(*)                                               
|              | 
|31.2          |  | Certification by Kim R. Payne Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(*)                                                    
|              | 
|32.1          |  | Certification by Charles J. Stubbs Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(*)
|              | 
|32.2          |  | Certification by Kim R. Payne Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(*)     



|(*) | Filed herewith.
|--- | ---------------



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



|                       |  |                                                  
|---------------------- |  | -------------------------------------------------
|                       |  | PRIMEDIA Inc.                                    
|                       |  | (Registrant)                                     
|                       | 
|Date: November 9, 2009 |  | /s/ CHARLES J. STUBBS                            
|                       |  | (Charles J. Stubbs)                              
|                       |  | President and Chief Executive Officer            
|                       |  | (Principal Executive Officer)                    
|                       | 
|Date: November 9, 2009 |  | /s/ KIM R. PAYNE                                 
|                       |  | (Kim R. Payne)                                   
|                       |  | Senior Vice President and Chief Financial Officer
|                       |  | (Principal Financial Officer)                    



39