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**UNITED STATES**SECURITIES AND EXCHANGE COMMISSION

**Washington,D.C. 20549**

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**FORM 10-Q**

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**QUARTERLY REPORT PURSUANTTO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934**

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**For the quarterly periodended: March 31, 2006**

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**Commissionfile number: 1-11106**

**PRIMEDIA Inc.**(Exactname of registrant as specified in its charter)

| **Delaware**                     |   | **13-3647573**       |
|----------------------------------|--------|----------------------|
| (State or other  jurisdiction of |   | (I.R.S. Employer     |
| incorporation or  organization)  |   | Identification  No.) |

 

**745 Fifth Avenue, New York, New York**(Address of principal executive offices)

**10151**(Zip Code)

Registrant’s telephonenumber, including area code   **(212)745-0100**

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

Indicate by check mark whether the registrant is alarge accelerated filer, an accelerated filer, or a non-accelerated filer (asdefined in Rule 12b-2 of the Exchange Act).

Large accelerated filer  o                          Accelerated filer  x                            Non-acceleratedfiler  o

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

Number of shares of common stock, par value $.01 pershare, of PRIMEDIA Inc. outstanding as of April 30, 2006: 264,011,416

 

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**PRIMEDIA Inc.**

***INDEX***
|                                         | ** ** | ** ** | ** ** | ** **                                                                                                           | ** ** | ** ** |
|-----------------------------------------|------------|------------|------------|----------------------------------------------------------------------------------------------------------------------|------------|------------|
| **Part I. Financial Information:** |       |       |
|                                    | ** ** | ** ** |       | ** **                                                                                                           |       |       |
|                                    |       | Item 1.    |       | Financial  Statements                                                                                                |       |       |
|                                    |       |       |       |                                                                                                                 |       |       |
|                                    |       |       |       | Condensed Consolidated Balance Sheets (Unaudited) as  of March 31, 2006 and December 31, 2005              |       | 2          |
|                                    |       |       |       |                                                                                                                 |       |       |
|                                    |       |       |       | Condensed Statements of Consolidated Operations  (Unaudited) for the three months ended March 31, 2006 and 2005 |       | 3          |
|                                    |       |       |       |                                                                                                                 |       |       |
|                                    |       |       |       | Condensed Statements of Consolidated Cash Flows  (Unaudited) for the three months ended March 31, 2006 and 2005 |       | 4          |
|                                    |       |       |       |                                                                                                                 |       |       |
|                                    |       |       |       | Notes to Condensed Consolidated Financial Statements  (Unaudited)                                                    |       | 5          |
|                                    |       |       |       |                                                                                                                 |       |       |
|                                    |       | Item 2.    |       | Management’s  Discussion and Analysis of Financial Condition and Results of Operations                          |       | 25         |
|                                    |       |       |       |                                                                                                                 |       |       |
|                                    |       | Item 3.    |       | Quantitative  and Qualitative Disclosures about Market Risk                                                          |       | 42         |
|                                    |       |       |       |                                                                                                                 |       |       |
|                                    |       | Item 4.    |       | Controls and  Procedures                                                                                             |       | 42         |
|                                    |       |       |       |                                                                                                                 |       |       |
| **Part II.  Other Information:**   |       |       |
|                                    | ** ** | ** ** |       | ** **                                                                                                           |       |       |
|                                    |       | Item  6.   |       | Exhibits                                                                                                             |       | 43         |
|                                    |       |       |       |                                                                                                                 |       |       |
|                                    |       |       |       | Signatures                                                                                                           |       | 43         |

 

1

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**PRIMEDIA INC. ANDSUBSIDIARIESCondensed Consolidated Balance Sheets (Unaudited)(in thousands, except share and per share amounts)**
| ** **                                                                                                                                                                                              | ** ** | **March 31,  2006** | ** ** | **December 31,  2005** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| **ASSETS**                                                                                                                                                                                              |       |                     |       |                        |       |
| Current assets:                                                                                                                                                                                         |       |                     |       |                        |       |
| Cash and cash equivalents                                                                                                                                                                               |       | $                        | 6,596      |                        | $          | 7,255 |   |
| Accounts receivable, net                                                                                                                                                                                |       | 139,647                  |       | 134,773                     |       |
| Inventories                                                                                                                                                                                             |       | 20,754                   |       | 21,212                      |       |
| Prepaid expenses and other                                                                                                                                                                              |       | 40,924                   |       | 29,722                      |       |
| Assets held for sale                                                                                                                                                                                    |       | 111,083                  |       | 109,129                     |       |
| Total current assets                                                                                                                                                                                    |       | 319,004                  |       | 302,091                     |       |
|                                                                                                                                                                                                    |       |                     |       |                        |       |
| Property and  equipment (net of accumulated depreciation and amortization of $227,951 in  2006 and $226,600 in 2005)                                                                                    |       | 53,215                   |       | 56,868                      |       |
| Intangible  assets, net                                                                                                                                                                                 |       | 226,007                  |       | 231,404                     |       |
| Goodwill                                                                                                                                                                                                |       | 775,960                  |       | 763,177                     |       |
| Other  non-current assets                                                                                                                                                                               |       | 28,434                   |       | 35,928                      |       |
| Total Assets                                                                                                                                                                                            |       | $                        | 1,402,620  |                        | $          | 1,389,468 |   |
|                                                                                                                                                                                                    |       |                     |       |                        |       |
| **LIABILITIES AND SHAREHOLDERS'  DEFICIENCY**                                                                                                                                                           |       |                     |       |                        |       |
| Current liabilities:                                                                                                                                                                                    |       |                     |       |                        |       |
| Accounts payable                                                                                                                                                                                        |       | $                        | 55,638     |                        | $          | 52,984 |   |
| Accrued expenses and other                                                                                                                                                                              |       | 130,543                  |       | 122,319                     |       |
| Deferred revenues                                                                                                                                                                                       |       | 115,203                  |       | 107,940                     |       |
| Current maturities of long-term debt                                                                                                                                                                    |       | 6,668                    |       | 7,677                       |       |
| Liabilities of businesses held for sale                                                                                                                                                                 |       | 33,078                   |       | 33,203                      |       |
| Total current liabilities                                                                                                                                                                               |       | 341,130                  |       | 324,123                     |       |
|                                                                                                                                                                                                    |       |                     |       |                        |       |
| Long-term debt                                                                                                                                                                                          |       | 1,449,186                |       | 1,456,770                   |       |
| Deferred  revenues                                                                                                                                                                                      |       | 14,025                   |       | 14,447                      |       |
| Deferred income  taxes                                                                                                                                                                                  |       | 84,990                   |       | 87,655                      |       |
| Other  non-current liabilities                                                                                                                                                                          |       | 76,244                   |       | 78,202                      |       |
| Total Liabilities                                                                                                                                                                                       |       | 1,965,575                |       | 1,961,197                   |       |
|                                                                                                                                                                                                    |       |                     |       |                        |       |
| Commitments and  contingencies (Note 12)                                                                                                                                                                |       |                     |       |                        |       |
|                                                                                                                                                                                                    |       |                     |       |                        |       |
| Shareholders'  deficiency:                                                                                                                                                                              |       |                     |       |                        |       |
| Common stock ($.01 par value, 350,000,000 shares authorized  at March 31, 2006 and December 31, 2005; 272,328,882 and 272,158,878 shares  issued at March 31, 2006 and December 31, 2005, respectively) |       | 2,724                    |       | 2,722                       |       |
| Additional paid-in capital (including warrants of  $31,690 at March 31, 2006 and December 31, 2005)                                                                                                     |       | 2,363,881                |       | 2,363,071                   |       |
| Accumulated deficit                                                                                                                                                                                     |       | (2,853,683               | )          | (2,861,645                  | )          |
| Common stock in treasury, at cost (8,442,409 shares  at March 31, 2006 and December 31, 2005)                                                                                                 |       | (75,877                  | )          | (75,877                     | )          |
| Total Shareholders' Deficiency                                                                                                                                                                          |       | (562,955                 | )          | (571,729                    | )          |
| Total Liabilities and Shareholders' Deficiency                                                                                                                                                          |       | $                        | 1,402,620  |                        | $          | 1,389,468 |   |

** **

See notes to condensed consolidated financialstatements (unaudited).

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**PRIMEDIA INC. ANDSUBSIDIARIESCondensed Statements of Consolidated Operations (Unaudited)(in thousands, except share and per share amounts)**
| ** **                                                                                                                                       | ** ** | **Three Months Ended March 31,** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                                                                                                                       | ** ** | **2006**                                             | ** ** | **2005** | ** ** |
| Revenues, net:                                                                                                                                   |       |                                                 |       |   |   |
| Advertising                                                                                                                                      |       | $                                                    | 154,131    |   | $ | 150,877 |   |
| Circulation                                                                                                                                      |       | 49,005                                               |       | 49,368 |   |
| Other                                                                                                                                            |       | 38,255                                               |       | 28,520 |   |
| Total revenues, net                                                                                                                              |       | 241,391                                              |       | 228,765 |   |
|                                                                                                                                             |       |                                                 |       |   |   |
| Operating costs and  expenses:                                                                                                                   |       |                                                 |       |   |   |
| Cost of goods sold (exclusive of depreciation of  property and equipment)                                                                        |       | 56,483                                               |       | 46,549 |   |
| Marketing and selling                                                                                                                            |       | 48,273                                               |       | 47,622 |   |
| Distribution, circulation and fulfillment                                                                                                        |       | 48,601                                               |       | 45,904 |   |
| Editorial                                                                                                                                        |       | 17,148                                               |       | 16,786 |   |
| Other general expenses                                                                                                                           |       | 32,293                                               |       | 30,904 |   |
| Corporate administrative expenses (including  non-cash compensation of $918 and $1,201 in 2006 and 2005, respectively)                           |       | 7,345                                                |       | 7,771 |   |
| Depreciation of property and equipment                                                                                                           |       | 6,605                                                |       | 6,026 |   |
| Amortization of intangible assets and other                                                                                                      |       | 2,958                                                |       | 2,202 |   |
| Provision for severance, closures and restructuring  related costs                                                                               |       | 376                                                  |       | 1,033 |   |
|                                                                                                                                             |       |                                                 |       |   |   |
| Operating income                                                                                                                                 |       | 21,309                                               |       | 23,968 |   |
|                                                                                                                                             |       |                                                 |       |   |   |
| Other income (expense):                                                                                                                          |       |                                                 |       |   |   |
| Interest expense                                                                                                                                 |       | (30,826                                              | )          | (33,121 | ) |
| Interest on shares subject to mandatory redemption                                                                                               |       | —                                               |       | (10,945 | ) |
| Amortization of deferred financing costs                                                                                                         |       | (659                                                 | )          | (1,334 | ) |
| Other income, net                                                                                                                                |       | 158                                                  |       | 671 |   |
|                                                                                                                                             |       |                                                 |       |   |   |
| Loss from  continuing operations before benefit (provision) for income taxes                                                                     |       | (10,018                                              | )          | (20,761 | ) |
| Benefit  (provision) for income taxes                                                                                                            |       | 1,150                                                |       | (3,648 | ) |
|                                                                                                                                             |       |                                                 |       |   |   |
| Loss from  continuing operations                                                                                                                 |       | (8,868                                               | )          | (24,409 | ) |
|                                                                                                                                             |       |                                                 |       |   |   |
| Discontinued  operations, net of tax (including gain on sale of businesses, net of tax, of  $13,707 and $383,178 in 2006 and 2005, respectively) |       | 16,808                                               |       | 389,923 |   |
| Cumulative effect of  change in accounting principle (from the adoption of Statement of                                                          |       |                                                 |       |   |   |
| Financial  Accounting Standards No. 123 (R))                                                                                                     |       | 22                                                   |       | — |   |
| Net income                                                                                                                                       |       | $                                                    | 7,962      |   | $ | 365,514 |   |
|                                                                                                                                             |       |                                                 |       |   |   |
| Basic and diluted  income (loss) per common share:                                                                                               |       |                                                 |       |   |   |
| Continuing operations                                                                                                                            |       | $                                                    | (0.03      | ) | $ | (0.09 | ) |
| Discontinued operations                                                                                                                          |       | 0.06                                                 |       | 1.48 |   |
| Net income                                                                                                                                       |       | $                                                    | 0.03       |   | $ | 1.39 |   |
|                                                                                                                                             |       |                                                 |       |   |   |
| Basic and  diluted common shares outstanding (weighted average)                                                                                  |       | 263,773,104                                          |       | 262,661,656 |   |

 

See notes to condensed consolidated financialstatements (unaudited).

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**PRIMEDIA INC. ANDSUBSIDIARIESCondensed Statements of Consolidated Cash Flows (Unaudited)(in thousands)**
| ** **                                                                         | ** ** | **Three Months Ended March 31,** | ** ** |
|------------------------------------------------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                                                         | ** ** | **2006**                                             | ** ** | **2005** | ** ** |
| **Operating activities:**                                                          |       |                                                 |       |   |   |
| Net income                                                                         |       | $                                                    | 7,962      |   | $ | 365,514 |   |
| Cumulative effect of a change in accounting  principle                             |       | (22                                                  | )          | — |   |
| Adjustments to reconcile net income to net cash  provided by  operating activities |       | (5,217                                               | )          | (365,002 | ) |
| Changes in operating assets and liabilities                                        |       | 5,101                                                |       | 4,094 |   |
| Net cash provided by operating activities                                          |       | 7,824                                                |       | 4,606 |   |
|                                                                               |       |                                                 |       |   |   |
| **Investing activities:**                                                          |       |                                                 |       |   |   |
| Additions to property, equipment and other                                         |       | (4,730                                               | )          | (5,891 | ) |
| Proceeds from sales of businesses                                                  |       | 17,000                                               |       | 431,306 |   |
| Payments for businesses acquired, net of cash  acquired                            |       | (12,317                                              | )          | (7,820 | ) |
| Net cash (used in) provided by investing activities                                |       | (47                                                  | )          | 417,595 |   |
|                                                                               |       |                                                 |       |   |   |
| **Financing activities:**                                                          |       |                                                 |       |   |   |
| Borrowings under credit agreements                                                 |       | 69,600                                               |       | 63,150 |   |
| Repayments of borrowings under credit agreements                                   |       | (70,100                                              | )          | (131,650 | ) |
| Payments for repurchases of senior notes                                           |       | (6,832                                               | )          | — |   |
| Proceeds from issuances of common stock                                            |       | 246                                                  |       | 1,074 |   |
| Deferred financing costs paid                                                      |       | —                                               |       | (62 | ) |
| Capital lease payments                                                             |       | (1,296                                               | )          | (2,073 | ) |
| Other                                                                              |       | (54                                                  | )          | (51 | ) |
| Net cash used in financing activities                                              |       | (8,436                                               | )          | (69,612 | ) |
|                                                                               |       |                                                 |       |   |   |
| (Decrease) increase  in cash and cash equivalents                                  |       | (659                                                 | )          | 352,589 |   |
| Cash and cash  equivalents, beginning of period                                    |       | 7,255                                                |       | 13,000 |   |
| Cash and cash  equivalents, end of period                                          |       | $                                                    | 6,596      |   | $ | 365,589 |   |
|                                                                               |       |                                                 |       |   |   |
| **Supplemental information:**                                                      |       |                                                 |       |   |   |
| Cash interest paid, including interest on capital  and restructured leases         |       | $                                                    | 16,033     |   | $ | 14,256 |   |
| Cash interest paid on shares subject to mandatory  redemption                      |       | $                                                    | —     |   | $ | 10,945 |   |
| Cash taxes paid, net of refunds received                                           |       | $                                                    | 4,079      |   | $ | 58 |   |
| Cash paid for severence, closures and restructuring  related costs                 |       | $                                                    | 1,666      |   | $ | 4,503 |   |
| Businesses  acquired:                                                              |       |                                                 |       |   |   |
| Fair value of assets acquired                                                      |       | $                                                    | 14,315     |   | $ | 7,888 |   |
| (Liabilities assumed) net of deferred purchase price  payments                     |       | (1,998                                               | )          | (68 | ) |
| Payments for businesses acquired, net of cash  acquired                            |       | $                                                    | 12,317     |   | $ | 7,820 |   |

** **

See notes to condensed consolidated financialstatements (unaudited).

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**PRIMEDIA INC. ANDSUBSIDIARIESNotes to Condensed Consolidated Financial Statements (Unaudited)(in thousands, except share and per share amounts)**

**1.   Summaryof Significant Accounting Policies**

***Basis of Presentation***

PRIMEDIA Inc., together with its subsidiaries, isherein referred to as either “PRIMEDIA” or the “Company” unless the contextimplies otherwise. In the opinion of the Company’s management, the condensedconsolidated financial statements present fairly the consolidated financialposition of the Company as of March 31, 2006 and December 31, 2005,the results of consolidated operations of the Company for the three monthsended March 31, 2006 and 2005, and consolidated cash flows of the Companyfor the three months ended March 31, 2006 and 2005. The adjustments(consisting of normal recurring accruals) considered necessary for a fairpresentation have been included. The condensed consolidated balance sheet as ofDecember 31, 2005 has been derived from the Company’s audited consolidatedbalance sheet included in the Company’s annual report on Form 10-Kfor the year ended December 31, 2005. All intercompany accounts andtransactions have been eliminated in consolidation. These statements should beread in conjunction with the Company’s annual consolidated financial statementsand related notes for the year ended December 31, 2005, which are includedin the Company’s Annual Report on Form 10-K for the year ended December 31,2005. The operating results for the three months ended March 31, 2006 arenot necessarily indicative of the results that may be expected for a full year.Certain amounts in the prior periods’ condensed consolidated financial statementsand related notes have been reclassified to conform to the presentation as ofand for the three months ended March 31, 2006.

***Stock-Based Compensation***

TheCompany has a stock-based employee compensation plan which is describedin Note 9. Prior to January 1, 2006, the Company accounted forstock based compensation using the Financial Accounting Standards Board’s (“FASB”)Statement of Financial Accounting Standards No. 123 (“SFAS No. 123”),“Accounting for Stock-Based Compensation” as amended by SFAS No. 148, “Accounting forStock-Based Compensation-Transition and Disclosure”, under theprospective method. Upon adoption, the Company began expensing the fair valueof stock-based compensation for all grants, modifications or settlementsmade on or after January 1, 2003. Effective January 1, 2006, theCompany adopted the provisions of, and account for stock-basedcompensation in accordance with, the FASB Statement of Financial AccountingStandards No. 123—revised 2004 (“SFAS No. 123(R)”), “Share-BasedPayment”, which replaced SFAS No. 123 and supersedes APB Opinion No. 25,“Accounting for Stock Issued to Employees.” Under the fair value recognitionprovisions of this statement, stock-based compensation cost is measured at thegrant date based on the fair value of the award and is recognized as expense ona straight-line basis over the requisite service period, which is the vestingperiod. The Company elected the modified prospective method, under which priorperiods are not revised for comparative purposes. The modified prospectivetransition method requires recognition of compensation expense from thebeginning of the fiscal period in which the recognition provisions are firstapplied as if the fair-value-based accounting method had been used to accountfor all employees awards granted, modified, or settled after the effective dateand to any awards that were not fully vested as of the effective date. Theadoption of SFAS No. 123(R) did not have a material impact on theCompany’s consolidated financial position, results of operations and cash flows.See Note 9 for further information.

***Recent Accounting Pronouncements***

During the first quarter of 2006 there were noaccounting pronouncements adopted that will have a material impact on theCompany’s consolidated financial statements.

**2.   Divestitures**

The Company has classified the results of certaindivested entities as discontinued operations in accordance with SFAS No. 144,“Accounting for the Impairment or Disposal of Long-Lived Assets”.

On March 18, 2005, the Company completed the saleof About.com, part of the Enthusiast Media segment, the results of which havebeen classified as discontinued operations for the period up to the date ofsale. Gross proceeds from the sale of approximately $410,600 were used toreduce the Company’s borrowings under its 

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revolving bank creditfacilities and for general corporate purposes. The Company recorded a net gainon the sale of About.com of $378,906 included in discontinued operations forthe three months ended March 31, 2005.

On March 31, 2005, the Company completed the saleof Bankers Training & Consulting Company, the financial servicesdivision of Workplace Learning. The Company recorded a net gain ofapproximately $4,298 included in discontinued operations for the three monthsended March 31, 2005.  On April 1,2005, the Company sold the remaining net assets of Workplace Learning for theassumption of liabilities. The operating results of Workplace Learning havebeen classified as discontinued operations for the period up to the date ofsale.

On September 30, 2005, the Company sold itsBusiness Information Segment for approximately $385,000, and during the fourthquarter of 2005, the Company sold Ward’s Automotive Group (“Ward’s”). Theoperating results of the Business Information segment, including Ward’s, havebeen classified as discontinued operations for the periods up to the date ofsale.  Additionally, during the thirdquarter of 2005, the Company discontinued the operations of two magazines inthe Enthusiast Media segment. Their operating results have been classified asdiscontinued operations for the period up to the date the two magazines werediscontinued. The net proceeds from these sales are subject to routinepost-closing adjustments.

During the fourth quarter of 2005, the Company decidedto pursue the sales of its Crafts and History groups, part of the EnthusiastMedia segment, and discontinue the operations of its Software on Demanddivision, part of the Education segment. The operating results of theseoperations have been classified as discontinued operations for all periodspresented.

In February of 2006, the Company completed thesale of the History group for $17,000, resulting in a net gain of approximately$13,700. The sale of this group reflects the Company’s increased focus ongrowing its properties that reach the valuable 18-34 male demographic. Thenet proceeds from this sale are subject to routine post-closing adjustments.

Net assets sold were comprised of the following:

| Accounts receivable |   | $       | 535    |   |
|---------------------|--------|---------|--------|--------|
| Intangible  assets  |   | 2,613   |   |
| Goodwill            |   | 9,568   |   |
| Other assets        |   | 835     |   |
|                |   | 13,551  |   |
|                |   |    |   |
| Deferred  revenues  |   | (10,292 | )      |
| Other  liabilities  |   | (11     | )      |
|                |   | (10,303 | )      |
| Net assets sold     |   | $       | 3,248  |   |

 

During the first quarter of 2006, the Company decidedto actively pursue the sale of its Films Media group within the Educationsegment. The operating results of the Films Media group have been classified asdiscontinued operations for all periods presented.

Total revenues,net, and income before provision for income taxes included in discontinuedoperations for the three months ended March 31, 2006 and 2005 on theaccompanying condensed statements of consolidated operations are as follows:

|                                           | ** ** | **Three Months Ended  March 31,** | ** ** |
|-------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                | ** ** | **2006**                                         | ** ** | **2005** | ** ** |
| Total revenues,  net                      |       | $                                                | 19,627     |   | $ | 93,335 |   |
| Income before provision  for income taxes |       | $                                                | 1,505      |   | $ | 7,156 |   |

*** ***

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Income before provision for income taxes aboveexcludes gains on sale of businesses, net of tax, of $13,707 and $383,178 forthe three months ended March 31, 2006 and 2005, respectively.

*Held for Sale*

The assets and liabilities of businesses which theCompany has initiated plans to sell, but had not sold, as of March 31,2006 and December 31, 2005, have been reclassified to held for sale on theaccompanying consolidated balance sheets. For March 31, 2006, thisrepresents the assets and liabilities of the Crafts and Films Media groups. ForDecember 31, 2005, this represents the assets and liabilities of theCrafts and History groups.
| ** **                               | ** ** | **March 31,  2006** | ** ** | **December 31,  2005** | ** ** |
|------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| **ASSETS**                               |       |                     |       |                        |       |
| Accounts  receivable, net                |       | $                        | 13,662     |                        | $          | 12,994 |   |
| Inventories                              |       | 1,841                    |       | 1,273                       |       |
| Prepaid expenses  and other              |       | 2,031                    |       | 883                         |       |
| Property and  equipment, net             |       | 2,852                    |       | 1,617                       |       |
| Intangible assets                        |       | 5,054                    |       | 5,148                       |       |
| Goodwill                                 |       | 78,794                   |       | 87,214                      |       |
| Other  non-current assets                |       | 6,849                    |       | —                      |       |
| Assets held for  sale                    |       | $                        | 111,083    |                        | $          | 109,129 |   |
| **LIABILITIES**                          |       |                     |       |                        |       |
| Accounts payable                         |       | $                        | 6,808      |                        | $          | 3,929 |   |
| Accrued expenses  and other              |       | 5,176                    |       | 1,085                       |       |
| Deferred  revenues—current          |       | 20,673                   |       | 28,189                      |       |
| Other  non-current liabilities           |       | 421                      |       | —                      |       |
| Liabilities of  businesses held for sale |       | $                        | 33,078     |                        | $          | 33,203 |   |

 

**3.   Acquisitions**

*Automotive.com - Forward Agreement*

On November 15, 2005, the Company purchasedAutomotive.com, Inc. (“Automotive.com”). PRIMEDIA and the minorityshareholders entered into a forward agreement through which PRIMEDIA willpurchase the remaining 20% of Automotive.com’s stock within a short period oftime after the 2008 audit date, or if the forward agreement is extended, the2009 audit date (early 2010). The settlement price of the forward agreement isbased on a measure of Automotive.com’s earnings in the fiscal year prior tosettlement.

For accounting purposes, the forward agreement wasbifurcated into the components relating to the Chief Executive Officer (“CEO”)of Automotive.com and the other minority shareholders. The component relatingto the CEO was measured at intrinsic value for the one and one half monthsremaining in 2005 following the transaction date. On January 1, 2006,PRIMEDIA adopted the provisions of SFAS 123(R) (see Note 9), whichrequires that the portion of the forward agreement relating to the CEO berecorded as a liability and measured at fair value. On January 1 and March 31,2006, the Company used an independent third party to assist in the valuation ofthis portion of the forward agreement. The initial recognition of theliability, as of January 1, 2006, totaling $330, was recorded as a portionof the cumulative effect of an accounting change (due to the adoption ofSFAS 123(R)). The liability measured on March 31, 2006 was $949resulting in compensation expense of $619.

The component of the forward agreement relating to theother minority shareholders was recorded as a liability at fair value as of thetransaction date and an adjustment to the purchase price. On March 31,2006, the Company utilized a

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third party to assist in the valuation of this portionof the forward agreement. The fair value of this liability was $22,699,resulting in a reduction to interest expense of $982.

The Company will utilize an independent third party toassist in the valuation of the forward agreement on a quarterly basis throughthe settlement date.

*RentClicks*

In January 2006, the Consumer Guides segment acquiredthe assets of *RentClicks* for approximately$12,700 in cash and a potential earnout consideration. The amount of theearnout consideration will be charged to goodwill when and if it is earned andis based on a measure of *RentClicks’*earnings for 2006. The Company is utilizing an independent third party toassist in the purchase price allocation and in the interim has classified thepurchase price primarily to goodwill.

**4.   AccountsReceivable, Net**

Accountsreceivable, net, consisted of the following:

|                                    | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                         | ** ** | **2006**           | ** ** | **2005**              | ** ** |
| Accounts  receivable               |       | $                  | 149,794    |                  | $          | 146,289 |   |
| Allowance for  doubtful accounts   |       | (7,742             | )          | (8,256                | )          |
| Allowance for  returns and rebates |       | (2,405             | )          | (3,260                | )          |
|                               |       | $                  | 139,647    |                  | $          | 134,773 |   |

 

**5.   Inventories**

Inventoriesconsisted of the following:

|                 | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|-----------------|------------|--------------------|------------|-----------------------|------------|
| ** **      | ** ** | **2006**           | ** ** | **2005**              | ** ** |
| Raw materials   |       | $                  | 17,350     |                  | $          | 17,895 |   |
| Work in process |       | 105                |       | 125                   |       |
| Finished goods  |       | 3,299              |       | 3,192                 |       |
|            |       | $                  | 20,754     |                  | $          | 21,212 |   |

** **

**6.   Goodwill,Other Intangible Assets and Other**

In accordance with SFAS 142, “Goodwill and OtherIntangible Assets”, the Company assesses goodwill and indefinite livedintangible assets for impairment at least once a year. The Company hasestablished October 31 as the annual impairment test date. In addition tothe annual impairment test, an assessment is also required whenever events orchanges in circumstances indicate that the carrying amount of an asset may notbe recoverable. For the three months ended March 31, 2006 and 2005, therewere no events or changes in circumstances requiring the Company to perform animpairment test related to goodwill, intangible assets or other finite livedassets, and accordingly, there were no impairments recorded.

With the adoption of SFAS 142, the Company nolonger amortizes the book basis in the indefinite-lived intangibles, butcontinues to amortize these intangibles for tax purposes. For the three monthsended March 31, 2006 and 2005, income tax expense primarily consisted ofdeferred income taxes of $2,769 and $3,578, respectively. The Company expectsthat it will record a total of approximately $12,000 to increase deferred taxliabilities during the remainder of 2006.

Changes in the carrying amount of goodwill for thethree months ended March 31, 2006, by operating segment, are as follows:

8

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|                                                             | ** ** | **Enthusiast  Media** | ** ** | **Consumer  Guides** | ** ** | **Total** | ** ** |
|-------------------------------------------------------------|------------|-----------------------|------------|----------------------|------------|-----------|------------|
| Balance as of  January 1, 2006                         |       | $                     | 650,510    |                 | $          | 112,667   |       | $ | 763,177 |   |
| Purchase price  adjustments for valuation reports           |       | (143                  | )          | 1,527                |       | 1,384     |       |
| Adjustment to  goodwill allocated to assets held for sale   |       | 975                   |       | —               |       | 975       |       |
| Goodwill  acquired related to the acquisition of businesses |       | —                |       | 12,547               |       | 12,547    |       |
| Goodwill written  off related to the sale of businesses     |       | (2,123                | )          | —               |       | (2,123    | )          |
| Balance as of  March 31, 2006                          |       | $                     | 649,219    |                 | $          | 126,741   |       | $ | 775,960 |   |

 

Intangible assetssubject to amortization in accordance with SFAS 142 consist of the following:
| ** **                                      | ** ** | ** **               | ** ** | **March 31, 2006** | ** ** | **December 31, 2005** | ** ** |
|-------------------------------------------------|------------|--------------------------|------------|------------------------------|------------|---------------------------------|------------|
| ** **                                      | ** ** | **Range  of Lives** | ** ** | **Gross  Carrying  Amount**  | ** ** | **Accumulated  Amortization**   | ** ** | **Net** | ** ** | **Gross  Carrying  Amount** | ** ** | **Accumulated  Amortization** | ** ** | **Net** | ** ** |
| Membership,  subscriber and customer lists |       | 2-20                     |       | $                            | 189,139    |                            | $          | 163,064 |   | $ | 26,075 |   | $ | 194,926 |   | $ | 166,553 |   | $ | 28,373 |   |
| Advertiser lists                                |       | 4-20                     |       | 96,065                       |       | 80,002                          |       | 16,063 |   | 96,065 |   | 79,418 |   | 16,647 |   |
| Other                                           |       | 1-20                     |       | 109,486                      |       | 98,752                          |       | 10,734 |   | 109,894 |   | 97,945 |   | 11,949 |   |
|                                            |       |                     |       | $                            | 394,690    |                            | $          | 341,818 |   | $ | 52,872 |   | $ | 400,885 |   | $ | 343,916 |   | $ | 56,969 |   |

 

Intangible assets not subject to amortization had acarrying value of $173,135 and $174,435 at March 31, 2006 and December 31,2005, respectively, and consisted primarily of trademarks. Amortization expensefor other intangible assets still subject to amortization was $2,798 and $1,857for the three months ended March 31, 2006 and 2005, respectively.Amortization of deferred wiring costs of $160 and $345 for the three monthsended March 31, 2006 and 2005, respectively, is also included inamortization of intangible assets and other on the accompanying condensedstatements of consolidated operations. At March 31, 2006, estimated futureamortization expenses of other intangible assets still subject to amortization,excluding deferred wiring costs, are as follows: approximately $8,000 for theremainder of 2006 and approximately $10,000, $6,000, $5,000 and $4,000 for2007, 2008, 2009 and 2010, respectively.

9

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**7.   AccruedExpenses and OtherAccrued expenses and other current liabilities consisted ofthe following:**
| ** **                                          | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|-----------------------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                                          | ** ** | **2006**           | ** ** | **2005**              | ** ** |
| Payroll,  commissions and related employee benefits |       | $                  | 37,163     |                  | $          | 30,333 |   |
| Rent and lease  liabilities                         |       | 5,697              |       | 5,643                 |       |
| Retail display  costs and allowances                |       | 10,573             |       | 11,450                |       |
| Royalties                                           |       | 89                 |       | 2,337                 |       |
| Circulation  costs                                  |       | 5,713              |       | 5,399                 |       |
| Professional  fees                                  |       | 2,592              |       | 2,943                 |       |
| Taxes                                               |       | 15,954             |       | 19,475                |       |
| Deferred  purchase price                            |       | 4,162              |       | 2,724                 |       |
| Interest payable                                    |       | 29,264             |       | 13,794                |       |
| Other                                               |       | 19,336             |       | 28,221                |       |
|                                                |       | $                  | 130,543    |                  | $          | 122,319 |   |

 

**8.   Long-termDebt**

Long-term debt consistedof the following:

 
| ** **                                  | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|---------------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                                  | ** ** | **2006**           | ** ** | **2005**              | ** ** |
| Borrowings under  bank credit facilities    |       | $                  | 512,500    |                  | $          | 513,000 |   |
| 87¤8%  Senior Notes Due 2011           |       | 464,216            |       | 471,013               |       |
| 8% Senior Notes  Due 2013                   |       | 300,000            |       | 300,000               |       |
| Senior Floating  Rate Notes Due 2010        |       | 175,000            |       | 175,000               |       |
|                                        |       | 1,451,716          |       | 1,459,013             |       |
| Obligation under  capital leases            |       | 4,138              |       | 5,434                 |       |
|                                        |       | 1,455,854          |       | 1,464,447             |       |
| Less: Current  maturities of long-term debt |       | 6,668              |       | 7,677                 |       |
|                                        |       | $                  | 1,449,186  |                  | $          | 1,456,770 |   |

 

In the first quarter of 2006, the Company redeemed$7,025 principal amount of its 87¤8% Senior Notesdue May 15, 2011 in three different transactions for $6,832 plus $200 ofaccrued interest. As a result, the Company recorded a gain of $54 net of thewrite-off of unamortized deferred financing costs and bond discount. Thisamount is included in the other income, net line on the accompanying condensedstatements of consoldiated operations for the three months ended March 31,2006.

Under the most restrictive covenants as defined in thebank credit facilities agreement, as amended on September 30, 2005, theCompany must maintain a minimum interest coverage ratio, as defined, of 1.75 to1 and a minimum fixed charge coverage ratio, as defined, of 1.05 to 1. The maximumallowable debt leverage ratio, as defined in the bank credit facilities, is6.25 to 1 and decreases to 6.00 to 1 on October 1, 2007. The Company is incompliance with all of the financial and operating covenants of its financingarrangements.

The Senior Floating Rate Notes bear interest equal tothree-month LIBOR plus 5.375% per year.

**9.   Share-Based Compensation Plans**

*Accounting Prior to Adoption of SFAS 123(R)*

Prior to January 1, 2006, the Company accountedfor stock based compensation using SFAS No. 123 under the prospective method.Upon adoption on January 1, 2003, the Company began expensing the fairvalue of stock-based compensation for all grants, modifications orsettlements made on or after January 1, 2003. The company adoptedSFAS No. 123(R) on January 1, 2006.

The PRIMEDIA Inc. 1992 StockPurchase and Option Plan, as amended (the “Stock Option Plan”), authorizessales of shares of common stock and grants of incentive awards in the form of,among other things, stock options to key employees and other persons with aunique relationship with the Company. The Stock Option Plan has authorizedgrants of up to 45,000,000 shares of the Company’s common stock or options tomanagement personnel.

Stock options are generallygranted with exercise prices at or above quoted market value at time ofissuance. Most of the options are exercisable at the rate of 20%-33% peryear commencing on the effective date of the grant. Most options grantedpursuant to the Stock Option Plan will expire no later than ten years from thedate the option was granted. The grant date fair value is calculated using the Black-Scholespricing model.

*Summary of Impact of SFAS 123(R)*

Under the fair value recognition provisions of SFAS No. 123(R),stock-based compensation cost is measured at the grant date based on the fairvalue of the award and is recognized as expense on a straight-line basis overthe requisite service period, which is the vesting period. The Company electedthe modified prospective method, under which prior periods are not revised forcomparative purposes. The modified prospective transition method requiresrecognition of compensation expense from the beginning of the fiscal period inwhich the recognition provisions are first applied as if the fair-value-basedaccounting method had been used to account for all employees awards granted,modified, or settled after the effective date and to any awards that were notfully vested as of the effective date.

Upon adoption of SFAS No. 123(R), the Companyrecorded an increase in net income of $352 as a portion of the cumulativeeffect of change in accounting principle due to SFAS No. 123(R)’srequirement to apply an estimated forfeiture rate to unvested awards(previously the Company recognized forfeitures when occurred) and a reductionto net income of $330 as a portion of the cumulative effect of change inaccounting principle as described in Note 3. 

10

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Theadoption of SFAS No. 123(R) did not have a material impact on theCompany’s consolidated financial position, results of operations and cashflows.

*Pro Forma Disclosure for theThree Months Ended March 31, 2005*

Pro forma information regardingnet income and earnings per share is required by SFAS No. 123(R), andhas been determined as if the Company had accounted for its employee stockoptions granted on or before December 31, 2002 under the fair valuemethod. The fair value of these options was estimated at the date of grantusing the Black-Scholes pricing model with assumptions noted in the StockOptions section below.

|                                                                                                                   | ** ** | **Three Months Ended  March, 31, 2005** | ** ** |
|-------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------|------------|
| Reported net  income                                                                                              |       | $                                                           | 365,514    |   |
| Add: stock-based  employee compensation expense included in reported net income                                   |       | 566                                                         |       |
|                                                                                                              |       |                                                        |       |
| Deduct: total  stock-based employee compensation expense determined under fair value based  method for all awards |       | (1,770                                                      | )          |
|                                                                                                              |       |                                                        |       |
| Pro forma net  income                                                                                             |       | $                                                           | 364,310    |   |
|                                                                                                              |       |                                                        |       |
| Per common  share:                                                                                                |       |                                                        |       |
| Reported basic and diluted income                                                                                 |       | $                                                           | 1.39       |   |
| Pro forma basic  and diluted income                                                                               |       | $                                                           | 1.39       |   |

 

*Fair Value Calculations by Award*

*Stock Options*

Thefair value of each option award was estimated at the date of grant using theBlack-Scholes pricing model that uses the assumptions noted in thefollowing table. Because the Black-Scholes pricing model incorporates ranges ofassumptions for inputs, those ranges are disclosed. Expected volatilities arebased on historical volatilities of the Company’s stock. The Company useshistorical data to estimate option exercises and employee terminations withinthe valuation model. The expected term of options granted is derived from thehistorical exercise behavior of employees and represents the period of timethat options granted are expected to be outstanding. The risk-free rate for theexpected term of the option is based on the U.S. Treasury yield curve in effectat the time of grant.

11

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|                              | ** ** | **Three Months ended  March 31, 2005(*)** | ** ** |
|------------------------------|------------|---------------------------------------------------------------|------------|
| Expected volatility          |       | 75.30                                                         | %          |
| Weighted-average  volatility |       | 75.30                                                         | %          |
| Expected dividends           |       | —                                                        |       |
| Expected term (in  years)    |       | 3                                                             |       |
| Risk-free rate               |       | 3.25%-3.96%                                                   |       |

 

(*) The Company did not grantstock options during the three months ended March 31, 2006.

The Black-Scholes pricing modelwas developed for use in estimating the fair value of traded options which haveno vesting restrictions and are fully transferable. In addition, optionvaluation models require the input of highly subjective assumptions includingthe expected stock price volatility. The Company’s employee stock options havecharacteristics significantly different from those of traded options, andchanges in the subjective input assumptions can materially affect the fairvalue estimate of its employee stock options.

A summary of the company’s stockoptions award activity as of March 31, 2006 and changes during the three monthsended March 31, 2006 is presented below:

|                                       | ** ** | **Options** | ** ** | **Weighted  Average  Exercise  Price** | ** ** | **Weighted  Average  remaining  Contractual  Term** | ** ** |
|---------------------------------------|------------|-------------|------------|----------------------------------------|------------|-----------------------------------------------------|------------|
| Outstanding at  January 1, 2006. |       | 20,712,058  |       | $                                      | 7.65       |                                                |       |   |
| Expired                               |       | (128,414    | )          | $                                      | 7.01       |                                                |       |   |
| Forfeited                             |       | (115,915    | )          | $                                      | 3.26       |                                                |       |   |
| Outstanding at  March 31, 2006   |       | 20,467,729  |       | $                                      | 7.67       |                                                | 4          |   |
| Exercisable at March 31,  2006        |       | 17,842,809  |       | $                                      | 8.11       |                                                | 4          |   |

 

No options were granted,exercised or settled in cash in the first quarter of 2006. In the first quarterof 2005, the weighted-average fair value per option for options grantedwas $2.12, the Company received $703 in cash from the exercise of stock optionsand 3,600 stock options were settled in cash for $7.

The Company’s policy forattributing the value of graded vested share-based compensation awards is on astraight-line basis over the requisite service period for the entire award. Asof March 31, 2006, there were $1,912 of total unrecognized compensationcost related to unvested stock options. The cost is expected to be recognizedover a weighted average period of 1 year.

*Nonvested shares*

The weighted average fair value ofnonvested shares granted in the first quarter of 2005 was $3.48.

A summary of the Company’snonvested shares award activity as of March 31, 2006 and changes duringthe three months ended March 31, 2006 is presented below:

12

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** **

** **

|                                           | ** ** | **Number of  Shares** | ** ** | **Weighted Average  Grant-Date  Fair Value** | ** ** |
|-------------------------------------------|------------|----------------------------|------------|--------------------------------------------------------|------------|
| Nonvested Shares  at January 1, 2006 |       | 847,646                    |       | $                                                      | 2.98       |   |
| Vested                                    |       | (20,000                    | )          | $                                                      | 2.36       |   |
| Forfeited                                 |       | (3,333                     | )          | $                                                      | 2.90       |   |
| Nonvested Shares  at March 31, 2006  |       | 824,313                    |       | $                                                      | 3.00       |   |

 

As of March 31, 2006, therewere $1,563 of total unrecognized compensation cost related to nonvested shares.The cost is expected to be recognized over a weighted average period of 1 year.

The total fair value of sharesvested during the three-month period ended March 31, 2006 was $47.

The Company had reservedapproximately 9,795,921 shares of the Company’s common stock for future grantsin connection with the Stock Option Plan at March 31, 2006.

*Employee Stock Purchase Plan (“ESPP”)*

Effective January 1, 2006,the ESPP was amended to provide that the purchase price of shares through theESPP is 95% of the closing stock price on the last day of the offering period. Dueto the amendment, the ESPP became non-compensatory and thus no charges wererecorded for the three months ended March 31, 2006. ESPP non-cashcompensation for the three months ended March 31, 2005 did not have amaterial impact on the Company’s statements of consolidated operations. In January 2006,the Company issued 170,054 shares purchased under the ESPP during the offeringperiod of the six months ended December 31, 2005.

The Company had reservedapproximately 2,564,000 shares of the Company’s common stock for future grantsin connection with the ESPP at March 31, 2006.

***Non-Cash Compensation***

|                                                              | ** ** | **Three Months Ended  March 31,** | ** ** |
|--------------------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                                   | ** ** | **2006**                                         | ** ** | **2005** | ** ** |
| Nonvested  shares(1)                                         |       | $                                                | 392        |   | $ | 635 |   |
| Share Based  Compensation (SFAS 123(R) and SFAS 123)(2) |       | 526                                              |       | 566 |   |
| Total                                                        |       | $                                                | 918        |   | $ | 1,201 |   |

----

(1)             TheCompany recognized $392 and $635 for the three months ended March 31, 2006and 2005, respectively, of non-cash compensation charges related to the Company’sgrants of nonvested shares to certain executives during 2003, 2004 and 2005.These grants are being expensed ratably over their related vesting periods.

(2)             Inaccordance with SFAS 123R in 2006 and SFAS 123 in 2005, the Company recorded anon-cash compensation charge of $526 and $566 for the three months ended March 31,2006 and 2005, respectively, relating to stock options in both 2006 and 2005and the PRIMEDIA ESPP in 2005.

13

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** **

** **

**10.   Provisionfor Severance, Closures and Restructuring Related Costs**

During the first quarter of 2006, the Company begannew cost reduction initiatives, primarily due to recent divestitures, tostreamline operations, reduce layers of management and consolidate real estate.

Details of the newinitiatives implemented and the payments made related to both the new andpreviously implemented plans during the three months ended March 31, 2006and 2005 are presented in the following tables: 

|                                                   | ** ** | **Liability as of  January 1,  2006** | ** ** | **Net Provision   for the Three  Months Ended  March 31,  2006** | ** ** | **Payments  during the Three  Months Ended  March 31,  2006** | ** ** | **Liability as of  March 31, 2006** | ** ** |
|---------------------------------------------------|------------|------------------------------------------------------|------------|------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------|------------|---------------------------------------------------------|------------|
| Severance and closures:                           |       |                                                 |       |                                                                                           |       |                                                                              |       |                                                    |       |
| Employee-related  termination costs               |       | $                                                    | 245        |                                                                                           | $          | 280                                                                               |       | $                                                       | (181       | ) | $ | 344 |   |
| Termination of  leases related to office closures |       | 29,228                                               |       | 96                                                                                             |       | (1,485                                                                            | )          | 27,839                                                  |       |
| Total severance and  closures                     |       | $                                                    | 29,473     |                                                                                           | $          | 376                                                                               |       | $                                                       | (1,666     | ) | $ | 28,183 |   |

 

|                                                   | ** ** | **Liability as of  January 1,  2005** | ** ** | **Net Provision   for the Three  Months Ended  March 31,  2005** | ** ** | **Payments  during the Three  Months Ended  March 31,  2005** | ** ** | **Liability as of  March 31, 2005** | ** ** |
|---------------------------------------------------|------------|------------------------------------------------------|------------|------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------|------------|----------------------------------------------------|------------|
| Severance and closures:                           |       |                                                 |       |                                                                                           |       |                                                                              |       |                                               |       |
| Employee-related  termination costs               |       | $                                                    | 1,499      |                                                                                           | $          | 672                                                                               |       | $                                                  | (1,391     | ) | $ | 780 |   |
| Termination of  leases related to office closures |       | 34,450                                               |       | 361                                                                                            |       | (2,567                                                                            | )          | 32,244                                             |       |
| Total severance and  closures                     |       | $                                                    | 35,949     | (1)                                                                                            | $          | 1,033                                                                             | (2)        | $                                                  | (3,958     | ) | $ | 33,024 |   |

----

(1)             Reducedfor liabilities relating to discontinued operations totaling $1,876 at January 1,2005.

(2)             Adjustedto exclude net provisions related to discontinued operations totaling $25 forthe three months ended March 31, 2005.

The remaining liability related to real estate lease commitments for space that theCompany no longer occupies, is expected to be paid through 2015. Toreduce the lease related costs, the Company has aggressively pursued subleasesof its available office space. These leases have been recorded at their netpresent value amounts and are net of sublease income amounts. The Companyevaluates the appropriateness of its reserves on a quarterly basis.

As a result of the implementation of this new plan,the Company has closed 1 office location and has notified a total of 5individuals that they would be terminated under this plan. As of March 31,2006, 4 of these individuals have been terminated.

Liabilities of $3,585 and $3,972 representing thecurrent portion of the provision for severance, closures and restructuringrelated costs are included in accrued expenses and other on the condensedconsolidated balance sheets as of March 31, 2006 and December 31,2005, respectively. Liabilities of $24,598 and $25,501 representing thenon-current portion of the provision for severance, closures and restructuringrelated costs are included in other non-current liabilities on the condensedconsolidated balance sheets as of March 31, 2006 and December 31,2005, respectively.

For purposes of the Company’s bank credit facility andSenior Note agreements, the provision for severance, closures and restructuringrelated costs is excluded from the Company’s calculation of consolidatedEBITDA.

14

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** **

** **

**11.   Incomeper Common Share**

Income per common share for the three months ended March 31,2006 and 2005 has been determined based on net income applicable to commonshareholders, divided by the weighted average number of common sharesoutstanding for all periods presented.

The securities that could potentially dilute basicearnings per share in the future consist of approximately 9,870,000 warrantsand 20,467,729 stock options at March 31, 2006. These securities were notincluded in the computation of diluted income per share because the effect oftheir inclusion would be antidilutive.

**12.   Commitmentsand Contingencies**

The Company is involved in ordinary and routinelitigation incidental to its business. In the opinion of management, there isno pending legal proceeding that would have a material adverse effect on thecondensed consolidated financial statements of the Company.

In 2005, the Company sold the remaining net assets ofWorkplace Learning for the assumption of liabilities, however, the Companyretains a secondary liability regarding the payment of the Carrolton, TX leasewhich has future minimum lease payments of approximately $14,000.

**13.   BusinessSegment Information**

The Company’s products compete primarily in the UnitedStates, in three principal segments: Enthusiast Media, Consumer Guides andEducation. PRIMEDIA believes that this structure aligns its businesses toprovide a clearer sense of its strategic focus and operating performance.

The Enthusiast Media segment produces and distributescontent through magazines and via the Internet to consumers in various nicheand enthusiast markets. It connects buyers and sellers through the Company’scomsumer magazine brands, Internet, events, television, radio, licensing andmerchandising.

The Consumer Guides segment is the nation’s largestpublisher and distributor of free publications, including *ApartmentGuide*, *New Home Guide* and*Auto Guide* and operates related Internet sites.

The Education segment consists of Channel One, aproprietary network to secondary schools, and PRIMEDIA Healthcare, a continuingmedical education business.

The following information includes certainintersegment transactions and is, therefore, not necessarily indicative of theresults had the operations existed as stand-alone businesses.Intersegment transactions represent intercompany advertising and otherservices, which are billed at what management believes are prevailing marketrates. These intersegment transactions, which represent transactions betweenoperating units in different business segments, are eliminated inconsolidation.

Information regarding the operations of the Company indifferent business segments is set forth below based primarily on the nature ofthe targeted audience. Corporate represents items not allocated to otherbusiness segments. PRIMEDIA evaluates performance based on several factors, ofwhich the primary financial measure is segment earnings before interest, taxes,depreciation, amortization and other charges (income) (“Segment EBITDA”). Othercharges (income) include non-cash compensation and provision for severance,closures and restructuring related costs.

15

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** **

** **

 

|                                                                                           | ** ** | **Three Months Ended March 31,** | ** ** |
|-------------------------------------------------------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                                                                | ** ** | **2006**                                             | ** ** | **2005** | ** ** |
| Revenues, net:                                                                            |       |                                                 |       |   |   |
| Continuing  Businesses:                                                                   |       |                                                 |       |   |   |
| Enthusiast Media                                                                          |       | $                                                    | 150,128    |   | $ | 140,006 |   |
| Consumer Guides                                                                           |       | 81,402                                               |       | 75,648 |   |
| Education                                                                                 |       | 9,938                                                |       | 13,209 |   |
| Intersegment Eliminations                                                                 |       | (77                                                  | )          | (98 | ) |
| Total                                                                                     |       | $                                                    | 241,391    |   | $ | 228,765 |   |
|                                                                                      |       |                                                 |       |   |   |
| Segment EBITDA: (1)                                                                       |       |                                                 |       |   |   |
| Continuing  Businesses:                                                                   |       |                                                 |       |   |   |
| Enthusiast Media                                                                          |       | 21,048                                               |       | $ | 20,806 |   |
| Consumer Guides                                                                           |       | 17,736                                               |       | 18,244 |   |
| Education                                                                                 |       | (175                                                 | )          | 1,962 |   |
| Corporate Overhead                                                                        |       | (6,443                                               | )          | (6,582 | ) |
| Total Segment EBITDA                                                                      |       | $                                                    | 32,166     |   | $ | 34,430 |   |
|                                                                                      |       |                                                 |       |   |   |
| Depreciation,  amortization and other charges: (2)                                        |       |                                                 |       |   |   |
| Continuing  Businesses:                                                                   |       |                                                 |       |   |   |
| Enthusiast Media                                                                          |       | $                                                    | 5,924      |   | $ | 4,539 |   |
| Consumer Guides                                                                           |       | 3,127                                                |       | 2,547 |   |
| Education                                                                                 |       | 551                                                  |       | 1,593 |   |
| Corporate overhead                                                                        |       | 1,255                                                |       | 1,783 |   |
|                                                                                      |       | $                                                    | 10,857     |   | $ | 10,462 |   |
|                                                                                      |       |                                                 |       |   |   |
| Operating income  (loss):                                                                 |       |                                                 |       |   |   |
| Continuing  Businesses:                                                                   |       |                                                 |       |   |   |
| Enthusiast Media                                                                          |       | $                                                    | 15,124     |   | $ | 16,267 |   |
| Consumer Guides                                                                           |       | 14,609                                               |       | 15,697 |   |
| Education                                                                                 |       | (726                                                 | )          | 369 |   |
| Corporate                                                                                 |       | (7,698                                               | )          | (8,365 | ) |
| Total                                                                                     |       | $                                                    | 21,309     |   | $ | 23,968 |   |
|                                                                                      |       |                                                 |       |   |   |
| Other income (expense):                                                                   |       |                                                 |       |   |   |
| Interest expense (3)                                                                      |       | (30,826                                              | )          | (33,121 | ) |
| Interest on shares subject to mandatory redemption  (4)                                   |       | —                                               |       | (10,945 | ) |
| Amortization of deferred financing costs                                                  |       | (659                                                 | )          | (1,334 | ) |
| Other income, net                                                                         |       | 158                                                  |       | 671 |   |
| Loss from  continuing operations before benefit (provision) for income taxes              |       | (10,018                                              | )          | (20,761 | ) |
| Benefit (provision)  for income taxes                                                     |       | 1,150                                                |       | (3,648 | ) |
| Loss from  continuing operations                                                          |       | (8,868                                               | )          | (24,409 | ) |
| Discontinued  operations (5)                                                              |       | 16,808                                               |       | 389,923 |   |
| Cumulative  effect of a change in accounting principle (from the adoption of SFAS 123(R)) |       | 22                                                   |       | — |   |
| Net income                                                                                |       | $                                                    | 7,962      |   | $ | 365,514 |   |

 

16

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** **

 

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(1)             Segment EBITDA represents the segments’earnings before interest, taxes, depreciation, amortization and other charges(income) (see Note 2 below). Segment EBITDA is not intended to be andshould not be considered as an alternative to net income or loss (as determinedin conformity with generally accepted accounting principles), as an indicatorof the Company’s operating performance. Segment EBITDA is presented hereinbecause the Company’s chief operating decision maker evaluates and measureseach business unit’s performance based on its Segment EBITDA results. PRIMEDIAbelieves that Segment EBITDA an accurate indicator of its segments’ results,because it focuses on revenue and operating cost items driven by each operatingmanagers’ performance, and excludes items largely outside of the operatingmanagers’ control. Segment EBITDA may not be available for the Company’sdiscretionary use as there are requirements to repay debt, among otherpayments. Segment EBITDA as presented may not be comparable to similarly titledmeasures reported by other companies since not all companies necessarilycalculate Segment EBITDA in an identical manner, and therefore, is not necessarilyan accurate measure of comparison between companies.

(2)             Other charges include non-cash compensationand provision for severance, closures and restructuring related costs.

(3)             The 2006 interest expense was reduced by $982due to the quarterly fair value measurement of the liability arising from theforward agreement related to the Automotive.com acquisition.

(4)             During 2005, the Company redeemed all of itsoutstanding shares subject to mandatory redemption (liquidation preference ofapproximately $475,000).

(5)             Discontinued operations include a gain on saleof businesses, net of $13,707 and $383,178 for the three months endedMarch 31, 2006 and 2005, respectively.

**14.   FinancialInformation for Guarantors of the Company’s Debt**

The information that follows presents condensedconsolidating financial information as of March 31, 2006 and December 31,2005 and for the three months ended March 31, 2006 and 2005 for a)PRIMEDIA Inc. (as the Issuer), b) the guarantor subsidiaries, which are withlimited exceptions, the restricted subsidiaries, represent the core PRIMEDIAbusinesses and exclude investment and other development properties included inthe unrestricted category, c) the non-guarantor subsidiaries (primarilyrepresenting Internet assets and businesses, new launches and other propertiesunder evaluation for turnaround or shutdown), which are with limitedexceptions, the unrestricted subsidiaries, d) elimination entries and e) theCompany on a consolidated basis. During the three months ended March 31,2006, there have been no reclassifications between restricted and unrestrictedsubsidiaries.

The condensed consolidating financial informationincludes certain allocations of revenues, expenses, assets and liabilitiesbased on management’s best estimates which are not necessarily indicative ofthe financial position, results of operations and cash flows that theseentities would have achieved on a stand-alone basis and should be read inconjunction with the consolidated financial statements of the Company. The intercompanybalances in the accompanying condensed consolidating financial statementsinclude cash management activities, management fees, cross promotionalactivities and other intercompany charges between Corporate and the businessunits and among the business units. The non-guarantor subsidiaries results ofoperations include: Internet operations, certain distribution operations,certain start-up magazine businesses, revenues and related expenses derivedfrom the licensing of certain products of guarantor subsidiaries and expensesassociated with the cross promotion by the guarantor subsidiaries of theactivities of the non-guarantor subsidiaries. The transactions described aboveare billed, by the Company, at what the Company believes are prevailing marketrates. All intercompany related activities are eliminated in consolidation.

The Company is herewith providing detailed informationand disclosure as to the methodology used in determining compliance with theleverage ratio in the credit facilities agreement. Under its bank creditfacilities and Senior Note agreements, the Company is allowed to designatecertain businesses as unrestricted subsidiaries to the extent that the value ofthose businesses does not exceed the permitted amounts, as defined in theseagreements. The Company has designated certain of its businesses as unrestricted(the “Unrestricted Group”), which primarily represent Internet businesses,trademark and content licensing and service companies, new launches (includingtraditional start-ups), other properties under evaluation for turnaround orshutdown and foreign subsidiaries. Except for those specifically designated bythe Company as unrestricted, all businesses of the Company are restricted (the “RestrictedGroup”). Indebtedness under the bank credit facilities and Senior Noteagreements is guaranteed by each of the Company’s 100%-owned domesticsubsidiaries in the Restricted Group in accordance with the provisions andlimitations of the Company’s bank credit facilities and Senior Note agreements.The guarantees are full, unconditional and joint and several. The UnrestrictedGroup does not guarantee the bank credit facilities or 

17

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** **

** **

Senior Notes. Although Automotive.com is included inthe Restricted Group under the bank credit facilities agreement it does notguarantee the debt. For purposes of determining compliance with certainfinancial covenants under the Company’s bank credit facilities, theUnrestricted Group’s results (positive or negative), are not reflected in theConsolidated EBITDA of the Restricted Group which, as defined in the bankcredit facilities agreement, excludes losses of the Unrestricted Group,non-cash charges and restructuring charges and is adjusted primarily for thetrailing four quarters results of acquisitions and divestitures and estimatedsavings for acquired business.

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**PRIMEDIA INC. ANDSUBSIDIARIESCONDENSED CONSOLIDATING BALANCE SHEET(UNAUDITED)March 31, 2006(dollars in thousands)**
| ** **                                         | ** ** | **Primedia Inc.** | ** ** | **Guarantor  Subsidiaries** | ** ** | **Non-Guarantor  Subsidiaries** | ** ** | **Eliminations** | ** ** | **Primedia Inc.  and  Subsidiaries** | ** ** |
|----------------------------------------------------|------------|------------------------|------------|-----------------------------|------------|---------------------------------|------------|------------------|------------|-------------------------------------------|------------|
| **ASSETS**                                         |       |                   |       |                        |       |                            |       |             |       |                                      |       |
| Current assets:                                    |       |                   |       |                        |       |                            |       |             |       |                                      |       |
| Cash and cash equivalents                          |       | $                      | 309        |                        | $          | 4,253                           |       | $                | 2,034      |                                      | $          | — |   | $ | 6,596 |   |
| Accounts receivable, net                           |       | —                 |       | 118,048                     |       | 21,599                          |       | —           |       | 139,647                                   |       |
| Inventories                                        |       | —                 |       | 18,547                      |       | 2,207                           |       | —           |       | 20,754                                    |       |
| Prepaid expenses and other                         |       | 4,978                  |       | 15,601                      |       | 20,345                          |       | —           |       | 40,924                                    |       |
| Assets held for sale                               |       | —                 |       | 111,083                     |       | —                          |       | —           |       | 111,083                                   |       |
| Total current assets                               |       | 5,287                  |       | 267,532                     |       | 46,185                          |       | —           |       | 319,004                                   |       |
|                                               |       |                   |       |                        |       |                            |       |             |       |                                      |       |
| Property and  equipment, net                       |       | 2,840                  |       | 39,272                      |       | 11,103                          |       | —           |       | 53,215                                    |       |
| Investment in  and advances to subsidiaries        |       | 1,293,192              |       | —                      |       | —                          |       | (1,293,192       | )          | —                                    |       |
| Other intangible  assets, net                      |       | —                 |       | 185,028                     |       | 40,979                          |       | —           |       | 226,007                                   |       |
| Goodwill                                           |       | —                 |       | 671,861                     |       | 104,099                         |       | —           |       | 775,960                                   |       |
| Other  non-current assets                          |       | 4,570                  |       | 21,890                      |       | 1,974                           |       | —           |       | 28,434                                    |       |
|                                               |       | $                      | 1,305,889  |                        | $          | 1,185,583                       |       | $                | 204,340    |                                      | $          | (1,293,192 | ) | $ | 1,402,620 |   |
|                                               |       |                   |       |                        |       |                            |       |             |       |                                      |       |
| **LIABILITIES AND SHAREHOLDERS’  DEFICIENCY** |       |                   |       |                        |       |                            |       |             |       |                                      |       |
| Current liabilities:                               |       |                   |       |                        |       |                            |       |             |       |                                      |       |
| Accounts payable                                   |       | $                      | 5,574      |                        | $          | 45,502                          |       | $                | 4,562      |                                      | —     |   | $ | 55,638 |   |
| Intercompany payables                              |       | 225,702                |       | (914,465                    | )          | 688,763                         |       | —           |       | —                                    |       |
| Accrued expenses and other                         |       | 56,128                 |       | 60,929                      |       | 13,486                          |       | —           |       | 130,543                                   |       |
| Deferred revenues                                  |       | 1,738                  |       | 105,841                     |       | 7,624                           |       | —           |       | 115,203                                   |       |
| Current maturities of long-term debt               |       | 5,057                  |       | 1,582                       |       | 29                              |       | —           |       | 6,668                                     |       |
| Liabilities of businesses held for sale       |       | —                 |       | 33,078                      |       | —                          |       | —           |       | 33,078                                    |       |
| Total current liabilities                          |       | 294,199                |       | (667,533                    | )          | 714,464                         |       | —           |       | 341,130                                   |       |
|                                               |       |                   |       |                        |       |                            |       |             |       |                                      |       |
| Long-term debt                                     |       | 1,446,864              |       | 2,218                       |       | 104                             |       | —           |       | 1,449,186                                 |       |
| Intercompany  notes payable                        |       | —                 |       | 2,218,757                   |       | —                          |       | (2,218,757       | )          | —                                    |       |
| Deferred  revenues                                 |       | 14,025                 |       | —                      |       | —                          |       | —           |       | 14,025                                    |       |
| Deferred income  taxes                             |       | 84,990                 |       | —                      |       | —                          |       |             |       | 84,990                                    |       |
| Other  non-current liabilities                     |       | 28,766                 |       | 21,208                      |       | 26,270                          |       | —           |       | 76,244                                    |       |
| Total  liabilities                                 |       | 1,868,844              |       | 1,574,650                   |       | 740,838                         |       | (2,218,757       | )          | 1,965,575                                 |       |
|                                               |       |                   |       |                        |       |                            |       |             |       |                                      |       |
| Shareholders’  deficiency:                    |       |                   |       |                        |       |                            |       |             |       |                                      |       |
| Common stock                                       |       | 2,724                  |       | —                      |       | —                          |       | —           |       | 2,724                                     |       |
| Additional paid-in capital                         |       | 2,363,881              |       | —                      |       | —                          |       | —           |       | 2,363,881                                 |       |
| Accumulated deficit                                |       | (2,853,683             | )          | (389,067                    | )          | (536,498                        | )          | 925,565          |       | (2,853,683                                | )          |
| Common stock in treasury, at cost                  |       | (75,877                | )          | —                      |       | —                          |       | —           |       | (75,877                                   | )          |
| Total shareholders’ deficiency                |       | (562,955               | )          | (389,067                    | )          | (536,498                        | )          | 925,565          |       | (562,955                                  | )          |
|                                               |       | $                      | 1,305,889  |                        | $          | 1,185,583                       |       | $                | 204,340    |                                      | $          | (1,293,192 | ) | $ | 1,402,620 |   |

** **

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**PRIMEDIA INC. ANDSUBSIDIARIESCONDENSED STATEMENT OF CONSOLIDATING OPERATIONS(UNAUDITED)For the Three Months Ended March 31, 2006(dollars in thousands)**
| ** **                                                                            | ** ** | **Primedia Inc.** | ** ** | **Guarantor  Subsidiaries** | ** ** | **Non-Guarantor  Subsidiaries** | ** ** | **Eliminations** | ** ** | **Primedia Inc.  and  Subsidiaries** | ** ** |
|---------------------------------------------------------------------------------------|------------|------------------------|------------|-----------------------------|------------|---------------------------------|------------|------------------|------------|-------------------------------------------|------------|
| Sales, net                                                                            |       | $                      | —     |                        | $          | 192,427                         |       | $                | 51,373     |                                      | $          | (2,409 | ) | $ | 241,391 |   |
| Operating costs and  expenses:                                                        |       |                   |       |                        |       |                            |       |             |       |                                      |       |
| Cost of goods sold                                                                    |       | —                 |       | 48,067                      |       | 8,416                           |       | —           |       | 56,483                                    |       |
| Marketing and selling                                                                 |       | —                 |       | 39,141                      |       | 9,132                           |       | —           |       | 48,273                                    |       |
| Distribution, circulation and fulfillment                                             |       | —                 |       | 26,093                      |       | 22,508                          |       | —           |       | 48,601                                    |       |
| Editorial                                                                             |       | —                 |       | 14,499                      |       | 2,649                           |       | —           |       | 17,148                                    |       |
| Other general expenses                                                                |       | 16                     |       | 16,355                      |       | 18,331                          |       | (2,409           | )          | 32,293                                    |       |
| Corporate administrative expenses (including  non-cash compensaion)                   |       | 5,850                  |       | 24                          |       | 1,471                           |       | —           |       | 7,345                                     |       |
| Depreciation of property and equipment                                                |       | 361                    |       | 4,357                       |       | 1,887                           |       | —           |       | 6,605                                     |       |
| Amortization of intangible assets and other                                           |       | —                 |       | 1,512                       |       | 1,446                           |       | —           |       | 2,958                                     |       |
| Provision for severance, closures and restructuring  related costs                    |       | —                 |       | 361                         |       | 15                              |       | —           |       | 376                                       |       |
| Gain on sales of businesses and other, net                                            |       | —                 |       | (570                        | )          | 570                             |       | —           |       | —                                    |       |
|                                                                                  |       |                   |       |                        |       |                            |       |             |       |                                      |       |
| Operating income  (loss)                                                              |       | (6,227                 | )          | 42,588                      |       | (15,052                         | )          | —           |       | 21,309                                    |       |
| Other income (expense):                                                               |       |                   |       |                        |       |                            |       |             |       |                                      |       |
| Interest expense                                                                      |       | (31,444                | )          | (340                        | )          | 958                             |       | —           |       | (30,826                                   | )          |
| Amortization of deferred financing costs                                              |       | —                 |       | (631                        | )          | (28                             | )          | —           |       | (659                                      | )          |
| Intercompany management fees and interest                                        |       | 36,161                 |       | (34,800                     | )          | (1,361                          | )          | —           |       | —                                    |       |
| Other, net                                                                            |       | 297                    |       | (162                        | )          | 23                              |       | —           |       | 158                                       |       |
|                                                                                  |       |                   |       |                        |       |                            |       |             |       |                                      |       |
| Income (loss)  from continuing operations before benefit (provision) for income taxes |       | (1,213)                |       | 6,655                       |       | (15,460                         | )          | —           |       | (10,018                                   | )          |
|                                                                                  |       |                   |       |                        |       |                            |       |             |       |                                      |       |
| Benefit (provision)  for income taxes                                                 |       | 1,256                  |       | (100                        | )          | (6                              | )          | —           |       | 1,150                                     |       |
| Equity in losses  of subsidiaries                                                     |       | 5,271                  |       | —                      |       | —                          |       | (5,271           | )          | —                                    |       |
| Income (loss)  from continuing operations                                             |       | 5,314                  |       | 6,555                       |       | (16,936                         | )          | (5,271           | )          | (8,868                                    | )          |
|                                                                                  |       |                   |       |                        |       |                            |       |             |       |                                      |       |
| Discontinued  operations, net of tax                                                  |       | 2,296                  |       | 14,697                      |       | (185                            | )          | —           |       | 16,808                                    |       |
| Cumulative  effect of change in accounting principle                                  |       | 352                    |       | (330                        | )          |                            |       | —           |       | 22                                        |       |
| Net income (loss)                                                                     |       | $                      | 7,962      |                        | $          | 20,922                          |       | $                | (15,651    | )                                         | $          | (5,271 | ) | $ | 7,962 |   |

** **

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**PRIMEDIA INC. ANDSUBSIDIARIESCONDENSED STATEMENT OF CONSOLIDATING CASH FLOWS (UNAUDITED)For the Three Months Ended March 31, 2006(dollars in thousands)**
| ** **                                                                                               | ** ** | ** **             | ** ** | **Guarantor**    | ** ** | **Non-Guarantor** | ** ** | ** **       | ** ** | **Primedia Inc.  and** | ** ** |
|----------------------------------------------------------------------------------------------------------|------------|------------------------|------------|------------------|------------|-------------------|------------|------------------|------------|-----------------------------|------------|
| ** **                                                                                               | ** ** | **Primedia Inc.** | ** ** | **Subsidiaries** | ** ** | **Subsidiaries**  | ** ** | **Eliminations** | ** ** | **Subsidiaries**            | ** ** |
| **Operating activities:**                                                                                |       |                   |       |             |       |              |       |             |       |                        |       |
| Net income (loss)                                                                                        |       | $                      | 7,962      |             | $          | 20,922            |       | $                | (15,651    | )                           | $          | (5,271 | ) | $ | 7,962 |   |
|                                                                                                     |       |                   |       |             |       |              |       |             |       |                        |       |
| Cumulative effect of a change in accounting  principle                                                   |       | (352                   | )          | —           |       | 330               |       | —           |       | (22                         | )          |
| Adjustments to reconcile net income (loss) to net  cash provided by (used in) operating activities  |       | (42,648                | )          | 27,834           |       | 4,326             |       | 5,271            |       | (5,217                      | )          |
| Changes in operating assets and liabilities                                                         |       | 8,861                  |       | 16,386           |       | (20,146           | )          | —           |       | 5,101                       |       |
|                                                                                                     |       |                   |       |             |       |              |       |             |       |                        |       |
| Net cash provided by (used in) operating activities                                                      |       | (26,177                | )          | 65,142           |       | (31,141           | )          | —           |       | 7,824                       |       |
|                                                                                                     |       |                   |       |             |       |              |       |             |       |                        |       |
| **Investing activities:**                                                                                |       |                   |       |             |       |              |       |             |       |                        |       |
| Additions to property, equipment and other, net                                                          |       | (113                   | )          | (3,038           | )          | (1,579            | )          | —           |       | (4,730                      | )          |
| Proceeds from sales of businesses and other                                                              |       | —                 |       | 30,039           |       | (13,039           | )          | —           |       | 17,000                      |       |
| Payments for businesses acquired, net of cash  acquired                                                  |       |                   |       | (12,292          | )          | (25               | )          | —           |       | (12,317                     | )          |
|                                                                                                     |       |                   |       |             |       |              |       |             |       |                        |       |
| Net cash provided by (used in) investing activities                                                      |       | (113                   | )          | 14,709           |       | (14,643           | )          | —           |       | (47                         | )          |
|                                                                                                     |       |                   |       |             |       |              |       |             |       |                        |       |
| **Financing activities:**                                                                                |       |                   |       |             |       |              |       |             |       |                        |       |
| Intercompany activity                                                                                    |       | 34,135                 |       | (79,068          | )          | 44,933            |       | —           |       | —                      |       |
| Borrowings under credit agreements                                                                       |       | 69,600                 |       | —           |       | —            |       | —           |       | 69,600                      |       |
| Repayments of borrowings under credit agreements                                                         |       | (70,100                | )          | —           |       | —            |       | —           |       | (70,100                     | )          |
| Payments for repurchases of senior notes                                                            |       | (6,832                 | )          | —           |       | —            |       | —           |       | (6,832                      | )          |
| Proceeds from issuances of common stock                                                                  |       | 246                    |       | —           |       | —            |       | —           |       | 246                         |       |
| Capital Lease Obligations                                                                                |       | (771                   | )          | (658             | )          | 133               |       |             |       | (1,296                      | )          |
| Other                                                                                                    |       | —                 |       | (54              | )          | —            |       | —           |       | (54                         | )          |
|                                                                                                     |       |                   |       |             |       |              |       |             |       |                        |       |
| Net cash provided by (used in) financing activities                                                      |       | 26,278                 |       | (79,780          | )          | 45,066            |       | —           |       | (8,436                      | )          |
|                                                                                                     |       |                   |       |             |       |              |       |             |       |                        |       |
| Increase  (decrease) in cash and cash equivalents                                                        |       | (12                    | )          | 71               |       | (718              | )          | —           |       | (659                        | )          |
| Cash and cash  equivalents, beginning of period                                                          |       | 321                    |       | 4,182            |       | 2,752             |       | —           |       | 7,255                       |       |
| Cash and cash  equivalents, end of period                                                      |       | $                      | 309        |             | $          | 4,253             |       | $                | 2,034      |                        | $          | — |   | $ | 6,596 |   |

** **

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** **

**PRIMEDIA INC. ANDSUBSIDIARIESCONDENSED CONSOLIDATING BALANCE SHEET(UNAUDITED)December 31, 2005(dollars in thousands)**
| ** **                                   | ** ** | ** **                                     | ** ** | ** **       | ** ** | ** **        | ** ** | ** **       | ** ** | **PRIMEDIA Inc.**                                           | ** ** |
|----------------------------------------------|------------|------------------------------------------------|------------|------------------|------------|-------------------|------------|------------------|------------|------------------------------------------------------------------|------------|
| ** **                                   | ** ** | ** **                                     | ** ** | **Guarantor**    | ** ** | **Non-Guarantor** | ** ** | ** **       | ** ** | **and**                                                          | ** ** |
| ** **                                   | ** ** | **  PRIMEDIA Inc.  ** | ** ** | **Subsidiaries** | ** ** | **Subsidiaries**  | ** ** | **Eliminations** | ** ** | **    Subsidiaries    ** | ** ** |
| **ASSETS**                                   | ** ** | ** **                                     | ** ** | ** **       | ** ** | ** **        | ** ** | ** **       | ** ** | ** **                                                       | ** ** |
| Current assets:                              |       |                                           |       |             |       |              |       |             |       |                                                             |       |
| Cash and cash equivalents                    |       | $                                              | 321        |             | $          | 4,182             |       | $                | 2,752      |                                                             | $          | — |   | $ | 7,255 |   |
| Accounts receivable, net                     |       | —                                         |       | 117,528          |       | 17,245            |       | —           |       | 134,773                                                          |       |
| Inventories                                  |       | —                                         |       | 19,601           |       | 1,611             |       | —           |       | 21,212                                                           |       |
| Prepaid expenses and other                   |       | 8,622                                          |       | 17,668           |       | 3,432             |       | —           |       | 29,722                                                           |       |
| Assets held for sale                         |       | —                                         |       | 109,129          |       | —            |       | —           |       | 109,129                                                          |       |
| Total current assets                         |       | 8,943                                          |       | 268,108          |       | 25,040            |       | —           |       | 302,091                                                          |       |
| Property and equipment, net                  |       | 3,090                                          |       | 42,215           |       | 11,563            |       | —           |       | 56,868                                                           |       |
| Investment in  and advances to subsidiaries  |       | 471,538                                        |       | —           |       | —            |       | (471,538         | )          | —                                                           |       |
| Other intangible  assets, net                |       | —                                         |       | 186,554          |       | 44,850            |       | —           |       | 231,404                                                          |       |
| Goodwill                                     |       | —                                         |       | 648,185          |       | 114,992           |       | —           |       | 763,177                                                          |       |
| Other  non-current assets                    |       | 4,727                                          |       | 28,990           |       | 2,211             |       | —           |       | 35,928                                                           |       |
| Total assets                                 |       | $                                              | 488,298    |             | $          | 1,174,052         |       | $                | 198,656    |                                                             | $          | (471,538 | ) | $ | 1,389,468 |   |
| **LIABILITIES AND SHAREHOLDERS' DEFICIENCY** | ** ** | ** **                                     | ** ** | ** **       | ** ** | ** **        | ** ** | ** **       | ** ** | ** **                                                       | ** ** |
| Current  liabilities:                        |       |                                           |       |             |       |              |       |             |       |                                                             |       |
| Accounts payable                             |       | $                                              | 8,140      |             | $          | 37,949            |       | $                | 6,895      |                                                             | $          | — |   | $ | 52,984 |   |
| Intercompany payables and receivables        |       | (588,458                                       | )          | (867,988         | )          | 1,456,446         |       | —           |       | —                                                           |       |
| Accrued expenses and other                   |       | 46,975                                         |       | 67,395           |       | 7,949             |       | —           |       | 122,319                                                          |       |
| Deferred revenues                            |       | 1,738                                          |       | 94,335           |       | 11,867            |       | —           |       | 107,940                                                          |       |
| Current maturities of long-term debt         |       | 5,816                                          |       | 1,827            |       | 34                |       | —           |       | 7,677                                                            |       |
| Liabilities of businesses held for sale      |       | —                                         |       | 33,203           |       | —            |       | —           |       | 33,203                                                           |       |
| Total current liabilities                    |       | (525,789                                       | )          | (633,279         | )          | 1,483,191         |       | —           |       | 324,123                                                          |       |
| Long-term debt                               |       | 1,454,174                                      |       | 2,457            |       | 139               |       | —           |       | 1,456,770                                                        |       |
| Intercompany  notes payable                  |       | —                                         |       | 2,226,286        |       | —            |       | (2,226,286       | )          | —                                                           |       |
| Deferred  revenues                           |       | 14,447                                         |       | —           |       | —            |       | —           |       | 14,447                                                           |       |
| Deferred income  taxes                       |       | 87,655                                         |       | —           |       | —            |       | —           |       | 87,655                                                           |       |
| Other  non-current liabilities               |       | 29,540                                         |       | 22,069           |       | 26,593            |       | —           |       | 78,202                                                           |       |
| Total Liabilities                            |       | 1,060,027                                      |       | 1,617,533        |       | 1,509,923         |       | (2,226,286       | )          | 1,961,197                                                        |       |
| Shareholders' deficiency:                    |       |                                           |       |             |       |              |       |             |       |                                                             |       |
| Common stock                                 |       | 2,722                                          |       | —           |       | —            |       | —           |       | 2,722                                                            |       |
| Additional paid-in capital                   |       | 2,363,071                                      |       | —           |       | —            |       | —           |       | 2,363,071                                                        |       |
| Accumulated deficit                          |       | (2,861,645                                     | )          | (443,481         | )          | (1,311,267        | )          | 1,754,748        |       | (2,861,645                                                       | )          |
| Common stock in treasury, at cost            |       | (75,877                                        | )          | —           |       | —            |       | —           |       | (75,877                                                          | )          |
| Total shareholders' deficiency               |       | (571,729                                       | )          | (443,481         | )          | (1,311,267        | )          | 1,754,748        |       | (571,729                                                         | )          |
|                                         |       | $                                              | 488,298    |             | $          | 1,174,052         |       | $                | 198,656    |                                                             | $          | (471,538 | ) | $ | 1,389,468 |   |

** **

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**PRIMEDIA INC. ANDSUBSIDIARIESCONDENSED STATEMENT OF CONSOLIDATING OPERATIONS(UNAUDITED)For the Three Months Ended March 31, 2005(dollars in thousands)**

** **
| ** **                                                                  | ** ** | ** **             | ** ** | ** **       | ** ** | ** **                                                       | ** ** | ** **       | ** ** | **Primedia Inc.** | ** ** |
|-----------------------------------------------------------------------------|------------|------------------------|------------|------------------|------------|------------------------------------------------------------------|------------|------------------|------------|------------------------|------------|
| ** **                                                                  | ** ** | ** **             | ** ** | **Guarantor**    | ** ** | **Non-Guarantor**                                                | ** ** | ** **       | ** ** | **and**                | ** ** |
| ** **                                                                  | ** ** | **Primedia Inc.** | ** ** | **Subsidiaries** | ** ** | **    Subsidiaries    ** | ** ** | **Eliminations** | ** ** | **Subsidiaries**       | ** ** |
| Revenues, net:                                                              |       | $                      | —     |             | $          | 198,173                                                          |       | $                | 38,547     |                   | $          | (7,955 | ) | $ | 228,765 |   |
| Operating costs and  expenses:                                              |       |                   |       |             |       |                                                             |       |             |       |                   |       |
| Cost of goods sold (exclusive of depreciation of  property and equipment)   |       | —                 |       | 43,875           |       | 2,674                                                            |       | —           |       | 46,549                 |       |
| Marketing and selling                                                       |       | —                 |       | 43,063           |       | 4,559                                                            |       | —           |       | 47,622                 |       |
| Distribution, circulation and fulfillment                                   |       | —                 |       | 29,847           |       | 16,057                                                           |       | —           |       | 45,904                 |       |
| Editorial                                                                   |       | —                 |       | 15,606           |       | 1,180                                                            |       | —           |       | 16,786                 |       |
| Other general expenses                                                      |       | 12                     |       | 17,751           |       | 21,096                                                           |       | (7,955           | )          | 30,904                 |       |
| Corporate administrative expenses (including non-cash  compensation)        |       | 6,511                  |       | —           |       | 1,260                                                            |       | —           |       | 7,771                  |       |
| Depreciation of property and equipment                                      |       | 710                    |       | 3,849            |       | 1,467                                                            |       | —           |       | 6,026                  |       |
| Amortization of intangible assets and other                                 |       | —                 |       | 2,194            |       | 8                                                                |       | —           |       | 2,202                  |       |
| Provision for severance, closures and restructuring  related costs          |       | (128                   | )          | 1,108            |       | 53                                                               |       | —           |       | 1,033                  |       |
|                                                                        |       |                   |       |             |       |                                                             |       |             |       |                   |       |
| Operating income  (loss)                                                    |       | (7,105                 | )          | 40,880           |       | (9,807                                                           | )          | —           |       | 23,968                 |       |
| Other income (expense):                                                     |       |                   |       |             |       |                                                             |       |             |       |                   |       |
| Interest expense                                                            |       | (32,775                | )          | (328             | )          | (18                                                              | )          | —           |       | (33,121                | )          |
| Interest on shares subject to mandatory redemption                          |       | (10,945                | )          | —           |       | —                                                           |       | —           |       | (10,945                | )          |
| Amortization of deferred financing costs                                    |       | (336                   | )          | (821             | )          | (177                                                             | )          | —           |       | (1,334                 | )          |
| Intercompany management fees and interest                                   |       | 37,278                 |       | (30,923          | )          | (6,355                                                           | )          | —           |       | —                 |       |
| Other income, net                                                           |       | 529                    |       | 135              |       | 7                                                                |       | —           |       | 671                    |       |
|                                                                        |       |                   |       |             |       |                                                             |       |             |       |                   |       |
| Income (loss)  from continuing operations before provision for income taxes |       | (13,354                | )          | 8,943            |       | (16,350                                                          | )          | —           |       | (20,761                | )          |
|                                                                        |       |                   |       |             |       |                                                             |       |             |       |                   |       |
| Provision for  income taxes                                                 |       | (3,578                 | )          | (69              | )          | (1                                                               | )          | —           |       | (3,648                 | )          |
| Equity in losses  of subsidiaries                                           |       | 382,776                |       | —           |       | —                                                           |       | (382,776         | )          | —                 |       |
|                                                                        |       |                   |       |             |       |                                                             |       |             |       |                   |       |
| Income (loss)  from continuing operations                                   |       | 365,844                |       | 8,874            |       | (16,351                                                          | )          | (382,776         | )          | (24,409                | )          |
|                                                                        |       |                   |       |             |       |                                                             |       |             |       |                   |       |
| Discontinued  operations, net of tax                                        |       | (330                   | )          | 387,651          |       | 2,602                                                            |       | —           |       | 389,923                |       |
|                                                                        |       |                   |       |             |       |                                                             |       |             |       |                   |       |
| Net income  (loss)                                                          |       | $                      | 365,514    |             | $          | 396,525                                                          |       | $                | (13,749    | )                      | $          | (382,776 | ) | $ | 365,514 |   |

** **

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**PRIMEDIAINC. AND SUBSIDIARIESCONDENSED STATEMENT OF CONSOLIDATING CASH FLOWS (UNAUDITED)For the Three Months Ended March 31, 2005(dollars in thousands)**

** **
| ** **                                                                                         | ** ** | ** **             | ** ** | ** **       | ** ** | ** **        | ** ** | ** **       | ** ** | **PRIMEDIA Inc.** | ** ** |
|----------------------------------------------------------------------------------------------------|------------|------------------------|------------|------------------|------------|-------------------|------------|------------------|------------|------------------------|------------|
| ** **                                                                                         | ** ** | ** **             | ** ** | **Guarantor**    | ** ** | **Non-Guarantor** | ** ** | ** **       | ** ** | **and**                | ** ** |
| ** **                                                                                         | ** ** | **PRIMEDIA Inc.** | ** ** | **Subsidiaries** | ** ** | **Subsidiaries**  | ** ** | **Eliminations** | ** ** | **Subsidiaries**       | ** ** |
| **Operating activities:**                                                                          | ** ** | ** **             | ** ** | ** **       | ** ** | ** **        | ** ** | ** **       | ** ** | ** **             | ** ** |
| Net income  (loss)                                                                                 |       | $                      | 365,514    |             | $          | 396,525           |       | $                | (13,749    | )                      | $          | (382,776 | ) | $ | 365,514 |   |
|                                                                                               |       |                   |       |             |       |              |       |             |       |                   |       |
| Adjustments to reconcile net income (loss) to net cash  provided by (used in) operating activities |       | (413,362               | )          | (337,575         | )          | 3,159             |       | 382,776          |       | (365,002               | )          |
| Changes in operating assets and liabilities                                                        |       | 10,230                 |       | 10,961           |       | (17,097           | )          | —           |       | 4,094                  |       |
|                                                                                               |       |                   |       |             |       |              |       |             |       |                   |       |
| Net cash provided by (used in) operating activities                                                |       | (37,618                | )          | 69,911           |       | (27,687           | )          | —           |       | 4,606                  |       |
|                                                                                               |       |                   |       |             |       |              |       |             |       |                   |       |
| **Investing activities:**                                                                          | ** ** | ** **             | ** ** | ** **       | ** ** | ** **        | ** ** | ** **       | ** ** | ** **             | ** ** |
| Additions to property, equipment and other, net                                                    |       | (116                   | )          | (1,042           | )          | (4,733            | )          | —           |       | (5,891                 | )          |
| Proceeds from sales of businesses and other                                                        |       | —                 |       | 410,000          |       | 21,306            |       | —           |       | 431,306                |       |
| Payments for businesses acquired, net of cash  acquired                                            |       | —                 |       | (1,056           | )          | (6,764            | )          | —           |       | (7,820                 | )          |
|                                                                                               |       |                   |       |             |       |              |       |             |       |                   |       |
| Net cash provided by (used in) investing activities                                                |       | (116                   | )          | 407,902          |       | 9,809             |       | —           |       | 417,595                |       |
|                                                                                               |       |                   |       |             |       |              |       |             |       |                   |       |
| **Financing activities:**                                                                          | ** ** | ** **             | ** ** | ** **       | ** ** | ** **        | ** ** | ** **       | ** ** | ** **             | ** ** |
| Intercompany activity                                                                              |       | 458,218                |       | (477,090         | )          | 18,872            |       | —           |       | —                 |       |
| Borrowings under credit agreements                                                                 |       | 63,150                 |       | —           |       | —            |       | —           |       | 63,150                 |       |
| Repayments of borrowings under credit agreements                                                   |       | (131,650               | )          | —           |       | —            |       | —           |       | (131,650               | )          |
| Proceeds from issuances of common stock, net                                                       |       | 1,074                  |       | —           |       | —            |       | —           |       | 1,074                  |       |
| Deferred financing costs paid                                                                      |       | —                 |       | (51              | )          | (11               | )          | —           |       | (62                    | )          |
| Capital lease obligations                                                                          |       | (911                   | )          | (900             | )          | (262              | )          | —           |       | (2,073                 | )          |
| Other                                                                                              |       | —                 |       | (51              | )          | —            |       | —           |       | (51                    | )          |
|                                                                                               |       |                   |       |             |       |              |       |             |       |                   |       |
| Net cash provided by (used in) financing activities                                                |       | 389,881                |       | (478,092         | )          | 18,599            |       | —           |       | (69,612                | )          |
|                                                                                               |       |                   |       |             |       |              |       |             |       |                   |       |
| Increase  (decrease) in cash and cash equivalents                                                  |       | 352,147                |       | (279             | )          | 721               |       | —           |       | 352,589                |       |
| Cash and cash  equivalents, beginning of period                                                    |       | 3,495                  |       | 9,480            |       | 25                |       | —           |       | 13,000                 |       |
| Cash and cash  equivalents, end of period                                                          |       | $                      | 355,642    |             | $          | 9,201             |       | $                | 746        |                   | $          | — |   | $ | 365,589 |   |

** **

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**Item2.**                          MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(dollars in thousands, except share and per share amounts)

**Introduction**

PRIMEDIA Inc., together with its subsidiaries, isherein referred to as either “PRIMEDIA” or the “Company.”

The following discussion and analysis summarizes thefinancial condition and operating performance of the Company and its businesssegments and should be read in conjunction with the unaudited condensed consolidatedfinancial statements and notes thereto.

**Executive Summary**

*Our Business*

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

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

*Background*

Historically, PRIMEDIA was a broad based mediaenterprise built primarily from a series of acquisitions and comprised ofnumerous disparate assets. Since 2000, the Company has been opportunisticallydivesting selective properties in order to better focus on its core businessesand to reduce debt and shares subject to mandatory redemption while focusing oninvesting in organic growth and primarily making only small acquisitions whichacclerate organic growth, particularly related to the Internet. The Company hasbeen positioning itself as a highly focused targeted media company which is investingin its businesses to drive growth.

Additionally, to counter the effects of the weaknessin the overall advertising environment, the Company aggressively attacked itscost structure. The Company also realigned and reorganized its managementstructure to better reflect its emphasis on delivering exceptional products andbrands to the marketplace to achieve organic growth. These initiatives haveresulted in charges for severance, closures and restructuring related costs tointegrate Company operations and consolidate many back office functions andfacilities, resulting in a significant reduction in the number of employees andoffice space, creating operational and financial efficiencies.

Overall, these actions have made the Company a moreefficient organization with a strengthened balance sheet and improvedliquidity.

*Business Trends*

The Company is currently facing difficult marketconditions, specifically in magazine advertising and circulation. Additionally,recent high levels of condominium conversions coupled with low mortgage ratesare spurring housing purchases and limiting existing and potential customersfor Apartment Guide markets while some markets affected by Hurricane Katrinaand other natural disasters experienced decreased vacancy rates and loweradvertising spending.

25

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*CompanyStrategy*

The Company’s strategy is to focus on its coretargeted media businesses and grow by expanding the Internet and leveraging andexpanding its market-leading brands. In 2006, the Company continues tomake organic growth its top priority. PRIMEDIA believes that it is wellpositioned to capitalize on the shift away from mass advertising to targetedmedia.

The Companycontinues to implement its organic growth strategy through various actions,including:

·    improving product quality andcirculation performance,

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

·       leveraging its dominance inthe highly targeted male 18-34 advertising market,

·       expanding its well-knownbrands through extensions including events, television, radio, licensing andmerchandising.

At thesame time, the Company continues to focus on cost reductions which will beutilized to fund various elements of its growth strategies.

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

*Summary ofConsolidated Results for the three months ended March 31, 2006*

For the three months ended March 31, 2006,revenues were $241,391, up 5.5% as compared to $228,765 in 2005. Revenuesincreased in the Company’s Enthusiast Media and Consumer Guides segments, by7.2% and 7.6%, respectively, while revenues decreased in the Education segmentby 24.8%. In 2006, Operating Expenses were $209,225, up 7.7% compared to 2005. In2006, operating income was $21,309 from $23,968 in 2005. Net income was $7,962in 2006 compared to $365,514 in 2005, the decrease primarily due to the gain onsale of About, Inc. of $378,906 in the first quarter of 2005.

*Forward-LookingInformation*

This report contains certain forward-lookingstatements concerning the Company’s operations, economic performance andfinancial condition. These statements are based upon a number of assumptionsand estimates, which are inherently subject to uncertainties and contingencies,many of which are beyond the control of the Company, and reflect anticipatedbusiness decisions, which are subject to change. Some of the assumptions mayprove to be incorrect and unanticipated events will occur which could affectthe Company’s results.

*Why We Use theTerm Segment EBITDA*

Segment EBITDA represents each segment’s earningsbefore interest, taxes, depreciation, amortization and other charges (income) (“SegmentEBITDA”). Other charges (income) include non-cash compensation and provisionfor severance, closures and restructuring related costs. PRIMEDIA believes thatSegment EBITDA is an accurate indicator of its segments’ results, because itfocuses on revenue and operating cost items driven by operating managers’performance, and excludes items largely outside of operating managers’ control.Internally, the Company’s chief operating decision maker, its Chairman,President and CEO, and the executive team measure performance primarily basedon Segment EBITDA.

Segment EBITDA is not intended to be and should not beconsidered as an alternative to net income or loss, as determined in conformitywith accounting principles generally accepted in the United States of America,as an indicator of the Company’s operating performance. Segment EBITDA may notbe available for the Company’s discretionary use as there are requirements torepay debt, among other payments. Segment EBITDA as presented may not becomparable to similarly titled measures reported by other companies since notall companies necessarily calculate Segment EBITDA in an identical manner, andtherefore, it is not necessarily an accurate 

26

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measure of comparison between companies. Seereconciliation of Segment EBITDA to net income for the Company’s three segmentsin their respective segment discussions below.

*Why We Use theTerm Free Cash Flow*

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

The Company believes that the use of Free Cash Flowenables the Company’s chief operating decision maker, its Chairman, Presidentand CEO, and the executive team to make decisions based on the Company’s cashresources. Free Cash Flow also is considered to be an indicator of the Company’sliquidity, including its ability to reduce debt and make strategic investments.

Free Cash Flow is not intended to represent cash flowsfrom operating activities as determined in conformity with accountingprinciples generally accepted in the United States of America. Free Cash Flowas presented may not be comparable to similarly titled measures reported byother companies since not all companies necessarily calculate Free Cash Flow inan identical manner, and therefore, is not necessarily an accurate measure ofcomparison between companies.

*IntersegmentTransactions*

The information presented below includes certainintersegment transactions and is, therefore, not necessarily indicative of theresults had the operations existed as stand-alone businesses.Intersegment transactions represent intercompany advertising and other serviceswhich are billed at what management believes are prevailing market rates. Theseintersegment transactions, which represent transactions between operating unitsin different business segments, are eliminated in consolidation.

*DiscontinuedOperations*

During the first quarter of 2005, the Companycompleted the sales of About.com and the Bankers Training Division of WorkplaceLearning. On April 1, 2005, the Company sold the remaining net assets ofWorkplace Learning for the assumption of liabilities. Also during 2005, theCompany sold its Business Information Segment, including Ward’s AutomotiveGroup (“Ward’s”), discontinued the operations of two magazines in the EnthusiastMedia segment, discontinued the operations of its Software on Demand divisionwithin the Education segment, and decided to pursue the sales of its Crafts andHistory groups within the Enthusiast Media segment.

During the first quarter of 2006, the Company decidedto actively pursue the sale of its Films Media group within the Educationsegment and completed the sale of the History group.

Financial results for these divestitures and planneddivestitures are reported in discontinued operations on the statements ofconsolidated operations for all periods presented.

27

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***Segment Data***

The following table presents the results of theCompany’s three operating segments and Corporate: 
| ** **                                                                                 | ** ** | **Three Months Ended March 31,** | ** ** |
|--------------------------------------------------------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                                                                 | ** ** | **2006**                                             | ** ** | **2005** | ** ** |
| Revenues, net:                                                                             |       |                                                 |       |   |   |
| Continuing Businesses:                                                                     |       |                                                 |       |   |   |
| Enthusiast Media                                                                           |       | $                                                    | 150,128    |   | $ | 140,006 |   |
| Consumer Guides                                                                            |       | 81,402                                               |       | 75,648 |   |
| Education                                                                                  |       | 9,938                                                |       | 13,209 |   |
| Intersegment Eliminations                                                                  |       | (77                                                  | )          | (98 | ) |
| Total                                                                                      |       | $                                                    | 241,391    |   | $ | 228,765 |   |
|                                                                                       |       |                                                 |       |   |   |
| Segment EBITDA:  (1)                                                                       |       |                                                 |       |   |   |
| Continuing Businesses:                                                                     |       |                                                 |       |   |   |
| Enthusiast Media                                                                           |       | $                                                    | 21,048     |   | $ | 20,806 |   |
| Consumer Guides                                                                            |       | 17,736                                               |       | 18,244 |   |
| Education                                                                                  |       | (175                                                 | )          | 1,962 |   |
| Corporate Overhead                                                                         |       | (6,443                                               | )          | (6,582 | ) |
| Total Segment EBITDA                                                                       |       | $                                                    | 32,166     |   | $ | 34,430 |   |
|                                                                                       |       |                                                 |       |   |   |
| Depreciation,  amortization and other charges: (2)                                         |       |                                                 |       |   |   |
| Continuing Businesses:                                                                     |       |                                                 |       |   |   |
| Enthusiast Media                                                                           |       | $                                                    | 5,924      |   | $ | 4,539 |   |
| Consumer Guides                                                                            |       | 3,127                                                |       | 2,547 |   |
| Education                                                                                  |       | 551                                                  |       | 1,593 |   |
| Corporate overhead                                                                         |       | 1,255                                                |       | 1,783 |   |
|                                                                                       |       | $                                                    | 10,857     |   | $ | 10,462 |   |
|                                                                                       |       |                                                 |       |   |   |
| Operating income  (loss):                                                                  |       |                                                 |       |   |   |
| Continuing Businesses:                                                                     |       |                                                 |       |   |   |
| Enthusiast Media                                                                           |       | $                                                    | 15,124     |   | $ | 16,267 |   |
| Consumer Guides                                                                            |       | 14,609                                               |       | 15,697 |   |
| Education                                                                                  |       | (726                                                 | )          | 369 |   |
| Corporate                                                                                  |       | (7,698                                               | )          | (8,365 | ) |
| Total                                                                                      |       | $                                                    | 21,309     |   | $ | 23,968 |   |
|                                                                                       |       |                                                 |       |   |   |
| Other income  (expense):                                                                   |       |                                                 |       |   |   |
| Interest expense (3)                                                                       |       | (30,826                                              | )          | (33,121 | ) |
| Interest on shares subject to mandatory redemption  (4)                                    |       | -                                                    |       | (10,945 | ) |
| Amortization of deferred financing costs                                                   |       | (659                                                 | )          | (1,334 | ) |
| Other income, net                                                                          |       | 158                                                  |       | 671 |   |
| Loss from  continuing  operations before benefit (provision) for income taxes              |       | (10,018                                              | )          | (20,761 | ) |
|                                                                                       |       |                                                 |       |   |   |
| Benefit (provision)  for income taxes                                                      |       | 1,150                                                |       | (3,648 | ) |
|                                                                                       |       |                                                 |       |   |   |
| Loss from  continuing operations                                                           |       | (8,868                                               | )          | (24,409 | ) |
|                                                                                       |       |                                                 |       |   |   |
| Discontinued  operations (5)                                                               |       | 16,808                                               |       | 389,923 |   |
|                                                                                       |       |                                                 |       |   |   |
| Cumulative  effect of a change in accounting principle  (from the adoption of SFAS 123(R)) |       | 22                                                   |       | — |   |
| Net income                                                                                 |       | $                                                    | 7,962      |   | $ | 365,514 |   |

 

28

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----

(1)             Segment EBITDA represents the segments’earnings before interest, taxes, depreciation, amortization and other charges(income) (see Note 2 below).

(2)             Other charges include non-cash compensationand provision for severance, closures and restructuring related costs.

(3)             The 2006 interest expense was reduced by $982due to the quarterly fair value measurement of the liability arising from theforward agreement related to the Automotive.com acquisition.

(4)             During 2005, the Company redeemed all of itsoutstanding shares subject to mandatory redemption (liquidation preference ofapproximately $475,000).

(5)             Discontinued operations include a gain on saleof businesses, net of $13,707 and $383,178 for the three months ended March 31,2006 and 2005, respectively.

***Resultsof Operations***

***Three Months Ended March 31, 2006 Compared toThree Months Ended March 31, 2005***

**ConsolidatedResults:**

*Revenues, Net*

Consolidatedrevenues were $241,391 in 2006 compared to $228,765 in 2005:

|                | ** ** | **Three Months Ended  March 31,** | ** ** | **Percent** | ** ** |
|----------------|------------|--------------------------------------------------|------------|-------------|------------|
| ** **     | ** ** | **2006**                                         | ** ** | **2005**    | ** ** | **Change** | ** ** |
| Revenues, net: |       |                                             |       |        |       |   |   |
| Advertising    |       | $                                                | 154,131    |        | $          | 150,877 |   | 2.2 |   |
| Circulation    |       | 49,005                                           |       | 49,368      |       | (0.7 | ) |
| Other          |       | 38,255                                           |       | 28,520      |       | 34.1 |   |
| Total          |       | $                                                | 241,391    |        | $          | 228,765 |   | 5.5 |   |

 

Advertising revenues increased by $3,254 in the firstquarter of 2006 compared to 2005 due**toincreases of $1,196 and $4,774 in the Enthusiast Media and Consumer Guidessegments, respectively, partially offset by a decrease of $2,716 in theEducation segment. Circulation revenues, which are generated entirely by theEnthusiast Media segment, decreased $363 in 2006 due to continued weakness insingle copy sales. Other revenues, including distribution and non-printrevenues, increased $9,735 in 2006 compared to 2005, primarily due to anincrease in the Enthusiast Media segment of $9,287. Revenue trends within eachsegment are further detailed in the segment discussions below.

*Operating Income*

Operating income was $21,309 in 2006 compared to$23,968 in 2005. The decrease in operating income in 2006 primarily resultedfrom increased operating expenses due to significant investments made in newpublications and in increased distribution capacity at Consumer Guides, as wellas increased paper prices.

*Net Income*

The Company had net income in 2006 of $7,962 comparedto $364,514 in 2005. The decrease in net income was primarily due to the netgain of $378,906 from the sale of About in the first quarter of 2005.

Interest expense decreased to $30,826 in 2006 from$33,121 in 2005. This decrease is due to the Company’s lower average debtlevels during the first quarter of 2006 as compared to the first quarter of2005. In addition, in

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2006 the Company recorded $982 as a reduction tointerest expense for the quarterly fair value measurement of the liabilityarising from the forward agreement related to the Automotive.com acquisition.

Interest on shares subject to mandatory redemption was$0 and $10,945 for the three months ended March 31, 2006 and 2005,respectively, as the Company redeemed all of its outstanding shares subject tomandatory redemption during 2005.

*DiscontinuedOperations*

SFAS 144 requires sales, disposals of long-livedassets and businesses held for sale that meet certain criteria to be classifiedon the condensed statement of consolidated operations as discontinuedoperations and to reclassify prior periods accordingly. During the firstquarter of 2005, the Company completed the sales of About.com and BankersTraining & Consulting Company, the financial services division ofPRIMEDIA Workplace Learning. On April 1, 2005, the Company sold theremaining net assets of Workplace Learning for the assumption of liabilities. Alsoduring 2005, the Company sold its Business Information Segment, including Ward’s,discontinued the operations of two magazines in the Enthusiast Media segment,discontinued the operations of its Software on Demand division within theEducation segment, and decided to pursue the sales of its Crafts and Historygroups within the Enthusiast Media segment.

During the first quarter of 2006, the Company decidedto actively pursue the sale of its Films Media group within the Educationsegment and completed the sale of the History group.

In accordance with SFAS 144, the financial results ofall of these operations have been classified as discontinued operations on the condensedstatements of consolidated operations for all periods presented. For the threemonths ended March 31, 2006 and 2005, discontinued operations include anet gain on sale of businesses of $13,707 and $383,178, respectively.

*CumulativeEffect of a Change in Accounting Principle*

Effective January 1, 2006, the Company adoptedSFAS 123(R) using the modified prospective method. Prior to the adoptionof this statement, the Company expensed the fair value of stock basedcompensation for all grants, modifications or settlements made on or after January 1,2003 in accordance with the provisions of SFAS 123 adopted on January 1,2003 using the prospective method. Upon adoption of SFAS 123(R), the Company isalso required to expense the fair value of any awards that were granted priorto January 1, 2003 and were not fully vested as of January 1, 2006.The cumulative effect of adopting this change in accounting principle, asrequired by SFAS 123(R), was $22, included in the three months ended March 31,2006.

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**Segment Results:**

**Enthusiast Media Segment (Includes Automotive, Outdoor,Marine, Equine, Action Sports, Soaps, Internet, events, television, radio,licensing and merchandising)**

*Revenues, Net*

Enthusiast Mediarevenues were $150,128 or 62.2% and $140,006 or 61.2% of the Company’sconsolidated revenues for 2006 and 2005, respectively. Enthusiast Mediarevenues increased $10,122 or 7.2% in 2006 compared to 2005 as follows:

|                       | ** ** | **Three Months Ended  March 31,** | ** ** | **Percent** | ** ** |
|-----------------------|------------|--------------------------------------------------|------------|-------------|------------|
| ** **            | ** ** | **2006**                                         | ** ** | **2005**    | ** ** | **Change** | ** ** |
| Revenues, net:        |       |                                             |       |        |       |   |   |
| Advertising           |       | $                                                | 79,600     |        | $          | 78,404 |   | 1.5 |   |
| Circulation           |       | 49,005                                           |       | 49,368      |       | (0.7 | ) |
| Other                 |       | 21,446                                           |       | 12,159      |       | 76.4 |   |
| Intersegment revenues |       | 77                                               |       | 75          |       |   |   |
| Total                 |       | $                                                | 150,128    |        | $          | 140,006 |   | 7.2 |   |

 

The slight growth in advertising revenue is primarilythe result of growth in the Company’s Consumer Automotive, Outdoor and ActionSports categories, offset by continued declines in the International Automotivecategory. The advertising weakness in the International Automotive category wasparticularly felt in the non-endemic advertising market. The slight decline incirculation revenue is primarily the result of continued softness in theCompany’s Automotive and Outdoor newsstand sales. Subscription revenue was downslightly, primarily due to softness in Performance Automotive. The increase inOther revenue was largely the result of the Company’s acquisition ofAutomotive.com, Inc. (“Automotive.com) in the fourth quarter of 2005,which resulted in an increase in online revenue of approximately $6,000. Additionally,events revenue increased approximately $3,000, resulting from increased successof existing events and new events introduced in 2006, as well as theacquisition of International Automotive Showcase in the second quarter of 2005.

Automotive:Consumer Automotive group advertising grew in the quarter, primarily due to thetiming of Asian and European automaker advertising versus the same period lastyear. Also, the 20th anniversary issue of *Automobile*,its largest issue in terms of advertising pages, had a positive impact on thequarter. U.S. automaker print advertising increased 19% off a low base in theCompany’s Consumer Automotive Group in the quarter, but was down 4%segment-wide.

U.S. automaker print advertising in the first quarterof 2006 was 4% of the Enthusiast Media segment’s total print advertisingrevenue. Total automaker print advertising in the quarter was 12% of thesegment’s total, and non-automaker automotive print advertising (e.g., aftermarket parts and accessories) was 50% of the segment’s total, both remainingconsistent with the first quarter of 2005.

Performance Automotive group advertising revenue grew,while newsstand circulation declined. International Automotive group advertisingand circulation revenue were down, with circulation down less than in recentprior periods, primarily due to increased sales of *Super Street*.

Outdoor, Marine, Equine:  Revenue for the Outdoor and Marine groups wasflat in the first quarter of 2006. Merchandise sales continue to grow with 21%year-over-year growth. Four new products were successfully launched in thefirst quarter including calendars and DVDs of PRIMEDIA Outdoor TV programming.

Additionally, in the Outdoor group, the Companyexpects positive results from product improvements in *Petersen’sHunting*, *Game & Fish*and *Shooting Times*. Specifically, *Game & Fish* has seen stronger renewal rates. InMarine, *Power & Motoryacht*, theindustry ad page leader for the quarter, had 2.7% revenue growth. The February issueof *Power & Motoryacht* was a recordissue in terms of ad pages and total

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pages. *SAIL* isbeginning to see strong results from management and product upgrades, andentered the early summer buying cycle in a much stronger position. Televisionand online revenues grew 10% in the first quarter as the group continues toaggressively extend the print franchises into television and realize theinitial benefits from improvements in online content and design.

Action Sports: The Action Sports group had revenue increases in both online and printadvertising, and improved circulation revenue due to product improvements at *Powder, Skateboarder*and *Surfing*.    

Licensing and Merchandising: Licensing and Merchandising revenue was down slightly primarily dueto a year-over-year decline in revenue from RadioShack. Licensing programs for *Motor Trend*, *Lowrider*, and *Hot Rod* continued their success, further expanding andincreasing availability of products at major retailers such as Sears and Meijer’s,and expanding video continuity programs for both outdoor and automotive titles.Licensed products are available at approximately 71 retail chains and in nearly800 independent retailers. New retailers added in the first quarter includeSears, Orchard Supply, and Menards.

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The Company continues to execute its growthstrategies:

The Company hascompleted product improvements on nine magazines thus far in 2006. Except forAutomobile Magazine, improvements are in the Performance and InternationalAutomotive Groups where newsstand challenges have been greatest. The Companyexpects to implement over 20 product improvements in total by September 2006.In addition, editorial and art talent upgrades are in progress while surveysand content testing programs are enabling the Company to increase its product’sappeal to consumers.

The Companycontinues to build multiple online revenue streams, including transactions,lead generation, and online advertising. Online is also generating printsubscriptions as magazine subscriber acquisitions via the Company’s websitesgrew more than 20% in the quarter. As a result of the acquisition ofAutomotive.com in the fourth quarter of 2005, online revenue grew over 170% inthe quarter. Online represented 7% of segment revenue in the quarter, up from3% in the prior year. The integration of Automotive.com and Equine.com into theAutomotive and Outdoor groups, respectively, continues on track to generate thesynergies expected from these transactions. The Company intends to extend bothof these platforms into new vertical markets in 2006.

During the firstquarter of 2006, the Company continued to improve circulation performance as aresult of product quality improvements implemented prior to 2006. Circulationresults are improving as the Company works to improve the ratio of the numberof copies sent to newsstands location-by-location (“draw”) to the number soldand adjust the draw for the seasonality of its titles. In the first quarter,PRIMEDIA reduced draw by 1.5 million copies, or 3%, which led to a positiveimpact on circulation profitability with a minimal loss of sales.

At the same time,the Company is focused on managing costs, particularly when its underlyingmarkets are soft. The cost control effort will assist in providing funding forthe growth strategies.

*Segment EBITDA*

Enthusiast Media Segment EBITDA increased 1.2% to$21,048 in 2006 from $20,806 in 2005. This reslutsed primarily from increasedrevenue in the online and events categories as described above, offset byincreased costs of good sold, due to the acquisition of Automotive.com andincreased paper costs. As a result, Segment EBITDA margin decreased to 14.0% in2006 from 14.9% in 2005.

Below is areconciliation of Enthusiast Media Segment EBITDA to operating income for thethree months ended March 31, 2006 and 2005: 
| ** **                                                         | ** ** | **Three Months Ended  March 31,** | ** ** |
|--------------------------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                                         | ** ** | **2006**                                         | ** ** | **2005** | ** ** |
| Segment EBITDA                                                     |       | $                                                | 21,048     |   | $ | 20,806 |   |
| Depreciation of property and equipment                             |       | 3,792                                            |       | 2,918 |   |
| Amortization of intangible assets and other                        |       | 1,878                                            |       | 460 |   |
| Provision for severance, closures and restructuring  related costs |       | 254                                              |       | 1,161 |   |
| Operating income                                                   |       | $                                                | 15,124     |   | $ | 16,267 |   |

 

*Operating Income*

Operating income was $15,124 in 2006 compared to$16,267 in 2005, a decrease of $1,143 or 7.0%. This decrease was primarilydriven by a slight increase in Segment EBITDA as discussed above, and offset bya larger increase in depreciation and amortization expenses, primarily due tothe acquisition of Automotive.com. In addition, in 2006 the Company recorded$619 of compensation expense resulting from the quarterly fair valuemeasurement of the liability arising from the forward agreement related to theCEO of Automotive.com.

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**Consumer Guides Segment (includes *Apartment Guide, New Home Guide, Auto Guide, ApartmentGuide.com,NewHomeGuide.com, RentClicks.com, Autoguide.com, AmericanHomeGuides.com,Rentals.com*, and the *DistribuTech*distributionbusiness)**

***Revenues, Net***

Consumer Guidesrevenues were $81,402 or 33.7% and $75,648 or 33.1% of the Company’sconsolidated revenues for 2006 and 2005, respectively. Consumer Guides revenuesincreased $5,754 or 7.6% in 2006 compared to 2005 as follows:
| ** **     | ** ** | **Three Months Ended  March 31,** | ** ** | **Percent** | ** ** |
|----------------|------------|--------------------------------------------------|------------|-------------|------------|
| ** **     | ** ** | **2006**                                         | ** ** | **2005**    | ** ** | **Change** | ** ** |
| Revenues, net: |       |                                             |       |        |       |   |   |
| Advertising    |       | $                                                | 67,092     |        | $          | 62,318 |   | 7.7 |   |
| Other          |       | 14,310                                           |       | 13,330      |       | 7.4 |   |
| Total          |       | $                                                | 81,402     |        | $          | 75,648 |   | 7.6 |   |

 

In the first quarter of 2006, Consumer Guidesadvertising revenue grew by 7.7%, primarily due to strong results in the *New Home Guide* division and the expansion of the *Auto Guide* division and Other revenue grew 7.4%, partially offsetby a 7.0% decrease in *Apartment Guide*revenue.

*Apartment Guide, Apartment Guide.com, RentClicks.com*:*The*segment’s largest business, Apartment Guide/Apartment Guide.com, continues toface challenging market conditions in the multi-family housing industry. Condominiumconversions, which reduce existing and potential apartment renters in *Apartment Guide* markets, continued to negatively impact thebusiness in the first quarter. In addition, occupancy rates increased tounattractive levels in several markets that have lost supply to condominiumconversions and in markets that have benefited from the 2005 hurricanes. Thesenegative market conditions resulted in reduced advertising revenues in thefirst quarter of 2006, and are expected to continue to impact the ApartmentGuide business for the rest of the year. Despite reduced revenues the *Apartment Guide* brand showed strength as *Apartment Guide.com* grew unique users by 16.5%. In January 2006,the Company acquired *RentClicks*, theleading online marketplace for small unit rental properties. This marketplacewhich consists of rental houses, town homes, condos and single unit apartments,accounts for 70% of the total rental market. The Company believes that *RentClicks* provides a strong platform for growth that canboth capture a new segment of the rental marketplace as well as recapture aportion of the *Apartment Guide* revenue lost tocondominium conversion.

*New Home Guide, NewHomeGuide.com:**The segment’s*New Home Guide*business had revenue growth 74.4% inthe first quarter of 2006. This increase was a result of strong organic growthof 46.5% in existing markets, and the acquisition of new magazines in Atlanta,Charlotte, Jacksonville, Nashville, Seattle and Portland markets during 2005. TheCompany also significantly expanded its online presence through upgrades to itsprimary web site,*NewHomeGuide.com*.*

*Auto Guide, AutoGuide.com: **During the first quarter of 2006, the*AutoGuide business was up 253% from 2005. AutoGuide.comgrew its listings significantly in the quarter, and now showcases over 650,000pre-owned cars and trucks on its website.

*DistribuTech*:  The segment grew its otherrevenue by 7.4% in the first quarter of 2006, as the DistribuTech divisionincreased its utilization of retail distribution programs across the country.

*Segment EBITDA*

Consumer Guides Segment EBITDA decreased $508 or 2.8%in 2006 to $17,736, from $18,244 in 2005. This decrease is primarily due to theimpact of the segment’s investment of $7.8 million in 2005 to launch new 

 

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Auto Guides, partiallyoffset by organic growth and acquisitions. Segment EBITDA margin decreased to21.8% in 2006 from 24.1% in 2005.

Below is areconciliation of Consumer Guides Segment EBITDA to operating income for thethree months ended March 31, 2006 and 2005: 
| ** **                                                   | ** ** | **Three Months Ended  March 31,** | ** ** |
|--------------------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                                   | ** ** | **2006**                                         | ** ** | **2005** | ** ** |
| Segment EBITDA                                               |       | $                                                | 17,736     |   | $ | 18,244 |   |
| Depreciation of property and equipment                       |       | 2,303                                            |       | 1,936 |   |
| Amortization of intangible assets and other                  |       | 678                                              |       | 611 |   |
| Non-cash compensation                                        |       | 24                                               |       | — |   |
| Provision for severance, closures and restructuring  related |       | 122                                              |       | — |   |
| Operating income                                             |       | $                                                | 14,609     |   | $ | 15,697 |   |

 

*Operating Income*

Operating income decreased $1,088 or 6.9% in 2006.This decrease was primarily driven by the decline in Segment EBITDA, coupledwith increased depreciation expense and charges for provision for severance,closures and restructuring related costs.

**Education Segment (includes Channel One and PRIMEDIAHealthcare)**

*Revenues, Net*

Education revenueswere $9,938 or 4.1% and $13,209 or 5.8% of the Company’s consolidated revenuesfor 2006 and 2005, respectively. Education revenues decreased $3,271 or 24.8%in 2006 compared to 2005 as follows: 
| ** **            | ** ** | **Three Months Ended  March 31,** | ** ** | **Percent** | ** ** |
|-----------------------|------------|--------------------------------------------------|------------|-------------|------------|
| ** **            | ** ** | **2006**                                         | ** ** | **2005**    | ** ** | **Change** | ** ** |
| Revenues, net:        |       |                                             |       |        |       |   |   |
| Advertising           |       | $                                                | 7,439      |        | $          | 10,155 |   | (26.7 | ) |
| Other                 |       | 2,499                                            |       | 3,031       |       | (17.6 | ) |
| Intersegment revenues |       | —                                           |       | 23          |       |   |   |
| Total                 |       | $                                                | 9,938      |        | $          | 13,209 |   | (24.8 | ) |

 

Education advertising revenues, which are generatedentirely by Channel One, declined $2,716, or 26.7% in the first quarter of 2006compared to the first quarter of 2005. The primary reason for the decrease inrevenues is Channel One’s decline in advertising revenue was mainlyattributable to the ongoing impact of large reductions in advertising from afew advertisers in late 2005.

*Segment EBITDA*

Education Segment EBITDA decreased $2,137 to $(175)for the first quarter of 2006, primarily due to decreased revenue. SegmentEBITDA margin decreased to (1.8)% in 2006 compared to 14.9% in 2005.

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Below is areconciliation of Education Segment EBITDA to operating income (loss) for thethree months ended March 31, 2006 and 2005:
| ** **                                  | ** ** | **Three Months Ended  March 31,** | ** ** |
|---------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                  | ** ** | **2006**                                         | ** ** | **2005** | ** ** |
| Segment EBITDA                              |       | $                                                | (175       | ) | $ | 1,962 |   |
| Depreciation of property and equipment      |       | 150                                              |       | 462 |   |
| Amortization of intangible assets and other |       | 401                                              |       | 1,131 |   |
| Operating income (loss)                     |       | $                                                | (726       | ) | $ | 369 |   |

 

*Operating Income(Loss)*

Education segment operating income (loss) for thefirst quarter of 2006 was $(726) compared to $369 in 2005. This increased losswas primarily due to the decrease in Segment EBITDA resulting from lowerrevenues.

**Corporate**

*CorporateAdministrative expenses*

Corporate administrative expenses, excluding non-cashcompensation, was $6,443 for the first quarter of 2006, flat compared to $6,582for the first quarter of 2005.

*Operating Loss*

Corporate operating loss was $7,698 for the firstquarter of 2006, down 8.0% compared to $8,365 for the first quarter of 2005.The decrease was mainly due to the decrease in non-cash compensation in thefirst quarter of 2006.

**DiscontinuedOperations**

In accordance with SFAS No. 144, the Company hasclassified the operating results of all of its divested entities and businessesheld for sale as discontinued operations for all periods presented.

*EnthusiastMedia*

The Company discontinued the following entities withinthe Enthusiast Media segment during 2005: About, Inc, Ward’s Automotive Group,the Crafts and History groups and two magazine titles (shut down). In February 2006,the Company completed the sale of the History group.

Discontinued operations of the Enthusiast Mediasegment for the three months ended March 31, 2006 and 2005 include revenueof $14,096 and $24,890, respectively, operating income of $14,615 and $383,293,respectively, and gain on sale of businesses, net of tax, of $13,707 and$378,906, respectively.

*Education*

The Company discontinued the operations of itsSoftware on Demand division during 2005. Additionally, the Company completedthe sale of its Workplace Learning division in 2005, excluding PRIMEDIAHealthcare. During the first quarter of 2006, the Company decided to activelypursue the sale of its Films Media Group.

Discontinued operations of the Education segment forthe three months ended March 31, 2006 and 2005 include revenue of $5,531and $15,041, respectively, and operating income of $194 and $4,475,respectively. For the three months ended March 31, 2005, discontinuedoperations include a gain on sale of business, net of tax, of $4,298 related tothe sale of Workplace Learning’s, Bankers Training Division.

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*BusinessInformation*

The Company sold its Business Information segmentduring the third quarter of 2005. Business Information segment revenues of$53,404 are included in discontinued operations for the three months ended March 31,2005. Also included is operating income of $3,254, and a loss on sale ofbusiness, net of tax, of $26 for the three months ended March 31, 2005.

***Liquidity,Capital and Other Resources***

As of March 31, 2006, the Company had cash andunused credit facilities of $248,400, as further detailed below under “FinancingArrangements”, compared to $250,889 as of December 31, 2005. The Company’sasset sales, debt redemption and investment in organic growth have facilitatedits strategy to become better strategically focused company while strengtheningits balance sheet and improving liquidity.

The Company believes its liquidity, capital resourcesand cash flow from operations are sufficient to fund planned capitalexpenditures, working capital requirements, interest and principal payments onits debt and other anticipated expenditures for the remainder of 2006 and for theforeseeable future. The Company has no significant required debt repaymentsuntil 2010.

*Working Capital*

Consolidated working capital, which includes currentmaturities of long-term debt, was a deficit of $22,126 at March 31, 2006compared to a working capital deficit of $22,032 at December 31, 2005.

*Cash Flow—2006Compared to 2005*

Net cash provided by operating activities increased$3,218, to $7,824 in 2006, from $4,606 in 2005. This change is primarily due tolower debt service and improved working capital management, partially offset bydecreased Segment EBITDA. For purposes of calculating net cash provided byoperating activities, discontinued operations are included until sold or shutdown. Hence, the results of the Business Information segment, About, andPRIMEDIA Workplace Learning’s Bankers Training division were included in thiscalculation for the first quarter of 2005 but not in the first quarter of 2006as these units were sold during 2005.

Net cash (used in) provided by investing activitiesdecreased to $(47) from $417,595 for the first quarter of 2006 and 2005,respectively. The primary reason for the decrease is the reduced proceeds fromsales of businesses in the first quarter 2006 versus 2005. Proceeds were$17,000 in 2006 versus $431,306 in 2005.

Net cash used in financing activities was $8,436 forthe first quarter of 2006, compared to $69,612 for the first quarter of 2005. Thedecrease is largely due to a reduction in repayments of borrowings under theCompany’s credit agreements.

 

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*Free Cash Flow*

The followingtable presents the Company’s Free Cash Flow for the three months ended March 31,2006 and 2005, respectively:
| ** **                                                                  | ** ** | **Three Months Ended  March 31,** | ** ** |
|-----------------------------------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                                                  | ** ** | **2006**                                         | ** ** | **2005** | ** ** |
| Net cash  provided by operating activities                                  |       | $                                                | 7,824      |   | $ | 4,606 |   |
| Additions to property, equipment and other, net                             |       | (4,730                                           | )          | (5,891 | ) |
| Capital lease obligations                                                   |       | (1,296                                           | )          | (2,073 | ) |
| Free Cash Flow                                                              |       | $                                                | 1,798      |   | $ | (3,358 | ) |
|                                                                        |       |                                             |       |   |   |
| Supplemental  information:                                                  |       |                                             |       |   |   |
|                                                                        |       |                                             |       |   |   |
| Cash interest paid, including interest on capital  and  restructured leases |       | $                                                | 16,033     |   | $ | 14,256 |   |
|                                                                        |       |                                             |       |   |   |
| Cash interest paid on shares subject to mandatory  redemption (1)           |       | $                                                | —     |   | $ | 10,945 |   |
|                                                                        |       |                                             |       |   |   |
| Cash taxes paid, net of refunds received                                    |       | $                                                | 4,079      |   | $ | 58 |   |
|                                                                        |       |                                             |       |   |   |
| Cash paid for  severance, closures and restructuring related  costs         |       | $                                                | 1,666      |   | $ | 4,503 |   |

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(1)             During2005, the Company redeemed all of its outstanding shares subject to mandatoryredemption (liquidation preference of approximately $475,000).

The Company’s Free Cash Flow was positive in 2006primarily due to lower debt service and improved working capital management,partially offset by decreased Segment EBITDA. For purposes of calculating FreeCash Flow, discontinued operations are included until sold or shut down. Hence,the results of the Business Information segment, About, and PRIMEDIA WorkplaceLearning’s Bankers Training division were included in this calculation for thefirst quarter of 2005 but not in the first quarter of 2006 as these units weresold during 2005.

***FinancingArrangements***

*Bank CreditFacilities*

Thebank credit facilities consisted of the following as of March 31, 2006:

|                                | ** ** | **Revolver** | ** ** | **Term B** | ** ** | **Total** | ** ** |
|--------------------------------|------------|--------------|------------|-----------------|------------|-----------|------------|
| Bank Credit  Facilities        |       | $            | 276,795    |            | $          | 497,500   |       | $ | 774,295 |   |
| Borrowings  Outstanding        |       | (15,000      | )          | (497,500        | )          | (512,500  | )          |
| Letters of  Credit Outstanding |       | (19,991      | )          | —          |       | (19,991   | )          |
| Unused Bank Commitments        |       | $            | 241,804    |            | $          | —    |       | $ | 241,804 |   |

 

The new term loan B bears interest at the base rateplus 1.25% or LIBOR plus 2.25% per year. At March 31, 2006, the weightedaverage variable interest rate on all outstanding borrowings under the bankcredit facilities was 6.8%.

Under the bank credit facilities, the Company hasagreed to pay commitment fees at a per annum rate of either 0.375% or 0.5%,depending on its debt to EBITDA ratio, as defined in the bank credit facilitiesagreement, on the daily average aggregate unutilized commitment under therevolving loan commitment. For the three months ended March 31, 2006, theCompany’s commitment fees were paid at a weighted average rate of 0.5%. TheCompany also has agreed to pay certain fees with respect to the issuance ofletters of credit and an annual administration fee. From time to time, theCompany may pay amendment fees under its bank credit facilities.

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The commitments under the revolving loan portion ofthe bank credit facilities are subject to mandatory reductions semi-annually onJune 30 and December 31, with the final reduction on June 30,2008. The aggregate remaining mandatory reductions of the revolving loancommitments under the bank credit facilities are $118,627 in 2007 and a finalreduction of $158,168 in 2008. To the extent that the total revolving creditloans outstanding exceed the reduced commitment amount, these loans must bepaid down to an amount equal to or less than the reduced commitment amount.However, if the total revolving credit loans outstanding do not exceed thereduced commitment amount, then there is no requirement to pay down any of therevolving credit loans. Remaining aggregate term loan payments under the bankcredit facilities are $2,500 in 2006, $5,000 in 2007 through 2012 and $465,000in 2013.

The bank credit facilities agreement, among otherthings, limits the Company’s ability to change the nature of its businesses,incur indebtedness, create liens, sell assets, issue stock, engage in mergers,consolidations or transactions with affiliates, make investments in or loans tocertain subsidiaries, issue guarantees and make certain restricted paymentsincluding dividend payments on or repurchases of the Company’s common stock inexcess of $75,000 in any given year.

The bank creditfacilities and Senior Notes agreements of the Company contain certain customaryevents of default which generally give the banks or the noteholders, asapplicable, the right to accelerate payments of outstanding debt. Under thebank credit facilities agreement, these events include:

·       failure to maintainrequired covenant ratios, as described below;

·       failure to make a paymentof principal, interest or fees within five days of its due date;

·       default, beyond anyapplicable grace period, on any aggregate indebtedness of PRIMEDIA exceeding$20,000;

·       occurrence of certaininsolvency proceedings with respect to PRIMEDIA or any of its materialsubsidiaries;

·       entry of one judgment ordecree involving a liability of $15,000 or more (or more than one involving anaggregate liability of $25,000 or more); and

·       occurrence of certainevents constituting a change of control of the Company.

The events of default contained in PRIMEDIA’s SeniorNotes are similar to, but generally less restrictive than, those contained inthe Company’s bank credit facilities.

*Senior Notes andSenior Note Redemptions*

*8**7**¤**8% SeniorNotes.**  *In the first quarter of 2006, the Company repurchased $7,025 principal amountof its 87¤8%Senior Notes due May 15, 2011 in three different transactions for $6,832plus $200 of accrued interest. As a result, the Company recorded a gain of $54net of the write-off of unamortized deferred financing costs and bond discount.This amount is included in the other income, net line on the accompanyingcondensed statements of consolidated operations for the three months ended March 31,2006. The unamortized discount for these notes totaled $4,258 and $4,959 at March 31,2006 and 2005, respectively. The Notes total $464,216, net of discount, atMarch 31, 2006. Beginning on May 15, 2006, the 87¤8% Senior Notes are redeemablein whole or in part at the option of the Company, at 104.438% with annualreductions to 100% in 2009 and thereafter, plus accrued and unpaid interest.

*8%Senior Notes.**  *On May 15, 2003, the Company issued $300,000 of 8% Senior Notes at parwhich mature on May 15, 2013 with no sinking fund requirements and may notbe redeemed prior to May 15, 2008 other than through the use of proceedsof future equity offerings, subject to certain conditions, or in connectionwith a change of control. Beginning on May 15, 2008, the notes areredeemable in whole or in part at the option of the Company, at 104% withannual reductions to 100% in 2011 and thereafter, plus accrued and unpaid interest.

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*SeniorFloating Rate Notes.**  *OnMay 14, 2004, the Company issued $175,000 of Senior Floating Rate Notes atpar. Interest is payable quarterly in February, May, August and November atthe annual rate equal to the three month LIBOR plus 5.375%. The Senior FloatingRate Notes mature on May 15, 2010 with no sinking fund requirements andmay not be redeemed prior to May 15, 2007 other than through the use ofproceeds of future equity offerings, subject to certain conditions, or inconnection with a change of control. Beginning in May 2007, the notes areredeemable in whole or in part at the option of the Company, at 103% in 2007with annual reductions to 100% in 2009 and thereafter, plus accrued and unpaidinterest.

*ContractualObligations*

There are norequired significant debt repayments until 2010. The following are certaincontractual obligations of the Company as of March 31, 2006:
| ** **                                                | ** ** | ** ** | ** ** | **Payments Due by Period** | ** ** |
|-----------------------------------------------------------|------------|------------|------------|-------------------------------------------|------------|
| **Contractual Obligations**                          | ** ** | ** ** | ** ** | **Total**                                 | ** ** | **Less than  1 year** | ** ** | **1-3 years** | ** ** | **4-5 years** | ** ** | **After  5 years** | ** ** |
| Long-term  debt obligations (net of unamortized discount) |       | $          | 1,451,716  |                                      | $          | 5,000 |   | $ | 25,000 |   | $ | 185,000 |   | $ | 1,236,716 |   |
| Interest on long-term  debt obligations(1)                |       | 760,448    |       | 121,540                                   |       | 242,164 |   | 227,266 |   | 169,478 |   |
| Capital lease  obligations                                |       | 4,138      |       | 1,668                                     |       | 1,498 |   | 858 |   | 114 |   |
| Fair value of  forward agreement (2)                      |       | 23,648     |       | —                                    |       | 23,648 |   | — |   | — |   |
| Interest on  capital lease obligations                    |       | 584        |       | 256                                       |       | 254 |   | 73 |   | 1 |   |
| Operating lease  obligations(3)                           |       | 207,124    |       | 43,850                                    |       | 64,823 |   | 36,858 |   | 61,593 |   |
| Total Contractual  Obligations                            |       | $          | 2,447,658  |                                      | $          | 172,314 |   | $ | 357,387 |   | $ | 450,055 |   | $ | 1,467,902 |   |
|                                                           |            |            |            |                                           |            |  |  |  |  |  |  |  |  |  |  |  |  |  |

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(1)             Interestpayments are based on the Company’s projected interest rates and estimatedprincipal amounts outstanding for the periods presented.

(2)  Present value of expected future payments related to the acquisition ofAutomotive.com.

(3)             Futurerental commitments for the above operating leases have not been reduced byminimum noncancelable sublease rentals aggregating $70,195 as of March 31,2006.

The Company had $15,000 of borrowings outstanding at March 31,2006 under the revolving loan portion of the bank credit facility. Therevolving loan portion of the bank credit facility expires in 2008, and theterm loan B expires in 2013. Assuming this balance remains constant untilthe end of the term, and application of the Company’s projected interest rates,total interest payments related to the revolver under our bank credit facilityare estimated to be $2,578 for the periods presented in the above table. Theseinterest payments are not included in the above table.

The Company has other commitments in the form ofletters of credit of $19,991 aggregate face value which expire on or before March 31,2007.

*Off Balance SheetArrangements*

The Company has no variable interest (otherwise knownas “special purpose”) entities or off balance sheet debt, other than as relatedto operating leases in the ordinary course of business as disclosed above.

In 2005, the Company sold the remaining net assets ofWorkplace Learning for the assumption of liabilities, however, the Companyretains a secondary liability regarding the payment of the Carrolton, TX leasewhich has future minimum lease payments of approximately $14,000.

*CovenantCompliance*

As defined in the amended bank credit facilitiesagreement, the maximum allowable debt leverage ratio was amended to 6.25 to 1and decreases to 6.00 to 1 on October 1, 2007. The amendment to the bankcredit facilities also sets the minimum interest coverage ratio, as defined inthe bank credit facilities, at 1.75 to 1 through maturity. The minimum fixedcharge coverage ratio, as defined, remains unchanged at 1.05 to 1 throughmaturity. The Company is in compliance with all of the financial and operatingcovenants of its financing arrangements.

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The Company is herewithproviding detailed information and disclosure as to the methodology used indetermining compliance with the leverage ratio in the bank credit facilityagreement. Under its bank credit facility and Senior Note agreements, theCompany is allowed to designate certain businesses as unrestricted subsidiariesto the extent that the value of those businesses does not exceed the permittedamounts, as defined in these agreements. The Company has designated certain ofits businesses as unrestricted (the “Unrestricted Group”), which primarilyrepresent Internet businesses, trademark and content licensing and servicecompanies, new launches (including traditional start-ups), other propertiesunder evaluation for turnaround or shutdown and foreign subsidiaries. Exceptfor those specifically designated by the Company as unrestricted, allbusinesses of the Company are restricted (the “Restricted Group”). Indebtednessunder the bank credit facility and Senior Note agreements is guaranteed by eachof the Company’s domestic subsidiaries in the Restricted Group in accordancewith the provisions and limitations of the Company’s bank credit facility andSenior Note agreements. The guarantees are full, unconditional and joint andseveral. The Unrestricted Group does not guarantee the bank credit facility orSenior Notes. For purposes of determining compliance with certain financialcovenants under the Company’s bank credit facility, the Unrestricted Group’sresults (positive or negative) are not reflected in the Consolidated EBITDA ofthe Restricted Group which, as defined in the bank credit facility agreement,excludes losses of the Unrestricted Group, non-cash charges and restructuringcharges and is adjusted primarily for the trailing four quarters results ofacquisitions and divestitures and estimated savings for acquired businesses.

The following represents a reconciliation of EBITDA of the RestrictedGroup for purposes of the leverage ratio as defined in the bank creditfacilities agreement to operating income:

|                                                                              | ** ** | **For the Three  Months Ended  March 31, 2006** | ** ** | **For the Twelve  Months Ended  March 31, 2006** | ** ** |
|------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------|------------|---------------------------------------------------------------------------|------------|
| EBITDA of the  Restricted Group                                              |       | $                                                                        | 47,863     |                                                                      | $          | 251,160 |   |
| EBITDA loss of  the Unrestricted Group                                       |       | (12,964                                                                  | )          | (49,373                                                                   | )          |
| Divestiture and  other adjustments                                           |       | (2,733                                                                   | )          | (27,983                                                                   | )          |
| Depreciation of  property and equipment                                      |       | (6,605                                                                   | )          | (32,129                                                                   | )          |
| Amortization of  intangible assets and other                                 |       | (2,958                                                                   | )          | (19,860                                                                   | )          |
| Severance  related to separated senior executives                            |       | —                                                                   |       | (1,775                                                                    | )          |
| Non-cash  compensation                                                       |       | (918                                                                     | )          | (5,806                                                                    | )          |
| Provision for  severance, closures and restructuring related costs           |       | (376                                                                     | )          | (1,157                                                                    | )          |
| Gain on the  sales of businesses and other, net                              |       | —                                                                   |       | 209                                                                       |       |
| Operating income                                                             |       | 21,309                                                                   |       | 113,286                                                                   |       |
| Other income (expense):                                                      |       |                                                                     |       |                                                                      |       |
| Interest expense                                                             |       | (30,826                                                                  | )          | (128,229                                                                  | )          |
| Interest on shares subject to mandatory redemption                           |       | —                                                                   |       | (13,258                                                                   | )          |
| Amortization of deferred financing costs                                     |       | (659                                                                     | )          | (3,616                                                                    | )          |
| Other income (expense), net                                                  |       | 158                                                                      |       | (14,066                                                                   | )          |
| Loss from  continuing operations before benefit (provision) for income taxes |       | (10,018                                                                  | )          | (45,883                                                                   | )          |
| Benefit  (provision) for income taxes                                        |       | 1,150                                                                    |       | (1,947                                                                    | )          |
| Loss from  continuing operations                                             |       | (8,868                                                                   | )          | (47,830                                                                   | )          |
| Discontinued  operations                                                     |       | 16,808                                                                   |       | 254,983                                                                   |       |
| Cumulative  effect of change in accounting principle                         |       | 22                                                                       |       | 22                                                                        |       |
| Net income                                                                   |       | $                                                                        | 7,962      |                                                                      | $          | 207,175 |   |

 

The EBITDA loss of the Unrestricted Group, as defined in the bank creditfacilities agreement, is comprised of the following categories:

|                                                 | ** ** | **For the Three  Months Ended  March 31, 2006** | ** ** | **For the Twelve  Months Ended  March 31, 2006** | ** ** |
|-------------------------------------------------|------------|--------------------------------------------------------------------------|------------|---------------------------------------------------------------------------|------------|
| Internet  properties                            |       | $                                                                        | 3,678      |                                                                      | $          | 13,345 |   |
| Traditional  turnaround and start-up properties |       | 7,815                                                                    |       | 30,570                                                                    |       |
| Related overhead  and other charges             |       | 1,471                                                                    |       | 5,458                                                                     |       |
|                                            |       | $                                                                        | 12,964     |                                                                      | $          | 49,373 |   |

 

The Company has establishedintercompany arrangements that reflect transactions, such as leasing,licensing, sales and related services and cross-promotion, between Companybusinesses in the Restricted Group and the Unrestricted Group which managementbelieves are on an arms’ length basis and as permitted by the bank creditfacilities and Senior Note agreements. These intercompany arrangements affordstrategic benefits across the Company’s properties and, in particular, enablethe Unrestricted Group to utilize established brands and content, promote brandawareness and increase traffic and revenue to the properties of theUnrestricted Group. For company-wide consolidated financial reporting, theseintercompany transactions are eliminated in consolidation.

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The calculation of the Company’sleverage ratio, as required under the bank credit facilities agreement forcovenant purposes, is defined as the Company’s consolidated debt divided by theEBITDA of the Restricted Group. At March 31, 2006, this leverage ratio wasapproximately 5.9 to 1.0.

*Contingencies*

The Company is involved inordinary and routine litigation incidental to its business. In the opinion ofmanagement, there is no pending legal proceeding that would have a materialadverse affect on the condensed consolidated financial statements of theCompany.

***Critical Accounting Policies and Estimates***

During the first quarter of 2006, there were nosignificant changes related to the Company’s critical accounting policies andestimates as disclosed in the Company’s annual report on Form 10-Kfor the year ended December 31, 2005.

***Recent Accounting Pronouncements***

During the first quarterof 2006 there were no accounting pronouncements announced that will have amaterial impact on the Company’s consolidated financial statements.

***Impact of Inflation and Other Costs***

The impact of inflation was immaterial during thefirst quarter of 2006. Postage, however, for product distribution and directmail solicitations is a significant expense of the Company. The Company usesthe U.S. Postal Service for distribution of many of its products and marketingmaterials. Postal rates increased 5.4% in 2006. In the past, the effects ofinflation on operating expenses including postage increases have substantiallybeen offset by PRIMEDIA’s ability to increase selling prices. No assurances canbe given that the Company can pass such cost increases through to its customersin the future. In addition to pricing actions, the Company is continuing toexamine all aspects of the manufacturing and purchasing processes to identifyways to offset price increases. The cost of paper continues to moderatelyincrease. The Company’s paper expense increased approximately 12% in the firstquarter of 2006 compared to 2005. Paper cost represented approximately 9.1% and8.8% of the Company’s total operating expenses in the first quarter of 2006 and2005, respectively.

***Seasonality***

The Company’s operations are seasonal in nature.Operating results have historically been stronger in the second half of theyear with generally strongest results generated in the fourth quarter of theyear. The seasonality of the Company’s business reflects (i) the relationshipbetween advertising purchases and the retail and school cycles and (ii) subscriptionpromotions and the holiday season. This seasonality causes, and will likelycontinue to cause, a variation in the Company’s quarterly operating results. Suchvariations have an effect on the timing of the Company’s cash flows and thereported quarterly results.

**Item3.**                          QUANTITATIVEAND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

During the first quarter of 2006, there were nosignificant changes related to the Company’s market risk exposure.

**Item4.**                          CONTROLSAND PROCEDURES

***Disclosure Controls and Procedures***

The Company’s management, with the participation ofthe Company’s Chief Executive Officer, Chief Financial Officer and ChiefAccounting Officer, has evaluated the effectiveness of the Company’s disclosurecontrols and procedures as of the end of the period covered by this report.Based on such evaluation, the Company’s Chief Executive Officer, ChiefFinancial Officer and Chief Accounting Officer have concluded that,

 

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as of the end of suchperiod, the Company’s disclosure controls and procedures are effective inrecording, processing, summarizing and reporting, on a timely basis,information required to be disclosed by the Company in the reports that itfiles or submits under the Securities Exchange Act of 1934, as amended. TheCompany’s Chief Executive Officer, Chief Financial Officer and Chief AccountingOfficer also have concluded that the controls and procedures are designed toensure that information required to be disclosed is accumulated andcommunicated to management, including the principal executive and principalfinancial officers as appropriate to allow timely decisions regarding requireddisclosure.

***Changes in Internal Control Over Financial Reporting***

During the three month period ended March 31,2006, there have not been any changes in the Company’s internal control overfinancial reporting that have materially affected, or are reasonably likely tomaterially affect, the Company’s internal control over financial reporting.

**PART II. OTHER INFORMATION**

**Item6.**                          EXHIBITS

(a)             Exhibits
| 31.1 |   | Certification by Dean  B. Nelson Pursuant to Section 302 of the Sarbanes-Oxley Act  of 2002(*)                                                  |
|------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.2 |   | Certification by  Beverly C. Chell Pursuant to Section 302 of the Sarbanes-Oxley Act  of 2002(*)                                                |
| 31.3 |   | Certification by Robert  J. Sforzo Pursuant to Section 302 of the Sarbanes-Oxley Act  of 2002(*)                                                |
| 32.1 |   | Certification by Dean  B. Nelson 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  Beverly C. Chell Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant  to Section 906 of the Sarbanes-Oxley Act of 2002(*) |
| 32.3 |   | Certification by Robert  J. Sforzo Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002(*) |

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(*)            Filedherewith.

**SIGNATURES**

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.
|        |               |   | PRIMEDIA  INC.  (Registrant)                                                                            |
|--------|--------------------|--------|---------------------------------------------------------------------------------------------------------|
|   |               |   |                                                                                                    |
| Date:  | May 10,  2006 |   | /s/ DEAN  B. NELSON                                                                                     |
|   |               |   | (Signature)

*Chairman,  Chief Executive Officer and President  (Principal Executive Officer)*          |
|   |               |   |                                                                                                    |
| Date:  | May 10, 2006  |   |  /s/ BEVERLY  C. CHELL                                                                             |
|   |               |   | (Signature)                                                                                             |
|   |               |   | * Vice Chairman and Chief Financial Officer*                                                       |
|   |               |   | *(Principal  Financial Officer)*                                                                        |
|   |               |   |                                                                                                    |
| Date:  | May 10,  2006 |   |  /s/ ROBERT  J. SFORZO                                                                             |
|   |               |   | (Signature)                                                                                             |
|   |               |   | * Senior  Vice President, Chief Accounting Officer and Controller (Principal Accounting  Officer)* |

 

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