UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported):

December 22, 2003

 

INFORMATION HOLDINGS INC.

(Exact name of registrant as specified in its charter)

 

 

 

Item 2.                                                           Acquisition or Disposition of Assets

 

Pursuant to the Asset Purchase Agreement, dated as of December 22, 2003 with effect as of December 31, 2003 (the “APA”), by and among Transcender LLC (“Transcender”), Information Ventures LLC, Information Holdings Inc. (“Information Holdings”), Kaplan Inc. (“Kaplan”) and Self Test Software, Inc., a subsidiary of Kaplan (the “Buyer”), Information Holdings sold its Transcender unit on December 22, 2003 to the Buyer.  Under the terms of the APA, the Buyer acquired substantially all of the assets of Transcender for cash consideration of $10 million, subject to a post-closing adjustment.  In addition, the Buyer assumed certain operating liabilities and, subject to certain conditions, acquired an option to acquire all of the membership interests of Transcender at a subsequent time.  The consideration was negotiated as part of an arms-length transaction between the parties.  Transcender, a subsidiary of Information Holdings, is a Delaware limited liability company.

 

The APA is attached hereto as Exhibit 2.1 and is incorporated herein by reference.  The foregoing is qualified in its entirety by reference to such document.

 

Item 5.                                                           Other Events and Regulation FD Disclosure

 

The new address for Information Holdings is 2777 Summer Street, Suite 602, Stamford, Connecticut 06905.

 

Item 7.                                                           Financial Statements and Pro Forma Financial Information

 

(b)           Pro Forma Financial Information

 

The following pro forma financial information is included herein:

 

I.                                         Pro Forma Condensed Consolidated Financial Statements of Information Holdings Inc.

 

Introduction

 

Pro Forma Condensed Consolidated Statements of Operations for the
Nine Months Ended September 30, 2003 and for the
Years Ended December 31, 2002, 2001 and 2000

Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2003

Notes to Pro Forma Condensed Consolidated Financial Statements

 

(c)           Exhibits

 

2.1           APA (Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K.  Information Holdings hereby undertakes to furnish supplementally to the Securities and Exchange Commission (the “SEC”) copies of any omitted schedules and exhibits upon request therefor by the SEC.)

 

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SIGNATURES

 

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

 

 

	INFORMATION HOLDINGS INC.
Dated:  January 6, 2004	By:		/s/ Vincent A. Chippari
		Name: Vincent A. Chippari
		Title: Executive Vice President & CFO

 

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EXHIBIT INDEX

 

Exhibit		Description
2.1		Asset Purchase Agreement, dated as of December 22, 2003 with effect as of December 31, 2003, by and among Transcender LLC, Information Ventures LLC, Information Holdings Inc., Self Test Software, Inc. and Kaplan Inc.  (Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K.  Information Holdings Inc. hereby undertakes to furnish supplementally to the Securities and Exchange Commission copies of any omitted schedules and exhibits upon request therefor by the Securities and Exchange Commission.)

 

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Information Holdings Inc.

 

Unaudited Pro Forma Condensed Consolidated Financial Statements

 

 

On April 8, 2003, Information Holdings Inc. (the “Company”) sold, pursuant to an Asset Purchase Agreement dated February 27, 2003, substantially all of the assets and certain liabilities of its wholly owned subsidiaries CRC Press LLC (“CRC Press LLC”), CRC Press (U.K.) LLC and Parthenon Publishing Group, Inc., to CRC Press I LLC and Routledge No. 2 Limited, both wholly owned subsidiaries of Taylor & Francis Group plc, for approximately $95,000,000 in cash, subject to a post closing adjustment.

 

On December 22, 2003, the Company sold substantially all of the assets and certain liabilities of its wholly owned subsidiary Transcender LLC (“Transcender”) to Self Test Software, Inc., a wholly owned subsidiary of Kaplan, Inc., for cash consideration of $10,000,000, subject to a post closing adjustment.

 

The following unaudited pro forma condensed consolidated statements of operations of the Company for the nine months ended September 30, 2003 and for the years ended December 31, 2002, 2001, and 2000 give effect to the disposition of CRC Press LLC and its subsidiaries (“CRC Press”) and of Transcender as if they both occurred on January 1, 2000.  The following unaudited pro forma condensed consolidated balance sheet of the Company as of September 30, 2003 gives effect to the disposition of Transcender as if it occurred on that date.  The unaudited pro forma condensed consolidated statements of operations do not reflect the gain on the sale of CRC Press, nor the loss on the sale of Transcender, nor do they reflect imputed interest on the proceeds from the dispositions.

 

The unaudited pro forma condensed consolidated financial statements have been prepared by the Company’s management.  The unaudited pro forma condensed consolidated financial statements are not designed to represent and do not represent what the Company’s results of operations and financial position would have been had the aforementioned transactions been completed as of the date or at the beginning of the period indicated or to project the Company’s results of operations or financial position at any future date or any future period.  The pro forma condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in the Company’s 2002 Annual Report on Form 10-K.

 

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Information Holdings Inc.

Unaudited Pro Forma Condensed Consolidated Statement of Operations
Nine Months Ended September 30, 2003

(In thousands, except per share data)

 

		Information Holdings			Less: Transcender			Pro Forma Consolidated
Revenues		$	64,923		$	6,589		$	58,334
Cost of sales		19,156			528			18,628
Gross profit		45,767			6,061			39,706
Operating expenses:
Selling, general and administrative		32,533			5,299			27,234
Depreciation and amortization		9,207			1,134			8,073
Total operating expenses		41,740			6,433			35,307
Income (loss) from operations		4,027			(372		)	4,399
Other income (expense):
Other expense		(578		)	—			(578		)
Interest income, net		1,327			—			1,327
Income (loss) from continuing operations before income taxes		4,776			(372		)	5,148
Provision for (benefit from) income taxes		1,729			(141		)	1,870
Income (loss) from continuing operations		$	3,047		$	(231	)	$	3,278
Basic earnings per common share from continuing operations		$	0.14					$	0.15
Diluted earnings per common share from continuing operations		$	0.14					$	0.15

 

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

 

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Information Holdings Inc.

Unaudited Pro Forma Condensed Consolidated Statement of Operations

Year Ended December 31, 2002

(In thousands, except per share data)

 

		Information Holdings			Less: CRC Press			Less: Transcender			Pro Forma Consolidated
Revenues		$	141,767		$	52,053		$	11,762		$	77,952
Cost of sales		41,966			17,929			822			23,215
Gross profit		99,801			34,124			10,940			54,737
Operating expenses:
Selling, general and administrative		66,909			24,108			7,775			35,026
Depreciation and amortization		16,941			3,102			3,008			10,831
Impairment of long-lived assets		39,380			—			36,222			3,158
Total operating expenses		123,230			27,210			47,005			49,015
(Loss) income from operations		(23,429		)	6,914			(36,065		)	5,722
Other income (expense):
Other income		5			—			—			5
Interest income (expense), net		473			(155		)	—			628
(Loss) income before income taxes		(22,951		)	6,759			(36,065		)	6,355
(Benefit from) provision for income taxes		(9,227		)	2,542			(13,705		)	1,936
Net (loss) income		$	(13,724	)	$	4,217		$	(22,360	)	$	4,419
Basic (loss) earnings per common share		$	(0.63	)							$	0.20
Diluted (loss) earnings per common share		$	(0.63	)							$	0.20

 

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

 

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Information Holdings Inc.

Unaudited Pro Forma Condensed Consolidated Statement of Operations

Year Ended December 31, 2001

(In thousands, except per share data)

 

		Information Holdings			Less: CRC Press			Less: Transcender			Pro Forma Consolidated
Revenues		$	105,336		$	42,424		$	21,347		$	41,565
Cost of sales		26,676			13,714			1,242			11,720
Gross profit		78,660			28,710			20,105			29,845
Operating expenses:
Selling, general and administrative		49,831			22,997			9,732			17,102
Depreciation and amortization		18,769			2,642			6,558			9,569
Impairment of long-lived assets		400			—			—			400
Total operating expenses		69,000			25,639			16,290			27,071
Income from operations		9,660			3,071			3,815			2,774
Other income (expense):
Other (expense) income		(16		)	—			3			(19		)
Interest income (expense), net		3,505			(148		)	—			3,653
Income before income taxes		13,149			2,923			3,818			6,408
Provision for income taxes		5,311			1,071			1,451			2,789
Net income		$	7,838		$	1,852		$	2,367		$	3,619
Basic income per common share		$	0.36								$	0.17
Diluted income per common share		$	0.36								$	0.17

 

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

 

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Information Holdings Inc.

Unaudited Pro Forma Condensed Consolidated Statement of Operations

Year Ended December 31, 2000

(In thousands, except per share data)

 

		Information Holdings			Less: CRC Press			Less: Transcender			Pro Forma Consolidated
Revenues		$	73,289		$	38,984		$	4,077		$	30,228
Cost of sales		19,720			10,422			302			8,996
Gross profit		53,569			28,562			3,775			21,232
Operating expenses:
Selling, general and administrative		36,987			20,602			2,014			14,371
Depreciation and amortization		9,744			1,993			971			6,780
Impairment of long-lived assets		1,500			—			—			1,500
Total operating expenses		48,231			22,595			2,985			22,651
Income from operations		5,338			5,967			790			(1,419		)
Other income (expense):
Other income (expense)		2			5			(1		)	(2		)
Interest income (expense), net		7,005			(144		)	—			7,149
Income before income taxes		12,345			5,828			789			5,728
Provision for income taxes		5,253			2,273			308			2,672
Net income		$	7,092		$	3,555		$	481		$	3,056
Basic income per common share		$	0.34								$	0.15
Diluted income per common share		$	0.34								$	0.15

 

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

 

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Information Holdings Inc.

Unaudited Pro Forma Condensed Consolidated Balance Sheet

September 30, 2003

(In thousands)

 

		Information Holdings			Less: Transcender			Pro Forma Adjustments			Pro Forma Consolidated
Cash, cash equivalents and short-term investments		$	54,407		$	(63	)	$	7,090	(1)	$	61,560
Accounts receivable, net		27,107			385						26,722
Other current assets		11,352			263						11,089
Total current assets		92,866			585			7,090			99,371
Investments		87,470			—						87,470
Identified intangible assets, net		66,315			2,405						63,910
Goodwill		83,140			12,800						70,340
Other long-term assets		8,445			607			(391		)(1),(2)	7,447
Total assets		$	338,236		$	16,397		$	6,699		$	328,538
Accounts payable		$	26,542		$	137					$	26,405
Deferred subscription revenue		17,791			80						17,711
Other current liabilities		19,712			243			(16,938		)(1)	2,531
Long-term liabilities		—			—			13,044		(2)	13,044
Total liabilities		64,045			460			(3,894		)	59,691
Common stock		219			—						219
Treasury stock		(14,723		)	—						(14,723		)
Additional paid-in capital		247,923			47,767			47,767		(1)	247,923
Accumulated comprehensive income		657			—						657
Retained earnings		40,115			(31,830		)	(37,174		)(1)	34,771
Total equity		274,191			15,937			10,593			268,847
Total liabilities and equity		$	338,236		$	16,397		$	6,699		$	328,538

 

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

 

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Information Holdings Inc.

 

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

 

1.     PRO FORMA ADJUSTMENTS

 

For purposes of determining the pro forma effect of the disposition of Transcender on Information Holdings Inc.’s Condensed Consolidated Balance Sheet as of September 30, 2003, the following adjustments have been made (In thousands):

 

(1)   Represents the proceeds from the sale of Transcender (net of estimated deal costs and settlement of retained obligations), the estimated loss on disposition, and the related impact on income taxes, as follows – debit (credit):

 

Cash		$	7,090
Other current liabilities (income tax liability)		16,938
Other long-term assets (deferred taxes)		(13,435		)
Additional paid in capital		(47,767		)
Retained earnings (loss of Transcender prior to disposition)		31,830
Retained earnings (estimated after-tax loss on disposition)		5,344

 

(2)   Represents a reclassification of net long-term deferred taxes.  The disposition of Transcender results in a reclassification in long-term deferred taxes from a net asset to a net liability.

 

Other long-term assets		$	13,044
Long-term liabilities		(13,044		)

 

2.     EARNINGS PER SHARE

 

Earnings per share are calculated by dividing the net income by the weighted average outstanding shares during the period.  The weighted average outstanding shares for the nine months ended September 30, 2003 and for the years ended December 31, 2002, 2001 and 2000, respectively are as follows (In thousands):

 

		September 30, 2003		December 31, 2002		December 31, 2001		December 31, 2000
Basic		21,159		21,735		21,686		20,583
Diluted		21,194		21,735		21,826		20,822

 

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