UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
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 27, 2001
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INFORMATION HOLDINGS INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-14371 06-1518007
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
2777 Summer Street, Suite 209, Stamford, Connecticut 06905
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 961-9106
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Item 7. Financial Statements and Pro Forma Financial Information
(a) Financial Statements of Business Acquired
The following documents are herein incorporated by reference:
I. Consolidated Financial Statements of ESPS, Inc. (d.b.a. Liquent, Inc.)
included in its Form 10-K filed with the Securities and Exchange
Commission:
Report of Independent Auditors
Consolidated Balance Sheets as of March 31, 2001 and 2000
Consolidated Statements of Operations for the Years Ended March 31, 2001,
2000 and 1999
Consolidated Statements of Stockholders' Equity for the Years Ended March
31, 2001, 2000 and 1999
Consolidated Statements of Cash Flows for the Years ended March 31, 2001,
2000 and 1999
Notes to Consolidated Financial Statements
II. Consolidated Financial Statements of Liquent, Inc. (formerly ESPS, Inc.)
included in its Form 10-Q for the Six Months Ended September 30, 2001 filed
with the Securities and Exchange Commission:
Consolidated Balance Sheet as of September 30, 2001 (Unaudited)
Consolidated Statements of Operations for the Six Months Ended September
30, 2001 and 2000 (Unaudited)
Consolidated Statements of Cash Flows for the Six Months Ended September
30, 2001 and 2000 (Unaudited)
Notes to Financial Statements (Unaudited)
(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 Year
Ended December 31, 2000 and for the Nine Months Ended September 30, 2001
Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2001
Notes to Pro Forma Condensed Consolidated Financial Statements
(c) Exhibit
23.1 Consent of Ernst & Young LLP
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
INFORMATION HOLDINGS INC.
Date: March 12, 2002 By: /s/ Vincent A. Chippari
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Vincent A. Chippari
Executive Vice President and Chief
Financial Officer
Signing on behalf of the registrant and
as principal financial and accounting
officer
3
Information Holdings Inc.
Unaudited Pro Forma Condensed Consolidated Financial Statements
The following unaudited pro forma condensed consolidated statements of
operations of Information Holdings Inc. (the "Company") for the year ended
December 31, 2000 and for the nine months ended September 30, 2001 give effect
to the acquisition of Liquent as if it occurred on January 1, 2000. The
following unaudited pro forma condensed consolidated balance sheet as of
September 30, 2001 gives effect to the acquisition of Liquent as if it occurred
on September 30, 2001. The unaudited pro forma condensed consolidated statements
of operations for the year ended December 31, 2000 and for the nine months ended
September 30, 2001 also reflect the results of Transcender and IDRAC, businesses
acquired in November 2000 and March 2001, respectively, as if those businesses
were acquired on January 1, 2000. The unaudited condensed consolidated financial
statements give effect to the acquisitions under the purchase method of
accounting and the assumptions in the accompanying notes to the condensed
consolidated financial statements.
In December 2001, the Company completed a tender offer and acquired Liquent
for cash consideration of approximately $41.1 million, excluding closing costs
and fees. Liquent is a leading provider of content assembly, publishing, and
regulatory and intellectual property information solutions for the life sciences
industry. In March 2001, the Company acquired the IDRAC business of IMS Health
and entered into several perpetual licenses agreements for aggregate
consideration of approximately $20.5 million. IDRAC is a leading provider of
regulatory and intellectual property information related to pharmaceutical
product registrations. In November 2000, the Company acquired all of the assets
of Transcender Corporation for cash consideration of approximately $60 million.
Transcender is a leading online provider of IT certification test-preparation
products.
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 consolidated results of operations and financial
position would have been had the aforementioned transactions been completed as
of September 30, 2001 or at the beginning of the periods 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 2000 Annual Report on Form 10-K and Quarterly
Reports on Form 10-Q, and the Liquent consolidated financial statements
incorporated herein by reference.
F-4
Information Holdings Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
Year Ended December 31, 2000
(In thousands except share data)
Information Transcender/ Pro Forma Pro Forma
Holdings IDRAC Liquent(a) Adjustments Consolidated
Revenues $ 73,289 $ 23,345 $ 23,979 $ 120,613
Cost of sales 19,720 2,644 8,855 31,219
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Gross profit 53,569 20,701 15,124 89,394
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Operating expenses:
Selling, general and administrative 36,987 19,959 21,033 77,979
Depreciation and amortization 9,744 9,184 (5) 1,745 $ 1,125 (1) 21,798
Impairment of long-lived assets 1,500 - - - 1,500
-------- --------- --------- --------- ------------
Total operating expenses 48,231 29,143 22,778 1,125 101,277
-------- --------- --------- --------- ------------
Income (loss) from operations 5,338 (8,442) (7,654) (1,125) (11,883)
Other income (expense):
Other income (expense) 2 (2) - - -
Interest income (expense), net 7,005 (4,966) (6) 1,148 (2,280) (2) 907
-------- --------- -------- --------- ------------
Income (loss) before income taxes 12,345 (13,410) (6,506) (3,405) (10,976)
Provision (benefit) for income taxes 5,253 (5,152) (7) 0 (3,765) (3) (3,664)
-------- --------- --------- --------- -----------
Net income (loss) $ 7,092 $ (8,258) $ (6,506) $ 360 $ (7,312)
======== ========== ========== ========= ===========
Basic earnings (loss) per common share $ 0.34 $ (0.36)
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Diluted earnings (loss) per common share $ 0.34 $ (0.36)
======== ============
The accompanying notes are an integral part of these pro forma condensed consolidated financial statements.
(a) For the fiscal year ended March 31, 2001.
F-5
Information Holdings Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
Nine Months Ended September 30, 2001
(In thousands except share data)
Information Pro Forma Pro Forma
Holdings IDRAC Liquent(a) Adjustments Consolidated
Revenues $ 75,985 $ 1,856 $ 16,122 $ 93,963
Cost of sales 18,540 360 7,727 26,627
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Gross profit 57,445 1,496 8,395 67,336
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Operating expenses:
Selling, general and administrative 36,310 744 16,865 53,919
Depreciation and amortization 13,366 698 (5) 1,787 $ 845 (1) 16,696
-------- ---------- ---------- ---------- ------------
Total operating expenses 49,676 1,442 18,652 845 70,615
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Income (loss) from operations 7,769 54 (10,257) (845) (3,279)
Other income (expense):
Other expense - - (925) - (925)
Interest income (expense), net 3,108 (231) (6) 460 (1,540) (2) 1,797
-------- ---------- ---------- ---------- ------------
Income (loss) before income taxes 10,877 (177) (10,722) (2,385) (2,407)
Provision (benefit) for income taxes 4,501 (90) (7) - (4,980) (3) (569)
-------- ---------- ---------- ---------- ------------
Net income (loss) $ 6,376 $ (87) $ (10,722) $ 2,595 $ (1,838)
======== ========== ========== ========== ============
Basic earnings (loss) per common share $ 0.29 $ (0.08)
======== ============
Diluted earnings (loss) per common share $ 0.29 $ (0.08)
======== ============
The accompanying notes are an integral part of these pro forma condensed consolidated financial statements.
(a) For the nine months ended September 30, 2001.
F-6
Information Holdings Inc.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
September 30, 2001
(In thousands)
Information Pro Forma Pro Forma
Holdings Liquent Adjustments Consolidated
Cash and cash equivalents $ 61,268 $ 12,599 $ (41,137) (4) $ 32,730
Accounts receivable, net 28,049 7,767 - 35,816
Other current assets 31,422 1,299 - 32,721
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Total current assets 120,739 21,665 (41,137) 101,267
Identified intangible assets, net 110,752 - 6,750 (4) 117,502
Goodwill, net 73,283 - 21,481 (4) 94,764
Other long-term assets 20,909 5,351 5,010 (4) 31,270
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Total assets $ 325,683 $ 27,016 $ (7,896) $ 344,803
============ ========== ========== ============
Accounts payable $ 19,196 $ 1,058 $ 20,254
Accrued expenses 6,555 3,674 $ 7,963 (4) 18,192
Other current liabilities 12,497 5,467 (1,850) (4) 16,114
Long-term deferred taxes 19,471 - 2,565 (4) 22,036
Other long-term liabilities 2,482 243 - 2,725
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Total liabilities 60,201 10,442 8,678 79,321
Common stock 218 18 (18) 218
Additional paid in capital 245,894 30,524 (30,524) 245,894
Accumulated other comprehensive gain 11 (19) 19 11
Retained earnings (deficit) 19,359 (13,949) 13,949 19,359
------------ ---------- -------- ------------
Total equity 265,482 16,574 (16,574) (4) 265,482
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Total liabilities and equity $ 325,683 $ 27,016 $ (7,896) $ 344,803
============ ========== ========== ============
The accompanying notes are an integral part of these pro forma condensed consolidated financial
statements.
F-7
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 acquisition of Liquent on Information Holdings Inc.'s Condensed
Consolidated Statements of Operations for the year ended December 31, 2000 and for the nine months ended September 30,
2001 and the Condensed Consolidated Balance Sheet as of September 30, 2001, the following adjustments have been made (In
thousands):
Nine Months
Year Ended Ended As of
12/31/00 09/30/01 09/30/01
(1) - Represents amortization of acquired intangible assets of Liquent,
amortized over a useful life of 6 years. Goodwill is not amortized since the
Liquent transaction was recorded after the Company's adoption of FAS
142, Goodwill and Other Intangible Assets. $1,125 $845
(2) - Represents an adjustment to net interest to reflect reduced interest
income associated with the funding of the Liquent acquisition. The acquisition
cost of $45.6 million, including closing costs, is assumed to have been funded
through cash on hand. Interest rates are assumed to be 5.0% on invested cash in
2000 and 4.5% in 2001. 2,280 1,540
(3) - Represents the income tax benefit of items
(1) and (2) above, plus income tax benefits on the pre-tax losses of Liquent, at
a tax rate of 38%. (3,765) (4,980)
(4) - Represents adjustment to reflect preliminary purchase price allocations
for Liquent as follows - debit (credit):
Cash - initial funding of acquisition cost (41,137)
Intangible assets - adjustment to reflect excess purchase price 6,750
Goodwill - adjustment to reflect excess purchase price 21,481
Deferred tax asset - associated with NOL carryforward of Liquent 5,010
Accrued expenses - costs associated with acquisition (7,963)
Deferred revenue - revaluation of acquired deferred revenue to fair market value 1,850
Deferred tax liability - associated with step-up in value of intangible assets (2,565)
Equity - eliminate prior owner's equity 16,574
F-8
Information Holdings Inc.
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements (Continued)
For purposes of determining the pro forma effect of the acquisitions of Transcender and IDRAC on Information Holdings
Inc.'s Condensed Consolidated Statements of Operations for the year ended December 31, 2000 and the nine months ended
September 30, 2001, the following adjustments have been included in the amounts presented herein (In thousands):
Nine Months
Year Ended Ended
12/31/00 09/30/01
(5) - Includes incremental amortization of acquired intangible assets of
Transcender and IDRAC, amortized over useful lives ranging from 3-15 years.
Goodwill amortization will cease on January 1, 2002 upon the Company's adoption
of FAS 142, Goodwill and Other Intangible Assets. $8,763 $668
(6) - Includes a reduction in interest income and an increase in interest
expense associated with the funding of the Transcender and IDRAC acquisitions.
Combined acquisition costs of $83.1 million are assumed to be funded through
cash on hand and incremental borrowings. Interest rates are assumed to be 5.5%
on invested cash and 8.5% on borrowed funds. 5,111 231
(7) - Represents the income tax benefit of the tax deductible components of
items (5) and (6) above, plus income taxes on the earnings or losses of
Transcender and IDRAC, at tax rates ranging from 34-39%, based on the applicable
tax jurisdiction. (5,152) (90)
2. EARNINGS PER SHARE
Earnings per share is calculated by dividing the net income by the weighted average outstanding shares during the
period. The dilutive impact of common stock equivalents was not considered in the pro forma earnings per share calculation
for December 31, 2000, as the effect was antidilutive. The weighted average outstanding shares during the period are
calculated as follows:
December 31, September 30,
2000 2001
Basic:
Shares outstanding 20,583,000 21,662,000
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Dilutive:
Shares outstanding 20,583,000 21,662,000
Common stock equivalents 239,000 119,000
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20,822,000 21,781,000
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F-9