8-K/A 1 i1018541b.txt AMENDMENT NO. 1 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 ----------------- INFORMATION HOLDINGS INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 1-14371 06-1518007 ------------------ ---------------- ------------------- (State or other jurisdiction (Commission File (IRS Employer of incorporation) Number) Identification No.) 2777 Summer Street, Suite 209, Stamford, Connecticut 06905 ---------------------------------------------------- ------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (203) 961-9106 -------------- 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 ----------------------------------- 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 -------- --------- --------- ------------ Gross profit 53,569 20,701 15,124 89,394 -------- --------- --------- ------------ 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) ======== ============ 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 -------- --------- ---------- ------------ Gross profit 57,445 1,496 8,395 67,336 -------- --------- ---------- ------------ 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 -------- --------- ---------- ---------- ------------ 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 ------------ ---------- ---------- ------------ 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 ------------ ---------- ---------- ------------ 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 ------------ ---------- ---------- ------------ 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 ------------ ---------- -------- ------------ 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 ========== ========== Dilutive: Shares outstanding 20,583,000 21,662,000 Common stock equivalents 239,000 119,000 ---------- ---------- 20,822,000 21,781,000 ========== ==========
F-9