-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QvFi/DdsRws3rlXHSR43VIA9ZSz3JZF5buTpCFMW1PUIt+T9az+2NZwOQUnnLY0v TtrJ99DZBL48XDHM/sh2Nw== 0000950135-98-002796.txt : 19980430 0000950135-98-002796.hdr.sgml : 19980430 ACCESSION NUMBER: 0000950135-98-002796 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980327 ITEM INFORMATION: FILED AS OF DATE: 19980429 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LEARNING CO INC CENTRAL INDEX KEY: 0000719612 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 942562108 STATE OF INCORPORATION: DE FISCAL YEAR END: 0104 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-12375 FILM NUMBER: 98604441 BUSINESS ADDRESS: STREET 1: ONE ATHENAEUM ST CITY: CAMBRIDGE STATE: MA ZIP: 02142 BUSINESS PHONE: 6174941200 MAIL ADDRESS: STREET 1: ONE ATHENAEUM ST CITY: CAMBRIDGE STATE: MA ZIP: 02142 FORMER COMPANY: FORMER CONFORMED NAME: SOFTKEY INTERNATIONAL INC DATE OF NAME CHANGE: 19940210 FORMER COMPANY: FORMER CONFORMED NAME: WORDSTAR INTERNATIONAL INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: MICROPRO INTERNATIONAL CORP DATE OF NAME CHANGE: 19890618 8-K/A 1 THE LEARNING COMPANY 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A AMENDMENT NO. 1 TO CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of Earliest Event Reported): March 27, 1998 ------------------------------ THE LEARNING COMPANY, INC. - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in its Charter) Delaware - -------------------------------------------------------------------------------- (State or Other Jurisdiction of Incorporation) 1-12375 94-2562108 - ------------------------ --------------------------------- (Commission File Number) (IRS Employer Identification No.) One Athenaeum Street, Cambridge, Massachusetts 02142 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (617) 494-1200 - -------------------------------------------------------------------------------- Registrant's Telephone Number, Including Area Code Not Applicable - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) 2 Item 7 is amended in its entirety as set forth below: ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (a) Financial Statements of Business Acquired The audited financial statements of Mindscape Group as of and for the year ended December 31, 1997 are filed herewith as Exhibit 99.3. (b) Pro Forma Financial Information The Unaudited Pro Forma Combined Condensed Consolidated Financial Statements of the Company as of and for the fiscal year ended January 3, 1998 are filed herewith as Exhibit 99.4. (c) Exhibits. See Index to Exhibits attached hereto. -2- 3 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 hereunto duly authorized. Date: April 29, 1998 THE LEARNING COMPANY, INC. (Registrant) By: /s/ Neal S. Winneg --------------------------------------- Neal S. Winneg Sr. Vice President and General Counsel -3- 4 EXHIBIT INDEX Exhibit Number Description - ------- ----------- 2.1 Stock Purchase Agreement, dated as of March 5, 1998, by and between The Learning Company, Inc. and Mindscape Holding Company, Pearson Overseas Holdings Ltd. and Pearson Netherlands, BV, as amended 10.1 Registration Rights Agreement, dated as of March 27, 1998, by and between The Learning Company, Inc. and Mindscape Holding Company 99.1 Press Release issued by The Learning Company, Inc. on March 6, 1998 99.2 Press Release issued by The Learning Company, Inc. on March 27, 1998 99.3 Audited Financial Statements of Mindscape Group as of and for the year ended December 31, 1997 99.4* The Unaudited Pro Forma Combined Condensed Consolidated Financial Statements of the Company as of and for the fiscal year ended January 3, 1998. - ------ * Filed herewith; all other exhibits previously filed -4- EX-99.4 2 FINANCIAL STATEMENTS 1 Exhibit 99.4 ------------ THE LEARNING COMPANY, INC. PRO FORMA COMBINED CONDENSED CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1997 (In thousands) (Unaudited)
The Learning Pro Forma Combined Company Mindscape Adjustments Pro Forma ------------ --------- ---------- --------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 95,137 $ 3,331 $ - $ 98,468 Accounts receivable, net 99,677 33,071 - 132,748 Inventories 29,600 9,391 - 38,991 Other current assets 32,590 6,881 - 39,471 --------- ------- -------- -------- 257,004 52,674 - 309,678 Fixed assets and other, net 32,306 5,017 - 37,323 Goodwill and other intangible assets, net 127,481 2,080 52,854 (a) 182,415 --------- ------- -------- -------- $ 416,791 $59,771 $ 52,854 $529,416 ========= ======= ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES: Accounts payable and accrued expenses $ 94,060 $34,094 $ - $128,154 Line of credit 35,150 300 - 35,450 Merger related accruals 12,533 - 28,674 (a) 41,207 Current portion of long-term obligations 10,717 - - 10,717 Purchase price payable 7,896 - 2,557 (a) 10,453 --------- ------- -------- -------- 160,356 34,394 31,231 225,981 LONG-TERM OBLIGATIONS: Long-term debt 294,356 - - 294,356 Accrued and deferred income taxes 59,746 - - 59,746 Other 6,119 - - 6,119 --------- ------- -------- -------- 360,221 - - 360,221 STOCKHOLDERS' EQUITY (DEFICIT): Stockholders' equity (deficit) (103,786) 25,377 21,623 (a) (56,786) --------- ------- -------- -------- $ 416,791 $59,771 $ 52,854 $529,416 ========= ======= ======== ========
The accompanying notes are an integral part of these pro forma combined condensed consolidated financial statements. 2 THE LEARNING COMPANY, INC. PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997 (In thousands, except share and per share amounts) (Unaudited)
The Learning Pro Forma Combined Company Mindscape Adjustments Pro Forma ------------ --------- ----------- ----------- REVENUES $ 392,438 $138,520 $ -- $ 530,958 COSTS AND EXPENSES: Costs of production 111,703 54,515 -- 166,218 Sales and marketing 86,621 43,771 -- 130,392 General and administrative 31,135 8,035 -- 39,170 Development and software costs 41,018 22,853 -- 63,871 Amortization, merger and other charges 515,016 15,625 10,485 (b) 541,126 ----------- -------- ---------- ----------- Total operating expenses 785,493 144,799 10,485 940,777 OPERATING LOSS (393,055) (6,279) (10,485) (409,819) ----------- -------- ---------- ----------- INTEREST INCOME (EXPENSE): Interest income 1,104 -- -- 1,104 Interest expense (22,482) (531) -- (23,013) ----------- -------- ---------- ----------- Total interest expense (21,378) (531) -- (21,909) LOSS BEFORE TAXES (414,433) (6,810) (10,485) (431,728) PROVISION FOR INCOME TAXES 61,234 -- -- 61,234 ----------- -------- ---------- ----------- NET LOSS $ (475,667) $ (6,810) $ (10,485) $ (492,962) =========== ======== ========== =========== NET LOSS PER SHARE: Basic and Diluted $ (9.59) $ (8.39) WEIGHT AVERAGE NUMBER OF SHARES OUTSTANDING: Basic and Diluted 49,613,000 9,117,600 (c) 58,730,600
The accompanying notes are an integral part of these pro forma combined condensed consolidated financial statements. 3 THE LEARNING COMPANY, INC. NOTES TO PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share and per share amounts) (Unaudited) A. PRO FORMA BASIS OF PRESENTATION AND ADJUSTMENTS On March 27, 1998, pursuant to a Stock Purchase Agreement, dated as of March 5, 1998 (the "Agreement"), by and between The Learning Company, Inc. ("TLC"), on the one hand, and Mindscape Holding Company, Pearson Overseas Holdings Ltd. and Pearson Netherlands, BV (collectively, the "Sellers"), on the other hand, TLC completed its acquisition from the Sellers of all of the outstanding capital stock of Mindscape, Inc., Mindscape International Ltd. and Mindscape France SARL (collectively, "Mindscape" or "Mindscape Group"). Prior to any potential adjustment in accordance with the terms of the Agreement, the total purchase price for the acquisition was $155,854, and included cash, other consideration consisting of TLC's common stock, transaction related costs and net liabilities assumed. The purchase price is subject to adjustment based upon the balance of Mindscape's working capital, as defined in the Agreement, at the closing date of the acquisition. TLC's common stock issued to the Sellers in connection with the acquisition of Mindscape and the special warrants of TLC's Canadian subsidiary, SoftKey Software Products Inc. ("SoftKey"), issued in connection with the financing of the acquisition (assuming exercise of SoftKey's special warrants for SoftKey's exchangeable non-voting shares (the "Exchangeable Shares") and exchange thereof for TLC's common stock) represent, in the aggregate, approximately 9,117,600 shares of TLC's common stock. TLC is accounting for the acquisition using the purchase method. TLC's fiscal year is the 52 or 53 weeks ending on or after December 31. For clarity of presentation herein, with regard to TLC, all references to December 31, 1997 relate to balances as of January 3, 1998, and the period from January 5, 1997 to January 3, 1998 is referred to as the Year Ended December 31, 1997. The pro forma combined condensed consolidated balance sheet sets forth the financial position of TLC and Mindscape at December 31, 1997, as if the acquisition of Mindscape by TLC had occurred on December 31, 1997. The pro forma combined condensed consolidated statement of operations sets forth the results of operations of TLC and Mindscape for the Year Ended December 31, 1997, as if the acquisition of Mindscape by TLC had occurred at the beginning of that year. The pro forma combined condensed consolidated financial statements are unaudited, are intended for informational purposes, and are not necessarily indicative of the future consolidated financial position or future results of operations of the combined entity. These pro forma combined condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in TLC's Annual Report on Form 10-K for the fiscal year ended January 3, 1998 and Mindscape Group's combined financial statements as of and for the year ended December 31, 1997. 5 4 THE LEARNING COMPANY, INC. NOTES TO PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED (In thousands, except share and per share amounts) (Unaudited) B. PRO FORMA ADJUSTMENTS TO PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (a) The pro forma combined condensed consolidated balance sheet sets forth the financial position of TLC and Mindscape at December 31, 1997, as if the acquisition of Mindscape by TLC had occurred on December 31, 1997. The pro forma adjustment to Goodwill and other intangible assets, in the amount of $52,854, includes the allocation of the purchase price to identified intangible assets acquired, in the amount of $43,000, and the excess purchase price over the fair value of Mindscape's net assets, in the amount of $9,854. The allocation of the purchase price reflects a nonrecurring charge, in the amount of $103,000, for the fair value of in-process research and development. The pro forma adjustment to Merger related accruals, in the amount of $28,674, reflects accruals in connection with transaction related costs, including investment banking and legal fees, termination of certain contractual commitments and other costs expected to result from the acquisition. The pro forma adjustment to Purchase price payable, in the amount of $2,557, reflects the amount of bank cash balances due to the Sellers in connection with the acquisition of Mindscape. The pro forma adjustment to Shareholders' equity (deficit), in the amount of $21,623, reflects the issuance of TLC's common stock and SoftKey's special warrants, in the amount of $150,000, in connection with the acquisition of Mindscape, reduced by the nonrecurring charge, in the amount of $103,000, for the fair value of in-process research and development and the elimination of Mindscape's shareholders' equity. (b) The pro forma combined condensed consolidated statement of operations sets forth the results of operations of TLC and Mindscape for the Year Ended December 31, 1997, as if the acquisition of Mindscape by TLC had occurred at the beginning of that year. The pro forma adjustment to Amortization, merger and other charges, in the amount of $10,485, reflects amortization of the identified intangible assets acquired and goodwill over the estimated useful lives of the assets, ranging from two to ten years, on a straight-line basis. The nonrecurring charge, in the amount of $103,000, for the fair value of in-process research and development is not considered in the pro forma combined condensed consolidated statement of operations. There were no intercorporate transactions that required elimination. (c) The pro forma adjustment to the weighted average number of shares outstanding reflects the issuance of TLC's common stock and SoftKey's special warrants, which represent (assuming exercise of SoftKey's special warrants for Exchangeable Shares and exchange thereof for TLC's common stock) in the aggregate approximately 9,117,600 shares of TLC's common stock, in connection with the acquisition of Mindscape. TLC issued approximately 1,366,700 shares of common stock to the Sellers in connection with the acquisition of Mindscape. On March 6, 1998, SoftKey agreed to sell to certain Canadian institutional investors 8,687,500 special warrants for proceeds of 6 5 THE LEARNING COMPANY, INC. NOTES TO PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED (In thousands, except share and per share amounts) (Unaudited) approximately $134,500. The pro forma adjustment reflects TLC's use of $120,000 of the proceeds in connection with the acquisition of Mindscape. Each SoftKey special warrant is exercisable without additional payment for one of SoftKey's Exchangeable Shares. TLC has issued a special voting share (the "Voting Share") which has a number of votes equal to the number of Exchangeable Shares outstanding (other than Exchangeable Shares owned by TLC or any entity controlled by TLC), and which may be voted by a trustee on behalf of such holders of Exchangeable Shares. The holder of the Voting Share is not entitled to dividends and, upon receiving voting instructions from holders of Exchangeable Shares, shall vote with the common stockholders as a single class. SoftKey's Exchangeable Shares are exchangeable on a one-for-one basis for TLC's common stock without additional payment. The exercise of the special warrants for Exchangeable Shares is ultimately subject to certain conditions, including receipt of certain regulatory approvals. For presentation in these pro forma combined condensed consolidated financial statements, TLC included special warrants, representing approximately 7,750,900 shares of common stock, in the computation of basic and diluted earnings per share as if the special warrants had been exercised for Exchangeable Shares and the Exchangeable Shares had been exchanged for TLC's common stock at the beginning of the Year Ended December 31, 1997. -----END PRIVACY-ENHANCED MESSAGE-----