UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 28, 2005
ProQuest Company
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 1-3246 | 36-3580106 | ||
| (State or Other Jurisdiction of Incorporation or Organization) |
(Commission File Number) | (I.R.S. Employer Identification No.) |
| 777 Eisenhower Parkway, Ann Arbor, Michigan | 48106-1346 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (734) 761-4700
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 420.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
This Current Report on Form 8-K/A amends and supplements the Current Report filed by ProQuest Company on November 3, 2005 (the Initial Form 8-K) to include pro forma financial information permitted pursuant to Item 9.01 of this Current Report on Form 8-K/A .
Item 9.01 Financial Statements and Exhibits
(a) Financial statements of businesses acquired.
Not applicable
(b) Pro forma financial information.
ProQuest Company
Pro Forma Condensed Consolidated Financial Statements
(Unaudited)
This information should be read in conjunction with the previously filed Form 8-K, dated November 3, 2005, the previously filed historical consolidated financial statements and accompanying notes of ProQuest Company (the “Company”), contained in its Annual Report on Form 10-K for the fiscal year ended January 1, 2005 and its Quarterly Report on Form 10-Q for the fiscal quarter ended October 1, 2005.
Subsequent to the initial Form 8-K filed on November 3, 2005, in accordance with the terms of the Asset Purchase Agreement the purchase price was reduced from $30 million to $26 million. The reduction in purchase price was a result of working capital and other adjustments. The Asset Purchase Agreement was filed as exhibit 2.1 to our Form 10-Q for the fiscal quarter ended October 1, 2005.
The following unaudited pro forma condensed consolidated statements of operations for the fiscal year ended January 1, 2005 and the fiscal quarter ended October 1, 2005 and the pro forma condensed consolidated balance sheet as of October 1, 2005, give effect to the disposal, by ProQuest Company, of certain assets related to its periodical microfilm and coursepack operations. The accompanying footnotes provide descriptions of the assumptions and adjustments made in the pro forma condensed consolidated financial statements.
The unaudited pro forma condensed consolidated statements of operations have been prepared assuming the disposal occurred as of the beginning of the period presented. The disposal actually occurred on October 28, 2005. The unaudited pro forma condensed consolidated balance sheet represents the financial position of the Company as of October 1, 2005, the last day of the Company’s most recently completed fiscal quarter, assuming the disposal occurred as of that date.
The unaudited pro forma condensed consolidated financial statements are provided for informational purposes only in response to Securities and Exchange Commission (“SEC”) requirements and do not purport to represent what the Company’s financial position or results of operations would actually have been if the transaction had in fact occurred at such dates, or to project the Company’s financial position or results of operations for any future date or period. Furthermore, the unaudited pro forma condensed consolidated financial statements have been prepared in accordance with rules prescribed by Article 11 of Regulation S-X.
ProQuest Company and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statement of Operations
(In thousands, except per share data)
Represents results as though the divestiture had occurred as of the first day of fiscal 2004.
| Year Ended January 1, 2005 Historical |
Disposal of Coursepack Operations |
Pro Forma Adjustments |
Year Ended January 1, 2005 Pro Forma |
|||||||||||||
| Net sales |
$ | 462,814 | $ | 42,118 | $ | — | $ | 420,696 | ||||||||
| Cost of sales |
(230,315 | ) | (23,276 | ) | (835 | )(a) | (207,874 | ) | ||||||||
| Gross profit |
232,499 | 18,842 | (835 | ) | 212,822 | |||||||||||
| R&D expense |
(16,603 | ) | (1,481 | ) | — | (15,122 | ) | |||||||||
| SG&A expense |
(120,592 | ) | (8,055 | ) | (208 | )(a) | (112,745 | ) | ||||||||
| Gain on sale of fixed assets |
900 | — | — | 900 | ||||||||||||
| Earnings from continuing operations before interest and income taxes |
96,204 | 9,306 | (1,043 | ) | 85,855 | |||||||||||
| Net interest expense: |
||||||||||||||||
| Interest income |
1,517 | — | 180 | (b) | 1,697 | |||||||||||
| Interest expense |
(17,952 | ) | (613 | )(c) | — | (17,339 | ) | |||||||||
| Net interest expense |
(16,435 | ) | (613 | ) | 180 | (15,642 | ) | |||||||||
| Earnings from continuing operations before income taxes |
79,769 | 8,693 | (863 | ) | 70,213 | |||||||||||
| Income tax expense |
(27,039 | ) | (2,947 | )(d) | 293 | (d) | (23,799 | ) | ||||||||
| Net earnings from continuing operations |
52,730 | 5,746 | (570 | ) | 46,414 | |||||||||||
| Net earnings per common share: |
||||||||||||||||
| Basic: |
||||||||||||||||
| Earnings from continuing operations |
$ | 1.85 | $ | 0.20 | $ | (0.02 | ) | $ | 1.63 | |||||||
| Diluted: |
||||||||||||||||
| Earnings from continuing operations |
$ | 1.83 | $ | 0.20 | $ | (0.02 | ) | $ | 1.61 | |||||||
| Average number of common shares and equivalents outstanding: |
||||||||||||||||
| Basic |
28,514 | 28,514 | 28,514 | 28,514 | ||||||||||||
| Diluted |
28,844 | 28,844 | 28,844 | 28,844 | ||||||||||||
See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
ProQuest Company and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statement of Operations
(In thousands, except per share data)
Represents results as though the divestiture had occurred as of the first day of fiscal 2005.
| Thirty-Nine Weeks Ended Historical |
Disposal of Periodical Microfilm and Coursepack Operations |
Pro Forma Adjustments |
Thirty-Nine Weeks Ended Pro Forma |
|||||||||||||
| Net sales |
$ | 420,871 | $ | 28,109 | $ | — | $ | 392,762 | ||||||||
| Cost of sales |
(205,317 | ) | (16,274 | ) | (696 | )(a) | (189,739 | ) | ||||||||
| Gross profit |
215,554 | 11,835 | (696 | ) | 203,023 | |||||||||||
| R&D expense |
(14,765 | ) | (779 | ) | — | (13,986 | ) | |||||||||
| SG&A expense |
(119,316 | ) | (4,436 | ) | (190 | )(a) | (115,070 | ) | ||||||||
| Earnings from continuing operations before interest and income taxes |
81,473 | 6,620 | (886 | ) | 73,967 | |||||||||||
| Net interest expense: |
||||||||||||||||
| Interest income |
1,157 | — | 135 | (b) | 1,292 | |||||||||||
| Interest expense |
(24,919 | ) | (836 | )(c) | — | (24,083 | ) | |||||||||
| Net interest expense |
(23,762 | ) | (836 | ) | 135 | (22,791 | ) | |||||||||
| Earnings from continuing operations before income taxes |
57,711 | 5,784 | (751 | ) | 51,176 | |||||||||||
| Income tax expense |
(19,454 | ) | (1,961 | )(d) | 254 | (d) | (17,239 | ) | ||||||||
| Net earnings from continuing operations |
$ | 38,257 | $ | 3,823 | $ | (497 | ) | $ | 33,937 | |||||||
| Net earnings per common share: |
||||||||||||||||
| Basic: |
||||||||||||||||
| Earnings from continuing operations |
$ | 1.29 | $ | 0.13 | $ | (0.01 | ) | $ | 1.15 | |||||||
| Diluted: |
||||||||||||||||
| Earnings from continuing operations |
$ | 1.27 | $ | 0.13 | $ | (0.01 | ) | $ | 1.13 | |||||||
| Average number of common shares and equivalents outstanding: |
||||||||||||||||
| Basic |
29,602 | 29,602 | 29,602 | 29,602 | ||||||||||||
| Diluted |
30,036 | 30,036 | 30,036 | 30,036 | ||||||||||||
See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
ProQuest Company and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Balance Sheet
(In thousands, except per share data)
The pro forma condensed consolidated balance sheet data presented below is computed assuming that
the assets sold and liabilities assumed were as of the end of the third quarter 2005. Actual
results may differ as the transaction was completed on October 28, 2005 and
the assets sold and liabilities assumed were as of that date.
| Historical As of |
Disposal of Periodical Microfilm and Coursepack Operations |
Use of Proceeds |
Pro Forma October 1, 2005 | ||||||||||
| ASSETS | |||||||||||||
| Cash and cash equivalents |
$ | 24,917 | $ | — | $ | — | $ | 24,917 | |||||
| Accounts receivable, net |
135,663 | 7,019 | — | 128,644 | |||||||||
| Inventory, net |
15,761 | 727 | — | 15,034 | |||||||||
| Other current assets |
70,031 | 431 | — | 69,600 | |||||||||
| Total current assets |
246,372 | 8,177 | — | 238,195 | |||||||||
| Net property, plant, equipment and product masters |
213,300 | 30,918 | — | 182,382 | |||||||||
| Long-term receivables |
10,065 | — | 2,000 | (e) | 12,065 | ||||||||
| Goodwill |
603,089 | 5,787 | — | 597,302 | |||||||||
| Identifiable intangibles, net |
21,572 | 646 | — | 20,926 | |||||||||
| Curriculum, net |
94,357 | — | — | 94,357 | |||||||||
| Purchased and developed software, net |
38,301 | 1,722 | — | 36,579 | |||||||||
| Other assets |
20,278 | 64 | — | 20,214 | |||||||||
| Total assets |
$ | 1,247,334 | $ | 47,314 | $ | 2,000 | $ | 1,202,020 | |||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||
| Current maturities of long-term debt |
$ | 164 | $ | — | $ | — | $ | 164 | |||||
| Accounts payable |
49,343 | 855 | — | 48,488 | |||||||||
| Accrued expenses |
57,004 | 3,186 | 2,000 | (f) | 55,818 | ||||||||
| Current portion of monetized future billings |
18,816 | — | — | 18,816 | |||||||||
| Deferred income |
86,018 | 15,260 | — | 70,758 | |||||||||
| Total current liabilities |
211,345 | 19,301 | 2,000 | 194,044 | |||||||||
| Long-term debt, less current maturities |
575,264 | — | (24,000 | )(g) | 551,264 | ||||||||
| Monetized future billings, less current portion |
22,323 | — | — | 22,323 | |||||||||
| Other liabilities |
103,092 | — | — | 103,092 | |||||||||
| Total long-term liabilities |
700,679 | — | (24,000 | ) | 676,679 | ||||||||
| Total shareholders’ equity |
335,310 | — | (4,013 | )(h) | 331,297 | ||||||||
| Total liabilities and shareholders’ equity |
$ | 1,247,334 | $ | 19,301 | $ | (26,013 | ) | $ | 1,202,020 | ||||
ProQuest Company and Subsidiaries
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
Statement of Operations
| (a) | Records pro forma adjustments for expected charges related to certain microfilm and electronic manufacturing services to be provided by the purchaser, National Archive Publishing Company, to ProQuest Information and Learning and its affiliates under the manufacturing provisions of the sale agreement. |
| (b) | Adjusts historical interest income to reflect interest earned on the $2 million Promissory Note issued by the purchasers, National Archive Publishing Company, as part of the sales agreement. |
| (c) | Adjusts historical interest expense to reflect the use of divestiture cash proceeds for repayment of indebtedness under ProQuest Company’s revolving credit facility. |
| (d) | Records the income tax effect of sale and pro forma adjustments at a statutory rate of 34%. The actual effective tax rate may differ. |
Balance Sheet
| (e) | Reflects the receipt of purchase price—cash proceeds of $24 million and a $2 million Promissory Note. Actual purchase price changed from the initial Form 8-K filing on November 3, 2005 as a result of working capital and other adjustments as outlined in the Asset Purchase Agreement. |
| (f) | Represents initial estimate of obligations under the Transitional Services Agreement. |
| (g) | Pro forma adjustment reflects the repayment of indebtedness under ProQuest Company’s revolving credit facility. |
| (h) | Represents sales proceeds less net book value of assets sold and liabilities transferred. |
(c) Exhibits.
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed in its behalf by the undersigned thereunto duly authorized.
| PROQUEST COMPANY | ||
| DATE: January 11, 2006 | /s/ Richard Surratt | |
| Richard Surratt | ||
| Senior Vice President and Chief Financial Officer | ||