As filed with the Securities and Exchange Commission on February 23, 2000
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ZIFF-DAVIS INC.
(Exact name of Registrant as specified in its charter)
NEW YORK 13-3987754
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
28 EAST 28TH STREET,
NEW YORK, NEW YORK 10016
(212) 503-3500
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
J. MALCOLM MORRIS
GENERAL COUNSEL
ZIFF-DAVIS INC.
28 EAST 28TH STREET
NEW YORK, NEW YORK 10016
(212) 503-3500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: At such
time or times as may be determined by the selling shareholder after this
Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_| ________________.
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_| ________________.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
<PAGE>
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================
TITLE OF AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT
SHARES TO TO BE AGGREGATE PRICE AGGREGATE OFFERING OF REGISTRATION
BE REGISTERED REGISTERED PER UNIT(1) PRICE (1) FEE
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<S> <C> <C> <C> <C>
ZDNet Common Stock, par value
$0.01 per share....
186,046 $30.625 $5,697,658.75 $1,504.19
============================================================================================================
<FN>
(1) Estimated in accordance with Rule 457(c) under the Securities Act of 1933 solely for purposes of calculating the registration
fee (based on the average of the high and low prices per Ziff-Davis Inc.-ZDNet Common Stock as reported on the New York Stock
Exchange on February 18, 2000).
</FN>
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
================================================================================
<PAGE>
TEXT OF RED HERRING
===================
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
<PAGE>
PROSPECTUS (Subject to Completion)
February 23, 2000
ZIFF-DAVIS INC.
186,046 SHARES OF ZDNET COMMON STOCK
(PAR VALUE $0.01 PER SHARE)
This document relates to an offering by the selling shareholder of up
to 186,046 shares of ZDNet common stock.
The selling shareholder acquired the shares offered by this document in
connection with our acquisition of the selling shareholder's equity interest in
Ziff-Davis Richina Media LDC. Ziff-Davis will not receive any of the proceeds
from the sale of the shares offered by this document.
The selling shareholder has informed us that it proposes to offer the
shares offered by this document from time to time and in any of several
different ways. The selling shareholder may offer shares:
o through brokers in ordinary brokerage transactions,
o to underwriters or dealers in negotiated transactions or
o by a combination of these methods of sale.
The selling shareholder may offer its shares at various prices,
including:
o at fixed prices,
o at market prices at the time of sale,
o at prices related to prevailing market prices or
o at negotiated prices.
ZDNet common stock trades on the New York Stock Exchange under the
symbol "ZDZ." On February 18, 2000, the closing price reported on the New York
Stock Exchange was $30 1/16 per share.
INVESTMENT IN THE SHARES INVOLVES SIGNIFICANT RISKS. YOU SHOULD READ
THE INFORMATION UNDER THE CAPTION "RISK FACTORS" BEGINNING ON PAGE 4 TO LEARN
ABOUT SOME FACTORS YOU SHOULD CONSIDER BEFORE INVESTING IN THE SHARES.
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NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED
OF THE SECURITIES TO BE OFFERED UNDER THIS DOCUMENT OR DETERMINED IF THIS
DOCUMENT IS ADEQUATE OR ACCURATE. IT IS ILLEGAL FOR ANYONE TO TELL YOU
OTHERWISE.
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THE DATE OF THE PROSPECTUS IS , 2000
<PAGE>
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TABLE OF CONTENTS
PAGE
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Ziff-Davis Inc...............................................................2
Recent Developments..........................................................3
Risk Factors.................................................................4
Unaudited Pro Forma Consolidated Financial Statementss of Ziff-Davis Inc....16
Where You Can Find More Information.........................................23
The Selling Shareholder.....................................................25
Plan of Distribution........................................................25
Use of Proceeds.............................................................26
Cautionary Statement Regarding Forward-Looking Statements...................27
Validity of Common Stock....................................................27
Experts.....................................................................27
ZIFF-DAVIS INC.
Ziff-Davis is a leading media and marketing company focused on computing
and Internet-related technologies. Through our ZDNet division, which we call
"ZDNet," we provide online content and other Internet related services. Through
our ZD division, which we call "ZD," we are or have been engaged in the print
publishing, trade shows and conferences, education and television businesses.
Ziff-Davis currently has two series of common stock, ZDNet common stock,
which we call "ZDNet stock," and ZD common stock, which we call "ZD stock." Each
of these series is what is commonly referred to as a "tracking stock." ZDNet
common stock is intended to track the performance of ZDNet and ZD common stock
is intended to track the performance of ZD. In addition to the businesses
referred to above, ZD owns a retained interest in ZDNet which is currently the
equivalent of 60 million shares of ZDNet stock.
The mailing address of our principal executive offices is 28 East 28th
Street, New York, New York 10016. Our telephone number is (212) 503-3500.
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RECENT DEVELOPMENTS
We are in the process of selling our ZD businesses as part of a
comprehensive restructuring described in our proxy statement dated February 7,
2000 which we mailed to stockholders on such date (our "Proxy Statement"), and
we have already completed the sale of ZD Market Intelligence, ZD Education and
our equity interest in ZDTV. As part of the restructuring, we intend to
eliminate our tracking stock structure and make ZDNet a standalone independent
Internet company by merging Ziff-Davis with a newly formed subsidiary so that
all current holders of our ZD stock and ZDNet stock will hold their investments
through a single class of ordinary common stock. We will rename the surviving
company ZDNet Inc.
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RISK FACTORS
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You should carefully consider the risk factors described below, as well as the
other information included in this document, before buying shares of ZDNet
stock.
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RISK FACTORS RELATING TO THE RESTRUCTURING
THE SALES OF ZD PUBLISHING AND ZD EVENTS MAY NOT OCCUR AS CONTEMPLATED.
It is possible that the sale of one or more of ZD Publishing and ZD
Events will not occur as currently contemplated.
The ZD Publishing sales agreement is subject to a number of conditions,
including, among others:
o the absence of certain adverse changes,
o the accuracy of representations and warranties on the closing date,
o the receipt of third party consents and
o the receipt of sufficient financing by the buyer.
Because these transactions are structured as asset sales, they will
require numerous third party consents, and we cannot assure you that we will be
able to obtain these consents on reasonable terms. The buyers will not be
obligated to purchase unless all the conditions to closing have been satisfied
and we cannot assure you that this will occur. If any of the conditions are not
satisfied, the sale may not proceed or we may be forced to renegotiate material
terms, including the price.
We are currently in discussions regarding a possible sale of ZD Events,
but we cannot assure you that a sale transaction will result and, if it does, we
cannot assure you that the sale price will meet Wall Street expectations. If we
are unable to reach agreement to sell ZD Events at an acceptable price, we
currently plan to recapitalize it and spin it off to holders of ZD stock.
However, we cannot assure you that we would be able to complete a
recapitalization and spin off. Moreover, if we are able to complete a
recapitalization and spin off of ZD Events, we cannot assure you that the value
of the special dividend (which would include most of the cash proceeds from the
recapitalization as well as the stock of ZD Events) would approximate the $5.00
per share of ZD stock that we currently envision.
If we do not complete one or more of the sales as planned, we will
still be free to complete the rest of the restructuring or otherwise revise it,
in our discretion.
THE SPECIAL DIVIDEND MAY BE LESS THAN $5.00 PER SHARE OF ZD STOCK.
We currently anticipate that we will pay a special dividend of about
$5.00 per share of ZD stock as part of the restructuring. This is, however, an
estimate and we cannot assure you that this will be the actual amount of the
dividend. The board of directors will determine the amount of the dividend after
taking into account several factors, including:
o the actual amount of proceeds from the sales of ZD's businesses and
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<PAGE>
o the amount of cash we retain to cover ZD's actual and contingent
liabilities and to fund ZDNet's future cash needs.
THE EXCHANGE RATIO MAY BE MORE OR LESS THAN OUR EXAMPLE.
Each share of ZDNet stock will convert into a fixed number of shares of
our common stock in the merger. The exact exchange ratio will depend upon three
factors that are not yet known and as a result we are unable to tell you now
what it will be. These three factors are:
o the value of the remaining ZD assets in excess of the cash set
aside to cover the ZD liabilities, as determined by our board of
directors,
o the market price of ZDNet stock on the date those assets are
transferred from ZD to ZDNet and
o the number of options to acquire ZD stock that are exercised prior
to the merger.
We have included an example of how we will calculate the exchange ratio
in our Proxy Statement which is based on certain assumptions with respect to
these three factors. This example, which results in an exchange ratio of about
1.77, is included for illustrative purposes only. The actual exchange ratio may
differ significantly from this example and may even fall outside the range set
forth in the stockholder's letter that appears on the front cover of our Proxy
Statement and incorporated herein by reference.
THE AMOUNT WE LEAVE BEHIND TO COVER ZD LIABILITIES MAY BE DIFFERENT FROM THE
AMOUNT ACTUALLY NEEDED.
We will determine the amount that we will leave behind to cover actual
or contingent ZD liabilities based on the advice of management and our financial
and legal advisors, as contemplated under "Proposal 1--The Restructuring of Ziff
Davis--Repayment of ZD Debt and Provision for Other ZD Liabilities" in our Proxy
Statement and incorporated herein by reference. Since contingent liabilities are
inherently uncertain, it is possible that the amount we leave behind will turn
out to be significantly more or less than the amount actually needed to cover
these liabilities. In that case, holders of ZDNet stock would end up with
significantly more or less value than they would otherwise have, and holders of
ZD stock would correspondingly end up with significantly less or more value than
they would otherwise have.
THE RESTRUCTURING INVOLVES TRANSACTIONS THAT MIGHT CREATE CONFLICTS OF INTEREST.
The restructuring involves transactions and issues that might create
conflicts or the appearance of conflicts between the interests of the holders of
ZD stock and the holders of ZDNet stock or between Softbank and other
stockholders. These transactions and issues include:
o the terms of the content license arrangements between ZDNet and the
buyer of our publishing business,
o the valuation of the assets being transferred from ZD to ZDNet,
o the valuation of any actual or potential ZD liabilities that will
be provided for and
o the possibility that Softbank may provide equity or debt financing
(or both) to the buyer in connection with a possible sale of ZD
Events.
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In order to address these potential conflicts of interest, we created a special
committee of our board of directors to review these issues and make
recommendations to the full board. Our board of directors has followed the
recommendations of the special committee to date and expects to continue to do
so in the future.
THE SALE OF ZD'S BUSINESSES MAY ADVERSELY AFFECT ZDNET'S FUTURE BUSINESS.
It is possible that the sale of ZD's businesses as part of the
restructuring may adversely affect ZDNet's future business in a number of ways,
including the following:
o ZDNet will no longer be able to leverage the ZD brand and
cross-market across all of ZD's platforms.
o ZDNet currently relies on content that it licenses from ZD
Publishing on an exclusive basis online. Under the agreement for
the sale of ZD Publishing, ZDNet will retain the rights to this
content online for only five years and those rights will remain
exclusive to ZDNet for only three years. After the three year
exclusivity period expires, the buyer of ZD Publishing will be free
to use the content to compete with ZDNet on the Internet, and after
four years the buyer will be free to license it to other online
competitors.
o The buyer of ZD Publishing is acquiring the "Ziff-Davis" brand name
and is receiving a license for the "ZD" brand name, in each case,
for use in print publishing and its future actions may adversely
affect the ZD brand.
o As a standalone company, ZDNet's costs of services may increase
significantly due to the loss of certain large volume discounts or
other special pricing arrangements it previously received as a
division of Ziff-Davis.
WE HAVE ONLY OPERATED AS A STANDALONE COMPANY SINCE MAY 1998, AND A SIGNIFICANT
PART OF OUR INFRASTRUCTURE MAY BE TRANSFERRED ALONG WITH THE BUSINESSES BEING
SOLD AS PART OF THE RESTRUCTURING.
We have only operated as a standalone company since May 1998. In
addition, a significant part of our infrastructure may be transferred along with
the businesses being sold as part of the restructuring. Our success will depend
on our continued ability to manage the company with the resources available to
us.
ZDNET MAY BE UNABLE TO OBTAIN ADDITIONAL FINANCING ON REASONABLE TERMS.
As mentioned in a number of the risk factors described below, ZDNet
will need access to additional financing in order to be successful. Because the
company will be considerably smaller and less diversified after the
restructuring, it may be difficult for it to obtain additional financing on
reasonable terms. If this is the case, ZDNet's future financial position and
results of operations may be adversely affected.
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OTHER RISK FACTORS
ZDNET HAS AN EXTREMELY LIMITED OPERATING HISTORY AND A HISTORY OF NET LOSSES AND
THERE IS NO ASSURANCE ZDNET WILL REPORT NET INCOME IN THE FUTURE.
ZDNet, which will constitute the major business of the company after
the restructuring, has an extremely limited operating history and an investor
must consider the risks, expenses and difficulties frequently encountered by
such companies, particularly in the new and rapidly evolving market for Internet
products, content and services. We cannot assure you that ZDNet will be
successful in addressing such risks. Although ZDNet has experienced revenue
growth in recent periods, we cannot assure you that ZDNet's revenue will
continue to grow or continue at its current level.
ZDNet has incurred significant net losses in the past ($21.2 million in
1997, $7.9 million in 1998 and $0.1 million in the first nine months of 1999).
For more information regarding these net losses, see "ZDNet Summary Historical
and Pro Forma Combined Financial and Other Data" included in our Proxy Statement
and incorporated herein by reference. We cannot assure you that ZDNet will
report net income in the future.
WE CANNOT ACCURATELY PREDICT ZDNET'S FUTURE REVENUE.
As a result of the evolving nature of the Internet and ZDNet's limited
operating history, we cannot accurately forecast ZDNet's revenue. Current and
future expense levels are based principally on estimated future revenue and are
to a large extent fixed. Accordingly, ZDNet may be unable to adjust spending to
compensate for any unexpected revenue shortfall. If ZDNet's actual revenue is
less than its estimated revenue, this could have an immediate material adverse
effect on ZDNet's profits and liquidity.
ZDNET'S QUARTERLY OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY AND ARE NOT
RELIABLE INDICATORS OF ITS FUTURE PERFORMANCE.
ZDNet's quarterly operating results may fluctuate significantly because
of a variety of factors, many of which are outside our control, including:
o overall usage levels of the Internet and of ZDNet's sites in
particular,
o demand for Internet advertising and the loss of advertisers,
o seasonal trends in Internet use and advertising,
o the amount and timing of ZDNet's capital expenditures,
o costs relating to the expansion of ZDNet's operations and the
introduction of new sites and services,
o price competition or pricing changes in Internet advertising and
o costs relating to technical difficulties or system downtime.
We believe Internet advertising typically slows in the first quarter of
the year. Historically, ZDNet has experienced lower advertising and lower
revenue in the first quarter of each year as compared to the fourth of the prior
year. Seasonality and cyclicality in the level of Internet advertising
expenditures generally could
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become more pronounced in the future as the Internet becomes more accepted
as an advertising vehicle. If a large number of ZDNet's advertisers do not
advertise in a given quarter or if advertising revenue is deferred, ZDNet's
revenue in that quarter could be substantially reduced. This would have a
material adverse effect on ZDNet's operating results and could impair its
business in future periods. Quarterly comparisons of ZDNet's results of
operations are not reliable and you should not rely on them as an indication of
ZDNet's future performance. For additional information about the seasonality of
ZDNet's revenue, see "ZDNet Management's Discussion and Analysis of Financial
Condition and Results of Operations" included in our Proxy Statement and
incorporated herein by reference.
ZDNET'S FUTURE REVENUE IS DEPENDENT ON THE GROWTH OF INTERNET USE AND THE
ACCEPTANCE OF THE INTERNET AS AN ADVERTISING AND COMMERCE MEDIUM.
ZDNet's future revenue will depend largely on the widespread acceptance
and use of the Internet as an information source and as an advertising and
commerce vehicle. Rapid growth in Internet use is a recent trend and market
acceptance of the Internet as an advertising and commercial medium is highly
uncertain.
The Internet may not be accepted as a viable advertising and commerce
medium for distribution of information and engaging in commerce for a number of
reasons, including:
o inadequate development of the network infrastructure,
o inadequate development of enabling technologies,
o insufficient commercial support for Internet advertising,
o concerns about privacy and security among users and
o lack of widely accepted standards for measuring the effectiveness
of advertising on the Internet.
ZDNET DEPENDS ON ADVERTISING AS A PRINCIPAL SOURCE OF ITS REVENUE.
ZDNet derived 86% of its revenue in 1998 and 92% of its revenue in the
first nine months of 1999 from the sale of advertising on its Internet sites and
we expect that advertising revenue will continue to be the principal source of
ZDNet's revenue in the foreseeable future. Most of ZDNet's advertising contracts
are either short-term arrangements and/or can be terminated by the advertiser at
any time with little notice. We cannot assure you that ZDNet will be able to
retain current advertisers or obtain new advertising contracts.
ZDNet's ability to generate advertising revenue will depend on several
factors, including:
o the continued development of the Internet as an advertising medium,
o the pricing of advertising on other Internet sites,
o the amount of traffic on ZDNet's network of sites,
o pricing pressure, delays and new product launches,
o ZDNet's ability to achieve, demonstrate and maintain attractive
user demographics and
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o ZDNet's ability to develop and retain a skilled advertising sales
force.
ZDNET IS INCREASINGLY DEPENDENT ON, AND RECEIVES A SIGNIFICANT PERCENTAGE OF ITS
REVENUE FROM, A LIMITED NUMBER OF ADVERTISERS.
A relatively small number of advertisers contribute a significant
percentage of ZDNet's consolidated revenue. ZDNet's top 20 advertising customers
accounted for approximately 46.5% of its advertising revenue in 1998 and
approximately 42.1% of its advertising revenue in the first nine months of 1999.
These advertising clients, and its other advertising clients, may not continue
to use ZDNet's services to the same extent, or at all, in the future. A
significant reduction in advertising by one or more of ZDNet's largest
advertisers would have a material adverse effect on ZDNet's profits and
liquidity.
ZDNET DEPENDS ON ARRANGEMENTS WITH THIRD PARTIES FOR INTERNET TRAFFIC TO ITS
SITES AND ZDNET'S FAILURE TO MAINTAIN THESE ARRANGEMENTS WITH THIRD PARTIES
COULD ADVERSELY AFFECT ITS BUSINESS.
ZDNet's ability to advertise on and maintain links from other Internet
sites is an important element to its success. Traffic originating from links
existing on other Internet sites (particularly search engines, directories and
other navigational tools managed by Internet service providers and Web browser
companies), is an important segment of the overall traffic on ZDNet's Internet
sites. ZDNet has special linking arrangements to generate additional traffic
with Yahoo!, AltaVista, Go.com, Lycos and iVillage which are either short-term
contracts and/or can be terminated with little notice. There is intense
competition for these types of linking arrangements. We cannot assure you that
these arrangements will be maintained or that advertising or links will continue
to be available on reasonable commercial terms or at all.
ZDNET DEPENDS ON LICENSED TECHNOLOGY FROM THIRD PARTIES AND ZDNET'S FAILURE TO
MAINTAIN THESE ARRANGEMENTS WITH THIRD PARTIES COULD ADVERSELY AFFECT ITS
BUSINESS.
ZDNet relies on certain technology licensed from third parties such as
Vignette's Storyserver, Thunderstone's Texis Search Engine and Netscape's Web
Server Software for use in operating and managing its Internet sites and
providing related services to users and advertisers. ZDNet's ability to generate
revenue from Internet commerce may also depend on data encryption and
authentication technologies that it may be required to license from third
parties. We cannot assure you that such technology licenses will be available at
all, that they will be available on reasonable commercial terms or that they
will operate as intended.
ZDNET'S COMPETITIVE POSITION DEPENDS ON ITS ABILITY TO ATTRACT AND RETAIN KEY
PERSONNEL.
ZDNet's failure to attract and retain qualified personnel could
diminish its competitive position. ZDNet's performance is substantially
dependent on the continued services and performance of its senior executive
officers and other key personnel. ZDNet does not have long-term employment
agreements with any of its key personnel and maintains no "key person" life
insurance policies. ZDNet's future success also depends on its ability to
identify, attract, retain and motivate highly skilled editorial, technical,
managerial, sales, marketing and customer service personnel. Competition for
such persons is intense. We cannot assure you that ZDNet will be able to attract
or retain such personnel.
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ZDNET MAY NOT BE ABLE TO ADEQUATELY RESPOND TO TECHNOLOGICAL CHANGE.
The market for Internet products and services is characterized by rapid
technological developments, frequent new product introductions and evolving
industry standards. ZDNet will be required to continually improve the
performance, features and reliability of its network infrastructure and Internet
sites, particularly in response to competition and changing customer demands. We
cannot assure you that ZDNet will be successful in responding rapidly,
cost-effectively or adequately to such developments.
ZDNET'S COMPETITION IS INTENSE AND IS EXPECTED TO INCREASE SIGNIFICANTLY.
We cannot assure you that ZDNet will be able to maintain its
competitive position. Competition among Internet content providers is intense
and is expected to increase significantly in the future. The market for Internet
content sites is rapidly evolving and barriers to entry are low, enabling
newcomers to launch competitive sites at relatively low cost. Moreover,
increased competition could result in price reductions, reduced margins or loss
of market share, any of which could have an effect on our future revenue and
profits.
We believe ZDNet competes most directly with Web sites specializing in
broad-based technology information. These include c/net, CMP, Internet.com and
IDG. ZDNet also generally competes for users and advertisers with:
o Internet portals and search sites that help users access
information rather than create original content and are not
specifically focused on technology related information, such as
Excite, Infoseek, Lycos and Yahoo!,
o general news sites, such as those provided by CNN and ABC,
o general purpose online service providers, such as America Online
and MSN,
o browser/software companies offering information services, such as
Microsoft and Netscape, and
o large general-interest sites.
In addition, ZDNet competes with traditional media content businesses
such as newspapers, magazines, radio and television. In order to compete
successfully and attract users, advertisers and strategic partners, ZDNet must
continue to provide high quality, engaging content in a timely and
cost-effective manner.
TO REMAIN COMPETITIVE, ZDNET MUST CONSTANTLY EXPAND AND DEVELOP NEW CONTENT
AREAS AND SERVICES. THIS IS INHERENTLY RISKY AND EXPENSIVE.
ZDNet's future success may depend in part on its ability to continue
expanding its Internet sites to include new subject matters and services. Costs
related to developing new content areas and services are expensed as they are
incurred while revenue related to these new content areas and services typically
builds over time. Accordingly, ZDNet's profitability from year to year may be
adversely affected by the number and timing of new launches. In addition, we
cannot assure you that any new areas or services will be developed in a timely
or cost-effective manner or that they will be successful.
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ZD NET HAS LAUNCHED AN EXPENSIVE ADVERTISING CAMPAIGN THAT MAY OR MAY NOT BE
EFFECTIVE.
On December 25, 1999, ZDNet launched a 15-month, $25 million consumer
advertising campaign. This campaign is ZDNet's first major attempt at offline
consumer advertising. The campaign will initially run on network and cable TV,
in mainstream and technology-focused print publications and in key online and
outdoor positions. We cannot assure you that this campaign, or any other
advertising campaign we may launch in the future, will be effective. In
addition, to remain competitive, ZDNet may need to spend significantly more
money on advertising in the future and such additional costs could adversely
affect ZDNet's profits.
WE CANNOT ASSURE YOU THAT ZDNET WILL CONTINUE TO DEVELOP THE ZDNET BRAND.
We cannot assure you that ZDNet will be able to continue to develop its
brand. ZDNet believes brand identity is important to attracting and expanding
its user base, Internet traffic and advertising and commerce relationships.
ZDNet believes the significance of brand recognition will intensify as the
number of Internet sites increases.
ANY CAPACITY CONSTRAINTS OR SYSTEM DISRUPTIONS COULD HAVE A MATERIAL ADVERSE
EFFECT ON ZDNET.
The performance and reliability of ZDNet's Internet sites and network
infrastructure are critical to its reputation and ability to attract and retain
users, advertisers, merchants and strategic partners. Any system error or
failure, or a sudden and significant increase in traffic, may result in the
unavailability of sites and significantly delay response times. Individual,
sustained or repeated occurrences could result in a loss of potential or
existing users, advertisers or strategic partners. In addition, because ZDNet's
advertising revenue is directly related to the number of advertisements it
delivers to users, system interruptions or delays would reduce the number of
impressions delivered and thereby reduce its revenue.
ZDNet's systems and operations are vulnerable to interruption or
malfunction due to certain events beyond its control, including natural
disasters, telecommunications failures and computer hacking. ZDNet also relies
on Web browsers and online service providers to provide Internet access to its
sites. We cannot assure you that ZDNet will be able to expand its network
infrastructure, either itself or through use of third-party hosting systems or
service providers, on a timely basis sufficient to meet demand. ZDNet presently
has only a limited amount of redundant facilities or systems, no formal disaster
recovery plan and no sufficient business interruption insurance to compensate
for losses that may occur. Any interruption to its systems or operations could
have a material adverse effect on ZDNet's business and its ability to retain
users, advertisers and strategic partners.
ZDNET'S NETWORKS MAY BE VULNERABLE TO SECURITY RISKS.
ZDNet's networks may be vulnerable to denial-of-service attacks,
unauthorized access, computer viruses and other security problems. A user who
circumvents security measures could misappropriate proprietary information or
cause interruptions or malfunctions in ZDNet's operations. ZDNet may be required
to expend significant resources to protect against the threat of such security
breaches or to alleviate problems caused by such breaches. Although ZDNet
intends to continue to implement industry-standard security measures, not all
securities which are implemented may be the latest state of the art and such
measures may be inadequate.
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INCREASED GOVERNMENT REGULATION OF THE INTERNET COULD HAVE A MATERIAL ADVERSE
EFFECT ON ZDNET.
Increased government regulation, or the application of existing laws to
online activities, could inhibit Internet growth, expose ZDNet and other online
content providers to additional liabilities and increase the cost of doing
business. This could have a material adverse effect on ZDNet's profits and
liquidity. The increasing popularity and use of the Internet and other online
services may lead to the adoption of new laws and regulations in the U.S. or
elsewhere covering issues affecting ZDNet's business, such as online privacy,
copyright and trademark, sales taxes and fair business practices or which
require qualification to do business as a foreign corporation in certain
jurisdictions. For instance, the European Union's privacy regulations may limit
the collection and use of certain user information.
ZDNET RELIES ON INTELLECTUAL PROPERTY RIGHTS WHICH MAY NOT BE ADEQUATELY
PROTECTED UNDER CURRENT LAWS.
To establish and protect its trademarks, service marks and other
proprietary rights in its products and services, ZDNet relies on a combination
of:
o copyright, unfair competition, trademark, service mark and trade
secret laws and
o confidentiality agreements with certain of its licensees and other
third parties and confidentiality agreements and policies covering
its employees.
We cannot assure you that these measures will be adequate, that ZDNet
will be able to secure registrations for all of its marks in the U.S. or
internationally or that third parties will not infringe upon or misappropriate
its proprietary rights. Any infringement or misappropriation, or litigation
relating to intellectual property rights, may divert management's attention and
ZDNet's funds to litigate such claims.
Legal standards relating to the validity, enforceability and scope of
protection of certain proprietary rights in Internet-related business are
uncertain and evolving. In particular, new domain name registration and
ownership priority procedures have recently been adopted which may make it more
difficult for ZDNet to retain or obtain desirable domain names.
ZDNET MAY INCUR LIABILITY FOR ITS INTERNET CONTENT AND USER DATA.
As a content provider, ZDNet may face potential liability for
intellectual property infringement, defamation, indecency and other claims. In
addition, ZDNet may incur liability for unauthorized duplication or distribution
of third-party content or materials or for information collected from and about
its users. We cannot assure you that third parties or users will not bring
claims against ZDNet relating to proprietary rights or use of personal
information. Although ZDNet seeks to obtain indemnification from strategic
partners for any liability resulting from licensed content or linked sites, we
cannot assure you that such indemnities will always be obtainable or adequate.
ZDNet's general liability insurance may not cover or be adequate for potential
claims of this type.
ZDNET MAY NOT BE ABLE TO ADEQUATELY MANAGE ITS GROWTH.
ZDNet will need to effectively plan and manage its business to succeed
in the rapidly evolving Internet industry. ZDNet continues to increase the scope
of its operations and has grown its workforce substantially. As of December 31,
1998, ZDNet had a total of 316 employees and as of December 31, 1999, ZDNet had
a total of 438 employees, a growth of 52.8%. This growth has placed, and future
growth may place, a
12
<PAGE>
significant strain on ZDNet's resources. For example, we expect that the variety
of advertising products available on ZDNet sites will expand, increasing demands
on ZDNet's billing and collection systems and requiring additional resources to
properly determine pricing and discounting structures. ZDNet expects that it
will need to continue to improve its financial and management controls and
reporting systems and procedures, and will need to continue to expand, train and
manage its workforce.
ZDNET'S ACQUISITION AND INVESTMENT STRATEGY EXPOSES IT TO RISKS.
ZDNet currently intends to continue acquisitions of and investments in
new or complementary businesses, products, services or technologies. However, we
cannot assure you that ZDNet will be able to identify suitable acquisition or
investment candidates. Even if ZDNet does identify suitable candidates, we
cannot assure you that ZDNet will be able to make such acquisitions or
investments on reasonable commercial terms or successfully assimilate personnel,
operations, products, services or technologies into its operations. This could
disrupt ZDNet's ongoing business, distract ZDNet's management and employees,
increase ZDNet's expenses, including amortization of goodwill, and materially
and adversely affect ZDNet's profits and liquidity.
ZDNET INTENDS TO EXPAND ITS INTERNATIONAL OPERATIONS AND MAY ENCOUNTER A NUMBER
OF PROBLEMS DOING SO. THERE ARE ALSO A NUMBER OF RISKS ASSOCIATED WITH
INTERNATIONAL OPERATIONS THAT COULD ADVERSELY AFFECT ZDNET'S BUSINESS.
EXPANSION OF INTERNATIONAL OPERATIONS. One component of ZDNet's growth
strategy is to further expand into international markets. ZDNet's international
operations are at an early stage of development and have an extremely limited
operating history. In addition, the markets in which ZDNet has undertaken
international expansion have technology and online industries that are less well
developed than in the U.S.
RISKS OF INTERNATIONAL OPERATIONS. There are certain risks inherent in
doing business in international markets, such as the following:
o uncertainty of product acceptance by different cultures,
o unforeseen changes in regulatory requirements,
o difficulties in staffing and managing multinational operations,
o state-imposed restrictions on the repatriation of funds,
o currency fluctuations,
o difficulties in finding appropriate foreign licensees or joint
venture partners and
o potentially adverse tax consequences.
There is a risk that such factors will have an adverse effect on
ZDNet's ability to successfully operate internationally and on its profits and
liquidity.
13
<PAGE>
THE INCLUSION OF COMPUTER SHOPPER IN OUR CONSOLIDATED RESULTS MAY ADVERSELY
AFFECT OUR STOCK PRICE.
We plan to include our Computer Shopper business in the assets that we
will transfer to ZDNet in return for an increase in ZD's retained interest in
ZDNet. Although we expect that the value of Computer Shopper will be immaterial
in relation to the expected market capitalization of ZDNet Inc. after the
restructuring, we also expect Computer Shopper to be highly material to the
consolidated financial statements of ZDNet Inc. after the restructuring. Even
though we plan to break out our online business as a separate segment from our
Computer Shopper business for accounting purposes, it is possible that the
market will not value our stock as highly as it would in the absence of Computer
Shopper since, among other things, we expect that our consolidated revenues will
grow at a substantially lower rate (or may even decline) as a result of
including Computer Shopper in our consolidated results.
OUR HISTORICAL AND PRO FORMA FINANCIAL INFORMATION IS NOT PARTICULARLY RELEVANT
TO OUR ACTUAL RESULTS.
Our financial information included in our Proxy Statement and
incorporated herein by reference does not reflect what the actual results of
operations, financial position and cash flows would have been had Ziff-Davis
existed and the restructuring been completed prior to the periods in question.
In addition, the financial information is not necessarily indicative of our
future results of operations, financial position and cash flows.
WE ARE CONTROLLED BY OUR PRINCIPAL STOCKHOLDER. THIS CREATES POTENTIAL CONFLICTS
OF INTEREST.
SOFTBANK Corp. and its non-Ziff-Davis affiliates ("Softbank") currently
own 71,620,000 shares of ZD stock and will, after the restructuring, own a
majority of our outstanding shares of common stock. As a result, Softbank will
be able to elect all the members of the board of directors. Softbank could also
control those actions requiring the approval of the holders of a majority of the
voting stock, including amendments to our charter and any business combinations.
This concentration of ownership could prevent a change in control of ZDNet that
might otherwise be beneficial to stockholders.
We have entered into certain agreements with Softbank governing ongoing
relationships. These agreements include certain licensing and management
agreements relating to ZDNet. However, the agreements with Softbank do not
preclude investments by venture capital funds managed by Softbank which invest
in, among other things, computer and Internet-related companies. These funds may
be able to co-invest with or compete with ZDNet with respect to new investments.
In addition, Softbank may also develop new funds which may compete with ZDNet
for investment opportunities. These agreements also prohibit ZDNet from
competing with SOFTBANK Corp. in Japan without the prior approval of SOFTBANK
Corp.'s board of directors and give Softbank the continuing right to license all
of ZDNet's products and services in Japan. These arrangements and undertakings
might be less favorable than arrangements negotiated at arm's length between
unrelated parties.
WE HAVE SIGNIFICANT DEBT OBLIGATIONS AND MAY BE UNABLE TO OBTAIN ADDITIONAL
FINANCING OR BE REQUIRED TO DIVERT FUNDS TO PAY DOWN PRINCIPAL AND INTEREST ON
OUR DEBT.
At September 30, 1999:
o Ziff-Davis's total debt was approximately $1.265 billion.
o Ziff-Davis's total stockholders' equity was approximately $1.605
billion.
14
<PAGE>
o Ziff-Davis's total debt was 78.8% of total capitalization.
Our indebtedness is substantial in relation to stockholders' equity.
The degree to which we are leveraged is important because:
o It may impair our ability to obtain additional financing for
working capital, capital expenditures, acquisitions or general
corporate purposes.
o It may reduce the funds available to us for our operations if a
substantial portion of our cash flow from operations is dedicated
to the payment of principal and interest on our indebtedness.
o It may impair our ability to incur additional debt because of
financial and other restrictive covenants, including those relating
to the incurrence of additional indebtedness, the creation of
liens, the payment of dividends and sales of assets.
o It may increase our vulnerability to adverse general economic
conditions, including increases in interest rates.
Our indebtedness requires us to use a substantial portion of our cash
flow to pay down principal and interest on our outstanding debt. This reduces
the funds available for capital expenditures and future business opportunities.
Our credit facility is secured, in part, by a first priority security
interest in the capital stock of certain of our subsidiaries and is guaranteed
by certain of our wholly owned domestic subsidiaries, including ZD Inc. and ZD
Events Inc.
WE ARE A DEFENDANT IN SEVERAL LAWSUITS, WHICH COULD MATERIALLY AND ADVERSELY
AFFECT OUR BUSINESS AND OPERATIONS.
In connection with the initial public offering of our common stock on
April 28, 1998, the repricing of certain stock options and a former joint
venture between Softbank and certain third parties, we have been named as a
defendant in several lawsuits. While we believe there are substantial defenses
to all of the claims, we cannot assure you that we will prevail. Defense costs
and/or settlement costs relating to these actions could be substantial, and the
defense of these actions may divert management's attention and resources. If the
plaintiffs prevail in these actions, any judgments awarded by the courts could
have a material adverse effect on our liquidity. For more information regarding
these lawsuits, see "ZDNet Description of Business - Legal Proceedings" included
in our Proxy Statement and incorporated herein by reference.
-----------
Our logo and certain of our Internet sites, publications, products and
services referenced in this document are our trademarks. Each trade name,
trademark or service mark of any other company appearing in this document is the
property of its owner.
15
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS OF ZIFF-DAVIS INC.
The following unaudited pro forma consolidated financial statements of
Ziff-Davis Inc. are based on the historical Consolidated Financial Statements of
Ziff-Davis Inc. appearing in an Annex to our Proxy Statement and incorporated
herein by reference, adjusted to give effect to the reorganization described in
Note 2 to the unaudited Consolidated Financial Statements of Ziff-Davis Inc.
included in that Annex, the public offering described in Note 3 to those
financial statements and the restructuring described in our Proxy Statement and
incorporated herein by reference.
The Unaudited Pro Forma Consolidated Balance Sheet as of December 31,
1998 gives pro forma effect to the public offering and the restructuring as if
they had occurred as of that date. The Unaudited Pro Forma Consolidated Balance
Sheet as of September 30, 1999 gives pro forma effect to the restructuring as if
it had occurred as of that date. The Unaudited Pro Forma Consolidated Statement
of Operations for the year ended December 31, 1998 gives pro forma effect to the
reorganization, the public offering and the restructuring as if they had
occurred immediately prior to January 1, 1998. The Unaudited Pro Forma
Consolidated Statement of Operations for the nine months ended September 30,
1999 gives pro forma effect to the public offering and the restructuring as if
they had occurred immediately prior to January 1, 1999. Further detail about the
pro forma adjustments appear in notes appearing at the end of the unaudited pro
forma consolidated financial statements.
These statements are not necessarily indicative of the actual financial
position or results of operations of Ziff-Davis Inc. as of the dates or for the
periods indicated or the financial position or results of operations that
Ziff-Davis Inc. would have experienced if the transactions for which the
statements give pro forma effect had in fact occurred at the times assumed.
Also, the statements do not purport to represent Ziff-Davis Inc.'s future
financial position or results of operations.
These statements should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations and the
Consolidated Financial Statements for Ziff-Davis Inc. included in the Annex to
our Proxy Statement and incorporated herein by reference.
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<PAGE>
<TABLE>
<CAPTION>
ZIFF-DAVIS INC.
UNAUDITED PRO FORMA CONSOLIDATED
BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
DECEMBER 31, 1998 SEPTEMBER 30, 1999
--------------------------------------------- ---------------------------------------------
ACTUAL ADJUSTMENT PRO FORMA ACTUAL ADJUSTMENT PRO FORMA
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents ....... $ 32,566 $ (12,274) $ 20,292 $ 29,791 $ 31,429 $ 61,220
Accounts receivable, net ........ 227,325 (189,495) 37,830 218,437 (186,322) 32,115
Inventories ..................... 15,551 (12,213) 3,338 12,946 (11,918) 1,028
Prepaid expenses and other
current
assets ....................... 34,543 (33,042) 1,501 37,407 (35,417) 1,990
Due from affiliates ............. 53,984 (53,984) -- 4,722 (4,722) --
Deferred taxes .................. 22,262 (21,483) 779 22,262 (22,262) --
------------- ------------- ------------- ------------- ------------- -------------
Total current assets ....... 386,231 (322,491) 63,740 325,565 (229,212) 96,353
Securities available for sale ........ -- -- -- 7,916 -- 7,916
Property and equipment, net .......... 91,189 (82,758) 8,431 116,917 (106,741) 10,176
Intangible assets, net 2,907,043 (2,799,704) 107,339 2,935,514 (2,787,725) 147,789
Other assets ......................... 49,340 (44,340) 5,000 58,024 (41,406) 16,618
------------- ------------- ------------- ------------- ------------- -------------
Total assets ............... $ 3,433,803 $ (3,249,293) $ 184,510 $ 3,443,936 $ (3,165,084) $ 278,852
============= ============= ============= ============= ============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ................ $ 75,863 $ (71,303) $ 4,560 $ 36,506 $ (32,307) 4,199
Accrued expenses ................ 97,319 (80,228) 17,091 136,081 (115,874) 20,207
Unearned income, net ............ 152,081 (147,307) 4,774 195,613 (183,097) 12,516
Due to affiliates and
management ................... 4,618 (4,618) -- -- -- --
Current portion of notes payable
to affiliates ................ 7,692 (7,692) -- 6,923 (6,923) --
Other current liabilities ....... 13,125 (13,125) -- 17,054 (17,054) --
------------- ------------- ------------- ------------- ------------- -------------
Total current liabilities .. 350,698 (324,273) 26,425 392,177 (355,255) 36,922
Notes payable to affiliates .......... 70,192 (70,192) -- 65,769 (65,769) --
Notes payable, net of unamortized
discount .......................... 1,469,130 (1,469,130) -- 1,199,215 (1,199,215) --
Deferred taxes ....................... 165,082 (164,303) 779 134,884 (134,884) --
Due to management .................... 5,400 (5,400) -- 665 (665) --
Other liabilities .................... 19,690 (19,690) -- 14,813 (14,813) --
------------- ------------- ------------- ------------- ------------- -------------
Total liabilities .......... 2,080,192 (2,052,988) 27,204 1,807,523 (1,770,601) 36,922
------------- ------------- ------------- ------------- ------------- -------------
Commitments and contingencies
Minority interest .................... 1,013 -- 1,013 31,255 (31,255) --
------------- ------------- ------------- ------------- ------------- -------------
Total stockholders' equity ........... 1,352,598 (1,196,305) 156,293 1,605,158 (1,363,228) 241,930
------------- ------------- ------------- ------------- ------------- -------------
Total liabilities and
stockholders' equity .... $ 3,433,803 $ (3,249,293) $ 184,510 $ 3,443,936 $ (3,165,084) $ 278,852
============= ============= ============= ============= ============= =============
Common Stock Outstanding, par
value $0.01 per share
Ziff-Davis Inc.--ZD Stock ............ 100,000,000 (100,000,000) -- 103,310,097 (103,310,097) --
Ziff-Davis Inc.--ZDNet Stock.......... 11,500,000 (11,500,000) -- 13,706,063 (13,706,063) --
Common Stock ......................... -- 129,890,502 129,890,502 -- 140,999,081 140,999,081
<FN>
The accompanying notes are an integral part of these pro forma financial statements.
</FN>
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
ZIFF-DAVIS INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
PRO FORMA
PRO FORMA NINE MONTHS NINE MONTHS
YEAR ENDED YEAR ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1998 ADJUSTMENT 1998 1999 ADJUSTMENT 1999
-------------- -------------- -------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Revenue, net
Publishing.................... $ 782,882 $ (673,184) $ 109,698 $ 518,626 $ (468,169) $ 50,457
Events........................ 269,867 (269,867) -- 157,150 (157,150) --
Internet...................... 56,143 3,665 59,808 67,791 2,634 70,425
Television.................... -- -- -- 9,343 (9,343) --
-------------- -------------- -------------- -------------- -------------- ---------------
1,108,892 (939,386) 169,506 752,910 (632,028) 120,882
Production and content............. 305,346 (244,195) 61,151 202,038 (159,534) 42,504
Selling, general and 567,683 (490,504) 77,179 458,593 (397,880) 60,713
administrative expenses.........
Stock-based compensation........... -- 3,477 3,477 4,861 (1,788) 3,073
Depreciation and amortization
of property and
equipment....................... 29,885 (27,785) 2,100 25,558 (23,281) 2,277
Amortization of intangible
assets.......................... 122,659 (115,216) 7,443 102,308 (94,237) 8,071
Restructuring charge............... 52,239 (52,239) -- -- -- --
-------------- -------------- -------------- -------------- -------------- ---------------
Income (loss) from
operations...................... 31,080 (12,924) 18,156 (40,448) 44,692 4,244
Interest expense, net--related
party........................... (65,935) 65,935 -- -- -- --
Interest expense, net.............. (77,612) 77,612 -- (89,602) 89,602 --
Other non-operating income,
net............................. 8,231 (8,097) 134 26,762 (26,762) --
Minority interest in losses of
subsidiaries.................... -- -- -- 15,686 (15,569) 117
-------------- -------------- -------------- -------------- -------------- ---------------
Income (loss) before income
taxes........................... (104,236) 122,526 18,290 (87,602) 91,963 4,361
Provision (benefit) for income
taxes........................... (26,427) 37,204 10,777 (31,655) 34,336 2,681
Net income (loss).................. $ (77,809) $ 85,322 $ 7,513 $ (55,947) $ 57,627 $ 1,680
============== ============== ============== ============== ============== ===============
Pro forma net income
per common share
Basic......................... $ 0.06 $ 0.01
Diluted....................... $ 0.05 $ 0.01
Pro forma weighted average
common shares outstanding
Basic......................... 129,890,502 137,736,688
Diluted....................... 141,485,182 151,580,906
<FN>
The accompanying notes are an integral part of these pro forma financial statements.
</FN>
</TABLE>
18
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET NOTES
December 31, 1998
The pro forma adjustments for the unaudited pro forma consolidated
balance sheet as of December 31, 1998 assume that the following had occurred as
of that date:
o the sale of 11,500,000 shares of ZDNet stock at a public offering
price of $19.00 per share, less underwriting discounts and
expenses of $1.74 per share;
o the application of the net proceeds from the sale of ZDNet stock
to reduce indebtedness under Ziff-Davis Inc.'s revolving credit
facility by approximately $200 million;
o the sale of ZD Market Intelligence, ZD Publishing (which excludes
Computer Shopper), ZD Events, Ziff-Davis Inc.'s equity interest
in ZDTV and ZD Eductation for proceeds assumed to aggregate $1.9
billion (the actual number will not impact the pro forma
statements, as explained under "--General Notes" below);
o the use of a portion of the proceeds from the sale of these
businesses to repay ZD's remaining debt (approximately $1.35
billion at December 31, 1998 after giving effect to the $200
million repayment referred to above), to pay certain expenses
(assumed to aggregate $75 million) and to cover certain ZD
contingent liabilities (assumed to aggregate $10 million) (see
"--General Notes" below);
o a $270 million write down of intangible assets relating to
Ziff-Davis Inc.'s Computer Shopper business (this amount, which
is an estimate of the impairment write down that Ziff-Davis Inc.
expects it will take in the fourth quarter of 1999, is the amount
by which the estimated net present value of future cash flows
from Computer Shopper exceeds the carrying value of Computer
Shopper);
o the vesting and exercise of options to purchase an assumed 5.5
million shares of ZD stock for an assumed $34 million and options
to purchase an assumed 2.3 million shares of ZDNet stock for an
assumed $10 million (see "--General Notes" below);
o the payment of a dividend to holders of ZD stock in an amount
assumed to equal all of the remaining proceeds from the sales of
the various businesses and the exercise of ZD options; under the
foregoing assumptions, the dividend would aggregate about $500
million, or about $4.73 per share of ZD stock (see "--General
Notes" below); and
o the elimination of Ziff-Davis Inc.'s tracking stock structure
through a merger with a newly formed subsidiary, as a result of
which each share of ZDNet stock will be converted into an assumed
1.77 shares of common stock and each share of ZD stock will
remain outstanding as one share of common stock (see "--General
Notes" below).
September 30, 1999
The pro forma adjustments for the unaudited pro forma consolidated
balance sheet as of September 30, 1999 assume that the following had occurred as
of that date:
19
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
o the sale of ZD Market Intelligence, ZD Publishing (which excludes
Computer Shopper), ZD Events, Ziff-Davis Inc.'s equity interest
in ZDTV and ZD Education for proceeds assumed to aggregate $1.9
billion (the actual number will not impact the pro forma
statements, as explained under "--General Notes" below);
o the use of a portion of the proceeds from the sale of these
businesses to repay ZD's remaining debt (approximately $1.27
billion at September 30, 1999), to pay certain expenses (assumed
to aggregate $75 million) and to cover certain ZD contingent
liabilities (assumed to aggregate $10 million) (see "--General
Notes" below);
o a $270 million write down of intangible assets relating to
Ziff-Davis Inc.'s Computer Shopper business (this amount, which
is an estimate of the impairment write down that Ziff-Davis Inc.
expects it will take in the fourth quarter of 1999, is the amount
by which the estimated net present value of future cash flows
from Computer Shopper exceeds the carrying value of Computer
Shopper);
o the vesting and exercise of options to purchase an assumed 7.6
million shares of ZD stock for an assumed $66 million and options
to purchase an assumed 3.3 million shares of ZDNet stock for an
assumed $39 million (see "--General Notes" below);
o the payment of a dividend to holders of ZD stock in an amount
assumed to equal all of the remaining proceeds from the sales of
the various businesses and the exercise of ZD options; under the
foregoing assumptions, the dividend would aggregate about $608
million, or about $5.48 per share of ZD stock (see "--General
Notes" below); and
o the elimination of Ziff-Davis Inc.'s tracking stock structure
through a merger with a newly formed subsidiary, as a result of
which each share of ZDNet stock will be converted into an assumed
1.77 shares of common stock and each share of ZD stock will
remain outstanding as one share of common stock (see "--General
Notes" below).
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS NOTES
Year Ended December 31, 1998
The pro forma adjustments for the unaudited pro forma consolidated
statement of operations for the year ended December 31, 1998 assume that the
following had occurred immediately prior to January 1, 1998:
o the reorganization described in Note 2 to the unaudited
Consolidated Financial Statements of Ziff-Davis Inc. included in
an Annex to our Proxy Statement and incorporated herein by
reference;
o the grant of ZDNet options that were in fact granted in the
fourth quarter of 1998 and the adjustment of the terms of those
options to reflect the dividend and merger described above,
resulting in a greater pro forma diluted weighted average common
shares outstanding and the recording of non-cash compensation
expense during the period; and
o each of the other transactions described under "Unaudited Pro
Forma Consolidated Balance Sheet Notes--December 31, 1998" above.
20
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In addition, for purposes of calculating the pro forma diluted weighted average
common shares outstanding (under the treasury stock method) and the resulting
pro forma diluted net income per common share, this consolidated statement of
operations assumes a weighted average price per common share of $15.71 (which is
equal to the closing price per share of ZDNet stock on January 31, 2000 divided
by the assumed exchange ratio in the merger of 1.77).
Nine Months Ended September 30, 1999
The pro forma adjustments for the unaudited pro forma consolidated
statement of operations for the nine months ended September 30, 1999 assume that
the following had occurred immediately prior to January 1, 1999:
o the sale of 11,500,000 shares of ZDNet stock at a public offering
price of $19.00 per share, less underwriting discounts and
expenses of $1.74 per share;
o the application of the net proceeds from the sale of ZDNet stock
to reduce indebtedness under Ziff-Davis Inc.'s revolving credit
facility by approximately $200 million;
o the grant of options that were in fact granted at various times
in the first three quarters of 1999 and the adjustment of the
terms of all options to reflect the dividend and merger described
above, resulting in a greater pro forma diluted weighted average
common shares outstanding during the period; and
o each of the other transactions described under "Unaudited Pro
Forma Consolidated Balance Sheet Notes--September 30, 1999"
above.
In addition, for purposes of calculating the pro forma diluted weighted average
common shares outstanding (under the treasury stock method) and the resulting
pro forma diluted net income per common share, this consolidated statement of
operations assumes a weighted average price per common share of $15.71 (which is
equal to the closing price per share of ZDNet stock on January 31, 2000 divided
by the assumed exchange ratio in the merger of 1.77).
GENERAL NOTES APPLICABLE TO ALL OF THE UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS
As long as the dividend to holders of ZD stock is assumed to equal all
of the remaining proceeds from the sales of the various businesses and the
exercise of ZD options, none of the following amounts have any impact on the pro
forma consolidated financial statements:
o the actual sale proceeds from the assumed sales of the various
businesses,
o the actual amount needed to repay ZD's remaining debt, to pay
various ZD expenses and to cover various ZD contingent
liabilities and
o the actual amount of proceeds from the exercise of ZD options.
Of course, the foregoing amounts will have a direct impact on the size of the
dividend paid to holders of ZD stock.
21
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The foregoing adjustments assume that Ziff-Davis Inc. will merge with a
newly formed subsidiary, as a result of which each share of ZDNet stock will be
converted into an assumed 1.77 shares of common stock and each share of ZD stock
will remain outstanding as one share of common stock. The actual exchange ratio
will be calculated as described under "Proposal 1--The Restructuring of
Ziff-Davis--The Merger" appearing in our Proxy Statement and incorporated herein
by reference. The underlying assumptions that generated this assumed exchange
ratio are described in that same section of our Proxy Statement and incorporated
herein by reference.
22
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
THE REGISTRATION STATEMENT
We have filed a registration statement with the SEC under the
Securities Act of 1933 that registers the shares of ZDNet common stock offered
by this document. We sometimes refer to these shares as the "ZDNet shares" or
the "ZD stock."
The registration statement that we filed with the SEC, including the
attached exhibits and schedules, contains additional relevant information about
Ziff-Davis and the ZDNet shares offered by this document. The SEC allows us to
omit some information included in the registration statement from this document.
You should read the entire registration statement in order to obtain this
additional information.
FILINGS WITH THE SEC
In addition, we file reports, proxy statements and other information
with the SEC under the Securities Exchange Act of 1934 on a regular basis. You
may read and copy this information at the following locations of the SEC:
<TABLE>
<S> <C> <C>
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
</TABLE>
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. You can obtain more information on the
operation of the SEC's Public Reference Room in Washington, D.C. by calling the
SEC at 1-800-SEC-0330.
The SEC also maintains an Internet world wide web site that contains
reports, proxy statements and other information about issuers, like Ziff-Davis,
who file electronically with the SEC. The address of that site is
http://www.sec.gov.
You can also inspect reports, proxy statements and other information
about Ziff-Davis at the offices of the NYSE, 20 Broad Street, New York, New York
10005.
DOCUMENTS INCORPORATED BY REFERENCE
THE SEC ALLOWS US TO "INCORPORATE BY REFERENCE" INFORMATION INTO THIS
DOCUMENT. THIS MEANS THAT WE CAN DISCLOSE IMPORTANT INFORMATION TO YOU BY
REFERRING YOU TO ANOTHER DOCUMENT FILED SEPARATELY WITH THE SEC. This
information incorporated by reference is a part of this document, unless we
provide you with different information in this document.
This document incorporates by reference the documents listed below that
we have previously filed with the SEC. They contain important information about
Ziff-Davis and its financial condition.
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<PAGE>
ZIFF-DAVIS COMMISSION FILINGS PERIOD COVERED OR DATE FILED
(FILE NO. 1-14055)
- ----------------------------------- ----------------------------
Our Annual Report on Form 10-K. Year ended December 31, 1998.
Quarterly Reports on Form 10-Q. Quarter ended March 31, 1999.
Quarter ended June 30, 1999.
Quarter ended September 30, 1999.
Current Reports on Form 8-K. Filed December 8, 1999.
The description of our ZDNet common Filed pursuant to Section 12 of the
stock contained in our Exchange Act on March 31, 1999,
Registration Statement on Form S-1 including any amendments or reports
(File No. 333-69447) filed under filed for the purpose of updating
the Securities Act of 1933 and such description.
incorporated in our Registration
Statement on Form 8-A.
The description of our ZDNet common Filed on August 4, 1999, containing the
stock contained in our Current Report final prospectus used in connection
on Form 8-K. with the initial public offering of the
ZDNet stock (the "IPO Prospectus").
The description of our restructuring Filed pursuant to Section 14(a) of the
contained in our Proxy Statement on Exchange Act on February 9, 2000.
Schedule 14A.
Ziff-Davis also incorporates by reference additional documents that we
may file with the SEC between the date of this document and the date that the
offering of the ZDNet stock is terminated. These documents include periodic
reports, like Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, other
Current Reports on Form 8-K and proxy statements.
You can obtain any of the documents incorporated by reference in this
document from us or from the SEC through the SEC's web site at the address
above. Documents incorporated by reference are available from us without charge,
excluding any exhibits to those documents unless we specifically incorporated by
reference the exhibit in this document. You can obtain these documents from us
by requesting them in writing or by telephone at the following address or
number:
Timothy C. O'Brien
Ziff-Davis Inc.
28 East 28th Street
New York, New York 10016
Telephone: (212) 503-3500
OTHER INFORMATION
We have not authorized anyone to give you any information about us or
this offering that is different from what we tell you in this document or in any
of the materials that we have incorporated into this document. If anyone gives
you any other information about us, you should not rely on it. If you are in a
24
<PAGE>
jurisdiction where offers to sell, or solicitations of offers to buy, the ZD
shares offered by this document are unlawful, or if you are a person to whom it
is unlawful to direct these types of activities, then the offer presented in
this document does not extend to you. The information contained in this document
speaks only as of the date of this document unless the information specifically
indicates that another date applies.
THE SELLING SHAREHOLDER
The ZDNet shares offered by this document are being offered by the
selling shareholder named below. The selling shareholder acquired its common
shares as a result of our acquisition of the outstanding equity Ziff-Davis
Richina Media LDC on January 18, 2000 owned by Richina Media and Entertainment
Limited (formerly known as Richina Media Holdings Ltd.).
The selling shareholder is listed below, together with the number of
ZDNet shares it beneficially owns as of February 23, 2000 and the number of
ZDNet shares offered by this document. Because the selling shareholder may not
sell all, or any, of the ZDNet shares by means of this document, we do not know
the number it will own after this offering.
ZDNET SHARES ZDNET SHARES
BENEFICIALLY OWNED ON OFFERED BY
SELLING SHAREHOLDER FEBRUARY 23, 2000 THIS DOCUMENT
Richina Media and Entertainment 186,046 186,046
Limited
New Hua Lian Building,
West Block, Suite 8B, 775 Huai Hai
Zhang Road, Shanghai 200020, PRC
TOTAL.................................. 186,046 186,046
PLAN OF DISTRIBUTION
METHODS OF DISTRIBUTION BY SELLING SHAREHOLDER
The selling shareholder has informed us that it proposes to offer for
sale the ZDNet shares offered by this document from time to time and in several
different ways. For example, it may make sales:
o on the New York Stock Exchange,
o on another stock exchange or interdealer quotation system on which
ZDNet shares are quoted or listed at the time,
o through negotiated transactions or
o otherwise at prices related to prevailing market prices or at
negotiated prices.
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<PAGE>
From time to time, the selling shareholder may offer the shares offered
by this document through brokers, dealers or agents, who may receive
compensation in the form of concessions or commissions from the selling
shareholder, agents and/or the purchasers for whom they may act as agent.
PREPARATION OF AN ADDITIONAL PROSPECTUS
If necessary, we will prepare another document to describe the method
of sale in greater detail. As of the date of this document, we do not know of
any arrangements by the selling shareholder to sell its shares, nor do we know
which brokerage firms the selling shareholder may select to sell its shares. In
addition, the selling shareholder may sell its shares without the aid of a
registration statement if it follows SEC rules.
PARTIES THAT MAY BE DEEMED UNDERWRITERS
The selling shareholder and any brokers, dealers or agents that
participate in the distribution of the shares offered by this document may be
considered "underwriters." If the selling shareholder is considered an
underwriter, any profits on the sale of common shares by it and any associated
discounts or commissions may be considered underwriting compensation. In
addition, if the selling shareholder is considered an underwriter, the selling
shareholder may be subject to liability for misstatements and omissions in the
registration statement relating to this document.
REGULATION OF SALES BY SELLING SHAREHOLDER
The selling shareholder and any other person participating in a sale or
distribution of the shares offered by this document will be subject to
applicable provisions of the Securities Exchange Act of 1934, which is the
federal statute regulating sales of securities. Some SEC rules and regulations,
including some limitations on activities during securities offerings and
anti-fraud provisions, may limit when the selling shareholder, or any other
person, may sell or purchase the common shares.
In some jurisdictions, the securities laws require that the shares
offered by this document be offered or sold only through registered or licensed
brokers or dealers. In addition, in some jurisdictions the shares may not be
offered or sold unless they have been registered or qualified for sale in such
jurisdictions or an exemption from registration or qualification is available
and is complied with.
EXPENSES
We will not receive any part of the proceeds from the sale of the ZDNet
shares offered by this document. We will bear all expenses we incur in
registering the shares with the SEC. The selling shareholder will pay its own
expenses, including brokerage commissions, personal legal and/or advisor fees or
similar expenses, in offering and selling its shares.
USE OF PROCEEDS
We will not receive any proceeds from the sales of the shares offered
by this document, but we will bear some of the expenses. See "Plan of
Distribution - Expenses" above for a description of the payment of expenses.
26
<PAGE>
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This document contains statements that anticipate or plan for the
future. These forward-looking statements include statements about our future
business plans and strategies, financial condition and results of operations,
and other statements that are not historical. These statements may be:
o made directly in this document or
o "incorporated by reference" to other documents Ziff-Davis files
with the SEC.
You can find many of these statements by looking for words like
"believes," "expects," "anticipates" and "estimates" and for similar
expressions. Because forward-looking statements involve assumptions and future
risks and uncertainties, there are factors that could cause the actual results
to differ materially from those expressed or implied. For example, the
statements appearing under "Risk Factors" herein and our December 31, 1998 Form
10-K, our March 31, 1999 Form 10-Q, our June 30, 1999 Form 10-Q and our
September 30, 1999 Form 10-Q describe circumstances that could not materially
affect the accuracy of forward-looking statements.
You should not unduly rely on these forward-looking statements, which
are correct only as of the date of this document or the date of any document
incorporated by reference.
If either Ziff-Davis or Richina Media and Entertainment Limited, or any
person acting on our behalf, makes any subsequent written or oral
forward-looking statements, these statements are qualified in total by the
cautionary statements contained or referred to in this section. Ziff-Davis
undertakes no obligation to release publicly any revisions to these
forward-looking statements to reflect events or circumstances after the date of
this document or to reflect the occurrence of unanticipated events.
This document also includes statistical data regarding the publishing,
trade show and Internet industries. This data was obtained from industry
publications and reports which we believe to be reliable sources. We have not
independently verified such data nor sought the consent of any organizations to
refer to their reports in this document.
VALIDITY OF COMMON STOCK
The validity of the shares of ZDNet stock being offered by this
document has been passed upon for Ziff-Davis by Sullivan & Cromwell.
EXPERTS
The following financial statements have been so incorporated in this
document and registration statement in reliance on the reports of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting:
o the consolidated financial statements of Ziff-Davis Inc. as of
December 31, 1997 and 1998 and for the three years in the period
ended December 31, 1998 appearing in Ziff-Davis Inc.'s Annual
Report on Form 10-K for the year ended December 31, 1998,
Ziff-Davis Inc.'s Current Report on Form 8-K dated April 2, 1999,
and Ziff-Davis Inc.'s Current Report on Form 8-K dated August 4,
1999;
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<PAGE>
o the combined financial statements of ZD (a division of Ziff-Davis
Inc.) as of December 31, 1997 and 1998 and for the three years in
the period ended December 31, 1998 appearing in Ziff-Davis Inc.'s
Current Report on Form 8-K dated April 2, 1999 and Ziff-Davis
Inc.'s Current Report on Form 8-K dated August 4, 1999;
o the combined financial statements of ZDNet (a division of
Ziff-Davis Inc.) as of December 31, 1997 and 1998 and for the three
years in the period ended December 31, 1998 appearing in Ziff-Davis
Inc.'s, Current Report on Form 8-K dated April 2, 1999 and
Ziff-Davis Inc.'s Current Report on Form 8-K dated August 4, 1999;
o the financial statements of ZDTV, LLC as of December 31, 1997 and
1998 and for the two years in the period ended December 31, 1998
appearing in Ziff-Davis Inc.'s Current Report on Form 8-K/A dated
April 20, 1999; and
o the consolidated financial statements of Ziff-Davis Inc. as of
December 31, 1997 and 1998, and for the years ended December
31, 1996, 1997 and 1998, appearing in Ziff-Davis Inc.'s Proxy
Statement on Schedule 14A dated February 7, 2000.
28
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the fees and expenses payable by the
Registrant in connection with this offering, other than underwriting discounts
and commissions. All the amounts shown are estimates, except the SEC
registration fee:
Registration Statement Filing Fee......................$ 1,504.19
Legal Fees and Expenses................................ 15,000.00
Accounting Fees and Expenses........................... 5,500.00
Printing Costs......................................... 2,500.00
Miscellaneous Fees and Expenses........................ 5,000.00
----------
Total..........................................$29,504.19
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with any threatened, pending or completed actions, suits or
proceedings in which such person is made a party by a reason of such person
being or having been a director, officer, employee or agent of the Registrant or
serving at the request of the corporation as a director, officer, employee or
agent of another corporation or other enterprise if the person acted in good
faith and in a manner the person reasonably believed was not opposed to the
corporation's best interests, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe the person's conduct was
unlawful. The statute provides that the indemnification is not exclusive of
other rights to which those seeking indemnification may be entitled under any
by-law, agreement, vote of stockholders or disinterested directors or otherwise.
Section 6.4 of the Registrant's By-laws provides for indemnification by the
Registrant of its directors, officers and employees to the fullest extent
permitted by the Delaware General Corporation Law and permits the Registrant to
maintain insurance to protect against such expense, liability or loss, whether
or not the Delaware General Corporation Law provides indemnification. In
addition to the protection available under the Registrant's Amended and Restated
Certificate of Incorporation, By-laws and insurance policies, the Registrant has
entered into agreements with its outside directors to indemnify them to the
fullest extent permitted by law against losses arising from any claim against
them by reason of being or having been a director.
Section 102(b)(7) of the Delaware General Corporation Law permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
payments of unlawful dividends or unlawful stock purchases or redemptions, or
(iv) for any transaction from which
II-1
<PAGE>
the director derived an improper personal benefit. The Registrant's Certificate
of Incorporation provides for such limitation of liability.
ITEM 16. EXHIBITS.
4.1 Specimen certificate representing Ziff-Davis Inc.'s ZDNet
Stock, par value $0.01 per share. (Incorporated by reference
to Ziff-Davis' Registration Statement on Form S-1) (File No.
333-69447)
5.1 Opinion of Sullivan & Cromwell.*
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Sullivan & Cromwell. (Included in Exhibit 5.1.)
24.1 Powers of Attorney. (Included in the signature pages of this
Registration Statement.)
- --------------------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (as amended, and together with the rules and
regulations thereunder, the "Securities Act");
(b) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
value of securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with
the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration statement.
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (1)(a) and (1)(b) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 (as amended, and together with the
II-2
<PAGE>
rules and regulations thereunder, the "Securities Exchange Act") that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(5) That, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part
of the registration statement as of the time it was declared effective.
(6) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(7) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
may, therefore, be unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on February 23, 2000.
Ziff-Davis Inc.
By: /s/ Timothy C. O'Brien
-------------------------------------
Timothy C. O'Brien
Chief Financial Officer
POWERS OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints J. Malcolm Morris (General Counsel
and Senior Vice President) and Timothy C. O'Brien (Chief Financial Officer),
acting individually, as his attorney-in-fact and agent, with full power of
substitution, for him in any and all capacities, to sign the registration
statement on Form S-3 of Ziff-Davis Inc., and any and all amendments thereto
under the Securities Act of 1933, including any and all pre-effective and
post-effective amendments, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully as he might or could do in person, and hereby
ratifies, approves and confirms all that his said attorney-in-fact and agent, or
his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement on Form S-3 has been signed by the following persons in the capacities
and on the date indicated.
SIGNATURE TITLE
/s/ Eric Hippeau
- ----------------------------
Eric Hippeau Chairman, Chief Executive Officer, Director
(Principal Executive Officer)
/s/ Timothy C. O'Brien
- ----------------------------
Timothy C. O'Brien Chief Financial Officer, Director
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<PAGE>
/s/ Mark D. Moyer
- ----------------------------
Mark D. Moyer Controller
- ----------------------------
Masayoshi Son Director
- ----------------------------
Ronald D. Fisher Director
/s/ Jason E. Chudnofsky
- ----------------------------
Jason E. Chudnofsky Director
/s/ Jonathan D. Lazarus
- ----------------------------
Jonathan D. Lazarus Director
/s/ Jerry Yang
- ----------------------------
Jerry Yang Director
/s/ Daniel L. Rosensweig
- ----------------------------
Daniel L. Rosensweig Director
Dated: February 23, 2000
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<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION LOCATION
- ----------- ----------- --------
4.1 Specimen certificate representing Incorporated by reference
Ziff-Davis Inc.'s ZDNet Stock, to Ziff-Davis'
par value $0.01 per share. Registration Statement on
Form S-1)
(File No. 333-69447)
5.1 Opinion of Sullivan & Cromwell. To be filed by amendment.
23.1 Consent of PricewaterhouseCoopers LLP. Filed herewith.
23.2 Consent of Sullivan & Cromwell. Included in Exhibit 5.1.
24.1 Powers of Attorney. Included in signature
pages of this Registration
Statement.
II-6
(EXHIBIT 23.1)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of Ziff-Davis Inc.
of:
(I) our report dated February 22, 1999 appearing on page F16 of Ziff-Davis
Inc.'s Annual Report on Form 10-K, on page 20 of Ziff-Davis Inc.'s
Current Report on Form 8-K dated April 2, 1999 and on page F-79 of
Ziff-Davis Inc.'s Current Report on Form 8-K dated August 4, 1999
relating to the Consolidated Financial Statements of Ziff-Davis Inc.
for the year ended December 31, 1998;
(II) our report dated February 22, 1999 appearing on page 94 of Ziff-Davis
Inc.'s Current Report on Form 8-K dated April 2, 1999 and on page F-33
of Ziff-Davis Inc.'s Current Report on Form 8-K dated August 4, 1999
relating to the Combined Financial Statements of ZD (a division of
Ziff-Davis Inc.) for the year ended December 31, 1998;
(III) our report dated February 22, 1999 appearing on page 168 of Ziff-Davis
Inc.'s Current Report on Form 8-K dated April 2, 1999 and on page F-5
of Ziff-Davis Inc.'s Current Report on Form 8-K dated August 4, 1999
relating to the Combined Financial Statements of ZDNet (a division of
Ziff-Davis Inc.) for the year ended December 31, 1998;
(IV) our report dated February 22, 1999 appearing on page F2 of Ziff-Davis
Inc.'s Current Report on Form 8-K/A dated April 20, 1999 relating to
the Financial Statements of ZDTV, LLC for the year ended December 31,
1998.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
New York, New York
February 22, 2000
SULLIVAN & CROMWELL
125 BROAD STREET
NEW YORK, NEW YORK 10004
February 23, 2000
Securities and Exchange Commission,
450 Fifth Street, NW,
Washington, DC 20549.
Re: Ziff-Davis Inc.-- Registration Statement on Form S-3
Ladies and Gentlemen:
On behalf of Ziff-Davis Inc. (the "Company"), transmitted herewith for
filing under the Securities Act of 1933 please find the Company's Registration
Statement on Form S-3 (including exhibits) registering 186,046 of the Company's
ZDNet Common Stock, par value $0.01 per share.
A wire transfer in the amount of $1,504.19 in payment of the filing fee
for the Registration Statement has previously been sent through the FEDWIRE
System to Mellon Bank in Pittsburgh, Pennsylvania.
Should the Commission have any questions or comments concerning the
attached, please contact me at (212) 558-3729 or Karen Greenstein at (212)
503-3500.
<PAGE>
Please send copies of any correspondence relating to this filing to the
undersigned by facsimile (212-558-3588), with the original by mail to Sullivan &
Cromwell, 125 Broad Street, New York, New York 10004.
Very truly yours,
/s/ JEANNE E. GREELEY
Jeanne E. Greeley
(Attachment)
cc: Karen Greenstein
(Ziff-Davis Inc.)
Alan Sinsheimer
(Sullivan & Cromwell)
