SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 5, 2000
ZIFF-DAVIS INC.
(Exact name of registrant as specified in its charter)
STATE OF DELAWARE 1-19676 13-3987754
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
Ziff-Davis Inc.
28 East 28th Street, New York, New York 10016
(Address of principal executive offices)
Registrant's telephone number, including area code: (212) 503-3500
N/A
(Former name or former address, if changed since last report)
<PAGE>
Item 1. Not Applicable.
Item 2. Acquisition or Disposition of Assets.
On April 5, 2000, Ziff-Davis Inc., a Delaware corporation (the
"COMPANY"), completed the sale of its ZD Publishing division (excluding Computer
Shopper and the Company's investment in Red Herring Communications Inc.) to
companies controlled by Willis Stein & Partners. The purchase price was
$780,000,000. Additional information about this sale may be found in the
Company's proxy statement dated February 7, 2000 (the "PROXY STATEMENT") and in
the Company's Form 10-K for the year ended December 31, 1999 (the "1999 FORM
10-K"), each of which is incorporated by reference into this Form 8-K/A.
Items 3-6. Not Applicable.
Items 7(a). Not applicable.
Item 7(b). Pro Forma Financial Information.
The following unaudited pro forma consolidated financial statements of
the Company are based on its historical Consolidated Financial Statements
included in the 1999 Form 10-K, adjusted to give pro forma effect to the March
31, 1999 initial public offering of ZDNet common stock described in Note 2 to
such Consolidated Financial Statements as well as the comprehensive
restructuring described in the Proxy Statement and the 1999 Form 10-K.
The Unaudited Pro Forma Consolidated Balance Sheet gives pro forma
effect to the restructuring as if it had occurred as of December 31, 1999. The
Unaudited Pro Forma Consolidated Statement of Operations for the year ended
December 31, 1999 gives pro forma effect to the initial public offering of ZDNet
common stock and the restructuring as if they had occurred immediately prior to
January 1, 1999. Further information about these transactions is set forth in
the 1999 Form 10-K and in Proxy Statement, each of which is incorporated by
reference herein. Further details about the pro forma adjustments are set forth
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 the Company as of the date or for the
period indicated or the financial position or results of operations that the
Company 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 the Company'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 included in the 1999 Form 10-K.
2
<PAGE>
<TABLE>
<CAPTION>
ZIFF-DAVIS INC.
UNAUDITED PRO FORMA
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
DECEMBER 31, 1999
-----------------------------------------------------
AS
REPORTED ADJUSTMENT PRO FORMA
--------------- ---------------- --------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 10,207 $ 2,664 $ 12,871
Accounts receivable, net 33,733 33,733
Inventories 468 468
Prepaid expenses and other current assets 2,835 2,835
Due from affiliates 4,485 4,485
Deferred taxes 6,423 6,423
--------------- ---------------- --------------
Total current assets 58,151 2,664 60,815
Securities available for sale 513 513
Property and equipment, net 23,181 23,181
Intangible assets, net 141,636 141,636
Assets held for sale 780,000 (780,000) -
Net assets from discontinued operations 934,669 (934,669) -
Other assets 49,695 (16,840) 32,855
--------------- ---------------- --------------
Total assets $ 1,987,845 $ (1,728,845) $ 259,000
=============== ================ ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,734 $ 1,734
Accrued expenses 79,240 79,240
Unearned income, net 12,808 12,808
Current portion of notes payable to affiliates 6,923 (6,923) -
Other current liabilities 10,224 10,224
--------------- ---------------- --------------
Total current liabilities 110,929 (6,923) 104,006
Notes payable to affiliates 64,039 (64,039) -
Notes payable, net of unamortized discount 1,100,736 (1,100,736) -
Other liabilities 3,876 3,876
--------------- ---------------- --------------
Total liabilities 1,279,580 (1,171,698) 107,882
Total stockholders' equity 708,265 (557,147) 151,118
--------------- ---------------- --------------
Total liabilities and stockholders' equity $ 1,987,845 $ (1,734,173) $ 259,000
=============== ================ ==============
Common Stock, par value $0.01 per share
Number of shares of ZD common stock 103,467,728 (103,467,728) -
Number of shares of ZDNet common stock 13,707,063 (13,707,063) -
Number of shares of ordinary common stock - 139,091,379 139,091,379
<FN>
The accompanying notes are an integral part of these pro forma financial statements
</FN>
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
ZIFF-DAVIS INC.
UNAUDITED PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEAR ENDED DECEMBER 31,1999
-------------------------------------------------
TOTAL
AS REPORTED ADJUSTMENTS PRO FORMA
--------------- --------------- ---------------
<S> <C> <C> <C>
Revenue, net:
Publishing $ 598,280 $ (528,124) $ 70,156
Internet 104,178 - 104,178
---------------- --------------- ---------------
702,458 (528,124) 174,334
Cost of production 186,748 (158,040) 28,708
Selling, general and administrative expenses 409,147 (275,476) 133,671
Stock-based compensation 9,916 (5,381) 4,535
Depreciation and amortization of property and equipment 23,867 (13,461) 10,406
Amortization of intangible assets 86,963 (73,955) 13,008
Write-down of intangible assets 1,048,185 (1,048,185) -
---------------- --------------- ---------------
Loss from operations (1,062,368) 1,046,374 (15,994)
Interest expense, net - related party (7,497) 7,497 -
Interest expense, net (79,451) 79,451 -
Other non-operating income, net 3,241 (1,769) 1,472
Minority interest 117 - 117
---------------- --------------- ---------------
Loss before taxes and discontinued operations (1,145,958) 1,131,553 (14,405)
Income tax benefit 131,111 (126,816) 4,295
---------------- --------------- ---------------
Loss from continuing operations $(1,014,847) $ 1,004,737 $ (10,110)
================ =============== ===============
Loss per basic share from continuing operations $ (0.07)
Weighted average basic shares outstanding 136,493,782
<FN>
The accompanying notes are an integral part of these pro forma financial statements
</FN>
</TABLE>
4
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET NOTES
The pro forma adjustments for the unaudited pro forma consolidated
balance sheet as of December 31, 1999 assume that the following had occurred as
of that date:
o the sale of ZD Publishing (excluding Computer Shopper and the
Company's investment in Red Herring Communications Inc.), ZD
Education (excluding Smart Planet) and the Company's equity
interest in ZDTV for proceeds aggregating $1,156.8 million (the
"YEAR 2000 SALES");
o the assumed borrowing of $400 million as part of a
recapitalization of the ZD Events group (see "General Notes"
below);
o the vesting and exercise of options to purchase an assumed 5.7
million shares of ZD stock for an assumed $51 million and options
to purchase an assumed 3.2 million shares of ZDNet stock for an
assumed $16 million (see "General Notes" below);
o the unwind of interest rate swaps that were in fact unwound at
various times during 1999 and 2000 and the receipt of $13.6
million in connection therewith, as further described in Note 11
to the Consolidated Financial Statements included in the 1999
Form 10-K;
o the use of a portion of the proceeds from the foregoing
transactions to repay in full the Company's remaining debt
($1,171.7 billion at December 31, 1999), to pay certain expenses
(assumed to aggregate $75 million) and to cover certain
contingent liabilities of the ZD group (assumed to aggregate $10
million) (see "General Notes" below); neither those contingent
liabilities nor the $10 million assumed to be used to cover them
appear on the pro forma consolidated balance sheet;
o the payment of a special cash dividend to holders of ZD common
stock (NYSE:ZD) in an amount assumed to equal all of the
remaining proceeds from the foregoing transactions other than an
assumed $2.7 million (the difference between the Company's actual
cash on hand at the balance sheet date and the sum of the cash
and the receivable from the ZD group held by the ZDNet group at
the balance sheet date);
o the spin off of ZD Events to holders of ZD common stock; and
o the elimination of the Company'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).
-5-
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS--CONTINUED
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS NOTES
The pro forma adjustments for the unaudited pro forma consolidated
statement of operations for the year ended December 31, 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, pursuant to the initial public
offering of ZDNet common stock described in Note 2 to the
Consolidated Financial Statements included in the 1999 Form 10-K
and the application of the net proceeds to reduce indebtedness
under the Company's revolving credit facility;
o the $1,048.1 million write down of intangible assets relating to
the publishing assets that was in fact taken in the fourth
quarter of 1999, as further described in Note 7 to the
Consolidated Financial Statements included in the 1999 Form 10-K;
and
o each of the other transactions described under "Unaudited Pro
Forma Consolidated Balance Sheet Notes" above.
GENERAL NOTES APPLICABLE TO ALL OF THE UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS
As long as the special cash dividend to the holders of ZD common stock
is assumed to equal all of the remaining proceeds from sales of the various ZD
businesses, the ZD Events borrowing and the unwind of interest rate swaps other
than an assumed $2.7 million, none of the following amounts have any impact on
the pro forma consolidated financial statements:
o the actual ZD Events borrowing,
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
special cash dividend paid to holders of ZD common stock.
The foregoing adjustments assume that the Company 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 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 the Proxy Statement and may be higher or
lower than 1.77. The underlying assumptions that generated this assumed exchange
ratio are described in that same section of that proxy statement.
-6-
<PAGE>
Item 7(c). Exhibits.
99.1 Form 10-K for the fiscal year ended December 31, 1999
(incorporated herein by reference, File No. 001-14055)
99.2 Proxy Statement, dated February 7, 2000 (incorporated
herein by reference, File No. 001-14055)
-7-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ZIFF-DAVIS INC.
By: /s/ J. Malcolm Morris
---------------------------------
Name: J. Malcolm Morris
Title: Senior Vice President
Date: April 19, 2000
-8-
