================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
SCHEDULE TO
(RULE 14d-100)
Tender Offer Statement Pursuant to Section 14(d)(1) or 13(e)(1) of
the Securities Exchange Act of 1934
HARCOURT GENERAL, INC.
(Name of Subject Company)
REH MERGERSUB INC.
REED ELSEVIER INC.
REED ELSEVIER US HOLDINGS INC.
REED ELSEVIER OVERSEAS BV
REED ELSEVIER HOLDINGS BV
REED ELSEVIER PLC
REED INTERNATIONAL P.L.C.
ELSEVIER NV
(Offerors)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
and
SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK,
PAR VALUE $1.00 PER SHARE
(Title of Class of Securities)
-----------------------
Common Stock (41163G101)
Series A Cumulative Convertible Preferred Stock (41163G200)
(Cusip Numbers)
Henry Horbaczewski, Esq.
Reed Elsevier Inc.
275 Washington Street
Newton, MA 02458
Telephone: (617) 558-4227
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of Filing Persons)
Copies to:
Joseph Rinaldi, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telephone: (212) 450-4000
CALCULATION OF FILING FEE
Transaction valuation Amount of filing fee
--------------------- --------------------
N/A N/A
|_| Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: N/A Filing Party: N/A
---------------- ---------------------
Form or Registration No.: N/A Date Filed: N/A
-------------- ------------------------
|X| Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which
the statement relates:
|_| third-party tender offer subject to Rule 14d-1.
|_| issuer tender offer subject to Rule 13e-4.
|_| going-private transaction subject to Rule 13e-3.
|_| amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results
of the tender offer. |_|
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<PAGE>
27th October 2000
Issued on behalf of Reed International P.L.C. and Elsevier NV
Reed Elsevier to acquire Harcourt General's
Scientific, Technical and Medical business and US Schools
Education and Testing businesses for net cost of $4.5 billion
Acquisition announced of whole of Harcourt General Inc. for $4.45 billion and
the assumption of $1.20 billion in debt, and on-sale of Higher Education and
certain Corporate and Professional Services businesses to The Thomson
Corporation for $2.06 billion
o Combination of Harcourt Scientific, Technical and Medical (STM) business
and Elsevier Science provides strong leadership position across entire
scientific, technical and medical spectrum
- enhances world leading scientific information business
- creates pre-eminent position in medical publishing
o Acquisition of Harcourt K-12 (kindergarten to grade 12) Education and
Testing transforms Reed Elsevier's education business to create new global
publishing division
- establishes excellent position in fast growing US schools education
market
- creates leading position in schools education in English speaking
world
o Acquisition creates higher quality portfolio and accelerated revenue and
profit growth
- accretive to adjusted earnings in year one
o Acquisition implementation
- cash tender offer for Harcourt General Inc at $59 per share
recommended by Harcourt Board
- back-to-back on-sale agreement with The Thomson Corporation for
certain Harcourt businesses
- initial financing through $6.5 billion new bank facilities; intention
to refinance through term debt issuance; new equity, in the
equalisation ratio, of up to 10% of the issued share capitals of Reed
International and Elsevier to be considered subject to market
conditions.
Commenting on the transaction, Reed Elsevier's Chief Executive, Crispin Davis,
said:
"The Harcourt STM and Educational businesses are of outstanding quality in very
attractive markets and the strategic fit is excellent. The combination of our
businesses provides an exceptional platform for growth, focused on new and
demonstrably superior Internet information services and solutions. The
acquisition of Harcourt transforms our position in schools education. The
education market has a strong growth dynamic. The combination of Harcourt
Education with Reed Educational and Professional Publishing is exceptionally
well positioned to drive new print and electronic product programmes and to grow
faster than the market.
<PAGE>
This acquisition represents a major step forward in our strategy announced in
February. In August, we announced good progress in the execution of our strategy
and results that were ahead of our targets. This progress has very much
continued in the second half. We have increasing confidence in our vision and
our ability to execute the strategy successfully to create value for
shareholders."
Enquiries:
Crispin Davis, Chief Executive Officer
Mark Armour, Chief Financial Officer
+ 44 20 7227 5670
2
<PAGE>
TRANSACTION
Reed Elsevier plc announced today that it has signed a definitive agreement with
Harcourt General Inc (Harcourt) to make a cash tender offer of $59 per share of
common stock, or share equivalent, for the entire issued share capital of
Harcourt (NYSE: H). The offer values the equity of the company at $4.45 billion
((pound)3.10 billion/(euro)5.37 billion) and has been unanimously recommended by
the Harcourt Board. The Smith Family, which owns approximately 28% of the common
stock of Harcourt, have undertaken to tender all their shares in the tender
offer and to support the offer.
Reed Elsevier plc also announced that it has signed a definitive agreement with
The Thomson Corporation (Thomson) to on-sell, for pre-tax proceeds of $2.06
billion, the Harcourt Higher Education business and the Corporate and
Professional Services businesses other than educational and clinical testing.
Following completion of the offer and the on-sale of businesses, Reed Elsevier
will have acquired Harcourt's Scientific, Technical and Medical (STM) business
and its K-12 (kindergarten to grade 12) Schools Education and Testing businesses
for an implied value of $4.5 billion, after taking into account $1.2 billion of
estimated net debt and $0.3 billion of net corporate liabilities assumed. In the
year to 31 October 1999, these businesses had sales of $1.4 billion, adjusted
operating profits (pre-amortisation of goodwill and intangible assets) of $297
million and net assets of $1.3 billion (including $0.8 billion of goodwill and
intangible assets) before corporate net debt of $1.3 billion.
The acquisition and the on-sale to Thomson are expected to be completed in the
first quarter 2001, subject to customary regulatory approvals. The transaction
will be financed initially through $6.5 billion of new bank facilities, to be
reduced by $1.6 billion of post-tax on-sale proceeds.
It is intended to refinance the bank facilities in due course through the
issuance of term debt securities. New equity of up to 10% of the issued share
capitals of Reed International and Elsevier, in the equalisation ratio, will be
considered subject to market conditions.
STRATEGY
This acquisition is a significant step in implementing Reed Elsevier's strategy
to be the indispensable partner of its target customers for information driven
services and solutions. The addition of the Harcourt STM and Education and
Testing businesses positions Reed Elsevier to be not only the partner of
scientists/medical professionals, lawyers and business professionals, but also
of educational professionals. All these services exploit comparable publishing
and sales/marketing skills and are increasingly delivered via the Internet. The
acquisition will also further Reed Elsevier's goal of establishing global
capability and leadership in all its target sectors.
The Harcourt STM business is an excellent fit with Elsevier Science, bringing
high quality Scientific and Technical journals and a global leadership position
in Medical publishing. The combined business will have strong positioning across
the entire scientific, technical and medical spectrum, with outstanding
platforms for accelerated growth in Internet information services.
The Harcourt K-12 business has an excellent position in the very attractive US
schools education market. Growth is driven by rising enrolment, the strong
funding environment and a favourable adoption calendar. Harcourt is very
successful in US education and has been growing share through exceptional
publishing skills, particularly in editorial, marketing and sales. Its
performance has accelerated in 2000 based on outstanding success in the major
state adoptions, evidenced by the 38% increase in revenues reported in the first
9 months of the year to 31 July. The combination of Reed Elsevier's existing
successful education business and Harcourt Education and Testing will establish
a leading position in schools education in the English speaking world.
The Harcourt Testing business is a leader in US educational testing, with
products such as the Stanford Achievement Test, the most widely used
norm-reference test in the US. It is extremely well positioned to take advantage
of the increasing emphasis on standards and accountability in education.
3
<PAGE>
HARCOURT STM BUSINESS
In the year to 31 October 1999, the Harcourt STM businesses had revenues and
adjusted operating profits of $633 million and $138 million respectively. In the
nine months to 31 July 2000, revenues and adjusted operating profits were $481
million and $106 million, up 7% and 33% respectively on the comparative prior
year period.
Harcourt STM has two principal businesses, Academic Press and Harcourt Health
Sciences:
- Academic Press (1999 revenues $158 million) publishes 174 peer-reviewed
journals, with particular focus on life, physical, social and computer
sciences. Academic Press also publishes major reference works and
databases. The IDEAL system provides Academic Press content online and
holds over 95,000 scientific research articles.
- Harcourt Health Sciences (1999 revenues $475 million) is the global leader
in healthcare and medical publishing measured by revenues. Through highly
regarded imprints, including Mosby, Churchill Livingstone, Harcourt and WB
Saunders, Harcourt Health Sciences publishes some 8,500 clinical reference
works and 250 journals and handbook series, covering the full spectrum of
primary medical research, clinical practice and allied healthcare. MD
Consult is a rapidly growing online service providing proprietary and
licensed clinical information to physicians and other healthcare
professionals.
STRATEGIC RATIONALE: STM
Elsevier Science is the leading international publisher of scientific
information through journals and the online ScienceDirect service. It also
operates a worldwide network of medical publishing and communications
businesses. In the year to 31 December 1999, it had revenues of (pound)652
million/(euro)991 million/$1,056 million and adjusted operating profits of
(pound)231 million/(euro)351 million/$374 million.
The fit of Harcourt STM with Elsevier Science is excellent. Two separate
divisions will be created within Elsevier Science: Science and Medical.
In Science, the combination of the brands and content of Academic Press and
Elsevier Science will create a business of outstanding quality, based on an
unparalleled breadth and depth of scientific information across all of the major
scientific disciplines. The ScienceDirect online platform is highly scalable and
the service will be extended quickly across the Academic Press content to
enhance this industry leading scientific information resource.
The demand for scientific information is growing at around 4-5%. Reed Elsevier
expects to grow sales significantly faster than this through expanding services
and growing the overall markets for its products.
In Medical, the acquisition of Harcourt Health Sciences represents an excellent
opportunity to secure leadership in a highly complementary area for Elsevier
Science. Elsevier Science's clinical medicine journals, medical databases and
the medical communications businesses fit well with Harcourt Health Sciences.
The Harcourt Health Sciences prestigious reference works and handbook series
across key clinical disciplines will also enable the development of enhanced
navigational tools for online information services. MD Consult is an attractive
entry point into online services for practising clinicians and will be leveraged
through the application of Elsevier Science's online publishing skills and
increased investment to create truly exceptional Internet services.
Worldwide demand for medical information is growing at around 6%. Accelerating
progress in medical sciences and in healthcare applications will continue to
drive this growth and has, with new online services, the capacity to increase
it.
The immediate priorities will be:
- to integrate the Elsevier Science and Academic Press businesses
- to leverage the combined science content and navigation tools to develop
new, customised online information services
- to integrate the worldwide medical businesses into one global operation
- to reorganise the medical publishing around key clinical disciplines and
expand online information
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<PAGE>
services and solutions
Derk Haank, Elsevier Science Chief Executive Officer and a Reed Elsevier main
board director, will manage the combined STM business.
HARCOURT EDUCATION AND TESTING BUSINESSES
In the year to 31 October 1999, the Harcourt Education and Testing businesses
had revenues and adjusted operating profits of $787 million and $159 million
respectively. In the nine months to 31 July 2000, revenues and adjusted
operating profits were $682 million and $123 million, up 38% and 68%
respectively on the prior year comparative period. This exceptional growth
reflects the current favourable adoption calendar and Harcourt's outstanding
success in winning market share.
The US K-12 education industry has annual sales of over $4 billion and has grown
historically at around 6%. Future growth is forecast to accelerate, driven by
rising levels of enrolment, a strong funding environment, a favourable adoption
calendar and the growth in technology enabled learning.
US K-12 educational publishing is divided into basal (i.e. core textbook) and
supplemental. It is also divided between "adoption" states, which use an
adoption system whereby materials are approved by the states, and "open" states
where providers sell materials directly to the school districts. In 2000, there
were major adoptions in the three largest adoption states of Texas, Florida and
California, principally in science and reading. This strong adoption environment
will continue in 2001 and 2002 with further major adoption programmes in these
and other adoption states in areas such as language arts, social studies and
arts.
Harcourt is a leader in US schools education, providing print and multi-media
teaching materials and testing. The business's success is built on excellence in
editorial, a detailed understanding of its customers and strong marketing and
sales programmes.
- Harcourt School Publishers (1999 revenues $283 million) is the leading US
elementary (K-6) publisher with particular strength in the four major
subject areas of science, reading, math and social studies. The success of
the business is reflected in its ability to capture share of programmes in
state adoptions, particularly in the three largest adoption states of
Texas, Florida and California. 2000 has been an outstanding year with
Harcourt winning with its new reading programme in the Texas adoption and
with science in Texas, Florida, California, North Carolina and West
Virginia. Success in these adoptions positions Harcourt well for the new
adoptions coming up over the next two years, and flows through into the
open (non-adoption) states and into strong backlist sales.
- Holt, Rinehart and Winston (1999 revenues $175 million) is a major US
secondary (grade 6-12) publisher with a leading position in literature and
language arts, the largest middle and secondary school discipline. It also
has a strong and growing position in science and is developing important
new math and social studies programmes. In the 2000 adoptions cycle, its
Elements of Literature and Elements of Writing captured the leading share
in every state adoption and its new science programme, Holt Science and
Technology, achieved a leading position in California.
- Steck-Vaughn (1999 revenues $85 million) is a publisher of US K-12, adult
education and public supplemental educational materials. The business is
highly complementary to Reed Elsevier's fast growing Rigby business.
- Harcourt Trade is a small niche US publishing business with the well
respected Harvest imprint.
Educational assessment is also an extremely attractive business in the US. It
generates annual sales of approximately $750 million and it is expected to grow
at over 10% per annum. This growth is driven primarily by the growing pressure
at the state and local level to improve the quality of education and to measure
performance on a structured basis. In parallel there is increasing emphasis on
speeding the process of administering, scoring and reporting test scores,
through the development of Internet delivered test administration and reporting
services.
5
<PAGE>
Harcourt Testing businesses - Harcourt Educational Measurement and The
Psychological Corporation (1999 revenues $193 million) are leaders in testing
and performance measurement services for educational and clinical use.
- Harcourt Educational Measurement provides a wide range of achievement,
aptitude and guidance educational testing services for measuring K-12
student progress. Harcourt Educational Measurement develops and administers
accountability tests for students in all 50 US states and is the exclusive
contractor in 20 states, including California and Florida. It is best known
for its norm-reference tests, including the Stanford Achievement Test, the
most widely used norm reference test in the US taken by over 15 million
students annually.
- The Psychological Corporation provides practising and research
psychologists with psychological, speech and occupational therapy
assessment tests for many aspects of human behaviour, intelligence and
development. Harcourt's leading product in this area is the Wechsler
Intelligence Scales, the most widely used intelligence tests in the world
and a standard against which other tests are compared and evaluated.
STRATEGIC RATIONALE: EDUCATION
Reed Educational and Professional Publishing (REPP) publishes educational and
academic books and materials in the UK, US, Australia, New Zealand and South
Africa. In the year to 31 December 1999, it had revenues of (pound)181
million/(euro)275 million/$293 million. It has leading positions in both
elementary and secondary schools education in the UK, driven by outstanding
publishing programmes under the Ginn and Heinemann imprints. In the US, REPP has
also had significant success with its fast growing Rigby supplemental education
business which is particularly strong in K-3 literacy.
Schools publishing has strongly attractive growth dynamics and the combination
of the Harcourt Education and Testing and REPP businesses will bring together
two leading publishers in the English speaking world, both with strong positions
in their respective territories. The combined business will be founded on
editorial excellence and proven strength in marketing and sales to deliver print
and multimedia schools publishing programmes of unparalleled quality. It will
establish a leadership position in schools education publishing in the English
speaking world.
The Education strategy will be focused on growing share through innovation and
excellence in publishing development. The goal will be to win in state adoptions
and open territories, and to build integrated interactive learning and support
services that extend beyond the classroom.
The immediate priorities will be:
- to maintain the current momentum in winning US state adoptions, and to
follow this success through in open states
- to integrate the Steck-Vaughn and Rigby supplemental businesses and
leverage the combined scale to expand the publishing programmes
- to step up investment in new programmes in secondary education,
particularly math
- to expand the scope and penetration of the testing business through
Internet delivery and services
- to step up investment in the online publishing unit to develop new
interactive learning programmes
The primary focus of accelerated investment in e-learning will be in the
migration of key course content, the development of supporting interactive
instructional material, the development of teacher and ancillary material, and
the strengthening of online library reference materials.
The combination of REPP and Harcourt Education is well positioned to outperform
the rapidly growing demand for schools education materials, and accelerate the
overall growth of Reed Elsevier.
A global head of Education will be appointed. The US Schools Education business
will continue to be led by Anthony Lucki, the Chief Executive Officer of
Harcourt Education. His management team is highly respected in the industry and
is expected to continue its outstanding success with Reed Elsevier. The other
Educational businesses will be headed, as now, by John Philbin, Chief Executive
6
<PAGE>
Officer of REPP. Both will report, in the interim, to Crispin Davis, Reed
Elsevier's Chief Executive Officer.
FINANCIAL EFFECTS
The acquisition is expected to enhance adjusted earnings in 2001 and to
accelerate the overall Reed Elsevier growth rate thereafter. It is expected to
add considerable shareholder value, with a return in excess of the group's cost
of capital within five years.
The results of the Harcourt STM and Education and Testing businesses to be
retained by Reed Elsevier have been as follows in the three years ended 31
October 1999 and the latest twelve months (LTM) to 31 July 2000:
1997 1998 1999 2000 (LTM)
$m $m $m $m
STM
Sales 400 466 633 664
Adjusted operating profit 97 105 138 164
Education and Testing
Sales 621 751 787 974
Adjusted operating profit 116 147 159 209
Total
Sales 1,021 1,217 1,420 1,638
Adjusted operating profit 213 252 297 373
From 1998, the figures include the STM acquisitions of Mosby, Churchill
Livingstone and Morgan Kaufman. Profit growth in the last twelve months to 31
July 2000 includes the benefits of integrating these acquisitions with the
existing business. In Education and Testing, exceptional growth in 2000 reflects
Harcourt's outstanding success in winning new adoptions and a favourable
adoption calendar.
Adjusted operating profit is stated before amortisation of goodwill and
intangible assets and Harcourt corporate expenses. The sales and adjusted
operating profit of Harcourt Publishers International, which distributes STM and
other Harcourt product internationally, have been allocated to the respective
publishing divisions. The Harcourt Testing businesses are included above,
reallocated from the Corporate and Professional Services segment in which they
are externally reported by Harcourt.
The figures in relation to Harcourt businesses above and elsewhere in this
document are unaudited and have been prepared under Harcourt's accounting
policies, except where indicated. They are, however, derived from financial
information which, in the aggregate, represents the results set out in the
audited consolidated accounts of Harcourt for the three financial years ended 31
October 1999 and in the unaudited quarterly public filings for the twelve months
to 31 July 2000.
Reed Elsevier's plans for the enlarged business include additional investment of
some $40 million annually over existing plans. This is targeted at new product
development, particularly in online initiatives, in both STM and Education.
The integration of Reed Elsevier and Harcourt's businesses is expected to
realise operational synergies and economies of scale that will deliver cost
savings of some $70 million. This includes approximately $25 million of annual
costs of the Harcourt Corporate Centre not charged to the businesses (and not
reflected in the table above); the remainder of the savings primarily relate to
the STM business. A total exceptional charge in respect of restructuring of up
to $100 million is expected to be taken in 2001.
Following completion, Reed Elsevier will have a higher quality portfolio with
four operating divisions.
7
<PAGE>
Reed Elsevier Proforma
------------------------------- -----------------------------
% Revenues Adjusted Revenues Adjusted operating
% operating profit % % profit %
Science 19 29 24 32
Legal 33 36 25 28
Education 5 4 18 16
Business 43 31 33 24
Reed Elsevier - Year to 31 December 1999
Harcourt STM and Educational and Testing - Last twelve months to 31 July 2000
(unaudited)
FINANCING THE ACQUISITION
The acquisition will be financed through $6.5 billion of new bank facilities to
cover the acquisition cost, the refinancing of Harcourt debt, and the funding of
working capital and net corporate liabilities. These facilities will be reduced
by the $2.06 billion on-sale proceeds from Thomson, less associated taxes of
around $0.5 billion, and by the potential assumption of up to $850 million of
Harcourt's public debt securities.
Proforma net borrowings of the combined Reed Elsevier businesses and Harcourt as
at 30 September 2000, after taking account of the acquisition costs including
the on-sale of businesses to Thomson, would be approximately (pound)4.7
billion/(euro)7.9 billion/$6.9 billion.
Reed Elsevier intends to refinance the acquisition debt facilities through the
issuance of term debt securities. New equity, in the equalisation ratio, of up
to 10% of the issued share capitals of Reed International and Elsevier will be
considered subject to market conditions.
HARCOURT TENDER OFFER AND ON-SALE AGREEMENT
The acquisition of Harcourt will be effected by a tender offer which is
conditional, inter alia, on the tender of at least a majority of the outstanding
common stock of Harcourt and certain regulatory approvals. The tender offer is
expected to begin shortly and to close in the first quarter of 2001.
The acquisition has been recommended by the Harcourt Board. The Smith Family,
who own approximately 28% of the outstanding voting stock, have undertaken to
accept the offer. Under the terms of the merger agreement between Reed Elsevier
and Harcourt, Reed Elsevier is entitled to a termination fee of $180 million if
the acquisition does not complete in specified circumstances.
Reed Elsevier has a back-to-back agreement with Thomson for the on-sale of the
Harcourt Higher Education and Corporate and Professional Services businesses,
excluding educational and clinical testing. The on-sale should be completed at
the time of the Harcourt acquisition.
GENERAL
Reed Elsevier is being advised by Morgan Stanley & Co. Ltd. (Morgan Stanley Dean
Witter), which is also arranging the debt financing. Cazenove & Co. and ABN AMRO
are acting as brokers to Reed International P.L.C. and Elsevier NV respectively
Morgan Stanley Dean Witter, which is regulated in the United Kingdom by the
Securities and Futures Authority Limited, is acting for Reed Elsevier and no one
else in connection with the transaction and will not be responsible to anyone
other than Reed Elsevier for providing the protection afforded to customers of
Morgan Stanley Dean Witter, nor for providing advice in relation to the
transaction.
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<PAGE>
Morgan Stanley Dean Witter does not make any representation or warranty express
or implied and it should not be assumed that the information contained in this
announcement will remain unchanged after the date hereof nor that any update
will be prepared. Information herein has been provided by Reed Elsevier and has
not been independently verified by Morgan Stanley Dean Witter, which does not
accept responsibility for its accuracy or completeness or conformity with
information in their possession.
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell shares of Harcourt General Inc. At the time Reed Elsevier commences this
offer, it will file a tender offer statement and Harcourt General Inc will file
a solicitation/recommendation statement with the US Securities and Exchange
Commission. The tender offer statement (including an offer to purchase, a
related letter of transmittal and other offer documents) and the
solicitation/recommendation statement will contain important information which
should be read carefully before any decision is made with respect to the offer.
These documents will be made available to all shareholders of Harcourt General
Inc at no expense to them. These documents will be made available at no charge
at the SEC's website at www.sec.gov.
This announcement contains forward-looking statements within the meaning of
Section 27A of the US Securities Act of 1933, as amended, and Section 21E of the
US Securities Exchange Act of 1934, as amended. These statements concern future
matters, such as the features and functions of, and markets for, products and
services offered by Reed Elsevier and Harcourt General Inc and their business
plans and strategies. These forward-looking statements also include statements
concerning the advantages of the proposed transaction; the products and services
to be offered by Reed Elsevier; the benefits of the transaction with regard to
leveraging the client bases of the respective companies and anticipated cost
savings; and other statements regarding matters that are not historical.
Forward-looking statements are based on the current expectations of the
management of Reed Elsevier and are subject to risks and uncertainties, and
actual results might differ materially from the results discussed in the
forward-looking statements. For example, there can be no assurance that any of
the expected advantages of the transaction will be realised. Factors that could
cause or contribute to differences in results include risks associated with
integration of the operations of Reed Elsevier and the acquired assets of
Harcourt General Inc; the effect on Reed Elsevier of the failure to realise
synergies or other anticipated benefits of the transaction; price and currency
fluctuations; the impact of electronic or other distribution formats;
legislative, fiscal and regulatory developments and political risks, general
conditions in the businesses, actions of competitors and general economic
conditions. Reed Elsevier is not under any obligation (and expressly disclaims
any such obligation) to update or alter its forward looking statements whether
as a result of new information, future events or otherwise.
9
<PAGE>
NOTES FOR EDITORS
Elsevier Science publishes over 1200 scientific journals, focused in particular
on the life sciences, chemistry and the physical sciences, together with leading
specialist databases, books and software applications. The ScienceDirect online
scientific information service is the global industry leader with over 1,000,000
scientific research articles available within the fully searchable database.
Over 40% of Elsevier Science's subscriptions, by value, now include the
ScienceDirect service, and usage is growing rapidly.
The medical publishing and communications business, which represents around 20%
of Elsevier Science's revenues, includes The Lancet, one of the world's most
respected medical journals. The Excepta Medica Communications business works
closely with pharmaceutical companies to provide worldwide marketing platforms.
Editions Scientifiques et Medicales Elsevier publishes over 80 medical,
biotechnology and clinical chemistry journals.
Reed Educational and Professional Publishing (REPP) publishes educational and
academic books and materials in the UK, US, Australia, New Zealand and South
Africa. Its most significant market is in the UK, where it is the market leader
in both elementary and secondary schools publishing through its Ginn and
Heinemann Schools businesses. In the US, Rigby has established a strong and fast
growing position in Supplemental Education with particular strength in K-3
literacy.
Reed Elsevier plc is a world leading publisher and information provider. It is
owned equally by its two parent companies, Reed International P.L.C and Elsevier
NV. The parent companies are listed on the Amsterdam and London Stock Exchanges
and, through American Depositary Shares (ADSs), on the New York Stock Exchange.
In 1999, Reed Elsevier made adjusted operating profit of (pound)792
million/(euro)1,204 million/$1,283 million on sales of (pound)3,390
million/(euro)5,153 million/$5,492 million. The group employs 30,300 people,
including 16,400 in North America, where 1999 sales were (pound)1,906
million/(euro)2,898 million/$3,088 million.
Reed Elsevier provides high value and flexible information solutions to
professional end users in the scientific, legal and business-to-business
sectors, with increasing emphasis on Internet delivery. In February 2000, the
Chief Executive Officer, Crispin Davis, announced a significant investment
programme with a total three year spend in excess of (pound)750
million/(euro)1,150 million/$1,215 million, of which over 90% will be
Internet-related. This formed part of an eight point strategic plan for the
development of the business, including a focus on top line growth; leveraging
Internet technology to upgrade products; geographical expansion; strengthening
the management team; more effective sales and marketing; aggressive investment
and cost savings programmes; and acquisitions and alliances to accelerate
achievement of the strategic goals.
In August 2000, Reed Elsevier reported that implementation of its strategic
programme was firmly on track and the appointment of a new management team
almost complete.
Further information on Reed Elsevier can be found on the company's website at
www.reedelsevier.com
Harcourt General Inc. owns Harcourt Inc., a broadband learning company and a
major publisher of education, assessment, training and professional information.
It provides high quality, value-added content. The company has organised its
businesses into four strategic groups, targeting specific customer sets:
Scientific Technical and Medical (STM); Kindergarten to Grade 12 Education
(K-12); Higher Education and Corporate and Professional Services.
10
