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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8 - K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 25,1995
HOUGHTON MIFFLIN COMPANY
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(Exact name of registrant as specified in charter)
Massachusetts 1-5406 04-1456030
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(State or other (Commission (IRS Employer
jurisdiction File Number) Identification No.)
of incorporation)
222 Berkeley Street, Boston, Massachusetts 02116
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(617) 351-5000
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N/A
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(Former name or former address, if changed since
last report)
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ITEM 5. Other Events.
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The following is the text of a press release issued on
September 25, 1995.
HOUGHTON MIFFLIN COMPANY AGREES TO ACQUIRE D.C. HEATH &
COMPANY FOR $455 MILLION
- --Enhanced Sales Growth Targeted Through Broader Offerings
with D.C. Heath's Current and New Products--
- --Acquisition Boosts Houghton Mifflin's Positions in
Mathematics, Modern Languages, Science at Secondary, College
Levels; Broadens Product Offerings at Elementary Level;
Positions Company for Solid Lonng-Term Performance--
- --Profit Margins Raised in Houghton Mifflin's Key Business
Areas Due to Operating Efficiencies--
BOSTON, MA, September 25, 1995 -- Houghton Mifflin Company
(NYSE:HTN) announced today that it has signed a definitive
agreement to acquire D.C. Heath from Raytheon Company for
$455 million in cash. The Board of Directors of Houghton
Mifflin has unanimously approved the transaction.
D.C. Heath & Company is a leading publisher of textbooks
in areas including modern languages, science, language
arts, social studies, and mathematics. In 1994, the
Company's revenues totaled $180 million. After the
acquisition, Houghton Mifflin will have combined revenues
of approximately $720 million.
"We are pleased to welcome into the Houghton Mifflin
family an organization of D.C. Heath's quality, providing
us with important strategic benefits that will strengthen
our position for the future," said Nader F. Darehshori,
Chairman, President, and Chief Executive Officer of
Houghton Mifflin. "D.C. Heath is an ideal fit for us and
will contribute to our ability to build and deliver value
for our shareholders by enhancing our long-term growth
potential; increasing our profitability and cash flow;
extending our scope in key products areas; increasing the
scale, efficiency, and productivity in vital segments of
our operations; and enhancing our ability to attract
desirable strategic partners for future initiatives."
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Mr. Darehshori added, "The acquisition of D.C. Heath's
assets dramatically improves our competitive position in
textbooks and related materials. D.C. Heath's strengths
in mathematics, modern languages, and science are an
exceptionally good complement to our own existing
products, especially in the secondary and college textbook
markets. We will be more efficient, and thus more
competitive with the largest educational publishers."
Mr. Darehshori continued, "While providing an immediate
complement to our existing strengths, D.C. Heath adds
substantially to Houghton Mifflin's potential for
sustained long-term growth. With its solid infrastructure
and strong management, Houghton Mifflin is in an
excellent position to further develop the product and
distribution strengths D.C. Heath brings to us. Spreading
our product development, sales, and marketing strengths
over a larger product base will improve our productivity
and efficiency. We believe the opportunity to purchase
such a high-quality publisher with product and
capabilities so complementary to our own is extremely
rare today."
The acquisition will be financed with approximately $350
million in debt. Houghton Mifflin has received
commitments for the full amount necessary from Morgan
Guaranty Trust Company of New York. Houghton Mifflin
said it expects to achieve efficiencies as it integrates
D.C. Heath into targeted operations. As a result of the
transaction, which is expected to close in the fourth
quarter, Houghton Mifflin will take a one-time charge of
approximately $70 million for acquisition and
integration-related costs and changes in accounting
policies. Because of the one-time charge, the
transaction will be highly dilutive in 1995. In 1996,
dilution is expected to be minimal, with moderate
accretion in 1997, and substantial gains accruing in 1998
and beyond. Houghton Mifflin expects to report
third-quarter earnings in line with expectations on
Thursday, October 19.
The Company added that the acquisition boosts Houghton
Mifflin's long-term operating potential in several
significant ways:
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In the college market, the acquisition gives
Houghton Mifflin a much more significant presence while
substantially increasing operating efficiency and sales
productivity. It will increase product breadth and depth,
allowing Houghton Mifflin to become a major college
publisher of books in mathematics, history, chemistry,
and modern languages. Houghton Mifflin and D.C. Heath
have similar philosophies on product development in the
college area, making it a wonderful fit for both authors
and employees.
D.C. Heath's technology products are a good
complement to Houghton Mifflin's stand-alone network-based
products. The acquisition will permit Houghton Mifflin to
spread technology development costs over a wider base of
product.
In secondary school publishing, the addition of
D.C. Heath will make the Company a major competitor in
additional disciplines such as modern languages, science,
and health, balancing Houghton Mifflin's strengths in
language arts and mathematics. The acquisition provides
a much larger revenue base, greater breadth and depth of
product, and added editorial expertise. It also augments
the existing sales force and provides more product to keep
that sales force operating efficiently through adoption
cycles. In addition, D.C. Heath has a superb track record
of selling college texts to high school advanced placement
programs, an area of significant sustainable revenue for
Houghton Mifflin going forward.
Houghton Mifflin's secondary school publishing
business is conducted through its McDougal Littell
subsidiary, a leading publisher of high school textbooks,
which it acquired in March 1994 and successfully
integrated during that year.
In elementary school publishing, the acquisition
provides a foreseeable stream of revenue through existing
lists with minimal investment required.
D.C. Heath's strong line of supplemental language
arts materials for use at the elementary and secondary
school levels is extremely popular with parents and
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teachers, shows good growth promise, and is an excellent
complement to Houghton Mifflin's textbook programs.
The acquisition augments Houghton Mifflin's
product line with well-established titles in new areas
far more quickly and efficiently than through internal
development.
The enhanced publishing strength Houghton Mifflin
realizes through the transaction will make the Company
the educational publisher of choice for a wide variety of
ventures, in such areas as software and other electronic
media products.
Houghton Mifflin is a leading publisher of textbooks,
instructional technology, assessments, and other
educational materials for the elementary and secondary
school and college markets. The Company also publishes
an extensive line of reference publications, fiction and
non-fiction for adults and young readers, and multimedia
entertainment products.
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Company has duly caused this
report to be signed on its behalf by the undersigned
thereunto duly authorized this 6th day of October, 1995.
HOUGHTON MIFFLIN COMPANY
By: /s/James F. Stack
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James F. Stack
Executive Vice President and
Chief Financial Officer
(Principal Accounting and
Financial Officer)
