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Form F-1 |
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America Online Inc.; Goldman Sachs International; Korn/Ferry International; Manpower Inc.; Pearson plc; TOTAL SA; Viacom International Inc.; Zurich Financial Services; Bank of New York; Citigroup Inc.; Goldman, Sachs & Co.; Morgan, Lewis & Bockius; Sullivan & Cromwell |
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2000 |
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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 7, 2000
REGISTRATION NO. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM F-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------------
PEARSON PLC
(Exact name of registrant as specified in its charter)
{TABLE}
{S} {C} {C}
ENGLAND AND WALES 2731 NOT REQUIRED
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification Number)
{/TABLE}
{TABLE}
{S} {C}
3 BURLINGTON GARDENS PEARSON INC.
LONDON, ENGLAND W1X 1LE 1330 AVENUE OF THE AMERICAS
44-20-7411-2000 NEW YORK, NEW YORK 10019
(Address, including zip code, and telephone number, (212) 641-2400
including area code, of registrant's principal executive (Name, address, including zip code, and telephone
offices) number,
including area code, of agent for service)
{/TABLE}
------------------------------
COPIES TO:
{TABLE}
{S} {C}
CHARLES E. ENGROS ROBERT M. THOMAS, JR.
MORGAN, LEWIS & BOCKIUS LLP SULLIVAN & CROMWELL
101 PARK AVENUE 125 BROAD STREET
NEW YORK, NEW YORK 10178 NEW YORK, NEW YORK 10004
(212) 309-6000 (212) 558-4000
FAX: (212) 309-6273 FAX: (212) 558-3588
{/TABLE}
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
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, 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 this Form is a post-effective amendment filed pursuant to Rule 462(d)
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. / /
------------------------------
CALCULATION OF REGISTRATION FEE
{TABLE}
{CAPTION}
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED(1) UNIT(2) PRICE(2) REGISTRATION FEE
{S} {C} {C} {C} {C}
Ordinary Shares, 25p per share 22,100,000 $15 $331,500,000 $87,516
Share Rights and ADS Rights(3) (4) None None None
{/TABLE}
(1) Includes approximately 17,600,000 Ordinary Shares that may be offered and
sold to holders of American Depositary Shares and to holders of Ordinary
Shares in the United States. This amount also includes up to 4,500,000
additional Ordinary Shares which (i) are to be offered and sold in the
United Kingdom and elsewhere outside the United States, but which may be
resold from time to time in the United States during the distribution and
(ii) may be sold or re-offered by the underwriters in the United States.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457; based upon an exchange rate of L1.00=$1.50, the Noon Buying
Rate on July 28, 2000.
(3) American Depositary Shares evidenced by American Depositary Receipts
issuable upon deposit of Ordinary Shares registered hereby will be
registered under a separate Registration Statement on Form F-6.
(4) Share rights to subscribe for Ordinary Shares as reflected in Provisional
Allotment Letters, and ADS Rights to subscribe for American Depositary
Shares pursuant to Warrants, each as described in the Prospectus contained
herein. No separate consideration will be received for Share Rights and ADS
Rights.
------------------------------
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 THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
{PAGE}
SUBJECT TO COMPLETION. DATED AUGUST 7, 2000.
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY
PROSPECTUS IS NOT AN OFFER TO SELL NOR DOES IT SEEK AN OFFER TO BUY THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
{PAGE}
[LOGO]
Rights Offering of Ordinary Shares and American Depositary Shares
------------------
Pearson plc is offering holders of its ordinary shares transferable rights
to subscribe for new ordinary shares at a price of L10 per share. Pearson plc is
also offering holders of its American Depositary Shares, or ADSs, each of which
represents one ordinary share, transferable rights to subscribe for new ADSs at
the US dollar equivalent of L10 per share. A UK tax of 1.5% per share is payable
by approximately each holder of an ADS who exercises an ADS right. At current
exchange rates, L10 represents $15. We intend to use the net proceeds of this
rights offering to finance our pending acquisition of National Computer Systems,
Inc., or NCS.
- We will grant three transferable share rights for every 11 ordinary shares
you own of record on July 28, 2000.
- We will grant three transferable ADS rights for every 11 ADSs you own of
record on July 28, 2000.
- We have made arrangements for you to elect to pay the subscription price
in US dollars.
- Share rights expire on September 1, 2000 and ADS rights expire on
August 30, 2000.
Goldman Sachs International and Cazenove & Co. have agreed, severally, to
underwrite up to 150,000,000 of the 170,528,278 shares offered in the rights
offering. A portion of the underwritten shares may be sold or resold by the
underwriters under this prospectus in the United States by selling agents of the
underwriters.
Our ordinary shares are traded on the London Stock Exchange and the ADSs
have been trading in the over-the-counter market in the US. On July 28, 2000,
the last reported sale of an ordinary share on the London Stock Exchange was
L20.10.
We will apply to list the ADRs evidencing ADSs on the New York Stock
Exchange under the symbol "PSO".
We do not intend to list the ADS rights, but you may trade them in the
over-the-counter market. The share rights will trade on the London Stock
Exchange.
SEE "RISK FACTORS" ON PAGE 11 TO READ ABOUT FACTORS YOU SHOULD CONSIDER
BEFORE BUYING ORDINARY SHARES OR ADSS.
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY
HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------
Assuming the rights are exercised in full, our gross proceeds from the
rights offering will be approximately L1.7 billion or $2.6 billion. We estimate
that our expenses in connection with the offering, including the underwriting
fee we expect to pay, will be approximately L15 million or $22.5 million. As a
result, the net proceeds to us will be approximately L1.69 billion or
$2.54 billion.
JOINT GLOBAL COORDINATORS
GOLDMAN SACHS INTERNATIONAL CAZENOVE & CO.
----------------
GOLDMAN, SACHS & CO. CAZENOVE INC.
Prospectus dated , 2000.
{PAGE}
PRESENTATION OF FINANCIAL INFORMATION;
EXCHANGE RATE INFORMATION
We have prepared the financial information contained in this prospectus in
accordance with UK GAAP, which differs in significant respects from US GAAP. We
describe these differences in "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Accounting Principles", and in Note 34 to
our consolidated financial statements included in this prospectus. Unless we
indicate otherwise, any reference in this prospectus to our consolidated
financial statements is to the consolidated financial statements and the related
notes, included elsewhere in this prospectus.
We publish our consolidated financial statements in sterling. We have
included, however, references to other currencies. In this prospectus:
- references to "sterling", "pounds", "pence" or "L" are to the lawful
currency of the United Kingdom,
- references to "euro" or "[EURO]" are to the euro, the single currency
established by the European Monetary Union, and
- references to "US dollars", "cents" or "$" are to the lawful currency of
the United States.
For convenience and except where we specify otherwise, we have translated
some sterling figures into US dollars at the rate of L1.00 = $1.51, the noon
buying rate in The City of New York for cable transfers and foreign currencies
as certified by the Federal Reserve Bank of New York for customs purposes on
June 30, 2000. We do not make any representation that the amounts of sterling
have been, could have been or could be converted into US dollars at the rates
indicated.
The following table sets forth, for the periods indicated, information
concerning the noon buying rate for sterling, expressed in US dollars per
sterling. The average rate is calculated by using the average of the noon buying
rates in The City of New York on each day during a monthly period, and on the
last day of each month during an annual period.
{TABLE}
{CAPTION}
MONTH HIGH LOW END AVERAGE RATE
----- -------- -------- -------- -------------
{S} {C} {C} {C} {C} {C}
August (through August 4)........................ $1.50 $1.49 $1.50 $1.50
July 2000........................................ $1.52 $1.49 $1.50 $1.51
June 2000........................................ $1.52 $1.49 $1.51 $1.51
May 2000......................................... $1.56 $1.47 $1.50 $1.51
April 2000....................................... $1.60 $1.56 $1.56 $1.58
March 2000....................................... $1.59 $1.57 $1.59 $1.58
February 2000.................................... $1.62 $1.58 $1.58 $1.60
January 2000..................................... $1.65 $1.62 $1.62 $1.64
{/TABLE}
{TABLE}
{CAPTION}
SIX MONTHS ENDED JUNE 30, 2000 HIGH LOW END AVERAGE RATE
------------------------------ -------- -------- -------- -------------
{S} {C} {C} {C} {C} {C}
$1.65 $1.47 $1.51 $1.57
{/TABLE}
{TABLE}
{CAPTION}
YEAR ENDED DECEMBER 31 HIGH LOW END AVERAGE RATE
---------------------- -------- -------- -------- -------------
{S} {C} {C} {C} {C} {C}
1999............................................. $1.68 $1.55 $1.62 $1.62
1998............................................. $1.72 $1.61 $1.66 $1.66
1997............................................. $1.70 $1.58 $1.64 $1.64
1996............................................. $1.71 $1.49 $1.71 $1.57
1995............................................. $1.64 $1.53 $1.55 $1.58
{/TABLE}
ii
{PAGE}
PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION CONTAINED ELSEWHERE IN THIS
PROSPECTUS AND MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU.
YOU SHOULD READ CAREFULLY THIS ENTIRE PROSPECTUS, INCLUDING THE RISK FACTORS AND
THE CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES, BEFORE ACQUIRING ANY
ORDINARY SHARES OR ADSS.
IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, REFERENCES TO
"WE", "US", "OUR" AND "PEARSON" REFER TO PEARSON PLC AND ITS SUBSIDIARIES.
INTRODUCTION
Pearson is a global media company with its principal operations in the
education, business information, consumer publishing and television markets. We
have significant operations in the United States and generate more than half our
revenues from that market. On July 31, 2000, we announced an agreement to
acquire National Computer Systems, or NCS, for a purchase price of approximately
$2.5 billion. NCS, which trades on the NASDAQ market under the symbol "NLCS", is
a leading testing and educational services company in the US. The combination of
NCS and our Pearson Education division will create an integrated education
company with strong market positions in curricular content, online learning,
assessment, enterprise applications for US schools and professional
accreditation.
We intend to finance the acquisition of NCS through the rights offering to
existing shareholders. We believe the rights offering to be the most efficient
means for us to raise the necessary funds.
PEARSON PLC
We create and manage intellectual property, which we promote and sell to our
customers under well-known brand names, to inform, educate and entertain. We
deliver our content in a variety of forms and through a variety of channels,
including books, newspapers, television programs and internet services.
We use online capabilities in our back office, our supply chains, our base
businesses and new businesses we create. The internet is already both an
integral part of each of our businesses and a facilitator of new product and
distribution opportunities.
Although we seek to build businesses that are worth more together than apart
because of the synergies they offer each other, our operations break down into
four core areas:
- PEARSON EDUCATION is a leading international publisher of textbooks,
supplementary materials and electronic education programs for elementary
and secondary school, higher education and business and professional
markets. In the US, our Scott Foresman, Addison Wesley Longman, Prentice
Hall and Allyn & Bacon brands have enabled us to capture significant
shares in the kindergarten through 12th grade markets. Our higher
education business has been pre-eminent in the US for many years. Our
international education business is the global leader in the English
language teaching materials market and has a major position in the
textbook and educational materials market outside the US, including being
the largest textbook and school program provider in a number of local
markets. In addition, we are a leader in using technology to educate,
including online assessment and digital courseware through the Computer
Curriculum Corporation, as well as products such as the Waterford Early
Reading Program and the KnowZone. Our education offerings also extend to
business education, where FT Knowledge provides distance learning for the
corporate and post-secondary markets and has entered into several
agreements with major business schools and other educational institutions
in the US and worldwide. We are currently developing the Learning Network,
a vertically integrated, internet-delivered community linking parents,
1
{PAGE}
teachers and students with educational opportunities. On June 29, 2000, we
announced the purchase of an 87% interest in FamilyEducation Network,
Inc., an online network for parents, teachers and students. We are working
to form strategic alliances with other internet content providers, to put
in place the necessary technological infrastructure and management team
for the Learning Network and to develop a marketing program. We expect to
launch the Learning Network in the Fall of 2000.
NCS, which will become a part of Pearson Education upon completion of the
acquisition, is the United States' largest commercial processor of student
assessment tests for kindergarten through 12th grade. NCS offers secure
internet-based electronic testing delivery and reporting capability,
allowing it to participate in the professional certification market. It
also provides software, services, systems applications and internet-based
technologies for the collection, management and interpretation of data in
education. NCS seeks to use internet-based technologies to increase its
market penetration and offer additional innovative products and services
to its customers in the education field.
- THE FT GROUP consists of our international newspaper, print and online
financial information, business magazine and professional publishing
interests. Our flagship product is the FINANCIAL TIMES, known
internationally for its premium editorial content and international scope.
Building upon the success of the FINANCIAL TIMES, we have developed a
global information portal (FT.com), an online personal finance resource
(FTYourMoney.com), and a European online financial news website
(FTMarketWatch.com). We have also developed a pan-European network of
leading business newspapers and related online business portals, including
FINANCIAL TIMES DEUTSCHLAND, LES ECHOS and EXPANSION, for the German,
French and Spanish-speaking markets. We own Recoletos, a Spanish media
group which, in addition to EXPANSION, publishes MARCA, the leading
Spanish sports newspaper, and we hold a 50% stake in THE ECONOMIST, an
international weekly current affairs and business magazine. We also own
60% of Data Broadcasting Corporation, a supplier of electronic database
services to US and UK securities professionals. Data Broadcasting
Corporation has a 34% ownership interest in MarketWatch.com, whose web
properties, CBS.MarketWatch.com and bigcharts.com, are among the most
popular destinations for financial and market news on the web.
- THE PENGUIN GROUP is one of the premier English language publishers in the
world, with brand imprints such as Penguin, Avery, Dutton, Putnam and
Viking. We publish an extensive portfolio of fiction and non-fiction,
literary and commercial works from authors such as Tom Clancy, Clive
Cussler, Dick Francis, Patricia Cornwell and Nick Hornby. We are one of
the pre-eminent classics publishers and own or have rights to some of the
most highly prized and enduring brands in children's publishing, featuring
the books of Roald Dahl and such popular characters as Spot, Peter Rabbit
and Madeline. We have a strong frontlist of new books by bestselling
authors, and a backlist of more than 25,000 popular titles. In 1999,
titles published by Penguin Putnam, as we are known in the US, spent a
record 262 weeks on THE NEW YORK TIMES bestseller list. Our recent
acquisition of Dorling Kindersley, or DK, a leading international
publisher of illustrated reference books, will add breadth to our
portfolio. DK offers many products with illustrations and graphics that
are particularly well-suited for online delivery, and DK has invested in
converting its properties into a digital format. As a result, this
acquisition also gives us many more opportunities for online rights
exploitation.
- PEARSON TELEVISION was recently merged with CLT-Ufa, the television and
broadcasting business owned by Germany's Bertelsmann AG, and Belgium's
Audiofina, to create the RTL Group. The combined company is an integrated
pan-European company with activities in television production, online
delivery and broadcasting, including the well-known RTL television
stations. The RTL Group is Europe's largest radio and television broadcast
2
{PAGE}
company by revenue and its shares are traded on the London Stock Exchange.
The terms of the merger, which closed on July 25, 2000, provide us with a
22% interest in the RTL Group and representation on its board.
COMPETITIVE STRENGTHS
We have achieved leading positions in our markets by capitalizing on our
competitive strengths:
- POWERFUL BRANDS--We have made a substantial investment to develop and
promote our quality brands. Our brands create customer loyalty and
facilitate the use of new distribution channels and our entry into new
markets.
- RICH CONTENT--Each of our businesses creates and manages informative,
educational and entertaining content. The quality, depth and originality
of our products reinforce the strength of our brands and attract
customers, partners and talented employees.
- INTERNATIONAL SCALE--We have operations around the world and publications
in English, French, Spanish, German and many other languages. Our large
business presence in many local markets enables us to move rapidly to
capitalize on international opportunities.
- ATTRACTIVE CUSTOMER BASE--Our products appeal to a range of
customers--institutions, businesses and a broad group of consumers of all
ages and interests. We have a highly educated customer base with a
substantial discretionary spending capacity.
- PROVEN MANAGEMENT TEAM--Since 1997, a new management team has transformed
the company into a simpler, more integrated media enterprise focused on
our core businesses. Since we started this process, we have publicly set
clear financial goals and consistently met or exceeded them.
OUR STRATEGIES
We focus on media businesses in growing markets and categories where we have
or we can attain strong, sustainable market positions. We use our content and
brands in our existing businesses and to develop new ones. We have integrated
the internet into each of our businesses to enhance our customers' experiences,
improve our ability to reach customers and increase the value of our content.
- PEARSON EDUCATION constantly seeks ways to make products more attractive
to teachers, students, parents and professionals. Over 1,200 of our
approximately 49,000 college textbooks have interactive companion websites
with online study guides to elaborate on text concepts, and chat rooms and
bulletin boards to facilitate interaction between students and faculty. We
continue to invest in a range of electronic learning tools to support our
programs. We are also developing the Learning Network, an interactive
online community of parents, students and teachers, to further expand the
distribution of our content and generate new revenue streams. In addition,
we are seeking to expand our international reach to benefit from our
market expertise and build scale.
Our acquisition of NCS will transform Pearson Education into an integrated
education company. The combined business will be well-placed to create new
market opportunities through developing customized learning in which
testing and curriculum work together. The combined business will connect
schools and homes, enabling parents to play a more active role in the
education of their children.
- THE FT GROUP aims to be the leading source of strategic information,
intelligence, analysis and commentary for senior managers and
institutional and individual investors around the
3
{PAGE}
world. We are building on the strength of our flagship brand, the
FINANCIAL TIMES, to create a pan-European network of national business
newspapers and websites, including LES ECHOS in France, EXPANSION in Spain
and FINANCIAL TIMES DEUTSCHLAND in Germany. With THE WALL STREET JOURNAL,
we have also launched VEDOMOSTI, a Russian language business newspaper.
We use the well recognized brand and premium content of the FINANCIAL
TIMES to develop new websites with diverse revenue models. We continue to
invest in FT.com, our leading global business information portal, to
further enhance its content, include more international company and market
information and add more sophisticated tools intended to increase the
"stickiness" of the site. We have launched FTYourMoney.com, to capitalize
on the rapidly growing personal finance market in the UK, and
FTMarketWatch.com, to capture the expanding market of European investors
who make their investment decisions online or look to the internet for
quick, market-oriented news.
- THE PENGUIN GROUP continues to strengthen its frontlist, working globally
to extend its stable of bestselling authors and identify new talent. We
are digitizing our business--all of our new titles and over half of our
backlist titles have been converted to an electronic digital format to
enable "printing on demand" and "e-book" delivery. We are also building
online communities around authors and genres to strengthen our
relationship with our readers and to create new revenue streams.
We recently acquired DK, a publisher of illustrated products such as
travel and children's reference books. We believe that DK's high quality
illustrated publications, many of which have been converted to a digital
format permitting online delivery, will provide us access to new customers
and markets, expand our product offerings and enhance our online marketing
efforts.
- PEARSON TELEVISION'S recently completed merger to form the RTL Group
offers Pearson Television the opportunity to take its quality content into
new distribution channels that are offered by our new media partners. The
RTL Group will continue Pearson Television's development of online
versions of television shows, such as THE PRICE IS RIGHT, and the building
of online communities around popular serial dramas.
We are working to capture the full synergistic potential that exists among
our media businesses through the sharing of content and distribution channels.
For example, FT Knowledge, our online distance learning business, results from
the merger of Pearson Education's higher education textbooks and professional
publishing resources with the FT Group's distance learning and management
education resources. Longman Penguin Readers are simplified classics for new
English speakers, combining Pearson Education's English language training
resources and Penguin's classics library. Content from Penguin and the FT Group
will be featured on our Learning Network.
STRATEGIC DEVELOPMENTS
In 1997, new management undertook a comprehensive review of our business and
established core financial targets for sales growth, cash flow, earnings per
share and operating margins. Management has since implemented a number of
strategic and operating initiatives in order to streamline and interrelate our
portfolio of businesses and increase employee share ownership.
As part of the initiatives undertaken by management since 1997, we have
completed approximately 120 divestitures and acquisitions. We have divested
businesses with a total value of over L2.0 billion. To increase the strength of
our core businesses, in addition to the NCS acquisition discussed below, we have
acquired businesses with a total value of over approximately L3.7 billion,
4
{PAGE}
including Simon & Schuster's educational, business & professional and reference
publishing businesses in 1998.
NCS ACQUISITION
NCS is a leading testing and educational services company in the US. For its
fiscal year ended January 29, 2000, NCS had revenues of $630 million, compared
to $505 million for the prior fiscal year, and income from operations of
$70 million, compared to $55 million for the prior fiscal year. At January 29,
2000, NCS had total assets of $450 million, total long-term debt of $2 million,
total cash and cash equivalent of $27 million and total stockholders' equity of
$276 million.
We have agreed to acquire all of the outstanding shares of NCS common stock
for approximately $2.5 billion, or $73 per share. Our merger agreement requires
us to launch a cash tender offer for all of the issued and outstanding shares of
NCS's common stock on or before August 7, 2000. The tender offer will remain
open for 23 business days, unless extended in accordance with the merger
agreement, and will be conditioned on the tender of a sufficient number of
shares to give us ownership of at least a majority of the fully diluted
outstanding shares of NCS. After the completion of the tender offer, NCS will
merge with us, and the remaining shareholders of NCS other than us will receive
the same cash consideration per share as offered in the tender offer. We intend
to finance the NCS acquisition with the proceeds of the rights offering.
We believe the acquisition of NCS is an important step in the development of
our Pearson Education business, providing the following opportunities:
- INTEGRATING EDUCATIONAL PROGRAMS. The combination of curricular content,
testing and educational applications will create opportunities to provide
schools, universities, colleges and professional and training
organizations a comprehensive range of education solutions, encompassing
curricular and training programs, assessment and testing and educational
services, including student curriculum, instructional and financial
management software.
- CUSTOMIZING LEARNING. Combining NCS's assessment tools with our curricular
content will enable us to create customized learning programs individually
tailored for each student.
- EXTENDING CUSTOMER REACH. Our salesforce will market NCS's instructional
management software, assessment tools and school administrative software
to kindergarten through 12th grade school districts to supplement NCS's
own direct salesforce.
- ACCELERATING THE DEVELOPMENT OF NEW ONLINE PRODUCTS. NCS's online business
will complement our business by enabling us to offer electronic end-to-end
learning solutions.
- DEVELOPING A NEW MARKET, WITH PARENTS AS CUSTOMERS. NCS's products will
enable us to reach parents with new educational content, creating new
revenue opportunities for our educational publishing business. It will
also extend the scale and reach of our Learning Network, enabling it to
reach directly a much bigger audience of parents and students.
- MOVING INTO NEW PROFESSIONAL MARKETS. Our professional publishing and
corporate training business will enable NCS to market its testing and
assessment skills to meet the growing demand for accreditation in a wide
range of professions and disciplines.
- WIDENING INTERNATIONAL SPREAD. With major educational publishing
operations around the world, Pearson Education will enhance NCS's
international presence.
5
{PAGE}
As a publicly traded company, NCS is subject to the informational
requirements of the Securities Exchange Act, and files reports and other
information with the SEC. The contents of these filed documents do not form a
part of this prospectus.
------------------------
Our principal place of business is located at 3 Burlington Gardens, London
W1X 1LE, England. Our telephone number is +44-20-7411-2000 and our registration
number in England is 53723.
6
{PAGE}
RIGHTS OFFERING SUMMARY
{TABLE}
{S} {C}
ORDINARY SHARES, INCLUDING ORDINARY SHARES
REPRESENTED BY ADSS, OUTSTANDING ON THE
RIGHTS OFFERING RECORD DATE................ 625,270,356
ORDINARY SHARES, INCLUDING ORDINARY SHARES
REPRESENTED BY ADSS, OFFERED............... 170,528,278
ORDINARY SHARES, INCLUDING ORDINARY SHARES
REPRESENTED BY ADSS, OUTSTANDING AFTER THE
RIGHTS OFFERING, ASSUMING FULL
SUBSCRIPTION............................... 795,798,634 ordinary shares, excluding
approximately 15,400,000 ordinary shares to
be issued pursuant to outstanding options
under employee stock incentive plans.
UNDERWRITING................................. Goldman Sachs International and Cazenove &
Co. have agreed, severally, to act as standby
underwriters for up to an aggregate of
150,000,000 ordinary shares. To the extent
the underwriters are obligated to take up
ordinary shares, their selling agents may
sell or resell them in the United States
under this prospectus.
USE OF PROCEEDS.............................. We intend to use the anticipated
L1.7 billion ($2.6 billion) proceeds from
the rights offering to finance the NCS
acquisition and pay the associated expenses.
HOLDERS OF ORDINARY SHARES:
Share rights............................... We will grant three transferable share rights
for every 11 ordinary shares owned at the
close of business in London on the share
right record date.
Share subscription price................... L10
Share right record date.................... July 28, 2000
Share right expiration date................ September 1, 2000
Share right subscription period............ August 10, 2000 through September 1, 2000
Share certificates......................... We will mail certificates representing new
ordinary shares to the holders by October 2,
2000.
Unexercised share rights................... The new ordinary shares relating to
unexercised share rights may be sold on
behalf of the unexercising holders through
arrangements with the underwriters. If they
are sold at a price in excess of the share
subscription price and the expenses of sale,
the aggregate premium will be paid pro rata
to the unexercising holders of share rights.
Listing.................................... Our ordinary shares are traded on the London
Stock Exchange under the symbol "PSON". The
share rights will also trade on the London
Stock Exchange.
{/TABLE}
7
{PAGE}
{TABLE}
{S} {C}
HOLDERS OF ADSS:
ADS rights................................. We will grant three transferable ADS rights
for every 11 ADSs owned on the ADS right
record date.
ADS subscription price..................... L10, which does not include a 1.5% UK tax for
which you will be responsible if you exercise
your rights. The ADS subscription price must
be paid in US dollars as outlined below.
Estimated US dollar ADS subscription Estimated at $16.50. As described in "The US
price.................................... Rights Offering", we have made arrangements
with The Bank of New York, as ADS
subscription agent, for you to pay the ADS
subscription price at this estimated US
dollar amount. To the extent the estimated US
dollar price is less than the actual US
dollar equivalent of the ADS subscription
price as of August 31, 2000, plus the 1.5% UK
tax, you will be required to pay the
difference. To the extent the estimated US
dollar price is higher, you will receive a
refund of the excess.
ADS right record date...................... July 28, 2000
ADS right expiration date.................. 12:00 noon (New York City time) on
August 30, 2000
ADS subscription period.................... August 10, 2000 through August 30, 2000
ADS subscription agent..................... The Bank of New York
ADR delivery............................... The Bank of New York will provide you with
American Depositary Receipts, or ADRs,
evidencing your new ADSs as soon as
practicable after October 2, 2000.
Unexercised ADS rights..................... The new ordinary shares underlying
unexercised ADS rights may be sold on behalf
of the unexercising holders, through
arrangements with the underwriters. If they
are sold at a price in excess of the share
subscription price and the expenses of sale,
any premium attributable to the unexercising
ADS holders will be paid to the ADS
depositary. The ADS depositary will pay any
amounts received by it, net of expenses and
commission, pro rata to the unexercising
holders of ADS rights.
ADS depositary............................. The Bank of New York
Listing.................................... We will apply to list the ADRs representing
the ADSs that you will receive in this rights
offering on the New York Stock Exchange under
the symbol "PSO". The ADS rights will not be
listed but you may trade them in the
over-the-counter market.
{/TABLE}
8
{PAGE}
SUMMARY CONSOLIDATED FINANCIAL DATA
The following summary consolidated financial data of Pearson should be read
in conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and our consolidated financial statements and the
related notes appearing elsewhere in this prospectus.
For convenience, we have translated the six months ended June 30, 2000 and
year ended December 31, 1999 amounts into US dollars at the rate of L1.00=$1.51,
the noon buying rate in The City of New York on June 30, 2000.
{TABLE}
{CAPTION}
SIX MONTHS
ENDED JUNE 30 YEAR ENDED DECEMBER 31
------------------------------ ---------------------------------------------------------------
2000 2000 1999 1999 1999 1998 1997 1996 1995
-------- -------- -------- -------- -------- -------- -------- -------- --------
$M LM LM $M LM LM LM LM LM
(UNAUDITED)
{S} {C} {C} {C} {C} {C} {C} {C} {C} {C}
UK GAAP INFORMATION:
CONSOLIDATED PROFIT AND LOSS
ACCOUNT DATA
Total sales.................... 2,333 1,545 1,306 5,031 3 ,332 2,395 2,293 2,186 1,830
Total sales from continuing
operations................... 2,333 1,545 1,306 5,031 3,332 2,251 2,011 1,830 1,484
Operating profit from
continuing operations(1)..... (29) (19) 25 408 270 187 252 132 192
Total operating profit......... (17) (11) 46 480 318 250 328 189 267
Profit after taxation.......... 137 91 (38) 453 300 441 40 248 272
Operating profit before
internet enterprises,
goodwill amortization and
other items(2)............... 236 156 133 888 588 389 328 289 267
Earnings per equity share(3)... 21.4 CENTS 14.2p (6.6)p 72.8 CENTS 48.2p 74.1p 6.6p 42.8p 47.1p
Adjusted earnings per equity
share after internet
enterprises(4)............... (0.9) (0.6) 6.3 73.2 48.5 42.0 34.9 30.6 28.8
Adjusted earnings per equity
share before internet
enterprises(5)............... 15.1 10.0 7.1 80.5 53.3 42.0 34.9 30.6 28.8
Diluted earnings per equity
share(6)..................... 20.8 13.8 (6.5) 71.7 47.5 73.3 6.4 42.5 46.4
CONSOLIDATED BALANCE SHEET DATA $M LM LM $M LM LM LM LM LM
Total assets (Fixed Assets plus
Current Assets).............. 9,817 6,501 5,447 8,079 5,350 5,317 2,253 2,246 2,568
Net assets..................... 2,935 1,944 1,107 2,004 1,327 1,084 156 393 856
Long-term obligations(7)....... 3,059 2,026 2,312 3,452 2,286 2,562 609 556 475
Capital Stock.................. 236 156 153 231 153 152 144 143 139
Number of equity shares
outstanding (millions of
ordinary shares)............. 625 625 611 613 613 610 577 571 556
{/TABLE}
9
{PAGE}
{TABLE}
{CAPTION}
YEAR ENDED
DECEMBER 31
------------------------------
1999 1999 1998
-------- -------- --------
$M LM LM
{S} {C} {C} {C}
US GAAP Information:(8)
Profit for the financial year............................... 299 198 444
Profit from continuing operations for the financial year.... 254 168 122
Basic earnings per equity share............................. 48.9 CENTS 32.4p 75.3p
Diluted earnings per equity share........................... 48.5 32.1 74.6
Basic earnings from continuing operations per equity
share..................................................... 41.5 27.5 20.7
Diluted earnings from continuing operations per equity
share..................................................... 41.1 27.2 20.5
$M LM LM
Shareholders' funds......................................... 3,949 2,615 2,468
{/TABLE}
------------------------------
(1) Continuing operations represent those operations carried on by us as at
June 30, 2000. Operating profit from continuing operations consists of
operating profit--Group, plus the Group's share of operating profit from
continuing operations for Group associates, as disclosed on page F-3 of the
consolidated profit and loss account.
(2) Other items include a L100 million charge for Penguin improper accounting in
1996, Year 2000 compliance costs of L5 million in 1999 and L7 million in
1998, integration costs in connection with our acquisition of Simon &
Schuster's educational, business & professional and reference publishing
business of L95 million in 1999 and L120 million in 1998 and integration
costs in connection with our acquisition of DK of L3 million in the first
six months of 2000.
(3) Earnings per equity share is based on profit for the financial period and
the weighted average number of ordinary shares in issue during the period.
(4) Adjusted earnings per equity share is based on adjusted earnings for the
financial period and the weighted average number of ordinary shares in issue
during the period. Adjusted earnings excludes profits or losses on the sale
of fixed assets and investments, businesses and associates, Year 2000
compliance costs and integration costs in respect of the Simon & Schuster
acquisition and the DK acquisition and, following the prospective
implementation of FRS10 "Goodwill and Intangible Assets" in 1998, goodwill
amortization. In 1996, the L100 million exceptional charge for improper
accounting in Penguin and the loan stock redemption premium have also been
excluded. In the first six months of 2000, the accelerated amortization of a
financing arrangement fee has also been excluded.
(5) Due to expenditures of L84 million in the first six months of 2000 and L39
million in 1999 on new internet enterprises, a second adjusted earnings per
equity share in accordance with UK GAAP is presented in which the results of
these internet enterprises are also excluded from earnings. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--General Overview--Internet Enterprises".
(6) Diluted earnings per equity share is based on diluted earnings for the
financial period and the diluted weighted average number of ordinary shares
in issue during the period. Diluted earnings comprise earnings adjusted for
the tax benefit on the conversion of share options by employees and the
weighted average number of ordinary shares adjusted for the dilutive effect
of share options.
(7) Long-term obligations are comprised of medium and long-term borrowings plus
amounts falling due after more than one year related to obligations under
finance leases.
(8) See Note 34 to the consolidated financial statements included in this
prospectus entitled "Summary of principal differences between United Kingdom
and United States generally accepted accounting principles".
10
{PAGE}
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS DESCRIBED BELOW, AS WELL AS
THE OTHER INFORMATION INCLUDED IN THIS PROSPECTUS, BEFORE ACQUIRING ORDINARY
SHARES OR ADSS. OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS COULD
BE MATERIALLY ADVERSELY AFFECTED BY ANY OR ALL OF THESE RISKS.
RISKS RELATED TO OUR BUSINESS
OUR RELIANCE ON INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS THAT MAY NOT BE
ADEQUATELY PROTECTED UNDER CURRENT LAWS IN SOME JURISDICTIONS MAY ADVERSELY
AFFECT OUR RESULTS AND OUR ABILITY TO GROW
Our products are largely comprised of intellectual property content
delivered through a variety of media, including newspapers, books, the internet
and television. We rely on trademark, copyright and other intellectual property
laws to establish and protect our proprietary rights in these products. However,
we cannot assure you that our proprietary rights will not be challenged,
invalidated or circumvented. Our intellectual property rights in jurisdictions
such as the US and UK, which are the jurisdictions with the largest proportions
of our operations, are well-established. However, we also conduct business in
other countries where the extent of effective legal protection for intellectual
property rights is uncertain, and this uncertainty could affect our future
growth. Moreover, despite trademark and copyright protection, third parties may
be able to copy, infringe or otherwise profit from our proprietary rights
without our authorization. These unauthorized activities may be more easily
facilitated by the internet.
In addition, the lack of internet-specific legislation relating to trademark
and copyright protection creates an additional challenge for us in protecting
our proprietary rights relating to our online business processes and other
digital technology rights.
WE OPERATE IN A HIGHLY COMPETITIVE ENVIRONMENT THAT IS SUBJECT TO RAPID CHANGE
AND WE MUST CONTINUE TO INVEST AND ADAPT TO REMAIN COMPETITIVE
Our education, business information, book publishing and television
businesses operate in highly competitive markets. These markets continue to
change in response to technological innovations and other factors. We cannot
predict with certainty the changes that may occur and affect the competitiveness
of our businesses. In particular, the means of delivering various of our
products may be subject to rapid technological change. Although we have
undertaken several initiatives to adapt to and benefit from these changes, we
cannot predict whether technological innovations will, in the future, make some
of our products, particularly those printed in traditional formats, wholly or
partially obsolete. If this were to occur, we may be required to invest
significant resources to further adapt to the changing competitive environment.
WE CANNOT ASSURE YOU WHETHER, OR WHEN, OUR SUBSTANTIAL INVESTMENT IN OUR
INTERNET INITIATIVES WILL PRODUCE RETURNS
We are investing, at increasing levels, significant amounts of capital to
develop and promote our internet initiatives. We believe that the success of our
internet initiatives will be an important component of our continued growth. We
can offer no assurance that our internet initiatives will result in revenue
streams developing to the same or a greater extent, or within the same time
frames, as alternative internet initiatives undertaken by our competitors. This
is due to a variety of factors, many of which are beyond our control. These
factors may include:
- the ability of our internet initiatives to achieve leadership positions in
their respective markets,
- competition from comparable and new technologies, and
- the public's acceptance and continued use of the internet.
11
{PAGE}
In addition, as a consequence of our internet and other technological
initiatives, we are increasingly dependent on the performance of the internet
and our systems.
CONSOLIDATION IN THE MARKETS IN WHICH WE OPERATE COULD POTENTIALLY PLACE US AT A
COMPETITIVE DISADVANTAGE
Recently, some of the markets in which we operate have experienced
significant consolidation. In particular, the combinations of traditional media
content companies and new media distribution companies have resulted in new
valuation methods, business models and strategies. We cannot predict with
certainty the extent to which these types of business combinations may occur or
the success that they may achieve. Although we currently have strong positions
in each of our market segments, these combinations could potentially place us at
a competitive disadvantage with respect to scale, resources and our ability to
develop and exploit new media technologies.
PEARSON EDUCATION, OUR LARGEST DIVISION, MAY NOT ACHIEVE CONTINUED GROWTH IN
EMERGING MARKETS DUE TO POLITICAL AND ECONOMIC FORCES BEYOND OUR CONTROL
A variety of factors beyond our control may inhibit the growth of Pearson
Education's operations in the emerging markets of Latin America, Africa, the Far
East and Eastern Europe. These factors include foreign currency exchange rate
risk, regulatory, political or economic conditions in a specific country or
region, trade protection measures and other regulatory requirements and
government spending patterns. Any or all of these factors could have a material
adverse impact on Pearson Education's and our growth and future international
business.
WE MAY NOT BE ABLE TO RETAIN OR ATTRACT THE KEY MANAGEMENT PERSONNEL AND
CREATIVE AND EDITORIAL TALENT THAT WE NEED TO REMAIN COMPETITIVE AND GROW
We operate in a number of highly visible industry segments where there is
intense competition for experienced and highly qualified individuals. Our
successful operations in these segments may increase the market visibility of
members of our management, creative and editorial teams and result in their
being recruited by other businesses.
In searching for new employees and retaining the current employees in our
internet enterprises, such as FT.com, FTYourMoney.com, FTMarketWatch.com and
Pearson Education's internet enterprises, we compete with other technology
companies, including start-up internet companies that may be perceived as
offering significant opportunities to realize wealth. We cannot be certain that
we will successfully attract or retain qualified personnel in the future.
RISKS RELATED TO THE NCS ACQUISITION
THE COMPLETION OF THE NCS ACQUISITION IS NOT A CONDITION TO THE COMPLETION OF
THE RIGHTS OFFERING
The acquisition of NCS is conditioned upon the consummation of the tender
offer, which requires the holders of at least a majority of the outstanding
shares of common stock of NCS to tender their shares. The tender offer is also
conditioned on certain regulatory clearances and other customary matters.
The rights offering is not conditioned upon the acquisition of NCS. In the
unlikely event that the NCS acquisition is not completed, we will consider the
return of a significant portion of the funds raised from the rights offering in
an appropriate manner. However, any such return of funds would be likely to give
rise to tax liabilities for some categories of shareholders. The extent of these
tax liabilities and the categories of shareholders who would be subject to them
would depend on the
12
{PAGE}
means by which we return the funds. As a result, we cannot determine them with
any greater specificity at this time.
WE MAY HAVE TO BORROW FUNDS TO COMPLETE THE NCS ACQUISITION IF THE RIGHTS
OFFERING IS NOT FULLY SUBSCRIBED
Our agreement to acquire NCS is not conditioned upon the completion of the
rights offering. The rights offering is only partially underwritten. If the
share rights and ADS rights are not fully subscribed, we may have to borrow
under our existing credit facility a portion of the funds needed to complete the
NCS acquisition.
WE CANNOT ASSURE YOU THAT WE WILL REALIZE ALL OF THE POTENTIAL BENEFITS OF THE
NCS ACQUISITION
The NCS acquisition will transform Pearson Education into an integrated
education company. We can, however, offer no assurance that we will realize the
potential benefits of this acquisition to the extent and within the time frame
contemplated.
RISKS RELATED TO THE OFFERING
WE CANNOT PREDICT THE EXTENT TO WHICH A MARKET FOR OUR ADSS WILL CONTINUE TO
DEVELOP IN THE US
Our ADSs have been traded over-the-counter in the US and our ordinary shares
are traded on the London Stock Exchange. We intend to list our ADSs on the New
York Stock Exchange. This listing will not, however, guarantee that an active
and liquid trading market for ADSs will develop on the New York Stock Exchange.
The price of our ordinary shares and our ADSs may fluctuate widely, for reasons
including the following:
- the investment community's perception of our prospects in general or the
prospects of one or more of our businesses in particular,
- differences between our actual operating results and those expected by
investors and analysts,
- changes in analysts' recommendations or projections,
- changes in general economic or market conditions and broad market
fluctuations, particularly those affecting the prices of securities of
companies engaged in businesses similar to ours, and
- changes in the exchange rate between sterling and the US dollar.
WE MAY OFFER ADDITIONAL ADSS OR ORDINARY SHARES IN THE FUTURE AND THESE AND
OTHER SALES MAY ADVERSELY AFFECT THE MARKET PRICE OF OUTSTANDING ORDINARY SHARES
AND ADSS
Although we have no current plans for a subsequent offering of ordinary
shares or ADSs, we continually evaluate the capital markets and may offer
additional shares in the future to raise capital or effect acquisitions. In
addition, the granting of ordinary shares and employee stock options is an
integral element of our compensation policies. An additional offering of shares
by us, significant sales of shares by employees, or the public perception that
an offering or sales may occur, could have an adverse effect on the market price
of outstanding ordinary shares and ADSs.
13
{PAGE}
FORWARD-LOOKING STATEMENTS
You should not rely unduly on forward-looking statements in this prospectus.
This prospectus, including the sections entitled "Prospectus Summary", "Risk
Factors", "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business", contains forward-looking statements that
relate to future events or our future financial performance. In some cases, you
can identify forward-looking statements by terms such as "may", "will",
"should", "expect", "intend", "plan", "anticipate", "believe", "estimate",
"predict", "potential", "continue" or the negative of these terms or other
comparable terminology. Examples of these forward-looking statements include,
but are not limited to, statements regarding the following:
- operations and prospects,
- growth strategy,
- potential benefits of the NCS acquisition,
- internet strategy,
- funding needs and financing resources,
- expected financial position,
- market risk,
- debt levels, and
- general market and economic conditions.
These forward-looking statements are only predictions. They involve known
and unknown risks, uncertainties and other factors that may cause our or our
industry's actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied by the forward-looking statements. In
evaluating them, you should consider various factors, including the risks
outlined under "Risk Factors", which may cause actual events or our or our
industry's results to differ materially from those expressed or implied by any
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