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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20579
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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) May 17, 1996
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SOFTKEY INTERNATIONAL INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 0-13069 94-2562108
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
ONE ATHENAEUM STREET, CAMBRIDGE, MASSACHUSETTS 02142
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(Address of principal executive offices) (Zip Code)
(617) 494 - 1200
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Registrant's telephone number, including area code:
N/A
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(Former name or former address, if changed since last report)
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Item 2. Disposition or Acquisition of Assets.
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(A) Acquisition of Minnesota Educational Computing Corporation (MECC). Pursuant
to the terms of the previously reported Agreement and Plan of Merger dated as of
October 30, 1995 (the "Merger Agreement") by and among SoftKey International
Inc., a Delaware corporation (the "Company"), SchoolCo Inc., a Minnesota
corporation and a wholly owned subsidiary of the Company ("SchoolCo"), and
Minnesota Educational Computing Corporation (MECC), a Minnesota corporation
("MECC"), on May 17, 1996, SchoolCo merged with and into MECC (the "Merger"),
with MECC surviving the Merger (the "Surviving Corporation"). At the effective
time of the Merger (the "Effective Time"), the separate existence of SchoolCo
ceased, and MECC became a wholly owned subsidiary of the Company. At the
Effective Time: (a) each common share, par value $.01 per share, of MECC ("MECC
Common Shares") outstanding immediately prior thereto (other than shares held by
MECC as treasury shares or by the Company or SchoolCo and other than shares as
to which dissenters' rights were or will be properly asserted under the
Minnesota Business Corporation Act) was converted into the right to receive
1.14286 shares of common stock, par value $.01 per share, of the Company
("Company Common Stock"); and (b) each common share, par value $.01 per share,
of SchoolCo outstanding immediately prior thereto was converted into one common
share, par value $.01 per share, of the Surviving Corporation. In the Merger,
each option to purchase MECC Common Shares ("MECC Option") outstanding
immediately prior to the Effective Time was assumed by the Company and converted
into an option to purchase a number of shares of Company Common Stock ("Company
Option") equal to the product of 1.14286 and the number of MECC Common Shares
formerly subject to such MECC Option, at an exercise price equal to the exercise
price of such MECC Option divided by 1.14286. The Company expects to issue
approximately 10,411,700 shares of Company Common Stock in connection with the
Merger, including shares issuable pursuant to MECC Options which are being
converted into Company Options.
The foregoing description of the terms and provisions of the Merger
Agreement is qualified in its entirety by reference to the Merger Agreement,
together with the respective exhibits thereto, listed as Exhibit 2.1 hereto,
which was filed as Exhibit 10.22 to the Quarterly Report on Form 10-Q of the
Company for
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the quarterly period ended September 30, 1995, and is hereby incorporated by
reference herein.
(b) Assets constituting plant, equipment or other physical property acquired by
the Company in the Merger were used by MECC in the development, marketing and
sale of software products for use on personal computers. The Company currently
intends to use these assets in the same manner in which they were used prior to
the Company's acquisition of MECC.
Item 7. Financial Statement, Pro Forma Financial Information and Exhibits.
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(a) Financial Statements of Business Acquired. The following financial
statements of MECC are filed herewith as Exhibit 99.2 hereto:
Independent auditors' report
Balance Sheets at March 31, 1994 and 1995 and December 31, 1995
(Unaudited)
Statements of Operations for the Years Ended March 31, 1993, 1994
and 1995 and for the Nine Months Ended December 31, 1994 and
1995 (Unaudited)
Statements of Cash Flows for the Years Ended March 31, 1993, 1994
and 1995 and for the Nine Months Ended December 31, 1994 and
1995 (Unaudited)
Statements of Shareholders' (Deficiency) Equity for the Years
Ended March 31, 1993, 1994 and 1995 and for the Nine Months
Ended December 31, 1995 (Unaudited)
Notes to Financial Statements
(b) Pro Forma Financial Information. Pro forma combined condensed
consolidated financial information at March 31, 1996 and for the
year ended December 31, 1995 and the quarter ended March 31, 1996
is filed herewith as Exhibit 99.3 hereto.
The unaudited pro forma combined condensed consolidated financial
statements give effect to the Merger under the purchase method of accounting.
The unaudited pro forma combined condensed consolidated balance sheet combines
the Company's unaudited balance sheet and MECC's unaudited balance sheet at
March 31, 1996, as if
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the Merger occurred on March 31, 1996. The unaudited pro forma combined
condensed consolidated statement of operations for the year ended December 31,
1995 combines the historical results of operations of the Company, MECC,
Compton's NewMedia Inc. and Compton's Learning Company (which the Company
acquired in December 1995), The Learning Company ("TLC") (which the Company
acquired in December 1995) and tewi Verlag GmbH (which the Company acquired in
July 1995) for the year ended December 31, 1995, as if each of (i) the
Merger, (ii) the foregoing acquisitions, (iii) the Company's October 23, 1995
issuance of $350 million principal amount of 5 1/2% Convertible Notes Due 2000
and (iv) the Company's December 28, 1995 issuance to Tribune Company of $150
million principal amount 5 1/2% Senior Convertible/Exchangeable Notes Due 2000
in connection with the acquisition of TLC had occurred at the beginning of such
period. The unaudited pro forma combined condensed consolidated statement of
operations for the quarter ended March 31, 1996 combines the historical results
of operations of the Company and MECC as if the acquisition occurred at the
beginning of such period. The unaudited pro forma combined condensed
consolidated statement of operations for the year ended December 31, 1995
combines the pro forma results of the Company for the year ended December 31,
1995 and the results of MECC for the twelve months ended December 31, 1995. For
ease of reference, as used herein, the Company's year ended January 6, 1996
(and all other dates tied to such date) is referred to as the year ended
December 31, 1995 and the quarterly period ended April 6, 1996 (and all other
dates tied to such date) is referred to as the quarter ended March 31, 1996.
The unaudited pro forma combined condensed consolidated financial
statements do not reflect cost savings and synergies which might be achieved
from the Merger. The unaudited pro forma combined condensed consolidated
financial statements do not purport to be indicative of the operating results or
financial position that would have been achieved had the Merger been effected
for the periods indicated or the results or financial position which may be
obtained in the future.
The unaudited pro forma combined condensed consolidated financial
statements are based on and should be read in conjunction with the audited
consolidated financial statements of the Company, including the notes thereto,
which are included in the Company's Annual Report on Form 10-K for the year
ended January 6, 1996 and the unaudited consolidated financial statements of the
Company which are included in the Company's Quarterly Report on Form 10-Q for
the quarter ended April 6, 1996 and the audited and unaudited financial
statements of MECC, including the notes thereto, which are included as Exhibit
99.2 hereto.
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(c) Exhibits.
Exhibit No. Description
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2.1 Agreement and Plan of Merger dated as of October 30, 1995 by
and among SoftKey International Inc., SchoolCo Inc. and
Minnesota Educational Computing Corporation (MECC).(1)
99.1 Form of Press Release issued by the Company dated May 17,
1996.
99.2 Financial Statements of Minnesota Educational Computing
Corporation (MECC).
99.3 Pro Forma Combined Condensed Consolidated Financial
Statements of SoftKey International Inc.
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(1) Incorporated by reference to Exhibit 10.22 to the Company's Quarterly
Report on Form 10-Q for the quarterly period ended September 30, 1995.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
SOFTKEY INTERNATIONAL INC.
By:/s/ Neal S. Winneg
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Neal S. Winneg
Vice President
Date: May 21, 1996
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Exhibit Index
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Exhibit Sequential
No. Description Page No.
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2.1 Agreement and Plan of Merger dated
as of October 30, 1995 by and among
SoftKey International Inc.,
SchoolCo Inc. and Minnesota Educa-
tional Computing Corporation
(MECC).(1)
99.1 Form of Press Release issued by the
Company dated May 17, 1996.
99.2 Financial Statements of Minnesota
Educational Computing Corporation
(MECC).
99.3 Pro Forma Combined Condensed Con-
solidated Financial Statements of
SoftKey International Inc.
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(1) Incorporated by reference to Exhibit 10.22 to the
Company's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 1995.
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