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Reed International - Acquisition
RNS Number:1655T
Reed International PLC
Elsevier NV
27 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 
 and the assumption of $1.20 billion in debt, on-sale of Higher Education and 
     certain Corporate and Professional Services businesses to The Thomson    
                         Corporation for $2.06 billion                        
                       
                              
* 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

* 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

* Acquisition creates higher quality portfolio and accelerated revenue and    
  profit growth

  - accretive to adjusted earnings in year one 

* 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 banking 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.

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

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 (£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 a net cost of $4.5 billion, after taking into account $1.2
billion of estimated net debt and $0.3 billion or 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, 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.

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 our 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.


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 £652
million/Euro 991 million/$1,056 million and adjusted operating profits of £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
  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.

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 £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 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    
                                  $m      $m      $m       LTM
STM                                                        $m
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.



                      Reed Elsevier                     Proforma

%            Revenues          Adjusted         Revenues         Adjusted 
                %         operating profit  %     %         operating 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 £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, which
may require some divestment of assets but which are not considered likely to
be material.  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 Limited (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 is regulated in the United Kingdom by the
Securities and Futures Authority Limited, and 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.

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.

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
£792 million/Euro 1,204 million/$1,283 million on sales of £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 £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 £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 is 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.