Shareholder Group Sues Over Accounting at Reed Elsevier

["Hamaker, Chuck" <cahamake@email.uncc.edu>]

NYT Times
http://nytimes.com/2002/07/05/business/05REED.html

July 5, 2002
Shareholder Group Sues Over Accounting at Reed Elsevier
By BLOOMBERG NEWS

AMSTERDAM, July 4 (Bloomberg News) - Reed Elsevier, the Dutch half of the
largest publisher of scientific journals, is being taken to court by a
shareholder interest group contesting how the company accounted for
takeover costs last year.

The interest group, the Foundation for Corporate Information Research,
known by its Dutch initials SOBI, said today that it wanted an Amsterdam
court to review the way Reed Elsevier accounted for good will related to
the $5.7 billion purchase of Harcourt General in July 2001.

A Reed Elsevier spokeswoman, Susanna Smart, did not return several calls
seeking comment.

"I'm not worried about this - with good will it's very arbitrary when to
take the costs," said Engbert Ebeling, an analyst at Amsterdam's
Effectenkantoor, an investment firm. "With Elsevier, I'm looking at
earnings before good will anyway."

Shares of Reed Elsevier N.V. ended the trading day in Amsterdam at 12.48
euros, up 1 cent. The shares of Reed Elsevier P.L.C., the British part of
the Reed Elsevier Group, rose 1 percent to �5.615.

SOBI's founder, Pieter Lakeman, said he thought Reed Elsevier N.V. should
have had higher good-will costs under Dutch accounting rules.

The company's 2001 good-will costs were 806 million euros (about $790
million), an increase of 38 million euros, it said in February, adding
that the costs mainly reflected "the midyear acquisition of the Harcourt
businesses."

Earlier today, the publisher reiterated its forecast that 2002 earnings
per share - excluding currency changes and some other costs like good-will
expenses - would rise at least 10 percent. On April 9, the company said it
could maintain at least 10 percent profit growth this year.

But in a note to investors, analysts at Dexis Securities said, "If
advertising difficulties in the U.S. and Europe remain difficult for the
rest of 2002, we believe that this target may become challenging." Reed
Elsevier's acquisition of Harcourt General a year ago made it one of the
four biggest textbook sellers in the United States and reduced its
dependence on ad revenue. Reed Elsevier has said it expected about 15
percent of 2002 revenue to come from ads, down from 22 percent in 2000.

snip....

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