Additional information on the ProQuest news article sent yesterday...
-James
-----Original Message-----
From: James-Gilboe, Lynda [mailto:[log in to unmask]]
Sent: Tuesday, May 23, 2006 11:41 AM
To: [log in to unmask]
Subject: ProQuest Update
Importance: Low
Dear Mr King:
I understand that members of the Federal Librarians Discussion List have
expressed some concern about a news article that was published about
ProQuest. You are valuable customers and I would like to help address this
for you by providing the material below. If you believe the full FEDLIB
list would benefit from this material, we would appreciate your posting it.
First, you will find a copy of a Letter to the Editor of the Ann Arbor News,
from our President, David "Skip" Prichard. Additionally, I am including an
advance copy of an update letter that we are emailing to customers today.
This letter will also be posted on our web site. Taken together, these
letters convey the confidence, pride, and commitment that all of us at
ProQuest feel.
We value your business and look forward to a long and productive future of
service to libraries.
Best regards,
Lynda James-Gilboe
Vice President, Marketing & Customer Support
ProQuest Information and Learning
789 E. Eisenhower Parkway
Ann Arbor, Michigan 48106
[log in to unmask]
734-761-4700, ext. 2521 or 800-521-0600, ext. 2521
Letter to the Editor of the Ann Arbor News from ProQuest Information &
Learning President:
May 10, 2006
Editor
Ann Arbor News
340 E. Huron St.
P.O. Box 1147
Ann Arbor, MI 48106-1147
Your 5/7 "analysis" of ProQuest ignores our company's considerable strengths
and importance to the Ann Arbor community -- facts we believe your readers
should know. While ProQuest has been open about its challenges, we are fully
engaged in addressing our issues and have confidence in our future. Any fair
analysis needs to recognize that we are part of the larger ProQuest Company
that continues to be a profitable global business, and we have a deep
heritage and a team of committed, hardworking people who care about our
customers, our products and our community.
ProQuest's Information and Learning division has been a leader in the
information industry since 1938 when its founder began microfilming precious
books threatened by WWII. Today, ProQuest is a leader in library advocacy.
Thousands of schools and libraries count on us for superior, value-based
information products. They award us with industry leading customer
satisfaction ratings and we work tirelessly to introduce new products that
will advance learning. This is our passion and we plan on continuing to do
it for a long time.
As one of the largest employers in Washtenaw County, we are proud of our
active role in the community. We donate to Ann Arbor schools and actively
support numerous local causes including the March of Dimes, United Way,
Hospice, Michigan Theater, Ann Arbor Art Center, Ann Arbor Symphony, and
Washtenaw Literacy. We believe in our responsibility to the community and
are 100 percent focused on achieving a solid business result that will have
a positive, lasting impact on our company, our employees and Ann Arbor.
I am proud to lead this business.
David "Skip" Prichard
President, ProQuest Information and Learning
Ann Arbor, MI 48106
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<http://www.il.proquest.com>
In late April I used a number of different venues to speak directly and
openly to ProQuest Information & Learning customers about the preliminary
results of ProQuest Company's financial restatement and the strategic
initiatives we are taking to strengthen ProQuest overall. Since then, we
have celebrated a number of great successes as well as endured a few
published reports that may have misled customers by characterizing ProQuest
I&L inaccurately. I am writing again to share our continued good news and
to set the record straight.
First, for those whom I might not have reached with my earlier messages, I
will repeat that ProQuest is working through internal accounting and
reporting issues, which while important to our historical balance sheets, do
not impact our ongoing operational performance for you and your end-users,
and do not affect our partners. Our customers' billings are correct, and
our publishers, distributors and other vendors have all been properly paid.
The root cause has been addressed and we have taken the appropriate steps to
ensure that it does not happen again. This has been a difficult experience
for us, but it certainly does not define us.
For nearly 70 years, ProQuest I&L has been providing libraries with
superior, value-based information. Our number one priority remains service
to our customers. Please take a look at the facts with me in the context of
some of the unfounded concerns I have heard:
Concern:
ProQuest I&L may not be able to provide the services my library has
subscribed to or purchased from it.
Fact:
ProQuest is solid and moving forward. After alerting all of the appropriate
parties about the accounting issue, the I&L team went right back to work on
your products. In 2006 to date, every scheduled launch of a new online
product and every shipment of microfilm has occurred on time. ProQuest
Company is moving to meet all of its reporting obligations to the investment
community and regulators, and it expects to complete our Board of Directors'
independent investigation of the accounting irregularities within weeks. As
announced just three weeks ago, our division's revenue outlook for 2006
exceeds $235 million; the revenue outlook for ProQuest company as a whole
was announced as far exceeding half a billion dollars. We remain a strong
company focused on publishing solutions for you and your patrons.
Concern:
ProQuest I&L may be sold causing libraries' service to end abruptly.
Fact:
Libraries' I&L services are secure. There has been some confusion about
ProQuest Company's openness to sell ProQuest Business Solutions (PBS). PBS
is a completely separate division from I&L and operates independently out of
its own headquarters in Richfield, OH and other locations. PBS is the
automotive market's global leader in the development and deployment of parts
and service information products and dealer performance applications. PBS
has no relationship to ProQuest I&L library business products such as
ABI/INFORM and CBCA, or our distribution arrangement with Factiva.
Concern:
ProQuest I&L will reduce its investment in new development projects.
Fact:
ProQuest is on track to invest more than $50 million in I&L product capital
this year. New products have already launched and will continue to be
launched on their pre-announced schedule all year long. 2007 is already
well into its planning stage.
Concern:
ProQuest's arrangements with its lenders are a risk for customers of the
business.
Fact:
Like millions of other businesses and individuals, ProQuest modified its
credit arrangements this year. While this was in large part because we are
restating our audited financial reports, it is a non-event for customers of
the business. We have essentially the same total credit we had before the
change, and the payments terms fit well within the company's existing
business plan. Our creditors are not threatening the business -- indeed,
our lenders have such confidence that some actually increased their share of
our overall credit facility.
In conclusion, I believe these points are particularly important and I want
to take the opportunity to underscore...
. ProQuest remains a leader in the library and information space. Other
providers might wish they didn't have to compete with our products and
service, but ProQuest is not going anywhere.
. Our products and services still boast the same high quality you have come
to trust from brands such as ProQuest, UMI, Chadwyck-Healey, SIRS, and
Serials Solutions. You will be working with the same team and will continue
to have the same experience.
. Importantly, as part of ProQuest Company, I&L enjoys the benefit of a
strong parent with a strong, diverse portfolio.
When I became President of I&L at the end of 2005, I saw a company with a
meaningful heritage; a clear strategy and strong sales; valued relationships
with content partners; and most importantly, loyal customers around the
globe. I was deeply disappointed to learn about the accounting
irregularities, but my Executive Leadership Team and I took immediate action
and all I&L associates are completely engaged in moving the business
forward. We are continuing to serve our customers, develop new and
innovative products and looking for other ways to improve how we do business
and we plan to continue to do this well into the future.
As always, we will be the best partner we can and we invite your input, as
usual, on how we can serve you better. Please don't hesitate to contact me
directly with any questions you may have. I look forward to a long and
productive relationship.
Sincerely,
Skip
David "Skip" Prichard
President
-----Original Message-----
From: James King [mailto:[log in to unmask]]
Sent: Monday, May 22, 2006 4:14 PM
To: [log in to unmask]
Subject: ProQuest in a fight for survival
ProQuest is in a fight for survival
Sale of its strongest division may not overcome accounting errors
http://www.mlive.com/business/aanews/index.ssf?/base/business-4/114699681418
7040.xml&coll=2
Sunday, May 07, 2006
BY MIKE RAMSEY
News Business Reporter
The accounting problems at ProQuest Co. raise questions about whether the
company will continue to exist - at least under that name - even as it
begins moving into a new $34 million headquarters building on Eisenhower
Parkway next Monday.
ProQuest, the Ann Arbor-based company which employs 650 people locally, is a
provider of electronic archived information and learning materials. The
company has been in the midst of an internal investigation into accounting
problems that led the public company to overstate its revenues by more than
$80 million in just under five years.
Its problems are big enough that it is planning to sell off its most
profitable division to raise cash - and company officials say they are not
counting out selling the entire company to maximize shareholder value. If
that happens, its future as one of Ann Arbor's largest private sector
employers becomes murkier.
ProQuest has already cut its staff locally by about 50 people and is looking
at its products to see whether there are unprofitable lines that could be
cut to save money.
Still, it's possible the company could right itself by selling off its
Business Solutions division, based in Richfield, Ohio. It's a move that
probably wouldn't affect local employment and could give the company enough
money to pay down a burdensome debt load of $530 million.
The company's creditors agreed last week to hold off on putting the company
into default on its debt payments until year's end. A group of the creditors
also agreed to extend ProQuest $56 million in capital to tide the company
over until customers make payments, typically in the fall.
"I don't think (selling the division) would change the local dynamic very
much,'' said Michael Meltz, a securities analyst with Bear Stearns & Co. who
covers ProQuest.
A little more than a week ago, ProQuest released the preliminary results of
an investigation into accounting problems the company believes will reduce
its earnings by between $80 million and $100 million in 2004 and 2005. It
also said earnings were overstated in 2000-2003, but by smaller amounts.
Considering the company originally reported profits of $52.7 million in 2004
and had estimated earnings in 2005 of the same amount, the accounting errors
are enormous in scale.
Since the report was released, the Securities and Exchange Commission opened
a formal inquiry into ProQuest's problems. The regulatory body already had
been monitoring the company since it announced on Feb. 9 that it had
uncovered accounting problems.
ProQuest is expected to receive the results of the forensic accounting
investigation in four to six weeks. That's the document that will spell out
what caused the mistakes.
Mark Trinske, vice president of investor relations, said one person who
works in the finance department of one of the company's three divisions, has
been placed on administrative leave pending the outcome of the
investigation.
However, Trinske said the company still hasn't determined whether the
problems were caused by one person or were systemic. The forensic audit will
try to determine that.
He said the company hopes to release its reconfigured earnings documents by
this fall.
Shares of ProQuest (NYSE: PQE) traded around $12 late last week, down from
around $28 when the accounting problems were first announced.
A few major shareholders have expressed anger with the lack of information
coming from the company and are calling for a management shake-up.
Trinske said the company has established a special Board of Directors
committee to discuss all the company's options. The primary one is to sell
off the Business Solutions division.
"If we are able to facilitate a sale at a good price, we may not have to do
much else. However, everything is being looked at,'' he said.
Meltz has estimated the worth of the division between $472 million and $649
million. Meltz estimated the value of the remaining two divisions of
ProQuest at between $656 million and $844 million.
Tom Kinnear, executive director of the Zell Lurie Institute for
Entrepreneurial Studies at University of Michigan, said there are many
private equity buyers looking for businesses to purchase right now.
In ProQuest's case, a buyer likely would be looking to buy it cheap because
of the low stock price, turn it private, change the management and then take
it public again.
"Nobody is safe at the moment,'' he said. "The world is awash in private
equity liquidity. Someone in distress is a good target.''
In the meantime, ProQuest is working hard to make sure that its customers
don't flee to competitors by reassuring them that operations will continue.
"We are preparing for competitive assault in terms of making sure we are in
touch with customers,'' Trinske said. "We are very much aware of it and very
much staying on top of it.''
Mike Ramsey can be reached at [log in to unmask] or 734-994-6864.
-James
R. James King, MLS
Chief Librarian
Naval Research Laboratory
Ruth H. Hooker Research Library
"NRL Partner in Research" for over 75 years!
[log in to unmask]
(202) 767-2357
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