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Harcourt General Inc – ‘10-K405’ for 10/31/00

On: Friday, 1/26/01, at 3:41pm ET · For: 10/31/00 · Accession #: 950135-1-176 · File #: 1-04925

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 1/26/01  Harcourt General Inc              10-K405    10/31/00    3:142K                                   Bowne of Boston/FA

Annual Report — [x] Reg. S-K Item 405 — Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K405     Harcourt General Inc                                  47    266K 
 2: EX-21.1     Subsidiaries of the Company                            3     14K 
 3: EX-23.1     Consent of Deloitte & Touche LLP                       1      5K

10-K405 — Harcourt General Inc
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Business Certain Relationships and Related Transactions Changes in and Disagreements With Accountants on Accounting and Financial Disclosure Consolidated Balance Sheets -- October 31, 2000 and 1999 Consolidated Statements of Earnings for the fiscal years ended October 31, 2000, 1999, and 1998 Directors and Executive Officers of the Registrant Dividends per share Executive Compensation Exhibits, Financial Statement Schedules and Reports on Form 8-K Financial Statements and Supplementary Data Independent Auditors' Report Interest Inventories Leases Legal Proceedings Management's Discussion and Analysis of Financial Condition and Results of Operations Market for the Registrant's Common Equity and Related Stockholder Matters Notes to Consolidated Financial Statements Properties Quantitative and Qualitative Disclosures About Market Risk Revenues Security Ownership of Certain Beneficial Owners and Management Selected Financial Data Signatures Submission of Matters to A Vote of Security Holders
1	1st Page - Filing Submission
3	Item 1. Business
4	Item 2. Properties
5	Item 3. Legal Proceedings
"	Item 4. Submission of Matters to A Vote of Security Holders
"	Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters
6	Item 6. Selected Financial Data
7	Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
"	Revenues
9	Quantitative and Qualitative Disclosures About Market Risk
11	Item 8. Financial Statements and Supplementary Data
"	Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
"	Item 10. Directors and Executive Officers of the Registrant
14	Item 11. Executive Compensation
"	Item 12. Security Ownership of Certain Beneficial Owners and Management
"	Item 13. Certain Relationships and Related Transactions
15	Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
"	Independent Auditors' Report
"	Consolidated Balance Sheets -- October 31, 2000 and 1999
"	Consolidated Statements of Earnings for the fiscal years ended October 31, 2000, 1999, and 1998
"	Notes to Consolidated Financial Statements
16	Signatures
24	Inventories
31	Interest
37	Leases
41	Dividends per share

10-K405 1st Page of 47 TOC ↑Top Previous Next ↓Bottom Just 1st

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED OCTOBER 31, 2000

COMMISSION FILE NUMBER 1-4925

HARCOURT GENERAL, INC.
(Exact name of registrant as specified in its charter)

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DELAWARE 04-1619609
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)

27 BOYLSTON STREET, CHESTNUT HILL, 02467
MASSACHUSETTS
(Address of principal executive offices) (Zip Code)

REGISTRANT'S TELEPHONE NUMBER AND AREA CODE: 617-232-8200
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

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NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------

Common Stock, $1.00 par value New York Stock Exchange
Series A Cumulative Convertible New York Stock Exchange
Stock, $1.00 par value

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K. Yes [X]

The aggregate market value of the Common Stock held by non-affiliates of
the registrant was $3.03 billion on January 19, 2001.

There were 55,160,702 shares of Common Stock, 18,110,927 shares of Class B
Stock and 705,819 shares of Series A Cumulative Convertible Stock outstanding as
of January 19, 2001.

DOCUMENTS INCORPORATED BY REFERENCE

Not applicable.
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HARCOURT GENERAL, INC.

ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED OCTOBER 31, 2000

TABLE OF CONTENTS

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PAGE NO.
--------

PART I
Item 1 Business.................................................... 1
Item 2 Properties.................................................. 2
Item 3 Legal Proceedings........................................... 3
Item 4 Submission of Matters to a Vote of Security Holders......... 3

PART II
Item 5 Market for the Registrant's Common Equity and Related
Stockholder Matters......................................... 3
Item 6 Selected Financial Data..................................... 4
Item 7 Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 5
Item 7A Quantitative and Qualitative Disclosures About Market
Risk........................................................ 8
Item 8 Financial Statements and Supplementary Data................. 8
Item 9 Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................... 8

PART III
Item 10 Directors and Executive Officers of the Registrant.......... 9
Item 11 Executive Compensation...................................... 12
Item 12 Security Ownership of Certain Beneficial Owners and
Management.................................................. 12
Item 13 Certain Relationships and Related Transactions.............. 12

PART IV
Item 14 Exhibits, Financial Statement Schedules, and Reports on Form
8-K......................................................... 13
Signatures.................................................. 14

10-K405 3rd Page of 47 TOC 1st Previous Next ↓Bottom Just 3rd

PART I

ITEM 1. BUSINESS

GENERAL

Harcourt General, Inc., a Delaware corporation formed in 1950 (the
"Company"), is a leading global multiple-media publisher providing educational,
training and assessment products and services to classroom, corporate,
professional and consumer markets.

On October 27, 2000, the Company announced that it had entered into an
agreement and plan of merger with U.S. affiliates of Reed Elsevier plc, a
London-based worldwide publisher ("Reed"), to sell the Company for $59.00 per
common share and $77.29 per share of Series A Cumulative Convertible Stock. The
agreement provides for a cash tender offer (on the condition that the number of
shares tendered represent at least a majority in voting power (on a fully
diluted basis) of the outstanding common stock), and following completion of the
offer, a second-step merger in which the remaining shares of the Company will be
exchanged for the same cash consideration. Reed has entered into an agreement
with The Thomson Corporation ("Thomson") pursuant to which it has agreed to sell
portions of the Company's business to Thomson immediately after consummation of
the merger. Completion of the transaction is subject to clearance of the tender
offer and the Thomson transaction under applicable antitrust laws, as well as
other customary closing conditions. See Note 2 to the Consolidated Financial
Statements in Item 14 below.

The Company operates its business through four principal segments,
described below and in Note 4 to the Consolidated Financial Statements in Item
14 below.

Education Group. The Education Group is a leading content provider to
classroom and at home K-12 and supplemental learners offering a complementary
array of value-added products and services through school, library and
direct-to-consumer channels. The Education Group includes the operations of
Harcourt School Publishers; Holt, Rinehart and Winston ("HRW"); Steck-Vaughn;
and Harcourt Trade publishers. The Education Group publishes textbooks and
related print and technology-enabled instructional materials for kindergarten to
grade eight through Harcourt School and for the middle and secondary education
markets through HRW. Steck-Vaughn publishes supplemental educational materials
used in elementary, secondary and adult education, and test preparation
materials, and offers English language literacy programs for training workers
for whom English is a second language. Harcourt Trade publishes children's
books, general adult fiction and nonfiction hardcover books, and trade
paperbacks under the Harvest imprint.

Higher Education Group. The Higher Education Group brings traditional and
technology-enabled content to adults seeking higher education in traditional and
non-traditional settings, offering a broad array of products and services to the
campus-based. direct-to-consumer and corporate markets. The Higher Education
Group includes Harcourt College Publishers, Harcourt Learning Direct, Harcourt
Higher Education and Harcourt Professional Education. Harcourt College publishes
textbooks and other materials for the college and university market under the
Harcourt, Saunders, Dryden and HRW imprints. Harcourt Learning Direct and
Harcourt Higher Education provide traditional and technology-based distance
learning opportunities in vocational, degree and professional self-study
programs. Harcourt Professional Education conducts review courses under the
BAR/BRI name for individuals preparing for bar examinations, as well as
live-lecture and computer-based review courses for law and accounting
examinations, and publishes print and electronic information resources,
including reference guides and newsletters for financial, legal and human
resources professionals.

Corporate and Professional Services Group. The Corporate and Professional
Services Group produces technology-based training, assessment and educational
products and services for the corporate learner market and individual
professionals. The Corporate and Professional Services Group includes the
operations of NETglobal (including NETg and Knowledge Communication, Inc.
("KCI")); The Psychological Corporation ("TPC"), Assessment Systems, Inc.
("ASI"), and Drake Beam Morin ("DBM"). NETg develops and sells self-study
information technology and related professional training product and service
solutions which are delivered by CD-ROM, the Internet, and corporate intranets
to information technology professionals. KCI

10-K405 4th Page of 47 TOC 1st Previous Next ↓Bottom Just 4th

provides technology-based professional development and business skills training.
TPC provides tests and related products and services for educational and
psychological assessment. ASI develops and administers computer-based tests and
related services for professional and regulatory licensing and credentialing and
corporate pre-employment testing. DBM is one of the world's leading
organizational and individual transition consulting firms, assisting
organizations and individuals worldwide in outplacement, career and transition
management and employee selection.

Worldwide Scientific, Technical and Medical Group. The Worldwide
Scientific, Technical and Medical ("STM") Group is a leading provider of
information products through both traditional and newer technology-enabled
channels to health, scientific and technical professionals worldwide. The STM
Group includes Harcourt Health Sciences, comprised of the global medical
publishing operations of W.B. Saunders, Mosby and Churchill Livingstone;
Academic Press; and Harcourt Publishers International. Harcourt Health Sciences
publishes books, periodicals and electronic products in the health sciences, and
advertising-based newsletters for health professionals. Academic Press publishes
scholarly books, journals, data bases and products and value-added services in
print and electronic media, in the life, physical, social and computer sciences.
Harcourt Publishers International is responsible for international distribution
of Harcourt English language products and the publication of adaptations,
translations and indigenous materials worldwide.

COMPETITION

Numerous companies compete in the markets in which the Company's various
businesses operate. The Company believes that the principal competitive factors
in connection with these businesses are the breadth, quality, timeliness, and
price of products and services; customer service and support; the ability to
acquire intellectual property rights; editorial, marketing, and distribution
capabilities; the ability to maintain key vendor alliances; the ability to
compete in non-U.S. markets; the reputation of the Company; and the Company's
financial and management resources.

CERTAIN ADDITIONAL INFORMATION

Employees

At October 31, 2000, the Company had approximately 13,200 employees
worldwide. Approximately 2% of the Company's employees are subject to collective
bargaining agreements.

The Company believes that its relations with its employees are generally
good.

Capital Expenditures; Seasonality; Liquidity; Capital Resources

For a review of the Company's financial results for fiscal 2000, including
information on capital expenditures, seasonality, liquidity, capital resources
and other financial information, reference is made to the "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained in Item 7 below.

Financial Information About Industry Segments and Geographical Operations

Information about the Company's principal industry segments and
geographical operations is included under the heading "Description of Continuing
Operations and Segment Information" in Note 4 of the Notes to Consolidated
Financial Statements in Item 14 below.

ITEM 2. PROPERTIES

The Company's corporate headquarters are located in leased facilities in
Chestnut Hill, Massachusetts, a suburb of Boston. At October 31, 2000, the
Company operated out of approximately 5.3 million square feet of office and
distribution facilities throughout the world, consisting of approximately
185,000 square feet of owned office facilities, 2.7 million square feet of
leased office facilities, 1.7 million square feet of owned distribution
facilities, and 700,000 square feet of leased distribution facilities.

For additional information about the properties of the Company, see the
information contained in Note 12 of the Notes to Consolidated Financial
Statements under the heading "Leases" in Item 14 below.

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ITEM 3. LEGAL PROCEEDINGS

The Company is involved in various suits and claims incidental to the
ordinary course of its business. The Company does not believe that the
disposition of any such suits or claims will have a material adverse effect on
the financial position or continuing operations of the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

(i) The dividends paid on the Company's outstanding equity securities are
set forth in "Dividends per share" in Note 16 of the Notes to Consolidated
Financial Statements in Item 14 below.

(ii) The Company's Common Stock and Series A Cumulative Convertible Stock
("Series A Stock") are traded on the New York Stock Exchange under the symbols H
and HPRA, respectively. The following table indicates the quarterly price range
of the Common Stock and Series A Stock for the past two fiscal years. Each share
of Series A Stock is convertible into 1.31 shares of Common Stock.

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2000 1999*
COMMON STOCK ---------------- ----------------
QUARTER HIGH LOW HIGH LOW
------------ ------ ------ ------ ------

First..................................... $41.69 $32.81 $54.94 $47.63
Second.................................... $41.00 $32.63 $50.00 $43.94
Third..................................... $58.75 $35.63 $54.00 $46.31
Fourth.................................... $62.75 $49.80 $47.13 $36.75

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2000 1999*
SERIES A STOCK ---------------- ----------------
QUARTER HIGH LOW HIGH LOW
-------------- ------ ------ ------ ------

First..................................... $52.38 $42.50 $60.00 $55.00
Second.................................... $50.00 $43.75 $51.25 $48.13
Third..................................... $75.00 $46.75 $56.75 $49.75
Fourth.................................... $80.25 $69.00 $52.00 $45.00

---------------
* With the exception of the fourth quarter "low" price in fiscal 1999, these
stock prices are prior to the tax-free distribution of shares in The Neiman
Marcus Group, which was effective on October 22, 1999.

The Company had 6,987 and 7,121 common shareholders of record at October
31, 2000 and 1999, respectively, and 394 and 435 Series A Stock shareholders of
record at October 31, 2000 and 1999, respectively.

The Company's Class B Stock is subject to significant restrictions on
transfer and is not listed or traded on any exchange or in any market. As of
January 16, 2001, there were 1,590 record holders of Class B Stock. For further
information with respect to the Class B Stock, including the ownership by the
family of Richard A. Smith (the Chairman of the Company) of 99.9% of the Class B
Stock, reference is made to the information contained in Annex B to the
Company's Solicitation/Recommendation Statement on Schedule 14D-9 dated November
8, 2000 under the heading "Stock Ownership of Certain Beneficial Owners and
Management."

Transfer agent and registrar for Common, Series A and Class B stock:

Fleet National Bank
c/o EquiServe Limited Partnership
Shareholder Services Division
Post Office Box 282001
Mail Stop 45-01-05
Boston, MA 02284
(800) 733-5001

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ITEM 6. SELECTED FINANCIAL DATA

SELECTED FINANCIAL DATA (UNAUDITED)

(in thousands except for per share amounts)

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2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ----------

Revenues............................. $2,408,177 $2,142,622 $1,861,907 $1,481,748 $1,214,916
Operating earnings (loss)............ 367,662 279,649 214,550 (183,939) 188,448
Investment income.................... 26,786 12,791 4,880 28,984 27,329
Interest expense..................... (105,672) (107,210) (86,436) (67,989) (54,654)
---------- ---------- ---------- ---------- ----------
Earnings (loss) from continuing
operations before income taxes and
minority interest.................. 288,776 185,230 132,994 (222,944) 161,123
Income tax benefit (expense)......... (106,847) (68,535) (45,952) 25,169 (44,516)
Minority interest in losses of
subsidiaries, net.................. 885 3,653 559 -- --
---------- ---------- ---------- ---------- ----------
Earnings (loss) from continuing
operations......................... 182,814 120,348 87,601 (197,775) 116,607
Earnings (loss) from discontinued
operations, net.................... (103,000) 63,482 54,015 82,653 74,244
---------- ---------- ---------- ---------- ----------
Net earnings (loss).................. $ 79,814 $ 183,830 $ 141,616 $ (115,122) $ 190,851
========== ========== ========== ========== ==========
Depreciation and amortization........ $ 252,659 $ 255,491 $ 243,121 $ 281,518 $ 120,014
Capital expenditures................. $ 257,781 $ 226,549 $ 194,137 $ 142,002 $ 156,919
Total assets......................... $3,079,793 $2,955,536 $3,389,878 $2,816,107 $2,315,184
Total long-term liabilities.......... $1,480,933 $1,601,023 $1,704,430 $1,186,018 $ 567,263
Basic amounts per share applicable to
common shareholders:
Continuing operations.............. $ 2.51 $ 1.68 $ 1.22 $ (2.81) $ 1.62
Discontinued operations............ (1.43) 0.89 0.77 1.17 1.04
---------- ---------- ---------- ---------- ----------
Basic earnings (loss)................ $ 1.08 $ 2.57 $ 1.99 $ (1.64) $ 2.66
========== ========== ========== ========== ==========
Diluted amounts per share applicable
to common shareholders:
Continuing operations.............. $ 2.50 $ 1.67 $ 1.21 $ (2.81) $ 1.60
Discontinued operations............ (1.41) 0.88 0.75 1.17 1.02
---------- ---------- ---------- ---------- ----------
Diluted earnings (loss).............. $ 1.09 $ 2.55 $ 1.96 $ (1.64) $ 2.62
========== ========== ========== ========== ==========

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

OPERATING RESULTS FROM CONTINUING OPERATIONS

The following table presents revenues and operating earnings by business:

[Enlarge/Download Table]

YEARS ENDED OCTOBER 31
------------------------------------
2000 1999 1998
---------- ---------- ----------
(IN THOUSANDS)

Revenues
Education Group.......................................... $ 754,751 $ 581,465 $ 563,533
Higher Education Group................................... 361,328 365,996 354,759
Corporate and Professional Services Group................ 547,005 497,573 416,610
Worldwide STM Group...................................... 745,093 697,588 527,005
---------- ---------- ----------
Total revenues................................... $2,408,177 $2,142,622 $1,861,907
========== ========== ==========
Operating Earnings
Education Group.......................................... $ 162,287 $ 105,401 $ 92,255
Higher Education Group................................... 50,246 43,985 23,633
Corporate and Professional Services Group................ 41,024 34,046 15,896
Worldwide STM Group...................................... 140,378 117,537 100,875
Corporate expenses....................................... (26,273) (21,320) (18,109)
---------- ---------- ----------
Total operating earnings......................... $ 367,662 $ 279,649 $ 214,550
========== ========== ==========

Education Group

Revenues from the Education Group increased $173.3 million, or 29.8%, in
2000; and $17.9 million, or 3.2% in 1999. The 2000 increase was primarily
attributable to higher elementary science and social studies program sales and
higher secondary language arts program sales. The 1999 increase was primarily
attributable to higher elementary math and social studies program sales, offset
in part by lower secondary school publishing sales. The higher relative growth
in 2000 is attributable to the significant number of adoptions that occurred in
2000.

Operating earnings from the Education Group increased $56.9 million, or
54.0%, in 2000; and $13.1 million, or 14.2%, in 1999. The 2000 increase resulted
primarily from the higher elementary and secondary program sales, which were
partially offset by higher selling and marketing costs. The 1999 increase
resulted primarily from the increased elementary sales, offset by higher plate
amortization costs, as well as from lower amortization of intangible assets at
Steck-Vaughn.

Higher Education Group

Revenues from the Higher Education Group decreased $4.7 million, or 1.3%,
in 2000; and increased $11.2 million, or 3.2% in 1999. The 2000 decrease was
primarily due to lower international sales at Harcourt Learning Direct, the
Company's distance learning business, and unfavorable currency exchange, as well
as the sale of its professional publishing business in May 2000. The 1999
increase was primarily due to higher sales of college titles and professional
education revenues, offset by a decrease in sales at Harcourt Learning Direct.

Operating earnings from the Higher Education Group increased $6.3 million,
or 14.2%, in 2000; and $20.4 million or 86.1% in 1999. The 2000 increase
resulted primarily from lower amortization of intangible assets at Harcourt
Learning Direct and lower Group marketing and selling expenses. The 1999
increase resulted primarily from higher sales, lower amortization of intangible
assets, and to a lesser extent, lower marketing costs.

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Corporate and Professional Services Group

Revenues from the Corporate and Professional Services Group increased $49.4
million, or 9.9%, in 2000; and $81.0 million, or 19.4% in 1999. The 2000
increase was primarily attributable to higher scoring and professional services
revenues at The Psychological Corporation, the Group's educational and clinical
assessment business, and higher revenues at NETg, the Group's technology-based
training business. The 1999 increase was primarily attributable to higher sales
at Drake Beam Morin (DBM), the Group's professional services and outplacement
business, higher sales at NETg, as well as higher sales from the test
administration and scoring businesses.

Operating earnings from the Corporate and Professional Services Group
increased $7.0 million, or 20.5%, in 2000; and $18.2 million or 114.2% in 1999.
The 2000 increase was primarily attributable to the higher sales and lower
amortization of intangible assets, partially offset by increases in selling and
other operating costs as well as increased product development costs at NETg.
The 1999 increase was also primarily attributable to higher sales and lower
amortization of intangible assets.

Worldwide Scientific Technical and Medical (STM) Group

Revenues from the Worldwide STM Group increased $47.5 million, or 6.8%, in
2000; and $170.6 million, or 32.4% in 1999. The 2000 increase was primarily
attributable to higher book sales at Harcourt Health Sciences and higher journal
sales at Academic Press, the Group's scientific publisher. The 1999 increase
represented primarily the revenues of Mosby, acquired in October 1998, which
were included for the full fiscal year in 1999.

Operating earnings from the Worldwide STM Group increased $22.8 million, or
19.4%, in 2000; and $16.7 million, or 16.5%, in 1999. The 2000 increase was
primarily due to the higher revenues at Harcourt Health Sciences and lower
general and administrative expenses resulting from the integration of Mosby.
Higher journal sales at Academic Press also contributed to this increase. The
1999 increase was primarily due to the inclusion of the results of Mosby, offset
by amortization of acquisition costs.

Corporate expenses

Corporate expenses increased $5.0 million, or 23.2%, in 2000; and $3.2
million, or 17.7%, in 1999. The increase in 2000 resulted primarily from costs
incurred in connection with the pending sale of the Company. The increase in
1999 resulted primarily from higher salaries and professional services fees.

Investment and other income

Investment income increased $14.0 million in 2000 and $7.9 million in 1999.
The increase in 2000 resulted primarily from a gain of $15.5 million from the
sale of the Company's professional publishing unit and a gain of $7.6 million
from the sale of securities. The 1999 increase resulted from a gain of $6.4
million on sale of the Conviser CPA Review Course, as well as a gain of $3.0
million from the sale of securities.

Interest expense

Interest expense decreased $1.5 million, or 1.4% in 2000; and increased
$20.8 million, or 24.0% in 1999. The decrease in 2000 was due to lower average
outstanding borrowings. The increase in 1999 was primarily due to interest on
borrowings under the Company's revolving credit facility, which was used to fund
the acquisition of Mosby in October 1998.

LIQUIDITY AND CAPITAL RESOURCES

The following discussion analyzes liquidity and capital resources by
operating, investing and financing activities as presented in the Company's
consolidated statements of cash flows.

Cash provided by operating activities in 2000 was $369.8 million compared
to $358.6 million in 1999. Cash provided by the Company's operations and
borrowings under its revolving credit facility was sufficient to fund working
capital, capital expenditures, acquisitions and dividend requirements. The most
significant

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change in cash from working capital was an increase in accounts receivable of
$40.3 million, which was primarily due to higher sales.

Cash flows used by investing activities were $256.4 million in 2000 and
consisted primarily of expenditures for prepublication costs. The Company
expects capital expenditures to approximate $265.0 million in fiscal 2001. In
2000, the Company received $29.4 million of proceeds from the sale of securities
and $21.0 million of proceeds from the sale of its professional publishing unit.
In addition, the Company acquired the remaining one-third minority interest of
MD Consult for $10.0 million and the remaining 8% minority interest in NETg for
$36.0 million.

On April 20, 2000 the Company issued 1,372,213 shares of common stock at a
price of $36.44 per share in a private placement to Salomon Smith Barney Inc.,
acting as agent for Citibank, N.A. The net proceeds of $50.0 million were used
to partially finance the repayment of the Company's 9.5% subordinated notes,
which matured in March 2000. Concurrently with the offering, the Company entered
into an equity swap agreement with Citibank, N.A. for a notional amount of $50.0
million. Subsequent to year end, the Company elected to settle the agreement in
cash, and received $23.6 million based on the price of the Company's common
stock at the settlement dates. The common stock issued and the related equity
swap were accounted for together as an equity instrument. At settlement, the
fair value of the equity swap was recorded as an adjustment to paid-in capital.

The Company borrowed $30.8 million under its revolving credit facility and
uncommitted lines in 2000. This credit facility is used to fund working capital
requirements, capital expenditures and dividend requirements as needed. The
Company used this facility as well as the proceeds from its equity offering to
repay subordinated notes of $125.0 million that matured in March 2000. At
October 31, 2000, the Company had $360.0 million available under its $750.0
million revolving credit facility, which expires in July 2002.

The Company believes its cash on hand, cash generated from operations and
its current and future debt capacity will be sufficient to fund its planned
capital expenditures, as well as its operating and dividend requirements.

On October 27, 2000, the Company announced that it had entered into an
agreement and plan of merger with U.S. affiliates of Reed Elsevier plc, a
London-based worldwide publisher ( "Reed"), to sell the Company for $59.00 per
common share and $77.29 per share of Series A Cumulative Convertible Stock in
cash. The agreement provides for a cash tender offer, (on the condition that the
number of shares tendered represent at least a majority in voting power (on a
fully diluted basis) of the outstanding common stock), and following completion
of the tender offer, a second-step merger in which the remaining shares of the
Company will be exchanged for the same cash consideration. Reed has entered into
a agreement with The Thomson Corporation ("Thomson") pursuant to which it has
agreed to sell portions of the Company's business to Thomson immediately after
consummation of the merger. Completion of the transaction is subject to
clearance of the tender offer and the Thomson transaction under applicable
antitrust laws, as well as other customary closing conditions.

Quantitative and Qualitative Disclosures about Market Risk

The market risk inherent in the Company's financial instruments and
position represents the potential loss arising from adverse changes in interest
rates. The Company does not enter into financial instruments for trading
purposes.

At October 31, 2000 and 1999, the fair value of the Company's fixed-rate
debt was estimated at $804.0 million and $927.7 million, respectively, using
quoted market prices and comparable publicly-traded issues. Such fair values
were less than carrying value by approximately $37.3 million and $39.5 million
at October 31, 2000 and October 31, 1999, respectively. Market risk is estimated
as the potential change in fair value resulting from a hypothetical 10% adverse
change in interest rates and amounted to approximately $48.7 million at October
31, 2000.

At October 31, 2000 and 1999, the Company had approximately $425.4 million
and $389.6 million, respectively, of variable rate borrowings outstanding under
its revolving credit facility, uncommitted lines and a term loan, which
approximated fair value. A hypothetical 10% adverse change in interest rates for
this

10-K405 10th Page of 47 TOC 1st Previous Next ↓Bottom Just 10th

variable rate debt would have an approximate $2.5 million negative effect on the
Company's pre-tax earnings and cash flows.

At October 31, 1999, the carrying value of the put option issued in
connection with the acquisition of Gartner Learning was $20.0 million, which
approximated fair value. This option was effectively terminated in 2000 in
conjunction with the acquisition by the Company of the minority interest in
NETg.

Impact of Inflation

The Company adjusts selling prices to maintain profit levels and will
continue to do so as competitive conditions permit. In general, management
believes that the impact of inflation or of changing prices is not material to
the financial position or results of operations of its business segments.

Seasonality

The Company's businesses are seasonal in nature. More than one-half of the
Company's annual operating earnings are historically generated in the third
quarter of its fiscal year, since the quarter includes the important educational
publishing selling season. Conversely, operating losses have historically been
reported in the first and second quarters during a period when publishing
revenues are at their lowest levels.

Dividends

The Company has a long-standing practice of returning a portion of its
earnings and cash flows to shareholders through the payment of cash dividends.
In December 2000 the Board of Directors declared a regular quarterly cash
dividend (payable on January 31, 2001 to shareholders of record on January 12,
2001) on the Common Stock of 21 cents per share, on the Series A Stock of 28.26
cents per share and on the Class B Stock of 18.9 cents per share.

Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities". In June 2000, the FASB issued SFAS No. 138,
which amends certain provisions of SFAS 133 to clarify four areas causing
difficulties in implementation. The amendment included expanding the normal
purchase and sale exemption for supply contracts, permitting the offsetting of
certain intercompany foreign currency derivatives and thus reducing the number
of third party derivatives, permitting hedge accounting for foreign-currency
denominated assets and liabilities, and redefining interest rate risk to reduce
sources of ineffectiveness. The Company will adopt SFAS 133 and the
corresponding amendments under SFAS 138 as of November 1, 2000. SFAS 133, as
amended by SFAS 138, is not expected to have a material impact on the Company's
consolidated results of operations, financial position or cash flows.

Forward-Looking Statements

Statements in this annual report on Form 10-K referring to the expected
future plans and performance of the Company are forward-looking statements.
Actual future results may differ materially from such statements. Factors that
could affect future performance in the Company's publishing and educational
services businesses include, but are not limited to: the Company's ability to
develop and market its products and services; the relative success of the
products and services offered by competitors; integration of acquired
businesses; the seasonal and cyclical nature of the markets for the Company's
products and services; changes in domestic or international economic conditions;
changes in public funding for the Company's educational products and services;
and changes in purchasing patterns in the Company's markets.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The response to this Item is contained in Item 7 above in "Management's
Discussion and Analysis of Financial Condition and Results of
Operation -- Quantitative and Qualitative Disclosures About Market Risk".

10-K405 11th Page of 47 TOC 1st Previous Next ↓Bottom Just 11th

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Consolidated Financial Statements and supplementary data listed in Item
14 are included in pages F-1 through F-25 of this Annual Report on Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

A. DIRECTORS

The Company has a classified Board of Directors consisting of three
staggered classes. At each annual meeting of stockholders, a class of directors
is elected for a full term of three years to succeed the directors of the same
class whose terms are then expiring.

DIRECTORS WHOSE TERMS EXPIRE IN 2003 (CLASS A DIRECTORS)

GARY L. COUNTRYMAN*, age 61, Director since 1996, member of Special Review
Committee

Mr. Countryman serves as Chairman Emeritus (since April 2000, Chairman
prior thereto) and Director of Liberty Mutual Insurance Company and Liberty
Mutual Fire Insurance Company and Chief Executive Officer and President (since
January 2000) and Director of Liberty Financial Companies, Inc. From 1992 until
April 1998, Mr. Countryman served as Chairman and Chief Executive Officer of
Liberty Mutual Insurance Company, Liberty Mutual Fire Insurance Company and
Liberty Financial Companies, Inc. Mr. Countryman is also a Director of
FleetBoston Financial Corporation and a Trustee of Nstar.

JACK M. GREENBERG*, age 58, Director since 1993, member of Audit, Compensation
and Special Review Committees

Mr. Greenberg has served as Chairman and Director of McDonald's Corporation
since May 1999 and Chief Executive Officer of McDonald's Corporation since
August 1998. Previously, he was President (until December 1999) and Vice
Chairman (from October 1996 until August 1998) of McDonald's Corporation and
Chairman (from October 1996 until August 1998) and Chief Executive Officer (from
July 1997 until August 1998) of McDonald's USA. Mr. Greenberg served as Chief
Financial Officer of McDonald's Corporation from January 1982 until October
1996. Mr. Greenberg is also a Director of Abbott Laboratories.

BRIAN J. KNEZ, age 43, Director since 1995, member of Executive Committee

Mr. Knez has served as President and Co-Chief Executive Officer of the
Company since November 1999; President and Co-Chief Operating Officer of the
Company from January 1997 until November 1999; Co-Chief Executive Officer of The
Neiman Marcus Group, Inc. since May 1999; Co-Chief Executive Officer of
Harcourt, Inc. since May 1999; President (until November 1998) and Chief
Executive Officer of Harcourt, Inc. from May 1995 until May 1999; Mr. Knez also
serves as a Director of The Neiman Marcus Group, Inc. Mr. Knez is the son-in-law
of Richard A. Smith and the brother-in-law of Robert A. Smith.

RICHARD A. SMITH, age 76, Director since 1950, Chairman of Executive Committee
and member of Nominating Committee

Mr. Smith serves as Chairman of the Company. He also serves as Chairman of
The Neiman Marcus Group, Inc. and GC Companies, Inc. Previously he served as
Chief Executive Officer of the Company from January 1997 until November 1999 and
prior to December 1991; Chief Executive Officer of The Neiman Marcus Group, Inc.
from January 1997 until December 1998 and prior to December 19991; and Chief
Executive Officer of GC Companies, Inc. until October 2000; Mr. Smith also
serves as a Director of The Neiman Marcus Group, Inc. and GC Companies, Inc. In
October 2000, GC Companies, Inc. filed a voluntary

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petition in the United States Bankruptcy Court for the District of Delaware
under Chapter 11 of the Bankruptcy Code. Mr. Smith is the father of Robert A.
Smith, the father-in-law of Brian J. Knez and the uncle of Jeffrey R. Lurie.

DIRECTORS WHOSE TERMS EXPIRE IN 2001 (CLASS B DIRECTORS)

WILLIAM F. CONNELL*, age 62, Director since 1992, Chairman of Nominating
Committee and member of Special Review Committee

Mr. Connell serves as Chairman and Chief Executive Officer of Connell
Limited Partnership. Mr. Connell is also a Director of FleetBoston Financial
Corporation and Liberty Financial Companies, Inc.

MAURICE SEGALL*, age 71, Director since 1986, Chairman of Compensation Committee
and member of Special Review Committee

Mr. Segall is the former Chairman and Chief Executive Officer of Zayre
Corp. Mr. Segall is a Director of AMR Corporation and Trustee of Cabot
Industrial Trust.

ROBERT A. SMITH, age 41, Director since 1989, member of Executive Committee

Mr. Smith has served as President and Co-Chief Executive Officer of the
Company since November 1999; President and Co-Chief Operating Officer of the
Company from January 1997 until November 1999; Co-Chief Executive Officer of
Harcourt, Inc. since May 1999; Co-Chief Executive Officer of The Neiman Marcus
Group, Inc. since May 1999; Chief Executive Officer of The Neiman Marcus Group,
Inc. from December 1998 until May 1999; President and Chief Operating Officer of
The Neiman Marcus Group Inc. from January 1997 to December 1998; Group Vice
President of the Company and The Neiman Marcus Group, Inc. prior thereto, and
President and Chief Operating Officer of GC Companies, Inc. from November 1995
until October 2000. In October 2000, GC Companies, Inc. filed a voluntary
petition in the United States Bankruptcy Court for the District of Delaware
under Chapter 11 of the Bankruptcy Code. Mr. Smith also serves as a Director of
The Neiman Marcus Group, Inc. Mr. Smith is the son of Richard A. Smith, the
brother-in-law of Brian J. Knez and the cousin of Jeffrey R. Lurie.

HUGO UYTERHOEVEN*, age 69, Director since 1980, Chairman of Audit Committee and
Special Review Committee, member of Compensation, Executive and Nominating
Committees

Mr. Uyterhoeven is Timken Professor of Business Administration Emeritus,
Graduate School of Business Administration, Harvard University; Mr. Uyterhoeven
is also a Director of Bombardier, Inc., The Stanley Works, Ecolab, Inc. and
Degussa-Huls AG.

DIRECTORS WHOSE TERMS EXPIRE IN 2002 (CLASS C DIRECTORS)

JEFFREY R. LURIE, age 49, Director since 1996

Mr. Lurie serves as principal owner and Chief Executive Officer of the
Philadelphia Eagles, Inc., a National Football League franchise and President
and Chief Executive Officer of Chestnut Hill Productions, a motion picture
production company. Mr. Lurie is the nephew of Richard A. Smith and the cousin
of Robert A. Smith.

LYNN MORLEY MARTIN*, age 61, Director since 1993, member of Compensation,
Nominating and Special Review Committees

Ms. Martin serves as Professor, J.L. Kellogg School of Management,
Northwestern University and Advisor, Deloitte & Touche LLP. Ms. Martin served as
United States Secretary of Labor from February 1991 to January 1993 and Member
of the United States House of Representatives (Illinois 16th Congressional

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District) from 1981 to February 1991. Ms. Martin is a Director of SBC
Communications, Inc., Ryder System, Inc., Procter & Gamble Co., TRW Inc. and 11
Dreyfus mutual funds.

PAULA STERN*, age 55, Director since 1993, member of Audit and Special Review
Committees

Ms. Stern serves as President of The Stern Group, Inc., an economic
analysis and trade advisory firm. Ms. Stern is former Chairwoman of the U.S.
International Trade Commission and serves as a Director of Wal-Mart Stores, Inc.
and Avon Products, Inc.

CLIFTON R. WHARTON, JR.*, age 74, Director since 1994, member of Audit and
Special Review Committees

Mr. Wharton is the Retired Chairman and Chief Executive Officer of Teachers
Insurance and Annuity Association-College Retirement Equities Fund (TIAA-CREF);
Mr. Wharton served as Deputy Secretary of State, U.S. Department of State, from
January 1993 to November 1993 and is former Chancellor, State University of New
York System. Mr. Wharton is a Member of TIAA-CREF Board of Overseers.
---------------
* The Company's By-Laws provide for the independence of a majority of the
members of the Board of Directors and the Audit, Nominating and Compensation
Committees. Those persons who are considered "independent" within the meaning
of the Company's By-Laws are indicated by an asterisk (*) above.

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers and persons who own more than 10%
of the Company's Common Stock to file initial reports of ownership and reports
of change in ownership with the Securities and Exchange Commission and the New
York Stock Exchange. The Company believes that all filing requirements
applicable to its insiders were complied with during fiscal 2000.

B. EXECUTIVE OFFICERS

Set forth below are the names, ages (at January 16, 2001) and principal
occupations for the last five years of each current executive officer of the
Company. All such persons have been elected to serve until the next annual
election of officers and their successors are elected or until their earlier
resignation or removal.

For information about Richard A. Smith, Chairman of the Company, and Robert
A. Smith and Brian J. Knez, Co-Chief Executive Officers of the Company, please
see the information on Directors included above in this Item 10.

JOHN R. COOK -- 59

Senior Vice President and Chief Financial Officer of the Company and of The
Neiman Marcus Group, Inc.; Director of The Neiman Marcus Group, Inc.

ERIC P. GELLER -- 53

Senior Vice President, General Counsel and Secretary of the Company and of
The Neiman Marcus Group, Inc.

KATHLEEN A. BURSLEY -- 46

Vice President of the Company since December 1998; Vice President and
General Counsel of Harcourt, Inc.

PETER FARWELL -- 58

Vice President -- Corporate Relations of the Company and of The Neiman
Marcus Group, Inc.

PAUL F. GIBBONS -- 49

Vice President and Treasurer of the Company and of The Neiman Marcus Group,
Inc.

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GERALD T. HUGHES -- 44

Vice President-Human Resources of the Company and of The Neiman Marcus
Group, Inc.

CATHERINE N. JANOWSKI -- 40

Vice President and Controller of the Company and of The Neiman Marcus
Group, Inc. since November 1997; Director, Corporate Accounting of the Company
and of The Neiman Marcus Group, Inc. prior thereto.

JAMES P. LEVY -- 60

Vice President of the Company since December 1998; President and Chief
Operating Officer of Harcourt, Inc. since November 1998; President of Harcourt
Education and Lifelong Learning & Assessment Groups prior thereto.

GAIL S. MANN -- 49

Vice President-Corporate Law and Associate General Counsel since August
1999; Vice President, Assistant General Counsel, Secretary and Clerk, Digital
Equipment Corporation from 1994 until September 1998.

MICHAEL F. PANUTICH -- 52

Vice President-General Auditor of the Company and of The Neiman Marcus
Group, Inc.

PAUL ROBERSHOTTE -- 47

Vice President -- Strategy and Business Development of the Company and of
The Neiman Marcus Group, Inc. since February 1999; President and Chief Executive
Officer of Age Wave Communications from February 1996 until June 1998; Executive
Vice President and Chief Operating Officer of Age Wave, Inc. from May 1995 until
February 1996; Vice President and Director of Bain & Co. prior thereto.

ITEM 11. EXECUTIVE COMPENSATION

The response to this Item will be included in an amendment to this Annual
Report on Form 10-K.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The response to this Item will be included in an amendment to this Annual
Report on Form 10-K.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The response to this Item is will be included in an amendment to this
Annual Report on Form 10-K.

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PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

14(A)(1) FINANCIAL STATEMENTS

The financial statements appear on pages F-1 through F-25 of this Annual
Report on Form 10-K.

Independent Auditors' Report.

Consolidated Balance Sheets -- October 31, 2000 and 1999.

Consolidated Statements of Earnings for the fiscal years ended October 31,
2000, 1999, and 1998.

Consolidated Statements of Cash Flows for the fiscal years ended October
31, 2000, 1999 and 1998.

Consolidated Statements of Shareholders' Equity for the fiscal years ended
October 31, 2000, 1999 and 1998.

Notes to Consolidated Financial Statements

14(A)(2) CONSOLIDATED FINANCIAL STATEMENT SCHEDULES

The document and schedule listed below are filed as part of this Form 10-K:

[Download Table]

PAGE IN
FORM 10-K
---------

Independent Auditors' Report on Consolidated Financial
Statement Schedule...................................... S-1
Schedule II -- Valuation and Qualifying Accounts and
Reserves................................................ S-2

All other schedules for which provision is made in the applicable
regulations of the Securities and Exchange Commission have been omitted because
the information is disclosed in the Consolidated Financial Statements or because
such schedules are not required or are not applicable.

14(A)(3) EXHIBITS

The exhibits filed as part of this Annual Report are listed in the Exhibit
Index immediately preceding the exhibits. The Company has identified with an
asterisk in the Exhibit Index each management contract and compensation plan
filed as an exhibit to this Form 10-K in response to Item 14(c) of Form 10-K.

14(B) REPORTS ON FORM 8-K

On October 11, 2000 the Company filed a report on Form 8-K reporting that
the Company had issued a press release with respect to the filing by GC
Companies, Inc. for Chapter 11 protection.

On October 25, 2000, the Company filed a report on Form 8-K reporting that
on October 18, 2000, the Company and Citibank, N.A. agreed to amend the
Confirmation for Equity Swap Transaction and the Purchase Agreement, each dated
as of April 20, 2000.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

HARCOURT GENERAL, INC.

By: /s/ BRIAN J. KNEZ
------------------------------------
Brian J. Knez, President
and Co-Chief Executive Officer

By: /s/ ROBERT A. SMITH
------------------------------------
Robert A. Smith, President
and Co-Chief Executive Officer

Dated: January 24, 2001

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the following capacities and on the dates indicated.

[Enlarge/Download Table]

SIGNATURE TITLE DATE
--------- ----- ----

PRINCIPAL EXECUTIVE OFFICERS:

/s/ BRIAN J. KNEZ President and Co-Chief Executive January 24, 2001
--------------------------------------------- Officer
Brian J. Knez

/s/ ROBERT A. SMITH President and Co-Chief Executive January 24, 2001
--------------------------------------------- Officer
Robert A. Smith

PRINCIPAL FINANCIAL OFFICER:

/s/ JOHN R. COOK Senior Vice President and Chief January 24, 2001
--------------------------------------------- Financial Officer
John R. Cook

PRINCIPAL ACCOUNTING OFFICER:

/s/ CATHERINE N. JANOWSKI Vice President and Controller January 24, 2001
---------------------------------------------
Catherine N. Janowski

DIRECTORS:

/s/ ROBERT A. SMITH January 24, 2001
---------------------------------------------
Robert A. Smith

/s/ WILLIAM F. CONNELL January 24, 2001
---------------------------------------------
William F. Connell

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[Download Table]

SIGNATURE TITLE DATE
--------- ----- ----

/s/ GARY L. COUNTRYMAN January 24, 2001
---------------------------------------------
Gary L. Countryman

/s/ JACK M. GREENBERG January 24, 2001
---------------------------------------------
Jack M. Greenberg

/s/ BRIAN J. KNEZ January 24, 2001
---------------------------------------------
Brian J. Knez

/s/ JEFFREY R. LURIE January 24, 2001
---------------------------------------------
Jeffrey R. Lurie

January , 2001
---------------------------------------------
Lynn Morley Martin

January , 2001
---------------------------------------------
Maurice Segall

/s/ ROBERT A. SMITH January 24, 2001
---------------------------------------------
Robert A. Smith

/s/ PAULA STERN January 24, 2001
---------------------------------------------
Paula Stern

/s/ HUGO UYTERHOEVEN January 24, 2001
---------------------------------------------
Hugo Uyterhoeven

/s/ CLIFTON R. WHARTON, JR. January 24, 2001
---------------------------------------------
Clifton R. Wharton, Jr.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

[Download Table]

PAGE
----

Independent Auditors' Report................................ F-2
Consolidated Balance Sheets -- October 31, 2000 and 1999.... F-3
Consolidated Statements of Earnings for the fiscal years
ended October 31, 2000, 1999, and 1998.................... F-4
Consolidated Statements of Cash Flows for the fiscal years
ended October 31, 2000, 1999, and 1998.................... F-5
Consolidated Statements of Shareholders' Equity for the
fiscal years ended October 31, 2000, 1999, and 1998....... F-6
Notes to Consolidated Financial Statements.................. F-7

F-1

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INDEPENDENT AUDITORS' REPORT

Board of Directors and Shareholders
Harcourt General, Inc.
Chestnut Hill, Massachusetts

We have audited the consolidated balance sheets of Harcourt General, Inc.
and its subsidiaries as of October 31, 2000 and 1999 and the related
consolidated statements of earnings, shareholders' equity and cash flows for
each of the three years in the period ended October 31, 2000. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Harcourt
General, Inc. and its subsidiaries as of October 31, 2000 and 1999 and the
results of their operations and their cash flows for each of the three years in
the period ended October 31, 2000 in conformity with accounting principles
generally accepted in the United States of America.

As discussed in Note 2 to the consolidated financial statements, the
Company has agreed to be acquired by an unrelated party.

Deloitte & Touche LLP
Boston, Massachusetts
December 12, 2000

F-2

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HARCOURT GENERAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

[Enlarge/Download Table]

OCTOBER 31
-----------------------
2000 1999
---------- ----------
(IN THOUSANDS)

ASSETS
Current assets
Cash and equivalents...................................... $ 29,150 $ 24,144
Accounts receivable, net.................................. 509,163 473,577
Inventories............................................... 226,977 212,771
Deferred income taxes..................................... 126,252 86,147
Other current assets...................................... 27,917 39,549
---------- ----------
Total current assets............................... 919,459 836,188
---------- ----------
Property and equipment
Land, buildings and improvements.......................... 94,741 94,512
Fixtures and equipment.................................... 223,964 218,038
---------- ----------
318,705 312,550
Less accumulated depreciation and
amortization.............................................. (193,412) (183,746)
---------- ----------
Total property and equipment, net.................. 125,293 128,804
---------- ----------
Other assets
Prepublication costs, net................................. 391,011 322,346
Investment in The Neiman Marcus Group, Inc................ 185,225 119,414
Goodwill, net............................................. 1,358,638 1,409,485
Other intangible assets, net.............................. 42,483 52,538
Other..................................................... 57,684 86,761
---------- ----------
Total other assets................................. 2,035,041 1,990,544
---------- ----------
Total assets....................................... $3,079,793 $2,955,536
========== ==========
LIABILITIES
Current liabilities
Notes payable and current maturities of long-term
liabilities............................................. $ 17,603 $ 6,868
Accounts payable.......................................... 196,648 203,521
Other current liabilities................................. 470,326 483,168
Accrued obligations under lease guarantees................ 170,295 --
---------- ----------
Total current liabilities.......................... 854,872 693,557
---------- ----------
Long-term liabilities
Notes and debentures...................................... 1,250,453 1,356,804
Other long-term liabilities............................... 154,991 182,842
Deferred income taxes..................................... 75,489 61,377
---------- ----------
Total long-term liabilities........................ 1,480,933 1,601,023
---------- ----------
Commitments and contingencies...............................

Minority interest........................................... -- 19,093

SHAREHOLDERS' EQUITY
Preferred stock
Series A Cumulative Convertible -- $l par value; issued
and outstanding -- 727 and 863 shares................... 727 863
Common stocks
Class B Stock -- $1 par value; issued and
outstanding -- 18,112 and 20,021 shares................. 18,112 20,021
Common Stock -- $1 par value; issued and
outstanding -- 55,113
and 51,146 shares....................................... 55,113 51,146
Paid-in capital............................................. 369,453 317,037
Accumulated other comprehensive income...................... 30,313 2,269
Retained earnings........................................... 270,270 250,527
---------- ----------
Total shareholders' equity......................... 743,988 641,863
---------- ----------
Total liabilities and shareholders' equity.................. $3,079,793 $2,955,536
========== ==========

See Notes to Consolidated Financial Statements.
F-3

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HARCOURT GENERAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

[Enlarge/Download Table]

YEARS ENDED OCTOBER 31
--------------------------------------------
2000 1999 1998
------------ ------------ ------------
(IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS)

Revenues............................................. $2,408,177 $2,142,622 $1,861,907
Costs applicable to revenues......................... 777,818 697,278 628,495
Selling, general and administrative expenses......... 1,236,424 1,144,375 1,000,753
Corporate expenses................................... 26,273 21,320 18,109
---------- ---------- ----------
Operating earnings................................... 367,662 279,649 214,550
Investment and other income.......................... 26,786 12,791 4,880
Interest expense..................................... (105,672) (107,210) (86,436)
---------- ---------- ----------
Earnings from continuing operations before income
taxes and minority interest........................ 288,776 185,230 132,994
Income tax expense................................... 106,847 68,535 45,952
---------- ---------- ----------
Earnings from continuing operations before
minority interest.................................. 181,929 116,695 87,042
Minority interest in net losses of subsidiaries...... 885 3,653 559
---------- ---------- ----------
Earnings from continuing operations.................. 182,814 120,348 87,601
Earnings (loss) from discontinued operations, net of
income tax expense (benefit) of ($68,700), $42,364,
and $37,838........................................ (103,000) 63,482 54,015
---------- ---------- ----------
Net earnings......................................... $ 79,814 $ 183,830 $ 141,616
========== ========== ==========
Weighted average number of common and common
equivalent shares outstanding:
Basic.............................................. 71,747 71,103 70,837
========== ========== ==========
Diluted............................................ 73,050 72,168 72,141
========== ========== ==========
Basic amounts per common share:
Continuing operations.............................. $ 2.51 $ 1.68 $ 1.22
Discontinued operations............................ (1.43) 0.89 0.77
---------- ---------- ----------
Basic net earnings.............................. $ 1.08 $ 2.57 $ 1.99
========== ========== ==========
Diluted amounts per common share:
Continuing operations.............................. $ 2.50 $ 1.67 $ 1.21
Discontinued operations............................ (1.41) 0.88 0.75
---------- ---------- ----------
Diluted net earnings............................ $ 1.09 $ 2.55 $ 1.96
========== ========== ==========

See Notes to Consolidated Financial Statements.

F-4

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HARCOURT GENERAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

[Enlarge/Download Table]

YEARS ENDED OCTOBER 31
------------------------------------
2000 1999 1998
--------- ----------- ----------
(IN THOUSANDS)

CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings.............................................. $ 79,814 $ 183,830 $ 141,616
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Discontinued operations, net.............................. 103,000 (63,482) (54,015)
Amortization of prepublication costs...................... 153,812 136,582 123,849
Depreciation and other amortization....................... 98,847 118,909 119,272
Gains on sale of business and securities.................. (23,174) (9,834) --
Minority interest......................................... (885) (3,653) (559)
Deferred income taxes..................................... 11,259 39,503 39,734
Other items............................................... 2,806 13,724 5,698
Changes in assets and liabilities:
Accounts receivable.................................... (40,266) (47,507) (64,934)
Inventories............................................ (14,321) (5,643) 19,961
Other current assets................................... 6,803 186 12,340
Accounts payable and other current liabilities......... (7,853) (4,053) (73,638)
--------- ----------- ----------
Net cash provided by operating activities......... 369,842 358,562 269,324
--------- ----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures...................................... (257,781) (226,549) (194,137)
Proceeds from sales of business and securities............ 50,394 13,157 --
Acquisition of Steck-Vaughn, net of cash acquired......... -- -- (40,512)
Acquisition of Mosby, net of cash acquired................ -- -- (413,733)
Other acquisitions and investing activities............... (48,992) (34,753) (27,139)
--------- ----------- ----------
Net cash used for investing activities............ (256,379) (248,145) (675,521)
--------- ----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds (repayments) of revolving credit facilities,
net.................................................... 30,755 (105,000) 460,722
Proceeds from issuance of stock........................... 49,950 -- --
Proceeds from borrowings.................................. -- 19,630 --
Repayment of debt......................................... (126,038) (2,845) (5,949)
Cash dividends paid....................................... (60,071) (56,810) (53,948)
Other financing activities................................ (3,053) 196 (1,855)
--------- ----------- ----------
Net cash provided by (used for) financing
activities...................................... (108,457) (144,829) 398,970
--------- ----------- ----------
CASH AND EQUIVALENTS
Increase (decrease) during the year....................... 5,006 (34,412) (7,227)
Beginning balance......................................... 24,144 58,556 65,783
--------- ----------- ----------
Ending balance............................................ $ 29,150 $ 24,144 $ 58,556
========= =========== ==========
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
Cash payments (refunds) for
Interest............................................... $ 107,406 $ 106,701 $ 84,461
========= =========== ==========
Income taxes........................................... $ 65,900 $ (7,460) $ 13,379
========= =========== ==========

See Notes to Consolidated Financial Statements.

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HARCOURT GENERAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

[Enlarge/Download Table]

ACCUMULATED
OTHER
COMPREHENSIVE
COMMON SERIES A PAID-IN INCOME RETAINED
STOCKS STOCK CAPITAL (LOSS) EARNINGS TOTAL
------- -------- --------- ------------- -------- ---------
(IN THOUSANDS)

BALANCE AT NOVEMBER 1, 1997...... $70,755 $1,125 $ 744,932 $ (7,113) $ 35,839 $ 845,538
Net earnings..................... -- -- -- -- 141,616 141,616
Other comprehensive loss, net
of tax, including foreign
currency translation and
other....................... -- -- -- (8,294) -- (8,294)
---------
Comprehensive income............. 133,322
Cash dividends paid.............. -- -- -- -- (53,948) (53,948)
Conversion of Series A Stock..... 232 (211) (21) -- -- --
Other equity transactions, net... 42 -- 768 -- -- 810
------- ------ --------- -------- -------- ---------
BALANCE AT OCTOBER 31, 1998...... 71,029 914 745,679 (15,407) 123,507 925,722
Net earnings..................... -- -- -- -- 183,830 183,830
Other comprehensive income, net
of tax:
Net unrealized investment
gains..................... -- -- -- 16,750 -- 16,750
Foreign currency translation
and other................. -- -- -- 926 -- 926
---------
Comprehensive income............. 201,506
Spin-off of specialty retail
operations..................... -- -- (431,214) -- -- (431,214)
Cash dividends paid.............. -- -- -- -- (56,810) (56,810)
Conversion of Series A stock..... 58 (51) (7) -- -- --
Other equity transactions, net... 80 -- 2,579 -- -- 2,659
------- ------ --------- -------- -------- ---------
BALANCE AT OCTOBER 31, 1999...... 71,167 863 317,037 2,269 250,527 641,863
Net earnings..................... -- -- -- -- 79,814 79,814
Other comprehensive income
(loss), net of tax:
Net unrealized investment
gains..................... -- -- -- 39,142 -- 39,142
Foreign currency translation
and other................. -- -- -- (11,098) -- (11,098)
---------
Comprehensive income............. 107,858
Cash dividends paid.............. -- -- -- -- (60,071) (60,071)
Issuance of common stock......... 1,372 -- 48,578 -- -- 49,950
Conversion of Series A Stock..... 179 (136) (43) -- -- --
Other equity transactions, net... 507 -- 3,881 -- -- 4,388
------- ------ --------- -------- -------- ---------
BALANCE AT OCTOBER 31, 2000...... $73,225 $ 727 $ 369,453 $ 30,313 $270,270 $ 743,988
======= ====== ========= ======== ======== =========

See Notes to Consolidated Financial Statements.

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HARCOURT GENERAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

The consolidated financial statements include the accounts of Harcourt
General, Inc. (the Company or Harcourt General) and its majority-owned
subsidiaries. Harcourt General is a leading global multiple-media publisher and
service provider for the educational, assessment, training and professional
information markets. All significant intercompany accounts and transactions are
eliminated.

Certain reclassifications have been made to prior year amounts to conform
with the current presentation.

Cash and equivalents

Cash and equivalents consist of cash in banks and money market accounts.
Cash and equivalents are stated at cost plus accrued interest, which
approximates fair value. The Company's practice is to invest cash with financial
institutions that have acceptable credit ratings and to limit the amount of
credit exposure to any one financial institution.

Inventories

Inventories, consisting primarily of finished goods, are stated at the
lower of cost or market. Substantially all inventories are valued using the
last-in, first-out (LIFO) method.

Property and equipment

Property and equipment are stated at cost. Depreciation and amortization
are provided using straight-line or accelerated methods over the estimated
useful lives of the related assets or over the terms of the related leases, if
shorter. When property and equipment are retired or have been fully depreciated,
the cost and the related accumulated depreciation are eliminated from the
respective accounts. Gains or losses arising from the dispositions are reported
as income or expense. Maintenance and repair costs are charged to expense as
incurred, and renewals and improvements that extend the useful lives of assets
are capitalized.

Prepublication costs

Prepublication costs consist of expenditures relating to the creation of a
publication and the preparation of that publication for sale. These costs are
amortized primarily using the sum-of-the-years-digits method over the estimated
useful lives of the publications, ranging from one to five years.

Investment in The Neiman Marcus Group, Inc.

The investment in The Neiman Marcus Group, Inc. (the investment) consisted
of approximately 10 percent of the outstanding common equity of The Neiman
Marcus Group, Inc. as of October 31, 2000 and 1999 and is accounted for as an
available-for-sale security. This investment is marked to market on a quarterly
basis and is classified as long-term as the Company intends to hold it for at
least one year. At October 31, 2000 and October 31, 1999 the gross unrealized
gain on the investment was $84.9 million and $19.1 million, respectively.

Goodwill and other intangible assets

Amortization of goodwill and publishing rights is recorded using the
straight-line method over their estimated useful lives, ranging from 10 to 40
years. Other intangible assets consist of course libraries, customer leads and
contracts, and existing technology, and are amortized using accelerated methods
over their estimated useful lives, ranging from one to five years.

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HARCOURT GENERAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Long-lived assets

Upon occurrence of an event or a change in circumstances which indicates
that the carrying amount of a long-lived identifiable asset may not be
recoverable, the Company compares the carrying value of its long-lived
identifiable assets against projected undiscounted cash flows to determine any
impairment and to evaluate the reasonableness of the depreciation or
amortization periods. Should an impairment be identified, the long-lived assets
are then written down to their fair value.

Other long-term liabilities

Other long-term liabilities of the Company consist primarily of a liability
for pension, postretirement health care benefits and provisions for other
employee benefits.

Derivatives

The Company uses treasury lock agreements (a derivative) as a means of
managing interest-rate risk associated with anticipated debt transactions. The
differentials to be received or paid under these contracts designated as hedges
are deferred and amortized to interest expense over the remaining life of the
associated debt. Derivative financial instruments are not held for trading
purposes.

Income taxes

Income taxes are calculated in accordance with Statement of Financial
Accounting Standards (SFAS) 109, "Accounting for Income Taxes." SFAS 109
requires the asset and liability method of accounting for income taxes.

Revenue recognition

The Company recognizes revenues principally upon shipment of products.
Subscription revenues are generally collected in advance and are deferred and
recognized pro-rata upon fulfillment. Contract revenues are recognized as
services are provided. For contracts where the Company anticipates that losses
will be incurred, such losses are recognized immediately.

Certain publications are sold to customers with a right of return. Revenues
are recorded net of a provision for future returns. Returned goods included in
inventory are valued at estimated realizable value not exceeding cost. Accounts
receivable are reported net of allowances for book returns of $94.6 million in
2000 and $94.1 million in 1999 and for doubtful accounts of $39.6 million in
2000 and $39.8 million in 1999.

Comprehensive income

Comprehensive income differs from net earnings primarily due to foreign
currency translation adjustments and unrealized gains or losses on the Company's
available-for-sale securities, less reclassification for realized gains or
losses included in net earnings. For the years ended October 31, 2000, 1999, and
1998, reclassification adjustments totaled $4.8 million, $1.9 million, and $0,
respectively.

Advertising costs

Advertising costs are expensed in the period incurred. Advertising expenses
were $106.0 million, $98.5 million and $95.9 million in 2000, 1999 and 1998,
respectively.

Significant estimates

The Company estimates the appropriate carrying values of certain assets and
liabilities which are not readily apparent from other sources. Management bases
its estimates on historical experience and on various

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HARCOURT GENERAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

assumptions which are believed to be reasonable under the circumstances. The
primary estimates underlying the Company's consolidated financial statements
include allowances for returns, doubtful accounts, valuation of inventories and
prepublication costs, accruals for self-insurance, pension and postretirement
benefits, and the accrual for obligations under lease guarantees. Actual results
could differ from these estimates.

Recent accounting pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities". In June 2000, the FASB issued SFAS No. 138, which
amends certain provisions of SFAS 133 to clarify four areas causing difficulties
in implementation. The amendment included expanding the normal purchase and sale
exemption for supply contracts, permitting the offsetting of certain
intercompany foreign currency derivatives and thus reducing the number of third
party derivatives, permitting hedge accounting for foreign-currency denominated
assets and liabilities, and redefining interest rate risk to reduce sources of
ineffectiveness. The Company will adopt SFAS 133 and the corresponding
amendments under SFAS 138 as of November 1, 2000. SFAS 133, as amended by SFAS
138, is not expected to have a material impact on the Company's consolidated
results of operations, financial position or cash flows.

2. PENDING SALE OF THE COMPANY

On October 27, 2000, the Company announced that it had entered into an
agreement and plan of merger with U.S. affiliates of Reed Elsevier plc, a
London-based worldwide publisher ("Reed"), to sell the Company for $59.00 per
common share and $77.29 per share of Series A Cumulative Convertible Stock in
cash. The agreement provides for a cash tender offer, (on the condition that the
number of shares tendered represent at least a majority in voting power (on a
fully diluted basis) of the outstanding common stock), and following completion
of the tender offer, a second-step merger in which the remaining shares of the
Company will be exchanged for the same cash consideration. Reed has entered into
an agreement with The Thomson Corporation ("Thomson") pursuant to which it has
agreed to sell portions of the Company's business to Thomson immediately after
consummation of the merger. Completion of the transaction is subject to
clearance of the tender offer and the Thomson transaction under applicable
antitrust laws, as well as other customary closing conditions.

3. DISCONTINUED OPERATIONS

Theatre operations

In December 1993, the Company spun-off its theatre operations to a newly
established entity, GC Companies, Inc. (GCC), in a pro-rata distribution to its
shareholders. Harcourt General is a secondary obligor on a significant number of
theatre leases existing at the date of the spin-off. In connection with the
distribution, GCC and Harcourt General entered into various agreements which
governed their ongoing relationship. Under the Reimbursement and Security
Agreement, GCC granted to Harcourt General a security interest in the stock of
certain of its theatre subsidiaries in order to secure GCC's obligation to
indemnify Harcourt General from any losses which Harcourt General might incur
due to its secondary liability on theatre leases.

On October 11, 2000 GCC filed for bankruptcy protection. The Company
recorded a charge of $103.0 million, net of taxes, for anticipated lease
liabilities arising from the lease guarantees. The charge consisted of
anticipated future lease and lease related payments and settlements. Also
included in the charge were expenses associated with the liability of
approximately $3.2 million.

Because of the economic substance of the anticipated settlements and future
negotiations, the Company has discounted its liabilities relative to the leases
using a variety of discount factors. These factors include

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HARCOURT GENERAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

known settlement provisions, market discount rates, and in limited instances, a
risk-free discount rate. Had the Company not taken into account these discount
factors that mitigate its liabilities, its anticipated gross obligation, before
tax benefits, would have been approximately $345 million.

Specialty retail operations

The Company's specialty retail operations, which consisted of its 54
percent ownership of The Neiman Marcus Group, Inc. (NMG), were spun off on
October 22, 1999 in a tax-free distribution to the Company's shareholders. The
Company distributed 21,440,960 shares of its 26,429,502 shares of NMG common
stock. The Company retained 4,988,542 shares of NMG Class A Common Stock, which
are accounted for as available-for-sale securities. The Company has agreed to
vote the retained shares on all matters in proportion to the votes cast
affirmatively or negatively by all other holders of NMG Class A Common Stock.

Each common shareholder of the Company received .3013 of a share of Class B
Common Stock of NMG for every share of Harcourt General Common Stock and Class B
Stock held on October 12, 1999, which was the record date for the distribution.
The Company's consolidated financial statements have been restated to reflect
the specialty retail operations as a discontinued operation.

Prior to the spin-off, the financial statements of NMG were consolidated
with a lag of one fiscal quarter. Consequently, the 1999 results of NMG
presented as discontinued operations include the results of NMG for its fiscal
year ended July 31, 1999, which totaled $47.7 million, and the results of its
operations from August 1, 1999 through October 22, 1999, the distribution date,
which totaled $18.0 million.

Under an amended intercompany services agreement, the Company provides
certain management, accounting, financial, legal, tax and other corporate
services to NMG. Most of the officers of the Company serve in similar capacities
with NMG. Three such officers serve as directors of both companies. The fees for
these services are charged at the Company's cost and are subject to the approval
of a committee of directors of NMG who are not affiliated with the Company.
Charges to NMG were $6.3 million in 2000, $6.2 million in 1999, and $5.4 million
in 1998.

On November 20, 2000, the Company terminated this agreement effective May
14, 2001.

4. DESCRIPTION OF CONTINUING OPERATIONS AND SEGMENT INFORMATION

Operating segments are defined as components of an enterprise for which
separate financial information is available and regularly reviewed by the
Company's senior management. The accounting policies of the operating segments
are the same as those described in the summary of significant accounting
policies.

The Company has four reportable segments: Education Group, Higher Education
Group, Corporate and Professional Services Group and Worldwide Scientific,
Technical and Medical (STM) Group. The Education Group consists of the Company's
K-12 and supplemental and trade publishing operations. The Higher Education
Group includes college, distance learning and graduate test preparation
businesses. The Corporate and Professional Services Group is comprised of
testing and related services, career counseling and technology-based IT and
human resources training. The Worldwide STM Group includes the Company's
scientific, technical and medical publishing businesses and its international
publishing and distribution operations. Other includes unallocated corporate
expenses. Interest expense is not allocated to the segments. The Company's
senior management evaluates the performance of the Company's assets on a
consolidated basis. Therefore, separate financial information for the Company's
assets on a segment basis is not presented.

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HARCOURT GENERAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following tables set forth the information for the Company's reportable
segments for the years ended October 31:

[Enlarge/Download Table]

2000 1999 1998
---------- ---------- ----------
(IN THOUSANDS)

REVENUES:
Education Group............................................ $ 754,751 $ 581,465 $ 563,533
Higher Education Group..................................... 361,328 365,996 354,759
Corporate and Professional Services Group.................. 547,005 497,573 416,610
Worldwide STM Group........................................ 745,093 697,588 527,005
---------- ---------- ----------
Total...................................................... $2,408,177 $2,142,622 $1,861,907
========== ========== ==========
OPERATING EARNINGS:
Education Group............................................ $ 162,287 $ 105,401 92,255
Higher Education Group..................................... 50,246 43,985 23,633
Corporate and Professional Services Group.................. 41,024 34,046 15,896
Worldwide STM Group........................................ 140,378 117,537 100,875
Other...................................................... (26,273) _ (21,320) (18,109)
---------- ---------- ----------
Total...................................................... $ 367,662 $ 279,649 $ 214,550
========== ========== ==========
DEPRECIATION AND AMORTIZATION:
Education Group............................................ $ 96,565 $ 83,640 $ 81,827
Higher Education Group..................................... 36,722 40,903 51,161
Corporate and Professional Services Group.................. 36,371 54,498 54,715
Worldwide STM Group........................................ 80,973 74,002 53,588
Other...................................................... 2,028 2,448 1,830
---------- ---------- ----------
Total...................................................... $ 252,659 $ 255,491 $ 243,121
========== ========== ==========
CAPITAL EXPENDITURES:
Education Group............................................ $ 127,624 $ 110,065 $ 93,752
Higher Education Group..................................... 40,147 34,023 29,763
Corporate and Professional Services Group.................. 25,699 24,423 22,791
Worldwide STM Group........................................ 63,885 55,475 46,941
Other...................................................... 426 2,563 890
---------- ---------- ----------
Total...................................................... $ 257,781 $ 226,549 $ 194,137
========== ========== ==========

The following is a schedule of revenues by geographic location:

[Download Table]

2000 1999 1998
---------- ---------- ----------
(IN THOUSANDS)

Revenues:
North America.............................. $1,954,084 $1,698,263 $1,433,359
Rest of world.............................. 454,093 444,359 428,548
---------- ---------- ----------
Total............................ $2,408,177 $2,142,622 $1,861,907
========== ========== ==========

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HARCOURT GENERAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. ACQUISITIONS

MD Consult

In May 2000, the Company completed the acquisition of the remaining
one-third interest in MD Consult, an Internet clinical information source for
physicians, for a cash purchase price of approximately $10.0 million. The
Company is now the sole owner of MD Consult. The acquisition has been accounted
for by the purchase method of accounting. The excess of cost over estimated fair
value of net assets acquired of $10.0 million was allocated to goodwill, which
is amortized on a straight-line basis over 15 years.

Mosby

On October 9, 1998, the Company completed the acquisition of Mosby, Inc.
for approximately $415.0 million in cash. Mosby is a publisher of books,
periodicals and electronic products and services in professional health
sciences, including nursing, allied health and medicine, and is included in the
Worldwide STM Group. The purchase price was funded with borrowings under the
Company's revolving credit facility.

The Mosby acquisition has been accounted for under the purchase method of
accounting and, accordingly, the results of operations of Mosby for the period
from October 9, 1998 are included in the accompanying consolidated financial
statements. The $388.6 million excess of cost over the estimated fair value of
net assets acquired was allocated to goodwill which is amortized over 30 years.
Assets acquired and liabilities assumed have been recorded at their estimated
fair values and useful lives. In the fourth quarter of fiscal 1999, the Company
completed its final purchase price allocation of Mosby, resulting in a net
reduction of goodwill and other current liabilities of $26.0 million from the
amounts initially recorded.

Gartner Learning

On August 31, 1998, the Company completed the acquisition of Gartner
Learning, the technology-based IT training operation of Gartner Group. Gartner
Learning was merged with the operations of NETg, a subsidiary of the Company,
which provides self-paced multimedia training courseware for IT professionals.
The acquisition was accounted for under the purchase method of accounting and,
accordingly, the results of operations of Gartner Learning for the period from
August 31, 1998 are included in the accompanying consolidated financial
statements.

The purchase price for Gartner Learning consisted of $5.0 million in cash
and eight percent of the newly combined company, known as NETg. The $61.9
million excess of cost over estimated fair value of net assets acquired was
allocated to goodwill, which is amortized on a straight-line basis over 25
years. In July 2000, the Company completed the acquisition of the remaining
eight percent minority interest in NETg from the Gartner Group for a cash
purchase price of $36.0 million. As a result, the Company is the sole owner of
NETg.

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HARCOURT GENERAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Acquisition liabilities

In connection with the above acquisitions as well as the Company's 1997
acquisition of National Education Corporation (NEC), the Company incurred
certain direct, integration and exit costs. Revisions to the initial estimates,
occurring within the one-year allocation period relating specifically to
management plans, have changed the purchase price and are reflected in the table
below. There have been no material subsequent changes in estimates following
this period. The roll-forward of the acquisition reserves is as follows:

[Enlarge/Download Table]

UNFULFILLED
CONTRACTUAL
FACILITIES SEVERANCE OBLIGATIONS OTHER TOTAL
---------- --------- ----------- ------ ------
(IN MILLIONS)

Balance at November 1, 1997....................... $ 64.7 $ 13.6 $ -- $ 38.4 $116.7
Payments.......................................... (31.4) (6.4) -- (0.8) (38.6)
Purchase price adjustments for NEC/initial
accruals for Gartner and Mosby.................. 19.7 21.6 9.2 17.1 67.6
------ ------ ----- ------ ------
Balance at October 31, 1998....................... 53.0 28.8 9.2 54.7 145.7
Payments.......................................... (19.3) (20.6) (2.9) (24.6) (67.4)
Purchase price adjustments........................ (8.1) (6.4) (3.2) (11.7) (29.4)
------ ------ ----- ------ ------
Balance at October 31, 1999....................... 25.6 1.8 3.1 18.4 48.9
Payments.......................................... (8.6) (1.4) (0.0) (12.5) (22.5)
------ ------ ----- ------ ------
Balance at October 31, 2000....................... $ 17.0 $ 0.4 $ 3.1 $ 5.9 $ 26.4
====== ====== ===== ====== ======

As of October 31, 2000, the majority of the remaining balance in the
facilities reserves related to the NEC and Mosby acquisitions.

Other acquisitions

In the periods presented, the Company has acquired several small publishing
and educational services related companies. The results of operations from these
acquired entities are reflected in the Company's statements of operations from
the date of acquisition. These acquisitions did not materially impact
consolidated results, and therefore no pro forma information is provided.

6. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and other intangible assets consisted of the following:

[Download Table]

OCTOBER 31,
------------------------
2000 1999
---------- ----------
(IN THOUSANDS)

Goodwill.................................................. $1,622,858 $1,616,900
Accumulated amortization.................................. (264,220) (207,415)
---------- ----------
Goodwill, net........................................ $1,358,638 $1,409,485
========== ==========
Publishing rights......................................... $ 53,765 $ 53,765
Acquired intangible assets................................ 96,400 96,400
---------- ----------
150,165 150,165
Accumulated amortization.................................. _(107,682) (97,627)
---------- ----------
Other intangibles, net............................... $ 42,483 $ 52,538
========== ==========

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HARCOURT GENERAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

As of October 31, 2000, goodwill consisted of approximately $739.9 million
amortized over 40 years, $388.6 million over 30 years and $494.3 million over
periods of 25 years or less. As of October 31, 1999, goodwill consisted of
approximately $739.9 million amortized over 40 years, $388.6 million over 30
years and $488.4 million over periods of 25 years or less. Amortization expense
was $67.2 million, $76.0 million and $76.8 million in 2000, 1999 and 1998,
respectively.

7. OTHER CURRENT LIABILITIES

Other current liabilities consisted of the following:

[Download Table]

OCTOBER 31,
--------------------
2000 1999
-------- --------
(IN THOUSANDS)

Accrued compensation and benefits........................... $103,223 $ 82,676
Self-insurance reserves..................................... 29,857 27,119
Unearned subscription income................................ 93,214 87,080
Accrued real estate and related charges..................... 28,477 54,426
Accrued interest............................................ 26,854 26,561
Taxes payable............................................... 50,637 31,697
Other....................................................... 138,064 173,609
-------- --------
Total............................................. $470,326 $483,168
======== ========

8. NOTES AND DEBENTURES

Notes and debentures of Harcourt General, all of which are unsecured, were
as follows at October 31:

[Enlarge/Download Table]

INTEREST
RATE MATURITY 2000 1999
-------- --------- ---------- ----------
(IN THOUSANDS)

Convertible subordinated debentures............... 6.5% May 2011 $ 44,757 $ 45,795
Revolving credit facility......................... Variable Jul. 2002 390,000 370,000
Senior debt....................................... 8.25% Jun. 2002 149,695 149,626
Senior debt....................................... 6.7% Jul. 2007 149,717 149,676
Senior debt....................................... 8.88% Jun. 2022 148,055 148,037
Senior debt....................................... 7.2% Jul. 2027 199,611 199,597
Senior debt....................................... 7.3% Jul. 2097 149,449 149,443
Subordinated notes................................ 9.5% Mar. 2000 -- 125,000
Term bank loan.................................... Variable Oct. 2004 19,169 19,630
---------- ----------
Total notes and debentures.............................................. $1,250,453 $1,356,804
========== ==========

In connection with the acquisition of NEC, the Company unconditionally
assumed all of the obligations of NEC under its 6 1/2% Convertible Subordinated
Debentures due 2011 and the related Indenture dated May 15, 1986, as amended.
The NEC Debentures are subject to a mandatory annual redemption of $2.9 million
in principal and, as a result of the acquisition of NEC by the Company, are
convertible at the option of the holder into $21.00 for every $25.00 in
principal of NEC Debentures.

The Company has a revolving credit facility with 18 banks, pursuant to
which the Company may borrow up to $750 million. The facility, which expires in
July 2002, may be terminated by the Company at any time on three business days'
notice. The rate of interest payable (6.8% at October 31, 2000) is determined
according to the senior debt rating of the Company and one of four pricing
options selected by the Company.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

At October 31, 2000, $390 million in borrowings were outstanding under the
facility. The revolving facility contains covenants which require the Company to
maintain certain leverage and interest coverage ratios.

In October 1999, a Canadian subsidiary of the Company entered into a
Canadian dollar denominated term bank loan that bears interest according to one
of two pricing options selected by the Company (7.0% at October 31, 2000). The
loan is guaranteed by the Company and may be prepaid at any time upon three
business days' notice without penalty or premium.

In anticipation of the Company's August 1997 debt offering, the Company
entered into several forward interest rate lock agreements which established
weighted average effective interest rates of 6.83% for the 10-year notes, 7.29%
for the 30-year debentures and 7.40% for the 100-year debentures. In August
1997, the Company paid $20.5 million to settle such agreements, which is being
amortized over the terms of the respective debt.

The aggregate maturities of notes and debentures are as follows: fiscal
2001 -- $2.9 million; fiscal 2002 -- $542.6 million; fiscal 2003 -- $2.9
million; fiscal 2004 -- $22.1 million; fiscal 2005- $2.9 million; all years
thereafter -- $677.1 million.

9. SHAREHOLDERS' EQUITY

Series A Cumulative Convertible Stock

Each share of Series A Stock is convertible into 1.31 shares of Common
Stock and is entitled to a quarterly dividend equal to the quarterly dividend on
each share of Common Stock multiplied by 1.31, plus $.0075. Each share of Series
A Stock is non-voting and entitled to a liquidation preference of $5.00 plus any
accrued but unpaid dividends. Liquidation proceeds remaining after the
satisfaction of such preference and the payment of $4.55 per share of Common
Stock would be distributed ratably to the holders of Common Stock and Series A
Stock. There were 10 million authorized shares of Series A Stock at October 31,
2000.

Class B Stock and Common Stock

The Class B Stock is not transferable except to family members and related
entities but is convertible at any time on a share-for-share basis into Common
Stock. The holders of Class B Stock are entitled to cash dividends which are 10%
lower per share than the cash dividends paid on each share of Common Stock. The
Class B Stock and the Common Stock are each entitled to vote separately as a
class on charter amendments, mergers, consolidations and certain extraordinary
transactions which are required to be approved by shareholders under Delaware
law. Under certain circumstances, the holders of Class B Stock have the right to
cast 10 votes per share for the election of directors. There were 80 million and
150 million shares of Class B Stock and Common Stock authorized for issuance at
October 31, 2000, respectively.

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HARCOURT GENERAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Class C Stock

Class C Stock is entitled to one-tenth (1/10) of one vote per share on all
matters and to cash dividends equal to any cash dividends payable on the Common
Stock. There were 100 million authorized shares of Class C Stock at October 31,
2000, none of which has been issued.

Common Stock Incentive Plans

The Company has established common stock incentive plans allowing for the
granting of stock options, restricted stock and other stock-based awards to its
employees. The Company applies Accounting Principles Board Opinion No. 25 and
related interpretations in accounting for its plans. The Company has adopted the
disclosure-only provision of SFAS 123, "Accounting for Stock-Based
Compensation."

Had compensation cost for the Company's common stock incentive plans been
determined based on the fair value at the grant dates for awards under the plans
consistent with the method of SFAS 123, the Company's earnings from continuing
operations and earnings per share from continuing operations for the years ended
October 31, 2000, 1999 and 1998 would have been as follows:

[Download Table]

2000 1999 1998
-------- -------- -------
(IN THOUSANDS, EXCEPT PER
SHARE AMOUNTS)

Earnings from continuing operations:
As reported.................................... $182,814 $120,348 $87,601
Pro forma...................................... $178,203 $116,380 $86,655
Basic earnings per share from continuing
operations:
As reported.................................... $ 2.51 $ 1.68 $ 1.22
Pro forma...................................... $ 2.45 $ 1.63 $ 1.21
Diluted earnings per share from continuing
operations:
As reported.................................... $ 2.50 $ 1.67 $ 1.21
Pro forma...................................... $ 2.44 $ 1.61 $ 1.20

The effects on pro forma net earnings and earnings per share of expensing
the estimated fair value of stock options are not necessarily representative of
the effects on reported net earnings for future years due to such factors as the
vesting period of the stock options and the potential for issuance of additional
stock options in future years. In addition, the disclosure requirements of SFAS
123 are applicable only to options granted subsequent to October 30, 1995.

Options outstanding at October 31, 2000 were granted at prices (not less
than 100% of the fair market value on the date of the grant) varying from $13.35
to $46.24. In conjunction with the spin-off of the specialty retail operations
on October 22, 1999, the number of shares and the exercise price of each option
outstanding were modified so that the aggregate fair value of the options before
the spin-off was preserved as of the date of the spin-off. Accordingly, no
charge was recorded in the consolidated financial statements relative to this
modification. Options generally vest ratably over five years and expire after
ten years. There were approximately 200 employees with options outstanding at
October 31, 2000. For all outstanding options at October 31, 2000, the weighted
average exercise price was $36.45 and the weighted average remaining contractual
life was approximately 8.3 years. At October 31, 2000, there were 1.7 million
shares of Common Stock available for issuance under the plan.

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HARCOURT GENERAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The fair value of each option grant is estimated on the date of the grant
using the Black-Scholes option pricing model with the following assumptions used
for grants in 2000, 1999 and 1998, respectively:

[Download Table]

2000 1999 1998
----- ----- -----

Expected life (years)................................. 7.... 7 7
Expected dividend yield............................... 1.5% 2.2% 1.7%
Expected volatility................................... 29.19% 26.74% 24.24%
Risk-free interest rate............................... 6.0% 6.0% 5.5%

A summary of the status of the Company's stock options as of October 31,
2000, 1999 and 1998 and changes during the years ended on those dates is as
follows:

[Enlarge/Download Table]

2000 1999 1998
--------------------- --------------------- ---------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
--------- --------- --------- --------- --------- ---------

Options outstanding at beginning of
year............................. 1,198,393 $38.61 722,552 $41.66 492,494 $ 34.08
Granted............................ 2,302,150 35.04 383,500 50.57 264,900 54.25
SAR surrenders..................... -- -- -- -- (13,205) 29.24
Exercised.......................... (93,687) 24.04 (46,777) 27.43 (14,457) 23.50
Canceled........................... (117,503) 40.04 (37,840) 51.17 (7,180) 45.34
Adjustment for spin-off of
specialty retail operations...... -- -- 176,958 N/A -- --
--------- ------ --------- ------ ------- ---------
Options outstanding at end of
year............................. 3,289,353 $36.45 1,198,393 $38.61 722,552 $ 41.66
========= ====== ========= ====== ======= =========
Options exercisable at end of
year............................. 496,001 $35.29 416,283 $29.98 287,922 $ 29.58
========= ====== ========= ====== ======= =========

The weighted-average fair value of options granted in 2000, 1999 and 1998
was $11.96, $15.52 and $17.09, respectively.

The following table summarizes information about the Company's stock
options as of October 31, 2000:

[Enlarge/Download Table]

OPTIONS OUTSTANDING OPTIONS EXERCISABLE
----------------------------------------------------------------------------- ------------------------------
SHARES
RANGE OF SHARES WEIGHTED-AVERAGE WEIGHTED-AVERAGE OUTSTANDING WEIGHTED-AVERAGE
EXERCISE OUTSTANDING REMAINING CONTRACTUAL EXERCISE AT EXERCISE
PRICES AT 10/31/00 LIFE PRICE 10/31/00 PRICE
-------------------- ----------- --------------------- ---------------- ----------- ----------------

$13.35 -- $19.94 51,025 1.0 $15.64 51,025 $15.64
$24.48 -- $28.34 140,765 3.4 $27.43 140,765 $27.43
$34.31 -- $37.81 2,342,450 9.0 $35.06 60,946 $35.69
$39.58 -- $41.02 135,457 6.6 $40.90 68,767 $40.98
$43.26 -- $46.24 619,656 7.7 $44.49 174,498 $45.00
-------------------- ----------- --------------------- ---------------- ----------- ----------------
$13.35 -- $46.24 3,289,353 8.3 $36.45 496,001 $35.29
==================== =========== ===================== ================ =========== ================

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HARCOURT GENERAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. INCOME TAXES

A reconciliation of the statutory federal income tax rate to the Company's
effective tax rate is as follows:

[Enlarge/Download Table]

YEARS ENDED OCTOBER 31,
---------------------------------------------------
2000 1999 1998
--------------- -------------- --------------
AMOUNT % AMOUNT % AMOUNT %
-------- --- ------- --- ------- ---
(IN THOUSANDS)

Statutory tax expense............ $101,072 35 $64,831 35 $46,547 35
State income taxes, net of
federal tax effect............. 1,300 1 2,031 1 1,381 1
Dividends received exclusion..... (770) (1) (754) (1) -- --
Other permanent items............ 5,245 2 2,427 2 5,034 4
Change in valuation allowance.... -- -- -- -- (7,010) (5)
-------- -- ------- -- ------- --
Income tax expense from
continuing operations.......... $106,847 37 $68,535 37 $45,952 35
======== == ======= == ======= ==

Income tax expense was as follows:

[Download Table]

YEARS ENDED OCTOBER 31,
------------------------------
2000 1999 1998
-------- ------- -------
(IN THOUSANDS)

Current
Federal.......................................... $ 82,238 $19,646 $ 2,308
State............................................ 1,510 3,125 (4,998)
Foreign.......................................... 11,840 6,261 8,906
Deferred
Federal.......................................... 10,769 38,923 37,237
State............................................ 490 580 2,499
-------- ------- -------
Income tax expense................................. $106,847 $68,535 $45,952
======== ======= =======

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HARCOURT GENERAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Significant components of the net deferred tax assets stated on a gross
basis at October 31 were as follows:

[Download Table]

2000 1999
-------- --------
(IN THOUSANDS)

GROSS DEFERRED TAX ASSETS:
Loss and credit carry forwards............................. $ 27,985 $ 42,599
Accrued liabilities and reserves........................... 95,018 30,791
Employee benefits.......................................... 13,600 13,970
Postretirement health care benefits........................ 25,508 26,454
Inventories................................................ 45,120 46,805
Allowance for doubtful accounts............................ 10,132 11,773
-------- --------
Total gross deferred tax assets............................ 217,363 172,392
Valuation allowance........................................ (6,575) (5,824)
-------- --------
Net deferred tax assets.................................... $210,788 $166,568
-------- --------
GROSS DEFERRED TAX LIABILITIES:
Property, equipment, prepublication costs and
intangibles.............................................. $127,058 $131,511
Unrealized gain on investment.............................. 31,415 7,065
Other, net................................................. 1,552 3,222
-------- --------
Total gross deferred tax liabilities....................... 160,025 141,798
-------- --------
Net deferred tax assets.................................... $ 50,763 $ 24,770
======== ========

The Company has recorded a valuation allowance for certain temporary
differences for which it is likely, at this time, that the Company will not
receive future tax benefit. During fiscal 1999, the Company reduced its
valuation allowance attributable to acquired net operating losses and tax credit
carry forwards. The change resulted in an increase in the deferred tax asset and
a reduction of goodwill of approximately $54.6 million. Realization of the
remaining deferred tax assets is dependent on generating sufficient future
taxable income. Although realization is not assured, management believes it is
more likely than not that the remaining deferred tax assets will be realized.

At October 31, 2000, the Company had federal and foreign net operating loss
carry forwards of approximately $72.4 million expiring at various dates through
2011. In addition, the Company had available $1.3 million of tax credit carry
forwards, with no expiration date, which may be utilized to offset future
regular tax liabilities.

11. INVESTMENT AND OTHER INCOME

Investment and other income consisted of the following:

[Download Table]

YEARS ENDED OCTOBER 31,
----------------------------
2000 1999 1998
------- ------- ------
(IN THOUSANDS)

Interest income...................................... $ 3,612 $ 2,957 $4,880
Other income......................................... 23,174 9,834 --
------- ------- ------
Total investment and other income.................... $26,786 $12,791 $4,880
======= ======= ======

Other income in 2000 includes a gain of $15.5 million from the sale of the
Company's professional publishing unit and a gain of $ 7.6 million from the sale
of securities. Other income in 1999 includes a gain of

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HARCOURT GENERAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

$6.4 million from the sale of the Conviser CPA Review Course and a gain of $3.0
million from the sale of securities.

12. COMMITMENTS AND CONTINGENCIES

Leases

The Company has long-term operating leases primarily for offices,
distribution centers, other facilities and equipment. Leases are generally for
periods of up to 30 years, with renewal options at fixed rentals. Rent expense
under operating leases for the years ended October 31 was $83.2 million in 2000,
$78.5 million in 1999 and $60.4 million in 1998.

Assuming renewal options are not exercised, the future minimum rental
payments are as follows: fiscal 2001 -- $63.8 million; fiscal 2002 -- $56.3
million; fiscal 2003 -- $45.7 million; fiscal 2004 -- $36.1 million; fiscal
2005 -- $30.4 million; all years thereafter -- $162.4 million.

Litigation

The Company is involved in various suits and claims in the ordinary course
of business. Management does not believe that the disposition of such suits and
claims will have a material adverse effect on its financial position or
operations.

13. PENSION PLANS AND POSTRETIREMENT HEALTH CARE BENEFITS

The Company has a noncontributory defined benefit pension plan covering
substantially all full-time employees. The Company also sponsors an unfunded
supplemental executive retirement plan which provides certain employees
additional pension benefits. Benefits under the plans are based on the
employees' years of service and compensation over defined periods of employment.
When funding is required, the Company's policy is to contribute amounts that are
deductible for federal income tax purposes. Pension plan assets consist
primarily of equity and fixed income securities.

Retirees and active employees hired prior to March 1, 1989 are eligible for
certain limited postretirement health care benefits if they have met certain
service and minimum age requirements. The cost of these benefits is accrued
during the years in which an employee provides services.

Components of net pension expense were as follows:

[Download Table]

YEARS ENDED OCTOBER 31
------------------------------
2000 1999 1998
-------- ------- -------
(IN THOUSANDS)

Service cost....................................... $ 12,531 $12,515 $ 8,053
Interest cost on projected benefit obligation...... 9,593 7,589 5,930
Expected return on assets.......................... (11,456) (9,745) (8,171)
Net amortization and deferral...................... (1,381) (540) (584)
-------- ------- -------
Net pension expense................................ $ 9,287 $ 9,819 $ 5,228
======== ======= =======

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HARCOURT GENERAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The periodic postretirement health care benefit cost was as follows:

[Download Table]

YEARS ENDED OCTOBER 31
-----------------------------
2000 1999 1998
------- ------- -------
(IN THOUSANDS)

Service cost........................................ $ 244 $ 425 $ 405
Interest cost on accumulated benefit obligation..... 2,293 2,293 2,199
Net amortization and deferral....................... (2,636) (1,399) (1,694)
------- ------- -------
Net periodic cost (benefit)......................... $ ( 99) $ 1,319 $ 910
======= ======= =======

The changes in the benefit obligations and the reconciliations of the
funded status of the Company's plans to the consolidated balance sheets were as
follows:

[Enlarge/Download Table]

PENSION BENEFITS POSTRETIREMENT BENEFITS
-------------------- ------------------------
YEAR ENDED OCTOBER 31
------------------------------------------------
2000 1999 2000 1999
-------- -------- ---------- ----------
(IN THOUSANDS)

Change in benefit obligations:
Benefit obligations at beginning of year...... $114,178 $ 93,562 $30,074 $33,490
Service cost.................................. 12,531 12,515 244 425
Interest...................................... 9,593 7,589 2,293 2,293
Acquisitions.................................. -- 12,719 -- --
Benefits paid................................. (5,142) (3,775) (2,459) (2,593)
Actuarial loss (gain)......................... (864) (8,432) 824 (3,541)
-------- -------- ------- -------
Benefit obligation at end of year............. $130,296 $114,178 $30,976 $30,074
======== ======== ======= =======

[Download Table]

PENSION PLANS
--------------------
2000 1999
-------- --------
(IN THOUSANDS)

Change in plan assets:
Fair value of plan assets at beginning of
year........................................ $129,030 $111,264
Actual return on assets........................ 15,745 11,697
Company contributions.......................... 540 86
Acquisitions................................... -- 9,758
Benefits paid.................................. (5,142) (3,775)
-------- --------
Fair value of plan assets at end of year....... $140,173 $129,030
======== ========

[Enlarge/Download Table]

PENSION PLANS POSTRETIREMENT PLANS
---------------------- --------------------
2000 1999 2000 1999
--------- --------- -------- --------
(IN THOUSANDS)

Funded status:
Fair value of plan assets greater (less)
than benefit obligation................ $ 9,878 $ 14,852 $(30,976) $(30,074)
Unrecognized net actuarial gain........... (32,090) (27,795) (37,828) (41,274)
Unrecognized prior service cost........... 480 583 (136) (150)
Unrecognized net obligation at
transition............................. -- (627) -- --
--------- --------- -------- --------
Liability recognized in the consolidated
balance sheets......................... $ (21,732) $ (12,987) $(68,940) $(71,498)
========= ========= ======== ========

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HARCOURT GENERAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

[Download Table]

PENSION BENEFITS
--------------------
2000 1999 1998
---- ---- ----

Weighted average assumptions:
Discount rate...................................... 7.75% 7.5% 7.0%
Expected long-term rate of return on plan assets... 9.0% 9.0% 9.0%
Rate of future compensation increases.............. 6.0% 6.0% 6.0%

The weighted average assumptions for postretirement health care benefits
included a discount rate of 7.75 percent in 2000, 7.5 percent in 1999 and 7.0
percent in 1998.

For measurement purposes, a 6.0 percent annual rate of increase in the per
capita cost of covered care benefits was assumed for fiscal 2001, and a 5.0
percent annual rate was assumed for fiscal 2002 and beyond.

If the health care trend rate were increased one percentage point,
postretirement benefit costs for the year ended October 31, 2000 would have been
$0.2 million higher, and the accumulated postretirement benefit obligation as of
October 31, 2000 would have been $2.6 million higher. If the health care trend
rate were decreased one percentage point, postretirement benefit costs for the
year ended October 31, 2000 would have been $0.2 million lower, and the
accumulated postretirement benefit obligation as of October 31, 2000 would have
been $2.2 million lower.

The Company has a qualified defined contribution 401(k) plan which covers
substantially all employees. Employees make contributions to the plan, and the
Company matches 100% of an employee's contribution for the first 2% of an
employee's compensation and matches 25% of an employee's contribution for the
next 4% of the employee's compensation. Company contributions for the years
ended October 31, 2000, 1999 and 1998 were $6.9 million, $7.0 million, and $5.9
million, respectively. The Company's employee stock ownership plan is
non-contributory.

14. FINANCIAL INSTRUMENTS

The estimated fair values of the Company's financial instruments are as
reported and disclosed in the consolidated financial statements, and as
discussed below.

Debt

The fair values of the Company's fixed-rate senior debt, subordinated notes
and convertible subordinated debentures were $804.0 million and $927.7 million
on October 31, 2000 and 1999, respectively, and were based upon quoted prices
and comparable publicly-traded issues. The corresponding book values of the
Company's fixed-rate senior debt, subordinated notes and convertible
subordinated debentures were $841.3 million and $967.2 million on October 31,
2000 and 1999, respectively.

F-22

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HARCOURT GENERAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

15. EARNINGS PER SHARE

Pursuant to the provisions of SFAS 128, "Earnings per Share," the earnings
from continuing operations and the number of weighted average shares used in
computing basic and diluted earnings per share (EPS) are as follows:

[Enlarge/Download Table]

YEARS ENDED OCTOBER 31
-------------------------------
2000 1999 1998
-------- -------- -------
(IN THOUSANDS)

Earnings from continuing operations....................... $182,814 $120,348 $87,601
Less: dividends on Series A Cumulative Convertible
Stock................................................... (900) (816) (881)
Less: effect of equity swap agreement..................... (1,594) -- --
-------- -------- -------

Earnings from continuing operations for computation of
basic EPS............................................... 180,320 119,532 86,720

Add: dividends on assumed conversion of Series A
Cumulative Convertible Stock and other.................. 900 816 881

Add: effect of equity swap agreement...................... 1,594 -- --
-------- -------- -------

Earnings from continuing operations for computation of
diluted EPS............................................. $182,814 $120,348 $87,601
======== ======== =======

Shares for computation of basic EPS from continuing
operations.............................................. 71,747 71,103 70,837

Add: assumed conversion of Series A Cumulative Convertible
Stock................................................... 1,064 987 1,182

Add: effect of dilutive stock options and nonvested stock
under common stock incentive plans...................... 519 78 122

Less: effect of equity swap agreement..................... (280) -- --
-------- -------- -------

Shares for computation of diluted EPS from continuing
operations.............................................. 73,050 72,168 72,141
======== ======== =======

For the years ended October 31, 2000, 1999 and 1998, options to purchase
256,123, 831,329 and 262,800 shares of common stock, respectively, were not
included in the computation of diluted EPS because the exercise price of those
options was greater than the average market price of those shares.

16. COMPARATIVE QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

[Enlarge/Download Table]

2000
---------------------------------------------------------
QUARTER 1 QUARTER 2 QUARTER 3 QUARTER 4 FULL YEAR
--------- --------- --------- --------- ---------
(IN MILLIONS EXCEPT FOR PER SHARE DATA)

Revenues..................................... $ 402.9 $ 410.3 $ 871.2 $ 723.8 $2,408.2
======== ======== ======== ======== ========

Gross profit................................. $ 248.0 $ 253.9 $ 621.0 $ 507.4 $1,630.3
======== ======== ======== ======== ========

Earnings (loss) from continuing operations... $ (33.4) $ (40.2) $ 173.5 $ 82.9 $ 182.8

Loss from discontinued operations............ -- -- -- (103.0) (103.0)
-------- -------- -------- -------- --------

Net earnings (loss).......................... $ (33.4) $ (40.2) $ 173.5 $ (20.1) $ 79.8
======== ======== ======== ======== ========

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HARCOURT GENERAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

[Enlarge/Download Table]

Basic amounts per share:
Continuing operations...................... $ (0.47) $ (0.57) $ 2.37 $ 1.13 $ 2.51
Discontinued operations.................... -- -- -- (1.42) (1.43)
-------- -------- -------- -------- --------
Basic net earnings........................... $ (0.47) $ (0.57) $ 2.37 $ (0.29) $ 1.08
======== ======== ======== ======== ========

Diluted amounts per share:
Continuing operations...................... $ (0.47) $ (0.57) $ 2.35 $ 1.12 $ 2.50
Discontinued operations.................... -- -- -- (1.39) (1.41)
-------- -------- -------- -------- --------

Diluted net earnings......................... $ (0.47) $ (0.57) $ 2.35 $ (0.27) $ 1.09
======== ======== ======== ======== ========

Dividends per share:
Common Stock............................... $ 0.21 $ 0.21 $ 0.21 $ 0.21 $ 0.84
======== ======== ======== ======== ========
Class B Stock.............................. $ 0.189 $ 0.189 $ 0.189 $ 0.189 $ 0.756
======== ======== ======== ======== ========
Series A Stock............................. $ 0.2826 $ 0.2826 $ 0.2826 $ 0.2826 $ 1.1304
======== ======== ======== ======== ========

Weighted average number of common and common
equivalent shares outstanding:
Basic...................................... 71,186 71,501 72,653 72,708 71,747
======== ======== ======== ======== ========
Diluted.................................... 71,186 71,501 73,786 74,261 73,050
======== ======== ======== ======== ========

[Enlarge/Download Table]

1999
---------------------------------------------------------
QUARTER 1 QUARTER 2 QUARTER 3 QUARTER 4 FULL YEAR
--------- --------- --------- --------- ---------
(IN MILLIONS EXCEPT FOR PER SHARE DATA)

Revenues........................................ $ 387.6 $ 378.4 $ 693.0 $ 683.6 $2,142.6
======= ======= ======= ======= ========
Gross profit.................................... $ 244.0 $ 235.7 $ 505.4 $ 460.2 $1,445.3
======= ======= ======= ======= ========
Earnings (loss) from continuing operations...... $ (32.3) $ (39.4) $ 122.2 $ 69.8 $ 120.3
Earnings from discontinued operations........... 12.8 15.8 18.3 16.6 63.5
------- ------- ------- ------- --------
Net earnings (loss)............................. $ (19.5) $ (23.6) $ 140.5 $ 86.4 $ 183.8
======= ======= ======= ======= ========
Basic amounts per share:
Continuing operations......................... $ (0.46) $ (0.55) $ 1.71 $ 0.98 $ 1.68
Discontinued operations....................... 0.18 0.22 0.26 0.23 0.89
------- ------- ------- ------- --------
Basic net earnings.............................. $ (0.28) $ (0.33) $ 1.97 $ 1.21 $ 2.57
======= ======= ======= ======= ========
Diluted amounts per share:
Continuing operations......................... $ (0.46) $ (0.55) $ 1.70 $ 0.97 $ 1.67
Discontinued operations....................... 0.18 0.22 0.25 0.23 0.88
------- ------- ------- ------- --------
Diluted net earnings............................ $ (0.28) $ (0.33) $ 1.95 $ 1.20 $ 2.55
======= ======= ======= ======= ========

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HARCOURT GENERAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

[Enlarge/Download Table]

Dividends per share:
Common Stock.................................. $ .20 $ .20 $ .20 $ .21 $ .81
======= ======= ======= ======= ========
Class B Stock................................. $ .18 $ .18 $ .18 $ .189 $ .729
======= ======= ======= ======= ========
Series A Stock................................ $ .2275 $ .2275 $ .2275 $ .2385 $ .921
======= ======= ======= ======= ========
Weighted average number of Common and common
equivalent shares outstanding:
Basic......................................... 71,060 71,115 71,133 71,159 71,103
======= ======= ======= ======= ========
Diluted....................................... 71,060 71,115 72,185 72,198 72,168
======= ======= ======= ======= ========

F-25

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INDEPENDENT AUDITORS' REPORT

Board of Directors and Shareholders
Harcourt General, Inc.
Chestnut Hill, Massachusetts

We have audited the consolidated financial statements of Harcourt General,
Inc. and its subsidiaries (the "Company") as of October 31, 2000 and 1999, and
for each of the three years in the period ended October 31, 2000, and have
issued our report thereon dated December 12, 2000. Such consolidated financial
statements and report are included in this Annual Report on Form 10-K. Our
audits also included the consolidated financial statement schedule of the
Company listed in Item 14(a)(2). The consolidated financial statement schedule
is the responsibility of the Company's management. Our responsibility is to
express an opinion based on our audits. In our opinion, such consolidated
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.

DELOITTE & TOUCHE LLP

Boston, Massachusetts
December 12, 2000

S-1

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SCHEDULE II

HARCOURT GENERAL, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
THREE YEARS ENDED OCTOBER 31, 2000
(IN THOUSANDS)

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COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
ADDITIONS
--------------------------
CHARGED
BALANCE AT CHARGED TO TO OTHER
BEGINNING COSTS AND ACCOUNTS- DEDUCTIONS- BALANCE AT
DESCRIPTION OF PERIOD EXPENSES DESCRIBE DESCRIBE END OF PERIOD
---------------------------------------------------------------------------------------------------------------

YEAR ENDED OCTOBER 31, 2000
Allowance for doubtful accounts
(deducted from accounts
receivable).......................... $39,822 12,357 449 13,025(C) $39,603
Allowance from book returns(A)
(deducted from accounts
receivable).......................... $94,120 155,335 14,398 169,216(D) $94,637
YEAR ENDED OCTOBER 31, 1999
Allowance for doubtful accounts
(deducted from accounts
receivable).......................... $40,253 8,564 (1,389) 7,606(C) $39,822
Allowance for book returns (A)
(deducted from accounts
receivable).......................... $71,200 171,740 (4,821) 143,999(D) $94,120
YEAR ENDED OCTOBER 31, 1998
Allowance for doubtful accounts
(deducted from accounts
receivable).......................... $30,318 5,924 13,113(B) 9,102(C) $40,253
Allowance for book returns (A)
(deducted from accounts
receivable).......................... $65,911 84,779 27,930(B) 107,420(D) $71,200

---------------

(A) Reflects gross allowance netted against receivable. Reserves for returns
to inventory and recovery of royalties payable are netted directly against
those balances and are not material.

(B) Reflects additions to the allowance from acquisitions during the year.

(D) Books actually returned during the year.

S-2

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EXHIBIT INDEX

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3.1 Restated Certificate of Incorporation of the Company,
incorporated herein by reference to Exhibit 3.1 to the
Company's Annual Report on Form 10-K for the fiscal year
ended October 31, 1999.
3.2 By-Laws of the Company, as amended, incorporated by
reference to Exhibit 3.2 to the Company's Annual Report on
From 10-K for the fiscal year ended October 31, 1999.
4.1 Indenture, dated as of May 1, 1987, between the Company and
Manufacturers Hanover Trust Company, as Trustee, and Terms
Agreement, dated March 16, 1988, among the Company, The
First Boston Corporation and Salomon Brothers Inc relating
to the Company's 9 1/2% Subordinated Notes due 2000,
incorporated herein by reference to Exhibit 1 to the
Company's Report on Form 8-K, dated March 16, 1988.
4.2 Indenture dated as of April 23, 1992 between the Company and
Bankers Trust Company, as Trustee, relating to the Company's
8 1/4% Senior Notes Due 2002 and the Company's 8 7/8% Senior
Debentures Due 2022, incorporated herein by reference to
Exhibit 4.1 to the Company's Registration Statement on Form
S-3, File No. 33-46148.
4.3 First Supplemental Indenture dated as of August 5, 1997
between the Company and Bankers Trust Company, as Trustee,
relating to the Company's 6.70% Senior Notes Due 2007, the
Company's 7.20% Senior Debentures Due 2027, and the
Company's 7.30% Senior Debentures Due 2097, incorporated
herein by reference to Exhibit 4.2 to the Company's
Registration Statement on Form S-3, File No. 333-30621.
4.4 Indenture dated as of May 15, 1986 between National
Education Corporation and Continental Illinois National Bank
and Trust Company of Chicago, as Trustee, incorporated
herein by reference to Exhibit 4.2 to Amendment No. 1 to
National Education Corporation's Registration Statement on
Form S-3, File No. 33-5552.
4.5 Tripartite Agreement dated as of June 1, 1990 among National
Education Corporation, IBJ Schroder Bank & Trust Company and
Continental Bank, National Association, as resigning
Trustee, incorporated herein by reference to Exhibit 4 to
National Education Corporation's Quarterly Report on Form
10-Q for the quarter ended June 30, 1990, File No. 1-6981.
4.6 First Supplemental Indenture dated as of July 21, 1997 among
National Education Corporation, Harcourt General, Inc., and
IBJ Schroder Bank & Trust Company, incorporated herein by
reference to Exhibit 4 the Company's Registration Statement
on Form 8-A, dated July 22, 1997, File No. 1-4925.
4.7 Smith-Lurie/Marks Stockholders' Agreement, dated December
29, 1986, incorporated herein by reference to Exhibit 4.5 to
the Company's Annual Report on Form 10-K for the fiscal year
ended October 31, 1992.
*10.1 1988 Stock Incentive Plan as amended, incorporated herein by
reference to Exhibit 10.2 to the Company's Quarterly Report
on Form 10-Q for the fiscal quarter ended July 31, 2000.
*10.2 1997 Incentive Plan as amended, incorporated herein by
reference to Exhibit 10.1 to the Company's Quarterly Report
on Form 10-Q for the fiscal quarter ended July 31, 2000.
*10.3 1983 Key Executive Stock Purchase Loan Plan, as amended,
incorporated herein by reference to Exhibit 10.4(b) to the
Company's Annual Report on Form 10-K for the fiscal year
ended October 31, 1984.
*10.4 Executive Medical Plan, as amended, incorporated herein by
reference to Exhibit 10.5 to the Company's Annual Report on
Form 10-K for the fiscal year ended October 31, 1994.
*10.5(a) Supplemental Executive Retirement Plan, incorporated herein
by reference to Exhibit 10.9 to the Company's Annual Report
on Form 10-K for the fiscal year ended October 31, 1988.
*10.5(b) Amendment to Supplemental Executive Retirement Plan, dated
October 26, 1990, incorporated herein by reference to
Exhibit 10.7(b) to the Company's Annual Report on Form 10-K
for the fiscal year ended October 31, 1990.

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*10.6 Deferred Compensation Plan for Non-Employee Directors,
incorporated herein by reference to Exhibit 10.6 of the
Company's Annual Report on Form 10-K for the fiscal year
ended October 31, 1998.
*10.7(a) Amended and Restated Deferred Compensation Agreement, dated
August 27, 1990, between the Company and Richard A. Smith,
incorporated herein by reference to Exhibit 10.13 of the
Company's Annual Report on Form 10-K for the fiscal year
ended October 31, 1990.
*10.7(b) Deferred Compensation Agreement dated as of December 15,
1994, between the Company and Richard A. Smith, incorporated
herein by reference to Exhibit 10.9(b) of the Company's
Annual Report on Form 10-K for the fiscal year ended October
31, 1995.
*10.8(a) Split Dollar Life Insurance Agreement, dated as of June 21,
1990, by and between the Company and the Richard and Susan
Smith 1990 Issue Trust, under a Declaration of Trust dated
as of April 3, 1990, incorporated herein by reference to
Exhibit 10.17 to the Company's Annual Report on Form 10-K
for the fiscal year ended October 31, 1991.
*10.8(b) Amendment, dated as of December 15, 1998, to Split Dollar
Life Insurance Agreement, dated as of June 21, 1990, by and
between the Company and the Richard and Susan Smith 1990
issue Trust, under a Declaration of Trust dated as of April
3, 1990, incorporated herein by reference to Exhibit 10.8(b)
of the Company's Annual Report on Form 10-K for the fiscal
year ended October 31, 1998.
*10.9 Key Employee Deferred Compensation Plan, as amended,
incorporated herein by reference to Exhibit 10.14 to the
Company's Annual Report on Form 10-K for the fiscal year
ended October 31, 1994.
10.10 Amended and Restated Reimbursement and Security Agreement
dated as of January 26, 1999 between the Company and GC
Companies, Inc., incorporated herein by reference to Exhibit
10.15 of the Company's Form 10-K/A filed on October 24,
2000.
10.11 Amended and Restated Intercompany Services Agreement, dated
as of November 1, 1999, between the Company and The Neiman
Marcus Group, Inc., incorporated herein by reference to
Exhibit 10.10 of the Company's Annual Report on Form 10-K
for the fiscal year ended October 31, 1999.
10.12 Amended and Restated Intercompany Services Agreement dated
as of November 1, 1995, between the Company and GC
Companies, Inc., incorporated herein by reference to Exhibit
10.11(b) of the Company's Annual Report on Form 10-K for the
fiscal year ended October 31, 1995.
*10.13 Termination Protection Agreements between the Company and
Richard A. Smith, Brian J. Knez, Robert A. Smith, John R.
Cook, Eric P. Geller, Kathleen A. Bursley, Peter Farwell,
Paul F. Gibbons, Gerald T. Hughes, Catherine N. Janowski,
James P. Levy, Gail S. Mann, Michael F. Panutich and Paul J.
Robershotte, incorporated herein by reference to Exhibit
10.3(a-n) to the Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended July 31, 2000.
10.14 Credit Agreement dated as of July 18, 1997 among the
Company, the banks listed therein, The Chase Manhattan Bank,
as syndication agent, Morgan Guaranty Trust Company of New
York, as documentation agent, and BankBoston, N.A., as
administrative agent, incorporated herein by reference to
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q
for the quarter ended July 31, 1997.
10.15 Amendment dated January 30, 1998 to Credit Agreement dated
as of July 18, 1997 among the Company, the banks listed
therein, The Chase Manhattan Bank, as syndication agent,
Morgan Guaranty Trust Company of New York, as documentation
agent, and BankBoston, N.A., as administrative agent,
incorporated herein by reference to Exhibit 10.12(b) to the
Company's Annual Report on Form 10-K for fiscal year ended
October 31, 1998.
10.16 Amended and Restated Agreement and Plan of Merger, dated as
of July 1, 1999, among the Company, The Neiman Marcus Group,
Inc., and Spring Merger Corporation, incorporated herein by
reference to Exhibit 10.1 to the Company's Quarterly Report
on Form 10-Q for the fiscal quarter ended July 31, 1999.

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10.17 Amended and Restated Distribution Agreement dated as of July
1, 1999, between the Company and The Neiman Marcus Group,
Inc., incorporated herein by reference to Exhibit 10.2 to
the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended July 31, 1999.
10.18 Purchase Agreement between the Company and Salomon Smith
Barney Inc., acting as agent for Citibank, N.A., dated April
20, 2000, incorporated herein by reference to Exhibit 1.1 to
the Company's Registration Statement on Form S-3, file No.
333-36438.
10.19 Equity Swap Agreement between the Company and Citibank,
N.A., dated April 20, 2000, incorporated herein by reference
to Exhibit 1.2 to the Company's Registration Statement on
Form S-3, file No. 333-36438.
10.20 Amendment to the Confirmation for Equity Swap Transaction
and Purchase Agreement dated October 18, 2000, incorporated
herein by reference to the Company's Current Report on Form
8-K filed on October 25, 2000.
10.21 Agreement and Plan of Merger dated as of October 27, 2000
among Reed Elsevier Inc., REH Mergersub Inc. and the
Company, incorporated herein by reference to Exhibit(d)(1)
to the Schedule TO of REH Mergersub Inc. filed on November
8, 2000.
10.22 Confidentiality Agreement, dated June 28, 2000, between Reed
Elsevier plc and the Company, incorporated herein by
reference to Exhibit(d)(3) to the Schedule TO of REH
Megersub Inc. filed on November 8, 2000.
21.1 Subsidiaries of the Company.
23.1 Consent of Deloitte & Touche LLP.

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘10-K405’ Filing	Date	First	Last	Other Filings

	5/14/01	27
	1/31/01	10		10-Q
Filed on:	1/26/01
	1/24/01	16	17
	1/19/01	1
	1/16/01	5	13
	1/12/01	10
	12/12/00	19	43
	11/20/00	27		8-K, SC 14D9/A, SC TO-T/A
	11/8/00	5	47	SC 14D9, SC TO-T
	11/1/00	10	26
For Period End:	10/31/00	1	44	10-K405/A
	10/27/00	3	47	8-K, SC TO-C
	10/25/00	15	47	8-K
	10/24/00	46		10-K/A
	10/18/00	15	47	8-K
	10/11/00	15	26	8-K
	7/31/00	45	46	10-Q
	6/28/00	47
	4/20/00	9	47
	11/1/99	46		8-K
	10/31/99	5	46	10-K, 10-K/A
	10/22/99	5	33	8-K
	10/12/99	27
	8/1/99	27
	7/31/99	27	47	10-Q
	7/1/99	46	47
	1/26/99	46
	12/15/98	46
	10/31/98	15	46	10-K
	10/9/98	29
	8/31/98	29
	1/30/98	46		SC 13G
	11/1/97	23	30
	8/5/97	45
	7/31/97	46		10-Q
	7/22/97	45		8-A12B
	7/21/97	45
	7/18/97	46
	11/1/95	46
	10/31/95	46		10-K
	10/30/95	33
	12/15/94	46		10-Q/A
	10/31/94	45	46	10-K, 8-K
	10/31/92	45
	4/23/92	45
				List all Filings

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Harcourt General Inc – ‘10-K405’ for 10/31/00

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Annual Report — [x] Reg. S-K Item 405 — Form 10-KFiling Table of Contents

10-K405 — Harcourt General IncDocument Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Annual Report — [x] Reg. S-K Item 405 — Form 10-K
Filing Table of Contents

10-K405 — Harcourt General Inc
Document Table of Contents