Interactive Data Reports Third-Quarter 2009 Results
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Net Income Growth of 17.5% Reflects the Benefit of Prior Cost-Containment Initiatives Combined with a Lower Effective Tax Rate
BEDFORD, Mass.--(BUSINESS WIRE)-- Interactive Data Corporation (NYSE: IDC) today reported its financial results for the third quarter ended September 30, 2009. Interactive Data's third-quarter 2009 revenue was $192.1 million, an increase of 1.9% from $188.6 million in the third quarter of 2008. Income from operations in the third quarter of 2009 was $58.4 million, an 8.8% increase over $53.7 million in the same period one year ago. Net income attributable to Interactive Data for the third quarter of 2009 was a record $43.1 million, or $0.45 per diluted share, an increase of 17.5% over net income of $36.7 million, or $0.38 per diluted share, in the third quarter of 2008.
Ray D'Arcy, Interactive Data's president and chief executive officer, stated, "Our third-quarter 2009 financial performance was highlighted by higher income from operations primarily driven by the combination of actions we took earlier this year to adjust spending and higher revenue. Our third-quarter 2009 net income growth of 17.5% reflects higher income from operations and a lower effective tax rate of 26.6%, which more than offset a significant decrease in interest income. By comparison with the effective annual tax rate of 34.8% in the first-half 2009, the reduction in our third-quarter 2009 effective tax rate contributed over $4.8 million, or approximately $0.05 per diluted share, to our third-quarter 2009 net income."
Commenting on the Company's revenue performance, D'Arcy said, "Organic revenue grew 3.6% in the third quarter of 2009 over the same period last year due to the resiliency in our fixed income evaluations and reference data product areas, and a solid performance in Europe. We were also pleased to see lower cancellation levels across our institutional business compared with first-half 2009 levels. Although this is encouraging, customers continue to focus on controlling costs, which we expect will continue to influence near-term usage-related revenue growth and progress with new sales."
D'Arcy concluded, "With a successful third quarter behind us, we have raised our guidance for net income to primarily reflect a lower effective annual tax rate and, to a lesser extent, incremental improvement in the underlying performance of our business. In addition, we lowered our 2009 capital expenditure plans due to changes in the timing for various initiatives, including the upgrading and expansion of our London office and data center. In the context of our full-year 2009 guidance, it is also important to keep in mind that we enjoyed an exceptionally strong fourth quarter of 2008 that was aided by certain one-time sales, strong usage-related revenue and other items. Looking ahead, we plan to remain disciplined with our spending while continuing to direct investment into high priority areas that we believe are fundamental to driving long-term success."
Third-Quarter 2009 Effective Tax Rate
-- Interactive Data's third-quarter 2009 effective tax rate of 26.6%
declined by 8.2 percentage points from the first-half 2009 effective tax
rate of 34.8%. The decrease was driven by discrete items totaling $6.1
million primarily resulting from a favorable UK audit settlement for
2005, 2006 and 2007 ($3.0 million), various state income tax audit
settlements ($1.5 million), and the expiration of the statute of
limitations in various U.S. tax jurisdictions which resulted in a
release of tax reserves ($2.0 million). The collective impact of these
discrete items was partially offset by a decrease in income generated in
lower tax rate jurisdictions, a decrease in foreign tax credits and
other items.
Segment Reporting, Related Operating Highlights and Revenue by Geography
Institutional Services Segment:
-- Interactive Data Pricing and Reference Data reported third-quarter 2009
revenue of $126.7 million, an increase of $7.1 million, or 5.9%, over
the prior year's third quarter (or an increase of $11.1 million, or
9.3%, before the effects of foreign exchange). Kler's Financial Data
Service S.r.l. (Kler's), which we acquired in August 2008, contributed
incremental revenue of $0.9 million in the third quarter of 2009. NTT
DATA Financial (NDF), in whom we acquired an 80% interest in December
2008 and subsequently acquired an additional 10% interest during the
second quarter of 2009, contributed an incremental $2.2 million to
third-quarter 2009 revenue. Third-quarter 2009 organic revenue for this
business, which excludes the contributions from Kler's and NDF, related
intercompany eliminations associated with NDF and the effects of foreign
exchange, increased by $8.0 million, or 6.8%, over the same period last
year primarily as a result of net new business progress in Europe during
the past several quarters and continued expansion of customer
relationships in the U.S. During the third quarter, this business
advanced alliances with specialist firms to provide valuation services
for Term Asset-Backed Securities Loan Facility (TALF) loans and
Municipal Auction Rate Securities (ARS) including Student Loan Auction
Rate Securities (SLARS). This business also established an alliance with
Goal Group, a leading UK-based global class actions service specialist,
to provide a comprehensive, outsourced class actions service designed to
support investors and corporations throughout the entire lifecycle of a
securities class action.
-- Interactive Data Real-Time Services generated third-quarter 2009 revenue
of $36.2 million, a decrease of $1.9 million, or 5.1%, over the same
quarter last year (or essentially unchanged before the effects of
foreign exchange). The organic revenue performance for this business
primarily reflects the impact of increased cancellations over the past
several quarters for its real-time market data services, offset by
continued strong growth in its U.S. Web-based solutions. In recent
months, Interactive Data continued to expand its Web-based solutions
business in the United States, announcing msnbc.com and Scivantage as
new customers.
-- Interactive Data Fixed Income Analytics reported revenue for the third
quarter of 2009 of $8.2 million, which was essentially unchanged from
last year's third quarter. During the third quarter, this business
introduced BondEdge(R) Cash Flow Analyst for Insurance, a new package of
capabilities designed to help address the asset modeling and risk
analysis needs of insurance portfolio asset-liability management.
Active Trader Services Segment:
-- eSignal's third-quarter 2009 revenue of $20.9 million decreased by $1.7
million, or 7.3%, from the third quarter of 2008 (or a decline of $1.3
million, or 5.9%, before the effects of foreign exchange) due to the
decline in the eSignal direct subscriber base and lower advertising
revenue. As of September 30, 2009, eSignal managed approximately 57,200
direct subscription terminals, which is 1.7% lower than the same period
last year and essentially unchanged from the prior quarter. eSignal's
recent highlights include the continued enhancement of its offerings and
the deployment of customized versions of its applications by Knowledge
to Action(TM), one of the UK's leading providers of financial training.
Revenue by Geography:
-- Interactive Data's North American third-quarter 2009 revenue of $133.0
million was essentially unchanged from the same period last year.
Organic revenue for Interactive Data's North American business, which
excludes eliminations associated with the Company's redistribution
relationship with NDF in Japan, grew 1.0% as growth in its evaluations,
reference data services and web-based solutions was largely offset by
revenue weakness in its real-time market data and eSignal product areas.
The Company's third-quarter 2009 revenue in Europe of $50.7 million was
essentially unchanged from last year's third quarter. Excluding the
effects of foreign exchange and the incremental contribution from
Kler's, third-quarter 2009 organic revenue in Europe grew 10.5%
primarily as a result of growth within the Company's evaluations,
reference data services and real-time market data areas. Interactive
Data's Asia-Pacific revenue of $8.4 million in the third quarter of 2009
grew 73.5% from the third quarter of 2008 primarily as a result of the
NDF contribution. Excluding the effects of foreign exchange and the
contribution from NDF, Asia-Pacific organic revenue grew 2.2% during the
third quarter of 2009.
-- A table comparing revenue by geography, including the impact of foreign
exchange as a percentage of total revenue for the three months and nine
months ended September 30, 2009 and 2008, for each of Interactive Data's
major geographic regions has been included on page 13 of this press
release.
Other Third-Quarter 2009 Financial and Operating Highlights
Effects of Foreign Exchange:
-- Interactive Data's third-quarter 2009 revenue was unfavorably impacted
by $6.3 million due to the effects of foreign exchange resulting from a
weaker US dollar in comparison with the third quarter of 2008.
Third-quarter 2009 revenue before the effects of foreign exchange grew
by $9.8 million, or 5.2%, over the same period in 2008. Total costs and
expenses in the third quarter of 2009 were favorably impacted by $4.1
million as a result of the effects of foreign exchange. Third-quarter
2009 total costs and expenses before the effects of foreign exchange
increased by $2.9 million, or 2.1%, over the third quarter of 2008.
-- A table comparing the average foreign exchange rates during the three
months and nine months ended September 30, 2009 versus the comparable
periods of 2008 in three of the Company's primary overseas currencies
(as measured against the U.S. dollar) is provided on page 15 of this
press release.
Cash Position, Stock Buyback Activities, and Quarterly Cash Dividend:
-- As of September 30, 2009, Interactive Data had no outstanding debt and
had cash, cash equivalents and marketable securities of $290.2 million.
During the third quarter of 2009, Interactive Data repurchased 479,500
shares of its common stock at an average price of $23.63 per share.
Entering the fourth quarter of 2009, nearly 2.0 million shares were
available for repurchase under the existing stock buyback program.
During the third quarter of 2009, Interactive Data paid $18.8 million to
stockholders in connection with its regular quarterly dividend of $0.20
per share.
Management Changes:
-- On September 16, 2009, Interactive Data announced that Christine A.
Sampson, the Company's vice president of finance and chief accounting
officer, began serving as interim chief financial officer and treasurer
as a result of Andrew J. Hajducky's resignation as executive vice
president, treasurer and chief financial officer. Interactive Data is in
the process of conducting a CFO search.
-- In early October, Interactive Data announced Elizabeth Duggan was
promoted to managing director of the Company's Evaluations organization.
Duggan has held a variety of management positions at Interactive Data,
serving most recently as chief operating officer, Evaluations since
January 2009.
Nine-Month 2009 Results
-- For the nine months ended September 30, 2009, Interactive Data reported
revenue of $563.1 million, an increase of $6.7 million, or 1.2%, from
$556.4 million in the same period last year. Foreign exchange
unfavorably impacted revenue during the first nine months by $33.2
million and acquisitions contributed an incremental $12.2 million during
that same period. For the first nine months of 2009, organic revenue,
which excludes the effects of foreign exchange and the net impact of
acquisitions, grew by 5.0%. Total costs and expenses increased $1.9
million, or 0.5%, to $405.8 million during the first nine months of
2009. Net income attributable to Interactive Data during the first nine
months of 2009 was $108.2 million, or $1.13 per diluted share, versus
$102.5 million, or $1.06 per diluted share, in the comparable period of
2008. The effective tax rate for the first nine months of 2009 was 31.8%
compared with 35.4% in the same period last year.
-- Interactive Data's results for the first nine months of 2009 included a
$10.9 million out-of-period accounting adjustment related to the
write-down of certain assets and the accrual of certain liabilities
associated with the Company's European real-time market data services
operation. The out-of-period accounting adjustment, which occurred in
the second quarter of 2009, decreased second-quarter 2009 revenue by
approximately $2.3 million and increased 2009 second-quarter total costs
by approximately $8.6 million, which is mostly related to data
acquisition expenses that were not properly recorded in prior periods,
primarily in 2008 and the first quarter of 2009. A table summarizing the
out-of-period accounting adjustment and its allocation to earlier
reporting periods has been included on page 16 of this press release.
2009 Outlook
Market conditions for the balance of 2009 are expected to remain challenging. Overall spending on market data and related services by customers in the financial services industry in 2009 is being influenced by various factors including cost-containment activities, the impact of recent mergers and acquisitions, and overall economic conditions. Based on these market conditions, our results to date and anticipated near-term performance, we have updated our 2009 non-GAAP and GAAP outlook as follows:
Non-GAAP:
-- 2009 organic revenue growth over 2008 (on a percentage change basis) is
now expected to be roughly 2.0%. This compares with prior organic
revenue guidance that called for the organic revenue growth to be at the
low end of the low-single digit range.
-- 2009 organic income from operations growth versus 2008 (on a percentage
change basis) is now expected to be roughly 6.0%. This is at the high
end of prior organic income from operations guidance that called for
growth in the mid-single digit range.
GAAP:
-- 2009 revenue is still expected to be roughly flat with 2008, which is
unchanged from the prior quarter's guidance.
o This forecast still includes an anticipated positive impact of
approximately two percentage points from acquisitions completed in
2008.
o Our prior revenue guidance assumed that 2009 revenue would be
negatively impacted by approximately four percentage points associated
with changes in foreign exchange rates. Our revenue forecast now
includes a negative impact of at least four percentage points
associated with changes in foreign exchange rates as of September 30,
2009.
-- 2009 income from operations versus 2008 (on a percentage change basis)
is now expected to be roughly flat. This compares with prior guidance
that called for the decline in 2009 income from operations to be in the
low single digit range.
o This forecast still includes an anticipated positive impact of
approximately two percentage points from acquisitions completed in
2008.
o Our prior guidance assumed that changes in foreign exchange rates
would negatively impact 2009 income from operations by more than five
percentage points. This forecast now includes a negative impact of
approximately five percentage points related to changes in foreign
exchange rates as of September 30, 2009.
-- Our effective 2009 annual tax rate is now expected to be in the range of
33.0% to 34.0%, versus prior guidance that ranged from 35.0% to 36.0%.
-- Due primarily to the change in our effective 2009 annual tax rate, 2009
net income attributable to Interactive Data versus 2008 (on a percentage
change basis) is now expected to be roughly flat. This compares with
prior guidance for 2009 net income to decline in the low-to-mid single
digit range.
-- 2009 capital expenditures are now expected to be in the range of $49.0
million to $51.0 million versus our prior capital expenditure guidance
of $54.0 million to $56.0 million.
o This capital expenditure forecast now includes spending of $6.5
million to $7.0 million for leasehold improvements related to the
planned relocation of our midtown New York office and refurbishment of
our London office and data center. This is lower than the $7.0 million
to $8.0 million that was included for these leasehold improvements in
our prior capital expenditures guidance. Due to the timing of these
activities, we now expect that approximately 50% of these leasehold
improvements will be reimbursed by each respective landlord in 2010
versus the prior expectation that 30% of these leasehold improvements
would be reimbursed by each respective landlord in 2009 with an
additional 20% reimbursed in 2010.
Conference Call Information
Interactive Data Corporation's management will conduct a conference call on Thursday, October 29, 2009 at 5:30 p.m. Eastern Time to discuss the third-quarter 2009 results, related financial and statistical information, and additional business matters. The dial-in number for the conference call is (706) 679-4631 and the related access code is 33734970. A live webcast of the conference call, along with related slides, will be broadcast on the investor relations section of the Company's Web site at www.interactivedata.com and through www.streetevents.com. To listen, please register and download audio software at the site at least 15 minutes prior to the call. For those who cannot listen to the live broadcast, a replay of the call will be available from October 29 at 8:00 p.m. until Thursday, November 5, 2009 at 8:00 p.m., and it can be accessed by dialing (706) 645-9291 or (800) 642-1687, using access code 33734970. An archived replay of the call, the related slides and other financial and statistical information presented on the conference call will also be available on the investor relations section of the Company's Web site at www.interactivedata.com after the call is completed. The information on the Company's Web site is not incorporated by reference into this press release.
Non-GAAP Information
In an effort to provide investors with additional information regarding our results on a generally accepted accounting principles (GAAP) basis, we also disclose the following non-GAAP information, which management believes provides the following useful information to investors:
-- Management refers to growth rates at constant foreign currency exchange
rates so that business results can be viewed without the impact of
changing foreign currency exchange rates, thereby facilitating
period-to-period comparisons of our underlying business. Generally, when
the U.S. dollar either strengthens or weakens against other currencies,
the growth at constant currency rates will be higher or lower than
growth reported at actual exchange rates.
-- Management includes information regarding organic revenue growth, which
excludes the contribution of businesses recently acquired, related
intercompany eliminations and the effects of foreign currency exchange
rates because management believes that facilitating period-to-period
comparisons of our organic revenue growth on a constant dollar basis
better reflects actual underlying business trends. As part of
determining organic growth, management refers to revenue for our
Interactive Data Pricing and Reference Data, Interactive Data Real-Time
Services, Interactive Data Fixed Income Analytics, and eSignal
businesses. Management uses this information for evaluating its
business, and for forecasting and planning purposes. In addition, since
we have historically reported revenue for these businesses to the
investment community as part of our reports on Form 10-K and Form 10-Q,
we believe that continuing to offer such information provides
consistency in our financial reporting.
-- Management includes information regarding core total costs and expenses
which excludes total costs and expenses associated with businesses
recently acquired, and the effects of foreign exchange because
management believes changes in our core total costs and expenses on a
constant dollar basis better reflect actual trends in the core
businesses.
-- Management includes information regarding non-GAAP income from
operations, which excludes revenue and costs and expenses associated
with recently acquired businesses, intercompany eliminations and the
effects of foreign exchange because management believes changes in our
non-GAAP income from operations on a constant dollar basis better
reflect actual underlying business trends in the core businesses.
The above measures are non-GAAP financial measures and should not be considered in isolation from (and are not intended to represent an alternative measure of) revenue, total costs and expenses, income from operations, net income or cash flows provided by operating activities, each as determined in accordance with GAAP. In addition, the above measures may not be comparable to similarly titled measures reported by other companies.
Forward-looking and Cautionary Statements
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and federal securities laws, and is subject to the safe-harbor created by such Act and laws. Forward-looking statements include all statements that are not historical statements and include our statements discussing our goals, beliefs, strategies, objectives, plans, future financial conditions, potential impact of customer consolidations, future challenges and opportunities. These statements include those regarding our ability to drive long-term success, that customer continuing focus on controlling costs will continue to influence near-term usage-related revenue growth and progress with new sales, that our spending will be disciplined, that we will continue to make investments in our business and that those investments will be directed at areas that are fundamental to our business, and all of the statements appearing under the heading "2009 Outlook." Our forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause actual results to be materially different from those contemplated by the forward-looking statements. Such factors include, but are not limited to: (i) the impact of cost-cutting pressures across the industries we serve, including, without limitation, delayed sales cycles and further deceleration in usage-related revenue growth; (ii) consolidation of financial services companies, both within an industry and across industries, or the failure of financial services firms; (iii) the intensity of competition from vendors with greater financial resources than ours and their strategic response to our services and offerings; (iv) the possibility of a prolonged outage or other major unexpected operational difficulty at any of our key facilities; (v) our ability to maintain relationships with our key suppliers and providers of market data; (vi) our ability to maintain our relationships with service bureaus and custodian banks; (vii) new technologies that could cause our offerings or services to become less competitive or obsolete; (viii) we may not be able to develop new or enhanced services or offerings in a timely manner, or at all, in response to evolving market demands; (ix) overall economic conditions; (x) a decline in activity levels in the securities markets; (xi) new legislation or changes in government or quasi-government rules, regulations, directives or standards may reduce demand for our service or increase our expenses; (xii) our ability to negotiate and enter into strategic acquisitions or alliances on favorable terms, if at all, or to realize the anticipated benefits from any strategic acquisitions or alliances that we enter into; (xiii) we provide services to financial institutions that are subject to significant regulatory oversight, and any investigation of us or our customers relating to our services could be expensive, time consuming and harm our reputation; (xiv) certain of our subsidiaries are subject to complex regulations and licensing requirements; (xv) the risks of doing business internationally, which includes the impact that changes in foreign exchange rates may have upon our results of operations; (xvi) the timing and magnitude of discrete items that may impact our effective tax rate in any given reporting period; (xvii) our ability to attract and retain key personnel; (xviii) the actual timing of planned capital expenditures and reimbursements from landlords which may differ from our expectations; and (xix) the ability of our majority shareholder to exert influence over our affairs, including the ability to approve or disapprove any corporate actions submitted to a vote of our stockholders; and other factors identified in our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission. We undertake no obligation to update these forward-looking statements.
About Interactive Data Corporation
Interactive Data Corporation (NYSE: IDC) is a leading global provider of financial market data, analytics and related solutions to financial institutions, active traders and individual investors. The Company's businesses supply real-time market data, time-sensitive pricing, evaluations and reference data for millions of securities traded around the world, including hard-to-value instruments. Many of the world's best-known financial service and software companies subscribe to the Company's services in support of their trading, analysis, portfolio management and valuation activities. Interactive Data, headquartered in Bedford, Mass., has approximately 2,400 employees in offices located throughout North America, Europe, Asia and Australia. Pearson plc (NYSE: PSO; LSE: PSON), an international media company, whose businesses include the Financial Times Group, Pearson Education, and the Penguin Group, is Interactive Data Corporation's majority stockholder.
For more information about Interactive Data Corporation and its businesses, please visit www.interactivedata.com.
INTERACTIVE DATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 Change 2009 2008 Change
REVENUE $ 192,092 $ 188,589 1.9 % $ 563,118 $ 556,449 1.2 %
COSTS AND
EXPENSES:
Cost of 60,347 60,469 -0.2 % 187,176 181,979 2.9 %
services
Selling,
general and 57,387 60,727 -5.5 % 172,918 181,101 -4.5 %
administrative
Depreciation 8,283 6,706 23.5 % 22,962 20,016 14.7 %
Amortization 7,644 7,006 9.1 % 22,715 20,761 9.4 %
Total costs and 133,661 134,908 -0.9 % 405,771 403,857 0.5 %
expenses
INCOME FROM 58,431 53,681 8.8 % 157,347 152,592 3.1 %
OPERATIONS
Interest income 335 1,893 -82.3 % 1,495 6,208 -75.9 %
INCOME BEFORE 58,766 55,574 5.7 % 158,842 158,800 0.0 %
INCOME TAXES
Income tax 15,636 18,859 -17.1 % 50,485 56,260 -10.3 %
expense
NET INCOME $ 43,130 $ 36,715 17.5 % $ 108,357 $ 102,540 5.7 %
Less: Net income
attributable to - - - (172 ) - 100.0 %
noncontrolling
interest
NET INCOME
ATTRIBUTABLE TO $ 43,130 $ 36,715 17.5 % $ 108,185 $ 102,540 5.5 %
INTERACTIVE DATA
CORPORATION
EARNINGS PER
SHARE-
INTERACTIVE DATA
CORPORATION:
Basic $ 0.46 $ 0.39 17.9 % $ 1.15 $ 1.09 5.5 %
Diluted $ 0.45 $ 0.38 18.4 % $ 1.13 $ 1.06 6.6 %
Cash dividends
declared per $ 0.20 $ 0.30 -33.3 % $ 0.40 $ 0.45 -11.1 %
common share*
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING:
Basic 93,994 94,002 0.0 % 93,902 94,094 -0.2 %
Diluted 96,047 96,764 -0.7 % 96,122 97,023 -0.9 %
* The payment of certain quarterly cash dividends does not necessarily occur in
the quarter in which it was declared.
INTERACTIVE DATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
September 30, December 31,
2009 2008
ASSETS (Unaudited)
Assets:
Cash and cash equivalents $ 190,459 $ 154,162
Marketable securities 99,766 74,616
Accounts receivable, net 123,848 109,052
Prepaid expenses and other current assets 21,236 16,039
Receivables from affiliates 1,597 -
Deferred income taxes 7,264 6,511
Total current assets 444,170 360,380
Property and equipment, net 112,143 109,210
Goodwill 566,714 550,282
Intangible assets, net 138,409 157,723
Other assets 5,036 4,930
Total Assets $ 1,266,472 $ 1,182,525
LIABILITIES AND EQUITY
Liabilities:
Accounts payable, trade $ 16,020 $ 17,011
Accrued liabilities 70,005 85,088
Payables to affiliates - 47
Income taxes payable 8,015 6,532
Deferred revenue 43,620 34,106
Dividends payable - 18,705
Total current liabilities 137,660 161,489
Income taxes payable 10,718 11,158
Deferred tax liabilities 33,412 39,057
Other liabilities 15,868 10,418
Total Liabilities 197,658 222,122
Equity:
Interactive Data Corporation stockholders' equity:
Preferred stock - -
Common stock 1,042 1,027
Additional paid-in-capital 1,007,278 976,651
Treasury stock, at cost (208,736 ) (190,000 )
Accumulated earnings 265,027 194,733
Accumulated other comprehensive income (loss) 4,203 (22,604 )
Total Interactive Data Corporation stockholders' 1,068,814 959,807
equity
Noncontrolling interest - 596
Total Equity 1,068,814 960,403
Total Liabilities and Equity $ 1,266,472 $ 1,182,525
INTERACTIVE DATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Nine Months Ended
September 30,
(Unaudited)
2009 2008
Cash flows provided by (used in) operating
activities:
Net income $ 108,357 $ 102,540
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 45,677 40,777
Amortization of discounts and premiums on marketable 1,484 456
securities, net
Deferred income taxes (7,967 ) (66 )
Excess tax benefits from stock-based compensation (2,559 ) (1,978 )
Stock-based compensation 12,709 10,648
Provision for doubtful accounts and sales credits 1,067 705
Loss on dispositions of fixed assets 463 246
Changes in operating assets and liabilities, net (22,748 ) (16,686 )
NET CASH PROVIDED BY OPERATING ACTIVITIES 136,483 136,642
Cash flows provided by (used in) investing
activities:
Purchase of fixed assets (25,157 ) (22,629 )
Acquisition of business (3,231 ) (27,338 )
Purchase of marketable securities (200,176 ) (117,552 )
Proceeds from maturities of marketable securities 173,510 136,215
NET CASH USED IN INVESTING ACTIVITIES (55,054 ) (31,304 )
Cash flows provided by (used in) financing
activities:
Proceeds from exercise of stock options and employee 15,936 16,657
stock purchase plan
Purchase of treasury stock (18,150 ) (44,767 )
Common stock cash dividends paid (56,413 ) (89,542 )
Excess tax benefits from stock-based compensation 2,559 1,978
NET CASH USED IN FINANCING ACTIVITIES (56,068 ) (115,674 )
Effect of change in exchange rates on cash and cash 10,936 (10,303 )
equivalents
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 36,297 (20,639 )
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 154,162 205,470
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 190,459 $ 184,831
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Revenue Before Effects of Foreign Exchange, Acquisition-Related Revenue
and Intercompany Eliminations Resulting from Acquisitions
(In thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 Change 2009 2008 Change
Revenue
Institutional
Services:
Pricing and $ 126,732 $ 119,673 5.9 % $ 371,754 $ 351,298 5.8 %
Reference Data
Real-Time Services 36,233 38,175 -5.1 % 103,992 114,038 -8.8 %
Fixed Income 8,231 8,188 0.5 % 24,593 24,388 0.8 %
Analytics
Institutional 171,196 166,036 3.1 % 500,339 489,724 2.2 %
Services total
Active Trader
Services:
eSignal 20,896 22,553 -7.3 % 62,779 66,725 -5.9 %
Active Trader 20,896 22,553 -7.3 % 62,779 66,725 -5.9 %
Services total
Total revenue 192,092 188,589 1.9 % 563,118 556,449 1.2 %
Effects of foreign
exchange
Institutional
Services:
Pricing and 4,064 - - 20,395 - -
Reference Data
Real-Time Services 1,924 - - 10,923 - -
Fixed Income 11 - - 49 - -
Analytics
Institutional 5,999 - 31,367 -
Services total
Active Trader
Services:
eSignal 336 - - 1,794 - -
Active Trader 336 - - 1,794 - -
Services total
Total effects of 6,335 - - 33,161 - -
foreign exchange
Non-GAAP revenue
before effects of 198,427 188,589 5.2 % 596,279 556,449 7.2 %
foreign exchange
Acquisition-related
revenue
Acquisition-related (895 ) - - (5,984 ) - -
revenue - Kler's
Acquisition-related
revenue - NTT DATA (3,635 ) - - (9,998 ) - -
Financial
Total effects of
acquisition-related (4,530 ) - - (15,982 ) - -
revenue
Non-GAAP revenue
before effects of
foreign exchange 193,897 188,589 2.8 % 580,297 556,449 4.3 %
and
acquisition-related
revenue
Intercompany
eliminations - NTT - (1,403 ) - - (3,826 ) -
DATA Financial
Non-GAAP revenue
before above 193,897 187,186 3.6 % 580,297 552,623 5.0 %
factors*
* Also referred to in this news release as organic revenue
Interactive Data Pricing and Reference Data Revenue
Before Effects of Foreign Exchange, Acquisition-Related Revenue
and Intercompany Eliminations Resulting from Acquisitions
($ in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 Change % 2009 2008 Change %
Interactive Data
Pricing and $ 126,732 $ 119,673 5.9 % $ 371,754 $ 351,298 5.8 %
Reference Data
revenue
Effects of foreign 4,064 - - 20,395 - -
exchange
$ 130,796 $ 119,673 9.3 % $ 392,149 $ 351,298 11.6 %
Acquisition-related (895 ) - - (5,984 ) - -
revenue - Kler's
Acquisition-related
revenue - NTT DATA (3,635 ) - - (9,998 ) - -
Financial
Intercompany
eliminations - NTT - (1,403 ) - - (3,826 ) -
DATA Financial
Non-GAAP revenue
before above $ 126,266 $ 118,270 6.8 % $ 376,167 $ 347,472 8.3 %
factors*
* Also referred to in this news release as organic revenue
Interactive Data Real-Time Services Revenue
Before Effects of Foreign Exchange
(In thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 Change % 2009 2008 Change %
Interactive
Data Real-Time $ 36,233 $ 38,175 -5.1 % $ 103,992 $ 114,038 -8.8 %
Services
revenue
Effects of
foreign 1,924 - - 10,923 - -
exchange
Non-GAAP
revenue before
effects of $ 38,157 $ 38,175 0.0 % $ 114,915 $ 114,038 0.8 %
foreign
exchange*
* Also referred to in this news release as organic revenue
Interactive Data Fixed Income Analytics Revenue
Before Effects of Foreign Exchange
(In thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 Change % 2009 2008 Change %
Interactive Data
Fixed Income $ 8,231 $ 8,188 0.5 % $ 24,593 $ 24,388 0.8 %
Analytics revenue
Effects of foreign 11 - - 49 - -
exchange
Non-GAAP revenue
before effects of $ 8,242 $ 8,188 0.7 % $ 24,642 $ 24,388 1.0 %
foreign exchange*
* Also referred to
in this news
release as organic
revenue
eSignal Revenue
Before Effects of Foreign Exchange
(In thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 Change % 2009 2008 Change %
eSignal revenue $ 20,896 $ 22,553 -7.3 % $ 62,779 $ 66,725 -5.9 %
Effects of 336 - - 1,794 - -
foreign exchange
Non-GAAP revenue
before effects of $ 21,232 $ 22,553 -5.9 % $ 64,573 $ 66,725 -3.2 %
foreign exchange*
* Also referred
to in this news
release as
organic revenue
Revenue by Geography Before Effects of Foreign Exchange, Acquisition-Related Revenue
and Related Intercompany Eliminations Resulting from Acquisitions
(In thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 Change 2009 2008 Change
Revenue by
Geography
North America $ 133,034 $ 133,131 -0.1 % $ 397,384 $ 391,360 1.5 %
Europe 50,688 50,635 0.1 % 142,427 151,340 -5.9 %
Asia-Pacific 8,370 4,823 73.5 % 23,307 13,749 69.5 %
Total revenue $ 192,092 $ 188,589 1.9 % $ 563,118 $ 556,449 1.2 %
Three Months Ended Nine Months Ended
September 30, September 30,
Revenue by
Geography as a 2009 2008 Change 2009 2008 Change
percentage of
revenue
North America 69.3 % 70.6 % -1.3 % 70.6 % 70.3 % 0.2 %
Europe 26.4 % 26.8 % -0.5 % 25.3 % 27.2 % -1.9 %
Asia-Pacific 4.4 % 2.6 % 1.8 % 4.1 % 2.5 % 1.7 %
Total revenue 100.0 % 100.0 % 0.0 % 100.0 % 100.0 % 0.0 %
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 Change 2009 2008 Change
Revenue - North $ 133,034 $ 133,131 -0.1 % $ 397,384 $ 391,360 1.5 %
America
Intercompany
eliminations - NTT - (1,403 ) - - (3,826 ) -
DATA Financial
Non-GAAP revenue
before effects of $ 133,034 $ 131,728 1.0 % $ 397,384 $ 387,534 2.5 %
foreign exchange*
* Also referred to
in this news
release as organic
revenue
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 Change 2009 2008 Change
Revenue - Europe $ 50,688 $ 50,635 0.1 % $ 142,427 $ 151,340 -5.9 %
Effects of foreign 6,139 - - 31,372 - -
exchange
56,827 50,635 12.2 % 173,799 151,340 14.8 %
Acquisition-related (895 ) - - (5,984 ) - -
revenue - Kler's
Non-GAAP revenue
before effects of $ 55,932 $ 50,635 10.5 % $ 167,815 $ 151,340 10.9 %
foreign exchange*
* Also referred to
in this news
release as organic
revenue
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 Change 2009 2008 Change
Revenue - Asia $ 8,370 $ 4,823 73.5 % $ 23,307 $ 13,749 69.5 %
Pacific
Effects of foreign 196 - - 1,789 - -
exchange
8,566 4,823 77.6 % 25,096 13,749 82.5 %
Acquisition-related
revenue - NTT DATA (3,635 ) - - (9,998 ) - -
Financial
Non-GAAP revenue
before effects of $ 4,931 $ 4,823 2.2 % $ 15,098 $ 13,749 9.8 %
foreign exchange*
* Also referred to
in this news
release as organic
revenue
Total Costs and Expenses Before Effects of Acquisition-Related
Total Costs and Expenses, and Foreign Exchange
(In thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 Change 2009 2008 Change
Total costs & $ 133,661 $ 134,908 -0.9 % $ 405,771 $ 403,857 0.5 %
expenses
Effects of foreign 4,114 - - 22,727 - -
exchange
Total costs &
expenses before the 137,775 134,908 2.1 % 428,498 403,857 6.1 %
effects of foreign
exchange
Effects of foreign
exchange primarily
related to the 797 1,401 - (1,125 ) 4,829 -
revaluation of
overseas bank
balances
Total costs &
expenses before all
foreign 138,572 136,309 1.7 % 427,373 408,686 4.6 %
exchange-related
items
Acquisition-related
costs & expenses
Total costs &
expenses - NTT DATA (1,861 ) - - (5,073 ) - -
Financial
Total costs & (479 ) - - (3,219 ) - -
expenses - Kler's
(2,340 ) - - (8,292 ) - -
Non-GAAP total
costs & expenses $ 136,232 $ 136,309 -0.1 % $ 419,081 $ 408,686 2.5 %
before above
factors
Income from Operations* Before Effects of Acquisitions and Foreign Exchange
(In thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 Change 2009 2008 Change
Non-GAAP revenue
before above $ 193,897 $ 187,186 3.6 % $ 580,297 $ 552,623 5.0 %
factors
Non-GAAP total
costs and 136,232 136,309 -0.1 % 419,081 408,686 2.5 %
expenses before
above factors
Non-GAAP income $ 57,665 $ 50,877 13.3 % $ 161,216 $ 143,937 12.0 %
from operations
* Also referred to in this news release as non-GAAP income from operations
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
2009 Outlook
GAAP Revenue to Organic (non-GAAP) Revenue
-- 2009 revenue is still expected to be roughly flat with 2008.
o This forecast still includes an anticipated positive impact of
approximately two percentage points from acquisitions completed in
2008.
o Our prior revenue guidance assumed that 2009 revenue would be
negatively impacted by approximately four percentage points associated
with changes in foreign exchange rates. Our revenue forecast now
includes a negative impact of at least four percentage points
associated with changes in foreign exchange rates as of September 30,
2009.
-- Excluding the above factors, 2009 organic (non-GAAP) revenue growth over
2008 (on a percentage change basis) is now expected to be roughly 2.0% .
This compares with prior organic revenue guidance that called for growth
to be at the low end of the low-single digit range.
GAAP Income from Operations to Organic (non-GAAP) Income from Operations
-- 2009 income from operations versus 2008 (on a percentage change basis)
is now expected to be roughly flat. This compares with prior guidance
that called for the decline in 2009 income from operations to be in the
low single digit range.
o This forecast still includes an anticipated positive impact of
approximately two percentage points from acquisitions completed in
2008.
o Our prior income from operations guidance assumed that changes in
foreign exchange rates would negatively impact 2009 income from
operations by more than five percentage points. This forecast now
includes a negative impact of approximately five percentage points
related to changes in foreign exchange rates as of September 30, 2009.
-- Excluding the above factors, 2009 organic (non-GAAP) income from
operations growth versus 2008 (on a percentage change basis) is now
expected to be roughly 6.0%. This forecast is now is at the high end of
prior organic (non-GAAP) income from operations guidance that called for
growth in the mid-single digit range
o It is not yet possible to quantify the magnitude of changes that are
likely to impact organic (non-GAAP) income from operations from the
effects of foreign exchange rate changes primarily related to the
revaluation of overseas bank balances.
SUPPLEMENTARY DATA
Average Foreign Exchange Rates
(1 Local Currency Unit to the U.S. dollar)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 $ Change % 2009 2008 $ Change %
Change Change
GBP
to $ 1.64 $ 1.89 $ (0.25 ) -13.2 % $ 1.54 $ 1.95 $ (0.41 ) -21.0 %
USD
EUR
to $ 1.43 $ 1.50 $ (0.07 ) -4.7 % $ 1.37 $ 1.52 $ (0.15 ) -9.9 %
USD
AUD
to $ 0.83 $ 0.89 $ (0.06 ) -6.7 % $ 0.75 $ 0.91 $ (0.16 ) -17.6 %
USD
Out-of-Period Accounting Adjustment*
(In thousands)
Three Months Year Ended Year Ended Year Ended
Ended
March 31, December 31, December 31, December 31, Total
2009 2008 2007 2006
Decrease in $ 191 $ 1,694 $ 200 $ 209 $ 2,294
Revenue
Increase in
Total Costs 1,308 6,554 611 122 8,595
and
Expenses
Total $ 1,499 $ 8,248 $ 811 $ 331 $ 10,889
* The out-of-period accounting adjustment detailed above occurred in
the second quarter of 2009 and it was related to write down of certain
assets and the accrual of certain liabilities
associated with the Company's European real-time market data services
operation within the Institutional Services Segment.
Source: Interactive Data Corporation
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