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IHS Inc. Reports Second Quarter 2013 Results

Stocks in this article: IHS

IHS is a registered trademark of IHS Inc. All other company and product names may be trademarks of their respective owners.

© 2013 IHS Inc. All rights reserved.

IHS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per-share amounts)
   
As of As of
May 31, 2013 November 30, 2012
(Unaudited) (Audited)
Assets
Current assets:
Cash and cash equivalents $ 267,131 $ 345,008
Accounts receivable, net 350,088 372,117
Income tax receivable 4,655 20,464
Deferred subscription costs 50,874 47,065
Deferred income taxes 50,164 55,084
Other 34,238   24,145  
Total current assets 757,150   863,883  
Non-current assets:
Property and equipment, net 187,474 163,013
Intangible assets, net 562,731 554,552
Goodwill 2,058,516 1,959,223
Other 7,070   8,540  
Total non-current assets 2,815,791   2,685,328  
Total assets $ 3,572,941   $ 3,549,211  
Liabilities and stockholders’ equity
Current liabilities:
Short-term debt $ 169,481 $ 170,102
Accounts payable 51,767 52,079
Accrued compensation 25,601 50,497
Accrued royalties 30,514 33,637
Other accrued expenses 69,044 55,304
Deferred revenue 599,635   515,318  
Total current liabilities 946,042 876,937
Long-term debt 839,538 890,922
Accrued pension and postretirement liability 22,632 30,027
Deferred income taxes 122,712 139,235
Other liabilities 29,157 27,732
Commitments and contingencies
Stockholders’ equity:
Class A common stock, $0.01 par value per share, 160,000,000 shares authorized, 67,621,367 shares issued, and 65,779,733 and 65,577,530 shares outstanding at May 31, 2013 and November 30, 2012, respectively 676 676
Additional paid-in capital 680,715 681,409
Treasury stock, at cost: 1,841,634 and 2,043,837 shares at May 31, 2013 and November 30, 2012, respectively (145,659 ) (139,821 )
Retained earnings 1,156,348 1,088,787
Accumulated other comprehensive loss (79,220 ) (46,693 )
Total stockholders’ equity 1,612,860   1,584,358  
Total liabilities and stockholders’ equity $ 3,572,941   $ 3,549,211  
 
IHS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for per-share amounts)
(Unaudited)
   
Three months ended May 31, Six months ended May 31,
2013   2012 2013   2012
Revenue:
Products $ 355,927 $ 326,517 $ 697,405 $ 624,498
Services 62,216   60,642   103,263   105,404  
Total revenue 418,143 387,159 800,668 729,902
Operating expenses:
Cost of revenue:
Products 143,632 135,532 283,917 260,354
Services 28,792   29,739   48,582   51,507  
Total cost of revenue (includes stock-based compensation expense of $1,294; $1,662; $2,976 and $2,979 for the three and six months ended May 31, 2013 and 2012, respectively) 172,424 165,271 332,499 311,861
Selling, general and administrative (includes stock-based compensation expense of $29,505; $24,812; $67,585 and $57,415 for the three and six months ended May 31, 2013 and 2012, respectively) 143,609 126,845 285,838 252,021
Depreciation and amortization 32,877 28,992 65,356 55,293
Restructuring charges 3,231 3,628 8,019 11,113
Acquisition-related costs 1,665 501 3,560 1,368
Net periodic pension and postretirement expense 2,242 1,997 4,482 3,997
Other expense (income), net 511   (566 ) 2,930   (1,302 )
Total operating expenses 356,559   326,668   702,684   634,351  
Operating income 61,584 60,491 97,984 95,551
Interest income 303 247 647 419
Interest expense (6,164 ) (4,886 ) (12,284 ) (9,780 )
Non-operating expense, net (5,861 ) (4,639 ) (11,637 ) (9,361 )
Income from continuing operations before income taxes 55,723 55,852 86,347 86,190
Provision for income taxes (12,840 ) (11,661 ) (18,793 ) (18,524 )
Income from continuing operations 42,883 44,191 67,554 67,666
Income from discontinued operations, net 7     7    
Net income $ 42,890   $ 44,191   $ 67,561   $ 67,666  
 
Basic earnings per share
Income from continuing operations $ 0.65 $ 0.67 $ 1.03 $ 1.03
Income from discontinued operations, net $   $   $   $  
Net income $ 0.65   $ 0.67   $ 1.03   $ 1.03  
Weighted average shares used in computing basic earnings per share 65,888   65,876   65,840   65,696  
 
Diluted earnings per share
Income from continuing operations $ 0.65 $ 0.66 $ 1.01 $ 1.02
Income from discontinued operations, net $   $   $   $  
Net income $ 0.65   $ 0.66   $ 1.01   $ 1.02  
Weighted average shares used in computing diluted earnings per share 66,421   66,544   66,584   66,625  
 
IHS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Six months ended May 31,
2013   2012
Operating activities:
Net income $ 67,561 $ 67,666
Reconciliation of net income to net cash provided by operating activities:
Depreciation and amortization 65,356 55,293
Stock-based compensation expense 70,561 60,394
Impairment of assets 1,629
Excess tax benefit from stock-based compensation (11,802 ) (10,301 )
Net periodic pension and postretirement expense 4,482 3,997
Pension and postretirement contributions (11,876 ) (65,704 )
Deferred income taxes (26,462 ) (7,166 )
Change in assets and liabilities:
Accounts receivable, net 37,053 44,078
Other current assets (15,803 ) (15,897 )
Accounts payable (10,430 ) 5,602
Accrued expenses (11,585 ) (28,916 )
Income tax payable 27,561 12,739
Deferred revenue 75,998 55,948
Other liabilities (1,077 ) 441  
Net cash provided by operating activities 261,166   178,174  
Investing activities:
Capital expenditures on property and equipment (42,436 ) (31,674 )
Acquisitions of businesses, net of cash acquired (155,505 ) (119,395 )
Intangible assets acquired (3,700 )
Change in other assets (2,317 ) (1,851 )
Settlements of forward contracts 128   (1,522 )
Net cash used in investing activities (200,130 ) (158,142 )
Financing activities:
Proceeds from borrowings 45,000 85,000
Repayment of borrowings (97,001 ) (45,069 )
Excess tax benefit from stock-based compensation 11,802 10,301
Proceeds from the exercise of employee stock options 285 76
Repurchases of common stock (83,365 ) (29,314 )
Net cash provided by (used in) financing activities (123,279 ) 20,994  
Foreign exchange impact on cash balance (15,634 ) (7,496 )
Net increase (decrease) in cash and cash equivalents (77,877 ) 33,530
Cash and cash equivalents at the beginning of the period 345,008   234,685  
Cash and cash equivalents at the end of the period $ 267,131   $ 268,215  
 
IHS INC.
SUPPLEMENTAL REVENUE DISCLOSURE
(In thousands)
(Unaudited)
       
Three months ended May 31, Percent change Six months ended May 31, Percent change
2013   2012 Total   Organic 2013   2012 Total   Organic
Revenue by segment:
Americas revenue $ 257,625 $ 230,468 12 % 3 % $ 486,791 $ 437,388 11 % 3 %
EMEA revenue 112,944 113,524 (1 )% (1 )% 222,415 212,933 4 % 1 %
APAC revenue 47,574   43,167   10 % 10 % 91,462   79,581   15 % 12 %
Total revenue $ 418,143   $ 387,159   8 % 3 % $ 800,668   $ 729,902   10 % 4 %
 
Revenue by transaction type:
Subscription revenue $ 313,923 $ 287,254 9 % 6 % $ 621,650 $ 560,644 11 % 7 %
Non-subscription revenue 104,220   99,905   4 % (6 )% 179,018   169,258   6 % (7 )%
Total revenue $ 418,143   $ 387,159   8 % 3 % $ 800,668   $ 729,902   10 % 4 %
 
Revenue by information domain:
Energy revenue $ 203,321 $ 181,832 $ 378,792 $ 340,886
Product Lifecycle (PLC) revenue 141,369 124,091 274,083 234,820
Security revenue 27,601 30,023 55,620 57,244
Environment revenue 23,787 25,001 49,068 47,140
Macroeconomic Forecasting and Intersection revenue 22,065   26,212   43,105   49,812  
Total revenue $ 418,143   $ 387,159   $ 800,668   $ 729,902  
 
IHS INC.
RECONCILIATION OF CONSOLIDATED NON-GAAP FINANCIAL MEASUREMENTS TO
MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS
(In thousands, except for per-share amounts)
(Unaudited)
   
Three months ended May 31, Six months ended May 31,
2013   2012 2013   2012
Net income $ 42,890 $ 44,191 $ 67,561 $ 67,666
Interest income (303 ) (247 ) (647 ) (419 )
Interest expense 6,164 4,886 12,284 9,780
Provision for income taxes 12,840 11,661 18,793 18,524
Depreciation 10,851 7,987 20,731 16,119
Amortization 22,026   21,005   44,625   39,174  
EBITDA $ 94,468 $ 89,483 $ 163,347 $ 150,844
Stock-based compensation expense 30,799 26,474 70,561 60,394
Restructuring charges 3,231 3,628 8,019 11,113
Acquisition-related costs 1,665 501 3,560 1,368
Impairment of assets 1,629
Loss on sale of assets 1,241
Income from discontinued operations, net (7 )   (7 )  
Adjusted EBITDA $ 130,156   $ 120,086   $ 248,350   $ 223,719  
 
Three months ended May 31, Six months ended May 31,
2013 2012 2013 2012
Earnings per diluted share $ 0.65 $ 0.66 $ 1.01 $ 1.02
Stock-based compensation expense 0.34 0.26 0.73 0.59
Restructuring charges 0.03 0.04 0.08 0.11
Acquisition-related costs 0.02 0.01 0.04 0.02
Impairment of assets 0.02
Loss on sale of assets     0.01    
Adjusted earnings per diluted share $ 1.04   $ 0.97   $ 1.90   $ 1.73  
Note: Amounts may not sum due to rounding
 
 
Three months ended May 31, Six months ended May 31,
2013 2012 2013   2012
Net cash provided by operating activities $ 129,480 $ 145,191 $ 261,166 $ 178,174
Capital expenditures on property and equipment (23,069 ) (18,118 ) (42,436 ) (31,674 )
Free cash flow $ 106,411   $ 127,073   $ 218,730   $ 146,500  
 
IHS INC.
RECONCILIATION OF SEGMENT NON-GAAP FINANCIAL MEASUREMENTS TO
MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS
(In thousands)
(Unaudited)
 
Three months ended May 31, 2013
Americas   EMEA   APAC   Shared Services   Total
Operating income $ 79,515 $ 20,485 $ 10,248 $ (48,664 ) $ 61,584
Adjustments:
Stock-based compensation expense 30,799 30,799
Depreciation and amortization 25,181 5,474 476 1,746 32,877
Restructuring charges 2,165 990 76 3,231
Acquisition-related costs 1,503   162       1,665
Adjusted EBITDA $ 108,364   $ 27,111   $ 10,800   $ (16,119 ) $ 130,156
 
Three months ended May 31, 2012
Americas EMEA APAC Shared Services Total
Operating income $ 68,681 $ 24,066 $ 11,493 $ (43,749 ) $ 60,491
Adjustments:
Stock-based compensation expense 26,474 26,474
Depreciation and amortization 21,221 6,347 270 1,154 28,992
Restructuring charges 2,378 1,250 3,628
Acquisition-related costs 385   116       501
Adjusted EBITDA $ 92,665   $ 31,779   $ 11,763   $ (16,121 ) $ 120,086
 
Six months ended May 31, 2013
Americas EMEA APAC Shared Services Total
Operating income $ 141,648 $ 36,471 $ 19,997 $ (100,132 ) $ 97,984
Adjustments:
Stock-based compensation expense 70,561 70,561
Depreciation and amortization 49,465 11,391 937 3,563 65,356
Restructuring charges 6,061 1,937 21 8,019
Acquisition-related costs 3,398 162 3,560
Impairment of assets 1,629 1,629
Loss on sale of assets   1,241       1,241
Adjusted EBITDA $ 202,201   $ 51,202   $ 20,955   $ (26,008 ) $ 248,350
 
Six months ended May 31, 2012
Americas EMEA APAC Shared Services Total
Operating income $ 119,985 $ 44,963 $ 19,488 $ (88,885 ) $ 95,551
Adjustments:
Stock-based compensation expense 60,394 60,394
Depreciation and amortization 41,758 10,181 321 3,033 55,293
Restructuring charges 9,377 1,505 231 11,113
Acquisition-related costs 1,252   116       1,368
Adjusted EBITDA $ 172,372   $ 56,765   $ 20,040   $ (25,458 ) $ 223,719
 
IHS INC.
SUPPLEMENTAL INFORMATION
(In thousands)
(Unaudited)
   
Three months ended May 31, 2013 Three months ended May 31, 2012
Pre-tax   After tax Pre-tax   After tax
Stock-based compensation expense $ 30,799 $ 22,591 $ 26,474 $ 17,202
Restructuring charges $ 3,231 $ 2,215 $ 3,628 $ 2,448
Acquisition-related costs $ 1,665 $ 1,358 $ 501 $ 501
Income from discontinued operations, net $ (11 ) $ (7 ) $ $
 
Six months ended May 31, 2013 Six months ended May 31, 2012
Pre-tax After tax Pre-tax After tax
Stock-based compensation expense $ 70,561 $ 48,635 $ 60,394 $ 39,040
Restructuring charges $ 8,019 $ 5,364 $ 11,113 $ 7,256
Acquisition-related costs $ 3,560 $ 2,886 $ 1,368 $ 1,368
Impairment of assets $ 1,629 $ 1,010 $ $
Loss on sale of assets $ 1,241 $ 827 $ $
Income from discontinued operations, net $ (11 ) $ (7 ) $ $




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