IHS Inc. (NYSE:IHS), one of the leading global providers of
critical technical information, decision-support tools and related
services, today reported results for the full year and fourth
quarter ended November 30, 2005. Revenue for fiscal 2005 was $476.1
million, representing an increase of 21 percent compared to $394.0
million for fiscal 2004. Net income for fiscal 2005 was $41.8
million, or $0.75 per diluted share, compared to $61.3 million, or
$1.11 per diluted share, for fiscal 2004. Revenue for the fourth
quarter of fiscal 2005 totaled $126.0 million, representing an
increase of six percent over fourth-quarter 2004 revenue of $118.4
million. Net income for the fourth quarter of 2005 decreased 39
percent to $16.4 million, or $0.29 per diluted share, compared to
fourth-quarter 2004 net income of $26.9 million, or $0.49 per
diluted share. Full-year and fourth-quarter 2004 net income amounts
include an after-tax gain of $23.0 million, or $0.42 per diluted
share related to the sale of an investment in an affiliate. IHS
generated approximately $48.3 million and $11.5 million of cash
flow from operations in the full year and fourth quarter of 2005,
respectively. The company also successfully completed an initial
public offering during the fourth quarter of 2005. Adjusted EBITDA
totaled $86.7 million for fiscal 2005, up 17 percent compared to
$74.4 million in fiscal 2004. Adjusted EBITDA totaled $28.6 million
in the fourth quarter of 2005, up 15 percent from $24.8 million in
the fourth quarter of 2004. Adjusted EBITDA, a non-GAAP financial
measure, is used by management to measure operating performance.
EBITDA is defined as net income plus net interest, taxes,
depreciation and amortization. Adjusted EBITDA excludes non-cash
items, gains and losses on sales of assets and investments and
other items that management does not utilize in assessing operating
performance (as further described in the attached financial
schedules). Management believes that it is useful to eliminate
these items in order to focus on what it deems to be a more
reliable indicator of ongoing operating performance. Management
believes that investors may find adjusted EBITDA useful for the
same reasons, although investors are cautioned that non-GAAP
financial measures, such as adjusted EBITDA, are not a substitute
for GAAP disclosures. Non-GAAP results are presented only as a
supplement to the financial statements based on U.S. generally
accepted accounting principles (GAAP). Reconciliations of
comparable GAAP measurements to non-GAAP measurements, such as
EBITDA and adjusted EBITDA, are provided within the schedules
attached to this release. "We believe that our strong results in
2005 demonstrate that we are meeting the needs of an expanding
market," said Charles Picasso, IHS President and CEO. "We grew the
top line organically in both of our Energy and Engineering business
segments by expanding our subscription base. We also enhanced our
product offerings, including integrating several smaller strategic
acquisitions, enhanced content and functionality of some of our
existing products, continued to drive efficiencies across the
organization, and generated significant cash flows. We are
leveraging our global opportunity by providing customers with
one-stop access to critical information and insight in our targeted
industries." Full-Year 2005 Our 21-percent overall revenue growth
in 2005 was primarily comprised of eight-percent organic growth and
10-percent growth from acquisitions completed within the last year.
Drivers of organic growth included expansion in the subscription
base and strong demand for services and decision-support tools.
Revenue within our Energy segment increased 30 percent in fiscal
2005 to $242.3 million, compared to $185.8 million in 2004. Organic
revenue growth contributed 13 percentage points of the increase.
The balance of revenue growth was primarily driven by acquisitions.
Engineering segment revenue increased 12 percent in fiscal 2005 to
$233.8 million, compared to $208.2 million in 2004. Organic revenue
growth contributed three percentage points of the increase. The
remainder of Engineering's revenue growth was primarily driven by
the combination of acquisitions and the unwinding of a joint
venture. Fourth-Quarter 2005 Overall revenue growth for IHS in the
fourth quarter of 2005 was primarily attributable to six-percent
organic growth. One important item affecting the year-over-year
organic revenue growth comparison was a seasonal standards product
in our Engineering division, which is released and primarily sold
in the fourth quarter once every three years -- including our
fiscal 2004, when it accounted for $3.7 million of revenue.
Excluding this product release from the comparison, organic growth
was nine percent. Drivers of organic growth included expansion of
the subscription base and strong growth rates within our services
businesses. Energy segment revenue increased 11 percent in the
fourth quarter of fiscal 2005 to $63.4 million, compared to $57.2
million in the comparable fiscal 2004 fourth quarter. That
segment's organic revenue growth contributed substantially all of
the increase. Engineering segment revenue increased two percent in
the fourth quarter of fiscal 2005 to $62.6 million, compared to
$61.3 million in the comparable 2004 fourth quarter. Engineering
segment's organic revenue growth was flat compared to the prior
year, but adjusting for the same product mentioned above,
Engineering organic growth would have been seven percent. Balance
Sheet IHS ended the 2005 fiscal year with $132.4 million of cash
and cash equivalents on the balance sheet, and virtually no debt.
"Our balance sheet provides us with financial flexibility which,
when coupled with our solid operating results and cash flows,
supports our growth strategies for the future," stated Michael
Sullivan, Senior Vice President and CFO. Outlook (forward-looking
statement) IHS currently anticipates organic revenue growth in a
range of seven to nine percent for the full year fiscal 2006 ending
November 30, 2006. The company further expects adjusted EBITDA to
grow 10 to 13 percent for the full year fiscal 2006. Adjusted
EBITDA excludes non-cash items, gains and losses on sales of assets
and investments and other items that management does not utilize in
assessing our operating performance, such as the net periodic
pension and post-retirement benefits and the estimated cost of
restricted stock grants. "Building on our robust fourth-quarter and
full-year results, we believe we are positioned well for fiscal
2006, in terms of our strong financial performance and progress in
implementing our strategic and operational plans to enhance IHS'
role as a global leader and growth company," said Mr. Picasso. As
previously announced, IHS will hold a conference call to discuss
fourth-quarter and full-year results on January 12, 2006, at 3:00
p.m. MST (5:00 p.m. EST). The conference call will be
simultaneously webcast on the company's website (www.ihs.com). IHS
Forward-Looking Statements This release may contain forward-looking
statements as defined in the Private Securities Litigation Reform
Act of 1995. Forward-looking statements are statements that are not
historical facts. Such statements may include financial projections
and estimates and their underlying assumptions, statements
regarding plans, objectives and expectations with respect to future
operations, products, and services, and statements regarding future
performance. Forward-looking statements are generally identified by
the words "expect," "anticipate," "believe," "intend," "estimate,"
"plan" and similar expressions. Although IHS and its management
believe that the expectations reflected in such forward-looking
statements are reasonable, investors are cautioned that
forward-looking information and statements are subject to various
risks and uncertainties -- many of which are difficult to predict
and generally beyond the control of IHS -- that could cause actual
results and developments to differ materially from those expressed
in, or implied or projected by, the forward-looking information and
statements. These risks and uncertainties include those discussed
or identified by IHS from time to time in its public filings. Other
than as required by applicable law, IHS does not undertake any
obligation to update or revise any forward-looking information or
statements. Please consult our public filings at www.sec.gov or
www.ihs.com. About IHS Inc. (www.ihs.com) IHS (NYSE:IHS) is one of
the leading global providers of critical technical information,
decision-support tools and related services to customers in a
number of industries including energy, defense, aerospace,
construction, electronics, and automotive through two operating
segments, Engineering and Energy. Our Engineering and Energy
segments each represent approximately one-half of IHS' total
revenues. We serve customers ranging from governments and large
multinational corporations to smaller companies and technical
professionals in more than 100 countries. Our customers rely on our
offerings to facilitate decision making, support key processes and
improve productivity. We have been in business for more than 45
years and employ more than 2,300 people around the world. IHS and
IHS Energy are registered trademarks of IHS Inc. All other company
and product names may be trademarks of their respective owners.
Copyright (C) 2005 IHS Inc. All rights reserved. -0- *T IHS INC.
CONSOLIDATED BALANCE SHEETS (In thousands, except share and
per-share amounts) As of November 30, -------------------- 2004
2005 -------------------- (Unaudited) Assets Current assets: Cash
and cash equivalents $124,452 $132,365 Short-term investments --
27,223 Accounts receivable, net 117,873 136,950 Deferred
subscription costs 25,727 27,918 Deferred income taxes 12,173
11,351 Other 11,625 10,638 -------------------- Total current
assets 291,850 346,445 Non-current assets: Property and equipment,
net 49,591 46,580 Intangible assets, net 26,821 27,456 Goodwill,
net 301,880 296,394 Prepaid pension asset 81,242 88,516 Other 1,260
1,765 -------------------- Total non-current assets 460,794 460,711
-------------------- Total assets $752,644 $807,156
==================== Liabilities and stockholders' equity Current
liabilities: Short-term capital leases $48 $-- Accounts payable
39,516 41,625 Accrued compensation 28,869 20,135 Accrued royalties
26,307 26,139 Other accrued expenses 28,262 34,975 Income tax
payable 9,114 7,726 Deferred subscription revenue 140,120 149,552
Risk management liabilities -- 2,705 -------------------- Total
current liabilities 272,236 282,857 Long-term debt and capital
leases 607 262 Accrued pension liability 7,531 6,824 Accrued
post-retirement benefits 18,740 20,278 Deferred income taxes 11,533
15,044 Other liabilities 8,065 4,402 Minority interests 1,209 309
Deferred stock units and restricted shares with put rights 11,672
-- Stockholders' equity: Class A common stock, $0.01 par value per
share, 80,000,000 shares authorized, 44,078,231 and 41,250,000
issued and outstanding at November 30, 2005 and 2004, respectively
413 441 Class B common stock, $0.01 par value per share, 13,750,000
shares authorized, issued and outstanding at November 30, 2005 and
2004 138 138 Class C common stock, $1.00 par value per share, 1,000
shares authorized, issued and held in treasury at November 30, 2004
-- -- Additional paid-in capital 122,300 168,196 Retained earnings
301,887 343,684 Accumulated other comprehensive loss (3,687)
(10,486) Unearned compensation -- (24,793) --------------------
Total stockholders' equity 421,051 477,180 --------------------
Total liabilities and stockholders' equity $752,644 $807,156
==================== *T -0- *T IHS INC. CONSOLIDATED STATEMENTS OF
OPERATIONS (In thousands, except per-share amounts) Three Months
Ended Years Ended November 30, November 30,
-------------------------------------- 2004 2005 2004 2005
-------------------------------------- (Unaudited) (Unaudited)
Revenue: Products $100,251 $104,487 $352,367 $395,830 Services
18,189 21,545 41,602 80,287 --------------------------------------
Total revenue 118,440 126,032 393,969 476,117 Operating expenses:
Cost of revenue: Products 43,783 43,993 150,357 176,049 Services
10,876 13,857 29,643 51,572 Compensation expense related to equity
awards 4,437 324 4,437 551 --------------------------------------
Total cost of revenue 59,096 58,174 184,437 228,172 Selling,
general and administrative 39,018 40,099 136,529 162,860
Depreciation and amortization 2,908 2,880 9,642 11,419
Restructuring and other charges -- 1,306 -- 13,703 Compensation
expense related to equity awards 17,065 1,403 17,065 4,721 Gain on
sales of assets, net (497) -- (5,532) (1,331) Impairment of assets
1,972 -- 1,972 -- Net periodic pension and post- retirement
benefits (1,447) (1,310) (5,791) (4,091) Earnings in unconsolidated
subsidiaries (43) (51) (437) (129) Other expense (income), net
(202) (578) 3,173 (1,059) --------------------------------------
Total operating expenses 117,870 101,923 341,058 414,265
-------------------------------------- Operating income 570 24,109
52,911 61,852 Gain on sale of investment in affiliate 26,601 --
26,601 -- Interest income 554 932 1,140 3,485 Interest expense
(196) (75) (450) (768) --------------------------------------
Non-operating income (expense), net 26,959 857 27,291 2,717
-------------------------------------- Income from continuing
operations before income taxes and minority interests 27,529 24,966
80,202 64,569 Provision for income taxes 543 (7,878) (16,644)
(20,376) -------------------------------------- Income from
continuing operations before minority interests 28,072 17,088
63,558 44,193 Minority interests (221) (132) (275) (146)
-------------------------------------- Income from continuing
operations 27,851 16,956 63,283 44,047 Discontinued operations:
Loss from discontinued operations, net (920) (598) (1,969) (2,250)
-------------------------------------- Net income $26,931 $16,358
$61,314 $41,797 ====================================== Income from
continuing operations per share: Basic (Class A and Class B common
stock) $0.51 $0.31 $1.15 $0.80
====================================== Diluted (Class A and Class B
common stock) $0.51 $0.30 $1.15 $0.79
====================================== Loss from discontinued
operations per share: Basic (Class A and Class B common stock)
$(0.02) $(0.01) $(0.04) $(0.04)
====================================== Diluted (Class A and Class B
common stock) $(0.02) $(0.01) $(0.04) $(0.04)
====================================== Net income per share: Basic
(Class A and Class B common stock) $0.49 $0.30 $1.11 $0.76
====================================== Diluted (Class A and Class B
common stock) $0.49 $0.29 $1.11 $0.75
====================================== Weighted average shares:
Basic (Class A common stock) 41,250 41,435 41,250 41,345
====================================== Basic (Class B common stock)
13,750 13,750 13,750 13,750 ======================================
Diluted (Class A common stock) 55,000 56,061 55,000 55,895
====================================== Diluted (Class B common
stock) 13,750 13,750 13,750 13,750
====================================== *T -0- *T IHS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Years Ended
November 30, ------------------ 2004 2005 ------------------
(Unaudited) Operating activities Net income $61,314 $41,797
Reconciliation of net income to net cash provided by operating
activities: Depreciation and amortization 9,882 11,655 Compensation
expense related to equity awards (non- cash portion) 11,872 5,272
Gain on sales of assets, net (5,532) (1,331) Gain on sale of
investment in affiliate (26,601) -- Impairment of assets 1,972 --
Net periodic pension and post-retirement benefits (5,791) (4,091)
Minority interests 275 (168) Deferred income taxes (1,424) 4,531
Tax benefit from equity compensation plans -- 295 Change in assets
and liabilities: Accounts receivable, net 4,557 (26,088) Other
current assets (11,755) (2,922) Accounts payable (15,208) 5,033
Accrued expenses 26,232 (3,044) Income taxes 1,035 963 Deferred
subscription revenue 16,152 16,388 ------------------ Net cash
provided by operating activities 66,980 48,290 Investing activities
Capital expenditures on property and equipment (4,444) (5,662)
Change in other assets 4,485 (4,171) Purchase of investments --
(28,384) Sales and maturities of investments -- 1,101 Acquisitions
of businesses, net of cash acquired (70,331) (3,518) Proceeds from
sales of assets and investment in affiliate 104,893 1,331
------------------ Net cash provided by (used in) investing
activities 34,603 (39,303) Financing activities Net payments on
debt (157) (390) Cash dividends (1,843) -- ------------------ Net
cash used in financing activities (2,000) (390) ------------------
Foreign exchange impact on cash balance 818 (684)
------------------ Net increase in cash and cash equivalents
100,401 7,913 Cash and cash equivalents at the beginning of the
year 24,051 124,452 ------------------ Cash and cash equivalents at
the end of the year $124,452 $132,365 ================== *T -0- *T
IHS INC. SEGMENT INFORMATION (In thousands) Three Months Ended
Years Ended November 30, November 30,
------------------------------------ 2004 2005 2004 2005
------------------------------------ (Unaudited) (Unaudited) Energy
revenue $57,158 $63,395 $185,792 $242,312 Engineering revenue
61,282 62,637 208,177 233,805 ------------------------------------
Revenue $118,440 $126,032 $393,969 $476,117
==================================== Energy operating income $9,008
$14,215 $35,225 $53,003 Engineering operating income 11,617 11,617
32,984 17,993 ------------------------------------ Total segment
operating income 20,625 25,832 68,209 70,996 Adjustments:
Corporate-level restructuring and other charges -- (1,306) --
(9,297) Compensation expense related to equity awards (21,502)
(1,727) (21,502) (5,272) Gain on sales of corporate assets, net --
-- 413 1,334 Net periodic pension and post- retirement benefits
1,447 1,310 5,791 4,091 ------------------------------------
Operating income $570 $24,109 $52,911 $61,852
==================================== *T -0- *T IHS INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASUREMENT TO MOST DIRECTLY
COMPARABLE GAAP FINANCIAL MEASUREMENT (In thousands) Three Months
Ended Years Ended November 30, November 30,
------------------------------------ 2004 2005 2004 2005
------------------------------------ (Unaudited) (Unaudited) Net
income $26,931 $16,358 $61,314 $41,797 Interest income (554) (932)
(1,140) (3,485) Interest expense 196 75 450 768 Provision for
income taxes (543) 7,878 16,644 20,376 Depreciation and
amortization 2,908 2,880 9,642 11,419
------------------------------------ EBITDA 28,938 26,259 86,910
70,875 Compensation expense related to equity awards 21,502 1,727
21,502 5,272 Restructuring and other charges -- 1,306 -- 13,703
Gain on sales of assets, net (497) -- (5,532) (1,331) Impairment of
assets 1,972 -- 1,972 -- Net periodic pension and post- retirement
benefits (1,447) (1,310) (5,791) (4,091) Gain on sale of investment
in affiliate (26,601) -- (26,601) -- Loss from discontinued
operations, net 920 598 1,969 2,250
------------------------------------ Adjusted EBITDA $24,787
$28,580 $74,429 $86,678 ==================================== *T -0-
*T IHS INC. SUPPLEMENTAL INFORMATION (In thousands, except
per-share amounts) Three Months Ended November 30,
-------------------------- 2004 2005 --------------------------
After- Per After- Per tax share tax share
-------------------------- (Unaudited) Compensation expense related
to equity awards $13,557 $0.25 $931 $0.02 Restructuring and other
charges -- -- 888 0.02 Gain on sales of assets, net (308)(0.01) --
-- Net periodic pension and post-retirement benefits (877)(0.02)
(534)(0.01) Loss from discontinued operations, net 920 0.02 598
0.01 Gain on sale of investment (23,009)(0.42) -- -- Years Ended
November 30, --------------------------- 2004 2005
--------------------------- After- Per After- Per tax share tax
share --------------------------- (Unaudited) Compensation expense
related to equity awards $13,557 $0.25 $3,315 $0.06 Restructuring
and other charges -- -- 10,574 0.19 Gain on sales of assets, net
(3,430)(0.06) (826)(0.02) Impairment of assets 1,223 0.02 -- -- Net
periodic pension and post-retirement benefits
(3,511)(0.06)(2,404)(0.04) Loss from discontinued operations, net
1,969 0.04 2,250 0.04 Gain on sale of investment (23,009)(0.42) --
-- *T
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