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® 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™, 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.
- This forecast still includes an
anticipated positive impact of approximately two percentage points
from acquisitions completed in 2008.
- 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.
- This forecast still includes an
anticipated positive impact of approximately two percentage points
from acquisitions completed in 2008.
- 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.
- 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 services 60,347 60,469 -0.2 %
187,176 181,979 2.9 % Selling, general and administrative 57,387
60,727 -5.5 % 172,918 181,101 -4.5 % 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 expenses 133,661 134,908
-0.9 % 405,771 403,857
0.5 % INCOME FROM OPERATIONS 58,431 53,681 8.8 % 157,347
152,592 3.1 % Interest income 335 1,893
-82.3 % 1,495 6,208 -75.9 %
INCOME BEFORE INCOME TAXES 58,766 55,574 5.7 % 158,842 158,800 0.0
% Income tax expense 15,636 18,859
-17.1 % 50,485 56,260 -10.3 %
NET INCOME $ 43,130 $ 36,715 17.5 % $ 108,357 $ 102,540 5.7 % Less:
Net income attributable to noncontrolling interest -
- - (172 ) - 100.0
% NET INCOME ATTRIBUTABLE TO INTERACTIVE DATA CORPORATION $ 43,130
$ 36,715 17.5 % $ 108,185 $ 102,540
5.5 % 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 common share* $ 0.20 $ 0.30 -33.3 % $ 0.40 $ 0.45 -11.1 %
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' equity 1,068,814 959,807
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 securities, net 1,484 456
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 stock purchase plan 15,936 16,657 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 equivalents 10,936
(10,303 )
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 Reference Data $ 126,732 $ 119,673 5.9 % $
371,754 $ 351,298 5.8 % Real-Time Services 36,233 38,175 -5.1 %
103,992 114,038 -8.8 % Fixed Income Analytics 8,231
8,188 0.5 % 24,593 24,388
0.8 % Institutional Services total 171,196 166,036 3.1 % 500,339
489,724 2.2 % Active Trader Services: eSignal 20,896
22,553 -7.3 % 62,779
66,725 -5.9 % Active Trader Services total 20,896 22,553
-7.3 % 62,779 66,725 -5.9 % Total revenue 192,092 188,589
1.9 % 563,118 556,449 1.2 % Effects of foreign exchange
Institutional Services: Pricing and Reference Data 4,064 - - 20,395
- - Real-Time Services 1,924 - - 10,923 - - Fixed Income Analytics
11 - - 49 -
- Institutional Services total 5,999 - 31,367 -
Active Trader Services: eSignal 336 -
- 1,794 - - Active
Trader Services total 336 - - 1,794 - - Total effects of
foreign exchange 6,335 - -
33,161 - - Non-GAAP
revenue before effects of foreign exchange 198,427 188,589 5.2 %
596,279 556,449 7.2 % Acquisition-related revenue
Acquisition-related revenue - Kler's (895 ) - - (5,984 ) - -
Acquisition-related revenue - NTT DATA Financial (3,635 )
- - (9,998 ) - -
Total effects of acquisition-related revenue (4,530 ) - - (15,982 )
- -
Non-GAAP revenue before effects of
foreign exchange and acquisition-related revenue
193,897 188,589 2.8 % 580,297 556,449 4.3 % Intercompany
eliminations - NTT DATA Financial - (1,403 ) -
- (3,826 ) - Non-GAAP
revenue before above factors* 193,897 187,186
3.6 % 580,297 552,623 5.0 %
* 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 Reference Data revenue $
126,732 $ 119,673 5.9 % $ 371,754 $ 351,298
5.8 % Effects of foreign exchange 4,064
- - 20,395
- - $ 130,796 $ 119,673 9.3 % $ 392,149 $
351,298 11.6 % Acquisition-related revenue - Kler's (895 ) - -
(5,984 ) - - Acquisition-related revenue - NTT DATA Financial
(3,635 ) - - (9,998 ) - - Intercompany eliminations - NTT DATA
Financial - (1,403 ) -
- (3,826 ) - Non-GAAP
revenue before above factors* $ 126,266 $ 118,270
6.8 % $ 376,167 $ 347,472
8.3 % * 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 Services revenue
$ 36,233 $ 38,175 -5.1 % $ 103,992 $ 114,038 -8.8 % Effects of
foreign exchange 1,924 - - 10,923
- - Non-GAAP revenue before effects of foreign
exchange* $ 38,157 $ 38,175 0.0 % $ 114,915 $ 114,038 0.8 %
* 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 Analytics
revenue $ 8,231 $ 8,188 0.5 % $ 24,593 $ 24,388 0.8 % Effects of
foreign exchange 11 - - 49 - -
Non-GAAP revenue before effects of foreign exchange* $ 8,242
$ 8,188 0.7 % $ 24,642 $ 24,388 1.0 %
* 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 foreign exchange 336
- - 1,794 - - Non-GAAP revenue
before effects of foreign exchange* $ 21,232 $ 22,553 -5.9 % $
64,573 $ 66,725 -3.2 %
* Also referred to in this news
release as organic revenue
Revenue by Geography Before
Effects of Foreign Exchange, Acquisition-Related Revenueand
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 percentage
of revenue
2009 2008
Change 2009 2008
Change 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 America $ 133,034 $ 133,131 -0.1 % $ 397,384 $ 391,360 1.5
% Intercompany eliminations - NTT DATA Financial -
(1,403 ) - - (3,826 ) -
Non-GAAP revenue before effects of foreign exchange* $ 133,034
$ 131,728 1.0 % $ 397,384 $ 387,534 2.5
% * 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 exchange
6,139 - - 31,372 -
- 56,827 50,635 12.2 % 173,799 151,340 14.8 %
Acquisition-related revenue - Kler's (895 ) -
- (5,984 ) - - Non-GAAP revenue
before effects of foreign exchange* $ 55,932 $ 50,635
10.5 % $ 167,815 $ 151,340 10.9 % * 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 Pacific $ 8,370 $ 4,823 73.5 %
$ 23,307 $ 13,749 69.5 % Effects of foreign exchange 196
- - 1,789 -
- 8,566 4,823 77.6 % 25,096 13,749 82.5 %
Acquisition-related revenue - NTT DATA Financial (3,635 )
- - (9,998 ) - -
Non-GAAP revenue before effects of foreign exchange* $ 4,931
$ 4,823 2.2 % $ 15,098 $ 13,749 9.8 % * 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 & expenses $ 133,661 $
134,908 -0.9 % $ 405,771 $ 403,857 0.5 % Effects of foreign
exchange 4,114 - - 22,727
- - Total costs & expenses before the
effects of foreign exchange 137,775 134,908 2.1 % 428,498 403,857
6.1 %
Effects of foreign exchange
primarily related to the revaluation of overseas bank balances
797 1,401 - (1,125 ) 4,829 - Total costs & expenses
before all foreign exchange-related items 138,572 136,309 1.7 %
427,373 408,686 4.6 % Acquisition-related costs &
expenses Total costs & expenses – NTT DATA Financial (1,861 ) -
- (5,073 ) - - Total costs & expenses – Kler's (479 )
- - (3,219 ) - - (2,340 ) - -
(8,292 ) - - Non-GAAP total costs & expenses before
above factors $ 136,232 $ 136,309 -0.1 % $ 419,081 $
408,686 2.5 %
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 factors $ 193,897 $ 187,186
3.6 % $ 580,297 $ 552,623 5.0 % Non-GAAP total costs and
expenses before above factors 136,232 136,309 -0.1 %
419,081 408,686 2.5 % Non-GAAP income from
operations $ 57,665 $ 50,877 13.3 % $ 161,216 $ 143,937 12.0 %
* 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.
- This forecast still includes an
anticipated positive impact of approximately two percentage points
from acquisitions completed in 2008.
- 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.
- This forecast still includes an
anticipated positive impact of approximately two percentage points
from acquisitions completed in 2008.
- 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
- 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 % Change
2009 2008 $
Change % Change GBP to USD $ 1.64 $
1.89 $ (0.25 ) -13.2 % $ 1.54 $ 1.95 $ (0.41 ) -21.0
% EUR to USD $ 1.43 $ 1.50 $ (0.07 ) -4.7 % $ 1.37 $ 1.52 $
(0.15 ) -9.9 % AUD to USD $ 0.83 $ 0.89 $ (0.06 ) -6.7 % $
0.75 $ 0.91 $ (0.16 ) -17.6 %
Out-of-Period Accounting
Adjustment*
(In thousands)
Three Months Ended Year Ended Year Ended
Year Ended March 31, 2009 December 31, 2008
December 31, 2007 December 31, 2006 Total
Decrease in Revenue $ 191 $ 1,694 $ 200 $ 209 $ 2,294
Increase in Total Costs and Expenses 1,308 6,554
611 122 8,595
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 liabilitiesassociated with the Company's European
real-time market data services operation within the Institutional
Services Segment.
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