EX-99.1 2 a2145317zex-99_1.htm EXHIBIT 99.1

Exhibit 99.1

 

 

 

 

INFORMATION HOLDINGS REPORTS RESULTS FOR

THIRD QUARTER ENDED SEPTEMBER 30, 2004

 

STAMFORD, CT, October 21, 2004 - Information Holdings Inc. (NYSE: IHI) today announced results for the quarter ended September 30, 2004.  Earnings per diluted common share (EPS) from continuing operations were $0.12 in the third quarter of 2004 compared to $0.05 in the third quarter of 2003.  EPS in the third quarter of 2004 includes charges equal to approximately $0.02 per share for costs associated with the pending merger with The Thomson Corporation (Thomson).  Including discontinued operations, EPS was $0.12 in the third quarter of 2004, compared to $0.06 in the third quarter of 2003.

 

Third Quarter Results

 

Revenues in the third quarter of 2004 increased 23.0% to $23.2 million from $18.9 million in the third quarter of 2003.  Revenues in the Company’s data segment (MicroPatent, Master Data Center and IDRAC) increased 14.4% to $16.6 million, based on continued strength in the Company’s patent information subscription products, patent and trademark management services and regulatory database subscriptions.  Software segment revenues increased 51.6% to $6.7 million due to revenues associated with CDC Solutions (CDC), which was acquired in December 2003.  Overall software revenues were below expected levels due to a decreased volume of license deals.  The Company currently expects improvement in license sales beginning in the fourth quarter of 2004, both from existing products and from the release of its new InSight Manager products.

 

Gross profit margin for the third quarter of 2004 was 71.9%, compared to 69.0% in the comparable prior year period.  The increase in gross margins is due primarily to improved gross profit margins at Liquent based on increased revenues, cost reduction initiatives and the integration of CDC.  Income from operations increased $2.7 million, or 236%, to approximately $3.8 million compared to $1.1 million in the third quarter of 2003.  Income from operations in the data businesses increased 45% to $5.4 million, compared to $3.8 million in the prior year

 

 

period, due primarily to improved profitability in the Company’s intellectual property information and management businesses.  Profit improvements reflect the operating leverage associated with increasing revenues in these units.  Loss from operations in the Company’s software segment decreased to $0.3 million from $1.6 million in the comparable prior year quarter.  Improved operating results in this segment are due primarily to cost containment initiatives and the integration of CDC.  In addition, the prior year period includes severance charges of approximately $0.8 million.  Corporate expenses reduced income from operations by $1.3 million in the third quarter of 2004 and $1.0 million in the third quarter of 2003.

 

The Company evaluates the earnings performance of its segments based primarily on EBITDA (earnings before interest, taxes, depreciation and amortization).  The Company believes that EBITDA is the most useful measure of business unit earnings because it more closely approximates the cash generating ability of each business compared to income from operations.  Income from operations includes charges for depreciation and amortization, the majority of which relate to amortization of intangible assets.  The Company generally does not incur capital expenditures to replace intangible assets within existing operations.  A reconciliation of EBITDA to income from operations before income taxes is presented after the attached financial information.

 

Based primarily on the factors impacting revenue and income from operations discussed above, EBITDA approximated $6.0 million in the third quarter of 2004, compared to $3.9 million in the third quarter of 2003.  EBITDA in the third quarter of 2004 includes non-operating expenses of $0.8 million, related to costs associated with the pending merger with Thomson, while EBITDA in the third quarter of 2003 includes severance charges of $0.8 million.  EBITDA in the third quarter of 2004 for the data segment approximated $7.6 million, an increase of 29% from the comparable prior year period.  EBITDA in the third quarter of 2004 for the software segment approximated $0.5 million, compared to a loss of $1.0 million in the comparable prior year period.  Other EBITDA was a loss of $2.1 million in the third quarter of 2004, compared to a loss of $1.0 million in the third quarter of 2003, related to corporate operating expenses and merger-related charges.

 

Commenting on the results, Mason Slaine, President & CEO said, “Our third quarter results reflect continued strong revenue and profit growth in our data businesses, while software

 

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license sales were lower than expected at Liquent.  We are encouraged by market response to the impending launch of Liquent’s InSight Manager products and are hopeful that overall operating results will continue to improve in the fourth quarter.  With respect to the pending acquisition of IHI by Thomson, our stockholders approved the merger agreement during the third quarter of 2004.  As we announced previously, IHI and Thomson have received a request for additional information and documentary material from the Department of Justice (DOJ), following DOJ’s review of the proposed acquisition of IHI by Thomson.  Accordingly, the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 is extended and will expire 30 days after substantial compliance by Thomson and IHI with this “second request”, unless terminated earlier by the DOJ.

 

Information Holdings Inc. will broadcast its third quarter earnings conference call via the Internet on Friday, October 22, 2004 at 10:00 a.m. EDT.  The broadcast can be accessed through the Company’s web site www.informationholdings.com.      

 

About Information Holdings Inc.

 

Information Holdings Inc. is a leading provider of information products and services to intellectual property and life science markets.  IHI’s data businesses, which include MicroPatent®, Master Data Centerä and IDRAC, provide a broad array of databases, information products and complementary services for intellectual property and regulatory professionals.  IHI’s Liquent unit is a leading provider of life science regulatory intelligence and publishing solutions.

 

                The statements in this press release that are not historical facts are forward-looking statements.  Forward-looking statements are typically statements that are preceded by, followed by or include the words “believes,” “plans,” “intends,” “will,” “expects,” “anticipates,” or similar expressions.  Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance.  These forward-looking statements involve risks and uncertainties that could render them materially different.  More information about factors that could potentially affect IHI’s financial results is included in IHI’s filings with the SEC, including its Annual Report on Form 10-K for the year ended December 31, 2003.  The forward-looking information in this release reflects management’s judgment only on the date of this press release.

 

 (Financial Tables Follow)

 

For further information, contact:

Vincent A. Chippari

Information Holdings Inc.

203-961-9208

vchippari@informationholdings.com

 

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Information Holdings Inc.

Consolidated Statements of Operations

(Unaudited)

 

 

 

Three Months Ended  September 30,

 

Nine Months Ended September 30,

 

(in thousands, except per share data)

 

2004

 

2003

 

2004

 

2003

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

Product

 

$

13,055

 

$

11,466

 

$

41,214

 

$

35,372

 

Service

 

10,226

 

7,456

 

29,747

 

22,962

 

Total revenues

 

23,281

 

18,922

 

70,961

 

58,334

 

Cost of sales:

 

 

 

 

 

 

 

 

 

Product

 

3,119

 

2,885

 

9,521

 

8,948

 

Service

 

3,412

 

2,988

 

10,449

 

9,680

 

Total cost of sales

 

6,531

 

5,873

 

19,970

 

18,628

 

Gross profit

 

16,750

 

13,049

 

50,991

 

39,706

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

10,088

 

9,194

 

31,111

 

27,234

 

Depreciation and amortization

 

2,839

 

2,719

 

8,876

 

8,073

 

Total operating expenses

 

12,927

 

11,913

 

39,987

 

35,307

 

Income from operations

 

3,823

 

1,136

 

11,004

 

4,399

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Interest income, net

 

792

 

519

 

2,367

 

1,327

 

Costs associated with pending merger

 

(778

)

—

 

(1,368

)

—

 

Early termination of credit agreement

 

—

 

—

 

—

 

(575

)

Other income (expense), net

 

3

 

(3

)

321

 

(3

)

Income from continuing operations before income taxes

 

3,840

 

1,652

 

12,324

 

5,148

 

Provision for income taxes

 

1,389

 

603

 

4,360

 

1,833

 

Income from continuing operations

 

2,451

 

1,049

 

7,964

 

3,315

 

Income (loss) from discontinued operations, net of income taxes

 

—

 

103

 

(1,361

)

29,703

 

Net income

 

$

2,451

 

$

1,152

 

$

6,603

 

$

33,018

 

Net income (loss) per basic common share:

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.12

 

$

0.05

 

$

0.38

 

$

0.16

 

Discontinued operations

 

0.00

 

0.00

 

(0.07

)

1.40

 

Net income

 

$

0.12

 

$

0.06

 

$

0.32

 

$

1.56

 

Net income (loss) per diluted common share:

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.12

 

$

0.05

 

$

0.38

 

$

0.16

 

Discontinued operations

 

0.00

 

0.00

 

(0.06

)

1.40

 

Net income

 

$

0.12

 

$

0.06

 

$

0.31

 

$

1.56

 

 

4

 

Information Holdings Inc.

Consolidated Balance Sheets

(in thousands)

 

 

 

September 30,

 

December 31,

 

 

 

2004

 

2003

 

Assets

 

(Unaudited)

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

58,805

 

$

39,693

 

Short-term investments

 

9,281

 

12,271

 

Restricted cash

 

—

 

3,000

 

Accounts receivable, net

 

35,651

 

37,650

 

Prepaid expenses and other current assets

 

4,922

 

5,669

 

Income taxes receivable

 

202

 

11,899

 

Deferred income taxes

 

2,001

 

2,001

 

Total current assets

 

110,862

 

112,183

 

 

 

 

 

 

 

Investments

 

86,071

 

83,207

 

Property and equipment, net

 

3,952

 

4,281

 

Identified intangible assets, net

 

65,320

 

70,248

 

Goodwill

 

99,699

 

100,871

 

Other assets

 

5,839

 

3,880

 

 

 

 

 

 

 

Total assets

 

$

371,743

 

$

374,670

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

32,105

 

$

32,073

 

Accrued expenses

 

13,290

 

18,124

 

Deferred revenue

 

22,302

 

25,753

 

Total current liabilities

 

67,697

 

75,950

 

 

 

 

 

 

 

Long-term deferred income taxes

 

14,789

 

16,307

 

Total liabilities

 

82,486

 

92,257

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Preferred stock

 

$

—

 

$

—

 

Common stock

 

219

 

219

 

Additional paid-in capital

 

248,966

 

247,964

 

Retained earnings

 

44,907

 

38,304

 

Treasury stock, at cost

 

(14,723

)

(14,723

)

Accumulated other comprehensive income

 

9,888

 

10,649

 

Total stockholders’ equity

 

289,257

 

282,413

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

371,743

 

$

374,670

 

 

5

 

Information Holdings Inc.

 

Reconciliation of Segment Income (loss) from continuing operations before income taxes to EBITDA

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended

September 30,

 

(in thousands)

 

2004

 

2003

 

2004

 

2003

 

 

 

 

 

 

 

 

 

 

 

Data Segment

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 

$

5,480

 

$

3,763

 

$

14,657

 

$

10,857

 

Amortization of capitalized software

 

—

 

2

 

1

 

11

 

Depreciation

 

601

 

719

 

2,064

 

2,062

 

Amortization of intangible assets

 

1,535

 

1,414

 

4,632

 

4,247

 

Interest income, net

 

(61

)

(21

)

(151

)

(140

)

EBITDA

 

7,555

 

5,877

 

21,203

 

17,037

 

 

 

 

 

 

 

 

 

 

 

Software Segment

 

 

 

 

 

 

 

 

 

(Loss) income from continuing operations before income taxes

 

(288

)

(1,622

)

753

 

(2,471

)

Amortization of capitalized software

 

75

 

42

 

224

 

118

 

Depreciation

 

225

 

299

 

734

 

881

 

Amortization of intangible assets

 

475

 

282

 

1,434

 

849

 

Interest (income) expense, net

 

(5

)

4

 

(11

)

11

 

EBITDA

 

482

 

(995

)

3,134

 

(612

)

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

Loss from continuing operations before income taxes

 

(1,352

)

(489

)

(3,086

)

(3,238

)

Depreciation

 

3

 

5

 

12

 

34

 

Interest income, net

 

(726

)

(502

)

(2,205

)

(1,198

)

EBITDA

 

(2,075

)

(986

)

(5,279

)

(4,402

)

 

 

 

 

 

 

 

 

 

 

Consolidated

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 

3,840

 

1,652

 

12,324

 

5,148

 

Amortization of capitalized software

 

75

 

44

 

225

 

129

 

Depreciation

 

829

 

1,023

 

2,810

 

2,977

 

Amortization of intangible assets

 

2,010

 

1,696

 

6,066

 

5,096

 

Interest income, net

 

(792

)

(519

)

(2,367

)

(1,327

)

EBITDA

 

$

5,962

 

$

3,896

 

$

19,058

 

$

12,023

 

 

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