EX-99.1 3 a04-2880_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

FOR IMMEDIATE RELEASE

 

INFORMATION HOLDINGS REPORTS RESULTS FOR

FOURTH QUARTER ENDED DECEMBER 31, 2003

 

Fourth Quarter EPS from Continuing Operations Increases 36% to $0.10

 

 

STAMFORD, CT, February 26, 2004  – Information Holdings Inc. (NYSE: IHI) today announced results for the quarter ended December 31, 2003.  Earnings per diluted common share (EPS) from continuing operations were $0.10 in the fourth quarter of 2003 compared to $0.07 in the fourth quarter of 2002.  Including discontinued operations, the Company incurred a loss of $0.09 per share in the fourth quarter of 2003, compared to a loss of $0.91 in the fourth quarter of 2002.  Results from continuing operations in the fourth quarter of 2003 include severance charges and other integration costs at Liquent associated with the acquisition of CDC Solutions equal to approximately $0.02 per diluted common share (“CDC integration costs”).

 

Fourth Quarter Results

 

Revenues in the fourth quarter of 2003 increased 11.4% to $23.1 million from $20.7 million in the fourth quarter of 2002.  Revenues in the Company’s data segment (MicroPatent, Master Data Center and IDRAC) increased 19.5% to $15.2 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 25.4% to $7.9 million due primarily to revenues generated by CDC Solutions, which was acquired in December 2003.

 

Gross profit margin for the fourth quarter of 2003 was 69.3%, compared to 71.0% in the comparable prior year period.  The decrease is due primarily to a reduction in gross profits in the Company’s LPS unit, which generated profits from patent licensing activities in the prior year period, partially offset by higher gross margins in the software segment, based on cost reduction initiatives and the integration of the Company’s Liquent and CDC Solutions units.  Income from

 

 

operations increased $0.1 million to $1.9 million compared to $1.8 million in the fourth quarter of 2002.  Income from operations in the data businesses increased 66% to $3.1 million, compared to $1.9 million in the prior year period, due primarily to improved profitability in the Company’s patent and regulatory information businesses.  Profit improvements reflect the operating leverage associated with increasing revenues in these units.  Income from operations in the Company’s software segment increased to $0.7 million from $0.1 million in the comparable prior year quarter.  The increase is after the CDC integration costs of approximately $0.7 million recorded in the fourth quarter of 2003.  Increased income from operations in this segment reflects the impact of both increased revenue and cost containment initiatives.  These increases were partially offset by increased corporate expenses due to timing and decreased income from operations in the Company’s LPS unit.  During the prior year period, LPS generated income from operations of approximately $1.4 million from patent licensing activities.

 

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 is presented after the attached financial statements.

 

Based on the factors impacting revenue and income from operations discussed above, EBITDA approximated $5.3 million in the fourth quarter of 2003, compared to $4.5 million in the fourth quarter of 2002.  EBITDA in the fourth quarter of 2003 for the data segment approximated $5.6 million, an increase of 42% from the comparable prior year period.  EBITDA in the fourth quarter of 2003 for the software segment approximated $1.4 million, an increase of 85% from the comparable prior year period.  Software EBITDA in the fourth quarter of 2003 is after the CDC integration costs of approximately $0.7 million.  Other EBITDA decreased by approximately $1.5 million to a loss of $1.7 million in the fourth quarter of 2003, due primarily to the income associated with patent licensing in the prior year period.

 

 

Fiscal 2003 Full Year Results

 

Revenues for the year ended December 31, 2003 increased 4.4% to $81.4 million compared to $78.0 million for the year ended December 31, 2002.  Income from operations increased 9.6% to $6.3 million from $5.7 million in 2002.  EBITDA in 2003 increased 4.0% to $17.3 from $16.6 million in 2002.  EPS from continuing operations increased to $0.25 in 2003 from $0.20 in 2002.  Including discontinued operations the Company had EPS of $1.48 in 2003, compared to a loss per share of $0.63 in 2002.

 

Forward Earnings Guidance

 

The Company currently estimates EPS from continuing operations of $0.55-$0.65 for the year ending December 31, 2004.

 

Commenting on the results, Mason Slaine, President & CEO said, “The fourth quarter culminates an important year with respect to positioning IHI for the future.  With the dispositions of CRC Press and Transcender and the acquisition of CDC Solutions, we enter 2004 as a business focused on generating growth in intellectual property and regulatory information and services.  Our fourth quarter results reflect a significant improvement in earnings relative to recent quarters and we enter 2004 with strong earnings momentum.  Our data businesses, which generated $23 million in EBITDA in 2003, are generating strong internal revenue growth while maintaining EBITDA margins of approximately 40%.  Our Liquent software business returned to profitability in the fourth quarter of 2003 and is poised for significant further improvement in 2004.  Important product development initiatives at Liquent will help drive revenue growth, while improved operating efficiencies and the successful integration of CDC and Liquent will drive improved profit margins.  We also continue to maintain a strong and flexible financial position.  We expect to exit the first quarter of 2004 with approximately $150 million in cash and investments and we remain debt free.  We believe our business is well positioned to generate growth and we remain committed to increasing shareholder value.”

 

 

Information Holdings will broadcast its fourth quarter earnings conference call via the Internet on Friday, February 27, 2004 at 10:00 a.m. EST.  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, 2002.  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

 

 

Information Holdings Inc.

Consolidated Statements of Operations

(Unaudited)

 

 

 

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

 

(in thousands, except per share data)

 

2003

 

2002

 

2003

 

2002

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

23,073

 

$

20,710

 

$

81,407

 

$

77,952

 

Cost of sales

 

7,094

 

6,006

 

25,722

 

23,215

 

Gross profit

 

15,979

 

14,704

 

55,685

 

54,737

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

10,989

 

10,120

 

38,223

 

35,026

 

Depreciation and amortization

 

3,119

 

2,723

 

11,192

 

10,831

 

Impairment of long-lived assets

 

—

 

95

 

—

 

3,158

 

Total operating expenses

 

14,108

 

12,938

 

49,415

 

49,015

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

1,871

 

1,766

 

6,270

 

5,722

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Interest income

 

673

 

225

 

2,080

 

971

 

Interest expense

 

—

 

(79

)

(80

)

(343

)

Early termination of credit agreement

 

—

 

—

 

(575

)

—

 

Other income (expense)

 

207

 

(3

)

204

 

5

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 

2,751

 

1,909

 

7,899

 

6,355

 

Provision for income taxes

 

733

 

384

 

2,603

 

1,936

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

2,018

 

1,525

 

5,296

 

4,419

 

(Loss) income from discontinued operations, net of income taxes

 

(3,829

)

(21,064

)

25,911

 

(18,143

)

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(1,811

)

$

(19,539

)

$

31,207

 

$

(13,724

)

 

 

 

 

 

 

 

 

 

 

Net income (loss) per basic and diluted common share:

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.10

 

$

0.07

 

$

0.25

 

$

0.20

 

Discontinued operations

 

(0.18

)

(0.98

)

1.23

 

(0.83

)

Net income

 

$

(0.09

)

$

(0.91

)

$

1.48

 

$

(0.63

)

 

 

Information Holdings Inc.

Consolidated Balance Sheets

(in thousands)

 

 

 

December 31,
2003

 

December 31,
2002

 

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

39,693

 

$

53,910

 

Short-term investments

 

12,271

 

13,056

 

Restricted cash

 

3,000

 

—

 

Accounts receivable, net

 

37,650

 

28,852

 

Prepaid expenses and other current assets

 

5,669

 

3,674

 

Income tax receivable

 

11,899

 

—

 

Deferred income taxes

 

2,001

 

4,589

 

Total assets of discontinued operations

 

—

 

77,453

 

Total current assets

 

112,183

 

181,534

 

 

 

 

 

 

 

Investments

 

83,207

 

—

 

Property and equipment, net

 

4,281

 

5,132

 

Identified intangible assets, net

 

70,248

 

69,005

 

Goodwill

 

100,871

 

70,299

 

Other assets

 

3,880

 

3,031

 

 

 

 

 

 

 

Total assets

 

$

374,670

 

$

329,001

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

32,073

 

$

26,744

 

Accrued expenses

 

18,124

 

10,060

 

Accrued income taxes

 

—

 

2,794

 

Deferred subscription revenue

 

25,753

 

21,067

 

Total liabilities of discontinued operations

 

—

 

18,533

 

Total current liabilities

 

75,950

 

79,198

 

 

 

 

 

 

 

Deferred income taxes

 

16,307

 

—

 

Other long-term liabilities

 

—

 

63

 

Total liabilities

 

92,257

 

79,261

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Preferred stock

 

$

—

 

$

—

 

Common stock

 

219

 

218

 

Additional paid in capital

 

247,964

 

247,026

 

Retained earnings

 

38,304

 

7,097

 

Treasury stock

 

(14,723

)

(5,227

)

Accumulated other comprehensive income

 

10,649

 

626

 

Total stockholders’ equity

 

282,413

 

249,740

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

374,670

 

$

329,001

 

 

 

Information Holdings Inc.

 

Reconciliation of Income from operations to EBITDA

 

 

 

 

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

 

(in thousands)

 

2003

 

2002

 

2003

 

2002

 

 

 

 

 

 

 

 

 

 

 

Data Segment

 

 

 

 

 

 

 

 

 

Income from operations

 

$

3,101

 

$

1,870

 

$

13,925

 

$

7,125

 

Amortization of capitalized software

 

1

 

—

 

12

 

17

 

Depreciation

 

704

 

691

 

2,766

 

2,599

 

Amortization of intangible assets

 

1,819

 

1,409

 

6,066

 

5,599

 

Other expense

 

(12

)

(26

)

(39

)

(26

)

EBITDA

 

5,613

 

3,944

 

22,730

 

15,314

 

 

 

 

 

 

 

 

 

 

 

Software Segment

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

718

 

99

 

(1,846

)

2,180

 

Amortization of capitalized software

 

66

 

21

 

184

 

40

 

Depreciation

 

256

 

320

 

1,137

 

1,423

 

Amortization of intangible assets

 

332

 

283

 

1,181

 

1,131

 

Other income

 

8

 

23

 

32

 

34

 

EBITDA

 

1,380

 

746

 

688

 

4,808

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

Loss from operations

 

(1,948

)

(203

)

(5,809

)

(3,583

)

Depreciation

 

8

 

20

 

42

 

79

 

Early termination of credit agreement

 

—

 

—

 

(575

)

—

 

Other income (expense)

 

211

 

—

 

211

 

(3

)

EBITDA

 

(1,729

)

(183

)

(6,131

)

(3,507

)

 

 

 

 

 

 

 

 

 

 

Consolidated

 

 

 

 

 

 

 

 

 

Income from operations

 

1,871

 

1,766

 

6,270

 

5,722

 

Amortization of capitalized software

 

67

 

21

 

196

 

57

 

Depreciation

 

968

 

1,031

 

3,945

 

4,101

 

Amortization of intangible assets

 

2,151

 

1,692

 

7,247

 

6,730

 

Early termination of credit agreement

 

—

 

—

 

(575

)

—

 

Other income (expense)

 

207

 

(3

)

204

 

5

 

EBITDA

 

$

5,264

 

$

4,507

 

$

17,287

 

$

16,615