Interactive Data Corporation reports strong year of growth with 2002 revenue up 10.3%

Fourth Quarter Revenues Increase 11.5%, EBITDA Increases 8.5% and Diluted EPS Rises to $0.18 from a Loss of $0.01 in Last Year's Fourth Quarter

Interactive Data Corporation (NYSE: IDC) today announced results for the fourth quarter and full year ended December 31, 2002.

In the fourth quarter, revenues increased 11.5% to $96.5 million from $86.5 million in last year's same period. Earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter increased 8.5% to $35.0 million from $32.3 million in the earlier period. Net income for the quarter rose to $17.0 million, or $0.18 per diluted share, from a loss of $1.0 million, or $0.01 per diluted share.

EBITDA in the fourth quarter of 2001 included a one-time recovery of previously written-off debt from Bridge Information Systems Inc. following the completion of its liquidation process. Without this recovery of approximately $2 million, EBITDA for the fourth quarter of 2002 would have grown by 15.6% from last year's comparable period.

On January 1, 2002, the company adopted Financial Accounting Standard No. 142, "Goodwill and Other Intangible Assets" ("FAS 142"). As a result, the company did not record any goodwill amortization expense in the fourth quarter of 2002 as compared to $9.2 million in the same period last year. For 2001, the company recorded $37.5 million in goodwill amortization expense for the full year, whereas the company did not record any goodwill amortization expense in 2002.

Stuart Clark, president and chief executive officer commented, "Our strong growth in revenue and profitability in the fourth quarter is continued testament to the resiliency of Interactive Data's business and its ability to generate growth in difficult market conditions.

"During the quarter, our institutional business grew by 13.7% (or 11.9% before the effects of foreign exchange), with most of this increase driven by our data content division, FT Interactive Data, which grew by 14.8%. Contributing to this growth was revenue from the Securities Pricing Service (SPS) business we acquired from Merrill Lynch at the end of January 2002. Also within the institutional segment, our CMS BondEdge analytics division grew by approximately 3.0%. The institutional segment now represents 89.7% of all Interactive Data Corporation's revenues.

"Revenues within our retail business segment declined 4.3%, or $449,000, due to the continued and expected decline in broadcast revenues. Within this segment, eSignal revenues grew for the second quarter in succession, giving us modest but creditable overall growth for eSignal for the year.

"Operating expenses for the fourth quarter rose by 13.3% primarily due to the inclusion of SPS-related expenses and the fact that the 2001 quarter's selling, general and administrative expenses, or SG&A, benefited from a $2 million recovery of previously written off debt."

Looking at some of the business highlights from the quarter and year, Clark commented, "Renewal rates in our institutional business continued to be high, running at the 95% plus level, and we virtually completed the integration of the SPS business into FT Interactive Data. Our Fair Value Information Service was implemented by three mutual funds, and overall sales for FT Interactive Data's North American component were very strong. Europe was our most challenging business region in 2002, with lower sales and higher service cancellations resulting in a small decline in revenues. Asia once again delivered high single digit growth, driven by strong sales in Australia and Japan. Our CMS BondEdge division generated good new sales this year, but growth was limited by cancellations arising from cost-cutting at customers. Within our retail segment, eSignal subscriber numbers grew in every month during 2002, leading to the very creditable revenue growth of this component. Per average subscriber rates dropped during the year as higher cost broadcast products were replaced by lower cost Internet-delivered versions.

"For 2003, we have an exciting mixture of new initiatives within all our divisions, augmented by the recently announced proposed acquisition from Standard & Poor's of the ComStock business, a worldwide provider of real-time market datafeeds covering approximately 180 stock exchanges. We expect this acquisition to open up new opportunities for Interactive Data. We will be able to offer ComStock's content and product to our several thousand institutional customers worldwide, many of whom we know have an interest in receiving real-time data. We intend to offer ComStock's real-time content with our own unmatched reservoir of end-of-day and historical data, which will enable us to create new and enhanced solutions for our customers. These combined opportunities offer the potential for many significant revenue and operational synergies, which will once again allow us to deliver exceptional growth in revenue and profitability, despite the prospect of continued difficult market conditions."

2003 Outlook

Interactive Data Corporation's guidance for 2003 assumes the ComStock acquisition announced on January 16, 2003 closes as anticipated at the end of February 2003. For the year, management expects that Interactive Data's institutional revenues will increase in the range of 20% to 23%, while retail revenues will be flat compared to 2002's results. Overall, revenues are expected to increase 18% to 21%, while EBITDA is expected to increase 14% to 18%. The effective tax rate is expected to be 38% to 39%. Earnings per share are expected to increase 15% to 19% compared to 2002's results. The company expects capital expenditures for 2003 to range between $21 million and $23 million.

Twelve Month Results

For the twelve months ended December 31, 2002, Interactive Data reported revenues of $375.0 million versus $340.0 million for 2001, an increase of 10.3%. Operating expenses rose 7.9% or $17.9 million during the same period. As a result, EBITDA for the period rose 15.0% from $114.3 million, or $1.24 per diluted share, to $131.5 million, or $1.40 per diluted share. Net income for 2002 totaled $60.7 million, or $0.65 per diluted share, compared to $4.3 million, or $0.05 per diluted share for 2001.

As of December 31, 2002, Interactive Data Corporation had no outstanding debt and had cash of $153.2 million. $115 million of this amount is earmarked for the ComStock acquisition. Under the previously announced 1 million share buyback program, the company has repurchased a total of 100,000 shares at an average price of $13.77 per share.

Conference Call Information

Interactive Data Corporation's management will conduct a conference call Thursday, February 6, 2003 at 11:00 a.m. Eastern Time to discuss the fourth-quarter 2002 results and additional matters. The dial-in number for the call is 703-871-3029; no access code is required. Investors and interested parties may also listen to the call via a live web broadcast available through the Investor Relations section of the company's web site at www.interactivedatacorp.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. A replay will be available on both web sites shortly after the call. In addition, a telephone replay will be available from February 6 at 2:00 p.m. through Thursday, February 13, 2003. To access the replay, please dial 703-925-2533 or 888-266-2081, passcode #6398998.

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 is subject to the safe-harbor created by such Act. These statements include the company's statement that it expects to deliver exceptional growth in revenue and profitability and all other statements discussing future financial results or projections including those appearing under the heading "2003 Outlook" and the company's statement that it expects to close the ComStock acquisition at the end of February. These statements involve known and unknown risks, uncertainties and other factors that may cause the actual results to be materially different from those contemplated in the forward-looking statements. Such factors include, but are not limited to: (i) the presence of competitors with greater financial resources than the company's and their strategic response to the company's services and products; (ii) changes in technology, which could affect the competitiveness of the company's products and services; (iii) maintaining relationships with key suppliers and providers of market data; (iv) a continuing decline in activity levels in the securities markets, which could lower demand for the company's products and services; (v) consolidation of financial services, both within an industry and across industries, which could lower demand for the company's products and services (vi) prolonged outage at one of the company's data centers; (vii) the ability of the company to broaden its subscriber base; (viii) the ComStock acquisition may not close on a timely basis or at all; (ix) difficulty or unexpected complications the company may experience integrating or operating the ComStock business; (x) ComStock revenues may materialize at lower than expected levels, (xi) a decline in market acceptance of the company's products or the potential obsolescence of the company's services due to the introduction of new technologies; and (xii) the failure of one or more new business initiatives. The company undertakes no obligation to update these forward-looking statements.

About Interactive Data Corporation

Interactive Data Corporation is a leading global provider of securities pricing, financial information, and analytic tools to institutional and individual investors. The company supplies time-sensitive pricing (including evaluated pricing), dividend, corporate action, and descriptive information for more than approximately 3.5 million securities traded around the world, including hard-to-value instruments. The company links to most of the world's best-known financial service and software companies for trading, analysis, portfolio management, and valuation.

Interactive Data Corporation is headquartered in Bedford, Massachusetts. Through its branded businesses, FT Interactive Data, CMS BondEdge, and eSignal, Interactive Data Corporation has approximately 1,600 employees in 22 offices in North America, Europe, Asia, and Australia. Pearson plc (NYSE: PSO), an international media company, whose businesses include the Financial Times Group, Pearson Education, and the Penguin Group, owns approximately 60 percent of Interactive Data Corporation.

 

 INTERACTIVE DATA CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)(In thousands except per share data)Three Months Ended Twelve Months EndedDecember December---------------------------------------------------2002 2001 Change 2002 2001 Change------------------------- -------------------------REVENUESInstitutional 86,496 76,090 13.7% 334,992 294,440 13.8%Retail-eSignal 9,164 8,650 5.9% 35,545 35,392 0.4%-Broadcast 798 1,761 -54.7% 4,478 10,170 -56.0%------------------------- -------------------------Total Retail 9,962 10,411 -4.3% 40,023 45,562 -12.2%------------------------- -------------------------Total Revenues 96,458 86,501 11.5% 375,015 340,002 10.3%COSTS & EXPENSESCost of Services 28,657 25,929 10.5% 112,377 103,618 8.5%Selling, general& administrative 32,813 28,319 15.9% 131,169 122,066 7.5%------------------------- ------------------------- EBITDA 34,988 32,253 8.5% 131,469 114,318 15.0%Depreciation 3,787 3,932 -3.7% 14,500 13,139 10.4%Amortization 3,488 15,393 -77.3% 18,737 75,526 -75.2%------------------------- -------------------------Total costs &expenses 68,745 73,573 -6.6% 276,783 314,349 -12.0%------------------------- ------------------------- INCOME FROMOPERATIONS 27,713 12,928 114.4% 98,232 25,653 282.9%Other income, net 491 499 -1.6% 1,989 2,882 -31.0%------------------------- ------------------------- INCOME BEFOREINCOME TAXES 28,204 13,427 110.1% 100,221 28,535 251.2% Provision forIncome Taxes 11,161 14,465 -22.8% 39,488 24,223 63.0%------------------------- ------------------------- NET INCOME (LOSS) 17,043 (1,038) -1741.9% 60,733 4,312 1308.5%NET INCOME (LOSS)PER SHAREBasic 0.19 (0.01) -1710.6% 0.67 0.05 1303.6%Diluted 0.18 (0.01) -1672.7% 0.65 0.05 1290.1%WEIGHTED AVERAGECOMMON SHARESOUTSTANDINGBasic 91,572 89,827 1.9% 91,159 90,844 0.3%Diluted 93,779 89,827 4.4% 93,731 92,510 1.3%Interactive Data CorporationBalance Sheet Statement-----------------------(In Thousands)December December31, 31,2002 2001--------------------(Unaudited)-------------------- ASSETSCurrent Assets:Cash and cash equivalents $153,243 $118,522Accounts receivable, net 53,924 46,792Receivable from affiliates - 7Prepaid expenses and other current assets 5,366 3,152Deferred income taxes 6,487 13,207--------------------Total current assets 219,020 181,680-------------------- Property and equipment, net 36,786 38,431 Goodwill 381,790 353,748 Other intangible assets, net 125,003 121,040 Other assets 2,628 3,084--------------------Total Assets $765,227 $697,983====================LIABILITIES AND STOCKHOLDERS' EQUITYCurrent Liabilities:Accounts payable, trade $10,805 $11,814Payable to affiliates 1,789 5,065Accrued liabilities 52,938 50,684Income taxes payable 9,235 13,578Deferred revenue 22,786 24,477--------------------Total current liabilities 97,553 105,618Deferred tax liabilities 3,305 8,209Other liabilities 1,626 1,489--------------------Total Liabilities 102,484 115,316--------------------Stockholders' Equity: Preferred stock - - Common stock 937 922 Additional paid-in capital 786,470 771,084 Treasury stock, at cost (25,650) (24,273) Accumulated deficit (94,398) (155,131) Accumulated other comprehensive loss (4,616) (9,935)--------------------Total Stockholders' Equity 662,743 582,667--------------------Total Liabilities and Stockholders' Equity $765,227 $697,983====================Interactive Data CorporationCash Flow Statement-------------------(In Thousands)Twelve Months EndedDecember 31,(Unaudited)--------------------2002 2001--------------------Cash flows provided by (used in) operatingactivities:Net income $60,733 $4,312Adjustments to reconcile net income to net cashprovided by operating activities:Depreciation and amortization 33,237 88,665Tax benefit from exercise of stock options 4,930 2,682Deferred income taxes 1,819 (7,928)Other non-cash items, net 256 267 Changes in operating assets and liabilities, net (16,922) 5,814-------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 84,053 93,812--------------------Cash flows provided by (used in) investingactivities:Purchase of fixed assets (13,772) (12,609)Net proceeds from sales of investments andbusiness - 43,224Acquisition of business (48,000) -Other investing activities 680 719-------------------- NET CASH PROVIDED BY (USED IN) INVESTINGACTIVITIES (61,092) 31,334Cash flows provided by (used in) financingactivities:Distribution of dividends - (26,871)Purchase of treasury stock (1,377) (24,273)Proceeds from exercise of stock options andemployee stock purchase plan 10,411 6,084--------------------NET CASH PROVIDED BY (USED IN) FINANCINGACTIVITIES 9,034 (45,060)Effect of exchange rate on cash 2,726 (216)--------------------NET INCREASE IN CASH AND CASH EQUIVALENTS 34,721 79,870CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 118,522 38,652--------------------CASH AND CASH EQUIVALENTS AT END OF PERIOD $153,243 $118,522====================

 CONTACT: Interactive Data Corporation, BedfordCompany:Steven Crane, 781/687-8309Steven.Crane@ftid.comorMedia:Naomi Kaufman, 781/687-8045Naomi.Kaufman@ftid.comorInvestor Relations:Lippert/Heilshorn & Assoc., New YorkHarriet Fried, 212/838-3777hfried@lhai.com