Interactive Data Corporation reports its 2nd quarter results

BEDFORD, Mass. - Interactive Data Corporation (NYSE: IDC) today announced results for the second quarter ended June 30, 2003.

Revenues increased 19.3% (or 17.2% before the effects of foreign exchange) to $111.5 million from $93.5 million for the second quarter of 2002. Net income rose 22.2% to $17.7 million, or $0.19 per diluted share, from $14.5 million, or $0.15 per diluted share, for last year's same period.

Stuart Clark, president and chief executive officer, commented "We were very pleased to once again deliver a strong financial performance, with net income growth of just over 22% for the second quarter and 29% for the first half of 2003. New sales in the second quarter continued to be strong across the company and, at the end of the half year, were at levels that were comparable to our new sales achievement for the equivalent period last year. This sales performance was driven by our higher value products, such as Fair Value Information, evaluated pricing of thinly traded securities, and the new Credit Risk module within our CMS BondEdge product.

"Against this success, the business climate we encountered remained one where many customers were under pressure to reduce costs, and this affected us through continued higher than usual levels of service cancellations and service downgrades, accompanied with a focus by customers on all areas of discretionary spending. Despite this very difficult business climate, we grew our revenues by 19.3% in the quarter, with the majority of that growth coming from the ComStock business that we acquired from Standard & Poor's on February 28, 2003. Renewal rates for our institutionally oriented business in the second quarter remained at the 95% level.

"As highlighted last quarter, our results now reflect all of the cost saving benefits envisioned from the Securities Pricing Service we acquired from Merrill Lynch on January 31, 2002. Our most recent acquisition, the ComStock business, is meeting our expectations and good progress is being made on all aspects of the integration process. Given the strength of our balance sheet and cash position, we continue to be well-placed to consider acquisition opportunities capable of accelerating the development of our business in areas of higher value products, relevant adjacent markets and geographic expansion."

Other Second Quarter Operating and Financial Highlights

-- The ComStock business contributed $15.5 million in revenues in
the second quarter, which was in line with our expectations.

-- Overall, the FT Interactive Data business continued to
generate much of the company's organic revenue growth through
the sale of high value evaluated pricing services on thinly
traded securities and from our Fair Value Information Service,
which has now been implemented by 12 leading mutual fund and
life insurance companies. In North America, revenue growth was
just over 1%. This rate of growth was reduced from that of
previous quarters due to higher than usual levels of service
cancellations and service downgrades, accompanied with a focus
by customers on all areas of discretionary spending. As
anticipated, business conditions in Europe remained
challenging, with revenues growing 7% (but declining by
approximately 3% before the effects of foreign exchange), from
the comparable three-month period last year. Asia-Pacific grew
approximately 22% (or just over 9% before the effects of
foreign exchange), over the comparable three-month period in
2002.

-- CMS BondEdge revenues decreased by approximately 2% compared
to the second quarter last year. For the first half of the
year, CMS BondEdge revenues increased by 2.5% as compared to
the same period in 2002. We achieved three new sales of the
Credit Risk module in the second quarter.

-- eSignal revenues increased 11.3% compared to the same quarter
last year. During the quarter, the number of subscribers to
the newer, Internet-delivered product reached an all-time high
of more than 42,000. As expected, revenues from
broadcast-delivered products declined by $0.7 million.

-- Due to the ComStock acquisition, operating expenses for the
second quarter rose by $11.7 million, or 19.1%, compared to
the second quarter of 2002. Without the acquisition, operating
expenses decreased by approximately 1% due to cost savings
realized through the integration of the Securities Pricing
Service.

Six Month Results

For the six months ended June 30, 2003, Interactive Data reported revenues of $210.9 million versus $182.9 million for the comparable period in 2002, an increase of 15.3%. Operating expenses rose 12.9%, or $15.5 million for the comparable period in 2002. Income from operations increased 28.3% from $45 million in the first six months of 2002 to $57.8 million for the comparable period in 2003. As a result, for the first six months of 2003, net income rose 29.0% to $36.0 million or $0.38 per diluted share from $27.9 million, or $0.30 per diluted share, for the comparable period in 2002.

As of June 30, 2003, Interactive Data Corporation had no outstanding debt and had cash and cash equivalents of $83.1 million. During the quarter, the company did not repurchase additional shares under its existing buyback program.

2003 Outlook

We previously indicated we expect revenue growth for 2003 to be on the lower end of a range between 18-21%, and earnings per share growth to be in the middle to higher end of a range between 15-19%. Given the continued softness in the markets we serve, as well as our need to invest in the integration of ComStock, we currently believe we are most likely to achieve revenue growth of approximately 17% and earnings per share growth in the middle of the 15-19% range. We continue to expect our effective tax rate for 2003 to be 38-39% and our 2003 capital expenditures to range between $21-$23 million. We continue to point out, however, that the worldwide economic recession and political conditions have had an adverse impact on the financial markets that we serve. Consequently, if such conditions or their impact worsen, our view of the company's 2003 outlook could change.

Conference Call Information

Interactive Data Corporation's management will conduct a conference call Thursday, July 24, at 11:00 a.m. Eastern Time to discuss the second quarter 2003 results and additional matters. The dial-in number for the call is 703-634-1052; 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 July 24 at 2:00 p.m. through Thursday, July 31, 2003. The replay can be accessed by can be accessed by dialing 706-645-9291 or 800-642-1687, conference ID #1186779.

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 our statements regarding our ability to grow in difficult market conditions, our ability to accelerate the development of our business in areas of higher value products, relevant adjacent markets and geographic expansion through strategic acquisitions, our ability to successfully integrate and deliver synergies from strategic acquisitions, including ComStock, the anticipated sales opportunities and infrastructure savings we expect from the ComStock acquisition, expected revenue growth or declines, and all other statements discussing future financial conditions, results or projections, including those appearing under the heading "2003 Outlook." These statements are subject to known and unknown risks, uncertainties 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 presence of competitors with greater financial resources than us and their strategic response to our services and products; (ii) changes in technology, which could affect the competitiveness of our products and services; (iii) maintaining relationships with our key suppliers and providers of market data; (iv) a continuing slowdown or decline in activity levels in the securities markets, which could lower demand for our products and services; (v) the impact of the difficult worldwide economic and political conditions on the financial markets and the industries we serve; (vi) the impact of cost cutting pressures across the industries we serve; (vii) consolidation of financial services, both within an industry and across industries, which could lower demand for our products and services; (viii) a prolonged outage at one of our data centers; (ix) our ability to broaden our subscriber base; (x) difficulty or unexpected complications we may experience integrating or operating the ComStock business; (xi) ComStock revenues may materialize at lower than expected levels; (xii) a decline in market acceptance of our services or products or the potential obsolescence of our services or products, including due to the introduction of new technologies; and (xiii) the failure of one or more new business initiatives. We undertake 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 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, ComStock, CMS BondEdge, and eSignal, Interactive Data Corporation has approximately 1,800 employees in offices located throughout 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 the outstanding common stock of Interactive Data Corporation.

 

 INTERACTIVE DATA CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)(In thousands except per share data)Three Months Ended Six Months EndedJune 30, June 30,2003 2002 Change 2003 2002 Change---------------------------------------------------SERVICE REVENUES 111,460 93,453 19.3% 210,937 182,895 15.3%COSTS & EXPENSES Cost of Services 35,569 28,236 26.0% 66,608 54,727 21.7% Selling, general &administrative 37,530 33,127 13.3% 68,683 65,111 5.5% Depreciation 4,603 3,676 25.2% 8,623 7,079 21.8% Amortization 5,122 4,746 7.9% 9,239 10,950 -15.6%-------------------------------------------------- Total costs &expenses 82,824 69,785 18.7% 153,153 137,867 11.1%--------------------------------------------------INCOME FROMOPERATIONS 28,636 23,668 21.0% 57,784 45,028 28.3%Other income, net 208 449 -53.7% 718 841 -14.6%-------------------------------------------------- INCOME BEFOREINCOME TAXES 28,844 24,117 19.6% 58,502 45,869 27.5% Provision forIncome Taxes 11,105 9,601 15.7% 22,523 17,981 25.3%--------------------------------------------------- NET INCOME 17,739 14,516 22.2% 35,979 27,888 29.0%NET INCOME PERSHARE Basic 0.19 0.16 18.8% 0.39 0.31 25.8% Diluted 0.19 0.15 26.7% 0.38 0.30 26.7%WEIGHTED AVERAGECOMMON SHARES OUTSTANDING Basic 92,189 91,116 1.2% 91,992 90,843 1.3% Diluted 94,381 94,121 0.3% 94,052 93,832 0.2%
 INTERACTIVE DATA CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(In thousands)June 30, December 31,2003 2002--------------------------(Unaudited)-------------------------- ASSETSCurrent Assets: Cash and cash equivalents $83,059 $153,243 Accounts receivable, net 70,299 53,924 Receivable from affiliates 388 - Prepaid expenses and other current assets 6,871 5,366 Deferred income taxes 6,550 6,487-------------------------- Total current assets 167,167 219,020-------------------------- Property and equipment, net 37,031 36,786 Goodwill 454,296 381,790 Other intangible assets, net 185,463 125,003 Other assets 2,613 2,628-------------------------- Total Assets $846,570 $765,227==========================LIABILITIES AND STOCKHOLDERS' EQUITYCurrent Liabilities: Accounts payable, trade $8,222 $10,805 Payable to affiliates 1,723 1,789 Accrued liabilities 54,255 52,938 Income taxes payable 8,885 9,235 Deferred revenue 30,261 22,786-------------------------- Total current liabilities 103,346 97,553 Deferred tax liabilities 30,903 3,305 Other liabilities 1,794 1,626-------------------------- Total Liabilities 136,043 102,484--------------------------Stockholders' Equity: Preferred stock - - Common stock 946 937 Additional paid-in capital 795,456 786,470 Treasury stock, at cost (26,980) (25,650) Accumulated deficit (58,419) (94,398) Accumulated other comprehensive loss (476) (4,616) Total Stockholders' Equity 710,527 662,743-------------------------- Total Liabilities and Stockholders' Equity $846,570 $765,227==========================
 INTERACTIVE DATA CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In Thousands)Six Months EndedJune 30,(Unaudited)-----------------------2003 2002-----------------------Cash flows provided by (used in) operatingactivities:Net income 35,979 27,888 Adjustments to reconcile net incometo net cash providedby operating activities: Depreciation and amortization 17,861 18,029 Tax benefit from exercise of stock options 2,711 4,074 Deferred income taxes 0 (878) Other non-cash items, net 50 6 Changes in operating assets and liabilities,net (12,344) (23,747)----------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 44,257 25,372-----------------------Cash flows provided by (used in) investingactivities:Purchase of fixed assets (4,404) (5,899) Acquisition of business (115,972) (48,000) Other investing activities 170 340----------------------- NET CASH USED IN INVESTING ACTIVITIES (120,206) (53,559)Cash flows provided by (used in) financingactivities:Purchase of treasury stock (1,330) - Proceeds from exercise of stock options andemployee stock purchase plan 6,284 7,201----------------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 4,954 7,201Effect of exchange rate on cash 810 798----------------------- NET DECREASE IN CASH AND CASH EQUIVALENTS (70,184) (20,188) CASH AND CASH EQUIVALENTS AT BEGINNING OFPERIOD 153,243 118,522-----------------------CASH AND CASH EQUIVALENTS AT END OF PERIOD 83,059 98,334======================= 

SOURCE: Interactive Data Corporation

 Interactive Data Corporation Steven Crane, 781/687-8309 Steven.Crane@ftid.com or Interactive Data Corporation Media Contact: Jeanne Murphy, 781/687-8548 Jeanne.Murphy@ftid.com or Lippert/Heilshorn & Assoc. Investor Relations: Harriet Fried, 212/838-3777 hfried@lhai.com