EXHIBIT 99.1
FOR IMMEDIATE RELEASE
INFORMATION HOLDINGS REPORTS RESULTS FOR
THIRD QUARTER ENDED SEPTEMBER 30, 2003
Third Quarter EPS from Continuing Operations Increases to $0.04
Data Segment Reaches Quarterly Operating Income
of $3.8 Million and EBITDA of $6.0 Million
STAMFORD, CT, October 23, 2003 - Information Holdings Inc. (NYSE: IHI) today announced results for the quarter ended September 30, 2003. Earnings per diluted common share (EPS) from continuing operations were $0.04 in the third quarter of 2003 compared to a net loss of $0.04 in the third quarter of 2002. EPS including discontinued operations was $0.06 in the third quarter of 2003 compared to $0.00 in the third quarter of 2002. Results for the third quarter of 2003 include severance charges equal to $0.02 per diluted common share, while results for the third quarter of 2002 include impairment charges equal to $0.09 per diluted common share. IHI’s data segment (MicroPatent, Master Data Center and IDRAC) generated $3.8 million of operating income in the third quarter of 2003 and $6.0 million in EBITDA (earnings before interest, taxes, depreciation and amortization).
Third Quarter Results
Revenues for the third quarter of 2003 were $20.8 million, a decrease of 4% from the third quarter of 2002. The data segment continued to show strong overall revenue growth of $2.0 million, or 16%, although revenues decreased in the software segment based on lower license and service revenues at Liquent and decreased license revenues at Transcender.
Gross profit margin for the third quarter of 2003 was 71.0%, compared to 72.0% in the comparable prior year period. Increased gross margins in the data segment were offset by gross margin decreases in the software segment. Income from operations increased $2.5 million to $0.7 million, compared to a loss of $1.8 million in the third quarter of 2002. Income from
1
operations in the data segment increased to $3.8 million, compared to a loss from operations of $0.7 million in the prior year period, due to the impairment charge of $3.1 million recorded in the third quarter of 2002 and strong revenue growth. Loss from operations increased in the software segment due primarily to decreased revenues and severance charges.
EBITDA was $3.9 million in the third quarter of 2003, compared to $1.8 million in the third quarter of 2002. EBITDA in the third quarter of 2003 for the data segment was $6.0 million, an increase of 33% from the comparable prior year period excluding impairment charges.
The Company evaluates the earnings performance of its segments based primarily on EBITDA. 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 income from operations to EBITDA is presented after the attached financial statements.
Commenting on the results, Mason Slaine, President & CEO said, “Our third quarter results include very strong results from our data businesses, which generated $6 million in EBITDA in the quarter, while software license sales remained soft. During October we have begun to see improved license sales at Liquent and the first products from its new InSight product line will be introduced later this quarter. Transcender is on track to release a series of new Microsoft Windows Server 2003 certification products over the next two months. We expect to see continued excellent growth from our data segment going forward and improved license sales at Liquent and Transcender beginning in the current quarter. With a current balance of cash and investments of approximately $145 million and no debt, we continue to evaluate numerous investment opportunities, including additional purchases of IHI stock and potential acquisitions. We believe our business is well positioned to generate growth and we remain committed to increasing shareholder value.”
2
Information Holdings will broadcast its third quarter earnings conference call via the Internet on Friday, October 24, 2003 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, life science and IT learning markets. IHI’s data segment, which includes MicroPatent®, Master Data Centerä and IDRAC, provides a broad array of databases, information products and complementary services for intellectual property and regulatory professionals. IHI’s software segment, which includes Liquent and Transcender®, provides software and related services in the life science and IT learning markets. Liquent is a leading provider of life science content assembly and publishing solutions, while Transcender is a leading online provider of IT certification test-preparation products.
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 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
3
Information Holdings Inc.
Consolidated Statements of Operations
(Unaudited)
|
| Three Months Ended |
| Nine Months Ended |
| ||||||||
(in thousands, except per share data) |
| 2003 |
| 2002 |
| 2003 |
| 2002 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Revenues |
| $ | 20,789 |
| $ | 21,663 |
| $ | 64,923 |
| $ | 66,676 |
|
Cost of sales |
| 6,033 |
| 6,068 |
| 19,156 |
| 17,835 |
| ||||
Gross profit |
| 14,756 |
| 15,595 |
| 45,767 |
| 48,841 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating expenses: |
|
|
|
|
|
|
|
|
| ||||
Selling, general and administrative |
| 10,928 |
| 10,804 |
| 32,533 |
| 30,993 |
| ||||
Depreciation and amortization |
| 3,092 |
| 3,533 |
| 9,207 |
| 10,582 |
| ||||
Impairment of long-lived assets |
| — |
| 3,063 |
| — |
| 3,063 |
| ||||
Total operating expenses |
| 14,020 |
| 17,400 |
| 41,740 |
| 44,638 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income (loss) from operations |
| 736 |
| (1,805 | ) | 4,027 |
| 4,203 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Other income (expense): |
|
|
|
|
|
|
|
|
| ||||
Interest income |
| 544 |
| 228 |
| 1,411 |
| 746 |
| ||||
Interest expense |
| (25 | ) | (87 | ) | (84 | ) | (264 | ) | ||||
Early termination of credit agreement |
| — |
| — |
| (575 | ) | — |
| ||||
Other (expense) income |
| (3 | ) | 11 |
| (3 | ) | 8 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income (loss) from continuing operations before income taxes |
| 1,252 |
| (1,653 | ) | 4,776 |
| 4,693 |
| ||||
Provision for (benefit from) income taxes |
| 488 |
| (674 | ) | 1,729 |
| 1,646 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income (loss) from continuing operations |
| 764 |
| (979 | ) | 3,047 |
| 3,047 |
| ||||
Income from discontinued operations, net of income taxes |
| 388 |
| 912 |
| 29,971 |
| 2,768 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income (loss) |
| $ | 1,152 |
| $ | (67 | ) | $ | 33,018 |
| $ | 5,815 |
|
|
|
|
|
|
|
|
|
|
| ||||
Net income (loss) per basic common share: |
|
|
|
|
|
|
|
|
| ||||
Continuing operations |
| $ | 0.04 |
| $ | (0.04 | ) | $ | 0.14 |
| $ | 0.14 |
|
Discontinued operations |
| 0.02 |
| 0.04 |
| 1.42 |
| 0.13 |
| ||||
Net income |
| $ | 0.06 |
| $ | 0.00 |
| $ | 1.56 |
| $ | 0.27 |
|
|
|
|
|
|
|
|
|
|
| ||||
Net income (loss) per diluted common share: |
|
|
|
|
|
|
|
|
| ||||
Continuing operations |
| $ | 0.04 |
| $ | (0.04 | ) | $ | 0.14 |
| $ | 0.14 |
|
Discontinued operations |
| 0.02 |
| 0.04 |
| 1.41 |
| 0.13 |
| ||||
Net income |
| $ | 0.06 |
| $ | 0.00 |
| $ | 1.56 |
| $ | 0.27 |
|
4
Information Holdings Inc.
Consolidated Balance Sheets
(in thousands)
|
| September 30, |
| December 31, |
| ||
|
| (Unaudited) |
|
|
| ||
Assets |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 45,046 |
| $ | 53,910 |
|
Investments |
| 12,361 |
| 13,056 |
| ||
Accounts receivable, net |
| 27,107 |
| 29,375 |
| ||
Prepaid expenses and other current assets |
| 4,285 |
| 3,940 |
| ||
Current portion of deferred income taxes |
| 4,067 |
| 4,589 |
| ||
Assets of discontinued operations |
| — |
| 59,653 |
| ||
Total current assets |
| 92,866 |
| 164,523 |
| ||
|
|
|
|
|
| ||
Investments |
| 87,470 |
| — |
| ||
Property and equipment, net |
| 4,573 |
| 5,837 |
| ||
Identified intangible assets, net |
| 66,315 |
| 72,309 |
| ||
Goodwill |
| 83,140 |
| 83,099 |
| ||
Other assets |
| 4,140 |
| 3,233 |
| ||
|
|
|
|
|
| ||
Total assets |
| $ | 338,504 |
| $ | 329,001 |
|
|
|
|
|
|
| ||
Liabilities and Stockholders’ Equity |
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Accounts payable |
| $ | 26,542 |
| $ | 26,224 |
|
Accrued expenses |
| 11,299 |
| 11,098 |
| ||
Accrued income taxes |
| 8,413 |
| 2,794 |
| ||
Deferred subscription revenue |
| 17,791 |
| 21,129 |
| ||
Liabilities of discontinued operations |
| — |
| 17,891 |
| ||
Total current liabilities |
| 64,045 |
| 79,136 |
| ||
|
|
|
|
|
| ||
Other long-term liabilities |
| — |
| 125 |
| ||
Total liabilities |
| 64,045 |
| 79,261 |
| ||
|
|
|
|
|
| ||
Stockholders’ equity: |
|
|
|
|
| ||
Preferred stock |
| $ | — |
| $ | — |
|
Common stock |
| 219 |
| 218 |
| ||
Additional paid in capital |
| 247,923 |
| 247,026 |
| ||
Retained earnings |
| 40,115 |
| 7,097 |
| ||
Treasury stock |
| (14,723 | ) | (5,227 | ) | ||
Accumulated other comprehensive income |
| 925 |
| 626 |
| ||
Total stockholders’ equity |
| 274,459 |
| 249,740 |
| ||
|
|
|
|
|
| ||
Total liabilities and stockholders’ equity |
| $ | 338,504 |
| $ | 329,001 |
|
5
Information Holdings Inc.
Reconciliation of Income from Operations to EBITDA
|
| Three Months Ended |
| Nine Months Ended |
| ||||||||
(in thousands) |
| 2003 |
| 2002 |
| 2003 |
| 2002 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Data Segment |
|
|
|
|
|
|
|
|
| ||||
Income (loss) from operations |
| $ | 3,831 |
| $ | (667 | ) | $ | 10,824 |
| $ | 5,255 |
|
Amortization of capitalized software |
| 2 |
| 17 |
| 11 |
| 17 |
| ||||
Depreciation |
| 719 |
| 650 |
| 2,062 |
| 1,908 |
| ||||
Amortization of intangible assets |
| 1,414 |
| 1,429 |
| 4,247 |
| 4,190 |
| ||||
Other expense |
| (9 | ) | — |
| (27 | ) | — |
| ||||
EBITDA |
| 5,957 |
| 1,429 |
| 17,117 |
| 11,370 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Software Segment |
|
|
|
|
|
|
|
|
| ||||
(Loss) income from operations |
| (2,104 | ) | (40 | ) | (2,936 | ) | 2,328 |
| ||||
Amortization of capitalized software |
| 75 |
| 61 |
| 217 |
| 61 |
| ||||
Depreciation |
| 372 |
| 437 |
| 1,116 |
| 1,431 |
| ||||
Amortization of intangible assets |
| 582 |
| 998 |
| 1,748 |
| 2,994 |
| ||||
Other income |
| 6 |
| 11 |
| 24 |
| 11 |
| ||||
EBITDA |
| (1,069 | ) | 1,467 |
| 169 |
| 6,825 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Other |
|
|
|
|
|
|
|
|
| ||||
Loss from operations |
| (991 | ) | (1,098 | ) | (3,861 | ) | (3,380 | ) | ||||
Depreciation |
| 5 |
| 19 |
| 34 |
| 59 |
| ||||
Early termination of credit agreement |
| — |
| — |
| (575 | ) | — |
| ||||
Other expense |
| — |
| — |
| — |
| (3 | ) | ||||
EBITDA |
| (986 | ) | (1,079 | ) | (4,402 | ) | (3,324 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Consolidated |
|
|
|
|
|
|
|
|
| ||||
Income (loss) from operations |
| 736 |
| (1,805 | ) | 4,027 |
| 4,203 |
| ||||
Amortization of capitalized software |
| 77 |
| 78 |
| 228 |
| 78 |
| ||||
Depreciation |
| 1,096 |
| 1,106 |
| 3,212 |
| 3,398 |
| ||||
Amortization of intangible assets |
| 1,996 |
| 2,427 |
| 5,995 |
| 7,184 |
| ||||
Early termination of credit agreement |
| — |
| — |
| (575 | ) | — |
| ||||
Other (expense) income |
| (3 | ) | 11 |
| (3 | ) | 8 |
| ||||
EBITDA |
| $ | 3,902 |
| $ | 1,817 |
| $ | 12,884 |
| $ | 14,871 |
|
6