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 |
| Twelve Months Ended |
| ||||||||
(in thousands, except per share data) |
| 2003 |
| 2002 |
| 2003 |
| 2002 |
| ||||
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|
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|
|
| ||||
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 |
| ||||
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|
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|
|
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|
| ||||
Operating expenses: |
|
|
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|
|
|
|
| ||||
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 |
| ||||
|
|
|
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|
|
|
|
|
| ||||
Income from operations |
| 1,871 |
| 1,766 |
| 6,270 |
| 5,722 |
| ||||
|
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|
|
|
|
|
|
|
| ||||
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 | ) | ||||
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Net (loss) income |
| $ | (1,811 | ) | $ | (19,539 | ) | $ | 31,207 |
| $ | (13,724 | ) |
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Net income (loss) per basic and diluted common share: |
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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, |
| December 31, |
| ||
|
| (Unaudited) |
|
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| ||
Assets |
|
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|
| ||
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 |
|
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| ||
Liabilities and Stockholders’ Equity |
|
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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 |
| Twelve Months Ended |
| ||||||||
(in thousands) |
| 2003 |
| 2002 |
| 2003 |
| 2002 |
| ||||
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Data Segment |
|
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| ||||
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 |
| ||||
|
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|
|
|
|
|
|
| ||||
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 | ) | ||||
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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 |
|