Exhibit 99.1
IMS Health Announces 20 Percent Reported Revenue Growth
in 2003 Fourth Quarter, up 11 Percent Constant Dollar
FAIRFIELD, Conn.--(BUSINESS WIRE)--Feb. 10, 2004--IMS Health
(NYSE: RX)
-- Full-Year 2003 Revenue up 13 Percent Reported, 6 Percent
Constant Dollar;
-- Full-Year Earnings Per Share Rises to $2.58 SEC-Reported,
$1.05 Adjusted and Before $0.03 Charge for Settlement of
Class-Action Litigation
IMS Health (NYSE: RX), the world's leading provider of information
solutions to the pharmaceutical and healthcare industries, today
reported fourth-quarter and full-year 2003 results. "IMS's performance
for the quarter and year was strong," said David Thomas, IMS chairman
and chief executive officer. "Four quarters of accelerating revenue
growth in 2003 reflect our progress in making IMS a more flexible,
innovative and customer-focused organization. We're building on that
momentum by leveraging global efficiencies and delivering new
consulting and services capabilities that differentiate us in the
marketplace."
Fourth-Quarter 2003 Results
Revenue for the 2003 fourth quarter totaled $384.1 million, up 20
percent on a reported basis over the fourth quarter of 2002. When
calculated on a constant-dollar basis, which eliminates the impact of
year-over-year foreign exchange fluctuations, quarterly revenue grew
11 percent from the fourth quarter of 2002. Operating income was
$115.1 million, compared with $116.1 million in the year-earlier
quarter, down 1 percent. Included in operating income is a $10.6
million pre-tax charge for the estimated costs of the probable
settlement of two class-action suits related to the Mayberry and
Douglas litigation.
Net income for the quarter totaled $69.7 million on an
SEC-reported basis and $70.9 million on an adjusted basis. Net income
includes a $6.4 million after-tax charge for the litigation
settlement. This compares with net income of $62.7 million on an
SEC-reported basis in the year-earlier quarter, an 11 percent
increase, and $78.3 million on an adjusted basis in the 2002 fourth
quarter, a 9 percent decline. SEC-reported earnings per share on a
diluted basis was $0.28, up 27 percent from $0.22 in the year-earlier
quarter. Before the costs for settlement of the class action
litigation, adjusted diluted earnings per share was $0.32 in the 2003
fourth quarter, up 14 percent over the year-earlier quarter. Including
the costs to settle the class action litigation, adjusted earnings per
share of $0.29 in the 2003 fourth quarter increased 4 percent over the
2002 fourth quarter. Adjusted results for the fourth quarter of 2003
exclude certain pre-tax income items totaling approximately $4.8
million. See Tables 3 and 4 for a reconciliation between SEC and
adjusted results for the 2003 fourth quarter and 2002 fourth quarter,
respectively.
Full-Year 2003 Results
IMS revenue rose to $1,381.8 million for the 2003 full year, up 13
percent on a reported basis and 6 percent constant dollar, compared
with revenue of $1,219.4 million in 2002. Operating income on an
SEC-reported basis was $361.5 million for the 2003 full year, down 10
percent, and on an adjusted basis was $398.7 million, down 1 percent
from the previous year. Net income in 2003 totaled $638.9 million on
an SEC-reported basis and $252.0 million on an adjusted basis. This
compares with net income of $266.1 million on an SEC-reported basis in
2002, a 140 percent increase, and $279.8 million on an adjusted basis,
a 10 percent decline. SEC-reported earnings per share on a diluted
basis was $2.58, up 177 percent from $0.93 a year earlier. Before the
costs to settle the class action litigation, adjusted diluted earnings
per share was $1.05 in 2003, up 7 percent over 2002. Including the
class action litigation settlement costs, adjusted earnings per share
of $1.02 in 2003 increased 4 percent over $0.98 in 2002.
Adjusted results for 2003 exclude certain pre-tax charges totaling
approximately $36.3 million. See Tables 7 and 8 for a reconciliation
between SEC and adjusted results for full-year 2003 and full-year
2002, respectively.
Share Repurchase Program
During the fourth quarter of 2003, IMS purchased approximately 3.6
million shares of company stock at an average price of $23.79 per
share, for a total cost of $86.2 million. For full-year 2003, IMS
purchased approximately 9.6 million shares of company stock at an
average price of $19.18 per share, for a total cost of $184.2 million.
The split-off of Cognizant Technology Solutions (CTS) in February 2003
reduced shares outstanding by an additional 36.5 million shares. As of
December 31, 2003, approximately 5.6 million shares remained available
under a 10 million share stock repurchase program authorized by the
board in April 2003. On February 10, 2004, the board authorized the
company to buy up to 10 million additional IMS shares under a new
stock repurchase program. There were approximately 238.3 million
shares outstanding as of December 31, 2003.
Consolidated Balance Sheet Highlights
IMS's cash, cash equivalents and short-term marketable securities
as of December 31, 2003 totaled $384.5 million, compared with $289.3
million on December 31, 2002. Total debt as of December 31, 2003 was
$562.0 million, up from $529.8 million at the end of 2002. The
December 31, 2002 balance sheet has been restated to present Cognizant
Technology Solutions (CTS) on a discontinued operations basis (see
Table 9).
Analyst Conference Call, Presentation Slides
Executive management will review the company's performance during
a conference call with analysts at 8:30 a.m. Eastern Time on
Wednesday, February 11, 2004. Details for accessing the call can be
found on the IMS website - www.imshealth.com. Prior to the call, a
copy of this press release and any other financial and statistical
information presented during the analyst conference call will be made
available in the "Investors" area of IMS's website, under
"Presentations & Analyst Calls."
About IMS
Operating in more than 100 countries, IMS is the world's leading
provider of information solutions to the pharmaceutical and healthcare
industries. With $1.4 billion in 2003 revenue and 50 years of industry
experience, IMS offers leading-edge business intelligence products and
services that are integral to clients' day-to-day operations,
including marketing effectiveness solutions for prescription and
over-the-counter pharmaceutical products; sales optimization solutions
to increase pharmaceutical sales force productivity; and consulting
and customized services that turn information into actionable
insights. Additional information is available at
http://www.imshealth.com.
This press release includes statements that may constitute
forward-looking statements made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. Although IMS
Health believes the expectations contained in such forward-looking
statements are reasonable, it can give no assurance that such
expectations will prove correct. This information may involve risks
and uncertainties that could cause actual results of IMS Health to
differ materially from the forward-looking statements. Factors that
could cause or contribute to such differences include, but are not
limited to (i) the risks associated with operating on a global basis,
including fluctuations in the value of foreign currencies relative to
the U.S. dollar, and the ability to successfully hedge such risks,
(ii) to the extent IMS Health seeks growth through acquisitions and
joint ventures, the ability to identify, consummate and integrate
acquisitions and ventures on satisfactory terms, (iii) the ability to
develop new or advanced technologies and systems for its businesses on
time and on a cost-effective basis, and the ability to implement
cost-containment measures, (iv) regulatory, legislative and
enforcement initiatives, particularly in the areas of medical privacy
and tax, (v) to the extent unforeseen cash needs arise, the ability to
obtain financing on favorable terms, and (vi) deterioration in
economic conditions, particularly in the pharmaceutical, healthcare or
other industries in which IMS Health's customers operate. Additional
information on factors that may affect the business and financial
results of the Company can be found in filings of the Company made
from time to time with the Securities and Exchange Commission.
Table 1
IMS Health
SEC Income Statement (a)
Three Months Ended December 31
(unaudited, in millions except per share)
2003 2002 % Fav
SEC SEC (Unfav)
----------------------
Revenue
Sales Management $236.6 $198.6 19 %
Market Research 131.8 112.5 17
Other 15.7 8.7 81
------- -------
Total 384.1 319.8 20
Operating Expenses
Operating Costs (150.2) (117.9) (27)
Selling and Administrative (88.0) (70.0) (26)
Depreciation and Amortization (20.1) (15.8) (27)
Class Action Settlement (10.6) - N/M
------- -------
Total (269.0) (203.7) (32)
Operating Income 115.1 116.1 (1)
Interest expense, net (2.8) (2.7)
Gains from investments, net (d) (0.9) 4.8
Loss on issuance of investees' stock, net (e) 0.0 (0.4)
Other expense, net (f) (4.1) (4.1)
------- -------
Pretax Income 107.4 113.7 (6)
Provision for Income Taxes (g) (35.4) (32.2)
TriZetto Equity Income (Loss), Net (b) (4.1) (0.2)
TriZetto impairment charge, net (i) 0.0 (26.1)
------- -------
Net Income from continuing operations 67.9 55.2 23
Income from discontinued operations - CTS (c) 0.0 7.5
Gain on discontinued operations - CTS (j) 1.8 0.0
------- -------
Net Income $ 69.7 $ 62.7 11
Diluted EPS:
Income from continuing operations 0.28 0.20
Income from discontinued operations - CTS (c) 0.00 0.03
Gain on discontinued operations - CTS (j) 0.01 0.00
------- -------
Total Diluted EPS $ 0.28 $ 0.22 27 %
Class Action Settlement impact (0.03) -
------- -------
Total Diluted EPS bef. Class Action
Settlement $ 0.31 $ 0.22 41 %
Shares Outstanding:
Weighted Average Diluted 244.8 281.2 13 %
End-of-Period Actual 238.3 281.1 15
The accompanying notes are an integral part of these financial tables.
Table 2
IMS Health
Adjusted Income Statement (a)
Three Months Ended December 31
(unaudited, in millions except per share)
2003 2002 % Fav Constant $
Adjusted Adjusted (Unfav) Growth
---------------------------------------
Revenue
Sales Management $236.6 $198.6 19 % 10 %
Market Research 131.8 112.5 17 9
Other 15.7 8.7 81 74
--------- ---------
Total 384.1 319.8 20 11
Operating Expenses
Operating Costs (150.2) (117.9) (27)
Selling and Administrative (88.0) (70.0) (26)
Depreciation and
Amortization (20.1) (15.8) (27)
Class Action Settlement (10.6) - N/M
--------- ---------
Total (269.0) (203.7) (32)
Operating Income 115.1 116.1 (1) (9)
Interest expense, net (2.8) (2.7) (1)
Other expense, net (f) (9.7) (9.8) 1
--------- ---------
Pretax Income 102.6 103.5 (1)
Provision for Income Taxes (g) (30.6) (31.7) 3
TriZetto Equity Income (Loss),
Net (b) (1.1) (0.2) N/M
--------- ---------
Net Income from continuing
operations 70.9 71.6 (1)%
Income from discontinued
operations - CTS (c) 0.0 6.6 (100)
--------- ---------
Net Income $ 70.9 $ 78.3 (9)%
Diluted EPS:
Income from continuing
operations 0.29 0.25 16
Income from discontinued
operations - CTS (c) 0.00 0.02 (100)
--------- ---------
Total Diluted EPS $ 0.29 $ 0.28 4 %
Class Action Settlement
impact (0.03) -
--------- ---------
Total Diluted EPS bef. Class
Action Settlement $ 0.32 $ 0.28 14 %
Shares Outstanding:
Weighted Average Diluted 244.8 281.2 13 %
End-of-Period Actual 238.3 281.1 15
The accompanying notes are an integral part of these financial tables.
Table 3
IMS Health
Reconciliation from SEC to Adjusted Income Statement (a)
Three Months Ended December 31, 2003
(unaudited, in millions except per share)
Adjusted
SEC Q4 Adjustments Q4
-----------------------------
Revenue
Sales Management $236.6 $0.0 $236.6
Market Research 131.8 0.0 131.8
Other 15.7 0.0 15.7
------- ----------- --------
Total 384.1 0.0 384.1
Operating Expenses
Operating Costs (150.2) 0.0 (150.2)
Selling and Administrative (88.0) 0.0 (88.0)
Depreciation and Amortization (20.1) 0.0 (20.1)
Class Action Settlement (10.6) 0.0 (10.6)
------- ----------- --------
Total (269.0) 0.0 (269.0)
Operating Income 115.1 0.0 115.1
Interest expense, net (2.8) 0.0 (2.8)
Gains from investments, net (d) (0.9) 0.9 0.0
Loss on issuance of investees' stock, net
(e) 0.0 0.0 0.0
Other expense, net (f) (4.1) (5.6) (9.7)
------- ----------- --------
Pretax Income 107.4 (4.8) 102.6
Provision for Income Taxes (g) (35.4) 4.8 (30.6)
TriZetto Equity Income, Net (b) (4.1) 3.0 (1.1)
------- ----------- --------
Net Income from continuing operations 67.9 3.0 70.9
Income from discontinued operations - CTS
(c) 0.0 0.0 0.0
Gain on discontinued operations - CTS (j) 1.8 (1.8) 0.0
------- ----------- --------
Net Income $ 69.7 1.2 $ 70.9
Diluted EPS:
Income from continuing operations 0.28 0.01 0.29
Income from discontinued operations -
CTS (c) 0.00 0.00 0.00
Gain on discontinued operations - CTS
(j) 0.01 (0.01) 0.00
------- ----------- --------
Total Diluted EPS $ 0.28 0.00 $ 0.29
Class Action Settlement impact (0.03) 0.00 (0.03)
------- ----------- --------
Total Diluted EPS bef. Class Action
Settlement $ 0.31 0.00 $ 0.32
Shares Outstanding:
Weighted Average Diluted 244.8 0.0 244.8
End-of-Period Actual 238.3 0.0 238.3
The accompanying notes are an integral part of these financial tables.
Table 4
IMS Health
Reconciliation from SEC to Adjusted Income Statement (a)
Three Months Ended December 31, 2002
(unaudited, in millions except per share)
Adjusted
SEC Q4 Adjustments Q4
-----------------------------
Revenue
Sales Management $198.6 $0.0 $198.6
Market Research 112.5 0.0 112.5
Other 8.7 0.0 8.7
------- ----------- --------
Total 319.8 0.0 319.8
Operating Expenses
Operating Costs (117.9) 0.0 (117.9)
Selling and Administrative (70.0) 0.0 (70.0)
Depreciation and Amortization (15.8) 0.0 (15.8)
------- ----------- --------
Total (203.7) 0.0 (203.7)
Operating Income 116.1 0.0 116.1
Interest expense, net (2.7) 0.0 (2.7)
Gains from investments, net (d) 4.8 (4.8) 0.0
Loss on issuance of investees' stock, net
(e) (0.4) 0.4 0.0
Other expense, net (f) (4.1) (5.7) (9.8)
------- ----------- --------
Pretax Income 113.7 (10.2) 103.5
Provision for Income Taxes (g) (32.2) 0.5 (31.7)
TriZetto Equity Loss, Net (b) (0.2) 0.0 (0.2)
TriZetto impairment charge, net (i) (26.1) 26.1 0.0
------- ----------- --------
Net Income from continuing operations 55.2 16.4 71.6
Income from discontinued operations - CTS
(c) 7.5 (0.8) 6.6
------- ----------- --------
Net Income $ 62.7 15.6 $ 78.3
Diluted EPS:
Income from continuing operations 0.20 0.06 0.25
Income from discontinued operations -
CTS (c) 0.03 0.00 0.02
------- ----------- --------
Total Diluted EPS $ 0.22 0.06 $ 0.28
Shares Outstanding:
Weighted Average Diluted 281.2 0.0 281.2
End-of-Period Actual 281.1 0.0 281.1
The accompanying notes are an integral part of these financial tables.
Table 5
IMS Health
SEC Income Statement (a)
Twelve Months Ended December 31
(unaudited, in millions except per share)
2003 2002 % Fav
SEC SEC (Unfav)
---------------------------
Revenue
Sales Management $ 836.3 $ 744.8 12 %
Market Research 491.7 427.7 15
Other 53.7 47.0 14
--------- ---------
Total 1,381.8 1,219.4 13
Operating Expenses
Operating Costs (556.5) (463.7) (20)
Selling and Administrative (340.8) (298.8) (14)
Depreciation and Amortization (75.1) (53.9) (39)
Class Action Settlement (10.6) - N/M
Severance, Impairment & other charges (h) (37.2) 0.0 N/M
--------- ---------
Total (1,020.3) (816.4) (25)
Operating Income 361.5 403.0 (10)
Interest expense, net (11.2) (8.7)
Gains from investments, net (d) 0.3 7.3
Loss on issuance of investees' stock, net
(e) (0.4) (1.0)
Other expense, net (f) (25.8) (21.9)
--------- ---------
Pretax Income 324.3 378.8 (14)
Provision for Income Taxes (g) (166.0) (115.0)
TriZetto Equity Loss, Net (b) (4.2) (0.9)
TriZetto impairment charge, net (i) (14.8) (26.1)
--------- ---------
Net Income from continuing operations 139.3 236.8 (41)
Income from discontinued operations - CTS
(c) 2.8 29.3
Gain on discontinued operations - CTS (j) 496.9 0.0
--------- ---------
Net Income $ 638.9 $ 266.1 140
Diluted EPS:
Income from continuing operations 0.56 0.83
Income from discontinued operations -
CTS (c) 0.01 0.10
Gain on discontinued operations - CTS
(j) 2.01 0.00
--------- ---------
Total Diluted EPS $ 2.58 $ 0.93 177 %
Class Action Settlement impact (0.03) -
--------- ---------
Total Diluted EPS bef. Class Action
Settlement $ 2.61 $ 0.93 181 %
Shares Outstanding:
Weighted Average Diluted 247.3 286.7 14 %
End-of-Period Actual 238.3 281.1 15
The accompanying notes are an integral part of these financial tables.
Table 6
IMS Health
Adjusted Income Statement (a)
Twelve Months Ended December 31
(unaudited, in millions except per share)
2003 2002 % Fav Constant $
Adjusted Adjusted (Unfav) Growth
---------------------------------------
Revenue
Sales Management $836.3 $744.8 12 % 4 %
Market Research 491.7 427.7 15 7
Other 53.7 47.0 14 11
--------- ---------
Total 1,381.8 1,219.4 13 6
Operating Expenses
Operating Costs (556.5) (463.7) (20)
Selling and Administrative (340.8) (298.8) (14)
Depreciation and
Amortization (75.1) (53.9) (39)
Class Action Settlement (10.6) - N/M
--------- ---------
Total (983.0) (816.4) (20)
Operating Income 398.7 403.0 (1) (8)
Interest expense, net (11.2) (8.7) (29)
Other expense, net (f) (26.9) (20.7) (30)
--------- ---------
Pretax Income 360.7 373.6 (4)
Provision for Income Taxes (g) (110.1) (116.6) 6
TriZetto Equity Loss, Net (b) (1.3) (0.9) (47)
--------- ---------
Net Income from continuing
operations 249.3 256.2 (3)%
Income from discontinued
operations - CTS (c) 2.8 23.6 (88)
--------- ---------
Net Income $252.0 $279.8 (10)%
Diluted EPS:
Income from continuing
operations 1.01 0.89 13
Income from discontinued
operations - CTS (c) 0.01 0.08 (88)
--------- ---------
Total Diluted EPS $ 1.02 $ 0.98 4 %
Class Action Settlement
impact (0.03) -
--------- ---------
Total Diluted EPS bef.
Class Action Settlement $ 1.05 $ 0.98 7 %
Shares Outstanding:
Weighted Average Diluted 247.3 286.7 14 %
End-of-Period Actual 238.3 281.1 15
The accompanying notes are an integral part of these financial tables.
Table 7
IMS Health
Reconciliation from SEC to Adjusted Income Statement (a)
Twelve Months Ended December 31, 2003
(unaudited, in millions except per share)
Adjusted
SEC FY Adjustments FY
-------------------------------
Revenue
Sales Management $836.3 $0.0 $836.3
Market Research 491.7 0.0 491.7
Other 53.7 0.0 53.7
--------- ----------- ---------
Total 1,381.8 0.0 1,381.8
Operating Expenses
Operating Costs (556.5) 0.0 (556.5)
Selling and Administrative (340.8) 0.0 (340.8)
Depreciation and Amortization (75.1) 0.0 (75.1)
Class Action Settlement (10.6) 0.0 (10.6)
Severance, impairment & other
charges (h) (37.2) 37.2 0.0
--------- ----------- ---------
Total (1,020.3) 37.2 (983.0)
Operating Income 361.5 37.2 398.7
Interest expense, net (11.2) 0.0 (11.2)
Gains from investments, net (d) 0.3 (0.3) 0.0
Loss on issuance of investees' stock,
net (e) (0.4) 0.4 0.0
Other expense, net (f) (25.8) (1.0) (26.9)
--------- ----------- ---------
Pretax Income 324.3 36.3 360.7
Provision for Income Taxes (g) (166.0) 55.8 (110.1)
TriZetto Equity Loss, Net (b) (4.2) 3.0 (1.3)
TriZetto impairment charge, net (i) (14.8) 14.8 0.0
--------- ----------- ---------
Net Income from continuing operations 139.3 110.0 249.3
Income from discontinued operations -
CTS (c) 2.8 0.0 2.8
Gain on discontinued operations - CTS
(j) 496.9 (496.9) 0.0
--------- ----------- ---------
Net Income $638.9 (387.0) $252.0
Diluted EPS:
Income from continuing operations 0.56 0.44 1.01
Income from discontinued operations
- CTS (c) 0.01 0.00 0.01
Gain on discontinued operations -
CTS (j) 2.01 (2.01) 0.00
--------- ----------- ---------
Total Diluted EPS $ 2.58 (1.56) $ 1.02
Class Action Settlement impact (0.03) 0.00 (0.03)
--------- ----------- ---------
Total Diluted EPS bef. Class Action
Settlement $ 2.61 (1.56) $ 1.05
Shares Outstanding:
Weighted Average Diluted 247.3 0.0 247.3
End-of-Period Actual 238.3 0.0 238.3
The accompanying notes are an integral part of these financial tables.
Table 8
IMS Health
Reconciliation from SEC to Adjusted Income Statement (a)
Twelve Months Ended December 31, 2002
(unaudited, in millions except per share)
Adjusted
SEC FY Adjustments FY
-------------------------------
Revenue
Sales Management $744.8 $0.0 $744.8
Market Research 427.7 0.0 427.7
Other 47.0 0.0 47.0
--------- ----------- ---------
Total 1,219.4 0.0 1,219.4
Operating Expenses
Operating Costs (463.7) 0.0 (463.7)
Selling and Administrative (298.8) 0.0 (298.8)
Depreciation and Amortization (53.9) 0.0 (53.9)
--------- ----------- ---------
Total (816.4) 0.0 (816.4)
Operating Income 403.0 0.0 403.0
Interest expense, net (8.7) 0.0 (8.7)
Gains from investments, net (d) 7.3 (7.3) 0.0
Loss on issuance of investees' stock,
net (e) (1.0) 1.0 0.0
Other expense, net (f) (21.9) 1.2 (20.7)
--------- ----------- ---------
Pretax Income 378.8 (5.1) 373.6
Provision for income taxes (g) (115.0) (1.6) (116.6)
TriZetto equity loss, Net (b) (0.9) 0.0 (0.9)
TriZetto impairment charge, net (i) (26.1) 26.1 0.0
--------- ----------- ---------
Net Income from continuing operations 236.8 19.4 256.2
Income from discontinued operations -
CTS (c) 29.3 (5.8) 23.6
--------- ----------- ---------
Net Income $266.1 13.6 $279.8
Diluted EPS:
Income from continuing operations 0.83 0.07 0.89
Income from discontinued operations
- CTS (c) 0.10 (0.02) 0.08
--------- ----------- ---------
Total Diluted EPS $ 0.93 0.05 $ 0.98
Shares Outstanding:
Weighted Average Diluted 286.7 0.0 286.7
End-of-Period Actual 281.1 0.0 281.1
The accompanying notes are an integral part of these financial tables.
Table 9
IMS Health
Selected Consolidated Balance Sheet Items
(unaudited, in millions)
Dec. 31, 2003 Dec. 31, 2002
------------- -------------
Cash and cash equivalents $344.4 $264.7
Short-term marketable securities 40.1 24.5
Accounts receivable, net 271.3 215.9
Short-term debt 409.9 204.8
Long-term debt 152.1 325.0
The December 31, 2002 balance sheet has been restated to present CTS
on a discontinued operations basis, consistent with the December 31,
2003 presentation. Cash and cash equivalents and accounts receivable,
net exclude CTS amounts in all periods.
The accompanying notes are an integral part of these financial tables.
IMS Health
NOTES TO FINANCIAL TABLES
(a) "Adjusted Income Statements" (Tables 2 and 6) differ from the "SEC
Income Statements" (Tables 1 and 5) by amounts that are detailed
on Tables 3, 4, 7 and 8. Adjusted results generally exclude from
corresponding U.S. GAAP measures items that are not related to the
core business of IMS (such as gains/losses on non-core
transactions, gains/losses on issuance of investees' stock, a tax
provision related to D&B legacy and related subsequent tax
transactions, etc.) and from time to time also have excluded items
that are related to the core business of IMS but have been
identified specifically by management to have arisen from special
historical circumstances that management does not expect to be
relevant to the core business going forward (such as special
restructuring, severance, impairment and other charges), together
with the tax effect of these items. Management uses these adjusted
results to evaluate its financial results for business
decision-making, to develop budgets and to manage expenditures
with respect to its core business. Management believes that the
adjusted results are useful to investors as a supplement to
historical U.S. GAAP information because they facilitate
comparisons across periods, more clearly indicate trends and add
insight into the Company's performance by focusing on the results
generated by the Company's core operations. The method IMS uses to
prepare adjusted results differs in significant respects from U.S.
GAAP and is likely to differ from the methods used by other
companies. Adjusted results should not be regarded as a
replacement for corresponding U.S. GAAP measures, which provide
more comprehensive information about the financial results of IMS.
Investors are urged to review the detailed reconciliations of the
adjusted measures to the comparable U.S. GAAP results.
(b) TriZetto Equity Income in the fourth quarter of 2003 is based on
TriZetto's year end earnings release and includes IMS's share of
TriZetto results as well as purchase accounting amortization
expenses. In the fourth quarter, TriZetto recorded an $18.7
million charge relating to loss contracts and asset impairments in
lines of business that TriZetto is exiting. IMS's share of this
charge ($3.0 million) has been excluded from adjusted results
because it is not related to IMS's core business operations.
(c) IMS divested its equity interest in CTS on February 6, 2003 via a
split-off transaction. Income from discontinued operations
includes IMS's share of CTS income on an after-tax basis for the
portion of the first quarter of 2003 prior to the split-off, and
for the four quarters of 2002. Previously CTS had been
consolidated into the IMS financial statements.
(d) Losses from investments, net were $0.9 million in the fourth
quarter of 2003, relating primarily to fees for the Enterprise
investments, compared with a gain of $4.8 million in the fourth
quarter of 2002. Gains from investments, net were $0.3 million for
full year 2003 compared to a gain of $7.3 million for full year
2002. These gains and losses are excluded from adjusted results
because they relate to non-strategic investments and are not
related to IMS's core business operations.
(e) Loss on issuance of investees' stock, net was $0.0 million in the
fourth quarter of 2003 compared with a loss of $0.4 million in the
fourth quarter of 2002. Loss on issuance of investees' stock was
$0.4 million for full year 2003 compared to a loss of $1.0 million
for full year 2002. These SAB 51 gains and losses relate to the
exercise of stock options by TriZetto employees and TriZetto share
repurchases. They are excluded from adjusted results because they
are not related to IMS's core business operations.
(f) Other expense, net includes $0.4 million of expenses for legal
fees in the fourth quarter of both 2003 and 2002, related to the
IRI litigation. For full year 2003, IRI litigation fees were
($1.0) million compared with $1.2 million for full year 2002.
These expenses are excluded from adjusted results because they
relate to a D&B legacy matter and are not related to IMS's core
business operations. In addition, Other expense, net excludes a
quarterly phasing adjustment of foreign currency hedge losses, net
of $6.0 million in the fourth quarter of 2003 and $6.1 million in
the fourth quarter of 2002. This phasing adjustment is made to
adjusted results in order to more closely match the timing of
foreign exchange hedge gains (losses) with the operating income
being hedged. For the full year, there is no difference between
the hedge losses in adjusted and SEC results.
(g) The tax provision for the fourth quarter of 2003 includes a tax
provision of $0.8 million related to the items described in notes
(d), (e) and (f). The tax provision for full year 2003 includes a
tax provision of $0.3 million relating to items described in notes
(d), (e) and (f), and a tax benefit of $14.1 million related to
the Severance, impairments and other charges, as described in note
(h). These tax benefits are excluded from adjusted results because
the related charges are excluded from adjusted results. In
addition, the fourth quarter 2003 adjusted tax provision includes
a phasing adjustment of $4.0 million. This relates to a Q1 tax
benefit that is being recognized ratably in adjusted results
throughout the full year. This phasing adjustment allows the full
year effective tax rate to be applied in each quarter to adjusted
pretax results. The tax provision for full year 2003 also includes
an accrual of $69.6 million related to a D&B legacy tax
transaction and subsequent related transactions. This tax
provision is excluded from adjusted results because it relates to
legacy tax transactions and is not related to IMS's core business
operations.
(h) IMS incurred $37.2 million of expense in the first quarter of 2003
for severance, impairment and other charges, including severance
for approximately 80 employees, contract cancellations and
impairments, idle real estate facilities and software writedowns.
These amounts are excluded from adjusted results because they
represent costs that are not related to IMS's core operations on
an on-going basis. Severance, impairment and other charges were
recorded in 2000, 2001 and 2003 and there can be no assurances
that such charges will not be recorded in the future.
(i) The TriZetto Impairment Charge, Net recorded in the first quarter
of 2003 reduced the book value per share of IMS's investment in
TriZetto shares ($6.14 per share) down to the March 31, 2003
market value per share ($4.13). This charge is excluded from
adjusted results because it relates to a non-strategic investment
and is not related to IMS's core business operations.
(j) The split-off of CTS described in Note (c) generated a net gain of
$495.1 million in the first quarter of 2003 and a net gain of $1.8
million in the fourth quarter, due to the final true-up of
transaction costs, for a total gain of $496.9 million for the
full-year 2003. This gain is calculated as the proceeds from the
split-off less the book value of IMS's investment in CTS and
transaction costs. No tax provision is provided as the split-off
is expected to be a tax-free transaction. This gain is excluded
from adjusted results as it relates to the divestiture of the
business and is not related to IMS's ongoing core business
operations.
Amounts presented in the financial tables may not add due to
rounding.
These financial tables should be read in conjunction with IMS
Health's filings previously made or to be made with the Securities and
Exchange Commission.
CONTACT: IMS Health
Communications:
Michael Gury, 203-319-4730
or
Investor Relations:
Darcie Peck, 203-319-4766