Exhibit 99.1
IMS Health Reports $0.34 Earnings Per Share and $0.26 Adjusted EPS,
Up 30 Percent, For 2004 First Quarter
FAIRFIELD, Conn.--(BUSINESS WIRE)--April 20, 2004--
First-Quarter 2004 Revenue Rises 15 Percent Reported,
8 Percent Constant Dollar
IMS Health (NYSE: RX), the world's leading provider of information
solutions to the pharmaceutical and healthcare industries, today reported
first-quarter 2004 results. "IMS's performance for the quarter was very strong,
maintaining the momentum we created last year," said David Thomas, IMS chairman
and chief executive officer. "Our results demonstrate that we are executing well
in a challenging environment for our customers around the world. The information
and services needs of our clients are expanding, and we have organized our
business, our strategy and our operations around that demand. We remain
confident that we are moving the business in the right direction and creating
new opportunities for growth."
First-Quarter 2004 Results
Revenue for the 2004 first quarter totaled $361.6 million, up 15 percent on
a reported basis over the first quarter of 2003. When calculated on a
constant-dollar basis, which eliminates the impact of year-over-year foreign
exchange fluctuations, quarterly revenue grew 8 percent from the first quarter
of 2003. Operating income was $96.2 million, compared with $41.2 million on an
SEC-reported basis and $78.4 million on an adjusted basis in the year-earlier
quarter.
Net income for the quarter totaled $81.1 million on an SEC-reported basis
and $61.4 million on an adjusted basis. This compares with net income of $444.7
million on an SEC-reported basis and $51.6 million on an adjusted basis in the
2003 first quarter, a 19 percent increase on an adjusted basis. SEC-reported
earnings per share on a diluted basis was $0.34, compared with $1.71 in the
year-earlier quarter. Adjusted earnings per share on a diluted basis of $0.26 in
the 2004 first quarter increased 30 percent over $0.20 reported in the 2003
first quarter.
Adjusted results for the first quarter of 2004 exclude certain pre-tax
income items totaling approximately $11.7 million, as well as certain net tax
benefits of approximately $7.9 million. Adjusted results for the first quarter
of 2003 exclude a one-time net gain of $495.1 million resulting from the
divestiture of IMS's equity interest in Cognizant Technology Solutions via a
split-off, as well as certain pre-tax charges totaling approximately $44.6
million, consisting primarily of severance, impairment and other charges.
Adjusted first-quarter 2003 results also exclude a $14.8 million after-tax
impairment charge taken on IMS's equity investment in The TriZetto Group
(Nasdaq: TZIX) and $42.5 million of tax provision, related to a number of items,
including a Dun & Bradstreet legacy tax transaction and subsequent related
transactions. See Tables 3 and 4 for a reconciliation between SEC and adjusted
results for the quarters ended March 31, 2004 and 2003, respectively.
Share Repurchase Program
During the first quarter of 2004, IMS purchased approximately 5.5 million
shares of company stock at a total cost of $138.9 million and has 10.1 million
shares remaining in its share repurchase authorization.
There were approximately 235.0 million shares outstanding as of March 31,
2004.
Consolidated Balance Sheet Highlights
IMS's cash, cash equivalents and short-term marketable securities as of
March 31, 2004 totaled $392.6 million, compared with $384.5 million on December
31, 2003. Total debt as of March 31, 2004 was $672.2 million, up from $562.0
million at the end of 2003. See Table 5 for selected consolidated balance sheet
items.
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, April 21,
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.
About IMS
Operating in more than 100 countries, IMS Health 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 portfolio
optimization capabilities; launch and brand management solutions; sales force
effectiveness innovations; managed care and over-the-counter offerings; and
consulting and services solutions that improve ROI and the delivery of quality
healthcare worldwide. 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 March 31
(unaudited, in millions except per share)
2004 2003 % Fav
SEC SEC (Unfav)
------------------------
Revenue
Sales Force Effectiveness $167.1 $152.4 10%
Portfolio Optimization 113.1 100.5 13
Brand, Launch and Other 48.8 39.6 23
Consulting and Services 32.6 21.5 52
------- -------
Total 361.6 313.9 15
Operating Expenses (b)
Operating Costs (149.6) (137.3) (9)
Selling and Administrative (94.1) (81.5) (15)
Depreciation and Amortization (21.7) (16.8) (29)
Severance, Impairment & other charges (i) 0.0 (37.2) NM
------- -------
Total (265.3) (272.8) 3
Operating Income 96.2 41.2 134
Interest expense, net (3.3) (2.8)
Gains (losses) from investments, net (e) 6.5 (0.9)
Loss on issuance of investees' stock, net (f) 0.0 (0.3)
Other income (expense), net (g) 2.8 (10.8)
------- -------
Pretax Income 102.2 26.4 287
Provision for Income Taxes (h) (20.1) (64.3)
TriZetto Equity Loss, net (c) (1.0) (0.3)
TriZetto impairment charge, net (j) 0.0 (14.8)
------- -------
Net Income (loss) from continuing operations 81.1 (53.2) NM
Income from discontinued operations - CTS (d) 0.0 2.8
Gain on discontinued operations - CTS (k) 0.0 495.1
------- -------
Net Income $81.1 $444.7 (82)
Diluted EPS:
Income from continuing operations 0.34 (0.20)
Income from discontinued operations -
CTS (d) 0.00 0.01
Gain on discontinued operations -
CTS (k) 0.00 1.90
------ -------
Total Diluted EPS $0.34 $1.71 (80)%
Shares Outstanding:
Weighted Average Diluted 240.4 260.0 8%
End-of-Period Actual 235.0 244.6 4
The accompanying notes are an integral part of these financial tables.
Table 2
IMS Health
Adjusted Income Statement (a)
Three Months Ended March 31
(unaudited, in millions except per share)
2004 2003 % Fav Constant $
Adjusted Adjusted (Unfav) Growth
------------------------------------
Revenue
Sales Force Effectiveness $167.1 $152.4 10% 3%
Portfolio Optimization 113.1 100.5 13 5
Brand, Launch and Other 48.8 39.6 23 13
Consulting and Services 32.6 21.5 52 44
--------- -------
Total 361.6 313.9 15 8
Operating Expenses (b)
Operating Costs (149.6) (137.3) (9)
Selling and Administrative (94.1) (81.5) (15)
Depreciation and
Amortization (21.7) (16.8) (29)
--------- -------
Total (265.3) (235.5) (13)
Operating Income 96.2 78.4 23 16
Interest expense, net (3.3) (2.8) (19)
Other expense, net (g) (2.5) (4.6) 46
--------- -------
Pretax Income 90.4 71.0 27
Provision for Income Taxes (h) (28.0) (21.9) (28)
TriZetto Equity Loss, net (c) (1.0) (0.3) (190)
--------- -------
Net Income from continuing
operations 61.4 48.8 26%
Income from discontinued
operations - CTS (d) 0.0 2.8 (100)
--------- -------
Net Income $61.4 $51.6 19%
Diluted EPS:
Income from continuing
operations 0.26 0.19 37
Income from discontinued
operations - CTS (d) 0.00 0.01 (100)
--------- -------
Total Diluted EPS $0.26 $0.20 30%
Shares Outstanding:
Weighted Average Diluted 240.4 260.0 8%
End-of-Period Actual 235.0 244.6 4
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 March 31, 2004
(unaudited, in millions except per share)
Adjusted
SEC Q1 Adjustments Q1
-------------------------------
Revenue
Sales Force Effectiveness $167.1 $0.0 $167.1
Portfolio Optimization 113.1 0.0 113.1
Brand, Launch and Other 48.8 0.0 48.8
Consulting and Services 32.6 0.0 32.6
------ ---- ------
Total 361.6 0.0 361.6
Operating Expenses (b)
Operating Costs (149.6) 0.0 (149.6)
Selling and Administrative (94.1) 0.0 (94.1)
Depreciation and Amortization (21.7) 0.0 (21.7)
------- ---- -------
Total (265.3) 0.0 (265.3)
Operating Income 96.2 0.0 96.2
Interest expense, net (3.3) 0.0 (3.3)
Gains from investments, net (e) 6.5 (6.5) 0.0
Loss on issuance of investees' stock,
net (f) 0.0 0.0 0.0
Other income (expense), net (g) 2.8 (5.3) (2.5)
------- ------ -------
Pretax Income 102.2 (11.7) 90.4
Provision for Income Taxes (h) (20.1) (7.9) (28.0)
TriZetto Equity Loss, net (c) (1.0) 0.0 (1.0)
------- ------ -------
Net Income $81.1 (19.6) $61.4
Diluted EPS $0.34 (0.08) $0.26
Shares Outstanding:
Weighted Average Diluted 240.4 0.0 240.4
End-of-Period Actual 235.0 0.0 235.0
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 March 31, 2003
(unaudited, in millions except per share)
Adjusted
SEC Q1 Adjustments Q1
------------------------------
Revenue
Sales Force Effectiveness $152.4 $0.0 $152.4
Portfolio Optimization 100.5 0.0 100.5
Brand, Launch and Other 39.6 0.0 39.6
Consulting and Services 21.5 0.0 21.5
------- ---- ------
Total 313.9 0.0 313.9
Operating Expenses (b)
Operating Costs (137.3) 0.0 (137.3)
Selling and Administrative (81.5) 0.0 (81.5)
Depreciation and Amortization (16.8) 0.0 (16.8)
Severance, Impairment & other
charges (i) (37.2) 37.2 0.0
-------- ---- -------
Total (272.8) 37.2 (235.5)
Operating Income 41.2 37.2 78.4
Interest expense, net (2.8) 0.0 (2.8)
Gains (losses) from investments, net (e) (0.9) 0.9 0.0
Loss on issuance of investees' stock,
net (f) (0.3) 0.3 0.0
Other expense, net (g) (10.8) 6.2 (4.6)
------- ---- -----
Pretax Income 26.4 44.6 71.0
Provision for Income Taxes (h) (64.3) 42.5 (21.9)
TriZetto Equity Loss, net (c) (0.3) 0.0 (0.3)
TriZetto impairment charge, net (j) (14.8) 14.8 0.0
------- ---- ----
Net Income (loss) from continuing
operations (53.2) 102.0 48.8
Income from discontinued operations -
CTS (d) 2.8 0.0 2.8
Gain on discontinued operations -
CTS (k) 495.1 (495.1) 0.0
-------- ------- ------
Net Income $444.7 (393.1) $51.6
Diluted EPS:
Income from continuing operations (0.20) 0.39 0.19
Income from discontinued
operations - CTS (d) 0.01 0.00 0.01
Gain on discontinued operations -
CTS (k) 1.90 (1.90) 0.00
-------- ------ ------
Total Diluted EPS $1.71 (1.51) $0.20
Shares Outstanding:
Weighted Average Diluted 260.0 0.0 260.0
End-of-Period Actual 244.6 0.0 244.6
The accompanying notes are an integral part of these financial tables.
Table 5
IMS Health
Selected Consolidated Balance Sheet Items
(unaudited, in millions)
March 31, 2004 Dec. 31, 2003
--------------- -------------
Cash and cash equivalents $352.4 $344.4
Short-term marketable securities 40.2 40.1
Accounts receivable, net 290.3 271.3
Short-term debt 319.0 409.9
Long-term debt 353.2 152.1
The accompanying notes are an integral part of these financial tables.
IMS Health
NOTES TO FINANCIAL TABLES
(a) "SEC Income Statement" (Table 1) differs from the "Adjusted Income
Statement" (Table 2) by amounts that are detailed on Tables 3 and 4.
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 that
management does not expect to be relevant to the business going
forward (such as special restructuring, severance, impairment and
other charges), together with the tax effect of these items.
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. 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. However, the
fact that an item has been excluded from adjusted results does not
mean that similar items will not be recorded in the future. 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) Operating expenses in 2003 reflect a reclassification between
operating costs and selling and administrative expenses to make them
comparable with the 2004 presentation.
(c) TriZetto Equity Loss in the first quarter of 2004 is based on an
estimate of TriZetto's results and includes IMS's share of TriZetto
results as well as purchase accounting amortization expenses.
(d) 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. Previously CTS had been
consolidated into the IMS Health financial statements.
(e) Gains from investments, net were $6.5 million in the first quarter of
2004, relating primarily to an $8.6 million gain from the sale of a
security, partially offset by $2.2 million of writedowns and fees for
the Enterprise investments. This is compared with a loss of $0.9
million in the first quarter of 2003. 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.
(f) Loss on issuance of investees' stock, net was zero in the first
quarter of 2004 compared with a loss of $0.3 million in the first
quarter of 2003. These SAB 51 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.
(g) Other expense, net includes $0.4 million of expenses for legal fees in
the first quarter of both 2004 and 2003, related to the IRI
litigation. 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 gains (losses),
net of ($5.7) million in the first quarter of 2004 and $5.8 million in
the first quarter of 2003. 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.
(h) The tax provision for the first quarter of 2004 includes a tax
provision of $4.1 million related to the items described in notes (e),
(f) and (g). The tax provision for the first quarter of 2003 includes
a tax benefit of $2.6 million for the items described in notes (e),
(f) and (g), and a tax benefit of $13.2 million for the item in note
(i). These tax provisions and benefits are excluded from adjusted
results because the related charges are excluded from adjusted
results. In addition, the first-quarter 2004 tax provision also
includes a $15.6 million tax benefit related to a favorable audit
resolution in the U.S. Adjusted results include a phasing adjustment
to defer $12.1 million of this benefit to recognize it ratably
throughout 2004. This phasing adjustment allows the full-year
effective rate to be applied in each quarter to adjusted pretax
results. Similarly, the tax provision for the first quarter of 2003
includes a $13.9 million tax benefit; adjusted results include a
phasing adjustment to defer $11.3 million of this benefit to recognize
it ratably throughout 2003. The tax provision for the first quarter of
2003 also includes an accrual of $69.6 million related to a D&B legacy
tax and subsequent related transactions. This tax provision is
excluded from adjusted results because it relates to legacy tax and
subsequent related transactions and is not related to IMS's core
business operations.
(i) 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 management does not expect them
to be relevant to the business going forward. 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.
(j) 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.
(k) The split-off of CTS described in note (d) generated a net gain of
$495.1 million in the first quarter of 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, Fairfield
(Communications)
Michael Gury, 203/319-4730
or (Investor Relations)
Darcie Peck, 203/319-4766