Exhibit 99.1
IMS Health Reports Third-Quarter 2004 Results
FAIRFIELD, Conn.--(BUSINESS WIRE)--Oct. 19, 2004--IMS Health
(NYSE: RX):
-- Adjusted Earnings Per Share of $0.30
-- SEC-reported EPS of $0.28
-- Revenues of $384 million, up 11 percent
IMS Health (NYSE: RX) today announced third-quarter 2004 adjusted
diluted earnings per share of $0.30, up 3 percent, compared with $0.29
in the prior-year period and consistent with guidance. Diluted
earnings per share on an SEC-reported basis for the third quarter was
$0.28, down 3 percent, compared with $0.29 in the 2003 third quarter.
Revenues for the third quarter were $384.2 million, up 11 percent (7
percent on a constant-dollar basis) compared with revenues of $346.0
million for the third quarter of 2003. Net income for the third
quarter of 2004 was $70.7 million on an adjusted basis and $65.6
million on an SEC-reported basis, compared with net income of $69.2
million on both an adjusted and SEC-reported basis in the year-earlier
quarter, up 2 percent on an adjusted basis.
"The IMS team delivered a solid quarter," said David Thomas, IMS
chairman and CEO. "For the first nine months of the year, we have
delivered double-digit growth in reported revenue and adjusted
earnings per share and net income, along with continued strong free
cash flow. Our performance reflects IMS's continued success in
providing our clients around the world with the most valuable
intelligence and insights they need to help solve their business
issues. Our year-to-date performance is on target for the full year,
and we remain confident that we will meet our 2004 guidance."
Adjusted results for the third quarter of 2004 exclude certain net
pre-tax expense items totaling approximately $1.7 million, as well as
certain net tax provisions of approximately $3.3 million. See Tables 5
and 7 for a reconciliation between SEC and adjusted results for the
quarters ended September 30, 2004 and 2003, respectively.
Year-to-Date Results
Adjusted diluted earnings per share in the 2004 first nine months
was $0.84, a 15 percent increase over the $0.73 reported in the
prior-year period. Diluted earnings per share on an SEC-reported basis
for the 2004 first nine months was $0.89, compared with $2.30 in the
year-earlier period. For the first nine months of 2004, revenues were
$1,125.3 million, up 13 percent (8 percent constant dollar) over the
same period in 2003. Net income for the first nine months of this year
was $201.6 million on an adjusted basis and $211.8 million on an
SEC-reported basis, compared with net income of $181.2 million on an
adjusted basis and $569.2 million on an SEC-reported basis for the
comparable period last year, up 11 percent on an adjusted basis.
Operating income was $301.6 million in the first nine months of
2004 on both an adjusted and SEC-reported basis, compared with $283.6
million on an adjusted basis and $246.4 million on an SEC-reported
basis in the year-earlier period. Operating income in the 2004 first
nine months was up 6 percent on an adjusted basis (3 percent constant
dollar) and rose 22 percent on an SEC-reported basis from the
year-earlier period.
Adjusted results for the first nine months of 2004 exclude certain
net pre-tax income items totaling approximately $9.6 million, as well
as certain net tax benefits of approximately $0.7 million. Adjusted
results for the first nine months 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 $41.1 million,
consisting primarily of severance, impairment and other charges.
In addition, adjusted first-nine months 2003 results exclude a
$14.8 million after-tax impairment charge taken on IMS's equity
investment in The TriZetto Group (Nasdaq: TZIX) and $51.0 million of
tax provision, related to a number of items, including a Dun &
Bradstreet legacy tax transaction and subsequent related transactions.
See Tables 6 and 8 for a reconciliation between SEC and adjusted
results for the nine months ended September 30, 2004 and 2003,
respectively.
Balance Sheet Highlights
IMS's cash, cash equivalents and short-term marketable securities
as of September 30, 2004 were $425.9 million, compared with $384.5
million on December 31, 2003. Total debt as of September 30, 2004 was
$634.4 million, up from $562.0 million at the end of 2003. See Table 9
for selected consolidated balance sheet items.
Share Repurchase Program, Shares Outstanding
IMS repurchased approximately 3.1 million shares in the third
quarter at a total cost of $72.8 million. Year-to-date, the company
has repurchased 11.2 million shares at a total cost of $277.1 million.
Approximately 4.4 million shares remain available for repurchase in
the company's current authorization.
The number of shares outstanding as of September 30, 2004 was
approximately 232.0 million compared with 239.5 million the same
period a year ago.
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.
Conference Call and Webcast Details
IMS will host a conference call at 5 p.m. (EDT) today to discuss
its third-quarter 2004 financial results. To participate, please dial
1-888-937-2887 (U.S. and Canada) and 1-646-862-1092 (outside the U.S.
and Canada) approximately 15 minutes before the scheduled start of the
call. The conference call also will be accessible live on the Investor
Relations section of the IMS Website at www.imshealth.com.
A replay of the conference call will be available online on the
Investor Relations section of the IMS Website and via telephone by
dialing 1-800-633-8284 (U.S. and Canada) or 1-402-977-9140 (outside
the U.S. and Canada), and entering access code 21173774 beginning one
hour after the call through 11:59 p.m. (EST) Tuesday, November 2.
Forward-Looking Statements
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.
Table 1
IMS Health
SEC Income Statement (a)
Three Months Ended September 30
(unaudited, in millions except per share)
% Fav
2004 SEC 2003 SEC (Unfav)
----------------------------------
Revenue
Sales Force Effectiveness $174.8 $163.8 7 %
Portfolio Optimization 107.5 104.9 3
Brand, Launch and Other 60.0 49.5 21
Consulting and Services 41.9 27.8 51
----------- -----------
Total 384.2 346.0 11
Operating Expenses (b)
Operating Costs (163.5) (142.5) (15)
Selling and Administrative (94.5) (77.2) (22)
Depreciation and Amortization (23.4) (18.4) (27)
----------- -----------
Total (281.3) (238.0) (18)
Operating Income 102.9 107.9 (5)
Interest expense, net (2.9) (2.9) 1
Gains from investments, net (e) 2.2 2.0 11
Gains (losses) on issuance of
investees' stock, net (f) 0.0 (0.1) NM
Other expense, net (g) (3.3) (1.1) (199)
----------- -----------
Pretax Income 98.9 105.7 (6)
Provision for Income Taxes (h) (33.9) (36.7) 8
TriZetto Equity Income, net (c) 0.7 0.2 204
----------- -----------
Net Income $65.6 $69.2 (5)
Diluted EPS:
Total Diluted EPS $0.28 $0.29 (3) %
Shares Outstanding:
Weighted Average Diluted 237.1 241.8 2 %
End-of-Period Actual 232.0 239.5 3
The accompanying notes are an integral part of these financial tables.
Table 2
IMS Health
SEC Income Statement (a)
Nine Months Ended September 30
(unaudited, in millions except per share)
% Fav
2004 SEC 2003 SEC (Unfav)
----------------------------------
Revenue
Sales Force Effectiveness $514.6 $475.8 8 %
Portfolio Optimization 330.3 304.8 8
Brand, Launch and Other 161.2 137.7 17
Consulting and Services 119.4 79.4 50
----------- -----------
Total 1,125.3 997.7 13
Operating Expenses (b)
Operating Costs (475.4) (421.3) (13)
Selling and Administrative (281.0) (237.8) (18)
Depreciation and Amortization (67.4) (55.0) (22)
Severance, Impairment & other
charges (i) 0.0 (37.2) 100
----------- -----------
Total (823.7) (751.3) (10)
Operating Income 301.6 246.4 22
Interest expense, net (8.3) (8.4) 1
Gains from investments, net (e) 10.7 1.1 NM
Loss on issuance of investees'
stock, net (f) (0.1) (0.4) 85
Other expense, net (g) (2.2) (21.8) 90
----------- -----------
Pretax Income 301.8 216.9 39
Provision for Income Taxes (h) (89.4) (130.5) 32
TriZetto Equity Loss, net (c) (0.6) (0.2) (235)
TriZetto impairment charge, net (j) 0.0 (14.8) 100
----------- -----------
Net Income from continuing
operations 211.8 71.4 197
Income from discontinued
operations - CTS (d) 0.0 2.8 (100)
Gain on discontinued
operations - CTS (k) 0.0 495.1 (100)
----------- -----------
Net Income $211.8 $569.2 (63)
Diluted EPS:
Income from continuing
operations 0.89 0.29 207
Income from discontinued
operations - CTS (d) 0.00 0.01 (100)
Gain on discontinued
operations - CTS (k) 0.00 2.00 (100)
----------- -----------
Total Diluted EPS $0.89 $2.30 (61) %
Shares Outstanding:
Weighted Average Diluted 239.2 247.9 4 %
End-of-Period Actual 232.0 239.5 3
The accompanying notes are an integral part of these financial tables.
Table 3
IMS Health
Adjusted Income Statement (a)
Three Months Ended September 30
(unaudited, in millions except per share)
2004 2003 % Fav Constant $
Adjusted Adjusted (Unfav) Growth
---------------------------------------------
Revenue
Sales Force
Effectiveness $174.8 $163.8 7 % 3 %
Portfolio Optimization 107.5 104.9 3 (2)
Brand, Launch and
Other 60.0 49.5 21 16
Consulting and
Services 41.9 27.8 51 46
----------- -----------
Total 384.2 346.0 11 7
Operating Expenses (b)
Operating Costs (163.5) (142.5) (15)
Selling and
Administrative (94.5) (77.2) (22)
Depreciation and
Amortization (23.4) (18.4) (27)
----------- -----------
Total (281.3) (238.0) (18)
Operating Income 102.9 107.9 (5) (6)
Interest expense, net (2.9) (2.9) 1
Other income (expense),
net (g) 0.6 (5.3) NM
----------- -----------
Pretax Income 100.6 99.7 1
Provision for Income
Taxes (30.6) (30.7) 0
TriZetto Equity Income,
net (c) 0.7 0.2 204
----------- -----------
Net Income $70.7 $69.2 2 %
Diluted EPS:
Total Diluted EPS $0.30 $0.29 3 %
Shares Outstanding:
Weighted Average
Diluted 237.1 241.8 2 %
End-of-Period Actual 232.0 239.5 3
The accompanying notes are an integral part of these financial tables.
Table 4
IMS Health
Adjusted Income Statement (a)
Nine Months Ended September 30
(unaudited, in millions except per share)
2004 2003 % Fav Constant $
Adjusted Adjusted (Unfav) Growth
---------------------------------------------
Revenue
Sales Force
Effectiveness $514.6 $475.8 8 % 3 %
Portfolio Optimization 330.3 304.8 8 3
Brand, Launch and
Other 161.2 137.7 17 11
Consulting & Services 119.4 79.4 50 45
----------- -----------
Total 1,125.3 997.7 13 8
Operating Expenses (b)
Operating Costs (475.4) (421.3) (13)
Selling and
Administrative (281.0) (237.8) (18)
Depreciation and
Amortization (67.4) (55.0) (22)
----------- -----------
Total (823.7) (714.1) (15)
Operating Income 301.6 283.6 6 3
Interest expense, net (8.3) (8.4) 1
Other expense, net (g) (1.1) (17.2) 94
----------- -----------
Pretax Income 292.2 258.0 13
Provision for Income
Taxes (90.0) (79.5) (13)
TriZetto Equity Loss,
net (c) (0.6) (0.2) (235)
----------- -----------
Net Income from
continuing operations 201.6 178.4 13 %
Income from discontinued
operations - CTS (d) 0.0 2.8 (100)
----------- -----------
Net Income $201.6 $181.2 11 %
Diluted EPS:
Income from
continuing
operations 0.84 0.72 17
Income from
discontinued
operations -
CTS (d) 0.00 0.01 (100)
----------- -----------
Total Diluted EPS $0.84 $0.73 15 %
Shares Outstanding:
Weighted Average
Diluted 239.2 247.9 4 %
End-of-Period Actual 232.0 239.5 3
The accompanying notes are an integral part of these financial tables.
Table 5
IMS Health
Reconciliation from SEC to Adjusted Income Statement (a)
Three Months Ended September 30, 2004
(unaudited, in millions except per share)
Adjusted
SEC Q3 Adjustments Q3
-----------------------------------
Revenue
Sales Force Effectiveness $174.8 $0.0 $174.8
Portfolio Optimization 107.5 0.0 107.5
Brand, Launch and Other 60.0 0.0 60.0
Consulting and Services 41.9 0.0 41.9
----------- ----------- -----------
Total 384.2 0.0 384.2
Operating Expenses (b)
Operating Costs (163.5) 0.0 (163.5)
Selling and Administrative (94.5) 0.0 (94.5)
Depreciation and Amortization (23.4) 0.0 (23.4)
----------- ----------- -----------
Total (281.3) 0.0 (281.3)
Operating Income 102.9 0.0 102.9
Interest expense, net (2.9) 0.0 (2.9)
Gains from investments, net (e) 2.2 (2.2) 0.0
Loss on issuance of investees'
stock, net (f) 0.0 0.0 0.0
Other income (expense), net (g) (3.3) 4.0 0.6
----------- ----------- -----------
Pretax Income 98.9 1.7 100.6
Provision for Income Taxes (h) (33.9) 3.3 (30.6)
TriZetto Equity Income, net (c) 0.7 0.0 0.7
----------- ----------- -----------
Net Income $65.6 5.0 $70.7
Diluted EPS $0.28 0.02 $0.30
Shares Outstanding:
Weighted Average Diluted 237.1 0.0 237.1
End-of-Period Actual 232.0 0.0 232.0
The accompanying notes are an integral part of these financial tables.
Table 6
IMS Health
Reconciliation from SEC to Adjusted Income Statement (a)
Nine Months Ended September 30, 2004
(unaudited, in millions except per share)
Adjusted
SEC Q3 Adjustments Q3
-----------------------------------
Revenue
Sales Force Effectiveness $514.6 $0.0 $514.6
Portfolio Optimization 330.3 0.0 330.3
Brand, Launch and Other 161.2 0.0 161.2
Consulting and Services 119.4 0.0 119.4
----------- ----------- -----------
Total 1,125.3 0.0 1,125.3
Operating Expenses (b)
Operating Costs (475.4) 0.0 (475.4)
Selling and Administrative (281.0) 0.0 (281.0)
Depreciation and Amortization (67.4) 0.0 (67.4)
----------- ----------- -----------
Total (823.7) 0.0 (823.7)
Operating Income 301.6 0.0 301.6
Interest expense, net (8.3) 0.0 (8.3)
Gains from investments, net (e) 10.7 (10.7) 0.0
Loss on issuance of investees'
stock, net (f) (0.1) 0.1 0.0
Other income (expense), net (g) (2.2) 1.1 (1.1)
----------- ----------- -----------
Pretax Income 301.8 (9.6) 292.2
Provision for Income Taxes (h) (89.4) (0.7) (90.0)
TriZetto Equity Loss, net (c) (0.6) 0.0 (0.6)
----------- ----------- -----------
Net Income $211.8 (10.2) $201.6
Diluted EPS $0.89 (0.05) $0.84
Shares Outstanding:
Weighted Average Diluted 239.2 0.0 239.2
End-of-Period Actual 232.0 0.0 232.0
The accompanying notes are an integral part of these financial tables.
Table 7
IMS Health
Reconciliation from SEC to Adjusted Income Statement (a)
Three Months Ended September 30, 2003
(unaudited, in millions except per share)
Adjusted
SEC Q3 Adjustments Q3
-----------------------------------
Revenue
Sales Force Effectiveness $163.8 $0.0 $163.8
Portfolio Optimization 104.9 0.0 104.9
Brand, Launch and Other 49.5 0.0 49.5
Consulting and Services 27.8 0.0 27.8
----------- ----------- -----------
Total 346.0 0.0 346.0
Operating Expenses (b)
Operating Costs (142.5) 0.0 (142.5)
Selling and Administrative (77.2) 0.0 (77.2)
Depreciation and Amortization (18.4) 0.0 (18.4)
----------- ----------- -----------
Total (238.0) 0.0 (238.0)
Operating Income 107.9 0.0 107.9
Interest expense, net (2.9) 0.0 (2.9)
Gains from investments, net (e) 2.0 (2.0) 0.0
Gain (loss) on issuance of
investees' stock, net (f) (0.1) 0.1 0.0
Other expense, net (g) (1.1) (4.2) (5.3)
----------- ----------- -----------
Pretax Income 105.7 (6.0) 99.7
Provision for Income Taxes (h) (36.7) 6.0 (30.7)
TriZetto Equity Income, net (c) 0.2 0.0 0.2
----------- ----------- -----------
Net Income $69.2 0.0 $69.2
Diluted EPS:
Total Diluted EPS $0.29 0.00 $0.29
Shares Outstanding:
Weighted Average Diluted 241.8 0.0 241.8
End-of-Period Actual 239.5 0.0 239.5
The accompanying notes are an integral part of these financial tables.
Table 8
IMS Health
Reconciliation from SEC to Adjusted Income Statement (a)
Nine Months Ended September 30, 2003
(unaudited, in millions except per share)
Adjusted
SEC Q3 Adjustments Q3
-----------------------------------
Revenue
Sales Force Effectiveness $475.8 $0.0 $475.8
Portfolio Optimization 304.8 0.0 304.8
Brand, Launch and Other 137.7 0.0 137.7
Consulting and Services 79.4 0.0 79.4
----------- ----------- -----------
Total 997.7 0.0 997.7
Operating Expenses (b)
Operating Costs (421.3) 0.0 (421.3)
Selling and Administrative (237.8) 0.0 (237.8)
Depreciation and Amortization (55.0) 0.0 (55.0)
Severance, Impairment & other
charges (i) (37.2) 37.2 0.0
----------- ----------- -----------
Total (751.3) 37.2 (714.1)
Operating Income 246.4 37.2 283.6
Interest expense, net (8.4) 0.0 (8.4)
Gains from investments, net (e) 1.1 (1.1) 0.0
Loss on issuance of investees'
stock, net (f) (0.4) 0.4 0.0
Other expense, net (g) (21.8) 4.6 (17.2)
----------- ----------- -----------
Pretax Income 216.9 41.1 258.0
Provision for Income Taxes (h) (130.5) 51.0 (79.5)
TriZetto Equity Loss, net (c) (0.2) 0.0 (0.2)
TriZetto impairment charge, net (j) (14.8) 14.8 0.0
----------- ----------- -----------
Net Income (loss) from continuing
operations 71.4 107.0 178.4
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 $569.2 (388.1) $181.2
Diluted EPS:
Income from continuing
operations 0.29 0.43 0.72
Income from discontinued
operations - CTS (d) 0.01 0.00 0.01
Gain on discontinued
operations - CTS (k) 2.00 (2.00) 0.00
----------- ----------- -----------
Total Diluted EPS $2.30 (1.57) $0.73
Shares Outstanding:
Weighted Average Diluted 247.9 0.0 247.9
End-of-Period Actual 239.5 0.0 239.5
The accompanying notes are an integral part of these financial tables.
Table 9
IMS Health
Selected Consolidated Balance Sheet Items
(unaudited, in millions)
Sept. 30, 2004 Dec. 31, 2003
-------------- --------------
Cash and cash equivalents $403.6 $344.4
Short-term marketable securities 22.2 40.1
Accounts receivable, net 256.9 271.3
Short-term debt 241.5 409.9
Long-term debt 392.9 152.1
The accompanying notes are an integral part of these financial tables.
IMS Health
NOTES TO FINANCIAL TABLES
(a) "SEC Income Statement" (Tables 1 and 2) differs from the "Adjusted
Income Statement" (Tables 3 and 4) by amounts that are detailed on
Tables 5, 6, 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 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. Severance,
impairment and other charges were recorded in 2000, 2001 and 2003,
and there can be no assurance 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 third 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 $2.2 million in the third quarter
of 2004, relating primarily to $2.7 million in gains from the sale
of two securities, partially offset by $0.5 million of fees for
the Enterprise investments. This compared with a net gain of $2.0
million in the third quarter of 2003. Gains from investments, net
were $10.7 million for the first nine months of 2004, primarily
from the sale of securities in the first two quarters and the
items discussed above. This is compared with a net gain of $1.1
million in the first nine months 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) Gain/(loss) on issuance of investees' stock, net was zero in the
third quarter and $(0.1) million in the first nine months of 2004
compared with a loss of $0.1 million in the third quarter and loss
of $0.4 million in the first nine months 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 $1.2 million and $0.4 million of
expenses for legal fees, respectively, in the third quarter of
2004 and 2003, related to the IRI litigation. For the first nine
months IRI litigation legal fees were $2.8 million and $(1.4)
million in 2004 and 2003, respectively. 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 $2.8
million in the third quarter and $(1.7) million in the first nine
months of 2004, and $(4.6) million in the third quarter and $6.0
million in the first nine months 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. For the full year, there will be no
difference between the hedge gains (losses) in adjusted and SEC
results.
(h) The tax provision for the third quarter and first nine months of
2004 includes a tax benefit of $0.6 million and tax provision of
$3.3 million, respectively, related to the items described in
notes (e), (f) and (g). The tax provision for the third quarter
and first nine months of 2003 includes a tax provision of $2.1
million and a tax benefit of $1.4 million, respectively, 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. of the
1998 and 1999 tax years. Adjusted results include a phasing
adjustment to recognize it ratably throughout 2004. The third
quarter phasing adjustment was $3.9 million and the phasing
adjustment for the first nine months was $(4.0) million. 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 recognize it ratably throughout 2003. The third quarter 2003
phasing adjustment was $3.9 million and the phasing adjustment for
the first nine months of 2003 was $(4.0) million. 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.
*T
Statements relating to guidance are based on current expectations
as of the date of this release. These statements are forward-looking,
and actual results may differ materially. IMS does not undertake to
update these targets in any way or for any reason prior to discussing
actual results.
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
Corporate Communications
Bill Hughes, 203-319-4732
bhughes@imshealth.com
or
Investor Relations
Darcie Peck, 203-319-4766
dpeck@imshealth.com