INTERACTIVE DATA CORP/MA/ - FORM 8-K - EX-99.1 - PRESS RELEASE

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Exhibit 99.1


		Press Release

INTERACTIVE DATA REPORTS THIRD-QUARTER 2011 RESULTS

BEDFORD, Mass – October 27, 2011 – Interactive Data Corporation today reported its financial results for the third quarter ended September 30, 2011. Please note that Interactive Data’s third-quarter 2010 results detailed below reflect the predecessor period prior to the Company’s acquisition (from July 1, 2010 through July 29, 2010) and the successor period following it (from July 30, 2010 through September 30, 2010) on a combined basis. All non-GAAP financial measures with applicable reconciliations, including those for the combined periods, are set forth on the pages following the financial tables of this press release.

Interactive Data’s third-quarter 2011 revenue increased 10.1% to a record $217.9 million from $197.9 million in the third quarter of 2010. Third-quarter 2010 revenue was reduced by $2.3 million due to the purchase accounting for the amortization of acquisition-related deferred revenue. Excluding the impact of changes in foreign exchange rates and the reduction in third-quarter 2010 revenue associated with the acquisition-related deferred revenue adjustment, Interactive Data’s organic (non-GAAP) revenue grew 6.7% from the third quarter in 2010.

Interactive Data’s third-quarter 2011 income from operations was $30.8 million, compared with a loss from operations of $85.9 million in same period one year ago. The third-quarter 2010 loss from operations included merger costs of $100.8 million. Non-GAAP adjusted EBITDA (which excludes items that are either not part of the Company’s ongoing core operations, or do not require a cash outlay, or are not otherwise expected to recur in the ordinary course) for the third quarter of 2011 was a Company record $87.4 million. This is 12.7% higher than $77.5 million in the same period one year ago.

“Our third-quarter 2011 results reflect continued progress across our business,” stated Mason Slaine, Interactive Data’s president and chief executive officer. “Our revenue growth during the third quarter of 2011 was driven primarily by ongoing strength in our Pricing and Reference Data business, and continued expansion of our Real-Time Services business largely resulting from another strong showing in our Interactive Data 7ticks product area. We converted our revenue growth into higher adjusted EBITDA and free cash flow this quarter as we balanced overall operating discipline with accelerated investment in key product and technology initiatives. As we move forward, we are well positioned to continue addressing the evolving needs of our customers worldwide.”

Segment Reporting and Related Operating Highlights

Institutional Services Segment:

•

Interactive Data Pricing and Reference Data reported third-quarter 2011 revenue of $141.0 million, a 9.3% increase over the third quarter of 2010. Excluding the effects of foreign exchange and the reduction of $1.5 million in third-quarter 2010 revenue associated with the acquisition-related deferred revenue adjustment, third-quarter 2011 organic (non-GAAP) revenue for this business increased by 6.6% from the same period last year. This business produced a strong quarter of new sales as demand across its global customer base for its evaluated pricing and reference data services remained healthy. During the third quarter of 2011, Interactive Data Pricing and Reference Data added local evaluated pricing resources in Germany and the business also recently announced that it is working with the Financial Industry Regulatory Authority (FINRA) to develop a set of daily reports designed to provide transparency into market activity related to U.S. structured securities.

•

Interactive Data Real-Time Services generated third-quarter 2011 revenue of $48.7 million, which is 19.5% higher than the same quarter last year. Excluding the effects of foreign exchange and the reduction of $0.6 million in third-quarter 2010 revenue associated with the acquisition-related deferred revenue adjustment, third-quarter 2011 organic (non-GAAP) revenue for this business increased 13.2%. The organic revenue growth for this business primarily reflects strong growth in the Interactive Data 7ticks business, as well as expansion within Interactive Data’s web-based solutions product area. During the third quarter of 2011, Emmanuel Doe, who most recently served as Global Business Manager for the Thomson Reuters Enterprise segment focusing on the high frequency trading market, was appointed president of Interactive Data’s Trading Solutions Group, which includes the Company’s real-time data and trading infrastructure services.

•

BondEdge Solutions, which was rebranded in July 2011 and was formerly known as Interactive Data Fixed Income Analytics, reported revenue for the third quarter of 2011 of $8.3 million, which declined by 4.8% from the same quarter last year. Excluding the effects of foreign exchange and the reduction of $0.1 million in third-quarter 2010 revenue associated with the acquisition-related deferred revenue adjustment, third-quarter 2011 organic (non-GAAP) revenue for this business decreased by 5.7%.

Active Trader Services Segment:

•

Interactive Data’s Desktop Solutions business reported third-quarter 2011 revenue of $19.8 million, an increase of 2.0% from the same period last year. Excluding the effects of foreign exchange and the reduction of $0.2 in third-quarter 2010 revenue associated with the acquisition-related deferred revenue adjustment, third-quarter 2011 organic revenue was essentially unchanged from the third quarter of 2010 as the impact from lower total subscribers was offset by higher average subscription fees. As of September 30, 2011, Desktop Solutions reported approximately 56,500 total subscribers, a decline of 4.5% from the same period last year with subscriber declines for its various active trader platforms partially offset by strong subscriber growth within the Market-Q platform.

Other Third-Quarter 2011 Financial and Operating Highlights

Effects of Foreign Exchange:

•

Interactive Data’s third-quarter 2011 revenue was favorably impacted by $4.1 million due to the effects of foreign exchange primarily resulting from a weaker US dollar against the GBP and the Euro in comparison with the third quarter of 2010. Total costs and expenses in the third quarter of 2011 were $4.0 million higher as a result of the effects of foreign exchange. The net positive effect of foreign exchange on third-quarter 2011 operating income was $0.1 million.

Balance Sheet Highlights:

•

As of September 30, 2011, Interactive Data had cash and cash equivalents of $217.2 million, a $29.2 million increase over second-quarter 2011 levels. The Company’s total debt outstanding as of September 30, 2011, was approximately $2.0 billion.

Results for the Nine Months Ended September 30, 2011

•

For the nine months ended September 30, 2011, Interactive Data reported revenue of $645.7 million, an increase of $56.9 million, or 9.7%, from $588.8 million in the same period last year. Excluding the effects of foreign exchange and the reduction of $2.3 million in revenue for the first nine months of 2010 associated with the deferred revenue adjustment, organic revenue grew by 7.2% during the first nine months of 2011.

•

Interactive Data’s income from operations for the first nine months of 2011 was $68.5 million, compared with a loss from operations of $5.9 million in the same period one year ago. For the first nine months of 2011, non-GAAP adjusted EBITDA (which excludes items that are not part of the Company’s ongoing core operations, or do not require a cash outlay, or are not otherwise expected to recur in the ordinary course) increased by 13.9% to $245.9 million from $215.9 million in the same period one year ago.

Conference Call Information

Interactive Data Corporation will host a conference call to discuss the Company’s third-quarter 2011 results on Friday, October 28, 2011 at 8:30 a.m. ET. The dial-in number for the conference call is (785) 424-1057 and the related access code is IDCQ311. For those who cannot listen to this broadcast, a replay of the call will be available from October 28 at 12:00 p.m. until Thursday, November 3, 2011 at 12:00 p.m., and it can be accessed by dialing (402) 530-9025 or (800) 695-1564 (no access code is required).

Non-GAAP Information

In addition to presenting our results in accordance with generally accepted accounting principles (GAAP), we also disclose the following non-GAAP information:

•

Management includes information regarding organic revenue. Organic revenue excludes the effects of foreign currency exchange rates, adjustments related to the amortization of acquisition-related deferred revenue, and, if applicable, the contribution of businesses recently acquired (and related intercompany eliminations as appropriate). Management believes reporting organic revenue facilitates period-to-period comparisons, and provides a better understanding of underlying business trends and our future revenue growth prospects.

•

Management includes organic revenue for our Interactive Data Pricing and Reference Data, Interactive Data Real-Time Services, BondEdge Solutions (formerly Interactive Data Fixed Income Analytics) and Interactive Data Desktop Solutions businesses because management believes this additional level of detail provides further insight into underlying trends and how the individual business areas are performing. In addition, since we have historically reported revenue for these businesses to the investment community as part of our reports on Form 10-K and Form 10-Q, we believe that continuing to offer such information provides consistency in our financial reporting.

•

Management includes information regarding earnings before interest, income taxes, depreciation and amortization (EBITDA). We also include information regarding adjusted EBITDA, which we define as earnings before interest, income taxes, depreciation and amortization, stock-based compensation expense, restructuring charges and benefits, adjustments related to the amortization of acquisition-related deferred revenue, and other non-cash, non-operational or non-recurring items. In addition, management also includes information regarding pro forma adjusted EBITDA. We define this metric as earnings, excluding all of the above factors as well as other adjustments permitted under the Company’s senior secured credit facilities. Management considers these measures to be important indicators of the Company’s operational profitability and cash generation strength and a good measure of the Company’s historical operating trend because it eliminates items that are either not part of the Company’s ongoing core operations, do not require a cash outlay, or are not otherwise expected to recur in the ordinary course of business. In addition, the Company’s pro forma adjusted EBITDA measure is based on the definition of EBITDA set forth in the agreements governing the Company’s senior secured credit facilities.

•

Management includes information regarding free cash flow, which we define as adjusted EBITDA less capital expenditures. Management considers free cash flow as another important measure of the Company’s cash generation strength that supports the Company’s ability to repay its debt obligations and invest in future growth through new business development activities or acquisitions.

•

Management uses these non-GAAP financial measures, in addition to GAAP financial measures, as the basis for measuring the Company’s core operating performance and comparing such performance to that of prior periods and to the performance of our competitors. Such measures are also used by management in their financial and operating decision-making, and for forecasting and planning purposes. In addition, management also considers pro forma adjusted EBITDA to be an important indicator which can be used for the purpose of analyzing covenant compliance under the Company’s senior secured credit facilities.

•

The non-GAAP financial measures of the Company’s results of operations included in this press release should not be considered in isolation from comparable measures determined in accordance with GAAP. The non-GAAP financial measures are not meant to be considered superior to or a substitute for the Company’s results of operations prepared in accordance with GAAP. Reconciliations of such non-GAAP financial measures to the comparable GAAP financial measures are set forth in the accompanying tables. The non-GAAP measures may not be comparable to similarly titled measures reported by other companies.

Forward-looking and Cautionary Statements

The following constitutes a “Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements that involve a number of risks and uncertainties. Forward-looking statements include all statements that are not historical statements and include our statements discussing our goals, beliefs, strategies, objectives, plans, future financial conditions, future challenges and opportunities, including our statements that, as we move forward, we are well positioned to continue addressing the evolving needs of our customers worldwide. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, under the caption “Risk Factors,” as well as the Company’s recent Quarterly Reports on Form 10-Q. The Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q are on file with the Securities and Exchange Commission and available in the “Investors” section of our Website under the heading “SEC Filings.” Important factors that could cause actual results to differ materially from those indicated by forward-looking statements include risks and uncertainties relating to: (i) the implementation of strategies designed to improve core revenue and profit growth; (ii) the impact of cost-cutting pressures across the industries we serve; (iii) general worldwide economic conditions and related uncertainties; (iv) consolidation of financial services companies, within and across industries, or the failure of financial institutions; (v) decline in activity levels in the securities markets, weak or declining financial performance of market participants or the failure of market participants; (vi) the intensity of competition we face; (vii) a prolonged outage at one of our data centers or other major disruptions of our computer operations or those of our suppliers; (viii) our ability to maintain relationships with our key suppliers and providers of market data; (ix) our ability to maintain our relationships with service bureaus and custodian banks and our other customers; (x) the need to develop new products and adapt to legal, regulatory, technology or other change; (xi) our cost-savings plans may not be effective or yield the expected efficiencies or may take longer than anticipated; (xii) risks related to our substantial leverage, including our ability to raise additional capital to fund operations or react to changes in the economy or our industry, and our exposure to interest rate risk due to the extent of our variable rate debt (to the extent the risk is not mitigated by our interest rate hedge and cap arrangements that may be in place and as amended from time to time); (xiii) our ability to negotiate and enter into strategic acquisitions or alliances on favorable terms, if at all, (xiv) our ability to realize the anticipated benefits from any strategic acquisitions or alliances that we enter into; (xv) we are subject to regulatory oversight and we provide services to financial institutions that are subject to regulatory oversight; (xvi) certain of our subsidiaries are

subject to complex regulations and licensing requirements; (xvii) the risks of doing business internationally; (xviii) intellectual property related risks, including any allegations that we infringe the intellectual property rights of others; and (xix) our ability to attract and retain qualified management and other key personnel. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change and, therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to today.

About Interactive Data Corporation

Interactive Data Corporation is a trusted leader in financial information. Thousands of financial institutions and active traders, as well as hundreds of software and service providers, subscribe to our fixed income evaluations, reference data, real-time market data, trading infrastructure services, fixed income analytics, desktop solutions and web-based solutions. Interactive Data’s offerings support clients around the world with mission-critical functions, including portfolio valuation, regulatory compliance, risk management, electronic trading and wealth management. Interactive Data is headquartered in Bedford, Massachusetts and has over 2,500 employees in offices worldwide.

For more information, please visit www.interactivedata.com.


COMPANY CONTACTS
Investors:		Media:
Andrew Kramer		Brian Willinsky
781-687-8306		339-203-0769
andrew.kramer@interactivedata.com		brian.willinsky@interactivedata.com

INTERACTIVE DATA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited

(In thousands)


	Successor			Combined			Successor			Predecessor
	Three Months Ended September 30, 2011			Three Months Ended September 30, 2010			Period from July 30 through September 30, 2010			Period from July 1 through July 29, 2010
REVENUE	$	217,850		$	197,947		$	134,261		$	63,686

COSTS AND EXPENSES:
Cost of services		72,081			74,532			47,435			27,097
Selling, general and administrative		63,853			72,433			38,640			33,793
Merger costs		—			100,818			63,379			37,439
Depreciation		9,601			9,130			5,926			3,204
Amortization		41,540			26,948			24,280			2,668

Total costs and expenses		187,075			283,861			179,660			104,201


INCOME (LOSS) FROM OPERATIONS		30,775			(85,914	)		(45,399	)		(40,515	)
Interest (expense) income, net		(38,390	)		(31,113	)		(31,269	)		156
Other income, net		30			745			703			42


LOSS BEFORE INCOME TAXES		(7,585	)		(116,282	)		(75,965	)		(40,317	)

Income tax benefit		(17,433	)		(35,812	)		(27,703	)		(8,109	)


NET INCOME (LOSS)	$	9,848		$	(80,470	)	$	(48,262	)	$	(32,208	)


	Successor			Combined			Successor			Predecessor
	Nine Months Ended September 30, 2011			Nine Months Ended September 30, 2010			Period from July 30 through September 30, 2010			Period from January 1 through July 29, 2010
REVENUE	$	645,650		$	588,805		$	134,261		$	454,544

COSTS AND EXPENSES:
Cost of services		219,030			209,334			47,435			161,899
Selling, general and administrative		190,089			196,850			38,640			158,210
Merger costs		—			116,113			63,379			52,734
Depreciation		30,193			28,430			5,926			22,504
Amortization		137,855			43,998			24,280			19,718

Total costs and expenses		577,167			594,725			179,660			415,065


INCOME (LOSS) FROM OPERATIONS		68,483			(5,920	)		(45,399	)		39,479

Interest (expense) income, net		(119,025	)		(30,509	)		(31,269	)		760
Other (expense) income, net		(2,708	)		952			703			249
Loss on extinguishment of debt		(25,450	)		—			—			—


(LOSS) INCOME BEFORE INCOME TAXES		(78,700	)		(35,477	)		(75,965	)		40,488

Income tax (benefit) expense		(51,295	)		(9,689	)		(27,703	)		18,014


NET (LOSS) INCOME	$	(27,405	)	$	(25,788	)	$	(48,262	)	$	22,474

INTERACTIVE DATA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)


	September 30, 2011			December 31, 2010
	(Unaudited)
ASSETS

Assets:
Cash and cash equivalents	$	217,191		$	123,704
Accounts receivable, net		119,057			107,067
Due from parent		—			7,500
Prepaid expenses and other current assets		31,855			21,079
Income tax receivable		5,940			40,764
Deferred income taxes		13,299			7,574


Total current assets		387,342			307,688

Property and equipment, net		110,678			110,386
Goodwill		1,638,068			1,638,268
Intangible assets, net		1,856,742			1,994,461
Deferred financing costs, net		56,863			71,827
Other assets		5,756			11,247


Total Assets	$	4,055,449		$	4,133,877


LIABILITIES AND EQUITY

Liabilities:
Accounts payable, trade	$	13,751		$	22,232
Accrued liabilities		86,659			92,020
Borrowings, current		13,450			10,088
Interest payable		12,314			30,647
Income taxes payable		3,970			5,521
Deferred revenue		33,515			24,296


Total current liabilities		163,659			184,804

Income taxes payable		11,236			11,314
Deferred tax liabilities		627,389			677,793
Other liabilities		56,127			48,130
Borrowings, net of current portion and original issue discount		1,974,143			1,959,365


Total Liabilities		2,832,554			2,881,406


Equity:
Common stock		—			—
Additional paid-in-capital		1,331,855			1,327,115
Accumulated loss		(121,668	)		(94,263	)
Accumulated other comprehensive income		12,708			19,619


Total Equity		1,222,895			1,252,471


Total Liabilities and Equity	$	4,055,449		$	4,133,877

INTERACTIVE DATA CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited

(In thousands)


	Successor			Combined			Successor			Predecessor
	Nine Months Ended September 30, 2011			Nine Months Ended September 30, 2010			Period from July 30 through September 30, 2010			Period from January 1 through July 29, 2010
Cash flows provided by (used in) operating activities:
Net (loss) income	$	(27,405	)	$	(25,788	)	$	(48,262	)	$	22,474
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		168,048			72,428			30,206			42,222
Amortization of discounts and premiums on marketable securities, net		—			766			—			766
Amortization of deferred financing costs and accretion of note discounts		13,386			3,313			3,313			—
Deferred income taxes		(54,586	)		(18,586	)		(25,856	)		7,270
Excess tax benefits from stock-based compensation		—			(3,625	)		—			(3,625	)
Stock-based compensation		2,740			24,768			783			23,985
Non-cash interest expense		—			331			331			—
(Recovery) provision for doubtful accounts and sales credits		(7	)		140			37			103
Loss on dispositions of fixed assets		124			115			1			114
Loss on extinguishment of debt		25,450			—			—			—
Changes in operating assets and liabilities, net		(8,576	)		(69,892	)		19,927			(89,819	)

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		119,174			(16,030	)		(19,520	)		3,490

Cash flows used in investing activities:
Purchase of fixed assets		(30,803	)		(34,636	)		(8,241	)		(26,395	)
Business acquisitions, net of acquired cash		19			(32,284	)		(2,361	)		(29,923	)
Acquisition of Interactive Data Corporation and subsidiaries		—			(3,374,155	)		(3,374,155	)		—
Purchase of marketable securities		—			(64,136	)		—			(64,136	)
Proceeds from maturities of marketable securities		—			159,428			—			159,428

NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES		(30,784	)		(3,345,783	)		(3,384,757	)		38,974

Cash flows provided by financing activities:
Proceeds from exercise of stock options and employee stock purchase plan		—			28,397			—			28,397
Common stock cash dividends paid		—			(18,964	)		—			(18,964	)
Excess tax benefits from stock-based compensation		—			3,625			—			3,625
Proceeds from issuance of long-term debt, net of issuance costs		1,358			1,899,670			1,899,670			—
Principal payments on long-term debt		(6,726	)		(5,325	)		(5,325	)		—
Investment by parent company		—			1,353,969			1,353,969			—
Proceeds from issuance of parent company common stock		11,850			—			—			—

NET CASH PROVIDED BY FINANCING ACTIVITIES		6,482			3,261,372			3,248,314			13,058

Effect of change in exchange rates on cash and cash equivalents		(1,385	)		(5,639	)		3,109			(8,748	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		93,487			(106,080	)		(152,854	)		46,774
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		123,704			209,946			256,720			209,946


CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	217,191		$	103,866		$	103,866			256,720

RECONCILIATION OF NON-GAAP MEASURES

Total Organic (Non-GAAP) Revenue