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IHS Inc. Reports Second Quarter 2014 Results

IHS Inc. (NYSE: IHS), the leading global source of information and analytics, today reported results for the second quarter ended May 31, 2014.

  • Revenue of $568 million, up 36 percent from the prior-year period
  • Total organic revenue growth of 6 percent, anchored by 6 percent subscription organic revenue growth
  • Adjusted EBITDA of $173 million, up 33 percent from the prior-year period
  • Adjusted earnings per diluted share (Adjusted EPS) of $1.47, up 17 percent from the prior-year period
  • Free cash flow of $195 million, up 83 percent from the prior-year period

Adjusted EBITDA, Adjusted EPS, and free cash flow are non-GAAP financial measures used by management to measure operating performance. These terms are defined elsewhere in this release. Please see schedules appearing later in this release for reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures.

Second Quarter and Year-to-Date 2014 Financial Performance

 
    Three months ended May 31,     Change     Six months ended May 31,     Change
(in thousands, except percentages and per share data) 2014     2013 $     % 2014     2013 $     %
Revenue $ 568,008 $ 418,143 $ 149,865 36 % $ 1,092,466 $ 800,668 $ 291,798 36 %
 
Net income $ 55,492 $ 42,890 $ 12,602 29 % $ 87,914 $ 67,561 $ 20,353 30 %
Adjusted EBITDA $ 172,733 $ 130,156 $ 42,577 33 % $ 328,908 $ 248,350 $ 80,558 32 %
 
GAAP EPS $ 0.81 $ 0.65 $ 0.16 25 % $ 1.28 $ 1.01 $ 0.27 27 %
Adjusted EPS $ 1.47 $ 1.26 $ 0.21 17 % $ 2.75 $ 2.34 $ 0.41 18 %
 
Cash flow from operations $ 221,113 $ 129,480 $ 91,633 71 % $ 374,974 $ 261,166 $ 113,808 44 %
Free cash flow $ 194,687 $ 106,411 $ 88,276 83 % $ 323,938 $ 218,730 $ 105,208 48 %
 

“We were pleased to deliver on our expanding organic growth objectives,” said Scott Key, IHS president and chief executive officer. “Encouragingly, our growth was broad-based, with progress and performance in each of the three regions and in each product category.”

“We had very strong cash flow in the quarter and have delivered over $500 million of free cash flow over the last twelve months,” said Todd Hyatt, IHS chief financial officer. “This has allowed us to de-lever from 3.7 times to 2.9 times in less than a year.”

Second Quarter and Year-to-Date 2014 Revenue Performance

Second quarter 2014 revenue increased 36 percent compared to the second quarter of 2013, and year-to-date 2014 revenue increased 36 percent compared to the same period in 2013. The components of revenue growth are described below by segment and in total.

 
  Increase in revenue
Second quarter 2014 vs. second quarter 2013     Year-to-date 2014 vs. year-to-date 2013
(All amounts represent         Foreign         Foreign
percentage points) Organic Acquisitive Currency Organic Acquisitive Currency
Americas 4 % 43 % (1 )% 5 % 45 % (1 )%
EMEA 10 % 9 % 4 % 8 % 9 % 3 %
APAC 4 % 6 % % 2 % 7 % (1 )%
Total 6 % 30 % 1 % 5 % 31 % %
 

The subscription-based business grew 6 percent organically in the second quarter of 2014 compared to the second quarter of 2013, as described in the following table.

 
    Three months ended May 31,     Percent change     Six months ended May 31,     Percent change
(in thousands, except percentages) 2014     2013 Total     Organic 2014     2013 Total     Organic
Subscription revenue $ 426,346 $ 313,923 36 % 6 % $ 843,720 $ 621,650 36 % 6 %
Non-subscription revenue   141,662   104,220 36 % 4 %   248,746   179,018 39 % 3 %
Total revenue $ 568,008 $ 418,143 36 % 6 % $ 1,092,466 $ 800,668 36 % 5 %
 

Second Quarter and Year-to-Date 2014 Segment Performance

On a consolidated basis, IHS continued to deliver solid organic revenue growth. Segment results were as follows:

  • Americas. Second quarter revenue for Americas increased $119 million, or 46 percent, to $377 million, and included 5 percent organic growth for the subscription-based business. Second quarter Adjusted EBITDA for Americas increased $27 million, or 25 percent, to $135 million. Second quarter operating income for Americas increased $14 million, or 18 percent, to $94 million.

    Year-to-date revenue for Americas increased $240 million, or 49 percent, to $727 million. Year-to-date Adjusted EBITDA for Americas increased $57 million, or 28 percent, to $259 million. Year-to-date operating income for Americas increased $30 million, or 21 percent, to $171 million.

    Americas results for both the second quarter and year-to-date 2014 periods benefited from the inclusion of R. L. Polk.
  • EMEA. Second quarter revenue for EMEA increased $26 million, or 23 percent, to $139 million, and included 9 percent organic growth for the subscription-based business. Second quarter Adjusted EBITDA for EMEA increased $13 million, or 48 percent, to $40 million. Second quarter operating income for EMEA increased $14 million, or 68 percent, to $34 million. EMEA profit benefited from revenue growth and prior investment in scaled infrastructure.

    Year-to-date revenue for EMEA increased $43 million, or 19 percent, to $266 million. Year-to-date Adjusted EBITDA for EMEA increased $21 million, or 41 percent, to $72 million. Year-to-date operating income for EMEA increased $23 million, or 62 percent, to $59 million.
  • APAC. Second quarter revenue for APAC increased $5 million, or 10 percent, to $52 million, and included 10 percent organic growth for the subscription-based business. Second quarter Adjusted EBITDA for APAC increased $3 million, or 25 percent, to $14 million. Second quarter operating income for APAC increased $3 million, or 26 percent, to $13 million.

    Year-to-date revenue for APAC increased $8 million, or 9 percent, to $100 million. Year-to-date Adjusted EBITDA for APAC increased $3 million, or 16 percent, to $24 million. Year-to-date operating income for APAC increased $3 million, or 15 percent, to $23 million.

Outlook (forward-looking statement)

For the year ending November 30, 2014, IHS expects:

  • Revenue in a range of $2.17 billion to $2.23 billion, including 6-7 percent organic growth on the subscription base;
  • Adjusted EBITDA in a range of $675 million to $705 million; and
  • Adjusted EPS in a range of $5.50 to $5.85 per diluted share.

Additionally, for the year ending November 30, 2014, IHS expects:

  • Depreciation expense to be approximately $75-80 million;
  • Amortization expense related to acquired intangible assets to be approximately $135-140 million;
  • Net interest expense to be approximately $55-60 million;
  • Stock-based compensation expense to be approximately $185-195 million;
  • An adjusted tax rate of approximately 28-30 percent;
  • An effective GAAP tax rate of approximately 20-22 percent; and
  • Fully diluted shares to be approximately 69-70 million.

The above outlook assumes no further currency movements, acquisitions, divestitures, pension mark-to-market adjustments or unanticipated events. See discussion of non-GAAP financial measures at the end of this release.

As previously announced, IHS will hold a conference call to discuss second quarter 2014 results on June 19, 2014, at 8:00 a.m. EDT. The conference call will be simultaneously webcast on the company’s website: www.ihs.com.

Use of Non-GAAP Financial Measures

Non-GAAP results are presented only as a supplement to our financial statements based on U.S. generally accepted accounting principles (GAAP). Non-GAAP financial information is provided to enhance the reader’s understanding of our financial performance, but none of these non-GAAP financial measures are recognized terms under GAAP and non-GAAP measures should not be considered in isolation or as a substitute for financial measures calculated in accordance with GAAP. Reconciliations of the most directly comparable GAAP measures to non-GAAP measures, such as Adjusted EBITDA, Adjusted net income, Adjusted EPS, and free cash flow are provided within the schedules attached to this release.

We use non-GAAP measures in our operational and financial decision-making, believing that it is useful to exclude certain items in order to focus on what we deem to be a more reliable indicator of ongoing operating performance and our ability to generate cash flow from operations. As a result, internal management reports used during monthly operating reviews feature the Adjusted EBITDA, Adjusted net income, Adjusted EPS, and free cash flow metrics. We also believe that investors may find non-GAAP financial measures useful for the same reasons, although investors are cautioned that non-GAAP financial measures are not a substitute for GAAP disclosures.

Because not all companies use identical calculations, our presentation of non-GAAP financial measures may not be comparable to other similarly-titled measures of other companies. However, these measures can still be useful in evaluating our performance against our peer companies because we believe the measures provide users with valuable insight into key components of GAAP financial disclosures.

IHS Forward-Looking Statements:

This release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “aim,” “strive,” “believe,” “project,” “predict,” “estimate,” “expect,” “continue,” “strategy,” “future,” “likely,” “may,” “might,” “should,” “will,” the negative of these terms and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding guidance relating to net income, net income per share, and expected operating results, such as revenue growth and earnings.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: economic and financial conditions, including volatility in interest and exchange rates; our ability to successfully manage risks associated with changes in demand for our products and services as well as changes in our targeted industries; our ability to develop new platforms to deliver our products and services, pricing, and other competitive pressures, and changes in laws and regulations governing our business; the extent to which we are successful in gaining new long-term relationships with customers or retaining existing ones and the level of service failures that could lead customers to use competitors’ services; our ability to successfully identify and integrate acquisitions into our existing businesses and manage risks associated therewith; and the other factors described under the caption “Risk Factors” in our most recent annual report on Form 10-K, along with our other filings with the U.S. Securities and Exchange Commission.

Any forward-looking statement made by us in this release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Please consult our public filings at www.sec.gov or www.ihs.com.

About IHS Inc. (www.ihs.com)

IHS Inc. (NYSE: IHS) is the leading source of information, insight and analytics in critical areas that shape today’s business landscape. Businesses and governments in more than 165 countries around the globe rely on the comprehensive content, expert independent analysis and flexible delivery methods of IHS to make high-impact decisions and develop strategies with speed and confidence. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS is committed to sustainable, profitable growth and employs approximately 8,000 people in 31 countries around the world.

IHS is a registered trademark of IHS Inc. All other company and product names may be trademarks of their respective owners.

© 2014 IHS Inc. All rights reserved.

 
IHS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per-share amounts)
 
    As of     As of

May 31, 2014

November 30, 2013

(Unaudited) (Audited)
Assets
Current assets:
Cash and cash equivalents $ 220,998 $ 258,367
Accounts receivable, net 416,771 459,263
Income tax receivable 164
Deferred subscription costs 63,289 49,327
Deferred income taxes 59,757 70,818
Other   59,896     43,065  
Total current assets   820,875     880,840  
Non-current assets:
Property and equipment, net 267,250 245,566
Intangible assets, net 1,077,083 1,144,464
Goodwill 3,064,631 3,065,181
Other   18,627     23,562  
Total non-current assets   4,427,591     4,478,773  
Total assets $ 5,248,466   $ 5,359,613  
Liabilities and stockholders’ equity
Current liabilities:
Short-term debt $ 140,911 $ 395,527
Accounts payable 57,372 57,001
Accrued compensation 60,979 89,460
Accrued royalties 33,652 36,289
Other accrued expenses 112,949 98,187
Income tax payable 9,961
Deferred revenue   667,264     560,010  
Total current liabilities 1,073,127 1,246,435
Long-term debt 1,715,595 1,779,065
Accrued pension and postretirement liability 31,210 27,191
Deferred income taxes 349,434 361,267
Other liabilities 51,775 38,692
Commitments and contingencies
Stockholders’ equity:
Class A common stock, $0.01 par value per share, 160,000,000 shares authorized, 69,051,356 and 67,901,101 shares issued, and 68,123,301 and 67,382,298 shares outstanding at May 31, 2014 and November 30, 2013, respectively 691 679
Additional paid-in capital 870,215 788,670
Treasury stock, at cost: 928,055 and 518,803 shares at May 31, 2014 and November 30, 2013, respectively (93,374 ) (45,945 )
Retained earnings 1,308,434 1,220,520
Accumulated other comprehensive loss   (58,641 )   (56,961 )
Total stockholders’ equity   2,027,325     1,906,963  
Total liabilities and stockholders’ equity $ 5,248,466   $ 5,359,613  
 
 
IHS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for per-share amounts)
(Unaudited)
 
    Three months ended May 31,     Six months ended May 31,
2014     2013 2014     2013
Revenue $ 568,008 $ 418,143 $ 1,092,466 $ 800,668
Operating expenses:
Cost of revenue (includes stock-based compensation expense of $1,511; $1,294; $3,371 and $2,976 for the three and six months ended May 31, 2014 and 2013, respectively) 224,945 172,424 437,870 332,499
Selling, general and administrative (includes stock-based compensation expense of $34,521; $29,505; $76,625 and $67,585 for the three and six months ended May 31, 2014 and 2013, respectively) 203,644 143,609 401,360 285,838
Depreciation and amortization 49,142 32,877 98,779 65,356
Restructuring charges 860 3,231 4,035 8,019
Acquisition-related costs 77 1,665 1,017 3,560
Net periodic pension and postretirement expense 2,834 2,242 5,670 4,482
Other expense (income), net   (267 )   511     1,308     2,930  
Total operating expenses   481,235     356,559     950,039     702,684  
Operating income 86,773 61,584 142,427 97,984
Interest income 235 303 486 647
Interest expense   (14,610 )   (6,164 )   (29,855 )   (12,284 )
Non-operating expense, net   (14,375 )   (5,861 )   (29,369 )   (11,637 )
Income from continuing operations before income taxes 72,398 55,723 113,058 86,347
Provision for income taxes   (16,906 )   (12,840 )   (25,144 )   (18,793 )
Income from continuing operations 55,492 42,883 87,914 67,554
Income from discontinued operations, net       7         7  
Net income $ 55,492   $ 42,890   $ 87,914   $ 67,561  
 
Basic earnings per share
Income from continuing operations $ 0.81 $ 0.65 $ 1.29 $ 1.03
Income from discontinued operations, net $   $   $   $  
Net income $ 0.81   $ 0.65   $ 1.29   $ 1.03  
Weighted average shares used in computing basic earnings per share   68,216     65,888     68,015     65,840  
 
Diluted earnings per share
Income from continuing operations $ 0.81 $ 0.65 $ 1.28 $ 1.01
Income from discontinued operations, net $   $   $   $  
Net income $ 0.81   $ 0.65   $ 1.28   $ 1.01  
Weighted average shares used in computing diluted earnings per share   68,697     66,421     68,730     66,584  
 
 
IHS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
    Six months ended May 31,
2014     2013
Operating activities:
Net income $ 87,914 $ 67,561
Reconciliation of net income to net cash provided by operating activities:
Depreciation and amortization 98,779 65,356
Stock-based compensation expense 79,996 70,561
Impairment of assets 1,629
Excess tax benefit from stock-based compensation (10,327 ) (11,802 )
Net periodic pension and postretirement expense 5,670 4,482
Pension and postretirement contributions (1,650 ) (11,876 )
Deferred income taxes 28,907 (26,462 )
Change in assets and liabilities:
Accounts receivable, net 38,871 37,053
Other current assets (23,153 ) (15,803 )
Accounts payable 119 (10,430 )
Accrued expenses (16,666 ) (11,585 )
Income tax payable (20,656 ) 27,561
Deferred revenue 105,570 75,998
Other liabilities   1,600     (1,077 )
Net cash provided by operating activities   374,974     261,166  
Investing activities:
Capital expenditures on property and equipment (51,036 ) (42,436 )
Acquisitions of businesses, net of cash acquired (155,505 )
Intangible assets acquired (714 )
Change in other assets 2,762 (2,317 )
Settlements of forward contracts   1,309     128  
Net cash used in investing activities   (47,679 )   (200,130 )
Financing activities:
Proceeds from borrowings 30,000 45,000
Repayment of borrowings (348,086 ) (97,001 )
Excess tax benefit from stock-based compensation 10,327 11,802
Proceeds from the exercise of employee stock options 285
Repurchases of common stock   (47,429 )   (83,365 )
Net cash used in financing activities   (355,188 )   (123,279 )
Foreign exchange impact on cash balance   (9,476 )   (15,634 )
Net decrease in cash and cash equivalents (37,369 ) (77,877 )
Cash and cash equivalents at the beginning of the period   258,367     345,008  
Cash and cash equivalents at the end of the period $ 220,998   $ 267,131  
 
 
IHS INC.
SUPPLEMENTAL REVENUE DISCLOSURE
(In thousands)
(Unaudited)
 
    Three months ended May 31,     Percent change     Six months ended May 31,     Percent change
2014     2013 Total     Organic 2014     2013 Total     Organic
Revenue by segment:
Americas $ 376,787 $ 257,625 46 % 4 % $ 727,207 $ 486,791 49 % 5 %
EMEA 138,847 112,944 23 % 10 % 265,708 222,415 19 % 8 %
APAC   52,374   47,574 10 % 4 %   99,551   91,462 9 % 2 %
Total revenue $ 568,008 $ 418,143 36 % 6 % $ 1,092,466 $ 800,668 36 % 5 %
 
Revenue by transaction type:
Subscription $ 426,346 $ 313,923 36 % 6 % $ 843,720 $ 621,650 36 % 6 %
Non-subscription   141,662   104,220 36 % 4 %   248,746   179,018 39 % 3 %
Total revenue $ 568,008 $ 418,143 36 % 6 % $ 1,092,466 $ 800,668 36 % 5 %
 
Revenue by product category:
Resources $ 243,876 $ 221,680 10 % 6 % $ 461,370 $ 412,196 12 % 7 %
Industrials 181,346 64,359 182 % 1 % 353,069 126,848 178 % %
Horizontal products   142,786   132,104 8 % 7 %   278,027   261,624 6 % 6 %
Total revenue $ 568,008 $ 418,143 36 % 6 % $ 1,092,466 $ 800,668 36 % 5 %
 
 
IHS INC.
RECONCILIATION OF CONSOLIDATED NON-GAAP FINANCIAL MEASUREMENTS TO
MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS
(In thousands, except for per-share amounts)
(Unaudited)
 
    Three months ended May 31,     Six months ended May 31,
2014     2013 2014     2013

Net income

$ 55,492 $ 42,890 $ 87,914 $ 67,561

Interest income

(235 ) (303 ) (486 ) (647 )
Interest expense 14,610 6,164 29,855 12,284
Provision for income taxes 16,906 12,840 25,144 18,793
Depreciation 16,090 10,851 31,880 20,731
Amortization related to acquired intangible assets   33,052     22,026     66,899     44,625  
EBITDA (1)(6) $ 135,915 $ 94,468 $ 241,206 $ 163,347
Stock-based compensation expense 36,032 30,799 79,996 70,561
Restructuring charges 860 3,231 4,035 8,019
Acquisition-related costs 77 1,665 1,017 3,560
Impairment of assets 1,629
(Gain) loss on sale of assets (151 ) 2,654 1,241
Income from discontinued operations, net       (7 )       (7 )
Adjusted EBITDA (2)(6) $ 172,733   $ 130,156   $ 328,908   $ 248,350  
 
 
Three months ended May 31, Six months ended May 31,
  2014     2013     2014     2013  
Net income $ 55,492 $ 42,890 $ 87,914 $ 67,561
Stock-based compensation expense 36,032 30,799 79,996 70,561
Amortization related to acquired intangible assets 33,052 22,026 66,899 44,625
Restructuring charges 860 3,231 4,035 8,019
Acquisition-related costs 77 1,665 1,017 3,560
Impairment of assets 1,629
(Gain) loss on sale of assets (151 ) 2,654 1,241
Income from discontinued operations, net (7 ) (7 )
Income tax effect on adjusting items   (24,511 )   (17,108 )   (53,733 )   (41,639 )
Adjusted net income (3) $ 100,851   $ 83,496   $ 188,782   $ 155,550  
Adjusted EPS (4)(6) $ 1.47   $ 1.26   $ 2.75   $ 2.34  
Weighted average shares used in computing Adjusted EPS   68,697     66,421     68,730     66,584  
 
 
Three months ended May 31, Six months ended May 31,
  2014     2013     2014       2013  
Net cash provided by operating activities $ 221,113 $ 129,480 $ 374,974 $ 261,166
Capital expenditures on property and equipment   (26,426 )   (23,069 )   (51,036 )   (42,436 )
Free cash flow (5)(6) $ 194,687   $ 106,411   $ 323,938   $ 218,730  
 
 
IHS INC.
RECONCILIATION OF SEGMENT NON-GAAP FINANCIAL MEASUREMENTS TO
MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASUREMENTS
(In thousands)
(Unaudited)
 
    Three months ended May 31, 2014
Americas     EMEA     APAC    

Shared Services

    Total
Operating income $ 93,587 $ 34,465 $ 12,938 $ (54,217 ) $ 86,773
Adjustments:
Stock-based compensation expense 36,032 36,032
Depreciation and amortization 41,395 5,314 475 1,958 49,142
Restructuring charges 87 656 117 860
Acquisition-related costs 277 (200 ) 77
Gain on sale of assets   (151 )             (151 )
Adjusted EBITDA $ 135,195   $ 40,235   $ 13,530 $ (16,227 ) $ 172,733  
 
Three months ended May 31, 2013
Americas EMEA APAC Shared Services Total
Operating income $ 79,515 $ 20,485 $ 10,248 $ (48,664 ) $ 61,584
Adjustments:
Stock-based compensation expense 30,799 30,799
Depreciation and amortization 25,181 5,474 476 1,746 32,877
Restructuring charges 2,165 990 76 3,231
Acquisition-related costs   1,503     162           1,665  
Adjusted EBITDA $ 108,364   $ 27,111   $ 10,800 $ (16,119 ) $ 130,156  
 
Six months ended May 31, 2014
Americas EMEA APAC Shared Services Total
Operating income $ 171,197 $ 59,060 $ 23,000 $ (110,830 ) $ 142,427
Adjustments:
Stock-based compensation expense 79,996 79,996
Depreciation and amortization 82,568 11,105 1,088 4,018 98,779
Restructuring charges 1,772 1,941 322 4,035
Acquisition-related costs 696 321 1,017
Loss on sale of assets   2,654               2,654  
Adjusted EBITDA $ 258,887   $ 72,427   $ 24,410 $ (26,816 ) $ 328,908  
 
Six months ended May 31, 2013
Americas EMEA APAC Shared Services Total
Operating income $ 141,648 $ 36,471 $ 19,997 $ (100,132 ) $ 97,984
Adjustments:
Stock-based compensation expense 70,561 70,561
Depreciation and amortization 49,465 11,391 937 3,563 65,356
Restructuring charges 6,061 1,937 21 8,019
Acquisition-related costs 3,398 162 3,560
Impairment of assets 1,629 1,629
Loss on sale of assets       1,241           1,241  
Adjusted EBITDA $ 202,201   $ 51,202   $ 20,955 $ (26,008 ) $ 248,350  
 

(1) EBITDA is defined as net income plus or minus net interest, plus provision for income taxes, depreciation and amortization.

(2) Adjusted EBITDA further excludes primarily non-cash items and other items that we do not consider to be useful in assessing our operating performance (e.g., stock-based compensation expense, restructuring charges, acquisition-related costs, asset impairment charges, gain or loss on sale of assets, pension mark-to-market and settlement expense, and income or loss from discontinued operations). All of the items included in the reconciliation from net income to Adjusted EBITDA are either non-cash items or items that we do not consider to be useful in assessing our operating performance. In the case of the non-cash items, we believe that investors can better assess our operating performance if the measures are presented without such items because, unlike cash expenses, these adjustments do not affect our ability to generate free cash flow or invest in our business. For example, by excluding depreciation and amortization from EBITDA, users can compare operating performance without regard to different accounting determinations such as useful life. In the case of the other items, we believe that investors can better assess operating performance if the measures are presented without these items because their financial impact does not reflect ongoing operating performance.

(3) Adjusted net income is defined as net income plus primarily non-cash items and other items that management does not consider to be useful in assessing our operating performance (e.g., stock-based compensation expense, amortization related to acquired intangible assets, restructuring charges, acquisition-related costs, asset impairment charges, gain or loss on sale of assets, pension mark-to-market and settlement expense, and income or loss from discontinued operations, all net of the related tax effects).

(4) Adjusted EPS is defined as Adjusted net income (as defined above) divided by diluted weighted average shares.

(5) Free cash flow is defined as net cash provided by operating activities less capital expenditures.

(6) EBITDA, Adjusted EBITDA, Adjusted EPS, and free cash flow are used by many of our investors, research analysts, investment bankers, and lenders to assess our operating performance. For example, a measure similar to Adjusted EBITDA is required by the lenders under our term loan and revolving credit agreements.

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SYS-CON Media named Andi Mann editor of DevOps Journal. DevOps Journal is focused on this critical enterprise IT topic in the world of cloud computing. DevOps Journal brings valuable information to DevOps professionals who are transforming the way enterprise IT is done. Andi Mann, Vice President, Strategic Solutions, at CA Technologies, is an accomplished digital business executive with extensive global expertise as a strategist, technologist, innovator, marketer, communicator, and thought lea...
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Even though it’s now Microservices Journal, long-time fans of SOA World Magazine can take comfort in the fact that the URL – soa.sys-con.com – remains unchanged. And that’s no mistake, as microservices are really nothing more than a new and improved take on the Service-Oriented Architecture (SOA) best practices we struggled to hammer out over the last decade. Skeptics, however, might say that this change is nothing more than an exercise in buzzword-hopping. SOA is passé, and now that people are ...
Information Technology (IT) service providers have historically struggled between the huge capital expenditure and long development cycles of building their own cloud versus the thin margins and limited flexibility of using public retailers such as Amazon Web Services (AWS). The emergence of wholesale cloud, and the technologies that make it possible, is revolutionizing how and by whom enterprise IT is delivered. Wholesale cloud is the game-changing third option between building your own (BYO) c...
You often hear the two titles of "DevOps" and "Immutable Infrastructure" used independently. In his session at DevOps Summit, John Willis, Technical Evangelist for Docker, will cover the union between the two topics and why this is important. He will cover an overview of Immutable Infrastructure then show how an Immutable Continuous Delivery pipeline can be applied as a best practice for "DevOps." He will end the session with some interesting case study examples.
Shipping daily, injecting faults, and keeping an extremely high availability "without Ops"? Understand why NoOps does not mean no operations. Agile development methodologies require evolved operations to be successful. In his keynote at DevOps Summit, David Tesar, Microsoft Technical Evangelist on Microsoft Azure and DevOps, will discuss how Microsoft teams who have made huge progress with a DevOps transformation effectively utilize operations staff and how challenges were overcome. Regardless ...
There is little doubt that Big Data solutions will have an increasing role in the Enterprise IT mainstream over time. 8th International Big Data Expo, co-located with 17th International Cloud Expo - to be held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA - has announced its Call for Papers is open. As advanced data storage, access and analytics technologies aimed at handling high-volume and/or fast moving data all move center stage, aided by the cloud computing bo...
The 5th International DevOps Summit, co-located with 17th International Cloud Expo – being held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA – announces that its Call for Papers is open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the...
Cloud services are the newest tool in the arsenal of IT products in the market today. These cloud services integrate process and tools. In order to use these products effectively, organizations must have a good understanding of themselves and their business requirements. In his session at 15th Cloud Expo, Brian Lewis, Principal Architect at Verizon Cloud, outlined key areas of organizational focus, and how to formalize an actionable plan when migrating applications and internal services to the ...
Most companies hope for rapid growth so it's important to invest in scalable core technologies that won't demand a complete overhaul when a business goes through a growth spurt. Cloud technology enables previously difficult-to-scale solutions like phone, network infrastructure or billing systems to automatically scale based on demand. For example, with a virtual PBX service, a single-user cloud phone service can easily transition into an advanced VoIP system that supports hundreds of phones and ...
"We have developers who are really passionate about getting their code out to customers, no matter what, in the shortest possible time. Operations are very focused on procedures and policies," explained Stan Klimoff, CTO of Qubell, in this SYS-CON.tv interview at DevOps Summit, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
The worldwide cellular network will be the backbone of the future IoT, and the telecom industry is clamoring to get on board as more than just a data pipe. In his session at @ThingsExpo, Evan McGee, CTO of Ring Plus, Inc., discussed what service operators can offer that would benefit IoT entrepreneurs, inventors, and consumers. Evan McGee is the CTO of RingPlus, a leading innovative U.S. MVNO and wireless enabler. His focus is on combining web technologies with traditional telecom to create a ...
Agility is top of mind for Cloud/Service providers and Enterprises alike. Policy Driven Data Center provides a policy model for application deployment by decoupling application needs from the underlying infrastructure primitives. In his session at 15th Cloud Expo, David Klebanov, a Technical Solutions Architect with Cisco Systems, discussed how it differentiates from the software-defined top-down control by offering a declarative approach to allow faster and simpler application deployment. Davi...