(Mark One)
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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13-3769440
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Large accelerated filer
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x
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Accelerated filer
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o
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Non-accelerated filer
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o
(Do not check if a smaller reporting company)
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Smaller Reporting Company
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o
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Page
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Item 1.
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Financial Statements
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As of
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As of
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||||
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February 28, 2014
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November 30, 2013
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||||
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(Unaudited)
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(Audited)
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||||
Assets
|
|
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||||
Current assets:
|
|
|
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||||
Cash and cash equivalents
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$
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205,055
|
|
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$
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258,367
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|
Accounts receivable, net
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524,010
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|
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459,263
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||
Income tax receivable
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12,171
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|
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—
|
|
||
Deferred subscription costs
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59,883
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|
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49,327
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Deferred income taxes
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50,662
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|
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70,818
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Other
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59,792
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43,065
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Total current assets
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911,573
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|
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880,840
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Non-current assets:
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|
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||||
Property and equipment, net
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255,139
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245,566
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||
Intangible assets, net
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1,107,623
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1,144,464
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||
Goodwill
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3,063,837
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3,065,181
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Other
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21,748
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23,562
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Total non-current assets
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4,448,347
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4,478,773
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Total assets
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$
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5,359,920
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$
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5,359,613
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Liabilities and stockholders’ equity
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|
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Current liabilities:
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||||
Short-term debt
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$
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210,320
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$
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395,527
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Accounts payable
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57,420
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57,001
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|
||
Accrued compensation
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58,431
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|
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89,460
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||
Accrued royalties
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40,639
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36,289
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||
Other accrued expenses
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102,424
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|
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98,187
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|
||
Income tax payable
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—
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|
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9,961
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|
||
Deferred revenue
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708,941
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|
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560,010
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Total current liabilities
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1,178,175
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1,246,435
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Long-term debt
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1,819,704
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1,779,065
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Accrued pension and postretirement liability
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29,200
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27,191
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Deferred income taxes
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348,812
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|
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361,267
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Other liabilities
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43,214
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|
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38,692
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Commitments and contingencies
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|
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||||
Stockholders’ equity:
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||||
Class A common stock, $0.01 par value per share, 160,000,000 shares authorized, 68,952,895 and 67,901,101 shares issued, and 68,053,423 and 67,382,298 shares outstanding at February 28, 2014 and November 30, 2013, respectively
|
690
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|
|
679
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Additional paid-in capital
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836,364
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788,670
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Treasury stock, at cost: 899,472 and 518,803 shares at February 28, 2014 and November 30, 2013, respectively
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(89,957
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)
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(45,945
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)
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Retained earnings
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1,252,942
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|
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1,220,520
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Accumulated other comprehensive loss
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(59,224
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)
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(56,961
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)
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Total stockholders’ equity
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1,940,815
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1,906,963
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Total liabilities and stockholders’ equity
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$
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5,359,920
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$
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5,359,613
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Three months ended February 28,
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||||||
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2014
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2013
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||||
Revenue
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$
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524,458
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$
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382,525
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Operating expenses:
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||||
Cost of revenue
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212,925
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160,075
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Selling, general and administrative
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197,716
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142,229
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Depreciation and amortization
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49,637
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32,479
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Restructuring charges
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3,175
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4,788
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Acquisition-related costs
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940
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1,895
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Net periodic pension and postretirement expense
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2,836
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2,240
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Other expense, net
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1,575
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2,419
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Total operating expenses
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468,804
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346,125
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Operating income
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55,654
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36,400
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Interest income
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251
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|
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344
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Interest expense
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(15,245
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)
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(6,120
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)
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Non-operating expense, net
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(14,994
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)
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(5,776
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)
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Income from continuing operations before income taxes
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40,660
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30,624
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Provision for income taxes
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(8,238
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)
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(5,953
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)
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Net income
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$
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32,422
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$
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24,671
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||||
Basic earnings per share
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$
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0.48
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$
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0.37
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Weighted average shares used in computing basic earnings per share
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67,809
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65,790
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||||
Diluted earnings per share
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$
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0.47
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$
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0.37
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Weighted average shares used in computing diluted earnings per share
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68,693
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66,701
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Three months ended February 28,
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||||||
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2014
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|
2013
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||||
Net income
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$
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32,422
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$
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24,671
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Other comprehensive income (loss), net of tax:
|
|
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||||
Unrealized gain (loss) on hedging activities
(1)
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|
(2,475
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)
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168
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|
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Foreign currency translation adjustment
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212
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(34,140
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)
|
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Total other comprehensive income (loss)
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(2,263
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)
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(33,972
|
)
|
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Comprehensive income (loss)
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$
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30,159
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|
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$
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(9,301
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)
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|
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|
||||
(1)
Net of tax benefit (expense) of $1,615 and $(103) for the three months ended February 28, 2014 and 2013, respectively.
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Three months ended February 28,
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||||||
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2014
|
|
2013
|
||||
Operating activities:
|
|
|
|
||||
Net income
|
$
|
32,422
|
|
|
$
|
24,671
|
|
Reconciliation of net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
49,637
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|
|
32,479
|
|
||
Stock-based compensation expense
|
43,964
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|
|
39,762
|
|
||
Impairment of assets
|
—
|
|
|
1,629
|
|
||
Excess tax benefit from stock-based compensation
|
(9,412
|
)
|
|
(11,345
|
)
|
||
Net periodic pension and postretirement expense
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2,836
|
|
|
2,240
|
|
||
Pension and postretirement contributions
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(825
|
)
|
|
(10,933
|
)
|
||
Deferred income taxes
|
32,939
|
|
|
(15,534
|
)
|
||
Change in assets and liabilities:
|
|
|
|
||||
Accounts receivable, net
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(69,021
|
)
|
|
(33,696
|
)
|
||
Other current assets
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(19,983
|
)
|
|
(12,978
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)
|
||
Accounts payable
|
(982
|
)
|
|
(6,485
|
)
|
||
Accrued expenses
|
(22,972
|
)
|
|
(8,930
|
)
|
||
Income tax payable
|
(33,570
|
)
|
|
16,063
|
|
||
Deferred revenue
|
148,391
|
|
|
116,157
|
|
||
Other liabilities
|
437
|
|
|
(1,414
|
)
|
||
Net cash provided by operating activities
|
153,861
|
|
|
131,686
|
|
||
Investing activities:
|
|
|
|
||||
Capital expenditures on property and equipment
|
(24,610
|
)
|
|
(19,367
|
)
|
||
Acquisitions of businesses, net of cash acquired
|
—
|
|
|
(38,448
|
)
|
||
Intangible assets acquired
|
(714
|
)
|
|
—
|
|
||
Change in other assets
|
(1,304
|
)
|
|
(846
|
)
|
||
Settlements of forward contracts
|
2,314
|
|
|
(776
|
)
|
||
Net cash used in investing activities
|
(24,314
|
)
|
|
(59,437
|
)
|
||
Financing activities:
|
|
|
|
||||
Proceeds from borrowings
|
30,000
|
|
|
45,000
|
|
||
Repayment of borrowings
|
(174,568
|
)
|
|
(53,786
|
)
|
||
Excess tax benefit from stock-based compensation
|
9,412
|
|
|
11,345
|
|
||
Repurchases of common stock
|
(44,012
|
)
|
|
(81,900
|
)
|
||
Net cash used in financing activities
|
(179,168
|
)
|
|
(79,341
|
)
|
||
Foreign exchange impact on cash balance
|
(3,691
|
)
|
|
(19,219
|
)
|
||
Net decrease in cash and cash equivalents
|
(53,312
|
)
|
|
(26,311
|
)
|
||
Cash and cash equivalents at the beginning of the period
|
258,367
|
|
|
345,008
|
|
||
Cash and cash equivalents at the end of the period
|
$
|
205,055
|
|
|
$
|
318,697
|
|
|
Shares of
Class A
Common
Stock
|
|
Class A
Common
Stock
|
|
Additional
Paid-In
Capital
|
|
Treasury
Stock
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
|
|||||||||||||
Balance at November 30, 2013 (Audited)
|
67,382
|
|
|
$
|
679
|
|
|
$
|
788,670
|
|
|
$
|
(45,945
|
)
|
|
$
|
1,220,520
|
|
|
$
|
(56,961
|
)
|
|
$
|
1,906,963
|
|
Stock-based award activity
|
671
|
|
|
11
|
|
|
38,282
|
|
|
(44,012
|
)
|
|
—
|
|
|
—
|
|
|
(5,719
|
)
|
||||||
Excess tax benefit on vested shares
|
—
|
|
|
—
|
|
|
9,412
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,412
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32,422
|
|
|
—
|
|
|
32,422
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,263
|
)
|
|
(2,263
|
)
|
||||||
Balance at February 28, 2014
|
68,053
|
|
|
$
|
690
|
|
|
$
|
836,364
|
|
|
$
|
(89,957
|
)
|
|
$
|
1,252,942
|
|
|
$
|
(59,224
|
)
|
|
$
|
1,940,815
|
|
1.
|
Basis of Presentation and Significant Accounting Policies
|
2.
|
Intangible Assets
|
|
As of February 28, 2014
|
|
As of November 30, 2013
|
||||||||||||||||||||
|
Gross
|
|
Accumulated
Amortization
|
|
Net
|
|
Gross
|
|
Accumulated
Amortization
|
|
Net
|
||||||||||||
Intangible assets subject to amortization:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Information databases
|
$
|
632,403
|
|
|
$
|
(210,787
|
)
|
|
$
|
421,616
|
|
|
$
|
633,347
|
|
|
$
|
(194,904
|
)
|
|
$
|
438,443
|
|
Customer relationships
|
467,338
|
|
|
(98,729
|
)
|
|
368,609
|
|
|
470,632
|
|
|
(90,827
|
)
|
|
379,805
|
|
||||||
Non-compete agreements
|
2,567
|
|
|
(1,695
|
)
|
|
872
|
|
|
2,717
|
|
|
(1,653
|
)
|
|
1,064
|
|
||||||
Developed computer software
|
158,008
|
|
|
(68,774
|
)
|
|
89,234
|
|
|
159,413
|
|
|
(64,514
|
)
|
|
94,899
|
|
||||||
Trademarks
|
168,448
|
|
|
(17,257
|
)
|
|
151,191
|
|
|
167,179
|
|
|
(13,300
|
)
|
|
153,879
|
|
||||||
Other
|
25,229
|
|
|
(13,176
|
)
|
|
12,053
|
|
|
25,404
|
|
|
(13,423
|
)
|
|
11,981
|
|
||||||
Total
|
$
|
1,453,993
|
|
|
$
|
(410,418
|
)
|
|
$
|
1,043,575
|
|
|
$
|
1,458,692
|
|
|
$
|
(378,621
|
)
|
|
$
|
1,080,071
|
|
Intangible assets not subject to amortization:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Trademarks
|
62,770
|
|
|
—
|
|
|
62,770
|
|
|
63,144
|
|
|
—
|
|
|
63,144
|
|
||||||
Perpetual licenses
|
1,278
|
|
|
—
|
|
|
1,278
|
|
|
1,249
|
|
|
—
|
|
|
1,249
|
|
||||||
Total intangible assets
|
$
|
1,518,041
|
|
|
$
|
(410,418
|
)
|
|
$
|
1,107,623
|
|
|
$
|
1,523,085
|
|
|
$
|
(378,621
|
)
|
|
$
|
1,144,464
|
|
Year
|
|
Amount
|
||
Remainder of 2014
|
|
$
|
99,429
|
|
2015
|
|
$
|
127,498
|
|
2016
|
|
$
|
118,389
|
|
2017
|
|
$
|
104,109
|
|
2018
|
|
$
|
92,099
|
|
Thereafter
|
|
$
|
502,051
|
|
3.
|
Derivatives
|
•
|
Interest rate derivative contracts that effectively swap
$100 million
of floating rate debt at a
1.80 percent
weighted-average fixed interest rate, plus the applicable Credit Facility spread. We entered into these swap contracts in 2011, and both contracts expire in July 2015.
|
•
|
Forward-starting interest rate derivative contracts that effectively swap
$400 million
of floating rate debt at a
2.86 percent
weighted-average fixed interest rate, plus the applicable Credit Facility spread. We entered into these swap contracts in November 2013 and January 2014. The contracts take effect between May 2015 and November 2015, with respective expiration dates between May 2020 and November 2020.
|
•
|
Foreign currency forward contracts that hedge the foreign currency exposure on Euro-denominated receipts in our U.S. Dollar functional entities. We utilize a rolling 12-month hedging program to mitigate this exposure. Because the critical terms of the forward contracts and the forecasted cash flows coincide, we do not expect any ineffectiveness associated with these contracts. We have designated and accounted for these derivatives as cash flow hedges, with changes in fair value being deferred in accumulated other comprehensive loss in our consolidated balance sheets. The notional amount of outstanding foreign currency forwards under these agreements as of
February 28, 2014
and
November 30, 2013
was approximately
$16.0 million
and
$15.9 million
, respectively.
|
•
|
Short-term foreign currency forward contracts that manage market risks associated with fluctuations in balances that are denominated in currencies other than the local functional currency. We account for these forward contracts at fair value and recognize the associated realized and unrealized gains and losses in other expense (income), net, since we have not designated these contracts as hedges for accounting purposes. The
|
|
|
February 28, 2014
|
|
November 30, 2013
|
||||
Notional amount of currency pair:
|
|
|
|
|
||||
Contracts to buy USD with CAD
|
|
$
|
60,900
|
|
|
$
|
142,606
|
|
Contracts to buy CAD with GBP
|
|
C$
|
—
|
|
|
C$
|
28,741
|
|
Contracts to buy USD with EUR
|
|
$
|
24,749
|
|
|
$
|
17,522
|
|
Contracts to buy CHF with USD
|
|
$
|
13,510
|
|
|
$
|
15,308
|
|
Contracts to buy GBP with EUR
|
|
£
|
4,939
|
|
|
£
|
5,866
|
|
Contracts to buy USD with GBP
|
|
£
|
1,795
|
|
|
£
|
1,863
|
|
|
|
Fair Value of Derivative Instruments
|
|
|
||||||
|
|
February 28, 2014
|
|
November 30, 2013
|
|
Balance Sheet Location
|
||||
Assets:
|
|
|
|
|
|
|
||||
Derivatives designated as accounting hedges:
|
|
|
|
|
|
|
||||
Foreign currency forwards
|
|
$
|
—
|
|
|
$
|
8
|
|
|
Other current assets
|
Derivatives not designated as accounting hedges:
|
|
|
|
|
|
|
||||
Foreign currency forwards
|
|
485
|
|
|
1,548
|
|
|
Other current assets
|
||
Total
|
|
$
|
485
|
|
|
$
|
1,556
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities:
|
|
|
|
|
|
|
||||
Derivatives designated as accounting hedges:
|
|
|
|
|
|
|
||||
Interest rate swaps
|
|
$
|
7,173
|
|
|
$
|
3,366
|
|
|
Other accrued expenses
|
Foreign currency forwards
|
|
554
|
|
|
423
|
|
|
Other accrued expenses
|
||
Derivatives not designated as accounting hedges:
|
|
|
|
|
|
|
||||
Foreign currency forwards
|
|
112
|
|
|
957
|
|
|
Other accrued expenses
|
||
Total
|
|
$
|
7,839
|
|
|
$
|
4,746
|
|
|
|
|
|
Amount of gain recognized in the consolidated statements of operations
|
|
|
||||||
|
|
February 28, 2014
|
|
February 28, 2013
|
|
Location on consolidated statements of operations
|
||||
Foreign currency forwards
|
|
$
|
2,205
|
|
|
$
|
2,357
|
|
|
Other expense, net
|
Derivatives in cash flow hedging relationships
|
|
Amount of gain/(loss) recognized in AOCI on derivative
|
|
Amount of gain/(loss) reclassified from AOCI into income
|
|
Location of gain/(loss) reclassified from AOCI into income
|
||||||||||||
|
|
February 28, 2014
|
|
February 28, 2013
|
|
February 28, 2014
|
|
February 28, 2013
|
|
|
||||||||
Interest rate swaps
|
|
$
|
(2,487
|
)
|
|
$
|
(22
|
)
|
|
$
|
(235
|
)
|
|
$
|
(226
|
)
|
|
Interest expense
|
Foreign currency forwards
|
|
(291
|
)
|
|
(58
|
)
|
|
(68
|
)
|
|
(22
|
)
|
|
Revenue
|
||||
Total
|
|
$
|
(2,778
|
)
|
|
$
|
(80
|
)
|
|
$
|
(303
|
)
|
|
$
|
(248
|
)
|
|
|
|
|
Unrecognized losses, net of tax
|
||||||
|
|
February 28, 2014
|
|
November 30, 2013
|
||||
Interest rate swaps
|
|
$
|
(4,339
|
)
|
|
$
|
(2,087
|
)
|
Foreign currency forwards
|
|
(335
|
)
|
|
(112
|
)
|
||
Total
|
|
$
|
(4,674
|
)
|
|
$
|
(2,199
|
)
|
4.
|
Debt
|
|
|
February 28, 2014
|
|
November 30, 2013
|
||||
Credit Facility:
|
|
|
|
|
||||
Revolver
|
|
$
|
652,000
|
|
|
$
|
770,000
|
|
Term loans
|
|
420,616
|
|
|
446,904
|
|
||
2012 term loan
|
|
250,000
|
|
|
250,000
|
|
||
2013 term loan
|
|
700,000
|
|
|
700,000
|
|
||
Capital leases
|
|
7,408
|
|
|
7,688
|
|
||
Total debt
|
|
$
|
2,030,024
|
|
|
$
|
2,174,592
|
|
Current portion
|
|
(210,320
|
)
|
|
(395,527
|
)
|
||
Total long-term debt
|
|
$
|
1,819,704
|
|
|
$
|
1,779,065
|
|
5.
|
Restructuring Charges
|
|
Employee
Severance and
Other
Termination
Benefits
|
|
Contract
Termination
Costs
|
|
Other
|
|
Total
|
||||||||
Balance at November 30, 2013
|
$
|
2,569
|
|
|
$
|
103
|
|
|
$
|
23
|
|
|
$
|
2,695
|
|
Add: Restructuring costs incurred
|
2,477
|
|
|
396
|
|
|
245
|
|
|
3,118
|
|
||||
Revision to prior estimates
|
(392
|
)
|
|
449
|
|
|
—
|
|
|
57
|
|
||||
Less: Amount paid
|
(1,982
|
)
|
|
(331
|
)
|
|
(268
|
)
|
|
(2,581
|
)
|
||||
Balance at February 28, 2014
|
$
|
2,672
|
|
|
$
|
617
|
|
|
$
|
—
|
|
|
$
|
3,289
|
|
6.
|
Acquisition-related Costs
|
|
Employee
Severance and
Other
Termination
Benefits
|
|
Contract
Termination
Costs
|
|
Other
|
|
Total
|
||||||||
Balance at November 30, 2013
|
$
|
5,859
|
|
|
$
|
201
|
|
|
$
|
71
|
|
|
$
|
6,131
|
|
Add: Costs incurred
|
497
|
|
|
515
|
|
|
15
|
|
|
1,027
|
|
||||
Revision to prior estimates
|
(87
|
)
|
|
—
|
|
|
—
|
|
|
(87
|
)
|
||||
Less: Amount paid
|
(2,725
|
)
|
|
(86
|
)
|
|
(86
|
)
|
|
(2,897
|
)
|
||||
Balance at February 28, 2014
|
$
|
3,544
|
|
|
$
|
630
|
|
|
$
|
—
|
|
|
$
|
4,174
|
|
7.
|
Pensions and Postretirement Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended February 28,
|
||||||
|
2014
|
|
2013
|
||||
Service costs incurred
|
$
|
4
|
|
|
$
|
6
|
|
Interest costs
|
103
|
|
|
100
|
|
||
Net periodic postretirement expense
|
$
|
107
|
|
|
$
|
106
|
|
8.
|
Stock-based Compensation
|
|
Three months ended February 28,
|
||||||
|
2014
|
|
2013
|
||||
Cost of revenue
|
$
|
1,860
|
|
|
$
|
1,682
|
|
Selling, general and administrative
|
42,104
|
|
|
38,080
|
|
||
Total stock-based compensation expense
|
$
|
43,964
|
|
|
$
|
39,762
|
|
|
Three months ended February 28,
|
||||||
|
2014
|
|
2013
|
||||
Income tax benefits
|
$
|
15,062
|
|
|
$
|
13,718
|
|
|
Shares
|
|
Weighted-
Average Grant Date Fair Value |
|||
|
(in thousands)
|
|
|
|||
Balance at November 30, 2013
|
3,017
|
|
|
$
|
92.93
|
|
Granted
|
826
|
|
|
$
|
113.36
|
|
Vested
|
(1,052
|
)
|
|
$
|
90.15
|
|
Forfeited
|
(44
|
)
|
|
$
|
98.72
|
|
Balance at February 28, 2014
|
2,747
|
|
|
$
|
100.05
|
|
9.
|
Income Taxes
|
10.
|
Commitments and Contingencies
|
11.
|
Earnings per Share
|
|
Three months ended February 28,
|
||||
|
2014
|
|
2013
|
||
Weighted-average shares outstanding:
|
|
|
|
||
Shares used in basic EPS calculation
|
67,809
|
|
|
65,790
|
|
Effect of dilutive securities:
|
|
|
|
||
Restricted stock units
|
884
|
|
|
907
|
|
Stock options and other stock-based awards
|
—
|
|
|
4
|
|
Shares used in diluted EPS calculation
|
68,693
|
|
|
66,701
|
|
12.
|
Accumulated Other Comprehensive Income (Loss)
|
|
|
Foreign currency translation
|
|
Net pension and OPEB liability
|
|
Unrealized losses on hedging activities
|
|
Total
|
||||||||
Balance at November 30, 2013
|
|
$
|
(46,565
|
)
|
|
$
|
(8,197
|
)
|
|
$
|
(2,199
|
)
|
|
$
|
(56,961
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
212
|
|
|
—
|
|
|
(2,778
|
)
|
|
(2,566
|
)
|
||||
Reclassifications from AOCI to income
|
|
—
|
|
|
—
|
|
|
303
|
|
|
303
|
|
||||
Balance at February 28, 2014
|
|
$
|
(46,353
|
)
|
|
$
|
(8,197
|
)
|
|
$
|
(4,674
|
)
|
|
$
|
(59,224
|
)
|
13.
|
Segment Information
|
|
Three months ended February 28,
|
||||||
|
2014
|
|
2013
|
||||
Subscription revenue
|
$
|
417,374
|
|
|
$
|
307,727
|
|
Non-subscription revenue
|
107,084
|
|
|
74,798
|
|
||
Total revenue
|
$
|
524,458
|
|
|
$
|
382,525
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Operational excellence.
We expect to capitalize on infrastructure investments to allow our employees to do their jobs more efficiently and effectively, including engaging and supporting new and existing customers. During the first quarter of 2014, we made progress in core process and system enhancements that we believe will allow us to meet our goals.
|
•
|
Commercial expansion.
We expect to continue our pace of new and integrated product platform releases and offerings, and we are on track with the development and release of product platforms across the various workflows we
|
•
|
Organic
– We define organic revenue growth as total revenue growth from continuing operations for all factors other than acquisitions and foreign currency movements. We drive this type of revenue growth through value realization (pricing), expanding wallet share of existing customers through up-selling and cross-selling efforts, securing new customer business, and through the sale of new or enhanced product offerings.
|
•
|
Acquisitive
– We define acquisitive revenue as the revenue generated from acquired products and services from the date of acquisition to the first anniversary date of that acquisition. This type of growth comes as a result of our strategy to purchase, integrate, and leverage the value of assets we acquire. We also include the impact of divestitures in this growth metric.
|
•
|
Foreign currency
– We define the foreign currency impact on revenue as the difference between current revenue at current exchange rates and current revenue at the corresponding prior period exchange rates. Due to the significance of revenue transacted in foreign currencies, we measure the impact of foreign currency movements on revenue.
|
•
|
Subscription revenue
represents the significant majority of our revenue, and is comprised of subscriptions to our various information offerings and software maintenance.
|
•
|
Non-subscription revenue
represents consulting (e.g., research and analysis, modeling, and forecasting), services, single-document product sales, software license sales and associated services, conferences and events, and advertising. Our non-subscription products and services are an important part of our business because they complement our subscription business in creating strong and comprehensive customer relationships.
|
|
Increase in Total Revenue
|
|||||||
(All amounts represent percentage points)
|
Organic
|
|
Acquisitive
|
|
Foreign
Currency
|
|||
First quarter 2014 vs. first quarter 2013
|
5
|
%
|
|
33
|
%
|
|
—
|
%
|
•
|
Fekete Associates and Waterborne Energy in the second quarter of 2013, and
|
•
|
PFC Energy in the third quarter of 2013.
|
|
Three months ended February 28,
|
|
Percentage
Change
|
|||||||
(In thousands, except percentages)
|
2014
|
|
2013
|
|
||||||
Revenue:
|
|
|
|
|
|
|||||
Americas
|
$
|
350,420
|
|
|
$
|
229,166
|
|
|
53
|
%
|
EMEA
|
126,861
|
|
|
109,471
|
|
|
16
|
%
|
||
APAC
|
47,177
|
|
|
43,888
|
|
|
7
|
%
|
||
Total revenue
|
$
|
524,458
|
|
|
$
|
382,525
|
|
|
37
|
%
|
|
|
|
|
|
|
|||||
As a percent of total revenue:
|
|
|
|
|
|
|||||
Americas
|
67
|
%
|
|
60
|
%
|
|
|
|||
EMEA
|
24
|
%
|
|
29
|
%
|
|
|
|||
APAC
|
9
|
%
|
|
11
|
%
|
|
|
|
Increase (decrease) in revenue
|
|||||||
|
First quarter 2014 vs. first quarter 2013
|
|||||||
(All amounts represent percentage points)
|
Organic
|
|
Acquisitive
|
|
Foreign
Currency
|
|||
Americas
|
5
|
%
|
|
48
|
%
|
|
(1
|
)%
|
EMEA
|
5
|
%
|
|
9
|
%
|
|
2
|
%
|
APAC
|
—
|
%
|
|
8
|
%
|
|
(1
|
)%
|
|
Three months ended February 28,
|
|
Percent change
|
||||||||||
(in thousands, except percentages)
|
2014
|
|
2013
|
|
Total
|
|
Organic
|
||||||
Subscription revenue
|
$
|
417,374
|
|
|
$
|
307,727
|
|
|
36
|
%
|
|
5
|
%
|
Non-subscription revenue
|
107,084
|
|
|
74,798
|
|
|
43
|
%
|
|
3
|
%
|
||
Total revenue
|
$
|
524,458
|
|
|
$
|
382,525
|
|
|
37
|
%
|
|
5
|
%
|
|
|
|
|
|
|
|
|
||||||
As a percent of total revenue:
|
|
|
|
|
|
|
|
||||||
Subscription
|
80
|
%
|
|
80
|
%
|
|
|
|
|
||||
Non-subscription
|
20
|
%
|
|
20
|
%
|
|
|
|
|
|
Three months ended February 28,
|
||||||
(In thousands, except percentages)
|
2014
|
|
2013
|
||||
Operating expenses:
|
|
|
|
||||
Cost of revenue
|
$
|
212,925
|
|
|
$
|
160,075
|
|
SG&A expense
|
$
|
197,716
|
|
|
$
|
142,229
|
|
Depreciation and amortization expense
|
$
|
49,637
|
|
|
$
|
32,479
|
|
|
|
|
|
||||
As a percent of revenue:
|
|
|
|
||||
Cost of revenue
|
41
|
%
|
|
42
|
%
|
||
SG&A expense
|
38
|
%
|
|
37
|
%
|
||
Depreciation and amortization expense
|
9
|
%
|
|
8
|
%
|
||
|
|
|
|
||||
Supplemental information:
|
|
|
|
||||
SG&A expense, excluding stock-based compensation
|
$
|
155,612
|
|
|
$
|
104,149
|
|
As a percent of revenue
|
30
|
%
|
|
27
|
%
|
|
Three months ended February 28,
|
||||||
(In thousands, except percentages)
|
2014
|
|
2013
|
||||
Operating income:
|
|
|
|
||||
Americas
|
$
|
77,610
|
|
|
$
|
62,133
|
|
EMEA
|
24,595
|
|
|
15,986
|
|
||
APAC
|
10,062
|
|
|
9,749
|
|
||
Shared services
|
(56,613
|
)
|
|
(51,468
|
)
|
||
Total operating income
|
$
|
55,654
|
|
|
$
|
36,400
|
|
|
|
|
|
||||
As a percent of segment revenue:
|
|
|
|
||||
Americas
|
22
|
%
|
|
27
|
%
|
||
EMEA
|
19
|
%
|
|
15
|
%
|
||
APAC
|
21
|
%
|
|
22
|
%
|
|
Three months ended February 28,
|
|
Percentage
Change |
|||||||
(In thousands, except percentages)
|
2014
|
|
2013
|
|
||||||
Net income
|
$
|
32,422
|
|
|
$
|
24,671
|
|
|
31
|
%
|
Interest income
|
(251
|
)
|
|
(344
|
)
|
|
|
|||
Interest expense
|
15,245
|
|
|
6,120
|
|
|
|
|||
Provision for income taxes
|
8,238
|
|
|
5,953
|
|
|
|
|||
Depreciation
|
15,790
|
|
|
9,880
|
|
|
|
|||
Amortization
|
33,847
|
|
|
22,599
|
|
|
|
|||
EBITDA
|
$
|
105,291
|
|
|
$
|
68,879
|
|
|
53
|
%
|
Stock-based compensation expense
|
43,964
|
|
|
39,762
|
|
|
|
|||
Restructuring charges
|
3,175
|
|
|
4,788
|
|
|
|
|||
Acquisition-related costs
|
940
|
|
|
1,895
|
|
|
|
|||
Impairment of assets
|
—
|
|
|
1,629
|
|
|
|
|||
Loss on sale of assets
|
2,805
|
|
|
1,241
|
|
|
|
|||
Adjusted EBITDA
|
$
|
156,175
|
|
|
$
|
118,194
|
|
|
32
|
%
|
Adjusted EBITDA as a percentage of revenue
|
29.8
|
%
|
|
30.9
|
%
|
|
|
(In thousands, except percentages)
|
As of February 28, 2014
|
|
As of November 30, 2013
|
|
Dollar change
|
|
Percent change
|
|||||||
Accounts receivable, net
|
$
|
524,010
|
|
|
$
|
459,263
|
|
|
$
|
64,747
|
|
|
14
|
%
|
Accrued compensation
|
$
|
58,431
|
|
|
$
|
89,460
|
|
|
$
|
(31,029
|
)
|
|
(35
|
)%
|
Deferred revenue
|
$
|
708,941
|
|
|
$
|
560,010
|
|
|
$
|
148,931
|
|
|
27
|
%
|
|
Three months ended February 28,
|
|||||||||||||
(In thousands, except percentages)
|
2014
|
|
2013
|
|
Dollar change
|
|
Percent change
|
|||||||
Net cash provided by operating activities
|
$
|
153,861
|
|
|
$
|
131,686
|
|
|
$
|
22,175
|
|
|
17
|
%
|
Net cash used in investing activities
|
$
|
(24,314
|
)
|
|
$
|
(59,437
|
)
|
|
$
|
35,123
|
|
|
(59
|
)%
|
Net cash used in financing activities
|
$
|
(179,168
|
)
|
|
$
|
(79,341
|
)
|
|
$
|
(99,827
|
)
|
|
126
|
%
|
|
Three months ended February 28,
|
|||||||||||||
(In thousands, except percentages)
|
2014
|
|
2013
|
|
Dollar change
|
|
Percent change
|
|||||||
Net cash provided by operating activities
|
$
|
153,861
|
|
|
$
|
131,686
|
|
|
|
|
|
|||
Capital expenditures on property and equipment
|
(24,610
|
)
|
|
(19,367
|
)
|
|
|
|
|
|||||
Free cash flow
|
$
|
129,251
|
|
|
$
|
112,319
|
|
|
$
|
16,932
|
|
|
15
|
%
|
Item 3.
|
Quantitative and Qualitative Disclosure About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
|
Total Number of Shares
Purchased
|
|
Average
Price Paid
per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (in thousands) (3)
|
||||||
December 1 - December 31, 2013:
|
|
|
|
|
|
|
|
||||||
Share repurchase programs (1)
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
4,021
|
|
Employee transactions (2)
|
13,127
|
|
|
$
|
115.43
|
|
|
N/A
|
|
|
N/A
|
|
|
January 1 - January 31, 2014:
|
|
|
|
|
|
|
|
||||||
Share repurchase programs (1)
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
4,021
|
|
Employee transactions (2)
|
205,474
|
|
|
$
|
117.33
|
|
|
N/A
|
|
|
N/A
|
|
|
February 1 - February 28, 2013:
|
|
|
|
|
|
|
|
||||||
Share repurchase programs (1)
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
4,021
|
|
Employee transactions (2)
|
162,068
|
|
|
$
|
113.46
|
|
|
N/A
|
|
|
N/A
|
|
|
Total share repurchases
|
380,669
|
|
|
$
|
115.62
|
|
|
—
|
|
|
|
Item 6.
|
Exhibits
|
(a)
|
Index of Exhibits
|
Exhibit
Number
|
|
Description
|
10.1
|
|
Amendment to Employment Agreement by and between IHS Inc. and Daniel Yergin, dated as of December 3, 2010
|
|
|
|
31.1
|
|
Certification of the Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Exchange Act
|
|
|
|
31.2
|
|
Certification of the Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Exchange Act
|
|
|
|
32
|
|
Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
IHS INC.
|
||||
|
|
|||
By:
|
|
/s/ Heather Matzke-Hamlin
|
||
|
|
Name:
|
|
Heather Matzke-Hamlin
|
|
|
Title:
|
|
Senior Vice President and Chief Accounting Officer
|
1.
|
The Letter Agreement (Termination of Employment (Non-Change in Control)) is hereby amended to delete the last sentence of Section 7(a)(a), which currently reads:
|
2.
|
The Letter Agreement (Death, Disability, or Retirement) is hereby amended to delete Section 7(c)(ii), which currently reads:
|
3.
|
The Letter Agreement is hereby amended to replace each reference therein to “two and one months” with “two and one-half months” in its place.
|
4.
|
Except as expressly amended herein, the Letter Agreement remains in full force and effect in accordance with its terms.
|
|
|
|
IHS Inc.
|
|
|
|
|
By:
|
/s/ Stephen Green
|
|
|
|
Name:
|
Stephen Green
|
|
|
|
Title:
|
Senior Vice President & General Counsel
|
Accepted and Agreed:
|
|
|
|
|
By:
|
/s/ Daniel Yergin
|
|
|
|
Employee Name:
|
Daniel Yergin
|
|
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of IHS Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ Scott Key
|
|
Scott Key
|
|
President and Chief Executive Officer
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of IHS Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ Todd S. Hyatt
|
|
Todd S. Hyatt
|
|
Executive Vice President and Chief Financial Officer
|
|
/s/ Scott Key
|
|
Scott Key
|
|
President and Chief Executive Officer
|
|
|
|
/s/ Todd S. Hyatt
|
|
Todd S. Hyatt
|
|
Executive Vice President and Chief Financial Officer
|
|