SOURCE: Interactive Data Corporation

Interactive Data Corporation

July 26, 2012 16:30 ET

Interactive Data Reports Second-Quarter 2012 Results

BEDFORD, MA--(Marketwire - Jul 26, 2012) -   Interactive Data Corporation today reported its financial results for the second quarter ended June 30, 2012. Interactive Data's second-quarter 2012 revenue increased 2.3% to $221.2 million from $216.3 million in the second quarter of 2011. Revenue in the second quarter of 2011 was reduced by $0.3 million due to the purchase accounting for the amortization of acquisition-related deferred revenue. Excluding this adjustment and the impact of changes in foreign exchange rates, Interactive Data's organic (non-GAAP) second-quarter 2012 revenue grew 3.6% from the same quarter last year.

Interactive Data's second-quarter 2012 income from operations was $38.3 million, compared with income from operations of $20.2 million in the same quarter one year ago. 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 second quarter of 2012 increased 5.0% to $85.7 million from $81.7 million in the same quarter one year ago. 

"Interactive Data's second-quarter 2012 financial performance improved over the same quarter last year and the prior quarter despite challenging market conditions," stated Mason Slaine, Interactive Data's chairman, president and chief executive officer. "We continued to generate revenue growth across a number of key product areas due in part to good new sales progress over the past several quarters. At the same time, we have balanced prudent expense control with focused investment in key technology and product-related initiatives. As a result, we converted our revenue growth into higher adjusted EBITDA and produced strong free cash flow. We remain well positioned to support our clients' needs for high-quality market data and solutions for use across their enterprises."

Segment Reporting and Related Operating Highlights

As previously disclosed, effective for the fourth quarter of 2011, Interactive Data's two reportable segments were reorganized as Pricing and Reference Data, and Trading Solutions. The change was made in response to operational and organizational initiatives undertaken during the preceding year and completed in the fourth quarter of 2011, and reflects the way the Company currently approaches the market and analyzes operating performance. The Pricing and Reference Data segment represents the Company's evaluated pricing, reference data and fixed income analytics product areas. The Trading Solutions segment represents the Company's real-time data feeds, ultra low latency infrastructure services, hosted web applications and workstations. Historical financial results have been reclassified to reflect this change.

Pricing and Reference Data Segment:

  • Interactive Data's Pricing and Reference Data segment reported second-quarter 2012 revenue of $154.3 million, a 4.4% increase over the second quarter of 2011. Excluding the impact of changes in foreign exchange rates and the reduction of $0.2 million in second-quarter 2011 revenue associated with the acquisition-related deferred revenue adjustment, second-quarter 2012 organic (non-GAAP) revenue for this segment increased by 5.1% from the same quarter last year. The second-quarter 2012 organic revenue performance primarily reflects continued expansion in its evaluated pricing and reference data services product areas in the U.S. and Asia Pacific regions, as well as improved performance within its BondEdge Solutions fixed income analytics product area. Earlier this month, the Company extended its long-standing alliance with Japan's QUICK Corp. under which the Company will provide fixed income data to QUICK's terminals. Other highlights during the second quarter of 2012 included the introduction of independent evaluations of Credit Default Swaps (CDS) and select CDS Indices, and the launch of BondEdge Wealth Manager, a new offering designed specifically to provide investment advisors with capabilities to more effectively manage fixed income portfolio strategies. 

Trading Solutions Segment:

  • Interactive Data's Trading Solutions segment generated second-quarter 2012 revenue of $66.9 million, compared with $68.6 million in the same quarter last year. Excluding the impact of changes in foreign exchange rates and the reduction of $0.1 million in second-quarter 2011 revenue associated with the acquisition-related deferred revenue adjustment, second-quarter 2012 organic (non-GAAP) revenue for this segment was essentially unchanged. Lower revenue within the real-time feeds product area was offset primarily by continued growth in the Interactive Data 7ticks trading infrastructure services area and hosted web applications area. During the second quarter of 2012, the Company continued to add new content and functionality into its FutureSource and Market-Q offerings for the energy and commodities, and wealth management markets, respectively. In addition, Interactive Data's two new ticker plants in Hong Kong went live during the second quarter. 

Other Second-Quarter 2012 Financial Highlights

Effects of Foreign Exchange:

  • The net effect of foreign exchange on second-quarter 2012 income from operations was positive $0.3 million. 

Balance Sheet Highlights:

  • As of June 30, 2012, Interactive Data had cash, cash equivalents and short-term investments of $266.1 million, compared with $218.7 last quarter, $188.0 million at the same time last year and $262.2 million at the end of 2011. The Company's total debt outstanding as of June 30, 2012, was approximately $2.0 billion. 

First-Half 2012 Results

  • For the first six months ended June 30, 2012, Interactive Data reported revenue of $437.8 million, an increase of $10.0 million, or 2.3%, from $427.8 million in the same period last year. Excluding the effects of foreign exchange and the reduction in revenue of $0.9 million associated with the deferred revenue adjustment, organic revenue grew by 3.1% during the first half of 2012. 

  • Interactive Data's first-half 2012 income from operations was $67.4 million, compared with income from operations of $37.7 million in the same period one year ago. For the first half of 2012, 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 2.3% to $162.2 million from $158.5 million in the same period one year ago. 

Conference Call Information

Interactive Data Corporation will host a conference call to discuss the Company's second-quarter 2012 results on Friday, July 27, 2012 at 8:30 a.m. ET. The dial-in number for the conference call is (785) 424-1057 and the related access code is IDCQ212. For those who cannot listen to this broadcast, a replay of the call will be available from July 27 at 12:00 p.m. until Friday, August 3, 2012 at 12:00 p.m., and it can be accessed by dialing (402) 220-7214 or (800) 756-8809 (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 Pricing and Reference Data, and Trading Solutions segments because management believes this additional level of detail provides further insight into underlying performance trends. 

  • 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 about remaining well positioned to support our clients' needs for high-quality market data and solutions for use across their enterprises. 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, 2011, under the caption "Risk Factors." The Company's Annual Report on Form 10-K is 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 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 on our variable rate debt (to the extent the risk is not mitigated by the interest rate hedge and cap arrangements that we may have in place 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.

                         
INTERACTIVE DATA CORPORATION AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(Unaudited)  
(In thousands)  
             
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2012     2011     2012     2011  
REVENUE   $ 221,243     $ 216,344     $ 437,775     $ 427,800  
                 
COSTS AND EXPENSES:                                
    Cost of services     73,789       75,509       148,463       146,949  
    Selling, general and administrative     64,475       61,621       133,083       126,236  
    Depreciation     10,160       10,594       19,804       20,592  
    Amortization     34,517       48,417       69,074       96,315  
  Total costs and expenses     182,941       196,141       370,424       390,092  
                                 
INCOME FROM OPERATIONS     38,302       20,203       67,351       37,708  
                                 
  Interest expense, net     (37,168 )     (38,738 )     (74,992 )     (80,635 )
  Other income (expense), net     28       (2,387 )     275       (2,738 )
  Loss on extinguishment of debt     -       -       -       (25,450 )
                                 
INCOME (LOSS) BEFORE INCOME TAXES     1,162       (20,922 )     (7,366 )     (71,115 )
                                 
  Income tax expense (benefit)     1,055       (10,855 )     1,319       (33,862 )
                                 
NET INCOME (LOSS)   $ 107     $ (10,067 )   $ (8,685 )   $ (37,253 )
                                 
                                 
             
INTERACTIVE DATA CORPORATION AND SUBSIDIARIES  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(In thousands)  
             
    June 30,     December 31,  
    2012     2011  
ASSETS   (Unaudited)        
Assets:                
Cash and cash equivalents   $ 248,633     $ 262,152  
Short-term investments     17,465       -  
Accounts receivable, net     133,014       118,248  
Prepaid expenses and other current assets     25,331       27,419  
Income tax receivable     6,247       6,251  
Deferred income taxes     34,570       42,281  
                 
Total current assets     465,260       456,351  
                 
Property and equipment, net     133,944       122,289  
Goodwill     1,636,598       1,637,126  
Intangible assets, net     1,748,743       1,818,117  
Deferred financing costs, net     49,603       54,478  
Other assets     4,695       5,310  
                 
Total Assets   $ 4,038,843     $ 4,093,671  
                 
LIABILITIES AND EQUITY                
                 
Liabilities:                
Accounts payable, trade   $ 16,711     $ 17,911  
Accrued liabilities     79,013       89,214  
Borrowings, current     -       56,417  
Interest payable     30,475       30,584  
Income taxes payable     21,533       7,008  
Deferred revenue     30,441       24,944  
                 
Total current liabilities     178,173       226,078  
                 
Income taxes payable     6,869       10,906  
Deferred tax liabilities     626,386       647,090  
Other liabilities     55,786       59,908  
Borrowings, net of current portion and original issue discount     1,958,226       1,929,784  
                 
Total Liabilities     2,825,440       2,873,766  
                 
Equity:                
Common stock     -       -  
Additional paid-in-capital     1,336,091       1,333,344  
Accumulated loss     (132,264 )     (123,579 )
Accumulated other comprehensive income     9,576       10,140  
                 
Total Equity     1,213,403       1,219,905  
                 
Total Liabilities and Equity   $ 4,038,843     $ 4,093,671  
                 
                 
   
INTERACTIVE DATA CORPORATION AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
(Unaudited)  
(In thousands)  
             
    Six Months Ended  
    June 30,  
    2012     2011  
                 
Cash flows from operating activities:                
Net loss   $ (8,685 )   $ (37,253 )
Adjustments to reconcile net loss to net cash provided by operating activities:                
  Depreciation and amortization     88,878       116,907  
  Amortization of deferred financing costs and accretion of notes discounts     8,929       9,027  
  Deferred income taxes     (12,569 )     (39,213 )
  Stock-based compensation     1,705       1,788  
  Non-cash interest expense     753       -  
  Provision (recovery) for doubtful accounts and sales credits     1,998       (764 )
  Loss on dispositions of fixed assets     13       126  
  Loss on extinguishment of debt     -       25,450  
Changes in operating assets and liabilities, net     (12,048 )     (6,443 )
NET CASH PROVIDED BY OPERATING ACTIVITIES     68,974       69,625  
                 
Cash flows from investing activities:                
  Purchase of property and equipment     (31,890 )     (17,885 )
  Business and asset acquisitions, net of acquired cash     -       19  
  Purchase of short-term investments     (17,548 )     -  
NET CASH USED IN INVESTING ACTIVITIES     (49,438 )     (17,866 )
                 
Cash flows from financing activities:                
  Proceeds from issuance of long-term debt, net of issuance costs     -       1,358  
  Principal payments on long-term debt     (32,029 )     (3,363 )
  Principal payments on capital leases     (171 )     -  
  Proceeds from issuance of restricted parent company common stock     -       11,850  
  Capital contribution resulting from exercise of parent company stock options     637       -  
  Payment of interest rate cap     (832 )     -  
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES     (32,395 )     9,845  
                 
  Effect of change in exchange rates on cash and cash equivalents     (660 )     2,708  
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS     (13,519 )     64,312  
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD     262,152       123,704  
                 
CASH AND CASH EQUIVALENTS AT END OF PERIOD   $ 248,633     $ 188,016  
                 
                 
 
RECONCILIATION OF NON-GAAP MEASURES
 
Total Organic (Non-GAAP) Revenue
(Revenue Before Effects of Deferred Revenue Adjustment and Foreign Exchange)
 (In thousands)
                             
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2012   2011   Change     2012   2011   Change  
                                     
Revenue   $ 221,243   $ 216,344   2.3 %   $ 437,775   $ 427,800   2.3 %
  Total deferred revenue adjustment     -     260   -       -     901   -  
Non-GAAP revenue before total deferred revenue adjustment     221,243     216,604   2.1 %     437,775     428,701   2.1 %
  Total effects of foreign exchange     3,130     -   -       4,080     -   -  
Total organic (non-GAAP) revenue   $ 224,373   $ 216,604   3.6 %   $ 441,855   $ 428,701   3.1 %
                                     
                                     
 
Interactive Data Pricing and Reference Data Segment
Organic (Non-GAAP) Revenue
(Revenue Before Effects of Deferred Revenue Adjustment and Foreign Exchange)
(In thousands)
                             
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2012   2011   Change     2012   2011   Change  
Pricing and Reference Data Revenue   $ 154,337   $ 147,765   4.4 %   $ 303,997   $ 291,904   4.1 %
  Effects of deferred revenue adjustment     -     150   -       -     600   -  
Non-GAAP revenue before effects of deferred revenue adjustment     154,337     147,915   4.3 %     303,997     292,504   3.9 %
  Effects of foreign exchange     1,189     -   -       1,555     -   -  
Total organic (non-GAAP) revenue   $ 155,526   $ 147,915   5.1 %   $ 305,552   $ 292,504   4.5 %
                                     
                                     
 
Interactive Data Trading Solutions Segment
Organic (Non-GAAP) Revenue
(Revenue Before Effects of Deferred Revenue Adjustment and Foreign Exchange)
(In thousands)
                             
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2012   2011   Change     2012   2011   Change  
Trading Solutions Revenue                                    
  Real-Time Feeds and Trading Infrastructure Services   $ 27,638   $ 28,523   -3.1 %   $ 54,865   $ 56,398   -2.7 %
  Hosted Web Applications and Workstations     39,268     40,056   -2.0 %     78,913     79,498   -0.7 %
Total Trading Solutions Revenue   $ 66,906   $ 68,579   -2.4 %   $ 133,778   $ 135,896   -1.6 %
  Effects of deferred revenue adjustment     -     110   -       -     301   -  
Non-GAAP revenue before effects of deferred revenue adjustment   $ 66,906   $ 68,689   -2.6 %   $ 133,778   $ 136,197   -1.8 %
  Effects of foreign exchange     1,941     -   -       2,525     -   -  
Total organic (non-GAAP) revenue   $ 68,847   $ 68,689   0.2 %   $ 136,303   $ 136,197   0.1 %
                                     
                                     
 
RECONCILIATION OF NON-GAAP MEASURES (CONTINUED)
 
Non-GAAP Adjusted EBITDA and Non-GAAP Pro Forma Adjusted EBITDA1
(In thousands, except margin data)
                         
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2012     2011     2012     2011  
Net Income (Loss)   $ 107     $ (10,067 )   $ (8,685 )   $ (37,253 )
  Interest expense     37,168       38,738       74,992       80,635  
  Other expense (income)     (28 )     2,387       (275 )     2,738  
  Income tax expense (benefit)     1,055       (10,855 )     1,319       (33,862 )
  Depreciation and amortization     44,677       59,011       88,878       116,907  
EBITDA   $ 82,979     $ 79,214     $ 156,229     $ 129,165  
                                 
Adjustments:                                
  Stock-based compensation     874       1,020       1,705       1,788  
  Other non-recurring charges2     351       745       1,160       26,656  
  Other charges3     1,534       704       3,066       913  
    Total Adjustments     2,759       2,469       5,931       29,357  
                                 
Adjusted EBITDA   $ 85,738     $ 81,683     $ 162,159     $ 158,522  
                                 
Adjusted EBITDA Margin4     38.8 %     37.7 %     37.0 %     37.0 %
                                 
Other Adjustments                                
  Pro forma cost savings5     7,500       7,500       15,000       15,000  
Pro Forma Adjusted EBITDA   $ 93,238     $ 89,183     $ 177,159     $ 173,522  
                                 
Pro Forma Adjusted EBITDA Margin4     42.1 %     41.2 %     40.5 %     40.5 %
                                 
1 Interactive Data's adjusted EBITDA excludes 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. In addition to excluding the aforementioned items, Interactive Data's pro forma adjusted EBITDA also reflects other adjustments permitted under the Company's senior secured credit facilities. 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. Please note that the sum of certain amounts may not equal the total due to rounding.
   
2 Other non-recurring charges include the impact of the deferred revenue adjustment, the loss on extinguishment of debt, facility consolidation costs, and certain severance and retention expenses.
   
3 Other charges include management fees, earnout-related expense, non-cash foreign exchange expense, acquisition-related adjustments, professional fees related to the registration of the Company's debt securities, and other costs.
   
4 Adjusted EBITDA margin and pro forma adjusted EBITDA margin are calculated by dividing each EBITDA measure by non-GAAP revenue (total revenue less deferred revenue adjustment).
   
5 Pro forma cost savings of up to a maximum of $30 million annually is an adjustment permitted under the Company's credit agreements for activities that may include, but are not limited to, the consolidation of a number of legacy organizational silos, technology platforms and content databases.
   
   
 
RECONCILIATION OF NON-GAAP MEASURES (CONTINUED)
 
Trailing Four Quarters and Trailing Twelve Months
Quarterly Non-GAAP Adjusted EBITDA and Non-GAAP Pro Forma Adjusted EBITDA1
(In thousands, except margin data)
                               
                            Trailing Twelve  
    Three Months Ended     Months Ended  
    September 30,     December 31,     March 31,     June 30,     June 30,  
    2011     2011     2012     2012     2012  
Net Income (Loss)   $ 9,848     $ (1,911 )   $ (8,792 )   $ 107     $ (748 )
  Interest expense     38,390       38,095       37,824       37,168       151,477  
  Other (income) expense     (30 )     1,011       (247 )     (28 )     706  
  Income tax expense (benefit)     (17,433 )     (3,960 )     264       1,055       (20,074 )
  Depreciation and amortization     51,141       46,420       44,201       44,677       186,439  
EBITDA   $ 81,916     $ 79,655     $ 73,250     $ 82,979     $ 317,800  
                                         
Adjustments:                                        
  Stock-based compensation     952       1,489       831       874       4,146  
  Other non-recurring charges2     2,679       557       809       351       4,396  
  Other charges3     1,814       1,756       1,531       1,534       6,635  
    Total Adjustments     5,445       3,802       3,171       2,759       15,177  
                                         
Adjusted EBITDA   $ 87,361     $ 83,457     $ 76,421     $ 85,738     $ 332,977  
                                         
Adjusted EBITDA Margin4     40.1 %     37.6 %     35.3 %     38.8 %     37.9 %
                                         
Other Adjustments                                        
  Pro forma cost savings5     7,500       7,500       7,500       7,500       30,000  
Pro Forma Adjusted EBITDA   $ 94,861     $ 90,957     $ 83,921     $ 93,238     $ 362,977  
                                         
Pro Forma Adjusted EBITDA Margin4     43.5 %     41.0 %     38.8 %     42.1 %     41.4 %
                                         
1 Interactive Data's adjusted EBITDA excludes 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. In addition to excluding the aforementioned items, Interactive Data's pro forma adjusted EBITDA also reflects other adjustments permitted under the Company's senior secured credit facilities. 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. Please note that the sum of certain amounts may not equal the total due to rounding.
   
2 Other non-recurring charges include the impact of the deferred revenue adjustment, the loss on extinguishment of debt, facility consolidation costs, and certain severance and retention expenses.
   
3 Other charges include management fees, earnout-related expense, non-cash foreign exchange expense, acquisition-related adjustments, professional fees related to the registration of the Company's debt securities, and other costs.
   
4 Adjusted EBITDA margin and pro forma adjusted EBITDA margin are calculated by dividing each EBITDA measure by non-GAAP revenue (total revenue less deferred revenue adjustment).
   
5 Pro forma cost savings of up to a maximum of $30 million annually is an adjustment permitted under the Company's credit agreements for activities that may include, but are not limited to, the consolidation of a number of legacy organizational silos, technology platforms and content databases.
   
   
 
Non-GAAP Free Cash Flow
(In thousands)
 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2012   2011   Change     2012   2011   Change  
Adjusted EBITDA   $ 85,738   $ 81,683   5.0 %   $ 162,159   $ 158,522   2.3 %
  Capital Expenditures     17,270     10,093   71.1 %     31,890     17,885   78.3 %
Free Cash Flow   $ 68,468   $ 71,590   -4.4 %   $ 130,269   $ 140,637   -7.4 %
                                     

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