SOURCE: Interactive Data Corporation

Interactive Data Corporation

October 24, 2013 16:30 ET

Interactive Data Reports Third-Quarter 2013 Results

BEDFORD, MA--(Marketwired - Oct 24, 2013) -  Interactive Data Corporation today reported its financial results for the third quarter ended September 30, 2013. Interactive Data's third-quarter 2013 revenue was $224.3 million, a 2.9% increase from $218.1 million in the third quarter of 2012. Excluding the impact of changes in foreign exchange rates, Interactive Data's organic (non-GAAP) revenue for the third quarter of 2013 grew by 3.5% from the third quarter in 2012. 

Interactive Data's third-quarter 2013 income from operations was $41.2 million, compared with income from operations of $36.7 million in the same period 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 third quarter of 2013 was $87.9 million, compared with $86.8 million in the same period one year ago. 

"Interactive Data's third-quarter 2013 financial results reflect another quarter of progress in expanding our business globally as we continued to make strategic investments in our people, products and technology," stated Stephen Daffron, who was appointed Interactive Data's president and CEO last month. "We continued to drive steady organic revenue growth in our Pricing and Reference Data segment while also producing modest improvements within the Workstations and Real-Time Feeds areas of our Trading Solutions segment. These dynamics, in combination with prudent, ongoing expense management, enabled us to maintain solid adjusted EBITDA margins and generate strong free cash flow this quarter." 

Segment Reporting and Related Operating Highlights

Pricing and Reference Data Segment:

  • Interactive Data's Pricing and Reference Data segment reported third-quarter 2013 revenue of $159.2 million, a 3.9% increase over the third quarter of 2012. Excluding the impact of changes in foreign exchange rates, third-quarter 2013 organic (non-GAAP) revenue for this business increased by 4.7% from the same period last year. The segment's performance primarily reflects growth in the Company's evaluated pricing and reference data services in North America. In July, BlackRock selected Interactive Data to serve as the calculation agent for its new CoRI Indexes, an innovative series of financial indexes that aim to fundamentally improve the way individuals and their advisors plan and save for retirement.  In September, Interactive Data released a new set of enhancements to Vantage(SM), which provides transparency into Interactive Data's evaluation services and facilitates pricing validation workflows. 

Trading Solutions Segment:

  • Interactive Data's Trading Solutions segment reported third-quarter 2013 revenue of $65.2 million, which was essentially unchanged from the same quarter last year. The segment's performance reflects improved revenue results in the Workstations area primarily due to modest subscriber growth and continued growth in Real-Time Feeds in Europe and Asia, the combination of which was largely offset by softness in the Hosted Web Applications area. A recent highlight in this segment was the announcement that Market-Q was selected by Oppenheimer & Co. to power the desktops and mobile devices of its 2,300 advisors in North America. In terms of product development milestones during the quarter, Interactive Data added content from two of Japan's leading proprietary trading systems, SBI Japannext and Chi-X Japan, to its Consolidated Feed and launched eSignal Mobile, a companion to the eSignal desktop used by professional and individual traders. 

Other Third-Quarter 2013 Financial and Operating Highlights

Stephen C. Daffron Appointed President and CEO

  • On September 20, 2013, Stephen C. Daffron, who most recently served as global head of operations and technology at Morgan Stanley, became president and chief executive officer of Interactive Data. He succeeded Mason Slaine, who has resumed his previous role as executive chairman where he remains involved with the Company's strategy and business development activities. In addition to his tenure at Morgan Stanley, Daffron's career in the financial services industry includes senior leadership positions at Renaissance Technologies Corp., Citigroup and Goldman Sachs & Co. 

Effects of Foreign Exchange:

  • The net effect of changes in foreign exchange rates increased third-quarter 2013 income from operations by $0.7 million. 

Balance Sheet Highlights:

  • As of September 30, 2013, Interactive Data had cash, cash equivalents and short-term investments of $313.6 million, compared with $289.3 million last quarter, $289.4 million at the same time last year and $248.2 million at the end of 2012. The Company's total debt outstanding as of September 30, 2013 was approximately $2.0 billion.

Results for the Nine Months Ended September 30, 2013

  • For the nine months ended September 30, 2013, Interactive Data reported revenue of $672.9 million, an increase of $17.1 million, or 2.6%, from $655.8 million in the same period last year. Excluding the effects of changes in foreign exchange, organic revenue grew by 3.2% during the first nine months of 2013. 

  • For the nine months ended September 30, 2013, Interactive Data's income from operations grew 28.9% to $134.2 million from $104.1 million in the same period one year ago. For the first nine months of 2013, 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) was $259.3 million, compared with $249.0 million in the same period one year ago. 

Conference Call Information

Interactive Data Corporation will host a conference call to discuss the Company's third-quarter 2013 results on Friday, October 25, 2013 at 8:30 a.m. ET. The dial-in number for the conference call is (785) 424-1826 and the related access code is IDCQ313. For those who cannot listen to this broadcast, a replay of the call will be available from October 25 at 12:00 p.m. until Friday, November 1, 2013 at 12:00 p.m., and it can be accessed by dialing (402) 220-1371 or (800) 688-9445 and the related access code is 771764.

Non-GAAP Information

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

  • Management includes information regarding organic revenue. Organic revenue excludes the impact of foreign exchange rate fluctuations, as well as, if applicable, adjustments related to the amortization of acquisition-related deferred revenue, and the contribution of businesses recently acquired (and related intercompany eliminations). Management believes reporting organic revenue is useful information for stakeholders as it facilitates a fuller understanding of period-to-period changes in revenue and underlying business trends. 

  • 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) and adjusted EBITDA. Adjusted EBITDA is defined 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 each case as applicable for the underlying periods. In addition, management also includes information regarding pro forma adjusted EBITDA. Pro forma adjusted EBITDA is defined 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 non-GAAP measures to be important indicators of the Company's operational profitability and cash generation strength. Management also believes these metrics provide transparency into and useful information regarding the Company's historical operating results because items that are either not part of the Company's ongoing core operating expenses, do not require a cash outlay, or are not otherwise expected to recur in the ordinary course of business are eliminated. The Company's pro forma adjusted EBITDA measure is based on the definition of Consolidated 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 to be an 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 current period 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, pro forma adjusted EBITDA is an important indicator of the Company's current compliance (and future ability to comply) with the financial covenants set forth in 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 should not be considered to be 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 presented 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 may contain forward-looking statements within the meaning of this Act. Forward-looking statements include all statements that are not historical statements and include our statements discussing the Company's goals, beliefs, strategies, objectives, plans, future financial conditions, future challenges and opportunities. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those indicated by such forward-looking statements. These risks and uncertainties include those set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2012, 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 the Company's website, www.interactivedata.com, 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 the Company serves; (iii) general worldwide economic conditions and related uncertainties; (iv) consolidation of financial services companies, within and across industries; (v) a 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 the Company faces; (vii) a prolonged outage at one of the Company's data centers or other major disruptions of the Company's computer operations or those of the Company's suppliers, including outages or disruptions that result in the failure to timely deliver services or otherwise adversely impacts the quality of the Company's services; (viii) the Company's ability to maintain relationships with its key suppliers and providers of market data; (ix) the Company's ability to maintain relationships with service bureaus and custodian banks; (x) the need to develop new products and services, and to adapt to legal, regulatory, technology or other changes or new competitive offerings; (xi) the Company's cost and operational optimization plans may not be effective or yield the expected efficiencies or may take longer than anticipated, including the Company's unified technology platform project; (xii) risks related to the Company's substantial leverage, including the Company's ability to raise additional capital to fund operations or react to changes in the economy or the Company's industry and market sectors, and the Company's exposure to interest rate risk on its variable rate debt (to the extent the risk is not mitigated by any interest rate hedge and cap arrangements that may be place from time to time); (xiii) the Company is subject to regulatory oversight and it provides services to financial institutions who are subject to regulatory oversight, and enforcement actions by regulatory agencies can be time-consuming, costly and could harm our Company's reputation; (xiv) the Company's ability to maintain its registered investment adviser status; (xv) the risks of doing business internationally; (xvi) intellectual property related risks, including any allegations that the Company infringes the intellectual property rights of others; (xvii) the Company's ability to attract and retain qualified management and other key personnel; (xviii) the Company's ability to negotiate and enter into any strategic acquisitions or alliance on favorable terms, if at all; and (xix) the Company's ability to realize the anticipated benefits from any strategic acquisitions or alliances that it may be a party to. While the Company may elect to update forward-looking statements at some point in the future, the Company specifically disclaim any obligation to do so, even if management estimates change and, therefore, you should not rely on these forward-looking statements as representing the Company's views as of any date subsequent to today.

About Interactive Data Corporation

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

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

   
   
INTERACTIVE DATA CORPORATION AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
Unaudited  
(In thousands)  
   
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2013     2012     2013     2012  
REVENUE   $ 224,330     $ 218,073     $ 672,944     $ 655,848  
                                 
COSTS AND EXPENSES:                                
    Cost of services     73,559       72,912       220,352       221,375  
    Selling, general and administrative     71,752       63,621       197,753       196,704  
    Depreciation     10,015       10,318       31,854       30,122  
    Amortization     27,844       34,494       88,820       103,568  
  Total costs and expenses     183,170       181,345       538,779       551,769  
                                 
INCOME FROM OPERATIONS     41,160       36,728       134,165       104,079  
                                 
    Interest expense, net     (34,198 )     (37,372 )     (103,617 )     (112,364 )
    Other income, net     -       329       347       604  
    Loss on extinguishment of debt     -       -       (10,213 )     -  
                                 
INCOME (LOSS) BEFORE INCOME TAXES     6,962       (315 )     20,682       (7,681 )
                                 
    Income tax benefit     (7,170 )     (18,357 )     (7,617 )     (17,038 )
                                 
NET INCOME   $ 14,132     $ 18,042     $ 28,299     $ 9,357  
                                 
                                 
                                 
   
INTERACTIVE DATA CORPORATION AND SUBSIDIARIES  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(In thousands)  
   
    September 30,     December 31,  
    2013     2012  
ASSETS   (Unaudited)        
Assets:                
Cash and cash equivalents   $ 307,552     $ 224,597  
Short-term investments     6,077       23,581  
Accounts receivable, net     147,507       134,855  
Prepaid expenses and other current assets     27,720       25,021  
Income tax receivable     6,257       6,253  
Deferred tax assets     11,024       23,396  
                 
Total current assets     506,137       437,703  
                 
Property and equipment, net     165,961       142,920  
Goodwill     1,633,577       1,640,541  
Intangible assets, net     1,593,658       1,690,652  
Deferred financing costs, net     34,941       44,854  
Other assets     6,059       5,638  
                 
Total Assets   $ 3,940,333     $ 3,962,308  
                 
LIABILITIES AND EQUITY                
                 
Liabilities:                
Accounts payable, trade   $ 24,282     $ 17,323  
Accrued liabilities     94,202       87,347  
Borrowings, current     13,050       20,258  
Interest payable     12,345       30,310  
Income taxes payable     1,396       5,578  
Deferred revenue     28,848       22,608  
                 
Total current liabilities     174,123       183,424  
                 
Income taxes payable     10,568       10,992  
Deferred tax liabilities     577,907       604,322  
Other liabilities     56,784       57,816  
Borrowings, net of current portion and original issue discount     1,953,963       1,941,887  
                 
Total Liabilities     2,773,345       2,798,441  
                 
Equity:                
Common stock     -       -  
Additional paid-in-capital     1,242,831       1,253,821  
Accumulated loss     (94,263 )     (122,562 )
Accumulated other comprehensive income     18,420       32,608  
                 
Total Equity     1,166,988       1,163,867  
                 
Total Liabilities and Equity   $ 3,940,333     $ 3,962,308  
                 
                 
                 
INTERACTIVE DATA CORPORATION AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
Unaudited  
(In thousands)  
   
    Nine Months Ended
September 30,
 
    2013     2012  
                 
Cash flows from operating activities:                
    Net Income   $ 28,299     $ 9,357  
    Adjustments to reconcile net income to net cash provided by operating activities:                
    Depreciation and amortization     120,674       133,690  
    Amortization of deferred financing costs and accretion of notes discounts     12,101       13,264  
    Deferred income taxes     (12,188 )     (21,135 )
    Non-cash stock-based compensation     2,793       2,580  
    Non-cash interest expense     1,130       1,130  
    Provision for doubtful accounts and sales credits     1,428       19  
    Loss on dispositions of fixed assets     11       28  
    Loss on extinguishment of debt     10,213       -  
    Portion of insurance settlement related to property and equipment     (2,485 )     -  
Changes in operating assets and liabilities, net     (18,411 )     (36,464 )
NET CASH PROVIDED BY OPERATING ACTIVITIES     143,565       102,469  
                 
Cash flows from investing activities:                
    Purchase of property and equipment     (54,056 )     (45,960 )
    Proceeds of insurance settlement related to property and equipment     2,485       -  
    Purchase of short-term investments     (3,335 )     (23,540 )
    Proceeds from maturities and sales of short-term investments     20,112       -  
NET CASH USED IN INVESTING ACTIVITIES     (34,794 )     (69,500 )
                 
Cash flows from financing activities:                
    Principal payments on long-term debt     (6,525 )     (32,029 )
    Principal payments on capital leases     (297 )     (279 )
    Payment of long-term debt issuance costs, net of proceeds     (1,009 )     -  
    Capital contribution resulting from exercise of parent company stock options     -       787  
    Payment of interest rate cap     (1,247 )     (1,248 )
    Dividend to parent company     (14,277 )     -  
    Capital reduction resulting from cash distribution to option holders     (650 )     -  
NET CASH USED IN FINANCING ACTIVITIES     (24,005 )     (32,769 )
                 
    Effect of change in exchange rates on cash and cash equivalents     (1,811 )     3,457  
                 
NET INCREASE IN CASH AND CASH EQUIVALENTS     82,955       3,657  
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD     224,597       262,152  
                 
CASH AND CASH EQUIVALENTS AT END OF PERIOD   $ 307,552     $ 265,809  
                 
                 
                 
 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     Nine Months Ended  
    September 30,     September 30,  
    2013   2012   Change     2013   2012   Change  
                                     
Total revenue   $ 224,330   $ 218,073   2.9 %   $ 672,944   $ 655,848   2.6 %
  Total effects of foreign exchange     1,446     -   -       4,020     -   -  
Total organic (non-GAAP) revenue   $ 225,776   $ 218,073   3.5 %   $ 676,964   $ 655,848   3.2 %
                                     
                                     
   
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     Nine Months Ended  
    September 30,     September 30,  
    2013   2012   Change     2013   2012   Change  
Pricing and Reference Data Revenue   $ 159,158   $ 153,189   3.9 %   $ 476,737   $ 457,186   4.3 %
  Effects of foreign exchange     1,294     -   -       3,334     -   -  
Total organic (non-GAAP) revenue   $ 160,452   $ 153,189   4.7 %   $ 480,071   $ 457,186   5.0 %
                                     
                                     
                                     
Interactive Data Trading Solutions Segment  
Organic (Non-GAAP) Revenue  
(Revenue before Effects of Deferred Revenue Adjustment and Foreign Exchange)  
(In thousands)  
   
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2013   2012   Change     2013   2012   Change  
Trading Solutions Revenue                                    
  Real-Time Feeds and Trading Infrastructure Services   $ 27,456   $ 27,290   0.6 %   $ 82,092   $ 82,154   -0.1 %
  Hosted Web Applications and Workstations     37,716     37,594   0.3 %     114,115     116,508   -2.1 %
Total Trading Solutions Revenue   $ 65,172   $ 64,884   0.4 %   $ 196,207   $ 198,662   -1.2 %
  Effects of foreign exchange     152     -   -       686     -   -  
Total organic (non-GAAP) revenue   $ 65,324   $ 64,884   0.7 %   $ 196,893   $ 198,662   -0.9 %
                                     
                                     
                                     
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     Nine Months Ended  
    September 30,     September 30,  
    2013     2012     2013     2012  
Net Income   $ 14,132     $ 18,042     $ 28,299     $ 9,357  
  Interest expense     34,198       37,372       103,617       112,364  
  Other income, net     -       (329 )     (347 )     (604 )
  Income tax benefit     (7,170 )     (18,357 )     (7,617 )     (17,038 )
  Depreciation and amortization     37,859       44,812       120,674       133,690  
EBITDA   $ 79,019     $ 81,540     $ 244,626     $ 237,769  
                                 
Adjustments:                                
  Non-cash stock-based compensation     1,067       875       2,793       2,580  
  Other non-recurring charges2     435       1,067       13,035       2,227  
  Other charges (income)3     7,343       3,335       (1,154 )     6,401  
    Total Adjustments     8,845       5,277       14,674       11,208  
                                 
Adjusted EBITDA   $ 87,864     $ 86,817     $ 259,300     $ 248,977  
                                 
Adjusted EBITDA Margin4     39.2 %     39.8 %     38.5 %     38.0 %
                                 
Other Adjustments                                
  Pro forma cost savings5     7,500       7,500       22,500       22,500  
Pro Forma Adjusted EBITDA   $ 95,364     $ 94,317     $ 281,800     $ 271,477  
                                 
Pro Forma Adjusted EBITDA Margin4     42.5 %     43.3 %     41.9 %     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 ($10.2 million in the nine months ended September 30, 2013), facility consolidation costs, and certain severance and retention expenses.
   
3

Other (income) charges include insurance recoveries, management fees, earn-out revaluation expense, non-cash foreign exchange expense, acquisition-related adjustments, professional fees related to the registration of the Company's debt securities, and other costs. The primary changes from 2012 to 2013 are driven by the non-cash foreign exchange expense and insurance recoveries related to Hurricane Sandy.
   
4
Adjusted EBITDA margin and pro forma adjusted EBITDA margin are calculated by dividing each EBITDA measure by total revenue.
 
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  
    December 31,     March 31,     June 30,     September 30,     September 30,  
    2012     2013     2013     2013      2013  
Net (Loss) Income   $ (8,340 )   $ (868 )   $ 15,035     $ 14,132     $ 19,959  
  Interest expense     37,162       35,209       34,210       34,198       140,779  
  Other income, net     (220 )     (333 )     (14 )     -       (567 )
  Income tax (benefit) expense     (830 )     (816 )     369       (7,170 )     (8,447 )
  Depreciation and amortization     45,806       42,476       40,339       37,859       166,480  
EBITDA   $ 73,578     $ 75,668     $ 89,939     $ 79,019     $ 318,204  
                                         
Adjustments:                                        
  Non-cash stock-based compensation     11,528       852       874       1,067       14,321  
  Other non-recurring charges2     6,126       11,782       818       435       19,161  
  Other charges (income)3     2,420       (5,162 )     (3,335 )     7,343       1,266  
    Total Adjustments     20,074       7,472       (1,643 )     8,845       34,748  
                                         
Adjusted EBITDA   $ 93,652     $ 83,140     $ 88,296     $ 87,864     $ 352,952  
                                         
Adjusted EBITDA Margin4     41.8 %     37.2 %     39.2 %     39.2 %     39.3 %
                                         
Other Adjustments                                        
  Pro forma cost savings5     7,500       7,500       7,500       7,500       30,000  
Pro Forma Adjusted EBITDA   $ 101,152     $ 90,640     $ 95,796     $ 95,364     $ 382,952  
                                         
Pro Forma Adjusted EBITDA Margin4     45.1 %     40.6 %     42.6 %     42.5 %     42.7 %
                                         
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 ($10.2 million in the nine months ended September 30, 2013), facility consolidation costs, and certain severance and retention expenses.
   
3 Other (income) charges include insurance recoveries, management fees, earn-out revaluation expense, non-cash foreign exchange expense, acquisition-related adjustments, professional fees related to the registration of the Company's debt securities, and other costs. The primary changes from 2012 to 2013 are driven by the non-cash foreign exchange expense and insurance recoveries related to Hurricane Sandy.
   
4 Adjusted EBITDA margin and pro forma adjusted EBITDA margin are calculated by dividing each EBITDA measure by total revenue.
   
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     Nine Months Ended  
    September 30,     September 30,  
    2013   2012   Change     2013   2012   Change  
Adjusted EBITDA   $ 87,864   $ 86,817   1.2 %   $ 259,300   $ 248,977   4.1 %
  Capital Expenditures     20,175     14,070   43.4 %     54,056     45,960   17.6 %
Free Cash Flow   $ 67,689   $ 72,747   -7.0 %   $ 205,244   $ 203,017   1.1 %
                                     

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