TMCnet News
IMS HEALTH HOLDINGS, INC. - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations(Edgar Glimpses Via Acquire Media NewsEdge) This discussion and analysis should be read in conjunction with the accompanying Condensed Consolidated Financial Statements (unaudited) and related notes and with the audited Consolidated Financial Statements and the notes thereto included in our prospectus filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended, with the Securities and Exchange Commission on April 4, 2014 (the "Prospectus"). This discussion and analysis includes forward-looking statements that involve risks and uncertainties. You should read the "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" sections of this Quarterly Report on Form 10-Q and the Prospectus for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. The terms "Company," "IMS," "we," "our" or "us," as used herein, refer to IMS Health Holdings, Inc. and its consolidated subsidiaries unless otherwise stated or indicated by context. Amounts presented may not add due to rounding. Background We are a leading global information and technology services company providing clients in the healthcare industry with comprehensive solutions to measure and improve their performance. We have one of the largest and most comprehensive collections of healthcare information in the world, spanning sales, prescription and promotional data, medical claims, electronic medical records and social media. We standardize, organize, structure and integrate this data by applying our sophisticated analytics and leveraging our global technology infrastructure to help our clients run their organizations more efficiently and make better decisions to improve their operational and financial performance. We have a presence in over 100 countries and we generated 63% of our 2013 revenue from outside the United States. We serve key healthcare organizations and decision makers around the world, spanning the breadth of life science companies, including pharmaceutical, biotechnology, consumer health and medical device manufacturers, as well as distributors, providers, payers, government agencies, policymakers, researchers and the financial community. Our information and technology services offerings, which we have developed with significant investment over our 60-year history, are deeply integrated into our clients' workflow. Initial Public Offering On April 4, 2014, our common stock began trading on the New York Stock Exchange under the symbol "IMS". On April 9, 2014, we completed our Initial Public Offering ("IPO") of our common stock at a price to the public of $20.00 per share. We issued and sold 52 million shares of common stock in the IPO. The selling shareholders offered and sold 22.75 million shares of common stock in the IPO, including 9.75 million shares that were offered and sold by the selling shareholders pursuant to the full exercise of the underwriters' allotment to purchase additional shares. As of September 30, 2014, affiliates of TPG Global, LLC (together with its affiliates, "TPG"), CPP Investment Board Private Holdings, Inc. ("CPPIB-PHI"), a wholly owned subsidiary of the Canada Pension Plan Investment Board (together with its affiliates, "CPPIB"), and Leonard Green & Partners, L.P. ("LGP" and collectively with TPG and CPPIB, the "Sponsors") collectively remained our majority shareholders. We raised net proceeds of approximately $987 million from the IPO, after deducting underwriting discounts, commissions and related expenses totaling $53 million. We did not receive any of the proceeds from the sale of the shares sold by the selling shareholders. Substantially all of our net proceeds of the IPO, approximately $500 million of borrowings under new term loans, $140 million of borrowings under our revolving credit facility and approximately $400 million of cash on the balance sheet were used to (i) fund the redemption of our 12.5% Senior Notes and Senior PIK Notes (defined in the Debt section below) and pay related fees and expenses, (ii) pay $30 million in the aggregate to holders of outstanding cash settled stock appreciation rights ("Phantom SARs") granted under our 2010 Equity Incentive Plan and (iii) pay a one-time fee of $72 million to terminate our management services agreement with the Sponsors. 22 --------------------------------------------------------------------------------Acquisitions We make acquisitions to enhance our capabilities and offerings in certain areas, including technology services. During the three months ended September 30, 2014, we completed the acquisitions of Aileron Solutions, LLC (U.S.), Global Channel Marketing Solutions (U.S.) and additional consumer health businesses of Nielsen Holdings N.V. in certain European markets. Aileron uses anonymous medical claims data to provide analytic services to pharmaceutical, biotechnology, and medical device companies for the purpose of identifying healthcare professionals that will most benefit from information regarding medical device, diagnostics, or prescription products. This acquisition accelerates our services in two primary growth areas: oncology specialty and the medical device and diagnostic channel. Global Channel Marketing Solutions is a multi-channel marketing company that helps life sciences companies transform their customer engagements through multi-channel marketing operations support and solutions. Additionally, during the first six months of 2014, we completed the acquisitions of Forcea NV, a Belgium-based company that specializes in business intelligence applications and analytics for hospitals and life sciences organizations, the consumer health business of Nielsen Holdings N.V. in certain other European markets and Kent Capital in the U.S. The purchase price allocation for these acquisitions will be finalized after the completion of the valuation of certain intangible assets and any adjustments to the preliminary purchase price allocation are not expected to have a material impact on our results of operations. The total cost for these acquisitions was approximately $60 million, of which $56 million was paid during the nine months ended September 30, 2014 and the balance will be paid in 2015 subject to certain conditions. See Note 2 to our Condensed Consolidated Financial Statements for additional information with respect to these acquisitions. The results of operations of acquired businesses have been included since the date of acquisition and were not significant to our consolidated results of operations. In addition to the completed acquisitions, we announced in June 2014 our intention to acquire certain Cegedim Information Solutions and Customer Relationship Management (CRM) businesses for €385 million (approximately $520 million, assuming an exchange rate of $1.35 to each Euro) in cash. Cegedim, headquartered in Paris, France, is a global technology and services company specializing in healthcare whose offerings help pharmaceutical companies manage their sales and marketing operations. In October 2014, we announced that following the successful completion of works council information and consultation requirements in certain countries, the Cegedim board of directors approved our offer and a definitive purchase agreement has been executed. We expect to finance this acquisition through a mix of cash on hand and existing credit facilities, with no material impact on our leverage ratio. The proposed transaction is subject to customary regulatory and other closing conditions. We anticipate the transaction will close in early 2015. Results excluding the Effects of Foreign Currency Translation and Certain Charges We report results in U.S. dollars, but we do business on a global basis. Exchange rate fluctuations affect the U.S. dollar value of foreign currency revenue and expenses and may have a significant effect on our results. The discussion of our financial results in this report includes comparisons with the prior year in constant currency terms, using consistent exchange rates. We believe this information facilitates comparison of the underlying results over time. During the first nine months of 2014, the U.S. dollar was generally stronger against the other currencies in which we transact business as compared to the first nine months of 2013. The revenue growth at actual currency rates was lower than the growth at constant currency exchange rates during the first nine months period. See "-How Exchange Rates Affect our Results" and "-Quantitative and Qualitative Disclosures about Market Risk" below for a more complete discussion regarding the impact of foreign currency translation on our business. We also discuss below our revenue, operating income, operating costs of information, direct and incremental costs of technology services, selling and administrative expenses and operating margins excluding non-cash stock-based compensation charges, acquisition-related charges, restructuring and related charges, purchase accounting adjustments and sponsor monitoring fees as a supplement to our results presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). We believe providing these non-GAAP measures is useful as it facilitates comparisons across the periods presented and more clearly indicates trends. Management uses these non-GAAP measures in its global decision making, including developing budgets and managing expenditures. 23 -------------------------------------------------------------------------------- Results of Operations Summary of Results Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2014 2013 2014 2013 Revenue $ 656 $ 633 $ 1,963 $ 1,870 Information 382 381 1,149 1,138 Technology services 274 252 814 732 Operating costs of information, exclusive of depreciation and amortization 164 163 502 480 Direct and incremental costs of technology services, exclusive of depreciation and amortization 147 130 423 377 Selling and administrative expenses, exclusive of depreciation and amortization 139 143 557 433 Depreciation and amortization 109 98 331 303 Severance, impairment and other charges 4 (1 ) 29 1 Operating Income 93 100 121 276 Interest income 1 1 3 3 Interest expense (43 ) (87 ) (181 ) (241 ) Other income (loss), net 7 (54 ) (281 ) (44 ) Non-Operating Loss, Net (35 ) (140 ) (459 ) (282 ) Income (loss) before income taxes 58 (40 ) (338 ) (6 ) (Provision for) benefit from income taxes (11 ) 20 141 6 Net Income (Loss) $ 47 $ (20 ) $ (197 ) $ - Net Income (Loss) to Adjusted EBITDA Reconciliation We have included a presentation of Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") because we believe it provides additional information regarding our performance and our ability to service our debt. In addition, management believes that Adjusted EBITDA is useful to assess our operating performance trends because it excludes certain material non-cash items, unusual or non-recurring items that are not expected to continue in the future and certain other items. Adjusted EBITDA is not presented in accordance with U.S. GAAP, and our computation of Adjusted EBITDA may vary from those used by other companies. Adjusted EBITDA should not be considered as an alternative to net income or loss, operating income or loss, cash flows from operating activities or any other measures of operating performance, liquidity or indebtedness derived in accordance with U.S. GAAP. Adjusted EBITDA has limitations as an analytical tool, and it should not be considered in isolation, or as a substitute for analysis of our results as reported under U.S. GAAP. 24 -------------------------------------------------------------------------------- Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2014 2013 2014 2013 Net Income (Loss) $ 47 $ (20 ) $ (197 ) $ - Provision for (benefit from) income taxes 11 (20 ) (141 ) (6 ) Other (income) loss, net (7 ) 54 281 44 Interest expense 43 87 181 241 Interest income (1 ) (1 ) (3 ) (3 ) Depreciation and amortization 109 98 331 303 Deferred revenue purchase accounting adjustments 1 - 3 2 Non-cash stock-based compensation charges(1) 6 5 52 18 Restructuring and related charges(2) 5 2 34 7 Acquisition-related charges(3) 7 2 19 6 Sponsor monitoring fees(3) - 2 74 6 Non-executive phantom SARs compensation expenses(4) - - 30 - Adjusted EBITDA $ 221 $ 209 $ 664 $ 618 (1) Non-cash stock-based compensation charges are included in Operating costs of information, Direct and incremental costs of technology services and Selling and administrative expenses as follows: Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2014 2013 2014 2013 Operating costs of information $ 1 $ - $ 6 $ 2 Direct and incremental costs of technology services 1 1 5 2 Selling and administrative expenses 4 4 41 14 (2) Restructuring and related charges includes severance and impairment charges and the cost of employee and third-party charges related to dual running costs for knowledge transfer activities. Dual running costs for knowledge transfer activities of $2 million and $4 million for the three and nine months ended September 30, 2014, respectively, and $2 million and $5 million for the three and nine months ended September 30, 2013, respectively, are primarily included in Operating costs of information. (3) Acquisition-related charges and Sponsor monitoring fees are included in Selling and administrative expenses. (4) Non-executive phantom SARs compensation expenses are included in Operating costs of information and Selling and administrative expenses as follows: Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2014 2013 2014 2013 Operating costs of information $ - $ - $ 10 $ - Selling and administrative expenses - - 20 - Revenue Total revenue grew 3.7% to $656 million for the three months ended September 30, 2014 compared to $633 million in the same quarter in the prior year, or 5.4% on a constant currency basis. Revenue from our information offerings was relatively flat in the third quarter of 2014 and grew 1.8% on a constant currency basis over the same period. Revenue from our technology services offerings grew 9.3% in the third quarter of 2014 and grew 10.8% on a constant currency basis over the same period. Constant currency growth in the Americas and EMEA (countries in Europe, the Middle East and Africa) regions contributed approximately 90% of our total revenue growth during the third quarter of 2014 compared to the same quarter of 2013. The constant currency increase in information offerings was driven by growth in almost all our geographies, with the largest contribution coming from EMEA. The constant currency increase in technology services offerings was driven by increases in commercial services throughout almost all of our geographies, with the largest contributions coming from the Americas and EMEA. Total revenue grew 5.0% to $1,963 million for the nine months ended September 30, 2014 compared to $1,870 million in the same period in the prior year, or 5.8% on a constant currency basis. Revenue from our information offerings increased 0.9% in the first nine months of 2014 and grew 1.9% on a constant currency basis over the same period. Revenue from our technology services offerings grew 11.3% in the first nine months of 2014 and grew 11.7% on a constant currency basis over the same period. Constant currency growth in the Americas and EMEA regions contributed approximately 85% of our total revenue growth during the first nine months of 2014 compared to the same period of 2013. The constant currency increase in information offerings was driven by growth in EMEA and to a lesser extent, Asia Pacific. The constant currency increase in technology services offerings was driven by increases in commercial services throughout almost all of our geographies, with the largest contributions coming from the Americas and EMEA. 25 --------------------------------------------------------------------------------Operating Costs of Information, exclusive of Depreciation and Amortization Operating costs of information offerings increased $1 million, or 1.3%, in the three months ended September 30, 2014 compared to the same quarter in the prior year. Excluding the effect of foreign currency translation of $1 million, non-cash stock-based compensation charges and restructuring and related charges, operating costs of information increased 2.4% in the third quarter of 2014 compared to the third quarter of 2013. The constant currency increase in operating costs of information was primarily due to an increase in data costs of approximately $3 million and compensation costs of approximately $2 million, in part due to an increase in headcount of approximately 200 employees from September 2013. This increase was partially offset by lower professional fees of approximately $2 million. Operating costs of information offerings increased $22 million, or 4.6%, in the nine months ended September 30, 2014 compared to the same period in the prior year. Excluding the effect of foreign currency translation of $2 million, non-executive Phantom SARs compensation expense of $10 million, non-cash stock-based compensation charges and restructuring and related charges, operating costs of information increased 2.4% in the first nine months of 2014 compared to the first nine months of 2013. The constant currency increase in operating costs of information was primarily due to an increase in data costs of approximately $8 million and compensation costs of $7 million, in part due to an increase in headcount of approximately 200 employees from September 2013. This increase was partially offset by lower professional fees of approximately $3 million. Direct and Incremental Costs of Technology Services, exclusive of Depreciation and Amortization Direct and incremental costs of technology services offerings grew $17 million, or 13.2%, in the three months ended September 30, 2014 compared to the same quarter in the prior year. Excluding the effect of foreign currency translation non-cash stock-based compensation charges, direct and incremental costs of technology services grew 13.4% in the third quarter of 2014 compared to the third quarter of 2013. The constant currency increase in direct and incremental costs of technology services was driven primarily by increased compensation costs of $12 million, partially due to an increase in headcount of approximately 500 employees from September 2013 to support the growth in our technology services offerings. Additionally, data costs and professional fees increased by approximately $4 million and $3 million, respectively, compared to the third quarter of 2013. Direct and incremental costs of technology services offerings grew $46 million, or 12.3%, in the nine months ended September 30, 2014 compared to the same period in the prior year. Excluding non-cash stock-based compensation charges, direct and incremental costs of technology services grew 11.5% in the first nine months of 2014 compared to the first nine months of 2013. The constant currency increase in direct and incremental costs of technology services was driven primarily by increased compensation costs of approximately $35 million, due to an increase in headcount of approximately 500 employees from September 2013 to support the growth in our technology services offerings and normal annual merit salary increases. Additionally, professional fees and data costs increased by approximately $4 million and $3 million, respectively, compared to the first nine months of 2013. Selling and Administrative Expenses, exclusive of Depreciation and Amortization Selling and administrative expenses decreased $4 million, or 2.5%, in the three months ended September 30, 2014 compared to the same quarter in the prior year. Excluding the effect of foreign currency translation, sponsor monitoring fees, non-cash stock-based compensation charges and acquisition-related charges, selling and administrative expenses decreased 6.1% in the third quarter of 2014 compared to third quarter of 2013. The constant currency decrease in selling and administrative expenses included decreased professional fees, exclusive of legal fees, of approximately $8 million, higher deferrals to computer software for new product development and a decrease in the fair value estimate of our contingent consideration liability of approximately $9 million, partially offset by an increase in compensation of approximately $10 million, primarily resulting from normal annual merit salary increases, higher selling and administrative headcount of approximately 250 employees from September 2013 from acquisitions and increased sales staff to drive revenue and higher legal fees of $4 million. Selling and administrative expenses grew $124 million, or 28.6%, in the nine months ended September 30, 2014 compared to the same period in the prior year. Included in Selling and administrative expenses for the nine months of 2014 was $72 million related to the termination of the management services agreement with affiliates of the Sponsors and $20 million of non-executive Phantom SARs compensation expense. Excluding the effect of foreign currency translation of $1 million, sponsor monitoring fees, non-executive Phantom SARs compensation expense, non-cash stock-based compensation charges and acquisition-related charges, selling and administrative expenses decreased 1.4% in the first nine months of 2014 compared to first nine months of 2013. The constant currency decrease in selling and administrative expenses included lower professional fees, exclusive of legal fees, of approximately $7 million, higher deferrals to computer software for new product development and a decrease in the fair value estimate of our contingent consideration liability of approximately $15 million, partially offset by an increase in compensation of approximately $22 million, primarily resulting from normal annual merit salary increases, higher selling and administrative headcount of approximately 250 employees from September 2013 from acquisitions and increased sales staff to drive revenue and an increase in legal fees of $9 million. Additionally, both occupancy and information technology costs increased by approximately $5 million each, related to the increased number of employees. 26 --------------------------------------------------------------------------------Depreciation and Amortization Depreciation and amortization charges increased $11 million, or 11.3%, in the three months ended September 30, 2014 compared to the same quarter in the prior year, primarily due to an increase in amortization of computer software. Depreciation and amortization charges increased $28 million, or 9.2%, in the nine months ended September 30, 2014. The increase was primarily due to higher depreciation expense, in part due to accelerated depreciation of assets related to a building lease that was impaired in the second quarter of 2014, and higher computer software and other intangibles amortization resulting from acquisitions in 2013 and the first half of 2014. Severance, Impairment and Other Charges Severance, impairment and other charges in the three and nine months ended September 30, 2014 were $4 million and $29 million, respectively. The third quarter of 2014 charge was primarily severance related. The nine months of 2014 charge was primarily comprised of $19 million of severance and $7 million for impaired leases for properties in the U.S. Severance, impairment and other charges in the three and nine months ended September 30, 2013 were income of $1 million and expense of $1 million, respectively, primarily comprised of impaired leases for properties vacated in the U.S. and contract-related charges for which we will not realize any future economic benefits, offset by the reversal of severance accruals due to the favorable settlement of required termination benefits and strategic business changes. See Severance, Impairment and Other Charges below for further information. Operating Income Operating income was $93 million in the three months ended September 30, 2014, a decline of $7 million, or 7.4%, compared to the same quarter in the prior year. This decrease was due to increases in operating expenses discussed above, partially offset by the revenue growth. Operating income for the third quarter of 2014 increased $1 million in constant currency terms compared to the third quarter of 2013. Absent the impact of non-cash stock-based compensation charges, acquisition-related charges, restructuring and related charges, purchase accounting adjustments, sponsor monitoring fees and non-executive Phantom SARs compensation expense, operating income increased 1.4% at reported foreign currency rates and 9.2% on a constant currency basis for the third quarter of 2014. Operating income was $121 million in the first nine months ended September 30, 2014, a decline of $155 million, or 56.1%, compared to the same period in the prior year. This decrease was due to $72 million related to the termination of the management services agreement with affiliates of the Sponsors, $30 million of non-executive Phantom SARs compensation expense and other increases in operating expenses discussed above, partially offset by the revenue growth. Operating income for the first nine months of 2014 decreased $141 million in constant currency terms compared to the first nine months of 2013. Absent the impact of non-cash stock-based compensation charges, acquisition-related charges, restructuring and related charges, purchase accounting adjustments, sponsor monitoring fees and non-executive Phantom SARs compensation expense, operating income increased 5.9% at reported foreign currency rates and 10.1% on a constant currency basis for the first nine months of 2014. Trends in Operating Margins Operating margins were 14.1% and 15.8% for the three months ended September 30, 2014 and 2013, respectively. Margins were negatively impacted by sponsor monitoring fees, non-cash stock-based compensation charges, acquisition-related charges, restructuring and related charges and purchase accounting adjustments. Excluding these charges, operating margins were 17.0% and 17.4% in the third quarter of 2014 and 2013, respectively. Operating margins were 6.2% and 14.8% for the first nine months ended September 30, 2014 and 2013, respectively. Margins were negatively impacted by sponsor monitoring fees, non-executive Phantom SARs compensation expense, non-cash stock-based compensation charges, acquisition-related charges, restructuring and related charges and purchase accounting adjustments. Excluding these charges, operating margins were 16.9% and 16.8% in the first nine months of 2014 and 2013, respectively. Non-Operating Loss, net Non-operating loss, net was $35 million in the three months ended September 30, 2014, a decrease of $105 million compared to the same quarter in the prior year. Included in the non-operating loss for the third quarter of 2014 was an $8 million gain related to the revaluation of other non-functional assets and liabilities, partially offset by a $4 million loss related to foreign exchange derivatives. Included in the non-operating loss for the third quarter of 2013 was a $34 million loss related to the translation of non-functional currency debt and a $17 million loss related to the revaluation of other non-functional assets and liabilities. Additionally, interest expense, net of interest income was $44 million lower than in the third quarter of 2013, primarily due to the redemption of our 12.5% Senior Notes and Senior PIK Notes in April 2014. 27 -------------------------------------------------------------------------------- Non-operating loss, net was $459 million in the first nine months ended September 30, 2014, an increase of $177 million compared to the same period in the prior year. Included in the non-operating loss for the first nine months of 2014 was $151 million of make-whole premium and $68 million for the write-off of debt issuance costs and discounts, both of which were related to the redemption of our 12.5% Senior Notes and Senior PIK Notes in April 2014, $13 million of debt extinguishment losses and third-party fees related to the 2014 amendment of our Senior Secured Credit Facilities and $49 million related to the remeasurement of our Venezuelan Bolívar account balances. Included in the non-operating loss for the first nine months of 2013 was $12 million of debt extinguishment losses and third-party fees related to the amendment of our Term loan B in February 2013 and a $14 million charge related to the official devaluation of Venezuela's current exchange rate. See Note 5 to our Condensed Consolidated Financial Statements for further information on the remeasurement of our Venezuelan Bolívar account balances and Note 6 for the debt transactions. Additionally, revaluation of other non-functional assets and liabilities, translation of non-functional currency debt and hedge of non-U.S. dollar anticipated royalties were a $3 million loss in the first nine months of 2014 compared to a $15 million loss in the first nine months of 2013. Partially offsetting this variance was interest expense, net of interest income, which was $60 million lower than in the first nine months of 2013, primarily due to the redemption of our 12.5% Senior Notes and Senior PIK Notes in April 2014. Taxes We operate in more than 100 countries around the world and our earnings are taxed at the applicable income tax rate in each of these countries. As required, we compute interim taxes based on an estimated annual effective tax rate. Our effective tax rate was an expense of 20.4% and a benefit of 50.5% for the three months ended September 30, 2014 and 2013, respectively. Our effective tax rate for the three months ended September 30, 2014 was primarily impacted by non-taxable income in the U.S. related to a change in the fair value of a contingent consideration liability, while our effective tax rate for the three months ended September 30, 2013 was primarily impacted by a tax reduction of $10 million as a result of the conclusion of U.S. audits. Our effective tax rate was a benefit of 41.6% and a benefit of 97.0% for the nine months ended September 30, 2014 and 2013, respectively. Our tax benefit for the nine months ended September 30, 2014 was primarily due to a significant amount of deductible expenses in the U.S. during 2014 related to the redemption of our 12.5% Senior Notes and Senior PIK Notes, the termination of the management services agreement with affiliates of the Sponsors and non-executive Phantom SARs compensation expense. Our tax benefit for the nine months ended September 30, 2013 was primarily due to a tax reduction of $10 million as a result of the conclusion of U.S. audits. We file numerous consolidated and separate income tax returns in U.S. (federal and state) and non-U.S. jurisdictions. We are no longer subject to U.S. federal income tax examination by tax authorities for years before 2012. Further, with few exceptions, we are no longer subject to tax examination in state and local jurisdictions for years prior to 2009 and in our material non-U.S. jurisdictions prior to 2008. It is reasonably possible that within the next twelve months we could realize $2 million of unrecognized tax benefits as a result of the expiration of certain statutes of limitation. Operations by Geographic Region Operating segments are defined as components of an enterprise about which financial information is available that is evaluated on a regular basis by the chief operating decision-maker, or decision-making groups, in deciding how to allocate resources to an individual segment and in assessing performance of the segment. We operate a globally consistent business model, offering pharmaceutical business information and related services to our clients in more than 100 countries. We maintain regional geographic management who are responsible for bringing our full suite of offerings to their respective markets and to facilitate local execution of its global strategies. However, we maintain global leaders for the majority of our critical business processes; and the most significant performance evaluations and resource allocations made by our chief operating decision maker are made on a global basis. As such, we have concluded that we maintain one operating and reportable segment. 28 -------------------------------------------------------------------------------- The following represents selected geographic information for the regions in which we operate. Asia Corporate (in millions) Americas(1) EMEA(2) Pacific(3) & Other Total Three Months Ended September 30 2014 Revenue(4) $ 303 $ 240 $ 113 $ - $ 656 Operating income (loss)(5) 71 57 35 (70 ) 93 2013 Revenue(4) $ 294 $ 227 $ 112 $ - $ 633 Operating income (loss)(5) 78 58 39 (75 ) 100 Nine Months Ended September 30 2014 Revenue(4) $ 887 $ 739 $ 337 $ - $ 1,963 Operating income (loss)(5) 204 183 103 (369 ) 121 2013 Revenue(4) $ 851 $ 682 $ 337 $ - $ 1,870 Operating income (loss)(5) 224 176 117 (241 ) 276 Notes to Geographic Financial Information: (1) Our Americas region includes the United States, Canada and Latin America. Revenue in the United States was $249 million and $233 million for the third quarters of 2014 and 2013, respectively, and $718 million and $682 million for the first nine months of 2014 and 2013, respectively. (2) Our EMEA region includes countries in Europe, the Middle East and Africa. (3) Our Asia Pacific region includes Japan, Australia and other countries in the Asia Pacific region. Revenue in Japan was $63 million and $66 million for the third quarters of 2014 and 2013, respectively and $193 million and $200 million for the first nine months of 2014 and 2013, respectively. (4) Revenue relates to external clients and is primarily based on the location of the client. Revenue for the geographic regions includes the impact of foreign exchange in converting results into U.S. dollars. (5) Operating income (loss) for the three geographic regions does not reflect the allocation of certain expenses that are maintained in Corporate and Other and as such, is not a true measure of the respective regions' profitability. The Operating Income amounts for the geographic segments include the impact of foreign exchange in converting results into U.S. dollars. The following presents the depreciation and amortization related to purchase accounting adjustments for each region that are presented in Corporate and Other: (in millions) Americas EMEA AsiaPacific Three Months Ended September 30 2014 $ 31 $ 21 $ 10 2013 31 22 10 Nine Months Ended September 30 2014 $ 94 $ 66 $ 30 2013 94 65 32 Americas Region Revenue in the Americas region grew 3.0% in the three months ended September 30, 2014 compared to the same quarter in the prior year. On a constant currency basis, revenue grew 5.3% in the third quarter of 2014 compared to the third quarter of 2013. Revenue in the Americas region grew 4.2% in the first nine months ended September 30, 2014 compared to the same period in the prior year. On a constant currency basis, revenue grew 5.8% in the first nine months of 2014 compared to the first nine months of 2013. Technology services offerings accounted for the majority of the growth for both the three and nine months of 2014, primarily driven by the U.S. Operating income in the Americas region decreased 8.6% in the three months ended September 30, 2014 compared to the same quarter in the prior year. On a constant currency basis, operating income decreased 2.6% in the third quarter of 2014 compared to the third quarter of 2013. The decrease in constant currency operating income in 2014 was a result of increases in operating expenses of $18 million to support the revenue growth in the region, partially offset by the revenue growth. Operating income in the Americas region decreased 9.0% in the first nine months ended September 30, 2014 compared to the same period in the prior year. On a constant currency basis, operating income decreased 5.8% in the first nine months of 2014 compared to the first nine months of 2013. The decrease in constant currency operating income in 2014 was a result of non-executive Phantom SARS compensation expense of approximately $12 million, impairment of a leased property of $7 million and increases in other operating expenses of $44 million to support the revenue growth in the region, partially offset by revenue growth. 29 --------------------------------------------------------------------------------EMEA Region Revenue in the EMEA region grew 6.1% in the three months ended September 30, 2014 compared to the same quarter in the prior year. On a constant currency basis, revenue grew 6.6% in the third quarter of 2014 compared to the third quarter of 2013. The constant currency increase in revenue in EMEA was the result of strong growth in our technology services offerings in North Europe and Africa and in our information offerings in South Europe and Middle East. Revenue in the EMEA region grew 8.5% in the first nine months ended September 30, 2014 compared to the same period in the prior year. On a constant currency basis, revenue grew 6.5% in the first nine months of 2014 compared to the first nine months of 2013. The constant currency increase in revenue in EMEA was the result of strong growth in our technology services offerings in North Europe and Africa and Central Europe and in our information offerings in South Europe and Middle East. Eastern Europe had strong growth in both offerings. Operating income in the EMEA region declined 4.2% in the three months ended September 30, 2014 compared to the same quarter in the prior year. On a constant currency basis, operating income declined 0.7% in the third quarter of 2014 compared to the third quarter of 2013. The decrease in constant currency operating income in 2014 was a result of increases in operating expenses of $16 million to support the revenue growth, partially offset by revenue growth in the region. Operating income in the EMEA region grew 3.3% in the first nine months ended September 30, 2014 compared to the same period in the prior year. On a constant currency basis, operating income grew 1.7% in the first nine months of 2014 compared to the first nine months of 2013. The increase in constant currency operating income in 2014 was a result of revenue growth in the region, partially offset by non-executive Phantom SARS compensation expense of approximately $10 million and increases in other operating expenses of $32 million to support the revenue growth. Asia Pacific Region Revenue in the Asia Pacific region grew 0.5% in the three months ended September 30, 2014 compared to the same quarter in the prior year. On a constant currency basis, revenue grew 3.0% in the third quarter of 2014 compared to the third quarter of 2013. The constant currency increase in revenue was driven by overall growth in China and to a lesser degree, other Asia Pacific areas. Revenue in the Asia Pacific region declined 0.2% in the first nine months ended September 30, 2014 compared to the same period in the prior year. On a constant currency basis, revenue grew 4.0% in the first nine months of 2014 compared to the first nine months of 2013. The constant currency increase in revenue was driven by growth in information offerings in China and both information and technology services offerings in Japan. Operating income in the Asia Pacific region declined 9.2% in the three months ended September 30, 2014 compared to the same quarter in the prior year. On a constant currency basis, operating income declined 4.4% in the third quarter of 2014 compared to the third quarter of 2013. The decrease in constant currency operating income in 2014 was a result of increases in operating expenses of $5 million due to continued investments in the region to drive growth, partially offset by the revenue increase. Operating income in the Asia Pacific region declined 11.3% in the first nine months ended September 30, 2014 compared to the same period in the prior year. On a constant currency basis, operating income declined 4.5% in the first nine months of 2014 compared to the first nine months of 2013. The decrease in constant currency operating income in 2014 was a result of increases in operating expenses of $18 million due to continued investments in the region to drive growth, partially offset by the revenue increase. How Exchange Rates Affect our Results We operate globally, deriving a significant portion of our operating income from non-U.S. operations. As a result, fluctuations in the value of foreign currencies in which we transact business relative to the U.S. dollar may increase the volatility of U.S. dollar operating results. We enter into foreign currency forward contracts to partially offset the effect of currency fluctuations and the impact of these forward contracts is reflected in Other income (loss), net on the Condensed Consolidated Statements of Comprehensive (Loss) Income. Foreign currency translation decreased our U.S. dollar revenue growth by approximately 1.7 percentage points in the third quarter of 2014 and 0.8 percentage points in the first nine months of 2014, while the impact on operating income growth decreased our operating income by 8.4 and increased our operating loss 4.7 percentage points in the third quarter and first nine months of 2014, respectively. Non-U.S. monetary assets are maintained in currencies other than the U.S. dollar, principally the Euro and the Japanese Yen, and as such, the reported values of these assets may be significantly affected by fluctuations in foreign exchange rates. At September 30, 2014, the Euro and Japanese Yen exchange rates were devalued against the U.S. Dollar compared to December 31, 2013. Where monetary assets are held in the functional currency of the local entity, changes in the value of these currencies relative to the U.S. dollar are reflected in accumulated other comprehensive income in the Condensed Consolidated Statements of Financial Position. The effect of exchange rate changes, which included the charges taken for our Venezuelan operations in both years, decreased the U.S. dollar amount of cash and cash equivalents by $62 million and $31 million during the first nine months of 2014 and 2013, respectively. 30 --------------------------------------------------------------------------------Liquidity and Capital Resources We fund our liquidity needs for capital investment, working capital, and other financial commitments through cash flow from operations and our credit facility. At September 30, 2014, cash and cash equivalents were $354 million and our total indebtedness was $3,899 million. Additionally, we had $228 million available for borrowing under our senior secured credit facility. In addition to operating cash flows, other factors that affect our overall management of liquidity include capital expenditures, software development costs, acquisitions, debt service requirements, adequacy of our revolving credit facility and access to the capital markets. On April 9, 2014, we completed our initial public offering ("IPO") of our common stock at a price to the public of $20.00 per share. We issued and sold 52 million shares of common stock in the IPO. The selling shareholders offered and sold 22.75 million shares of common stock in the IPO, including 9.75 million shares that were offered and sold by the selling shareholders pursuant to the full exercise of the underwriters' allotment to purchase additional shares. We raised net proceeds of approximately $987 million from the IPO, after deducting underwriting discounts, commissions and related expenses totaling $53 million. We did not receive any of the proceeds from the sale of shares by the selling shareholders. Substantially all of our net proceeds from the IPO, approximately $500 million of borrowings under new term loans, $140 million of borrowings under our revolving credit facility and approximately $400 million of cash on the balance sheet were used to (i) fund the redemption of our 12.5% Senior Notes and Senior PIK Notes (defined in the Debt section below) and pay related fees and expenses, (ii) pay $30 million in the aggregate to holders of outstanding cash-settled stock appreciation rights granted under our 2010 Equity Incentive Plan ("Phantom SARs") and (iii) pay a one-time fee of $72 million to terminate our management services agreement with the Sponsors. Our de-leveraging in connection with the IPO improved our credit ratings and financial position and enabled us to issue long-term debt at favorable market rates, including issuance of new Term Loan A debt in April 2014 of $500 million at an average floating rate of 2.5% and re-price and extend tenor on our existing $2,777 million of Term Loan B debt. Because we retired our highest cost debt, our interest expense is estimated to decline by 50% on an annualized basis, compared with a 20% reduction in debt. We believe we will have available resources to meet both our short-term and long-term liquidity requirements, including our debt service. We expect the cash flow from our operations, combined with existing cash and amounts available under the secured revolving credit facility, will provide sufficient liquidity to fund our current obligations, projected working capital requirements, restructuring obligations and capital spending over the next year. While our board of directors will review our dividend policy from time to time, we currently do not intend to pay dividends in the foreseeable future. In addition we may, from time to time, purchase, repay, redeem or retire any of our outstanding debt or equity securities in privately negotiated or open market transactions, by tender offer or otherwise. Over the next twelve months, we currently expect that we will use our cash and cash equivalents primarily to fund: · principal and interest payments of approximately $216 million; · development of software to be used in our new products and capital expenditures of $140 million to $150 million to expand and upgrade our information technology capabilities and to build or acquire facilities to house our business; · payments of approximately $26 million related to our employee severance plans; · pension and other postretirement benefit plan contributions of approximately $20 million; and · acquisitions and potential payments for contingent consideration. Cash Flows Cash and cash equivalents decreased $371 million to $354 million at September 30, 2014 compared to $725 million at December 31, 2013. The decrease reflects cash used in operating activities of $37 million, investing activities of $207 million and financing activities of $65 million, and a decrease of $62 million due to the effect of exchange rate changes. Net cash used in operating activities amounted to $37 million for the nine months ended September 30, 2014 compared to cash provided of $336 million for the nine months ended September 30, 2013. Cash flows from operating activities for the first nine months of 2014 reflects $72 million paid to terminate the management services agreement with affiliates of our Sponsors, $151 million in make-whole premiums related to the repayment of our 12.5% Senior Notes and Senior PIK Notes and $30 million paid to the holders of the outstanding Phantom SARs. Additionally, income tax paid, net of refunds, was $68 million higher in 2014, primarily due to a $47 million refund in 2013 related to the conclusion of a U.S. tax audit and due to increased taxable profits in 2014 in non-U.S. jurisdictions. Interest paid was $6 million lower in 2014, primarily due to the redemption of the 12.5% Senior Notes and the Senior PIK Notes in conjunction with our IPO in April 2014. 31 -------------------------------------------------------------------------------- Net cash used in investing activities amounted to $207 million for the nine months ended September 30, 2014, an increase in cash used of $33 million compared to the nine months ended September 30, 2013. The increase relates to higher capital expenditures, including the purchase of an office building in India, higher additions to computer software and a premium paid for the interest rate caps purchased in April 2014, partially offset by lower purchases of short-term investments and lower payments for acquisitions in the first nine months of 2014 compared to the first nine months of 2013. Net cash used in financing activities amounted to $65 million for the nine months ended September 30, 2014, an increase in cash used of $17 million compared to the nine months ended September 30, 2013. Cash flows from financing activities for the first nine months of 2014 included the repayment of our 12.5% Senior Notes and Senior PIK Notes and the payment of contingent consideration relating to a 2013 acquisition, partially offset by the net proceeds received from the IPO, proceeds from the issuance of Term Loan A and borrowings, net of repayments under our revolving credit facility. Cash flows from financing activities for the first nine months of 2013 included the dividend paid to shareholders, partially offset by proceeds from our August 2013 debt offering. Debt At September 30, 2014, our principal amount of debt totaled $3,923 million. Management does not believe that this level of debt poses a material risk to us due to the following factors: · in each of the last two calendar years, we have generated strong net cash provided by operating activities of approximately $400 million; · at September 30, 2014, we had $354 million in worldwide cash and cash equivalents; and · at September 30, 2014, we had a $500 million revolving credit facility, of which $228 million was unused. The following table summarizes our debt at the dates indicated: September 30, December 31, (in millions) 2014 2013Senior Secured Credit Facilities: Senior Secured Term A Loan due 2019-USD LIBOR at average floating rates of 2.48% $ 311 $ - Senior Secured Term A Loan due 2019-EUR LIBOR at average floating rates of 2.31% 166 - Senior Secured Term B Loan due 2021-USD LIBOR at average floating rates of 3.50% 1,739 1,747 Senior Secured Term B Loan due 2021-EUR LIBOR at average floating rates of 3.75% 935 1,030 Revolving Credit Facility due 2019-USD LIBOR at average floating rates of 2.40% 272 - 12.5% Senior Notes due 2018 - 1,000 7.375%/8.125% Senior PIK Toggle Notes due 2018 - 750 6.00% Senior Notes due 2020 500 500 Principal Amount of Debt 3,923 5,027 Less: Unamortized Discounts (24 ) (67 ) Total Debt $ 3,899 $ 4,960 Senior Secured Credit Facilities In March 2014, IMS Health Incorporated ("IMS Health"), our indirect wholly-owned subsidiary, and certain of its subsidiaries, as co-borrowers, entered into an amendment (the "2014 Amendment") to amend and restate the Second Amended and Restated Credit and Guaranty Agreement, which until such date governed IMS Health's Senior Secured Credit Facilities (the amended and restated credit agreement resulting from the 2014 Amendment, the "2014 Credit Agreement"). The 2014 Amendment added commitments in respect of new Term A loans (the "New Term Loans") in the aggregate dollar equivalent amount of $500 million, increased outstanding commitments under the revolving credit facility to $500 million, modified certain interest rates and covenants and made additional modifications to IMS Health's Senior Secured Credit Facilities. The commitments in respect of the New Term Loans mature in March 2019. The New Term Loans were funded in April 2014 concurrent with the IPO. In addition to the New Term Loans, we have Term B loan commitments and in March 2014, IMS Health reduced the borrowing margins and the EUR LIBOR floor by 25 basis points each, respectively, extended the maturity date to March 2021 for these existing Term B loans and increased the capacity to $500 million and extended the maturity date to March 2019 for the existing Revolving Credit Facility. As a result of the 2014 Amendment, we recorded $11 million of debt extinguishment losses and $2 million of third party fees in Other income (loss), net during the nine months ended September 30, 2014. 32 -------------------------------------------------------------------------------- In February 2013, IMS Health and certain of its subsidiaries entered into an amendment of the then existing senior secured term loans due 2017 ("Term Loan Amendment") to reduce our borrowing costs. IMS Health reduced the borrowing margins and LIBOR floors by 50 basis points and 25 basis points, respectively, for both the USD and EUR tranches of debt. As a result of the Term Loan Amendment, we recorded $9 million of debt extinguishment losses and $3 million of third party fees in Other income (loss), net during the nine months ended September 30, 2013. In October 2012, IMS Health and certain of its subsidiaries completed a recapitalization (the "Recapitalization"). The Recapitalization included an amendment (the "Amendment") to its Amended and Restated Credit and Guaranty Agreement for additional term loans and (a) extended the maturity date of the Revolving Credit Facility to August 2017; and (b) increased the maximum leverage ratio. IMS Health is required to make scheduled quarterly payments on the Term A loans at rates that vary from 1.25% to 2.50% of the original principal amount of the term loans, with the remaining balance paid at maturity. Additionally IMS Health is required to make scheduled quarterly payments on the Term B loans each equal to approximately 0.25% of the original principal amount of the term loans, with the remaining balance paid at maturity. IMS Health is also required to pay an annual commitment fee that ranges from 0.30% to 0.40% in respect of any unused commitments under the revolving credit facility. At September 30, 2014, IMS Health, IMS AG and IMS Japan K.K., as co-borrowers, had an aggregate $500 million revolving credit facility, of which $228 million was unused. The Senior Secured Credit Facilities are secured by a security interest in substantially all of Healthcare Technology Intermediate Holdings, Inc.'s, IMS Health's and the U.S. subsidiary guarantors' tangible and intangible assets, including the stock of IMS Health and certain of IMS Health's U.S. restricted subsidiaries and a portion of the stock of IMS Health's non-U.S. restricted subsidiaries directly owned by Healthcare Technology Intermediate Holdings, Inc., IMS Health or a U.S. subsidiary guarantor. In addition, the obligations of IMS AG are guaranteed by certain of its Swiss restricted subsidiaries and are secured by certain assets of IMS AG and the Swiss guarantors, including the stock of the Swiss guarantors, and the obligations of IMS Japan K.K. are secured by certain of its assets. There have been no borrowings by IMS AG or IMS Japan K.K. to date. Senior Notes In February 2010, IMS Health issued an aggregate principal amount of $1 billion of senior unsecured notes due 2018 ("Old 12.5% Senior Notes"). In order to effect the Recapitalization, we conducted an exchange offer and consent solicitation to exchange the Old 12.5% Senior Notes for new 12.5% Senior Notes due 2018 ("New 12.5% Senior Notes" and, together with Old 12.5% Senior Notes, "12.5% Senior Notes"), and to solicit consents to proposed amendments to the indenture governing the Old 12.5% Senior Notes to permit the Recapitalization. The requisite consents were obtained and 99.96% of the holders of the Old 12.5% Senior Notes agreed to participate in the exchange and received New 12.5% Senior Notes in an equal principal amount. In connection with the IPO, the 12.5% Senior Notes were redeemed in April 2014 at a price equal to 100% of the principal amount of $1 billion, plus accrued interest of $17 million and a make-whole premium of $136 million. We incurred a loss on extinguishment of debt of $189 million in the second quarter of 2014, consisting of the make-whole premium and the write-off of $53 million of debt issuance costs and discounts. The Recapitalization also included a new offering of $500 million aggregate principal amount of 6% Senior Notes due 2020 (the "6% Senior Notes"). Interest is payable semi-annually each year. The 6% Senior Notes are guaranteed on a senior unsecured basis by IMS Health's wholly-owned domestic subsidiaries that are guarantors under the Senior Secured Credit Facilities. The 6% Senior Notes have a three-year no call redemption period. Senior PIK Notes In August 2013, Healthcare Technology Intermediate, Inc., our wholly-owned subsidiary, issued $750 million of Senior PIK Notes. The Senior PIK Notes were unsecured obligations of Healthcare Technology Intermediate, Inc. and had a maturity date of September 1, 2018. Interest was to be paid semi-annually in March and September of each year, commencing March 1, 2014. The proceeds, along with cash provided by us, were used to pay an approximate $753 million dividend to our shareholders and for the payment of fees and expenses of the transaction of approximately $17 million. In connection with the IPO, the Senior PIK Notes were redeemed in April 2014 at a price equal to 100% of the principal amount of $750 million, plus accrued interest of $6 million and a make-whole premium of $15 million. We incurred a loss on extinguishment of debt of $30 million in the second quarter of 2014, consisting of the make-whole premium and the write-off of $15 million of debt issuance costs. 33 -------------------------------------------------------------------------------- Costs incurred to issue debt are generally deferred and amortized as a component of interest expense over the estimated term of the related debt using the effective interest rate method. As of September 30, 2014, the unamortized balance of original issue discount reflected as a reduction to long term debt and fees and expenses related to the issuance of the debt included in Other assets was $24 million and $59 million, respectively. We recorded interest expense of $3 million and $9 million for the three months ended September 30, 2014 and 2013, respectively, and $15 million and $27 million for the nine months ended September 30, 2014 and 2013, respectively, related to the amortization of these balances. The financing arrangements provide for certain covenants and events of default customary for similar instruments, including in the case of the Senior Secured Credit Facilities beginning with the fiscal quarter ending June 30, 2014, a covenant not to exceed a specified ratio of consolidated senior secured net indebtedness to Consolidated EBITDA, as defined in the 2014 Credit Agreement and a covenant to maintain a specified minimum interest coverage ratio. If an event of default occurs under any of our or our subsidiaries' financing arrangements, the creditors under such financing arrangements will be entitled to take various actions, including the acceleration of amounts due under such arrangements, and in the case of the lenders under the revolving credit facility and New Term Loans, other actions permitted to be taken by a secured creditor. At September 30, 2014, we were in compliance with the financial covenants under our financing arrangements. Severance, Impairment and Other Charges As a result of ongoing cost reduction efforts, we recorded severance charges consisting of global workforce reductions to streamline our organization. The following table sets forth the activity in our severance-related reserves for the nine months ended September 30, 2014: (in millions) 2014 Plan(1) 2013 Plan(2) 2012 Plan(3) Balance at December 31, 2013 $ - $ 12 $ 6 Charges 19 - - Cash payments (7 ) (4 ) (3 ) Balance at September 30, 2014 $ 12 $ 8 $ 3 (1) In May 2014, we implemented a restructuring plan (the "2014 Plan") and recorded a pre-tax severance charge of $15 million. In September 2014, we recorded an additional pre-tax severance charge of $4 million under the 2014 Plan. We anticipate that there may be further charges recorded under the 2014 plan during the balance of fiscal 2014. We expect that cash outlays related to the 2014 Plan will be substantially complete by the end of 2015. (2) In December 2013, we implemented a restructuring plan (the "2013 Plan") and recorded a pre-tax severance charge of $12 million. We expect that cash outlays related to the 2013 Plan will be substantially complete by the end of 2015. (3) In December 2012, we implemented a restructuring plan (the "2012 Plan") and recorded a pre-tax severance charge of $23 million. In the third quarter of 2013, $6 million of severance accruals were reversed due to the favorable settlement of required termination benefits and strategic business changes. We expect that cash outlays related to the 2012 Plan will be substantially complete by the end of 2014. Other charges During the nine months ended September 30, 2014, we recorded impairment charges of $10 million, $7 million of which related to impaired leases for properties in the U.S. and $3 million for the write-down of certain assets and contract-related charges for which we will not realize any future economic benefits. During the three and nine months ended September 30, 2013, we recorded impairment charges of $6 million and $7 million, respectively, related to impaired leases for properties vacated in the U.S. and contract-related charges for which we will not realize any future economic benefits. Contingencies We are exposed to certain known contingencies that are material to our investors. The facts and circumstances surrounding these contingencies and a discussion of their effect on us are included in Note 11 to our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q. These contingencies may have a material effect on our liquidity, capital resources or results of operations. In addition, even where our reserves are adequate, the incurrence of any of these liabilities may have a material effect on our liquidity and the amount of cash available to us for other purposes. Management believes that we have made appropriate arrangements in respect of the future effect on us of these known contingencies. Management also believes that the amount of cash available to us from our operations, together with cash from financing, will be sufficient for us to pay any known contingencies as they become due without materially affecting our ability to conduct our operations and invest in the growth of our business. 34 --------------------------------------------------------------------------------Contractual Obligations Following the redemption of our 12.5% Senior Notes and Senior PIK Notes in April 2014 and the March 2014 amendment to our Senior Secured Credit facilities, our future scheduled debt principal payments and estimated interest payments, including payments on our interest rate swaps, based on rates as of September 30, 2014 are $49 million for the remainder of 2014, $193 million for 2015, $191 million for 2016, $195 million for 2017, $205 million for 2018 and $3,749 million thereafter. Recently Issued Accounting Standards Information relating to recently issued accounting standards is included in Note 1 to our Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q. Cautionary Note Regarding Forward-Looking Statements This Quarterly Report on Form 10-Q, as well as information included in oral statements or other written statements made or to be made by us, contain statements that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, and other future conditions. Forward-looking statements can be identified by words such as "anticipate," "believe," "envision," "estimate," "expect," "intend," "may," "plan," "predict," "project," "target," "potential," "will," "would," "could," "should," "continue," "contemplate" and other similar expressions, although not all forward-looking statements contain these identifying words. Examples of forward-looking statements include, among others, statements we make regarding: · plans for future growth and other business development activities, including acquisitions; · plans for capital expenditures; · expectations for market and industry growth; · financing sources; · dividends; · the effects of regulation and competition; · foreign currency conversion; and · all other statements regarding our intent, plans, beliefs or expectations or those of our directors or officers. 35 -------------------------------------------------------------------------------- We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place significant reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. Important factors that could cause actual results and events to differ materially from those indicated in the forward-looking statements include, among others, the following: · our data suppliers might restrict our use of or refuse to license data, which could lead to our inability to provide certain products or services; · failure to meet productivity objectives under our internal business transformation initiatives could adversely impact our competitiveness and our ability to meet our growth objectives; · we may be unsuccessful at investing in growth opportunities; · we may not close announced acquisitions in the indicated timeframes or at all, and may not successfully integrate our acquisition targets or for other reasons may not achieve expected benefits of our acquisition transactions; · data protection and privacy laws may restrict our current and future activities; · breaches or misuse of our or our outsourcing partners' security or communication systems could expose us, our clients, our data suppliers or others to risk of loss; · hardware and software failures, delays in the operation of our computer and communications systems or the failure to implement system enhancements may adversely impact us; · consolidation in the industries in which our clients operate may reduce the volume of products and services purchased by consolidated clients following an acquisition or merger; · our ability to protect our intellectual property rights and our susceptibility to claims by others that we are infringing on their intellectual property rights; and · the other risks identified in our registration statement on Form S-1 and any subsequent filings we make with the Securities and Exchange Commission. The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Report. We undertake no obligation to publicly update any forward-looking statements whether as a result of new information, future developments or otherwise. |