IHS Inc. (IHS)
Seismic Micro-Technology Acquisition Closing and Integration Conference Call
August 11, 2011 8:00 AM ET
Andy Schulz – IR
Jerre Stead – Chairman and CEO
Mike Sullivan – EVP and CFO
Scott Key – President and COO
Manav Patnaik – Barclays Capital
Suzy Stein – Morgan Stanley
George Tong – Piper Jaffray
Kelly Flynn – Credit Suisse
Dan Leben – Robert W. Baird
Dave Lewis – JPMorgan
Bill Warmington – Raymond James
Brian Karimzad – Goldman Sachs
Eric Boyer – Wells Fargo
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Thanks, Veronica. Good morning, and thank you for joining us for this special conference call. We issued two news releases this morning. If you do not have a copy of these releases, they are available on our website at ihs.com. As stated in the first release, IHS has completed the acquisition of Seismic Micro-Technology, or SMT, a market leader for geosciences software, for $500 million. The transaction is all cash and was funded by accessing a revolving credit facility. In addition, we issued a release announcing the departure for personal reasons of IHS’ EVP and CFO, Mike Sullivan.
The primary purpose of this call is to discuss the closing of the acquisition announced this morning. As many of you know, we are in the midst of our 2011 third quarter and it is not our intent to preview earnings. However, we will provide an update to the guidance we gave on our earnings call to account for the expected impact of the SMT acquisition as of the date of the close.
Some of our comments today are based on non-GAAP measures. Our non-GAAP or adjusted numbers exclude stock-based compensation and other non-cash charges, net pension expense, and other items. The non-GAAP results are a supplement to the GAAP financial statements. IHS believes this non-GAAP presentation and the elimination of these items is useful in order to focus on what we deem to be a more reliable indicator of ongoing operating performance.
We provide a reconciliation of non-GAAP measures on our website at ihs.com. As a reminder, this conference call is being recorded and webcast and is the copyrighted property of IHS. Any rebroadcast of this information in whole or in part without the prior written consent of IHS is prohibited.
Please keep in mind that this conference call may contain statements about expected future events that are forward-looking and subject to risks and uncertainties. Factors that could cause actual results to differ and vary materially from expectations can be found in IHS’s filings with the SEC and on the IHS website.
After formal comments, we will open the call for Q&A. Jerre Stead, IHS’ Chairman and CEO; Scott Key, President and Chief Operating Officer; and Mike Sullivan, EVP and CFO; and Rich Walker, incoming EVP and CFO; are on the call and will also be able to answer questions.
With that, it is my pleasure to turn the call over to Jerre Stead. Jerre?
Thank you, Andy. Good morning and welcome to all of our investors and IHS colleagues on this call or webcast. I’d like to extend a special welcome to our new colleagues at SMT. I also want to express my sincere thanks to all of our colleagues who worked so hard on closing this transaction. It’s the largest in our company’s history. Our integration team has already begun its work, and we look forward to a fast and very successful effort.
I’ll provide additional color regarding the strategic rationale for this transaction as well as integration plans for this asset. In addition, I’ll spend a few moments reviewing the work we’ve been doing to ensure that we are executing all acquisition integrations with excellence. Then I will turn the call over to Mike to cover the financial characteristics of SMT and the expected impact on our financial results. We’ll wrap up by providing an update to our guidance. However, before I get into the discussion of SMT, I’d first like to thank and recognize Mike for 12 great years of teamwork and partnership.
Recently, Mike informed me of his desire to begin considering the next chapter of his life and to start by taking a few very well deserved months off. He has been CFO at IHS for 12 years, a long time for any executive, and has seen the company through a significant turnaround, a successful IPO, and now an ever stronger growth phase. He has been a strong and steady financial steward for our company and has delivered much value. He will leave with our respect and appreciation. And the entire IHS family wishes him only the very best in his next phase. Mike will be supporting us until the end of this fiscal year.
We are fortunate to have an executive leadership team with tremendous depth of talent and experience. And I’m pleased we are able to replace Mike by promoting Rich Walker from our team. Rich has filled a critical leadership position for IHS, is our Chief Strategy Officer and Head of our Corporate Development team. His experience and knowledge of our business will help drive the continued growth and success of the company.