IUSA Infogroup Inc. Common Sto (MM)

Infogroup (NASDAQ: IUSA), the leading provider of data driven and interactive resources for targeted sales, marketing and research solutions today reported preliminary unaudited financial results for the first quarter of 2010 ended on March 31, 2010.

FIRST QUARTER 2010 RESULTS

GAAP Results

During the first quarter of 2010, Infogroup recorded net sales of $124.2 million, compared to $127.5 million for the same period in 2009, representing a decline of $3.3 million or 3%. On a currency neutral basis, net sales declined by 4% year over year. Net sales for the Data Group for the first quarter of 2010 were $64.0 million, a 5% decrease from $67.3 million for the same period in 2009. Net sales for the Services Group for the first quarter of 2010 were $35.8 million, flat from $35.8 million for the same period in 2009. Net sales for the Marketing Research Group for the first quarter of 2010 were $24.4 million, a decrease of $0.1 million from $24.5 million for the same period in 2009.

Infogroup’s operating income for the first quarter of 2010 was $12.3 million, which included $5.2 million of restructuring, non-recurring and non-cash charges, compared to operating income of $2.7 million in the first quarter of 2009, which included $8.8 million of comparable charges. Operating income for the Data Group for the first quarter of 2010 was $17.5 million, or 27% of net sales, compared to $12.9 million, or 19% of net sales for the same period in 2009. Operating income for the Services Group for the first quarter of 2010 was $4.5 million, or 13% of net sales, compared to $5.0 million, or 14% of net sales for the same period in 2009. Operating loss for the Marketing Research Group was $0.04 million, or 0.2% of revenue, compared to $0.2 million, or 0.8% of net sales for the same period in 2009. Operating loss for Corporate Activities for the first quarter of 2010 was $9.7 million, compared to $15.1 million for the same period in 2009.

Infogroup’s net income from continuing operations for the first quarter of 2010 was $7.3 million, or earnings per share from continuing operations of $0.13, compared to a net loss from continuing operations of $0.7 million, or a loss per share from continuing operations of $0.01 in the first quarter of 2009.

Non-GAAP Results

Infogroup’s adjusted earnings per share from continuing operations for the first quarter of 2010, excluding the restructuring, non-recurring and non-cash charges, was $0.17, compared to $0.09 for the first quarter of 2009, an increase of $0.08.

In the first quarter of 2010, EBITDA was $21.8 million compared to $9.8 million in the first quarter of 2009. Adjusted EBITDA, which excludes certain restructuring, non-recurring and non-cash charges, was $24.8 million in the first quarter of 2010, compared to $19.1 million in the first quarter of 2009. Adjusted EBITDA for the Data Group in the first quarter of 2010 was $22.8 million, compared to $19.1 million for the same period in 2009. Adjusted EBITDA for the Services Group in the first quarter of 2010 was $7.6 million, compared to $8.1 million for the same period in 2009. Adjusted EBITDA for the Marketing Research Group in the first quarter of 2010 was $2.3 million, compared to $1.7 million for the same period in 2009. Adjusted EBITDA for Corporate Activities in the first quarter of 2010 was a loss of $7.9 million, compared to a loss of $9.9 million for the same period in 2009.

In total, the Company recorded $4.0 million in costs during the first quarter of 2010 for restructuring, non-recurring and non-cash charges. This included restructuring costs for severance associated with headcount reductions and facility closures of $3.0 million, merger related expenses of $2.0 million, accelerated tradename amortization expense of $0.9 million, SEC investigation expenses of $0.2 million and litigation settlement charges of $0.1 million. These charges were offset by non-recurring benefits of $2.3 million. This included $1.3 million of realized gains primarily related to the sale of marketable securities and $1.0 million net benefit from non-cash stock compensation expense resulting from a $1.3 million reversal of prior expense for stock awards forfeited during the quarter. Of these charges, $4.3 million was recorded in selling, general and administrative expenses, $0.9 million was recorded in amortization of intangible assets expenses, and income of $1.3 million was recorded in investment income. During the first quarter of 2009, the Company recorded $9.3 million of comparable charges.

Net Debt as of March 31, 2010 was $163.3 million, compared to $174.1 million as of December 31, 2009, representing a decline of $10.8 million.

During the first quarter of 2010 the Company implemented and realized cost savings of approximately $4.0 million. These cost savings in addition to those implemented in 2009 contributed to lower overall adjusted selling, general and administrative expenses by approximately $8.3 million. The first quarter of 2010 cost savings initiatives will have a realized impact of approximately $15.0 million for the full year of 2010, with an annualized impact of approximately $16.0 million.

NON-GAAP INFORMATION

In addition to presenting results determined in accordance with generally accepted accounting principles, or GAAP, this release also presents non-GAAP financial measures. Investors are referred to the tables included in this press release for a reconciliation of these non-GAAP measures to GAAP financial measures.

Management considers GAAP and non-GAAP financial measures in evaluating the operating performance of the Company. EBITDA is commonly used as an analytical indicator within Infogroup’s industry. Adjusted EBITDA, adjusted earnings per share, non-GAAP selling, general and administrative expenses and non-GAAP operating income exclude items that management believes result from events that are not recurring and are not part of on-going operations. Additionally management discloses non-GAAP net debt, which deducts cash and marketable securities from GAAP debt. Management believes these non-GAAP financial measures also provide useful supplemental information to investors in evaluating the aggregate performance of the Company’s operating businesses.

All companies do not calculate non-GAAP measures in the same manner and the non-GAAP financial measures presented in this press release may not be comparable to similar measures used by other companies. Non-GAAP measures should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The non-GAAP financial measures should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP.

CONFERENCE CALL

Given the pending transaction with CCMP Capital Advisors, LLC announced on March 8, 2010, the Company will not hold a conference call to discuss its quarterly results.

About Infogroup

Infogroup (NASDAQ: IUSA) is the leading provider of data and interactive resources that enables targeted sales, effective marketing and insightful research solutions. Our information powers innovative tools and insight for businesses to efficiently reach current and future customers through multiple channels, including the world’s most dominant and powerful Internet search engines and GPS navigation systems. Infogroup’s headquarters are located at 5711 South 86th Circle, Omaha, NE 68127. For more information, call (402) 593-4500 or visit www.infogroup.com.

Forward-Looking Statements

Statements in this announcement other than historical data and information constitute forward looking statements that involve risks and uncertainties that could cause actual results to differ materially from those stated or implied by such forward-looking statements. Forward looking statements can be identified by terminology such as “may,” “will,” “should,” “could,” “would,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continues” or the negative of these terms or other comparable terminology. The potential risks and uncertainties include, but are not limited to, recent changes in senior management, risks associated with litigation, the successful completion of the Company’s proposed merger, integration of future acquisitions, fluctuations in operating results, failure to successfully carry out our Internet strategy or to grow our Internet revenue, effects of leverage, changes in technology and increased competition. More information about potential factors that could affect the company's business and financial results is included in the Company's filings with the Securities and Exchange Commission.

    Infogroup INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts)         THREE MONTHS ENDED March 31, 2010       2009 (UNAUDITED) Net sales $ 124,218 $ 127,537 Costs and expenses: Cost of goods and services 46,394 46,989 Selling, general and administrative 57,433 70,136 Depreciation and amortization of operating assets 4,884 4,759 Amortization of intangible assets   3,169     2,934   Total operating costs and expenses   111,880     124,818   Operating income 12,338 2,719 Investment income (expense) 1,278 (2 ) Other income (expense) 127 (625 ) Interest expense   (1,763 )   (3,246 ) Other expense, net   (358 )   (3,873 ) Income (loss) before income taxes 11,980 (1,154 ) Income tax expense (benefit)   4,668     (427 ) Net income (loss) from continuing operations 7,312 (727 ) Loss from discontinued operations, net of tax   (13 )   (8,612 ) Net income (loss) $ 7,299   $ (9,339 )     BASIC EARNINGS (LOSS) PER SHARE: Income (loss) from continuing operations $ 0.13 $ (0.01 ) Loss from discontinued operations $ -   $ (0.15 ) Net income (loss) $ 0.13   $ (0.16 ) Basic weighted average shares outstanding   57,861     57,113     DILUTED EARNINGS (LOSS) PER SHARE: Income (loss) from continuing operations $ 0.13 $ (0.01 ) Loss from discontinued operations $ -   $ (0.15 ) Net income (loss) $ 0.13   $ (0.16 ) Diluted weighted average shares outstanding   58,247     57,113                   Infogroup INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)   March 31, December 31, 2010 2009 (UNAUDITED) ASSETS Current assets: Cash and cash equivalents $ 16,506 $ 5,784 Marketable securities 74 1,773 Trade accounts receivable, net 43,086 61,947 List brokerage trade accounts receivable, net 67,943 81,033 Unbilled services 9,163 8,487 Deferred income taxes 480 1,184 Prepaid expenses 10,911 8,702 Deferred marketing costs 1,052 742 Escrow, current 10,037 - Assets held for sale   1,132     1,457   Total current assets   160,384     171,109   Property and equipment, net 48,747 50,285 Goodwill 346,451 346,265 Intangible assets, net 60,360 61,828 Other assets 3,694 3,736 Escrow, noncurrent   -     10,029   $ 619,636   $ 643,252   LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 70,066 $ 2,692 Accounts payable 10,967 18,500 List brokerage trade accounts payable 54,021 65,936 Accrued payroll expenses 25,398 31,767 Accrued expenses 12,526 11,370 Income taxes payable 1,145 3,751 Deferred revenue   60,197     62,582   Total current liabilities   234,320     196,598   Long-term debt, net of current portion 109,850 179,010 Deferred income taxes 7,086 5,774 Other liabilities 11,119 11,034 Stockholders’ equity: Common stock 145 144 Paid-in capital 154,557 151,529 Retained earnings 114,829 107,530 Note receivable - shareholder (9,790 ) (6,800 ) Accumulated other comprehensive loss   (2,480 )   (1,567 ) Total stockholders’ equity   257,261     250,836   $ 619,636   $ 643,252         Infogroup INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)   THREE MONTHS ENDED

March 31,

2010

     

2009

(UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 7,299 $ (9,339 ) Net loss from discontinued operations   (13 )   (8,612 ) Net income (loss) from continuing operations 7,312 (727 ) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of operating assets 4,884 4,759 Amortization of intangible assets 3,169 2,934 Amortization of deferred financing fees 388 312 Deferred income taxes 2,585 (2,873 ) Non-cash stock compensation expense (benefit) (1,046 ) 428 Non-cash 401(k) contribution in common stock and other non-cash expense 754 821 (Gain) loss on sale of assets and marketable securities (1,298 ) 29 Asset impairment charges - 2,060

Changes in assets and liabilities:

Trade accounts receivable and unbilled services 17,860 13,302 List brokerage trade accounts receivable 13,090 10,137 Prepaid expenses and other assets (2,227 ) (3,999 ) Deferred marketing costs (310 ) (82 ) Accounts payable (8,048 ) (13,509 ) List brokerage trade accounts payable (11,915 ) (9,937 ) Income taxes receivable and payable, net (4,612 ) 51,580 Accrued expenses and other liabilities (4,995 ) (2,442 ) Deferred revenue   (1,994 )   (1,536 ) Net cash provided by operating activities – continuing operations 13,597 51,257 Net cash used in operating activities – discontinued operations   (21 )   (34,531 ) Net cash provided by operating activities   13,576     16,726   CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of marketable securities 1,674 9 Proceeds from sale of property and equipment 322 776 Purchases of property and equipment (1,398 ) (1,659 ) Software and database development costs and purchases of other intangibles   (3,494 )   (1,900 ) Net cash used in investing activities – continuing operations (2,896 ) (2,774 ) Net cash provided by investing activities – discontinued operations   -     128,428   Net cash provided by (used in) investing activities   (2,896 )   125,654   CASH FLOWS FROM FINANCING ACTIVITIES: Repayments of long-term debt (6,786 ) (105,429 ) Proceeds from long-term debt 5,000 4,000 Deferred financing costs paid - (1,085 ) Tax benefit related to issuance of common stock 127 - Proceeds from shareholder pursuant to stipulation of settlement   2,200     2,200   Net cash provided by (used in) financing activities – continuing operations 541 (100,314 ) Effect of exchange rate fluctuations on cash and cash equivalents   (499 )   (449 ) Net increase in cash and cash equivalents 10,722 41,617 Cash and cash equivalents, beginning   5,784     4,691   Cash and cash equivalents, ending $ 16,506   $ 46,308      

The following provides a reconciliation of GAAP net income (loss) to non-GAAP EBITDA, non-GAAPadjusted EBITDA, as well as total adjustments included in income (loss) before income taxes:

    THREE MONTHS ENDED (in thousands) March 31, 2010   2009 (UNAUDITED)   GAAP net income (loss) $ 7,299 $ (9,339 ) Loss from discontinued operations, net of tax 13 8,612 Interest expense 1,763 3,246 Income tax expense (benefit) 4,668 (427 ) Depreciation and amortization of operating assets 4,884 4,759 Amortization of intangible assets   3,169     2,934   Non-GAAP EBITDA $ 21,796   $ 9,785   EBITDA adjustments: SEC investigation and merger related expenses $ 2,206 $ 3,832 Restructuring costs 3,017 2,638 Net impairments and write-down of assets / (gains) on sale of assets (1,257 ) 2,183 Litigation settlement charges 102 258 Non-cash stock compensation expense (benefit)   (1,046 )   427   Total EBITDA adjustments   3,022     9,338   Non-GAAP adjusted EBITDA $ 24,818   $ 19,123     Total adjustments: EBITDA adjustments $ 3,022 $ 9,338 Accelerated tradename amortization expense   943     -   Total adjustments included in income (loss) before income taxes $ 3,965   $ 9,338    

The following provides a reconciliation of GAAP basic earnings (loss) per share to non-GAAPadjusted basic earnings (loss) per share:

  THREE MONTHS ENDED (in thousands, except per share amounts) March 31, 2010 2009 (UNAUDITED)   GAAP basic earnings (loss) per share from continuing operations $ 0.13 $ (0.01 ) Effect of adjustments (see below) $ 0.04   $ 0.10   Non-GAAP adjusted basic earnings per share from continuing operations $ 0.17   $ 0.09     GAAP basic earnings (loss) per share $ 0.13 $ (0.16 ) Effect of adjustments (see below) $ 0.04   $ 0.10   Non-GAAP adjusted basic earnings (loss) per share $ 0.17   $ (0.06 )   Adjustments (detail in above table) $ 3,965 $ 9,338 Income tax effect of adjustments   1,547     3,595   Impact of adjustments on net income $ 2,418   $ 5,743   Basic weighted average shares outstanding   57,861     57,113  

Effect of adjustments on basic earnings (loss) per share from continuingoperations and basic earnings per share

$ 0.04   $ 0.10      

The following provides a reconciliation of GAAP income (loss) before income taxes by segment to non-GAAP EBITDA and non-GAAP adjusted EBITDA by segment:

(in thousands)   For the Three Months Ended March 31, 2010     Marketing     Condensed Services Research Corporate Consolidated Data Group   Group   Group   Activities   Total

 

(UNAUDITED)

  GAAP income (loss) before income taxes $ 17,538 $ 4,513 $ (39 ) $ (10,032 ) $ 11,980 Interest expense - - - 1,763 1,763 Depreciation and amortization of operating assets 2,676 1,244 472 492 4,884 Amortization of intangible assets   757     634     1,778     -     3,169   Non-GAAP EBITDA $ 20,971   $ 6,391   $ 2,211   $ (7,777 ) $ 21,796   EBITDA adjustments: SEC investigation and merger related expenses $ - $ - $ - $ 2,206 $ 2,206 Restructuring costs 1,803 1,038 93 83 3,017 Net impairments and write-down of assets / (gains) on sale of assets 19 - - (1,276 ) (1,257 ) Litigation settlement charges - 102 - - 102 Non-cash stock compensation expense (benefit)   16     44     18     (1,124 )   (1,046 ) Total EBITDA adjustments   1,838     1,184     111     (111 )   3,022   Non-GAAP adjusted EBITDA $ 22,809   $ 7,575   $ 2,322   $ (7,888 ) $ 24,818   Adjusted EBITDA percentage of net sales 36 % 21 % 10 % - 20 %     (in thousands) For the Three Months Ended March 31, 2009 Marketing Condensed Services Research Corporate Consolidated Data Group   Group   Group   Activities   Total

 

(UNAUDITED)

  GAAP income (loss) before income taxes $ 12,917 $ 5,042 $ (164 ) $ (18,949 ) $ (1,154 ) Interest expense - - - 3,246 3,246 Depreciation and amortization of operating assets 2,406 1,089 501 763 4,759 Amortization of intangible assets   1,243     860     831     -     2,934   Non-GAAP EBITDA $ 16,566   $ 6,991   $ 1,168   $ (14,940 ) $ 9,785   EBITDA adjustments: SEC investigation and merger related expenses $ - $ - $ - $ 3,832 $ 3,832 Restructuring costs 1,214 861 560 3 2,638 Net impairments and write-down of assets / (gains) on sale of assets 1,343 - 15 825 2,183 Litigation settlement charges 8 250 - - 258 Non-cash stock compensation expense (benefit)   -     -     -     427     427   Total EBITDA adjustments   2,565     1,111     575     5,087     9,338   Non-GAAP adjusted EBITDA $ 19,131   $ 8,102   $ 1,743   $ (9,853 ) $ 19,123   Adjusted EBITDA percentage of net sales 28 % 23 % 7 % - 15 %    

The following provides a reconciliation of GAAP selling, general and administrative expenses to non-GAAP adjusted selling, general and administrative expenses, excluding restructuring, non-recurring and non-cash charges:

  THREE MONTHS ENDED (in thousands) March 31, 2010   2009 (UNAUDITED)   GAAP selling, general and administrative expenses $ 57,433 $ 70,136 Less restructuring, non-recurring and non-cash charges   4,300   8,750

Non-GAAP adjusted selling, general and administrative expenses, excludingrestructuring, non-recurring and non-cash charges

$ 53,133 $ 61,386  

The following provides a reconciliation of GAAP operating income to non-GAAPoperating income, excluding restructuring, non-recurring and non-cash charges:

  THREE MONTHS ENDED (in thousands) March 31, 2010 2009 (UNAUDITED)   GAAP operating income $ 12,338 $ 2,719 Plus restructuring, non-recurring and non-cash charges 4,300 8,750 Plus acceleration of tradename amortization expense   943   -

Non-GAAP operating income, excluding restructuring, non-recurringand non-cash charges

$ 17,581 $ 11,469  

The following provides a reconciliation of GAAP debt to non-GAAP net debt:

  (in thousands) March 31, December 31, 2010   2009 (UNAUDITED)   GAAP long-term debt, net of current portion $ 109,850 $ 179,010 GAAP current portion of long-term debt   70,066   2,692 Total GAAP debt 179,916 181,702 Less GAAP cash and GAAP marketable securities: GAAP cash 16,506 5,784 GAAP marketable securities   74   1,773 Total GAAP cash and marketable securities   16,580   7,557 Non-GAAP net debt $ 163,336 $ 174,145