IMS Health Inc. Reports Operating Results (10-Q)
IMS Health is the global provider of information solutions to the pharmaceutical and healthcare industries. IMS Health consists of: the IMS segment which consists of the market information and decision-support services business for the pharmaceutical and healthcare industries conducted by IMS Health and IMS Health Strategic Technologies Emerging Markets and a majority ownership interest in Cognizant Technology Solutions Corporation. IMS Health Inc. has a market cap of $2.28 billion; its shares were traded at around $12.56 with a P/E ratio of 7.3 and P/S ratio of 0.9. The dividend yield of IMS Health Inc. stocks is 1%. IMS Health Inc. had an annual average earning growth of 11.3% over the past 10 years. GuruFocus rated IMS Health Inc. the business predictability rank of 3-star. Highlight of Business Operations: Our operating revenue declined 8.2% to $526,944 in the first quarter of 2009 as compared to $574,180 in the first quarter of 2008. The operating revenue decrease was a result of a decline in all three of our business lines. Our operating income declined 13.3% to $100,865 in the first quarter of 2009 as compared to $116,382 in the first quarter of 2008. The operating income decline was a result of decreased operating revenues, partially offset by decreases in operating
costs and selling and administrative expenses, as discussed below. Our net income attributable to IMS was $133,332 for the first quarter of 2009, an increase of $74,157 as compared to $59,175 for the first quarter of 2008, due to the Non-Operating Loss, net items discussed below and certain tax items as discussed in Note 11 of the Condensed Consolidated Financial Statements (Unaudited). Our diluted earnings per share of Common Stock increased to $0.73 for the first quarter of 2009 as compared to $0.32 for the first quarter of 2008.
· Other Income (Expense), net: Other income (expense), net, grew by $23,517 in the first quarter of 2009 as compared to the first quarter of 2008. This was a result of net foreign exchange gains of $4,884 in the first quarter of 2009 as compared to net foreign exchange losses of $18,598 in the first quarter of 2008.
For the three months ended March 31, 2009, our effective tax rate was reduced primarily as a result of the reorganization of certain subsidiaries which resulted in a foreign exchange loss recognized for tax purposes (tax benefit of approximately $63,200), the repayment of a certain intercompany loan which resulted in a foreign exchange loss recognized for tax purposes (tax benefit of approximately $6,100) and the expiration of certain statutes of limitation (tax benefits of approximately $4,000). For the three months ended March 31, 2008, our effective tax rate was reduced primarily as a result of the filing of an advance pricing agreement (APA) between two taxing jurisdictions (tax benefit of approximately $4,900). The APA ensures conformity between the jurisdictions taxing authorities regarding the treatment of certain intercompany transactions, thereby allowing us to record a corresponding tax benefit.
For the three months ended March 31, 2009, we recorded approximately $3,800 of tax expense related to unrecognized tax benefits that if recognized, would favorably affect the effective tax rate. Included in this amount is approximately $1,700 of interest and penalties. For the three months ended March 31, 2008, we recorded approximately $4,800 of tax expense related to unrecognized tax benefits including approximately $2,700 of interest and penalties.
Our cash and cash equivalents decreased $41,091 during the first quarter of 2009 to $174,591 at March 31, 2009 compared to $215,682
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