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INFOGROUP INC. Reports Operating Results (10-Q)

August 10, 2009 | About:

INFOGROUP INC. (IUSA) filed Quarterly Report for the period ended 2009-06-30.

infoUSA is the leading provider of business and consumer information products database marketing services data processing services and Internet marketing solutions. The infoUSA databases power the directory services of the top traffic-generating Internet sites including Yahoo! Microsoft and InfoSpace. They have partnership agreements with several Internet companies including DoubleClick Network Solutions USWeb/CKS Dell and MyWay.com. INFOGROUP INC. has a market cap of $372.5 million; its shares were traded at around $6.5 with a P/E ratio of 12.7 and P/S ratio of 0.5.

Highlight of Business Operations:

Selling, general and administrative expenses for the quarter ended June 30, 2009 were $67.0 million, or 55% of net sales, compared to $79.7 million, or 54% of net sales for the same period in 2008. Selling, general and administrative expenses for the six months ended June 30, 2009 were $137.1 million, or 55% of net sales, compared to $162.0 million, or 54% of net sales for the same period in 2008. During the three months ended June 30, 2009, the Company recorded restructuring charges of $6.9 million, which included $4.5 million for a reduction in workforce of approximately 146 employees and $2.4 million in facility closure costs. During the six months ended June 30, 2009, the Company recorded restructuring charges of $9.5 million. This included $6.4 million for a reduction in workforce of approximately 282 employees and $3.1 million in facility closure costs.

Selling, general and administrative expenses of the Data Group for the quarter ended June 30, 2009 were $31.0 million, or 50% of net sales, compared to $33.5 million, or 42% of net sales for the same period in 2008. Selling, general and administrative expenses of the Data Group for the six months ended June 30, 2009 were $61.1 million, or 47% of net sales, compared to $72.8 million, or 45% of net sales for the same period in 2008. The majority of the decrease in selling, general and administrative costs is related to cost cutting initiatives introduced in 2009 that include consolidating operations. The Data Group incurred $2.5 million in severance costs and $0.8 million in facility closure costs during the quarter ended June 30, 2009. For the six months ended June 30, 2009, the Data Group incurred $3.4 million in severance costs and $1.1 million in facility closure costs. The cost savings experienced by the Data Group were slightly offset by fixed and intangible asset impairment charges incurred of $0.8 million and $1.7 million for the three and six months ended June 30, 2009, respectively. Also, $2.1 million in costs were recorded during the quarter ended June 30, 2009 for software development costs incurred related to projects deemed to be impaired.

Selling, general and administrative expenses of the Marketing Research Group for the quarter ended June 30, 2009 were $8.0 million, or 32% of net sales, compared to $9.9 million, or 34% of net sales for the same period in 2008. Selling, general and administrative expenses of the Marketing Research Group for the six months ended June 30, 2009 were $15.8 million, or 32% of net sales, compared to $18.6 million, or 32% of net sales for the same period in 2008. The majority of the decrease in selling, general and administrative costs is related to cost cutting initiatives introduced in 2009 that include consolidating operations. The Marketing Research Group incurred $0.2 million in severance costs and $0.6 million in facility closure costs during the quarter ended June 30, 2009. For the six months ended June 30, 2009, the Marketing Research Group incurred $0.7 million in severance costs and $0.7 million in facility closure costs.

Selling, general and administrative expenses of Corporate Activities for the quarter ended June 30, 2009 were $9.9 million, compared to $14.9 million for the same period in 2008. Selling, general and administrative expenses of Corporate Activities for the six months ended June 30, 2009 were $23.2 million, compared to $27.7 million for the same period in 2008. Corporate Activities includes selling, general and administrative costs that cannot be directly attributed to the revenue producing segments. During the three and six months ended June 30, 2009, the Company incurred $1.9 million and $5.7 million, respectively, in legal and professional fees related to the investigation by the SEC as described in further detail in Note 13 in the Notes to Condensed Consolidated Financial Statements. During the three and six months ended June 30, 2008, the Company incurred $6.0 million and $9.7 million, respectively, in legal and professional fees related to the Special Litigation Committees investigation and the Derivative Litigation. During the three and six months ended June 30, 2009, Corporate Activities incurred $1.3 million of severance costs.

Other expense, net was $2.9 million, or 2% of net sales, and $3.8 million, or 2% of net sales, for the quarters ended June 30, 2009 and 2008, respectively. Other expense, net was $6.7 million, or 3% of net sales, and $7.6 million, or 3% of net sales, for the six months ended June 30, 2009 and 2008, respectively. Other expense, net is comprised of interest expense, investment income or expense, and other income or expense items, which do not represent components of operating expense of the Company. The majority of the other expense, net was for interest expense, which was $2.2 million and $3.7 million for the quarters ended June 30, 2009 and 2008, respectively, and $5.4 million and $9.1 million for the six months ended June 30, 2009 and 2008, respectively. The decrease in interest expense is due to the decrease in our long-term debt balances as we have made significant efforts to pay down our debt. Debt was reduced by $5.8 million during the second quarter of 2009. Other charges for the six months ended 2009 were $1.3 million compared to other income of $0.2 million for the same period in 2008. Other charges for the six-months ended 2009 include the impairment of a marketable security of $0.6 million for an other-than-temporary decline in its value.

Income from discontinued operations, net of tax, for the quarter ended June 30, 2009 was $1.5 million and a loss from discontinued operations, net of tax for the six months ended June 30, 2009 of $7.1 million. This includes a loss from the sale of Macro of $9.8 million as a result of receiving proceeds from the sale of Macro of $155.0 million, less the net investment and transaction costs of $129.8 million, resulting in a pre-tax gain of $25.2 million, less income tax expense of $35.0 million. The Company finalized the working capital adjustment per the Macro sale agreement as of July 24, 2009 and recorded a current other receivable of $2.6 million within the Companys Condensed Consolidated Balance Sheet as of June 30, 2009 with a corresponding gain of $2.6 million, $1.6 million after tax, within discontinued operations of the Condensed Consolidated Statement of Operations for the three months ended June 30, 2009. The Company received the $2.6 million from ICF International Inc. (ICF) on July 31, 2009 and the current escrow amount of $3.0 million was released to the Company on August 3, 2009. The proceeds received from the Macro transaction were used to pay down our debt.

Read the The complete ReportIUSA is in the portfolios of HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC.

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