| ProQuest Company Reports Growth in Revenue and Net Earnings for the First Quarter of 2004 |
ANN ARBOR, Mich., April 20 /PRNewswire-FirstCall/ -- ProQuest Company (NYSE: PQE), a leading publisher of information solutions for the education, automotive, and power equipment markets, today reported increases in revenue and net earnings for the fiscal quarter ended April 3, 2004. First Quarter Financial Review * Revenue increased 4 percent to $116.2 million, compared to $111.8 million for the prior year's first quarter. * EBIT (earnings before interest and income taxes) was $21.9 million versus $22.2 million for the first quarter of 2003, a decrease of $0.3 million. * EBITDA (earnings before interest, income taxes, depreciation and amortization) increased 3 percent to $38.3 million, compared to $37.1 million for the first quarter of 2003. * Net earnings increased 3 percent to $11.5 million or $0.40 per fully diluted share, versus net earnings of $11.2 million or $0.40 per fully diluted share in the first quarter of fiscal 2003. * Operating cash flow was a use of $0.6 million, a decrease of $28.3 million over the prior year's first quarter which included a tax refund of $13.1 million. Excluding this prior year tax refund, operating cash flow decreased $15.2 million. * Free cash flow (operating cash flow less expenditures for property, plant, equipment, product masters and software) was a use of $21.3 million, a decrease of $26.9 million over the first quarter of fiscal 2003 which included a tax refund of $13.1 million. Excluding this prior year tax refund, free cash flow decreased by $13.8 million. * Expenditures for property, plant, equipment, product masters and software decreased 6 percent to $20.7 million from $22.1 million in the prior year's first quarter. These expenditures were 18 percent of revenue in the first quarter of 2004 versus 20 percent of revenue in the first quarter of 2003. "The cash flow results for the first quarter are consistent with the company's cash flow outlook for the year. As anticipated, the decrease in cash flow is primarily the result of the first quarter ending five days later than it did in 2003, pulling certain payments into the first quarter of 2004 that were made at the beginning of the second quarter in 2003," said Kevin Gregory, ProQuest Company's senior vice president and chief financial officer. First Quarter Operations Review "ProQuest Company achieved a number of important operational objectives in the first quarter of 2004," said Alan Aldworth, president and chief executive officer of ProQuest Company. "We introduced a new interface for the K-12 market for our highly successful Historical Newspapers product, and we renewed a long-term exclusive agreement with Dow Jones & Company which gives us access to their premium content," added Aldworth. ProQuest Company Reiterates Guidance for 2004 ProQuest Company projects the following results for fiscal 2004: * Organic revenue growth in a range of 5 to 7 percent * Earnings per share growth of 10 to 13 percent * A cash conversion rate (defined as free cash flow as a percentage of net earnings) of 75 to 90 percent "Historically, ProQuest's revenue, earnings and cash flow have been seasonal. For 2004, revenue and earnings growth and free cash flow generation will be weighted toward the second half of the year," said Kevin Gregory. Basis of Presentation The financial results in this press release are presented in accordance with generally accepted accounting principles (GAAP), except for references to earnings before interest and taxes (EBIT), which excludes interest and income taxes; earnings before interest, taxes, depreciation and amortization (EBITDA), which excludes interest, income taxes, depreciation and amortization; debt, net of cash and cash equivalents (net debt); and free cash flow. Reconciliations of non-GAAP amounts to the company's GAAP results are attached, and can also be found on the ProQuest Company website at www.proquestcompany.com . EBIT and free cash flow are key metrics used by ProQuest Company to assess the performance of its business segments. The company defines free cash flow as operating cash flow less expenditures for property, plant, equipment, product masters and software. Free cash flow provides a measure of the company's cash flows after all operational expenditures. EBITDA provides useful information about how ProQuest Company's management assesses the company's ability to fund working capital items and capital expenditures as well as service its debt. The company's ability to fund working capital items, fund capital expenditures and service debt in the future, however, may be affected by other operating or legal requirements. EBITDA is also a component of ProQuest's debt covenants under both its senior notes and revolving credit facility. Debt, net of cash and cash equivalents, provides a source of consistent measurement from period to period of the company's outstanding debt commitments, net of any cash on hand that may be utilized to pay down the debt balance. Conference Call To participate in a conference call and question and answer session regarding the first quarter with ProQuest's senior management, call 888-688-0384 (International 706-679-7706), using the password ProQuest Company, at 5:00 p.m. (ET) on Tuesday, April 20, 2004. For your convenience, the call will be taped and archived until April 30, 2004 and can be accessed by calling 706-645-9291, and entering ID#6030251. This conference call may also be accessed over the Internet at www.proquestcompany.com or www.streetevents.com . To listen to the live call, please go to the web site at least fifteen minutes early to register, download, and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available shortly after the call at the StreetEvents website. About ProQuest Company ProQuest Company (NYSE: PQE) is based in Ann Arbor, Mich., and is a leading publisher of information solutions for the education, automotive and power equipment markets. We provide products and services to our customers through two business segments: Information and Learning and Business Solutions. Through our Information and Learning segment, which primarily serves the education market, we collect, organize and publish content from a wide range of sources including newspapers, periodicals and books. Our Business Solutions segment is primarily engaged in the delivery in electronic form of comprehensive parts and service information to the automotive market. It also provides dealers in the power equipment (motorcycle, marine, recreational vehicle, lawn & garden and heavy equipment) market with management systems that enable them to manage their inventory, customer service and other aspects of their businesses. Forward-Looking Statements Some of the statements contained herein constitute forward-looking statements. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our or our markets' actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. These risks and other factors you should specifically consider include, among other things, the company's ability to successfully integrate acquisitions and reduce costs, global economic conditions, product demand, financial market performance, and other risks listed under "Risk Factors" in our regular filings with the Securities and Exchange Commission. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential", "continue", "projects", "intends", "prospects", "priorities", or the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially.
PROQUEST COMPANY AND SUBSIDIARIES
RESULTS OF OPERATIONS
(In Millions, Except Per Share Data)
First Quarter Ended
April 3, % of March 29, % of
2004 Sales 2003 Sales
Net sales $116.2 100% $111.8 100%
Cost of sales (57.6) (50%) (56.0) (50%)
Gross profit 58.6 50% 55.8 50%
R&D expense (4.7) (4%) (5.0) (4%)
SG&A expense (27.8) (24%) (25.5) (23%)
Corporate expense (4.2) (3%) (3.1) (3%)
Earnings from operations before
interest and income taxes 21.9 19% 22.2 20%
Net interest expense:
Interest income 0.3 0% 0.2 0%
Interest expense (4.5) (4%) (4.8) (4%)
Net interest expense (4.2) (4%) (4.6) (4%)
Earnings before income taxes 17.7 15% 17.6 16%
Income tax expense (6.2) (5%) (6.4) (6%)
Net earnings $11.5 10% $11.2 10%
Shares - Basic 28.406 28.013
Shares - Diluted 28.799 28.037
EPS - Basic 0.40 0.40
EPS - Diluted 0.40 0.40
PROQUEST COMPANY AND SUBSIDIARIES
RESULTS OF OPERATIONS
(In Millions)
First Quarter Ended
April 3, % of March 29, % of Inc/(Dec)
2004 Sales 2003 Sales $ %
Net sales
ProQuest Information and
Learning:
Published Products $25.4 37% $18.6 28% $6.8 37%
General Reference Products 16.4 24% 18.6 28% (2.2) (12%)
Traditional Products 24.1 35% 25.8 40% (1.7) (7%)
Classroom Products 2.6 4% 2.8 4% (0.2) (7%)
Total ProQuest Information and
Learning $68.5 100% $65.8 100% $2.7 4%
ProQuest Business Solutions:
Automotive Group $40.0 84% $39.0 84% $1.0 3%
Power Equipment - Electronic 7.4 15% 6.0 13% 1.4 23%
Power Equipment - Film - - 0.7 2% (0.7) NM
Other 0.3 1% 0.3 1% - -
Total ProQuest Business Solutions $47.7 100% $46.0 100% $1.7 4%
Total Net Sales $116.2 100% $111.8 100% $4.4 4%
EBIT (1), (3)
ProQuest Information and Learning $14.0 12% $12.8 12% $1.2 9%
ProQuest Business Solutions 12.1 11% 12.5 11% (0.4) (3%)
Corporate / Other (4.2) (4%) (3.1) (3%) (1.1) (35%)
Total EBIT $21.9 19% $22.2 20% $(0.3) (1%)
EBITDA (2), (3)
ProQuest Information and Learning $28.2 24% $26.2 24% $2.0 8%
ProQuest Business Solutions 14.2 12% 13.9 12% 0.3 2%
Corporate / Other (4.1) (3%) (3.0) (3%) (1.1) (37%)
Total EBITDA $38.3 33% $37.1 33% $1.2 3%
Other Data
Capital expenditures & software
spending $20.7 18% $22.1 20% $(1.4) (6%)
Debt, net of cash and cash
equivalents (3) $209.6 $203.3 $6.3 3%
(1) EBIT is defined as earnings from operations before interest and income
taxes.
(2) EBITDA is defined as EBIT plus depreciation and amortization.
(3) See "Reconciliation of Non-GAAP Measures".
PROQUEST COMPANY AND SUBSIDIARIES
CONDENSED BALANCE SHEETS
(In Thousands)
ASSETS
April 3, January 3, March 29,
2004 2004 2003
Cash and cash equivalents $4,676 $7,312 $5,984
Accounts receivable, net 79,506 94,242 78,306
Inventory, net 5,090 4,939 5,730
Other current assets:
Prepaid royalties 20,792 15,188 12,629
Other 27,280 24,558 15,535
Total other current assets 48,072 39,746 28,164
Total current assets 137,344 146,239 118,184
Net property, plant, equipment and
product masters 186,619 180,745 178,827
Long-term receivables 4,009 5,106 3,490
Goodwill 304,469 303,693 295,539
Identifiable intangibles, net 9,754 9,435 8,252
Purchased and developed software, net 54,448 55,005 49,671
Other assets 18,699 23,813 21,321
Total assets $715,342 $724,036 $675,284
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable $- $300 $-
Accounts payable 38,968 49,156 36,146
Accrued expenses 21,256 39,428 36,253
Current portion of monetized future
billings 25,352 25,583 26,250
Deferred income 106,383 121,890 109,302
Total current liabilities 191,959 236,357 207,951
Long-term debt 214,250 191,000 209,300
Monetized future billings, less
current portion 44,933 46,835 50,437
Other liabilities 63,543 62,444 67,657
Total long-term liabilities 322,726 300,279 327,394
Total shareholders' equity 200,657 187,400 139,939
Total liabilities and shareholders'
equity $715,342 $724,036 $675,284
Note: Certain reclassifications to the 2003 balance sheets have been made to conform to the 2004 presentation.
PROQUEST COMPANY AND SUBSIDIARIES
CASH FLOW SCHEDULE
(In Thousands)
First Quarter Ended
April 3, March 29,
2004 2003
Operating activities:
Earnings from operations $11,483 $11,236
Adjustments to reconcile net earnings
to net cash provided
by operating activities:
Depreciation and amortization 16,365 14,894
Deferred income taxes 4,838 5,803
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable, net 15,350 15,891
Inventory, net (69) (830)
Other current assets (7,759) (2,284)
Long-term receivables 1,097 1,145
Other assets 96 (823)
Accounts payable (10,389) (4,797)
Accrued expenses (15,013) (6,776)
Deferred income (15,755) (17,385)
Other long-term liabilities (1,246) (1,661)
Other, net 426 269
Net cash provided by operating
activities before tax refund (576) 14,682
Tax refund - 13,090
Net cash provided by operating activities (576) 27,772
Investing activities:
Expenditures for property, plant,
equipment, product masters
and software (20,744) (22,137)
Acquisitions, net of cash acquired (1,246) (23,804)
Expenditures associated with sales of
discontinued operations (2,367) -
Net cash used in investing activities (24,357) (45,941)
Financing activities:
Net decrease in short-term debt (303) (53)
Proceeds from long-term debt 144,650 139,950
Repayment of long-term debt (121,400) (117,650)
Monetized future billings (2,133) (1,122)
Repurchases of common stock - (925)
Proceeds from exercise of stock
options, net 1,469 179
Net cash provided by (used in)
financing activities 22,283 20,379
Effect of exchange rate changes on cash 14 191
Increase (decrease) in cash and cash
equivalents (2,636) 2,401
Cash and cash equivalents, beginning
of period 7,312 3,583
Cash and cash equivalents, end of period $4,676 $5,984
Note: Certain reclassifications to the 2003 balance sheets have been made to conform to the 2004 presentation.
PROQUEST COMPANY AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(In Millions)
Reconciliations of non-GAAP measures to GAAP measures:
EBITDA & EBIT
First Quarter Ended April 3, 2004
Corp./
PQIL PQBS Other Total
EBITDA $28.2 $14.2 $(4.1) $38.3
Less: Depreciation & amortization (14.2) (2.1) (0.1) (16.4)
EBIT $14.0 $12.1 $(4.2) $21.9
Less: Net interest expense (4.2)
Income tax expense (6.2)
Net earnings $11.5
First Quarter Ended March 29, 2003
Corp./
PQIL PQBS Other Total
EBITDA $26.2 $13.9 $(3.0) $37.1
Less: Depreciation & amortization (13.4) (1.4) (0.1) (14.9)
EBIT $12.8 $12.5 $(3.1) $22.2
Less: Net interest expense (4.6)
Income tax expense (6.4)
Net earnings $11.2
Debt, net of cash and cash
equivalents
April 3, January 3, March 29,
2004 2004 2003
Long-term debt $214.3 $191.0 $209.3
Notes payable - 0.3 -
Less: Cash and cash equivalents (4.7) (7.3) (6.0)
Debt, net of cash and cash
equivalents $209.6 $184.0 $203.3
Free cash flow
First Quarter Ended
April 3, March 29,
2004 2003
Net cash (used in) provided by
operating activities $(0.6) $27.7
Expenditures for property, plant,
equipment, product masters, and
software (20.7) (22.1)
Free cash flow $(21.3) $5.6
Less: Tax refund - (13.1)
Free cash flow, net of tax refund $(21.3) $(7.5)
CONTACT:
Mark Trinske |