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:
Kevin Gregory
Senior Vice President, Chief Financial Officer
734-997-4925
kevin.gregory@proquest.com

Mark Trinske
Vice President, Investor Relations
734-997-4910
mark.trinske@proquest.com
Both of ProQuest Company