Forward-Looking Statements

We have made statements under the captions "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Business and Properties" and in other sections of this Form 10-Q that are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as "may," "might," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential," or "continue," the negative of these terms, and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties, and assumptions, may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance, or achievements to differ materially from the results, level of activity, performance, or achievements expressed or implied by the forward-looking statements. In particular, you should consider the risks outlined under "Risk Factors" in the 2008 Form 10-K.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events.

We are under no duty to update any of these forward-looking statements after the date of this Form 10-Q to conform our prior statements to actual results or revised expectations.

Overview

Results of Operations

IHS is a leading provider and comprehensive source of Critical Information and Insight in a sizable global market. Our customers rely on our products and services to facilitate crucial decision-making, support key processes, and improve productivity. At the heart of our products and services is data obtained from public sources, third parties, and our own proprietary databases. We transform that data into Critical Information and Insight that is both useful to our customers and available where and when they make critical business decisions. The data is transformed into Critical Information when we combine it with our proprietary and third-party technology to create graphical user interfaces, search and navigation tools, and online delivery systems or we deliver as individual documents. We further transform that information into Insight products and services with analysis and interpretation from our teams of experts.

We sell our offerings primarily through subscriptions. As a result of our subscription-based business model and historically high renewal rates, we generate recurring revenue and cash flow. We generally recognize revenue from subscriptions (which are usually for one-year periods) ratably over the term of the subscription. Subscriptions are generally paid in full within one to two months after the subscription period commences. As a result, the timing of our cash flows generally precedes the recognition of revenue and income. Historically, our business has had seasonal aspects. However, with the continued organic growth in our subscription-based business model combined with several acquisitions in recent years, our seasonal aspects have diminished although our fourth quarter revenue and profit tends to be slightly higher than other quarters due to the product mix typically sold in the fourth quarter. Our first quarter also benefits from the inclusion of the results from IHS CERAWeek, an annual energy executive gathering.

We serve some of the world's largest corporations across multiple industries, as well as governments and other organizations, in more than 100 countries. Our primary operations outside the United States are in the United Kingdom, Canada, Switzerland and China. We have structured our business around our customers and the geographies in which they reside: Americas (which includes the United States, Canada, and Latin America); EMEA(Europe, the Middle East, and Africa, with India also included in the region),

and APAC (the Asia Pacific region, which includes many countries such as China, Japan, South Korea, Malaysia, and Australia). This allows us to tailor and expand the solutions we offer to meet the unique needs of our customers both globally and in local markets.

Our consolidated financial statements are expressed in U.S. dollars, but a portion of our business is conducted in currencies other than U.S. dollars. Approximately 50% of our revenue is transacted outside of the United States, however, only approximately 30% of our revenue is transacted in a currency other than U.S. dollars. As a result, a strengthening U.S. dollar has a negative impact on our revenue while the impact on operating income is mitigated due to certain operating expenses denominated in currencies other than the U.S. dollar.

We have targeted four specific information "domains"-Energy, Product Lifecycle, Security, and Environment. Since these four information domains represent areas where our customers have needs for Critical Information and Insight, we use these domains to set priorities and design our business strategies. In addition, we have certain product lines that intersect multiple domains. We have categorized these products and services as Intersection and have not allocated them to any specific domain.

As we continue to deliver Critical Information and Insight in these four information domains, we prepare our financial reports and analyze our business across our three reportable geographic segments. As the information that our customers need to address their complex business issues continues to converge at the intersection of the information domains that we serve, we have organized our management structure to a geographic focus, the point of contact with our customers. This integrated global organization allows for our customers to do business with us by providing a cohesive, consistent, and effective sales and marketing approach in each region. By structuring our business around customers and the geographies in which they reside, we are able to tailor and expand the solutions we offer to meet the unique needs of our customers both globally and in local markets. We are also able to manage our Critical Information and Insight activities according to the best practices of each. This structure provides a solid foundation for growth in each market for all of our capabilities. It allows us an efficient method of bringing new products and services to customers, and supports growth in existing accounts and with new customers and markets.

Inherent in all of our strategies is a firm commitment to put our customers first in everything that we do. We believe that maintaining a disciplined "outside-in" approach will allow us to better serve our customers and our shareholders. Our primary strategy is to achieve and strengthen a leading position in-and at the intersection of-our targeted information domains. We also intend to continue driving margin and quality improvement through operational transformation.

Business Combination

Through our ownership of Prime Publications Limited (Prime), during the first quarter of 2009 we obtained a controlling interest in the Lloyd's Register-Fairplay Limited (LRF) joint venture, a leading source of global maritime information. LRF is the leading brand name in the maritime information industry providing comprehensive details of the current world merchant fleet (tankers, cargo, carrier and passenger ships) and a complete range of products and services to assist the world's maritime community. The investment in LRF is the primary asset of Prime. Since our acquisition of Prime on March 3, 2008 and through the year-ended November 30, 2008, we had accounted for LRF under the equity method of accounting. With the obtaining of the controlling interest, LRF is now consolidated within our results as of December 1, 2008. On June 17, 2009, we acquired the remaining 49.9% of Lloyd's Register-Fairplay from Lloyd's Register giving us 100% ownership of LRF. The 49.9% interest was acquired for approximately £37 million, net of cash acquired.

Segment Information



                                                              Segment       Shared       Consolidated
                           Americas      EMEA       APAC       Totals      Services         Total
                                                         (In thousands)
Three months ended
May 31, 2009
Revenue                   $  148,631   $ 67,660   $ 18,985   $  235,276   $         -   $      235,276
Operating income              48,047     12,746      6,518       67,311       (25,052 )         42,259
Depreciation and
amortization                   7,727      3,346         25       11,098           538           11,636
Three months ended
May 31, 2008
Revenue                   $  126,193   $ 66,726   $ 14,274   $  207,193   $         -   $      207,193
Operating income              39,449     11,801      3,789       55,039       (22,223 )         32,816
Depreciation and
amortization                   5,372      3,444         37        8,853           830            9,683

                                                               Segment       Shared       Consolidated
                           Americas      EMEA        APAC       Totals      Services         Total
                                                         (In thousands)
Six months ended
May 31, 2009
Revenue                   $  296,986   $ 136,450   $ 37,251   $  470,687   $         -   $      470,687
Operating income              91,684      26,557     11,510      129,751       (49,946 )         79,805
Depreciation and
amortization                  15,406       6,495         51       21,952         1,308           23,260
Six months ended
May 31, 2008
Revenue                   $  247,392   $ 130,357   $ 28,221   $  405,970   $         -   $      405,970
Operating income              78,004      22,404      7,760      108,168       (44,419 )         63,749
Depreciation and
amortization                  10,278       6,687         72       17,037         1,469           18,506

Revenue by information domain was as follows:

                                  Three Months Ended May 31,          Six Months Ended May 31,
                                    2009              2008             2009             2008
                                                         (In thousands)
Energy revenue                 $      110,310    $      109,646    $     226,410    $     219,942
Product Lifecycle revenue              73,291            72,812          143,606          141,843
Security revenue                       24,831            18,893           48,155           35,765
Environment revenue                     7,353             5,842           14,449            8,420
Intersection revenue                   19,491                 -           38,067                -
Total revenue                  $      235,276    $      207,193    $     470,687    $     405,970

Revenue by product category was as follows:

                                  Three Months Ended May 31,          Six Months Ended May 31,
                                    2009              2008             2009             2008
                                                         (In thousands)
Critical Information
Products revenue               $      137,251    $      139,248    $     271,394    $     269,670
Critical Information
Services revenue                       13,537            13,765           26,688           25,444
Insight Products revenue               67,919            37,855          133,634           72,615
Insight Services revenue               16,569            16,325           38,971           38,241
Total revenue                  $      235,276    $      207,193    $     470,687    $     405,970

Three Months Ended May 31, 2009 Compared to the Three Months Ended May 31, 2008

Revenue. Revenue was $235.3 million for the quarter ended May 31, 2009, compared to $207.2 million for the quarter ended May 31, 2008, an increase of $28.1 million or 14%. This increase was driven in part by acquisitions which contributed $35.9 million, or 17%, and organic growth which contributed $6.9 million, or 3%. Unfavorable foreign currency rates had an adverse translation impact of $14.8 million, or 7% due to the strengthening U.S. dollar. Moreover, the growth that we attribute to acquisitions was also negatively impacted by foreign currency translation. When taking this into consideration, foreign exchange negatively impacted our overall revenue growth by approximately 10% in the quarter ended May 31, 2009 in comparison to the quarter ended May 31, 2008. Lastly, the stronger U.S. dollar negatively impacted organic growth related to pricing pressures on U.S. dollar denominated revenue streams sold into non-dollar based countries. The amount of this impact is not included in our 10% estimate as it is not possible to compute precisely.

Our subscription-based revenue accounted for 78% of our revenue in the quarter and, while growth in this area of the business is slowing, it maintained a growth rate of 10.1% over the second quarter of 2008. This growth rate was approximately 1.5% lower sequentially from the quarter ended February 28, 2009. Our other revenue types (consulting, transaction and other revenue) have been more greatly impacted by the current difficult economic environment. Consulting and transaction revenue were down organically by 34% and 18%, respectively. Revenue from other revenue types also decreased by 2% organically due to slower software sales. Year-to-date cash-based sales of subscription products have grown over the same period prior year, however at a lower growth rate than the 10.1%. As a result, we expect the subscription based revenue growth rates to decline moderately in the second half of 2009. Conversely, our consulting and transaction revenue comparisons to prior year will ease in the second half of 2009 as we experienced lower revenue levels in these areas in the second half of 2008.

Revenue for our Americas segment was $148.6 million for the quarter ended May 31, 2009, compared to $126.2 million for the quarter ended May 31, 2008, an increase of $22.4 million or 18%. This increase was driven primarily by acquisitions which added $20.6 million and organic growth which contributed $5.9 million, or 5% which was in line with overall company growth and was driven by growth in certain subscription products. Unfavorable foreign currency rates impacted revenue by $4.0 million.

Revenue for our EMEA segment was $67.7 million for the quarter ended May 31, 2009, compared to $66.7 million for the quarter ended May 31, 2008, an increase of $1.0 million or 1%. This increase was driven primarily by acquisitions which contributed $11.9 million and partially offset by unfavorable foreign currency rates adversely impacted revenue by $9.7 million. Organic revenue decreased by $1.2 million. The organic decrease was due primarily the fact that the EMEA region contains a higher percentage of consulting revenue which experienced lower growth rates.

Revenue for our APAC segment was $19.0 million for the quarter ended May 31, 2009, compared to $14.3 million for quarter ended May 31, 2008, an increase of $4.7 million or 33%. This increase was driven in part by acquisitions which contributed $3.4 million, or 24% and organic growth which contributed $2.3 million, or 16%. The organic increase was due primarily to the fact that the APAC region contains a higher percentage of subscription revenue which experienced higher growth rates. Unfavorable foreign currency rates adversely impacted revenue by $1.0 million.

Revenue for the Energy domain was $110.3 million for the quarter ended May 31, 2009, an increase of $0.7 million, or 1% over the quarter ended May 31, 2008. This growth was primarily due to an increase in the subscription-based sales which was partially offset by the impact of unfavorable foreign currency rates and a decrease in consulting revenue. Product Lifecycle domain revenue was $73.3 million for the quarter ended May 31, 2009, an increase of $0.5 million, or 1% over the quarter ended May 31, 2008 which was primarily due to acquisitions, partially offset by the impact of unfavorable foreign currency rates. Revenue for the Security domain was $24.8 million for the quarter ended May 31, 2009, an increase of $5.9 million, or 31% over the quarter ended May 31, 2008 primarily the result of acquisitions. Environment domain revenue was $7.4 million for the quarter ended May 31, 2009, an increase of $1.5 million, or 26% due to increases in subscription-based products. Intersection revenue, which includes offerings that intersect multiple domains, was $19.5 million in the second quarter of 2009 and was entirely attributable to acquisitions.

Cost of Revenue. Cost of revenue was $97.9 million for the quarter ended May 31, 2009, compared to $93.2 million for the quarter ended May 31, 2008, an increase of $4.7 million or 5%. As a percentage of revenue, cost of revenue improved to 41.6% from 45.0%. Cost of revenue as a percentage of revenue within our Americas segment improved to 40.1% from 42.8% resulting from increased sales of our subscription products which have a relatively fixed-cost base. This was partially offset by higher Insight service revenues which have lower margins. Cost of revenue as a percentage of revenue within our EMEA segment improved to 44.5% from 47.5%. Cost of revenue as a percentage of revenue within our APAC segment improved to 36.2% from 44.0%. These improvements were principally due to an increase in higher margin Insight products combined with a decrease in lower margin services and the impact of foreign currency fluctuations which have a more dramatic impact on revenue than they do cost of revenue resulting in margin improvement. In addition, the restructuring in the third quarter of 2008 reduced costs of revenue in the Americas and EMEA segments.

Selling, General and Administrative Expenses. Selling, general and administrative (SG&A) expenses were $82.6 million for the quarter ended May 31, 2009, compared to $72.9 million for the quarter ended May 31, 2008, an increase of $9.7 million or 13%. Stock-based compensation expense included in SG&A increased $4.2 million to $14.2 million. Excluding stock-based compensation, organic SG&A decreased by $1.9 million as we continue to carefully control operating costs which was partially offset by increased spending related to our quote-to-cash system implementation and other initiatives. Acquisitions contributed $11.9 million of the increase. Foreign currency movements decreased SG&A by $4.6 million. As a percentage of revenue and excluding stock-based compensation expense, SG&A decreased from 30.4% for the second quarter of 2008 to 29.1% for the second quarter of 2009.

Depreciation and Amortization Expenses. Depreciation and amortization expenses were $11.6 million for the quarter ended May 31, 2009, compared to $9.7 million for the quarter ended May 31, 2008, an increase of $1.9 million or 20%. The increase was primarily due to acquisitions made within the last year.

Operating Income. Operating income was $42.3 million for the quarter ended May 31, 2009, compared to $32.8 million for the quarter ended May 31, 2008, an increase of $9.5 million or 29%. As a percentage of revenue, operating income increased to 18.0% for the quarter ended May 31, 2009 from 15.8% for the quarter ended May 31, 2008.

Operating income for our Americas segment was $48.0 million for the quarter ended May 31, 2009, compared to $39.4 million for the quarter ended May 31, 2008, an increase of $8.6 million or 22%. The increase was principally due to the additional revenue discussed above coupled with our ability to leverage a relatively fixed-cost structure with our subscriptions-based products. As a percentage of revenue, Americas operating income increased to 32.3% from 31.3% in the second quarter of 2008.

Operating income for our EMEA segment was $12.7 million for the quarter ended May 31, 2009, compared to $11.8 million for the quarter ended May 31, 2008, an increase of $0.9 million or 8%. As a percentage of revenue, EMEA operating income increased to 18.8% for the quarter ended May 31, 2009 compared to 17.7% for the quarter ended May 31, 2008. These increases are primarily due

to the higher growth in higher margin subscription products in 2009 and decreases in lower margin service offerings along with the impact of foreign currency rates at the Operating Income level.

Operating income for our APAC segment was $6.5 million for the quarter ended May 31, 2009, compared to $3.8 million for the quarter ended May 31, 2008, an increase of $2.7 million or 72%. Operating income increased due to the increase in sales. As a percentage of revenue, APAC operating income improved to 34.3% for the quarter ended May 31, 2009 from 26.5% for the quarter ended May 31, 2008. This increase was due to the mix of products sold with higher growth of higher margin Insight products in the second quarter of 2009.

Operating expenses for our shared services were $25.1 million for the quarter ended May 31, 2009, compared to $22.2 million for the quarter ended May 31, 2008, an increase of $2.9 million or 13%. As a percentage of revenue, operating expenses for our shared services was 10.6% for the quarter ended May 31, 2009 compared to 10.7% for the quarter ended May 31, 2008.

Provision for Income Taxes. Our effective tax rate for the period ended May 31, 2009 was 21.2%, compared to 31.9% for the period ended May 31, 2008. The 2009 rate reflects the impact of our internal legal entity reorganization within EMEA that occurred in the third quarter of 2008 as well as discrete period tax benefits recognized from the successful outcome of a French tax appeal and a favorable UK tax ruling in the second quarter of 2009.

Six Months Ended May 31, 2009 Compared to the Six Months Ended May 31, 2008

Revenue. Revenue was $470.7 million for the six months ended May 31, 2009, compared to $406.0 million for the six months ended May 31, 2008, an increase of $64.7 million or 16%. This increase was driven in part by acquisitions which contributed $75.5 million, or 19%, and organic growth which contributed $18.4 million, or 4.5%. Unfavorable foreign currency rates had an adverse translation impact of $29.2 million, or 7% due to the strengthening U.S. dollar. Moreover, the growth that we attribute to acquisitions was also negatively impacted by foreign currency translation. When taking this into consideration, foreign exchange negatively impacted our overall revenue growth by approximately 10% in the first two quarters of 2009 in comparison to the first two quarters of 2008. Lastly, the stronger U.S. dollar negatively impacted organic growth related to pricing pressures on U.S. dollar denominated revenue streams sold into non-dollar based countries. The amount of this impact is not included in our 10% estimate as it is not possible to compute precisely.

Our subscription based revenue accounted for 77% of our revenue in the quarter and, while growth in this area of the business is slowing, it maintained a 10.8% growth rate over the first half of 2008. Our other revenue types (consulting, transaction and other revenue) have been more greatly impacted by the current economic environment. Transaction and consulting revenue were down organically by 19% and 33%, respectively. These decreases were partially offset by organic growth in other revenue of 3%. Year-to-date cash-based sales of subscription products have grown over the same period prior year, however at a lower growth rate than the 10.8%. As a result, we expect the subscription based revenue growth rates to decline moderately in the second half of 2009. Conversely, our consulting and transaction revenue comparisons to prior year will ease in the second half of 2009 as we experienced lower revenue levels in these areas in the second half of 2008.

Revenue for our Americas segment was $297.0 million for the six months ended May 31, 2009, compared to $247.4 million for the same period of 2008, an increase of $49.6 million or 20%. This increase was driven primarily by acquisitions which added $42.5 million and organic growth which contributed $15.1 million or 6% which was in line with overall company growth and was driven by growth in certain subscription products. Unfavorable foreign currency rates impacted revenue by $8.0 million.

Revenue for our EMEA segment was $136.5 million for the six months ended May 31, 2009, compared to $130.4 million for the six months ended May 31, 2008, an increase of $6.1 million or 5%. This increase was driven primarily by acquisitions which contributed $26.7 million. Organic revenue decreased by $1.2 million due to slowing consulting revenue. Unfavorable foreign currency rates impacted revenue by $19.4 million

Revenue for our APAC segment was $37.3 million for the six months ended May 31, 2009, compared to $28.2 million for the six months ended May 31, 2008, an increase of $9.1 million or 32%. This increase was driven in part by acquisitions which contributed $6.4 million and organic growth which contributed $4.4 million. The organic increase was due primarily to a the fact that the APAC region contains a higher percentage of subscription revenue which experienced higher growth rates. Unfavorable foreign currency rates adversely impacted revenue by $1.8 million.

Revenue for the Energy domain was $226.4 million for the six months ended May 31, 2009, an increase of $6.5 million, or 3% over the same period in 2008. This growth was primarily due to an increase in the subscription-based sales which was partially offset by unfavorable foreign currency rates and a decrease in consulting revenue. Product Lifecycle domain revenue was $143.6 million for the six months ended May 31, 2009, an increase of $1.8 million, or 1% over the six months ended May 31, 2008. Revenue for the

Security domain was $48.2 million for the first two quarters of 2009, an increase of $12.4 million over the same period in 2008. Environment domain revenue was $14.4 million for the six months ended May 31, 2009 compared to $8.4 million for the six months ended May 31, 2008. The increase was primarily from acquisitions. Intersection revenue, which includes product lines that intersect multiple domains, was $38.1 million in the first half of 2009 and was entirely attributable to acquisitions.

Cost of Revenue. Cost of revenue was $200.8 million for the six months ended May 31, 2009, compared to $182.3 million for the six months ended May 31, 2008, an increase of $18.5 million or 10%. As a percentage of revenue, cost of revenue improved to 42.7% from 44.9%. Cost of revenue as a percentage of revenue within our Americas segment improved to 41.2% from 42.8% resulting from increased sales in our subscription based products which have a relatively fixed-cost base. Cost . . .