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, which typically represents greater than 75% or our reported revenue. 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. Our first quarter has historically benefited from the inclusion of the results from CERAWeek, an annual energy executive gathering. CERAWeek is scheduled for the second quarter in 2010.

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

On March 3, 2008, we acquired Prime Publications Limited (Prime), which owned a 50% interest in the Lloyd's Register-Fairplay Limited (LRF) joint venture, a leading source of global maritime information. LRF is the pre-eminent brand name in the maritime information industry and the only organization that provides 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 was the primary asset of Prime. IHS accounted for the joint venture under the equity method of accounting from March 2008 through November 30, 2008. As of December 1, 2008, we obtained an additional 0.1%, bringing us to a 50.1% controlling interest in the joint venture and accordingly began consolidating LRF within our results. On June 17, 2009, we acquired the remaining 49.9% of LRF from Lloyd's Register giving us 100% ownership of LRF. The remaining 49.9% interest was acquired for approximately $64.0 million.

Segment Information



                                                                 Segment      Shared       Consolidated
                             Americas      EMEA        APAC      Totals      Services         Total
                                                           (In thousands)
Three months ended
August 31, 2009
Revenue                      $ 147,682   $  72,606   $ 19,197   $ 239,485   $         -   $      239,485
Operating income                48,539      14,352      6,261      69,146       (22,936 )         46,216
Depreciation and
amortization                     7,755       4,461         27      12,243           528           12,771
Three months ended
August 31, 2008
Revenue                      $ 128,936   $  64,665   $ 13,833   $ 207,434   $         -   $      207,434
Operating income                37,160       6,301      4,167      47,628       (23,537 )         24,091
Depreciation and
amortization                     5,502       3,321         29       8,852           823            9,675

                                                                 Segment      Shared       Consolidated
                             Americas      EMEA        APAC      Totals      Services         Total
                                                           (In thousands)
Nine months ended
August 31, 2009
Revenue                      $ 444,668   $ 209,056   $ 56,448   $ 710,172   $         -   $      710,172
Operating income               140,223      40,909     17,771     198,897       (72,882 )        126,021
Depreciation and
amortization                    23,161      10,956         78      34,195         1,836           36,031
Nine months ended
August 31, 2008
Revenue                      $ 376,328   $ 195,022   $ 42,054   $ 613,404   $         -   $      613,404
Operating income               115,164      28,705     11,927     155,796       (67,956 )         87,840
Depreciation and
amortization                    15,780      10,008        101      25,889         2,292           28,181

Revenue by information domain was as follows:

                                     Three Months Ended August 31,          Nine Months Ended August 31,
                                        2009               2008               2009               2008
                                                                (In thousands)
Energy revenue                     $       109,188    $       107,613    $       335,598    $       327,555
Product Lifecycle revenue                   76,510             72,512            220,116            214,355
Security revenue                            27,526             20,347             75,681             56,112
Environment revenue                          6,319              6,962             20,768             15,382
Intersection revenue                        19,942                  -             58,009                  -
Total revenue                      $       239,485    $       207,434    $       710,172    $       613,404

Revenue by product category was as follows:

                                          Three Months Ended August 31,          Nine Months Ended August 31,
                                             2009               2008               2009               2008
                                                                     (In thousands)
Critical Information Products revenue   $       140,890    $       141,331    $       412,284    $       411,001
Critical Information Services revenue            13,541             14,501             40,229             39,945
Insight Products revenue                         72,615             40,701            206,249            113,316
Insight Services revenue                         12,439             10,901             51,410             49,142
Total revenue                           $       239,485    $       207,434    $       710,172    $       613,404

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

Revenue. Revenue was $239 million for the quarter ended August 31, 2009, an increase of 15% over the prior year. This increase was driven in part by acquisitions which contributed 17% and organic growth which contributed 2%. Foreign currency rates had an adverse impact of 4%.

Revenue for our Americas segment was $148 million for the quarter ended August 31, 2009, an increase of 15% over the prior year. This increase was driven by acquisitions which added 16%. Organic revenue was flat with organic subscription revenue growing by 5%, offset by decreases in consulting, transaction and other revenue. Foreign currency rates held revenue down by approximately 1%.

Revenue for our EMEA segment was $72.6 million for the quarter ended August 31, 2009, compared to $64.7 million for the quarter ended August 31, 2008, an increase of 12%. This increase was driven primarily by acquisitions which contributed 19% and organic revenue which increased by 3%. The organic subscription revenue grew 14% which was partially offset by decreases in consulting, transaction and other revenue. Foreign currency movements adversely impacted revenue by 9%.

Revenue for our APAC segment was $19.2 million for the quarter ended August 31, 2009, an increase of 39% over the prior year. This increase was driven by acquisitions which contributed 23% and organic growth which contributed 19%. The organic increase was due primarily to growth in subscription revenue. Foreign currency movements held revenue down by 4%.

Our subscription-based revenue accounted for 80% of our revenue in the quarter and, while growth in this area of the business is slowing, it experienced an organic growth rate of 9% over the third quarter of 2008. This growth rate was approximately 1.5% lower sequentially from the quarter ended May 31, 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 32% and 12%, respectively. Revenue from other revenue types also decreased by 15% organically due to slower software and advertising sales. Cash-based sales represents completed contracts with customers, however the revenue is deferred over the subscription period. This measure is a leading indicator of current sales performance. Year-to-date "cash-based" sales, or invoiced sales of subscription products have grown over the same period prior year, however at a lower growth rate than the 9% earned revenue growth. As a result, we expect the subscription based revenue growth rates to continue to decline through the fourth quarter of 2009.

Revenue for the Energy domain was $109 million for the quarter ended August 31, 2009, an increase of 1% over the quarter ended August 31, 2008. This growth was primarily due to an increase in the subscription-based sales which was partially offset by the impact of foreign currency movements and a decrease in consulting revenue. Product Lifecycle domain revenue was $76.5 million for the quarter ended August 31, 2009, an increase of 6% over the quarter ended August 31, 2008 which was primarily due to increased subscription-based revenue and partially offset by the impact of foreign currency movements. Revenue for the Security domain was $27.5 million for the quarter ended August 31, 2009, an increase of 35% over the quarter ended August 31, 2008, primarily the result of the consolidation of LRF. Environment domain revenue was $6.3 million for the quarter ended August 31, 2009, a decrease of 9% due to a decrease in services revenue. Intersection revenue, which includes offerings that intersect multiple domains, was $19.9 million in the third quarter of 2009 and was entirely attributable to acquisitions.

Cost of Revenue. Cost of revenue was $102 million for the quarter ended August 31, 2009, an increase of 11%. In general, our subscription-based revenue generates higher margins as it has a relatively fixed-based cost structure whereas consulting and transaction revenue have comparatively lower margins due to the variable direct costs associated with these revenue streams. We define sales margins as revenue net of costs of sales, as a percentage of sales. Total sales margins improved to 57.5% from 56.0%. Sales margins within our Americas segment decreased to 58.7% from 59.6% resulting primarily from the impact of the Global Insight acquisition which has a higher concentration of lower margin consulting revenue. Sales margins within our EMEA segment improved to 55.1% from 50.2% due to increased sales of our subscription-based products which was partially offset by the impact of the lower margin Global Insight revenue. In addition, the restructuring in the third quarter of 2008 resulted in reduced costs of revenue in the Americas and EMEA segments in 2009. Sales margins within our APAC segment improved to 62.5% from 58.6%. This improvement was principally due to an increase in higher margin subscription-based 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.

Selling, General and Administrative Expenses. Selling, general and administrative (SG&A) expenses were $79.4 million for the quarter ended August 31, 2009, an increase of 9%. Stock-based compensation expense included in SG&A increased $2.4 million to $12.4 million. Excluding stock-based compensation, organic SG&A decreased by $4.1 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 $10.7 million of the increase. Foreign currency movements decreased SG&A by $2.6 million. As a percentage of revenue and excluding stock-based compensation expense, SG&A decreased from 30.4% for the third quarter of 2008 to 28.0% for the third quarter of 2009.

Restructuring Charge. During the third quarter of 2008, we executed a restructuring initiative which primarily affected the Americas and EMEA segments. This initiative was undertaken to further the realignment of our resources around our regional organizational structure and to further transform our knowledge-based data accumulation operations to ensure continuous improvement in the quality of the critical information and insight we deliver to our customers. During the course of the restructuring, we reduced our aggregate workforce by approximately 7%, we eliminated certain contractor positions and we closed certain offices. The restructuring charge of $12.5 million was incurred in its entirety during the third quarter of 2008 and was comprised primarily of employee severance and termination benefits. Approximately $5.8 million of the charge related to our Americas segment, $6.3 million pertained to our EMEA segment and $0.4 million related to corporate costs.

Depreciation and Amortization Expenses. Depreciation and amortization expenses were $12.8 million for the quarter ended August 31, 2009, compared to $9.7 million for the quarter ended August 31, 2008, an increase of 32% over the prior year. The increase was primarily due to addition of depreciable and amortizable assets from acquisitions made within the last year.

Operating Income. Operating income was $46.2 million for the quarter ended August 31, 2009, an increase of 92%. As a percentage of revenue, operating income increased to 19.3% for the quarter ended August 31, 2009 from 11.6% for the quarter ended August 31, 2008. The third quarter of 2008 was impacted by a restructuring charge of $12.5 million. Without this charge, the operating income as a percentage of revenue for the third quarter of 2008 would have been 17.6%.

Operating income for our Americas segment was $48.5 million for the quarter ended August 31, 2009, an increase of 31%. The increase was principally due to the fact that the third quarter of 2008 included a restructuring charge of $5.8 million. In addition, 2009 had higher sales margins. As a percentage of revenue, Americas operating income increased to 32.9% from 28.8% in the third quarter of 2008. Without the restructuring charge, the operating income as a percentage of revenue would have been 33.3% in the third quarter of 2008. The normalized decrease is due primarily to higher depreciation and amortization costs related to acquisitions.

Operating income for our EMEA segment was $14.4 million for the quarter ended August 31, 2009, an increase of 128%. The increase was primarily due to the third quarter of 2008 including a restructuring charge of $6.3 million. In addition, 2009 had higher sales margins. As a percentage of revenue, EMEA operating income increased to 19.8% for the quarter ended August 31, 2009 compared to 9.7% for the quarter ended August 31, 2008. Without the restructuring charge, the operating income as a percentage of revenue would have been 19.5% in the third quarter of 2008.

Operating income for our APAC segment was $6.3 million for the quarter ended August 31, 2009, an increase of 50%. Operating income increased due to the increase in sales. As a percentage of revenue, APAC operating income improved to 32.6% for the quarter ended August 31, 2009 from 30.1% for the quarter ended August 31, 2008. This increase was due to the mix of products sold with higher growth of higher margin subscription-based products in the third quarter of 2009.

Operating expenses for our shared services were $22.9 million for the quarter ended August 31, 2009, a decrease of 3%. As a percentage of revenue, operating expenses for our shared services was 9.6% for the quarter ended August 31, 2009 compared to 11.3%

for the quarter ended August 31, 2008. The decrease was primarily due to reduced travel and other cost containment initiatives during 2009.

Provision for Income Taxes. Our effective tax rate for the period ended August 31, 2009 was 24.6%, compared to 18.7% for the period ended August 31, 2008. The 2008 rate reflects the year-to-date impact of our internal legal entity reorganization within EMEA that occurred in the third quarter of 2008 and is reflected ratably in each quarter of 2009.

Nine Months Ended August 31, 2009 Compared to the Nine Months Ended August 31, 2008

Revenue. Revenue was $710 million for the nine months ended August 31, 2009, an increase of 16% over the prior year. This increase was driven in part by acquisitions which contributed 18%, and organic growth which contributed 4%. Foreign currency movements had an adverse impact of 6%. Moreover, the growth that we attribute to acquisitions was also negatively impacted by foreign currency. When taking this into consideration, foreign exchange negatively impacted our overall revenue growth by approximately 8% in the first three quarters of 2009 in comparison to the first three quarters of 2008.

Revenue for our Americas segment was $445 million for the nine months ended August 31, 2009, an increase of 18% over the prior year. This increase was driven primarily by acquisitions which contributed 17%. Organic growth contributed 4% which was in line with overall company growth and was driven by growth in subscription products which grew 7% organically. This was partially offset by lower organic consulting and transaction revenue. Additionally, foreign currency held down revenue by 3%.

Revenue for our EMEA segment was $209 million for the nine months ended August 31, 2009, an increase of 7% over the prior year. This increase was driven primarily by acquisitions which contributed 20%. Organic revenue was flat with organic subscription revenue growing 13% which was offset by lower organic consulting and transaction revenue. Additionally foreign currency movements adversely impacted revenue by 13%.

Revenue for our APAC segment was $56.4 million for the nine months ended August 31, 2009, an increase of 34%. This increase was driven by acquisitions which contributed 23% and organic growth which contributed 17%. The organic increase was due to growth in subscription products. Foreign currency movements held down revenue by 6%.

Our subscription based revenue accounted for 78% of our revenue in the first three quarters of 2009, while growth in this area of the business is slowing, it experienced a 10% organic growth rate compared to the first nine months of 2008. Our other revenue types (consulting, transaction and other revenue) have been more greatly impacted by the current difficult economic environment. Transaction and consulting revenue were down organically by 17% and 33%, respectively. In addition, other revenue decreased 3% organically. Cash-based sales represents completed contracts with customers, however the revenue is deferred over the subscription period. This measure is a leading indicator of current sales performance. Year-to-date "cash-based" sales, or invoiced sales of subscription products have grown over the same period prior year, however at a lower growth rate than the 10% earned revenue growth. As a result, we expect the subscription based revenue growth rates to continue to decline through the fourth quarter of 2009.

Revenue for the Energy domain was $336 million for the nine months ended August 31, 2009, an increase of 2% 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 movements and a decrease in consulting revenue. Product Lifecycle domain revenue was $220 million for the nine months ended August 31, 2009, an increase of 3% over the nine months ended August 31, 2008 which was primarily due to increased subscription revenue and partially offset by the impact of foreign currency movements. Revenue for the Security domain was $75.7 million for the first three quarters of 2009, an increase of $19.6 million over the same period in 2008, which was primarily due to the consolidation of LRF and partially offset by the impact of foreign currency movements. Environment domain revenue was $20.8 million for the nine months ended August 31, 2009 compared to $15.4 million for the nine months ended August 31, 2008. The increase was primarily from acquisitions. Intersection revenue, which includes product lines that intersect multiple domains, was $58.0 million in the first nine months of 2009 and was entirely attributable to acquisitions.

Cost of Revenue. Cost of revenue was $303 million for the nine months ended August 31, 2009, an increase of 11%. In general, our subscription-based revenue generates higher margins as it has a relatively fixed-based cost structure whereas consulting and transaction revenue have comparatively lower margins due to the variable direct costs associated with these revenue streams. We define sales margins as revenue net of costs of sales, as a percentage of sales. Total sales margins improved to 57.4% from 55.4%. Sales margins within our Americas segment improved to 58.8% from 58.0% resulting from increased sales in our subscription based products and partially offset by the impact of the Global Insight acquisition which has a higher concentration of lower margin consulting . . .