##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


FORM 10-K

For Annual and Transition Reports Pursuant to
Sections 13 or 15(d)

of the Securities Exchange Act of
1934


(Mark One)

| |   |                                               | 
| | - | --------------------------------------------- | 
| | þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) | 

| |                                                 | 
| | ----------------------------------------------- | 
| | OF THE SECURITIES EXCHANGE ACT OF 1934          | 
|
| | For the fiscal year ended December 31,
    2002 | 



| |   |                                                   | 
| | - | ------------------------------------------------- | 
| | o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) | 

| |                                        | 
| | -------------------------------------- | 
| | OF THE SECURITIES EXCHANGE ACT OF 1934 | 

Commission file number 0-20311

INTERACTIVE DATA CORPORATION

(Exact name of registrant as specified in its
charter)


|                                |  |                    
|------------------------------- |  | -------------------
|Delaware                        |  | 13-3668779         
|(State or other jurisdiction of |  | (I.R.S. Employer   
|Incorporation or organization)  |  | Identification No.)

22 Crosby Drive

Bedford, Massachusetts 01730


(Address of principal executive
offices)


Registrants telephone number, including
area code: (781) 687-8800

Securities registered pursuant to
Section 12(b) of the Act:

|                                                               |  |                                                                      
|-------------------------------------------------------------- |  | ---------------------------------------------------------------------
|Title of each class
    common stock, $.01 par value per share |  | Name of each exchange on which registered
    New York Stock Exchange

Securities registered pursuant to
Section 12(g) of the Act: None

Indicate by check mark whether the registrant:
(1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the
past
90 days.     Yes  þ  No  o

Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be
contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to
this
Form 10-K.     þ

Indicate by check whether the registrant is an
accelerated filer (as determined in Rule 12b-2 of the
Act.  Yes  þ  No  o

The aggregate market value of the
registrants voting and nonvoting common stock held by
non-affiliates (without admitting that any person whose shares
are not included in such calculation is an affiliate) computed
by reference to the price at which the common stock was last
sold, as of the last business day of the registrants most
recently completed second fiscal quarter was $427,256,808.

As of February 28, 2003, the registrant had
91,920,176 shares of common stock outstanding.

Documents Incorporated by Reference

The following documents (or parts thereof) are
incorporated by reference into the following parts of this
Form 10-K: Certain information required in Part III of
this Annual Report on Form 10-K is incorporated by
reference from the Registrants Proxy Statement for the
Annual Meeting of Stockholders to be held on May 21, 2003.









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TABLE OF CONTENTS



|                                               |                                                                                                              |  |  |  |  |  |  | 
|---------------------------------------------- | ------------------------------------------------------------------------------------------------------------ |  |  |  |  |  |  | 
|TABLE OF CONTENTS                             
|PART I                                        
|                                               | Item 1. Business                                                                                            
|                                               | Item 2. Properties                                                                                          
|                                               | Item 3. Legal Proceedings                                                                                   
|                                               | Item 4. Submission of Matters to a Vote of Security Holders                                                 
|PART II                                       
|                                               | Item 5. Market for Registrants Common Equity and Related Stockholder Matters                               
|                                               | Item 6. Selected Financial Data                                                                             
|                                               | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations (in thousands)
|                                               | Item 7A. Quantitative and Qualitative Disclosures about Market Risk                                         
|                                               | Item 8. Financial Statements and Supplementary Data                                                         
|                                               | Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure                
|PART III                                      
|                                               | Item 10. Directors and Executive Officers of the Registrant                                                 
|                                               | Item 11. Executive Compensation                                                                             
|                                               | Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters     
|                                               | Item 13. Certain Relationships and Related Transactions                                                     
|                                               | Item 14. Controls and Procedures                                                                            
|                                               | Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K                                    
|Ex-21  Subsidiaries                           
|Ex-23.1 Consent of PricewaterhouseCoopers  LLP
|Ex-99.1 Certification of Stuart J. Clark      
|Ex-99.2 Certification of Steven G. Crane      



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##### Table of Contents






TABLE OF CONTENTS

|         |          |    |                                                                                                    |  |   
|-------- | -------- | -- | -------------------------------------------------------------------------------------------------- |  | --
|PART I   |          | 2 
|         | Item 1.  |    | Business                                                                                           |  | 2 
|         | Item 2.  |    | Properties                                                                                         |  | 8 
|         | Item 3.  |    | Legal Proceedings                                                                                  |  | 8 
|         | Item 4.  |    | Submission of Matters to a Vote of Security
    Holders                                            |  | 9 
|PART II  |          | 9 
|         | Item 5.  |    | Market for Registrants Common Equity and
    Related Stockholder Matters                          |  | 9 
|         | Item 6.  |    | Selected Financial Data                                                                            |  | 10
|         | Item 7.  |    | Managements Discussion and Analysis of
    Financial Condition and Results of Operations          |  | 11
|         | Item 7A. |    | Quantitative and Qualitative Disclosures about
    Market Risk                                     |  | 24
|         | Item 8.  |    | Financial Statements and Supplementary
    Data                                                    |  | 25
|         | Item 9.  |    | Changes In and Disagreements With Accountants
    on Accounting and Financial Disclosure           |  | 54
|PART III |          | 54
|         | Item 10. |    | Directors and Executive Officers of the
    Registrant                                             |  | 54
|         | Item 11. |    | Executive Compensation                                                                             |  | 55
|         | Item 12. |    | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters |  | 55
|         | Item 13. |    | Certain Relationships and Related
    Transactions                                                 |  | 55
|         | Item 14. |    | Controls and Procedures                                                                            |  | 55
|         | Item 15. |    | Exhibits, Financial Statement Schedules and
    Reports on Form 8-K                                |  | 56

1



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##### Table of Contents






PART I




Item 1.     Business

Interactive Data Corporation, directly and
through its subsidiaries (the Company), is a leading
global provider of financial and business information to
institutional and retail investors. The Company supplies
time-sensitive pricing (including evaluated pricing), dividend,
corporate action, and descriptive information for approximately
3.5 million securities traded around the world as well as
fixed income portfolio analytics, consulting and valuation
services to institutional fixed income portfolio managers. At
the core of the Companys business are its extensive
database expertise and technology resources.

The Company distributes real-time, end of day and
historically archived data to customers through a variety of
products featuring Internet, dedicated line, satellite and
dialup delivery protocols. Through a broad range of strategic
alliances, the Company provides links to leading financial
service and software companies offering trading, analysis,
portfolio management and valuation services.

General Development of Business

The Company was formerly known as Data
Broadcasting Corporation and changed its name to Interactive
Data Corporation following stockholder approval in
June 2001.

On February 29, 2000, Data Broadcasting
Corporation completed a merger (the Merger) with
Interactive Data Corporation (now known as FT Interactive Data
Corporation), then a wholly owned subsidiary of Pearson Longman,
Inc. Pearson Longman, Inc. through a series of other entities,
is wholly owned by Pearson plc (Pearson). Upon the
Merger, the Company issued 56,423,949 shares of its common stock
to Pearson Longman, Inc. which were subsequently transferred to
Pearson DBC Holdings, Inc., a wholly owned subsidiary of Pearson
Longman, Inc. As a result, Pearson plc became the indirect
holder of approximately 60% of the Companys common stock.
Interactive Data Corporation prior to the Merger is referred to
herein as FT Interactive Data Corporation (FT Interactive
Data), which continues to be the Companys major
institutional services subsidiary.

On January 31, 2001, the Company sold
several investments and businesses for aggregate proceeds of
approximately $43.2 million and in January 2002, the
Company acquired the Securities Pricing Services of Merrill
Lynch, Pierce, Fenner & Smith Incorporated
(Merrill Lynch) for $48.0 million.

On February 28, 2003, the Company acquired
S&P ComStock, Inc. (ComStock), a real-time
information service providing financial data from approximately
180 stock exchanges worldwide. The Company paid
$115 million in cash for ComStock. which was formerly a
unit of Standard & Poors, a division of The
McGraw-Hill Companies (NYSE: MHP).

Forward-looking Statements

Forward-looking statements, within the meaning of
Section 21E of the Securities Exchange Act of 1934 are made
throughout this Annual Report on Form 10-K. Any statements
in this document that are not statements of historical fact may
be deemed forward-looking statements including statements
regarding strategy, future operating results and projections.
Without limiting the foregoing, the words, believes,
anticipates, plans, expects,
seeks, estimates, trends,
and similar expressions are intended to identify forward-looking
statements. While the Company may elect to update
forward-looking statements in the future, it specifically
disclaims any obligation to do so, even if the Companys
estimates change, and readers should not rely on those
forward-looking statements as representing the Companys
views as of any date subsequent to the date of the filing of
this report.

Known and unknown risks and uncertainties, as
well as inaccurate assumptions, could cause the results of the
Company to differ materially from those indicated by such
forward-looking statements, including those detailed under the
heading Information Regarding Forward-Looking
Statements in Part II, Item 7,
Managements Discussion and Analysis of Financial
Condition and Results of Operations.

2



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Description of Business

The Company operates in two business segments:



| |                                        
| | ---------------------------------------
| | (1)     Institutional
    services, and
|
| | (2)     Retail Investor
    services.  

In the Institutional services segment, the
Company supplies time sensitive pricing (including evaluated
pricing), dividend, corporate action and descriptive information
for approximately 3.5 million securities traded around the
world to banks, brokerage firms, insurance companies, money
managers and mutual fund companies. The Company also provides
fixed income portfolio analytics, consulting and valuation
services to institutional fixed income portfolio managers.

The Retail Investor services segment primarily
provides streaming, real-time, continuously updating financial
data over the Internet (through its eSignal® division) and
via broadcast technology to individual and professional
investors and traders. This segment provides market quotes for
stocks, options and futures, as well as charts, news, research,
alerts, analytics and decision support tools.

For the last three years, total revenue
contributed by the Companys operating segments was as
follows (see Note 18 to the consolidated financial statements
for additional financial information about the Companys
segments):

|                         |           |             |         |        |  |      |         |        |  |   |         |        | 
|------------------------ | --------- | ----------- | ------- | ------ |  | ---- | ------- | ------ |  | - | ------- | ------ | 
|                         |           | 2002        |         | 2001   |  | 2000
|                         |           |             |         |        |  |     
|                         |           |            
|                         |           | (In $000s)
|Institutional Services   |           | $           | 334,992 |        |  | $    | 294,440 |        |  | $ | 269,943 |       
|Retail Investor Services |           |             |         |        |  |      |         |        |  |   |         |       
|                         | eSignal   |             |         | 35,545 |  |      |         | 35,392 |  |   |         | 27,427 | 
|                         | Broadcast |             |         | 4,478  |  |      |         | 10,170 |  |   |         | 16,768 | 
|                         |           |             |         |        |  |      |         |        |  |   |         |       
|Total Retail             |           | $           | 40,023  |        |  | $    | 45,562  |        |  | $ | 44,195  |       
|Total                    |           | $           | 375,015 |        |  | $    | 340,002 |        |  | $ | 314,138 |       

The Company derives a significant amount of its
revenues from outside the United States (see Note 18 to the
consolidated financial statements for information regarding such
revenues and foreign assets). The Company is subject to currency
fluctuation and risks due to political, social, regulatory, tax
and economic structures of other countries.

Institutional Services Segment

The Company operates under two brands in the
Institutional services segment of its business,
FT Interactive Data and CMS BondEdge®.



| |                    
| | -------------------
| | FT Interactive Data

FT Interactive Data is a leading provider of
financial data. FT Interactive Data plays an important
supporting role in many areas of the financial information
market, including:



| |   |                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | post-transaction portfolio evaluation, where
    customers focus on valuing and administering securities;                                                                              
|
| |  | post-transaction back office functions, in which
    purchases and sales of securities are finalized and customers
    prepare account statements for themselves and their clients; and
|
| |  | investment research, which helps customers
    determine whether and when to buy and sell securities.                                                                                  

FT Interactive Data operates in three main
geographic regions: North America, United Kingdom/ Europe and
Asia/ Pacific (Hong Kong, Singapore and Australia).

3



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Services

Data
Collection

FT Interactive Data collects and calculates
information on approximately 3.5 million securities,
including approximately 2.5 million fixed income securities
traded around the world. The coverage includes North American
corporate, government and agency fixed income issues, municipal
bonds, pass-through securities and structured finance
securities. For non-North American issues, FT Interactive
Data covers convertibles, debentures, Eurobonds, government and
corporate bonds and loan capital. The information for fixed
income issues includes pricing (including evaluated pricing),
call and sinking fund, called announcements, descriptive data,
interest payments, original issue discount and reorganization
data.

FT Interactive Data also collects and creates
databases of information on equities traded on exchanges around
the world. The information includes pricing, capitalization
changes and dividends, descriptive data, earnings and shares
outstanding and reorganization announcements.
FT Interactive Data is also a provider of index and
constituent data to the global investment markets.

FT Interactive Data stores this data in a variety
of databases, offering clients up to 35 years of selected
history. Historical data is used by to clients who need this
information to perform a variety of analyses including
investment and risk analyses.

Data
Delivery Services

FT Interactive Data provides data to customers
using various delivery applications designed to deliver its data
to clients in a timely and reliable manner. These delivery
services include online access to a client via the clients
PC using either a dial-up modem or a Web connection.
FT Interactive Data also delivers data via a mainframe
computer link that is used to deliver large amounts of data over
high-speed communication lines.

Marketing
Strategy

FT Interactive Data markets its services through
a dedicated sales force located in the U.S., Europe and Asia
Pacific. The sales force is supported by promotional campaigns
focused on direct mail, trade shows and advertising in trade
publications. Programs are specialized to the U.S., European and
Asian markets. Most of FT Interactives services are sold
on a subscription basis for a one-year initial term, with
automatic renewal for subsequent one-year terms unless
terminated.

The Company has rights to use the FT
brand in conjunction with its institutional activities on a
global basis under a license with The Financial Times Limited,
an affiliate of Pearson. As of February 28, 2003, Pearson
indirectly owns approximately 60% of the Companys
outstanding common stock. This license has an initial five-year
term that ends in March 2006. Thereafter the license renews for
subsequent one-year terms unless terminated.

Customers
and Competition

FT Interactive Data supplies data directly to
several thousand institutional end user customers, including
banks, brokerage firms and investment management firms. Most of
FT Interactive Datas customers purchase data to support
their own operational needs.

FT Interactive Data also contracts with
redistributors and service bureaus (or outsourcing
organizations) to sub-license or redistribute data to the medium
and small institutions and individual investors. Unlike the
institutional end user customers described above, these
redistributors and service bureaus use their own delivery
systems or serve as an interface between their clients and FT
Interactive Datas delivery systems, to redistribute and/or
process the data provided by FT Interactive Data.

FT Interactive Data also operates within the
securities research segment of the financial information market.
Stockbrokers, trustees, fund managers and consultants use
securities index data provided by FT Interactive Data to
conduct benchmarking, risk analysis, fund tracking, performance
measurement and attribution and trading activities.

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FT Interactive Datas main competitors
include several large global suppliers of news and financial
data and many smaller suppliers that compete in a variety of
geographic and niche markets. FT Interactive Data also faces
competition from large broker dealers, which trade fixed income
securities. Coverage of securities, accuracy of data, timeliness
and reliability of data delivery and customer support are the
primary competitive factors in this marketplace. The Company
believes that FT Interactive Data competes favorably in each of
these areas.

Technical
Infrastructure

FT Interactive Datas mainframe processors
located, in Waltham, Massachusetts and London, England, are used
to process securities history and daily pricing data.
Fault-tolerant processors located in Hong Kong; London, England;
Melbourne, Australia; New York City; and Waltham, Massachusetts,
process real-time feeds from securities exchanges around the
world. UNIX machines located in each of these data centers are
used to collect and deliver data.

In addition, at each data center, FT Interactive
Data uses what it believes to be state-of-the-art disk storage
devices configured to provide optimum speed and reliability.

CMS
BondEdge®

Services

CMS BondEdge is a leading provider of fixed
income portfolio analytics to the institutional investment
community. Its flagship product, the BondEdge system, provides
interest rate and credit risk management, regulatory reporting
and compliance tools. BondEdge portfolio applications include
advanced risk measures, standard and custom reports, what-if
analytics, bond index comparisons and tracking error analysis,
cash flow and total return simulations, total return
optimization, performance measurement and performance
attribution.

Marketing
Strategy

BondEdge is marketed to institutional fixed
income managers on both the buy-side and the sell-side. The open
architecture of BondEdge allows for the import and export of
calculated and descriptive data. BondEdge interfaces with many
of the major third-party accounting and asset/liability software
packages to reduce duplicate data entry and to help to improve
accuracy and efficiency within an organization.

In North America, the Company markets BondEdge as
CMS BondEdge, an affiliate of FT Interactive Data. During 2001,
the Company introduced BondEdge under the FT Interactive Data
brand outside North America seek to leverage off the strength of
the FT brand in Europe. The target market for the BondEdge
product is the institutional fixed income portfolio manager who
invests in or sells a broad range of security types that require
specialized modeling. End-users at a client site are typically
portfolio managers, quantitative research analysts and
institutional brokers.

BondEdge is marketed through advertising, highly
targeted trade shows specific to fixed income analysis, direct
mail and a dedicated sales force that provides on-site or remote
product demonstrations via the Internet. CMS BondEdge also hosts
its own annual fixed income conference for clients and
prospective clients. BondEdge is a subscription-based, modular
service.

Customers
and Competition

CMS BondEdge targets the premium end of the fixed
income institutional investor market. With over 500
institutional investment firms, banks, insurance companies and
brokerage houses in North America who use BondEdge, CMS BondEdge
believes it has a strong position in the North American market.

As a specialty service, CMS BondEdge has several
competitors of various sizes. None of its major competitors is
solely focused on fixed income analytics software; to the
Companys knowledge, CMS BondEdge is one of the few
independent fixed income analytics providers, having no
affiliation with a

5



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brokerage firm or a consulting business.
Competition focuses on product reputation, sophistication of
analytics, types of securities analyzed, breadth of data,
flexibility of reporting and quality of customer service. The
Company believes that CMS BondEdge competes favorably in each of
these areas.


Technical
Infrastructure

BondEdge clients are provided access to daily
market data updates via the Internet to facilitate accurate
analytic calculations and reports, and a flexible array of
deployment options. There is continuous development and support
of various deployment options, with a goal of delivering fixed
income analytics to additional sectors of the market and
end-users. CMS BondEdge currently supports the following
deployment options for BondEdge analytics: client-server, local
area network (LAN), wide area network (WAN), application service
provider (ASP) and service bureau (outsourcing reporting
service). Alternative deployment projects under development
include a private labeled version of the ASP solution for
potential redistributors and rearchitecture of the product into
independently saleable components. CMS BondEdges data
storage facility is located in Santa Monica, California.

Retail Investor Services Segment

The Retail Investor services segment, operating
through the Companys eSignal division, provides streaming,
real-time financial market information and decision support
tools over the Internet and via leased lines. The financial data
and support tools include stock and commodity market quotes for
approximately 750,000 securities from all domestic markets and
several international exchanges, equity analytics, financial
news and information, access to historical databases, technical
charting, back testing, customizable portfolio tracking, and
news coverage and commentary.

Marketing
Strategy

eSignal is marketed through advertising,
marketing alliances, third party developer relationships,
product seminars, trade shows, email, direct mail and referrals.
Advertising is used to generate telephone calls to sales
representatives.

In addition, the Company has developed marketing
alliances with online brokers that market eSignals
Internet-delivered products to their customers. eSignal also
encourages third-party software developers to write trading
system software that is integrated with eSignals systems.
In addition, eSignal provides incentives to existing subscribers
for referrals.

Customers
and Competition

eSignal services are sold primarily to active and
professional investors. These clients seek real-time, delayed or
end-of-day quotations, analytical and portfolio tracking
services or some combination thereof. The target market for the
real-time services of eSignal consists primarily of individuals
who make their own investment decisions, trade frequently and
earn a substantial portion of their income from trading.

eSignal competes primarily in the high quality,
higher price segment of the real-time financial data market
against numerous competitors. The Company believes the principal
competitive factors in the industry include data availability
and reliability, ease of use, compatibility with third-party
software packages and price. The Company believes eSignal
competes favorably in each of these areas.

Technical
Infrastructure

Over the past years, eSignal has blended
technologies to create a large, flexible, networked data
transmission system. Built internally by the eSignal team, the
Companys data delivery technology, TurboFeedTM,
is an IP multicast backbone that delivers real-time, streaming
market data directly from the exchanges. This technological
infrastructure provides two redundant ticker plant facilities
with multiple, geographically dispersed server farms, fed with
live data from direct, redundant connections to the NYSE, AMEX,
Nasdaq, Canadian, North American and European Futures and U.S.
Options exchanges. Once the

6



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##### Table of Contents



data from the ticker plants is received and
consolidated, a compressed and proprietary datafeed is produced
and distributed via multiple technologies to the client. News
services and market commentary are also processed in this manner.


eSignals ticker plants are staffed
24 hours per day, 7 days a week, 365 days a year.
Its two locations are in Hayward, California and Salt Lake City,
Utah. Either site can function as a primary site in the event of
a system failure, equipment problem or regional disaster. User
connections are load balanced between both sites. In the event
of a site failure, the remaining site has the capacity to handle
the additional load.

Intellectual Property

The Company maintains a portfolio of intellectual
property, including registered and common law trademarks and
service marks, copyrights and patents, which are important in
each segment of its business; however, no particular trademark,
service mark, copyright, or patent is so important that its loss
would significantly affect the Companys operations as a
whole. Collectively, the Company and its divisions and
subsidiaries claim approximately 50 trademarks and service
marks. The Company places significant emphasis on its branding
and considers its trademark and service mark portfolio to be an
important part of its ongoing branding campaign. In addition,
the Company owns the copyrights to its internally developed
software applications and data delivery services. The Company
currently has three United States patents issued and one United
States patent application pending. The three United States
patents expire in 2007, 2011, and 2012, respectively.

License agreements, both as licensor with its
customers and as licensee with suppliers of data, are important
to the Companys business. The termination of any license
with a major data supplier, such as the New York Stock Exchange,
could materially disrupt the Companys operations.

Employees

The Company employed approximately
1,570 people as of December 31, 2002. The Company
believes that its relationship with employees is good.

Regulation

The Federal Communications Commission
(FCC) regulates the broadcasting of satellite,
FM-SCA and other airwave transmissions in the United States. The
FCC has licensed the Company to transmit data from its uplink
facilities in Salt Lake City, Utah. Although the Company uses
its FCC license to transmit data to third-party satellites
for further transmission, the loss of such license would not be
expected to have a long-term material adverse effect on the
Company because of other transmission alternatives.

DBC Securities Inc., a subsidiary of the Company,
is registered as a broker-dealer with the Securities and
Exchange Commission (SEC) and various state
securities commissions and is also subject to regulation by the
National Association of Securities Dealers, Inc., of which it is
a member.

FT Interactive Data Corporation, a subsidiary of
the Company, is registered with the SEC as an investment
advisor. As such it is subject to regulation under the
Investment Advisors Act of 1940.

Internet Address and SEC Reports

The Companys Internet address
(website) is www.interactivedatacorp.com. The
Companys annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K, and
all amendments to those reports are available free of charge
through the Investor section of the Companys website as
soon as reasonably practicable after such reports have been
electronically filed with, or furnished to, the SEC.

7



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Item 2.     Properties

The Company owns no real estate but leases the
following principal facilities for use as corporate
headquarters, sales offices and data centers:

|                     |  |                          |               |        |        |             |        |            |           |   |           |  |           |  |                | 
|-------------------- |  | ------------------------ | ------------- | ------ | ------ | ----------- | ------ | ---------- | --------- | - | --------- |  | --------- |  | -------------- | 
|                     |  | Operating                |               | Square |        | Current     |        | Expiration
|Location             |  | Unit/Segment             |               | Feet   |        | Annual Rate |        | Date      
|                     |  |                          |               |        |        |             |        |           
|New York, NY         |  |                          | Institutional |        |        |             | 87,304 |            |           | $ | 1,921,977 |  |           |  | May 2013       | 
|New York, NY         |  |                          | Institutional |        |        |             | 27,386 |            |           | $ | 868,136   |  |           |  | November 2009  | 
|Bedford, MA          |  | Institutional/ Corporate |               |        | 80,348 |             |        | $          | 1,522,083 |   |           |  | July 2006 | 
|Boston, MA           |  |                          | Institutional |        |        |             | 11,910 |            |           | $ | 464,484   |  |           |  | March 2005     | 
|Waltham, MA          |  |                          | Institutional |        |        |             | 32,535 |            |           | $ | 512,348   |  |           |  | September 2005 | 
|Chicago, IL          |  |                          | Institutional |        |        |             | 3,689  |            |           | $ | 28,488    |  |           |  | September 2004 | 
|Newport Beach, CA    |  |                          | Institutional |        |        |             | 600    |            |           | $ | 25,650    |  |           |  | October 2003   | 
|Santa Monica, CA     |  |                          | Institutional |        |        |             | 22,877 |            |           | $ | 687,957   |  |           |  | November 2012  | 
|Hong Kong, PRC       |  |                          | Institutional |        |        |             | 741    |            |           | $ | 17,309    |  |           |  | April 2003     | 
|Melbourne, Australia |  |                          | Institutional |        |        |             | 4,828  |            |           | $ | 50,224    |  |           |  | November 2005  | 
|Singapore            |  |                          | Institutional |        |        |             | 743    |            |           | $ | 20,356    |  |           |  | December 2004  | 
|Hayward, CA          |  |                          | Retail        |        |        |             | 60,000 |            |           | $ | 1,043,676 |  |           |  | June 2013      | 
|Salt Lake City, UT   |  |                          | Retail        |        |        |             | 17,196 |            |           | $ | 302,772   |  |           |  | December 2003  | 
|Akron, OH            |  |                          | Retail        |        |        |             | 6,500  |            |           | $ | 154,992   |  |           |  | September 2003 | 
|London, England      |  |                          | Institutional |        |        |             | 65,000 |            |           | $ | 1,390,382 |  |           |  | April 2010     | 
|Edinburgh, Scotland  |  |                          | Institutional |        |        |             | 5,200  |            |           | $ | 109,727   |  |           |  | August 2006    | 
|Dublin, Ireland      |  |                          | Institutional |        |        |             | 4,000  |            |           | $ | 105,218   |  |           |  | March 2005     | 
|Luxembourg           |  |                          | Institutional |        |        |             | 2,500  |            |           | $ | 97,703    |  |           |  | September 2006 | 

The Company believes its facilities are in good
condition and are suitable and adequate for its current
operations.

If the Company is unable to renew any of the
leases that are due to expire in the next year or two, the
Company believes that suitable replacement properties are
available on commercially reasonable terms.




Item 3.     Legal
Proceedings

Early in 2001, seven lawsuits were filed by
various stockholders of the Company against the Companys
directors, Pearson Longman plc and its subsidiary Pearson
Longman, Inc. These actions have been consolidated in the
Delaware Chancery Court for New Castle County under the caption
In re Data Broadcasting Corporation Derivative Litigation:
Consolidated Civil Action No. 18665-NC(the
Derivative Action). As is usual in derivative
actions, the Company is named as a nominal defendant in the
Derivative Action on the theory that the plaintiff stockholders
are allegedly suing on its behalf and for its benefit.

The Derivative Action challenges the
Companys January 2001 sale of its 34.4% interest in
MarketWatch.com Inc. (MarketWatch) MarketWatch to
Pearson, the parent company of the Companys majority
stockholder, as having been consummated at an allegedly
inadequate price due to the supposedly undue influence of
Pearson as the Companys majority stockholder. Plaintiffs
seek to have Pearson and the Companys directors
account to the Company for damages that the Company
allegedly sustained by reason of an unduly low sale price.

In January 2003, counsel for all parties signed a
stipulation whereby the named plaintiffs dismissed the case with
prejudice as to the three independent director defendants.
Should the plaintiffs elect to go forward with the action as to
the remaining defendants, the Company and the remaining director
defendants intend to continue to vigorously contest the
allegations against them.

8



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##### Table of Contents



In November 2000, the Securities and Exchange
Commission (the SEC) began an investigation into
management of two Heartland Group high-yield municipal bond
funds. The Company was not named in the SECs formal order
of investigation but has cooperated fully with the SEC. The SEC
staff subsequently notified us of its view that the Company may
have facilitated federal securities laws violations committed by
other parties and has advised us that it may recommend the
commencement of an enforcement action against the Company. None
of our officers, directors, or employees has been similarly so
notified. The SEC staff has not identified who the other parties
are or specified what their misconduct was. We understand that
the SEC staff is concerned about evaluated prices for several
small high-yield municipal bonds provided by the Company in
March-April 2000 and in July-August 2000. We believe that our
evaluations were both appropriate and consistent with our usual
practices. We have informed the SEC staff as to the reasons for
our belief that no action against the Company would be factually
or legally warranted. If the SEC decides to proceed with an
enforcement action, we would contest the matter vigorously.
Irrespective of its outcome, we believe that this matter will
not materially affect our results of operations or financial
condition.

On a separate but related matter, shareholders of
the two funds have notified us of their intention to commence an
action against the Company, even though neither the funds nor
their advisor had ever chosen to do so. We understand that the
shareholders claims would be related to widely reported
September and October 2000 decreases in the funds net
asset values. We do not believe that any such action would have
merit or would materially affect the Companys results of
operations or financial condition.

In addition to the matters discussed above, the
Company is involved in ordinary, routine litigation from time to
time in the ordinary course of business with a portion of the
defense and/or settlement costs in some such cases being covered
by various commercial liability insurance policies. The Company
does not expect that the outcome of any of these matters will
have a material adverse impact on its financial condition or
results of operations.




Item 4.     Submission
of Matters to a Vote of Security Holders

No matters were submitted to a vote of security
holders during the fourth quarter of 2002.




PART II




Item 5.     Market
for Registrants Common Equity and Related Stockholder
Matters

Market Information

The Company has two classes of authorized stock:
200 million shares of common stock, $0.01 par value per
share, and 5 million shares of preferred stock, $0.01 par
value per share, none of which has been issued.

The Companys common stock commenced trading
on the New York Stock Exchange under the trading symbol
IDC on December 10, 2002. Prior to
December 10, 2002, the Companys common stock traded
on the Nasdaq National Market under the trading symbol
IDCO.

The range of high and low bid prices for the
common stock of the Company as reported by Nasdaq for each
quarterly period since the first quarter of 2001 is shown below
(with respect to the quarter ended December 31, 2002 such
table includes consideration of the high and low sales price as
reported by NYSE for the period December 10 through
December 31, 2002):

|      |                            |      |   |       |  |  |   |       | 
|----- | -------------------------- | ---- | - | ----- |  |  | - | ----- | 
|      |                            | High |   | Low  
|      |                            |      |   |      
|2002: |                            |      |   |       |  |  |   |      
|      | Quarter Ended March 31     |      | $ | 18.07 |  |  | $ | 13.90 | 
|      | Quarter Ended June 30      |      | $ | 20.00 |  |  | $ | 14.74 | 
|      | Quarter Ended September 30 |      | $ | 15.20 |  |  | $ | 11.72 | 
|      | Quarter Ended December 31  |      | $ | 15.63 |  |  | $ | 12.25 | 

9



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##### Table of Contents



|      |                            |      |   |       |  |  |   |       | 
|----- | -------------------------- | ---- | - | ----- |  |  | - | ----- | 
|      |                            | High |   | Low  
|      |                            |      |   |      
|2001: |                            |      |   |       |  |  |   |      
|      | Quarter Ended March 31     |      | $ | 7.59  |  |  | $ | 3.69  | 
|      | Quarter Ended June 30      |      | $ | 10.25 |  |  | $ | 6.50  | 
|      | Quarter Ended September 30 |      | $ | 13.10 |  |  | $ | 9.65  | 
|      | Quarter Ended December 31  |      | $ | 15.00 |  |  | $ | 12.67 | 

Stockholders

As of February 28, 2003, there were 1,417
holders of record of the 91,920,176 outstanding shares of the
Companys common stock.

Dividends

In January 2001, the Company paid a special
dividend of $0.29 per share of common stock, or an aggregate
amount of $26,871,000, related to the proceeds received from the
sale of the Companys investment in MarketWatch. The
Company currently intends to retain earnings, if any, to finance
the development of the Companys business and does not
anticipate paying cash dividends on the Companys common
stock in the foreseeable future. Future determinations by the
Companys board of directors to pay dividends on the
Companys common stock would be based primarily upon the
financial condition, results of operations and business
requirements of the Company. Dividends, if any, would be payable
in the sole discretion of the Companys board of directors
out of the funds legally available therefore.




Item 6.     Selected
Financial Data

The following selected historical consolidated
financial information for each of the years ended
December 31, 1998 through 2002 has been derived from the
Companys consolidated financial statements and represents
the historical consolidated financial information of FT
Interactive Data prior to the Merger and the combined Company
subsequent to the Merger. For additional information see
Managements Discussion and Analysis of Financial
Condition and Results of Operations included in
Item 7. The information set forth below is qualified by
reference to and should be read in conjunction with the
Companys consolidated financial statements and related
notes thereon included herein.

|                                         |         |                                           |         |        |  |      |         |        |  |      |          |        |   |   |         |        |  |   |         |        |  
|---------------------------------------- | ------- | ----------------------------------------- | ------- | ------ |  | ---- | ------- | ------ |  | ---- | -------- | ------ | - | - | ------- | ------ |  | - | ------- | ------ | -
|                                         |         |                                          
|                                         |         | As of and For the Year Ended December 31,
|                                         |         |                                          
|                                         |         | 2002                                      |         | 2001   |  | 2000 |         | 1999   |  | 1998
|                                         |         |                                           |         |        |  |      |         |        |  |     
|                                         |         |                                          
|                                         |         | (In thousands, except per share amounts) 
|Revenues                                 |         | $                                         | 375,015 |        |  | $    | 340,002 |        |  | $    | 314,138  |        |   | $ | 188,956 |        |  | $ | 153,677 |       
|Income (loss) from operations            |         |                                           | 98,232  |        |  |      | 25,653  |        |  |      | (3,091   | )      |   |   | 17,604  |        |  |   | (30     | )     
|Net income (loss)(1)                     |         |                                           | 60,733  |        |  |      | 4,312   |        |  |      | (143,472 | )      |   |   | 6,197   |        |  |   | (3,215  | )     
|Net income (loss) per common share       |         |                                           |         |        |  |      |         |        |  |      |          |        |   |   |         |        |  |   |         |       
|                                         | Basic   |                                           |         | .67    |  |      |         | .05    |  |      |          | (1.68  | ) |   |         | .11    |  |   |         | (.06   | )
|                                         | Diluted |                                           |         | .65    |  |      |         | .05    |  |      |          | (1.68  | ) |   |         | .11    |  |   |         | (.06   | )
|Weighted average common shares           |         |                                           |         |        |  |      |         |        |  |      |          |        |   |   |         |        |  |   |         |       
|                                         | Basic   |                                           |         | 91,159 |  |      |         | 90,844 |  |      |          | 85,560 |   |   |         | 56,424 |  |   |         | 56,424 |  
|                                         | Diluted |                                           |         | 93,730 |  |      |         | 92,510 |  |      |          | 85,560 |   |   |         | 56,424 |  |   |         | 56,424 |  
|Total assets                             |         |                                           | 765,227 |        |  |      | 697,983 |        |  |      | 742,090  |        |   |   | 452,702 |        |  |   | 295,048 |       
|Stockholders equity                     |         |                                           | 662,743 |        |  |      | 582,667 |        |  |      | 622,512  |        |   |   | 340,953 |        |  |   | 221,736 |       
|Cash dividends declared per common share |         |                                           |        |        |  |      | .29     |        |  |      |         |        |   |   |        |        |  |   |        |       



---



|    |                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Results for 2000 include equity in the losses
    from MarketWatch of $67,229 and an other than temporary loss in
    MarketWatch of $141,844.

10



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##### Table of Contents








|        |                                                                                                             
|------- | ------------------------------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis
    of Financial Condition and Results of Operations (in
    thousands)

The following discussion should be read in
conjunction with Item 6. Selected Financial
Data and the Companys consolidated financial
statements included herein.

General

The Company primarily supplies financial and
business information to institutional and retail investors
worldwide. The Company is a leading provider of time sensitive
pricing (including evaluated pricing), dividend, corporate
action and descriptive information for approximately
3.5 million securities. The Company also provides fixed
income portfolio analytics, consulting and valuation services to
institutional fixed income portfolio managers. At the core of
the business are its extensive database expertise and technology
resources.

The Company distributes real-time, end of day and
historically archived data to customers through a variety of
services featuring Internet, dedicated line, satellite and
dialup delivery protocols. Through a broad range of strategic
alliances, the Company provides links to leading financial
service and software companies offering trading, analysis,
portfolio management and valuation services.

The Company operates in two business segments:

Institutional
services delivery of time
sensitive pricing (including evaluated pricing), dividend,
corporate action, hard-to-value unlisted fixed income
instruments, and descriptive information and fixed income
portfolio analytics to institutional customers.

Retail Investor
services delivery of
real-time financial market information and decision support
tools primarily to the active investor and professional trader
customers.

The services provided by the Company include the
following:



| |                        
| | -----------------------
| | Institutional services:

FT Interactive Data provides a wide range of high
quality financial information to trading houses, custodians and
fund managers worldwide. The financial information collected,
generated and distributed includes pricing, descriptive and
corporate action information on securities from all over the
world.

CMS BondEdge® provides fixed income
analytical tools and models designed for investment managers,
broker dealers, insurance companies and bank and pension fund
managers.



| |                          
| | -------------------------
| | Retail investor services:

The Companys Internet based services offer
real-time, Internet delivered subscription quote service
primarily for active and professional traders offering charts,
news, research, decision support tools and alerts direct to a
laptop, PC or telephone.

The Companys broadcast services deliver
real time quotes to communication devices that rely on FM
subcarriers, satellite and cable television or telephone lines.



| |               
| | --------------
| | Market trends:

In 2002, the core institutional services market
has experienced a higher than normal level of cancellations
primarily attributable to cost cutting across financial
institutions. However, 2002 revenues from the FT Interactive
Data business remained relatively resilient in the current
uncertain market conditions due primarily to new business
generated in the final quarter of 2001 and new customer
contracts entered into in 2002, which more than offset the level
of cancellations noted above. The Company believes that this is
because much of the data supplied by the Company is mission
critical to its customers and needed for their operations
regardless of market conditions. In 2002, more of our new
business at FT Interactive Data came from our services that
address fixed income securities as asset managers moved
investments out of equities

11



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##### Table of Contents



into fixed income instruments. The Companys
CMS BondEdge division saw a continued slowdown in sales
primarily attributable to cost cutting across financial
institutions.


There is a continuing trend in North America for
major financial institutions to outsource their back office
operations to service bureaus and custodian banks. The Company
has established relationships with, and is a major data supplier
to, many service bureaus and custodian banks, and expects to
benefit from their growth. Another trend in North America is the
consolidation of financial institutions. When institutions
merge, they look to gain synergies by combining their
operations, thereby removing the need for two data sources,
which accounts for some of the higher than normal cancellations
mentioned previously.

Growth in the institutional market is dependent
on the Companys ability to continue to expand its data
content offerings to meet the needs of its clients. This will
include continuing to expand the coverage of premium priced
fixed income data sets and the launch of new services such as
the Companys Fair Value Information Service
which is primarily oriented toward mutual funds. In addition,
the Company will continue to look to expand its market share in
the European market, although the Company expects current
difficult market conditions will slow this effort as customers
take longer to make purchase decisions. Purchasing decisions in
the United States are also expected to take longer.

In the Companys retail investor services
segment, the eSignal service continued to strengthen its
position as a leading financial data provider primarily for
retail and professional investors. After a decline in
subscribers through the end of September 2001, the Company
experienced net growth in subscribers in the final quarter of
2001 and throughout 2002. In 2002, a large proportion of the
increase in subscribers has come from developing further
distribution channels, which generate incremental revenues at a
lower rate than from direct customers. Although the number of
subscribers is up, per subscriber revenue declined as further
described below.

On January 31, 2002, the Company completed
its acquisition of the Securities Pricing Service business from
Merrill Lynch (SPS) for aggregate cash consideration
of $48,000. This acquisition allowed the FT Interactive
Data business to expand its client base and enhance its coverage
of fixed income securities. The operational results of SPS have
been included in the consolidated results from the date of
acquisition.

The Company acquired from The McGraw-Hill
Companies, Inc. the stock of S&P Comstock, Inc.
(ComStock) and the assets of certain ComStock
related McGraw-Hill businesses in the United Kingdom, France,
Australia, Singapore and Hong Kong for $115,000 on
February 28, 2003. The Company funded this acquisition from
its existing cash resources.

ComStock, a real-time information service,
provides worldwide financial data, news, historical information
and software applications. This acquisition provides the Company
direct access to real-time market data from more than
180 stock exchanges and other sources worldwide. The
acquisition also expands the Companys real-time datafeed
services, and provides the Company the opportunity to market
ComStocks content and product to several thousand
institutional customers worldwide.

12



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##### Table of Contents



Results of Operations

Selected Financial Data

|                                                       |           |                                       |         |        |  |      |         |        |  |   |          |        |  
|------------------------------------------------------ | --------- | ------------------------------------- | ------- | ------ |  | ---- | ------- | ------ |  | - | -------- | ------ | -
|                                                       |           |                                      
|                                                       |           | For the Years Ended December 31,     
|                                                       |           |                                      
|                                                       |           | 2002                                  |         | 2001   |  | 2000
|                                                       |           |                                       |         |        |  |     
|                                                       |           |                                      
|                                                       |           | (Amounts in thousands, except for per
|                                                       |           | share information)                   
|SERVICES REVENUES                                      |           |                                       |         |        |  |      |         |        |  |   |          |       
|Institutional                                          |           | $                                     | 334,992 |        |  | $    | 294,440 |        |  | $ | 269,943  |       
|Retail:                                                |           |                                       |         |        |  |      |         |        |  |   |          |       
|                                                       | eSignal   |                                       |         | 35,545 |  |      |         | 35,392 |  |   |          | 27,427 |  
|                                                       | Broadcast |                                       |         | 4,478  |  |      |         | 10,170 |  |   |          | 16,768 |  
|                                                       |           |                                       |         |        |  |      |         |        |  |   |          |       
|TOTAL REVENUES                                         |           |                                       | 375,015 |        |  |      | 340,002 |        |  |   | 314,138  |       
|Cost of Services                                       |           |                                       | 112,377 |        |  |      | 103,618 |        |  |   | 105,524  |       
|Selling, General & Administrative                      |           |                                       | 131,169 |        |  |      | 122,066 |        |  |   | 116,091  |       
|                                                       |           |                                       |         |        |  |      |         |        |  |   |          |       
|EBITDA(1)                                              |           |                                       | 131,469 |        |  |      | 114,318 |        |  |   | 92,523   |       
|Depreciation                                           |           |                                       | 14,500  |        |  |      | 13,139  |        |  |   | 12,671   |       
|Amortization                                           |           |                                       | 18,737  |        |  |      | 75,526  |        |  |   | 82,943   |       
|                                                       |           |                                       |         |        |  |      |         |        |  |   |          |       
|INCOME (LOSS) FROM OPERATIONS                          |           |                                       | 98,232  |        |  |      | 25,653  |        |  |   | (3,091   | )     
|Equity in loss from MarketWatch.com, Inc.              |           |                                       |        |        |  |      |        |        |  |   | (67,229  | )     
|Other than temporary loss in MarketWatch.com,
    Inc. |           |                                       |        |        |  |      |        |        |  |   | (141,844 | )     
|Other income, net                                      |           |                                       | 1,989   |        |  |      | 2,882   |        |  |   | 1,170    |       
|                                                       |           |                                       |         |        |  |      |         |        |  |   |          |       
|INCOME (LOSS) BEFORE INCOME TAXES                      |           |                                       | 100,221 |        |  |      | 28,535  |        |  |   | (210,994 | )     
|Income tax expense (benefit)                           |           |                                       | 39,488  |        |  |      | 24,223  |        |  |   | (67,522  | )     
|                                                       |           |                                       |         |        |  |      |         |        |  |   |          |       
|NET INCOME (LOSS)                                      |           | $                                     | 60,733  |        |  | $    | 4,312   |        |  | $ | (143,472 | )     
|                                                       |           |                                       |         |        |  |      |         |        |  |   |          |       
|NET INCOME (LOSS) PER SHARE                            |           |                                       |         |        |  |      |         |        |  |   |          |       
|                                                       | Basic     |                                       |         | $0.67  |  |      |         | $0.05  |  |   |          | $(1.68 | )
|                                                       | Diluted   |                                       |         | $0.65  |  |      |         | $0.05  |  |   |          | $(1.68 | )
|Weighted average shares outstanding:                   |           |                                       |         |        |  |      |         |        |  |   |          |       
|                                                       | Basic     |                                       |         | 91,159 |  |      |         | 90,844 |  |   |          | 85,560 |  
|                                                       | Diluted   |                                       |         | 93,730 |  |      |         | 92,510 |  |   |          | 85,560 |  



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | EBITDA is defined as net income
    before other income, net income taxes, depreciation and
    amortization expense, equity in losses from MarketWatch and
    other than temporary loss in MarketWatch. EBITDA is presented
    because it is a widely accepted indicator of funds available to
    a business, although it is not a measure of liquidity or
    financial performance under generally accepted accounting
    principles. The Company believes that EBITDA, while providing
    useful information, should not be considered in isolation or as
    an alternative to net income or cash flows as determined under
    generally accepted accounting principles. EBITDA, as presented
    here, may differ from similarly titled measures reported by
    other companies due to potential differences in methods of
    calculation between the Company and other companies.



| |                 
| | ----------------
| | 2002 versus 2001

Revenue for the Company increased from $340,002
in 2001 to $375,015 in 2002, an increase of 10.3%. Revenue for
the institutional services business increased by 13.8% from
$294,440 in 2001 to $334,992 in 2002, reflecting growth in the
FT Interactive Data business, the inclusion of the SPS
business for 11 months of 2002,

13



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##### Table of Contents



and a small benefit from foreign exchange (1%).
The core FT Interactive Data business, including SPS, grew
by 13.7%. This increase reflected the strong performance in new
business from new subscriptions and growth from redistributor
and usage revenues, moderate (between 4% and 6%) price increases
in FT Interactive Data services and subscriptions to our
evaluated pricing services by major financial institutions and
the inclusion of revenue from the acquired SPS business for
11 months of 2002. This growth was partially offset by a
higher level of cancellations due to customers looking to lower
costs in their data collection operations, as a result of the
economic downturn in the overall financial services sector, and
the loss of some revenue where customers used the SPS service as
a backup to the FT Interactive Data service. The
Companys CMS BondEdge division grew revenues by 2.7%
as the division saw a slowdown in new business as a result of
the reluctance of customers to commit to new services in the
current economic environment. Revenue for the retail investor
services business decreased from $45,562 in 2001 to $40,023 in
2002, a decline of 12.2%. eSignals revenues grew
marginally from $35,392 in 2001 to $35,545 in 2002 despite
growing subscribers. This was due to the decline in active
traders willing to subscribe to the full cost eSignal service
being replaced by subscribers only willing to pay for the basic
eSignal service and the growth in eSignal providing feeds to
other active trader tools for a lower monthly subscription. The
Companys broadcast business declined by 56%, as expected,
due to customers migrating to alternative information sources
including the Companys Internet service. This anticipated
decline in the broadcast business is expected to continue.


Cost of services increased by 8.5% from $103,618
in 2001 to $112,377 in 2002. The increase was mainly due to the
inclusion of the SPS business for 11 months in 2002. Cost
of services as a percentage of revenue declined marginally from
30.5% in 2001 to 30% in 2002. The main reasons for this decline
were the cost reductions made in the Companys retail
investor services business to reflect the decline in the number
of broadcast subscribers including reductions in communication
and data acquisition costs as part of the planned phase-out of
the broadcast business, combined with synergies achieved by
combining the FT Interactive Data and SPS businesses.
Selling, general and administrative expenses increased by 7.5%
from $122,066 in 2001 to $131,169 in 2002, reflecting the
inclusion of the SPS business in 2002. Selling, general and
administrative expenses as a percentage of revenue decreased
from 35.9% in 2001 to 35% in 2002. The main reason for this
decrease was the decline in marketing and sales expenditures in
the Companys retail investor services business combined
with synergies from merging the SPS functions with those of
FT Interactive Data.

In 2002, the Company recorded restructuring
charges in the U.S. and UK. These restructuring charges totaled
$3,320 and were primarily related to employee severance. The
severance, in part, was related to the European business
initiation of a restructuring program to transfer part of its
data collection operation from London, England to Dublin,
Ireland in order to gain cost synergies and improve
productivity. The Company recorded costs of $1,100 associated
with this restructuring.

EBITDA increased from $114,318 in 2001 to
$131,469 in 2002, an increase of 15%. This increase was due to
the revenue growth in the institutional services business and
improved margins in both the Companys business segments
combined with the contribution from 11 months results from
the SPS business.

Income from operations increased from $25,653 in
2001 to $98,232 in 2002. The increase in income from operations
was due to higher EBITDA and lower amortization following the
adoption of FAS 142, Goodwill and Other Intangible
Assets on January 1, 2002. As a result of adopting
FAS 142, the Company ceased the amortization of goodwill. These
favorable items were partially offset by higher depreciation due
to a growing level of investment in the Companys
technological infrastructure to handle the expanding volumes of
business and to accommodate the acquisition of the SPS business.

Income before taxes increased from $28,535 in
2001 to $100,221 in 2002 reflecting the higher income from
operations being partially offset by lower other income. Other
income decreased from $2,882 in 2001 to $1,989 in 2002,
reflecting the decline in interest rates on invested cash.

The Companys effective tax rate declined
from 85% in 2001 to 39.4% in 2002 due mainly to the reduction in
non-deductible amortization expense between 2001 and 2002.

14



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##### Table of Contents



The Company generated net income of $60,733 in
2002 compared with net income of $4,312 in 2001. This
improvement was primarily due to the higher income from
operations in 2002 as compared with 2001 discussed above.

The Company generated basic net income per share
of $0.67 and diluted net income per share of $0.65 in 2002, as
compared with basic and diluted net income per share of $0.05 in
2001 due to a combination of higher net income offset, in part,
by a higher number of weighted average shares.

Weighted average basic shares outstanding
increased by 0.3% in 2002 and weighted average diluted shares
increased by 1.3% in 2002 due to options exercised in 2002 as
well as higher level of stock options outstanding in 2002,
partially offset by the Companys stock repurchase plan.

2001 versus
2000

The Companys results for 2001 include a
full year of results for both the FT Interactive Data business
and the Data Broadcasting Corporation (DBC)
business, while the results for 2000 include the operating
results of FT Interactive Data from January 1, 2000 and the
operating results of DBC from February 29, 2000. The
Companys results for 2000 also include results from
Federal News Service (FNS) business, which was sold
on January 10, 2001 and its equity in the losses of
MarketWatch and the other than temporary loss on the MarketWatch
investment.

Revenue for the institutional services business
increased by 9% in 2001 over 2000. The increase reflected strong
growth in the FT Interactive Data business and the inclusion of
the CMS BondEdge business for a full year in 2001, being
partially offset by the sale of the FNS business in January
2001. The Company experienced growth, in part, due to the
continuing expansion of the mutual fund industry and increased
market share for its fixed income evaluated pricing service. The
growth was adversely affected by foreign exchange due to the
strength of the US dollar over the UK pound. Excluding the
effects of foreign exchange, revenue for the institutional
services business grew by 11%. Revenue for the retail investor
services eSignal business grew by 29%, primarily reflecting the
inclusion of this business for a full year in 2001. The
Companys broadcast business declined by 39%, due to
customers migrating to other products including the
Companys Internet product and despite the inclusion of an
additional two months of operating results in 2001.

Cost of services decreased by 2% in 2001 over
2000. The decrease was mainly due a combination of the sale of
the FNS business and cost reduction measures taken in the
Companys retail investor services segment to reflect the
lower subscriber levels in the Broadcast and eSignal businesses,
partially offset by an additional two months costs
following the Merger (See Note 3 to the consolidated
financial statements). Cost of services as a percentage of
revenue declined from 34% in 2000 to 30% in 2001. The main
reasons for this decline were the cost reductions made in the
Companys retail investor services business referred to
above and the sale of the FNS business. Selling, general and
administrative expenses as a percentage of revenue decreased
from 37% in 2000 to 36% in 2001. The main reason for this
decrease was the decline in marketing and sales expenditures in
the Companys retail investor services business, combined
with synergies from merging the central functions of DBC with
those of FT Interactive Data.

EBITDA increased from $92,523 in 2000 to $114,318
in 2001, an increase of 24%. This increase was due to the
revenue growth in the Institutional Services business and
improved margins in both of the Companys business segments
combined with the contribution from an additional two months of
operating results from the DBC businesses. In addition, the
Company continued to benefit from the synergies realized from
combining the businesses of Muller Data® Corporation,
MuniView®, and Valorinform and with FT Interactive Data and
as a result of the Merger (See Note 3 to the consolidated
financial statements).

Income from operations increased from a loss of
$3,091 in 2000 to income of $25,653 in 2001. The increase in
income from operations was due to the factors discussed above
and lower amortization charges.

Income before taxes increased from a loss of
$210,994 in 2000 to income of $28,535 in 2001. The main reason
for the increase was that in 2000 the Company had an equity loss
from its investment in MarketWatch of $67,229. In addition, on
December 27, 2000, the Company announced the sale of its
34.4% ownership in MarketWatch to Pearson for $26,888 which
resulted in the recognition of an other than temporary loss of

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$141,844 on the MarketWatch investment. Other
income increased from $1,170 in 2000 to $2,882 in 2001. This
increase was due primarily to higher invested cash balances in
2001 than in 2000.


The Companys effective tax rate changed
from a benefit of 32% in 2000 to an expense of 85% in 2001
mainly due to net income in 2001 compared with losses in 2000.
The difference between the Companys statutory tax rate and
effective tax rate was primarily due to amortization expense
deducted for financial reporting purposes, which was not
deductible for federal and state tax purposes.

The Company generated net income of $4,312 in
2001 compared with a net loss of $143,472 in 2000. This
improvement was primarily due to higher revenue and income from
operations in 2001 versus 2000 and the significant loss
associated with the investment and disposition of MarketWatch in
2000.

Weighted average diluted shares outstanding grew
by 8% due to the inclusion, throughout 2001, of the shares
issued in connection with the Merger.

Liquidity and Capital Resources

Cash provided by operating activities was
$84,380, $93,812 and $64,950, in 2002, 2001, and 2000,
respectively. The decline from 2001 to 2002 was due, in part,
from increased accounts receivable following the acquisition of
the SPS business in 2002 and higher billings in 2002 as compared
with 2001. The increase from 2000 to 2001 was due to the
improved operating results of the Company and improved working
capital due, in part, from decreased accounts receivable.

The Companys capital expenditures declined
from 2000 to 2001, but increased in 2002. In 2001, capital
expenditures declined to $12,609 from $15,699 in 2000 reflecting
the slow down in the retail investor services segment and
completion of the integration following the Merger in 2000 and
the integration of the businesses acquired in 1999. The increase
to $13,561 in 2002 was mainly due to the integration of the SPS
business acquired in January 2002. Expenditures will continue to
grow in 2003 with the acquisition of Comstock (see Note 19 to
the consolidated financial statements) and the move to
consolidate the Companys multiple data centers.

In 2000, the Company purchased additional shares
of MarketWatch common stock for $43,000. Also, in 2000, the
Company spent $14,766 on two acquisitions. On April 1,
2000, FT Interactive Data acquired Itex (FIT) Limited for
consideration totaling $12,800, comprised of a cash payment of
$11,200 plus relief against an accounts receivable due to the
Companys UK subsidiary of $1,600. On August 31, 2000,
the Company acquired Trading Techniques, Inc. for consideration
totaling $5,566, comprised of cash of $3,566 and a deferred
payment of $2,000. The deferred payment was made in August 2002.
The Company also received $402 in 2000 from the exercise of 192
stock options.

In 2000, the Company acquired cash of $48,402
from the Merger (See Note 3 to the consolidated financial
statements). In 2001, the Company received $43,224 from the sale
of non-core investments and businesses. This amount included the
net proceeds of $26,871 from the sale of its investment in
MarketWatch, which the Company distributed to its stockholders
by way of a dividend. The Company also received net proceeds of
$3,853 from the sale of its FNS business and $12,500 from the
disposition of its investment in Sportsline.com, Inc. Also in
2001, the Company received $6,084 from the exercise of 1,043
stock options and due to a favorable price in the market, the
Company repurchased 2,000 of outstanding stock for a total cost
of $24,273.

In 2001, the Company entered into an unsecured
credit facility for $10,000, with KeyBank National Association
that expired on May 1, 2002. During 2001 and 2002, there
were no borrowings associated with this credit facility and at
December 31, 2002, there was no outstanding balance. The
Company did not renew the facility and the facility has been
terminated.

In 2002, the Company acquired the SPS business
from Merrill Lynch, Pierce, Fenner & Smith, Incorporated.
The consideration was $48,000 in cash. The acquisition closed on
January 31, 2002. The consideration was paid from the
existing cash resources of the Company. The Company received
$10,411 from the exercise of 1,404 stock options. For the year
ended December 31, 2002, the Company utilized $1,377 to

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repurchase 100 shares of outstanding shares. As
of March 10, 2003, the Company has repurchased an
additional 100 outstanding shares at an aggregate price of
$1,330.


On February 28, 2003, the Company completed
its acquisition of ComStock for $115,000, in cash. The Company
funded this acquisition from its existing cash resources.

Management believes that the cash generated by
operating activities will be sufficient to meet the cash needs
of the Company. The Company currently has no long-term debt.

Income Taxes

The Company recognizes future tax benefits or
expenses attributable to its taxable temporary differences, net
operating loss carry forwards. Recognition of deferred tax
assets is subject to the Companys determination that
realization is more likely than not. Based on taxable income
projections, management believes that the majority of the
recorded deferred tax assets will be realized.

Related Parties Transactions

The Company and Pearson are parties to a
management services agreement that became effective as of
February 29, 2000. Pearson owns approximately 60% of the
issued and outstanding common stock of the Company This
agreement governs the provision of services by either company to
the other and renews annually.

Pursuant to the agreement, Pearson provides
certain services to the Company and the Company provides certain
services to Pearson. The services provided by Pearson to the
Company afford the Company administrative convenience and the
Company believes the terms of such services are more favorable
to it than if it had negotiated similar arrangements with
non-affiliated third parties. The services provided by Pearson
include administering 401(k), employee health benefit plans and
insurance plans in the United States and United Kingdom and
billing, accounts payable, accounts receivable, computer and
accounting system support, financial accounting, tax and payroll
services related to certain subsidiaries of the Company,
primarily in the United Kingdom. The services provided by the
Company to Pearson include information technology and property
services. A majority of the charges for services to and from
Pearson and its affiliates are at cost. Certain of the
Companys directors are employees of Pearson. The
independent committee of the Companys Board of Directors,
which consists of three directors, none of whom are employees of
Pearson, approved the management services agreement on behalf of
the Company. There was no material effect on the financial
condition or results of operations of the Company as a result of
entering into this agreement. If Pearsons services to the
Company were to be terminated, the Company would be required to
seek equivalent services in the open market at potentially
increased costs. In addition, the Company would lose the
efficiencies of working in concert with Pearson, and would bear
the entire burden of administrating such services, resulting in
an increased demand on the Companys administrative
resources. The management services agreement is amended from
time to time by mutual agreement to address changes in the terms
or services provided to or on behalf of the Company. Any such
amendments are approved by the independent committee.

In 2001, Pearsons Financial Times Group
entered into a trademark license agreement with the Company
authorizing the Company to use the FT and
Financial Times trademarks and logos in its
business. The license grants the Company the right to use the FT
and Financial Times brands for a five-year period for one
British Pound with an automatic renewal thereafter, unless
terminated. The license is subject to quality control standards,
restrictions on sublicensing the trademarks to third parties and
certain other restrictions. The independent committee of the
Companys Board of Directors approved this agreement on
behalf of the Company.

On March 26, 2001, the Company purchased
used equipment comprised of servers for an aggregate of $97 from
FT.com, a wholly owned subsidiary of Pearson. The purchase price
was at or lower than discounts offered elsewhere for comparable
equipment. The purchase was approved by the independent
committee of the Board of Directors on behalf of the Company.

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Any amounts payable or receivable to and from
Pearson or Pearson affiliates are classified as an affiliate
transaction on the balance sheet. For the years ended
December 31, 2002, 2001 and 2000, the Company incurred net
(income)/expense of ($79), ($3,508), and $588 for these services
provided to Pearson and received from Pearson. In 2000, the
Company had an arrangement with a Pearson affiliate, Financial
Times Electronic Publishing (FTEP), for FTEPs
use of certain production equipment. In 2000, the Company
invoiced FTEP $4,465 for this service. The Company recorded this
transaction as a reduction to costs. This service was not in
effect for the years ended December 31, 2002 and 2001.

Critical Accounting Policies and
Estimates

The Companys discussion and analysis of its
financial condition and results of operations is based upon the
Companys consolidated financial statements, which have
been prepared in accordance with accounting principles generally
accepted in the United States. For a detailed discussion on the
application of these and other accounting policies, see
Note 1 in the Notes to the Consolidated Financial
Statements in Item 8 of this Annual Report on
Form 10-K.

The preparation of these financial statements
requires the Company to make estimates and judgments that affect
the reported amounts of assets, liabilities, revenues and
expenses, and related disclosure of contingent assets and
liabilities. On an on-going basis, the Company evaluates its
estimates, including those related to revenue recognition,
goodwill and intangible assets, income taxes, retirement plans,
stock based compensation and contingencies and commitments. The
Company bases its estimates on historical experience and on
various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different
assumptions or conditions.

The Company believes the following critical
accounting policies require its most significant judgments and
estimates used in the preparation of its consolidated financial
statements:

Revenue
Recognition

Revenues are recognized over contractual periods
as services are performed. Amounts recognized as revenue are
determined based upon contractually agreed upon fee schedules
with the Companys customers. The Company accounts for
subscription revenues received in advance of service being
performed by deferring such amounts until the related services
are performed. From time to time, the Company is required to
adjust revenue associated with incorrect billings and data
accessed inadvertently by customers. The Company maintains a
reserve for these adjustments based upon historical experience
and believes that the reserve established as of
December 31, 2002 is adequate.

Goodwill

Goodwill is recorded in connection with business
acquisitions and represents the excess purchase price over the
fair value of identifiable net assets at the acquisition date.
On January 1, 2002, the Company adopted Financial
Accounting Standard No. 142, Goodwill and Other
Intangible Assets (FAS 142). As a result
of the adoption of this standard, the Company ceased recording
amortization expense associated with its goodwill.

FAS 142 requires an impairment test for the
Companys reporting units be performed on an annual basis
or whenever events or circumstances indicate an impairment may
exist. Each impairment test is based upon a comparison of the
fair value of the reporting unit, determined using a discounted
cash flow model to the net book value of the reporting unit.
Projections used in these analyses are consistent with those
used by management to run the Company and make capital
allocation decisions. If impairment is indicated due to the book
value being in excess of the fair value, the goodwill is written
down to its implied fair value. The Company typically utilizes
the services of a third party business valuation firm to assist
in this process. In assessing the potential impairment of the
retail reporting unit, consideration was given to the planned
expansion of the real time service in the retail reporting unit
to more institutional clients. Given the decline in

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the Companys retail customer base, the
goodwill in this reporting unit would be considered impaired
without the anticipated future revenue from institutional
customers.


Accrued
Liabilities

The Company maintains balances for certain
accrued liabilities as they relate to employee costs such as
bonuses and other costs such as data charges and royalties.
These amounts are based upon managements best estimates
and judgement based upon historical experience and on various
other assumptions that are believed to be reasonable under the
circumstances.

Retirement
Plans

The Company records pension activity in
accordance with Financial Accounting Standard No. 87,
Employers Accounting for Pensions. Pearson
Inc., a Pearson U.S. subsidiary, sponsors a defined benefit plan
(the Plan) for Pearsons U.S. employees and the
Plan also includes certain of the Companys U.S. employees.
Pension costs are actuarially determined. The Company funds
pension costs attributable to its employees to the extent
allowable under IRS regulations. In 2001, the Company froze the
benefits associated with this pension plan. There was no gain or
loss recorded as a result of the curtailment. The Companys
actuarially determined liability is based on estimates such as
the discount rate associated with future liabilities under the
plan, expected return on plan assets and the rate of increase of
compensation costs of participants in the plan. These estimates
are based on the Companys best estimates of future events
associated with the plan.

Stock Based
Compensation

In 2000, the Company adopted the 2000 Long Term
Incentive Plan (the 2000 Plan). Under the 2000 Plan,
the compensation committee of the Board of Directors can grant
stock-based awards representing up to 20% of the total number of
shares of common stock outstanding at the date of grant. The
2000 Plan provides for the discretionary issuance of stock-based
awards to directors, officers, and employees of the Company, as
well as persons who provide consulting or other services to the
Company. The exercise price of options granted employees under
the 2000 Plan is determined at the discretion of the
compensation committee. The exercise price for all options
granted to date has been equal to the market price at the date
of grant. Options expire ten years from the date of grant and
generally vest over a three to four year period.

In 2002, the Company adopted an employee stock
purchase plan for all eligible employees. Under the plan, shares
of the Companys common stock may be purchased at six-month
intervals at 85% of the lower of the fair market value on the
first or the last day of each six-month period. During 2002,
employees purchased approximately 50 shares at a price of $12.04
per share. At December 31, 2002, 1,950 shares were reserved
for future issuance.

As discussed in Note 1 to the consolidated
financial statements, the Company applies APB Opinion
No. 25 in accounting for stock based compensation and,
accordingly, no compensation cost has been recognized for its
stock options or employee stock purchase plan in the
consolidated financial statements.

Intangible
Assets

Intangible assets include securities databases,
computer software, covenants not to compete, and customer lists
arising principally from acquisitions. Such intangibles are
valued on the acquisition dates based on a combination of
replacement cost and comparable purchase methodologies by a
third party appraiser and are amortized over periods ranging
from two to fourteen years. The carrying amount of these
balances is evaluated periodically in relation to the operating
performance and fair value of the underlying assets. Adjustments
are recorded if the fair value is less than book value.

Income
Taxes

Income tax assets and liabilities are determined
by taxable jurisdiction. The Company does not provide for taxes
on undistributed earnings of its foreign subsidiaries. It is the
Companys intention to reinvest

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undistributed earnings of the Companys
foreign subsidiaries and thereby indefinitely postpone their
remittance. Accordingly, no provision has been made for foreign
withholding taxes or United States income taxes which may become
payable if undistributed earnings of foreign subsidiaries are
paid as dividends to the Company. The Company has net operating
loss carryforwards (NOLs) which were generated
in prior years. The annual utilization of the NOLs is
restricted by applicable tax regulations. Based on the
Companys forecasts management fully expects to utilize
these NOLs prior to their expiration date.


Throughout the year the Company determines its
periodic income tax expense based upon the current period income
and the estimated annual effective tax rate for the Company. The
rate is revised, if necessary, at the end of each successive
interim period during the fiscal year to the Companys best
current estimate of its annual effective tax rate.

Commitment and Contingencies

The Company has no outstanding debt. The Company
meets its existing working capital and capital expenditure needs
from existing operating cash flow.

In 2001, the Company entered into an unsecured
credit facility for $10,000 with KeyBank National Association
that expired on May 1, 2002. During 2001 and 2002, there
were no borrowings associated with this credit facility and at
December 31, 2002, there was no outstanding balance. The
Company did not renew the facility and it has been terminated.

The Company has obligations under non-cancelable
operating leases for real estate, equipment and distribution
agreements for satellite and cable space and FM radio channels.
Certain of the leases include renewal options and escalation
clauses. Real estate leases are for the Companys corporate
headquarters, sales offices, major operating units and data
centers. Approximate annual future commitments under
non-cancelable operating leases with lease terms in excess of
one year are as follows:

|                             |  |               |        |              |  |   |       | 
|---------------------------- |  | ------------- | ------ | ------------ |  | - | ----- | 
|                             |  | Real Estate   |        | Distribution
|                             |  | and Equipment |        | Agreements  
|                             |  |               |        |             
|2003                         |  | $             | 10,623 |              |  | $ | 901   | 
|2004                         |  |               | 9,626  |              |  |   | 582   | 
|2005                         |  |               | 8,858  |              |  |   | 452   | 
|2006                         |  |               | 7,475  |              |  |   | 269   | 
|2007                         |  |               | 6,330  |              |  |   | 2     | 
|Thereafter                   |  |               | 30,839 |              |  |   |      | 
|                             |  |               |        |              |  |   |       | 
|Total minimum lease payments |  | $             | 73,751 |              |  | $ | 2,206 | 
|                             |  |               |        |              |  |   |       | 

The Company expects to satisfy its lease
obligations from its existing cash flow. The Companys key
operating locations operate in facilities under long-term
leases, the earliest of which will expire in 2005. The Company
believes it will be able to successfully negotiate key operating
leases and/or find alternative locations for its facilities
without significant interruption to the business.

Inflation

Although management believes that inflation has
not had a material effect on the results of its operations
during the past three years, there can be no assurance that the
Companys results of operations will not be affected by
inflation in the future.

Seasonality

The Company has not experienced any material
seasonal fluctuations in its business. However, financial
information market demand is largely dependent upon activity
levels in the securities markets. In the event that the U.S.
financial markets were to suffer a prolonged period of investor
inactivity in trading securities, the

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Companys business could be adversely
affected. The degree of such consequences is uncertain.
Exposures in this area are somewhat mitigated by the
Companys service offerings in non-U.S. markets.


Recently Issued Accounting
Pronouncements

Accounting
for Business Combinations and Goodwill and Intangible
Assets

In June 2001, the Financial Accounting Standards
Board (FASB), issued Financial Accounting Standard
No. 141, Business Combinations
(FAS 141) and Financial Accounting Standard
No. 142, Goodwill and Other Intangible Assets
(FAS 142). These statements amend the
accounting and reporting standards for business combinations,
goodwill and certain other intangible assets. FAS 141 is
effective for all business combinations initiated after
June 30, 2001. FAS 142 is effective for fiscal years
beginning after December 15, 2001. The Company adopted
FAS 141 beginning July 1, 2001 and adopted
FAS 142 on January 1, 2002. No material changes to the
carrying values of goodwill and other intangible assets as a
result of the adoption of FAS 142 were made. Additionally,
as a result of the adoption of FAS 142 the Company ceased
recording amortization expense associated with its acquired
goodwill. During 2001, this amortization was $37,535.

Asset
Retirement Obligations

In August 2001, FASB issued Financial Accounting
Standard No. 143, Accounting for Asset Retirement
Obligations (FAS 143), which addresses
financial accounting and reporting for obligations associated
with the retirement of tangible long-lived assets and the
associated asset retirement costs. FAS 143 is required to
be adopted for fiscal years beginning after June 15, 2002.
The adoption of this standard will not have an immediate impact
on the Companys financial position or results of
operations.

Accounting
for the Impairment or Disposal of Long-Lived
Assets

In October 2001, FASB issued Financial Accounting
Standard No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets (FAS 144).
FAS 144 supersedes FASB Statement No. 121,
Accounting for the Impairment of Long-Lived Assets and for
Long Lived Assets to Be Disposed of. FAS 144 applies
to all long-lived assets (including discontinued operations) and
consequently amends Accounting Principles Board Opinion
No. 30, Reporting Results of Operations 
Reporting the Effects of Disposal of a Segment of a
Business. FAS 144 is effective for financial
statements issued for fiscal years beginning after
December 15, 2001, and has been adopted by the Company, as
required, on January 1, 2002. The adoption of FAS 144
did not have any impact on the Companys financial position
and results of operations.

Accounting
for Costs Associated with Exit or Disposal
Activities

In July 2002, the FASB issued Financial
Accounting Standard No. 146, Accounting for Costs
Associated with Exit or Disposal Activities
(FAS 146), which addresses financial accounting
for the costs associated with exit or disposal activities.
FAS 146 supersedes Emerging Issues Task Force Issue
No. 94-3, Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit and Activity
(including Certain Costs incurred in a Restructuring).
FAS 146 is effective for exit and disposal activities that
are initiated after December 31, 2002 and will be adopted
by the Company on its effective date. Management does not expect
the adoption of FAS 146 to have a material impact on its
financial position or results of operations.



| |                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------
| | Guarantors Accounting and Disclosure
    Requirements for Guarantees, Including Indirect Guarantees of
    Indebtedness of Others

In November 2002, the FASB issued FASB
Interpretation No. 45, Guarantors Accounting
and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others (the
Interpretation). This Interpretation expands on the
disclosures to be made by a guarantor in its interim and annual
financial statements about its obligations under certain
guarantees that it had issued. It also clarifies

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that a guarantor is required to recognize, at the
inception of a guarantee, a liability for the fair value of the
obligation undertaken in issuing the guarantee. The initial
recognition and measurement provisions of this Interpretation
are applicable on a prospective basis to guarantees issued or
modified after December 31, 2002. The disclosure
requirements in this Interpretation are effective for financial
statements of interim or annual periods ending after
December 15, 2002. The adoption of this Interpretation did
not have a material impact on the Companys financial
position or results of operations.


Accounting
for Stock Based Compensation  Transition and
Disclosure

In December 2002, the FASB issued Financial
Accounting Standard No. 148 (FAS 148),
Accounting for Stock Based Compensation-Transition and
Disclosure, an amendment of FASB Statement No. 123.
FAS No. 148 amends FAS No. 123, Accounting for
Stock-Based Compensation, to provide alternative methods
of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. In
addition, FAS No. 148 amends the disclosure requirements of
FAS No. 123 to require prominent disclosures in both annual
and interim financial statements about the method of accounting
for stock-based employee compensation and the effect of the
method used on reported results. As provided for in FAS
No. 123, the Company has elected to apply Accounting
Principles Board (APB) No. 25 Accounting
for Stock Issued to Employees and related interpretations
in accounting for stock based employee compensation plans. APB
No. 25 does not require employee stock options to be
expensed when granted with an exercise price equal to the fair
market value. The Company intends to continue to apply the
provisions of APB. No 25.

Information Regarding Forward-Looking
Statements

From time to time, including in this Annual
Report on Form 10-K and in the Companys annual report
to shareholders, the Company may issue forward-looking
statements relating to such matters as anticipated financial
performance, business prospects, strategy, plans, critical
accounting policies, technological developments, new products,
research and development activities and similar matters. The
Private Securities Litigation Reform Act of 1995 provides a safe
harbor for forward-looking statements. The Company notes that a
variety of factors, including known and unknown risks and
uncertainties as well as incorrect assumptions, could cause the
Companys actual results and experience to differ
materially from the anticipated results or other expectations
expressed in the Companys forward-looking statements. Some
of the factors that may affect the operations, performance,
development and results of the Companys business include
the following:

The Company competes against companies with
greater financial resources.The
Company operates in highly competitive markets in which it
competes with other distributors of financial and business
information and related services. The Company expects
competition to continue to be rigorous. Some of the
Companys competitors and potential competitors have
significantly greater financial, technical and marketing
resources than the Company does. These competitors may be able
to expand product offerings and data content more effectively
and to respond more rapidly than the Company to new or emerging
technologies, changes in the industry or changes in customer
needs. They may also be in a position to devote greater
resources to the development, promotion and sale of their
products. Increased competition in the future could limit the
Companys ability to maintain or increase its market share
or maintain its margins, and could have a material adverse
effect on the Companys business, financial condition or
operating results.

A prolonged outage at one of the
Companys data centers could have a material adverse impact
on revenues.The Companys
customers rely on the Company for time sensitive, reliable and
up-to-date data. The Companys business is dependent on its
ability to rapidly and efficiently process substantial
quantities of data and transactions on its computer-based
networks and systems. The Companys computer operations and
those of its suppliers and customers are vulnerable to
interruption by fire, earthquake, power loss, telecommunications
failure, terrorist attacks, wars and other events beyond the
Companys control. The Company maintains back-up facilities
for each of its major data centers to seek to minimize the risk
that any such event will disrupt operations. In addition, the
Company maintains insurance for such events, however, the
business interruption insurance the Company carries may not be
sufficient to compensate the Company fully for losses or damages
that may occur as a result of such events. Any such losses or
damages incurred by the Company

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could have a material adverse effect on the
Companys business. Although the Company seeks to minimize
these risks as far as commercially reasonable through controls
and back-up data centers, there can be no assurance that such
efforts will be successful in all cases.


The inability to maintain relationships with
key suppliers and providers of market data or service bureaus
and custodian banks could result in a material adverse effect on
the results of operations.The Company
currently depends on key suppliers for the data it provides to
its customers. Some of this data is exclusive to such suppliers
and cannot be obtained from other suppliers. In other cases,
although the data may be available from secondary sources, the
secondary source may not be as adequate or reliable as the
primary or preferred source. Further, there can be no assurance
that the Company could obtain replacement data from an
alternative supplier without undue cost and expense, if at all.
The Company generally obtains data via license agreements. The
disruption of any relationship or the termination of any license
with a major data supplier, such as the New York Stock Exchange,
could materially disrupt the Companys operations and lead
to a material adverse impact on results of operations. Part of
the Companys strategy is to serve as a major data supplier
to service bureaus and custodian banks and thereby to benefit
from the trend of major financial institutions in North America
outsourcing their back office operations to such entities. If
this trend shifts or any of these relationships falter the
Companys results of operations could be adversely impacted.

A decline in activity levels in the securities
markets could lower demand for the Companys services.The Companys business is
dependent upon the health of the financial markets and the
participants in those markets. Financial information market
demand is somewhat dependent upon activity levels in the
securities markets. In the event that the U.S. or international
financial markets suffer a prolonged downturn that results in a
significant decline in investor activity, the Companys
revenue levels could be adversely affected.

Consolidation of financial services within and
across industries could lower demand for the Companys
products and services.As
consolidation occurs and synergies are achieved, the number of
potential customers for the Companys products and services
decreases. This consolidation has two forms: consolidations
within an industry (such as banking) and across industries (such
as consolidations of insurance, banking and brokerage
companies). When two companies that separately use the
Companys products and services combine, they may terminate
the use of some of the Companys products and services that
become duplicative. The Company has experienced higher than
normal cancellations as a result of such trend in recent years
and can give no assurance that such consolidation and
cancellations will not continue. A large number of cancellations
or lower utilization resulting from consolidations could have a
material adverse effect on the Companys revenues.

New or enhanced product offerings by
competitors or technologies could cause the Companys
services to become obsolete.The
Company operates in an industry that is characterized by rapid
and significant technological changes, frequent new products,
services, data content and coverage enhancements and evolving
industry standards. Without the timely introductions of new
products, services and data content and coverage enhancements,
the Companys products and services will likely become
technologically obsolete or inadequate over time, in which case
the Companys revenue and operating results would suffer.
The Company expects its competitors to continue to improve the
performance of their current products and services, to enhance
data content and coverage and to introduce new products,
services and technologies. These competitors may adapt more
quickly to new technologies, changes in the industry and changes
in customers requirements than we can. If the Company
fails to anticipate customers needs and technological
trends accurately, the Company will be unable to introduce new
products and services into the market to successfully compete.
If the Company is unsuccessful at developing and introducing new
products and services that are appealing to customers with
acceptable prices and terms and available timely, the
Companys business and operating results would be
negatively impacted because the Company would not be able to
compete effectively and its ability to generate revenues would
suffer. In addition, new products, services, data content and
coverage that the Company may develop and introduce may not
achieve market acceptance.

Failure to successfully integrate the ComStock
business and any other business or product line the Company
acquires could adversely affect the Companys future
results of operations.The success of
any acquisition depends in part on the Companys ability to
integrate the acquired company. The process of

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integrating acquired businesses may involve
unforeseen difficulties and may require a disproportionate
amount of managements attention and financial and other
resources. In particular, the integration of the operations of
ComStock could present a significant challenge to the
Companys management. The integration process is continuing
and will proceed for at least eighteen months. The Company can
give no assurance that it will ultimately be able to effectively
integrate and manage the operations of any acquired business, in
general, and ComStock, in particular. Nor can the Company give
assurance that it will be able to maintain or improve the
historical financial performance of ComStock or other
acquisitions. The failure to successfully integrate cultures,
operating systems, procedures and information technologies could
have a material adverse effect on the Companys results of
operations.


Pearson has the ability to control the
Company.Pearson owns approximately
60% of the Companys outstanding common stock. Accordingly,
Pearson has the ability to exert significant influence over the
management and affairs of the Company, including the ability to
elect all of the directors and to approve or disapprove any
corporate actions submitted to a vote of the Companys
stockholders.

The inability of the Company to broaden its
retail subscriber base by adding more individual investors
outside of the Companys traditional
active-trader market could result in lower revenues.The customers of the Companys
retail investor segment have traditionally been
active-traders. As the stock markets have been flat
or continue to decline this has led to a significant downturn in
trading activity and the number of active traders has decreased.
If the Company cannot successfully sell additional retail
products and services to individual investors to counteract the
decrease in trading activities and the number of potential
active trader customers, the Company could experience a material
decrease in revenues.

The foregoing discussion of risks, uncertainties,
and assumptions is by no means complete but is designed to
highlight important factors that may impact the Companys
results.






|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures
    about Market Risk

A portion of the Companys business is
conducted outside the United States through its foreign
subsidiaries and branches. The Company has foreign currency
exposure related to its operations in international markets
where it transacts business in foreign currencies and,
accordingly, the Company is subject to exposure from adverse
movements in foreign currency exchange rates. The Companys
foreign subsidiaries maintain their accounting records in their
local currencies. Consequently, changes in currency exchange
rates may impact the translation of foreign statements of
operations into U.S. dollars, which may in turn affect the
Companys consolidated statements of operations. The
Companys primary exposure to foreign currency exchange
rate risks rest with the UK Sterling to US Dollar exchange rate
due to the significant size of the Companys operations in
the United Kingdom.

The Company does not enter into any hedging or
derivative arrangements and the Company does not hold any market
risk sensitive instruments for investment or other purposes.

The Company currently invests excess cash
balances in money market accounts. These accounts are largely
invested in U.S. Government obligations and investment grade
commercial paper; accordingly, the Company is exposed to market
risk related to changes in interest rates. The Company believes
that the effect, if any, of reasonable near-term changes in
interest rates on the Companys financial position, results
of operations, and cash flows will not be material.

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##### Table of Contents






Item 8.     Financial
Statements and Supplementary Data

|                                            |                                                                                                                             |      |    |    | 
|------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------- | ---- | -- | -- | 
|                                            |                                                                                                                             | Page
|                                            |                                                                                                                             |     
|Index to Consolidated Financial Statements: |                                                                                                                             |      |    |   
|Report of Independent Accountants           |                                                                                                                             |      | 26 |   
|                                            | Consolidated Statements of Operations and
    Comprehensive Income for the years ended December 31, 2002,
    2001 and 2000 |      |    | 27 | 
|                                            | Consolidated Balance Sheets as of
    December 31, 2002 and 2001                                                            |      |    | 28 | 
|                                            | Consolidated Statements of Cash Flows for the
    years ended December 31, 2002, 2001 and 2000                              |      |    | 29 | 
|                                            | Consolidated Statements of Stockholders
    Equity for the years ended December 31, 2002, 2001 and 2000                    |      |    | 30 | 
|Notes to Consolidated Financial Statements  |                                                                                                                             |      | 31 |   
|Quarterly Financial Information (Unaudited) |                                                                                                                             |      | 51 |   
|Index to Financial Statement Schedule:      |                                                                                                                             |      |    |   
|                                            | Schedule VIII Valuation and Qualifying
    Accounts                                                                         |      |    | 52 | 

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##### Table of Contents



REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders

of Interactive Data Corporation:


In our opinion, the consolidated financial
statements listed in the accompanying index present fairly, in
all material respects, the financial position of Interactive
Data Corporation and its subsidiaries at December 31, 2002
and 2001, and the results of their operations and their cash
flows for each of the three years in the period ended
December 31, 2002, in conformity with accounting principles
generally accepted in the United States of America. In addition,
in our opinion, the financial statement schedule listed in the
accompanying index presents fairly, in all material respects,
the information set forth therein when read in conjunction with
the related consolidated financial statements. These financial
statements and financial statement schedule are the
responsibility of the Companys management; our
responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits.
We conducted our audits of these statements and schedule in
accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform
the audit to obtain reasonable assurance about whether the
financial statements and schedule are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

As discussed in Note 1 to the consolidated
financial statements, effective January 1, 2002, the
Company changed its method of accounting for goodwill and
intangible assets upon adoption of Financial Accounting Standard
No. 142, Goodwill and Other Intangible Assets.

/s/ PRICEWATERHOUSECOOPERS LLP

Boston, Massachusetts

February 3, 2003,


except as to Note 19,


which is as of February 28, 2003


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##### Table of Contents



INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF
OPERATIONS

AND COMPREHENSIVE INCOME


|                                                       |                                         |                                       |         |         |         |      |         |         |         |   |          |         |         | 
|------------------------------------------------------ | --------------------------------------- | ------------------------------------- | ------- | ------- | ------- | ---- | ------- | ------- | ------- | - | -------- | ------- | ------- | 
|                                                       |                                         |                                      
|                                                       |                                         | Year Ended December 31,              
|                                                       |                                         |                                      
|                                                       |                                         | 2002                                  |         | 2001    |         | 2000
|                                                       |                                         |                                       |         |         |         |     
|                                                       |                                         |                                      
|                                                       |                                         | (In thousands, except per share data)
|SERVICE REVENUES                                       |                                         | $                                     | 375,015 |         |         | $    | 340,002 |         |         | $ | 314,138  |        
|COSTS AND EXPENSES                                     |                                         |                                       |         |         |         |      |         |         |         |   |          |        
|                                                       | Cost of services                        |                                       |         | 112,377 |         |      |         | 103,618 |         |   |          | 105,524 |        
|                                                       | Selling, general and administrative     |                                       |         | 131,169 |         |      |         | 122,066 |         |   |          | 116,091 |        
|                                                       | Depreciation                            |                                       |         | 14,500  |         |      |         | 13,139  |         |   |          | 12,671  |        
|                                                       | Amortization                            |                                       |         | 18,737  |         |      |         | 75,526  |         |   |          | 82,943  |        
|                                                       |                                         |                                       |         |         |         |      |         |         |         |   |          |        
|                                                       |                                         | Total costs and expenses              |         |         | 276,783 |      |         |         | 314,349 |   |          |         | 317,229 | 
|                                                       |                                         |                                       |         |         |         |      |         |         |         |   |          |        
|INCOME (LOSS) FROM OPERATIONS                          |                                         |                                       | 98,232  |         |         |      | 25,653  |         |         |   | (3,091   | )      
|Equity in loss from MarketWatch.com,
    Inc.          |                                         |                                       |        |         |         |      |        |         |         |   | (67,229  | )      
|Other than temporary loss in MarketWatch.com,
    Inc. |                                         |                                       |        |         |         |      |        |         |         |   | (141,844 | )      
|Other income (expense), net                            |                                         |                                       | 1,989   |         |         |      | 2,882   |         |         |   | 1,170    |        
|                                                       |                                         |                                       |         |         |         |      |         |         |         |   |          |        
|INCOME (LOSS) BEFORE INCOME TAXES                      |                                         |                                       | 100,221 |         |         |      | 28,535  |         |         |   | (210,994 | )      
|Income tax expense (benefit)                           |                                         |                                       | 39,488  |         |         |      | 24,223  |         |         |   | (67,522  | )      
|                                                       |                                         |                                       |         |         |         |      |         |         |         |   |          |        
|NET INCOME (LOSS)                                      |                                         | $                                     | 60,733  |         |         | $    | 4,312   |         |         | $ | (143,472 | )      
|                                                       |                                         |                                       |         |         |         |      |         |         |         |   |          |        
|Other comprehensive income (loss)                      |                                         |                                       |         |         |         |      |         |         |         |   |          |        
|                                                       | Foreign currency translation adjustment |                                       |         | 8,004   |         |      |         | (1,779  | )       |   |          | (6,400  | )      
|                                                       | Additional minimum pension liability    |                                       |         | (2,685  | )       |      |         |        |         |   |          |        |        
|                                                       |                                         |                                       |         |         |         |      |         |         |         |   |          |        
|COMPREHENSIVE INCOME (LOSS)                            |                                         | $                                     | 66,052  |         |         | $    | 2,533   |         |         | $ | (149,872 | )      
|                                                       |                                         |                                       |         |         |         |      |         |         |         |   |          |        
|Weighted average shares:                               |                                         |                                       |         |         |         |      |         |         |         |   |          |        
|                                                       | Basic                                   |                                       |         | 91,159  |         |      |         | 90,844  |         |   |          | 85,560  |        
|                                                       | Diluted                                 |                                       |         | 93,730  |         |      |         | 92,510  |         |   |          | 85,560  |        
|NET INCOME (LOSS) PER SHARE:                           |                                         |                                       |         |         |         |      |         |         |         |   |          |        
|                                                       | Basic                                   |                                       | $       | 0.67    |         |      | $       | 0.05    |         |   | $        | (1.68   | )      
|                                                       | Diluted                                 |                                       | $       | 0.65    |         |      | $       | 0.05    |         |   | $        | (1.68   | )      

The accompanying notes are an integral part of
these consolidated financial statements.

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##### Table of Contents



INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

|                                                                                                     |                                                                                                          |                                                                                                                                                                                     |                                            |         |     |         |         |          |     |         | 
|---------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | --- | ------- | ------- | -------- | --- | ------- | 
|                                                                                                     |                                                                                                          |                                                                                                                                                                                    
|                                                                                                     |                                                                                                          | December 31,                                                                                                                                                                       
|                                                                                                     |                                                                                                          |                                                                                                                                                                                    
|                                                                                                     |                                                                                                          | 2002                                                                                                                                                                                |                                            | 2001   
|                                                                                                     |                                                                                                          |                                                                                                                                                                                     |                                            |        
|                                                                                                     |                                                                                                          |                                                                                                                                                                                    
|                                                                                                     |                                                                                                          | (In thousands,                                                                                                                                                                     
|                                                                                                     |                                                                                                          | except for share data)                                                                                                                                                             
|ASSETS                                                                                               |                                                                                                          |                                                                                                                                                                                     |                                            |         |     |         |         |         
|Cash and cash equivalents                                                                            |                                                                                                          | $                                                                                                                                                                                   | 153,243                                    |         |     | $       | 118,522 |         
|Accounts receivable, net of allowance for
    doubtful accounts of $4,172 at 2002 and $4,293 at 2001 |                                                                                                          |                                                                                                                                                                                     | 53,924                                     |         |     |         | 46,792  |         
|Receivable from affiliate                                                                            |                                                                                                          |                                                                                                                                                                                     |                                           |         |     |         | 7       |         
|Prepaid expenses and other current assets                                                            |                                                                                                          |                                                                                                                                                                                     | 5,366                                      |         |     |         | 3,152   |         
|Deferred income taxes                                                                                |                                                                                                          |                                                                                                                                                                                     | 6,487                                      |         |     |         | 13,207  |         
|                                                                                                     |                                                                                                          |                                                                                                                                                                                     |                                            |         |     |         |         |         
|                                                                                                     |                                                                                                          |                                                                                                                                                                                     | Total current assets                       |         |     | 219,020 |         |          |     | 181,680 | 
|Property and equipment, net                                                                          |                                                                                                          |                                                                                                                                                                                     | 36,786                                     |         |     |         | 38,431  |         
|Goodwill                                                                                             |                                                                                                          |                                                                                                                                                                                     | 381,790                                    |         |     |         | 353,748 |         
|Other intangible assets, net                                                                         |                                                                                                          |                                                                                                                                                                                     | 125,003                                    |         |     |         | 121,040 |         
|Other assets                                                                                         |                                                                                                          |                                                                                                                                                                                     | 2,628                                      |         |     |         | 3,084   |         
|                                                                                                     |                                                                                                          |                                                                                                                                                                                     |                                            |         |     |         |         |         
|                                                                                                     |                                                                                                          |                                                                                                                                                                                     | Total Assets                               |         | $   | 765,227 |         |          | $   | 697,983 | 
|                                                                                                     |                                                                                                          |                                                                                                                                                                                     |                                            |         |     |         |         |         
|LIABILITIES AND STOCKHOLDERS
    EQUITY                                                             |                                                                                                          |                                                                                                                                                                                     |                                            |         |     |         |         |         
|Current Liabilities:                                                                                 |                                                                                                          |                                                                                                                                                                                     |                                            |         |     |         |         |         
|                                                                                                     | Accounts payable, trade                                                                                  |                                                                                                                                                                                     | $                                          | 10,805  |     |         | $       | 11,814   |    
|                                                                                                     | Accrued liabilities                                                                                      |                                                                                                                                                                                     |                                            | 52,938  |     |         |         | 50,684   |    
|                                                                                                     | Payables to affiliates                                                                                   |                                                                                                                                                                                     |                                            | 1,789   |     |         |         | 5,065    |    
|                                                                                                     | Income taxes payable                                                                                     |                                                                                                                                                                                     |                                            | 9,235   |     |         |         | 13,578   |    
|                                                                                                     | Deferred revenue                                                                                         |                                                                                                                                                                                     |                                            | 22,786  |     |         |         | 24,477   |    
|                                                                                                     |                                                                                                          |                                                                                                                                                                                     |                                            |         |     |         |         |         
|                                                                                                     |                                                                                                          |                                                                                                                                                                                     | Total current liabilities                  |         |     | 97,553  |         |          |     | 105,618 | 
|                                                                                                     | Deferred tax liabilities                                                                                 |                                                                                                                                                                                     |                                            | 3,305   |     |         |         | 8,209    |    
|                                                                                                     | Other liabilities                                                                                        |                                                                                                                                                                                     |                                            | 1,626   |     |         |         | 1,489    |    
|                                                                                                     |                                                                                                          |                                                                                                                                                                                     |                                            |         |     |         |         |         
|                                                                                                     |                                                                                                          |                                                                                                                                                                                     | Total Liabilities                          |         |     | 102,484 |         |          |     | 115,316 | 
|Commitments and contingencies (Note 14)                                                              |                                                                                                          |                                                                                                                                                                                     |                                            |         |     |         |         |         
|Stockholders Equity:                                                                                |                                                                                                          |                                                                                                                                                                                     |                                            |         |     |         |         |         
|                                                                                                     | Preferred Stock                                                                                          |                                                                                                                                                                                     |                                            |        |     |         |         |         |    
|                                                                                                     | Common stock $0.01 par value                                                                             |                                                                                                                                                                                     |                                            |         |     |         |         |          |    
|                                                                                                     |                                                                                                          | Authorized: 200,000,000 shares; 93,698,789 issued
    and 91,598,789 outstanding at December 31, 2002 and
    92,245,419 issued and 90,245,419 outstanding at
    December 31, 2001 |                                            |         | 937 |         |         |          | 922 |        
|                                                                                                     | Additional paid-in capital                                                                               |                                                                                                                                                                                     |                                            | 786,470 |     |         |         | 771,084  |    
|                                                                                                     | Treasury Stock, at cost, 2,100,000 and 2,000,000
    shares, at December 31, 2002 and 2001, respectively |                                                                                                                                                                                     |                                            | (25,650 | )   |         |         | (24,273  | )  
|                                                                                                     | Accumulated deficit                                                                                      |                                                                                                                                                                                     |                                            | (94,398 | )   |         |         | (155,131 | )  
|                                                                                                     | Accumulated other comprehensive loss                                                                     |                                                                                                                                                                                     |                                            | (4,616  | )   |         |         | (9,935   | )  
|                                                                                                     |                                                                                                          |                                                                                                                                                                                     |                                            |         |     |         |         |         
|                                                                                                     |                                                                                                          |                                                                                                                                                                                     | Total Stockholders Equity                 |         |     | 662,743 |         |          |     | 582,667 | 
|                                                                                                     |                                                                                                          |                                                                                                                                                                                     |                                            |         |     |         |         |         
|                                                                                                     |                                                                                                          |                                                                                                                                                                                     | Total Liabilities and Stockholders Equity |         | $   | 765,227 |         |          | $   | 697,983 | 
|                                                                                                     |                                                                                                          |                                                                                                                                                                                     |                                            |         |     |         |         |         

The accompanying notes are an integral part of
these consolidated financial statements.

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INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH
FLOWS

|                                                                                             |                                                                              |                         |         |         |   |      |         |         |   |   |          |         |  
|-------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | ----------------------- | ------- | ------- | - | ---- | ------- | ------- | - | - | -------- | ------- | -
|                                                                                             |                                                                              |                        
|                                                                                             |                                                                              | Year Ended December 31,
|                                                                                             |                                                                              |                        
|                                                                                             |                                                                              | 2002                    |         | 2001    |   | 2000
|                                                                                             |                                                                              |                         |         |         |   |     
|                                                                                             |                                                                              |                        
|                                                                                             |                                                                              | (In thousands)         
|Cash flows provided by (used in) operating
    activities:                                   |                                                                              |                         |         |         |   |      |         |         |   |   |          |        
|Net income (loss)                                                                            |                                                                              | $                       | 60,733  |         |   | $    | 4,312   |         |   | $ | (143,472 | )      
|Adjustments to reconcile net income
    (loss) to net cash provided by operating activities: |                                                                              |                         |         |         |   |      |         |         |   |   |          |        
|                                                                                             | Depreciation and amortization                                                |                         |         | 33,237  |   |      |         | 88,665  |   |   |          | 95,614  |  
|                                                                                             | Tax benefit from exercise of stock options                                   |                         |         | 4,873   |   |      |         | 2,682   |   |   |          | 499     |  
|Equity in loss from MarketWatch.com,
    Inc.                                                |                                                                              |                         |        |         |   |      |        |         |   |   | 67,229   |        
|Other than temporary loss from investment in
    MarketWatch.com, Inc.                       |                                                                              |                         |        |         |   |      |        |         |   |   | 141,844  |        
|                                                                                             | Deferred income taxes                                                        |                         |         | 1,733   |   |      |         | (7,928  | ) |   |          | (83,618 | )
|Other non-cash items, net                                                                    |                                                                              |                         | 256     |         |   |      | 267     |         |   |   | 113      |        
|Changes in operating assets and liabilities, net:                                            |                                                                              |                         |         |         |   |      |         |         |   |   |          |        
|                                                                                             | Accounts receivable and due from affiliates                                  |                         |         | (6,518  | ) |      |         | 4,943   |   |   |          | (5,731  | )
|                                                                                             | Prepaid expenses and other assets                                            |                         |         | (1,635  | ) |      |         | 1,355   |   |   |          | 1,209   |  
|                                                                                             | Accounts and taxes payable and due to affiliates                             |                         |         | (5,556  | ) |      |         | 628     |   |   |          | (6,362  | )
|                                                                                             | Accrued expenses and other liabilities                                       |                         |         | (556    | ) |      |         | 789     |   |   |          | (322    | )
|                                                                                             | Deferred revenue                                                             |                         |         | (2,187  | ) |      |         | (1,901  | ) |   |          | (2,053  | )
|                                                                                             |                                                                              |                         |         |         |   |      |         |         |   |   |          |        
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                                    |                                                                              |                         | 84,380  |         |   |      | 93,812  |         |   |   | 64,950   |        
|                                                                                             |                                                                              |                         |         |         |   |      |         |         |   |   |          |        
|Cash flows provided by (used in) investing
    activities:                                   |                                                                              |                         |         |         |   |      |         |         |   |   |          |        
|                                                                                             | Purchase of fixed assets                                                     |                         |         | (13,561 | ) |      |         | (12,609 | ) |   |          | (15,699 | )
|                                                                                             | Cash acquired through merger                                                 |                         |         |        |   |      |         |        |   |   |          | 48,402  |  
|                                                                                             | Investment in MarketWatch.com, Inc.                                          |                         |         |        |   |      |         |        |   |   |          | (43,000 | )
|                                                                                             | Acquisition of businesses                                                    |                         |         | (48,000 | ) |      |         |        |   |   |          | (14,766 | )
|                                                                                             | Net proceeds from sales of investments and
    business                      |                         |         |        |   |      |         | 43,224  |   |   |          |        |  
|                                                                                             | Other investing activities                                                   |                         |         | 680     |   |      |         | 719     |   |   |          |        |  
|                                                                                             |                                                                              |                         |         |         |   |      |         |         |   |   |          |        
|NET CASH PROVIDED BY (USED IN) INVESTING
    ACTIVITIES                                      |                                                                              |                         | (60,881 | )       |   |      | 31,334  |         |   |   | (25,063  | )      
|                                                                                             |                                                                              |                         |         |         |   |      |         |         |   |   |          |        
|Cash flows provided by (used in) financing
    activities:                                   |                                                                              |                         |         |         |   |      |         |         |   |   |          |        
|                                                                                             | Receipt of payment from affiliate                                            |                         |         |        |   |      |         |        |   |   |          | 19,224  |  
|                                                                                             | Payment of promissory note to affiliate                                      |                         |         |        |   |      |         |        |   |   |          | (20,000 | )
|                                                                                             | Proceeds from exercise of stock options and
    employee stock purchase plan |                         |         | 10,411  |   |      |         | 6,084   |   |   |          | 402     |  
|                                                                                             | Contribution (distribution) of capital from
    (to) parent                  |                         |         |        |   |      |         |        |   |   |          | (10,764 | )
|                                                                                             | Purchase of treasury stock                                                   |                         |         | (1,377  | ) |      |         | (24,273 | ) |   |          |        |  
|                                                                                             | Distribution of dividends                                                    |                         |         |        |   |      |         | (26,871 | ) |   |          |        |  
|                                                                                             |                                                                              |                         |         |         |   |      |         |         |   |   |          |        
|NET CASH PROVIDED BY (USED IN) FINANCING
    ACTIVITIES                                      |                                                                              |                         | 9,034   |         |   |      | (45,060 | )       |   |   | (11,138  | )      
|Effect of change in exchange rate                                                            |                                                                              |                         | 2,188   |         |   |      | (216    | )       |   |   | (2,105   | )      
|                                                                                             |                                                                              |                         |         |         |   |      |         |         |   |   |          |        
|NET INCREASE IN CASH AND CASH EQUIVALENTS                                                    |                                                                              |                         | 34,721  |         |   |      | 79,870  |         |   |   | 26,644   |        
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                             |                                                                              |                         | 118,522 |         |   |      | 38,652  |         |   |   | 12,008   |        
|                                                                                             |                                                                              |                         |         |         |   |      |         |         |   |   |          |        
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                   |                                                                              | $                       | 153,243 |         |   | $    | 118,522 |         |   | $ | 38,652   |        
|                                                                                             |                                                                              |                         |         |         |   |      |         |         |   |   |          |        
|Supplemental disclosure of cash flow information:                                            |                                                                              |                         |         |         |   |      |         |         |   |   |          |        
|                                                                                             | Cash paid for taxes                                                          |                         | $       | (33,484 | ) |      | $       | (29,007 | ) |   | $        | (9,489  | )
|                                                                                             | Cash (paid) received for interest                                            |                         | $       | 2,031   |   |      | $       | 3,050   |   |   | $        | (1,591  | )

The accompanying notes are an integral part of
these consolidated financial statements.

29



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##### Table of Contents



INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS
EQUITY

(in thousands)


|                                                                                |  |              |        |           |  |           |     |            |  |         |       |               |  |        |         |             |  |               |         |   |  |   |          |   |  |   |        |   |  |   |          |   |  |   |          |  
|------------------------------------------------------------------------------- |  | ------------ | ------ | --------- |  | --------- | --- | ---------- |  | ------- | ----- | ------------- |  | ------ | ------- | ----------- |  | ------------- | ------- | - |  | - | -------- | - |  | - | ------ | - |  | - | -------- | - |  | - | -------- | -
|                                                                                |  |              |        |           |  |           |     |            |  |         |       | Accumulated   |  |        |         |            
|                                                                                |  | Common Stock |        | Treasury  |  |           |     |            |  |         |       | Other         |  |        |         |            
|                                                                                |  |              |        | Stock     |  | Treasury  |     | Additional |  |         |       | Comprehensive |  |        |         | Total      
|                                                                                |  | Number of    |        |           |  | Number of |     | Stock      |  | Paid in |       | Parents      |  | Income |         | Accumulated |  | Stockholders
|                                                                                |  | Shares       |        | Par Value |  | Shares    |     | Costs      |  | Capital |       | Investment    |  | (Loss) |         | Deficit     |  | Equity       
|                                                                                |  |              |        |           |  |           |     |            |  |         |       |               |  |        |         |             |  |              
|Balance, December 31, 1999                                                      |  |              |       |           |  | $         |    |            |  |         |      |               |  | $      |        |             |  | $             |        |   |  | $ | 358,680  |   |  | $ | (1,756 | ) |  | $ | (15,971  | ) |  | $ | 340,953  |  
|Distribution to parent                                                          |  |              |       |           |  |           |    |            |  |         |      |               |  |        |        |             |  |               |        |   |  |   | (7,764   | ) |  |   |       |   |  |   |         |   |  |   | (7,764   | )
|Reorganization (Note 3)                                                         |  |              | 56,424 |           |  |           | 564 |            |  |         |      |               |  |        |        |             |  |               | 350,352 |   |  |   | (350,916 | ) |  |   |       |   |  |   |         |   |  |   |         |  
|Issuance of shares associated with merger
    (Note 3)                          |  |              | 34,586 |           |  |           | 346 |            |  |         |      |               |  |        |        |             |  |               | 437,948 |   |  |   |         |   |  |   |       |   |  |   |         |   |  |   | 438,294  |  
|Exercise of stock options                                                       |  |              | 192    |           |  |           | 2   |            |  |         |      |               |  |        |        |             |  |               | 400     |   |  |   |         |   |  |   |       |   |  |   |         |   |  |   | 402      |  
|Tax benefit from exercise of stock options                                      |  |              |       |           |  |           |    |            |  |         |      |               |  |        |        |             |  |               | 499     |   |  |   |         |   |  |   |       |   |  |   |         |   |  |   | 499      |  
|Other comprehensive loss                                                        |  |              |       |           |  |           |    |            |  |         |      |               |  |        |        |             |  |               |        |   |  |   |         |   |  |   | (6,400 | ) |  |   |         |   |  |   | (6,400   | )
|Net loss                                                                        |  |              |       |           |  |           |    |            |  |         |      |               |  |        |        |             |  |               |        |   |  |   |         |   |  |   |       |   |  |   | (143,472 | ) |  |   | (143,472 | )
|                                                                                |  |              |        |           |  |           |     |            |  |         |       |               |  |        |         |             |  |               |         |   |  |   |          |   |  |   |        |   |  |   |          |   |  |   |          |  
|Balance, December 31, 2000                                                      |  |              | 91,202 |           |  | $         | 912 |            |  |         |      |               |  | $      |        |             |  | $             | 789,199 |   |  | $ |         |   |  | $ | (8,156 | ) |  | $ | (159,443 | ) |  | $ | 622,512  |  
|Distribution of dividend                                                        |  |              |       |           |  |           |    |            |  |         |      |               |  |        |        |             |  |               | (26,871 | ) |  |   |         |   |  |   |       |   |  |   |         |   |  |   | (26,871  | )
|Exercise of stock options                                                       |  |              | 1,043  |           |  |           | 10  |            |  |         |      |               |  |        |        |             |  |               | 6,074   |   |  |   |         |   |  |   |       |   |  |   |         |   |  |   | 6,084    |  
|Tax benefit from exercise of stock options                                      |  |              |       |           |  |           |    |            |  |         |      |               |  |        |        |             |  |               | 2,682   |   |  |   |         |   |  |   |       |   |  |   |         |   |  |   | 2,682    |  
|Purchase of treasury stock                                                      |  |              |       |           |  |           |    |            |  |         | 2,000 |               |  |        | (24,273 | )           |  |               |        |   |  |   |         |   |  |   |       |   |  |   |         |   |  |   | (24,273  | )
|Other comprehensive income                                                      |  |              |       |           |  |           |    |            |  |         |      |               |  |        |        |             |  |               |        |   |  |   |         |   |  |   | (1,779 | ) |  |   |         |   |  |   | (1,779   | )
|Net income                                                                      |  |              |       |           |  |           |    |            |  |         |      |               |  |        |        |             |  |               |        |   |  |   |         |   |  |   |       |   |  |   | 4,312    |   |  |   | 4,312    |  
|                                                                                |  |              |        |           |  |           |     |            |  |         |       |               |  |        |         |             |  |               |         |   |  |   |          |   |  |   |        |   |  |   |          |   |  |   |          |  
|Balance, December 31, 2001                                                      |  |              | 92,245 |           |  | $         | 922 |            |  |         | 2,000 |               |  | $      | (24,273 | )           |  | $             | 771,084 |   |  | $ |         |   |  | $ | (9,935 | ) |  | $ | (155,131 | ) |  | $ | 582,667  |  
|Exercise of stock options                                                       |  |              | 1,404  |           |  |           | 14  |            |  |         |      |               |  |        |        |             |  |               | 9,799   |   |  |   |         |   |  |   |       |   |  |   |         |   |  |   | 9,813    |  
|Issuance of stock in connection with employee
    stock purchase plan           |  |              | 50     |           |  |           | 1   |            |  |         |      |               |  |        |        |             |  |               | 597     |   |  |   |         |   |  |   |       |   |  |   |         |   |  |   | 598      |  
|Tax benefit from exercise of stock options and
    employee stock purchase plan |  |              |       |           |  |           |    |            |  |         |      |               |  |        |        |             |  |               | 4,873   |   |  |   |         |   |  |   |       |   |  |   |         |   |  |   | 4,873    |  
|Exercise of extended stock options                                              |  |              |        |           |  |           |     |            |  |         |       |               |  |        |         |             |  |               | 117     |   |  |   |          |   |  |   |        |   |  |   |          |   |  |   | 117      |  
|Purchase of treasury stock                                                      |  |              |       |           |  |           |    |            |  |         | 100   |               |  |        | (1,377  | )           |  |               |        |   |  |   |         |   |  |   |       |   |  |   |         |   |  |   | (1,377   | )
|Other comprehensive income                                                      |  |              |       |           |  |           |    |            |  |         |      |               |  |        |        |             |  |               |        |   |  |   |         |   |  |   | 5,319  |   |  |   |         |   |  |   | 5,319    |  
|Net income                                                                      |  |              |       |           |  |           |    |            |  |         |      |               |  |        |        |             |  |               |        |   |  |   |         |   |  |   |       |   |  |   | 60,733   |   |  |   | 60,733   |  
|                                                                                |  |              |        |           |  |           |     |            |  |         |       |               |  |        |         |             |  |               |         |   |  |   |          |   |  |   |        |   |  |   |          |   |  |   |          |  
|Balance, December 31, 2002                                                      |  |              | 93,699 |           |  | $         | 937 |            |  |         | 2,100 |               |  | $      | (25,650 | )           |  | $             | 786,470 |   |  | $ |         |   |  | $ | (4,616 | ) |  | $ | (94,398  | ) |  | $ | 662,743  |  
|                                                                                |  |              |        |           |  |           |     |            |  |         |       |               |  |        |         |             |  |               |         |   |  |   |          |   |  |   |        |   |  |   |          |   |  |   |          |  

The accompanying notes are an integral part of
these consolidated financial statements.

30



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##### Table of Contents



INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

(In Thousands)


(except per share data)




|   |                                               
|-- | ----------------------------------------------
|1. | Summary of Significant Accounting
    Policies



| |                   
| | ------------------
| | Nature of Business

Interactive Data Corporation (the
Company) is a leading global provider of financial
and business information to individual and institutional
investors. The Company supplies time sensitive pricing,
dividend, corporate action and descriptive information for
approximately 3.5 million securities that are traded around
the world, including hard-to-value fixed income instruments. The
cores of the business are its extensive database expertise and
technology resources.

The Company delivers real-time, end-of-day and
historically archived data to customers through a variety of
products featuring Internet, dedicated line, satellite and
dial-up protocols. Through a broad range of partnerships, the
Company provides links to most of the worlds best-known
financial service and software companies for trading, analysis,
portfolio management and valuation.

On February 29, 2000, Data Broadcasting
Corporation completed a merger (the Merger) with
Interactive Data Corporation (now known as FT Interactive
Data Corporation), a wholly owned subsidiary of Pearson Longman,
Inc. (Pearson Longman). Pearson Longman, through a
series of other entities, is wholly owned by Pearson plc
(Pearson). Upon the Merger, the Company issued
56,424 shares of its common stock to Pearson Longman that
resulted in the ownership by Pearson Longman of approximately
60% of the Company. (Interactive Data Corporation prior to the
Merger is referred to herein as FT Interactive Data
Corporation, which continues to be the Companys major
institutional services subsidiary.) The Merger was accounted for
as a reverse merger as discussed in Note 3 to the
consolidated financial statements. The shares of the Company
were subsequently transferred to Pearson DBC Holdings, Inc.,
another wholly owned subsidiary of Pearson Longman.

The Corporations common stock commenced
trading on the New York Stock Exchange under the trading symbol
IDC on December 10, 2002. Prior to
December 10, 2002, the Corporations common stock
traded on the Nasdaq National Market under the trading symbol
IDCO.



| |                            
| | ---------------------------
| | Principles of Consolidation

The consolidated financial statements include the
results of the Company and all majority-owned subsidiaries. All
significant intercompany accounts and transactions have been
eliminated.



| |                  
| | -----------------
| | Reclassifications

Certain prior year amounts have been reclassified
to conform with the current years presentation. These
reclassifications had no effect on the Companys results of
operations.



| |                          
| | -------------------------
| | Cash and Cash Equivalents

Cash and cash equivalents include cash on hand
and short-term investments with an original maturity of three
months or less. At December 31, 2002 and 2001, cash and
cash equivalents included cash equivalents of $134,538 and
$94,911, respectively.



| |                                        
| | ---------------------------------------
| | Fair Value of Financial
    Instruments

The carrying amount of cash, cash equivalents,
trade receivables and trade payables approximates their fair
value because of the short maturity of these investments.

31



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##### Table of Contents



INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                    
| | -------------------
| | Revenue Recognition

Revenues are recognized over contractual periods
as services are performed. Amounts recognized as revenue for
services performed are determined based upon contractually
agreed upon fee schedules with the Companys customers. The
Company accounts for subscription revenues received in advance
of providing services by deferring such amounts until the
related services are performed.



| |                                                                        
| | -----------------------------------------------------------------------
| | Accounts Receivable, Concentration of
    Credit Risk and Uncertainties

The Company is subject to credit risk through
trade receivables. Credit risk with respect to trade receivables
is mitigated by the diversification of the Companys
operations, as well as its large client base and its
geographical dispersion. No single customer accounts for more
than 10% of revenues or more than 10% of accounts receivable for
any period presented. Ongoing credit evaluations of
customers financial conditions are performed and
collateral is not required. The Company maintains reserves for
potential credit losses and such losses, in the aggregate, have
not exceeded managements expectations.

In addition, the Company has temporary cash
investments. At December 31, 2002 approximately $134,538 of
cash equivalents were deposited in money market accounts. These
accounts are largely invested in U.S. Government
obligations and investment grade commercial paper, thereby
limiting credit risk. At December 31, 2002, the Company
believes that it had no significant concentrations of credit
risk.



| |             
| | ------------
| | Income Taxes

In accordance with Statement of Financial
Accounting Standards No. 109, Accounting for Income
Taxes, deferred tax assets and liabilities are determined
based on differences between the financial reporting and the tax
basis of assets and liabilities and are measured by applying
enacted tax rates and laws to taxable years in which such
differences are expected to reverse. The Companys practice
is to provide currently for taxes that will be payable upon
remittance of foreign earnings of subsidiaries and affiliates to
the extent that such earnings are not considered to be
reinvested indefinitely. The Companys practice is to
permanently reinvest the unremitted earnings of its subsidiaries
and, accordingly, no taxes have been provided for these amounts.



| |         
| | --------
| | Goodwill

Goodwill is recorded in connection with business
acquisitions and represents the excess of the purchase price
over the fair value of identifiable net assets at the
acquisition date. In January 2002, the Company adopted Financial
Accounting Standard No. 142, Goodwill and Other
Intangible Assets (FAS 142). As a result
of the adoption of this standard, the Company ceased recording
amortization expense associated with its goodwill.

FAS 142 requires an impairment test for the
Companys reporting units be performed on an annual basis
or whenever events or circumstances indicate an impairment may
exist. Each impairment test is based upon a comparison of the
fair value of the reporting unit to the net book value of the
related asset. If impairment is indicated due to the net book
value being in excess of the fair value, the asset is written
down to its implied fair value.



| |                        
| | -----------------------
| | Other Intangible Assets

Other intangible assets include securities
databases, computer software, covenants not to compete, and
customer lists arising principally from acquisitions. Such
intangibles are valued on the acquisition dates based on a
combination of replacement cost and comparable purchase
methodologies by a third party appraiser and are amortized over
periods ranging from two to fourteen years.

32



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##### Table of Contents



INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                       
| | ----------------------
| | Property and Equipment

Fixed assets are recorded at cost. Equipment is
depreciated using the straight-line method over its estimated
useful life of three to eight years. Leasehold improvements are
amortized using the straight-line method over the terms of the
respective leases or useful lives, whichever is shorter.
Maintenance and repairs are charged to operations as incurred.
Retirements, sales and disposals of assets are recorded by
removing the cost and accumulated depreciation from the asset
and accumulated depreciation accounts with the resulting gain or
loss reflected in income.



| |                                    
| | -----------------------------------
| | Impairment of Long Lived
    Assets

The Company reviews long lived assets whenever
events or circumstances indicate that the carrying value of the
assets may not be recovered over their remaining useful lives.
If an impairment is indicated, the Company compares the fair
value of the related asset, generally determined using a
discounted cash flow methodology, to the carrying value of the
asset and records an impairment charge to the extent that fair
value is lower than the carrying value of the asset.



| |                           
| | --------------------------
| | Capitalized Software Costs

Capitalized software costs include costs incurred
in connection with the development of internal use software and
purchased software. These costs relate to software used by
subscribers to access, manage and analyze information in the
Companys databases. Costs associated with internally
developed software are capitalized in accordance with Statement
of Position 98-1, Accounting for Costs of Computer
Software Developed or Obtained for Internal Use. In 2002,
the Company capitalized approximately $2,747 related to the
development of internal use software. In 2002, amortization
expense associated with the internally developed software was
$1,386. At December 31, 2002, the remaining book value of
the software developed for internal use was $5,076. Amortization
is computed on a case-by-case basis over the estimated economic
life of the software, which ranges from three to five years.
Also, in 2002, the Company wrote off $2,800 of capitalized
development projects in Europe, as a result of the
Companys decision to cancel these projects.



| |                                      
| | -------------------------------------
| | Translation of Foreign
    Currencies

The functional currency of certain businesses
within the consolidated financial statements is the local
currency. Assets and liabilities of foreign companies are
translated into U.S. dollars at exchange rates in effect at
the balance sheet date; income and expense items and cash flows
are translated at average exchange rates for the period.
Cumulative net translation adjustments are included in
stockholders equity as other comprehensive income. Gains
and losses resulting from foreign currency transactions, not
significant in amount, are included in the results of operations
as other income (expense).



| |                 
| | ----------------
| | Use of Estimates

The preparation of the consolidated financial
statements in conformity with accounting principles generally
accepted in the United States of America requires the extensive
use of managements estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the consolidated financial
statement date. Actual results could differ from those estimates.



| |                      
| | ---------------------
| | Restructuring Charges

In 2002, the Company recorded restructuring
charges in the UK and US. These restructuring charges totaled
$3,320 and were primarily related to employee severance. As of
December 31, 2002, the remaining restructuring accrual is
$2,473. The Company expects to complete the majority of these
payments by December 31, 2003.

33



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##### Table of Contents



INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                                   
| | ----------------------------------
| | Research and Development
    Costs

Expenditures for research and development are
expensed as incurred. The Company expensed approximately $2,481,
$2,327 and $2,675 in research and development costs during the
years ended December 31, 2002, 2001 and 2000, respectively,
primarily related to the development of new services.



| |                  
| | -----------------
| | Advertising Costs

Advertising expenditures consists of print media,
radio, television, direct marketing and trade shows. All
advertising expenses are charged to income during the period
incurred and totaled $5,216, $5,886 and $6,825 for the years
ended December 31, 2002, 2001 and 2000, respectively.



| |                         
| | ------------------------
| | Stock-Based Compensation

The Company follows Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to
Employees (APB No. 25), in accounting for
its employee stock option and employee stock purchase plans,
rather than the fair value method of accounting provided under
Statement of Financial Accounting Standards No. 123,
Accounting for Stock-Based Compensation (SFAS
No. 123). Under APB No. 25, the Company accounts
for its employee stock options using the intrinsic value method.
Under this method the Company does not recognize compensation
expense on stock options granted to employees because the
exercise price of each option is equal to the market price of
the underlying stock on the date of the grant.

The following pro forma information presents the
Companys net income and basic and diluted net income per
share for the years ended December 31, 2002, 2001 and 2000
as if compensation cost had been measured under the fair value
method of SFAS No. 123, Accounting for Stock
Based Employee Compensation, for the employee stock option
and employee stock purchase plans.

|                                                                                                                                                  |                       |                         |         |      |  |      |        |      |  |   |          |       |  
|------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------- | ----------------------- | ------- | ---- |  | ---- | ------ | ---- |  | - | -------- | ----- | -
|                                                                                                                                                  |                       |                        
|                                                                                                                                                  |                       | Year Ended December 31,
|                                                                                                                                                  |                       |                        
|                                                                                                                                                  |                       | 2002                    |         | 2001 |  | 2000
|                                                                                                                                                  |                       |                         |         |      |  |     
|Net income (loss), as reported                                                                                                                    |                       | $                       | 60,733  |      |  | $    | 4,312  |      |  | $ | (143,472 | )    
|Deduct:Total stock
    based employee compensation expense determined under fair value
    based method for all awards net of related tax effects |                       |                         | (11,060 | )    |  |      | (2,972 | )    |  |   | (894     | )    
|                                                                                                                                                  |                       |                         |         |      |  |      |        |      |  |   |          |      
|Pro forma, net                                                                                                                                    |                       | $                       | 49,673  |      |  | $    | 1,340  |      |  | $ | (144,366 | )    
|                                                                                                                                                  |                       |                         |         |      |  |      |        |      |  |   |          |      
|Earnings (loss) per share                                                                                                                         |                       |                         |         |      |  |      |        |      |  |   |          |      
|                                                                                                                                                  | Basic  as reported   |                         | $       | 0.67 |  |      | $      | 0.05 |  |   | $        | (1.68 | )
|                                                                                                                                                  | Basic  pro forma     |                         | $       | 0.54 |  |      | $      | 0.01 |  |   | $        | (1.69 | )
|                                                                                                                                                  | Diluted  as reported |                         | $       | 0.65 |  |      | $      | 0.05 |  |   | $        | (1.68 | )
|                                                                                                                                                  | Diluted  pro forma   |                         | $       | 0.53 |  |      | $      | 0.01 |  |   | $        | (1.69 | )

See Note 11 for further details on the fair
value methodology employed by the Company to determine the above
pro forma effects of FAS 123. The effects of applying SFAS
No. 123 in this pro forma disclosure are not indicative of
future amounts. Additional awards in future years are
anticipated.

34



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##### Table of Contents



INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                   
| | ------------------
| | Earnings per Share

The Company calculates its earnings per share in
accordance with Financial Accounting Standard No. 128,
Earnings per Share. Below is a reconciliation of the
earnings per share and weighted average shares outstanding (in
thousands) between the basic and diluted calculations for each
period.

|                                                        |               |                             |        |                  |  |           |        |       |  |   |      |      |  
|------------------------------------------------------- | ------------- | --------------------------- | ------ | ---------------- |  | --------- | ------ | ----- |  | - | ---- | ---- | -
|                                                        |               |                            
|                                                        |               | For the Twelve Months Ended
|                                                        |               | December 31, 2002          
|                                                        |               |                            
|                                                        |               |                             |        | Weighted Average |  |          
|                                                        |               | Income                      |        | Shares           |  | Per-Share
|                                                        |               | (Numerator)                 |        | (Denominator)    |  | Amount   
|                                                        |               |                             |        |                  |  |          
|Net income available to common stockholders-basic       |               | $                           | 60,733 |                  |  |           | 91,159 |       |  | $ | 0.67 |     
|Effect of dilutive securities:                          |               |                             |        |                  |  |           |        |       |  |   |      |     
|                                                        | Stock options |                             |        |                 |  |           |        | 2,571 |  |   |      | (.02 | )
|                                                        |               |                             |        |                  |  |           |        |       |  |   |      |     
|Net income available to common
    stockholders-diluted |               | $                           | 60,733 |                  |  |           | 93,730 |       |  | $ | 0.65 |     
|                                                        |               |                             |        |                  |  |           |        |       |  |   |      |     

|                                                        |               |                             |       |                  |  |           |        |       |  |   |      |   | 
|------------------------------------------------------- | ------------- | --------------------------- | ----- | ---------------- |  | --------- | ------ | ----- |  | - | ---- | - | 
|                                                        |               |                            
|                                                        |               | For the Twelve Months Ended
|                                                        |               | December 31, 2001          
|                                                        |               |                            
|                                                        |               |                             |       | Weighted Average |  |          
|                                                        |               | Income                      |       | Shares           |  | Per-Share
|                                                        |               | (Numerator)                 |       | (Denominator)    |  | Amount   
|                                                        |               |                             |       |                  |  |          
|Net income available to common stockholders-basic       |               | $                           | 4,312 |                  |  |           | 90,844 |       |  | $ | 0.05 |  
|Effect of dilutive securities:                          |               |                             |       |                  |  |           |        |       |  |   |      |  
|                                                        | Stock options |                             |       |                 |  |           |        | 1,666 |  |   |      |  | 
|                                                        |               |                             |       |                  |  |           |        |       |  |   |      |  
|Net income available to common
    stockholders-diluted |               | $                           | 4,312 |                  |  |           | 92,510 |       |  | $ | 0.05 |  
|                                                        |               |                             |       |                  |  |           |        |       |  |   |      |  

|                                                  |               |                             |          |                  |  |           |        |   |  |   |       |   | 
|------------------------------------------------- | ------------- | --------------------------- | -------- | ---------------- |  | --------- | ------ | - |  | - | ----- | - | 
|                                                  |               |                            
|                                                  |               | For the Twelve Months Ended
|                                                  |               | December 31, 2000          
|                                                  |               |                            
|                                                  |               |                             |          | Weighted Average |  |          
|                                                  |               | Income                      |          | Shares           |  | Per-Share
|                                                  |               | (Numerator)                 |          | (Denominator)    |  | Amount   
|                                                  |               |                             |          |                  |  |          
|Net loss available to common stockholders-basic   |               | $                           | (143,472 | )                |  |           | 85,560 |   |  | $ | (1.68 | )
|Effect of dilutive securities:                    |               |                             |          |                  |  |           |        |   |  |   |       |  
|                                                  | Stock options |                             |          |                 |  |           |        |  |  |   |       |  | 
|                                                  |               |                             |          |                  |  |           |        |   |  |   |       |  
|Net loss available to common stockholders-diluted |               | $                           | (143,472 | )                |  |           | 85,560 |   |  | $ | (1.68 | )
|                                                  |               |                             |          |                  |  |           |        |   |  |   |       |  

Due to the net loss in 2000, the effect of the
options would have been anti-dilutive and, therefore, such
options were excluded from the calculation of diluted earnings
per share.

2.     New Accounting
Pronouncements

Asset
Retirement Obligations

In August 2001, the FASB issued Financial
Accounting Standard No. 143, Accounting for Asset
Retirement Obligations (FAS 143), which
addresses financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. FAS 143 is required
to be adopted for fiscal years beginning after June 15,
2002. The adoption of this standard will not have any immediate
impact on the Companys financial position or results of
operations.

35



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##### Table of Contents



INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                                                                   
| | ------------------------------------------------------------------
| | Accounting for the Impairment or Disposal
    of Long-Lived Assets

In October 2001, FASB issued Financial Accounting
Standard No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets (FAS 144).
FAS 144 supersedes FASB Statement No. 121,
Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed of. FAS 144 applies
to all long-lived assets (including discontinued operations) and
consequently amends Accounting Principles Board Opinion
No. 30, Reporting Results of Operations 
Reporting the Effects of Disposal of a Segment of a
Business. FAS 144 is effective for financial
statements issued for fiscal years beginning after
December 15, 2001, and the Company adopted FAS 144, as
required, on January 1, 2002. The adoption of FAS 144
did not have any impact on the Companys financial position
or results of operations.



| |                                                                     
| | --------------------------------------------------------------------
| | Accounting for Costs Associated with Exit
    or Disposal Activities

In July 2002, the FASB issued, Financial
Accounting Standard No. 146, Accounting for Costs
Associated with Exit or Disposal Activities
(FAS 146), which addresses financial accounting
for the costs associated with exit or disposal activities. FAS
146 supersedes Emerging Issues Task Force Issue No. 94-3,
Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit and Activity (including Certain
Costs incurred in a Restructuring). FAS 146 is
effective for exit and disposal activities that are initiated
after December 31, 2002 and will be adopted by the Company
on its effective date. Management does not expect the adoption
of FAS 146 to have a material impact on its financial
position or results of operations.



| |                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------
| | Guarantors Accounting and Disclosure
    Requirements for Guarantees, Including Indirect Guarantees of
    Indebtedness of Others

In November 2002, the Financial Accounting
Standards Board issued FASB Interpretation No. 45,
Guarantors Accounting and Disclosure Requirements
for Guarantees, Including Indirect Guarantees of Indebtedness of
Others (the Interpretation). This
Interpretation expands on the disclosures to be made by a
guarantor in its interim and annual financial statements about
its obligations under certain guarantees that it had issued. It
also clarifies that a guarantor is required to recognize, at the
inception of a guarantee, a liability for the fair value of the
obligation undertaken in issuing the guarantee. The initial
recognition and measurement provisions of this Interpretation
are applicable on a prospective basis to guarantees issued or
modified after December 31, 2002. The disclosure
requirements in this Interpretation are effective for financial
statements of interim or annual periods ending after
December 15, 2002. The adoption of this Interpretation did
not have a material impact on the Companys financial
position or results of operations.



| |                                                                        
| | -----------------------------------------------------------------------
| | Accounting for Stock Based
    Compensation  Transition and Disclosure

In December 2002, the FASB issued Financial
Accounting Standard No. 148, (FAS 148)
Accounting for Stock Based Compensation 
Transition and Disclosure, an amendment of FASB Statement
No. 123. FAS No. 148 amends FAS No. 123,
Accounting for Stock-Based Compensation, to provide
alternative methods of transition for a voluntary change to the
fair value based method of accounting for stock-based employee
compensation. In addition, FAS No. 148 amends the
disclosure requirements of FAS No. 123 to require prominent
disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee
compensation and the effect of the method used on reported
results. As provided for in FAS No. 123, the Company has
elected to apply Accounting Principles Board (APB)
No. 25 Accounting for Stock Issued to Employees
and related interpretations in accounting for stock based
employee compensation plans. APB No. 25 does not require
employee stock options to be expensed when granted with an
exercise price equal to the fair market value. The Company
intends to continue to apply the provisions of APB No. 25.

36



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##### Table of Contents



INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

3.     Merger of Data
Broadcasting Corporation and Interactive Data
Corporation

On February 29, 2000, Data Broadcasting
Corporation completed the Merger with Interactive Data
Corporation, a wholly owned subsidiary of Pearson Longman.
Pearson Longman, through a series of other entities, is wholly
owned by Pearson. Upon the Merger, the Company issued
56,424 shares of its common stock to Pearson Longman that
resulted in the ownership by Pearson Longman of approximately
60% of the Company. (Interactive Data Corporation prior to the
Merger is referred to herein as FT Interactive Data Corporation,
which continues to be the Companys major institutional
services subsidiary.)

The Merger has been accounted for as a reverse
acquisition. Accordingly, the historical financial statements of
FT Interactive Data Corporation are the historical financial
statements of the Company.

The Merger was accounted for as follows:

|                                      |                |                      |         |        |         | 
|------------------------------------- | -------------- | -------------------- | ------- | ------ | ------- | 
|Assets acquired                       |                |                      |         |       
|Cash and cash equivalents             |                | $                    | 48,402  |       
|Accounts receivable                   |                |                      | 12,457  |       
|Fixed assets                          |                |                      | 16,863  |       
|Other assets                          |                |                      | 4,475   |       
|Goodwill                              |                |                      | 205,516 |       
|Investment in MarketWatch.com, Inc.   |                |                      | 192,960 |       
|Other intangibles assets:             |                |                      |         |       
|                                      | Customer Lists |                      |         | 72,300 |        
|                                      | Workforce      |                      |         | 4,400  |        
|                                      | Technology     |                      |         | 8,000  |        
|                                      |                |                      |         |       
|                                      |                |                      | 565,373 |       
|Liabilities assumed                   |                |                      |         |       
|Accounts payable and accrued expenses |                |                      | 22,956  |       
|Deferred revenue                      |                |                      | 12,846  |       
|Other liabilities                     |                |                      | 2,387   |       
|Deferred tax liabilities              |                |                      | 77,537  |       
|Accrued professional costs            |                |                      | 2,300   |       
|Accrued acquisition costs             |                |                      | 9,053   |       
|                                      |                |                      |         |       
|                                      |                |                      | 127,079 |       
|                                      |                | Total Purchase Price |         | $      | 438,294 | 
|                                      |                |                      |         |       

Intangible assets are being amortized between two
and eleven years. Accrued professional costs include investment
banking, accounting and legal services. As of December 31,
2000, all accrued professional costs had been paid. Accrued
acquisition costs include severance, relocation and lease
termination costs. As of December 31, 2002, accrued
acquisition costs remaining were $582. An additional $3,000 of
acquisition costs were funded by Pearson and treated as
additional goodwill and a capital contribution.

37



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##### Table of Contents



INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Accrued acquisition costs are comprised of the
following:

|                           |  |           |       |              |  |       |       |       |  |   |     |  |  |   |       | 
|-------------------------- |  | --------- | ----- | ------------ |  | ----- | ----- | ----- |  | - | --- |  |  | - | ----- | 
|                           |  | Employee  |       | Lease        |  |       |       |      
|                           |  | Severance |       | Terminations |  | Other |       | Total
|                           |  |           |       |              |  |       |       |      
|Original Amount            |  | $         | 6,613 |              |  | $     | 1,591 |       |  | $ | 849 |  |  | $ | 9,053 | 
|2000 payments/adjustments  |  |           | 3,778 |              |  |       | 6     |       |  |   | 514 |  |  |   | 4,298 | 
|                           |  |           |       |              |  |       |       |       |  |   |     |  |  |   |       | 
|Balance, December 31, 2000 |  |           | 2,835 |              |  |       | 1,585 |       |  |   | 335 |  |  |   | 4,755 | 
|2001 payments/adjustments  |  |           | 1,245 |              |  |       | 702   |       |  |   | 145 |  |  |   | 2,092 | 
|                           |  |           |       |              |  |       |       |       |  |   |     |  |  |   |       | 
|Balance, December 31, 2001 |  |           | 1,590 |              |  |       | 883   |       |  |   | 190 |  |  |   | 2,663 | 
|2002 payments              |  |           | 1,008 |              |  |       | 883   |       |  |   | 190 |  |  |   | 2,081 | 
|                           |  |           |       |              |  |       |       |       |  |   |     |  |  |   |       | 
|Balance, December 31, 2002 |  | $         | 582   |              |  | $     |      |       |  | $ |    |  |  | $ | 582   | 
|                           |  |           |       |              |  |       |       |       |  |   |     |  |  |   |       | 

The following unaudited pro forma financial
information reflects the Merger, the transaction discussed in
Note 4, and the sale discussed in Note 6 as if they
occurred on January 1, 2000:

|                   |  |                   |         |  
|------------------ |  | ----------------- | ------- | -
|                   |  | Pro Forma Results
|                   |  | for Year Ended   
|                   |  | December 31, 2000
|                   |  |                  
|Revenue            |  | $                 | 326,438 |  
|Net Loss           |  | $                 | (20,608 | )
|Net loss per share |  | $                 | (.23    | )

4.     Investment in
MarketWatch.com, Inc.

In connection with the transaction described in
Note 3, the Companys investment in MarketWatch.com,
Inc. (MarketWatch) was written up to its fair value
on February 29, 2000 of $192,960. This amount exceeded the
Companys share of the underlying equity of MarketWatch on
that date by $148,686. This excess was being amortized over
three years.

On December 27, 2000, the Company entered
into an agreement with an affiliate of Pearson to sell its 34.4%
ownership in MarketWatch for $26,888. As a result of this sale,
the Company recorded an other than temporary loss of $141,844 in
2000 in connection with this transaction. The balance sheet at
December 31, 2000 included an investment in MarketWatch of
$26,888, which represented the related proceeds received in
January 2001.

On January 16, 2001, the Company paid a
special dividend of $26,871 to stockholders of record on
January 8, 2001. This dividend related to the proceeds
received from the sale of the Companys investment in
MarketWatch, less $17 paid in administrative related fees.

The Company purchased news and web advertising
from MarketWatch in the amount of $1,381 and $143, respectively,
for the twelve months ended December 31, 2001 and $1,050
and $33, respectively, for the twelve months ended
December 31, 2002. The Company had provided services to
MarketWatch including accounting, network operations, web
hosting and data feeds, which ended as of March 31, 2001.
The Company charged MarketWatch $112 for such services for the
twelve months ended December 31, 2001 and these amounts
were recorded as reductions of the gross expenses incurred by
the Company. In 2002, the Company charged MarketWatch $20 for
other services and these amounts were recorded as reductions of
the gross expenses incurred by the Company.

38



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##### Table of Contents



INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

5.     Acquisitions

On January 31, 2002, the Company, through
its FT Interactive Data Corporation subsidiary, acquired certain
assets from Merrill Lynch, Pierce, Fenner & Smith
Incorporated used in its Securities Pricing Service
(SPS) business. The price paid in cash for the
assets was $48,000 and was funded from the operating cash of FT
Interactive Data Corporation. In addition, FT Interactive Data
Corporation incurred acquisition costs of $1,233, consisting of
severance costs and legal and accounting services. As of
December 31, 2002, $523 of the acquisition costs have been
paid.

The acquisition was accounted for using the
purchase method of accounting in accordance with Financial
Accounting Standard No. 141, Business
Combinations. The purchase price has been assigned to the
assets acquired based on their fair values as determined by an
independent third party appraisal. The intangible asset,
customer lists, is being amortized over a fourteen-year period.
The Companys financial statements include the results of
operations of SPS subsequent to the acquisition date.

The acquisition was accounted for as follows:

|                     |                           |   |        |        | 
|-------------------- | ------------------------- | - | ------ | ------ | 
|Assets               |                           |   |        |       
|                     | Customer lists            |   | $      | 30,100 | 
|                     | Fixed assets              |   |        | 772    | 
|                     | Goodwill                  |   |        | 17,822 | 
|                     | Deferred tax assets       |   |        | 539    | 
|                     |                           |   |        |       
|                     |                           | $ | 49,233 |       
|Liabilities          |                           |   |        |       
|                     | Accrued acquisition costs |   | $      | 1,233  | 
|                     |                           |   |        |       
|Total Purchase Price |                           | $ | 48,000 |       

6.     Sale of
Business

On January 10, 2001, the Company completed
the sale of its wholly owned subsidiary, Federal News Service
Inc. (FNS), for net cash proceeds of $3,853. There
was no gain or loss recorded as a result of this transaction.

On April 6, 2001, the Company sold its
common stock in Sportsline.com, Inc. for $12,500 in cash
consideration. There was no gain or loss recorded as a result of
this transaction.

7.     Property and
Equipment

Property and equipment consisted of the following
at December 31:

|                                     |                               |             |               |      |  |      |         |         |   |   |         |         |  
|------------------------------------ | ----------------------------- | ----------- | ------------- | ---- |  | ---- | ------- | ------- | - | - | ------- | ------- | -
|                                     |                               | Useful Life |               | 2002 |  | 2001
|                                     |                               |             |               |      |  |     
|Computer and communication equipment |                               |             | 35 years     |      |  | $    | 64,828  |         |   | $ | 63,080  |        
|Leasehold improvements               |                               |             | Life of lease |      |  |      | 18,499  |         |   |   | 17,428  |        
|Furniture and fixtures               |                               |             | 38 years     |      |  |      | 14,173  |         |   |   | 16,084  |        
|Capitalized software                 |                               |             | 35 years     |      |  |      | 14,311  |         |   |   | 9,393   |        
|                                     |                               |             |               |      |  |      |         |         |   |   |         |        
|                                     |                               |             |               |      |  |      | 111,811 |         |   |   | 105,985 |        
|                                     | Less accumulated depreciation |             |               |      |  |      |         | (75,025 | ) |   |         | (67,554 | )
|                                     |                               |             |               |      |  |      |         |         |   |   |         |        
|                                     |                               |             |               |      |  | $    | 36,786  |         |   | $ | 38,431  |        
|                                     |                               |             |               |      |  |      |         |         |   |   |         |        

39



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##### Table of Contents



INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Depreciation expense was $14,500, $13,139 and
$12,671 for the years ended December 31, 2002, 2001 and
2000, respectively.

8.     Goodwill and
Intangible Assets

Goodwill and intangible assets consist of the
following:

|                       |  |              |            |                   |  |                   |         |          |  |          |          |              |  |          |         |  |  |   |         |  |  |   |          |   |  |   |         | 
|---------------------- |  | ------------ | ---------- | ----------------- |  | ----------------- | ------- | -------- |  | -------- | -------- | ------------ |  | -------- | ------- |  |  | - | ------- |  |  | - | -------- | - |  | - | ------- | 
|                       |  |              |            |                   |  |                  
|                       |  |              |            | December 31, 2002 |  | December 31, 2001
|                       |  | Weighted     |            |                   |  |                  
|                       |  | Average      |            | Gross             |  |                   |         | Gross    |  |         
|                       |  | Amortization |            | Carrying          |  | Accumulated       |         | Net Book |  | Carrying |          | Accumulated  |  | Net Book
|                       |  | Period       |            | Value             |  | Amortization      |         | Value    |  | Value    |          | Amortization |  | Value   
|                       |  |              |            |                   |  |                   |         |          |  |          |          |              |  |         
|Non-compete agreements |  |              | 2.8 years  |                   |  | $                 | 87,500  |          |  | $        | (87,500  | )            |  | $        | 0       |  |  | $ | 87,898  |  |  | $ | (87,732  | ) |  | $ | 166     | 
|Securities database    |  |              | 3.5 years  |                   |  |                   | 10,792  |          |  |          | (10,739  | )            |  |          | 53      |  |  |   | 10,792  |  |  |   | (9,069   | ) |  |   | 1,723   | 
|Computer software      |  |              | 6.7 years  |                   |  |                   | 42,486  |          |  |          | (39,019  | )            |  |          | 3,467   |  |  |   | 42,486  |  |  |   | (35,015  | ) |  |   | 7,471   | 
|Customer lists         |  |              | 11.9 years |                   |  |                   | 170,600 |          |  |          | (49,117  | )            |  |          | 121,483 |  |  |   | 140,500 |  |  |   | (35,823  | ) |  |   | 104,677 | 
|Workforce              |  |              | 8.4 years  |                   |  |                   |        |          |  |          |         |              |  |          |        |  |  |   | 9,382   |  |  |   | (2,379   | ) |  |   | 7,003   | 
|                       |  |              |            |                   |  |                   |         |          |  |          |          |              |  |          |         |  |  |   |         |  |  |   |          |   |  |   |         | 
|Total                  |  |              |            |                   |  | $                 | 311,378 |          |  | $        | (186,375 | )            |  | $        | 125,003 |  |  | $ | 291,058 |  |  | $ | (170,018 | ) |  | $ | 121,040 | 
|                       |  |              |            |                   |  |                   |         |          |  |          |          |              |  |          |         |  |  |   |         |  |  |   |          |   |  |   |         | 

In 2002, the Company adopted Financial Accounting
Standard No. 142, Goodwill and Other Intangible
Assets (FAS 142) and accordingly has
reclassified the workforce intangible asset to goodwill.

The impact on net income and earnings per share
as a result of the adoption of Financial Accounting Standard
No. 142, Goodwill and Other Intangible Assets
(FAS 142), for the year ended December 31
is as follows:

|                                          |  |      |        |      |  |      |        |  |  |   |          |  
|----------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ |  |  | - | -------- | -
|                                          |  | 2002 |        | 2001 |  | 2000
|                                          |  |      |        |      |  |     
|Reported net income                       |  | $    | 60,733 |      |  | $    | 4,312  |  |  | $ | (143,472 | )
|Add back: goodwill/workforce amortization |  |      |       |      |  |      | 39,018 |  |  |   | 37,310   |  
|                                          |  |      |        |      |  |      |        |  |  |   |          |  
|Adjusted net income                       |  | $    | 60,733 |      |  | $    | 43,330 |  |  | $ | (106,162 | )
|Basic earnings per share:                 |  |      |        |      |  |      |        |  |  |   |          |  
|Reported net income                       |  | $    | .67    |      |  | $    | .05    |  |  | $ | (1.68    | )
|Goodwill amortization                     |  |      |       |      |  |      | .43    |  |  |   | .44      |  
|Adjusted earnings per share               |  | $    | .67    |      |  | $    | .48    |  |  | $ | (1.24    | )
|Diluted earnings per share:               |  |      |        |      |  |      |        |  |  |   |          |  
|Reported net income                       |  | $    | .65    |      |  | $    | .05    |  |  | $ | (1.68    | )
|Goodwill amortization                     |  |      |       |      |  |      | .42    |  |  |   | .44      |  
|Adjusted diluted earnings per share       |  | $    | .65    |      |  | $    | .47    |  |  | $ | (1.24    | )

Estimated amortization expense:

|                        |  |        
|----------------------- |  | -------
|For year ended 12/31/03 |  | $13,793
|For year ended 12/31/04 |  | $13,740
|For year ended 12/31/05 |  | $12,406
|For year ended 12/31/06 |  | $12,140
|For year ended 12/31/07 |  | $12,140

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INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The changes in the carrying amount of goodwill
for the years ended December 31, 2002 and 2001 are as
follows:

|                                                                                                      |  |   |         |  
|----------------------------------------------------------------------------------------------------- |  | - | ------- | -
|Balance as of January 1, 2001                                                                         |  | $ | 395,696 |  
|Goodwill amortization                                                                                 |  |   | (37,535 | )
|Purchase accounting adjustments                                                                       |  |   | (2,447  | )
|Impact of change in foreign exchange rates                                                            |  |   | (1,966  | )
|                                                                                                      |  |   |         |  
|Balance as of December 31, 2001                                                                       |  | $ | 353,748 |  
|Goodwill acquired during year                                                                         |  |   | 17,822  |  
|Workforce intangible and related deferred taxes
    reclassified to goodwill upon adoption of FAS 142 |  |   | 4,187   |  
|Purchase accounting adjustments                                                                       |  |   | (173    | )
|Impact of change in foreign exchange rates                                                            |  |   | 6,206   |  
|                                                                                                      |  |   |         |  
|Balance as of December 31, 2002                                                                       |  | $ | 381,790 |  
|                                                                                                      |  |   |         |  

The Company does not allocate goodwill to its
operating segments due to the fact that the Companys chief
operating decision maker does not use this information in
evaluating the operations for each of the Companys
segments. (See Note 18 for further discussions of the
Companys segments).

9.     Accrued
Liabilities

Accrued expenses consist of the following at
December 31:

|                                        |  |      |        |      |  |   |        | 
|--------------------------------------- |  | ---- | ------ | ---- |  | - | ------ | 
|                                        |  | 2002 |        | 2001
|                                        |  |      |        |     
|Bonus                                   |  | $    | 9,307  |      |  | $ | 7,684  | 
|Payroll taxes                           |  |      | 1,501  |      |  |   | 725    | 
|Employee related costs                  |  |      | 15,232 |      |  |   | 17,232 | 
|Commissions                             |  |      | 1,590  |      |  |   | 3,026  | 
|Professional services                   |  |      | 3,610  |      |  |   | 2,197  | 
|Acquisition costs (Notes 3 and 5)       |  |      | 1,538  |      |  |   | 2,929  | 
|Data center costs                       |  |      | 2,135  |      |  |   | 1,605  | 
|Property costs                          |  |      | 1,216  |      |  |   | 502    | 
|Travel costs                            |  |      | 465    |      |  |   | 254    | 
|Royalties                               |  |      | 2,749  |      |  |   | 3,334  | 
|Sales taxes                             |  |      | 2,418  |      |  |   | 2,080  | 
|Data charges                            |  |      | 6,354  |      |  |   | 4,396  | 
|Franchise/property taxes                |  |      | 521    |      |  |   | 952    | 
|Other discontinued operations (Note 13) |  |      | 925    |      |  |   | 867    | 
|Other                                   |  |      | 3,377  |      |  |   | 2,901  | 
|                                        |  |      |        |      |  |   |        | 
|                                        |  | $    | 52,938 |      |  | $ | 50,684 | 
|                                        |  |      |        |      |  |   |        | 

10.     Credit
Arrangements

At December 31, 2000, the Company had an
outstanding letter of credit in the amount of $1,500. This
letter of credit was established in connection with the
settlement of a class action lawsuit against Check Rite of
California, a discontinued operation of the Company. In 2001,
final settlement was made and the letter of

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INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

credit was cancelled. The settlement did not have
a material effect on the Companys financial condition or
results of operations.

In 2001, the Company entered into an unsecured
credit facility for $10,000 with KeyBank National Association.
During 2001 and 2002, there were no borrowings associated with
this credit facility and at December 31, 2002, there was no
outstanding balance. The credit facility consisted of a $10,000
line of credit, which matured on May 1, 2002. The Company
did not renew the facility.

11.     Stock Based
Compensation



| |                             
| | ----------------------------
| | Employee Stock Purchase Plan

In 2002, the Company adopted an employee stock
purchase plan for all eligible employees. Under the plan, shares
of the Companys common stock may be purchased at six-month
intervals at 85% of the lower of the fair market value on the
first or the last day of each six-month period. During 2002,
employees purchased approximately 50 shares at a price of $12.04
per share. At December 31, 2002, 1,950 shares were reserved
for future issuance.



| |                           
| | --------------------------
| | Employee Stock Option Plan

In 2000, the Company adopted the 2000 Long Term
Incentive Plan (the 2000 Plan). Under the 2000 Plan,
the compensation committee of the Board of Directors can grant
stock-based awards representing up to 20% of the total number of
shares of common stock outstanding at the date of grant. The
2000 Plan provides for the discretionary issuance of stock-based
awards to directors, officers, and employees of the Company, as
well as persons who provide consulting or other services to the
Company. The exercise price of options granted employees under
the 2000 Plan is determined at the discretion of the
Compensation Committee. The exercise price for all options
granted to date has been equal to the market price of the
related shares at the date of grant. Options expire ten years
from the date of grant and generally vest over a three to four
year period.

Stock option activity for the years ended
December 31, 2002 and 2001 are as follows:

|                               |           |         |       |                |   |   |       |       | 
|------------------------------ | --------- | ------- | ----- | -------------- | - | - | ----- | ----- | 
|                               |           |         |       | Weighted      
|                               |           |         |       | Average       
|                               |           | Options |       | Exercise Price
|                               |           |         |       |               
|Outstanding December 31, 2000  |           |         | 3,666 |                |   | $ | 5.91  |      
|                               | Granted   |         |       | 5,273          |   |   |       | 8.73  | 
|                               | Exercised |         |       | (1,043         | ) |   |       | 5.84  | 
|                               | Canceled  |         |       | (207           | ) |   |       | 7.51  | 
|                               |           |         |       |                |   |   |       |      
|Outstanding, December 31, 2001 |           |         | 7,689 |                |   |   | 7.82  |      
|                               | Granted   |         |       | 2,610          |   |   |       | 16.15 | 
|                               | Exercised |         |       | (1,404         | ) |   |       | 6.99  | 
|                               | Canceled  |         |       | (276           | ) |   |       | 9.88  | 
|                               |           |         |       |                |   |   |       |      
|Outstanding, December 31, 2002 |           |         | 8,619 |                |   | $ | 10.43 |      
|                               |           |         |       |                |   |   |       |      
|Exercisable, December 31, 2002 |           |         | 3,397 |                |   | $ | 7.80  |      
|                               |           |         |       |                |   |   |       |      

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INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The following table summarizes information about
stock options outstanding and exercisable at December 31,
2002.

Range of option exercise prices:

|                                         |  |             |       |             |  |         |       |          |  |  |       |  |  |   |       | 
|---------------------------------------- |  | ----------- | ----- | ----------- |  | ------- | ----- | -------- |  |  | ----- |  |  | - | ----- | 
|                                         |  |             |       |            
|                                         |  | Outstanding |       | Exercisable
|                                         |  |             |       |            
|                                         |  |             |       | Weighted    |  |         |       | Weighted
|                                         |  |             |       | Average     |  |         |       | Average 
|                                         |  |             |       | Exercise    |  |         |       | Exercise
|                                         |  | Options     |       | Price       |  | Options |       | Price   
|                                         |  |             |       |             |  |         |       |         
|$2.44 to $3.31 (Avg. life: 1.20 years)   |  |             | 248   |             |  | $       | 2.71  |          |  |  | 211   |  |  | $ | 2.63  | 
|$3.81 to $5.54 (Avg. life: 6.40 years)   |  |             | 716   |             |  |         | 4.69  |          |  |  | 527   |  |  |   | 4.75  | 
|$5.75 to $8.63 (Avg. life: 4.60 years)   |  |             | 546   |             |  |         | 7.50  |          |  |  | 546   |  |  |   | 7.50  | 
|$8.63 to $12.50 (Avg. life: 8.40 years)  |  |             | 4,497 |             |  |         | 8.81  |          |  |  | 2,024 |  |  |   | 8.81  | 
|$12.99 to $18.50 (Avg. life: 9.40 years) |  |             | 2,612 |             |  |         | 16.13 |          |  |  | 89    |  |  |   | 16.85 | 
|                                         |  |             |       |             |  |         |       |          |  |  |       |  |  |   |       | 
|                                         |  |             | 8,619 |             |  |         |       |          |  |  | 3,397 |  |  |   |       | 
|                                         |  |             |       |             |  |         |       |          |  |  |       |  |  |   |       | 

As discussed in Note 1, the Company applies
APB Opinion No. 25 in accounting for stock based employee
compensation and, accordingly, no compensation cost has been
recognized for its employee stock options or employee stock
purchase plan in the consolidated financial statements.

The fair value of stock options was estimated as
of the date of grant using a Black-Scholes option pricing model
with the following assumptions:

|                            |  |      |      |      |  |      |      |   |  |   |      |  
|--------------------------- |  | ---- | ---- | ---- |  | ---- | ---- | - |  | - | ---- | -
|                            |  | 2002 |      | 2001 |  | 2000
|                            |  |      |      |      |  |     
|Risk free interest rate     |  |      | 3.87 | %    |  |      | 4.25 | % |  |   | 6.00 | %
|Expected life (in years)    |  |      | 4.00 |      |  |      | 4.00 |   |  |   | 4.06 |  
|Volatility                  |  |      | 77   | %    |  |      | 90   | % |  |   | 109  | %
|Expected dividend yield     |  |      | 0    | %    |  |      | 0    | % |  |   | 0    | %
|Weighted average fair value |  | $    | 9.52 |      |  | $    | 5.93 |   |  | $ | 4.80 |  

The fair value of stock issued related to the
employee stock purchase plan implemented in 2002 was estimated
as of the beginning date of the offering period using a
Black-Scholes option pricing model with the following
assumptions.

|                            |  |      |       |  
|--------------------------- |  | ---- | ----- | -
|                            |  | 2002
|                            |  |     
|Risk free interest rate     |  |      | 1.78  | %
|Expected life (in years)    |  |      | 0.47  |  
|Volatility                  |  |      | 39    | %
|Expected dividend yield     |  |      | 0     | %
|Weighted average fair value |  |      | $3.75 |  

12.     Stockholders
Equity

In addition to the Companys common stock,
the Company may issue up to 5,000 preferred shares, at $0.01 par
value, with terms determined by the board of directors, without
any further action by the stockholders of the Company. At
December 31, 2002, no such stock has been issued.

13.     Discontinued
Operations

As of December 31, 2002, the Company had
$925 of accrued expenses associated with the discontinued
operations of Check Rite International that was a division of
Data Broadcasting Corporation whose operations were discontinued
in 1997. These costs pertain to expected settlements associated
with ongoing litigation.

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INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

14.     Commitments
and Contingencies

The Company has obligations under non-cancelable
operating leases for real estate, equipment and distribution
agreements for satellite and cable space and FM radio channels.
Certain of the leases include renewal options and escalation
clauses. Real estate leases are for the Companys corporate
headquarters, sales offices, major operating units and data
centers. Approximate annual future commitments under
non-cancelable operating leases with lease terms in excess of
one year are as follows:

|                             |  |               |        |              |  |   |       | 
|---------------------------- |  | ------------- | ------ | ------------ |  | - | ----- | 
|                             |  | Real Estate   |        | Distribution
|                             |  | and Equipment |        | Agreements  
|                             |  |               |        |             
|2003                         |  | $             | 10,623 |              |  | $ | 901   | 
|2004                         |  |               | 9,626  |              |  |   | 582   | 
|2005                         |  |               | 8,858  |              |  |   | 452   | 
|2006                         |  |               | 7,475  |              |  |   | 269   | 
|2007                         |  |               | 6,330  |              |  |   | 2     | 
|Thereafter                   |  |               | 30,839 |              |  |   |      | 
|                             |  |               |        |              |  |   |       | 
|Total minimum lease payments |  | $             | 73,751 |              |  | $ | 2,206 | 
|                             |  |               |        |              |  |   |       | 

The Company expects to satisfy its lease
obligations from its existing cash flow. The Companys key
operating locations operate in facilities under long-term
leases, the earliest of which will expire in 2005. The Company
believes it will be able to successfully negotiate key operating
leases and/or find alternative locations for its facilities
without significant interruption to the business.

Rental expense was $10,491, $9,476, and $11,677
for the years ended December 31, 2002, 2001 and 2000,
respectively.

Early in 2001, seven lawsuits were filed by
various stockholders of the Company against the Companys
directors, Pearson Longman plc and its subsidiary Pearson
Longman, Inc. These actions have been consolidated in the
Delaware Chancery Court for New Castle County under the caption
In re Data Broadcasting Corporation Derivative Litigation:
Consolidated Civil Action No. 18665-NC(the
Derivative Action). As is usual in derivative
actions, the Company is named as a nominal defendant in the
Derivative Action on the theory that the plaintiff stockholders
are allegedly suing on its behalf and for its benefit.

The Derivative Action challenges the
Companys January 2001 sale of its 34.4% interest in
MarketWatch to Pearson, the parent company of the Companys
majority stockholder, as having been consummated at an allegedly
inadequate price due to the supposedly undue influence of
Pearson as the Companys majority stockholder. Plaintiffs
seek to have Pearson and the Companys directors
account to the Company for damages that the Company
allegedly sustained by reason of an unduly low sale price.

In January 2003, counsel for all parties signed a
stipulation whereby the named plaintiffs dismissed the case with
prejudice as to the three independent director defendants.
Should the plaintiffs elect to go forward with the action as to
the remaining defendants, the Company and the remaining director
defendants intend to continue to vigorously contest the
allegations against them.

In November 2000, the Securities and Exchange
Commission (the SEC) began an investigation into
management of two Heartland Group high-yield municipal bond
funds. The Company was not named in the SECs formal order
of investigation but has cooperated fully with the SEC. The SEC
staff subsequently notified us of its view that the Company may
have facilitated federal securities laws violations committed by
other parties and has advised us that it may recommend the
commencement of an enforcement action against the Company. None
of our officers, directors, or employees has been similarly so
notified. The SEC staff has not identified who the other parties
are or specified what their misconduct was. We understand that
the SEC staff is concerned about evaluated prices for several
small high-yield municipal bonds provided by the

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INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Company in March-April 2000 and in July-August
2000. We believe that our evaluations were both appropriate and
consistent with our usual practices. We have informed the SEC
staff as to the reasons for our belief that no action against
the Company would be factually or legally warranted. If the SEC
decides to proceed with an enforcement action, we would contest
the matter vigorously. Irrespective of its outcome, we believe
that this matter will not materially affect our results of
operations or financial condition.

On a separate but related matter, shareholders of
the two funds have notified us of their intention to commence an
action against the Company, even though neither the funds nor
their advisor had ever chosen to do so. We understand that the
shareholders claims would be related to widely reported
September and October 2000 decreases in the funds net
asset values. We do not believe that any such action would have
merit or would materially affect the Companys results of
operations or financial condition.

In addition to the matters discussed above, the
Company is involved in ordinary, routine litigation from time to
time in the ordinary course of business with a portion of the
defense and/or settlement costs in some such cases being covered
by various commercial liability insurance policies. The Company
does not expect that the outcome of these matters will have a
material impact on its financial position or results of
operations.

15.     Income
Taxes

The components of income (loss) before
income taxes are as follows for the years ended December 31:

|         |  |      |         |      |  |      |        |  |  |   |          |  
|-------- |  | ---- | ------- | ---- |  | ---- | ------ |  |  | - | -------- | -
|         |  | 2002 |         | 2001 |  | 2000
|         |  |      |         |      |  |     
|Domestic |  | $    | 83,035  |      |  | $    | 14,672 |  |  | $ | (222,107 | )
|Foreign  |  |      | 17,186  |      |  |      | 13,863 |  |  |   | 11,113   |  
|         |  |      |         |      |  |      |        |  |  |   |          |  
|Total    |  | $    | 100,221 |      |  | $    | 28,535 |  |  | $ | (210,994 | )
|         |  |      |         |      |  |      |        |  |  |   |          |  

Income tax expense (benefits) consists of the
following for the years ended December 31:

|          |         |      |        |        |  |      |        |        |   |   |         |         |  
|--------- | ------- | ---- | ------ | ------ |  | ---- | ------ | ------ | - | - | ------- | ------- | -
|          |         | 2002 |        | 2001   |  | 2000
|          |         |      |        |        |  |     
|Current:  |         |      |        |        |  |      |        |        |   |   |         |        
|          | Federal |      | $      | 25,142 |  |      | $      | 21,369 |   |   | $       | 6,292   |  
|          | State   |      |        | 7,600  |  |      |        | 5,780  |   |   |         | 3,740   |  
|          | Foreign |      |        | 4,426  |  |      |        | 5,874  |   |   |         | 6,705   |  
|          |         |      |        |        |  |      |        |        |   |   |         |        
|          |         |      | 37,168 |        |  |      | 33,023 |        |   |   | 16,737  |        
|          |         |      |        |        |  |      |        |        |   |   |         |        
|Deferred: |         |      |        |        |  |      |        |        |   |   |         |        
|          | Federal |      |        | 1,317  |  |      |        | (7,600 | ) |   |         | (71,391 | )
|          | State   |      |        | 336    |  |      |        | (765   | ) |   |         | (11,940 | )
|          | Foreign |      |        | 667    |  |      |        | (435   | ) |   |         | (928    | )
|          |         |      |        |        |  |      |        |        |   |   |         |        
|          |         |      | 2,320  |        |  |      | (8,800 | )      |   |   | (84,259 | )      
|          |         |      |        |        |  |      |        |        |   |   |         |        
|          |         | $    | 39,488 |        |  | $    | 24,223 |        |   | $ | (67,522 | )      
|          |         |      |        |        |  |      |        |        |   |   |         |        

Deferred taxes are recorded for differences
between the financial statement and tax basis of assets and
liabilities using enacted tax rates in effect for the year in
which the differences are expected to reverse. The

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INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

components of the Companys deferred income
taxes recognized in the financial statements are as follows at
December 31:

|                                 |  |      |         |      |  |   |         |  
|-------------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|                                 |  | 2002 |         | 2001
|                                 |  |      |         |     
|Current deferred tax:            |  |      |         |      |  |   |         |  
|Accrued expenses                 |  | $    | 3,976   |      |  | $ | 6,978   |  
|Depreciation                     |  |      | 24      |      |  |   | 1,913   |  
|Other                            |  |      | 1,475   |      |  |   | 3,079   |  
|Accounts Receivable Allowance    |  |      | 1,012   |      |  |   | 1,237   |  
|                                 |  |      |         |      |  |   |         |  
|                                 |  |      | 6,487   |      |  |   | 13,207  |  
|Long term deferred tax:          |  |      |         |      |  |   |         |  
|Other intangible assets          |  |      | 9,654   |      |  |   | 5,378   |  
|Non compete agreements           |  |      | 22,446  |      |  |   | 24,302  |  
|Net operating loss carryforwards |  |      | 3,034   |      |  |   | 4,191   |  
|Customer Lists                   |  |      | (38,439 | )    |  |   | (42,080 | )
|Sale of business                 |  |      | 6,634   |      |  |   | 6,477   |  
|                                 |  |      |         |      |  |   |         |  
|                                 |  |      | 3,329   |      |  |   | (1,732  | )
|Valuation allowance              |  |      | (6,634  | )    |  |   | (6,477  | )
|                                 |  |      |         |      |  |   |         |  
|                                 |  |      | (3,305  | )    |  |   | (8,209  | )
|                                 |  |      |         |      |  |   |         |  
|Total                            |  | $    | 3,182   |      |  | $ | 4,998   |  
|                                 |  |      |         |      |  |   |         |  

The long term deferred tax asset of $6,634 was
recorded concurrently with the sale of MarketWatch (see
Note 4). The realization of this tax asset is not within
the control of the Company and as such a full valuation
allowance has been provided against this asset.

The Company has $8,669 of federal net operating
loss carryforwards that were obtained in the acquisition of Data
Broadcasting Corporation. IRS regulations and certain state
regulations limit the usage of the net operating loss
carryforwards. The Company believes that based upon its
forecasts, these net operating loss carryforwards will be fully
utilized.

Income taxes computed using the federal statutory
income tax rate differ from the Companys effective tax
rate primarily due to the following:

|                                                  |  |                          |      |      |  |      |      |   |  |  |       |   
|------------------------------------------------- |  | ------------------------ | ---- | ---- |  | ---- | ---- | - |  |  | ----- | --
|                                                  |  |                         
|                                                  |  | Years Ended December 31,
|                                                  |  |                         
|                                                  |  | 2002                     |      | 2001 |  | 2000
|                                                  |  |                          |      |      |  |     
|Statutory U.S. federal tax rate                   |  |                          | 35.0 | %    |  |      | 35.0 | % |  |  | (35.0 | )%
|State taxes, net of federal tax benefit           |  |                          | 5.1  |      |  |      | 11.4 |   |  |  | (2.5  | ) 
|Foreign income taxed at different statutory rates |  |                          | (.9  | )    |  |      | (2.4 | ) |  |  | (.2   | ) 
|Basis difference in sale of MarketWatch           |  |                          |     |      |  |      |     |   |  |  | (3.1  | ) 
|Nondeductible goodwill/other                      |  |                          | .2   |      |  |      | 38.0 |   |  |  | 4.0   |   
|Other, net                                        |  |                          |     |      |  |      | 3.0  |   |  |  | 4.8   |   
|                                                  |  |                          |      |      |  |      |      |   |  |  |       |   
|Effective tax rate                                |  |                          | 39.4 | %    |  |      | 85.0 | % |  |  | (32.0 | )%
|                                                  |  |                          |      |      |  |      |      |   |  |  |       |   

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INTERACTIVE DATA CORPORATION AND
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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

16.     Retirement
Plans

Pearson, Inc.
Savings and Investment Plan

The Companys U.S. employees are eligible to
participate in a Pearson subsidiarys U.S. 401(k) Plan
(the 401(k) Plan). The 401(k) Plan allows all
employees to make contributions of a specified percentage of
their compensation, which is subject to a 50% employer match.
The 401(k) Plan additionally allows certain employees to
contribute amounts above the specified percentage, which are not
subject to any employer match. Contributions made by the Company
for the 401(k) Plan are determined as a percentage of covered
salary and amounted to $2,774, $1,590, and $1,633 for the years
ended December 31, 2002, 2001 and 2000, respectively.

In 2002, the Company introduced an additional
discretionary 401(k) contribution. This contribution is expected
to be equivalent to 1.25% of eligible employee compensation and
for the year ended December 31, 2002, the Company recorded
an expense of $1,100 for this benefit. The Company expects to
make this contribution in the second quarter of 2003.

Pearson, Inc.
Pension Plan

Pearson Inc., a Pearson U.S. subsidiary, sponsors
a defined benefit plan (the Plan) for Pearsons
U.S. employees and the Plan also includes certain of the
Companys U.S. employees. Pension costs are actuarially
determined. The Company funds pension costs attributable to its
employees to the extent allowable under IRS regulations. In
2001, the Company froze the benefits associated with this
pension plan. There was no gain or loss recorded as a result of
the curtailment. In 2002, the valuation date for the pension
plan was changed from September to December. There was no
material impact to the financial results of the Company as a
result of this change.

Presented below is certain financial information
relating to the Companys participation in the Plan:

|                                        |  |              |       |      |  |   |       |  
|--------------------------------------- |  | ------------ | ----- | ---- |  | - | ----- | -
|                                        |  |             
|                                        |  | Year Ended  
|                                        |  | December 31,
|                                        |  |             
|                                        |  | 2002         |       | 2001
|                                        |  |              |       |     
|Change in benefit obligation:           |  |              |       |      |  |   |       |  
|Benefit obligation at beginning of year |  | $            | 6,484 |      |  | $ | 5,543 |  
|Service cost                            |  |              | 137   |      |  |   | 2,127 |  
|Interest cost                           |  |              | 446   |      |  |   | 427   |  
|Amendments                              |  |              | 14    |      |  |   | (9    | )
|Impact of change in measurement date    |  |              | 116   |      |  |   |      |  
|Curtailment                             |  |              |      |      |  |   | (969  | )
|Actuarial loss (gain)                   |  |              | 1,616 |      |  |   | (196  | )
|Benefits paid                           |  |              | (311  | )    |  |   | (439  | )
|                                        |  |              |       |      |  |   |       |  
|                                        |  | $            | 8,502 |      |  | $ | 6,484 |  
|                                        |  |              |       |      |  |   |       |  

47



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##### Table of Contents



INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

|                                                                          |  |              |        |      |  |   |       |  
|------------------------------------------------------------------------- |  | ------------ | ------ | ---- |  | - | ----- | -
|                                                                          |  |             
|                                                                          |  | Year Ended  
|                                                                          |  | December 31,
|                                                                          |  |             
|                                                                          |  | 2002         |        | 2001
|                                                                          |  |              |        |     
|Change in plan assets:                                                    |  |              |        |      |  |   |       |  
|                                                                          |  | $            | 2,598  |      |  | $ | 1,789 |  
|Actual return on plan assets                                              |  |              | (460   | )    |  |   | (243  | )
|Impact of change in measurement date                                      |  |              | 179    |      |  |   |      |  
|Employer contribution                                                     |  |              | 2,105  |      |  |   | 1,491 |  
|Benefits paid                                                             |  |              | (311   | )    |  |   | (439  | )
|                                                                          |  |              |        |      |  |   |       |  
|Fair value of plan assets at end of period                                |  | $            | 4,111  |      |  | $ | 2,598 |  
|                                                                          |  |              |        |      |  |   |       |  
|Reconciliation of funded status:                                          |  |              |        |      |  |   |       |  
|Benefit obligation at end of year                                         |  | $            | 8,502  |      |  | $ | 6,484 |  
|Fair value of plan assets at end of period                                |  |              | 4,111  |      |  |   | 2,598 |  
|                                                                          |  |              |        |      |  |   |       |  
|Funded status at end of period                                            |  |              | 4,391  |      |  |   | 3,886 |  
|Unrecognized prior service cost                                           |  |              | 4      |      |  |   | 10    |  
|Unrecognized net actuarial loss                                           |  |              | (2,695 | )    |  |   | (370  | )
|                                                                          |  |              |        |      |  |   |       |  
|Net amount recognized                                                     |  | $            | 1,700  |      |  | $ | 3,526 |  
|                                                                          |  |              |        |      |  |   |       |  
|Amounts recognized in the statement of financial
    position consist of: |  |              |        |      |  |   |       |  
|Accrued benefit liability                                                 |  |              | 4,395  |      |  |   | 3,526 |  
|Accumulated other comprehensive income                                    |  |              | 2,695  |      |  |   |      |  
|                                                                          |  |              |        |      |  |   |       |  
|Net amount recognized                                                     |  |              | 1,700  |      |  |   | 3,526 |  
|                                                                          |  |              |        |      |  |   |       |  

|                                             |  |                         |      |      |  |      |       |   |  |   |       |  
|-------------------------------------------- |  | ----------------------- | ---- | ---- |  | ---- | ----- | - |  | - | ----- | -
|                                             |  |                        
|                                             |  | Year Ended December 31,
|                                             |  |                        
|                                             |  | 2002                    |      | 2001 |  | 2000
|                                             |  |                         |      |      |  |     
|Components of net periodic benefit
    cost: |  |                         |      |      |  |      |       |   |  |   |       |  
|Service cost                                 |  | $                       | 137  |      |  | $    | 2,127 |   |  | $ | 1,493 |  
|Interest cost                                |  |                         | 446  |      |  |      | 427   |   |  |   | 281   |  
|Expected return on plan assets               |  |                         | (282 | )    |  |      | (160  | ) |  |   | (75   | )
|Amortization of prior service costs          |  |                         | (1   | )    |  |      | (21   | ) |  |   | (21   | )
|                                             |  |                         |      |      |  |      |       |   |  |   |       |  
|Net periodic benefit cost                    |  | $                       | 300  |      |  | $    | 2,373 |   |  | $ | 1,678 |  
|                                             |  |                         |      |      |  |      |       |   |  |   |       |  

|                               |  |              |      |      |  |  |      |  
|------------------------------ |  | ------------ | ---- | ---- |  |  | ---- | -
|                               |  |             
|                               |  | Year Ended  
|                               |  | December 31,
|                               |  |             
|                               |  | 2002         |      | 2001
|                               |  |              |      |     
|Weighted average assumptions:  |  |              |      |      |  |  |      |  
|Discount rate                  |  |              | 6.75 | %    |  |  | 7.25 | %
|Expected return on plan assets |  |              | 8.50 | %    |  |  | 9.00 | %
|Rate of compensation increase  |  |              | 4.50 | %    |  |  | 4.50 | %



| |                      
| | ---------------------
| | Foreign Pension Plans

Pearson and its subsidiaries maintain certain
pension plans for which certain non-U.S. employees of the
Company are eligible to participate. Information relating to the
Companys portion of the actuarial value of plan benefits,
asset values, and other pension disclosures pertaining to these
other Pearson plans are not separately determinable. Pension
expense incurred by the Company related to these plans for the
years ended December 31, 2002, 2001 and 2000 was $2,242,
$1,870, and $1,745, respectively.

48



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INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Certain of the Companys employees
participate in Pearson equity based employee benefit plans. For
the years ended December 31, 2002, 2001 and 2000, the
Company recorded costs of $0, $797 and $343, respectively,
related to the participation in these plans.



|    |                           
|--- | --------------------------
|17. | Related Party Transactions

The Company and Pearson are parties to a
management services agreement that became effective as of
February 29, 2000. Pearson owns approximately 60% of the
issued and outstanding common stock of the Company This
agreement governs the provision of services by either company to
the other and renews annually.

Pursuant to the agreement, Pearson provides
certain services to the Company and the Company provides certain
services to Pearson. The services provided by Pearson to the
Company afford the Company administrative convenience and the
Company believes the terms of such services are more favorable
to it than if it had negotiated similar arrangements with
non-affiliated third parties. The services provided by Pearson
include administering 401(k) and employee health benefit plans
and insurance plans in the United States and United Kingdom and
billing, accounts payable, accounts receivable, computer and
accounting system support, financial accounting, tax and payroll
services related to certain subsidiaries of the Company,
primarily in the United Kingdom. The services provided by the
Company to Pearson include information technology and property
services. A majority of the charges for services to and from
Pearson and its affiliates are at cost. Certain of the
Companys directors are employees of Pearson. The
independent committee of the Companys Board of Directors,
which consists of three directors, none of whom are employees of
Pearson, approved the management services agreement on behalf of
the Company. There was no material effect on the financial
condition or results of operations of the Company as a result of
entering into this agreement. If Pearsons services to the
Company were to be terminated, the Company would be required to
seek equivalent services in the open market at potentially
increased costs. In addition, the Company would lose the
efficiencies of working in concert with Pearson, and would bear
the entire burden of administrating such services, resulting in
an increased demand on the Companys administrative
resources. The management services agreement is amended from
time to time by mutual agreement to address changes in the terms
or services provided to or on behalf of the Company. Any such
amendments are approved by the independent committee.

In 2001, Pearsons Financial Times Group
entered into a trademark license agreement with the Company
authorizing the Company to use the FT and
Financial Times trademarks and logos in its
business. The license grants the Company the right to use the FT
and Financial Times brands for a five-year period for one
British Pound with an automatic renewal thereafter, unless
terminated. The license is subject to quality control standards,
restrictions on sublicensing the trademarks to third parties and
certain other restrictions. The independent committee of the
Companys Board of Directors approved this agreement on
behalf of the Company.

On March 26, 2001, the Company purchased
used equipment comprised of servers for an aggregate of $97 from
FT.com, a wholly owned subsidiary of Pearson. The purchase price
was at or lower than discounts offered elsewhere for comparable
equipment. The purchase was approved by the independent
committee of the Board of Directors on behalf of the Company.

Any amounts payable or receivable to and from
Pearson or Pearson affiliates are classified as an affiliate
transaction on the balance sheet. For the years ended
December 31, 2002, 2001 and 2000, the Company incurred net
(income)/expense of ($79), ($3,508), and $588 for these services
provided to Pearson and received from Pearson. In 2000, the
Company had an arrangement with a Pearson affiliate, Financial
Times Electronic Publishing (FTEP), for FTEPs
use of certain production equipment. In 2000, the Company
invoiced FTEP $4,465 for this service. The Company recorded this
transaction as a reduction to costs. This service was not in
effect for the years ended December 31, 2002 and 2001.

49



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INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



|    |                    
|--- | -------------------
|18. | Segment Information

The Companys reportable segments are as
follows:



|                         |  |                                                                                                                                                                                                                                                                                            
|------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Institutional Services   |  | delivery of time sensitive pricing, dividend,
    corporate action, hard-to-value unlisted fixed income
    instruments, and descriptive information for more than
    3.5 million securities traded around the world, and fixed
    income portfolio analytics to institutional customers.
|                        
|Retail Investor Services |  | delivery of real-time financial market
    information primarily to retail customers.                                                                                                                                                                                                      

The Company evaluates its segments on the basis
of revenue, operating income and earnings before interest,
taxes, depreciation and amortization, and equity in the loss of
MarketWatch.

|                              |                               |           |       |         |        |         |   |         |        |         |   |         |        |         |  
|----------------------------- | ----------------------------- | --------- | ----- | ------- | ------ | ------- | - | ------- | ------ | ------- | - | ------- | ------ | ------- | -
|                              |                               | 2002      |       | 2001    |        | 2000   
|                              |                               |           |       |         |        |        
|Revenues                      |                               |           |       |         |        |         |   |         |        |         |   |        
|                              | Institutional                 |           | $     | 334,992 |        |         | $ | 294,440 |        |         | $ | 269,943 |       
|                              | Retail                        |           |       |         |        |         |   |         |        |         |   |         |       
|                              |                               | eSignal   |       |         | 35,545 |         |   |         | 35,392 |         |   |         | 27,427 |        
|                              |                               | Broadcast |       |         | 4,478  |         |   |         | 10,170 |         |   |         | 16,768 |        
|                              |                               |           |       |         |        |         |   |         |        |         |   |        
|                              |                               |           | Total |         | $      | 375,015 |   |         | $      | 340,002 |   |         | $      | 314,138 |  
|                              |                               |           |       |         |        |         |   |         |        |         |   |        
|Income (loss) from operations |                               |           |       |         |        |         |   |         |        |         |   |        
|                              | Institutional                 |           | $     | 129,661 |        |         | $ | 110,046 |        |         | $ | 84,883  |       
|                              | Retail                        |           |       | 1,196   |        |         |   | 3,048   |        |         |   | (962    | )     
|                              | Corporate and unallocated (1) |           |       | (32,625 | )      |         |   | (87,441 | )      |         |   | (87,012 | )     
|                              |                               |           |       |         |        |         |   |         |        |         |   |        
|                              |                               |           | Total |         | $      | 98,232  |   |         | $      | 25,653  |   |         | $      | (3,091  | )
|                              |                               |           |       |         |        |         |   |         |        |         |   |        
|Identifiable assets           |                               |           |       |         |        |         |   |         |        |         |   |        
|                              | Institutional                 |           | $     | 357,032 |        |         | $ | 251,735 |        |         | $ | 248,613 |       
|                              | Retail                        |           |       | 12,003  |        |         |   | 13,567  |        |         |   | 36,087  |       
|                              | Corporate and unallocated     |           |       | 396,192 |        |         |   | 432,681 |        |         |   | 457,390 |       
|                              |                               |           |       |         |        |         |   |         |        |         |   |        
|                              |                               |           | Total |         | $      | 765,227 |   |         | $      | 697,983 |   |         | $      | 742,090 |  
|                              |                               |           |       |         |        |         |   |         |        |         |   |        



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Corporate and unallocated assets and loss in 2000
    and 2001 from operations primarily consists of goodwill and
    intangible amortization. In 2002, corporate and unallocated
    assets and loss from operations primarily consists of intangible
    amortization. Because the Companys chief operating
    decision maker does not use this information as a measure of
    each segments profit or loss, it has not been allocated to
    the segments.

50



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INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The Companys geographic distribution is as
follows:

|                    |               |       |       |         |         |         |   |         |         |         |   |         |         |         | 
|------------------- | ------------- | ----- | ----- | ------- | ------- | ------- | - | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                    |               | 2002  |       | 2001    |         | 2000   
|                    |               |       |       |         |         |        
|Revenues            |               |       |       |         |         |         |   |         |         |         |   |        
|                    | United States |       | $     | 302,128 |         |         | $ | 268,019 |         |         | $ | 242,000 |        
|                    | Europe        |       |       | 67,913  |         |         |   | 67,384  |         |         |   | 67,302  |        
|                    | Asia          |       |       | 4,974   |         |         |   | 4,599   |         |         |   | 4,836   |        
|                    |               |       |       |         |         |         |   |         |         |         |   |        
|                    |               | Total |       | $       | 375,015 |         |   | $       | 340,002 |         |   | $       | 314,138 |        
|                    |               |       |       |         |         |         |   |         |         |         |   |        
|Identifiable assets |               |       |       |         |         |         |   |         |         |         |   |        
|                    | United States |       | $     | 638,236 |         |         | $ | 587,745 |         |         | $ | 641,166 |        
|                    | Europe        |       |       | 121,976 |         |         |   | 106,228 |         |         |   | 96,769  |        
|                    | Asia          |       |       | 5,015   |         |         |   | 4,010   |         |         |   | 4,155   |        
|                    |               |       |       |         |         |         |   |         |         |         |   |        
|                    |               |       | Total |         | $       | 765,227 |   |         | $       | 697,983 |   |         | $       | 742,090 | 
|                    |               |       |       |         |         |         |   |         |         |         |   |        



|    |                 
|--- | ----------------
|19. | Subsequent Event

On January 16, 2003, the Company agreed to
acquire from The McGraw-Hill Companies, Inc. the stock of
ComStock and the assets of certain McGraw-Hill businesses in the
United Kingdom, France, Australia, Singapore and Hong Kong for
$115,000. This transaction closed on February 28, 2003. The
Company funded this acquisition from its existing cash resources.

51



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INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES

QUARTERLY FINANCIAL INFORMATION
(UNAUDITED)

(In thousands, except per share
data)


The following table presents selected unaudited
financial information for the eight quarters in the period ended
December 31, 2002. The results for any quarter are not
necessarily indicative of future quarterly results and,
accordingly, period-to-period comparisons should not be relied
upon as an indication of future performance.

The increase in the Companys fourth quarter
tax expense in 2001, was due to a shift in income from the
Companys UK business to the Companys US business
where the Companys effective tax rate is higher as well as
a settlement of certain prior year tax matters.

|                             |  |                |        |              |  |               |        |              |  |      |        |  |  |   |        |  |  |   |         | 
|---------------------------- |  | -------------- | ------ | ------------ |  | ------------- | ------ | ------------ |  | ---- | ------ |  |  | - | ------ |  |  | - | ------- | 
|                             |  |                |        |             
|                             |  | Quarters Ended |        | Year Ended  
|                             |  |                |        | December 31,
|                             |  | March 31,      |        | June 30,     |  | September 30, |        | December 31, |  | 2002
|                             |  |                |        |              |  |               |        |              |  |     
|Revenue                      |  | $              | 89,442 |              |  | $             | 93,453 |              |  | $    | 95,662 |  |  | $ | 96,458 |  |  | $ | 375,015 | 
|Total costs and expenses     |  |                | 68,082 |              |  |               | 69,785 |              |  |      | 70,171 |  |  |   | 68,745 |  |  |   | 276,783 | 
|Income from operations       |  |                | 21,360 |              |  |               | 23,668 |              |  |      | 25,491 |  |  |   | 27,713 |  |  |   | 98,232  | 
|Other income, net            |  |                | 392    |              |  |               | 449    |              |  |      | 657    |  |  |   | 491    |  |  |   | 1,989   | 
|Provision for income taxes   |  |                | 8,380  |              |  |               | 9,601  |              |  |      | 10,346 |  |  |   | 11,161 |  |  |   | 39,488  | 
|Net income                   |  |                | 13,372 |              |  |               | 14,516 |              |  |      | 15,802 |  |  |   | 17,043 |  |  |   | 60,733  | 
|Net income per share Basic   |  | $              | 0.15   |              |  | $             | 0.16   |              |  | $    | 0.17   |  |  | $ | 0.19   |  |  | $ | 0.67    | 
|Net income per share Diluted |  | $              | 0.14   |              |  | $             | 0.15   |              |  | $    | 0.17   |  |  | $ | 0.18   |  |  | $ | 0.65    | 

|                                              |  |                |        |              |  |               |        |              |  |      |        |  |  |   |        |   |  |   |         | 
|--------------------------------------------- |  | -------------- | ------ | ------------ |  | ------------- | ------ | ------------ |  | ---- | ------ |  |  | - | ------ | - |  | - | ------- | 
|                                              |  |                |        |             
|                                              |  | Quarters Ended |        | Year Ended  
|                                              |  |                |        | December 31,
|                                              |  | March 31,      |        | June 30,     |  | September 30, |        | December 31, |  | 2001
|                                              |  |                |        |              |  |               |        |              |  |     
|Revenue                                       |  | $              | 83,775 |              |  | $             | 84,439 |              |  | $    | 85,287 |  |  | $ | 86,501 |   |  | $ | 340,002 | 
|Total costs and expenses                      |  |                | 83,796 |              |  |               | 80,608 |              |  |      | 76,372 |  |  |   | 73,573 |   |  |   | 314,349 | 
|Income (loss) from operations                 |  |                | (21    | )            |  |               | 3,831  |              |  |      | 8,915  |  |  |   | 12,928 |   |  |   | 25,653  | 
|Other income, net                             |  |                | 658    |              |  |               | 791    |              |  |      | 934    |  |  |   | 499    |   |  |   | 2,882   | 
|Provision for income taxes                    |  |                | 480    |              |  |               | 3,267  |              |  |      | 6,011  |  |  |   | 14,465 |   |  |   | 24,223  | 
|Net income (loss)                             |  |                | 157    |              |  |               | 1,355  |              |  |      | 3,838  |  |  |   | (1,038 | ) |  |   | 4,312   | 
|Net income (loss) per share Basic and Diluted |  | $              | 0.00   |              |  | $             | 0.01   |              |  | $    | 0.04   |  |  | $ | (0.01  | ) |  | $ | 0.05    | 

52



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INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES

For the Years Ended December 31, 2002,
2001, and 2000

(In thousands)


Schedule VIII Valuation and Qualifying
Accounts

|                                |                              |            |   |           |  |            |   |            |  |           |   |     |      |  |   |        |  |  |   |       | 
|------------------------------- | ---------------------------- | ---------- | - | --------- |  | ---------- | - | ---------- |  | --------- | - | --- | ---- |  | - | ------ |  |  | - | ----- | 
|                                |                              | Balance at |   |           |  | Charged to |   |            |  | Balance  
|                                |                              | Beginning  |   |           |  | Other      |   |            |  | at End of
|Description                     |                              | of Period  |   | Additions |  | Accounts   |   | Write Offs |  | Period   
|                                |                              |            |   |           |  |            |   |            |  |          
|Allowance for doubtful accounts |                              |            |   |           |  |            |   |            |  |           |   |     |      |  |   |        |  |  |   |      
|                                | Year Ended December 31, 2002 |            | $ | 4,293     |  |            | $ | 10,103     |  |           | $ | 84  | (A)  |  | $ | 10,308 |  |  | $ | 4,172 | 
|                                | Year Ended December 31, 2001 |            |   | 3,819     |  |            |   | 7,700      |  |           |   | (16 | )(A) |  |   | 7,210  |  |  |   | 4,293 | 
|                                | Year Ended December 31, 2000 |            |   | 4,129     |  |            |   | 4,094      |  |           |   | (63 | )(A) |  |   | 4,341  |  |  |   | 3,819 | 



---



|    |                                                           
|--- | ----------------------------------------------------------
|(A) | Currency translation adjustments for foreign
    entities.

53



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|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes In and Disagreements With
    Accountants on Accounting and Financial Disclosure

None.




PART III




Item 10.     Directors
and Executive Officers of the Registrant

That portion of the Companys definitive
Proxy Statement appearing under the captions Election of
Directors  Nominees and
Section 16(a) Beneficial Ownership Reporting
Compliance to be filed with the Commission and to be used
in connection with its 2003 Annual Meeting of Stockholders is
hereby incorporated by reference.

Executive Officers of the Registrant (as of
February 28, 2003)

|                  |  |     |    |                          |  |                                                            
|----------------- |  | --- | -- | ------------------------ |  | -----------------------------------------------------------
|Name              |  | Age |    | Office Held with Company
|                  |  |     |    |                         
|Stuart J. Clark   |  |     | 55 |                          |  | President and Chief Executive Officer                      
|Steven G. Crane   |  |     | 46 |                          |  | Executive Vice President and Chief Financial
    Officer   
|Andrea H. Loew    |  |     | 45 |                          |  | Vice President, General Counsel and Corporate
    Secretary
|John L. King      |  |     | 52 |                          |  | Chief Operating Officer of FT Interactive Data             
|Raymond L. DArcy |  |     | 50 |                          |  | President, Data Delivery Products, FT Interactive
    Data 

Stuart J. Clarkhas
served as president and chief executive officer of the Company
and a member of the Companys board of directors since
February 29, 2000, and has been employed in the financial
information industry since 1968. Prior to his current position
with the Company he had been president of Interactive Data
Corporation (as it existed prior to the Merger) since 1995. From
1993 to 1995, Mr. Clark was a director of UK-based
Financial Times Information, with specific responsibility for
the Market Data Division. Prior to 1993, Mr. Clark had led
the Market Data Division of Extel Financial Limited, which was
acquired by Pearson plcs Financial Times Group in December
1993.

Steven G. Cranehas
served as executive vice president and chief financial officer
of the Company since November 30, 1999. From October 1997
through November 30, 1999, Mr. Crane served as vice
president and chief financial officer of Video Services
Corporation, a company listed on the American Stock Exchange.
From 1996 to 1997, Mr. Crane was the owner of ATE, Inc., a
provider of packaging related equipment to international
bottling companies. From 1990 to 1995, Mr. Crane was a
division CFO for Pepsi-Cola International.

Andrea H. Loewhas
served as vice president, general counsel and corporate
secretary of the Company since February 29, 2000. From
September 1996 until February 29, 2000, Ms. Loew
served as vice president, general counsel and corporate
secretary of Interactive Data Corporation (as it existed prior
to the Merger). Prior thereto, Ms. Loew was a partner in
Eckert, Seamans, Cherin & Mellott, LLC.

John L. Kinghas
served as chief operating officer of FT Interactive Data since
April 1999. From 1997 to April 1999, Mr. King served as the
managing director/president of Financial Times Groups
Extel Financial Ltd. Division. Prior thereto, Mr. King
served as vice president, IDSITM services for
Interactive Data Corporation (as it existed prior to the Merger).

Raymond L. DArcyhas served as President of Data
Delivery Products for FT Interactive Data since January 2001.
From 1999 to 2001, Mr. DArcy served as Senior Vice
President of Global Sales, Marketing and Customer Support for
Interactive Data Corporation as it existed prior to the Merger
and from 1996 to 1999 as Vice President of North American Sales,
Marketing and Customer Support. Prior thereto,
Mr. DArcy served as FT Interactive Datas
Regional Sales Director for Eastern North America for ten years.

54



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##### Table of Contents






Item 11.     Executive
Compensation

That portion of the Companys definitive
Proxy Statement appearing under the caption Executive
Compensation to be filed with the Commission and to be
used in connection with its 2003 Annual Meeting of Stockholders
is hereby incorporated by reference.






|         |                                                                                                       
|-------- | ------------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder
    Matters

That portion of the Companys definitive
Proxy Statement appearing under the caption Security
Ownership of Certain Beneficial Owners and Management to
be filed with the Commission and to be used in connection with
its 2003 Annual Meeting of is hereby incorporated by reference.

Equity Compensation Plan Information

The following provides certain aggregate
information with respect to all of the Companys equity
compensation plans in effect as of December 31, 2002:

|                                                              |  |                      |           |                      |  |                         |       |  |  |  |            |    
|------------------------------------------------------------- |  | -------------------- | --------- | -------------------- |  | ----------------------- | ----- |  |  |  | ---------- | ---
|                                                              |  |                      |           |                      |  | Number of Securities   
|                                                              |  | Number of Securities |           |                      |  | Remaining Available for
|                                                              |  | to be Issued         |           |                      |  | Future Issuance Under  
|                                                              |  | Upon Exercise of     |           | Weighted Average     |  | Equity Compensation    
|                                                              |  | Outstanding          |           | Exercise Price of    |  | Plans (excluding       
|                                                              |  | Options,             |           | Outstanding Options, |  | securities reflected in
|Plan Category                                                 |  | Warrants and Rights  |           | Warrants and Rights  |  | first column)          
|                                                              |  |                      |           |                      |  |                        
|Equity Compensation Plans Approved by
    Securityholders(1)  |  |                      | 8,618,735 |                      |  | $                       | 10.43 |  |  |  | 20,270,123 | (2)
|Equity Compensation Plans not Approved by
    Securityholders |  |                      |          |                      |  |                         |      |  |  |  |           |    
|Total                                                         |  |                      | 8,618,735 |                      |  | $                       | 10.43 |  |  |  | 20,270,123 | (2)



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | These plans consist of the Companys 2000
    Long Term Incentive Plan, the Data Broadcasting Corporation
    Stock Option Plan as amended through September 13, 1994,
    the Companys 2001 Employee Stock Purchase Plan and the
    Companys UK Savings Related Share Option Plan.                                                                                                                                                                                                                                                                                                                                                   
|   
|(2) | Represents shares of the Companys common
    stock reserved for issuance under the Companys 2001
    Employee Stock Purchase Plan, the UK Savings Related Share
    Option and shares available for future issuance under the
    Companys 2000 Long-Term Incentive Plan. The number of
    shares available under the Companys 2000 Long-Term
    Incentive Plan is adjusted from time to time. Under such plan,
    the compensation committee of board of directors can grant stock
    based awards representing up to 20% of the total number of
    shares of common stock of the Company outstanding at the date of
    grant.




Item 13.     Certain
Relationships and Related Transactions

That portion of the Companys definitive
Proxy Statement appearing under the caption Related Party
Transactions and Employment Agreements, Termination
of Employment and Change in Control Arrangements to be
filed with the Commission and to be used in connection with its
2003 Annual Meeting of Stockholders is hereby incorporated by
reference.




Item 14.     Controls
and Procedures

(a) Evaluation of Disclosure Controls and
Procedures.The Companys chief
executive officer and chief financial officer, after evaluating
the effectiveness of the Companys disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14(c) and
15d-14(c)) as of a date within 90 days of the filing date
of this Annual Report on Form 10-K, have concluded that,
based on such evaluation, the Companys disclosure controls
and procedures were effective to ensure that information
relating to the Company, including its consolidated
subsidiaries, was made known to them by others within those
entities, particularly during the period in which this Annual
Report on Form 10-K was being prepared.

55



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##### Table of Contents



(b) Changes in Internal Controls.There were no significant changes in
the Companys internal controls or in other factors that
could significantly affect these controls subsequent to the date
of their evaluation, nor were there any significant deficiencies
or material weaknesses in the Companys internal controls.
Accordingly, no corrective actions were required or undertaken.






|         |                                                                    
|-------- | -------------------------------------------------------------------
|Item 15. | Exhibits, Financial Statement Schedules and
    Reports on Form 8-K

A.     The following
documents are filed as part of this annual report:

1.     Financial
Statements



| |                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------
| | The financial statements and report of
    independent accountants required by this item are included in
    Part II, Item 8.



| |                                        
| | ---------------------------------------
| | 2.     Financial
    Statement Schedule



| |                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Schedule VIII, Valuation and Qualifying
    Accounts, is included in Part II, Item 8.                                                                                                                
|
| | All other schedules are omitted because they are
    not applicable or not required, or because the required
    information is shown either in the financial statements or in
    the notes thereto.



| |                 
| | ----------------
| | 3.     Exhibits*

The exhibits to this Form 10-K are listed
below.

|        |      |                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|------- | ---- | ----------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |                        
|Number  |      | Description of Exhibits
|        |      |                        
|        | 2.1  |                         |  | Agreement and Plan of Merger, dated as of
    November 14, 1999, among Data Broadcasting Corporation,
    Pearson Longman, Inc., Detective Merger-Sub, Inc. and
    Interactive Data Corporation. (Exhibit 99.5.1 to
    registrants Form 8-K filed on November 22, 1999.)                                                                                                                                                                                                                                           
|        | 2.2  |                         |  | Amendment No. 1 to Agreement and Plan of
    Merger, dated as of January 10, 2000, among Data
    Broadcasting Corporation, Pearson Longman, Inc., Detective
    Merger-Sub, Inc. and Interactive Data Corporation.
    (Appendix B to registrants Schedule 14A filed on
    January 11, 2000.)                                                                                                                                                                                                                      
|        | 2.3  |                         |  | Agreement, dated as of December 27, 2000,
    among Data Broadcasting Corporation and Pearson Overseas
    Holdings Limited. (Exhibit 99.1 to registrants
    Form 8-K filed on January 23, 2001.)                                                                                                                                                                                                                                                                                                                   
|        | 2.4  |                         |  | Asset Sale and Purchase Agreement, dated as of
    December 31, 2001, between Merrill Lynch, Pierce, Fenner
    & Smith Incorporated and FT Interactive Data Corporation, as
    amended. (Exhibit 2.4 to registrants Form 10-K
    for the fiscal year ended December 31, 2001.) (Confidential
    treatment granted as to certain portions.)                                                                                                                                                                       
|        | 2.5  |                         |  | Stock and Asset Purchase Agreement, dated as of
    January 16, 2003, by and among The McGraw-Hill Companies,
    Inc., Standard & Poors Information Services
    (Australia) Pty Ltd., McGraw-Hill International (U.K.) Ltd., and
    McGraw-Hill International Enterprises, Inc. and Interactive Data
    Corporation. (Exhibit 2.1 to registrants Current
    Report on Form 8-K filed on March 14, 2003.) (Portions
    of this Exhibit have been omitted pursuant to a request for
    confidential treatment.)
|        | 3.1  |                         |  | Restated Certificate of Incorporation of
    Interactive Data Corporation. (Exhibit 3.1 to
    registrants Quarterly Report on Form 10-Q for the
    fiscal quarter ended September 30, 2002.)                                                                                                                                                                                                                                                                                                                       
|        | 3.2  |                         |  | Bylaws of Interactive Data Corporation, as
    amended. (Exhibit 3.2 to registrants Form 8-A
    filed on June 15, 1992 (SEC File No. 00020311).)                                                                                                                                                                                                                                                                                                                                                                    
|        | 10.1 |                         |  | Registration Rights Agreement, dated as of
    June 25, 1992, between Financial News Network, Inc., on the
    one hand, and Allan R. Tessler and Alan J. Hirschfield, on the
    other hand. (Exhibit 28.5 to registrants Current
    Report on Form 8-K filed on June 30, 1992 (SEC File
    No. 00020311).)                                                                                                                                                                                                       
|        | 10.2 |                         |  | Data Broadcasting Corporation Stock Option Plan,
    as amended through September 13, 1994. (Exhibit 10.2
    to registrants Form 10-K for the fiscal year ended
    December 31, 2000.)**                                                                                                                                                                                                                                                                                                                           
|        | 10.3 |                         |  | Interactive Data Corporation 2000 Long-Term
    Incentive Plan. (Exhibit 10.3 to registrants
    Form 10-K for the year ended December 31, 2000.)**                                                                                                                                                                                                                                                                                                                                                                  

56



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##### Table of Contents



|        |       |                         |  |                                                                                                                                                                                                                                            
|------- | ----- | ----------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                        
|Number  |       | Description of Exhibits
|        |       |                        
|        | 10.4  |                         |  | 2001 Amendment to Interactive Data Corporation
    2000 Long-Term Incentive Plan. (Exhibit 10.2 to
    registrants Quarterly Report on Form 10-Q for the
    fiscal quarter ended September 30, 2002.)**                                  
|        | 10.5  |                         |  | Letter Agreement, dated November 14, 1999,
    between Data Broadcasting Corporation and Alan J.
    Hirschfield. (Exhibit 10.4 to registrants
    Form 10-K for the year ended December 31, 2000.)**                                     
|        | 10.6  |                         |  | Letter Agreement, dated November 14, 1999,
    between Data Broadcasting Corporation and Allan R. Tessler.
    (Exhibit 10.5 to registrants Form 10-K for the
    year ended December 31, 2000.)**                                        
|        | 10.7  |                         |  | Trade Mark License Agreement, dated March 7,
    2001, between Data Broadcasting Corporation and The Financial
    Times Limited. (Exhibit 10.7 to registrants
    Form 10-K for the year ended December 31, 2000.)                       
|        | 10.8  |                         |  | Employment Agreement with Steven G. Crane, dated
    October 15, 1999. (Exhibit 10.13 to registrants
    Form 10-K for the year ended December 31, 2000.)**                                                                               
|        | 10.9  |                         |  | Interactive Data Corporation 2001 Employee Stock
    Purchase Plan. (Exhibit 10.8 to registrants Annual
    Report on Form 10-K for the fiscal year ended
    December 31, 2001.)**                                                       
|        | 10.10 |                         |  | 2001 Amendment to Interactive Data Corporation
    2001 Employee Stock Purchase Plan. (Exhibit 10.9 to
    registrants Annual Report on Form 10-K for the fiscal
    year ended December 31, 2001.)**                                     
|        | 10.11 |                         |  | Rules of the Interactive Data Corporation UK
    Savings Related Share Option Plan. (Exhibit 10.10 to
    registrants Annual Report on Form 10-K for the fiscal
    year ended December 31, 2001.)**                                      
|        | 10.12 |                         |  | Management Services Agreement, dated as of
    November 29, 2001, between Pearson plc and Interactive Data
    Corporation. (Exhibit 10.11 to registrants Annual
    Report on Form 10-K for the fiscal year ended
    December 31, 2001.)
|        | 10.13 |                         |  | Amendment No. 1 to Management Services
    Agreement, dated October 3, 2002 (Exhibit 10.1 to
    registrants Quarterly Report on Form 10-Q for the
    fiscal quarter ended September 30, 2002.)                                          
|        | 10.14 |                         |  | The Pearson Reward Plan. (Exhibit 10.12 to
    registrants Annual Report on Form 10-K for the fiscal
    year ended December 31, 2001.)**                                                                                                 
|        | 10.15 |                         |  | The Pearson 1988 Executive Share Option Plan.
    (Exhibit 10.13 to registrants Annual Report on
    Form 10-K for the fiscal year ended December 31,
    2001.)**                                                                        
|        | 10.16 |                         |  | Rules of the Pearson plc 1992 United States
    Executive Share Option Plan. (Exhibit 10.14 to
    registrants Annual Report on Form 10-K for the fiscal
    year ended December 31, 2001.)**                                             
|        | 10.17 |                         |  | The Pearson 1998 Executive Share Option Plan.
    (Exhibit 10.15 to registrants Annual Report on
    Form 10-K for the fiscal year ended December 31,
    2001.)**                                                                        
|        | 10.18 |                         |  | Pearson plc Annual Bonus Share Matching Plan.
    (Exhibit 10.16 to registrants Annual Report on
    Form 10-K for the fiscal year ended December 31,
    2001.)**                                                                        
|        | 10.19 |                         |  | Pearson, Inc. Excess Savings and Investment Plan.
    (Exhibit 10.17 to registrants Annual Report on
    Form 10-K for the fiscal year ended December 31,
    2001.)**                                                                    
|        | 10.20 |                         |  | Pearson, Inc. Supplemental Executive Retirement
    Plan. (Exhibit 10.18 to registrants Annual Report on
    Form 10-K for the fiscal year ended December 31,
    2001.) **                                                               
|        | 21    |                         |  | Subsidiaries of the Registrant.                                                                                                                                                                                                            
|        | 23    |                         |  | Consent of PricewaterhouseCoopers LLP.                                                                                                                                                                                                     
|        | 99.1  |                         |  | Certification pursuant to 18 U.S.C.
    Section 1350, as adopted pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002 of Stuart J. Clark.                                                                                         
|        | 99.2  |                         |  | Certification pursuant to 18 U.S.C.
    Section 1350, as adopted pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002 of Steven G. Crane.                                                                                         



---



| |   |                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------
| | * | Exhibits followed by a parenthetical reference
    are previously filed incorporated by reference from the document
    described.

57



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##### Table of Contents





|   |                                                            
|-- | -----------------------------------------------------------
|** | Management contract or compensation plan or
    arrangement

A.     Reports on
Form 8-K

During the quarter ended December 31, 2002,
the Company did not file any Current Reports on Form 8-K.

58



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##### Table of Contents



SIGNATURES

Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



| |                             
| | ----------------------------
| | INTERACTIVE DATA CORPORATION



| |     |                    
| | --- | -------------------
| | By: | /s/ STUART J. CLARK

| |                        
| | -----------------------
| |                        
| | Stuart J. Clark        
| | Chief Executive Officer

March 31, 2003

Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities indicated, as of March 31, 2003.

|                                           |  |                                                                        |  |  |  | 
|------------------------------------------ |  | ---------------------------------------------------------------------- |  |  |  | 
|                                           |  |                                                                        |  | 
|Signature                                  |  | Title                                                                  |  | 
|                                           |  |                                                                        |  | 
|/s/ STUART J. CLARKStuart J. Clark         |  | Chief Executive Officer and Director
    (principal executive officer) |  | 
|                                          
|/s/ JOHN MAKINSONJohn Makinson             |  | Chairman of the Board                                                  |  | 
|                                          
|/s/ STEVEN G. CRANESteven G. Crane         |  | Chief Financial Officer
    (principal accounting officer)             |  | 
|                                          
|/s/ WILLIAM ETHRIDGEWilliam Ethridge       |  | Director                                                               |  | 
|                                          
|/s/ JOHN FALLONJohn Fallon                 |  | Director                                                               |  | 
|                                          
|/s/ WILLIAM B. GAULDWilliam B. Gauld       |  | Director                                                               |  | 
|                                          
|/s/ DONALD P. GREENBERGDonald P. Greenberg |  | Director                                                               |  | 
|                                          
|/s/ ALAN J. HIRSCHFIELDAlan J. Hirschfield |  | Director                                                               |  | 
|                                          
|/s/ PHILIP J. HOFFMANPhilip J. Hoffman     |  | Director                                                               |  | 
|                                          
|/s/ CARL SPIELVOGELCarl Spielvogel         |  | Director                                                               |  | 
|                                          
|/s/ ALLAN R. TESSLERAllan R. Tessler       |  | Director                                                               |  | 

59



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##### Table of Contents



CERTIFICATIONS

I, Stuart J. Clark, certify that:

1.     I have reviewed
this annual report on Form 10-K of Interactive Data
Corporation;

2.     Based on my
knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this annual
report;

3.     Based on my
knowledge, the financial statements, and other financial
information included in this annual report, fairly present in
all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this annual report;

4.     The
registrants other certifying officers and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for the registrant and have:



| |                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this annual report is being prepared;
|
| | b) evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | c) presented in this annual report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                

5.     The
registrants other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrants auditors and the audit committee of
registrants board of directors (or persons performing the
equivalent functions):



| |                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    

6.     The
registrants other certifying officers and I have indicated
in this annual report whether there were significant changes in
internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most
recent evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.



| |     |                    
| | --- | -------------------
| | By: | /s/ STUART J. CLARK

| |                              
| | -----------------------------
| |                              
| | Stuart J. Clark              
| | Chief Executive Officer      
| | (principal executive officer)

Date: March 31, 2003

60



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##### Table of Contents



I, Steven G. Crane, certify that:

1.     I have reviewed
this annual report on Form 10-K of Interactive Data
Corporation;

2.     Based on my
knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this annual
report;

3.     Based on my
knowledge, the financial statements, and other financial
information included in this annual report, fairly present in
all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this annual report;

4.     The
registrants other certifying officers and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for the registrant and have:



| |                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this annual report is being prepared;
|
| | b) evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | c) presented in this annual report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                

5.     The
registrants other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrants auditors and the audit committee of
registrants board of directors (or persons performing the
equivalent functions):



| |                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    

6.     The
registrants other certifying officers and I have indicated
in this annual report whether there were significant changes in
internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most
recent evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.



| |     |                    
| | --- | -------------------
| | By: | /s/ STEVEN G. CRANE

| |                              
| | -----------------------------
| |                              
| | Steven G. Crane              
| | Chief Financial Officer      
| | (principal financial officer)

March 31, 2003

61