##### 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, 2003                                                 
|          
|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
    Incorporation or organization) |  | (I.R.S. Employer
    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                    |  | Name of Each Exchange on Which Registered
|                                       |  |                                          
|common stock, $.01 par value per share |  | 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.    o

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 for
any other purpose) 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 $562,448,748.

As of February 27,
2004, the registrant had 93,139,995 shares of common stock
outstanding.

Documents Incorporated by Reference

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 20, 2004.



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TABLE OF CONTENTS

|                                        |          |    |                                                                                                                      |  |   
|--------------------------------------- | -------- | -- | -------------------------------------------------------------------------------------------------------------------- |  | --
|PART I                                  |          | 2 
|                                        | Item 1.  |    | Business                                                                                                             |  | 2 
|                                        | Item 2.  |    | Properties                                                                                                           |  | 10
|                                        | Item 3.  |    | Legal Proceedings                                                                                                    |  | 10
|                                        | Item 4.  |    | Submission of Matters to a
    Vote of Security Holders                                                              |  | 11
|                                        | Item 4A. |    | Executive Officers                                                                                                   |  | 11
|PART II                                 |          | 12
|                                        | Item 5.  |    | Market for Registrants
    Common Equity, Related Stockholder Matters and Issuer Purchases
    of Equity Securities |  | 12
|                                        | Item 6.  |    | Selected Financial Data                                                                                              |  | 13
|                                        | Item 7.  |    | Managements Discussion
    and Analysis of Financial Condition and Results of Operations                            |  | 13
|                                        | Item 7A. |    | Quantitative and Qualitative
    Disclosures about Market Risk                                                       |  | 31
|                                        | Item 8.  |    | Financial Statements and
    Supplementary Data                                                                      |  | 32
|                                        | Item 9.  |    | Changes In and Disagreements
    With Accountants on Accounting and Financial Disclosure                             |  | 62
|                                        | Item 9A. |    | Controls and Procedures                                                                                              |  | 62
|PART III                                |          | 62
|                                        | Item 10. |    | Directors and Executive
    Officers of the Registrant                                                               |  | 62
|                                        | Item 11. |    | Executive Compensation                                                                                               |  | 62
|                                        | Item 12. |    | Security Ownership of
    Certain Beneficial Owners and Management and Related Stockholder
    Matters               |  | 63
|                                        | Item 13. |    | Certain Relationships and
    Related Transactions                                                                   |  | 63
|                                        | Item 14. |    | Principal Accountant Fees
    and Services                                                                           |  | 63
|PART IV                                 |          | 63
|                                        | Item 15. |    | Exhibits, Financial
    Statement Schedules and Reports on Form 8-K                                                  |  | 63
|2004 Amendment Long Term Incentive Plan
|Subsidiaries of the Registrant         
|Consent of Pricewaterhouse Coopers LLP 
|CEO Sarbanes Oxley Certification       
|CFO Sarbanes Oxley Certification       
|CEO Section 302 Certification          
|CFO Section 302 Certification          



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PART I






|        |         
|------- | --------
|Item 1. | Business

Overview

We are a leading global provider of financial and
business information to financial institutions and retail
investors. We offer our services through four branded businesses:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | FT Interactive Data.Through our FT Interactive Data business, institutional
    customers obtain end-of-day and historical pricing (including
    evaluated pricing), dividend and descriptive information for
    over 3.5 million securities, commodities, and derivative
    instruments that are traded around the world. Financial
    institutions, including banks, brokerage firms, mutual fund
    companies, insurance companies and money managers, regard these
    services as critical to their business activities. We collect,
    edit, generate, maintain, and deliver data on a wide range of
    equity and fixed income securities, commodities, and derivative
    instruments in order to meet the information needs of our
    institutional customers.
|
| | CMS BondEdge.Our
    CMS BondEdge business is focused on providing sophisticated
    fixed income portfolio analytics to fixed income portfolio
    managers, quantitative research analysts and institutional
    brokers. Customers use our CMS BondEdge products for risk/return
    analysis, regulatory reporting and investment decision
    evaluation.                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | ComStock.Through
    our ComStock business, institutional and information media
    customers obtain real-time financial market information covering
    more than 1.8 million securities including equities,
    derivatives, futures, fixed income securities and foreign
    exchange rates, as well as timely information on fixed income
    securities and foreign exchange rates from over 300 stock
    exchanges and market data sources located around the world.                                                                                                                                                                                                                                                                                                    
|
| | eSignal.Through our
    eSignal business, investors obtain real-time financial market
    information regarding securities traded on all major markets in
    the United States as well as a number of important international
    markets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

Most of our services are provided on a flat fee
subscription basis; others are provided on a usage basis, and
some are a combination of a flat minimum fee with additional
amounts charged for usage above an established level. We have
historically achieved high customer retention rates,
particularly from our institutional client base. Through a broad
range of business alliances, many of the worlds best-known
financial service and software companies access our services in
support of their trading, analysis, portfolio management, and
valuation activities. At the core of our business are our
customer relationships, business alliances, extensive databases,
in-depth product, technical know-how and technology
infrastructure resources.

We have been in the financial data business for
over 35 years. On February 29, 2000, Data Broadcasting
Corporation merged with Interactive Data Corporation. This
merger brought together the businesses of Data Broadcasting
Corporation, which included the eSignal and CMS BondEdge
businesses, with the historical and end-of-day businesses of
Interactive Data Corporation.

Since this merger, we have continued to evaluate
acquisition candidates with technologies and customer
relationships that complement our core strengths and add to our
established businesses. In 2002, we acquired certain assets from
Merrill Lynch used in its Securities Pricing Service business.
In 2003, we acquired ComStock, allowing us to provide real-time
information regarding securities traded around the world to our
institutional clients, as well as the client base from HyperFeed
Technologies, through which we expanded the client base for our
ComStock services.

Market for Financial Data

To support the numerous complex tasks they
perform, financial services industry participants typically
require timely delivery of high-quality data obtained from
multiple sources. Among other things, data obtained from
external data vendors is used:



| |   |                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | As input to be considered as part of a
    determination of the valuation of individual securities held in
    an investment portfolio.The valuation
    of such portfolios is an important issue for mutual funds,
    pension

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | funds, and money managers. For example, each
    U.S. mutual fund has a regulatory obligation to regularly
    determine the funds net asset value. The net asset value
    is used to set the price per share for all investments into and
    redemptions from that mutual fund for the transactions that
    occurred before the markets closed on that day. While we do not
    and, as a regulatory matter, cannot set mutual fund net asset
    values, many mutual funds consider our data as one important
    part of their own daily valuation determinations.                                                                                                                                                 
|
| |  | In support of back office
    operations.Financial institutions
    require trading activity information in order to settle
    purchases and sales of securities and to prepare account
    statements for themselves and their clients. In addition,
    financial institutions may utilize securities information
    provided by third parties for consideration as they perform the
    activities required to meet the various regulatory requirements
    to which they are subject. We believe that the importance of
    these services will continue to increase as the financial
    services industry moves towards faster and more automated
    settlement processing and as regulatory requirements expand.
|
| |  | In research to determine whether and when to
    buy and sell securities.Retail
    brokerage firms, investment management firms, banks and
    individual investors all desire both real-time and historical
    data to assist in their investment decisions. Our data is one of
    many inputs that may be considered as part of the ongoing
    research and investment activities of financial institutions and
    other third party entities in the business of investment
    research and analytics.                                                                                                                                                                                                            

There are numerous challenges associated with
obtaining, aggregating, storing, evaluating and distributing
financial and business information regarding securities traded
on the worlds financial markets. These challenges include:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Infrequently Traded
    Securities.Many securities,
    particularly fixed income securities, are difficult to value
    because they trade infrequently. A small number of companies
    have developed reliable proprietary models and methodologies
    used to produce a good faith opinion as to what buyers in the
    marketplace would pay in a current sale for a security for which
    market quotations are not readily available. The generation and
    delivery of these opinions, or evaluated prices, represent a
    significant market within the financial services industry.
|
| | Aggregating Multiple
    Sources.The information required by
    financial institutions comes from many sources, including
    securities exchanges and other financial markets in North
    America, Europe, Asia/ Pacific and elsewhere in the world.
    Aggregating this data requires establishing relationships with
    each of these sources, creating a global technical
    infrastructure capable of collecting the source data and
    incorporating the source data into a uniform data structure.                                                                                  
|
| | Reliability.The
    distance, speed and volume of data moved on a daily basis
    creates significant operational and quality challenges.
    Identifying and minimizing source or other errors in reporting,
    collecting, aggregating, storing and distributing financial
    information is a unique challenge.                                                                                                                                                                                                                                                                             
|
| | Know-how.Extensive
    expertise and technical know-how regarding the financial data
    industry are required to effectively obtain, store, evaluate and
    distribute the volume and diversity of financial and business
    information needed to operate in the financial services
    industry. The expertise and know-how required are
    highly-specialized, diffuse and is not readily obtainable or
    transferable.                                                                                                                                                                 

To assist in addressing these challenges,
financial institutions commonly purchase services from companies
that specialize in providing financial and business information
to multiple customers in a cost effective manner.

Services

We sell our services to two business segments,
financial institutions and retail investors. The retail investor
segment includes active retail investors and professional
traders. Our businesses address the requirements of both
financial institutions and retail investors by reliably
providing timely information regarding a broad spectrum of
securities. We have established relationships with numerous key
international financial markets and data providers to obtain the
source data. We have developed proprietary methods of receiving
and packaging the source data. We employ teams of professionals
who work to enhance the quality

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and completeness of the data that we deliver to
our customers. In most cases, we also use our proprietary
techniques and extensive data expertise to add value to the data
prior to delivering it to customers.




| |                       
| | ----------------------
| | Financial Institutions

Our FT Interactive Data, CMS BondEdge and
ComStock businesses service the informational needs of financial
institutions.



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

FT Interactive Data is our largest business,
accounting for $309.3 million, or 69.9% of our revenue in
2003. Services delivered by FT Interactive Data provide
financial institutions with information on approximately
3.5 million securities. In addition to information
concerning listed securities, we specialize in hard to value,
unlisted fixed income securities and hard to obtain information
from emerging markets.

We cover approximately 2.5 million unexpired
fixed income securities, including:



| |   |                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | corporate, government, municipal, and agency
    fixed income securities, municipal bonds, pass-through
    securities and structured finance securities issued by North
    American issuers; and
|
| |  | convertibles, debentures, Eurobonds, government
    and corporate bonds and loan capital issued by foreign issuers.                                                                               

Our proprietary evaluated pricing methods combine
modeling techniques, information from market sources and a team
of skilled evaluators to take account of market conditions and
specific price impacting events in order to provide a good faith
opinion of the price a buyer in the market place would pay for a
given fixed income security in a current sale under normal
market conditions. In addition to evaluated pricing services, we
provide call and sinking fund, called announcement, descriptive
data, interest payment original issue discount, and
reorganization data relating to these securities.

Our coverage of equity and derivative securities
includes securities traded around the world. The information
regarding these securities includes pricing, capitalization
changes and dividends, descriptive data, earnings and shares
outstanding information and reorganization announcements. In
addition to providing customers with end-of-day data regarding
the covered securities, we offer our clients access to analytic
tools and our extensive database containing historical and
descriptive information.

Our institutional customers receive a majority of
their data through Internet-based applications and
computer-to-computer links. We design our data feeds to be
compatible with third-party software applications and standard
industry protocols in order to allow our institutional customers
to integrate our data feeds into their technology
infrastructures.

In July 2002, we launched our Fair Value
Information Service. This service, which to date has been
targeted at U.S.-based mutual fund companies, is designed to
provide users with data they can consider in determining whether
the local closing price for an international equity is stale as
of 4:00 p.m. Eastern Time and, if so, in estimating the
price for that security at 4:00 p.m. Eastern Time in a
liquid market in view of the information available at that time.
This service is designed as a tool for U.S. mutual funds as
they undertake to:



| |   |                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | meet their obligations to address the statutory
    mandate that funds determine the fair value of portfolio
    securities when market quotations are not readily
    available; and
|
| |  | reassure long term fund investors that
    appropriate procedures are being utilized to help safeguard the
    investors interests against market timers and short-term
    traders.



| |             
| | ------------
| | CMS BondEdge

CMS BondEdge accounted for $30.5 million, or
6.9% of our revenue in 2003. Through our CMS BondEdge business,
we are a leading provider of fixed income portfolio analytics to
portfolio managers, quantitative research analysts and
institutional brokers. Our CMS BondEdge services are used to
assist institutional investors in managing risks and
understanding the performance of diversified fixed income
portfolios. The CMS BondEdge services include interest rate and
credit risk management tools, as well as

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regulatory reporting and compliance tools. In
addition, customers can simulate various market environments to
help forecast performance results. Customers are institutional
fixed income portfolio managers who invest in or sell fixed
income securities, and in particular those that require
specialized modeling.


CMS BondEdge services are desktop Windows®
based services. The services interface with many of the major
third-party accounting and asset/liability software packages
designed to reduce duplicate data entry and to facilitate
improved accuracy and efficiency within an organization.
BondEdge clients are provided access to daily market data
updates via the Internet to assist in the creation of high
quality analytic calculations and reports. These services are
offered via an array of delivery options, including:



| |   |                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------
| |  | client-server (BondEdge),                                                                                                                          
|
| |  | ASP/Internet accessible (eBondEdge),                                                                                                               
|
| |  | enterprise-wide/local area network, or LAN, wide
    area network, or WAN solutions (BondEdge ES), and                                             
|
| |  | service bureau, which is our outsource service
    option whereby customers outsource certain fixed income
    portfolio analysis activities to us.

In early 2003, we launched a Credit Risk module,
which combines CMS BondEdge proprietary data with theoretical
information and analyses developed by a third party risk
management software vendor. This module is a tool for fixed
income investors and managers to use as they seek to more
effectively evaluate potential credit risk at the individual
security level, as well as to measure portfolio credit exposure
against a benchmark.



| |         
| | --------
| | ComStock

ComStock accounted for $54.1 million, or
12.2% of our revenue in 2003. Our ComStock business, which
focuses on providing real-time information to institutional
customers, provides coverage of over 1.8 million securities
in virtually all asset classes traded worldwide. ComStocks
suite of services ranges from a real-time global market datafeed
to fully customized and hosted market data services.

The ComStock XpressFeed service is a real-time,
high speed, digital, global market data feed, integrating
real-time data from over 300 sources and exchanges worldwide,
covering in excess of 1.8 million financial instruments.
XpressFeed has broad coverage of the U.S. domestic
marketplace, as well as extensive international coverage,
including markets in Europe, Asia Pacific, Latin America, South
America and Africa. The data includes:



| |   |                                                                     
| | - | --------------------------------------------------------------------
| |  | Equities;                                                           
|
| |  | Market depth and Electronic Communication
    Network, or ECN, data;
|
| |  | Corporate bonds;                                                    
|
| |  | Commodities and options;                                            
|
| |  | Mutual funds and money markets;                                     
|
| |  | Fixed income instruments; and                                       
|
| |  | Foreign exchange rates.                                             

We offer a variety of delivery methods, including
via leased line, satellite and virtual private network.

The eFinance Solutions services within the
ComStock business represents a suite of modular, global market
data components, leveraging ComStocks breadth and depth of
market data with a flexible web services architecture. Comprised
of support tools, analytical content, and market data, eFinance
Solutions are capable of being customized to meet the needs of
financial service users, from consumer portals to front-office
and back-office professionals. Built on a flexible
infrastructure, the eFinance Solutions content management
platform is designed to allow integration of proprietary and
third party data and to meet the robust performance requirements
of the financial services industry.

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Retail Investors



| |        
| | -------
| | eSignal

eSignal accounted for $45.3 million, or
10.2% of our revenue in 2003. eSignal provides streaming,
real-time financial market information and decision support
tools to active retail investors and professional traders. The
financial data and support tools available to eSignal
subscribers include equity, options, derivatives data, single
stock futures, indices, market depth from the NASDAQ Stock
Market, the New York Stock Exchange, the Chicago Mercantile
Exchange, the Chicago Board of Trade, as well as ECN and foreign
exchange market information, fixed income data, mutual fund, and
money market data for approximately 850,000 securities from key
domestic markets and international exchanges, as well as access
to historical databases, technical charting, customizable
analytics, back testing, portfolio tracking, and news and
commentary.

The information is delivered via eSignals
internally engineered and operated network with advanced IP
multicast backbone and multiple, geographically dispersed server
farms. eSignal also provides services using satellite broadcast
technology. eSignal products include eSignal, Advanced GET,
MarketCenter, eSignal Pro and eSignal Market Scanner. eSignal
reintroduced QuoTrek to its product line in February 2004, a
real-time quotes, charts and news application for wireless
devices, such as personal digital assistants, or PDAs, and
cellular phones.

Although eSignal continues to provide satellite
broadcast based services, the broadcast based technology
services have declined significantly, as expected, year to year
over the past couple of years, declining 58.6% from 2002 to
2003, and 55.9% from 2001 to 2002, as customers have migrated to
alternative delivery sources, including our Internet based
services.

Marketing Strategy

All of our major services are sold to our
customers on a flat fee subscription basis, a usage basis or
some combination of both. Our institutionally-oriented services,
delivered from the FT Interactive Data, CMS BondEdge and
ComStock businesses, have historically maintained high renewal
rates, with annual renewal rates of approximately 95% during
2003. eSignal, which supplies information to a customer base
that includes retail customers and active traders, has
historically had lower renewal rates.

Each of the major services we supply to financial
institutions is marketed through a separate dedicated sales
force. These sales teams possess specialized industry and
product expertise. They provide on-site and remote
demonstrations of our services and interact directly with our
customers and potential customers. Our sales forces are
supported by promotional campaigns including direct mail,
targeted trade shows and advertising in trade publications.

eSignals services are marketed through
advertising, marketing alliances, third party developer
relationships, product seminars, trade shows, email, direct mail
and incentives for referrals. In addition, we have developed
marketing alliances with online brokers that market
eSignals Internet-delivered services to their customers.
eSignal also encourages third-party software developers to write
trading system software that is compatible with eSignals
systems and encourages trading educators to use eSignal products
in their seminars. Distribution channels, as opposed to direct
sales, have been an important source of new subscribers in
recent years.

Windows® is a registered trademark of
Microsoft Corporation. ComStock®, BondEdge®,
eSignal®, QuoTrek®, Xstream Quotes®, and
Exshare® are our registered trademarks.

Customers

Through our FT Interactive Data business, we
supply data directly to several thousand institutional
customers, including banks, brokerage firms and investment
management firms. We also contract with redistributors and
outsourcing organizations to sub-license or redistribute data to
the medium and small institutions and individual investors.
Unlike the institutional customers described above, these
redistributors and outsourcing organizations 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.

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CMS BondEdge targets portfolio managers,
quantitative research analysts and institutional brokers in the
fixed income institutional investor market. As of
December 31, 2003, approximately 500 institutional
investment firms, banks, insurance companies and brokerage
houses in North America subscribed to CMS BondEdge services.

ComStock clients range from financial
institutions, financial information redistributors, investment
managers and online media portals to retail investors worldwide.
As of December 31, 2003, ComStock had approximately 2,400
direct customers and millions of users through our
redistribution partners.

eSignal services are sold primarily to active
retail investors and professional traders. As of
December 31, 2003, eSignal had over 52,000 subscribers. The
target market for eSignal consists primarily of individuals who
make their own investment decisions, trade frequently and earn a
substantial portion of their income from trading.

Competition

The market for providing financial and business
information regarding securities is intensely competitive. We
believe that our ability to compete depends on a number of
factors, including:



| |   |                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the timeliness, reliability and breadth of
    coverage of our products and services compared with that of our
    competitors;                                                                               
|
| |  | our ability to expand our data content offerings
    to meet the current and evolving needs of our customers;                                                                                                 
|
| |  | our ability to launch new services and both
    expand and strengthen our customer base through the release of
    new services such as our Fair Value Information Service and our
    Credit Risk module; and
|
| |  | the quality of our customer service and support.                                                                                                                                                              

The main competitors with respect to our
institutionally oriented FT Interactive Data and ComStock
businesses are large global suppliers of news and financial
data, including Bloomberg, Thomson Financial, Reuters Group plc,
Standard and Poors, Telekurs Financial, similar data
producers and smaller data vendors that compete against us in
specific geographic regions and niche markets. The primary
competitive factors with respect to these products are
value-added features, coverage of securities, reliability,
timeliness of data delivery and customer support.

As a specialty service, CMS BondEdge which
provides analytical software primarily to institutional
investment managers, competes against other financial services
analytical software companies such as The Yield Book, Inc.,
which is a division of Citigroups Salomon Smith Barney
unit, Wilshire Associates Axiom fixed-income analytics
product and Derivative Solutions, and faces competition from
brokerage firms developing software solutions internally or with
the assistance of outside consultants.

eSignal competes primarily in the high caliber
segment of the retail oriented real-time financial data market
against numerous competitors including Townsend, Thomson,
TradeStation, DTN Market Access, Inc. and CQG, Inc. We believe
the principal competitive factors in the industry include data
availability and reliable and timely delivery, ease of use,
compatibility with third-party software packages and price.

Technical Infrastructure

Our technology infrastructure and operations are
designed to facilitate the reliable and efficient processing and
delivery of data to our customers. Our systems contain multiple
layers of redundancy to enhance system performance, including
maintaining, processing and storing data at multiple data
centers. In our eSignal and ComStock businesses, user
connections are load balanced between our data centers and, in
the event of a site failure, equipment problem or regional
disaster, the remaining centers have the capacity to handle the
additional load.

We are in the process of a major project to
streamline our data collection and delivery infrastructure. In
2003, we signed a lease for a 50,000 sq. ft.
technology center in Boxborough, Massachusetts. We expect this
facility to be operational in mid-2005. It will be our main East
Coast technology center. In mid-2004, we plan to expand our
current West Coast technology center in Hayward, California. Our
plan is to have two

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independent major data centers in North America
to enhance backup and resiliency for our North American
businesses. Throughout 2004 and 2005, we will be closing our
current data centers in Waltham, Massachusetts, Salt Lake City,
Utah, Harrison, New York and Hightstown, New Jersey and
migrating the technologies to Boxborough and Hayward.


We are in the process of merging our real-time
ticker plant technologies to create a single ticker plant
capable of servicing all our global businesses with a single
technology platform from various redundant sites around the
globe. During 2004 and 2005, we will be consolidating our
real-time technologies, with the expectation of being on a
single platform for the delivery of real-time data by 2006.

We are focused on maintaining an infrastructure
that allows us to provide data to our customers using various
delivery methods designed to meet the needs of our customers.
Our institutional customers receive a majority of their data
through dedicated private networks, Internet-based applications,
global satellite networks, and computer-to-computer links. We
design our data feeds to be compatible with third-party software
and standard industry protocols in order to allow our
institutional customers to integrate our data feeds into their
technology infrastructures. Information is distributed to our
retail customers primarily via the Internet and directly to
wireless mobile devices.

Intellectual Property

We maintain a portfolio of intellectual property,
including registered and common-law trademarks and service
marks, copyrights and patents. We have rights to approximately
50 trademarks and service marks. We place significant emphasis
on our branding and consider our trademark and service mark
portfolio to be an important part of our ongoing branding
campaign. In addition, we own the copyrights to our internally
developed software applications and data delivery services. We
currently have three United States patents issued and one United
States patent application pending. The three United States
patents expire in 2007, 2011, and 2012, respectively. No single
trademark, service mark, copyright, or patent if lost would
materially adversely affect our operations or financial results
as a whole.

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

We have rights to use the FT brand in
conjunction with our institutional activities on a global basis
under a license with The Financial Times Limited, an affiliate
of Pearson plc. As of February 29, 2004, Pearson plc
indirectly owns approximately 60% of our 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.

Geographic Areas

Through subsidiaries and affiliates, we conduct
business in numerous countries outside the United States. Our
international business is subject to risks customarily
encountered in foreign operations, including fluctuations in
foreign currency exchange rates and controls, import and export
controls, and other laws, policies and regulations of foreign
governments. During the past three fiscal years our service
revenues by geographic region are as follows:

|                         |       |                |         |         |  |      |         |         |  |   |         |         | 
|------------------------ | ----- | -------------- | ------- | ------- |  | ---- | ------- | ------- |  | - | ------- | ------- | 
|                         |       | 2003           |         | 2002    |  | 2001
|                         |       |                |         |         |  |     
|                         |       |               
|                         |       | (In thousands)
|United States and Canada |       | $              | 346,533 |         |  | $    | 302,128 |         |  | $ | 268,019 |        
|Europe                   |       |                | 89,990  |         |  |      | 67,913  |         |  |   | 67,384  |        
|Asia                     |       |                | 6,167   |         |  |      | 4,974   |         |  |   | 4,599   |        
|                         |       |                |         |         |  |      |         |         |  |   |         |        
|                         | Total |                | $       | 442,690 |  |      | $       | 375,015 |  |   | $       | 340,002 | 
|                         |       |                |         |         |  |      |         |         |  |   |         |        

8



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During the past three fiscal years identifiable
assets by geographic region are as follows:

|                         |       |                |         |         |  |      |         |         |  |   |         |         | 
|------------------------ | ----- | -------------- | ------- | ------- |  | ---- | ------- | ------- |  | - | ------- | ------- | 
|                         |       | 2003           |         | 2002    |  | 2001
|                         |       |                |         |         |  |     
|                         |       |               
|                         |       | (In thousands)
|United States and Canada |       | $              | 733,572 |         |  | $    | 638,236 |         |  | $ | 587,745 |        
|Europe                   |       |                | 169,024 |         |  |      | 121,976 |         |  |   | 106,228 |        
|Asia                     |       |                | 7,726   |         |  |      | 5,015   |         |  |   | 4,010   |        
|                         |       |                |         |         |  |      |         |         |  |   |         |        
|                         | Total |                | $       | 910,322 |  |      | $       | 765,227 |  |   | $       | 697,983 | 
|                         |       |                |         |         |  |      |         |         |  |   |         |        

Employees

We had 1,766 employees as of December 31,
2003. We believe that our relations with our employees are good.

Regulation

The Federal Communications Commission, or FCC,
regulates the broadcasting of satellite, FM-SCA and other
airwave transmissions in the United States. We have a license
from the FCC to transmit data from our uplink facilities in Salt
Lake City, Utah. Although we use our 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 our business because we have other
transmission alternatives.

DBC Securities Inc., one of our subsidiaries, is
registered as a broker-dealer with the Securities and Exchange
Commission, or 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, one of our
subsidiaries, is registered with the SEC as an investment
advisor and is subject to regulation under the Investment
Advisors Act of 1940.

Internet Address and SEC Reports

We maintain a website with the address
www.interactivedatacorp.com. We are not including the
information contained on our website as a part of, or
incorporating it by reference into, this Annual Report on
Form 10-K. We make available free of charge through our
website our Annual Reports on Form 10-K, Quarterly Reports
on Form 10-Q and Current Reports on Form 8-K, and
amendments to these reports, as soon as reasonably practicable
after we electronically file such material with, or furnish such
material to, the Securities and Exchange Commission. We also
include on our website our corporate governance guidelines and
the charters for each of the major committees of our board of
directors. In addition, we intend to disclose on our website any
amendments to, or waivers from, our code of business conduct and
ethics that are required to be publicly disclosed pursuant to
rules of the SEC and the New York Stock Exchange.

9



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##### Table of Contents








|        |           
|------- | ----------
|Item 2. | Properties

We own no real estate but lease the following
principal facilities for use as corporate headquarters, sales
offices and data centers:

|                     |  |                                             |  |        |        |             |  |                 |           |  |  |                                       
|-------------------- |  | ------------------------------------------- |  | ------ | ------ | ----------- |  | --------------- | --------- |  |  | --------------------------------------
|                     |  | Operating                                   |  | Square |        | Current     |  |                
|Location             |  | Unit/Segment                                |  | Feet   |        | Annual Rate |  | Expiration Date
|                     |  |                                             |  |        |        |             |  |                
|New York, NY         |  | Institutional                               |  |        | 87,304 |             |  | $               | 1,921,980 |  |  | May 2013                              
|New York, NY         |  | Institutional                               |  |        | 27,386 |             |  | $               | 868,136   |  |  | November 2009                         
|Bedford, MA          |  | Institutional and
    Corporate             |  |        | 80,348 |             |  | $               | 1,522,079 |  |  | July 2006                             
|Boston, MA           |  | Institutional                               |  |        | 11,910 |             |  | $               | 464,484   |  |  | March 2005                            
|Boxborough, MA       |  | Corporate,
    Institutional and
    Retail |  |        | 48,817 |             |  | $               | 329,515   |  |  | September 2018                        
|Waltham, MA          |  | Institutional                               |  |        | 32,535 |             |  | $               | 512,348   |  |  | September 2005                        
|Harrison, NY         |  | Institutional                               |  |        | 37,760 |             |  | $               | 982,566   |  |  | October 2005                          
|Chicago, IL          |  | Institutional                               |  |        | 4,646  |             |  | $               | 74,340    |  |  | September 2004                        
|Newport Beach, CA    |  | Institutional                               |  |        | 600    |             |  | $               | 25,650    |  |  | October 2004                          
|Santa Monica, CA     |  | Institutional                               |  |        | 22,877 |             |  | $               | 687,957   |  |  | November 2012                         
|Hong Kong, PRC       |  | Institutional                               |  |        | 741    |             |  | $               | 17,309    |  |  | April 2004                            
|Melbourne, Australia |  | Institutional                               |  |        | 4,828  |             |  | $               | 68,310    |  |  | November 2005                         
|Singapore            |  | Institutional                               |  |        | 2,530  |             |  | $               | 62,125    |  |  | October 2006                          
|Hayward, CA          |  | Retail                                      |  |        | 60,158 |             |  | $               | 1,066,944 |  |  | June 2013                             
|Salt Lake City, UT   |  | Retail                                      |  |        | 12,231 |             |  | $               | 226,272   |  |  | December 2004                         
|Akron, OH            |  | Retail                                      |  |        | 4,110  |             |  | $               | 76,032    |  |  | September 2006                        
|London, England      |  | Institutional                               |  |        | 65,000 |             |  | $               | 1,621,320 |  |  | April 2010                            
|Dublin, Ireland      |  | Institutional                               |  |        | 15,902 |             |  | $               | 390,480   |  |  | March 2005/February 2012/December 2012
|Luxembourg           |  | Institutional                               |  |        | 2,500  |             |  | $               | 113,931   |  |  | September 2006                        
|Edinburgh, Scotland  |  | Institutional                               |  |        | 5,200  |             |  | $               | 127,953   |  |  | August 2006                           

We believe our facilities are in good condition
and are suitable and adequate for our current and currently
planned operations.

If we are unable to renew any of the leases that
are due to expire in 2004 or 2005, we believe that suitable
replacement properties are available on commercially reasonable
terms.






|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings

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 cooperated fully with the SEC. The SEC
staff subsequently notified us of its view that the Company
might have facilitated federal securities laws violations
committed by unidentified other parties and advised us of its
intention to recommend the commencement of an enforcement action
against the Company. None of our officers, directors, or
employees was similarly so notified. We later learned that the
SEC staff was concerned about evaluated prices for a small
number of high-yield municipal bonds provided by the Company in
March through early May 2000 and in July-August 2000. FT
Interactive Data, the Companys principal operating
subsidiary, entered into a settlement with the SEC without
admitting or denying the SECs formal findings. The
settlement is embodied in an administrative order that was
issued by the SEC on December 11, 2003. As reflected in
that order, FT Interactive Data was censured, paid a civil
penalty of $125,000, and was required to implement some new
valuation and record keeping procedures for high-yield municipal
securities and other securities for which market quotations are
not readily available. There will not be insignificant costs
associated with FT Interactive Datas increased record
keeping

10



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##### Table of Contents



obligations. However, we do not expect the SEC
settlement to have a material effect on our results of
operations or financial condition.


On a separate but related matter, shareholders of
the two Heartland high-yield funds notified us late in 2002 of
their intention to proceed against the Company, even though
neither the funds nor their advisor had chosen to do so. We
understand that the shareholders claims would be related
to the September and October 2000 decreases in the funds
net asset values. While we do not believe that any such claims
would have merit or would materially affect the Companys
results of operations or financial condition, we agreed upon a
resolution with the shareholders counsel. Because it
involves a class claim, the agreed settlement is subject to
court approval. The shareholders filed a motion for approval of
the agreed settlement on February 20, 2004. The overall
settlement terms are subject to court approval and will require
us to pay $1 million to shareholders of the two Heartland
high-yield funds. After adherence to standard class action
settlement procedures, we expect that the settlement will be
approved. The amount of the settlement is expected to be fully
covered by insurance. If approval were not forthcoming and the
shareholders were to proceed against the Company, we do not
believe that the matter would materially affect our 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. We do not
expect that the outcome of any of these matters will have a
material adverse impact on our 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 2003.






|         |                                         
|-------- | ----------------------------------------
|Item 4A. | Executive Officers of the
    Registrant

|                  |  |     |    |                          |  |                                                            
|----------------- |  | --- | -- | ------------------------ |  | -----------------------------------------------------------
|Name              |  | Age |    | Office Held with Company
|                  |  |     |    |                         
|Stuart J. Clark   |  |     | 56 |                          |  | President and Chief Executive Officer                      
|Steven G. Crane   |  |     | 47 |                          |  | Executive Vice President and Chief Financial
    Officer   
|Andrea H. Loew    |  |     | 46 |                          |  | Vice President, General Counsel and Corporate
    Secretary
|John L. King      |  |     | 53 |                          |  | Chief Operating Officer of FT Interactive Data             
|Raymond L. DArcy |  |     | 51 |                          |  | President, Data Delivery Products, FT Interactive
    Data 

Stuart J. Clarkhas
served as our president and chief executive officer and a member
of our board of directors since February 29, 2000, and has
been employed in the financial information industry since 1968.
Prior to his current position with us, he served as president of
Interactive Data Corporation (as it existed prior to its merger
with Data Broadcasting Corporation) 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 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 our executive vice president and chief financial
officer 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 our vice president, general counsel and corporate
secretary 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 its merger
with Data Broadcasting Corporation). Prior thereto,
Ms. Loew was a partner in Eckert, Seamans,
Cherin & Mellott, LLC.

11



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##### Table of Contents



John L. Kinghas
served as our 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, IDSI services for
Interactive Data Corporation (as it existed prior to its merger
with Data Broadcasting Corporation).

Raymond L.
DArcyhas served as our
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 its merger with Data Broadcasting Corporation) 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.




PART II






|        |                                                                                                                     
|------- | --------------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities

Market Information

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

The following table sets forth, for the periods
indicated, the high and lows sales prices per share of our
common stock during each of the quarters set forth below as
reported on the Nasdaq for the periods from January 1, 2002
through December 9, 2002 and on the New York Stock
Exchange from December 10, 2002 through December 31,
2003:

|      |                            |      |   |       |  |  |   |       | 
|----- | -------------------------- | ---- | - | ----- |  |  | - | ----- | 
|      |                            | High |   | Low  
|      |                            |      |   |      
|2003: |                            |      |   |       |  |  |   |      
|      | Quarter Ended March 31     |      | $ | 14.23 |  |  | $ | 12.74 | 
|      | Quarter Ended June 30      |      | $ | 18.00 |  |  | $ | 13.64 | 
|      | Quarter Ended September 30 |      | $ | 17.35 |  |  | $ | 15.40 | 
|      | Quarter Ended December 31  |      | $ | 17.59 |  |  | $ | 15.47 | 

|      |                            |      |   |       |  |  |   |       | 
|----- | -------------------------- | ---- | - | ----- |  |  | - | ----- | 
|      |                            | 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 | 

Stockholders

As of February 27, 2004, there 93,139,995
outstanding shares of our common stock held by 1,374 holders of
record.

Dividends

In January 2001, we 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
our investment in MarketWatch. We currently intend to retain
earnings, if any, to finance the development of our business and
do not anticipate paying cash dividends on our common stock in
the foreseeable future. Future determinations by our board of
directors to pay dividends on our common stock would be based
primarily upon our financial condition, results of operations
and business requirements. Dividends, if any, would be payable
in the sole discretion of our board of directors out of the
funds legally available therefore.

12



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##### Table of Contents








|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data

The following selected historical consolidated
financial information for each of the years ended
December 31, 1999 through 2003 has been derived from our
consolidated financial statements and represents the historical
consolidated financial information of FT Interactive Data prior
to the merger of Interactive Data Corporation and Data
Broadcasting Corporation on February 29, 2000 and the
combined company since February 29, 2000. 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 our
consolidated financial statements and related notes.

|                                         |         |                                           |         |        |     |      |         |        |     |      |         |        |     |   |          |        |       |   |         |        |     | 
|---------------------------------------- | ------- | ----------------------------------------- | ------- | ------ | --- | ---- | ------- | ------ | --- | ---- | ------- | ------ | --- | - | -------- | ------ | ----- | - | ------- | ------ | --- | 
|                                         |         |                                          
|                                         |         | As of and for the Year Ended December 31,
|                                         |         |                                          
|                                         |         | 2003                                      |         | 2002   |     | 2001 |         | 2000   |     | 1999
|                                         |         |                                           |         |        |     |      |         |        |     |     
|                                         |         |                                          
|                                         |         | (In thousands, except per share amounts) 
|Service revenues                         |         | $                                         | 442,690 |        |     | $    | 375,015 |        |     | $    | 340,002 |        |     | $ | 314,138  |        |       | $ | 188,956 |       
|Income (loss) from operations            |         |                                           | 115,349 |        |     |      | 98,232  |        |     |      | 25,653  |        |     |   | (3,091   | )      |       |   | 17,604  |       
|Net income (loss)(1)                     |         |                                           | 72,201  |        |     |      | 60,733  |        |     |      | 4,312   |        |     |   | (143,472 | )      |       |   | 6,197   |       
|Net income (loss) per common share       |         |                                           |         |        |     |      |         |        |     |      |         |        |     |   |          |        |       |   |         |       
|                                         |         | Basic                                     |         |        | .78 |      |         |        | .67 |      |         |        | .05 |   |          |        | (1.68 | ) |         |        | .11 | 
|                                         |         | Diluted                                   |         |        | .76 |      |         |        | .65 |      |         |        | .05 |   |          |        | (1.68 | ) |         |        | .11 | 
|Weighted average common shares           |         |                                           |         |        |     |      |         |        |     |      |         |        |     |   |          |        |       |   |         |       
|                                         | Basic   |                                           |         | 92,319 |     |      |         | 91,159 |     |      |         | 90,844 |     |   |          | 85,560 |       |   |         | 56,424 |    
|                                         | Diluted |                                           |         | 94,450 |     |      |         | 93,730 |     |      |         | 92,510 |     |   |          | 85,560 |       |   |         | 56,424 |    
|Total assets                             |         |                                           | 910,322 |        |     |      | 765,227 |        |     |      | 697,983 |        |     |   | 742,090  |        |       |   | 452,702 |       
|Stockholders equity                     |         |                                           | 762,531 |        |     |      | 662,743 |        |     |      | 582,667 |        |     |   | 622,512  |        |       |   | 340,953 |       
|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.






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

The following discussion should be read in
conjunction with Item 6. Selected Financial
Data and our consolidated financial statements included
herein. Amounts in this discussion are shown in thousands,
except for share and per share information.

Overview

We are a leading global provider of financial and
business information to financial institutions and retail
investors. We offer our services through four branded businesses:



| |   |                                                                                                                                                                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | FT Interactive Data.Through our FT Interactive Data business, institutional
    customers obtain end-of-day and historical pricing (including
    evaluated pricing), dividend and descriptive information for
    over 3.5 million securities, commodities, and derivative
    instruments traded around the world.
|
| |  | CMS BondEdge.Our
    CMS BondEdge business is focused on providing sophisticated
    fixed income portfolio analytics to fixed income portfolio
    managers, qualitative research analysts and institutional
    brokers.                                                                                          
|
| |  | ComStock.Through
    our ComStock business, institutional customers and information
    media obtain real-time financial market information covering
    more than 1.8 million securities from over 300 stock
    exchanges and market data sources located around the world.                                       
|
| |  | eSignal.Through our
    eSignal business, investors obtain real-time financial market
    information regarding securities traded on all major markets in
    the United States as well as a number of important international
    markets.                                                                         

13



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##### Table of Contents



Our FT Interactive Data, CMS BondEdge and
ComStock businesses comprise our Institutional Services business
segment, and our eSignal business is our Retail Investor
business segment.

All of our services are provided on a
subscription basis. Most of the subscriptions are for a fixed
fee; others are billed, at least in part, on a usage basis. We
have historically achieved high retention rates, particularly
from our institutional client base. Through a broad range of
business alliances, many of the worlds best-known
financial service and software companies utilize our services in
support of their trading, analysis, portfolio management, and
valuation activities. At the core of our business are our
customer relationships, business alliances, broad databases,
extensive product and technical know-how and technology
infrastructure resources.

Development of Business

Prior to February 29, 2000, our business
related primarily to the delivery of historical and end-of-day
financial data to institutional customers through what is now
our FT Interactive Data business. On February 29, 2000,
Data Broadcasting Corporation merged with Interactive Data
Corporation (now known as FT Interactive Data). This merger
brought together the businesses of Data Broadcasting Corporation
which included eSignal and CMS BondEdge with the businesses of
Interactive Data Corporation (now known as FT Interactive Data).
As a result of this transaction, approximately 60% of the shares
of the Company are held directly or indirectly by Pearson plc.
On January 31, 2002, we acquired the Securities Pricing
Services of Merrill Lynch, Pierce, Fenner & Smith
Incorporated for approximately $48.0 million. We acquired
from The McGraw-Hill Companies, Inc.s S&P division,
the stock of S&P ComStock, Inc. and the assets of specific
ComStock related McGraw-Hill businesses in the United Kingdom,
France, Australia, Singapore and Hong Kong for approximately
$116.0 million on February 28, 2003. We acquired the
consolidated market data feed client contracts from HyperFeed
Technologies, Inc. for $8.5 million on October 31,
2003. The price for these client contracts consisted of an
initial payment of $7.4 million with the balance to be paid
over 24 months if agreed upon milestones are reached. We
are currently migrating the HyperFeed Technologies, Inc.
customers from the HyperFeed production platform to our ComStock
production platform. We expect this migration to be concluded by
the end of 2004.

As a result of these acquisitions, our results of
operations for 2001 and 2002 include the activities of our FT
Interactive Data, CMS BondEdge and eSignal businesses. Our 2003
results of operations, in addition to the three aforementioned
businesses, include 10 months of activities for ComStock,
including two months of activities resulting from the
acquisition of the HyperFeed customer contracts. In reference to
our ongoing core business the discussion that follows, is
comprised of our FT Interactive Data, CMS BondEdge and eSignal
businesses and, excludes our ComStock and HyperFeed businesses.
We have provided specific information separately for our ongoing
core businesses and our ComStock and HyperFeed businesses
because we believe it is helpful to understand the underlying
trends in our performance and to provide additional information
that makes it easier to compare our results over multiple
periods.

Business and Market Trends

In 2003, market conditions for our primary
market, the financial services industry, continued to remain
difficult, with economic uncertainty adversely impacting the
industry and our customers. The largest business within the
Institutional Services segment, FT Interactive Data, experienced
strong cost containment pressure from its customer base. This
manifested itself in customers seeking to renegotiate service
levels and prices. Customers analyzed their current data needs
and eliminated duplicate or unnecessary services. Cancellations
were higher than customary. Despite the challenging market
conditions, we continued to generate new business, some of which
was eroded by cancellations. We believe that much of the data we
supply is mission critical to our customers and necessary for
their operations regardless of market conditions; however, we
are affected, at least in part, by the continuing cost pressures
being experienced by our client base. If the data we provided
were not mission critical, we believe the difficult market
conditions would have affected us more adversely.

There has been and continues to be a trend in
North America for major financial institutions to outsource
their back office operations to service bureaus and custodian
banks. We have established relationships with, and are a major
data supplier to, many service bureaus and custodian banks, and
have benefited and expect to

14



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##### Table of Contents



continue to benefit from their growth. Another
trend over the past decade in North America is the consolidation
of financial institutions both within and across the financial
service industry. When institutions merge, they look to gain
synergies by combining their operations, including eliminating
the need for redundant data sources. This has contributed to
some of the higher than normal cancellations we have been
experiencing. To the extent customer consolidations occur, this
could have a continuing effect on customer cancellations. These
cancellations do not necessarily occur simultaneously with the
closing of customer mergers; rather the cancellations occur
post-closing as the institutions seek to gain the consolidation
synergies.


Growth in the FT Interactive Data market is
dependent on our ability to continue to expand our data content
offerings to meet the current and evolving needs of our clients.
This would include responding to changes in the financial
markets as well as regulatory and competitive pressures. This
would also include continuing to expand the coverage of premium
priced fixed income data sets and the launch of new services
such as our Fair Value Information Service, which is primarily
oriented towards North American mutual funds. In addition, we
will continue to seek to expand our market share in continental
Europe, although we expect current difficult market conditions
will slow this effort as customers take longer to make purchase
decisions than they historically have taken. Due to the
difficult industry conditions described above, purchasing
decisions in North America are also expected to take longer than
in normal market conditions.

The CMS BondEdge business continued to grow
throughout 2003, although it experienced many of the same
pressures as FT Interactive Data. The CMS BondEdge business is
dependent on activity levels in the US financial markets and the
financial performance of the major financial institutions. If
the financial markets continue to improve, we would expect this
to translate into more favorable operating conditions for CMS
BondEdge.

The ComStock business, which we acquired in
February 2003, met our revenue expectations. In the markets that
it operates, ComStock continued to experience strong price
pressures, with customers being focused on cost containment. We
expect this trend to continue. We will be promoting the ComStock
service widely to FT Interactive Datas institutional
customer base. The ComStock business was reinforced by the
acquisition of HyperFeed Technologies, Inc.s consolidated
market data feed client contracts at the end of October, 2003.

In our Retail Services segment, the eSignal
business continues to strengthen its position as a leading
real-time financial data provider primarily for retail and
professional investors. We continued to experience positive net
growth in subscribers in 2003. A source of new subscribers
continued to be from distribution channels that generated
incremental revenues at a lower rate than from direct sales.
Although the number of subscribers continues to increase
substantially, per subscriber revenue has declined.

15



---



##### Table of Contents



Results of Operations

Selected Financial Data

|                                     |         |                                       |         |        |  |      |         |        |  |   |         |        | 
|------------------------------------ | ------- | ------------------------------------- | ------- | ------ |  | ---- | ------- | ------ |  | - | ------- | ------ | 
|                                     |         |                                      
|                                     |         | For the Years Ended December 31,     
|                                     |         |                                      
|                                     |         | 2003                                  |         | 2002   |  | 2001
|                                     |         |                                       |         |        |  |     
|                                     |         |                                      
|                                     |         | (Amounts in thousands, except for per
|                                     |         | share information)                   
|SERVICE REVENUES                     |         | $                                     | 442,690 |        |  | $    | 375,015 |        |  | $ | 340,002 |       
|COSTS AND EXPENSES:                  |         |                                       |         |        |  |      |         |        |  |   |         |       
|Cost of services                     |         |                                       | 141,631 |        |  |      | 110,321 |        |  |   | 103,618 |       
|Selling, general & administrative    |         |                                       | 149,129 |        |  |      | 133,225 |        |  |   | 122,066 |       
|Depreciation                         |         |                                       | 16,807  |        |  |      | 14,500  |        |  |   | 13,139  |       
|Amortization                         |         |                                       | 19,774  |        |  |      | 18,737  |        |  |   | 75,526  |       
|                                     |         |                                       |         |        |  |      |         |        |  |   |         |       
|Total costs and expenses             |         |                                       | 327,341 |        |  |      | 276,783 |        |  |   | 314,349 |       
|                                     |         |                                       |         |        |  |      |         |        |  |   |         |       
|INCOME FROM OPERATIONS               |         |                                       | 115,349 |        |  |      | 98,232  |        |  |   | 25,653  |       
|Other income, net                    |         |                                       | 1,100   |        |  |      | 1,989   |        |  |   | 2,882   |       
|                                     |         |                                       |         |        |  |      |         |        |  |   |         |       
|INCOME BEFORE INCOME TAXES           |         |                                       | 116,449 |        |  |      | 100,221 |        |  |   | 28,535  |       
|Income tax expense                   |         |                                       | 44,248  |        |  |      | 39,488  |        |  |   | 24,223  |       
|                                     |         |                                       |         |        |  |      |         |        |  |   |         |       
|NET INCOME                           |         | $                                     | 72,201  |        |  | $    | 60,733  |        |  | $ | 4,312   |       
|                                     |         |                                       |         |        |  |      |         |        |  |   |         |       
|NET INCOME PER SHARE                 |         |                                       |         |        |  |      |         |        |  |   |         |       
|                                     | Basic   |                                       | $       | 0.78   |  |      | $       | 0.67   |  |   | $       | 0.05   | 
|                                     | Diluted |                                       | $       | 0.76   |  |      | $       | 0.65   |  |   | $       | 0.05   | 
|Weighted average shares outstanding: |         |                                       |         |        |  |      |         |        |  |   |         |       
|                                     | Basic   |                                       |         | 92,319 |  |      |         | 91,159 |  |   |         | 90,844 | 
|                                     | Diluted |                                       |         | 94,450 |  |      |         | 93,730 |  |   |         | 92,510 | 



| |                 
| | ----------------
| | 2003 versus 2002

Service Revenues

|                               |  |                |         |      |  |          |         |  |  |  |       |  
|------------------------------ |  | -------------- | ------- | ---- |  | -------- | ------- |  |  |  | ----- | -
|                               |  | 2003           |         | 2002 |  | % Growth
|                               |  |                |         |      |  |         
|                               |  |               
|                               |  | (In thousands)
|Institutional Services         |  |                |         |      |  |          |         |  |  |  |       |  
|FT Interactive Data            |  | $              | 302,743 |      |  | $        | 297,395 |  |  |  | +1.8  | %
|CMS BondEdge                   |  |                | 30,488  |      |  |          | 29,643  |  |  |  | +2.9  | %
|ComStock                       |  |                | 54,093  |      |  |          |        |  |  |  | NA    |  
|Other                          |  |                | 3,507   |      |  |          | 3,957   |  |  |  | -11.4 | %
|Foreign Exchange               |  |                | 6,581   |      |  |          |        |  |  |  | NA    |  
|Institutional Services Total   |  |                | 397,412 |      |  |          | 330,995 |  |  |  | +20.1 | %
|Retail Investor Services       |  |                |         |      |  |          |         |  |  |  |       |  
|eSignal                        |  |                | 43,426  |      |  |          | 39,542  |  |  |  | +9.8  | %
|Broadcast                      |  |                | 1,852   |      |  |          | 4,478   |  |  |  | -58.6 | %
|Retail Investor Services Total |  |                | 45,278  |      |  |          | 44,020  |  |  |  | +2.9  | %
|TOTAL SERVICE REVENUES         |  | $              | 442,690 |      |  | $        | 375,015 |  |  |  | +18.0 | %

Our revenue increased from $375,015 in 2002 to
$442,690 in 2003, an increase of $67,675 or 18.0%. Excluding the
revenues from our ComStock business, which we acquired at the
end of February 2003, revenues grew by 3.6%. Excluding the
positive effect of foreign exchange, mainly due to the weakness
of the US dollar against the UK pound sterling, our
underlying revenue growth was 1.9%.

16



---



##### Table of Contents



Revenues within the Institutional Services
segment increased from $330,995 in 2002 to $397,412 in 2003, an
increase of $66,417 or 20.1% excluding the effects of foreign
exchange, the increase was $59,836 or 18.1%. Excluding revenues
from the ComStock business which we acquired at the end of
February 2003, revenues grew by 1.7%. Revenues for our FT
Interactive Data business increased from $297,395 to $302,743,
an increase of $5,348 or 1.8%. The main growth for our FT
Interactive Data business came from North America, where despite
difficult market conditions and a higher than historical level
of cancellations, revenues grew by 3.1%. The performance was
driven by continued success with sale of evaluated prices helped
by the introduction of our Fair Value Information Service, and
moderate price increases. The UK business of FT Interactive Data
declined by 2.9% from 2002 to 2003 with new sales being more
than offset by high levels of cancellations and customers
requesting service downgrades. The Asia Pacific business grew by
8.6%, with the main growth coming from Australia. In the other
key markets of Hong Kong and Singapore, revenues were relatively
flat.

Our CMS BondEdge business grew revenues by $845
or 2.9%, as we continued to see a slowdown in new business as a
result of the reluctance of customers to commit to new services
in the current economic environment. If the economic environment
and the financial markets continue to improve, we would expect
to see this reluctance to begin to subside, which should
translate into new business revenues.

Our ComStock business performed in line with our
expectations during the ten months of 2003. Progress was made in
promoting the ComStock real-time feed service to the FT
Interactive Data customer base. We expect to continue this
promotion throughout 2004. With the acquisition of HyperFeed
Technologies, Inc.s consolidated market data feed client
contracts on October 31, 2003, we are fully engaged in
migrating this customer base from the HyperFeed production
platform to the existing ComStock production platform.

Other revenues declined by 11.4%, which mainly
represents a slow down in our real-time foreign exchange data
business which we were integrating with the ComStock business in
2003. In 2004, we expect that this will be fully integrated
within the ComStock business.

Within our Retail Investor Services segment,
revenues grew by $1,258 or 2.9% from $44,020 to $45,278, which
includes an expected 58.6% decline in the Broadcast business
amounting to $2,626. This anticipated decline in the Broadcast
business is expected to continue as the remaining customers
migrate to alternative information sources including
eSignals Internet based service. Excluding Broadcast,
revenue for eSignals Internet delivered services grew
$3,884 or 9.8%. The number of eSignal subscribers grew by 44% in
2003 to just over 52,000. The lower revenue growth, as compared
to the subscriber growth, is due to the majority of the
subscriber growth arising from our provision of data feeds to
active trader tools, which increases subscriber levels but at a
lower monthly subscription rate. We include subscribers who
subscribe to the active trader tools to whom we provide data
feeds in the total count of eSignal subscribers.

Foreign exchange contributed $6,581 to revenue in
2003. This was mainly due to the weakness of the US dollar
against the UK pound sterling. The average rate for the
US dollar against the UK pound sterling was $1.635 in 2003
compared with $1.503 in 2002.

Service Revenues by Geographic Region

|                         |  |                |         |      |  |   |         | 
|------------------------ |  | -------------- | ------- | ---- |  | - | ------- | 
|                         |  | 2003           |         | 2002
|                         |  |                |         |     
|                         |  |               
|                         |  | (In thousands)
|United States and Canada |  | $              | 346,533 |      |  | $ | 302,128 | 
|Europe                   |  |                | 89,990  |      |  |   | 67,913  | 
|Asia                     |  |                | 6,167   |      |  |   | 4,974   | 
|TOTAL SERVICE REVENUES   |  | $              | 442,690 |      |  | $ | 375,015 | 

17



---



##### Table of Contents



Total Costs and Expenses:



| |                 
| | ----------------
| | Cost of Services

|                       |  |                |         |      |  |          |         |  |  |  |       |  
|---------------------- |  | -------------- | ------- | ---- |  | -------- | ------- |  |  |  | ----- | -
|                       |  | 2003           |         | 2002 |  | % Growth
|                       |  |                |         |      |  |         
|                       |  |               
|                       |  | (In thousands)
|Core Business          |  | $              | 113,819 |      |  | $        | 110,321 |  |  |  | +3.2  | %
|Acquired Businesses    |  |                | 25,735  |      |  |          |        |  |  |  |      |  
|Foreign Exchange       |  |                | 2,077   |      |  |          |        |  |  |  |      |  
|TOTAL COST OF SERVICES |  | $              | 141,631 |      |  | $        | 110,321 |  |  |  | +28.4 | %

Cost of services increased by $31,310 or 28.4%
from $110,321 in 2002 to $141,631 in 2003. This increase was
mainly due to the inclusion of the two businesses we acquired in
2003 (ComStock and the HyperFeed Technologies, Inc.s
consolidated market data feed client contracts), and the
inclusion of costs relating to the integration of the ComStock
business with our existing business. Cost of services as a
percentage of revenue increased from 29.4% in 2002 to 32.0% in
2003. The main reasons for this increase were the additional
costs associated with the commencement of the integration of the
ComStock business into our existing business infrastructure. In
addition, the ComStock business has had a traditionally higher
cost of services to revenue percentage than our existing
business. In our ongoing core business, the cost of services
grew by 3.2% or $3,498 due to the continued investment in
increasing the breadth and quality of our evaluated pricing data
and operations. Excluding this investment, our cost of services
was relatively flat due to savings related to the completion, in
2003, of the integration of the Securities Pricing Service
business acquired from Merrill Lynch, Pierce, Fenner &
Smith Incorporated in January 2002 (SPS) (see
Note 3 to the Consolidated Financial Statements for a
further discussion of this acquisition) which covered normal
growth in salaries and operating costs. The impact of foreign
exchange increased cost of services by $2,077 in 2003, mainly
due to the weakness of the US dollar against the UK pound
sterling referred to above.



| |                                               
| | ----------------------------------------------
| | Selling, General & Administrative
    Expenses

|                    |  |                |         |      |  |          |         |  |  |  |       |  
|------------------- |  | -------------- | ------- | ---- |  | -------- | ------- |  |  |  | ----- | -
|                    |  | 2003           |         | 2002 |  | % Growth
|                    |  |                |         |      |  |         
|                    |  |               
|                    |  | (In thousands)
|Core Business       |  | $              | 126,315 |      |  | $        | 133,225 |  |  |  | -5.2  | %
|Acquired Businesses |  |                | 19,462  |      |  |          |        |  |  |  |      |  
|Foreign Exchange    |  |                | 3,352   |      |  |          |        |  |  |  |      |  
|TOTAL SG&A          |  | $              | 149,129 |      |  | $        | 133,225 |  |  |  | +11.9 | %

Selling, general and administrative expenses
increased by $15,904 or 11.9% from $133,225 in 2002 to $149,129
in 2003. This increase was mainly due to the inclusion of the
two businesses we acquired in 2003 (ComStock and the HyperFeed
Technologies, Inc.s consolidated market data feed client
contracts). Excluding these costs, and those relating to foreign
exchange, selling, general and administrative expenses declined
by 5.2% or $6,910. The main reasons for the reduction were the
synergies achieved from merging SPS into the FT Interactive Data
business. In addition, the write-off of certain capitalized
development costs in Europe in 2002 contributed to the overall
reduction. Offsetting these savings were restructuring charges
totaling $3,311 related to the first stage in the integration of
our US data centers, severance relating to the decision to move
some of our European data collection to a lower cost site and
costs related to the closure of our Index Services unit in
Edinburgh, Scotland. We also recorded a charge of $1,368 related
to the write down of the carrying value of a 5% interest we held
in a company that was spun off in 2000. Overall, selling,
general and administrative expenses as a percentage of revenue
decreased from 35.5% in 2002 to 33.7% in 2003.



| |             
| | ------------
| | Depreciation

|                    |  |                |        |      |  |          |        |  |  |  |       |  
|------------------- |  | -------------- | ------ | ---- |  | -------- | ------ |  |  |  | ----- | -
|                    |  | 2003           |        | 2002 |  | % Growth
|                    |  |                |        |      |  |         
|                    |  |               
|                    |  | (In thousands)
|Core Business       |  | $              | 14,008 |      |  | $        | 14,500 |  |  |  | -3.4  | %
|Acquired Businesses |  |                | 2,474  |      |  |          |       |  |  |  |      |  
|Foreign Exchange    |  |                | 325    |      |  |          |       |  |  |  |      |  
|TOTAL DEPRECIATION  |  | $              | 16,807 |      |  | $        | 14,500 |  |  |  | +15.9 | %

18



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##### Table of Contents



Depreciation expense increased by $2,307 or 15.9%
mainly due to the inclusion of the two acquired businesses in
2003 referenced above. In addition, there was a small effect
($325) from the impact of foreign exchange, mainly due to the
weakness of the US dollar against the UK pound sterling referred
to above. Depreciation in our ongoing core business declined by
3.4% mainly due a large number of fixed assets becoming fully
depreciated in 2003. In addition, the majority of capital
expenditure occurred in the final quarter of 2003 and the impact
will not affect operating results until 2004.



| |             
| | ------------
| | Amortization

|                    |  |                |        |      |  |          |        |  |  |  |       |  
|------------------- |  | -------------- | ------ | ---- |  | -------- | ------ |  |  |  | ----- | -
|                    |  | 2003           |        | 2002 |  | % Growth
|                    |  |                |        |      |  |         
|                    |  |               
|                    |  | (In thousands)
|Core Business       |  | $              | 13,792 |      |  | $        | 18,737 |  |  |  | -26.4 | %
|Acquired Businesses |  |                | 5,982  |      |  |          |       |  |  |  |      |  
|TOTAL AMORTIZATION  |  | $              | 19,774 |      |  | $        | 18,737 |  |  |  | +5.5  | %

Amortization expense increased from $18,737 in
2002 to $19,774 in 2003, an increase of 5.5% or $1,037. The main
reason for the increase was the amortization relating to the
acquisitions of ComStock and HyperFeed Technologies, Inc.s
consolidated market data feed client contracts of $5,982.
Excluding these, amortization declined by 26.4%. The main
reasons for the decline was due to certain intangibles relating
to previous acquisitions and some intangibles created at the
time of the merger of Data Broadcasting Corporation and
Interactive Data in 2000 becoming fully amortized. (See
Note 3 to the Consolidated Financial Statements).



| |                                            
| | -------------------------------------------
| | Other Condensed Consolidated
    Financials

Income from operations increased from $98,232 in
2002 to $115,349 in 2003, an increase of $17,117 or 17.4%. The
increase in income from operations was due to the higher
operating results discussed above.

Other income decreased from $1,989 in 2002 to
$1,100 in 2003, reflecting the decline in interest rates and
lower invested cash following the acquisitions of ComStock on
February 28, 2003 and HyperFeed Technologies, Inc.s
consolidated market data feed client contracts on
October 31, 2003. Both of these entities were acquired
using our existing cash resources.

Income before taxes increased from $100,221 in
2002 to $116,449 in 2003 reflecting the higher income from
operations being partially offset by lower other income.

Our effective tax rate declined from 39.4% in
2002 to 38.0% in 2003 primarily due to the effect of tax
planning initiatives instituted in 2003.

We generated net income of $72,201 in 2003
compared with net income of $60,733 in 2002 an increase of
$11,468 or 18.9%. This improvement was primarily due to the
higher income from operations in 2003 as compared with 2002 as
discussed above.

We generated basic net income per share of $0.78
and diluted net income per share of $0.76 in 2003, as compared
with basic net income per share of $0.67 and diluted net income
per share of $0.65 in 2002. The increase was 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 1.3% in 2003 and weighted average diluted shares
increased by 0.8% in 2003 due to employee stock options
exercised in 2003, as well as a higher level of stock options
outstanding in 2003, partially offset by activity under our
stock repurchase plan.

19



---



##### Table of Contents





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



| |                 
| | ----------------
| | Service Revenues

|                               |  |                |         |      |  |          |         |  |  |  |       |  
|------------------------------ |  | -------------- | ------- | ---- |  | -------- | ------- |  |  |  | ----- | -
|                               |  | 2002           |         | 2001 |  | % Growth
|                               |  |                |         |      |  |         
|                               |  |               
|                               |  | (In thousands)
|Institutional Services         |  |                |         |      |  |          |         |  |  |  |       |  
|FT Interactive Data            |  | $              | 294,313 |      |  | $        | 258,099 |  |  |  | +14.0 | %
|CMS BondEdge                   |  |                | 29,643  |      |  |          | 28,860  |  |  |  | +2.7  | %
|Other                          |  |                | 3,957   |      |  |          | 4,051   |  |  |  | -2.3  | %
|Foreign Exchange               |  |                | 3,082   |      |  |          |        |  |  |  | NA    |  
|Institutional Services Total   |  |                | 330,995 |      |  |          | 291,010 |  |  |  | +13.7 | %
|Retail Investor Services       |  |                |         |      |  |          |         |  |  |  |       |  
|eSignal                        |  |                | 39,542  |      |  |          | 38,822  |  |  |  | +1.9  | %
|Broadcast                      |  |                | 4,478   |      |  |          | 10,170  |  |  |  | -56.0 | %
|Retail Investor Services Total |  |                | 44,020  |      |  |          | 48,992  |  |  |  | -10.1 | %
|TOTAL SERVICE REVENUES         |  | $              | 375,015 |      |  | $        | 340,002 |  |  |  | +10.3 | %

Revenues increased from $340,002 in 2001 to
$375,015 in 2002, an increase of $35,013 or 10.3%. Excluding the
positive effect of foreign exchange, mainly due to the weakness
of the US dollar against the UK pound sterling, underlying
growth was 9.4%.

Revenues within the Institutional Services
segment increased from $291,010 in 2001 to $330,995 in 2002, an
increase of $39,985 or 13.7% or excluding the effects of foreign
exchange an increase of $36,903 or 12.7%. Revenues for our FT
Interactive Data business increased by $36,214 or 14.0% from
$258,099 in 2001 to $294,313 in 2002, reflecting growth in our
FT Interactive Data business and the inclusion of the SPS
business for 11 months of 2002. This increase also
reflected the strong performance in new business from new
subscriptions and growth from redistributor and usage revenues
and moderate price increases of our evaluated pricing services.
This growth was partially offset by a higher level of
cancellations due to customers looking to lower costs in their
data processing operations, as a result of the economic downturn
in the overall financial services sector, industry consolidation
and the loss of some revenue where customers used the SPS
service as an independent backup to the FT Interactive Data
service.

Our CMS BondEdge division grew revenues by $783
or 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.

Other revenues declined by 2.3%, which mainly
represents a slow down in our real-time foreign exchange data
business due to the market conditions described above.

Revenues for the Retail Investor Services segment
declined by 10.1% or $4,972 from $48,992 in 2001 to $44,020 in
2002. This decrease includes an expected 56.0% or $5,692 decline
in the Broadcast business as customers migrated to alternative
information sources including eSignals Internet service.
If the Broadcast revenues are excluded, the growth in revenues
for the Internet delivered service was 1.9%. This modest
increase was due to a change in the subscriber base, with a
decline in active traders willing to subscribe to the full cost
eSignal service being replaced by subscribers willing to pay for
the basic eSignal service, as well as the growth resulting from
eSignal providing feeds via redistributors to other active
trader tools for a lower monthly subscription.

Foreign exchange contributed $3,082 to revenues
in 2002. This was mainly due to the weakness of the US dollar
against the UK pound sterling. The average rate for the US
dollar against the UK pound sterling was $1.503 in 2002 compared
with $1.44 in 2001.

20



---



##### Table of Contents





| |                 
| | ----------------
| | Cost of Services

|                       |  |                |         |      |  |          |         |  |  |  |      |  
|---------------------- |  | -------------- | ------- | ---- |  | -------- | ------- |  |  |  | ---- | -
|                       |  | 2002           |         | 2001 |  | % Growth
|                       |  |                |         |      |  |         
|                       |  |               
|                       |  | (In thousands)
|Core Business          |  | $              | 109,393 |      |  | $        | 103,618 |  |  |  | +5.6 | %
|Foreign Exchange       |  |                | 928     |      |  |          |        |  |  |  |     |  
|TOTAL COST OF SERVICES |  | $              | 110,321 |      |  | $        | 103,618 |  |  |  | +6.5 | %

Cost of services increased by $6,703, or 6.5%,
from $103,618 in 2001 to $110,321 in 2002. Excluding the impact
of foreign exchange, the core cost of services grew by 5.6%. 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 from 30.5% in 2001 to 29.4% in 2002. The main
reasons for this decrease were the cost reductions made in our
eSignal 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 & Administrative
    Expenses

|                 |  |                |         |      |  |          |         |  |  |  |      |  
|---------------- |  | -------------- | ------- | ---- |  | -------- | ------- |  |  |  | ---- | -
|                 |  | 2002           |         | 2001 |  | % Growth
|                 |  |                |         |      |  |         
|                 |  |               
|                 |  | (In thousands)
|Core Business    |  | $              | 131,554 |      |  | $        | 122,066 |  |  |  | +7.8 | %
|Foreign Exchange |  |                | 1,671   |      |  |          |        |  |  |  |     |  
|TOTAL SG&A       |  | $              | 133,225 |      |  | $        | 122,066 |  |  |  | +9.1 | %

Selling, general and administrative expenses
increased by $11,159 or 9.1% from $122,066 in 2001 to $133,225
in 2002, primarily reflecting the inclusion of the SPS business
in 2002. Excluding the impact of foreign exchange, the core cost
of services grew by 7.8%. Selling, general and administrative
expenses as a percentage of revenue decreased from 35.9% in 2001
to 35.5% in 2002. The main reason for this decrease was the
decline in marketing and sales expenditures in our eSignal
business combined with synergies from merging the SPS functions
with those of FT Interactive Data. In 2002, we 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 operations from London, England to a
lower cost site in Dublin, Ireland in order to gain cost
synergies and improve productivity. We recorded costs of $1,100
associated with this restructuring.



| |             
| | ------------
| | Depreciation

|                   |  |                |        |      |  |          |        |  |  |  |       |  
|------------------ |  | -------------- | ------ | ---- |  | -------- | ------ |  |  |  | ----- | -
|                   |  | 2002           |        | 2001 |  | % Growth
|                   |  |                |        |      |  |         
|                   |  |               
|                   |  | (In thousands)
|Core Business      |  | $              | 14,332 |      |  | $        | 13,139 |  |  |  | +9.1  | %
|Foreign Exchange   |  |                | 168    |      |  |          |       |  |  |  |      |  
|TOTAL DEPRECIATION |  | $              | 14,500 |      |  | $        | 13,139 |  |  |  | +10.4 | %

Depreciation expense increased by $1,361 or
10.4%, including a small effect ($168) from the impact of
foreign exchange, resulting from the weakness of the US dollar
against the UK pound sterling. Core depreciation increased by
9.1% mainly due to a growing level of investment in our
technological infrastructure to accommodate the expanding volume
of business and the acquisition of the SPS business.



| |             
| | ------------
| | Amortization

|                   |  |                |        |      |  |          |        |  |  |  |       |  
|------------------ |  | -------------- | ------ | ---- |  | -------- | ------ |  |  |  | ----- | -
|                   |  | 2002           |        | 2001 |  | % Growth
|                   |  |                |        |      |  |         
|                   |  |               
|                   |  | (In thousands)
|TOTAL AMORTIZATION |  | $              | 18,737 |      |  | $        | 75,526 |  |  |  | -75.2 | %

Amortization expense declined from $75,526 in
2001 to $18,737 in 2002, a decrease of 75.2% or $56,789. The
main reason for the decrease was the adoption of FAS 142,
Goodwill and Other Intangible Assets on
January 1, 2002. As a result of adopting FAS 142, we
ceased the amortization of goodwill.

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| |                                            
| | -------------------------------------------
| | Other Condensed Consolidated
    Financials

Income from operations increased from $25,653 in
2001 to $98,232 in 2002. The increase in income from operations
was due the higher operating results and lower amortization
charges discussed above.

Other income decreased from $2,882 in 2001 to
$1,989 in 2002, reflecting the decline in interest rates on
invested cash and 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.

Our effective tax rate declined from 85.0% in
2001 to 39.4% in 2002 due mainly to the reduction in
non-deductible amortization expense between 2001 and 2002.

We 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.

We 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 purchases under our stock repurchase plan.

Liquidity and Capital Resources

Cash provided by operating activities was
$109,554, $84,380 and $93,812, in 2003, 2002, and 2001,
respectively. The increase in 2003 from 2002 of $25,174 was due
to an increase in net income of $11,468, higher depreciation and
amortization of $3,344, higher non cash items of $1,636
representing a charge of $1,368 related to the write off of the
carrying value of a 5% interest in a company that was spun off
in 2000, the introduction of a Senior Executive Deferred Stock
Compensation program and a reduction of working capital
investment of $12,099. Partially offsetting these positive items
was a lower tax benefit from the exercise of employee stock
options of $1,097. The working capital investment reduction was
mainly due to the timing of payments for the UK and US pension
plans, accrued bonuses, data center costs associated with our
new North American Data Center, and income tax payable. The
decline from 2001 to 2002 of $9,432 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.

Our capital expenditures increased in 2003 to
$21,503 from $13,561 in 2002 due mainly to the build out of our
new North American Data Center. The increase in capital
expenditures in 2002 of $13,561 from $12,609 in 2001 was mainly
due to the integration of the SPS business acquired in January
2002. In 2004, capital expenditures are expected to be in the
range of $20,000 to $23,000, as we continue the consolidation of
our multiple data centers to our two main North American Data
Centers, and take additional steps to improve the resiliency and
disaster recovery abilities of all of our businesses.

In 2001, we received $43,224 from the sale of
investments and businesses. This amount included the net
proceeds of $26,871 from the sale of our investment in
MarketWatch, which we distributed to our stockholders by way of
a dividend. We also received net proceeds of $3,853 from the
sale of our FNS business and $12,500 from the disposition of our
investment in Sportsline.com, Inc.

Also in 2001, we received $6,084 from the
exercise of 1,043,000 stock options and, we repurchased
2,000,000 shares of outstanding common stock for a total
price of $24,273.

In 2001, we 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. We did
not renew the facility.

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On January 31, 2002, we acquired the SPS
business from Merrill Lynch, Pierce, Fenner & Smith
Incorporated. The consideration was $48,000 in cash. The
consideration was paid from our existing cash resources.

In 2002, we received $10,411 from the exercise of
1,404,000 stock options and the issuance of 50,000 shares
in connection with the Employee Stock Purchase Plan. For the
year ended December 31, 2002, we repurchased
100,000 shares of outstanding common stock for a total
price of $1,377.

In 2003, we acquired from The McGraw-Hill
Companies, Inc., the stock of S&P ComStock, Inc. and the
assets of certain McGraw-Hill businesses in the United Kingdom,
France, Australia, Singapore and Hong Kong
(ComStock) for $115,972, in cash. We funded this
acquisition from our existing cash resources. In 2003, we also
acquired the consolidated market data feed client contracts from
HyperFeed Technologies, Inc. for $8,500, consisting of an
initial payment of $7,375 with the balance to be paid over
24 months as agreed upon milestones are reached, offset by
cash acquired of $1,011. We funded this acquisition from our
existing cash resources.

In 2003, we repurchased 100,000 shares of
outstanding common stock for a total cost of $1,330. Also, in
2003, we received $9,925 from the exercise of 1,195,000 stock
options and the issuance of 118,000 shares in connection
with the Employee Stock Purchase Plan.

We believe that the cash generated by operating
activities will be sufficient to meet our cash needs. We
currently have no long-term debt.

Income Taxes

We recognize future tax benefits or expenses
attributable to our taxable temporary differences and net
operating loss carry forwards. Recognition of deferred tax
assets is subject to our determination that realization is more
likely than not. Based on taxable income projections, we believe
that the recorded deferred tax assets will be realized.

Related Parties Transactions

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

Pursuant to the agreement, Pearson provides
certain services us and we provide certain services to Pearson.
The services provided by Pearson afford us administrative
convenience and we believe the terms of such services are more
favorable to us than if we had negotiated similar arrangements
with non-affiliated third parties. The services provided by
Pearson include administering 401(k), travel 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 of our
subsidiaries, primarily in the United Kingdom. The services
provided by us to Pearson include financial information and
property services. During 2003, we ended some of the services
provided by Pearson and moved them in-house or to a third party
provider. These included billing, accounts payable, accounts
receivable and payroll services. A majority of the charges for
services to and from Pearson are at cost. Prior to entering into
any service arrangement with Pearson, we assess whether it would
be more advantageous to obtain such services from a third party.
Certain of our directors are employees of Pearson. The
independent committee of our Board of Directors, which consists
of four directors, none of whom are employees of Pearson,
approved the management services agreement on our behalf. There
was no material effect on our financial condition or results of
operations as a result of entering into this agreement. If
Pearsons services to us were to be terminated, we would be
required to seek equivalent services in the open market at
potentially increased costs. In addition, we 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 our 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 our behalf. The independent committee approves
any such amendments. From time to time, we assess the ongoing
relationships between the Company and Pearson, and if we

23



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determine that it would be more advantageous for
us to secure any such services outside of Pearson, we pursue
doing so.


In 2001, Pearsons Financial Times Group
entered into a trademark license agreement with us authorizing
us to use the FT and Financial Times
trademarks and logos in our business. The license grants us 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 our Board of Directors approved this agreement on
our behalf.

On March 26, 2001, we 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.

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, 2003, 2002 and 2001, we incurred net (income)/
expense of $(22), $413, and ($1,969) for these services provided
to Pearson and received from Pearson.

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 and $0 and $53, respectively, for the
twelve months ended December 31, 2003. In 2002, the Company
entered into a revenue sharing agreement with MarketWatch the
Company paid MarketWatch $35 and $38 respectively, for the
twelve months ended December 31, 2003 and 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 and in 2003 charged
MarketWatch $16 for other services and these amounts were
recorded as reductions of the gross expenses incurred by the
Company.

Critical Accounting Policies and
Estimates

Our discussion and analysis of our financial
condition and results of operations is based upon our
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 us 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, we evaluate our estimates, including those
related to revenue recognition, goodwill and intangible assets,
accrued liabilities, income taxes, retirement plans, stock based
compensation and contingencies and commitments. We base our
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.

We believe the following critical accounting
policies require our most significant judgments and estimates
used in the preparation of our consolidated financial statements:



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

Revenue is recognized over contractual periods as
services are performed. Amounts recognized as revenue are
determined based upon contractually agreed upon fee schedules
with our customers. We account for subscription revenues
received in advance of service being performed by deferring such
amounts until the related services are performed. From time to
time, we are required to adjust revenue associated with incorrect

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billings and data accessed inadvertently by
customers. We maintain a reserve for these adjustments based
upon historical experience and believe that the reserve
established as of December 31, 2003 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, we adopted Financial Accounting
Standard No. 142, Goodwill and Other Intangible
Assets (FAS 142). As a result of the
adoption of this standard, we ceased recording amortization
expense associated with our goodwill.

FAS 142 requires an impairment test for our
reporting units to 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. We typically utilize the services of
a third party business valuation firm to assist in this process.



| |                    
| | -------------------
| | Accrued Liabilities

We maintain 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 judgment
based upon historical experience and on various other
assumptions that are believed to be reasonable under the
circumstances.



| |                 
| | ----------------
| | Retirement Plans

We record 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 our U.S. employees. Pension
costs are actuarially determined. We fund pension costs
attributable to our employees to the extent allowable under IRS
regulations. In 2001, we froze the benefits associated with the
Plan. There was no gain or loss recorded as a result of the
curtailment. The 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 our best estimates of
future events associated with the Plan.



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

In 2000, we adopted the 2000 Long Term Incentive
Plan (as amended from time to time, 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 as well as persons who provide consulting or other
services to us. 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. The Plan has a
ten-year term and terminates in February 2010.

In 2002, we adopted an employee stock purchase
plan for all eligible employees. Under the plan, shares of our
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. In 2002, employees purchased
approximately 50,000 shares at a price of $12.04 per
share. In 2003, employees purchased approximately
118,000 shares at a price of $11.24 per share. As of
December 31, 2003, 1,832,000 shares were reserved for
future issuance.

In June 2003, we awarded deferred stock
compensation to certain executives under the 2000 Plan. We
granted an aggregate of 75,999 deferred stock units of common
stock. Under the 2000 Plan, the shares are available for
distribution, at no cost, to these individuals at the end of a
three-year vesting period. The total

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deferred compensation cost related to this grant
is $1,290, which will be amortized over a three year period. As
of December 31, 2003, $233 has been expensed. The remaining
unamortized deferred compensation cost at December 31, 2003
is $1,057.


As discussed in Note 1 to the consolidated
financial statements, we apply APB Opinion No. 25 in
accounting for stock based compensation and, accordingly, no
compensation cost has been recognized for 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 twenty five 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 determined to be less than
book value.



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

Income tax assets and liabilities are determined
by taxable jurisdiction. We currently provide income taxes on
the earnings of foreign subsidiaries and associated companies to
the extent these earnings are currently taxable or expected to
be remitted. Taxes have not been provided on approximately
$40,000 of accumulated foreign unremitted earnings, which are
expected to remain invested indefinitely. We have net operating
loss carry forwards (NOLs) that were generated in
prior years. The annual utilization of the NOLs is restricted by
applicable tax regulations. We have provided a valuation
allowance for certain NOLs whose utilization is dependent upon
state tax limitations.

Throughout the year we determine our periodic
income tax expense based upon our current period income and our
estimated annual effective tax rate. The rate is revised, if
necessary, at the end of each successive interim period during
the fiscal year to our best current estimate of our annual
effective tax rate.

Commitment and Contingencies

We have no outstanding debt. We meet our existing
working capital and capital expenditure needs from our existing
operating cash flow.

In 2001, we 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. We did
not renew the facility.

We have 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 our 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  
|                             |  |               |        |             
|2004                         |  | $             | 12,429 |              |  | $ | 130 | 
|2005                         |  |               | 11,053 |              |  |   |     | 
|2006                         |  |               | 8,660  |              |  |   |     | 
|2007                         |  |               | 7,290  |              |  |   |     | 
|2008                         |  |               | 10,154 |              |  |   |     | 
|Thereafter                   |  |               | 21,077 |              |  |   |    | 
|                             |  |               |        |              |  |   |     | 
|Total minimum lease payments |  | $             | 70,663 |              |  | $ | 130 | 
|                             |  |               |        |              |  |   |     | 

We expect to satisfy our lease obligations from
our existing cash flow. Our key operating locations operate in
facilities under long-term leases, the earliest of which will
expire in 2005. We believe we will be able to

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successfully negotiate key operating leases
and/or find alternative locations for our facilities without
significant interruption to the business.


Inflation

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

Seasonality

We have not experienced any material seasonal
fluctuations in our 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, our business could be adversely affected.
The degree of such consequences is uncertain. Exposures in this
area are somewhat mitigated by our service offerings in
non-U.S. markets.

Recently Issued Accounting
Pronouncements



| |                             
| | ----------------------------
| | 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, 2003.
The adoption of this standard did not have an immediate impact
on our financial position or results of operations.



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

In June 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. We adopted
FAS 146 on January 1, 2003. The adoption of
FAS 146 did not have a material impact on our 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 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 our financial position or results of operations.



| |                                                
| | -----------------------------------------------
| | Consolidation of Variable interest
    Entities

In January 2003, the FASB issued
FIN No. 46 Consolidation of Variable Interest
Entities, an interpretation of ARB 51.
FIN No. 46 provides guidance on the identification of
entities for which control is achieved through means other than
through voting rights called variable interest
entities or VIEs and how to determine when and
which business enterprise should consolidate the VIE (the
primary beneficiary). This new model for
consolidation applies to an entity in which either (1) the
equity investors (if any) do not

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have a controlling financial interest or
(2) the equity investment at risk is insufficient to
finance that entitys activities without receiving
additional subordinated financial support from other parties. In
addition, FIN No. 46 requires that both the primary
beneficiary and all other enterprises with a significant
variable interest in a VIE make additional disclosures. In
October 2003, the FASB deferred the effective date for applying
the provisions of FIN 46 to interests held in certain
variable interest entities or potential variable interest
entities until the end of the first interim or annual period
ending after December 15, 2003 if the VIE or potential VIE
was created before February 1, 2003 and the entity has not
issued financial statements reporting that VIE in accordance
with FIN 46, other than in certain disclosures required. We
do not have any interests that would change our current
reporting entity or require additional disclosure outlined in
FIN No. 46.




| |                                                                                                         
| | --------------------------------------------------------------------------------------------------------
| | Accounting for Certain Financial
    Instruments with Characteristics of Both Liabilities and
    Equity

In May 2003, the FASB issued SFAS 150,
Accounting For Certain Financial Instruments with
Characteristics of Both Liabilities and Equity ( SFAS 150),
which establishes standards for how an issuer of financial
instruments classifies and measures certain financial
instruments with characteristics of both liabilities and equity.
It requires that an issuer classify a financial instrument that
is within its scope as a liability (or an asset in some
circumstances) if, at inception, the monetary value of the
obligation is based solely or predominantly on a fixed monetary
amount known at inception, variations in something other than
the fair value of the issuers equity shares or variations
inversely related to changes in the fair value of the
issuers equity shares. In November 2003, the FASB deferred
the effective date for applying the provisions of SFAS 150
for mandatorily redeemable financial instruments that have a
fixed redemption period to be effective for fiscal periods
beginning after December 15, 2003. For all other
mandatorily redeemable financial instruments, the disclosure
provisions of SFAS 150 have been deferred for an indefinite
period. We will continue to evaluate the impact of SFAS 150
on our financial position and results of operations.



| |                                                                             
| | ----------------------------------------------------------------------------
| | Employers Disclosures about Pensions
    and Other Post Retirement Benefits

In December 2003, the FASB issued Statement of
Financial Accounting Standards No. 132 (revised 2003)
(SFAS 132), Employers Disclosures about
Pensions and Other Post Retirement Benefits, that improves
financial statement disclosures for defined benefit plans. The
change replaces existing SFAS 132 disclosure requirements
for pensions and other post retirement benefits and revises
employers disclosures about pension plans and other post
retirement benefit plans. It does not change the measurement of
recognition of those plans required by SFAS 87,
Employers Accounting for Pensions,
SFAS 88, Employers Accounting for Settlements
and Curtailments of Defined Benefit Pension Plans and for
Termination Benefits, and SFAS 132 revised retains
the disclosure requirements contained in the original
SFAS 132, but requires additional disclosures about the
plan assets, obligations, cash flows, and net periodic benefit
cost of defined benefit pension plans and other defined benefit
post retirement plans. SFAS 132 revised is effective for
annual and interim periods with fiscal years ending after
December 15, 2003. We have adopted the revised disclosure
provisions.

Information Regarding Forward-Looking
Statements

From time to time, including in this Annual
Report on Form 10-K and our annual report to shareholders,
we 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. We note that a variety of factors, including known
and unknown risks and uncertainties as well as incorrect
assumptions, could cause our actual results and experience to
differ materially from the anticipated results or other
expectations expressed in such forward-looking statements. The
factors that may affect the operations, performance, development
and results of our business include the following:

We compete against companies with greater
financial resources.We operate in
highly competitive markets in which we compete with other
distributors of financial and business information and related
services. We expect competition to continue to be rigorous. Some
of our competitors and potential competitors have significantly
greater financial, technical and marketing resources than we
have. These competitors may be able to expand product offerings
and data content more effectively and to respond more rapidly
than us to

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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 our ability to maintain or increase our
market share or maintain our margins, and could have a material
adverse effect on our business, financial condition or operating
results.


A prolonged outage at one of our data centers
could result in reduced revenue and the loss of
customers.Our customers rely on us
for time sensitive, up-to-date data that is reliably delivered.
Our business is dependent on our ability to rapidly and
efficiently process substantial quantities of data and
transactions on our computer-based networks and systems. Our
computer operations and those of our suppliers and customers are
vulnerable to interruption by fire, earthquake, power loss,
telecommunications failure, terrorist attacks, wars, Internet
failures, computer viruses and other events beyond our
reasonable control. We maintain back-up facilities for each of
our major data centers to seek to minimize the risk that any
such event will disrupt operations. In addition, we maintain
insurance for such events, however, the business interruption
insurance we carry may not be sufficient to compensate us fully
for losses or damages that may occur as a result of such events.
Any such losses or damages incurred by us could have a material
adverse effect on our business. Although we seek to minimize
these risks through controls and back-up data centers there can
be no assurance that such efforts will be successful or
effective.

If we are unable to maintain relationships
with key suppliers and providers of market data, we would not be
able to provide our services to our
customers.We depend on key suppliers
for the data we provide to our customers. Some of this data is
exclusive to particular 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,
or we may not be able to obtain replacement data from an
alternative supplier without undue cost and expense, if at all.
We generally obtain data via license agreements. The disruption
of any license agreement with a major data supplier, such as the
New York Stock Exchange, could disrupt our operations and
lead to an adverse impact on our results of operations.

Our inability to maintain relationships with
service bureaus and custodian banks would decrease our
revenue.Part of our 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 are disrupted or are terminated, our results
of operations could be adversely impacted.

A decline in activity levels in the securities
markets could lower demand for our products and
services.Our business is dependent
upon the health of the financial markets as well as the
financial health of the participants in those markets. Some of
the financial data and information market demand is dependent
upon activity levels in the securities markets while other
demand is static and is not dependent on activity levels. In the
event that the U.S. or international financial markets
suffer a prolonged downturn that results in a significant
decline in investor activity, our revenue levels could be
adversely affected. We have experienced higher than normal
cancellations or downgrades as a result of the cost cutting
pressures evident in the financial services sector in recent
years and such cancellations or downgrades may continue.

Consolidation of financial services within and
across industries could lower demand for our products and
services.As consolidation occurs and
synergies are achieved, the number of potential customers for
our 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
subscribe to or use our products and services combine, they may
terminate or reduce duplicative subscriptions for our products
and services or if they are billed on a usage basis, usage may
decline due to synergies created by the business combination. We
have experienced higher than normal cancellations as a result of
this trend in recent years and these consolidations and
cancellations may continue. A large number of cancellations, or
lower utilization resulting from consolidations, could have a
material adverse effect on our revenues.

New product offerings by competitors or new
technologies could cause our products or services to become
obsolete.We operate 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
timely introduction of new products, services and data content
and coverage enhancements, our products and services could
become technologically obsolete or inadequate over time, in
which case our

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revenue and operating results would suffer. We
expect our 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 we fail to
adequately anticipate customers needs and technological
trends accurately, we will be unable to introduce new products
and services into the market and our ability to compete would be
adversely impacted. Further if we are unsuccessful at developing
and introducing new products and services that are appealing to
customers, with acceptable prices and terms, or if any such new
products and services are not timely made available, our ability
to compete would be adversely impacted. In both cases our
ability to generate revenues could suffer and our business and
operating results could be materially adversely affected. We
will need to successfully enhance or add to current products and
services in order to effectively expand into new geographic
areas. In addition, new products, services, data content and
coverage that we may develop and introduce may not achieve
market acceptance; lack of market acceptance would result in
lower revenues.


We may fail to derive the anticipated benefits
from our acquisitions.A significant
part of our growth strategy has been and continues to be growth
through strategic acquisition. The success of any acquisition
depends in part on our ability to integrate the acquired
business or assets. Successful integration of a business
involves the integration of some or all of the following: sales,
employees, operating systems, operating procedures and
information technology systems. We may not be able to
effectively integrate and manage the operations of any acquired
business. In addition, the process of integrating acquired
businesses or assets may involve unforeseen difficulties.
Integrating any newly acquired businesses may require a
disproportionate amount of managements attention and
financial and other resources and detract from the resources
remaining for our pre-existing businesses. Further we may not be
able to maintain or improve the historical financial performance
of acquired businesses. Finally, we may not fully derive all of
the anticipated benefits from our acquisitions, for example,
supply cost synergies or reduced operating costs due to
centralized or shared technical infrastructure.

We provide services to financial institutions
that are subject to significant regulatory oversight and any
investigation of us or our clients relating to our services
could be expensive, time consuming and harm our
reputation.The securities laws and
other regulations that govern our activities and the activities
of our clients are complex. Compliance with these regulations
may be reviewed by federal agencies, including the SEC, state
authorities and other governmental entities both in the United
States and foreign countries. Any investigation by a regulatory
agency of one of our clients or us, whether or not founded,
could cause us to incur substantial costs and distract our
management from our business. To the extent any of our customers
become the subject of a regulatory investigation or a civil
lawsuit due to actual or alleged violations of one or more of
their regulatory obligations, we could become subject to intense
scrutiny. The intense scrutiny could involve an examination of
whether the services we provided to the customer during the time
period of the alleged violation were related to or had
contributed in any manner to the commission of the violation. We
may be required to expend a significant amount of resources
explaining and/or defending the services we provided. In
addition, the negative publicity associated with any public
investigation could adversely affect our ability to retain
current clients and attract new clients.

Our FT Interactive Data subsidiary is a
registered investment advisory and is subject to significant
regulatory obligations.The securities
laws and other regulations that govern our activities as a
registered investment advisor are complex. These regulations are
issued by federal agencies, including the SEC, state authorities
and other governmental entities both in the United States and
foreign countries. If we were to ever lose our investment
advisor status, we could no longer operate those portions of our
business that require us to qualify as an investment advisor.
Recently, the financial services industry, and in particular the
mutual fund industry, has received negative publicity, which has
led to increased legislation, regulation, review of industry
practices and private litigation. As the regulatory obligations
applicable to investment advisors increase our compliance costs
likewise increase. There are currently several pending proposals
for new compliance rules and procedures and, in addition, in
this era of heightened scrutiny, we are devoting additional
resource to compliance. The inability to provide one or more of
our services would adversely impact revenues and could have a
material adverse affect on our business and results of operation.

We may not be able to attract and retain key
personnel.We depend on our ability to
attract and retain qualified personnel to operate and expand our
business. We do not have employment agreements with any of

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our key personnel, and we may not be able to
retain the services of our key personnel. Our ability to replace
any key personnel who resigns may be difficult and may take an
extended period of time because of the limited number of senior
individuals in the financial information industry with the
breadth of skills and experiences required to operate and
successfully expand a business such as ours or perform some of
the key business functions we require. Competition to hire from
this limited pool is intense, and we may not be able to hire or
retain these personnel.


Pearson plc has the ability to control
us.Pearson plc directly or indirectly
holds approximately 60% of our issued and outstanding common
stock. Accordingly, Pearson has the ability to exert significant
influence over our management and our affairs, including the
ability to elect all of the directors and to approve or
disapprove any corporate actions submitted to a vote of our
stockholders.

The foregoing discussion of risks, uncertainties,
and assumptions is by no means complete but is designed to
highlight important factors that may impact our results of
operation and our business.






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

A portion of our business is conducted outside
the United States through our foreign subsidiaries and branches.
We have operations in Europe, primarily the United Kingdom and
operations in Asia located in Australia, Hong Kong and Singapore
with the primary operations in Australia. We have foreign
currency exposure related to our operations in international
markets where it transacts business in foreign currencies and,
accordingly, we are subject to exposure from adverse movements
in foreign currency exchange rates. Our 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 our consolidated
statements of operations. Our primary exposure to foreign
currency exchange rate risks rest with the UK Sterling to US
Dollar exchange rate due to the significant size of our
operations in the United Kingdom.

The revenues for the past three years and assets
for the past two years, by geographic region, is as follows:

|                  |        |       |   |         |         |      |   |        |        |  |   |        |        | 
|----------------- | ------ | ----- | - | ------- | ------- | ---- | - | ------ | ------ |  | - | ------ | ------ | 
|                  |        | 2003  |   | 2002    |         | 2001
|                  |        |       |   |         |         |     
|Revenues          |        |       |   |         |         |      |   |        |        |  |   |       
|                  | Europe |       | $ | 89,990  |         |      | $ | 67,913 |        |  | $ | 67,384 |       
|                  | Asia   |       |   | 6,167   |         |      |   | 4,974  |        |  |   | 4,599  |       
|                  |        |       |   |         |         |      |   |        |        |  |   |       
|                  |        | Total |   | $       | 96,157  |      |   | $      | 72,887 |  |   | $      | 71,983 | 
|                  |        |       |   |         |         |      |   |        |        |  |   |       
|Long Lived Assets |        |       |   |         |         |      |   |        |        |  |   |       
|                  | Europe |       | $ | 124,275 |         |      | $ | 77,886 |        |  |   |        |       
|                  | Asia   |       |   | 2,579   |         |      |   | 1,965  |        |  |   |        |       
|                  |        |       |   |         |         |      |   |        |        |  |   |       
|                  |        | Total |   | $       | 126,854 |      |   | $      | 79,851 |  |   |        |        | 
|                  |        |       |   |         |         |      |   |        |        |  |   |       

We do not enter into any hedging or derivative
arrangements and we do not hold any market risk sensitive
instruments for investment or other purposes.

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

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|        |                                                
|------- | -----------------------------------------------
|Item 8. | Financial Statements and Supplementary
    Data

|                                                                                                                            |                                                     |      |    |    | 
|--------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------- | ---- | -- | -- | 
|                                                                                                                            |                                                     | Page
|                                                                                                                            |                                                     |     
|Index to Consolidated Financial Statements:                                                                                 |                                                     |      |    |   
|Report of Independent Auditors                                                                                              |                                                     |      | 33 |   
|Consolidated Statements of Operations and
    Comprehensive Income for the years ended December 31, 2003,
    2002 and 2001 |                                                     |      | 34 |   
|Consolidated Balance Sheets as of
    December 31, 2003 and 2002                                                            |                                                     |      | 35 |   
|Consolidated Statements of Cash Flows for the
    years ended December 31, 2003, 2002 and 2001                              |                                                     |      | 36 |   
|Consolidated Statements of Stockholders
    Equity for the years ended December 31, 2003, 2002 and 2001                    |                                                     |      | 37 |   
|Notes to Consolidated Financial Statements                                                                                  |                                                     |      | 38 |   
|Quarterly Financial Information (Unaudited)                                                                                 |                                                     |      | 61 |   
|Index to Financial Statement Schedule:                                                                                      |                                                     |      |    |   
|                                                                                                                            | Schedule VIII Valuation and Qualifying
    Accounts |      |    | 62 | 

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REPORT OF INDEPENDENT AUDITORS

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, 2003
and 2002, and the results of their operations and their cash
flows for each of the three years in the period ended
December 31, 2003, 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.



| |                               
| | ------------------------------
| | /s/ PRICEWATERHOUSECOOPERS LLP

Boston, Massachusetts

February 24, 2004


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INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF
OPERATIONS

AND COMPREHENSIVE INCOME


|                                     |                                         |                                       |         |         |         |      |         |         |         |   |         |         |         | 
|------------------------------------ | --------------------------------------- | ------------------------------------- | ------- | ------- | ------- | ---- | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                                     |                                         |                                      
|                                     |                                         | Year Ended December 31,              
|                                     |                                         |                                      
|                                     |                                         | 2003                                  |         | 2002    |         | 2001
|                                     |                                         |                                       |         |         |         |     
|                                     |                                         |                                      
|                                     |                                         | (In thousands, except per share data)
|SERVICE REVENUES                     |                                         | $                                     | 442,690 |         |         | $    | 375,015 |         |         | $ | 340,002 |        
|COSTS AND EXPENSES                   |                                         |                                       |         |         |         |      |         |         |         |   |         |        
|                                     | Cost of services                        |                                       |         | 141,631 |         |      |         | 110,321 |         |   |         | 103,618 |        
|                                     | Selling, general and administrative     |                                       |         | 149,129 |         |      |         | 133,225 |         |   |         | 122,066 |        
|                                     | Depreciation                            |                                       |         | 16,807  |         |      |         | 14,500  |         |   |         | 13,139  |        
|                                     | Amortization                            |                                       |         | 19,774  |         |      |         | 18,737  |         |   |         | 75,526  |        
|                                     |                                         |                                       |         |         |         |      |         |         |         |   |         |        
|                                     |                                         | Total costs and expenses              |         |         | 327,341 |      |         |         | 276,783 |   |         |         | 314,349 | 
|                                     |                                         |                                       |         |         |         |      |         |         |         |   |         |        
|INCOME FROM OPERATIONS               |                                         |                                       | 115,349 |         |         |      | 98,232  |         |         |   | 25,653  |        
|Other income, net                    |                                         |                                       | 1,100   |         |         |      | 1,989   |         |         |   | 2,882   |        
|                                     |                                         |                                       |         |         |         |      |         |         |         |   |         |        
|INCOME BEFORE INCOME TAXES           |                                         |                                       | 116,449 |         |         |      | 100,221 |         |         |   | 28,535  |        
|Income tax expense                   |                                         |                                       | 44,248  |         |         |      | 39,488  |         |         |   | 24,223  |        
|                                     |                                         |                                       |         |         |         |      |         |         |         |   |         |        
|NET INCOME                           |                                         | $                                     | 72,201  |         |         | $    | 60,733  |         |         | $ | 4,312   |        
|                                     |                                         |                                       |         |         |         |      |         |         |         |   |         |        
|Other comprehensive income (loss)    |                                         |                                       |         |         |         |      |         |         |         |   |         |        
|                                     | Foreign currency translation adjustment |                                       |         | 14,983  |         |      |         | 8,004   |         |   |         | (1,779  | )      
|                                     | Additional minimum pension liability    |                                       |         |        |         |      |         | (2,685  | )       |   |         |        |        
|                                     |                                         |                                       |         |         |         |      |         |         |         |   |         |        
|COMPREHENSIVE INCOME                 |                                         | $                                     | 87,184  |         |         | $    | 66,052  |         |         | $ | 2,533   |        
|                                     |                                         |                                       |         |         |         |      |         |         |         |   |         |        
|Weighted average shares outstanding: |                                         |                                       |         |         |         |      |         |         |         |   |         |        
|                                     | Basic                                   |                                       |         | 92,319  |         |      |         | 91,159  |         |   |         | 90,844  |        
|                                     | Diluted                                 |                                       |         | 94,450  |         |      |         | 93,730  |         |   |         | 92,510  |        
|NET INCOME PER SHARE:                |                                         |                                       |         |         |         |      |         |         |         |   |         |        
|                                     | Basic                                   |                                       | $       | 0.78    |         |      | $       | 0.67    |         |   | $       | 0.05    |        
|                                     | Diluted                                 |                                       | $       | 0.76    |         |      | $       | 0.65    |         |   | $       | 0.05    |        

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

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INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

|                                                                                                                        |                                                                                                                                                                                                                  |                                            |         |         |         |   |         |         |         | 
|----------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                                                                                                                        |                                                                                                                                                                                                                  |                                           
|                                                                                                                        |                                                                                                                                                                                                                  | December 31,                              
|                                                                                                                        |                                                                                                                                                                                                                  |                                           
|                                                                                                                        |                                                                                                                                                                                                                  | 2003                                       |         | 2002   
|                                                                                                                        |                                                                                                                                                                                                                  |                                            |         |        
|                                                                                                                        |                                                                                                                                                                                                                  |                                           
|                                                                                                                        |                                                                                                                                                                                                                  | (In thousands,                            
|                                                                                                                        |                                                                                                                                                                                                                  | except for share data)                    
|ASSETS                                                                                                                 
|Cash and cash equivalents                                                                                               |                                                                                                                                                                                                                  | $                                          | 131,639 |         |         | $ | 153,243 |        
|Accounts receivable, net of allowance for
    doubtful accounts of $6,467 and $4,950 at 2003 and 2002,
    respectively |                                                                                                                                                                                                                  |                                            | 75,785  |         |         |   | 53,924  |        
|Prepaid expenses and other current assets                                                                               |                                                                                                                                                                                                                  |                                            | 6,773   |         |         |   | 5,366   |        
|Deferred income taxes                                                                                                   |                                                                                                                                                                                                                  |                                            | 4,640   |         |         |   | 6,487   |        
|                                                                                                                        |                                                                                                                                                                                                                  |                                            |         |         |         |   |         |        
|                                                                                                                        |                                                                                                                                                                                                                  | Total current assets                       |         |         | 218,837 |   |         |         | 219,020 | 
|Property and equipment, net                                                                                             |                                                                                                                                                                                                                  |                                            | 46,193  |         |         |   | 36,786  |        
|Goodwill                                                                                                                |                                                                                                                                                                                                                  |                                            | 462,323 |         |         |   | 381,790 |        
|Other intangible assets, net                                                                                            |                                                                                                                                                                                                                  |                                            | 182,305 |         |         |   | 125,003 |        
|Other assets                                                                                                            |                                                                                                                                                                                                                  |                                            | 664     |         |         |   | 2,628   |        
|                                                                                                                        |                                                                                                                                                                                                                  |                                            |         |         |         |   |         |        
|                                                                                                                        |                                                                                                                                                                                                                  | Total Assets                               |         | $       | 910,322 |   |         | $       | 765,227 | 
|                                                                                                                        |                                                                                                                                                                                                                  |                                            |         |         |         |   |         |        
|                                                                                                                       
|LIABILITIES AND STOCKHOLDERS
    EQUITY                                                                               
|Current Liabilities:                                                                                                    |                                                                                                                                                                                                                  |                                            |         |         |         |   |         |        
|                                                                                                                        | Accounts payable, trade                                                                                                                                                                                          |                                            | $       | 9,877   |         |   | $       | 10,805  |        
|                                                                                                                        | Accrued liabilities                                                                                                                                                                                              |                                            |         | 62,311  |         |   |         | 52,938  |        
|                                                                                                                        | Payables to affiliates                                                                                                                                                                                           |                                            |         | 1,279   |         |   |         | 1,789   |        
|                                                                                                                        | Income taxes payable                                                                                                                                                                                             |                                            |         | 12,948  |         |   |         | 9,235   |        
|                                                                                                                        | Deferred revenue                                                                                                                                                                                                 |                                            |         | 30,336  |         |   |         | 22,786  |        
|                                                                                                                        |                                                                                                                                                                                                                  |                                            |         |         |         |   |         |        
|                                                                                                                        |                                                                                                                                                                                                                  | Total current liabilities                  |         |         | 116,751 |   |         |         | 97,553  | 
|                                                                                                                        | Deferred tax liabilities                                                                                                                                                                                         |                                            |         | 29,204  |         |   |         | 3,305   |        
|                                                                                                                        | Other liabilities                                                                                                                                                                                                |                                            |         | 1,836   |         |   |         | 1,626   |        
|                                                                                                                        |                                                                                                                                                                                                                  |                                            |         |         |         |   |         |        
|                                                                                                                        |                                                                                                                                                                                                                  | Total Liabilities                          |         |         | 147,791 |   |         |         | 102,484 | 
|Commitments and contingencies
    (Note 11)                                                                             |                                                                                                                                                                                                                  |                                            |         |         |         |   |         |        
|Stockholders Equity:                                                                                                   |                                                                                                                                                                                                                  |                                            |         |         |         |   |         |        
|                                                                                                                        | Preferred Stock                                                                                                                                                                                                  |                                            |         |        |         |   |         |        |        
|                                                                                                                        | Common stock $0.01 par value Authorized:
    200,000,000 shares; 95,011,707 issued and 92,811,707
    outstanding at December 31, 2003 and 93,698,789 issued and
    91,598,789 outstanding at December 31, 2002 |                                            |         | 950     |         |   |         | 937     |        
|                                                                                                                        | Additional paid-in capital                                                                                                                                                                                       |                                            |         | 801,448 |         |   |         | 786,470 |        
|                                                                                                                        | Treasury Stock, at cost, 2,200,000 and
    2,100,000 shares, at December 31, 2003 and 2002,
    respectively                                                                                                     |                                            |         | (26,980 | )       |   |         | (25,650 | )      
|                                                                                                                        | Accumulated deficit                                                                                                                                                                                              |                                            |         | (22,197 | )       |   |         | (94,398 | )      
|                                                                                                                        | Accumulated other comprehensive income (loss)                                                                                                                                                                    |                                            |         | 10,367  |         |   |         | (4,616  | )      
|Deferred stock based compensation                                                                                       |                                                                                                                                                                                                                  |                                            | (1,057  | )       |         |   |        |        
|                                                                                                                        |                                                                                                                                                                                                                  |                                            |         |         |         |   |         |        
|                                                                                                                        |                                                                                                                                                                                                                  | Total Stockholders Equity                 |         |         | 762,531 |   |         |         | 662,743 | 
|                                                                                                                        |                                                                                                                                                                                                                  |                                            |         |         |         |   |         |        
|                                                                                                                        |                                                                                                                                                                                                                  | Total Liabilities and Stockholders Equity |         | $       | 910,322 |   |         | $       | 765,227 | 
|                                                                                                                        |                                                                                                                                                                                                                  |                                            |         |         |         |   |         |        

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,
|                                                                                      |                                                                              |                        
|                                                                                      |                                                                              | 2003                    |          | 2002     |   | 2001
|                                                                                      |                                                                              |                         |          |          |   |     
|                                                                                      |                                                                              |                        
|                                                                                      |                                                                              | (In thousands)         
|Cash flows provided by (used in) operating
    activities:                            |                                                                              |                         |          |          |   |      |         |         |   |   |         |        
|Net income                                                                            |                                                                              | $                       | 72,201   |          |   | $    | 60,733  |         |   | $ | 4,312   |        
|Adjustments to reconcile net income to net cash
    provided by operating activities: |                                                                              |                         |          |          |   |      |         |         |   |   |         |        
|                                                                                      | Depreciation and amortization                                                |                         |          | 36,581   |   |      |         | 33,237  |   |   |         | 88,665  |  
|                                                                                      | Tax benefit from exercise of stock options                                   |                         |          | 3,776    |   |      |         | 4,873   |   |   |         | 2,682   |  
|                                                                                      | Deferred income taxes                                                        |                         |          | (543     | ) |      |         | 1,733   |   |   |         | (7,928  | )
|Other non-cash items, net                                                             |                                                                              |                         | 1,892    |          |   |      | 256     |         |   |   | 267     |        
|Changes in operating assets and liabilities, net:                                     |                                                                              |                         |          |          |   |      |         |         |   |   |         |        
|                                                                                      | Accounts receivable and due from affiliates, net                             |                         |          | (13,910  | ) |      |         | (6,518  | ) |   |         | 4,943   |  
|                                                                                      | Prepaid expenses and other assets                                            |                         |          | 932      |   |      |         | (1,635  | ) |   |         | 1,355   |  
|                                                                                      | Accounts and taxes payable and due to affiliates,
    net                    |                         |          | 1,609    |   |      |         | (5,556  | ) |   |         | 628     |  
|                                                                                      | Accrued expenses and other liabilities                                       |                         |          | 1,071    |   |      |         | (556    | ) |   |         | 789     |  
|                                                                                      | Deferred revenue                                                             |                         |          | 5,945    |   |      |         | (2,187  | ) |   |         | (1,901  | )
|                                                                                      |                                                                              |                         |          |          |   |      |         |         |   |   |         |        
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                             |                                                                              |                         | 109,554  |          |   |      | 84,380  |         |   |   | 93,812  |        
|                                                                                      |                                                                              |                         |          |          |   |      |         |         |   |   |         |        
|Cash flows provided by (used in) investing
    activities:                            |                                                                              |                         |          |          |   |      |         |         |   |   |         |        
|                                                                                      | Purchase of fixed assets                                                     |                         |          | (21,503  | ) |      |         | (13,561 | ) |   |         | (12,609 | )
|                                                                                      | Acquisition of businesses                                                    |                         |          | (122,336 | ) |      |         | (48,000 | ) |   |         |        |  
|                                                                                      | Net proceeds from sales of investments and
    business                      |                         |          |         |   |      |         |        |   |   |         | 43,224  |  
|                                                                                      | Other investing activities                                                   |                         |          | 506      |   |      |         | 680     |   |   |         | 719     |  
|                                                                                      |                                                                              |                         |          |          |   |      |         |         |   |   |         |        
|NET CASH PROVIDED BY (USED IN) INVESTING
    ACTIVITIES                               |                                                                              |                         | (143,333 | )        |   |      | (60,881 | )       |   |   | 31,334  |        
|                                                                                      |                                                                              |                         |          |          |   |      |         |         |   |   |         |        
|Cash flows provided by (used in) financing
    activities:                            |                                                                              |                         |          |          |   |      |         |         |   |   |         |        
|                                                                                      | Proceeds from exercise of stock options and
    employee stock purchase plan |                         |          | 9,925    |   |      |         | 10,411  |   |   |         | 6,084   |  
|                                                                                      | Purchase of treasury stock                                                   |                         |          | (1,330   | ) |      |         | (1,377  | ) |   |         | (24,273 | )
|                                                                                      | Distribution of dividends                                                    |                         |          |         |   |      |         |        |   |   |         | (26,871 | )
|                                                                                      |                                                                              |                         |          |          |   |      |         |         |   |   |         |        
|NET CASH PROVIDED BY (USED IN) FINANCING
    ACTIVITIES                               |                                                                              |                         | 8,595    |          |   |      | 9,034   |         |   |   | (45,060 | )      
|Effect of change in exchange rate                                                     |                                                                              |                         | 3,580    |          |   |      | 2,188   |         |   |   | (216    | )      
|                                                                                      |                                                                              |                         |          |          |   |      |         |         |   |   |         |        
|NET INCREASE (DECREASE) IN CASH AND CASH
    EQUIVALENTS                              |                                                                              |                         | (21,604  | )        |   |      | 34,721  |         |   |   | 79,870  |        
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                      |                                                                              |                         | 153,243  |          |   |      | 118,522 |         |   |   | 38,652  |        
|                                                                                      |                                                                              |                         |          |          |   |      |         |         |   |   |         |        
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                            |                                                                              | $                       | 131,639  |          |   | $    | 153,243 |         |   | $ | 118,522 |        
|                                                                                      |                                                                              |                         |          |          |   |      |         |         |   |   |         |        
|Supplemental disclosure of cash flow information:                                     |                                                                              |                         |          |          |   |      |         |         |   |   |         |        
|                                                                                      | Cash paid for taxes                                                          |                         | $        | (37,066  | ) |      | $       | (33,484 | ) |   | $       | (29,007 | )
|                                                                                      | Cash received for interest                                                   |                         | $        | 1,123    |   |      | $       | 2,031   |   |   | $       | 3,050   |  

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

36



---



##### Table of Contents



INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


CONSOLIDATED STATEMENTS OF STOCKHOLDERS
EQUITY

(In thousands)


|                                                                                |  |              |        |           |  |           |     |            |  |          |       |               |  |        |         |             |  |               |         |   |  |   |        |   |  |   |        |   |  |   |          |   |  |   |         |  
|------------------------------------------------------------------------------- |  | ------------ | ------ | --------- |  | --------- | --- | ---------- |  | -------- | ----- | ------------- |  | ------ | ------- | ----------- |  | ------------- | ------- | - |  | - | ------ | - |  | - | ------ | - |  | - | -------- | - |  | - | ------- | -
|                                                                                |  |              |        |           |  |           |     |            |  |          |       | Accumulated   |  |        |         |            
|                                                                                |  | Common Stock |        | Treasury  |  |           |     |            |  |          |       | Other         |  |        |         |            
|                                                                                |  |              |        | Stock     |  | Treasury  |     | Additional |  | Deferred |       | Comprehensive |  |        |         | Total      
|                                                                                |  | Number of    |        |           |  | Number of |     | Stock      |  | Paid in  |       | Compensation  |  | Income |         | Accumulated |  | Stockholders
|                                                                                |  | Shares       |        | Par Value |  | Shares    |     | Costs      |  | Capital  |       | Cost          |  | (Loss) |         | Deficit     |  | Equity       
|                                                                                |  |              |        |           |  |           |     |            |  |          |       |               |  |        |         |             |  |              
|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 |  
|                                                                                |  |              |        |           |  |           |     |            |  |          |       |               |  |        |         |             |  |               |         |   |  |   |        |   |  |   |        |   |  |   |          |   |  |   |         |  
|Exercise of stock options                                                       |  |              | 1,195  |           |  |           | 12  |            |  |          |      |               |  |        |        |             |  |               | 8,580   |   |  |   |       |   |  |   |       |   |  |   |         |   |  |   | 8,592   |  
|Issuance of stock in connection with employee
    stock purchase plan           |  |              | 118    |           |  |           | 1   |            |  |          |      |               |  |        |        |             |  |               | 1,332   |   |  |   |       |   |  |   |       |   |  |   |         |   |  |   | 1,333   |  
|Tax benefit from exercise of stock options and
    employee stock purchase plan |  |              |       |           |  |           |    |            |  |          |      |               |  |        |        |             |  |               | 3,776   |   |  |   |       |   |  |   |       |   |  |   |         |   |  |   | 3,776   |  
|Purchase of treasury stock                                                      |  |              |       |           |  |           |    |            |  |          | 100   |               |  |        | (1,330  | )           |  |               |        |   |  |   |       |   |  |   |       |   |  |   |         |   |  |   | (1,330  | )
|Deferred stock-based compensation plan cost                                     |  |              |       |           |  |           |    |            |  |          |      |               |  |        |        |             |  |               | 1,290   |   |  |   | (1,290 | ) |  |   |       |   |  |   |         |   |  |   |        |  
|Amortization of deferred stock-based compensation
    plan                      |  |              |       |           |  |           |    |            |  |          |      |               |  |        |        |             |  |               |        |   |  |   | 233    |   |  |   |       |   |  |   |         |   |  |   | 233     |  
|Other comprehensive income                                                      |  |              |       |           |  |           |    |            |  |          |      |               |  |        |        |             |  |               |        |   |  |   |       |   |  |   | 14,983 |   |  |   |         |   |  |   | 14,983  |  
|Net income                                                                      |  |              |       |           |  |           |    |            |  |          |      |               |  |        |        |             |  |               |        |   |  |   |       |   |  |   |        |   |  |   | 72,201   |   |  |   | 72,201  |  
|                                                                                |  |              |        |           |  |           |     |            |  |          |       |               |  |        |         |             |  |               |         |   |  |   |        |   |  |   |        |   |  |   |          |   |  |   |         |  
|Balance, December 31, 2003                                                      |  |              | 95,012 |           |  | $         | 950 |            |  |          | 2,200 |               |  | $      | (26,980 | )           |  | $             | 801,448 |   |  | $ | (1,057 | ) |  | $ | 10,367 |   |  | $ | (22,197  | ) |  | $ | 762,531 |  
|                                                                                |  |              |        |           |  |           |     |            |  |          |       |               |  |        |         |             |  |               |         |   |  |   |        |   |  |   |        |   |  |   |          |   |  |   |         |  

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

37



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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
core 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
56,424,000 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 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.



| |                            
| | ---------------------------
| | 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 money market investments. At December 31, 2003 and
2002, cash and cash equivalents included cash equivalents of
$114,663 and $134,538, 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.

38



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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 although
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, 2003 approximately $114,663 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, 2003, the Company
believes that it had no significant concentrations of credit
risk.



| |             
| | ------------
| | 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 taxes have not been provided on approximately
$40,000 of accumulated foreign unremitted earnings which are
expected to remain invested indefinitely.



| |         
| | --------
| | 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 twenty five years.

39



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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 2003,
the Company capitalized approximately $2,958 related to the
development of internal use software. In 2003, amortization
expense associated with the internally developed software was
$1,756. At December 31, 2003, the remaining book value of
the software developed for internal use was $6,165. 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 selling, general and administrative 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, 2003, the remaining restructuring accrual is
$439 which consists of lease termination costs. The Company
expects to complete the majority of these payments by
December 31, 2004. In 2003, the Company recorded
restructuring charges in

40



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##### Table of Contents



INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

the UK and US. These restructuring charges
totaled $3,311 and were primarily related to severance, lease
termination costs and the closure of the Companys Index
Services business in Edinburgh, Scotland. As of
December 31, 2003, the remaining restructuring accrual that
pertains to the 2003 charges is $2,931. The Company expects to
complete the majority of these payments by December 31,
2004.



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

Expenditures for research and development are
expensed as incurred. The Company expensed approximately $2,726,
$2,481 and $2,327 in research and development costs during the
years ended December 31, 2003, 2002 and 2001, 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 $4,786, $5,216 and $5,886 for the years
ended December 31, 2003, 2002 and 2001, 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, 2003, 2002 and 2001
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,
|                                                                                                                                                   |                       |                        
|                                                                                                                                                   |                       | 2003                    |        | 2002 |  | 2001
|                                                                                                                                                   |                       |                         |        |      |  |     
|Net income as reported                                                                                                                             |                       | $                       | 72,201 |      |  | $    | 60,733  |      |  | $ | 4,312  |     
|Deduct: Total stock based employee compensation
    expense determined under fair value based method for all awards
    net of related tax effects |                       |                         | (9,358 | )    |  |      | (11,060 | )    |  |   | (2,972 | )   
|                                                                                                                                                   |                       |                         |        |      |  |      |         |      |  |   |        |     
|Pro forma, net                                                                                                                                     |                       | $                       | 62,843 |      |  | $    | 49,673  |      |  | $ | 1,340  |     
|Earnings per share                                                                                                                                 |                       |                         |        |      |  |      |         |      |  |   |        |     
|Basic  as reported                                                                                                                                |                       | $                       | 0.78   |      |  | $    | 0.67    |      |  | $ | 0.05   |     
|                                                                                                                                                   | Basic  pro forma     |                         | $      | 0.68 |  |      | $       | 0.54 |  |   | $      | 0.01 | 
|                                                                                                                                                   | Diluted  as reported |                         | $      | 0.76 |  |      | $       | 0.65 |  |   | $      | 0.05 | 
|                                                                                                                                                   | Diluted  pro forma   |                         | $      | 0.67 |  |      | $       | 0.53 |  |   | $      | 0.01 | 

See Note 9 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.

41



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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
weighted average number of common shares outstanding (in
thousands, except per share amounts).

Stock options to purchase approximately 1,842,
2,564 and 20 shares of common stock were outstanding during
the years ended December 31, 2003, 2002, and 2001,
respectively, but were not included in the calculation of
diluted net income per share because the options exercise
prices were greater than the average market price of the
Companys common stock during those years. Additionally, 76
deferred stock units were outstanding during 2003 (Note 9)
and were also excluded from the calculation of diluted net
income per share as they were antidilutive. Although these stock
options and deferred stock units were antidilutive in fiscal
2003, 2002, and 2001, they may be dilutive in future years
calculations.

|                                                          |               |                             |        |                  |  |           |        |       |  |   |     |      |  
|--------------------------------------------------------- | ------------- | --------------------------- | ------ | ---------------- |  | --------- | ------ | ----- |  | - | --- | ---- | -
|                                                          |               |                            
|                                                          |               | For the Twelve Months Ended
|                                                          |               | December 31, 2003          
|                                                          |               |                            
|                                                          |               |                             |        | Weighted Average |  |          
|                                                          |               | Income                      |        | Shares           |  | Per-Share
|                                                          |               | (Numerator)                 |        | (Denominator)    |  | Amount   
|                                                          |               |                             |        |                  |  |          
|Net income available to common
    stockholders  basic   |               | $                           | 72,201 |                  |  |           | 92,319 |       |  | $ | .78 |     
|Effect of dilutive securities:                            |               |                             |        |                  |  |           |        |       |  |   |     |     
|                                                          | Stock options |                             |        |                 |  |           |        | 2,131 |  |   |     | (.02 | )
|                                                          |               |                             |        |                  |  |           |        |       |  |   |     |     
|Net income available to common
    stockholders  diluted |               | $                           | 72,201 |                  |  |           | 94,450 |       |  | $ | .76 |     
|                                                          |               |                             |        |                  |  |           |        |       |  |   |     |     

|                                                          |               |                             |        |                  |  |           |        |       |  |   |      |      |  
|--------------------------------------------------------- | ------------- | --------------------------- | ------ | ---------------- |  | --------- | ------ | ----- |  | - | ---- | ---- | -
|                                                          |               |                            
|                                                          |               | 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 |  
|                                                          |               |                             |       |                  |  |           |        |       |  |   |      |  

42



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##### Table of Contents



INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



|   |                              
|-- | -----------------------------
|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 did not have any immediate
impact on the Companys financial position or results of
operations.



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

In June 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. The Company adopted
FAS 146 on January 1, 2003. The adoption of
FAS 146 did not have a material impact on the
Companys 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.



| |                                                
| | -----------------------------------------------
| | Consolidation of Variable interest
    Entities

In January 2003, the FASB issued FIN No. 46
Consolidation of Variable Interest Entities, an
interpretation of ARB 51. FIN No. 46 provides
guidance on the identification of entities for which control is
achieved through means other than through voting rights called
variable interest entities or VIEs and
how to determine when and which business enterprise should
consolidate the VIE (the primary beneficiary). This
new model for consolidation applies to an entity in which either
(1) the equity investors (if any) do not have a controlling
financial interest or (2) the equity investment at risk is
insufficient to finance that entitys activities without
receiving additional subordinated financial support from other
parties. In addition, FIN No. 46 requires that both the
primary beneficiary and all other enterprises with a significant
variable interest in a VIE make additional disclosures. In
October 2003, the FASB deferred the effective date for applying
the provisions of FIN 46 to interests held in certain
variable interest entities or potential variable interest
entities until the end of the first interim or annual period
ending after December 15, 2003 if the VIE or potential VIE
was created before February 1, 2003 and the entity has not
issued financial statements reporting that VIE in accordance
with FIN 46, other than in certain disclosures required.
The Company does not have any interests that would change its
current reporting entity or require additional disclosure
outlined in FIN No. 46.

43



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##### Table of Contents



INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                                                                                                         
| | --------------------------------------------------------------------------------------------------------
| | Accounting for Certain Financial
    Instruments with Characteristics of Both Liabilities and
    Equity

In May 2003, the FASB issued SFAS 150,
Accounting For Certain Financial Instruments with
Characteristics of Both Liabilities and Equity ( SFAS 150),
which establishes standards for how an issuer of financial
instruments classifies and measures certain financial
instruments with characteristics of both liabilities and equity.
It requires that an issuer classify a financial instrument that
is within its scope as a liability (or an asset in some
circumstances) if, at inception, the monetary value of the
obligation is based solely or predominantly on a fixed monetary
amount known at inception, variations in something other than
the fair value of the issuers equity shares or variations
inversely related to changes in the fair value of the
issuers equity shares. In November 2003, the FASB deferred
the effective date for applying the provisions of SFAS 150
for mandatorily redeemable financial instruments that have a
fixed redemption period to be effective for fiscal periods
beginning after December 15, 2003. For all other
mandatorily redeemable financial instruments, the disclosure
provisions of SFAS 150 have been deferred for an indefinite
period. The Company will continue to evaluate the impact of
SFAS 150 on its financial position and results of
operations.



| |                                                                             
| | ----------------------------------------------------------------------------
| | Employers Disclosures about Pensions
    and Other Post Retirement Benefits

In December 2003, the FASB issued Statement of
Financial Accounting Standards No. 132 (revised 2003)
(SFAS 132), Employers Disclosures about
Pensions and Other Post Retirement Benefits, that improves
financial statement disclosures for defined benefit plans. The
change replaces existing SFAS 132 disclosure requirements
for pensions and other post retirement benefits and revises
employers disclosures about pension plans and other post
retirement benefit plans. It does not change the measurement of
recognition of those plans required by SFAS 87,
Employers Accounting for Pensions,
SFAS 88, Employers Accounting for Settlements
and Curtailments of Defined Benefit Pension Plans and for
Termination Benefits, and SFAS 132 revised retains
the disclosure requirements contained in the original
SFAS 132, but requires additional disclosures about the
plan assets, obligations, cash flows, and net periodic benefit
cost of defined benefit pension plans and other defined benefit
post retirement plans. SFAS 132 revised is effective for
annual and interim periods with fiscal years ending after
December 15, 2003. The Company has adopted the revised
disclosure provisions.



|   |                         
|-- | ------------------------
|3. | Mergers and Acquisitions

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 plc. Upon the Merger, the Company issued
56,424,000 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
acquisition. Accordingly, the historical financial statements of
FT Interactive Data Corporation are the historical financial
statements of the Company.

Assets acquired totaled $565,373 and included
cash, goodwill, an investment in MarketWatch.com and intangible
assets. Liabilities acquired totaled $127,079 and included
accounts payable, accrued expenses and deferred tax liabilities.

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, 2003, accrued
acquisition costs remaining were $268. An additional $3,000 of
acquisition costs were funded by Pearson and treated as
additional goodwill and a capital contribution.

44



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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
|                           |  |           |       |              |  |       |       |      
|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   | 
|2003 payments/adjustments  |  |           | 314   |              |  |       |      |       |  |   |    |  |  |   | 314   | 
|                           |  |           |       |              |  |       |       |       |  |   |     |  |  |   |       | 
|Balance, December 31, 2003 |  | $         | 268   |              |  | $     |      |       |  | $ |    |  |  | $ | 268   | 
|                           |  |           |       |              |  |       |       |       |  |   |     |  |  |   |       | 

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 $1,088, consisting of
severance costs and legal and accounting services. As of
December 31, 2003, $1,069 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                  |                      |        | 17,768 |       
|            | Deferred tax assets       |                      |        | 448    |       
|            |                           |                      |        |       
|            |                           | $                    | 49,088 |       
|Liabilities |                           |                      |        |       
|            | Accrued acquisition costs |                      | $      | 1,088  |       
|            |                           | Total Purchase Price |        | $      | 48,000 | 

On February 28, 2003, the Company acquired
the stock of S&P ComStock, Inc from The McGraw-Hill
Companies, Inc. and the assets of certain McGraw-Hill businesses
in the United Kingdom, France, Australia, Singapore and Hong
Kong (ComStock). This acquisition provides the
Company direct access to real-time market data from more than
300 stock exchanges and other sources worldwide. The acquisition
also expands the Companys real-time data feed services,
and provides the Company with the opportunity to market
ComStocks content and product to several thousand
institutional customers worldwide. The price paid in cash for
the assets was $115,972 and was funded from the operating cash
of the Company. In addition, the Company incurred acquisition
costs of $1,250, consisting of severance costs and legal and
accounting services. As of December 31, 2003, $922 of the
acquisition costs have been paid. The Company expects the
remaining costs, consisting mainly of employee severance, to be
paid by December 31, 2004.

45



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##### Table of Contents



INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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 assets are
being amortized over a period ranging from two to twenty-five
years. The Companys financial statements for the twelve
months ended December 31, 2003 include the results of
operations of ComStock subsequent to the acquisition date.

The acquisition was accounted for as follows:

|                     |                                           |   |         |        | 
|-------------------- | ----------------------------------------- | - | ------- | ------ | 
|Assets               |                                           |   |         |       
|                     | Accounts receivable, net                  |   | $       | 6,683  | 
|                     | Prepaid expenses and other current assets |   |         | 935    | 
|                     | Fixed assets                              |   |         | 3,987  | 
|                     | Customer lists                            |   |         | 30,900 | 
|                     | Service Contracts                         |   |         | 16,700 | 
|                     | Trademarks                                |   |         | 1,700  | 
|                     | Computer Software/ Technology             |   |         | 20,400 | 
|                     | Goodwill                                  |   |         | 72,036 | 
|                     |                                           |   |         |       
|                     |                                           | $ | 153,341 |       
|Liabilities          |                                           |   |         |       
|                     | Accrued liabilities                       |   | $       | 5,712  | 
|                     | Deferred revenue                          |   |         | 2,257  | 
|                     | Deferred tax liabilities, net             |   |         | 28,150 | 
|                     | Accrued acquisition costs                 |   |         | 1,250  | 
|                     |                                           |   |         |       
|                     |                                           | $ | 37,369  |       
|                     |                                           |   |         |       
|Total Purchase Price |                                           | $ | 115,972 |       
|                     |                                           |   |         |       

On October 31, 2003, the Company acquired
the consolidated market data feed client contracts from
HyperFeed Technologies, Inc. for $8,500, consisting of an
initial payment of $7,375 with the balance to be paid over
24 months subject to the achievement of certain milestones,
offset by cash acquired of $1,011. The Company funded this
acquisition from its existing cash resources.

46



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##### Table of Contents



INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The acquisition was accounted for as follows:

|                     |                     |   |       |       | 
|-------------------- | ------------------- | - | ----- | ----- | 
|Assets               |                     |   |       |      
|                     | Cash                |   | $     | 1,011 | 
|                     | Accounts receivable |   |       | 579   | 
|                     | Customer lists      |   |       | 6,835 | 
|                     | Service contract    |   |       | 540   | 
|                     | Prepaid expenses    |   |       | 29    | 
|                     |                     |   |       |      
|                     |                     | $ | 8,994 |      
|Liabilities          |                     |   |       |      
|                     | Deferred revenue    |   | $     | 983   | 
|                     | Customer deposits   |   |       | 636   | 
|                     |                     |   |       |      
|                     |                     | $ | 1,619 |      
|                     |                     |   |       |      
|Total Purchase Price |                     | $ | 7,375 |      
|                     |                     |   |       |      



|   |                 
|-- | ----------------
|4. | 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.



|   |                       
|-- | ----------------------
|5. | Property and Equipment

Property and equipment consisted of the following
at December 31:

|                                     |                               |               |  |      |         |         |   |   |         |         |  
|------------------------------------ | ----------------------------- | ------------- |  | ---- | ------- | ------- | - | - | ------- | ------- | -
|                                     |                               | Useful Life   |  | 2003 |         | 2002   
|                                     |                               |               |  |      |         |        
|Computer and communication equipment |                               | 3-5 years     |  | $    | 78,709  |         |   | $ | 64,828  |        
|Leasehold improvements               |                               | Life of lease |  |      | 25,835  |         |   |   | 18,499  |        
|Furniture and fixtures               |                               | 3-10 years    |  |      | 17,504  |         |   |   | 14,173  |        
|Capitalized software                 |                               | 3-5 years     |  |      | 15,035  |         |   |   | 14,311  |        
|                                     |                               |               |  |      |         |         |   |   |         |        
|                                     |                               |               |  |      | 137,083 |         |   |   | 111,811 |        
|                                     | Less accumulated depreciation |               |  |      |         | (90,890 | ) |   |         | (75,025 | )
|                                     |                               |               |  |      |         |         |   |   |         |        
|                                     |                               |               |  | $    | 46,193  |         |   | $ | 36,786  |        
|                                     |                               |               |  |      |         |         |   |   |         |        

Depreciation expense was $16,807, $14,500 and
$13,139 for the years ended December 31, 2003, 2002 and
2001, respectively.

47



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##### Table of Contents



INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



|   |                               
|-- | ------------------------------
|6. | Goodwill and Intangible Assets

Intangible assets consist of the following:

|                       |  |              |            |                   |  |                   |         |          |  |          |          |              |  |          |         |  |  |   |         |  |  |   |          |   |  |   |         | 
|---------------------- |  | ------------ | ---------- | ----------------- |  | ----------------- | ------- | -------- |  | -------- | -------- | ------------ |  | -------- | ------- |  |  | - | ------- |  |  | - | -------- | - |  | - | ------- | 
|                       |  |              |            |                   |  |                  
|                       |  |              |            | December 31, 2003 |  | December 31, 2002
|                       |  | Weighted     |            |                   |  |                  
|                       |  | Average      |            | Gross             |  |                   |         | Gross    |  |         
|                       |  | Amortization |            | Carrying          |  | Accumulated       |         | Net Book |  | Carrying |          | Accumulated  |  | Net Book
|                       |  | Period       |            | Value             |  | Amortization      |         | Value    |  | Value    |          | Amortization |  | Value   
|                       |  |              |            |                   |  |                   |         |          |  |          |          |              |  |         
|Non-compete agreements |  |              | 2.9 years  |                   |  | $                 | 87,500  |          |  | $        | (87,500  | )            |  | $        |        |  |  | $ | 87,500  |  |  | $ | (87,500  | ) |  | $ |        | 
|Securities database    |  |              | 3.5 years  |                   |  |                   | 10,792  |          |  |          | (10,792  | )            |  |          |        |  |  |   | 10,792  |  |  |   | (10,739  | ) |  |   | 53      | 
|Computer software      |  |              | 7.1 years  |                   |  |                   | 62,886  |          |  |          | (42,744  | )            |  |          | 20,142  |  |  |   | 42,486  |  |  |   | (39,019  | ) |  |   | 3,467   | 
|Customer lists         |  |              | 11.5 years |                   |  |                   | 208,336 |          |  |          | (64,292  | )            |  |          | 144,044 |  |  |   | 170,600 |  |  |   | (49,117  | ) |  |   | 121,483 | 
|Service Contracts      |  |              | 24.1 years |                   |  |                   | 17,240  |          |  |          | (727     | )            |  |          | 16,513  |  |  |   |        |  |  |   |         |   |  |   |        | 
|Trademarks             |  |              | 15.0 years |                   |  |                   | 1,700   |          |  |          | (94      | )            |  |          | 1,606   |  |  |   |        |  |  |   |         |   |  |   |        | 
|                       |  |              |            |                   |  |                   |         |          |  |          |          |              |  |          |         |  |  |   |         |  |  |   |          |   |  |   |         | 
|Total                  |  |              |            |                   |  | $                 | 388,454 |          |  | $        | (206,149 | )            |  | $        | 182,305 |  |  | $ | 311,378 |  |  | $ | (186,375 | ) |  | $ | 125,003 | 
|                       |  |              |            |                   |  |                   |         |          |  |          |          |              |  |          |         |  |  |   |         |  |  |   |          |   |  |   |         | 

Estimated amortization expense of intangible
assets is as follows:

|                        |  |   |        | 
|----------------------- |  | - | ------ | 
|For year ended 12/31/04 |  | $ | 22,107 | 
|For year ended 12/31/05 |  | $ | 20,074 | 
|For year ended 12/31/06 |  | $ | 19,799 | 
|For year ended 12/31/07 |  | $ | 19,403 | 
|For year ended 12/31/08 |  | $ | 19,324 | 

The changes in the carrying amount of goodwill
for the years ended December 31, 2003 and 2002 are as
follows:

|                                                                                                      |  |   |         |  
|----------------------------------------------------------------------------------------------------- |  | - | ------- | -
|Balance as of January 1, 2002                                                                         |  | $ | 353,748 |  
|Goodwill acquired during year                                                                         |  |   | 17,768  |  
|Workforce intangible and related deferred taxes
    reclassified to goodwill upon adoption of FAS 142 |  |   | 4,187   |  
|Purchase accounting adjustments                                                                       |  |   | (119    | )
|Impact of change in foreign exchange rates                                                            |  |   | 6,206   |  
|                                                                                                      |  |   |         |  
|Balance as of December 31, 2002                                                                       |  | $ | 381,790 |  
|Goodwill acquired during the year                                                                     |  |   | 72,036  |  
|Purchase accounting adjustments                                                                       |  |   | (4,271  | )
|Impact of change in foreign exchange rates                                                            |  |   | 12,768  |  
|                                                                                                      |  |   |         |  
|Balance as of December 31, 2003                                                                       |  | $ | 462,323 |  
|                                                                                                      |  |   |         |  

48



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##### Table of Contents



INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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:

|                                          |  |      |        |      |  |      |        |  |  |   |        | 
|----------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ |  |  | - | ------ | 
|                                          |  | 2003 |        | 2002 |  | 2001
|                                          |  |      |        |      |  |     
|Reported net income                       |  | $    | 72,201 |      |  | $    | 60,733 |  |  | $ | 4,312  | 
|Add back: goodwill/workforce amortization |  |      |       |      |  |      |       |  |  |   | 39,018 | 
|                                          |  |      |        |      |  |      |        |  |  |   |        | 
|Adjusted net income                       |  | $    | 72,201 |      |  | $    | 60,733 |  |  | $ | 43,330 | 
|Basic earnings per share:                 |  |      |        |      |  |      |        |  |  |   |        | 
|Reported net income                       |  | $    | .78    |      |  | $    | .67    |  |  | $ | .05    | 
|Goodwill amortization                     |  |      |       |      |  |      |       |  |  |   | .43    | 
|Adjusted earnings per share               |  | $    | .78    |      |  | $    | .67    |  |  | $ | .48    | 
|Diluted earnings per share:               |  |      |        |      |  |      |        |  |  |   |        | 
|Reported net income                       |  | $    | .76    |      |  | $    | .65    |  |  | $ | .05    | 
|Goodwill amortization                     |  |      |       |      |  |      |       |  |  |   | .42    | 
|Adjusted diluted earnings per share       |  | $    | .76    |      |  | $    | .65    |  |  | $ | .47    | 

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 15 for further discussions of the
Companys segments).



|   |                    
|-- | -------------------
|7. | Accrued Liabilities

Accrued expenses consist of the following at
December 31:

|                              |  |      |        |      |  |   |        | 
|----------------------------- |  | ---- | ------ | ---- |  | - | ------ | 
|                              |  | 2003 |        | 2002
|                              |  |      |        |     
|Bonus                         |  | $    | 10,884 |      |  | $ | 9,307  | 
|Payroll taxes                 |  |      | 1,768  |      |  |   | 1,501  | 
|Employee related costs        |  |      | 16,542 |      |  |   | 15,232 | 
|Commissions                   |  |      | 1,883  |      |  |   | 1,590  | 
|Professional services         |  |      | 3,516  |      |  |   | 3,610  | 
|Acquisition costs (Note 3)    |  |      | 615    |      |  |   | 1,538  | 
|Data center costs             |  |      | 4,752  |      |  |   | 2,135  | 
|Property costs                |  |      | 2,963  |      |  |   | 1,216  | 
|Travel costs                  |  |      | 530    |      |  |   | 465    | 
|Royalties                     |  |      | 5,763  |      |  |   | 2,749  | 
|Sales taxes                   |  |      | 2,853  |      |  |   | 2,418  | 
|Data charges                  |  |      | 6,199  |      |  |   | 6,354  | 
|Franchise/property taxes      |  |      | 102    |      |  |   | 521    | 
|Other discontinued operations |  |      |       |      |  |   | 925    | 
|Other                         |  |      | 3,941  |      |  |   | 3,377  | 
|                              |  |      |        |      |  |   |        | 
|                              |  | $    | 62,311 |      |  | $ | 52,938 | 
|                              |  |      |        |      |  |   |        | 

49



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##### Table of Contents



INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



|   |                    
|-- | -------------------
|8. | Credit Arrangements

In 2001, the Company entered into an unsecured
credit facility for $10,000 with KeyBank National Association.
During 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.



|   |                         
|-- | ------------------------
|9. | 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 2003,
employees purchased approximately 118 shares at a price of
$11.24 per share. At December 31, 2003,
1,832 shares were reserved for future issuance.



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

In 2000, the Company adopted the 2000 Long Term
Incentive Plan (as amended and in effect from time to time, 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. As originally approved
by shareholders, the 2000 Plan had no termination date. On
February 24, 2004, the 2000 Plan was amended to include a
termination date of February 22, 2010. 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, 2003, 2002 and 2001 was as follows:

|                               |           |         |       |                |   |   |       |       | 
|------------------------------ | --------- | ------- | ----- | -------------- | - | - | ----- | ----- | 
|                               |           |         |       | Weighted      
|                               |           |         |       | Average       
|                               |           | Options |       | Exercise Price
|                               |           |         |       |               
|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 |      
|                               | Granted   |         |       | 2,107          |   |   |       | 16.40 | 
|                               | Exercised |         |       | (1,195         | ) |   |       | 7.20  | 
|                               | Canceled  |         |       | (173           | ) |   |       | 12.36 | 
|                               |           |         |       |                |   |   |       |      
|Outstanding, December 31, 2003 |           |         | 9,358 |                |   | $ | 12.15 |      
|                               |           |         |       |                |   |   |       |      
|Exercisable, December 31, 2003 |           |         | 4,259 |                |   | $ | 9.93  |      

50



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##### Table of Contents



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,
2003.

Range of option exercise prices:

|                                         |  |             |       |             |  |         |       |          |  |  |       |  |  |   |       | 
|---------------------------------------- |  | ----------- | ----- | ----------- |  | ------- | ----- | -------- |  |  | ----- |  |  | - | ----- | 
|                                         |  |             |       |            
|                                         |  | Outstanding |       | Exercisable
|                                         |  |             |       |            
|                                         |  |             |       | Weighted    |  |         |       | Weighted
|                                         |  |             |       | Average     |  |         |       | Average 
|                                         |  |             |       | Exercise    |  |         |       | Exercise
|                                         |  | Options     |       | Price       |  | Options |       | Price   
|                                         |  |             |       |             |  |         |       |         
|$2.88 to $4.31 (Avg. life: 6.10 years)   |  |             | 143   |             |  | $       | 3.59  |          |  |  | 115   |  |  | $ | 3.57  | 
|$4.41 to $6.53 (Avg. life: 5.00 years)   |  |             | 499   |             |  |         | 5.01  |          |  |  | 470   |  |  |   | 5.02  | 
|$7.69 to $11.23 (Avg. life: 7.30 years)  |  |             | 4,117 |             |  |         | 8.73  |          |  |  | 2,643 |  |  |   | 8.69  | 
|$12.50 to $18.50 (Avg. life: 8.80 years) |  |             | 4,599 |             |  |         | 16.25 |          |  |  | 1,031 |  |  |   | 16.04 | 
|                                         |  |             |       |             |  |         |       |          |  |  |       |  |  |   |       | 
|                                         |  |             | 9,358 |             |  |         |       |          |  |  | 4,259 |  |  |   |       | 

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:

|                            |  |      |      |      |  |      |      |   |  |   |      |  
|--------------------------- |  | ---- | ---- | ---- |  | ---- | ---- | - |  | - | ---- | -
|                            |  | 2003 |      | 2002 |  | 2001
|                            |  |      |      |      |  |     
|Risk free interest rate     |  |      | 2.00 | %    |  |      | 3.87 | % |  |   | 4.25 | %
|Expected life (in years)    |  |      | 4.00 |      |  |      | 4.00 |   |  |   | 4.00 |  
|Volatility                  |  |      | 61   | %    |  |      | 77   | % |  |   | 90   | %
|Expected dividend yield     |  |      | 0    | %    |  |      | 0    | % |  |   | 0    | %
|Weighted average fair value |  | $    | 8.09 |      |  | $    | 9.52 |   |  | $ | 5.93 |  

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.

|                            |  |      |      |      |  |   |      |  
|--------------------------- |  | ---- | ---- | ---- |  | - | ---- | -
|                            |  | 2003 |      | 2002
|                            |  |      |      |     
|Risk free interest rate     |  |      | 1.20 | %    |  |   | 1.78 | %
|Expected life (in years)    |  |      | 0.50 |      |  |   | 0.47 |  
|Volatility                  |  |      | 25   | %    |  |   | 39   | %
|Expected dividend yield     |  |      | 0    | %    |  |   | 0    | %
|Weighted average fair value |  | $    | 2.64 |      |  | $ | 3.75 |  



| |                            
| | ---------------------------
| | Deferred Stock Compensation

In June 2003, the Company awarded deferred stock
compensation to certain executives under the 2000 Plan. An
aggregate of 75,999 deferred stock units of the Companys
common stock were granted. Under the 2000 Plan, the shares are
available for distribution, at no cost, to these individuals at
the end of a three-year vesting period. The total deferred
compensation cost related to this grant is $1,290, which will be
amortized over a three-year period. As of December 31,
2003, $233 has been expensed. The remaining unamortized deferred
compensation cost at December 31, 2003 is $1,057.

51



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##### Table of Contents



INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



|    |                     
|--- | --------------------
|10. | 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, 2003, no such stock has been
issued.

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.



|    |                              
|--- | -----------------------------
|11. | 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  
|                             |  |               |        |             
|2004                         |  | $             | 12,429 |              |  | $ | 130 | 
|2005                         |  |               | 11,053 |              |  |   |     | 
|2006                         |  |               | 8,660  |              |  |   |     | 
|2007                         |  |               | 7,290  |              |  |   |     | 
|2008                         |  |               | 10,154 |              |  |   |     | 
|Thereafter                   |  |               | 21,077 |              |  |   |    | 
|                             |  |               |        |              |  |   |     | 
|Total minimum lease payments |  | $             | 70,663 |              |  | $ | 130 | 
|                             |  |               |        |              |  |   |     | 

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 $14,251, $10,491, and $9,476
for the years ended December 31, 2003, 2002 and 2001,
respectively.

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 cooperated fully with the SEC. The SEC
staff subsequently notified us of its view that the Company
might have facilitated federal securities laws violations
committed by unidentified other parties and advised us of its
intention to recommend the commencement of an enforcement action
against the Company. None of our officers, directors, or
employees was similarly so notified. We later learned that the
SEC staff was concerned about evaluated prices for a small
number of high-yield municipal bonds provided by the Company in
March through early May 2000 and in July-August 2000. FT
Interactive Data, the Companys principal operating
subsidiary, entered into a settlement with the SEC without
admitting or denying the SECs formal findings. The
settlement is embodied in an administrative order that was
issued by the SEC on December 11, 2003. As reflected in
that order, FT Interactive Data was censured, paid a civil
penalty of $125,000, and was required to implement some new
valuation and record keeping procedures for high-yield municipal
securities and other securities for which market quotations are
not readily. There will not be insignificant costs associated
with FT Interactive Datas increased record keeping
obligations. However, we do not expect the SEC settlement to
have a material effect on our results of operations or financial
condition.

52



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##### Table of Contents



INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

On a separate but related matter, shareholders of
the two Heartland high-yield funds notified us late in 2002 of
their intention to proceed against the Company, even though
neither the funds nor their advisor had chosen to do so. We
understand that the shareholders claims would be related
to the September and October 2000 decreases in the funds
net asset values. While we do not believe that any such claims
would have merit or would materially affect the Companys
results of operations or financial condition, we agreed upon a
resolution with the shareholders counsel. Because it
involves a class claim, the agreed settlement is subject to
court approval. The shareholders filed a motion for approval of
the agreed settlement on February 20, 2004. The overall
settlement terms are subject to court approval and will require
us to pay $1 million to shareholders of the two Heartland
high-yield funds. After adherence to standard class action
settlement procedures, we expect that the settlement will be
approved. The amount of the settlement is expected to be fully
covered by insurance. If approval were not forthcoming and the
shareholders were to proceed against the Company, we do not
believe that the matter would materially affect our 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. We do not
expect that the outcome of any of these matters will have a
material adverse impact on our financial condition or results of
operations.



|    |             
|--- | ------------
|12. | Income Taxes

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

|         |  |      |         |      |  |      |         |  |  |   |        | 
|-------- |  | ---- | ------- | ---- |  | ---- | ------- |  |  | - | ------ | 
|         |  | 2003 |         | 2002 |  | 2001
|         |  |      |         |      |  |     
|Domestic |  | $    | 98,085  |      |  | $    | 83,035  |  |  | $ | 14,672 | 
|Foreign  |  |      | 18,364  |      |  |      | 17,186  |  |  |   | 13,863 | 
|         |  |      |         |      |  |      |         |  |  |   |        | 
|Total    |  | $    | 116,449 |      |  | $    | 100,221 |  |  | $ | 28,535 | 
|         |  |      |         |      |  |      |         |  |  |   |        | 

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

|          |         |      |        |        |   |      |        |        |  |   |        |        |  
|--------- | ------- | ---- | ------ | ------ | - | ---- | ------ | ------ |  | - | ------ | ------ | -
|          |         | 2003 |        | 2002   |   | 2001
|          |         |      |        |        |   |     
|Current:  |         |      |        |        |   |      |        |        |  |   |        |       
|          | Federal |      | $      | 31,653 |   |      | $      | 25,142 |  |   | $      | 21,369 |  
|          | State   |      |        | 9,194  |   |      |        | 7,600  |  |   |        | 5,780  |  
|          | Foreign |      |        | 5,763  |   |      |        | 4,426  |  |   |        | 5,874  |  
|          |         |      |        |        |   |      |        |        |  |   |        |       
|          |         |      | 46,610 |        |   |      | 37,168 |        |  |   | 33,023 |       
|          |         |      |        |        |   |      |        |        |  |   |        |       
|Deferred: |         |      |        |        |   |      |        |        |  |   |        |       
|          | Federal |      |        | (1,803 | ) |      |        | 1,317  |  |   |        | (7,600 | )
|          | State   |      |        | (334   | ) |      |        | 336    |  |   |        | (765   | )
|          | Foreign |      |        | (225   | ) |      |        | 667    |  |   |        | (435   | )
|          |         |      |        |        |   |      |        |        |  |   |        |       
|          |         |      | (2,362 | )      |   |      | 2,320  |        |  |   | (8,800 | )     
|          |         |      |        |        |   |      |        |        |  |   |        |       
|          |         | $    | 44,248 |        |   | $    | 39,488 |        |  | $ | 24,223 |       
|          |         |      |        |        |   |      |        |        |  |   |        |       

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

53



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INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

components of the Companys deferred income
tax assets (liabilities) recognized in the financial
statements are as follows at December 31:

|                                 |  |      |         |      |  |   |         |  
|-------------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|                                 |  | 2003 |         | 2002
|                                 |  |      |         |     
|Current deferred tax:            |  |      |         |      |  |   |         |  
|Accrued expenses                 |  | $    | 3,930   |      |  | $ | 3,976   |  
|Depreciation                     |  |      | (1,751  | )    |  |   | 24      |  
|Other                            |  |      | 1,033   |      |  |   | 1,475   |  
|Accounts receivable allowance    |  |      | 1,428   |      |  |   | 1,012   |  
|                                 |  |      |         |      |  |   |         |  
|                                 |  |      | 4,640   |      |  |   | 6,487   |  
|Long term deferred tax:          |  |      |         |      |  |   |         |  
|Deferred compensation            |  |      | 504     |      |  |   |        |  
|Other intangible assets          |  |      | (6,371  | )    |  |   | 9,654   |  
|Non compete agreements           |  |      | 20,007  |      |  |   | 22,446  |  
|Net operating loss carryforwards |  |      | 4,560   |      |  |   | 3,034   |  
|Customer lists                   |  |      | (45,611 | )    |  |   | (38,439 | )
|Sale of business                 |  |      | 6,619   |      |  |   | 6,634   |  
|                                 |  |      |         |      |  |   |         |  
|                                 |  |      | (20,292 | )    |  |   | 3,329   |  
|Valuation allowance              |  |      | (8,912  | )    |  |   | (6,634  | )
|                                 |  |      |         |      |  |   |         |  
|                                 |  |      | (29,204 | )    |  |   | (3,305  | )
|                                 |  |      |         |      |  |   |         |  
|Total                            |  | $    | (24,564 | )    |  | $ | 3,182   |  
|                                 |  |      |         |      |  |   |         |  

The long term deferred tax asset of $6,619 at
December 31, 2003 was recorded concurrently with the sale
of MarketWatch (see Note 10). 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 $2,267 of pre-acquisition federal
net operating loss carryforwards related to Data Broadcasting
Corporation. IRS regulations and certain state regulations limit
the use of net operating loss carryforwards. The Company
believes based upon forecasts of future taxable income, that
these net operating loss carryforwards will be fully utilized.
In addition, the Company has $2,293 of state net operating loss
carryforwards against which a full valuation allowance has been
provided since the utilization of the next operating losses is
dependent upon state tax limitations.

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

|                                                  |  |              |      |      |  |      |      |   |  |  |      |  
|------------------------------------------------- |  | ------------ | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                                                  |  |             
|                                                  |  | Years Ended 
|                                                  |  | December 31,
|                                                  |  |             
|                                                  |  | 2003         |      | 2002 |  | 2001
|                                                  |  |              |      |      |  |     
|Statutory U.S. federal tax rate                   |  |              | 35.0 | %    |  |      | 35.0 | % |  |  | 35.0 | %
|State taxes, net of federal tax benefit           |  |              | 4.9  |      |  |      | 5.1  |   |  |  | 11.4 |  
|Foreign income taxed at different statutory rates |  |              | (2.0 | )    |  |      | (.9  | ) |  |  | (2.4 | )
|Nondeductible goodwill/other                      |  |              |     |      |  |      |     |   |  |  | 38.0 |  
|Other, net                                        |  |              | .1   |      |  |      | .2   |   |  |  | 3.0  |  
|                                                  |  |              |      |      |  |      |      |   |  |  |      |  
|Effective tax rate                                |  |              | 38.0 | %    |  |      | 39.4 | % |  |  | 85.0 | %
|                                                  |  |              |      |      |  |      |      |   |  |  |      |  

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INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The Company currently provides income taxes on
the earnings of foreign subsidiaries and associated companies to
the extent these earnings are currently taxable or expected to
be remitted. Taxes have not been provided on approximately
$40,000 of accumulated unremitted earnings, which are expected
to remain invested indefinitely.



|    |                 
|--- | ----------------
|13. | 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 $3,307, $2,774, and
$1,590 for the years ended December 31, 2003, 2002 and
2001, 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 made this
contribution in the second quarter of 2003. In 2003, the Company
recorded an expense of $1,322 for this benefit and the
contribution was made in February 2004.



| |                           
| | --------------------------
| | 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.

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INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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

Obligations and Funded Status:

|                                                                          |  |              |        |      |  |   |        |  
|------------------------------------------------------------------------- |  | ------------ | ------ | ---- |  | - | ------ | -
|                                                                          |  |             
|                                                                          |  | Year Ended  
|                                                                          |  | December 31,
|                                                                          |  |             
|                                                                          |  | 2003         |        | 2002
|                                                                          |  |              |        |     
|Change in benefit obligation:                                             |  |              |        |      |  |   |        |  
|Benefit obligation at beginning of year                                   |  | $            | 8,502  |      |  | $ | 6,484  |  
|Service cost                                                              |  |              |       |      |  |   | 137    |  
|Interest cost                                                             |  |              | 543    |      |  |   | 446    |  
|Amendments                                                                |  |              | 32     |      |  |   | 14     |  
|Impact of change in measurement date                                      |  |              |       |      |  |   | 116    |  
|Actuarial loss                                                            |  |              | 653    |      |  |   | 1,616  |  
|Benefits paid                                                             |  |              | (369   | )    |  |   | (311   | )
|                                                                          |  |              |        |      |  |   |        |  
|Benefit obligation at end of year                                         |  | $            | 9,361  |      |  | $ | 8,502  |  
|Change in plan assets:                                                    |  |              |        |      |  |   |        |  
|Fair value of plan assets at beginning of year                            |  | $            | 4,111  |      |  | $ | 2,598  |  
|Actual return on plan assets                                              |  |              | 980    |      |  |   | (460   | )
|Impact of change in measurement date                                      |  |              |       |      |  |   | 179    |  
|Employer contribution                                                     |  |              | 902    |      |  |   | 2,105  |  
|Benefits paid                                                             |  |              | (368   | )    |  |   | (311   | )
|                                                                          |  |              |        |      |  |   |        |  
|Fair value of plan assets at end of period                                |  | $            | 5,625  |      |  | $ | 4,111  |  
|                                                                          |  |              |        |      |  |   |        |  
|Reconciliation of funded status:                                          |  |              |        |      |  |   |        |  
|Benefit obligation at end of year                                         |  | $            | 9,361  |      |  | $ | 8,502  |  
|Fair value of plan assets at end of period                                |  |              | 5,625  |      |  |   | 4,111  |  
|Funded status at end of period                                            |  |              | 3,736  |      |  |   | 4,391  |  
|Unrecognized prior service cost (benefit)                                 |  |              | (33    | )    |  |   | 4      |  
|Unrecognized net actuarial gain                                           |  |              | (2,695 | )    |  |   | (2,695 | )
|                                                                          |  |              |        |      |  |   |        |  
|Net amount recognized                                                     |  | $            | 1,008  |      |  | $ | 1,700  |  
|Amounts recognized in the statement of financial
    position consist of: |  |              |        |      |  |   |        |  
|Accrued benefit cost                                                      |  |              | 3,736  |      |  |   | 4,391  |  
|Intangible assets                                                         |  |              | (33    | )    |  |   | 4      |  
|Accumulated other comprehensive loss                                      |  |              | (2,695 | )    |  |   | (2,695 | )
|                                                                          |  |              |        |      |  |   |        |  
|Net amount recognized                                                     |  | $            | 1,008  |      |  | $ | 1,700  |  

56



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INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

|                                         |  |                         |      |      |  |      |      |   |  |   |       |  
|---------------------------------------- |  | ----------------------- | ---- | ---- |  | ---- | ---- | - |  | - | ----- | -
|                                         |  |                        
|                                         |  | Year Ended December 31,
|                                         |  |                        
|                                         |  | 2003                    |      | 2002 |  | 2001
|                                         |  |                         |      |      |  |     
|Components of net periodic benefit cost: |  |                         |      |      |  |      |      |   |  |   |       |  
|Service cost                             |  | $                       |     |      |  | $    | 137  |   |  | $ | 2,127 |  
|Interest cost                            |  |                         | 543  |      |  |      | 446  |   |  |   | 427   |  
|Expected return on plan assets           |  |                         | (340 | )    |  |      | (282 | ) |  |   | (160  | )
|Amortization of prior service costs      |  |                         | 3    |      |  |      | (1   | ) |  |   | (21   | )
|Recognized actuarial loss                |  |                         | 147  |      |  |      |     |   |  |   |      |  
|                                         |  |                         |      |      |  |      |      |   |  |   |       |  
|Net periodic benefit cost                |  | $                       | 353  |      |  | $    | 300  |   |  | $ | 2,373 |  

The accumulated benefit obligation for all
defined benefit pension plans was $9,361, $8,500 and $6,484 at
December 31, 2003, 2002 and 2001, respectively.

Information for pension plans with an accumulated
benefit obligation in excess of plan assets:

|                               |  |              |       |      |  |   |       | 
|------------------------------ |  | ------------ | ----- | ---- |  | - | ----- | 
|                               |  |             
|                               |  | Year Ended  
|                               |  | December 31,
|                               |  |             
|                               |  | 2003         |       | 2002
|                               |  |              |       |     
|Projected benefit obligation   |  | $            | 9,361 |      |  | $ | 8,502 | 
|Accumulated benefit obligation |  |              | 9,361 |      |  |   | 8,500 | 
|Fair value of plan assets      |  |              | 5,625 |      |  |   | 4,111 | 

Additional Information:

|                                                                                    |  |                         |   |      |  |      |        |   |  |   |   | 
|----------------------------------------------------------------------------------- |  | ----------------------- | - | ---- |  | ---- | ------ | - |  | - | - | 
|                                                                                    |  |                        
|                                                                                    |  | Year Ended December 31,
|                                                                                    |  |                        
|                                                                                    |  | 2003                    |   | 2002 |  | 2001
|                                                                                    |  |                         |   |      |  |     
|Increase/(decrease) in minimum liability included
    in other comprehensive income |  | $                       |  |      |  | $    | (2,695 | ) |  | $ |  | 

Weighted average assumptions used to determine
benefit obligations at December 31:

|                              |  |              |      |      |  |  |      |  
|----------------------------- |  | ------------ | ---- | ---- |  |  | ---- | -
|                              |  |             
|                              |  | Year Ended  
|                              |  | December 31,
|                              |  |             
|                              |  | 2003         |      | 2002
|                              |  |              |      |     
|Discount rate                 |  |              | 6.10 | %    |  |  | 6.75 | %
|Rate of compensation increase |  |              | 4.50 | %    |  |  | 4.50 | %

Weighted average assumptions used to determine
net periodic benefit cost for years ended December 31:

|                               |  |              |      |      |  |  |      |  
|------------------------------ |  | ------------ | ---- | ---- |  |  | ---- | -
|                               |  |             
|                               |  | Year Ended  
|                               |  | December 31,
|                               |  |             
|                               |  | 2003         |      | 2002
|                               |  |              |      |     
|Discount rate                  |  |              | 6.75 | %    |  |  | 7.25 | %
|Expected return on plan assets |  |              | 8.50 | %    |  |  | 8.50 | %
|Rate of compensation increase  |  |              | 4.50 | %    |  |  | 4.50 | %

The Companys expected long-term rate of
return on plan assets is reviewed annually, taking into
consideration our asset allocation, historical returns on the
types of assets held and the current economic environment.

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INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Plan Assets:

The Companys pension plan weighted-average
asset allocation at December 31, 2003 and 2002 by asset
category are as follows:

|                  |       |              |    |      |   |  |    |     |  
|----------------- | ----- | ------------ | -- | ---- | - |  | -- | --- | -
|                  |       |             
|                  |       | Year Ended  
|                  |       | December 31,
|                  |       |             
|                  |       | 2003         |    | 2002
|                  |       |              |    |     
|Equity securities |       |              | 62 | %    |   |  | 60 | %  
|Debt securities   |       |              | 38 | %    |   |  | 40 | %  
|                  |       |              |    |      |   |  |    |    
|                  | Total |              |    | 100  | % |  |    | 100 | %
|                  |       |              |    |      |   |  |    |    

It is the Companys intention to meet the
pension obligations as they come due. The Company employs
advisors to assist it in the determination of optimum asset
allocation.



| |                      
| | ---------------------
| | 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, 2003, 2002 and 2001 was $3,281,
$2,242, and $1,870, respectively.

Certain of the Companys employees
participate in Pearson equity based employee benefit plans. For
the years ended December 31, 2003, 2002 and 2001, the
Company recorded costs of $0, $0 and $797, respectively, related
to the participation in these plans.



|    |                           
|--- | --------------------------
|14. | 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), travel 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. During 2003 the Company ended some of the
services provided by Pearson and moved them in-house or to a
third party provider. These included billing, accounts payable,
accounts receivable and payroll services. A majority of the
charges for services to and from Pearson and its affiliates are
at cost. Prior to entering into any service arrangement with
Pearson, we assess whether it would be more advantageous to
obtain such services from a third party. 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

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INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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. The independent committee
approves any such amendments. From time to time, we assess the
ongoing relationships between the Company and Pearson, and if we
determine that it would be more advantageous for us to secure
any such services outside of Pearson, we pursue doing so.

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 independent committee of the Board of Directors
on behalf of the Company approved the purchase.

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, 2003, 2002 and 2001, the Company incurred net
(income)/ expense of ($22), $413, and $1,969 for these services
provided to Pearson and received from Pearson.

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 and $0 and $53, respectively, for the
twelve months ended December 31, 2003. In 2002, the Company
entered into a revenue sharing agreement with MarketWatch, the
Company paid MarketWatch $35 and $38 respectively for the twelve
months ended December 31, 2003 and 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 and in 2003 charged
MarketWatch $16, for other services and these amounts were
recorded as reductions of the gross expenses incurred by the
Company.



|    |                    
|--- | -------------------
|15. | 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.                                                                                                                                                                                                      

59



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INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Segment financial information is as follows (in
thousands):

|                              |                              |       |         |         |         |      |         |         |         |   |         |         |         | 
|----------------------------- | ---------------------------- | ----- | ------- | ------- | ------- | ---- | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                              |                              | 2003  |         | 2002    |         | 2001
|                              |                              |       |         |         |         |     
|Service revenues              |                              |       |         |         |         |      |         |         |         |   |         |        
|Institutional                 |                              | $     | 397,412 |         |         | $    | 330,995 |         |         | $ | 291,010 |        
|Retail                        |                              |       | 45,278  |         |         |      | 44,020  |         |         |   | 48,992  |        
|                              |                              |       |         |         |         |      |         |         |         |   |         |        
|                              |                              | Total |         | $       | 442,690 |      |         | $       | 375,015 |   |         | $       | 340,002 | 
|                              |                              |       |         |         |         |      |         |         |         |   |         |        
|Income (loss) from operations |                              |       |         |         |         |      |         |         |         |   |         |        
|                              | Institutional                |       | $       | 145,887 |         |      | $       | 127,505 |         |   | $       | 109,014 |        
|                              | Retail                       |       |         | 6,491   |         |      |         | 3,352   |         |   |         | 4,080   |        
|                              | Corporate and unallocated(1) |       |         | (37,029 | )       |      |         | (32,625 | )       |   |         | (87,441 | )      
|                              |                              |       |         |         |         |      |         |         |         |   |         |        
|                              |                              | Total |         | $       | 115,349 |      |         | $       | 98,232  |   |         | $       | 25,653  | 
|                              |                              |       |         |         |         |      |         |         |         |   |         |        
|Identifiable assets           |                              |       |         |         |         |      |         |         |         |   |         |        
|                              | Institutional                |       | $       | 588,436 |         |      | $       | 357,032 |         |   |         |         |        
|                              | Retail                       |       |         | 11,640  |         |      |         | 12,003  |         |   |         |         |        
|                              | Corporate and unallocated    |       |         | 310,246 |         |      |         | 396,192 |         |   |         |         |        
|                              |                              |       |         |         |         |      |         |         |         |   |         |        
|                              |                              | Total |         | $       | 910,322 |      |         | $       | 765,227 |   |         |         |         | 
|                              |                              |       |         |         |         |      |         |         |         |   |         |        



---



|    |                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Corporate and unallocated loss from operations in
    2001 primarily consists of goodwill and intangible asset
    amortization and corporate selling, general and administrative
    expenses. Corporate and unallocated losses from operations in
    2002 and 2003 primarily consists of intangible asset
    amortization and corporate selling, general and administrative
    expenses.

The Companys geographic distribution is as
follows:

|                  |                          |       |   |         |         |      |   |         |         |  |   |         |         | 
|----------------- | ------------------------ | ----- | - | ------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                  |                          | 2003  |   | 2002    |         | 2001
|                  |                          |       |   |         |         |     
|Revenues          |                          |       |   |         |         |      |   |         |         |  |   |        
|                  | United States and Canada |       | $ | 346,533 |         |      | $ | 302,128 |         |  | $ | 268,019 |        
|                  | Europe                   |       |   | 89,990  |         |      |   | 67,913  |         |  |   | 67,384  |        
|                  | Asia                     |       |   | 6,167   |         |      |   | 4,974   |         |  |   | 4,599   |        
|                  |                          |       |   |         |         |      |   |         |         |  |   |        
|                  |                          | Total |   | $       | 442,690 |      |   | $       | 375,015 |  |   | $       | 340,002 | 
|                  |                          |       |   |         |         |      |   |         |         |  |   |        
|Long Lived assets |                          |       |   |         |         |      |   |         |         |  |   |        
|                  | United States and Canada |       | $ | 564,631 |         |      | $ | 466,356 |         |  |   |         |        
|                  | Europe                   |       |   | 124,275 |         |      |   | 77,886  |         |  |   |         |        
|                  | Asia                     |       |   | 2,579   |         |      |   | 1,965   |         |  |   |         |        
|                  |                          |       |   |         |         |      |   |         |         |  |   |        
|                  |                          | Total |   | $       | 691,485 |      |   | $       | 546,207 |  |   |         |         | 
|                  |                          |       |   |         |         |      |   |         |         |  |   |        

60



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##### Table of Contents



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, 2003. 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.

|                             |  |                |        |              |  |               |         |              |  |      |         |  |  |   |         |  |  |   |         | 
|---------------------------- |  | -------------- | ------ | ------------ |  | ------------- | ------- | ------------ |  | ---- | ------- |  |  | - | ------- |  |  | - | ------- | 
|                             |  |                |        |             
|                             |  | Quarters Ended |        | Year Ended  
|                             |  |                |        | December 31,
|                             |  | March 31,      |        | June 30,     |  | September 30, |         | December 31, |  | 2003
|                             |  |                |        |              |  |               |         |              |  |     
|Revenue                      |  | $              | 99,477 |              |  | $             | 111,460 |              |  | $    | 111,334 |  |  | $ | 120,419 |  |  | $ | 442,690 | 
|Total costs and expenses     |  |                | 70,329 |              |  |               | 82,824  |              |  |      | 82,253  |  |  |   | 91,935  |  |  |   | 327,341 | 
|Income from operations       |  |                | 29,148 |              |  |               | 28,636  |              |  |      | 29,081  |  |  |   | 28,484  |  |  |   | 115,349 | 
|Other income, net            |  |                | 510    |              |  |               | 208     |              |  |      | 193     |  |  |   | 189     |  |  |   | 1,100   | 
|Provision for income taxes   |  |                | 11,418 |              |  |               | 11,105  |              |  |      | 11,271  |  |  |   | 10,454  |  |  |   | 44,248  | 
|Net income                   |  |                | 18,240 |              |  |               | 17,739  |              |  |      | 18,003  |  |  |   | 18,219  |  |  |   | 72,201  | 
|Net income per share Basic   |  | $              | 0.20   |              |  | $             | 0.19    |              |  | $    | 0.19    |  |  | $ | 0.20    |  |  | $ | 0.78    | 
|Net income per share Diluted |  | $              | 0.19   |              |  | $             | 0.19    |              |  | $    | 0.19    |  |  | $ | 0.19    |  |  | $ | 0.76    | 

|                             |  |                |        |              |  |               |        |              |  |      |        |  |  |   |        |  |  |   |         | 
|---------------------------- |  | -------------- | ------ | ------------ |  | ------------- | ------ | ------------ |  | ---- | ------ |  |  | - | ------ |  |  | - | ------- | 
|                             |  |                |        |             
|                             |  | 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    | 

61



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##### Table of Contents



INTERACTIVE DATA CORPORATION AND
SUBSIDIARIES

For the Years Ended December 31, 2003,
2002, and 2001


Schedule VIII Valuation and Qualifying
Accounts

|                                |                              |                |   |           |  |            |   |            |  |           |   |     |      |  |   |        |  |  |   |       | 
|------------------------------- | ---------------------------- | -------------- | - | --------- |  | ---------- | - | ---------- |  | --------- | - | --- | ---- |  | - | ------ |  |  | - | ----- | 
|                                |                              | Balance at     |   |           |  | Charged to |   |            |  | Balance  
|                                |                              | Beginning      |   |           |  | Other      |   |            |  | at End of
|Description                     |                              | of Period      |   | Additions |  | Accounts   |   | Write Offs |  | Period   
|                                |                              |                |   |           |  |            |   |            |  |          
|                                |                              |               
|                                |                              | (In thousands)
|Allowance for doubtful accounts |                              |                |   |           |  |            |   |            |  |           |   |     |      |  |   |        |  |  |   |      
|                                | Year Ended December 31, 2003 |                | $ | 4,950     |  |            | $ | 3,936      |  |           | $ | 294 | (A)  |  | $ | 2,713  |  |  | $ | 6,467 | 
|                                | Year Ended December 31, 2002 |                |   | 5,739     |  |            |   | 9,257      |  |           |   | 261 | (A)  |  |   | 10,307 |  |  |   | 4,950 | 
|                                | Year Ended December 31, 2001 |                |   | 4,697     |  |            |   | 7,548      |  |           |   | (51 | )(A) |  |   | 6,455  |  |  |   | 5,739 | 



---



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






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

None.






|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

(a) Evaluation of Disclosure Controls and
Procedures.     Our management,
with the participation of our Chief Executive Officer, or CEO,
and Chief Financial Officer, or CFO, evaluated the effectiveness
of our disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange
Act) as of December 31, 2003. Based on this evaluation, our
CEO and CFO concluded that, as of December 31, 2003, our
disclosure controls and procedures were (1) designed to
ensure that material information relating to us, including our
consolidated subsidiaries, is made known to our CEO and CFO by
others within those entities, particularly during the period in
which this report was being prepared and (2) effective, in
that they provide reasonable assurance that information required
to be disclosed by us in the reports that we file or submit
under the Securities Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the
Securities and Exchange Commissions rules and forms.

(b) Changes in Internal
Controls.     No change in our
internal control over financial reporting (as defined in
Rules 13a-15(f) and 15d-15(f) under the Securities Exchange
Act) occurred during the fiscal quarter ended December 31,
2003 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.




PART III






|         |                                                       
|-------- | ------------------------------------------------------
|Item 10. | Directors and Executive Officers of the
    Registrant

That portion of our 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 our 2004 Annual Meeting of Stockholders is
hereby incorporated by reference.






|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation

That portion of our definitive Proxy Statement
appearing under the caption Executive Compensation
to be filed with the Commission and to be used in connection
with our 2004 Annual Meeting of Stockholders is hereby
incorporated by reference.

62



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##### Table of Contents








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

That portion of our 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 our 2004 Annual
Meeting of Stockholders is hereby incorporated by reference.

Equity Compensation Plan Information

The following provides certain aggregate
information with respect to all of our equity compensation plans
in effect as of December 31, 2003:

|                                                              |  |                      |           |                      |  |                       |       |  |  |  |           |    
|------------------------------------------------------------- |  | -------------------- | --------- | -------------------- |  | --------------------- | ----- |  |  |  | --------- | ---
|                                                              |  |                      |           |                      |  | Number of Securities 
|                                                              |  |                      |           |                      |  | Remaining Available  
|                                                              |  |                      |           |                      |  | for Future Issuance  
|                                                              |  | Number of Securities |           |                      |  | Under Equity         
|                                                              |  | to be Issued Upon    |           | Weighted Average     |  | Compensation Plans   
|                                                              |  | Exercise of          |           | Exercise Price of    |  | (Excluding Securities
|                                                              |  | Outstanding Options, |           | Outstanding Options, |  | Reflected in First   
|Plan Category                                                 |  | Warrants and Rights  |           | Warrants and Rights  |  | Column)              
|                                                              |  |                      |           |                      |  |                      
|Equity Compensation Plans Approved by
    Securityholders(1)  |  |                      | 9,358,468 |                      |  | $                     | 12.15 |  |  |  | 9,203,873 | (2)
|Equity Compensation Plans not Approved by
    Securityholders |  |                      |          |                      |  |                       |      |  |  |  |          |    
|Total                                                         |  |                      | 9,358,468 |                      |  | $                     | 12.15 |  |  |  | 9,203,873 | (2)



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | These plans consist of the our 2000 Long Term
    Incentive Plan, as amended, the Data Broadcasting Corporation
    Stock Option Plan as amended through September 13, 1994,
    the our 2001 Employee Stock Purchase Plan, and the
    Companys UK Savings Related Share Option Plan.                                                                                                                                                                                                                                                                                   
|   
|(2) | Represents shares of common stock reserved for
    issuance under our 2001 Employee Stock Purchase Plan, the UK
    Savings Related Share Option and shares available for future
    issuance under our 2000 Long-Term Incentive Plan. The number of
    shares available under our 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 our
    common stock outstanding at the date of grant.






|         |                                                   
|-------- | --------------------------------------------------
|Item 13. | Certain Relationships and Related
    Transactions

That portion of our 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 our
2004 Annual Meeting of Stockholders is hereby incorporated by
reference.






|         |                                           
|-------- | ------------------------------------------
|Item 14. | Principal Accountant Fees and
    Services

That portion of our definitive Proxy Statement
for the 2004 Annual Meeting of Stockholders is appearing under
the caption Principal Accountant Fees and Services
is incorporated herein by reference.




PART IV






|         |                                                                    
|-------- | -------------------------------------------------------------------
|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.

63



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##### Table of Contents





| |                                        
| | ---------------------------------------
| | 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.)
    (Confidential treatment granted as to certain portions.)
|        | 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.)**                                                                                                                                                                                                                                                                                                                        
|        | 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                      |  | 2004 Amendment to Interactive Data Corporation
    2000 Long-Term Incentive Plan.                                                                                                                                                                                                                                                                                                                                                                                           
|        | 10 | .6                      |  | 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 | .7                      |  | 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 | .8                      |  | 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 | .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.)**                                                                                                                                                                                                                                                                                        

64



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##### Table of Contents



|        |    |                         |  |                                                                                                                                                                                                                                            
|------- | -- | ----------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Exhibits
|        |    |                        
|        | 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.                                                                                                                                                                                                     
|        | 31 | .1                      |  | Certification of Chief Executive Officer pursuant
    to Exchange Act Rules 13a-14 or 15d-14, as adopted pursuant
    to Section 302 of Sarbanes-Oxley Act of 2002.                                                                        
|        | 31 | .2                      |  | Certification of Chief Financial Officer pursuant
    to Exchange Act Rules 13a-14 or 15d-14, as adopted pursuant
    to Section 302 of Sarbanes-Oxley Act of 2002.                                                                        
|        | 32 | .1                      |  | Certification of Chief Executive Officer pursuant
    to Exchange Act Rules 13a-14(b) or 15d-14(b) and
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of Sarbanes-Oxley Act of 2002.                                   
|        | 32 | .2                      |  | Certification of Chief Financial Officer pursuant
    to Exchange Act Rules 13a-14(b) or 15d-14(b) and
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of Sarbanes-Oxley Act of 2002.                                   



---



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



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

A.     Reports on
Form 8-K

On October 23, 2003, we furnished a Current
Report on Form 8-K, under Items 7 and 12, regarding
our Press Release reporting our results of operations and
financial condition for the third quarter of 2003.

On December 11, 2003, we issued a press
release announcing that our major operating division; FT
Interactive Data had entered into a settlement with the
Securities and Exchange Commission regarding FT Interactive
Datas provision of evaluated prices of securities held by
two high-yield municipal bond funds managed by the Heartland
Funds Group.

65



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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 15, 2004

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 15, 2004.

|                                           |  |                                                                        |  | 
|------------------------------------------ |  | ---------------------------------------------------------------------- |  | 
|                                           |  |                                                                       
|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                                                              

66



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##### Table of Contents



|                                     |  |          |  | 
|------------------------------------ |  | -------- |  | 
|                                     |  |         
|Signature                            |  | Title   
|                                     |  |         
|                                    
|/s/ CARL SPIELVOGELCarl Spielvogel   |  | Director
|                                    
|/s/ ALLAN R. TESSLERAllan R. Tessler |  | Director

67