##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-K
  ANNUAL REPORT 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 1934For the fiscal year ended
    December 31, 2005ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          
    to   Commission file number
    001-31555
 Interactive Data
    Corporation
 (Exact name of registrant as
    specified in its charter)
  Delaware(State or other
    jurisdiction of
    Incorporation or organization)

13-3668779(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) 687-8500
  Securities registered pursuant to Section 12(b) of the
    Act:
   Title of Each Class

Name of Each Exchange on Which
    Registeredcommon stock, $.01 par value
    per share

New York Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act: None
  þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  þ o o
  Rule 12b-2 o þ
      Documents
    Incorporated by Reference
  Form 10-K




---



##### 



TABLE OF
    CONTENTS
  PagePART I




1Item 1.

Business


1Item 1A.

Risk Factors


11Item 1B.

Unresolved Staff
    Comments


14Item 2.

Properties


15Item 3.

Legal
    Proceedings


16Item 4.

Submission of
    Matters to a Vote of Security Holders


16PART II




16Item 5.

Market for
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


16Item 6.

Selected Financial
    Data


17Item 7.

Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


18Item 7A.

Quantitative and
    Qualitative Disclosures about Market Risk


36Item 8.

Financial
    Statements and Supplementary Data


38Item 9.

Changes In and
    Disagreements With Accountants on Accounting and Financial
    Disclosure


71Item 9A.

Controls and
    Procedures


71Item 9B.

Other
    Information


71PART III




72Item 10.

Directors and
    Executive Officers of the Registrant


72Item 11.

Executive
    Compensation


72Item 12.

Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters


72Item 13.

Certain
    Relationships and Related Transactions


72Item 14.

Principal
    Accountant Fees and Services


73PART IV




73Item 15.

Exhibits and
    Financial Statement Schedules


73Ex-10.8 Form of Non-Qualified Option Grant CertificateEx-10.27 Amendment No. 5 to Management Services AgreementEx-21 Subisidiaries of the registrantEx-23 Consent of PricewaterhouseCoopers LLPEx-31.1 Section 302 Certification of C.E.O.Ex-31.2 Section 302 Certification of C.F.O.Ex-32.1 Section 906 Certification of C.E.O.Ex-32.2 Section 906 Certification of C.F.O.   i




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##### Table of Contents



PART I  Item 1.
    Business  OVERVIEW
      Institutional
    Services
    FT Interactive Data. end-of-day
  ComStock.
  CMS BondEdge.
  Active
    Trader Services
    eSignal.
  tm tm ® tm
 1




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##### Table of Contents



Form 10-K.
  Corporate
    History
  end-of-day
    
    In 2002, we acquired certain assets from Merrill Lynch, Pierce,
    Fenner & Smith Incorporated used in its Securities
    Pricing Service business.
    In 2003, we acquired from The McGraw-Hill Companies, Inc. the
    stock of S&P ComStock, Inc., and the non-US assets of
    certain related businesses in the United Kingdom, France,
    Australia, Singapore and Hong Kong, collectively referred to as
    ComStock.
    In 2003, we acquired the real-time datafeed customer base of
    HyperFeed Technologies, Inc., a provider of enterprise-wide
    real-time data processing and transaction technology software
    and services.
    In 2004, we acquired the assets of FutureSource, LLC, and its
    subsidiaries, or FutureSource, a leading provider of real-time
    futures and commodities data.
    In December 2005, we acquired approximately 95.1% of the stock
    of IS.Teledata AG and its subsidiaries, or IS.Teledata, a
    leading provider of managed market data solutions that aggregate
    and display customized financial content. We subsequently
    acquired an additional 3.6% of IS.Teledata shares from minority
    shareholders, increasing our total ownership in IS.Teledata to
    approximately 98.7% as of March 3, 2006.
    In March 2006, we acquired the assets of Quote.com and certain
    other related assets from Lycos, Inc. These assets include
    subscription-based services for active traders, QCharts and
    LiveCharts, and financial websites, Quote.com and RagingBull.com.  Industry
    Background
     2




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##### Table of Contents



Services
    and Customers
    Institutional
    Services
    FT
    Interactive Data
  end-of-day
  hard-to-value, hard-to-obtain
 3




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##### Table of Contents



end-of-day
  computer-to-computer
  hard-to-value
  ComStock
     4




---



##### Table of Contents



CMS
    BondEdge
    ®
    Active
    Trader Services
   5




---



##### Table of Contents



eSignal
      ® ®
    year-to-year,
  Business
    Strategy
      Focus on High-Value Services. hard-to-value hard-to-obtain
 6




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##### Table of Contents



Expand into Adjacent Markets. end-of-day
  Extend Our Reach Geographically.
      Marketing
        Institutional
    Services
    on-site
 7




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##### Table of Contents



Active
    Trader Services
    Competition
    
    The timeliness, reliability, quality and breadth of coverage
    associated with our data and related services compared with
    those of our competitors;
    Our ability to expand our data content offerings to meet the
    current and evolving needs of our customers;
    Our ability to deliver market data services using a variety of
    delivery platforms and technologies, and easily and
    cost-effectively integrate this content into the operational
    workflow of our customers;
    Our ability to launch new services to both expand and strengthen
    our customer base; and
    The quality of our customer service and support.  Institutional
    Services
      Active
    Trader Services
   8




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##### Table of Contents



Technology
    Infrastructure
      Intellectual
    Property
        Geographic
    Areas
   9




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##### Table of Contents



2005


2004


2003(In thousands)United States

$
416,151


$
382,242


$
346,457United Kingdom


64,820



60,246



62,783All other European countries and
    Canada


50,934



33,876



27,050Asia Pacific


10,962



8,201



6,400Total

$
542,867


$
484,565


$
442,690     2005


2004(In thousands)United States

$
549,128


$
568,435United Kingdom


119,213



134,363All other European countries


54,416



Asia Pacific


4,504



2,654Total

$
727,261


$
705,452   Employees
    Regulation
        Internet
    Address, SEC Reports and NYSE Reports
  Form 10-K. Form 10-K, Form 10-Q Form 8-K,
   10




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##### Table of Contents



Executive
    Officers of the Registrant
  Name

Age

Office Held with
    CompanyStuart J. Clark


58



President and Chief Executive
    OfficerSteven G. Crane


49



Executive Vice President and Chief
    Financial OfficerAndrea H. Loew


48



Vice President, General Counsel
    and Corporate SecretaryJohn L. King


55



Chief Operating OfficerRaymond L. DArcy


53



President, Sales, Marketing and
    Institutional Business Development   Stuart J. Clark
  Steven G. Crane
  Andrea H. Loew
  John L. King
  Raymond L. DArcy
 Item 1A.Risk
    Factors  We face intense competition.
 11




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##### Table of Contents



A prolonged outage at one of our data centers could result in
    reduced service revenue and the loss of
    customers. up-to-date back-up back-up
  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.
  Our inability to maintain relationships with service bureaus
    and custodian banks would decrease our service
    revenue.
  A decline in activity levels in the securities markets could
    lower demand for our services.
  Consolidation of financial services within and across
    industries could lower demand for our
    services.
  The continuing impact of cost-cutting pressures across the
    financial services industry could reduce demand for our
    services.
 12




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##### Table of Contents



New offerings by competitors or new technologies could cause
    our services to become less competitive or obsolete or we may
    not be able to develop new and enhanced service
    offerings.
  We may not be able to negotiate and enter into strategic
    alliances or acquisitions on favorable terms, if at all, and we
    may fail to derive the anticipated benefits from these
    transactions.
  We are subject to regulatory oversight and we provide
    services to financial institutions that are subject to
    significant regulatory oversight, and any investigation of us or
    our customers relating to our services could be expensive, time
    consuming and harm our reputation.
 13




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##### Table of Contents



and/or and/or
  Certain of our subsidiaries are subject to complex
    regulations and licensing requirements.
  We may not be able to attract and retain key
    personnel.
  Pearson has the ability to control us.
   Item 1B.Unresolved
    Staff Comments   14




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##### Table of Contents



Item 2.
    Properties    CurrentOperating

Square


AnnualLocation

Unit/Segment

Feet


Rental Rate


Expiration DateAkron, OH

Active Trader


4,110


$
57,026



September 2006Bedford, MA

Institutional and 
    Corporate


95,725


$
1,172,631



May 2016Bedford, MA

Institutional and 
    Corporate


64,349


$
656,894



July 2006Boston, MA

Institutional


11,910


$
357,300



March 2010Boxborough, MA

Corporate,
    Institutional and
    Active Trader


48,817


$
244,085



September 2018Channel Islands, UK

Institutional


2,301


$
92,705



October 2011Cheltenham, UK

Institutional


2,100


$
42,919



October 2010Chicago, IL

Institutional


4,646


$
135,932



September 2011Chicago, IL

Active Trader


3,840


$
97,236



October 2007Cologne, Germany

Institutional


15,777


$
248,450



December 2008Dublin, Ireland

Institutional


15,902


$
290,171



February 2012Edinburgh, Scotland

Institutional


5,200


$
83,549



August 2006Fort Lauderdale, FL

Active Trader


1,210


$
19,331



August 2006Frankfurt, Germany

Institutional


78,548


$
2,180,844



December 2011Geneva, Switzerland

Active Trader


1,270


$
9,106



June 2006Harrison, NY

Institutional


37,760


$
827,052



October 2006Hayward, CA

Active Trader


60,158


$
1,317,327



June 2013Hong Kong, PRC

Institutional


3,369


$
42,343



June 2008Houston, TX

Active Trader


2,486


$
76,953



June 2007Lombard, IL

Active Trader


9,356


$
153,444



May 2011London, UK

Institutional


65,000


$
1,587,994



April 2010Luxembourg

Institutional


2,500


$
12,371



December 2010Madrid, Spain

Institutional


2,063


$
85,777



May 2007Melbourne, Australia

Active Trader 
    and Institutional


4,828


$
82,212



November 2010Milan, Italy

Institutional


2,045


$
19,289



July 2006New York, NY

Institutional


87,304


$
2,125,836



May 2013New York, NY

Institutional


27,386


$
980,419



November 2009New York, NY

Active Trader


11,572


$
413,640



June 2012Paris, France

Institutional


2,669


$
157,186



December 2008Paris, France

Institutional


700


$
29,540



May 2006Santa Monica, CA

Institutional


22,877


$
676,930



November 2012Singapore

Institutional


2,530


$
47,620



October 2006West Orange, NJ

Corporate


2,201


$
49,522



January 2008Zurich, Switzerland

Institutional


1,808


$
35,758



April 2006      15




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##### Table of Contents



Item 3.
    Legal
    Proceedings  and/or
  Item 4.
    Submission
    of Matters to a Vote of Security Holders   PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    Information
      High


Low2005:Quarter Ended March 31

$
21.84


$
20.00Quarter Ended June 30

$
22.46


$
19.05Quarter Ended September 30

$
22.89


$
20.60Quarter Ended December 31

$
23.43


$
21.63   High


Low2004:Quarter Ended March 31

$
18.50


$
16.40Quarter Ended June 30

$
18.77


$
16.25Quarter Ended September 30

$
19.28


$
16.80Quarter Ended December 31

$
22.17


$
18.24   Stockholders
    Dividends
      Issuer
    Purchases of Equity Securities
  Form 8-K
 16




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##### Table of Contents



(d) MaximumNumber of(c) Total Number of


SharesShares


that May Yet Be(a) Total Number of





Purchased as Part of


Purchased UnderShares


(b) Average Price


Publicly Announced


the Plans orPeriod

Purchased(1)


Paid per Share


Plans or Programs


ProgramsOctober 1,
    2005  October 31, 2005


84,000 shares


$
22.33



84,000 shares



616,000 sharesNovember 1,
    2005  November 30, 2005


84,000 shares


$
22.16



84,000 shares



532,000 sharesDecember 1,
    2005  December 31, 2005


84,000 shares


$
22.50



84,000 shares



448,000 sharesTotal


252,000 shares


$
22.33



252,000 shares     (1)
    
    No shares have been purchased by us other than through our
    publicly announced stock buyback program.  Item 6.
    Selected
    Financial Data  Form 10-K. Form 10-K.
  As of and for the Year Ended
    December 31,2005


2004


2003


2002


2001(In thousands, except per share
    data)Service revenue

$
542,867


$
484,565


$
442,690


$
375,015


$
340,002Income from operations(1)


144,140



125,869



115,349



98,232



25,653Net income


93,864



80,271



72,201



60,733



4,312Net income per common shareBasic


1.01



0.86



0.78



0.67



0.05Diluted


0.98



0.84



0.76



0.65



0.05Weighted average common shares
    Basic


93,204



93,152



92,319



91,159



90,844Diluted


95,989



95,525



94,450



93,730



92,510Total assets


996,920



1,019,776



905,578



765,227



697,983Stockholders equity


855,406



857,756



762,531



662,743



582,667Cash dividends declared per common
    share


0.80















0.29     (1)
    
    Income from operations, net income and net income per common
    share, in 2001 includes amortization of goodwill in the amount
    of $37,535,000. Beginning in 2002, the amortization of goodwill
    was no longer required in accordance with the adoption of
    Statement of Financial Accounting Standard No. 142,
    Goodwill and Other Intangible Assets. 17




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##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations    Overview
      Institutional
    Services
    
    FT Interactive Dataprovides historical and
    end-of-day
    pricing, evaluations, dividend, corporate actions and
    descriptive information for an extensive range of financial
    instruments traded worldwide.
    ComStockprovides real-time and delayed financial market
    information as well as a suite of managed market data solutions
    that aggregate and customize the display of financial content.
    CMS BondEdgeprovides sophisticated fixed income
    analytics.    Active
    Trader Services
    
    eSignalprovides real-time financial market information
    and access to decision-support tools.     18




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##### Table of Contents



Development
    of Business
        Business
    and Market Trends
    Institutional
    Services
           19




---



##### Table of Contents



Active
    Trader Services
  year-over-year
   20




---



##### Table of Contents



RESULTS
    OF OPERATIONS  SELECTED FINANCIAL DATA
  For the Years Ended
    December 31,2005


2004


2003(In thousands, except per share
    data)SERVICE REVENUE

$
542,867


$
484,565


$
442,690COSTS AND EXPENSESCost of services


167,089



156,646



141,631Selling, general and administrative


191,615



161,313



149,129Depreciation


18,767



18,521



16,807Amortization


21,256



22,216



19,774Total costs and expenses


398,727



358,696



327,341INCOME FROM OPERATIONS


144,140



125,869



115,349Other income, net


4,711



2,522



1,100INCOME BEFORE INCOME TAXES


148,851



128,391



116,449Income tax expense


54,987



48,120



44,248NET INCOME

$
93,864


$
80,271


$
72,201NET INCOME PER SHAREBasic

$
1.01


$
0.86


$
0.78Diluted

$
0.98


$
0.84


$
0.76Cash dividends paid per common
    share

$
0.80







WEIGHTED AVERAGE
    SHARES OUTSTANDINGBasic


93,204



93,152



92,319Diluted


95,989



95,525



94,450   2005
    versus 2004
  Service
    Revenue
  %2005


2004


change(In thousands)Institutional Services:FT Interactive Data

$
353,231


$
329,329



+7.3
%CMS BondEdge


32,394



31,997



+1.2
%ComStock


85,905



68,136



+26.1
%IS.Teledata


1,957







Foreign Exchange


(467
)






Total Institutional Services


473,020



429,462



+10.1
%Active Trader Services:eSignal


50,805



47,183



+7.7
%FutureSource


19,042



7,577



+151.3
%Broadcast






343



Total Active Trader Services


69,847



55,103



+26.8
%TOTAL SERVICE REVENUE

$
542,867


$
484,565



+12.0
%  21




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##### Table of Contents



Total
    Service Revenue
      Institutional
    Services
            Active
    Trader Services
   22




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##### Table of Contents



Service
    Revenue by Geographic Region
  %2005


2004


Change(In thousands)United States

$
416,151


$
382,242



+8.9
%United Kingdom


64,820



60,246



+7.6
%All other European countries and
    Canada


50,934



33,876



+50.4
%Asia Pacific


10,962



8,201



+33.7
%TOTAL SERVICE REVENUE

$
542,867


$
484,565



+12.0
%   Total
    Costs and Expenses
  start-up
    %2005


2004


Change(In thousands)Institutional Services

$
292,436


$
263,267



+11.1
%Active Trader Services


53,162



44,630



+19.1
%Corporate and unallocated


53,508



50,799



+5.3
%Foreign Exchange


(379
)






TOTAL COSTS AND EXPENSES

$
398,727


$
358,696



+11.2
%     Cost of
    Services
    %2005


2004


Change(In thousands)Institutional Services

$
138,440


$
134,744



+2.7
%Active Trader Services


26,064



21,902



+19.0
%Corporate and unallocated


2,681







Foreign Exchange


(96
)


TOTAL COST OF SERVICES

$
167,089


$
156,646



+6.7
%  23




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##### Table of Contents



Institutional
    Services
    Active
    Trader Services
    Corporate
    and Unallocated
    Selling,
    General and Administrative Expenses
    2005


2004


% Change(In thousands)Institutional Services

$
141,255


$
115,222



+22.6
%Active Trader Services


23,301



19,047



+22.3
%Corporate and unallocated


27,322



27,044



+1.0
%Foreign Exchange


(263
)






TOTAL SG&A

$
191,615


$
161,313



+18.8
%    24




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##### Table of Contents



Institutional
    Services
    Active
    Trader Services
    Corporate
    and Unallocated
  start-up
  Other
    Consolidated Financial Information
             25




---



##### Table of Contents



2004
    versus 2003
  Service
    Revenue
  2004


2003


% Change(In thousands)Institutional ServicesFT Interactive Data

$
320,755


$
309,324



+3.7
%CMS BondEdge


31,997



30,561



+4.7
%ComStock


66,601



57,527



+15.8
%Foreign Exchange


10,109







Institutional Services total


429,462



397,412



+8.1
%Active Trader ServiceseSignal


47,183



43,426



+8.7
%FutureSource


7,577







Broadcast


343



1,852



−81.5
%Active Trader Services total


55,103



45,278



+21.7
%TOTAL SERVICE REVENUE

$
484,565


$
442,690



+9.5
%   Total
    Service Revenue
      Institutional
    Services
     26




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##### Table of Contents



Active
    Trader Services
    Service
    Revenue by Geographic Region
  2004


2003


% Change(In thousands)United States

$
382,242


$
346,457



+10.3
%United Kingdom


60,246



62,783



−4.0
%All other European countries and
    Canada


33,876



27,050



+25.2
%Asia Pacific


8,201



6,400



+28.1
%TOTAL SERVICE REVENUE

$
484,565


$
442,690



+9.5
%   Total
    Costs and Expenses
  start-up
   27




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##### Table of Contents



2004


2003


% Change(In thousands)Institutional Services

$
255,523


$
248,806



+2.7
%Active Trader Services


44,630



38,789



+15.1
%Corporate and unallocated


50,799



39,746



+27.8
%Foreign Exchange


7,744







TOTAL COSTS AND EXPENSES

$
358,696


$
327,341



+9.6
%     Cost of
    Services
    2004


2003


% Change(In thousands)Institutional Services

$
131,664


$
121,391



+8.5
%Active Trader Services


21,902



20,240



+8.2
%Foreign Exchange


3,080







TOTAL COST OF SERVICES

$
156,646


$
141,631



+10.6
%     Institutional
    Services
    Active
    Trader Services
   28




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##### Table of Contents



Selling,
    General And Administrative Expenses
    2004


2003


% Change(In thousands)Institutional Services

$
111,018


$
114,479



−3.0
%Active Trader Services


19,047



14,981



+27.1
%Corporate and unallocated


27,044



19,669



+37.5
%Foreign Exchange


4,204







TOTAL SG&A

$
161,313


$
149,129



+8.2
%     Institutional
    Services
    Active
    Trader Services
    Corporate
    and Unallocated
  start-up
 29




---



##### Table of Contents



Other
    Consolidated Financial Information
                    Liquidity
    and Capital Resources
   30




---



##### Table of Contents



Year Ended
    December 31,2005


2004


2003(In thousands)Cash flow provided by (used in):Operating activities

$
129,582


$
121,702


$
109,554Investing activities


(100,479
)


(43,952
)


(143,333
)Financing activities


(85,194
)


(4,393
)


8,595Effect of exchange rates on cash
    balances


(4,449
)


2,912



3,580Increase (Decrease) in cash and
    cash equivalents

$
(60,540
)

$
76,269


$
(21,604
)   Operating
    Activities
      Investing
    Activities
         31




---



##### Table of Contents



Financing
    Activities
            Income
    Taxes
     32




---



##### Table of Contents



Off-Balance
    Sheet Arrangements
    Related
    Party Transactions
    back-up
       33




---



##### Table of Contents



Critical
    Accounting Policies and Estimates
  Form 10-K.
      Revenue
    Recognition
    Goodwill
    and Intangible Assets
       34




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##### Table of Contents



Income
    Taxes
        Commitments
    and Contingencies
        Payment Due by PeriodLess Than








More ThanContractual
    Obligations

Total


1 Year


1-3 Years


3-5 years


5 Years(In thousands)Operating Lease Obligations

$
97,984


$
16,067


$
27,940


$
24,065


$
29,912Distribution Agreements

$
1,380


$
809


$
403


$
168



Purchase Obligations

$
18,065


$
18,065











Total

$
117,429


$
34,941


$
28,343


$
24,233


$
29,912     Inflation
    Seasonality
    and Market Activity
   35




---



##### Table of Contents



Recently
    Issued Accounting Pronouncements
  Share-Based
    Payment
  Form 10-K
  Accounting
    Changes and Error Corrections
    Information
    Regarding Forward-Looking Statements
  Form 10-K Form 10-K.
  Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk   36




---



##### Table of Contents



2005


2004


2003(In thousands)Service RevenueUnited Kingdom

$
64,820


$
60,246


$
62,783All other European countries and
    Canada


50,934



33,876



27,050Asia Pacific


10,962



8,201



6,400Total

$
126,716


$
102,323


$
96,233Long-Lived AssetsUnited Kingdom

$
119,213


$
134,363All other European countries


54,416



Asia Pacific


4,504



2,654Total

$
178,133


$
137,017      37




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  PageIndex to Consolidated Financial
    Statements:Report of
    Independent Registered Public Accounting Firm


39Consolidated
    Statements of Operations for the years ended December 31,
    2005, 2004 and 2003


41Consolidated
    Balance Sheets as of December 31, 2005 and 2004


42Consolidated
    Statements of Cash Flows for the years ended December 31,
    2005, 2004 and 2003


43Consolidated
    Statements of Stockholders Equity and Comprehensive Income
    for the years ended December 31, 2005, 2004 and 2003


44Notes to
    Consolidated Financial Statements


45Quarterly Financial
    Information (Unaudited)


69Index to Financial Statement
    Schedule:Schedule II
    Valuation and Qualifying Accounts


70  38




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
    To the Board of Directors and Shareholders of Interactive Data
    Corporation    Consolidated
    financial statements and financial statement
    schedule
    Internal
    control over financial reporting
  Internal
    Control  Integrated Framework Internal
    Control  Integrated Framework
   39




---



##### Table of Contents



PRICEWATERHOUSECOOPERS
    LLP
    40




---



##### Table of Contents



INTERACTIVE
    DATA CORPORATION AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF OPERATIONS
  Year Ended
    December 31,2005


2004


2003(In thousands, except per share
    data)SERVICE REVENUE

$
542,867


$
484,565


$
442,690COSTS AND EXPENSESCost of services


167,089



156,646



141,631Selling, general and administrative


191,615



161,313



149,129Depreciation


18,767



18,521



16,807Amortization


21,256



22,216



19,774Total costs and expenses


398,727



358,696



327,341INCOME FROM OPERATIONS


144,140



125,869



115,349Other income, net


4,711



2,522



1,100INCOME BEFORE INCOME TAXES


148,851



128,391



116,449Income tax expense


54,987



48,120



44,248NET INCOME

$
93,864


$
80,271


$
72,201Weighted average shares
    outstanding:Basic


93,204



93,152



92,319Diluted


95,989



95,525



94,450NET INCOME PER SHARE:Basic

$
1.01


$
0.86


$
0.78Diluted

$
0.98


$
0.84


$
0.76Cash dividends paid per common
    share

$
0.80


$



$
    41




---



##### Table of Contents



INTERACTIVE
    DATA CORPORATION AND SUBSIDIARIES
  CONSOLIDATED BALANCE SHEETS
  December 31,2005


2004(In thousands, except share
    data)ASSETSCash and cash equivalents

$
147,368


$
207,908Marketable securities


25,019



2,371Accounts receivable, net of
    allowance for doubtful accounts of $7,720 and $7,283 at 2005 and
    2004, respectively


84,553



83,250Prepaid expenses and other current
    assets


11,209



15,809Deferred income taxes


1,509



4,986Total current assets


269,658



314,324Property and equipment, net


64,252



54,854Goodwill


480,179



480,444Intangible assets, net


182,156



169,338Other assets


675



816Total Assets

$
996,920


$
1,019,776LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable, trade

$
18,032


$
15,943Accrued liabilities


68,747



67,276Payables to affiliates


892



1,552Income taxes payable


2,045



10,672Deferred revenue


23,988



35,729Total current liabilities


113,704



131,172Deferred tax liabilities


23,864



28,731Other liabilities


3,946



2,117Total Liabilities


141,514



162,020Commitments and contingencies
    (Note 9)Stockholders Equity:Preferred stock, $0.01 par
    value, 5,000,000 shares authorized; no shares issued or
    outstanding at December 31, 2005 and December 31, 2004






Common stock, $0.01 par
    value, 200,000,000 shares authorized; 97,882,926 issued and
    93,330,926 outstanding at December 31, 2005 and 96,292,583
    issued and 93,147,583 outstanding at December 31, 2004


979



963Additional paid-in capital


851,312



823,211Treasury Stock, at cost, 4,552,000
    and 3,145,000 shares, at December 31, 2005 and 2004,
    respectively


(74,587
)


(44,308
)Accumulated earnings


77,449



58,074Accumulated other comprehensive
    income


3,428



21,437Deferred compensation cost


(3,175
)


(1,621
)Total Stockholders Equity


855,406



857,756Total Liabilities and
    Stockholders Equity

$
996,920


$
1,019,776    42




---



##### Table of Contents



INTERACTIVE
    DATA CORPORATION AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF CASH FLOWS
  Year Ended
    December 31,2005


2004


2003(In thousands)Cash flows provided by (used
    in) operating activities:Net income

$
93,864


$
80,271


$
72,201Adjustments to reconcile net
    income to net cash provided by operating activities:Depreciation and amortization


40,023



40,737



36,581Amortization of discounts and
    premiums on marketable securities, net


1,958







Tax benefit from exercise of stock
    options and employee stock purchase plan


5,152



3,778



3,776Deferred income taxes


1,411



1,101



(543
)Other non-cash items including
    stock-based compensation


1,944



2,622



1,892Changes in operating assets and
    liabilities, net:Accounts receivable, net


2,462



(8,228
)


(10,673
)Prepaid expenses and other assets


4,789



(8,221
)


932Accounts and taxes payable and
    payable to affiliates, net


(11,187
)


2,972



1,609Accrued expenses and other
    liabilities


(2,336
)


(1,698
)


1,071Deferred revenue


(8,498
)


8,368



2,708NET CASH PROVIDED BY OPERATING
    ACTIVITIES


129,582



121,702



109,554Cash flows provided by (used
    in) investing activities:Purchase of property, plant and
    equipment


(26,060
)


(23,898
)


(21,503
)Acquisition of businesses, net of
    cash acquired


(49,983
)


(17,683
)


(122,336
)Purchase of marketable securities


(193,000
)


(2,371
)


Proceeds from sales and maturities
    of marketable securities


168,394







Other investing activities


170







506NET CASH USED IN INVESTING
    ACTIVITIES


(100,479
)


(43,952
)


(143,333
)Cash flows provided by (used
    in) financing activities:Proceeds from exercise of stock
    options and employee stock purchase plan


19,574



12,935



9,925Cash dividend paid


(74,489
)






Purchase of treasury stock


(30,279
)


(17,328
)


(1,330
)NET CASH PROVIDED BY (USED IN)
    FINANCING ACTIVITIES


(85,194
)


(4,393
)


8,595Effect of change in exchange rates
    on cash and cash equivalents


(4,449
)


2,912



3,580NET INCREASE (DECREASE) IN CASH
    AND CASH EQUIVALENTS


(60,540
)


76,269



(21,604
)CASH AND CASH EQUIVALENTS AT
    BEGINNING OF PERIOD


207,908



131,639



153,243CASH AND CASH EQUIVALENTS AT END
    OF PERIOD

$
147,368


$
207,908


$
131,639Supplemental disclosure of cash
    flow information:Cash paid for taxes

$
(56,574
)

$
(42,924
)

$
(37,066
)Cash received for interest

$
6,983


$
2,464


$
1,123    43




---



##### Table of Contents



INTERACTIVE
    DATA CORPORATION AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF STOCKHOLDERS
    EQUITY AND COMPREHENSIVE INCOME
  AccumulatedTreasury











OtherCommon Stock


Stock


Treasury


Additional


Deferred


Comprehensive


Accumulated


Total


TotalNumber of





Number of


Stock


Paid-In


Compensation


Income


Earnings


Stockholders


ComprehensiveShares


Par Value


Shares


Cost


Capital


Cost


(Loss)


(Deficit)


Equity


Income (Loss)(In thousands)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


















1,290



(1,290
)














Amortization of deferred
    stock-based compensation






















233











233



Other comprehensive income
    (Note 14)


























14,983







14,983



14,983Net income






























72,201



72,201



72,201Balance, December 31, 2003


95,012


$
950



2,200


$
(26,980
)

$
801,448


$
(1,057
)

$
10,367


$
(22,197
)

$
762,531



87,184Exercise of stock options


1,157



12











11,125















11,137



Issuance of stock in connection
    with employee stock purchase plan


124



1











1,797















1,798



Tax benefit from exercise of stock
    options and employee stock purchase plan


















3,778















3,778



Purchase of treasury stock










945



(17,328
)


















(17,328
)


Deferred stock-based compensation


















1,212



(1,212
)














Amortization of deferred
    stock-based compensation






















648











648



Capital contributions by affiliates


















3,851















3,851



Other comprehensive income
    (Note 14)


























11,070







11,070



11,070Net income






























80,271



80,271



80,271Balance, December 31, 2004


96,293


$
963



3,145


$
(44,308
)

$
823,211


$
(1,621
)

$
21,437


$
58,074


$
857,756



91,341Exercise of stock options


1,412



14











16,330















16,344



Issuance of stock in connection
    with employee stock purchase plan


178



2











3,228















3,230



Tax benefit from exercise of stock
    options and employee stock purchase plan


















5,152















5,152



Purchase of treasury stock










1,407



(30,279
)


















(30,279
)


Deferred stock-based compensation


















3,391



(3,045
)










346



Amortization of deferred
    stock-based compensation






















1,491











1,491



Other comprehensive (loss)
    (Note 14)


























(18,009
)






(18,009
)


(18,009
)Common stock cash dividends






























(74,489
)


(74,489
)


Net income






























93,864



93,864



93,864Balance, December 31, 2005


97,883


$
979



4,552


$
(74,587
)

$
851,312


$
(3,175
)

$
3,428


$
77,449


$
855,406


$
75,855    44




---



##### Table of Contents



INTERACTIVE
    DATA CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS
  1.
    Summary
    of Significant Accounting Policies  Nature
    of Business
          Principles
    of Consolidation
    Reclassifications
    Cash
    and Cash Equivalents
   45




---



##### Table of Contents



INTERACTIVE
    DATA CORPORATION AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Marketable
    Securities
  available-for-sale available-for-sale
    Unrealized


EstimatedCost


Losses


Fair Value(In thousands)Municipal Bonds

$
25,029


$
(10
)

$
25,019     Unrealized


EstimatedCost


Losses


Fair Value(In thousands)Municipal Bonds

$
2,371






$
2,371   Fair
    Value of Financial Instruments
    Revenue
    Recognition
    Accounts
    Receivable, Concentration of Credit Risk and
    Uncertainties
    Income
    Taxes
       46




---



##### Table of Contents



INTERACTIVE
    DATA CORPORATION AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Goodwill
    Intangible
    Assets
    Property
    and Equipment
      Impairment
    of Long-Lived Assets
    Translation
    of Foreign Currenciest
   47




---



##### Table of Contents



INTERACTIVE
    DATA CORPORATION AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Use of
    Estimates
    Restructuring
    Charges
      Employee Severance


Lease Terminations


Other


Total(In thousands)December 31, 2002

$
1,671


$
673


$
129


$
2,4732003 Additions


2,161



888



261



3,3102003 Payments/Adjustments


(1,789
)


(234
)


(390
)


(2,413
)December 31, 2003


2,043



1,327







3,3702004 Additions


1,754



37







1,7912004 Payments/Adjustments


(3,281
)


(375
)






(3,656
)December 31, 2004


516



989







1,5052005 Additions


1,484











1,4842005 Payments/Adjustments


(1,511
)


(814
)






(2,325
)December 31, 2005

$
489


$
175


$



$
664   Research
    and Development Costs
    Advertising
    Costs
   48




---



##### Table of Contents



INTERACTIVE
    DATA CORPORATION AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Stock-Based
    Compensation
      Year Ended
    December 31,2005


2004


2003(In thousands, except per share
    data)Net income as reported

$
93,864


$
80,271


$
72,201Add: Stock-based compensation
    included in net income, net of related tax effects


934



707



238Deduct: Total stock-based employee
    compensation expense determined under fair value based method
    for all awards, net of related tax effects


(11,663
)


(11,438
)


(9,596
)Pro forma, net income

$
83,135


$
69,540


$
62,843Earnings per share:Basic  as reported

$
1.01


$
0.86


$
0.78Basic  pro forma

$
0.89


$
0.75


$
0.68Diluted  as
    reported

$
0.98


$
0.84


$
0.76Diluted  pro forma

$
0.87


$
0.73


$
0.67     2005


2004


2003Risk free interest rate


3.86
%


3.45
%


2.00
%Expected term (in years)


4



4



4Volatility


24.50
%


32.20
%


61.10
%Expected dividend yield


0.00
%


0.00
%


0.00
%Weighted average fair value

$
5.56


$
7.50


$
8.09     2005


2004


2003Risk free interest rate


2.33
%


1.03
%


1.20
%Expected life (in years)


0.50



0.49



0.50Volatility


20.00
%


20.00
%


25.00
%Expected dividend yield


0.00
%


0.00
%


0.00
%Weighted average fair value

$
3.68


$
3.24


$
2.64  49




---



##### Table of Contents



INTERACTIVE
    DATA CORPORATION AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Earnings
    per Share
      For the Twelve Months EndedDecember 31, 2005Weighted AverageIncome


Shares


Per-Share(Numerator)


(Denominator)


Amount(In thousands, except per share
    data)Net income-basic

$
93,864



93,204


$
1.01Effect of dilutive securities:Stock options






2,704



(0.03
)Deferred and restricted stock units






81



Net income-diluted

$
93,864



95,989


$
0.98   For the Twelve Months
    EndedDecember 31, 2004Weighted AverageIncome


Shares


Per-Share(Numerator)


(Denominator)


Amount(In thousands, except per share
    data)Net income-basic

$
80,271



93,152


$
0.86Effect of dilutive securities:Stock options






2,358



(0.02
)Deferred and restricted stock units






15



Net income-diluted

$
80,271



95,525


$
0.84   For the Twelve Months EndedDecember 31, 2003Weighted AverageIncome


Shares


Per-Share(Numerator)


(Denominator)


Amount(In thousands, except per share
    data)Net income-basic

$
72,201



92,319


$
0.78Effect of dilutive securities:Stock options






2,131



(0.02
)Net income-diluted

$
72,201



94,450


$
0.76  50




---



##### Table of Contents



INTERACTIVE
    DATA CORPORATION AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   2.
    New
    Accounting Pronouncements  Share-Based
    Payment
    Accounting
    Changes and Error Corrections
    3.
    Mergers
    and Acquisitions         51




---



##### Table of Contents



INTERACTIVE
    DATA CORPORATION AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
         AssetsAccounts receivable, net

$
7,700Prepaid expenses and other current
    assets


877Fixed assets


3,902Customer lists


30,900Service contracts


16,700Trademarks


1,700Computer software/technology


20,400Goodwill


69,419$
151,598LiabilitiesAccrued liabilities

$
5,161Deferred revenue


2,257Deferred tax liabilities, net


27,181Accrued acquisition costs


1,027$
35,626Total Purchase Price

$
115,972    52




---



##### Table of Contents



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

$
1,011Accounts receivable


579Prepaid expenses


29Customer lists


7,290Service contract


790$
9,699LiabilitiesDeferred revenue

$
983Customer deposits


636$
1,619Total Purchase Price

$
8,080      53




---



##### Table of Contents



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

$
317Accounts receivable


2,406Prepaid expenses and other current
    assets


371Deferred tax assets


819Fixed assets


790Goodwill


12,708Customer lists


3,000Trademarks


500Computer software/technology


5,500Other assets


166$
26,577LiabilitiesAccounts payable

$
2,522Accrued liabilities


2,137Deferred revenue


1,792Other liabilities


149Accrued acquisition costs


1,630$
8,230Total Purchase Price

$
18,347      54




---



##### Table of Contents



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

$
5,212Accounts receivable, net


5,201Prepaid expenses and other current
    assets


1,017Fixed assets


3,251Customer lists


14,219Completed software/technology


19,551Deferred tax assets, net


3,147Goodwill


17,734$
69,332Liabilities:Accounts payable

$
4,957Accrued liabilities


4,589Deferred revenue


956Other liabilities


2,702Accrued acquisition costs


1,500$
14,704Total Purchase Price

$
54,628   4.
    Property
    and Equipment    Useful Life


2005


2004(In thousands)Computer and communication
    equipment


3-5 years


$
109,115


$
102,876Leasehold improvements


Life of lease



26,099



23,767Furniture and fixtures


3-10 years



34,362



30,687Purchased and capitalized software


3-5 years



35,063



29,203204,639



186,533Less accumulated depreciation






(140,387
)


(131,679
)$
64,252


$
54,854      55




---



##### Table of Contents



INTERACTIVE
    DATA CORPORATION AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   5.
    Goodwill
    and Intangible Assets    Weighted


December 31, 2005


December 31, 2004Average


Gross








GrossAmortization


Carrying


Accumulated


Net Book


Carrying


Accumulated


Net BookPeriod


Value


Amortization


Value


Value


Amortization


Value(In thousands)


(In thousands)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



(10,792
)


Computer software


7.8 years



87,849



(50,624
)


37,225



68,386



(47,098
)


21,288Customer lists


11.3 years



225,946



(97,529
)


128,417



211,460



(80,772
)


130,688Service Contracts


23.8 years



17,490



(2,771
)


14,719



17,365



(1,974
)


15,391Trademarks


13.4 years



2,200



(405
)


1,795



2,200



(229
)


1,971Total





$
431,777


$
(249,621
)

$
182,156


$
397,703


$
(228,365
)

$
169,338     For year ending 12/31/06

$
24,271For year ending 12/31/07

$
23,875For year ending 12/31/08

$
23,796For year ending 12/31/09

$
23,796For year ending 12/31/10

$
23,785     Balance as of January 1, 2004

$
462,323Goodwill acquired during the year


12,776Purchase accounting adjustments


(3,079
)Impact of change in foreign
    exchange rates


8,424Balance as of December 31,
    2004

$
480,444Goodwill acquired during the year


17,734Purchase accounting adjustments


(4,708
)Impact of change in foreign
    exchange rates


(13,291
)Balance as of December 31,
    2005

$
480,179    56




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##### Table of Contents



INTERACTIVE
    DATA CORPORATION AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   6.
    Accrued
    Liabilities    2005


2004(In thousands)Bonus

$
15,636


$
13,831Employee related costs


20,291



18,922Commissions


3,787



3,449Professional services


4,835



4,033Acquisition costs (see Note 3)


1,601



1,918Property costs


4,232



4,563Royalties


3,731



4,065Sales taxes


1,989



2,942Data and communication charges


7,787



8,569Other


4,858



4,984$
68,747


$
67,276   7.
    Stock
    Based Compensation  Employee
    Stock Purchase Plan
    Employee
    Stock Option Plan
   57




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##### Table of Contents



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


Exercise Price(In thousands)Outstanding, December 31, 2003


9,358


$
12.15Granted


1,937



17.48Exercised


(1,157
)


9.59Canceled


(306
)


13.32Outstanding, December 31, 2004


9,832


$
13.46Granted


1,940



21.38Exercised


(1,412
)


11.57Canceled


(292
)


16.86Outstanding, December 31, 2005


10,068


$
15.16Exercisable, December 31, 2005


6,052


$
12.58       Outstanding


ExercisableWeighted





WeightedAverage





AverageExercise





ExerciseOptions


Price


Options


Price(In thousands)





(In thousands)$3.00 to $4.41 (Avg. life:
    4.20 years)


33


$
3.51



33


$
3.51$4.75 to $6.53 (Avg. life:
    3.60 years)


206



4.99



206



4.99$7.69 to $10.25 (Avg. life:
    5.30 years)


2,685



8.74



2,685



8.74$12.50 to $18.71 (Avg. life:
    7.40 years)


5,243



16.68



3,103



16.45$20.45 to $21.94 (Avg. life:
    9.50 years)


1,901



21.38



25



20.4510,068







6,052     Deferred
    Stock Compensation
   58




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##### Table of Contents



INTERACTIVE
    DATA CORPORATION AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   8.
    Stockholders
    Equity      9.
    Commitments
    and Contingencies      Payment Due by PeriodLess Than








More ThanContractual
    Obligations

Total


1 Year


1-3 Years


3-5 years


5 Years(In thousands)Operating Lease Obligations

$
97,984


$
16,067


$
27,940


$
24,065


$
29,912Distribution Agreements

$
1,380


$
809


$
403


$
168



Purchase Obligations

$
18,065


$
18,065











Total

$
117,429


$
34,941


$
28,343


$
24,233


$
29,912       and/or
 59




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##### Table of Contents



INTERACTIVE
    DATA CORPORATION AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   10.
    Income
    Taxes    2005


2004


2003(In thousands)Domestic

$
124,443


$
100,558


$
98,085Foreign


24,408



27,833



18,364Total

$
148,851


$
128,391


$
116,449     2005


2004


2003(In thousands)Current:Federal

$
37,262


$
30,114


$
31,653State


11,456



8,863



9,194Foreign


10,332



10,054



5,76359,050



49,031



46,610Deferred:Federal


(1,615
)


766



(1,803
)State


(687
)


(1
)


(334
)Foreign


(1,761
)


(1,676
)


(225
)(4,063
)


(911
)


(2,362
)$
54,987


$
48,120


$
44,248    60




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##### Table of Contents



INTERACTIVE
    DATA CORPORATION AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Asset/(Liability)

2004


2005(In thousands)Current deferred tax:Accrued expenses

$
3,305


$
6,199Accounts receivable allowance


2,278



2,274Other


(253
)


635,330



8,536Less: valuation allowance


(3,821
)


(3,550
)Current deferred tax asset


1,509



4,986Long Term deferred
    tax:Deferred compensation


2,398



1,374Other intangible assets


(5,923
)


(6,551
)Depreciation


(2,700
)


(2,698
)Non compete agreements


15,229



17,618Net operating loss carryforwards


6,433



7,658Customer lists


(32,751
)


(39,376
)Sale of MarketWatch


5,916



6,634Software development costs


(4,905
)


(4,147
)Asset impairment


795



560(15,508
)


(18,928
)Less: valuation allowance


(8,356
)


(9.803
)Deferred tax liabilities


(23,864
)


(28,731
)Total deferred tax liabilities, net

$
(22,355
)

$
(23,745
)      61




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##### Table of Contents



INTERACTIVE
    DATA CORPORATION AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       Years Ended
    December 31,2005


2004


2003Statutory US federal tax rate


35.0
%


35.0
%


35.0
%State taxes, net of federal tax
    benefit


4.7



4.5



4.9Foreign income taxed at different
    statutory rates


(1.6
)


(2.7
)


(2.0
)Other, net


(1.2
)


.7



.1Effective tax rate


36.9
%


37.5
%


38.0
%     11.
    Retirement
    Plans  Pearson,
    Inc. Savings and Investment Plan
      Pearson,
    Inc. Pension Plan
   62




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##### Table of Contents



INTERACTIVE
    DATA CORPORATION AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       Year EndedDecember 31,2005


2004(In thousands)Change in benefit obligation:Benefit obligation at beginning of
    year

$
9,315


$
9,361Service cost






Interest cost


499



518Amendments






Actuarial loss


184



1Benefits paid


(510
)


(565
)Benefit obligation at end of year

$
9,488


$
9,315Change in plan assets:Fair value of plan assets at
    beginning of year

$
6,788


$
5,625Actual return on plan assets


505



658Employer contribution


1,457



1,070Benefits paid


(510
)


(565
)Fair value of plan assets at end
    of period

$
8,240


$
6,788Reconciliation of funded status:Benefit obligation at end of year

$
9,488


$
9,315Fair value of plan assets at end
    of period


8,240



6,788Funded status at end of period


1,248



2,527Unrecognized prior service
    (benefit)


(28
)


(31
)Unrecognized net actuarial gain


(2,400
)


(2,263
)Net amount recognized

$
(1,180
)

$
233Amounts recognized in the
    statement of financial position consist of:Accrued benefit cost


1,248



2,527Intangible assets


(28
)


(31
)Accumulated other comprehensive
    loss


(2,400
)


(2,263
)Net amount recognized

$
(1,180
)

$
233   63




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##### Table of Contents



INTERACTIVE
    DATA CORPORATION AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Year EndedDecember 31,2005


2004


2003(In thousands)Components of net periodic benefit
    cost:Service cost

$



$



$
Interest cost


499



518



543Expected return on plan assets


(574
)


(481
)


(340
)Amortization of prior service costs


2



2



3Recognized actuarial loss


115



121



147Net periodic benefit cost

$
42


$
160


$
353       Year EndedDecember 31,2005


2004(In thousands)Projected benefit obligation

$
9,488


$
9,315Accumulated benefit obligation


9,488



9,315Fair value of plan assets


8,240



6,788Additional Information:   Year EndedDecember 31,2005


2004


2003(In thousands)Increase in minimum liability
    included in other comprehensive income

$
106


$
391


$
     2005


2004Discount rate


5.60
%


5.85
%Rate of compensation increase


4.50
%


4.50
%     2005


2004Discount rate


5.85
%


6.10
%Expected return on plan assets


8.50
%


8.50
%Rate of compensation increase


4.50
%


4.50
%        64




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##### Table of Contents



INTERACTIVE
    DATA CORPORATION AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Year EndedDecember 31,2005


2004Equity securities


61
%


63
%Debt securities


32
%


37
%Other


7
%



%Total


100
%


100
%       Year

Total(In thousands)2006

$
8662007


10052008


9662009


8222010


6092011 through 2015


2,985     Foreign
    Pension Plans
    12.
    Related
    Party Transactions    back-up
 65




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##### Table of Contents



INTERACTIVE
    DATA CORPORATION AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
              13.
    Segment
    Information   66




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##### Table of Contents



INTERACTIVE
    DATA CORPORATION AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     2005


%


2004


%


2003


%(In thousands)Service revenue:Institutional Services

$
473,020



87
%

$
429,462



89
%

$
397,412



90
%Active Trader Services


69,847



13
%


55,103



11
%


45,278



10
%Total

$
542,867



100
%

$
484,565



100
%

$
442,690



100
%Income (loss) from operations:Institutional Services

$
180,963



125
%

$
166,196



132
%

$
148,606



129
%Active Trader Services


16,685



12
%


10,472



8
%


6,489



6
%Corporate and unallocated(1)


(53,508
)


(37
)%


(50,799
)


(40
)%


(39,746
)


(35
)%Total

$
144,140



100
%

$
125,869



100
%

$
115,349



100
%Identifiable assets:Institutional Services

$
728,332



73
%

$
754,527



74
%Active Trader Services


19,297



2
%


17,529



2
%Corporate and unallocated (1)


249,291



25
%


247,720



24
%Total

$
996,920



100
%

$
1,019,776



100
%     (1)
    
    Corporate and unallocated loss from operations for the periods
    ended December 31 primarily consists of intangible asset
    amortization and corporate, general and administrative expenses.    2005


2004


2003(In thousands)Service revenue:United States

$
416,151


$
382,242


$
346,457United Kingdom


64,820



60,246



62,783All other European countries and
    Canada


50,934



33,876



27,050Asia Pacific


10,962



8,201



6,400Total

$
542,867


$
484,565


$
442,690Long-lived assets:United States

$
549,128


$
568,435United Kingdom


119,213



134,363All other European countries


54,416



Asia Pacific


4,504



2,654Total

$
727,261


$
705,452  67




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##### Table of Contents



INTERACTIVE
    DATA CORPORATION AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   14.
    Other
    Comprehensive Income    December 31,2005


2004(In thousands)Unrealized gains on securities
    (net of tax, $343 as of December 31, 2005 and $214 as of
    December 31, 2004)

$
546


$
342Foreign currency translation
    adjustment


5,282



23,389Minimum pension liability


(2,400
)


(2,294
)Total accumulated other
    comprehensive income

$
3,428


$
21,437     December 31,2005


2004


2003(In thousands)Net Income

$
93,864


$
80,271


$
72,201Unrealized gains on securities
    (net of tax, $129, $160 and $103 as of December 31, 2005,
    2004 and 2003, respectively)


204



255



166Minimum pension liability
    adjustment


(106
)


391



Foreign currency translation
    adjustment


(18,107
)


10,424



14,817Total comprehensive income

$
75,855


$
91,341


$
87,184   15.
    Subsequent
    Event       68




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##### Table of Contents



INTERACTIVE
    DATA CORPORATION AND SUBSIDIARIES
  QUARTERLY
    FINANCIAL INFORMATION (UNAUDITED)
 (In thousands, except per share data)
  period-to-period
  Year EndedQuarters Ended


December 31,March 31,


June 30,


September 30,


December 31,


2005Service revenue

$
139,652


$
132,998


$
134,198


$
136,019


$
542,867Total costs and expenses


103,494



97,844



97,281



100,108



398,727Income from operations


36,158



35,154



36,917



35,911



144,140Other income, net


1,014



1,165



1,212



1,320



4,711Income tax expense


13,499



13,897



14,985



12,606



54,987Net income


23,673



22,422



23,144



24,625



93,864Net income per
    share  basic

$
0.25


$
0.24


$
0.25


$
0.26


$
1.01Net income per
    share  diluted

$
0.25


$
0.23


$
0.24


$
0.26


$
0.98Cash dividend paid per common share

$



$



$
0.80


$



$
0.80   Year EndedQuarters Ended


December 31,March 31,


June 30,


September 30,


December 31,


2004Service revenue

$
117,630


$
118,875


$
122,884


$
125,176


$
484,565Total costs and expenses


88,276



88,543



89,260



92,617



358,696Income from operations


29,354



30,332



33,624



32,559



125,869Other income, net


380



552



622



968



2,522Income tax expense


11,373



11,814



12,482



12,451



48,120Net income


18,361



19,070



21,764



21,076



80,271Net income per
    share  basic

$
0.20


$
0.20


$
0.23


$
0.23


$
0.86Net income per
    share  diluted

$
0.19


$
0.20


$
0.23


$
0.22


$
0.84  69




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##### Table of Contents



INTERACTIVE
    DATA CORPORATION AND SUBSIDIARIES
  For the Years Ended December 31, 2005, 2004, and 2003
 Schedule II
    Valuation and Qualifying Accounts  Balance at





Charged to





BalanceBeginning





Other





at End ofDescription

of Period


Additions


Accounts


Write Offs


Period(In thousands)Allowance for doubtful accountsYear Ended December 31, 2005

$
7,283


$
6,563


$
(383
)(A)

$
5,743


$
7,720Year Ended December 31, 2004


6,467



7,257



(756
)(A)


5,685



7,283Year Ended December 31, 2003


4,950



3,936



294
(A)


2,713



6,467     Balance at





Charged to





BalanceBeginning





Other





at End ofDescription

of Period


Additions


Accounts


Write Offs


Period(In thousands)Valuation AllowanceYear Ended December 31, 2005

$
13,353


$



$



$
1,176


$
12,177Year Ended December 31, 2004


12,793



560











13,353Year Ended December 31, 2003


12,801











8



12,793  70




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##### Table of Contents



Item 9.
    Changes
    In and Disagreements With Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Evaluation of Disclosure Controls and
    Procedures. Rules 13a-15(e) 15d-15(e)
  Managements Annual Report on Internal Control Over
    Financial Reporting. Rule 13a-15(f).
  Internal Control-Integrated Framework
    Form 10-K.
  Changes in Internal Control Over Financial
    Reporting.
 Item 9B.Other
    Information   71




---



##### Table of Contents



PART III  Item 10.
    Directors
    and Executive Officers of the Registrant    Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Equity
    Compensation Plan Information
    Number of SecuritiesRemaining Availablefor Future IssuanceNumber of Securities





under Equityto be Issued upon


Weighted Average


Compensation PlansExercise of


Exercise Price of


(Excluding SecuritiesOutstanding Options,


Outstanding Options,


Reflected in FirstPlan Category

Warrants and Rights


Warrants and Rights


Column)Equity Compensation Plans Approved
    by Securityholders(1)


10,068,274


$
15.16



8,597,911(2
)Equity Compensation Plans not
    Approved by Securityholders










Total


10,068,274


$
15.16



8,597,911(2
)     (1)
    
    These plans consist of our 2000 Long-Term Incentive Plan, as
    amended, the Data Broadcasting Corporation Stock Option Plan, as
    amended, our 2001 Employee Stock Purchase Plan, as amended, and
    our UK Savings Related Share Option Plan.(2)
    
    Represents shares of common stock reserved for issuance under
    our 2001 Employee Stock Purchase Plan and 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   72




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##### Table of Contents



Item 14.
    Principal
    Accountant Fees and Services   PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules  The following documents are filed as part of this annual
    report:
            Exhibits*
  Form 10-K
  ExhibitNumber

Description of
    Exhibits2
.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 Current Report on
    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 Current Report on
    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 Annual Report on
    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 (UK) 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

By-laws of Interactive Data
    Corporation, as amended. (Exhibit 3.2 to registrants
    Form 8-A
    filed on June 15, 1992.)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.)10
.2

Data Broadcasting Corporation
    Stock Option Plan, as amended through September 13, 1994.
    (Exhibit 10.2 to registrants Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2000.)** 73




---



##### Table of Contents



ExhibitNumber

Description of
    Exhibits10
.3

Interactive Data Corporation 2000
    Long-Term Incentive Plan.(Exhibit 10.3 to registrants
    Annual Report on
    Form 10-K
    for the fiscal 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. (Exhibit 10.5 to
    registrants Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2003.)**10
.6

Form of Option Grant Certificate
    under Interactive Data Corporation 2000 Long-Term Incentive Plan
    for Non-Employee Directors. (Exhibit 99.2 to
    registrants Current Report on
    Form 8-K
    filed on February 28, 2005.)**10
.7

Form of Option Grant Certificate
    under Interactive Data Corporation 2000 Long-Term Incentive Plan
    for Non-Executives. (Exhibit 10.7 to registrants
    Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2004).**10
.8

Form of Non-Qualified Option Grant
    Certificate under Interactive Data Corporation 2000 Long-Term
    Incentive Plan for Non-Executives.**10
.9

Form of Option Grant Certificate
    under Interactive Data Corporation 2000 Long-Term Incentive Plan
    for Executives (Exhibit 10.8 to registrants Annual
    Report on
    Form 10-K
    for this fiscal year ended December 31, 2004).**10
.10

Form of Non-Qualified Option Grant
    Certificate under Interactive Data Corporation 2000 Long-Term
    Incentive Plan for Executives. (Exhibit 99.1 to
    registrants Current Report on
    Form 8-K
    filed July 25, 2005)**10
.11

Forms of 2003 and 2004 Deferred
    Stock Unit Grant for Executive Officers and Non-Employee
    Directors. (Exhibit 10.21 to registrants Quarterly
    Report on
    Form 10-Q
    for the fiscal quarter ended September 30, 2004.)**10
.12

Form of Deferred Stock Unit Grant
    for Non-Employee Director.(Exhibit 99.3 to
    registrants Current Report on
    Form 8-K
    filed on February 28, 2005.)10
.13

Form of Restricted Stock Unit
    Award Agreement under Interactive Data Corporation 2000
    Long-Term Incentive Plan for Executives. (Exhibit 99.2 to
    registrants Current Report on
    Form 8-K
    filed July 25, 2005)**10
.14

Form of Non-Employee Director
    Restricted Stock Unit Award Agreement. (Exhibit 99.2 to
    registrants Current Report on
    Form 8-K
    filed February 22, 2006).10
.15

Interactive Data Corporation
    Compensation Plan for Non-Employee Directors (Exhibit 99.1
    to registrants Current Report on
    Form 8-K
    filed February 22, 2006.)10
.16

Letter Agreement, dated
    November 14, 1999, between Data Broadcasting Corporation
    and Alan J. Hirschfield. (Exhibit 10.4 to registrants
    Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2000.)**10
.17

Letter Agreement, dated
    November 14, 1999, between Data Broadcasting Corporation
    and Allan R. Tessler. (Exhibit 10.5 to registrants Annual
    Report on
    Form 10-K
    for the fiscal year ended December 31, 2000.)**10
.18

Trade Mark License Agreement,
    dated March 7, 2001, between Data Broadcasting Corporation
    and The Financial Times Limited. (Exhibit 10.7 to
    registrants Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2000.)10
.19

Interactive Data Corporation 2001
    Employee Stock Purchase Plan. (Exhibit 10.8 to
    registrants Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2001.)**10
.20

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
.21

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
.22

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.) 74




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##### Table of Contents



ExhibitNumber

Description of
    Exhibits10
.23

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
.24

Amendment No. 2 to Management
    Services Agreement, dated September 16, 2004.
    (Exhibit 10.20 to the registrants Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2004.)10
.25

Amendment No. 3 to Management
    Services Agreement dated September 16, 2004.
    (Exhibit 10.21 to the registrants Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2004.)10
.26

Amendment No. 4 to Management
    Services Agreement dated September 16, 2004.
    (Exhibit 10.22 to the registrants Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2004.)10
.27

Amendment No. 5 to Management
    Services Agreement effective as of July 1, 2004.10
.28

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
.29

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
.30

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
.31

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
.32

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
.33

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
.34

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.)**10
.35

Pearson plc Long-Term Incentive
    Plan. (Exhibit 10.31 to registrants Quarterly Report
    on
    Form 10-Q
    for the fiscal quarter ended March 31, 2005)**10
.36

Pearson Inc. Pension Plan.
    (Exhibit 10.32 to registrants Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended March 31, 2005)**10
.37

Amendment to Pearson Inc. Pension
    Plan with effective date January 1, 2002.
    (Exhibit 10.33 to registrants Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended March 31, 2005)**10
.38

Amendment to Pearson Inc. Pension
    Plan dated May 30, 2002. (Exhibit 10.34 to
    registrants Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended March 31, 2005)**10
.39

Amendment to Pearson Inc. Pension
    Plan with effective date November 20, 2003.
    (Exhibit 10.35 to registrants Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended March 31, 2005)**10
.40

Pearson plc Pension Plan.
    (Exhibit 10.36 to registrants Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended March 31, 2005)**10
.41

2005 Executive Management Bonus
    Plan. (Exhibit 99.1 to registrants Current Report on
    Form 8-K
    filed April 6, 2005.)**10
.42

2005 Executive Management Bonus
    Plan for Stuart Clark. (Exhibit 99.1 to registrants
    Current Report on
    Form 8-K
    filed May 24, 2005)**21


Subsidiaries of the registrant.23


Consent of PricewaterhouseCoopers
    LLP. 75




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##### Table of Contents



ExhibitNumber

Description of
    Exhibits31
.1

Certification of Chief Executive
    Officer pursuant to Exchange Act
    Rules 13a-14(a)
    or
    15d-14(a),
    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(a)
    or
    15d-14(a),
    as adopted pursuant to Section 302 of Sarbanes-Oxley Act of
    2002.32
.1

Certification of Chief Executive
    Officer pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
    (furnished)32
.2

Certification of Chief Financial
    Officer pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
    (furnished)     *
    
    Exhibits followed by a parenthetical reference are previously
    filed and incorporated by reference from the document described.**
    
    Management contract or compensation plan or arrangement. 76




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##### Table of Contents



SIGNATURES
      By:
    /s/  Stuart
    J. Clark   Chief Executive Officer
      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/  Olivier
    FleurotOlivier
    Fleurot

Director/s/  Donald
    P. GreenbergDonald
    P. Greenberg

Director/s/  Alan
    J. HirschfieldAlan
    J. Hirschfield

Director/s/  Philip
    J. HoffmanPhilip
    J. Hoffman

Director/s/  Carl
    SpielvogelCarl
    Spielvogel

Director/s/  Allan
    R. TesslerAllan
    R. Tessler

Director  77