**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

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**FORM 10-Q**

 

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**(Mark One)**

 
| **x**      | ** ** | **QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**                                                                                                                                                                                                                                           |
|------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                             |
| ** ** | ** ** | **For  the quarterly period ended August 31, 2007**                                                                                                                                                                                                                                                                                    |
| ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                             |
| **OR**     |
| ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                             |
| **o**      | ** ** | **TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**                                                                                                                                                                                                                                          |
| ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                                                             |
| ** ** | ** ** | **For  the transition period from                         to                        ** |

** **

**Commission file number 001-32511**

 

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**IHS INC.**

(Exactname of registrant as specified in its charter)

 

| **Delaware**                                                    | ** ** | **13-3769440**                      |
|-----------------------------------------------------------------|------------|-------------------------------------|
| (State or Other Jurisdiction of  Incorporation or Organization) |       | (IRS Employer   Identification No.) |

 

**15Inverness Way EastEnglewood, CO 80112**

(Addressof Principal Executive Offices)

 

**(303)790-0600**

(Registrant’stelephone number, including area code)

 

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Indicateby check mark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.
|                      x YES                o NO |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, or a non-accelerated filer. See definition of “acceleratedfiler and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Checkone):
| Large accelerated filer   o |   |   |   | Accelerated filer x |   | Non-accelerated  filer o |
|--------------------------------------------|--------|--------|--------|--------------------------|--------|-------------------------------|

 

Indicateby check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Act).
|                      o YES                x NO |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

As ofAugust 31, 2007, there were 48,904,247 shares of our Class A Common Stockoutstanding and 13,750,000 shares of our Class B Common Stock outstanding.

 

 

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** **

**TABLE OFCONTENTS**

 
| **PART I**    | ** **                                                                                  | ** ** |
|---------------|---------------------------------------------------------------------------------------------|------------|
| Item  1.      | Financial Statements                                                                        |       |
| Item 2.       | Management’s  Discussion and Analysis of Financial Condition and Results of Operations |       |
| Item 3.       | Quantitative  and Qualitative Disclosures About Market Risk                                 |       |
| Item 4.       | Controls and  Procedures                                                                    |       |
|          |                                                                                        |       |
| **PART II**   | ** **                                                                                  | ** ** |
| Item 1.       | Legal Proceedings                                                                           |       |
| Item 2.       | Unregistered  Sales of Equity Securities and Use of Proceeds                                |       |
| Item  6.      | Exhibits                                                                                    |       |
|          |                                                                                        |       |
| **SIGNATURE** | ** **                                                                                  | ** ** |

 

 

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**PART I.FINANCIAL INFORMATION**

Item 1.Financial Statements

 

**IHS INC.**

**CONDENSED CONSOLIDATED BALANCE SHEETS**

** **

**(In thousandsexcept share data)**

** **
| ** **                                                                                                                                                                                                                     | ** ** | **As of  August 31, 2007** | ** ** | **As of  November 30, 2006** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------|------------|------------------------------|------------|
| ** **                                                                                                                                                                                                                     | ** ** | **(Unaudited)**            | ** ** | ** **                   | ** ** |
| **Assets**                                                                                                                                                                                                                     | ** ** | ** **                 | ** ** | ** **                   | ** ** |
| Current assets:                                                                                                                                                                                                                |       |                       |       |                         |       |
| Cash and cash  equivalents                                                                                                                                                                                                     |       | $                          | 132,366    |                         | $          | 180,034 |   |
| Short-term  investments                                                                                                                                                                                                        |       | 16,870                     |       | 2,076                        |       |
| Accounts  receivable, net                                                                                                                                                                                                      |       | 142,009                    |       | 151,300                      |       |
| Deferred  subscription costs                                                                                                                                                                                                   |       | 32,240                     |       | 33,293                       |       |
| Deferred income  taxes                                                                                                                                                                                                         |       | 15,242                     |       | 7,758                        |       |
| Other                                                                                                                                                                                                                          |       | 14,296                     |       | 6,461                        |       |
| Total current  assets                                                                                                                                                                                                          |       | 353,023                    |       | 380,922                      |       |
| Non-current  assets:                                                                                                                                                                                                           |       |                       |       |                         |       |
| Property and  equipment, net                                                                                                                                                                                                   |       | 58,614                     |       | 53,096                       |       |
| Intangible  assets, net                                                                                                                                                                                                        |       | 196,381                    |       | 65,962                       |       |
| Goodwill, net                                                                                                                                                                                                                  |       | 534,257                    |       | 350,896                      |       |
| Prepaid pension  asset                                                                                                                                                                                                         |       | 94,510                     |       | 92,488                       |       |
| Other                                                                                                                                                                                                                          |       | 1,251                      |       | 937                          |       |
| Total non-current  assets                                                                                                                                                                                                      |       | 885,013                    |       | 563,379                      |       |
| Total assets                                                                                                                                                                                                                   |       | $                          | 1,238,036  |                         | $          | 944,301 |   |
| **Liabilities and stockholders’ equity**                                                                                                                                                                                  | ** ** | ** **                 | ** ** | ** **                   | ** ** |
| Current  liabilities:                                                                                                                                                                                                          |       |                       |       |                         |       |
| Short-term debt                                                                                                                                                                                                                |       | $                          | 3,062      |                         | $          | 500 |   |
| Accounts payable                                                                                                                                                                                                               |       | 20,652                     |       | 45,622                       |       |
| Accrued  compensation                                                                                                                                                                                                          |       | 25,290                     |       | 30,788                       |       |
| Accrued royalties                                                                                                                                                                                                              |       | 13,184                     |       | 22,801                       |       |
| Other accrued  expenses                                                                                                                                                                                                        |       | 42,282                     |       | 36,047                       |       |
| Income tax  payable                                                                                                                                                                                                            |       | 15,650                     |       | 11,484                       |       |
| Deferred  subscription revenue                                                                                                                                                                                                 |       | 230,736                    |       | 191,229                      |       |
| Total current  liabilities                                                                                                                                                                                                     |       | 350,856                    |       | 338,471                      |       |
| Long-term debt                                                                                                                                                                                                                 |       | —                     |       | 74                           |       |
| Accrued pension  liability                                                                                                                                                                                                     |       | 13,774                     |       | 12,309                       |       |
| Accrued  post-retirement benefits                                                                                                                                                                                              |       | 16,020                     |       | 18,200                       |       |
| Deferred income  taxes                                                                                                                                                                                                         |       | 48,326                     |       | 2,788                        |       |
| Other liabilities                                                                                                                                                                                                              |       | 7,887                      |       | 6,891                        |       |
| Minority  interests                                                                                                                                                                                                            |       | 172                        |       | 377                          |       |
| Commitments and  contingencies                                                                                                                                                                                                 |       |                       |       |                         |       |
| Stockholders’  equity:                                                                                                                                                                                                    |       |                       |       |                         |       |
| Class A common  stock, $0.01 par value per share, 80,000,000 shares authorized, 49,750,527  and 45,265,794 shares issued, 48,904,247 and 45,042,232 shares outstanding at  August 31, 2007 and November 30, 2006, respectively |       | 498                        |       | 453                          |       |
| Class B common  stock, $0.01 par value per share, 13,750,000 shares authorized, issued and  outstanding at August 31, 2007 and November 30, 2006                                                                               |       | 138                        |       | 138                          |       |
| Additional paid  in capital                                                                                                                                                                                                    |       | 369,572                    |       | 175,027                      |       |
| Treasury stock,  at cost: 846,280 and 223,562 shares at August 31, 2007 and November 30, 2006,  respectively                                                                                                                   |       | (32,960                    | )          | (7,551                       | )          |
| Retained earnings                                                                                                                                                                                                              |       | 458,719                    |       | 400,029                      |       |
| Accumulated other  comprehensive income (loss)                                                                                                                                                                                 |       | 5,034                      |       | (2,905                       | )          |
| Total  stockholders’ equity                                                                                                                                                                                               |       | 801,001                    |       | 565,191                      |       |
| Total liabilities  and stockholders’ equity                                                                                                                                                                               |       | $                          | 1,238,036  |                         | $          | 944,301 |   |

 

See accompanying notes.

 

3

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** **

**IHS INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**

** **

**(In thousands except per-share amounts)**

** **
| ** **                                                                                                                                                                                         | ** ** | **Three Months Ended August 31,** | ** ** | **Nine Months Ended August 31,** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------|------------|----------------------------------|------------|
| ** **                                                                                                                                                                                         | ** ** | **2007**                          | ** ** | **2006**                         | ** ** | **2007** | ** ** | **2006** | ** ** |
| ** **                                                                                                                                                                                         | ** ** | **(Unaudited)**                   | ** ** |
| **Revenue:**                                                                                                                                                                                       |       |                              |       |                             |       |   |   |   |   |
| Products                                                                                                                                                                                           |       | $                                 | 154,959    |                             | $          | 117,200 |   | $ | 407,074 |   | $ | 334,265 |   |
| Services                                                                                                                                                                                           |       | 28,397                            |       | 22,723                           |       | 83,803 |   | 68,379 |   |
| Total revenue                                                                                                                                                                                      |       | 183,356                           |       | 139,923                          |       | 490,877 |   | 402,644 |   |
| **Operating expenses:**                                                                                                                                                                            |       |                              |       |                             |       |   |   |   |   |
| Cost of revenue:                                                                                                                                                                                   |       |                              |       |                             |       |   |   |   |   |
| Products                                                                                                                                                                                           |       | 64,259                            |       | 47,871                           |       | 163,266 |   | 141,395 |   |
| Services                                                                                                                                                                                           |       | 18,790                            |       | 16,435                           |       | 53,274 |   | 46,956 |   |
| Total cost of revenue (includes stock-based  compensation expense of $383, $392, $839 and $2,558 for the three and nine  months ended August 31, 2007 and 2006, respectively)                      |       | 83,049                            |       | 64,306                           |       | 216,540 |   | 188,351 |   |
| Selling, general and administrative (includes stock-based  compensation expense of $8,759; $4,048; $21,684 and $9,907 for the three and  nine months ended August 31, 2007 and 2006, respectively) |       | 66,479                            |       | 50,494                           |       | 180,977 |   | 143,338 |   |
| Depreciation and amortization                                                                                                                                                                      |       | 7,118                             |       | 4,218                            |       | 16,619 |   | 10,930 |   |
| Restructuring and other charges                                                                                                                                                                    |       | —                            |       | —                           |       | — |   | 2 |   |
| Gain on sales of assets, net                                                                                                                                                                       |       | —                            |       | 53                               |       | (756 | ) | 53 |   |
| Net periodic pension and post-retirement  benefits                                                                                                                                                 |       | 257                               |       | (1,081                           | )          | (365 | ) | (2,626 | ) |
| Earnings in unconsolidated subsidiaries                                                                                                                                                            |       | (44                               | )          | (50                              | )          | (208 | ) | (180 | ) |
| Other expense (income), net                                                                                                                                                                        |       | (2,975                            | )          | 204                              |       | (3,171 | ) | 1,024 |   |
| Total operating expenses                                                                                                                                                                           |       | 153,884                           |       | 118,144                          |       | 409,636 |   | 340,892 |   |
| **Operating income**                                                                                                                                                                               |       | 29,472                            |       | 21,779                           |       | 81,241 |   | 61,752 |   |
| Interest income                                                                                                                                                                                    |       | 1,970                             |       | 1,789                            |       | 5,318 |   | 4,161 |   |
| Interest expense                                                                                                                                                                                   |       | (99                               | )          | (120                             | )          | (308 | ) | (272 | ) |
| Non-operating income, net                                                                                                                                                                          |       | 1,871                             |       | 1,669                            |       | 5,010 |   | 3,889 |   |
| Income from continuing operations before  income taxes and minority interests                                                                                                                      |       | 31,343                            |       | 23,448                           |       | 86,251 |   | 65,641 |   |
| Provision for income taxes                                                                                                                                                                         |       | (9,580                            | )          | (6,987                           | )          | (27,532 | ) | (21,079 | ) |
| Income from continuing operations before  minority interests                                                                                                                                       |       | 21,763                            |       | 16,461                           |       | 58,719 |   | 44,562 |   |
| Minority interests                                                                                                                                                                                 |       | (32                               | )          | (89                              | )          | (29 | ) | (170 | ) |
| Income from continuing operations                                                                                                                                                                  |       | 21,731                            |       | 16,372                           |       | 58,690 |   | 44,392 |   |
| Discontinued operations:                                                                                                                                                                           |       |                              |       |                             |       |   |   |   |   |
| Loss from discontinued operations, net                                                                                                                                                             |       | —                            |       | (298                             | )          | — |   | (1,920 | ) |
| **Net income**                                                                                                                                                                                     |       | $                                 | 21,731     |                             | $          | 16,074 |   | $ | 58,690 |   | $ | 42,472 |   |
| Income from continuing operations per  share:                                                                                                                                                      |       |                              |       |                             |       |   |   |   |   |
| Basic (Class A and Class B common  stock)                                                                                                                                                |       | $                                 | 0.36       |                             | $          | 0.29 |   | $ | 1.00 |   | $ | 0.79 |   |
| Diluted (Class A and Class B  common stock)                                                                                                                                              |       | $                                 | 0.35       |                             | $          | 0.29 |   | $ | 0.98 |   | $ | 0.79 |   |
| Loss from discontinued operations per  share:                                                                                                                                                      |       |                              |       |                             |       |   |   |   |   |
| Basic (Class A and Class B common  stock)                                                                                                                                                |       | $                                 | —     |                             | $          | (0.01 | ) | $ | — |   | $ | (0.04 | ) |
| Diluted (Class A and Class B  common stock)                                                                                                                                              |       | $                                 | —     |                             | $          | (0.01 | ) | $ | — |   | $ | (0.04 | ) |
| Net income per share:                                                                                                                                                                              |       |                              |       |                             |       |   |   |   |   |
| Basic (Class A and Class B common  stock)                                                                                                                                                |       | $                                 | 0.36       |                             | $          | 0.28 |   | $ | 1.00 |   | $ | 0.75 |   |
| Diluted (Class A and Class B  common stock)                                                                                                                                              |       | $                                 | 0.35       |                             | $          | 0.28 |   | $ | 0.98 |   | $ | 0.75 |   |
| Weighted average shares:                                                                                                                                                                           |       |                              |       |                             |       |   |   |   |   |
| Basic (Class A common stock)                                                                                                                                                                  |       | 47,367                            |       | 43,299                           |       | 44,954 |   | 42,568 |   |
| Basic (Class B common stock)                                                                                                                                                                  |       | 13,750                            |       | 13,750                           |       | 13,750 |   | 13,750 |   |
| Diluted (Class A common stock)                                                                                                                                                                |       | 62,197                            |       | 57,090                           |       | 59,616 |   | 56,433 |   |
| Diluted (Class B common stock)                                                                                                                                                                |       | 13,750                            |       | 13,750                           |       | 13,750 |   | 13,750 |   |

 

See accompanying notes.

 

4

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** **

**IHS INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

** **

**(In thousands)**

** **
| ** **                                                                       | ** ** | **Nine Months Ended August 31,** | ** ** |
|----------------------------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                                       | ** ** | **2007**                         | ** ** | **2006** | ** ** |
| ** **                                                                       | ** ** | **(Unaudited)**                  | ** ** |
| **Operating activities**                                                         | ** ** | ** **                       | ** ** | ** ** | ** ** |
| Net income                                                                       |       | $                                | 58,690     |   | $ | 42,472 |   |
| Reconciliation of net income to net cash  provided by operating activities: |       |                             |       |   |   |
| Depreciation and amortization                                                    |       | 16,619                           |       | 10,930 |   |
| Stock-based compensation expense                                                 |       | 22,523                           |       | 12,720 |   |
| (Gain) loss on sales of assets, net                                              |       | (756                             | )          | 53 |   |
| Impairment of assets of discontinued  operations                                 |       | —                           |       | 1,012 |   |
| Non-cash net periodic pension and  post-retirement benefits                      |       | (2,988                           | )          | (3,212 | ) |
| Undistributed earnings of unconsolidated  subsidiaries, net                      |       | 96                               |       | — |   |
| Minority interests                                                               |       | (203                             | )          | 49 |   |
| Deferred income taxes                                                            |       | 7,715                            |       | 569 |   |
| Change in assets and liabilities:                                                |       |                             |       |   |   |
| Accounts receivable, net                                                         |       | 25,312                           |       | 51,148 |   |
| Other current assets                                                             |       | 1,384                            |       | 3,273 |   |
| Accounts payable                                                                 |       | (28,477                          | )          | (26,679 | ) |
| Accrued expenses                                                                 |       | (18,828                          | )          | (10,772 | ) |
| Income taxes                                                                     |       | 841                              |       | (971 | ) |
| Deferred subscription revenue                                                    |       | 6,832                            |       | 13,560 |   |
| **Net cash provided by operating activities**                                    |       | 88,760                           |       | 94,152 |   |
| **Investing activities**                                                         | ** ** | ** **                       | ** ** | ** ** | ** ** |
| Capital expenditures on property and  equipment                                  |       | (7,173                           | )          | (8,047 | ) |
| Intangible assets acquired                                                       |       | —                           |       | (3,300 | ) |
| Change in other assets                                                           |       | (3,409                           | )          | 289 |   |
| Purchase of investments                                                          |       | (83,675                          | )          | (5,353 | ) |
| Sales and maturities of investments                                              |       | 68,833                           |       | 26,671 |   |
| Acquisitions of businesses, net of cash  acquired                                |       | (87,343                          | )          | (84,454 | ) |
| Proceeds from sales of assets                                                    |       | 2,461                            |       | 400 |   |
| **Net cash used in investing activities**                                        |       | (110,306                         | )          | (73,794 | ) |
| **Financing activities**                                                         | ** ** | ** **                       | ** ** | ** ** | ** ** |
| Net payments on debt                                                             |       | (500                             | )          | (210 | ) |
| Excess tax benefit from equity compensation  plans                               |       | 715                              |       | 7,383 |   |
| Repurchases of common stock                                                      |       | (25,409                          | )          | — |   |
| **Net cash provided by (used in) financing  activities**                         |       | (25,194                          | )          | 7,173 |   |
| Foreign exchange impact on cash balance                                          |       | (928                             | )          | 1,735 |   |
| Net decrease in cash and cash equivalents                                        |       | (47,668                          | )          | 29,266 |   |
| Cash and cash equivalents at the beginning  of the period                        |       | 180,034                          |       | 132,365 |   |
| Cash and cash equivalents at the end of the  period                              |       | $                                | 132,366    |   | $ | 161,631 |   |

 

See accompanying notes.

 

5

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** **

**IHS INC.**

**CONSOLIDATEDSTATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY**

**(Inthousands)**

 
| ** **                                                   | ** ** | **Shares  of  Class A  Common  Stock** | ** ** | **Class A  Common  Stock** | ** ** | **Shares  of  Class B  Common  Stock** | ** ** | **Class B  Common  Stock** | ** ** | **Additional  Paid-In  Capital** | ** ** | **Treasury  Stock** | ** ** | **Retained  Earnings** | ** ** | **Accumulated  Other  Comprehensive  Income (Loss)** | ** ** | **Total** | ** ** |
|--------------------------------------------------------------|------------|----------------------------------------|------------|----------------------------|------------|----------------------------------------|------------|----------------------------|------------|----------------------------------|------------|---------------------|------------|------------------------|------------|------------------------------------------------------|------------|-----------|------------|
| ** **                                                   | ** ** | **(Unaudited)**                        | ** ** |
| **Balance  at November 30, 2006**                       |       | 45,042                                 |       | $                          | 453        |                                   | 13,750     |                       | $          | 138                              |       | $                   | 175,027    |                   | $          | (7,551                                               | )          | $         | 400,029    |   | $ | (2,905 | ) | $ | 565,191 |   |
| Stock-based award  activity                                  |       | 44                                     |       | 1                          |       | —                                 |       | —                     |       | 22,489                           |       | (1,999              | )          | —                 |       | —                                               |       | 20,491    |       |
| Excess tax  benefit on vested shares                         |       | —                                 |       | —                     |       | —                                 |       | —                     |       | 715                              |       | —              |       | —                 |       | —                                               |       | 715       |       |
| Repurchases of  common stock                                 |       | (581                                   | )          | —                     |       | —                                 |       | —                     |       | —                           |       | (23,410             | )          | —                 |       | —                                               |       | (23,410   | )          |
| Shares issued for  Jane’s Information Group acquisition |       | 4,399                                  |       | 44                         |       | —                                 |       | —                     |       | 171,341                          |       | —              |       | —                 |       | —                                               |       | 171,385   |       |
| Net income                                                   |       | —                                 |       | —                     |       | —                                 |       | —                     |       | —                           |       | —              |       | 58,690                 |       | —                                               |       | 58,690    |       |
| Other  comprehensive income:                                 |       |                                   |       |                       |       |                                   |       |                       |       |                             |       |                |       |                   |       |                                                 |       |      |       |
| Foreign currency  translation adjustments                    |       | —                                 |       | —                     |       | —                                 |       | —                     |       | —                           |       | —              |       | —                 |       | 7,939                                                |       | 7,939     |       |
| Comprehensive  income, net of tax                       |       |                                   |       |                       |       |                                   |       |                       |       |                             |       |                |       |                   |       |                                                 |       | 66,629    |       |
| **Balance  at August 31, 2007**                         |       | 48,904                                 |       | $                          | 498        |                                   | 13,750     |                       | $          | 138                              |       | $                   | 369,572    |                   | $          | (32,960                                              | )          | $         | 458,719    |   | $ | 5,034 |   | $ | 801,001 |   |

 

See accompanyingnotes.

 

6

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**IHS INC.**

**NOTES TOUNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

 

**1.**     Basis of Presentation and Significant Accounting Policies

** **

***Nature ofOperations***

*** ***

IHS Inc. (IHS, the Company, we,our, or us) is a publicly traded Delaware corporation. We are one of theleading global providers of critical technical information, decision-supporttools and services to customers in the energy, defense, aerospace,construction, electronics, and automotive industries.

 

***ConsolidationPolicy***

*** ***

The consolidated financial statementsinclude the accounts of all wholly owned and majority-owned subsidiaries. Allsignificant intercompany accounts and transactions have been eliminated.

 

***UnauditedCondensed Consolidated Financial Statements***

*** ***

The accompanying unauditedcondensed consolidated financial statements reflect all adjustments, consistingof normal recurring accruals, which are necessary for a fair presentation ofthe financial position, results of operations and cash flows for the periodspresented. The accompanying condensed consolidated financial statements includeour accounts and the accounts of our majority-owned domestic and foreignsubsidiaries. All significant intercompany transactions and balances have beeneliminated in consolidation. These condensed consolidated financial statementsshould be read in conjunction with the consolidated financial statements forthe year ended November 30, 2006. The results of operations for the three andnine months ended August 31, 2007, are not necessarily indicative of the resultsthat may be achieved for the full fiscal year and cannot be used to indicatefinancial performance for the entire year.

 

The year-end condensed consolidatedbalance sheet data was derived from the audited November 30, 2006, balancesheet.

 

***ResultsSubject to Seasonal Variations***

*** ***

Historically, our business has hadseasonal aspects. However, with the continued organic growth in oursubscription-based business model combined with several acquisitions in recentyears, our seasonal aspects have diminished. Our first quarter does benefitfrom the inclusion of the results from CERAWeek, an annual energy executivegathering.

 

Subscriptions are generally paid infull within one to two months after the subscription period commences. As aresult, the timing of our cash flows generally precedes the recognition ofrevenue and income. Due to the historical timing and alignment of our sales tocorrespond to certain of our customers’ budget and funding cycles, our cashflow provided by operating activities tends to be higher in our first fiscalquarter as we receive subscription payments.

 

***Use ofEstimates***

*** ***

Thepreparation of financial statements in conformity with generally acceptedaccounting principles requires management to make estimates and assumptionsthat affect the reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements andthe reported amounts of revenues and expenses during the reporting period.Significant estimates have been made in areas that include revenue recognition,useful lives of fixed and intangible assets, allocation of purchase price toacquired assets and liabilities, the recoverability of intangible assets andgoodwill, income and other taxes, pension and post-retirement benefits, andstock-based compensation. Actual results could differ from those estimates.

 

7

 

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*** ***

***Reclassification***

*** ***

***Certain prior-year balances have been reclassified toconform to current-year presentation.***

*** ***

***IncomeTaxes***

*** ***

Our effective quarterly tax rate isestimated based upon the effective tax rate expected to be applicable for thefull fiscal year.

 

Our effective taxrate for the third quarter of 2007 was 30.6% compared to 29.8% for theprior-year period. Our effective tax rate for the nine months ended August 31,2007, was 31.9% compared to 32.1% for the nine months ended August 31, 2006.

 

***NewAccounting Pronouncements***

*** ***

InJuly 2006, the Financial Accounting Standards Board (FASB) issued FASBInterpretation No. 48, *Accounting for Uncertaintyin Income Taxes—an interpretation of FASB Statement No. 109* (FIN48), which provides clarification related to the process associated withaccounting for uncertain tax positions recognized in consolidated financialstatements. FIN 48 prescribes a more-likely-than-not threshold for financialstatement recognition and measurement of a tax position taken, or expected tobe taken, in a tax return. FIN 48 also provides guidance related to, amongother things, classification, accounting for interest and penalties associated withtax positions, and disclosure requirements. We are required to adopt FIN 48 onDecember 1, 2007, the first day of our 2008 fiscal year. We are currentlyevaluating the impact of adopting FIN 48 on our financial position and resultsof operations.

 

In September2006, the FASB issued SFAS No. 157, *Fair Value Measurements*(SFAS No. 157). Among other requirements, SFAS No. 157 defines fair value andestablishes a framework for measuring fair value and also expands disclosureabout the use of fair value to measure assets and liabilities. SFAS No. 157 iseffective beginning the first fiscal year that begins after November 15, 2007.We are required to adopt SFAS No. 157 on December 1, 2007, although earlieradoption is permitted. We are currently evaluating the impact of SFAS No. 157on our financial position and results of operations.

 

InSeptember 2006, FASB issued SFAS No. 158, *Employer’s Accounting forDefined Benefit Pension and Other Postretirement Plans - an Amendment of FASBStatements No. 87, 88, 106 and 132(R)* (SFAS No. 158). SFAS No. 158requires an employer that is a business entity and sponsors one or more singleemployer benefit plans to (1) recognize the funded status of the benefit in itsstatement of financial position, (2) recognize as a component of othercomprehensive income, net of tax, the gains or losses and prior service costsor credits that arise during the period but are not recognized as components ofnet periodic benefit cost, (3) measure defined benefit plan assets andobligations as of the date of the employer’s fiscal year end statement offinancial position and (4) disclose in the notes to financial statementsadditional information about certain effects on net periodic benefit cost forthe next fiscal year that arise from delayed recognition of the gains orlosses, prior service costs on credits, and transition asset or obligations. Weplan to adopt SFAS No. 158 effective at the end of our fiscal year endingNovember 30, 2007. If SFAS No. 158 had been effective as of November 30, 2006,total assets would have been approximately $22 million lower, total liabilitieswould have been approximately $5 million lower and shareholders’ equity wouldhave been approximately $17 million lower. Because our net pension liabilitiesare dependent upon future events and circumstances, the impact at the time ofadoption of SFAS No. 158 may differ from these amounts. Adoption of SFAS No.158 is not expected to have any effect on our compliance with our debtcovenants.

 

InFebruary 2007, the FASB issued SFAS No. 159, *The FairValue Option for Financial Assets and Financial Liabilities* (SFASNo. 159). SFAS No. 159 expands the use of fair value measurement by permittingentities to choose to measure many financial instruments and certain otheritems at fair value that are not currently required to be measured at fairvalue. SFAS No. 159 is effective beginning the first fiscal year that beginsafter November 15, 2007. We are required to adopt SFAS No. 159 on December 1,2007, although earlier adoption is permitted. We are currently evaluating theimpact of SFAS No. 159 on our financial position and results of operations.

 

8

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**2.**     Business Combinations

** **

Allacquisitions are accounted for using the purchase method of accounting. Theconsolidated financial statements include all the assets and liabilitiesacquired and the results of operations from the respective dates ofacquisition. Pro forma results related to the acquired businesses have not beenpresented as they did not have a material impact on our results of operations.Notable transactions for the nine months ended August 31, 2007, are discussedbelow.

 

***Acquisitions***

*** ***

*PCNAlert*.On August 27, 2007, we announced we acquired the assets of PCNAlert fromSupplyEdge, Inc., of Pasadena, Calif., for $10 million in an all-cashtransaction. PCNAlert delivers leading component event management solutions,including product change notifications and end-of-life notifications for theelectronic components industry.

 

*John S. Herold, Inc. (Herold).*On August 16, 2007, we announced theacquisition of Norwalk, CT-based Herold, an independent research firm thatprovides in-depth analyses and key financial and operational data on more than400 global oil and gas companies. We acquired Herold for approximately $47.1million, net of acquired cash, using existing cash on hand.

 

*StrategicDecision Group Corporation’s Oil & Gas Consulting Practice (SDG).*OnJuly 17, 2007,**we announced we acquired theassets of SDG, a provider of strategic consulting services to leadingenterprises in the global oil and gas industry, for $8.4 million using $5.3million of existing cash on-hand and a $3.1 million note payable. SDG will bemanaged as a service within Cambridge Energy Research Associates (CERA), an IHScompany.

 

*Jane’sInformation Group* (*Jane’s*). OnJune 12, 2007, we executed an agreement with Woodbridge International HoldingsS.A. (Woodbridge) for the purchase of Jane’s, a leading provider of informationto the defense industry and governments.  The parties completed thetransaction on the same date.  Terms of the transaction included deliveryof 4,399,000 shares of our Class A Common Stock valued at $171.4 million andless than $0.1 million in cash in exchange for all of the outstanding equityand debt of Jane’s. Woodbridge has agreed to a three-year lock-up agreementthat restricts its ability to sell any IHS shares.

 

*GeologicalConsulting Services (GCS).*On June 6, 2007, we announced weacquired the inventory and assets of GCS of Houston—a provider of formationtops data files in electronic and other media covering South Texas, East Texas,North Louisiana, South Arkansas, Mississippi, Alabama and Florida—for $8.2million using existing cash on hand.

 

*RapiData*.On March 21, 2007, we announced we acquired certain assets including theRapiDataTM product, well known for its comprehensive well test, pressure andcompletions data for the Western Canadian Sedimentary Basin. IHS purchasedRapiData from Rapid Technology Corporation of Calgary, Alberta, Canada, forapproximately $6.3 million using existing cash on hand.

 

*GeologicalData Services Inc. (GDS).* On January 11, 2007, we announcedwe acquired the majority of the assets of GDS of Addison, Texas, a provider ofinterpreted subsurface data “formation-tops” covering the Permian Basin, U.S.mid-continent and Rocky Mountain regions. We acquired GDS for $8.0 millionusing existing cash on hand.

 

9

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Thepurchase prices for these 2007 acquisitions, excluding acquired cash andincluding acquisition-related costs, were initially allocated as follows (inthousands):
| ** **                  | ** ** | **Jane’s** | ** ** | **Herold** | ** ** | **All others** | ** ** | **Total** | ** ** |
|-----------------------------|------------|-----------------|------------|------------|------------|----------------|------------|-----------|------------|
| Assets:                     |       |            |       |       |       |           |       |      |       |
| Current assets              |       | $               | 16,100     |       | $          | 3,597          |       | $         | 2,517      |   | $ | 22,214 |   |
| Property and equipment      |       | 4,685           |       | 285        |       | 320            |       | 5,290     |       |
| Intangible assets           |       | 94,500          |       | 29,200     |       | 16,135         |       | 139,835   |       |
| Goodwill                    |       | 115,545         |       | 30,285     |       | 24,813         |       | 170,643   |       |
| Other long-term assets      |       | 223             |       | —     |       | —         |       | 223       |       |
| Total assets                |       | 231,053         |       | 63,367     |       | 43,785         |       | 338,205   |       |
| Liabilities:                |       |            |       |       |       |           |       |      |       |
| Current liabilities         |       | 29,573          |       | 6,913      |       | 2,797          |       | 39,283    |       |
| Deferred taxes              |       | 27,002          |       | 9,314      |       | —         |       | 36,316    |       |
| Other long-term liabilities |       | 1,841           |       | 44         |       | —         |       | 1,885     |       |
| Total liabilities           |       | 58,416          |       | 16,271     |       | 2,797          |       | 77,484    |       |
| Purchase price              |       | $               | 172,637    |       | $          | 47,096         |       | $         | 40,988     |   | $ | 260,721 |   |

** **

**3.**     Restructuring and Offering Charges

** **

Duringthe fourth quarter of 2006, we executed a restructuring initiative principallyaffecting our Engineering segment. This initiative was undertaken to facilitatecontinued growth through the focus on a narrower group of products andservices, exit non-core legacy applications and improve our operationaleffectiveness. During the course of the restructuring, we reduced our aggregateworkforce by approximately 40 employees.

 

Therestructuring charge was incurred in its entirety during the fourth quarter of2006. Approximately $1.9 million of the charge related to our Engineeringsegment, $0.4 million pertained to our Energy segment, and $0.1 million relatedto Shared Services. The restructuring charge was comprised entirely of employeeseverance and other termination benefits costs.

 

Areconciliation of the related accrued restructuring liability as of August 31,2007 was as follows:
| ** **                                                 | ** ** | **Employee  Severance and  Other  Termination  Benefits** | ** ** |
|------------------------------------------------------------|------------|-----------------------------------------------------------|------------|
| ** **                                                 | ** ** | **(In thousands)**                                        | ** ** |
| Balance at November 30, 2006                               |       | $                                                         | 2,046      |   |
| Less: Amount paid during the period ended  August 31, 2007 |       | (1,627                                                    | )          |
| Balance at August 31, 2007                                 |       | $                                                         | 419        |   |

 

**4.**     Discontinued Operations

** **

During the third quarter of 2005, a businessin our Energy segment was classified as being held for sale. We continuallyevaluate opportunities to align our business activities within core operations.The business held for sale was a manufacturing operation, which is not a partof our core operations.

 

Duringthe first quarter of 2006, we revised our estimate and wrote down the value ofthe assets of the discontinued operation $1.0 million based on what we hadexperienced to date in the sales process. During the third quarter of 2006, wesold the business to an unrelated third party for approximately$0.3 million and recognized a loss of less than $0.1 million on thesale of the business.

 

10

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For all of the periods presented,the related results of operations are shown as a discontinued operation, net oftax, in our condensed consolidated statements of operations and cash flows.

 

Operating results of thediscontinued operations for the three and nine months ended August 31, 2007 and2006 were as follows:

 
| ** **                             | ** ** | **Three Months Ended August 31,** | ** ** | **Nine Months Ended August 31,** | ** ** |
|----------------------------------------|------------|-----------------------------------|------------|----------------------------------|------------|
| ** **                             | ** ** | **2007**                          | ** ** | **2006**                         | ** ** | **2007** | ** ** | **2006** | ** ** |
| ** **                             | ** ** | **(In thousands)**                | ** ** |
| Revenue                                |       | $                                 | —     |                             | $          | 5 |   | $ | — |   | $ | 399 |   |
| Loss from discontinued operations      |       | $                                 | —     |                             | $          | (309 | ) | $ | — |   | $ | (2,766 | ) |
| Tax benefit                            |       | —                            |       | 11                               |       | — |   | 846 |   |
| Loss from discontinued operations, net |       | $                                 | —     |                             | $          | (298 | ) | $ | — |   | $ | (1,920 | ) |

 

**5.****    ****Commitments and Contingencies**

 

We are a party to various legalproceedings that arise in the ordinary course of business. In the opinion ofmanagement, none of these actions, either individually or in the aggregate, isexpected to have a material adverse affect on our financial condition,liquidity or results of operations.

 

**6.**     Goodwill and IntangibleAssets

** **

Thefollowing table presents details of our intangible assets, other than goodwill,as of August 31, 2007:

 
| ** **                                      | ** ** | **Useful Life** | ** ** | **Gross**          | ** ** | **Accumulated  Amortization** | ** ** | **Net** | ** ** |
|-------------------------------------------------|------------|-----------------|------------|--------------------|------------|-------------------------------|------------|---------|------------|
| ** **                                      | ** ** | **(Years)**     | ** ** | **(In thousands)** | ** ** |
| Intangible assets subject to amortization:      |       |            |       |               |       |                          |       |    |       |
| Information databases                           |       | 5-15            |       | $                  | 132,590    |                          | $          | (10,854 | )          | $ | 121,736 |   |
| Customer relationships                          |       | 2-11            |       | 42,643             |       | (6,907                        | )          | 35,736  |       |
| Non-compete agreements                          |       | 5               |       | 5,297              |       | (2,625                        | )          | 2,672   |       |
| Developed computer software                     |       | 5               |       | 7,435              |       | (2,158                        | )          | 5,277   |       |
| Other                                           |       | 3-11            |       | 1,355              |       | (1,155                        | )          | 200     |       |
| Total                                           |       |            |       | 189,320            |       | (23,699                       | )          | 165,621 |       |
| Intangible assets not subject to  amortization: |       |            |       |               |       |                          |       |    |       |
| Trademarks                                      |       |            |       | 29,252             |       |                          |       | 29,252  |       |
| Perpetual licenses                              |       |            |       | 1,508              |       | —                        |       | 1,508   |       |
| Total                                           |       |            |       | 30,760             |       | —                        |       | 30,760  |       |
| Total intangible assets                         |       |            |       | $                  | 220,080    |                          | $          | (23,699 | )          | $ | 196,381 |   |

 

11

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Thefollowing table presents details of our intangible assets, other than goodwill,as of November 30, 2006:

 
| ** **                                      | ** ** | **Useful Life** | ** ** | **Gross**          | ** ** | **Accumulated  Amortization** | ** ** | **Net** | ** ** |
|-------------------------------------------------|------------|-----------------|------------|--------------------|------------|-------------------------------|------------|---------|------------|
| ** **                                      | ** ** | **(Years)**     | ** ** | **(In thousands)** | ** ** |
| Intangible assets subject to amortization:      |       |            |       |               |       |                          |       |    |       |
| Information databases                           |       | 5-15            |       | $                  | 24,600     |                          | $          | (5,535  | )          | $ | 19,065 |   |
| Customer relationships                          |       | 2-5             |       | 28,664             |       | (1,904                        | )          | 26,760  |       |
| Non-compete agreements                          |       | 5               |       | 3,844              |       | (809                          | )          | 3,035   |       |
| Developed computer software                     |       | 5               |       | 6,824              |       | (1,244                        | )          | 5,580   |       |
| Other                                           |       | 3-11            |       | 2,042              |       | (1,499                        | )          | 543     |       |
| Total                                           |       |            |       | 65,974             |       | (10,991                       | )          | 54,983  |       |
| Intangible assets not subject to  amortization: |       |            |       |               |       |                          |       |    |       |
| Trademarks                                      |       |            |       | 9,509              |       | —                        |       | 9,509   |       |
| Perpetual licenses                              |       |            |       | 1,470              |       | —                        |       | 1,470   |       |
| Total intangible assets                         |       |            |       | $                  | 76,953     |                          | $          | (10,991 | )          | $ | 65,962 |   |

 

Theestimated future amortization expense of intangible assets is as follows:

 
| **Year**       | ** ** | **Amount**         | ** ** |
|----------------|------------|--------------------|------------|
| ** **     | ** ** | **(In thousands)** | ** ** |
| Remainder 2007 |       | $                  | 5,066      |   |
| 2008           |       | 19,633             |       |
| 2009           |       | 17,811             |       |
| 2010           |       | 15,828             |       |
| 2011           |       | 13,941             |       |
|                |            |                    |            |  |

 

Amortizationexpense of intangible assets was $3.2 million and $2.7 million for the threemonths ended August 31, 2007 and 2006, respectively. Amortization expense ofintangible assets was $9.1 million and $6.0 million for the nine months endedAugust 31, 2007 and 2006, respectively.

 

Changesin our goodwill from November 30, 2006, to August 31, 2007 were the result ofacquisitions (see Note 2) and foreign-currency exchange-rate fluctuations.

 

12

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**7.**     Other Comprehensive Income(Loss)

** **

Ourcomprehensive income (loss) for the three and nine months ended August 31, 2007and 2006 was as follows:

 
| ** **                                               | ** ** | **Three Months Ended August 31,** | ** ** | **Nine Months Ended August 31,** | ** ** |
|----------------------------------------------------------|------------|-----------------------------------|------------|----------------------------------|------------|
| ** **                                               | ** ** | **2007**                          | ** ** | **2006**                         | ** ** | **2007** | ** ** | **2006** | ** ** |
| ** **                                               | ** ** | **(In thousands)**                | ** ** |
| Net income                                               |       | $                                 | 21,731     |                             | $          | 16,074 |   | $ | 58,690 |   | $ | 42,472 |   |
| Other comprehensive income (loss):                       |       |                              |       |                             |       |   |   |   |   |
| Foreign currency translation adjustment                  |       | 4,160                             |       | (159                             | )          | 7,939 |   | 8,648 |   |
| Minimum pension liability adjustment                     |       | —                            |       | —                           |       | — |   | (323 | ) |
| Unrealized gains on foreign currency  hedges, net of tax |       | —                            |       | 809                              |       | — |   | 2,597 |   |
| Unrealized gains on short-term investments,  net of tax  |       | —                            |       | 5                                |       | — |   | 25 |   |
| Total other comprehensive income, net of  tax            |       | $                                 | 25,891     |                             | $          | 16,729 |   | $ | 66,629 |   | $ | 53,419 |   |

 

**8.**     Stock-based Compensation

** **

OnAugust 31, 2007, we had one share-based compensation plan: the Amended andRestated IHS Inc. 2004 Long-Term Incentive Plan (LTIP). The LTIP provides forthe grant of non-qualified stock options, incentive stock options, stockappreciation rights, restricted stock, restricted stock units, performanceunits and performance shares, cash-based awards, other stock based awards andcovered employee annual incentive awards. Certain option and share awardsprovide for accelerated vesting if there is a change in control (as defined inthe plans). The 2004 Directors Stock Plan, a sub-plan under the LTIP, providesfor the grant of restricted stock and restricted stock units to non-employeedirectors as defined in that plan. We believe that such awards better align theinterests of our employees and non-employee directors with those of ourshareholders.

 

We haveauthorized a maximum of 7 million shares, minus the number of shares relatingto any award granted and outstanding as of, or subsequent to, the effectivedate under any other of our equity compensation plans, unless shares used tosatisfy such award are shares repurchased from the open market.

 

Stock-based compensation expense that hasbeen charged against income for those plans was as follows:

 
| ** **                          | ** ** | **Three Months Ended August 31,** | ** ** | **Nine Months Ended August 31,** | ** ** |
|-------------------------------------|------------|-----------------------------------|------------|----------------------------------|------------|
| ** **                          | ** ** | **2007**                          | ** ** | **2006**                         | ** ** | **2007** | ** ** | **2006** | ** ** |
| ** **                          | ** ** | **(In thousands)**                | ** ** |
| Cost of revenue                     |       | $                                 | 383        |                             | $          | 392 |   | $ | 839 |   | $ | 2,558 |   |
| Selling, general and administrative |       | 8,759                             |       | 4,048                            |       | 21,684 |   | 9,907 |   |
| Stock-based compensation expense    |       | $                                 | 9,142      |                             | $          | 4,440 |   | $ | 22,523 |   | $ | 12,465 |   |

 

Totalincome tax benefit recognized in the income statement for share-basedcompensation arrangements for the three and nine months ended August 31 was asfollows:

 
| ** **         | ** ** | **Three Months Ended August 31,** | ** ** | **Nine Months Ended August 31,** | ** ** |
|--------------------|------------|-----------------------------------|------------|----------------------------------|------------|
| ** **         | ** ** | **2007**                          | ** ** | **2006**                         | ** ** | **2007** | ** ** | **2006** | ** ** |
| ** **         | ** ** | ** **                        | ** ** | ** **                       | ** ** | **(In thousands)** | ** ** | ** ** | ** ** |
| Income tax benefit |       | $                                 | 3,383      |                             | $          | 1,643 |   | $ | 8,334 |   | $ | 4,612 |   |
|                    |            |                                   |            |                                  |            |  |  |  |  |  |  |  |  |

 

Nocompensation cost was capitalized during the three and nine months ended August31, 2007 and 2006.

 

13

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SFAS 123(R) requires forfeitures to beestimated at the grant date. Accordingly, compensation cost is recognized basedon the number of awards expected to vest. There may be adjustments in futureperiods if actual forfeitures differ from our estimates. Our forfeiture rate isbased upon historical experience as well as anticipated employee turnoverconsidering certain qualitative factors.

 

Total compensation expense related tononvested awards, both share awards and stock options, not yet recognized was$57.8 million as of August 31, 2007, with a weighted-average recognition periodof approximately 13⁄4 years. Total compensation expense related to nonvestedawards, both share awards and stock options, not yet recognized was$34.6 million as of August 31, 2006, with a weighted-average recognitionperiod of approximately two years.

 

*Nonvested Stock.*Shareawards generally vest from one to four years. Share awards are generallysubject to graded vesting but we do have a limited number of share awardssubject to cliff vesting. The fair value of nonvested stock is based on thefair value of our common stock on the date of grant. We amortize the value ofshare awards to expense over the vesting period on a straight-line basis. Forawards with performance conditions, an evaluation is made each quarter as tothe likelihood of the performance criteria being met and the expected number ofshare to vest. Certain of our performance grants allow for incremental sharesto be issued if “stretch” targets are met. Compensation expense is thenadjusted to reflect the number of shares expected to vest and the cumulativevesting period met to date.

 

A summary of the status of our nonvestedshares as of August 31, 2007, and changes during the nine months ended August31, 2007, was as follows:

 
| ** **                       | ** ** | **Shares**         | ** ** | **Weighted-  Average Grant  Date Fair Value** | ** ** |
|----------------------------------|------------|--------------------|------------|-----------------------------------------------|------------|
| ** **                       | ** ** | **(in thousands)** | ** ** | ** **                                    | ** ** |
| Balances, November 30, 2006 |       | 1,721              |       | $                                             | 18.57      |   |
| Granted                          |       | 1,439              |       | $                                             | 38.59      |   |
| Vested                           |       | (212               | )          | $                                             | 23.56      |   |
| Forfeited                        |       | (109               | )          | $                                             | 27.64      |   |
| Balances, August 31, 2007        |       | 2,839              |       | $                                             | 28.01      |   |

 

The total fair value of nonvested stock thatvested during the nine months ended August 31, 2007, was $9.5 million based onthe weighted-average fair value on the vesting date and $5.0 million based onthe weighted-average fair value on the date of grant.

 

*Stock Options.*Optionawards are granted with an exercise price equal to the fair market value of ourstock at the date of grant. Options outstanding as of August 31, 2007, vest inaccordance with terms over a period of 3-to-4 years of continuous serviceand have 8-year contractual terms.

 

The fair value of each option award wasestimated on the date of grant using the Black-Scholes pricing model that usedthe assumptions noted in the following table:

 
| ** **                                            | ** ** | **Nine Months Ended August 31,** | ** ** |
|-------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                            | ** ** | **2007**                         | ** ** | **2006** | ** ** |
| Dividend yield                                        |       | 0.0                              | %          | 0.0 | % |
| Expected volatility                                   |       | 30.66                            | %          | 27.83 | % |
| Risk-free interest rate                               |       | 4.92                             | %          | 5.00 | % |
| Expected term (in years)                              |       | 5.0                              |       | 6.0 |   |
| Weighted average fair value of stock  options granted |       | $                                | 13.57      |   | $ | 11.77 |   |
|                                                       |            |                                  |            |  |  |  |  |

 

Our dividend yield is 0.0% since we have nohistory of paying dividends and currently have no plan to do so. Our expectedvolatility is determined periodically using a basket of peer company historicalvolatility rates until such time

 

14

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our stock history is equal to our contractual terms. Our risk-freeinterest rate is the treasury-bill rate for the period equal to the expectedterm based on the Treasury note strip principal rates as reported in well-knownand widely used financial sources. Our expected term is the average of thecontractual term of the option and the vesting period (i.e., the “shortcutmethod”, which is an acceptable method under Staff Accounting Bulletin 107).

 

The following table summarized changes inoutstanding stock options during the nine months ended August 31, 2007, as wellas options that are vested and expected to vest and stock options exercisableat August 31, 2007:

 
| ** **                                      | ** ** | **Shares**         | ** ** | **Weighted-  Average  Exercise  Price** | ** ** | **Weighted-  Average  Remaining  Contractual  Term** | ** ** | **Aggregate  Intrinsic  Value** | ** ** |
|-------------------------------------------------|------------|--------------------|------------|-----------------------------------------|------------|------------------------------------------------------|------------|---------------------------------|------------|
| ** **                                      | ** ** | **(in thousands)** | ** ** | ** **                              | ** ** | **(in years)**                                       | ** ** | **(in thousands)**              | ** ** |
| Outstanding at November 30, 2006           |       | 99                 |       | $                                       | 30.80      |                                                 |       |                            |       |   |
| Granted                                         |       | 193                |       | $                                       | 37.65      |                                                 |       |                            |       |   |
| Exercised                                       |       | —             |       | —                                  |       |                                                 |       |                            |       |
| Forfeited                                       |       | (3                 | )          | $                                       | 37.65      |                                                 |       |                            |       |   |
| Outstanding at August 31, 2007                  |       | 289                |       | $                                       | 35.31      |                                                 | 2.5        |                            | $          | 4,386 |   |
| Vested and expected to vest at August 31,  2007 |       | 285                |       | $                                       | 35.31      |                                                 | 2.5        |                            | $          | 4,386 |   |
| Exercisable at August 31, 2007                  |       | —             |       | —                                  |       | —                                               |       | $                               | —     |   |

 

The aggregate intrinsic value amounts in thetable above represent the difference between the closing price of our commonstock on August 31, 2007, which was $50.47, and the exercise price, multipliedby the number of in-the-money stock options as of the same date. Thisrepresents the amount that would have been received by the stock option holdersif they had all exercised their stock options on August 31, 2007. In futureperiods, this amount will change depending on fluctuations in our stock price.The total intrinsic value of stock options exercised during the three and ninemonths ended August 31, 2007 was $0.

 

**9.****     Pensions and PostretirementBenefits**

 

We have defined-benefit plans anddefined-contribution plans. Our defined-benefit plans consist of anon-contributory retirement plan for all of our U.S. employees with at leastone year of service (U.S. RIP), a pension plan that covers certain employees ofone of our United Kingdom-based subsidiaries (U.K. RIP), and a supplementalincome plan (SIP) for certain company executives.

 

15

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Ournet periodic pension (income) expense was comprised of the following:

 
| ** **                                       | ** ** | **Three Months Ended August 31, 2007** | ** ** | **Three Months Ended August 31, 2006** | ** ** |
|--------------------------------------------------|------------|----------------------------------------|------------|----------------------------------------|------------|
| ** **                                       | ** ** | **U.S.  RIP**                          | ** ** | **U.K.  RIP**                          | ** ** | **SIP** | ** ** | **Total** | ** ** | **U.S.  RIP** | ** ** | **U.K.  RIP** | ** ** | **SIP** | ** ** | **Total** | ** ** |
| ** **                                       | ** ** | **(In thousands)**                     | ** ** |
| Service costs incurred                           |       | $                                      | 1,569      |                                   | $          | 293 |   | $ | 48 |   | $ | 1,910 |   | $ | 1,269 |   | $ | 234 |   | $ | 32 |   | $ | 1,535 |   |
| Interest costs on projected benefit  obligation  |       | 2,720                                  |       | 530                                    |       | 86 |   | 3,336 |   | 2,651 |   | 410 |   | 97 |   | 3,158 |   |
| Expected return on plan assets                   |       | (5,077                                 | )          | (458                                   | )          | — |   | (5,535 | ) | (5,071 | ) | (391 | ) | — |   | (5,462 | ) |
| Amortization of prior service cost  (benefit)    |       | (119                                   | )          | —                                 |       | 12 |   | (107 | ) | (118 | ) | — |   | 23 |   | (95 | ) |
| Amortization of actuarial loss                   |       | 375                                    |       | 307                                    |       | 20 |   | 702 |   | 224 |   | 157 |   | 25 |   | 406 |   |
| Amortization of transitional  obligation/(asset) |       | (142                                   | )          | —                                 |       | 11 |   | (131 | ) | (142 | ) | — |   | 10 |   | (132 | ) |
| Settlement expense                               |       | —                                 |       | —                                 |       | 570 |   | 570 |   | — |   | — |   | — |   | — |   |
| Net periodic pension benefit (income)  expense   |       | $                                      | (674       | )                                      | $          | 672 |   | $ | 747 |   | $ | 745 |   | $ | (1,187 | ) | $ | 410 |   | $ | 187 |   | $ | (590 | ) |

** **
| ** **                                       | ** ** | **Nine Months Ended August 31, 2007** | ** ** | **Nine Months Ended August 31, 2006** | ** ** |
|--------------------------------------------------|------------|---------------------------------------|------------|---------------------------------------|------------|
| ** **                                       | ** ** | **U.S.  RIP**                         | ** ** | **U.K.  RIP**                         | ** ** | **SIP** | ** ** | **Total** | ** ** | **U.S.  RIP** | ** ** | **U.K.  RIP** | ** ** | **SIP** | ** ** | **Total** | ** ** |
| ** **                                       | ** ** | **(In thousands)**                    | ** ** |
| Service costs incurred                           |       | $                                     | 4,707      |                                  | $          | 867 |   | $ | 144 |   | $ | 5,718 |   | $ | 3,483 |   | $ | 661 |   | $ | 105 |   | $ | 4,249 |   |
| Interest costs on projected benefit  obligation  |       | 8,159                                 |       | 1,569                                 |       | 272 |   | 10,000 |   | 8,013 |   | 1,155 |   | 295 |   | 9,463 |   |
| Expected return on plan assets                   |       | (15,232                               | )          | (1,356                                | )          | — |   | (16,588 | ) | (15,181 | ) | (1,101 | ) | — |   | (16,282 | ) |
| Amortization of prior service cost  (benefit)    |       | (355                                  | )          | —                                |       | 34 |   | (321 | ) | (262 | ) | — |   | 82 |   | (180 | ) |
| Amortization of actuarial loss                   |       | 1,124                                 |       | 909                                   |       | 80 |   | 2,113 |   | 699 |   | 441 |   | 74 |   | 1,214 |   |
| Amortization of transitional  obligation/(asset) |       | (426                                  | )          | —                                |       | 31 |   | (395 | ) | (426 | ) | — |   | 30 |   | (396 | ) |
| Settlement expense                               |       | —                                |       | —                                |       | 570 |   | 570 |   | — |   | — |   | — |   | — |   |
| Net periodic pension benefit (income)  expense   |       | $                                     | (2,023     | )                                     | $          | 1,989 |   | $ | 1,131 |   | $ | 1,097 |   | $ | (3,674 | ) | $ | 1,156 |   | $ | 586 |   | $ | (1,932 | ) |

 

Ournet periodic post-retirement benefit (income) expense was comprised of thefollowing for the three and nine months ended August 31:

 
| ** **                                             | ** ** | **Three Months Ended August 31,** | ** ** | **Nine Months Ended August 31,** | ** ** |
|--------------------------------------------------------|------------|-----------------------------------|------------|----------------------------------|------------|
| ** **                                             | ** ** | **2007**                          | ** ** | **2006**                         | ** ** | **2007** | ** ** | **2006** | ** ** |
| ** **                                             | ** ** | **(In thousands)**                | ** ** |
| Service costs incurred                                 |       | $                                 | 34         |                             | $          | 38 |   | $ | 103 |   | $ | 254 |   |
| Interest costs                                         |       | 148                               |       | 145                              |       | 444 |   | 583 |   |
| Amortization of prior service amounts                  |       | (808                              | )          | (807                             | )          | (2,422 | ) | (1,883 | ) |
| Amortization of net actuarial loss                     |       | 138                               |       | 133                              |       | 413 |   | 352 |   |
| Net periodic post-retirement benefit  (income) expense |       | $                                 | (488       | )                                | $          | (491 | ) | $ | (1,462 | ) | $ | (694 | ) |

 

**10.**  Earnings per Share

** **

Earnings per common share (EPS) arecomputed in accordance with SFAS No. 128, *Earnings per Share*.Basic EPS is computed by dividing net income by the weighted average number ofcommon shares outstanding during the

 

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period.Diluted EPS reflects the potential dilution that could occur if securities orother contracts to issue common stock were exercised or converted into commonshares.

 

Our authorized capital stockconsists of 80,000,000 shares of Class A common stock and 13,750,000 shares ofClass B common stock. These classes have equal dividend rights and liquidationrights. However, the holders of our Class A common stock are entitled to onevote per share and holders of our Class B common stock are entitled to tenvotes per share on all matters to be voted upon by the stockholders. Each shareof Class B common stock is convertible at any time at the option of the holderinto one share of Class A common stock and will automatically convert, withoutany action by the holder, upon the earlier of the occurrence of specifiedevents or November 16, 2009. On June 12, 2007, we issued 4,399,000 shares ofour Class A common stock valued at $171.4 million and less than $0.1 million incash in exchange for all of the outstanding equity and debt of Jane’sInformation Group.

 

We use the two-class method forcomputing basic and diluted EPS amounts. We calculated undistributed earningsas follows:

 
| ** **             | ** ** | **Three Months Ended August 31,** | ** ** | **Nine Months Ended August 31,** | ** ** |
|------------------------|------------|-----------------------------------|------------|----------------------------------|------------|
| ** **             | ** ** | **2007**                          | ** ** | **2006**                         | ** ** | **2007** | ** ** | **2006** | ** ** |
| ** **             | ** ** | **(In thousands)**                | ** ** |
| Net income             |       | $                                 | 21,731     |                             | $          | 16,074 |   | $ | 58,690 |   | $ | 42,472 |   |
| Less: dividends        |       | —                            |       | —                           |       | — |   | — |   |
| Undistributed earnings |       | $                                 | 21,731     |                             | $          | 16,074 |   | $ | 58,690 |   | $ | 42,472 |   |

 

Weighted average common sharesoutstanding are calculated as follows:

 
| ** **                                    | ** ** | **Three Months Ended August 31,** | ** ** |
|-----------------------------------------------|------------|-----------------------------------|------------|
| ** **                                    | ** ** | **2007**                          | ** ** | **2006** | ** ** |
| ** **                                    | ** ** | **Class A**                  | ** ** | **Class B** | ** ** | **Class A** | ** ** | **Class B** | ** ** |
| ** **                                    | ** ** | **(In thousands)**                | ** ** |
| Weighted average common shares outstanding:   |       |                              |       |   |   |   |   |   |   |
| Shares used in basic per-share calculation    |       | 47,367                            |       | 13,750 |   | 43,299 |   | 13,750 |   |
| Effect of dilutive securities:                |       |                              |       |   |   |   |   |   |   |
| Deferred stock units                          |       | 20                                |       | — |   | 9 |   | — |   |
| Restricted shares                             |       | 1,039                             |       | — |   | 31 |   | — |   |
| Options                                       |       | 21                                |       | — |   | 1 |   | — |   |
| Assumed conversion of Class B shares     |       | 13,750                            |       | — |   | 13,750 |   | — |   |
| Shares used in diluted per-share  calculation |       | 62,197                            |       | 13,750 |   | 57,090 |   | 13,750 |   |

 
| ** **                                    | ** ** | **Nine Months Ended August 31,** | ** ** |
|-----------------------------------------------|------------|----------------------------------|------------|
| ** **                                    | ** ** | **2007**                         | ** ** | **2006** | ** ** |
| ** **                                    | ** ** | **Class A**                 | ** ** | **Class B** | ** ** | **Class A** | ** ** | **Class B** | ** ** |
| ** **                                    | ** ** | **(In thousands)**               | ** ** |
| Weighted average common shares outstanding:   |       |                             |       |   |   |   |   |   |   |
| Shares used in basic per-share calculation    |       | 44,954                           |       | 13,750 |   | 42,568 |   | 13,750 |   |
| Effect of dilutive securities:                |       |                             |       |   |   |   |   |   |   |
| Deferred stock units                          |       | 5                                |       | — |   | 68 |   | — |   |
| Restricted shares                             |       | 899                              |       | — |   | 46 |   | — |   |
| Options                                       |       | 8                                |       | — |   | 1 |   | — |   |
| Assumed conversion of Class B shares     |       | 13,750                           |       | — |   | 13,750 |   | — |   |
| Shares used in diluted per-share  calculation |       | 59,616                           |       | 13,750 |   | 56,433 |   | 13,750 |   |

 

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Undistributed earnings and calculatedbasic and diluted EPS amounts are calculated as follows:

 
| ** **                                                                             | ** ** | **Three Months Ended August 31,** | ** ** |
|----------------------------------------------------------------------------------------|------------|-----------------------------------|------------|
| ** **                                                                             | ** ** | **2007**                          | ** ** | **2006** | ** ** |
| ** **                                                                             | ** ** | **Class A**                  | ** ** | **Class B** | ** ** | **Class A** | ** ** | **Class B** | ** ** |
| ** **                                                                             | ** ** | **(In thousands)**                | ** ** |
| **Basic**                                                                              | ** ** | ** **                        | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Weighted average shares outstanding                                                    |       | 47,367                            |       | 13,750 |   | 43,299 |   | 13,750 |   |
| Divided by: Total weighted average shares  outstanding (Class A and Class B) |       | 61,117                            |       | 61,117 |   | 57,049 |   | 57,049 |   |
| Multiplied by: Undistributed earnings                                                  |       | $                                 | 21,731     |   | $ | 21,731 |   | $ | 16,074 |   | $ | 16,074 |   |
| Subtotal                                                                               |       | $                                 | 16,842     |   | $ | 4,889 |   | $ | 12,200 |   | $ | 3,874 |   |
| Divided by: Weighted average shares  outstanding                                       |       | 47,367                            |       | 13,750 |   | 43,299 |   | 13,750 |   |
| Earnings per share                                                                     |       | $                                 | 0.36       |   | $ | 0.36 |   | $ | 0.28 |   | $ | 0.28 |   |
|                                                                                   |       |                              |       |   |   |   |   |   |   |
| **Diluted**                                                                            | ** ** | ** **                        | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Weighted average shares outstanding                                                    |       | 62,197                            |       | 13,750 |   | 57,090 |   | 13,750 |   |
| Divided by: Total weighted average shares  outstanding (Class A and Class B) |       | 62,197                            |       | 62,197 |   | 57,090 |   | 57,090 |   |
| Multiplied by: Undistributed earnings                                                  |       | $                                 | 21,731     |   | $ | 21,731 |   | $ | 16,074 |   | $ | 16,074 |   |
| Subtotal                                                                               |       | $                                 | 21,731     |   | $ | 4,804 |   | $ | 16,074 |   | $ | 3,871 |   |
| Divided by: Weighted average shares  outstanding                                       |       | 62,197                            |       | 13,750 |   | 57,090 |   | 13,750 |   |
| Earnings per share                                                                     |       | $                                 | 0.35       |   | $ | 0.35 |   | $ | 0.28 |   | $ | 0.28 |   |

** **
| ** **                                                                             | ** ** | **Nine Months Ended August 31,** | ** ** |
|----------------------------------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                                             | ** ** | **2007**                         | ** ** | **2006** | ** ** |
| ** **                                                                             | ** ** | **Class A**                 | ** ** | **Class B** | ** ** | **Class A** | ** ** | **Class B** | ** ** |
| ** **                                                                             | ** ** | **(In thousands)**               | ** ** |
| **Basic**                                                                              | ** ** | ** **                       | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Weighted average shares outstanding                                                    |       | 44,954                           |       | 13,750 |   | 42,568 |   | 13,750 |   |
| Divided by: Total weighted average shares  outstanding (Class A and Class B) |       | 58,704                           |       | 58,704 |   | 56,318 |   | 56,318 |   |
| Multiplied by: Undistributed earnings                                                  |       | $                                | 58,690     |   | $ | 58,690 |   | $ | 42,472 |   | $ | 42,472 |   |
| Subtotal                                                                               |       | $                                | 44,943     |   | $ | 13,747 |   | $ | 32,102 |   | $ | 10,370 |   |
| Divided by: Weighted average shares  outstanding                                       |       | 44,954                           |       | 13,750 |   | 42,568 |   | 13,750 |   |
| Earnings per share                                                                     |       | $                                | 1.00       |   | $ | 1.00 |   | $ | 0.75 |   | $ | 0.75 |   |
|                                                                                   |       |                             |       |   |   |   |   |   |   |
| **Diluted**                                                                            | ** ** | ** **                       | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Weighted average shares outstanding                                                    |       | 59,616                           |       | 13,750 |   | 56,433 |   | 13,750 |   |
| Divided by: Total weighted average shares  outstanding (Class A and Class B) |       | 59,616                           |       | 59,616 |   | 56,433 |   | 56,433 |   |
| Multiplied by: Undistributed earnings                                                  |       | $                                | 58,690     |   | $ | 58,690 |   | $ | 42,472 |   | $ | 42,472 |   |
| Subtotal                                                                               |       | $                                | 58,690     |   | $ | 13,536 |   | $ | 42,472 |   | $ | 10,348 |   |
| Divided by: Weighted average shares  outstanding                                       |       | 59,616                           |       | 13,750 |   | 56,433 |   | 13,750 |   |
| Earnings per share                                                                     |       | $                                | 0.98       |   | $ | 0.98 |   | $ | 0.75 |   | $ | 0.75 |   |

 

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**11.**  Segment Information

** **

Wehave two reportable segments: Energy and Engineering. Our Energy segmentdevelops and delivers critical oil and gas industry data on exploration,development, production, and transportation activities to major global energyproducers and national and independent oil companies. Our Energy segment alsoprovides operational, research, and strategic advisory services to thesecustomers, as well as to utilities and transportation, petrochemical, coal, andpower companies. Our Engineering segment provides solutions incorporatingtechnical specifications and standards, regulations, parts data, design guides,and other information to customers in its targeted industries. Both segmentsprimarily derive their revenue from subscriptions.

 

Informationas to the operations of our two segments is set forth below based on the natureof the offerings. Our Chairman and Chief Executive Officer and his directreports represent our chief operating decision maker as defined by SFAS No.131, *Disclosures about Segments of an Enterprise andRelated Information*, and they evaluate segment performance basedprimarily on revenue and operating profit. The accounting policies of oursegments are the same as those described in the summary of significantaccounting policies (see Note 2 to our consolidated financial statementsincluded in our 2006 Form 10-K).

 

Nosingle customer accounted for 10% or more of our total revenue for the threeand nine months ended August 31, 2007 or 2006. There are no materialinter-segment revenues for any period presented.

 

We arein the process of consolidating back-office functions and moving to ashared-services model. Consequently, we are changing our internal structurecausing the composition of our internal segments to change. Previously, weallocated certain shared costs, such as general and administrative expenses anddepreciation and amortization expense, to our two segments. Starting in thefirst quarter of 2007, we no longer allocate shared costs to our two segments.Accordingly, the following prior-year amounts have been reclassified to conformto the current-year presentation. 

 
| ** **                             | ** ** | **Energy**         | ** ** | **Engineering** | ** ** | **Shared  Services** | ** ** | **Consolidated  Total** | ** ** |
|----------------------------------------|------------|--------------------|------------|-----------------|------------|----------------------|------------|-------------------------|------------|
| ** **                             | ** ** | **(In thousands)** | ** ** |
| **Three Months Ended August 31, 2007** | ** ** | ** **         | ** ** | ** **      | ** ** | ** **           | ** ** | ** **              | ** ** |
| Revenue                                |       | $                  | 93,484     |            | $          | 89,872               |       | $                       | —     |   | $ | 183,356 |   |
| Segment operating income               |       | 30,859             |       | 15,482          |       | (16,869              | )          | 29,472                  |       |
| Depreciation and amortization          |       | 3,116              |       | 3,403           |       | 599                  |       | 7,118                   |       |
| **Three Months Ended August 31, 2006** | ** ** | ** **         | ** ** | ** **      | ** ** | ** **           | ** ** | ** **              | ** ** |
| Revenue                                |       | $                  | 75,848     |            | $          | 64,075               |       | $                       | —     |   | $ | 139,923 |   |
| Segment operating income               |       | 20,815             |       | 11,986          |       | (11,022              | )          | 21,779                  |       |
| Depreciation and amortization          |       | 2,583              |       | 1,301           |       | 334                  |       | 4,218                   |       |

 
| ** **                            | ** ** | **Energy**         | ** ** | **Engineering** | ** ** | **Shared  Services** | ** ** | **Consolidated  Total** | ** ** |
|---------------------------------------|------------|--------------------|------------|-----------------|------------|----------------------|------------|-------------------------|------------|
| ** **                            | ** ** | **(In thousands)** | ** ** |
| **Nine Months Ended August 31, 2007** | ** ** | ** **         | ** ** | ** **      | ** ** | ** **           | ** ** | ** **              | ** ** |
| Revenue                               |       | $                  | 269,058    |            | $          | 221,819              |       | $                       | —     |   | $ | 490,877 |   |
| Segment operating income              |       | 86,777             |       | 40,292          |       | (45,828              | )          | 81,241                  |       |
| Depreciation and amortization         |       | 8,711              |       | 6,215           |       | 1,693                |       | 16,619                  |       |
| **Nine Months Ended August 31, 2006** | ** ** | ** **         | ** ** | ** **      | ** ** | ** **           | ** ** | ** **              | ** ** |
| Revenue                               |       | $                  | 214,461    |            | $          | 188,183              |       | $                       | —     |   | $ | 402,644 |   |
| Segment operating income              |       | 59,943             |       | 32,070          |       | (30,261              | )          | 61,752                  |       |
| Depreciation and amortization         |       | 6,090              |       | 4,027           |       | 813                  |       | 10,930                  |       |

 

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** **

**12.**  Subsequent Event

** **

On September 7, 2007, we entered into an amended andrestated credit agreement (the Revolver). The $385 million unsecuredrevolving credit agreementallows us, under certain conditions, to increase the facility to amaximum of $500 million. The agreement expires in September 2012.

 

The interest rates for borrowing under the Revolverare based upon our Leverage Ratio, which is the ratio of Consolidated FundedIndebtedness to rolling four quarter Consolidated Earnings Before Interest Expense,Taxes, Depreciation and Amortization (EBITDA), as defined in the Revolver. Therate ranges from the applicable LIBOR plus 50 basis points to 125 basis pointsor the agent bank’s base rate. A commitment fee is payable periodically andranges from 10 to 25 basis points based upon our Leverage Ratio. The Revolvercontains certain financial and other covenants, including limitations oncapital lease obligations and maximum Leverage and Interest Coverage Ratios, asdefined in the Revolver.

 

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**Item 2.**    Management’s Discussion and Analysis of FinancialCondition and Results of Operations

** **

**Forward-Looking Statements**

 

This discussion contains statements that relate to IHS’s future plans,objectives, expectations, performance, events and the like that may constitute“forward-looking statements” within the “safe harbor” provisions of the PrivateSecurities Litigation Reform Act of 1995, Section 27A of the SecuritiesAct of 1933, and Section 21E of the Securities Exchange Act of 1934. Wordssuch as “may,” “could,” “should,” “would,” “believe,” “expect,” “anticipate,”“estimate,” “intend,” “seeks,” “plan,” “project,” “continue,” “predict” andother words or expressions of similar meaning are intended to identify forward-lookingstatements, although not all forward-looking statements contain theseidentifying words. These statements are based on our current expectations aboutfuture events or results and information that is currently available to us,involve assumptions, risks and uncertainties, and speak only as of the date onwhich such statements are made. Our actual results may differ materially fromthose expressed or implied in these forward-looking statements. Those factorsinclude, but are not limited to, our ability to obtain content from thirdparties (including Standards Development Organizations) on commerciallyreasonable terms, changes in demand for IHS’s products and services, changes inthe energy industry, our ability to develop new products and services, pricingand other competitive pressures, risks associated with the integration ofacquisitions, changes in laws and regulations governing our business andcertain other factors discussed under the caption “Risk Factors” in theMD&A section of our 2006 Form 10-K, and in our other filings with theSEC. IHS undertakes no duty to update, whether as a result of new information,future events or otherwise, unless required by law.

 

**Overview**

 

**Results of Operations**

 

IHS is one of the leading global providers ofcritical technical information, decision-support tools, and related services tocustomers in the energy, defense, aerospace, construction, electronics, andautomotive industries. We have developed a comprehensive collection oftechnical information that is highly relevant to the industries we serve. Ourdecision-support tools enable our customers to quickly and easily search andanalyze this information and integrate it into their work flows. Ouroperational, research, and strategic advisory services combine this informationand these tools with our extensive industry expertise to meet the needs of ourcustomers.

 

Our customers rely on these offerings tofacilitate decision making, support key processes, and improve productivity.For example, major global oil companies use our offerings to support a broadrange of decision-making processes that identify attractive explorationinvestments, assess the likelihood of successful oil production projects, anddevelop detailed planning scenarios. We also, for example, provide some of thelargest aerospace companies with desktop access to industry specifications andstandards; parts, logistics, and procurement data; engineering methods; andrelated analytical tools.

 

Wesell our offerings primarily through subscriptions. As a result of oursubscription-based business model and historically high renewal rates, wegenerate recurring revenue and cash flow. We generally recognize revenue fromsubscriptions (which are usually for one-year periods) ratably over the term ofthe subscription. Historically,our business has had seasonal aspects. However, with the continued organicgrowth in our subscription-based business model combined with severalacquisitions in recent years, our seasonal aspects have diminished. Our firstquarter does benefit from the inclusion of the results from CERAWeek, an annualenergy executive gathering.

 

Subscriptions are generally paid in full within one to two months afterthe subscription period commences. As a result, the timing of our cash flows generallyprecedes the recognition of revenue and income. Due to the historical timingand alignment of our sales to correspond to certain of our customers’ budgetand funding cycles, our cash flow provided by operating activities tends to behigher in the first quarter of our fiscal year as we receive subscriptionpayments.

 

We serve some of the world’s largest corporations across multipleindustries, as well as governments and other organizations, in more than 100countries. We generate approximately half of our total revenue from outside theUnited States. Our primary operations outside the United States are in theUnited Kingdom, Canada, and Switzerland. Our

 

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operating profit outside the United States has historically exceededour domestic operating profit. We manage our business through our Energy andEngineering operating segments.

 

**Acquisitions**

 

Acquisitionsfor the nine months ended August 31, 2007, are discussed below.

 

*PCNAlert*.On August 27, 2007, we announced we acquired the assets of PCNAlert fromSupplyEdge, Inc., of Pasadena, Calif., for $10 million in an all-cashtransaction. PCNAlert delivers leading component event management solutions,including product change notifications and end-of-life notifications for theelectronic components industry.

 

*John S. Herold, Inc. (Herold).*On August 16, 2007, we announced theacquisition of Norwalk, CT-based Herold, an independent research firm thatprovides in-depth analyses and key financial and operational data on more than400 global oil and gas companies. We acquired Herold for approximately $47.1million, net of acquired cash, using existing cash on hand.

 

*StrategicDecision Group Corporation’s Oil & Gas Consulting Practice (SDG).*OnJuly 17, 2007,**we announced we acquired theassets of SDG, a provider of strategic consulting services to leadingenterprises in the global oil and gas industry, for $8.4 million using $5.3million of existing cash on-hand and a $3.1 million note payable. SDG will bemanaged as a service within Cambridge Energy Research Associates (CERA), an IHScompany.

 

*Jane’sInformation Group* (*Jane’s*). OnJune 12, 2007, we executed an agreement with Woodbridge International HoldingsS.A. (Woodbridge) for the purchase of Jane’s, a leading provider of informationto the defense industry and governments.  The parties completed thetransaction on the same date.  Terms of the transaction included deliveryof 4,399,000 shares of our Class A Common Stock valued at $171.4 million and lessthan $0.1 million in cash in exchange for all of the outstanding equity anddebt of Jane’s. Woodbridge has agreed to a three-year lock-up agreement thatrestricts its ability to sell any IHS shares.

 

*GeologicalConsulting Services (GCS).*On June 6, 2007, we announced weacquired the inventory and assets of GCS of Houston—a provider of formationtops data files in electronic and other media covering South Texas, East Texas,North Louisiana, South Arkansas, Mississippi, Alabama and Florida—for $8.2million using existing cash on hand.

 

*RapiData*.On March 21, 2007, we announced we acquired certain assets including theRapiDataTM product, well known for its comprehensive well test, pressure andcompletions data for the Western Canadian Sedimentary Basin. IHS purchased RapiDatafrom Rapid Technology Corporation of Calgary, Alberta, Canada, forapproximately $6.3 million using existing cash on hand.

 

*GeologicalData Services Inc. (GDS).* On January 11, 2007, we announcedwe acquired the majority of the assets of GDS of Addison, Texas, a provider ofinterpreted subsurface data “formation-tops” covering the Permian Basin, U.S.mid-continent and Rocky Mountain regions. We acquired GDS for $8.0 millionusing existing cash on hand.

 

22

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Thepurchase prices for these 2007 acquisitions, excluding acquired cash andincluding acquisition-related costs, were initially allocated as follows (inthousands):
| ** **                  | ** ** | **Jane’s** | ** ** | **Herold** | ** ** | **All others** | ** ** | **Total** | ** ** |
|-----------------------------|------------|-----------------|------------|------------|------------|----------------|------------|-----------|------------|
| Assets:                     |       |            |       |       |       |           |       |      |       |
| Current assets              |       | $               | 16,100     |       | $          | 3,597          |       | $         | 2,517      |   | $ | 22,214 |   |
| Property and equipment      |       | 4,685           |       | 285        |       | 320            |       | 5,290     |       |
| Intangible assets           |       | 94,500          |       | 29,200     |       | 16,135         |       | 139,835   |       |
| Goodwill                    |       | 115,545         |       | 30,285     |       | 24,813         |       | 170,643   |       |
| Other long-term assets      |       | 223             |       | —     |       | —         |       | 223       |       |
| Total assets                |       | 231,053         |       | 63,367     |       | 43,785         |       | 338,205   |       |
| Liabilities:                |       |            |       |       |       |           |       |      |       |
| Current liabilities         |       | 29,573          |       | 6,913      |       | 2,797          |       | 39,283    |       |
| Deferred taxes              |       | 27,002          |       | 9,314      |       | —         |       | 36,316    |       |
| Other long-term liabilities |       | 1,841           |       | 44         |       | —         |       | 1,885     |       |
| Total liabilities           |       | 58,416          |       | 16,271     |       | 2,797          |       | 77,484    |       |
| Purchase price              |       | $               | 172,637    |       | $          | 47,096         |       | $         | 40,988     |   | $ | 260,721 |   |

 

**Segment Information**

 
| ** **                     | ** ** | **Three Months  Ended August 31,** | ** ** | **Nine Months  Ended August 31,** | ** ** |
|--------------------------------|------------|------------------------------------|------------|-----------------------------------|------------|
| ** **                     | ** ** | **2007**                           | ** ** | **2006**                          | ** ** | **2007** | ** ** | **2006** | ** ** |
| ** **                     | ** ** | **(In  thousands)**                | ** ** |
| Energy revenue                 |       | $                                  | 93,484     |                              | $          | 75,848 |   | $ | 269,058 |   | $ | 214,461 |   |
| Engineering  revenue           |       | 89,872                             |       | 64,075                            |       | 221,819 |   | 188,183 |   |
| Total  consolidated revenue    |       | $                                  | 183,356    |                              | $          | 139,923 |   | $ | 490,877 |   | $ | 402,644 |   |
| Energy operating  income       |       | $                                  | 30,859     |                              | $          | 20,815 |   | $ | 86,777 |   | $ | 59,943 |   |
| Engineering  operating income  |       | 15,482                             |       | 11,986                            |       | 40,292 |   | 32,070 |   |
| Shared services  expenses      |       | (16,869                            | )          | (11,022                           | )          | (45,828 | ) | (30,261 | ) |
| Consolidated  operating income |       | $                                  | 29,472     |                              | $          | 21,779 |   | $ | 81,241 |   | $ | 61,752 |   |

 

**Three Months Ended August 31, 2007 Compared to theThree Months Ended August 31, 2006**

 

**Revenue.**Revenue was $183.4 millionfor the three months ended August 31, 2007, compared to $139.9 million for thethree months ended August 31, 2006, an increase of $43.4 million or 31%.Revenue increased primarily due to organic growth, which contributed $20.5million. Acquisitions grew revenue by $19.4 million and the impact of foreigncurrency added $3.6 million.

 

Revenue for our Energy segment was$93.5 million for the three months ended August 31, 2007, compared to $75.8million for the three months ended August 31, 2006, an increase of $17.6million or 23%. The increase was principally due to organic growth, whichcontributed $12.3 million. Additionally, acquisitions added $3.6 million.Favorable foreign currency rates contributed $1.7 million of revenue growth.Organic growth during the third quarter of 2007 was primarily driven by priceincreases, growth in certain critical information subscription products, andhigher demand for services.

 

Revenue for our Engineering segmentwas $89.9 million for the three months ended August 31, 2007, compared to $64.1million for the three months ended August 31, 2006, an increase of $25.8million or 40%. Acquisitions added $15.7 million, organic growth contributed$8.2 million and foreign currency movements added $1.9 million. The majority ofthe organic growth was caused by sales from the once-every-three-year releaseof a certain engineering standard, the Boiler Pressure Vessel Code.

 

** Costof Revenue**.Cost of revenue was $83.0 million for the three months ended August 31, 2007,compared to $64.3 million for the three months ended August 31, 2006, anincrease of $18.7 million or 29%. As a percentage of revenue, cost of revenuedecreased to 45.3% from 46.0%. Margins within our Energy segment increased

 

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principallydue to the additional revenue discussed above coupled with our ability toleverage a relatively fixed-cost structure. Margins from our Engineeringsegment decreased slightly principally due to the once-every-three-year releaseof a certain engineering standard, the Boiler Pressure Vessel Code, whichcarries a lower gross margin than our overall Engineering offerings.

 

**Selling, General and Administrative Expenses**. Selling, general andadministrative expenses (SG&A) were $66.5 million for the three monthsended August 31, 2007, compared to $50.5 million for the three months endedAugust 31, 2006, an increase of $16.0 million or 32%. Stock-based compensationexpense included in SG&A increased $4.7 million. As a percentage of revenueand excluding stock-based compensation expense, SG&A was 31.5% for thethree months ended August 31, 2007, down from 33.2% for the three months endedAugust 31, 2006. Acquisitions contributed $7.4 million of the increase. SG&Aincreased organically due to several reasons, including increased sellingexpense because of higher sales and a revised commission structure, costsassociated with our ongoing transformational initiatives, and merit increases. Foreign-currencymovements also increased SG&A by $1.0 million.

 

**Depreciation and Amortization Expenses**. Depreciation andamortization expenses were $7.1 million for the three months ended August 31,2007, compared to $4.2 million for the three months ended August 31, 2006, anincrease of $2.9 million or 69%. The increase was primarily due toacquisitions.

 

**Operating Income**. Operating income was $29.5million for the three months ended August 31, 2007, compared to $21.8 millionfor the three months ended August 31, 2006, an increase of $7.7 million or 35%.As a percentage of revenue, operating income increased to 16.1% for the threemonths ended August 31, 2007, from 15.6% for the three months ended August 31,2006.

 

Operating income for our Energysegment was $30.9 million for the three months ended August 31, 2007, comparedto $20.8 million for the three months ended August 31, 2006, an increase of$10.0 million or 48%. The increase was principally due to the additionalrevenue discussed above coupled with our ability to leverage a relativelyfixed-cost structure. Acquisitions contributed $1.0 million.

 

 Operating income for our Engineering segmentwas $15.5 million for the three months ended August 31, 2007, compared to $12.0million for the three months ended August 31, 2006, an increase of $3.5 millionor 29%. Operating income increased due to the once-every-three-year release ofa certain engineering standard, the Boiler Pressure Vessel Code, and increasedsales in our subscriptions-based business partially offset by lower servicesrevenue, which decreased due to our fourth-quarter-2006 restructuring, andlower sales of retail products. Costs were relatively flat as reduced headcountand cost savings from our fourth-quarter-2006 restructuring offset meritincreases.

 

Operating expenses for our sharedservices were $16.9 million for the three months ended August 31, 2007,compared to $11.0 million for the three months ended August 31, 2006, anincrease of $5.8 million or 53%. Increased stock-based compensation expensecontributed $4.7 million. Costs associated with our ongoing transformationalinitiatives and merit-based salary increases also contributed to the increase. Theseincreases were partially offset by a $2.8 million foreign-exchangetransactional gain; the underlying transaction has since been hedged.

 

**Nine Months Ended August 31, 2007 Compared to theNine Months Ended August 31, 2006**

 

**Revenue.**Revenue was $490.9 millionfor the nine months ended August 31, 2007, compared to $402.6 million for thenine months ended August 31, 2006, an increase of $88.2 million or 22%. Revenueincreased primarily due to organic growth, which contributed $50.4 million. Acquisitionsgrew revenue by $28.3 million and the impact of foreign currency added $9.6million.

 

Revenue for our Energy segment was$269.1 million for the nine months ended August 31, 2007, compared to $214.5million for the nine months ended August 31, 2006, an increase of $54.6 millionor 25%. The increase was principally due to organic growth, which contributed$38.7 million. Additionally, acquisitions added $12.0 million. Favorableforeign currency movements grew revenue by $3.9 million. Organic growth duringthe first nine months

 

24

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of 2007 wasprimarily driven by price increases, growth in certain critical-informationsubscription products and our decision-support tools, stronger results fromCERAWeek, and higher demand for services.

 

Revenue for our Engineering segmentwas $221.8 million for the nine months ended August 31, 2007, compared to$188.2 million for the nine months ended August 31, 2006, an increase of $33.6million or 18%. Acquisitions added $16.3 million. Organic growth contributed$11.6 million. Also, foreign currency movements grew revenue $5.7 million. Organicgrowth was partially driven by sales from the once-every-three-year release ofa certain engineering standard, the Boiler Pressure Vessel Code. Also,increased sales in our specifications-and-standards and parts-managementofferings were partially offset by lower services revenue, which decreased dueto our fourth-quarter-2006 restructuring.

 

**Cost of Revenue**. Cost of revenue was $216.5million for the nine months ended August 31, 2007, compared to $188.4 millionfor the nine months ended August 31, 2006, an increase of $28.2 million or 15%.As a percentage of revenue, cost of revenue decreased to 44.1% from 46.8%.Margins within our Energy segment increased principally due to the additionalrevenue discussed above coupled with our ability to leverage a relativelyfixed-cost structure. Similarly, margins within our Engineering segmentimproved slightly, principally due to increased revenue, discussed above, andrelatively flat expenses.

 

**Selling, General and Administrative Expenses**. Selling, general and administrativeexpenses (SG&A) were $181.0 million for the nine months ended August 31,2007, compared to $143.3 million for the nine months ended August 31, 2006, anincrease of $37.6 million or 26%. Stock-based compensation expense increased$11.8 million. As a percentage of revenue and excluding stock-basedcompensation expense, SG&A was 32.5% for the nine months ended August 31,2007, down from 33.1% for the nine months ended August 31, 2006. SG&Aincreased due to several reasons, including increased selling expense becauseof higher sales and a revised commission structure, costs associated with ourhuman resources information system implementation and our ongoingtransformational initiatives, and merit-based salary increases. Acquisitionscontributed $8.6 million of the increase. Foreign-currency movements alsoincreased SG&A by $2.8 million.

 

**Depreciation and Amortization Expenses**. Depreciation andamortization expenses were $16.6 million for the nine months ended August 31,2007, compared to $10.9 million for the nine months ended August 31, 2006, anincrease of $5.7 million or 52%. The increase was primarily due toacquisitions.

 

**Operating Income**. Operating income was $81.2million for the nine months ended August 31, 2007, compared to $61.8 million forthe nine months ended August 31, 2006, an increase of $19.5 million or 32%. Asa percentage of revenue, operating income increased to 16.6% for the ninemonths ended August 31, 2007 from 15.3% for the nine months ended August 31,2006.

 

Operating income for our Energysegment was $86.8 million for the nine months ended August 31, 2007, comparedto $59.9 million for the nine months ended August 31, 2006, an increase of$26.8 million or 45%. The increase was primarily attributable to increasedrevenue discussed above coupled with our ability to leverage a relativelyfixed-cost structure. Acquisitions contributed $5.0 million, and foreignexchange movements added $0.7 million.

 

 Operating income for our Engineering segmentwas $40.3 million for the nine months ended August 31, 2007, compared to $32.1million for the nine months ended August 31, 2006, an increase of $8.2 millionor 26%. Operating income increased due to sales from the once-every-three-yearrelease of a certain engineering standard, the Boiler Pressure Vessel Code. Additionally,increased sales in our subscriptions-based business were partially offset bylower services revenue, due to our fourth-quarter-2006 restructuring. Costswere relatively flat as reduced headcount and cost savings from ourfourth-quarter-2006 restructuring offset merit-based salary increases.

 

Operating expenses for our sharedservices were $45.8 million for the nine months ended August 31, 2007, comparedto $30.3 million for the nine months ended August 31, 2006, an increase of$15.6 million or 51%. Increased stock-based compensation expense contributed$10.0 million. Costs associated with our human resources information systemimplementation and our ongoing transformational initiatives and merit-basedsalary increases also contributed to the increase.

 

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**Liquidity and Capital Resources**

** **

As of August 31, 2007, we had cashand cash equivalents of $132.4 million, short-term investments of $16.9million, and virtually no debt. We have generated strong cash flows fromoperations over the last few years. As a result of these factors, as well asthe availability of funds under our credit facility, we believe we will havesufficient cash to meet our working capital and capital expenditure needs.

 

Our future capital requirementswill depend on many factors, including the timing and extent of spending tosupport product development efforts, the expansion of sales and marketingactivities, the timing of introductions of new products, changing technology,and the continued market acceptance of our offerings. We could be required, orcould elect, to seek additional funding through public or private equity ordebt financing for any possible future acquisitions. Additional funds may notbe available on terms acceptable to us or at all. We expect our capitalexpenditures, excluding potential acquisitions, to be less than $11 million for2007.

 

*Share Repurchase Program*

 

Asannounced last year, our board of directors approved a plan allowing us toacquire up to one million of our Class A common shares per year in the openmarket to help offset the dilutive effect of our employee equity programs. Wepurchased 580,862 shares during the first nine months of 2007 for approximately$23.4 million, or an average price of $40.30 per share.

 

*Cash Flows*

* *

Net cash provided by operatingactivities was $88.8 million for the nine months ended August 31, 2007,compared to $94.2 million for the nine months ended August 31, 2006, a decreaseof $5.4 million. The decrease was generated by several factors. Net operatingcash flow in 2007 includes one additional U.S. payroll versus the prior yearaccounting for a $4.1 million decrease. Net operating cash flow in 2007 wasadversely affected by approximately $2.5 million due to cash used to purchasethe entire Boiler Pressure Vessel Code, a once-every-three-year productrelease, inventory in the third quarter while a portion of the customerreceipts will be collected in the fourth quarter. Our annual bonus payments,which are paid in the first quarter each year, were approximately $7 millionhigher in 2007 than in 2006. Receivable collections were robust at the end of2006, enhancing 2006 cash flow at the expense of 2007. The effective rate ofour cash paid for tax has increased slightly in 2007, adversely affecting cashflow in 2007.

 

 Net cash used in investing activities was$110.3 million for the nine months ended August 31, 2007, compared to $73.8million for the nine months ended August 31, 2006. The change is driven primarilyby purchases and sales of short-term investments. During the third quarter of2007, we began purchasing short-term tax-exempt municipal securities.

 

Net cash used in financingactivities was $25.2 million for the nine months ended August 31, 2007. Netcash provided by financing activities was $7.2 million during the nine monthsended August 31, 2006. Beginning first quarter 2007, we started purchasing ourown common stock in the open market. We repurchased 580,862 shares for approximately$23.4 million.

 

*Credit Facility*

* *

On September 7, 2007, we entered into an amended andrestated credit agreement (the Revolver). The $385 million unsecuredrevolving credit agreementallows us, under certain conditions, to increase the facility to amaximum of $500 million. The agreement expires in September 2012.

 

The interest rates for borrowing under the Revolverare based upon our Leverage Ratio, which is the ratio of Consolidated FundedIndebtedness to rolling four quarter Consolidated Earnings Before Interest Expense,Taxes, Depreciation and Amortization (EBITDA), as defined in the Revolver. Therate ranges from the applicable LIBOR plus 50 basis points to 125 basis pointsor the agent bank’s base rate. A commitment fee is payable periodically andranges from 10 to 25 basis points based upon our Leverage Ratio. The Revolvercontains certain financial and other covenants,

 

26

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includinglimitations on capital lease obligations and maximum Leverage and InterestCoverage Ratios, as defined in the Revolver.

 

As of August 31, 2007, we were in compliance with all of the covenantsin the agreement and had no outstanding borrowings. However, we had letters ofcredit totaling approximately $1.8 million as of August 31, 2007, which serveto reduce the amount available for borrowing.

 

**Off-Balance Sheet Transactions**

** **

We have no off-balance sheettransactions.

 

**Critical Accounting Policies**

 

Our management makes a number of significantestimates, assumptions and judgments in the preparation of our financialstatements. See “Management’s Discussion and Analysis and Results ofOperations—Critical Accounting Policies and Estimates” in our 2006Form 10-K for a discussion of the estimates and judgments necessary in ouraccounting for revenue recognition, valuation of long-lived and intangibleassets and goodwill, income taxes, pension and post-retirement benefits, and stock-based compensation.

 

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** **

**Item 3.**    Quantitative and Qualitative Disclosure AboutMarket Risk

** **

For information regarding our exposure to certainmarket risk, see Item 7A, “Quantitative and Qualitative Disclosures AboutMarket Risk,” in our 2006 Form 10-K. There were no material changes to ourmarket risk exposure during the first nine months of 2007.

 

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** **

**Item 4.**    Controls and Procedures

** **

*(a)Evaluation of disclosure controls and procedures.*

 

Under the supervision and with the participation ofthe Company’s management, including the Chief Executive Officer and ChiefFinancial Officer, the Company has evaluated the effectiveness of itsdisclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e)under the Securities Exchange Act of 1934, as of the end of the period coveredby this report. Based on that evaluation, the Chief Executive Officer and ChiefFinancial Officer concluded that the Company’s disclosure controls andprocedures as defined in Rules 13a-15(e) and 15d-15(e) under the SecuritiesExchange Act of 1934, as amended, are effective in ensuring that all materialinformation required to be filed in this quarterly report has been made knownto them in a timely fashion.

 

*(b)Changes in internal control over financial reporting.*

 

Therewere no changes in our internal control over financial reporting that occurredduring the period covered by this Form 10-Q that have materially affected, orare reasonably likely to materially affect, our internal control over financialreporting.

 

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** **

**PART II. OTHER INFORMATION**

** **

**Item 1.**  LegalProceedings

** **

Fromtime to time, we are involved in litigation, most of which is incidental to ourbusiness. In our opinion, no litigation to which we currently are a party islikely to have a material adverse effect on our results of operations orfinancial condition.

 

**Item 2.**  UnregisteredSales of Equity Securities and Use of Proceeds

** **

Items2(a) and (b) are inapplicable.

 
| (c) |   | The  following table provides a month-to-month summary of the share repurchase  activity under the current stock repurchase program during the nine months  ended August 31, 2007: |
|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 
| **Period**                           | ** ** | **Total Number  of Shares  Purchased** | ** ** | **Average Fair  Market Value  per Share** | ** ** | **Total Number  of Shares  Purchased as  Part of Publicly  Announced  Plans or  Programs** | ** ** | **Maximum  Number of  Shares That  May Yet Be  Purchased  Under the  Plans or  Programs** | ** ** |
|--------------------------------------|------------|----------------------------------------|------------|-------------------------------------------|------------|--------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------|------------|
| December 1 – December 31, 2006  |       | —                                 |       | $                                         | —     |                                                                                       | —     |                                                                                      | 1,000,000  |   |
| January 1 –  January 31, 2007   |       | 54,000                                 |       | $                                         | 37.59      |                                                                                       | 54,000     |                                                                                      | 946,000    |   |
| February 1 –  February 28, 2007 |       | 146,000                                |       | $                                         | 38.01      |                                                                                       | 146,000    |                                                                                      | 800,000    |   |
| March 1 – March  31, 2007       |       | 96,762                                 |       | $                                         | 37.56      |                                                                                       | 96,762     |                                                                                      | 703,238    |   |
| April 1 – April  30, 2007       |       | 103,238                                |       | $                                         | 40.64      |                                                                                       | 103,238    |                                                                                      | 600,000    |   |
| May 1 – May 31,  2007           |       | —                                 |       | $                                         | —     |                                                                                       | —     |                                                                                      | 600,000    |   |
| June 1 – June 30,  2007         |       | 93,500                                 |       | $                                         | 42.47      |                                                                                       | 93,500     |                                                                                      | 506,500    |   |
| July 1 – July 31,  2007         |       | 7,900                                  |       | $                                         | 45.94      |                                                                                       | 7,900      |                                                                                      | 498,600    |   |
| August 1 – August  31, 2007     |       | 79,462                                 |       | $                                         | 46.13      |                                                                                       | 79,462     |                                                                                      | 419,138    |   |
| Total                                |       | 580,862                                |       | $                                         | 40.30      |                                                                                       | 580,862    | (1)                                                                                       | 419,138    | (1) |

 

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(1)   During 2006, our board of directors authorized therepurchase of up to one million shares of IHS Class A common stock to offsetthe dilutive effect of our employee equity programs. Repurchases will be madefrom time to time in the open market. This table does not include the surrenderof common shares by employees to the company to cover taxes due by employeesupon the vesting of employee-equity awards.

 

**Item 6.**    Exhibits

** **
|   | (a)    |   | Index of Exhibits                                         |
|--------|--------|--------|-----------------------------------------------------------|
|   |   |   |                                                      |
|   |   |   | The following exhibits are filed as part of this  report: |

 
| **Exhibit  Number** | ** ** | **Description**                                                                                                                                                                       |
|---------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.1*               |       | Certification  of the Chief Executive Officer Pursuant to Rules 13a-14(a) and  15d-14(a) of the Securities Exchange Act.                                                    |
| 31.2*               |       | Certification  of the Chief Financial Officer Pursuant to Rules 13a-14(a) and  15d-14(a) of the Securities Exchange Act.                                                    |
| 32.1*               |       | Certification  of the Chief Executive Officer and Chief Financial Officer Pursuant to 18  U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley  Act of 2002. |

 

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*                 Filedelectronically herewith.

 

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** **

**SIGNATURE**

** **

Pursuantto the requirements of Section 13 or 15(d) of the Securities Exchange Act of1934, the Registrant has duly caused this report to be signed on its behalf bythe undersigned, thereunto duly authorized, on September 28, 2007.

 

 
|   | IHS  INC. |
|--------|-----------|
|   |      |
|   |      |
|   | By:       |  /s/  Heather Matzke-Hamlin |   |
|   |      | Name:   Heather  Matzke-Hamlin |
|   |      | Title:     Senior  Vice President and Chief Accounting Officer |

** **

31

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** **

**EXHIBIT INDEX**

 
| **Exhibit  Number** | ** ** | **Description**                                                                                                                                                                       |
|---------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.1*               |       | Certification  of the Chief Executive Officer Pursuant to Rules 13a-14(a) and  15d-14(a) of the Securities Exchange Act.                                                    |
| 31.2*               |       | Certification  of the Chief Financial Officer Pursuant to Rules 13a-14(a) and  15d-14(a) of the Securities Exchange Act.                                                    |
| 32.1*               |       | Certification  of the Chief Executive Officer and Chief Financial Officer Pursuant to 18  U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley  Act of 2002. |

 

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*    Filed electronically herewith.

 

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