**UNITED STATES**

**SECURITIES AND EXCHANGECOMMISSION**

**Washington, D.C. 20549**

 

----

 

**FORM 10-Q**

 

----

 
| **(Mark  One)** |
|-----------------|
| **x**           | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
| ** **      | ** ** |
| ** **      | **For the quarterly period ended  May 31, 2008** |
|            |
| **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**

 

----

 

**IHSINC.**

(Exact name of registrant as specified in its charter)

 

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

 

**15 Inverness Way East**

**Englewood, CO 80112**

(Address of Principal Executive Offices)

 

**(303) 790-0600**

(Registrant’s telephone number, including area code)

 

----

 

Indicate bycheck mark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrantwas required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days.

 
| x YES | o NO |
|-------|------|

 

Indicate bycheck mark whether the registrant is a large accelerated filer, an acceleratedfiler, a non-accelerated filer, or a smaller reporting company. See definitionsof “large accelerated filer,” and “accelerated filer,” and smaller reportingcompany in Rule 12b-2 of the Exchange Act. (Check one):

 

| Large accelerated filer x                       |   | Accelerated filer o         |
|-------------------------------------------------|--------|-----------------------------|
|                                            |   |                        |
| Non-accelerated filer o                         |   | Smaller Reporting Company o |
| (Do not check if  a smaller reporting  company) |   |                        |

 

Indicate bycheck mark whether the registrant is a shell company (as defined in Rule 12b-2of the Act).

 
| o YES | x NO |
|-------|------|

 

As of May 31,2008, there were 48,703,869 shares of our Class ACommon Stock outstanding and 13,750,000 shares of our Class B Common Stockoutstanding.

 

 

----

 

**TABLE OF CONTENTS**

 
| ** **       | ** **                                                                                  | ** ** | **Page**   |
|------------------|---------------------------------------------------------------------------------------------|------------|------------|
| ** **       | ** **                                                                                  | ** ** | ** ** |
| **PART I**  | ** **                                                                                  | ** ** | ** ** |
| Item  1.         | Financial Statements                                                                        |       | 3          |
| Item 2.          | Management’s  Discussion and Analysis of Financial Condition and Results of Operations |       | 19         |
| Item 3.          | Quantitative  and Qualitative Disclosures About Market Risk                                 |       | 26         |
| Item 4.          | Controls and  Procedures                                                                    |       | 27         |
|             |                                                                                        |       |       |
| **PART II** | ** **                                                                                  | ** ** | ** ** |
| Item 1.          | Legal Proceedings                                                                           |       | 28         |
| Item  1A.        | Risk Factors                                                                                |       | 28         |
| Item 2.          | Unregistered  Sales of Equity Securities and Use of Proceeds                                |       | 28         |
| Item 6.          | Exhibits                                                                                    |       | 29         |
|             |                                                                                        |       |       |
| **SIGNATURE**    |                                                                                        |       | 30         |

 

----

 

**PART I. FINANCIALINFORMATION**

Item 1. FinancialStatements

 

**IHS INC.**

**CONDENSED CONSOLIDATED BALANCESHEETS**

 

**(In thousands except share data)**

 
| ** **                                                                                                                                                                                                                                 | ** ** | **As of**             | ** ** | **As of**                  | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------|------------|---------------------------------|------------|
| ** **                                                                                                                                                                                                                                 | ** ** | **May 31, 2008** | ** ** | **November 30, 2007** | ** ** |
| ** **                                                                                                                                                                                                                                 | ** ** | **(Unaudited)**            | ** ** | ** **                      | ** ** |
| **Assets**                                                                                                                                                                                                                                 |       |                       |       |                            |       |
| Current assets:                                                                                                                                                                                                                            |       |                       |       |                            |       |
| Cash and cash  equivalents                                                                                                                                                                                                                 |       | $                          | 105,371    |                            | $          | 148,484 |   |
| Short-term  investments                                                                                                                                                                                                                    |       | —                     |       | 10,518                          |       |
| Accounts  receivable, net                                                                                                                                                                                                                  |       | 169,801                    |       | 175,542                         |       |
| Deferred  subscription costs                                                                                                                                                                                                               |       | 42,830                     |       | 35,910                          |       |
| Deferred income  taxes                                                                                                                                                                                                                     |       | 21,435                     |       | 17,681                          |       |
| Other                                                                                                                                                                                                                                      |       | 17,683                     |       | 14,112                          |       |
| Total current  assets                                                                                                                                                                                                                      |       | 357,120                    |       | 402,247                         |       |
| Non-current  assets:                                                                                                                                                                                                                       |       |                       |       |                            |       |
| Property and  equipment, net                                                                                                                                                                                                               |       | 58,009                     |       | 58,756                          |       |
| Equity investment  in joint venture                                                                                                                                                                                                        |       | 73,002                     |       | —                          |       |
| Intangible  assets, net                                                                                                                                                                                                                    |       | 223,292                    |       | 206,359                         |       |
| Goodwill, net                                                                                                                                                                                                                              |       | 616,199                    |       | 564,582                         |       |
| Prepaid pension  asset                                                                                                                                                                                                                     |       | 93,229                     |       | 91,116                          |       |
| Other                                                                                                                                                                                                                                      |       | 835                        |       | 747                             |       |
| Total non-current  assets                                                                                                                                                                                                                  |       | 1,064,566                  |       | 921,560                         |       |
| Total assets                                                                                                                                                                                                                               |       | $                          | 1,421,686  |                            | $          | 1,323,807 |   |
| **Liabilities and stockholders’ equity**                                                                                                                                                                                              |       |                       |       |                            |       |
| Current  liabilities:                                                                                                                                                                                                                      |       |                       |       |                            |       |
| Short-term debt                                                                                                                                                                                                                            |       | $                          | 28,485     |                            | $          | 3,062 |   |
| Accounts payable                                                                                                                                                                                                                           |       | 26,092                     |       | 37,550                          |       |
| Accrued  compensation                                                                                                                                                                                                                      |       | 19,104                     |       | 37,014                          |       |
| Accrued royalties                                                                                                                                                                                                                          |       | 20,599                     |       | 22,684                          |       |
| Other accrued  expenses                                                                                                                                                                                                                    |       | 41,299                     |       | 37,435                          |       |
| Income tax  payable                                                                                                                                                                                                                        |       | 7,902                      |       | 15,255                          |       |
| Deferred  subscription revenue                                                                                                                                                                                                             |       | 288,346                    |       | 239,395                         |       |
| Total current  liabilities                                                                                                                                                                                                                 |       | 431,827                    |       | 392,395                         |       |
| Long-term debt                                                                                                                                                                                                                             |       | —                     |       | 37                              |       |
| Accrued pension  liability                                                                                                                                                                                                                 |       | 11,413                     |       | 11,965                          |       |
| Accrued  post-retirement benefits                                                                                                                                                                                                          |       | 8,717                      |       | 10,203                          |       |
| Deferred income  taxes                                                                                                                                                                                                                     |       | 68,666                     |       | 60,461                          |       |
| Other liabilities                                                                                                                                                                                                                          |       | 7,380                      |       | 7,619                           |       |
| Minority  interests                                                                                                                                                                                                                        |       | 252                        |       | 219                             |       |
| Commitments and  contingencies                                                                                                                                                                                                             |       |                       |       |                            |       |
| Stockholders’  equity:                                                                                                                                                                                                                |       |                       |       |                            |       |
| Class A  common stock, $0.01 par value per share, 80,000,000 shares authorized,  50,081,110 and 49,831,293 shares issued, 48,703,869 and 48,758,518 shares  outstanding at May 31, 2008 and November 30, 2007, respectively |       | 500                        |       | 498                             |       |
| Class B  common stock, $0.01 par value per share, 13,750,000 shares authorized, issued  and outstanding at May 31, 2008 and November 30, 2007                                                                               |       | 138                        |       | 138                             |       |
| Additional paid  in capital                                                                                                                                                                                                                |       | 411,908                    |       | 381,124                         |       |
| Treasury stock,  at cost: 1,377,231 and 1,072,775 shares at May 31, 2008 and  November 30, 2007, respectively                                                                                                                    |       | (64,709                    | )          | (46,045                         | )          |
| Retained earnings                                                                                                                                                                                                                          |       | 529,915                    |       | 483,804                         |       |
| Accumulated other  comprehensive income                                                                                                                                                                                                    |       | 15,679                     |       | 21,389                          |       |
| Total  stockholders’ equity                                                                                                                                                                                                           |       | 893,431                    |       | 840,908                         |       |
| Total liabilities  and stockholders’ equity                                                                                                                                                                                           |       | $                          | 1,421,686  |                            | $          | 1,323,807 |   |

 

See accompanyingnotes.

 

3

----

 

**IHS INC.**

**CONDENSED CONSOLIDATEDSTATEMENTS OF OPERATIONS**

 

**(In thousands except per-shareamounts)**

 
| ** **                                                                                                                                                                                             | ** ** | **Three Months Ended May 31,** | ** ** | **Six Months Ended May 31,** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                                                                                                                                                                             | ** ** | **2008**                                           | ** ** | **2007**                                         | ** ** | **2008** | ** ** | **2007** | ** ** |
| ** **                                                                                                                                                                                             | ** ** | **(Unaudited)**                                    | ** ** |
| **Revenue:**                                                                                                                                                                                           |       |                                               |       |                                             |       |   |   |   |   |
| Products                                                                                                                                                                                               |       | $                                                  | 171,522    |                                             | $          | 129,136 |   | $ | 331,211 |   | $ | 252,115 |   |
| Services                                                                                                                                                                                               |       | 35,671                                             |       | 25,764                                           |       | 74,759 |   | 55,406 |   |
| Total revenue                                                                                                                                                                                          |       | 207,193                                            |       | 154,900                                          |       | 405,970 |   | 307,521 |   |
| **Operating expenses:**                                                                                                                                                                                |       |                                               |       |                                             |       |   |   |   |   |
| Cost of revenue:                                                                                                                                                                                       |       |                                               |       |                                             |       |   |   |   |   |
| Products                                                                                                                                                                                               |       | 71,481                                             |       | 50,274                                           |       | 134,575 |   | 99,007 |   |
| Services                                                                                                                                                                                               |       | 21,699                                             |       | 17,479                                           |       | 47,765 |   | 34,484 |   |
| Total cost of revenue (includes stock-based  compensation expense of $376, $105, $687 and $456 for the three and six months  ended May 31, 2008 and 2007, respectively)                           |       | 93,180                                             |       | 67,753                                           |       | 182,340 |   | 133,491 |   |
| Selling, general and  administrative (includes stock-based compensation expense of $10,001;  $5,940; $22,391 and $12,925 for the three and six months ended May 31,  2008 and 2007, respectively) |       | 72,923                                             |       | 56,607                                           |       | 144,809 |   | 114,498 |   |
| Depreciation and amortization                                                                                                                                                                          |       | 9,683                                              |       | 4,921                                            |       | 18,506 |   | 9,501 |   |
| Restructuring and other charges                                                                                                                                                                        |       | —                                             |       | 9                                                |       | — |   | — |   |
| Gain on sales of assets, net                                                                                                                                                                           |       | —                                             |       | (5                                               | )          | (119 | ) | (756 | ) |
| Net periodic pension and post-retirement benefits                                                                                                                                                      |       | (1,086                                             | )          | (354                                             | )          | (2,179 | ) | (622 | ) |
| Other expense (income), net                                                                                                                                                                            |       | (323                                               | )          | 84                                               |       | (1,136 | ) | (360 | ) |
| Total operating expenses                                                                                                                                                                               |       | 174,377                                            |       | 129,015                                          |       | 342,221 |   | 255,752 |   |
| **Operating income**                                                                                                                                                                                   |       | 32,816                                             |       | 25,885                                           |       | 63,749 |   | 51,769 |   |
| Interest income                                                                                                                                                                                        |       | 697                                                |       | 1,694                                            |       | 1,914 |   | 3,348 |   |
| Interest expense                                                                                                                                                                                       |       | (843                                               | )          | (76                                              | )          | (979 | ) | (209 | ) |
| Non-operating (loss) income, net                                                                                                                                                                       |       | (146                                               | )          | 1,618                                            |       | 935 |   | 3,139 |   |
| Income from continuing operations before  income taxes and minority interests                                                                                                                          |       | 32,670                                             |       | 27,503                                           |       | 64,684 |   | 54,908 |   |
| Provision for income taxes                                                                                                                                                                             |       | (10,425                                            | )          | (8,909                                           | )          | (21,024 | ) | (17,952 | ) |
| Income from continuing operations before  equity investments and minority interests                                                                                                                    |       | 22,245                                             |       | 18,594                                           |       | 43,660 |   | 36,956 |   |
| Income from equity investment                                                                                                                                                                          |       | 1,044                                              |       | —                                           |       | 1,044 |   | — |   |
| Minority interests                                                                                                                                                                                     |       | (31                                                | )          | (12                                              | )          | (15 | ) | 3 |   |
| **Net income**                                                                                                                                                                                         |       | $                                                  | 23,258     |                                             | $          | 18,582 |   | $ | 44,689 |   | $ | 36,959 |   |
| Net income per share:                                                                                                                                                                                  |       |                                               |       |                                             |       |   |   |   |   |
| Basic (Class A and Class B common  stock)                                                                                                                                                    |       | $                                                  | 0.37       |                                             | $          | 0.32 |   | $ | 0.72 |   | $ | 0.64 |   |
| Diluted (Class A and Class B  common stock)                                                                                                                                                  |       | $                                                  | 0.37       |                                             | $          | 0.32 |   | $ | 0.71 |   | $ | 0.63 |   |
| Weighted average shares:                                                                                                                                                                               |       |                                               |       |                                             |       |   |   |   |   |
| Basic (Class A common stock)                                                                                                                                                                      |       | 48,471                                             |       | 43,626                                           |       | 48,347 |   | 43,733 |   |
| Basic (Class B common stock)                                                                                                                                                                      |       | 13,750                                             |       | 13,750                                           |       | 13,750 |   | 13,750 |   |
| Diluted (Class A common stock)                                                                                                                                                                    |       | 63,086                                             |       | 58,281                                           |       | 63,045 |   | 58,328 |   |
| Diluted (Class B common stock)                                                                                                                                                                    |       | 13,750                                             |       | 13,750                                           |       | 13,750 |   | 13,750 |   |

 

See accompanyingnotes.

 

4

----

 

**IHS INC.**

**CONDENSED CONSOLIDATEDSTATEMENTS OF CASH FLOWS**

 

**(In thousands)**

 
| ** **                                                                       | ** ** | **Six Months Ended May 31,** | ** ** |
|----------------------------------------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                                                       | ** ** | **2008**                                         | ** ** | **2007** | ** ** |
| ** **                                                                       | ** ** | **(Unaudited)**                                  | ** ** |
| **Operating activities**                                                         |       |                                             |       |   |   |
| Net income                                                                       |       | $                                                | 44,689     |   | $ | 36,959 |   |
| Reconciliation of net income to net cash  provided by operating activities: |       |                                             |       |   |   |
| Depreciation and amortization                                                    |       | 18,506                                           |       | 9,501 |   |
| Stock-based compensation expense                                                 |       | 23,078                                           |       | 13,381 |   |
| Gain on sales of assets, net                                                     |       | (119                                             | )          | (756 | ) |
| Distributions from equity-method investment                                      |       | 378                                              |       | — |   |
| Non-cash net periodic pension and  post-retirement benefits                      |       | (3,122                                           | )          | (1,997 | ) |
| Undistributed earnings of unconsolidated  subsidiaries, net                      |       | (1,233                                           | )          | 140 |   |
| Minority interests                                                               |       | 15                                               |       | (234 | ) |
| Deferred income taxes                                                            |       | 2,075                                            |       | (1,015 | ) |
| Change in assets and liabilities:                                                |       |                                             |       |   |   |
| Accounts receivable, net                                                         |       | 5,800                                            |       | 24,825 |   |
| Other current assets                                                             |       | (10,078                                          | )          | (5,565 | ) |
| Accounts payable                                                                 |       | (9,956                                           | )          | (25,388 | ) |
| Accrued expenses                                                                 |       | (17,304                                          | )          | (15,492 | ) |
| Income taxes                                                                     |       | (1,867                                           | )          | 5,311 |   |
| Deferred subscription revenue                                                    |       | 44,568                                           |       | 26,092 |   |
| Other liabilities                                                                |       | (457                                             | )          | — |   |
| **Net cash provided by operating activities**                                    |       | 94,973                                           |       | 65,762 |   |
| **Investing activities**                                                         |       |                                             |       |   |   |
| Capital expenditures on property and  equipment                                  |       | (5,351                                           | )          | (3,645 | ) |
| Change in other assets                                                           |       | (2,654                                           | )          | (3,496 | ) |
| Sales and maturities of investments                                              |       | 10,500                                           |       | 2,008 |   |
| Acquisitions of businesses, net of cash  acquired                                |       | (130,878                                         | )          | (14,607 | ) |
| Proceeds from sales of assets                                                    |       | 140                                              |       | 2,461 |   |
| **Net cash used in investing activities**                                        |       | (128,243                                         | )          | (17,279 | ) |
| **Financing activities**                                                         |       |                                             |       |   |   |
| Proceeds from borrowings                                                         |       | 50,000                                           |       | — |   |
| Repayment of borrowings                                                          |       | (43,095                                          | )          | (500 | ) |
| Excess tax benefit from equity compensation  plans                               |       | 454                                              |       | 121 |   |
| Repurchases of common stock                                                      |       | (18,664                                          | )          | (15,663 | ) |
| **Net cash used in financing activities**                                        |       | (11,305                                          | )          | (16,042 | ) |
| Foreign exchange impact on cash balance                                          |       | 1,462                                            |       | (189 | ) |
| Net (decrease) increase in cash and cash  equivalents                            |       | (43,113                                          | )          | 32,252 |   |
| Cash and cash equivalents at the beginning  of the period                        |       | 148,484                                          |       | 180,034 |   |
| Cash and cash equivalents at the end of the  period                              |       | $                                                | 105,371    |   | $ | 212,286 |   |

 

See accompanyingnotes.

 

5

----

 

**IHS INC.**

**CONSOLIDATEDSTATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY**

**(In thousands)**

 
| ** **                                | ** ** | **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, 2007**    |       | 48,759                                          |       | $                               | 498        |                                            | 13,750     |                            | $          | 138                              |       | $                   | 381,124    |                   | $          | (46,045                                                   | )          | $         | 483,804    |   | $ | 21,389 |   | $ | 840,908 |   |
| Stock-based award  activity               |       | 39                                              |       | 2                               |       | —                                          |       | —                          |       | 22,523                           |       | (13,118             | )          | —                 |       | —                                                    |       | 9,407     |       |
| Excess tax  benefit on vested shares      |       | —                                          |       | —                          |       | —                                          |       | —                          |       | 8,261                            |       | —              |       | —                 |       | —                                                    |       | 8,261     |       |
| Repurchases of  common stock              |       | (94                                             | )          | —                          |       | —                                          |       | —                          |       | —                           |       | (5,546              | )          | —                 |       | —                                                    |       | (5,546    | )          |
| Net income                                |       | —                                          |       | —                          |       | —                                          |       | —                          |       | —                           |       | —              |       | 44,689                 |       | —                                                    |       | 44,689    |       |
| Other  comprehensive income:              |       |                                            |       |                            |       |                                            |       |                            |       |                             |       |                |       |                   |       |                                                      |       |      |       |
| Foreign currency  translation adjustments |       | —                                          |       | —                          |       | —                                          |       | —                          |       | —                           |       | —              |       | —                 |       | (5,710                                                    | )          | (5,710    | )          |
| Comprehensive  income, net of tax    |       | —                                          |       | —                          |       | —                                          |       | —                          |       | —                           |       | —              |       | —                 |       | —                                                    |       | 38,979    |       |
| Adoption of FIN  48                       |       | —                                          |       | —                          |       | —                                          |       | —                          |       | —                           |       | —              |       | 1,422                  |       | —                                                    |       | 1,422     |       |
| **Balance  at May 31, 2008**    |       | 48,704                                          |       | $                               | 500        |                                            | 13,750     |                            | $          | 138                              |       | $                   | 411,908    |                   | $          | (64,709                                                   | )          | $         | 529,915    |   | $ | 15,679 |   | $ | 893,431 |   |

 

See accompanying notes.

 

6

----

** **

**IHS INC.**

**NOTES TOUNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

** **

**1.**              Basis of Presentation andSignificant Accounting Policies

 

***Nature of Operations***

 

IHS Inc. (IHS, the Company, we, our, orus) is a publicly traded Delaware corporation. IHS is a leading provider andcomprehensive source of Critical Information and Insight in a sizable andgrowing global market. Our customers rely on our products and services tofacilitate crucial decision-making, support key processes, and improveproductivity. At the heart of our products and services is data obtained frompublic sources, third parties, and our own proprietary databases. We transformthat data into Critical Information and Insight that is both useful to ourcustomers and available where and when they make critical business decisions.The data becomes Critical Information when we combine it with our proprietaryand third-party technology to create graphical user interfaces, search andnavigation tools, and online delivery systems. We further transform thatinformation into Insight products and services with analysis and interpretationfrom our teams of experts.

 

We serve some of the world’s largestcorporations across multiple industries, as well as governments and otherorganizations, in more than 100 countries. We generate approximately half ofour total revenue from outside the United States. Our primary operationsoutside the United States are in the United Kingdom, Canada and Switzerland.Our operating profit outside the United States has historically exceeded ourdomestic operating profit. We manage our business through our Energy andEngineering operating segments.

 

We have targeted four specific information “domains”—Energy,Product Lifecycle, Security, and Environment. Since these four informationdomains represent areas where our customers have needs for critical informationand insight, we use these domains to set priorities and design our businessobjectives. As we continue to deliver Critical Information and Insight in thosefour information domains, we prepare and analyze our financial reports toinclude our two reportable segments. As the information that our customers needto address their complex business issues continues to converge at theintersection of the information domains that we serve, we are evolving ourmanagement structure to a geographic focus, the point of contact with ourcustomers. As a result of this transformation, our defined operating segmentswill change to regional segments during the third quarter of 2008.

 

***Consolidation Policy***

*** ***

The consolidated financialstatements include the accounts of all wholly-owned and majority-ownedsubsidiaries. All significant intercompany accounts and transactions have beeneliminated.  Investments inunconsolidated affiliated companies are accounted for under the equity methodand are included in “Equity Investment in Joint Venture” in the accompanyingConsolidated Balance Sheets. Our proportionate share of income from theunconsolidated affiliates is included in “Income from Equity Investment” in theaccompanying Consolidated Statements of Operations.  We generally utilize the equity method ofaccounting when we have a non-controlling ownership interest of between 20% and50% in an entity, provided we are able to exercise significant influence overthe investee’s operations.

 

***Unaudited Condensed ConsolidatedFinancial 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 foreign subsidiaries.  All significant intercompany transactions andbalances have been eliminated in consolidation. These condensed consolidatedfinancial statements should be read in conjunction with the consolidatedfinancial statements for the year ended November 30, 2007.  The results of operations for the three andsix months ended May 31, 2008, are not necessarily indicative of theresults that may be achieved for the full fiscal year and cannot be used toindicate financial performance for the entire year.

 

The year-end condensed consolidatedbalance sheet data was derived from the audited November 30, 2007, balancesheet.

 

***Results Subject to SeasonalVariations***

*** ***

Historically, ourbusiness has had seasonal aspects. However, with the continued organic growth in our subscription-basedbusiness model combined with several acquisitions in recent years, our seasonalaspects have diminished. Our first quarter does benefit from the inclusion ofthe results from CERAWeek, an annual energy executive gathering.  Subscriptions are generally paid in full within one to twomonths after the subscription period commences. As a result, the timing of ourcash flows generally precedes the recognition of revenue and income.

 

7

----

 

***Use of Estimates***

*** ***

The preparationof interim condensed consolidated financial statements in conformity withaccounting principles generally accepted in the United States requires us tomake estimates and assumptions that affect the amounts reported and disclosedin the financial statements and the accompanying notes. Significant estimateshave been made in areas that include revenue recognition, useful lives of fixedand intangible assets, allocation of purchase price to acquired assets andliabilities, the recoverability of intangible assets and goodwill, income andother taxes, pension and post-retirement benefits, and stock-basedcompensation. Actual results could differ from those estimates.

 

***Reclassification***

 

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

*** ***

***Income Taxes***

*** ***

Oureffective quarterly rate is estimated based upon the effective tax rateexpected to be applicable for the full fiscal year.

 

Oureffective tax rate for the second quarter of 2008 was 31.9% compared to 32.4%for the prior year period.  Our effectivetax rate for the first half of 2008 was 32.5% compared to 32.7% for the prioryear period.  The 2008 rate reflects theimpact from net reductions in unrecognized tax benefits principally from thesuccessful completion of a recent Canadian tax audit, as well as net benefitsfrom changes to certain estimates.

 

OnDecember 1, 2007 we adopted the provisions of Financial AccountingStandards Board Interpretation No. 48 (FIN 48). Upon adoption, we recognized a $1.4 million decrease in liabilities onuncertain tax positions, resulting in a balance of $1.7 million in unrecognizedtax benefits as of December 1, 2007.  Since December 1, 2007, unrecognized tax benefits decreased by $0.2 million.   This reduction represents the net ofdecreases from the recognition of tax benefits due to the closure of a Canadiantax audit and from the filing of certain non-U.S. amended tax returns, andincreases due to additional unrecognized tax benefits and accrued interest duringthe six months ended May 31, 2008. As of May 31, 2008, the total amount of unrecognized tax benefitswas $1.5 million.  If recognized,essentially all of the unrecognized tax benefits would affect our effective taxrate.

 

We recognize interest and penalties related tounrecognized tax benefits within the provision for income taxes.   For the sixmonths ended May 31, 2008, we recognized $0.1 million of net benefit frominterest on unrecognized tax benefits.

 

Weare subject to taxation and file income tax returns in the U.S. and in manyforeign jurisdictions. For U.S. federal, Canadian and Swiss income taxpurposes, effectively all years prior to 2004 are closed.  For United Kingdom income tax purposes, allyears prior to 2005 are effectively closed.

 

Theopen tax years contain matters that could be subject to differinginterpretations of applicable tax laws and regulations as it relates to theamount and/or timing of income, deductions and tax credits. Although theoutcome of tax audits is always uncertain, we believe that adequate amounts oftax and interest have been provided for any adjustments that are expected toresult from an audit of the open tax years. Although timing of the resolution and/or closure of audits is highlyuncertain, we do not believe it is reasonably possible that our unrecognizedtax benefits will materially change in the next 12 months.

 

***New Accounting Pronouncements***

 

In September 2006,the Financial Accounting Standards Board (FASB) issued SFAS No. 157, *Fair Value Measurements* (SFAS No. 157). Among otherrequirements, SFAS No. 157 defines fair value and establishes a frameworkfor measuring fair value and also expands disclosure about the use of fairvalue to measure assets and liabilities. Subsequently, the FASB deferred the

 

8

----

 

application of this pronouncement for non-financialassets and liabilities to fiscal years beginning after November 15,2008.  SFAS No. 157 is effective forfinancial assets and liabilities beginning the first fiscal year that beginsafter November 15, 2007. We adopted SFAS No. 157 for financial assetsand liabilities on December 1, 2007, with no material impact to ourconsolidated financial statements.

 

In February 2007,the FASB issued SFAS No. 159, *The Fair Value Option forFinancial Assets and Financial Liabilities* (SFAS No. 159). SFASNo. 159 expands the use of fair value measurement by permitting entitiesto choose to measure many financial instruments and certain other items at fairvalue that are not currently required to be measured at fair value. SFAS No. 159was effective beginning the first fiscal year that begins after November 15,2007. We have opted not to electively adopt the provisions of SFAS No. 159in the accompanying consolidated financial statements.

 

In December 2007,the FASB issued SFAS No. 141(R), *BusinessCombinations*and SFAS No. 160, *Accountingand Reporting of Noncontrolling Interest in Consolidated Financial Statements,an amendment of ARB No. 51*. These new standards will significantly change the accounting for andreporting of business combination transactions and noncontrolling (minority)interests in consolidated financial statements.  SFAS Nos. 141(R) and160 are required to be adopted simultaneously and are effective for the firstannual reporting period beginning on or after December 15, 2008.  Thus, we are required to adopt thesestandards on December 1, 2009, the first day of our 2010 fiscal year.Earlier adoption is prohibited.  We arecurrently evaluating the impact of adopting SFAS Nos. 141(R) and 160 onour consolidated financial statements.

 

In March 2008,the FASB issued SFAS No. 161, *Disclosures aboutDerivative Instruments and Hedging Activities*.  SFAS No. 161 requires additionaldisclosures related to the use of derivative instruments, the accounting forderivatives and how derivatives impact financial statements.  SFAS No. 161 is effective for fiscalyears and interim periods beginning after November 15, 2008.  Thus, we are required to adopt this standardon December 1, 2008, the first day of our 2009 fiscal year.  We are currently evaluating the impact ofadopting SFAS No. 161 on our consolidated financial statements.

 

In May 2008,the FASB issued SFAS No. 162, *The Hierarchy of GeneralAccepted Accounting Principles*. This statement documents the hierarchy of the various sources ofaccounting principles and the framework for selecting the principles used inpreparing financial statements.  Thisstatement shall be effective 60 days following the Securities and Exchange Commission’sapproval of the Public Company Accounting Oversight Board amendments to AU Section 411,*The Meaning of Present Fairly in Conformity WithGenerally Accepted Accounting Principles*.  SFAS No. 162 will not have a materialimpact to our consolidated financial statements.

 

**2.****             ****Business Combinations**

 

In December 2007, we acquiredMcCloskey Group Limited (McCloskey), the leading provider of news, criticalinformation and insight on the international coal markets located near London,England.  We acquired McCloskey for £13.9million, or approximately $28.2 million using cash on hand.

 

On March 3, 2008, weacquired Prime Publications Limited (Prime), which owns a 50% interest in theLloyd’s Register-Fairplay Limited (LRF) joint venture, a leading source of globalmaritime information.  LRF is thepre-eminent brand name in the maritime information industry and the onlyorganization that provides comprehensive details of the current world merchantfleet (tankers, cargo, carrier and passenger ships) and a complete range ofproducts and services to assist the world’s maritime community.  The investment in LRF was the primary asset of Prime.  Lloyd’s Register of London, England is thejoint venture partner owning the other 50%. IHS accounts for the joint venture under the equity method ofaccounting.  IHS acquired 100 percent ofthe stock of Prime for approximately £38.0million, or approximately $74.6 million, which included £10.7 million, or approximately $21.2 million innon-interest bearing seller notes valued at $18.5 million and the remainder waspaid in cash.

 

Also on March 3,2008, we acquired Dolphin Software, Inc. (Dolphin) for approximately $23.7million in cash. Dolphin is a leader in developing and using chemical datainformation and software used by companies to record and track chemicals storedand used in their facilities.

 

9

----

 

On March 13, 2008,we acquired Environmental Software Providers (ESP), a provider of enterpriseinformation solutions used by companies to assist in managing theirenvironmental sustainability programs for approximately $18.7 million in cash.

 

On March 14, 2008,we acquired JFA International (JFA), a London, England based provider ofstrategic analysis to the energy industry’s exploration and productionsectors.  JFA was acquired for £2.0 million, orapproximately $3.9 million.

 

Cash used for the March 2008acquisitions came from cash on hand and a draw down of $50.0 million on our$385 million revolving credit agreement.

 

Theseacquisitions were accounted for using the purchase method of accounting. Ourconsolidated financial statements include all the assets and liabilitiesacquired and the results of operations from the respective date of acquisition.Pro forma results of the acquired businesses have not been presented as theydid not have a material impact on our results of operations.

 

Thepurchase prices for these 2008 acquisitions, excluding acquired cash andincluding acquisition-related costs and notes payable, were initially allocatedas follows (in thousands):

 
| ** **                         | ** ** | **Prime** | ** ** | **McCloskey** | ** ** | **All others** | ** ** | **Total** | ** ** |
|------------------------------------|------------|-----------|------------|---------------|------------|---------------------|------------|-----------|------------|
| Assets:                            |       |      |       |          |       |                |       |      |       |
| Current assets                     |       | $         | 110        |          | $          | 774                 |       | $         | 2,944      |   | $ | 3,828 |   |
| Property and equipment             |       | 6         |       | 114           |       | 741                 |       | 861       |       |
| Intangible assets                  |       | 3,572     |       | 8,180         |       | 16,755              |       | 28,507    |       |
| Goodwill                           |       | 687       |       | 24,136        |       | 34,136              |       | 58,959    |       |
| Equity investment in joint venture |       | 72,271    |       | —        |       | —              |       | 72,271    |       |
| Other long-term assets             |       | —    |       | —        |       | 52                  |       | 52        |       |
| Total assets                       |       | 76,646    |       | 33,204        |       | 54,628              |       | 164,478   |       |
| Liabilities:                       |       |      |       |          |       |                |       |      |       |
| Current liabilities                |       | 1,079     |       | 2,700         |       | 4,655               |       | 8,434     |       |
| Deferred taxes                     |       | 1,000     |       | 2,298         |       | 3,620               |       | 6,918     |       |
| Other long-term liabilities        |       | —    |       | —        |       | 20                  |       | 20        |       |
| Total liabilities                  |       | 2,079     |       | 4,998         |       | 8,295               |       | 15,372    |       |
| Purchase price                     |       | $         | 74,567     |          | $          | 28,206              |       | $         | 46,333     |   | $ | 149,106 |   |

 

**3.**              **Commitments and Contingencies**

 

We are a party to various legalproceedings that arise in the ordinary course of business.  In the opinion of management, none of theseactions, either individually or in the aggregate, is expected to have amaterial adverse affect on our financial condition, liquidity or results ofoperations.

 

10

----

 

**4.**              Other ComprehensiveIncome

** **

**Ourcomprehensive income for the three and six months ended May 31, 2008 and2007 was as follows:**

 
| ** **                                    | ** ** | **Three Months Ended May 31,** | ** ** | **Six Months Ended May 31,** | ** ** |
|-----------------------------------------------|------------|----------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                    | ** ** | **2008**                                           | ** ** | **2007**                                         | ** ** | **2008** | ** ** | **2007** | ** ** |
| ** **                                    | ** ** | **(In thousands)**                            | ** ** |
| Net income                                    |       | $                                                  | 23,258     |                                             | $          | 18,582 |   | $ | 44,689 |   | $ | 36,959 |   |
| Other comprehensive income (loss):            |       |                                               |       |                                             |       |   |   |   |   |
| Foreign currency translation adjustment       |       | (1,571                                             | )          | 6,346                                            |       | (5,710 | ) | 3,779 |   |
| Total other comprehensive income, net of  tax |       | $                                                  | 21,687     |                                             | $          | 24,928 |   | $ | 38,979 |   | $ | 40,738 |   |

 

**5.****              Stock-BasedCompensation**

 

On May 31,2008, we had one share based compensation plan: the Amended and Restated IHSInc. 2004 Long-Term Incentive Plan (LTIP). The LTIP provides for the grant ofnon-qualified stock options, incentive stock options, stock appreciationrights, restricted stock, restricted stock units, performance units andperformance shares, cash-based awards, other stock based awards and coveredemployee annual incentive awards. The 2004 Directors Stock Plan, a sub-planunder the LTIP, provides for the grant of restricted stock and restricted stockunits to non-employee directors as defined in that plan. We believe that suchawards better align the interests of our employees and non-employee directorswith those of our shareholders.

 

Wehave authorized a maximum of 11,250,000 shares, less the number of sharesrelating to any award granted and outstanding.

 

Stock-based compensation expense that has been charged against incomefor the plan was as follows:

 

| ** **                          | ** ** | **Three Months Ended May 31,** | ** ** | **Six Months Ended May 31,** | ** ** |
|-------------------------------------|------------|----------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                          | ** ** | **2008**                                           | ** ** | **2007**                                         | ** ** | **2008** | ** ** | **2007** | ** ** |
| ** **                          | ** ** | **(In thousands)**                            | ** ** |
| Cost of revenue                     |       | $                                                  | 376        |                                             | $          | 105 |   | $ | 687 |   | $ | 456 |   |
| Selling, general and administrative |       | 10,001                                             |       | 5,940                                            |       | 22,391 |   | 12,925 |   |
| Stock-based compensation expense    |       | $                                                  | 10,377     |                                             | $          | 6,045 |   | $ | 23,078 |   | $ | 13,381 |   |

 

Total income tax benefit recognized in the incomestatement for share-based compensation arrangements for the three and sixmonths ended May 31 was as follows:

 

| ** **         | ** ** | **Three Months Ended May 31,** | ** ** | **Six Months Ended May 31,** | ** ** |
|--------------------|------------|----------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **         | ** ** | **2008**                                           | ** ** | **2007**                                         | ** ** | **2008** | ** ** | **2007** | ** ** |
| ** **         | ** ** | **(In thousands)**                            | ** ** |
| Income tax benefit |       | $                                                  | 3,840      |                                             | $          | 2,237 |   | $ | 8,539 |   | $ | 4,951 |   |
|                    |            |                                                    |            |                                                  |            |  |  |  |  |  |  |  |  |

 

Nocompensation cost was capitalized during the six months ended May 31, 2008and 2007.

 

*Nonvested Stock.*  Share awards generally vest from one to fouryears. Share awards are generally subject to graded vesting but we do have alimited number of share awards subject to cliff vesting. The fair value ofnonvested stock is based on the fair value of our common stock on the date ofgrant. We amortize the value of share awards to expense over the vesting periodon a straight-line basis. For awards with performance conditions, an evaluationis made each quarter as to the likelihood of the performance criteria beingmet. Compensation expense is then adjusted to reflect the

 

11

----

 

number of shares expected to vest and the cumulative vesting period metto date.  Additionally, we estimateforfeitures at the grant date and recognize compensation cost based on thenumber of awards expected to vest. There may be adjustments in future periodsif the likelihood of meeting performance criteria changes or if actualforfeitures differ from our estimates. Our forfeiture rate is based uponhistorical experience as well as anticipated employee turnover consideringcertain qualitative factors.

 

Total compensation expense related to nonvested awards, both shareawards and stock options, not yet recognized was $76.9 million as of May 31,2008, with a weighted-average recognition period of approximately 2 years.

 

A summary of the status of our nonvested shares as of May 31,2008, and changes during the six months ended May 31, 2008, was asfollows:

 
| ** **                       | ** ** | **Shares**              | ** ** | **Weighted-  Average Grant  Date Fair Value** | ** ** |
|----------------------------------|------------|-------------------------|------------|--------------------------------------------------------------|------------|
| ** **                       | ** ** | **(in thousands)** | ** ** | ** **                                                   | ** ** |
| Balances, November 30, 2007 |       | 2,429                   |       | $                                                            | 32.16      |   |
| Granted                          |       | 785                     |       | $                                                            | 62.03      |   |
| Vested                           |       | (593                    | )          | $                                                            | 25.66      |   |
| Forfeited                        |       | (72                     | )          | $                                                            | 44.83      |   |
| Balances, May 31, 2008      |       | 2,549                   |       | $                                                            | 42.53      |   |

 

The total fair value of nonvested stock that vested during the threeand six months ended May 31, 2008, was $0.6 million and $37.7million, respectively based on the fair value on the vesting date and $0.3million and $15.2 million, respectively based on the fair value on the date ofgrant.

 

*Stock Options.*  Option awards are granted with an exerciseprice equal to the fair market value of our stock at the date of grant. Optionsoutstanding as of May 31, 2008, vest in various ways over a period of3-to-4 years of continuous service and have 8-year contractual terms.Certain option and share awards provide for accelerated vesting if there is achange in control (as defined in the plans).

 

The following table summarizes changes in outstanding stock optionsduring the six months ended May 31, 2008, as well as options that arevested and expected to vest and stock options exercisable at May 31, 2008:

 
| ** **                                        | ** ** | **Shares**              | ** ** | **Weighted-  Average  Exercise  Price** | ** ** | **Weighted-  Average  Remaining  Contractual  Term** | ** ** | **Aggregate  Intrinsic  Value** | ** ** |
|---------------------------------------------------|------------|-------------------------|------------|-----------------------------------------|------------|------------------------------------------------------|------------|---------------------------------|------------|
| ** **                                        | ** ** | **(in thousands)** | ** ** | ** **                              | ** ** | **(in years)**                                  | ** ** | **(in thousands)**         | ** ** |
| Outstanding at November 30, 2007             |       | 287                     |       | $                                       | 35.31      |                                                 | 2.0        |                            | $          | 10,009 |   |
| Granted                                           |       | —                  |       |                                    |       |                                                 |       |                            |       |
| Exercised                                         |       | (9                      | )          | 37.65                                   |       |                                                 |       |                            |       |
| Forfeited                                         |       | —                  |       |                                    |       |                                                 |       |                            |       |
| Outstanding at May 31, 2008                  |       | 278                     |       | $                                       | 35.21      |                                                 | 1.5        |                            | $          | 6,777 |   |
| Vested and expected to vest at May 31,  2008 |       | 278                     |       | $                                       | 35.21      |                                                 | 1.5        |                            | $          | 6,777 |   |
| Exercisable at May 31, 2008                  |       | 54                      |       | $                                       | 37.65      |                                                 | —     |                            | $          | 1,181 |   |

 

The aggregate intrinsic value amounts in the table above represent thedifference between the closing price of our common stock on May 31, 2008,which was $59.56, and the exercise price, multiplied by the number ofin-the-money stock options as of the same date. This represents the amount thatwould have been received by the stock option holders if they had all exercisedtheir stock options on May 31, 2008. In future periods, this amount willchange depending on fluctuations in our stock price. The total intrinsic valueof stock options exercised during the three and six months ended May 31,2008 was $0.2 million and $0.3 million, respectively.

 

12

----

 

**6.****              Debt**

 

On September 7, 2007, we entered into an amended and restatedcredit agreement (Revolver). The $385 million unsecured Revolver allowsus, under certain conditions, to increase the facility to a maximum of$500 million. The agreement expires in September 2012.

 

The interest rates for borrowing under the Revolver are based upon ourLeverage Ratio, which is the ratio of Consolidated Funded Indebtedness torolling four quarter Consolidated Earnings Before Interest Expense, Taxes,Depreciation and Amortization (EBITDA), as defined in the Revolver. The rate rangesfrom the applicable LIBOR plus 50 basis points to 125 basis points or the agentbank’s base rate. A commitment fee is payable periodically and ranges from 10to 25 basis points based upon our Leverage Ratio. The Revolver contains certainfinancial and other covenants, including limitations on capital leaseobligations and maximum Leverage and Interest Coverage Ratios, as defined inthe Revolver.

 

As of May 31, 2008, we were in compliance with all of thecovenants in the agreement.  We hadletters of credit totaling approximately $1.0 million as of May 31,2008.  On March 3, 2008, we borrowed $50.0 million under the Revolverat an annual rate of 3.6% to fund acquisitions, of which $10.0 million wasoutstanding as of May 31, 2008.  The use of the Revolver allows us tomaintain cash levels to fund the ongoing operational needs of the business andhas tax benefits as we may not have to repatriate cash from foreign locationsto fund the acquisitions.

 

Asof May 31, 2008, we also had $21.2 million of non-interest bearing notesthat were issued to the sellers of Prime. After discounting these notes assuming an annual interest rate at 5.69%,the recorded balance at May 31, 2008 is $18.5 million.  These notes are due upon demand and aretherefore recorded in “Short-term Debt” in the accompanying ConsolidatedBalance Sheets.

 

**7.****              Pensions andPostretirement Benefits**

 

We have defined-benefit plans and defined-contribution plans. Ourdefined-benefit plans consist of a non-contributory retirement plan for all ofour U.S. employees with at least one year of service (U.S. RIP), a pension planthat covers certain employees of one of our United Kingdom-based subsidiaries(U.K. RIP), and a supplemental income plan (SIP) for certain companyexecutives.

 

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

 
| ** **                                       | ** ** | **Three Months Ended May 31, 2008** | ** ** | **Three Months Ended May 31, 2007** | ** ** |
|--------------------------------------------------|------------|--------------------------------------------------------------|------------|--------------------------------------------------------------|------------|
| ** **                                       | ** ** | **U.S.  RIP**                                                | ** ** | **U.K.  RIP**                                                | ** ** | **SIP** | ** ** | **Total** | ** ** | **U.S.  RIP** | ** ** | **U.K.  RIP** | ** ** | **SIP** | ** ** | **Total** | ** ** |
| ** **                                       | ** ** | **(In thousands)**                                      | ** ** |
| Service costs incurred                           |       | $                                                            | 1,572      |                                                         | $          | 238 |   | $ | 72 |   | $ | 1,882 |   | $ | 1,569 |   | $ | 288 |   | $ | 48 |   | $ | 1,905 |   |
| Interest costs on projected benefit  obligation  |       | 2,999                                                        |       | 539                                                          |       | 114 |   | 3,652 |   | 2,720 |   | 499 |   | 82 |   | 3,301 |   |
| Expected return on plan assets                   |       | (5,361                                                       | )          | (562                                                         | )          | — |   | (5,923 | ) | (5,078 | ) | (451 | ) | — |   | (5,529 | ) |
| Amortization of prior service cost               |       | (118                                                         | )          | —                                                       |       | 11 |   | (107 | ) | (119 | ) | — |   | — |   | (119 | ) |
| Amortization of actuarial loss                   |       | —                                                       |       | —                                                       |       | 47 |   | 47 |   | 375 |   | 302 |   | 30 |   | 707 |   |
| Amortization of transitional  obligation/(asset) |       | (142                                                         | )          | —                                                       |       | 10 |   | (132 | ) | (142 | ) | — |   | 10 |   | (132 | ) |
| Net periodic pension benefit (income)  expense   |       | $                                                            | (1,050     | )                                                            | $          | 215 |   | $ | 254 |   | $ | (581 | ) | $ | (675 | ) | $ | 638 |   | $ | 170 |   | $ | 133 |   |

 

13

----

 
| ** **                                       | ** ** | **Six Months Ended May 31, 2008** | ** ** | **Six Months Ended May 31, 2007** | ** ** |
|--------------------------------------------------|------------|------------------------------------------------------------|------------|------------------------------------------------------------|------------|
| ** **                                       | ** ** | **U.S.  RIP**                                              | ** ** | **U.K.  RIP**                                              | ** ** | **SIP** | ** ** | **Total** | ** ** | **U.S.  RIP** | ** ** | **U.K.  RIP** | ** ** | **SIP** | ** ** | **Total** | ** ** |
| ** **                                       | ** ** | **(In thousands)**                                    | ** ** |
| Service costs incurred                           |       | $                                                          | 3,144      |                                                       | $          | 476 |   | $ | 144 |   | $ | 3,764 |   | $ | 3,138 |   | $ | 574 |   | $ | 96 |   | $ | 3,808 |   |
| Interest costs on projected benefit  obligation  |       | 5,998                                                      |       | 1,078                                                      |       | 228 |   | 7,304 |   | 5,440 |   | 1,039 |   | 186 |   | 6,665 |   |
| Expected return on plan assets                   |       | (10,729                                                    | )          | (1,124                                                     | )          | — |   | (11,853 | ) | (10,156 | ) | (898 | ) | — |   | (11,054 | ) |
| Amortization of prior service cost               |       | (236                                                       | )          | —                                                     |       | 22 |   | (214 | ) | (237 | ) | — |   | 22 |   | (215 | ) |
| Amortization of actuarial loss                   |       | —                                                     |       | —                                                     |       | 94 |   | 94 |   | 750 |   | 602 |   | 60 |   | 1,412 |   |
| Amortization of transitional  obligation/(asset) |       | (284                                                       | )          | —                                                     |       | 20 |   | (264 | ) | (284 | ) | — |   | 20 |   | (264 | ) |
| Net periodic pension benefit (income)  expense   |       | $                                                          | (2,107     | )                                                          | $          | 430 |   | $ | 508 |   | $ | (1,169 | ) | $ | (1,349 | ) | $ | 1,317 |   | $ | 384 |   | $ | 352 |   |

 

Ournet periodic post-retirement income was comprised of the following for thethree and six months ended May 31:

 
| ** **                                  | ** ** | **Three Months Ended May 31,** | ** ** | **Six Months Ended May 31,** | ** ** |
|---------------------------------------------|------------|----------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                  | ** ** | **2008**                                           | ** ** | **2007**                                         | ** ** | **2008** | ** ** | **2007** | ** ** |
| ** **                                  | ** ** | **(In thousands)**                            | ** ** |
| Service costs incurred                      |       | $                                                  | 25         |                                             | $          | 34 |   | $ | 50 |   | $ | 68 |   |
| Interest costs                              |       | 158                                                |       | 148                                              |       | 316 |   | 296 |   |
| Amortization of prior service amounts       |       | (806                                               | )          | (807                                             | )          | (1,612 | ) | (1,614 | ) |
| Amortization of net actuarial loss          |       | 118                                                |       | 138                                              |       | 236 |   | 276 |   |
| Net periodic post-retirement benefit income |       | $                                                  | (505       | )                                                | $          | (487 | ) | $ | (1,010 | ) | $ | (974 | ) |

 

**8.**              Earnings per Share

 

Earnings per common share (EPS) arecomputed in accordance with SFAS No. 128, *Earnings perShare*. Basic EPS is computed by dividing net income by the weightedaverage number of common shares outstanding during the period. Diluted EPSreflects the potential dilution that could occur if securities or othercontracts to issue common stock were exercised or converted into common shares.

 

Our authorized capital stockconsists of 80,000,000 shares of Class A common stock and 13,750,000shares of Class B common stock. These classes have equal dividend rights and liquidation rights.However, the holders of our Class A common stock are entitled to one voteper 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 theholder into one share of Class A common stock and will automaticallyconvert, without any action by the holder, upon the earlier of the occurrenceof specified events or November 16, 2009.

 

We use the two-class method for computing basic and dilutedEPS amounts. We calculated undistributed earnings as follows:

 
| ** **             | ** ** | **Three Months Ended May 31,** | ** ** | **Six Months Ended May 31,** | ** ** |
|------------------------|------------|----------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **             | ** ** | **2008**                                           | ** ** | **2007**                                         | ** ** | **2008** | ** ** | **2007** | ** ** |
| ** **             | ** ** | **(In thousands)**                            | ** ** |
| Net income             |       | $                                                  | 23,258     |                                             | $          | 18,582 |   | $ | 44,689 |   | $ | 36,959 |   |
| Less: dividends        |       | —                                             |       | —                                           |       | — |   | — |   |
| Undistributed earnings |       | $                                                  | 23,258     |                                             | $          | 18,582 |   | $ | 44,689 |   | $ | 36,959 |   |

 

14

----

 

Weighted average common shares outstanding are calculatedas follows:

 
| ** **                                                                                       | ** ** | **Three Months Ended May 31,** | ** ** |
|--------------------------------------------------------------------------------------------------|------------|----------------------------------------------------|------------|
| ** **                                                                                       | ** ** | **2008**                                           | ** ** | **2007** | ** ** |
| ** **                                                                                       | ** ** | **Class A**                                   | ** ** | **Class B** | ** ** | **Class A** | ** ** | **Class B** | ** ** |
| ** **                                                                                       | ** ** | **(In thousands)**                            | ** ** |
| Weighted  average common shares outstanding:                                                     |       |                                               |       |   |   |   |   |   |   |
| Shares used  in basic per-share calculation                                                      |       | 48,471                                             |       | 13,750 |   | 43,626 |   | 13,750 |   |
| Effect of  dilutive securities:                                                                  |       |                                               |       |   |   |   |   |   |   |
| Deferred  stock units                                                                            |       | 42                                                 |       | — |   | 18 |   | — |   |
| Restricted  shares                                                                               |       | 752                                                |       | — |   | 876 |   | — |   |
| Options                                                                                          |       | 71                                                 |       | — |   | 11 |   | — |   |
| Assumed  conversion of Class B shares                                                       |       | 13,750                                             |       | — |   | 13,750 |   | — |   |
| Shares used  in diluted per-share calculation                                                    |       | 63,086                                             |       | 13,750 |   | 58,281 |   | 13,750 |   |
|                                                                                             |       |                                               |       |   |   |   |   |   |   |
| ** **                                                                                       | ** ** | **Six Months Ended May 31,**                  | ** ** |
| ** **                                                                                       | ** ** | **2008**                                           | ** ** | **2007** | ** ** |
| ** **                                                                                       | ** ** | **Class A**                                   | ** ** | **Class B** | ** ** | **Class A** | ** ** | **Class B** | ** ** |
| ** **                                                                                       | ** ** | **(In thousands)**                                 | ** ** |
| Weighted  average common shares outstanding:                                                     |       |                                               |       |   |   |   |   |   |   |
| Shares used  in basic per-share calculation                                                      |       | 48,347                                             |       | 13,750 |   | 43,733 |   | 13,750 |   |
| Effect of  dilutive securities:                                                                  |       |                                               |       |   |   |   |   |   |   |
| Deferred  stock units                                                                            |       | 40                                                 |       | — |   | 18 |   | — |   |
| Restricted  shares                                                                               |       | 839                                                |       | — |   | 826 |   | — |   |
| Options                                                                                          |       | 69                                                 |       | — |   | 1 |   | — |   |
| Assumed  conversion of Class B shares                                                       |       | 13,750                                             |       | — |   | 13,750 |   | — |   |
| Shares used  in diluted per-share calculation                                                    |       | 63,045                                             |       | 13,750 |   | 58,328 |   | 13,750 |   |
|                                                                                             |       |                                               |       |   |   |   |   |   |   |
| Undistributed  earnings and calculated basic and diluted EPS amounts are calculated as  follows: |       |
|                                                                                             |       |                                               |       |   |   |   |   |   |   |
| ** **                                                                                       | ** ** | **Three Months Ended May 31,** | ** ** |
| ** **                                                                                       | ** ** | **2008**                                           | ** ** | **2007** | ** ** |
| ** **                                                                                       | ** ** | **Class A**                                   | ** ** | **Class B** | ** ** | **Class A** | ** ** | **Class B** | ** ** |
| ** **                                                                                       | ** ** | **(In thousands)**                            | ** ** |
| **Basic**                                                                                        |       |                                               |       |   |   |   |   |   |   |
| Weighted  average shares outstanding                                                             |       | 48,471                                             |       | 13,750 |   | 43,626 |   | 13,750 |   |
| Divided by: Total weighted average shares  outstanding (Class A and Class B)           |       | 62,221                                             |       | 62,221 |   | 57,376 |   | 57,376 |   |
| Multiplied  by: Undistributed earnings                                                           |       | $                                                  | 23,258     |   | $ | 23,258 |   | $ | 18,582 |   | $ | 18,582 |   |
| Subtotal                                                                                         |       | $                                                  | 18,118     |   | $ | 5,140 |   | $ | 14,129 |   | $ | 4,453 |   |
| Divided by:  Weighted average shares outstanding                                                 |       | 48,471                                             |       | 13,750 |   | 43,626 |   | 13,750 |   |
| Earnings per  share                                                                              |       | $                                                  | 0.37       |   | $ | 0.37 |   | $ | 0.32 |   | $ | 0.32 |   |
|                                                                                             |       |                                               |       |   |   |   |   |   |   |
| **Diluted**                                                                                      |       |                                               |       |   |   |   |   |   |   |
| Weighted  average shares outstanding                                                             |       | 63,086                                             |       | 13,750 |   | 58,281 |   | 13,750 |   |
| Divided by: Total weighted average shares  outstanding (Class A and Class B)           |       | 63,086                                             |       | 63,086 |   | 58,281 |   | 58,281 |   |
| Multiplied  by: Undistributed earnings                                                           |       | $                                                  | 23,258     |   | $ | 23,258 |   | $ | 18,582 |   | $ | 18,582 |   |
| Subtotal                                                                                         |       | $                                                  | 23,258     |   | $ | 5,069 |   | $ | 18,582 |   | $ | 4,384 |   |
| Divided by:  Weighted average shares outstanding                                                 |       | 63,086                                             |       | 13,750 |   | 58,281 |   | 13,750 |   |
| Earnings per  share                                                                              |       | $                                                  | 0.37       |   | $ | 0.37 |   | $ | 0.32 |   | $ | 0.32 |   |

 

15

----

 
| ** **                                                                             | ** ** | **Six Months Ended May 31,** | ** ** |
|----------------------------------------------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                                                             | ** ** | **2008**                                         | ** ** | **2007** | ** ** |
| ** **                                                                             | ** ** | **Class A**                                 | ** ** | **Class B** | ** ** | **Class A** | ** ** | **Class B** | ** ** |
| ** **                                                                             | ** ** | **(In thousands)**                          | ** ** |
| **Basic**                                                                              |       |                                             |       |   |   |   |   |   |   |
| Weighted  average shares outstanding                                                   |       | 48,347                                           |       | 13,750 |   | 43,733 |   | 13,750 |   |
| Divided by: Total weighted average shares  outstanding (Class A and Class B) |       | 62,097                                           |       | 62,097 |   | 57,483 |   | 57,483 |   |
| Multiplied  by: Undistributed earnings                                                 |       | $                                                | 44,689     |   | $ | 44,689 |   | $ | 36,959 |   | $ | 36,959 |   |
| Subtotal                                                                               |       | $                                                | 34,794     |   | $ | 9,895 |   | $ | 28,118 |   | $ | 8,841 |   |
| Divided by:  Weighted average shares outstanding                                       |       | 48,347                                           |       | 13,750 |   | 43,733 |   | 13,750 |   |
| Earnings per  share                                                                    |       | $                                                | 0.72       |   | $ | 0.72 |   | $ | 0.64 |   | $ | 0.64 |   |
|                                                                                   |       |                                             |       |   |   |   |   |   |   |
| **Diluted**                                                                            |       |                                             |       |   |   |   |   |   |   |
| Weighted  average shares outstanding                                                   |       | 63,045                                           |       | 13,750 |   | 58,328 |   | 13,750 |   |
| Divided by: Total weighted average shares  outstanding (Class A and Class B) |       | 63,045                                           |       | 63,045 |   | 58,328 |   | 58,328 |   |
| Multiplied  by: Undistributed earnings                                                 |       | $                                                | 44,689     |   | $ | 44,689 |   | $ | 36,959 |   | $ | 36,959 |   |
| Subtotal                                                                               |       | $                                                | 44,689     |   | $ | 9,747 |   | $ | 36,959 |   | $ | 8,712 |   |
| Divided by:  Weighted average shares outstanding                                       |       | 63,045                                           |       | 13,750 |   | 58,328 |   | 13,750 |   |
| Earnings per  share                                                                    |       | $                                                | 0.71       |   | $ | 0.71 |   | $ | 0.63 |   | $ | 0.63 |   |

 

*Share Repurchase Program*

 

During2006, our board of directors approved a program to reduce the dilutive effectsof employee equity grants, by allowing employees to surrender shares back tothe company for a value equal to their statutory tax liability.  IHS then pays the statutory tax on behalf ofthe employee.  Later in 2006, our boardof directors approved an additional program—a stock buyback program—whereby IHSmay acquire up to one million shares per year in the open market to more fullyoffset the dilutive effect of our employee equity programs. This program wasrenewed by the board of directors in late 2007 for fiscal year 2008.  During the three months ended May 31,2008, we repurchased 27,700 shares of our Class A common stock forapproximately $1.7 million, or $60.00 per share, pursuant to the stock buybackprogram and 2,430 shares for approximately $0.2 million, or $63.09 per share,related to shares withheld for taxes. During the six months ended May 31, 2008, we repurchased 94,200shares of our Class A common stock for approximately $5.5 million, or$58.88 per share, pursuant to the stock buyback program and 210,256 shares forapproximately $13.1 million, or $62.39 per share, related to shares withheldfor taxes.  Since the inception of theseprograms, we have repurchased 784,162 shares of our Class A common stockfor approximately $34.7 million, or $44.29 per share, pursuant to the stockbuyback program and 593,069 shares for approximately $30.0 million, or $50.56per share, related to shares withheld for taxes.

 

16

----

 

**9.**              Goodwill and Intangible Assets

** **

The following table presents details of our intangible assets, otherthan goodwill, as of May 31, 2008:

 
| ** **                                      | ** ** | **Useful Life** | ** ** | **Gross**  | ** ** | **Accumulated  Amortization** | ** ** | **Net**    | ** ** |
|-------------------------------------------------|------------|----------------------|------------|------------|------------|-------------------------------|------------|------------|------------|
| ** **                                      | ** ** | **(Years)**          | ** ** | ** ** | ** ** | **(In thousands)**       | ** ** | ** ** | ** ** |
| Intangible assets subject to amortization:      |       |                 |       |       |       |                          |       |       |       |
| Information databases                           |       | 5-15                 |       | $          | 152,456    |                          | $          | (23,264    | )          | $ | 129,192 |   |
| Customer relationships                          |       | 2-15                 |       | 49,379     |       | (10,370                       | )          | 39,009     |       |
| Non-compete agreements                          |       | 5                    |       | 5,935      |       | (3,523                        | )          | 2,412      |       |
| Developed computer software                     |       | 5                    |       | 15,556     |       | (3,436                        | )          | 12,120     |       |
| Other                                           |       | 3-11                 |       | 6,064      |       | (1,590                        | )          | 4,474      |       |
| Total                                           |       |                 |       | 229,390    |       | (42,183                       | )          | 187,207    |       |
| Intangible assets not subject to  amortization: |       |                 |       |       |       |                          |       |       |       |
| Trademarks                                      |       |                 |       | 34,602     |       | —                        |       | 34,602     |       |
| Perpetual licenses                              |       |                 |       | 1,483      |       | —                        |       | 1,483      |       |
| Total                                           |       |                 |       | 36,085     |       | —                        |       | 36,085     |       |
| Total intangible assets                         |       |                 |       | $          | 265,475    |                          | $          | (42,183    | )          | $ | 223,292 |   |

 

The following tablepresents details of our intangible assets, other than goodwill, as of November 30,2007:

 
| ** **                                      | ** ** | **Useful Life** | ** ** | **Gross**  | ** ** | **Accumulated  Amortization** | ** ** | **Net**    | ** ** |
|-------------------------------------------------|------------|----------------------|------------|------------|------------|-------------------------------|------------|------------|------------|
| ** **                                      | ** ** | **(Years)**          | ** ** | ** ** | ** ** | **(In thousands)**       | ** ** | ** ** | ** ** |
| Intangible assets subject to amortization:      |       |                 |       |       |       |                          |       |       |       |
| Information databases                           |       | 5-15                 |       | $          | 137,317    |                          | $          | (14,926    | )          | $ | 122,391 |   |
| Customer relationships                          |       | 2-15                 |       | 45,650     |       | (7,981                        | )          | 37,669     |       |
| Non-compete agreements                          |       | 5                    |       | 5,514      |       | (2,889                        | )          | 2,625      |       |
| Developed computer software                     |       | 5                    |       | 15,036     |       | (2,527                        | )          | 12,509     |       |
| Other                                           |       | 3-11                 |       | 1,009      |       | (984                          | )          | 25         |       |
| Total                                           |       |                 |       | 204,526    |       | (29,307                       | )          | 175,219    |       |
| Intangible assets not subject to  amortization: |       |                 |       |       |       |                          |       |       |       |
| Trademarks                                      |       |                 |       | 29,602     |       | —                        |       | 29,602     |       |
| Perpetual licenses                              |       |                 |       | 1,538      |       | —                        |       | 1,538      |       |
| Total                                           |       |                 |       | 31,140     |       | —                        |       | 31,140     |       |
| Total intangible assets                         |       |                 |       | $          | 235,666    |                          | $          | (29,307    | )          | $ | 206,359 |   |

 

The estimated amortization expense of intangible assets for businesscombinations completed as of May 31, 2008 for each of the next five yearsis as follows:

 
| **Year**       | ** ** | **Amount**              | ** ** |
|----------------|------------|-------------------------|------------|
| ** **     | ** ** | **(In thousands)** | ** ** |
| Remainder 2008 |       | $                       | 12,208     |   |
| 2009           |       | 21,815                  |       |
| 2010           |       | 19,490                  |       |
| 2011           |       | 18,336                  |       |
| 2012           |       | 16,947                  |       |
|                |            |                         |            |  |

 

Amortization expense of intangible assets was $6.3 million and $3.2million for the three months ended May 31, 2008 and May 31, 2007,respectively.  Amortization expense ofintangible assets was $12.0 million and $5.9 million for the six months ended May 31,2008 and May 31, 2007, respectively.

 

17

----

 

Changesin our goodwill from November 30, 2007 to May 31, 2008 were primarilythe result of the Prime, McCloskey, ESP, Dolphin and JFA acquisitions (see Note2) and foreign-currency exchange-rate fluctuations.

 

**10.**       Segment Information

** **

We have two reportable segments: Energy andEngineering. Our Energy segment serves the Energy information domain where itdevelops 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 is focused primarily on the ProductLifecycle, Security, and Environment information domains where it providessolutions incorporating technical specifications and standards, regulations,parts data, design guides, security, environmental, and other information tocustomers in its targeted industries. Both segments primarily derive theirrevenue from subscriptions. As the information that our customers need toaddress their complex business issues continues to converge at the intersectionof the information domains that we serve, we are evolving our managementstructure to a geographic focus, the point of contact with our customers.  As a result, our defined operating segmentswill change to a geographic structure during the third quarter of 2008.

 

Information as to the operations of our twosegments is set forth below based on the nature of the offerings. Our Chairmanand Chief Executive Officer represents our chief operating decision maker, andhe evaluates segment performance based primarily on revenue and operatingprofit. The accounting policies of our segments are the same as those describedin the summary of significant accounting policies (see Note 2 to ourconsolidated financial statements included in our 2007 Form 10-K). As ourmanagement structure changes to a geographic focus in the third quarter of2008, we are modifying our internal reporting to a geographic focus and ourchief operating decision maker will use this information to evaluateperformance.

 

No single customer accounted for 10% or moreof our total revenue for the three or six months ended May 31, 2008. Thereare no material inter-segment revenues for any period presented.

 

As shown below, certain corporatetransactions are not allocated to the reportable segments. Amounts notallocated include, but are not limited to, such items as, stock-basedcompensation expense, net periodic pension and post-retirement benefits income,corporate-level impairments, and gain (loss) on sales of corporate assets.

 
| ** **                               | ** ** | **Energy**              | ** ** | **Engineering** | ** ** | **Shared  Services** | ** ** | **Consolidated  Total** | ** ** |
|------------------------------------------|------------|-------------------------|------------|-----------------|------------|----------------------|------------|-------------------------|------------|
| ** **                               | ** ** | **(In thousands)** | ** ** |
| **Three Months Ended May 31, 2008** |       |                    |       |            |       |                 |       |                    |       |
| Revenue                                  |       | $                       | 109,648    |            | $          | 97,545               |       | $                       | —     |   | $ | 207,193 |   |
| Segment operating income                 |       | 38,753                  |       | 17,209          |       | (23,146              | )          | 32,816                  |       |
| Depreciation and amortization            |       | 4,313                   |       | 4,541           |       | 829                  |       | 9,683                   |       |
| **Three Months Ended May 31, 2007** |       |                    |       |            |       |                 |       |                    |       |
| Revenue                                  |       | $                       | 88,828     |            | $          | 66,072               |       | $                       | —     |   | $ | 154,900 |   |
| Segment operating income                 |       | 28,873                  |       | 11,825          |       | (14,813              | )          | 25,885                  |       |
| Depreciation and amortization            |       | 2,917                   |       | 1,407           |       | 597                  |       | 4,921                   |       |

 
| ** **                             | ** ** | **Energy**              | ** ** | **Engineering** | ** ** | **Shared  Services** | ** ** | **Consolidated  Total** | ** ** |
|----------------------------------------|------------|-------------------------|------------|-----------------|------------|----------------------|------------|-------------------------|------------|
| ** **                             | ** ** | **(In thousands)** | ** ** |
| **Six Months Ended May 31, 2008** |       |                    |       |            |       |                 |       |                    |       |
| Revenue                                |       | $                       | 219,947    |            | $          | 186,023              |       | $                       | —     |   | $ | 405,970 |   |
| Segment operating income               |       | 77,905                  |       | 32,201          |       | (46,357              | )          | 63,749                  |       |
| Depreciation and amortization          |       | 8,371                   |       | 8,667           |       | 1,468                |       | 18,506                  |       |
| **Six Months Ended May 31, 2007** |       |                    |       |            |       |                 |       |                    |       |
| Revenue                                |       | $                       | 175,574    |            | $          | 131,947              |       | $                       | —     |   | $ | 307,521 |   |
| Segment operating income               |       | 55,918                  |       | 24,810          |       | (28,959              | )          | 51,769                  |       |
| Depreciation and amortization          |       | 5,595                   |       | 2,812           |       | 1,094                |       | 9,501                   |       |

 

18

----

** **

**Item 2.**           Management’s Discussionand Analysis of Financial Condition 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-lookingstatements” within the “safe harbor” provisions of the Private SecuritiesLitigation Reform Act of 1995, Section 27A of the Securities Act of 1933,and Section 21E of the Securities Exchange Act of 1934. Words such as “may,”“could,” “should,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,”“seeks,” “plan,” “project,” “continue,” “predict” and other words orexpressions 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 third parties(including Standards Development Organizations) on commercially reasonableterms, changes in demand for IHS’s products and services, changes in the energyindustry, our ability to develop new products and services, pricing and othercompetitive pressures, risks associated with the integration of acquisitions,changes in laws and regulations governing our business and certain otherfactors discussed under the caption “Risk Factors” in the MD&A section ofour 2007 Form 10-K, and in our other filings with the SEC. IHS undertakesno duty to update, whether as a result of new information, future events orotherwise, unless required by law.

 

**Overview**

 

**Results of Operations**

 

IHS Inc. is a publicly traded Delaware corporation. IHS is aleading provider and comprehensive source of Critical Information and Insightin a sizable and growing global market. Our customers rely on our products andservices to facilitate crucial decision-making, support key processes, andimprove productivity. At the heart of our products and services is dataobtained from public sources, third parties, and our own proprietary databases.We transform that data into Critical Information and Insight that is bothuseful to our customers and available where and when they make critical businessdecisions. The data becomes Critical Information when we combine it with ourproprietary and third-party technology to create graphical user interfaces,search and navigation tools, and online delivery systems. We further transformthat information into Insight products and services with analysis andinterpretation from our teams of experts.

 

We sell our offerings primarily through subscriptions. As a result ofour subscription-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 organic growth in our subscription-based businessmodel combined with several acquisitions in recent years, our seasonal aspectshave diminished.  Our first quarter does benefit from the inclusion of theresults from CERAWeek, an annual energy executive gathering.  Subscriptionsare generally paid in full within one to two months after the subscriptionperiod commences. As a result, the timing of our cash flows generally precedesthe recognition of revenue and income.

 

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 operating profit outside the UnitedStates has historically exceeded our domestic operating profit. We manage ourbusiness through our Energy and Engineering operating segments.

 

We have targeted four specific information “domains”—Energy, ProductLifecycle, Security, and Environment. Since these four information domainsrepresent areas where our customers have needs for critical information andinsight, we use these domains to set priorities and design our businessstrategies. As we continue to deliver Critical

 

19

----

 

Information and Insight in those four information domains, we prepareand analyze our financial reports to include our two reportable segments.  As the information that our customers need toaddress their complex business issues continues to converge at the intersectionof the information domains that we serve, we are evolving our managementstructure to a geographic focus, the point of contact with our customers. As a result of this transformation, our defined operating segments will changeto geographic segments during the third quarter of 2008.

 

Inherent in all of our strategies is a firm commitment to put ourcustomers first in everything that we do. We believe that maintaining adisciplined “outside-in” approach will allow us to better serve our customersand our shareholders.  Our primary strategy is to achieve and strengthen aleading position in—and at the intersection of—our targeted informationdomains. We also intend to continue driving margin and quality improvementthrough operational transformation. And finally, we intend to enhance theeffectiveness of our other strategies with a continued emphasis onacquisitions.

 

To support these strategies, we have several on-going cross-functionalprojects led by members of the senior leadership team. Our operationaltransformation is an evolution, one which started over three years ago and willcontinue for a few years to come. We have not designed these initiatives aspurely cost-cutting events. Rather, they are multi-faceted endeavors designedto simultaneously improve the quality of our offerings while optimizing theefficiency and effectiveness of the processes involved.

 

Our current initiatives are designed to focus on three key areas: ourcustomers, financial model and operational improvements.  One of the key initiatives is our dataaccumulation process improvement initiative which includes combining our dataaccumulation operations into a shared service to enhance our ability to workacross all geographies.  In addition, wehave partnered with a third party to focus on quality and process improvementwithin our data accumulation function.  As a result of this initiative, it is expected that some existing roleswill be eliminated.  At this time, we are still evaluating work functionsand implications to individual roles and colleagues so we do not yet know howmany positions will be affected. It is important to note that any individualwhose job is affected by the changes, and who is not offered another positionwithin IHS, they will be offered a severance package along with outplacementassistance.

 

**Segment Information**

 
| ** **                     | ** ** | **Three Months Ended May 31,** | ** ** | **Six Months Ended May 31,** | ** ** |
|--------------------------------|------------|----------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                     | ** ** | **2008**                                           | ** ** | **2007**                                         | ** ** | **2008** | ** ** | **2007** | ** ** |
| ** **                     | ** ** | **(In thousands)**                            | ** ** |
| Energy revenue                 |       | $                                                  | 109,648    |                                             | $          | 88,828 |   | $ | 219,947 |   | $ | 175,574 |   |
| Engineering  revenue           |       | 97,545                                             |       | 66,072                                           |       | 186,023 |   | 131,947 |   |
| Total  consolidated revenue    |       | $                                                  | 207,193    |                                             | $          | 154,900 |   | $ | 405,970 |   | $ | 307,521 |   |
| Energy operating  income       |       | $                                                  | 38,753     |                                             | $          | 28,873 |   | $ | 77,905 |   | $ | 55,918 |   |
| Engineering  operating income  |       | 17,209                                             |       | 11,825                                           |       | 32,201 |   | 24,810 |   |
| Shared services  expenses      |       | (23,146                                            | )          | (14,813                                          | )          | (46,357 | ) | (28,959 | ) |
| Consolidated  operating income |       | $                                                  | 32,816     |                                             | $          | 25,885 |   | $ | 63,749 |   | $ | 51,769 |   |

 

**Three Months Ended May 31, 2008 Compared tothe Three Months Ended May 31, 2007**

 

**Revenue.**  Revenue was $207.2 million for the threemonths ended May 31, 2008, compared to $154.9 million for the three monthsended May 31, 2007, an increase of $52.3 million or 34%. The increase inrevenue was driven in part by acquisitions which contributed $36.0 million andorganic growth which contributed $13.3 million. The impact of foreign currency added $3.0 million.

 

Revenue for our Energy segment was$109.6 million for the three months ended May 31, 2008, compared to $88.8million for the three months ended May 31, 2007, an increase of $20.8million or 23%. The increase in revenue was driven in part by acquisitions whichcontributed $10.6 million and organic growth which contributed $8.5 million.Favorable foreign currency rates added

 

20

----

 

$1.8million. Organic growth during the second quarter of 2008 was driven by priceincreases and growth in certain critical information subscription products.

 

Revenue for our Engineering segmentwas $97.5 million for the three months ended May 31, 2008, compared to$66.1 million for the three months ended May 31, 2007, an increase of$31.4 million or 48%. The increase in revenue was driven in part by acquisitionswhich contributed $25.4 million and in part by organic growth which contributed$4.8 million. Favorable foreign currency rates added $1.3 million.  Organic growth was driven primarily byincreased sales in our specifications-and-standards offerings in 2008.

 

**Cost of Revenue**.  Cost of revenue was $93.2 million for thethree months ended May 31, 2008, compared to $67.8 million for the threemonths ended May 31, 2007, an increase of $25.4 million or 38%. As apercentage of revenue, cost of revenue increased to 45.0% from 43.7%. Marginsas a percentage of revenue within our Energy segment remained relatively flatwith increases in our critical information margin being offset by lower consultingrelated margins and the near-term impact of recent acquisitions.  Margins as a percentage of revenue within ourEngineering segment decreased slightly, principally due to a shift in productmix.

 

**Selling, General and Administrative Expenses**.  Selling, general and administrative expenses(SG&A) were $72.9 million for the three months ended May 31, 2008,compared to $56.6 million for the three months ended May 31, 2007, anincrease of $16.3 million or 29%. Stock-based compensation expense included inSG&A increased $4.1 million. As a percentage of revenue and excludingstock-based compensation expense, SG&A was 30.4% for the three months endedMay 31, 2008, down from 32.7% for the three months ended May 31,2007.  Organic SG&A increased by $2.3million as we incurred costs related to our quote-to-cash system implementationand we have been able to maintain lower organic SG&A growth elsewhere by leveragingthe cost base in back-office functions.  Acquisitionscontributed $9.4 million of the increase. Foreign-currency movements alsoincreased SG&A by $0.6 million.

 

**Depreciation and Amortization Expenses**.  Depreciation and amortization expenses were$9.7 million for the three months ended May 31, 2008, compared to $4.9million for the three months ended May 31, 2007, an increase of $4.8million or 97%. The increase was primarily due to acquisitions.

 

**Operating Income**.  Operating income was $32.8 million for thethree months ended May 31, 2008, compared to $25.9 million for the threemonths ended May 31, 2007, an increase of $6.9 million or 27%. As apercentage of revenue, operating income decreased to 15.8% for the three monthsended May 31, 2008 from 16.7% for the three months ended May 31,2007.

 

Operating income for our Energysegment was $38.8 million for the three months ended May 31, 2008,compared to $28.9 million for the three months ended May 31, 2007, anincrease of $9.9 million or 34%. The increase was principally due to theadditional revenue discussed above coupled with our ability to leverage arelatively fixed-cost structure.  As apercentage of revenue, Energy operating income increased to 35.3% for the threemonths ended May 31, 2008 from 32.5% for the three months ended May 31,2007.

 

Operating income for ourEngineering segment was $17.2 million for the three months ended May 31,2008, compared to $11.8 million for the three months ended May 31, 2007,an increase of $5.4 million or 46%. Operating income increased due to increasedsales in our subscriptions-based businesses along with cost containment in thesecond quarter of 2008.

 

Operating expenses for our sharedservices were $23.1 million for the three months ended May 31, 2008,compared to $14.8 million for the three months ended May 31, 2007, anincrease of $8.3 million or 56%.  Theincrease in costs are principally due to higher stock-based compensation aswell as our quote-to-cash system implementation and our ongoingtransformational initiatives.

 

**Provision for Income Taxes.**  Our effective tax rate for the three monthsended May 31, 2008 was 31.9%, compared to 32.4% for the three months endedMay 31, 2007. The 2008 rate reflects the impact from net reductionsin unrecognized tax benefits principally from the successful completion of arecent Canadian tax audit, as well as net benefits from changes to certainestimates.

 

21

----

 

**Six Months Ended May 31, 2008 Compared to theSix Months Ended May 31, 2007**

 

**Revenue.**  Revenue was $406.0 million for the six monthsended May 31, 2008, compared to $307.5 million for the six months ended May 31,2007, an increase of $98.5 million or 32%. This increase was driven in part byacquisitions which contributed $64.4 million and organic growth whichcontributed $27.3 million.  The impact offoreign currency added $6.8 million.

 

Revenue for our Energy segment was $219.9 million for thesix months ended May 31, 2008, compared to $175.6 million for the sixmonths ended May 31, 2007, an increase of $44.4 million or 25%.  This increase was driven in part by organicrevenue growth of $21.4 million and acquisitions which contributed $18.9million. Favorable foreign currency rates added $4.1 million of revenue growth.Organic growth during the first half of 2008 was driven by price increases andgrowth in certain critical information subscription products.

 

Revenue for our Engineering segmentwas $186.0 million for the six months ended May 31, 2008, compared to$131.9 million for the six months ended May 31, 2007, an increase of $54.1million or 41%. This increase was driven in part by acquisitions whichcontributed by $45.5 million and organic growth which contributed $5.9 million.Favorable foreign currency rates contributed $2.7 million of revenuegrowth.  Organic growth was drivenprimarily by increased sales in our specifications-and-standards offerings in2008.

 

**Cost of Revenue**.  Cost of revenue was $182.3 million for thesix months ended May 31, 2008, compared to $133.5 million for the sixmonths ended May 31, 2007, an increase of $48.8 million or 37%. As apercentage of revenue, cost of revenue increased to 44.9% from 43.4%.  Margins as a percentage of revenue within ourEnergy segment remained relatively flat with increases in our criticalinformation margin being offset by lower consulting related margins.  Margins as a percentage of revenue within ourEngineering segment decreased slightly, principally due to a shift in productmix.

 

**Selling, General and Administrative Expenses**.  Selling, general and administrative expenses(SG&A) were $144.8 million for the six months ended May 31, 2008,compared to $114.5 million for the six months ended May 31, 2007, anincrease of $30.3 million or 26%. Stock-based compensation expense increased$9.5 million. As a percentage of revenue and excluding stock-based compensationexpense, SG&A was 30.2% for the six months ended May 31, 2008, downfrom 33.0% for the six months ended May 31, 2007.  Organic SG&A increased at $2.8 million aswe incurred costs related to our quote-to-cash system implementation and wehave been able to maintain lower organic SG&A growth by leveraging the costbase in back-office functions.  Acquisitions contributed $16.7 million of theincrease. Foreign-currency movements also increased SG&A by $1.4 million.

 

**Depreciation and Amortization Expenses**.  Depreciation and amortization expenses were$18.5 million for the six months ended May 31, 2008, compared to $9.5million for the six months ended May 31, 2007, an increase of $9.0 millionor 95%. The increase was primarily due to acquisitions.

 

**Operating Income**.  Operating income was $63.7 million for thesix months ended May 31, 2008, compared to $51.8 million for the sixmonths ended May 31, 2007, an increase of $11.9 million or 23%. As apercentage of revenue, operating income decreased to 15.7% for the six monthsended May 31, 2008 from 16.8% for the six months ended May 31, 2007.

 

Operating income for our Energysegment was $77.9 million for the six months ended May 31, 2008, comparedto $55.9 million for the six months ended May 31, 2007, an increase of$22.0 million or 39%. The increase was principally due to the additionalrevenue discussed above coupled with our ability to leverage a relativelyfixed-cost structure.  As a percentage ofrevenue, Energy operating income increased to 35.4% for the six months ended May 31,2008 from 31.8% for the six months ended May 31, 2007.

 

Operating income for ourEngineering segment was $32.2 million for the six months ended May 31,2008, compared to $24.8 million for the six months ended May 31, 2007, anincrease of $7.4 million or 30%. Operating income increased due to increased sales in oursubscriptions-based businesses along with operating expense containment in thefirst half of 2008. As a percentage of revenue, Engineering operating incomedecreased to 17.3% for the six months ended May 31, 2008 from 18.8% forthe six months ended May 31, 2007. This decrease is principally due to the higher depreciation andamortization relating to recent acquisitions.

 

22

----

 

Operating expenses for our sharedservices were $46.4 million for the six months ended May 31, 2008, comparedto $29.0 million for the six months ended May 31, 2007, an increase of$17.4 million or 60%.  Stock-basedcompensation increased $9.7 million.  Theincrease in costs are also due to our quote-to-cash system implementation andour ongoing transformational initiatives.

 

**Provisionfor Income Taxes**.  Our effective taxrate for the six months ended May 31, 2008 was 32.5%, compared to 32.7%for the six months ended May 31, 2007. The 2008 rate reflects theimpact from net reductions in unrecognized tax benefits principally from thesuccessful completion of a recent Canadian tax audit, as well as net benefitsfrom changes to certain estimates.

 

**Financial Condition**

** **

**Accounts Receivable. **Accounts receivable has decreased by $5.7 million, or 3%,to $169.8 million compared to $175.5 million as of November 30, 2007. Thedecrease is primarily attributable to seasonal declines partially offset byorganic and acquisition related growth.

** **

**AccruedCompensation.**  Accruedcompensation was $19.1 million as of May 31, 2008, compared to $37.0million as of November 30, 2007, a decrease of $17.9 million, or 48%.  The decrease is primarily due to thedisbursement of annual incentive bonuses during the first quarter of 2008.

 

**Deferred Revenue. **Deferredrevenue was $288.3 million as of May 31, 2008, compared to $239.4 millionas of November 30, 2007, an increase of $49.0 million, or 20%. Theincrease is attributable to both organic and acquisition related growth.

 

**Liquidity and Capital Resources**

** **

As of May 31, 2008, we hadcash and cash equivalents of $105.4 million and $28.5 million of short-termdebt. We have generated strong cash flows from operations over the last fewyears. As a result of these factors, as well as the availability of funds underour credit facility, we believe we will have sufficient cash to meet ourworking 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 $15 million for2008.

 

*Cash Flows*

* *

Net cash provided by operatingactivities was approximately $95.0 million for the six months ended May 31,2008, compared to $65.8 million for the six months ended May 31, 2007, anincrease of $29.2 million. The increase was principally due to the profitablegrowth year over year, primarily due to increased pricing, an expandingsubscription base, increased sales and the positive impact of ouracquisitions.  Our subscription-basedbusiness model typically generates a high rate of cash flow and is aided by thefollowing:

 

·      Relatively low levels ofrequired capital expenditures;

 

·      Positive working capitalcharacteristics that do not generally require substantial working capitalincreases to support our growth;

 

·      A cash-for-tax rate thatcontinues to trend lower than our effective tax rate; and

 

·      Our well-capitalized balancesheet

 

23

----

 

The positive cash flow impact of our growing business in the first halfof  2008 was partially offset by the annual bonus payments, which aresubstantially paid in the first quarter each year and were approximately$6.4 million higher in 2008 than in 2007.

 

Net cash used ininvesting activities was approximately $128.2 million for the six months ended May 31,2008, compared to $17.3 million for the six months ended May 31, 2007. Thechange is driven primarily by acquisitions. In 2008, we disbursed $130.9 million for the purchase of the assets offive businesses. In the first half of 2007, we disbursed approximately $14.6million for acquisitions.

 

Net cash used in financingactivities was $11.3 million for the six months ended May 31, 2008compared to $16.0 million during the six months ended May 31, 2007.  In the second quarter of 2008, we borrowed$50.0 million on our Revolver which was used to fund acquisitions.  By May 31, 2008, the balance outstandingon the Revolver was down to $10.0 million.

 

*Share Repurchase Program*

 

During2006, our board of directors approved a program to reduce the dilutive effectsof employee equity grants, by allowing employees to surrender shares back tothe company for a value equal to their statutory tax liability.  IHS then pays the statutory tax on behalf ofthe employee.  Later in 2006, our boardof directors approved an additional program—a stock buyback program—whereby IHSmay acquire up to one million shares per year in the open market to more fullyoffset the dilutive effect of our employee equity programs. This program wasrenewed by the board of directors in late 2007 for fiscal year 2008.  During the three months ended May 31,2008, we repurchased 27,700 shares of our Class A common stock forapproximately $1.7 million, or $60.00 per share, pursuant to the stock buybackprogram and 2,430 shares for approximately $0.2 million, or $63.09 per share,related to shares withheld for taxes. During the six months ended May 31, 2008, we repurchased 94,200shares of our Class A common stock for approximately $5.5 million, or$58.88 per share, pursuant to the stock buyback program and 210,256 shares forapproximately $13.1 million, or $62.39 per share, related to shares withheldfor taxes.  Since the inception of theseprograms, we have repurchased 784,162 shares of our Class A common stockfor approximately $34.7 million, or $44.29 per share, pursuant to the stock buybackprogram and 593,069 shares for approximately $30.0 million, or $50.56 pershare, related to shares withheld for taxes.

 

*Credit Facility*

* *

On September 7, 2007, we entered into an amended and restatedcredit agreement (Revolver). The $385 million unsecured Revolver allowsus, under certain conditions, to increase the facility to a maximum of$500 million. The agreement expires in September 2012.

 

The interest rates for borrowing under the Revolver are based upon ourLeverage Ratio, which is the ratio of Consolidated Funded Indebtedness torolling four quarter Consolidated Earnings Before Interest Expense, Taxes,Depreciation and Amortization (EBITDA), as defined in the Revolver. The rateranges from the applicable LIBOR plus 50 basis points to 125 basis points orthe agent bank’s base rate. A commitment fee is payable periodically and rangesfrom 10 to 25 basis points based upon our Leverage Ratio. The Revolver containscertain financial and other covenants, including limitations on capital leaseobligations and maximum Leverage and Interest Coverage Ratios, as defined inthe Revolver.

 

As of May 31, 2008, we were in compliance with all of thecovenants in the agreement. We had letters of credit totaling approximately$1.0 million as of May 31, 2008.  On March 3, 2008, we borrowed$50.0 million under the Revolver at an annual rate of 3.6% to fundacquisitions, of which $10.0 million was outstanding as of May 31,2008.  The use of the Revolver allows us to maintain cash levels to fundthe ongoing operational needs of the business and has tax benefits as we maynot have to repatriate cash from foreign locations to fund the acquisitions.

 

**Off-Balance Sheet Transactions**

** **

We have no off-balance sheettransactions.

 

24

----

 

**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 2007 Form 10-Kfor a discussion of the estimates and judgments necessary in our accounting forrevenue recognition, valuation of long-lived and intangible assets andgoodwill, income taxes,  pension andpost-retirement benefits, and stock-based compensation.

 

25

----

 

**Item 3.**           Quantitative andQualitative Disclosure About Market Risk

** **

For information regarding our exposure to certainmarket risk, see Item 7A, “Quantitative and Qualitative Disclosures AboutMarket Risk,” in our 2007 Form 10-K. There were no material changes to ourmarket risk exposure during the first six months of 2008.

 

26

----

 

**Item 4.**           Controls and Procedures

** **

*(a) Evaluationof 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) underthe Securities Exchange Act of 1934, as of the end of the period covered bythis 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 theSecurities Exchange Act of 1934, as amended, are effective in ensuring that allmaterial information required to be filed in this quarterly report has beenmade known to them in a timely fashion.

 

*(b) Changesin 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,or are reasonably likely to materially affect, our internal control overfinancial reporting.

 

27

----

 

**PART II. OTHER INFORMATION**

** **

**Item 1.**           Legal Proceedings

** **

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 1A.  Risk Factors**

 

There have been no material changes to the risk factors associated withthe business previously disclosed in Part I, Item 1A of our 2007 AnnualReport on Form 10-K.

 

**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 six months  ended May 31, 2008: |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 
| **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, 2007  |       | —                                           |       | $                                                        | —     |                                                                                                                     | —     |                                                                                                                    | 1,000,000  |   |
| January 1 —  January 31, 2008   |       | 66,300                                           |       | $                                                        | 58.41      |                                                                                                                     | 66,300     |                                                                                                                    | 933,700    |   |
| February 1 —  February 29, 2008 |       | 200                                              |       | $                                                        | 60.02      |                                                                                                                     | 200        |                                                                                                                    | 933,500    |   |
| March 1 –  March 31, 2008       |       | 27,700                                           |       | $                                                        | 60.00      |                                                                                                                     | 27,700     |                                                                                                                    | 905,800    |   |
| April 1 –  April 30, 2008       |       | —                                           |       | —                                                   |       | —                                                                                                                   |       | 905,800                                                                                                                 |       |
| May 1 –  May 31, 2008           |       | —                                           |       | —                                                   |       | —                                                                                                                   |       | 905,800                                                                                                                 |       |
| Total                                          |       | 94,200                                           |       | $                                                        | 58.88      |                                                                                                                     | 94,200     | (1)                                                                                                                     | 905,800    | (1) |

 

----

| (1) | During  2006, our board of directors authorized the repurchase of up to one million  IHS shares of Class A common stock per year to more fully offset the  dilutive effect of our employee equity programs. Repurchases will be made  from time to time in the open market. This table does not include the  surrender of common shares by employees to the company to cover taxes due by  employees upon the vesting of employee-equity awards. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

28

----

 
| **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. |

 

----

*                 Filedelectronically herewith.

 

29

----

 

**SIGNATURE**

** **

Pursuantto the requirements of Section 13 or 15(d) of the Securities ExchangeAct of 1934, the Registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized, on June 24, 2008.

 

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

 

30

----