IHS Markit
Annual Report 2010

Plain-text annual report

Annual Report 2010 Shareholder Letter Notice of 2011 Annual Shareholder Meeting Proxy Statement 2010 Form 10-K Annual Report R * G R G A A 7 % C 3 + 0 % C 4 + R R G G A A 30.2% 8 % C 1 + 0 % C 3 + 18.2% statements ell rterly 7, 2011, 2010 Annual Report Letter to Shareowners March 2011 Dear Shareowners, This past November marked the five-year anniversary of our initial public offering. In those five years, IHS has evolved, improved and grown every facet of the organization and in every corner of the world. And in 2010, despite the challenge of a continuing difficult economic climate, IHS levels of achievement and success. attained new While we have been navigating through the constant current of change, the fundamental philosophy of how we manage our business has remained consistent: we are focused on delighting our customers in everything we do and guided by four externally measured objectives, driven by a performance- based culture and managed by a strong governance structure. Objectives During 2010, we continued to make great progress against our four company objectives: • Colleague success • Customer Delight • Profitable top- and bottom-line growth • Shareowner success relative to our peer group These objectives are interdependent; one drives another. An engaged colleague base produces delighted customers. In turn, delighted customers generate profitable growth. Consistent profitable growth results in better returns relative to our peer group. Such success relative to our peer group creates colleague success and the cycle continues. Colleague Success An unprecedented 98 percent of our colleagues participated in our annual colleague survey in 2010, providing us with a very clear view of the actions and experiences that most affect our colleagues’ commitment and performance at IHS. Our score of 73 was an improvement over our prior-year performance and, importantly, places us in the top 25 percent of the thousands of companies surveying their colleagues. We remain laser-focused on progressing toward our goal of being world-class in Colleague Engagement in 2012. Notably, in three areas—Recognition, Communication and Trust in Leadership— we scored in the top 10 percent of the companies included in the benchmark. Customer Delight We continue to listen carefully to our customers and improve the services and products we provide to them. Our Customer Delight score of 59 in 2010 was an improvement upon our prior-year performance. We continue to put the right actions in place and see tangible proof that our efforts are paying off. In 2010, we made an important enhancement to our Customer Delight survey process by measuring Customer Delight three times a year on a staggered basis (with each customer only surveyed once annually) to ensure our investments and strategies are delivering on our customers’ expectations. More frequent surveys provide more timely information and allow us to adjust our initiatives as needed in a similar time frame. We serve 30 of our largest clients with global teams made up of regional, industry and product specialists led by a proven global account manager. These Global Account Management (GAM) teams are a great example of how we strategically sell into an account through the right sales channel based on the size of the customer. We will leave 2011 and 2012 serving our 250 largest customers and 1,000 largest customers, respectively, with account management teams in place. Relative to Customer Delight, our GAM account teams continue to perform better with our customers, with a score in 2010 that improved nine percent over last year. Whether it is with our largest customers or our smallest, we focus first and foremost on delighting customers in everything we do. We believe the actions we put in place during this past year will positively impact our trajectory in 2011 and put us on track to become a global “best-in-class” company with regard to customer delight. Profitable Top- and Bottom-Line Growth IHS continued to grow profitably during 2010 with revenue increasing more than 11 percent on the strength of five percent organic growth and seven strategic acquisitions. We also continued to expand our profit margin (as measured by adjusted EBITDA divided by revenue), increasing it 140 basis points in 2010 and more than 1,200 basis points since our initial public offering in 2005. It is important to note that as we continue to grow at a fast rate, we are also investing millions of dollars in internal infrastructure, new products and services and acquisitions critical to the long-term success of IHS. Shareowner Success Relative to Our Peer Group As a result of the progress we made in 2010 both operationally and financially, we continue to deliver shareowner success relative to our peer group: Total Shareholder Return From DDate off IHS IPO Thhrougghh Febrruary 228, 200111 37% 24% 23% 6% 5% 1% 0% -3%% -9% -9% -11% IHS FDS IT DDNB TRRI ABBBCO EFXX MHPP MMCO FIICO EEXXBD Performance-Based Culture To achieve superior results it is imperative to have a performance-based culture. We have created such a culture at IHS through the alignment of our objectives, measures and rewards across all levels of the organization. This common line-of-sight harnesses the power of a talented collection of colleagues into a greater force capable of achieving great things. Our compensation philosophy is foundational to our performance-based culture; it rewards colleagues for performance, for living our values and for their ever- improving competencies driving the long-term success of IHS. This has been a significant contributor to our success not only in 2010, but during the five years we have been a public company. Our compensation philosophy extends even more robustly to our senior leadership team who are rewarded with compensation packages that are significantly ‘at risk.’ Annual incentive compensation is tied directly to the achievement of the annual objectives discussed previously and is only awarded if those objectives are met. Long-term incentive compensation is comprised of performance-based restricted shares and is tied to specific three-year forward revenue and profit targets. If the targets are not met, the shares do not vest. Our compensation program drives the behaviors necessary to meet or exceed our corporate objectives. Such success ultimately rewards all IHS stakeholders: customers, colleagues, partners, and you, our valued shareowners. 2011 Priorities Looking ahead, to help ensure we achieve our 2011 goals, we will focus on three priorities that support our externally benchmarked objectives: • Advance our customer focus and our customers’ experience • Realize our growth potential • Demonstrate and communicate the value of IHS Each priority will be approached through several tactical steps to be taken during 2011. I look forward to reporting back to you next year on our progress and on our other endeavors. Advancing Decisions That Advance the World We are creating a company that has never before existed. IHS has a strong foundation in information, insight, and expertise that has 250 years in history. We continue to build on this foundation both organically and through acquisitions, to provide the most comprehensive solutions to our customers, ultimately supporting both their success and ours. We have focused our expertise across six broad capability areas. IHS Capabilities In each of these areas, IHS provides products and services that not only consider information from different industry perspectives, but also includes analysis and insight that connects the dots to other areas of expertise, drawing a clearer picture to inform decisions. We are investing for our future, and ultimately, for the success of our shareowners. Our many thanks to you our shareowners, and to our valued customers, partners and colleagues, for your continued interest and support of IHS. My best regards, Jerre Stead Chairman & CEO, IHS Inc. IHS INC. 15 Inverness Way East Englewood, Colorado 80112 www.ihs.com March 23, 2011 Dear IHS Shareholder: We are pleased to invite you to attend our 2011 Annual Meeting of Shareholders. The Annual Meeting will be held at 10:00 a.m. Eastern Daylight Time, on Thursday, May 5, 2011, at The Waldorf=Astoria, 301 Park Avenue, New York City, New York. Whether or not you attend the Annual Meeting, it is important that you participate. Your votes count. Please review the enclosed Proxy Card carefully to understand how you may vote by proxy. If you choose to cast your vote in writing, please sign and return your proxy promptly. A return envelope, requiring no postage if mailed in the United States, is enclosed for your convenience in replying. For your convenience, we have also arranged to allow you to submit your proxy electronically. If you want to attend the Annual Meeting in person, please let us know in advance. Each shareholder of record has the opportunity to mark the Proxy Card in the space provided, or during the electronic voting process. If your shares are not registered in your name (for instance, if you hold shares through a broker, bank, or other institution), please advise the shareholder of record that you wish to attend; that firm will then provide you with evidence of ownership that will be required for admission to the meeting. Let us know if we can explain any of these matters or otherwise help you with voting or attending our annual meeting. Remember that your shares cannot be voted unless you submit your proxy, in writing or electronically, or attend the Annual Meeting in person. Your participation is important to all of us at IHS, so please review these materials carefully and cast your vote. We look forward to seeing you at the Annual Meeting. Sincerely, Stephen Green General Counsel and Corporate Secretary [THIS PAGE INTENTIONALLY LEFT BLANK] NOTICE OF ANNUAL MEETING OF SHAREHOLDERS To Be Held Thursday, May 5, 2011 To our Shareholders: IHS Inc. will hold its Annual Meeting of Shareholders at 10:00 a.m. Eastern Daylight Time, on Thursday, May 5, 2011, at The Waldorf=Astoria, 301 Park Avenue, New York City, New York. We are holding this Annual Meeting to allow our shareholders to vote on several key topics: Š to elect four directors to serve until the 2014 Annual Meeting or until their successors are duly elected and qualified; Š to ratify the appointment of Ernst & Young LLP as our independent registered public accountants; Š to approve the amendment and restatement of the IHS Inc. 2004 Long-Term Incentive Plan; Š to increase the number of shares available for issuance under the Amended & Restated IHS Inc. 2004 Long-Term Incentive Plan; Š to approve, on an advisory, non-binding basis, the compensation of our named executive officers; Š to recommend, on an advisory, non-binding basis, whether an advisory vote on the compensation of our named executive officers should take place every one, two, or three years; and Š to transact such other business as may properly come before the Annual Meeting and any adjournments or postponements of the Annual Meeting. Only shareholders of record at the close of business on March 7, 2011 (the “Record Date”) are entitled to notice of, and to vote, at this Annual Meeting and any adjournments or postponements of the Annual Meeting. For ten days prior to the Annual Meeting, a complete list of shareholders entitled to vote at the Annual Meeting will be available. To obtain that list, write to: IHS Inc., Attn: Corporate Secretary, 15 Inverness Way East, Englewood, Colorado 80112. It is important that your shares are represented at this Annual Meeting. Even if you plan to attend the Annual Meeting in person, we hope that you will promptly vote and submit your proxy by dating, signing, and returning the enclosed Proxy Card by mail, or by voting electronically. Casting a vote by proxy will not limit your rights to attend or vote at the Annual Meeting. By Order of the Board of Directors, Stephen Green General Counsel and Corporate Secretary March 23, 2011 [THIS PAGE INTENTIONALLY LEFT BLANK] TABLE OF CONTENTS Information Concerning Voting and Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appointment of Proxy Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Who Can Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . How You Can Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Revocation of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Required Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Solicitation of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proposal 1—Election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Directors and Nominees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vote Required and Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proposal 2—Ratification of the Appointment of Independent Registered Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proposed Ratification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Audit and Non-Audit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Audit Committee Pre-Approval Policies and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vote Required and Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proposal 3—Approval of the Amendment and Restatement of the IHS Inc. 2004 Long-Term 1 1 1 1 2 2 2 3 3 3 5 5 5 6 6 6 7 7 Incentive Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 8 History and Purpose of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Summary of Section 162(m) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Summary of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Securities Authorized for Issuance Under Equity Compensation Plans . . . . . . . . . . . . . . . . . . . . . 12 Summary of Federal Tax Aspects of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 New Plan Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Vote Required and Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Proposal 4—Approval of a Proposal to Increase the Number of Shares Available for Issuance under the Amended and Restated IHS Inc. 2004 Long-Term Incentive Plan . . . . . 15 History and Purpose of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Purpose of the Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Securities Authorized for Issuance Under Equity Compensation Plans . . . . . . . . . . . . . . . . . . . . . 16 Dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Amendment of the Plan to Increase the Number of Shares Available for Issuance . . . . . . . . . . . . 16 New Plan Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Summary of the Plan and Federal Tax Aspects of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Vote Required and Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Proposal 5—Advisory Vote on Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Proposal 6—Advisory Vote on the Frequency of Executive Compensation Advisory Vote . . 21 Corporate Governance and Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Board Leadership Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 The Role of the Board of Directors in Risk Oversight Business Experience and Qualification of Board Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Organization of the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Independent and Non-Management Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Code of Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Communications with the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Communications with Non-Management Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 i Composition of Board Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Director Nominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Director Stock Ownership Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Director Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Director Compensation During Fiscal Year 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . . . . . . . . . . 35 Section 16(a) Beneficial Ownership Reporting Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Report of the Audit Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Report of the Human Resources Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Compensation Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Objectives of the Executive Compensation Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Design of the Total Compensation Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Overview of Executive Compensation Decisions During Fiscal Year 2010 . . . . . . . . . . . . . . . . . . . 44 Elements of Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Special Grants of Time-Based Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Stock Ownership Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Retirement Benefits and Perquisites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Employment Contracts, Termination of Employment Arrangements, and Change-in-Control Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Impact of Accounting and Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 2010 Summary Compensation Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 2010 Grants of Plan-Based Awards During Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Narrative Disclosure to 2010 Summary Compensation Table and 2010 Grants of Plan-Based Accrued Benefit Awards Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Outstanding Equity Awards at 2010 Fiscal Year End . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Option Exercises and Stock Vested During Fiscal Year 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Pension Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Potential Payments upon Termination or Change in Control Executive Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Review and Approval of Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Relationships with Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Registration Rights Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Shareholder Proposals for the 2012 Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 ii IHS INC. PROXY STATEMENT INFORMATION CONCERNING VOTING AND SOLICITATION This Proxy Statement is being furnished to you in connection with the solicitation by the Board of Directors of IHS Inc., a Delaware corporation, of proxies to be used at the 2011 Annual Meeting of Shareholders and any adjournments or postponements thereof. The annual meeting will be held at to be held at 10:00 a.m. Eastern Daylight Time, on Thursday, May 5, 2011, at The Waldorf=Astoria, 301 Park Avenue, New York City, New York, and any adjournments or postponements thereof. This Proxy Statement and the accompanying form of Proxy Card are being first sent to shareholders on or about March 23, 2011. References in this Proxy Statement to “we,” “us,” “our,” “the Company,” and “IHS” refer to IHS Inc. and our consolidated subsidiaries. Appointment of Proxy Holders The Board of Directors of IHS (the “Board”) asks you to appoint the following individuals as your proxy holders to vote your shares at the 2011 Annual Meeting of Shareholders: Jerre L. Stead, Chairman and Chief Executive Officer; Michael J. Sullivan, Executive Vice President and Chief Financial Officer; and Stephen Green, Senior Vice President, General Counsel, and Corporate Secretary You may make this appointment by voting the enclosed Proxy Card using one of the voting methods described below. If appointed by you, the proxy holders will vote your shares as you direct on the matters described in this Proxy Statement. In the absence of your direction, they will vote your shares as recommended by your Board. Unless you otherwise indicate on the Proxy Card, you also authorize your proxy holders to vote your shares on any matters not known by your Board at the time this Proxy Statement was printed and that, under our Bylaws, may be properly presented for action at the Annual Meeting. Who Can Vote Only shareholders who owned shares of our common stock at the close of business on March 7, 2011—the “Record Date“ for the Annual Meeting—can vote at the Annual Meeting. Each holder of our Class A common stock is entitled to one vote for each share held as of the Record Date, March 7, 2011. As of the close of business on March 7, 2011, we had 64,838,960 shares of Class A common stock outstanding and entitled to vote. There is no cumulative voting in the election of directors. How You Can Vote You may vote your shares at the Annual Meeting either in person, by mail, or electronically, as described below. Shareholders holding shares through a bank or broker should follow the voting instructions on the form of Proxy Card received. 1 Voting by Mail or Internet. You may vote by proxy by dating, signing and returning your Proxy Card in the enclosed postage-prepaid return envelope. You may also use the Internet to transmit your voting instructions. If you vote by proxy, carefully review and follow the instructions on the enclosed Proxy Card. Giving a proxy will not affect your right to vote your shares if you attend the Annual Meeting and want to vote in person. Voting at the Annual Meeting. Voting by proxy will not limit your right to vote at the Annual Meeting, if you decide to attend in person. Your Board recommends that you vote by proxy, as it is not practical for most shareholders to attend the Annual Meeting. If you hold shares through a bank or broker, you must obtain a proxy, executed in your favor, from the bank or broker to be able to attend and vote in person at the Annual Meeting. Revocation of Proxies Shareholders can revoke their proxies at any time before they are exercised in any of three ways: Š by voting in person at the Annual Meeting; Š by submitting written notice of revocation to the Corporate Secretary prior to the Annual Meeting; or Š by submitting another proxy—properly executed and delivered—of a later date, but prior to the Annual Meeting. Quorum A quorum, which is a majority of the outstanding shares entitled to vote as of the Record Date, must be present to hold the Annual Meeting. A quorum is calculated based on the number of shares represented by the shareholders attending in person and by their proxy holders. If you indicate an abstention as your voting preference, your shares will be counted toward a quorum but they will not be voted on any given proposal. “Broker non-votes” (see below) will be counted as shares of stock that are present and entitled to vote for the purpose of determining the presence of a quorum. Required Vote Our directors are elected by a plurality vote, which means that the four nominees receiving the most affirmative votes will be elected (Proposal 1). A “withhold” vote with respect to a director nominee will count as a vote against that nominee. Each of the following proposals will be approved if they receive the affirmative vote of the majority of shares present in person or represented by proxy and entitled to vote: Proposal 2, the ratification of our independent auditors; Proposal 3, approval of the amendment and restatement of our Long-Term Incentive Plan; Proposal 4, proposed increase in the number of shares available for issuance under our Long- Term Incentive Plan; and Proposal 5, the advisory vote on executive compensation. With respect to Proposals 2, 3, 4, and 5, abstentions will not be counted as votes cast on these proposals and will have no effect on the outcome. 2 In tabulating the votes on Proposal 6, the advisory vote on frequency of future “say on pay” proposals, we will consider the frequency (one, two, or three years) receiving the most affirmative votes to be the preference of our shareowners in this non-binding advisory vote. Abstentions will not count as votes cast on this proposal and will not influence the outcome. Please note that under current New York Stock Exchange rules brokers may no longer vote your shares on certain “non-routine” matters without your voting instructions. Accordingly, if you do not provide your broker or other nominee with instructions on how to vote your shares, it will be considered a “broker non-vote” and your broker or nominee will not be permitted to vote those shares on the election of directors (Proposal 1), approval of the amendment and restatement of our Long-Term Incentive Plan (Proposal 3), proposed increase in the number of shares available for issuance under our Long-Term Incentive Plan (Proposal 4), the advisory vote on executive compensation (Proposal 5), or the advisory vote on the frequency of future “say on pay” proposals (Proposal 6). Your broker or nominee will be entitled to cast broker non-votes on the ratification of independent auditors (Proposal 2). We encourage you to provide instructions to your broker regarding the voting of your shares. Confidentiality It is our policy to maintain the confidentiality of all materials that identify individual shareowners except as may be necessary to meet any applicable legal requirements and, in the case of any contested proxy solicitation, as may be necessary to permit proper parties to verify the propriety of proxies presented by any person and the results of the voting. The inspectors of election and any employees associated with processing proxy cards or ballots and tabulating the vote are required to acknowledge their responsibility to comply with this policy of confidentiality. Solicitation of Proxies We pay the cost of printing and mailing the Notice of Annual Meeting, the Annual Report, and all proxy and voting materials. We have retained Georgeson Inc. to aid in the solicitation of proxies by mail, telephone, facsimile, e-mail and personal solicitation for a fee of $12,000, plus reasonable expenses. Our directors, officers, and other employees may participate in the solicitation of proxies by personal interview, telephone, or e-mail. No additional compensation will be paid to these persons for solicitation. We will reimburse brokerage firms and others for their reasonable expenses in forwarding solicitation materials to beneficial owners of our common stock. Other Matters Multiple IHS shareowners who share an address may receive only one copy of this Proxy Statement and the 2010 Annual Report from their bank, broker, or other nominee, unless the shareowner gives instructions to the contrary. We will deliver promptly a separate copy of this Proxy Statement and the 2010 Annual Report to any IHS shareholder who resides at a shared address and to which a single copy of the documents was delivered, if the shareholder make a request by contacting the Corporate Secretary, IHS, 15 Inverness Way East, Englewood, Colorado 80112, phone 303-790-0600. Multiple shareowners who share a single address and who receive multiple copies of the Proxy Statement and the 2010 Annual Report and who wish to receive a single copy of each at that address in the future will need to contact their bank, broker, or other nominee. 3 Important Reminder Please promptly vote and submit your proxy in writing or electronically. To submit a written vote, you may sign, date, and return the enclosed Proxy Card in the postage-prepaid return envelope. To vote electronically, follow the instructions provided on the Proxy Card. Voting by proxy will not limit your rights to attend or vote at the Annual Meeting. 4 PROPOSAL 1 ELECTION OF DIRECTORS Directors and Nominees Pursuant to the authority granted to the Company’s Board of Directors (the “Board”) by the Company’s Amended and Restated By-Laws, the Board has determined that it be composed of nine directors, divided into three classes. Directors are elected for three-year terms and one class is elected at each Annual Meeting. Four directors are to be elected at the 2011 Annual Meeting. These directors will hold office until the Annual Meeting in 2014, or until their respective successors have been elected and qualified. Each director nominee set forth below has consented to being named in this Proxy Statement as a nominee for election as director and has agreed to serve as a director if elected. In the event that any of the nominees should become unavailable prior to the Annual Meeting, proxies in the enclosed form will be voted for a substitute nominee or nominees designated by the Board, or the Board may reduce the number of directors to constitute the entire Board, in its discretion. 2011 NOMINEES FOR DIRECTOR For more information about each director nominee, our continuing directors, and the operation of our Board see below under Business Experience and Qualification of Directors. Name Jerre L. Stead . . . . . . . . . . . . . . . . . . . . . . C. Michael Armstrong . . . . . . . . . . . . . . . . Balakrishnan S. Iyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Brian H. Hall Age 68 72 54 63 Director Since 2000 2003 2003 2008 Position with Company Chairman of the Board, CEO Director Director Director Vote Required and Recommendation Directors are elected by a plurality vote, which means that the four nominees receiving the most affirmative votes will be elected. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF THESE NOMINEES 5 PROPOSAL 2 Ratification of the Appointment of Independent Registered Public Accountants Proposed Ratification The Audit Committee of the Board (the “Audit Committee”), which is composed entirely of non-employee independent directors, has selected Ernst & Young LLP as the independent registered public accountants to audit our books, records, and accounts and those of our subsidiaries for the fiscal year 2011. The Board has endorsed this appointment. Ratification of the selection of Ernst & Young LLP by stockholders is not required by law. However, as a matter of good corporate practice, such selection is being submitted to the stockholders for ratification at the Annual Meeting. If the stockholders do not ratify the selection, the Board and the Audit Committee will reconsider whether or not to retain Ernst & Young LLP, but may, in its discretion, retain Ernst & Young LLP. Even if the selection is ratified, the Audit Committee, in its discretion, may change the appointment at any time during the year if it determines that such change would be in the best interests of IHS and its stockholders. Ernst & Young LLP previously audited our consolidated financial statements during the ten fiscal years ended November 30, 2010. Representatives of Ernst & Young LLP will be present at the Annual Meeting. They will have an opportunity to make a statement, if they desire to do so, and will be available to respond to appropriate stockholder questions. Audit and Non-Audit Fees In connection with the audit of the 2010 financial statements, IHS entered into an engagement agreement with Ernst & Young LLP that set forth the terms by which Ernst & Young LLP has performed audit services for IHS. That agreement subjects IHS to alternative dispute resolution procedures and excludes the award of punitive damages in the event of a dispute between IHS and Ernst & Young LLP. Aggregate fees for professional services rendered for us by Ernst & Young LLP for the years ended November 30, 2010 and 2009, respectively, were as follows: Audit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Audit-Related Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tax Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . All Other Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2010 2009 (in thousands) $2,159 74 129 — $2,164 73 110 — Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,362 $2,347 Audit Fees. Audit fees consist of fees billed for professional services rendered for the audit of our consolidated financial statements, the statutory audit of our subsidiaries, the review of our interim consolidated financial statements, and other services provided in connection with statutory and regulatory filings. 6 Audit-Related Fees. Audit-related fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s consolidated financial statements and are not reported under “Audit Fees.” These services may include employee benefit plan audits, auditing work on proposed transactions, attestation services that are not required by regulation or statute, and consultations regarding financial accounting or reporting standards. Tax Fees. Tax Fees consist of tax compliance consultations, preparation of tax reports, and other tax services. Audit Committee Pre-Approval Policies and Procedures The Audit Committee has implemented pre-approval policies and procedures related to the provision of audit and non-audit services by Ernst & Young LLP. Under these procedures, the Audit Committee pre-approves both the type of services to be provided by Ernst & Young LLP and the estimated fees related to these services. During the approval process, the Audit Committee considers the impact of the types of services and the related fees on the independence of the registered public accountant. The services and fees must be deemed compatible with the maintenance of such accountants’ independence, including compliance with rules and regulations of the U.S. Securities and Exchange Commission (the “Commission”) and the New York Stock Exchange (the “NYSE”). The Audit Committee does not delegate its responsibilities to pre-approve services performed by Ernst & Young LLP to management or to any individual member of the Audit Committee. Throughout the year, the Audit Committee will review any revisions to the estimates of audit and non-audit fees initially approved. Vote Required and Recommendation Ratification of the appointment of Ernst & Young LLP requires the affirmative vote of a majority of the shares present and voting at the Annual Meeting in person or by proxy. Unless marked to the contrary, proxies received will be voted “FOR” this Proposal 2 regarding the ratification of Ernst & Young LLP as our independent registered public accountants. In the event ratification is not obtained, the Audit Committee will review its future selection of our independent registered public accountants. THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RATIFICATION OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS. 7 PROPOSAL 3 Approval of the Amendment and Restatement of the IHS Inc. 2004 Long-Term Incentive Plan The Company is seeking stockholder approval of the Amended and Restated IHS Inc. 2004 Long-Term Incentive Plan (the “Plan”) for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (“Section 162(m)” of the “Code”), to increase the annual limit on covered employee compensation from $1.2 million to $2 million (see “Covered Employee Annual Incentive Award” below), and to extend the expiration date of the Plan from November 30, 2014, to November 30, 2018. See Proposal 4, below, for a proposal to increase the number of shares authorized for issuance under the Plan. With this Proposal 3, the Company is asking its stockholders to approve the material terms providing for performance-based compensation under the Plan for the purposes of Section 162(m), to increase the annual limit on covered employee compensation from $1.2 million to $2.0 million (see “Covered Employee Annual Incentive Award” below), and to extend the expiration date of the Plan from November 30, 2014, to November 30, 2018. Section 162(m) requires that stockholders approve, at least every five years, the material terms of any compensation plan that provides for payment of performance-based compensation in order for that compensation to be fully deductible for federal income tax purposes. Under Section 162(m), the material terms concerning performance-based compensation are (i) eligibility for awards, (ii) individual grant limits on awards, and (iii) the business criteria that can be used as performance goals for awards. Our Board has directed that such material terms of the Plan be submitted to stockholders in 2011 for approval. If the stockholders approve this proposal, the performance-based compensation paid by the Company pursuant to the Plan will be fully deductible by the Company for income tax purposes under Section 162(m). History and Purpose of the Plan The Plan was originally approved by our Board on November 22, 2004 and by stockholders on November 30, 2004 to allow for issuance of up to 7,000,000 shares. On April 26, 2005, the Human Resources Committee of the Board (the “Human Resources Committee”) amended and restated the Plan in its entirety. On April 24, 2008, our stockholders approved an amendment to the Plan increasing the number of shares available for issuance under the Plan by 4,250,000 shares. Summary of Section 162(m) Section 162(m) generally provides that no federal income tax business expense deduction is permitted for annual compensation in excess of $1 million paid by a publicly-traded corporation to its chief executive officer and up to three other most highly compensated officers who are included in the summary compensation table in the Company’s Proxy Statement, excluding the chief financial officer or principal financial officer (the “covered employees”), as determined in accordance with the applicable rules under the Securities Exchange Act of 1934 (the “Exchange Act”). Under the Code, however, there is no limitation on the deductibility of “qualified performance-based compensation.” Qualified performance-based compensation by the Company must be paid solely on account of the attainment of one or more objective performance goals established in writing by the Human Resources Committee. Goals that are substantially certain to be achieved may not be used. Performance goals 8 may be based on one or more business criteria that apply to an individual, a business unit or the Company as a whole, but need not be based on an increase or positive result under the business criteria selected. These goals should also be based on an objective formula, such that a third party could calculate the award with knowledge of the relevant performance results. Under Section 162(m), stockholders must approve the types of performance goals and the maximum amount that may be paid to cover executive officers or the formula used to calculate such amount. Payment of performance-based compensation pursuant to the Plan to a covered employee is contingent upon the attainment of one or more performance goals established in writing by the Human Resources Committee for a covered employee for each performance period. Performance goals will be based on one or more of the following business criteria: (i) net earnings or net income (before or after taxes); (ii) earnings per share; (iii) net sales or revenue growth; (iv) net operating profit; (v) return measures; (vi) cash flow; (vii) earnings before or after taxes, interest, depreciation and/or amortization, and/or lease payments or other rent obligations; (viii) gross or operating margins; (ix) productivity ratios; (x) share price (including growth measures and total stockholder return); (xi) expense targets; (xii) margins; (xiii) operating efficiency; (xiv) market share; (xv) customer satisfaction; (xvi) working capital targets; and (xvii) economic value added or EVA® (i.e., net operating profit after tax, minus the sum of capital multiplied by the cost of capital). Summary of the Plan The following paragraphs provide a summary of the principal terms of the Plan and its operation. The following summary is qualified in its entirety by reference to the Plan, a copy of which is included as an appendix to this Proxy Statement. Types of Awards; Eligibility. The Plan provides for the grant of the following types of incentive awards: (i) non-qualified stock options; (ii) incentive stock options; (iii) stock appreciation rights; (iv) restricted stock; (v) restricted stock units; (vi) performance units and performance shares; (vii) cash-based awards; (viii) other stock-based awards; and (ix) covered employee annual incentive awards. Our 2004 Directors Stock Plan, a sub-Plan under the Plan, provides for the grant of restricted stock, restricted stock units, and cash-based awards to non-employee directors as defined in that Plan. Our employees and employees of our affiliates, our directors, and any consultants, agents, advisors or independent contractors (with certain exclusions), who render services to us or any of our affiliates, are eligible to receive awards under the Plan. Individual Grant Limitations. No individual may receive awards that relate to more than 500,000 shares in any calendar year. Separately, in the case of an award that is not valued in a way in which the limitation set forth in the preceding sentence would operate as an effective limitation satisfying applicable law, in any calendar year, no individual may receive awards authorizing the earning of an amount that exceeds the individual’s annual amount, which for this purpose is equal to $5,000,000, plus the amount of the individual’s unused annual limit as of the close of the previous calendar year. As of March 7, 2011, approximately 4,700 employees and all of our non-employee directors were eligible to participate in the Plan. Shares Subject to the Plan. The aggregate maximum number of shares that may be issued pursuant to awards under the Plan is currently 11,250,000 shares of Class A common stock, minus the number of shares relating to any award granted and outstanding as of, or subsequent to, the effective date under any of our other equity compensation plans, unless shares used to satisfy such award under other 9 equity compensation plans are shares repurchased from the open market. Under the proposed amendment to the Plan discussed in Proposal 4, the maximum number of shares available for issuance will be 14,750,000, minus the number of shares relating to any award granted and outstanding as of, or subsequent to, the effective date under any of our other equity compensation plans, unless shares used to satisfy such award are shares repurchased from the open market. Shares issued under the Plan may be either treasury shares or shares originally issued for this purpose. Any rights to receive shares that terminate by expiration, forfeiture, cancellation or otherwise, pursuant to the terms of an award, will be available again for grant under the Plan. In addition, if the tax withholding requirements with respect to any Award are satisfied by tendering shares to the Company, those tendered shares will be held in Treasury and made available for issuance under the Plan. At the close of trading on March 7, 2011, the fair market value of a share of Class A common stock was $88.00. In the event of a merger, consolidation, reorganization, recapitalization, separation, stock dividend, stock split, reverse stock split, split up, spin-off or other distribution of stock or property of the Company, combination of shares, exchange of shares, dividend in kind or other like change in capital structure or distribution (other than normal cash dividends) to stockholders of the Company, or any similar corporate event or transaction, the Company shall make, in its sole discretion, appropriate adjustments to the number of and kind of shares available for issuance under the Plan, the number and kind of shares subject to outstanding awards, the exercise or grant price applicable to outstanding awards, the annual award limits and other value determinations applicable to outstanding awards to prevent dilution or expansion of any participant’s rights under the Plan. Term of the Plan. With the approval of this amendment, the Plan will terminate on November 30, 2018, unless sooner terminated as provided in the Plan. After the termination date, no awards may be granted under the Plan, but any award previously granted under the Plan shall remain outstanding in accordance with the terms and conditions of the Plan. Administration. The Plan is administered by the Human Resources Committee of the Board. The Human Resources Committee has authority to determine who is eligible to participate in the Plan, select individuals to whom awards will be granted, interpret the Plan, and prescribe and amend rules and regulations relating to the Plan. The Human Resources Committee may delegate to one or more of its members or to one or more of our officers or officers of our affiliates or to one or more agents or advisors such administrative duties or powers as it may deem advisable. The Human Resources Committee may, by resolution, authorize one or more of the Company’s officers to designate employees and employees of our affiliates to be recipients of awards, provided, however, that grants to any employee who is subject to Section 16 of the Securities Exchange Act of 1934, as amended, will be made by the Human Resources Committee. All awards to non-employee directors are determined by our Board or the Human Resources Committee. Options. The Human Resources Committee may grant nonqualified stock options and incentive stock options under the Plan. The Human Resources Committee determines the number of shares subject to each option and the exercise price of options granted under the Plan, provided that the exercise price must at least be equal to the fair market value of the Company’s common stock on the date of grant. In addition, the exercise price of an incentive stock option granted to any participant who owns more than 10 percent of the total voting power of all classes of the Company’s outstanding stock must be at least 110 percent of the fair market value of the common stock on the grant date. Options cannot be repriced without prior approval of the Company’s stockholders. The term of nonqualified stock options or incentive stock options granted under the Plan may not exceed ten years, except that with respect to any participant who owns 10 percent of the total voting 10 power of all classes of the Company’s outstanding stock, the term of an incentive stock option may not exceed five years. After termination of service with the Company, a participant may exercise the vested portion of his or her option for the period of time stated in his or her award document. Stock Appreciation Rights. The Human Resources Committee may grant stock appreciation rights either alone or in tandem with stock options. A stock appreciation right is the right to receive the appreciation in fair market value of common stock between the exercise date and the date of grant. The Company can pay the appreciation in cash, shares of common stock, or any combination of cash and shares or in any other manner approved by the Human Resources Committee. Stock appreciation rights become exercisable at the times and on the terms established by the Human Resources Committee, subject to the terms of the Plan. Stock appreciation rights cannot be repriced without prior approval of the Company’s stockholders. After termination of service with the Company, a participant may exercise the vested portion of his or her stock appreciation right for the period of time stated in a participant’s award document. In no event will a stock appreciation right be exercised later than the expiration of its term. Restricted Stock. Awards of restricted stock are rights to acquire shares of Company common stock. Restricted stock vests in accordance with the terms and conditions established by the Human Resources Committee in its sole discretion and set forth in a participant’s award document. Restricted Stock Units. The Human Resources Committee may grant awards of restricted stock units. Restricted stock units are rights to acquire shares of the Company common stock or receive the dollar value equivalent of shares that vest in accordance with the terms and conditions established by the Human Resources Committee its sole discretion and set forth in a participant’s award document. Performance Units and Performance Shares. The Human Resources Committee may grant performance units and performance shares, which are awards that result in a payment to a participant only if the performance goals or other vesting criteria that the Human Resources Committee establishes are achieved or the awards otherwise vest. The Human Resources Committee establishes organizational, individual performance goals, or other vesting criteria in its discretion, which, depending on the extent to which they are met, determines the number and/or the value of performance units and performance shares to be paid out to participants. Performance Measures. The performance goals applicable to an award to a participant who is a covered employee, as defined in Section 162(m), are intended to qualify such awards as performance- based compensation, as defined under Section 162(m). The performance goals upon which the payment or vesting of any award to a covered employee shall be limited to the following performance measures: (i) net earnings or net income (before or after taxes); (ii) earnings per share; (iii) net sales or revenue growth; (iv) net operating profit; (v) return measures; (vi) cash flow; (vii) earnings before or after taxes, interest, depreciation and/or amortization, and/or lease payments or other rent obligations; (viii) gross or operating margins; (ix) productivity ratios; (x) share price (including growth measures and total stockholder return); (xi) expense targets; (xii) margins; (xiii) operating efficiency; (xiv) market share; (xv) customer satisfaction; (xvi) working capital targets; and (xvii) economic value added or EVA® (i.e., net operating profit after tax, minus the sum of capital multiplied by the cost of capital). 11 Awards that are intended to qualify as performance-based compensation may not be adjusted upward. The Human Resources Committee shall retain the discretion to adjust such awards downward, either on a formula basis or discretionary basis, or any combination thereof, as the Human Resources Committee deems appropriate. Covered Employee Annual Incentive Award. The Human Resources Committee may designate covered employees who are eligible to receive a monetary payment in any Plan year based on a percentage of an incentive pool equal to the greater of: (i) 9 percent of the Company’s consolidated operating earnings for the Plan year; (ii) 10 percent of the Company’s operating cash flow for the Plan year; or (iii) 15 percent of the Company’s net income for the Plan year. The Human Resources Committee shall allocate an incentive pool percentage to each designated covered employee for each Plan year. In no event may (1) any covered employee receive more than $2 million from the incentive pool; and (2) the sum of the incentive pool percentages for all covered employees cannot exceed 100 percent of the total pool. Transferability of Awards. The Plan generally does not permit the transfer of Awards, although the administrator of the Plan has the discretion to provide for transferability of an award, and all rights with respect to an award granted to a participant generally are available during a participant’s lifetime only to the participant. Change in Control. In the event of a change in control of us, all then-outstanding non-qualified stock options, incentive stock options and stock appreciation rights will become fully vested and exercisable, and all other then-outstanding awards that vest on the basis of continuous service will vest in full and be free of restrictions, unless an award provides otherwise and except to the extent that a replacement award that satisfies the conditions stated in the Plan is provided to the participant. Upon a termination of employment or termination of directorship of a participant occurring in connection with or within one year of a change in control of us, all replacement awards held by the participant will become fully vested and (if applicable) exercisable and free of restrictions, and all non-qualified stock options, incentive stock options and stock appreciation rights held as of the date of the change in control or that constitute replacement awards will remain exercisable for not less than one year following the participant’s termination of employment or until the stated expiration of the option or stock appreciation right, whichever period is shorter. Amendment and Termination of the Plan. The Human Resources Committee has the authority to amend, alter, modify, suspend, or terminate the Plan, except that stockholder approval will be required for any amendment to the Plan to the extent required by any applicable law, regulation, or stock exchange rule. Any amendment, modification, alteration, suspension, or termination will not, without the consent of the participant, materially adversely affect any rights or obligations under any award previously granted. Securities Authorized for Issuance Under Equity Compensation Plans For information regarding compensation plans under which equity securities are authorized for issuance, see the table “Equity Compensation Plan Information” described in Proposal 4 below. 12 Summary of Federal Tax Aspects of the Plan The following paragraphs are a summary of the general U.S. federal income tax consequences to U.S. taxpayers and to the Company of awards granted under the Plan. Tax consequences for any particular individual may be different. The following assumes non-qualified stock options and incentive stock options have been granted at an exercise price per share at least equal to 100 percent of the fair market value of our common stock on the date of grant. Nonqualified Stock Options. No taxable income is reportable when a nonqualified stock option with an exercise price equal to the fair market value of the Company’s stock is granted to a participant. Upon exercise, the participant recognizes ordinary income in an amount equal to the excess of the fair market value (on the exercise date) of the shares purchased over the exercise price of the option. Any additional gain or loss recognized upon any later disposition of the shares is capital gain or loss. Incentive Stock Options. No taxable income is reportable when an incentive stock option is granted or exercised (except for purposes of the alternative minimum tax, in which case the tax treatment is similar as the treatment applicable to nonqualified stock options). If the participant exercises the option and then later sells or otherwise disposes of the shares more than two years after the grant date and more than one year after the exercise date, the difference between the sale price and the exercise price will be taxed as capital gain or loss. If the participant exercises the option and then later sells or otherwise disposes of the shares before the end of the two- or one-year holding periods described above, he or she generally will have ordinary income at the time of the sale equal to the fair market value of the shares on the exercise date (or the sale price, if less) minus the exercise price of the option. Stock Appreciation Rights. No taxable income is reportable when a stock appreciation right with an exercise price equal to the fair market value on the date of grant is granted to a participant. Upon exercise, the participant recognizes ordinary income in an amount equal to the amount of any cash received and the fair market value of any shares received. Any additional gain or loss recognized upon any later disposition of the shares is capital gain or loss. Restricted Stock, Restricted Stock Units, Performance Units and Performance Shares. A participant generally does not have taxable income at the time an award of restricted stock, restricted stock units, performance shares or performance units are granted. Instead, he or she recognizes ordinary income in the first taxable year in which his or her interest in the shares underlying the award becomes either (i) freely transferable; or (ii) no longer subject to substantial risk of forfeiture. However, the recipient of a restricted stock award may elect to recognize income at the time he or she receives the award in an amount equal to the fair market value of the shares underlying the award (less any cash paid for the shares) on the date the award is granted. Tax Effect for the Company. As set forth above, the Company is generally entitled to a tax deduction in connection with an award under the Plan in an amount equal to the ordinary income realized by a participant at the time the participant recognizes such income (for example, the exercise of a nonqualified stock option). Special rules limit the deductibility of compensation paid to the Company’s Chief Executive Officer and to each of its three most highly compensated executive officers (excluding the Chief Financial Officer and the principal/chief financial officer). Under Section 162(m), the annual compensation paid to any of these specified executives is deductible only to the extent that it does not exceed $1,000,000. However, the Company can preserve the deductibility of certain compensation in excess of $1,000,000 if the conditions of Section 162(m) are met. These conditions include stockholder 13 approval of the Plan, setting limits on the number of awards that any individual may receive, and for awards other than certain stock options, establishing performance criteria that must be met before the award actually will vest or be paid. The Plan has been designed to permit the Human Resources Committee to grant awards that qualify as performance-based for purposes of satisfying the conditions of Section 162(m), thereby permitting the Company to continue to receive a federal income tax deduction in connection with such awards. THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION UPON PARTICIPANTS AND THE COMPANY WITH RESPECT TO THE GRANT AND EXERCISE OF AWARDS UNDER THE PLAN. IT DOES NOT PURPORT TO BE COMPLETE. New Plan Benefits New awards under the amended 2004 LTIP will be subject to the discretion of the Human Resources Committee of the Board of Directors. Thus future awards are not determinable. Vote Required and Recommendation Approval of the material terms of the Plan requires a majority of the shares present and voting at the Annual Meeting in person or by proxy. The Board believes that it is in the best interest of the Company and its stockholders for the stockholders to approve the material terms of the Plan. Our named executive officers and directors have an interest in this proposal as they are eligible to receive awards under the Plan. THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE IHS INC. 2004 LONG-TERM INCENTIVE PLAN. 14 PROPOSAL 4 Approval of a Proposal to Increase the Number of Shares Available for Issuance under the Amended and Restated IHS Inc. 2004 Long-Term Incentive Plan The Company is seeking stockholder approval for an amendment of the Amended and Restated IHS Inc. 2004 Long-Term Incentive Plan (the “Plan”) to increase the number of shares issuable under the Plan by 3,500,000 shares. If the stockholders approve this proposal, the only change to the current version of the Plan will be an increase in the number of shares available for issuance. Otherwise, all other provisions of the current version of the Plan will remain in effect, with the possible exceptions of amendments addressed in Proposal 3. History and Purpose of the Plan As discussed in Proposal 3 above, the Plan was originally approved by our Board on November 22, 2004 and by stockholders on November 30, 2004 to allow for issuance of up to 7,000,000 shares. On April 26, 2005, the Human Resources Committee amended and restated the Plan in its entirety. On April 24, 2008, our stockholders approved an amendment to the Plan increasing the number of shares available for issuance under the Plan by 4,250,000 shares. Purpose of the Amendment Through our Total Rewards Program (described in our “Compensation Discussion and Analysis” below) IHS has established a stock ownership culture among all of its employees worldwide. The Board believes this stock ownership culture provides a means for employees to develop a sense of proprietorship and personal involvement in the development and financial success of the Company, thereby advancing the interests of the Company and its stockholders. Since our initial public offering, IHS has created significant shareholder value, and our Board believes our employee ownership culture has had a critical role in driving this value. We have performed favorably compared to our peer group and against the major stock indices (see the performance comparison in the “Executive Summary” of the “Compensation Discussion and Analysis”). We believe that the equity component of our compensation helps to keep the interests of our employees and directors aligned with the interests of our stockholders. In addition, the performance-based nature of the grants we make to our senior executives creates further alignment with our shareholders and ensures that the company itself (not just the general markets) must perform well before payouts are earned. As discussed in detail in the “Compensation Discussion and Analysis” section of this proxy statement, a significant portion of the compensation for each of our named executive officers is “at-risk” —based on the future performance of our company and the value of our equity. In other words, bonus and performance equity incentives reward success only when objectives are achieved, including the performance objectives that directly benefit our shareholders. 15 In order to continue offering equity components of our Total Rewards Program, which our Board believes to have been critical to our past performance and to be essential in the pursuit of our five-year strategic plan, the Board believes that shares available under the Plan must be replenished. Since 2006, IHS has had in place a program which allows employees to surrender shares back to the Company upon the vesting of time- and performance-based restricted stock and units, for a value equal to their minimum statutory tax liability. IHS then pays the statutory tax on behalf of the employee. To more fully offset the dilutive effect of our employee equity programs, our board of directors this month approved a stock buyback program whereby IHS is authorized to acquire up to one million shares per year in the open market. IHS may execute on this program at its discretion, balancing dilution offset with other investment opportunities of the business, including acquisitions. Securities Authorized for Issuance Under Equity Compensation Plans The following table sets forth information as of March 7, 2011, our record date, with respect to compensation plans under which equity securities are authorized for issuance. Equity Compensation Plan Information Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted-average exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) 3,867,460(1) $37.65(2) 1,418,946(3) Plan Category Equity compensation plans approved by security holders . . . . . . . . . . . . . . . . . . Equity compensation plans not approved by security holders . . . . . . . . Total: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A 3,867,460 N/A $37.65 N/A 1,418,946 (1) Includes (a) 2,871,564 restricted stock units and performance stock units at target performance levels that were issued with no exercise price or other consideration, (b) 764,312 shares reserved for issuance if above target performance levels on performance-based stock units are met, (c) 106,444 deferred stock units payable to non-employee directors upon their termination of service; (d) 8,640 restricted stock units that are payable in cash; and (d) 116,500 outstanding stock options. (2) Calculation of the weighted-average exercise price is only for the 116,500 outstanding stock options described in footnote 1 above. (3) Includes shares surrendered to the Company upon vesting of time- and performance-based restricted stock units for a value equal to their minimum statutory tax liability. Dilution IHS currently grants performance-based and time-based restricted stock units under the Plan. The Board believes a focus on units, as opposed to options or stock appreciation rights, better controls the dilutive effect of the Plan. For the last three years, the Company has been able to provide equity to all of its employees, creating a significant tie to performance measures, and maintaining a burn rate (defined as awards granted/weighted shares outstanding) of less than 3 percent per year. Amendment of the Plan to Increase the Number of Shares Available for Issuance Since the previous amendment of the Plan in April 2008, we have used a substantial portion of the current authorized share pool under the Plan for equity awards to our plan participants. As a result, the Human Resources Committee has approved an amendment to the Plan to increase the number of 16 shares available for issuance under this Plan from 11.25 million shares to 14.75 million shares, subject to stockholder approval. Of the 11.25 million shares available under the Plan as of the Record Date, 5.96 million have been issued and are currently outstanding under the Plan; 3.87 million are currently reserved for outstanding awards; and 1.42 million are available for grant. If we receive approval for the 3.5 million additional shares requested in this Proposal 4, the number of shares available for grant will increase from 1.42 million shares to 4.92 million shares. New Plan Benefits New awards under the amended 2004 LTIP will be subject to the discretion of the Human Resources Committee of the Board of Directors. Thus future awards are not determinable. Summary of the Plan and Federal Tax Aspects of the Plan For a summary of the Plan and a summary of the Federal Tax Aspects of the Plan, please see the discussion in Proposal 3, above. Vote Required and Recommendation Approval of the material terms of the Plan and an amendment to the Plan requires a majority of the shares present and voting at the Annual Meeting in person or by proxy. In accordance with applicable rules of the NYSE, our Board is asking stockholders to approve the amendment to the Plan. Our named executive officers and directors have an interest in this proposal as they are eligible to receive awards under the Plan. THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE PROPOSAL TO INCREASE THE NUMBER OF SHARES AVAILABLE FOR ISSUANCE UNDER THE AMENDED AND RESTATED IHS INC. 2004 LONG-TERM INCENTIVE PLAN. 17 PROPOSAL 5 Advisory Vote on Executive Compensation With this proposal, we are providing stockholders an opportunity to vote to approve, on an advisory, nonbinding basis, the compensation of our named executive officers as disclosed in this Proxy Statement. This proposal has been designed to meet the requirements of the recently enacted Dodd- Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”). As described in detail under the heading “Executive Compensation—Compensation Discussion and Analysis,” our executive compensation programs are designed to (i) align executive compensation with key stakeholder interests; (ii) attract, retain, and motivate highly qualified executive talent; and (iii) provide appropriate rewards for the achievement of business objectives and growth in stockholder value. Under these programs, our named executive officers are rewarded for the achievement of specific individual and corporate goals, with an emphasis on creating overall stockholder value. As indicated by the performance charts below, our compensation programs have continued to be a key driver of shareholder value creation versus a selection of peer companies and market indices. Company Annualized Total Shareholder Return* 3-Year 1-Year 5-Year ADVISORY BOARD CO . . . . . . . . . . . . . . . . . . CORPORATE EXECUTIVE BRD CO . . . . . . . . DUN & BRADSTREET CORP . . . . . . . . . . . . . . EQUIFAX INC . . . . . . . . . . . . . . . . . . . . . . . . . . . FACTSET RESEARCH SYSTEMS INC . . . . . . FAIR ISAAC CORP . . . . . . . . . . . . . . . . . . . . . . GARTNER INC . . . . . . . . . . . . . . . . . . . . . . . . . . MCGRAW-HILL COMPANIES . . . . . . . . . . . . . MOODY’S CORP . . . . . . . . . . . . . . . . . . . . . . . . MSCI INC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . THOMSON-REUTERS CORP . . . . . . . . . . . . . 55.4% 67.0% -0.8% 16.2% 44.1% 10.0% 84.0% 12.0% 0.8% 22.5% 19.4% -9.5% -11.2% -0.9% -0.1% 20.5% -9.7% 23.7% -3.2% -8.0% 0.5% 0.5% 0.0% -13.4% 5.4% -0.7% 19.1% -11.7% 20.8% -4.6% -14.5% — 4.6% IHS INC 46.7% 9.9% 31.4% 25th Percentile . . . . . . . . . . . . . . . . . . . . . . . . . . Median . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75th Percentile . . . . . . . . . . . . . . . . . . . . . . . . . . IHS Percentile Rank . . . . . . . . . . . . . . . . . . . . . S&P 500 COMP-LTD . . . . . . . . . . . . . . . . . . . . . DOW JONES INDUSTRIALS-30 STK . . . . . . . NASDAQ INDEX COMPOSITE . . . . . . . . . . . . 11% 19% 50% 73% 15.1% 14.1% 16.9% -9% -1% 0% 82% -2.8% -1.6% 0.0% -10% 0% 5% 100% 2.3% 4.3% 3.8% * As of December 31, 2010 18 Please read the “Compensation Discussion and Analysis” for additional details about our executive compensation programs, including information about the fiscal year 2010 compensation of our named executive officers. We would like to specifically point out the following highlights: Š Through the awards of performance and time-based restricted stock units, we have tied our named executive officers’ compensation opportunity directly to the value of our stock. We have emphasized long-term performance with stringent holding requirements and performance-based awards that focus on three-year performance objectives. Our named executive officers are required to retain, until termination of employment, 50 percent of their net after-tax shares of all restricted stock unit awards granted after they were named executive officers. Š Our CEO does not have an employment agreement. Š All NEO employment agreements contain a double trigger where an ownership change and termination of employment must both occur before any benefits, other than the acceleration of the vesting of stock awards, are due to the NEO. Additionally, new employment agreements do not provide for a tax gross-up with respect to the excise tax liability under Internal Revenue Code Section 4999 related to any Section 280G excess parachute payment. Š Beginning in 2010, the Board has eliminated all but de minimis perquisites to its executive officers. Š The independent compensation consultant retained by the Human Resources Committee of the Board of Directors is prohibited from doing any other work for the Company. The Human Resources Committee continually reviews the compensation programs for our named executive officers to ensure they achieve the desired goals of aligning our executive compensation structure with our stockholders’ interests and current market practices. We are asking our stockholders to indicate their support for our named executive officer compensation program and practices as described in this Proxy Statement. This proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies, and practices described in this Proxy Statement. Accordingly, we will ask our stockholders to vote on the following resolution at the Annual Meeting: “RESOLVED, that the stockholders hereby approve the policies and practices compensation of IHS’s named executive officers as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the Commission (which includes the “Compensation Discussion and Analysis,” the compensation tables and related material).” The say-on-pay vote is advisory, and therefore not binding on the Company, the Human Resources Committee or our Board. Our Board and our Human Resources Committee value the opinions of our stockholders and, to the extent there is a significant vote against the named executive officer compensation policies and practices as disclosed in this Proxy Statement, we will consider our stockholders’ concerns and the Human Resources Committee will evaluate whether any actions are necessary to address those concerns. 19 Unless you instruct us to the contrary, proxies will be voted “FOR” this Proposal 5 regarding named executive officer compensation policies and practices, as described in “Compensation Discussion and Analysis,” below, and the other related tables and disclosure in this Proxy Statement. THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT PURSUANT TO THE COMPENSATION DISCLOSURE RULES OF THE COMMISSION. 20 PROPOSAL 6 Advisory Vote on the Frequency of Executive Compensation Advisory Vote The vote described in this proposal will enable our stockholders to indicate how frequently we should seek an advisory vote on the compensation of our named executive officers, as disclosed pursuant to the Commission’s compensation disclosure rules, such as Proposal 5 included above. By voting on this Proposal 6, stockholders may indicate whether they would prefer an advisory vote on named executive officer compensation every one, two, or three years, or abstain from the vote. After careful consideration of this Proposal 6, our Board recommends to you that an advisory vote on executive compensation that occurs every year (annually) is the most appropriate alternative for our investors and for IHS. Therefore, our Board recommends that you vote for one year intervals for the advisory vote on executive compensation. In formulating its recommendation, our Board carefully considered the interval that would be most appropriate for our stockholders. The Board believes that an annual advisory vote on executive compensation will allow our stockholders to provide us with input on our compensation philosophy, policies, and practices as disclosed in the proxy statement. The Human Resources Committee of the Board, which is composed entirely of independent directors, carefully considers a wide range of factors in the design and oversight of the compensation program to achieve those goals (see “Compensation Discussion and Analysis” later in this Proxy Statement). Our executive compensation program is intended to attract, motivate, and reward the executive talent required to achieve our corporate objectives and increase stockholder value. Our compensation program is designed to induce and reward performance over a multi-year period. As discussed in this Proxy Statement and our disclosures over the preceding years, our executive compensation program has remained consistent in both design and practice. Although we design our programs for the long term, we understand the need for shareholders to voice their opinion on our compensation programs more frequently. We understand that our stockholders may have different views as to what is the best approach for IHS and we look forward to hearing from our stockholders on this Proposal. You may cast your vote on your preferred voting frequency choosing the option of one year, two years, three years, or abstain from voting. The option of one year, two years, or three years that receives the highest number of votes cast by stockholders will be the frequency for the advisory vote on executive compensation that has been selected by stockholders. While the result of this advisory vote will be considered by the Board of IHS as valuable feedback, this is an advisory resolution that is not binding on the Board, the Human Resources Committee, or IHS. The Board may decide that it is in the best interests of our stockholders and IHS to hold an advisory vote on executive compensation more or less frequently than the option approved by our stockholders. THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE OPTION OF ONCE EVERY YEAR AS THE FREQUENCY WITH WHICH STOCKHOLDERS ARE PROVIDED AN ADVISORY VOTE ON EXECUTIVE COMPENSATION, AS DISCLOSED PURSUANT TO THE COMPENSATION DISCLOSURE RULES OF THE COMMISSION. 21 Corporate Governance and Board of Directors Board Leadership Structure The Board of Directors of IHS believes strongly in the value of an independent board of directors. Of the nine members of our Board of Directors, seven are independent. This includes all members of the key board committees—the Audit Committee, the Human Resources Committee, and the Nominating and Corporate Governance Committee. IHS has established a Lead Independent Director role with broad authority and responsibility, as described further below. The independent members of the Board of Directors also meet regularly without management, which meetings are chaired by the Lead Independent Director. Mr. Armstrong currently serves as Lead Independent Director and Mr. Stead currently serves as the Chairman and Chief Executive Officer of IHS. The Board believes it is important to retain its flexibility to allocate the responsibilities of the offices of the Chairman and Chief Executive Officer in any way that it deems to be in the best interests of the Company at a given point in time. The Board may make a determination as to the appropriateness of its current policies in connection with the recruitment and succession of the Chairman of the Board and/or the CEO. The Board presently believes that it is in the best interests of IHS and its stakeholders for the positions of Chairman and Chief Executive Officer to be combined. This structure provides for unified vision and leadership within the Company as well as plays a critical role in establishing and maintaining effective communications with the Company’s external stakeholders, including shareholders, customers, suppliers, communities, and governments. Jerre Stead’s service as both Chairman of the Board and Chief Executive Officer is optimal because Mr. Stead possesses detailed and in-depth knowledge of the business of IHS and the opportunities we have in the global marketplace and is thus best positioned to develop agendas that ensure that the Board’s time and attention are focused on the most critical matters. Each of the directors other than Jerre Stead and Christoph Grolman, are independent (see “Independent and Non-Management Directors” below), and the Board believes that the independent directors provide effective oversight of management. In addition, in October 2006, the Board of Directors appointed C. Michael Armstrong as the Company’s Lead Independent Director. As Lead Independent Director, Mr. Armstrong’s responsibilities include: Š scheduling meetings of the independent directors; Š chairing the separate meetings of the independent directors; Š serving as principal liaison between the independent directors and the Chairman and CEO on sensitive issues; Š communicating from time to time with the Chairman and CEO and disseminating information to the rest of the Board of Directors as appropriate; Š providing leadership to the Board of Directors if circumstances arise in which the role of the Chairman may be, or may be perceived to be, in conflict; Š reviewing the quality, quantity and timeliness of information provided to the Board; Š being available, as appropriate, for communication with shareholders; and Š presiding over the annual self-evaluation of the Board of Directors. 22 The Board believes that these responsibilities appropriately and effectively complement the combined Chairman/Chief Executive Officer structure of IHS. The Role of the Board of Directors in Risk Oversight We believe that risk is inherent in innovation and the pursuit of long-term growth opportunities. Management at IHS is responsible for day-to-day risk management activities. The Board of Directors, acting directly and through its committees, is responsible for the oversight of the Company’s risk management. With the oversight of the Board of Directors, IHS has implemented practices and programs designed to help manage the risks to which we are exposed in our business and to align risk-taking appropriately with our efforts to increase shareholder value. Each committee reports regularly to the full Board of Directors on its activities. In addition, the Board of Directors participates in regular discussions among the Board and with IHS senior management on many core subjects, including strategy, operations, finance, human resources, and legal and public policy matters, in which risk oversight is an inherent element. The Board of Directors believes that the leadership structure described above under “Board Leadership Structure” facilitates the Board’s oversight of risk management because it allows the Board, with leadership from the Lead Independent Director and working through its committees, including the independent Audit Committee, to participate actively in the oversight of management’s actions. Business Experience and Qualification of Board Members The following discussion presents information about the persons who comprise the Board of Directors of IHS, including the four nominees for re-election. C. Michael Armstrong, 72, has served as a member of our Board since December 2003. Mr. Armstrong served as Chairman of Comcast Corporation from 2002 until May 2004. He was Chairman and Chief Executive Officer of AT&T Corp. from 1997 to 2002, Chairman and Chief Executive Officer of Hughes Electronic Corporation from 1992 to 1997, and retired from IBM in 1991 as Chairman of IBM World Trade after a 31-year career. He was formerly on the board of Citigroup Inc. from 1989 through 2010. Mr. Armstrong is on the board of directors of Parsons Corporation and the Telluride Foundation, and is Vice Chairman of the board of trustees of Johns Hopkins University and Chairman of John Hopkins Medical Health Systems and Hospital. Mr. Armstrong brings to the Board of Directors experience in executive roles and a background of leading global organizations in the technology industry. Through this experience, he has developed expertise in several valued areas including strategic development, business development, and finance. Ruann F. Ernst, 64, has served as a member of our Board since December 2006. Dr. Ernst served as Chief Executive Officer of Digital Island, Inc. before retiring and was Chief Executive Officer and Chairperson of the board of Digital Island from 1998 until the company was acquired by Cable & Wireless, Plc. in 2001. Prior to Digital Island, Dr. Ernst worked for Hewlett Packard in various management positions, including General Manager, Financial Services Business Unit. Prior to that, she was Vice President for General Electric Information Services Company and a faculty member and Director of medical computing at the Ohio State University where she managed a biomedical computing and research facility. Dr. Ernst currently serves on the board of Digital Realty Trust and is Chairman of the Board of Red Planet Capital, a NASA technology venture. She also serves on the not-for-profit boards of the Ohio State University Foundation, the Fisher College of Business, and the Azimuth Foundation, dba Kids Sports Stars, where she is a founding board member and chair. 23 Dr. Ernst brings to the Board of Directors a strong technical and computing background as well as skill in the development of information technology businesses. She also has extensive experience as a member of the board where strategic planning and long-term planning are critical to the success of the enterprise. Christoph v. Grolman, 52, was appointed to our Board in March 2007. Mr. Grolman has served as Managing Director of TBG Limited (until 2009 TBG Holdings N.V.) since March 2007. From December 2006 to March 2007, Mr. Grolman served as Executive Director of TBG. From 2002 to 2006 he held the position of Executive Vice President of TBG, responsible for an industrial operating group and venture investments. Prior to joining TBG, he was a consultant with Roland Berger & Partner Management Consultants in Munich. Mr. Grolman brings to our Board a wealth of experience in global business operations, strategic acquisitions, and financial strategies for a diverse portfolio of investments. Brian H. Hall, 63, was appointed to our Board in March 2008. From January 2007 through August 2007, Mr. Hall served as Vice Chairman of Thomson Corporation. Previously, from 1998 through 2006, Mr. Hall served as President and CEO of Thomson Legal & Regulatory and West Publishing. Prior to joining Thomson, Mr. Hall was President of Shepard’s and Executive Vice President of McGraw-Hill. Mr. Hall is currently a director of Archipelago Learning, Inc. He also serves on the board of trustees for the Cheyenne Mountain Zoo and the Intergenerational Foundation. Mr. Hall serves as Vice-Chairman and a member of the board of trustees of the Rochester Institute of Technology. He is a former board member of Bank One of Colorado Springs and Ryerson of Canada. Mr. Hall brings to the Board many years of relevant industry experience gained in executive level positions in the information services industry. Roger Holtback, 66, has served as a member of our Board since December 2003. Since 2001, Mr. Holtback has served as Chairman of Holtback Invest AB. From 1993 to 2001 he served as President and Chief Executive Officer of Bure Equity AB. From 1991 to 1993, he served as a member of the Group Executive Committee of SEB and Coordinating Chairman of SEB Sweden. From 1984 to 1990, he served as President and Chief Executive Officer of Volvo Car Corporation and Executive Vice President of AB Volvo. Mr. Holtback is currently Chairman of Finnveden Bulten AB, Rullpack AB, Thule AB, and the Swedish Exhibition Centre. He also serves as a member of the Stena Sphere Advisory Board as Senior Advisor to Nordic Capital. Mr. Holtback brings significant operational and strategic experience gained during many years in a Chief Executive Officer position. The Board also benefits from his long experience as an outside public company board member and his vast experience and perspective as a European executive leader. Balakrishnan S. Iyer, 54, has served as a member of our Board since December 2003. From October 1998 to June 2003, Mr. Iyer served as Senior Vice President and Chief Financial Officer of Conexant Systems, Inc. From 1997 to 1998, he was Senior Vice President and Chief Financial Officer of VLSI Technology Inc. and, from 1993 to 1997, he was Vice President, Corporate Controller of VLSI Technology Inc. Mr. Iyer serves on the board of directors of Life Technologies, Skyworks Solutions, Conexant Systems, Inc., Power Integrations, Inc., and QLogic Corporation. Mr. Iyer provides to the Board of Directors expertise in corporate finance, accounting and strategy, including experience gained as the chief financial officer of two public companies. Mr. Iyer also brings a background in organizational leadership, and experience serving as a public company outside director. 24 Michael Klein, 47, serves as an independent financial advisor to companies and government organizations, and as a special advisor to the United Nations World Food Program. Mr. Klein has served as a member of our Board since December 2003. From March 2008 through July 2008, Mr. Klein served as Chairman of the Institutional Clients Group of Citigroup Inc. He had previously served as Chairman & Co-Chief Executive Officer of Citi Markets & Banking since February 2007. Prior to 2007, Mr. Klein held a variety of positions at Citigroup or its predecessor firms. Mr. Klein’s deep experience in leading banking and financial service companies, allows him to contribute extensive financial management and strategic expertise. In addition, Mr. Klein brings to the Board of Directors market insights, including from his experience as an outside public company board member, and the Board of Directors benefits from his corporate governance knowledge. Richard W. Roedel, 61, has served as a member of our Board since November 2004. Mr. Roedel also serves as a director of Sealy Corporation, Lorillard, Inc., Brightpoint, Inc, Six Flags Entertainment Corporation, and Luna Innovations Incorporated. Mr. Roedel is chairman of the audit committee for Brightpoint, Sealy, and Lorillard, as well as a member of the audit committee of Six Flags and Luna. Mr. Roedel also serves as the lead independent director of Lorillard and as the non-executive chairman of Luna. He is also a director of the Association of Audit Committee Members, Inc., a not-for-profit organization dedicated to strengthening audit committees, and Broadview Network Holdings, Inc, a private company. Mr. Roedel had previously served as a director and chairman of the audit committee of Dade Behring Holdings, Inc. from October 2002 until November 2007 when Dade was acquired by Siemens AG. Mr. Roedel served in various capacities at Take-Two Interactive Software, Inc. from November 2002 until June 2005, including chairman and chief executive officer. From 1971 through 2000, he was employed by BDO Seidman LLP, becoming an audit partner in 1980, later being promoted in 1990 to managing partner in Chicago and then managing partner in New York in 1994, and finally, in 1999, to chairman and chief executive officer. Mr. Roedel is a certified public accountant. Mr. Roedel provides to the Board of Directors expertise in corporate finance, accounting, and strategy. He brings experience gained as the chief executive officer of several organizations. The Board of Directors also benefits from Mr. Roedel’s experience serving as a public company outside director for several organizations. Jerre L. Stead, 68, was elected Chief Executive Officer of IHS in September 2006 and has served as Chairman of our Board since December 1, 2000. From August 1996 until June 2000, Mr. Stead served as Chairman of the board of directors and Chief Executive Officer of Ingram Micro Inc. Prior to that, he served as Chief Executive Officer and Chairman of the board of directors at Legent Corporation, from January 1995 to August 1995. From May 1993 to December 1994, he was Executive Vice President of AT&T and Chairman and Chief Executive Officer of AT&T Corp. Global Information Solutions (NCR Corporation). From September 1991 to April 1993, he was President and Chief Executive Officer of AT&T Corp. Global Business Communication Systems (Avaya Corporation). Mr. Stead also serves on the board of directors of Brightpoint, Inc, Mindspeed Technologies, Inc, and Conexant, Inc.; however, he will be resigning from the board of directors of Conexant on the earlier of the closing of the acquisition of Conexant or June 30, 2011. Mr. Stead has been involved in the leadership of IHS for more than 10 years and was previously the Chief Executive Officer of six different public companies. As Chairman and Chief Executive Officer, Mr. Stead brings to the Board of Directors his thorough knowledge of IHS’ business, strategy, people, operations, competition, and financial position. Mr. Stead provides recognized executive leadership and vision. In addition, he brings with him a global network of customer, industry, and government relationships. 25 Organization of the Board of Directors The Board held eight meetings during the fiscal year ended November 30, 2010. Each director attended at least 75 percent of the total regularly scheduled and special meetings of the Board and the committees on which they served. As stated in our Governance Guidelines, our board expects each director to attend our Annual Meeting of Shareholders, although attendance is not required. At the prior year’s annual meeting, eight of our directors were in attendance. Our Board has established three standing committees: the Audit Committee, the Human Resources Committee, and the Nominating and Corporate Governance Committee. We believe that all members of the Audit, Human Resources, and Nominating and Corporate Governance Committees meet the independence standards of the New York Stock Exchange and SEC rules and regulations. The Board has approved a charter for each of these committees, each of which can be found on our website at www.ihs.com. Independent and Non-Management Directors We believe that all of our directors other than Messrs. Stead and Grolman are “independent directors,” based on the independence standards described above. All of our directors other than Mr. Stead are non-management directors. In accordance with the IHS Corporate Governance Guidelines, the independent directors designated C. Michael Armstrong as lead independent director. The lead independent director chairs executive sessions of the independent directors. During our 2010 fiscal year, the independent directors of the Board met four times without the presence of management. Code of Conduct We have adopted a Code of Business Conduct and Ethics as our “code of ethics” as defined by regulations promulgated under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. Our Code of Business Conduct and Ethics also meets the New York Stock Exchange requirements for a “code of conduct.” Our Code of Business Conduct and Ethics applies to our directors as well as all of our principal executive officers, our financial and accounting officers, and all other employees of IHS. Our Code of Business Conduct and Ethics, as well as our Governance Guidelines, are available on our website at www.ihs.com. If we approve any substantive amendment to our Governance Guidelines or our Code of Conduct, or if we grant any waiver of the Code of Conduct to the Chief Executive Officer, the Chief Financial Officer, or the Chief Accounting Officer, we intend to post an update on the Investor Relations page of the Company’s website (www.ihs.com) within five business days and keep the update on the site for at least one year. 26 Communications with the Board The Board has a process for shareholders or any interested party to send communications to the Board, including any Committee of the Board, any individual director, or our non-management directors. If you wish to communicate with the Board as a whole, with any Committee, with any one or more individual directors, or with our non-management directors, you may send your written communication to: Stephen Green General Counsel and Corporate Secretary IHS Inc. 15 Inverness Way East Englewood, Colorado 80112 Communications with Non-Management Directors Interested parties wishing to reach our independent directors or non-management directors may address the communication to our lead independent director, Mr. Armstrong, on behalf of the non-management directors. Address such communications as follows: C. Michael Armstrong Lead Independent Director IHS Inc. 15 Inverness Way East Englewood, Colorado 80112 Depending on how the communication is addressed, either Mr. Armstrong or Mr. Green will review any communication received and will forward the communication to the appropriate director or directors based on how the communication is addressed and the subject matter. Composition of Board Committees The Board has three standing committees, with duties, current membership, and number of meetings for each as shown below. Name C. Michael Armstrong . . . . . . . . . . . . . . . . . . . . . . . Ruann F. Ernst . . . . . . . . . . . . . . . . . . . . . . . . . . . . Christoph v. Grolman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Brian H. Hall Roger Holtback . . . . . . . . . . . . . . . . . . . . . . . . . . . . Balakrishnan S. Iyer . . . . . . . . . . . . . . . . . . . . . . . . Michael Klein . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Richard W. Roedel 2010 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . Audit ✓ Chair ✓ 10 Human Resources ✓ ✓ Chair ✓ 6 Nominating and Governance Chair ✓ ✓ 3 27 Audit Committee Members: Balakrishnan S. Iyer, Chairman Roger Holtback Richard W. Roedel The Audit Committee assists our Board in its oversight of (i) the integrity of our financial statements, (ii) our independent registered public accountant’s qualifications, independence, and performance, (iii) the performance of our internal audit function, and (iv) our compliance with legal and regulatory requirements. The Audit Committee is governed by a charter. A more detailed description of the functions of the Audit Committee can be found in the Audit Committee Charter, a copy of which may be found at the Company’s website www.ihs.com. As required by the Audit Committee Charter, all members of the Audit Committee meet the criteria for “independence” within the meaning of the standards established by the New York Stock Exchange, the Company’s Corporate Governance Guidelines, and the Audit Committee Charter. Each member of the Audit Committee is financially literate and each member has accounting or related financial management expertise as required by New York Stock Exchange listing standards. In addition, the Board has determined that each member of the Audit Committee meets the definition of “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K promulgated by the SEC. Human Resources Committee Members: Brian H. Hall, Chairman C Michael Armstrong Ruann F. Ernst Michael Klein The Human Resources Committee has been created by our Board to (i) oversee our compensation and benefits policies generally, (ii) evaluate executive officer performance and review our management succession plan, (iii) oversee and set compensation for our executive officers, and (iv) prepare the report on executive officer compensation that the SEC rules require to be included in the Company’s annual proxy statement. The Human Resources Committee is governed by a charter, a copy of which is available at the Company’s website www.ihs.com. See “Compensation Discussion and Analysis” below for a more detailed description of the functions of the Human Resources Committee. All members of the Human Resources Committee are “independent” as required by our Corporate Governance Guidelines and the Human Resources Committee Charter. Nominating and Corporate Governance Committee Members: C. Michael Armstrong, Chairman Brian H. Hall Balakrishnan S. Iyer The Nominating and Corporate Governance Committee has been created by our Board to (i) identify individuals qualified to become board members and recommend director nominees to the Board, (ii) recommend directors for appointment to committees established by the Board, (iii) make 28 recommendations to the Board as to determinations of director independence, (iv) oversee the evaluation of the Board, (v) make recommendations to the Board as to compensation for our directors, and (vi) develop and recommend to the Board our corporate governance guidelines and code of business conduct and ethics. The Nominating and Corporate Governance Committee is governed by a charter. A more detailed description of the functions of the Nominating and Corporate Governance Committee can be found under “Director Nominations” in this Proxy Statement, and in the Nominating and Corporate Governance Committee Charter, a copy of which can be found at the Company’s website www.ihs.com. All members of the Nominating and Corporate Governance Committee are “independent” as required by our Corporate Governance Guidelines and the Nominating and Corporate Governance Committee Charter. Director Nominations Our Board nominates directors to be elected at each Annual Meeting of Shareholders and elects new directors to fill vacancies when they arise. The Nominating and Corporate Governance Committee has the responsibility to identify, evaluate, recruit, and recommend qualified candidates to the Board for nomination or election. In addition to considering an appropriate balance of knowledge, experience and capability, the Board has as an objective that its membership be composed of experienced and dedicated individuals with diversity of backgrounds, perspectives, and skills. The Nominating and Corporate Governance Committee will select candidates for director based on the candidate’s character, judgment, diversity of experience, business acumen, and ability to act on behalf of all shareholders (without regard to whether the candidate has been nominated by a shareholder). The Nominating and Corporate Governance Committee believes that nominees for director should have experience, such as experience in management or accounting and finance, or industry and technology knowledge, that may be useful to IHS and the Board, high personal and professional ethics, and the willingness and ability to devote sufficient time to effectively carry out his or her duties as a director. The Nominating and Corporate Governance Committee believes it appropriate for at least one, and, preferably, multiple, members of the Board to meet the criteria established by the SEC for an “audit committee financial expert,” and for a majority of the members of the Board to meet the definition of “independent director” under the rules of the New York Stock Exchange. The Nominating and Corporate Governance Committee also believes it appropriate for certain key members of our management to participate as members of the Board. Prior to each Annual Meeting of Shareholders, the Nominating and Corporate Governance Committee identifies nominees first by evaluating the current directors whose term will expire at the Annual Meeting and who are willing to continue in service. These candidates are evaluated based on the criteria described above, including as demonstrated by the candidate’s prior service as a director, and the needs of the Board with respect to the particular talents and experience of its directors. In the event that a director does not wish to continue in service, the Nominating and Corporate Governance Committee determines not to re-nominate the director, or a vacancy is created on the Board as a result of a resignation, an increase in the size of the Board or other event, the Nominating and Corporate Governance Committee will consider various candidates for membership, including those suggested by the Nominating and Corporate Governance Committee members, by other Board members, by any executive search firm engaged by the Nominating and Corporate Governance Committee, or by any nomination properly submitted by a shareholder pursuant to the procedures for shareholder 29 nominations for directors provided in “Shareholder Proposals for the 2012 Annual Meeting” in this Proxy Statement. As a matter of policy, candidates recommended by shareholders are evaluated on the same basis as candidates recommended by the Board members, executive search firms, or other sources. Director Stock Ownership Guidelines We believe that our nonemployee directors should have a significant equity interest in the Company. In order to promote equity ownership and further align the interests of our directors with management, a significant portion of our nonemployee directors’ overall compensation is given in equity, specifically in the form of deferred restricted stock units. These units vest in one year, but must be held in their entirety until after the director’s service to the Company ends. Additionally, nonemployee directors may elect to receive a portion of their cash compensation in the form of deferred stock units. These units must also be held until after the director’s service to the Company ends. The requirement to hold equity awards until after termination of service is applicable to all equity awards granted to nonemployee directors since January 2005. Mr. Grolman was exempt from the director stock ownership requirements during 2010 because he was prohibited by his personal employment policy from holding IHS stock. Mr. Grolman has historically not received stock awards from the Company. Due to a change in his employer’s policy, Mr. Grolman began receiving director stock awards with the fiscal year 2011 grant on December 1, 2010. Director Compensation Our nonemployee directors receive compensation for their service on our Board. The compensation is comprised of cash retainers, equity awards, and reimbursement of reasonable expenses. Board Retainer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Committee Chair Retainer —Audit Committee . . . . . . . . . . . . . . . . . . . . . . . . . . —all other Committees . . . . . . . . . . . . . . . . . . . . . . . Committee Member Retainer 2010 ($) 90,000 30,000 17,500 —Audit Committee . . . . . . . . . . . . . . . . . . . . . . . . . . —all other Committees . . . . . . . . . . . . . . . . . . . . . . . Lead Independent Director Retainer . . . . . . . . . . . . . . . . Annual Equity Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . Initial Equity Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000 10,000 30,000 150,000 150,000 All equity awards for nonemployee directors will be issued pursuant to the IHS Inc. 2004 Directors Stock Plan. The Board Retainer and certain other retainers may be converted into deferred stock units or deferred under the IHS Inc. 2004 Directors Stock Plan. We provide liability insurance for our directors and officers. By agreement between Mr. Grolman and IHS, Mr. Grolman was not compensated in cash, stock, or other remuneration for his service as a director of IHS during 2010. Due to a change in his employer’s policy, Mr. Grolman began receiving director stock awards with the fiscal year 2011 grant on December 1, 2010. 30 Director Compensation During Fiscal Year 2010 The following table sets forth information concerning the compensation of our non-employee directors during the fiscal year ended November 30, 2010. Directors did not receive any stock option awards during fiscal year 2010. Name C. Michael Armstrong . . . . . . . . Steven A. Denning(1) . . . . . . . . Ruann F. Ernst . . . . . . . . . . . . . . Christoph v. Grolman . . . . . . . . Brian Hall . . . . . . . . . . . . . . . . . . Roger Holtback . . . . . . . . . . . . . Balakrishnan S. Iyer . . . . . . . . . Michael Klein . . . . . . . . . . . . . . . . . . . . . . . . . Richard W. Roedel Fees Earned or Paid in Cash ($) 147,500 117,500(2) 100,000 — (3) 100,000 105,000(2) 130,000 100,000 105,000(2) Stock Awards ($)(4) 149,988 149,988 149,988 149,988 149,988 149,988 149,988 149,988 Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(5) 3,005 3,005 Total ($) 300,493 270,493 249,988 249,988 254,988 279,988 249,988 254,988 (1) Mr. Denning resigned from the IHS Board of Directors, effective January 28, 2011. (2) Includes the value of deferred stock units granted to each of Messrs. Denning, Holtback, and Roedel. These three directors elected to receive deferred stock units rather than the following cash retainers: Mr. Denning, $117,500; Mr. Holtback, $90,000 (who deferred his board retainer only); Mr. Roedel, $105,000. The deferred units will be paid out in shares of IHS common stock after that director’s service terminates. (3) By agreement between IHS and Mr. Grolman, Mr. Grolman was not compensated for his service as a director of IHS during 2010. (4) On each December 1, the first day of the Company’s fiscal year, non-employee directors each receive an annual award of Restricted Stock Units with a market value of $150,000, rounded down to the nearest whole share. These units vest one year from the date of grant. The valuation of the stock awards reported in this table is the grant date fair value computed in accordance with FASB ASC Topic 718 for awards granted in fiscal year 2010. Any estimated forfeitures are excluded from values reported in this table. The aggregate number of unissued stock awards held by each director on November 30, 2010, the last day of fiscal year 2010, is as follows: Name C. Michael Armstrong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Steven A. Denning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ruann F. Ernst . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Christoph v. Grolman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Brian H. Hall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Roger Holtback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Balakrishnan S. Iyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Michael Klein . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Richard W. Roedel(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Stock Awards Outstanding at Fiscal Year-End (#)(b)(c) 14,477 18,624 13,388 — 9,462 14,477 26,977(d) 6,934 14,477 (a) Mr. Roedel has gifted all of his Stock Awards to his spouse and disclaims beneficial ownership of these shares. (b) Stock Awards Outstanding at Fiscal Year-End excludes deferred stock units awarded in lieu of cash retainers as follows: Mr. Denning, 6,534 deferred units; Mr. Hall, 2,199 deferred units; Mr. Holtback, 5,986 deferred units; and Mr. Roedel, 6,307 deferred units. (c) Annual stock awards granted to directors since 2005 have a one-year vesting schedule, and payment of the shares is deferred until after the director’s service to IHS terminates. (d) Mr. Iyer’s awards include 12,500 shares of restricted stock granted in December 2004 that will vest in July 2011. (5) Prior to fiscal year 2010, Messrs. Armstrong and Denning had elected to defer certain annual retainers in cash. These deferred cash amounts earn interest at a rate of five percent each year and will be paid after the director’s termination of service. None of our non-employee directors are eligible for a pension plan or similar benefit. 31 Officers Set forth below is information concerning our executive officers as of March 7, 2011. Name Age Position Jerre L. Stead . . . . . . . . . . . Daniel Yergin . . . . . . . . . . . Scott Key . . . . . . . . . . . . . . Michael J. Sullivan . . . . . . . Jane Okun Bomba . . . . . . . 68 Chairman of the Board and Chief Executive Officer 64 Executive Vice President and Strategic Advisor 52 President and Chief Operating Officer 46 Executive Vice President and Chief Financial Officer 48 Senior Vice President and Chief Sustainability, Investor Relations, and Communications Officer David Carlson . . . . . . . . . . . Stephen Green . . . . . . . . . . Heather Matzke-Hamlin . . . Jeffrey Sisson . . . . . . . . . . . Richard G. Walker . . . . . . . 70 Senior Vice President and Chief Technology Officer 58 Senior Vice President and General Counsel 43 Senior Vice President and Chief Accounting Officer 54 Senior Vice President and Chief Human Resources Officer 47 Senior Vice President and Chief Strategy Officer Executive officers are appointed by our Board. Information about Mr. Stead is provided under “Directors” in this Proxy Statement. A brief biography for each of our other executive officers follows. Daniel Yergin was appointed Executive Vice President and Strategic Advisor for IHS in September 2006. Dr. Yergin also serves as Chairman of IHS CERA, a position he has held since 1983. Dr. Yergin founded CERA in 1982 and the business was acquired by IHS in 2004. He is a Pulitzer Prize winner, a member of the Board of the United States Energy Association, and a member of the National Petroleum Council and serves on the US Secretary of Energy Advisory Board. He chaired the US Department of Energy’s Task Force on Strategic Energy Research and Development. He is also a Trustee of the Brookings Institution and a Director of the US-Russian Business Council and the New America Foundation. Dr. Yergin received his Bachelor of Arts degree from Yale University and his Doctor of Philosophy degree from the University of Cambridge, where he was a Marshall Scholar. Scott Key has served as President and Chief Operating Officer of IHS since January 2011. He served as Senior Vice President, Global Products and Services, from January through December 2010. Key joined IHS in 2003 to lead strategy, marketing and product teams for the IHS energy business,and has led transformation and growth across IHS operations in his eight years with the company. He was involved in supporting the IHS IPO, led corporate marketing and strategic planning, and has led acquisition integration efforts, including the largest IHS acquisitions. During his tenure at IHS, Key has held leadership positions that span each of the Company’s information and insight assets in economics, energy, security, product lifecycle, and environment. Previously, he served as President and Chief Operating Officer of IHS Global Insight since September 2008. Based in London in 2007-2008, he served as President and Chief Operating Officer of Jane’s and chairman of IHS Fairplay. In addition, Key led the EMEA/APAC sales organization as IHS integrated sales team on a global basis. Based in Denver 2003-2007, he served as Senior Vice President of Corporate Strategy and Marketing, and led Energy Strategy, Products and Marketing. Prior to joining IHS in 2003, he served as a senior executive in Energy technology and services, based in Houston. Mr. Key served as deepwater development manager for Vastar Resources from 1998 to 2000 and was employed by Phillips Petroleum in a range of international and US domestic roles of increasing scope from 1987 to 1998. Mr. Key holds Bachelor of Science degrees in both physics and mathematics from the University of Washington in Seattle as well as a master’s degree in geophysics from the University of Wyoming. 32 Michael J. Sullivan served as Senior Vice President and Chief Financial Officer of IHS since October 1999 and was appointed Executive Vice President in March 2006. Prior to joining IHS, Mr. Sullivan was Director of Corporate Accounting from April 1997 to February 1998, and Director of Financial Planning and Analysis from February 1998 to October 1999, for Coors Brewing Company. Prior to joining Coors, he spent 10 years with PricewaterhouseCoopers (formerly Price Waterhouse) in audit services and the transaction support group. Mr. Sullivan holds a bachelor’s degree in business administration and accounting from the University of Iowa. Jane Okun Bomba was named Senior Vice President and Chief Sustainability, Investor Relations, and Communications Officer in March 2011. She previously served as Senior Vice President and Chief Customer Process Officer from August 2007 through March 2011 and as Senior Vice President, Investor Relations and Corporate Communications from November 2004 through August 2007. From 2002 to 2004, Ms. Okun Bomba was a partner with Genesis, Inc., a strategic marketing firm also specializing in investor relations. Prior to that, she was Vice President, Investor Relations and Corporate Communications of Velocom, Inc., from 2000 to 2001, and Executive Director, Investor Relations of Media One Group from 1998 to 2000. Prior to joining Media One, Ms. Okun Bomba headed Investor Relations at Northwest Airlines, where she also held multiple corporate finance positions. Ms. Okun Bomba holds a bachelor’s degree and a master’s degree in business administration from the University of Michigan. David Carlson was named Senior Vice President and Chief Technology Officer in October 2009. Mr. Carlson previously served as Vice President of Product Development and Delivery since joining IHS in 2007. From 2005 to 2007, he was President and Chief Executive Officer of DMC Companies, a strategic consulting firm supporting customer-focused technology. During that time, Mr. Carlson briefly left DMC to accept the role of Senior Vice President of Financial Operations and Business Process Engineering for Kintera, Inc. during 2006 and 2007. Prior to joining DMC, Mr. Carlson held a series of senior executive roles, including Senior Vice President and Chief Information Officer for Kmart and Senior Vice President and Chief Technology Officer for Ingram Micro. Mr. Carlson holds several degrees from the University of Michigan, including a doctorate in industrial and operations engineering, a master’s degree in industrial administration, and a bachelor’s degree in mathematics. Stephen Green has served as Senior Vice President and General Counsel of IHS since 2003. He was Vice President and General Counsel of IHS from 1996 to 2003 and was appointed Senior Vice President and General Counsel in December 2003. Mr. Green joined the legal department of TBG Holdings N.V. (“TBG”) in 1981. Mr. Green holds a bachelor’s degree from Yale University and a law degree from Columbia Law School. Heather Matzke-Hamlin has served as Senior Vice President and Chief Accounting Officer since February 2005. Prior to joining IHS, Ms. Matzke-Hamlin was Director of Internal Audit at Storage Technology Corporation from February 1999 to February 2005. Prior to joining StorageTek, she spent over nine years with PricewaterhouseCoopers (formerly Price Waterhouse) in audit services. Ms. Matzke-Hamlin holds a bachelor’s degree in accounting from Indiana University and is a Certified Public Accountant in the state of Colorado. Jeffrey Sisson was appointed Senior Vice President and Chief Human Resources Officer in January 2008. Previously, beginning in January 2005, he was Senior Vice President of Global Human Resources of IHS. From September 2002 to January 2005, Mr. Sisson was a Principal in Executive Partners, a private human resources consulting firm. From July 2001 to August 2002, Mr. Sisson was 33 Senior Vice President, Human Resources for EaglePicher, Inc. From March 2000 to July 2001, he was Senior Director, Human Resources for Snap-on Incorporated. From February 1998 to February 2000, he was Director, Human Resources for Whirlpool Corporation. Mr. Sisson holds a bachelor’s degree and a master’s degree from Michigan State University. Richard G. Walker was named Senior Vice President and Chief Strategy Officer in March 2011. He served previously as Senior Vice President with leadership responsibility in Strategy, Marketing, Corporate Development, and Alliances since joining IHS in December 2006. Prior to joining IHS, Mr. Walker was Chief Operating Officer at Autobytel Inc., where he had also served as Executive Vice President of Corporate Development and Strategy since January 2003. Previously, Mr. Walker served as Vice President for LoneTree Capital Management from August 2000 to December 2002. Prior to that, he was the Vice President of Corporate Development for MediaOne from April 1997 to July 2000. Prior to joining MediaOne, Mr. Walker had been with US WEST Communications since 1990, where he was Executive Director of Corporate Development and also held various leadership positions in investor relations, business development, and strategic marketing. Mr. Walker began his career in 1986 as a certified public accountant with Arthur Andersen & Co. in Atlanta, Georgia. Mr. Walker graduated magna cum laude with a bachelor of science degree in business from the University of Colorado and holds a master’s degree in business administration from the Executive Program at the University of Denver. 34 Security Ownership of Certain Beneficial Owners and Management The following table sets forth certain information as of March 7, 2011, as to shares of our Class A common stock beneficially owned by: (i) each person who is known by us to own beneficially more than five percent of our common stock, (ii) each of our executive officers listed in the Summary Compensation Table under “Executive Compensation” in this Proxy Statement, (iii) each of our directors, and (iv) all our directors and executive officers as a group. Unless otherwise stated below, the address of each beneficial owner listed on the table is “c/o IHS Inc., 15 Inverness Way East, Englewood, Colorado 80112.” The percentage of common stock beneficially owned is based on 64,838,027 shares of Class A common stock outstanding as of the Record Date, March 7, 2011. There are no shares of Class B common stock outstanding, so no votes from that class may be voted. In accordance with SEC rules, “beneficial ownership” includes voting or investment power with respect to securities. To our knowledge, except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table each have sole voting and investment power with respect to all shares of common stock beneficially owned by them. No shares of common stock held by our directors or officers have been pledged. Name of Beneficial Owner Jerre L. Stead(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Daniel Yergin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Scott Key . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Michael J. Sullivan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jeffrey R. Tarr(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. Michael Armstrong . . . . . . . . . . . . . . . . . . . . . . . . . . Steven A. Denning(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . Ruann F. Ernst . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Christoph v. Grolman . . . . . . . . . . . . . . . . . . . . . . . . . . . Brian H. Hall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Roger Holtback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Balakrishnan S. Iyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . Michael Klein . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Richard W. Roedel(5) . . . . . . . . . . . . . . . . . . . . . . . . . . All current directors and executive officers as a group (18 persons) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Urvanos Investments Limited(6) . . . . . . . . . . . . . . . . . . T. Rowe Price Associates(7) . . . . . . . . . . . . . . . . . . . . . The Woodbridge Company Limited(8) . . . . . . . . . . . . . Class A Common Stock Shares Beneficially Owned Number of Shares(1) % of Class and Total Voting Power 534,170 238,603 69,191 63,340 86,810 34,639 28,594 15,450 2,062 15,097 34,930 29,039 8,996 43,789 * * * * * * * * * * * * * * 1,292,827 14,708,859 5,636,140 4,544,409 2.0% 22.7% 8.7% 7.0% * Represents less than 1 percent. (1) Number of shares beneficially owned includes stock options that are exercisable within 60 days of the record date, restricted stock, restricted stock units and deferred stock units held by the listed executive officers (our “Named Executive Officers”), non-employee directors, and all executive officers. The number of shares beneficially owned excludes performance-based awards held by our executive officers that are payable in common stock upon the achievement of certain performance goals. 35 The stock options, restricted stock and restricted stock units included in beneficial ownership are as follows:. Name of Beneficial Owner Stead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yergin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Key . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sullivan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tarr . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Armstrong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Denning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ernst . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Grolman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Holtback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Iyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Klein . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Roedel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . All current executive officers and directors as a Options Exercisable Within 60 days of March 7, 2011 Restricted Stock Restricted Stock Units and Deferred Stock Units 75,000 12,500 5,000 — — — — — — — — — — — — — — — — — — — — — — 12,500 — — 41,667 194,800 46,000 16,000 — 16,539 — 15,450 2,062 15,097 23,968 16,539 8,996 24,289 group (18 persons) . . . . . . . . . . . . . . . . . . . . . . 109,500 12,500 476,143 The excluded performance awards are as follows: Name of Beneficial Owner Stead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yergin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Key . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sullivan . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tarr . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . All current executive officers as a group (10 persons)* . . . . . . . . . . . . . . . . . . . . . Number of Performance-Based Shares at Target Performance Level 100,000 50,000 61,000 65,000 — Fiscal Years in Which Performance Will Be Measured 2011, 2012, 2013 2011, 2012, 2013 2011, 2012, 2013 2011, 2012, 2013 2011, 2012, 2013 447,100 2011, 2012, 2013 * None of our non-employee directors hold performance-based stock awards. (2) Mr. Stead’s reported beneficial ownership includes 258,889 shares held by JMJS II LLLP, a family trust. (3) Ownership reported for Mr. Tarr, our former President and Chief Operating Officer, is as of December 31, 2010, the last day Mr. Tarr was subject to Section 16 as a reporting officer of IHS. (4) Ownership reported for Mr. Denning is as of January 28, 2011, the last day Mr. Denning was subject to Section 16 as a director of IHS. (5) Mr. Roedel’s wife is the holder of all of his reported ownership. Mr. Roedel disclaims beneficial ownership of these shares. (6) This information was obtained from American Stock Transfer & Trust Company, our transfer agent, and the security holder. Voting and investment decisions with respect to the common stock that is owned by Urvanos have historically been made by TBG Holdings N.V. (“TBG”), a Malta company, which is the indirect sole owner of the Urvanos Investments Limited (“Urvanos”). Based on information received from our shareholder, TBG is wholly owned indirectly by TB Continuity II Trust (the “Trust”), of which Georg Heinrich Thyssen-Bornemisza is the sole primary beneficiary. George Heinrich Thyssen-Bornemisza is the chairman of the board of directors of TBG. The address of Urvanos is 17 Grigoriou Xenopoulou Street, P.O. Box 54425, Limassol, Cyprus. (7) These securities are owned by various individual and institutional investors, for which T. Rowe Price Associates, Inc. (Price Associates) serves as investment adviser with power to direct investments and/or sole power to vote the securities. For purposes of the reporting requirements of the Securities Exchange Act of 1934, Price Associates is deemed to be a beneficial owner of such securities; however, Price Associates expressly disclaims that it is, in fact, the beneficial owner of such securities. This information was obtained from the Schedule 13G/A filed with the SEC by T. Rowe Price Associates, Inc. on February 10, 2011. (8) This information was obtained from American Stock Transfer & Trust Company, our transfer agent, representing shares owned as of March 7, 2011 by The Woodbridge Company Limited, 65 Queen Street West, Suite 2400, Toronto, Ontario, M5H 2M8. 36 Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than 10 percent of a registered class of our equity securities, to file reports of ownership on Forms 3, 4, and 5 with the SEC. Officers, directors, and greater than 10 percent stockholders are required to furnish us with copies of all Forms 3, 4, and 5 that they file. Based solely on our review of the copies of such forms we have received and written representations from certain reporting persons that they filed all required reports, we believe that, during the last fiscal year, all filings required under Section 16(a) applicable to the Company’s officers, directors, and 10 percent stockholders were timely, with the exception of a late Form 4 filed during fiscal year 2010 for shares withheld to cover taxes related to a vesting of shares awarded to Mr. Carlson. 37 Report of the Audit Committee The following report of the Audit Committee does not constitute “soliciting material” and shall not be deemed filed or incorporated by reference into any other filing by IHS under the Securities Act of 1933 or the Securities Exchange Act of 1934. The Audit Committee provides assistance to the Board in fulfilling its legal and fiduciary obligations in matters involving the Company’s accounting, auditing, financial reporting, internal control, and legal compliance functions by approving the services performed by the Company’s independent registered public accountants and reviewing their reports regarding the Company’s accounting practices and systems of internal accounting controls as set forth in a written charter adopted by the Board. The Company’s management is responsible for preparing the Company’s financial statements. The independent registered public accountants are responsible for auditing those financial statements. The Audit Committee is responsible for overseeing the conduct of these activities by the Company’s management and the independent registered public accountants. To fulfill that responsibility, the Audit Committee has regularly met and held discussions with management and the independent registered public accountants. Management represented to the Audit Committee that the Company’s consolidated financial statements for fiscal year 2010 were prepared in accordance with generally accepted accounting principles and the Audit Committee has reviewed and discussed the consolidated financial statements with management and the independent registered public accountants. The Audit Committee has discussed with the independent registered public accountants matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees), as amended. As part of that review, the Committee received the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and the Committee has discussed the independent registered public accounting firm’s independence from the Company and its management, including any matters in those written disclosures. Additionally, the Audit Committee considered whether the provision of non-audit services was compatible with maintaining such accountants’ independence. The Audit Committee has discussed with internal accountants and independent registered public accountants, with and without management present, its evaluations of the Company’s internal control over financial reporting, and the overall quality of the Company’s financial reporting. In reliance on the reviews and discussions with management and the independent registered public accountants referred to above, the Audit Committee approved the inclusion of the audited financial statements for fiscal year 2010 in the IHS Annual Report on Form 10-K for filing with the SEC. Respectfully submitted on March 23, 2011, by the members of the Audit Committee of the Board: Mr. Balakrishnan S. Iyer, Chairman Mr. Roger Holtback Mr. Richard W. Roedel 38 Report of the Human Resources Committee The following report of the Human Resources Committee does not constitute “soliciting material” and shall not be deemed filed or incorporated by reference into any other filing by IHS under the Securities Act of 1933 or the Securities Exchange Act of 1934. The Human Resources Committee of the Board has reviewed and discussed with Company management the Compensation Discussion and Analysis section of this Proxy Statement, as required by Item 402(b) of SEC Regulation S-K. Based on such review and discussion, the Human Resources Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement. Respectfully submitted on March 23, 2011 by the members of the Human Resources Committee of the Board: Mr. Brian H. Hall, Chairman Mr. C. Michael Armstrong Dr. Ruann F. Ernst Mr. Michael Klein 39 Compensation Discussion and Analysis Introduction The Compensation Discussion and Analysis will focus on the following: Š the objectives of our executive compensation program, including the performance it is designed to motivate and reward; Š the elements of our executive compensation program and their purposes; and Š how we make compensation decisions and determine the amount of each element of compensation, in general and in fiscal year 2010. Executive Summary This past November marked the five-year anniversary of the Company’s initial public offering. During that time, our company has been constantly evolving and improving, in every part of the organization and in every corner of the world. Despite navigating through the constant current of change, the fundamentals of our organization have remained consistent: a focus on delighting the customer in everything we do and creating value and opportunity for our shareholders and colleagues. At the time of the IPO, we designed a compensation and incentive structure that focused on our key business objectives and has been instrumental in driving performance. We believe this structure works as evidenced by our total shareholder return, as compared to our peers, and the broader indices. Company ADVISORY BOARD CO CORPORATE EXECUTIVE BRD CO DUN & BRADSTREET CORP EQUIFAX INC FACTSET RESEARCH SYSTEMS INC FAIR ISAAC CORP GARTNER INC MCGRAW-HILL COMPANIES MOODY’S CORP MSCI INC THOMSON-REUTERS CORP Annualized Total Shareholder Return* 1-Year 3-Year 5-Year 55.4% 67.0% -0.8% 16.2% 44.1% 10.0% 84.0% 12.0% 0.8% 22.5% 19.4% -9.5% -11.2% -0.9% -0.1% 20.5% -9.7% 23.7% -3.2% -8.0% 0.5% 0.5% 0.0% -13.4% 5.4% -0.7% 19.1% -11.7% 20.8% -4.6% -14.5% — 4.6% IHS INC 46.7% 9.9% 31.4% 25th Percentile Median 75th Percentile IHS Percentile Rank S&P 500 COMP-LTD DOW JONES INDUSTRIALS-30 STK NASDAQ INDEX COMPOSITE * As of December 31, 2010 11% 19% 50% 73% 15.1% 14.1% 16.9% -9% -1% 0% 82% -2.8% -1.6% 0.0% -10% 0% 5% 100% 2.3% 4.3% 3.8% 40 In order to achieve superior results, it is imperative to have a performance-based culture with compensation programs that are linked to and reward performance. We have created such a culture at IHS, and we have done so through the alignment of our objectives, measures and reward systems across all levels of the organization. Our compensation philosophy is critical to the creation of a performance-based culture; it rewards colleagues for performance, for demonstrating our values and for sharing mutual accountability for the long-term success of IHS. This compensation philosophy has been a significant contributor to our success not only in 2010, but in the five years we have been a public company. We have also built a strong alignment with stockholders though our equity program—a critical element of our performance- based culture. The average pay mix for the Chairman/CEO and other executive officers is shown below and reflects this important alignment. 2010 CEO Pay Elements 2010 Average NEO Pay Elements Base Pay 17% Bonus 17% Stock Awards 66% CEO Pay at Risk: 83% CEO Pay Directly Tied to Shareholder Value: 66% NEO Pay Directly Tied to Shareholder Value: 67% Stock Awards 67% Base Pay 18% Bonus 15% NEO Pay at Risk: 82% Our compensation programs drive the behaviors necessary to meet or exceed our corporate objectives. Such success ultimately rewards all IHS stakeholders: customers, colleagues, and you, our valued shareowners. The structure of our executive compensation programs is no different in terms of supporting our company’s overall objectives. Well-structured executive compensation arrangements require balance. This is because compensation needs must reflect many important business variables and time frames. Specifically, among the most important variables that must be managed include: Š Alignment with company strategy and performance across time, i.e., short-, intermediate-, and long-term performance; Š Design that properly encourages the necessary tradeoffs between short-term results and greater long-term value; Š Attraction and retention of key executive talent; Š Competitiveness with prevailing practices in both level and mix of pay; Š Program design and overall mix of compensation consistent with both managerial effectiveness and sound governance; Š Equitable and sensible progression of opportunities across senior positions; Š Consistent program design that can be reasonably applied to a broader cross-section of positions other than just NEOs; Š Sensible, sustainable, and proportionate sharing of company success between shareholders and employees. 41 Balancing these reinforcing (and competing) objectives is what the programs at IHS are intended to do. We believe the programs and related pay opportunities allow us to achieve these objectives in a prudent and effective way. The executive compensation structure at IHS is straightforward, competitive in the marketplace, has a strong emphasis on performance (more than many), and is one that shareholders can strongly support. Total Compensation Base Salary Annual Bonus Long-Term Incentives Retirement, Health and Welfare Benefits Adjusted EPS Performance Shares Adjusted EBITDA EBITDA Growth Strategic Goals Revenue Growth Customer Delight We have implemented this structure in a way that supports and properly balances the items outlined above. Objectives of the Executive Compensation Program The objectives of our executive compensation program are to: Š align executive compensation with key stakeholder interests; Š attract, retain and motivate highly qualified executive talent; and Š provide appropriate rewards for the achievement of business objectives and growth in stockholder value. 42 Design of the Total Compensation Program Our executive compensation program consists of several elements. The following table outlines details of each element. Component Base Salary Purpose Philosophy Statement Š Pay for expertise and experience Š Generally, targeted at the 50th percentile of peer companies Š Attract and retain qualified Š Actual salaries also based on executives individual experience, expertise, and performance Short-Term Incentives Š Pay for demonstration of our Š Opportunity generally targeted at core competencies the 50th percentile Š Motivate superior operational and financial performance Š Provide for increased opportunity when performance exceeds goals Š Provide annual recognition of Š Measures intended to foster performance customer delight, sustainable year-over year growth, and value creation Š Align performance and rewards with competitive opportunities Long-Term Incentives Š Align executives with stockholders Š Appropriate target opportunities based on a review of multiple reference points: Š Provide incentives to drive long- — Market data (50th – 75th term value creation percentiles) Š Ensure long-term retention — Individual and company Š Align with competitive practices Executive Retirement Š Contribute to a competitive total Benefits rewards package performance Š Predominant focus on long-term incentive vehicles that reward for results based on long-term financial drivers of shareholder value Š Intended to maintain a meaningful and yet forfeitable ownership stake denominated in our stock Š Programs are consistent with those of employees generally, plus restoration for retirement benefits capped by limits imposed by the Internal Revenue Code on compensation that counts as retirement-eligible 43 Component Purpose Philosophy Statement Employment Agreements Š Attract and retain critical talent, Š Benefit levels set conservatively particularly for those roles with a high demand for their expertise and services Š Institute a measure of protection by requiring non-compete and non-solicitation provisions as a condition of employment compared to peer group practices Š Protect executives in the case of job loss (except for any termination for cause) Š For change-in-control protection, help ensure that executives consider all appropriate transactions to increase stockholder value Overview of Executive Compensation Decisions During Fiscal Year 2010 The Human Resources Committee of the Board (the “Committee”) considered a variety of factors in making compensation decisions in fiscal year 2010: Š experience, responsibilities, and individual and overall company performance; Š internal equity among senior executives; Š role an executive plays in our succession planning efforts; Š competitive market data and trends; and Š alignment with three key stakeholders—stockholders, customers, and colleagues. These factors are particularly important in designing compensation arrangements to attract and motivate executives in the markets in which IHS competes. The Committee also takes into account the necessary balance between appropriately motivating our executives and ensuring that the compensation program does not encourage excessive risk-taking. We believe the balance between short- and long-term incentives supports our shareholders’ desire that we deliver results while ensuring financial soundness of our company over the long term. For fiscal year 2010, the Committee concluded that the compensation program adequately managed risk-taking incentives, including the application of both our annual and long-term incentive plans. Specifically, we continued to rely on our long-term performance measures, stock ownership guidelines, and robust internal controls over financial reporting to ensure that performance-based awards are earned on the basis of accurate financial data. Based on this analysis, the Committee concluded that our compensation programs, both executive and broad-based, provide multiple effective safeguards to protect against unnecessary risk-taking, effectively balancing risk and reward in the best interest of our shareholders. The Committee engages an outside consultant for counsel on executive compensation matters. At the beginning of the year, its outside advisor, Hewitt Associates, undertook a separation of a significant portion of its North American Executive Compensation Practice in order to respond to the need for greater independence in its executive compensation services. This separation resulted in the creation of a new, stand-alone, independent consultancy, Meridian Compensation Partners, LLC. Accordingly, the Committee’s advisor is now Meridian. Meridian only engages in executive compensation and related governance matters and therefore does not perform other unrelated services. 44 The Committee periodically reviews benchmarking data provided by its external consultant. The advisor provides market references for base salary, short-term incentives, and long-term incentives. Given the volatility in the market, the Committee also reviews overall trend data as it relates to long- term incentives. The peer group in fiscal year 2010 was based on companies that have similar business operations to IHS and are generally considered comparable companies with respect to business results. Our peer group for compensation benchmarking consists of the following companies: IHS Peer Group for Compensation Benchmarking Advisory Board Company The Corporate Executive Board Company Fair Isaac Corporation The Dun & Bradstreet Corporation Equifax Inc. Gartner, Inc. McGraw-Hill Companies FactSet Research Systems Inc. Moody’s Corporation MSCI, Inc. Thomson Reuters Corporation After reviewing the benchmark data, the Committee considered the recommendations of our Chief Executive Officer (“CEO”) for each of the Named Executive Officers (“NEOs”), excluding the CEO, for base salary adjustments, target short- term incentive levels, and long-term incentive grants. In preparing recommendations and in presenting those recommendations to the Committee, the CEO will work as necessary in conjunction with the Chief Human Resources Officer to understand the relevant market comparisons, internal equity, succession planning and other relevant individual executive considerations. In general, the CEO’s pay recommendations considered the following: Š performance versus stated individual and Company business objectives; Š the critical nature of each executive officer to the Company’s future success; Š market data and the need to retain critical leadership talent. For the CEO’s compensation, the Committee discussed his compensation in executive session without the CEO present. In 2010, the Committee considered the following factors in setting the compensation for the CEO: strong company performance, particularly in light of economic conditions; Mr. Stead’s experience level, leadership, and individual performance for the year; and Mr. Stead’s results in building teamwork and collaboration across our global organization as we continue to focus on delighting our customers. The Committee and Mr. Stead have agreed to put more emphasis on pay at risk in his compensation than is given in our stated philosophy. During fiscal year 2010, the Committee also reviewed tally sheets to ensure that it had a complete understanding of the value of all compensation being delivered currently, as well as potential value in the future. In addition, the Committee reviews at each meeting a summary of the equity position for each executive for those awards that have vested and those that will vest in the future. These analyses were used to help the Committee ensure that: Š the executive team has a significant forfeitable equity stake; and Š the amount earned by executives is appropriate at various performance levels. The Committee believes that the compensation program design is appropriate based on internal and external benchmarks. Most importantly, the Committee believes that the compensation program appropriately rewards stockholder value creation. 45 Elements of Compensation Base Salary Despite our company’s strong performance in 2010, a decision was made to forgo general salary increases for all of our executive officers with the exception of two special circumstances. This decision was made in light of the continued global economic conditions and as a matter of prudence for the company. In general, the CEO is below the 50th percentile market data and the other executive officers are at or below that level. Š Mr. Key’s salary was increased 5.9 percent to $450,000 to reflect his promotion and leadership for both the Insight and Information businesses. Š Dr. Yergin’s salary was increased to $600,000 as a result of his new contract and given the fact that he will no longer receive company provided financial counseling and supplemental life and disability insurances. The company has elected to no longer pay for these benefits which have never been provided to other named executive officers. During 2010, Mr. Stead chose to cease any further accruals in the Company’s Supplemental Retirement Plan. As a result, his payments under this plan commenced January 1, 2010 and equal $214,572 annually. Due to these payments, Mr. Stead chose to reduce his salary by an equal amount. As a result, his new salary was $535,428 effective January 1, 2010. Short-Term Incentives Our short-term incentive program is intended to motivate superior operational and financial performance, provide annual recognition of performance, and align performance with the business strategy and objectives. Target incentive opportunities are intended to be competitive with market practice. However, to emphasize pay for performance, payouts are a function of performance and not a result of market benchmarking of the payouts of the peer group. Each level within IHS has a target annual opportunity as a percentage of base salary. The target opportunities for each level are generally based on 50th percentile market data from our benchmarking analysis, as well as considerations for internal equity. Targets for the NEOs are as follows: Named Executive Officer Stead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yergin . . . . . . . . . . . . . . . . . . . . . . . . . . . . Key . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sullivan . . . . . . . . . . . . . . . . . . . . . . . . . . . Tarr(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2010 Short-Term Incentive Target as Percentage of Salary 100% 100% 75% 75% 75% (1) Mr. Tarr resigned as an executive officer of the Company effective December 31, 2010. 46 In order to achieve the objectives of the compensation program, performance against the metrics in the table below are measured to determine actual amounts earned from the bonus. The Committee believes that these metrics represent key operational and financial criteria for IHS that drive long-term stockholder value. The weightings between financial performance and strategic/individual goals are consistent across the organization. Metric Weighting Payout Level 2010 Goal Percentage of Target Earned(1) Corporate Adjusted Earnings per Share (EPS)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 30% Threshold Corporate Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) Margin(2) . . . . . . Target Maximum 35% Threshold Target Maximum Strategic/ Individual Goals . . . . . . . . . . . . . 25% Threshold Target Maximum Customer Delight . . . . . . . . . . . . . . . . . . . . . 10% Threshold Target Maximum $2.75 $2.93 $3.08 29% 30% 31% Based on CEO and/or Committee Assessment 60% 62% 64% 30% 100% 150% 30% 100% 150% 50% 100% 150% 30% 100% 150% (1) Percentage of target earned is interpolated between these points. No amount is paid below the level identified as “Threshold.” (2) Adjusted measures exclude extraordinary items, pension income or expense, and expense related to restricted share grants. The “Strategic/Individual Goals” portion was primarily tied to an assessment of each NEO’s performance in terms of our four goals as follows: Š improving on customer satisfaction (“Customer Delight”); Š fostering a culture that enables colleague success; Š delivering profitable top and bottom-line growth; and Š shareowner success relative to peer group. In addition to earned awards that are possible under the plan as described above, we have a special achievement award. Specifically, the special achievement award is tied to organic revenue growth for all employees eligible for the annual incentive plan, including the NEOs. For every one percent of corporate organic revenue growth above 9.5 percent annual growth in 2010, all plan participants would receive an additional award equal to five percent of the calculated bonus amount. Awards are calculated on a pro-rata basis. The full-year organic growth target under this special achievement plan was not met in 2010 and no payment occurred under this award. For fiscal year 2010, the results for the NEO short-term incentives were: Metric Actual Payout % Corporate Adjusted EPS . . . . . . . . . . . . . . . . . Corporate Adjusted EBITDA Margin % . . . . . Overall Customer Delight . . . . . . . . . . . . . . . . Strategic/Individual Performance . . . . . . . . . . 110% 112% 65% Determined by the Committee 47 The final payout is as follows: Named Executive Officer Target Bonus Opportunity Final Payout Stead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yergin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Key . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sullivan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tarr(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $750,000 $600,000 $337,500 $337,500 $382,500 $871,500 $630,000 $385,000 $365,000 $420,000 (1) Mr. Tarr resigned as an executive officer of the Company effective December 31, 2010. Long-Term Incentives Our long-term incentive awards are intended to align executives with stockholders, drive long-term value in the organization, provide for significant long-term retention, and match competitive compensation practices. Awards were granted in February 2010 after approval in the December 2009 Committee meeting. Additional grants were also awarded in August 2010. Performance Share Units Performance-based restricted stock units (“PSUs”) strongly align executives both to our financial performance and our stock price. PSUs granted in fiscal year 2010 to each of our NEOs will be earned at the end of fiscal year 2012 if specified performance goals are met. The Committee feels that these goals are key drivers of long-term stockholder value. The awards are denominated and paid in shares of IHS stock so that executives are directly aligned with stockholders during the performance period. The table below applies to all of our NEOs, except for Mr. Stead. Metric 2011 Corporate Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . 2011 Corporate Adjusted EBITDA(1) . . . . . . . . . . . . . . . . . . Weighting Payout Level Percentage of Target Shares Earned(2) 50% 50% Threshold Target Maximum Threshold Target Maximum 50% 100% 175% 50% 100% 175% (1) Adjusted measures exclude extraordinary items, pension income or expense, and expense related to restricted share grants. (2) If threshold levels are not met, 0 percent of target is earned for that measure. 48 The Committee sets what it believes to be stretch performance goals for revenue and adjusted EBITDA. To achieve 100 percent of target payout, the Company must grow at a rate in excess of historical industry trends. At the beginning of 2010, when our metrics were put in place for the 2010— 2012 long-term performance cycle, the global economic crisis continued to impact many industries in a negative manner. For this reason, the targets which were approved reflect strong year-over-year growth versus broader historical market growth trends and were generally established to motivate strong year-over-year performance during this period of economic uncertainty. Named Executive Officer Performance Share Units at Target Performance Yergin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Key . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sullivan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tarr(1) 15,000 18,000 18,000 19,000 (1) Mr. Tarr resigned as an executive officer of the Company effective December 31, 2010. For 2010, Mr. Stead was granted time-based shares. These shares were to provide recognition for the Company’s outstanding performance during very difficult global economic conditions. These time- based grants are also critical in retaining Mr. Stead over the next two to three years. Mr. Stead continues to participate in our PSU program through awards granted prior to 2010 that cover company performance through 2011. In February 2011, Mr. Stead received a grant of 50,000 PSUs, the vesting of which half is tied to company performance for fiscal year 2012 and half is tied to performance for fiscal year 2013. A market range of shares between the 50th and 75th percentile was utilized for the NEOs. Within this market range, each individual was granted a differentiated award based on the Committee’s evaluation of performance, potential and an analysis of outstanding unvested equity. These awards were approved at the December 2009 Committee meeting and were granted in February 2010 based on our annual compensation cycle. The timing of grants for the NEOs is consistent with all other IHS employees. Special Grants of Time-Based Awards During 2010, two separate time-based grants were awarded to our executive officers, including Mr. Stead as described above. The first grant occurred in February along with our normal grant cycle and an additional grant was made in August 2010. While our program continues to be focused on PSUs and a strong link to shareholder value creation, the Committee believed it was important to make these time-based grants in 2010 for the following reasons: Š Despite the Company’s outstanding performance in 2010, the PSUs granted in 2008 for the performance period 2008-2010 vested below target levels due to the fact that performance metrics were set well in advance of the global economic downturn which began in late 2008. Recognition of the value created since the IPO and of our ability to continue to create significant value for shareholders was very important to the Committee. Š The Committee has a strong desire to retain the current executive team which has been critical to the Company’s ongoing success since our initial public offering in 2005. 49 Š Our current team of executives is critical to the Company’s ongoing succession planning which continued to evolve during 2010 as we further assessed our executive talent. The Committee believes it is in the best interest of shareholders to retain and motivate the executive team during the unprecedented global recession. Effective as of July 2, 2010, the Committee approved an employment agreement with Dr. Yergin, replacing Dr. Yergin’s prior employment agreement dated September 1, 2004. The Committee entered into this agreement because of the unique value Dr. Yergin brings to IHS. Dr. Yergin is an internationally respected expert on energy policy, international politics and economics. He is a Pulitzer Prize winning author, a member of the Board of the United States Energy Association, and a member of the National Petroleum Council (see “Officers”). His skills and expertise cannot be found elsewhere. Among other provisions, the agreement provided for a one-time award of 175,000 restricted stock units (“RSUs”) with an eight-year time-based vesting schedule and eligibility for an annual grant of 20,000 PSUs. (See “Executive Employment Agreements.”) The time-based grant will provide for the retention of Dr. Yergin through retirement. Stock Ownership Guidelines The Committee believes that senior management should have a significant equity interest in the Company. In order to promote equity ownership and further align the interests of management with our stockholders, the Committee has adopted share retention and ownership guidelines for senior management. Our executive officers must retain 50 percent of the net after-tax shares of all non-option awards that were granted after the individual was named an executive officer of the Company. These shares must be held until the executive officer terminates employment with IHS. The Committee reviews share ownership levels of those persons subject to these guidelines in their annual review of tally sheets. All NEOs are in compliance with these guidelines. Retirement Benefits and Perquisites We maintain qualified defined benefit and defined contribution plans with an employer match available to all employees, including the NEOs. The Company has an unfunded nonqualified defined benefit plan that restores benefits that are not able to be provided under the qualified defined benefit plan due to limits imposed by the Internal Revenue Code. The NEOs are eligible to participate in this plan. We do not provide any other type of nonqualified retirement plan for our NEOs. We also provide our NEOs with life and medical insurance, pension, and other benefits generally available to all employees. Overall, the Committee believes that the Company provides only de minimis perquisites to our senior executives. Four of the five NEOs received no perquisites. Dr. Yergin’s perquisites were provided pursuant to his employment agreement and represent historical services he received prior to our purchase of CERA in 2004. These perquisites are no longer provided under his new agreement that went into effect in July 2010. 50 Employment Contracts, Termination of Employment Arrangements, and Change in Control Arrangements We have entered into employment agreements with each of our NEOs, except for the CEO who does not have an employment agreement. These employment agreements set forth the terms of employment for these NEOs. They establish what is expected of the NEO, compensation elements for which they are eligible, and benefits due to them, if any, upon termination of employment. The particular events chosen to trigger benefits upon employment termination are based on common practices within our peer group for executive severance protections. Severance protection particularly related to potential change in control (CIC) serves the interest of shareholders. Specifically, by providing severance and other protections related to a CIC enables the following: Š Neutrality with respect to a potential CIC that allows an executive to focus on shareholder interest and not future employment; Š Retention of executives involved in the negotiation, consummation, and/or implementation of a CIC; Š Attracting executives from other industries and geographical regions; Š Competitive employment arrangements; and Š Bridge to future employment opportunities. In a CIC scenario, a double trigger (ownership change and termination of employment) is required before any benefits under the arrangement are due to the NEO, other than the acceleration of vesting of stock awards. The termination benefits are intended to be less generous than competitive compensation practices, but are meaningful and designed to protect stockholder value. In October 2010, the Company entered into an agreement with Mr. Tarr related to Mr. Tarr’s conclusion of service as the Company’s President and Chief Operating Officer. The Committee approved this agreement in recognition of the years of exemplary service Mr. Tarr provided to the Company, and his contribution to our success since the IPO. The terms of the agreement provided for payment of Mr. Tarr’s cash bonus for fiscal year 2010 and acceleration of the vesting of 62,500 shares under pre-existing time- and performance-based equity awards. In the agreement, Mr. Tarr released the company from all claims on customary terms and conditions. Impact of Accounting and Tax Treatment The Committee considers the anticipated accounting and tax treatment to IHS and to the executive officers in its decision-making process. From an accounting perspective, the Committee wishes to ensure that there are no significant negative accounting implications due to the design of the compensation program. The short-term and long-term incentive plans are generally designed to meet the requirements of Section 162(m) of the Internal Revenue Code. However, the Committee may in the future take actions that it determines are necessary or appropriate to further the best interests of stockholders or to achieve our compensation objectives, but that could cause us to lose all or part of the deduction under Section 162(m) of the Internal Revenue Code. Our compensation program is also designed with Section 409A of the Internal Revenue Code in mind, so as to avoid additional taxes for our executive officers. 51 2010 Summary Compensation Table The following summary compensation table sets forth information concerning aggregate compensation earned by or paid to (i) our Chief Executive Officer, (ii) our Chief Financial Officer, and (iii) our three other most highly compensated executive officers who served in such capacities as of November 30, 2010. As noted above, we refer to these individuals as our “named executive officers” (“NEOs”). Summary Compensation Table Name and Principal Position Year Stock Awards ($)(1) Non-Equity Incentive Plan Compensation ($)(2) Salary ($) Jerre L. Stead(5) Chairman and Chief Executive Officer . . . . . . . . . . . 2010 551,934 2,894,250 2009 750,000 4,431,000 2008 750,000 871,500 882,750 — 1,028,344 Daniel Yergin . . . . . . . . . . . . . . 2010 553,231 11,417,368 664,650 803,270 Executive Vice President and Advisor 2009 511,538 2008 500,000 Scott Key . . . . . . . . . . . . . . . . . 2010 445,865 2,107,230 810,600 2009 408,173 President and Chief Operating Officer(6) Michael J. Sullivan . . . . . . . . . . 2010 450,000 2,043,570 2009 437,308 886,200 2008 416,231 1,050,430 Executive Vice President and Chief Financial Officer 630,000 750,000 663,000 385,000 420,000 365,000 420,000 374,317 Jeffrey R. Tarr(7) . . . . . . . . . . . 2010 510,000 3,294,470 2009 497,308 1,019,130 2008 480,000 1,235,800 Former President and Chief Operating Officer 420,000 470,000 427,791 Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(3) 93,715 484,322 319,262 89,552 83,283 61,787 42,138 41,587 38,245 70,088 7,633 43,086 55,325 13,916 All Other Compensation ($)(4) Total ($) 984 1,200 2,040 17,300 76,231 418,162 11,828 188,384 11,835 11,817 11,635 11,943 11,925 11,819 4,412,383 6,549,272 2,099,646 12,707,451 2,085,702 2,446,219 2,992,061 1,868,744 2,908,650 1,825,413 1,860,246 4,279,499 2,053,688 2,169,326 (1) Reflects the grant–date fair value of time-based RSUs and performance-based restricted stock units PSUs. The value of these awards is calculated in accordance with Financial Accounting Standards Board Statement of Financial Accounting Standards ASC Topic 718. Any estimated forfeitures are excluded from values reported in this table. For a discussion of the assumptions made in valuing these awards and a description of how we factor forfeitures into our overall equity compensation expense, refer to Note 13, “Stock-Based Compensation,” to our financial statements contained in our annual reports on Form 10-K for the fiscal years ended November 30, 2008, 2009, and 2010. (2) Represents performance-based cash payments paid on February 4, 2011 that were earned in fiscal year 2010 under our 2010 annual incentive plan. (See “Compensation Discussion and Analysis—Elements of Compensation—Short-Term Incentives.”) (3) Amounts represent the aggregate increase in actuarial value to the NEO of pension benefits accrued during 2010 based on the November 30th measurement date used for financial statement reporting purposes. Assumptions used to calculate the change in pension value are discussed in Note 14, “Employee Retirement Plans,” to our financial statements contained in our annual report on Form 10-K for the fiscal year ended November 30, 2010. (4) None of the NEOs had perquisites that had a value in excess of $10,000. The table below provides a breakdown of other annual compensation in 2010 for each of our NEOs. All Other Compensation 401(k) Company Matching Contributions ($) Dollar Value of Life Insurance Premiums ($) Supplemental Life and Disability Insurance Coverage ($) — 9,925 11,025 11,025 11,025 984 996 803 810 918 — 6,379 — — — Total ($) 984 17,300 11,828 11,835 11,943 Name Stead . . . . . . . . . . . Yergin . . . . . . . . . . . Key . . . . . . . . . . . . . Sullivan . . . . . . . . . . Tarr . . . . . . . . . . . . . 52 (5) During 2010, Mr. Stead elected to cease his nonqualified retirement accruals in the Company’s Supplemental Retirement Plan. He began receiving payments under this plan beginning in January 2010. Due to these payments, Mr. Stead chose to reduce his salary by the amount that he was receiving through the retirement plan. (6) As of November 30, 2010, Mr Key was our Senior Vice President of Global Products and Services; effective January 1, 2011, he became our President and Chief Operating Officer. (7) Mr. Tarr resigned from IHS effective December 31, 2010. 2010 Grants of Plan-Based Awards During Fiscal Year The following table provides information regarding grants of plan-based awards to each of our named executive officers during fiscal year 2010. During fiscal year 2010, none of the NEOs received any stock options. Name Stead . . . . . . . . . . Yergin . . . . . . . . . Key . . . . . . . . . . . Sullivan . . . . . . . . Grant Date Date Award Approved 2/1/2010 12/16/2009 8/6/2010 7/21/2010 2/1/2010 12/16/2009 7/2/2010 3/9/2010 8/6/2010 7/21/2010 2/1/2010 12/16/2009 8/6/2010 7/21/2010 2/1/2010 12/16/2009 8/6/2010 7/21/2010 Grants of Plan-Based Awards Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) Estimated Future Payouts Under Equity Incentive Plan Awards(2) Threshold (#) Target (#) Maximum (#) Threshold (#) Target (#) Maximum (#) 262,500 750,000 1,237,500 210,000 600,000 990,000 7,500 15,000 26,250 118,125 337,500 556,875 118,125 337,500 556,875 9,000 18,000 31,500 9,000 18,000 31,500 9,500 19,000 33,250 All Other Stock Awards; Number of Shares of Stock or Units (3) Grant Date Fair Value of Stock and Option Awards ($)(4) 25,000 25,000 1,302,750 1,591,500 175,000 7,300 781,650 10,171,000 464,718 9,000 11,000 9,000 10,000 9,500 11,000 1,406,970 700,260 1,406,970 636,600 1,485,135(5) 700,260 (6) 1,109,075(6) Tarr . . . . . . . . . . . 133,875 382,500 631,125 2/1/2010 12/16/2009 8/6/2010 7/21/2010 10/29/2010 10/28/2010 (1) The amounts in these columns reflect ranges of possible payouts under our 2010 annual incentive plan. Under this plan, threshold performance must be met in order for there to be any payout. We made various assumptions to determine the estimated payouts as shown in the table above, including: • • • Threshold amounts assume financial performance payout at 30 percent and individual performance payout at 50 percent. Target amounts assume financial and individual performance payout at 100 percent. Stretch, or maximum, amounts assume financial and individual performance payout at 150 percent. Additionally, we assumed payout at 10 percent of the core calculated for the organic revenue special award achievement. (2) Represents shares of our common stock underlying PSUs granted to our NEOs under our Amended and Restated 2004 Long-Term Incentive Plan (the “Plan”). The actual payout of shares under the PSU grants will be determined in the first quarter of fiscal year 2013 based on performance achieved in fiscal year 2012. (See “Compensation Disclosure and Analysis—Elements of Compensation—Long-Term Incentives”). (3) Represents shares of our common stock underlying RSUs granted to our NEOs under the Plan. These awards vest on the dates shown in the table below, “Outstanding Equity Awards at 2010 Fiscal Year End.” (4) The grant date fair value of PSUs is calculated by multiplying the fair market value of a share of our common stock, as determined under the Plan, on the date of grant by the target number of shares granted. Under the Plan, the fair market value for a share of our common stock is the average of the high and low trading prices on the date of grant. 53 (5) Under the terms of an agreement between the Company and Mr. Tarr related to Mr. Tarr’s resignation as an executive officer of the Company, the 19,000 PSUs granted on February 1, 2010 were forfeited on December 31, 2010. (6) On October 29, 2010, per the terms of an agreement between the Company and Mr. Tarr related to Mr. Tarr’s resignation as an executive officer of the Company, the vesting terms were modified for 62,500 RSUs and PSUs previously granted to Mr. Tarr. These shares were paid to Mr. Tarr on December 31, 2010. The grant date value reported in the table is equal to the incremental fair value of these awards, computed as of the modification date. Narrative Disclosure to 2010 Summary Compensation Table and 2010 Grants of Plan-Based Awards Table In fiscal year 2010, all of our non-equity and equity incentive compensation awards were made under and subject to the terms of our Amended and Restated 2004 Long-Term Incentive Plan (the “Plan”). In 2010, we granted PSUs and RSUs to each of the NEOs, except for Mr. Stead, who received RSUs only in 2010. (See “Compensation Discussion and Analysis—Elements of Compensation— Performance Share Units”) The PSUs will be earned after the end of fiscal year 2012 if specified performance goals are met. The awards are paid in shares of common stock, and have dividend equivalent rights that are payable only if the underlying awards vest. The RSUs will vest over a period of two to three years, except for an award of RSUs to Dr. Yergin that will vest over a period of eight years. In October 2010, the Company and Mr. Tarr entered into an agreement related to Mr. Tarr’s resignation as an executive officer of IHS. In this agreement, the vesting terms were modified for 62,500 PSUs and RSUs so that Mr. Tarr would receive the shares underlying these awards on the earlier of his final day of service or December 31, 2010. Outstanding Equity Awards at 2010 Fiscal Year-End The following table sets forth information concerning the current holdings of stock options, RSUs, and PSUs by our named executive officers as of November 30, 2010, the last day of our fiscal year 2010. The market value of the shares set forth under the “Stock Awards” column was determined by multiplying the number of unvested or unearned shares by $72.32, the closing price of our common stock on November 30, 2010, the last day of our fiscal year. None of the NEOs had unexercisable options at the end of the fiscal year. Outstanding Equity Awards at Fiscal Year-End Option Awards Stock Awards Number of Securities Underlying Unexercised Options (#) Exercisable Option Exercise Price ($)(1) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#) Market Value of Shares or Units of Stock That Have Not Vested ($) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($) 75,000(2) 37.65 12,500(2) 37.65 5,000(2) 37.65 0 — 1/29/2015 88,500(4) 6,400,320 1/29/2015 217,310(5) 15,715,859 42,480(6) 3,072,154 1/29/2015 32,090(7) 2,320,749 — 50,000(9) 3,616,000 30,000(10) 2,169,600 36,000(10) 2,603,520 38,000(10) 2,748,160 12,500(2) 37.65 30,500(3) 30.80 3/31/2011 3/31/2011 (8) (8) Name Stead . . . . . . . . . Yergin . . . . . . . . Key . . . . . . . . . . . Sullivan . . . . . . . . . . . . . . . . . Tarr 54 (1) The option price is equal to the closing price of IHS Stock on the date of grant. (2) Of the total options granted (equal to the sum of the options exercisable), one-third vested and became exercisable on each of January 29, 2008, January 29, 2009, and January 29, 2010. (3) These options vested on July 24, 2010. (4) Consists of 50,000 RSUs and 38,500 PSUs. The RSUs vest as follows: 8,333 on each of February 1, 2011 and February 1, 2012; 8,334 vest on February 1, 2012; and 12,500 on each of August 6, 2011 and August 6, 2012. The PSUs vested on January 13, 2011, based upon 2010 financial performance. (5) Consists of 207,300 RSUs and 10,010 PSUs. The RSUs vest as follows: 12,500 on each of January 15, 2011 and January 15, 2012; 3,650 on each of August 6, 2011 and August 6, 2012; and 20,000 on each July 1 of years 2011 through 2015; and 25,000 on each July 1 of years 2016 through 2018. The PSUs vested on January 13, 2011, based upon 2010 financial performance. (6) Consists of 24,000 RSUs and 18,480 PSUs. The RSUs vest as follows: 3,000 on each of February 1, 2011, February 1, 2012, and February 1, 2013; 5,500 on each of August 6, 2011 and August 6, 2012; and 4,000 on July 10, 2011. The PSUs vested on January 13, 2011 based upon 2010 financial performance. (7) Consists of 19,000 RSUs and 13,090 PSUs. The RSUs vest as follows: 3,000 on each of February 1, 2011, February 1, 2012, and February 1, 2013; and 5,000 on each of August 6, 2011 and August 6, 2012. The PSUs vested on January 13, 2011 based upon 2010 financial performance (8) Excludes 20,000 PSUs that were outstanding on November 30, 2010, but were forfeited on December 31, 2010 per the terms of an agreement related to Mr. Tarr’s resignation as an executive officer of the Company. (9) This award consists of PSUs granted in 2009 that will pay out based upon company performance in 2011. The PSUs have three key payout levels: threshold, target, and maximum. If threshold performance is not met, the award will be forfeited. The numbers of shares reported in the table above are at the target payout level. The following table describes the payout levels at threshold and maximum performance levels. (10) These awards consists of PSUs granted in 2009 and 2010 that will pay out based upon company performance in 2011 and 2012, respectively. The PSUs have three key payout levels: threshold, target, and maximum. If threshold performance is not met, the award will be forfeited. The numbers of shares reported in the table above are at the target payout level. The following table describes the payout levels at threshold and maximum performance levels. PSUs Outstanding at End of Fiscal Year 2010 Name Stead . . . . . . . . . . Key . . . . . . . . . . . . Yergin . . . . . . . . . . Sullivan . . . . . . . . . Tarr(1) Performance Year Measured 2011 2011 2012 2011 2012 2011 2012 Threshold Target Maximum Performance Number of Unearned Units That Have Not Vested (#) 25,000 9,000 9,000 7,500 7,500 10,000 9,000 Market Value of Unearned Units That Have Not Vested ($) 1,808,000 650,880 650,880 542,400 542,400 723,200 650,880 Number of Unearned Units That Have Not Vested (#) 50,000 18,000 18,000 15,000 15,000 20,000 18,000 Market Value of Unearned Units That Have Not Vested ($) 3,616,000 1,301,760 1,301,760 1,084,800 1,084,800 1,446,400 1,301,760 Number of Unearned Units That Have Not Vested (#) 87,500 31,500 31,500 26,250 26,250 35,000 31,500 Market Value of Unearned Units That Have Not Vested ($) 6,328,000 2,278,080 2,278,080 1,898,400 1,898,400 2,531,200 2,278,080 (1) Excludes 20,000 PSUs at target that were outstanding on November 30, 2010, but were forfeited on December 31, 2010 per the terms of an agreement related to Mr. Tarr’s resignation as an executive officer of the Company. Of the awards forfeited, (a) 1,000 of the shares were for the 2011 performance year and had a threshold payout of 500 shares and a maximum payout of 1,750 shares, and (b) 19,000 of the shares were for the 2012 performance year and had a threshold payout of 9,500 shares and a maximum payout of 33,250 shares. 55 Option Exercises and Stock Vested During Fiscal Year 2010 The following table sets forth information concerning the number of shares acquired and dollar amounts realized by each of our named executive officers during the fiscal year ended November 30, 2010 on the exercise of stock options and the vesting of RSUs and PSUs. Name Option Awards Number of Shares Acquired on Exercise (#) Stock Awards Value Realized on Exercise ($)(1) Number of Shares Acquired on Vesting (#) Value Realized on Vesting ($)(2) Option Exercises and Stock Vested Stead . . . . . . . . . . . . . . . . . . Yergin . . . . . . . . . . . . . . . . . . Key . . . . . . . . . . . . . . . . . . . . Sullivan . . . . . . . . . . . . . . . . . Tarr . . . . . . . . . . . . . . . . . . . . 10,000 19,000 296,617 643,327 92,667 60,442 8,108 37,067 120,933 5,121,705 3,280,545 448,129 2,048,693 7,853,967(3) (1) Value realized on option exercises is the difference between the market price of the underlying shares at exercise and the option exercise price. (2) Value realized on vesting is calculated by multiplying the number of shares vesting by the average of the high and low trading prices on the vesting date (the fair market value as authorized in the Plan). The value realized upon vesting does not necessarily reflect the actual proceeds that may have been or will in the future be received by the named executive officer upon the sale of the shares that vested. (3) The value realized on vesting for Mr. Tarr is the sum of (a) $3,357,092, which represents the value of awards vested and released during 2010 under the original terms of Mr. Tarr’s stock awards, and (b) $4,496,875, which represents the value of 62,500 RSUs and PSUs on October 29, 2010, the day the terms of these awards were modified pursuant to an agreement between Mr. Tarr and the Company related to his resignation. The terms of the 62,500 RSUs and PSUs were modified so that Mr. Tarr would receive the shares underlying these awards on the earlier of Mr. Tarr’s final service date or December 31, 2010. 56 Pension Benefits IHS sponsors a tax-qualified defined benefit pension plan (Retirement Income Plan) for all U.S. employees. The Company also sponsors a nonqualified supplemental retirement plan to provide benefits to participants that are limited by IRS Code limits that apply to tax-qualified defined benefit plans. Under the Code, the maximum permissible benefit from the qualified plans, for retirements in 2010, is $195,000, and annual compensation exceeding $245,000 in 2010 cannot be considered in computing the maximum permissible benefit under the plans. Benefits under the Supplemental Plan replace the benefits that would have been provided if the IRS Code limits were not in place. The table below sets forth the present value of accumulated benefits payable at age 65 (or later if applicable) as of November 30, 2010. Name Plan Name Jerre Stead(1) . . . . . . . . . . Qualified Daniel Yergin . . . . . . . . . . . Qualified Supplemental Supplemental Scott Key . . . . . . . . . . . . . . Qualified Supplemental Michael Sullivan . . . . . . . . . Qualified Supplemental Jeffrey Tarr(2) . . . . . . . . . . Qualified Supplemental Number of Years of Credited Service Present Value of Accumulated Benefit ($) Payments During Last Fiscal Year($) 10.0 35.0 4.6 4.6 4.6 4.6 11.1 11.1 6.0 6.0 621,332 2,714,265 153,712 159,780 82,698 44,659 135,865 67,705 84,052 79,548 — 189,813(3) — — — — — — — — (1) In 2003, Mr. Stead was granted an additional 25 years of benefit service under the supplemental retirement plan, which is $2,291,395 of the present value listed above. None of the other NEOs has received any additional years of benefit service beyond their years actually worked. (2) Mr. Tarr resigned as an executive officer of the Company effective December 31, 2010. (3) In January 2010, Mr. Stead began receiving payments under the Retirement Income Plan. The amount reported in this table is the actual amount Mr. Stead received in fiscal year 2010. The annual amount of payments Mr. Stead receives under the Retirement Income Plan equals $214,572. Accrued Benefit The accrued benefit is calculated according to the formula outlined below: A.Benefit Accrued as of April 30, 2006: (i)+(ii)+(iii)* i. 1.25 percent of highest five years’ average compensation in last 10 years as of April 30, 2006 up to covered compensation times years of benefit service (maximum 30 years), ii. 1.70 percent of highest five years’ average compensation in last 10 years as of April 30, 2006 in excess of covered compensation times years of benefit service (maximum 30 years), plus iii. 0.5 percent of highest five years’ average compensation in last 10 years as of April 30, 2006 times years of benefit service in excess of 30 years. Plus B.From May 1, 2006, 15 percent of pensionable earnings, payable at age 65 as a lump sum pension. * Note for grandfathered participants, all service is covered under portion A. In the table above, Mr. Stead is the only grandfathered NEO. 57 Vesting Participants are 100 percent vested in their benefit at the time they are credited with three years of vesting service or the date they reach age 65. Vesting may be accelerated in years in which we make a transfer of surplus plan assets to the retiree medical accounts to provide for retiree medical coverage. Participants who were eligible employees as of May 1, 2006 are fully vested. Retirement Eligibility Normal retirement age under the plan is 65, but a participant who terminates employment with at least ten years of vesting service may retire as early as age 55. Under Formula A above, participants who terminate employment after age 55 with ten years of vesting service will receive a benefit reduction equal to 0.5 percent for each month that benefit commencement precedes age 62. Participants who terminate employment before age 55 with ten years of vesting service will receive a benefit reduction equal to 0.5 percent for each month that benefit commencement precedes age 65. Formula A will be actuarially reduced for benefit commencements prior to age 55. Under Formula B, participants who terminate prior to age 65 will receive a benefit reduction equal to 4.5 percent compounded annually for each year commencement precedes age 65 58 Potential Payments upon Termination or Change in Control The Company has entered into certain agreements that provide for compensation to the NEOs in the event of certain forms of termination of employment, including a Change in Control (CIC). Each of the NEOs except for Mr. Stead has an employment agreement with the Company; all of the NEOs including Mr. Stead benefit from accelerated vesting of all or a portion of their equity awards following certain termination events, pursuant to the terms of their equity award agreements. In addition to the amounts discussed in the tables below, all of the NEOs may receive payouts from our qualified plans in the same manner that any salaried employee would (e.g., life or disability insurance payouts, pension plan payouts). The tables below provide details of the nature and amounts of compensation to each NEO, assuming a hypothetical termination on November 30, 2010, the last day of our fiscal year. The tables are based on the following four scenarios: 1. Voluntary Termination Other Than For Good Reason, or Involuntary Termination for Cause This category refers to voluntary terminations by the executive other than for Good Reason (i.e., resignations, retirements, or other terminations by mutual agreement), as well as terminations by the company for Cause (e.g., willful failure to perform material duties). In October 2010, the Company and Mr. Tarr entered into an agreement related to his resignation as an executive officer of the Company, as described below. 2. Involuntary Termination Without Cause, or Termination for Good Reason (not Related to CIC) This category refers to voluntary terminations by the executive for Good Reason or involuntary terminations by the Company without Cause. This form of termination covers events outside of a CIC context. For Messrs. Sullivan and, Key, “Good Reason” is defined as any breach by the Company of its material obligations under each executive’s employment agreement, excluding immaterial actions (or failures of action) not taken (or omitted to be taken) in bad faith and which, if capable of being remedied, are remedied by the Company within 30 days of receipt of notice. For Dr. Yergin, “Good Reason” is defined the same way, but also may be triggered if Dr. Yergin’s principal location of work is moved more than 50 miles (other than any relocation recommended or consented to by Dr. Yergin); it being understood that Dr. Yergin may be required to travel on business to other locations as may be required or desirable in connection with the performance of job duties. 3. Involuntary Termination Without Cause, or Termination for Good Reason (CIC) Within the employment agreements of Messrs. Sullivan, Key, and Yergin, and under the Company’s Long-Term Incentive (LTI) plan document, “Change in Control” is defined as follows: • The acquisition, directly or indirectly, by any person or group (within the meaning of Section 13(d)(3) of the Exchange Act) of the beneficial ownership of securities of the Company possessing more than 50 percent of the total combined voting power of all outstanding securities of the Company; 59 • • • • • A merger or consolidation in which the Company is not the surviving entity, except for a transaction in which the holders of the outstanding voting securities of the Company immediately prior to such merger or consolidation hold, in the aggregate, securities possessing more than 50 percent of the total combined voting power of all outstanding voting securities of the surviving entity immediately after such merger or consolidation; A reverse merger in which the Company is the surviving entity but in which securities possessing more than 50 percent of the total combined voting power of all outstanding voting securities of the Company are transferred to or acquired by a person or persons different from the persons holding directly or indirectly those securities immediately prior to such merger; The sale, transfer or other disposition (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company; The approval by the stockholders of a plan or proposal for the liquidation or dissolution of the Company; or As a result of, or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transactions (a “Transaction”), the persons who are members of the Board before the Transaction will cease to constitute a majority of the board of directors of the Company or any successor thereto. For Messrs. Sullivan, Key, and Yergin, “Good Reason” following a CIC is defined as follows: • • • The material diminution of position (including titles and reporting relationships), duties or responsibilities, excluding immaterial actions not taken in bad faith; The breach by the Company of any of its material obligations under the employment agreement, excluding immaterial actions (or failures of action) not taken (or omitted to be taken) in bad faith and which, if capable of being remedied, are remedied by the Company within 30 days after receipt of such notice thereof; The Company’s relocation of the executive’s principal location of work by more than 50 miles (other than any relocation recommended or consented to by the executive); it being understood that the executive may be required to travel on business to other locations as may be required or desirable in connection with the performance of job duties. For all executives, unvested equity awards (i.e., stock options, PSUs, and time-based RSUs) vest automatically in the event of a CIC. For Messrs. Sullivan, Key, and Yergin, other severance is earned if they are terminated involuntarily without Cause or voluntarily with Good Reason within 15 months following a CIC. 4. Death or Disability For all equity compensation awards, “Disability” is defined as a mental or physical illness that entitles one to receive benefits under the company’s long-term disability plan. 60 Potential Post-Termination Payments Table—Stead(1) Voluntary Termination Other Than For Good Reason, or Involuntary Termination for Cause Involuntary Termination Without Cause, or Termination for Good Reason (not Related to Change in Control) Involuntary Termination Without Cause, or Termination for Good Reason (Change in Control) Death Disability — — — — — — — — — — — — — — — Executive Benefit and Payments Upon Separation Cash Compensation: Cash Severance(1) . . . . . . Bonus Compensation(1) . . . . . . Long-Term Incentive Compensation: Stock Options(2) . . . . . . . . Performance RSUs (PSUs)(3) . . . . . . . . . . . . $6,400,320 Time-Vested RSUs(4) . . . . Benefits & Perquisites: Retirement Enhancement Welfare Benefits . . . . . . . . Continuation . . . . . . . . . . Outplacement — — — Assistance . . . . . . . . . . . Excise Tax & Gross-Up . . — — . . . . . . . . . . . . . . . . . . . . . $6,400,320 Total $6,400,320 $ 7,232,000 $ 7,232,000 $ 7,232,000 — $ 3,616,000 $ 3,616,000 $ 3,616,000 — — — — — — — — — — — — — — — — $6,400,320 $10,848,000 $10,848,000 $10,848,000 (1) Mr. Stead does not have an employment agreement; payments to him upon termination are limited to the provisions of his award agreements for equity compensation. (2) Mr. Stead has no unvested stock options outstanding. (3) The value for PSUs is based on the Company’s stock price at the end of the 2010 fiscal year. Mr. Stead’s PSU award for the 2008-2010 performance period is vested subject to certification; the value of that award is included in this table based on actual payout at 77 percent of Target (for terminations unrelated to Change in Control, death or Disability; for such terminations, the award vests at Target). Other unvested PSUs vest at Target in the event of death, Disability, or Change in Control, and based on actual results for any termination following November 30, 2010 (presented based on Target amounts in this table since the performance period is incomplete). (4) The value of time-bested RSUs is based on the company’s stock price at the end of the 2010 fiscal year. Mr. Stead’s time-vested RSU awards vest in the event of death, Disability, or Change in Control. They also vest for any other form of termination if it takes place on or after February 1, 2012, but are forfeited for a termination prior to that date (unless related to death, Disability or Change in Control). 61 Potential Post-Termination Payments Table—Yergin Voluntary Termination Other Than For Good Reason, or Involuntary Termination for Cause Involuntary Termination Without Cause, or Termination for Good Reason (not Related to Change in Control) Involuntary Termination Without Cause, or Termination for Good Reason (Change in Control)(5) Executive Benefit and Payments Upon Separation Cash Compensation: Cash Severance(1) . . . . . . Bonus Compensation(1) . . Long-Term Incentive Compensation: Stock Options(2) Performance RSUs . . . . . . . . (PSUs)(3) . . . . . . . . . . . . Time-Vested RSUs(4) . . . . Benefits & Perquisites: Retirement Enhancement . . . . . . . . . Welfare Benefits Continuation . . . . . . . . . . Outplacement Assistance . . . . . . . . . . . Excise Tax & Gross-Up (6) . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . — — — — — — — — — — $ 1,800,000 $ 2,400,000 $ 600,000 $ 600,000 $ Death Disability — 600,000 $ — 600,000 — — — — — $ 3,109,760 $ 3,109,760 $ 3,109,760 $12,656,000 $14,991,936 $ 8,663,936 $ 8,663,936 — — — — $ 12,500 $ 12,500 — — — — — — — — — — $15,068,500 $21,114,196 $12,373,696 $12,376,960 (1) Dr. Yergin receives a multiple of base salary and target bonus (1.5X for a termination without Cause or for Good Reason, 2X if termination follows a Change in Control) plus a pro-rata bonus payment at Target (following termination due to death, Disability, or Change in Control) or at actual results for the full year (following termination outside of a Change in Control – presented at Target in this table). A portion of Dr. Yergin’s cash payment is made during the year following termination. (2) Dr. Yergin has no unvested stock options outstanding. (3) The value for PSUs is based on the Company’s stock price at the end of the 2010 fiscal year assuming vesting based on Target performance. Actual awards will vest based on actual performance, once the Board has certified the results. All unvested PSUs vest at Target in the event of death, Disability, or Change in Control. (4) The value for time-vested RSUs is based on the Company’s stock price at the end of the 2010 fiscal year. One of Dr. Yergin’s unvested awards vests in full upon Change in Control, or for any termination by the Company other than for Cause, or for a termination by Dr. Yergin for Good Reason, and vests at 50 percent for a termination due to death or Disability. Other unvested awards vest in full in the event of death, Disability, or Change in Control. (5) Equity awards vest in the event of a Change in Control; other severance is earned for a qualified termination following a Change in Control. (6) Dr. Yergin has no excise tax protection in place. 62 Potential Post-Termination Payments Table—Key Voluntary Termination Other Than For Good Reason, or Involuntary Termination for Cause Involuntary Termination Without Cause, or Termination for Good Reason (not Related to Change in Control) Involuntary Termination Without Cause, or Termination for Good Reason (Change in Control)(5) Executive Benefit and Payments Upon Separation Cash Compensation: Cash Severance(1) . . . . . . . Bonus Compensation(1) . . . Long-Term Incentive Compensation: Stock Options(2) . . . . . . . . . Performance RSUs (PSUs)(3) . . . . . . . . . . . . . Time-Vested RSUs(4) . . . . . Benefits & Perquisites: Retirement Enhancement(6) . . . . . . . Welfare Benefits Continuation(7) . . . . . . . . Outplacement Assistance . . . . . . . . . . . . Excise Tax & Gross-Up(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total — — — — — — — — — $1,181,250 $ 1,575,000 $ 337,500 $ 337,500 $ 337,500 $ 337,500 Death Disability — — — — — — — $ 4,339,200 $4,339,200 $4,339,200 — $ 1,735,680 $1,735,680 $1,735,680 $ $ $ 88,748 $ 88,748 20,321 $ 27,094 12,500 $ 12,500 — $ 2,895,123 — — — — — — — — $1,640,319 $11,010,845 $6,412,380 $6,412,380 (1) Mr. Key receives a multiple of base salary and target bonus (1.5X for a termination without Cause or for Good Reason, 2X if termination follows a Change in Control) plus a pro-rata bonus payment at Target (following termination due to death, Disability, or Change in Control) or at actual results for the full year (following termination outside of a Change in Control – presented at Target in this table). (2) Mr. Key has no unvested stock options outstanding. (3) The value for PSUs is based on the company’s stock price at the end of the 2010 fiscal year assuming vesting based on Target performance. Actual awards will vest based on actual performance, once the Board has certified the results. All unvested PSUs vest at Target in the event of death, Disability, or Change in Control. (4) The value for time-vested RSUs is based on the company’s stock price at the end of the 2010 fiscal year. Mr., Key’s time-vested RSU awards vest in the event of death, Disability, or Change in Control. (5) Equity awards vest in the event of a Change in Control; other severance is earned for a qualified termination following a Change in Control. (6) Mr. Key receives a retirement enhancement in the event of termination without Cause or for Good Reason (either within a Change in Control situation, or outside of one). This is an actuarially calculated value equal to a two-year credit in the retirement programs in which the executives participate. A discussion of the assumptions made in determining this increase is included in the Annual Report on Form 10-K for the period. (7) Mr. Key receives welfare benefits continuation under certain termination scenarios, equal to 18 months (outside of a Change in Control) or 24 months (following a Change in Control). “Welfare Benefits” denotes health care, dental, and vision benefits. (8) Mr. Key is eligible to receive an additional payment sufficient to offset the levying of an excise tax on excess parachute payments (as defined by section 280(g) of the IRS Code). This payment is only triggered in a Change in Control situation. Mr. Key is in an excise tax position as of November 30, 2010. 63 Potential Post-Termination Payments Table—Sullivan Voluntary Termination Other Than For Good Reason, or Involuntary Termination for Cause Involuntary Termination Without Cause, or Termination for Good Reason (not Related to Change in Control) Involuntary Termination Without Cause, or Termination for Good Reason (Change in Control)(5) Death Disability — — — — — — — — — — $1,181,250 $1,575,000 — — $ 337,500 $ 337,500 $ 337,500 $ 337,500 — — — — — — — — — $3,977,600 $3,977,600 $3,977,600 $1,374,080 $1,374,080 $1,374,080 $ $ $ 71,609 20,321 12,500 — $ $ $ 71,609 27,094 12,500 — — — — — — — — — $1,623,180 $7,375,383 $5,689,180 $5,689,180 Executive Benefit and Payments Upon Separation Cash Compensation: Cash Severance(1) . . . . Bonus Compensation(1) . . . . Long-Term Incentive Compensation: Stock Options(2) . . . . . . Performance RSUs (PSUs)(3) . . . . . . . . . . Time-Vested RSUs(4) . . . . . . . . . . . Benefits & Perquisites: Retirement Enhancement(6) . . . . Welfare Benefits Continuation(7) . . . . . . Outplacement Assistance . . . . . . . . . Excise Tax & Gross-Up(8) . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . (1) Mr. Sullivan receives a multiple of base salary and target bonus (1.5X for a termination without Cause or for Good Reason, 2X if termination follows a Change in Control) plus a pro-rata payment at Target (following termination due to death, Disability, or Change in Control) or at actual results for the full year (following termination outside of a Change in Control – presented at Target in this table). (2) Mr. Sullivan has no unvested stock options outstanding. (3) The value for PSUs is based on the Company’s stock price at the end of the 2010 fiscal year assuming vesting based on Target performance. Actual awards will vest based on actual performance, once the Board has certified the results. All unvested PSUs vest at Target in the event of death, Disability, or Change in Control. (4) The value for time-vested RSUs is based on the Company’s stock price at the end of the 2010 fiscal year. Mr. Sullivan’s time-vested RSU awards vest in the event of death, Disability, or Change in Control. (5) Equity awards vest in the event of a Change in Control; other severance is earned for a qualified termination following a Change in Control. (6) Mr. Sullivan receives a retirement enhancement in the event of termination without Cause or for Good Reason (either within a Change in Control situation, or outside of one). This is an actuarially calculated value equal to a two-year credit in the retirement programs in which the executives participate. A discussion of the assumptions made in determining this increase is included in the Annual Report on Form 10-K for the period. (7) Mr. Sullivan receives welfare benefits continuation under certain termination scenarios, equal to 18 months (outside of a Change in Control) or 24 months (following a Change in Control). “Welfare Benefits” denotes health care, dental, and vision benefits. (8) Mr. Sullivan is eligible to receive an additional payment sufficient to offset the levying of an excise tax on excess parachute payments (as defined by section 280(g) of the IRS Code). This payment is only triggered in a Change-in-Control situation. Mr. Sullivan is not in an excise tax position as of November 30, 2010. 64 Post Termination Payments—Tarr On October 29, 2010, the Company and Mr. Tarr entered into an agreement related to Mr. Tarr’s resignation as an employee and executive officer of IHS. Under the terms of this agreement, Mr. Tarr would (a) remain employed as an executive officer of the Company through December 31, 2010, (b) receive his annual bonus payment for the fiscal year 2010; and (c) receive acceleration of 62,500 then unvested RSUs and PSUs and would forfeit another 20,000 PSUs. On December 31, 2010, the 62,500 RSUs and PSUs that were accelerated were paid to Mr. Tarr in the form of 62,500 shares of common stock. The table below reflects the bonus payment made to Mr. Tarr and the value of the accelerated RSUs and PSUs as of November 30, 2010. Had IHS terminated his employment on November 30, 2010, we would have also paid him $58,846, the amount of his December 2010 regular salary. Actual Post-Termination Payments—Tarr Cash 2010 Bonus Payout . . . . . . . . . . . . . . . . . . . . . . . $ 420,000 Long Term Incentive Compensation Time- and Performance-Based RSUs . . . . . . . . $4,520,000 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,940,000 65 Executive Employment Agreements We have entered into an employment agreement with each of our executive officers, except for the CEO who does not have an employment agreement. Each of our NEOs, other than the CEO, has an employment agreement that sets forth the terms of employment, establishes the duties and expectations of the NEO, and details the compensation elements and benefits due to them, if any, upon termination of employment. Below are descriptions of the employment agreements for our NEOs. These descriptions are intended to be summaries and do not describe all provisions of the agreements. You will find the full text of each agreement filed as exhibits to our public filings with the SEC. Each of the employment agreements described below provides for certain benefits upon termination of employment (for a summary of these benefits, see “Potential Payments upon Termination or Change in Control” above). Jeffrey R. Tarr. During fiscal year 2010, Mr. Tarr served as President and Chief Operating Officer under an employment agreement substantively similar in terms to the agreements entered into with Messrs. Sullivan and Key, respectively, as described below. On October 29, 2010, Mr. Tarr decided not to renew his employment agreement that would have otherwise been renewed under its terms on December 1, 2010. At that time, Mr. Tarr agreed to continue to serve as President and Chief Operating Officer through December 31, 2010. Effective October 29, 2010, the Company and Mr. Tarr entered into an agreement regarding the non-renewal of Mr. Tarr’s employment agreement. Terms of the agreement include the provision for his continued service through December 31, 2010 or such earlier date when his employment would have ended. Provisions of the agreement also included payment of Mr. Tarr’s cash bonus for fiscal year 2010 on the date in 2011 when bonuses for 2010 are paid, acceleration of vesting of 62,500 shares under pre-existing time- and performance-based equity awards to be delivered on his termination date, and forfeiture of 20,000 unvested shares under Mr. Tarr’s other pre-existing performance-based equity awards. In addition, Mr. Tarr agreed to release the company from all claims with other customary terms and conditions. Michael J. Sullivan and Scott Key. The employment agreements with each of Michael J. Sullivan and Scott Key include the following provisions. Term. Each agreement has an initial term of one year, and it renews automatically on each anniversary of that date for an additional one-year period, unless the executive’s employment is terminated earlier in accordance with his agreement or either party notifies the other party in writing at least 30 days prior to the applicable anniversary of the commencement date. For Mr. Sullivan, the effective date is November 1, 2004 and for Mr. Key it is October 31, 2007. Base salary, bonus, and benefits. The agreements of Messrs. Sullivan and Key provide for a base salary, to be reviewed and increased by the Human Resources Committee of our Board in its sole discretion (as described under “Compensation Discussion and Analysis” above). Under their agreements, Messrs. Sullivan and Key are eligible for an annual bonus pursuant to our then current annual incentive plan. Messrs. Sullivan and Key are also entitled to participate in the employee benefits plans, programs, and arrangements as are customarily accorded to our executives. Each of these agreements has been amended as follows: (a) on November 7, 2007, to modify the severance and change in control benefits provided by each agreement (as described in “Potential Payments upon Termination or Change in Control” above); (b) in 2009 (October 22 for Mr. Key and October 21 for 66 Mr. Sullivan) to state that the calculation of performance-related bonus amounts will be based on actual financial results upon Involuntary Termination without Cause; and (c) on December 3, 2010, to provide that severance becomes payable on termination only when the executive executes a release of claims in favor of the Company and to make technical changes to assure compliance under Section 409A. Tax indemnity. Under their agreements, if any amounts or benefits received under the agreements or otherwise are subject to the excise tax imposed under Section 4999 of the IRS Code, an additional payment will be made to restore Messrs. Sullivan or Key to the after-tax position that he would have been in if the excise tax had not been imposed. Covenants. Under their agreements, Messrs. Sullivan and Key have agreed to maintain the confidentiality of our proprietary or confidential information at all times during their respective employments and thereafter unless first obtaining the prior written consent of our Board. Each of them has also agreed not to compete with us during their respective terms of employment and for a restricted period, as described below, after any termination of employment. Each of them has also agreed not to solicit, hire, or cause to be hired any of our employees or employees of any of our subsidiaries for or on behalf of any competitor during that restricted period. Under each of their agreements, the “restricted period” means the longer of (i) the one-year period following termination of employment of that executive or (ii) in the event the executive in question receives payments as a result of his resignation for good reason, termination without cause, or following a change in control, in an amount greater than one year of his then base salary, the period following his termination of employment equal to the total number of months upon which those payments are calculated, up to a maximum period of two years. Daniel Yergin. In July 2010, we entered into a new employment agreement with Daniel Yergin. This new employment agreement replaced Dr. Yergin’s prior employment agreement dated September 1, 2004, and was intended to reflect the unique value that Dr. Yergin brings to IHS (see “Compensation Discussion and Analysis” above). The following is a description of the material terms of that agreement with Dr. Yergin. Term. The effective date of Dr. Yergin’s agreement was July 2, 2010. It has an initial term of one year, and it renews automatically on each anniversary of that date for an additional one-year period, unless his employment is terminated earlier in accordance with his agreement or either party notifies the other party in writing at least 30 days prior to the applicable anniversary of the commencement date. The agreement also includes change in control and other termination provisions (as described in “Potential Payments upon Termination or Change in Control” above). Base salary, bonus and benefits. The agreement provides for a base salary, to be reviewed and increased by the Human Resources Committee of our Board in its sole discretion (as described under “Compensation Discussion and Analysis” above). Dr. Yergin is eligible for an annual bonus of up to 100 percent of his base salary (at “target” performance) or up to 150 percent for meeting predetermined objectives. Any bonus would be subject to our then current annual incentive plan. Dr. Yergin is also entitled to participate in the employee benefits plans, programs, and arrangements as are customarily accorded to our executives. 67 Equity Incentives. Under the agreement, Dr. Yergin is eligible to receive annual grants to 20,000 PSUs, up to a maximum of 100,000 PSUs. In addition, Dr. Yergin received a one-time award of 175,000 restricted stock units as of the effective date of his agreement. These restricted stock units vest over a period of eight years. Covenants. Dr. Yergin has agreed to maintain the confidentiality of our proprietary or confidential information at all times during his employment and thereafter unless first obtaining the prior written consent of IHS. He has also agreed not to compete with us during the term of his employment and for a restricted period, as described below, after any termination of employment, subject to specific exclusions and definitions of permissible advisory and academic activities. He has also agreed not to solicit, hire, or cause to be hired any of our employees or employees of any of our subsidiaries for or on behalf of any competitor during that restricted period. Under Dr. Yergin’s agreement, the “restricted period” means the two-year period following termination of his employment. 68 Certain Relationships and Related Transactions Review and Approval of Related Party Transactions We follow processes and policies that are designed to detect and, if appropriate, approve and disclose any transaction that would constitute a “related party transaction” under SEC rules. That would mean any transaction in which the amount involved would exceed $120,000 and the parties involved would include any IHS directors, executive officers, greater than five percent stockholders, or any immediate family members or affiliates of any of them. It could include direct or indirect interests in the transaction or the parties involved. Our Board of Directors has delegated this responsibility for reviewing related party transactions to the Nominating and Governance Committee. To support this process, each year we solicit internal disclosure of any transactions between IHS and its directors and officers, their immediate family members, and their affiliated entities, including the nature of each transaction and the amount involved. The Nominating and Governance Committee annually reviews and evaluates that information with respect to directors as part of its assessment of each director’s independence. In addition, all directors, officers and employees of IHS are governed by the IHS Code of Conduct and our Conflict of Interest Policy that requires directors to inform the Corporate Secretary and employees to inform the General Counsel or Chief Compliance Officer of any existing or proposed relationship, financial interest, or business transaction that could, or might appear to be, a conflict of interest. If the Nominating and Governance Committee were presented with a proposed related party transaction, it would evaluate the business purpose and the risks involved to ensure that the proposed transaction would be in the best interest of IHS and its shareholders. Factors would include determining whether the transaction would be as favorable to IHS as comparable transactions with non-related parties as well as a requirement that the related party transaction follow the same bidding, review, and approval processes and the same standards that would apply to comparable transactions with unaffiliated entities. Based on these processes and reviews, the Nominating and Governance Committee determined for fiscal year 2010 that IHS has not been a party to any “related party transaction.” Relationships with Security Holders Historically—prior to September 2008—a majority of our voting interest was held by TBG Holdings N.V. (“TBG”), a Malta company, or its predecessor entities, through shares held directly and through its indirect sole ownership of Urvanos Investments Limited, a Cyprus limited liability company (“Urvanos”). As of the Record Date, TBG’s aggregate voting power was approximately 23 percent. We do not face, and have not in the past faced, liabilities (including relating to environmental or health and safety matters) with respect to any properties, businesses or entities that are not part of our core business but are now or were historically owned by TBG or its affiliates, and we do not anticipate incurring such liabilities in the future. However, we cannot provide assurances that this will continue to be the case. We have entered into an agreement with TBG in which each party has agreed to provide certain indemnities to the other. This agreement generally provides that we will indemnify TBG for liabilities relating to our properties and core business, and that TBG will indemnify us for liabilities relating to any properties, businesses or entities that are now or were historically owned by TBG or its affiliates (other than our properties and core business). 69 Registration Rights Agreements Urvanos In connection with the reorganization in 2007 of family trusts affiliated with TBG, we amended and restated an agreement that provides registration rights to Urvanos and its permitted transferees. At any time upon the written request of a holder, we will be required to use our best efforts to effect, as expeditiously as possible, the registration of all or a portion of a holder’s Class A common stock, provided that the aggregate proceeds of the offering is expected to equal or exceed $50 million. The holders under this agreement are entitled to four demand registrations. However, we will not be required to effect more than one demand registration within any twelve-month period, and we will have the right to preempt any demand registration with a primary registration, in which case the holders will have incidental registration rights. Under this agreement, a holder also has incidental rights to request that its shares be included in any registration of our Class A common stock, other than registrations on Form S-8 or Form S-4, registrations for our own account pursuant to Rule 415, or in compensation or acquisition related registrations. The foregoing summary does not include the full text or all of the terms and conditions contained in the registration rights agreement. A copy of the agreement is available for review as an exhibit to Company filings that you may access on the SEC website, www.sec.gov, or under the Investor Relations section of the IHS website, www.ihs.com. 70 Shareholder Proposals for the 2012 Annual Meeting If a shareholder wishes to present a proposal to be included in our Proxy Statement for the 2012 Annual Meeting of Shareholders, the proponent and the proposal must comply with these instructions and the proxy proposal submission rules of the SEC. One very important requirement is that the proposal be received by the Corporate Secretary of IHS no later than November 24, 2011. Proposals we receive after that date will not be included in the Proxy Statement for the 2012 Annual Meeting. We urge shareholders to submit proposals by Certified Mail—Return Receipt Requested. A shareholder proposal not included in our proxy statement for the 2012 Annual Meeting will be ineligible for presentation at the 2012 Annual Meeting unless the shareholder gives timely notice of the proposal in writing to the Corporate Secretary of IHS at the principal executive offices of IHS: IHS Inc. Attn: Corporate Secretary 15 Inverness Way East Englewood, CO 80112 In order to be timely under our Bylaws, notice of shareholder proposals related to shareholder nominations for the election of Directors must be received by the Corporate Secretary of IHS—in the case of an annual meeting of the shareholders—no later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the anniversary date of the immediately preceding annual meeting of shareholders. If the next annual meeting is called for a date that is more than 30 days before or more than 70 days after that anniversary date, notice by the shareholder in order to be timely must be received not earlier than the close of business on the 120th day prior to such annual meeting or not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement is first made by IHS of the date of such meeting. If the number of Directors to be elected to the Board at an annual meeting is increased and IHS has not made a public announcement naming the nominees for the additional directorships at least 100 days prior to the first anniversary of the preceding year’s annual meeting of shareholders, a shareholder’s notice will be considered timely—but only with respect to nominees for the additional directorships—if it is delivered to the Corporate Secretary of IHS not later than the close of business on the 10th day following the day on which such public announcement is first made by IHS. Shareholder nominations for the election of Directors at a special meeting of the shareholders must be received by the Corporate Secretary of IHS no earlier than the close of business on the 120th day prior to such special meeting and not later than the close of business on the later of the 90th day prior to such special meeting or the 10th day following the day on which public announcement is first made of the date of such special meeting and of the nominees proposed by the Board to be elected at such meeting. A shareholder’s notice to the Corporate Secretary must be in proper written form and must set forth information related to the shareholder giving the notice and the beneficial owner (if any) on whose behalf the nomination is made, including: Š the name and record address of the shareholder and the beneficial owner; 71 Š the class and number of shares of the Company’s capital stock which are owned beneficially and of record by the shareholder and the beneficial owner; Š a representation that the shareholder is a holder of record of the Company’s stock entitled to vote at that meeting and that the shareholder intends to appear in person or by proxy at the meeting to bring the nomination before the meeting; and Š a representation as to whether the shareholder or the beneficial owner intends or is part of a group which intends to deliver a proxy statement or form of proxy to holders of at least the percentage of the Company’s outstanding capital stock required to elect the nominee, or otherwise to solicit proxies from shareholders in support of such nomination. As to each person whom the shareholder proposes to nominate for election as a Director, the notice must include: Š all information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of Directors pursuant to the Securities Exchange Act of 1934; and Š the nominee’s written consent to being named in the proxy statement as a nominee and to serving as a Director if elected. Notice procedures for shareholder proposals not related to Director nominations, in the case of an annual meeting of shareholders, are the same as the notice requirements for shareholder proposals related to Director nominations discussed above insofar as they relate to the timing of receipt of notice by the Secretary. A shareholder’s notice to the Corporate Secretary of IHS must be in proper written form and must set forth, as to each matter the shareholder and the beneficial owner (if any) proposes to bring before the meeting: Š a description of the business desired to be brought before the meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and, if such business includes a proposal to amend the Company’s Bylaws, the language of the proposed amendment), the reasons for conducting the business at the meeting and any material interest in such business of such shareholder and beneficial owner on whose behalf the proposal is made; Š the name and record address of the shareholder and beneficial owner; Š the class and number of shares of the Company’s capital stock which are owned beneficially and of record by the shareholder and the beneficial owner; Š a representation that the shareholder is a holder of record of the Company’s stock entitled to vote at the meeting and that the shareholder intends to appear in person or by proxy at the meeting to propose such business; and Š a representation as to whether the shareholder or the beneficial owner intends or is part of a group which intends to deliver a proxy statement or form of proxy to holders of at least the percentage of the Company’s outstanding capital stock required to approve or adopt the business proposal, or otherwise to solicit proxies from shareholders in support of such proposal. You may obtain a copy of the current rules for submitting shareholder proposals from the SEC at: U.S. Securities and Exchange Commission Division of Corporation Finance 100 F Street, NE Washington, DC 20549 or through the SEC’s website: www.sec.gov. 72 The IHS 2010 Annual Report on Form 10-K has been mailed with this Proxy Statement. You may also review that document and all exhibits on our website (www.ihs.com). We will provide printed copies of exhibits to the Annual Report on Form 10-K, but will charge a reasonable fee per page to any requesting shareholder. Send that request in writing to IHS Inc. at 15 Inverness Way East, Englewood, Colorado 80112, Attention: Investor Relations. The request must include a representation by the shareholder that as of our Record Date, March 7, 2011, the shareholder was entitled to vote at the Annual Meeting. 73 Other Matters The Board does not know of any other business that will be presented at the Annual Meeting. If any other business is properly brought before the Annual Meeting, your proxy holders will vote on it as they think best unless you direct them otherwise in your proxy instructions. Whether or not you intend to be present at the Annual Meeting, we urge you to submit your signed proxy promptly. By Order of the Board of Directors, Stephen Green General Counsel and Corporate Secretary March 23, 2011 74 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended November 30, 2010 ‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES or EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-32511 IHS INC. (Exact name of registrant as specified in its charter) Delaware (State or Other Jurisdiction of Incorporation or Organization) 13-3769440 (IRS Employer Identification No.) 15 Inverness Way East Englewood, CO 80112 (Address of Principal Executive Offices) (303) 790-0600 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Class A Common Stock, $0.01 par value per share Series A junior participating preferred stock purchase rights (attached to the Class A Common Stock) New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None. Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. È Yes ‘ No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. ‘ Yes È No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. È Yes ‘ No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). È Yes ‘ No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ‘ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer È Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ‘ Yes È No The aggregate market value of the voting and non-voting common equity held by non-affiliates, based upon the closing price for the Common Stock as reported on the New York Stock Exchange composite tape on the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $2.1 billion. All executive officers, directors, and holders of 5% or more of the outstanding Common Stock of the registrant have been deemed, solely for purposes of the foregoing calculation, to be “affiliates” of the registrant. As of December 31, 2010, there were 64,315,530 shares of the registrant’s Class A Common Stock outstanding. Non-accelerated filer ‘ Accelerated filer ‘ Smaller reporting company ‘ DOCUMENTS INCORPORATED BY REFERENCE The information required by Part III of the Form 10-K, to the extent not set forth herein, is incorporated herein by reference from the registrant’s definitive proxy statement on Schedule 14A for the Annual Meeting of Shareholders to be held on May 5, 2011, to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the close of the registrant’s fiscal year. [THIS PAGE INTENTIONALLY LEFT BLANK] Page 3 3 14 18 19 20 20 21 21 24 25 43 45 82 83 84 85 85 85 85 85 85 86 86 89 Table of Contents Forward-Looking Statements PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 2. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Removed and Reserved). Item 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Market for the Registrant’s Common Equity, Related Shareholder Matters and Item 5. PART II Item 6. Item 7. Issuer Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 8. Changes in and Disagreements With Accountants on Accounting and Financial Item 9. PART III Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Item 12. Shareholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 13. Certain Relationships and Related Transactions, and Director Independence . . . . . Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 14. PART IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 15. i Forward-Looking Statements We have made statements under the captions “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business and Properties” and in other sections of this Form 10-K that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue,” the negative of these terms, and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties, and assumptions, may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance, or achievements to differ materially from the results, level of activity, performance, or achievements expressed or implied by the forward-looking statements. In particular, you should consider the risks outlined under “Risk Factors.” Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward- looking statements. You should not rely upon forward-looking statements as predictions of future events. We do not intend to update any of these forward-looking statements after the date of this Form 10-K to conform our prior statements to actual results or revised expectations. * * * * Fiscal Year End Our fiscal years end on November 30 of each year. Unless otherwise indicated, references in this Annual Report to an individual year means the fiscal year ended November 30. For example, “2010” refers to the fiscal year ended November 30, 2010. ii Part I Item 1. Business Overview IHS is a leading source of information and insight in pivotal areas that shape today’s business landscape: energy, economics, geopolitical risk, sustainability and supply chain management. Businesses and governments around the globe rely on our comprehensive content, expert analysis and flexible delivery methods to make high-impact decisions and develop strategies with speed and confidence. IHS was incorporated in the State of Delaware on May 5, 1994. Vision Our vision is to be the Source for Critical Information and Insight that powers growth and value for our customers. We intend to be the source that customers trust, rely upon and come to first when they need to better understand the present and anticipate the future. Corporate Objectives In order to achieve our vision to be the Source for Critical Information and Insight, we have established four interdependent objectives upon which we focus our efforts, as described below. We externally benchmark our progress annually against these four objectives. To measure customer satisfaction and colleague success, we use third-party surveys and develop goals based on those metrics. For 2011, our corporate objectives will continue to be focused on the following areas: Š Improving customer satisfaction; Š Fostering a culture that enables colleague success; Š Delivering profitable top- and bottom-line growth; and Š Providing an opportunity for shareholder success relative to our peer group. Corporate Strategy Our strategy is designed to allocate the company’s resources in the most optimal manner to achieve the objectives described above. Our strategy has several key elements: Š An unrelenting focus on our customers and their experience, which drives our actions, decisions, and investments; Š Offering our customers a uniquely broad scope of proprietary information and analysis that is critical to addressing their evolving business challenges and managing their workflows; Š Enhancing our offerings through organic development, focused partnerships and acquisitions that reinforce and strengthen the value, scale, and scope of what we do; and Š Investing in our people and supporting them with systems and processes to continuously expand our potential. Our corporate strategy is executed through initiatives implemented across our entire organization. A few of the most critical, time-bound initiatives for each upcoming year are identified as IHS Annual Priorities. Our 2011 Priorities include the following initiatives: Š Advance our customer focus and our customers’ experience; Š Realize our growth potential; and Š Demonstrate and communicate the value of IHS. 3 Geographic Organization To best serve our customers and be as close to them as possible, we are organized by geographies into three business segments. We also prepare our financial reports and analyze our business according to our geographic organization. Our three reporting segments are: Americas, which includes the United States, Canada, and Latin America; EMEA, which includes Europe, the Middle East, Africa, and India; and APAC, or Asia Pacific. As our APAC operations have evolved, the management structure of the region has also evolved, and going forward, will include responsibility for overseeing India. Accordingly, in 2011, India will become part of our APAC region. Our integrated global organization makes it easier for our customers to do business with us by providing a cohesive, consistent, and effective sales-and-marketing approach in each local geography. By structuring our business around customers and the regions in which they reside, we are better able to serve the specific needs of our customers in their local markets and globally. A regional structure provides a solid foundation for profitable growth as it provides an efficient method of bringing new products and services to customers and supports growth in existing accounts and with new customers and markets. Customers Industries We have a diverse customer base, ranging from large entities such as governments and multi-national companies to small companies and technical professionals. Our solutions are applicable in numerous end markets, though we have a particularly large presence in the oil and gas, aerospace, and defense markets. We define our customers by the industry in which they operate, leveraging commonly accepted industry nomenclature such as the North American Industry Classification System (NAICS) and the Global Industry Classification Standard (GICS). At the highest level, we focus on five customer industries: Energy, Capital Goods, Government, Transportation and Materials. Within these industries, we further define specific customer vertical markets; for example, oil and gas is a vertical market within the Energy industry. We are not dependent upon any single customer, the loss of which would have a material adverse effect on our business. Functions within Customers We deliver our expertise by focusing on how our customers use information in their daily workflows. We target specific functions within customer organizations in our target industries. We develop a deep understanding of these functions, including the roles of the various users and their workflows and specific information needs. By offering a compelling suite of information products targeted at these functions, we become an essential part of our customers’ workflows, which we expect will drive increasing revenues and margins. Our target functions and sample roles are illustrated below. Function Strategy and Analysis Example Roles Strategic Planning, Corporate Development, M&A, Investment Analysis, Risk Assessment, Business Development, Trading Energy Technical Geo-science, Petroleum Engineering Product Engineering Engineering, Design, Research and Development Supply Chain Procurement, Logistics, Operations, Manufacturing Environmental Health and Safety Sustainability, Regulatory, Environment, Health and Safety Other functions within customer organizations inevitably use our products, but they are not the core focus of our positioning and development efforts. 4 Sales and Marketing Our sales and marketing teams are organized to support our three geographic segments. Thus, our customer-facing efforts are aligned with our customers and their local markets to best serve them. “Customers First,” our program to understand both current customer satisfaction levels and potential opportunities for improvement, provides additional direction to sales and marketing about key areas of focus. Within each of our geographic segments, our sales force is organized based on the size of our customers, our expertise in key customer industries and our customers’ functions. Our global account management teams address the needs of our largest customers. Other customers’ sales and renewal efforts are served by our regional sales teams, e-commerce and our network of channel partners. New customer acquisition is largely conducted by our dedicated new business team. This team identifies potential new customer opportunities and develops the sales approach for larger new business opportunities. Our inside sales team pursues smaller new customer opportunities. We supplement our sales efforts with e-commerce capabilities, which enable customers to purchase offerings online. Representing less than three percent of our total revenue, we use a network of channel partners to reach customers in locations where it is not cost-effective to use our sales teams or maintain a sales office. Our marketing teams are organized at the corporate, regional and product levels. Our corporate team provides marketing infrastructure and tools to support our increasing scale, drives alignment of our messaging strategy and value story across the business, and strategizes on new ways to reach customers through emerging social and online marketing vehicles. Corporate marketing works closely with our brand team in continuing to build the IHS brand and articulate our value story to raise the visibility of our products and services to new and continuing customers. Product marketers define the marketing strategy and plan, and our regional marketers execute marketing plans in support of our regional sales teams by driving brand awareness, demand generation, and retention at the local level. We tailor marketing programs by target audience and regionally leverage a marketing mix of events, e-marketing, social media, advertising, sales collateral, and public relations. Our product management teams are primarily responsible for ensuring that our offerings meet customer needs and provide innovative solutions. These teams conduct market research to understand customer needs and how our solutions can help them advance critical decisions, avoid risk and improve business effectiveness. These teams bring deep vertical industry expertise to bear to understand the rapidly changing market environments and the current and future impacts on both business and governments. This work allows us to improve current products, introduce new offerings, and extend our content and software capabilities to new markets and customer groups. What We Do: Transforming Data into Critical Information and Insight Companies are flooded with data because of the countless sources available today: internal company, Internet, news media, government, external companies and so many more. More than ever before, decision-makers are required to make business decisions that will materially affect their company using this unrefined data. One of our core competencies is sourcing data and transforming it into critical information and insight that businesses, governments, and others use every day to make high-impact decisions with confidence. We are dedicated to providing the information our customers need to make critical decisions that drive growth and value for their operations. 5 We create customer solutions by integrating our information with proprietary and widely used decision- support technology, thus producing critical information solutions designed to meet customer needs. Our product development teams have also created proprietary web services and application interfaces that enhance access to our information. These services allow our customers to integrate our information with other data, business processes, and applications (e.g., computer-aided design, enterprise resource planning, supply chain management, and product data/lifecycle management). We convert raw data into information through a series of transformational steps that reduce the uncertainty that is inherent in unrefined data. At each step along the way, we ensure quality of the data transformation across four dimensions, which we call the “4 Cs”: Correctness Currency Completeness Consistency Validate data accuracy through comparison to external reference points. Deliver new and updated content in a timely manner. Provide the right data attributes and analysis to ensure customers have all of the necessary information to make critical decisions. Standardize identifiers and content across databases and products to be sure customers receive consistent information regardless of product platform. We have standardized the data transformation process into seven steps. The order of the steps and the need to have quality checks throughout the process is important because the quality of each step is dependent on the quality of all of the preceding steps. The seven-step process we follow in transforming data into critical information and insight involves the following: Sourcing Capture Matching Identification Relationships Analysis We locate hundreds of possible data sources and then evaluate them for correctness, currency, and completeness. We collect documents and digital feeds, place phone calls, harvest content from publicly available sources, visit sites for updates, etc. Once the data is aggregated, we validate and normalize the data before loading it into our proprietary databases. We link disparate instances of the same attribute. This knowledge-based activity ensures consistency over time and across sources, eliminating unlinked information about a single well, a single part, a single chemical, etc. We attach an IHS identifier to matched information to ensure that the matched information stays linked. We also confirm that industry standard identifiers, which often vary over time, are accurate and appropriately matched to the IHS identifier. We identify logical relationships and associations between entities and link those relationships through identification numbers. Examples include corporate parent and subsidiary relationships, leases and associated wells, international standards, and national standards. This step supplies the context for analysis. We use our industry experts to review, analyze, and add context and editorial commentary to the data in order to transform it into critical information for our customers. Modeling & Forecasting We utilize our critical information to produce additional insight by providing unique and unbiased research and intelligence with proprietary models and forecasting tools. Our numerous Ph.D.s use their extensive experience to build models and forecasting tools that our customers use every day. 6 Using this proven seven-step process and the “4 Cs” of quality, we transform data into critical information and insight that is both useful to our customers and available where and when they need it. Our Capabilities: Deploying our Information Domain Strategy We have continued to build a sustainable advantage in target markets by employing a strategy that aligns our critical information into and at the intersections of the four domains where we can leverage our breadth of offerings to deliver high-value solutions to our customers: Energy, Product Lifecycle, Security and Environment, all supported by extensive expert analysis and Macroeconomic Forecasting. Our domains represent our expertise and our capabilities. They address customer needs in virtually every industry and in all regions. We also focus on these domains because we believe it is where we have the best and most significant global market opportunities to be the Source for Critical Information and Insight for our customers. These domains are often inter-related and inter-linked. The intersections between them represent areas of vital interest for our customers and further market opportunities where we can capitalize on the breadth and depth of our information capabilities and expertise. Energy We source, develop and deliver critical oil and gas industry information and analysis on exploration, development, production, transportation, industry trends, and financial information to national and international oil and gas companies, electric power companies, financial institutions, governments and technology providers. We also provide operational, research and strategic advisory services to these customers and to utilities, transportation, petrochemical, coal and power companies. We complement this information with analytical tools, expert and independent analysis, and strategic direction on economic, financial, political, mergers and acquisitions, and regulatory issues in the energy arena. Our products and solutions help companies make better decisions, reduce operating costs, increase efficiency and productivity, and effectively evaluate investment opportunities. Our energy products and services encompass the entire energy supply chain, from exploration and development to distribution and consumption. Examples of our information and analysis include: Š Production information on more than 90 percent of the world’s oil and gas production in more than 100 countries; Š Comprehensive geological information on more than four million current and historic oil and gas wells around the world; Š Comprehensive information about current and future seismic, drilling and development activities in more than 180 countries and 335 hydrocarbon-producing regions around the world; Š Information and research on the development of unconventional hydrocarbon resources, including shale gas, coal bed methane, and heavy oil; Š Strategic advisory services to assess energy markets, strategies, industry trends and companies; Š Information and research summits such as CERAWeek and the IHS Herold Pacesetters Energy Conference, which offer high-level leaders and decision-makers the opportunity to interact with our experts; and Š Information on other energy sources such as coal, nuclear power, and renewables. 7 Major Product Offerings Energy Critical Information Decision Support and Information Delivery Tools Editorial Products IHS CERA IHS Herold Global surface and subsurface geologic, engineering, fiscal and political risk information. Key attributes include well, production volumes, basin, scouting, ownership, and logs that enable customers to profitably extract oil and gas from every energy province in the world. Industry-leading analytical tools, such as PETRA, Power Tools, SubPUMP and QUE$TOR, that help customers find oil and gas, model the economic benefits and optimize well performance. Web- based delivery platforms, such as Enerdeq, AccuMap and Edin, provide a proprietary interface, easy-to-use map, or text-based access to critical energy information. Our suite of editorial products such as GEPS, PEPS, IOL, and WME supply our customers with current, historical and planned activity in the worldwide exploration and production (E&P) sector, as well as concise weekly overviews and analysis of E&P activity worldwide. Our IHS CERA-branded offerings provide critical knowledge and independent analysis on energy markets, geopolitics, industry trends and strategy that help decision makers anticipate the energy future and formulate timely, successful plans in the face of rapid changes and uncertainty. Our IHS Herold-branded offerings provide online access to databases and research reports, as well as analyst consultation and expert advisory services. Product and service retainers include proprietary research of companies’ transactions and trends in the global energy industry. Product Lifecycle Our Product Lifecycle solutions provide information that allows customers to manage a product through its life, from conception and design to production, maintenance and disposal. We also provide companies with single-source access to specifications and standards that allow them to optimize direct and indirect supply, achieve excellence in product design and development, and comply with regulations. Our teams work with customers to design workflows that enhance quality, reduce costs, and improve productivity. Our customers cover a broad spectrum of industries, including the aerospace, defense, electronics, telecommunications, construction, energy, and automotive industries. We also have a comprehensive proprietary collection of engineering processes, principles and related equations covering more than 250 specific structural and mechanical topics. Examples of our Product Lifecycle information and analysis include: Š Industry specifications and standards that provide information for all phases of a product’s lifecycle; Š Component part technical attributes and lifecycle information that customers use to make part selection decisions; Š Price, cost, demand and technology forecasts for the electronics value chain; Š Design methods to aid in complex and capital-intensive research and development; Š Services supporting the management of parts information in factories and plants, which is critical for maintaining plant uptime and appropriately managing obsolescence; and Š Government parts and regulatory information. 8 Major Product Offerings IHS Standards Expert IHS 4DOnline Suite IHS iSuppli IHS Intermat IHS Haystack® Gold A comprehensive standards management solution, providing desktop access to over 1.2 million standards from 370 Standards Development Organizations (SDOs), with tools to search, monitor, access, and manage standards by individuals or project teams worldwide. World-class component databases used to efficiently research and compare electronic components and fasteners from over 500 suppliers. Also includes tools and services to manage complex product configurations and ensure component availability, sustainability, and environmental compliance. Technology value chain research and advisory services, including electronic component research, device-specific application market forecasts, product teardown analysis, and consumer electronics market analysis. Content, software and services that customers use to manage Maintenance, Repair and Operations (MRO) materials spend and inventory. Standardizes material descriptions, identifies duplicate and obsolete items, and helps customers optimize inventory order points/quantities and lead times. Tools used to manage the complexities of parts procurement, logistics, inventory, and obsolescence planning. Includes information on more than 100 million items in the U.S. Federal Supply Catalog and more than 70 U.S. Army, Navy, Air Force and related databases. Specify-it Construction Information Service UK’s leading online service for construction professionals, delivering key technical information on all aspects of the building, engineering, design and construction processes, providing the framework for organizations to complete projects accurately and on time. Security Our Security solutions help customers address their defense and security risks, including threats to operations, people, facilities, resources, and supply chains. We provide comprehensive, current and accurate information and expertise to companies, governments and agencies around the world to assess and manage their security risks. Through our IHS Jane’s and IHS Fairplay branded offerings, we provide information and analysis about security issues worldwide. Examples of our Security information and analysis include: Š Comprehensive information on defense, aerospace and weapons systems worldwide; Š National and international security analysis on terrorist and insurgency activities; Š Commercial shipping information, including detailed ship specifications, tracking, port information and consultancy; Š Risk management assessment on regions and supply chains; and Š Transportation, law enforcement and public safety. 9 Major Product Offerings Jane’s Defence Equipment and Technology Intelligence Centre Jane’s Defence Weekly Jane’s Military and Security Assessments Centre Jane’s All The World’s Aircraft and Jane’s Fighting Ships Jane’s Defence Industry and Markets Intelligence Centre Internet Ships Register Fairplay Comprehensive electronic resource that enables users (e.g., governments, armed forces and corporations) to identify and evaluate equipment for global defense technologies, including extensive detail on equipment specifications, platforms, versions, dimensions, performance, structure, sub-systems, and armaments. World-renowned publication (hardcopy and electronic) that holds an unequalled record for pinpointing geopolitical threats, revealing new weapon technology and analyzing military activity around the world. Jane’s Defence Weekly has a reputation for breaking world exclusive news and for expert, meaningful interpretation of what we see on the ground, at sea, and in the air, as well as in boardrooms and command centers throughout the world. Electronic data, news and analysis on country risk, state and non- state threats and actors, alliances, foreign and security policy, and conflict. One-hundred-year-old publications (hardcopy and electronic) that provide technical and production details for all known aircraft and naval vessels that are either currently in production or anticipating commercial production throughout the world. Provides breaking news on the defense industry, detailed executive summaries on global defense equipment, and market trending and analysis. This information enables our customers to obtain a thorough understanding of country capabilities, potential requirements, and expected actions. Online access to the latest information on commercial ships (over 299 gross tons) and their owners, operators, managers, and builders. News, analysis, markets summary, topical features, and commentary on the shipping industry. Information is provided daily in electronic format and weekly in hardcopy format. Environment Our Environmental Health & Safety (EHS) and Sustainability solutions deliver software applications, content subscriptions and services that enable organizations to optimize their EHS and Sustainability programs. Organizations around the globe are rapidly integrating sustainability information management into their business strategies in order to drive financial success, environmental excellence and social responsibility in partnership with their customers, shareholders, employees, suppliers and the communities in which they operate. Customers are building sustainability programs to manage compliance with local, regional, national, and global EHS standards in an efficient and effective manner. Organizations with world-class EHS compliance and sustainability information management strategies look to us to provide them with the information and insight they need to grow rapidly while reducing operational risks and costs. We provide on-premise, on-demand, and hosted solutions in the following areas: Š Environmental Compliance—solutions that protect the customer’s license to operate through compliance with local, regional, and national environmental regulations, management system standards, and industry best practices. 10 Š Greenhouse Gas and Energy—solutions that assist the customer in meeting greenhouse gas reporting requirements, addressing cap and trade programs, and supporting country and region- specific protocols and programs. Š Hazardous Materials Management—solutions that manage chemical and hazardous material inventories, from pre-acquisition authorization and acquisition to waste shipment and regulatory reporting. These solutions help the customer manage the level of on-hand inventory, optimize their logistics efforts, properly manage compliance reporting, and increase their overall greening of purchases. Š Health and Safety—risk management solutions that dramatically improve operational excellence by enabling the discovery and removal of risk exposures that could result in organizational losses. Š Incident and Crisis Management—solutions that support four key phases of comprehensive emergency incident management: mitigation, preparedness, response and recovery. Š Product Regulatory Compliance—product compliance solutions that enable faster time to market with best practices in Regulatory Document Authoring & Management, Managed Regulatory Content, Chemical Lifecycle Management and supply chain communication. Š Sustainability & Corporate Responsibility—solutions that collect and manage information for planning sustainability investments and reporting improvement progress to stakeholders using standards like the Global Reporting Initiative (GRI). Macroeconomic Forecasting and Competitive Advantage at the Intersection of the Domains Underlying our domain strategy is an unparalleled foundation of macroeconomic forecasting. IHS Global Insight-branded offerings give us a platform to deliver unsurpassed market outlook and economic forecasting capabilities for our customers across and at the intersections of all domains, increasing our cross-selling opportunities. Specifically, our capabilities include: Š Detailed forecasts and timely analysis of economic conditions within political, economic, legal, tax, operational and security environments around the world; Š Detailed history and forecasts of global price, wage, and manufacturing costs, including commodity prices and labor costs; Š Forecasting, market-sizing, and risk assessment in a multitude of industries across the world. While each domain represents a significant market opportunity by itself, our point of differentiation is in how we take advantage of the market opportunity where the domains intersect. Increased globalization and a challenging world economy have heightened our customers’ need to integrate their decision- making across all business challenges. For example: Š As security issues become a bigger part of production costs, we have the potential to use our capabilities in the Security and Product Lifecycle domains to help customers manage product cost with a better understanding of security-related issues that can impact the sourcing of materials and products. Š At the intersection of the Security and Energy information domains, we have the opportunity to help customers understand and manage security issues as a significant driver of cost in exploring for, producing and delivering energy around the world. Š At the intersection of the Energy and Environment domains, our customers can look to us for help with their growing need for information and insight as they manage the increasingly important issue of environmental impact from energy exploration, production, and delivery. 11 Š At the intersection of the Environment and Product Lifecycle domains, we have the opportunity to help a wide range of customers understand and manage regulatory compliance and the environmental impact of their manufacturing processes. Š With the growing emphasis on climate change, we can use our Environment expertise to help a wide range of customers address the topic of “clean energy” with a suite of products and solutions that can help them understand and apply economic factors, regulation, energy sources, markets (including new markets such as carbon credits), and technology (including new and developing technologies, such as those employed in hybrid vehicles). Acquisitions Acquisitions play a key role in expanding our information market leadership and driving profitable growth. We have acquired and integrated over 30 businesses since our initial public offering in 2005. Our acquisition strategy is driven by a need to serve our customers’ most pressing business issues at both the strategic and operating level, as well as our goal to deepen our expertise in our core focus areas. Our disciplined approach to acquisitions helps us identify opportunities that: Š Provide a strategic and synergistic fit by filling gaps within our targeted information domains, adding capabilities to our suite of technologies and online tools, and enhancing our portfolio of products and services; Š Offer an opportunity to drive more customer value or product continuity with other offerings; Š Add a differentiated value proposition that would be difficult for us to replicate organically; Š Provide the opportunity to add to our human capital depth; Š Share our core values and have a complementary corporate culture; Š Are accretive over a reasonable period of time; and Š Meet our financial criteria. Competition We believe the principal competitive factors in our business include the following: Š depth, breadth, timeliness, and accuracy of information provided, Š quality of decision-support tools and services, Š quality and relevance of our analysis and insight, Š ease of use, Š customer support, and Š value for the price. We believe that we compete favorably on each of these factors. Although we do not believe that we have a direct competitor across all of our information domains, we do face competition in specific industries or with respect to specific offerings within those domains. In our Energy information domain, our U.S. well and production data offerings compete with offerings from TGS-NOPEC Geophysical Company and DrillingInfo, Inc., in addition to smaller companies. Certain of our Energy offerings compete with products from Wood Mackenzie Ltd. and Geologic Data Systems, Inc., in addition to other specialized companies. Our Energy domain’s advisory services compete with PFC Energy in addition to other smaller consulting companies. 12 In the Product Lifecycle, Security and Environment domains, we compete against a fragmented set of companies. In the Product Lifecycle domain, we compete with SAI Global’s ILI, Thomson Reuters Corporation’s Techstreet, and some of the SDOs. Also within that domain, our parts offerings compete with products from PartMiner, Inc.; SAI Global’s ILI; and Total Parts Plus, Inc., among others. In the Security domain, we compete against small, specific products from publishers such as McGraw-Hill and Gannett as well as smaller niche players such as Armada International, Forecast International, and Control Risks, among others. The Environment information domain is highly fragmented. Primary competition in this marketplace comes from SAP and small niche players like Enablon. IHS Global Insight-branded offerings compete with a variety of niche players and the Economist Intelligence Unit. Government Contracts We sell our products to various government agencies and entities. No individual contract is significant to our business. Although some of our government contracts are subject to terms that would allow renegotiation of profits or termination at the election of the government, we believe that no renegotiation or termination of any given contract or subcontract at the election of the government would have a material adverse effect on our financial results. Intellectual Property We rely heavily on intellectual property, including the intellectual property we own and license. We regard our trademarks, copyrights, licenses and other intellectual property as valuable assets and use intellectual property laws, as well as license and confidentiality agreements with our employees, dealers, and others, to protect our rights. In addition, we exercise reasonable measures to protect our intellectual property rights and enforce these rights when we become aware of any potential or actual violation or misuse. Intellectual property licensed from third parties, including SDOs, is a component of our offerings and, in many cases, cannot be independently replaced or recreated by us or others. We have longstanding relationships with most of the third parties, including SDOs, government agencies, and manufacturers, from whom we license information. Almost all of the licenses that we rely upon are nonexclusive and expire within one to two years unless renewed. We maintain registered trademarks in jurisdictions around the world. In addition, we have applied for patents in the United States relating to digital rights management, remote access printing, and print on demand. For more information relating to our intellectual property rights, see “Risk Factors—We may not be able to protect intellectual property rights.” Employees As of November 30, 2010, we had approximately 4,400 employees located in more than 30 countries around the world. None of our employees are represented by a collective bargaining agreement and we consider our employee relations to be good. Financial Information about Segments See “Item 8—Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note 19” of our Notes to Consolidated Financial Statements for information with respect to each segment’s revenues, profits or losses, and total assets. Available Information Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports are available, without charge, on our website, www.ihs.com, as soon as 13 reasonably practicable after they are filed electronically with the SEC. We have also posted our code of ethics on our website. Copies of each of these documents are also available, without charge, from IHS Investor Relations and Corporate Communications, 15 Inverness Way East, Englewood, CO 80112. We routinely post important information on our website under the “Investor Relations” link, so please check www.ihs.com. In addition, the SEC maintains an Internet site that contains our public filings and other information regarding issuers that file electronically with the SEC at www.sec.gov. As an alternative, you may read and copy the materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. For more information on the operation of the Public Reference Room, call the SEC at 1-800-SEC-0330. Item 1A. Risk Factors In addition to the other information provided in this report, you should carefully consider the risks described in this section. The risks described below are not the only risks that could impact our business—other risks currently deemed minor or additional risks not currently known to us could also impact our business. These and other factors could materially and adversely impact the value of your investment in our shares, meaning that you could lose all or part of your investment. Note that this section includes forward-looking statements and future expectations as of the date of this annual report. This discussion of Risk Factors should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes in Part II of this Form 10-K. Our growth strategy may prove unsuccessful. A significant part of our strategy involves enhancing our offerings to meet the needs of our customers through organic development, focused partnerships, and acquisitions. If we are unable to execute our growth strategy, or if we do so less capably than our competitors, our operating performance including our ability to generate additional revenues on a profitable basis may be adversely affected. If we are unable to consistently renew subscriptions for our offerings, our results could weaken. The majority of our revenue is based on subscriptions to our offerings. In 2010, we derived nearly 80% of our revenues from subscriptions, most of which were for a term of one year. Our operating results depend on our ability to achieve and sustain high annual renewal rates on existing subscriptions and to enter into new subscription arrangements on commercially acceptable terms. Our failure to achieve high annual renewal rates on commercially acceptable terms would have a material adverse effect on our business, financial condition, and operating results. The loss of, or the inability to attract and retain, key personnel could impair our future success. Our future success depends to a large extent on the continued service of our employees, including highly skilled subject matter experts as well as personnel in sales, marketing, product development, critical operational roles, and management including our executive officers. We must maintain our ability to attract, motivate, and retain highly qualified employees in order to support our customers and achieve business results. The loss of the services of one or more of our key personnel or our inability to recruit replacements for such personnel or to otherwise attract, motivate, or retain qualified personnel could have a materially adverse effect on our business, operating results, and financial condition. 14 If we are unable to successfully identify or effectively integrate acquisitions, our financial results may be adversely affected. As we continue pursuing selective acquisitions to support our business and our growth strategy, there can be no assurance that we will be able to identify suitable candidates for successful acquisitions at acceptable prices. In addition, our ability to achieve the expected returns and synergies from our past and future acquisitions and alliances depends in part upon our ability to integrate the offerings, technology, administrative functions, and personnel of these businesses into our business in an efficient and effective manner. We cannot assure you that we will be successful in integrating acquired businesses or that our acquired businesses will perform at the levels we anticipate. In addition, our past and future acquisitions may subject us to unanticipated risks or liabilities or disrupt our operations. Our strategic investments and cost reduction initiatives may not result in anticipated savings or more efficient operations. Over the past several years, including in 2010, we implemented significant strategic initiatives to reduce our cost structure, standardize our operations, and improve our ability to grow. Certain of our most significant investments, including our business transformation initiative to consolidate and standardize our sales force automation, lead to cash, and all supporting systems (which we call “Vanguard”) and investments in infrastructure to support our growth strategy, are still in development and implementation phases. We must also continue to invest in enhancements to our existing products and development of new products to meet the needs of our customers and differentiate our offerings from those of our competitors. There is a risk that we may not realize the full potential benefit of these investments, that implementation of our strategic initiatives may be disruptive to our operations, and that cost overruns could have material adverse effects on our results of operations. We could experience system failures or capacity constraints that could interrupt the delivery of our offerings to customers and ultimately cause us to lose customers. Our ability to provide reliable service largely depends on the efficient and uninterrupted operation of complex systems, relying on people, process, and technology to function effectively. Some elements of these systems have been outsourced to third-party providers. Any significant interruption to, or failure of, these systems could severely harm our business and reputation. The impact could include a loss of customers and significant expenses, for instance to repair or replace equipment or facilities. The systems upon which we depend could be exposed to damage or interruption from a wide variety of threats, including power disruption, fire, flood, telecommunications failure, unauthorized entry, computer viruses, terrorism, unavailability of a facility, loss or incapacitation of staff, or other natural or man-made disasters. This includes the possibility of failures at third party data centers, disruptions to the Internet, and the loss or failure of other systems over which we have no control. While we have taken and are taking steps to prevent and mitigate the damage of such events, including information backup and disaster recovery processes, those steps may not be effective and there can be no assurance that any such steps can be effective against all possible risks. In addition, our property and business interruption insurance may not be adequate to compensate us for all losses or failures that may occur. We may not be able to protect intellectual property rights. We rely on copyright laws and nondisclosure, license, and confidentiality arrangements to protect our proprietary rights as well as the intellectual property rights of third parties whose content we license. However, we cannot assure you that the steps we have taken to protect our intellectual property rights, and the rights of those from whom we license intellectual property, are adequate to prevent 15 unauthorized use, misappropriation, or theft of our intellectual property. There is a risk that we may not be able to detect unauthorized uses or take timely and effective steps to remedy unauthorized conduct. In particular, a significant portion of our revenues are derived internationally, including jurisdictions where adequately protecting intellectual property rights may prove more challenging or impossible. To prevent or respond to unauthorized uses of our intellectual property, we might be required to engage in costly and time-consuming litigation and we may not ultimately prevail. We depend on content obtained through agreements with third parties to support certain of our offerings and the failure to maintain these agreements on commercially reasonable terms could prove harmful to our business. Certain of our offerings include content that is either purchased or licensed from third parties. In particular, our Specs and Standards offerings that support our Product Lifecycle domain strategy rely on information licensed from SDOs. Offerings that rely upon SDO information accounted for approximately 20% of our total revenue in 2010. We believe that the content licensed from many of these third parties, including the SDOs, cannot be obtained from alternate sources on favorable terms, if at all. Our license agreements with these third parties are generally nonexclusive and many are terminable on less than one year’s notice. In addition, many of these third parties, including the SDOs, compete with one another and us. As a result, we may not be able to maintain or renew these agreements at cost-effective prices, or these third parties might restrict or withdraw their content from us for competitive or other reasons, which could adversely affect the quality of our offerings and our business, operating results, and financial condition. We may be exposed to litigation related to content we make available to customers and we may face legal liability or damage to our reputation if our customers are not satisfied with our offerings or if our offerings are misused. Our business relies on licensing and delivering intellectual property to our customers and obtaining intellectual property from our suppliers. Accordingly, we may face potential liability for, among other things, breach of contract, negligence, and copyright and trademark infringement. Even litigation or infringement claims that lack merit may expose us to material expense or reputational damage. Damage to our reputation for any reason could materially adversely affect our ability to attract and retain customers, employees, and information suppliers. In addition, if the information in our offerings is incorrect for any reason, or if it is misused or used inappropriately, we could be subject to reputational damage or litigation that could exceed the value of any insurance or legal remedies and materially adversely affect our business. We use a network of independent contractors and third parties whose actions could have an adverse effect on our business. We obtain some of our critical information from independent contractors, particularly for offerings that support our Energy products and for certain offerings under the IHS Jane’s brand. In addition, we rely on a network of third party dealers to sell our offerings in locations where we do not maintain a sales office or sales teams. We are limited in our ability to monitor and direct the activities of these independent contractors and dealers, but if any actions or business practices of these individuals or entities violate our policies or procedures or are otherwise deemed inappropriate or illegal, we could be subject to litigation, regulatory sanctions, or reputational damage, any of which could have a materially adverse effect on our business. As part of our strategic business model, we outsource certain operations and engage independent contractors to perform work in various locations around the world. For example, we outsourced certain of our data hosting and certain functions involving our data accumulation to business partners who we 16 believe offer us deep expertise in these areas, as well as scalability and cost effective services. By entering into these independent contractor arrangements and relying on them for critical business functions, we face risks that one or more independent contractors may unexpectedly cease operations, that they may perform work that deviates from our standards, that events in a given region may disrupt the independent contractor’s operations, or that we may not be able to adequately protect our intellectual property. If these or other unforeseen risks were to occur, they could materially adversely affect our business. We operate in competitive markets, which may adversely affect our market share and financial results. We face competition in specific industries and with respect to specific offerings. We may also face competition from organizations and businesses that have not traditionally competed with us but that could adapt their products and services to meet the demands of our customers. Some of our competitors focus on product categories within our targeted industries while others have significant financial and information-gathering resources, recognized brands, technological expertise, and market experience. We believe that competitors are continuously enhancing their products and services, developing new products and services, and investing in technology to better serve the needs of their existing customers and to attract new customers. Increased competition may require us to reduce the prices of our offerings or make additional capital investments that could adversely affect our margins. Some of the critical information we use in our offerings is publicly available in raw form at little or no cost. The Internet, widespread availability of sophisticated search engines, and pervasive wireless data delivery have simplified the process of locating, gathering, and disseminating data, potentially diminishing the perceived value of our offerings. While we believe our offerings are distinguished by such factors as currency, accuracy and completeness and our analysis and other added value, if users choose to obtain the information they need from public or other sources, our business, financial condition, and results of operations could be adversely and materially affected. Our brand and reputation are key assets and competitive advantages of our Company and our business may be affected by how we are perceived in the marketplace. Our ability to attract and retain customers is highly dependent upon the external perceptions of our brand and reputation. Reputational damage from negative perceptions or publicity could damage our reputation with customers and the public, which could make it difficult for us to attract and maintain customers. Although we monitor developments for areas of potential risk to our reputation and brand, negative perceptions or publicity could have a material adverse effect on our business and financial results. Our international operations are subject to exchange rate fluctuations and other risks relating to operations outside of the U.S. We operate in over 100 countries around the world and a significant part of our revenue comes from international sales. In 2010, we generated approximately 47% of our revenues from sales outside the United States. We earn revenues, pay expenses, own assets, and incur liabilities in countries using currencies other than the U.S. dollar, including among others the British Pound, the Canadian Dollar, and the Swiss Franc. Because our consolidated financial statements are presented in U.S. dollars, we must translate revenues, income, expenses, and the value of assets and liabilities into U.S. dollars at exchange rates in effect during or at the end of each reporting period. We may use derivative financial instruments to reduce our net exposure to currency exchange rate fluctuations. Nevertheless, increases or decreases in the value of the U.S. dollar against other major currencies can materially 17 affect our net operating revenues, operating income, and the value of balance sheet items denominated in foreign currencies. Operations outside of the United States may be affected by changes in trade protection laws, policies and measures, and other regulatory requirements affecting trade and investment; unexpected changes in regulatory requirements; social, political, labor or economic conditions in a specific country or region; and difficulties in staffing and managing foreign operations. In addition, we must manage the uncertainties of obtaining data and creating solutions that are relevant to particular geographic markets; differing levels of intellectual property protection in various jurisdictions; and restrictions or limitations on the repatriation of funds. Our inability to manage this risk could have a materially adverse effect on our business, operating results, and financial condition. Our business performance might not be sufficient for us to meet the full-year financial guidance that we provide publicly. We provide full-year financial guidance to the public based upon our assumptions regarding our expected financial performance. For example, we provide assumptions regarding our ability to grow revenue and to achieve our profitability targets. While we believe that our annual financial guidance provides investors and analysts with insight to our view of the company’s future performance, such financial guidance is based on assumptions that may not always prove to be accurate and may vary from actual results. If we fail to meet the full-year financial guidance that we provide, or if we find it necessary to revise such guidance during the year, the market value of our common stock could be materially adversely affected. The price of our common stock may be volatile and may be affected by market conditions beyond our control. Our share price is likely to fluctuate in the future because of the volatility of the stock market in general and a variety of factors, many of which are beyond our control. For instance, if our investors sell substantial amounts of our common stock in the public market, or if there is a perception that such sales could occur, it could adversely affect the market price of our shares. Market fluctuations could result in volatility in the price of shares of our common stock, one possible outcome of which could be a decline in the value of your investment. In addition, if our operating results fail to meet the expectations of stock analysts or investors, or if we are perceived by the market to suffer material business or reputational damage, we may experience an immediate and significant decline in the trading price of our common stock. Item 1B. Unresolved Staff Comments None. 18 Item 2. Properties Our Facilities Our colleagues work in offices at 105 locations around the world. We own the buildings at three of our facilities, including our headquarters in Englewood, Colorado, and two other office locations. All of our other facilities are leased with terms ranging from month-to-month at one facility to an expiration date in 2024 for another facility. We believe that our properties, taken as a whole, are in good operating condition, are suitable and adequate for our current business operations, and that additional or alternative space will be available on commercially reasonable terms for future use and expansion. Locations by region are as follows: Americas Brazil Rio de Janeiro Canada Alberta Ontario Quebec Mexico Mexico City United States Arizona California Colorado Connecticut District of Columbia Florida Georgia Maryland Michigan Minnesota Missouri New York Oklahoma Oregon Pennsylvania Texas Utah Virginia 50 APAC 20 EMEA Australia Bella Vista China Beijing Futian Shanghai Shenzhen Hong Kong S. A. R. Kowloon Tsim Sha Tsui Japan Tokyo Korea, Republic of Seoul Malaysia Selangor Singapore Singapore Taiwan Taiwan Thailand Bangkok 1 1 8 2 1 3 2 2 1 1 4 4 1 1 1 1 1 1 1 1 1 1 1 1 4 2 1 1 1 1 44 2 7 2 1 3 1 1 3 3 1 1 1 3 1 1 11 1 1 Denmark Copenhagen France Paris Germany Frankfurt am Main Munich India Bangalore Gurgaon Italy Milan Netherlands Nijmegen Poland Gdansk Russian Federation Moscow South Africa Pretoria Spain Barcelona Sweden Gothenberg Stockholm Switzerland Geneva Zurich United Arab Emirates Dubai United Kingdom Hampshire Lincs London Surrey Berkshire Tetbury Hertfordshire 35 1 1 3 3 3 1 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 1 1 4 3 1 2 2 12 1 1 4 2 2 1 1 19 Our ownership and operation of real property and our operation of our business is subject to various environmental protection and health and safety laws and regulations around the world. Some environmental laws hold current and previous owners and operators of businesses and real property liable for contamination on owned or operated property and on properties at which they disposed of hazardous waste, even if they did not know of and were not responsible for the contamination, and for claims for property damage or personal injury associated with the exposure to or the release of hazardous or toxic substances. We have not incurred and do not currently anticipate incurring any material liabilities in connection with such environmental laws. Item 3. Legal Proceedings We are not party, and have not been a party in fiscal year 2010, to any material litigation and are not aware of any pending or threatened litigation that could have a material adverse effect upon our business, operating results, or financial condition. Item 4. (Removed and Reserved) 20 Part II Item 5. Market for the Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Our Class A common stock is quoted on the New York Stock Exchange under the symbol “IHS”. The following table sets forth for the indicated periods the high and low sales prices per share for our Class A common stock on the New York Stock Exchange: Fiscal Year 2010 Quarters Ended: February 28, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May 31, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . August 31, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . November 30, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fiscal Year 2009 Quarters Ended: February 28, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . August 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . November 30, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Low $55.70 56.73 64.67 75.74 $49.46 48.22 50.81 62.29 High Low $48.99 49.94 51.45 54.93 $33.15 36.15 44.65 47.25 We have been advised by our transfer agent, American Stock Transfer, that we had 20 holders of record of our Class A Common Stock as of January 4, 2011. Based on reports of security position listings and the number of proxies requested by brokers in conjunction with the prior year’s annual meeting of shareholders, we believe we may have in excess of 6,000 beneficial holders of our Class A Common Stock. Our authorized capital stock consisted of 160,000,000 shares of Class A common stock. The holders of our Class A common stock are entitled to one vote per share. Dividend Policy We currently anticipate that we will retain all available funds for use in the operation and expansion of our business, and we do not anticipate paying any dividends in the foreseeable future. We have not previously paid a dividend. 21 Issuer Purchases of Equity Securities During fiscal year 2010, we withheld shares of our common stock from the vesting of employee equity awards to fund employee statutory withholding tax requirements. As shares vest and tax withholdings come due, IHS withholds enough shares in treasury to cover the tax liability and make a payment to the tax authority out of corporate cash. Full year 2010 funding was $26.4 million and 484,648 shares. Total Number of Shares Withheld(1) 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 Period December 1—December 31, 2009 . . . . January 1—January 31, 2010 . . . . . . . . February 1—February 28, 2010 . . . . . . March 1—March 31, 2010 . . . . . . . . . . . April 1—April 30, 2010 . . . . . . . . . . . . . . May 1—May 31, 2010 . . . . . . . . . . . . . . June 1—June 30, 2010 . . . . . . . . . . . . . July 1—July 31, 2010 . . . . . . . . . . . . . . August 1—August 31, 2010 . . . . . . . . . September 1—September 30, 2010 . . . October 1—October 31, 2010 . . . . . . . . November 1—November 30, 2010 . . . . 23,730 211,969 101,687 1,574 3,411 78,650 6,486 18,710 24,615 350 10,958 2,508 Total . . . . . . . . . . . . . . . . . . . . . . . . . 484,648 $52.74 $54.79 $51.98 $53.07 $53.26 $51.48 $54.38 $59.94 $62.98 $64.27 $68.76 $72.20 $54.57 — — — — — — — — — — — — — — — — — — — — — — — — — — (1) Since we simply withhold shares, rather than buying them in the open market, we do not consider this a share buyback program. Nevertheless, we anticipate that this program will help reduce the dilutive impact of employee equity awards. 22 Performance Graph The following graph compares our total cumulative shareholder return with the Standard & Poors Composite Stock Index (S&P 500) and a peer index representing the total price change of The Advisory Board Company; The Dun & Bradstreet Corporation; Equifax Inc.; The Corporate Executive Board Company; FactSet Research Systems Inc.; Fair Isaac Corporation; Gartner, Inc.; The McGraw- Hill Companies, Inc.; Moody’s Corporation; and Thomson Reuters Corporation. The graph assumes a $100 cash investment on November 30, 2005 and the reinvestment of all dividends (which we did not pay). This graph is not indicative of future financial performance. Comparison of Cumulative Total Return Among IHS Inc., S&P 500 Index, and Peer Group IHS Inc. Peer Group S&P 500 Value of $100.00 investment in stock or index: IHS Peer Group S&P 500 11/30/2005 11/30/2006 11/30/2007 11/30/2008 11/30/2009 11/30/2010 $100.00 $100.00 $100.00 $192.37 $116.81 $112.10 $364.17 $105.93 $118.54 $188.42 $ 63.13 $ 71.73 $261.06 $ 76.25 $ 87.69 $375.49 $ 96.09 $ 94.48 s r a l l o D $450 $400 $350 $300 $250 $200 $150 $100 $50 $- 5 0 . 0 3 . 1 1 6 0 . 0 3 . 1 1 7 0 . 0 3 . 1 1 8 0 . 0 3 . 1 1 9 0 . 0 3 . 1 1 0 1 . 0 3 . 1 1 23 Item 6. Selected Financial Data You should read the following selected consolidated financial data in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes appearing elsewhere in this Form 10-K. 2010 2009 2008 2007 2006 Years Ended November 30, (In thousands, except per-share amounts) Statement of Operations Data: Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,075,460 $ 967,300 $ 844,030 $ 688,392 $550,770 Income from continuing operations . . . . . . Income (loss) from discontinued 141,369 137,245 98,574 83,216 57,861 operations . . . . . . . . . . . . . . . . . . . . . . . . . (54) (138) 432 623 (1,348) Net income . . . . . . . . . . . . . . . . . . . . . . . . . . 141,315 137,107 99,006 83,839 56,513 Net income attributable to IHS Inc. . . . . . . $ 141,315 $ 134,963 $ 98,993 $ 83,775 $ 56,345 Basic earnings per share: Income from continuing operations attributable to IHS Inc. . . . . . . . . . . . $ 2.21 $ 2.14 $ 1.59 $ 1.40 $ 1.02 Income (loss) from discontinued operations, net . . . . . . . . . . . . . . . . . — — 0.01 0.01 (0.02) Net income attributable to IHS Inc.(1) . . . . . . . . . . . . . . . . . . . . . $ 2.21 $ 2.14 $ 1.60 $ 1.41 $ 1.00 Diluted earnings per share: Income from continuing operations attributable to IHS Inc. . . . . . . . . . . . $ 2.18 $ 2.11 $ 1.57 $ 1.38 $ 1.02 Income (loss) from discontinued operations, net . . . . . . . . . . . . . . . . . — — 0.01 0.01 (0.02) Net income attributable to IHS Inc.(1) . . . . . . . . . . . . . . . . . . . . . $ 2.18 $ 2.11 $ 1.57 $ 1.39 $ 0.99 Balance Sheet Data (as of period end): 31,040 $ 148,484 $180,034 Cash and cash equivalents . . . . . . . . . . . . . $ 200,735 $ 124,201 $ Total assets . . . . . . . . . . . . . . . . . . . . . . . . . 2,155,702 1,675,588 1,436,180 1,323,807 944,301 Total long-term debt and capital leases . . . 74 141 275,095 840,908 565,191 Total shareholders’ equity . . . . . . . . . . . . . . 1,176,081 1,013,678 801,055 37 — (1) Amounts may not sum due to rounding. 24 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations As described in the “Forward-Looking Statements” section at the start of this -Form 10-K, we make forward-looking statements throughout this report. These forward-looking statements generally are identified by the use of the words “may,” “might,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue,” the negative of these terms, and other similar expressions. Forward-looking statements are based on current expectations, assumptions, and projections that are subject to risks and uncertainties, which may cause actual results to differ materially from the forward-looking statements. A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is outlined under the “Risk Factors” section below. We do not intend to update or publicly revise these forward-looking statements, whether as a result of new information, future events, or otherwise. The following discussion of our financial condition and operating results should be read in conjunction with “Selected Financial Data,” our consolidated financial statements and accompanying notes included in this Form 10-K, and important information and disclosure that we routinely post to our website (www.ihs.com). Business Overview We are a leading source of information and insight in pivotal areas that shape today’s business landscape: energy, economics, geopolitical risk, sustainability and supply chain management. Businesses and governments around the globe rely on our comprehensive content, expert independent analysis and flexible delivery methods to make high-impact decisions and develop strategies. We have been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, we employ more than 4,400 people in more than 30 countries around the world. We source raw data and transform it into information through a series of transformational steps that reduce the uncertainty that is inherent in unrefined data and enhances its usefulness. Inherent in all of our strategies is a firm commitment to put our customers first in everything that we do. We believe that maintaining a disciplined “outside-in” approach will allow us to better serve our customers and our shareholders. To achieve that goal, we have organized our business around our customers and the geographies in which they reside: Americas, EMEA, and APAC. This structure allows us to tailor and expand the solutions we offer to meet the unique needs of our customers both globally and in local markets. We sell our offerings primarily through subscriptions, which tend to generate recurring revenue and cash flow for us. Our subscriptions are usually for one-year periods, and we have historically seen high renewal rates. Subscriptions are generally paid in full within one or two months after the subscription period commences; as a result, the timing of our cash flows generally precedes the recognition of revenue and income. Historically, our business has had seasonal aspects. Our second quarter of 2010 benefited from the inclusion of revenue from CERAWeek, an annual energy executive gathering. In prior years, this conference was held in the first quarter of the year. We intend to hold our CERAWeek conference in the second quarter for the foreseeable future. The third quarter of 2010 benefited from the inclusion of revenue generated by the triennial release of the Boiler Pressure Vessel Code (BPVC) engineering standard. 25 Global Operations We serve some of the world’s largest corporations across multiple industries, as well as governments and other organizations, in more than 100 countries. Approximately 47% of our revenue is transacted outside of the United States; however, only about 30% of our revenue is transacted in currencies other than the U.S. dollar. As a result, a strengthening U.S. dollar relative to certain currencies has a negative impact on our revenue; conversely, a weakening U.S. dollar has a positive impact on our revenue. However, the impact on operating income is diminished due to certain operating expenses denominated in currencies other than the U.S. dollar. Our largest foreign currency exposures, in order of magnitude, are the British Pound, the Canadian Dollar and the Euro. Fluctuations in foreign currency rates increased (decreased) our revenues by $6.1 million, $(36.8) million and $(2.6) million for the years ended November 30, 2010, 2009 and 2008, respectively, and increased (decreased) our operating income by $1.1 million, $(5.1) million and $1.0 million for the same respective periods. See “Qualitative and Quantitative Disclosures About Market Risk—Foreign Currency Risk.” Key Performance Indicators We believe that revenue growth, adjusted EBITDA (both in dollars and margin), and free cash flow are the key measures of our success. Adjusted EBITDA and free cash flow are non-GAAP financial measures (as defined by the rules of the Securities and Exchange Commission) that are further discussed in the following paragraphs. Revenue growth. We review year-over-year revenue growth in our segments as a key measure of our success in addressing customer needs in each region of the world. We measure revenue growth in terms of organic, acquisitive, and foreign currency impacts. We define these components as follows: Š Organic—We define organic revenue growth as total revenue growth due to all factors other than acquisitions and foreign currency. We drive this type of revenue growth through value realization (pricing), expanding wallet share of existing customers through up-selling and cross-selling efforts, securing new customer business, and through the sale of new offerings. Š Acquisitive—We define acquisition-related revenue as the revenue generated from acquired products and services from the date of acquisition to the first anniversary date of that acquisition. This type of growth comes as a result of our strategy to purchase, integrate, and leverage the value of assets we acquire. Š Foreign currency—We define the foreign currency impact on revenue as the difference between current revenue at current exchange rates and current revenue at prior period exchange rates. Because of the significance of revenue transacted in foreign currencies, we feel it is important to measure the impact of foreign currency movements on revenue. Non-GAAP measures. We use non-GAAP measures such as adjusted EBITDA and free cash flow in our operational and financial decision-making, believing that such measures allow us to focus on what we deem to be more reliable indicators of ongoing operating performance and our ability to generate cash flow from operations. We also believe that investors may find non-GAAP financial measures useful for the same reasons, although we caution readers that non-GAAP financial measures are not a substitute for GAAP financial measures or disclosures. None of these non-GAAP financial measures are recognized terms under GAAP and do not purport to be an alternative to net income or operating cash flow as an indicator of operating performance or any other GAAP measure. Throughout this section on management’s discussion and analysis and on our IHS website, we provide reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures. Adjusted EBITDA. EBITDA and adjusted EBITDA are used by many of our investors, research analysts, investment bankers and lenders to assess our operating performance. For example, a measure similar to EBITDA is required by the lenders under our term loan and revolving credit 26 agreement. We define EBITDA as net income plus or minus net interest, plus provision for income taxes, depreciation and amortization. Our definition of adjusted EBITDA also excludes non-cash items such as stock-based compensation expense and net periodic pension and post-retirement benefits expense, and gains and losses on sales of assets, restructuring charges, gains and losses from discontinued operations, and other items that management does not utilize in assessing our operating performance. Free Cash Flow. We define free cash flow as net cash provided by operating activities less capital expenditures. Because not all companies use identical calculations, our presentation of non-GAAP financial measures may not be comparable to other similarly titled measures of other companies. However, these measures can still be useful in evaluating our performance against our peer companies because we believe the measures provide users with valuable insight into key components of GAAP financial disclosures. For example, a company with higher GAAP net income may not be as appealing to investors if its net income is more heavily comprised of gains on asset sales. Likewise, eliminating the effects of interest income and expense moderates the impact of a company’s capital structure on its performance. Business Combinations Effective December 1, 2009, our accounting for business combinations follows the new accounting guidance for business combinations and noncontrolling interests. The adoption of this guidance did not have a significant impact on our financial position or results of operations. The following paragraphs summarize the acquisitions we completed in fiscal 2010. On February 10, 2010, we acquired Emerging Energy Research, LLC (EER) for approximately $18 million, net of cash acquired. EER is a leading advisory firm whose mission is to help clients understand, leverage, and exploit the technological, regulatory and competitive trends in the global emerging energy sector. We recorded approximately $5 million of intangible assets and $14 million of goodwill as a result of the transaction. On March 17, 2010, we acquired CSM Worldwide, Inc. for approximately $25 million, net of cash acquired. CSM Worldwide is a leading automotive market forecasting firm dedicated to providing automotive suppliers with market information and production, power train, and sales forecasting through trusted automotive market forecasting services, and strategic advisory solutions to the world’s top automotive manufacturers, suppliers, and financial organizations. We recorded approximately $8 million of intangible assets and $25 million of goodwill as a result of the transaction. On May 5, 2010, we acquired Quantitative Micro Software, LLC (QMS) for approximately $40 million, net of cash acquired. QMS is a worldwide leader in Windows-based econometric and forecasting software applications. We recorded approximately $13 million of intangible assets and $29 million of goodwill as a result of the transaction. On September 7, 2010, we acquired certain chemical and energy portfolio business assets of Access Intelligence for approximately $79 million, net of cash acquired. We purchased these businesses in order to extend the breadth of information available for current IHS energy customers and support the development of additional products and services for a broad range of industries along the supply chain. We recorded approximately $31 million of intangible assets and $58 million of goodwill as a result of the transaction. On September 22, 2010, we acquired Atrion International Inc. for approximately $56 million, net of cash acquired. Atrion is a company that combines regulatory expertise and industry-leading technology to streamline the generation, management, and distribution of hazardous materials communication 27 documents and reports. We recorded approximately $26 million of intangible assets and $40 million of goodwill as a result of the transaction. On September 22, 2010, we also acquired Syntex Management Systems, Inc. for approximately $23 million, net of cash acquired. Syntex is a leading provider of operational risk management software and services that help companies ensure the health and safety of their workers while protecting the environment and managing costs. We recorded approximately $11 million of intangible assets and $20 million of goodwill as a result of the transaction. On November 19, 2010, we acquired iSuppli, Inc. for approximately $94 million, net of cash acquired. iSuppli is a global leader in technology value chain research and advisory services. The transaction also included Screen Digest Limited, a leading digital media and technology research company, which had been recently acquired by iSuppli. We preliminarily recorded approximately $28 million of intangible assets and $70 million of goodwill as a result of the transaction. Our consolidated financial statements include the results of operations and cash flows for these business combinations beginning on their respective dates of acquisition. Pricing information We customize many of our sales offerings to meet individual customer needs and base our pricing on a number of factors, including the number of customer locations, the number of simultaneous users, and the breadth of the content to be included in the offering. Because of the level of offering customization we employ, it is difficult for us to evaluate pricing impacts on a period-to-period basis. This analysis is further complicated by the fact that the offering sets purchased by customers are often not constant between periods. As a result, we are not able to precisely differentiate between pricing and volume impacts on changes in revenue. Restructuring Charges 2010. During the third quarter of 2010, we announced various plans to streamline operations and merge functions. As a result, we reduced our aggregate workforce by approximately 3% and consolidated several locations. The changes primarily affected the Americas and EMEA segments. The restructuring charge that we recorded in 2010 consisted of direct and incremental costs associated with restructuring and related activities, including severance, outplacement and other employee related benefits; facility closures and relocations; and legal expenses associated with employee terminations incurred during the quarter. The entire $9.1 million restructuring charge was recorded during the third quarter of 2010. Approximately $7.7 million of the charge related to our Americas segment and $1.3 million pertained to our EMEA segment, with the remainder in APAC. We recorded a $0.1 million restructuring credit in the second quarter of 2010. 2008. During the third quarter of 2008, we executed a restructuring initiative that primarily affected the Americas and EMEA segments. Restructuring and related expenses consisted of direct and incremental costs associated with restructuring and related activities, including severance, outplacement, and other employee related benefits; facility closures, including non-cash expenses related to fixed asset and leasehold improvement write-offs; and legal expenses associated with employee terminations that were incurred during the quarter. This initiative was undertaken to further the realignment of our resources around our regional organizational structure and to further transform our knowledge-based data accumulation operations to ensure continuous improvement in the quality of the products and services we deliver to our customers. During the course of the restructuring, we reduced our aggregate workforce by approximately 7%, we eliminated certain contractor positions, and we closed certain offices. 28 The restructuring charge was incurred in its entirety during the third quarter of 2008. Approximately $5.8 million of the charge related to our Americas segment, $5.9 million pertained to our EMEA segment and $0.4 million related to shared services. The majority of the liability was paid during 2008 and the remaining liability at November 30, 2008 was $1.0 million. An over-accrual of $0.7 million was reversed during 2009. The remaining balance was substantially paid as of November 30, 2009. Other Items Cost of operating our business. We incur our cost of revenue primarily to acquire, manage, and deliver our offerings. These costs include personnel, information technology, and occupancy costs, as well as royalty payments to third-party information providers. Royalty payments are based on the level of subscription sales from certain product offerings. Our selling, general, and administrative expenses include wages and other personnel costs, commissions, corporate occupancy costs, and marketing costs. A large portion of our operating expenses are not directly variable with volume sold, particularly in our subscription-based business. Some of our revenue is driven from the sale of specifications and standards; a portion of this content is obtained from standards development organizations. Stock-based compensation expense. We have issued stock-based compensation awards, almost exclusively restricted stock units, for which we record cost over the respective vesting periods. The typical vesting period is three years, and none of the grants exceed eight years. As of November 30, 2010, we had approximately 2.9 million stock-based awards outstanding, of which approximately 1.0 million were performance-based awards, assuming target payout of the performance awards in 2012 and beyond. The majority of the annual grants for our highest-ranking employees are performance-based awards. The vesting of the performance shares granted to date is principally based on achieving certain financial performance levels during fiscal years 2011 and 2012. As of November 30, 2010, we have estimated that the target number of shares issuable for the 2011 and 2012 fiscal years will vest. Using these estimates in addition to estimated 2011 grants, projected share-based compensation expense for 2011 is expected to be around $80 million. Grant date fair values that differ from our projections or a change in the actual performance levels that we achieve could result in a change in the actual amount of stock based compensation that we recognize. For example, in the event we do not achieve the projected performance metrics for 2011 or 2012, our stock-based compensation expense could decrease. Conversely, if we exceed the projected performance metrics, our stock-based compensation could increase. Pension and post-retirement benefits. We provide the following pension and post-retirement plans: Š U.S. RIP—this defined-benefit plan covers the majority of our employees in the United States. Š U.K. RIP—this defined-benefit plan covers a limited number of our employees in the United Kingdom. Š post-retirement medical plan—this plan is a contributory plan that provides access to group rates for U.S. employees who meet specified conditions. Š Supplemental Income Plan (SIP)—this plan is a non-qualified pension plan for certain company personnel. During 2010, we approved a plan design change to the U.S. RIP that will be effective March 1, 2011, which resulted in a $5.3 million reduction in liability that will be amortized over the remaining average future working lifetime of the employee group, which is approximately six years. In 2010, we also made the decision to discontinue future benefit accruals under the U.K. RIP, which resulted in a $0.8 million reduction in liability because of the curtailment. 29 Both the U.S. RIP and U.K. RIP were underfunded as of November 30, 2010. The post-retirement medical plan and the SIP are unfunded. Net periodic pension and post-retirement benefits income (expense) were comprised of the following: Years Ending November 30, 2009 2008 2010 Net pension expense (income) . . . . . . . . . . . . . . . . . Post-retirement benefit income . . . . . . . . . . . . . . . . . $ 6,723 (1,939) Net periodic pension and post-retirement expense (In thousands) $ (450) (2,234) $(1,681) (2,023) (income) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,784 $(2,684) $(3,704) We expect net pension expense to be approximately $11 million in fiscal year 2011. Provision for income taxes. Our effective tax rate was 23.7%, 23.2%, and 28.1% in the years ended November 30, 2010, 2009, and 2008, respectively. We expect our fiscal year 2011 effective tax rate to be slightly lower than the fiscal year 2010 rate. See our consolidated financial statements included in this Form 10-K for additional disclosure about our income taxes. Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with U.S. GAAP. In applying U.S. GAAP, we make significant estimates and judgments that affect our reported amounts of assets, liabilities, revenues, and expenses, as well as disclosure of contingent assets and liabilities. In many instances, we reasonably could have used different accounting estimates. In addition, changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ significantly from our estimates. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations will be affected. We base our estimates on historical experience and other assumptions that we believe are reasonable, and we evaluate these estimates on an ongoing basis. We refer to accounting estimates of this type as critical accounting policies and estimates, which are discussed further below. Revenue Recognition The majority of our offerings are provided under agreements containing standard terms and conditions. Approximately 78% of our revenue is derived from the sale of subscriptions, which is initially deferred and then recognized ratably as delivered over the subscription period (generally 12 months). These standard agreements typically do not require any significant judgments about when revenue should be recognized. For non-standard agreements, we generally make judgments about revenue recognition matters such as: Š whether sufficient legally binding terms and conditions exist; Š whether customer acceptance has been achieved; and Š progress on certain consulting projects where revenue is recognized on a proportional performance basis. We review customer agreements and utilize advice from legal counsel, as appropriate, in evaluating the binding nature of contract terms and conditions, as well as whether customer acceptance has been achieved. We estimate progress on consulting project deliverables based on our knowledge and judgment about the current status of individual consulting engagements. 30 Historically, our judgments and estimates have been reasonably accurate, as we have not experienced significant disputes with our customers regarding the timing and acceptance of delivered products and services. However, our actual experience in future periods with respect to binding terms and conditions and customer acceptance may differ from our historical experience. Business Combinations We allocate the total cost of an acquisition to the underlying net assets based on their respective estimated fair values. As part of this allocation process, we identify and attribute values and estimated lives to the intangible assets acquired. These determinations involve significant estimates and assumptions about several highly subjective variables, including future cash flows, discount rates, and asset lives. There are also different valuation models for each component, the selection of which requires considerable judgment. Our estimates and assumptions may be based, in part, on the availability of listed market prices or other transparent market data. These determinations will affect the amount of amortization expense recognized in future periods. We base our fair value estimates on assumptions we believe are reasonable, but recognize that the assumptions are inherently uncertain. Depending on the size of the purchase price of a particular acquisition and the mix of intangible assets acquired, the purchase price allocation could be materially impacted by applying a different set of assumptions and estimates. Goodwill and Other Intangible Assets We make various assumptions about our goodwill and other intangible assets, including their estimated useful lives and whether any potential impairment events have occurred. We perform an impairment analysis on the carrying values of goodwill and indefinite-lived intangible assets at least annually. Additionally, we review the carrying value of goodwill and other intangible assets whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. Examples of such events or changes in circumstances, many of which are subjective in nature, include the following: Š significant negative industry or economic trends, Š a significant change in the manner of our use of the acquired assets or our strategy, Š a significant decrease in the market value of the asset, and Š a significant change in legal factors or in the business climate that could affect the value of the asset. If an impairment indicator is present, we perform an analysis to confirm whether an impairment has actually occurred and if so, the amount of the required charge. We begin the analysis by determining the fair value of the asset, which we calculate based on projected future cash flows. The determination of fair value requires a number of significant assumptions and judgments, including assumptions about future economic conditions, revenue growth, operating margins, and discount rates. For finite-lived intangible assets, we review the carrying amount at least annually to determine whether current events or circumstances require an adjustment to the carrying amount. A finite-lived intangible asset is considered to be impaired if its carrying value exceeds the estimated future undiscounted cash flows to be derived from it. Any impairment is measured by the amount that the carrying value of such assets exceeds their fair value. For indefinite-lived intangible assets other than goodwill, we evaluate for impairment by comparing the amount that the carrying value of such assets exceeds their fair value, primarily based on estimated discounted cash flows. We exercise judgment in selecting the assumptions used in the estimated discounted cash flows analysis. 31 For goodwill, we determine the fair value of each reporting unit, then compare the fair value of each reporting unit to its carrying value. If carrying value exceeds fair value for any reporting unit, then we calculate and compare the implied fair value of goodwill to the carrying amount of goodwill and record an impairment charge for any excess of carrying value over implied fair value. The use of different estimates or assumptions within our projected future cash flows model, or the use of a methodology other than a projected future cash flow model, could result in significantly different fair values for our goodwill and other intangible assets. Income Taxes We exercise significant judgment in determining our provision for income taxes, current tax assets and liabilities, deferred tax assets and liabilities, our future taxable income (for purposes of assessing our ability to realize future benefit from our deferred tax assets), and recorded reserves related to uncertain tax positions. A valuation allowance is established to reduce our deferred tax assets to the amount that is considered more likely than not to be realized through the generation of future taxable income and other tax planning opportunities. To the extent that a determination is made to establish or adjust a valuation allowance, the expense or benefit is recorded in the period in which the determination is made. If actual results differ from estimates we have used, or if we adjust these estimates in future periods, our operating results and financial position could be materially affected. Pension and Post-retirement Benefits We have defined benefit plans that cover the majority of our employees in the U.S. and a limited number of employees in the U.K. We also have post-retirement plans in the U.S. that provide medical benefits for certain retirees and their eligible dependents. We make a number of key assumptions in measuring our plan obligations, many of which are highly susceptible to change from period to period. These assumptions include the discount rate, the long- term expected return on plan assets, the rate of future salary increases, and various demographic assumptions, as follows: Š Discount rate—we utilized a bond matching model that averages a bond universe of about 500 AA-graded non-callable bonds between the 10th and 90th percentiles for each maturity group as a proxy for setting the discount rate at year-end. Š Asset returns are based upon the anticipated average rate of earnings expected on invested funds of the plan over the long-term. Š Salary increase assumptions are based upon historical experience and anticipated future management actions. Š Demographic assumptions, such as turnover, retirement and disability, are based upon historical experience and are monitored on a continuing basis to determine if adjustments to these assumptions are warranted in order to better reflect anticipated future experience. Depending on the assumptions and estimates used, our net periodic pension and post-retirement benefit expense could vary significantly within a range of possible outcomes and could have a material impact on our financial results. Discount rates and expected rates of return on plan assets are selected at the end of a given fiscal year and will impact expense in the subsequent year. A fifty-basis-point decrease in certain 32 assumptions made at the beginning of 2010 would have resulted in the following effects on 2010 pension expense and the projected benefit obligation (PBO) as of November 30, 2010: Change in Assumption Impact to Pension Results—U.S. Plan Increase/ (Decrease) on 2010 Pre-Tax Expense Increase/ (Decrease) on November 30, 2010 PBO (In thousands) 50-basis-point decrease in discount rate . . . . . . . . . . . . . . . . . . . . . . . 50-basis-point increase in discount rate . . . . . . . . . . . . . . . . . . . . . . . . 50-basis-point decrease in expected return on assets . . . . . . . . . . . . 50-basis-point increase in expected return on assets . . . . . . . . . . . . . $ 1,302 $(1,206) $(1,222) $ 1,222 $10,437 $ (9,569) $ — $ — Change in Assumption Impact to Pension Results—U.K. Plan Increase/ (Decrease) on 2010 Pre-Tax Expense Increase/ (Decrease) on November 30, 2010 PBO (In thousands) 50-basis-point decrease in discount rate . . . . . . . . . . . . . . . . . . . . . . . 50-basis-point increase in discount rate . . . . . . . . . . . . . . . . . . . . . . . . 50-basis-point decrease in expected return on assets . . . . . . . . . . . . 50-basis-point increase in expected return on assets . . . . . . . . . . . . . £ 97 £ (95) £(100) £ 100 £ 2,890 £(2,530) £ — £ — Stock-Based Compensation Our stock plans provide for the grant of various equity awards, including performance-based awards. As of November 30, 2010, we had outstanding stock-based awards for 2.9 million shares of our stock, of which approximately 1.0 million shares were subject to performance-based awards, assuming target payout of the performance awards in 2012 and beyond. For time-based grants, we calculate stock-based compensation cost by multiplying the grant date fair market value by the number of shares granted, reduced for estimated forfeitures. The estimated forfeiture rate is based on historical experience, and we update our calculations quarterly based on actual experience. For performance-based grants, we calculate stock-based compensation cost by multiplying the grant date fair market value by the number of shares granted, reduced for estimated forfeitures. We assume that shares will vest at target, and we evaluate that assumption each quarter and adjust as appropriate when it appears probable that the shares will vest at a level other than target. For example, in the event we do not achieve the projected performance metrics for 2011, 2012, or 2013, our stock based compensation expense would decrease. Conversely, if we exceed the projected performance metrics, our stock-based compensation would increase. Since we only had outstanding options exercisable for 0.2 million shares of common stock as of November 30, 2010, changes in valuation assumptions for stock options will not materially affect our financial results. However, if the number of options granted materially increases in the future, the likelihood that changes in our valuation assumptions could materially impact our financial results also increases. 33 Results of Operations Total Revenue Total revenue for 2010 increased 11% compared to 2009. Total revenue for 2009 increased 15% compared to 2008. The table below displays the percentage point change in revenue due to organic, acquisitive, and foreign currency factors when comparing 2010 to 2009 and 2009 to 2008. (All amounts represent percentage points) Increase (Decrease) in Total Revenue Foreign Currency Acquisitive Organic 2010 vs. 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2009 vs. 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5% 3% 5% 16% 1% (4)% 2010 vs. 2009. The 5% organic revenue growth for 2010 was driven primarily by a 6% increase in our subscription-based business. Subscriptions make up approximately 78% of our overall business; therefore, changes in subscription sales patterns have a proportionately larger impact on the direction of our total revenues. We also benefited from growth within the non-subscription parts of the business, including revenue from the triennial release of the Boiler Pressure Vessel Code (BPVC) engineering standard. The acquisition-related revenue growth for 2010 was due to acquisitions we made this year, as well as the run-out of acquisitions made in 2009. Acquisitions made during 2010 include the following: Š Emerging Energy Research (EER) in the first quarter of 2010, Š CSM Worldwide (CSM) and Quantitative Micro Software (QMS) in the second quarter of 2010, and Š Access Intelligence, Atrion, Syntex, and iSuppli/Screen Digest in the fourth quarter of 2010. 2009 vs. 2008. The 3% organic revenue growth for 2009 was driven primarily by a 9% increase in our subscription-based business, due in part to higher sales of Energy and Product Lifecycle information. This increase was partially offset by significant organic decreases in our non-subscription businesses, most notably consulting and transaction revenue, which both suffered from softness in business due to the difficult economy. The acquisition-related revenue growth for 2009 was partially due to acquisitions made during 2009, but was primarily due to the fourth quarter 2008 acquisition of Global Insight. Acquisitions made during 2009 include the following: Š The remaining 49.9% interest in Fairplay (giving us 100% ownership of Fairplay) in the third quarter of 2009, and Š LogTech Canada Ltd. (LogTech) and Environmental Support Solutions, Inc. (ESS) in the fourth quarter of 2009. We evaluate revenue by segment in order to better understand our customers’ needs in the geographies where they reside. We also supplementally review revenue by transaction type and information domain. Understanding revenue by transaction type helps us identify changes related to recurring revenue and product margin, while revenue by information domain helps us understand performance based on our capabilities as we define them. 34 Revenue by Segment (geography) (In thousands, except percentages) 2010 % Change 2010 vs. 2009 2009 % Change 2009 vs. 2008 2008 Americas revenue . . . . . . . . . . . . . . . . $ 670,811 11% $602,641 16% $520,925 As a percent of total revenue . . . . EMEA revenue . . . . . . . . . . . . . . . . . . . As a percent of total revenue . . . . APAC revenue . . . . . . . . . . . . . . . . . . . As a percent of total revenue . . . . 62% 62% 62% 311,916 8% 287,855 9% 263,457 29% 30% 31% 92,733 21% 76,804 29% 59,648 9% 8% 7% Total revenue . . . . . . . . . . . . . . . . . . . . $1,075,460 11% $967,300 15% $844,030 The percentage change in each geography segment is due to the factors described in the following table. 2010 vs. 2009 2009 vs. 2008 Organic Acquisitive Foreign Currency Organic Acquisitive Foreign Currency Americas revenue . . . . . . . . . . . . . . . . . . EMEA revenue . . . . . . . . . . . . . . . . . . . . . APAC revenue . . . . . . . . . . . . . . . . . . . . . 4% 6% 8% 6% 3% 11% 1% 0% 1% 3% 1% 13% 14% 18% 20% (2)% (10)% (4)% 2010 vs. 2009. We began to see a turn in our organic revenue growth numbers in the second quarter of 2010. Our growth rate, while still positive, had been decelerating, which we attributed to the general difficult worldwide economic conditions. We are now experiencing a period of modestly accelerating organic growth, led by continuing increases in the subscription business in all three regions. We also had the benefit of the BPVC sales in our 2010 numbers, which aided in the overall growth of the non-subscription portion of the business. APAC is continuing to grow in all areas of the business, and we expect to continue expanding our sales efforts in that region. 2009 vs. 2008. The worldwide economic conditions in 2009 had a negative impact on the Americas and EMEA regions growth. While we still saw positive organic revenue growth in each region, our growth rates were down from recent historical results. Our subscription-based organic revenue growth was positive in each region, but was largely offset by organic decreases in consulting and transaction revenue. The APAC region expanded in all areas of the business as we began concentrating more of our efforts to address the emerging markets in that region. Revenue by Transaction Type (In thousands, except percentages) 2010 % Change 2010 vs. 2009 2009 % Change 2009 vs. 2008 2008 Subscription revenue . . . . . . . . . . . . . . $ 836,039 12% $749,123 19% $627,164 As a percent of total revenue . . . Consulting revenue . . . . . . . . . . . . . . . As a percent of total revenue . . . Transaction revenue . . . . . . . . . . . . . . As a percent of total revenue . . . Other revenue . . . . . . . . . . . . . . . . . . . As a percent of total revenue . . . 78% 62,331 6% 64,162 6% 3% 9% 77% 60,496 6% 74% 8% 56,197 7% 58,980 (15)% 69,614 6% 8% 112,928 14% 98,701 8% 91,055 11% 10% 11% Total revenue . . . . . . . . . . . . . . . . . . . . $1,075,460 11% $967,300 15% $844,030 35 2010 vs. 2009. Subscription-based revenue is at the core of our business model, and we continue to maintain a high percentage of our revenue in subscriptions. In 2010, approximately half of the subscription-based revenue increase was due to organic growth and the other half was due to acquisition-related growth. Growth in 2010 consulting revenue was due to acquisition activity, offset by 9% organic revenue declines. We experienced 16% Transaction organic revenue growth in 2010, in large part due to the sales of BPVC in the third quarter of 2010. Other revenue growth was primarily due to acquisition activity in 2010. 2009 vs. 2008. Subscription-based revenue grew 9% organically in 2009 due in part to higher sales of Energy and Product Lifecycle Information, among other things. Consulting revenue decreased 25% organically due to softness in demand for our consulting services, primarily in our Energy domain. Transaction revenue was down 18% organically due to slowing in the Product Lifecycle and Energy single document businesses. The organic decreases in consulting and transaction revenues were more pronounced because they were more adversely affected by the economic environment than was our subscription business. Other revenue was flat organically as higher sales of Product Lifecycle parts products were offset by lower Energy software sales. Revenue by Information Domain (In thousands, except percentages) 2010 % Change 2010 vs. 2009 2009 % Change 2009 vs. 2008 2008 Energy revenue . . . . . . . . . . . . . . . . . . $ 472,240 5% $448,798 1% $442,919 As a percent of total revenue . . . . Product Lifecycle revenue . . . . . . . . . . As a percent of total revenue . . . . Security revenue . . . . . . . . . . . . . . . . . . As a percent of total revenue . . . . Environment revenue . . . . . . . . . . . . . . As a percent of total revenue . . . . Macroeconomic Forecasting and Intersection revenue . . . . . . . . . . . . . As a percent of total revenue . . . . 44% 46% 52% 344,935 15% 298,968 3% 290,637 32% 31% 112,061 6% 105,566 10% 11% 61,015 84% 33,195 40% 48% 6% 3% 34% 75,192 9% 22,456 3% 85,209 5% 80,773 530% 12,826 8% 8% 2% Total revenue . . . . . . . . . . . . . . . . . . . . $1,075,460 11% $967,300 15% $844,030 2010 vs. 2009. Our Energy domain revenue continues to be our most significant source of revenue, and grew during 2010 as we continued to see improving trends in our core Energy subscription offerings. Product Lifecycle revenue increases were driven by inclusion of the BPVC sales, as well as continuing solid organic growth and the inclusion of the CSM Worldwide acquisition. We continue to see good organic growth in Security revenue, in large part due to sales of our maritime offerings. Environment’s significant revenue increases were primarily due to recent acquisitions, helped by positive organic growth. The Macroeconomic Forecasting and Intersection revenue supports all of the other domains, and increased proportionally with the increases we saw in the other domains. All of our domains had positive organic growth in 2010. 2009 vs. 2008. Revenue growth for the Energy domain was primarily due to an increase in the subscription-based business, which was largely offset by the impact of unfavorable foreign currency rates and a decrease in consulting revenue. Product Lifecycle domain growth was primarily due to an increase in the subscription-based business as well as acquisitions, partially offset by the impact of unfavorable foreign currency rates. Revenue growth for the Security domain was primarily the result of consolidating Fairplay as of December 1, 2008, although higher subscription-based revenue also 36 contributed to the increase. Environment domain revenue growth was primarily the result of acquisitions. Macroeconomic Forecasting and Intersection revenue growth was primarily attributable to the Global Insight acquisition in October 2008. Each of our domains experienced positive organic growth in 2009. Operating Expenses We continuously evaluate our operating expenses and look for opportunities to improve margins and manage expenses. In 2010, we eliminated approximately three percent of our worldwide workforce. We also continued to make progress on our Vanguard initiative, which is our plan for consolidating and standardizing billing systems, general ledgers, sales-force automation capabilities and all supporting business processes. We are taking a phased implementation approach to Vanguard in order to ensure no disruption to our business or our customers. The following table shows our operating expenses and the associated percentages of revenue. (In thousands, except percentages) 2010 % Change 2010 vs. 2009 2009 % Change 2009 vs. 2008 2008 Operating expenses: Cost of revenue . . . . . . . . . . . . . . . . . . . . $457,878 12% $409,946 10% $373,231 As a percent of total revenue . . . . . SG&A expense . . . . . . . . . . . . . . . . . . . . As a percent of total revenue . . . . . Depreciation and amortization expense . . . . . . . . . . . . . . . . . . . . . . . . As a percent of total revenue . . . . . Supplemental information: SG&A expense excluding stock-based compensation . . . . . . . . . . . . . . . . . . . . As a percent of total revenue . . . . . Cost of Revenue and Sales Margins 43% 42% 44% 358,012 8% 332,518 13% 295,523 33% 34% 35% 59,474 21% 49,146 25% 39,410 6% 5% 5% 295,171 6% 277,970 8% 256,912 27% 29% 30% In 2010, 2009, and 2008, cost of revenue increased in line with the increase in revenue. Sales margins, which we define as revenue less cost of sales, divided by total sales, were also largely unchanged in total for the three years. The following table shows the sales margin percentages and percentage point change by operating segment. (Percentages) 2010 % Change 2010 vs. 2009 2009 % Change 2009 vs. 2008 2008 Americas sales margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . EMEA sales margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . APAC sales margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total sales margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59% 55% 61% 57% 0% 0% (2)% (1)% 59% 55% 63% 58% 1% 3% 4% 2% 58% 52% 59% 56% As we have discussed in recent periods, the rate of sales margin expansion has been slowing due to product mix changes, and the acquisition of businesses with lower margins than ours has also moderated sales margin expansion, although, as is the case with many of our acquisitions, we expect to bring the margin profile up throughout the first year of ownership. We anticipate that sales margin expansion will be flat to slightly up for the near term. 37 The 2009 improvement in our sales margins for each of the three regions and for the company overall was driven primarily by sales mix, as we experienced higher growth rates in our subscription products, and to cost reductions resulting from the third quarter 2008 restructuring. In general, our subscription- based revenue generates higher contribution margins as it has a relatively fixed cost structure whereas consulting and transaction revenue have comparatively lower contribution margins due to the variable nature of the costs associated with those revenue streams. Selling, General and Administrative (SG&A) Expense We typically evaluate our SG&A expense excluding stock-based compensation expense. The 2010 total dollar increase in this line item was primarily due to acquisition-related activity, but the percentage improvements in this category reflect a continued focus on the cost structure of our business. The 2009 total dollar increase in SG&A expense was also driven primarily by acquisition-related activity, partially offset by foreign currency movements. Depreciation and Amortization Expense For 2010, compared to 2009, our depreciation and amortization expense increased primarily due to the increase in depreciable and amortizable assets from acquisitions, as well as an increase of approximately $4 million in capital expenditures. For 2009, compared to 2008, the increase was primarily due to the addition of depreciable and amortizable assets from acquisitions made in 2009, as well as an increase in capital expenditures of $14 million over 2008. Restructuring We restructured in 2008 and again in 2010, as more fully explained in Note 4 to the Consolidated Financial Statements in this Form 10-K. As a result of our most recent restructuring in the third quarter of 2010, we expect to realize an $8-10 million improvement annually to pre-tax income and adjusted EBITDA as a result of our actions. Operating Income by Segment (geography) (In thousands, except percentages) 2010 % Change 2010 vs. 2009 2009 % Change 2009 vs. 2008 2008 Americas operating income . . . . . . . . . . $ 203,451 6% $191,754 19% $160,757 As a percent of segment revenue . . . . . . . . . . . . . . . . . . . . EMEA operating income . . . . . . . . . . . . 30% 32% 31% 69,689 15% 60,576 38% 43,758 As a percent of segment revenue . . . . . . . . . . . . . . . . . . . . APAC operating income . . . . . . . . . . . . . 22% 21% 17% 29,574 20% 24,650 36% 18,098 As a percent of segment revenue . . . . . . . . . . . . . . . . . . . . Shared services operating loss . . . . . . . 32% (115,971) 32% (97,094) 30% (89,602) Total operating income . . . . . . . . . . . . . $ 186,743 4% $179,886 35% $133,011 As a percent of total revenue . . . . . 17% 19% 16% 2010 vs. 2009. Fiscal 2010 was impacted by the recording of a net $9.0 million restructuring charge. Without this charge, operating income as a percentage of revenue for 2010 would have been 18.2%. 38 The increase in Americas operating income was primarily due to increasing strength in our subscription revenue growth, partially offset by the third quarter 2010 restructuring charge of $7.7 million related to the Americas segment. We also saw positive benefit from the addition of acquisition activity during the year. The increase in operating income for the EMEA segment during 2010 was primarily due to the high organic growth rate within revenue, the leveraging of the EMEA cost structure, and the positive benefit of recent acquisitions in the region. The EMEA increase was partially offset by the EMEA portion of the third quarter 2010 restructuring charge ($1.3 million). The increase in APAC operating income was primarily due to the CSM Worldwide acquisition, which has significant operations in the APAC region, but the increase was also driven by continuing strength in our businesses in the APAC segment. Our shared services operating income decreased primarily because of the increase in stock-based compensation expense for 2010. We allocate all stock-based compensation expense to our shared services function. 2009 vs. 2008. Fiscal 2008 was impacted by the recording of a $12.1 million restructuring charge. Without this charge, the operating income as a percentage of revenue for 2008 would have been 17.2%. Operating income for our Americas segment for 2008 included a restructuring charge of $5.8 million. Without the restructuring charge, operating income as a percentage of revenue would have been 32.0% in 2008, in line with 2009. Operating income for our EMEA segment increased primarily due to higher sales margins in 2009 and the fact that 2008 included a $5.9 million restructuring charge. Without the restructuring charge, the operating income as a percentage of revenue would have been 18.8% in 2008. Operating income for our APAC segment increased due to the mix of products sold with higher growth of higher margin subscription-based products in 2009. Provision for Income Taxes. Our effective tax rates for the year ended November 30, 2010 was 23.7%, compared to 23.2% in 2009 and 28.1% in 2008. The 2010 effective tax rates reflect the benefit from a tax election made during the second quarter of 2010. The 2009 rate reflects the impact of several EMEA activities, including discrete period tax benefits recognized from the successful outcome of an appeal and a favorable ruling, as well as the full year impact of our internal legal entity reorganization within EMEA that occurred in the third quarter of 2008. Adjusted EBITDA (non-GAAP measure) All of the reconciling items included in the following table are either (i) non-cash items (e.g., depreciation and amortization, stock-based compensation, non-cash pension and post-retirement expense) or (ii) items that we do not consider to be useful in assessing our operating performance (e.g., income taxes, restructuring charges, and gain on sale of assets). In the case of the non-cash items, we believe that investors can better assess our operating performance if the measures are presented without such items because, unlike cash expenses, these adjustments do not affect our ability to generate free cash flow or invest in our business. For example, by eliminating depreciation and amortization from EBITDA, users can compare operating performance without regard to different 39 accounting determinations such as useful life. In the case of the other items, we believe that investors can better assess operating performance if the measures are presented without these items because their financial impact does not reflect ongoing operating performance. (In thousands, except percentages) 2010 % Change 2010 vs. 2009 2009 % Change 2009 vs. 2008 2008 Net income attributable to IHS Inc. . . . . . $141,315 (655) 2,036 43,993 59,474 Interest income . . . . . . . . . . . . . . . . . Interest expense . . . . . . . . . . . . . . . . Provision for income taxes . . . . . . . Depreciation and amortization . . . . 5% $134,963 (1,088) 2,217 41,512 49,146 36% $ 98,993 (3,162) 2,482 38,444 39,410 EBITDA. . . . . . . . . . . . . . . . . . . . . . . . . . . $246,163 9% $226,750 29% $176,167 Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . Restructuring charges (credits) . . . . Gain on sales of assets, net . . . . . . Non-cash net periodic pension and post-retirement expense (income) . . . . . . . . . . . . . . . . . . . . Loss (income) from discontinued 66,474 9,022 — 3,407 operations, net . . . . . . . . . . . . . . . 54 57,112 (735) (365) (4,006) 138 39,972 12,089 (328) (5,551) (432) Adjusted EBITDA . . . . . . . . . . . . . . . . . . . $325,120 17% $278,894 26% $221,917 Our 2010 adjusted EBITDA increased primarily because of our improving organic revenue growth, the acquisitions we have made, our focus on costs, and the leverage in our business model. Our 2009 adjusted EBITDA increased for the same reasons. We continue to use these mechanisms to improve our overall results. Financial Condition (In thousands, except percentages) As of November 30, 2010 As of November 30, 2009 $ Change % Change Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . Accrued compensation . . . . . . . . . . . . . . . . . . . . . . . . . Deferred subscription revenue . . . . . . . . . . . . . . . . . . . $256,552 $ 51,233 $392,132 $203,500 $ 44,196 $319,163 $53,052 $ 7,037 $72,969 26% 16% 23% The increase in our accounts receivable balance is due to a combination of organic growth and the addition of our 2010 acquisitions. The change in accrued compensation is primarily due to the impact of payroll timing and an increased number of employees, who were added primarily through acquisitions in 2010. The increase in deferred subscription revenue was primarily attributable to acquisitive growth, but also includes robust organic growth. As of November 30, 2010, the organic growth rate implied within deferred subscription revenue was 10%. While this is a leading indicator for our subscription-based business, we rely on it primarily as a directionally accurate indicator. Liquidity and Capital Resources As of November 30, 2010, we had cash and cash equivalents of $201 million and $294 million of debt. We have generated strong cash flows from operations over the last few years. On a trailing twelve month basis, our conversion of Adjusted EBITDA to free cash flow was 72%; excluding restructuring payments, our conversion ratio was 75%. Because of our cash, debt, and cash flow positions, as well 40 as the new financing that we secured in January 2011 (see Note 8 to the Consolidated Financial Statements in this Form 10-K), we believe we will have sufficient cash to meet our working capital and capital expenditure needs. Our future capital requirements will depend on many factors, including the level of future acquisitions, the need for additional facilities or facility improvements, the timing and extent of spending to support product development efforts, the expansion of sales and marketing activities, the timing of introductions of new products, changing technology, investments in our internal business applications, and the continued market acceptance of our offerings. We could be required, or could elect, to seek additional funding through public or private equity or debt financing for any possible future acquisitions; however, additional funds may not be available on terms acceptable to us or at all. We expect to incur approximately $35-40 million in capital expenditures for 2011. Cash Flows (In thousands, except percentages) 2010 Net cash provided by operating % Change 2010 vs. 2009 2009 % Change 2009 vs. 2008 2008 activities . . . . . . . . . . . . . . . . . . . . . . $ 266,188 13% $ 234,694 24% $ 189,249 Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . (366,960) 138% (154,038) (46)% (284,949) Net cash provided by (used in) financing activities . . . . . . . . . . . . . . 181,602 (1) 407 (112)% (3,509) (1) Not meaningful. 2010 vs. 2009. The increase in net cash provided by operating activities was principally due to profitable business growth year over year, as evidenced by increased sales activity, which led to a higher deferred subscription revenue balance. Our payables and accrued liabilities balances increased year over year, but were offset by higher receivables balances related to our growth, as well as cash outflows relating to our third quarter 2010 restructuring activity. Our subscription-based business model continues to be a cash flow generator that is aided by the following factors: Š positive working capital characteristics that do not generally require substantial working capital increases to support our growth, Š a cash-for-tax rate that is trending with our effective tax rate (below 30%), and Š our well-capitalized balance sheet. The increase in net cash used in investing activities was almost all due to increased acquisition activity in 2010 compared to 2009, with increased capital expenditures in 2010 accounting for the remainder of the difference. We continue to believe that it is important for us to re-invest our earnings and cash flows into our business to increase our return to shareholders. The increase in net cash provided by financing activities was principally due to increased borrowings on our credit facility to fund acquisitions, partially offset by an increase in repurchases of our common stock through our share repurchase program used for statutory withholding requirements associated with the vesting of shares under our employee stock program. 2009 vs. 2008. The increase in net cash provided by operating activities was principally due to our business growing profitably year over year, our positive receivables collections in 2009, and the continued positive impact of our acquisitions. The positive cash flow impact of our growing business in 2009 was partially offset by the decreased accounts payable and accrued expenses as we paid certain restructuring costs in 2009 as well as payments to standards groups in 2009 that were accrued for as of November 2008. 41 The decrease in cash used in investing activities was primarily driven by the fact that there was decreased acquisition volume in 2009. In 2009, we used $125 million in acquisitions of businesses compared to $273 million in 2008. In 2009, our cash flows from financing activities included net repayment of borrowings of $4 million, while in 2008 we had net borrowings of $77 million on our credit facility and other notes payable. In addition, in 2009 we had $10 million in repurchases of common stock while in 2008 we had $84 million, as we were active in the open market during 2008. Free Cash Flow (non-GAAP measure) The following table reconciles our non-GAAP free cash flow measure to net cash provided by operating activities. (In thousands, except percentages) Net cash provided by operating 2010 % Change 2010 vs. 2009 2009 % Change 2009 vs. 2008 2008 activities . . . . . . . . . . . . . . . . . . . . . . . . $266,188 $234,694 $189,249 Capital expenditures on property and equipment . . . . . . . . . . . . . . . (31,836) (27,739) (13,885) Free cash flow . . . . . . . . . . . . . . . . . . . . . $234,352 13% $206,955 18% $175,364 Our free cash flow has historically been very healthy, and we expect that it will continue to be a significant source of funding for our business strategy of growth through organic and acquisitive means. Credit Facility and Other Debt Please refer to Note 8 of the Consolidated Financial Statements in this Form 10-K for a discussion of the current status of our credit facility and debt, including our new financing arrangement completed in January 2011. In 2010, particularly the fourth quarter, we made significant additional borrowings against our revolving credit agreement in order to fund acquisitions and working capital requirements. In January 2011, we elected to implement a new credit facility since we had less than two years remaining on our prior credit facility, and as market conditions had improved substantially. In completing the new $1 billion credit facility, we added capacity to fund future acquisitions. Share Repurchase Program Please refer to Part II, Item 5 and to Note 16 of the Consolidated Financial Statements in this Form 10-K for a discussion of our share repurchase programs and associated activity. Off-Balance Sheet Transactions We have no off-balance sheet transactions. Contractual Obligations and Commercial Commitments We have various contractual obligations and commercial commitments which are recorded as liabilities in our consolidated financial statements. Other items, such as certain purchase commitments and other executory contracts, are not recognized as liabilities in our consolidated financial statements but 42 are required to be disclosed. The following table summarizes our contractual obligations and commercial commitments at November 30, 2010, along with the obligations associated with the term loan that we entered into on January 5, 2011, and the future periods in which such obligations are expected to be settled in cash: Contractual Obligations and Commercial Commitments Total Less than 1 year 1 - 3 years 3 - 5 years (In thousands) More than 5 years Payment due by period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $320,925 $20,299 $ 54,686 $245,940 $ — 168,393 Debt Operating lease obligations . . . . . . . . . . . . . . . Post-retirement medical-benefit plan 36,374 24,599 41,056 66,364 contributions . . . . . . . . . . . . . . . . . . . . . . . . . . Unconditional purchase obligations . . . . . . . . . 8,430 14,792 878 7,222 1,794 6,432 1,765 1,138 3,993 — Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $512,540 $52,998 $103,968 $285,217 $70,357 We expect to contribute approximately $1.7 million to the UK RIP and approximately $0.7 million to the SIP during 2011. We do not expect to make any contributions for the U.S. RIP in 2011. Recent Accounting Pronouncements In October 2009, the FASB issued guidance on revenue recognition that will become effective for us beginning December 1, 2010. Under the new guidance, when vendor specific objective evidence (VSOE) or third party evidence for deliverables in an arrangement cannot be determined, a best estimate of the selling price is required to separate deliverables and allocate arrangement consideration using the relative selling price method. The new guidance includes new disclosure requirements on how the application of the relative selling price method affects the timing and amount of revenue recognition. The adoption of the update will not have a material impact on our financial position and results of operations. Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk As of November 30, 2010, we had no investments other than cash and cash equivalents and therefore we were not exposed to material interest rate risk on investments. We may be exposed from time to time to changes in interest rates that may adversely affect our results of operations and financial position related to our debt. A 10% adverse change in interest rates would result in hypothetical increase of approximately $0.3 million in interest expense. Foreign Currency Exchange Rate Risk Our consolidated financial statements are expressed in U.S. dollars, but a portion of our business is conducted in currencies other than U.S. dollars. Changes in the exchange rates for such currencies into U.S. dollars can affect our revenues, earnings, and the carrying values of our assets and liabilities in our consolidated balance sheet, either positively or negatively. Fluctuations in foreign currency rates increased (decreased) our revenues by $6.1 million, $(36.8) million, and $(2.6) million for the years ended November 30, 2010, 2009, and 2008, respectively, and increased (decreased) our operating income by $1.1 million, $(5.1) million, and $1.0 million for the same respective periods. The translation effects of changes in exchange rates in our consolidated balance sheet are recorded within the cumulative translation adjustment component of our shareholders’ equity. In 2010, we recorded cumulative translation loss of $18 million, reflecting changes in exchange rates of various currencies compared to the U.S. dollar. 43 A 10% change in the currencies that we are primarily exposed to would have impacted our 2010 revenue and operating income by approximately $31.1 million and $6.4 million, respectively. Approximately 56% of total revenue was earned in subsidiaries with the U.S. dollar as the functional currency. Credit Risk We are exposed to credit risk associated with cash equivalents, foreign currency derivatives, and trade receivables. We do not believe that our cash equivalents or foreign currency derivatives present significant credit risks because the counterparties to the instruments consist of major financial institutions that are financially sound or have been capitalized by the U.S. government, and we manage the notional amount of contracts entered into with any one counterparty. Substantially all trade receivable balances are unsecured. The concentration of credit risk with respect to trade receivables is limited by the large number of customers in our customer base and their dispersion across various industries and geographic areas. We perform ongoing credit evaluations of our customers and maintain an allowance for potential credit losses. 44 Item 8. Financial Statements and Supplementary Data Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Management’s Report on Internal Control Over Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Consolidated Financial Statements Consolidated Balance Sheets as of November 30, 2010 and 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Consolidated Statements of Operations for the Years Ended November 30, 2010, 2009, and 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Consolidated Statement of Changes in Shareholders’ Equity for the Years Ended November 30, 2010, 2009, and 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Consolidated Statements of Cash Flows for the Years Ended November 30, 2010, 2009, and 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Notes to Consolidated Financial Statements for the Years Ended November 30, 2010, 2009, and 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 45 Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders of IHS Inc. We have audited the accompanying consolidated balance sheets of IHS Inc. as of November 30, 2010 and 2009, and the related consolidated statements of operations, changes in shareholders’ equity, and cash flows for each of the three years in the period ended November 30, 2010. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of IHS Inc. at November 30, 2010 and 2009, and the consolidated results of its operations and its cash flows for each of the three years in the period ended November 30, 2010, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), IHS Inc.’s internal control over financial reporting as of November 30, 2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated January 14, 2011 expressed an unqualified opinion thereon. /s/ Ernst & Young LLP Denver, Colorado January 14, 2011 46 Management’s Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of November 30, 2010, based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, our management concluded that our internal control over financial reporting was effective as of November 30, 2010. Our independent registered public accounting firm has issued an audit report on our internal control over financial reporting. Their report appears on the following page. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Date: January 14, 2011 /s/ JERRE L. STEAD Jerre L. Stead Chairman and Chief Executive Officer /s/ MICHAEL J. SULLIVAN Michael J. Sullivan Executive Vice President and Chief Financial Officer 47 Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting The Board of Directors and Shareholders of IHS Inc. We have audited IHS Inc.’s internal control over financial reporting as of November 30, 2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). IHS Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, IHS Inc. maintained, in all material respects, effective internal control over financial reporting as of November 30, 2010, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of IHS Inc. as of November 30, 2010 and 2009, and the related consolidated statements of operations, changes in shareholders’ equity, and cash flows for each of the three years in the period ended November 30, 2010 and our report dated January 14, 2011 expressed an unqualified opinion thereon. /s/ Ernst & Young LLP Denver, Colorado January 14, 2011 48 IHS Inc. Consolidated Balance Sheets As of November 30, 2009 2010 (In thousands) Assets Current assets: Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 200,735 $ 124,201 203,500 Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,279 Deferred subscription costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,970 Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,284 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other 256,552 41,449 33,532 20,466 Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-current assets: 552,734 413,234 Property and equipment, net Intangible assets, net Goodwill, net Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93,193 384,568 1,120,830 4,377 74,798 309,795 875,742 2,019 Total non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,602,968 1,262,354 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,155,702 $1,675,588 Liabilities and shareholders’ equity Current liabilities: Short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income tax payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred subscription revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,054 $ 35,854 51,233 24,338 51,307 4,350 392,132 Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued pension liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued post-retirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Commitments and contingencies 578,268 275,095 25,104 10,056 73,586 17,512 92,577 26,470 44,196 25,666 39,385 1,720 319,163 549,177 141 19,194 9,914 68,334 15,150 Shareholders’ equity: Class A common stock, $0.01 par value per share, 160,000,000 and 80,000,000 shares authorized; 66,250,283 and 64,801,035 shares issued; 64,248,547 and 63,283,947 shares outstanding at November 30, 2010 and 2009, respectively . . . . . . . . . . . . . . . . . . . . . Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Treasury stock, at cost; 2,001,736 and 1,517,088 shares at November 30, 2010 and 2009, respectively . . . . . . . . . . . . . . . . . . . . . Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . 662 541,108 648 472,791 (101,554) 860,497 (124,632) (75,112) 719,182 (103,831) Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,176,081 1,013,678 Total liabilities and shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,155,702 $1,675,588 See accompanying notes. 49 IHS Inc. Consolidated Statements of Operations Years Ended November 30, 2009 2010 2008 Revenue: (In thousands, except per-share amounts) Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 937,383 $840,129 $722,311 121,719 Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127,171 138,077 Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,075,460 967,300 844,030 Operating expenses: Cost of revenue: Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 383,499 74,379 339,950 69,996 295,429 77,802 Total cost of revenue (includes stock-based compensation expense of $3,633; $2,564; and $1,361 for the years ended November 30, 2010, 2009, and 2008, respectively) . . . . . . . . Selling, general and administrative (includes stock-based compensation expense of $62,841; $54,548; and $38,611 for the years ended November 30, 2010, 2009, and 2008, respectively) . . . . . . . . . . . . . . . . Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Restructuring charges (credits) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gain on sales of assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net periodic pension and post-retirement expense (income) . . . . . . . . . . Other income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 457,878 409,946 373,231 358,012 59,474 9,022 — 4,784 (453) 332,518 49,146 (735) (365) (2,684) (412) 295,523 39,410 12,089 (328) (3,704) (5,202) Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 888,717 787,414 711,019 Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186,743 655 (2,036) 179,886 1,088 (2,217) 133,011 3,162 (2,482) Non-operating income (expense), net . . . . . . . . . . . . . . . . . . . . . . . . . (1,381) (1,129) 680 Income from continuing operations before income taxes and equity investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income from equity investment 185,362 (43,993) 178,757 (41,512) — — 133,691 (38,444) 3,327 Income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income (loss) from discontinued operations, net . . . . . . . . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less: Net income attributable to noncontrolling interests . . . . . . . . . . . . . . . . . 141,369 (54) 141,315 — 137,245 (138) 137,107 (2,144) 98,574 432 99,006 (13) Net income attributable to IHS Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 141,315 $134,963 $ 98,993 Basic earnings per share: Income from continuing operations attributable to IHS Inc. . . . . . . . . . . . . $ Income (loss) from discontinued operations, net . . . . . . . . . . . . . . . . . . . . 2.21 $ — 2.14 $ — Net income attributable to IHS Inc.(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2.21 $ 2.14 $ 1.59 0.01 1.60 Weighted average shares used in computing basic earnings per share . . . . . 63,964 63,055 62,063 Diluted earnings per share: Income from continuing operations attributable to IHS Inc. . . . . . . . . . . . . $ Income (loss) from discontinued operations, net . . . . . . . . . . . . . . . . . . . . 2.18 $ — 2.11 $ — Net income attributable to IHS Inc.(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2.18 $ 2.11 $ 1.57 0.01 1.57 Weighted average shares used in computing diluted earnings per share . . . . 64,719 63,940 62,957 (1) Amounts may not sum due to rounding. 50 See accompanying notes. l a t o T e v i s n e h e r p m o C ) s s o L ( e m o c n I d e n i a t e R i s g n n r a E y r u s a e r T k c o t S n I - d i a P l a t i p a C d e t a l u m u c c A r e h t O l a n o i t i d d A B s s a l C n o m m o C k c o t S f o s e r a h S B s s a l C n o m m o C k c o t S A s s a l C n o m m o C k c o t S f o s e r a h S A s s a l C n o m m o C k c o t S y t i u q E ’ l s r e d o h e r a h S n I s e g n a h C f o t n e m e t a t S d e t a d i l o s n o C . c n I S H I 5 5 0 , 1 0 8 $ ) 0 8 1 , 7 2 1 ( $ 9 1 2 , 4 8 5 $ ) 2 3 6 , 4 6 ( $ 7 0 0 , 8 0 4 $ — $ 8 2 6 , 6 3 8 6 , 7 4 3 6 9 , 4 3 1 7 2 6 , 1 4 ) 8 7 2 , 8 1 ( 2 1 3 , 8 5 1 — — — — 7 2 6 , 1 4 ) 8 7 2 , 8 1 ( — — — — — 3 6 9 , 4 3 1 — — — — — ) 0 8 4 , 0 1 ( — — — — 8 2 6 , 6 6 5 1 , 8 5 — — — — — — 8 7 6 , 3 1 0 , 1 $ ) 1 3 8 , 3 0 1 ( $ 2 8 1 , 9 1 7 $ ) 2 1 1 , 5 7 ( $ 1 9 7 , 2 7 4 $ — $ 1 7 5 , 3 8 1 3 , 8 3 5 1 3 , 1 4 1 ) 5 2 7 , 2 ( ) 6 7 0 , 8 1 ( 4 1 5 , 0 2 1 — — — — ) 5 2 7 , 2 ( ) 6 7 0 , 8 1 ( — — — — — 5 1 3 , 1 4 1 — — — — — ) 2 4 4 , 6 2 ( — — — — 1 7 5 , 3 6 4 7 , 4 6 — — — — — — 1 8 0 , 6 7 1 , 1 $ ) 2 3 6 , 4 2 1 ( $ 7 9 4 , 0 6 8 $ ) 4 5 5 , 1 0 1 ( $ 8 0 1 , 1 4 5 $ — $ 3 5 3 , 9 3 8 1 , 0 2 ) 5 4 5 , 5 6 ( 0 1 3 , 4 4 — 3 9 9 , 8 9 ) 7 7 9 , 6 9 ( ) 2 9 5 , 1 5 ( 2 2 4 , 1 ) 6 7 5 , 9 4 ( — — — — — — — — ) 7 7 9 , 6 9 ( ) 2 9 5 , 1 5 ( — — — — — 3 9 9 , 8 9 — — — 2 2 4 , 1 8 0 9 , 0 4 8 $ 9 8 3 , 1 2 $ 4 0 8 , 3 8 4 $ — — — — — — — — — — — — — — — — — ) s d n a s u o h t n I ( ) 5 4 0 , 6 4 ( ) 7 1 8 , 8 1 ( — ) 5 4 5 , 5 6 ( 5 7 7 , 5 6 $ 4 2 1 , 1 8 3 $ 8 3 1 $ 0 5 7 , 3 1 3 5 3 , 9 5 9 9 , 8 3 ) 5 6 4 , 1 2 ( — — — — — — — — ) 8 3 1 ( ) 0 5 7 , 3 1 ( — — — — — — — — — — — — — — — — — — — — 5 8 9 4 $ — — — 8 3 1 — — — — — 2 9 1 — 9 5 7 , 8 4 ) 0 0 2 , 1 ( 1 0 3 , 1 0 5 7 , 3 1 — — — — — — — — — — — — — — — 7 2 8 4 1 4 6 $ 2 0 8 , 2 6 — — — — — — — — — — 4 1 8 4 6 $ 5 6 9 4 8 2 , 3 6 2 6 6 $ 9 4 2 , 4 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x a t f o t e n . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 0 0 2 , 0 3 r e b m e v o N t a e c n a l a B . . . . y t i v i t c a d r a w a d e s a b - k c o t S s e r a h s d e t s e v n o t i f e n e b x a t s s e c x E . . . . . . . . k c o t s n o m m o c f o s e s a h c r u p e R . s n o i i t i s u q c a r o f d e u s s i s e r a h S s e r a h s A s s a C o l t i n o s r e v n o c s e r a h s B s s a C l . . . . . . . . . . c n I S H I o t l e b a t u b i r t t a e m o c n i t e N : e m o c n i i e v s n e h e r p m o c r e h t O , s t n e m t s u d a n o j i t l a s n a r t y c n e r r u c i n g e r o F . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x a t f o t e n , t n e m t s u d a j y t i l i b a i l i n o s n e p t e N . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x a t f o t e n , e m o c n i i e v s n e h e r p m o C . . . . . . . . e c n a d u g x a i t w e n f o n o i t p o d A 8 0 0 2 , 0 3 r e b m e v o N t a e c n a l a B . . . . y t i v i t c a d r a w a d e s a b - k c o t S . . . c n I S H I o t l e b a t u b i r t t a e m o c n i t e N s e r a h s d e t s e v n o t i f e n e b x a t s s e c x E : e m o c n i i e v s n e h e r p m o c r e h t O x a t f o t e n , s t n e m t s u d a n o j i t l a s n a r t y c n e r r u c i n g e r o F . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x a t f o t e n , t n e m t s u d a j y t i l i b a i l i n o s n e p t e N . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x a t f o t e n , e m o c n i i e v s n e h e r p m o C . . . . 9 0 0 2 , 0 3 r e b m e v o N t a e c n a l a B . . . . y t i v i t c a d r a w a d e s a b - k c o t S . . . c n I S H I o t l e b a t u b i r t t a e m o c n i t e N s e r a h s d e t s e v n o t i f e n e b x a t s s e c x E : e m o c n i i e v s n e h e r p m o c r e h t O x a t f o t e n , s t n e m t s u d a n o j i t l a s n a r t y c n e r r u c i n g e r o F . . . . . . . . . . . . . . . . . . . . . . . . x a t f o t e n , t n e m t s u d a j y t i l i b a i l i n o s n e p t e N . . . . . . . . . . . . . . . . . . . . x a t f o t e n , e m o c n i i e v s n e h e r p m o C . . 0 1 0 2 , 0 3 r e b m e v o N t a e c n a l a B . s e t i o n g n y n a p m o c c a e e S 51 IHS Inc. Consolidated Statements of Cash Flows Years Ended November 30, 2009 2010 2008 Operating activities: Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 141,315 $ 137,107 $ 99,006 Reconciliation of net income to net cash provided by operating (In thousands) activities: Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . Gain on sales of assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . Impairment of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Excess tax benefit from stock-based compensation . . . . . . . . Non-cash net periodic pension and post-retirement expense (income) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Distributions from equity investment . . . . . . . . . . . . . . . . . . . . . Income from equity investment . . . . . . . . . . . . . . . . . . . . . . . . . Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in assets and liabilities: Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income tax payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred subscription revenue . . . . . . . . . . . . . . . . . . . . . . Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net cash provided by operating activities . . . . . . . . . . . . . . . . . . Investing activities: Capital expenditures on property and equipment . . . . . . . . . . . . . . Acquisitions of businesses, net of cash acquired . . . . . . . . . . . . . . Intangible assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change in other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Settlements of forward contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . Sales and maturities of investments . . . . . . . . . . . . . . . . . . . . . . . . . Proceeds from sales of assets and investment in affiliate . . . . . . . Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . Financing activities: Proceeds from borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repayment of borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Excess tax benefit from stock-based compensation . . . . . . . . . . . . Proceeds from the exercise of employee stock options . . . . . . . . . Repurchases of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net cash provided by (used in) financing activities . . . . . . . . . Foreign exchange impact on cash balance . . . . . . . . . . . . . . . . . . . Net increase (decrease) in cash and cash equivalents . . . . . . . . . . Cash and cash equivalents at the beginning of the period . . . . . . . 59,474 66,474 — — (5,024) 3,407 — — (3,471) (37,886) (2,565) 3,017 (800) 6,547 36,268 (568) 266,188 (31,836) (334,514) — (186) (424) — — 49,146 57,112 (365) — (13,072) (4,006) — — 18,272 19,476 205 (13,280) (13,334) (2,606) 712 (673) 234,694 39,410 39,972 (328) 323 (3,952) (5,551) 3,924 (3,327) 4,833 (23,944) (1,314) (4,789) 8,398 325 36,580 (317) 189,249 (27,739) (125,379) (5,300) 1,501 830 — 2,049 (13,885) (272,844) (4,000) (3,979) (881) 10,500 140 (366,960) (154,038) (284,949) 245,000 (43,300) 5,024 1,320 (26,442) 181,602 (4,296) 76,534 124,201 179,000 (183,297) 13,072 2,112 (10,480) 407 12,098 93,161 31,040 160,000 (83,099) 3,952 — (84,362) (3,509) (18,235) (117,444) 148,484 Cash and cash equivalents at the end of the period . . . . . . . . . . . . $ 200,735 $ 124,201 $ 31,040 52 See accompanying notes. IHS Inc. Notes to Consolidated Financial Statements 1. Nature of Business We are a leading source of information and insight in pivotal areas that shape today’s business landscape: energy, economics, geopolitical risk, sustainability and supply chain management. Businesses and governments around the globe rely on our comprehensive content, expert independent analysis and flexible delivery methods to make high-impact decisions and develop strategies. We have been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, we employ more than 4,400 people in more than 30 countries around the world. We source raw data and transform it into information through a series of transformational steps that reduce the uncertainty that is inherent in unrefined data and enhances its usefulness. We have organized our business around our customers and the geographies in which they reside: Americas, EMEA, and APAC. This structure allows us to tailor and expand the solutions we offer to meet the unique needs of our customers both globally and in local markets. We sell our offerings primarily through subscriptions, which tend to generate recurring revenue and cash flow for us. Our subscriptions are usually for one-year periods, and we have historically seen high renewal rates. Subscriptions are generally paid in full within one or two months after the subscription period commences; as a result, the timing of our cash flows generally precedes the recognition of revenue and income. 2. Significant Accounting Policies Fiscal Year End Our fiscal years end on November 30 of each year. References herein to individual years mean the year ended November 30. For example, 2010 means the year ended November 30, 2010. Consolidation Policy The consolidated financial statements include the accounts of all wholly-owned and majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Investments in unconsolidated affiliated companies are accounted for under the equity method, and our proportionate share of income from unconsolidated affiliates is included in “Income from Equity Investment” in the accompanying Consolidated Statements of Operations. We generally utilize the equity method of accounting when we have a non-controlling ownership interest of between 20% and 50% in an entity, provided we are able to exercise significant influence over the investee’s operations. Reclassifications Certain prior-year balances have been reclassified to conform to the current-year presentation. In December 2007, the Financial Accounting Standards Board (FASB) issued new guidance related to noncontrolling interests in consolidated financial statements, which modifies reporting for noncontrolling interests (formerly minority interests) in consolidated financial statements. As required, we adopted the new guidance effective December 1, 2009, the beginning of our 2010 fiscal year. Upon adoption, we revised our prior period financial statements to comply with the retrospective application guidance for the presentation of our noncontrolling interests. The impact of the retrospective application of this guidance is as follows: Š Consolidated Statements of Operations—reclassifies Minority interests to Net income attributable to noncontrolling interests; 53 Š Consolidated Statements of Cash Flows—reclassifies distributions of cumulative income to minority/noncontrolling interests from operating activities to financing activities and reclassifies purchases of minority/noncontrolling interests from investing activities to financing activities. Additionally, reclassifies Minority interests to Net income; and Š Notes to the Consolidated Financial Statements—adjusts references to noncontrolling interests to reflect the new changes. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires that we make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Significant estimates have been made in areas that include revenue recognition, valuation of long-lived and intangible assets and goodwill, income taxes, pension and post-retirement benefits, and stock-based compensation. Actual results could differ from those estimates. Concentration of Credit Risk We are exposed to credit risk associated with cash equivalents and trade receivables. We do not believe that our cash equivalents or investments present significant credit risks because the counterparties to the instruments consist of major financial institutions that are financially sound or have been capitalized by the U.S. government and we manage the notional amount of contracts entered into with any counterparty. Substantially all trade receivable balances are unsecured. The concentration of credit risk with respect to trade receivables is limited by the large number of customers in our customer base and their dispersion across various industries and geographic areas. We perform ongoing credit evaluations of our customers and maintain an allowance for probable credit losses. The allowance is based upon management’s assessment of known credit risks as well as general industry and economic conditions. Specific accounts receivable are written-off upon notification of bankruptcy or once it is determined the account is significantly past due and collection efforts are unsuccessful. Fair Value of Financial Instruments The carrying values of our financial instruments, including cash, accounts receivable, accounts payable, and short-term and long-term debt, approximate their fair value. Revenue Recognition Revenue is recognized when all of the following criteria have been met: (a) persuasive evidence of an arrangement exists, (b) delivery has occurred or services have been rendered, (c) the price to the customer is fixed or determinable, and (d) collectibility is reasonably assured. The majority of our revenue is derived from the sale of subscriptions to our Critical Information, which is initially deferred and then recognized ratably as delivered over the subscription period, which is generally 12 months. Revenue is recognized upon delivery for non-subscription-based sales. In certain locations, we use dealers to distribute our Critical Information and Insight. Revenue for products sold through dealers is recognized as follows: Š For subscription-based services, revenue is recognized ratably as delivered to the end user over the subscription period. Š For non-subscription-based products, revenue is recognized upon delivery to the dealer. 54 We do not defer the revenue for the limited number of sales of subscriptions in which we act as a sales agent for third parties and we have no continuing responsibility to maintain and update the underlying database. We recognize this revenue on a net basis upon the sale of these subscriptions and delivery of the information and tools. Services We provide our customers with service offerings that are primarily sold on a stand-alone basis and on a significantly more limited basis as part of a multiple-element arrangement. Our service offerings are generally separately priced in a standard price book. For services that are not in a standard-price book, as the price varies based on the nature and complexity of the service offering, pricing is based on the estimated amount of time to be incurred at standard billing rates for the estimated underlying effort for executing the associated deliverable in the contract. Revenue related to services performed under time-and-material-based contracts is recognized in the period performed at standard billing rates. Revenue associated with fixed-price contracts is recognized upon completion of each specified performance obligation or proportionally based upon performance progress under the terms of the contract. See discussion of “multiple-element arrangements” below. If the contract includes acceptance contingencies, revenue is recognized in the period in which we receive documentation of acceptance from the customer. Multiple-element arrangements Occasionally, we may execute contracts with customers which contain multiple offerings. In our business, multiple-element arrangements refer to contracts with separate fees for decision-support tools, maintenance, and/or related services. We have established separate units of accounting as each offering is primarily sold on a stand-alone basis. Generally, if sufficient vendor-specific objective evidence of the fair value of each element of the arrangement exists based on stand-alone sales of these products and services, then the elements of the contract are unbundled and are recognized as follows: Š Subscription offerings and license fees are recognized ratably over the license period as long as there is an associated licensing period or a future obligation. Otherwise, revenue is recognized upon delivery. Š For non-subscription offerings of a multiple-element arrangement, the revenue is generally recognized for each element in the period in which delivery of the product to the customer occurs, completion of services occurs or, for post-contract support, ratably over the term of the maintenance period. Š In some instances, customer acceptance is required for consulting services rendered. For those transactions, the service revenue component of the arrangement is recognized in the period that customer acceptance is obtained. In infrequent instances where a multiple-element arrangement includes offerings for which vendor- specific objective evidence is not available, we consider the substance of the whole arrangement to be a subscription and thus revenue is recognized ratably over the service period. See “Recent Accounting Pronouncements” below for further discussion of the impact of recently issued multiple-element arrangement accounting guidance. Cash and Cash Equivalents We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents are carried at cost, which approximates fair value. 55 Deferred Subscription Costs Deferred subscription costs represent royalties and commissions associated with customer subscriptions. These costs are deferred and amortized to expense over the period of the subscriptions. Generally, subscription periods are 12 months in duration. Property and Equipment Land, buildings and improvements, machinery and equipment are stated at cost. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets as follows: Buildings and improvements . . . . . . . . . . . . . . . . . . Machinery and equipment . . . . . . . . . . . . . . . . . . . . 7 to 30 years 3 to 10 years Leasehold improvements are depreciated over their estimated useful life, or the life of the lease, whichever is shorter. Maintenance, repairs and renewals of a minor nature are expensed as incurred. Betterments and major renewals which extend the useful lives of buildings, improvements, and equipment are capitalized. Leases In certain circumstances, we enter into leases with free rent periods or rent escalations over the term of the lease. In such cases, we calculate the total payments over the term of the lease and record them ratably as rent expense over that term. Identifiable Intangible Assets and Goodwill We account for our business acquisitions using the purchase method of accounting. We allocate the total cost of an acquisition to the underlying net assets based on their respective estimated fair values. As part of this allocation process, we must identify and attribute values and estimated lives to the intangible assets acquired. We evaluate our intangible assets and goodwill for impairment at least annually, as well as whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. Impairments are expensed as incurred. Finite-lived intangible assets Identifiable intangible assets with finite lives are generally amortized on a straight-line basis over their respective lives, as follows: Information databases . . . . . . . . . . . . . . . . . . . . . . . Customer relationships . . . . . . . . . . . . . . . . . . . . . . Non-compete agreements . . . . . . . . . . . . . . . . . . . . Developed computer software . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 to 15 years 2 to 15 years 1 to 5 years 3 to 10 years 3 to 11 years Indefinite-lived intangible assets We perform the impairment test for indefinite-lived intangible assets, which consist of trade names and perpetual licenses, by comparing the asset’s fair value to its carrying value. An impairment charge is recognized if the asset’s estimated fair value is less than its carrying value. We estimate the fair value based on the relief from royalty method using projected discounted future cash flows, which, in turn, are based on our views of uncertain variables such as growth rates, anticipated future economic conditions and the appropriate discount rates relative to risk and estimates 56 of residual values. The use of different estimates or assumptions within our discounted cash flow model when determining the fair value of our indefinite-lived intangible assets or using a methodology other than a discounted cash flow model could result in different values for our indefinite-lived intangible assets and could result in an impairment charge. Goodwill We test goodwill for impairment on a reporting unit level. A reporting unit is a group of businesses (i) for which discrete financial information is available and (ii) that have similar economic characteristics. We test goodwill for impairment using the following two-step approach: Š We first determine the fair value of each reporting unit. If the fair value of a reporting unit is less than its carrying value, this is an indicator that the goodwill assigned to that reporting unit might be impaired, which requires performance of the second step. We determine the fair value of our reporting units based on projected future discounted cash flows, which, in turn, are based on our views of uncertain variables such as growth rates, anticipated future economic conditions and the appropriate discount rates relative to risk and estimates of residual values. There were no deficiencies in reporting unit fair values versus carrying values in the fiscal years ended November 30, 2010, 2009, and 2008. Š If necessary, in the second step, we allocate the fair value of the reporting unit to the assets and liabilities of the reporting unit as if it had just been acquired in a business combination and as if the purchase price was equivalent to the fair value of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities is referred to as the implied fair value of goodwill. We then compare that implied fair value of the reporting unit’s goodwill to the carrying value of that goodwill. If the implied fair value is less than the carrying value, we recognize an impairment loss for the excess. Income Taxes Deferred income taxes are provided using tax rates enacted for periods of expected reversal on all temporary differences. Temporary differences relate to differences between the book and tax basis of assets and liabilities, principally intangible assets, property and equipment, deferred subscription revenue, pension assets, accruals, and stock-based compensation. Valuation allowances are established to reduce deferred tax assets to the amount that will more likely than not be realized. To the extent that a determination is made to establish or adjust a valuation allowance, the expense or benefit is recorded in the period in which the determination is made. Judgment is required in determining the worldwide provision for income taxes. Additionally, the income tax provision is based on calculations and assumptions that are subject to examination by many different tax authorities and to changes in tax law and rates in many jurisdictions. We adjust our income tax provision in the period in which it becomes probable that actual results will differ from our estimates. On December 1, 2007, we adopted new guidance which prescribed a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This guidance also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Upon adoption of this guidance, we recorded a cumulative effect adjustment of $1.4 million to increase beginning retained earnings. Subsequent to adoption, we include accrued interest and accrued penalties related to amounts accrued for unrecognized tax benefits in our provision for income taxes. We had previously included interest and penalties in interest income (expense) and other income (expense), respectively. 57 Treasury Stock For all IHS stock retention and buyback programs and transactions, we utilize the cost method of accounting. Regarding the inventory costing method for treasury stock transactions, we employ the weighted-average cost method. Earnings per Share Basic EPS is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted EPS is computed using the weighted average number of common shares and dilutive potential common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities were exercised or converted into common shares. Foreign Currency Absent circumstances to the contrary, the functional currency of each of our foreign subsidiaries is such subsidiary’s local currency. Assets and liabilities are translated at period-end exchange rates. Income and expense items are translated at weighted average rates of exchange prevailing during the year. Any translation adjustments are included in other comprehensive income. Transactions executed in different currencies resulting in exchange adjustments are translated at spot rates and resulting foreign-exchange-transaction gains and losses are included in the results of operations. From time to time, we utilize forward-contract instruments to manage market risks associated with fluctuations in certain foreign-currency exchange rates as they relate to specific balances of accounts and notes receivable and payable denominated in foreign currencies. At the end of the reporting period, non-functional foreign-currency-denominated receivable and cash balances are re-measured into the functional currency of the reporting entities at current market rates. The change in value from this re-measurement is reported as a foreign exchange gain or loss for that period in other income (expense) in the accompanying consolidated statements of operations. The resulting gains or losses from the forward foreign currency contracts described above, which are also included in other income (expense), mitigate the exchange rate risk of the associated assets. Research and Development Costs of research and development, which are included in cost of revenue, are expensed as incurred and amounted to approximately $0.6 million, $2.7 million, and $4.3 million for 2010, 2009, and 2008, respectively. Impairment of Long-Lived Assets We review the carrying amounts of long-lived assets to determine whether current events or circumstances warrant adjustment to such carrying amounts annually. A long-lived asset is considered to be impaired if its carrying value exceeds the estimated future undiscounted cash flows to be derived from it. Any impairment is measured by the amount that the carrying value of such assets exceeds their fair value, primarily based on estimated discounted cash flows. Considerable management judgment is necessary to estimate the fair value of assets. Assets to be disposed of are carried at the lower of their financial statement carrying amount or fair value, less cost to sell. Stock-Based Compensation All share-based payments to employees, including grants of employee stock options, are recognized in the income statement based on their fair values. In addition, we estimate forfeitures at the grant date. Compensation cost is recognized based on the number of awards expected to vest. There may be 58 adjustments in future periods if actual forfeitures differ from our estimates. Our forfeiture rate is based upon historical experience as well as anticipated employee turnover considering certain qualitative factors. We amortize the value of nonvested share awards to expense over the vesting period on a straight-line basis. For awards with performance conditions, an evaluation is made each quarter as to the likelihood of the performance criteria being met. Compensation expense is then adjusted to reflect the number of shares expected to vest and the cumulative vesting period met to date. For stock options, we estimate the fair value of awards on the date of grant using the Black-Scholes pricing model. We amortize the value of stock options to expense over the vesting period on a straight-line basis. Recent Accounting Pronouncements In October 2009, the FASB issued guidance on revenue recognition that will become effective for us beginning December 1, 2010. Under the new guidance, when vendor specific objective evidence (VSOE) or third party evidence for deliverables in an arrangement cannot be determined, a best estimate of the selling price is required to separate deliverables and allocate arrangement consideration using the relative selling price method. The new guidance includes new disclosure requirements on how the application of the relative selling price method affects the timing and amount of revenue recognition. The adoption of the update will not have a material impact on our financial position and results of operations. 3. Business Combinations During 2010, we made the following acquisitions: Emerging Energy Research, LLC (EER). On February 10, 2010, we acquired EER for approximately $18 million, net of cash acquired. EER is a leading advisory firm whose mission is to help clients understand, leverage, and exploit the technological, regulatory and competitive trends in the global emerging energy sector. CSM Worldwide, Inc. (CSM). On March 17, 2010, we acquired CSM for approximately $25 million, net of cash acquired. CSM is a leading automotive market forecasting firm dedicated to providing automotive suppliers with market information and production, power train, and sales forecasting through trusted automotive market forecasting services, and strategic advisory solutions to the world’s top automotive manufacturers, suppliers, and financial organizations. Quantitative Micro Software, LLC (QMS). On May 5, 2010, we acquired QMS for approximately $40 million, net of cash acquired. QMS is a worldwide leader in Windows-based econometric and forecasting software applications. Access Intelligence. On September 7, 2010, we acquired certain chemical and energy portfolio business assets of Access Intelligence for approximately $79 million, net of cash acquired. We purchased these businesses in order to extend the breadth of information available for current IHS energy customers and support the development of additional products and services for a broad range of industries along the supply chain. Atrion International Inc. (Atrion). On September 22, 2010, we acquired Atrion for approximately $56 million, net of cash acquired. Atrion is a company that combines regulatory expertise and industry- leading technology to streamline the generation, management, and distribution of hazardous materials communication documents and reports. Syntex Management Systems, Inc. (Syntex). On September 22, 2010, we acquired Syntex for approximately $23 million, net of cash acquired. Syntex is a leading provider of operational risk management software and services that help companies ensure the health and safety of their workers while protecting the environment and managing costs. 59 iSuppli, Inc. (iSuppli). On November 19, 2010, we acquired iSuppli for approximately $94 million, net of cash acquired. iSuppli is a global leader in technology value chain research and advisory services. The transaction also included Screen Digest Limited, a leading digital media and technology research company, which had been recently acquired by iSuppli. The purchase prices for these 2010 acquisitions, excluding acquired cash, were initially allocated as follows (in thousands): iSuppli Access Intelligence Atrion All others Total Assets: Current assets . . . . . . . . . . . . . . . . . . . . . $ 7,496 1,435 Property and equipment . . . . . . . . . . . . . . 27,576 Intangible assets . . . . . . . . . . . . . . . . . . . . 70,289 Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . 5,590 Other long-term assets . . . . . . . . . . . . . . $ 3,841 213 30,635 57,858 — $ 2,868 $ 6,527 $ 20,732 3,803 120,565 255,475 7,760 403 26,259 39,890 2,072 1,752 36,095 87,438 98 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 112,386 92,547 71,492 131,910 408,335 Liabilities: Current liabilities . . . . . . . . . . . . . . . . . . . . Deferred revenue . . . . . . . . . . . . . . . . . . . Deferred taxes . . . . . . . . . . . . . . . . . . . . . Other long-term liabilities . . . . . . . . . . . . . Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 5,424 10,775 1,807 — 18,006 955 11,698 647 222 13,522 1,066 6,381 7,878 141 15,466 7,934 12,658 6,145 90 26,827 15,379 41,512 16,477 453 73,821 Purchase price . . . . . . . . . . . . . . . . . . . . . $ 94,380 $79,025 $56,026 $105,083 $334,514 During 2009, we made the following acquisitions: Prime Publications Limited (Prime) and Lloyd’s Register-Fairplay Limited (Fairplay). On March 3, 2008, we acquired Prime Publications Limited (Prime), which owned a 50% interest in the Lloyd’s Register- Fairplay Limited (Fairplay) joint venture, a leading source of global maritime information. Fairplay is the pre-eminent brand name in the maritime information industry and the only organization that provides comprehensive details of the current world merchant fleet (tankers, cargo, carrier and passenger ships) and a complete range of products and services to assist the world’s maritime community. The investment in Fairplay was the primary asset of Prime. IHS accounted for the joint venture under the equity method of accounting from March 2008 through November 30, 2008. As of December 1, 2008, we obtained an additional 0.1% ownership interest and a majority position on the venture’s governing board giving us a 50.1% controlling interest in the joint venture and accordingly began consolidating Fairplay within our results. On June 17, 2009, we acquired the remaining 49.9% of Fairplay from Lloyd’s Register giving us 100% ownership of Fairplay. The remaining 49.9% interest was acquired for approximately $64 million. LogTech Canada Ltd. (LogTech). On September 2, 2009, we acquired LogTech, a leader in the development of pragmatic and cost-effective software solutions, services and digital log data for the petroleum industry. We acquired LogTech for $3 million, net of cash acquired. Environmental Support Solutions, Inc. (ESS). On September 17, 2009, we acquired ESS, a leading provider of environmental, health and safety and crisis management software for enterprise sustainability, for approximately $59 million, net of cash acquired. 60 The purchase prices for these 2009 acquisitions, excluding acquired cash and including acquisition- related costs, were initially allocated as follows (in thousands): Prime(1) ESS LogTech Total Assets: Current assets . . . . . . . . . . . . . . . . . . . . . Property and equipment . . . . . . . . . . . . . Intangible assets . . . . . . . . . . . . . . . . . . . Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . Other long-term assets . . . . . . . . . . . . . . $ 5,597 553 29,625 104,175 — $ 3,988 669 16,850 49,450 32 $ 145 36 1,508 2,393 — $ 9,730 1,258 47,983 156,018 32 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 139,950 70,989 4,082 215,021 Liabilities: Current liabilities . . . . . . . . . . . . . . . . . . . Deferred taxes . . . . . . . . . . . . . . . . . . . . . Other long-term liabilities . . . . . . . . . . . . Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 10,487 6,973 2,253 19,713 11,358 378 127 11,863 839 185 — 1,024 22,684 7,536 2,380 32,600 Purchase price . . . . . . . . . . . . . . . . . . . . . $120,237 $59,126 $3,058 $182,421 (1) Includes cumulative purchase price for the 50% interest acquired in 2008 and the remaining 50% interest acquired in 2009. Individual purchase prices are impacted by foreign currency fluctuation. During 2008, we made the following acquisitions: Global Insight, Inc (Global Insight). In October 2008, we completed our acquisition of Global Insight, Inc. based in Lexington, Massachusetts, now known as IHS Global Insight. The acquisition closed for $117.2 million in cash and approximately 1.3 million shares of IHS common stock, which were valued at $44.3 million based on the closing price of IHS on Oct. 10, 2008. Terms of the transaction included a lock-up agreement restricting the transferability and salability of IHS shares with 10 percent of the shares restricted for one year, 50 percent for two years, and 40 percent for three years. Divestco USA Inc. (Divestco). In September 2008, we acquired the U.S. product portfolio of Divestco, a strategic provider of comprehensive data and analytical tools for the oil and gas industry, for approximately $3.0 million in cash. Documental Solutions LLC (Documental Solutions). In September 2008, we acquired Documental Solutions LLC of Falls Church, Virginia for approximately $22.2 million in cash. Documental Solutions is a leading provider of market intelligence and analysis tools for the defense and aerospace industry. JFA International (JFA). In March 2008, we acquired the assets of JFA, a London, England based provider of strategic analysis to the energy industry’s exploration and production sectors. JFA was acquired for £2.0 million, or approximately $3.9 million based on the exchange rate as of the date of acquisition. Environmental Software Providers (ESP). In March 2008, we acquired Environmental Software Providers, the business name for Electric Software Products, Inc., based in Mountain View, California, for approximately $18.7 million in cash. ESP is a provider of enterprise information solutions used by companies to assist in managing their environmental sustainability programs. Dolphin Software, Inc. (Dolphin). In March 2008, we acquired Dolphin of Lake Oswego, Oregon for approximately $23.7 million in cash. Dolphin is a leader in developing and using chemical data information and software used by companies to record and track chemicals stored and used in their facilities. 61 Prime Publications Limited (Prime). As described above, we acquired Prime in March 2008 for approximately $76.1 million based on the exchange rate as of the date of acquisition, which included $16.0 million in non-interest bearing seller notes, and the remainder was paid in cash. McCloskey Group Limited (McCloskey). In December 2007, we acquired McCloskey, the leading provider of news, Critical Information and Insight on the international coal markets located near London, England. We acquired McCloskey for £13.9 million, or approximately $28.2 million based on the exchange rate as of the date of acquisition, using cash on hand. The purchase prices for these 2008 acquisitions, excluding acquired cash and including acquisition- related costs, were initially allocated as follows (in thousands): Global Insight Prime McCloskey All others Total Assets: Current assets . . . . . . . . . . . . . . . . . . . . . . . $ 24,413 $ Property and equipment . . . . . . . . . . . . . . . Intangible assets . . . . . . . . . . . . . . . . . . . . . Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . Equity investment in joint venture . . . . . . . Other long-term assets . . . . . . . . . . . . . . . . 4,130 85,000 125,698 — 1,495 110 6 3,572 717 73,822 — $ 774 114 8,180 24,136 — — $ 3,549 $ 28,846 5,021 122,353 202,208 74,798 1,553 771 25,601 51,657 976 58 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240,736 78,227 33,204 82,612 434,779 Liabilities: Current liabilities . . . . . . . . . . . . . . . . . . . . . Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . Other long-term liabilities . . . . . . . . . . . . . . Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,807 21,267 1,183 79,257 50 2,059 — 2,109 2,741 2,258 — 4,999 7,322 2,870 927 11,119 66,920 28,454 2,110 97,484 Purchase price . . . . . . . . . . . . . . . . . . . . . . $161,479 $76,118 $28,205 $71,493 $337,295 4. Net Restructuring Charges (Credits) Net restructuring charges (credits) were $9.0 million, $(0.7) million, and $12.1 million for the years ended November 30, 2010, 2009, and 2008, respectively. 2010 Restructuring During the third quarter of 2010, we announced various plans to streamline operations and merge functions. As a result, we reduced our aggregate workforce by approximately 3% and consolidated several locations. The changes primarily affected the Americas and EMEA segments. The restructuring charge that we recorded consisted of direct and incremental costs associated with restructuring and related activities, including severance, outplacement and other employee related benefits; facility closures and relocations; and legal expenses associated with employee terminations incurred during the quarter. The entire $9.1 million restructuring charge was recorded during the third quarter of 2010. Approximately $7.7 million of the charge related to our Americas segment and $1.3 million pertained to our EMEA segment, with the remainder in APAC. The restructuring charge was comprised of the following (in thousands): Employee severance and other termination benefits . . . . . . . . . . . Contract termination costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $8,024 972 108 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $9,104 62 A reconciliation of the related accrued restructuring liability as of November 30, 2010 was as follows: Employee Severance and Other Termination Benefits Contract Termination Costs (In thousands) Other Total Balance at November 30, 2009 . . . . . . . . . . . . . . . . . . . . . Add: Restructuring costs incurred . . . . . . . . . . . . . . . . . . . Less: Amount paid during the year ended November 30, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — 8,024 $ — 972 $ — $ — 108 9,104 (6,738) (850) (61) (7,649) Balance at November 30, 2010 . . . . . . . . . . . . . . . . . . . . . $ 1,286 $ 122 $ 47 $ 1,455 We also recorded a $0.1 million restructuring credit in the second quarter of 2010. 2008 Restructuring During the third quarter of 2008, we executed a restructuring initiative which primarily affected the Americas and EMEA segments. Restructuring and related expenses consisted of direct and incremental costs associated with restructuring and related activities, including severance, outplacement and other employee related benefits; facility closure including non-cash expenses related to fixed asset and leasehold improvement write-offs; and legal expenses associated with employee terminations which were incurred during the third quarter of 2008. This initiative was undertaken to further the realignment of our resources around our regional organizational structure and to further transform our knowledge-based data accumulation operations to ensure continuous improvement in the quality of the Critical Information and Insight we deliver to our customers. During the course of the restructuring, we reduced our aggregate workforce by approximately 7%, eliminated certain contractor positions and closed certain offices. The restructuring charge was incurred in its entirety during the third quarter of 2008. Approximately $5.8 million of the charge related to our Americas segment, $5.9 million pertained to our EMEA segment and $0.4 million related to shared services. The majority of the liability was paid during 2008 and the remaining liability at November 30, 2008 was $1.0 million. An over-accrual of $0.7 million was reversed during 2009. The remaining balance was substantially paid as of November 30, 2009. 5. Accounts Receivable Our accounts receivable balance consists of the following as of November 30: Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . Less—accounts receivable allowance . . . . . . . . . . $259,576 (3,024) $208,011 (4,511) Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . $256,552 $203,500 2010 2009 (In thousands) 63 The activity in our accounts receivable allowance consists of the following as of November 30: Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . Provision for bad debts . . . . . . . . . . . . . . . . . . . . . . . . . Recoveries and other additions . . . . . . . . . . . . . . . . . . Write-offs and other deductions . . . . . . . . . . . . . . . . . . 2010 2009 (In thousands) $ 4,511 987 1,674 (4,148) $ 4,790 2,663 1,249 (4,191) Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,024 $ 4,511 We record allowances for doubtful accounts when it is probable that the accounts receivable balance will not be collected and the amounts are based upon management’s estimates and historical collection trends. 6. Property and Equipment Property and equipment consists of the following at November 30: Land, buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Machinery and equipment $ 76,941 128,293 $ 76,112 97,437 2010 2009 (In thousands) Less: accumulated depreciation . . . . . . . . . . . . . . 205,234 (112,041) 173,549 (98,751) $ 93,193 $ 74,798 Depreciation expense was approximately $18.7 million, $15.1 million and $13.6 million in 2010, 2009, and 2008, respectively. 7. Goodwill and Intangible Assets The following table presents details of our intangible assets, other than goodwill, as of November 30: 2010 Accumulated Amortization Gross 2009 Accumulated Amortization Net Net Gross (In thousands) Intangible assets subject to amortization: Information databases . . . . . . . . $237,888 $ (73,815) $164,073 $195,286 $(51,427) $143,859 64,432 Customer relationships . . . . . . . . 132,878 722 9,551 Non-compete agreements . . . . . Developed computer (28,533) 104,345 3,617 (19,777) (5,134) 84,209 5,856 (5,934) software . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . 52,258 14,944 (15,926) (10,273) 36,332 4,671 33,986 13,075 (8,375) (7,687) 25,611 5,388 Total . . . . . . . . . . . . . . . . . . . $447,519 $(134,481) $313,038 $332,412 $(92,400) $240,012 Intangible assets not subject to amortization: Trademarks . . . . . . . . . . . . . . . . . Perpetual licenses . . . . . . . . . . . 70,366 1,164 — — 70,366 1,164 68,583 1,200 — — 68,583 1,200 Total intangible assets . . . . $519,049 $(134,481) $384,568 $402,195 $(92,400) $309,795 64 The estimated future amortization expense of intangible assets is as follows: Year 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereafter Amount (In thousands) $52,220 49,106 43,658 36,501 34,368 97,185 Amortization expense of intangible assets was $40.7 million, $34.0 million and $25.8 million for the years ended November 30, 2010, 2009, and 2008, respectively. Changes in our intangible assets in both 2009 and 2010 were the result of acquisitions (see Note 3) and foreign currency exchange rate fluctuations. 8. Debt On January 5, 2011, we entered into a $1 billion syndicated bank credit facility consisting of a $300 million term loan and a $700 million revolver (collectively, the Credit Facility). All borrowing under the Credit Facility is unsecured. The loan and revolver included in the Credit Facility have a five-year term ending in January 2016. The interest rates for borrowing under the Credit Facility will be the applicable LIBOR plus 1.25% to 2.00%, depending upon our Leverage Ratio, which is defined as the ratio of Consolidated Funded Indebtedness to rolling four-quarter Consolidated Earnings Before Interest Expense, Taxes, Depreciation and Amortization (EBITDA), as defined in the Credit Facility. A commitment fee on any unused balance is payable periodically and ranges from 0.20% to 0.35% based upon our Leverage Ratio. The Credit Facility contains certain financial and other covenants, including a maximum Leverage Ratio and a maximum Interest Coverage Ratio, as defined in the Credit Facility. The old revolving credit agreement was retired immediately upon consummation of the new financing. As of November 30, 2010, we were still operating under our 2007 amended and restated credit agreement (the Revolver). The $385 million Revolver allowed us, under certain conditions, to increase the facility to a maximum of $500 million. The agreement was set to expire in September 2012. As a result of the new Credit Facility, we reclassified $275 million of the Revolver debt as of November 30, 2010 to long-term debt in the 2010 balance sheet. The interest rates for borrowing under the Revolver were based upon our Leverage Ratio, which was the ratio of Consolidated Funded Indebtedness to rolling four-quarter Consolidated EBITDA, as defined in the Revolver. The rate ranged from the applicable LIBOR plus 0.50% to 1.25% or the agent bank’s base rate. A commitment fee was payable periodically and ranged from 0.10% to 0.25% based upon our Leverage Ratio. The Revolver contained certain financial and other covenants, including limitations on capital lease obligations and maximum Leverage and Interest Coverage Ratios, as defined in the Revolver. As of November 30, 2010, we were in compliance with all of the covenants in the Revolver and had $290 million of outstanding borrowings with an annual interest rate of 0.81%. In addition, we had outstanding letters of credit under the Revolver totaling approximately $0.4 million as of November 30, 2010. As of November 30, 2010, we also had $3.9 million of non-interest bearing notes that were issued to the sellers of Prime. These notes are due upon demand and are therefore recorded in short-term debt in the 2010 and 2009 balance sheets. 65 9. Indemnifications In the normal course of business, we are party to a variety of agreements under which we may be obligated to indemnify the other party for certain matters. These obligations typically arise in contracts where we customarily agree to hold the other party harmless against losses arising from a breach of representations or covenants for certain matters such as title to assets and intellectual property rights associated with the sale of products. We also have indemnification obligations to our officers and directors. The duration of these indemnifications varies, and in certain cases, is indefinite. In each of these circumstances, payment by us depends upon the other party making an adverse claim according to the procedures outlined in the particular agreement, which procedures generally allow us to challenge the other party’s claims. In certain instances, we may have recourse against third parties for payments that we make. We are unable to reasonably estimate the maximum potential amount of future payments under these or similar agreements due to the unique facts and circumstances of each agreement and the fact that certain indemnifications provide for no limitation to the maximum potential future payments under the indemnification. We have not recorded any liability for these indemnifications in the accompanying consolidated balance sheets; however, we accrue losses for any known contingent liability, including those that may arise from indemnification provisions, when the obligation is both probable and reasonably estimable. 10. Income Taxes The amounts of income from continuing operations before income taxes and noncontrolling interests by U.S. and foreign jurisdictions is as follows for the years ended November 30: U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 26,986 158,376 (In thousands) $ 33,952 144,805 $ 23,993 113,025 2010 2009 2008 $185,362 $178,757 $137,018 The provision for income tax expense (benefit) from continuing operations, for the years ended November 30 was as follows: 2010 2009 2008 (In thousands) Current: U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $18,741 25,657 3,066 $ 1,895 17,923 3,422 $ 8,560 22,253 2,798 Total current . . . . . . . . . . . . . . . . . . . . . . . 47,464 23,240 33,611 Deferred: U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (371) (2,955) (145) 18,285 (505) 492 Total deferred . . . . . . . . . . . . . . . . . . . . . . (3,471) 18,272 6,465 (1,860) 228 4,833 Provision for income taxes . . . . . . . . . . . . . . . . . . . $43,993 $41,512 $38,444 66 The provision for income taxes from continuing operations recorded within the consolidated statements of operations differs from the provision determined by applying the U.S. statutory tax rate to pretax earnings as a result of the following for the years ended November 30: Statutory U.S. federal income tax . . . . . . . . . . . . State income tax, net of federal benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign rate differential U.S. tax on dividends from foreign affiliates, net . . . . . . . . . . . . . . Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . Tax-exempt interest . . . . . . . . . . . . . . . . . . . . . . . Change in reserves . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . of foreign tax credits (FTCs) Income tax expense . . . . . . . . . . . . . . . . . . . . . . . Effective tax rate expressed as a percentage of pretax earnings . . . . . . . . . . . . . . . . . . . . . . . . . 2010 $ 64,877 1,665 (32,635) 2009 (In thousands) $ 62,539 2,847 (33,476) 2008 $ 46,967 1,956 (16,764) 11,972 (690) — 27 (1,223) 10,873 (1,519) — (177) 425 7,828 (1,042) (157) 147 (491) $ 43,993 $ 41,512 $ 38,444 23.7% 23.2% 28.1% Undistributed earnings of our foreign subsidiaries were approximately $190 million at November 30, 2010. Those earnings are considered to be indefinitely reinvested, and do not include earnings from certain subsidiaries which are considered distributed. Accordingly, no provision for U.S. federal and state income taxes has been provided on the undistributed earnings. Upon repatriation of those earnings, in the form of dividends or otherwise, we would be subject to both U.S. income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to the various foreign countries. Determination of the amount of unrecognized deferred U.S. income tax liability is not practicable due to the complexities associated with its hypothetical calculation. Withholding taxes of approximately $0.5 million would be payable upon remittance of all previously unremitted earnings at November 30, 2010. The significant components of deferred tax assets and liabilities at November 30 were: Deferred tax assets: Accruals and reserves . . . . . . . . . . . . . . . . . . Deferred revenue . . . . . . . . . . . . . . . . . . . . . . Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . Pension and post retirement benefits . . . . . . Tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . Restructuring reserves . . . . . . . . . . . . . . . . . . Deferred stock-based compensation . . . . . . Loss carryforwards . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gross deferred tax assets . . . . . . . . . . . Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . Realizable deferred tax assets . . . . . . . . . . . Deferred tax liabilities: 2010 2009 (In thousands) $ 6,875 2,658 1,596 14,717 4,995 570 23,146 22,436 3,064 80,057 (2,667) 77,390 $ 3,516 1,319 2,166 12,448 9,839 822 24,220 16,072 655 71,057 (3,259) 67,798 Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . Gross deferred tax liabilities . . . . . . . . . (117,444) (117,444) (105,162) (105,162) Net deferred tax liability . . . . . . . . . . . . . . . . . . . . . $ (40,054) $ (37,364) 67 As of November 30, 2010, we had loss carryforwards totaling approximately $65.7 million, comprised of $46.8 million of U.S. net operating loss carryforwards, $4.8 million U.S. capital-loss carryforwards, and $14.1 million of foreign loss carryforwards for tax purposes, which will be available to offset future taxable income. If not used, the U.S. net operating loss carryforwards will begin to expire in 2013, the U.S. capital loss carryforwards will expire in 2012, and the foreign tax loss carryforwards generally may be carried forward indefinitely. The U.S. net operating loss carryforwards increased as a result of the iSuppli acquisition. These losses begin to expire in 2018 and are subject to prior Section 382 limits, as well as 382 limits as a result of the IHS acquisition. Only losses deemed more likely than not of being realizable were recorded. The U.S. capital loss was incurred during 2007 as the previously deferred loss on stock investment was realized. We believe the realization of the deferred tax asset related to the U.S. capital loss is not more likely than not to occur, and accordingly, have placed a valuation allowance on this asset. We have analyzed the foreign net operating losses and placed valuation allowances on those that we have determined the realization is not more likely than not to occur. Global Insight foreign net operating losses at the acquisition date were $26.7 million, and were recorded with purchase accounting during 2009. As of November 30, 2010, we had foreign tax credit (FTC) carryforwards of approximately $1.5 million, research and development (R&D) credit carryforwards of approximately $0.1 million, and Alternative Minimum Tax (AMT) credit carryforwards of approximately $3.1 million, which will be available to offset future U.S. tax liabilities. If not used, the FTC carryforwards will expire in 2016, and the R&D credit carryforwards will expire between 2026 and 2027. The AMT credit carryforwards may be carried forward indefinitely. We believe that it is more likely than not that we will realize our R&D, FTC, and AMT tax credit assets. The valuation allowance for deferred tax assets decreased by $0.6 million in 2010. The decrease in this allowance was primarily due to a decrease on the allowance against the R&D credits of $0.4 million, as credits set to expire were utilized in 2009, and a decrease in U.S. capital loss allowance of $0.2 million, as a portion of the capital loss was used to offset capital gains in 2009. We have provided what we believe to be an appropriate amount of tax for items that involve interpretation of the tax law. However, events may occur in the future that will cause us to reevaluate our current reserves and may result in an adjustment to the reserve for taxes. On December 1, 2007, we adopted FASB guidance on income taxes, which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This pronouncement also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Upon adoption, we recorded a cumulative effect adjustment of $1.4 million to increase beginning retained earnings. Subsequent to adoption, we include accrued interest and accrued penalties related to amounts accrued for unrecognized tax benefits in our provision for income taxes. We had previously included interest and penalties in interest income (expense) and other income (expense), respectively. 68 A summary of the activities associated with our reserve for unrecognized tax benefits, interest and penalties follows: Balance at December 1, 2009 . . . . . . . . . . . . . . . Additions: Current year tax positions . . . . . . . . . . . . . . . Acquisition-related . . . . . . . . . . . . . . . . . . . . . Prior year tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Associated with interest Decreases: Unrecognized Tax Benefits Interest Penalties (In thousands) $1,421 $108 $ 4 151 154 112 — — — — 89 — — — — — Lapse of statute of limitations . . . . . . . . . . . . (315) (9) Balance at November 30, 2010 . . . . . . . . . . . . . . $1,523 $188 $ 4 As of November 30, 2010, the total amount of unrecognized tax benefits was $1.7 million, of which $0.2 million related to interest. Changes in the reserve for unrecognized tax benefits associated with current year tax positions were primarily related to uncertain tax filing requirements associated with our acquisition of IHS Global Insight. It is reasonably possible that we will experience a $0.2 million decrease in the reserve for unrecognized tax benefits within the next twelve months. We would experience this decrease in relation to uncertainties associated with closing of statutes. IHS or its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The tax years for IHS and our significant subsidiaries that remain subject to examination are as follows: Jurisdiction Years Under Examination Additional Open Years U.S. Federal . . . . . . . . . . . . . . United Kingdom . . . . . . . . . . . Canada . . . . . . . . . . . . . . . . . . Switzerland . . . . . . . . . . . . . . — — — — 2004 - 2009 2006 - 2009 2006 - 2009 2008 - 2009 The 2004 and 2005 U.S. tax returns were amended in November 2010 to carry back a portion of the capital loss; as such, these tax years are open for examination of the items changed. 69 11. Other Comprehensive Income (Loss) Net pension and post- retirement liability adjustment Foreign currency translation adjustments Accumulated other comprehensive income (loss) Balances, November 30, 2007 . . . . . . . . . . . . $ 24,785 (In thousands) $ (3,396) $ 21,389 Foreign currency translation adjustments, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . Net pension liability adjustment . . . . . . . . . Foreign currency effect on pension . . . . . . Tax provision on pension . . . . . . . . . . . . . . . . . Foreign currency effect on tax benefit (96,977) — — (884) — 247 (83,805) 884 32,213 (247) (96,977) (83,805) — 32,213 — Balances, November 30, 2008 . . . . . . . . . . . . $(72,829) $(54,351) $(127,180) Foreign currency translation adjustments, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . Net pension liability adjustment . . . . . . . . . Foreign currency effect on pension . . . . . . Tax provision on pension . . . . . . . . . . . . . . . . . Foreign currency effect on tax benefit 41,678 — (71) — 20 — (28,504) 71 10,175 (20) 41,678 (28,504) — 10,175 — Balances, November 30, 2009 . . . . . . . . . . . . $(31,202) $(72,629) $(103,831) Foreign currency translation adjustments, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . Net pension liability adjustment . . . . . . . . . Foreign currency effect on pension . . . . . . Tax provision on pension . . . . . . . . . . . . . . . . . Foreign currency effect on tax benefit (18,076) — (292) — 133 — (4,660) 292 1,935 (133) (18,076) (4,660) — 1,935 — Balances, November 30, 2010 . . . . . . . . . . . . $(49,437) $(75,195) $(124,632) 12. Discontinued Operations Effective December 31, 2009, we sold our small non-core South African business for approximately $2 million with no gain or loss on sale. The sale of this business included a building and certain intellectual property. In exchange for the sale of these assets, we received two three-year notes receivable, one secured by a mortgage on the building and the other secured by a pledge on the shares of the South African company. In December 2010, we received payment in full on the note secured by a mortgage on the building. Operating results of the discontinued operations for the three years ended November 30 were as follows: 2010 2009 2008 Income (loss) from discontinued operations . . . . . . . . . . . . . Tax benefit (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (In thousands) $ (70) (68) $(68) 14 $500 (68) Income (loss) from discontinued operations, net . . . . . . . . . $(54) $(138) $432 70 13. Stock-Based Compensation As of November 30, 2010, we had one share-based compensation plan: the Amended and Restated IHS Inc. 2004 Long-Term Incentive Plan, which is described further below. Stock-based compensation expense for the three years ended November 30 was as follows: Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . Selling, general and administrative expenses . . . . $ 3,633 62,841 (In thousands) $ 2,564 54,548 $ 1,361 38,611 Total stock-based compensation expense . . . . . . . $66,474 $57,112 $39,972 2010 2009 2008 Total income tax benefit recognized in the income statement for share-based compensation arrangements for the three years ended November 30 was as follows: Income tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . $24,215 (In thousands) $21,131 $14,790 2010 2009 2008 No stock-based compensation cost was capitalized during the years ended November 30, 2010, 2009, or 2008. Amended and Restated 2004 Long-Term Incentive Plan The Amended and Restated 2004 Long-Term Incentive Plan provides for the grant of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance units and performance shares, cash-based awards, other stock based awards and covered employee annual incentive awards. The 2004 Directors Stock Plan, a sub-plan under our Amended and Restated 2004 Long-Term Incentive Plan, provides for the grant of restricted stock and restricted stock units to non-employee directors as defined in that plan. We believe that such awards better align the interests of our employees and non-employee directors with those of our shareholders. We have authorized a maximum of 11.25 million shares. As of November 30, 2010, the number of shares available for future grant was 2.2 million. Total compensation expense related to nonvested awards, both share awards and stock options, not yet recognized was $78.7 million as of November 30, 2010, with a weighted-average recognition period of approximately 1.2 years. Nonvested Stock. Share awards typically vest from six months to four years. Share awards are generally subject to either cliff vesting or graded vesting. The fair value of nonvested stock is based on the fair value of our common stock on the date of grant. We amortize the value of share awards to expense over the vesting period on a straight-line basis. Just over 35% of our outstanding awards have performance-based vesting provisions. For those awards, an evaluation is made each quarter as to the likelihood of the performance criteria being met. As the number of shares expected to vest increases or decreases, compensation expense is then adjusted up or down to reflect the number of shares expected to vest and the cumulative vesting period met to date. Additionally, we estimate forfeitures at the grant date and recognize compensation cost based on the number of awards expected to vest. There may be adjustments in future periods if the likelihood of meeting performance criteria changes or if actual forfeitures differ from our estimates. Our forfeiture rate is based upon historical experience as well as anticipated employee turnover considering certain qualitative factors. 71 A summary of the status of our nonvested shares as of November 30, 2010, and changes during the year then ended were as follows: Balances, November 30, 2009 . . . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . Vested . . . . . . . . . . . . . . . . . . . . . . . . Forfeited . . . . . . . . . . . . . . . . . . . . . . Shares (in thousands) 2,674 1,821 (1,428) (335) Balances, November 30, 2010 . . . . . . . . 2,732 Weighted-Average Grant Date Fair Value $46.38 $56.17 $44.97 $51.96 $48.40 The total fair value of nonvested stock that vested during the year ended November 30, 2010, was $78.0 million based on the weighted-average fair value on the vesting date and $64.2 million based on the weighted-average fair value on the grant date. Stock Options. Option awards are generally granted with an exercise price equal to the fair market value of our stock at the date of grant. All outstanding options were fully vested as of November 30, 2010, with 8-year contractual terms. No options were granted in the years ended November 30, 2010, 2009, or 2008. The following table summarizes changes in outstanding stock options during the years ended November 30, 2010, 2009, and 2008, as well as options that are vested and expected to vest and stock options exercisable at November 30, 2010 and 2009: Outstanding at November 30, 2008 . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . Exercised . . . . . . . . . . . . . . . . . . . . . . . . Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . Outstanding at November 30, 2009 . . . . . . Vested and expected to vest at November 30, 2009 . . . . . . . . . . . . . . . . . Exercisable at November 30, 2009 . . . . . . . Outstanding at November 30, 2009 . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . Exercised . . . . . . . . . . . . . . . . . . . . . . . . Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . Outstanding at November 30, 2010 . . . . . . Vested and expected to vest at November 30, 2010 . . . . . . . . . . . . . . . . . Exercisable at November 30, 2010 . . . . . . . Shares (in thousands) 275 — (66) (9) 200 200 98 200 — (38) — 162 162 162 Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term Aggregate Intrinsic Value (in thousands) $35.18 — $32.48 $37.65 $35.96 $35.96 $37.65 $35.96 — $34.27 — $36.36 $36.36 $36.36 4.9 4.9 5.0 4.1 4.1 4.1 $2,871 $2,871 $1,243 $5,825 $5,825 $5,825 The aggregate intrinsic value amounts in the table above represent the difference between the closing prices of our common stock on November 30, 2009 and 2010, which were $50.28 and $72.32, respectively, and the exercise price, multiplied by the number of in-the-money stock options as of the same date. This represents the amounts that would have been received by the stock option holders if they had all exercised their stock options on the respective year-end date. In future periods, the 72 intrinsic value will change depending on fluctuations in our stock price. The total intrinsic value of stock options exercised during the year ended November 30, 2010, was $1.1 million. 14. Employee Retirement Benefits Defined Benefit Plans We sponsor a non-contributory, defined-benefit retirement plan (the U.S. RIP) for all of our U.S. employees with at least one year of service. We also have a defined-benefit pension plan (the U.K. RIP) that covers certain employees of a subsidiary based in the United Kingdom. We also have an unfunded Supplemental Income Plan (SIP), which is a non-qualified pension plan, for certain company personnel. Benefits for all three plans are generally based on years of service and either average or cumulative base compensation. Plan funding strategies are influenced by employee benefit laws and tax laws. The U.K. RIP includes a provision for employee contributions and inflation-based benefit increases for retirees. During 2010, the Company approved a plan design change for the U.S. RIP that will be effective March 1, 2011. This change is considered to be a prospective plan amendment pursuant to existing pension accounting guidance. Accordingly, we have reflected the modification to the U.S. RIP within the November 30, 2010 balance sheet, which resulted in a $5.3 million reduction in liability that will be amortized over the remaining average future working lifetime of the employee group, which is approximately six years. In 2010, we also made the decision to discontinue future benefit accruals under the U.K. RIP, which resulted in a $0.8 million reduction of liability because of the curtailment. Total defined-benefit pension-plan (income) expense was $6.7 million, $(0.5) million and $(1.7) million for the years ending November 30, 2010, 2009, and 2008, respectively. Both the U.S. RIP and U.K. RIP plan assets consist primarily of equity securities with smaller holdings of bonds and alternative assets. Equity assets are diversified between international and domestic investments, with additional diversification in the domestic category through allocations to large-cap, mid-cap, and growth and value investments. The U.S. RIP’s established investment policy seeks to balance the need to maintain a viable and productive capital base and yet achieve investment results superior to the actuarial rate consistent with our funds’ investment objectives. The U.K. RIP’s established investment policy is to match the liabilities for active and deferred members with equity investments and match the liabilities for pensioner members with fixed-income investments. Asset allocations are subject to ongoing analysis and possible modification as basic capital market conditions change over time (interest rates, inflation, etc.). The following compares target asset allocation percentages as of the beginning of 2010 with actual asset allocations at the end of 2010: U.S. RIP Assets U.K. RIP Assets Target Allocations Actual Allocations Target Allocations Actual Allocations Equities . . . . . . . . . . . . . . . . . . . . . . . . . Fixed Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Alternatives/Other 65% 30 5 66% 29 5 55% 45 — 51% 44 5 Investment return assumptions for both plans have been determined by obtaining independent estimates of expected long-term rates of return by asset class and applying the returns to assets on a weighted-average basis. 73 We expect to contribute approximately $1.7 million to the U.K. RIP and approximately $0.7 million to the SIP during 2011. We do not expect to make any contributions for the U.S. RIP in 2011. The following table provides the expected benefit payments for our pension plans: U.S. RIP U.K. RIP SIP Total (In thousands) 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 - 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $18,245 18,488 17,060 16,038 15,780 72,971 $ 700 722 744 766 766 4,188 $ 696 $19,641 19,907 18,434 17,402 17,123 79,801 697 630 598 577 2,642 The following represents our net periodic pension (income) expense: Year Ended November 30, 2010 U.S. RIP U.K. RIP SIP Total (In thousands) Service costs incurred . . . . . . . . . . . . . . . . . . . . . Interest costs on projected benefit obligation . . . Expected return on plan assets . . . . . . . . . . . . . . Amortization of prior service cost (benefit) . . . . . Amortization of actuarial loss . . . . . . . . . . . . . . . . Amortization of transitional obligation/(asset) . . . $ 8,015 11,971 (20,151) (473) 5,984 — $ 644 1,780 (2,135) — 197 — $ 213 $ 8,872 14,166 415 — (22,286) (429) 44 6,360 179 40 40 Net periodic pension expense . . . . . . . . . . . . . . . $ 5,346 $ 486 $ 891 $ 6,723 Year Ended November 30, 2009 U.S. RIP U.K. RIP SIP Total (In thousands) Service costs incurred . . . . . . . . . . . . . . . . . . . . . Interest costs on projected benefit obligation . . . Expected return on plan assets . . . . . . . . . . . . . . Amortization of prior service cost (benefit) . . . . . Amortization of actuarial loss . . . . . . . . . . . . . . . . Amortization of transitional obligation/(asset) . . . Settlement expense . . . . . . . . . . . . . . . . . . . . . . . $ 6,912 12,921 (20,906) (473) — (229) — $ 525 1,585 (1,730) — — — — $ 233 $ 7,670 490 14,996 — (22,636) (429) 44 85 85 (189) 40 53 53 Net periodic pension (income) expense . . . . . . . $ (1,775) $ 380 $ 945 $ (450) Year Ended November 30, 2008 U.S. RIP U.K. RIP SIP Total (In thousands) Service costs incurred . . . . . . . . . . . . . . . . . . . . . Interest costs on projected benefit obligation . . . Expected return on plan assets . . . . . . . . . . . . . . Amortization of prior service cost (benefit) . . . . . Amortization of actuarial loss . . . . . . . . . . . . . . . . Amortization of transitional obligation/(asset) . . . Settlement expense . . . . . . . . . . . . . . . . . . . . . . . $ 6,289 11,998 (21,470) (473) — (568) 693 $ 907 2,055 (2,141) — — — — $ 286 $ 7,482 456 14,509 — (23,611) (429) 44 203 203 (528) 40 693 — Net periodic pension (income) expense . . . . . . . $ (3,531) $ 821 $1,029 $(1,681) 74 The changes in the projected benefit obligation, plan assets and the funded status of the pension plans were as follows: U.S. RIP November 30, 2010 Underfunded SIP U.K. RIP (In thousands) Consolidated Change in projected benefit obligation: Net benefit obligation at November 30, 2009 . . . . . $ 211,879 $ 35,545 $ 7,399 $ 254,823 8,872 Service costs incurred . . . . . . . . . . . . . . . . . . . . . . . . 209 Employee contributions . . . . . . . . . . . . . . . . . . . . . . . 14,166 Interest costs on projected benefit obligation . . . . . 11,997 Actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14,803) Gross benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . (5,405) Plan amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . (751) Settlement expense . . . . . . . . . . . . . . . . . . . . . . . . . . (1,859) Foreign currency exchange rate change . . . . . . . . . 644 209 1,780 (874) (755) — (751) (1,859) 11,971 12,740 (13,541) (5,288) — — 213 — 415 131 (507) (117) — — 8,015 — Net benefit obligation at November 30, 2010 . . . . . $ 225,776 $ 33,939 $ 7,534 $ 267,249 Change in plan assets: Fair value of plan assets at November 30, 2009 . . . $ 203,403 $ 32,226 $ — $ 235,629 20,474 Actual return on plan assets . . . . . . . . . . . . . . . . . . . 2,340 Employer contributions . . . . . . . . . . . . . . . . . . . . . . . 209 Employee contributions . . . . . . . . . . . . . . . . . . . . . . . (14,803) Gross benefits and settlements paid . . . . . . . . . . . . (1,704) Foreign currency exchange rate change . . . . . . . . . 1,830 1,833 209 (755) (1,704) — 507 — (507) — (13,541) 18,644 — — — Fair value of plan assets at November 30, 2010 . . . $ 208,506 $ 33,639 $ — $ 242,145 Funded status: Projected benefit obligation at November 30, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(225,776) $(33,939) $(7,534) $(267,249) 242,145 Fair value of plan assets at November 30, 2010 . . . 208,506 33,639 — Funded status—Underfunded . . . . . . . . . . . . . . . . . . $ (17,270) $ (300) $(7,534) $ (25,104) Amounts recognized in the Consolidated Balance Sheets: Accrued liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (17,270) $ (300) $(7,534) $ (25,104) Amounts in Accumulated Other Comprehensive Income not yet recognized as components of net periodic pension expense (income), pretax: Net prior service cost (benefit) . . . . . . . . . . . . . . . . . $ (8,182) $ — $ Net actuarial loss (gain) . . . . . . . . . . . . . . . . . . . . . . . Net transitional obligation (asset) . . . . . . . . . . . . . . . 3,696 — 119,783 — (42) $ (8,224) 125,258 239 1,779 239 Total not yet recognized . . . . . . . . . . . . . . . . . . . . . . $ 111,601 $ 3,696 $ 1,976 $ 117,273 75 U.S. RIP November 30, 2009 Underfunded SIP U.K. RIP (In thousands) Consolidated Change in projected benefit obligation: Net benefit obligation at November 30, 2008 . . . . . $ 179,467 $ 22,295 $ 6,778 $ 208,540 7,670 Service costs incurred . . . . . . . . . . . . . . . . . . . . . . . . 231 Employee contributions . . . . . . . . . . . . . . . . . . . . . . . 14,996 Interest costs on projected benefit obligation . . . . . 36,394 Actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15,279) Gross benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Settlement expense . . . . . . . . . . . . . . . . . . . . . . . . . . 2,218 Foreign currency exchange rate change . . . . . . . . . 525 231 1,585 9,605 (914) — 2,218 233 — 490 321 (476) 53 — 12,921 26,468 (13,889) 6,912 — — — Net benefit obligation at November 30, 2009 . . . . . $ 211,879 $ 35,545 $ 7,399 $ 254,823 Change in plan assets: Fair value of plan assets at November 30, 2008 . . . $ 186,900 $ 23,630 $ — $ 210,530 35,534 Actual return on plan assets . . . . . . . . . . . . . . . . . . . 2,567 Employer contributions . . . . . . . . . . . . . . . . . . . . . . . 231 Employee contributions . . . . . . . . . . . . . . . . . . . . . . . (15,279) Gross benefits and settlements paid . . . . . . . . . . . . 2,046 Foreign currency exchange rate change . . . . . . . . . 5,142 2,091 231 (914) 2,046 — 476 — (476) — (13,889) 30,392 — — — Fair value of plan assets at November 30, 2009 . . . $ 203,403 $ 32,226 $ — $ 235,629 Funded status: Projected benefit obligation at November 30, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(211,879) $(35,545) $(7,399) $(254,823) 235,629 Fair value of plan assets at November 30, 2009 . . . 203,403 32,226 — Funded status—Underfunded . . . . . . . . . . . . . . . . . . $ (8,476) $ (3,319) $(7,399) $ (19,194) Amounts recognized in the Consolidated Balance Sheets: Accrued liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (8,476) $ (3,319) $(7,399) $ (19,194) Amounts in Accumulated Other Comprehensive Income not yet recognized as components of net periodic pension expense (income), pretax: Net prior service cost (benefit) . . . . . . . . . . . . . . . . . $ (3,367) $ — $ Net actuarial loss (gain) . . . . . . . . . . . . . . . . . . . . . . . Net transitional obligation (asset) . . . . . . . . . . . . . . . 5,480 — 111,519 — 119 $ (3,248) 118,826 278 1,827 278 Total not yet recognized . . . . . . . . . . . . . . . . . . . . . . $ 108,152 $ 5,480 $ 2,224 $ 115,856 IHS Global Insight has a funded defined benefit pension plan for certain former employees located in the UK. According to the most recently available actuarial report, this plan has average annual pension amounts of less than $0.1 million. This plan is closed to both new entrants and future accruals. As a result of this plan, $1.5 million was recorded as a pension liability in the final purchase price allocation. 76 Amortization Amounts Expected to be Recognized in Net Periodic Pension and Post-retirement Expense (Income) during Fiscal Year Ending November 30, 2011, pretax: Amortization of net actuarial loss . . . . . . . . . . . . . . . Amortization of transitional obligation . . . . . . . . . . . . . . . . Amortization of net prior service cost (benefit) $ 9,851 $ — $(1,343) (In thousands) $ 37 $— $— $169 $10,057 $ 40 $ 40 $ (7) $ (1,350) U.S. RIP U.K. RIP SIP Total Pension expense (income) is actuarially calculated annually based on data available at the beginning of each year. We determine the expected return on plan assets by multiplying the expected long-term rate of return on assets by the market-related value of plan assets. The market-related value of plan assets is a calculated value that recognizes investment gains and losses in fair value over five years. Assumptions used in the actuarial calculation include the discount rate selected and disclosed at the end of the previous year as well as other assumptions detailed in the table below, for the years ended November 30: U.S. RIP U.K. RIP SIP 2010 2009 2010 2009 2010 2009 Weighted-average assumptions as of year-end Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.50% 5.90% 5.50% 5.40% 5.50% 5.90% Average salary increase rate . . . . . . . . . . . . . . . . . . . . . . . . . 4.50 Expected long-term rate of return on assets . . . . . . . . . . . . . 8.25 4.50 — 4.50 6.50 8.25 7.00 — 4.50 — 4.50 Fair Value Measurements Financial instruments included in plan assets carried at fair value as of November 30, 2010 and measured at fair value on a recurring basis are classified as follows: Š Level 1 Inputs—Quoted prices (unadjusted) for identical assets or liabilities in active markets that are accessible as of the measurement date. Level 1 consists of equity securities and fixed income securities of $135.8 million. Š Level 2 Inputs—Inputs other than quoted prices within Level 1 that are observable either directly or indirectly, including but not limited to quoted prices in markets that are not active, quoted prices in active markets for similar assets or liabilities, and observable inputs other than quoted prices such as interest rates or yield curves. Level 2 consists of collective trust funds holding equity securities and fixed income securities of $96.2 million. Š Level 3 Inputs—Unobservable inputs reflecting our own assumptions about the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Level 3 consists of an investment in a real estate fund of $10.1 million. Defined Contribution Plan Employees of certain subsidiaries may participate in defined contribution plans. Benefit expense relating to these plans was approximately $6.9 million, $5.4 million and $5.1 million for 2010, 2009, and 2008, respectively. 15. Post-retirement Benefits We sponsor a contributory post-retirement medical plan. The plan grants access to group rates for retiree-medical coverage for all U.S. employees who leave IHS after age 55 with at least 10 years of service. Additionally, IHS subsidizes the cost of coverage for retiree-medical coverage for certain grandfathered employees. The IHS subsidy is capped at different rates per month depending on individual retirees’ Medicare eligibility. 77 The obligation under our plan was determined by the application of the terms of medical and life insurance plans together with relevant actuarial assumptions. Effective 2006, IHS does not provide prescription drug coverage for Medicare-eligible retirees except through a Medicare Advantage fully insured option; therefore our liability does not reflect any impact of the Medicare Modernization Act Part D subsidy. The discount rate used in determining the accumulated post-retirement benefit obligation was 5.5%, 5.9% and 7.5% at November 30, 2010, 2009, and 2008, respectively. Our net periodic post-retirement expense (income) and changes in the related projected benefit obligation were as follows: 2010 2009 2008 (In thousands) Service costs incurred . . . . . . . . . . . . . . . . . . . . . . . . Interest costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amortization of prior service cost(1) . . . . . . . . . . . . . Amortization of net actuarial loss . . . . . . . . . . . . . . . . $ 48 559 (3,229) 683 $ 57 632 (3,229) 306 $ 100 634 (3,229) 472 Net periodic post-retirement income . . . . . . . . . . . . . $(1,939) $(2,234) $(2,023) Year Ended November 30, 2010 Year Ended November 30, 2009 (In thousands) Change in projected post-retirement benefit obligation: Post-retirement benefit obligation at beginning of year . . . . . . . . . . . . . . . . Service costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Actuarial loss (gain) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,914 48 559 403 (868) Post-retirement benefit obligation at end of year . . . . . . . . . . . . . . . . . . . . . $ 10,056 $ 8,852 57 632 1,175 (802) $ 9,914 Funded status—Unfunded: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(10,056) $(9,914) Amounts recognized in the Consolidated Balance Sheets: Accrued liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(10,056) $(9,914) Amounts in Accumulated Other Comprehensive Income not yet recognized as components of net periodic pension expense (income), pretax: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net prior service benefit Net actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net transitional obligation (assets) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (325) 3,684 — Total not yet recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,359 Amortization Amounts Expected to be Recognized in Net Periodic Pension and Post-retirement Expense (Income) during Fiscal Year Ending November 30, 2011, pretax: Amortization of net actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amortization of transitional obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amortization of net prior service benefit $ 678 — (325) $(3,554) 3,964 — $ 410 (1) We amended our plan in 2006. The plan was amended to limit benefits to be paid for future health-care costs. IHS no longer subsidizes the cost of coverage for retiree-medical coverage. Certain employees were grandfathered with the IHS subsidy capped at different rates per month depending on individual retirees’ Medicare eligibility. This change resulted in a $15.9 million negative plan amendment to be amortized over a period of time resulting in net periodic post-retirement benefit income in 2006 through 2011. 78 Employer contributions to the post-retirement benefit plan expected to be paid during the year ending November 30, 2011, are approximately $0.9 million. The following table provides the expected cash out-flows for our post-retirement benefit plan (in thousands): 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 - 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 878 897 897 892 873 3,993 A one-percentage-point change in assumed health-care-cost-trend rates would have no effect on service cost, interest cost, or the post-retirement benefit obligation as of November 30, 2010 because the IHS subsidy is capped. 16. Common Stock and Earnings per Share As of November 30, 2010, our authorized capital stock consisted of 160,000,000 shares of Class A common stock. We increased the number of authorized shares from 80,000,000 shares to 160,000,000 shares on May 6, 2010, as a result of shareholder approval of the increase. Prior to September 18, 2008, our authorized capital stock consisted of 80,000,000 shares of Class A common stock and 13,750,000 shares of Class B common stock. These classes had equal dividend rights and liquidation rights. However, the holders of our Class A common stock were entitled to one vote per share and the holder of our Class B common stock was entitled to ten votes per share on all matters to be voted upon by the shareholders. Each share of Class B common stock was convertible at any time at the option of the holder into one share of Class A common stock. On September 18, 2008, the holder of our 13,750,000 shares of Class B common stock converted those shares to 13,750,000 Class A common shares. In exchange for this conversion, the number of allowable demand registrations available to that shareholder increased from two to four. Weighted average common shares outstanding were calculated as follows: Weighted average common shares outstanding: Shares used in basic earnings per share calculation . . . . . . . . . . . . . . . . . . . . . . . Effect of dilutive securities: Years Ended November 30, 2008 2009 2010 63,964 63,055 62,063 Deferred stock units . . . . . . . . . . . . . . . . . Restricted stock units . . . . . . . . . . . . . . . Stock options . . . . . . . . . . . . . . . . . . . . . . 91 612 52 55 797 33 40 795 59 Shares used in diluted earnings per share calculation . . . . . . . . . . . . . . . . . . . . . . . . . . 64,719 63,940 62,957 Share Buyback Program During 2006, our board of directors approved a program to reduce the dilutive effects of employee equity grants, by allowing employees to surrender shares back to the Company for a value equal to their statutory tax liability. IHS then pays the statutory tax on behalf of the employee. Additionally, our board of directors periodically approves additional buyback programs whereby IHS acquires shares in the open market to more fully offset the dilutive effect of our employee equity programs. During the 79 year ended November 30, 2010, we accepted 484,648 shares surrendered by employees under the tax withholding program for approximately $26.4 million, or $54.57 per share. No shares were repurchased in 2010 or 2009 pursuant to the share buyback program. 17. Long-Term Leases, Commitments and Contingencies Rental charges in 2010, 2009, and 2008 approximated $27.5 million, $29.3 million and $21.2 million, respectively. Minimum rental commitments under non-cancelable operating leases in effect at November 30, 2010, are as follows (in thousands): 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,599 21,593 19,463 18,265 18,109 66,364 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $168,393 We had outstanding letters of credit and bank guarantees in the aggregate amount of approximately $2.1 million and $2.4 million at November 30, 2010 and 2009, respectively. From time to time, we are involved in litigation, most of which is incidental to our business. In our opinion, no litigation to which we currently are a party is likely to have a material adverse effect on our results of operations or financial condition. 18. Supplemental Cash Flow Information Net cash provided by operating activities reflects cash payments for interest and income taxes as shown below, for the years ended November 30: Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,422 (In thousands) $ 1,799 $ 1,088 Income tax payments, net . . . . . . . . . . . . . . . . . . . . $38,877 $27,403 $28,744 2010 2009 2008 Cash and cash equivalents amounting to approximately $200.7 million and $124.2 million reflected on the consolidated balance sheets at November 30, 2010 and 2009, respectively, are maintained primarily in U.S. Dollars, Canadian Dollars, British Pounds, and Euros, and were subject to fluctuations in the current exchange rate. 19. Segment Information We prepare our financial reports and analyze our business results within our three reportable geographic segments: Americas, EMEA and APAC. During 2008, we reorganized our management structure to a geographic focus, the point of contact with our customers. This new integrated global organization makes it easier for our customers to do business with us by providing a more cohesive, consistent, and effective sales and marketing approach in each region. By structuring our business around our geographic segments, we are able to tailor and expand the solutions we offer to meet the unique needs of our customers both globally and in local markets. We are also able to manage our activities according to the best practices of each. This structure provides a solid foundation for growth in each market for all of our capabilities. It allows us a more efficient method of bringing new products and services to customers, and supports growth in existing accounts and with new customers and markets. 80 As our APAC operations have evolved, the management structure of the region has also evolved, and going forward, will include responsibility for overseeing India. Accordingly, in 2011, India will be moved from our EMEA region to our APAC region. Information as to the operations of our three segments is set forth below based on the nature of the offerings. Our Chairman and Chief Executive Officer represents our chief operating decision maker, and he evaluates segment performance based primarily on revenue and operating profit of these three segments. In addition, he also reviews revenue for the domains and transaction types. The accounting policies of our segments are the same as those described in the summary of significant accounting policies (see Note 2). No single customer accounted for 10% or more of our total revenue for the year ended November 30, 2010. There are no material inter-segment revenues for any period presented. As shown below, certain corporate transactions are not allocated to the reportable segments. Amounts not allocated include, but are not limited to, such items as stock-based compensation expense, net periodic pension and post-retirement benefits expense, corporate-level impairments, and gain (loss) on sales of corporate assets. Americas EMEA APAC Shared Services Consolidated Total (In thousands) 69,689 15,257 657,384 203,451 41,884 1,350,520 2010 Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . $ 670,811 $311,916 $92,733 $ Operating income . . . . . . . . . . . . . . . . . . . Depreciation and amortization . . . . . . . . . Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2009 Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . $ 602,641 $287,855 $76,804 $ Operating income . . . . . . . . . . . . . . . . . . . Depreciation and amortization . . . . . . . . . Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2008 Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . $ 520,925 $263,457 $59,648 $ Operating income . . . . . . . . . . . . . . . . . . . Depreciation and amortization . . . . . . . . . Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191,754 31,750 943,769 60,576 14,927 595,178 43,758 12,997 445,667 160,757 23,187 862,896 29,574 154 62,955 24,650 115 62,244 18,098 132 66,817 — $1,075,460 186,743 59,474 2,155,702 (115,971) 2,179 84,843 — $ 967,300 179,886 49,146 1,675,588 (97,094) 2,354 74,397 — $ 844,030 133,011 39,410 1,436,180 (89,602) 3,094 60,800 Goodwill rollforward was as follows: Americas EMEA APAC (In thousands) Consolidated Total Balance at November 30, 2008 . . . . . . . . . . Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . Adjustment to purchase price . . . . . . . . . . . Foreign currency translation . . . . . . . . . . . . $465,001 51,843 (8,865) 5,714 $187,000 104,175 (5,910) 23,708 $53,076 — — — $705,077 156,018 (14,775) 29,422 Balance at November 30, 2009 . . . . . . . . . . 513,693 308,973 53,076 875,742 Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . Adjustment to purchase price . . . . . . . . . . . Foreign currency translation . . . . . . . . . . . . 240,440 288 3,706 15,035 (239) (14,142) — — — 255,475 49 (10,436) Balance at November 30, 2010 . . . . . . . . . . 758,127 309,627 53,076 1,120,830 81 Revenue by transaction type was as follows: Years Ended November 30, 2010 2009 2008 Subscription revenue . . . . . . . . . . . . . . . . . . . Consulting revenue . . . . . . . . . . . . . . . . . . . . . Transaction revenue . . . . . . . . . . . . . . . . . . . . Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . $ 836,039 62,331 64,162 112,928 (In thousands) $749,123 60,496 58,980 98,701 $627,164 56,197 69,614 91,055 Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . $1,075,460 $967,300 $844,030 Revenue by information domain was as follows: Energy revenue . . . . . . . . . . . . . . . . . . . . . . . Product Lifecycle revenue . . . . . . . . . . . . . . . Security revenue . . . . . . . . . . . . . . . . . . . . . . . Environment revenue . . . . . . . . . . . . . . . . . . . Macroeconomic Forecasting and Years Ended November 30, 2010 2009 2008 $ 472,240 344,935 112,061 61,015 (In thousands) $448,798 298,968 105,566 33,195 $442,919 290,637 75,192 22,456 Intersection revenue . . . . . . . . . . . . . . . . . . 85,209 80,773 12,826 Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . $1,075,460 $967,300 $844,030 20. Quarterly Results of Operations (Unaudited) The following summarizes certain quarterly results of operations: 2010 Revenue . . . . . . . . . . . . . . . . . . . . . . . . Cost of revenue . . . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . Net income attributable to IHS Inc. . . . Earnings per share: February 28 Three Months Ended May 31 August 31 November 30 (In thousands) $240,735 105,206 26,823 26,823 $266,480 112,938 38,478 38,478 $272,059 115,791 34,559 34,559 $296,186 123,943 41,455 41,455 Basic . . . . . . . . . . . . . . . . . . . . . . . . Diluted . . . . . . . . . . . . . . . . . . . . . . $ $ 0.42 0.42 $ $ 0.60 0.60 $ $ 0.54 0.53 $ $ 0.65 0.64 2009 Revenue . . . . . . . . . . . . . . . . . . . . . . . . Cost of revenue . . . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . Net income attributable to IHS Inc. . . . Earnings per share: $235,411 102,717 28,144 27,104 $235,276 97,860 33,058 31,954 $239,485 101,707 34,706 34,706 $257,128 107,662 41,199 41,199 Basic . . . . . . . . . . . . . . . . . . . . . . . . Diluted . . . . . . . . . . . . . . . . . . . . . . $ $ 0.43 0.43 $ $ 0.51 0.50 $ $ 0.55 0.54 $ $ 0.65 0.64 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable. 82 Item 9A. Controls and Procedures Disclosure Controls and Procedures Under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, the Company has evaluated the effectiveness of its disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act are effective to ensure that information required to be disclosed in the reports required to be filed or submitted under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Internal Control over Financial Reporting Our Chief Executive Officer and our Chief Financial Officer are responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act rule 13a-15(f). A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management is required to base its assessment of the effectiveness of our internal control over financial reporting on a suitable, recognized control framework, such as the framework developed by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO framework”). Our principal executive officer and our principal financial officer have chosen the COSO framework on which to base their assessment. Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of November 30, 2010. The Company’s independent registered public accounting firm has audited, and reported on, the effectiveness of our internal control over financial reporting. Management’s report and the independent registered public accounting firm’s report are included under the captions entitled “Management’s Report on Internal Control Over Financial Reporting” and “Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting,” respectively, in Item 8 of this Form 10-K and are incorporated herein by reference. 83 Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting that occurred during the period covered by this Form 10-K that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information None. 84 Part III Item 10. Directors, Executive Officers and Corporate Governance The information required by this item concerning our executive officers, directors, compliance with Section 16 of the Securities and Exchange Act of 1934, and our code of ethics that applies to our principal executive officer, principal financial officer, and principal accounting officer is incorporated by reference to the information set forth in the sections entitled “Election of Directors,” “Section 16(a) Beneficial Ownership Reporting Compliance” and “Corporate Governance and Board of Directors— Code of Conduct” in our Proxy Statement for our 2010 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission not later than March 30, 2011, which is 120 days after the fiscal year ended November 30, 2010 (the “Proxy Statement”). Item 11. Executive Compensation The information required by this item is incorporated by reference to the information set forth in the sections entitled “Corporate Governance and Board of Directors—Director Compensation” and “Executive Compensation” in the Proxy Statement. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters The information required by this item is incorporated by reference to the information set forth in the sections entitled “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” in the Proxy Statement. Item 13. Certain Relationships and Related Transactions, and Director Independence The information required by this item is incorporated by reference to the information set forth in the section entitled “Certain Relationships and Related Transactions” in the Proxy Statement. Item 14. Principal Accountant Fees and Services The information required by this item is incorporated by reference to the information set forth in the section entitled “Ratification of the Appointment of Independent Registered Public Accountants— Accounting and Non-Audit Fees” in the Proxy Statement. 85 Part IV Item 15. Exhibits and Financial Statement Schedules (a) Index of Financial Statements The Financial Statements listed in the Index to Consolidated Financial Statements are filed as part of this report on Form 10-K (see Part II, Item 8—Financial Statements and Supplementary Data). (b) Index of Exhibits The following exhibits are filed as part of this report: Exhibit Index Exhibit Number 3.1* 3.2** 4.1*** 4.2*** 4.3† Description Amended and Restated Certificate of Incorporation Amended and Restated By-Laws Form of Class A Common Stock Certificate Rights Agreement between IHS Inc. and Computershare Trust Company, Inc., as Rights Agent Amendment to Rights Agreement Designating American Stock Transfer & Trust as Rights Agent 10.1†† Amended and Restated IHS Inc. 2004 Long-Term Incentive Plan 10.2* 10.3** 10.4** 10.5†† 10.6** 10.7** 10.8††† 10.9††† 10.10††† 10.11††† 10.12††† 86 Amended and Restated IHS Inc. 2004 Directors Stock Plan IHS Inc. Employee Stock Purchase Plan IHS Supplemental Income Plan Summary of Non-Employee Director Compensation Form of Indemnification Agreement between the Company and its Directors IHS Executive Relocation Policy (2004) IHS Inc. 2004 Long-Term Incentive Plan, Form of 2007 Stock Option Award— Senior Executive Level IHS Inc. 2004 Long-Term Incentive Plan, Form of 2007 Stock Option Award— Executive Level IHS Inc. 2004 Long-Term Incentive Plan, Form of 2007 Restricted Stock Unit Award—Senior Executive Level IHS Inc. 2004 Long-Term Incentive Plan, Form of 2007 Restricted Stock Unit Award—Time-Based IHS Inc. 2004 Long-Term Incentive Plan, Form of 2007 Restricted Stock Unit Award—Performance-Based Exhibit Number 10.13*** 10.14*** 10.15‡ Description IHS Inc. 2004 Long-Term Incentive Plan, Form of Restricted Stock Unit Award— Performance-Based Employment Agreement by and between IHS Inc. and Michael J. Sullivan, dated as of November 1, 2004 Employment Agreement by and between IHS Inc. and Jeffrey R. Tarr, dated as of December 1, 2004 10.16‡‡‡‡ IHS Inc. 2004 Long-Term Incentive Plan, Form of 2010 Restricted Stock Unit Award—Performance-Based 10.17* 10.18‡‡ 10.19‡‡ 10.20‡‡ 10.21‡‡ 10.22* 10.23‡‡‡ 21* 23* 24* 31.1* 31.2* 32* IHS Inc. 2004 Long-Term Incentive Plan, Form of 2011 Restricted Stock Unit Award—Performance-Based Employment Agreement by and between IHS Inc. and Scott Key, dated as of October 31, 2007 Amendment to Employment Agreement by and between IHS Inc. and Michael J. Sullivan, dated as of October 21, 2009 Amendment to Employment Agreement by and between IHS Inc. and Jeffrey R. Tarr, dated as of October 22, 2009 Amendment to Employment Agreement by and between IHS Inc. and Scott Key, dated as of October 22, 2009 Employment Agreement by and between IHS Global Inc. and Daniel H. Yergin, dated as of July 2, 2010 Credit Agreement by and among IHS Inc., and certain of its subsidiaries, and J.P. Morgan, Bank of America N.A., RBS Citizens, N.A., Wells Fargo Bank, National Association, and BBVA Compass dated as of January 5, 2011. List of Subsidiaries of the Registrant Consent of Ernst & Young LLP Power of Attorney Certification of the Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Certification of the Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 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 101.INS**** XBRL Instance Document 101.SCH**** XBRL Taxonomy Extension Schema Document 101.CAL**** XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF**** XBRL Taxonomy Extension Definition Linkbase Document 101.LAB**** XBRL Taxonomy Extension Label Linkbase Document 101.PRE**** XBRL Taxonomy Extension Presentation Linkbase Document 87 * ** *** **** † †† Filed electronically herewith. Previously filed with the Securities and Exchange Commission as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2009, and incorporated herein by reference. Previously filed with the Securities and Exchange Commission as an exhibit to the Registration Statement on Form S-1 (No. 333-122565) of the Registrant and incorporated herein by reference. XBRL (Extensible Business Reporting Language) information is furnished and not filed herewith, is not a part of a registration statement or Prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections. Previously filed with the Securities and Exchange Commission as an exhibit to the Registrant’s Annual Report on Form 10-K for the period ended November 30, 2008, and incorporated herein by reference. Previously filed with the Securities and Exchange Commission as an exhibit to the Registrant’s Registration Statement on Form S-8 (No. 333-151082) and incorporated herein by reference. ††† Previously filed with the Securities and Exchange Commission as an exhibit to the Registrant’s Annual Report on Form 10-K for the period ‡ ‡‡ ended November 30, 2006, and incorporated herein by reference. Previously filed with the Securities and Exchange Commission as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the period ended February 28, 2006, and incorporated herein by reference. Previously filed with the Securities and Exchange Commission as an exhibit to the Registrant’s Annual Report on Form 10-K for the period ended November 30, 2009, and incorporated herein by reference. ‡‡‡ Previously filed with the Securities and Exchange Commission as an exhibit to the Registrant’s Periodic Report on Form 8-K dated January 6, 2011, and incorporated herein by reference. ‡‡‡‡ Previously filed with the Securities and Exchange Commission as an exhibit to the Registrant’s Periodic Report on Form 8-K dated January 6, 2011, and incorporated herein by reference. (c) Financial Statement Schedules All schedules for the Registrant have been omitted since the required information is not present or because the information is included in the financial statements or notes thereto. 88 Signatures Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on January 14, 2011. IHS INC. By: Name: Title: /s/ STEPHEN GREEN Stephen Green Senior Vice President and General Counsel Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed by the following persons on behalf of the registrant and in the capacities indicated on the 14th day of January, 2011. Signature Title /S/ JERRE L. STEAD Jerre L. Stead /S/ MICHAEL J. SULLIVAN Michael J. Sullivan /S/ HEATHER MATZKE-HAMLIN Heather Matzke-Hamlin Chairman and Chief Executive Officer (Principal Executive Officer) Executive Vice President and Chief Financial Officer (Principal Financial Officer) Senior Vice President and Chief Accounting Officer (Principal Accounting Officer) * C. Michael Armstrong * Steven A. Denning * Ruann F. Ernst * Brian H. Hall * Roger Holtback * Balakrishnan S. Iyer * Michael Klein * Richard W. Roedel Director Director Director Director Director Director Director Director 89 Signature * Christoph v. Grolman *By: /s/ STEPHEN GREEN Stephen Green Attorney-in-Fact Title Director 90 Exhibit Index Exhibit Number 3.1* 3.2** 4.1*** 4.2*** 4.3† Description Amended and Restated Certificate of Incorporation Amended and Restated By-Laws Form of Class A Common Stock Certificate Rights Agreement between IHS Inc. and Computershare Trust Company, Inc., as Rights Agent Amendment to Rights Agreement Designating American Stock Transfer & Trust as Rights Agent 10.1†† Amended and Restated IHS Inc. 2004 Long-Term Incentive Plan 10.2* 10.3** 10.4** 10.5†† 10.6** 10.7** 10.8††† 10.9††† 10.10††† 10.11††† 10.12††† 10.13*** 10.14*** 10.15‡ Amended and Restated IHS Inc. 2004 Directors Stock Plan IHS Inc. Employee Stock Purchase Plan IHS Supplemental Income Plan Summary of Non-Employee Director Compensation Form of Indemnification Agreement between the Company and its Directors IHS Executive Relocation Policy (2004) IHS Inc. 2004 Long-Term Incentive Plan, Form of 2007 Stock Option Award— Senior Executive Level IHS Inc. 2004 Long-Term Incentive Plan, Form of 2007 Stock Option Award— Executive Level IHS Inc. 2004 Long-Term Incentive Plan, Form of 2007 Restricted Stock Unit Award—Senior Executive Level IHS Inc. 2004 Long-Term Incentive Plan, Form of 2007 Restricted Stock Unit Award—Time-Based IHS Inc. 2004 Long-Term Incentive Plan, Form of 2007 Restricted Stock Unit Award—Performance-Based IHS Inc. 2004 Long-Term Incentive Plan, Form of Restricted Stock Unit Award— Performance-Based Employment Agreement by and between IHS Inc. and Michael J. Sullivan, dated as of November 1, 2004 Employment Agreement by and between IHS Inc. and Jeffrey R. Tarr, dated as of December 1, 2004 10.16‡‡‡‡ IHS Inc. 2004 Long-Term Incentive Plan, Form of 2010 Restricted Stock Unit Award—Performance-Based 10.17* 10.18‡‡ 10.19‡‡ IHS Inc. 2004 Long-Term Incentive Plan, Form of 2011 Restricted Stock Unit Award—Performance-Based Employment Agreement by and between IHS Inc. and Scott Key, dated as of October 31, 2007 Amendment to Employment Agreement by and between IHS Inc. and Michael J. Sullivan, dated as of October 21, 2009 Exhibit Number 10.20‡‡ 10.21‡‡ 10.22* 10.23‡‡‡ 21* 23* 24* 31.1* 31.2* 32* Description Amendment to Employment Agreement by and between IHS Inc. and Jeffrey R. Tarr, dated as of October 22, 2009 Amendment to Employment Agreement by and between IHS Inc. and Scott Key, dated as of October 22, 2009 Employment Agreement by and between IHS Global Inc. and Daniel H. Yergin, dated as of July 2, 2010 Credit Agreement by and among IHS Inc., and certain of its subsidiaries, and J.P. Morgan, Bank of America N.A., RBS Citizens, N.A., Wells Fargo Bank, National Association, and BBVA Compass dated as of January 5, 2011. List of Subsidiaries of the Registrant Consent of Ernst & Young LLP Power of Attorney Certification of the Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Certification of the Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 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 101.INS**** XBRL Instance Document 101.SCH**** XBRL Taxonomy Extension Schema Document 101.CAL**** XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF**** XBRL Taxonomy Extension Definition Linkbase Document 101.LAB**** XBRL Taxonomy Extension Label Linkbase Document 101.PRE**** XBRL Taxonomy Extension Presentation Linkbase Document * ** *** **** † †† Filed electronically herewith. Previously filed with the Securities and Exchange Commission as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2009, and incorporated herein by reference. Previously filed with the Securities and Exchange Commission as an exhibit to the Registration Statement on Form S-1 (No. 333-122565) of the Registrant and incorporated herein by reference. XBRL (Extensible Business Reporting Language) information is furnished and not filed herewith, is not a part of a registration statement or Prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections. Previously filed with the Securities and Exchange Commission as an exhibit to the Registrant’s Annual Report on Form 10-K for the period ended November 30, 2008, and incorporated herein by reference. Previously filed with the Securities and Exchange Commission as an exhibit to the Registrant’s Registration Statement on Form S-8 (No. 333-151082) and incorporated herein by reference. ††† Previously filed with the Securities and Exchange Commission as an exhibit to the Registrant’s Annual Report on Form 10-K for the period ‡ ‡‡ ended November 30, 2006, and incorporated herein by reference. Previously filed with the Securities and Exchange Commission as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the period ended February 28, 2006, and incorporated herein by reference. Previously filed with the Securities and Exchange Commission as an exhibit to the Registrant’s Annual Report on Form 10-K for the period ended November 30, 2009, and incorporated herein by reference. ‡‡‡ Previously filed with the Securities and Exchange Commission as an exhibit to the Registrant’s Periodic Report on Form 8-K dated January 6, 2011, and incorporated herein by reference. ‡‡‡‡ Previously filed with the Securities and Exchange Commission as an exhibit to the Registrant’s Periodic Report on Form 8-K dated January 6, 2011, and incorporated herein by reference. [THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK] Information General Information Investor & Media Relations IHS Inc. Headquarters 15 Inverness Way East Englewood, CO 80112 Phone: +1 800 525 7052 or +1 303 790 0600 Common Stock Listing: New York Stock Exchange (Symbol: IHS) Shareholder Services Communications about share ownership, transfer requirements, changes of address, lost stock certificates, account status and sale of shares should be directed to: American Stock Transfer & Trust Company 59 Maiden Lane New York, NY 10038 +1 800 937 5449 Independent Auditors Ernst & Young LLP Denver, CO IHS Forward-Looking Statements Securities analysts, investor professionals, and general media should contact: Investor Relations & Corporate Communications +1 303 397 7970 Investor_relations@ihs.com The company’s annual report, press releases, and filings with the Securities Exchange Commission may be obtained from the IHS web site located at www.ihs.com. Annual Meeting The company’s annual meeting of shareholders will be held at: Waldorf-Astoria New York 301 Park Avenue New York, NY 10022, United States Thursday, May 5, 2011 10:00 a.m. Eastern Daylight Time This report may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking state- ments are statements that are not historical facts. Such statements may include financial projections and estimates and their underlying as- sumptions, statements regarding plans, objectives, and expectations with respect to future operations, products, and services, and statements regarding future performance. In some cases, you can identify these statements by forward-looking words such as “intend,” “may,” “might,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue,” the negative of these terms, and other comparable terminology; however, be advised that not all forward-looking statements contain such identifying words. Our forward-looking statements, which are subject to risks, uncertainties, and assumptions, may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance, or achievements to differ materially from the results, level of activity, performance, or achievements expressed or implied by the forward-looking statements. Those factors include, but are not limited to, the success of our growth strategy, risks associated with making and integrating acquisitions, subscription renewals, international currency exchange rate fluctuations, economic challenges faced by our customers, changes in demand for our products and services, our ability to develop new products and services, pricing and other competitive pressures, changes in laws and regulations govern- ing our business and certain other risk factors, including those discussed or identified by us from time to time in our public filings (which may be viewed at www.sec.gov or www.ihs.com). Although we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of our forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Other than as required by applicable law, IHS does not undertake any obligation to update any of these forward-looking statements after the date of this report to conform our prior statements to actual results or revised expectations. IHS is a registered trademark of IHS Inc. All other company and product names may be trademarks of their respective owners. Copyright © 2011 IHS Inc. All rights reserved. B P 0 1 3 0 _ 8 1 9 0 IHS is a registered trademark of IHS Inc. All other company and product names may be trademarks of their respective owners. Copyright © 2011 IHS Inc. All rights reserved. 2021 

Continue reading text version or see original annual report in PDF format above