Back to GetFilings.com

Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Form 10-K

Commission file number 0-25849

OneSource Information Services, Inc.

300 Baker Avenue Concord, MA 01742

Registrant’s telephone number, including area code:

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes þ         No o

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Annual Report on Form 10-K or any amendment to this Annual Report on Form 10-K.    o

     Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).    Yes o         No þ

     The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the most recently completed second fiscal quarter (June 30, 2002) was approximately $50 million. Shares of common stock held by each officer and director and by each person who owns 5% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for any other purpose.

     As of March 20, 2003, the registrant had 11,679,012 shares of common stock outstanding, $.01 par value.

DOCUMENTS INCORPORATED BY REFERENCE:

     OneSource Information Services, Inc. (“OneSource”) intends to file its proxy statement pursuant to Regulation 14A within 120 days of the end of the fiscal year ended December 31, 2002. Portions of the proxy statement are incorporated by reference into Part III of this Annual Report on Form 10-K. In addition, OneSource has filed a Registration Statement on Form S-1, File No. 333-73263.

Table of Contents

TABLE OF CONTENTS

1

Table of Contents

PART I

Item 1. Business

      Except for historical information contained herein, the matters discussed in this Annual Report on Form 10-K are forward-looking statements that involve risks and uncertainties. OneSource makes such forward-looking statements under the provision of the “Safe Harbor” section of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements should be considered in light of the factors described below in Part II, Item 7 under “Certain Factors that May Affect Future Results.” Actual results may vary materially from those projected, anticipated or indicated in any forward-looking statements. In this Annual Report on Form 10-K, the words “anticipates,” “believes,” “expects,” “intends,” “future,” “could,” and similar words or expressions (as well as other words or expressions referencing future events, conditions or circumstances) identify forward-looking statements.

      OneSource’s Internet address is www.onesource.com, and OneSource maintains a website at that address. OneSource makes available on or through its website, without charge, its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports on the day such material is electronically filed with the United States Securities and Exchange Commission or if not reasonably practical on that day, on the first business day following electronic filing with the United States Securities and Exchange Commission.

General

      OneSource provides primarily Web-based business and financial information products and services to professionals who need quick access to timely and reliable company, industry, and market intelligence. OneSource’s primary products, the OneSource® Business Browser^SM products, are password-protected, subscription-based products that provide sales, marketing, finance, and management professionals and consultants with industry and company profiles, research reports, media accounts, executive listings and biographies, and financial information on over 1.7 million public and private companies. OneSource customers access this information over the Internet using standard Web browsers. As a Web-based solution, the Business Browser product line does not require the purchase of additional computer hardware by the customer. OneSource also distributes its CorpTech® high-technology company database as part of the Business Browser product line, as part of a separate Web-based product, as part of CD Roms, and through third party distributors.

      OneSource uses its proprietary classification system, which is referred to as the Global Business Taxonomy™ system, to associate, link, and integrate over 2,500 disparate sources of information on public and private companies worldwide that are made available from more than 30 information providers and the OneSource CorpTech high-technology database. Each information source provides its database to OneSource with identifiers for companies unique to that source. The information providers provide both textual information, such as news, business and trade articles, SEC filings, executive listings and profiles, industry intelligence, and analyst reports; and numeric information, such as company financial statements, stock quotes, and industry statistics.

      The OneSource product line also includes the AppLink^SM software development kit. The Applink software development kit lets OneSource customers access Business Browser content in HTML and XML formats via their internal applications. These customer applications may be internally developed or utilize third party software, and typically apply to corporate intranets, portals, or customer relationship platforms. OneSource has formed a number of alliances to enhance the integration and marketing of Business Browser content with third party software platforms. OneSource believes that the flexibility of its customers to access, use, and integrate information from the OneSource products with their own internal applications is an important trend and requirement.

      OneSource products are designed to address the information needs of leading professional and financial services firms, technology companies, and other large organizations. OneSource’s primary target market consists of Global 5000 business-to-business companies in the technology, professional services, and financial

2

Table of Contents

      As of December 31, 2002, 812 organizations subscribed to the Business Browser product line, compared to 817 as of December 31, 2001. On average, customers for Business Browser products as of December 31, 2002 had an annualized contract value of $69,058 per customer, compared to an average annualized contract value of $68,700 per customer as of December 31, 2001. As of December 31, 2002, 51 organizations subscribed to the AppLink software development kit. Customers for the AppLink software development kit as of December 31, 2002 generated, on average, approximately $345,000 each in annualized contract value.

      The aggregate annualized contract value of Business Browser product contracts was $56.1 million as of December 31, 2002 and December 31, 2001. Of this $56.1 million, $42.6 million was attributable to those customers that were under contract as of both December 31, 2001 and 2002. The renewal rate for subscribers of the Business Browser product line as of December 31, 2002 was 76% calculated on a dollar basis, whereas the renewal rate for those subscribers to the AppLink software development kit as of December 31, 2002 was 82% calculated on a dollar basis (Annualized contract value is described in more detail in Part II, Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations).

      OneSource’s business is not seasonal to any significant extent. As a percentage of total invoiced fees, invoiced fees in the fourth quarter of the fiscal year have exceeded invoiced fees in other quarters for the corresponding fiscal year. However, this percentage does not represent seasonality to any significant extent. During the fourth quarter of fiscal years 2002, 2001, and 2000, OneSource invoiced 34%, 31%, and 38% of total invoiced fees for each fiscal year, respectively. OneSource attributes this primarily to the budgeting cycles of its customers.

      OneSource was incorporated in Delaware in July 1993 under the name Datext Holding Corporation. In May 1998, OneSource sold its CD-Insurance division to allow OneSource to focus more completely on its Web-based product line. On October 1, 1999, OneSource acquired Corporate Technology Information Services, Inc., a Delaware corporation then located in Woburn, Massachusetts. Corporate Technology Information Services, Inc. is a provider of high technology company profiles with a focus on emerging private companies. For more information regarding the sale of OneSource’s CD-Insurance division and the Corporate Technology Information Services, Inc. acquisition, see Part II, Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Overview.” OneSource’s principal executive offices are located at 300 Baker Avenue, Concord, Massachusetts, 01742, and its telephone number is (978) 318-4300. OneSource’s common stock is traded on the NASDAQ National Market System under the symbol “ONES” and its Web address is www.onesource.com.

Industry Trends

      During the past several years, the direct access to, and the purchasing decisions for, business information products have increasingly migrated from centralized information specialists to core operating functions in corporations. This has led to the availability of more information products throughout corporations and has increased direct access to these products by end-users.

      The spread of information products throughout corporations has created opportunities for companies with knowledge of business information and the requisite skills and experience in integrating such information to assist customers in better leveraging their internal and external information sources. It has also empowered end-users to require that information products are designed and developed to work with their existing applications and business processes, and that the information itself is the most relevant to perform their functions.

      This underlying trend is directly affected by the substantial investments that corporations have made in various software applications such as customer relationship management, enterprise information portals, and

3

Table of Contents

Business Strategy

      OneSource’s goal is to be the leading provider of business information solutions to Global 5000 companies. It plans to achieve that goal through a number of core business strategies as follows:

	1)	Evolve and develop products and services that respond to the market trend to support the functions, applications, and business processes of end-users. OneSource’s product strategy is to provide end-users with the information they need, when they need it, and in the applications they use. OneSource believes that the productivity and efficiency of workers such as sales people, loan officers, and management consultants are enhanced with additional time saved or revenue earned from the use of effective, easy-to-use, and customized business information products and services. OneSource’s product strategy will be driven by two primary themes:

	a.	Continue to enhance Business Browser products — Today Business Browser products comprise the majority of Web-based revenues. OneSource will continue to invest in and serve Business Browser customers with new features and functions, and information content. This will include new features that better serve the functions and industries of end-users as well as expanded geographic and field-specific coverage of the information content that OneSource delivers.
	b.	Introduce new and evolved products and services — At the same time while serving Business Browser customers, OneSource will introduce and evolve its products and services that address the needs of customers who seek solutions that are flexible, customizable, and integrate with the software applications, business processes, and tasks of end-users. Recent improvements to the AppLink software development kit and the provision of custom design and development services are initial examples of OneSource’s efforts to introduce new and evolved products and services. OneSource expects new products and services to contribute an increasing portion of future revenues and growth.
		These new products and services will leverage investments that OneSource has made and will make towards its Business Browser products and platforms. Specifically, new products and services will share the OneSource website, the computer hardware and software that hosts OneSource products, the underlying technology platform on which the products are built, third party information content, the CorpTech high-technology database, and OneSource’s sales force and development staff.

	2)	Have the right information content in support of the roles and requirements of end-users. OneSource spends considerable time in acquiring, integrating, and managing its content sources and ensuring that critical fields of data such as executive and financial data are available to serve the specific roles and tasks of end-users. OneSource considers information quality to be a priority, and to that end OneSource strives to obtain accurate, complete, and timely information and to influence the information industry in enhancing its overall data quality.
	3)	Continue to leverage its core competency in integrating company-related business information. The OneSource Global Business Taxonomy system allows OneSource to easily and effectively classify business information and tie together internal and external sources of business information. OneSource plans to continue to extend the capabilities of the Global Business Taxonomy system.
	4)	Selectively expand geographically. In 2002, OneSource expanded its presence to the Pacific Rim region to supplement its core markets in North America and Europe. OneSource intends to continue to evaluate geographies to extend its products and services and sales and marketing reach.

4

Table of Contents

	5)	Align and train sales, marketing, and customer support teams to optimally serve OneSource’s primary target market. In 2002 and continuing forward, OneSource has taken and will take a number of steps to enhance how its sales, marketing, and support teams serve Global 5000 customers. First, OneSource’s selling approach seeks to better understand customers’ business and information needs and market both products and services that solve more of these needs. This builds upon OneSource’s past selling approach that was primarily based on generalized product use. Secondly, OneSource’s sales and marketing efforts focus on its primary target market. This focus is meant to acquire and build domain specific skills and knowledge in terms of the applications, business processes, and functions of these customers and the industries in which they operate. Thirdly, this past year OneSource created a professional services consulting team. This team, which provides fee-based services, will promote and support the integration of OneSource’s Web-based products with customers’ systems, data, and applications, and will assist in the design and development of custom applications.

Products

      The OneSource Business Browser product line is designed to be a comprehensive, efficient, and easy to use business and financial information resource for professionals who require quick access to reliable company, industry, and market intelligence. OneSource customers generally use OneSource products for such purposes as account prospecting and management (i.e., business development), competitive and peer analysis, company tracking and monitoring, and company and industry research.

      The Business Browser products integrate over 2,500 sources of business information from more than 30 business and financial information providers. These sources include textual information, such as company profiles, news, business and trade articles, SEC filings, executive listings and biographies, industry intelligence, and analyst reports; and numeric information, such as company financial statements, stock quotes, and industry statistics. OneSource uses its proprietary Global Business Taxonomy system to sort, categorize, link, and integrate information on over 1.7 million worldwide public and private companies.

      Business Browser products are accessible to licensed users through a standard Web browser that is likely available and familiar to users. OneSource customers require minimal installation and systems support, and users can access the Business Browser products at any time via the Internet. In addition, the AppLink software development kit enables Business Browser product subscribers the option to access Business Browser content via their corporate intranets, portals, or customer relationship platforms.

      OneSource concentrates on the functional uses of the business and financial information that it integrates and makes available to users. The Business Browser product line has been designed for use not only by traditional users of business information, but also throughout an organization, including sales forces, professional service and consulting staffs, marketing and new business development executives, financial analysts, and purchasing personnel. OneSource applies its knowledge of how business professionals use information in order to transform raw, disparate data into information that is integrated, meaningful, and actionable. OneSource specializes in integrating and presenting information in such a manner that the user can efficiently interpret, analyze, and problem solve. OneSource uses the feedback of its users in deriving and enhancing its products’ user interface and functionality in order to make its products easy to use, and to enable users to become productive quickly with minimal training.

      The Business Browser product line is generally available to a specified number of users in a customer organization at a fixed annual subscription fee that declines on a per-user basis as the total number of users increases. OneSource also offers an enterprise-wide license that allows for an unlimited number of Business Browser product users within the customer’s organization for a fixed annual subscription fee.

      The Business Browser product line includes:

      GLOBAL BUSINESS BROWSER. Global Business Browser was introduced because business professionals require global perspectives to complement detailed coverage of local markets. Global Business Browser is available in four editions. Global Business Browser, US Edition is an integrated information

5

Table of Contents

      US BUSINESS BROWSER. US Business Browser is focused specifically on public and private companies in the United States and Canada. It contains a subset of business, financial, and industry information from Global Business Browser, US Edition. It covers approximately 352,000 public and private companies in the United States and Canada. OneSource makes available in-depth content on Canadian companies for an additional subscription fee. OneSource also makes available in-depth content on small and mid-market United States and Canadian companies for an additional subscription fee.

      EUROPEAN BUSINESS BROWSER. European Business Browser provides users with an integrated database on more than 405,000 public and private companies across Europe, including 50,000 United Kingdom companies. It contains a subset of business, financial, and industry information from Global Business Browser, European Edition. European Business Browser is available in two configurations, European Business Browser Select and European Business Browser Standard. European Business Browser Select comprises a subset of the content and functionality that European Business Browser Standard contains. European Business Browser Select contains a fewer number of financial variables that are available for screening purposes and financial information only for the current year. European Business Browser Standard contains up to 3 years of detailed financial information for European companies and up to 5 years for United Kingdom companies.

      UK BUSINESS BROWSER. UK Business Browser is an integrated source of information on up to 400,000 public and private companies in the United Kingdom. It contains a subset of business, financial, and industry information from Global Business Browser, UK Edition. UK Business Browser is available in two configurations, a 100,000 companies edition and a 400,000 companies edition. OneSource makes available in-depth content on United Kingdom quoted companies for an additional subscription fee. OneSource also makes available in-depth content on United Kingdom public sector and partnership entities for an additional subscription fee.

      US COMPANY BROWSER. US Company Browser is focused specifically on public and private companies in the United States and Canada. It comprises a subset of the business and financial information and functionality that US Business Browser contains. It covers approximately 300,000 companies in the United States and Canada. OneSource also makes available in-depth content on small and mid-market United States and Canadian companies for an additional subscription fee.

      Revenues contributed by the Business Browser product line during each of the last three fiscal years were as follows: $55.7 million for the year ended December 31, 2002; $56.3 million for the year ended December 31, 2001; and $47.3 million for the year ended December 31, 2000. Such information is also included in Part II, Item 6 — “Selected Consolidated Financial and Operating Data,” and Part II, Item 8 — “Financial Statements and Supplementary Data in this Annual Report on Form 10-K.”

      The Business Browser product line delivers information in an integrated format. This allows customers to obtain different types of information from multiple sources through a single, easy to use interface. Business Browser products organize data around business applications, and transform raw, disparate data into meaningful, actionable information, delivered according to the characteristics that users have defined and in the custom formats, tables, and reports that users require. Users that wish to perform detailed analysis can also easily transfer certain quantitative data into spreadsheets or other desktop tools, such as contact management software.

      Examples of some of the core functions of the Business Browser product line are as follows:

	•	profile a public or private company for a business summary, current news, financial reports, corporate affiliations, and executive listings;

6

Table of Contents

	•	research an industry to measure a market, list major participants, or review articles or reports on market share and trends;
	•	identify companies by industry, geography, size, or other key characteristics;
	•	research a topic and find the latest news, analyst reports, and trade information;
	•	learn who’s who in the executive arena; and
	•	track the latest news and product information on competitors.

Additional Software Applications

      Two additional optional software applications that are available for Business Browser products for additional subscription fees are as follows:

      BUSINESS BROWSER AP. Business Browser AP is an advanced Web-based quantitative analysis tool available as an add-on option with all of the Business Browser products other than European Business Browser. Business Browser AP lets users screen across a wide range of public company financial statement items, ratios, growth rates, and other criteria. It also allows users to produce detailed quantitative reports of their own design. Business Browser AP also enhances the readability of documents filed with the Securities and Exchange Commission by removing confusing computer codes, formatting tables for easy viewing and printing, and allowing users to export tables to spreadsheets.

      APPLINK SOFTWARE DEVELOPMENT KIT. The AppLink software development kit consists of software that allows customers to easily access Business Browser content, such as company profiles, news, business and trade articles, analyst reports, executive biographies, industry intelligence, and financial data, in HTML and XML formats without use of the Business Browser product interface and for use with customers’ intranet or other third party software applications such as prospect and customer databases, sales force automation tools, enterprise reporting software and corporate Web applications. No special client software, other than a standard Web browser and dedicated servers, are necessary.

Legacy and Other Products

      Prior to the introduction of the Business Browser product line in 1996, OneSource distributed business information on CD Rom. At the end of 2000, all OneSource CD Rom products, with the exception of the OneSource CorpTech CD Rom products, were completely phased out.

      With the acquisition of Corporate Technology Information Services, Inc. in October 1999, OneSource acquired several product lines that include CD Rom and printed directories. The printed directories product line was discontinued at the end of 2000. In 2002, OneSource introduced on-line access to the CorpTech high-technology database through a website located at www.corptech.com. This website offers a few options for customers including downloadable report lists that are based on such criteria as geography and companies of interest in a particular industry, company profile reports on a pay-per-view basis, and a subscription-based offering in which the fee varies based on the functionality selected and whether the licensee is a library or other entity type.

Services

      OneSource provides fee-based services to customers that seek to integrate Business Browser content with their internal systems, data, and applications and enhance functionality by using the Global Business Taxonomy system to organize and link disparate internal data sources and connect them to Business Browser content.

      OneSource also offers customers fee-based expert services to assist them in designing and building custom information applications and solving their business and financial information needs such as linking together internal and external information databases.

7

Table of Contents

Product and Platform Development

      OneSource employs two teams that contribute to the commercialization and research and development of OneSource products and their underlying technology platforms and the licensing and management of the data in the OneSource products as follows: the Products and Solutions Team and the Content Team.

      The Products and Solutions Team (formerly the Packaged Solutions Team, Embedded Solutions Team, and Engineering Team) consists of product managers, consultants, and engineers. Product managers supervise the specification, maintenance, and enhancement of functionality, user interface, product workflow, format and look of reports, and information required for the OneSource products. Consultants provide fee-based expert services to assist customers in designing and building custom information applications and solving their business information needs such as linking together internal and external information databases. Engineers develop, deploy, and maintain the functionality, core technologies, and underlying architecture that support the OneSource product line. They work closely with product managers to ensure that functionality and support requirements are understood, prioritized, and developed according to agreed upon time frames and requirements. They also research and qualify third party software such as database engines, operating systems and platforms, and emerging industry standards such as HTML, XML, and Simple Object Access Protocol. The Product and Solutions Team seeks to ensure overall product quality resulting from rigorous process control, development cost awareness, and adoption of best practices.

      The Content Team analyzes and evaluates third party data sources and acquires the information required for the OneSource products. This team also includes database engineers who receive content feeds from information providers and write database loader code. Additionally, the Content Team maintains and enhances the proprietary Global Business Taxonomy system and Business Browser content, provides fee-based services to customers that seek to integrate Business Browser content with their internal systems and applications and enhance functionality by using the Global Business Taxonomy system to organize and link disparate internal data sources and connect them to Business Browser content. The Content Team also manages the multiple SIC codes and industry mappings that are assigned to companies from the different information sources, and reclassifies these SIC codes and industry mappings assigned to companies into consistent categories. The Content Team further maintains and enhances a list of company name synonyms as part of the Global Business Taxonomy system to allow users to perform searches in OneSource products by the use of commonly used alternative company names. In total, the Global Business Taxonomy system contains approximately over 1.7 million companies; 250 business-focused topics; 1,900 industries and lines of business such as SIC codes; 310 geographic regions, countries, and territories; and 20 executive functions applied to over 6 million corporate executives.

      Operating expenses relating to product and platform development during each of the last three fiscal years were as follows: $10.0 million for the year ended December 31, 2002; $8.4 million for the year ended December 31, 2001; and $8.8 million for the year ended December 31, 2000. These expenses were net of capitalized software development costs associated with the development of OneSource’s new products and platforms, which were $1.9 million for the year ended December 31, 2002, $0.8 million for the year ended December 31, 2001, and $0.5 million for the year ended December 31, 2000. OneSource plans to increase its investment in product and platform research and development in the future by approximately $2.0 million, or 20%, net of capitalized software development costs, for fiscal year 2003 as it intends to invest further in the tools and technology to address the needs of Global 5000 customers, its target market. OneSource anticipates capitalized software development costs to be approximately $3.0 million to $4.0 million in 2003.

Information and Providers

      OneSource Business Browser products integrate and include a careful selection of financial, company, industry, executive, and news-related content from over 2,500 sources provided by more than 30 information providers and the proprietary OneSource CorpTech high-technology company database. OneSource enters into contracts with its information providers in order to license their information. These license agreements allow OneSource to integrate and distribute the information as part of OneSource on-line products.

8

Table of Contents

      OneSource’s contracts with its information providers are generally for multi-year terms and typically automatically renew for additional one-year periods in the absence of prior notice of termination. In addition, these contracts allow for termination under certain circumstances including contract breaches. Royalties under these contracts are typically calculated and paid as a flat percentage of OneSource revenues, as a fee based on the number of licensed users that declines on a per user basis as the number of authorized users of the product increases, as a fixed fee per period, or in some cases, as a calculated fee based upon product growth compared to like periods from the prior year. Royalties are generally paid to information providers on a quarterly basis.

      The information contained in the OneSource Business Browser products is updated at varying frequencies depending on the nature of data. For example, news-related information is updated frequently throughout the day whereas portions of the information databases on company and executive profiles are updated on either a weekly, monthly, quarterly, semi-annual, or annual basis. In any case, OneSource attempts to ensure that the information contained in its products is updated no less frequently than each information provider makes the information available to its own customers or to other distributors.

      Alternative supply sources generally exist for the information that OneSource licenses from information providers. However, consolidation in the information industry is an ongoing trend, and there is no assurance that alternative supply sources will continue to exist. The nature and relative importance of any given database in OneSource products varies. OneSource attempts to secure longer-term rights for certain more critical databases where alternative supply sources are limited. Some of OneSource’s information providers include Comtex News Network, Inc.; the United States and United Kingdom business units of Dun & Bradstreet, Inc. (a subsidiary of The Dun & Bradstreet Corporation); The Gale Group (a Thomson Corporation subsidiary); Thomson Financial, Inc. (a Thomson Corporation subsidiary); and Market Guide Inc. (a Multex.com, Inc. subsidiary).

Intellectual Property

      OneSource owns and controls copyrights, trademarks, trade names, trade secrets, confidential information, and other intellectual property rights that are important to OneSource’s business. Specifically, OneSource believes that the following are important to its business: the CorpTech high-technology company database; the Global Business Taxonomy system; the trade secrets relating to OneSource products; the OneSource logo and related marks; each of the “OneSource” names, related names, and brands; and its source code. OneSource is licensed to access and use certain technology and other intellectual property that are owned and controlled by third parties. Likewise, third parties are licensed to access and use certain technology and other intellectual property that are owned and controlled by OneSource. OneSource’s contracts with its technology and information providers typically warrant that the licensed technology or data do not infringe any trade name, trademark, copyright, or other proprietary right of any third party, and state that the technology and information providers agree to defend, indemnify, and hold OneSource harmless with respect to any third party claim alleging that the licensed technology or data infringes any trade name, trademark, copyright, or other proprietary right of any third party. OneSource believes these industry standard indemnities are sufficient to protect it from claims of infringement relating to the intellectual property that it licenses, but there can be no assurance that these indemnities will be adequate. OneSource considers its copyrights, trademarks, trade names, service marks, databases, software, and other intellectual property to be proprietary, and OneSource relies on a combination of copyright, trademark, trade secret, patent, and confidentiality and contract safeguards to ensure adequate protection. OneSource has filed and/or registered trademarks and service marks in the United States, Canada, and the European Union, and has registered copyrights in the United States. OneSource believes that its intellectual property does not infringe upon the proprietary rights of third parties.

Alliances

      In 2002, OneSource renewed its alliance with Siebel Systems, Inc., a supplier of e-business applications software. OneSource’s strategy in identifying and forming alliances with other companies is to extend the possibilities for access to the information from OneSource products by ensuring compatibility, and the integration of such information, with other third party software applications. These applications generally

9

Table of Contents

      Examples of other alliances that OneSource has formed include those with the following corporations: Pivotal Corporation, a provider of customer relationship management, business marketing, and service solutions; ONYX Software Corporation, a provider of enterprise-wide customer-centric e-business solutions; and Microsoft Business Solutions Corporation (a subsidiary of Microsoft Corporation), a provider of business management software. OneSource believes that its ability to provide access to its products through other third party applications is an important component to its growth strategy, and it expects to continue to selectively form alliances in the future.

Customers

      OneSource does not rely upon any single customer, or a few customers, such that a loss of any one or a few customers would have a material effect on OneSource’s business. As of December 31, 2002, OneSource had 812 corporate customers. In 2002, no one customer contributed more than 3% of annual revenues, and 338 customers comprised 80% of annualized contract value. OneSource’s primary target market consists of Global 5000 companies and specifically business-to-business companies in the technology, professional services, and financial services industries with not less than 500 employees and $250 million or more in sales, and that employ large sales forces. As of December 31, 2002, approximately 69%, or $38.7 million, of total annualized contract value for OneSource Business Browser products came from Global 5000 customers. In addition, as of December 31, 2002, approximately 32%, or $18.0 million, of total annualized contract value for OneSource Business Browser products came from customers who subscribe to the OneSource AppLink software development kit.

Sales and Marketing

      OneSource markets its products through a field and telephonic sales force and a support and marketing staff. Sales and marketing employees are located primarily in the United States and the United Kingdom. OneSource also has formed alliances to help in the promotion and marketing of its products.

      As of December 31, 2002, OneSource incurred selling and marketing expense in the amount of $16.5 million, compared to $18.4 million incurred at the end of fiscal year 2001 and $20.5 million at the end of fiscal year 2000. OneSource expects that selling and marketing expense will increase by approximately 8% for fiscal year 2003 as OneSource intends to enhance sales and marketing initiatives focused on Global 5000 customers, its target market.

Customer Service & Support

      OneSource provides customer support in the form of on-site, electronic mail, and telephone support for customers. OneSource employs field support consultants who assist customers with various administrative and technical tasks such as managing product trials, training, registering end users, promoting product-related awareness, and providing consulting services for projects including the customization of Web pages, the building of prototype applications using the AppLink software development kit, and other technical projects.

      OneSource also employs telephone-based customer support representatives in the United States and in the United Kingdom. These representatives operate the telephone help desk that is open from 8:00 a.m. to 8:00 p.m., local time, Monday through Friday.

Website Technology and Operations

      OneSource makes its on-line products available through a hosting facility managed by Cable & Wireless plc, a third party hosting vendor. The hosting facility is located in Medford, Massachusetts. Cable & Wireless provides facilities management services including continuous monitoring, multiple high-volume access lines to the Internet, uninterrupted power supplies, generators, physical security, and protection from disaster. In the first half of 2003, OneSource intends to activate a second hosting site that utilizes existing

10

Table of Contents

      OneSource also has a production data center at its corporate headquarters located in Concord, Massachusetts. This data center is used to process data feeds from information providers, distribute this data to the live sites, and serve as the physical facility where all of OneSource’s pre-production/ development and internal computing resources are located. OneSource has taken a number of steps to keep its data center operational in the event of emergency. These steps include the use of a diesel standby generator, an automatic FM200 fire suppression system, and uninterruptible power supplies and electrical power filters. Redundant cooling capacity is also in place. All systems are under maintenance contracts. Additionally, there are separate security and access restrictions as well as in-house operational staff.

Competition

      The business information services industry is intensely competitive. Several of OneSource’s information providers compete against each other and in some cases with OneSource. OneSource faces direct or indirect competition from numerous companies, including the following:

	•	large, well-established business and financial information providers, such as Dow Jones & Co., Pearson PLC, Reuters Group PLC, and McGraw-Hill Companies Inc.;
	•	aggregators of business and financial information, such as LexisNexis Group (a Reed Elsevier Plc subsidiary), The Dialog Corporation (a Thomson Corporation subsidiary), Factiva (a Dow Jones & Co. and Reuters Group PLC joint venture), and Bureau Van Dijk Computer Services SA;
	•	providers of company information, such as Thomson Financial, Inc. (a Thomson Corporation subsidiary), Market Guide Inc. (a Multex.com, Inc. subsidiary), Hemscott Group Ltd., and Hoovers, Inc. (a subsidiary of The Dun & Bradstreet Corporation);
	•	providers of sales, marketing, and credit information, such as Dun & Bradstreet, Inc. (a subsidiary of The Dun & Bradstreet Corporation) and infoUSA Inc.; and
	•	Web retrieval, Web “portal” companies, and other free or low-cost mass market on-line information services, such as Yahoo! Inc., AOL-Time Warner, Inc., MarketWatch.com, Inc., and TheStreet.com, Inc.

      Several of these competitors offer products or services similar to those of OneSource and in some cases at lower prices. The principal competitive factors in the business information services industry are availability of comprehensive, timely, integrated, and reliable business and financial information; product ease of use; support and training capabilities; financial, technical, and marketing resources; brand recognition; and product price/ performance characteristics. OneSource differentiates itself from its direct and indirect competitors in terms of product features and ease of use; target market and geographical focus; data integration capabilities; expertise in the design and development of custom information applications; corporate selling skills; and customer support services.

Laws and Government Regulations

      OneSource is subject, both directly and indirectly, to laws and government regulations relating to the Internet and OneSource’s Web-based information products. There are currently few laws or government regulations directly applicable to Web-based information products or the Internet. Some existing laws we believe may be applicable to Web-based information or the Internet, albeit indirectly, are those that relate to, but are not limited to, property rights, libel, and personal privacy. However, due to the increasing use of the Internet for information-based solutions and company and industry research, laws and government regulations

11

Table of Contents

Employees

      As of December 31, 2002, OneSource employed 242 employees (including 232 full-time employees and 10 part-time employees), compared to 239 at the end of fiscal year 2001 (including 232 full-time employees and 7 part-time employees). OneSource employees are not represented by any collective bargaining organization. OneSource has never experienced a work stoppage, and believes that its relationships with its employees are generally satisfactory.

Geographic Information

      OneSource conducts its business globally through two geographic locations: the United States and the United Kingdom. OneSource had revenues of $15.7 million, $14.9 million, and $10.8 million from the United Kingdom business, and $42.0 million, $44.1 million and $41.1 million from the United States business, for the years ended December 31, 2002, 2001, and 2000, respectively.

      The operations in the United Kingdom are subject to the usual risks inherent in doing business in countries outside of the United States, including potential higher costs, unanticipated regulatory changes, political instability, difficulties in staffing and managing operations, adverse tax consequences, currency and exchange rate fluctuations, and seasonal reductions in business activity. In addition, the impact of cultural differences may result in product and service offerings that may not satisfy the needs of OneSource customers and that may not be profitable. Further, possible nationalization, expropriation, and unique laws pertaining to the collection and provision of certain types of information on individuals (e.g., the Data Protection Act) may hinder operations out of the United Kingdom location.

      OneSource’s headquarters are currently located in approximately 50,900 square feet of office space located in Concord, Massachusetts. The office space has been leased through June 2004. This lease includes an option to renew the lease at the then current market rental rate for another five years. OneSource leases additional office space in New York, New York; San Francisco, California; Woking, England; and London, England. OneSource believes that its existing facilities are adequate to meet current requirements, and that suitable additional or substitute space will be available as needed.

      OneSource deems the buildings and equipment used in its operations (whether owned or leased), generally to be in good condition and adequate for the purposes for which they are used.

      OneSource is not a party to any material legal proceedings.

      No matters were submitted to a vote of our security holders during the fourth quarter of the year ended December 31, 2002.

12

Table of Contents

PART II

      OneSource’s common stock is traded on the Nasdaq National Market System under the symbol “ONES”. Public trading of OneSource’s common stock commenced on May 19, 1999.

      The following table sets forth the high and low closing prices as reported by the NASDAQ National Market for the periods indicated.

      The quotations represent inter-dealer quotations, without adjustments for retail markups, markdowns, or commissions, and may not necessarily represent actual transactions. The number of record holders of OneSource’s common stock at March 20, 2003 was 67.

      OneSource has not declared or paid any cash dividends on its common stock and presently intends to retain its future earnings, if any, to fund the development and growth of its business and, therefore, does not anticipate paying any cash dividends in the foreseeable future.

      In May 1999, OneSource completed an initial public offering, (the “Offering”) of 3,636,000 shares of its common stock, of which 2,500,000 shares were issued and sold by OneSource, and 1,136,000 shares were issued and sold by certain stockholders of OneSource.

      The net proceeds to OneSource from the Offering, after deducting underwriting discounts and commissions and other offering expenses, were approximately $27.0 million.

      The net proceeds from the Offering, less $6.8 million used to payoff long-term debt and $7.6 million used to acquire Corporate Technology Information Services, Inc., have been invested in interest bearing, investment grade securities.

      OneSource has not sold any securities in 2002, 2001, and 2000 that were not registered under the Securities Act of 1933.

      The information required by this Item with respect to our equity compensation plans appears in this Annual Report on Form 10-K in the Notes to Consolidated Financial Statements under the caption “Stock Plans” on page F-15, and is incorporated by reference.

13

Table of Contents

      The consolidated statements of operations data provided for the years ended December 31, 2002, 2001 and 2000, and the consolidated balance sheet data as of December 31, 2002 and 2001, are derived from, and are qualified by reference to, our audited consolidated financial statements, which are included elsewhere in this Annual Report on Form 10-K. The consolidated statements of operations data for the years ended December 31, 1999 and 1998, and the consolidated balance sheet data as of December 31, 2000, 1999 and 1998, are derived from audited consolidated financial statements, which are not included in this Annual Report on Form 10-K. The following consolidated financial data should be read in conjunction with the Consolidated Financial Statements and the Notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Annual Report on Form 10-K.