Exhibit 99.1
Verisk Analytics, Inc., Reports Fourth-Quarter 2012 Financial Results
Delivers 18.2% Revenue Growth and 26.0% Diluted Adjusted EPS Growth
JERSEY CITY, N.J., February 26, 2013 — Verisk Analytics, Inc. (Nasdaq:VRSK), a leading source of information about risk, today announced results for the fiscal quarter and year ended December 31, 2012:
Financial Highlights
See Tables 4 and 5 for a reconciliation of non-GAAP financial measures to the relevant GAAP measures.
| | • | | Diluted GAAP earnings per share (diluted GAAP EPS) were $0.57 for fourth-quarter 2012. Diluted adjusted earnings per share (diluted adjusted EPS) were $0.63 for fourth-quarter 2012, an increase of 26.0% versus the same period in 2011. For the fiscal year ended December 31, 2012 diluted GAAP EPS were $1.92 and diluted adjusted EPS were $2.10. |
| | • | | Total revenue increased 18.2% in the fourth quarter and 15.2% for fiscal year 2012. Excluding the impact of recent acquisitions, revenue grew 6.7% for fourth-quarter 2012 and 7.3% for fiscal year 2012. Revenue growth in the fourth quarter was driven by a 28.7% increase in Decision Analytics revenue, with additional contribution from the 2.9% growth in Risk Assessment revenue. Risk Assessment revenue growth, excluding the reclassification of $3.0 million and $12.1 million of revenue to Decision Analytics in fourth-quarter 2012 and fiscal year 2012, was 5.0%. |
| | • | | EBITDA increased 19.4% to $189.6 million for fourth-quarter 2012, with an EBITDA margin of 45.6%. For fiscal year 2012, EBITDA increased 17.4% to $695.9 million, with an EBITDA margin of 45.4%. |
| | • | | Net income was $98.3 million for fourth-quarter 2012 and adjusted net income was $108.7 million, an increase of 22.4% and 27.1%, respectively, versus the comparable periods in 2011. Net income was $329.1 million and adjusted net income was $361.3 million for fiscal year 2012, an increase of 16.4% and 19.0% versus 2011. |
| | • | | In fourth-quarter 2012, the company repurchased a total of $34.8 million of its common stock under its existing repurchase program. For fiscal 2012, total repurchases were $162.6 million, and as of December 31, 2012, the company had $144.2 million remaining under its share repurchase authorization. |
Frank J. Coyne, chairman and chief executive officer, said, “Our fourth-quarter results were strong with solid, broad-based contributions from our businesses. Our healthcare business finished 2012 with organic growth exceeding 30% and is well positioned for the future, with the unified healthcare technology platform continuing apace. The performance of Argus remains exceptional, with strong growth prospects.”
“Even as our insurance solutions continue to lead the market, we are developing additional valuable analytic offerings for the future. We are excited about many initiatives we have under way, including use of remote imagery and our next-generation catastrophe modeling platform, Touchstone. While the mortgage market remains challenging, we did finish 2012 somewhat better than expected. However, we do anticipate challenges for mortgage to continue in 2013,” concluded Coyne.
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Table 1: Summary of Results for 2012
(in thousands, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31, | | | | | | Twelve Months Ended December 31, | | | | |
| | | 2012 | | | 2011 | | | Change | | | 2012 | | | 2011 | | | Change | |
Revenues | | $ | 415,730 | | | $ | 351,593 | | | | 18.2 | % | | $ | 1,534,320 | | | $ | 1,331,840 | | | | 15.2 | % |
EBITDA | | $ | 189,578 | | | $ | 158,776 | | | | 19.4 | % | | $ | 695,915 | | | $ | 592,887 | | | | 17.4 | % |
Net income | | $ | 98,299 | | | $ | 80,318 | | | | 22.4 | % | | $ | 329,142 | | | $ | 282,758 | | | | 16.4 | % |
Adjusted net income | | $ | 108,714 | | | $ | 85,516 | | | | 27.1 | % | | $ | 361,287 | | | $ | 303,633 | | | | 19.0 | % |
Diluted GAAP EPS | | $ | 0.57 | | | $ | 0.47 | | | | 21.3 | % | | $ | 1.92 | | | $ | 1.63 | | | | 17.8 | % |
Diluted adjusted EPS | | $ | 0.63 | | | $ | 0.50 | | | | 26.0 | % | | $ | 2.10 | | | $ | 1.75 | | | | 20.0 | % |
Revenue
Revenue grew 18.2% for the quarter ended December 31, 2012 and 15.2% for fiscal year 2012. Excluding the effect of recent acquisitions (MediConnect, Argus, and Aspect Loss Prevention), revenue grew 6.7% in the fourth quarter and 7.3% for fiscal year 2012. Overall revenue growth was the result of continued double-digit growth in Decision Analytics and single-digit growth in Risk Assessment. For fourth-quarter 2012, Decision Analytics revenue represented approximately 65% of total revenue and 62% for fiscal year 2012.
Table 2A: Decision Analytics Revenues by Category
(in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31, | | | | | | Twelve Months Ended
December 31, | | | | |
| | | 2012 | | | 2011 | | | Change | | | 2012 | | | 2011 | | | Change | |
Insurance | | $ | 128,609 | | | $ | 117,301 | | | | 9.6 | % | | $ | 493,456 | | | $ | 451,216 | | | | 9.4 | % |
Financial services | | | 45,505 | | | | 32,091 | | | | 41.8 | % | | | 153,039 | | | | 134,702 | | | | 13.6 | % |
Healthcare | | | 72,802 | | | | 38,506 | | | | 89.1 | % | | | 222,955 | | | | 103,722 | | | | 115.0 | % |
Specialized markets | | | 22,333 | | | | 21,384 | | | | 4.4 | % | | | 85,364 | | | | 78,839 | | | | 8.3 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Decision Analytics | | $ | 269,249 | | | $ | 209,282 | | | | 28.7 | % | | $ | 954,814 | | | $ | 768,479 | | | | 24.2 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Within the Decision Analytics segment, revenue grew 28.7% for fourth-quarter 2012, and growth excluding recent acquisitions and the reclassification of property-specific revenue to Decision Analytics was 7.9%. Growth in the quarter was driven by strong increases in healthcare revenue, including the recent acquisition of MediConnect, and good contributions from the insurance-facing revenue category, as well as the revenue from the acquisition of Argus, which was owned for the full quarter and is reported in the financial services category.
Within the insurance category, revenue growth was 9.6% for the fourth quarter of 2012 and 9.3% excluding the recent acquisition of Aspect. This growth was driven by continued good growth in catastrophe modeling solutions and satisfactory growth in loss quantification and from fraud solutions. Catastrophe modeling continued to benefit from new and expanded use of our models as well as strong market share for catastrophe bond modeling. Loss quantification solutions growth moderated as fourth-quarter revenue related to storm activity was captured under customer contract minimums. Insurance fraud claims solutions also delivered revenue growth, driven by annual invoice increases for certain solutions and increased adoption of existing and new solutions.
In the financial services category, revenue increased 41.8% in fourth-quarter 2012 but declined 19.6% after adjusting for the acquisition of Argus and the 2012 transition of appraisal tool revenue into the financial services category from the property-specific rating and underwriting information category in Risk Assessment. The decline in mortgage revenue within the financial services category reflected continued lower volumes in forensic audit solutions, which were not offset by strong growth in underwriting. For fiscal year 2012, financial services revenue declined 11.3% after adjusting for the acquisition of Argus and the 2012 transition of appraisal tool revenue into the financial services category from Risk Assessment.
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In the healthcare vertical, revenue in the fourth quarter grew 89.1%, with organic growth of 28.5%, driven by double-digit growth for payment accuracy fraud solutions and revenue integrity, and good growth for enterprise analytics. Total revenue growth included the 2012 acquisition of MediConnect. Organic growth reflected continued customer implementations and new customer sales.
In the specialized markets category, revenue grew 4.4% in fourth-quarter 2012, as good growth in weather and climate analytics was moderated by slower growth in environmental health and safety solutions.
Table 2B: Risk Assessment Revenues by Category
(in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31, | | | | | | Twelve Months Ended
December 31, | | | | |
| | | 2012 | | | 2011 | | | Change | | | 2012 | | | 2011 | | | Change | |
Industry-standard insurance programs | | $ | 114,052 | | | $ | 107,799 | | | | 5.8 | % | | $ | 450,646 | | | $ | 426,228 | | | | 5.7 | % |
Property-specific rating and underwriting information | | | 32,429 | | | | 34,512 | | | | (6.0 | %) | | | 128,860 | | | | 137,133 | | | | (6.0 | %) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Risk Assessment | | $ | 146,481 | | | $ | 142,311 | | | | 2.9 | % | | $ | 579,506 | | | $ | 563,361 | | | | 2.9 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Within the Risk Assessment segment, revenue grew 2.9% for the quarter and 5.0% excluding the reclassification of property-specific revenue to Decision Analytics as discussed previously. The overall increase within the segment was due principally to 5.8% revenue growth in industry-standard insurance programs resulting primarily from the continued annual effect of growth in 2012 invoices effective from January 1 as well as continued strong performance from premium leakage solutions. As of fourth-quarter 2012, the statistical agency and actuarial services revenue categories are included in the industry-standard insurance programs line.
Property-specific rating and underwriting information revenue declined 6.0% in the fourth quarter. After adjusting for the reclassification of $3.0 million of revenue in fourth-quarter 2012 from the property-specific revenue category into the financial services revenue category of Decision Analytics, property-specific rating and underwriting information revenue grew 2.6%. Growth was due to new sales and higher volumes from certain customers, offset by lower revenue from appraisal solutions.
Cost of Revenue
Cost of revenue increased 21.1% in fourth-quarter 2012 and 6.4% excluding recent acquisitions as compared to 2011. For fiscal year 2012, cost of revenue increased 13.8% and 4.1% excluding acquisitions. The year-over-year increase relates primarily to 2012 annual compensation adjustments and higher headcount in Decision Analytics in support of the growth of our business, partially offset by reduced pension costs related to the freeze of the pension plan in February 2012.
For fourth-quarter 2012, cost of revenue decreased 3.1% for Risk Assessment, primarily related to reduced pension expense, and increased 33.8% for Decision Analytics (11.3% excluding recent acquisitions). For fiscal year 2012, cost of revenue decreased 5.8% for Risk Assessment and increased 24.9% for Decision Analytics (9.8% excluding recent acquisitions).
Selling, General, and Administrative
Selling, general, and administrative expense, or SG&A, increased 6.4% in fourth-quarter 2012 and 1.0% excluding recent acquisitions. For fiscal year 2012, SG&A increased 10.4% and 5.2% excluding recent acquisitions. The increase relates primarily to 2012 annual compensation adjustments and higher headcount in Decision Analytics in support of the growth of our business, which were partially offset by reduced pension costs related to the pension plan freeze.
In fourth-quarter 2012, SG&A decreased 10.9% for Risk Assessment. SG&A grew 17.8% for Decision Analytics (8.8% excluding recent acquisitions), reflecting increased headcount and commissions related to the growth of the business. For fiscal year 2012, SG&A decreased 3.1% for Risk Assessment and increased 19.4% for Decision Analytics (10.8% excluding recent acquisitions).
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EBITDA
For fourth-quarter 2012, consolidated EBITDA grew 19.4% to $189.6 million, with a consolidated EBITDA margin of 45.6%. For fiscal year 2012, consolidated EBITDA grew 17.4% to $695.9 million, with a consolidated EBITDA margin of 45.4%.
Table 3: Segment EBITDA
(in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31, | | | | | | Twelve Months Ended
December 31, | | | | |
| | | 2012 | | | 2011 | | | Change | | | 2012 | | | 2011 | | | Change | |
Decision Analytics | | $ | 108,376 | | | $ | 85,220 | | | | 27.2 | % | | $ | 379,655 | | | $ | 305,837 | | | | 24.1 | % |
EBITDA margin | | | 40.3 | % | | | 40.7 | % | | | | | | | 39.8 | % | | | 39.8 | % | | | | |
Risk Assessment | | $ | 81,202 | | | $ | 73,556 | | | | 10.4 | % | | $ | 316,260 | | | $ | 287,050 | | | | 10.2 | % |
EBITDA margin | | | 55.4 | % | | | 51.7 | % | | | | | | | 54.6 | % | | | 51.0 | % | | | | |
Total EBITDA | | $ | 189,578 | | | $ | 158,776 | | | | 19.4 | % | | $ | 695,915 | | | $ | 592,887 | | | | 17.4 | % |
EBITDA margin | | | 45.6 | % | | | 45.2 | % | | | | | | | 45.4 | % | | | 44.5 | % | | | | |
Decision Analytics EBITDA grew 27.2% in fourth-quarter 2012 and Risk Assessment EBITDA grew 10.4% versus the same period in the previous year, as shown in Table 3. For fiscal year 2012, Risk Assessment EBITDA grew 10.2% and Decision Analytics EBITDA grew 24.1%.
The fourth-quarter 2012 EBITDA margin in Risk Assessment increased to 55.4% from 51.7% in fourth-quarter 2011 because revenue outpaced our primary costs, which were personnel-related, including pension. The fiscal year 2012 EBITDA margin in Risk Assessment was 54.6% versus 51.0% in fiscal year 2011.
The fourth-quarter 2012 EBITDA margin for Decision Analytics decreased slightly to 40.3% from 40.7% in fourth-quarter 2011 because of investment in certain businesses. The fiscal year 2012 EBITDA margin in Decision Analytics was 39.8%, the same as in fiscal year 2011.
Net Income and Adjusted Net Income
Net income increased 22.4% in fourth-quarter 2012, driven by growth in the business and favorable tax benefits relating to fiscal year 2012 as well as previous periods, partially offset by increased interest expense and amortization associated with acquisitions. Tax benefits recognized for previous periods totaled approximately $12.3 million in the fourth quarter and contributed about $0.07 to diluted adjusted EPS. Net income grew 16.4% for fiscal year 2012.
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Adjusted net income grew 27.1% for fourth-quarter 2012 and 19.0% for fiscal year 2012. The table below sets forth a reconciliation of net income to adjusted net income and adjusted EPS based on historical results:
Table 4: Net Income and Adjusted Net Income
(in thousands, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31, | | | | | | Twelve Months Ended
December 31, | | | | |
| | | 2012 | | | 2011 | | | Change | | | 2012 | | | 2011 | | | Change | |
Net Income | | $ | 98,299 | | | $ | 80,318 | | | | 22.4 | % | | $ | 329,142 | | | $ | 282,758 | | | | 16.4 | % |
plus: Amortization of intangibles | | | 17,359 | | | | 8,663 | | | | | | | | 53,575 | | | | 34,792 | | | | | |
less: Income tax effect on amortization of intangibles | | | (6,944 | ) | | | (3,465 | ) | | | | | | | (21,430 | ) | | | (13,917 | ) | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted net income | | $ | 108,714 | | | $ | 85,516 | | | | 27.1 | % | | $ | 361,287 | | | $ | 303,633 | | | | 19.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Basic adjusted EPS | | $ | 0.65 | | | $ | 0.52 | | | | 25.0 | % | | $ | 2.18 | | | $ | 1.83 | | | | 19.1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Diluted adjusted EPS | | $ | 0.63 | | | $ | 0.50 | | | | 26.0 | % | | $ | 2.10 | | | $ | 1.75 | | | | 20.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Weighted average shares outstanding (in millions) | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | | 166.8 | | | | 163.9 | | | | | | | | 165.9 | | | | 166.0 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Diluted | | | 171.9 | | | | 170.5 | | | | | | | | 171.7 | | | | 173.3 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net Cash Provided by Operating Activities and Capital Expenditures
Net cash provided by operating activities was $468.2 million, an increase of $92.5 million, or 24.6%, for the fiscal year ended December 31, 2012, compared to 2011. This change was the result of a $107.0 million increase caused by the improved profitability of the business, a $62.7 million decrease in income taxes paid, and a $9.5 million decrease in working capital, partially offset by a $73.4 million increase in pension and postretirement funding primarily due to the voluntary $72.0 million contribution to our pension and a $12.8 million increase in interest paid due to higher debt levels.
Capital expenditures were $79.8 million in fiscal year 2012, an increase of $11.4 million over the same period in 2011. Capital expenditures were 5.2% of revenue in fiscal year 2012. Net cash provided by operating activities less capital expenditures represented 55.8% of EBITDA in fiscal year 2012. The cash flow conversion rate was lowered by the voluntary pension funding of $72.0 million discussed above.
Share Repurchases and Financing Activities
The company continued to balance its internal investment and acquisition initiatives with share repurchases. In fourth-quarter 2012, the company repurchased shares for a total cost of $34.8 million at an average price of $48.60. At December 31, 2012, the company had $144.2 million remaining under its share repurchase authorization.
Conference Call
Verisk’s management team will host a live audio webcast on Wednesday, February 27, 2013, at 8:30 a.m. Eastern time (5:30 a.m. Pacific time) to discuss the financial results and business highlights. All interested parties are invited to listen to the live event via webcast on the Verisk investor website athttp://investor.verisk.com. The discussion is also available through dial-in number 1-877-755-3792 for U.S./Canada participants or 706-758-8912 for international participants.
A replay of the webcast will be available on the Verisk investor website for 30 days and also through the conference call number 1-855-859-2056 for U.S./Canada participants or 404-537-3406 for international participants using Conference ID #96739276.
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About Verisk Analytics
Verisk Analytics (Nasdaq:VRSK) is a leading provider of information about risk to professionals in insurance, healthcare, financial services, government, and risk management. Using advanced technologies to collect and analyze billions of records, Verisk Analytics draws on vast industry expertise and unique proprietary data sets to provide predictive analytics and decision support solutions in fraud prevention, actuarial science, insurance coverages, fire protection, catastrophe and weather risk, data management, and many other fields. In the United States and around the world, Verisk Analytics helps customers protect people, property, and financial assets. For more information, visit www.verisk.com.
Forward-Looking Statements
This release contains forward-looking statements. These statements relate to future events or to future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “target,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these terms or other comparable terminology. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties, and other factors that are, in some cases, beyond our control and that could materially affect actual results, levels of activity, performance, or achievements.
Other factors that could materially affect actual results, levels of activity, performance, or achievements can be found in Verisk’s quarterly reports on Form 10-Q, annual reports on Form 10-K, and current reports on Form 8-K filed with the Securities and Exchange Commission. If any of these risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary significantly from what we projected. Any forward-looking statement in this release reflects our current views with respect to future events and is subject to these and other risks, uncertainties, and assumptions relating to our operations, results of operations, growth strategy, and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, whether as a result of new information, future events, or otherwise.
Notes Regarding the Use of Non-GAAP Financial Measures
The company has provided certain non-GAAP financial information as supplemental information regarding its operating results. These measures are not in accordance with, or an alternative for, U.S. GAAP and may be different from non-GAAP measures reported by other companies. The company believes that its presentation of non-GAAP measures, such as EBITDA, EBITDA margin, adjusted net income, and adjusted EPS, provides useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations. In addition, the company’s management uses these measures for reviewing the financial results of the company and for budgeting and planning purposes.
EBITDA
Table 5 below sets forth a reconciliation of net income to EBITDA based on our historical results:
Table 5: EBITDA Reconciliation
(in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31, | | | | | | Twelve Months Ended
December 31, | | | | |
| | | 2012 | | | 2011 | | | Change | | | 2012 | | | 2011 | | | Change | |
Net income | | $ | 98,299 | | | $ | 80,318 | | | | 22.4 | % | | $ | 329,142 | | | $ | 282,758 | | | | 16.4 | % |
Depreciation and amortization of fixed and intangible assets | | | 30,535 | | | | 19,532 | | | | 56.3 | % | | | 104,199 | | | | 78,619 | | | | 32.5 | % |
Interest expense | | | 20,613 | | | | 14,754 | | | | 39.7 | % | | | 72,508 | | | | 53,847 | | | | 34.7 | % |
Provision for income taxes | | | 40,131 | | | | 44,172 | | | | (9.1 | %) | | | 190,066 | | | | 177,663 | | | | 7.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
EBITDA | | $ | 189,578 | | | $ | 158,776 | | | | 19.4 | % | | $ | 695,915 | | | $ | 592,887 | | | | 17.4 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
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EBITDA is a financial measure that management uses to evaluate the performance of our segments. In all periods shown here and going forward, the company defines “EBITDA” as net income before interest expense, income taxes, and depreciation and amortization of fixed and intangible assets. In previous periods, this measure also excluded investment income and realized gain on securities, net.
Although EBITDA is frequently used by securities analysts, lenders, and others in their evaluation of companies, EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of our statement of cash flow reported under U.S. GAAP. Management uses EBITDA in conjunction with traditional U.S. GAAP operating performance measures as part of its overall assessment of company performance. Some of these limitations are as follows:
| | • | | EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments. |
| | • | | EBITDA does not reflect changes in, or cash requirement for, our working capital needs. |
| | • | | Although depreciation and amortization are noncash charges, the assets being depreciated and amortized often will have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements. |
| | • | | Other companies in our industry may calculate EBITDA differently than we do, limiting the usefulness of their calculations as comparative measures. |
Attached Financial Statements
Please refer to the full Form 10-K filing for the complete financial statements and related notes.
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VERISK ANALYTICS, INC.
CONSOLIDATED BALANCE SHEETS
As of December 31, 2012 and 2011
| | | | | | | | |
| (In thousands, except for share and per share data) | | 2012 | | | 2011 | |
ASSETS | | | | | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 89,819 | | | $ | 191,603 | |
Available-for-sale securities | | | 4,883 | | | | 5,066 | |
Accounts receivable, net | | | 178,430 | | | | 153,339 | |
Prepaid expenses | | | 21,946 | | | | 21,905 | |
Deferred income taxes, net | | | 10,397 | | | | 3,818 | |
Income taxes receivable | | | 45,975 | | | | 36,675 | |
Other current assets | | | 39,109 | | | | 41,248 | |
| | | | | | | | |
Total current assets | | | 390,559 | | | | 453,654 | |
| | |
Noncurrent assets: | | | | | | | | |
Fixed assets, net | | | 154,084 | | | | 119,411 | |
Intangible assets, net | | | 520,935 | | | | 226,424 | |
Goodwill | | | 1,247,459 | | | | 709,944 | |
Deferred income taxes, net | | | — | | | | 10,480 | |
Other assets | | | 47,299 | | | | 21,193 | |
| | | | | | | | |
Total assets | | $ | 2,360,336 | | | $ | 1,541,106 | |
| | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | | | | | | | | |
Current liabilities: | | | | | | | | |
Accounts payable and accrued liabilities | | $ | 187,648 | | | $ | 162,992 | |
Acquisition related liabilities | | | — | | | | 250 | |
Short-term debt and current portion of long-term debt | | | 195,263 | | | | 5,554 | |
Pension and postretirement benefits, current | | | 1,734 | | | | 4,012 | |
Fees received in advance | | | 200,705 | | | | 176,842 | |
| | | | | | | | |
Total current liabilities | | | 585,350 | | | | 349,650 | |
| | |
Noncurrent liabilities: | | | | | | | | |
Long-term debt | | | 1,266,162 | | | | 1,100,332 | |
Pension benefits | | | 38,655 | | | | 109,161 | |
Postretirement benefits | | | 2,627 | | | | 18,587 | |
Deferred income taxes, net | | | 133,761 | | | | — | |
Other liabilities | | | 78,190 | | | | 61,866 | |
| | | | | | | | |
Total liabilities | | | 2,104,745 | | | | 1,639,596 | |
| | | | | | | | |
Stockholders’ equity (deficit): | | | | | | | | |
Verisk Class A common stock, $.001 par value; 1,200,000,000 shares authorized; 544,003,038 shares issued and 167,727,073 and 164,285,227 outstanding, respectively | | | 137 | | | | 137 | |
Unearned KSOP contributions | | | (483 | ) | | | (691 | ) |
Additional paid-in capital | | | 1,044,746 | | | | 874,808 | |
Treasury stock, at cost, 376,275,965 and 379,717,811 shares, respectively | | | (1,605,376 | ) | | | (1,471,042 | ) |
Retained earnings | | | 905,727 | | | | 576,585 | |
Accumulated other comprehensive losses | | | (89,160 | ) | | | (78,287 | ) |
| | | | | | | | |
Total stockholders’ equity (deficit) | | | 255,591 | | | | (98,490 | ) |
| | | | | | | | |
Total liabilities and stockholders’ equity (deficit) | | $ | 2,360,336 | | | $ | 1,541,106 | |
| | | | | | | | |
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VERISK ANALYTICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months and Twelve Months Ended December 31, 2012 and 2011
| | | | | | | | | | | | | | | | |
| (In thousands, except for share and per share data) | | Three Months Ended December 31, | | | Twelve Months Ended December 31, | |
| | | 2012 | | | 2011 | | | 2012 | | | 2011 | |
Revenues | | $ | 415,730 | | | $ | 351,593 | | | $ | 1,534,320 | | | $ | 1,331,840 | |
| | | | | | | | | | | | | | | | |
Expenses: | | | | | | | | | | | | | | | | |
Cost of revenues (exclusive of items shown separately below) | | | 170,021 | | | | 140,375 | | | | 607,174 | | | | 533,735 | |
Selling, general and administrative | | | 56,200 | | | | 52,829 | | | | 231,359 | | | | 209,469 | |
Depreciation and amortization of fixed assets | | | 13,176 | | | | 10,869 | | | | 50,624 | | | | 43,827 | |
Amortization of intangible assets | | | 17,359 | | | | 8,663 | | | | 53,575 | | | | 34,792 | |
Acquisition related liabilities adjustment | | | — | | | | — | | | | — | | | | (3,364 | ) |
| | | | | | | | | | | | | | | | |
Total expenses | | | 256,756 | | | | 212,736 | | | | 942,732 | | | | 818,459 | |
| | | | | | | | | | | | | | | | |
Operating income | | | 158,974 | | | | 138,857 | | | | 591,588 | | | | 513,381 | |
| | | | | | | | | | | | | | | | |
Other income (expense): | | | | | | | | | | | | | | | | |
Investment income | | | 63 | | | | 102 | | | | 460 | | | | 201 | |
Realized gain (loss) on securities, net | | | 6 | | | | 285 | | | | (332 | ) | | | 686 | |
Interest expense | | | (20,613 | ) | | | (14,754 | ) | | | (72,508 | ) | | | (53,847 | ) |
| | | | | | | | | | | | | | | | |
Total other expense, net | | | (20,544 | ) | | | (14,367 | ) | | | (72,380 | ) | | | (52,960 | ) |
| | | | | | | | | | | | | | | | |
Income before income taxes | | | 138,430 | | | | 124,490 | | | | 519,208 | | | | 460,421 | |
Provision for income taxes | | | (40,131 | ) | | | (44,172 | ) | | | (190,066 | ) | | | (177,663 | ) |
| | | | | | | | | | | | | | | | |
Net income | | $ | 98,299 | | | $ | 80,318 | | | $ | 329,142 | | | $ | 282,758 | |
| | | | | | | | | | | | | | | | |
Basic net income per share | | $ | 0.59 | | | $ | 0.49 | | | $ | 1.98 | | | $ | 1.70 | |
| | | | | | | | | | | | | | | | |
Diluted net income per share | | $ | 0.57 | | | $ | 0.47 | | | $ | 1.92 | | | $ | 1.63 | |
| | | | | | | | | | | | | | | | |
Weighted average shares outstanding: | | | | | | | | | | | | | | | | |
Basic | | | 166,799,952 | | | | 163,874,595 | | | | 165,890,258 | | | | 166,015,238 | |
| | | | | | | | | | | | | | | | |
Diluted | | | 171,925,360 | | | | 170,532,542 | | | | 171,709,518 | | | | 173,325,110 | |
| | | | | | | | | | | | | | | | |
9
VERISK ANALYTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2012 and 2011
| | | | | | | | |
| (In thousands) | | 2012 | | | 2011 | |
Cash flows from operating activities: | | | | | | | | |
Net income | | $ | 329,142 | | | $ | 282,758 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
Depreciation and amortization of fixed assets | | | 50,624 | | | | 43,827 | |
Amortization of intangible assets | | | 53,575 | | | | 34,792 | |
Amortization of debt issuance costs and original issue discount | | | 2,337 | | | | 1,655 | |
Allowance for doubtful accounts | | | 1,065 | | | | 1,278 | |
KSOP compensation expense | | | 13,111 | | | | 12,615 | |
Stock based compensation | | | 24,696 | | | | 22,656 | |
Noncash charges associated with performance based appreciation awards | | | — | | | | 585 | |
Acquisition related liabilities adjustment | | | — | | | | (3,364 | ) |
Realized loss (gain) on securities, net | | | 332 | | | | (686 | ) |
Deferred income taxes | | | 63,261 | | | | 21,321 | |
Loss on disposal of fixed assets | | | 597 | | | | 868 | |
Excess tax benefits from exercised stock options | | | (60,672 | ) | | | (53,195 | ) |
Other operating activities, net | | | 265 | | | | 132 | |
| | |
Changes in assets and liabilities, net of effects from acquisitions: | | | | | | | | |
Accounts receivable | | | (6,425 | ) | | | (25,926 | ) |
Prepaid expenses and other assets | | | 550 | | | | (2,720 | ) |
Income taxes | | | 83,711 | | | | 46,959 | |
Accounts payable and accrued liabilities | | | 11,256 | | | | 15,468 | |
Fees received in advance | | | 20,493 | | | | 12,373 | |
Pension and postretirement benefits | | | (105,829 | ) | | | (13,599 | ) |
Other liabilities | | | (13,860 | ) | | | (22,076 | ) |
| | | | | | | | |
Net cash provided by operating activities | | | 468,229 | | | | 375,721 | |
| | | | | | | | |
Cash flows from investing activities: | | | | | | | | |
Acquisitions, net of cash acquired of $36,113 and $590 respectively | | | (769,513 | ) | | | (121,721 | ) |
Purchase of non-controlling interest in non-public companies | | | (2,250 | ) | | | — | |
Earnout payments | | | (250 | ) | | | (3,500 | ) |
Escrow funding associated with acquisitions | | | (38,800 | ) | | | (19,560 | ) |
Proceeds from release of acquisition related escrows | | | 1,455 | | | | — | |
Purchases of fixed assets | | | (74,373 | ) | | | (59,829 | ) |
Purchases of available-for-sale securities | | | (1,784 | ) | | | (1,549 | ) |
Proceeds from sales and maturities of available-for-sale securities | | | 1,932 | | | | 1,730 | |
Other investing activities, net | | | — | | | | 300 | |
| | | | | | | | |
Net cash used in investing activities | | | (883,583 | ) | | | (204,129 | ) |
| | | | | | | | |
Cash flows from financing activities: | | | | | | | | |
Proceeds from issuance of long-term debt, net of original issue discount | | | 347,224 | | | | 696,559 | |
Repayment of current portion of long-term debt | | | — | | | | (125,000 | ) |
Repayment of short-term debt refinanced on a long-term basis | | | (347,224 | ) | | | (440,000 | ) |
Proceeds from issuance of short-term debt with original maturities greater than three months | | | — | | | | 120,000 | |
Proceeds from short-term debt, net | | | 357,224 | | | | 10,000 | |
Payment of debt issuance cost | | | (3,905 | ) | | | (7,835 | ) |
Repurchase of Class A common stock | | | (162,275 | ) | | | (381,776 | ) |
Excess tax benefits from exercised stock options | | | 60,672 | | | | 53,195 | |
Proceeds from stock options exercised | | | 68,388 | | | | 43,345 | |
Other financing activities, net | | | (6,549 | ) | | | (3,268 | ) |
| | | | | | | | |
Net cash provided by (used in) financing activities | | | 313,555 | | | | (34,780 | ) |
| | | | | | | | |
Effect of exchange rate changes | | | 15 | | | | (183 | ) |
| | | | | | | | |
(Decrease) increase in cash and cash equivalents | | | (101,784 | ) | | | 136,629 | |
| | |
Cash and cash equivalents, beginning of period | | | 191,603 | | | | 54,974 | |
| | | | | | | | |
Cash and cash equivalents, end of period | | $ | 89,819 | | | $ | 191,603 | |
| | | | | | | | |
Supplemental disclosures: | | | | | | | | |
Taxes paid | | $ | 47,516 | | | $ | 117,717 | |
| | | | | | | | |
Interest paid | | $ | 60,977 | | | $ | 48,158 | |
| | | | | | | | |
Non-cash investing and financing activities: | | | | | | | | |
Repurchase of Class A common stock included in accounts payable and accrued liabilities | | $ | 1,511 | | | $ | 1,200 | |
| | | | | | | | |
Deferred tax (liability) asset established on the date of acquisitions | | $ | (80,979 | ) | | $ | 1,324 | |
| | | | | | | | |
Capital lease obligations | | $ | 3,869 | | | $ | 7,248 | |
| | | | | | | | |
Capital expenditures included in accounts payable and accrued liabilities | | $ | 4,946 | | | $ | 3,437 | |
| | | | | | | | |
Increase in goodwill due to acquisition related escrow distributions | | $ | 5,934 | | | $ | — | |
| | | | | | | | |
Increase in goodwill due to accrual of acquisition related liabilities | | $ | — | | | $ | 250 | |
| | | | | | | | |
10
