JERSEY CITY, N.J., March 9, 2010 (GLOBE NEWSWIRE) -- Verisk Analytics, Inc. (Nasdaq:VRSK), a leading source of information about risk, today announced results for the fourth quarter and fiscal year ended December 31, 2009:
Financial Highlights
See Tables 4 and 5 for a reconciliation of non-GAAP financial measures to the relevant GAAP measures.
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Diluted GAAP earnings/(loss) per share ("diluted GAAP EPS") were $0.70 for the fiscal-year 2009 and ($0.03) for fourth-quarter 2009, reflecting the one-time noncash charge of $57.7 million related to an accelerated ESOP allocation, which is not deductible for income tax. Diluted adjusted earnings per share ("diluted adjusted EPS") were $1.21 for fiscal-year 2009 and $0.32 for fourth-quarter 2009, an increase of 18.6% and 28.0%, respectively, versus the same periods in 2008.
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Total revenues increased 14.9% for fiscal-year 2009 and 14.5% for the fourth quarter, driven by 29.3% and 26.9% increases, respectively, in Decision Analytics revenues. Risk Assessment revenues grew 3.9% and 4.2% for fiscal year 2009 and fourth-quarter 2009, respectively, despite the weak growth of premiums for our property/casualty insurance customers. Excluding the impact of recent acquisitions, total revenues grew 11.2% and 10.9% for the fiscal year and fourth quarter, respectively.
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Adjusted EBITDA increased 13.4% to $447.5 million for fiscal-year 2009 and 21.5% to $120.6 million for fourth-quarter 2009. Adjusted net income increased 13.6% to $221.1 million for fiscal-year 2009 and 28.9% to $59.9 million for fourth-quarter 2009.
- Net income for the fiscal year ended December 31, 2009, was $126.6 million, and adjusted net income was $221.1 million after adding back ESOP expense, including the accelerated ESOP allocation and other adjustments detailed in Table 4. For the fourth quarter, net income/(loss) and adjusted net income were ($6.4) million and $59.9 million, respectively.
Frank J. Coyne, chairman, president, and CEO, said, "We are pleased to report these strong results in our first year-end report as a public company. Verisk has a proven business model that continues to deliver profitable growth in a tough economic environment. In Decision Analytics, we continue to see strong performance of our mortgage analytics business, among others. With the recent acquisition of Strategic Analytics, we have enhanced our analytic capabilities in the mortgage market and extended our reach to the consumer lending market. We also remain excited about the cross-sell opportunity between our Risk Assessment and Decision Analytics businesses, having achieved some valuable sales at the end of 2009."
"In addition to the impressive growth in our Decision Analytics businesses, we have been able to continue to grow our Risk Assessment businesses despite the weakness in property/casualty insurance premiums for our customers. While we recognize the challenges continue for our customers, we believe the value proposition of our offerings is even more important to them in this environment. As a result, we can continue to grow our revenues in the face of declining premiums," added Coyne.
Summary of Results for Fiscal Year and Fourth Quarter 2009
Table 1
| Three Months Ended | Year Ended | |||||
| December 31, | Change | December 31, | Change | |||
| 2009 | 2008 | (%) | 2009 | 2008 | (%) | |
| (In thousands, except per share amounts) | ||||||
| Revenues | $265,126 | $231,469 | 14.5% | $1,027,104 | $893,550 | 14.9% |
| Adjusted EBITDA | $120,562 | $99,191 | 21.5% | $447,499 | $394,493 | 13.4% |
| Net income | $(6,445) | $36,439 | (117.7%) | $126,614 | $158,228 | (20.0%) |
| Adjusted net income | $59,900 | $46,467 | 28.9% | $221,081 | $194,653 | 13.6% |
| Diluted GAAP EPS | $(0.03) | $0.20 | (115.0%) | $0.70 | $0.83 | (15.7%) |
| Diluted adjusted EPS | $0.32 | $0.25 | 28.0% | $1.21 | $1.02 | 18.6% |
Revenues
Revenues grew 14.9% for the fiscal year and 14.5% for the quarter ended December 31, 2009. Excluding the impact of recent acquisitions (AER, D2Hawkeye, TierMed, and Enabl-u), revenues grew 11.2% for fiscal-year 2009 and 10.9% for the quarter.
Table 2A
| Three Months Ended | Year Ended | |||||
| December 31, | Change | December 31, | Change | |||
| 2009 | 2008 | (%) | 2009 | 2008 | (%) | |
| (In thousands) | ||||||
| Decision Analytics revenues by category: | ||||||
| Fraud identification and detection solutions | $73,325 | $56,340 | 30.1% | $273,103 | $213,994 | 27.6% |
| Loss prediction solutions | 36,626 | 25,775 | 42.1% | 137,328 | 95,128 | 44.4% |
| Loss quantification solutions | 24,092 | 23,505 | 2.5% | 92,697 | 80,037 | 15.8% |
| Total Decision Analytics | $134,043 | $105,620 | 26.9% | $503,128 | $389,159 | 29.3% |
Within the Decision Analytics segment, revenues grew 29.3% for the fiscal year ended December 31, 2009 and 20.8% excluding recent acquisitions. Fiscal 2009 revenue growth not related to acquisitions was led by a 27.6% increase in our fraud identification solutions revenues, as growth in mortgage fraud and other fraud detection solutions continued.
Loss quantification solutions revenues grew 15.8% for the year and reported 2.5% growth for fourth-quarter 2009. Fourth quarter revenue from 2008 included additional professional services revenue from a customer that did not recur in 2009. Excluding this 2008 revenue, loss quantification revenues for the fourth quarter would have grown double-digits. Loss prediction solutions revenues grew at 9.7% for fiscal 2009 and 9.6% for the quarter, excluding the impact of the recent acquisitions.
Table 2B
| Three Months Ended | Year Ended | |||||
| December 31, | Change | December 31, | Change | |||
| 2009 | 2008 | (%) | 2009 | 2008 | (%) | |
| (In thousands) | ||||||
| Risk Assessment revenues by category: | ||||||
| Industry standard insurance programs | $84,727 | $82,338 | 2.9% | $341,079 | $329,858 | 3.4% |
| Property-specific rating and underwriting information | 32,939 | 31,261 | 5.4% | 132,027 | 125,835 | 4.9% |
| Statistical agency and data services | 7,465 | 6,895 | 8.3% | 28,619 | 27,451 | 4.3% |
| Actuarial services | 5,952 | 5,355 | 11.1% | 22,251 | 21,247 | 4.7% |
| Total Risk Assessment | $131,083 | $125,849 | 4.2% | $523,976 | $504,391 | 3.9% |
Within the Risk Assessment segment, revenues grew 3.9% in the fiscal year ended December 31, 2009. The slightly higher growth of 4.2% in the fourth quarter reflected increased usage of actuarial services for special projects and growth in our statistical agency and data services.
Cost of Revenues
Cost of revenues increased 27.0% in the fiscal year ended December 31, 2009, and 10.9% excluding the impact of recent acquisitions and the accelerated ESOP allocation. After also excluding the increased pension costs primarily due to the downturn in the global financial markets and the associated decline in our pension assets, cost of revenues grew 7.1%. The remaining increase in cost of revenues was primarily due to increases in salary and benefits, as well as third-party data costs related primarily to our mortgage fraud analytics solutions.
Cost of revenues increased 56.7% in fourth-quarter 2009 and 7.5% excluding the impact of recent acquisitions and the accelerated ESOP allocation. After also excluding the increased pension costs discussed above, cost of revenues grew 3.4%.
Selling, General, and Administrative
Selling, general, and administrative expense increased 23.9% in the fiscal year ended December 31, 2009, and 4.1% excluding the impact of recent acquisitions and the accelerated ESOP allocation. After also excluding the increased pension costs discussed earlier, selling, general, and administrative expense grew 1.8%.
Selling, general, and administrative expense grew 30.1% in the fourth-quarter 2009, but declined 12.3% excluding the impact of recent acquisitions and the accelerated ESOP allocation. After also excluding the increased pension costs discussed previously, selling, general, and administrative declined 13.5%, reflecting the benefit of an insurance recovery paid to Verisk, savings in 401(k) costs due to the ESOP acceleration, as well as adjustments to staffing levels.
EBITDA and Adjusted EBITDA
EBITDA declined 0.6% in the fiscal year ended December 31, 2009 as a result of the accelerated ESOP allocation, and Adjusted EBITDA grew 13.4% in the fiscal year ended December 31, 2009 as shown in Table 3A. For the fourth quarter, Adjusted EBITDA grew 21.5%.
At the time of our initial public offering, the company accelerated the allocation of ESOP shares, causing a one-time, noncash charge of $57.7 million in fourth-quarter 2009. This acceleration will eliminate the portion of ESOP expense not associated with the 401(k) and profit sharing contributions going forward. Because Verisk does not expect these ESOP allocation expenses, or IPO-related costs, to impact EBITDA in 2010 and forward, the company believes it is appropriate to present Adjusted EBITDA.
The Adjusted EBITDA margin was 43.6% for fiscal-year 2009, a decline from Adjusted EBITDA margin of 44.1% in the same period in 2008. The overall Adjusted EBITDA margin in fourth-quarter 2009 was 45.5% compared to 42.9% in the comparable period of 2008. The 2009 margin benefited from an insurance recovery paid to Verisk of $2.0 million and by approximately $1.8 million in savings in 401(k) costs due to the ESOP acceleration. Increased pension expense, as discussed earlier, negatively impacted Adjusted EBITDA margin by 1.8% for the full year and 1.7% for the fourth quarter.
Table 3A
| Three Months Ended | Year Ended | |||||
| December 31, | Change | December 31, | Change | |||
| 2009 | 2008 | (%) | 2009 | 2008 | (%) | |
| (In thousands) | ||||||
| EBITDA | $59,837 | $93,611 | (36.1%) | $373,206 | $375,414 | (0.6%) |
| plus: ESOP allocation expense | 57,720 | 2,546 | 67,322 | 12,563 | ||
| plus: IPO-related costs | 3,005 | 3,034 | 6,971 | 6,516 | ||
| Adjusted EBITDA | $120,562 | $99,191 | 21.5% | $447,499 | $394,493 | 13.4% |
| EBITDA margin | 22.6% | 40.4% | 36.3% | 42.0% | ||
| Adjusted EBITDA margin | 45.5% | 42.9% | 43.6% | 44.1% | ||
Adjusted EBITDA grew 22.8% for Decision Analytics and 7.2% for Risk Assessment for the fiscal year ended December 31, 2009 as shown in Table 3B. However, increased pension costs primarily related to the global economic downturn in 2008 had a negative impact on Adjusted EBITDA margin of 0.6% for Decision Analytics and 2.9% for Risk Assessment.
For fiscal 2009, Adjusted EBITDA margins were 48.4% and 38.6% for Risk Assessment and Decision Analytics, respectively. Risk Assessment Adjusted EBITDA margin expanded to 52.3% in the fourth quarter, benefiting in part from $1.7 million of the insurance recovery and reduction in 401(k) costs discussed above. Decision Analytics Adjusted EBITDA margin was 38.8% in the quarter, up from 37.2% in fourth-quarter 2008.
Table 3B
| Three Months Ended | Year Ended | |||||
| December 31, | Change | December 31, | Change | |||
| 2009 | 2008 | (%) | 2009 | 2008 | (%) | |
| (In thousands) | ||||||
| Segment EBITDA: | ||||||
| Risk Assessment | $33,812 | $55,393 | (39.0%) | $210,928 | $222,706 | (5.3%) |
| EBITDA margin | 25.8% | 44.0% | 40.3% | 44.2% | ||
| Decision Analytics | $26,025 | 38,218 | (31.9%) | $162,278 | 152,708 | 6.3% |
| EBITDA margin | 19.4% | 36.2% | 32.3% | 39.2% | ||
| Total EBITDA | $59,837 | $93,611 | (36.1%) | $373,206 | $375,414 | (0.6%) |
| EBITDA margin | 22.6% | 40.4% | 36.3% | 42.0% | ||
| Adjusted segment EBITDA: | ||||||
| Risk Assessment | $68,507 | $59,866 | 14.4% | $253,419 | $236,432 | 7.2% |
| Adjusted EBITDA margin | 52.3% | 47.6% | 48.4% | 46.9% | ||
| Decision Analytics | $52,055 | $39,325 | 32.4% | $194,080 | $158,061 | 22.8% |
| Adjusted EBITDA margin | 38.8% | 37.2% | 38.6% | 40.6% | ||
| Total adjusted EBITDA | $120,562 | $99,191 | 21.5% | $447,499 | $394,493 | 13.4% |
| Adjusted EBITDA margin | 45.5% | 42.9% | 43.6% | 44.1% | ||
Net Income and Adjusted Net Income
Net income declined 20.0% in fiscal-year 2009 primarily because of the $57.7 million noncash, nondeductible charge related to the accelerated ESOP allocation, which was partially offset by growth in our business. Adjusted net income grew 13.6% in fiscal-year 2009 and 28.9% for fourth-quarter 2009. Included in the adjustment to net income was a $1.2 million noncash charge, net of tax, related to an impairment of a minority investment in a telematics business.
The table below sets forth a reconciliation of net income to adjusted net income and adjusted EPS based on our historical results:
Table 4
| Three Months Ended | Year Ended | |||||
| December 31, | Change | December 31, | Change | |||
| 2009 | 2008 | (%) | 2009 | 2008 | (%) | |
| (In thousands, except share and per share amounts) | ||||||
| Net income | $(6,445) | $36,439 | (117.7%) | $126,614 | $158,228 | (20.0%) |
| plus: Amortization of intangibles | 7,635 | 7,577 | 32,621 | 29,555 | ||
| plus: ESOP allocation expense | 57,720 | 2,546 | 67,322 | 12,563 | ||
| plus: IPO-related costs | 3,005 | 3,034 | 6,971 | 6,516 | ||
| plus: Minority investment impairment, net of tax | 1,172 | -- | 1,172 | -- | ||
| less: Income tax effect on amortization of intangibles | (3,187) | (3,129) | (13,619) | (12,209) | ||
| Adjusted net income | $59,900 | $46,467 | 28.9% | $221,081 | $194,653 | 13.6% |
| Basic adjusted EPS | $0.33 | $0.26 | 26.9% | $1.26 | $1.06 | 18.9% |
| Diluted adjusted EPS | $0.32 | $0.25 | 28.0% | $1.21 | $1.02 | 18.6% |
| Weighted average shares outstanding | ||||||
| Basic | 179,545,631 | 176,701,294 | 174,767,795 | 182,885,700 | ||
| Diluted | 188,479,023 | 183,481,468 | 182,165,661 | 190,231,700 | ||
Net Cash Provided by Operating Activities and Capital Expenditures
Net cash provided by operating activities was $326.4 million and increased $78.5 million, or 31.7%, for the fiscal year ended December 31, 2009 compared to the fiscal year ended December 31, 2008. This growth was primarily a result of a $58.5 million increase due to the improved profitability of the business, $21.4 million due to working capital benefit, and $10.2 million due to decreased employee-related payments related to an additional pay cycle that occurred in 2008. This was partially offset by $6.0 million of increased tax payments, net of benefits related to exercised stock options, and an increase of $5.2 million in interest expense versus 2008 due to higher borrowing costs and increased debt balances.
Capital expenditures were $43.7 million in 2009, an increase of $10.5 million over 2008 due to investment in infrastructure, acquisitions, and new product development. Capital expenditures were 4.3% of revenue in 2009.
Business Outlook
Mr. Coyne concluded, "We're confident in our ability to execute our growth plans and are pleased with the double-digit revenue growth we have been able to deliver this year. Our revenue growth has been achieved while continuing to deliver attractive EBITDA margins and free cash flow growth."
Conference Call
Verisk's management team will host a live audio webcast on Wednesday, March 10, 2010, 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 at http://investor.verisk.com. The discussion is also available through dial-in number 1-877-368-8165 for U.S./Canada participants or 970-315-0262 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 1-800-642-1687 for U.S./Canada participants or 706-645-9291 for international participants using Conference ID #58951656.
About Verisk Analytics
Verisk Analytics (Nasdaq:VRSK) is a leading provider of risk assessment solutions to professionals in insurance, healthcare, mortgage lending, government, risk management, and human resources. 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.
The Verisk Analytics logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6694
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, 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 and Adjusted EBITDA, 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 and Adjusted EBITDA
The table below sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA based on our historical results:
Table 5
| Three Months Ended | Year Ended | |||
| December 31, | December 31, | |||
| 2009 | 2008 | 2009 | 2008 | |
| (In thousands) | ||||
| Net income | $(6,445) | $36,439 | $126,614 | $158,228 |
| Depreciation and amortization of fixed and intangible assets | 17,679 | 17,416 | 71,199 | 64,872 |
| Investment income and realized losses on securities, net | 1,917 | 646 | 2,137 | 327 |
| Interest expense | 9,139 | 8,750 | 35,265 | 31,316 |
| Provision for income taxes | 37,547 | 30,360 | 137,991 | 120,671 |
| EBITDA | $59,837 | $93,611 | $373,206 | $375,414 |
| plus: ESOP allocation expense | 57,720 | 2,546 | 67,322 | 12,563 |
| plus: IPO-related costs | 3,005 | 3,034 | 6,971 | 6,516 |
| Adjusted EBITDA | $120,562 | $99,191 | $447,499 | $394,493 |
EBITDA and Adjusted EBITDA are financial measures that management uses to evaluate the performance of our segments. The company defines "EBITDA" as net income before investment income, realized (gains)/losses on securities interest expense, income taxes, depreciation, and amortization. The company defines "Adjusted EBITDA" as EBITDA before ESOP allocation expense, IPO-related costs, and other nonrecurring items.
Although EBITDA and adjusted EBITDA are frequently used by securities analysts, lenders and others in their evaluation of companies, EBITDA and adjusted EBITDA have limitations as analytical tools and should not be considered in isolation, or as a substitute for an analysis of our statement of cash flow reported under GAAP. Management uses EBITDA and Adjusted EBITDA in conjunction with traditional GAAP operating performance measures as part of its overall assessment of company performance. Some of these limitations are:
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EBITDA and Adjusted EBITDA do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments.
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EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirement for, our working capital needs.
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Although depreciation and amortization are noncash charges, the assets being depreciated and amortized often will have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements.
- Other companies in our industry may calculate EBITDA and adjusted EBITDA differently than we do, limiting their usefulness as comparative measures.
Attached Financial Statements
Please refer to the full Form 10-K filing for the complete financial statements and related notes.
VERISK ANALYTICS, INC.
CONSOLIDATED BALANCE SHEETS
As of December 31, 2009 and 2008
| 2009 | 2008 | |
| (In thousands, except for share and per share data) | ||
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $ 71,527 | $ 33,185 |
| Available-for-sale securities | 5,445 | 5,114 |
| Accounts receivable, net | 89,436 | 83,941 |
| Prepaid expenses | 16,155 | 13,010 |
| Deferred income taxes, net | 4,405 | 4,490 |
| Federal and foreign income taxes receivable | 16,721 | 12,311 |
| State and local income taxes receivable | -- | 689 |
| Other current assets | 21,656 | 16,187 |
| Total current assets | 225,345 | 168,927 |
| Noncurrent assets: | ||
| Fixed assets, net | 89,165 | 82,587 |
| Intangible assets, net | 108,526 | 112,713 |
| Goodwill | 490,829 | 447,372 |
| Deferred income taxes, net | 66,257 | 100,256 |
| State income taxes receivable | 6,536 | 8,112 |
| Other assets | 10,295 | 8,910 |
| Total assets | $ 996,953 | $ 928,877 |
| LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS' DEFICIT | ||
| Current liabilities: | ||
| Accounts payable and accrued liabilities | $ 101,401 | $ 83,381 |
| Acquisition related liabilities | -- | 82,700 |
| Short-term debt and current portion of long-term debt | 66,660 | 219,398 |
| Pension and postretirement benefits, current | 5,284 | 5,397 |
| Fees received in advance | 125,520 | 114,023 |
| State and local income taxes payable | 1,414 | -- |
| Total current liabilities | 300,279 | 504,899 |
| Noncurrent liabilities: | ||
| Long-term debt | 527,509 | 450,356 |
| Pension benefits | 102,046 | 133,914 |
| Postretirement benefits | 25,108 | 23,798 |
| Other liabilities | 76,960 | 76,194 |
| Total liabilities | 1,031,902 | 1,189,161 |
| Redeemable common stock: | ||
|
ISO Class A redeemable common stock, stated at redemption value, $.0002 par value; 335,000,000 shares authorized; 150,388,050 shares issued and 37,306,950 outstanding as of December 31, 2008 and vested options at intrinsic value (1) |
-- | 752,912 |
| ISO Class A unearned common stock KSOP shares | -- | (3,373) |
| Total redeemable common stock | -- | 749,539 |
| Commitments and contingencies | ||
| Stockholders' deficit: | ||
|
Verisk Class A common stock, $.001 par value; 1,200,000,000 shares authorized; 125,815,600 shares issued and outstanding as of December 31, 2009 (1) |
30 | -- |
|
ISO Class B common stock, $.0002 par value; 1,000,000,000 shares authorized; 500,225,000 shares issued and 143,187,100 outstanding as of December 31, 2008 (1) |
-- | 100 |
| Verisk Class B (series 1) common stock, $.001 par value; 400,000,000 shares authorized; 205,637,925 shares issued and 27,118,975 outstanding as of December 31, 2009 (1) | 50 | -- |
|
Verisk Class B (series 2) common stock, $.001 par value; 400,000,000 shares authorized; 205,637,925 shares issued and 27,118,975 outstanding as of December 31, 2009 (1) |
50 | -- |
| Unearned KSOP contributions | (1,305) | -- |
| Additional paid-in capital | 652,573 | -- |
|
Treasury stock, at cost, 357,037,900 shares as of December 31, 2009 and 2008 (1) |
(683,994) | (683,994) |
| Retained earning/(accumulated deficit) | 51,275 | (243,495) |
| Accumulated other comprehensive loss | (53,628) | (82,434) |
| Total stockholders' deficit | (34,949) | (1,009,823) |
| Total liabilities, redeemable common stock and stockholders' deficit | $ 996,953 | $ 928,877 |
(1) All share and per share data has been adjusted to reflect a fifty-for-one stock split that occurred in October 2009.
VERISK ANALYTICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For The Years Ended December 31, 2009 and 2008
| 2009 | 2008 | |
| (In thousands, except for share and per share data) | ||
| Revenues | $ 1,027,104 | $ 893,550 |
| Expenses: | ||
| Cost of revenues (exclusive of items shown separately below) | 491,294 | 386,897 |
| Selling, general and administrative | 162,604 | 131,239 |
| Depreciation and amortization of fixed assets | 38,578 | 35,317 |
| Amortization of intangible assets | 32,621 | 29,555 |
| Total expenses | 725,097 | 583,008 |
| Operating income | 302,007 | 310,542 |
| Other income/(expense): | ||
| Investment income | 195 | 2,184 |
| Realized losses on securities, net | (2,332) | (2,511) |
| Interest expense | (35,265) | (31,316) |
| Total other expense, net | (37,402) | (31,643) |
| Income before income taxes | 264,605 | 278,899 |
| Provision for income taxes | (137,991) | (120,671) |
| Net income | $ 126,614 | $ 158,228 |
| Basic net income per share of Class A and Class B (1) | $ 0.72 | $ 0.87 |
| Diluted net income per share of Class A and Class B (1) | $ 0.70 | $ 0.83 |
| Weighted average shares outstanding: | ||
| Basic (1) | 174,767,795 | 182,885,700 |
| Diluted (1) | 182,165,661 | 190,231,700 |
(1) All share and per share data has been adjusted to reflect a fifty-for-one stock split that occurred in October 2009.
VERISK ANALYTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Years Ended December 31, 2009 and 2008
| 2009 | 2008 | |
| (In thousands) | ||
| Cash flows from operating activities: | ||
| Net income | $ 126,614 | $ 158,228 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation and amortization of fixed assets | 38,578 | 35,317 |
| Amortization of intangible assets | 32,621 | 29,555 |
| Amortization of debt issuance costs | 785 | -- |
| Allowance for doubtful accounts | 916 | 1,536 |
| KSOP compensation expense | 76,065 | 22,274 |
| Acquisition related compensation expense | -- | 300 |
| Stock-based compensation | 12,744 | 9,881 |
| Non-cash charges/(credits) associated with performance based appreciation awards | 4,039 | (91) |
| Interest income on notes receivable from stockholders | -- | (1,050) |
| Proceeds from repayment of interest on notes receivable from stockholders | -- | 2,318 |
| Realized losses on securities, net | 2,332 | 2,511 |
| Deferred income taxes | 12,190 | 19,895 |
| Other operating | 222 | 284 |
| Loss on disposal of assets | 810 | 1,082 |
| Non-cash charges associated with lease termination | 196 | -- |
| Excess tax benefits from exercised stock options | (19,976) | (26,099) |
| Changes in assets and liabilities, net of effects from acquisitions: | ||
| Accounts receivable | (1,990) | 3,609 |
| Prepaid expenses and other assets | (1,839) | (6,486) |
| Federal and foreign income taxes | 13,662 | 5,969 |
| State and local income taxes | 5,710 | (5,977) |
| Accounts payable and accrued liabilities | 2,986 | 3,075 |
| Acquisition related liabilities | (300) | (2,200) |
| Fees received in advance | 10,460 | (1,042) |
| Other liabilities | 9,576 | (4,983) |
| Net cash provided by operating activities | 326,401 | 247,906 |
VERISK ANALYTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
For The Years Ended December 31, 2009 and 2008
| 2009 | 2008 | |
| (In thousands) | ||
| Cash flows from investing activities: | ||
| Acquisitions, net of cash acquired of $9,477 and $365, respectively | (61,350) | (18,951) |
| Purchase of cost-based investments | -- | (5,800) |
| Earnout payments | (78,100) | (98,100) |
| Proceeds from release of contingent escrows | 129 | 558 |
| Escrow funding associated with acquisitions | (7,636) | (1,500) |
| Purchases of available-for-sale securities | (575) | (361) |
| Proceeds from sales and maturities of available-for-sale securities | 886 | 21,724 |
| Purchases of fixed assets | (38,694) | (30,652) |
| Proceeds from repayment of notes receivable from stockholders | -- | 3,863 |
| Issuance of notes receivable from stockholders | -- | (1,247) |
| Net cash used in investing activities | (185,340) | (130,466) |
| Cash flows from financing activities: | ||
| Proceeds from issuance of short-term debt, net | -- | 114,000 |
| Proceeds from issuance of long-term debt | 80,000 | 150,000 |
| Redemption of ISO Class A common stock | (46,740) | (387,561) |
| Repurchase of ISO Class B common stock | -- | (5,001) |
| Repayment of current portion of long-term debt | (100,000) | -- |
| Repayment of short-term debt, net | (59,244) | (35,287) |
| Debt issuance cost | (4,510) | -- |
| Excess tax benefits from exercised stock options | 19,976 | 26,099 |
| Proceeds from repayment of exercise price loans classified as a component of redeemable common stock | -- | 29,482 |
| Proceeds from stock options exercised | 7,709 | 892 |
| Net cash used in financing activities | (102,809) | (107,376) |
| Effect of exchange rate changes | 90 | (928) |
| Increase in cash and cash equivalents | 38,342 | 9,136 |
| Cash and cash equivalents, beginning of period | 33,185 | 24,049 |
| Cash and cash equivalents, end of period | $ 71,527 | $ 33,185 |
| Supplemental disclosures: | ||
| Taxes paid | $ 111,458 | $ 99,323 |
| Interest paid | $ 34,201 | $ 28,976 |
| Non-cash investing and financing activities: | ||
| Loans made to directors and officers in connection with the exercise of stock options | $ -- | $ (20,148) |
| Redemption of ISO Class A common stock used to repay maturities of notes receivable from stockholders | $ -- | $ 42,202 |
| Redemption of ISO Class A common stock used to fund the exercise of stock options | $ 2,326 | $ 4,281 |
| Deferred tax liability established on date of acquisition | $ (5,728) | $ (2,963) |
| Capital lease obligations | $ 3,659 | $ 2,610 |
| Capital expenditures included in accounts payable and accrued liabilities | $ 1,388 | $ -- |
| Decrease in goodwill due to finalization of acquisition related liabilities | $ (4,300) | $ -- |
| Accrual of acquisition related liabilities | $ -- | $ 82,400 |
| Increase in goodwill due to acquisition related escrow distributions | $ 181 | $ 4,388 |
VERISK ANALYTICS, INC.
Supplement Cost Information
| For the year ended December 31, 2009 | |||
| Total | Risk Assessment | Decision Analytics | |
| (In Millions) | |||
| Accelerated ESOP allocation | $ 57.7 | $ 32.9 | $ 24.8 |
| Cost of revenues | 44.4 | 25.4 | 19.0 |
| Selling, general and administrative | 13.3 | 7.5 | 5.8 |
| ESOP allocation through the third quarter 2009 | $ 9.6 | $ 5.5 | $ 4.1 |
| Cost of revenues | 7.5 | 4.3 | 3.2 |
| Selling, general and administrative | 2.1 | 1.2 | 0.9 |
| IPO-related costs | $ 7.0 | $ 4.1 | $ 2.9 |
| Total add-backs to Adjusted EBITDA | $ 74.3 | $ 42.5 | $ 31.8 |
| Incremental pension cost increase over prior year | $ 18.1 | $ 15.1 | $ 3.0 |
| Cost of revenues | 15.0 | 12.7 | 2.3 |
| Selling, general and administrative | 3.1 | 2.4 | 0.7 |
| For the three months ended December 31, 2009 | |||
| Total | Risk Assessment | Decision Analytics | |
| (In Millions) | |||
| Accelerated ESOP allocation, fourth quarter 2009 | $ 57.7 | $ 32.9 | $ 24.8 |
| Cost of revenues | 44.4 | 25.4 | 19.0 |
| Selling, general and administrative | 13.3 | 7.5 | 5.8 |
| IPO-related costs | $ 3.0 | $ 1.7 | $ 1.3 |
| Total add-backs to Adjusted EBITDA | $ 60.7 | $ 34.6 | $ 26.1 |
| Incremental pension cost increase over prior year | $ 4.5 | $ 3.8 | $ 0.7 |
| Cost of revenues | 4.0 | 3.4 | 0.6 |
| Selling, general and administrative | 0.5 | 0.4 | 0.1 |