Release: Immediate

Contact:

Media
Rich Tauberman
MWW Group (for Verisk Analytics)
202-600-4546
rtauberman@mww.com

Investor Relations
Eva Huston
Senior Vice President and Treasurer, Corporate Finance and Investor Relations
Verisk Analytics, Inc.
201-469-2142
eva.huston@verisk.com

 

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.


Table 1: Summary of Results for 2012
(in thousands, except per share amounts)

 

Three Months Ended

 

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

 

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

 

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

 

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.

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

 

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

 

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).

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

 

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

 

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.

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

 

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

 

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 at http://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.

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

 

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

 

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%


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.


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


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


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