Release: Immediate

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

Investor Relations
Eva Huston
Treasurer and Head of Investor Relations
Verisk Analytics, Inc.
201-469-2142
eva.huston@verisk.com

 

Verisk Analytics, Inc., Reports Second-Quarter 2013 Financial Results

Delivers 12.9% Revenue Growth and 17% Diluted Adjusted EPS Growth

JERSEY CITY, N.J., July 30, 2013 Verisk Analytics, Inc. (Nasdaq:VRSK), a leading source of information about risk, today announced results for the fiscal quarter ended June 30, 2013.

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 $0.49 for second-quarter 2013. Diluted adjusted earnings per share (diluted adjusted EPS) were $0.55 for second-quarter 2013, an increase of 17.0% versus the same period in 2012.
  • Total revenue increased 12.9% in second-quarter 2013 compared with second-quarter 2012. Excluding the impact of recent acquisitions, revenue grew 7.8% for second-quarter 2013. Revenue growth in the second-quarter was driven by a 16.6% increase in Decision Analytics revenue, with additional contribution from the 7.0% growth in Risk Assessment revenue.
  • EBITDA increased 13.3% to $185.6 million for second-quarter 2013, with an EBITDA margin of 44.1%.
  • Net income was $84.2 million for second-quarter 2013 and adjusted net income was $94.9 million, an increase of 14.8% and 17.6%, respectively, versus the comparable period in 2012.
  • In second-quarter 2013, the company repurchased a total of $116.1 million of its common stock under its existing repurchase program. As of June 30, 2013, the company had $306.6 million remaining under its share repurchase authorization, including the incremental $300 million authorization announced on June 20.

Scott Stephenson, president and chief executive officer, said, “Second-quarter results were solid and reflected increased organic growth. This strength is a result of the commitment and hard work of our leadership and their teams. Our focus on analytic solutions allows our customers to leverage the power of the increased volume of data available to understand the changing landscape of risk. We are proud to partner with our customers and continue to invest in developing new and enhanced solutions to meet their needs, both in the United States and other parts of the world.

“Consistent with our expectations, we accelerated our insurance solutions growth in the quarter. Our healthcare business continues to deliver excellent results and build for the future. We continue to execute our unified healthcare platform strategy and solutions that respond to the changing nature of risk sharing among industry participants.

“Financial services also remains an area in which we can build on the success of our payments solutions to date. Argus continues to exceed our expectations and be a thought leader within our firm for customer collaboration,” concluded Stephenson.

 

Table 1: Summary of Results for Second-Quarter 2013
(in thousands, except per share amounts)

 

Three Months Ended

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

June 30,

 

 

 

2013

 

2012

 

Change

 

2013

 

2012

 

Change

Revenues

$

421,320

 

    $

373,226

 

12.9%

 

$

824,643

 

    $

719,727

 

14.6%

EBITDA

$

185,638

 

    $

163,805

 

13.3%

 

$

365,339

 

    $

323,432

 

13.0%

Net income

$

84,205

 

    $

73,331

 

14.8%

 

$

164,716

 

    $

147,932

 

11.3%

Adjusted net income

$

94,867

 

    $

80,643

 

17.6%

 

$

186,046

 

    $

160,396

 

16.0%

Diluted GAAP EPS

$

0.49

 

    $

0.43

 

14.0%

 

$

0.95

 

    $

0.86

 

10.5%

Diluted adjusted EPS

$

0.55

 

    $

0.47

 

17.0%

 

$

1.08

 

    $

0.93

 

16.1%

 

Revenue

Revenue grew 12.9% for the quarter ended June 30, 2013. Excluding the effect of recent acquisitions (Argus Information & Advisory Services and Aspect Loss Prevention), revenue grew 7.8% in the second-quarter of 2013. Overall revenue growth was the result of continued double-digit growth in Decision Analytics and single-digit growth in Risk Assessment. For second-quarter 2013, Decision Analytics revenue represented approximately 63% of total revenue.

Table 2A: Decision Analytics Revenues by Category
(in thousands)

 

Three Months Ended

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

June 30,

 

 

 

2013

 

2012

 

Change

 

2013

 

2012

 

Change

Insurance

$

133,785

 

    $

122,210

 

9.5%

 

$

260,334

 

    $

238,546

 

9.1%

Financial services

 

50,529

 

 

35,299

 

43.1%

 

 

94,437

 

 

69,574

 

35.7%

Healthcare

 

61,087

 

 

50,381

 

21.3%

 

 

120,136

 

 

80,829

 

48.6%

Specialized markets

 

21,660

 

 

21,147

 

2.4%

 

 

42,864

 

 

41,620

 

3.0%

Total Decision Analytics

$

267,061

 

    $

229,037

 

16.6%

 

$

517,771

 

    $

430,569

 

20.3%


Within the Decision Analytics segment, revenue grew 16.6% for second-quarter 2013, and growth excluding recent acquisitions was 8.3%. Growth in the quarter was driven by strong increases in healthcare revenue. Accelerated growth from the insurance revenue category also contributed to second-quarter growth, as did the revenue from the acquisition of Argus, which is reported in the financial services category.

Within the insurance category, revenue growth was 9.5% for the second-quarter of 2013 and 8.9% excluding the recent acquisition of Aspect. This growth was driven by strong growth in underwriting solutions and continued good growth in catastrophe modeling solutions. Insurance fraud claims solutions and loss quantification solutions also added to revenue growth. Overall growth was driven by increased adoption of existing and new solutions and annual invoice increases for certain solutions. 

In the financial services category, revenue increased 43.1% in second-quarter 2013 but declined 8.9% after adjusting for the acquisition of Argus. The decline in mortgage revenue within the financial services category reflected continued lower volumes in forensic audit solutions but was partially offset by growth in underwriting and appraisal solutions.

In the healthcare category, revenue in the second-quarter grew 21.3%, all organic. Revenue growth reflected continued expansion of solutions sold to existing customers as well as the addition of new customers. Beginning this quarter, MediConnect Global, acquired in March 2012 and part of revenue and quality intelligence solutions, is included in organic growth.

In the specialized markets category, revenue grew 2.4% in second-quarter 2013. Growth in weather and climate analytics was affected by lower growth in government contracts. Growth in environmental health and safety solutions was driven by ongoing customer agreements moderated by lower volumes of customer implementation projects.

 

Table 2B: Risk Assessment Revenues by Category
(in thousands)

 

Three Months Ended

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

June 30,

 

 

 

2013

 

2012

 

Change

 

2013

 

2012

 

Change

Industry-standard insurance programs

$

117,289

 

    $

111,730

 

5.0%

   

$

233,739

 

    $

224,142

 

4.3%

Property-specific rating and underwriting information

 

36,970

 

 

32,459

 

13.9%

 

 

73,133

 

 

65,016

 

12.5%

Total Risk Assessment

$

154,259

 

    $

144,189

 

7.0%

 

$

306,872

 

    $

289,158

 

6.1%


Within the Risk Assessment segment, revenue grew 7.0% for the quarter. Revenue growth in industry-standard insurance programs was 5.0%, resulting primarily from the annual effect of growth in 2013 invoices effective from January 1.

Property-specific rating and underwriting information revenue grew 13.9% in the second-quarter. Growth was due to new sales resulting in higher committed volumes from certain customers as well as incremental revenue contributions due to the expiration of a revenue-sharing agreement with a technology provider in fourth-quarter 2012.

Cost of Revenue

Cost of revenue increased 18.8% in second-quarter 2013 and 12.3% excluding recent acquisitions compared with second-quarter 2012. The year-over-year increase relates primarily to additional investments in people and technology, especially in Decision Analytics in support of the growth of the business.

For second-quarter 2013, cost of revenue increased 7.0% for Risk Assessment and increased 24.0% for Decision Analytics (14.6% excluding recent acquisitions), driven by additional headcount to support new solutions. Growth in Decision Analytics cost of revenue was also influenced by investments for future solution development.

Selling, General and Administrative

Selling, general, and administrative expense, or SG&A, decreased 2.1% in second-quarter 2013 and decreased 4.0% excluding recent acquisitions. The decrease relates primarily to lower stock-based compensation expenses associated with employees who have reached retirement age, partially offset by higher headcount in Decision Analytics in support of the growth of the business.

In second-quarter 2013, SG&A decreased 14.4% for Risk Assessment. SG&A grew 5.0% for Decision Analytics (2.1% excluding recent acquisitions).

EBITDA

For second-quarter 2013, consolidated EBITDA grew 13.3% to $185.6 million, with a consolidated EBITDA margin of 44.1%.

Table 3: Segment EBITDA
(in thousands)

 

Three Months Ended

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

June 30,

 

 

 

2013

 

2012

 

Change

 

2013

 

2012

 

Change

Decision Analytics

$

99,308

 

    $

87,706

 

13.2%

 

$

192,931

 

    $

166,963

 

15.6%

EBITDA margin

 

37.2%

 

 

38.3%

 

 

 

 

37.3%

 

 

38.8%

 

 

Risk Assessment

$

86,330

 

    $

76,099

 

13.4%

 

$

172,408

 

    $

156,469

 

10.2%

EBITDA margin

 

56.0%

 

 

52.8%

 

 

 

 

56.2%

 

 

54.1%

 

 

Total EBITDA

$

185,638

 

    $

163,805

 

13.3%

 

$

365,339

 

    $

323,432

 

13.0%

EBITDA margin

 

44.1%

 

 

43.9%

 

 

 

 

44.3%

 

 

44.9%

 

 

 

Decision Analytics EBITDA grew 13.2% in second-quarter 2013 and Risk Assessment EBITDA grew 13.4% versus the same period in the previous year, as shown in Table 3.

The second-quarter 2013 EBITDA margin in Risk Assessment increased to 56.0% from 52.8% in second-quarter 2012 as a result of the previously discussed revenue growth and nearly flat expenses.

The second-quarter 2013 EBITDA margin for Decision Analytics decreased to 37.2% from 38.3% in second-quarter 2012, as margin expansion in existing solutions was offset by continuing investment in innovation.

Net Income and Adjusted Net Income

Net income increased 14.8% in second-quarter 2013 driven by growth in the business, but partially offset by increased interest expense and increased amortization associated with acquisitions. Adjusted net income grew 17.6% for second-quarter 2013. 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

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

June 30,

 

 

 

2013

 

2012

 

Change

 

2013

 

2012

 

Change

Net Income

$

84,205

 

    $

73,331

 

14.8%

 

 

$164,716

 

    $

147,932

 

11.3%

plus:  Amortization of intangibles

 

17,196

 

 

12,187

 

 

 

 

34,403

 

 

20,774

 

 

less:  Income tax effect on amortization of intangibles

 

(6,534)

 

 

(4,875)

 

 

 

 

(13,073)

 

 

(8,310)

 

 

Adjusted net income

$

94,867

 

    $

80,643

 

17.6%

 

 

$186,046

 

    $

160,396

 

16.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic adjusted EPS

$

0.56

 

    $

0.49

 

14.3%

 

 

$1.11

 

    $

0.97

 

14.4%

Diluted adjusted EPS

$

0.55

 

    $

0.47

 

17.0%

 

 

$1.08

 

    $

0.93

 

16.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

168,147,069

 

 

165,946,009

 

 

 

 

168,112,829

 

 

165,391,500

 

 

Diluted

 

172,467,688

 

 

171,901,349

 

 

 

 

172,614,164

 

 

171,626,084

 

 



Net Cash Provided by Operating Activities and Capital Expenditures

Net cash provided by operating activities was $246.7 million, an increase of $59.3 million, or 31.6%, for the six-month period ended June 30, 2013, compared with the same period in 2012. Cash provided by operations as reported was affected by the timing of excess tax benefits from exercised stock options in first-quarter 2013 and by a $72.0 million voluntary pension contribution in second-quarter 2012. Adjusted for those items, growth for the six-month period ended June 30, 2013, was 17.4%.

The increase in cash provided by operating activities was the result of a $43.8 million increase generated by improved profitability of the business, a $6.8 million decrease in working capital, and $86.7 million from pension and post-retirement benefits including the voluntary pension contribution in 2012. This was partially offset by a $12.4 million increase in interest paid due to higher debt levels and an increase of $65.6 million in taxes, including the timing of excess tax benefits from exercised stock options in first-quarter 2013 and the tax benefit related to the voluntary pension contribution in 2012.

Capital expenditures were $64.1 million in the six months ended June 30, 2013, an increase of $26.1 million over the same period in 2012. Capital expenditures were 7.8% of revenue for the six months ended June 30, 2013. Net cash provided by operating activities less capital expenditures represented 50.0% of EBITDA in the first six months of 2013. Adjusted for the timing of excess tax benefits from exercised stock options in first-quarter 2013 and the voluntary pension contribution in second-quarter 2012, net cash provided by operating activities less capital expenditures increased 7.8% to $218.7 million, representing 59.9% of EBITDA for the first six months of 2013.

Share Repurchases

The company continued to balance its internal investment and acquisition initiatives with share repurchases. In second-quarter 2013, the company repurchased shares for a total cost of $116.1 million at an average price of $59.71. On June 20, 2013, the company announced an additional $300 million authorization. At June 30, 2013, the company had $306.6 million remaining under its share repurchase authorization.

Conference Call

Verisk’s management team will host a live audio webcast on Wednesday, July 1, 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 for 30 days on the Verisk investor website 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 # 16903623.

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

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

June 30,

 

 

 

2013

 

2012

 

Change

 

2013

 

2012

 

Change

Net income

$

84,205

 

$

73,331

 

14.8%

 

$

164,716

 

$

147,932

 

11.3%

Depreciation and amortization of fixed and intangible assets

 

34,007

 

 

25,277

 

34.5%

 

 

66,428

 

 

45,508

 

46.0%

Interest expense

 

19,704

 

 

17,377

 

13.4%

 

 

39,794

 

 

33,762

 

17.9%

Provision for income taxes

 

47,722

 

 

47,820

 

(0.2%)

 

 

94,401

 

 

96,230

 

(1.9%)

EBITDA

$

185,638

 

$

163,805

 

13.3%

 

$

365,339

 

$

323,432

 

13.0%


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-Q filing for the complete financial statements and related notes.

 

VERISK ANALYTICS, INC.
CONSOLIDATED BALANCE SHEETS
As of June 30, 2013 (Unaudited) and December 31, 2012

 

 

 

 

 

 

(In thousands, except for share and per share data)

 

As of June 30, 2013
(unaudited)

 

 

As of December 31, 2012

 

 

 

 

 

 

ASSETS

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

172,587

 

$

89,819

Available-for-sale securities

 

4,254

 

 

4,883

Accounts receivable, net of allowance for doubtful accounts of $4,936 and $4,753, respectively

 

186,549

 

 

178,430

Prepaid expenses

 

31,048

 

 

21,946

Deferred income taxes, net

 

10,463

 

 

10,397

Income taxes receivable

 

54,013

 

 

45,975

Other current assets

 

34,695

 

 

39,109

Total current assets

 

493,609

 

 

390,559

 

 

 

 

 

 

Noncurrent assets:

 

 

 

 

 

Fixed assets, net

 

185,928

 

 

154,084

Intangible assets, net

 

486,532

 

 

520,935

Goodwill

 

1,249,271

 

 

1,247,459

Other assets

 

24,011

 

 

47,299

Total assets

$

2,439,351

 

$

2,360,336

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable and accrued liabilities

$

157,961

 

$

187,648

Short-term debt and current portion of long-term debt

 

137,870

 

 

195,263

Pension and postretirement benefits, current

 

1,734

 

 

1,734

Fees received in advance

 

287,571

 

 

200,705

Total current liabilities

 

585,136

 

 

585,350

 

 

 

 

 

 

Noncurrent liabilities:

 

 

 

 

 

Long-term debt

 

1,266,910

 

 

1,266,162

Pension benefits

 

32,138

 

 

38,655

Postretirement benefits

 

2,267

 

 

2,627

Deferred income taxes, net

 

135,257

 

 

133,761

Other liabilities

 

52,138

 

 

78,190

Total liabilities

 

2,073,846

 

 

2,104,745

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Class A common stock, $.001 par value; 1,200,000,000 shares authorized; 544,003,038 shares issued and 167,629,024 and 167,727,073 outstanding, respectively

 

137

 

 

137

Unearned KSOP contributions

 

 (402)

 

 

 (483)

Additional paid-in capital

 

1,116,948

 

 

1,044,746

Treasury stock, at cost, 376,374,014 and 376,275,965 shares, respectively

 

 (1,733,283)

 

 

 (1,605,376)

Retained earnings

 

1,070,443

 

 

905,727

Accumulated other comprehensive losses

 

 (88,338)

 

 

 (89,160)

Total stockholders' equity

 

365,505

 

 

                              255,591

Total liabilities and stockholders’ equity

$

2,439,351

 

$

2,360,336

 

 

VERISK ANALYTICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three Months and Six Months Ended June 30, 2013 and 2012

(In thousands, except for share and per share data)

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

2013

 

2012

 

2013

 

2012

 

Revenues

$

421,320

 

$

373,226

 

$

824,643

 

$

719,727

 

 

 

 

 

 

 

 

 

 

 

 

 Expenses:

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues (exclusive of items shown separately below)

 

174,663

 

 

147,074

 

 

339,112

 

 

280,404

Selling, general and administrative

 

61,152

 

 

62,473

 

 

120,180

 

 

116,452

Depreciation and amortization of fixed assets

 

16,811

 

 

13,090

 

 

32,025

 

 

24,734

Amortization of intangible assets

 

17,196

 

 

12,187

 

 

34,403

 

 

20,774

Total expenses

 

269,822

 

 

234,824

 

 

525,720

 

 

442,364

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

151,498

 

 

138,402

 

 

298,923

 

 

277,363

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 (19,704)

 

 

 (17,377)

 

 

 (39,794)

 

 

 (33,762)

Investment income

 

40

 

 

156

 

 

88

 

 

261

Realized gain (loss) on available-for-sale securities, net

 

93

 

 

 (30)

 

 

 (100)

 

 

300

Total other expense, net

 

 (19,571)

 

 

 (17,251)

 

 

 (39,806)

 

 

 (33,201)

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

131,927

 

 

121,151

 

 

259,117

 

 

244,162

Provision for income taxes

 

 (47,722)

 

 

 (47,820)

 

 

 (94,401)

 

 

 (96,230)

   Net income

$

84,205

 

$

73,331

 

$

164,716

 

$

147,932

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per share

$

0.50

 

$

0.44

 

$

0.98

 

$

0.89

 

 

 

 

 

 

 

 

 

 

 

 

Diluted net income per share

$

0.49

 

$

0.43

 

$

0.95

 

$

0.86

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

   Basic

 

168,147,069

 

 

165,946,009

 

 

168,112,829

 

 

165,391,500

 

 

 

 

 

 

 

 

 

 

 

 

   Diluted

 

172,467,688

 

 

171,901,349

 

 

172,614,164

 

 

171,626,084

 

 

VERISK ANALYTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Months Ended June 30, 2013 and 2012

(In thousands)

 

For the Six Months Ended June 30,

 

 

2013

 

2012

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

164,716

 

$

147,932

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization of fixed assets

 

 

32,025

 

 

24,734

Amortization of intangible assets

 

 

34,403

 

 

20,774

Amortization of debt issuance costs and original issue discount

 

 

1,368

 

 

1,096

Allowance for doubtful accounts

 

 

633

 

 

461

KSOP compensation expense

 

 

7,357

 

 

6,186

Stock based compensation

 

 

10,955

 

 

13,653

Realized loss (gain) on available-for-sale securities, net

 

 

100

 

 

 (300)

Deferred income taxes

 

 

1,007

 

 

 (535)

Loss on disposal of fixed assets

 

 

428

 

 

21

Excess tax benefits from exercised stock options

 

 

 (63,934)

 

 

 (31,624)

Other operating activities, net

 

 

28

 

 

 (18)

 

 

 

 

 

 

 

Changes in assets and liabilities, net of effects from acquisitions:

 

 

 

 

 

 

Accounts receivable

 

 

 (8,752)

 

 

 (13,652)

Prepaid expenses and other assets

 

 

 (1,696)

 

 

4,289

Income taxes

 

 

24,171

 

 

59,929

Accounts payable and accrued liabilities

 

 

 (12,833)

 

 

 (24,124)

Fees received in advance

 

 

86,866

 

 

77,038

Pension and postretirement benefits

 

 

 (4,099)

 

 

 (90,808)

Other liabilities

 

 

 (26,052)

 

 

 (7,617)

Net cash provided by operating activities

 

 

246,691

 

 

187,435

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Acquisitions, net of cash acquired of $0 and $29,387, respectively

 

 

 (983)

 

 

 (331,330)

Purchase of non-controlling interest in non-public companies

 

 

 

 

 (2,000)

Earnout payments

 

 

 

 

 (250)

Proceeds from release of acquisition related escrows

 

 

192

 

 

Escrow funding associated with acquisitions

 

 

 

 

 (17,000)

Purchases of fixed assets

 

 

 (63,505)

 

 

 (36,532)

Purchases of available-for-sale securities

 

 

 (4,967)

 

 

 (1,128)

Proceeds from sales and maturities of available-for-sale securities

 

 

5,826

 

 

1,203

Other investing activities, net

 

 

439

 

 

Net cash used in investing activities

 

 

 (62,998)

 

 

 (387,037)

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Repayment of current portion of long-term debt

 

 

 (45,000)

 

 

(Repayment) proceeds of short-term debt, net

 

 

 (10,000)

 

 

150,000

Excess tax benefits from exercised stock options

 

 

63,934

 

 

31,624

Repurchase of common stock

 

 

 (135,595)

 

 

 (106,305)

Proceeds from stock options exercised

 

 

30,528

 

 

33,453

Other financing activities, net

 

 

 (4,111)

 

 

 (3,441)

Net cash (used in) provided by financing activities

 

 

 (100,244)

 

 

105,331

 

 

 

 

 

 

 

Effect of exchange rate changes

 

 

 (681)

 

 

 (134)

 

 

 

 

 

 

 

Increase (decrease) in cash and cash equivalents

 

 

82,768

 

 

 (94,405)

 

 

 

 

 

 

 

Cash and cash equivalents, beginning of period

 

 

89,819

 

 

191,603

Cash and cash equivalents, end of period

 

$

172,587

 

$

97,198

 

 

 

 

 

 

 

Supplemental disclosures:

 

 

 

 

 

 

Taxes paid

 

$

71,029

 

$

37,736

Interest paid

 

$

39,029

 

$

26,619

 

 

 

 

 

 

 

Noncash investing and financing activities:

 

 

 

 

 

 

Repurchase of common stock included in accounts payable and accrued liabilities

 

$

3,550

 

$

1,936

Deferred tax asset (liability) established on date of acquisition

 

$

343

 

$

 (40,358)

Capital lease obligations

 

$

2,106

 

$

3,043

Capital expenditures included in accounts payable and accrued liabilities

 

$

3,426

 

$

1,864