Release: Immediate

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 Third-Quarter 2013 Financial Results

Delivers 10.0% Revenue Growth and 14.8% Diluted Adjusted EPS Growth

JERSEY CITY, N.J., November 5, 2013 Verisk Analytics, Inc. (Nasdaq:VRSK), a leading source of information about risk, today announced results for the fiscal quarter ended September 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 $0.56 for third-quarter 2013. Diluted adjusted earnings per share (diluted adjusted EPS) were $0.62 for third-quarter 2013, an increase of 14.8% versus the same period in 2012.
  • Total revenue increased 10.0% in third-quarter 2013 compared with third-quarter 2012. Excluding the impact of recent acquisitions, revenue grew 6.1% for third-quarter 2013. Revenue growth in the third quarter was driven by an 11.2% increase in Decision Analytics revenue, with additional contribution from the 7.8% growth in Risk Assessment revenue.
  • EBITDA increased 10.9% to $202.9 million for third-quarter 2013, with an EBITDA margin of 46.3%.
  • Net income was $96.4 million for third-quarter 2013 and adjusted net income was $106.0 million, an increase of 16.3% and 15.0%, respectively, versus the comparable period in 2012.
  • In third-quarter 2013, the company repurchased a total of $24.4 million of its common stock under its existing repurchase program. As of September 30, 2013, the company had $282.1 million remaining under its share repurchase authorization.
  • On October 28, 2013, the company announced it had increased the size of its revolving credit facility to $975.0 million and extended the maturity to October 2018. The facility is available for general corporate purposes.

Scott Stephenson, president and chief executive officer, said, “We were pleased to achieve several innovation milestones in the third quarter including initial customer use of our anti-fraud, pooled data platform in the healthcare space, our first provision of Roof Insight reports using aerial imagery, and the first sale of our new supply chain platform. We remain focused on our twin goals of organic growth through innovation and efficiently scalable operations. We fully expect our innovation agenda to enable us to deliver strong growth over the long-term.

“Third-quarter financial results were good, reflecting continued organic growth, although modestly below our long-term trend line. Consistent with our previous comments, we accelerated our insurance solutions growth in the quarter. Our healthcare business delivered growth that was below our plan, but we remain enthusiastic about our longer-term outlook.

“In financial services, Argus has been part of Verisk for more than a year and continues to deliver excellent growth. The recent launch of our Verisk Climate division is a great example of how we can combine deep vertical knowledge and capabilities across our teams to create new solutions for our customers,” concluded Stephenson.

 

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

 

Three Months Ended

 

 

 

 

Nine Months Ended

 

 

 

 

September 30,

 

 

 

 

September 30,

 

 

 

 

2013

 

 

2012

 

 

Change

 

2013

 

 

2012

 

 

Change

Revenues

$

438,597

 

 

    $

398,863

 

 

10.0

%

 

$

1,263,240

 

 

    $

1,118,590

 

 

12.9

%

EBITDA

$

202,915

 

 

    $

182,905

 

 

10.9

%

 

$

568,254

 

 

    $

506,337

 

 

12.2

%

Net income

$

96,441

 

 

    $

82,911

 

 

16.3

%

 

$

261,157

 

 

    $

230,843

 

 

13.1

%

Adjusted net income

$

105,984

 

 

    $

92,177

 

 

15.0

%

 

$

292,031

 

 

    $

252,573

 

 

15.6

%

Diluted GAAP EPS

$

0.56

 

 

    $

0.48

 

 

16.7

%

 

$

1.51

 

 

    $

1.34

 

 

12.7

%

Diluted adjusted EPS

$

0.62

 

 

    $

0.54

 

 

14.8

%

 

$

1.69

 

 

    $

1.47

 

 

15.0

%

 

Revenue

Revenue grew 10.0% for the quarter ended September 30, 2013. Excluding the effect of recent acquisitions (Argus Information & Advisory Services), revenue grew 6.1% in the third 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 third-quarter 2013, Decision Analytics revenue represented approximately 64.6% of total revenue.

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

 

Three Months Ended

 

 

 

 

Nine Months Ended

 

 

 

 

September 30,

 

 

 

 

September 30,

 

 

 

 

2013

 

 

2012

 

 

Change

 

2013

 

 

2012

 

 

Change

Insurance

$

140,771

 

 

    $

126,301

 

 

11.5

%

 

$

401,105

 

 

    $

364,847

 

 

9.9

%

Financial services

 

48,049

 

 

 

37,960

 

 

26.6

%

 

 

142,486

 

 

 

107,534

 

 

32.5

%

Healthcare

 

73,612

 

 

 

69,324

 

 

6.2

%

 

 

193,748

 

 

 

150,153

 

 

29.0

%

Specialized markets

 

21,110

 

 

 

21,411

 

 

(1.4

)%

 

 

63,974

 

 

 

63,031

 

 

1.5

%

Total Decision Analytics

$

283,542

 

 

    $

254,996

 

 

11.2

%

 

$

801,313

 

 

    $

685,565

 

 

16.9

%


Within the Decision Analytics segment, revenue grew 11.2% for third-quarter 2013, and growth excluding recent acquisitions was 5.2%. Growth in the quarter was driven by acceleration from the insurance revenue category. Healthcare growth, while slower than in recent quarters, contributed to third-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 11.5% for the third-quarter of 2013, all organic. The increase was driven by strong growth in underwriting and catastrophe modeling solutions. Insurance fraud claims and loss quantification solutions also added to revenue growth. Overall growth was driven by the increased adoption of existing and new solutions and annual invoice increases for certain solutions.

In the financial services category, revenue increased 26.6% in third-quarter 2013 but declined 16.6% 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 and modest declines in underwriting and appraisal solutions. Beginning in fourth-quarter 2013, Argus will be included in organic revenue growth.

In the healthcare category, revenue in the third quarter grew 6.2%. Revenue growth reflected continued expansion of solutions sold to existing customers as well as the addition of new customers, partially offset by the near-term impact of lower volumes from certain customers.

In the specialized markets category, revenue declined 1.4% in third-quarter 2013. The performance of weather and climate analytics and environmental health and safety solutions was affected by lower customer activity.

 

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

 

Three Months Ended

 

 

 

 

Nine Months Ended

 

 

 

 

September 30,

 

 

 

 

September 30,

 

 

 

 

2013

 

 

2012

 

 

Change

 

2013

 

 

2012

 

 

Change

Industry-standard insurance programs

$

118,234

 

 

    $

112,452

 

 

5.1

%

 

$

351,973

 

 

    $

336,594

 

 

4.6

%

Property-specific rating and underwriting information

 

36,821

 

 

 

31,415

 

 

17.2

%

 

 

109,954

 

 

 

96,431

 

 

14.0

%

Total Risk Assessment

$

155,055

 

 

    $

143,867

 

 

7.8

%

 

$

461,927

 

 

    $

433,025

 

 

6.7

%


Within the Risk Assessment segment, revenue grew 7.8% for the quarter. Revenue growth in industry-standard insurance programs was 5.1%, resulting primarily from the annual effect of growth in 2013 invoices effective from January 1.

Property-specific rating and underwriting information revenue grew 17.2% in the third quarter. Growth was due to new sales resulting in higher committed volumes, project revenue from certain customers, and 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 12.7% in third-quarter 2013 and 7.7% excluding recent acquisitions compared with third-quarter 2012. The year-over-year increase relates primarily to additional investments in people, data, and technology, especially in Decision Analytics in support of the growth of the business.

For third-quarter 2013, cost of revenue increased 11.5% for Risk Assessment and increased 13.1% for Decision Analytics (6.1% 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, increased 1.1% in third-quarter 2013 and increased 1.2% excluding recent acquisitions. The increase relates primarily to higher headcount in Decision Analytics in support of the growth of the business.

In third-quarter 2013, SG&A decreased 0.5% for Risk Assessment. SG&A grew 1.9% for Decision Analytics (2.1% excluding recent acquisitions).

EBITDA

For third-quarter 2013, consolidated EBITDA grew 10.9% to $202.9 million, with a consolidated EBITDA margin of 46.3%.

Table 3: Segment EBITDA
(in thousands)

 

Three Months Ended

 

 

 

 

Nine Months Ended

 

 

 

 

September 30,

 

 

 

 

September 30,

 

 

 

 

2013

 

 

2012

 

 

Change

 

2013

 

 

2012

 

 

Change

Decision Analytics

$

117,498

 

 

    $

104,316

 

 

12.6

%

 

$

310,429

 

 

    $

271,279

 

 

14.4

%

EBITDA margin

 

41.4

%

 

 

40.9

%

 

 

 

 

38.7

%

 

 

39.6

%

 

 

Risk Assessment

$

85,417

 

 

    $

78,589

 

 

8.7

%

 

$

257,825

 

 

    $

235,058

 

 

9.7

%

EBITDA margin

 

55.1

%

 

 

54.6

%

 

 

 

 

55.8

%

 

 

54.3

%

 

 

Total EBITDA

$

202,915

 

 

    $

182,905

 

 

10.9

%

 

$

568,254

 

 

    $

506,337

 

 

12.2

%

EBITDA margin

 

46.3

%

 

 

45.9

%

 

 

 

 

45.0

%

 

 

45.3

%

 

 

 

Decision Analytics EBITDA grew 12.6% in third-quarter 2013 and Risk Assessment EBITDA grew 8.7% versus the same period in the previous year, as shown in Table 3.

The third-quarter 2013 EBITDA margin in Risk Assessment increased to 55.1% from 54.6% in third-quarter 2012 as a result of the previously discussed revenue growth and good expense management.

The third-quarter 2013 EBITDA margin for Decision Analytics increased to 41.4% from 40.9% in third-quarter 2012, as a result of the previously discussed revenue growth and good expense management, even as we invest in innovation to drive future growth.

Net Income and Adjusted Net Income

Net income increased 16.3% in third-quarter 2013, driven by growth in the business and a lower tax rate, partially offset by increased interest expense and depreciation and amortization. Adjusted net income grew 15.0% for third-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

 

 

 

 

Nine Months Ended

 

 

 

 

September 30,

 

 

 

 

September 30,

 

 

 

 

2013

 

 

2012

 

 

Change

 

2013

 

 

2012

 

 

Change

Net Income

$

96,441

 

 

    $

82,911

 

 

16.3

%

 

$

261,157

 

 

    $

230,843

 

 

13.1

%

plus:  Amortization of intangibles

 

15,393

 

 

 

15,442

 

 

 

 

 

49,796

 

 

 

36,216

 

 

 

less:  Income tax effect on amortization of intangibles

 

(5,850

)

 

 

(6,176

)

 

 

 

 

(18,922

)

 

 

(14,486

)

 

 

Adjusted net income

$

105,984

 

 

    $

92,177

 

 

15.0

%

 

$

292,031

 

 

    $

252,573

 

 

15.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic adjusted EPS

$

0.63

 

 

    $

0.56

 

 

12.5

%

 

$

1.74

 

 

    $

1.53

 

 

13.7

%

Diluted adjusted EPS

$

0.62

 

 

    $

0.54

 

 

14.8

%

 

$

1.69

 

 

    $

1.47

 

 

15.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

168,044,100

 

 

 

165,978,080

 

 

 

 

 

168,089,919

 

 

 

165,587,027

 

 

 

Diluted

 

172,154,553

 

 

 

171,660,543

 

 

 

 

 

172,460,960

 

 

 

171,637,571

 

 

 



Net Cash Provided by Operating Activities and Capital Expenditures

Net cash provided by operating activities was $386.5 million, an increase of $65.5 million, or 20.4%, for the nine-month period ended September 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 nine-month period ended September 30, 2013, was 12.9%.

The increase in cash provided by operating activities was the result of a $61.3 million increase generated by improved profitability of the business, a $9.5 million decrease in working capital, and $89.0 million from pension and post-retirement benefits, including the voluntary pension contribution in 2012. This was partially offset by a $16.6 million increase in interest paid due to higher debt levels and an increase of $77.8 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 $114.9 million in the nine months ended September 30, 2013, an increase of $58.0 million over the same period in 2012. Capital expenditures were 9.1% of revenue for the nine months ended September 30, 2013. Net cash provided by operating activities less capital expenditures represented 47.8% of EBITDA in the first nine 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 decreased 3.1% to $307.7 million, representing 54.1% of EBITDA for the first nine months of 2013.

Share Repurchases

The company continued to balance its internal investment and acquisition initiatives with share repurchases. In third-quarter 2013, the company repurchased shares for a total cost of $24.4 million at an average price of $64.09. At September 30, 2013, the company had $282.1 million remaining under its share repurchase authorization.

Conference Call

Verisk’s management team will host a live audio webcast on Wednesday, November 6, 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 512-961-6560 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 # 72851252.

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

 

 

 

 

Nine Months Ended

 

 

 

 

September 30,

 

 

 

 

September 30,

 

 

 

 

2013

 

 

2012

 

 

Change

 

2013

 

 

2012

 

 

Change

Net income

$

96,441

 

 

    $

82,911

 

 

16.3

%

 

$

261,157

 

 

    $

230,843

 

 

13.1

%

Depreciation and amortization of fixed and intangible assets

 

33,097

 

 

 

28,156

 

 

17.5

%

 

 

99,525

 

 

 

73,664

 

 

35.1

%

Interest expense

 

18,692

 

 

 

18,133

 

 

3.1

%

 

 

58,486

 

 

 

51,895

 

 

12.7

%

Provision for income taxes

 

54,685

 

 

 

53,705

 

 

1.8

%

 

 

149,086

 

 

 

149,935

 

 

(0.6

)%

EBITDA

$

202,915

 

 

    $

182,905

 

 

10.9

%

 

$

568,254

 

 

    $

506,337

 

 

12.2

%


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 securities analysts, lenders, and others frequently use EBITDA 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 September 30, 2013 (Unaudited) and December 31, 2012

 

2013

 

2012

 

(unaudited)

 

 

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

 

 

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

180,203

 

 

$

89,819

 

Available-for-sale securities

4,514

 

 

4,883

 

Accounts receivable, net of allowance for doubtful accounts of $5,389 and $4,753, respectively

167,767

 

 

178,430

 

Prepaid expenses

25,986

 

 

21,946

 

Deferred income taxes, net

11,960

 

 

10,397

 

Income taxes receivable

42,191

 

 

45,975

 

Other current assets

28,709

 

 

39,109

 

Total current assets

461,330

 

 

390,559

 

Noncurrent assets:

 

 

 

Fixed assets, net

219,116

 

 

154,084

 

Intangible assets, net

471,139

 

 

520,935

 

Goodwill

1,250,888

 

 

1,247,459

 

Other assets

27,399

 

 

47,299

 

Total assets

$

2,429,872

 

 

$

2,360,336

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued liabilities

$

171,285

 

 

$

187,648

 

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

39,459

 

 

195,263

 

Pension and postretirement benefits, current

1,734

 

 

1,734

 

Fees received in advance

244,160

 

 

200,705

 

Total current liabilities

456,638

 

 

585,350

 

Noncurrent liabilities:

 

 

 

Long-term debt

1,271,170

 

 

1,266,162

 

Pension benefits

28,534

 

 

38,655

 

Postretirement benefits

1,922

 

 

2,627

 

Deferred income taxes, net

143,432

 

 

133,761

 

Other liabilities

45,174

 

 

78,190

 

Total liabilities

1,946,870

 

 

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 168,220,591 and 167,727,073 outstanding, respectively

137

 

 

137

 

Unearned KSOP contributions

(371

)

 

(483

)

Additional paid-in capital

1,156,175

 

 

1,044,746

 

Treasury stock, at cost, 375,782,447 and 376,275,965 shares, respectively

(1,753,231

)

 

(1,605,376

)

Retained earnings

1,166,884

 

 

905,727

 

Accumulated other comprehensive losses

(86,592

)

 

(89,160

)

Total stockholders’ equity

483,002

 

 

255,591

 

Total liabilities and stockholders’ equity

$

2,429,872

 

 

$

2,360,336

 

 

 

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

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2013

 

2012

 

2013

 

2012

 

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

Revenues

$

438,597

 

 

$

398,863

 

 

$

1,263,240

 

 

$

1,118,590

 

Expenses:

 

 

 

 

 

 

 

Cost of revenues (exclusive of items
   shown separately below)

176,580

 

 

156,749

 

 

515,692

 

 

437,153

 

Selling, general and administrative

59,330

 

 

58,707

 

 

179,510

 

 

175,159

 

Depreciation and amortization of fixed
   assets

17,704

 

 

12,714

 

 

49,729

 

 

37,448

 

Amortization of intangible assets

15,393

 

 

15,442

 

 

49,796

 

 

36,216

 

Total expenses

269,007

 

 

243,612

 

 

794,727

 

 

685,976

 

Operating income

169,590

 

 

155,251

 

 

468,513

 

 

432,614

 

Other income (expense):

 

 

 

 

 

 

 

Interest expense

(18,692

)

 

(18,133

)

 

(58,486

)

 

(51,895

)

Investment income

227

 

 

136

 

 

315

 

 

397

 

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

1

 

 

(638

)

 

(99

)

 

(338

)

Total other expense, net

(18,464

)

 

(18,635

)

 

(58,270

)

 

(51,836

)

Income before income taxes

151,126

 

 

136,616

 

 

410,243

 

 

380,778

 

Provision for income taxes

(54,685

)

 

(53,705

)

 

(149,086

)

 

(149,935

)

Net income

$

96,441

 

 

$

82,911

 

 

$

261,157

 

 

$

230,843

 

Basic net income per share

$

0.57

 

 

$

0.50

 

 

$

1.55

 

 

$

1.39

 

Diluted net income per share

$

0.56

 

 

$

0.48

 

 

$

1.51

 

 

$

1.34

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

168,044,100

 

 

165,978,080

 

 

168,089,919

 

 

165,587,027

 

Diluted

172,154,553

 

 

171,660,543

 

 

172,460,960

 

 

171,637,571

 

 

 

VERISK ANALYTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

For the Nine Months Ended September 30, 2013 and 2012

 

2013

 

2012

(In thousands)

 

 

 

Cash flows from operating activities:

 

 

 

Net income

$

261,157

 

 

$

230,843

 

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

 

 

 

Depreciation and amortization of fixed assets

49,729

 

 

37,448

 

Amortization of intangible assets

49,796

 

 

36,216

 

Amortization of debt issuance costs and original issue discount

2,048

 

 

1,649

 

Allowance for doubtful accounts

1,188

 

 

576

 

KSOP compensation expense

11,174

 

 

9,481

 

Stock based compensation

16,745

 

 

19,303

 

Realized loss on available-for-sale securities, net

99

 

 

338

 

Deferred income taxes

5,888

 

 

(526

)

Loss on disposal of fixed assets

476

 

 

88

 

Excess tax benefits from exercised stock options

(81,689

)

 

(55,056

)

Other operating activities, net

448

 

 

215

 

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

 

 

 

Accounts receivable

9,475

 

 

(3,026

)

Prepaid expenses and other assets

(4,727

)

 

7,126

 

Income taxes

48,554

 

 

99,508

 

Accounts payable and accrued liabilities

12,267

 

 

3,168

 

Fees received in advance

43,372

 

 

39,588

 

Pension and postretirement benefits

(6,532

)

 

(97,809

)

Other liabilities

(33,016

)

 

(8,133

)

Net cash provided by operating activities

386,452

 

 

320,997

 

Cash flows from investing activities:

 

 

 

Acquisitions, net of cash acquired of $0 and $36,113, respectively

(983

)

 

(743,091

)

Purchase of non-controlling interest in non-public companies

 

 

(2,000

)

Earnout payments

 

 

(250

)

Proceeds from release of acquisition related escrows

280

 

 

 

Escrow funding associated with acquisitions

 

 

(37,800

)

Purchases of fixed assets

(107,915

)

 

(55,724

)

Purchases of available-for-sale securities

(5,003

)

 

(1,317

)

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

5,825

 

 

1,478

 

Other investing activities, net

439

 

 

 

Net cash used in investing activities

(107,357

)

 

(838,704

)

Cash flows from financing activities:

 

 

 

Proceeds from issuance of long-term debt, net of original issue discount

 

 

347,224

 

Repayment of current portion of long-term debt

(145,000

)

 

 

Repayment of short-term debt refinanced on a long-term basis

 

 

(347,224

)

(Repayment) proceeds of short-term debt, net

(10,000

)

 

462,224

 

Payment of debt issuance costs

 

 

(3,623

)

Excess tax benefits from exercised stock options

81,689

 

 

55,056

 

Repurchase of common stock

(160,970

)

 

(128,073

)

Proceeds from stock options exercised

51,326

 

 

43,571

 

Other financing activities, net

(5,350

)

 

(5,151

)

Net cash (used in) provided by financing activities

(188,305

)

 

424,004

 

Effect of exchange rate changes

(406

)

 

(130

)

Increase (decrease) in cash and cash equivalents

90,384

 

 

(93,833

)

Cash and cash equivalents, beginning of period

89,819

 

 

191,603

 

Cash and cash equivalents, end of period

$

180,203

 

 

$

97,770

 

Supplemental disclosures:

 

 

 

Taxes paid

$

102,203

 

 

$

51,017

 

Interest paid

$

58,018

 

 

$

41,431

 

Noncash investing and financing activities:

 

 

 

Repurchase of common stock included in accounts payable and accrued liabilities

$

2,622

 

 

$

953

 

Deferred tax liability established on date of acquisition

$

(1,187

)

 

$

(78,832

)

Capital lease obligations

$

9,014

 

 

$

3,544

 

Capital expenditures included in accounts payable and accrued liabilities

$

2,890

 

 

$

998

 

Increase in goodwill due to acquisition related escrow distributions

$

 

 

$

4,128