EX-99.1 2 ex991q32016pressrelease.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1
Verisk Analytics, Inc., Reports Third-Quarter 2016 Financial Results
•
Revenue from continuing operations grew 5.9%; organic constant currency revenue growth from continuing operations was 6.2%.
•
Income from continuing operations increased 2.7% to $128 million; adjusted EBITDA from continuing operations decreased 0.6% to $253 million; excluding the 2015 $15.6 million gain on sale of warrants, adjusted EBITDA grew 5.9%.
•
Diluted GAAP earnings per share (GAAP EPS) from continuing operations increased 1.4% to $0.74; diluted adjusted earnings per share (adjusted EPS) from continuing operations increased 7.7% to $0.84.
•
Net cash provided by operating activities was $464 million year-to-date. Free cash flow from continuing operations, adjusted for $75 million of taxes paid related to the sale of the healthcare business, was $429 million year-to-date, an increase of 12.8%.
•
Repurchases of Verisk common stock were $73 million in third-quarter 2016. As of September 30, 2016, the company had $280 million remaining under its share repurchase authorization.
JERSEY CITY, N.J., November 1, 2016 — Verisk Analytics, Inc. (Nasdaq:VRSK), a leading data analytics provider, today announced results for the quarter ended September 30, 2016.
Scott Stephenson, chairman, president, and CEO, said, "Our third-quarter results once again included solid revenue growth and strong margins as we continue to deliver outstanding data analytics solutions for our customers across our key verticals of insurance, natural resources, and financial services. While reported revenue growth from continuing operations was 5.9%, combined insurance and financial services revenue growth of 7.7% is consistent with our historical, corporate, organic performance. In addition, we were pleased to resume returning capital to our shareholders, even as we invest in the business to drive future growth."
Table 1: Summary of Results
(in millions, except per share amounts)

 
Three Months Ended



Nine Months Ended
 
 
 
September 30,
 
 
 
September 30,
 
 
 
2016
 
2015
 
Change
 
2016
 
2015
 
Change
Revenues from continuing operations
$
498.1

 
$
470.4

 
5.9
 %
 
$
1,489.1

 
$
1,283.3

 
16.0
 %
Income from continuing operations
$
127.6

 
$
124.2

 
2.7
 %
 
$
344.0

 
$
379.5

 
(9.3
)%
Adjusted EBITDA from continuing operations
$
253.3

 
$
254.8

 
(0.6
)%
 
$
746.9

 
$
673.0

 
11.0
 %
Adjusted net income from continuing operations
$
144.4

 
$
133.5

 
8.1
 %
 
$
396.1

 
$
354.5

 
11.7
 %
Diluted GAAP EPS from continuing operations
$
0.74

 
$
0.73

 
1.4
 %
 
$
2.01

 
$
2.27

 
(11.5
)%
Diluted adjusted EPS from continuing operations
$
0.84

 
$
0.78

 
7.7
 %
 
$
2.31

 
$
2.12

 
9.0
 %
Revenue
Total revenue from continuing operations increased 5.9% in third-quarter 2016 compared with third-quarter 2015. Organic constant currency revenue growth from continuing operations was 6.2%. Financial services led the organic revenue growth in the quarter.
Decision Analytics segment revenue from continuing operations grew 6.2% in the third quarter of 2016. Decision Analytics organic constant currency revenue growth from continuing operations was 6.9%.
•
Insurance category revenue increased 7.4%, with solid growth in underwriting, claims analytics, and catastrophe modeling solutions. Loss quantification solutions also contributed to the growth in the quarter.

1


•
Financial services category revenue increased 24.5% in the quarter, led by growth in analytical solutions and media effectiveness.
•
Energy and specialized markets category revenue declined 0.1%. Organic revenue, excluding the PCI, Infield, Greentech Media, and Quest Offshore businesses, declined 4.9%, primarily as a result of continuing end-market and currency headwinds affecting the energy business.
Table 2: Decision Analytics Revenues by Category
(in millions)

 
Three Months Ended



Nine Months Ended
 
 
 
September 30,
 
 
 
September 30,
 
 
 
2016
 
2015
 
Change
 
2016
 
2015
 
Change
Insurance
$
174.4

 
$
162.4

 
7.4
 %
 
$
521.4

 
$
481.4

 
8.3
%
Financial services
 
33.8

 
 
27.0

 
24.5
 %
 
 
92.8

 
 
88.6

 
4.7
%
Energy and specialized markets
 
109.1

 
 
109.2

 
(0.1
)%
 
 
333.2

 
 
198.9

 
67.5
%
Total Decision Analytics
$
317.3

 
$
298.6

 
6.2
 %
 
$
947.4

 
$
768.9

 
23.2
%
Risk Assessment segment revenue grew 5.3% in the quarter and 5.0% excluding the recent acquisition of Risk Intelligence Ireland.
•
Revenue growth in industry-standard insurance programs was 5.4%, and 5.1% on an organic basis, resulting primarily from the annual effect of growth in 2016 invoicing effective from January 1 and growth from new solutions.
•
Property-specific rating and underwriting information revenue grew 4.8% in the third quarter. Growth was led by an increase in commercial underwriting solutions subscription revenue.
Table 3: Risk Assessment Revenues by Category
(in millions)
 
Three Months Ended



Nine Months Ended
 
 
 
September 30,
 
 
 
September 30,
 
 
 
2016
 
2015
 
Change
 
2016
 
2015
 
Change
Industry-standard insurance programs
$
138.2

 
$
131.2

 
5.4
%
 
$
414.2

 
$
392.5

 
5.5
%
Property-specific rating and underwriting information
 
42.6

 
 
40.6

 
4.8
%
 
 
127.5

 
 
121.9

 
4.5
%
Total Risk Assessment
$
180.8

 
$
171.8

 
5.3
%
 
$
541.7

 
$
514.4

 
5.3
%
Expenses and Income
Cost of revenues from continuing operations increased 4.2% compared with third-quarter 2015. The year-over-year increase was primarily due to salaries, benefits, and technology to support business growth.
Selling, general, and administrative expense, or SG&A, from continuing operations increased 10.2% in the quarter due to acquisition-related costs and other expenses related to supporting business growth.
Income from continuing operations increased 2.7% to $128 million. Adjusted EBITDA from continuing operations decreased 0.6% to $253 million. Excluding the third quarter 2015 $15.6 million gain on sale of warrants, included in investment income and others, net, growth was 5.9%.
•
The 3.7% decrease to $147 million in Decision Analytics adjusted EBITDA from continuing operations was the result of the non-recurring gain on sale of warrants in the prior period, which was partially offset by profitable growth of the business in the current period.     
•
Third-quarter 2016 adjusted EBITDA in Risk Assessment increased 4.0% to $106 million as a result of revenue growth and good expense management, partially offset by recent increases in hiring related to the previously

2


announced talent realignment.
Table 4: Segment Results Summary and Adjusted EBITDA Reconciliation
(in millions)

 
Three Months Ended

Three Months Ended
 
 
 
 
 
 

September 30, 2016

September 30, 2015
 
Change
 
DA

RA

Total

DA

RA

Total

DA

RA

Total
Revenues
$
317.3

 
$
180.8

 
$
498.1

 
$
298.6

 
$
171.8

 
$
470.4

 
6.2
 %
 
5.3
 %
 
5.9
 %
Cost of revenues
 
(117.6
)
 
 
(52.1
)
 
 
(169.7
)
 
 
(114.6
)
 
 
(48.3
)
 
 
(162.9
)
 
2.6
 %
 
7.9
 %
 
4.2
 %
SG&A
 
(55.4
)
 
 
(22.4
)
 
 
(77.8
)
 
 
(49.3
)
 
 
(21.3
)
 
 
(70.6
)
 
12.1
 %
 
5.5
 %
 
10.2
 %
Depreciation and amortization of fixed and intangible assets
 
(45.1
)
 
 
(7.1
)
 
 
(52.2
)
 
 
(32.9
)
 
 
(6.8
)
 
 
(39.7
)
 
37.0
 %

3.8
 %

31.3
 %
Investment income and others, net
 
0.6

 
 
1.5

 
 
2.1

 
 
17.9

 
 
—

 
 
17.9

 
(96.7
)%
 
100.0
 %
 
(88.1
)%
Interest expense
 
NA
 
 
NA
 
 
(28.1
)
 
 
NA
 
 
NA
 
 
(33.0
)
 
NA
 
NA
 
(14.7
)%
Provision for income tax
 
NA
 
 
NA
 
 
(44.8
)
 
 
NA
 
 
NA
 
 
(57.9
)
 
NA
 
NA
 
(22.5
)%
Income from continuing operations
 
NA
 
 
NA
 
 
127.6

 
 
NA
 
 
NA
 
 
124.2

 
NA
 
NA
 
2.7
 %
plus: Interest expense
 
NA
 
 
NA
 
 
28.1

 
 
NA
 
 
NA
 
 
33.0

 
NA
 
NA
 
(14.7
)%
plus: Provision for income tax
 
NA
 
 
NA
 
 
44.8

 
 
NA
 
 
NA
 
 
57.9

 
NA
 
NA
 
(22.5
)%
plus: Depreciation and amortization
 
45.1

 
 
7.1

 
 
52.2

 
 
32.9

 
 
6.8

 
 
39.7

 
37.0
 %
 
3.8
 %
 
31.3
 %
plus: Nonrecurring severance charges

2.1



—



2.1



—



—



—


100.0
 %

—
 %

100.0
 %
minus: Gain on sale of equity investments

—



(1.5
)


(1.5
)


—



—



—


—
 %

(100.0
)%

(100.0
)%
Adjusted EBITDA from continuing operations
$
147.0

 
$
106.3

 
$
253.3

 
$
152.6

 
$
102.2

 
$
254.8

 
(3.7
)%
 
4.0
 %
 
(0.6
)%

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations margin
 
NA
 
 
NA
 
 
25.6
%
 
 
NA
 
 
NA
 
 
26.4
%
 
 
 
 
 
 
Adjusted EBITDA from continuing operations margin
 
46.3
%
 
 
58.8
%
 
 
50.9
%
 
 
51.1
%
 
 
59.5
%
 
 
54.2
%
 


 


 




3


 
Nine Months Ended
 
Nine Months Ended
 
 
 
September 30, 2016

September 30, 2015
 
Change
 
DA

RA

Total

DA

RA

Total

DA

RA

Total
Revenues
$
947.4

 
$
541.7

 
$
1,489.1

 
$
768.9

 
$
514.4

 
$
1,283.3

 
23.2
 %
 
5.3
 %
 
16.0
 %
Cost of revenues
 
(362.6
)
 
 
(158.8
)
 
 
(521.4
)
 
 
(301.7
)
 
 
(149.6
)
 
 
(451.3
)
 
20.2
 %
 
6.1
 %
 
15.5
 %
SG&A
 
(161.8
)
 
 
(62.6
)
 
 
(224.4
)
 
 
(142.5
)
 
 
(60.2
)
 
 
(202.7
)
 
13.5
 %
 
4.0
 %
 
10.7
 %
Depreciation and amortization of fixed and intangible assets
 
(139.9
)
 
 
(21.2
)
 
 
(161.1
)
 
 
(92.8
)
 
 
(19.3
)
 
 
(112.1
)
 
50.7
 %
 
9.8
 %
 
43.7
 %
Investment income and others, net
 
1.6

 
 
1.4

 
 
3.0

 
 
17.0

 
 
0.1

 
 
17.1

 
(90.7
)%
 
735.4
 %
 
(82.4
)%
Interest expense
 
NA
 
 
NA
 
 
(91.7
)
 
 
NA
 
 
NA
 
 
(88.9
)
 
NA
 
NA
 
3.0
 %
Provision for income tax
 
NA
 
 
NA
 
 
(149.5
)
 
 
NA
 
 
NA
 
 
(151.1
)
 
NA
 
NA
 
(1.0
)%
Gain on derivative
 
—

 
 
—

 
 
—

 
 
85.2

 
 
—

 
 
85.2

 
(100.0
)%
 
—
 %
 
(100.0
)%
Income from continuing operations
 
NA
 
 
NA
 
 
344.0

 
 
NA
 
 
NA
 
 
379.5

 
NA
 
NA
 
(9.3
)%
plus: Interest expense
 
NA
 
 
NA
 
 
91.7

 
 
NA
 
 
NA
 
 
88.9

 
NA
 
NA
 
3.0
 %
plus: Provision for income tax
 
NA
 
 
NA
 
 
149.5

 
 
NA
 
 
NA
 
 
151.1

 
NA
 
NA
 
(1.0
)%
plus: Depreciation and amortization
 
139.9

 
 
21.2

 
 
161.1

 
 
92.8

 
 
19.3

 
 
112.1

 
50.7
 %
 
9.8
 %
 
43.7
 %
plus: Nonrecurring severance charges

2.1



—



2.1



—



—



—


100.0
 %

—
 %

100.0
 %
minus: Gain on sale of equity investments

—



(1.5
)


(1.5
)


—



—



—


—
 %

(100.0
)%

(100.0
)%
minus: Nonrecurring items related to the Wood Mackenzie acquisition
 
—

 
 
—

 
 
—

 
 
(58.6
)
 
 
—

 
 
(58.6
)
 
(100.0
)%
 
—
 %
 
(100.0
)%
Adjusted EBITDA from continuing operations
$
426.7

 
$
320.2

 
$
746.9

 
$
368.3

 
$
304.7

 
$
673.0

 
15.8
 %
 
5.1
 %
 
11.0
 %

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations margin
 
NA
 
 
NA
 
 
23.1
%
 
 
NA
 
 
NA
 
 
29.6
%
 
 
 
 
 
 
Adjusted EBITDA from continuing operations margin
 
45.0
%
 
 
59.1
%
 
 
50.2
%
 
 
47.9
%
 
 
59.2
%
 
 
52.4
%
 
 
 
 
 
 
Earnings Per Share
Diluted GAAP EPS from continuing operations was $0.74 for third-quarter 2016, an increase of 1.4%; the prior period included a $15.6 million gain on sale of warrants. Diluted adjusted EPS was $0.84 for third-quarter 2016, an increase of 7.7% compared with the same period in 2015. Adjusted EPS from continuing operations increased because of solid operations, lower interest expense, and a lower tax rate. The increases were partially offset by depreciation and amortization expense and the prior period gain on sale of warrants that did not recur in 2016.
Cash Flow
Net cash provided by operating activities was $464 million for the nine months ended September 30, 2016. Capital expenditures from continuing operations increased 0.8% to $88 million and were 5.9% of revenues for the nine months ended September 30, 2016. Free cash flow from continuing operations, excluding $75 million of taxes paid related to the sale of the healthcare business, was $429 million year-to-date, an increase of 12.8%.
Free cash flow from continuing operations represented 103.0% of income from continuing operations and 47.4% of adjusted EBITDA from continuing operations for the nine months ended September 30, 2016.
Share Repurchases and Financing Activities
The company repurchased 0.9 million shares for a total cost of $73 million in the quarter. At September 30, 2016, the company had $280 million remaining under its share repurchase authorization.

4


Conference Call
Verisk’s management team will host a live audio webcast on Wednesday, November 2, 2016, at 8:30 a.m. EDT (5:30 a.m. PDT, 12:30 p.m. GMT) 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 #1363417.
About Verisk Analytics
Verisk Analytics (Nasdaq:VRSK) is a leading data analytics provider serving customers in insurance, natural resources, and financial services. Using advanced technologies to collect and analyze billions of records, Verisk Analytics draws on unique data assets and deep domain expertise to provide first-to-market innovations that are integrated into customer workflows. Verisk offers predictive analytics and decision support solutions to customers in rating, underwriting, claims, catastrophe and weather risk, global risk analytics, natural resources intelligence, economic forecasting, and many other fields. Around the world, Verisk Analytics helps customers protect people, property, and financial assets.

Headquartered in Jersey City, N.J., Verisk Analytics operates in 23 countries and is a member of Standard & Poor’s S&P 500® Index. In 2016, Forbes magazine named Verisk Analytics to its World’s Most Innovative Companies list and to its America’s Best Large Employers list. Verisk is one of only 14 companies to appear on both lists. For more information, please visit www.verisk.com.
Contact:

Investor Relations
David Cohen
Director, Investor Relations and Strategic Finance
Verisk Analytics, Inc.
201-469-2174
david.e.cohen@verisk.com
Media
Rich Tauberman
MWW Group (for Verisk Analytics)
202-600-4546
rtauberman@mww.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.

5


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 organic constant currency revenue, adjusted EBITDA, adjusted EBITDA margin, adjusted net income from continuing operations, adjusted EPS, and free cash flow, 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.
Our operating results reported in U.S. dollars are affected by foreign currency exchange rate fluctuations because the underlying foreign currencies in which we transact change in value over time compared to the U.S. dollar; accordingly, we present certain constant currency financial information to provide a framework to assess how our businesses performed excluding the impact of foreign currency exchange rate fluctuations. We use the term “constant currency” to present results that have been adjusted to exclude foreign currency impact. Foreign currency impact represents the difference in results that are attributable to fluctuations in the currency exchange rates used to convert the results for businesses where the functional currency is not the U.S. dollar. This impact is calculated by translating comparable prior period year results at the currency exchange rates used in the current period, rather than the exchange rates in effect during the prior period.
Adjusted 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 “adjusted EBITDA” as net income from continuing operations before interest expense, provision for income taxes, and depreciation and amortization expense, non-recurring severance charges, gain on sale of equity investments, and excluding second-quarter 2015 nonrecurring items related to the Wood Mackenzie acquisition.
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 adjusted 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:
•
Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments.
•
Adjusted EBITDA does not reflect changes in, or cash requirements 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 adjusted EBITDA does not reflect any cash requirements for such replacements.

6


•
Other companies in our industry may calculate adjusted EBITDA differently than we do, limiting the usefulness of their calculations as comparative measures.
See Table 4, above, for a reconciliation of adjusted EBITDA to income from continuing operations, Table 5 for a reconciliation of adjusted net income to income from continuing operations, and Table 6 for a reconciliation of free cash flow from continuing operations to net cash provided by operating activities.


Table 5: Adjusted Net Income from Continuing Operations Reconciliation
(in millions, except per share amounts)
 
Three Months Ended



Nine Months Ended
 
 
 
September 30,
 
 
 
September 30,
 
 
 
2016
 
2015
 
Change
 
2016
 
2015
 
Change
Income from continuing operations
$
127.6

 
$
124.2

 
2.7
%
 
$
344.0

 
$
379.5

 
(9.3
)%
plus: Amortization of intangible assets
 
22.7

 
 
12.6

 
 
 
 
70.4

 
 
43.0

 
 
less: Income tax effect on amortization of intangible assets
 
(5.9
)
 
 
(3.3
)
 
 
 
 
(18.3
)
 
 
(12.1
)
 
 
less: Nonrecurring items related to the Wood Mackenzie acquisition
 
—

 
 
—

 
 
 
 
—

 
 
(45.2
)
 
 
less: Income tax effect on one-time items related to the Wood Mackenzie acquisition
 
—

 
 
—

 
 
 
 
—

 
 
(10.7
)
 
 
Adjusted net income from continuing operations
$
144.4

 
$
133.5

 
8.1
%
 
$
396.1

 
$
354.5

 
11.7
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic adjusted EPS from continuing operations
$
0.85

 
$
0.79

 
7.6
%
 
$
2.35

 
$
2.17

 
8.3
 %
Diluted adjusted EPS from continuing operations
$
0.84

 
$
0.78

 
7.7
%
 
$
2.31

 
$
2.12

 
9.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding (in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
168.9

 
 
168.7

 
 
 
 
168.5

 
 
163.7

 
 
Diluted
 
171.8

 
 
172.2

 
 
 
 
171.5

 
 
167.1

 
 
Table 6: Free Cash Flow Reconciliation
(in millions)

Nine Months Ended



September 30,



2016

2015

Change
Net cash provided by operating activities




$
463.7






$
520.0


(10.8
)%
less: Net cash provided by operating activities from discontinued operations





(21.4
)





(52.5
)

(59.2
)%
Capital expenditures
$
(98.6
)





$
(105.7
)





(6.8
)%
less: Capital expenditures from discontinued operations

10.6







18.5






(42.5
)%
less: Capital expenditures from continuing operations





(88.0
)






(87.2
)

0.8
 %
Free cash flow from continuing operations



$
354.3





$
380.3


(6.8
)%

Attached Financial Statements
Please refer to the full Form 10-Q filing for the complete financial statements and related notes.

7


VERISK ANALYTICS, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
As of September 30, 2016, and December 31, 2015
 
2016
 
2015
 
 
 
 
 
 
 
(In thousands, except for
share and per share data)
ASSETS
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
164,787

 
$
138,348

Available-for-sale securities
 
3,457

 
 
3,576

Accounts receivable, net of allowance for doubtful accounts of $3,119 and $2,642,
respectively
 
229,939

 
 
250,947

Prepaid expenses
 
28,616

 
 
34,126

Income taxes receivable
 
11,236

 
 
48,596

Other current assets
 
26,266

 
 
52,913

Current assets held-for-sale
 
—

 
 
76,063

Total current assets
 
464,301

 
 
604,569

Noncurrent assets:
 
 
 
 
 
Fixed assets, net
 
355,867

 
 
350,311

Intangible assets, net
 
1,069,089

 
 
1,245,083

Goodwill
 
2,632,178

 
 
2,753,026

Pension assets
 
42,524

 
 
32,922

Other assets
 
121,092

 
 
25,845

Noncurrent assets held-for-sale
 
—

 
 
581,896

Total assets
$
4,685,051

 
$
5,593,652

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
 
 
 
 
 
Accounts payable and accrued liabilities
$
192,301

 
$
222,112

Short-term debt and current portion of long-term debt
 
6,899

 
 
874,811

Pension and postretirement benefits, current
 
1,831

 
 
1,831

Deferred revenues
 
355,459

 
 
340,833

Current liabilities held-for-sale
 
—

 
 
39,670

Total current liabilities
 
556,490

 
 
1,479,257

Noncurrent liabilities:
 
 
 
 
 
Long-term debt
 
2,279,443

 
 
2,270,904

Pension benefits
 
12,526

 
 
12,971

Postretirement benefits
 
1,407

 
 
1,981

Deferred income taxes, net
 
305,694

 
 
329,175

Other liabilities
 
54,061

 
 
58,360

Noncurrent liabilities held-for-sale
 
—

 
 
68,993

Total liabilities
 
3,209,621

 
 
4,221,641

Commitments and contingencies
 
 
 
 
 
Stockholders’ equity:
 
 
 
 
 
Common stock, $.001 par value; 2,000,000,000 shares authorized; 544,003,038
shares issued and 168,340,643 and 169,424,981 shares outstanding, respectively
 
137

 
 
137

Additional paid-in capital
 
2,100,989

 
 
2,023,390

Treasury stock, at cost, 375,662,395 and 374,578,057 shares, respectively
 
(2,750,440
)
 
 
(2,571,190
)
Retained earnings
 
2,643,678

 
 
2,161,726

Accumulated other comprehensive losses
 
(518,934
)
 
 
(242,052
)
Total stockholders’ equity
 
1,475,430

 
 
1,372,011

Total liabilities and stockholders’ equity
$
4,685,051

 
$
5,593,652



8


VERISK ANALYTICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three and Nine Months Ended September 30, 2016 and 2015

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
 
 
 
(In thousands, except for share and per share data)
Revenues
$
498,081

 
$
470,408

 
$
1,489,077

 
$
1,283,300

Expenses:
 
 
 
 
 
 
 
 
 
 
 
Cost of revenues (exclusive of items shown
separately below)
 
169,665

 
 
162,874

 
 
521,408

 
 
451,298

Selling, general and administrative
 
77,814

 
 
70,642

 
 
224,408

 
 
202,692

Depreciation and amortization of fixed assets
 
29,501

 
 
27,105

 
 
90,776

 
 
69,169

Amortization of intangible assets
 
22,679

 
 
12,639

 
 
70,355

 
 
42,998

Total expenses
 
299,659

 
 
273,260

 
 
906,947

 
 
766,157

Operating income
 
198,422

 
 
197,148

 
 
582,130

 
 
517,143

Other income (expense):
 
 
 
 
 
 
 
 
 
 
 
Investment income and others, net
 
2,124

 
 
17,894

 
 
3,014

 
 
17,134

Gain on derivative instruments
 
—

 
 
—

 
 
—

 
 
85,187

Interest expense
 
(28,150
)
 
 
(33,003
)
 
 
(91,617
)
 
 
(88,927
)
Total other income (expense), net
 
(26,026
)
 
 
(15,109
)
 
 
(88,603
)
 
 
13,394

Income from continuing operations before income
taxes
 
172,396

 
 
182,039

 
 
493,527

 
 
530,537

Provision for income taxes
 
(44,819
)
 
 
(57,858
)
 
 
(149,484
)
 
 
(151,066
)
Income from continuing operations
 
127,577

 
 
124,181

 
 
344,043

 
 
379,471

Discontinued operations
 
 
 
 
 
 
 
 
 
 
 
Income from discontinued operations
 
—

 
 
11,750

 
 
256,525

 
 
23,770

Provision for income taxes from discontinued
operations
 
—

 
 
(4,117
)
 
 
(118,616
)
 
 
(9,421
)
Income from discontinued operations
 
—

 
 
7,633

 
 
137,909

 
 
14,349

Net income
$
127,577

 
$
131,814

 
$
481,952

 
$
393,820

Basic net income per share:
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations
$
0.76

 
$
0.74

 
$
2.04

 
$
2.32

Income from discontinued operations
 
—

 
 
0.04

 
 
0.82

 
 
0.09

Basic net income per share
$
0.76

 
$
0.78

 
$
2.86

 
$
2.41

Diluted net income per share:
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations
$
0.74

 
$
0.73

 
$
2.01

 
$
2.27

Income from discontinued operations
 
—

 
 
0.04

 
 
0.80

 
 
0.09

Diluted net income per share
$
0.74

 
$
0.77

 
$
2.81

 
$
2.36

Weighted average shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
Basic
 
168,874,129

 
 
168,739,437

 
 
168,541,399

 
 
163,656,387

Diluted
 
171,785,900

 
 
172,171,337

 
 
171,495,189

 
 
167,079,550








9


VERISK ANALYTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Nine Months Ended September 30, 2016 and 2015
 
2016
 
2015
 
 
 
(In thousands)
Cash flows from operating activities:
 
 
 
 
 
Net income
$
481,952

 
$
393,820

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
Depreciation and amortization of fixed assets
 
97,832

 
 
86,571

Amortization of intangible assets
 
76,259

 
 
61,496

Amortization of debt issuance costs and original issue discount
 
3,999

 
 
11,770

Allowance for doubtful accounts
 
1,483

 
 
1,151

KSOP compensation expense
 
11,386

 
 
10,575

Stock based compensation
 
23,822

 
 
25,471

Gain on derivative instruments
 
—

 
 
(85,187
)
Gain on sale of discontinued operations
 
(269,385
)
 
 
—

Realized loss on available-for-sale securities, net
 
311

 
 
19

Gain on exercise of common stock warrants
 
(1,464
)
 
 
(15,602
)
Deferred income taxes
 
(1,733
)
 
 
1,498

Loss (gain) on disposal of fixed assets, net
 
851

 
 
(2
)
Excess tax benefits from exercised stock options and restricted stock awards
 
(20,763
)
 
 
(18,214
)
Changes in assets and liabilities, net of effects from acquisitions:
 
 
 
 
 
Accounts receivable
 
32,608

 
 
39,651

Prepaid expenses and other assets
 
(15,053
)
 
 
2,662

Income taxes
 
45,258

 
 
44,716

Accounts payable and accrued liabilities
 
(7,205
)
 
 
(1,175
)
Deferred revenues
 
14,655

 
 
(30,772
)
Pension and postretirement benefits
 
(7,972
)
 
 
(10,552
)
Other liabilities
 
(3,170
)
 
 
2,148

Net cash provided by operating activities
 
463,671

 
 
520,044

Cash flows from investing activities:
 
 
 
 
 
Acquisitions, net of cash acquired of $1,034 and $35,398, respectively
 
(45,161
)
 
 
(2,811,759
)
Purchase of non-controlling interest in non-public companies
 
—

 
 
(101
)
Sale of non-controlling equity investments in non-public companies
 
8,464

 
 
101

Proceeds from sale of discontinued operations
 
719,374

 
 
—

Escrow funding associated with acquisition
 
(4,444
)
 
 
(78,694
)
Proceeds from the settlement of derivative instruments
 
—

 
 
85,187

Capital expenditures
 
(98,570
)
 
 
(105,765
)
Purchases of available-for-sale securities
 
(158
)
 
 
(54
)
Proceeds from sales and maturities of available-for-sale securities
 
441

 
 
281

Other investing activities, net
 
(620
)
 
 
—

Cash received from exercise of common stock warrants
 
—

 
 
15,602

Net cash provided by (used in) investing activities
 
579,326

 
 
(2,895,202
)
Cash flows from financing activities:
 
 
 
 
 
Proceeds from issuance of long-term debt, net of original issue discount
 
—

 
 
1,243,966

Repayment of short-term debt, net
 
(870,000
)
 
 
(90,000
)
Proceeds from issuance of short-term debt with original maturities greater than three months
 
—

 
 
830,000

Repayment of current portion of long-term debt
 
—

 
 
(170,000
)
Repayment of long-term debt
 
—

 
 
(50,000
)
Payment of debt issuance costs
 
(475
)
 
 
(23,942
)
Repurchases of common stock
 
(182,533
)
 
 
—

Excess tax benefits from exercised stock options and restricted stock awards
 
20,763

 
 
18,214

Proceeds from stock options exercised
 
32,591

 
 
31,283

Proceeds from issuance of stock as part of a public offering
 
—

 
 
720,848

Net share settlement of restricted stock awards
 
(3,065
)
 
 
(2,350
)
Other financing activities, net
 
(4,399
)
 
 
(4,784
)
Net cash (used in) provided by financing activities
 
(1,007,118
)
 
 
2,503,235

Effect of exchange rate changes
 
(9,440
)
 
 
1,389

Increase in cash and cash equivalents
 
26,439

 
 
129,466

Cash and cash equivalents, beginning of period
 
138,348

 
 
39,359

Cash and cash equivalents, end of period
$
164,787

 
$
168,825

Supplemental disclosures:
 
 
 
 
 
Taxes paid
$
221,419

 
$
111,867

Interest paid
$
75,845

 
$
56,583

Noncash investing and financing activities:
 
 
 
 
 
Repurchases of common stock included in accounts payable and accrued liabilities
$
7,274

 
$
—

Promissory note received for sale of discontinued operations
$
82,900

 
$
—

Equity interest received for sale of discontinued operations 
$
8,400

 
$
—

Deferred tax liability established on date of acquisition
$
3,765

 
$
258,976

Tenant improvement included in other liabilities
$
74

 
$
1,168

Capital lease obligations
$
11,502

 
$
1,158

Capital expenditures included in accounts payable and accrued liabilities
$
2,336

 
$
605


10