JERSEY CITY, N.J., Nov. 16, 2009 (GLOBE NEWSWIRE) -- Verisk Analytics, Inc. (Nasdaq:VRSK), a leading source of information about risk, today announced results for the nine-month period ended September 30, 2009:
Financial Highlights
See Tables 3A, 4, and 5 for a reconciliation of non-GAAP financial measures to the relevant GAAP measures.
* Total revenues increased 15.1% for the first nine months of
2009, including a 30.2% increase in Decision Analytics
revenues and a 3.8% increase in Risk Assessment revenues.
Excluding the impact of recent acquisitions, revenues grew
21.5% in Decision Analytics, 3.8% in Risk Assessment and
11.4% for the total company.
* Net income for the nine months ended September 30, 2009 was
$133.1 million and adjusted net income was $161.2 million.
Net income for the third quarter of 2009 was $42.2 million
and adjusted net income was $53.8 million.
* Adjusted EBITDA increased 10.7% to $326.9 million for the
first nine months of 2009 and 11.4% to $109.4 million for
the third quarter of 2009. Adjusted net income increased 8.8%
to $161.2 million for the first nine months of 2009 and 9.0%
to $53.9 million for the third quarter of 2009.
* For the first nine months of 2009, adjusted EBITDA margin
was 42.9%. Increased pension expense primarily related to the
downturn in the global financial markets in 2008 resulted in
a 1.8% negative impact on adjusted EBITDA margin. Adjusted
EBITDA margin was 44.6% in the same period of 2008.
* Diluted GAAP earnings per share ("Diluted GAAP EPS") were
$0.74 for the first nine months of 2009 and $0.23 for the
third quarter of 2009. Diluted adjusted earnings per share
("diluted adjusted EPS") were $0.89 for the first nine months
of 2009 and $0.30 for the third quarter of 2009, an increase
of 15.6% and 15.4%, respectively, versus the same periods in
2008.
* Subsequent to the quarter close, on October 9th, Verisk
completed its initial public offering, raising gross proceeds
of approximately $2.2 billion for its selling shareholders.
Frank J. Coyne, chairman, president, and CEO, said, "We are pleased to report these strong results in our first quarterly report as a public company. We believe this shows we have a strong foundation to deliver both growth and strong margins for our shareholders over the long term. Our client-centric solutions remain valuable and unique in measuring risk in the key end markets of insurance, mortgage and healthcare and are able to deliver growth despite weakness in the economy."
"Recent business achievements also highlight our ability to deliver on the Verisk strategy of using innovative approaches to risk analysis to grow our presence in new end markets. In 2009, we have continued to invest in new product development, announced a launch of our important partnership with MERSCORP, Inc. in mortgage fraud analytics to create a nationwide fraud database, and acquired two companies, TierMed and D2Hawkeye, in the healthcare analytics space. At the same time, we continue to grow our Risk Assessment business during one of the softest premium markets in recent history," added Mr. Coyne.
Summary of Results through September 30, 2009
---------------------------------------------
Table 1
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ Change ------------------ Change
2009 2008 (%) 2009 2008 (%)
-----------------------------------------------------
(In thousands, except per share amounts)
Revenues $258,311 $224,391 15.1% $761,978 $662,081 15.1%
Adjusted EBITDA $109,404 $ 98,230 11.4% $326,937 $295,302 10.7%
Net income $ 42,205 $ 40,840 3.3% $133,059 $121,789 9.3%
Adjusted net
income $ 53,848 $ 49,383 9.0% $161,181 $148,186 8.8%
Diluted GAAP
EPS $ 0.23 $ 0.22 4.5% $ 0.74 $ 0.63 17.5%
Diluted
adjusted EPS $ 0.30 $ 0.26 15.4% $ 0.89 $ 0.77 15.6%
Revenues
Revenues grew 15.1% for both the nine months and three months ended September 30, 2009. Excluding the impact of recent acquisitions (AER, D2Hawkeye, and TierMed), revenue grew 11.4% for the first nine months of 2009.
Table 2A
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ Change ------------------ Change
2009 2008 (%) 2009 2008 (%)
-----------------------------------------------------
(In thousands)
Decision
Analytics
revenues by
category:
Fraud
identification
and detection
solutions $ 69,303 $ 54,796 26.5% $199,778 $157,654 26.7%
Loss
prediction
solutions 33,806 23,093 46.4% 100,702 69,353 45.2%
Loss
quantification
solutions 25,182 21,316 18.1% 68,605 56,532 21.4%
Total
Decision
Analytics $128,291 $ 99,205 29.3% $369,085 $283,539 30.2%
---------------------------------------------
Within our Decision Analytics segment, revenues grew 30.2% for the nine months ended September 30, 2009 and 21.5% excluding the revenue associated with recent acquisitions. Year-to-date revenue growth was led by a 26.7% increase in our fraud identification solutions. Loss quantification solutions grew 21.4%. Loss prediction solutions grew at 9.7%, excluding the impact of the recent acquisitions of AER, D2Hawkeye and TierMed. Overall, our Decision Analytics revenues now compose approximately 48% of our total revenues in the nine months ended September 30, 2009, up from approximately 43% in the same period in 2008 as we continue to balance our sources of revenue by growing our Decision Analytics segment.
Table 2B
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ Change ------------------ Change
2009 2008 (%) 2009 2008 (%)
-----------------------------------------------------
(In thousands)
Risk Assessment
revenues by
category:
Industry
standard
insurance
programs $ 84,159 $ 81,801 2.9% $256,352 $247,520 3.6%
Property-
specific
rating and
underwriting
information 33,219 31,230 6.4% 99,088 94,574 4.8%
Statistical
agency and
data services 7,019 6,736 4.2% 21,154 20,556 2.9%
Actuarial
services 5,623 5,419 3.8% 16,299 15,892 2.6%
Total Risk
Assessment $130,020 $125,186 3.9% $392,893 $378,542 3.8%
================== ==================
Within our Risk Assessment segment, revenues grew 3.8% in the nine months ended September 30, 2009. Our revenues in this segment continued to grow even with the impact of the soft premium market, which is the basis for the premium-based component of revenue.
Cost of Revenues
Cost of revenues increased 16.9% in the nine months ended September 30, 2009 and 12.1% excluding the impact of recent acquisitions. After also excluding the increased pension costs discussed earlier, cost of revenues grew 8.3%. Excluding recent acquisitions and increased pension costs, the increase in cost of revenues was primarily due to staff-related costs, with some additional costs for data and consultants related to the growth of our Decision Analytics segment.
Selling, General and Administrative
Selling, general and administrative expense increased 21.3% in the nine months ended September 30, 2009 and 11.3% excluding the impact of recent acquisitions. After also excluding the increased pension costs discussed earlier, selling, general and administrative expense grew 8.4%. The increase in selling, general and administrative expense excluding recent acquisitions and increased pension costs was primarily due to staff-related costs.
EBITDA and Adjusted EBITDA
EBITDA grew 11.2% in the nine months ended September 30, 2009 and Adjusted EBITDA grew 10.7% in the nine months ended September 30 as shown in Table 3A. Increased pension expense primarily related to the downturn in the global financial markets negatively impacted adjusted EBITDA growth by 4.6%.
At the time of the IPO, the company accelerated the allocation of ESOP shares, which will cause a one-time non- cash charge of approximately $57.7 million in fourth quarter of 2009 and then eliminate the portion of ESOP expense not associated with our 401(k) and profit sharing going forward. Because we do not expect these expenses to impact our EBITDA in 2010 and forward, we believe it is appropriate to present adjusted EBITDA.
Table 3A
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ Change ------------------ Change
2009 2008 (%) 2009 2008 (%)
------------------ ----------------------------------
(In thousands)
EBITDA $102,428 $ 93,819 9.2% $313,369 $281,803 11.2%
plus: ESOP
allocation
expense 3,822 3,240 9,602 10,017
plus: IPO-
related costs 3,154 1,171 3,966 3,482
Adjusted
EBITDA $109,404 $ 98,230 11.4% $326,937 $295,302 10.7%
EBITDA margin 39.7% 41.8% 41.1% 42.6%
Adjusted
EBITDA
margin 42.4% 43.8% 42.9% 44.6%
Adjusted EBITDA grew 19.6% for Decision Analytics and 4.7% for Risk Assessment for the nine months ended September 30, 2009 as shown in Table 3B. Adjusted EBITDA margin was 42.9% for the first nine months of 2009, a decline from adjusted EBITDA margin of 44.6% in the same period in 2008. However, increased pension costs primarily related to the global economic downturn in 2008 had a negative impact of 1.8% on our EBITDA margin during the first nine months of 2009. Increased pension costs had a negative impact on adjusted EBITDA growth of 2.0% for Decision Analytics and 6.4% for Risk Assessment.
Table 3B
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ Change ------------------ Change
2009 2008 (%) 2009 2008 (%)
----------------------------------------------------
(In thousands)
Segment EBITDA:
Risk
Assessment $ 55,919 $ 53,813 3.9% $177,116 $167,313 5.9%
EBITDA margin 43.0% 43.0% 45.1% 44.2%
Decision
Analytics $ 46,509 $ 40,006 16.3% $136,253 $114,490 19.0%
EBITDA margin 36.3% 40.3% 36.9% 40.4%
Total EBITDA $102,428 $ 93,819 9.2% $313,369 $281,803 11.2%
EBITDA
margin 39.7% 41.8% 41.1% 42.6%
Adjusted
segment EBITDA:
Risk
Assessment $ 59,871 $ 56,833 5.3% $184,912 $176,566 4.7%
Adjusted
EBITDA
margin 46.0% 45.4% 47.1% 46.6%
Decision
Analytics $ 49,533 $ 41,397 19.7% $142,025 $118,736 19.6%
Adjusted
EBITDA
margin 38.6% 41.7% 38.5% 41.9%
Total
adjusted
EBITDA $109,404 $ 98,230 11.4% $326,937 $295,302 10.7%
Adjusted
EBITDA
margin 42.4% 43.8% 42.9% 44.6%
Net Income and Adjusted Net Income
Net income grew 9.3% in the first nine months of 2009. Adjusted net income grew 8.8% in the first nine months of 2009 as growth in adjusted EBITDA was partially offset by increased interest expense related to increased debt outstanding during the period and increased provision for income taxes related to a higher effective tax rate due to non-deductibility of the majority of our ESOP expenses and of certain expenses related to the initial public offering.
The table below sets forth a reconciliation of net income to adjusted net income and adjusted EPS based on our historical results:
Table 4
Three Months Ended
September 30,
-------------------------- Change
2009 2008 (%)
-----------------------------------
(In thousands, except share and
per share amounts)
Net income $ 42,205 $ 40,840 3.3%
plus: Amortization of
intangibles 8,012 7,041
plus: ESOP allocation expense 3,822 3,240
plus: IPO-related costs 3,154 1,171
less: Income tax effect on
amortization of intangibles (3,345) (2,909)
Adjusted net income $ 53,848 $ 49,383 9.0%
Basic adjusted EPS $ 0.31 $ 0.27 14.8%
Diluted adjusted EPS $ 0.30 $ 0.26 15.4%
Weighted average shares
outstanding
Basic 172,796,400 182,267,667
Diluted 179,850,850 189,667,514
--------------------------
Nine Months Ended
September 30,
-------------------------- Change
2009 2008 (%)
-----------------------------------
(In thousands, except share and
per share amounts)
Net income $ 133,059 $ 121,789 9.3%
plus: Amortization of
intangibles 24,986 21,978
plus: ESOP allocation expense 9,602 10,017
plus: IPO-related costs 3,966 3,482
less: Income tax effect on
amortization of intangibles (10,432) (9,080)
Adjusted net income $ 161,181 $ 148,186 8.8%
Basic adjusted EPS $ 0.93 $ 0.80 16.3%
Diluted adjusted EPS $ 0.89 $ 0.77 15.6%
Weighted average shares
outstanding
Basic 173,216,650 184,925,950
Diluted 180,117,150 192,493,650
----------------------------
Net Cash Provided by Operating Activities and Capital Expenditures
Net cash provided by operating activities was $255.6 million and increased $61.5 million or 31.7% for the nine months ended September 30, 2009. This growth was primarily a result of a $35.5 million increase due to the strong operations of the business, $4.6 million due to working capital benefit, $10.2 million due to decreased in employee- related payments related to an additional pay cycle that occurred in 2008, and $15.4 million of excess tax benefits related to exercised stock options.
Capital expenditures increased by $6.5 million over the prior period to $31.3 million because of investment in infrastructure and new product development.
Business Outlook
Mr. Coyne concluded, "We're confident in our ability to execute our growth plans. As the economy continues to grow, so does the value of assets at risk and the complexity in analyzing and protecting against those risks." The company has set its long-term organic financial targets as follows:
Revenue growth, excluding new acquisitions 10-12% Adjusted EBITDA margin 43-45% Growth of net cash provided by operating activities less capital expenditures 12-13%
Conference Call Information
Verisk's management team will host a live audio webcast on Tuesday, November 17, 2009, at 8:00 a.m. Eastern time (5:00 a.m. Pacific time) to discuss the financial results and business highlights. All interested parties are invited to listen to the live webcast on the Verisk investor website at http://investor.verisk.com. A replay of the webcast will be available on the Verisk investor website for 30 days.
An audio recording of the conference call will be available on our website (approximately two hours) after the conclusion of the live event. To listen to the recording, visit http://investor.verisk.com. Alternatively, you may dial 1- 888-203-1112 or 1-719-457-0820 and enter replay pass code 4704330. The replay will be available from November 17, 2009 at 11:00 a.m. Eastern time through December 16, 2009 at 11:59 p.m.
About Verisk Analytics
Verisk Analytics (Nasdaq:VRSK) is a leading provider of risk assessment solutions to professionals in insurance, healthcare, mortgage lending, government, risk management, and human resources. 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," "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 final prospectus dated October 6, 2009 filed with the Securities and Exchange Commission and in quarterly reports on Form 10-Q and current reports on Form 8-K. If any of these risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary significantly from what we projected. Any forward-looking statement in this release reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, whether as a result of new information, future events, or otherwise.
Notes Regarding the Use of Non-GAAP Financial Measures
The company has provided certain non-GAAP financial information as supplemental information regarding its operating results. These measures are not in accordance with, or an alternative for, GAAP and may be different from non-GAAP measures reported by other companies. The company believes that its presentation of non-GAAP measures, such as EBITDA and adjusted EBITDA, adjusted net income, and adjusted EPS, provides useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations. In addition, the company's management uses these measures for reviewing the financial results of the company and for budgeting and planning purposes.
EBITDA and Adjusted EBITDA
The table below sets forth a reconciliation of net income to EBITDA and adjusted EBITDA based on our historical results:
Table 5
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------------------
2009 2008 2009 2008
--------------------------------------
(In thousands)
Net income $ 42,205 $ 40,840 $133,059 $121,789
Depreciation and amortization
of fixed and intangible
assets 17,633 16,095 53,520 47,456
Investment income and
realized (gains)/losses on
securities, net (53) (2) 220 (319)
Interest expense 9,449 8,393 26,126 22,566
Provision for income taxes 33,194 28,493 100,444 90,311
--------------------------------------
EBITDA $102,428 $ 93,819 $313,369 $281,803
plus: ESOP allocation
expense 3,822 3,240 9,602 10,017
plus: IPO-related costs 3,154 1,171 3,966 3,482
--------------------------------------
Adjusted EBITDA $109,404 $ 98,230 $326,937 $295,302
--------------------------------------
EBITDA and adjusted EBITDA are financial measures that management uses to evaluate the performance of our segments. The company defines "EBITDA" as net income before investment income, realized (gains)/losses on securities interest expense, income taxes, depreciation, and amortization. The company defines "adjusted EBITDA" as EBITDA before ESOP allocation expense and IPO-related costs.
Although EBITDA and adjusted EBITDA are frequently used by securities analysts, lenders and others in their evaluation of companies, EBITDA and adjusted EBITDA have limitations as 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 GAAP. Management uses EBITDA and adjusted EBITDA in conjunction with traditional GAAP operating performance measures as part of its overall assessment of company performance. Some of these limitations are:
* EBITDA and adjusted EBITDA do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments. * EBITDA and adjusted EBITDA do not reflect changes in, or cash requirement for, our working capital needs. * Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and EBITDA and adjusted EBITDA does not reflect any cash requirements for such replacements. * Other companies in our industry may calculate EBITDA and adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
Note on the Attached Financial Information
Verisk Analytics, Inc ("Verisk") was established on May 23, 2008 to serve as the parent holding company of Insurance Services Office, Inc ("ISO") upon completion of the proposed initial public offering ("IPO"). On June 27, 2008, the company's stockholders approved certain corporate governance changes necessary to allow Verisk to proceed with a proposed IPO. On October 6, 2009, Verisk effected a corporate reorganization whereby the Class A and Class B common stock of ISO was exchanged for the common stock of Verisk on a one-for-one basis. Verisk immediately thereafter effected a fifty-for-one stock split of Class A and Class B common stock. The unaudited financial information presented in the attachment for the periods is that of ISO. Verisk had no operating activity from its formation on May 23, 2008 through September 30, 2009.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For The Three and Nine Month Periods Ended September 30, 2009
and 2008
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------------------------
2009 2008 2009 2008
---------------------------------------------------
(In thousands, except for share and per share data)
Revenues (include
revenues from
related parties
of $25,120 and
$22,228 for the
three months
ended September
30, 2009 and
2008 and
$73,263 and
$65,417 for the
nine months
ended September
30, 2009 and
2008,
respectively) $ 258,311 $ 224,391 $ 761,978 $ 662,081
Expenses:
Cost of
revenues
(exclusive of
items shown
separately
below) 117,383 98,307 337,884 288,985
Selling,
general and
administrative 38,500 32,265 110,725 91,293
Depreciation
and
amortization
of fixed
assets 9,621 9,054 28,534 25,478
Amortization of
intangible
assets 8,012 7,041 24,986 21,978
---------------------------------------------------
Total expenses 173,516 146,667 502,129 427,734
---------------------------------------------------
Operating income 84,795 77,724 259,849 234,347
Other income/
(expense):
Investment
income 29 381 121 1,984
Realized gains/
(losses) on
securities,
net 24 (379) (341) (1,665)
Interest
expense (9,449) (8,393) (26,126) (22,566)
---------------------------------------------------
Total other
expense, net (9,396) (8,391) (26,346) (22,247)
---------------------------------------------------
Income before
income taxes 75,399 69,333 233,503 212,100
Provision for
income taxes (33,194) (28,493) (100,444) (90,311)
---------------------------------------------------
Net income $ 42,205 $ 40,840 $ 133,059 $ 121,789
===================================================
Basic net income
per share of
Class A and
Class B (1) $ 0.24 $ 0.22 $ 0.77 $ 0.66
---------------------------------------------------
Diluted net
income per
share of Class
A and Class
B (1) $ 0.23 $ 0.22 $ 0.74 $ 0.63
---------------------------------------------------
Weighted average
shares
outstanding:
Basic (1) 172,796,400 182,267,667 173,216,650 184,925,950
---------------------------------------------------
Diluted (1) 179,850,850 189,667,514 180,117,150 192,493,650
---------------------------------------------------
(1) All share and per share data has been adjusted to reflect a
fifty-for-one stock split. See Note 1 in the 10Q dated
September 30, 2009 for further information.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
As of September 30, 2009 and December 31, 2008
2009 2008
------------------------
(In thousands, except
for share and per share
data)
ASSETS
Current assets:
Cash and cash equivalents $ 60,560 $ 33,185
Available-for-sale securities 5,352 5,114
Accounts receivable, net (including
amounts from related parties of $2,992
and $3,421, respectively) 104,083 83,941
Prepaid expenses 16,729 13,010
Deferred income taxes 4,490 4,490
Federal and foreign income taxes
receivable 2,935 12,311
State and local income taxes receivable 3,984 689
Other current assets 22,630 16,187
------------------------
Total current assets 220,763 168,927
Noncurrent assets:
Fixed assets, net 87,229 82,587
Intangible assets, net 118,338 112,713
Goodwill 489,245 447,372
Deferred income taxes 83,629 100,256
State income taxes receivable 7,793 8,112
Other assets 12,379 8,910
------------------------
Total assets $ 1,019,376 $ 928,877
========================
LIABILITIES, REDEEMABLE COMMON STOCK AND
STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued liabilities $ 100,979 $ 83,381
Acquisition related liabilities -- 82,700
Short-term debt and current portion of
long-term debt 131,528 219,398
Pension and postretirement benefits,
current 5,397 5,397
Fees received in advance (including
amounts from related parties of $6,711
and $3,699, respectively) 153,415 114,023
------------------------
Total current liabilities 391,319 504,899
Noncurrent liabilities:
Long-term debt 527,894 450,356
Pension benefits 137,417 133,914
Postretirement benefits 21,936 23,798
Other liabilities 77,258 76,194
------------------------
Total liabilities 1,155,824 1,189,161
Redeemable common stock:
Class A redeemable common stock, stated at
redemption value, $.0002 par value;
335,000,000 shares authorized;
150,882,000 and 150,388,050 shares
issued and 34,768,750 and 37,306,950
outstanding as of September 30, 2009 and
December 31, 2008, respectively, and
vested options at intrinsic value (1) 1,064,896 752,912
Class A unearned common stock KSOP shares (2,827) (3,373)
------------------------
Total redeemable common stock 1,062,069 749,539
Commitments and contingencies
Stockholders' deficit:
Class B common stock, $.0002 par value;
1,000,000,000 shares authorized;
500,225,000 shares issued and 143,187,100
outstanding as of September 30, 2009 and
December 31, 2008 (1) 100 100
Accumulated other comprehensive loss (75,561) (82,434)
Accumulated deficit (439,062) (243,495)
Class B common stock, treasury stock,
357,037,900 shares as of September 30,
2009 and December 31, 2008 (1) (683,994) (683,994)
------------------------
Total stockholders' deficit (1,198,517) (1,009,823)
------------------------
Total liabilities, redeemable common
stock and stockholders' deficit $ 1,019,376 $ 928,877
------------------------
(1) All share and per share data has been adjusted to reflect a
fifty-for-one stock split. See Note 1 in the 10Q dated
September 30, 2009 for further information.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For The Nine Months Ended September 30, 2009 and 2008
2009 2008
--------------------
(In thousands)
Cash flows from operating activities:
Net income $ 133,059 $ 121,789
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of fixed
assets 28,534 25,478
Amortization of intangible assets 24,986 21,978
Allowance for doubtful accounts 692 266
KSOP compensation expense 17,620 17,353
Acquisition related compensation expense -- 550
Stock-based compensation 8,526 7,522
Non-cash charges associated with performance
based appreciation awards 2,649 2,618
Interest income on notes receivable from
stockholders -- (1,142)
Realized losses on securities, net 341 1,665
Deferred income taxes 4,990 --
Other operating 207 282
Loss on disposal of assets 342 31
Non-cash charges associated with lease
termination 196 --
Excess tax benefits from exercised stock
options (1,723) (17,101)
Changes in assets and liabilities, net of
effects from acquisitions:
Accounts receivable (16,946) 4,145
Prepaid expenses and other assets (2,241) (3,479)
Federal and foreign income taxes 10,460 (13,292)
State and local income taxes (2,082) 17,669
Accounts payable and accrued liabilities 1,359 (9,082)
Acquisition related liabilities (300) (2,200)
Fees received in advance 38,414 22,830
Other liabilities 6,493 (3,834)
Net cash provided by operating activities 255,576 194,046
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(UNAUDITED)
For The Nine Months Ended September 30, 2009 and 2008
2009 2008
(In thousands)
Cash flows from investing activities:
Acquisitions, net of cash acquired of $9,477
in 2009 (58,831) (41)
Purchase of cost-based investments -- (3,822)
Earnout payments (78,100) (98,100)
Proceeds from release of contingent escrows 24 549
Escrow funding associated with acquisitions (7,400) (3,320)
Purchases of available-for-sale securities (450) (156)
Proceeds from sales and maturities of
available-for-sale securities 772 21,609
Purchases of fixed assets (24,319) (22,323)
Proceeds from repayment of notes receivable
from stockholders -- 6,181
Issuance of notes receivable from stockholders -- (1,247)
Net cash used in investing activities (168,304) (100,670)
Cash flows from financing activities:
Proceeds from issuance of long-term debt 80,000 150,000
Proceeds from issuance of short-term debt, net 6,808 40,000
Redemption of Class A common stock (46,740) (263,744)
Repurchase of Class B common stock -- (5,001)
Repayment of current portion of long-term debt (100,000) --
Repayment of short-term debt, net -- (35,219)
Debt issuance cost (4,510) --
Excess tax benefits from exercised stock
options 1,723 17,101
Proceeds from repayment of exercise price
loans classified as a component of
redeemable common stock -- 29,482
Proceeds from stock options exercised 2,612 892
Net cash used in financing activities (60,107) (66,489)
Effect of exchange rate changes 210 88
Increase in cash and cash equivalents 27,375 26,975
Cash and cash equivalents, beginning of
period 33,185 24,049
Cash and cash equivalents, end of period $ 60,560 $ 51,024
Supplemental disclosures:
Taxes paid $ 90,917 $ 85,498
Interest paid $ 25,824 $ 20,896
Non-cash investing and financing activities:
Loans made to directors and officers in
connection with the exercise of stock options $ -- $ 20,148
Redemption of Class A common stock used to
repay maturities of notes receivable from
stockholders $ -- $ 41,970
Redemption of Class A common stock used to
fund the exercise of stock options $ 2,326 $ 3,838
Deferred tax liability established on date of
acquisition $ (8,907) $ --
Capital lease obligations $ 2,860 $ 2,485
Capital expenditures included in accounts
payable and accrued liabilities $ 4,165 $ --
Decrease in goodwill due to finalization of
acquisition related liabilities $ (4,300) $ --
Accrual of acquisition related liabilities $ -- $ 15,200