Edgar Filing: Verisk Analytics, Inc.

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2012

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-34480

VERISK ANALYTICS, INC.

(Exact name of registrant as specified in its charter)


Delaware		26-2994223
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

545 Washington Boulevard Jersey City, NJ		07310-1686
(Address of principal executive offices)		(Zip Code)

(201) 469-2000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of July 27, 2012, there was the following number of shares outstanding of each of the issuer’s classes of common stock:


Class		Shares Outstanding
Class A common stock $.001 par value		165,833,557

Verisk Analytics, Inc.

Index to Form 10-Q

Table of Contents


	Page Number
PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

Condensed Consolidated Balance Sheets		3

Condensed Consolidated Statements of Operations		4

Condensed Consolidated Statements of Comprehensive Income		5

Condensed Consolidated Statements of Changes in Stockholders’ Equity/(Deficit)		6

Condensed Consolidated Statements of Cash Flows		7

Notes to Condensed Consolidated Financial Statements		8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		25

Item 3. Quantitative and Qualitative Disclosures About Market Risk		33

Item 4. Controls and Procedures		33

PART II — OTHER INFORMATION

Item 1. Legal Proceedings		34

Item 1A. Risk Factors		34

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		34

Item 3. Defaults Upon Senior Securities		34

Item 4. Mine Safety Disclosures		34

Item 5. Other Information		34

Item 6. Exhibits		34

SIGNATURES		35

Exhibit 31.1

Exhibit 31.2

Exhibit 32.1

Exhibit 99.1

Item 1.

Financial Statements

VERISK ANALYTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

As of June 30, 2012 and December 31, 2011


	2012
	unaudited			2011
	(In thousands, except for share and per share data)
ASSETS
Current assets:
Cash and cash equivalents	$	97,198		$	191,603
Available-for-sale securities		4,782			5,066
Accounts receivable, net of allowance for doubtful accounts as of June 30, 2012 and December 31, 2011 of $4,088 and $4,158, respectively		173,607			153,339
Prepaid expenses		28,492			21,905
Deferred income taxes, net		15,613			3,818
Federal and foreign income taxes receivable		27,705			25,242
State and local income taxes receivable		3,638			11,433
Other current assets		46,460			41,248

Total current assets		397,495			453,654

Noncurrent assets:
Fixed assets, net		133,731			119,411
Intangible assets, net		363,555			226,424
Goodwill		934,762			709,944
Deferred income taxes, net		—			10,480
Other assets		23,800			21,193

Total assets	$	1,853,343		$	1,541,106

LIABILITIES AND STOCKHOLDERS’ EQUITY/(DEFICIT)
Current liabilities:
Accounts payable and accrued liabilities	$	153,684		$	162,992
Acquisition related liabilities		—			250
Short-term debt and current portion of long-term debt		201,783			5,554
Pension and postretirement benefits, current		2,912			4,012
Fees received in advance		253,880			176,842

Total current liabilities		612,259			349,650

Noncurrent liabilities:
Long-term debt		1,054,395			1,100,332
Pension benefits		24,997			109,161
Postretirement benefits		10,624			18,587
Deferred income taxes, net		41,880			—
Other liabilities		62,506			61,866

Total liabilities		1,806,661			1,639,596

Commitments and contingencies
Stockholders’ equity/(deficit):
Common stock, $.001 par value; 1,200,000,000 shares authorized; 544,003,038 shares issued and 165,721,412 and 164,285,227 outstanding as of June 30, 2012 and December 31, 2011, respectively		137			137
Unearned KSOP contributions		(591	)		(691	)
Additional paid-in capital		963,052			874,808
Treasury stock, at cost, 378,281,626 and 379,717,811 shares as of June 30, 2012 and December 31, 2011, respectively		(1,563,079	)		(1,471,042	)
Retained earnings		724,517			576,585
Accumulated other comprehensive losses		(77,354	)		(78,287	)

Total stockholders’ equity/(deficit)		46,682			(98,490	)

Total liabilities and stockholders’ equity/(deficit)	$	1,853,343		$	1,541,106

The accompanying notes are an integral part of these condensed consolidated financial statements.

VERISK ANALYTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

For The Three and Six Months Ended June 30, 2012 and 2011


	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
	(In thousands, except for share and per share data)
Revenues (including amounts from related parties of $0 and $4,787 for the three months ended June 30, 2012 and 2011 and $0 and $9,183 for the six months ended June 30, 2012 and 2011, respectively) (1)	$	373,226		$	327,280		$	719,727		$	640,149

Expenses:
Cost of revenues (exclusive of items shown separately below)		147,074			131,185			280,404			255,741
Selling, general and administrative		62,473			55,909			116,452			105,165
Depreciation and amortization of fixed assets		13,090			10,855			24,734			22,160
Amortization of intangible assets		12,187			8,877			20,774			17,332
Acquisition related liabilities adjustment		—			(3,364	)		—			(3,364	)

Total expenses		234,824			203,462			442,364			397,034

Operating income		138,402			123,818			277,363			243,115

Other income/(expense):
Investment income/(loss)		156			(10	)		261			—
Realized (loss)/gain on securities, net		(30	)		125			300			487
Interest expense		(17,377	)		(14,885	)		(33,762	)		(24,500	)

Total other expense, net		(17,251	)		(14,770	)		(33,201	)		(24,013	)

Income before income taxes		121,151			109,048			244,162			219,102
Provision for income taxes		(47,820	)		(43,471	)		(96,230	)		(87,649	)

Net income	$	73,331		$	65,577		$	147,932		$	131,453

Basic net income per share	$	0.44		$	0.39		$	0.89		$	0.78

Diluted net income per share	$	0.43		$	0.38		$	0.86		$	0.75

Weighted average shares outstanding:
Basic		165,946,009			166,960,806			165,391,500			167,995,517

Diluted		171,901,349			174,634,046			171,626,084			175,799,120

(1)	See Note 13. Related Parties for further information.

The accompanying notes are an integral part of these condensed consolidated financial statements.

VERISK ANALYTCS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

For The Three and Six Months Ended June 30, 2012 and 2011


	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
	(In thousands)
Net income	$	73,331		$	65,577		$	147,932		$	131,453

Other comprehensive income, net of tax:
Unrealized holding loss on investments		(116	)		(126	)		(313	)		(252	)
Unrealized foreign currency (loss)/gain		(287	)		235			(134	)		573
Pension and postretirement unfunded liability adjustment		452			1,220			1,380			1,974

Total other comprehensive income		49			1,329			933			2,295

Comprehensive income	$	73,380		$	66,906		$	148,865		$	133,748

The accompanying notes are an integral part of these condensed consolidated financial statements.

VERISK ANALYTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY/(DEFICIT) (UNAUDITED)

For The Year Ended December 31, 2011 and The Six Months Ended June 30, 2012


																					Accumulated
											Unearned			Additional							Other			Total
	Common Stock Issued										KSOP			Paid-in		Treasury			Retained		Comprehensive			Stockholders’
	Class A		Class B (Series 1)			Class B (Series 2)			Par Value		Contributions			Capital		Stock			Earnings		Losses			Equity/(Deficit)
	(In thousands, except for share data)
Balance, December 31, 2010		150,179,126		198,327,962			193,665,008		$	135	$	(988	)	$	754,708	$	(1,106,321	)	$	293,827	$	(55,803	)	$	(114,442	)
Net income		—		—			—			—		—			—		—			282,758		—			282,758
Other comprehensive loss		—		—			—			—		—			—		—			—		(22,484	)		(22,484	)
Conversion of Class B (Series 1) common stock		198,327,962		(198,327,962	)		—			—		—			—		—			—		—			—
Conversion of Class B (Series 2) common stock		193,665,008		—			(193,665,008	)		—		—			—		—			—		—			—
Treasury stock acquired—Class A (11,326,624 shares)		—		—			—			—		—			—		(380,710	)		—		—			(380,710	)
KSOP shares earned		—		—			—			—		297			12,318		—			—		—			12,615
Stock options exercised, including tax benefit of $57,684 (3,716,165 shares reissued from treasury stock)		1,830,942		—			—			2		—			85,051		15,978			—		—			101,031
Stock based compensation		—		—			—			—		—			22,656		—			—		—			22,656
Other stock issuances		—		—			—			—		—			75		11			—		—			86

Balance, December 31, 2011		544,003,038		—			—			137		(691	)		874,808		(1,471,042	)		576,585		(78,287	)		(98,490	)

Net income		—		—			—			—		—			—		—			147,932		—			147,932
Other comprehensive income		—		—			—			—		—			—		—			—		933			933
Treasury stock acquired—Class A (2,351,655 shares)		—		—			—			—		—			—		(107,041	)		—		—			(107,041	)
KSOP shares earned		—		—			—			—		100			6,086		—			—		—			6,186
Stock options exercised, including tax benefit of $49,974 (3,787,840 shares reissued from treasury stock)		—		—			—			—		—			68,505		15,004			—		—			83,509
Stock based compensation		—		—			—			—		—			13,653		—			—		—			13,653

Balance, June 30, 2012		544,003,038		—			—		$	137	$	(591	)	$	963,052	$	(1,563,079	)	$	724,517	$	(77,354	)	$	46,682

The accompanying notes are an integral part of these condensed consolidated financial statements.

VERISK ANALYTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

For The Six Months Ended June 30, 2012 and 2011


	2012			2011
	(In thousands)
Cash flows from operating activities:
Net income	$	147,932		$	131,453
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of fixed assets		24,734			22,160
Amortization of intangible assets		20,774			17,332
Amortization of debt issuance costs and original issue discount		1,096			754
Allowance for doubtful accounts		461			557
KSOP compensation expense		6,186			6,408
Stock based compensation		13,653			12,331
Noncash charges associated with performance-based appreciation awards		—			583
Acquisition related liabilities adjustment		—			(3,364	)
Realized gain on securities, net		(300	)		(487	)
Deferred income taxes		(535	)		1,660
Loss on disposal of assets		21			221
Excess tax benefits from exercised stock options		(31,624	)		(5,470	)
Other operating		(18	)		30
Changes in assets and liabilities, net of effects from acquisitions:
Accounts receivable		(13,652	)		(16,979	)
Prepaid expenses and other assets		4,289			(8,082	)
Federal and foreign income taxes		51,957			7,703
State and local income taxes		7,972			(140	)
Accounts payable and accrued liabilities		(24,124	)		(15,190	)
Fees received in advance		77,038			50,520
Pension and postretirement benefits		(90,808	)		(9,747	)
Other liabilities		(7,617	)		(5,166	)

Net cash provided by operating activities		187,435			187,087

Cash flows from investing activities:
Acquisitions, net of cash acquired for 2012 and 2011 of $29,387 and $590, respectively		(331,330	)		(121,721	)
Purchase of non-controlling equity investment in non-public companies		(2,000	)		—
Earnout payments		(250	)		(3,500	)
Escrow funding associated with acquisitions		(17,000	)		(19,560	)
Purchases of fixed assets		(36,532	)		(28,171	)
Purchases of available-for-sale securities		(1,128	)		(1,338	)
Proceeds from sales and maturities of available-for-sale securities		1,203			1,704

Net cash used in investing activities		(387,037	)		(172,586	)

Cash flows from financing activities:
Proceeds from issuance of long-term debt, net of original issue discount		—			448,956
Repayment of current portion of long-term debt		—			(50,000	)
Repayment of short-term debt refinanced on a long-term basis		—			(295,000	)
Proceeds/(repayments) of short-term debt, net		150,000			72,919
Payment of debt issuance costs		—			(4,434	)
Repurchase of Class A common stock		(106,305	)		(214,021	)
Proceeds from stock options exercised		33,453			18,032
Excess tax benefits from exercised stock options		31,624			5,470
Other financing, net		(3,441	)		—

Net cash provided by/(used in) financing activities		105,331			(18,078	)

Effect of exchange rate changes		(134	)		573

Decrease in cash and cash equivalents		(94,405	)		(3,004	)
Cash and cash equivalents, beginning of period		191,603			54,974

Cash and cash equivalents, end of period	$	97,198		$	51,970

Supplemental disclosures:
Taxes paid	$	37,736		$	80,924

Interest paid	$	26,619		$	17,997

Noncash investing and financing activities:
Repurchase of Class A common stock included in accounts payable and accrued liabilities	$	1,936		$	5,292

Deferred tax liability established on date of acquisition	$	40,358		$	1,280

Capital lease obligations	$	3,043		$	8,013

Capital expenditures included in accounts payable and accrued liabilities	$	1,864		$	307

The accompanying notes are an integral part of these condensed consolidated financial statements.

VERISK ANALYTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except for share and per share data, unless otherwise stated)

1. Organization:

Verisk Analytics, Inc. and its consolidated subsidiaries (“Verisk” or the “Company”) enable risk-bearing businesses to better understand and manage their risks. The Company provides its customers proprietary data that, combined with analytic methods, create embedded decision support solutions. The Company is one of the largest aggregators and providers of data pertaining to property and casualty (“P&C”) insurance risks in the United States of America (“U.S.”). The Company offers solutions for detecting fraud in the U.S. P&C insurance, mortgage and healthcare industries and sophisticated methods to predict and quantify loss in diverse contexts ranging from natural catastrophes to supply chain to health insurance. The Company provides solutions, including data, statistical models or tailored analytics, all designed to allow clients to make more logical decisions.

Verisk was established to serve as the parent holding company of Insurance Services Office, Inc. (“ISO”). ISO was formed in 1971 as an advisory and rating organization for the P&C insurance industry to provide statistical and actuarial services, to develop insurance programs and to assist insurance companies in meeting state regulatory requirements. Over the past decade, the Company has broadened its data assets, entered new markets, placed a greater emphasis on analytics, and pursued strategic acquisitions. Verisk’s Class A common stock trades under the ticker symbol “VRSK” on the NASDAQ Global Select Market.

2. Basis of Presentation and Summary of Significant Accounting Policies:

The accompanying unaudited condensed consolidated financial statements have been prepared on the basis of accounting principles generally accepted in the U.S. (“U.S. GAAP”). The preparation of financial statements in conformity with these accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates include acquisition purchase price allocations, the fair value of goodwill, the realization of deferred tax assets and liabilities, acquisition related liabilities, fair value of stock based compensation, liabilities for pension and postretirement benefits, and the estimate for the allowance for doubtful accounts. Actual results may ultimately differ from those estimates. Certain reclassifications have been made related to the segment reporting within Decision Analytics’ revenue categories in the notes to the condensed consolidated financial statements to conform to the respective 2012 presentation.

The condensed consolidated financial statements as of June 30, 2012 and for the three and six months ended June 30, 2012 and 2011, in the opinion of management, include all adjustments, consisting of normal recurring accruals, to present fairly the Company’s financial position, results of operations and cash flows. The operating results for the three and six months ended June 30, 2012 are not necessarily indicative of the results to be expected for the full year. The condensed consolidated financial statements and related notes for the three and six months ended June 30, 2012 have been prepared on the same basis as and should be read in conjunction with the annual report on Form 10-K for the year ended December 31, 2011. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules of the Securities and Exchange Commission (“SEC”). The Company believes the disclosures made are adequate to keep the information presented from being misleading.

Recent Accounting Pronouncement

In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-05, Presentation of Comprehensive Income (“ASU No. 2011-05”). Under ASU No. 2011-05, an entity has the option to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income and a total amount for comprehensive income. ASU No. 2011-05 was adopted by the Company on January 1, 2012 and did not have a material impact on the Company’s condensed consolidated financial statements.

3. Investments:

The following is a summary of available-for-sale securities:


			Gross		Gross
	Adjusted		Unrealized		Unrealized
	Cost		Gain		Loss			Fair Value
June 30, 2012
Registered investment companies	$	4,857	$	—	$	(75	)	$	4,782

Total available-for-sale securities	$	4,857	$	—	$	(75	)	$	4,782

December 31, 2011
Registered investment companies	$	4,618	$	439	$	—		$	5,057
Equity securities		14		—		(5	)		9

Total available-for-sale securities	$	4,632	$	439	$	(5	)	$	5,066

In addition to the available-for-sale securities above, the Company has equity investments in non-public companies in which the Company acquired non-controlling interests and for which no readily determinable market value exists. These securities were accounted for under the cost method in accordance with Accounting Standards Codification (“ASC”) 323-10-25, The Equity Method of Accounting for Investments in Common Stock. At June 30, 2012 and December 31, 2011, the carrying value of such securities was $5,443 and $3,443, respectively, and has been included in “Other assets” in the accompanying condensed consolidated balance sheets.

4. Fair Value Measurements:

Certain assets and liabilities of the Company are reported at fair value in the accompanying condensed consolidated balance sheets. Such assets and liabilities include amounts for both financial and non-financial instruments. To increase consistency and comparability of assets and liabilities recorded at fair value, ASC 820-10, Fair Value Measurements (“ASC 820-10”) establishes a three-level fair value hierarchy to prioritize the inputs to valuation techniques used to measure fair value. ASC 820-10 requires disclosures detailing the extent to which companies measure assets and liabilities at fair value, the methods and assumptions used to measure fair value and the effect of fair value measurements on earnings. In accordance with ASC 820-10, the Company applied the following fair value hierarchy:

Level 1 -

Assets or liabilities for which the identical item is traded on an active exchange, such as publicly-traded instruments.

Level 2 -

Assets and liabilities valued based on observable market data for similar instruments.

Level 3 -

Assets or liabilities for which significant valuation assumptions are not readily observable in the market; instruments valued based on the best available data, some of which is internally-developed, and considers risk premiums that market participant would require.

The following table provides information for such assets and liabilities as of June 30, 2012 and December 31, 2011. The fair values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, and short-term debt approximate their carrying amounts because of the short-term maturity of these instruments. The short-term debt would be a Level 2 liability if it was measured at fair value on the condensed consolidated balance sheets. The fair value of the Company’s long-term debt was estimated at $1,209,082 and $1,181,788 as of June 30, 2012 and December 31, 2011, respectively, and would be a Level 2 liability if the long-term debt was measured at fair value on the condensed consolidated balance sheets. The long-term debt is based on quoted market prices if available, and if not, an estimate of interest rates available to the Company for debt with similar features, the Company’s current credit rating and spreads applicable to the Company. These assets and liabilities are not presented in the following table.


			Quoted Prices
			in Active Markets		Significant Other
			for Identical		Observable
	Total		Assets (Level 1)		Inputs (Level 2)
June 30, 2012
Cash equivalents—money-market funds	$	553	$	—	$	553
Registered investment companies (1)	$	4,782	$	4,782	$	—

December 31, 2011
Cash equivalents—money-market funds	$	2,449	$	—	$	2,449
Registered investment companies (1)	$	5,057	$	5,057	$	—
Equity securities (1)	$	9	$	9	$	—

(1)	Registered investment companies and equity securities are classified as available-for-sale securities and are valued using quoted prices in active markets multiplied by the number of shares owned.

5. Acquisitions:

2012 Acquisition

On March 30, 2012, the Company acquired 100% of the stock of MediConnect Global, Inc. (“MediConnect”), a service provider of medical record retrieval, digitization, coding, extraction, and analysis, for a net cash purchase price of approximately $331,330 and funded $17,000 of indemnity escrows. Within the Company’s Decision Analytics segment, MediConnect further supports the Company’s objective as the leading provider of data, analytics, and decision-support solutions to the healthcare and property casualty industry.

The preliminary purchase price allocation of the acquisition resulted in the following:


	MediConnect
Accounts receivable	$	7,077
Current assets		14,918
Fixed assets		1,075
Intangible assets		157,905
Goodwill		223,982
Other assets		17,087

Total assets acquired		422,044

Current liabilities		3,005
Other liabilities		70,634

Total liabilities assumed		73,639

Net assets acquired	$	348,405

The amounts assigned to intangible assets by type for the current year acquisition are summarized in the table below:


	Weighted Average Useful Life	MediConnect
Technology-based	10 years	$	43,110
Marketing-related	4 years		14,782
Customer-related	10 years		100,013

Total intangible assets	9 years	$	157,905

The allocations of the purchase price (noted within the tables above) are all subject to revisions as additional information is obtained about the facts and circumstances that existed as of the acquisition date. The revisions may have an impact on the consolidated financial statements. The allocations of the purchase price will be finalized once all information is obtained, but not to exceed one year from the acquisition date.

The goodwill associated with MediConnect is not deductible for tax purposes. For the three and six months ended June 30, 2012, the Company incurred transaction costs related to this acquisition of $17 and $827, respectively, included within “Selling, general and administrative” expenses in the accompanying condensed consolidated statements of operations.

Supplemental information on an unaudited pro forma basis is presented below as if the acquisition of MediConnect occurred at the beginning of the year 2011. The pro forma information for the six months ended June 30, 2012 and 2011 presented below is based on estimates and assumptions, which the Company believes are reasonable and not necessarily indicative of the consolidated financial position or results of operations in future periods or the results that actually would have been realized had this acquisition been completed at the beginning of 2011. The unaudited pro forma information includes intangible asset amortization charges and incremental borrowing costs as a result of the acquisition, net of related tax, estimated using the Company’s effective tax rate for continuing operations for the periods.


	For the Six Months Ended June 30,
	2012		2011
	(unaudited)
Pro forma revenues	$	736,885	$	661,491
Pro forma net income	$	146,691	$	123,877
Pro forma basic income per share	$	0.89	$	0.74
Pro forma diluted income per share	$	0.85	$	0.70

2011 Acquisitions

On June 17, 2011, the Company acquired the net assets of Health Risk Partners, LLC (“HRP”), a provider of solutions to optimize revenue, ensure compliance and improve quality of care for Medicare Advantage and Medicaid health plans, for a net cash purchase price of approximately $46,400 and funded $3,000 of indemnity escrows and $10,000 of contingency escrows. Within the Company’s Decision Analytics segment, this acquisition further advances the Company’s position as a major provider of data, analytics, and decision-support solutions to the healthcare vertical market.

On April 27, 2011, the Company acquired 100% of the stock of Bloodhound Technologies, Inc. (“Bloodhound”), a provider of real-time pre-adjudication medical claims editing, for a net cash purchase price of approximately $75,321 and funded $6,560 of indemnity escrows. Within the Company’s Decision Analytics segment, Bloodhound addresses the need of healthcare payers to control fraud and waste in a real-time claims-processing environment, and these capabilities align with the Company’s existing fraud identification tools in the healthcare vertical market.

The goodwill associated with Bloodhound is not deductible for tax purposes; whereas the goodwill associated with HRP is deductible for tax purposes as this was an asset purchase rather than a stock purchase. For the three and six months ended June 30, 2012, the Company incurred no transaction costs related to these acquisitions. In accordance with ASC 805, the allocation of the purchase prices for HRP and Bloodhound was revised during the measurement period. Refer to Note 6. Goodwill and Intangible Assets for further discussion.

Acquisition Escrows

Pursuant to the related acquisition agreements, the Company has funded various escrow accounts to satisfy pre-acquisition indemnity and tax claims arising subsequent to the acquisition date, as well as a portion of the contingent payments. At June 30, 2012 and December 31, 2011, the current portion of the escrows amounted to $45,508 and $36,967, and the noncurrent portion of the escrow amounted to $5,000 and $4,508, respectively. The current and noncurrent portions of the escrows have been included in “Other current assets” and “Other assets” in the accompanying condensed consolidated balance sheets, respectively.

6. Goodwill and Intangible Assets:

The following is a summary of the change in goodwill from December 31, 2011 through June 30, 2012, both in total and as allocated to the Company’s operating segments:


	Risk Assessment		Decision Analytics		Total
Goodwill at December 31, 2011 (1)	$	27,908	$	682,036	$	709,944
Current year acquisition		—		223,982		223,982
Purchase accounting reclassifications		—		836		836

Goodwill at June 30, 2012 (1)	$	27,908	$	906,854	$	934,762

(1)	These balances are net of accumulated impairment charges of $3,244 that occurred prior to January 1, 2009.

The Company finalized the purchase accounting for the acquisitions of HRP and Bloodhound during the quarter ended June 30, 2012. The Company’s purchase accounting reclassifications primarily related to the finalization of HRP and Bloodhound resulted in an increase in goodwill of $836, and an increase in liabilities of $1,233, an increase in other assets of $882 and a decrease in fixed assets of $226. The impact of these adjustments on the consolidated statements of operations for the six months ended June 30, 2012 and 2011 was immaterial.

Goodwill and intangible assets with indefinite lives are subject to impairment testing annually as of June 30, or whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. Goodwill impairment testing compares the carrying value of each reporting unit to its fair value. If the fair value of the reporting unit exceeds the carrying value of the net assets, including goodwill assigned to that reporting unit, goodwill is not impaired. If the carrying value of the reporting unit’s net assets including goodwill exceeds the fair value of the reporting unit, then the Company will determine the implied fair value of the reporting unit’s goodwill. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, then an impairment loss is recorded for the difference between the carrying amount and the implied fair value of goodwill. The Company completed the required annual impairment test as of June 30, 2012, which resulted in no impairment of goodwill.

The Company’s intangible assets and related accumulated amortization consisted of the following:


	Weighted Average Useful Life	Cost		Accumulated Amortization			Net
June 30, 2012
Technology-based	7 years	$	278,764	$	(165,511	)	$	113,253
Marketing-related	5 years		63,552		(35,907	)		27,645
Contract-based	6 years		6,555		(6,555	)		—
Customer-related	12 years		273,237		(50,580	)		222,657

Total intangible assets		$	622,108	$	(258,553	)	$	363,555

December 31, 2011
Technology-based	7 years	$	235,654	$	(155,333	)	$	80,321
Marketing-related	5 years		48,770		(33,190	)		15,580
Contract-based	6 years		6,555		(6,482	)		73
Customer-related	13 years		173,224		(42,774	)		130,450

Total intangible assets		$	464,203	$	(237,779	)	$	226,424

Consolidated amortization expense related to intangible assets for the three months ended June 30, 2012 and 2011, was $12,187 and $8,877, respectively. Consolidated amortization expense related to intangible assets for the six months ended June 30, 2012 and 2011, was $20,774 and $17,332, respectively. Estimated amortization expense in future periods through 2017 and thereafter for intangible assets subject to amortization is as follows:


Year	Amount
2012	$	24,092
2013		42,977
2014		35,851
2015		33,387
2016		32,255
2017 and Thereafter		194,993

	$	363,555

7. Income Taxes:

The Company’s effective tax rate for the three and six months ended June 30, 2012 was 39.47% and 39.41%, respectively, compared to the effective tax rate for the three and six months ended June 30, 2011 of 39.86% and 40.00%, respectively. The June 30, 2012 effective tax rate is lower than the June 30, 2011 effective tax rate primarily due to the continued execution of tax planning strategies. The difference between statutory tax rates and the Company’s effective tax rate is primarily attributable to state taxes and non-deductible share appreciation from the ISO 401(K) Savings and Employee Stock Ownership Plan (“KSOP”).

8. Debt:

The following table presents short-term and long-term debt by issuance:

Issuance

Maturity

June 30,

December 31,

Date

2012

2011

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

Syndicated revolving credit facility

Various

150,000

—

Prudential senior notes:

6.28% Series I senior notes

4/29/2008

4/29/2013

15,000

—

Aviva Investors senior notes:

6.46% Series A senior notes

4/27/2009

4/27/2013

30,000

—

Capital lease obligations and other

Various

6,783

5,554

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

201,783

5,554

Long-term debt:

Verisk senior notes:

5.800% senior notes, less unamortized discount of $915 and $967 as of June 30, 2012 and December 31, 2011, respectively

4/6/2011

5/1/2021

449,085

449,033

4.875% senior notes, less unamortized discount of $2,207 and $2,376 as of June 30, 2012 and December 31, 2011, respectively

12/8/2011

1/15/2019

247,793

247,624

Prudential senior notes:

6.13% Series G senior notes

8/8/2006

8/8/2013

75,000

5.84% Series H senior notes

10/26/2007

10/26/2013

17,500

5.84% Series H senior notes

10/26/2007

10/26/2015

17,500

6.28% Series I senior notes

4/29/2008

4/29/2013

—

15,000

6.28% Series I senior notes

4/29/2008

4/29/2015

85,000

6.85% Series J senior notes

6/15/2009

6/15/2016

50,000

Principal senior notes:

6.16% Series B senior notes

8/8/2006

8/8/2013

25,000

New York Life senior notes:

5.87% Series A senior notes

10/26/2007

10/26/2013

17,500

5.87% Series A senior notes

10/26/2007

10/26/2015

17,500

6.35% Series B senior notes

4/29/2008

4/29/2015

50,000

Aviva Investors senior notes:

6.46% Series A senior notes

4/27/2009

4/27/2013

—

30,000

Capital lease obligations and other

Various

2,517

3,675

Long-term debt

1,054,395

1,100,332

Total debt

1,256,178

1,105,886

As of June 30, 2012, the Company has a borrowing capacity of $725,000 under the syndicated revolving credit facility with Bank of America N.A., JPMorgan Chase Bank N.A., Morgan Stanley Bank N.A., Wells Fargo Bank N.A., Sovereign Bank, RBS Citizens, N.A., Sun Trust Bank, The Northern Trust Company, and TD Bank N.A. Borrowings may be used for general corporate purposes, including working capital and capital expenditures, acquisitions and share repurchase programs. This committed senior unsecured facility expires in October 2016. As of June 30, 2012 and December 31, 2011, the Company had $150,000 and $0 outstanding under this agreement, respectively. On July 2, 2012, the Company repaid $10,000 of the outstanding balance of the syndicated revolving credit facility.

9. Stockholders’ Equity/(Deficit):

The Company has 1,200,000,000 shares of authorized Class A common shares. The Class A common shares have rights to any dividend declared by the board of directors, subject to any preferential or other rights of any outstanding preferred stock, and voting rights to elect all eleven members of the board of directors.

Share Repurchase Program

The Company has authorized repurchases of up to $900,000 of its common stock through its share repurchase program (the “Repurchase Program”) and as of June 30, 2012, the Company had $199,737 available to repurchase shares. The Company has no obligation to repurchase stock under this program and intends to use this authorization as a means of offsetting dilution from the issuance of shares under the KSOP, the Verisk 2009 Equity Incentive Plan (the “Incentive Plan”) and the ISO 1996 Incentive Plan (the “Option Plan”), while providing flexibility to repurchase additional shares if warranted. This authorization has no expiration date and may be increased, reduced, suspended, or terminated at any time. Repurchased shares will be recorded as treasury stock and will be available for future issuance as part of the Repurchase Program.

During the six months ended June 30, 2012, the Company repurchased 2,351,655 shares of Class A common stock as part of this program at a weighted average price of $45.52 per share. The Company utilized cash from operations and the proceeds from its senior notes and syndicated revolving credit facility to fund these repurchases. As treasury stock purchases are recorded based on trade date, the Company has included $1,936 in “Accounts payable and accrued liabilities” in the accompanying condensed consolidated balance sheets for those purchases that have not settled as of June 30, 2012.

Earnings Per Share (“EPS”)

Basic EPS is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding, using the treasury stock method, if the dilutive potential common shares, including stock options and nonvested restricted stock, had been issued.

The following is a reconciliation of the numerators and denominators of the basic and diluted EPS computations for the three and six months ended June 30, 2012 and 2011:


	For the Three Months Ended				For the Six Months Ended
	June 30, 2012		June 30, 2011		June 30, 2012		June 30, 2011
Numerator used in basic and diluted EPS:
Net income	$	73,331	$	65,577	$	147,932	$	131,453

Denominator:
Weighted average number of common shares used in basic EPS		165,946,009		166,960,806		165,391,500		167,995,517
Effect of dilutive shares:
Potential Class A common shares issuable from stock options and stock awards		5,955,340		7,673,240		6,234,584		7,803,603

Weighted average number of common shares and dilutive potential common shares used in diluted EPS		171,901,349		174,634,046		171,626,084		175,799,120

Basic net income per share	$	0.44	$	0.39	$	0.89	$	0.78

Diluted net income per share	$	0.43	$	0.38	$	0.86	$	0.75

The potential shares of common stock that were excluded from diluted EPS were 781,505 and 1,402,980 for the six months ended June 30, 2012 and 2011, respectively, because the effect of including these potential shares was anti-dilutive.

Accumulated Other Comprehensive Losses

The following is a summary of accumulated other comprehensive losses:


	June 30,			December 31,
	2012			2011
Unrealized (losses)/gains on investments, net of tax	$	(44	)	$	269
Unrealized foreign currency losses		(1,109	)		(975	)
Pension and postretirement unfunded liability adjustment, net of tax		(76,201	)		(77,581	)

Accumulated other comprehensive losses	$	(77,354	)	$	(78,287	)

10. Equity Compensation Plans:

All of the Company’s granted equity awards, including outstanding stock options and restricted stock, are covered under the Incentive Plan or the Option Plan. Awards under the Incentive Plan may include one or more of the following types: (i) stock options (both nonqualified and incentive stock options), (ii) stock appreciation rights, (iii) restricted stock, (iv) restricted stock units, (v) performance awards, (vi) other share based awards, and (vii) cash. Employees, directors and consultants are eligible for awards under the Incentive Plan. On July 1, 2011, the Company began issuing Class A common stock under these plans from the Company’s treasury shares. Cash received from stock option exercises for the six months ended June 30, 2012 and 2011 was $33,453 and $18,032, respectively. On July 1, 2012, the Company granted 3,174 shares of Class A common stock, 23,027 nonqualified stock options that were immediately vested and 96,750 nonqualified stock options with a one year service vesting period, to the directors of the Company. These options have an exercise price equal to the closing price of the Company’s Class A common stock on the grant date and a ten year contractual term. As of June 30, 2012, there were 5,941,673 shares of Class A common stock reserved and available for future issuance under the plans.

On April 1, 2012, the Company granted 785,079 nonqualified stock options and 229,009 shares of restricted stock to key employees. The nonqualified stock options have an exercise price equal to the closing price of the Company’s Class A common stock on March 30, 2012, with a ten-year contractual term and a service vesting period of four years. The restricted stock is valued at the closing price of the Company’s Class A common stock on March 30, 2012 and has a service vesting period of four years. The Company recognizes the expense of the restricted stock ratably over the periods in which the restrictions lapse. The restricted stock is not assignable or transferrable until it becomes vested.

The fair value of the stock options granted during the six months ended June 30, 2012 and 2011 was estimated using a Black-Scholes valuation model that uses the weighted average assumptions noted in the following table:


	2012			2011
Option pricing model		Black-Scholes			Black-Scholes
Expected volatility		32.25	%		30.04	%
Risk-free interest rate		0.97	%		2.32	%
Expected term in years		4.8			5.3
Dividend yield		0.00	%		0.00	%
Weighted average grant date fair value per stock option	$	13.70		$	10.48

The expected term for a majority of the stock options granted was estimated based on studies of historical experience and projected exercise behavior. However, for certain stock options granted, for which no historical exercise pattern exists, the expected term was estimated using the simplified method. The risk-free interest rate is based on the yield of U.S. Treasury zero coupon securities with a maturity equal to the expected term of the equity award. The volatility factor was based on the average volatility of the Company’s peers, calculated using historical daily closing prices over the most recent period that is commensurate with the expected term of the stock option award. The expected dividend yield was based on the Company’s expected annual dividend rate on the date of grant.

A summary of options outstanding under the Incentive Plan and the Option Plan as of December 31, 2011 and June 30, 2012 and changes during the interim period is presented below:


	Number of Options			Weighted Average Exercise Price		Aggregate Intrinsic Value
Outstanding at December 31, 2011		18,896,405		$	16.55	$	445,510

Granted		785,079		$	46.97
Exercised		(3,750,300	)	$	8.94	$	133,338

Cancelled or expired		(256,133	)	$	11.88

Outstanding at June 30, 2012		15,675,051		$	19.97	$	459,054

Options exercisable at June 30, 2012		10,387,287		$	15.68	$	348,780

Options exercisable at December 31, 2011		12,153,311		$	12.35	$	337,647

Intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the quoted price of Verisk’s common stock as of the reporting date. The aggregate intrinsic value of stock options outstanding and exercisable at June 30, 2012 was $459,054 and $348,780, respectively. In accordance with ASC 718, Stock Compensation, excess tax benefit from exercised stock options is recorded as an increase to additional paid-in capital and a corresponding reduction in income taxes payable. This tax benefit is calculated as the excess of the intrinsic value of options exercised in excess of compensation recognized for financial reporting purposes. The amount of the tax benefit that has been realized, as a result of those excess tax benefits, is presented as a financing cash inflow within the accompanying condensed consolidated statements of cash flows. For the six months ended June 30, 2012 and 2011, the Company recorded excess tax benefit from stock options exercised of $49,974 and $16,530, respectively. The Company realized $31,624 and $5,470 of tax benefit within the Company’s quarterly tax payments through June 30, 2012 and 2011, respectively.

The Company estimates expected forfeitures of equity awards at the date of grant and recognizes compensation expense only for those awards that the Company expects to vest. The forfeiture assumption is ultimately adjusted to the actual forfeiture rate. Changes in the forfeiture assumptions may impact the total amount of expense ultimately recognized over the requisite service period and may impact the timing of expense recognized over the requisite service period.

A summary of the status of the restricted stock awarded under the Incentive Plan as of December 31, 2011 and June 30, 2012 and changes during the interim period is presented below:


	Number			Weighted average grant date fair value
	of shares			Weighted average grant date fair value
Outstanding at December 31, 2011		145,634		$	33.32
Granted		229,009		$	46.97
Vested		(36,752	)	$	33.48
Forfeited		(2,779	)	$	38.44

Outstanding at June 30, 2012		335,112		$	42.57

As of June 30, 2012, there was $47,945 of total unrecognized compensation costs related to nonvested share-based compensation arrangements granted under the Incentive Plan and the Option Plan. That cost is expected to be recognized over a weighted average period of 2.75 years. As of June 30, 2012, there were 5,287,764 and 335,112 nonvested stock options and restricted stock, respectively, of which 4,673,449 and 285,007 are expected to vest. The total grant date fair value of options vested during the six months ended June 30, 2012 and 2011 was $10,053 and $9,838, respectively. The total grant date fair value of restricted stock vested during the six months ended June 30, 2012 and 2011 was $1,263 and $305, respectively.

On May 16, 2012, the Company’s stockholders approved the implementation of an employee stock purchase plan (“ESPP”). The ESPP will commence on October 1, 2012 and offer eligible employees the opportunity to authorize payroll deductions of up to 20.00% of their regular base salary and up to 50.00% of their short-term incentive compensation, both of which in total may not exceed $25 in any calendar year, to purchase shares of the Company’s Class A common stock at a 5.00% discount of its fair market value at the time of purchase. In accordance with ASC 718, the ESPP is noncompensatory as the purchase discount is 5.00% or less from the fair market value, substantially all employees that meet limited employment qualifications may participate, and it incorporates no option features.

11. Pension and Postretirement Benefits:

The Company maintained a qualified benefit pension plan for substantially all of its employees hired prior to March 1, 2005 through membership in the Pension Plan for Insurance Organizations (the “Pension Plan”), a multiple-employer trust. Future benefits provided to participants within the Pension Plan are determined using a cash balance formula. Under the cash balance formula, each participant has an account, which is credited annually based on salary rates determined by years of service, as well as the interest earned on their previous year-end cash balance. The Profit Sharing Plan, a defined contribution plan, replaced the Pension Plan for all eligible employees hired on or after March 1, 2005. The Company also has a nonqualified supplemental cash balance plan (“SERP”) for certain employees. The SERP is funded from the general assets of the Company.

On February 29, 2012, the Company instituted a hard freeze, which eliminated all future compensation and services credits, to participants in the Pension Plan and SERP. Accordingly, the Company remeasured the assets and liabilities of both plans and recognized a curtailment, resulting in a net reduction in the unfunded pension liability of $10,466 as of March 31, 2012. There is no longer a service cost component in the net periodic benefit cost as all participants are considered inactive in both plans. The Company generally amortized the actuarial gains and losses for the plans over the average future service period of the active participants. However, beginning February 29, 2012, the Company is amortizing the actuarial losses over the remaining life of the inactive plan participants since all are now considered inactive. The February 29, 2012 remeasurement utilized a weighted average discount rate of 4.73%, compared to the rate of 4.98% used for the year ended December 31, 2011.

The Company also provides certain healthcare and life insurance benefits for both active and retired employees. The Postretirement Health and Life Insurance Plan (the “Postretirement Plan”) is contributory, requiring participants to pay a stated percentage of the premium for coverage. As of October 1, 2001, the Postretirement Plan was amended to freeze benefits for current retirees and certain other employees at the January 1, 2002 level. Also, as of October 1, 2001, the Postretirement Plan had a curtailment, which eliminated retiree life insurance for all active employees and healthcare benefits for almost all future retirees, effective January 1, 2002.

The components of net periodic benefit (credit)/cost and the amounts recognized in other comprehensive income for the three and six months ended June 30, 2012 and 2011 are summarized below:


	Pension Plan and SERP						Postretirement Plan
	For the Three Months Ended June 30,
	2012			2011			2012			2011
Service cost	$	—		$	1,611		$	—		$	—
Interest cost		4,883			5,397			175			251
Expected return on plan assets		(7,279	)		(6,434	)		(120	)		—
Amortization of prior service credit		—			(201	)		(37	)		(36	)
Amortization of net actuarial loss		610			1,406			137			163

Net periodic benefit (credit)/cost	$	(1,786	)	$	1,779		$	155		$	378

Employer contributions	$	72,362		$	6,487		$	5,583		$	1,067


	For the Six Months Ended June 30,
	2012			2011			2012			2011
Service cost	$	282		$	3,181		$	—		$	—
Interest cost		10,037			10,838			350			502
Expected return on plan assets		(14,347	)		(12,899	)		(120	)		—
Curtailment gain		(779	)		—			—			—
Amortization of prior service credit		(133	)		(401	)		(75	)		(72	)
Amortization of net actuarial loss		2,351			2,815			275			326

Net periodic benefit (credit)/cost	$	(2,589	)	$	3,534		$	430		$	756

Employer contributions	$	79,355		$	12,655		$	9,652		$	1,382

In March 2012, the Company established a voluntary employees beneficiary association plan (the “VEBA Plan”) under Section 501(c)(9) of the Internal Revenue Code to fund the Postretirement Plan. The Company contributed $5,000 and $8,500 to the VEBA Plan for the three and six months ended June 30, 2012, respectively. The contribution to the Postretirement Plan for the remaining quarters for the year ending December 31, 2012 is expected to be consistent with this quarter. In addition, in April 2012, the Company completed a voluntary prefunding to the Pension Plan of $72,000, which resulted in a total contribution of $78,837 for the year, of which $28,206 was the minimum contribution requirement for 2012. Since the Company has fulfilled the minimum contribution requirement for the year ending December 31, 2012, the Company does not expect to make any further contribution to the Pension Plan.

12. Segment Reporting:

ASC 280-10, Disclosures About Segments of an Enterprise and Related Information (“ASC 280-10”), establishes standards for reporting information about operating segments. ASC 280-10 requires that a public business enterprise report financial and descriptive information about its reportable operating segments. Operating segments are components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company’s Chief Executive Officer and Chairman of the Board is identified as the CODM as defined by ASC 280-10. To align with the internal management of the Company’s business operations based on service offerings, the Company is organized into the following two operating segments, which are also the Company’s reportable segments:

Decision Analytics: The Company develops solutions that its customers use to analyze the three key processes in managing risk: ‘prediction of loss’, ‘detection and prevention of fraud’ and ‘quantification of loss’. The Company’s combination of algorithms and analytic methods incorporates its proprietary data to generate solutions in each of these three categories. In most cases, the Company’s customers integrate the solutions into their models, formulas or underwriting criteria in order to predict potential loss events, ranging from hurricanes and earthquakes to unanticipated healthcare claims. The Company develops catastrophe and extreme event models and offers solutions covering natural and man-made risks, including acts of terrorism. The Company also develops solutions that allow customers to quantify costs after loss events occur. Fraud solutions include data on claim histories, analysis of mortgage applications to identify misinformation, analysis of claims to find emerging patterns of fraud, and identification of suspicious claims in the insurance, mortgage and healthcare sectors. Effective December 31, 2011, the Company provided additional disclosure about its revenue within Decision Analytics segment based on the industry vertical groupings of insurance, mortgage and financial services, healthcare, and specialized markets. Previously, the Company disclosed revenues based on the classification of its solutions as fraud identification and detection solutions, loss prediction solutions and loss quantification solutions.

Risk Assessment: The Company is the leading provider of statistical, actuarial and underwriting data for the U.S. P&C insurance industry. The Company’s databases include cleansed and standardized records describing premiums and losses in insurance transactions, casualty and property risk attributes for commercial buildings and their occupants and fire suppression capabilities of municipalities. The Company uses this data to create policy language and proprietary risk classifications that are industry standards and to generate prospective loss cost estimates used to price insurance policies.

The two aforementioned operating segments represent the segments for which separate discrete financial information is available and upon which operating results are regularly evaluated by the CODM in order to assess performance and allocate resources. The Company uses EBITDA as the profitability measure for making decisions regarding ongoing operations. EBITDA is net income before interest expense, provision for income taxes, depreciation and amortization of fixed and intangible assets. In the second quarter of 2012, the Company changed its definition of EBITDA such that it only reflects the definition noted and no longer excludes investment income/(loss) and realized gain/(loss) on securities, net, for all periods presented. EBITDA is the measure of operating results used to assess corporate performance and optimal utilization of debt and acquisitions. Operating expenses consist of direct and indirect costs principally related to personnel, facilities, software license fees, consulting, travel, and third-party information services. Indirect costs are generally allocated to the segments using fixed rates established by management based upon estimated expense contribution levels and other assumptions that management considers reasonable. The Company does not allocate interest expense and provision for income taxes, since these items are not considered in evaluating the segment’s overall operating performance. The CODM does not evaluate the financial performance of each segment based on assets. On a geographic basis, no individual country outside of the U.S. accounted for 1.00% or more of the Company’s consolidated revenue for either the three and six months ended June 30, 2012 or 2011. No individual country outside of the U.S. accounted for 1.00% or more of total consolidated long-term assets as of June 30, 2012 or December 31, 2011.

The following table provides the Company’s revenue and operating income performance by reportable segment for the three and six months ended June 30, 2012 and 2011, as well as reconciliations to income before income taxes for all periods presented in the accompanying condensed consolidated statements of operations:


	For the Three Months Ended								For the Three Months Ended
	June 30, 2012								June 30, 2011
	Decision		Risk						Decision			Risk
	Analytics		Assessment			Total			Analytics			Assessment			Total
Revenues	$	229,037	$	144,189		$	373,226		$	186,750		$	140,530		$	327,280
Expenses:

Cost of revenues (exclusive of items shown separately below)		101,769		45,305			147,074			82,132			49,053			131,185
Selling, general and administrative		39,562		22,911			62,473			32,564			23,345			55,909
Acquisition related liabilities adjustment		—		—			—			(3,364	)		—			(3,364	)
Investment (income)/loss and realized loss/(gain) on securities, net		—		(126	)		(126	)		—			(115	)		(115	)

EBITDA		87,706		76,099			163,805			75,418			68,247			143,665
Depreciation and amortization of fixed assets		9,021		4,069			13,090			7,325			3,530			10,855
Amortization of intangible assets		12,187		—			12,187			8,841			36			8,877
Investment income/(loss) and realized (loss)/gain on securities, net		—		126			126			—			115			115

Operating income	$	66,498	$	71,904			138,402		$	59,252		$	64,566			123,818

Investment income/(loss) and realized (loss)/gain on securities, net							126									115
Interest expense							(17,377	)								(14,885	)

Income before income taxes						$	121,151								$	109,048

Capital expenditures, including noncash purchases of fixed assets and capital lease obligations	$	16,425	$	5,645		$	22,070		$	12,219		$	3,394		$	15,613


	For the Six Months Ended								For the Six Months Ended
	June 30, 2012								June 30, 2011
	Decision		Risk						Decision			Risk
	Analytics		Assessment			Total			Analytics			Assessment			Total
Revenues	$	430,569	$	289,158		$	719,727		$	359,076		$	281,073		$	640,149
Expenses:

Cost of revenues (exclusive of items shown separately below)		189,667		90,737			280,404			159,431			96,310			255,741
Selling, general and administrative		73,939		42,513			116,452			62,693			42,472			105,165
Acquisition related liabilities adjustment		—		—			—			(3,364	)		—			(3,364	)
Investment income and realized gain on securities, net		—		(561	)		(561	)		—			(487	)		(487	)

EBITDA		166,963		156,469			323,432			140,316			142,778			283,094
Depreciation and amortization of fixed assets		17,506		7,228			24,734			14,312			7,848			22,160
Amortization of intangible assets		20,774		—			20,774			17,260			72			17,332
Investment income and realized gain on securities, net		—		561			561			—			487			487

Operating income	$	128,683	$	148,680			277,363		$	108,744		$	134,371			243,115

Investment income and realized gain on securities, net							561									487
Interest expense							(33,762	)								(24,500	)

Income before income taxes						$	244,162								$	219,102

Capital expenditures, including noncash purchases of fixed assets and capital lease obligations	$	29,657	$	8,345		$	38,002		$	27,564		$	6,789		$	34,353

Operating segment revenue by type of service is provided below:


	For the Three Months Ended				For the Six Months Ended
	June 30, 2012		June 30, 2011		June 30, 2012		June 30, 2011
Decision Analytics:
Insurance	$	122,210	$	112,334	$	238,546	$	217,634
Mortgage and financial services		35,299		35,643		69,574		68,339
Healthcare		50,381		19,322		80,829		34,939
Specialized markets		21,147		19,451		41,620		38,164

Total Decision Analytics		229,037		186,750		430,569		359,076

Risk Assessment:
Industry-standard insurance programs		98,010		92,389		197,144		185,246
Property-specific rating and underwriting information		32,459		35,017		65,016		69,514
Statistical agency and data services		8,130		7,633		15,854		15,375
Actuarial services		5,590		5,491		11,144		10,938

Total Risk Assessment		144,189		140,530		289,158		281,073

Total revenues	$	373,226	$	327,280	$	719,727	$	640,149

13. Related Parties:

The Company considers its stockholders that own more than 5% of the outstanding stock within a respective class to be related parties as defined within ASC 850, Related Party Disclosures. In 2011, all of the Company’s outstanding Class B (Series 1) and Class B (Series 2) shares converted to Class A. As a result of the conversion, the Company had no related parties owning more than 5% of a class of stock as of June 30, 2012.

At June 30, 2011, there were three Class A and five Class B stockholders, each owning more than 5% of the respective outstanding class. The Company had revenues from related parties for the three months ended June 30, 2012 and 2011 of $0 and $4,787, respectively, and revenues of $0 and $9,183 for the six months ended June 30, 2012 and 2011, respectively.

14. Commitments and Contingencies:

The Company is a party to legal proceedings with respect to a variety of matters in the ordinary course of business, including the matters described below. With respect to ongoing matters, the Company is unable, at the present time, to determine the ultimate resolution of or provide a reasonable estimate of the range of possible loss attributable to these matters or the impact it may have on the Company’s results of operations, financial position or cash flows. This is primarily because the matters are in early stages and discovery has either not commenced or been completed. Although the Company believes it has strong defenses and intends to vigorously defend these matters, the Company could in the future incur judgments or enter into settlements of claims that could have a material adverse effect on its results of operations, financial position or cash flows.

Citizens Insurance Litigation

On February 28, 2012, the Company was served with a complaint filed in the Florida State Circuit Court for Pasco County naming Citizens Property Insurance Corporation (“Citizens”) and the Company’s Xactware subsidiary. The complaint alleged a class action seeking declaratory and injunctive relief against defendants and was brought on behalf of “all individuals who have purchased a new or renewed a property casualty insurance policy from Citizens” where Citizens used Xactware’s 360Value product to determine replacement value of the property. On March 12, 2012, plaintiffs served their First Amended Complaint on Xactware additionally alleging that: (1) Citizens and Xactware knowingly made false statements to the plaintiff class concerning their properties’ replacement cost values; (2) fraud against Xactware based on its alleged misrepresentation of the replacement value of plaintiffs’ properties; (3) conspiracy against Citizens and Xactware based on their alleged artificial inflation of the value of plaintiffs’ properties; and (4) products liability against Xactware, claiming Xactware defectively designed 360Value as used in the Florida insurance market. The First Amended Complaint sought declaratory and injunctive relief, as well as unspecified monetary damages alleged to be in excess of $1,000 for the class. On May 31, 2012 plaintiff served his Second Amended Complaint which no longer alleges a class action, but continues to allege: (1) that Citizens and Xactware artificially inflated the replacement cost value of plaintiff’s property using 360Value; (2) fraud by Xactware; (3) a conspiracy between Citizens and Xactware; and (4) products liability against Xactware. The Second Amended Complaint similarly seeks declaratory and injunctive relief as well as damages representing the difference between the premium plaintiff paid to Citizens using 360Value and what the premium should have been if Citizens used an accurate replacement cost value for plaintiff’s property.

At this time it is not possible to determine the ultimate resolution of, or estimate the liability related to, this matter.

Intellicorp Records, Inc. Litigation

On April 20, 2012, the Company was served with a complaint filed in Alameda County Superior Court in California naming the Company’s subsidiary Intellicorp Records, Inc. The complaint titled Jane Roe v. Intellicorp Records, Inc. et al. alleges a nationwide putative class action on behalf of all persons who have been the subject of a consumer report furnished to a third party by Intellicorp for employment purposes and whose report contained any negative public record of criminal arrest, charge or conviction during the 5 years preceding the filing of the action until final resolution. The complaint alleges that Intellicorp failed to implement policies and procedures designed to ensure that criminal record information provided to employers is complete and up to date, and failed to notify class members contemporaneously of the fact that criminal record information was being provided to their employers and prospective employers. The complaint seeks statutory damages for the class in an amount not less than one hundred dollars and not more than one thousand dollars per violation, punitive damages, costs and attorneys fees as well as unspecified monetary damages for the named plaintiff.

At this time, it is not possible to determine the ultimate resolution of, or estimate the liability related to, this matter.

15. Condensed Consolidated Financial Information for Guarantor Subsidiaries and Non-Guarantor Subsidiaries

In April and December 2011, Verisk Analytics, Inc. (the “Parent Company”) registered senior notes with full and unconditional and joint and several guarantees by certain of its 100 percent wholly-owned subsidiaries and issued certain other debt securities with full and unconditional and joint and several guarantees by certain of its subsidiaries. Accordingly, presented below is the condensed consolidating financial information for (i) the Parent Company, (ii) the guarantor subsidiaries of the Parent Company on a combined basis and (iii) all other non-guarantor subsidiaries of the Parent Company on a combined basis, as of June 30, 2012 and December 31, 2011 and for the three and six months ended June 30, 2012 and 2011. The condensed consolidating financial information has been presented using the equity method of accounting, to show the nature of assets held, results of operations and cash flows of the Parent Company, the guarantor subsidiaries and the non-guarantor subsidiaries assuming all guarantor subsidiaries provide both full and unconditional, and joint and several guarantees to the Parent Company at the beginning of the periods presented. Effective as of December 31, 2011, ISO Staff Services, Inc. (“ISOSS”), a guarantor of the senior notes, merged with and into ISO, also a guarantor of the senior notes, pursuant to which ISO was the surviving corporation. By virtue of the merger, ISO expressly assumed all of the obligations of ISOSS, including the guarantee by ISOSS of the senior notes. The Company corrected certain classifications on the Condensed Consolidating Statement of Cash Flows for the six-month period ended June 30, 2011 within the Guarantor Subsidiaries, which removed a gross-up in the repayments received from other subsidiaries and repayments of advances to other subsidiaries reflected in cash flows from investing activities and cash flows from financing activities, respectively. This correction did not have any impact on the net cash position of the Guarantor Subsidiaries.

CONDENSED CONSOLIDATING BALANCE SHEET (UNAUDITED)

As of June 30, 2012


	Verisk Analytics, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminating Entries			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	511	$	47,729	$	48,958	$	—		$	97,198
Available-for-sale securities		—		4,782		—		—			4,782
Accounts receivable, net of allowance for doubtful accounts of $4,088		—		128,269		45,338		—			173,607
Prepaid expenses		—		26,043		2,449		—			28,492
Deferred income taxes, net		—		2,557		13,056		—			15,613
Federal and foreign income taxes receivable		6,717		27,429		—		(6,441	)		27,705
State and local income taxes receivable		516		2,757		365		—			3,638
Intercompany receivables		349,949		528,301		182,176		(1,060,426	)		—
Other current assets		12,000		25,898		8,562		—			46,460

Total current assets		369,693		793,765		300,904		(1,066,867	)		397,495

Noncurrent assets:
Fixed assets, net		—		113,471		20,260		—			133,731
Intangible assets, net		—		72,008		291,547		—			363,555
Goodwill		—		482,110		452,652		—			934,762
Deferred income taxes, net		—		49,957		—		(49,957	)		—
Investment in subsidiaries		762,711		456,126		—		(1,218,837	)		—
Other assets		10,932		11,411		1,457		—			23,800

Total assets	$	1,143,336	$	1,978,848	$	1,066,820	$	(2,335,661	)	$	1,853,343

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	13,166	$	93,173	$	47,345	$	—		$	153,684
Short-term debt and current portion of long-term debt		—		201,248		535		—			201,783
Pension and postretirement benefits, current		—		2,912		—		—			2,912
Fees received in advance		—		216,848		37,032		—			253,880
Intercompany payables		386,610		471,317		202,499		(1,060,426	)		—
Federal and foreign taxes payable		—		—		6,441		(6,441	)		—

Total current liabilities		399,776		985,498		293,852		(1,066,867	)		612,259

Noncurrent liabilities:
Long-term debt		696,878		357,416		101		—			1,054,395
Pension and postretirement benefits		—		35,621		—		—			35,621
Deferred income taxes, net		—		—		91,837		(49,957	)		41,880
Other liabilities		—		51,909		10,597		—			62,506

Total liabilities		1,096,654		1,430,444		396,387		(1,116,824	)		1,806,661

Total stockholders’ equity		46,682		548,404		670,433		(1,218,837	)		46,682

Total liabilities and stockholders’ equity	$	1,143,336	$	1,978,848	$	1,066,820	$	(2,335,661	)	$	1,853,343

CONDENSED CONSOLIDATING BALANCE SHEET

As of December 31, 2011


	Verisk Analytics, Inc.			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminating Entries			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	76,238		$	76,813	$	38,552	$	—		$	191,603
Available-for-sale securities		—			5,066		—		—			5,066
Accounts receivable, net of allowance for doubtful accounts of $4,158		—			128,214		25,125		—			153,339
Prepaid expenses		—			20,090		1,815		—			21,905
Deferred income taxes, net		—			2,557		1,261		—			3,818
Federal and foreign income taxes receivable		7,905			23,024		—		(5,687	)		25,242
State and local income taxes receivable		618			10,392		423		—			11,433
Intercompany receivables		250,177			482,172		147,996		(880,345	)		—
Other current assets		—			26,094		15,154		—			41,248

Total current assets		334,938			774,422		230,326		(886,032	)		453,654

Noncurrent assets:
Fixed assets, net		—			102,202		17,209		—			119,411
Intangible assets, net		—			81,828		144,596		—			226,424
Goodwill		—			481,736		228,208		—			709,944
Deferred income taxes, net		—			50,267		—		(39,787	)		10,480
Investment in subsidiaries		601,380			104,430		—		(705,810	)		—
Other assets		6,218			13,059		1,916		—			21,193

Total assets	$	942,536		$	1,607,944	$	622,255	$	(1,631,629	)	$	1,541,106

LIABILITIES AND STOCKHOLDERS’ (DEFICIT)/EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	6,328		$	117,759	$	38,905	$	—		$	162,992
Acquisition related liabilities		—			—		250		—			250
Short-term debt and current portion of long-term debt		—			5,161		393		—			5,554
Pension and postretirement benefits, current		—			4,012		—		—			4,012
Fees received in advance		—			152,948		23,894		—			176,842
Intercompany payables		338,041			354,362		187,942		(880,345	)		—
Federal and foreign income taxes payable		—			—		5,687		(5,687	)		—

Total current liabilities		344,369			634,242		257,071		(886,032	)		349,650

Noncurrent liabilities:
Long-term debt		696,657			403,586		89		—			1,100,332
Pension and postretirement benefits		—			127,748		—		—			127,748
Deferred income taxes, net		—			—		39,787		(39,787	)		—
Other liabilities		—			58,158		3,708		—			61,866

Total liabilities		1,041,026			1,223,734		300,655		(925,819	)		1,639,596

Total stockholders’ (deficit)/equity		(98,490	)		384,210		321,600		(705,810	)		(98,490	)

Total liabilities and stockholders’ (deficit)/equity	$	942,536		$	1,607,944	$	622,255	$	(1,631,629	)	$	1,541,106

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (UNAUDITED)

For The Three Month Period Ended June 30, 2012


	Verisk Analytics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated
Revenues	$	—		$	319,254		$	60,782		$	(6,810	)	$	373,226

Expenses:
Cost of revenues (exclusive of items shown separately below)		—			121,813			28,828			(3,567	)		147,074
Selling, general and administrative		—			51,202			14,514			(3,243	)		62,473
Depreciation and amortization of fixed assets		—			10,817			2,273			—			13,090
Amortization of intangible assets		—			4,892			7,295			—			12,187

Total expenses		—			188,724			52,910			(6,810	)		234,824

Operating income		—			130,530			7,872			—			138,402

Other income/(expense):
Investment income		18			26			112			—			156
Realized loss on securities, net		—			(30	)		—			—			(30	)
Interest expense		(9,875	)		(7,488	)		(14	)		—			(17,377	)

Total other (expense)/income, net		(9,857	)		(7,492	)		98			—			(17,251	)

(Loss)/income before equity in net income of subsidiaries and income taxes		(9,857	)		123,038			7,970			—			121,151
Equity in net income of subsidiaries		79,571			2,967			—			(82,538	)		—
Provision for income taxes		3,617			(48,475	)		(2,962	)		—			(47,820	)

Net income	$	73,331		$	77,530		$	5,008		$	(82,538	)	$	73,331

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (UNAUDITED)

For The Six Month Period Ended June 30, 2012


	Verisk Analytics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated
Revenues	$	—		$	626,353		$	104,383		$	(11,009	)	$	719,727

Expenses:
Cost of revenues (exclusive of items shown separately below)		—			238,152			48,200			(5,948	)		280,404
Selling, general and administrative		—			94,539			26,974			(5,061	)		116,452
Depreciation and amortization of fixed assets		—			20,368			4,366			—			24,734
Amortization of intangible assets		—			9,820			10,954			—			20,774

Total expenses		—			362,879			90,494			(11,009	)		442,364

Operating income		—			263,474			13,889			—			277,363

Other income/(expense):
Investment income		36			100			125			—			261
Realized gain on securities, net		—			300			—			—			300
Interest expense		(19,744	)		(13,995	)		(23	)		—			(33,762	)

Total other (expense)/income, net		(19,708	)		(13,595	)		102			—			(33,201	)

(Loss)/income before equity in net income of subsidiaries and income taxes		(19,708	)		249,879			13,991			—			244,162
Equity in net income of subsidiaries		160,407			3,253			—			(163,660	)		—
Provision for income taxes		7,233			(96,795	)		(6,668	)		—			(96,230	)

Net income	$	147,932		$	156,337		$	7,323		$	(163,660	)	$	147,932

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (UNAUDITED)

For The Three Month Period Ended June 30, 2011


	Verisk Analytics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated
Revenues	$	—		$	289,353		$	43,842		$	(5,915	)	$	327,280

Expenses:
Cost of revenues (exclusive of items shown separately below)		—			114,120			19,906			(2,841	)		131,185
Selling, general and administrative		—			45,936			13,047			(3,074	)		55,909
Depreciation and amortization of fixed assets		—			8,739			2,116			—			10,855
Amortization of intangible assets		—			4,797			4,080			—			8,877
Acquisition related liabilities adjustment		—			(2,800	)		(564	)		—			(3,364	)

Total expenses		—			170,792			38,585			(5,915	)		203,462

Operating income		—			118,561			5,257			—			123,818

Other income/(expense):
Investment income/(loss)		—			1,457			(38	)		(1,429	)		(10	)
Realized gain on securities, net		—			125			—			—			125
Interest expense		(7,681	)		(8,562	)		(71	)		1,429			(14,885	)

Total other expense, net		(7,681	)		(6,980	)		(109	)		—			(14,770	)

(Loss)/income before equity in net income of subsidiaries and income taxes		(7,681	)		111,581			5,148			—			109,048
Equity in net income of subsidiaries		70,428			2,702			—			(73,130	)		—
Provision for income taxes		2,830			(44,525	)		(1,776	)		—			(43,471	)

Net income	$	65,577		$	69,758		$	3,372		$	(73,130	)	$	65,577


CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (UNAUDITED) For The Six Month Period Ended June 30, 2011

	Verisk Analytics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated
Revenues	$	—		$	568,933		$	78,964		$	(7,748	)	$	640,149

Expenses:
Cost of revenues (exclusive of items shown separately below)		—			222,903			36,659			(3,821	)		255,741
Selling, general and administrative		—			82,414			26,678			(3,927	)		105,165
Depreciation and amortization of fixed assets		—			18,181			3,979			—			22,160
Amortization of intangible assets		—			10,117			7,215			—			17,332
Acquisition related liabilities adjustment		—			(2,800	)		(564	)		—			(3,364	)

Total expenses		—			330,815			73,967			(7,748	)		397,034

Operating income		—			238,118			4,997			—			243,115

Other income/(expense):
Investment income/(loss)		—			1,471			(42	)		(1,429	)		—
Realized gain on securities, net		—			487			—			—			487
Interest expense		(7,681	)		(18,157	)		(91	)		1,429			(24,500	)

Total other expense, net		(7,681	)		(16,199	)		(133	)		—			(24,013	)

(Loss)/income before equity in net income of subsidiaries and income taxes		(7,681	)		221,919			4,864			—			219,102
Equity in net income of subsidiaries		136,304			1,614			—			(137,918	)		—
Provision for income taxes		2,830			(88,078	)		(2,401	)		—			(87,649	)

Net income	$	131,453		$	135,455		$	2,463		$	(137,918	)	$	131,453

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

For The Three Months Ended June 30, 2012


	Verisk Analytics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated
Net income	$	73,331		$	77,530		$	5,008		$	(82,538	)	$	73,331

Other comprehensive income, net of tax:
Unrealized holding loss on investments		(116	)		(116	)		—			116			(116	)
Unrealized foreign currency loss		(287	)		(248	)		(254	)		502			(287	)
Pension and postretirement unfunded liability adjustment		452			452			—			(452	)		452

Total other comprehensive income		49			88			(254	)		166			49

Comprehensive income	$	73,380		$	77,618		$	4,754		$	(82,372	)	$	73,380

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

For The Six Months Ended June 30, 2012


	Verisk Analytics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated
Net income	$	147,932		$	156,337		$	7,323		$	(163,660	)	$	147,932

Other comprehensive income, net of tax:
Unrealized holding loss on investments		(313	)		(313	)		—			313			(313	)
Unrealized foreign currency loss		(134	)		(96	)		(113	)		209			(134	)
Pension and postretirement unfunded liability adjustment		1,380			1,380			—			(1,380	)		1,380

Total other comprehensive income		933			971			(113	)		(858	)		933

Comprehensive income	$	148,865		$	157,308		$	7,210		$	(164,518	)	$	148,865

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

For The Three Months Ended June 30, 2011


	Verisk Analytics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminating Entries			Consolidated
Net income	$	65,577		$	69,758		$	3,372	$	(73,130	)	$	65,577

Other comprehensive income, net of tax:
Unrealized holding loss on investments		(126	)		(126	)		—		126			(126	)
Unrealized foreign currency gain		235			57			234		(291	)		235
Pension and postretirement unfunded liability adjustment		1,220			1,220			—		(1,220	)		1,220

Total other comprehensive income		1,329			1,151			234		(1,385	)		1,329

Comprehensive income	$	66,906		$	70,909		$	3,606	$	(74,515	)	$	66,906

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

For The Six Months Ended June 30, 2011


	Verisk Analytics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminating Entries			Consolidated
Net income	$	131,453		$	135,455		$	2,463	$	(137,918	)	$	131,453

Other comprehensive income, net of tax:
Unrealized holding loss on investments		(252	)		(252	)		—		252			(252	)
Unrealized foreign currency gain		573			358			612		(970	)		573
Pension and postretirement unfunded liability adjustment		1,974			1,974			—		(1,974	)