Attached files
| file | filename |
|---|---|
| EX-23.1 - EX-23.1 - Verisk Analytics, Inc. | d352454dex231.htm |
| EX-99.2 - EX-99.2 - Verisk Analytics, Inc. | d352454dex992.htm |
| EX-99.1 - EX-99.1 - Verisk Analytics, Inc. | d352454dex991.htm |
| 8-K/A - FORM 8-K/A - Verisk Analytics, Inc. | d352454d8ka.htm |
Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited pro forma condensed consolidated financial statements (the “pro forma financial statements”) present the pro forma results of operations and financial position of Verisk Analytics, Inc. (the “Company”) and MediConnect Global, Inc. (“MediConnect”) on a consolidated basis, giving effect to the acquisition, which was accounted for under the purchase method of accounting, as well as the assumptions and adjustments described in the accompanying notes to the pro forma financial statements. The unaudited pro forma condensed consolidated balance sheet gives effect to the acquisition as if it had occurred on December 31, 2011. The unaudited pro forma consolidated statement of operations for the year ended December 31, 2011 is presented as if the acquisition had occurred on January 1, 2011. The pro forma financial statements are based on the audited and unaudited historical consolidated financial statements of the Company and MediConnect, respectively, as of and for the year ended December 31, 2011. The unaudited results of operations of MediConnect for the year ended December 31, 2011 was derived from the unaudited results of operations for the nine months ended December 31, 2011, included in Exhibit 99.2, plus the unaudited results of operations for the three months ended March 31, 2011.
The pro forma financial statements are based on currently available information and assumptions and estimates, which the Company believes are reasonable. These assumptions and estimates, however, are subject to change. The Company believes that all necessary adjustments have been made to fairly present the pro forma information.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of December 31, 2011
(In thousands)
| Verisk Analytics | MediConnect | Pro Forma Adjustments |
Pro Forma Consolidated |
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| ASSETS |
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| Current assets: |
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| Cash and cash equivalents |
$ | 191,603 | $ | 26,123 | $ | (26,123 | )a1 | $ | 191,603 | |||||||
| Accounts receivable, net |
153,339 | 7,804 | — | 161,143 | ||||||||||||
| Other current assets |
108,712 | 765 | 14,159 | a7 | 123,636 | |||||||||||
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| Total current assets |
453,654 | 34,692 | (11,964 | ) | 476,382 | |||||||||||
| Noncurrent assets: |
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| Intangible assets, net |
226,424 | 2,962 | 154,943 | a3 | 384,329 | |||||||||||
| Goodwill |
709,944 | 6,851 | 220,679 | a4 | 937,474 | |||||||||||
| Other assets |
151,084 | 4,364 | 13,800 | a2 | 169,248 | |||||||||||
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| Total assets |
$ | 1,541,106 | $ | 48,869 | $ | 377,458 | $ | 1,967,433 | ||||||||
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| LIABILITIES AND STOCKHOLDERS’ DEFICIT |
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| Current liabilities: |
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| Accounts payable and accrued liabilities |
$ | 162,992 | $ | 4,463 | $ | — | $ | 167,455 | ||||||||
| Fees received in advance |
176,842 | 3,100 | — | 179,942 | ||||||||||||
| Other current liabilities |
9,816 | 1,677 | (1,356 | )a5 | 10,137 | |||||||||||
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| Total current liabilities |
349,650 | 9,240 | (1,356 | ) | 357,534 | |||||||||||
| Noncurrent liabilities: |
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| Long-term debt |
1,100,332 | 3,230 | 344,693 | a1 | 1,448,255 | |||||||||||
| Other liabilities |
189,614 | 1,528 | 68,992 | a6 | 260,134 | |||||||||||
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| Total liabilities |
1,639,596 | 13,998 | 412,329 | 2,065,923 | ||||||||||||
| Commitments and contingencies |
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| Stockholders’ (deficit)/equity |
(98,490 | ) | 34,871 | (34,871 | )a5 | (98,490 | ) | |||||||||
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| Total liabilities and stockholders’ (deficit)/equity |
$ | 1,541,106 | $ | 48,869 | $ | 377,458 | $ | 1,967,433 | ||||||||
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| (a1) | The unaudited pro forma condensed consolidated balance sheet assumes that the purchase price, net of cash of $26.1 million, for this acquisition was assumed to be funded entirely through uncommitted senior notes with a fixed interest rate of 5.75% (average cost of debt of Verisk). Differences between the assumed financing, as presented in the pro forma financial statements as of December 31, 2011, and the actual financing of this acquisition that occurred on March 30, 2012 could have a significant impact on the pro forma financial statements. The pro forma adjustment also reflects the payoff of MediConnect’s existing long-term outstanding debt obligations. |
| (a2) | To reflect preliminary purchase accounting adjustments, including indemnity escrow funded. |
| (a3) | To reflect preliminary purchase accounting adjustments for fair value of acquired definite-lived intangible assets, offset by the removal of MediConnect’s existing balance of $3.0 million. |
| (a4) | To reflect the fair value of acquired goodwill based on assets acquired and liabilities assumed as if the acquisition occurred on December 31, 2011. The difference between the amount recorded on a pro forma basis and the actual balance as of the effective date of the acquisition is the result of changes in the assets and liabilities of MediConnect between December 31, 2011 and the closing date of March 30, 2012. |
| (a5) | To reflect the preliminary purchase accounting adjustments. |
| (a6) | To reflect preliminary purchase accounting adjustments for deferred tax liabilities and indemnity escrow funded. |
| (a7) | To reflect preliminary purchase accounting adjustments for deferred tax assets. |
The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2011
(In thousands, except for share and per share data)
| Pro Forma | Pro Forma | |||||||||||||||
| Verisk Analytics | MediConnect | Adjustments | Consolidated | |||||||||||||
| Revenues |
$ | 1,331,840 | $ | 58,567 | $ | — | $ | 1,390,407 | ||||||||
| Expenses: |
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| Cost of revenues (exclusive of items shown separately below) |
533,735 | 30,135 | — | 563,870 | ||||||||||||
| Selling, general and administrative |
209,469 | 6,774 | — | 216,243 | ||||||||||||
| Depreciation and amortization of fixed assets |
43,827 | 1,603 | — | 45,430 | ||||||||||||
| Amortization of intangible assets |
34,792 | 667 | 13,880 | b1 | 49,339 | |||||||||||
| Acquisition related liabilities adjustment |
(3,364 | ) | — | — | (3,364 | ) | ||||||||||
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| Total expenses |
818,459 | 39,179 | 13,880 | 871,518 | ||||||||||||
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| Operating income |
513,381 | 19,388 | (13,880 | ) | 518,889 | |||||||||||
| Other income/(expense): |
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| Investment income |
201 | 589 | — | 790 | ||||||||||||
| Realized gain on securities, net |
686 | — | — | 686 | ||||||||||||
| Interest expense |
(53,847 | ) | (312 | ) | (19,697 | )a1 | (73,856 | ) | ||||||||
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| Total other (expense)/income, net |
(52,960 | ) | 277 | (19,697 | ) | (72,380 | ) | |||||||||
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| Income before income taxes |
460,421 | 19,665 | (33,577 | ) | 446,509 | |||||||||||
| Provision for income taxes |
(177,663 | ) | (7,160 | ) | 13,116 | b2 | (171,707 | ) | ||||||||
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| Net income |
$ | 282,758 | $ | 12,505 | $ | (20,461 | ) | $ | 274,802 | |||||||
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| Basic net income per share |
$ | 1.70 | $ | 1.66 | ||||||||||||
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| Diluted net income per share |
$ | 1.63 | $ | 1.59 | ||||||||||||
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| Weighted average shares outstanding: |
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| Basic |
166,015,238 | 166,015,238 | ||||||||||||||
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| Diluted |
173,325,110 | 173,325,110 | ||||||||||||||
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| (b1) | To reflect amortization expense related to the acquired definite-lived intangible assets. |
| (b2) | To reflect estimated adjustment to tax provision from pro forma adjustments using a statutory tax rate of 40.0%. |
The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements.
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NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| 1. | Basis of Pro Forma Presentation |
The pro forma financial statements and explanatory notes give effect to the combination of the Company and MediConnect. The acquisition was accounted for under the purchase method of accounting.
For the purposes of the pro forma financial statements, the acquisition of MediConnect, net of cash of $26.1 million, was assumed to be funded entirely with $347.8 million of uncommitted senior notes with a fixed interest rate of 5.75% (average cost of debt of the Company), and not funded with cash on hand as of December 31, 2011, as the cash was to be utilized to fund working capital and capital expenditure needs, as well as share repurchases. A hypothetical 1/8% increase or decrease in the assumed interest rate on the borrowings used to fund the acquisition would have resulted in a $0.4 million increase or decrease, respectively, in annual interest expense. These assumptions are based on prevailing circumstances existing during the period covered by the pro forma financial statements.
The amount of certain assets and liabilities presented are based on preliminary valuations and are subject to adjustment as additional information is obtained and valuations are reviewed and finalized. The areas of the purchase price allocation that are considered preliminary are the fair values of accounts receivable, fixed assets, intangible assets, indemnity escrow, fees received in advance, goodwill and the related tax impact of adjustments to these areas. However, as indicated in note (a4) above, the Company has made certain adjustments to the December 31, 2011 historical book values of the assets and liabilities of MediConnect to reflect certain preliminary estimates of the fair values necessary to prepare the pro forma financial statements. Any excess purchase price over the historical net assets of MediConnect, as adjusted to reflect estimated fair values, has been recorded as goodwill. Actual results may differ from the pro forma financial statements once the Company has completed the valuations necessary to finalize the required purchase price allocation. Such finalization could result in material changes to the pro forma financial statements. The allocation of the purchase price will be finalized once all information is obtained, but not to exceed one year from the acquisition date.
The pro forma financial statements are not intended to represent or be indicative of the consolidated results of operations or financial position of the Company that would have been reported had the acquisition been completed as of the dates presented, and should not be taken as representative of the future consolidated results of operations or financial position of the Company. This information should be read in conjunction with the accompanying notes to the pro forma financial statements, the historical consolidated financial statements and accompanying notes to the Company’s annual report filed on Form 10-K for the year ended December 31, 2011, filed on February 28, 2012, and the audited and unaudited financial statements of MediConnect included as Exhibit 99.1 and 99.2, respectively, in this Current Report on Form 8-K/A.
| 2. | Preliminary Purchase Price Allocation |
The preliminary purchase price allocation, net of cash acquired of $29.4 million, as of the acquisition effective date and giving effect to the purchase price allocation adjustments similar to those made in the pro forma financial statements, resulted in the following:
| MediConnect | ||||
| Accounts receivable |
$ | 7,077 | ||
| Current assets |
14,918 | |||
| Fixed assets |
1,075 | |||
| Intangible assets |
157,905 | |||
| Goodwill |
223,354 | |||
| Other assets |
17,087 | |||
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| Total assets acquired |
421,416 | |||
| Current liabilities |
3,005 | |||
| Other liabilities |
70,634 | |||
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| Total liabilities assumed |
73,639 | |||
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| Net assets acquired |
$ | 347,777 | ||
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NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The preliminary amounts assigned to intangible assets by category 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 | ||||||
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| Total intangible assets |
9 years | $ | 157,905 | |||||
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