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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________
FORM 10-Q
___________________________________
 
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2016
OR
☐
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  ☒    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  ☒    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.
Large accelerated filer
 
☒
 
Accelerated filer
 
☐
 
 
 
 
 
 
 
Non-accelerated filer
 
☐  (Do not check if a smaller reporting company)
 
Smaller reporting company
 
☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of October 28, 2016, there were 167,450,965 shares outstanding of the registrant's Common Stock, par value $.001.
 

Table of Contents

Verisk Analytics, Inc.
Index to Form 10-Q
Table of Contents
 
 
Page Number
 
 
PART I — FINANCIAL INFORMATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exhibit 31.1
 
 
 
Exhibit 31.2
 
 
 
Exhibit 32.1
 

Table of Contents

PART I — FINANCIAL INFORMATION
Item 1. Financial Statements

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

 
$
138,348

Available-for-sale securities
 
3,457

 
 
3,576

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

 
 
250,947

Prepaid expenses
 
28,616

 
 
34,126

Income taxes receivable
 
11,236

 
 
48,596

Other current assets
 
26,266

 
 
52,913

Current assets held-for-sale
 
—

 
 
76,063

Total current assets
 
464,301

 
 
604,569

Noncurrent assets:
 
 
 
 
 
Fixed assets, net
 
355,867

 
 
350,311

Intangible assets, net
 
1,069,089

 
 
1,245,083

Goodwill
 
2,632,178

 
 
2,753,026

Pension assets
 
42,524

 
 
32,922

Other assets
 
121,092

 
 
25,845

Noncurrent assets held-for-sale
 
—

 
 
581,896

Total assets
$
4,685,051

 
$
5,593,652

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

 
$
222,112

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

 
 
874,811

Pension and postretirement benefits, current
 
1,831

 
 
1,831

Deferred revenues
 
355,459

 
 
340,833

Current liabilities held-for-sale
 
—

 
 
39,670

Total current liabilities
 
556,490

 
 
1,479,257

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

 
 
2,270,904

Pension benefits
 
12,526

 
 
12,971

Postretirement benefits
 
1,407

 
 
1,981

Deferred income taxes, net
 
305,694

 
 
329,175

Other liabilities
 
54,061

 
 
58,360

Noncurrent liabilities held-for-sale
 
—

 
 
68,993

Total liabilities
 
3,209,621

 
 
4,221,641

Commitments and contingencies
 

 
 

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

 
 
137

Additional paid-in capital
 
2,100,989

 
 
2,023,390

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

 
 
2,161,726

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

 
 
1,372,011

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

 
$
5,593,652

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

1
Table of Contents

VERISK ANALYTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For The Three and Nine Months Ended September 30, 2016 and 2015
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands, except for share and per share data)
Revenues
$
498,081

 
$
470,408

 
$
1,489,077

 
$
1,283,300

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

 
 
162,874

 
 
521,408

 
 
451,298

Selling, general and administrative
 
77,814

 
 
70,642

 
 
224,408

 
 
202,692

Depreciation and amortization of fixed assets
 
29,501

 
 
27,105

 
 
90,776

 
 
69,169

Amortization of intangible assets
 
22,679

 
 
12,639

 
 
70,355

 
 
42,998

Total expenses
 
299,659

 
 
273,260

 
 
906,947

 
 
766,157

Operating income
 
198,422

 
 
197,148

 
 
582,130

 
 
517,143

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

 
 
17,894

 
 
3,014

 
 
17,134

Gain on derivative instruments
 
—

 
 
—

 
 
—

 
 
85,187

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

Income from continuing operations before income
taxes
 
172,396

 
 
182,039

 
 
493,527

 
 
530,537

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

 
 
124,181

 
 
344,043

 
 
379,471

Discontinued operations:
 


 
 


 
 
 
 
 
 
Income from discontinued operations
 
—

 
 
11,750

 
 
256,525

 
 
23,770

Provision for income taxes from discontinued
operations
 
—

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

 
 
7,633

 
 
137,909

 
 
14,349

Net income
$
127,577

 
$
131,814

 
$
481,952

 
$
393,820

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

 
$
0.74

 
$
2.04

 
$
2.32

Income from discontinued operations
 
—

 
 
0.04

 
 
0.82

 
 
0.09

Basic net income per share
$
0.76

 
$
0.78

 
$
2.86

 
$
2.41

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

 
$
0.73

 
$
2.01

 
$
2.27

Income from discontinued operations
 
—

 
 
0.04

 
 
0.80

 
 
0.09

Diluted net income per share
$
0.74

 
$
0.77

 
$
2.81

 
$
2.36

Weighted average shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
Basic
 
168,874,129

 
 
168,739,437

 
 
168,541,399

 
 
163,656,387

Diluted
 
171,785,900

 
 
172,171,337

 
 
171,495,189

 
 
167,079,550




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

2
Table of Contents

VERISK ANALYTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
For The Three and Nine Months Ended September 30, 2016 and 2015
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
 
 
 
(In thousands)
Net income
$
127,577

 
$
131,814

 
$
481,952

 
$
393,820

Other comprehensive loss, net of tax:
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustment
 
(62,091
)
 
 
(95,843
)
 
 
(278,612
)
 
 
(100,272
)
Unrealized holding gain (loss) on available-for-sale securities
 
90

 
 
(22
)
 
 
293

 
 
47

Pension and postretirement liability adjustment
 
210

 
 
321

 
 
1,437

 
 
1,322

Total other comprehensive loss
 
(61,791
)
 
 
(95,544
)
 
 
(276,882
)
 
 
(98,903
)
Comprehensive income
$
65,786

 
$
36,270

 
$
205,070

 
$
294,917






















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

3
Table of Contents

VERISK ANALYTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
For The Year Ended December 31, 2015 and The Nine Months Ended September 30, 2016
 
Common Stock
Issued
 
Par 
Value
 
Unearned
KSOP
Contributions
 
Additional
Paid-in
Capital
 
Treasury
Stock
 
Retained
Earnings
 
Accumulated
Other Comprehensive
Losses
 
Total
Stockholders’
Equity 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands, except for share data)
Balance, January 1, 2015
544,003,038

 
$
137

 
$
(161
)
 
$
1,171,196

 
$
(2,533,764
)
 
$
1,654,149

 
$
(80,514
)
 
$
211,043

Net income
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
507,577

 
 
—

 
 
507,577

Other comprehensive loss
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
(161,538
)
 
 
(161,538
)
Treasury stock acquired (1,088,474 shares)
—

 
 
—

 
 
—

 
 
100,000

 
 
(120,456
)
 
 
—

 
 
—

 
 
(20,456
)
KSOP shares earned (47,686 shares reissued from
treasury stock)
—

 
 
—

 
 
161

 
 
13,588

 
 
327

 
 
—

 
 
—

 
 
14,076

Shares issued from equity offering (10,604,000 shares
reissued from treasury stock)
—

 
 
—

 
 
—

 
 
651,258

 
 
69,590

 
 
—

 
 
—

 
 
720,848

Stock options exercised, including tax benefit of $27,992
(1,739,847 shares reissued from treasury stock)
—

 
 
—

 
 
—

 
 
57,503

 
 
11,730

 
 
—

 
 
—

 
 
69,233

Restricted stock lapsed, including tax benefit of $1,238
(177,252 shares reissued from treasury stock)
—

 
 
—

 
 
—

 
 
68

 
 
1,170

 
 
—

 
 
—

 
 
1,238

Employee stock purchase plan (25,599 shares reissued
from treasury stock)
—

 
 
—

 
 
—

 
 
1,625

 
 
173

 
 
—

 
 
—

 
 
1,798

Stock based compensation
—

 
 
—

 
 
—

 
 
30,116

 
 
—

 
 
—

 
 
—

 
 
30,116

Net share settlement from restricted stock awards (32,882
shares withheld for tax settlement)
—

 
 
—

 
 
—

 
 
(2,350
)
 
 
—

 
 
—

 
 
—

 
 
(2,350
)
Other stock issuances (5,844 shares reissued from treasury
stock)
—

 
 
—

 
 
—

 
 
386

 
 
40

 
 
—

 
 
—

 
 
426

Balance, December 31, 2015
544,003,038

 
 
137

 
 
—

 
 
2,023,390

 
 
(2,571,190
)
 
 
2,161,726

 
 
(242,052
)
 
 
1,372,011

Net income
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
481,952

 
 
—

 
 
481,952

Other comprehensive loss
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
(276,882
)
 
 
(276,882
)
Treasury stock acquired (2,561,814 shares)
—

 
 
—

 
 
—

 
 
—

 
 
(189,807
)
 
 
—

 
 
—

 
 
(189,807
)
KSOP shares issued (143,439 shares reissued from treasury stock)
—

 
 
—

 
 
—

 
 
10,354

 
 
1,032

 
 
—

 
 
—

 
 
11,386

Stock options exercised, including tax benefit of $17,217
(1,116,483 shares reissued from treasury stock)
—

 
 
—

 
 
—

 
 
45,137

 
 
7,973

 
 
—

 
 
—

 
 
53,110

Restricted stock lapsed, including tax benefit of $1,193
(168,280 shares reissued from treasury stock)
—

 
 
—

 
 
—

 
 
(9
)
 
 
1,202

 
 
—

 
 
—

 
 
1,193

Employee stock purchase plan (23,168 shares reissued
from treasury stock)
—

 
 
—

 
 
—

 
 
1,609

 
 
167

 
 
—

 
 
—

 
 
1,776

Stock based compensation
—

 
 
—

 
 
—

 
 
23,712

 
 
—

 
 
—

 
 
—

 
 
23,712

Net share settlement of restricted stock awards (38,250
shares withheld for tax settlement)
—

 
 
—

 
 
—

 
 
(3,065
)
 
 
—

 
 
—

 
 
—

 
 
(3,065
)
Other stock issuances (26,106 shares reissued
from treasury stock)
—

 
 
—

 
 
—

 
 
(139
)
 
 
183

 
 
—

 
 
—

 
 
44

Balance, September 30, 2016
544,003,038

 
$
137

 
$
—

 
$
2,100,989

 
$
(2,750,440
)
 
$
2,643,678

 
$
(518,934
)
 
$
1,475,430

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

4
Table of Contents

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

 
$
393,820

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

 
 
86,571

Amortization of intangible assets
 
76,259

 
 
61,496

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

 
 
11,770

Allowance for doubtful accounts
 
1,483

 
 
1,151

KSOP compensation expense
 
11,386

 
 
10,575

Stock based compensation
 
23,822

 
 
25,471

Gain on derivative instruments
 
—

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

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

 
 
19

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

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

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

 
 
39,651

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

Income taxes
 
45,258

 
 
44,716

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

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

Net cash provided by operating activities
 
463,671

 
 
520,044

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

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

 
 
101

Proceeds from sale of discontinued operations
 
719,374

 
 
—

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

 
 
85,187

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

 
 
281

Other investing activities, net
 
(620
)
 
 
—

Cash received from exercise of common stock warrants
 
—

 
 
15,602

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

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

 
 
1,243,966

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

 
 
830,000

Repayment of current portion of long-term debt
 
—

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

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

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

 
 
18,214

Proceeds from stock options exercised
 
32,591

 
 
31,283

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

 
 
720,848

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

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

Increase in cash and cash equivalents
 
26,439

 
 
129,466

Cash and cash equivalents, beginning of period
 
138,348

 
 
39,359

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

 
$
168,825

Supplemental disclosures:
 
 
 
 
 
Taxes paid
$
221,419

 
$
111,867

Interest paid
$
75,845

 
$
56,583

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

 
$
—

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

 
$
—

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

 
$
—

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

 
$
258,976

Tenant improvement included in other liabilities
$
74

 
$
1,168

Capital lease obligations
$
11,502

 
$
1,158

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

 
$
605

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

5
Table of Contents

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 predictive analytics and decision support solutions to customers in rating, underwriting, claims, catastrophe and weather risk, global risk analytics, natural resources intelligence, economic forecasting, and many other fields.
Verisk was established to serve as the parent holding company of Insurance Services Office, Inc. (“ISO”) upon completion of the initial public offering ("IPO"), which occurred on October 9, 2009. 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. For 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 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, fair value of stock based compensation, assets and liabilities for pension and postretirement benefits, and the estimate for the allowance for doubtful accounts. Actual results may ultimately differ from those estimates. On March 31, 2016, the Company's healthcare business qualified as assets held-for-sale. Accordingly, the respective assets and liabilities have been classified as held-for-sale in the condensed consolidated balance sheet at December 31, 2015. The Company's healthcare business was sold on June 1, 2016. The results of operations and the gain on sale of the Company's healthcare business are reported as a discontinued operation for the periods presented herein (See Note 6).
The condensed consolidated financial statements as of September 30, 2016 and for the three and nine months ended September 30, 2016 and 2015, in the opinion of management, include all adjustments, consisting of normal recurring items, to present fairly the Company’s financial position, results of operations and cash flows. The operating results for the three and nine months ended September 30, 2016 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 nine months ended September 30, 2016 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, 2015. 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 Pronouncements

In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-03. The amendments in this update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The Company adopted the guidance on January 1, 2016 and as a result, debt issuance costs of $22,275 were reclassified from "Other assets" to "Long-term debt" on the Company's condensed consolidated balance sheet as of December 31, 2015.

In April 2015, the FASB issued ASU No. 2015-05, Customer's Accounting for Fees Paid in a Cloud Computing Arrangement ("ASU No. 2015-05"). This guidance is intended to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement, primarily to determine whether the arrangement includes a sale or license of software. The Company adopted the guidance on January 1, 2016. The adoption of ASU No. 2015-05 did not have a material impact on the Company's condensed consolidated financial statements.

6
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In September 2015, the FASB issued ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments ("ASU No. 2015-16"). ASU No. 2015-16 requires, for business combinations, that the acquirer record, in the same period's financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The Company adopted the guidance on January 1, 2016. Adoption of this guidance did not have a material impact on the results of operations or financial position (see Note 5).

In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU No. 2016-01”). The amendments in this update require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity method of accounting or those that result in consolidation of the investee). The amendments allow equity investments that do not have readily determinable fair values to be remeasured at fair value either upon occurrence of an observable price change or upon identification of an impairment. The amendments in ASU No. 2016-01 are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. For amendments applicable to the Company, early adoption is not permitted. The Company will conform to ASC No. 2016-01 in the condensed consolidated financial statements in future periods.
In February 2016, the FASB issued ASU No. 2016-02, Leases ("ASU No. 2016-02"). This ASU amends the existing accounting considerations and treatments for leases through the creation of Topic 842, Leases, to increase transparency and comparability among organizations by requiring the recognition of lease assets and lease liabilities on the balance sheet and disclosing key information about lease arrangements. The amendments in ASU No. 2016-02 are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application of the amendments is permitted for all entities. The Company has decided not to early adopt ASU No. 2016-02 and is currently evaluating the impact the amendments may have on its condensed consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-07, Equity Method and Joint Ventures (“ASU No. 2016-07”).  The amendments in the update eliminate the requirement that an entity retroactively adopt the equity method of accounting if an investment qualifies for use of the equity method as a result of an increase in the level of ownership or degree of influence.  The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of account as of the date the investment becomes qualified for equity method accounting.  The amendments in ASU No. 2016-07 are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016.  Early adoption is permitted. The Company has not elected to early adopt.  The adoption of ASU No. 2016-07 is not expected to have a material impact on the Company’s condensed consolidated financial statements.
In March 2016, the FASB issued ASU No. 2016-08, Principal Versus Agent Considerations (“ASU No. 2016-08”). The amendments to this update are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. The amendments in ASU No. 2016-08 are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently evaluating ASU No. 2016-08 and has not determined the impact this standard may have on its condensed consolidated financial statements nor decided upon the method of adoption.
In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU No. 2016-09”). The objective of this update is to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in ASU No. 2016-09 are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any entity in any interim or annual period. The Company has not elected to early adopt. The Company is currently evaluating ASU No. 2016-09 and has not determined the impact these amendments may have on its condensed consolidated financial statements.
In April 2016, the FASB issued ASU No. 2016-10, Identifying Performance Obligations and Licensing (“ASU No. 2016-10”). The amendments in this update clarify the following two aspects of Accounting Standards Codification ("ASC") 606 ("ASC 606"), Revenue From Contracts With Customers: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. The amendments in ASU No. 2016-10 are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company has not elected to early adopt. The Company is currently evaluating ASU No. 2016-10 and has not determined the impact this standard may have on its condensed consolidated financial statements nor decided upon the method of adoption.

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In May 2016, the FASB issued ASU No. 2016-11, Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting (SEC Update) ("ASU No. 2016-11"). Specifically, registrants should not rely on the following SEC Staff Observer comments upon adoption of ASC 606: a. Revenue and Expense Recognition for Freight Services in Process, b. Accounting for Shipping and Handling Fees and Costs, c. Accounting for Consideration Given by a Vendor to a Customer, and d. Accounting for Gas-Balancing Arrangements. The adoption of ASU No. 2016-11 is not expected to have a material impact on the Company’s condensed consolidated financial statements.
In May 2016, the FASB issued ASU No. 2016-12, Narrow-Scope Improvements and Practical Expedients ("ASU No. 2016-12"). ASU No. 2016-12 does not change the core principle of the guidance in ASC 606. Rather, this update affects only the narrow scope improvements to the guidance on collectability, noncash consideration, and completed contracts at transition. The effective date and transition requirements for ASU 2016-12 are the same as the effective date and transition requirements for ASC 606. The adoption of ASU No. 2016-12 is not expected to have a material impact on the Company’s condensed consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments ("ASU No. 2016-13"). Financial assets measured at amortized cost basis, including but not limited to loans, debt securities and trade receivables , that have the contractual right to receive cash are within the scope of this guidance. Under ASU No. 2016-13, these financial assets should be presented at the net amount expected to be collected. The income statement should reflect the measurement of credit losses that have taken place during the period. The amendments in ASU No. 2016-13 are effective for fiscal years beginning after December 15, 2019. Earlier adoption is permitted. The Company has decided not to early adopt ASU No. 2016-13. The adoption of ASU No. 2016-13 is not expected to have a material impact on the Company’s condensed consolidated financial statements.
In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments ("ASU No. 2016-15"). The amendments in this update provide guidance on various specific cash flow issues to reduce diversity in the practice of how certain transactions are classified in the statement of cash flows. ASU No. 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company has not elected to early adopt. The Company is currently evaluating ASU No. 2016-15 and has not yet determined the impact these amendments may have on its condensed consolidated financial statements.
3. Investments:
Available-for-sale securities consisted of the following: 
 
Adjusted Cost
 
Gross Unrealized
Gain (Loss)
 
Fair Value
September 30, 2016
 
 
 
 
 
 
 
 
Registered investment companies
$
3,029

 
$
428

 
$
3,457

December 31, 2015
 
 
 
 
 
 
 
 
Registered investment companies
$
3,622

 
$
(46
)
 
$
3,576

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 in accordance with ASC 323-10-25, The Equity Method of Accounting for Investments in Common Stock ("ASC 323-10-25"). At September 30, 2016 and December 31, 2015, the carrying value of such securities was $9,887 and $8,487, 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. To increase consistency and comparability of assets and liabilities recorded at fair value, ASC 820-10, Fair Value Measurements (“ASC 820-10”), established 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: 

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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 are internally-developed, and considers
   risk premiums that market participants would require.
The fair values of cash and cash equivalents, accounts receivable, securities accounted for under ASC 323-10-25, accounts payable and accrued liabilities, and short-term debt approximate their carrying amounts because of the short-term nature of these instruments.
The following table summarizes fair value measurements by level for cash equivalents and registered investment companies that were measured at fair value on a recurring basis:
 
Quoted Prices
in Active Markets
for Identical
Assets (Level 1)
September 30, 2016
 
 
Registered investment companies (1)
$
3,457

December 31, 2015
 
 
Registered investment companies (1)
$
3,576

______________________
(1) Registered investment companies are classified as available-for-sale securities and are valued using quoted prices in active markets multiplied by the number of shares owned.
The Company has not elected to carry its long-term debt at fair value. The carrying value of the long-term debt represents amortized cost less unamortized discount and debt issuance costs. The Company assesses the fair value of its long-term debt 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. The following table summarizes the carrying value and estimated fair value of the long-term debt as of September 30, 2016 and December 31, 2015, respectively: 
 
 
 
2016
 
2015
 
Fair Value Hierarchy
 
Carrying
Value
 
Estimated
Fair Value
 
Carrying
Value
 
Estimated
Fair Value
Financial instrument not carried at fair value:
 
 
 
 
 
 
 
 
 
 
 
 
 
Subordinated promissory note receivable
Level 2
 
$
83,613

 
$
80,400

 
$
—

 
$
—

Long-term debt excluding capitalized
leases
Level 2
 
$
2,276,578

 
$
2,485,280

 
$
2,274,144

 
$
2,328,134

5. Acquisitions:
2016 Acquisitions
On August 19, 2016, the Company acquired the data and subscriptions business of Quest Offshore Resources, Inc. ("Quest Offshore"), which supplies market intelligence to the offshore oil and gas sector, for a net cash purchase price of $8,000, including a holdback of $792. The data and subscriptions business has become part of Wood Mackenzie Limited ("Wood Mackenzie") within the Decision Analytics segment and complements its existing upstream analysis expertise.
On July 26, 2016, the Company acquired 100 percent of the stock of Greentech Media, Inc. (“Greentech Media”),  an information services provider for the electricity and renewables sector, for a net cash purchase price of $36,192, of which $4,440 represents indemnity escrows. The cash paid will be adjusted subsequent to close to reflect final balances of certain working capital accounts and other closing adjustments. Greentech Media has become part of Wood Mackenzie within the Decision Analytics segment and enables Wood Mackenzie to provide its clients with market intelligence across several categories, including solar generation, energy storage, and smart grids that react to changes in supply and demand.
On April 14, 2016, the Company acquired 100 percent of the stock of Risk Intelligence Ireland ("RII"), a provider of fraud detection, compliance, risk control, and process automation services to the Irish insurance industry, for a net cash purchase price of $6,200. RII enhances the ability of the Company's Risk Assessment segment to serve the international insurance market.

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The preliminary allocations of the purchase price of these acquisitions are subject to revisions as additional information is obtained about the facts and circumstances that existed as of each acquisition date. The revisions may have a significant impact on the condensed 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 primary areas of the purchase price allocation that are not yet finalized relate to fixed assets and operating leases, income and non-income taxes, deferred revenues, the valuation of intangible assets acquired, and residual goodwill. The preliminary amounts assigned to intangible assets by type for these acquisitions were based upon the Company's valuation model and historical experiences with entities with similar business characteristics.
The goodwill associated with the stock purchases of Greentech Media and RII is not deductible for tax purposes; whereas the goodwill associated with the asset purchase of Quest Offshore is deductible for tax purposes. For the three and nine months ended September 30, 2016, the Company incurred transaction costs related to these acquisitions of $835 and $1,003, respectively, included within "Selling, general and administrative" expenses in the accompanying condensed consolidated statements of operations.
2015 Acquisitions
On May 19, 2015, the Company acquired 100 percent of the stock of Wood Mackenzie for a net cash purchase price of $2,889,629, including $78,694 of an indemnity escrow, which the Company financed through a combination of debt and equity offerings, borrowings under the Company's credit facility, and cash on hand. Due to the fact that a portion of the purchase price was funded in pounds sterling and the remainder in U.S. dollars, the Company entered into a foreign currency hedging instrument to purchase pounds sterling. The Company recorded a gain on the hedge of $85,187 for the nine months ended September 30, 2015. The proceeds from the gain were utilized to partially fund the acquisition of Wood Mackenzie. Wood Mackenzie is a global provider of data analytics and commercial intelligence for the energy, chemicals, metals and mining verticals. This acquisition advances the Company’s strategy to expand internationally and positions the Company in the global energy market. Wood Mackenzie is included in the energy and specialized markets vertical, formerly named the specialized markets vertical, of the Decision Analytics segment.
As of June 30, 2016, the Company finalized the purchase accounting for the acquisition of Wood Mackenzie. The final purchase price allocations of the acquisition resulted in the following:

Wood Mackenzie
Cash and cash equivalents
$
35,398

Accounts receivable

80,307

Current assets

97,397

Fixed assets

71,929

Intangible assets

1,111,950

Goodwill and other

2,002,418

Other assets

1,993

Total assets acquired

3,401,392

Current liabilities

121,996

Deferred revenues

142,457

Deferred income taxes, net

204,289

Other liabilities

7,623

Total liabilities assumed

476,365

Net assets acquired

2,925,027

Cash acquired

(35,398
)
Net cash purchase price
$
2,889,629

The impact of finalization of the purchase accounting for Wood Mackenzie was not material to the condensed consolidated statements of operations for the three and nine months ended September 30, 2016 and 2015.

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The Company determined the fair values of the assets and liabilities of Wood Mackenzie with the assistance of valuations performed by third party specialists, discounted cash flow analysis and estimates made by management. The final amounts assigned to intangible assets by type for the Wood Mackenzie acquisition are summarized in the table below:
 
 
Weighted Average Useful Life
 
Total
Technology-related
 
7 years
 
$
104,663

Marketing-related
 
20 years
 
 
232,935

Customer-related
 
15 years
 
 
278,106

Database-related
 
20 years
 
 
496,246

Total intangible assets
 
 
 
$
1,111,950

On November 6, 2015, the Company acquired 100 percent of the stock of Infield Systems Limited ("Infield"). Infield is a provider of business intelligence, analysis, and research to the oil, gas, and associated marine industries. Infield has become part of Wood Mackenzie and continues to provide services to enhance Wood Mackenzie's upstream and supply chain capabilities in the Decision Analytics segment. The Company paid a net cash purchase price of $13,804.
On November 20, 2015, the Company acquired 100 percent of the stock of The PCI Group ("PCI"). PCI is a consortium of five specialist companies that offer integrated data and subscriptions research in the chemicals, fibers, films, and plastics sectors. PCI has become part of Wood Mackenzie and continues to provide services to enhance Wood Mackenzie's chemicals capabilities in the Decision Analytics segment. The Company paid a net cash purchase price of $37,387.
The preliminary allocations of the purchase prices for the acquisitions of Infield and PCI are subject to revisions as additional information is obtained about the facts and circumstances that existed as of the acquisition dates. The revisions may have a significant impact on the condensed consolidated financial statements. The allocations of the purchase prices will be finalized during the quarter ending December 31, 2016. The primary areas of the purchase price allocations that are not yet finalized relate to fixed assets and operating leases, income and non-income taxes, deferred revenues, the valuation of intangible assets acquired, and residual goodwill.

The goodwill associated with the stock purchases of Wood Mackenzie, Infield and PCI is not deductible for tax purposes. For the nine months ended September 30, 2015, the Company incurred transaction costs related to the Wood Mackenzie acquisition of $26,617 included within "Selling, general and administrative" expenses and $13,336 included within "Interest expense" in the accompanying condensed consolidated statements of operations.

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 September 30, 2016 and December 31, 2015, the current portion of the escrows amounted to $9,180 and $38,656, and the noncurrent portion of the escrows amounted to $0 and $4,591, 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. Discontinued Operations:

On June 1, 2016, the Company sold 100 percent of the stock of its healthcare business, Verisk Health ("Verisk Health"), in exchange for a purchase price that consisted of $719,374 of cash consideration after a working capital adjustment of $626, a subordinated promissory note with a face value of $100,000 and an eight year maturity (the "Note"), and other contingent consideration (collectively, the "Sale"). The Company recognized income from the discontinued operation, net of tax, of $0 and $137,909 for the three and nine months ended September 30, 2016, respectively. Results of operations for the healthcare business are reported as a discontinued operation for the three and nine months ended September 30, 2016 and for all prior periods presented.

The Note has a stated interest rate of 9.0% per annum, increasing to 11.0% per annum at the earlier of specified refinancings or acquisitions, or the fourth anniversary of the closing of the Sale. Interest shall accrue from the closing date and on each anniversary of the Sale until the Note is paid in full on the unpaid principal amount of the Note outstanding at the interest rate in effect (computed on the basis of a 360-day year of twelve 30-day months). On each anniversary of the Sale, accrued interest shall be paid in kind by adding the amount of such accrued interest to the outstanding principal amount of the Note. The issuer of the Note may, at its option at any time prior to the maturity date, prepay any, or all, of the principal amount of the Note, plus accrued but unpaid interest as of the elected prepayment date, without any premium or penalty. There is a mandatory prepayment of the Note as a result of

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(i) the proceeds of a specified dividend recapitalization received by the issuer, (ii) the consummation of a change of control of the issuer, or (iii) the sale, transfer or other disposition by the parent of the issuer of more than 10.0% of the capital stock of the issuer. As of September 30, 2016, the Company had a receivable of $83,613 outstanding under the Note. The fair value of the Note is based on management estimates with the assistance of valuations performed by third party specialists, discounted cash flow analysis based on current market conditions and assumptions that the Note would be paid in full at maturity, including accrued interest, with no prepayment election.

The Company also received a 10.0% non-participating interest in the issuer's stock, the exercise value of which will be contingent on the parent of the issuer realizing a specified rate of return on its investment. As of September 30, 2016, the Company had an equity investment of $8,400 related to such interest accounted for in accordance with ASC 323-10-25. The value of the equity investment is based on management estimates with the assistance of valuations performed by third party specialists. Refer to Note 3. Investments for further discussion.

The following table summarizes the results from the discontinued operation for the three and nine months ended September 30:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016

2015
 
2016

2015
Revenues from discontinued operations
$
—

 
$
79,993

 
$
112,323


$
224,148

Expenses:
 


 
 

 
 
 
 
 
 
Cost of revenues (exclusive of items shown
separately below)
 
—

 
 
47,293

 
 
75,878

 
 
138,281

Selling, general and administrative
 
—

 
 
8,668

 
 
36,559

 
 
26,216

Depreciation and amortization of fixed assets
 
—

 
 
6,396

 
 
7,056

 
 
17,402

Amortization of intangible assets
 
—

 
 
5,904

 
 
5,904

 
 
18,498

Total expenses
 
—

 
 
68,261

 
 
125,397

 
 
200,397

Operating income
 
—

 
 
11,732

 
 
(13,074
)
 
 
23,751

Other income (expense):
 


 
 

 
 
 
 
 
 
Gain on sale
 
—

 
 
—

 
 
269,385

 
 
—

Investment income and others, net
 
—

 
 
18

 
 
214

 
 
19

Total other income
 
—

 
 
18

 
 
269,599

 
 
19

Income from discontinued operations before
income taxes
 
—

 

11,750

 

256,525



23,770

Provision for income taxes (including tax on
gain of $118,019)
 
—

 
 
(4,117
)
 

(118,616
)


(9,421
)
Income from discontinued
operations, net of tax
$
—

 
$
7,633

 
$
137,909


$
14,349



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The following table summarizes the assets held-for-sale and the liabilities held-for-sale as of December 31, 2015:

December 31, 2015
Accounts receivable, net of allowance for doubtful accounts of $2,428
$
69,152

Prepaid expenses

6,615

Income tax receivable

257

Other current assets

39

Total current assets held-for-sale
$
76,063



 
Fixed assets, net
$
67,857

Intangible assets, net

131,662

Goodwill

381,800

Other assets

577

Total noncurrent assets held-for-sale
$
581,896



 
Accounts payable and accrued liabilities
$
23,552

Deferred revenues

16,118

Total current liabilities held-for-sale
$
39,670



 
Deferred income taxes, net
$
67,255

Other liabilities

1,738

Total noncurrent liabilities held-for-sale
$
68,993


Net cash provided by operating activities and net cash used in investing activities from the discontinued operation for the nine months ended September 30 are presented below:

Nine Months Ended September 30,
 
2016

2015
Net cash provided by operating activities
$
21,443


$
52,521

Net cash used in investing activities
$
(10,649
)

$
(18,530
)

The Company has also entered into a transitional service agreement ("TSA") with the buyer of Verisk Health. Under the TSA, the Company provides various services for terms generally up to 12 months from the acquisition date and receives a level of cost reimbursement from the buyer.
7. Goodwill and Intangible Assets:
The following is a summary of the change in goodwill from December 31, 2015 through September 30, 2016, both in total and as allocated to the Company’s operating segments:
 
Risk
Assessment
 
Decision
Analytics
 
Total
Goodwill at December 31, 2015 (1)
$
55,555

 
$
2,697,471

 
$
2,753,026

Current year acquisition
 
4,639

 
 
36,465

 
 
41,104

Purchase accounting reclassification
 
—

 
 
8,646

 
 
8,646

Foreign currency translation
 
(22
)
 
 
(170,576
)
 
 
(170,598
)
Goodwill at September 30, 2016 (1)
$
60,172

 
$
2,572,006

 
$
2,632,178

______________________
(1)
The balances at December 31, 2015 are net of the reclassification of goodwill to noncurrent assets held-for-sale of $381,800. Refer to Note 6. Discontinued Operations for further discussion.
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

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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, 2016, and concluded that there was 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
September 30, 2016
 
 
 
 
 
 
 
 
 
 
Technology-based
7 years
 
$
323,093

 
$
(191,682
)
 
$
131,411

Marketing-related
17 years
 
 
234,234

 
 
(45,387
)
 
 
188,847

Contract-based
6 years
 
 
4,996

 
 
(4,996
)
 
 
—

Customer-related
14 years
 
 
486,325

 
 
(121,122
)
 
 
365,203

Database-related
20 years
 
 
412,119

 
 
(28,491
)
 
 
383,628

Total intangible assets
 
 
$
1,460,767

 
$
(391,678
)
 
$
1,069,089

December 31, 2015
 
 
 
 
 
 
 
 
 
 
Technology-based
7 years
 
$
327,767

 
$
(175,746
)
 
$
152,021

Marketing-related
18 years
 
 
259,158

 
 
(37,798
)
 
 
221,360

Contract-based
6 years
 
 
4,996

 
 
(4,996
)
 
 
—

Customer-related
14 years
 
 
512,632

 
 
(96,549
)
 
 
416,083

Database-related
20 years
 
 
470,367

 
 
(14,748
)
 
 
455,619

Total intangible assets
 
 
$
1,574,920

 
$
(329,837
)
 
$
1,245,083

Amortization expense related to intangible assets for the three months ended September 30, 2016 and 2015 was $22,679 and $12,639, respectively. Amortization expense related to intangible assets for the nine months ended September 30, 2016 and 2015 was $70,355 and $42,998, respectively. Estimated amortization expense for the remainder of 2016 and the years through 2021 and thereafter for intangible assets subject to amortization is as follows:
Year
Amount
2016
$
22,653

2017
 
90,297

2018
 
90,165

2019
 
89,632

2020
 
88,952

2021 and thereafter
 
687,390

 
$
1,069,089

8. Income Taxes:
The Company’s effective tax rate for the three and nine months ended September 30, 2016 was 26.00% and 30.29% , respectively, compared to the effective tax rate for the three and nine months ended September 30, 2015 of 31.78% and 28.47%. The effective tax rate for the three months ended September 30, 2016 is lower than the September 30, 2015 effective tax rate primarily due to tax benefits of legislation enacted in the United Kingdom lowering future income tax rates. The effective tax rate for the nine months ended September 30, 2016 is higher than the September 30, 2015 effective tax rate primarily due to non-recurring tax benefits related to the Wood Mackenzie acquisition in 2015. The difference between statutory tax rates and the Company’s effective tax rate is primarily attributable to state taxes and tax benefits related to the Wood Mackenzie acquisition.

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9. Debt:
The following table presents short-term and long-term debt by issuance as of September 30, 2016 and December 31, 2015: 
 
Issuance
Date
 
Maturity
Date
 
2016
 
2015
Short-term debt and current portion of long-term debt:
 
 
 
 
 
 
 
 
 
Syndicated revolving credit facility
Various
 
Various
 
$
—

 
$
870,000

Capital lease obligations
Various
 
Various
 
 
6,899

 
 
4,811

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

 
 
874,811

Long-term debt:
 
 
 
 
 
 
 
 
 
Senior notes:
 
 
 
 
 
 
 
 
 
4.000% senior notes, less unamortized discount
and debt issuance costs of $10,689 and
$11,619, respectively
5/15/2015

6/15/2025
 
 
889,311

 
 
888,381

5.500% senior notes, less unamortized discount
and debt issuance costs of $5,094 and $5,226,
respectively
5/15/2015

6/15/2045
 
 
344,906

 
 
344,774

4.125% senior notes, less unamortized discount
and debt issuance costs of $3,655 and $4,117,
respectively
9/12/2012
 
9/12/2022
 
 
346,345

 
 
345,883

4.875% senior notes, less unamortized discount
and debt issuance costs of $1,504 and $2,002,
respectively
12/8/2011
 
1/15/2019
 
 
248,496

 
 
247,998

5.800% senior notes, less unamortized discount
and debt issuance costs of $2,480 and $2,892,
respectively
4/6/2011

5/1/2021
 
 
447,520

 
 
447,108

Capital lease obligations
Various
 
Various
 
 
7,332

 
 
2,317

Syndicated revolving credit facility debt issuance
costs
Various

Various
 
 
(4,467
)
 
 
(5,557
)
Long-term debt
 
 
 
 
 
2,279,443

 
 
2,270,904

Total debt
 
 
 
 
$
2,286,342

 
$
3,145,715

As of September 30, 2016 and December 31, 2015, the Company had senior notes with an aggregate principal amount of $2,300,000 outstanding and was in compliance with their financial debt covenants.
As of September 30, 2016, the Company had a borrowing capacity of $1,500,000 under the committed senior unsecured Syndicated Revolving Credit Facility (the "Credit Facility") with Bank of America N.A., JP Morgan Chase, N.A., Sun Trust Bank, Wells Fargo Bank N.A., Citizens Bank, N.A., Morgan Stanley Senior Funding, Inc., HSBC Bank USA, N.A., Royal Bank of Canada, BNP Paribas, TD Bank, N.A., The Northern Trust Company, and Capital One N.A. The Credit Facility may be used for general corporate purposes, including working capital needs and capital expenditures, acquisitions and the share repurchase program (the "Repurchase Program"). The Company was in compliance with all financial debt covenants under the Credit Facility as of September 30, 2016. As of September 30, 2016 and December 31, 2015, the Company had outstanding borrowings under the Credit Facility of $0 and $870,000, respectively. During the nine months ended September 30, 2016, the Company utilized a portion of the proceeds from the sale of Verisk Health and cash flows from operations to repay the outstanding borrowings under the Credit Facility. On May 26, 2016, the Company entered into the Second Amendment to the Credit Facility, which reduced the borrowing capacity from $1,750,000 to $1,500,000 and amended the pricing grid.
10. Stockholders’ Equity:
The Company has 2,000,000,000 shares of authorized common stock. The common shares have rights to any dividend declared by the board of directors (the "Board"), subject to any preferential or other rights of any outstanding preferred stock, and voting rights to elect all fourteen members of the Board.
The Company has 80,000,000 shares of authorized preferred stock, par value $0.001 per share. The preferred shares have preferential rights over the common shares with respect to dividends and net distribution upon liquidation. The Company did not issue any preferred shares as of September 30, 2016.


15
Table of Contents

Share Repurchase Program

Since the introduction of the Repurchase Program as a feature of the Company's capital management strategies in 2010, the Company has authorized repurchases of up to $2,300,000 of its common stock and has repurchased shares with an aggregate value of $2,020,456. The Company repurchased 2,561,814 shares of common stock with an aggregate value of $189,807 during the nine months ended September 30, 2016. As of September 30, 2016, the Company had $279,545 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 2013 Equity Incentive Plan (the “2013 Incentive Plan”), the Verisk 2009 Equity Incentive Plan (the “2009 Incentive Plan”), and the ISO 1996 Incentive Plan (the “1996 Incentive 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. Shares that are repurchased under the Repurchase Program will be recorded as treasury stock and will be available for future issuance.

Treasury Stock

As of September 30, 2016, the Company’s treasury stock consisted of 375,662,395 shares of common stock. During the nine months ended September 30, 2016, the Company reissued 1,477,476 shares of common stock from the treasury shares at a weighted average price of $7.15 per share.

Earnings Per Share (“EPS”)

Basic EPS is computed by dividing income from continuing operations, income from discontinued operations and net income, respectively, 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, nonvested restricted stock awards, and nonvested restricted stock units, had been issued.
The following is a reconciliation of the numerators and denominators of the basic and diluted EPS computations for the three and nine months ended September 30, 2016 and 2015:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
Numerator used in basic and diluted EPS:
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations
$
127,577

 
$
124,181

 
$
344,043

 
$
379,471

Income from discontinued operations (Note 6)
 
—

 
 
7,633

 
 
137,909

 
 
14,349

Net income
$
127,577

 
$
131,814

 
$
481,952

 
$
393,820

Denominator:
 
 
 
 
 
 
 
 
 
 
 
Weighted average number of common shares used
in basic EPS
 
168,874,129

 
 
168,739,437

 
 
168,541,399

 
 
163,656,387

Effect of dilutive shares:
 
 
 
 

 
 
 
 
 

Potential common shares issuable from stock
options and stock awards
 
2,911,771

 
 
3,431,900

 
 
2,953,790

 
 
3,423,163

Weighted average number of common shares
and dilutive potential common shares used
in diluted EPS
 
171,785,900

 
 
172,171,337

 
 
171,495,189

 
 
167,079,550

The potential shares of common stock that were excluded from diluted EPS were 1,239,406 and 1,596,280 for the three months ended September 30, 2016 and 2015, and 1,890,460 and 1,127,414 for the nine months ended September 30, 2016 and 2015, respectively, because the effect of including these potential shares was anti-dilutive.

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Table of Contents

Accumulated Other Comprehensive Losses
The following is a summary of accumulated other comprehensive losses as of September 30, 2016 and December 31, 2015:
 
2016

2015
Foreign currency translation adjustment
$
(444,440
)
 
$
(165,828
)
Unrealized holding gains on available-for-sale securities, net of tax
 
296

 
 
3

Pension and postretirement adjustment, net of tax
 
(74,790
)
 
 
(76,227
)
Accumulated other comprehensive losses
$
(518,934
)
 
$
(242,052
)

The before tax and after tax amounts of other comprehensive income for the three and nine months ended September 30, 2016 and 2015 are summarized below:

Before Tax

Tax Benefit 
(Expense)

After Tax
For the Three Months Ended September 30, 2016








Foreign currency translation adjustment
$
(62,091
)

$
—


$
(62,091
)
Unrealized holding gain on available-for-sale securities before
reclassifications

731



(279
)


452

Amount reclassified from accumulated other comprehensive losses
(1)

(585
)


223



(362
)
Unrealized holding gain on available-for-sale securities

146



(56
)


90

Pension and postretirement adjustment before reclassifications

1,821



(1,026
)


795

Amortization of net actuarial loss and prior service benefit
reclassified from accumulated other comprehensive losses (2)

(938
)


353



(585
)
Pension and postretirement adjustment

883



(673
)


210

Total other comprehensive loss
$
(61,062
)

$
(729
)

$
(61,791
)
For the Three Months Ended September 30, 2015








Foreign currency translation adjustment
$
(95,843
)

$
—


$
(95,843
)
Unrealized holding loss on available-for-sale securities before
reclassifications

(2
)


1



(1
)
Amount reclassified from accumulated other comprehensive losses
(1)

(34
)


13



(21
)
Unrealized holding loss on available-for-sale securities

(36
)


14



(22
)
Pension and postretirement adjustment before reclassifications

1,574



(767
)


807

Amortization of net actuarial loss and prior service benefit
reclassified from accumulated other comprehensive losses (2)

(787
)


301



(486
)
Pension and postretirement adjustment

787



(466
)


321

Total other comprehensive loss
$
(95,092
)

$
(452
)

$
(95,544
)

17
Table of Contents


 
Before Tax
 
 
Tax Benefit 
(Expense)
 
 
After Tax
For the Nine Months Ended September 30, 2016
 


 


 

Foreign currency translation adjustment
$
(278,612
)

$
—


$
(278,612
)