10-Q
Table of Contents

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________
FORM 10-Q
___________________________________
 
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2015
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  ý    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  ý    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
 
ý
 
Accelerated filer
 
¨
 
 
 
 
 
 
 
Non-accelerated filer
 
o  (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  ý

As of October 23, 2015, there were 169,428,352 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 10.2
 
 
 
Exhibit 31.1
 
 
 
Exhibit 31.2
 
 
 
Exhibit 32.1
 


Table of Contents


Item 1. Financial Statements
VERISK ANALYTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
As of September 30, 2015 and December 31, 2014
 
2015
 
2014
 
(unaudited)
 
 
(In thousands, except for
share and per share data)
ASSETS
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
168,825

 
$
39,359

Available-for-sale securities
 
3,630

 
 
3,801

Accounts receivable, net of allowance for doubtful accounts of $5,727 and $5,995,
respectively
 
266,000

 
 
220,668

Prepaid expenses
 
46,129

 
 
31,496

Deferred income taxes, net
 
4,769

 
 
4,772

Income taxes receivable
 
45,209

 
 
65,512

Other current assets
 
83,200

 
 
18,875

Total current assets
 
617,762

 
 
384,483

Noncurrent assets:
 
 
 
 
 
Fixed assets, net
 
391,625

 
 
302,273

Intangible assets, net
 
1,415,566

 
 
406,476

Goodwill
 
3,119,485

 
 
1,207,146

Pension assets
 
31,245

 
 
18,589

Other assets
 
43,414

 
 
26,363

Total assets
$
5,619,097

 
$
2,345,330

 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
 
 
 
 
 
Accounts payable and accrued liabilities
$
266,467

 
$
180,726

Short-term debt and current portion of long-term debt
 
905,473

 
 
336,058

Pension and postretirement benefits, current
 
1,894

 
 
1,894

Fees received in advance
 
366,924

 
 
252,592

Total current liabilities
 
1,540,758

 
 
771,270

Noncurrent liabilities:
 
 
 
 
 
Long-term debt
 
2,292,892

 
 
1,100,874

Pension benefits
 
13,413

 
 
13,805

Postretirement benefits
 
2,475

 
 
2,410

Deferred income taxes, net
 
401,422

 
 
202,540

Other liabilities
 
54,501

 
 
43,388

Total liabilities
 
4,305,461

 
 
2,134,287

Commitments and contingencies
 

 
 

Stockholders’ equity:
 
 
 
 
 
Common stock, $.001 par value; 1,200,000,000 shares authorized;
544,003,038 shares issued and 169,104,003 and 157,913,227 outstanding,
respectively
 
137

 
 
137

Unearned KSOP contributions
 

 
 
(161
)
Additional paid-in capital
 
1,999,779

 
 
1,171,196

Treasury stock, at cost, 374,899,035 and 386,089,811 shares, respectively
 
(2,554,832
)
 
 
(2,533,764
)
Retained earnings
 
2,047,969

 
 
1,654,149

Accumulated other comprehensive losses
 
(179,417
)
 
 
(80,514
)
Total stockholders’ equity
 
1,313,636

 
 
211,043

Total liabilities and stockholders’ equity
$
5,619,097

 
$
2,345,330



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

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Table of Contents

VERISK ANALYTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For The Three and Nine Months Ended September 30, 2015 and 2014
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2015
 
2014
 
2015
 
2014
 
(In thousands, except for share and per share data)
Revenues
$
550,401

 
$
448,665

 
$
1,507,448

 
$
1,281,862

Expenses:
 
 
 
 
 
 
 
 
 
 
 
Cost of revenues (exclusive of items shown
separately below)
 
210,167

 
 
180,873

 
 
589,579

 
 
523,016

Selling, general and administrative
 
79,310

 
 
56,164

 
 
228,908

 
 
170,372

Depreciation and amortization of fixed assets
 
33,501

 
 
21,951

 
 
86,571

 
 
62,455

Amortization of intangible assets
 
18,543

 
 
14,187

 
 
61,496

 
 
42,620

Total expenses
 
341,521

 
 
273,175

 
 
966,554

 
 
798,463

Operating income
 
208,880

 
 
175,490

 
 
540,894

 
 
483,399

Other income (expense):
 
 
 
 
 
 
 
 
 
 
 
Investment income and others, net
 
17,912

 
 
(285
)
 
 
17,153

 
 
(76
)
Gain on derivative instruments
 

 
 

 
 
85,187

 
 

Interest expense
 
(33,003
)
 
 
(17,498
)
 
 
(88,927
)
 
 
(52,396
)
Total other (expense) income, net
 
(15,091
)
 
 
(17,783
)
 
 
13,413

 
 
(52,472
)
Income before income taxes
 
193,789

 
 
157,707

 
 
554,307

 
 
430,927

Provision for income taxes
 
(61,975
)
 
 
(58,692
)
 
 
(160,487
)
 
 
(159,372
)
Income from continuing operations

131,814

 

99,015

 
 
393,820

 
 
271,555

Income from discontinued operations, net of tax
of $0 and $23,365, for the three and nine
months ended September 30, 2014,
respectively (Note 6)
 

 
 

 
 

 
 
31,117

Net income
$
131,814

 
$
99,015

 
$
393,820

 
$
302,672

Basic net income per share:
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations
$
0.78

 
$
0.60

 
$
2.41

 
$
1.63

Income from discontinued operations
 

 
 

 
 

 
 
0.19

Basic net income per share
$
0.78

 
$
0.60

 
$
2.41

 
$
1.82

Diluted net income per share:
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations
$
0.77

 
$
0.58

 
$
2.36

 
$
1.60

Income from discontinued operations
 

 
 

 
 

 
 
0.18

Diluted net income per share
$
0.77

 
$
0.58

 
$
2.36

 
$
1.78

Weighted average shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
Basic
 
168,739,437

 
 
166,187,540

 
 
163,656,387

 
 
166,504,384

Diluted
 
172,171,337

 
 
169,522,448

 
 
167,079,550

 
 
169,815,867




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


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Table of Contents

VERISK ANALYTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
For The Three and Nine Months Ended September 30, 2015 and 2014
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2015
 
2014
 
2015
 
2014
 
(In thousands)
Net income
$
131,814

 
$
99,015

 
$
393,820

 
$
302,672

Other comprehensive income, net of tax:
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustment
 
(95,843
)
 
 
(547
)
 
 
(100,272
)
 
 
213

Unrealized holding (loss) gain on available-for-sale securities
 
(22
)
 
 
(40
)
 
 
47

 
 
(3
)
Pension and postretirement liability adjustment
 
321

 
 
103

 
 
1,322

 
 
417

Total other comprehensive (loss) income
 
(95,544
)
 
 
(484
)
 
 
(98,903
)
 
 
627

Comprehensive income
$
36,270

 
$
98,531

 
$
294,917

 
$
303,299






















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

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VERISK ANALYTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
For The Year Ended December 31, 2014 and The Nine Months Ended September 30, 2015
 
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, December 31, 2013
544,003,038

 
$
137

 
$
(306
)
 
$
1,202,106

 
$
(1,864,967
)
 
$
1,254,107

 
$
(43,488
)
 
$
547,589

Net income

 
 

 
 

 
 

 
 

 
 
400,042

 
 

 
 
400,042

Other comprehensive income

 
 

 
 

 
 

 
 

 
 

 
 
(37,026
)
 
 
(37,026
)
Treasury stock acquired (10,802,087 shares)

 
 

 
 

 
 
(100,000
)
 
 
(675,446
)
 
 

 
 

 
 
(775,446
)
KSOP shares earned

 
 

 
 
145

 
 
15,206

 
 

 
 

 
 

 
 
15,351

Stock options exercised, including tax benefit of $15,438
(1,091,746 shares reissued from treasury stock)

 
 

 
 

 
 
34,011

 
 
5,781

 
 

 
 

 
 
39,792

Restricted stock lapsed, including tax benefit of $550
(134,713 shares reissued from treasury stock)

 
 

 
 

 
 
(148
)
 
 
698

 
 

 
 

 
 
550

Employee stock purchase plan (26,953 shares reissued
from treasury stock)

 
 

 
 

 
 
1,414

 
 
149

 
 

 
 

 
 
1,563

Stock based compensation

 
 

 
 

 
 
20,011

 
 

 
 

 
 

 
 
20,011

Net share settlement from restricted stock awards (27,159
shares withheld for tax settlement)

 
 

 
 

 
 
(1,625
)
 
 

 
 

 
 

 
 
(1,625
)
Other stock issuances (3,975 shares reissued from treasury
stock)

 
 

 
 

 
 
221

 
 
21

 
 

 
 

 
 
242

Balance, December 31, 2014
544,003,038

 
 
137

 
 
(161
)
 
 
1,171,196

 
 
(2,533,764
)
 
 
1,654,149

 
 
(80,514
)
 
 
211,043

Net income

 
 

 
 

 
 

 
 

 
 
393,820

 
 

 
 
393,820

Other comprehensive income

 
 

 
 

 
 

 
 

 
 

 
 
(98,903
)
 
 
(98,903
)
Treasury stock acquired (809,021 shares)

 
 

 
 

 
 
100,000

 
 
(100,000
)
 
 

 
 

 
 

KSOP shares earned

 
 

 
 
161

 
 
10,414

 
 

 
 

 
 

 
 
10,575

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 $17,062
(1,201,112 shares reissued from treasury stock)

 
 

 
 

 
 
40,308

 
 
8,055

 
 

 
 

 
 
48,363

Restricted stock lapsed, including tax benefit of $1,163
(170,670 shares reissued from treasury stock)

 
 

 
 

 
 
2,388

 
 
1,125

 
 

 
 

 
 
3,513

Employee stock purchase plan (18,171 shares reissued
from treasury stock)

 
 

 
 

 
 
1,134

 
 
122

 
 

 
 

 
 
1,256

Stock based compensation

 
 

 
 

 
 
25,045

 
 

 
 

 
 

 
 
25,045

Net share settlement of 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, September 30, 2015
544,003,038

 
$
137

 
$

 
$
1,999,779

 
$
(2,554,832
)
 
$
2,047,969

 
$
(179,417
)
 
$
1,313,636

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

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Table of Contents

VERISK ANALYTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For The Nine Months Ended September 30, 2015 and 2014
 
2015
 
2014
 
(In thousands)
Cash flows from operating activities:
 
 
 
 
 
Net income
$
393,820

 
$
302,672

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
Depreciation and amortization of fixed assets
 
86,571

 
 
63,450

Amortization of intangible assets
 
61,496

 
 
42,731

Amortization of debt issuance costs and original issue discount
 
11,770

 
 
1,989

Allowance for doubtful accounts
 
1,151

 
 
953

KSOP compensation expense
 
10,575

 
 
11,613

Stock based compensation
 
25,471

 
 
16,323

Gain on derivative instruments
 
(85,187
)
 
 

Gain on sale of discontinued operations
 

 
 
(65,410
)
Realized loss (gain) on available-for-sale securities, net
 
19

 
 
(122
)
Gain on exercise of common stock warrants
 
(15,602
)
 
 

Deferred income taxes
 
1,498

 
 
(3,348
)
(Gain) loss on disposal of fixed assets
 
(2
)
 
 
510

Excess tax benefits from exercised stock options and restricted stock awards
 
(18,214
)
 
 
(16,665
)
Changes in assets and liabilities, net of effects from acquisitions:
 
 
 
 
 
Accounts receivable
 
39,651

 
 
(23,530
)
Prepaid expenses and other assets
 
2,662

 
 
(12,102
)
Income taxes
 
44,716

 
 
45,369

Accounts payable and accrued liabilities
 
(1,175
)
 
 
(2,164
)
Fees received in advance
 
(30,772
)
 
 
26,651

Pension and postretirement benefits
 
(10,552
)
 
 
(9,763
)
Other liabilities
 
2,148

 
 
(522
)
Net cash provided by operating activities
 
520,044

 
 
378,635

Cash flows from investing activities:
 
 
 
 
 
Acquisitions, net of cash acquired of $35,398 and $0, respectively
 
(2,811,759
)
 
 
(4,001
)
Purchase of non-controlling interest in non-public companies
 
(101
)
 
 
(5,000
)
Sale of non-controlling equity investments in non-public companies
 
101

 
 

Proceeds from sale of discontinued operations
 

 
 
151,170

Escrow funding associated with acquisition
 
(78,694
)
 
 

Proceeds from the settlement of derivative instruments
 
85,187

 
 

Capital expenditures
 
(105,765
)
 
 
(102,992
)
Purchases of available-for-sale securities
 
(54
)
 
 
(83
)
Proceeds from sales and maturities of available-for-sale securities
 
281

 
 
381

Cash received from exercise of common stock warrants
 
15,602

 
 

Net cash (used in) provided by investing activities
 
(2,895,202
)
 
 
39,475

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
 
(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
 
(23,942
)
 
 

Repurchases of common stock
 

 
 
(183,093
)
Excess tax benefits from exercised stock options and restricted stock awards
 
18,214

 
 
16,665

Proceeds from stock options exercised
 
31,283

 
 
20,855

Proceeds from issuance of stock as part of a public offering
 
720,848

 
 

Net share settlement of restricted stock awards
 
(2,350
)
 
 
(1,613
)
Other financing activities, net
 
(4,784
)
 
 
(4,448
)
Net cash provided by (used in) financing activities
 
2,503,235

 
 
(151,634
)
Effect of exchange rate changes
 
1,389

 
 
213

Increase in cash and cash equivalents
 
129,466

 
 
266,689

Cash and cash equivalents, beginning of period
 
39,359

 
 
165,801

Cash and cash equivalents, end of period
$
168,825

 
$
432,490

Supplemental disclosures:
 
 
 
 
 
Taxes paid
$
111,867

 
$
140,462

Interest paid
$
56,583

 
$
50,567

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

 
$
4,878

Tenant improvement included in other liabilities
$
1,168

 
$
8,856

Capital lease obligations
$
1,158

 
$
4,682

Capital expenditures included in accounts payable and accrued liabilities
$
605

 
$
1,662


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 solutions for detecting fraud in the U.S. P&C insurance, financial, healthcare, and global energy 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”) 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, 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. The results of operations for the Company's mortgage services business are reported as a discontinued operation for the period presented herein (See Note 6).
On May 19, 2015, the Company acquired Wood Mackenzie Limited (“Wood Mackenzie”) and has consolidated its financial statements into the Company's condensed consolidated financial statements as of that date. The preliminarily estimated fair values of the tangible and intangible assets acquired and liabilities assumed in connection with the purchase of Wood Mackenzie have been recognized in the accompanying condensed consolidated balance sheets at September 30, 2015 based upon their preliminarily estimated fair values at May 19, 2015. The excess of the purchase price over the preliminary fair values of the net tangible and intangible assets was recorded as goodwill. The preliminary fair values recorded were based upon estimates and assumptions used in the Company’s historical valuation methodology. These estimates and assumptions are subject to change during the measurement period (up to one year from the acquisition date) and may have a significant impact on the consolidated financial statements (See Note 5 for further information).
The condensed consolidated financial statements as of September 30, 2015 and for the three and nine months ended September 30, 2015 and 2014, 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, 2015 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, 2015 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, 2014. 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 Standard Board ("FASB") issued Accounting Standards Update ("ASU") 2015-03, Simplifying the Presentation of Debt Issuance Costs ("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. ASU No. 2015-03 is effective for fiscal years beginning after December 15,

6

Table of Contents

2015, and interim periods within those fiscal years. Early adoption is permitted. The Company has elected not to early adopt and will conform with ASU No. 2015-03 in the condensed consolidated financial statements in future periods.

In April 2015, the FASB issued ASU 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. ASU No. 2015-05 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. The Company has elected not to early adopt. The adoption of ASU No. 2015-05 is not expected to have a material impact on the Company's condensed consolidated financial statements.

In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers - Deferral of the Effective Date ("ASU No. 2015-14"). The amendments in this update defer the effective date of ASU No. 2014-09, Revenue from Contracts with Customers ("ASU No. 2015-09"), for all entities by one year. Public business entities will apply the guidance in ASU No. 2015-09 for annual reporting periods beginning after December 15, 2017. The Company is currently evaluating ASU No. 2015-09 and has not determined the impact this standard may have on its financial statements nor decided upon the method of adoption.

In August 2015, the FASB issued ASU No. 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements ("ASU No. 2015-15"). ASU No. 2015-15 clarifies that ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs, does not address the presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. As a results, an entity may present debt issuance costs related to line-of-credit arrangements as an asset instead of as a direct deduction from the carrying amount of the debt. The Company has elected not to early adopt ASU No. 2015-15.

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. ASU No. 2015-16 is effective for fiscal years beginning after December 15, 2015. Early adoption is permitted for reporting periods for which financial statements have not been issued. The Company has elected to early adopt ASU No. 2015-16 on a prospective basis (see Note 5).
3. Investments:
Available-for-sale securities consisted of the following: 
 
Adjusted Cost
 
Gross
Unrealized Loss
 
Fair Value
September 30, 2015
 
 
 
 
 
 
 
 
Registered investment companies
$
3,799

 
$
(169
)
 
$
3,630

December 31, 2014
 
 
 
 
 
 
 
 
Registered investment companies
$
4,045

 
$
(244
)
 
$
3,801

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 ASC 323-10-25, The Equity Method of Accounting for Investments in Common Stock. At September 30, 2015 and December 31, 2014, the carrying value of such securities was $8,487, and has been included in “Other assets” in the accompanying condensed consolidated balance sheets.

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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: 
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 (other than money-market funds which are recorded on a reported net asset value basis disclosed below), accounts receivable, accounts payable and accrued liabilities, fees received in advance, 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:
 
Total
 
Quoted Prices
in Active Markets
for Identical
Assets (Level 1)
 
Significant Other
Observable
Inputs (Level 2)
September 30, 2015
 
 
 
 
 
 
 
 
Registered investment companies (1)
$
3,630

 
$
3,630

 
$

December 31, 2014
 
 
 
 
 
 
 
 
Cash equivalents - money-market funds
$
3,707

 
$

 
$
3,707

Registered investment companies (1)
$
3,801

 
$
3,801

 
$

______________________
(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. 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 fair value of the long-term debt would be a Level 2 liability if the long-term debt was measured at fair value on the condensed consolidated balance sheets. The following table summarizes the carrying value and estimated fair value of the long-term debt as of September 30, 2015 and December 31, 2014, respectively: 
 
2015
 
2014
 
Carrying
Value
 
Estimated
Fair Value
 
Carrying
Value
 
Estimated
Fair Value
Financial instrument not carried at fair value:
 
 
 
 
 
 
 
 
 
 
 
Long-term debt excluding capitalized
leases
$
2,290,552

 
$
2,356,699

 
$
1,265,848

 
$
1,371,213

5. Acquisitions:
2015 Acquisition
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 new 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 within "Gain on derivative instruments" in the accompanying

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consolidated statements of operations and received proceeds on the hedge of $85,187. These proceeds 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.
The preliminary purchase price allocation of the Wood Mackenzie acquisition resulted in the following:
Cash and cash equivalents
$
35,398

Accounts receivable
 
82,786

Current assets
 
85,592

Fixed assets
 
66,884

Intangible assets
 
1,111,951

Goodwill and other
 
1,983,276

Other assets
 
2,007

Total assets acquired
 
3,367,894

Current liabilities
 
(91,390
)
Fees received in advance
 
(142,457
)
Deferred income taxes, net
 
(201,904
)
Other liabilities
 
(7,116
)
Total liabilities assumed
 
(442,867
)
Net assets acquired
 
2,925,027

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

The preliminary allocations of the purchase price above are subject to revisions as additional information is obtained about the facts and circumstances that existed as of the acquisition date. The revisions may have a significant impact on the consolidated financial statements. During the three months ended September 30, 2015, the Company revised the estimated valuation of intangible assets and preliminary allocation of the purchase price for the Wood Mackenzie acquisition, and recorded a decrease to intangible assets of $182,993, a decrease in deferred tax liabilities of $57,072, an increase in other items of $258, and an increase to goodwill of $126,179. These adjustments have been reflected in the above preliminary allocations of the purchase price. As a result of these adjustments, the Company also recorded a decrease of $8,067 to the amortization of intangible assets that would have impacted the second quarter of 2015. The impact of all adjustments have been reflected in the condensed consolidated financial statements as of September 30, 2015 and for the three and nine months ended September 30, 2015. 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, fees received in advance, the valuation of intangible assets acquired, and residual goodwill. The preliminary amounts assigned to intangible assets by type for the Wood Mackenzie acquisition were based upon the Company's valuation model and historical experiences with entities with similar business characteristics. The preliminary amounts are summarized in the table below:


Weighted Average Useful Life

Total
Database-related
 
20 years
 
$
496,246

Customer-related

15 years


278,106

Marketing-related

20 years


232,935

Technology-related

7 years

 
104,664

Total intangible assets



$
1,111,951


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


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Supplemental information on an unaudited pro forma basis is presented below as if the acquisition of Wood Mackenzie occurred at the beginning of 2014. The pro forma information for the nine months ended September 30, 2015 and 2014 presented below is based on estimates and assumptions, which the Company believes to be reasonable but 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 2014. 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 presented.

For the Three Months Ended September 30,
 
For the Nine Months Ended September 30,
 
2015
 
2014
 
2015

2014
 
(unaudited)
Pro forma revenues
$
550,401


$
544,993

 
$
1,647,162


$
1,562,817

Pro forma income from continuing operations
$
131,814


$
139,740

 
$
374,868


$
321,313

Pro forma basic income from continuing operations
per share
$
0.78


$
0.84

 
$
2.29


$
1.93

Pro forma diluted income from continuing operations
per share
$
0.77


$
0.82

 
$
2.24


$
1.89


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. At September 30, 2015 and December 31, 2014, the escrows amounted to $76,263 and $5,583, respectively and have been included in “Other current assets” in the accompanying condensed consolidated balance sheets, respectively.
6. Discontinued Operations:

On March 11, 2014, the Company sold 100 percent of the stock of the Company’s mortgage services business, Interthinx, which was a guarantor subsidiary under the then existing credit facility, in exchange for a purchase price of $151,170 after a working capital adjustment of $3,830. Upon completion of the sale, Interthinx ceased being a guarantor under the then existing credit facility. The Company recognized income from discontinued operations, net of tax, of $29,177 in 2014 upon the finalization of the provision for income taxes. Results of operations for the mortgage services business are reported as a discontinued operation for the three and nine months ended September 30, 2014.

The mortgage services business met the criteria for reporting as a discontinued operation and has been segregated from continuing operations. The following table summarizes the results from the discontinued operation for the three and nine months ended September 30, 2014:
 
Three months ended September 30, 2014

Nine months ended
September 30, 2014
Revenues from discontinued operations
$

 
$
11,512

Income from discontinued operations before income taxes (including gain on
sale of $65,410)
$

 
$
54,482

Provision for income taxes (including tax on gain on sale of $27,067)
 

 
 
(23,365
)
Income from discontinued operations, net of tax
$

 
$
31,117

 
 
 
 
 
 

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7. Goodwill and Intangible Assets:
The following is a summary of the change in goodwill from December 31, 2014 through September 30, 2015, both in total and as allocated to the Company’s operating segments:
 
Risk
Assessment
 
Decision
Analytics
 
Total
Goodwill at December 31, 2014 (1)
$
55,555

 
$
1,151,591

 
$
1,207,146

Current year acquisition
 

 
 
1,983,276

 
 
1,983,276

Foreign currency translation
 

 
 
(70,937
)
 
 
(70,937
)
Goodwill at September 30, 2015 (1)
$
55,555

 
$
3,063,930

 
$
3,119,485

______________________
(1)
These balances are net of accumulated impairment charges of $3,244 that occurred prior to December 31, 2013.
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, 2015, 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, 2015
 
 
 
 
 
 
 
 
 
 
Technology-based
8 years
 
$
400,383

 
$
(212,402
)
 
$
187,981

Marketing-related
16 years
 
 
295,939

 
 
(62,719
)
 
 
233,220

Contract-based
6 years
 
 
6,555

 
 
(6,555
)
 
 

Customer-related
13 years
 
 
665,570

 
 
(140,626
)
 
 
524,944

Database-related
20 years
 
 
478,162

 
 
(8,741
)
 
 
469,421

Total intangible assets
 
 
$
1,846,609

 
$
(431,043
)
 
$
1,415,566

December 31, 2014
 
 
 
 
 
 
 
 
 
 
Technology-based
8 years
 
$
299,705

 
$
(195,698
)
 
$
104,007

Marketing-related
5 years
 
 
71,504

 
 
(54,745
)
 
 
16,759

Contract-based
6 years
 
 
6,555

 
 
(6,555
)
 
 

Customer-related
13 years
 
 
399,011

 
 
(113,301
)
 
 
285,710

Total intangible assets
 
 
$
776,775

 
$
(370,299
)
 
$
406,476

Amortization expense related to intangible assets for the three months ended September 30, 2015 and 2014 was $18,543 and $14,187, respectively. Amortization expense related to intangible assets for the nine months ended September 30, 2015 and 2014 was $61,496 and $42,620, respectively. Estimated amortization expense for the remainder of 2015 and the years through 2020 and thereafter for intangible assets subject to amortization is as follows:

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Year
Amount
2015
$
33,337

2016
 
119,282

2017
 
118,378

2018
 
117,632

2019
 
116,172

2020 and thereafter
 
910,765

 
$
1,415,566

8. Income Taxes:
The Company’s effective tax rate for the three and nine months ended September 30, 2015 was 31.98% and 28.95%, compared to the effective tax rate for the three and nine months ended September 30, 2014 of 37.22% and 36.98%, respectively. The effective tax rate for the three and nine months ended September 30, 2015 is lower than the September 30, 2014 effective tax rate primarily due to tax benefits related to the Wood Mackenzie acquisition. The difference between statutory tax rates and the Company’s effective tax rate is primarily attributable to state taxes, tax benefits related to the Wood Mackenzie acquisition, and nondeductible share appreciation from the ISO 401(k) Savings and Employee Stock Ownership Plan (“KSOP”).
9. Debt:
The following table presents short-term and long-term debt by issuance as of September 30, 2015 and December 31, 2014: 
 
Issuance
Date
 
Maturity
Date
 
2015
 
2014
Short-term debt and current portion of long-term debt:
 
 
 
 
 
 
 
 
 
Syndicated revolving credit facility
Various
 
Various
 
$
900,000

 
$
160,000

Prudential shelf notes:
 
 
 
 
 
 
 
 
 
5.84% Series H shelf notes
10/26/2007
 
10/26/2015
 
 

 
 
17,500

6.28% Series I shelf notes
4/29/2008
 
4/29/2015
 
 

 
 
85,000

New York Life shelf notes:
 
 
 
 
 
 
 
 
 
5.87% Series A shelf notes
10/26/2007
 
10/26/2015
 
 

 
 
17,500

6.35% Series B shelf notes
4/29/2008
 
4/29/2015
 
 

 
 
50,000

Capital lease obligations
Various
 
Various
 
 
5,473

 
 
6,058

Short-term debt and current portion of long-term
debt
 
 
 
 
 
905,473

 
 
336,058

Long-term debt:
 
 
 
 
 
 
 
 
 
Senior notes:
 
 
 
 
 
 
 
 
 
4.000% senior notes, less unamortized discount
of $4,652 and $0, respectively
5/15/2015

6/15/2025
 
 
895,348

 
 

5.500% senior notes, less unamortized discount
of $1,185 and $0, respectively
5/15/2015

6/15/2045
 
 
348,815

 
 

4.125% senior notes, less unamortized discount
of $1,929 and $2,137, respectively
9/12/2012
 
9/12/2022
 
 
348,071

 
 
347,863

4.875% senior notes, less unamortized discount
of $1,107 and $1,361, respectively
12/8/2011
 
1/15/2019
 
 
248,893

 
 
248,639

5.800% senior notes, less unamortized discount
of $575 and $654, respectively
4/6/2011

5/1/2021
 
 
449,425

 
 
449,346

Prudential shelf notes:
 
 
 
 
 

 
 
 
6.85% Series J shelf notes
6/15/2009
 
6/15/2016
 
 

 
 
50,000

Capital lease obligations
Various
 
Various
 
 
2,340

 
 
5,026

Long-term debt
 
 
 
 
 
2,292,892

 
 
1,100,874

Total debt
 
 
 
 
$
3,198,365

 
$
1,436,932

On May 15, 2015, the Company completed an issuance of senior notes in the aggregate principal amount of $900,000 and

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$350,000 due on June 15, 2025 and June 15, 2045, respectively, that accrue interest at a rate of 4.000% and 5.500%, respectively. Interest is payable semi-annually on both series of senior notes on June 15th and December 15th of each year, beginning on December 15, 2015. The senior notes were issued at a discount of $4,833 and $1,201, respectively, and the Company incurred debt issuance costs on the senior notes of $7,560 and $4,138, respectively. The discount and debt issuance costs were recorded in "Long-term debt" and "Other assets," respectively, in the accompanying condensed consolidated balance sheets and these costs will be amortized to "Interest expense" in the accompanying condensed consolidated statements of operations over the life of the respective senior note. The net proceeds from the issuance of these notes was utilized to partially fund the acquisition of Wood Mackenzie. The indenture governing the senior notes restricts the Company's ability to, among other things, create certain liens, enter into sales/leaseback transactions and consolidate with, sell, lease, convey or otherwise transfer all or substantially all of the Company's assets, or merge with or into, any other person or entity. As of September 30, 2015 and December 31, 2014, the Company had senior notes with an aggregate principal amount of $2,300,000 and $1,050,000 outstanding, respectively, and was in compliance with their debt covenants.
On April 22, 2015, the Company signed an agreement to enter into a $1,750,000 committed senior unsecured Syndicated Revolving Credit Facility (the "new 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 new Credit Facility became effective on May 15, 2015. The new Credit Facility has a single borrower, Verisk Analytics, Inc,. and there are no guarantor subsidiaries of the debt.  In accordance with the indenture governing our senior notes, the guarantor subsidiaries of the senior notes were automatically released as they were no longer guarantor subsidiaries under the new Credit Facility.   Due to the fact that there are no longer any guarantor subsidiaries of the registered senior notes, the disclosure containing the Condensed Consolidated Financial Information for Guarantor Subsidiaries and Non-Guarantor Subsidiaries is no longer required. On July 24, 2015, the Company entered into the First Amendment to the new Credit Facility which modified the definitions of Consolidated EBIT and Consolidated EBITDA to permit the adding back of certain non-recurring expenses related to the acquisition of Wood Mackenzie.
The Company utilized borrowings of $930,000 from the new Credit Facility to partially fund the purchase of Wood Mackenzie. The new Credit Facility may also be used for general corporate purposes, including working capital needs and capital expenditures, acquisitions and the share repurchase program (the "Repurchase Program").
The new Credit Facility has replaced the previously existing $990,000 Syndicated Revolving Credit Facility (the "old Credit Facility"). The new Credit Facility contains certain financial and other covenants that, among other things, impose certain restrictions on indebtedness, liens, investments, and capital expenditures. These covenants also place restrictions on mergers, asset sales, sale/leaseback transactions, payments between the Company and its subsidiaries, and certain transactions with affiliates. The financial covenants require that, at the end of any fiscal quarter, the Company have a consolidated interest coverage ratio of at least 3.0 to 1.0 and that it maintains, during any period of four fiscal quarters, a consolidated funded debt leverage ratio of 3.75 to 1.0, which ratio steps down to 3.5 to 1.0 at the end of the fourth fiscal quarter ending after the consummation of the acquisition of Wood Mackenzie. The Company was in compliance with all debt covenants under the new Credit Facility as of September 30, 2015. Interest on borrowings under the new Credit Facility is payable at an interest rate of LIBOR plus 1.125% to 1.625%, depending upon the consolidated funded debt leverage ratio. A commitment fee on any unused balance is payable periodically and will range from 12.5 to 25 basis points based upon the consolidated funded debt leverage ratio. As of September 30, 2015 and December 31, 2014, the Company had outstanding borrowings under the new Credit Facility and old Credit Facility of $900,000 and $160,000, respectively. On October 19, 2015, the Company repaid $70,000 of its revolver borrowings that were outstanding as of September 30, 2015.
As of September 30, 2015, the Company no longer has any outstanding private placement debt. On April 29, 2015, the Company repaid $85,000 and $50,000 of private placement debt with Prudential Capital Group and New York Life, respectively, that came due utilizing $55,000 from cash from on hand and $80,000 from borrowings under the Credit Facility. On May 14, 2015, the Company prepaid the remaining private placement debt with New York Life of $17,500, which had been due on October 26, 2015, and $17,500 and $50,000 of remaining private placement debt with Prudential, which was due on October 26, 2015, and June 15, 2016, respectively. To prepay this debt, the Company utilized $25,000 of cash on hand and borrowings from its Credit Facility of $60,000. The make-whole costs for the prepayment of this debt was $4,786 and was recorded to "Interest expense" in the accompanying condensed consolidated statements of operations during the nine months ended September 30, 2015.
On March 10, 2015, in connection with the Company's agreement to acquire Wood Mackenzie, the Company entered into a commitment letter for a $2,300,000 364-day bridge financing arrangement with Bank of America N.A. and Morgan Stanley Bank N.A. acting as joint lead arrangers. This financing arrangement was only to be utilized in the event the Company did not complete the debt and equity offerings relating to its acquisition of Wood Mackenzie by a certain date, and was terminated upon the closing of the acquisition. See Note 5. The Company paid fees associated with this financing arrangement of $9,100. Due to the completion of the debt and equity offerings, this arrangement was terminated and the full $9,100 of fees were recorded to "Interest expense" in the accompanying condensed consolidated statements of operations during the nine months ended September

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30, 2015.
10. Stockholders’ Equity:
The Company has 1,200,000,000 shares of authorized common stock. The 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 twelve members of the board of directors.
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, 2015.

Equity Offering

The Company completed an equity offering of its common stock on May 12, 2015 in order to finance the acquisition of Wood Mackenzie. The Company received total proceeds of $721,867, net of underwriting discount of $20,413, from the offering of 10,604,000 treasury shares at a net public offering price of $68.075 per share. In conjunction with the offering, the Company incurred $1,019 of costs related to the issuance of the common stock. The proceeds from the offering, net of underwriting discount and related issuance costs, was recorded as a decrease to treasury shares at the weighted average price of the Company's treasury shares, with the remainder of the net proceeds recorded as an increase to additional paid in capital in the accompanying condensed consolidated balance sheets and condensed consolidated statements of changes in stockholders' equity.

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 $2,000,000 of its common stock and has repurchased shares with an aggregate value of $1,810,193. The Company did not repurchase any shares during the nine months ended September 30, 2015. As of September 30, 2015, the Company had $189,807 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.
In December 2014, the Company entered into an accelerated share repurchase program ("ASR") to repurchase shares of its common stock for an aggregate purchase price of $500,000. Upon payment of the aggregate purchase price in December 2014, the Company received an initial delivery of 6,372,472 shares of the Company's common stock. Upon final settlement of the ASR agreement in June 2015, the Company received an additional 809,021 shares of the Company's common stock.

Treasury Stock

As of September 30, 2015, the Company’s treasury stock consisted of 374,899,035 shares of common stock. During the nine months ended September 30, 2015, the Company reissued 11,999,797 shares of common stock from the treasury shares at a weighted average price of $6.58 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, and nonvested restricted stock units, had been issued.

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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, 2015 and 2014:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2015
 
2014
 
2015
 
2014
Numerator used in basic and diluted EPS:
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations
$
131,814

 
$
99,015

 
$
393,820

 
$
271,555

Income from discontinued operations, net of tax
of $0 and $23,365, for the three and nine months
ended September 30, 2014, respectively (Note 6)
 

 
 

 
 

 
 
31,117

Net income
$
131,814

 
$
99,015

 
$
393,820

 
$
302,672

Denominator:
 
 
 
 
 
 
 
 
 
 
 
Weighted average number of common
shares used in basic EPS
 
168,739,437

 
 
166,187,540

 
 
163,656,387

 
 
166,504,384

Effect of dilutive shares:
 
 
 
 
 
 
 
 
 
 
 
Potential common shares issuable from stock
options and stock awards
 
3,431,900

 
 
3,334,908

 
 
3,423,163

 
 
3,311,483

Weighted average number of common shares
and dilutive potential common shares used
in diluted EPS
 
172,171,337

 
 
169,522,448

 
 
167,079,550

 
 
169,815,867

The potential shares of common stock that were excluded from diluted EPS were 1,596,280 and 1,857,450 for the three months ended September 30, 2015 and 2014 and 1,127,414 and 1,574,984 for the nine months ended September 30, 2015 and 2014, 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 as of September 30, 2015 and December 31, 2014:
 
2015

2014
Foreign currency translation adjustment
$
(103,358
)
 
$
(3,086
)
Unrealized holding losses on available-for-sale securities, net of tax
 
(63
)
 
 
(110
)
Pension and postretirement adjustment, net of tax
 
(75,996
)
 
 
(77,318
)
Accumulated other comprehensive losses
$
(179,417
)
 
$
(80,514
)
The before tax and after tax amounts of other comprehensive income for the three and nine months ended September 30, 2015 and 2014 are summarized below:

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Table of Contents


Before Tax

Tax Benefit 
(Expense)

After Tax
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
)
For the Three Months Ended September 30, 2014








Foreign currency translation adjustment
$
(547
)

$


$
(547
)
Unrealized holding loss on available-for-sale securities before
reclassifications

(72
)


28



(44
)
Amount reclassified from accumulated other comprehensive
losses (1)

7



(3
)


4

Unrealized holding loss on available-for-sale securities

(65
)


25



(40
)
Pension and postretirement adjustment before reclassifications

606



(315
)


291

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

(303
)


115



(188
)
Pension and postretirement adjustment

303



(200
)


103

Total other comprehensive loss
$
(309
)

$
(175
)

$
(484
)










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Table of Contents

 
 
Before Tax
 
 
Tax Benefit 
(Expense)
 
 
After Tax
For the Nine Months Ended September 30, 2015
 

 
 

 
 

Foreign currency translation adjustment
$
(100,272
)
 
$

 
$
(100,272
)
Unrealized holding gain on available-for-sale securities before
reclassifications
 
94

 
 
(35
)
 
 
59

Amount reclassified from accumulated other comprehensive
losses (1)
 
(19
)
 
 
7

 
 
(12
)
Unrealized holding gain on available-for-sale securities
 
75

 
 
(28
)
 
 
47

Pension and postretirement adjustment before reclassifications
 
4,862

 
 
(2,039
)
 
 
2,823

Amortization of net actuarial loss and prior service benefit
reclassified from accumulated other comprehensive losses (2)
 
(2,431
)
 
 
930

 
 
(1,501
)
Pension and postretirement adjustment
 
2,431

 
 
(1,109
)
 
 
1,322

Total other comprehensive loss
$
(97,766
)
 
$
(1,137
)
 
$
(98,903
)
For the Nine Months Ended September 30, 2014
 

 
 

 
 

Foreign currency translation adjustment
$
213

 
$

 
$
213

Unrealized holding loss on available-for-sale securities before
reclassifications
 
(127
)
 
 
49

 
 
(78
)
Amount reclassified from accumulated other comprehensive
losses (1)
 
122

 
 
(47
)
 
 
75

Unrealized holding loss on available-for-sale securities
 
(5
)
 
 
2

 
 
(3
)
Pension and postretirement adjustment before reclassifications
 
1,700

 
 
(759
)
 
 
941

Amortization of net actuarial loss and prior service benefit
reclassified from accumulated other comprehensive losses (2)
 
(850
)
 
 
326

 
 
(524
)
Pension and postretirement adjustment
 
850

 
 
(433
)
 
 
417

Total other comprehensive income
$
1,058

 
$
(431
)
 
$
627

 
 
 
 
 
 
 
 
 
____________________
(1)
This accumulated other comprehensive loss component, before tax, is included under “Investment income and others, net” in the accompanying condensed consolidated statements of operations.
(2)
These accumulated other comprehensive loss components, before tax, are included under “Cost of revenues” and “Selling, general and administrative” in the accompanying condensed consolidated statements of operations. These components are also included in the computation of net periodic (benefit) cost (see Note 12 Pension and Postretirement Benefits for additional details).

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Table of Contents

11. Equity Compensation Plans:
All of the Company’s outstanding stock options and restricted stock awards are covered under the 2013 Incentive Plan, 2009 Incentive Plan or the 1996 Incentive Plan. Awards under the 2013 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 2013 Incentive Plan. The Company issued common stock under these plans from the Company’s treasury shares. As of September 30, 2015, there were 10,131,411 shares of common stock reserved and available for future issuance under the 2013 Incentive Plan. Cash received from stock option exercises for the nine months ended September 30, 2015 and 2014 was $31,283 and $20,855, respectively.
The Company has granted equity awards to key employees and directors of the Company. The nonqualified stock options have an exercise price equal to the closing price of the Company’s common stock on the grant date, with a 10-year contractual term. The fair value of the restricted stock is determined using the closing price of the Company’s common stock on the grant date. The restricted stock is not assignable or transferable until it becomes vested. The Company recognizes the expense of the equity awards ratably over the vesting period. A summary of the equity awards granted during the nine months ended September 30, 2015 is presented below.
Grant Date
 
Service Vesting Period
 
Stock Options
 
Restricted Stock
 
Common Stock
April 1, 2015
 
Four-year graded vesting
 
1,177,191

 
211,756

 

April 1, 2015
 
Not applicable
 

 

 
840

May 19, 2015
 
Immediate vesting on grant date
 
255,473

 
52,960

 

May 19, 2015
 
Four-year graded vesting
 
225,363

 
42,064

 

May 19, 2015
 
Four-year cliff vesting
 
127,931

 
28,445

 

July 1, 2015
 
Immediate vesting on grant date
 
27,047

 
1,131

 

July 1, 2015
 
One-year cliff vesting
 
51,876

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