UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

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

For the quarterly period ended March 31, 2010

OR

o		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 (State or other jurisdiction of incorporation or organization)		26-2994223 (I.R.S. Employer Identification No.)
545 Washington Boulevard Jersey City, NJ (Address of principal executive offices)		07310-1686 (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 þ No o

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 o No o

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 o		Accelerated filer o		Non-accelerated filer þ		Smaller reporting company o
				(Do not check if a 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 o No þ

As of May 3, 2010 there was the following number of shares outstanding of each of the issuer’s classes of common stock:

Class		Shares Outstanding
Class A common stock $.001 par value		126,373,495
Class B (Series 1) common stock $.001 par value		27,118,975
Class B (Series 2) common stock $.001 par value		27,118,975

 

 

Verisk Analytics, Inc.
Index to Form 10-Q

Table of Contents

		Page Number
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed Consolidated Balance Sheets			1
Condensed Consolidated Statements of Operations			2
Condensed Consolidated Statements of Changes in Stockholders’ Equity/(Deficit)			3
Condensed Consolidated Statements of Cash Flows			4
Notes to Condensed Consolidated Financial Statements			5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			21
Item 3. Quantitative and Qualitative Disclosures About Market Risk			31
Item 4. Controls and Procedures			31
PART II — OTHER INFORMATION
Item 1. Legal Proceedings			32
Item 1A. Risk Factors			32
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			32
Item 3. Defaults Upon Senior Securities			32
Item 4. (Removed and Reserved)			32
Item 5. Other Information			32
Item 6. Exhibits			32
SIGNATURES			33
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1

Item 1. Financial Statements

VERISK ANALYTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

		2010
		unaudited				2009
		(In thousands, except for share and per share data)
ASSETS
Current assets:
Cash and cash equivalents		$	130,992			$	71,527
Available-for-sale securities			5,546				5,445
Accounts receivable, net (including amounts from related parties of $2,963 and $1,353) (1)			132,896				89,436
Prepaid expenses			21,130				16,155
Deferred income taxes, net			4,405				4,405
Federal and foreign income taxes receivable			—				16,721
Other current assets			20,880				21,656
Total current assets			315,849				225,345
Noncurrent assets:
Fixed assets, net			88,272				89,165
Intangible assets, net			107,248				108,526
Goodwill			494,283				490,829
Deferred income taxes, net			63,948				66,257
State income taxes receivable			4,933				6,536
Other assets			11,146				10,295
Total assets		$	1,085,679			$	996,953
LIABILITIES AND STOCKHOLDERS’ EQUITY/(DEFICIT)
Current liabilities:
Accounts payable and accrued liabilities		$	78,001			$	101,401
Acquisition related liabilities			544				—
Short-term debt			4,723				66,660
Pension and postretirement benefits, current			5,284				5,284
Fees received in advance (including amounts from related parties of $6,921 and $439) (1)			214,295				125,520
Federal and foreign income taxes payable			16,216				—
State and local income taxes payable			6,069				1,414
Total current liabilities			325,132				300,279
Noncurrent liabilities:
Long-term debt			527,076				527,509
Pension benefits			99,327				102,046
Postretirement benefits			24,673				25,108
Other liabilities			81,219				76,960
Total liabilities			1,057,427				1,031,902
Commitments and contingencies
Stockholders’ equity/(deficit):
Verisk Class A common stock, $.001 par value; 1,200,000,000 shares authorized; 125,815,600 shares issued and outstanding as of March 31, 2010 and December 31, 2009			30				30
Verisk Class B (Series 1) common stock, $.001 par value; 400,000,000 shares authorized; 205,637,925 shares issued and 27,118,975 outstanding as of March 31, 2010 and December 31, 2009			50				50
Verisk Class B (Series 2) common stock, $.001 par value; 400,000,000 shares authorized; 205,637,925 shares issued and 27,118,975 outstanding as of March 31, 2010 and December 31, 2009			50				50
Unearned KSOP contributions			(1,241	)			(1,305	)
Additional paid-in capital			659,392				652,573
Treasury stock, at cost, 357,037,900 shares as of March 31, 2010 and December 31, 2009			(683,994	)			(683,994	)
Retained earnings			106,650				51,275
Accumulated other comprehensive loss			(52,685	)			(53,628	)
Total stockholders’ equity/(deficit)			28,252				(34,949	)
Total liabilities and stockholders’ equity/(deficit)		$	1,085,679			$	996,953

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

VERISK ANALYTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

		2010				2009
		(In thousands, except for
		share and per share data)
Revenues (including amounts from related parties of $15,133 and $24,087) (1)		$	276,154			$	245,751
Expenses:
Cost of revenues (exclusive of items shown separately below)			114,993				107,523
Selling, general and administrative			37,514				33,320
Depreciation and amortization of fixed assets			9,929				9,195
Amortization of intangible assets			7,304				8,510
Total expenses			169,740				158,548
Operating income			106,414				87,203
Other income/(expense):
Investment income			32				43
Realized gains/(losses) on securities, net			32				(398	)
Interest expense			(8,466	)			(8,154	)
Total other expense, net			(8,402	)			(8,509	)
Income before income taxes			98,012				78,694
Provision for income taxes			(42,637	)			(33,779	)
Net income		$	55,375			$	44,915
Basic net income per share of Class A and Class B (2):		$	0.31			$	0.26
Diluted net income per share of Class A and Class B (2):		$	0.29			$	0.25
Weighted average shares outstanding:
Basic (2)			180,053,550				173,938,000
Diluted (2)			189,454,756				180,604,450

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

VERISK ANALYTICS, INC.

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

																																		(Accumulated				Accumulated				Total
		Common Stock Issued																				Unearned				Additional								Deficit)/				Other				Stockholders’
										Verisk				Verisk								KSOP				Paid-in				Treasury				Retained				Comprehensive				(Deficit)/
		Verisk Class A				ISO Class B				Class B (Series 1)				Class B (Series 2)				Par Value				Contributions				Capital				Stock				Earnings				Loss				Equity
		(In thousands, except for share data)
Balance, January 1, 2009			—				500,225,000				—				—			$	100			$	—			$	—			$	(683,994	)		$	(243,495	)		$	(82,434	)		$	(1,009,823	)
Comprehensive income:
Net income			—				—				—				—				—				—				—				—				126,614				—				126,614
Other comprehensive income			—				—				—				—				—				—				—				—				—				28,806				28,806
Comprehensive income			—				—				—				—				—				—				—				—				—				—				155,420
Increase in redemption value of ISO Class A common stock			—				—				—				—				—				—				—				—				(272,428	)			—				(272,428	)
Conversion of ISO Class B common stock upon corporate reorganization (Note 10)			88,949,150				(500,225,000	)			205,637,925				205,637,925				—				—				—				—				—				—				—
Conversion of ISO Class A redeemable common stock upon corporate reorganization (Note 9)			34,768,750				—				—				—				30				(1,305	)			624,282				—				440,584				—				1,063,591
KSOP shares earned			—				—				—				—				—				—				725				—				—				—				725
Stock options exercised (including tax benefit of $18,253)			2,097,700				—				—				—				—				—				23,348				—				—				—				23,348
Stock-based compensation			—				—				—				—				—				—				4,218				—				—				—				4,218
Balance, December 31, 2009			125,815,600				—				205,637,925				205,637,925			$	130			$	(1,305	)		$	652,573			$	(683,994	)		$	51,275			$	(53,628	)		$	(34,949	)
Comprehensive income:
Net income			—				—				—				—				—				—				—				—				55,375				—				55,375
Other comprehensive income			—				—				—				—				—				—				—				—				—				943				943
Comprehensive income			—				—				—				—				—				—				—				—				—				—				56,318
KSOP shares earned			—				—				—				—				—				64				2,786				—				—				—				2,850
Stock options exercised (including tax benefit of $147)			—				—				—				—				—				—				147				—				—				—				147
Stock-based compensation			—				—				—				—				—				—				3,886				—				—				—				3,886
Balance, March 31, 2010			125,815,600				—				205,637,925				205,637,925			$	130			$	(1,241	)		$	659,392			$	(683,994	)		$	106,650			$	(52,685	)		$	28,252

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

VERISK ANALYTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

		2010				2009
		(In thousands)
Cash flows from operating activities:
Net income		$	55,375			$	44,915
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of fixed assets			9,929				9,195
Amortization of intangible assets			7,304				8,510
Amortization of debt issuance costs			395				—
Allowance for doubtful accounts			105				349
KSOP compensation expense			2,850				5,127
Stock-based compensation			3,886				2,005
Non-cash charges associated with performance based appreciation awards			566				610
Realized (gains)/losses on securities, net			(32	)			398
Deferred income taxes			973				766
Other operating			15				15
Loss on disposal of assets			11				228
Excess tax benefits from exercised stock options			(147	)			(171	)
Changes in assets and liabilities, net of effects from acquisitions:
Accounts receivable			(42,699	)			(28,219	)
Prepaid expenses and other assets			(4,591	)			(3,637	)
Federal and foreign income taxes			32,937				27,785
State and local income taxes			6,405				(860	)
Accounts payable and accrued liabilities			(25,415	)			(24,060	)
Acquisition related liabilities			—				(300	)
Fees received in advance			88,273				88,692
Other liabilities			1,049				4,045
Net cash provided by operating activities			137,189				135,393
Cash flows from investing activities:
Acquisitions, net of cash acquired of $1,556 and $9,477			(6,227	)			(51,618	)
Proceeds from release of acquisition related escrows			213				—
Escrow funding associated with acquisitions			(1,500	)			(7,000	)
Purchases of available-for-sale securities			(252	)			(365	)
Proceeds from sales and maturities of available-for-sale securities			335				421
Purchases of fixed assets			(7,498	)			(8,359	)
Net cash used in investing activities			(14,929	)			(66,921	)
Cash flows from financing activities:
Redemption of ISO Class A common stock			—				(25,881	)
Repayment of short-term debt, net			(62,945	)			(30,682	)
Excess tax benefits from exercised stock options			147				171
Proceeds from stock options exercised			—				179
Net cash used in financing activities			(62,798	)			(56,213	)
Effect of exchange rate changes			3				(438	)
Increase in cash and cash equivalents			59,465				11,821
Cash and cash equivalents, beginning of period			71,527				33,185
Cash and cash equivalents, end of period		$	130,992			$	45,006
Supplemental disclosures:
Taxes paid		$	616			$	6,034
Interest paid		$	8,228			$	8,178
Non-cash investing and financing activities:
Deferred tax liability established on date of acquisition		$	(732	)		$	(8,744	)
Capital lease obligations		$	575			$	—
Capital expenditures included in accounts payable and accrued liabilities		$	815			$	3,225
Decrease in goodwill due to finalization of acquisition related liabilities		$	—			$	(4,300	)
Increase in goodwill due to acquisition related escrow distributions		$	489			$	—

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

VERISK ANALYTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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, creates embedded decision support solutions. The Company is one of the largest aggregators and providers of data pertaining to property and casualty (“P&C”) or P&C insurance risks in the United States of America (“U.S.”). The Company offers solutions for detecting fraud in the U.S. P&C insurance, mortgage and healthcare industries and sophisticated methods to predict and quantify loss in diverse contexts ranging from natural catastrophes to 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 on May 23, 2008 to serve as the parent holding company of Insurance Services Office, Inc. (“ISO”) upon completion of the initial public offering (“IPO”). ISO was formed in 1971 as an advisory and rating organization for the P&C insurance industry to provide statistical and actuarial services, to develop insurance programs and to assist insurance companies in meeting state regulatory requirements. Over the past decade, the Company has broadened its data assets, entered new markets, placed a greater emphasis on analytics, and pursued strategic acquisitions. On October 6, 2009, ISO effected a corporate reorganization whereby the Class A and Class B common stock of ISO were exchanged by the current stockholders for the common stock of Verisk on a one-for-one basis. Verisk immediately thereafter effected a fifty-for-one stock split of its Class A and Class B common stock and equally sub-divided the Class B common stock into two new series of stock, Verisk Class B (Series 1) and Verisk Class B (Series 2). Except as the context otherwise requires, all share and per share information in the condensed consolidated financial statements gives effect to the fifty-for-one stock split that occurred immediately after the reorganization.

On October 9, 2009, the Company completed its IPO. Upon completion of the IPO, the selling stockholders sold 97,995,750 shares of Class A common stock of Verisk, which included the 12,745,750 over-allotment option, at the IPO price of $22.00 per share. The Company did not receive any proceeds from the sales of common stock in the offering. Verisk trades on the NASDAQ Global Select Market under the ticker symbol “VRSK.”

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, acquisition related liabilities, fair value of stock based compensation, liabilities for pension and postretirement benefits, and the estimate for the allowance for doubtful accounts. Actual results may ultimately differ from those estimates.

The condensed consolidated financial statements as of March 31, 2010 and for the three month periods ended March 31, 2010 and 2009, in the opinion of management, include all adjustments, consisting only of normal recurring accruals, to present fairly the Company’s financial position, results of operations and cash flows. The operating results for the three months ended March 31, 2010 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 months ended March 31, 2010 have been prepared on the same basis as and should be read in conjunction with our annual report on Form 10-K for the year ended December 31, 2009. 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 2010, the FASB issued ASU No. 2010-12, Accounting for Certain Tax Effects of the 2010 Health Care Reform Acts (“ASU No. 2010-12”). On March 30, 2010, the President signed the Health Care and Education Reconciliation Act of 2010, which is a reconciliation bill that amends the Patient Protection and Affordable Care Act that was signed by the President on March 23, 2010 (the “Acts”). ASU No. 2010-12 provides guidance on questions that have arisen about the effect, if any, that the different signing dates might have on the accounting for these two Acts. The adoption of ASU No. 2010-12, effective March 31, 2010, did not have any impact on the company’s consolidated financial statements as the two acts were both signed within the Company’s three month reporting period ended March 31, 2010.

In January 2010, the FASB issued ASU No. 2010-06, Fair Value Measurements and Disclosures (“ASU No. 2010-06”). ASU No. 2010-06 provides guidance on improving disclosures on fair value measurements, such as the transfers between Level 1, Level 2 and Level 3 inputs and the disaggregated activity in the rollforward for Level 3 fair value measurements. ASU No. 2010-06 is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about the disaggregated activity in the rollforward for Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal periods. The adoption of the portion of ASU No. 2010-06 that discusses the transfers between Level 1, Level 2 and Level 3 inputs, effective January 1, 2010, did not have a material impact on the Company’s consolidated financial statements. The Company is currently evaluating the impact of the portion of ASU No. 2010-06 that discusses the disclosures about the disaggregated activity in the rollforward for Level 3 fair value measurements on its consolidated financial statements.

In October 2009, the FASB issued ASU No. 2009-13, Multiple-Deliverable Revenue Arrangements (“ASU No. 2009-13”). ASU No. 2009-13 establishes the accounting and reporting guidance for arrangements under which the vendor will perform multiple revenue-generating activities. Specifically, ASU No. 2009-13 addresses how to separate deliverables and how to measure and allocate arrangement consideration to one or more units of accounting. ASU No. 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The Company has elected not to early adopt and is currently evaluating the impact of ASU No. 2009-13 on its consolidated financial statements.

In June 2009, the FASB issued Accounting Standards Codification (“ASC”) 860-10-50, Accounting for Transfers of Financial Assets — an amendment of FASB Statement No. 140 (“ASC 860-10-50”). ASC 860-10-50 was issued to improve the relevance, representational faithfulness and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance and cash flows; and a transferor’s continuing involvement, if any, in the transferred financial assets. ASC 860-10-50 is effective for an entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. Earlier application is prohibited. The adoption of ASC 860-10-50, effective January 1, 2010, did not have any impact on the Company’s consolidated financial statements.

In June 2009, the FASB issued ASC 810-10-50, Amendments to FASB Interpretation No. 46(R) (“ASC 810-10-50”). ASC 810-10-50 was issued to address the effects on certain provisions of FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities (“FIN No. 46(R)”), as a result of the elimination of the qualifying special-purpose entity concept in ASC 810-10-50 and constituent concerns about the application of certain key provisions of FIN No. 46(R), including those in which the accounting and disclosures under the interpretation do not always provide timely and useful information about an enterprise’s involvement in a variable interest entity. ASC 810-10-50 is effective for an entity’s first annual reporting period that begins after November 15, 2009. The adoption of ASC 810-10-50, effective January 1, 2010, did not have any impact on the Company’s consolidated financial statements.

3. Investments:

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

						Gross				Gross
		Adjusted				Unrealized				Unrealized
		Cost				Gains				Losses				Fair Value
March 31, 2010
Registered investment companies		$	4,537			$	1,006			$	(9	)		$	5,534
Equity securities			14				—				(2	)			12
Total available-for-sale securities		$	4,551			$	1,006			$	(11	)		$	5,546
December 31, 2009
Registered investment companies		$	4,530			$	905			$	—			$	5,435
Equity securities			14				—				(4	)			10
Total available-for-sale securities		$	4,544			$	905			$	(4	)		$	5,445

The Company has investments in private equity securities 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 (“ASC 323-10-25”). At March 31, 2010 and December 31, 2009, the carrying value of such securities was $3,841 for each period and have been included in “Other assets” in the accompanying condensed consolidated balance sheets.

4. Fair Value Measurements:

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

	Level 1 —		Assets or liabilities for which the identical item is traded on an active exchange, such as publicly-traded instruments.
	Level 2 —		Assets and liabilities valued based on observable market data for similar instruments.
	Level 3 —		Assets or liabilities for which significant valuation assumptions are not readily observable in the market; instruments valued based on the best available data, some of which is internally-developed, and considers risk premiums that a market participant would require.

The following tables provide information for such assets and liabilities as of March 31, 2010 and December 31, 2009. The fair values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, acquisitions related liabilities, and short-term debt approximate their carrying amounts because of the short-term maturity of these instruments. The fair value of the Company’s long-term debt was estimated at $582,396 and $578,804 as of March 31, 2010 and December 31, 2009, respectively, and is based on an estimate of interest rates available to the Company for debt with similar features, the Company’s current credit rating and spreads applicable to the Company. These assets and liabilities are not presented in the following table.

						Quoted Prices
						in Active Markets				Significant Other				Significant
						for Identical				Observable				Unobservable
		Total				Assets (Level 1)				Inputs (Level 2)				Inputs (Level 3)
March 31, 2010
Registered investment companies (1)		$	5,534			$	5,534			$	—			$	—
Equity securities (1)		$	12			$	12			$	—			$	—
Contingent consideration under ASC 805 (2)		$	(3,840	)		$	—			$	—			$	(3,840	)
December 31, 2009
Registered investment companies (1)		$	5,435			$	5,435			$	—			$	—
Equity securities (1)		$	10			$	10			$	—			$	—
Cost based investment recorded at fair value on a non-recurring basis (3)		$	1,809			$	—			$	—			$	1,809
Contingent consideration under ASC 805 (2)		$	(3,344	)		$	—			$	—			$	(3,344	)

The table below includes a rollforward of the Company’s contingent consideration under ASC 805 for the three months ended March 31:

		2010				2009
Beginning balance		$	3,344			$	—
Acquisitions (1)			491				2,800
Accretion on acquisition related liabilities			5				—
Ending balance		$	3,840			$	2,800

5. Goodwill and Intangible Assets:

The following is a summary of the change in goodwill from December 31, 2009 through March 31, 2010, both in total and as allocated to the Company’s operating segments:

		Risk				Decision
		Assessment				Analytics				Total
Goodwill at December 31, 2009 (1)		$	27,908			$	462,921			$	490,829
Current year acquisitions			—				2,965				2,965
Finalization of acquisition related escrows			—				489				489
Goodwill at March 31, 2010 (1)		$	27,908			$	466,375			$	494,283

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. The Company completed the required annual impairment test as of June 30, 2009, which resulted in no impairment of goodwill. This 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. There were no goodwill impairment indicators after the date of the last annual impairment test.

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

		Weighted
		Average						Accumulated
		Useful Life		Cost				Amortization				Net
March 31, 2010
Technology-based		6 years		$	177,234			$	(122,818	)		$	54,416
Marketing-related		4 years			36,124				(25,544	)			10,580
Contract-based		6 years			6,555				(6,141	)			414
Customer-related		12 years			70,279				(28,441	)			41,838
Total intangible assets				$	290,192			$	(182,944	)		$	107,248

		Weighted
		Average						Accumulated
		Useful Life		Cost				Amortization				Net
December 31, 2009
Technology-based		6 years		$	174,973			$	(117,986	)		$	56,987
Marketing-related		4 years			35,104				(24,690	)			10,414
Contract-based		6 years			6,555				(6,092	)			463
Customer-related		12 years			67,534				(26,872	)			40,662
Total intangible assets				$	284,166			$	(175,640	)		$	108,526

Consolidated amortization expense related to intangible assets for the three months ended March 31, 2010 and 2009, was approximately $7,304 and $8,510, respectively. Estimated amortization expense in future periods through 2014 and thereafter for intangible assets subject to amortization is as follows:

Year		Amount
2010		$	20,847
2011		$	22,234
2012		$	18,250
2013		$	12,087
2014		$	5,036
Thereafter		$	28,794

6. Acquisitions:

2010 Acquisitions

On February 26, 2010, the Company acquired 100% of the stock of Strategic Analytics, Inc. (“Strategic Analytics”), a privately owned provider of credit risk and capital management solutions to consumer and mortgage lenders, for a net cash purchase price of approximately $6,227 and the Company funded $1,500 of indemnity escrows. Within the Decision Analytics segment, the Company believes Strategic Analytics’ solutions and application set will allow customers to take advantage of state-of-the-art loss forecasting, stress testing, and economic capital requirement tools to better understand and forecast the risk associated within their credit portfolios.

The preliminary allocation of purchase price resulted in the following:

		Purchase Price
		Allocation
Accounts receivable		$	866
Current assets			56
Fixed assets			159
Intangible assets			6,026
Goodwill			2,965
Total assets acquired			10,072
Deferred income taxes			732
Current liabilities			1,122
Other liabilities			1,991
Total liabilities assumed			3,845
Net assets acquired		$	6,227

Other liabilities consist of a $1,500 payment due to the sellers of Strategic Analytics, assuming no pre-acquisition indemnity claims arise subsequent to the acquisition date through December 31, 2012, which was funded into escrow at close. The remaining balance is contingent consideration of $491, which was estimated as of the acquisition date by averaging the probability of achieving each of the specific predetermined EBITDA and revenue targets, which could result in a payment ranging from $0 to $18,000 for the fiscal year ending December 31, 2011. The terms of the contingent consideration include a range that allows the sellers to benefit from the potential growth of Strategic Analytics; however, the amount recorded as of March 31, 2010 represents management’s best estimate based on the prior financial results as well as management’s current best estimate of the future growth of revenue and EBITDA. Subsequent changes in the fair value of contingent consideration is recorded in the statement of operations. For the three months ended March 31, 2010, the Company incurred legal expenses related to this acquisition of $217 included within “Selling, general and administrative” expenses in the accompanying condensed consolidated statements of operations.

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

		Weighted Average
		Useful Life		Total
Technology-based		7 years		$	2,261
Marketing-related		5 years			1,020
Customer-related		10 years			2,745
Total intangible assets		8 years		$	6,026

2009 Acquisitions

On October 30, 2009, the Company acquired the net assets of Enabl-u Technology Corporation, Inc. (“Enabl-u”), a privately owned provider of data management, training and communication solutions to companies with regional, national or global work forces, for a net cash purchase price of $2,502 and the Company funded $136 of indemnity escrows and $100 of contingency escrows. The Company believes this acquisition will enhance the Company’s ability to provide solutions for customers to measure loss prevention and improve asset management through the use of software and software services.

On July 24, 2009, the Company acquired the net assets of TierMed Systems LLC (“TierMed”), a privately owned provider of Healthcare Effectiveness Data and Information Set (“HEDIS”) solutions to healthcare organizations that have HEDIS or quality-reporting needs, for a net cash purchase price of $7,230 and the Company funded $400 of indemnity escrows. The Company believes this acquisition will enhance the Company’s ability to provide solutions for customers to measure and improve healthcare quality and financial performance through the use of software and software services.

On January 14, 2009, the Company acquired 100% of the stock of D2 Hawkeye (“D2”), a privately-owned provider of data mining, decision support, clinical quality analysis, and risk analysis tools for the healthcare industry, for a net cash purchase price of $51,618 and the Company funded $7,000 of indemnity escrows. The Company believes this acquisition will enhance the Company’s position in the healthcare analytics and predictive modeling market by providing new market, cross-sell, and diversification opportunities for the Company’s expanding healthcare solutions.

The total net cash purchase price of these three acquisitions was $61,350 and the Company funded $7,636 of escrows, of which $7,000 and $236 is currently included in “Other current assets” and “Other assets,” respectively, in the accompanying condensed consolidated balance sheets. The preliminary allocation of purchase price, including working capital adjustments, resulted in accounts receivable of $4,435, current assets of $573, fixed assets of $2,387, finite lived intangible assets with no residual value of $25,265, goodwill of $49,776, current liabilities of $4,879, other liabilities of $10,479, and deferred tax liabilities of $5,728. Other liabilities consist of a $7,236 payment due to the sellers of D2 and Enabl-u at the conclusion of the escrows funded at close, assuming no pre-acquisition indemnity claims arise subsequent to the acquisition date, and $3,344 of contingent consideration, which was estimated as of the acquisition date by averaging the probability of achieving each of the specific predetermined EBITDA and revenue targets, which could result in a payment ranging from $0 to $65,700 for the fiscal year ending December 31, 2011 for D2 and a payment ranging from $0 to $6,000 for the fiscal year ending December 31, 2010 for TierMed. Under ASC 805, contingent consideration is recognized at fair value at the end of each reporting period. Subsequent changes in the fair value of contingent consideration is recorded in the statement of operations. For the three months ended March 31, 2009, the Company incurred legal expenses related to these acquisitions of $287 included within “Selling, general and administrative” expenses in the accompanying condensed consolidated statements of operations.

The amounts assigned to intangible assets by type for acquisitions during the year ended December 31, 2009 are summarized in the table below:

		Weighted Average
		Useful Life		Total
Technology-based		12 years		$	9,282
Marketing-related		5 years			4,698
Customer-related		8 years			11,285
Total intangible assets		9 years		$	25,265

The preliminary allocation of the purchase price for the 2010 and 2009 acquisitions to intangible assets, goodwill, accrued liabilities, and the determination of an ASC 740-10-25, Accounting for Uncertainty in Income Taxes (“ASC 740-10-25”), liability is subject to revisions, which may have a material impact on the Company’s consolidated financial statements. As the values of such assets and liabilities are preliminary in nature, they are subject to adjustment as additional information is obtained about the facts and circumstances that existed as of the acquisition date. In accordance with ASC 805, the allocation of the purchase price will be finalized once all information is obtained, but not to exceed one year from the acquisition date. The value of goodwill associated with these acquisitions is currently included within the Decision Analytics segment. The goodwill for the Enabl-u and TierMed acquisitions are expected to be deductible for tax purposes over fifteen years. The goodwill for the D2 and Strategic Analytics acquisitions are not deductible for tax purposes. Included within the condensed consolidated statements of operations for the three months ended March 31, 2010 are revenues of $94 and an operating loss of $472, associated with the Strategic Analytics acquisition. Excluding the final resolution of indemnity escrows and contingent consideration, the Company finalized the purchase accounting for the acquisition of D2 and there have been no adjustments since December 31, 2009.

7. Income Taxes:

As a result of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, the tax treatment of federal subsidies paid to sponsors of retiree health benefit plans that provide prescription drug benefits that are at least actuarially equivalent to the corresponding benefits provided under Medicare Part D was effectively changed. The legislative change reduces the future tax benefits of the coverage provided by the Company to participants in the postretirement plan. The Company is required to account for this change in the period for which the law is enacted. As a result, the Company recorded a non-cash tax charge of $2,362 for the three months ended March 31, 2010.

The Company’s effective tax rate for the three months ended March 31, 2010 was 43.5% compared to the effective tax rate for the three months ended March 31, 2009 of 42.9%. The effective rate for the three months ended March 31, 2010 was higher primarily due to a change in deferred tax assets of $2,362 resulting from reduced tax benefits of Medicare subsidies associated with legislative changes in the current period. Without this charge, the effective rate for the current period would have been 41.1%. This rate is lower than the prior period due to lower nondeductible expenses in 2010 related to the ISO 401(K) Savings and Employee Stock Ownership Plan (“KSOP”). The difference between statutory tax rates and the company’s effective tax rate are primarily attributable to state taxes and nondeductible share appreciation from the KSOP.

8. Debt:

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

		Issuance		Maturity		March 31,				December 31,
		Date		Date		2010				2009
Short-term debt:
Syndicated Revolving Credit Facility		12/16/2009		1/19/2010		$	—			$	10,000
Syndicated Revolving Credit Facility		12/23/2009		1/25/2010			—				50,000
Capital lease obligations		Various		Various			4,439				5,488
Other		Various		Various			284				1,172
Short-term debt						$	4,723			$	66,660
Long-term debt:
Prudential senior notes:
4.60% Series E senior notes		6/14/2005		6/13/2011		$	50,000			$	50,000
6.00% Series F senior notes		8/8/2006		8/8/2011			25,000				25,000
6.13% Series G senior notes		8/8/2006		8/8/2013			75,000				75,000
5.84% Series H senior notes		10/26/2007		10/26/2013			17,500				17,500
5.84% Series H senior notes		10/26/2007		10/26/2015			17,500				17,500
6.28% Series I senior notes		4/29/2008		4/29/2013			15,000				15,000
6.28% Series I senior notes		4/29/2008		4/29/2015			85,000				85,000
6.85% Series J senior notes		6/15/2009		6/15/2016			50,000				50,000
Principal senior notes:
6.03% Series A senior notes		8/8/2006		8/8/2011			50,000				50,000
6.16% Series B senior notes		8/8/2006		8/8/2013			25,000				25,000
New York Life senior notes:
5.87% Series A senior notes		10/26/2007		10/26/2013			17,500				17,500
5.87% Series A senior notes		10/26/2007		10/26/2015			17,500				17,500
6.35% Series B senior notes		4/29/2008		4/29/2015			50,000				50,000
Aviva Investors North America:
6.46% Series A senior notes		4/27/2009		4/27/2013			30,000				30,000
Other obligations:
Capital lease obligations		Various		Various			1,895				2,094
Other		Various		Various			181				415
Long-term debt						$	527,076			$	527,509

On January 19, 2010 and January 25, 2010, the Company paid $10,000 and $50,000, respectively, of its outstanding borrowings from its syndicated revolving credit facility as of December 31, 2009. The Company did not enter into any new borrowings during the three months ended March 31, 2010.

In March 2010, the Company amended the New York Life Master Shelf Agreement to increase the authorization of additional senior promissory notes by $15,000, from $100,000, to $115,000, and to extend the maturity of the agreement through March 2013. As of March 31, 2010 and December 31, 2009, the Company had long-term debt outstanding of $85,000 under this agreement.

9. Redeemable Common Stock:

Prior to the corporate reorganization on October 6, 2009, the Company followed ASC 480-10-S99-1, Presentation in Financial Statements of Preferred Redeemable Stock (“ASC 480-10-S99-1”). ASC 480-10-S99-1 required the Company to record ISO Class A common stock and vested stock options at full redemption value at each balance sheet date as the redemption of these securities was not solely within the control of the Company. Effective with the corporate reorganization, the Company is no longer obligated to redeem shares of ISO Class A common stock and is therefore no longer required to record the ISO Class A common stock and vested stock options at redemption value under ASC 480-10-S99-1. The reversal of the redeemable common stock of $1,064,896 on October 6, 2009 resulted in the elimination of accumulated deficit of $440,584, an increase of $30 to Class A common stock at par value, an increase of $624,282 to additional paid-in-capital, and a reclassification of the ISO Class A unearned common stock KSOP shares balance of $1,305 to unearned KSOP contributions.

During the three months ended March 31, 2009, 1,669,550 shares of ISO Class A common stock were redeemed by the Company at a weighted average price of $15.50 per share.

10. Stockholders’ Equity/(Deficit):

On November 18, 1996, the Company authorized 335,000,000 shares of ISO Class A redeemable common stock. Effective with the corporate reorganization on October 6, 2009, the ISO Class A redeemable common stock and all Verisk Class B shares sold into the IPO were converted to Verisk Class A common stock on a one-for-one basis. In addition, the Verisk Class A common stock authorized was increased to 1,200,000,000 shares. The Verisk Class A common shares have rights to any dividend declared by the board of directors, subject to any preferential or other rights of any outstanding preferred stock, and voting rights to elect nine of the twelve members of the board of directors. The Company did not repurchase any Class A shares during the three months ended March 31, 2010.

On November 18, 1996, the Company authorized 1,000,000,000 ISO Class B shares and issued 500,225,000 shares. On October 6, 2009, the Company completed a corporate reorganization whereby the ISO Class B common stock and treasury stock were converted to Verisk Class B common stock on a one-for-one basis. All Verisk Class B shares sold into the IPO were converted to Verisk Class A common stock on a one-for-one basis. In addition, the Verisk Class B common stock authorized was reduced to 800,000,000 shares, sub-divided into 400,000,000 shares of Class B (Series 1) (“Class B-1”) and 400,000,000 shares of Class B (Series 2) (“Class B-2”). Each share of Class B-1 common stock shall convert automatically, without any action by the stockholder, into one share of Verisk Class A common stock on April 6, 2011. Each share of Class B-2 common stock shall convert automatically, without any action by the stockholder, into one share of Verisk Class A common stock on October 6, 2011. The Class B shares have the same rights as Verisk Class A shares with respect to dividends and economic ownership, but have voting rights to elect three of the twelve directors. The Company did not repurchase any Class B shares during the three months ended March 31, 2010 and 2009.

On October 6, 2009, the Company authorized 80,000,000 shares of preferred stock, par value $0.001 per share, in connection with the reorganization. The preferred shares have preferential rights over the Verisk Class A and Class B common shares with respect to dividends and net distribution upon liquidation. The Company did not issue any preferred shares from the reorganization date through March 31, 2010.

Earnings Per Share (“EPS”)

As disclosed in “Note 1 — Organization,” on October 6, 2009 Verisk became the new parent holding company of ISO. In connection with the IPO, the stock of ISO was exchanged for the stock of Verisk on a one-for-one basis and Verisk effected a fifty-for-one stock split of its Verisk Class A and Class B common stock. As a result of the stock split on October 6, 2009, all share and per share data throughout this report has been adjusted to reflect the fifty-for-one stock split.

Basic earnings per common share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding during the period less the weighted average Employee Stock Ownership Plan (“ESOP”) shares of common stock that have not been committed to be released. 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, such as stock awards and stock options, had been issued.

The following is a reconciliation of the numerators and denominators of the basic and diluted EPS computations for the three months ended March 31, 2010 and 2009:

		2010				2009
Numerator used in basic and diluted EPS:
Net income		$	55,375			$	44,915
Denominator:
Weighted average number of common shares used in basic EPS			180,053,550				173,938,000
Effect of dilutive shares:
Potential Class A common stock issuable upon the exercise of stock options			9,401,206				6,666,450
Weighted average number of common shares and dilutive potential common shares used in diluted EPS			189,454,756				180,604,450
Basic EPS of Class A and Class B		$	0.31			$	0.26
Diluted EPS of Class A and Class B		$	0.29			$	0.25

The potential shares of common stock that were excluded from diluted EPS were 147,280 and 5,301,650 for the three months ended March 31, 2010 and 2009, respectively, because the effect of including these potential shares was antidilutive.

Accumulated Other Comprehensive Loss

The following is a summary of accumulated other comprehensive loss:

		March 31,				December 31,
		2010				2009
Unrealized gains on investments		$	620			$	526
Unrealized foreign currency losses			(680	)			(683	)
Pension and postretirement unfunded liability adjustment			(52,625	)			(53,471	)
Accumulated other comprehensive loss		$	(52,685	)		$	(53,628	)

The before tax and after tax amounts of other comprehensive income for the three months ended March 31, 2010 and 2009 are summarized below:

						Tax Benefit/
		Before Tax				(Expense)				After Tax
For the Three Months Ended March 31, 2010
Unrealized holding gains on investments arising during the year		$	146			$	(59	)		$	87
Reclassification adjustment for amounts included in net income			12				(5	)			7
Unrealized foreign currency gains			3				—				3
Pension and postretirement unfunded liability adjustment			1,391				(545	)			846
Total other comprehensive income		$	1,552			$	(609	)		$	943
For the Three Months Ended March 31, 2009
Unrealized holding losses on investments arising during the year		$	(267	)		$	108			$	(159	)
Reclassification adjustment for amounts included in net income			386				(156	)			230
Unrealized foreign currency losses			(438	)			—				(438	)
Pension and postretirement unfunded liability adjustment			2,450				(989	)			1,461
Total other comprehensive income		$	2,131			$	(1,037	)		$	1,094

11. Stock Option Plan:

All of the Company’s outstanding stock options are covered under the Verisk Analytics, Inc. 2009 Equity Incentive Plan (the “Incentive Plan”) or the Insurance Services Office, Inc. 1996 Incentive Plan. Awards under the Incentive Plan may include one or more of the following types: (i) stock options (both nonqualified and incentive stock options), (ii) stock appreciation rights, (iii) restricted stock, (iv) restricted stock units, (v) performance awards, (vi) other share-based awards, and (vii) cash. Employees, directors and consultants are eligible for awards under the Incentive Plan. On October 6, 2009, Verisk granted options to purchase 2,875,871 shares of our Verisk Class A common stock to its directors, officers and key employees. These options have an exercise price equal to the IPO price of $22.00 and a ten year contractual term and the majority of the awards have a four year vesting term; however, certain awards have a three year vesting term. Cash received from stock option exercises for the three months ended March 31, 2010 and 2009 was $0 and $179, respectively. As of March 31, 2010, there are 10,874,129 shares of Class A common stock reserved and available for future issuance. On April 1, 2010, the Company granted 2,011,390 nonqualified stock options to key employees with an exercise price equal to the closing price of the Company’s Class A common stock on March 31, 2010, with a ten year contractual term and a service vesting period of four years.

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

Exercise prices for options outstanding and exercisable at March 31, 2010 ranged from $1.84 to $22.00 as outlined in the following table:

		Options Outstanding							Options Exercisable
		Weighted-							Weighted-
		Average				Weighted-			Average						Weighted-
		Remaining		Stock		Average			Remaining		Stock				Average
Range of		Contractual		Options		Exercise			Contractual		Options				Exercise
Exercise Prices		Life		Outstanding		Price			Life		Exercisable				Price
$1.84 to $2.20		0.7		1,700,900		$	2.15		0.7			1,700,900			$	2.15
$2.21 to $2.96		2.9		2,083,600		$	2.84		2.9			2,083,600			$	2.84
$2.97 to $4.62		3.1		5,574,750		$	3.58		3.1			5,574,750			$	3.58
$4.63 to $8.90		5.1		4,304,050		$	8.30		5.1			4,304,050			$	8.30
$8.91 to $13.62		6.0		1,826,950		$	11.82		6.0			1,776,950			$	11.77
$13.63 to $15.10		6.9		1,839,700		$	15.10		6.9			1,332,200			$	15.10
$15.11 to $17.78		8.5		6,268,950		$	16.65		7.9			1,479,200			$	17.20
$17.79 to $22.00		9.4		3,128,071		$	21.66		8.3			236,200			$	17.84
				26,726,971								18,487,850

A summary of options outstanding under the Incentive Plan as of March 31, 2010 and changes during the three months then ended are presented below:

						Weighted
						Average				Aggregate
		Number				Exercise				Intrinsic
		of Options				Price				Value
Outstanding at December 31, 2009			26,761,221			$	10.74			$	522,914
Cancelled or expired			(34,250	)		$	17.34
Outstanding at March 31, 2010			26,726,971			$	10.73			$	466,878
Options exercisable at March 31, 2010			18,487,850			$	7.36			$	385,370

The aggregate intrinsic value of stock options outstanding at March 31, 2010 was $466,878. The aggregate intrinsic value of stock options currently exercisable at March 31, 2010 was $385,370. Intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the quoted price of Verisk’s common stock as of the reporting date.

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

As of March 31, 2010, there was $37,649 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Incentive Plan. That cost is expected to be recognized over a weighted-average period of 2.78 years. As of March 31, 2010, there were 8,239,121 nonvested stock options, of which 7,307,251 are expected to vest. The total grant date fair value of shares vested during the three months ended March 31, 2010 and 2009 was $6,177 and $2,825, respectively.

12. Pension and Postretirement Benefits:

Prior to January 1, 2002, the Company maintained a qualified defined benefit pension plan for substantially all of its employees through membership in the Pension Plan for Insurance Organizations (the “Pension Plan”), a multiple-employer trust. The Company has applied the projected unit credit cost method for its pension plan, which attributes an equal portion of total projected benefits to each year of employee service. Effective January 1, 2002, the Company amended the Pension Plan to determine future benefits using a cash balance formula. Under the cash balance formula, each participant has an account, which is credited annually based on salary rates determined by years of service, as well as the interest earned on their previous year-end cash balance. Prior to December 31, 2001, pension plan benefits were based on years of service and the average of the five highest consecutive years’ earnings of the last ten years. Effective March 1, 2005, the Company established the Profit Sharing Plan, a defined contribution plan, to replace the Pension Plan for all eligible employees hired on or after March 1, 2005. The Company also has a non-qualified supplemental cash balance plan (“SERP”) for certain employees. The SERP is funded from the general assets of the Company.

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

The components of net periodic benefit cost and the amounts recognized in other comprehensive income for the three months ended March 31, 2010 and 2009 are summarized below:

		For the Three Months Ended March 31,
		Pension Plan								Postretirement Plan
		2010				2009				2010				2009
Service cost		$	1,810			$	1,915			$	—			$	—
Interest cost			5,275				5,329				320				400
Amortization of transition obligation			—				—				42				50
Expected return on plan assets			(5,638	)			(4,608	)			—				—
Amortization of prior service cost			(200	)			(200	)			—				—
Amortization of net actuarial loss			1,411				2,550				138				50
Net periodic benefit cost		$	2,658			$	4,986			$	500			$	500
Employer contributions		$	4,165			$	1,445			$	755			$	1,024

The expected contributions to the Pension Plan and the Postretirement Plan for the year ended December 31, 2010 are consistent with the amounts previously disclosed as of December 31, 2009.

13. Segment Reporting:

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

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

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

The two aforementioned operating segments represent the segments for which separate discrete financial information is available and upon which operating results are regularly evaluated by the CODM in order to assess performance and allocate resources. The Company uses segment EBITDA as the profitability measure for making decisions regarding ongoing operations. Segment EBITDA is income from continuing operations before investment income and interest expense, income taxes, depreciation and amortization. Segment EBITDA is the measure of operating results used to assess corporate performance and optimal utilization of debt and acquisitions. Segment operating expenses consist of direct and indirect costs principally related to personnel, facilities, software license fees, consulting, travel, and third-party information services. Indirect costs are generally allocated to the segments using fixed rates established by management based upon estimated expense contribution levels and other assumptions that management considers reasonable. The Company does not allocate investment income, realized losses, interest income, interest expense or income tax expense, since these items are not considered in evaluating the segment’s overall operating performance. The CODM does not evaluate the financial performance of each segment based on assets. On a geographic basis, no individual country outside of the United States accounted for 1% or more of the Company’s consolidated revenue for either the three months ended March 31, 2010 or 2009. No individual country outside of the United States accounted for 1% or more of total consolidated long-term assets as of March 31, 2010 or December 31, 2009.

The following tables provide the Company’s revenue and operating income performance by reportable segment for the three months ended March 31, 2010 and 2009, as well as a reconciliation to income before income taxes for all periods presented in the accompanying condensed consolidated statements of operations:

		For The Three Months Ended March 31, 2010												For The Three Months Ended March 31, 2009
		Risk				Decision								Risk				Decision
		Assessment				Analytics				Total				Assessment				Analytics				Total
Revenues		$	134,578			$	141,576			$	276,154			$	129,566			$	116,185			$	245,751
Expenses:
Cost of revenues (exclusive of items shown separately below)			49,898				65,095				114,993				51,499				56,024				107,523
Selling, general and administrative			19,184				18,330				37,514				17,468				15,852				33,320
Segment EBITDA			65,496				58,151				123,647				60,599				44,309				104,908
Depreciation and amortization of fixed assets			4,323				5,606				9,929				4,812				4,383				9,195
Amortization of intangible assets			36				7,268				7,304				169				8,341				8,510
Operating income			61,137				45,277				106,414				55,618				31,585				87,203
Unallocated expenses:
Investment income											32												43
Realized gains/(losses) on securities, net											32												(398	)
Interest expense											(8,466	)											(8,154	)
Consolidated income before income taxes										$	98,012											$	78,694
Capital expenditures, including non-cash purchases of fixed assets and capital lease obligations		$	1,889			$	6,999			$	8,888			$	2,904			$	8,680			$	11,584