UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

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

For the quarterly period ended December 31, 2015

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 001-33461

Solera Holdings, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	26-1103816
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1301 Solana Blvd. Building #2, Suite 2100 Westlake, Texas 76262	(817) 961-2100
(Address of Principal Executive Offices, including Zip Code)	(Registrant’s Telephone Number, Including Area Code)

(Former name, former address and former fiscal year, if changed since last report.)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes  x   No  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  x    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 definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	x	Accelerated filer	o
Non-accelerated filer	o (Do not check if a smaller reporting company)	Smaller reporting company	o

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

The number of shares outstanding of the issuer’s common stock as of January 25, 2016 was 68,294,857.

TABLE OF CONTENTS

		Page
PART I	FINANCIAL INFORMATION	3
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets as of December 31, 2015 and June 30, 2015	3
	Condensed Consolidated Statements of Income (Loss) for the three and six month periods ended December 31, 2015 and 2014	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six month periods ended December 31, 2015 and 2014	5
	Condensed Consolidated Statements of Cash Flows for the six month periods ended December 31, 2015 and 2014	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4.	Controls and Procedures.	50
PART II	OTHER INFORMATION	51
Item 1.	Legal Proceedings	51
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68
Item 6.	Exhibits	69
	Signatures	70

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

SOLERA HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)

	December 31, 2015			June 30, 2015
ASSETS
Current assets:
Cash and cash equivalents	$	470,522		$	479,592
Accounts receivable, net of allowance for doubtful accounts of $5,525 and $6,114 at December 31, 2015 and June 30, 2015, respectively	162,454			156,955
Other receivables	22,194			21,234
Other current assets	58,412			53,597
Deferred income tax assets	5,186			12,878
Total current assets	718,768			724,256
Property and equipment, net	91,122			93,391
Goodwill	1,938,236			1,950,408
Intangible assets, net	834,782			898,500
Other noncurrent assets	88,330			70,330
Noncurrent deferred income tax assets	41,384			15,745
Total assets	$	3,712,622		$	3,752,630
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	39,451		$	44,239
Accrued expenses and other current liabilities	230,251			266,861
Income taxes payable	12,759			16,263
Deferred income tax liabilities	5,680			9,077
Total current liabilities	288,141			336,440
Long-term debt	3,125,384			2,481,828
Other noncurrent liabilities	97,871			73,799
Noncurrent deferred income tax liabilities	154,792			176,316
Total liabilities	3,666,188			3,068,383
Redeemable noncontrolling interests	80,795			445,552
Stockholders’ equity:
Solera Holdings, Inc. stockholders’ equity:
Common shares, $0.01 par value: 150,000 shares authorized; 68,250 and 66,985 issued and outstanding as of December 31, 2015 and June 30, 2015, respectively	374,350			579,602
Accumulated deficit	(217,673		)	(173,305		)
Accumulated other comprehensive loss	(202,619		)	(178,474		)
Total Solera Holdings, Inc. stockholders’ equity (deficit)	(45,942		)	227,823
Noncontrolling interests	11,581			10,872
Total stockholders’ equity (deficit)	(34,361		)	238,695
Total liabilities and stockholders’ equity	$	3,712,622		$	3,752,630

See accompanying notes to condensed consolidated financial statements.

3

SOLERA HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended December 31,					Six Months Ended December 31,
	2015			2014		2015			2014
Revenues	$	308,045		$	282,697	$	621,367		$	562,780
Cost of revenues:
Operating expenses	86,239			72,437		175,026			140,969
Systems development and programming costs	28,261			25,480		56,635			51,382
Total cost of revenues (excluding depreciation and amortization)	114,500			97,917		231,661			192,351
Selling, general and administrative expenses (1)	78,956			75,591		171,934			157,467
Depreciation and amortization	44,493			39,368		88,998			77,366
Restructuring charges, asset impairments, and other costs associated with exit and disposal activities	3,398			633		4,571			2,890
Acquisition and related costs	14,960			11,458		42,978			22,810
Interest expense	45,928			28,961		90,607			56,593
Other (income) expense, net	(18,931		)	17,818		20,897			18,281
	283,304			271,746		651,646			527,758
Income (loss) before provision for income taxes	24,741			10,951		(30,279		)	35,022
Income tax provision (benefit)	(31,157		)	1,753		(21,867		)	9,252
Net income (loss)	55,898			9,198		(8,412		)	25,770
Less: Net income attributable to noncontrolling interests	2,888			4,751		5,447			8,959
Net income (loss) attributable to Solera Holdings, Inc.	$	53,010		$	4,447	$	(13,859	)	$	16,811
Net income (loss) attributable to Solera Holdings, Inc. per common share:
Basic	$	0.78		$	0.06	$	(0.21	)	$	0.24
Diluted	$	0.78		$	0.06	$	(0.21	)	$	0.24
Dividends paid per share	$	0.225		$	0.195	$	0.45		$	0.39
Weighted-average shares used in the calculation of net income (loss) attributable to Solera Holdings, Inc. per common share:
Basic	67,415			68,057		67,224			68,263
Diluted	67,700			68,397		67,224			68,691

(1) Includes share-based compensation expense of $6.2 million and $4.2 million for the three months ended December 31, 2015 and 2014, respectively, and $14.2 million and $14.3 million for the six months ended December 31, 2015 and 2014, respectively.

See accompanying notes to condensed consolidated financial statements.

4

SOLERA HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)

	Three Months Ended December 31,						Six Months Ended December 31,
	2015			2014			2015			2014
Net income (loss)	$	55,898		$	9,198		$	(8,412	)	$	25,770
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net of tax of $4,545, $0, $2,919 and $858, respectively	(20,638		)	(42,076		)	(26,200		)	(109,488		)
Unrealized gain (loss) on derivative financial instruments:
Unrealized gains on derivative financial instruments, net of tax of $(1,052), $(4,145), $(475), and $8,613, respectively	1,763			7,029			1,277			19,037
Amounts reclassified out of accumulated other comprehensive income (loss), net of tax of $1,295, $3,401, $542 and $(7,353), respectively	(2,169		)	(5,765		)	(1,305		)	(16,250		)
Net change in unrealized gain (loss) on derivative financial instruments, net of tax	(406		)	1,264			(28		)	2,787
Total other comprehensive loss	(21,044		)	(40,812		)	(26,228		)	(106,701		)
Total comprehensive income (loss)	34,854			(31,614		)	(34,640		)	(80,931		)
Comprehensive income (loss) attributable to noncontrolling interests	77			840			3,364			(1,469		)
Comprehensive income (loss) attributable to Solera Holdings, Inc.	$	34,777		$	(32,454	)	$	(38,004	)	$	(79,462	)

See accompanying notes to condensed consolidated financial statements.

5

SOLERA HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended December 31,
	2015			2014
Cash flows from operating activities:
Net income (loss)	$	(8,412	)	$	25,770
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	88,998			77,366
Provision for doubtful accounts	1,798			2,181
Share-based compensation expense	14,186			14,312
Deferred income tax expense (benefit)	4,766			(1,513		)
Change in fair value of derivative financial instruments	(1,847		)	(16,250		)
Loss on extinguishment of debt	1,055			—
Other	(644		)	384
Changes in operating assets and liabilities, net of effects from acquisition of businesses:
(Increase) decrease in accounts receivable	(11,955		)	35
Increase in other assets	(69,149		)	(50,298		)
Increase (decrease) in accounts payable	(8,824		)	15
Increase (decrease) in accrued expenses and other liabilities	(11,942		)	27,867
Net cash provided by (used in) operating activities	(1,970		)	79,869
Cash flows from investing activities:
Capital expenditures	(20,122		)	(30,572		)
Acquisitions and capitalization of intangible assets	(19,724		)	(14,918		)
Acquisitions of businesses, net of cash acquired	(4,720		)	(757,642		)
Increase in restricted cash	(2,171		)	(123		)
Net cash used in investing activities	(46,737		)	(803,255		)
Cash flows from financing activities:
Proceeds from debt issuance, net of payments of debt issuance costs	841,996			416,327
Payment of contingent purchase consideration	(2,692		)	(15,531		)
Acquisition of additional shares in majority-owned subsidiary	(619,843		)	—
Principal payments on financed asset acquisitions	(71		)	(92		)
Repayments of long-term debt	(200,000		)	—
Cash dividends paid on common shares and participating securities	(30,509		)	(26,927		)
Cash dividends paid to noncontrolling interests	(1,674		)	(1,954		)
Repurchases of common stock	—			(82,751		)
Proceeds from stock purchase plan and exercise of stock options	38,777			3,896
Net cash provided by financing activities	25,984			292,968
Effect of foreign currency exchange rate changes on cash and cash equivalents	13,653			(14,296		)
Net change in cash and cash equivalents	(9,070		)	(444,714		)
Cash and cash equivalents, beginning of period	479,592			837,751
Cash and cash equivalents, end of period	$	470,522		$	393,037
Supplemental cash flow information:
Cash paid for interest	$	93,554		$	60,963
Cash paid for income taxes	$	25,854		$	34,906
Supplemental disclosure of non-cash investing and financing activities:
Capital assets financed	$	214		$	1,342
Accrued contingent purchase consideration	$	72		$	11,973

See accompanying notes to condensed consolidated financial statements.

6

SOLERA HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation and Significant Accounting Policies

Description of Business

Solera Holdings, Inc. and subsidiaries (the “Company”, “Solera”, “we”, “us” or “our”) is a leading provider of risk and asset management software and services to the automotive and property marketplace, including the global property and casualty ("P&C") insurance industry. In addition to our global-leading position in collision repair and our U.S. based mechanical repair presence, we provide data driven productivity and decision support solutions to other aspects of vehicle ownership such as vehicle validation, driver violation monitoring, vehicle salvage and electronic titling. We are also expanding our core competencies of data, software and connectivity from the auto to the home. We are active in over 75 countries across six continents.

Through our acquisition of the Insurance and Services Division of Pittsburgh Glass Works LLC (“I&S”) in July 2014, we also provide software and business management tools, third-party claims administration, first notice of loss and network management services to the U.S. auto and property repair industries, specializing in glass claims. In addition, through our acquisition of CAP Automotive ("CAP") in November 2014, we provide valuation data and specification data for new and used vehicles in the United Kingdom. In July 2015, we completed the acquisition of the remaining ownership interest of Service Repair Solutions, Inc. ("SRS") from Welsh, Carson, Anderson & Stowe ("WCAS"). This acquisition enables Solera to strengthen its service maintenance and repair ("SMR") business and expand our footprint in the global automotive industry.

Financial Statement Preparation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”), and therefore, certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") have been condensed or omitted. In the opinion of management, the accompanying condensed consolidated financial statements for the periods presented reflect all adjustments, consisting of only normal, recurring adjustments, necessary to fairly state our financial position, results of operations and cash flows. These condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements for the fiscal year ended June 30, 2015, included in our Annual Report on Form 10-K filed with the SEC on August 31, 2015. Our operating results for the three month period ended December 31, 2015 are not necessarily indicative of the results that may be expected for any future periods.

Principles of Consolidation

The unaudited condensed consolidated financial statements include our accounts and those of our wholly-owned and majority-owned subsidiaries. Our consolidated majority-owned subsidiaries include certain of our subsidiaries located in Belgium, France, Portugal, Spain and Mexico. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the accompanying consolidated financial statements and related disclosures in conformity with U.S. GAAP requires management to make judgments, assumptions and estimates that affect the amounts reported in the consolidated financial statements and accompanying notes. We base our estimates and judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results could differ from those estimates. The reported amounts of assets, liabilities, revenues and expenses are affected by estimates and assumptions which are used for, but not limited to, the accounting for sales allowances, allowance for doubtful accounts, fair value of derivatives, valuation of goodwill and intangible assets, amortization of intangibles, restructurings, liabilities under defined benefit plans, stock-based compensation, redeemable noncontrolling interests and income taxes.

7

New Accounting Pronouncements Not Yet Adopted

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU Topic No. 2014-09, Revenue from Contracts with Customers, which supersedes the revenue recognition requirements in ASC Topic No. 605, Revenue Recognition, and most industry-specific guidance. This guidance primarily requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU Topic No. 2015 - 14, Revenue from Contracts with Customers (Topic 606): Deferral of the effective date, which deferred the effective date of ASU Topic No. 2014-09 for one year. As a result, ASU Topic No. 2014-09 will be effective for our fiscal year 2019. ASU Topic No. 2014-09 permits the use of either the retrospective or cumulative effect transition method. We have not yet selected a transition method and are currently evaluating the effect that ASU Topic No. 2014-09 will have on our financial condition, results of operations and financial statement disclosures.

In August 2014, the FASB issued ASU Topic No. 2014-15, Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern, which requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date of issuance of the entity’s financial statements. ASU Topic No. 2014-15 is effective for our fiscal year 2017. We do not expect the adoption of this standard to have a material impact on our financial statements.

In April 2015, the FASB issued ASU Topic No. 2015-3, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires 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 Topic No. 2015-3 is effective for our fiscal year 2017. Given the absence of authoritative guidance within ASU Topic No. 2015-03 for debt issuance costs related to line-of-credit arrangements, in August 2015, the FASB issued ASU Topic No. 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated With Line-of-Credit Arrangements — Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting, which clarified the presentation and measurement requirements of debt issuance costs incurred in connection with line-of-credit arrangements. ASU Topic No. 2015-15 allows an entity to either defer and present debt issuance costs as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement, or present them as a direct deduction from the carrying amount of the debt as provided by ASU Topic No. 2015-3.ASU Topic No. 2015-15 is effective for our fiscal year 2017. The adoption of these standards will result in reclassification of debt issuance costs from assets to liabilities.

In April 2015, the FASB issued ASU Topic No. 2015- 5, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement, which provides guidance to help entities determine whether a cloud computing arrangement includes a software license and evaluate fees paid by a customer in a cloud computing arrangement. ASU Topic No. 2015-5 is effective for our fiscal year 2017. We do not expect the adoption of this standard to have a material impact on our financial statements.

In September 2015, the FASB issued ASU Topic No. 2015 - 16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments, which allows an entity to recognize adjustments to provisional amounts that in a business combination in the reporting period in which the adjustment amounts are determined. ASU Topic No. 2015-16 is effective for our fiscal year 2017. We do not expect the adoption of this standard to have a material impact on our financial statements.

In November 2015, the FASB issued ASU Topic No. 2015 - 17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which requires deferred tax assets and liabilities to be classified as noncurrent assets or noncurrent liabilities. ASU Topic No. 2015-16 is effective for our fiscal year 2018. We do not expect the adoption of this standard to have a material impact on our financial statements.

In January 2016, the FASB issued ASU Topic No. 2016 - 1, Financial Statements - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which requires equity investments to be measured at fair value with changes in fair value recognized in income; use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements; present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk; and eliminates the requirement disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet.

8

ASU Topic No. 2016-1 is effective for our fiscal year 2019. We do not expect the adoption of this standard to have a material impact on our financial statements.

2. Net Income (Loss) Attributable to Solera Holdings, Inc. Per Common Share

All of our restricted stock units and performance share units have the right to receive non-forfeitable dividends on an equal basis with common stock and therefore are considered participating securities that must be included in the calculation of net income (loss) per share using the two-class method. Under the two-class method, basic and diluted net income (loss) per share is determined by calculating net income (loss) per share for common stock and participating securities based on the cash dividends paid and participation rights in undistributed earnings. Diluted net income per share also considers the dilutive effect of in-the-money stock options and unvested restricted stock units and performance share units that have the right to receive forfeitable dividends, calculated using the treasury stock method. Under the treasury stock method, the amount of assumed proceeds from unexercised stock options and unvested restricted stock units and performance share units that have the right to forfeitable dividends includes the amount of compensation cost attributable to future services not yet recognized, proceeds from the exercise of the options, and any excess income tax benefit or liability. For the six months ended December 31, 2015, we reported a net loss attributable to common shares and, as a result, all potentially dilutive common share equivalents have been excluded from the calculation of diluted net loss per share as they would be antidilutive.

The computation of basic and diluted net income (loss) attributable to Solera Holdings, Inc. per common share using the two-class method is as follows (in thousands, except per share amounts):

	Three Months Ended December 31,						Six Months Ended December 31,
	2015			2014			2015			2014
Basic net income (loss) attributable to Solera Holdings, Inc. per common share:
Net income (loss) attributable to Solera Holdings, Inc.	$	53,010		$	4,447		$	(13,859	)	$	16,811
Less: Dividends paid and undistributed earnings allocated to participating securities	(115		)	(133		)	(277		)	(224		)
Less: Undistributed earnings allocated to participating securities	(273		)	—			—			—
Net income (loss) attributable to common shares – basic	$	52,622		$	4,314		$	(14,136	)	$	16,587
Weighted-average number of common shares used to compute basic net income (loss) attributable to Solera Holdings, Inc. per common share	67,415			68,057			67,224			68,263
Basic net income (loss) attributable to Solera Holdings, Inc. per common share	$	0.78		$	0.06		$	(0.21	)	$	0.24
Diluted net income (loss) attributable to Solera Holdings, Inc. per common share:
Net income (loss) attributable to Solera Holdings, Inc.	$	53,010		$	4,447		$	(13,859	)	$	16,811
Less: Dividends paid and undistributed earnings allocated to participating securities	(115		)	(133		)	(277		)	(224		)
Less: Undistributed earnings allocated to participating securities	(273		)	—			—			—
Net income (loss) attributable to common shares – diluted	$	52,622		$	4,314		$	(14,136	)	$	16,587

Weighted-average number of common shares used to compute basic net income (loss) attributable to Solera Holdings, Inc. per common share	67,415		68,057		67,224			68,263
Dilutive effect of options to purchase common stock, restricted stock units and performance share units	285		340		—			428
Weighted-average number of common shares used to compute diluted net income (loss) attributable to Solera Holdings, Inc. per common share	67,700		68,397		67,224			68,691
Diluted net income (loss) attributable to Solera Holdings, Inc. per common share	$	0.78	$	0.06	$	(0.21	)	$	0.24

9

The following securities that could potentially dilute earnings per share in the future are not included in the determination of diluted net income (loss) attributable to Solera Holdings, Inc. per common share (in thousands):

	Three Months Ended December 31,		Six Months Ended December 31,
	2015	2014	2015	2014
Antidilutive options to purchase common stock and restricted stock units	41	55	390	31

3. Business Combinations

Six months ended December 31, 2015

We originally acquired a 50% equity ownership interest in SRS from WCAS in November 2013. Since the November 2013 acquisition date, we had control of SRS as defined by accounting principles generally accepted in the United States and therefore consolidated its assets, liabilities, and financial results from the closing date.

On July 16, 2015, we completed the acquisition of the remaining 50% equity ownership interest in SRS held by WCAS for a purchase price of approximately $594.8 million, plus WCAS’ approximate share of SRS’s cash balance of $25.0 million (the “SRS Equity Buyout”). The purchase price payable in the SRS Equity Buyout was negotiated with WCAS and was not determined based on the existing call option or put option formulas provided in the stockholders agreement. We financed the SRS Equity Buyout using a portion of the net proceeds from the issuance of additional senior unsecured notes in July 2015 (Note 9).

During the six months ended December 31, 2015, in addition to the SRS Equity Buyout, we acquired one business for approximately $4.6 million in cash paid at closing and additional future cash payments of $5.5 million contingent upon the achievement of certain financial performance and objectives. This acquisition is immaterial to our consolidated financial statements. The purchase price allocation for this acquisition reflected in the accompanying condensed consolidated balance sheet as of December 31, 2015 is preliminary.

Six months ended December 31, 2014

On November 19, 2014, we acquired 100% of the equity interests of CAP, for approximately £284.8 million ($449.7 million) in cash paid at closing.

On July 29, 2014, we acquired 100% of the operating entities and other assets comprising I&S, for approximately $279.4 million in cash paid at closing.

During the six months ended December 31, 2014, in addition to CAP and I&S, we acquired two businesses for approximately $27.5 million in cash paid at closing and additional future cash payments of up to $14.2 million contingent upon the achievement of certain financial performance, product-related, integration and other objectives. The acquisitions completed during the six months ended December 31, 2014 were immaterial to our financial statements, both individually and in the aggregate.

At December 31, 2015, the maximum aggregate amount of remaining contingent cash payments associated with our business combinations is $68.9 million payable through fiscal year 2019.

10

4. Goodwill and Intangible Assets

Intangible assets consist of the following (in thousands):

	December 31, 2015							June 30, 2015
	Gross Carrying Amount		Accumulated Amortization			Intangible Assets, net		Gross Carrying Amount		Accumulated Amortization			Intangible Assets, net
Amortized intangible assets:
Internally developed software	$	97,640	$	(35,383	)	$	62,257	$	83,196	$	(30,958	)	$	52,238
Purchased customer relationships	711,000		(295,227		)	415,773		721,170		(267,012		)	454,158
Purchased trade names and trademarks	40,401		(33,618		)	6,783		41,259		(32,928		)	8,331
Purchased software and database technology	608,899		(411,809		)	197,090		616,040		(389,524		)	226,516
Other	4,859		(4,576		)	283		4,992		(4,679		)	313
	$	1,462,799	$	(780,613	)	$	682,186	$	1,466,657	$	(725,101	)	$	741,556
Intangible assets not subject to amortization:
Purchased trade names and trademarks with indefinite lives	152,596		—			152,596		156,944		—			156,944
	$	1,615,395	$	(780,613	)	$	834,782	$	1,623,601	$	(725,101	)	$	898,500

The following table summarizes the activity in goodwill for the six months ended December 31, 2015 (in thousands):

	Balance at Beginning of Period		Current Period Acquisitions		Other (1)		Foreign Currency Translation Effect			Balance at End of Period
EMEA	$	796,701	$	2,219	$	4,778	$	(19,422	)	$	784,276
Americas	1,153,707		—		2,062		(1,809		)	1,153,960
Total	$	1,950,408	$	2,219	$	6,840	$	(21,231	)	$	1,938,236

(1) Primarily represents purchase accounting adjustments related to acquisitions completed in fiscal year 2015.

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5. Stockholders’ Equity and Redeemable Noncontrolling Interests

The following table summarizes the activity in stockholders’ equity and redeemable noncontrolling interests for the periods indicated (in thousands):

	Stockholders’ Equity Attributable to Solera Holdings, Inc.
	Common Shares
	Shares	Amount			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Solera Holdings, Inc. Stockholders’ Equity (Deficit)			Noncontrolling Interests			Total Stockholders’ Equity (Deficit)			Redeemable Noncontrolling Interests
Balance at June 30, 2015	66,985	$	579,602		$	(173,305	)	$	(178,474	)	$	227,823		$	10,872		$	238,695		$	445,552
Net income (loss)	—	—			(13,859		)	—			(13,859		)	2,600			(11,259		)	2,847
Other comprehensive loss	—	—			—			(24,145		)	(24,145		)	(678		)	(24,823		)	(1,405		)
Share-based compensation expense	—	14,186			—			—			14,186			—			14,186			—
Issuance of common shares under stock award plans, net	1,265	38,777			—			—			38,777			—			38,777			—
Dividends paid on common stock and participating securities	—	—			(30,509		)	—			(30,509		)	—			(30,509		)	—
Dividends due to noncontrolling owners	—	—			—			—			—			(1,674		)	(1,674		)	(4,571		)
Acquisition of remaining 50% equity ownership interest in SRS	—	(258,847		)	—			—			(258,847		)	—			(258,847		)	(360,975		)
Revaluation of and additions to noncontrolling interests	—	632			—			—			632			461			1,093			(653		)
Balance at December 31, 2015	68,250	$	374,350		$	(217,673	)	$	(202,619	)	$	(45,942	)	$	11,581		$	(34,361	)	$	80,795

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	Stockholders’ Equity Attributable to Solera Holdings, Inc.
	Common Shares
	Shares		Amount			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Solera Holdings, Inc. Stockholders’ Equity			Noncontrolling Interests			Total Stockholders’ Equity			Redeemable Noncontrolling Interests
Balance at June 30, 2014	68,552		$	629,247		$	71,417		$	(12,688	)	$	687,976		$	9,524		$	697,500		$	382,298
Net income	—		—			16,811			—			16,811			2,549			19,360			6,409
Other comprehensive loss	—		—			—			(96,272		)	(96,272		)	(1,260		)	(97,532		)	(9,167		)
Share-based compensation expense	—		14,312			—			—			14,312			—			14,312			—
Purchases of Solera Holdings, Inc. common shares (1)	(1,526	)	(14,002		)	(68,749		)	—			(82,751		)	—			(82,751		)	—
Issuance of common shares under stock award plans, net	263		3,977			—			—			3,977			—			3,977			—
Dividends paid on common stock and participating securities	—		—			(26,927		)	—			(26,927		)	—			(26,927		)	—
Dividends due to noncontrolling owners	—		—			—			—			—			(1,952		)	(1,952		)	(5,303		)
Acquisition of additional ownership interest in majority-owned subsidiary	—		(547		)	—			—			(547		)	—			(547		)	—
Revaluation of and additions to noncontrolling interests	—		(34,569		)	—			—			(34,569		)	—			(34,569		)	34,569
Balance at December 31, 2014	67,289		$	598,418		$	(7,448	)	$	(108,960	)	$	482,010		$	8,861		$	490,871		$	408,806

(1) Please refer to Note 6 for further information on repurchases of our common stock. In accordance with ASC Topic No. 505-30-30, we have allocated the cost of the shares repurchased between paid-in capital and retained earnings based on the excess of the repurchase price over the stated value.

6. Share Repurchase Program

In November 2014, our Board of Directors approved a new share repurchase program, replacing the share repurchase program authorized in October 2013, for up to a total of $375 million of our common stock through December 31, 2016. Share repurchases are made from time to time, through an accelerated stock purchase agreement, in open market transactions at prevailing market prices or in privately negotiated transactions. The repurchase program does not require us to purchase any specific number or amount of shares, and the timing and amount of such purchases will be determined by management based upon market conditions and other factors. In addition, the program may be amended or terminated at the discretion of our Board of Directors. Through December 31, 2015, we have repurchased approximately 1.6 million shares for $78.8 million under the share repurchase program, approved by our Board of Directors in November 2014. No shares were repurchased during the six months ended December 31, 2015.

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7. Accumulated Other Comprehensive Loss

The following table summarizes the changes in accumulated other comprehensive loss during the three and six months ended December 31, 2015 and 2014 (in thousands):

	Foreign Currency Translation Adjustment			Unrealized Gains (Losses) on Derivative Financial Instruments			Change in Funded Status of Defined Benefit Pension Plans			Accumulated Other Comprehensive Loss
Balance at September 30, 2015	$	(162,812	)	$	(1,638	)	$	(19,935	)	$	(184,385	)
Other comprehensive income (loss) before reclassifications, net of tax	(17,828		)	1,763			—			(16,065		)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax	—			(2,169		)	—			(2,169		)
Balance at December 31, 2015	$	(180,640	)	$	(2,044	)	$	(19,935	)	$	(202,619	)
Balance at September 30, 2014	$	(49,741	)	$	(5,431	)	$	(16,888	)	$	(72,060	)
Other comprehensive income (loss) before reclassifications, net of tax	(38,164		)	7,029			—			(31,135		)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax	—			(5,765		)	—			(5,765		)
Balance at December 31, 2014	$	(87,905	)	$	(4,167	)	$	(16,888	)	$	(108,960	)

	Foreign Currency Translation Adjustment			Unrealized Gains (Losses) on Derivative Financial Instruments			Change in Funded Status of Defined Benefit Pension Plans			Accumulated Other Comprehensive Loss
Balance at June 30, 2015	$	(156,523	)	$	(2,016	)	$	(19,935	)	$	(178,474	)
Other comprehensive income (loss) before reclassifications, net of tax	(24,117		)	1,277			—			(22,840		)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax	—			(1,305		)	—			(1,305		)
Balance at December 31, 2015	$	(180,640	)	$	(2,044	)	$	(19,935	)	$	(202,619	)
Balance at June 30, 2014	$	11,154		$	(6,954	)	$	(16,888	)	$	(12,688	)
Other comprehensive income (loss) before reclassifications, net of tax	(99,059		)	19,037			—			(80,022		)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax	—			(16,250		)	—			(16,250		)
Balance at December 31, 2014	$	(87,905	)	$	(4,167	)	$	(16,888	)	$	(108,960	)

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8. Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table summarizes our assets and liabilities that require fair value measurements on a recurring basis and their respective input levels based on the fair value hierarchy (in thousands):

			Fair Value Measurements Using:
	Fair Value		Quoted Market Prices for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Fair value at December 31, 2015:
Cash and cash equivalents	$	470,522	$	470,522	$	—	$	—
Restricted cash (1)	6,063		6,063		—		—
Derivative financial instruments classified as assets (2)	69,653		—		69,653		—
Derivative financial instruments classified as liabilities (3)	50,694		—		50,694		—
Accrued contingent purchase consideration (3)	13,802		—		—		13,802
Redeemable noncontrolling interests	80,795		—		—		80,795
Fair value at June 30, 2015:
Cash and cash equivalents	$	479,592	$	479,592	$	—	$	—
Restricted cash (1)	4,077		4,077		—		—
Derivative financial instruments classified as assets (2)	60,734		—		60,734		—
Derivative financial instruments classified as liabilities (3)	41,223		—		41,223		—
Accrued contingent purchase consideration (3)	15,561		—		—		15,561
Redeemable noncontrolling interests	84,577		—		—		84,577

(1) Included in other current assets and other noncurrent assets in the accompanying consolidated balance sheets. Restricted cash primarily relates to funds held in escrow for the benefit of customers and the sellers of acquired businesses, and facility lease deposits.

(2) Included in other current assets and other noncurrent assets in the accompanying consolidated balance sheet.

(3) Included in accrued expenses and other current liabilities, and other noncurrent liabilities in the accompanying consolidated balance sheet.

Cash and cash equivalents and restricted cash. Our cash and cash equivalents and restricted cash, primarily consist of bank deposits, money market funds and bank certificates of deposit. The fair value of our cash and cash equivalents and restricted cash are determined using quoted market prices for identical assets (Level 1 inputs).

Derivative financial instruments. We estimate the fair value of our derivative financial instruments using industry standard valuation techniques that utilize market-based observable inputs to extrapolate future reset rates from period-end yield curves and standard valuation models based on a discounted cash flow model. Market-based observable inputs including spot and forward rates, volatilities and interest rate curves at observable intervals are used as inputs to the models (Level 2 inputs). Our estimate of fair value also considers the credit related risk that the swap contracts will not be fulfilled.

Accrued contingent purchase consideration. Contingent future cash payments related to business combinations that are not deemed to be compensatory are accrued at fair value as of the acquisition date. We re-assess the fair value measurement at each reporting date. Fair value is determined by estimating the present value of potential future cash payments that would be earned upon achievement by the acquired business of certain financial performance, product-related, integration and other objectives. Our estimate of fair value considers a range of possible cash payment scenarios using information available as of the reporting date, including the recent financial performance of the acquired businesses (Level 3 inputs).

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The following table summarizes the activity in accrued contingent purchase consideration which is measured at fair value on a recurring basis using significant unobservable inputs (Level 3 inputs) (in thousands):

	Three Months Ended December 31,						Six Months Ended December 31,
	2015			2014			2015			2014
Balance at beginning of period	$	16,164		$	17,008		$	15,561		$	20,784
Current period acquisitions	—			851			1,759			12,276
Change in fair value	(666		)	(448		)	(816		)	(448		)
Payments	(1,692		)	(5,978		)	(2,692		)	(21,508		)
Effect of foreign exchange	(4		)	(2,879		)	(10		)	(2,550		)
Balance at end of period	$	13,802		$	8,554		$	13,802		$	8,554

Redeemable noncontrolling interests. We estimate the fair value of our redeemable noncontrolling interests through an income approach, utilizing a discounted cash flow model. We also consider the fair value using a market approach, which considers comparable companies and transactions, including transactions with the noncontrolling stockholders of our majority-owned subsidiaries.

Under the income approach, the discounted cash flow model determines fair value based on the present value of projected cash flows over a specific projection period and a residual value related to future cash flows beyond the projection period. Both values are discounted to reflect the degree of risk inherent in an investment in the reporting unit and achieving the projected cash flows. A weighted average cost of capital of a market participant, which is an unobservable input, is used as the discount rate. The residual value is generally determined by applying a constant terminal growth rate to the estimated net cash flows at the end of the projection period. Alternatively, the present value of the residual value may be determined by applying a market multiple at the end of the projection period.

Under the market approach, fair value is determined based on multiples of revenues and earnings before interest, taxes, depreciation and amortization for each reporting unit. For our calculation, we determined the multiples based on a selection of comparable companies and acquisition transactions, discounted for each reporting unit to reflect the relative size, diversification and risk of the reporting unit in comparison to the indexed companies and transactions.

Although we considered the fair value under both the income and market approaches, we estimated the fair value of our redeemable noncontrolling interests based solely upon the income approach, which utilizes a discounted cash flow model, a Level 3 input, as we believe this is the better indicator of fair value. The significant unobservable inputs in the discounted cash flow model include a discount rate and a long-term growth rate. The discount rate used in the determination of the estimated fair value of the redeemable noncontrolling interests as of December 31, 2015 using the income approach ranged between 12.8% and 16.4%, with a weighted average discount rate of 13.2%, reflecting a market participant's perspective as a noncontrolling shareholder in a privately-held subsidiary. The long-term growth rate used in the determination of the estimated fair value of the redeemable noncontrolling interests as of December 31, 2015 using the income approach was 4.0%.

The following table summarizes the activity in redeemable noncontrolling interests which are measured at fair value on a recurring basis solely using the income approach and using significant unobservable inputs (Level 3 inputs) (in thousands):

	Three Months Ended December 31,						Six Months Ended December 31,
	2015			2014			2015			2014
Balance at beginning of period	$	85,700		$	80,175		$	84,577		$	85,958
Net income attributable to redeemable noncontrolling interests	1,440			1,664			2,847			3,412
Dividends due to noncontrolling owners	(4,571		)	(5,303		)	(4,571		)	(5,303		)
Change in fair value	841			6,870			(653		)	5,237
Effect of foreign exchange	(2,615		)	(3,269		)	(1,405		)	(9,167		)
Balance at end of period	$	80,795		$	80,137		$	80,795		$	80,137

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

No assets or liabilities were required to be measured at fair value on a nonrecurring basis during the six months ended December 31, 2015.

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Fair Value of Other Financial Instruments

The carrying amounts of certain of our financial instruments, including accounts receivable, accounts payable and accrued expenses, approximate fair value due to their short-term nature. Based on the current quoted trading price of our senior unsecured notes (Level 1 inputs), we believe that the fair value of our senior unsecured notes is approximately $3.1 billion at December 31, 2015.

9. Long-Term Debt

Long-term debt consists of the following (in thousands):

	December 31, 2015		June 30, 2015
Senior unsecured notes due June 2021	$	1,705,539	$	1,707,400
Senior unsecured notes due November 2023	1,419,845		574,428
Unsecured term loan due May 2016	—		200,000
Total debt (1)	3,125,384		2,481,828
Less: Current portion	—		—
Long-term portion	$	3,125,384	$	2,481,828

(1) The balance as of December 31, 2015 and June 30, 2015 includes unamortized net premium of $25.4 million and $31.8 million, respectively.

We have issued senior unsecured notes due 2021 (the “2021 Senior Notes”) pursuant to an indenture dated as of July 2, 2013 and senior unsecured notes due 2023 (the “2023 Senior Notes”) pursuant to an indenture dated as of November 5, 2013. The 2021 Senior Notes accrue interest at 6.000% per annum, payable semi-annually, and become due and payable on June 15, 2021. The 2023 Senior Notes accrue interest at 6.125% per annum, payable semi-annually, and become due and payable on November 1, 2023.

On July 16, 2015, we issued additional 2023 Senior Notes in the aggregate principal amount of $850.0 million. The additional 2023 Senior Notes were issued at an original issue price of 99.500% plus accrued interest from May 1, 2015. The net proceeds from the issuance of the additional 2023 Senior Notes of $842.5 million were used to finance the SRS Equity Buyout and repay the $200.0 million unsecured term loan due May 2016. As a result of the repayment of the unsecured term loan, unamortized debt issuance costs of $1.1 million were written off during the six months ended December 31, 2015 and are presented in other (income) expense, net in the accompanying consolidated statement of income (loss). We intend to use any remaining net proceeds from the issuance of the 2023 Senior Notes for general corporate purposes, including continuing to actively seek, evaluate and potentially pursue strategic initiatives. Such strategic initiatives may include future acquisitions, joint ventures, investments or other business development opportunities.

The 2021 Senior Notes include redemption provisions that allow us, at our option, to redeem all or a portion of the aggregate principal amount of the 2021 Senior Notes as follows:

• At any time prior to June 15, 2016, we may redeem up to 35% of the aggregate principal amount of the 2021 Senior Notes at a redemption price equal to 106.000% of the principal amount of the notes redeemed, plus accrued and unpaid interest, if any, through the date of redemption.

• At any time prior to June 15, 2017, we may redeem the 2021 Senior Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the notes redeemed plus a premium and accrued and unpaid interest to the redemption date. The premium at the applicable redemption date is the greater of: (1) 1.0% of the then outstanding principal amount of the notes; or (2) the excess of: (a) the present value at such redemption date of the sum of the redemption price of the notes at June 15, 2017 plus all required interest payments due on the notes through June 15, 2017 (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over (b) the then outstanding principal amount of the notes.

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• At any time on or after June 15, 2017, we may redeem the 2021 Senior Notes, in whole or in part, at the following redemption prices, plus accrued and unpaid interest, if any, through the date of redemption: (i) if the redemption occurs on or after June 15, 2017 but prior to June 15, 2018, the redemption price is 103.000% of the principal amount of the notes; (ii) if the redemption occurs on or after June 15, 2018 but prior to June 15, 2019, the redemption price is 101.500% of the principal amount of the notes; and (iii) if the redemption occurs on or after June 15, 2019, the redemption price is 100% of the principal amount of the notes.

The 2023 Senior Notes include redemption provisions that allow us, at our option, to redeem all or a portion of the aggregate principal amount of the 2023 Senior Notes as follows:

• At any time prior to November 1, 2016, we may redeem up to 35% of the aggregate principal amount of the 2023 Senior Notes at a redemption price equal to 106.125% of the principal amount of the notes redeemed, plus accrued and unpaid interest, if any, through the date of redemption.

• At any time prior to November 1, 2018, we may redeem the 2023 Senior Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the notes redeemed plus a premium and accrued and unpaid interest to the redemption date. The premium at the applicable redemption date is the greater of: (1) 1.0% of the then outstanding principal amount of the notes; or (2) the excess of: (a) the present value at such redemption date of the sum of the redemption price of the notes at November 1, 2018 plus all required interest payments due on the notes through November 1, 2018 (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points over (b) the then outstanding principal amount of the notes.

• At any time on or after November 1, 2018, we may redeem the 2023 Senior Notes, in whole or in part, at the following redemption prices, plus accrued and unpaid interest, if any, through the date of redemption: (i) if the redemption occurs on or after November 1, 2018 but prior to November 1, 2019, the redemption price is 103.063% of the principal amount of the notes; (ii) if the redemption occurs on or after November 1, 2019 but prior to November 1, 2020, the redemption price is 102.042% of the principal amount of the notes; (iii) if the redemption occurs on or after November 1, 2020 but prior to November 1, 2021, the redemption price is 101.021% of the principal amount of the notes; and (iv) if the redemption occurs on or after November 1, 2021, the redemption price is 100.000% of the principal amount of the notes.

In connection with the pending merger with entities affiliated with Vista Equity Partners, the Company has commenced cash tender offer to purchase all of the outstanding 2021 Senior Notes and the 2023 Senior Notes (Note 16).

The costs associated with the issuance of the 2021 Senior Notes and the 2023 Senior Notes are deferred and are included in other noncurrent assets in our consolidated balance sheet. We are amortizing these debt issuance costs to interest expense over the term of the related debt using the effective interest method.

The indentures governing the 2021 Senior Notes and the 2023 Senior Notes contain limited covenants, including those restricting our and our subsidiaries’ ability to incur certain liens, engage in sale and leaseback transactions and consolidate, merge with, or convey, transfer or lease substantially all of our or their assets to, another person, and, in the case of any of our subsidiaries that did not issue or guarantee such notes, incur indebtedness. We are in compliance with the specified covenants of the 2021 Senior Notes and the 2023 Senior Notes at December 31, 2015.

10. Derivative Financial Instruments

In the normal course of business, we are exposed to variability in interest rates and foreign currency exchange rates. We use derivatives to mitigate risks associated with this variability. We do not use derivatives for speculative purposes. The following is a summary of outstanding derivative financial instruments as of December 31, 2015:

• In April 2012, we entered into two pay fixed Euros / receive fixed U.S. dollars cross-currency swaps in the aggregate notional amount of €109.0 million. We pay Euro fixed coupon payments at 6.990% and receive U.S. dollar fixed coupon payments at 6.750% on the notional amount. The maturity date of the swaps is June 15, 2018. These cross-currency swaps were designated, at inception, as cash flow hedges and we evaluate the swaps for effectiveness quarterly. We report the effective portion of the gain or loss on these hedges as a component of accumulated other comprehensive income (loss) in stockholders' equity and reclassify these gains or losses into earnings when the hedged transaction affects earnings. To date, there has been no hedge ineffectiveness.

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• In November 2014, we entered into a pay floating / received fixed interest rate swap with a notional amount of $400.0 million. Under the terms of the interest rate swap, we pay quarterly floating coupon payments at 3-month LIBOR plus 3.924% and receive semi-annual fixed coupon payments at 6.000%. The maturity date of the interest rate swap is June 15, 2021, although the swap may be terminated at any time effective June 15, 2017 by the counterparty subject to the payment of a cancellation fee. The interest rate swap was not designated as a hedge at inception. We recognize changes in the fair value of the interest rate swap in other (income) expense, net in our consolidated statements of income (loss).

• In November 2014, we entered into a pay fixed Euros / receive fixed U.S. dollars cross-currency swap with a notional amount of €401.6 million. Under the terms of the cross-currency swap, we pay Euro fixed coupon payments at 4.993% and receive U.S. dollar fixed coupon payments at 6.000% on the notional amount. The maturity date of the cross-currency swap is June 15, 2021. The cross-currency swap was not designated as a hedge at inception. We recognize changes in the fair value of the cross-currency swap in other (income) expense, net in our consolidated statements of income (loss).

• In March 2015, we entered into a pay fixed Euros / receive fixed U.S. dollars cross-currency swap with a notional amount of €174.8 million. Under the terms of the cross-currency swap, we pay Euro fixed coupon payments at 4.725% and receive U.S. dollar fixed coupon payments at 6.000% on the notional amount. The maturity date of the cross-currency swap is June 15, 2021. The cross-currency swap was designated as a net investment hedge at inception. We report the effective portion of the gain or loss on these hedges as a component of accumulated other comprehensive income (loss) in stockholders' equity and reclassify these gains or losses into earnings when the hedged transaction affects earnings. In October 2015, we de-designated the cross-currency swap as a net investment hedge. Upon de-designation, we recognize changes in the fair value of the cross-currency swap in other (income) expense, net in our consolidated statements of income (loss).

• In March 2015, we entered into a foreign exchange forward contract with a notional amount of €472.9 million. Under the terms of the forward contract, we pay predetermined forward rate on the settlement date. The foreign exchange forward contract was not designated as a hedge at inception. We recognize changes in the fair value in other (income) expense, net in our consolidated statements of income (loss). In July 2015, we partially settled the foreign exchange forward contract for a cash payment of $8.9 million which is reported in other (income) expense, net in our consolidated statements of income (loss). Settlement of the remaining foreign exchange forward contract with a notional amount of €235.8 million was extended to July 2016.

• In July 2015, we entered into two pay fixed Euros / receive fixed U.S. dollars cross-currency swaps, each with a notional amount of €137.0 million. Under the terms of the cross-currency swaps, we pay Euro fixed coupon payments at 5.135% and receive U.S. dollar fixed coupon payments at 6.125% on the notional amount. The maturity date of the cross-currency swaps is November 1, 2018. One of the cross-currency swaps was designated as a net investment hedge at inception and one was not designated as a hedge at inception. We report the effective portion of the gain or loss on the cross-currency swap designated as a net investment hedge as a component of accumulated other comprehensive income (loss) in stockholders' equity and reclassify these gains or losses into earnings when the hedged transaction affects earnings. In October 2015, we de-designated the cross-currency swap as a net investment hedge. Upon the de-designation, we recognize changes in the fair value of both swaps in other (income) expense, net in our consolidated statements of income (loss).

• In July 2015, we entered into a pay fixed Euros / receive fixed U.S. dollars cross-currency swap with a notional amount of €274.0 million. Under the terms of the cross-currency swap, we pay Euro fixed coupon payments at 5.585% and receive U.S. dollar fixed coupon payments at 6.125% on the notional amount. The maturity date of the cross-currency swap is November 1, 2023. The cross-currency swap was not designated as a hedge at inception. We recognize changes in the fair value of the cross-currency swaps in other (income) expense, net in our consolidated statements of income (loss).

We determined the estimated fair value of our derivatives using an income approach and standard valuation techniques that utilize market-based observable inputs including spot and forward interest and foreign currency exchange rates, volatilities and interest rate curves at observable intervals. Our estimate of fair value also considers the risk that the swap contracts will not be fulfilled.

19

The following table summarizes the fair value of our derivative financial instruments, which are included in other current assets, other noncurrent assets, accrued expenses and other current liabilities, and other noncurrent liabilities in the accompanying condensed consolidated balance sheets (in thousands):

	December 31, 2015		June 30, 2015
Derivative financial instruments classified as assets
U.S. dollar interest rate swaps	$	116	$	—
Fixed rate cross-currency swaps	69,537		60,734
Total	$	69,653	$	60,734
Derivative financial instruments classified as liabilities
U.S. dollar interest rate swaps	$	—	$	2,170
Fixed rate cross-currency swaps	41,722		14,327
Foreign currency forward contract	8,972		24,726
Total	$	50,694	$	41,223

The following table summarizes the effect of our derivative financial instruments designated as cash flow hedges on the consolidated statements of income (loss) and accumulated other comprehensive income (loss) (“AOCI”) for the three and six months ended December 31, 2015 and 2014 (in thousands).

Derivative Financial Instruments	Income (Loss) Recognized in AOCI on Derivatives (1)		Location of Income (Loss) Reclassified from AOCI into Income (1)	Income (Loss) Reclassified from AOCI into Income (1)		Location of Income (Loss) Recognized in Income on Derivatives (2)	Income (Loss) Recognized in Income on Derivatives  (2)
Three Months Ended December 31, 2015
Fixed rate cross-currency swaps	$	3,162	Interest Expense	$	347	N/A	$	—
			Other (Income) Expense, net	3,464		N/A	—
Total	$	3,162		$	3,811		$	—
Three Months Ended December 31, 2014
Fixed rate cross-currency swaps	$	7,852	Interest Expense	$	67	N/A	$	—
			Other (Income) Expense, net	5,777		N/A	—
Total	$	7,852		$	5,844		$	—

Six Months Ended December 31, 2015
Fixed rate cross-currency swaps	$	2,382	Interest Expense	$	631	N/A	$	—
			Other (Income) Expense, net	1,842		N/A	—
Total	$	2,382		$	2,473		$	—
Six Months Ended December 31, 2014
Fixed rate cross-currency swaps	$	17,866	Interest Expense	$	76	N/A	$	—
			Other (Income) Expense, net	16,754		N/A	—
Total	$	17,866		$	16,830		$	—

(1) Effective portion.

(2) Ineffective portion and amount excluded from effectiveness testing.

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The following table summarizes the effect of our derivative financial instruments designated as net investment hedges on the consolidated statements of income (loss) and accumulated other comprehensive income (loss) (“AOCI”) for the three and six months ended December 31, 2015:

	Income (Loss) Recognized in AOCI on Derivatives (1)			Location of Income (Loss) Reclassified from AOCI into Income (1)	Income (Loss) Reclassified from AOCI into Income (1)		Location of Income (Loss) Recognized in Income on Derivatives (2)	Income (Loss) Recognized in Income on Derivatives (2)
Three Months Ended December 31, 2015
Fixed rate cross-currency swap (3)	$	—		N/A	$	—	N/A	$	—
Six Months Ended December 31, 2015
Fixed rate cross-currency swap	$	(4,825	)	N/A	$	—	N/A	$	—

(1) Effective portion.

(2) Ineffective portion and amount excluded from effectiveness testing.

(3) We de-designated the fixed rate cross-currency swaps as net investment hedges in October 2015.

No net investment hedges were outstanding during the three and six months ended December 31, 2014.

We recognized unrealized (gains) losses on derivatives not designated as hedging instruments of $(14.8) million and $12.5 million during the three and six months ended December 31, 2015, respectively, as compared to $11.8 million and $9.4 million during the three and six months ended December 31, 2014, respectively. Unrealized (gains) losses on derivatives not designated as hedging instruments are included in other (income) expense, net in our consolidated statements of income (loss).

11. Share-Based Compensation

Share-Based Award Activity

The following table summarizes restricted stock unit and performance share unit activity during the six months ended December 31, 2015:

	Number of Shares (in thousands)		Weighted Average Grant Date Fair Value per Share
Nonvested at June 30, 2015	793		$	57.49
Granted	—		$	—
Vested	(234	)	$	55.29
Forfeited	(67	)	$	57.89
Nonvested at December 31, 2015	492		$	58.49

Each performance share unit represents the right to receive one share of our common stock based on our total stockholder return and/or the achievement of certain financial performance targets during applicable performance periods. The number of granted shares reflected in the table above assumes the maximum number of performance share units will be earned.

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The following table summarizes stock option activity during the six months ended December 31, 2015:

	Number of Shares (in thousands)		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at June 30, 2015	4,063		$	50.57
Granted	—		$	—
Exercised	(1,053	)	$	38.04
Canceled	(68	)	$	49.71
Outstanding at December 31, 2015	2,942		$	55.07	3.95	$	6,876
Exercisable at December 31, 2015	982		$	51.98	3.44	$	4,736

Of the stock options outstanding at December 31, 2015, approximately 1.7 million are vested or expected to vest.

Cash received from the exercise of stock options was $38.8 million during the six months ended December 31, 2015. The intrinsic value of stock options exercised during the six months ended December 31, 2015 and 2014 totaled $16.8 million and $1.3 million, respectively.

Valuation of Share-Based Awards

No stock options were granted during the six months ended December 31, 2015. For stock options granted during the six months ended December 31, 2014, we utilized the Black-Scholes option pricing model for estimating the grant date fair value of stock options with the following assumptions:

	Risk-Free Interest Rate		Expected Term (in years)	Weighted Average Expected Stock Price Volatility		Expected Dividend Yield		Weighted Average Per Share Grant Date Fair Value
Six Months Ended December 31, 2014	1.7	%	4.5	24	%	1.4	%	$	11.20

We based the risk-free interest rate on the implied yield available on U.S. Treasury constant maturities in effect at the time of the grant with remaining terms equivalent to the respective expected terms of the options. We determined the expected life of an award by considering various relevant factors, including the vesting period and contractual term of the award, our employees’ historical exercise patterns and length of service, the expected future volatility of our stock price and employee characteristics. We determined the expected volatility based on our historical stock price volatility over the expected term. The dividend yield is based on our quarterly dividend of $0.195 per share declared during the six months ended December 31, 2014.

No restricted stock units or performance share units were granted during the six months ended December 31, 2015. The weighted average grant date fair value of restricted stock units and performance share units granted during the six months ended December 31, 2014 was $56.40, determined based on the market price of our common stock on the date of grant, which approximates the intrinsic value.

Share-Based Compensation Expense

Share-based compensation expense was $6.2 million and $4.2 million for the three months ended December 31, 2015 and 2014, respectively, $14.2 million and $14.3 million for the six months ended December 31, 2015 and 2014, respectively, and is reported in selling, general and administrative expenses in the accompanying consolidated statements of income (loss). At December 31, 2015, the estimated total remaining unamortized share-based compensation expense, net of forfeitures, was $29.2 million, which we expect to recognize over a weighted-average period of 1.8 years.

12. Defined Benefit Pension Plans

Our foreign subsidiaries sponsor various defined benefit pension plans and individual defined benefit arrangements covering certain eligible employees. We base the benefits under these pension plans on years of service and compensation levels. Funding is limited to statutory requirements.

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The components of net pension expense were as follows (in thousands):

	Three Months Ended December 31,						Six Months Ended December 31,
	2015			2014			2015			2014
Service cost — benefits earned during the period	$	1,229		$	1,145		$	2,501		$	2,353
Interest cost on projected benefits	487			673			987			1,381
Expected return on plan assets	(460		)	(536		)	(932		)	(1,099		)
Amortization of gain	360			303			729			620
Net pension expense	$	1,616		$	1,585		$	3,285		$	3,255

13. Other (Income) Expense, Net

Other (income) expense, net consists of the following (in thousands):

	Three Months Ended December 31,						Six Months Ended December 31,
	2015			2014			2015			2014
Investment income	$	(126	)	$	(160	)	$	(393	)	$	(376	)
Foreign exchange losses	5,640			11,674			11,164			24,927
Realized gains on derivative financial instruments	(5,478		)	—			(822		)	—
Reclassifications of accumulated other comprehensive income related to derivative financial instruments designated as hedges	(3,464		)	(5,778		)	(1,847		)	(16,250		)
Unrealized losses (gains) on derivative financial instruments not designated as hedges	(14,816		)	11,757			12,518			9,365
(Gains) losses on asset sales	(895		)	3			(933		)	109
Loss on debt extinguishment	—			—			1,055			—
Other expense	208			322			155			506
Other (income) expense, net	$	(18,931	)	$	17,818		$	20,897		$	18,281

14. Provision For Income Taxes

Our tax provision or benefit from income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period.  Our quarterly tax provision is subject to significant variation due to several factors, including variability in accurately predicting our pre-tax income or loss and the mix of jurisdictions to which they relate, changes in how we do business, acquisitions, foreign currency gains (losses), changes in law, and relative changes of expenses or losses for which tax benefits are not recognized. Additionally, our effective tax rate can be more or less volatile based on the amount of pre-tax income or loss.

We recorded an income tax provision (benefit) of $(31.2) million and $(21.9) million for the three and six months ended December 31, 2015, respectively, and $1.8 million and $9.3 million for the three and six months ended December 31, 2014, respectively. For the three and six months ended December 31, 2015, the expected tax provision derived from applying the U.S. federal statutory rate to our pre-tax income differed from our recorded income tax provision primarily due to the amount of our pre-tax loss, relative to our income tax expense, nondeductible expenses, and changes in tax law.

Gross unrecognized tax benefits as of December 31, 2015 and June 30, 2015 were $10.6 million and $10.3 million, respectively. No significant interest and penalties have been accrued during the six months ended December 31, 2015.

Pursuant to the terms of the respective acquisition agreements, the sellers in our business combinations have indemnified us for all tax liabilities related to the pre-acquisition periods. We are liable for any tax assessments for the post-acquisition periods for our U.S. and foreign jurisdictions.

As of each reporting date, management considers all evidence, both positive and negative, that could impact our view with regards to future realization of deferred tax assets including our U.S. cumulative income or loss position over the 12

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quarters ended December 31, 2015 which included recent increases to interest expense. As of December 31, 2015 and June 30, 2015, we continue to maintain a valuation allowance on our U.S. deferred tax assets of $26.9 million due to the limitation in our ability to utilize foreign tax credit carryforwards prior to the expiration of the carryforward periods. The U.S. cumulative loss position reduced the weight given to subjective evidence such as projections for future growth.We believe that our estimate of future taxable income is reasonable but inherently uncertain, and if our current or future operations and investments generate taxable income different than the anticipated amounts or US tax law changes reduce income expected in the future, adjustments to the valuation allowance are possible.

Primarily due to the increase in our U.S. debt service obligations resulting from the issuance of additional unsecured senior notes in the aggregate principal amount of $400.0 million during fiscal year 2015 and the issuance of additional unsecured senior notes in the aggregate principal amount of $850.0 million in July 2015, management concluded that the ability to access certain amounts of foreign earnings would provide greater flexibility to meet domestic cash flow needs without constraining foreign objectives. Accordingly, in fiscal year 2015 we withdrew the permanent reinvestment assertion on $350.0 million of earnings generated by certain of our foreign subsidiaries through fiscal year 2015. We provided for U.S. income taxes on the $350.0 million of undistributed foreign earnings, resulting in the recognition of a deferred tax liability ofapproximately $123.7 million. During the three and six months ended December 31, 2015, we recognized a deferred income tax expense of $4.5 million and $2.9 million, respectively, related to the impact of fluctuations in foreign currency exchanges rates on the portion of the $350.0 million of unremitted earnings generated prior to fiscal year 2015.

15. Segment and Geographic Information

We have aggregated our operating segments into two reportable segments: EMEA and Americas. Our EMEA reportable segment encompasses our operations in Europe, the Middle East, Africa, Asia and Australia. Our Americas reportable segment encompasses our operations in North, Central and South America.

Our chief operating decision maker is our Chief Executive Officer. We evaluate the performance of our reportable segments based on revenues, income before provision for income taxes and adjusted EBITDA, a non-U.S. GAAP financial measure. We calculate adjusted EBITDA as net income attributable to Solera Holdings, Inc. excluding interest expense, provision for income taxes, depreciation and amortization, share-based compensation expense, restructuring charges, asset impairments and other costs associated with exit and disposal activities, acquisition and related costs, litigation related expenses and other (income) expense, net. We do not allocate certain costs, managed at the corporate level, to reportable segments, including costs related to our financing activities, business development and oversight, and tax, audit and other professional fees, to our reportable segments.

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(in thousands)	EMEA		Americas		Corporate			Total
Three Months Ended December 31, 2015
Revenues	$	133,441	$	174,604	$	—		$	308,045
Income (loss) before provision for income taxes	38,794		42,864		(56,917		)	24,741
Significant items included in income (loss) before provision for income taxes:
Depreciation and amortization	15,914		27,048		1,531			44,493
Interest expense	331		25		45,572			45,928
Other (income) expense, net	1,574		1,016		(21,521		)	(18,931		)
Capital expenditures	6,993		6,862		—			13,855
Three Months Ended December 31, 2014
Revenues	$	134,655	$	148,042	$	—		$	282,697
Income (loss) before provision for income taxes	44,764		32,254		(66,067		)	10,951
Significant items included in income (loss) before provision for income taxes:
Depreciation and amortization	13,920		25,285		163			39,368
Interest expense	55		27		28,879			28,961
Other expense, net	861		879		16,078			17,818
Capital expenditures	9,752		9,918		—			19,670
Six Months Ended December 31, 2015
Revenues	$	267,097	$	354,270	$	—		$	621,367
Income (loss) before provision for income taxes	71,814		77,664		(179,757		)	(30,279		)
Significant items included in income (loss) before provision for income taxes:
Depreciation and amortization	31,905		55,213		1,880			88,998
Interest expense	410		50		90,147			90,607
Other expense, net	2,298		4,931		13,668			20,897
Capital expenditures	9,717		10,405		—			20,122
Total assets as of December 31, 2015	1,541,506		1,895,524		275,592			3,712,622
Total assets as of June 30, 2015	1,596,681		1,986,409		169,540			3,752,630
Six Months Ended December 31, 2014
Revenues	$	270,523	$	292,257	$	—		$	562,780
Income (loss) before provision for income taxes	91,296		65,173		(121,447		)	35,022
Significant items included in income (loss) before provision for income taxes:
Depreciation and amortization	27,186		49,851		329			77,366
Interest expense	99		87		56,407			56,593
Other expense, net	858		1,534		15,889			18,281
Capital expenditures	15,668		14,904		—			30,572

Geographic revenue information is based on the location of the customer and was as follows for the periods presented (in thousands):

	Europe *		United States		United Kingdom		All Other		Total
Three Months Ended December 31, 2015	$	85,480	$	153,905	$	42,974	$	25,686	$	308,045
Three Months Ended December 31, 2014	93,637		123,814		36,419		28,827		282,697
Six Months Ended December 31, 2015	169,814		312,279		87,495		51,779		621,367
Six Months Ended December 31, 2014	192,393		242,861		69,292		58,234		562,780

*    Excludes the United Kingdom.

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16. Pending Acquisition by Affiliates of Vista Equity Partners

On September 13, 2015, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Summertime Holding Corp., a Delaware corporation (“Parent”), and Summertime Acquisition Corp., a Delaware corporation and an indirect wholly owned subsidiary of Parent (“Merger Sub”), pursuant to which, upon the terms and subject to the conditions set forth therein, Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger as an indirect wholly owned subsidiary of Parent. Parent and Merger Sub were formed by affiliates of Vista Equity Partners Fund V, L.P., a Delaware limited partnership (the “Sponsor” or “Vista”). The board of directors of the Company (the “Board”), following the receipt of the unanimous recommendation of a special committee of independent directors of the Board, unanimously approved the Merger Agreement. On December 8, 2015, our stockholders voted to adopt the Merger Agreement.

Pursuant to the Merger Agreement, at the effective time of the Merger, each share of common stock, par value $0.01 per share, of the Company (the “Common Stock”) issued and outstanding immediately prior to the effective time of the Merger (other than (i) shares owned by stockholders who have perfected and not withdrawn a demand for appraisal rights, (ii) shares owned by Parent, Merger Sub or any other direct or indirect wholly owned subsidiary of Parent and (iii) shares owned by the Company or any direct or indirect wholly owned subsidiary of the Company, in each of cases (ii) and (iii) not held on behalf of third parties), will be canceled and converted into the right to receive cash in an amount equal to $55.85, without interest thereon.

Consummation of the Merger is subject to the satisfaction or waiver of specified closing conditions, including (i) the approval of the Merger by the affirmative vote of holders of a majority of the outstanding shares of the Common Stock entitled to vote at a stockholders meeting (which was approved on December 8, 2015), (ii) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (which termination occurred on October 9, 2015) and the receipt of certain other non-United States regulatory approvals required to consummate the Merger (which we have received effective as of December 31, 2015), and (iii) other customary closing conditions, including (a) the absence of any law or order prohibiting the Merger or the other transactions contemplated by the Merger Agreement, (b) the accuracy of each party’s representations and warranties (subject to customary materiality qualifiers) and (c) each party’s performance of its obligations and covenants contained in the Merger Agreement. The Merger Agreement contains representations, warranties and covenants of the parties customary for a transaction of this type, including, among other things, covenants not to solicit alternative transactions or to provide information or enter into discussions in connection with alternative transactions, subject to certain exceptions to allow the Board to exercise its fiduciary duties.

The Merger Agreement contains certain termination rights for both the Company and Parent, including, among others, if the transactions contemplated by the Merger Agreement are not consummated on or before March 15, 2016 or if the Company terminates the Merger Agreement in compliance with its terms in order to accept a superior proposal. Upon termination of the Merger Agreement under specified circumstances, the Company has agreed to pay Parent a termination fee of $114.4 million and/or reimburse Parent’s expenses up to $5.0 million (which reimbursement shall reduce, on a dollar for dollar basis, any termination fee subsequently payable by the Company). Upon termination of the Merger Agreement under certain other specified circumstances, Parent will be required to pay the Company a termination fee equal to $228.75 million. The Sponsor has provided the Company with a limited guarantee in favor of the Company guaranteeing the payment of Parent’s termination fee if such amount becomes payable under the Merger Agreement.

Parent has obtained common equity, preferred equity and debt financing commitments for the transactions contemplated by the Merger Agreement, the aggregate proceeds of which will be sufficient for Parent to pay the aggregate merger consideration and all related fees and expenses. Financing will consist of common equity committed by Parent and common equity, preferred equity and debt committed by third party financing sources.

In connection with the pending Merger, the Company commenced cash tender offers for the 2021 Senior Notes and the 2023 Senior Notes (collectively, the "Notes"). Noteholders that validly tender their Notes by January 28, 2016 (the “Early Tender Date”) will receive an amount equal to $1,012.50 per $1,000.00 in principal amount of Notes, which includes an early participation premium of $50.00 per $1,000.00 in principal amount. Noteholders that validly tender their Notes by January 29, 2016 (the “Expiration Date”) will receive an amount equal to $962.50 per $1,000.00 in principal amount of Notes. Consummation of the tender offer and payment for the Notes validly tendered pursuant to the tender offer are subject to the satisfaction of certain conditions, including, but not limited to, the receipt of requisite consents, the consummation of the Merger and financing conditions.

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Concurrently with the commencement of the tender offer, the Company commenced the requisite change of control redemption offer for the Notes at a redemption price equal to 101.000% of the principal amount of the notes redeemed, plus accrued and unpaid interest, if any, through the redemption date ("Change of Control Offer").

As of January 6, 2016, the Company has received tenders and consents from holders of $1,680.7 million in aggregate principal amount of the 2021 Senior Notes, representing approximately 99.7% of the total outstanding principal amount of the 2021 Senior Notes, and tenders and consents from holders of $1,413.8 million in aggregate principal amount of the 2023 Notes, representing approximately 99.9% of the total outstanding principal amount of the 2023 Notes.

The Company has received the requisite consents in respect of the Notes to amend the respective indentures governing the Notes. As a result, the Company and the Trustee executed supplemental indentures relating to each of the 2021 Notes and the 2023 Notes on November 20, 2015 ("Supplemental Indentures").  Upon the effectiveness of the Supplemental Indentures, the Company will no longer have an obligation to make the Change of Control Offer.  As a result, the Company terminated the Change of Control Offer.

On September 21, 2015, an alleged stockholder of the Company filed an action in the Court of Chancery of the State of Delaware on behalf of a putative class of the Company’s stockholders against the Company and its directors, Vista, Parent and Merger Sub. The complaint alleges, among other things, that the Company’s directors breached their fiduciary duties by approving the Merger Agreement at an inadequate price and following an inadequate sale process, and that the Company, Vista, Parent and Merger Sub aided and abetted these alleged breaches of duty. The complainant seeks, among other things, either to enjoin the proposed transaction or to rescind it should it be consummated, as well as an award of plaintiff’s attorneys’ fees and costs in the action. On October 13, 2015, the defendants moved to dismiss the complaint for failure to state a claim. On October 21, 2015, the plaintiff filed an amended complaint that added allegations contending that the Company’s disclosure contained in the preliminary version the Company’s proxy statement misstated or failed to disclose certain allegedly material information to Company stockholders. On October 22, 2015, the plaintiff filed a motion for a preliminary injunction seeking to enjoin the holding of the Company’s shareholder meeting based upon his claim that the Company’s public disclosures were inadequate. On November 5, 2015, the Court denied the motion for expedited proceedings, and declined to consider plaintiff's motion seeking to enjoin the special meeting. The defendants deny any wrongdoing in connection with the merger and plan to defend vigorously against the claims set forth in the amended complaint and any injunction motion.

On November 17, 2015, a duplicative action was filed in the Court of Chancery of the State of Delaware against our directors on behalf of the same putative class of the Company’s stockholders, alleging similar claims for breach of fiduciary duty and challenging the merger and the disclosures relating to the merger.   On December 23, 2015, the defendants filed a motion to dismiss this action.  That motion remains pending.  The defendants deny any wrongdoing in connection with the merger and plan to defend vigorously against the claims set forth in these actions.

Other than expenses associated with the proposed Merger, which are reported in acquisition and related costs in the accompanying consolidated statements of income (loss), the Merger did not impact our reported financial results as of and for the three and six months ended December 31, 2015.

17. Subsequent Events

On January 28, 2016, we announced that the Audit Committee of our Board of Directors approved the payment of a quarterly dividend of $0.225 per share of outstanding common stock and per outstanding restricted stock unit. The dividends are payable on the earlier of the closing date of the Merger or March 1, 2016 to stockholders and restricted stock unit holders of record at the close of business on February 11, 2016.

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CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This report contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are identified by the use of terms and phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” and similar terms and phrases, including references to assumptions. However, these words are not the exclusive means of identifying such statements. These statements relate to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. These statements also relate to our future prospects, developments and business strategies and include, but are not limited to, statements about: the expected completion of the Merger and Vista's ability to consummate the Merger; our ability to execute on Mission 2020; increase in customer demand for our software and services; growth rates for the automobile insurance claims industry; growth rates for vehicle purchases and car parcs; customer adoption rates for digitized claims processing software and services; increases in customer spending on digitized claims processing software and services; efficiencies resulting from digitized claims processing; performance and benefits of our products and services; development or acquisition of claims processing and other products and services in areas other than automobile insurance, including our "digital garage" and risk and asset management platform; our relationship with insurance company customers as they continue global expansion; revenue growth resulting from the launch of new software and services, including our "digital garage" and risk and asset management platform; improvements in operating margins resulting from operational efficiency initiatives; increased utilization of our software and services resulting from increased severity; our expectations regarding the growth rates for vehicle insurance; changes in the amount of our existing unrecognized tax benefits; our revenue mix; our income taxes, including the periods during which tax benefits may be recognized; restructuring plans, potential restructuring charges and their impact on our revenues; our operating expense growth and operating expenses as a percentage of our revenues; stability of our development and programming costs; growth of our selling, general and administrative expenses; increase in total depreciation and amortization expense; increase in interest expense and possible impact of future foreign currency fluctuations; growth of our acquisition and related costs; our ability to realize our U.S. deferred tax assets during the respective carryforward and reversal periods; our use of cash and liquidity position going forward; cash needs to service our debt; our ability to grow in all types of markets and the benefits of products and services of companies or assets we have acquired.

Actual results could differ materially from those projected, implied or anticipated by our forward-looking statements. Some of the risks that could cause actual results to differ include: those set forth in the sections titled “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and elsewhere as described in this Quarterly Report on Form 10-Q. These risks include, but are not limited to: the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement; the failure to satisfy each of the conditions to the consummation of the Merger; the failure to obtain the necessary funding under the financing arrangements set forth in the debt and equity commitment letters delivered pursuant to the Merger Agreement; risks related to disruption of our management's attention from our ongoing business operations due to the Merger; the effect of the announcement of the Merger on our relationships with our customers, suppliers, operating results and business generally; the risk that any announcements relating to the Merger could have adverse effects on the market price of our common stock; the outcome of any legal proceedings related to the Merger; our ability to recognize expected benefits of the Merger; risks related to employee retention as a result of the Merger; the risk that the Merger will not be consummated within the expected time period or at all; our reliance on a limited number of customers for a substantial portion of our revenues; effects of competition on our software and service pricing and our business; unpredictability and volatility of our operating results, which include the volatility associated with foreign currency exchange risks, our sales cycle, seasonality, changes in the amount of our income tax provision (benefit) or other factors; effects of the global economic downturn on demand for or utilization of our products and services; risks associated with and possible negative consequences of acquisitions, joint ventures, divestitures and similar transactions, including regulatory matters and risks related to our ability to successfully integrate our acquired businesses; our ability to increase market share, successfully introduce new software and services (including but not limited to our risk and asset management platform and our “digital garage” product) and expand our operations, including in new geographic locations; time and expenses associated with customers switching from competitive software and services to our software and services; rapid technology changes in our industry; effects of changes in or violations by us or our customers of government regulations; costs and possible future losses or impairments relating to our acquisitions; use of cash to service our debt and effects on our business of restrictive covenants in our bond indentures; our ability to obtain additional financing as necessary to support our operations including Mission 2020; country-specific risks associated with operating in multiple countries; damage to our business or reputation resulting from system failures, delays and other problems; successful integration of acquired businesses that operate in industries outside of our core market; risks associated with a diversified business; our reliance on third-party information for our software and services; the financial impact of future significant restructuring and severance charges; the impact of changes in our tax provision (benefit) or effective tax rate; our ability to pay dividends in future periods; our present and anticipated continued dependence on both a limited number of key personnel and hiring and retaining sufficient numbers of qualified personnel to support our present and future operations and business strategy; any material adverse impact of cur

28

rent or future litigation on our results or business, including litigation with Mitchell International; and other factors that are described from time to time in our periodic filings with the SEC.

All forward-looking statements are qualified in their entirety by this cautionary statement, and we undertake no obligation to revise or update this Quarterly Report on Form 10-Q to reflect events or circumstances after the date hereof.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion of our financial condition and results of operations should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended June 30, 2015 filed with the SEC on August 31, 2015. You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

All percentage amounts and ratios were calculated using the underlying data in whole dollars and may reflect rounding adjustments. Operating results for the three months ended December 31, 2015 are not necessarily indicative of the results that may be expected for any future period. We describe the effects on our results that are attributed to changes in foreign currency exchange rates as constant currency which we measure by converting the current period results into U.S. dollars at the average rates in effect for the same period from the prior year.

Overview of the Business

Solera is a leading provider of risk and asset management software and services to the automotive and property marketplace, including the global P&C industry. We are expanding beyond our global-leading position in collision repair and U.S. based mechanical repair presence to bring data driven productivity and decision support solutions to other aspects of vehicle ownership such as vehicle validation, glass repair, driver violation monitoring, vehicle salvage and electronic titling. We are also taking our core competencies of data, software and connectivity from the auto to the home.

We help our customers:

• estimate the costs to repair damaged vehicles and determine pre-collision fair market values for damaged vehicles for which the repair costs exceed the vehicles’ value;

• automate and outsource steps of the claims process that insurance companies have historically performed internally;

• diagnose and repair vehicle mechanical problems; and

• improve their ability to monitor and manage their businesses through data reporting and analysis.

We serve over 195,000 customers and are active in over 75 countries across six continents with approximately 5,400 employees. Our customers include more than 4,000 automobile insurance companies, 60,500 collision repair facilities, 12,600 independent assessors, 49,000 service, maintenance and repair facilities and 68,400 automotive recyclers, auto dealers and others. We derive revenues from many of the world’s largest automobile insurance companies, including the ten largest automobile insurance companies in Europe and eight of the ten largest automobile insurance companies in North America.

At the core of our software and services are our proprietary databases, which are localized to each geographical market we serve. Our insurance claims processing software and services are typically integrated into our customers’ systems, operations and processes, making it costly and time consuming to switch to another provider. This customer integration, along with our products and long-standing customer relationships, has contributed to our very high customer retention rate.

Pending Acquisition by affiliates of Vista Equity Partners

On September 13, 2015, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Summertime Holding Corp., a Delaware corporation (“Parent”), and Summertime Acquisition Corp., a Delaware corporation and an indirect wholly owned subsidiary of Parent (“Merger Sub”), pursuant to which, upon the terms and subject to the conditions set forth therein, Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger as an indirect wholly owned subsidiary of Parent. Parent and Merger Sub were formed by affiliates of Vista Equity Partners Fund V, L.P., a Delaware limited partnership (the “Sponsor” or “Vista”). Our board of directors (the “Board”), following the receipt of the unanimous recommendation of a special committee of independent directors of the Board, unanimously approved the Merger Agreement. On December 8, 2015, our stockholders voted to adopt the Merger Agreement.

Pursuant to the Merger Agreement, at the effective time of the Merger, each share of common stock, par value $0.01 per share, of the Company (the “Common Stock”) issued and outstanding immediately prior to the effective time of the Merger (other than (i) shares owned by stockholders who have perfected and not withdrawn a demand for appraisal rights, (ii) shares owned by Parent, Merger Sub or any other direct or indirect wholly owned subsidiary of Parent and (iii) shares owned by the Company or any direct or indirect wholly owned subsidiary of the Company, in each of cases (ii) and (iii) not held on behalf of

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third parties), will be canceled and converted into the right to receive cash in an amount equal to $55.85, without interest thereon.

The closing of the Merger is conditioned upon customary closing conditions. We have received all required regulatory approvals necessary to complete the Merger. The Merger is expected to close no later than the first calendar quarter of 2016.

Segments

We have aggregated our operating segments into two reportable segments: EMEA and Americas. Our EMEA reportable segment encompasses our operating segments in Europe, the Middle East, Africa, Asia and Australia, while our Americas reportable segment encompasses our operations in North, Central and South America.

Our chief operating decision maker is our Chief Executive Officer. We evaluate the performance of our reportable segments based on revenues, income before provision for income taxes and adjusted EBITDA, a non-U.S. GAAP financial measure that represents U.S. GAAP net income (loss) excluding interest expense, provision for income taxes, depreciation and amortization, stock-based compensation expense, restructuring charges, asset impairments and other costs associated with exit and disposal activities, acquisition and related costs, litigation related expenses and other (income) expense, net. We do not allocate certain costs to reportable segments, including costs related to our financing activities, business development and oversight, and tax, audit and other professional fees, to our reportable segments. Instead, we manage these costs at the Corporate level.

The table below sets forth our revenues by reportable segment and as a percentage of our total revenues for the periods indicated (dollars in millions):

	Three Months Ended December 31,								Six Months Ended December 31,
	2015				2014				2015				2014
EMEA	$	133.4	43.3	%	$	134.7	47.6	%	$	267.1	43.0	%	$	270.5	48.1	%
Americas	174.6		56.7		148.0		52.4		354.3		57.0		292.3		51.9
Total	$	308.0	100.0	%	$	282.7	100.0	%	$	621.4	100.0	%	$	562.8	100.0	%

For the three and six months ended December 31, 2015, the United States and the United Kingdom were the only countries that individually represented more than 10% of our total revenues.

Components of Revenues and Expenses

Revenues

We generate revenues from the sale of software and services to our customers pursuant to negotiated contracts or pricing agreements. Pricing for our software and services is set forth in these agreements and negotiated with each customer. We generally bill our customers monthly under one or more of the following bases:

• price per transaction;

• fixed monthly amount for a prescribed number of transactions;

• fixed monthly subscription rate;

• price per set of services rendered; and

• price per system delivered.

Our software and services are often sold as packages, without individual pricing for each component. Our revenues are reflected net of customer sales allowances, which we estimate based on both our examination of a subset of customer accounts and historical experience.

Our core offering is our estimating and workflow software, which is used by our insurance company, collision repair facility and independent assessor customers, representing the majority of our revenues. We also derive revenues from our salvage and recycling software; business intelligence and consulting services; vehicle data validation; salvage disposition; driver violation reporting services; service, maintenance and repair solutions; and other offerings.

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Cost of revenues (excluding depreciation and amortization)

Our costs and expenses applicable to revenues represent the total of operating expenses and systems development and programming costs, which are discussed below.

Operating expenses

Our operating expenses primarily include: compensation and benefit costs for our operations, database development and customer service personnel; other costs related to operations, database development and customer support functions; third-party data and royalty costs; costs related to computer software and hardware used in the delivery of our software and services; postage costs; and the costs of purchased data.

Systems development and programming costs

Systems development and programming costs primarily include: compensation and benefit costs for our product development and product management personnel; other costs related to our product development and product management functions; and costs related to external software consultants involved in systems development and programming activities.

Selling, general and administrative expenses

Our selling, general and administrative expenses primarily include: compensation and benefit costs for our sales, marketing, administration and corporate personnel, costs related to our facilities; and professional and legal fees.

We also include share-based compensation expense in our selling, general and administrative expenses, which represents the recognition of the grant-date fair value of stock awards granted to employees, officers, members of our board of directors and others pursuant to our equity compensation plans. We recognize the grant date fair value as share-based compensation expense over the requisite service period.

Depreciation and amortization

Depreciation includes depreciation attributable to buildings, leasehold improvements, data processing and computer equipment, purchased software, and furniture and fixtures. Amortization includes amortization attributable to software developed or obtained for internal use and intangible assets acquired in business combinations, particularly our acquisitions of Explore Information Services, LLC ("Explore"), Service Repair Solutions, Inc. ("SRS"), the Insurance and Services Division of Pittsburgh Glass Works LLC ("I&S") and CAP Automotive ("CAP").

Restructuring charges, asset impairments and other costs associated with exit and disposal activities

Restructuring charges, asset impairments and other costs associated with exit and disposal activities primarily represent costs incurred in relation to our restructuring initiatives. Restructuring charges primarily include employee termination benefits charges and charges related to the lease and vendor contract liabilities that we do not expect to provide future economic benefits due to the implementation of our restructuring initiatives.

Acquisition and related costs

Acquisition and related costs include costs incurred in relation to the proposed acquisition of Solera by Vista, including professional fees and personnel retention incentives; legal and professional fees and other transaction costs associated with completed and contemplated business combinations and asset acquisitions; costs associated with integrating acquired businesses, including costs incurred to eliminate workforce redundancies and for product rebranding; and other charges incurred as a direct result of our acquisition efforts. These other charges include changes to the fair value of contingent purchase consideration, acquired assets and assumed liabilities subsequent to the completion of the purchase price allocation, purchase price that is deemed to be compensatory in nature and incentive compensation arrangements with continuing employees of acquired companies.

Interest expense

Interest expense consists primarily of interest on our debt and amortization of related debt issuance costs, net of premium and discount amortization.

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Other (income) expense, net

Other (income) expense, net consists of foreign exchange gains and losses on notes receivable and notes payable to affiliates, realized and unrealized gains and losses on derivative instruments, investment income and other miscellaneous income and expense.

Income tax provision

Income taxes have been provided for all items included in the statements of income included herein, regardless of when such items were reported for tax purposes or when the taxes were actually paid or refunded.

Net income attributable to noncontrolling interests

Several of our customers and other entities own noncontrolling interests in certain of our operating subsidiaries. Net income attributable to noncontrolling interests reflect such owners’ proportionate interest in the earnings of such operating subsidiaries.

Factors Affecting Our Operating Results

Below is a summary description of several external factors that have or may have an effect on our operating results.

Foreign currency. During the three and six months ended December 31, 2015, we generated approximately 50% of our revenues and incurred a majority of our costs, in currencies other than the U.S. dollar, primarily the Euro, as compared to 56% and 57% for the three and six months ended December 31, 2014, respectively. We translate our local currency financial results into U.S. dollars based on average exchange rates prevailing during a reporting period for our consolidated statement of income and certain components of stockholders’ equity and the exchange rate at the end of that period for the consolidated balance sheet. These translations resulted in foreign currency translation loss adjustments of $17.8 million and $24.1 million for the three and six months ended December 31, 2015, respectively, and $38.2 million and $99.1 million for the three and six months ended December 31, 2014, respectively, which are recorded as a component of accumulated other comprehensive income (loss) in stockholders’ equity. Foreign currency transaction losses recognized in our consolidated statements of income (loss) were $2.2 million and $9.3 million during the three and six months ended December 31, 2015, respectively, and $5.9 million and $8.7 million during the three and six months ended December 31, 2014, respectively.

Exchange rates between most of the major foreign currencies we use to transact our business and the U.S. dollar have fluctuated significantly over the last few years and we expect that they will continue to fluctuate during fiscal year 2016. The majority of our revenues and costs are denominated in Euros, Pound Sterling, Swiss francs, Canadian dollars and other foreign currencies. The following table provides the average quarterly exchange rates for the Euro and Pound Sterling since the beginning of fiscal year 2015:

Period	Average Euro-to-U.S. Dollar Exchange Rate		Average Pound Sterling-to-U.S. Dollar Exchange Rate
Quarter ended September 30, 2014	$	1.33	$	1.67
Quarter ended December 31, 2014	$	1.25	$	1.58
Quarter ended March 31, 2015	$	1.13	$	1.52
Quarter ended June 30, 2015	$	1.11	$	1.53
Quarter ended September 30, 2015	$	1.11	$	1.55
Quarter ended December 31, 2015	$	1.10	$	1.52

During the three months ended December 31, 2015 as compared to the three months ended December 31, 2014, the U.S. dollar strengthened against most major foreign currencies we use to transact our business. The average U.S. dollar strengthened versus the Euro by 12.3% and the Pound Sterling by 4.1%, which decreased our revenues and expenses for the three months ended December 31, 2015. A hypothetical 5% increase or decrease in the U.S. dollar versus other currencies in which we transact our business would have resulted in an increase or decrease, as the case may be, to our revenues of $7.7 million and $15.5 million during the three and six months ended December 31, 2015.

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Factors that affect business volume. The following external factors have or may have an effect on the number of claims that are submitted and/or our volume of transactions, any of which can affect our revenues:

• Number of insurance claims made. In fiscal year 2015, the number of insurance claims made increased slightly versus fiscal year 2014. In several of our large western European markets, the number of insurance claims for vehicle damage submitted by owners to their insurance carriers declined slightly. The number of insurance claims made can be influenced by factors such as unemployment levels, the number of miles driven, rising gasoline prices, the number of uninsured drivers, rising insurance premiums and insured opting for lower coverage or higher deductible levels, among other things. Fewer claims made can reduce the transaction-based fees that we generate.

• Sales of new and used vehicles.According to industry sources, global new light vehicle sales grew by 3.6% in 2014 to 86.3 million units and sales are forecasted to reach 88.3 million units, up by 2.4% in 2015. In markets where automobile insurance is generally government-mandated and claims processing is automated (“advanced markets”), sales are projected to grow at a 0.7% compound annual growth rate from 2014 through 2024. In other markets, sales are projected to grow at a 6.6% compound annual growth rate from 2014 through 2024. Fewer new light vehicle sales can result in fewer insured vehicles on the road and fewer automobile accidents, which can reduce the transaction-based fees that we generate.

• Damaged vehicle repair costs. The cost to repair damaged vehicles, also known as severity, includes labor, parts and other related costs. Severity has steadily risen for a number of years. According to industry sources, from 2001 through 2010, the price index for body work has increased by 30.5% compared with a 23.2% increase in the general cost of living index. Insurance companies purchase our products and services to help standardize the cost of repair. Should the cost of labor, parts and other related items continue to increase over time, insurance companies may seek to purchase and utilize an increasing number of our products and services to help improve the standardization of the cost of repair.

• Penetration Rate of Vehicle Insurance. An increasing rate of procuring vehicle insurance will result in an increase in the number of insurance claims made for damaged vehicles. An increasing number of insurance claims submitted can increase the transaction-based fees that we generate for partial-loss and total-loss estimates. This is due in part to both increased regulation and increased use of financing in the purchase of new and used vehicles. We expect that the rate of vehicle insurance in our less mature international markets will continue to increase during the next eighteen months.

• Automobile usage—number of miles driven.Several factors can influence miles driven including gasoline prices and economic conditions. According to industry sources, for calendar year 2014, cumulative miles driven in the United States increased by 2.6% compared to the same period in the prior year. Fewer miles driven can result in fewer automobile accidents, which can reduce the transaction-based fees that we generate.

• Seasonality. Our business is subject to seasonal and other fluctuations. In particular, we have historically experienced higher revenues during the second quarter and third quarter versus the first quarter and fourth quarter during each fiscal year. This seasonality is caused primarily by more days of inclement weather during the second quarter and third quarter in most of our markets, which contributes to a greater number of vehicle accidents and damage during these periods. In addition, our business is subject to fluctuations caused by other factors, including the occurrence of extraordinary weather events and the timing of certain public holidays. For example, the Easter holiday occurs during the third quarter in certain fiscal years and occurs during the fourth quarter in other fiscal years, resulting in a change in the number of business days during the quarter in which the holiday occurs.

Share-based compensation expense. We incurred pre-tax, non-cash share-based compensation charges of $6.2 million and $14.2 million for the three and six months ended December 31, 2015, respectively, and $4.2 million and $14.3 million for the three and six months ended December 31, 2014, respectively. We expect to recognize additional pre-tax, non-cash share-based compensation charges related to share-based awards outstanding at December 31, 2015. The estimated total remaining unamortized share-based compensation expense, net of forfeitures, was $29.2 million, which we expect to recognize over a weighted-average period of 1.8 years.

Restructuring charges. We have incurred restructuring charges in each period presented and also expect to incur additional restructuring charges, primarily relating to severance costs, over the next several quarters as we work to improve efficiencies in our business. We do not expect reduced revenues or an increase in other expenses as a result of continued implementation of our restructuring initiatives.

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Other factors. Other factors that have or may have an effect on our operating results include:

• gain and loss of customers;

• pricing pressures;

• acquisitions, joint ventures or similar transactions;

• expenses to develop new software or services; and

• expenses and restrictions related to indebtedness.

We do not believe inflation has had a material effect on our financial condition or results of operations in recent years.

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Results of Operations

Our results of operations include the results of operations of acquired companies from the date of the respective acquisitions.

The table below sets forth statement of income data, including the amount and percentage changes for the periods indicated (dollars in thousands):

	Three Months Ended December 31,							Six Months Ended December 31,
	2015		2014	Change				2015		2014	Change
	$		$	$		%		$		$	$		%
Revenues	308,045		282,697	25,348		9.0		621,367		562,780	58,587		10.4
Cost of revenues:
Operating expenses	86,239		72,437	13,802		19.1		175,026		140,969	34,057		24.2
Systems development and programming costs	28,261		25,480	2,781		10.9		56,635		51,382	5,253		10.2
Total cost of revenues (excluding depreciation and amortization)	114,500		97,917	16,583		16.9		231,661		192,351	39,310		20.4
Selling, general & administrative expenses	78,956		75,591	3,365		4.5		171,934		157,467	14,467		9.2
Depreciation and amortization	44,493		39,368	5,125		13.0		88,998		77,366	11,632		15.0
Restructuring charges, asset impairments and other costs associated with exit and disposal activities	3,398		633	2,765		436.8		4,571		2,890	1,681		58.2
Acquisition and related costs	14,960		11,458	3,502		30.6		42,978		22,810	20,168		88.4
Interest expense	45,928		28,961	16,967		58.6		90,607		56,593	34,014		60.1
Other (income) expense, net	(18,931	)	17,818	(36,749	)	(206.2	)	20,897		18,281	2,616		14.3
	283,304		271,746	11,558		4.3		651,646		527,758	123,888		23.5
Income (loss) before provision for income taxes	24,741		10,951	13,790		125.9		(30,279	)	35,022	(65,301	)	(186.5	)
Income tax provision (benefit)	(31,157	)	1,753	(32,910	)	(1,877.4	)	(21,867	)	9,252	(31,119	)	(336.3	)
Net income (loss)	55,898		9,198	46,700		507.7		(8,412	)	25,770	(34,182	)	(132.6	)
Less: Net income attributable to noncontrolling interests	2,888		4,751	(1,863	)	(39.2	)	5,447		8,959	(3,512	)	(39.2	)
Net income (loss) attributable to Solera Holdings, Inc.	53,010		4,447	48,563		1,092.0		(13,859	)	16,811	(30,670	)	(182.4	)

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The table below sets forth our statement of income data expressed as a percentage of revenues for the periods indicated:

	Three Months Ended December 31,				Six Months Ended December 31,
	2015		2014		2015		2014
Revenues	100.0	%	100.0	%	100.0	%	100.0	%
Cost of revenues:
Operating expenses	28.0		25.6		28.2		25.0
Systems development and programming costs	9.2		9.0		9.1		9.1
Total cost of revenues (excluding depreciation and amortization)	37.2		34.6		37.3		34.1
Selling, general & administrative expenses	25.6		26.7		27.7		28.0
Depreciation and amortization	14.4		13.9		14.3		13.7
Restructuring charges, asset impairments and other costs associated with exit and disposal activities	1.1		0.2		0.7		0.5
Acquisition and related costs	4.9		4.1		6.9		4.1
Interest expense	14.9		10.2		14.6		10.1
Other (income) expense, net	(6.1	)	6.3		3.4		3.2
	92.0		96.1		104.9		93.8
Income (loss) before provision for income taxes	8.0		3.9		(4.9	)	6.2
Income tax provision (benefit)	(10.1	)	0.6		(3.5	)	1.6
Net income (loss)	18.1		3.3		(1.4	)	4.6
Less: Net income attributable to noncontrolling interests	0.9		1.7		0.9		1.6
Net income (loss) attributable to Solera Holdings, Inc.	17.2	%	1.6	%	(2.2	)%	3.0	%

Revenues

Three Months Ended December 31, 2015 vs. Three Months Ended December 31, 2014. During the three months ended December 31, 2015, revenues increased $25.3 million, or 9.0%, to $308.0 million and include incremental revenue contributions from CAP and other acquisitions of $6.4 million, and $22.5 million respectively. On a constant currency basis and excluding incremental revenue contributions from CAP and other acquisitions, revenues increased $16.5 million, or 5.9%, during the three months ended December 31, 2015 due to revenue growth in our EMEA and America segments.

Our EMEA revenues decreased $1.2 million, or 0.9%, to $133.4 million and include incremental revenue contributions from CAP and other acquisitions of $6.4 million and $1.3 million, respectively. On a constant currency basis and excluding the incremental revenue contributions from CAP and other acquisitions, EMEA revenues increased $5.7 million, or 4.4%, during the three months ended December 31, 2015 primarily due to growth in transaction revenues in several countries.

Our Americas revenues increased $26.6 million, or 17.9%, to $174.6 million and include incremental revenue contributions from other acquisitions of $21.2 million. On a constant currency basis and excluding incremental revenue contributions from other acquisitions, Americas revenues increased $10.7 million, or 7.3%, during the three months ended December 31, 2015 resulting from growth in transaction and subscription revenues from sales to new and existing customers.

Six Months Ended December 31, 2015 vs. Six Months Ended December 31, 2014. During the six months ended December 31, 2015, revenues increased $58.6 million, or 10.4%, to $621.4 million and include incremental revenue contributions from I&S, CAP and other acquisitions of $5.7 million, $18.2 million, and $45.1 million, respectively. On a constant currency basis and excluding incremental revenue contributions from I&S, CAP and other acquisitions, revenues increased $36.6 million, or 6.9%, during the six months ended December 31, 2015 due to revenue growth in our EMEA and America segments.

Our EMEA revenues decreased $3.4 million, or 1.3%, to $267.1 million and include incremental revenue contributions from CAP and other acquisitions of $18.2 million and $2.2 million, respectively. On a constant currency basis and excluding the incremental revenue contributions from CAP and other acquisitions, EMEA revenues increased $11.3 million, or 4.3%, during the six months ended December 31, 2015 resulting from growth in transaction revenues in several countries.

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Our Americas revenues increased $62.0 million, or 21.2%, to $354.3 million and include incremental revenue contributions from I&S and other acquisitions of $5.7 million and $42.9 million, respectively. On a constant currency basis and excluding incremental revenue contributions from I&S and other acquisitions, Americas revenues increased $25.2 million, or 9.4%, during the six months ended December 31, 2015 resulting from growth in transaction and subscription revenues from sales to new and existing customers.

Set forth below are revenues from each of our principal customer categories and as a percentage of revenues for the periods indicated (dollars in millions):

	Three Months Ended December 31,								Six Months Ended December 31,
	2015				2014				2015				2014
Insurance companies	$	108.4	35.2	%	$	112.2	39.7	%	$	221.8	35.7	%	$	221.4	39.3	%
Collision and glass repair facilities	68.7		22.3		72.3		25.6		137.3		22.1		147.9		26.3
Independent assessors	16.0		5.2		18.2		6.4		31.9		5.1		37.6		6.7
Service, maintenance and repair facilities	56.1		18.2		31.8		11.3		111.9		18.0		63.1		11.2
Automotive recyclers, salvage, dealerships and others	58.8		19.1		48.2		17.0		118.5		19.1		92.7		16.6
Total	$	308.0	100.0	%	$	282.7	100.0	%	$	621.4	100.0	%	$	562.7	100.0	%

Revenue growth for each of our customer categories was as follows:

	Three Months Ended December 31, 2015					Six Months Ended December 31, 2015
(dollars in millions)	Revenue Growth			Percentage Change		Revenue Growth			Percentage Change
Insurance companies	$	(3.8	)	(3.3	)%	$	0.4		0.2	%
Collision and glass repair facilities	(3.6		)	(4.9	)	(10.6		)	(7.1	)
Independent assessors	(2.2		)	(12.0	)	(5.7		)	(15.3	)
Service, maintenance and repair facilities	24.3			76.3		48.8			77.2
Automotive recyclers, salvage, dealerships and others	10.6			21.8		25.8			27.7
Total	$	25.3		9.0	%	$	58.7		10.4	%

On a constant currency basis, revenue growth for each of our customer categories was as follows:

	Three Months Ended December 31, 2015				Six Months Ended December 31, 2015
(dollars in millions)	Revenue Growth		Percentage Change		Revenue Growth		Percentage Change
Insurance companies	$	4.9	4.3	%	$	19.8	9.0	%
Collision and glass repair facilities	4.0		5.5		7.3		4.9
Independent assessors	0.3		2.0		0.3		0.8
Service, maintenance and repair facilities	24.3		76.4		48.8		77.2
Automotive recyclers, salvage, dealerships and others	12.6		26.1		31.2		33.6
Total	$	46.1	16.3	%	$	107.4	19.1	%

Operating expenses

Three Months Ended December 31, 2015 vs. Three Months Ended December 31, 2014. During the three months ended December 31, 2015, operating expenses increased $13.8 million, or 19.1%, to $86.2 million and include incremental operating expense contributions from CAP and other acquisitions of $1.1 million and $13.5 million, respectively. On a constant currency basis and excluding incremental operating expense contributions from CAP and other acquisitions, operating expenses increased $2.7 million, or 3.8%, during the three months ended December 31, 2015 primarily due to an increase in operating expenses in our Americas segment.

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Our EMEA operating expenses decreased $0.6 million, or 2.5%, to $24.0 million and include incremental operating expense contributions from CAP and other acquisitions of $1.1 million and $0.4 million, respectively. On a constant currency basis and excluding the incremental operating expense contributions from CAP and other acquisitions, EMEA operating expenses increased $0.4 million, or 1.7%, during the three months ended December 31, 2015, resulting from the revenue growth during the period.

Our Americas operating expenses increased $14.4 million or 30.1%, to $62.3 million and include incremental operating expense contributions from other acquisitions of $13.1 million. On a constant currency basis and excluding incremental operating expense contributions from other acquisitions, Americas operating expenses increased $2.3 million, or 4.8%, during the three months ended December 31, 2015 resulting from the revenue growth during the period.

Six Months Ended December 31, 2015 vs. Six Months Ended December 31, 2014. During the six months ended December 31, 2015, operating expenses increased $34.1 million, or 24.2%, to $175.0 million and include incremental operating expense contributions from I&S, CAP, and other acquisitions of $3.2 million, $2.6 million, and $27.0 million, respectively. On a constant currency basis and excluding incremental operating expense contributions from I&S, CAP, and other acquisitions, operating expenses increased $9.1 million, or 7.3%, during the six months ended December 31, 2015 primarily due to an increase in operating expenses in our Americas segment.

Our EMEA operating expenses decreased $2.2 million, or 4.5%, to $46.7 million and include incremental operating expense contributions from CAP and other acquisitions of $2.6 million and $0.6 million, respectively. On a constant currency basis and excluding the incremental operating expense contributions from CAP and other acquisitions, EMEA operating expenses increased $0.3 million, or 0.6%, during the six months ended December 31, 2015 resulting from the revenue growth during the period.

Our Americas operating expenses increased $36.3 million or 39.4%, to $128.3 million and include incremental operating expense contributions from I&S and other acquisitions of $3.2 million and $26.4 million, respectively. On a constant currency basis and excluding incremental operating expense contributions from I&S and other acquisitions, Americas operating expenses increased $8.8 million, or 11.5%, during the six months ended December 31, 2015 resulting from the revenue growth during the period.

Systems development and programming costs

Three Months Ended December 31, 2015 vs. Three Months Ended December 31, 2014. During the three months ended December 31, 2015, systems development and programming costs (“SD&P”) increased $2.8 million, or 10.9%, to $28.3 million and include incremental SD&P contributions from CAP and other acquisitions of $0.4 million and $1.6 million, respectively. On a constant currency basis and excluding incremental SD&P contributions from CAP and other acquisition, SD&P increased $2.5 million, or 9.7%, during the three months ended December 31, 2015 primarily due to an increase in SD&P expenses in both our Americas and EMEA segments.

Our EMEA SD&P increased $3.9 million, or 29.1%, to $17.1 million and include incremental SD&P contributions from CAP of $0.4 million. On a constant currency basis, and excluding the incremental SD&P contributions from CAP, EMEA SD&P increased $4.8 million, or 36.3%, during the three months ended December 31, 2015 primarily due to increased investment in product development.

Our Americas SD&P increased $1.9 million, or 15.5%, to $14.1 million and include incremental SD&P contributions from other acquisitions of $1.6 million. On a constant currency basis and excluding incremental SD&P contributions from other acquisitions, Americas SD&P for the three months ended December 31, 2015 increased $0.6 million or 5.2% primarily due to an increase in personnel expenses.

Six Months Ended December 31, 2015 vs. Six Months Ended December 31, 2014. During the six months ended December 31, 2015, SD&P increased $5.3 million, or 10.2%, to $56.6 million and include incremental contributions from CAP and other acquisitions of $0.8 million and $3.5 million, respectively. On a constant currency basis and excluding incremental SD&P contributions from CAP and other acquisitions, SD&P increased $4.8 million, or 9.4%, during the six months ended December 31, 2015 primarily due to an increase in SD&P expenses in both our Americas and EMEA segments.

Our EMEA SD&P increased $3.7 million, or 13.6%, to $30.7 million and include incremental SD&P contributions from CAP of $0.8 million. On a constant currency basis, and excluding the incremental SD&P contributions from CAP, EMEA SD&P increased $5.8 million, or 21.5%, during the six months ended December 31, 2015 primarily due to increased investment in product development.

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Our Americas SD&P increased $3.1 million, or 12.6%, to $27.4 million and include incremental SD&P contributions from other acquisitions of $3.5 million. On a constant currency basis, and excluding incremental SD&P contributions from other acquisitions, Americas SD&P increased by $0.4 million or 1.8% for the six months ended December 31, 2015 primarily due to an increase in personnel expenses.

Selling, general and administrative expenses

Three Months Ended December 31, 2015 vs. Three Months Ended December 31, 2014. During the three months ended December 31, 2015, selling, general and administrative expenses (“SG&A”) increased $3.4 million, or 4.5%, to $79.0 million and include incremental SG&A contributions from CAP and other acquisitions of $1.9 million and $3.3 million, respectively. On a constant currency basis and excluding incremental SG&A contributions from CAP and other acquisitions, SG&A increased $2.3 million, or 3.1%, primarily due to continued growth in our business, including an increase in legal and other professional fees of $1.4 million, an increase in facilities expenses of $0.4 million, an increase in advertising expenses of $0.4 million and an increase in share-based compensation expense of $2.0 million, partially offset by a decrease in legal fees associated with the Mitchell patent infringement litigation of $2.0 million.

Six Months Ended December 31, 2015 vs. Six Months Ended December 31, 2014. During the six months ended December 31, 2015, selling, general and administrative expenses (“SG&A”) increased $14.5 million, or 9.2%, to $171.9 million and include incremental SG&A contributions from I&S, CAP, and other acquisitions of $0.3 million, $4.8 million, and $6.7 million, respectively. On a constant currency basis and excluding incremental SG&A contributions from I&S, CAP, and other acquisitions, SG&A increased $12.8 million, or 8.3%, primarily due to a one-time special cash award of $10.0 million paid to our chief executive officer, Tony Aquila, in August 2015, an increase in legal and other professional fees of $3.0 million, an increase in facilities and equipment expenses of $1.8 million, and an increase in other administrative expenses of $0.8 million, partially offset by a decrease in legal fees associated with the Mitchell patent infringement litigation of $3.4 million.

Depreciation and amortization

Three Months Ended December 31, 2015 vs. Three Months Ended December 31, 2014. During the three months ended December 31, 2015, depreciation and amortization increased by $5.1 million, or 13.0%, to $44.5 million and includes incremental depreciation and amortization contributions from CAP and other acquisitions of $3.1 million and $3.2 million, respectively. On a constant currency basis and excluding incremental depreciation and amortization contributions from CAP and other acquisitions, depreciation and amortization for the three months ended December 31, 2015 increased $0.3 million, or 0.9%, due to an increase in depreciation expense resulting increased investment in data processing equipment to support ongoing growth.

Six Months Ended December 31, 2015 vs. Six Months Ended December 31, 2014. During the six months ended December 31, 2015, depreciation and amortization increased by $11.6 million, or 15.0%, to $89.0 million and includes incremental depreciation and amortization contributions from I&S, CAP, and other acquisitions of $0.3 million, $7.8 million, and $6.2 million, respectively. On a constant currency basis and excluding incremental depreciation and amortization contributions from I&S, CAP, and other acquisitions, depreciation and amortization for the six months ended December 31, 2015 increased $0.9 million, or 1.3%, due to an increase in depreciation expense resulting increased investment in data processing equipment to support ongoing growth.

We generally amortize intangible assets on an accelerated basis to reflect the pattern in which the economic benefits of the intangible assets are realized.

Restructuring charges, asset impairments and other costs associated with exit and disposal activities

Three Months Ended December 31, 2015 vs. Three Months Ended December 31, 2014. During the three months ended December 31, 2015 and 2014, we incurred restructuring charges, asset impairments and other costs associated with exit and disposal activities of $3.4 million and $0.6 million, respectively.

The restructuring charges, asset impairments and other costs associated with exit and disposal activities incurred during the three months ended December 31, 2015 and 2014, respectively, consist primarily of employee termination benefits related to ongoing restructuring initiatives.

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Six Months Ended December 31, 2015 vs. Six Months Ended December 31, 2014. During the six months ended December 31, 2015 and 2014, we incurred restructuring charges, asset impairments and other costs associated with exit and disposal activities of $4.6 million and $2.9 million, respectively.

The restructuring charges, asset impairments and other costs associated with exit and disposal activities incurred during the six months ended December 31, 2015 and 2014, respectively, consist primarily of employee termination benefits related to ongoing restructuring initiatives.

Acquisition and related costs

Three Months Ended December 31, 2015 vs. Three Months Ended December 31, 2014. We incurred acquisition and related costs of $15.0 million and $11.5 million, during the three months ended December 31, 2015 and 2014, respectively.

Acquisition and related costs incurred during the three months ended December 31, 2015 and 2014 consist primarily of contingent purchase consideration that is deemed compensatory in nature and other costs associated with completedacquisitions of $0.8 million and $6.9 million, respectively, and legal and professional fees, incurred in relation to completed and contemplated business combinations and asset acquisitions of $1.1 million and $4.6 million, respectively. Acquisition and related costs for the three months ended December 31, 2015, also include $13.1 million of professional fees and other costs incurred in relation to the pending acquisition of Solera by entities affiliated with Vista Equity Partners.

Six Months Ended December 31, 2015 vs. Six Months Ended December 31, 2014. We incurred acquisition and related costs of $43.0 million and $22.8 million, during the six months ended December 31, 2015 and 2014, respectively.

Acquisition and related costs incurred during the six months ended December 31, 2015 and 2014 consist primarily of contingent purchase consideration that is deemed compensatory in nature and other costs associated with completedacquisitions of $17.3 million and $14.5 million, respectively, and legal and professional fees, incurred in relation to completed and contemplated business combinations and asset acquisitions of $1.0 million and $8.3 million, respectively. Acquisition and related costs for the six months ended December 31, 2015, also include $24.7 million of professional fees and other costs incurred in relation to the pending acquisition of Solera by entities affiliated with Vista Equity Partners.

Interest expense

Three Months Ended December 31, 2015 vs. Three Months Ended December 31, 2014. During the three months ended December 31, 2015, interest expense increased $17.0 million due to the interest expense resulting from the issuance ofadditional senior unsecured notes in November 2014 and July 2015.

Six Months Ended December 31, 2015 vs. Six Months Ended December 31, 2014. During the six months ended December 31, 2015, interest expense increased $34.0 million due to the interest expense resulting from the issuance of additional senior unsecured notes in November 2014 and July 2015.

We expect that our annual interest expense will increase in fiscal year 2016, as compared to fiscal year 2015, as a result of the issuance of additional unsecured notes in fiscal year November 2014 and July 2015.

Other (income) expense, net

Three Months Ended December 31, 2015 vs. Three Months Ended December 31, 2014. During the three months ended December 31, 2015, other (income) expense, net increased $36.7 million due primarily to a $32.1 million increase in net realized and unrealized gains on derivative financial instruments and a $3.7 million decrease in foreign currency transaction losses during the three months ended December 31, 2015.

Six Months Ended December 31, 2015 vs. Six Months Ended December 31, 2014. During the six months ended December 31, 2015, other expense, net increased $2.6 million due primarily to a $2.3 million increase in net realized and unrealized losses on derivative financial instruments during the six months ended December 31, 2015.

Income tax provision (benefit)

Three Months Ended December 31, 2015 vs. Three Months Ended December 31, 2014. During the three months ended December 31, 2015 and 2014, we recorded an income tax provision (benefit) of $(31.2) million and $1.8 million, respectively. The decrease in the income tax provision is primarily due to the U.S. tax benefit related to the increase in certain expenses

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during fiscal year 2015. For the three months ended December 31, 2015, the expected tax provision derived from applying the U.S. federal statutory rate to our pre-tax income differed from our recorded income tax provision primarily due to the amount of our pre-tax loss, relative to our income tax expense, nondeductible expenses, and changes in tax law.

Six Months Ended December 31, 2015 vs. Six Months Ended December 31, 2014. During the six months ended December 31, 2015 and 2014, we recorded an income tax provision (benefit) of $(21.9) million and $9.3 million, respectively. The decrease in the income tax provision is primarily due to the U.S. tax benefit related to the increase in certain expenses during fiscal year 2015. For the six months ended December 31, 2015, the expected tax provision derived from applying the U.S. federal statutory rate to our pre-tax income differed from our recorded income tax provision primarily due to the amount of our pre-tax loss, relative to our income tax expense, nondeductible expenses, and changes in tax law.

Our income tax provision for the three and six months ended December 31, 2015 is not necessarily indicative of the effective tax rate that may be expected for fiscal year 2016.

Our tax provision or benefit from income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period.  Our quarterly tax provision is subject to significant variation due to several factors, including variability in accurately predicting our pre-tax income or loss and the mix of jurisdictions to which they relate, changes in how we do business, acquisitions, foreign currency gains (losses), changes in law, and relative changes of expenses or losses for which tax benefits are not recognized. Additionally, our effective tax rate can be more or less volatile based on the amount of pre-tax income or loss

Factors that impact our income tax provision include, but are not limited to, the mix of jurisdictional earnings and varying jurisdictional income tax rates, establishment and release of valuation allowances in certain jurisdictions, permanent differences resulting from the book and tax treatment of certain items, and discrete items. Future changes in tax laws or tax rulings may have a significant adverse impact on our effective tax rate.

As of each reporting date, management considers all evidence, both positive and negative, that could impact our view with regards to future realization of deferred tax assets. As of December 31, 2015 and June 30, 2015, we continue to maintain a valuation allowance on our U.S. deferred tax assets $26.9 million due to the limitation in our ability to utilize foreign tax credit carryforwards prior to the expiration of the carryforward periods.

We are subject to periodic changes in the amount of our income tax provision and these changes could adversely affect our operating results; we may not be able to utilize all of our tax benefits before they expire.

Our effective tax rate could be adversely affected by our mix of earnings in countries with high versus low tax rates; by changes in the valuation of our deferred tax assets and liabilities; by a change in our assertion that our foreign earnings are indefinitely reinvested; by the outcomes of examinations, audits or disputes by or with relevant tax authorities; or by changes in tax laws and regulations. There have been several U.S. domestic and international laws which recently expired or were enacted that could continue to have a material adverse impact on our tax expense.

Our ability to utilize certain U.S. tax deferred tax assets is dependent upon generating sufficient taxable income before the expiration of the carryforward period. The decrease in our U.S. taxable income, including recent increases in interest expense resulted in a decrease in the amount of U.S. deferred tax assets considered realizable. Our projections of future taxable income required to fully realize the recorded amount of the net deferred tax asset reflect numerous assumptions about our operating business and investments, and are subject to change as conditions change specific to our operating business, investments or general economic conditions. Adverse changes in certain jurisdictions could result in the need to increase the deferred tax asset valuation allowance resulting in a charge against earnings.

Significant judgment is required to apply the recognition and measurement criteria prescribed in ASC Topic No. 740-10, Income Taxes. In addition, ASC Topic No. 740-10 applies to all income tax positions, including the potential recovery of previously paid taxes which, if settled unfavorably, could adversely impact our provision for income taxes or additional paid-incapital. We record unrecognized tax benefits as liabilities in accordance with ASC Topic No. 740 and adjust these liabilities when our judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the unrecognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available.

Primarily due to the increase in our U.S. debt service obligations resulting from the issuance of additional unsecured senior notes in the aggregate principal amount of $400.0 million during fiscal year 2015 and the issuance of additional

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unsecured senior notes in the aggregate principal amount of $850.0 million in July 2015, management concluded that the ability to access certain amounts of foreign earnings would provide greater flexibility to meet domestic cash flow needs without constraining foreign objectives. Accordingly, in fiscal year 2015 we withdrew the permanent reinvestment assertion on $350.0 million of earnings generated by certain of our foreign subsidiaries through fiscal year 2015. We provided for U.S. income taxes on the $350.0 million of undistributed foreign earnings, resulting in the recognition of a deferred tax liability of approximately $123.7 million. During the three and six months ended December 31, 2015, we recognized a deferred income tax expense of $4.5 million and $2.9 million, respectively, related to the impact of fluctuations in foreign currency exchanges rates on the portion of the $350.0 million of unremitted earnings generated prior to fiscal year 2015.

We have not provided for U.S. federal or foreign income taxes, including withholding taxes, on the remaining $840.7 million of undistributed earnings of our foreign subsidiaries as of December 31, 2015. We continue to assert that the $840.7 million of undistributed earnings is permanently reinvested in our foreign operations and have no current plans to repatriate those earnings. If we were to distribute those earnings in the form of dividends or otherwise, we could be subject to both U.S. income and foreign taxes and withholding taxes payable to various foreign countries. It is currently not practicable to compute the residual taxes due on such earnings as we do not know the time or manner in which we would distribute these earnings.

Liquidity and Capital Resources

Our principal sources of cash include cash generated from operations and the proceeds from the issuance of the senior unsecured notes. Our principal uses of cash have been, and we expect them to continue to be, for business combinations, debt service, dividends, stock repurchases, capital expenditures and working capital.

As of December 31, 2015, we had cash and cash equivalents of $470.5 million. At December 31, 2015, our total current and long-term debt obligations were $3.1 billion, consisting of $1.7 billion related to our senior unsecured notes due 2021 (the “2021 Senior Notes”) and $1.4 billion related to our senior unsecured notes due 2023 (the “2023 Senior Notes”).

On July 16, 2015, we issued additional 2023 Senior Notes in the aggregate principal amount of $850.0 million. The additional 2023 Senior Notes were issued at an original issue price of 99.500% plus accrued interest from May 1, 2015. The net proceeds from the issuance of the additional 2023 Senior Notes of $842.5 million were used to finance the SRS Equity Buyout and repay the $200.0 million unsecured term loan due May 2016. We intend to use any remaining net proceeds for general corporate purposes, including continuing to actively seek, evaluate and potentially pursue strategic initiatives. Such strategic initiatives may include future acquisitions, joint ventures, investments or other business development opportunities.

In connection with the pending Merger, the Company commenced cash tender offers for the 2021 Senior Notes and the 2023 Senior Notes (collectively, the "Notes"). Noteholders that validly tender their Notes by January 28, 2016 (the “Early Tender Date”) will receive an amount equal to $1,012.50 per $1,000.00 in principal amount of Notes, which includes an early participation premium of $50.00 per $1,000.00 in principal amount. Noteholders that validly tender their Notes by January 29, 2016 (the “Expiration Date”) will receive an amount equal to $962.50 per $1,000.00 in principal amount of Notes. Consummation of the tender offer and payment for the Notes validly tendered pursuant to the tender offer are subject to the satisfaction of certain conditions, including, but not limited to, the receipt of requisite consents, the consummation of the Merger and financing conditions.

Concurrently with the commencement of the tender offer, the Company commenced the requisite change of control redemption offer for the Notes at a redemption price equal to 101.000% of the principal amount of the notes redeemed, plus accrued and unpaid interest, if any, through the redemption date ("Change of Control Offer").

As of January 6, 2016, the Company has received tenders and consents from holders of $1,680.7 million in aggregate principal amount of the 2021 Senior Notes, representing approximately 99.7% of the total outstanding principal amount of the 2021 Senior Notes, and tenders and consents from holders of $1,413.8 million in aggregate principal amount of the 2023 Notes, representing approximately 99.9% of the total outstanding principal amount of the 2023 Notes.

The Company has received the requisite consents in respect of the Notes to amend the respective indentures governing the Notes. As a result, the Company and the Trustee executed supplemental indentures relating to each of the 2021 Notes and the 2023 Notes on November 20, 2015 ("Supplemental Indentures").  Upon the effectiveness of the Supplemental Indentures, the Company will no longer have an obligation to make the Change of Control Offer.  As a result, the Company terminated the Change of Control Offer.

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The 2021 Senior Notes include redemption provisions that allow us, at our option, to redeem all or a portion of the aggregate principal amount of the 2021 Senior Notes as follows:

• At any time prior to June 15, 2016, we may redeem up to 35% of the aggregate principal amount of the 2021 Senior Notes at a redemption price equal to 106.000% of the principal amount of the notes redeemed, plus accrued and unpaid interest, if any, through the date of redemption.

• At any time prior to June 15, 2017, we may redeem the 2021 Senior Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the notes redeemed plus a premium and accrued and unpaid interest to the redemption date. The premium at the applicable redemption date is the greater of: (1) 1.0% of the then outstanding principal amount of the notes; or (2) the excess of: (a) the present value at such redemption date of the sum of the redemption price of the notes at June 15, 2017 plus all required interest payments due on the notes through June 15, 2017 (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over (b) the then outstanding principal amount of the notes.

• At any time on or after June 15, 2017, we may redeem the 2021 Senior Notes, in whole or in part, at the following redemption prices, plus accrued and unpaid interest, if any, through the date of redemption: (i) if the redemption occurs on or after June 15, 2017 but prior to June 15, 2018, the redemption price is 103.000% of the principal amount of the notes; (ii) if the redemption occurs on or after June 15, 2018 but prior to June 15, 2019, the redemption price is 101.500% of the principal amount of the notes; and (iii) if the redemption occurs on or after June 15, 2019, the redemption price is 100% of the principal amount of the notes.

The 2023 Senior Notes include redemption provisions that allow us, at our option, to redeem all or a portion of the aggregate principal amount of the 2023 Senior Notes as follows:

• At any time prior to November 1, 2016, we may redeem up to 35% of the aggregate principal amount of the 2023 Senior Notes at a redemption price equal to 106.125% of the principal amount of the notes redeemed, plus accrued and unpaid interest, if any, through the date of redemption.

• At any time prior to November 1, 2018, we may redeem the 2023 Senior Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the notes redeemed plus a premium and accrued and unpaid interest to the redemption date. The premium at the applicable redemption date is the greater of: (1) 1.0% of the then outstanding principal amount of the notes; or (2) the excess of: (a) the present value at such redemption date of the sum of the redemption price of the notes at November 1, 2018 plus all required interest payments due on the notes through November 1, 2018 (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points over (b) the then outstanding principal amount of the notes.

• At any time on or after November 1, 2018, we may redeem the 2023 Senior Notes, in whole or in part, at the following redemption prices, plus accrued and unpaid interest, if any, through the date of redemption: (i) if the redemption occurs on or after November 1, 2018 but prior to November 1, 2019, the redemption price is 103.063% of the principal amount of the notes; (ii) if the redemption occurs on or after November 1, 2019 but prior to November 1, 2020, the redemption price is 102.042% of the principal amount of the notes; (iii) if the redemption occurs on or after November 1, 2020 but prior to November 1, 2021, the redemption price is 101.021% of the principal amount of the notes; and (iv) if the redemption occurs on or after November 1, 2021, the redemption price is 100.000% of the principal amount of the notes.

The indentures governing the 2021 Senior Notes and the 2023 Senior Notes contain limited covenants, including those restricting our and our subsidiaries’ ability to incur certain liens, engage in sale and leaseback transactions and consolidate, merge with, or convey, transfer or lease substantially all of our or their assets to, another person, and, in the case of any of our subsidiaries that did not issue or guarantee such notes, incur indebtedness. We are in compliance with the specified covenants of the 2021 Senior Notes and the 2023 Senior Notes at December 31, 2015.

The noncontrolling stockholders of certain of our subsidiaries have the right to require us to redeem their shares. We do not have any indication that the exercise of any remaining redemption rights is probable within the next twelve months. Further, we do not believe the occurrence of conditions precedent to the exercise of certain of these redemption rights is probable within the next twelve months. If the stockholders exercise their redemption rights within the next twelve months, we believe that we have sufficient liquidity to fund such redemptions.

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In November 2014, our Board of Directors approved a new share repurchase program, replacing the share repurchase program authorized in October 2013, for up to a total of $375 million of our common stock through December 31, 2016. Share repurchases are made from time to time, through an accelerated stock purchase agreement, in open market transactions at prevailing market prices or in privately negotiated transactions. The repurchase program does not require us to purchase any specific number or amount of shares, and the timing and amount of such purchases will be determined by management based upon market conditions and other factors. In addition, the program may be amended or terminated at the discretion of our Board of Directors. Through December 31, 2015, we have repurchased approximately 1.6 million shares for $78.8 million under the share repurchase program approved by our Board of Directors in November 2014.

On December 3, 2015, we paid a quarterly cash dividend with a value of $0.225 per outstanding share of common stock and per outstanding restricted stock unit to our stockholders and restricted stock unit holders of record on November 19, 2015. The aggregate dividend payments for the six months ended December 31, 2015 were $30.5 million.

We believe that our existing cash on hand and cash flow from operations will be sufficient to fund currently anticipated working capital and debt service requirements, as well as investment of capital in acquisition and other strategic and investment opportunities, including the investment of capital pursuant to our Mission 2020 goal, for at least the next twelve months.

Our management believes that our cash is best utilized by investing in the future growth of our business to support the achievement of our Mission 2020 goal, either through acquisitions or penetration of new geographic markets and other strategic opportunities, and maximizing stockholder return through the payment of cash dividends and stock repurchases. We regularly review acquisition and other strategic opportunities, which may require additional debt or equity financing. If we raise additional funds by issuing equity securities, further dilution to our then-existing stockholders may result. Additional debt financing may include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Any equity or debt financing may contain terms, such as liquidation and other preferences, that are not favorable to us or our stockholders.

Our foreign subsidiaries generate earnings that are not subject to U.S. income taxes so long as they are permanently reinvested in our operations outside of the U.S. Pursuant to ASC Topic No. 740-30 (formerly APB 23), undistributed earnings of foreign subsidiaries that are no longer permanently reinvested would become subject to deferred income taxes under U.S. tax law. Prior to fiscal year 2015, we asserted that the undistributed earnings of our foreign subsidiaries were permanently reinvested.

Primarily due to the increase in our U.S. debt service obligations resulting from the issuance of additional unsecured senior notes in the aggregate principal amount of $400.0 million during fiscal year 2015 and the issuance of additional unsecured senior notes in the aggregate principal amount of $850.0 million in July 2015, management concluded that the ability to access certain amounts of foreign earnings would provide greater flexibility to meet domestic cash flow needs without constraining foreign objectives. Accordingly, in the fourth quarter of fiscal year 2015 we withdrew the permanent reinvestment assertion on $350.0 million of earnings generated by certain of our foreign subsidiaries through fiscal year 2015.

There is no certainty as to the timing of when such foreign earnings will be distributed to the U.S. in whole or in part. Further, when the foreign earnings are distributed to the U.S., we anticipate that a substantial portion of the resulting U.S. income taxes due would be reduced by existing deferred tax assets.

We have not provided for U.S. federal or foreign income taxes, including withholding taxes, on the remaining $840.7 million of undistributed earnings of our foreign subsidiaries as of December 31, 2015. We continue to assert that the $840.7 million of undistributed earnings is permanently reinvested in our foreign operations and have no current plans to repatriate those earnings. If we were to distribute those earnings in the form of dividends or otherwise, we could be subject to both U.S. income and foreign taxes and withholding taxes payable to various foreign countries. It is currently not practicable to compute the residual taxes due on such earnings as we do not know the time or manner in which we would distribute these earnings.

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The following summarizes our primary sources and uses of cash in the periods presented (in millions):

	Six Months Ended December 31,
	2015			2014			Change
Operating activities	$	(2.0	)	$	79.9		$	(81.9	)
Investing activities	(46.7		)	(803.3		)	756.6
Financing activities	26.0			293.0			(267.0		)

Operating activities. The $81.9 million decrease in cash provided by operating activities was primarily attributable to increases in payments of contingent purchase consideration that is considered compensatory in nature and interest payments on our senior unsecured notes.

Investing activities. The $756.6 million decrease in cash used in investing activities was primarily attributable to a decrease in cash used to acquire businesses of $752.9 million and a decrease in capital expenditures of $10.5 million, partially offset by an increase in acquisitions and capitalization of intangible assets of $4.8 million.

Financing activities. The $267.0 million decrease in cash provided by financing activities is primarily attributable to the use of the net proceeds from the issuance of the 2023 Senior Notes in July 2015 of $842.0 million to acquire the remaining equity ownership interest in SRS of $619.8 million and the repayment of the unsecured term loan of $200.0 million, whereas cash provided by financing activities for the six months ended December 31, 2014 includes the net proceeds from the issuance of additional senior unsecured notes of $416.3 million, partially offset by repurchase of approximately 1.5 million shares for $82.8 million under our share repurchase programs.

Off-Balance Sheet Arrangements and Related Party Transactions

As of December 31, 2015, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Certain minority stockholders of our international subsidiaries are also commercial purchasers and users of our software and services. Revenue transactions with all of the individual minority stockholders in the aggregate were less than 10% of our consolidated revenue for the six months ended December 31, 2015 and 2014, respectively, and aggregate accounts receivable from the minority stockholders represent less than 10% of consolidated accounts receivable at December 31, 2015 and June 30, 2015, respectively.

On February 12, 2013, we entered into a Facilities Use Agreement with Aquila Family Ventures, LLC (“AFV"), an entity owned by the family of our Chief Executive Officer, Tony Aquila, pursuant to which we shall pay AFV a fixed annual fee of $140,000 in exchange for our use during calendar year 2013 of certain guest ranch facilities in Wyoming (the "Wyoming Facility"). On December 26, 2013, we executed an amendment to the Facilities Use Agreement with AFV and Chaparral Lane Investment, LLC ("CLI"), an entity owned by our Chief Executive Officer and his family, to (i) add an additional facility in Roanoke, Texas (the "Roanoke Facility") to the Facilities Use Agreement and (ii) increase the fixed annual fee to $170,000 in exchange for our use during calendar year 2014 of the Wyoming Facility. This fee increase is due to increased operating expenses of the Wyoming Facility and an increase in the number of days during which we use the Wyoming Facility. On December 31, 2014, we executed another amendment to the Facilities Use Agreement to: (i) increase the fixed annual fee paid by us to AFV for our use of the Wyoming Facility to $272,250, and (ii) provide for a true-up payment by us to AFV to the extent that our actual use of the Wyoming Facility during a calendar year exceeds the assumed use for that calendar year, which assumed use was a basis for the fixed annual fee. The true-up payment paid by us to AFV for calendar year 2015 was $101,640.

On April 7, 2015, we entered into a Lease Agreement with CLI where we lease the Roanoke Facility. We have been using the Roanoke Facility since 2013 pursuant to the terms of the Facilities Use Agreement. We use the Roanoke Facility for various purposes, including: research and development; global employee meetings, training and team building; and functions intended to foster client, partner and vendor relations as well as business and corporate development. The Lease Agreement provides us with continued, exclusive, long-term rights to use the Roanoke Facility and protects our investment in the improvements to the Roanoke Facility. The Lease Agreement has term of 20 years with an additional five-year extension option. The monthly lease payment is $10,000.

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Critical Accounting Policies and Estimates

Our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). The preparation of these financial statements requires us to make estimates and judgments that affect the amounts reported in our consolidated financial statements. On an ongoing basis, we evaluate estimates. We base our estimates on historical experiences and assumptions which we believe to be reasonable under the circumstances. These estimates form the basis for our judgments that affect the amounts reported in the consolidated financial statements. Actual results could differ from our estimates under different assumptions or conditions. Our significant accounting policies, which may be affected by our estimates and assumptions, are more fully described in Note 2 to our audited consolidated financial statements for the year ended June 30, 2015 and our critical accounting policies are more fully described in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” each of which are included in our Annual Report on Form 10-K for the year ended June 30, 2015 filed with the SEC on August 31, 2015. There have been no significant changes in our critical accounting policies and estimates during the six months ended December 31, 2015.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Foreign Currency Risk

We conduct operations in many countries around the world. As a result, our results of operations are subject to both currency transaction risk and currency translation risk. We incur currency transaction risk when we enter into either a purchase or sale transaction using a currency other than the local functional currency. With respect to currency translation risk, our financial condition and results of operations are measured and recorded in the relevant local functional currency and then translated into U.S. dollars for inclusion in our consolidated financial statements.

Exchange rates between most of the major foreign currencies we use to transact our business and the U.S. dollar have fluctuated significantly over the last few years and we expect that they will continue to fluctuate. The majority of our revenues and costs are denominated in Euros, Pound Sterling, Swiss francs, Canadian dollars and other foreign currencies. The following table provides the average quarterly exchange rates for the Euro and Pound Sterling since the beginning of fiscal year 2015:

Period	Average Euro-to-U.S. Dollar Exchange Rate		Average Pound Sterling-to-U.S. Dollar Exchange Rate
Quarter ended September 30, 2014	$	1.33	$	1.67
Quarter ended December 31, 2014	$	1.25	$	1.58
Quarter ended March 31, 2015	$	1.13	$	1.52
Quarter ended June 30, 2015	$	1.11	$	1.53
Quarter ended September 30, 2015	$	1.11	$	1.55
Quarter ended December 31, 2015	$	1.10	$	1.52

During the three months ended December 31, 2015 as compared to the three months ended December 31, 2014, the U.S. dollar strengthened against most major foreign currencies we use to transact our business. The average U.S. dollar strengthened versus the Euro by 12.3% and the Pound Sterling by 4.1%, which decreased our revenues and expenses for the three months ended December 31, 2015. A hypothetical 5% increase or decrease in the U.S. dollar versus other currencies in which we transact our business would have resulted in an increase or decrease, as the case may be, to our revenues of $7.7 million and $15.5 million during the three and six months ended December 31, 2015.

The following is a summary of outstanding derivative financial instruments that are relevant to our exposure to foreign currency risk:

• In April 2012, we entered into two pay fixed Euros / receive fixed U.S. dollars cross-currency swaps in the aggregate notional amount of €109.0 million. We pay Euro fixed coupon payments at 6.990% and receive U.S. dollar fixed coupon payments at 6.750% on the notional amount. The maturity date of the swaps is June 15, 2018. These cross-currency swaps were designated, at inception, as cash flow hedges and we evaluate the swaps for effectiveness quarterly. We report the effective portion of the gain or loss on these hedges as a component of accumulated other comprehensive income (loss) in stockholders' equity and reclassify these gains or losses into earnings when the hedged transaction affects earnings. To date, there has been no hedge ineffectiveness.

• In November 2014, we entered into a pay fixed Euros / receive fixed U.S. dollars cross-currency swap with a notional amount of €401.6 million. Under the terms of the cross-currency swap, we pay Euro fixed coupon payments at 4.993% and receive U.S. dollar fixed coupon payments at 6.000% on the notional amount. The maturity date of the cross-currency swap is June 15, 2021. The cross-currency swap was not designated as a hedge at inception. We recognize changes in the fair value of the cross-currency swap in other (income) expense, net in our consolidated statements of income (loss).

• In March 2015, we entered into a pay fixed Euros / receive fixed U.S. dollars cross-currency swap with a notional amount of €174.8 million. Under the terms of the cross-currency swap, we pay Euro fixed coupon payments at 4.725% and receive U.S. dollar fixed coupon payments at 6.000% on the notional amount. The maturity date of the cross-currency swap is June 15, 2021. The cross-currency swap was designated as a net investment hedge at inception. We report the effective portion of the gain or loss on these hedges as a component of accumulated other comprehensive income (loss) in stockholders' equity and reclassify these gains or losses into earnings when the hedged transaction

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affects earnings. In October 2015, we de-designated the cross-currency swap as a net investment hedge. Upon de-designation, we recognize changes in the fair value of the cross-currency swap in other (income) expense, net in our consolidated statements of income (loss).

• In March 2015, we entered into a foreign exchange forward contract with a notional amount of €472.9 million. Under the terms of the forward contract, we pay predetermined forward rate on the settlement date. The foreign exchange forward contract was not designated as a hedge at inception. We recognize changes in the fair value in other (income) expense, net in our consolidated statements of income. In July 2015, we partially settled the foreign exchange forward contract for a cash payment of $8.9 million which is reported in other (income) expense, net in our consolidated statements of income (loss). Settlement of the remaining foreign exchange forward contract with a notional amount of €235.8 million was extended to July 2016.

• In July 2015, we entered into two pay fixed Euros / receive fixed U.S. dollars cross-currency swaps, each with a notional amount of €137.0 million. Under the terms of the cross-currency swaps, we pay Euro fixed coupon payments at 5.135% and receive U.S. dollar fixed coupon payments at 6.125% on the notional amount. The maturity date of the cross-currency swaps is November 1, 2018. One of the cross-currency swaps was designated as a net investment hedge at inception and one was not designated as a hedge at inception. We report the effective portion of the gain or loss on the cross-currency swap designated as a net investment hedge as a component of accumulated other comprehensive income (loss) in stockholders' equity and reclassify these gains or losses into earnings when the hedged transaction affects earnings. In October 2015, we de-designated the cross-currency swap as a net investment hedge. Upon de-designation, we recognize changes in the fair value of both cross-currency swaps in other (income) expense, net in our consolidated statements of income (loss).

• In July 2015, we entered into a pay fixed Euros / receive fixed U.S. dollars cross-currency swap with a notional amount of €274.0 million. Under the terms of the cross-currency swap, we pay Euro fixed coupon payments at 5.585% and receive U.S. dollar fixed coupon payments at 6.125% on the notional amount. The maturity date of the cross-currency swap is November 1, 2023. The cross-currency swap was not designated as a hedge at inception. We recognize changes in the fair value of the cross-currency swap in other (income) expense, net in our consolidated statements of income (loss).

Interest Rate Risk

Our outstanding long-term debt as of December 31, 2015 consists entirely of senior unsecured notes that bear interest at a fixed interest rate. Accordingly, we are not subject to interest rate risk on our indebtedness. However, in November 2014, we entered into a pay floating / received fixed interest rate swap with a notional amount of $400.0 million. Under the terms of the interest rate swap, we pay quarterly floating coupon payments at 3-month LIBOR plus 3.924% and receive semi-annual fixed coupon payments at 6.000%. The maturity date of the interest rate swap is June 15, 2021, although the swap may be terminated at any time effective June 15, 2017 by the counterparty subject to the payment of a cancellation fee. The interest rate swap was not designated as a hedge at inception. We recognize changes in the fair value of the interest rate swap in other (income) expense, net in our consolidated statements of income.

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ITEM 4. CONTROLS AND PROCEDURES.

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required financial disclosures. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures and, based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of December 31, 2015 at the reasonable assurance level.

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures will prevent all error or all fraud. A control system can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Solera have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the control. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Controls

We did not identify any changes in our internal control over financial reporting that occurred during the second quarter of fiscal year 2016, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In the normal course of business, various claims, charges and litigation are asserted or commenced against us, including:

• We have been the subject of allegations that our repair estimating and total loss software and services produced results that favored our insurance company customers, one of which is the subject of pending litigation.

• We are subject to assertions by our customers and strategic partners that we have not complied with the terms of our agreements with them or our agreements with them are not enforceable.

• We are subject to claims that (i) the members of our Board breached their fiduciary duties by approving the Merger Agreement at an inadequate price and following an inadequate sale process, and that we, Vista, Parent and Merger Sub aided and abetted these alleged breaches of duty, and (ii) the disclosures contained in the preliminary version of our proxy statement related to the Merger misstated or failed to disclose certain allegedly material information to our stockholders.

We have and will continue to vigorously defend ourselves against these claims. We believe that final judgments, if any, which may be rendered against us in current litigation, are adequately reserved for, covered by insurance or would not have a material adverse effect on our financial position.

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ITEM 1A. RISK FACTORS

In addition to the cautionary statement regarding forward-looking statements included above in this Quarterly Report on Form 10-Q, we also provide the following cautionary discussion of risks and uncertainties relevant to our business. These risks and uncertainties, as well as other factors that we may not be aware of, could cause our actual results to differ materially from expected and historical results and could cause assumptions that underlie our business plans, expectations and statements in this Quarterly Report on Form 10-Q to be inaccurate.

If the Merger does not occur, it could have a material adverse effect on our business, results of operations, financial condition and stock price.

Completion of the Merger is subject to the satisfaction of various conditions, including (a) the absence of any law or order prohibiting the Merger or the other transactions contemplated by the Merger Agreement, (b) the accuracy of each party’s representations and warranties (subject to customary materiality qualifiers) and (c) each party’s performance of its obligations and covenants contained in the Merger Agreement. There is no assurance that all of the various conditions will be satisfied, or that the Merger will be completed on the proposed terms, within the expected timeframe, or at all. The Merger Agreement contains certain termination rights for both the Company and Parent, including, among others, if the transactions contemplated by the Merger Agreement are not consummated on or before March 15, 2016.  

The Merger gives rise to inherent risks that include:

• potential stockholder litigation that could prevent or delay the Merger or otherwise negatively impact our business and operations;

• the price of our common stock will change if the Merger is not completed to the extent that the current market price of our stock reflects an assumption that the Merger will be completed;

• the amount of cash to be paid under the agreement governing the Merger is fixed and will not be adjusted for changes in our business, assets, liabilities, prospects, outlook, financial condition or results of operations or in the event of any change in the market price of, analyst estimates of, or projections relating to, our common stock;

• the ability of Vista and its affiliates to obtain the necessary funds to complete the Merger;

• the possibility of disruption to our business, including increased costs and diversion of management time and resources;

• difficulties maintaining business and operational relationships, including relationships with customers, suppliers, and other business partners;

• the inability to attract and retain key personnel pending consummation of the Merger;

• the inability to pursue alternative business opportunities or make changes to our business pending the completion of the Merger;

• the requirement to pay a termination fee of $114.4 million and/or reimburse Parent’s expenses up to $5.0 million if we terminate the agreement governing the Merger under certain circumstances;

• developments beyond our control including, but not limited to, changes in domestic or global economic conditions that may affect the timing or success of the Merger;

• potential disputes between us and Vista regarding satisfaction of or compliance with the terms and conditions of the Merger Agreement; and

• the risk that if the Merger is not completed, the market price of our common stock could decline, investor confidence could decline, shareholder litigation could be brought against us, relationships with customers, suppliers and other business partners may be adversely impacted, we may be unable to retain key personnel, and profitability may be adversely impacted due to costs incurred in connection with the proposed Merger.

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We depend on a limited number of customers for a substantial portion of our revenues, and the loss of, or a significant reduction in volume from, any of these customers would harm our financial results.

We derive a substantial portion of our revenues from sales to large insurance companies and collision repair facilities that have relationships with these insurance companies. During the six months ended December 31, 2015, we derived 14.7% of our revenues from our ten largest insurance company customers. The largest three of these customers accounted for 2.9%, 2.6%, and 2.3%, respectively, of our revenues during the six months ended December 31, 2015. A loss of one or more of these customers would result in a significant decrease in our revenues, including the business generated by collision repair facilities associated with those customers. Furthermore, many of our arrangements with European customers are terminable by them on short notice or at any time. In addition, disputes with customers may lead to delays in payments to us, terminations of agreements or litigation. Additional terminations or non-renewals of customer contracts or reductions in business from our large customers would harm our business, financial condition and results of operations.

Our industry is highly competitive, and our failure to compete effectively could result in a loss of customers and market share, which could harm our revenues and operating results.

The markets for our automobile insurance claims processing software and services are highly competitive. In the United

States, our principal competitors are CCC Information Services Group Inc. and Mitchell International Inc. In Europe, our principal competitors are EurotaxGlass’s Group, DAT GmbH and GT Motive Enisa Group. Mitchell International recently consummated a strategic relationship with GT Motive Einsa Group, including an equity investment. We also encounter regional or country-specific competition in the markets for automobile insurance claims processing software and services and our other products and services. For example Experian® is our principal competitor in the United Kingdom in the vehicle validation market, car.tv is our principal competitor in Germany in the online salvage vehicle disposition market and ChoicePoint is our principal competitor in the United States in the automobile reunderwriting solutions market. The principal competitors of SRS in the U.S. service, repair and maintenance software and solutions market are ALLDATA and the Mitchell 1 repair manuals. The principal competitor of our I&S business is Safelite Solutions and the principle competitors to CAP are Kee Resources and Glass's Guide. If one or more of our competitors develop software or services that are superior to ours or are more effective in marketing their software or services, our market share could decrease, thereby reducing our revenues. In addition, if one or more of our competitors retain existing or attract new customers for which we have developed new software or services, we may not realize expected revenues from these new offerings, thereby reducing our profitability.

Some of our current or future competitors may have or develop closer customer relationships, develop stronger brands, have greater access to capital, lower cost structures and/or more attractive system design and operational capabilities than we have. Consolidation within our industry could result in the formation of competitors with substantially greater financial, management or marketing resources than we have, and such competitors could utilize their substantially greater resources and economies of scale in a manner that affects our ability to compete in the relevant market or markets. As a result of consolidation, our competitors may be able to adapt more quickly to new technologies and customer needs, devote greater resources to promoting or selling their products and services, initiate and withstand substantial price competition, expand into new markets, hire away our key employees, change or limit access to key information and systems, take advantage of acquisition or other strategic opportunities more readily and develop and expand their product and service offerings (including those products and services that may compete with our risk and asset management platform and our “digital garage” product) more quickly than we can. In addition, our competitors may form strategic or exclusive relationships with each other, such as the equity interest in GT Motive purchased by Mitchell International, and with other companies in attempts to compete more successfully against us. These relationships may increase our competitors’ ability, relative to ours, to address customer needs with their software and service offerings, which may enable them to rapidly increase their market share.

Moreover, many insurance companies have historically entered into agreements with automobile insurance claims processing service providers like us and our competitors whereby the insurance company agrees to use that provider on an exclusive or preferred basis for particular products and services and agrees to require collision repair facilities, independent

assessors and other vendors to use that provider. If our competitors are more successful than we are at negotiating these exclusive or preferential arrangements, we may lose market share even in markets where we retain other competitive advantages.

In addition, our insurance company customers have varying degrees of in-house development capabilities, and one or more of them have expanded and may seek to further expand their capabilities in the areas in which we operate. Many of our customers are larger and have greater financial and other resources than we do and could commit significant resources to product development. Our software and services have been, and may in the future be, replicated by our insurance company customers in-house, which could result in our loss of those customers and their associated repair facilities, independent assessors and other vendors, resulting in decreased revenues and net income.

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The time and expense associated with switching from our competitors’ software and services to ours may limit our growth.

The costs for an insurance company to switch providers of claims processing software and services can be significant and the process can sometimes take 12 to 18 months to complete. As a result, potential customers may decide that it is not worth the time and expense to begin using our software and services, even if we offer competitive and economic advantages. If we are unable to convince these customers to switch to our software and services, our ability to increase market share will be limited and could harm our revenues and operating results.

Our operating results may be subject to volatility as a result of exposure to foreign currency exchange risks.

We derive most of our revenues, and incur most of our costs, in currencies other than the U.S. dollar, mainly the Euro. In our historical financial statements, we translate our local currency financial results into U.S. dollars based on average exchange rates prevailing during a reporting period for our consolidated statement of income and certain components of stockholders’ equity or the exchange rate at the end of that period for the consolidated balance sheet. These translations resulted in a net foreign currency translation adjustment of $24.1 million and $99.1 million for the six months ended December 31, 2015 and 2014, respectively, which are recorded as a component of accumulated other comprehensive income (loss) in the stockholders' equity. Ongoing global economic conditions have impacted currency exchange rates.

Exchange rates between most of the major foreign currencies we use to transact our business and the U.S. dollar have fluctuated significantly over the last few years and we expect that they will continue to fluctuate. The majority of our revenues and costs are denominated in Euros, Pound Sterling, Swiss francs, Canadian dollars and other foreign currencies. The following table provides the average quarterly exchange rates for the Euro and Pound Sterling since the beginning of fiscal year 2015:

Period	Average Euro-to-U.S. Dollar Exchange Rate		Average Pound Sterling-to-U.S. Dollar Exchange Rate
Quarter ended September 30, 2014	$	1.33	$	1.67
Quarter ended December 31, 2014	$	1.25	$	1.58
Quarter ended March 31, 2015	$	1.13	$	1.52
Quarter ended June 30, 2015	$	1.11	$	1.53
Quarter ended September 30, 2015	$	1.11	$	1.55
Quarter ended December 31, 2015	$	1.10	$	1.52

During the three months ended December 31, 2015 as compared to the three months ended December 31, 2014, the U.S. dollar strengthened against most major foreign currencies we use to transact our business. The average U.S. dollar strengthened versus the Euro by 12.3% and the Pound Sterling by 4.1%, which decreased our revenues and expenses for the three months ended December 31, 2015. A hypothetical 5% increase or decrease in the U.S. dollar versus other currencies in which we transact our business would have resulted in an increase or decrease, as the case may be, to our revenues of $7.7 million and $15.5 million during the three and six months ended December 31, 2015.

The following is a summary of outstanding derivative financial instruments that are relevant to our exposure to foreign currency risk:

• In April 2012, we entered into two pay fixed Euros / receive fixed U.S. dollars cross-currency swaps in the aggregate notional amount of €109.0 million. We pay Euro fixed coupon payments at 6.990% and receive U.S. dollar fixed coupon payments at 6.750% on the notional amount. The maturity date of the swaps is June 15, 2018. These cross-currency swaps were designated, at inception, as cash flow hedges and we evaluate the swaps for effectiveness quarterly. We report the effective portion of the gain or loss on these hedges as a component of accumulated other comprehensive income (loss) in stockholders' equity and reclassify these gains or losses into earnings when the hedged transaction affects earnings. To date, there has been no hedge ineffectiveness.

• In November 2014, we entered into a pay fixed Euros / receive fixed U.S. dollars cross-currency swap with a notional amount of €401.6 million. Under the terms of the cross-currency swap, we pay Euro fixed coupon payments at 4.993% and receive U.S. dollar fixed coupon payments at 6.000% on the notional amount. The maturity date of the cross-

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currency swap is June 15, 2021. The cross-currency swap was not designated as a hedge at inception. We recognize changes in the fair value of the cross-currency swap in other (income) expense, net in our consolidated statements of income (loss).

• In March 2015, we entered into a pay fixed Euros / receive fixed U.S. dollars cross-currency swap with a notional amount of €174.8 million. Under the terms of the cross-currency swap, we pay Euro fixed coupon payments at 4.725% and receive U.S. dollar fixed coupon payments at 6.000% on the notional amount. The maturity date of the cross-currency swap is June 15, 2021. The cross-currency swap was designated as a net investment hedge at inception. We report the effective portion of the gain or loss on these hedges as a component of accumulated other comprehensive income (loss) in stockholders' equity and reclassify these gains or losses into earnings when the hedged transaction affects earnings. In October 2015, we de-designated the cross-currency swap as a net investment hedge. Upon de-designation, we recognize changes in the fair value of the cross-currency swap in other (income) expense, net in our consolidated statements of income (loss).

• In March 2015, we entered into a foreign exchange forward contract with a notional amount of €472.9 million. Under the terms of the forward contract, we pay predetermined forward rate on the settlement date. The foreign exchange forward contract was not designated as a hedge at inception. We recognize changes in the fair value in other (income) expense, net in our consolidated statements of income (loss). In July 2015, we partially settled the foreign exchange forward contract for a cash payment of $8.9 million which is reported in other (income) expense, net in our consolidated statements of income (loss). Settlement of the remaining foreign exchange forward contract with a notional amount of €235.8 million was extended to July 2016.

• In July 2015, we entered into two pay fixed Euros / receive fixed U.S. dollars cross-currency swaps, each with a notional amount of €137.0 million. Under the terms of the cross-currency swaps, we pay Euro fixed coupon payments at 5.135% and receive U.S. dollar fixed coupon payments at 6.125% on the notional amount. The maturity date of the cross-currency swaps is November 1, 2018. One of the cross-currency swaps was designated as a net investment hedge at inception and one was not designated as a hedge at inception. We report the effective portion of the gain or loss on the cross-currency swap designated as a net investment hedge as a component of accumulated other comprehensive income (loss) in stockholders' equity and reclassify these gains or losses into earnings when the hedged transaction affects earnings. In October 2015, we de-designated the cross-currency swap as a net investment hedge. Upon the de-designation, we recognize changes in the fair value of both cross-currency swaps in other (income) expense, net in our consolidated statements of income (loss).

• In July 2015, we entered into a pay fixed Euros / receive fixed U.S. dollars cross-currency swap with a notional amount of €274.0 million. Under the terms of the cross-currency swap, we pay Euro fixed coupon payments at 5.585% and receive U.S. dollar fixed coupon payments at 6.125% on the notional amount. The maturity date of the cross-currency swap is November 1, 2023. The cross-currency swap was not designated as a hedge at inception. We recognize changes in the fair value of the cross-currency swap in other (income) expense, net in our consolidated statements of income (loss).

Further fluctuations in exchange rates against the U.S. dollar could decrease our revenues and associated profits and, therefore, harm our future operating results.

Current uncertainty in global economic conditions makes it particularly difficult to predict product demand, utilization and other related matters and makes it more likely that our actual results could differ materially from expectations.

Our operations and performance depend on worldwide economic conditions, which have deteriorated significantly in many countries where our products and services are sold, and may remain depressed for the foreseeable future. These conditions make it difficult for our customers and potential customers to accurately forecast and plan future business activities, and could cause our customers and potential customers to slow, reduce or refrain from spending on our products. In addition, external factors that affect our business have been and may continue to be impacted by the global economic slowdown. Examples include:

• Number of Insurance Claims Made: In fiscal year 2015, the number of insurance claims made increased slightly versus fiscal year 2014. In several of our large western European markets, the number of insurance claims for vehicle damage submitted by owners to their insurance carriers declined slightly. The number of insurance claims made can be influenced by factors such as unemployment levels, the number of miles driven, rising gasoline prices, the number of uninsured drivers, rising insurance premiums and insured opting for lower coverage or higher deductible levels, among other things. Fewer claims made can reduce the transaction-based fees that we generate.

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• Sales of New and Used Vehicles: According to industry sources, global new light vehicle sales grew by 3.6% in 2014 to 86.3 million units and sales are forecasted to reach 88.3 million units, up by 2.4% in 2015. In markets where automobile insurance is generally government-mandated and claims processing is automated (“advanced markets”), sales are projected to grow at a 0.7% compound annual growth rate from 2014 through 2024. In other markets, sales are projected to grow at a 6.6% compound annual growth rate from 2014 through 2024. Fewer new light vehicle sales can result in fewer insured vehicles on the road and fewer automobile accidents, which can reduce the transaction-based fees that we generate.

• Used Vehicle Retail and Wholesale Values: Declines in retail and wholesale used vehicle values can impact vehicle owner and insurance carrier decisions about which damaged vehicles should be repaired and which should be declared a total loss. The lower the retail and wholesale used vehicle values, the more likely it is that a greater percentage of automobiles are declared a total loss versus a partial loss. The fewer number of vehicles that owners and insurance carriers decide to repair can reduce the transaction-based fees that we generate for partial-loss estimates, but may have a beneficial impact on the transaction-based fees that we generate for total-loss estimates.

• Automobile Usage: Several factors can influence miles driven including gasoline prices and economic conditions. According to industry sources, for calendar year 2014, cumulative miles driven in the United States increased by 2.6% compared to the same period in the prior year. Fewer miles driven can result in fewer automobile accidents, which can reduce the transaction-based fees that we generate.

We may engage in acquisitions, joint ventures, dispositions or similar transactions that could disrupt our operations, cause us to incur substantial expenses, result in dilution to our stockholders and harm our business or results of operations.

Our growth is dependent upon market growth and our ability to enhance our existing products and introduce new products on a timely basis. We have addressed and will continue to address the need to introduce new products both through internal development and through acquisitions of other companies and technologies that would complement or extend our business or enhance our technological capability. In fiscal year 2015, we acquired six businesses, including I&S and CAP, and substantially all of the assets of another business. In fiscal year 2016 to date, we acquired one business, substantially all of the assets of another business and the remaining 50% equity ownership interest in SRS.

Our ability to realize the anticipated benefits of our acquisitions will depend, to a varying extent, on our ability to continue to expand the acquired business' products and services and integrate them with our products and services. Our management will be required to devote significant attention and resources to these efforts, which may disrupt our core business, the acquired business or both and, if executed ineffectively, could preclude realization of the full benefits we expect. Failure to realize the anticipated benefits of our acquisitions could cause an interruption of, or a loss of momentum in, the operations of the acquired business. In addition, the efforts required to realize the benefits of our acquisitions may result in material unanticipated problems, expenses, liabilities, competitive responses, loss of customer relationships, and the diversion of management’s attention, and may cause our stock price to decline. The risks associated with our acquisitions and future acquisitions include:

• adverse effects on existing customer or supplier relationships, such as cancellation of orders or the loss of key customers or suppliers;

• difficulties in integrating or retaining key employees of the acquired company;

• difficulties in integrating the operations of the acquired company, such as information technology resources, and financial and operational data;

• entering geographic or product markets in which we have no or limited prior experience;

• difficulties in assimilating product lines or integrating technologies of the acquired company into our products;

• disruptions to our operations;

• diversion of our management’s attention;

• potential incompatibility of business cultures;

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• potential dilution to existing stockholders if we issue shares of common stock or other securities as consideration in an acquisition or if we issue any such securities to finance acquisitions;

• prohibitions against completing acquisitions as a result of regulatory restrictions or disruptions in connection with regulatory investigations of completed acquisitions;

• limitations on the use of net operating losses or tax benefits;

• negative market perception, which could negatively affect our stock price;

• the assumption of debt and other liabilities, both known and unknown; and

• additional expenses associated with the amortization of intangible assets or impairment charges related to purchased intangibles and goodwill, or write-offs, if any, recorded as a result of the acquisition.

Many of these factors will be outside of our control, and any one of them could result in increased costs, decreases in the amount of expected revenues and diversion of management’s time and energy.

Our merger and acquisition activities are subject to antitrust and competition laws, which laws could impact our ability to pursue strategic transactions. If we were found to violate antitrust and competition laws, we would be subject to various remedies, including divestiture of the acquired businesses.

We participate in joint ventures in some countries and may participate in future joint ventures. Our partners in these ventures may have interests and goals that are inconsistent with or different from ours, which could result in the joint venture taking actions that negatively impact our growth in the local market and consequently harm our business or financial condition. If we are unable to find suitable partners or if suitable partners are unwilling to enter into joint ventures with us, our growth into new geographic markets may slow, which would harm our results of operations.

Additionally, we may finance future acquisitions, and/or additional joint ventures with cash from operations, additional indebtedness and/or the issuance of additional securities, any of which may impair the operation of our business or present additional risks, such as reduced liquidity, or increased interest expense. We may also seek to restructure our business in the future by disposing of certain of our assets, which may harm our future operating results, divert significant managerial attention from our operations and/or require us to accept non-cash consideration, the market value of which may fluctuate.

Failure to implement our acquisition strategy, including successfully integrating acquired businesses, could have an adverse effect on our business, financial condition and results of operations.

Our operating results may vary widely from period to period due to the sales cycle, seasonal fluctuations and other factors.

Our contracts with insurance companies generally require time-consuming authorization procedures by the customer, which can result in additional delays between when we incur development costs and when we begin generating revenues from those software or service offerings. In addition, we incur significant operating expenses while we are researching and designing new software and related services, and we typically do not receive corresponding payments in those same periods. As a result, the number of new software and service offerings that we are able to implement, successfully or otherwise, can cause significant variations in our cash flow from operations, and we may experience a decrease in our net income as we incur the expenses necessary to develop and design new software and services. Accordingly, our quarterly and annual revenues and operating results may fluctuate significantly from period to period.

Our business is subject to seasonal and other fluctuations. In particular, we have historically experienced higher revenues during the second quarter and third quarter versus the first quarter and fourth quarter during each fiscal year. This seasonality is caused primarily by more days of inclement weather during the second quarter and third quarter in most of our markets, which contributes to a greater number of vehicle accidents and damage during these periods. In addition, our business is subject to fluctuations caused by other factors, including the occurrence of extraordinary weather events and the timing of certain public holidays. For example, the Easter holiday occurs during the third quarter in certain fiscal years and occurs during the fourth quarter in other fiscal years, resulting in a change in the number of business days during the quarter in which the holiday occurs.

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We anticipate that our revenues will continue to be subject to seasonality and therefore our financial results will vary from period to period. However, actual results from operations may or may not follow these normal seasonal patterns in a given year leading to performance that is not in alignment with expectations.

We also may experience variations in our earnings due to other factors beyond our control, such as:

• the introduction of new software or services by our competitors;

• customer acceptance of new software or services;

• the volume of usage of our offerings by existing customers;

• variations of vehicle accident rates due to factors such as changes in fuel prices, number of miles driven or new vehicle purchases and their impact on vehicle usage;

• competitive conditions, or changes in competitive conditions, in our industry generally;

• prolonged system failures during which time customers cannot submit or process transactions; or

• prolonged interruptions in our access to third-party data incorporated in our software and services.

We may also incur significant or unanticipated expenses when contracts expire, are terminated or are not renewed. Any of these events could harm our financial condition and results of operations and cause our stock price to decline.

Our industry is subject to rapid technological changes, and if we fail to keep pace with these changes, or our present or future product offerings are diminished or made obsolete in the marketplace, our market share and revenues will decline.

Our industry is characterized by rapidly changing technology, evolving industry standards and frequent introductions of, and enhancements to, existing software and services, all with an underlying pressure to reduce cost. Industry changes could render our present or future product offerings (including but not limited to our risk and asset management platform and our “digital garage” product) less attractive or obsolete, and we may be unable to make the necessary adjustments to our present or future product offerings at a competitive cost, or at all. We also incur substantial expenses in researching, developing, designing, purchasing, licensing and marketing new software and services, including but not limited to our risk and asset management platform and our “digital garage” product. The development or adaptation of these new technologies and products may result in unanticipated expenditures and capital costs that would not be recovered in the event that such new technologies or products are unsuccessful. The research, development, production and marketing of new software and services are also subject to changing market requirements, access to and rights to use third-party data, the satisfaction of applicable regulatory requirements and customers’ approval procedures and other factors, each of which could prevent us from successfully marketing any new software and services or responding to competing technologies. The success of new software in our industry also often depends on the ability to be first to market, and our failure to be first to market with any particular product offering could limit our ability to recover the development expenses associated with such product. If we cannot develop or acquire new technologies, software and services or any of our existing or anticipated future product offerings (including but not limited to our risk and asset management platform and our “digital garage” product) are diminished in value, made less attractive or rendered obsolete by technological changes or present or future competitive products and services in the marketplace, our revenues and income could decline and we may lose market share to our established or new competitors, which would impact our future operations and financial results.

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We are currently making, and anticipate making additional, strategic decisions and investments to leverage and expand our product and service offerings, including offerings in addition to the automotive sector.

We have invested, and expect to continue to invest, significant management attention and financial resources to develop, integrate and implement new business strategies, products, services, features, applications, and functionality (including but not limited to our risk and asset management platform and our "digital garage" product). Such endeavors may involve significant risks and uncertainties, including distraction of management from current core operations, insufficient revenues to offset liabilities assumed and expenses associated with these new investments, inadequate return of capital on our investments, and unanticipated issues or problems that arise during our implementation of such strategies and offerings. Because these new endeavors are inherently risky, our business strategies and product and service offerings may not be successful and may adversely affect our business, financial condition and results of operations.

Some of our strategies and offerings may be outside the insurance claims industry such as our SMR business. CAP and our "digital garage" product), may be outside of the automotive sector (such as our property claims business and our "digital garage" product), or may be consumer-based (such as our "digital garage" product). We have limited historical experience directly serving consumers or customers outside of the automotive sector and our products and services may not be accepted or widely utilized by such consumers or customers. These offerings may also subject us to new or additional laws and regulations (including those relating to consumer protection) and may lead to increased legal and regulatory compliance, risk and liability.

Changes in or violations by us or our customers of applicable government regulations could reduce demand for or limit our ability to provide our software and services in those jurisdictions.

Our insurance company customers are subject to extensive government regulations, mainly at the state level in the United States and at the country level in our non-U.S. markets. Some of these regulations relate directly to our software and services, including regulations governing the use of total loss and estimating software. If our insurance company customers fail to comply with new or existing insurance regulations, including those applicable to our software and services, they could lose their certifications to provide insurance and/or reduce their usage of our software and services, either of which would reduce our revenues. Also, we are subject to direct regulation in some markets, and our failure to comply with these regulations could significantly reduce our revenues or subject us to government sanctions. In addition, future regulations could force us to implement costly changes to our software and/or databases or have the effect of prohibiting or rendering less valuable one or more of our offerings. Moreover, some states in the United States have changed and are contemplating changes to their regulations to permit insurance companies to use book valuations or public source valuations for total loss calculations, making our total loss software potentially less valuable to insurance companies in those states. Some states have adopted total loss regulations that, among other things, require insurers to use a methodology deemed acceptable to the respective government agency.

We submit our methodology to such agencies, and if they do not approve our methodology, we will not be able to perform total loss valuations in their respective states. Other states are considering legislation that would limit the data that our software can provide to our insurance company customers. In the event that demand for or our ability to provide our software and services decreases in particular jurisdictions due to regulatory changes, our revenues and margins may decrease.

There is momentum to create a U.S. federal government oversight mechanism for the insurance industry. There is also legislation under consideration by the U.S. legislature relating to the vehicle repair industry. Federal regulatory oversight of or legislation relating to the insurance industry in the United States could result in a broader impact on our business versus similar oversight or legislation at the U.S. state level.

Regulatory developments could negatively impact our business.

We acquire and distribute personal, public and non-public information, store it in our some of our databases and provide it in various forms to certain of our customers in accordance with applicable law and contracts. We are subject to government regulation and, from time to time, companies in similar lines of business to us are subject to adverse publicity concerning the use of such data. We provide many types of data and services that are subject to regulation under the Fair Credit Reporting Act, Gramm-Leach-Bliley Act, Driver’s Privacy Protection Act, Health Insurance Portability and Accountability Act, the European Union’s Data Protection Directive, the United Kingdom's Financial Services and Markets Act 2000 Order 2001, and, to a lesser extent, various other international, federal, state and local laws and regulations. These laws and regulations are designed to protect the privacy of the public and to prevent the misuse of personal information. Our suppliers that provide us with protected and regulated data face similar regulatory requirements and, consequently, they may cease to be able to provide data to us or may substantially increase the fees they charge us for this data which may make it financially burdensome or impossible for us to acquire data that is necessary to offer our certain of our products and services. Additionally, many

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consumer advocates, privacy advocates, and government regulators believe that the existing laws and regulations do not adequately protect privacy of personal information. They have become increasingly concerned with the use of personal information, particularly social security numbers, department of motor vehicle data and dates of birth. As a result, they are lobbying for further restrictions on the dissemination or commercial use of personal information to the public and private sectors. The following legal and regulatory developments also could have a material adverse effect on our business, financial position, results of operations or cash flows:

• amendment, enactment, or interpretation of laws and regulations which restrict the access, use and distribution of personal information and limit the supply of data available to customers;

• changes in cultural and consumer attitudes to favor further restrictions on information collection and sharing, which may lead to regulations that prevent full utilization of our services;

• failure of our services to comply with current or amended laws and regulations; and

• failure of our services to adapt to changes in the regulatory environment in an operational effective, efficient, cost-effective manner.

We require a significant amount of cash to service our indebtedness, which reduces the cash available to finance our organic growth, make strategic acquisitions and enter into alliances and joint ventures; our bond indentures contain restrictive covenants that limit our ability to engage in certain activities.

We have a significant amount of indebtedness. As of December 31, 2015, our indebtedness, including current maturities, was $3.1 billion, which consists of $1.7 billion related to the 2021 Senior Notes and $1.4 billion related to the 2023 Senior Notes.

During the six months ended December 31, 2015, our aggregate interest expense was $90.6 million. Cash paid for interest during the three months ended December 31, 2015 was $93.6 million. As a result of our issuance of additional unsecured senior notes in November 2014 and July 2015, we expect our interest expense and cash interest expense to increase in fiscal year 2016 as compared to fiscal year 2015.

Our indebtedness could:

• make us more vulnerable to unfavorable economic conditions and reduce our revenues;

• make it more difficult to obtain additional financing in the future for working capital, capital expenditures or other general corporate purposes;

• require us to dedicate or reserve a large portion of our cash flow from operations for making payments on our indebtedness which would prevent us from using it for other purposes including product development;

• to the extent that we have variable rate debt that is not covered by interest rate derivative agreements, make us susceptible to fluctuations in market interest rates that affect the cost of our borrowings; and

• make it more difficult to pursue strategic acquisitions, joint ventures, alliances and collaborations.

Our ability to service our indebtedness will depend on our future performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors. Some of these factors are beyond our control. If we cannot generate sufficient cash flow from operations to service our indebtedness and to meet our other obligations and commitments, we may be required to refinance our debt, to dispose of assets or to repatriate foreign earnings to obtain funds for such purpose. We cannot assure you that debt refinancing or asset dispositions could be completed on a timely basis or on satisfactory terms, if at all, or would be permitted by the terms of our debt instruments. If we were to repatriate foreign earnings, we would incur incremental U.S. federal and state income taxes. 

Our bond indentures contain covenants that restrict our and our subsidiaries' ability to incur certain liens, engage in sale and leaseback transactions and consolidate, merge with, or convey, transfer or lease substantially all of our or their assets to, another person, and, in the case of any of our subsidiaries that did not issue or guarantee our senior notes, incur indebtedness.

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Our failure to comply with any of these covenants could result in the acceleration of our outstanding indebtedness. If acceleration occurs, we would not be able to repay our debt and it is unlikely that we would be able to borrow sufficient additional funds to refinance our debt. Even if new financing is made available to us, it may not be available on acceptable or reasonable terms. An acceleration of our indebtedness would impair our ability to operate as a going concern.

Pursuant to agreements entered into prior to the CSG Acquisition, the noncontrolling stockholders of certain of our majority-owned subsidiaries have the right to require us to redeem their shares at the then fair market value. For financial statement reporting purposes, the estimated fair market value of these redeemable noncontrolling interests was $80.8 million at December 31, 2015.

We are active in over 75 countries, where we are subject to country-specific risks that could adversely impact our business and results of operations.

During the six months ended December 31, 2015, we generated approximately 50% of our revenues outside the U.S. and we expect revenues from non-U.S. markets to continue to represent a majority of our total revenues. Business and operations in individual countries are subject to changes in local government regulations and policies, including those related to tariffs and trade barriers, investments, taxation, currency exchange controls and repatriation of earnings. Our results are also subject to the difficulties of coordinating our activities across over 75 different countries. Furthermore, our business strategy includes expansion of our operations into new and developing markets, which will require even greater international coordination, expose us to additional local government regulations and involve markets in which we do not have experience or established operations. In addition, our operations in each country are vulnerable to changes in socio-economic conditions and monetary and fiscal policies, intellectual property protection disputes, the settlement of legal disputes through foreign legal systems, the collection of receivables through foreign legal systems, exposure to possible expropriation or other governmental actions, unsettled political conditions, possible terrorist attacks and pandemic disease. These and other factors may harm our operations in those countries and therefore our business, financial condition and results of operations.

We have a large amount of goodwill and other intangible assets as a result of acquisitions. Our earnings will be harmed if we suffer an impairment of our goodwill or other intangible assets.

We have a large amount of goodwill and other intangible assets and are required to perform an annual, or in certain situations a more frequent, assessment for possible impairment for accounting purposes. At December 31, 2015, we had goodwill and other intangible assets of $2.8 billion, or approximately 75% of our total assets. If we do not achieve our planned operating results or other factors impair these assets, we may be required to incur a non-cash impairment charge. Any impairment charges in the future will adversely affect our results of operations.

We may incur significant restructuring and severance charges in future periods, which would harm our operating results and cash position or increase debt.

We incurred restructuring charges of $4.6 million and $2.9 million during the six months ended December 31, 2015 and 2014, respectively. These charges consist primarily of relocation and termination benefits paid or to be paid to employees, lease obligations associated with vacated facilities and other costs incurred related to our restructuring initiatives. As of December 31, 2015, our remaining restructuring and severance obligations associated with these restructuring initiatives were $0.2 million.

We regularly evaluate our existing operations and capacity, and we expect to incur additional restructuring charges as a result of future personnel reductions, related restructuring, and productivity and technology enhancements, which could exceed the levels of our historical charges. In addition, we may incur certain unforeseen costs as existing or future restructuring activities are implemented. Any of these potential charges could harm our operating results and significantly reduce our cash position.

Our software and services rely on information generated by third parties and any interruption of our access to such information could materially harm our operating results.

We believe that our success depends significantly on our ability to provide our customers access to data from many different sources. For example, a substantial portion of the data used in our repair estimating software is derived from parts and repair data provided by, among others, original equipment manufacturers, or OEMs, aftermarket parts suppliers, data aggregators, automobile dealerships, government organizations and vehicle repair facilities. We obtain much of our data about vehicle parts and components and collision repair labor and costs through license agreements with OEMs, automobile dealers, and other providers; and we obtain much of our data in our vehicle validation database and motor violation database from

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government organizations. EurotaxGlass’s Group, one of our primary competitors in Europe, provides us with valuation and paint data for use in our European markets pursuant to a similar arrangement. In some cases, the data included in our products and services is licensed from sole-source suppliers. Mitchell International, one of our primary competitors in the United States, has historically provided us with vehicle glass data for use in our U.S. markets pursuant to a vehicle data license agreement. Many of the license agreements through which we obtain data are for terms of one year and may be terminated without cost to the provider on short notice.

If one or more of our licenses are terminated or if we are unable to renew one or more of these licenses on favorable terms or at all, we may be unable to access the information (in the case of information licensed from sole-service suppliers) or unable to access alternative data sources that would provide comparable information without incurring substantial additional costs. Some data sources have indicated to us that they intend to materially increase the licensing costs for their data. While we do not believe that our access to many of the individual sources of data is material to our operations, prolonged industry-wide price increases or reductions in data availability could make receiving certain data more difficult and could result in significant cost increases, which would materially harm our operating results.

System failures, delays and other problems could harm our reputation and business, cause us to lose customers and expose us to customer liability.

Our success depends on our ability to provide accurate, consistent and reliable services and information to our customers on a timely basis. Our operations could be interrupted by any damage to or failure of:

• our computer software or hardware or our customers’ or third-party service providers’ computer software or hardware;

• our networks, our customers’ networks or our third-party service providers’ networks; and

• our connections to and outsourced service arrangements with third parties, such as Acxiom, which hosts data and applications for us and our customers.

Our systems and operations are also vulnerable to damage or interruption from:

• power loss or other telecommunications failures;

• earthquakes, fires, floods, hurricanes and other natural disasters;

• computer viruses or software defects;

• physical or electronic break-ins, sabotage, intentional acts of vandalism and similar events; and

• errors by our employees or third-party service providers.

As part of our ongoing process improvements efforts, we have and will continue to migrate product and system platforms to next generation platforms and we may increase data and applications that we host ourselves, and the risks noted above will be exacerbated by these efforts. Because many of our services play a mission-critical role for our customers, any damage to or failure of the infrastructure we rely on (even if temporary), including those of our customers and vendors, could disrupt our ability to deliver information to and provide services for our customers in a timely manner, which could harm our reputation and result in the loss of current and/or potential customers or reduced business from current customers. In addition, we generally indemnify our customers to a limited extent for damages they sustain related to the unavailability of, or errors in, the software and services we provide; therefore, a significant interruption of, or errors in, our software and services could expose us to significant customer liability.

Fraudulent data access and other security breaches may negatively impact our business and harm our reputation.

Security breaches in our facilities, computer networks, and databases may cause harm to our business and reputation and result in a loss of customers and data suppliers. Our systems may be vulnerable to physical break-ins, computer viruses, attacks by hackers and similar disruptive problems. If users gain improper access to our databases, they may be able to steal, publish, delete or modify confidential third-party information that is stored or transmitted on our networks.

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In addition, customers’ misuse of our information services could cause harm to our business and reputation and result in loss of customers. Any such misappropriation and/or misuse of our information could result in us, among other things, being in breach of certain data protection and related legislation.

A security or privacy breach may affect us in the following ways:

• deterring customers from using our solutions;

• deterring data suppliers from supplying data to us;

• harming our reputation;

• exposing us to liability;

• increasing operating expenses to correct problems caused by the breach;

• affecting our ability to meet customers’ expectations; or

• causing inquiry from governmental authorities.

We may detect incidents in which consumer data has been fraudulently or improperly acquired. The number of potentially affected consumers identified by any future incidents is obviously unknown. Any such incident could materially and adversely affect our business, reputation, financial condition, operating results and cash flows.

Privacy concerns could require us to exclude data from our software and services, which may reduce the value of our offerings to our customers, damage our reputation and deter current and potential users from using our software and services.

In the United States, European Union and other jurisdictions, there are significant restrictions on the use of personal and consumer data. Our violations of these laws could harm our business. In addition, these restrictions may place limits on the information that we can collect from and provide to our customers. Furthermore, concerns about our collection, use or sharing of automobile insurance claims information, moving violation information or other privacy-related matters, even if unfounded, could damage our reputation and operating results.

We depend on a limited number of key personnel who would be difficult to replace. If we lose the services of these individuals, or are unable to attract and retain sufficient numbers of qualified employees to support our present and future operations and business strategy, our business will be adversely affected.

We depend upon the ability and experience of our key personnel, who have substantial experience with our operations, the rapidly changing automobile insurance claims processing industry and the markets in which we offer our software and services. The loss of the services of one or more of our senior executives or key employees, particularly our Chairman of the Board, Chief Executive Officer and President, Tony Aquila, could harm our business and operations.

Our success also depends on our ability to continue to attract, manage and retain qualified management, sales and technical personnel as we grow and implement our present and future business strategy. Particularly, we have a present and anticipated future need to attract, manage and retain sufficient numbers of appropriately qualified personnel to develop and commercialize our risk and asset management platform and our “digital garage” product offering. Competition for such qualified personnel is intense and we may not be able to continue to attract or retain such qualified personnel in the future.

We may require additional capital in the future, which may not be available on favorable terms, or at all.

Our future capital requirements depend on many factors, including our ability to develop and market new software and services and to generate revenues at levels sufficient to cover ongoing expenses or possible acquisition or similar transactions. If we need to raise additional capital, equity or debt financing may not be available at all or may be available only on terms that are not favorable to us. In the case of equity financings, dilution to our stockholders could result, and in any case such securities may have rights, preferences and privileges that are senior to our outstanding common stock. In the case of debt financings, we may have to grant additional security interests in our assets to lenders and agree to restrictive business and operating covenants. If we cannot obtain adequate capital on favorable terms or at all, we may be unable to support future growth or operating requirements and, accordingly, our business, financial condition and results of operations could be harmed.

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Our business depends on our brands, and if we are not able to maintain and enhance our brands, our business and operating results could be harmed.

We believe that the brand identity we have developed and acquired has significantly contributed to the success of our business. We also believe that maintaining and enhancing our brands, such as Solera, Solera Holdings, Audatex, ABZ, Hollander, Informex, Sidexa, HPI, AUTOonline, Market Scan, IMS, Identifix, AutoPoint, LYNX Services, CAP and Explore, are critical to the expansion of our software and services to new customers in both existing and new markets. Maintaining and enhancing our brands may require us to make substantial investments and these investments may not be successful. If we fail to promote and maintain our brands or if we incur excessive expenses in this effort, our business, operating results and financial condition will be harmed. We anticipate that, as our markets become increasingly competitive, maintaining and enhancing our brands may become increasingly difficult and expensive. Maintaining and enhancing our brands will depend largely on our ability to be a technology innovator, to continue to provide high quality software and services and protect and defend our brand names and trademarks, which we may not do successfully. To date, we have not engaged in extensive direct brand promotion activities, and we may not successfully implement brand enhancement efforts in the future.

Third parties may claim that we are infringing upon their intellectual property rights, and we could be prevented from selling our software or suffer significant litigation expense even if these claims have no merit.

Our competitive position is driven in part by our intellectual property and other proprietary rights. Third parties, however, may claim that our software, products or technology, including claims data or other data, which we obtain from other parties, are infringing or otherwise violating their intellectual property rights. We may also develop software, products or technology, unaware of pending patent applications of others, which software products or technology may infringe a third party patent once that patent is issued. Any claims of intellectual property infringement or other violation, even claims without merit, could be costly and time-consuming to defend and could divert our management and key personnel from operating our business. In addition, if any third party has a meritorious or successful claim that we are infringing or violating its intellectual property rights, we may be forced to change our software or enter into licensing arrangements with third parties, which may be costly or impractical. These claims may also require us to stop selling our software and/or services as currently designed, which could harm our competitive position. We also may be subject to significant damages or injunctions that prevent the further development and sale of certain of our software or services and may result in a material loss in revenue. Currently, one of our trademarks is subject to a nullification proceeding in front of the Brazil trademark authority.

We may be unable to protect our intellectual property and property rights, either without incurring significant costs or at all, which would harm our business.

We rely on a combination of trade secrets, copyrights, know-how, trademarks, patents, license agreements and contractual provisions, as well as internal procedures, to establish and protect our intellectual property rights. The steps we have taken and will take to protect our intellectual property rights may not deter infringement, duplication, misappropriation or violation of our intellectual property by third parties. In addition, any of the intellectual property we own or license from third parties may be challenged, invalidated, circumvented or rendered unenforceable, or may not be of sufficient scope or strength to provide us with any meaningful information. Furthermore, because of the differences in foreign patent, trademark and other laws concerning proprietary rights, our software and other intellectual property rights may not receive the same degree of protection in foreign countries as they would in the U.S., if at all. We may be unable to protect our rights in trade secrets and unpatented proprietary technology in these countries. We may also be unable to prevent the unauthorized disclosure or use of our technical knowledge, trade secrets or other proprietary information by consultants, vendors, former employees or current employees, despite the existence of nondisclosure and confidentiality agreements, intellectual property assignments and other contractual restrictions. It is also possible that others will independently develop the technology that is the same or similar to ours. If our trade secrets and other proprietary information become known or we are unable to maintain the proprietary nature of our intellectual property, we may not receive any return on the resources expended to create the intellectual property or generate any competitive advantage based on it.

We rely on our brands to distinguish our products and services from the products and services of our competitors, and have registered or applied to register trademarks covering many of these brands. We cannot assure you that our trademark applications will be approved. Third parties may also oppose our trademark applications, or otherwise challenge our use of the trademarks. In the event that our trademarks are successfully challenged, we could be forced to rebrand our products and services, which could result in loss of brand recognition, and could require us to devote resources to advertising and marketing new brands.

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Third parties, including competitors, may infringe our intellectual property right and we may not have adequate resources to enforce our intellectual property rights. Pursuing infringers of our intellectual property could result in significant monetary costs and diversion of management resources, and any failure to pursue or successfully litigate claims against infringers or otherwise enforce our intellectual property rights could result in competitors using our technology and offering similar products and services, potentially resulting in loss of our competitive advantage and decreased revenues.

Currently, we believe that one or more of our customers in our EMEA segment may be infringing our intellectual property by making and distributing unauthorized copies of our software. We have also filed a trademark revocation application with the European Union trademark authority seeking revocation of a registered trademark held by a company in the United Kingdom that is similar to one of the trademarks we use. Enforcement of our intellectual property rights may be difficult and may require considerable resources.

Our lawsuit against Mitchell International, Inc. for patent infringement will be costly to litigate, could be decided adversely to us, and could adversely affect our intellectual property rights, distract our management and technical staff, and cause our stock price to decline.

On February 6, 2012, we filed a lawsuit against Mitchell International, Inc. in the United States District Court for the District of Delaware for infringement of one of our U.S. patents and we subsequently added an additional two continuation patents to the lawsuit. On February 24, 2015, at Mitchell International’s request, the U.S. Patent and Trademark Office (“USPTO”) instituted a Covered Business Method Patent Review (“CBM”) of the patents at issue in the lawsuit. In so doing, the USPTO preliminarily determined that it is more likely than not that the claims of such patents are not eligible for patent protection. On March 24, 2015, the United States District Court for the Southern District of California, where the lawsuit now resides, issued an order to stay the lawsuit pending the ruling of the USPTO in the CBM proceeding. Oral argument of the CBM proceeding was held before the USPTO on October 19, 2015, and the USPTO is expected to publish its decision regarding the validity of the patents at issue in the CBM proceeding by February 2016.

It is possible that the USPTO may ultimately invalidate or narrow the scope of such patents when it issues its final ruling. If the lawsuit resumes following completion of the CBM, we expect that the lawsuit, if we cannot resolve it before trial, could require a substantial period of time to litigate, and at this stage we cannot predict the duration or cost of such litigation. We also expect that the lawsuit, even if it is ultimately determined in our favor or settled by us on favorable terms, will be costly to litigate, and that the cost of such litigation could have an adverse financial impact on our operating results. The CBM and the litigation could also distract our management team and technical personnel from our other business operations, to the detriment of our business results. It is possible that we might not prevail in the CBM or in our lawsuit against Mitchell International, in which case our costs of litigation would not be recovered, and we could effectively lose some of our patent rights. It is also possible that Mitchell International might respond to our lawsuit by asserting counterclaims against us. Delays in the litigation, and any or all of these potential adverse results, could cause a substantial decline in our stock price.

Current or future litigation could have a material adverse impact on us.

We have been and continue to be involved in legal proceedings, claims and other litigation that arise in the ordinary course of business. For example, we have been involved in disputes with collision repair facilities, acting individually and as a group in some situations that claim that we have colluded with our insurance company customers to depress the repair time estimates generated by our repair estimating software. We have also been involved in litigation alleging that we have colluded with our insurance company customers to cause the estimates of vehicle fair market value generated by our total loss estimation software to be unfairly low. On February 28, 2014, Solera, Explore, and Audatex North America, Inc. were each served with a civil complaint filed against them and another defendant by an insurance company third party claimant in Minnesota state court.  The complaint seeks state-wide class action status for similarly situated claimants, claiming that the defendant’s methodology for determining the value of total loss vehicles violates Minnesota law.  We filed a motion to dismiss on April 18, 2014.  The complaint was subsequently removed to the U.S. District Court for the District of Minnesota and an amended complaint was filed on July 16, 2014. We and our co-defendant moved to dismiss the amended complaint and on October 31, 2014, the Court issued an order dismissing two of the three counts with prejudice and, of the remaining count, dismissing one claim with prejudice and one claim without prejudice.

On September 21, 2015, an alleged stockholder of the Company filed an action in the Court of Chancery of the State of Delaware on behalf of a putative class of the Company’s stockholders against the Company and its directors, Vista, Parent and Merger Sub. The complaint alleges, among other things, that the Company’s directors breached their fiduciary duties by approving the Merger Agreement at an inadequate price and following an inadequate sale process, and that the Company, Vista, Parent and Merger Sub aided and abetted these alleged breaches of duty. The complainant seeks, among other things, either to

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enjoin the proposed transaction or to rescind it should it be consummated, as well as an award of plaintiff’s attorneys’ fees and costs in the action. On October 13, 2015, the defendants moved to dismiss the complaint for failure to state a claim. On October 21, 2015, the plaintiff filed an amended complaint that added allegations contending that the Company’s disclosure contained in the preliminary version the Company’s proxy statement misstated or failed to disclose certain allegedly material information to Company stockholders. On October 22, 2015, the plaintiff filed a motion for a preliminary injunction seeking to enjoin the holding of the Company’s shareholder meeting based upon his claim that the Company’s public disclosures were inadequate. On November 5, 2015, the Court denied the motion for expedited proceedings, and declined to consider plaintiff's motion seeking to enjoin the special meeting. The defendants deny any wrongdoing in connection with the merger and plan to defend vigorously against the claims set forth in the amended complaint and any injunction motion.

On November 17, 2015, a duplicative action was filed in the Court of Chancery of the State of Delaware against our directors on behalf of the same putative class of the Company’s stockholders, alleging similar claims for breach of fiduciary duty and challenging the merger and the disclosures relating to the merger.   On December 23, 2015, the defendants filed a motion to dismiss this action.  That motion remains pending.  The defendants deny any wrongdoing in connection with the merger and plan to defend vigorously against the claims set forth in these actions.

Furthermore, we are also subject to assertions by our customers and strategic partners that we have not complied with the terms of our agreements with them or that the agreements are not enforceable against them, some of which are the subject of pending litigation and any of which could in the future lead to arbitration or litigation. While we do not expect the outcome of any such pending or threatened litigation to have a material adverse effect on our financial position, litigation is unpredictable and excessive verdicts, both in the form of monetary damages and injunction, could occur. In the future, we could incur judgments or enter into settlements of claims that could harm our financial position and results of operations.

We are subject to periodic changes in the amount of our income tax provision (benefit) and these changes could adversely affect our operating results; we may not be able to utilize all of our tax benefits before they expire.

Our effective tax rate could be adversely affected by our mix of earnings in countries with high versus low tax rates; by changes in the valuation of our deferred tax assets and liabilities; by a change in our assertion that our foreign earnings are indefinitely reinvested; by the outcomes of examinations, audits or disputes by or with relevant tax authorities; or by changes in tax laws and regulations.

Significant judgment is required to determine the recognition and measurement attributes prescribed in ASC Topic No. 740-10, Income Taxes. In addition, ASC Topic No. 740-10 applies to all income tax positions, including the potential recovery of previously paid taxes, which if settled unfavorably could adversely impact our provision for income taxes or additional paid-in capital.

We are subject to adverse changes in our liquidity if we initiate action to repatriate unremitted earnings and precipitate payments of U.S. income taxes.

Our foreign subsidiaries generate earnings that are not subject to U.S. income taxes so long as they are permanently reinvested in our operations outside of the U.S. Pursuant to ASC Topic No. 740-30 (formerly APB 23), undistributed earnings of foreign subsidiaries that are no longer permanently reinvested would become subject to deferred income taxes under U.S. tax law. In determining if the undistributed earnings of our foreign subsidiaries are permanently reinvested, we consider the following: (i) the forecasts, budgets and cash requirements of our U.S business and our foreign subsidiaries, both for the short and long term; (ii) the tax consequences of any decision to reinvest foreign earnings, including any changes in U.S. income tax law relating to the treatment of these undistributed foreign earnings; and (iii) any U.S. and foreign government programs or regulations relating to the repatriation of these unremitted earnings. In fiscal year 2015, we have concluded that $350.0 million of our foreign earnings are no longer permanently reinvested, and we have recognized a deferred income taxes on these earnings. If we initiate actions to repatriate these unremitted earnings and precipitate payments of U.S. income taxes, such payments could materially adversely affect our liquidity. We continue to assert that the remaining $840.7 million of undistributed earnings generated through December 31, 2015 is permanently reinvested in our foreign operations and have no current plans to repatriate those earnings.

We began paying dividends in fiscal year 2010 and we may not be able to pay dividends on our common stock and restricted stock units in the future; as a result, your only opportunity to achieve a return on your investment may be if the price of our common stock appreciates.

We began paying quarterly cash dividends to holders of our outstanding of common stock and restricted stock units in the quarter ended September 30, 2009. On January 28, 2016, we announced that the Audit Committee of our Board of Directors

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approved the payment of a quarterly dividend of $0.225 per share of outstanding common stock and per outstanding restricted stock unit. The dividends are payable on the earlier of the closing date of the Merger or March 1, 2016 to stockholders and restricted stock unit holders of record at the close of business on February 11, 2016. Any determination to pay dividends in future periods will be at the discretion of our Board of Directors. Our ability to pay dividends to holders of our common stock and restricted stock units in future periods may be limited by restrictive covenants under the indenture for the senior unsecured notes. As a result, your only opportunity to achieve a return on your investment in us could be if the market price of our common stock appreciates and you sell your shares at a profit. We cannot assure you that the market price for our common stock will ever exceed the price that you pay.

Requirements associated with being a public company increase our costs significantly, as well as divert significant company resources and management attention.

The expenses that are required as a result of being a public company are and will likely continue to be material. Compliance with the various reporting and other requirements applicable to public companies also require considerable time and attention of management. In addition, any changes we make may not be sufficient to allow us to satisfy our obligations as a public company on a timely basis.

We continue to work with our legal, independent accounting and financial advisors to identify those areas in which changes should be made to our financial and management control systems to manage our growth and our obligations as a public company. These areas include corporate governance, corporate control, internal audit, disclosure controls and procedures and financial reporting and accounting systems. We have made, and will continue to make, changes in these and other areas. In addition, we are taking steps to address new U.S. federal legislation relating to corporate governance matters and are monitoring other proposed and recently-enacted U.S. federal and state legislation relating to corporate governance and other regulatory matters and how the legislation could affect our obligations as a public company.

In addition, being a public company could make it more difficult or more costly for us to obtain certain types of insurance, including directors’ and officers’ liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.

Our certificate of incorporation and by-laws contain provisions that could discourage another company from acquiring us and may prevent attempts by our stockholders to replace or remove our current management.

Some provisions of our certificate of incorporation and by-laws may have the effect of delaying, discouraging or preventing a merger or acquisition that our stockholders may consider favorable, including transactions in which stockholders may receive a premium for their shares. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace or remove our board of directors. These provisions include:

• authorization of the issuance of “blank check” preferred stock without the need for action by stockholders;

• the removal of directors only by the affirmative vote of the holders of two-thirds of the shares of our capital stock entitled to vote;

• any vacancy on the board of directors, however occurring, including a vacancy resulting from an enlargement of the board, may only be filled by vote of the directors then in office;

• inability of stockholders to call special meetings of stockholders and limited ability of stockholders to take action by written consent; and

• advance notice requirements for board nominations and proposing matters to be acted on by stockholders at stockholder meetings.

We are monitoring proposed U.S. federal and state legislation relating to stockholder rights and related regulatory matters and how the legislation could affect, among other things, the nomination and election of directors and our charter documents.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

In November 2014, our Board of Directors approved a new share repurchase program, replacing the share repurchase program authorized in October 2013, for up to a total of $375 million of our common stock through December 31, 2016. Share repurchases are made from time to time, through an accelerated stock purchase agreement, in open market transactions at prevailing market prices or in privately negotiated transactions. The repurchase program does not require us to purchase any specific number or amount of shares, and the timing and amount of such purchases will be determined by management based upon market conditions and other factors. In addition, the program may be amended or terminated at the discretion of our Board of Directors. The following table provides the amount of shares repurchased under the repurchase program during each month to date (in thousands, except per share amounts):

	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands)
October 2013 Share Repurchase Program
October 2013 (Authorized Amount)	—	$	—	—	$	200,000
November 2013	136	$	64.73	136	$	191,183
December 2013	14	$	68.43	14	$	190,236
January 2014	—	$	—	—	$	190,236
February 2014	250	$	66.91	250	$	173,503
March 2014	50	$	66.74	50	$	170,165
April 2014	—	$	—	—	$	170,165
May 2014	153	$	66.45	153	$	159,974
June 2014	195	$	65.61	195	$	147,171
July 2014	—	$	—	—	$	147,171
August 2014	35	$	60.81	35	$	145,051
September 2014	465	$	60.58	465	$	116,865
Total	1,298	$	64.03	1,298	$	116,865
November 2014 Share Repurchase Program
November 2014 (Authorized Amount)					$	375,000
November 2014	350	$	53.38	350	$	356,316
December 2014	696	$	48.55	696	$	322,535
January 2015	157	$	47.86	157	$	314,495
February 2015	137	$	54.31	137	$	307,040
March 2015	66	$	51.51	66	$	303,640
May 2015	150	$	49.91	150	$	296,153
June 2015	—	$	—	—	$	296,153
July 2015	—	$	—	—	$	296,153
August 2015	—	$	—	—	$	296,153
September 2015	—	$	—	—	$	296,153
October 2015	—	$	—	—	$	296,153
November 2015	—	$	—	—	$	296,153
December 2015	—	$	—	—	$	296,153
Total	1,556	$	50.66	1,556	$	296,153

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ITEM 6. EXHIBITS.

Exhibit No.	Description
31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Tony Aquila, Chief Executive Officer.
31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Renato Giger, Chief Financial Officer and Treasurer.
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SOLERA HOLDINGS, INC.

/S/    TONY AQUILA

Tony Aquila

Chief Executive Officer and President

(Principal Executive Officer)

/S/    RENATO GIGER

Renato Giger

Chief Financial Officer

(Principal Financial Officer)

January 28, 2016

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