20. Condensed Consolidated Financial Information for Guarantor Subsidiaries and Non-Guarantor Subsidiaries

In 2012 and 2011, Verisk Analytics, Inc. (the “Parent Company”) registered senior notes with full and unconditional and joint and several guarantees by certain of its 100 percent wholly-owned subsidiaries and issued certain other debt securities with full and unconditional and joint and several guarantees by certain of its subsidiaries. Accordingly, presented below is condensed consolidating financial information for (i) the Parent Company, (ii) the guarantor subsidiaries of the Parent Company on a combined basis, and (iii) all other non-guarantor subsidiaries of the Parent Company on a combined basis, as of December 31, 2012 and 2011 and for the years ended December 31, 2012, 2011 and 2010. The condensed consolidating financial information has been presented using the equity method of accounting, to show the nature of assets held, results of operations and cash flows of the Parent Company, the guarantor subsidiaries and the non-guarantor subsidiaries assuming all guarantor subsidiaries provide both full and unconditional, and joint and several guarantees to the Parent Company at the beginning of the periods presented. Effective as of December 31, 2011, ISO Staff Services, Inc. (“ISOSS”), a guarantor of the senior notes, merged with and into ISO, also a guarantor of the senior notes, pursuant to which ISO was the surviving corporation. By virtue of the merger, ISO expressly assumed all of the obligations of ISOSS, including the guarantee by ISOSS of the senior notes.

CONDENSED CONSOLIDATING BALANCE SHEET

As of December 31, 2012


	Verisk Analytics, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminating Entries			Consolidated
	(In thousands)

ASSETS
Current assets:
Cash and cash equivalents	$	128	$	35,571	$	54,120	$	—		$	89,819
Available-for-sale securities		—		4,883		—		—			4,883
Accounts receivable, net		—		124,212		54,218		—			178,430
Prepaid expenses		—		19,340		2,606		—			21,946
Deferred income taxes, net		—		375		10,022		—			10,397
Income taxes receivable		15,834		37,180		—		(7,039	)		45,975
Intercompany receivables		424,927		206,165		211,792		(842,884	)		—
Other current assets		12,008		19,124		7,977		—			39,109

Total current assets		452,897		446,850		340,735		(849,923	)		390,559
Noncurrent assets:
Fixed assets, net		—		126,481		27,603		—			154,084
Intangible assets, net		—		66,045		454,890		—			520,935
Goodwill		—		515,705		731,754		—			1,247,459
Deferred income taxes, net		—		2,584		—		(2,584	)		—
Investment in subsidiaries		946,612		904,198		—		(1,850,810	)		—
Other assets		13,896		31,801		1,602		—			47,299

Total assets	$	1,413,405	$	2,093,664	$	1,556,584	$	(2,703,317	)	$	2,360,336

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	14,638	$	113,512	$	59,498	$	—		$	187,648
Short-term debt and current portion of long-term debt		—		194,980		283		—			195,263
Pension and postretirement benefits, current		—		1,734		—		—			1,734
Fees received in advance		—		167,962		32,743		—			200,705
Intercompany payables		98,768		575,907		168,209		(842,884	)		—
Income taxes payable		—		—		7,039		(7,039	)		—

Total current liabilities		113,406		1,054,095		267,772		(849,923	)		585,350
Noncurrent liabilities:
Long-term debt		1,044,408		221,706		48		—			1,266,162
Pension and postretirement benefits		—		41,282		—		—			41,282
Deferred income taxes, net		—		—		136,345		(2,584	)		133,761
Other liabilities		—		46,892		31,298		—			78,190

Total liabilities		1,157,814		1,363,975		435,463		(852,507	)		2,104,745
Total stockholders’ equity		255,591		729,689		1,121,121		(1,850,810	)		255,591

Total liabilities and stockholders’ equity	$	1,413,405	$	2,093,664	$	1,556,584	$	(2,703,317	)	$	2,360,336

CONDENSED CONSOLIDATING BALANCE SHEET

As of December 31, 2011


	Verisk Analytics, Inc.			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminating Entries			Consolidated
	(In thousands)

ASSETS
Current assets:
Cash and cash equivalents	$	76,238		$	76,813	$	38,552	$	—		$	191,603
Available-for-sale securities		—			5,066		—		—			5,066
Accounts receivable, net		—			128,214		25,125		—			153,339
Prepaid expenses		—			20,090		1,815		—			21,905
Deferred income taxes, net		—			2,557		1,261		—			3,818
Income taxes receivable		8,523			33,416		—		(5,264	)		36,675
Intercompany receivables		250,177			482,172		147,996		(880,345	)		—
Other current assets		—			26,094		15,154		—			41,248

Total current assets		334,938			774,422		229,903		(885,609	)		453,654
Noncurrent assets:
Fixed assets, net		—			102,202		17,209		—			119,411
Intangible assets, net		—			81,828		144,596		—			226,424
Goodwill		—			481,736		228,208		—			709,944
Deferred income taxes, net		—			50,267		—		(39,787	)		10,480
Investment in subsidiaries		601,380			104,430		—		(705,810	)		—
Other assets		6,218			13,059		1,916		—			21,193

Total assets	$	942,536		$	1,607,944	$	621,832	$	(1,631,206	)	$	1,541,106

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	6,328		$	117,759	$	38,905	$	—		$	162,992
Acquisition related liabilities		—			—		250		—			250
Short-term debt and current portion of long-term debt		—			5,161		393		—			5,554
Pension and postretirement benefits, current		—			4,012		—		—			4,012
Fees received in advance		—			152,948		23,894		—			176,842
Intercompany payables		338,041			354,362		187,942		(880,345	)		—
Income taxes payable		—			—		5,264		(5,264	)		—

Total current liabilities		344,369			634,242		256,648		(885,609	)		349,650
Noncurrent liabilities:
Long-term debt		696,657			403,586		89		—			1,100,332
Pension and postretirement benefits		—			127,748		—		—			127,748
Deferred income taxes, net		—			—		39,787		(39,787	)		—
Other liabilities		—			58,158		3,708		—			61,866

Total liabilities		1,041,026			1,223,734		300,232		(925,396	)		1,639,596
Total stockholders’ (deficit) equity		(98,490	)		384,210		321,600		(705,810	)		(98,490	)

Total liabilities and stockholders’ (deficit) equity	$	942,536		$	1,607,944	$	621,832	$	(1,631,206	)	$	1,541,106

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For The Year Ended December 31, 2012


	Verisk Analytics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated
	(In thousands)

Revenues	$	—		$	1,288,606		$	266,427		$	(20,713	)	$	1,534,320
Expenses:
Cost of revenues (exclusive of items shown separately below)		—			492,190			125,111			(10,127	)		607,174
Selling, general and administrative		—			185,615			56,330			(10,586	)		231,359
Depreciation and amortization of fixed assets		—			40,885			9,739			—			50,624
Amortization of intangible assets		—			19,311			34,264			—			53,575

Total expenses		—			738,001			225,444			(20,713	)		942,732

Operating income		—			550,605			40,983			—			591,588
Other income (expense):
Investment income		44			224			192			—			460
Realized loss on securities, net		—			(332	)		—			—			(332	)
Interest expense		(42,848	)		(29,619	)		(41	)		—			(72,508	)

Total other (expense) income, net		(42,804	)		(29,727	)		151			—			(72,380	)

(Loss) income before equity in net income of subsidiary and income taxes		(42,804	)		520,878			41,134			—			519,208
Equity in net income of subsidiary		356,113			19,159			—			(375,272	)		—
Provision for income taxes		15,833			(190,728	)		(15,171	)		—			(190,066	)

Net income	$	329,142		$	349,309		$	25,963		$	(375,272	)	$	329,142

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For The Year Ended December 31, 2011


	Verisk Analytics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated
	(In thousands)

Revenues	$	—		$	1,181,396		$	167,044		$	(16,600	)	$	1,331,840
Expenses:
Cost of revenues (exclusive of items shown separately below)		—			466,445			75,603			(8,313	)		533,735
Selling, general and administrative		—			165,091			52,665			(8,287	)		209,469
Depreciation and amortization of fixed assets		—			36,007			7,820			—			43,827
Amortization of intangible assets		—			20,351			14,441			—			34,792
Acquisition related liabilities adjustment		—			(2,800	)		(564	)		—			(3,364	)

Total expenses		—			685,094			149,965			(16,600	)		818,459

Operating income		—			496,302			17,079			—			513,381
Other income (expense):
Investment income		36			3,025			22			(2,882	)		201
Realized gain on securities, net		—			686			—			—			686
Interest expense		(23,239	)		(33,319	)		(171	)		2,882			(53,847	)

Total other expense, net		(23,203	)		(29,608	)		(149	)		—			(52,960	)

(Loss) income before equity in net income of subsidiary and income taxes		(23,203	)		466,694			16,930			—			460,421
Equity in net income of subsidiary		297,439			6,891			—			(304,330	)		—
Provision for income taxes		8,522			(180,578	)		(5,607	)		—			(177,663	)

Net income	$	282,758		$	293,007		$	11,323		$	(304,330	)	$	282,758

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For The Year Ended December 31, 2010


	Verisk Analytics, Inc.		Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated
	(In thousands)

Revenues	$	—	$	1,086,211		$	68,731		$	(16,599	)	$	1,138,343
Expenses:
Cost of revenues (exclusive of items shown separately below)		—		434,247			40,764			(11,538	)		463,473
Selling, general and administrative		—		146,005			24,841			(4,472	)		166,374
Depreciation and amortization of fixed assets		—		35,974			5,260			(506	)		40,728
Amortization of intangible assets		—		24,205			3,193			—			27,398
Acquisition related liabilities adjustment		—		(544	)		—			—			(544	)

Total expenses		—		639,887			74,058			(16,516	)		697,429

Operating income (loss)		—		446,324			(5,327	)		(83	)		440,914
Other income (expense):
Investment income		—		223			82			—			305
Realized gain on securities, net		—		95			—			—			95
Interest expense		—		(34,605	)		(142	)		83			(34,664	)

Total other expense, net		—		(34,287	)		(60	)		83			(34,264	)

Income (loss) before equity in net income of subsidiary and income taxes		—		412,037			(5,387	)		—			406,650
Equity in net income (loss) of subsidiary		242,552		(2,550	)		—			(240,002	)		—
Provision for income taxes		—		(166,340	)		2,242			—			(164,098	)

Net income (loss)	$	242,552	$	243,147		$	(3,145	)	$	(240,002	)	$	242,552

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME

For The Year Ended December 31, 2012


	Verisk Analytics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminating Entries			Consolidated

Net income	$	329,142		$	349,309		$	25,963	$	(375,272	)	$	329,142

Other comprehensive income (loss), net of tax:
Unrealized holding loss on investments		(197	)		(197	)		—		197			(197	)
Unrealized foreign currency gain on investments		15			172			46		(218	)		15
Pension and postretirement unfunded liability adjustment		(10,691	)		(10,691	)		—		10,691			(10,691	)

Total other comprehensive (loss) income		(10,873	)		(10,716	)		46		10,670			(10,873	)

Comprehensive income	$	318,269		$	338,593		$	26,009	$	(364,602	)	$	318,269

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME

For The Year Ended December 31, 2011


	Verisk Analytics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated

Net income	$	282,758		$	293,007		$	11,323		$	(304,330	)	$	282,758

Other comprehensive income (loss), net of tax:
Unrealized holding loss on investments		(456	)		(456	)		—			456			(456	)
Unrealized foreign currency (loss) gain		(183	)		55			(231	)		176			(183	)
Pension and postretirement unfunded liability adjustment		(21,845	)		(21,845	)		—			21,845			(21,845	)

Total other comprehensive loss		(22,484	)		(22,246	)		(231	)		22,477			(22,484	)

Comprehensive income	$	260,274		$	270,761		$	11,092		$	(281,853	)	$	260,274

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME

For The Year Ended December 31, 2010


	Verisk Analytics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated

Net income (loss)	$	242,552		$	243,147		$	(3,145	)	$	(240,002	)	$	242,552

Other comprehensive income (loss), net of tax:
Unrealized holding gain on investments		199			199			—			(199	)		199
Unrealized foreign currency loss		(109	)		(109	)		(248	)		357			(109	)
Pension and postretirement unfunded liability adjustment		(2,265	)		(2,265	)		—			2,265			(2,265	)

Total other comprehensive loss		(2,175	)		(2,175	)		(248	)		2,423			(2,175	)

Comprehensive income (loss)	$	240,377		$	240,972		$	(3,393	)	$	(237,579	)	$	240,377

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For The Year Ended December 31, 2012


	Verisk Analytics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated
	(In thousands)
Net cash (used in) provided by operating activities	$	(20,115	)	$	329,845		$	158,499		$	—		$	468,229
Cash flows from investing activities:
Acquisitions, net of cash acquired of $36,113		—			(762,596	)		(6,917	)		—			(769,513	)
Purchase of non-controlling equity investments in non-public companies		(250	)		(2,000	)		—			—			(2,250	)
Earnout payments		—			—			(250	)		—			(250	)
Escrow funding associated with acquisitions		—			(38,000	)		(800	)		—			(38,800	)
Proceeds from release of acquisition related escrows		—			1,455			—			—			1,455
Repayments received from other subsidiaries		19,400			592,356			—			(611,756	)		—
Advances provided to other subsidiaries		—			(52,000	)		—			52,000			—
Purchases of fixed assets		—			(60,525	)		(13,848	)		—			(74,373	)
Purchases of available-for-sale securities		—			(1,784	)		—			—			(1,784	)
Proceeds from sales and maturities of available-for-sale securities		—			1,932			—			—			1,932

Net cash provided by (used in) investing activities		19,150			(321,162	)		(21,815	)		(559,756	)		(883,583	)
Cash flows from financing activities:
Proceeds from issuance of long-term debt, net of original issue discount		347,224			—			—			—			347,224
Repayment of short-term debt refinanced on a long-term basis		—			(347,224	)		—			—			(347,224	)
Proceeds of short-term debt, net		—			357,224			—			—			357,224
Payment of debt issuance cost		(2,557	)		(1,348	)		—			—			(3,905	)
Repurchase of Class A common stock		—			(162,275	)		—			—			(162,275	)
Repayments of advances to other subsidiaries		(419,812	)		(19,400	)		(172,544	)		611,756			—
Advances received from other subsidiaries		—			—			52,000			(52,000	)		—
Excess tax benefits from exercised stock options		—			60,672			—			—			60,672
Proceeds from stock options exercised		—			68,388			—			—			68,388
Other financing activities, net		—			(5,931	)		(618	)		—			(6,549	)

Net cash (used in) provided by financing activities		(75,145	)		(49,894	)		(121,162	)		559,756			313,555
Effect of exchange rate changes		—			(31	)		46			—			15

(Decrease) increase in cash and cash equivalents		(76,110	)		(41,242	)		15,568			—			(101,784	)
Cash and cash equivalents, beginning of period		76,238			76,813			38,552			—			191,603

Cash and cash equivalents, end of period	$	128		$	35,571		$	54,120		$	—		$	89,819

Supplemental disclosures:
Increase in intercompany balances from the purchase of MediConnect and Argus by ISO	$	17,000		$	790,174		$	773,174		$	—		$	—

Increase in intercompany balances from the purchase of treasury stock by Verisk funded directly by ISO	$	162,275		$	162,275		$	—		$	—		$	—

Increase in intercompany balances from proceeds received by ISO related to issuance of Verisk common stock from options exercised	$	68,388		$	68,388		$	—		$	—		$	—

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For The Year Ended December 31, 2011


	Verisk Analytics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated
	(In thousands)
Net cash (used in) provided by operating activities	$	(14,821	)	$	346,820		$	43,722		$	—		$	375,721
Cash flows from investing activities:
Acquisitions, net of cash acquired of $590		—			(121,721	)		—			—			(121,721	)
Earnout payments		—			—			(3,500	)		—			(3,500	)
Escrow funding associated with acquisitions		—			(19,560	)		—			—			(19,560	)
Repayments received from other subsidiaries		—			9,714			—			(9,714	)		—
Advances provided to other subsidiaries		(10,052	)		(54,701	)		(81,824	)		146,577			—
Proceeds from repayment of intercompany note receivable		—			617,796			—			(617,796	)		—
Purchases of fixed assets		—			(50,813	)		(9,016	)		—			(59,829	)
Purchases of available-for-sale securities		—			(1,549	)		—			—			(1,549	)
Proceeds from sales and maturities of available-for-sale securities		—			1,730			—			—			1,730
Other investing activities, net		—			300			—			—			300

Net cash (used in) provided by investing activities		(10,052	)		381,196			(94,340	)		(480,933	)		(204,129	)
Cash flows from financing activities:
Proceeds from issuance of long-term debt, net of original issue discount		696,559			—			—			—			696,559
Repayment of current portion of long-term debt		—			(125,000	)		—			—			(125,000	)
Repayment of short-term debt refinanced on a long-term basis		—			(440,000	)		—			—			(440,000	)
Proceeds from issuance of short-term debt with original maturities greater than three months		—			120,000			—			—			120,000
Proceeds of short-term debt, net		—			10,000			—			—			10,000
Payment of debt issuance cost		(4,487	)		(3,348	)		—			—			(7,835	)
Repurchase of Class A common stock		—			(381,776	)		—			—			(381,776	)
Repayments of advances provided to other subsidiaries		(7,204	)		(2,510	)		—			9,714			—
Repayment of intercompany note payable		(617,796	)		—			—			617,796			—
Advances received from other subsidiaries		34,038			46,013			66,526			(146,577	)		—
Excess tax benefits from exercised stock options		—			53,195			—			—			53,195
Proceeds from stock options exercised		—			43,345			—			—			43,345
Other financing activities, net		—			(2,746	)		(522	)		—			(3,268	)

Net cash provided by (used in) financing activities		101,110			(682,827	)		66,004			480,933			(34,780	)
Effect of exchange rate changes		—			48			(231	)		—			(183	)

Increase in cash and cash equivalents		76,237			45,237			15,155			—			136,629
Cash and cash equivalents, beginning of period		1			31,576			23,397			—			54,974

Cash and cash equivalents, end of period	$	76,238		$	76,813		$	38,552		$	—		$	191,603

Supplemental disclosures:
Increase in intercompany balances from the purchase of treasury stock by Verisk funded directly by ISO	$	381,776		$	381,776		$	—		$	—		$	—

Increase in intercompany balances from proceeds received by ISO related to issuance of Verisk common stock from options exercised	$	43,345		$	43,345		$	—		$	—		$	—

Issuance of intercompany note payable (receivable) from amounts previously recorded as intercompany payables (receivables)	$	615,000		$	(615,000	)	$	—		$	—		$	—

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For The Year Ended December 31, 2010


	Verisk Analytics, Inc.		Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated
	(In thousands)

Net cash provided by (used in) operating activities	$	—	$	336,661		$	(629	)	$	—		$	336,032
Cash flows from investing activities:
Acquisitions, net of cash acquired of $10,524		—		(189,578	)		—			—			(189,578	)
Escrow funding associated with acquisitions		—		(15,980	)		—			—			(15,980	)
Proceeds from release of acquisition related escrows		—		283			—			—			283
Advances provided to other subsidiaries		—		(50,978	)		(4,506	)		55,484			—
Purchases of fixed assets		—		(32,680	)		(5,961	)		—			(38,641	)
Purchases of available-for-sale securities		—		(516	)		—			—			(516	)
Proceeds from sales and maturities of available-for-sale securities		—		743			—			—			743

Net cash used in investing activities		—		(288,706	)		(10,467	)		55,484			(243,689	)
Cash flows from financing activities:
Proceeds from issuance of short-term debt with maturities of three months or greater		—		215,000			—			—			215,000
Proceeds from issuance of short-term debt, net		—		35,000			—			—			35,000
Payment of debt issuance cost		—		(1,781	)		—			—			(1,781	)
Repurchase of Class A common stock		—		(210,246	)		—			—			(210,246	)
Repurchase of Class B-1 common stock		—		(199,936	)		—			—			(199,936	)
Repurchase of Class B-2 common stock		—		(9,879	)		—			—			(9,879	)
Net share settlement of taxes upon exercise of stock options		—		(15,051	)		—			—			(15,051	)
Advances received from other subsidiaries		—		41,223			14,261			(55,484	)		—
Excess tax benefits from exercised stock options		—		49,015			—			—			49,015
Proceeds from stock options exercised		—		35,482			—			—			35,482
Other financing activities, net		—		(6,350	)		(41	)		—			(6,391	)

Net cash (used in) provided by financing activities		—		(67,523	)		14,220			(55,484	)		(108,787	)
Effect of exchange rate changes		—		139			(248	)		—			(109	)

(Decrease) increase in cash and cash equivalents		—		(19,429	)		2,876			—			(16,553	)
Cash and cash equivalents, beginning of period		1		51,005			20,521			—			71,527

Cash and cash equivalents, end of period	$	1	$	31,576		$	23,397		$	—		$	54,974

Supplemental disclosures:
Changes in intercompany balances due to acquisitions funded directly by ISO	$	197,670	$	197,670		$	—		$	—		$	—

Increase in investment in subsidiaries due to assets transferred to non-guarantors in exchange for common stock	$	197,670	$	—		$	197,670		$	—		$	—

Non-cash capital contribution	$	—	$	26,555		$	26,555		$	—		$	—

Increase in intercompany balances from the purchase of treasury stock by Verisk funded directly by ISO	$	435,112	$	435,112		$	—		$	—		$	—

Increase in intercompany balances from proceeds received by ISO related to issuance of Verisk common stock from options exercised	$	35,482	$	35,482		$	—		$	—		$	—