EX-99.3 4 exhibit993.htm EXHIBIT 99.3 Exhibit 99.3


Exhibit 99.3


On March 25, 2014 ("Closing Date"), CoreLogic, Inc., a Delaware corporation (“Corelogic” or the “Company”), through its indirect wholly-owned subsidiaries, CoreLogic Acquisition Co. I, LLC, a Delaware limited liability company, CoreLogic Acquisition Co. II, LLC, a Delaware limited liability company, and CoreLogic Acquisition Co. III, LLC, a Delaware limited liability company, completed the previously-announced acquisition of (1) all of the issued and outstanding equity interests of Decision Insight Information Group (U.S.) I, Inc., a Delaware corporation, and Decision Insight Information Group (U.S.) III, LLC, a Delaware limited liability company from Property Data Holdings, Ltd., a Cayman Islands company (the “Stock Seller”); (2) the credit, flood and automated valuation model assets of DataQuick Lending Solutions, Inc., a Delaware corporation (“DQLS”); and (3) certain intellectual property assets of Decision Insight Information Group S.à r.l., a Luxembourg private limited company (“Luxco”), and assumed certain transferred liabilities (collectively, the “Transaction”) with Stock Seller, DQLS, Luxco, and, solely with respect to CoreLogic Solutions, LLC, a California limited liability company, and solely with respect to, and Property Data Holdings, L.P., a Cayman Islands exempted limited partnership.

The total consideration paid in connection with the transaction referenced above was approximately $650.1 million in cash (as adjusted) and subject to future working capital adjustment, which was funded through borrowings under the Credit Agreement (as defined below).

On the Closing Date, and in connection with the Transaction, the Borrowers also entered into a credit agreement among the Company, the Australian Borrower, the lenders party thereto (the “Lenders”), the other parties thereto and Bank of America, N.A., as Administrative Agent (the “Credit Agreement”). The Credit Agreement provides for a $850.0 million five-year term loan facility (the “Term Facility”) and a $550.0 million five-year revolving credit facility (which includes a $100.0 million multicurrency revolving sub-facility and a $50.0 million letter of credit sub-facility) (the “Revolving Facility”). The Credit Agreement also provides for the ability to increase the Term Facility and/or Revolving Facility by up to $500.0 million in the aggregate.

The Transaction has been accounted for using the acquisition method of accounting in accordance with current accounting guidance for business combinations and non-controlling interest. As a result, the total purchase price has been preliminarily allocated to the net tangible and intangible assets acquired and liabilities assumed of the acquired businesses (a carve-out of Property Data Holdings, Ltd.) based on their estimated fair values. Any excess of the purchase price over the fair value of identified assets acquired and liabilities assumed is recognized as goodwill. The preliminary allocation reflects management’s best estimates of fair value, which are based on key assumptions of the Transaction, including prior acquisition experience, benchmarking of similar acquisitions and historical data. In addition, portions of the preliminary allocation are dependent upon certain valuations and other studies that have yet to commence or progress to a stage where there is sufficient information for a definitive measurement. Upon completion of detailed valuation studies and the final determination of fair value, the Company may make additional adjustments to the fair value allocation, which may differ significantly from the valuations set forth in the unaudited pro forma condensed combined financial statements.

The unaudited pro forma condensed combined statements of operations are based on estimates and assumptions, which have been made solely for the purposes of developing such pro forma information. Pro forma adjustments arising from the Transaction are derived from the estimated fair value of the assets acquired and liabilities assumed included in the preliminary purchase price allocation. The unaudited pro forma condensed combined statements of operations also include certain purchase accounting adjustments such as increased amortization expense on acquired intangible assets, adjustments to deferred revenue, changes in interest expense on the debt incurred to complete the Transaction and debt repaid as part of the Transaction as well as the tax impacts related to these adjustments. The pro forma adjustments are based upon available information and certain assumptions that the Company believes are reasonable.

These unaudited pro forma condensed combined financial statements should be read in conjunction with the:

Accompanying notes;

Separate audited consolidated financial statements of Corelogic, Inc. included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2013; and

Separate audited balance sheet of the acquired businesses (a carve-out of Property Data Holdings, Ltd.) as of December 31, 2013 and the related statements of operations and cash flow for the year ended December 31, 2013.

The unaudited pro forma condensed combined financial statements have been presented for information purposes only and are





not necessarily indicative of what the combined company’s financial position or results of operations actually would have been had the business combination been completed as of the dates indicated, nor are they necessarily indicative of the future operating results or financial position of the combined company. As a result, they do not reflect future events that may occur after the Transaction, including the potential realization of any cost savings from operating efficiencies, synergies, restructuring or any other costs relating to the integration of the businesses. Therefore, the actual amounts recorded as of the date of Transaction and thereafter may differ from the information presented herein.






CoreLogic, Inc.
Pro Forma Condensed Combined Balance Sheet
As of December 31, 2013
(unaudited)
(in thousands, except par value)
Corelogic
 
Acquired Business
 
Pro Forma Adjustments
 
Pro Forma Combined
Assets
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
Cash and cash equivalents
$
134,741

 
$

 
$
39,275

A
$
174,016

Marketable securities
22,220

 

 

 
22,220

Accounts receivable, net
196,282

 
5,440

 

 
201,722

Prepaid expenses and other current assets
50,674

 
1,973

 

 
52,647

Income tax receivable
13,516

 

 

 
13,516

Deferred income tax assets, current
86,158

 
705

 
1,143

B
88,006

Assets of discontinued operations
138,023

 

 

 
138,023

Total current assets
641,614

 
8,118

 
40,418

 
690,150

Property and equipment, net
195,645

 
3,792

 
173,608

C
373,045

Goodwill, net
1,390,674

 
264,155

 
93,929

D
1,748,758

Other intangible assets, net
175,808

 
220,547

 
(91,147
)
E
305,208

Capitalized data and database costs, net
330,188

 

 

 
330,188

Investment in affiliates, net
95,343

 
17,535

 
7,290

F
120,168

Deferred income tax assets, long-term

 
120

 
(120
)
B

Restricted cash
12,050

 

 

 
12,050

Other assets
162,033

 
2

 
12,111

G
174,146

Total assets
$
3,003,355

 
$
514,269

 
$
236,089

 
$
3,753,713

Liabilities and Equity
 
 
 
 
 
 

Current liabilities:
 
 
 
 
 
 

Accounts payable and accrued expenses
$
154,526

 
$
8,940

 
$

 
$
163,466

Accrued salaries and benefits
101,715

 

 

 
101,715

Income taxes payable

 
1,473

 

 
1,473

Deferred revenue, current
223,323

 
23,064

 
(11,602
)
H
234,785

Current portion of long-term debt
28,154

 

 

 
28,154

Liabilities of discontinued operations
30,309

 

 

 
30,309

Total current liabilities
538,027

 
33,477

 
(11,602
)
 
559,902

Long-term debt, net of current
811,776

 

 
689,377

I
1,501,153

Deferred revenue, net of current
377,086

 
2,489

 
(1,063
)
H
378,512

Deferred income tax liabilities, long term
74,308

 

 
23,821

B
98,129

Other liabilities
147,583

 

 

 
147,583

Total liabilities
1,948,780

 
35,966

 
700,533

 
2,685,279

 
 
 
 
 
 
 
 
Redeemable noncontrolling interest
10,202

 

 

 
10,202

 
 
 
 
 
 
 
 
Equity:
 
 
 
 
 
 
 
CoreLogic stockholders' equity:
 
 
 
 
 
 
 
Stockholders' equity
1,097,962

 
478,303

 
(464,444
)
J
1,111,821

Accumulated other comprehensive loss
(53,589
)
 

 

 
(53,589
)
Total equity
1,044,373

 
478,303

 
(464,444
)
 
1,058,232

Total liabilities and equity
$
3,003,355

 
$
514,269

 
$
236,089

 
$
3,753,713








CoreLogic, Inc.
Pro Forma Condensed Combined Statement of Income
For the Fiscal Year Ended December 31, 2013
(unaudited)
(in thousands, except per share amounts)
Corelogic
 
Acquired Business
 
Pro Forma Adjustments
 
Pro Forma Combined
Operating revenues
$
1,330,630

 
$
121,315

 
$
(19,056
)
(A)
$
1,432,889

Cost of services (excluding depreciation and amortization shown below)
670,228

 
48,025

 
(7,518
)
(B)
710,735

Selling, general and administrative expenses
360,506

 
32,784

 

 
393,290

Depreciation and amortization
127,020

 
34,766

 
(15,931
)
(C)
145,855

Total operating expenses
1,157,754

 
115,575

 
(23,449
)
 
1,249,880

Operating income
172,876

 
5,740

 
4,393

 
183,009

Interest expense:
 
 
 
 
 
 
 
Interest income
4,701

 

 

 
4,701

Interest expense
52,350

 

 
14,400

(D)
66,750

Total interest expense, net
(47,649
)
 

 
(14,400
)
 
(62,049
)
Gain/(loss) on investments and other, net
12,032

 
(130
)
 

 
11,902

Income from continuing operations before equity in earnings of affiliates and income taxes
137,259

 
5,610

 
(10,007
)
 
132,862

Provision for income taxes
34,473

 
808

 
(3,828
)
(E)
31,453

Income from continuing operations before equity in earnings of affiliates
102,786

 
4,802

 
(6,179
)
 
101,409

Equity in earnings of affiliates, net of tax
27,361

 
(2,354
)
 

 
25,007

Net income from continuing operations
$
130,147

 
$
2,448

 
$
(6,179
)
 
$
126,416

Basic income/(loss) per share:
 
 
 
 
 
 
 
Net income from continuing operations
$
1.37

 
 
 
 
 
$
1.33

Diluted income/(loss) per share:
 
 
 
 
 
 
 
Net income from continuing operations
$
1.34

 
 
 
 
 
$
1.30

Weighted-average common shares outstanding:
 
 
 
 
 
 
 
Basic
95,088

 
 
 
 
 
95,088

Diluted
97,109

 
 
 
 
 
97,109







Note 1 – Description of Transaction

On March 25, 2014 ("Closing Date"), CoreLogic, Inc., a Delaware corporation (“CoreLogic” or the “Company”), through its indirect wholly owned subsidiaries, CoreLogic Acquisition Co. I, LLC, a Delaware limited liability company, CoreLogic Acquisition Co. II, LLC, a Delaware limited liability company, and CoreLogic Acquisition Co. III, LLC, a Delaware limited liability company, completed the previously announced acquisition of (1) all of the issued and outstanding equity interests of Decision Insight Information Group (U.S.) I, Inc., a Delaware corporation, and Decision Insight Information Group (U.S.) III, LLC, a Delaware limited liability company from Property Data Holdings, Ltd., a Cayman Islands company (the “Stock Seller”), (2) the credit, flood and automated valuation model assets of DataQuick Lending Solutions, Inc., a Delaware corporation (“DQLS”); and (3) certain intellectual property assets of Decision Insight Information Group S.à r.l., a Luxembourg private limited company (“Luxco”), and assumed certain transferred liabilities (collectively, the “Transaction”) with Stock Seller, DQLS, Luxco, and, solely with respect to CoreLogic Solutions, LLC, a California limited liability company, and solely with respect to, and Property Data Holdings, L.P., a Cayman Islands exempted limited partnership.

The total consideration paid in connection with the transaction referenced above was approximately $650.1 million in cash (as adjusted) and subject to future working capital adjustment, which was funded through borrowings under the Credit Agreement (as defined below).

On the Closing Date, and in connection with the Transaction, the Borrowers also entered into a credit agreement among the Company, the Australian Borrower, the lenders party thereto (the “Lenders”), the other parties thereto and Bank of America, N.A., as Administrative Agent (the “Credit Agreement”). The Credit Agreement provides for a $850.0 million five-year term loan facility (the “Term Facility”) and a $550.0 million five-year revolving credit facility (which includes a $100.0 million multicurrency revolving sub-facility and a $50.0 million letter of credit sub-facility) (the “Revolving Facility”). The Credit Agreement also provides for the ability to increase the Term Facility and/or Revolving Facility by up to $500.0 million in the aggregate.

Note 2 – Basis of Presentation
The unaudited pro forma condensed combined financial statements herein are based upon the historical consolidated financial statements of CoreLogic and Data Business (a carve-out of Property Data Holdings, Inc.) and have been prepared to illustrate the effects of the Transaction. The unaudited pro forma condensed combined balance sheet as of December 31, 2013 gives effect to the Transaction as if it had occurred on December 31, 2013. The unaudited pro forma condensed combined statements of operations for year ended December 31, 2013 give effect to the Transaction as if it had occurred on January 1, 2013 (the first day of the Company’s 2013 fiscal year). Certain amounts in the Data Business (a carve-out of Property Data Holdings, Inc.) consolidated financial statements have been reclassified to conform to the Company’s basis of presentation.

Note 3 – Preliminary Estimated Purchase Price Allocation
The Transaction has been accounted for using the acquisition method of accounting in accordance with current accounting guidance for business combinations and non-controlling interest. The purchase price was allocated to the assets acquired and liabilities assumed using a variety of valuation techniques including discounted cash flow analysis which included significant unobservables. Any excess of the purchase price over the fair value of identified assets acquired and liabilities assumed is recognized as goodwill. The allocation of purchase price is subject to change based on our final determination of fair value. The preliminary allocation of the purchase price, as if the Acquisition occurred on December 31, 2013, is as follows:






 
 Purchase Price
Accounts receivable, net
$
5,440

Prepaid expenses and other current assets
1,973

Deferred income tax assets, current
1,848

Property and equipment, net
177,400

Goodwill, net
358,084

Other intangible assets, net
129,400

Investment in affiliates, net
24,825

Other assets
2

Total assets acquired
698,972

Accounts payable and accrued expenses
8,940

Income taxes payable
1,473

Deferred revenue, current
13,212

Deferred revenue, net of current
1,426

Deferred income tax liabilities, long term
23,821

Net assets acquired
$
650,100


The following table sets forth the components of identifiable intangible assets acquired and their preliminary estimated useful lives as of the date of the Acquisition.

 
 
Purchase Price
 
Useful Lives
Customer list
 
$
66,400

 
14 years
Trade names
 
63,000

 
10 years
 
 
$
129,400

 
 

Note 4 – Pro Forma Adjustments
Unaudited Pro Forma Condensed Combined Balance Sheet Adjustments
The following is a summary of pro forma adjustments reflected in the Unaudited Pro Forma Condensed Combined Balance Sheet. These adjustments are based on preliminary estimates, which may change as additional information is obtained:

(A)
Excess cash obtained from borrowing.
(B)
To adjust tax related accounts to their estimated fair value.
(C)
To adjust property and equipment, net to reflect its estimated fair value. As of the date of acquisition, the preliminary estimated useful life range is 3 to 15 years.
(D)
To adjust goodwill, net to reflect the purchase price allocation residual from the Transaction.
(E)
To adjust other identifiable intangible assets, net to reflect the purchase price allocation from the Transaction.
(F)
To adjust investment in affiliates, net to reflect its estimated fair value.
(G)
Reflects the capitalization of new deferred financing costs of $13.1 million net of write-off on previously capitalized deferred financing costs of $1.0 million.
(H)
Reflects an adjustment to Data Business' deferred revenues to their estimated fair value of $10.9 million and the elimination of $1.8 million of intercompany deferred revenue, current.
(I)
To record additional financing incurred to close the acquisition.
(J)
Reflects the elimination of the equity accounts of the Data Business of $478.3 million, the offset to the net deferred financing cost adjustment of $12.1 million and the offset to the elimination of $1.8 million of intercompany deferred revenue.

Unaudited Pro Forma Condensed Combined Statement of Operations Adjustments
The following is a summary of pro forma adjustments reflected in the Unaudited Pro Forma Condensed Combined Statement of Operations. These adjustments are based on preliminary estimates, which may change as additional information is obtained:






(A)
Reflects reduction of intercompany revenue of $7.5 million and an adjustment to deferred revenue of $11.5 million.
(B)
Reflects reduction on cost of services related to eliminated intercompany revenues.
(C)
True-up of amortization for property and equipment and intangibles after purchase accounting.
(D)
Includes additional interest expense of $12.1 million and an increase in amortization of deferred financing costs of $2.3 million. We reflected approximately $689.4 million in additional long-term debt outstanding. A hypothetical 0.125% increase or decrease in interest rates would have resulted in an approximately $0.9 million change to interest expense in our condensed combined statement of operations.
(E)
Reflects our estimated statutory rate of 38.25% for income tax on the pro forma adjustments to income from continuing operations before equity in earnings of affiliates and income taxes.