UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

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

Commission File Number: 001-34480

VERISK ANALYTICS, INC.

(Exact name of registrant as specified in its charter)

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

(201) 469-2000
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

As of April 29, 2011 there was the following number of shares outstanding of each of the issuer’s classes of common stock:

Class		Shares Outstanding
Class A common stock $.001 par value		152,557,291
Class B (Series 2) common stock $.001 par value		14,771,340

 

 

Verisk Analytics, Inc.
Index to Form 10-Q

Table of Contents

		Page Number
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed Consolidated Balance Sheets			3
Condensed Consolidated Statements of Operations			4
Condensed Consolidated Statements of Changes in Stockholders’ Deficit			5
Condensed Consolidated Statements of Cash Flows			6
Notes to Condensed Consolidated Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			25
Item 3. Quantitative and Qualitative Disclosures About Market Risk			34
Item 4. Controls and Procedures			34
PART II — OTHER INFORMATION
Item 1. Legal Proceedings			35
Item 1A. Risk Factors			35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			35
Item 3. Defaults Upon Senior Securities			35
Item 4. (Removed and Reserved)			35
Item 5. Other Information			35
Item 6. Exhibits			35
SIGNATURES			36
EX-31.1
EX-31.2
EX-32.1
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

Item 1.		Financial Statements

VERISK ANALYTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
As of March 31, 2011 and December 31, 2010

		2011
		unaudited				2010
		(In thousands, except for share and per share data)
ASSETS
Current assets:
Cash and cash equivalents		$	101,238			$	54,974
Available-for-sale securities			5,603				5,653
Accounts receivable, net of allowance for doubtful accounts of $3,435 and $4,028 (including amounts from related parties of $612 and $515, respectively) (1)			163,888				126,564
Prepaid expenses			25,490				17,791
Deferred income taxes, net			3,681				3,681
Federal and foreign income taxes receivable			—				15,783
State and local income taxes receivable			4,093				8,923
Other current assets			7,705				7,066
Total current assets			311,698				240,435
Noncurrent assets:
Fixed assets, net			100,774				93,409
Intangible assets, net			191,774				200,229
Goodwill			632,668				632,668
Deferred income taxes, net			21,548				21,879
State income taxes receivable			1,773				1,773
Other assets			26,196				26,697
Total assets		$	1,286,431			$	1,217,090
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable and accrued liabilities		$	88,458			$	111,995
Acquisition related liabilities			3,500				3,500
Short-term debt and current portion of long-term debt			129,997				437,717
Pension and postretirement benefits, current			4,663				4,663
Fees received in advance (including amounts from related parties of $1,425 and $1,231, respectively) (1)			247,064				163,007
Federal and foreign income taxes payable			18,788				—
Total current liabilities			492,470				720,882
Noncurrent liabilities:
Long-term debt			700,520				401,826
Pension benefits			89,908				95,528
Postretirement benefits			23,019				23,083
Other liabilities			89,605				90,213
Total liabilities			1,395,522				1,331,532
Commitments and contingencies
Stockholders’ equity/(deficit):
Verisk Class A common stock, $.001 par value; 1,200,000,000 shares authorized; 150,421,644 and 150,179,126 shares issued and 141,066,860 and 143,067,924 outstanding as of March 31, 2011 and December 31, 2010, respectively			40				39
Verisk Class B (Series 1) common stock, $.001 par value; 400,000,000 shares authorized; 198,327,962 shares issued and 12,225,480 outstanding as of March 31, 2011 and December 31, 2010			47				47
Verisk Class B (Series 2) common stock, $.001 par value; 400,000,000 shares authorized; 193,665,008 shares issued and 14,771,340 outstanding as of March 31, 2011 and December 31, 2010			49				49
Unearned KSOP contributions			(917	)			(988	)
Additional paid-in capital			766,528				754,708
Treasury stock, at cost, 374,350,934 and 372,107,352 shares as of March 31, 2011 and December 31, 2010, respectively			(1,179,704	)			(1,106,321	)
Retained earnings			359,703				293,827
Accumulated other comprehensive loss			(54,837	)			(55,803	)
Total stockholders’ deficit			(109,091	)			(114,442	)
Total liabilities and stockholders’ deficit		$	1,286,431			$	1,217,090

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

VERISK ANALYTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For The Three-Month Periods Ended March 31, 2011 and 2010

		2011				2010
		(In thousands, except for share and per
		share data)
Revenues (including amounts from related parties of $4,396 and $15,133, respectively) (1)		$	312,869			$	276,154
Expenses:
Cost of revenues (exclusive of items shown separately below)			124,556				114,993
Selling, general and administrative			49,256				37,514
Depreciation and amortization of fixed assets			11,305				9,929
Amortization of intangible assets			8,455				7,304
Total expenses			193,572				169,740
Operating income			119,297				106,414
Other income/(expense):
Investment income			10				32
Realized gains on securities, net			362				32
Interest expense			(9,615	)			(8,466	)
Total other expense, net			(9,243	)			(8,402	)
Income before income taxes			110,054				98,012
Provision for income taxes			(44,178	)			(42,637	)
Net income		$	65,876			$	55,375
Basic net income per share of Class A and Class B:		$	0.39			$	0.31
Diluted net income per share of Class A and Class B:		$	0.37			$	0.29
Weighted average shares outstanding:
Basic			169,030,227				180,053,550
Diluted			176,964,192				189,454,756

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

VERISK ANALYTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT (UNAUDITED) 
For The Year Ended December 31, 2010 and The Three Months Ended March 31, 2011

																																		Accumulated				Total
		Common Stock Issued																Unearned				Additional												Other				Stockholders’
						Verisk				Verisk								KSOP				Paid-in				Treasury				Retained				Comprehensive				(Deficit)/
		Verisk Class A				Class B (Series 1)				Class B (Series 2)				Par Value				Contributions				Capital				Stock				Earnings				Loss				Equity
		(In thousands, except for share data)
Balance, January 1, 2010			125,815,600				205,637,925				205,637,925			$	130			$	(1,305	)		$	652,573			$	(683,994	)		$	51,275			$	(53,628	)		$	(34,949	)
Comprehensive income:
Net income			—				—				—				—				—				—				—				242,552				—				242,552
Other comprehensive loss			—				—				—				—				—				—				—				—				(2,175	)			(2,175	)
Comprehensive income			—				—				—				—				—				—				—				—				—				240,377
Conversion of Class B-1 common stock upon follow-on public offering (Note 1)			7,309,963				(7,309,963	)			—				—				—				—				—				—				—				—
Conversion of Class B-2 common stock upon follow-on public offering (Note 1)			11,972,917				—				(11,972,917	)			—				—				—				—				—				—				—
Treasury stock acquired — Class A (7,111,202 shares)			—				—				—				—				—				—				(212,512	)			—				—				(212,512	)
Treasury stock acquired — Class B-1 (7,583,532 shares)			—				—				—				—				—				—				(199,936	)			—				—				(199,936	)
Treasury stock acquired — Class B-2 (374,718 shares)			—				—				—				—				—				—				(9,879	)			—				—				(9,879	)
KSOP shares earned			—				—				—				—				317				11,256				—				—				—				11,573
Stock options exercised (including tax benefit of $49,015)			5,579,135				—				—				5				—				84,492				—				—				—				84,497
Net share settlement of taxes upon exercise of stock options			(503,043	)			—				—				—				—				(15,051	)			—				—				—				(15,051	)
Stock based compensation			—				—				—				—				—				21,298				—				—				—				21,298
Other stock issuances			4,554				—				—				—				—				140				—				—				—				140
Balance, December 31, 2010			150,179,126				198,327,962				193,665,008			$	135			$	(988	)		$	754,708			$	(1,106,321	)		$	293,827			$	(55,803	)		$	(114,442	)
Comprehensive income:
Net income			—				—				—				—				—				—				—				65,876				—				65,876
Other comprehensive income			—				—				—				—				—				—				—				—				966				966
Comprehensive income			—				—				—				—				—				—				—				—				—				66,842
Treasury stock acquired — Class A (2,243,582 shares)			—				—				—				—				—				—				(73,383	)			—				—				(73,383	)
KSOP shares earned			—				—				—				—				71				3,040				—				—				—				3,111
Stock options exercised (including tax benefit of $1,383)			242,518				—				—				1				—				4,962				—				—				—				4,963
Stock-based compensation			—				—				—				—				—				3,818				—				—				—				3,818
Balance, March 31, 2011			150,421,644				198,327,962				193,665,008			$	136			$	(917	)		$	766,528			$	(1,179,704	)		$	359,703			$	(54,837	)		$	(109,091	)

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

VERISK ANALYTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For The Three Months Ended March 31, 2011 and 2010

		2011				2010
		(In thousands)
Cash flows from operating activities:
Net income		$	65,876			$	55,375
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of fixed assets			11,305				9,929
Amortization of intangible assets			8,455				7,304
Amortization of debt issuance costs			309				395
Allowance for doubtful accounts			151				105
KSOP compensation expense			3,111				2,850
Stock-based compensation			3,818				3,886
Non-cash charges associated with performance based appreciation awards			546				566
Realized gains on securities, net			(362	)			(32	)
Deferred income taxes			(158	)			973
Other operating			15				15
Loss on disposal of assets			96				11
Excess tax benefits from exercised stock options			—				(147	)
Changes in assets and liabilities, net of effects from acquisitions:
Accounts receivable			(37,475	)			(42,699	)
Prepaid expenses and other assets			(7,890	)			(4,591	)
Federal and foreign income taxes			35,954				32,937
State and local income taxes			4,830				6,405
Accounts payable and accrued liabilities			(22,100	)			(25,415	)
Fees received in advance			84,057				88,273
Other liabilities			(4,957	)			1,049
Net cash provided by operating activities			145,581				137,189
Cash flows from investing activities:
Acquisitions, net of cash acquired of $1,556 in 2010			—				(6,227	)
Proceeds from release of acquisition related escrows			—				213
Escrow funding associated with acquisitions			—				(1,500	)
Purchases of available-for-sale securities			(960	)			(252	)
Proceeds from sales and maturities of available-for-sale securities			1,154				335
Purchases of fixed assets			(13,648	)			(7,498	)
Net cash used in investing activities			(13,454	)			(14,929	)
Cash flows from financing activities:
Repurchase of Verisk Class A common stock			(73,578	)			—
Repayment of short-term debt, net			(15,946	)			(62,945	)
Payment of debt issuance cost			(256	)			—
Excess tax benefits from exercised stock options			—				147
Proceeds from stock options exercised			3,579				—
Net cash used in financing activities			(86,201	)			(62,798	)
Effect of exchange rate changes			338				3
Increase in cash and cash equivalents			46,264				59,465
Cash and cash equivalents, beginning of period			54,974				71,527
Cash and cash equivalents, end of period		$	101,238			$	130,992
Supplemental disclosures:
Taxes paid		$	3,351			$	616
Interest paid		$	9,479			$	8,228
Non-cash investing and financing activities:
Repurchase of Verisk Class A common stock included in accounts payable and accrued liabilities		$	2,070			$	—
Deferred tax liability established on date of acquisition		$	—			$	(732	)
Capital lease obligations		$	6,920			$	575
Capital expenditures included in accounts payable and accrued liabilities		$	310			$	815
Increase in goodwill due to acquisition related escrow distributions		$	—			$	489

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

VERISK ANALYTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except for share and per share data, unless otherwise stated)

1. Organization:

Verisk Analytics, Inc. and its consolidated subsidiaries (“Verisk” or the “Company”) enable risk-bearing businesses to better understand and manage their risks. The Company provides its customers proprietary data that, combined with analytic methods, create embedded decision support solutions. The Company is one of the largest aggregators and providers of data pertaining to property and casualty (“P&C”) insurance risks in the United States of America (“U.S.”). The Company offers solutions for detecting fraud in the U.S. P&C insurance, mortgage and healthcare industries and sophisticated methods to predict and quantify loss in diverse contexts ranging from natural catastrophes to health insurance. The Company provides solutions, including data, statistical models or tailored analytics, all designed to allow clients to make more logical decisions.

Verisk was established on May 23, 2008 to serve as the parent holding company of Insurance Services Office, Inc. (“ISO”) upon completion of the initial public offering (“IPO”). ISO was formed in 1971 as an advisory and rating organization for the P&C insurance industry to provide statistical and actuarial services, to develop insurance programs and to assist insurance companies in meeting state regulatory requirements. Over the past decade, the Company has broadened its data assets, entered new markets, placed a greater emphasis on analytics, and pursued strategic acquisitions. On October 6, 2009, ISO effected a corporate reorganization whereby the Class A and Class B common stock of ISO were exchanged by the current stockholders for the common stock of Verisk on a one-for-one basis. Verisk immediately thereafter effected a fifty-for-one stock split of its Class A and Class B common stock and equally sub-divided the Class B common stock into two new series of stock, Verisk Class B (Series 1) (“Class B-1”) and Verisk Class B (Series 2) (“Class B-2”).

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

On October 1, 2010, the Company completed a follow-on public offering. Upon completion of this offering, the selling stockholders sold 2,602,212 and 19,282,880 shares of Class A and Class B common stock of Verisk, respectively, which included the underwriters’ 2,854,577 over-allotment option, at the public offering price of $27.25 per share. Class B common stock sold into this offering was automatically converted into Class A common stock. The Company did not receive any proceeds from the sale of common stock in the offering. Concurrently with the closing of this offering, the Company also repurchased 7,300,000 shares of Class B common stock at $26.3644 per share, which represents the net proceeds per share the selling stockholders received in the public offering. The Company funded a portion of this repurchase with proceeds from borrowings of $160,000 under its syndicated revolving credit facility. Upon consummation of the offering and the repurchase, the Company’s Class B-1 and Class B-2 common stock outstanding was 12,554,605 and 15,100,465 shares, respectively. The Class B-1 shares converted to Class A common stock on April 6, 2011 and the Class B-2 shares will automatically convert to Class A common Stock on October 6, 2011.

2. Basis of Presentation and Summary of Significant Accounting Policies:

The accompanying unaudited condensed consolidated financial statements have been prepared on the basis of accounting principles generally accepted in the U.S. (“U.S. GAAP”). The preparation of financial statements in conformity with these accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates include acquisition purchase price allocations, the fair value of goodwill, the realization of deferred tax assets, acquisition related liabilities, fair value of stock-based compensation, liabilities for pension and postretirement benefits, and the estimate for the allowance for doubtful accounts. Actual results may ultimately differ from those estimates.

The condensed consolidated financial statements as of March 31, 2011 and for the three-month periods ended March 31, 2011 and 2010, in the opinion of management, include all adjustments, consisting of normal recurring accruals, to present fairly the Company’s financial position, results of operations and cash flows. The operating results for the three-month period ended March 31, 2011 are not necessarily indicative of the results to be expected for the full year. The condensed consolidated financial statements and related notes for the three-month period ended March 31, 2011 have been prepared on the same basis as and should be read in conjunction with our annual report on Form 10-K for the year ended December 31, 2010. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules of the Securities and Exchange Commission (“SEC”). The Company believes the disclosures made are adequate to keep the information presented from being misleading.

Recent Accounting Pronouncements

In December 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2010-28, When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts (“ASU No. 2010-28”). ASU No. 2010-28 modifies Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist. ASU No. 2010-28 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. Early adoption is not permitted. The adoption of ASU No. 2010-28 did not have any impact on the Company’s consolidated financial statements, and the Company will incorporate the provisions of this guidance as part of their Step 1 testing for goodwill impairment as of June 30, 2011.

In April 2010, the FASB ASU No. 2010-17, Revenue Recognition—Milestone Method (“ASU No. 2010-17”). ASU No. 2010-17 provides guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research or development transactions. ASU No. 2010-17 is effective on a prospective basis for milestones achieved in fiscal years, and interim periods within those years, beginning on or after June 15, 2010. Based on the Company’s current agreements, ASU No. 2010-17 did not have a material impact on the Company’s consolidated financial statements as the Company does not typically perform research or development transactions.

In January 2010, the FASB issued ASU No. 2010-06, Fair Value Measurements and Disclosures (“ASU No. 2010-06”). ASU No. 2010-06 provides guidance on improving disclosures on fair value measurements, such as the transfers between Level 1, Level 2 and Level 3 inputs and the disaggregated activity in the rollforward for Level 3 fair value measurements. ASU No. 2010-06 is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about the disaggregated activity in the rollforward for Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal periods. The adoption of ASU No. 2010-06 had no impact on the Company’s consolidated financial statements.

In October 2009, the FASB issued ASU No. 2009-13, Multiple-Deliverable Revenue Arrangements (“ASU No. 2009-13”). ASU No. 2009-13 establishes the accounting and reporting guidance for arrangements under which the vendor will perform multiple revenue-generating activities. Specifically, ASU No. 2009-13 addresses how to separate deliverables and how to measure and allocate arrangement consideration to one or more units of accounting. ASU No. 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The Company has elected not to early adopt. The adoption of ASU No. 2009-13 did not have a material impact on the Company’s consolidated financial statements as our Company’s multiple deliverables arrangements are comprised primarily of software licenses and services, rather than hardware. Currently, a majority of our deliverables do not have stand alone value, which would preclude the separation and allocation of the arrangement. Therefore, the Company will continue to recognize revenue over the duration of the license term.

3. Investments:

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

						Gross				Gross
		Adjusted				Unrealized				Unrealized
		Cost				Gains				Losses				Fair Value
March 31, 2011
Registered investment companies		$	4,566			$	1,030			$	—			$	5,596
Equity securities			14				—				(7	)			7
Total available-for-sale securities		$	4,580			$	1,030			$	(7	)		$	5,603
December 31, 2010
Registered investment companies		$	4,398			$	1,248			$	—			$	5,646
Equity securities			14				—				(7	)			7
Total available-for-sale securities		$	4,412			$	1,248			$	(7	)		$	5,653

In addition to the available-for-sale securities above, the Company has equity investments in non-public companies in which the Company acquired non-controlling interests and for which no readily determinable market value exists. These securities were accounted for under the cost method in accordance with ASC 323-10-25, The Equity Method of Accounting for Investments in Common Stock. At March 31, 2011 and December 31, 2010, the carrying value of such securities was $3,443 and $3,642 for each period and has been included in “Other assets” in the accompanying condensed consolidated balance sheets.

4. Fair Value Measurements:

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

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

The following tables provide information for such assets and liabilities as of March 31, 2011 and December 31, 2010. The fair values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, acquisition related liabilities prior to the adoption of ASC 805, Business Combinations (“ASC 805”), and short-term debt approximate their carrying amounts because of the short-term maturity of these instruments. The fair value of the Company’s long-term debt was estimated at $872,157 and $584,361 as of March 31, 2011 and December 31, 2010, respectively, and is based on an estimate of interest rates available to the Company for debt with similar features, the Company’s current credit rating and spreads applicable to the Company. These assets and liabilities are not presented in the following table.

						Quoted Prices
						in Active Markets				Significant Other				Significant
						for Identical				Observable				Unobservable
		Total				Assets (Level 1)				Inputs (Level 2)				Inputs (Level 3)
March 31, 2011
Cash equivalents — money-market funds		$	1,666			$	—			$	1,666			$	—
Registered investment companies (1)		$	5,596			$	5,596			$	—			$	—
Equity securities (1)		$	7			$	7			$	—			$	—
Contingent consideration under ASC 805 (2)		$	(3,351	)		$	—			$	—			$	(3,351	)
December 31, 2010
Cash equivalents — money-market funds		$	2,273			$	—			$	2,273			$	—
Registered investment companies (1)		$	5,646			$	5,646			$	—			$	—
Equity securities (1)		$	7			$	7			$	—			$	—
Contingent consideration under ASC 805 (2)		$	(3,337	)		$	—			$	—			$	(3,337	)

The table below includes a rollforward of the Company’s contingent consideration liability under ASC 805 for the three-month periods ended March 31, 2011 and 2010:

		For the Three Months Ended
		March 31, 2011				March 31, 2010
Beginning balance		$	3,337			$	3,344
Acquisitions (1)			—				491
Accretion on acquisition related liabilities			14				5
Ending balance		$	3,351			$	3,840

5. Goodwill and Intangible Assets:

Goodwill as allocated to the Company’s operating segments, Risk Assessment and Decision Analytics, was $27,908 and $604,760, respectively, as of March 31, 2011 and December 31, 2010. There had been no changes in goodwill from December 31, 2010 through March 31, 2011. These balances are net of accumulated impairment charges of $3,244 that occurred prior to the periods included within the condensed consolidated financial statements.

Goodwill and intangible assets with indefinite lives are subject to impairment testing annually as of June 30, or whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. The Company completed the required annual impairment test as of June 30, 2010, which resulted in no impairment of goodwill. Based on the results of the impairment assessment as of June 30, 2010, the Company confirmed that the fair value of its reporting units exceeded their respective carrying value and that there were no reporting units that were at risk for impairment. This testing compares the carrying value of each reporting unit to its fair value. If the fair value of the reporting unit exceeds the carrying value of the net assets, including goodwill assigned to that reporting unit, goodwill is not impaired. If the carrying value of the reporting unit’s net assets including goodwill exceeds the fair value of the reporting unit, then the Company will determine the implied fair value of the reporting unit’s goodwill. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, then an impairment loss is recorded for the difference between the carrying amount and the implied fair value of goodwill. There were no goodwill impairment indicators after the date of the last annual impairment test.

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

		Weighted
		Average								Accumulated
		Useful Life				Cost				Amortization				Net
March 31, 2011
Technology-based		7 years				$	210,212			$	(141,523	)		$	68,689
Marketing-related		5 years					40,882				(29,837	)			11,045
Contract-based		6 years					6,555				(6,336	)			219
Customer-related		13 years					145,567				(33,746	)			111,821
Total intangible assets						$	403,216			$	(211,442	)		$	191,774

		Weighted
		Average								Accumulated
		Useful Life				Cost				Amortization				Net
December 31, 2010
Technology-based		7 years				$	210,212			$	(136,616	)		$	73,596
Marketing-related		5 years					40,882				(28,870	)			12,012
Contract-based		6 years					6,555				(6,287	)			268
Customer-related		13 years					145,567				(31,214	)			114,353
Total intangible assets						$	403,216			$	(202,987	)		$	200,229

Consolidated amortization expense related to intangible assets for the three months ended March 31, 2011 and 2010 was $8,455 and $7,304, respectively. Estimated amortization expense in future periods through 2016 and thereafter for intangible assets subject to amortization is as follows:

Year		Amount
2011		$	22,439
2012			27,551
2013			22,038
2014			14,912
2015			14,724
2016-Thereafter			90,110
		$	191,774

6. Acquisitions:

2010 Acquisitions

On December 16, 2010, the Company acquired 100% of the stock of 3E Company (“3E”), a global source for a comprehensive suite of environmental health and safety compliance solutions for a net cash purchase price of approximately $99,603 and funded $7,730 of indemnity escrows. Within the Company’s Decision Analytics segment, 3E overlaps the customer sets served by the other supply chain risk management solutions and helps the Company’s customers across a variety of vertical markets address their environmental health and safety issues.

On December 14, 2010, the Company acquired 100% of the stock of Crowe Paradis Services Corporation (“CP”), a provider of claims analysis and compliance solutions to the P&C insurance industry for a net cash purchase price of approximately $83,589 and funded $6,750 of indemnity escrows. Within the Company’s Decision Analytics segment, CP offers solutions for complying with the Medicare Secondary Payer Act, provides services to P&C insurance companies, third-party administrators and self-insured companies, which the Company believes further enhances the solution it currently offers.

On February 26, 2010, the Company acquired 100% of the stock of Strategic Analytics (“SA”), a provider of credit risk and capital management solutions to consumer and mortgage lenders, for a net cash purchase price of approximately $6,386 and the Company funded $1,500 of indemnity escrows. Within the Decision Analytics segment, the Company believes SA solutions and application set will allow customers to take advantage of state-of-the-art loss forecasting, stress testing, and economic capital requirement tools to better understand and forecast the risk associated within their credit portfolios.

Acquisition Contingent Payments

Based on the results of operations of Atmospheric and Environmental Research, Inc. (“AER”), which was acquired in 2008, the Company recorded an increase of $3,500 to acquisition related liabilities and goodwill during the year ended December 31, 2010. AER was acquired in 2008 and therefore, accounted for under the transition provisions of FASB No. 141 (Revised), Business Combinations (“FAS No. 141(R)”). As such, any adjustments to contingent consideration are recorded to goodwill until the final resolution has occurred.

Acquisition Escrows

Pursuant to the related acquisition agreements, the Company has funded various escrow accounts to satisfy pre-acquisition indemnity and tax claims arising subsequent to the acquisition date, as well as a portion of the contingent payments. At March 31, 2011 and December 31, 2010, the current portion of the escrows amounted to $6,168 and $6,167, respectively, and has been included in “Other current assets” in the accompanying condensed consolidated balance sheets. At March 31, 2011 and December 31, 2010, the noncurrent portion of the escrow amounted to $15,958 and $15,953, respectively.

7. Income Taxes:

The Company’s effective tax rate for the three months ended March 31, 2011 was 40.1% compared to the effective tax rate for the three months ended March 31, 2010 of 43.5%. The effective rate for the three months ended March 31, 2011 was lower primarily due to a change in deferred tax assets of $2,362 resulting from reduced tax benefits of Medicare subsidies associated with legislative changes in the period ending March 31, 2010. Without this charge, the effective rate for the prior period would have been 41.1%. The March 31, 2011 effective tax rate is also lower than the March 31, 2010 effective tax rate due to favorable state audit settlements, the continued execution of tax planning strategies and the benefits associated with enacted research and development legislation. The difference between statutory tax rates and the company’s effective tax rate are primarily attributable to state taxes and non-deductible share appreciation from the KSOP.

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

8. Debt:

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

		Issuance		Maturity		March 31,				December 31,
		Date		Date		2011				2010
Short-term debt and current portion of long-term debt:
Syndicated revolving credit facility		Various		Various		$	—			$	310,000
Prudential senior notes:
4.60% Series E senior notes		6/14/2005		6/13/2011			50,000				50,000
6.00% Series F senior notes		8/8/2006		8/8/2011			25,000				25,000
Principal senior notes:
6.03% Series A senior notes		8/8/2006		8/8/2011			50,000				50,000
Capital lease obligations and other		Various		Various			4,997				2,717
Short-term debt and current portion of long-term debt						$	129,997			$	437,717
Long-term debt:
Syndicated revolving credit facility		Various		Various		$	295,000			$	—
Prudential senior notes:
6.13% Series G senior notes		8/8/2006		8/8/2013			75,000				75,000
5.84% Series H senior notes		10/26/2007		10/26/2013			17,500				17,500
5.84% Series H senior notes		10/26/2007		10/26/2015			17,500				17,500
6.28% Series I senior notes		4/29/2008		4/29/2013			15,000				15,000
6.28% Series I senior notes		4/29/2008		4/29/2015			85,000				85,000
6.85% Series J senior notes		6/15/2009		6/15/2016			50,000				50,000
Principal senior notes:
6.16% Series B senior notes		8/8/2006		8/8/2013			25,000				25,000
New York Life senior notes:
5.87% Series A senior notes		10/26/2007		10/26/2013			17,500				17,500
5.87% Series A senior notes		10/26/2007		10/26/2015			17,500				17,500
6.35% Series B senior notes		4/29/2008		4/29/2015			50,000				50,000
Aviva Investors North America:
6.46% Series A senior notes		4/27/2009		4/27/2013			30,000				30,000
Capital lease obligations and other		Various		Various			5,520				1,826
Long-term debt						$	700,520			$	401,826
Total debt						$	830,517			$	839,543

On March 16, 2011, The Northern Trust Company joined the syndicated revolving credit facility to increase the capacity by $25,000, for a $600,000 total commitment. In connection with the senior notes issuance on April 6, 2011 described below, the Company used a portion of the proceeds from the senior notes issuance to refinance on a long term basis the outstanding balance of $295,000. As such, in accordance with ASC 470, Classification of Short-Term Obligations Expected to Be Refinanced, the Company recorded $295,000 of its outstanding obligation as of March 31, 2011 under the syndicated revolving credit facility as a “Noncurrent liabilities” within the accompanying condensed consolidated balance sheet. On March 28, 2011, the Company entered into amendments to our revolving credit facility and our master shelf agreements to, among other things, permit the issuance of the notes and guarantees noted below.

On April 6, 2011, the Company completed an issuance of senior notes in the aggregate principal amount of $450,000. These senior notes are due on May 1, 2021 and accrue interest at a rate of 5.80%. The Company received net proceeds of $446,031 after deducting original issue discount, underwriting discount, and commissions of $3,969. The senior notes are fully and unconditionally guaranteed, jointly and severally, on an unsecured and unsubordinated basis by ISO and certain subsidiaries that guarantee our syndicated revolving credit facility or any amendment, refinancing or replacement thereof (See Note 15. Condensed Consolidated Financial Information for Guarantor Subsidiaries and Non-Guarantor Subsidiaries for further information). Interest will be payable semi-annually on May 1st and November 1st of each year, beginning on November 1, 2011. Interest accrues from April 6, 2011. The debt issuance costs will be amortized from the date of issuance to the maturity date.

9. Stockholders’ Deficit:

On November 18, 1996, the Company authorized 335,000,000 shares of ISO Class A redeemable common stock. Effective with the corporate reorganization on October 6, 2009, the ISO Class A redeemable common stock and all Verisk Class B shares sold into the IPO were converted to Verisk Class A common stock on a one-for-one basis. In addition, the Verisk Class A common stock authorized was increased to 1,200,000,000 shares. The Verisk Class A common shares have rights to any dividend declared by the board of directors, subject to any preferential or other rights of any outstanding preferred stock, and voting rights to elect eight of the eleven members of the board of directors. The eleventh seat on the board of directors is held by the CEO of the Company.

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

On October 6, 2009, the Company authorized 80,000,000 shares of preferred stock, par value $0.001 per share, in connection with the reorganization. The preferred shares have preferential rights over the Verisk Class A and Class B common shares with respect to dividends and net distribution upon liquidation. The Company did not issue any preferred shares from the reorganization date through March 31, 2011.

Share Repurchase Program

On April 29, 2010, the Company’s board of directors authorized a $150,000 share repurchase program of the Company’s common stock (the “Repurchase Program”). On October 19, 2010, the Company’s board of directors authorized another $150,000 of share repurchases under the Repurchase Program. Under the Repurchase Program, the Company may repurchase stock in the open market or as otherwise determined by the Company. The Company has no obligation to repurchase stock under this program and intends to use this authorization as a means of offsetting dilution from the issuance of shares under the KSOP, the Verisk Analytics, Inc. 2009 Equity Incentive Plan (the “Incentive Plan”) and the Insurance Services Office, Inc. 1996 Incentive Plan (the “Option Plan”). This authorization has no expiration date and may be suspended or terminated at any time. Repurchased shares will be recorded as treasury stock and will be available for future issuance as part of the Repurchase Program. On March 11, 2011, the Company’s board of directors authorized an additional $150,000 of share repurchases under the Repurchase Program.

During the three months ended March 31, 2011, 2,243,582 shares of Verisk Class A common stock were repurchased by the Company as part of this program at a weighted average price of $32.71 per share. The Company utilized cash from operations and borrowings from its syndicated revolving credit facility to fund these repurchases. As treasury stock purchases are recorded based on trade date, the Company has included $2,070 in “Accounts payable and accrued liabilities” in the accompanying consolidated balance sheets for those purchases that have not settled as of March 31, 2011. The Company had $164,105 available to repurchase shares under the Repurchase Program as of March 31, 2011.

Treasury Stock

As of March 31, 2011, the Company’s treasury stock consisted of 9,354,784 Class A common stock, 186,102,482 Class B-1 common stock and 178,893,668 Class B-2 common stock. Consistent with the Class B-1 and Class B-2 common stock, the Company’s Class B-1 treasury stock converted to Class A treasury stock on April 6, 2011 and the Class B-2 treasury stock will convert to Class A treasury stock on October 6, 2011.

Earnings Per Share (“EPS”)

Basic earnings per common share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding during the period less the weighted average Employee Stock Ownership Plan (“ESOP”) shares of common stock that have not been committed to be released. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding, using the treasury stock method, if the dilutive potential common shares, such as stock awards and stock options, had been issued.

The following is a reconciliation of the numerators and denominators of the basic and diluted EPS computations for the three-month periods ended March 31, 2011 and 2010:

		2011				2010
Numerator used in basic and diluted EPS:
Net income		$	65,876			$	55,375
Denominator:
Weighted average number of common shares used in basic EPS			169,030,227				180,053,550
Effect of dilutive shares:
Potential Class A common stock issuable upon the exercise of stock options			7,933,965				9,401,206
Weighted average number of common shares and dilutive potential common shares used in diluted EPS			176,964,192				189,454,756
Basic EPS of Class A and Class B		$	0.39			$	0.31
Diluted EPS of Class A and Class B		$	0.37			$	0.29

The potential shares of common stock that were excluded from diluted EPS were 1,957,020 and 147,280 for the three months ended March 31, 2011 and 2010, respectively, because the effect of including these potential shares was anti-dilutive.

Accumulated Other Comprehensive Losses

The following is a summary of accumulated other comprehensive losses:

		March 31,				December 31,
		2011				2010
Unrealized gains on investments		$	599			$	725
Unrealized foreign currency losses			(454	)			(792	)
Pension and postretirement unfunded liability adjustment			(54,982	)			(55,736	)
Accumulated other comprehensive losses		$	(54,837	)		$	(55,803	)

The before tax and after tax amounts of other comprehensive income for the three months ended March 31, 2011 and 2010 are summarized below:

						Tax Benefit/
		Before Tax				(Expense)				After Tax
For the Three Months Ended March 31, 2011
Unrealized holding loss on investments arising during the year		$	(218	)		$	92			$	(126	)
Unrealized foreign currency gain			338				—				338
Pension and postretirement unfunded liability adjustment			1,336				(582	)			754
Total other comprehensive income		$	1,456			$	(490	)		$	966
For the Three Months Ended March 31, 2010
Unrealized holding gain on investments arising during the year		$	146			$	(59	)		$	87
Reclassification adjustment for amounts included in net income			12				(5	)			7
Unrealized foreign currency gain			3				—				3
Pension and postretirement unfunded liability adjustment			1,391				(545	)			846
Total other comprehensive income		$	1,552			$	(609	)		$	943

10. Equity Compensation Plans:

All of the Company’s granted equity awards, including outstanding stock options and restricted stock, are covered under the Incentive Plan or the Option Plan. Awards under the Incentive Plan may include one or more of the following types: (i) stock options (both nonqualified and incentive stock options), (ii) stock appreciation rights, (iii) restricted stock, (iv) restricted stock units, (v) performance awards, (vi) other share-based awards, and (vii) cash. Employees, directors and consultants are eligible for awards under the Incentive Plan. Cash received from stock option exercises for the three months ended March 31, 2011 and 2010 was $3,579 and $0, respectively. The Company did not grant any stock options for the three months ended March 31, 2011 and 2010. As of March 31, 2011, there are 8,683,159 shares of Class A common stock reserved and available for future issuance.

On April 1, 2011, the Company granted 1,401,308 nonqualified stock options and 146,664 shares of restricted stock to key employees. The nonqualified stock options have an exercise price equal to the closing price of the Company’s Class A common stock on the grant date, with a ten-year contractual term and a service vesting period of four years. The restricted stock is valued at the closing price of the Company’s Class A common stock on the date of grant and has a graded service vesting period of four years. The Company will recognize the expense of the restricted stock ratably over the periods in which the restrictions lapse. The restricted stock is not assignable or transferrable until it becomes vested.

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

Exercise prices for options outstanding and exercisable at March 31, 2011 ranged from $2.16 to $30.25 as outlined in the following table:

		Options Outstanding												Options Exercisable
														Weighted
		Weighted												Average
		Average				Stock				Weighted				Remaining				Stock				Weighted
Range of		Remaining				Options				Average				Contractual				Options				Average
Exercise Prices		Contractual Life				Outstanding				Exercise Price				Life				Exercisable				Exercise Price
$2.16 to $2.96			1.8				1,772,850			$	2.80				1.8				1,772,850			$	2.80
$2.97 to $4.80			2.2				4,038,600			$	3.72				2.2				4,038,600			$	3.72
$4.81 to $8.90			4.2				3,732,250			$	8.52				4.2				3,732,250			$	8.52
$8.91 to $15.10			5.5				2,726,825			$	13.55				5.5				2,726,825			$	13.55
$15.11 to $17.84			7.5				5,650,215			$	16.68				7.3				2,649,400			$	17.05
$17.85 to $22.00			8.5				2,766,053			$	22.00				8.5				437,192			$	22.00
$22.01 to $30.25			9.0				2,127,046			$	28.36				9.3				31,906			$	30.20
							22,813,839												15,389,023

A summary of options outstanding under the Incentive Plan and the Option Plan as of March 31, 2011 and changes during the three months ended are presented below:

						Weighted				Aggregate
		Number				Average				Intrinsic
		of Options				Exercise Price				Value
Outstanding at December 31, 2010			23,057,857			$	13.35			$	478,014
Exercised			(242,518	)		$	14.76			$	(4,296	)
Cancelled or expired			(1,500	)		$	17.08
Outstanding at March 31, 2011			22,813,839			$	13.33			$	443,189
Options exercisable at March 31, 2011			15,389,023			$	9.39			$	359,613
Options exercisable at December 31, 2010			14,820,447			$	9.22			$	368,466

Intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the quoted price of Verisk’s common stock as of the reporting date. The aggregate intrinsic value of stock options outstanding and exercisable at March 31, 2011 was $443,189 and $359,613, respectively. In accordance with ASC 718, Stock Compensation, excess tax benefit from exercised stock options is recorded as an increase to additional paid-in capital and a corresponding reduction in taxes payable. This tax benefit is calculated as the excess of the intrinsic value of options exercised in excess of compensation recognized for financial reporting purposes. The amount of the tax benefit that has been realized, as a result of those excess tax benefits, is presented in the statement of cash flows as a financing cash inflow. For the three months ended March 31, 2011 and 2010, the Company recorded excess tax benefit from stock options exercised of $1,383 and $0, respectively. The Company realized $0 and $147 of tax benefit within the Company’s quarterly tax payments through March 31, 2011 and 2010, respectively. The realized tax benefit is presented as a financing cash inflow within the accompanying condensed consolidated statements of cash flows.

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

As of March 31, 2011, there was $35,095 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Incentive Plan and the Option Plan. That cost is expected to be recognized over a weighted average period of 2.34 years. As of March 31, 2011, there were 7,424,816 nonvested stock options, of which 6,429,934 are expected to vest. The total grant date fair value of options vested during the three months ended March 31, 2011 and 2010 was $4,818 and $6,177, respectively.

11. Pension and Postretirement Benefits:

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

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

The components of net periodic benefit cost and the amounts recognized in other comprehensive income for the three-month periods ended March 31, 2011 and 2010 are summarized below:

		For the Three Months Ended March 31,
		Pension Plan								Postretirement Plan
		2011				2010				2011				2010
Service cost		$	1,570			$	1,810			$	—			$	—
Interest cost			5,441				5,275				251				320
Amortization of transition obligation			—				—				—				42
Expected return on plan assets			(6,465	)			(5,638	)			—				—
Amortization of prior service cost			(200	)			(200	)			(36	)			—
Amortization of net actuarial loss			1,409				1,411				163				138
Net periodic benefit cost		$	1,755			$	2,658			$	378			$	500
Employer contributions		$	6,168			$	4,165			$	315			$	755

The expected contributions to the Pension Plan and the Postretirement Plan for the year ending December 31, 2011 are consistent with the amounts previously disclosed as of December 31, 2010.

12. Segment Reporting:

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

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

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

The two aforementioned operating segments represent the segments for which separate discrete financial information is available and upon which operating results are regularly evaluated by the CODM in order to assess performance and allocate resources. The Company uses segment EBITDA as the profitability measure for making decisions regarding ongoing operations. Segment EBITDA is income from continuing operations before investment income and interest expense, income taxes, depreciation and amortization, and acquisition related liabilities adjustment. Segment EBITDA is the measure of operating results used to assess corporate performance and optimal utilization of debt and acquisitions. Segment operating expenses consist of direct and indirect costs principally related to personnel, facilities, software license fees, consulting, travel, and third-party information services. Indirect costs are generally allocated to the segments using fixed rates established by management based upon estimated expense contribution levels and other assumptions that management considers reasonable. The Company does not allocate investment income, realized gains/(losses) on securities, net, interest expense, or income tax expense, since these items are not considered in evaluating the segment’s overall operating performance. The CODM does not evaluate the financial performance of each segment based on assets. On a geographic basis, no individual country outside of the U.S. accounted for 1% or more of the Company’s consolidated revenue for either the three-month periods ended March 31, 2011 or 2010. No individual country outside of the U.S. accounted for 1% or more of total consolidated long-term assets as of March 31, 2011 or December 31, 2010.

The following tables provide the Company’s revenue and operating income performance by reportable segment for the three-month periods ended March 31, 2011 and 2010, as well as a reconciliation to income before income taxes for all periods presented in the accompanying condensed consolidated statements of operations:

		For the Three Months Ended												For the Three Months Ended
		March 31, 2011												March 31, 2010
		Risk				Decision								Risk				Decision
		Assessment				Analytics				Total				Assessment				Analytics				Total
Revenues		$	140,543			$	172,326			$	312,869			$	134,578			$	141,576			$	276,154
Expenses:
Cost of revenues (exclusive of items shown separately below)			47,257				77,299				124,556				49,898				65,095				114,993
Selling, general and administrative			19,127				30,129				49,256				19,184				18,330				37,514
Segment EBITDA			74,159				64,898				139,057				65,496				58,151				123,647
Depreciation and amortization of fixed assets			4,318				6,987				11,305				4,323				5,606				9,929
Amortization of intangible assets			36				8,419				8,455				36				7,268				7,304
Operating income			69,805				49,492				119,297				61,137				45,277				106,414
Unallocated expenses:
Investment income											10												32
Realized gains on securities, net											362												32
Interest expense											(9,615	)											(8,466	)
Income before taxes										$	110,054											$	98,012
Capital expenditures, including non-cash purchases of fixed assets and capital lease obligations		$	3,395			$	15,345			$	18,740			$	1,889			$	6,999			$	8,888