SAN DIEGO, Dec. 19 /PRNewswire-FirstCall/ -- Solera Holdings, Inc. (NYSE:
SLH), the leading global provider of software and services to the automobile
insurance claims processing industry, today announced that it has completed
the acquisition of HPI Ltd., the leading UK provider of used vehicle
validation services, from Aviva plc, the largest insurance provider in the
U.K.
Audatex, a Solera company, and Aviva have been strategic international
partners for more than a decade. As a leading global provider of claims
solutions and one of Aviva's claims management technology partners, Solera
provides an innovative suite of services that help customers improve
performance within the auto and property claims environments. Solera believes
its acquisition of HPI will enhance that capability significantly.
The total consideration paid for HPI at closing was approximately $117.4
million (78.3 million pounds Sterling), which consisted of approximately
$100.5 million (67.0 million pounds) in cash and a subordinated note in the
amount of approximately $16.9 million (11.3 million pounds). The subordinated
note carries an annual rate of interest of 8.0% and becomes due and payable in
full on December 31, 2011, subject to certain restrictions contained in our
Amended and Restated First Lien Credit and Guaranty Agreement. Up to a
maximum additional aggregate amount of approximately $7.2 million (4.8 million
pounds) in cash could be earned by the seller of HPI should HPI achieve
certain post-closing financial performance measures in Calendar Years 2009,
2010, and 2011. After payment of the cash portion of the consideration for
HPI at closing, we had approximately $150 million of cash on our balance sheet
and no amounts outstanding under the Senior Secured Revolving Credit Facility
portion of our Amended and Restated First Lien Credit and Guaranty Agreement.
"The acquisition of HPI is consistent with our strategy of investing in
companies that are both aligned with and extend our core automotive claims and
data services offering. The HPI suite of products and services will enhance
our delivery of decision support data and software applications to our
insurer, car manufacturer, auto dealer, and finance company customers. The
acquisition will help us meet some of the increased demand from our clients
for access to integrated historical information on specific vehicles and
specific clients with which they are about to transact. Additionally, we
will begin exploring the extension of the HPI model both regionally and
internationally within the Solera portfolio. We are excited to have completed
this transaction, and we very much look forward to focusing on building
additional stockholder value through leveraging the assets of Solera and HPI
for the benefit of our clients," said Tony Aquila, Solera's Chairman and Chief
Executive Officer.
Although we do not plan to update our previously issued financial outlook
for Fiscal Year 2009 until our second fiscal quarter 2009 earnings release and
conference call currently anticipated for the first week of February, 2009,
our preliminary estimate is that the acquisition of HPI will add approximately
$21.0 million (14.0 million pounds) to our Fiscal Year 2009 revenues and
approximately $9.0 million (6.0 million pounds) to our Fiscal Year 2009
Adjusted EBITDA. Additionally, our preliminary estimate is that the
acquisition of HPI will add approximately $4.0 million (2.7 million pounds) to
our Fiscal Year 2009 GAAP Net Income (or $0.06 per fully-diluted share), and
approximately $4.5 million (3.0 million pounds) to our Fiscal Year 2009
Adjusted Net Income (or $0.07 per fully-diluted share) which offset the
dilutive effect of our recent equity offering of approximately ($0.03) per
fully-diluted share to our Fiscal Year 2009 GAAP Net Income and approximately
($0.06) per fully-diluted share to our Fiscal Year 2009 Adjusted Net Income.
All amounts payable to the sellers are payable in Pound Sterling, and all U.S.
Dollar amounts above assume an exchange rate of $1.50-for-1.00 pounds.
We are currently in the process of determining the amount and nature of
goodwill and intangible assets associated with the purchase of HPI in
accordance with SFAS No. 142. We expect to complete this process during the
next 45 days. Should our final determination of the amount and nature of
goodwill and intangible assets differ substantially from our preliminary
estimates, this could significantly change the impact that we estimate the HPI
acquisition will have on our Fiscal Year 2009 GAAP Net Income and Fiscal Year
2009 Adjusted Net Income.
We are also in the process of determining our filing requirements for the
HPI acquisition pursuant to Rule 3-05(b) promulgated under Regulation S-X. We
anticipate filing the required HPI financial statements by March 6, 2009.
About Solera
Solera is the leading global provider of software and services to the
automobile insurance claims processing industry. Solera is active in over 50
countries across six continents. The Solera companies include Audatex in the
United States, Canada, and in more than 45 additional countries, Informex in
Belgium, Sidexa in France, ABZ in The Netherlands, Hollander serving the North
American recycling market, and IMS providing medical review services. For more
information, please refer to the company's website at
http://www.solerainc.com.
Non-GAAP Financial Measures
We use a number of non-GAAP financial measures that are not intended to be
used in lieu of GAAP presentations, but are provided because management
believes that they provide additional information with respect to the
performance of our fundamental business activities and are also frequently
used by securities analysts, investors and other interested parties to
facilitate the evaluation of our business on a comparable basis to other
companies. The three primary non-GAAP financial measures that we use are
Adjusted EBITDA, Adjusted Net Income, and Adjusted Net Income per diluted
share. We believe that Adjusted EBITDA, Adjusted Net Income and Adjusted Net
Income per diluted share are useful to investors in providing information
regarding our operating results and our continuing operations. We rely on
Adjusted EBITDA as a primary measure to review and assess the operating
performance of our Company and our management team in connection with our
executive compensation and bonus plans. Adjusted EBITDA also allows us to
compare our current operating results with corresponding prior periods as well
as to the operating results of other companies in our industry. We present
Adjusted Net Income and Adjusted Net Income per diluted share because we
believe both of these measures provide useful information regarding our
operating results in addition to our GAAP measures. We believe that Adjusted
Net Income and Adjusted Net Income per diluted share provide investors with
valuable insight into our profitability exclusive of unusual adjustments, and
provide further insight into the cash impact resulting from the different
treatments of goodwill for financial reporting and tax purposes.
Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per diluted
share have limitations as analytical tools, and you should not consider them
in isolation or as a substitute for net income, earnings per share and other
consolidated income statement data prepared in accordance with accounting
principles generally accepted in the United States. Because of these
limitations, Adjusted EBITDA, Adjusted Net Income, and Adjusted Net Income per
diluted share should not be considered as a replacement for net income. We
compensate for these limitations by relying primarily on our GAAP results and
using Adjusted EBITDA, Adjusted Net Income, and Adjusted Net Income per
diluted share as supplemental information.
Adjusted EBITDA is a non-GAAP financial measure that represents GAAP net
income, excluding interest, taxes, depreciation and amortization, stock-based
compensation, restructuring charges, other income - net, and
acquisition-related costs. Acquisition-related costs consist of transaction
costs, retention-related compensation costs, legal and professional fees,
severance costs and other transition costs associated with our acquisitions.
Adjusted Net Income is a non-GAAP financial measure that represents GAAP
net income, plus the following items: provision for income taxes, amortization
of acquisition-related intangibles associated with our acquisition of the
Claims Services Group from ADP in April 2006, stock-based compensation
expense, restructuring charges, other income - net (not including interest
income for periods ending after June 30, 2008), and acquisition-related costs.
Acquisition-related costs consist of transaction costs, retention-related
compensation costs, legal and professional fees, severance costs and other
transition costs associated with our acquisitions. From this figure, we then
subtract a provision for income taxes to arrive at Adjusted Net Income. For
periods ended June 30, 2008 and prior, we use a 33% tax rate. For periods
ending after June 30, 2008, we use a 28% tax rate. We use this 28% tax rate in
order to approximate our long-term effective corporate tax rate, which
includes certain benefits from net operating loss carryforwards, tax
deductible goodwill and amortization, and a low tax-rate jurisdiction for
certain corporate holding companies.
Adjusted Net Income per diluted share (or cash earnings per diluted share)
is a non-GAAP financial measure that represents Adjusted Net Income (as
defined above) divided by the number of diluted shares outstanding for the
period.
Cautions about Forward-Looking Statements
This press release contains forward-looking statements, including
statements about enhancements to our products and services resulting from our
acquisition of HPI, HPI's contributions to our consolidated financial
performance for Fiscal Year 2009, possible expansion of HPI's products and
services into new markets and building stockholder value. These statements
are based on our current expectations, estimates and assumptions and are
subject to many risks, uncertainties and unknown future events that could
cause actual results to differ materially. Actual results may differ
materially from those set forth in this press release due to the risks and
uncertainties inherent to transactions of this nature and our business,
including, without limitation: the failure to realize the expected benefits
from our acquisition of HPI; our inability to successfully integrate HPI's
business, including HPI's existing employees, infrastructure and service
offerings, with our existing business at reasonable cost, or at all; reliance
on a limited number of customers for a substantial portion of HPI's revenues;
unpredictability and volatility relating to (i) foreign currency exchange
risks associated with our consolidated financial reports that include HPI's
operating results and (ii) changes in the number of used car sales in the
United Kingdom; HPI's reliance on third-party information for its software
and services; impacts on HPI's business of any restructuring or severance
charges in future periods; effects of system failures or security breaches on
HPI's business and reputation; and country-specific risks relating to
expansion into new markets, including compliance with local country laws and
regulations. For a discussion of these and other factors that could impact
our operations or financial results and cause our results to differ materially
from those in the forward-looking statements, please refer to our filings with
the Securities and Exchange Commission, particularly our Quarterly Report on
Form 10-Q for the Year Quarter September 30, 2008. We are under no obligation
to (and specifically disclaim any such obligation to) update or alter our
forward-looking statements whether as a result of new information, future
events or otherwise.
SOURCE: Solera Holdings, Inc.
CONTACT:
Investor Relations,
Kamal Hamid of Solera Holdings, Inc.,
+1-858-946-1676,
kamal.hamid@audatex.com
Web Site: http://www.solerainc.com
