Solera Holdings, Inc. Reports Fourth Quarter and Fiscal Year 2008 Results

Fourth Quarter Revenue of $145.5 Million, Up 18.8%; Fiscal Year
Revenue of $539.9 million, Up 14.4%; Company Issues Guidance for
Fiscal 2009
SAN DIEGO--(Business Wire)--
Solera Holdings, Inc. (NYSE: SLH) the leading global provider of
software and services to the automobile insurance claims processing
industry, today reported results for the fourth quarter and fiscal
year ended June 30, 2008.

Results for the Fourth Quarter and Fiscal Year Ended June 30,
2008:

GAAP Results

-- Revenue for the fourth quarter was $145.5 million, an 18.8%
increase over the prior year fourth quarter revenue of $122.5
million;

-- Revenue for the fiscal year was $539.9 million, a 14.4%
increase over the prior fiscal year revenue of $472.0 million;

-- Net loss allocable to common stockholders for the fourth
quarter was $21.6 million, a $21.6 million improvement over
the prior year fourth quarter net loss allocable to common
stockholders of $43.2 million;

-- Net income allocable to common stockholders for the fiscal
year was $0.6 million, a $96.1 million improvement over the
prior fiscal year net loss allocable to common stockholders of
$95.5 million;

-- Diluted net loss per share for the fourth quarter was $0.33, a
$0.57 per share improvement over the prior year fourth quarter
diluted net loss per share of $0.90;

-- Diluted net income per share for the fiscal year was $0.01, a
$2.83 per share improvement over the prior fiscal year diluted
net loss per share of $2.82.

Non-GAAP Results

-- Adjusted EBITDA for the fourth quarter was $50.9 million, a
30.2% increase over the prior year fourth quarter Adjusted
EBITDA of $39.1 million;

-- Adjusted EBITDA for the fiscal year was $185.5 million, a
28.8% increase over the prior fiscal year Adjusted EBITDA of
$144.0 million;

-- Adjusted Net Income for the fourth quarter was $22.2 million,
a 52.4% increase over the prior year fourth quarter Adjusted
Net Income of $14.6 million;

-- Adjusted Net Income for the fiscal year was $78.7 million, a
50.1% increase over the prior fiscal year Adjusted Net Income
of $52.4 million;

-- Adjusted Net Income per diluted share for the fourth quarter
and for the fiscal year was $0.34 and $1.22, respectively.

"The fourth quarter represented another good quarter for us,
capping off a tremendous year for the company. Our focus continues to
be on delivering quality and value to our customers, striving to
create greater efficiencies in the business and investing in global
growth opportunities," said Tony Aquila, founder, chairman and CEO of
Solera Holdings, Inc. "Through these efforts, we exceeded First Call
estimates for revenue, operating margins and Adjusted Net Income for
the fourth quarter. While we are pleased with our results, we are
never satisfied and will continue to focus our efforts on further
improving our business and stockholder value."

Business Statistics for the Fourth Quarter and Fiscal Year ended
June 30, 2008:

-- EMEA revenues were $92.9 million and $334.2 million for the
fourth quarter and the full fiscal year, respectively,
representing a 25.9% increase and a 19.3% increase over the
respective prior year period;

-- Americas revenues were $52.6 million and $205.7 million for
the fourth quarter and the full fiscal year, respectively,
representing an 8.0% increase and a 7.2% increase over the
respective prior year period;

-- Revenues from insurance company customers were $59.7 million
and $220.0 million for the fourth quarter and the full fiscal
year, respectively, representing a 16.8% increase and a 6.0%
increase over the respective prior year period;

-- Revenues from collision repair facility customers were $54.8
million and $204.2 million for the fourth quarter and the full
fiscal year, respectively, representing a 26.3% increase and a
25.9% increase over the respective prior year period;

-- Revenues from independent assessors were $15.8 million and
$57.3 million for the fourth quarter and the full fiscal year,
respectively, representing a 30.3% increase and a 27.6%
increase over the respective prior year period;

-- Revenues from automotive recycling and other customers were
$15.2 million and $58.4 million for the fourth quarter and the
full fiscal year, respectively, representing a 4.4% decrease
and a 1.9% increase over the respective prior year period.

GAAP Income Tax Provision

Our fourth quarter tax provision of $26.7 million includes a $30.0
million valuation allowance for deferred tax assets pursuant to the
requirements of Statement of Financial Accounting Standards No. 109,
or SFAS 109. Approximately $27.1 million of this valuation allowance
related primarily to cumulative net operating losses incurred in
several of our U.S. subsidiaries. Under SFAS 109, a deferred tax asset
is reduced by a valuation allowance when it is more likely than not
that the deferred tax asset may not be realized. An important factor
in assessing the need for this valuation allowance is our history of
losses in the United States since our acquisition of the Claims
Services Group from Automatic Data Processing in April 2006 (the
Acquisition). These losses are primarily driven by our interest
expense and our tax deductible amortization of acquired intangibles in
the United States resulting from the Acquisition. To the extent we
have taxable income in the United States in the future, we would
record a benefit from these net operating losses and credits. Although
no assurances can be given, such taxable income could occur as early
as fiscal 2009. Offsetting the valuation allowance in the fourth
quarter was a one-time non-cash deferred tax benefit of approximately
$11.0 million, resulting from the jurisdictional change that lowered
the tax rate for one of our Swiss holding companies. Additional
details regarding the GAAP income tax provision will be provided
during our August 27 conference call and in our Annual Report on Form
10-K for the Year Ended June 30, 2008 to be filed with the Securities
and Exchange Commission.

Fiscal Year 2009 Outlook:

Based upon the fourth quarter and fiscal year results for the
period ended June 30, 2008 outlined above - we are issuing our initial
outlook for our full fiscal year ending June 30, 2009 as follows:

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Fiscal Year 2009 Outlook
---------------------------------------------
Revenues $570 million -- $580 million
Net Income $40 million -- $45 million
Adjusted Net Income $97 million -- $102 million
Adjusted Net Income per
diluted share $1.45 -- $1.55
Adjusted EBITDA $200 million -- $205 million
*T

The Fiscal Year 2009 outlook above assumes constant exchange rates
from those currently prevailing, no acquisitions, and, to calculate
Adjusted Net Income, a 28% tax rate.

Earnings Conference Call:

We will host our fourth quarter and fiscal year ended June 30,
2008 earnings call today at 5:00 p.m. (Eastern Time) - August 27,
2008. The conference call will be webcast live on the Internet and can
be accessed by visiting: www.solerainc.com. A replay will be available
on the Solera website until midnight on September 10, 2008. A live
audio broadcast of the call will be accessible to the public by
calling (866) 831-6224 or for international callers, (617) 213-8853;
please enter the following access code when prompted: 72755630.
Callers should dial in approximately ten minutes before the call
begins.

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SOLERA HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE QUARTERS ENDED JUNE 30, 2008 AND 2007
AND FOR THE TWELVE MONTHS ENDED JUNE 30, 2008 AND 2007
(In thousands, except per share/unit amounts)
(Unaudited)
----------------------------------------------------------------------

Quarter Ended June Twelve Months Ended
30, June 30,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------

Revenues $145,533 $122,540 $539,853 $471,960
--------- --------- --------- ---------

Cost of revenues :
Operating expenses 33,585 35,498 131,715 138,345
Systems development and
programming costs 17,728 17,048 66,666 65,041
--------- --------- --------- ---------
Total cost of revenues
(excluding depreciation and
amortization) 51,313 52,546 198,381 203,386
--------- --------- --------- ---------

Selling, general and
administrative expenses 42,576 38,940 154,532 134,545
Depreciation and
amortization 25,379 27,199 95,266 104,419
Restructuring charges 10,449 4,243 13,286 6,049
Interest expense 11,442 14,390 45,730 69,681
Other (income) expense --
net (3,191) 29,537 (9,518) 31,509
--------- --------- --------- ---------
86,655 114,309 299,296 346,203
--------- --------- --------- ---------
Income (loss) before income
tax provision (benefit) and
minority interests 7,565 (44,315) 42,176 (77,629)
Income tax provision
(benefit) 26,694 (4,217) 34,335 (773)
Minority interest in net
income of consolidated
subsidiaries 2,444 1,189 7,243 4,050
--------- --------- --------- ---------
Net income (loss) (21,573) (41,287) 598 (80,906)
Dividends and redeemable
preferred unit accretion - 1,880 - 14,614
--------- --------- --------- ---------
Net income (loss) allocable
to common
stockholders/unitholders $(21,573) $(43,167) $ 598 $(95,520)
========= ========= ========= =========
Net income (loss) allocable
to common
stockholders/unitholders
per share/unit:
Basic $ (0.34) $ (0.90) $ 0.01 $ (2.82)
========= ========= ========= =========
Diluted $ (0.33) $ (0.90) $ 0.01 $ (2.82)
========= ========= ========= =========
Weighted average
shares/units used in the
calculation of net income
(loss) per share/unit
allocable to common
stockholders/unitholders:
Basic 63,985 47,999 63,500 33,865
========= ========= ========= =========
Diluted 64,814 47,999 64,737 33,865
========= ========= ========= =========
*T

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 earnings (loss) allocable to common
stockholders/unitholders, excluding interest, taxes,
depreciation and amortization, stock-based compensation,
restructuring charges, other (income) expense - 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 acquisition of the Claims
Services Group from ADP in April 2006. A reconciliation of our
Adjusted EBITDA to GAAP net earnings (loss) allocable to
common stockholders/unitholders, the most directly comparable
GAAP measure, is provided in the attached table.

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Three Months Ended Twelve Months Ended
June 30, June 30,
--------------------- --------------------
2008 2007 2008 2007
---------- ---------- --------- ----------
Reconciliation to Adjusted
EBITDA
Net earnings (loss) $ (21,573) $ (41,287) $ 598 $ (80,906)
Add: Income tax provision 26,694 (4,217) 34,335 (773)
---------- ---------- --------- ----------
Net earnings (loss) before
income tax 5,121 (45,504) 34,933 (81,679)
Add: Depreciation and
amortization 25,379 27,199 95,266 104,419
Add: Interest expense 11,442 14,390 45,730 69,681
Add: Stock-based
compensation expense 1,475 1,791 4,848 2,343
Add: Restructuring charges 10,449 4,243 13,286 6,049
Add: Other (income)
expense -- net (3,191) 29,537 (9,518) 31,509
Add: Acquisition related
costs 212 7,425 954 11,699
---------- ---------- --------- ----------
Adjusted EBITDA $ 50,887 $ 39,081 $185,499 $ 144,021
========== ========== ========= ==========
*T

-- Adjusted Net Income is a non-GAAP financial measure that
represents GAAP net earnings (loss) allocable to common
stockholders/unitholders, plus the following items: provision
for income taxes, amortization of acquisition-related
intangibles, stock-based compensation expense, restructuring
charges, other (income) expense - 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 acquisition of the Claims Services Group from ADP in
April 2006. 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 a
certain corporate holding company. A reconciliation of our
Adjusted Net Income to GAAP net earnings (loss) allocable to
common stockholders/unitholders, the most directly comparable
GAAP measure, is provided in the attached table.

-- Adjusted Net Income 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. A reconciliation of our Adjusted Net Income per
diluted share to GAAP net earnings (loss) per share, the most
directly comparable GAAP measure, is provided in the attached
table.

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*T

Three Months Ended Twelve Months Ended
June 30, June 30,
------------------- -------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Reconciliation to Adjusted Net
Income
Net earnings (loss) $(21,573) $(41,287) $ 598 $(80,906)
Add: Income tax provision 26,694 (4,217) 34,335 (773)
--------- --------- --------- ---------
Net earnings (loss) before
income tax 5,121 (45,504) 34,933 (81,679)
Add: Amortization of
acquisition related
intangibles 19,091 20,183 72,996 79,725
Add: Interest expense
associated with debt repaid at
the IPO - 4,080 - 28,630
Add: Stock-based compensation
expense 1,475 1,791 4,848 2,343
Add: Restructuring charges 10,449 4,243 13,286 6,049
Add: Other (income) expense --
net (3,191) 29,537 (9,518) 31,509
Add: Acquisition related costs 212 7,425 954 11,699
--------- --------- --------- ---------
Adjusted earnings (loss) before
income tax provision 33,157 21,755 117,499 78,276
Less: Assumed provision for
income taxes at 33% rate (10,942) (7,179) (38,775) (25,831)
--------- --------- --------- ---------
Adjusted net income $ 22,215 $ 14,576 $ 78,724 $ 52,445
========= ========= ========= =========

Adjusted net income per share /
unit
Basic $ 0.35 $ 1.24
========= =========
Diluted $ 0.34 $ 1.22
========= =========

Weighted average shares/units
used in the calculation
of adjusted net income per
share/unit
Basic 63,985 63,500
========= =========
Diluted 64,814 64,737
========= =========
*T

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SOLERA HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2008 AND JUNE 30, 2007
(In thousands, except share/unit amounts)
(Unaudited)
----------------------------------------------------------------------

June 30, June 30,
2008 2007
----------- -----------

Assets
Current Assets:
Cash and cash equivalents $ 149,311 $ 89,868
Accounts receivable, net 95,843 85,543
Other receivables 9,784 9,297
Other current assets 18,314 16,901
Deferred income tax assets 4,802 3,248
----------- -----------
Total current assets 278,054 204,857
----------- -----------

Property and equipment, net 49,243 51,485
Other assets 22,980 11,625
Long-term deferred income tax assets 5,162 23,835
Goodwill 646,098 569,165
Intangible assets, net 330,218 362,986
----------- -----------
Total assets $1,331,755 $1,223,953
=========== ===========

Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 32,191 $ 25,571
Accrued expenses and other current liabilities 103,597 89,240
Income taxes payable 12,449 13,995
Deferred income tax liabilities 842 1,076
Current portion of long-term debt 6,336 14,140
----------- -----------
Total current liabilities 155,415 144,022
----------- -----------

Long-term debt 624,570 599,128
Other liabilities 33,475 25,378
Long-term deferred income tax liabilities 36,558 42,922
----------- -----------
Total liabilities $ 850,018 $ 811,450
----------- -----------

Minority interests in consolidated subsidiaries 15,429 11,229

Stockholders' equity:
Common Shares, $0.01 par value: 150,000,000
units authorized; 64,816,018 and 64,813,563
issued and outstanding, as of June 30, 2008
and 2007, respectively 510,900 505,939
Accumulated deficit (110,157) (111,687)
Accumulated other comprehensive income 65,565 7,022
----------- -----------
Total stockholders' equity 466,308 401,274
----------- -----------
Total liabilities and stockholders' equity $1,331,755 $1,223,953
=========== ===========
*T

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SOLERA HOLDINGS, INC. AND SUBSIDIARIES
SELECTED STATEMENT OF CASH FLOWS INFORMATION
FOR THE TWELVE MONTHS ENDED JUNE 30, 2008 and 2007
(In thousands)
(Unaudited)
-------------------------------------------------
Twelve Months Ended
June 30,
---------------------
2008 2007
---------------------
Net cash provided by operating activities $ 117,402 $ 46,078
Net cash (used in) investing activities (19,135) (41,507)
Net cash (used in) financing activities (51,346) (6,356)
Effect of foreign currency exchange rate changes 12,522 2,827
---------------------
Net increase in cash and cash equivalents 59,443 1,042
Cash and cash equivalents, beginning of period 89,868 88,826
---------------------

Cash and cash equivalents, end of period $ 149,311 $ 89,868
=====================

Supplemental Cash Flow Information:
Cash paid for interest $ 44,913 $ 66,806
---------------------
Supplemental Disclosure of Non-cash Investing and
Finance Activities:
Capital assets financed $ 3,735 $ 9,618
---------------------
*T

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.

Cautions about Forward-Looking Statements:

This press release contains forward-looking statements, including
statements about building stockholder and customer value, taxable
income, our expected effective corporate income tax rate, our business
outlook for fiscal year 2009, our business strategy, and statements
about historical results or performance that may suggest trends for
our business. 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 in
our business, including, without limitation: our reliance on a limited
number of customers for a substantial portion of our revenues; effects
of competition on our software and service pricing and our business;
unpredictability and volatility of our operating results, which
includes the volatility associated with foreign currency exchange
risks and changes in vehicle accident rates; time and expenses
associated with customers switching from competitive software and
services to our software and services; costs and possible future
losses or impairments relating to our 2006 acquisition of the Claims
Services Group from Automatic Data Processing, Inc.; impacts on our
business of restructuring or severance changes in future periods;
effects of changes in or violations by us or our customers of
government regulations; rapid technology changes in our industry; use
of cash to service our debt; our reliance on third-party information
for our software and services; effects of system failures or security
breaches on our business and reputation; country-specific risks
associated with operating in multiple countries; risks associated with
any future acquisitions, joint ventures or similar transactions; our
ability to obtain additional financing as necessary to support our
operations; effects on our business of restrictive covenants in our
debt facility; and any material adverse impact of current or future
litigation on our results or business. 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 Quarter Ended March 31, 2008. Solera is under no
obligation to (and specifically disclaims any such obligation to)
update or alter its forward-looking statements whether as a result of
new information, future events or otherwise.

When we refer to First Call estimates in this press release, we
mean the estimates of certain analysts who cover Solera, as reported
by Thomson First Call.

Solera Holdings, Inc.
Investor Relations
Kamal Hamid, 858-946-1676
kamal.hamid@audatex.com

Copyright Business Wire 2008