Solera Holdings, Inc. Signs Definitive Agreement for Joint Venture with Welsh, Carson, Anderson & Stowe for Vehicle Service, Maintenance and Repair Market Presence

WESTLAKE, Texas, Oct. 3, 2013 /PRNewswire/ -- Solera Holdings, Inc. (NYSE: SLH), a leading global provider of software and services to the automobile insurance claims processing and decision support industries, today announced that it has signed a definitive agreement to purchase equity interests in a parent company of Service Repair Solutions, Inc. ("SRS") from an affiliate of Welsh, Carson, Anderson & Stowe ("Welsh Carson"), a leading private equity firm (the "Joint Venture"). The transaction is subject to customary closing conditions, including Hart-Scott-Rodino clearance, and is expected to close in Solera's second quarter of fiscal year 2014.

SRS is a leading provider in the $200B service, maintenance and repair market with proprietary databases and workflow solutions. The combination of Solera and SRS will expand Solera's reach deeper into household decisions related to the total cost of automobile ownership. This marks yet another step as Solera strengthens its insurance carrier, auto dealer, mechanical and collision repair facility, and OEM relationships.

SRS's market-leading solutions help auto dealers and mechanical repair shops to increase their efficiency, profitability and customer loyalty. SRS's diagnostic and repair database includes over 800,000 user and expert-generated, mechanical diagnoses, and is utilized by approximately 225,000 auto technicians in 50,000 repair shops in the U.S. and Canada.

SRS's dealer services business also leverages a proprietary database of more than 78 million repair orders, 28 million completed inspections and 9 million pages of OEM data used by approximately 1,000 auto dealers.

Tony Aquila, Solera's founder, Chairman and Chief Executive Officer said, "We are thrilled to be working with Welsh Carson and SRS's management team, as we believe we can help them build upon the double-digit top-line growth that SRS has enjoyed over the last five years."

"Partnering with Solera gives SRS the benefit of the strong operating culture that has driven Solera's solid track record. Furthermore, Solera is uniquely qualified to accelerate SRS's international expansion through its global footprint," said Sanjay Swani, General Partner of Welsh Carson. "We look forward to working with Solera and SRS management."

Under the terms of the Joint Venture agreements, Solera will purchase at least 50% of the Joint Venture shares for approximately $289 million. Solera will have the right to call Welsh Carson's Joint Venture shares, and Welsh Carson will have the right to put its Joint Venture shares to Solera. Solera will have operational control of the Joint Venture, and Tony Aquila will be its chairman.

Assuming eight months of pre-synergy contribution from SRS during Solera's fiscal year 2014, the transaction is expected to generate:

• Revenue of between $80 million and $82 million; and
• Adjusted Net Income per common share attributable to Solera of between $0.20 and $0.22.

About Solera

Solera is a leading global provider of software and services to the automobile insurance claims processing and decision support industries. Solera is active in more than 65 countries across six continents. The Solera companies include Audatex in the United States, Canada, and in more than 45 additional countries, Informex in Belgium and Greece, Sidexa in France, ABZ and Market Scan in the Netherlands, HPI in the United Kingdom, Hollander serving the North American recycling market, AUTOonline providing salvage disposition in a number of European and Latin American countries, IMS providing medical review services, and Explore providing data and analytics to United States property and casualty insurers. For more information, please refer to the company's website at http://www.solerainc.com.  

About Welsh, Carson, Anderson & Stowe

Welsh, Carson, Anderson & Stowe focuses its investment activity in two target industries, information/business services and healthcare. Since its founding in 1979, the Firm has organized 15 limited partnerships with total capital of $20 billion. WCAS has a current portfolio of thirty-three companies.  The Firm seeks to (i) invest in growth businesses, (ii) partner with outstanding management teams and (iii) build long-term value through a combination of operational improvements, strategic growth initiatives and complementary acquisitions.  The Firm is currently investing an equity fund, Welsh, Carson, Anderson & Stowe XI, L.P. See www.welshcarson.com to learn more.

Non-GAAP Financial Measures

We use a number of non-GAAP financial measures, including Adjusted Net Income per diluted common share, 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. We believe that Adjusted Net Income per diluted common share is useful to investors in providing information regarding our operating results in addition to our GAAP measures. We also believe that Adjusted Net Income per diluted common share provides 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 Net Income per diluted common share has limitations as an analytical tool, and should not be considered in isolation or as a substitute for net income per share prepared in accordance with accounting principles generally accepted in the United States. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted Net Income per diluted common share as supplemental information.

Adjusted Net Income per diluted common share is a non-GAAP financial measure that represents Adjusted Net Income (as defined below) divided by the number of diluted shares outstanding for the period used in the calculation of GAAP net income attributable to Solera Holdings, Inc. per diluted common share. Adjusted Net Income is a non-GAAP financial measure that represents GAAP net income attributable to Solera Holdings, Inc., excluding (i) provision for income taxes, (ii) amortization of acquired intangible assets, (iii) stock-based compensation expense, (iv) restructuring charges, asset impairments, and other costs associated with exit and disposal activities, (v) other (income) expense, not including interest income, (vi) litigation related expenses, and (vii) acquisition and related costs. From this amount, we subtract an assumed provision for income taxes to arrive at Adjusted Net Income. For calculations of historical Adjusted Net Income, we assume a 28% income tax rate as an approximation of our long-term effective corporate income tax rate, which includes certain benefits from net operating loss carryforwards, tax credits, tax deductible goodwill and amortization, and certain holding companies in low tax-rate jurisdictions.

Cautions about Forward-Looking Statements

This press release contains forward-looking statements, including statements about: the expected closing date of the transaction; the expansion of our and SRS's product offerings, including geographic expansion; the value and benefits of SRS's products and services to customers, both alone and in combination with our other products and services; transaction-related synergies; the payment of the closing purchase price, the call price or the put prices; and the expected impact of the investment on our fiscal year 2014 revenue and Cash EPS.  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, SRS's business and our business, including, without limitation: that we may not complete our initial acquisition of the equity interests of SRS or any subsequent acquisitions of additional equity interests of SRS; the failure to realize the expected benefits from our joint venture with Welsh, Carson or our investment in or subsequent acquisition of SRS; our inability to successfully integrate SRS's business, including SRS's existing employees, infrastructure and service offerings, with our existing businesses at reasonable cost, or at all; our inability to pay (or finance, as applicable) the call price or put prices at our expected cost, or at all, and the possible reduction in our cash balance or increase in outstanding debt after payment of the closing purchase price, call price or put prices; use of cash to service our debt and effects on our business of restrictive covenants in our debt facilities; our ability to obtain additional financing as necessary to support our operations; reliance on a limited number of customers for a substantial portion of our revenues; SRS's and our reliance on third-party information for its and our products and services; impacts on SRS's or our business of any restructuring or severance charges in future periods; effects of changes in or violations by SRS, us or its or our customers of government regulations; effects of competition on SRS's or our product and service pricing and its and our business; risks associated with operating in multiple countries, including regulatory, political and exchange rate risk; effects of system failures, security breaches or regulatory violations on SRS's and our business and reputation; risks associated with the uncertainty in and volatility of global economic conditions; and risks related to business expansion beyond SRS's and our core products and services. For a discussion of these and other factors that could impact our business, 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 Annual Report on Form 10-K for the Fiscal Year Ended June 30, 2013. 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.

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