SOLERA HOLDINGS, INC - FORM 10-Q

Attached files

file	filename
EX-32.1 - EXHIBIT 32.1 - SOLERA HOLDINGS, INC	slhexhibit-321ceosection90.htm
EX-32.2 - EXHIBIT 32.2 - SOLERA HOLDINGS, INC	slhexhibit-322cfosection90.htm
EX-31.2 - EXHIBIT 31.2 - SOLERA HOLDINGS, INC	slhexhibit-312cfosection30.htm
EX-10.2 - EXHIBIT 10.2 - SOLERA HOLDINGS, INC	slhexhibit-102cappurchasea.htm
EX-10.3 - EXHIBIT 10.3 - SOLERA HOLDINGS, INC	slhexhibit-103managementwa.htm
EX-31.1 - EXHIBIT 31.1 - SOLERA HOLDINGS, INC	slhexhibit-311ceosection30.htm
EX-10.1 - EXHIBIT 10.1 - SOLERA HOLDINGS, INC	slhexhibit-101secondamendm.htm
EXCEL - IDEA: XBRL DOCUMENT - SOLERA HOLDINGS, INC	Financial_Report.xls

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)



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

For the quarterly period ended December 31, 2014



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

For the transition period from to

Commission File Number 001-33461

Solera Holdings, Inc.

(Exact Name of Registrant as Specified in Its Charter)




Delaware		26-1103816
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

7 Village Circle, Suite 100 Westlake, Texas 76262		(817) 961-2100
(Address of Principal Executive Offices, including Zip Code)		(Registrant’s Telephone Number, Including Area Code)

(Former name, former address and former fiscal year, if changed since last report.)

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 x 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 x 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 definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	x	Accelerated filer	o

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

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

The number of shares outstanding of the issuer’s common stock as of February 3, 2015 was 67,195,335.

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		Page
PART I	FINANCIAL INFORMATION	3

Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets as of December 31, 2014 and June 30, 2014	3
	Condensed Consolidated Statements of Income (Loss) for the three and six month periods ended December 31, 2014 and 2013	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six month periods ended December 31, 2014 and 2013	5
	Condensed Consolidated Statements of Cash Flows for the six month periods ended December 31, 2014 and 2013	6
	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47

Item 4.	Controls and Procedures.	48

PART II	OTHER INFORMATION	48

Item 1.	Legal Proceedings	48

Item 1A.	Risk Factors	49

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	63

Item 6.	Exhibits	64

	Signatures	65

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PART I. FINANCIAL INFORMATION


ITEM 1.	FINANCIAL STATEMENTS.

SOLERA HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)



	December 31, 2014			June 30, 2014
ASSETS
Current assets:
Cash and cash equivalents	$	393,037		$	837,751
Accounts receivable, net of allowance for doubtful accounts of $5,082 and $5,098 at December 31, 2014 and June 30, 2014, respectively	152,418			153,150
Other receivables	21,566			23,002
Other current assets	50,606			35,594
Deferred income tax assets	31,846			8,184
Total current assets	649,473			1,057,681
Property and equipment, net	88,595			76,977
Goodwill	1,959,054			1,574,937
Intangible assets, net	872,521			584,756
Other noncurrent assets	20,202			13,012
Noncurrent deferred income tax assets	91,122			92,723
Total assets	$	3,680,967		$	3,400,086
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	47,376		$	37,413
Accrued expenses and other current liabilities	213,286			216,828
Income taxes payable	24,129			15,179
Deferred income tax liabilities	4,568			13,332
Total current liabilities	289,359			282,752
Long-term debt	2,284,238			1,867,808
Other noncurrent liabilities	70,508			63,433
Noncurrent deferred income tax liabilities	137,185			106,295
Total liabilities	2,781,290			2,320,288
Redeemable noncontrolling interests	408,806			382,298
Stockholders’ equity:
Solera Holdings, Inc. stockholders’ equity:
Common shares, $0.01 par value: 150,000 shares authorized; 67,289 and 68,552 issued and outstanding as of December 31, 2014 and June 30, 2014, respectively	598,418			629,247
Retained earnings (accumulated deficit)	(7,448		)	71,417
Accumulated other comprehensive loss	(108,960		)	(12,688		)
Total Solera Holdings, Inc. stockholders’ equity	482,010			687,976
Noncontrolling interests	8,861			9,524
Total stockholders’ equity	490,871			697,500
Total liabilities and stockholders’ equity	$	3,680,967		$	3,400,086

See accompanying notes to condensed consolidated financial statements.

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SOLERA HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(In thousands, except per share amounts)

(Unaudited)



	Three Months Ended December 31,					Six Months Ended December 31,
	2014		2013			2014		2013
Revenues	$	282,697	$	238,915		$	562,780	$	456,943
Cost of revenues:
Operating expenses	72,437		54,758			140,969		104,509
Systems development and programming costs	25,480		21,636			51,382		41,208
Total cost of revenues (excluding depreciation and amortization)	97,917		76,394			192,351		145,717
Selling, general and administrative expenses (1)	75,591		71,087			157,467		136,194
Depreciation and amortization	39,368		29,594			77,366		54,697
Restructuring charges, asset impairments, and other costs associated with exit and disposal activities	633		720			2,890		1,111
Acquisition and related costs	11,458		6,288			22,810		17,483
Interest expense	28,961		28,531			56,593		55,460
Other expense, net	17,818		61,502			18,281		62,217
	271,746		274,116			527,758		472,879
Income (loss) before provision for income taxes	10,951		(35,201		)	35,022		(15,936		)
Income tax provision	1,753		12,513			9,252		15,209
Net income (loss)	9,198		(47,714		)	25,770		(31,145		)
Less: Net income attributable to noncontrolling interests	4,751		3,339			8,959		6,217
Net income (loss) attributable to Solera Holdings, Inc.	$	4,447	$	(51,053	)	$	16,811	$	(37,362	)
Net income (loss) attributable to Solera Holdings, Inc. per common share:
Basic	$	0.06	$	(0.74	)	$	0.24	$	(0.54	)
Diluted	$	0.06	$	(0.74	)	$	0.24	$	(0.54	)
Dividends paid per share	$	0.195	$	0.17		$	0.39	$	0.34
Weighted-average shares used in the calculation of net income (loss) attributable to Solera Holdings, Inc. per common share:
Basic	68,057		68,829			68,263		68,833
Diluted	68,397		68,829			68,691		68,833

(1) Includes share-based compensation expense of $4.2 million and $9.0 million for the three months ended December 31, 2014 and 2013, respectively, and $14.3 million and $19.4 million for the six months ended December 31, 2014 and 2013, respectively.

See accompanying notes to condensed consolidated financial statements.

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SOLERA HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)



	Three Months Ended December 31,						Six Months Ended December 31,
	2014			2013			2014			2013
Net income (loss)	$	9,198		$	(47,714	)	$	25,770		$	(31,145	)
Other comprehensive income (loss), net of taxes:
Foreign currency translation adjustments, net of income tax benefit (expense) of $0, $(87), $858 and $(501), respectively	(42,076		)	13,328			(109,488		)	46,171
Unrealized gain (loss) on derivative financial instruments:
Unrealized gain (loss) on derivative financial instruments, net of income tax benefit (expense) of $(4,145), $(721), $8,613 and $4,038, respectively	7,029			(653		)	19,037			(8,526		)
Amounts reclassified out of accumulated other comprehensive income, net of income tax benefit (expense) of $3,401, $2,919, $(7,353) and $(3,911), respectively	(5,765		)	2,643			(16,250		)	8,257
Net change in unrealized gain (loss) on derivative financial instruments	1,264			1,990			2,787			(269		)
Total other comprehensive income (loss)	(40,812		)	15,318			(106,701		)	45,902
Total comprehensive income (loss)	(31,614		)	(32,396		)	(80,931		)	14,757
Comprehensive income (loss) attributable to noncontrolling interests	840			5,047			(1,469		)	11,419
Comprehensive income (loss) attributable to Solera Holdings, Inc.	$	(32,454	)	$	(37,443	)	$	(79,462	)	$	3,338

See accompanying notes to condensed consolidated financial statements.

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SOLERA HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)



	Six Months Ended December 31,
	2014			2013
Cash flows from operating activities:
Net income (loss)	$	25,770		$	(31,145	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	77,366			54,697
Provision for doubtful accounts	2,181			2,753
Share-based compensation expense	14,312			19,398
Deferred income tax benefit	(1,513		)	(3,693		)
Change in fair value of derivative financial instruments	(16,250		)	8,257
Loss on extinguishment of debt	—			63,328
Other	384			1,430
Changes in operating assets and liabilities, net of effects from acquisition of businesses:
Decrease in accounts receivable	35			11,130
(Increase) in other assets	(50,298		)	(12,422		)
Increase (decrease) in accounts payable	15			(3,975		)
Increase in accrued expenses and other liabilities	27,867			17,324
Net cash provided by operating activities	79,869			127,082
Cash flows from investing activities:
Capital expenditures	(30,572		)	(20,361		)
Acquisitions and capitalization of intangible assets	(14,918		)	(5,927		)
Acquisitions of businesses, net of cash acquired and proceeds from sale of business	(757,642		)	(325,822		)
(Increase) decrease in restricted cash	(123		)	250
Net cash used in investing activities	(803,255		)	(351,860		)
Cash flows from financing activities:
Proceeds from debt issuance, net of payments of debt issuance costs	416,327			1,701,433
Payment of contingent purchase consideration	(15,531		)	(2,097		)
Principal payments on financed asset acquisitions	(92		)	(82		)
Repayments of long-term debt	—			(1,197,691		)
Cash dividends paid on common shares and participating securities	(26,927		)	(23,625		)
Cash dividends paid to noncontrolling interests	(1,954		)	(4,695		)
Repurchases of common stock	(82,751		)	(14,899		)
Proceeds from stock purchase plan and exercise of stock options	3,896			6,779
Net cash provided by financing activities	292,968			465,123
Effect of foreign currency exchange rate changes on cash and cash equivalents	(14,296		)	6,354
Net change in cash and cash equivalents	(444,714		)	246,699
Cash and cash equivalents, beginning of period	837,751			464,239
Cash and cash equivalents, end of period	$	393,037		$	710,938
Supplemental cash flow information:
Cash paid for interest	$	60,963		$	61,538
Cash paid for income taxes	$	34,906		$	23,621
Supplemental disclosure of non-cash investing and financing activities:
Capital assets financed	$	1,342		$	287
Accrued contingent purchase consideration	$	11,973		$	1,469

See accompanying notes to condensed consolidated financial statements.

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SOLERA HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


1.	Basis of Presentation and Significant Accounting Policies

Description of Business

Solera Holdings, Inc. and subsidiaries (the “Company”, “Solera”, “we”, “us” or “our”) is a leading provider of risk and asset management software and services to the automotive and property marketplace, including the global "property and casualty" ("P&C") insurance industry. In addition to our global-leading position in collision repair and our U.S. based mechanical repair presence, we provide data driven productivity and decision support solutions to other aspects of vehicle ownership such as vehicle validation, driver violation monitoring, vehicle salvage and electronic titling. We are also expanding our core competencies of data, software and connectivity from the auto to the home. We are active in over 70 countries across six continents.

Through our acquisition of the Insurance and Services Division of Pittsburgh Glass Works LLC (“I&S”) in July 2014, we also provide software and business management tools, third-party claims administration, first notice of loss and network management services to the U.S. auto and property repair industries, specializing in glass claims. In addition, through our acquisition of CAP Automotive ("CAP") in November 2014, we provide valuation data and specification data for new and used vehicles in the United Kingdom.

Financial Statement Preparation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”), and therefore, certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") have been condensed or omitted. In the opinion of management, the accompanying condensed consolidated financial statements for the periods presented reflect all adjustments, consisting of only normal, recurring adjustments, necessary to fairly state our financial position, results of operations and cash flows. These condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements for the fiscal year ended June 30, 2014, included in our Annual Report on Form 10-K filed with the SEC on August 29, 2014. Our operating results for the three month period ended December 31, 2014 are not necessarily indicative of the results that may be expected for any future periods.

Principles of Consolidation

The unaudited condensed consolidated financial statements include our accounts and those of our wholly-owned and majority-owned subsidiaries, as well as Service Repair Solutions, Inc. ("SRS"). Our consolidated majority-owned subsidiaries include certain of our subsidiaries located in Belgium, France, Portugal, Spain and Mexico. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the accompanying consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make judgments, assumptions and estimates that affect the amounts reported in the consolidated financial statements and accompanying notes. We base our estimates and judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results could differ from those estimates. The reported amounts of assets, liabilities, revenues and expenses are affected by estimates and assumptions which are used for, but not limited to, the accounting for sales allowances, allowance for doubtful accounts, fair value of derivatives, valuation of goodwill and intangible assets, amortization of intangibles, restructurings, liabilities under defined benefit plans, stock-based compensation, redeemable noncontrolling interests and income taxes.

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Reclassifications

Share-based compensation expense for the previously reported periods has been reclassified to selling, general and administrative expenses from a separate line item in the accompanying condensed consolidated statements of income (loss) to conform with the current period presentation.

Recently Adopted Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") Topic No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which requires an entity to present certain unrecognized tax benefits as reductions to deferred tax assets rather than as liabilities in balance sheets when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. ASU Topic No. 2013-11 does not affect the recognition or measurement of uncertain tax positions under ASC 740. We adopted ASU Topic No. 2013-11 in the first quarter of our fiscal year 2015. The adoption of ASU Topic No. 2013-11 did not impact our financial condition, results of operations or cash flows.

New Accounting Pronouncements Not Yet Adopted

In May 2014, the FASB issued ASU Topic No. 2014-09, Revenue from Contracts with Customers, which supersedes the revenue recognition requirements in ASC Topic No. 605, Revenue Recognition, and most industry-specific guidance. This guidance primarily requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU Topic No. 2014-09 is effective for our fiscal year 2017.

In August 2014, the FASB issued ASU Topic No. 2014-15, Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern, which requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date of issuance of the entity’s financial statements. ASU Topic No. 2014-15 is effective for our fiscal year 2017.


2.	Net Income (Loss) Attributable to Solera Holdings, Inc. Per Common Share

Substantially all of our restricted stock units have the right to receive non-forfeitable dividends on an equal basis with common stock and therefore are considered participating securities that must be included in the calculation of net income (loss) per share using the two-class method. Under the two-class method, basic and diluted net income (loss) per share is determined by calculating net income (loss) per share for common stock and participating securities based on the cash dividends paid and participation rights in undistributed earnings. Diluted net income (loss) per share also considers the dilutive effect of in-the-money stock options and unvested restricted stock units and performance share units that have the right to receive forfeitable dividends, calculated using the treasury stock method. Under the treasury stock method, the amount of assumed proceeds from unexercised stock options and unvested restricted stock units includes the amount of compensation cost attributable to future services not yet recognized, proceeds from the exercise of the options, and any excess income tax benefit or liability.

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The computation of basic and diluted net income (loss) attributable to Solera Holdings, Inc. per common share using the two-class method is as follows (in thousands, except per share amounts):



	Three Months Ended December 31,						Six Months Ended December 31,
	2014			2013			2014			2013
Basic net income (loss) attributable to Solera Holdings, Inc. per common share:
Net income (loss) attributable to Solera Holdings, Inc.	$	4,447		$	(51,053	)	$	16,811		$	(37,362	)
Less: Dividends paid and undistributed earnings allocated to participating securities	(133		)	(79		)	(224		)	(176		)
Net income (loss) attributable to common shares – basic	$	4,314		$	(51,132	)	$	16,587		$	(37,538	)
Weighted-average number of common shares used to compute basic net income (loss) attributable to Solera Holdings, Inc. per common share	68,057			68,829			68,263			68,833
Basic net income (loss) attributable to Solera Holdings, Inc. per common share	$	0.06		$	(0.74	)	$	0.24		$	(0.54	)
Diluted net income (loss) attributable to Solera Holdings, Inc. per common share:
Net income (loss) attributable to Solera Holdings, Inc.	$	4,447		$	(51,053	)	$	16,811		$	(37,362	)
Less: Dividends paid and undistributed earnings allocated to participating securities	(133		)	—			(224		)	—
Net income (loss) attributable to common shares – diluted	$	4,314		$	(51,053	)	$	16,587		$	(37,362	)



Weighted-average number of common shares used to compute basic net income (loss) attributable to Solera Holdings, Inc. per common share	68,057		68,829			68,263		68,833
Dilutive effect of options to purchase common stock, restricted stock units and performance share units	340		—			428		—
Weighted-average number of common shares used to compute diluted net income (loss) attributable to Solera Holdings, Inc. per common share	68,397		68,829			68,691		68,833
Diluted net income (loss) attributable to Solera Holdings, Inc. per common share	$	0.06	$	(0.74	)	$	0.24	$	(0.54	)

The following securities that could potentially dilute earnings per share in the future are not included in the determination of diluted net income attributable to Solera Holdings, Inc. per common share (in thousands):



	Three Months Ended December 31,		Six Months Ended December 31,
	2014	2013	2014	2013
Antidilutive options to purchase common stock and restricted stock units	55	500	31	474


3.	Business Combinations

Acquisition of CAP

On November 19, 2014, we acquired 100% of the equity interests of CAP, for approximately £284.8 million ($449.7 million) in cash paid at closing. CAP is a leading provider of real-time, high-accuracy valuations and specifications for new and used vehicles in the United Kingdom. CAP's solutions provide pricing transparency for vehicle transactions and enable buyers and sellers of vehicles to make accurate pricing decisions. The acquisition of CAP creates the only United Kingdom-based enterprise with decision support data and software solutions spanning vehicle valuation, validation, collision and mechanical repair and total cost of ownership. We financed the acquisition of CAP through the issuance of additional senior unsecured notes (Note 9) as well as cash on hand. CAP has been assigned to our EMEA segment. We have included the results of operations of CAP in our consolidated statements of income from the acquisition date. Revenues and net income earned by CAP were $4.9 million and $1.7 million, respectively, for the period from the acquisition date through December 31, 2014.

We have accounted for the acquisition of CAP under the acquisition method of accounting and, accordingly, the total purchase price has been allocated to the acquired tangible and identifiable intangible assets and assumed liabilities based on their estimated fair values on the acquisition date. The excess of the purchase price over the aggregate fair values was recorded

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as goodwill. Of the purchase price for CAP, we have preliminarily allocated £186.3 million ($294.2 million) to goodwill and £122.7 million ($193.6 million) to identifiable intangible assets. The goodwill recorded in the acquisition represents future enhancements to the software and database, future customer relationships and markets, and the workforce. The goodwill recorded in the CAP acquisition is not expected to be tax deductible for U.S. federal income tax purposes.

The following table summarizes the preliminary purchase price allocation for the acquisition of CAP (in thousands):



Goodwill	$	294,168
Intangible assets	193,640
Cash	4,606
Accounts receivable	9,352
Other assets acquired	2,876
Accounts payable and other current liabilities assumed	(5,585		)
Deferred revenue	(16,925		)
Deferred tax liabilities	$	(32,476	)
Total	$	449,656

Identifiable intangible assets acquired from CAP were as follows:



	Value (in thousands)		Weighted Average Amortizable Life (in years)
Customer relationships	$	78,365	19.8
Technology	58,900		10.0
Trademarks	56,375		Indefinite
Total	$	193,640

We are amortizing the acquired identifiable intangible assets on an accelerated basis to reflect the pattern in which the economic benefits of the intangible assets are consumed.

We valued the purchased trademark and technology assets under the income approach using the relief from royalty method, which assumes value to the extent that the acquired company is relieved of the obligation to pay royalties for the benefits received from them. We valued the purchased customer relationships asset under the income approach using the excess earnings methodology based upon estimated future discounted cash flows attributable to revenues projected to be generated from those customers.

In connection with the acquisition of CAP, we incurred direct and incremental costs of $4.2 million, consisting of legal and professional fees, which are included in acquisition and related costs in our consolidated statements of income.

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The following table presents the unaudited pro forma combined results of Solera and CAP as though the acquisition of CAP occurred at the beginning of fiscal year 2014. The unaudited pro forma financial information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisition had occurred at the beginning of fiscal year 2014. The unaudited pro forma financial information reflects all material, recurring adjustments directly attributable to the acquisition of CAP, including amortization of acquired intangible assets, interest expense associated with the senior unsecured notes issued in November 2014 to finance our acquisition of CAP and any related tax effects. Amounts are in thousands, except per share data.



	Three Months Ended December 31, 2014		Three Months Ended December 31, 2013			Six Months Ended December 31, 2014		Six Months Ended December 31, 2013
	(unaudited)					(unaudited)
Revenues	$	289,466	$	247,929		$	580,399	$	474,575
Net income (loss) attributable to Solera Holdings, Inc.	3,780		(55,174		)	11,603		(45,911		)
Net income (loss) attributable to Solera Holdings, Inc. per common share—basic	0.05		(0.80		)	0.17		(0.67		)
Net income (loss) attributable to Solera Holdings, Inc. per common share—diluted	0.05		(0.80		)	0.17		(0.67		)

Acquisition of I&S

On July 29, 2014, we acquired 100% of the operating entities and other assets comprising I&S, for approximately $279.4 million in cash paid at closing. Operating under the brand names of LYNX Services, GTS Services, and GLAXIS, I&S is a leading provider of software and business management tools, third-party claims administration, first notice of loss and network management services to the U.S. auto and property repair industries, specializing in glass claims. The acquisition of I&S allows us to expand our relationship with insurance companies in the U.S. and abroad with workflow tools and third-party management services for glass, property, and collision claims as well as providing business management solutions to a broad network of auto repair and flat glass retailers. I&S has been included in our Americas segment. We have included the results of operations of I&S in our consolidated statements of income from the acquisition date. Revenues earned and net loss incurred by I&S were $25.2 million and $(1.3) million, respectively, for the period from the acquisition date through December 31, 2014.

We have accounted for the acquisition of I&S under the acquisition method of accounting and, accordingly, the total purchase price has been allocated to the acquired tangible and identifiable intangible assets and assumed liabilities based on their estimated fair values on the acquisition date. The excess of the purchase price over the aggregate fair values was recorded as goodwill. Of the purchase price for I&S, we have preliminarily allocated $153.5 million to goodwill and $129.6 million to identifiable intangible assets. The goodwill recorded in the acquisition represents future enhancements to the software and database, future customer relationships and markets, and the workforce. All of the goodwill recorded in the I&S acquisition is expected to be tax deductible.

The following table summarizes the preliminary purchase price allocation for the acquisition of I&S (in thousands):



Goodwill	$	153,451
Intangible assets	129,560
Accounts receivable	2,836
Other assets acquired	2,648
Accounts payable	(6,839		)
Accrued expenses and other current liabilities assumed	(2,240		)
Total	$	279,416

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Identifiable intangible assets acquired from I&S were as follows:



	Value (in thousands)		Weighted Average Amortizable Life (in years)
Customer relationships	$	76,240	19.2
Technology	31,670		15.0
Trademarks	21,650		Indefinite
Total	$	129,560

We are amortizing the acquired identifiable intangible assets on an accelerated basis to reflect the pattern in which the economic benefits of the intangible assets are consumed.

In connection with the acquisition of I&S, we incurred direct and incremental costs of $2.0 million, consisting of legal and professional fees, which are included in acquisition and related costs in our consolidated statements of income.

The following table presents the unaudited pro forma combined results of Solera and I&S as though the acquisition of I&S occurred at the beginning of fiscal year 2014. The unaudited pro forma financial information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisition had occurred at the beginning of fiscal year 2014. The unaudited pro forma financial information reflects all material, recurring adjustments directly attributable to the acquisition of I&S, including amortization of acquired intangible assets and any related tax effects. Amounts are in thousands, except per share data.



	Three Months Ended December 31, 2014		Three Months Ended December 31, 2013			Six Months Ended December 31, 2014		Six Months Ended December 31, 2013
	(unaudited)					(unaudited)
Revenues	$	282,697	$	252,173		$	567,692	$	484,832
Net income (loss) attributable to Solera Holdings, Inc.	4,447		(50,719		)	18,435		(36,269		)
Net income (loss) attributable to Solera Holdings, Inc. per common share—basic	0.06		(0.74		)	0.27		(0.53		)
Net income (loss) attributable to Solera Holdings, Inc. per common share—diluted	0.06		(0.74		)	0.27		(0.53		)

Other Acquisitions

In addition to CAP and I&S, we acquired two businesses during the six months ended December 31, 2014 for approximately $27.5 million in cash paid at closing and additional future cash payments of up to $14.2 million contingent upon the achievement of certain financial performance, product-related, integration and other objectives. These acquisitions are immaterial, both individually and in the aggregate. The purchase price allocation for these acquisitions reflected in the accompanying consolidated balance sheet as of December 31, 2014 are preliminary.

During the six months ended December 31, 2013, we acquired four businesses for approximately $50.2 million in cash paid at closing and additional future cash payments of up to $31.2 million contingent upon the achievement of certain financial performance, product-related, integration and other objectives. The acquisitions completed during the six months ended December 31, 2013 were immaterial both individually and in the aggregate.

Contingent Purchase Consideration

At December 31, 2014, the maximum aggregate amount of remaining contingent cash payments associated with our business combinations is $105.6 million which is payable through fiscal year 2018.

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4.	Goodwill and Intangible Assets

Intangible assets consist of the following (in thousands):



	December 31, 2014							June 30, 2014
	Gross Carrying Amount		Accumulated Amortization			Intangible Assets, net		Gross Carrying Amount		Accumulated Amortization			Intangible Assets, net
Amortized intangible assets:
Internally developed software	$	70,944	$	(24,922	)	$	46,022	$	60,330	$	(22,349	)	$	37,981
Purchased customer relationships	675,115		(241,357		)	433,758		518,483		(224,305		)	294,178
Purchased trade names and trademarks	37,592		(30,513		)	7,079		39,662		(30,766		)	8,896
Purchased software and database technology	606,139		(378,610		)	227,529		540,803		(381,478		)	159,325
Other	5,424		(5,114		)	310		6,021		(5,776		)	245
	$	1,395,214	$	(680,516	)	$	714,698	$	1,165,299	$	(664,674	)	$	500,625
Intangible assets not subject to amortization:
Purchased trade names and trademarks with indefinite lives	157,823		—			157,823		84,131		—			84,131
	$	1,553,037	$	(680,516	)	$	872,521	$	1,249,430	$	(664,674	)	$	584,756

The following table summarizes the activity in goodwill for the six months ended December 31, 2014 (in thousands):



	Balance at Beginning of Period		Current Period Acquisitions		Other			Foreign Currency Translation Effect			Balance at End of Period
EMEA	$	632,701	$	310,010	$	(2,716	)	$	(73,340	)	$	866,655
Americas	942,236		153,451		(623		)	(2,665		)	1,092,399
Total	$	1,574,937	$	463,461	$	(3,339	)	$	(76,005	)	$	1,959,054

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5.	Stockholders’ Equity and Redeemable Noncontrolling Interests

The following table summarizes the activity in stockholders’ equity and redeemable noncontrolling interests for the periods indicated (in thousands):



	Stockholders’ Equity Attributable to Solera Holdings, Inc.
	Common Shares
	Shares		Amount			Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Loss			Total Solera Holdings, Inc. Stockholders’ Equity			Noncontrolling Interests			Total Stockholders’ Equity			Redeemable Noncontrolling Interests
Balance at June 30, 2014	68,552		$	629,247		$	71,417		$	(12,688	)	$	687,976		$	9,524		$	697,500		$	382,298
Net income	—		—			16,811			—			16,811			2,549			19,360			6,409
Other comprehensive loss	—					—			(96,272		)	(96,272		)	(1,260		)	(97,532		)	(9,167		)
Share-based compensation	—		14,312			—			—			14,312			—			14,312			—
Purchases of Solera Holdings, Inc. common shares(1)	(1,526	)	(14,002		)	(68,749		)	—			(82,751		)	—			(82,751		)	—
Issuance of common shares under stock award plans, net	263		3,977			—			—			3,977			—			3,977			—
Dividends paid on common stock and participating securities	—		—			(26,927		)	—			(26,927		)	—			(26,927		)	—
Dividends due or paid to noncontrolling owners	—		—			—			—			—			(1,952		)	(1,952		)	(5,303		)
Acquisition of ownership interest in majority-owned subsidiary	—		(547		)	—			—			(547		)	—			(547		)	—
Revaluation and additions to noncontrolling interests	—		(34,569		)	—			—			(34,569		)	—			(34,569		)	34,569
Balance at December 31, 2014	67,289		$	598,418		$	(7,448	)	$	(108,960	)	$	482,010		$	8,861		$	490,871		$	408,806


(1)	Please refer to Note 6 for further information on repurchases of our common stock. In accordance with ASC Topic No. 505-30-30, we have allocated the cost of the shares repurchased between paid-in capital and retained earnings based on the excess of the repurchase price over the stated value.

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	Stockholders’ Equity Attributable to Solera Holdings, Inc.
	Common Shares
	Shares		Amount			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Solera Holdings, Inc. Stockholders’ Equity			Noncontrolling Interests			Total Stockholders’ Equity			Redeemable Noncontrolling Interests
Balance at June 30, 2013	68,764		$	602,613		$	177,335		$	(43,147	)	$	736,801		$	11,438		$	748,239		$	84,737
Net income (loss)	—		—			(37,362		)	—			(37,362		)	2,464			(34,898		)	3,753
Other comprehensive income	—		—			—			40,699			40,699			357			41,056			4,845
Share-based compensation	—		19,398			—			—			19,398			—			19,398			—
Purchases of Solera Holdings, Inc. common shares(1)	(250	)	(2,178		)	(12,721		)	—			(14,899		)	—			(14,899		)	—
Issuance of common shares under stock award plans, net	377		6,791			—			—			6,791			—			6,791			—
Dividends paid on common stock and participating securities	—		—			(23,625		)	—			(23,625		)	—			(23,625		)	—
Dividends paid to noncontrolling owners	—		—			—			—			—			(4,695		)	(4,695		)	—
Acquisition of ownership interest in majority-owned subsidiary	—		—			—			—			—			—			—			289,176
Revaluation of and additions to noncontrolling interests	—		(8,684		)	—			—			(8,684		)	—			(8,684		)	8,684
Balance at December 31, 2013	68,891		$	617,940		$	103,627		$	(2,448	)	$	719,119		$	9,564		$	728,683		$	391,195


(1)	Please refer to Note 6 for further information on repurchases of our common stock. In accordance with ASC Topic No. 505-30-30, we have allocated the cost of the shares repurchased between paid-in capital and retained earnings based on the excess of the repurchase price over the stated value.

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6.	Share Repurchase Program

In November 2014, our Board of Directors approved a new share repurchase program, replacing the share repurchase program authorized in October 2013, for up to a total of $375 million of our common stock through December 31, 2016. Share repurchases are made from time to time, through an accelerated stock purchase agreement, in open market transactions at prevailing market prices or in privately negotiated transactions. The repurchase program does not require us to purchase any specific number or amount of shares, and the timing and amount of such purchases will be determined by management based upon market conditions and other factors. In addition, the program may be amended or terminated at the discretion of our Board of Directors. Through December 31, 2014, we repurchased approximately 1.0 million shares for $52.5 million under the share repurchase program that was authorized in November 2014. During the six months ended December 31, 2014, we repurchased approximately 1.5 million shares for $82.8 million under our share repurchase programs.


7.	Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes in accumulated other comprehensive income (loss) during the three and six months ended December 31, 2014 and 2013 (in thousands):



	Foreign Currency Translation Adjustment			Unrealized Losses on Derivative Financial Instruments			Change in Funded Status of Defined Benefit Pension Plans			Accumulated Other Comprehensive Loss
Balance at September 30, 2014	$	(49,741	)	$	(5,431	)	$	(16,888	)	$	(72,060	)
Other comprehensive income (loss) before reclassifications	$	(38,164	)	$	7,029		$	—		$	(31,135	)
Amounts reclassified from accumulated other comprehensive loss	$	—		$	(5,765	)	$	—		$	(5,765	)
Balance at December 31, 2014	$	(87,905	)	$	(4,167	)	$	(16,888	)	$	(108,960	)

Balance at September 30, 2013	$	1,369		$	(6,013	)	$	(11,415	)	$	(16,059	)
Other comprehensive income (loss) before reclassifications	11,621			(653		)	—			10,968
Amounts reclassified from accumulated other comprehensive loss	—			2,643			—			2,643
Balance at December 31, 2013	$	12,990		$	(4,023	)	$	(11,415	)	$	(2,448	)



	Foreign Currency Translation Adjustment			Unrealized Losses on Derivative Financial Instruments			Change in Funded Status of Defined Benefit Pension Plans			Accumulated Other Comprehensive Loss
Balance at June 30, 2014	$	11,154		$	(6,954	)	$	(16,888	)	$	(12,688	)
Other comprehensive income (loss) before reclassifications	$	(99,059	)	$	19,037		$	—		$	(80,022	)
Amounts reclassified from accumulated other comprehensive loss	$	—		$	(16,250	)	$	—		$	(16,250	)
Balance at December 31, 2014	$	(87,905	)	$	(4,167	)	$	(16,888	)	$	(108,960	)

Balance at June 30, 2013	$	(27,978	)	$	(3,754	)	$	(11,415	)	$	(43,147	)
Other comprehensive income (loss) before reclassifications	40,968			(8,526		)	—			32,442
Amounts reclassified from accumulated other comprehensive loss	—			8,257						8,257
Balance at December 31, 2013	$	12,990		$	(4,023	)	$	(11,415	)	$	(2,448	)

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8.	Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table summarizes our assets and liabilities that require fair value measurements on a recurring basis and their respective input levels based on the fair value hierarchy (in thousands):



			Fair Value Measurements Using:
	Fair Value		Quoted Market Prices for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Fair value at December 31, 2014:
Cash and cash equivalents	$	393,037	$	393,037	$	—	$	—
Restricted cash (1)	1,175		1,175		—		—
Derivative financial instruments classified as assets (2)	4,890		—		4,890		—
Derivative financial instruments classified as liabilities (3)	12,963		—		12,963		—
Accrued contingent purchase consideration (3)	8,554		—		—		8,554
Redeemable noncontrolling interests	80,137		—		—		80,137
Fair value at June 30, 2014:
Cash and cash equivalents	$	837,751	$	837,751	$	—	$	—
Restricted cash (1)	317		317		—		—
Derivative financial instruments classified as liabilities (3)	13,898		—		13,898		—
Accrued contingent purchase consideration (3)	20,784		—		—		20,784
Redeemable noncontrolling interests	85,958		—		—		85,958


(1)	Included in other current assets and other noncurrent assets in the accompanying consolidated balance sheets. Restricted cash primarily relates to funds held in escrow for the benefit of customers and facility lease deposits.


(2)	Included in other noncurrent assets in the accompanying consolidated balance sheet.


(3)	Included in accrued expenses and other current liabilities, and other noncurrent liabilities in the accompanying consolidated balance sheet.

Cash and cash equivalents and restricted cash. Our cash and cash equivalents and restricted cash, primarily consist of bank deposits, money market funds and bank certificates of deposit. The fair value of our cash and cash equivalents and restricted cash are determined using quoted market prices for identical assets (Level 1 inputs).

Derivative financial instruments. We estimate the fair value of our cross-currency swaps using industry standard valuation techniques that utilize market-based observable inputs to extrapolate future reset rates from period-end yield curves and standard valuation models based on a discounted cash flow model. Market-based observable inputs including spot and forward rates, volatilities and interest rate curves at observable intervals are used as inputs to the models (Level 2 inputs). Our estimate of fair value also considers the risk that the swap contracts will not be fulfilled.

Accrued contingent purchase consideration. Contingent future cash payments related to business combinations that are not deemed to be compensatory are accrued at fair value as of the acquisition date. We re-assess the fair value measurement at each reporting date. Fair value is determined by estimating the present value of potential future cash payments that would be earned upon achievement by the acquired business of certain financial performance, product-related, integration and other objectives. Our estimate of fair value considers a range of possible cash payment scenarios using information available as of the reporting date, including the recent financial performance of the acquired businesses (Level 3 inputs).

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The following table summarizes the activity in accrued contingent purchase consideration which is measured at fair value on a recurring basis using significant unobservable inputs (Level 3 inputs) (in thousands):



	Three Months Ended December 31,						Six Months Ended December 31,
	2014			2013			2014			2013
Balance at beginning of period	$	17,008		$	22,891		$	20,784		$	23,334
Current period acquisitions	851			969			12,276			969
Changes in fair value	(448		)	(1,500		)	(448		)	(1,500		)
Payments	(5,978		)	(1,638		)	(21,508		)	(2,108		)
Effect of foreign exchange	(2,879		)	205			(2,550		)	232
Balance at end of period	$	8,554		$	20,927		$	8,554		$	20,927

Redeemable noncontrolling interests. We estimate the fair value of our redeemable noncontrolling interests through an income approach, utilizing a discounted cash flow model. We also consider the fair value using a market approach, which considers comparable companies and transactions, including transactions with the noncontrolling stockholders of our majority-owned subsidiaries.

Under the income approach, the discounted cash flow model determines fair value based on the present value of projected cash flows over a specific projection period and a residual value related to future cash flows beyond the projection period. Both values are discounted to reflect the degree of risk inherent in an investment in the reporting unit and achieving the projected cash flows. A weighted average cost of capital of a market participant, which is an unobservable input, is used as the discount rate. The residual value is generally determined by applying a constant terminal growth rate to the estimated net cash flows at the end of the projection period. Alternatively, the present value of the residual value may be determined by applying a market multiple at the end of the projection period.

Under the market approach, fair value is determined based on multiples of revenues and earnings before interest, taxes, depreciation and amortization for each reporting unit. For our calculation, we determined the multiples based on a selection of comparable companies and acquisition transactions, discounted for each reporting unit to reflect the relative size, diversification and risk of the reporting unit in comparison to the indexed companies and transactions.

The significant unobservable inputs in the valuation of redeemable noncontrolling interests include a discount rate and long-term growth rates.

The discount rate used in the determination of the estimated fair value of the redeemable noncontrolling interests as of December 31, 2014 using the income approach ranged between 13.5% and 15.6%, with a weighted average discount rate of 13.6%, reflecting a market participant's perspective as a noncontrolling shareholder in a privately-held subsidiary. The long-term growth rate used in the determination of the estimated fair value of the redeemable noncontrolling interests as of December 31, 2014 using the income approach ranged between 3.0% and 4.0%, with a weighted average long-term growth rate of 3.9%.

The following table summarizes the activity in redeemable noncontrolling interests which are measured at fair value on a recurring basis solely using the income approach and using significant unobservable inputs (Level 3 inputs) (in thousands):



	Three Months Ended December 31,					Six Months Ended December 31,
	2014			2013		2014			2013
Balance at beginning of period	$	80,175		$	88,004	$	85,958		$	84,737
Net income attributable to redeemable noncontrolling interests	1,664			1,717		3,412			3,414
Dividends due to noncontrolling owners	(5,303		)	—		(5,303		)	—
Changes in fair value	6,870			3,048		5,237			1,345
Effect of foreign exchange	(3,269		)	1,572		(9,167		)	4,845
Balance at end of period	$	80,137		$	94,341	$	80,137		$	94,341

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Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

No assets or liabilities were required to be measured at fair value on a nonrecurring basis during the six months ended December 31, 2014.

Fair Value of Other Financial Instruments

The carrying amounts of certain of our financial instruments, including accounts receivable, accounts payable and accrued expenses, approximate fair value due to their short-term nature. Based on the current quoted trading price of our senior unsecured notes (Level 1 inputs), we believe that the fair value of our senior unsecured notes is approximately $2.3 billion at December 31, 2014.


9.	Long-Term Debt

Long-term debt consists of the following (in thousands):



	December 31, 2014		June 30, 2014
Senior unsecured notes due June 2021	$	1,709,249	$	1,527,808
Senior unsecured notes due November 2023	574,989		340,000
Total debt (1)	2,284,238		1,867,808
Less: Current portion	—		—
Long-term portion	$	2,284,238	$	1,867,808

(1) Total debt as of December 31, 2014 and June 30, 2014 includes unamortized premium of $34.2 million and $17.8 million, respectively.

In November 2014, we issued additional senior unsecured notes due 2021 (the "2021 Senior Notes") in the aggregate principal amount of $175.0 million and additional senior unsecured notes due 2023 (the "2023 Senior Notes") in the aggregate principal amount of $225.0 million, resulting in net proceeds of $416.3 million. The 2021 Senior Notes and 2023 Senior Notes issued in November 2014 were issued at an original issue price of 104.50% plus accrued interest from June 2014. We used the net proceeds from the issuance of the 2021 Senior Notes and 2023 Senior Notes in November 2014, together with existing cash on hand, to finance our acquisition of CAP (Note 3).

The 2021 Senior Notes include redemption provisions that allow us, at our option, to redeem all or a portion of the aggregate principal amount of the 2021 Senior Notes as follows:


•	At any time prior to June 15, 2016, we may redeem up to 35% of the aggregate principal amount of the 2021 Senior Notes at a redemption price equal to 106.000% of the principal amount of the notes redeemed, plus accrued and unpaid interest, if any, through the date of redemption.

•

At any time prior to June 15, 2017, we may redeem the 2021 Senior Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the notes redeemed plus a premium and accrued and unpaid interest to the redemption date. The premium at the applicable redemption date is the greater of: (1) 1.0% of the then outstanding principal amount of the notes; or (2) the excess of: (a) the present value at such redemption date of the sum of the redemption price of the notes at June 15, 2017 plus all required interest payments due on the notes through June 15, 2017 (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over (b) the then outstanding principal amount of the notes.

•

At any time on or after June 15, 2017, we may redeem the 2021 Senior Notes, in whole or in part, at the following redemption prices, plus accrued and unpaid interest, if any, through the date of redemption: (i) if the redemption occurs on or after June 15, 2017 but prior to June 15, 2018, the redemption price is 103.000% of the principal amount of the notes; (ii) if the redemption occurs on or after June 15, 2018 but prior to June 15, 2019, the redemption price is 101.500% of the principal amount of the notes; and (iii) if the redemption occurs on or after June 15, 2019, the redemption price is 100.000% of the principal amount of the notes.

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The 2023 Senior Notes include redemption provisions that allow us, at our option, to redeem all or a portion of the aggregate principal amount of the 2023 Senior Notes as follows:


•	At any time prior to November 1, 2016, we may redeem up to 35% of the aggregate principal amount of the 2023 Senior Notes at a redemption price equal to 106.125% of the principal amount of the notes redeemed, plus accrued and unpaid interest, if any, through the date of redemption.

•

At any time prior to November 1, 2018, we may redeem the 2023 Senior Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the notes redeemed plus a premium and accrued and unpaid interest to the redemption date. The premium at the applicable redemption date is the greater of: (1) 1.0% of the then outstanding principal amount of the notes; or (2) the excess of: (a) the present value at such redemption date of the sum of the redemption price of the notes at November 1, 2018 plus all required interest payments due on the notes through November 1, 2018 (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over (b) the then outstanding principal amount of the notes.

•

At any time on or after November 1, 2018, we may redeem the 2023 Senior Notes, in whole or in part, at the following redemption prices, plus accrued and unpaid interest, if any, through the date of redemption: (i) if the redemption occurs on or after November 1, 2018 but prior to November 1, 2019, the redemption price is 103.063% of the principal amount of the notes; (ii) if the redemption occurs on or after November 1, 2019 but prior to November 1, 2020, the redemption price is 102.042% of the principal amount of the notes; (iii) if the redemption occurs on or after November 1, 2020 but prior to November 1, 2021, the redemption price is 101.021% of the principal amount of the notes; and (iv) if the redemption occurs on or after November 1, 2021, the redemption price is 100.000% of the principal amount of the notes.

Upon the occurrence of a change of control, we are required to offer to redeem the 2021 Senior Notes and the 2023 Senior Notes at a redemption price equal to 101% of the principal amount of the notes redeemed, plus accrued and unpaid interest, if any, through the redemption date.

The indentures governing the 2021 Senior Notes and the 2023 Senior Notes contain limited covenants, including those restricting our and our subsidiaries’ ability to incur certain liens, engage in sale and leaseback transactions and consolidate, merge with, or convey, transfer or lease substantially all of our or their assets to, another person, and, in the case of any of our subsidiaries that did not issue or guarantee such notes, incur indebtedness. We are in compliance with the specified covenants of the 2021 Senior Notes and the 2023 Senior Notes at December 31, 2014.


10.	Derivative Financial Instruments

In the normal course of business, we are exposed to variability in interest rates and foreign currency exchange rates. We use derivatives to mitigate risks associated with this variability. We do not use derivatives for speculative purposes. The following is a summary of outstanding derivative financial instruments as of December 31, 2014:

•

In April 2012, we entered into two pay fixed Euros / receive fixed U.S. dollars cross-currency swaps in the aggregate notional amount of €109.0 million. We pay Euro fixed coupon payments at 6.990% and receive U.S. dollar fixed coupon payments at 6.750% on the notional amount. The maturity date of the swaps is June 15, 2018. These cross-currency swaps were designated, at inception, as cash flow hedges and we evaluate the swaps for effectiveness quarterly. We report the effective portion of the gain or loss on these hedges as a component of accumulated other comprehensive income (loss) in stockholders' equity and reclassify these gains or losses into earnings when the hedged transaction affects earnings. To date, there has been no hedge ineffectiveness.

•

In November 2014, we entered into a pay floating / received fixed interest rate swap with a notional amount of $400.0 million. Under the terms of the interest rate swap, we pay quarterly floating coupon payments at 3-month LIBOR plus 3.924% and receive semi-annual fixed coupon payments at 6.000%. The maturity date of the interest rate swap is June 15, 2021, although the swap may be terminated at any time effective June 15, 2017 by the counterparty subject to the payment of a cancellation fee. The interest rate swap was not designated as a hedge at inception. We recognize changes in the fair value of the interest rate swap in other (income) expense, net in our consolidated statements of income.

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•

In November 2014, we entered into a pay fixed Euros / receive fixed U.S. dollars cross-currency swap with a notional amount of €401.6 million. Under the terms of the cross-currency swap, we pay Euro fixed coupon payments at 4.993% and receive U.S. dollar fixed coupon payments at 6.000% on the notional amount. The maturity date of the cross-currency swap is June 15, 2021. The cross-currency swap was not designated as a hedge at inception. We recognize changes in the fair value of the cross-currency swap in other (income) expense, net in our consolidated statements of income.

In addition, in December 2014, we settled a pay floating Euros / receive floating U.S. dollars cross-currency swap in the aggregate notional amount of €26.3 million.

We determined the estimated fair value of our derivatives using an income approach and standard valuation techniques that utilize market-based observable inputs including spot and forward interest and foreign currency exchange rates, volatilities and interest rate curves at observable intervals. Our estimate of fair value also considers the risk that the swap contracts will not be fulfilled.

The following table summarizes the fair value of our derivative financial instruments, which are included in other current assets, other noncurrent assets, accrued expenses and other current liabilities, and other noncurrent liabilities in the accompanying condensed consolidated balance sheets (in thousands):



	December 31, 2014		June 30, 2014
Derivative financial instruments classified as assets
Fixed rate cross-currency swaps	$	4,890	$	—

Derivative financial instruments classified as liabilities
U.S. dollar interest rate swap	$	2,754	$	—
Fixed rate cross-currency swaps	10,209		12,900
Floating rate cross-currency swap	—		998
Total	$	12,963	$	13,898

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The following table summarizes the effect of our derivative financial instruments designated as cash flow hedges on the consolidated statements of income (loss) and accumulated other comprehensive income (loss) (“AOCI”) for the three and six months ended December 31, 2014 and 2013 (in thousands).



Derivative Financial Instruments	Income (Loss) Recognized in AOCI on Derivatives (1)			Location of Income (Loss) Reclassified from AOCI into Income (1)	Income (Loss) Reclassified from AOCI into Income (1)			Location of Income (Loss) Recognized in Income on Derivatives (2)	Income (Loss) Recognized in Income on Derivatives (2)
Three Months Ended December 31, 2014
Fixed rate cross-currency swaps	$	7,852		Interest Expense	$	67		N/A	$	—
				Other Expense, net	5,777				—
Total	$	7,852			$	5,844			$	—
Three Months Ended December 31, 2013
Fixed rate cross-currency swaps	$	(3,044	)	Interest Expense	$	(192	)	N/A	$	—
				Other Expense, net	(2,627		)		—
Total	$	(3,044	)		$	(2,819	)		$	—
Six Months Ended December 31, 2014
Fixed rate cross-currency swaps	$	17,866		Interest Expense	$	76		N/A	$	—
				Other Expense, net	16,754
Total	$	17,866			$	16,830			$	—
Six Months Ended December 31, 2013
Fixed rate cross-currency swaps	$	(8,552	)	Interest Expense	$	(344	)	N/A	$	—
				Other Expense, net	(8,207		)		—
U.S. dollar interest rate swaps	—			Interest Expense	(3		)	Interest Expense	548
Euro interest rate swaps	—			Interest Expense	(3		)	Interest Expense	(364		)
Total	$	(8,552	)		$	(8,557	)		$	184


(1)	Effective portion.


(2)	Ineffective portion and amount excluded from effectiveness testing.

During the three and six months ended December 31, 2014 and 2013, we recognized a loss on swaps not designated as hedging instruments of $11.8 million, $2.2 million, $9.4 million and $7.3 million, respectively which is included in other (income) expense, net in our consolidated statements of income (loss).

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11.	Share-Based Compensation

Share-Based Award Activity

The following table summarizes restricted stock unit and performance share unit activity during the six months ended December 31, 2014:



	Number of Shares (in thousands)		Weighted Average Grant Date Fair Value per Share
Nonvested at June 30, 2014	837		$	62.27
Granted	249		$	56.40
Vested	(160	)	$	59.20
Forfeited	(141	)	$	57.55
Nonvested at December 31, 2014	785		$	61.88

Each performance share unit represents the right to receive one share of our common stock based on our total stockholder return (“TSR”) and/or the achievement of certain financial performance targets during applicable performance periods. The number of shares reflected in the table above assumes the maximum number of performance share units will be earned.

The following table summarizes stock option activity during the six months ended December 31, 2014:



	Number of Shares (in thousands)		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at June 30, 2014	4,264		$	50.33
Granted	223		$	56.51
Exercised	(116	)	$	41.12
Canceled	(285	)	$	55.43
Outstanding at December 31, 2014	4,086		$	50.57	3.9	$	19,296
Exercisable at December 31, 2014	1,609		$	42.17	3.4	$	16,625

Of the stock options outstanding at December 31, 2014, approximately 2.2 million are vested or expected to vest.

Cash received from the exercise of stock options was $4.7 million during the six months ended December 31, 2014. The intrinsic value of stock options exercised during the six months ended December 31, 2014 and 2013 totaled $1.3 million and $4.5 million, respectively.

Valuation of Share-Based Awards

We utilized the Black-Scholes option pricing model for estimating the grant date fair value of stock options with the following assumptions:



	Risk-Free Interest Rate		Expected Term (in years)	Weighted Average Expected Stock Price Volatility		Expected Dividend Yield		Weighted Average Per Share Grant Date Fair Value
Six Months Ended December 31, 2014	1.7	%	4.5	24	%	1.4	%	$	11.20
Six Months Ended December 31, 2013	1.7	%	4.6	27	%	1.3	%	$	11.27

We based the risk-free interest rates on the implied yield available on U.S. Treasury constant maturities in effect at the time of the grant with remaining terms equivalent to the respective expected terms of the options. We determine the expected life of an award by considering various relevant factors, including the vesting period and contractual term of the award, our employees’ historical exercise patterns and length of service, the expected future volatility of our stock price and employee characteristics. We determined the expected volatility based on our historical stock price volatility over the expected term. The dividend yield

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is based on our quarterly dividend of $0.195 and $0.17 per share declared during the six months ended December 31, 2014 and 2013, respectively.

The weighted average per share grant date fair value of restricted stock units and performance share units granted during the six months ended December 31, 2014 and 2013, was $56.40 and $55.62, respectively, determined based on the market price of our common stock on the date of grant, which approximates the intrinsic value.

Share-Based Compensation Expense

At December 31, 2014, the estimated total remaining unamortized share-based compensation expense, net of forfeitures, was $43.8 million, which we expect to recognize over a weighted-average period of 2.3 years.

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12.	Defined Benefit Pension Plans

Our foreign subsidiaries sponsor various defined benefit pension plans and individual defined benefit arrangements covering certain eligible employees. We base the benefits under these pension plans on years of service and compensation levels. Funding is limited to statutory requirements.

The components of net pension expense were as follows (in thousands):



	Three Months Ended December 31,						Six Months Ended December 31,
	2014			2013			2014			2013
Service cost — benefits earned during the period	$	1,145		$	1,045		$	2,353		$	2,061
Interest cost on projected benefits	673			867			1,381			1,711
Expected return on plan assets	(536		)	(648		)	(1,099		)	(1,278		)
Amortization of gain	303			205			620			404
Net pension expense	$	1,585		$	1,469		$	3,255		$	2,898

13. Other Expense, Net

Other expense, net consists of the following (in thousands):



	Three Months Ended December 31,						Six Months Ended December 31,
	2014			2013			2014			2013
Investment income	$	(160	)	$	(211	)	$	(376	)	$	(382	)
Foreign exchange (gains) losses	11,674			(3,768		)	24,927			(13,896		)
Reclassification of accumulated other comprehensive (income) loss related to derivative financial instruments designated as hedges	(5,778		)	2,643			(16,250		)	8,257
Losses on derivative financial instruments not designated as hedges	11,757			2,158			9,365			7,265
Gain on asset sales	3			320			109			(2,479		)
Loss on debt extinguishment (1)	—			60,184			—			63,328
Other expense	322			176			506			124
Other expense, net	$	17,818		$	61,502		$	18,281		$	62,217

(1) Represents the redemption premium on the 2018 Senior Notes of $58.4 million, and the write-off of unamortized debt issuance costs associated with the repayment of the outstanding term loans under the Amended Credit Facility in July 2013 and the redemption of the senior unsecured notes due 2018 (the "Senior Notes") in November 2013, net of the write-off of the unamortized premium on the 2018 Senior Notes.

14. Provision for Income Taxes

We recorded an income tax provision of $1.8 million and $9.3 million for the three and six months ended December 31, 2014, respectively and $12.5 million and $15.2 million for the three and six months ended December 31, 2013, respectively. For the three and six months ended December 31, 2014, the expected tax provision derived from applying the U.S. federal statutory rate to our pre-tax income differed from our recorded income tax provision primarily due to earnings in jurisdictions with lower income tax rates which are indefinitely reinvested and certain discrete tax benefits. For the three and six months ended December 31, 2013, the expected tax provision derived from applying the U.S. federal statutory rate to our pre-tax income differed from our recorded income tax provision primarily due to the recognition of a $29.7 million valuation allowance on our U.S. deferred tax assets.

Gross unrecognized tax benefits as of December 31, 2014 and June 30, 2014 were $12.6 million and $13.2 million, respectively. No significant interest and penalties have been accrued during the six months ended December 31, 2014.

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Pursuant to the terms of the acquisition agreements, the sellers in our business combinations have indemnified us for all tax liabilities related to the pre-acquisition periods. We are liable for any tax assessments for the post-acquisition periods for our U.S. and foreign jurisdictions.

As of each reporting date, management considers all evidence, both positive and negative, that could impact our view with regards to future realization of deferred tax assets. As of December 31, 2014 and June 30, 2014, we continue to maintain a valuation allowance on our U.S. deferred tax assets $24.8 million due to the limitation in our ability to utilize foreign tax credit carryforwards prior to the expiration of the carryforward periods.

In assessing the future realization of our U.S. deferred tax assets, all available evidence was considered, including our U.S. cumulative income or loss position over the 12 quarters ended December 31, 2014 which included recent increases to interest expense. The U.S. cumulative loss position reduced the weight given to subjective evidence such as projections for future growth. As of each reporting date, our management considers new evidence, both positive and negative, that could impact management’s view with regards to future realization of deferred tax assets. We believe that our estimate of future taxable income is reasonable but inherently uncertain, and if our current or future operations and investments generate taxable income different than the anticipated amounts or US tax law changes reduce income expected in the future, adjustments to the valuation allowance are possible.

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15.	Segment and Geographic Information

We have aggregated our operating segments into two reportable segments: EMEA and Americas. Our EMEA reportable segment encompasses our operations in Europe, the Middle East, Africa, Asia and Australia. Our Americas reportable segment encompasses our operations in North, Central and South America.

Our chief operating decision maker is our Chief Executive Officer. We evaluate the performance of our reportable segments based on revenues, income before provision for income taxes and adjusted EBITDA, a non-U.S. GAAP financial measure that represents U.S. GAAP net income (loss) excluding interest expense, provision for income taxes, depreciation and amortization, share-based compensation expense, restructuring charges, asset impairments and other costs associated with exit and disposal activities, acquisition and related costs, litigation related expenses and other (income) expense, net. We do not allocate certain costs to reportable segments, including costs related to our financing activities, business development and oversight, and tax, audit and other professional fees, to our reportable segments. Instead, we manage these costs at the Corporate level.



(in thousands)	EMEA		Americas			Corporate			Total
Three Months Ended December 31, 2014
Revenues	$	134,655	$	148,042		$	—		$	282,697
Income (loss) before provision for income taxes	44,764		32,254			(66,067		)	10,951
Significant items included in income (loss) before provision for income taxes:
Depreciation and amortization	13,920		25,285			163			39,368
Interest expense	55		27			28,879			28,961
Other expense, net	861		879			16,078			17,818
Capital expenditures	9,752		9,918			—			19,670
Three Months Ended December 31, 2013
Revenues	$	127,766	$	111,149		$	—		$	238,915
Income (loss) before provision for income taxes	44,803		28,217			(108,221		)	(35,201		)
Significant items included in income (loss) before provision for income taxes:
Depreciation and amortization	11,412		18,082			100			29,594
Interest expense	14		27			28,490			28,531
Other (income) expense, net	2,412		(363		)	59,453			61,502
Capital expenditures	2,231		10,536			—			12,767
Six Months Ended December 31, 2014
Revenues	$	270,523	$	292,257		$	—		$	562,780
Income (loss) before provision for income taxes	91,296		65,173			(121,447		)	35,022
Significant items included in income (loss) before provision for income taxes:
Depreciation and amortization	27,186		49,851			329			77,366
Interest expense	99		87			56,407			56,593
Other expense, net	858		1,534			15,889			18,281
Capital expenditures	15,668		14,904			—			30,572
Total assets as of December 31, 2014	1,678,142		1,844,892			157,933			3,680,967
Total assets as of June 30, 2014	1,328,348		1,556,323			515,415			3,400,086
Six Months Ended December 31, 2013
Revenues	$	249,729	$	207,214		$	—		$	456,943
Income (loss) before provision for income taxes	92,563		52,061			(160,560		)	(15,936		)
Significant items included in income (loss) before provision for income taxes:
Depreciation and amortization	22,198		32,288			211			54,697
Interest expense	28		26			55,406			55,460
Other expense, net	803		345			61,069			62,217
Capital expenditures	6,548		13,813			—			20,361

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Geographic revenue information is based on the location of the customer and was as follows for the periods presented (in thousands):



	Europe *	United States	United Kingdom	All Other	Total
Three Months Ended December 31, 2014	93,637	123,814	36,419	28,827	282,697
Three Months Ended December 31, 2013	96,617	85,373	27,821	29,104	238,915
Six Months Ended December 31, 2014	192,393	242,861	69,292	58,234	562,780
Six Months Ended December 31, 2013	187,700	156,885	54,692	57,666	456,943

* Excludes the United Kingdom.

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16.	Subsequent Events

On February 5, 2015, we announced that the Audit Committee of our Board of Directors approved the payment of a quarterly dividend of $0.195 per share of outstanding common stock and per outstanding restricted stock unit. The dividends are payable on March 3, 2015 to stockholders and restricted stock unit holders of record at the close of business on February 19, 2015.

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CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This report contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are identified by the use of terms and phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” and similar terms and phrases, including references to assumptions. However, these words are not the exclusive means of identifying such statements. These statements relate to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. These statements also relate to our future prospects, developments and business strategies and include, but are not limited to, statements about: our ability to execute on Mission 2020; increase in customer demand for our software and services; growth rates for the automobile insurance claims industry; growth rates for vehicle purchases and car parcs; customer adoption rates for digitized claims processing software and services; increases in customer spending on digitized claims processing software and services; efficiencies resulting from digitized claims processing; performance and benefits of our products and services; development or acquisition of claims processing and other products and services in areas other than automobile insurance; our relationship with insurance company customers as they continue global expansion; revenue growth resulting from the launch of new software and services; improvements in operating margins resulting from operational efficiency initiatives; increased utilization of our software and services resulting from increased severity; our expectations regarding the growth rates for vehicle insurance; changes in the amount of our existing unrecognized tax benefits; our revenue mix; our income taxes, including the periods during which tax benefits may be recognized; restructuring plans, potential restructuring charges and their impact on our revenues; our operating expense growth and operating expenses as a percentage of our revenues; stability of our development and programming costs; growth of our selling, general and administrative expenses; increase in total depreciation and amortization expense; increase in interest expense and possible impact of future foreign currency fluctuations; growth of our acquisition and related costs, including costs related to SRS; our ability to realize our U.S. deferred tax assets during the respective carryforward and reversal periods; our use of cash and liquidity position going forward; cash needs to service our debt; our ability to grow in all types of markets and the benefits of products and services of companies or assets we have acquired.

Actual results could differ materially from those projected, implied or anticipated by our forward-looking statements. Some of the factors that could cause actual results to differ include: those set forth in the sections titled “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and elsewhere as described in this Quarterly Report on Form 10-Q. These factors include, but are not limited to: 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 include the volatility associated with foreign currency exchange risks, our sales cycle, seasonality, changes in the amount of our income tax provision (benefit) or other factors; effects of the global economic downturn on demand for or utilization of our products and services; risks associated with and possible negative consequences of acquisitions, joint ventures, divestitures and similar transactions, including regulatory matters and risks related to our ability to successfully integrate our acquired businesses; our ability to increase market share, successfully introduce new software and services and expand our operations to new geographic locations; time and expenses associated with customers switching from competitive software and services to our software and services; rapid technology changes in our industry; effects of changes in or violations by us or our customers of government regulations; costs and possible future losses or impairments relating to our acquisitions; use of cash to service our debt and effects on our business of restrictive covenants in our bond indentures; our ability to obtain additional financing as necessary to support our operations including Mission 2020; country-specific risks associated with operating in multiple countries; damage to our business or reputation resulting from system failures, delays and other problems; we may not complete any subsequent acquisitions of additional equity interests of SRS; the failure to realize the expected benefits from our joint venture with Welsh, Carson, Anderson & Stowe ("WCAS") 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; successful integration of acquired businesses that operate in industries outside of our core market; risks associated with a diversified business; our reliance on third-party information for our software and services; the financial impact of future significant restructuring and severance charges; the impact of changes in our tax provision (benefit) or effective tax rate; our ability to pay dividends or repurchase shares in future periods; our dependence on a limited number of key personnel; any material adverse impact of current or future litigation on our results or business, including litigation with Mitchell International; and other factors that are described from time to time in our periodic filings with the SEC.

All forward-looking statements are qualified in their entirety by this cautionary statement, and we undertake no obligation to revise or update this Quarterly Report on Form 10-Q to reflect events or circumstances after the date hereof.

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ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion of our financial condition and results of operations should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended June 30, 2014 filed with the SEC on August 29, 2014. You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

All percentage amounts and ratios were calculated using the underlying data in whole dollars and may reflect rounding adjustments. Operating results for the three months ended December 31, 2014 are not necessarily indicative of the results that may be expected for any future period. We describe the effects on our results that are attributed to changes in foreign currency exchange rates as constant currency which we measure by converting the current period results into U.S. dollars at the average rates in effect for the same period from the prior year.

Overview of the Business

Solera is the leading provider of risk and asset management software and services to the automotive and property marketplace, including the global P&C industry. We are expanding beyond our global-leading position in collision repair and U.S. based mechanical repair presence to bring data driven productivity and decision support solutions to other aspects of vehicle ownership such as vehicle validation, glass repair, driver violation monitoring, vehicle salvage and electronic titling. We are also taking our core competencies of data, software and connectivity from the auto to the home.

We help our customers:


•	estimate the costs to repair damaged vehicles and determine pre-collision fair market values for damaged vehicles for which the repair costs exceed the vehicles’ value;


•	automate and outsource steps of the claims process that insurance companies have historically performed internally;


•	diagnose and repair vehicle mechanical problems; and


•	improve their ability to monitor and manage their businesses through data reporting and analysis.

We serve over 180,000 customers and are active in over 70 countries across six continents with approximately 4,700 employees. Our customers include more than 4,000 automobile insurance companies, 60,500 collision repair facilities, 12,500 independent assessors, 44,500 service, maintenance and repair facilities and 58,500 automotive recyclers, auto dealers and others. We derive revenues from many of the world’s largest automobile insurance companies, including the ten largest automobile insurance companies in Europe and eight of the ten largest automobile insurance companies in North America.

At the core of our software and services are our proprietary databases, which are localized to each geographical market we serve. Our insurance claims processing software and services are typically integrated into our customers’ systems, operations and processes, making it costly and time consuming to switch to another provider. This customer integration, along with our long-standing customer relationships, has contributed to our successful customer retention rate.

Segments

We have aggregated our operating segments into two reportable segments: EMEA and Americas. Our EMEA reportable segment encompasses our operations in Europe, the Middle East, Africa, Asia and Australia, while our Americas reportable segment encompasses our operations in North, Central and South America.

Our chief operating decision maker is our Chief Executive Officer. We evaluate the performance of our reportable segments based on revenues, income before provision for income taxes and adjusted EBITDA, a non-U.S. GAAP financial measure that represents U.S. GAAP net income (loss) excluding interest expense, provision for income taxes, depreciation and amortization, stock-based compensation expense, restructuring charges, asset impairments and other costs associated with exit and disposal activities, acquisition and related costs, litigation related expenses and other (income) expense, net. We do not allocate certain costs to reportable segments, including costs related to our financing activities, business development and oversight, and tax, audit and other professional fees, to our reportable segments. Instead, we manage these costs at the Corporate level.

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The table below sets forth our revenues by reportable segment and as a percentage of our total revenues for the periods indicated (dollars in millions):



	Three Months Ended December 31,								Six Months Ended December 31,
	2014				2013				2014				2013
EMEA	$	134.7	47.6	%	$	127.8	53.5	%	$	270.5	48.1	%	$	249.7	54.7	%
Americas	148.0		52.4	%	111.1		46.5	%	292.3		51.9	%	207.2		45.3	%
Total	$	282.7	100.0	%	$	238.9	100.0	%	$	562.8	100.0	%	$	456.9	100.0	%

For the three and six months ended December 31, 2014, the United States and the United Kingdom were the only countries that individually represented more than 10% of our total revenues.

Components of Revenues and Expenses

Revenues

We generate revenues from the sale of software and services to our customers pursuant to negotiated contracts or pricing agreements. Pricing for our software and services is set forth in these agreements and negotiated with each customer. We generally bill our customers monthly under one or more of the following bases:


•	price per transaction;


•	fixed monthly amount for a prescribed number of transactions;


•	fixed monthly subscription rate;


•	price per set of services rendered; and


•	price per system delivered.

Our software and services are often sold as packages, without individual pricing for each component. Our revenues are reflected net of customer sales allowances, which we estimate based on both our examination of a subset of customer accounts and historical experience.

Our core offering is our estimating and workflow software, which is used by our insurance company, collision repair facility and independent assessor customers, representing the majority of our revenues. We also derive revenues from our salvage and recycling software, business intelligence and consulting services, vehicle data validation, salvage disposition, driver violation reporting services, service, maintenance and repair solutions, and other offerings.

Cost of revenues (excluding depreciation and amortization)

Our costs and expenses applicable to revenues represent the total of operating expenses and systems development and programming costs, which are discussed below.

Operating expenses

Our operating expenses primarily include: compensation and benefit costs for our operations, database development and customer service personnel; other costs related to operations, database development and customer support functions; third-party data and royalty costs; costs related to computer software and hardware used in the delivery of our software and services; and the costs of purchased data from state departments of motor vehicles.

Systems development and programming costs

Systems development and programming costs primarily include: compensation and benefit costs for our product development and product management personnel; other costs related to our product development and product management functions; and costs related to external software consultants involved in systems development and programming activities.

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Selling, general and administrative expenses

Our selling, general and administrative expenses primarily include: compensation and benefit costs for our sales, marketing, administration and corporate personnel; share-based compensation expense which represents the recognition of the grant-date fair value of stock awards granted to employees, officers, members of our board of directors and others pursuant to our equity compensation plans; costs related to our facilities; and professional and legal fees.

Depreciation and amortization

Depreciation includes depreciation attributable to buildings, leasehold improvements, data processing and computer equipment, purchased software, and furniture and fixtures. Amortization includes amortization attributable to software developed or obtained for internal use and intangible assets acquired in business combinations, particularly our acquisitions of Explore Information Services, LLC ("Explore"), Service Repair Solutions, Inc. ("SRS"), I&S and CAP.

Restructuring charges, asset impairments and other costs associated with exit and disposal activities

Restructuring charges, asset impairments and other costs associated with exit and disposal activities primarily represent costs incurred in relation to our restructuring initiatives. Restructuring charges primarily include employee termination benefits charges and charges related to the lease and vendor contract liabilities that we do not expect to provide future economic benefits due to the implementation of our restructuring initiatives.

Acquisition and related costs

Acquisition and related costs include legal and other professional fees and other transaction costs associated with completed and contemplated business combinations and asset acquisitions, costs associated with integrating acquired businesses, including costs incurred to eliminate workforce redundancies and for product rebranding, and other charges incurred as a direct result of our acquisition efforts. These other charges include changes to the fair value of contingent purchase consideration, acquired assets and assumed liabilities subsequent to the completion of the purchase price allocation, purchase consideration that is deemed to be compensatory in nature, and incentive compensation arrangements with continuing employees of acquired companies.

Interest expense

Interest expense consists primarily of interest on our debt and amortization of related debt issuance costs, net of premium amortization.

Other (income) expense, net

Other (income) expense, net consists of foreign exchange gains and losses on notes receivable and notes payable to affiliates, changes in the fair value of derivative instruments, investment income and other miscellaneous income and expense.

Income tax provision

Income taxes have been provided for all items included in the statements of income included herein, regardless of when such items were reported for tax purposes or when the taxes were actually paid or refunded.

Net income attributable to noncontrolling interests

Several of our customers and other entities own noncontrolling interests in seven of our operating subsidiaries. Net income attributable to noncontrolling interests reflect such owners’ proportionate interest in the earnings of such operating subsidiaries.

Factors Affecting Our Operating Results

Below is a summary description of several external factors that have or may have an effect on our operating results.

Foreign currency. During the three and six months ended December 31, 2014, we generated approximately 56% and 57%, respectively, of our revenues and incurred a majority of our costs, in currencies other than the U.S. dollar, primarily the Euro, as compared to 64% and 66% for the three and six months ended December 31, 2013, respectively. We translate our local

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currency financial results into U.S. dollars based on average exchange rates prevailing during a reporting period for our consolidated statement of income and certain components of stockholders’ equity and the exchange rate at the end of that period for the consolidated balance sheet. These translations resulted in foreign currency translation adjustments of $(38.2) million and $(99.1) million for the three and six months ended December 31, 2014, respectively, and $11.6 million and $41.0 million for the three and six months ended December 31, 2013, respectively, which are recorded as a component of accumulated other comprehensive income (loss) in stockholders’ equity. Foreign currency transaction losses (gains) recognized in our consolidated statements of income were $5.9 million and $8.7 million during the three and six months ended December 31, 2014, respectively, and $(1.1) million and $(5.6) million during the three and six month ended December 31, 2013, respectively.

Exchange rates between most of the major foreign currencies we use to transact our business and the U.S. dollar have fluctuated significantly over the last few years and we expect that they will continue to fluctuate during fiscal year 2015. The majority of our revenues and costs are denominated in Euros, Pound Sterling, Swiss francs, Canadian dollars and other foreign currencies. The following table provides the average quarterly exchange rates for the Euro and Pound Sterling since the beginning of fiscal year 2014:



Period	Average Euro-to-U.S. Dollar Exchange Rate		Average Pound Sterling-to-U.S. Dollar Exchange Rate
Quarter ended September 30, 2013	$	1.32	$	1.55
Quarter ended December 31, 2013	1.36		1.62
Quarter ended March 31, 2014	1.37		1.65
Quarter ended June 30, 2014	1.37		1.68
Quarter ended September 30, 2014	1.33		1.67
Quarter ended December 31, 2014	1.25		1.58

During the three months ended December 31, 2014 as compared to the three months ended December 31, 2013, the U.S. dollar strengthened against most major foreign currencies we use to transact our business. Relative to the Euro and the Pound Sterling, the average U.S. dollar strengthened by 8.2% and 2.2%, respectively, which decreased our revenues and expenses for the three months ended December 31, 2014. A hypothetical 5% increase or decrease in the U.S. dollar versus other currencies in which we transact our business would have resulted in an increase or decrease, as the case may be, to our revenues of $7.9 million and $16.0 million during the three and six months ended December 31, 2014, respectively.

Factors that affect business volume. The following external factors have or may have an effect on the number of claims that are submitted and/or our volume of transactions, any of which can affect our revenues:

•

Number of insurance claims made. In fiscal year 2014, the number of insurance claims made increased slightly versus fiscal year 2013. In several of our large western European markets, the number of insurance claims for vehicle damage submitted by owners to their insurance carriers declined slightly. The number of insurance claims made can be influenced by factors such as unemployment levels, the number of miles driven, changing gasoline prices, the number of uninsured drivers, changing insurance premiums and insured opting for lower coverage or higher deductible levels, among other things. Fewer claims made can reduce the transaction-based fees that we generate.

•

Sales of new and used vehicles. According to industry sources, global new vehicle sales grew by 3.7% in 2012 to 79.5 million units and by 4.2% in 2013 to 82.8 million units. In markets where automobile insurance is generally government-mandated and claims processing is digitized (“advanced markets”), sales are projected to grow at 1.3% compound annual growth rate through 2020. Fewer new light vehicle sales can result in fewer insured vehicles on the road and fewer automobile accidents, which can reduce the transaction-based fees that we generate.

•

Damaged vehicle repair costs. The cost to repair damaged vehicles, also known as severity, includes labor, parts and other related costs. Severity has steadily risen for a number of years. According to industry sources, from 2001 through 2010, the price index for body work has increased by 30.5% compared with a 23.2% increase in the general cost of living index. Insurance companies purchase our products and services to help standardize the cost of repair. Should the cost of labor, parts and other related items continue to increase over time, insurance companies may seek to purchase and utilize an increasing number of our products and services to help improve the standardization of the cost of repair.

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•

Penetration Rate of Vehicle Insurance. An increasing rate of procuring vehicle insurance will result in an increase in the number of insurance claims made for damaged vehicles. An increasing number of insurance claims submitted can increase the transaction-based fees that we generate for partial-loss and total-loss estimates. This is due in part to both increased regulation and increased use of financing in the purchase of new and used vehicles. We expect that the rate of vehicle insurance in our less mature international markets will continue to increase during the next eighteen months.

•

Automobile usage—number of miles driven. Several factors can influence miles driven including gasoline prices and economic conditions. According to industry sources, miles driven in the United States increased 0.6% from January through August of calendar year 2014 compared to the same period in prior year. Fewer miles driven can result in fewer automobile accidents, which can reduce the transaction-based fees that we generate.

•

Seasonality. Our business is subject to seasonal and other fluctuations. In particular, we have historically experienced higher revenues during the second quarter and third quarter versus the first quarter and fourth quarter during each fiscal year. This seasonality is caused primarily by more days of inclement weather during the second quarter and third quarter in most of our markets, which contributes to a greater number of vehicle accidents and damage during these periods. In addition, our business is subject to fluctuations caused by other factors, including the occurrence of extraordinary weather events and the timing of certain public holidays. For example, the Easter holiday occurs during the third quarter in certain fiscal years and occurs during the fourth quarter in other fiscal years, resulting in a change in the number of business days during the quarter in which the holiday occurs.

Share-based compensation expense. We incurred pre-tax, non-cash share-based compensation charges of $4.2 million and $14.3 million for the three and six months ended December 31, 2014, respectively and $9.0 million and $19.4 million for the three and six months ended December 31, 2013, respectively. We expect to recognize additional pre-tax, non-cash share-based compensation charges related to share-based awards outstanding at December 31, 2014. The estimated total remaining unamortized share-based compensation expense, net of forfeitures, was $43.8 million, which we expect to recognize over a weighted-average period of 2.3 years.

Restructuring charges. We have incurred restructuring charges in each period presented and also expect to incur additional restructuring charges, primarily relating to severance costs, over the next several quarters as we work to improve efficiencies in our business. We do not expect reduced revenues or an increase in other expenses as a result of continued implementation of our restructuring initiatives.

Other factors. Other factors that have or may have an effect on our operating results include:


•	gain and loss of customers;


•	pricing pressures;


•	acquisitions, joint ventures or similar transactions;


•	expenses to develop new software or services; and


•	expenses and restrictions related to indebtedness.

We do not believe inflation has had a material effect on our financial condition or results of operations in recent years.

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Results of Operations

Our results of operations include the results of operations of acquired companies from the date of the respective acquisitions.

The table below sets forth statement of income data, including the amount and percentage changes for the periods indicated (dollars in thousands):



	Three Months Ended December 31,							Six Months Ended December 31,
	2014	2013		Change				2014	2013		Change
	$	$		$		%		$	$		$		%
Revenues	282,697	238,915		43,782		18.3		562,780	456,943		105,837		23.2
Cost of revenues:
Operating expenses	72,437	54,758		17,679		32.3		140,969	104,509		36,460		34.9
Systems development and programming costs	25,480	21,636		3,844		17.8		51,382	41,208		10,174		24.7
Total cost of revenues (excluding depreciation and amortization)	97,917	76,394		21,523		28.2		192,351	145,717		46,634		32.0
Selling, general & administrative expenses	75,591	71,087		4,504		6.3		157,467	136,194		21,273		15.6
Depreciation and amortization	39,368	29,594		9,774		33.0		77,366	54,697		22,669		41.4
Restructuring charges, asset impairments and other costs associated with exit and disposal activities	633	720		(87	)	(12.1	)	2,890	1,111		1,779		160.1
Acquisition and related costs	11,458	6,288		5,170		82.2		22,810	17,483		5,327		30.5
Interest expense	28,961	28,531		430		1.5		56,593	55,460		1,133		2.0
Other expense, net	17,818	61,502		(43,684	)	(71.0	)	18,281	62,217		(43,936	)	(70.6	)
	271,746	274,116		(2,370	)	(0.9	)	527,758	472,879		54,879		11.6
Income (loss) before provision for income taxes	10,951	(35,201	)	46,152		(131.1	)	35,022	(15,936	)	50,958		(319.8	)
Income tax provision	1,753	12,513		(10,760	)	(86.0	)	9,252	15,209		(5,957	)	(39.2	)
Net income (loss)	9,198	(47,714	)	56,912		(119.3	)	25,770	(31,145	)	56,915		(182.7	)
Less: Net income attributable to noncontrolling interests	4,751	3,339		1,412		42.3		8,959	6,217		2,742		44.1
Net income (loss) attributable to Solera Holdings, Inc.	4,447	(51,053	)	55,500		(108.7	)	16,811	(37,362	)	54,173		(145.0	)

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The table below sets forth our statement of income data expressed as a percentage of revenues for the periods indicated:



	Three Months Ended December 31,				Six Months Ended December 31,
	2014		2013		2014		2013
Revenues	100.0	%	100.0	%	100.0	%	100.0	%
Cost of revenues:
Operating expenses	25.6		22.9		25.0		22.9
Systems development and programming costs	9.0		9.1		9.1		9.0
Total cost of revenues (excluding depreciation and amortization)	34.6		32.0		34.1		31.9
Selling, general & administrative expenses	26.7		29.8		28.0		29.8
Depreciation and amortization	13.9		12.4		13.7		12.0
Restructuring charges, asset impairments and other costs associated with exit and disposal activities	0.2		0.3		0.5		0.2
Acquisition and related costs	4.1		2.6		4.1		3.8
Interest expense	10.2		11.9		10.1		12.1
Other expense, net	6.3		25.7		3.2		13.6
	96.1		114.7		93.8		103.5
Income (loss) before provision for income taxes	3.9		(14.7	)	6.2		(3.5	)
Income tax provision	0.6		5.2		1.6		3.3
Net income (loss)	3.3		(20.0	)	4.6		(6.8	)
Less: Net income attributable to noncontrolling interests	1.7		1.4		1.6		1.4
Net income (loss) attributable to Solera Holdings, Inc.	1.6	%	(21.4	)%	3.0	%	(8.2	)%

Revenues

Three Months Ended December 31, 2014 vs. Three Months Ended December 31, 2013. During the three months ended December 31, 2014, revenues increased $43.8 million, or 18.3%, to 282.7 million and include incremental revenue contributions from SRS, I&S and CAP of $17.0 million, $14.2 million, and $4.9 million respectively. On a constant currency basis and excluding incremental revenue contributions from SRS, I&S and CAP, revenues increased $20.6 million, or 9.2%, during the three months ended December 31, 2014 due to revenue growth in both our EMEA and Americas segments.

Our EMEA revenues increased $6.9 million, or 5.4%, to $134.7 million and includes the incremental revenue contribution from CAP of $4.9 million. On a constant currency basis and excluding the incremental revenue contribution from CAP, EMEA revenues increased 12.7 million or 9.9% during the three months ended December 31, 2014 resulting from incremental revenue contributions from recently-acquired businesses other than CAP, and growth in transaction revenues in several countries from sales to new customers and increased transaction volume from and sales of new software and services to existing customers.

Our Americas revenues increased $36.9 million, or 33.2%, to $148.0 million and include incremental revenue contributions from SRS and I&S of $17.0 million and $14.2 million, respectively. On a constant currency basis and excluding incremental revenue contributions from SRS and I&S, Americas revenues increased $7.9 million, or 8.2%, during the three months ended December 31, 2014 resulting from incremental revenue contributions from recently-acquired businesses other than SRS and I&S, growth in transaction and subscription revenues from sales to new customers and increased transaction volume from and sales of new software and services to new and existing customers.

Six Months Ended December 31, 2014 vs. Six Months Ended December 31, 2013. During the six months ended December 31, 2014, revenues increased 105.8 million, or 23.2% to $562.8 million, and include incremental revenue contributions from SRS, I&S and CAP of $48.3 million, $25.2 million, and $4.9 million respectively. On a constant currency basis and excluding incremental revenue contributions from SRS, I&S and CAP, revenues increased $39.5 million or 8.9%, during the six months ended December 31, 2014 due to revenue growth in both our EMEA and Americas segments.

Our EMEA revenues increased $20.8 million, or 8.3%, to $270.5 million and include the incremental revenue contribution from CAP of $4.9 million. On a constant currency basis and excluding the incremental revenue contribution from

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CAP, EMEA revenues increased $25.2 million, or 10.1%, during the six months ended December 31, 2014 resulting from incremental revenue contributions from recently-acquired businesses other than CAP, and growth in transaction revenues in several countries from sales to new customers and increased transaction volume from and sales of new software and services to existing customers.

Our Americas revenues increased $85.0 million, or 41.0%, to $292.3 million and include incremental revenue contributions from SRS and I&S of $48.3 million and $25.2 million, respectively. On a constant currency basis and excluding incremental revenue contributions from SRS and I&S, Americas revenues increased $14.3 million, or 7.4%, during the six months ended December 31, 2014 resulting from incremental revenue contributions from recently-acquired businesses other than SRS and I&S, growth in transaction and subscription revenues from sales to new customers and increased transaction volume from and sales of new software and services to new and existing customers.

Set forth below are revenues from each of our principal customer categories and as a percentage of revenues for the periods indicated (dollars in millions):



	Three Months Ended December 31,								Six Months Ended December 31,
	2014				2013				2014				2013
Insurance companies	$	112.2	39.7	%	$	96.3	40.3	%	$	221.4	39.3	%	$	191.2	41.8	%
Collision and glass repair facilities	72.3		25.6		72.2		30.2		147.9		26.3		141.1		30.9
Independent assessors	18.2		6.4		20.0		8.4		37.6		6.7		39.8		8.7
Service, maintenance and repair facilities	31.8		11.3		14.8		6.2		63.1		11.2		14.8		3.2
Automotive recyclers, salvage, dealerships and others	48.2		17.0		35.6		14.9		92.7		16.6		70.0		15.4
Total	$	282.7	100.0	%	$	238.9	100.0	%	$	562.7	100.0	%	$	456.9	100.0	%

Revenue growth for each of our customer categories was as follows:



	Three Months Ended December 31, 2014					Six Months Ended December 31, 2014
(dollars in millions)	Revenue Growth			Percentage Change		Revenue Growth			Percentage Change
Insurance companies	$	15.9		16.5	%	$	30.2		15.8	%
Collision and glass repair facilities	0.1			—		6.8			4.8
Independent assessors	(1.8		)	(9.2	)	(2.2		)	(5.5	)
Service, maintenance and repair facilities	17.0			114.7		48.3			325.9
Automotive recyclers, salvage, dealerships and others	12.6			35.6		22.7			32.4
Total	$	43.8		18.3	%	$	105.8		23.2	%

On a constant currency basis, revenue growth for each of our customer categories was as follows:



	Three Months Ended December 31, 2014				Six Months Ended December 31, 2014
(dollars in millions)	Revenue Growth		Percentage Change		Revenue Growth			Percentage Change
Insurance companies	$	21.1	22.0	%	$	35.9		18.8	%
Collision and glass repair facilities	5.0		7.0		11.5			8.1
Independent assessors	0.1		0.1		(0.3		)	(0.7	)
Service, maintenance and repair facilities	17.0		114.7		48.3			325.9
Automotive recyclers, salvage, dealerships and others	13.7		38.6		22.8			32.5
Total	$	56.9	23.8	%	$	118.2		25.9	%

Revenues from service, maintenance and repair facilities represent revenue contributions from our acquisition of SRS.

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Operating expenses

Three Months Ended December 31, 2014 vs. Three Months Ended December 31, 2013. During the three months ended December 31, 2014, operating expenses increased $17.7 million, or 32.3% to $72.4 million, and include incremental operating expense contributions from SRS, I&S and CAP of $4.5 million, $8.6 million and $0.6 million, respectively. On a constant currency basis and excluding incremental operating expense contributions from SRS, I&S and CAP, operating expenses increased $6.1 million, or 11.8%, during the three months ended December 31, 2014 primarily due to an increase in operating expenses in our Americas segments.

Our EMEA operating expenses increased $0.6 million, or 2.4% to $24.6 million and includes the incremental operating expense contribution from CAP of $0.6 million. On a constant currency basis and excluding the incremental operating expense contribution from CAP, EMEA operating expenses increased $1.7 million, or 7.1%, during the three months ended December 31, 2014 primarily due to incremental operating expense contributions from recently-acquired businesses other than CAP, mainly personnel related expenses.

Our Americas operating expenses increased $17.2 million or 56.3% to $47.8 million, and include incremental operating expense contributions from SRS and I&S of $4.5 million and $8.6 million, respectively. On a constant currency basis and excluding incremental operating expense contributions from SRS and I&S, Americas operating expenses increased $4.5 million, or 16.6%, during the three months ended December 31, 2014 primarily due to an increase in the costs of data purchased from state departments of motor vehicles consistent with the revenue growth in our AudaExplore re-underwriting business, increased personnel related expenses and incremental operating expense contributions from recently-acquired businesses other than SRS and I&S, mainly personnel related expenses.

Six Months Ended December 31, 2014 vs. Six Months Ended December 31, 2013. During the six months ended December 31, 2014, operating expenses increased $36.5 million, or 34.9% to $141.0 million, and include incremental operating expense contributions from SRS, I&S and CAP of $11.8 million, $14.8 million and $0.6 million, respectively. On a constant currency basis and excluding incremental operating expense contributions of SRS, I&S and CAP, operating expenses increased $11.0 million, or 10.9%, during the six months ended December 31, 2014 primarily due to an increase in operating expenses in our Americas segments.

Our EMEA operating expenses increased $1.3 million, or 2.7% to $48.9 million and includes the incremental operating expense contribution from CAP of $0.6 million. On a constant currency basis and excluding the incremental operating expense contribution from CAP, EMEA operating expenses increased $2.1 million, or 4.3%, during the six months ended December 31, 2014 primarily due to incremental operating expenses contributions from recently-acquired businesses other than CAP, mainly personnel related expenses.

Our Americas operating expenses increased $35.4 million or 62.6% to $92.0 million, and include incremental operating expense contributions from SRS and I&S of $11.8 million and $14.8 million, respectively. On a constant currency basis and excluding incremental operating expense contributions from SRS and I&S, Americas operating expenses increased $9.2 million, or 17.3%, during the six months ended December 31, 2014 primarily due to personnel related expenses and an increase in the costs of data purchased from state departments of motor vehicles consistent with the revenue growth in our AudaExplore re-underwriting business, increased personnel related expenses and incremental operating expense contributions from recently-acquired businesses other than SRS and I&S, mainly personnel related expenses.

Systems development and programming costs

Three Months Ended December 31, 2014 vs. Three Months Ended December 31, 2013. During the three months ended December 31, 2014, systems development and programming costs (“SD&P”) increased $3.8 million, or 17.8% to $25.5 million, and include incremental SD&P contributions from SRS, I&S and CAP of $0.9 million, $0.2 million and $0.1 million, respectively. On a constant currency basis and excluding incremental SD&P contributions from SRS and I&S, SD&P increased $3.7 million, or 18.4%, during the three months ended December 31, 2014 primarily due to an increase in SD&P expenses in both our Americas and EMEA segments.

Our EMEA SD&P increased $1.7 million, or 15.0% to $13.3 million and includes the incremental SD&P contribution from CAP of $0.1 million. On a constant currency basis and excluding the incremental SD&P contribution from CAP, EMEA SD&P increased $2.6 million, or 22.3%, during the three months ended December 31, 2014 primarily due to increased personnel expenses and incremental SD&P expense contributions from recently-acquired businesses other than CAP, mainly personnel related expenses.

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Our Americas SD&P increased $2.1 million, or 21.2% to $12.2 million, and includes incremental SD&P contributions from SRS and I&S of $0.9 million and $0.2 million, respectively. On a constant currency basis and excluding incremental SD&P contributions from SRS and I&S, Americas SD&P increased $1.1 million, or 13.5%, during the three months ended December 31, 2014 primarily due to increased personnel expenses and incremental SD&P contributions from recently-acquired business other than SRS and I&S.

Six Months Ended December 31, 2014 vs. Six Months Ended December 31, 2013. During the six months ended December 31, 2014, SD&P increased $10.2 million, or 24.7%, to $51.4 million, and includes incremental SD&P contributions from SRS, I&S and CAP of $3.7 million, $0.4 million and $0.1 million, respectively. On a constant currency basis and excluding incremental SD&P contributions from SRS, I&S and CAP, SD&P increased $6.9 million, or 17.3%, during the six months ended December 31, 2014 primarily due to an increase in SD&P expenses in both our Americas and EMEA segments.

Our EMEA SD&P increased $4.6 million, or 20.3% to $27.0 million and includes the incremental SD&P contribution from CAP of $0.1 million. On a constant currency basis and excluding the incremental SD&P contributions from CAP, EMEA SD&P increased $5.2 million, or 23.0%, during the six months ended December 31, 2014 primarily due to increased personnel expenses and external development costs, and incremental SD&P expense contributions from recently-acquired businesses other than CAP, mainly personnel related expenses.

Our Americas SD&P increased 5.6 million, or 30.1%, to $24.4 million and include incremental SD&P contributions from SRS and I&S of $3.7 million and $0.4 million, respectively. On a constant currency basis and excluding incremental SD&P contributions from SRS and I&S, Americas SD&P increased $1.7 million, or 10.0%, during the six months ended December 31, 2014 primarily due to increased personnel expenses and incremental SD&P contributions from recently-acquired business other than SRS and I&S, mainly personnel related expenses.

Selling, general and administrative expenses

Three Months Ended December 31, 2014 vs. Three Months Ended December 31, 2013. During the three months ended December 31, 2014, selling, general and administrative expenses (“SG&A”) increased $4.5 million, or 6.3%, to $75.6 million and include incremental SG&A contributions from SRS, I&S and CAP of $2.6 million, $1.3 million and $1.4 million, respectively. On a constant currency basis and excluding incremental SG&A contributions from SRS, I&S and CAP, SG&A increased $2.2 million, or 3.3%, primarily due to incremental SG&A expense contributions from recently-acquired businesses other than SRS, I&S and CAP, mainly personnel related expenses, a $2.1 million increase in legal fees associated with the Mitchell patent infringement litigation, $1.5 million increase in personnel related expenses to support continued growth in our business and an increase in professional fees of $0.9 million, partially offset by a $4.8 million decrease in share based compensation expense primarily due to the reversal of previously recognized share-based compensation expense associated with the cancellation of unvested awards resulting from the termination of a senior executive.

Six Months Ended December 31, 2014 vs. Six Months Ended December 31, 2013. During the six months ended December 31, 2014, SG&A increased $21.3 million, or 15.6%, to $157.5 million and include incremental SG&A contributions from SRS, I&S and CAP of $9.7 million, $2.2 million and $1.4 million, respectively. On a constant currency basis and excluding incremental SG&A contributions from SRS, I&S and CAP, SG&A increased $10.6 million, or 8.0%, primarily due to incremental SG&A expense contributions from recently-acquired businesses other than SRS, I&S and CAP, mainly personnel related expenses, an $8.2 million increase in personnel and facilities related expenses to support continued growth in our business, a $1.7 million increase in legal fees associated with the Mitchell patent infringement litigation, an increase in professional fees of $0.9 million and an increase in advertising and marketing expenses of $0.7 million, partially offset by a $5.1 million decrease in share based compensation expense primarily due to the reversal of previously recognized share based compensation expense associated with the cancellation of unvested awards resulting from the termination of a senior executive.

Notwithstanding the impact of fluctuations in the value of the U.S. dollar versus certain foreign currencies in which we transact business, we expect SG&A to continue to increase in the future in absolute dollars as we continue to expand our business into new markets, incur costs related to acquisitions and continue to incur costs associated with being a public company.

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Depreciation and amortization

Three Months Ended December 31, 2014 vs. Three Months Ended December 31, 2013; During the three months ended December 31, 2014, depreciation and amortization increased by $9.8 million, or 33.0%, to $39.4 million and includes incremental depreciation and amortization contributions from SRS, I&S and CAP of $3.2 million, $4.0 million and $1.4 million, respectively. On a constant currency basis and excluding incremental depreciation and amortization contributions from SRS, I&S and CAP, depreciation and amortization increased $2.2 million, or 8.6%, for the three months ended December 31, 2014 primarily due to incremental contributions from recently acquired businesses other than SRS, I&S and CAP, offset by the continued decrease in amortization expense related to the intangible assets acquired in the acquisition of Explore since these intangible assets are being amortized on an accelerated basis.

Six Months Ended December 31, 2014 vs. Six Months Ended December 31, 2013. During the six months ended December 31, 2014, depreciation and amortization increased by $22.7 million, or 41.4%, to $77.4 million and includes incremental depreciation and amortization contributions from SRS, I&S and CAP of $11.0 million, $6.7 million and $1.4 million, respectively. On a constant currency basis and excluding incremental depreciation and amortization contributions from SRS, I&S and CAP, depreciation and amortization increased $4.5 million, or 8.9%, for the six months ended December 31, 2014 primarily due to incremental contributions from recently acquired businesses other than SRS, I&S and CAP, offset by the continued decrease in amortization expense related to the intangible assets acquired in the acquisition of Explore since these intangible assets are being amortized on an accelerated basis.

We generally amortize intangible assets on an accelerated basis to reflect the pattern in which the economic benefits of the intangible assets are realized. Notwithstanding the impact of fluctuations in the value of the U.S. dollar versus certain foreign currencies in which we transact business, we anticipate that our annual depreciation and amortization expense will increase over the next several years as a result of the amortization of the intangible assets acquired in business combinations and asset acquisitions.

Restructuring charges, asset impairments and other costs associated with exit and disposal activities

Three Months Ended December 31, 2014 vs. Three Months Ended December 31, 2013; Six Months Ended December 31, 2014 vs. Six Months Ended December 31, 2013. During the three months ended December 31, 2014 and 2013, we incurred restructuring charges, asset impairments and other costs associated with exit and disposal activities of $0.6 million and $0.7 million, respectively. During the six months ended December 31, 2014 and 2013, we incurred restructuring charges, asset impairments and other costs associated with exit and disposal activities of $2.9 million and $1.1 million, respectively.

The restructuring charges, asset impairments and other costs associated with exit and disposal activities incurred during the three and six months ended December 31, 2014 and 2013, respectively, consist primarily of employee termination benefits related to ongoing restructuring initiatives.

We expect to incur additional restructuring charges in future periods as we continue to undertake additional efforts to improve efficiencies in our business.

Acquisition and related costs

Three Months Ended December 31, 2014 vs. Three Months Ended December 31, 2013. We incurred acquisition and related costs of $11.5 million and $6.3 million, during the three months ended December 31, 2014 and 2013, respectively.

Acquisition and related costs incurred during the three months ended December 31, 2014 and 2013 consist primarily of contingent purchase consideration that is deemed compensatory in nature and other costs associated with completed acquisitions of $6.9 million and $6.8 million, respectively, and legal and professional fees incurred in connection with completed and contemplated business combinations of $4.6 million and $3.0 million, respectively. Acquisition and related costs incurred during the three months ended December 31, 2013 also reflects a $2.5 million cash payment received from SRS at closing which was intended to reimburse us for a portion of the direct and incremental costs we incurred related to the acquisition.

Six Months Ended December 31, 2014 vs. Six Months Ended December 31, 2013. We incurred acquisition and related costs of $22.8 million and $17.5 million, during the six months ended December 31, 2014 and 2013, respectively.

Acquisition and related costs incurred during the six months ended December 31, 2014 and 2013 consist primarily of contingent purchase consideration that is deemed compensatory in nature and other costs associated with completed

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acquisitions of $14.5 million and $15.4 million, respectively, and legal and professional fees incurred in connection with completed and contemplated business combinations of $8.3 million and $4.6 million, respectively. Acquisition and related costs incurred during the six months ended December 31, 2013 also reflects a $2.5 million cash payment received from SRS at closing which was intended to reimburse us for a portion of the direct and incremental costs we incurred related to the acquisition.

We expect to incur additional acquisition and related costs in future years as we continue to pursue potential business combinations and asset acquisitions as part of our plan to grow our business.

Interest expense

Three Months Ended December 31, 2014 vs. Three Months Ended December 31, 2013; Six Months Ended December 31, 2014 vs. Six Months Ended December 31, 2013. During the three and six months ended December 31, 2014, interest expense increased $0.4 million and $1.1 million, respectively, due to the increase in our total outstanding debt to approximately $2.3 billion resulting from the issuance of additional senior unsecured notes in June 2014 and November 2014.

We expect that our annual interest expense will increase in fiscal year 2015, as compared to fiscal year 2014, as a result of the issuance of additional unsecured notes in June 2014 and November 2014.

Other Expense, Net

Three Months Ended December 31, 2014 vs. Three Months Ended December 31, 2013. During the three months ended December 31, 2014, other expense, net decreased $43.7 million due primarily to the $60.2 million losses on debt extinguishment associated with the redemption of our 2018 Senior Notes incurred during the three months ended December 31, 2013, offset by an increase in loss on derivative instruments not designated as hedges of $9.6 million attributable to the swaps executed in November 2014 and the impact of fluctuations in foreign currency exchange rates on intercompany loans denominated in a currency other than the functional currency of the local company.

Six Months Ended December 31, 2014 vs. Six Months Ended December 31, 2013. During the six months ended December 31, 2014, other expense, net decreased $43.9 million due primarily to the $63.3 million loss on debt extinguishment associated with the redemption of our 2018 Senior Notes incurred during the six months ended December 31, 2013, offset by an increase in losses on derivative instruments not designated as hedges of $2.1 million attributable to the swaps executed in November 2014, a $2.5 million gain on asset sales recognized during the six months ended December 31, 2013 and the impact of fluctuations in foreign currency exchange rates on intercompany loans denominated in a currency other than the functional currency of the local company.

Income tax provision

Three Months Ended December 31, 2014 vs. Three Months Ended December 31, 2013; Six Months Ended December 31, 2014 vs. Six Months Ended December 31, 2013. During the three months ended December 31, 2014 and 2013, we recorded an income tax provision of $1.8 million and $12.5 million, respectively. The decrease in the income tax provision is due primarily to the establishment of a $29.7 million valuation allowance on our U.S. deferred tax assets during the three months ended December 31, 2013, partially offset by the tax benefit recognized during the three months ended December 31, 2013 related to costs associated with the redemption of the 2018 Senior Notes and certain discrete tax benefits recognized during the three months ended December 31, 2014.

Six Months Ended December 31, 2014 vs. Six Months Ended December 31, 2013. During the six months ended December 31, 2014 and 2013, we recorded an income tax provision of $9.3 million and $15.2 million, respectively. The decrease in the income tax provision is primarily due to the establishment of a $29.7 million valuation allowance on our U.S. deferred tax assets during the six months ended December 31, 2013, partially offset by the tax benefit recognized during the six months ended December 31, 2013 related to costs associated with the redemption of the 2018 Senior Notes and certain discrete tax benefits recognized during the six months ended December 31, 2014.

Our income tax provision for the three and six months ended December 31, 2014 is not necessarily indicative of the effective tax rate that may be expected for fiscal year 2015.

Factors that impact our income tax provision include, but are not limited to, the mix of jurisdictional earnings and varying jurisdictional income tax rates, establishment and release of valuation allowances in certain jurisdictions, permanent differences

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resulting from the book and tax treatment of certain items, and discrete items. Future changes in tax laws or tax rulings may have a significant adverse impact on our effective tax rate.

We are subject to periodic changes in the amount of our income tax provision and these changes could adversely affect our operating results; we may not be able to utilize all of our tax benefits before they expire.

Our effective tax rate could be adversely affected by our mix of earnings in countries with high versus low tax rates; by changes in the valuation of our deferred tax assets and liabilities; by a change in our assertion that our foreign earnings are indefinitely reinvested; by the outcomes of examinations, audits or disputes by or with relevant tax authorities; or by changes in tax laws and regulations. There have been several U.S. domestic and international laws which recently expired or were enacted that could continue to have a material adverse impact on our tax expense.

Our ability to utilize certain U.S. tax deferred tax assets is dependent upon generating sufficient taxable income before the expiration of the carryforward period. The decrease in our U.S. taxable income, including recent increases in interest expense resulted in a decrease in the amount of U.S. deferred tax assets considered realizable. Our projections of future taxable income required to fully realize the recorded amount of the net deferred tax asset reflect numerous assumptions about our operating business and investments, and are subject to change as conditions change specific to our operating business, investments or general economic conditions. Adverse changes in certain jurisdictions could result in the need to increase the deferred tax asset valuation allowance resulting in a charge against earnings.

Significant judgment is required to apply the recognition and measurement criteria prescribed in ASC Topic No. 740-10, Income Taxes. In addition, ASC Topic No. 740-10 applies to all income tax positions, including the potential recovery of previously paid taxes which, if settled unfavorably, could adversely impact our provision for income taxes or additional paid-in capital. We record unrecognized tax benefits as liabilities in accordance with ASC Topic No. 740 and adjust these liabilities when our judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the unrecognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available.

Liquidity and Capital Resources

Our principal sources of cash include cash generated from operations and the proceeds from the issuance of the senior unsecured notes. Our principal uses of cash have been, and we expect them to continue to be, for business combinations, debt service, dividends, stock repurchases, capital expenditures and working capital.

As of December 31, 2014, we had cash and cash equivalents of $393.0 million. At December 31, 2014, our total current and long-term debt obligations were $2.3 billion, consisting of $1.7 billion related to our senior unsecured notes due 2021 (the “2021 Senior Notes”) and $0.6 billion related to our senior unsecured notes due 2023 (the “2023 Senior Notes”).

The 2021 Senior Notes accrue interest at 6.000% per annum, payable semi-annually, and become due and payable on June 15, 2021. The 2021 Senior Notes include redemption provisions that allow us, at our option, to redeem all or a portion of the aggregate principal amount of the 2021 Senior Notes as follows:


•	At any time prior to June 15, 2016, we may redeem up to 35% of the aggregate principal amount of the 2021 Senior Notes at a redemption price equal to 106.000% of the principal amount of the notes redeemed, plus accrued and unpaid interest, if any, through the date of redemption.

•

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Treasury Rate as of such redemption date plus 50 basis points; over (b) the then outstanding principal amount of the notes.

•

The 2023 Senior Notes accrue interest at 6.125% per annum, payable semi-annually, and become due and payable on November 1, 2023. The 2023 Senior Notes include redemption provisions that allow us, at our option, to redeem all or a portion of the aggregate principal amount of the 2023 Senior Notes as follows:


•	At any time prior to November 1, 2016, we may redeem up to 35% of the aggregate principal amount of the 2023 Senior Notes at a redemption price equal to 106.125% of the principal amount of the notes redeemed, plus accrued and unpaid interest, if any, through the date of redemption.

•

The noncontrolling stockholders of certain of our subsidiaries have the right to require us to redeem their shares. We do not have any indication that the exercise of any remaining redemption rights is probable within the next twelve months. Further, we do not believe the occurrence of conditions precedent to the exercise of certain of these redemption rights is probable within the next twelve months. If the stockholders exercise their redemption rights within the next twelve months, we believe that we have sufficient liquidity to fund such redemptions.

In connection with our acquisition of 50% equity ownership interest in SRS and its subsidiaries from WCAS, WCAS has the right to require that we purchase its equity ownership interest in SRS up to four times per year, subject to an annual cap of $250 million and a $25 million per exercise minimum (the “Annual Put Right”) at a price based on the TTM EBITDA. In addition, WCAS has additional rights to require that we purchase either half or all (depending on the triggering event) of their equity ownership interest of SRS at a price, subject to certain adjustments, equal to a specified multiple of WCAS's cost basis of such equity ownership interest (the “Special Put Right”). The triggering events for the Special Put Right include, among others, a drop in our corporate credit rating below certain specified levels or if SRS is required to become a guarantor of any of

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the indebtedness of Solera or its subsidiaries (other than SRS) or at any time beginning on August 1, 2018 and ending on the earlier of (x) December 31, 2018 and (y) the consummation of any Annual Put Right after August 1, 2018.

On December 3, 2014, we paid a quarterly cash dividend with a value of $0.195 per outstanding share of common stock and per outstanding restricted stock unit to our stockholders and restricted stock unit holders of record on November 20, 2014. The aggregate dividend payments for the six months ended December 31, 2014 were $26.9 million. On February 5, 2015, we announced that the Audit Committee of our Board of Directors approved the payment of a quarterly dividend of $0.195 per share of outstanding common stock and per outstanding restricted stock unit. The dividends are payable on March 3, 2015 to stockholders and restricted stock unit holders of record at the close of business on February 19, 2015. Any determination to pay dividends in future periods will be at the discretion of our Board of Directors. The indenture governing our senior unsecured notes include restrictions on our ability to pay dividends on our common stock.

We believe that our existing cash on hand and cash flow from operations will be sufficient to fund currently anticipated working capital and debt service requirements, as well as investment of capital in acquisition and other strategic and investment opportunities, including the investment of capital pursuant to Phase I of our Mission 2020 goal, for at least the next twelve months.

Our management believes that our cash is best utilized by investing in the future growth of our business to support the achievement of our Mission 2020 goal, either through acquisitions or penetration of new geographic markets and other strategic opportunities, and maximizing stockholder return through the payment of cash dividends and stock repurchases. We regularly review acquisition and other strategic opportunities, which may require additional debt or equity financing. If we raise additional funds by issuing equity securities, further dilution to our then-existing stockholders may result. Additional debt financing may include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Any equity or debt financing may contain terms, such as liquidation and other preferences, that are not favorable to us or our stockholders.

We consider the undistributed earnings of our foreign subsidiaries as of December 31, 2014 to be indefinitely reinvested and, accordingly, no U.S. income taxes have been provided thereon. At December 31, 2014, the amount of cash associated with permanently reinvested foreign earnings was approximately $242.2 million. We have not, nor do we anticipate the need to, repatriate funds to the U.S. in order to satisfy domestic liquidity needs arising in the ordinary course of business, including liquidity needs associated with our domestic debt service requirements. If we were to repatriate such foreign earnings in the future, we would incur incremental U.S. federal and state income taxes. However, our intent is to continue to indefinitely reinvest our foreign earnings and our current plans do not demonstrate a need to repatriate foreign earnings to fund our U.S. operations.

The following summarizes our primary sources and uses of cash in the periods presented (in millions):



	Six Months Ended December 31,
	2014			2013			Change
Operating activities	$	79.9		$	127.1		$	(47.2	)
Investing activities	(803.3		)	(351.9		)	(451.4		)
Financing activities	293.0			465.1			(172.1		)

Operating activities. The $47.2 million decrease in cash provided by operating activities was primarily attributable to increases in payments of contingent purchase consideration that is considered compensatory in nature and employee incentive compensation payments.

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Investing activities. The $451.4 million increase in cash used in investing activities was primarily attributable to an increase in cash used to acquire businesses, primarily the $279.4 million and $449.7 million paid to acquire I&S and CAP in July 2014 and November 2014, respectively. Also contributing to the increase is in increase in capital expenditures of $10.2 million and an increase in acquisitions and capitalization of intangible assets of $9.0 million.

Financing activities. The $172.1 million decrease in cash provided by financing activities is primarily attributable to a decrease in net proceeds from the issuance of senior unsecured notes, net of repayments of long-term debt, of $87.5 million. Also contributing to the decrease is a $67.9 million increase in stock repurchases due to the adoption of a new share repurchase program in November 2014 and a $13.4 million increase in payments of contingent purchase consideration.

Off-Balance Sheet Arrangements and Related Party Transactions

As of December 31, 2014, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Certain minority stockholders of our international subsidiaries are also commercial purchasers and users of our software and services. Revenue transactions with all of the individual minority stockholders in the aggregate were less than 10% of our consolidated revenue for the six months ended December 31, 2014 and 2013, respectively, and aggregate accounts receivable from the minority stockholders represent less than 10% of consolidated accounts receivable at December 31, 2014 and June 30, 2014, respectively.

On February 12, 2013, we entered into a Facilities Use Agreement with Aquila Family Ventures, LLC (“AFV"), an entity owned by the family of our Chief Executive Officer, Tony Aquila, pursuant to which we shall pay AFV a fixed annual fee of $140,000 in exchange for our use during calendar year 2013 of certain guest ranch facilities in Wyoming (the "Wyoming Facility"). On December 26, 2013, we executed an amendment to the Facilities Use Agreement with AFV and Chaparral Lane Investment, LLC ("CLI"), an entity owned by our Chief Executive Officer and his family, to (i) add an additional facility in Roanoke, Texas (the "Roanoke Facility") to the Facilities Use Agreement and (ii) increase the fixed annual fee to $170,000 in exchange for our use during calendar year 2014 of the Wyoming Facility. This fee increase is due to increased operating expenses of the Wyoming Facility and an increase in the number of days during which we use the Wyoming Facility. On December 31, 2014, we executed another amendment to the Facilities Use Agreement to: (i) increase the fixed annual fee paid by us to AFV for our use of the Wyoming Facility to $272,250, and (ii) provide for a true-up payment by us to AFV to the extent that our actual use of the Wyoming Facility during a calendar year exceeds the assumed use for that calendar year, which assumed use was a basis for the fixed annual fee. The true-up payment paid by us to AFV for calendar year 2014 was $63,270.

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared in accordance with generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the amounts reported in our consolidated financial statements. On an ongoing basis, we evaluate estimates. We base our estimates on historical experiences and assumptions which we believe to be reasonable under the circumstances. These estimates form the basis for our judgments that affect the amounts reported in the consolidated financial statements. Actual results could differ from our estimates under different assumptions or conditions. Our significant accounting policies, which may be affected by our estimates and assumptions, are more fully described in Note 2 to our audited consolidated financial statements for the year ended June 30, 2014 and our critical accounting policies are more fully described in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” each of which are included in our Annual Report on Form 10-K for the year ended June 30, 2014 filed with the SEC on August 29, 2014. There have been no significant changes in our critical accounting policies and estimates during the six months ended December 31, 2014.

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ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Foreign Currency Risk

We conduct operations in many countries around the world. As a result, our results of operations are subject to both currency transaction risk and currency translation risk. We incur currency transaction risk when we enter into either a purchase or sale transaction using a currency other than the local functional currency. With respect to currency translation risk, our financial condition and results of operations are measured and recorded in the relevant local functional currency and then translated into U.S. dollars for inclusion in our consolidated financial statements.

Exchange rates between most of the major foreign currencies we use to transact our business and the U.S. dollar have fluctuated significantly over the last few years and we expect that they will continue to fluctuate. The majority of our revenues and costs are denominated in Euros, Pound Sterling, Swiss francs, Canadian dollars and other foreign currencies. The following table provides the average quarterly exchange rates for the Euro and Pound Sterling since the beginning of fiscal year 2014:



Period	Average Euro-to-U.S. Dollar Exchange Rate		Average Pound Sterling-to-U.S. Dollar Exchange Rate
Quarter ended September 30, 2013	$	1.32	$	1.55
Quarter ended December 31, 2013	1.36		1.62
Quarter ended March 31, 2014	1.37		1.65
Quarter ended June 30, 2014	1.37		1.68
Quarter ended September 30, 2014	1.33		1.67
Quarter ended December 31, 2014	1.25		1.58

In the normal course of business, we are exposed to variability in foreign currency exchange rates. We use derivatives to mitigate risks associated with this variability. The following is a summary of outstanding derivative financial instruments as of December 31, 2014 that are intended to mitigate our exposure to variability in foreign currency exchange rates:

•

In April 2012, we entered into two pay fixed Euros / receive fixed U.S. dollars cross-currency swaps in the aggregate notional amount of €109.0 million. We pay Euro fixed coupon payments at 6.990% and receive U.S. dollar fixed coupon payments at 6.750% on the notional amount. The maturity date of the swaps is June 15, 2018. These cross-currency swaps were designated, at inception, as cash flow hedges. We report the effective portion of the gain or loss on these hedges as a component of accumulated other comprehensive income (loss) in stockholders' equity and reclassify these gains or losses into earnings when the hedged transaction affects earnings.

•

Interest Rate Risk

Our outstanding long-term debt as of December 31, 2014 consists entirely of senior unsecured notes that bear interest at a fixed interest rate. Accordingly, we are not subject to interest rate risk.

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ITEM 4.	CONTROLS AND PROCEDURES.

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required financial disclosures. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures and, based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of December 31, 2014.

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures will prevent all error or all fraud. A control system can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Solera have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the control. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Controls

We did not identify any changes in our internal control over financial reporting that occurred during the second quarter of fiscal year 2015, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION


ITEM 1.	LEGAL PROCEEDINGS

In the normal course of business, various claims, charges and litigation are asserted or commenced against us, including:


•	We have been the subject of allegations that our repair estimating and total loss software and services produced results that favored our insurance company customers, one of which is the subject of pending litigation.


•	We are subject to assertions by our customers and strategic partners that we have not complied with the terms of our agreements with them or our agreements with them are not enforceable.

We have and will continue to vigorously defend ourselves against these claims. We believe that final judgments, if any, which may be rendered against us in current litigation, are adequately reserved for, covered by insurance or would not have a material adverse effect on our financial position.

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ITEM 1A.	RISK FACTORS

In addition to the cautionary statement regarding forward-looking statements included above in this Quarterly Report on Form 10-Q, we also provide the following cautionary discussion of risks and uncertainties relevant to our business. These risks and uncertainties, as well as other factors that we may not be aware of, could cause our actual results to differ materially from expected and historical results and could cause assumptions that underlie our business plans, expectations and statements in this Quarterly Report on Form 10-Q to be inaccurate.

We depend on a limited number of customers for a substantial portion of our revenues, and the loss of, or a significant reduction in volume from, any of these customers would harm our financial results.

We derive a substantial portion of our revenues from sales to large insurance companies and collision repair facilities that have relationships with these insurance companies. During the six months ended December 31, 2014, we derived 15.4% of our revenues from our ten largest insurance company customers. The largest three of these customers accounted for 2.7%, 2.3%, and 2.0%, respectively, of our revenues during the six months ended December 31, 2014. A loss of one or more of these customers would result in a significant decrease in our revenues, including the business generated by collision repair facilities associated with those customers. Furthermore, many of our arrangements with European customers are terminable by them on short notice or at any time. In addition, disputes with customers may lead to delays in payments to us, terminations of agreements or litigation. Additional terminations or non-renewals of customer contracts or reductions in business from our large customers would harm our business, financial condition and results of operations.

Our industry is highly competitive, and our failure to compete effectively could result in a loss of customers and market share, which could harm our revenues and operating results.

The markets for our automobile insurance claims processing software and services are highly competitive. In the United

States, our principal competitors are CCC Information Services Group Inc. and Mitchell International Inc. In Europe, our principal competitors are EurotaxGlass’s Group, DAT GmbH and GT Motive Enisa Group. Mitchell International recently consummated a strategic relationship with GT Motive Einsa Group, including an equity investment. We also encounter regional or country-specific competition in the markets for automobile insurance claims processing software and services and our other products and services. For example Experian® is our principal competitor in the United Kingdom in the vehicle validation market, car.tv is our principal competitor in Germany in the online salvage vehicle disposition market and ChoicePoint is our principal competitor in the United States in the automobile reunderwriting solutions market. The principal competitors of SRS in the U.S. service, repair and maintenance software and solutions market are ALLDATA and the Mitchell1 repair manuals. The principal competitor of our I&S business is Safelite Solutions. If one or more of our competitors develop software or services that are superior to ours or are more effective in marketing their software or services, our market share could decrease, thereby reducing our revenues. In addition, if one or more of our competitors retain existing or attract new customers for which we have developed new software or services, we may not realize expected revenues from these new offerings, thereby reducing our profitability.

Some of our current or future competitors may have or develop closer customer relationships, develop stronger brands, have greater access to capital, lower cost structures and/or more attractive system design and operational capabilities than we have. Consolidation within our industry could result in the formation of competitors with substantially greater financial, management or marketing resources than we have, and such competitors could utilize their substantially greater resources and economies of scale in a manner that affects our ability to compete in the relevant market or markets. As a result of consolidation, our competitors may be able to adapt more quickly to new technologies and customer needs, devote greater resources to promoting or selling their products and services, initiate and withstand substantial price competition, expand into new markets, hire away our key employees, change or limit access to key information and systems, take advantage of acquisition or other strategic opportunities more readily and develop and expand their product and service offerings more quickly than we can. In addition, our competitors may form strategic or exclusive relationships with each other, such as the equity interest in GT Motive purchased by Mitchell International, and with other companies in attempts to compete more successfully against us. These relationships may increase our competitors’ ability, relative to ours, to address customer needs with their software and service offerings, which may enable them to rapidly increase their market share.

Moreover, many insurance companies have historically entered into agreements with automobile insurance claims processing service providers like us and our competitors whereby the insurance company agrees to use that provider on an exclusive or preferred basis for particular products and services and agrees to require collision repair facilities, independent

assessors and other vendors to use that provider. If our competitors are more successful than we are at negotiating these exclusive or preferential arrangements, we may lose market share even in markets where we retain other competitive advantages.

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In addition, our insurance company customers have varying degrees of in-house development capabilities, and one or more of them have expanded and may seek to further expand their capabilities in the areas in which we operate. Many of our customers are larger and have greater financial and other resources than we do and could commit significant resources to product development. Our software and services have been, and may in the future be, replicated by our insurance company customers in-house, which could result in our loss of those customers and their associated repair facilities, independent assessors and other vendors, resulting in decreased revenues and net income.

The time and expense associated with switching from our competitors’ software and services to ours may limit our growth.

The costs for an insurance company to switch providers of claims processing software and services can be significant and the process can sometimes take 12 to 18 months to complete. As a result, potential customers may decide that it is not worth the time and expense to begin using our software and services, even if we offer competitive and economic advantages. If we are unable to convince these customers to switch to our software and services, our ability to increase market share will be limited and could harm our revenues and operating results.

Our operating results may be subject to volatility as a result of exposure to foreign currency exchange risks.

We derive most of our revenues, and incur most of our costs, in currencies other than the U.S. dollar, mainly the Euro. In our historical financial statements, we translate our local currency financial results into U.S. dollars based on average exchange rates prevailing during a reporting period for our consolidated statement of income and certain components of stockholders’ equity or the exchange rate at the end of that period for the consolidated balance sheet. These translations resulted in a net foreign currency translation adjustment of $(99.1) million and $41.0 million for the six months ended December 31, 2014 and 2013, respectively, which are recorded as a component of accumulated other comprehensive income (loss) in the stockholders' equity. Ongoing global economic conditions have impacted currency exchange rates.

Exchange rates between most of the major foreign currencies we use to transact our business and the U.S. dollar have fluctuated significantly over the last few years and we expect that they will continue to fluctuate. The majority of our revenues and costs are denominated in Euros, Pound Sterling, Swiss francs, Canadian dollars and other foreign currencies. The following table provides the average quarterly exchange rates for the Euro and Pound Sterling since the beginning of fiscal year 2014:



Period	Average Euro-to-U.S. Dollar Exchange Rate		Average Pound Sterling-to-U.S. Dollar Exchange Rate
Quarter ended September 30, 2013	$	1.32	$	1.55
Quarter ended December 31, 2013	1.36		1.62
Quarter ended March 31, 2014	1.37		1.65
Quarter ended June 30, 2014	1.37		1.68
Quarter ended September 30, 2014	1.33		1.67
Quarter ended December 31, 2014	1.25		1.58

During the three months ended December 31, 2014 as compared to the three months ended December 31, 2013, the U.S. dollar strengthened against most major foreign currencies we use to transact our business. Relative to the Euro and the Pound Sterling, the average U.S. dollar strengthened versus the Euro by 8.2% and 2.2%, respectively, which decreased our revenues and expenses for the three months ended December 31, 2014. A hypothetical 5% increase or decrease in the U.S. dollar versus other currencies in which we transact our business would have resulted in an increase or decrease, as the case may be, to our revenues of $7.9 million and $16.0 million during the three and six months ended December 31, 2014, respectively.


•	In April 2012, we entered into two pay fixed Euros / receive fixed U.S. dollars cross-currency swaps in the aggregate notional amount of €109.0 million. We pay Euro fixed coupon payments at 6.990% and receive U.S. dollar fixed coupon payments at 6.750% on the notional amount. The maturity date of the swaps is June 15, 2018. These cross-

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currency swaps were designated, at inception, as cash flow hedges. We report the effective portion of the gain or loss on these hedges as a component of accumulated other comprehensive income (loss) in stockholders' equity and reclassify these gains or losses into earnings when the hedged transaction affects earnings.

•

During the three and six months ended December 31, 2014 and 2013, we recognized a loss on the floating rate cross-currency swaps not designated as hedging instruments of $11.8 million, $2.2 million, $9.4 million and $7.3 million, respectively, which is included in other (income) expense, net in our consolidated statements of income.

Further fluctuations in exchange rates against the U.S. dollar could decrease our revenues and associated profits and, therefore, harm our future operating results.

Current uncertainty in global economic conditions makes it particularly difficult to predict product demand, utilization and other related matters and makes it more likely that our actual results could differ materially from expectations.

Our operations and performance depend on worldwide economic conditions, which have deteriorated significantly in many countries where our products and services are sold, and may remain depressed for the foreseeable future. These conditions make it difficult for our customers and potential customers to accurately forecast and plan future business activities, and could cause our customers and potential customers to slow, reduce or refrain from spending on our products. In addition, external factors that affect our business have been and may continue to be impacted by the global economic slowdown. Examples include:

•

Number of Insurance Claims Made: In fiscal year 2014, the number of insurance claims made increased slightly versus fiscal year 2013. However, in several of our large western European markets, the number of insurance claims for vehicle damage submitted by owners to their insurance carriers declined slightly. The number of insurance claims made can be influenced by factors such as unemployment levels, the number of miles driven, changing gasoline prices, the number of uninsured drivers, changing insurance premiums and insured drivers opting for lower coverage or higher deductible levels, among other things. Fewer claims made can reduce the transaction-based fees that we generate.

•

Sales of New and Used Vehicles: According to industry sources, global new vehicle sales grew by 3.7% in 2012 to 79.5 million units and by 4.2% in 2013 to 82.8 million units. In markets where automobile insurance is generally government-mandated and claims processing is digitized (“advanced markets”), sales are projected to grow at 1.3% compound annual growth rate through 2020. Fewer new light vehicle sales can result in fewer insured vehicles on the road and fewer automobile accidents, which can reduce the transaction-based fees that we generate.

•

Used Vehicle Retail and Wholesale Values: Declines in retail and wholesale used vehicle values can impact vehicle owner and insurance carrier decisions about which damaged vehicles should be repaired and which should be declared a total loss. The lower the retail and wholesale used vehicle values, the more likely it is that a greater percentage of automobiles are declared a total loss versus a partial loss. The fewer number of vehicles that owners and insurance carriers decide to repair can reduce the transaction-based fees that we generate for partial-loss estimates, but may have a beneficial impact on the transaction-based fees that we generate for total-loss estimates.

•

Automobile Usage—Number of Miles Driven: Several factors can influence miles driven, including gasoline prices and economic conditions. According to industry sources, miles driven in the United States increased 0.6% from January through August of calendar year 2014 compared to the same period in prior year. For calendar year 2013, cumulative miles driven in the United States increased by 0.6% compared to miles driven in calendar year 2012. For calendar year 2012, cumulative miles driven in the United States increased by 0.6% compared to the same period in the prior year. For calendar year 2011, cumulative miles driven in the United States declined compared to the same period in the prior year. In calendar year 2010, the number of miles driven in the United States increased compared to calendar years 2009 and 2008. Fewer miles driven can result in fewer automobile accidents, which can reduce the transaction-based fees that we generate. Many of our markets around the world continue to experience or have recently experienced volatility. Accordingly, we cannot predict the timing, strength or duration of any economic

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slowdown or subsequent economic recovery, worldwide or in particular economic markets. These and other economic factors could have a material adverse effect on demand for or utilization of our products and on our financial condition and operating results.

We may engage in acquisitions, joint ventures, dispositions or similar transactions that could disrupt our operations, cause us to incur substantial expenses, result in dilution to our stockholders and harm our business or results of operations.

Our growth is dependent upon market growth and our ability to enhance our existing products and introduce new products on a timely basis. We have addressed and will continue to address the need to introduce new products both through internal development and through acquisitions of other companies and technologies that would complement or extend our business or enhance our technological capability. In fiscal year 2014, we acquired six businesses, as well as 50% ownership interest in SRS. In fiscal year 2015 to date, we have acquired four businesses, including I&S and CAP.

Our ability to realize the anticipated benefits of our acquisitions will depend, to a varying extent, on our ability to continue to expand the acquired business' products and services and integrate them with our products and services. Our management will be required to devote significant attention and resources to these efforts, which may disrupt our core business, the acquired business or both and, if executed ineffectively, could preclude realization of the full benefits we expect. Failure to realize the anticipated benefits of our acquisitions could cause an interruption of, or a loss of momentum in, the operations of the acquired business. In addition, the efforts required to realize the benefits of our acquisitions may result in material unanticipated problems, expenses, liabilities, competitive responses, loss of customer relationships, and the diversion of management’s attention, and may cause our stock price to decline. The risks associated with our acquisitions and future acquisitions include:


•	adverse effects on existing customer or supplier relationships, such as cancellation of orders or the loss of key customers or suppliers;


•	difficulties in integrating or retaining key employees of the acquired company;


•	difficulties in integrating the operations of the acquired company, such as information technology resources, and financial and operational data;


•	entering geographic or product markets in which we have no or limited prior experience;


•	difficulties in assimilating product lines or integrating technologies of the acquired company into our products;


•	disruptions to our operations;


•	diversion of our management’s attention;


•	potential incompatibility of business cultures;


•	potential dilution to existing stockholders if we issue shares of common stock or other securities as consideration in an acquisition or if we issue any such securities to finance acquisitions;


•	prohibitions against completing acquisitions as a result of regulatory restrictions or disruptions in connection with regulatory investigations of completed acquisitions;


•	limitations on the use of net operating losses or tax benefits;


•	negative market perception, which could negatively affect our stock price;


•	the assumption of debt and other liabilities, both known and unknown; and


•	additional expenses associated with the amortization of intangible assets or impairment charges related to purchased intangibles and goodwill, or write-offs, if any, recorded as a result of the acquisition.

Many of these factors will be outside of our control, and any one of them could result in increased costs, decreases in the amount of expected revenues and diversion of management’s time and energy.

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Our merger and acquisition activities are subject to antitrust and competition laws, which laws could impact our ability to pursue strategic transactions. If we were found to violate antitrust and competition laws, we would be subject to various remedies, including divestiture of the acquired businesses. For example, we recently announced that the U.S. Federal Trade Commission (the "FTC") closed its investigation into our acquisition of Actual Systems. Pursuant to the termination of the investigation, and without admitting any violation of the law, we agreed to enter into a consent order with the FTC relating to the salvage yard management system business and effected a voluntary divestiture of the United States and Canadian businesses of Actual Systems in August 2013 to a purchaser group substantially composed of the former shareholders of Actual Systems. Additionally, our completed acquisition of CAP in the United Kingdom is subject to an ongoing merger review by the Competition and Markets Authority (the "CMA"). We are restricted from integrating CAP into our existing business operations until the conclusion of the CMA review.

We (i) participate in our SRS joint venture with an affiliate of WCAS, (ii) participate in joint ventures in some countries and, (iii) may participate in future joint ventures. Our partners in these ventures may have interests and goals that are inconsistent with or different from ours, which could result in the joint venture taking actions that negatively impact our growth in the local market and consequently harm our business or financial condition. If we are unable to find suitable partners or if suitable partners are unwilling to enter into joint ventures with us, our growth into new geographic markets may slow, which would harm our results of operations.

Additionally, we may finance future acquisitions and acquisitions of additional interests in our SRS joint venture and/or additional joint ventures with cash from operations, additional indebtedness and/or the issuance of additional securities, any of which may impair the operation of our business or present additional risks, such as reduced liquidity, or increased interest expense. For example, we financed the purchase price for the Explore, CAP and I&S acquisitions with private offerings of additional senior unsecured notes. We may also seek to restructure our business in the future by disposing of certain of our assets, which may harm our future operating results, divert significant managerial attention from our operations and/or require us to accept non-cash consideration, the market value of which may fluctuate. The ability of WCAS to require us to purchase its equity interests in our SRS joint venture is outside of our control and, as a result, we may be required to purchase such equity interests at a time in which we would otherwise want to use such funds for another purpose, including funding capital expenditures or other strategic initiatives.

Failure to implement our acquisition strategy, including successfully integrating acquired businesses, could have an adverse effect on our business, financial condition and results of operations.

Our operating results may vary widely from period to period due to the sales cycle, seasonal fluctuations and other factors.

Our contracts with insurance companies generally require time-consuming authorization procedures by the customer, which can result in additional delays between when we incur development costs and when we begin generating revenues from those software or service offerings. In addition, we incur significant operating expenses while we are researching and designing new software and related services, and we typically do not receive corresponding payments in those same periods. As a result, the number of new software and service offerings that we are able to implement, successfully or otherwise, can cause significant variations in our cash flow from operations, and we may experience a decrease in our net income as we incur the expenses necessary to develop and design new software and services. Accordingly, our quarterly and annual revenues and operating results may fluctuate significantly from period to period.

Our business is subject to seasonal and other fluctuations. In particular, we have historically experienced higher revenues during the second quarter and third quarter versus the first quarter and fourth quarter during each fiscal year. This seasonality is caused primarily by more days of inclement weather during the second quarter and third quarter in most of our markets, which contributes to a greater number of vehicle accidents and damage during these periods. In addition, our business is subject to fluctuations caused by other factors, including the occurrence of extraordinary weather events and the timing of certain public holidays. For example, the Easter holiday occurs during the third quarter in certain fiscal years and occurs during the fourth quarter in other fiscal years, resulting in a change in the number of business days during the quarter in which the holiday occurs.

We anticipate that our revenues will continue to be subject to seasonality and therefore our financial results will vary from period to period. However, actual results from operations may or may not follow these normal seasonal patterns in a given year leading to performance that is not in alignment with expectations.

We also may experience variations in our earnings due to other factors beyond our control, such as:

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•	the introduction of new software or services by our competitors;


•	customer acceptance of new software or services;


•	the volume of usage of our offerings by existing customers;


•	variations of vehicle accident rates due to factors such as changes in fuel prices, number of miles driven or new vehicle purchases and their impact on vehicle usage;


•	competitive conditions, or changes in competitive conditions, in our industry generally;


•	prolonged system failures during which time customers cannot submit or process transactions; or


•	prolonged interruptions in our access to third-party data incorporated in our software and services.

We may also incur significant or unanticipated expenses when contracts expire, are terminated or are not renewed. Any of these events could harm our financial condition and results of operations and cause our stock price to decline.

Our industry is subject to rapid technological changes, and if we fail to keep pace with these changes, our market share and revenues will decline.

Our industry is characterized by rapidly changing technology, evolving industry standards and frequent introductions of, and enhancements to, existing software and services, all with an underlying pressure to reduce cost. Industry changes could render our offerings less attractive or obsolete, and we may be unable to make the necessary adjustments to our offerings at a competitive cost, or at all. We also incur substantial expenses in researching, developing, designing, purchasing, licensing and marketing new software and services. The development or adaptation of these new technologies may result in unanticipated expenditures and capital costs that would not be recovered in the event that our new software or services are unsuccessful. The research, development, production and marketing of new software and services are also subject to changing market requirements, access to and rights to use third-party data, the satisfaction of applicable regulatory requirements and customers’ approval procedures and other factors, each of which could prevent us from successfully marketing any new software and services or responding to competing technologies. The success of new software in our industry also often depends on the ability to be first to market, and our failure to be first to market with any particular software project could limit our ability to recover the development expenses associated with that project. If we cannot develop or acquire new technologies, software and services or any of our existing software or services are rendered obsolete, our revenues and income could decline and we may lose market share to our competitors, which would impact our future operations and financial results.

We are currently making, and anticipate making additional, strategic decisions and investments to leverage and expand our product and service offerings, including offerings in addition to the automotive sector.

We have invested, and expect to continue to invest, significant management attention and financial resources to develop, integrate and implement new business strategies, products, services, features, applications, and functionality. Such endeavors may involve significant risks and uncertainties, including distraction of management from current core operations, insufficient revenues to offset liabilities assumed and expenses associated with these new investments, inadequate return of capital on our investments, and unanticipated issues or problems that arise during our implementation of such strategies and offerings. Because these new endeavors are inherently risky, our business strategies and product and service offerings may not be successful and may adversely affect our business, financial condition and results of operations.

Some of our strategies and offerings may be outside the insurance claims industry (such as our SRS joint venture), may be outside of the automotive sector (such as our property claims business), or may be consumer-based. We have limited historical experience directly serving consumers or customers outside of the automotive sector and our products and services may not be accepted or widely utilized by such consumers or customers. These offerings may also subject us to new or additional laws and regulations (including those relating to consumer protection) and may lead to increased legal and regulatory compliance, risk and liability.

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Changes in or violations by us or our customers of applicable government regulations could reduce demand for or limit our ability to provide our software and services in those jurisdictions.

Our insurance company customers are subject to extensive government regulations, mainly at the state level in the United States and at the country level in our non-U.S. markets. Some of these regulations relate directly to our software and services, including regulations governing the use of total loss and estimating software. If our insurance company customers fail to comply with new or existing insurance regulations, including those applicable to our software and services, they could lose their certifications to provide insurance and/or reduce their usage of our software and services, either of which would reduce our revenues. Also, we are subject to direct regulation in some markets, and our failure to comply with these regulations could significantly reduce our revenues or subject us to government sanctions. In addition, future regulations could force us to implement costly changes to our software and/or databases or have the effect of prohibiting or rendering less valuable one or more of our offerings. Moreover, some states in the United States have changed and are contemplating changes to their regulations to permit insurance companies to use book valuations or public source valuations for total loss calculations, making our total loss software potentially less valuable to insurance companies in those states. Some states have adopted total loss regulations that, among other things, require insurers to use a methodology deemed acceptable to the respective government agency.

We submit our methodology to such agencies, and if they do not approve our methodology, we will not be able to perform total loss valuations in their respective states. Other states are considering legislation that would limit the data that our software can provide to our insurance company customers. In the event that demand for or our ability to provide our software and services decreases in particular jurisdictions due to regulatory changes, our revenues and margins may decrease.

There is momentum to create a U.S. federal government oversight mechanism for the insurance industry. There is also legislation under consideration by the U.S. legislature relating to the vehicle repair industry. Federal regulatory oversight of or legislation relating to the insurance industry in the United States could result in a broader impact on our business versus similar oversight or legislation at the U.S. state level.

Regulatory developments could negatively impact our business.

We acquire and distribute personal, public and non-public information, store it in our some of our databases and provide it in various forms to certain of our customers in accordance with applicable law and contracts. We are subject to government regulation and, from time to time, companies in similar lines of business to us are subject to adverse publicity concerning the use of such data. We provide many types of data and services that are subject to regulation under the Fair Credit Reporting Act, Gramm-Leach-Bliley Act, Driver’s Privacy Protection Act, Health Insurance Portability and Accountability Act, the European Union’s Data Protection Directive, the United Kingdom's Financial Services and Markets Act 2000 Order 2001, and, to a lesser extent, various other international, federal, state and local laws and regulations. These laws and regulations are designed to protect the privacy of the public and to prevent the misuse of personal information. Our suppliers that provide us with protected and regulated data face similar regulatory requirements and, consequently, they may cease to be able to provide data to us or may substantially increase the fees they charge us for this data which may make it financially burdensome or impossible for us to acquire data that is necessary to offer our certain of our products and services. Additionally, many consumer advocates, privacy advocates, and government regulators believe that the existing laws and regulations do not adequately protect privacy of personal information. They have become increasingly concerned with the use of personal information, particularly social security numbers, department of motor vehicle data and dates of birth. As a result, they are lobbying for further restrictions on the dissemination or commercial use of personal information to the public and private sectors. The following legal and regulatory developments also could have a material adverse effect on our business, financial position, results of operations or cash flows:


•	amendment, enactment, or interpretation of laws and regulations which restrict the access, use and distribution of personal information and limit the supply of data available to customers;


•	changes in cultural and consumer attitudes to favor further restrictions on information collection and sharing, which may lead to regulations that prevent full utilization of our services;


•	failure of our services to comply with current or amended laws and regulations; and


•	failure of our services to adapt to changes in the regulatory environment in an operational effective, efficient, cost-effective manner.

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We require a significant amount of cash to service our indebtedness, which reduces the cash available to finance our organic growth, make strategic acquisitions and enter into alliances and joint ventures; our bond indentures contain restrictive covenants that limit our ability to engage in certain activities.

We have a significant amount of indebtedness. As of December 31, 2014, our indebtedness, including current maturities, was $2.3 billion, which consists of $1.7 billion related to the 2021 Senior Notes and $0.6 billion related to the 2023 Senior Notes.

During the six months ended December 31, 2014, our aggregate interest expense was $56.6 million and cash paid for interest was $61.0 million. As a result of our issuance of additional senior unsecured notes in June and November 2014, we expect our interest expense and cash interest expense to increase in fiscal year 2015 as compared to fiscal year 2014.

Our indebtedness could:


•	make us more vulnerable to unfavorable economic conditions and reduce our revenues;


•	make it more difficult to obtain additional financing in the future for working capital, capital expenditures or other general corporate purposes;


•	require us to dedicate or reserve a large portion of our cash flow from operations for making payments on our indebtedness which would prevent us from using it for other purposes including product development;


•	to the extent that we have variable rate debt that is not covered by interest rate derivative agreements, make us susceptible to fluctuations in market interest rates that affect the cost of our borrowings; and


•	make it more difficult to pursue strategic acquisitions, joint ventures, alliances and collaborations.

Our ability to service our indebtedness will depend on our future performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors. Some of these factors are beyond our control. If we cannot generate sufficient cash flow from operations to service our indebtedness and to meet our other obligations and commitments, we may be required to refinance our debt, to dispose of assets or to repatriate foreign earnings to obtain funds for such purpose. We cannot assure you that debt refinancings or asset dispositions could be completed on a timely basis or on satisfactory terms, if at all, or would be permitted by the terms of our debt instruments. If we were to repatriate foreign earnings, we would incur incremental U.S. federal and state income taxes.

Our bond indentures contain covenants that restrict our and our subsidiaries' ability to incur certain liens, engage in sale and leaseback transactions and consolidate, merge with, or convey, transfer or lease substantially all of our or their assets to, another person, and, in the case of any of our subsidiaries that did not issue or guarantee our senior notes, incur indebtedness.

Our failure to comply with any of these covenants could result in the acceleration of our outstanding indebtedness. If acceleration occurs, we would not be able to repay our debt and it is unlikely that we would be able to borrow sufficient additional funds to refinance our debt. Even if new financing is made available to us, it may not be available on acceptable or reasonable terms. An acceleration of our indebtedness would impair our ability to operate as a going concern.

Pursuant to agreements entered into prior to the CSG Acquisition, the noncontrolling stockholders of certain of our majority-owned subsidiaries have the right to require us to redeem their shares at the then fair market value. For financial statement reporting purposes, the estimated fair market value of these redeemable noncontrolling interests was $80.1 million at December 31, 2014.

We are active in over 70 countries, where we are subject to country-specific risks that could adversely impact our business and results of operations.

During the six months ended December 31, 2014, we generated approximately 57% of our revenues outside the U.S. and we expect revenues from non-U.S. markets to continue to represent a majority of our total revenues. Business and operations in individual countries are subject to changes in local government regulations and policies, including those related to tariffs and trade barriers, investments, taxation, currency exchange controls and repatriation of earnings. Our results are also subject to the difficulties of coordinating our activities across over 70 different countries. Furthermore, our business strategy includes expansion of our operations into new and developing markets, which will require even greater international coordination, expose us to additional local government regulations and involve markets in which we do not have experience or established

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operations. In addition, our operations in each country are vulnerable to changes in socio-economic conditions and monetary and fiscal policies, intellectual property protection disputes, the settlement of legal disputes through foreign legal systems, the collection of receivables through foreign legal systems, exposure to possible expropriation or other governmental actions, unsettled political conditions, possible terrorist attacks and pandemic disease. These and other factors may harm our operations in those countries and therefore our business, financial condition and results of operations.

We have a large amount of goodwill and other intangible assets as a result of acquisitions. Our earnings will be harmed if we suffer an impairment of our goodwill or other intangible assets.

We have a large amount of goodwill and other intangible assets and are required to perform an annual, or in certain situations a more frequent, assessment for possible impairment for accounting purposes. At December 31, 2014, we had goodwill and other intangible assets of $2.8 billion, or approximately 77% of our total assets. If we do not achieve our planned operating results or other factors impair these assets, we may be required to incur a non-cash impairment charge. Any impairment charges in the future will adversely affect our results of operations.

We may incur significant restructuring and severance charges in future periods, which would harm our operating results and cash position or increase debt.

We incurred restructuring charges of $2.9 million and $1.1 million during the six months ended December 31, 2014 and 2013, respectively. These charges consist primarily of relocation and termination benefits paid or to be paid to employees, lease obligations associated with vacated facilities and other costs incurred related to our restructuring initiatives. As of December 31, 2014, our remaining restructuring and severance obligations associated with these restructuring initiatives were $0.9 million.

We regularly evaluate our existing operations and capacity, and we expect to incur additional restructuring charges as a result of future personnel reductions, related restructuring, and productivity and technology enhancements, which could exceed the levels of our historical charges. In addition, we may incur certain unforeseen costs as existing or future restructuring activities are implemented. Any of these potential charges could harm our operating results and significantly reduce our cash position.

Our software and services rely on information generated by third parties and any interruption of our access to such information could materially harm our operating results.

We believe that our success depends significantly on our ability to provide our customers access to data from many different sources. For example, a substantial portion of the data used in our repair estimating software is derived from parts and repair data provided by, among others, original equipment manufacturers, or OEMs, aftermarket parts suppliers, data aggregators, automobile dealerships, government organizations and vehicle repair facilities. We obtain much of our data about vehicle parts and components and collision repair labor and costs through license agreements with OEMs, automobile dealers, and other providers; and we obtain much of our data in our vehicle validation database and motor violation database from government organizations. EurotaxGlass’s Group, one of our primary competitors in Europe, provides us with valuation and paint data for use in our European markets pursuant to a similar arrangement. In some cases, the data included in our products and services is licensed from sole-source suppliers. Many of the license agreements through which we obtain data are for terms of one year and may be terminated without cost to the provider on short notice.

Mitchell International, one of our primary competitors in the United States, has historically provided us with vehicle glass data for use in our U.S. markets pursuant to a vehicle data license agreement. Mitchell International filed a complaint against us with the California Superior Court alleging that we have breached the license agreement. Our discussions with Mitchell International continue regarding a resolution of the dispute relating to this agreement. We continue to investigate Mitchell International's claim that we have breached the agreement, and we cannot be certain about the outcome of these discussions or our continued access to the data.

If one or more of our licenses are terminated or if we are unable to renew one or more of these licenses on favorable terms or at all, we may be unable to access the information (in the case of information licensed from sole-service suppliers) or unable to access alternative data sources that would provide comparable information without incurring substantial additional costs. Some OEM sources have indicated to us that they intend to materially increase the licensing costs for their data. While we do not believe that our access to many of the individual sources of data is material to our operations, prolonged industry-wide price increases or reductions in data availability could make receiving certain data more difficult and could result in significant cost increases, which would materially harm our operating results.

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System failures, delays and other problems could harm our reputation and business, cause us to lose customers and expose us to customer liability.

Our success depends on our ability to provide accurate, consistent and reliable services and information to our customers on a timely basis. Our operations could be interrupted by any damage to or failure of:


•	our computer software or hardware or our customers’ or third-party service providers’ computer software or hardware;


•	our networks, our customers’ networks or our third-party service providers’ networks; and


•	our connections to and outsourced service arrangements with third parties, such as Acxiom, which hosts data and applications for us and our customers.

Our systems and operations are also vulnerable to damage or interruption from:


•	power loss or other telecommunications failures;


•	earthquakes, fires, floods, hurricanes and other natural disasters;


•	computer viruses or software defects;


•	physical or electronic break-ins, sabotage, intentional acts of vandalism and similar events; and


•	errors by our employees or third-party service providers.

As part of our ongoing process improvements efforts, we have and will continue to migrate product and system platforms to next generation platforms and we may increase data and applications that we host ourselves, and the risks noted above will be exacerbated by these efforts. Because many of our services play a mission-critical role for our customers, any damage to or failure of the infrastructure we rely on (even if temporary), including those of our customers and vendors, could disrupt our ability to deliver information to and provide services for our customers in a timely manner, which could harm our reputation and result in the loss of current and/or potential customers or reduced business from current customers. In addition, we generally indemnify our customers to a limited extent for damages they sustain related to the unavailability of, or errors in, the software and services we provide; therefore, a significant interruption of, or errors in, our software and services could expose us to significant customer liability.

Fraudulent data access and other security breaches may negatively impact our business and harm our reputation.

Security breaches in our facilities, computer networks, and databases may cause harm to our business and reputation and result in a loss of customers and data suppliers. Our systems may be vulnerable to physical break-ins, computer viruses, attacks by hackers and similar disruptive problems. If users gain improper access to our databases, they may be able to steal, publish, delete or modify confidential third-party information that is stored or transmitted on our networks.

In addition, customers’ misuse of our information services could cause harm to our business and reputation and result in loss of customers. Any such misappropriation and/or misuse of our information could result in us, among other things, being in breach of certain data protection and related legislation.

A security or privacy breach may affect us in the following ways:


•	deterring customers from using our solutions;


•	deterring data suppliers from supplying data to us;


•	harming our reputation;


•	exposing us to liability;


•	increasing operating expenses to correct problems caused by the breach;

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•	affecting our ability to meet customers’ expectations; or


•	causing inquiry from governmental authorities.

We may detect incidents in which consumer data has been fraudulently or improperly acquired. The number of potentially affected consumers identified by any future incidents is obviously unknown. Any such incident could materially and adversely affect our business, reputation, financial condition, operating results and cash flows.

Privacy concerns could require us to exclude data from our software and services, which may reduce the value of our offerings to our customers, damage our reputation and deter current and potential users from using our software and services.

In the United States, European Union and other jurisdictions, there are significant restrictions on the use of personal and consumer data. Our violations of these laws could harm our business. In addition, these restrictions may place limits on the information that we can collect from and provide to our customers. Furthermore, concerns about our collection, use or sharing of automobile insurance claims information, moving violation information or other privacy-related matters, even if unfounded, could damage our reputation and operating results.

We depend on a limited number of key personnel who would be difficult to replace. If we lose the services of these individuals, or are unable to attract new talent, our business will be adversely affected.

We depend upon the ability and experience of our key personnel, who have substantial experience with our operations, the rapidly changing automobile insurance claims processing industry and the markets in which we offer our software and services. The loss of the services of one or more of our senior executives or key employees, particularly our Chairman of the Board, Chief Executive Officer and President, Tony Aquila, could harm our business and operations.

Our success depends on our ability to continue to attract, manage and retain other qualified management, sales and technical personnel as we grow. We may not be able to continue to attract or retain such personnel in the future.

We may require additional capital in the future, which may not be available on favorable terms, or at all.

Our future capital requirements depend on many factors, including our ability to develop and market new software and services and to generate revenues at levels sufficient to cover ongoing expenses or possible acquisition or similar transactions. If we need to raise additional capital, equity or debt financing may not be available at all or may be available only on terms that are not favorable to us. In the case of equity financings, dilution to our stockholders could result, and in any case such securities may have rights, preferences and privileges that are senior to our outstanding common stock. In the case of debt financings, we may have to grant additional security interests in our assets to lenders and agree to restrictive business and operating covenants. If we cannot obtain adequate capital on favorable terms or at all, we may be unable to support future growth or operating requirements and, accordingly, our business, financial condition and results of operations could be harmed.

Our business depends on our brands, and if we are not able to maintain and enhance our brands, our business and operating results could be harmed.

We believe that the brand identity we have developed and acquired has significantly contributed to the success of our business. We also believe that maintaining and enhancing our brands, such as Audatex, ABZ, Hollander, Informex, Sidexa, HPI, AUTOonline, Market Scan, IMS, Identifix, AutoPoint, LYNX Services, CAP and Explore, are critical to the expansion of our software and services to new customers in both existing and new markets. Maintaining and enhancing our brands may require us to make substantial investments and these investments may not be successful. If we fail to promote and maintain our brands or if we incur excessive expenses in this effort, our business, operating results and financial condition will be harmed. We anticipate that, as our markets become increasingly competitive, maintaining and enhancing our brands may become increasingly difficult and expensive. Maintaining and enhancing our brands will depend largely on our ability to be a technology innovator, to continue to provide high quality software and services and protect and defend our brand names and trademarks, which we may not do successfully. To date, we have not engaged in extensive direct brand promotion activities, and we may not successfully implement brand enhancement efforts in the future.

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Third parties may claim that we are infringing upon their intellectual property rights, and we could be prevented from selling our software or suffer significant litigation expense even if these claims have no merit.

Our competitive position is driven in part by our intellectual property and other proprietary rights. Third parties, however, may claim that our software, products or technology, including claims data or other data, which we obtain from other parties, are infringing or otherwise violating their intellectual property rights. We may also develop software, products or technology, unaware of pending patent applications of others, which software products or technology may infringe a third party patent once that patent is issued. Any claims of intellectual property infringement or other violation, even claims without merit, could be costly and time-consuming to defend and could divert our management and key personnel from operating our business. In addition, if any third party has a meritorious or successful claim that we are infringing or violating its intellectual property rights, we may be forced to change our software or enter into licensing arrangements with third parties, which may be costly or impractical. These claims may also require us to stop selling our software and/or services as currently designed, which could harm our competitive position. We also may be subject to significant damages or injunctions that prevent the further development and sale of certain of our software or services and may result in a material loss in revenue. Currently, one of our trademarks is subject to a nullification proceeding in front of the Brazil trademark authority.

We may be unable to protect our intellectual property and property rights, either without incurring significant costs or at all, which would harm our business.

We rely on a combination of trade secrets, copyrights, know-how, trademarks, patents, license agreements and contractual provisions, as well as internal procedures, to establish and protect our intellectual property rights. The steps we have taken and will take to protect our intellectual property rights may not deter infringement, duplication, misappropriation or violation of our intellectual property by third parties. In addition, any of the intellectual property we own or license from third parties may be challenged, invalidated, circumvented or rendered unenforceable, or may not be of sufficient scope or strength to provide us with any meaningful information. Furthermore, because of the differences in foreign patent, trademark and other laws concerning proprietary rights, our software and other intellectual property rights may not receive the same degree of protection in foreign countries as they would in the U.S., if at all. We may be unable to protect our rights in trade secrets and unpatented proprietary technology in these countries. We may also be unable to prevent the unauthorized disclosure or use of our technical knowledge, trade secrets or other proprietary information by consultants, vendors, former employees or current employees, despite the existence of nondisclosure and confidentiality agreements, intellectual property assignments and other contractual restrictions. It is also possible that others will independently develop the technology that is the same or similar to ours. If our trade secrets and other proprietary information become known or we are unable to maintain the proprietary nature of our intellectual property, we may not receive any return on the resources expended to create the intellectual property or generate any competitive advantage based on it.

We rely on our brands to distinguish our products and services from the products and services of our competitors, and have registered or applied to register trademarks covering many of these brands. We cannot assure you that our trademark applications will be approved. Third parties may also oppose our trademark applications, or otherwise challenge our use of the trademarks. In the event that our trademarks are successfully challenged, we could be forced to rebrand our products and services, which could result in loss of brand recognition, and could require us to devote resources to advertising and marketing new brands.

Third parties, including competitors, may infringe our intellectual property right and we may not have adequate resources to enforce our intellectual property rights. Pursuing infringers of our intellectual property could result in significant monetary costs and diversion of management resources, and any failure to pursue or successfully litigate claims against infringers or otherwise enforce our intellectual property rights could result in competitors using our technology and offering similar products and services, potentially resulting in loss of our competitive advantage and decreased revenues.

Currently, we believe that one or more of our customers in our EMEA segment may be infringing our intellectual property by making and distributing unauthorized copies of our software. We have also filed a trademark revocation application with the European Union trademark authority seeking revocation of a registered trademark held by a company in the United Kingdom that is similar to one of the trademarks we use. Enforcement of our intellectual property rights may be difficult and may require considerable resources.

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Our lawsuit against Mitchell International, Inc. for patent infringement will be costly to litigate, could be decided adversely to us, and could adversely affect our intellectual property rights, distract our management and technical staff, and cause our stock price to decline.

On February 6, 2012, we filed a lawsuit against Mitchell International, Inc. in the United States District Court for the District of Delaware for infringement of one of our U.S. patents. We expect that our lawsuit, if we cannot resolve it before trial, could require several years to litigate, and at this stage we cannot predict the duration or cost of such litigation. We also expect that our lawsuit, even if it is determined in our favor or settled by us on favorable terms, will be costly to litigate, and that the cost of such litigation could have an adverse financial impact on our operating results. The litigation could also distract our management team and technical personnel from our other business operations, to the detriment of our business results. It is possible that we might not prevail in our lawsuit against Mitchell International, in which case our costs of litigation would not be recovered, and we could effectively lose some of our patent rights. It is also possible that Mitchell International might respond to our lawsuit by asserting counterclaims against us. Delays in the litigation, and any or all of these potential adverse results, could cause a substantial decline in our stock price.

Current or future litigation could have a material adverse impact on us.

We have been and continue to be involved in legal proceedings, claims and other litigation that arise in the ordinary course of business. For example, we have been involved in disputes with collision repair facilities, acting individually and as a group in some situations that claim that we have colluded with our insurance company customers to depress the repair time estimates generated by our repair estimating software. We have also been involved in litigation alleging that we have colluded with our insurance company customers to cause the estimates of vehicle fair market value generated by our total loss estimation software to be unfairly low. On February 28, 2014, Solera, Explore, and Audatex North America, Inc. were each served with a civil complaint filed against them and another defendant by an insurance company third party claimant in Minnesota state court. The complaint seeks state-wide class action status for similarly situated claimants, claiming that the defendant’s methodology for determining the value of total loss vehicles violates Minnesota law. We filed a motion to dismiss on April 18, 2014. The complaint was subsequently removed to the U.S. District Court for the District of Minnesota and an amended complaint was filed on July 16, 2014. We and our co-defendant moved to dismiss the amended complaint and on October 31, 2014, the Court issued an order dismissing two of the three counts with prejudice and, of the remaining count, dismissing one claim with prejudice and one claim without prejudice. Furthermore, we are also subject to assertions by our customers and strategic partners that we have not complied with the terms of our agreements with them or that the agreements are not enforceable against them, some of which are the subject of pending litigation and any of which could in the future lead to arbitration or litigation. While we do not expect the outcome of any such pending or threatened litigation to have a material adverse effect on our financial position, litigation is unpredictable and excessive verdicts, both in the form of monetary damages and injunction, could occur. In the future, we could incur judgments or enter into settlements of claims that could harm our financial position and results of operations.

We are subject to periodic changes in the amount of our income tax provision (benefit) and these changes could adversely affect our operating results; we may not be able to utilize all of our tax benefits before they expire.

For purposes of concluding our domestic deferred tax assets are more-likely-than-not realizable we currently rely on Subpart F income as a source of future taxable income. A change in U.S. tax law that would reduce Subpart F income, and accordingly future taxable income, would require us to assess the need for a valuation allowance against our domestic deferred tax assets.

Significant judgment is required to determine the recognition and measurement attributes prescribed in ASC Topic No. 740-10, Income Taxes. In addition, ASC Topic No. 740-10 applies to all income tax positions, including the potential recovery of previously paid taxes, which if settled unfavorably could adversely impact our provision for income taxes or additional paid-in capital.

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We began paying dividends in fiscal year 2010 and we may not be able to pay dividends on our common stock and restricted stock units in the future; as a result, your only opportunity to achieve a return on your investment may be if the price of our common stock appreciates.

We began paying quarterly cash dividends to holders of our outstanding of common stock and restricted stock units in the quarter ended September 30, 2009. On February 5, 2015, we announced that the Audit Committee of our Board of Directors approved the payment of a quarterly dividend of $0.195 per outstanding share of common stock and per outstanding restricted stock unit. The dividends are payable on March 3, 2015 to stockholders and restricted stock unit holders of record at the close of business on February 19, 2015. Any determination to pay dividends in future periods will be at the discretion of our Board of Directors. Our ability to pay dividends to holders of our common stock and restricted stock units in future periods may be limited by restrictive covenants under the indenture for the senior unsecured notes. As a result, your only opportunity to achieve a return on your investment in us could be if the market price of our common stock appreciates and you sell your shares at a profit. We cannot assure you that the market price for our common stock will ever exceed the price that you pay.

Requirements associated with being a public company increase our costs significantly, as well as divert significant company resources and management attention.

The expenses that are required as a result of being a public company are and will likely continue to be material. Compliance with the various reporting and other requirements applicable to public companies also require considerable time and attention of management. In addition, any changes we make may not be sufficient to allow us to satisfy our obligations as a public company on a timely basis.

We continue to work with our legal, independent accounting and financial advisors to identify those areas in which changes should be made to our financial and management control systems to manage our growth and our obligations as a public company. These areas include corporate governance, corporate control, internal audit, disclosure controls and procedures and financial reporting and accounting systems. We have made, and will continue to make, changes in these and other areas. In addition, we are taking steps to address new U.S. federal legislation relating to corporate governance matters and are monitoring other proposed and recently-enacted U.S. federal and state legislation relating to corporate governance and other regulatory matters and how the legislation could affect our obligations as a public company.

In addition, being a public company could make it more difficult or more costly for us to obtain certain types of insurance, including directors’ and officers’ liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.

Our certificate of incorporation and by-laws contain provisions that could discourage another company from acquiring us and may prevent attempts by our stockholders to replace or remove our current management.

Some provisions of our certificate of incorporation and by-laws may have the effect of delaying, discouraging or preventing a merger or acquisition that our stockholders may consider favorable, including transactions in which stockholders may receive a premium for their shares. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace or remove our board of directors. These provisions include:


•	authorization of the issuance of “blank check” preferred stock without the need for action by stockholders;


•	the removal of directors only by the affirmative vote of the holders of two-thirds of the shares of our capital stock entitled to vote;


•	any vacancy on the board of directors, however occurring, including a vacancy resulting from an enlargement of the board, may only be filled by vote of the directors then in office;


•	inability of stockholders to call special meetings of stockholders and limited ability of stockholders to take action by written consent; and


•	advance notice requirements for board nominations and proposing matters to be acted on by stockholders at stockholder meetings.

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We are monitoring proposed U.S. federal and state legislation relating to stockholder rights and related regulatory matters and how the legislation could affect, among other things, the nomination and election of directors and our charter documents.


ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

In November 2014, our Board of Directors approved a new share repurchase program replacing the share repurchase program authorized in October 2013, for up to a total of $375 million of our common stock through December 31, 2016. Share repurchases are made from time to time in open market transactions at prevailing market prices or in privately negotiated transactions. The repurchase program does not require us to purchase any specific number or amount of shares, and the timing and amount of such purchases will be determined by management based upon market conditions and other factors. In addition, the program may be amended or terminated at the discretion of our Board of Directors. The following table provides the amount of shares repurchased under the repurchase program during each month to date (in thousands, except per share amounts):



	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands)
October 2013 Share Repurchase Program
October 2013	—	$	—	—	$	200,000
November 2013	136	$	64.73	136	$	191,183
December 2013	14	$	68.43	14	$	190,236
January 2014	—	$	—	—	$	190,236
February 2014	250	$	66.91	250	$	173,503
March 2014	50	$	66.74	50	$	170,165
April 2014	—	$	—	—	$	170,165
May 2014	153	$	66.45	153	$	159,974
June 2014	195	$	65.61	195	$	147,171
July 2014	—	$	—	—	$	147,171
August 2014	35	$	60.81	35	$	145,051
September 2014	465	$	60.58	465	$	116,865
Total	1,298	$	64.03	1,298	$	116,865
November 2014 Share Repurchase Program
November 2014					$	375,000
November 2014	350	$	53.38	350	$	356,316
December 2014	696	$	48.55	696	$	322,535
Total	1,046	$	50.17	1,046	$	322,535

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ITEM 6.	EXHIBITS.



Exhibit No.		Description
10.1		Second Amendment to the Facilities Use Agreement, dated December 31, 2014, by and among Aquila Family Ventures, LLC, Chapparal Lane Investment, LLC and Solera Holdings, Inc.
10.2		Sale and Purchase Agreement, dated November 20, 2014, by and among CAP Group S.a.r.l, Montagu IV, LP, Montagu IV(B) LP, Montagu IV (non-U.S.) LP, Montagu IV (U.S.) LP, HPI Holding Limited, and certain other individuals set forth therein.
10.3		Warranty Deed, dated November 20, 2014, by and among HPI Holding Limited and certain individuals set forth therein.
31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Tony Aquila, Chief Executive Officer.
31.2		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Renato Giger, Chief Financial Officer and Treasurer.
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*		XBRL Instance Document.
101.SCH*		XBRL Taxonomy Extension Schema Document.
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*		XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document.


*	These exhibits are not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. Such exhibits will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that we incorporate them by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	SOLERA HOLDINGS, INC.

	/S/ TONY AQUILA
	Tony Aquila
	Chief Executive Officer and President
	(Principal Executive Officer)

	/S/ RENATO GIGER
	Renato Giger
	Chief Financial Officer
	(Principal Financial Officer)

February 9, 2015

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