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Note 11 - Stockholders' Equity
 9 Months Ended
Sep. 30, 2022
Notes to Financial Statements  
Stockholders' Equity Note Disclosure [Text Block]

11. Stockholders’ Equity:

 

We have 2,000,000,000 shares of authorized common stock as of  September 30, 2022 and December 31, 2021. Our common shares have rights to any dividend declared by the board of directors (the "Board"), subject to any preferential or other rights of any outstanding preferred stock, and voting rights to elect all current members of the Board. At September 30, 2022 and December 31, 2021, the adjusted closing price of our common stock was $170.53 and $227.90 per share, respectively. 

 

We have 80,000,000 shares of authorized preferred stock, par value $0.001 per share. The preferred shares have preferential rights over the common shares with respect to dividends and net distribution upon liquidation. We did not issue any preferred shares as of September 30, 2022 and December 31, 2021. 

 

On February 16, 2022,  April 27, 2022, and July 27, 2022, our Board approved a cash dividend of $0.31 per share of common stock issued and outstanding to the holders of record as of March 15, 2022,  June 15, 2022, and September 15, 2022. Cash dividends of $147.2 million and 141.0 million were paid during the nine months ended September 30, 2022 and 2021 and recorded as a reduction to retained earnings, respectively. 

 

Share Repurchase Program

 

In December 2021,  March 2022, and June 2022, we entered into Accelerated Share Repurchase ("ASR") agreements to repurchase shares of our common stock for an aggregate purchase price of $100.0 million, $325.0 million, and $300.0 million with Citibank, N.A and Morgan Stanley & Co., LLC, and Citibank, N.A., respectively. The ASR agreements are accounted for as treasury stock transactions and forward stock purchase agreements indexed to our common stock. The forward stock purchase agreement is classified as an equity instrument under ASC 815-40, Contracts in Entity's Own Equity ("ASC 815-40") and deemed to have a fair value of zero at the respective effective date. Upon payment of the aggregate purchase price on January 4, 2022, April 1, 2022, and July 1, 2022, we received an aggregate delivery of 360,913, 1,211,387, and 1,386,562 shares of our common stock. Upon the final settlement of the ASR agreement in February 2022,  May 2022, and September 2022, we received an additional 141,766, 349,762, and 217,024 shares as determined by the volume weighted average share price of our common stock of $198.93, $208.18, and $187.08 during the term of the ASR agreement, respectively. The aggregate purchase price was recorded as a reduction to stockholders' equity in our condensed consolidated statements of changes in stockholders' equity for the nine months ended September 30, 2022. These repurchases of 3,667,414 shares for the nine months ended September 30, 2022 resulted in a reduction of outstanding shares used to calculate the weighted average common shares outstanding for basic and diluted earnings per share ("EPS").

 

During the nine months ended September 30, 2022, we repurchased 6,217,296 shares of common stock with an aggregate value of $1,196.3 million as part of the Repurchase Program, inclusive of the ASR, at a weighted average price of $192.42 per share. We utilized cash from operations and borrowings from our Credit Facility to fund these repurchases. As of September 30, 2022, we had $407.5 million available to repurchase shares through our Repurchase Program, inclusive of the $1,000.0 million authorization approved by our Board on February 16, 2022.

 

In September 2022, we entered into an additional ASR agreement with HSBC Bank USA, N.A. to repurchase shares of our common stock for an aggregate purchase price of $100.0 million. Upon payment of the aggregate purchase price on October 3, 2022, we received an initial delivery of 469,126 shares of our common stock at a price of $170.53 per share, representing approximately $80.0 million of the aggregate purchase price. Upon the final settlement of the ASR agreement in the fourth quarter of 2022, we may be entitled to receive additional shares of our common stock or, under certain limited circumstances, be required to deliver shares to the counterparty. 

 

Treasury Stock

 

As of September 30, 2022, our treasury stock consisted of 387,161,020 shares of common stock, carried at cost. During the nine months ended September 30, 2022, we transferred 1,407,675 shares of common stock from the treasury shares at a weighted average treasury stock price of $14.07 per share.

 

Earnings Per Share

 

Basic EPS is computed by dividing net income attributable to Verisk by the weighted average number of common shares outstanding during the period. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding, using the treasury stock method, if the dilutive potential common shares, including vested and nonvested stock options, nonvested restricted stock awards, nonvested restricted stock units, nonvested performance awards consisting of performance share units ("PSU"), and nonvested deferred stock units, had been issued.

 

The following is a presentation of the numerators and denominators of the basic and diluted EPS computations for the three and nine months ended September 30, 2022 and 2021:

 

  

Three Months Ended September 30,

  

Nine Months Ended September 30,

 
  

2022

  

2021

  

2022

  

2021

 

Numerator used in basic and diluted EPS:

                

Net income attributable to Verisk

 $189.4  $201.7  $892.8  $524.3 

Denominator:

                

Weighted average number of common shares used in basic EPS

  156,940,608   161,366,544   158,531,439   162,005,382 

Effect of dilutive shares:

                

Potential common shares issuable from stock options and stock awards

  1,037,998   1,426,247   1,048,823   1,419,967 

Weighted average number of common shares and dilutive potential common shares used in diluted EPS

  157,978,606   162,792,791   159,580,262   163,425,349 

 

The potential shares of common stock that were excluded from diluted EPS were 1,321,733 and 740,090 for the three months ended  September 30, 2022 and 2021, and 1,365,720 and 824,067 for the nine months ended September 30, 2022 and 2021, respectively, because the effect of including these potential shares was anti-dilutive.

 

Accumulated Other Comprehensive Losses

 

The following is a summary of accumulated other comprehensive losses as of September 30, 2022 and December 31, 2021:

 

  

2022

  

2021

 

Foreign currency translation adjustment

 $(860.8) $(338.0)

Pension and postretirement adjustment, net of tax

  (55.3)  (56.6)

Accumulated other comprehensive losses

 $(916.1) $(394.6)

 

The before-tax and after-tax amounts of other comprehensive (loss) income for the three and nine months ended September 30, 2022 and 2021 are summarized below:

 

  

Before Tax

  

Tax (Expense) Benefit

  

After Tax

 

For the Three Months Ended September 30, 2022

            

Foreign currency translation adjustment attributable to Verisk

 $(233.0) $—  $(233.0)

Foreign currency translation adjustment attributable to noncontrolling interests

  (1.2)  —   (1.2)

Foreign currency translation adjustment

  (234.2)  —   (234.2)

Pension and postretirement adjustment before reclassifications

  1.5   (0.4)  1.1 

Amortization of net actuarial loss and prior service benefit reclassified from accumulated other comprehensive losses (1)

  (0.9)  0.1   (0.8)

Pension and postretirement adjustment

  0.6   (0.3)  0.3 

Total other comprehensive loss

 $(233.6) $(0.3) $(233.9)

For the Three Months Ended September 30, 2021

            

Foreign currency translation adjustment

 $(80.4) $—  $(80.4)

Pension and postretirement adjustment before reclassifications

  2.1   (0.6)  1.5 

Amortization of net actuarial loss and prior service benefit reclassified from accumulated other comprehensive losses (1)

  (1.1)  0.3   (0.8)

Pension and postretirement adjustment

  1.0   (0.3)  0.7 

Total other comprehensive loss

 $(79.4) $(0.3) $(79.7)

 

  

Before Tax

  

Tax (Expense) Benefit

  

After Tax

 

For the Nine Months Ended September 30, 2022

            

Foreign currency translation adjustment attributable to Verisk

 $(522.8) $—  $(522.8)

Foreign currency translation adjustment attributable to noncontrolling interests

  (2.7)  —   (2.7)

Foreign currency translation adjustment

  (525.5)  —   (525.5)

Pension and postretirement adjustment before reclassifications

  4.2   (1.1)  3.1 

Amortization of net actuarial loss and prior service benefit reclassified from accumulated other comprehensive losses (1)

  (2.4)  0.6   (1.8)

Pension and postretirement adjustment

  1.8   (0.5)  1.3 

Total other comprehensive loss

 $(523.7) $(0.5) $(524.2)

For the Nine Months Ended September 30, 2021

            

Foreign currency translation adjustment

 $(55.2) $—  $(55.2)

Pension and postretirement adjustment before reclassifications

  6.2   (1.6)  4.6 

Amortization of net actuarial loss and prior service benefit reclassified from accumulated other comprehensive losses (1)

  (3.1)  0.8   (2.3)

Pension and postretirement adjustment

  3.1   (0.8)  2.3 

Total other comprehensive loss

 $(52.1) $(0.8) $(52.9)

___________

(1)

These accumulated other comprehensive loss components, before tax, are included under "Cost of revenues" and "Selling, general and administrative" in our accompanying condensed consolidated statements of operations. These components are also included in the computation of net periodic (benefit) cost (see Note 13. Pension and Postretirement Benefits for additional details).