S-1 1 a2175744zs-1.htm FORM S-1
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As filed with the Securities and Exchange Commission on February 12, 2007

Registration No. 333-             



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM S-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933


Solera Holdings, LLC*
(Exact name of Registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)
  7370
(Primary Standard Industrial
Classification in Number)
  20-4552341
(I.R.S. Employer
Identification No.)

6111 Bollinger Canyon Road, Suite 200
San Ramon, California 94583
(925) 866-1100
(Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices)


Jack Pearlstein
Chief Financial Officer
Solera Holdings, LLC
6111 Bollinger Canyon Road, Suite 200
San Ramon, California 94583
(925) 866-1100
(Name, address, including zip code, and telephone number, including area code, of agent for service)


Copies to:

Dennis M. Myers, P.C.
Gregory C. Vogelsperger
Kirkland & Ellis LLP
200 East Randolph Drive
Chicago, Illinois 60601
Telephone: (312) 861-2000
Telecopy: (312) 861-2200
  Steven B. Stokdyk
Michael E. Sullivan
Latham & Watkins LLP
633 West Fifth Street, Suite 4000
Los Angeles, California 90071
Telephone: (213) 485-1234
Telecopy: (213) 891-8763

        Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

        If any of the securities being registered on this Form are being offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the "Securities Act"), check the following box.  o

        If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering.  o

        If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering.  o

        If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering.  o

        If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box.  o


CALCULATION OF REGISTRATION FEE


Title of Each Class of
Securities to be Registered

  Proposed Maximum Aggregate
Offering Price(1)(2)

  Amount of
Registration Fee(1)


Common Stock, par value $0.01 per share   $460,000,000   $49,220

(1)
Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act.
(2)
Includes offering price of additional shares which the underwriters have the option to purchase.
*
The registrant's board of managers has approved the conversion of the registrant into a corporation to be named Solera Holdings, Inc. The conversion will become effective prior to the completion of this offering.

        The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.




The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion. Dated February 12, 2007

                Shares

GRAPHIC

Solera Holdings, Inc.

Common Stock


        This is an initial public offering of shares of common stock of Solera Holdings, Inc.

        We are offering             of the shares to be sold in the offering. The selling stockholders identified in this prospectus are offering an additional             shares. We will not receive any of the proceeds from the sale of shares being sold by the selling stockholders.

        Prior to this offering, there has been no public market for our common stock. It is currently estimated that the initial public offering price per share will be between $                     and $                    . We intend to list our common stock on the New York Stock Exchange under the symbol "SLH."

        See "Risk Factors" beginning on page 8 to read about factors you should consider before buying shares of our common stock.


        Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.


 
  Per Share
  Total
Initial public offering price   $   $
Underwriting discount   $   $
Proceeds, before expenses, to Solera Holdings, Inc.   $   $
Proceeds, before expenses, to the selling stockholders   $   $

        To the extent that the underwriters sell more than                shares of common stock, the underwriters have the option to purchase up to an additional                 shares from certain existing stockholders at the initial public offering price less the underwriting discount.


        The underwriters expect to deliver the shares against payment in New York, New York on        , 2007.

Goldman, Sachs & Co.   JPMorgan

Citigroup

Deutsche Bank Securities

Lehman Brothers

Prospectus dated                          , 2007.



TABLE OF CONTENTS

 
  Page
Prospectus Summary   1
Risk Factors   8
Forward-Looking Statements   22
Industry and Market Data   23
Corporate Reorganization   23
Use of Proceeds   24
Dividend Policy   24
Capitalization   25
Dilution   26
Unaudited Pro Forma Combined Financial Statements   28
Selected Historical Financial Data   35
Management's Discussion and Analysis of Financial Condition and Results of Operations   37
Business   55
Management   67
Certain Relationships and Related Party Transactions   76
Principal and Selling Stockholders   81
Description of Capital Stock   83
Description of Principal Indebtedness   87
Shares Eligible for Future Sale   90
Certain Material United States Federal Income Tax Consequences   92
Underwriting   96
Legal Matters   100
Experts   100
Where You Can Find More Information   100
Index to Financial Statements   F-1



PROSPECTUS SUMMARY

        This summary highlights information contained elsewhere in this prospectus. Before investing in our common stock, you should read the entire prospectus carefully, including the section entitled "Risk Factors", our financial statements and the related notes included elsewhere in this prospectus. Unless the context requires otherwise, the terms "we," "us," "our," "our company" and "our business" collectively refer to: (1) the combined operations of the Claims Services Group of Automatic Data Processing, Inc., or ADP, for periods prior to its acquisition by Solera Holdings, LLC, (2) the consolidated operations of Solera Holdings, LLC, for the periods following its April 2006 acquisition of the Claims Services Group and prior to the completion of our corporate reorganization, and (3) Solera Holdings, Inc. as of the completion of our corporate reorganization and thereafter. Our fiscal year ends on June 30 of each year. Fiscal years are identified in this prospectus according to the calendar year in which they end. For example, the fiscal year ended June 30, 2006 is referred to as "fiscal 2006." All share numbers in this prospectus are based on an assumed initial public offering price of $               , the midpoint of the range set forth on the cover of this prospectus.


Our Company

        We are the leading global provider of software and services to the automobile insurance claims processing industry. Our customers include more than 900 automobile insurance companies, including nine of the ten largest automobile insurance companies in Europe and each of the ten largest automobile insurance companies in North America. We also provide our software and services to over 33,000 collision repair facilities, 7,000 independent assessors and 3,000 automotive recyclers. Our software and services help our customers:

    estimate the costs to repair damaged vehicles;

    determine pre-collision fair market values for vehicles damaged beyond repair;

    automate steps of the claims process;

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

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

        The automobile insurance claims process is complex and time-consuming, with multiple steps requiring significant interaction among several parties. Our software and services automate and simplify this process, and include:

    estimating and workflow software that helps our customers determine vehicle repair costs, calculate the fair market values of vehicles, connect with other industry participants and manage the overall claims process;

    salvage and recycling software that helps automotive recyclers manage their inventory and locate, sell and exchange vehicle parts;

    business intelligence and consulting services that help our customers assess and monitor their performance through customized data, reports and analyses; and

    shared services that help insurance companies outsource claims-related tasks, such as estimate reviews and policyholder interaction.

        We generated pro forma revenues of $430.2 million in fiscal 2006 and revenues of $111.5 million for the three months ended September 30, 2006.

1



Industry Trends

        We estimate that the global automobile insurance industry processes over 100 million claims per year. The primary participants in the automobile insurance claims process are automobile insurance companies, collision repair facilities, independent assessors and automotive recyclers. Our business is affected by trends associated with these participants, including:

    growth in the number of worldwide vehicles;

    an increasing percentage of vehicles that are covered by automobile insurance;

    initiatives by automobile insurance companies and other industry participants to reduce costs and increase claims processing efficiency; and

    increased use of recycled and aftermarket parts.


Key Competitive Strengths

        Leading Global Provider.    We operate in 45 countries across five continents and believe we are either the largest or second-largest provider of automobile insurance claims processing software and services in each of our markets.

        Significant Barriers to Entry.    We believe our proprietary databases pose barriers to entry due to the significant capital investment and time that would be required to replicate and customize them for use in local markets. We have developed our proprietary repair estimating database over the last 35 years.

        Long-Standing Relationships with Customers.    Our relationships with our ten largest customers in Europe and North America date back, on average, 16 and 17 years, respectively.

        History of Developing New Software and Services.    We continually develop new software and services to meet our customers' needs through both internal development and the acquisition and licensing of third-party products and technology.

        Attractive Operating Model.    We believe we have an attractive operating model due to the recurring nature of our revenues, the scalability of our databases and software and the significant operating cash flow we generate.


Business Strategy

        Broaden the Scope of our Software and Services.    We intend to further broaden the capabilities, features and functionality of our claims processing software, as well as the breadth of our service offerings.

        Expand Customer Base in Existing Markets.    We seek to expand our customer base in existing markets by competing on the quality of our software and services, our industry expertise and our strong industry relationships.

        Expand into New Markets.    We intend to expand in markets where we have recently established operations, such as China and India, and enter markets where we currently have no operations.

        Improve Operational Efficiencies.    We have identified and targeted several operational efficiency initiatives, including the elimination of database and infrastructure redundancies; productivity and technological enhancements; and reduction of overhead.

        Pursue Strategic Acquisitions.    We plan to supplement our organic growth by acquiring businesses or technologies to expand the range of our services, increase our customer base and enter new markets.

2



Our History

        Our operations began in 1966, when Swiss Re Corporation founded our predecessor. Solera was founded in February 2005 by our Chief Executive Officer, Tony Aquila, and private equity firm GTCR Golder Rauner II, L.L.C., or GTCR. On April 13, 2006, Solera acquired the Claims Services Group from ADP for approximately $1.0 billion. We refer to this acquisition in this prospectus as the Acquisition.

        We are currently a limited liability company. Our board of managers has approved the terms of a corporate reorganization that will occur prior to and is contingent upon the completion of this offering and includes our conversion into a Delaware corporation.


The Refinancing Transactions

        This offering is one of a series of transactions, which we collectively refer to in this prospectus as the refinancing transactions, which also include:

    the repayment of a portion of the indebtedness outstanding under our existing first lien credit facility, and all of the indebtedness outstanding under our existing second lien and subordinated unsecured credit facilities, including the payment of related prepayment premia; and

    the refinancing of our remaining indebtedness of approximately $             million pursuant to an amended and restated senior credit facility.

        We expect that our amended and restated senior credit facility will consist of a $          million revolving loan, a $            million term loan and a €                  million term loan. We anticipate that the entire principal amount of the revolving loan will be available immediately following the closing of the refinancing transactions.


Risks Affecting Us

        You should carefully consider the information under the heading "Risk Factors" beginning on page 8 of this prospectus and all other information in this prospectus before investing in our common stock.


Corporate and Other Information

        Our principal executive offices are located at 6111 Bollinger Canyon Road, Suite 200, San Ramon, California 94583, and our telephone number is (925) 866-1100. Our website is www.solerainc.com. The information contained in, or that can be accessed through, our website is not a part of this prospectus and should not be relied upon in determining whether to make an investment in our common stock.

        This prospectus refers to brand names, trademarks, service marks and trade names of us and other companies and organizations, and these brand names, service marks and trade names are the property of their respective holders.

3



The Offering

Common stock offered by Solera Holdings, Inc.                        shares

Common stock offered by the selling stockholders

 

                     shares

Common stock to be outstanding after this offering

 

                     shares

Option to purchase additional shares

 

Certain of our existing stockholders have granted the underwriters an option to purchase up to an additional                shares.

Use of proceeds

 

We intend to use the net proceeds from this offering to reduce our outstanding indebtedness. We will not receive any proceeds from the sale of shares, if any, by the selling stockholders. See "Use of Proceeds."

Dividend policy

 

We currently intend to retain all future earnings, if any, for use in the operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future.

Proposed New York Stock Exchange symbol

 

"SLH"

        The number of shares of our common stock to be outstanding after this offering is based on             shares outstanding as of             , 2007 and excludes              additional shares to be reserved for issuance under our 2007 Long-Term Equity Incentive Plan and our 2007 Employee Stock Purchase Plan.

        Except as otherwise indicated, all information in this prospectus assumes:

    the effectiveness, prior to the completion of this offering, of our reorganization as a Delaware corporation and the conversion of all of our limited liability units into shares of common stock;

    the completion of the other refinancing transactions;

    the effectiveness of our certificate of incorporation and the adoption of our by-laws prior to the completion of this offering; and

    no exercise of the underwriters' option to purchase additional shares.

4



Summary Historical and Pro Forma Financial Data

        The following tables summarize our historical and pro forma financial data for the periods presented. We derived the summary historical consolidated financial data as of and for the year ended June 30, 2006 from the audited consolidated financial statements of Solera Holdings, LLC included elsewhere in this prospectus. We derived the summary historical combined financial data as of and for the years ended June 30, 2004 and 2005 and for the period from July 1, 2005 to April 13, 2006 from the audited combined financial statements of the Claims Services Group included elsewhere in this prospectus. We derived the summary historical combined financial data for the three months ended September 30, 2005 from the unaudited combined financial statements of the Claims Services Group, which are not included in this prospectus. We derived the summary historical consolidated financial data as of and for the three months ended September 30, 2006 from the unaudited condensed consolidated financial statements of Solera Holdings, LLC, which are included elsewhere in this prospectus. Prior to the Acquisition, the Claims Services Group operated as a business unit of ADP. As a result, the historical financial data of our predecessor included in this prospectus do not necessarily reflect what our financial position or results of operations would have been had we operated the business as a separate, stand-alone entity during those periods. We sometimes refer to the Claims Services Group as our "predecessor."

        The unaudited pro forma statement of operations data for fiscal 2006 give effect to the Acquisition, the corporate reorganization and the refinancing transactions, including the completion of this offering and the application of the net proceeds therefrom as described under "Use of Proceeds," as if each occurred on July 1, 2005. The unaudited pro forma statement of operations data for the three months ended September 30, 2006 give effect to our corporate reorganization and the refinancing transactions, including the completion of this offering and the application of the net proceeds therefrom as described under "Use of Proceeds," as if each occurred on July 1, 2005. The unaudited pro forma balance sheet data as of September 30, 2006 give effect to our corporate reorganization and the refinancing transactions, including the completion of this offering and the application of the net proceeds therefrom as described under "Use of Proceeds," as if each occurred on September 30, 2006.

        The pro forma financial data are for informational purposes only and should not be considered indicative of actual results that would have been achieved had the specified transactions been completed on the dates indicated and do not purport to indicate what our financial position or results of operations might be as of any future date or for any future period.

        The following summary historical and pro forma financial data should be read together with "Selected Historical Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Unaudited Pro Forma Combined Financial Statements" and the historical financial statements and related notes included elsewhere in this prospectus.

5


 
   
   
   
   
  Solera Holdings, LLC
 
  Claims Services Group(1)
 
   
   
  Three Months Ended
September 30,

 
  Fiscal Year Ended
June 30,

   
   
  Fiscal Year Ended
June 30, 2006

 
   
  Three Months
Ended
September 30,
2005

 
  July 1, 2005
to April 13,
2006

  2006
Actual

  2006
Pro Forma

 
  2004
  2005
  Actual(2)
  Pro Forma
 
  (in thousands, except per unit/share data)

Statement of Operations Data:                                                
  Revenues   $ 361,179   $ 412,355   $ 335,146   $ 104,278   $ 95,084   $     $ 111,482   $  
  Operating expenses     107,590     117,361     101,995     30,979     29,013           32,710      
  Selling, general and administrative expenses     94,757     112,480     87,033     24,930     27,105           30,890      
  Systems development and programming costs     57,465     62,690     52,306     16,030     15,080           16,176      
  Depreciation and amortization     28,754     34,335     28,894     8,842     23,571           25,176      
  Restructuring charges     1,740     5,512     (468 )   (256 )   2,871           895      
  Impairment charges     4,214                                
  Interest expense     271     334     318     149     14,842           17,857      
  Other (income) expense, net     (1,323 )   (4,065 )   (3,069 )   (1,292 )   1,836           4,340      
  Earnings (loss) from continuing operations before income tax provision (benefit) and minority interests     67,711     83,708     68,137     24,896     (19,234 )         (16,562 )    
  Income tax provision (benefit)     22,124     24,030     23,688     8,605     (1,268 )         243      
  Minority interests in net income of consolidated subsidiaries     1,229     1,909     3,468     1,000     921           1,085      
   
 
 
 
 
 
 
 
  Earnings (loss) from continuing operations     44,358     57,769     40,981     15,291     (18,887 )         (17,890 )    
  Loss (income) from discontinued operations     (3,816 )   128                            
   
 
 
 
 
 
 
 
  Net income (loss)     48,174     57,641     40,981     15,291     (18,887 )         (17,890 )    
Less: Dividends and redeemable preferred unit accretion                     88,789           4,191      
   
 
 
 
 
 
 
 
Net income (loss) applicable to common unitholders/stockholders   $ 48,174   $ 57,641   $ 40,981   $ 15,291   $ (107,676 ) $     $ (22,081 ) $  
   
 
 
 
 
 
 
 
Basic net income (loss) per                                                
  common unit/share   $ (2.11 ) $     $ (0.25 ) $  
Diluted net income (loss) per                                                
  common unit/share     (2.11 )         (0.25 )    
Weighted average common units/shares outstanding:                                                
  Basic     50,933           87,114      
  Diluted     50,933           87,114      

Other Financial Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  EBITDA, as adjusted(3)   $ 104,222   $ 118,263   $ 99,464   $ 33,287   $ 24,882   $     $ 31,699   $  
  Capital expenditures     15,980     7,659     9,671     4,019     4,112           6,895      
  Cash flows provided by (used in):                                                
    Operating activities     74,017     106,840     51,325     14,056     45,356           28,191      
    Investing activities     (141,228 )   (62,975 )   (18,464 )   (4,896 )   (936,471 )         (7,935 )    
    Financing activities     96,199     (33,369 )   (82,787 )       977,954           (19,128 )    
 
  Claims Services Group
  Solera Holdings, LLC
 
  As of June 30,
  As of September 30, 2006
 
  2004
  2005
  2006
  Actual
  Pro Forma
 
  (in thousands)

Balance Sheet Data:                              
Cash and cash equivalents   $ 107,824   $ 121,313   $ 88,826   $ 89,775   $  
Total assets     556,769     608,065     1,253,005     1,256,562      
Long-term debt, net of current portion             831,628     833,903      
Total group/unitholders'/stockholders' equity (deficit)     376,386     399,282     (12,403 )   (34,710 )    

(1)
The Claims Services Group was owned by ADP until Solera acquired it on April 13, 2006.

(2)
The statement of operations data for fiscal 2006 include the results of operations for our predecessor from April 14, 2006 and the results of operations for Solera Holdings, LLC for all of fiscal 2006. Financial information presented reflects adjustment of assets and liabilities to then-fair value at the date of the Acquisition, which is used as the basis for amounts included in our results of operations from April 14, 2006 until June 30, 2006. Prior to the Acquisition, Solera's operations consisted primarily of developing our business plan, recruiting personnel, providing consulting services, raising capital and identifying and evaluating operating assets for acquisition.

(3)
We define EBITDA, as adjusted, as the sum of (1) net income (loss), (2) income tax provision (benefit), (3) interest expense, (4) depreciation and amortization, (5) other (income) expense, net, (6) restructuring charges, (7) impairment charges, (8) equity-based

6


    compensation expense and (9) Acquisition-related costs. EBITDA, as adjusted, does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by U.S. generally accepted accounting principles, or GAAP, and our calculation thereof is not comparable to that reported by other companies. We have excluded from EBITDA, as adjusted, the effects of restructuring charges, costs directly related to the Acquisition, certain impairment charges and the effects of charges relating to equity-based compensation awards, in each case because our management believes that certain of these items may not occur in future periods or are non-cash in nature, the amounts recognized can vary significantly from period to period and these items do not facilitate an understanding of our operating performance. Our management uses EBITDA, as adjusted, as a means of evaluating our operating performance and comparing our performance both against our operations in prior periods and those of other companies with different capital structures. Annual bonus payments to our management are also based, in large part, on the achievement of specified levels of EBITDA, as adjusted. We believe that EBITDA, as adjusted, is useful to investors, when presented along with the primary GAAP presentation of net income (loss) and the related discussion in "Management's Discussion and Analysis of Financial Condition and Results of Operations," because it provides them with information relating to our operating results on the same basis as that used by our management, and because it will help investors assess our compliance with debt covenants. EBITDA, as adjusted, has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

      it does not reflect our capital expenditures or future requirements for capital expenditures or contractual commitments;

      it does not reflect changes in, or cash requirements for, our working capital needs;

      it does not reflect the significant interest expense or cash requirements necessary to service interest or principal payments on our debt;

      although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA, as adjusted, does not reflect any cash requirements for such replacements;

      restructuring and impairment charges reflect costs associated with strategic decisions about resource allocations made in prior periods, and we may incur similar charges and losses in the future; and

      other companies in our industry calculate EBITDA, as adjusted, differently than we do, limiting its usefulness as a comparative measure.

      Because of these limitations, you should not consider EBITDA, as adjusted, as a measure of our earnings as reported under GAAP. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA, as adjusted, only supplementally to evaluate our performance.

      The following is a reconciliation of EBITDA, as adjusted, to net income (loss), the most directly comparable GAAP measure:

 
   
   
   
   
  Solera Holdings, LLC
 
  Claims Services Group
 
   
   
  Three Months Ended
September 30,

 
  Fiscal Year Ended
June 30,

   
   
  Fiscal Year Ended
June 30, 2006

 
   
  Three Months
Ended
September 30,
2005

 
  July 1, 2005
to April 13,
2006

  2006
Actual

  2006
Pro Forma

 
  2004
  2005
  Actual
  Pro Forma
 
  (in thousands)

Net income (loss)   $ 48,174   $ 57,641   $ 40,981   $ 15,291   $ (18,887 ) $     $ (17,890 ) $  
Income tax provision (benefit)     22,124     24,030     23,688     8,605     (1,268 )         243      
Interest expense     271     334     318     149     14,842           17,857      
Depreciation and amortization     28,754     34,335     28,894     8,842     23,571           25,176      
Other (income) expense, net     (1,323 )   (4,065 )   (3,069 )   (1,292 )   1,836           4,340      
Restructuring charges     1,740     5,512     (468 )   (256 )   2,871           895      
Impairment charges     4,214                              
Equity-based compensation expense     268     476     7,443     1,948     361           191      
Acquisition-related costs (a)             1,677         1,556         887    
   
 
 
 
 
 
 
 
EBITDA, as adjusted   $ 104,222   $ 118,263   $ 99,464   $ 33,287   $ 24,882   $     $ 31,699   $  
   
 
 
 
 
 
 
 
    (a)
    For the period ended April 13, 2006, Claims Services Group's Acquisition-related costs of $1.7 million consisted of $1.6 million of transaction and retention compensation and $0.1 million of legal fees, professional fees, severance costs and other transition costs. For the fiscal year ended June 30, 2006, our Acquisition-related costs of $1.6 million consisted of $0.5 million of expense related to the exercise by our employees of ADP stock options and $1.1 million of legal fees, professional fees, severance costs and other transition costs. For the three months ended September 30, 2006, our Acquisition-related costs of $0.9 million consisted of legal fees, professional fees, severance costs and other transition costs.

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RISK FACTORS

        The purchase of our common stock involves significant investment risks. You should consider the risks set forth below, as well as other information contained in this prospectus, carefully before making a decision to invest in our common stock. If any of the following risks actually materializes, then our business, financial condition and results of operations would suffer. In addition, there may be risks of which we are currently unaware or that we currently regard as immaterial based on the information available to us that later prove to be material. These risks may adversely affect our business, financial condition and operating results. As a result, the trading price of our common stock could decline, and you could lose some or all of your investment. You should read the section entitled "Forward-Looking Statements" immediately following these risk factors for a discussion of what types of statements are forward-looking statements, as well as the significance of such statements in the context of this prospectus.


Risks Related to Our Business

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. In fiscal 2006, we derived 17.0% of our pro forma revenues from our ten largest insurance company customers. The largest three of these customers accounted for 5.1%, 3.5% and 1.9%, respectively, of our pro forma revenues during this period. 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. In April 2006, we lost a customer contract during its renewal phase that accounted for pro forma revenues in fiscal 2006 of approximately $4.3 million. In January 2007, one of our large U.S. insurance company customers, who is currently our principal customer for shared services, delivered a notice of breach of contract to us, which may negatively impact our contractual relationships with that customer. 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.

Competitive pressures may require us to significantly lower our prices.

        Pricing pressures have required us to significantly lower prices for some of our software and services in several of our markets. We may be required to implement further price reductions in response to the following:

    price reductions by competitors;

    the consolidation of property and casualty insurance companies;

    the introduction of competing software or services; and

    a decrease in the frequency of accidents.

If we are required to accept lower prices for our software and services, it would result in decreased revenues and harm our business, financial condition and results of operations.

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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 U.S. 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. For example, some states in the U.S. have changed their regulations to permit insurance companies to use book valuations for total loss calculations, making our total loss software less valuable to insurance companies. New Jersey is considering legislation that, among other things, would require us to include additional data in the output of our estimating software. 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.

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 U.S., our principal competitors are CCC Information Services Group Inc. and Mitchell International Inc. In Europe, our principal competitors are EurotaxGlass's Group and DAT GmbH. If one or more of our competitors develop software or services that are superior to ours or are more effective in marketing its software or services, our market share could decrease, 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, 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. In addition, 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.

        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

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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 12-18 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, which could harm our revenues and operating results.

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 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, as well as 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 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 have a very limited operating history as a stand-alone company, which may make it difficult to compare our current operating results to prior periods.

        Prior to the Acquisition, our predecessor operated as a business unit of ADP. Our predecessor relied on ADP during this period for many of its internal functions, including accounting, tax, payroll, technology and administrative and operational support. In connection with the Acquisition, ADP agreed to continue providing us with systems, network, programming and operational support and other administrative services for periods ranging from three to six months following the date of the Acquisition. Although we have replaced these services either through third-party contracts or internal sources, we may not be able to perform any or all of these services in a cost-effective manner. If we are unable to maintain substitute arrangements on terms that are favorable to us or effectively perform these services internally, our business, financial condition and results of operations would be adversely affected.

        In addition, the historical financial information of our predecessor included in this prospectus may not reflect what our results of operations, financial position and cash flows would have been had we operated as a separate stand-alone company without the shared resources of ADP for the periods presented and are not necessarily indicative of our future results of operations, financial position and cash flows. For example, ADP allocated expenses and other centralized operating

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costs to our predecessor for periods prior to the Acquisition, and the allocated costs included in our predecessor's historical financial statements could differ from amounts that we would have incurred if we had operated on a stand-alone basis.

We have a large amount of goodwill and other intangible assets as a result of the Acquisition. 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 assessment for possible impairment for accounting purposes. At September 30, 2006, we had goodwill and other intangible assets of $963.7 million. 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 have experienced net losses since the Acquisition, and future net losses may cause our stock price to decline.

        We had a net loss of $17.9 million for the three months ended September 30, 2006. We expect to continue to incur net losses in the future, due primarily to amortization of the $419.8 million of intangible assets that we had as of September 30, 2006 and interest expense associated with our indebtedness. We cannot assure you that we will become or remain profitable, and future net losses may reduce our stock price.

We expect to incur significant restructuring charges over the next 12 months, which will harm our operating results.

        We incurred restructuring charges of $1.7 million in fiscal 2004, $5.5 million in fiscal 2005, $(0.5) million during the period from July 1, 2005 through April 13, 2006, $2.9 million during the period from April 14, 2006 through June 30, 2006 and $0.9 million for the three months ended September 30, 2006. These charges consisted primarily of termination benefits. We continue to evaluate our existing operations and capacity, and expect to incur additional restructuring charges as a result of future personnel reductions, related restructuring and productivity and technology enhancements, which may exceed the levels of our historical charges.

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 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. EurotaxGlass's, 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. Many of the license agreements through which we obtain data are for terms of one year and/or may be terminated without cost to the provider on short notice. 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 alternative data sources that would provide comparable information. Some data that we obtain are dependent upon a single OEM source, and recently OEM sources have indicated to us that they intend to materially increase the licensing costs for their data. Any interruption of our access to the parts, labor and repair information

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provided by one or more of our licensors or other sources of data could reduce the value of our software and services to our customers, which could materially harm our operating results.

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.

        These risks will be exacerbated by our planned migration of our systems and operations to a more centralized platform. Because many of our services play a mission-critical role for our customers, any damage to or failure of the infrastructure we rely on, 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 result in the loss of current and/or potential 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.

Security breaches could result in lost revenues, litigation claims and/or harm to our reputation.

        Our databases contain confidential data relating to our customers, policyholders and other industry participants. Security breaches, particularly those involving connectivity to the Internet, and the trend toward broad consumer and general public notification of such incidents, could significantly harm our business, financial condition or results of operations. Our databases could be vulnerable to physical system or network break-ins or other inappropriate access, which could result in claims against us and/or harm our reputation. In addition, potential competitors may obtain our data illegally and use it to provide services that are competitive to ours.

We operate in 45 countries, where we are subject to country-specific risks that could adversely impact our business and results of operations.

        We generated approximately 66.0% of our pro forma revenues during fiscal 2006 outside the U.S., and we expect sales from non-U.S. markets to continue to represent a majority of our total sales. Sales 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,

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currency exchange controls and repatriation of earnings. Our results are also subject to the difficulties of coordinating our operations across 45 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 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 and possible terrorist attacks. These and other factors may harm our operations in those countries and therefore our business and results of operations.

Our operating results may vary widely from period to period, which may cause our stock price to decline.

        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 services offerings. Our quarterly and annual revenues and operating results may fluctuate significantly in the future. 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 services 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. We also may experience variations in our earnings due to other factors beyond our control, such as 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 and competitive conditions in our industry generally. 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 future 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 cost of sales and operating expenses, in currencies other than the U.S. dollar, principally the Euro. We currently do not hedge our exposure to foreign currency risks. In our historical financial statements, we re-measure our local currency financial results into U.S. dollars based on average exchange rates prevailing during a reporting period or the exchange rate at the end of that period. These re-measurements resulted in foreign currency translation adjustments of $10.9 million in fiscal 2005 and $3.8 million in fiscal 2006. Further fluctuations in exchange rates against the U.S. dollar could decrease our revenues, increase our costs and expenses and therefore harm our future operating results.

Future acquisitions and joint ventures or dispositions may require significant resources and/or result in significant unanticipated losses, costs or liabilities.

        We have grown in part, and in the future may continue to grow, by making acquisitions or entering into joint ventures or similar arrangements. Acquisitions and joint ventures require significant investment and managerial attention, which may be diverted from our other operations, and could entail a number of additional risks, including:

    problems with effective integration of operations and/or management;

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    loss of key customers, suppliers or employees;

    increased operating costs; and

    exposure to unanticipated liabilities.

        Furthermore, we participate in joint ventures in some countries. 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/or 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. We may seek also 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.

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. 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 those of the shares offered hereby. 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.

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 European Union and other jurisdictions, there are significant restrictions on the use of personal data. Violations of these laws would harm our business. In addition, concerns about our collection, use or sharing of automobile insurance claims information or other privacy-related matters, even if unfounded, could damage our reputation and operating results.

Our business depends on our brands, particularly our Audatex brand, 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 that we have developed has significantly contributed to the success of our business. We also believe that maintaining and enhancing our brands, such as Audatex, 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 and to continue to provide high quality software and services, which we may not do successfully. To date, we have engaged in relatively little 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 we, our software or operations or any products or technology, including claims data or other data, we obtain from other parties are infringing upon the intellectual property rights of others, and we may be unaware of intellectual property rights of others that may cover some of our assets, technology, software and services. Any litigation initiated against us regarding patents, trademarks, copyrights or other intellectual property rights, even litigation relating to claims without merit, could be costly and time-consuming 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 upon its intellectual property rights, we may be forced to change our software or enter into licensing arrangement 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.

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 patents, copyrights, know-how, trademarks, 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. In addition, the laws of some of the countries in which products similar to ours may be developed may not protect our software and intellectual property to the same extent as U.S. laws or 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 or trade secrets by consultants, vendors, former employees and current employees, despite the existence of nondisclosure and confidentiality agreements and other contractual restrictions. If our trade secrets become known, we may lose our competitive advantages. If we fail to protect 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.

        Pursuing infringers of our intellectual property could result in significant litigation costs and diversion of management resources, and any failure to pursue or successfully litigate claims against infringers could result in competitors using our technology and offering similar products and services, potentially resulting in loss of competitive advantage and decreased revenues.

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, such as our Chief Executive Officer, Tony Aquila, could harm our business and operations. Our success also depends on our ability to

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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 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.

        We have a significant amount of indebtedness. As of September 30, 2006, on a pro forma basis, our indebtedness, including current maturities, would have been $             million, and we would have been able to borrow an additional $             million under our amended and restated senior credit facility. For fiscal 2006, on a pro forma basis, our aggregate interest expense would have been $              million.

        Our indebtedness could:

    make us more vulnerable to unfavorable economic conditions and a reduction in 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 software development;

    make us susceptible to fluctuations in market interest rates that affect the cost of our borrowings to the extent that our variable rate debt is not covered by interest rate derivative agreements; 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 or to dispose of assets 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.

Our amended and restated credit facility may limit our ability to pay dividends, incur additional debt, make acquisitions and make other investments.

        Our amended and restated credit facility will contain covenants that may restrict our and our subsidiaries' ability to make certain distributions with respect to our capital stock, prepay other debt, encumber our assets, incur additional indebtedness, make capital expenditures above specified levels, engage in business combinations or undertake various other corporate activities. These covenants may require us also to maintain certain specified financial ratios, including those relating to total leverage and interest coverage.

        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.

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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 and are currently 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. In addition, we are currently one of the defendants in a putative class action lawsuit 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. Furthermore, we are also subject to assertions by our customers that we have not complied with the terms of our agreements with them, 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.


Risks Related to This Offering

We will continue to be controlled by GTCR after the completion of this offering, which will limit your ability to influence corporate activities and may adversely affect the market price of our common stock.

        Upon completion of the offering, GTCR will own or control common stock representing, in the aggregate, a    % voting interest in us, or    % if the underwriters exercise in full their option to purchase additional shares. As a result of this ownership, GTCR will control the outcome of votes on all matters requiring approval by our stockholders, including the election of directors, the adoption of amendments to our certificate of incorporation and by-laws and approval of significant corporate transactions. GTCR can also take actions that have the effect of delaying or preventing a change in control of us or discouraging others from making tender offers for our shares, which could prevent stockholders from receiving a premium for their shares. These actions may be taken even if other stockholders oppose them.

        GTCR may also exercise control with respect to mergers or other business combinations that involve a change in control of us pursuant to a securityholders agreement among us, GTCR and some of our executives. Subject to specified conditions, that agreement requires the securityholders who are parties to it to consent to a sale of us to a non-affiliate of GTCR if the sale is approved by the holders of a majority of the shares subject to the agreement. So long as the shares subject to the securityholders agreement represent a majority of the voting power of our capital stock, this right gives GTCR the practical ability to sell us in its sole discretion, because GTCR currently controls a majority of the shares subject to the securityholders agreement and will continue to do so upon completion of this offering. Following this offering, a majority of the voting power of our capital stock will be subject to the securityholders agreement.

Conflicts of interest may arise because some of our directors are principals of our controlling stockholder.

        Two principals of GTCR will serve on our board of directors upon the completion of this offering. GTCR and its affiliates may invest in entities that directly or indirectly compete with us or companies in which they currently invest may begin competing with us. As a result of these relationships, when conflicts between the interests of GTCR and the interests of our other stockholders arise, these directors may not be disinterested. Although our directors and officers will have a duty of loyalty to us under Delaware law and our certificate of incorporation that will be

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adopted in connection with this offering, transactions that we enter into in which a director or officer has a conflict of interest are generally permissible so long as (1) the material facts relating to the director's or officer's relationship or interest as to the transaction are disclosed to our board of directors and a majority of our disinterested directors, or a committee consisting solely of disinterested directors, approves the transaction, (2) the material facts relating to the director's or officer's relationship or interest as to the transaction are disclosed to our stockholders and a majority of our disinterested stockholders approves the transaction or (3) the transaction is otherwise fair to us. Under our certificate of incorporation, GTCR's representatives will not be required to offer to us any transaction opportunity of which they become aware and could take any such opportunity for themselves or offer it to other companies in which they have an investment, unless such opportunity is expressly offered to them solely in their capacity as a director of ours.

We are a "controlled company" within the meaning of the New York Stock Exchange rules and, as a result, will qualify for, and intend to rely on, exemptions from certain corporate governance requirements.

        Following the completion of this offering we will be deemed to be a "controlled company" under the rules of the NYSE. Under these rules, a company of which more than 50% of the voting power is held by a group is a "controlled company" and may elect not to comply with certain NYSE corporate governance requirements, including (1) the requirement that a majority of the board of directors consist of independent directors, (2) the requirement that the nominating committee be composed entirely of independent directors, (3) the requirement that the compensation committee be composed entirely of independent directors and (4) the requirement for an annual performance evaluation of the nominating and corporate governance and compensation committees. We intend to rely on this exemption, and therefore we do not intend to have a majority of independent directors or nominating and compensation committees consisting entirely of independent directors. Accordingly, you may not have the same protections afforded to stockholders of companies that are not deemed "controlled companies."

If we are not able to implement the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner or with adequate compliance, we may be subject to sanctions by regulatory authorities.

        Section 404 of the Sarbanes-Oxley Act requires that we evaluate and determine the effectiveness of our internal control over financial reporting by the end of June 30, 2008. If we have a material weakness in our internal control over financial reporting, we may not detect errors on a timely basis and our financial statements may be materially misstated. We will be evaluating our internal controls systems to allow management to report on, and our independent auditors to attest to, our internal controls. We will be performing the system and process evaluation and testing (and any necessary remediation) required to comply with the management certification and auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. While we anticipate being able to fully implement the requirements relating to internal controls and all other aspects of Section 404 by the June 30, 2008 deadline, we cannot be certain as to the timing of completion of our evaluation, testing and remediation actions or the impact of the same on our operations. If we are not able to implement the requirements of Section 404 in a timely manner or with adequate compliance, we may be subject to sanctions or investigation by regulatory authorities, such as the SEC or NYSE. Any such action could adversely affect our financial results or investors' confidence in us and could cause our stock price to fall. In addition, the controls and procedures that we will implement may not comply with all of the relevant rules and regulations of the SEC and NYSE. If we fail to develop and maintain effective controls and procedures, we may be unable to provide financial information in a timely and reliable manner, subjecting us to sanctions and harm to our reputation.

18



Future sales of our common stock, or the perception in the public markets that these sales may occur, could depress our stock price.

        Sales of substantial amounts of our common stock in the public market after this offering, or the perception that these sales could occur, could adversely affect the price of our common stock and could impair our ability to raise capital through the sale of additional shares. Upon completion of this offering, we will have             shares of common stock outstanding. Of these shares, the    shares of common stock sold in this offering will be freely tradable, without restriction, in the public market. After the lock-up agreements pertaining to this offering expire, an additional    shares will be eligible for sale in the public market, subject to applicable manner of sale and other limitations under Rule 144 under the Securities Act of 1933, as amended, or the Securities Act. Following the expiration of the lock-up period, parties to our registration rights agreement, subject to certain exceptions, will have demand registration rights with respect to the registration of shares under the Securities Act. If this right is exercised, holders of all shares subject to the registration rights agreement will be entitled to participate in such registration. By exercising their registration rights, and selling a large number of shares, these holders could cause the price of our common stock to decline. An estimated             shares of common stock will be subject to our registration rights agreement upon completion of the offering.

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

        Prior to this offering, we have not been subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, or the other rules and regulations of the SEC or any securities exchange relating to public companies. We are working 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. However, the expenses that will be required in order to adequately prepare for being a public company could be material. Compliance with the various reporting and other requirements applicable to public companies will also require considerable time and attention of management. We cannot predict or estimate the amount of the additional costs we may incur, the timing of such costs or the degree of impact that our management's attention to these matters will have on our business. In addition, the changes we make may not be sufficient to allow us to satisfy our obligations as a public company on a timely basis.

        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

19



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.

Our common stock has not been publicly traded prior to this offering, and we expect that the price of our common stock may fluctuate substantially.

        There has not been a public market for our common stock prior to this offering. We cannot predict the extent to which a trading market will develop or how liquid that market may become. If you purchase shares of our common stock in this offering, you will pay a price that was not established in the public trading markets. The initial public offering price will be determined by negotiations between the underwriters and us. You may not be able to resell your shares above the initial public offering price and may suffer a loss on your investment.

        Broad market and industry factors may adversely affect the market price of our common stock, regardless of our actual operating performance. Factors that could cause fluctuations in our stock price may include, among other things:

    actual or anticipated variations in quarterly operating results;

    changes in financial estimates by us or by any securities analysts who may cover our stock or our failure to meet the estimates made by securities analysts;

    changes in the market valuations of other companies operating in our industry;

    announcements by us or our competitors of significant acquisitions, strategic partnerships or divestitures;

    additions or departures of key personnel; and

    sales of our common stock, including sales of our common stock by our directors and officers or by GTCR or our other principal stockholders.

We currently do not intend to pay dividends on our common stock, and as a result, your only opportunity to achieve a return on your investment is if the price of our common stock appreciates.

        We currently do not expect to declare or pay dividends on our common stock in the foreseeable future. In addition, we expect that our amended and restated senior credit facility will limit our ability to declare and pay cash dividends on our common stock. As a result, your only opportunity to achieve a return on your investment in us will 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.

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You will suffer immediate and substantial dilution in the book value of your common stock as a result of this offering.

        The initial public offering price of our common stock will be considerably more than the net tangible book value per share of our outstanding common stock. This reduction in the value of your equity is known as dilution. This dilution occurs in large part because our earlier investors paid substantially less than the initial public offering price when they purchased their shares. Investors purchasing common stock in this offering will incur immediate dilution of $             in net tangible book value per share of common stock, based on an assumed initial public offering price of $             per share, the midpoint of the range set forth on the cover of this prospectus. In addition, if we raise funds by issuing additional securities, the newly issued shares will further dilute your percentage ownership of us.

21



FORWARD-LOOKING STATEMENTS

        This prospectus contains forward-looking statements that are based on our management's beliefs and assumptions and on information currently available to us. These statements may be found throughout this prospectus, particularly under the headings "Summary," "Risk Factors," "Dividend Policy," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business," among others. Forward-looking statements typically are identified by the use of terms such as "may," "should," "expect," "anticipate," "believe," "could," "estimate," "intend" and similar words, although some forward-looking statements are expressed differently. You should consider statements that contain these words carefully because they describe our expectations, plans, strategies, goals and beliefs concerning future business conditions, our results of operations, financial position and our business outlook or state other "forward-looking" information based on currently available information. The factors listed under the heading "Risk Factors" and in the other sections of this prospectus provide examples of risks, uncertainties and events that could cause our actual results to differ materially from the expectations expressed in our forward-looking statements. These factors include, among other things, the following:

    our dependence on a limited number of customers for a substantial portion of our revenues;

    continued pricing pressure;

    implementation of or changes in laws, regulations or policies that could negatively affect our operations;

    the competitive nature of the automobile insurance claims processing industry;

    our ability to increase market share, successfully introduce new software and services and expand our operations to new geographic locations;

    our ability to anticipate changes in technology and regulatory standards and to successfully develop and introduce new and enhanced software on a timely basis;

    our limited operating history as a stand-alone company;

    potential impairment of our significant amount of goodwill and intangible assets and our ability to return to profitability;

    our access to information generated by third parties;

    our operating results may vary widely from period to period;

    system failure or other operational events that impact our ability to deliver software and services in a timely manner;

    our ability to safeguard our data;

    risks associated with our extensive global operations;

    the impact of or our ability to enter into future acquisitions, joint ventures or divestitures;

    future availability of additional capital;

    the unpredictability of intellectual property protection and maintenance and other intellectual property issues;

    any future changes in management or loss of key personnel;

    the degree to which we are leveraged and the terms of our debt service obligations; and

    the outcome of legal proceedings.

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        The forward-looking statements made in this prospectus relate only to events as of the date on which the statements are made. Except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, even if new information becomes available in the future. We note that the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995 does not apply to statements made in connection with an initial public offering.


INDUSTRY AND MARKET DATA

        Unless otherwise indicated, information contained in this prospectus concerning the automobile insurance claims processing and automobile insurance industries and our general expectations concerning these industries are based on information from independent industry analysts and publications and management estimates. We have derived management estimates from publicly available information released by third-party sources, as well as data from our internal research, and have based our estimates on such data and our knowledge of our industry and markets, which we believe to be reasonable. None of the independent industry publications used in this prospectus was prepared on our or our affiliates' behalf. Market position is based on total revenues, unless otherwise indicated. Estimates of historical growth rates in the markets in which we operate are not necessarily indicative of future growth rates in such markets.


CORPORATE REORGANIZATION

        We are currently a Delaware limited liability company. Prior to the completion of this offering, we will convert into a Delaware corporation. This conversion has been authorized by our board of managers pursuant to the authority granted to it in our limited liability company agreement, without any required vote or consent on the part of our existing unitholders. Upon the effectiveness of the conversion, all of our outstanding preferred and common units will be automatically converted into shares of common stock based on their relative rights as set forth in our limited liability company agreement. Specifically, each outstanding common unit will be converted into a number of shares of common stock equal to its pre-offering equity value divided by the initial public offering price. Each outstanding preferred unit will be converted into a number of shares of common stock equal to its liquidation value divided by the initial public offering price. Our preferred units have a liquidation value equal to their initial issuance price of $1,000, plus accrued yield at 8% per annum, compounded quarterly. As of September 30, 2006, the aggregate liquidation value of our outstanding preferred units was $212.1 million. Any increase or decrease in the initial public offering price as compared to the assumed initial public offering price will change the relative percentages of common stock owned by our preferred unitholders and common unitholders, but will not change the aggregate number of shares outstanding following the completion of this offering. See "Description of Capital Stock" for additional information regarding the terms of our certificate of incorporation and bylaws as will be in effect upon the closing of this offering.

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USE OF PROCEEDS

        Our net proceeds from the sale of             shares of common stock in this offering are estimated to be approximately $             million, based on an assumed offering price of $             per share, the midpoint of the range set forth on the cover of this prospectus, after deducting estimated underwriting discounts and commissions and estimated expenses payable by us in connection with the refinancing transactions.

        We intend to use the net proceeds from this offering as follows:

    approximately $             million to repay outstanding principal indebtedness of $             million and to pay a related prepayment premium of $              million under our second lien credit facility;

    approximately $             million to repay outstanding principal indebtedness of $             million under our subordinated unsecured credit facility and to pay a related prepayment premium; and

    the remaining proceeds to reduce our outstanding borrowings under our first lien credit facility.

        We will not receive any of the proceeds from the sale of shares by the selling stockholders.

        As of September 30, 2006, the outstanding indebtedness under our first lien credit facility was $527.0 million, the outstanding indebtedness under our second lien credit facility was $211.0 million, and the outstanding indebtedness under our subordinated unsecured credit facility was $108.1 million. We used the net proceeds of these borrowings to fund a portion of the purchase price in connection with the Acquisition. As of September 30, 2006, the weighted average interest rate for borrowings under the first lien credit facility was 6.73% per annum, the interest rate for the second lien credit facility was 8.58% per annum, and the interest rate for the subordinated unsecured credit facility was 12.13% per annum. Our first lien credit facility matures in April 2013, our second lien credit facility matures in October 2013 and our subordinated unsecured credit facility matures in October 2014.

        If we obtain more proceeds from this offering than anticipated, we will borrow less under our amended and restated senior credit facility. If we obtain fewer proceeds, we will borrow more under our amended and restated senior credit facility.

        Affiliates of Goldman, Sachs & Co. and Citigroup Global Markets Inc., two of the underwriters in this offering, are lenders under our existing senior credit facility and therefore will receive a portion of the net proceeds of this offering.


DIVIDEND POLICY

        We do not expect for the foreseeable future to pay dividends on our common stock. Instead, we anticipate that all of our earnings in the foreseeable future will be used in the operation and growth of our business. Any future determination to pay dividends will be at the discretion of our board of directors and will depend upon, among other factors, our results of operations, financial condition, capital requirements and contractual restrictions. Our ability to pay dividends to holders of our common stock will be limited by restrictive covenants under our amended and restated senior credit facility.

24



CAPITALIZATION

        The following table sets forth our consolidated cash and cash equivalents and our consolidated capitalization as of September 30, 2006 on an actual basis and on a pro forma basis to give effect to:

    our reorganization as a corporation and the resultant conversion of all outstanding limited liability units into shares of common stock prior to the completion of this offering as described in "Corporate Reorganization"; and

    the refinancing transactions, including the completion of this offering and the application of the net proceeds therefrom as described under "Use of Proceeds."

        You should read this table together with "Use of Proceeds," "Unaudited Pro Forma Combined Financial Statements," "Selected Historical Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the historical financial statements and related notes included elsewhere in this prospectus.

 
  As of September 30, 2006
 
  Actual
  Pro Forma(1)
 
  (in thousands, except unit/share amounts)

Cash and cash equivalents   $ 89,775   $  
   
 
Long-term debt:            
  Senior secured credit facility:            
    First lien credit facility:            
      Revolving loan   $ 7,000   $  
      Term loans     520,004      
    Second lien credit facility     210,981    
  Subordinated unsecured credit facility     108,132    
   
 
    Total long-term debt     846,117      
Redeemable preferred units, 204,239 units issued and outstanding, actual; no preferred units issued and outstanding, pro forma     212,056    
Unitholders'/stockholders' equity (deficit):            
  Common units, 93,140,904 units issued and outstanding, actual; no common units issued and outstanding, pro forma        
  Common stock, par value $0.01 per share, no shares authorized, issued and outstanding, actual;         shares authorized and         shares issued and outstanding, pro forma          
  Additional paid-in capital          
  Retained earnings (accumulated deficit)     (38,056 )    
  Accumulated other comprehensive income     3,346      
   
 
    Total unitholders'/stockholders' equity (deficit)     (34,710 )    
   
 
      Total capitalization   $ 1,023,463   $  
   
 

(1)
A $1.00 decrease or increase in the assumed initial public offering price would result in approximately a $             million decrease or increase in each of pro forma additional paid-in capital, pro forma total unitholders'/stockholders' equity and pro forma total capitalization, assuming the total number of shares offered by us remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Increases or decreases in the initial public offering price or the number of shares sold will also affect our outstanding borrowings under our amended and restated senior credit facility.

        The number of shares of common stock shown in the table above as issued and outstanding excludes             additional shares to be reserved for issuance under our 2007 Long-Term Equity Incentive Plan and our 2007 Employee Stock Purchase Plan.

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DILUTION

        Our net tangible book value deficit as of September 30, 2006, after giving effect to our corporate reorganization but before giving effect to the sale of              shares in this offering, was approximately $     million, or approximately $     per share. Net tangible book value deficit per share represents, prior to the sale of the    shares of common stock offered in this offering, the amount of our total tangible assets less the amount of our total liabilities, divided by the number of shares of common stock outstanding at September 30, 2006 after giving effect to our corporate reorganization. Dilution in net tangible book value per share represents the difference between the amount per share paid by investors in this offering and the pro forma net tangible book value per share of our common stock outstanding immediately after this offering.

        After giving effect to our corporate reorganization and the sale of the             shares of common stock in this offering, based upon an initial offering price of $              per share, the midpoint of the range set forth on the cover of this prospectus, after deducting underwriting discounts and commissions and estimated expenses payable by us in connection with the refinancing transactions, our pro forma net tangible book value as of September 30, 2006 would have been approximately $             million, or $             per share of common stock. This represents an immediate increase in pro forma net tangible book value of $             per share to existing stockholders and an immediate dilution of $             per share to new investors purchasing shares of common stock in this offering at the initial public offering price.

        The following table illustrates this dilution in pro forma net tangible book value to new investors:

Assumed initial public offering price per share   $  
Net tangible book value per share as of September 30, 2006 after giving effect to our corporate reorganization      
Increase in net tangible book value (deficit) per share attributable to this offering      
Pro forma net tangible book value per share as of September 30, 2006 after giving effect to our corporate reorganization and this offering      
   
Dilution per share to new investors   $  
   

        The following table summarizes, as of September 30, 2006, on a pro forma basis, the number of shares of our common stock purchased from us, the aggregate cash consideration paid to us and the average price per share paid to us by existing stockholders and to be paid by new investors purchasing shares of our common stock in this offering. The table assumes an initial public offering price of $                        per share, the midpoint of the range set forth on the cover of this prospectus, before deducting underwriting discounts and commissions and estimated offering expenses payable by us in connection with the refinancing transactions:

 
  Shares Purchased
  Total Consideration
   
 
  Average
Price Per
Share

 
  Number
  Percent
  Amount
  Percent
Existing stockholders         % $       % $  
New investors         % $       % $  
   
 
 
 
     
Total       100 % $     100 %    
   
 
 
 
     

        The above discussion and tables are based on             shares of common stock issued and outstanding as of September 30, 2006 after giving pro forma effect to our reorganization into a corporation and excludes             additional shares to be reserved for issuance under our 2007 Long-Term Equity Incentive Plan and our 2007 Employee Stock Purchase Plan. In addition, you will

26



incur additional dilution if we grant options, warrants or other rights to purchase our common stock in the future with exercise prices below the initial public offering price.

        If the underwriters exercise in full their option to purchase additional shares, our existing stockholders would own approximately    % and our new investors would own approximately    % of the total number of shares of our common stock outstanding after this offering.

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UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

        The following unaudited pro forma combined financial statements give effect to the Acquisition and the corporate reorganization and refinancing transactions, including the completion of this offering and the application of the net proceeds therefrom as described under "Use of Proceeds," in accordance with Article 11 of the Securities and Exchange Commission's Regulation S-X.

The Acquisition

        On April 13, 2006, Solera Holdings, LLC acquired the Claims Services Group for approximately $1.0 billion. The Acquisition was accounted for as a purchase pursuant to Statement of Financial Accounting Standard, or SFAS No. 141, Business Combinations. Under purchase accounting, the total purchase price was allocated to the acquired business's net tangible and identifiable intangible assets based on their estimated fair values as of April 13, 2006. The excess of the purchase price over the net tangible and identifiable intangible assets was recorded as goodwill. The fair value of the identifiable intangible assets pertaining to software and database technology, customer relationships and trademarks was established based on a discounted cash flow approach. The preliminary allocation of the purchase price was based upon certain estimates and assumptions that are subject to change. The primary areas of the purchase price allocation that are not yet finalized relate to certain employee related liabilities, income and non-income based taxes and residual goodwill. The purchase price allocation resulted in the following identifiable intangible assets and related amortization periods:

Description

  Amount
  Amortization Period
 
  (in millions)

  (in years)

Software and database technology   $239.2   9
Customer relationships   $173.9   20
Trademarks   $13.5   4

        These intangible assets are amortized on an accelerated basis to reflect the pattern in which economic benefits of the intangible assets are consumed. The above useful lives represent our best estimates of the expected useful lives. However, the actual lives may differ significantly from these estimates.

        The Acquisition was financed through a combination of common and preferred equity and debt financing.

        Prior to the Acquisition, Solera's operations consisted primarily of developing our business plan, recruiting personnel, providing consulting services, raising capital and identifying and evaluating operating assets for acquisition.

        Prior to the Acquisition, our business was operated as the Claims Services Group, a business unit of ADP. As a result, the historical combined financial information of the Claims Services Group included in this prospectus is presented on a carve-out basis and reflects the assets, liabilities, revenues and expenses that were attributed or allocated to it as a business unit of ADP. These historical combined financial statements include costs for facilities, functions and services used by the Claims Services Group at ADP sites that it shared with other ADP business units and costs for certain functions and services performed by centralized ADP organizations that were directly charged to the Claims Services Group based on usage. The combined statements of earnings for the Claims Services Group include allocations of certain expenses of ADP, including general corporate overhead, insurance, equity-based compensation and pension plans, royalty fees, facilities and other expenses. These allocations were based on a variety of factors. We believe that these allocations are not materially different from amounts we would have incurred as a stand-alone company.

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Corporate Reorganization and Refinancing Transactions

        We are currently a Delaware limited liability company. Prior to the completion of this offering, we will convert into a Delaware corporation. Upon the effectiveness of the conversion, all of our outstanding preferred and common units will be automatically converted into shares of common stock based on their relative rights as set forth in our limited liability company agreement. As a part of this offering we will also repay a portion of our indebtedness outstanding and refinance our remaining indebtedness. See "Corporate Reorganization" and "Use of Proceeds" for additional information.

Pro Forma Combined Financial Statements

        The unaudited pro forma combined balance sheet as of September 30, 2006 gives effect to our corporate reorganization and the refinancing transactions, including the completion of this offering and the application of the net proceeds therefrom as described under "Use of Proceeds," as if they occurred on September 30, 2006. The unaudited pro forma combined statement of operations for fiscal 2006 gives effect to the Acquisition, our corporate reorganization and the refinancing transactions as if each had occurred on July 1, 2005. The unaudited pro forma combined statement of operations for the three months ended September 30, 2006 gives effect to the corporate reorganization and the refinancing transactions as if each had occurred on July 1, 2005. The assumptions underlying the pro forma adjustments are described in the accompanying notes. These notes are an integral part of the unaudited pro forma combined financial statements.

        The unaudited pro forma combined balance sheet as of September 30, 2006 has been derived from the unaudited historical consolidated balance sheet of Solera Holdings, LLC as of September 30, 2006.

        The unaudited pro forma combined statement of operations for fiscal 2006 has been derived from the audited historical consolidated statement of operations for Solera Holdings, LLC for the year ended June 30, 2006 and from the audited historical combined statement of operations for the Claims Services Group for the period from July 1, 2005 to April 13, 2006. The unaudited pro forma combined statement of operations for the three months ended September 30, 2006 has been derived from the unaudited historical consolidated statement of operations for Solera Holdings, LLC for the three months ended September 30, 2006.

        The unaudited combined pro forma financial statements should not be considered indicative of actual results that would have been achieved had the transactions described above been actually completed on the dates indicated and do not purport to indicate financial data as of any future period. The unaudited combined pro forma financial statements should be read together with the information contained in "Selected Historical Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the historical financial statements and the related notes included elsewhere in this prospectus.

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SOLERA HOLDINGS, INC. AND SUBSIDIARIES

Pro Forma Combined Balance Sheet
as of September 30, 2006

 
  Solera Holdings, LLC
Historical

  Reorganization and
Refinancing
Adjustments

  Pro Forma(o)
 
  (in thousands, except unit/share amounts)

Assets                  

Current assets:

 

 

 

 

 

 

 

 

 
  Cash and cash equivalents   $ 89,775   $     $  
  Accounts receivable, net     73,376            
  Other current assets     37,208            
  Deferred income tax assets     4,720            
   
 
 
    Total current assets     205,079            
   
 
 
Property and equipment-net     44,095            
Other assets     36,873            
Long-term deferred income tax assets     6,812            
Goodwill     543,898            
Intangible assets     419,805            
   
 
 
    Total   $ 1,256,562   $     $  
   
 
 

Liabilities and Unitholders'/Stockholders' Equity

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 
  Accounts payable   $ 26,993   $     $  
  Accrued expenses and other current liabilities     115,752            
  Income taxes payable     24,774            
  Deferred income tax liabilities     3,381            
  Current portion of long-term debt     12,213            
   
 
 
    Total current liabilities     183,113            
Long-term debt     833,903            
Other liabilities     2,709            
Long-term deferred income tax liabilities     48,978            
   
 
 
    Total liabilities     1,068,703            
   
 
 
Redeemable preferred units, 204,239 units issued and outstanding     212,056            
Minority interests in consolidated subsidiaries     10,513            

Commitments and contingencies

 

 

 

 

 

 

 

 

 

Unitholders'/stockholders' equity (deficit):

 

 

 

 

 

 

 

 

 
  Common units, 93,140,904 units issued and outstanding                
  Common stock $0.01 par value;    shares authorized;    shares issued and outstanding                
  Additional paid-in capital                
  Retained earnings (accumulated deficit)     (38,056 )          
  Accumulated other comprehensive income     3,346            
   
 
 
    Total unitholders'/stockholders' equity (deficit)     (34,710 )          
   
 
 
      Total   $ 1,256,562   $     $  
   
 
 

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SOLERA HOLDINGS, INC. AND SUBSIDIARIES

Pro Forma Combined Statement of Operations
For the Fiscal Year Ended June 30, 2006

 
  Solera
Holdings, LLC
Historical

  Claims Services Group
   
   
   
   
 
 
   
   
  Reorganization
and
Refinancing
Adjustments

   
 
 
  Fiscal Year
Ended
June 30, 2006

  July 1, 2005 to
April 13,
2006

  Acquisition
Adjustments(a)

  Acquisition
Pro Forma

  Pro Forma(o)
 
 
  (in thousands, except per unit/share data)

 
Statement of Operations Data:                                      
  Revenues   $ 95,084   $ 335,146   $   $ 430,230   $   $    
  Operating expenses     29,013     101,995     (1,174 )(b)   129,834            
  Selling, general and administrative expenses     27,105     87,033     (2,326 )(b)(c)(d)   111,812            
  Systems development and programming costs     15,080     52,306     (3,029 )(b)   64,357            
  Depreciation and amortization     23,571     28,894     70,095  (e)   122,560            
  Restructuring charges     2,871     (468 )       2,403            
  Interest expense     14,842     318     56,228  (f)   71,388       (j)      
  Other (income) expense, net     1,836     (3,069 )       (1,233 )   (k)      
                           
 
 
  Earnings (loss) from continuing operations before income tax provision (benefit) and minority interests     (19,234 )   68,137     (119,794 )   (70,891 )          
  Income tax provision (benefit)     (1,268 )   23,688     (21,800 )(g)   620            
  Minority interests in net income of consolidated subsidiaries     921     3,468         4,389            
   
 
 
 
 
 
 
    Net income (loss)     (18,887 )   40,981     (97,994 )   (75,900 )          
Less:  Dividends and redeemable preferred unit accretion     88,789         (72,044 )(h)   16,745            
   
 
 
 
 
 
 
    Net income (loss) applicable to common unitholders/ stockholders   $ (107,676 ) $ 40,981   $ (25,950 ) $ (92,645 ) $   $    
   
 
 
 
 
 
 
Basic net income (loss) per common unit/share   $ (2.11 ) $   $   $ (1.08 ) $     $    
Diluted net income (loss) per common unit/share     (2.11 )           (1.08 )            
Weighted average common units/shares outstanding:                                      
    Basic     50,933             86,006 (i)           (l)
    Diluted     50,933             86,006             (m)

31



SOLERA HOLDINGS, INC. AND SUBSIDIARIES

Pro Forma Statement of Operations
For the Three Months Ended September 30, 2006

 
  Solera Holdings, LLC
Historical

  Reorganization
and Refinancing
Adjustments

  Pro Forma(o)
 
 
  (in thousands, except per unit/share data)

 
Statement of Operations Data:                    
  Revenues   $ 111,482   $   $    
  Operating expenses     32,710            
  Selling, general and administrative expenses     30,890            
  Systems development and programming costs     16,176            
  Depreciation and amortization     25,176            
  Restructuring charges     895            
  Interest expense     17,857              
  Other (income) expense, net     4,340     (k)      
   
 
 
 
  Earnings (loss) from continuing operations before income tax provision and minority interests     (16,562 )          
  Income tax provision     243            
  Minority interest in net income of consolidated subsidiaries     1,085            
    Net income (loss)     (17,890 )          
Less:  Dividends and redeemable preferred unit
accretion
    4,191     (n)      
   
 
 
 
            Net income (loss) applicable to common
            unitholders/stockholders
  $ (22,081 ) $   $    
   
 
 
 
Basic net income (loss) per common unit/share   $ (0.25 ) $     $    
Diluted net income (loss) per common unit/share     (0.25 )            
Weighted average common units/shares outstanding:                    
  Basic     87,114           (l )
  Diluted     87,114           (m )

32



NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

1.     Adjustments Related to the Acquisition

    (a)
    On April 13, 2006, we acquired the Claims Services Group. Our results of operations for the year ended June 30, 2006 include the operating results of our predecessor from April 14, 2006 through June 30, 2006 and our operating results for the entire year ended June 30, 2006.

    (b)
    Reflects the elimination of $7.4 million of stock-based compensation expense recorded by the Claims Services Group pursuant to SFAS No. 123(R), Share Based Payment, or SFAS No. 123(R). As a business unit of a public company, the Claims Services Group adopted SFAS No. 123(R) on July 1, 2005. As a private company, we were not required to adopt SFAS No. 123(R) on July 1, 2005. We adopted SFAS No. 123(R) effective July 1, 2006.

    (c)
    Reflects the elimination of our predecessor's deferred rent and leasehold improvements liabilities of $0.6 million, originally established to reflect favorable rent conditions. As the economic benefit of these favorable rent conditions are not recognizable by us, the liabilities are eliminated.

    (d)
    Reflects the addition of $0.3 million of unit-based compensation expense relating to the sale of common and preferred units to our officers, managers and employees in connection with the Acquisition.

    (e)
    Reflects $81.9 million of amortization of identifiable intangible assets, consisting of software and database technology, customer relationships, software developed for internal use and trademarks resulting from the Acquisition and the elimination of $11.8 million of amortization expense related to the acquired identifiable intangible assets of our predecessor expensed through the period ended April 13, 2006.

    (f)
    Reflects $52.7 million of interest expense incurred in respect of indebtedness incurred to finance the Acquisition, together with $3.5 million of amortization of deferred financing costs.

    (g)
    Reflects $21.8 million of incremental benefit for state and federal income taxes resulting from the pro forma effect of items (b) through (f).

    (h)
    Reflects $13.1 million of additional dividends on the Class B preferred units that were issued to finance the Acquisition and the elimination of $85.1 million of the one-time accretion to record the Class B preferred units at their redemption value recognized in our historical financial statements on the issue date of the Class B preferred units.

    (i)
    The weighted average common units/shares outstanding used to compute basic pro forma earnings per unit/share reflects the issuance of 46,354,521 common units issued in connection with the Acquisition, as if the units had been issued on July 1, 2005.

2.     Adjustments Giving Effect to Our Corporate Reorganization and the Refinancing Transactions

    (j)
    Reflects the reduction of interest expense as a result of the repayment of approximately $             million of the term loan under our first lien of credit facility, our €              million ($             million) term loan under our second lien credit facility and our €              million subordinated unsecured credit facility with a portion of the proceeds from this offering, offset by an increase in interest expense attributable to borrowings of $             under our amended and restated senior credit facility.

33


    (k)
    Reflects the write-off of deferred financing costs associated with the repayment of debt using the net proceeds we expect to receive from this offering.

    (l)
    The pro forma as adjusted basic weighted average common units/shares outstanding reflects the following shares of common stock as if the shares had been issued on July 1, 2005:              shares of common stock to be issued in connection with this offering; and             shares of common stock to be issued in connection with the conversion of the Class B preferred units, including accrued dividends, assuming an initial public offering price of $         per share, the midpoint of the range set forth on the cover of this prospectus.

    (m)
    The calculation of diluted weighted average common units/shares outstanding reflects the treasury stock effect of unvested units, as if such units had been issued on July 1, 2005, in the case of units issued in connection with the Acquisition, and as of the respective issue dates of units issued prior to the Acquisition.

    (n)
    Reflects the elimination of $          million of dividends and accretion on preferred units as a result of the conversion of all of the 204,239 outstanding Class B preferred units into shares of our common stock.

    (o)
    A $1.00 decrease or increase in the assumed initial public offering price would result in an approximately $             million decrease or increase in each of pro forma additional paid-in capital and pro forma total unitholders'/stockholders' equity, assuming the total number of shares offered by us remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Increases or decreases in the initial public offering price or the number of shares sold will also affect our outstanding borrowings under our amended and restated senior credit facility.

34



SELECTED HISTORICAL FINANCIAL DATA

        The following table sets forth selected historical financial data regarding our business and should be read together with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the historical financial statements and the related notes included elsewhere in this prospectus.

        The selected historical consolidated financial data as of and for the fiscal year ended June 30, 2006 are derived from the consolidated financial statements of Solera Holdings, LLC that are included elsewhere in this prospectus, which financial statements have been audited by Deloitte & Touche LLP as indicated by their report thereon. The historical combined balance sheet data as of June 30, 2004 and 2005 and the historical combined statements of operations and cash flows data for fiscal 2004 and 2005 and the period from July 1, 2005 through April 13, 2006 are derived from the audited combined financial statements of our predecessor that are included elsewhere in this prospectus, which financial statements have been audited by Deloitte & Touche LLP as indicated by their report thereon. The historical combined financial data as of and for the year ended June 30, 2003 are derived from the audited combined financial statements of our predecessor, which are not included in this prospectus. The historical combined balance sheet data as of June 30, 2002 and September 30, 2005, the historical combined statements of operations data for fiscal 2002 and the three-month period ended September 30, 2005 of our predecessor are derived from unaudited combined financial statements of our predecessor, which are not included in this prospectus. The historical consolidated financial data as of and for the three months ended September 30, 2006 are derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus and include certain adjustments, all of which are normal recurring adjustments, which we consider necessary for a fair presentation of our results for these unaudited periods. The results of operations for the three months ended September 30, 2006 are not necessarily indicative of our results of operations for a full fiscal year. In addition, the historical financial information of our predecessor included in this prospectus does not necessarily reflect what our financial position or results of operations would have been had we operated the business as a separate, stand-alone entity during those periods.

35


 
   
   
   
   
   
   
  Solera Holdings, LLC
 
 
  Claims Services Group(1)
 
 
  Fiscal
Year
Ended
June 30,
2006(2)

   
 
 
  Fiscal Year Ended June 30,
  July 1,
2005 to
April 13,
2006

  Three Months
Ended
September 30,
2005

  Three Months
Ended
September 30,
2006

 
 
  2002
  2003
  2004
  2005
 
 
  (in thousands, except per unit amounts)

 
Statement of Operations Data:                                                  
  Revenues   $ 278,766   $ 311,334   $ 361,179   $ 412,355   $ 335,146   $ 104,278   $ 95,084   $ 111,482  
  Operating expenses     88,904     88,708     107,590     117,361     101,995     30,979     29,013     32,710  
  Selling, general and administrative expenses     72,373     80,105     94,757     112,480     87,033     24,930     27,105     30,890  
  Systems development and programming costs     41,275     42,517     57,465     62,690     52,306     16,030     15,080     16,176  
  Depreciation and amortization     19,189     23,834     28,754     34,335     28,894     8,842     23,571     25,176  
  Restructuring charges     72     1,067     1,740     5,512     (468 )   (256 )   2,871     895  
  Impairment charges             4,214                      
  Interest expense         284     271     334     318     149     14,842     17,857  
  Other (income) expense, net     (868 )   (2,271 )   (1,323 )   (4,065 )   (3,069 )   (1,292 )   1,836     4,340  
  Earnings (loss) from continuing operations before provision for income provision (benefit) and minority interests     57,821     77,090     67,711     83,708     68,137     24,896     (19,234 )   (16,562 )
  Income tax provision (benefit)     19,276     25,700     22,124     24,030     23,688     8,605     (1,268 )   243  
  Minority interests in net income of consolidated subsidiaries     1,259     626     1,229     1,909     3,468     1,000     921     1,085  
   
 
 
 
 
 
 
 
 
  Earnings (loss) from continuing operations     37,286     50,764     44,358     57,769     40,981     15,291     (18,887 )   (17,890 )
  Loss (income) from discontinued operations     1,021     6,438     (3,816 )   128                  
   
 
 
 
 
 
 
 
 
    Net income (loss)     36,265     44,326     48,174     57,641     40,981     15,291     (18,887 )   (17,890 )
Less: Dividends and redeemable preferred unit accretion                             88,789     4,191  
   
 
 
 
 
 
 
 
 
    Net income (loss) applicable to common unitholders   $ 36,265   $ 44,326   $ 48,174   $ 57,641   $ 40,981   $ 15,291   $ (107,676 ) $ (22,081 )
   
 
 
 
 
 
 
 
 
Basic loss per common unit   $ (2.11 ) $ (0.25 )
Diluted loss per common unit     (2.11 )   (0.25 )
Weighted average common units outstanding:                                                  
  Basic     50,933     87,114  
  Diluted     50,933     87,114  
Other Financial Data:                                                  
  Capital expenditures   $     $ 14,940   $ 15,980   $ 7,659   $ 9,671   $ 4,019   $ 4,112   $ 6,895  
  Cash flows provided by (used in):                                                  
    Operating activities         113,000     74,017     106,840     51,325     14,056     45,356     28,191  
    Investing activities         (28,598 )   (141,228 )   (62,975 )   (18,464 )   (4,896 )   (936,471 )   (7,935 )
    Financing activities         (69,922 )   96,199     (33,369 )   (82,787 )       977,954     (19,128 )
 
  Claims Services Group(1)
   
   
 
 
  Solera Holdings, LLC
 
 
  As of June 30,
   
   
 
 
  As of
April 13,
2006

  As of
September 30,
2005

  As of
June 30,
2006

  As of
September 30,
2006

 
 
  2002
  2003
  2004
  2005
 
 
  (in thousands)

 
Balance Sheet Data:                                                  
  Cash and cash equivalents   $ 51,131   $ 76,866   $ 107,824   $ 121,313   $     $ 130,702   $ 88,826   $ 89,775  
  Total assets     312,431     341,899     556,769     608,065                 1,253,005     1,256,562  
  Long-term debt, net of current portion                             831,628     833,903  
  Total group/unitholders' equity (deficit)     205,677     213,061     376,386     399,282                 (12,403 )   (34,710 )

(1)
The Claims Services Group was owned by ADP until Solera acquired it on April 13, 2006.

(2)
The statement of operations data for fiscal 2006 include the results of operations for our predecessor from April 14, 2006 and the results of operations for Solera Holdings, LLC for all of fiscal 2006. Financial information presented reflects adjustment of assets and liabilities to then-fair value at the date of the Acquisition, which became the basis for amounts included in our results of operations from April 14, 2006 until June 30, 2006. Prior to the Acquisition, Solera's operations consisted primarily of developing our business plan, recruiting personnel, providing consulting services, raising capital and identifying and evaluating operating assets for acquisition.

36



MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        You should read the following discussion together with "Selected Historical Financial Data," "Unaudited Pro Forma Combined Financial Statements" and the historical financial statements and related notes included elsewhere in this prospectus. The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements in this discussion are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in "Risk Factors" and "Forward Looking Statements." Our actual results may differ materially from those contained in or implied by any forward-looking statements.

Overview

        We provide automobile insurance claims processing software and services to insurance companies, collision repair facilities, independent assessors and automotive recyclers. We have operations in 45 countries and derive most of our revenues from our estimating and workflow software.

        Set forth below is our percentage of revenues for the periods presented from each of our principal customer categories:

 
   
  Three Months Ended
September 30, 2006

 
 
   
  EMEA
  Americas
   
 
Customer Category

  2006
Acquisition
Pro Forma

  Total
Percent

 
  Amount
  Percent
  Amount
  Percent
 
 
  (dollars in millions)

   
 
Insurance companies   41.4 % $ 21.1   32.4 % $ 23.4   50.8 % 40.0 %
Collision repair facilities   33.1     23.1   35.2     14.7   31.9   33.8  
Independent assessors   9.2     10.5   16.1     0.3   0.7   9.7  
Automotive recyclers   6.5           7.1   15.4   6.4  
Other   9.8     10.7   16.3     0.6   1.2   10.1  
   
 
 
 
 
 
 
  Total   100.0 % $ 65.4   100.0 % $ 46.1   100.0 % 100.0 %
   
 
 
 
 
 
 

Segments

        We operate our business using two reportable segments: EMEA and Americas. Our EMEA segment consists of our operations in Europe, the Middle East, Africa and Asia. Our Americas segment consists of our operations in North, Central and South America. Prior to December 1, 2006, we organized our business using three reportable segments: EMEA, Americas and the Netherlands. Since that date, we have reorganized our operations into two regional operating segments (EMEA and Americas) by incorporating our Netherlands operations into our EMEA segment. In addition, for periods prior to the Acquisition, we included our Latin American operations in our EMEA segment. We have recast the financial information in this prospectus, other than the information relating to our predecessor, to conform to our current segments.

        The table below sets forth our revenues by regional operating segment and as a percentage of our total revenues for the periods indicated.

 
  Fiscal Year Ended June 30,
   
   
 
 
  Three Months
Ended September 30,
2006

 
 
  2004

  2005

  Pro Forma 2006

 
 
  (dollars in millions)

 
EMEA   $ 178.2   49 % $ 227.0   55 % $ 243.3   57 % $ 65.4   59 %
Americas     183.0   51     185.4   45     186.9   43     46.1   41  
   
 
 
 
 
 
 
 
 
  Total   $ 361.2   100 % $ 412.4   100 % $ 430.2   100 % $ 111.5   100 %
   
 
 
 
 
 
 
 
 

37


        The accounting policies for each of our segments are the same. We evaluate the operating performance of our segments based primarily upon their respective revenues and EBITDA, as adjusted. For the most part, we do not evaluate our costs and expenses on a per segment basis.

Effects of the Acquisition

        Solera was initially formed in March 2005. On April 13, 2006, Solera acquired the Claims Services Group, a business unit of ADP, for approximately $1.0 billion. Prior to the Acquisition, Solera's operations consisted primarily of developing our business plan, recruiting personnel, providing consulting services, raising capital and identifying and evaluating operating assets for acquisition. Our statement of operations for fiscal 2006 includes Solera's results of operations for the entire year and the results of operations for the Claims Services Group from April 14, 2006.

        We accounted for the Acquisition using the purchase method of accounting. As a result, the Acquisition has and will continue to affect our results of operations significantly. We allocated the aggregate acquisition consideration to the tangible and intangible assets acquired and liabilities assumed based on their respective fair values as of the date of the Acquisition, which resulted in an increase in the accounting bases of some of our assets. This has resulted in a significant increase in our annual depreciation and amortization expenses. In addition, due to the effects of the increased borrowings to finance the Acquisition, our interest expense has increased significantly in the periods following the Acquisition. As a result, the financial information for periods beginning on or after July 1, 2006 are not comparable to the information prior to this date.

        Prior to the Acquisition, our business was operated as the Claims Services Group, a business unit of ADP. As a result, the combined financial information of the Claims Services Group included in this prospectus is presented on a carve-out basis and reflects the assets, liabilities, revenues and expenses that were attributed or allocated to it as a business unit of ADP. The historical financial results in the combined financial statements presented may not be indicative of the results that would have been achieved had the Company operated as a stand-alone entity. These combined financial statements include costs for facilities, functions and services used by the Claims Services Group at ADP sites that it shared with other ADP business units and costs for certain functions and services performed by centralized ADP organizations and directly charged to the Claims Services Group based on usage. The combined statements of earnings for the Claims Services Group include allocations of certain expenses of ADP, including general corporate overhead, insurance, stock compensation and pension plans, royalty fees, facilities and other expenses. These allocations were based on a variety of factors.

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; or

    price per system delivered.

38


        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.

    Operating Expenses

        Our operating expenses 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; and costs related to computer software and hardware used in the delivery of our software and services.

    Selling, General and Administrative Expenses

        Our selling, general and administrative expenses include compensation and benefit costs for our sales, marketing, administration and corporate personnel; other costs related to our sales, marketing, administrative and corporate functions; costs related to our facilities; and professional and legal fees.

    Systems Development and Programming Costs

        Systems development and programming costs 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.

    Depreciation and Amortization

        Depreciation includes depreciation attributable to buildings, leasehold improvements, data processing and computer equipment, furniture and fixtures. Amortization includes amortization attributable to software purchases and software developed or obtained for internal use and our intangible assets, the majority of which were acquired in the Acquisition.

    Interest Expense

        Interest expense consists primarily of payments of interest on our credit facilities and amortization of related debt issuance costs.

    Other (Income) Expense, Net

        Other (income) expense, net consists of foreign exchange gains and losses on notes receivable and notes payable to affiliates as well as other miscellaneous income and expense.

    Minority Interests in Net Income of Consolidated Subsidiaries

        Several of our customers own minority interests in our local operating subsidiaries. Minority interests in net income of consolidated subsidiaries reflect such customers' proportionate interest in the earnings of such operating subsidiaries. In April 2004, we increased our ownership interest in a Spanish entity from 25% to 75%, which resulted in such entity being consolidated with our results of operations.

    Income Tax Provision (Benefit)

        We are currently a limited liability company and, therefore, are not subject to entity-level federal income taxation. However, we do incur income taxes on our operations as they are held by taxable entities both in the U.S. and abroad. Our taxes with respect to our holding company are payable by

39


our equity holders at rates applicable to them. Historical financial statements for our predecessor, which was a C corporation for federal tax purposes, are based upon corporate tax rates for the periods presented. Following our conversion to a C corporation in connection with this offering, transactions recorded by us will be subject to federal income taxation for which we do not expect a significant impact to our overall income tax liability. For the pro forma financial data included in this prospectus, income taxes have been provided based on a calculation of the estimated income tax expense that we would have incurred had we operated as a separate entity. Income taxes have been provided for all items included in the statements of income (loss) included herein, regardless of when such items were reported for tax purposes or when the taxes were actually paid or refunded.

        As part of the Acquisition, a portion of the purchase price has been allocated to intangible assets and goodwill. For most jurisdictions in which we operate, the amortization charges and impairment charges will not be deductible for income tax purposes. The net deferred tax liability as shown on our balance sheet is primarily the result of the difference between book and tax basis of the acquired intangible assets.

Factors Affecting Our Operating Results

        Overview.    The automobile insurance claims processing industry is influenced by growth and trends in the automobile insurance industry. Demand for our software and services is generally related to automobile usage and the penetration of automobile insurance in our markets. A large portion of our operating costs are fixed and we generate a large percentage of our revenues from periodic-and transaction-based fees related to software and ongoing claims processing services.

        Our operating results are and will be influenced by a variety of factors, including:

    gain and loss of customers;

    pricing pressures;

    expansions into new markets, which requires us to incur costs prior to generating revenues;

    expenses to develop new software or services;

    restructuring charges related to efficiency initiatives;

    the Acquisition in April 2006, including the debt we incurred; and

    our corporate reorganization and the refinancing transactions.

        Foreign currency.    During pro forma fiscal 2006, we generated approximately 66.0% of our revenues, and incurred most of our operating expenses, in currencies other than the U.S. dollar, primarily the Euro. We currently do not hedge our exposure to foreign currency risks. In our historical financial statements, we re-measure our local currency financial results in U.S. dollars based on average exchange rates prevailing during a reporting period or the exchange rate at the end of that period. These re-measurements resulted in foreign currency translation adjustments of $2.1 million in fiscal 2004, $10.9 million in fiscal 2005, $3.8 million in fiscal 2006 and $(0.4) million in the first quarter of fiscal 2007.

        In February 2006, we entered into a foreign exchange option for the benefit of existing unitholders. This option gives us the right to call $200.0 million in U.S. dollars at a strike price of €1.1646 per U.S. dollar at any time up to February 8, 2011. The fair value of this option was approximately $4.0 million as of June 30, 2006 and $3.4 million as of September 30, 2006, and was recorded in other assets in our consolidated balance sheet. Decreases in fair value of approximately $3.9 million, and $0.6 million were recognized in other expense in the statement of operations during pro forma fiscal 2006 and the three months ended September 30, 2006,

40



respectively. Prior to the completion of this offering, this option will be terminated and any payments received therefrom will be distributed to our existing common unitholders.

        Non-cash and restructuring charges.    On July 25, 2006, we granted the right to purchase Class A common units to certain employees. Under these and other arrangements, we issued an aggregate of 1,876,308 Class A common units to 20 of our employees for $0.2 million in January 2007. We expect to incur a pre-tax, non-cash charge of approximately $2.9 million in connection with these issuances, including approximately $0.3 million in fiscal 2007. We expect to incur an additional pre-tax, non-cash charge of approximately $17.3 million on the early extinguishment of debt with the proceeds of this offering. This relates primarily to the write-off of unamortized debt issuance costs and a prepayment premium on our second lien credit facility and our subordinated unsecured credit facility. We have incurred restructuring charges (or reversal) 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.

Results of Operations

        Due to the significant impact of the Acquisition on our business, the results of operations for fiscal 2006 included in this section include pro forma financial information giving effect to the Acquisition as if it occurred on July 1, 2005, and this discussion and analysis uses it in our comparison to fiscal 2005. We refer to our fiscal 2006 pro forma financial information giving effect to the Acquisition as "acquisition pro forma." This pro forma financial information differs in material respects from our fiscal 2006 historical financial statements, which are set forth elsewhere in this prospectus. Historical and pro forma results are not necessarily indicative of the operating results that may be expected in the future.

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

 
  Fiscal Year Ended
June 30,

   
   
 
 
  Three Months Ended September 30,
 
 
   
   
  2006
Acquisition
Pro Forma

 
 
  2004
  2005
  2005
  2006
 
Revenues   100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Operating expenses   29.8   28.5   30.2   29.7   29.3  
Selling, general and administrative expenses   26.2   27.3   26.0   23.9   27.7  
Systems development and programming costs   15.9   15.2   15.0   15.3   14.5  
Depreciation and amortization   8.0   8.3   28.4   8.4   22.6  
Restructuring charges   0.5   1.3   0.6   (0.2 ) 0.8  
Impairment charges   1.2          
Interest expense   0.1   0.1   16.6   0.1   16.0  
Other (income) expense, net   (0.4 ) (1.0 ) (0.3 ) (1.2 ) 3.9  
Income tax provision (benefit)   6.1   5.8   0.1   8.3   0.2  
Minority interests in net income of consolidated subsidiaries   0.3   0.5   1.0   1.0   1.0  
Earnings (loss) from continuing operations   12.3   14.0   (17.6 ) 14.7   (16.0 )

41


    Three Months Ended September 30, 2006 Compared to Predecessor Three Months Ended September 30, 2005

        The table below sets forth statement of operations data, including the amount and percentage changes for the periods indicated:

 
  Three Months Ended September 30,
   
   
 
 
  Change in
Dollars

  Percentage
Change

 
 
  2005
  2006
 
 
  (in thousands)

   
 
Revenues   $ 104,278   $ 111,482   $ 7,204   6.9 %
Operating expenses     30,979     32,710     1,731   5.6  
Selling, general and administrative expenses     24,930     30,890     5,960   23.9  
Systems development and programming costs     16,030     16,176     146   0.9  
Depreciation and amortization     8,842     25,176     16,334   184.7  
Restructuring charges     (256 )   895     1,151   (449.6 )
Interest expense     149     17,857     17,708   11,884.6  
Other (income) expense, net     (1,292 )   4,340     5,632   (435.9 )
Income tax provision     8,605     243     (8,362 ) (97.2 )
Minority interests in net income of consolidated subsidiaries     1,000     1,085     85   8.5  
   
 
           
Earnings (loss) from continuing operations   $ 15,291   $ (17,890 )   (33,181 ) (217.0 )
   
 
           

        Revenues.    Revenues increased due to higher revenues in our EMEA segment. Our EMEA revenues increased $7.0 million, or 12.0%, to $65.4 million due primarily to growth in transaction and subscription revenues in several countries from existing as well as several new customers, and a $0.5 million increase resulting from the completion of a small acquisition in the Netherlands. Our Americas revenues increased $0.2 million, or 0.5%, to $46.1 million due to growth in Canada, Brazil and Mexico, partially offset by the loss of several significant U.S. insurance customer contracts. Revenue growth for each of our customer categories was as follows:

Customer Category

  Revenue Growth
  Percentage
Change

 
 
  (in millions)

   
 
Insurance companies   $ 0.7   1.6 %
Collision repair facilities     3.9   11.5  
Independent assessors     1.8   20.0  
Automotive recyclers and other     0.8   4.5  
   
     
  Total   $ 7.2   6.9  
   
     

        Operating expenses.    Operating expenses increased primarily due to higher customer support, database development and implementation costs in our EMEA segment, partially offset by slightly lower operating costs in our Americas segment. The increased operating costs in our EMEA segment were primarily the result of additional full-time personnel hired to support continued growth in transactions and our customer base. The slightly lower operating costs in our Americas segment were primarily the result of fewer full-time customer service personnel in response to the loss of several insurance customer contracts. We continually evaluate our operating costs in order to identify inefficiencies and eliminate unnecessary costs. We anticipate that, although our operating expenses will continue to increase, they will decline as a percentage of revenues over the next several years.

42



        Selling, general and administrative expenses.    Selling, general and administrative expenses increased due to increased costs of executive and administrative personnel, and an increase in marketing, facilities, severance and transition costs. Selling, general and administrative costs also increased as a result of our expansion efforts into new markets, such as Eastern Europe, India and China. We expect these expenses to continue to increase as we incur additional costs associated with being a public company and as we continue to expand our business into new markets.

        Systems development and programming costs.    Systems development and programming costs increased $0.1 million due to increased costs in certain geographies, offset by a reduction in costs in the U.S. The increase of costs in certain geographies was related to the development of software updates and new releases. The reduction in systems development and programming costs in the U.S. was the result of reductions in the number of full-time systems development and programming personnel and lower external software consultant costs. Our systems development and programming costs fluctuate based upon the levels and timing of product releases. We expect our systems development and programming costs to remain relatively stable over the next several quarters.

        Depreciation and amortization.    Depreciation and amortization increased due to the significant intangibles amortization expense resulting from the Acquisition, partially offset by a slight decrease in depreciation expense due to the timing of asset purchases and the capitalization of expenses associated with the development of our internal use software. We expect to experience significant depreciation and amortization in the future as we amortize intangible assets purchased in the Acquisition.

        Restructuring charges.    Restructuring charges in the three months ended September 30, 2006 were incurred as a result of operational reviews conducted after the Acquisition. The prior period included a reversal of charges incurred in preceding periods as a result of actual restructuring costs incurred being lower than anticipated. We expect to incur additional restructuring charges, relating primarily to severance costs, over the next several quarters as we work to improve efficiencies in our business.

        Interest expense.    Interest expense increased primarily due to borrowings in connection with the Acquisition. We expect lower interest expense following this offering as a result of the refinancing transactions.

        Other (income) expense, net.    Other (income) expense, net increased in the three months ended September 30, 2006, primarily as a result of a $0.6 million write-down in the fair value of our foreign currency exchange option and $4.4 million expense related to the realized and unrealized losses related to two interest rate swaps.

        Income tax provision (benefit).    Income taxes were a provision of $0.2 million compared to a provision of $8.6 million in the prior period resulting in an effective tax rate of 1.5% on a net loss of approximately $16.6 million as compared to 35% for the prior period. The decrease in our effective rate is primarily due to losses of $13.3 million resulting from interest charges related to acquisition indebtedness occurring in jurisdictions for which we have not recorded a tax benefit due to uncertainty regarding the realizability of such losses. We expect to have a higher effective tax rate in future periods.

43



    Fiscal Year Ended June 30, 2006 (Acquisition Pro Forma) Compared to Predecessor Fiscal Year Ended June 30, 2005

        The table below sets forth statement of operations data and amount and percentage changes for the periods indicated:

 
  Fiscal Year Ended
June 30,

   
   
 
 
  2005
  2006
Acquisition
Pro Forma

  Change in
Dollars

  Percentage
Change

 
 
  (in thousands)

   
 
Revenues   $ 412,355   $ 430,230   $ 17,875   4.3 %
Operating expenses     117,361     129,834     12,473   10.6  
Selling, general and administrative expenses     112,480     111,812     (668 ) (0.6 )
Systems development and programming costs     62,690     64,357     1,667   2.7  
Depreciation and amortization     34,335     122,560     88,225   257.0  
Restructuring charges     5,512     2,403     (3,109 ) (56.4 )
Interest expense     334     71,388     71,054   21,273.7  
Other (income) expense, net     (4,065 )   (1,233 )   2,832   (69.7 )
Income tax provision     24,030     620     (23,410 ) (97.4 )
Minority interests in net income from consolidated subsidiaries     1,909     4,389     2,480   129.9  
   
 
           
Earnings (loss) from continuing operations   $ 57,769   $ (75,900 )   (133,669 ) (231.4 )
   
 
           

        Revenues.    Revenue growth in pro forma fiscal 2006 was due primarily to increased revenues in our EMEA segment. Our EMEA revenues grew $16.3 million, or 7.2%, to $243.3 million due to a $16.3 million increase in revenues resulting from the inclusion of a full twelve months of operations of our Spanish subsidiary, which we began consolidating in May 2005, and a $1.8 million increase due to the acquisition of two German entities in fiscal 2006. These increases were partially offset by reduced sales in several of our European countries resulting from prior price reductions offered to several customers. Our Americas revenues increased $1.5 million, or 0.8%, to $186.9 million due to growth in Canada, Brazil and Mexico, partially offset by the loss of several significant U.S. insurance company customer contracts.

        Operating expenses.    The increase in operating expenses was due primarily to increased costs of customer support, operations, and database development personnel. Approximately $5.0 million of this increase was a result of the inclusion of a full twelve months of operations of our Spanish subsidiary, which we began consolidating in May 2005.

        Selling, general and administrative expenses.    Selling, general and administrative expenses decreased due to reduced costs of executive, administrative and sales personnel, which resulted from a workforce reduction, partially offset by an increase of approximately $2.4 million due to the inclusion of a full twelve months of operations of our Spanish subsidiary.

        Systems development and programming costs.    Systems development and programming costs increased slightly due to increased systems development and programming personnel and external software consultant costs. Approximately $1.1 million of this increase related to inclusion of a full twelve months of operations of our Spanish subsidiary, with the remainder being related to the development of software version updates and new product releases in certain of our markets.

44



        Depreciation and amortization.    Depreciation and amortization increased significantly due to the amortization of intangibles associated with the Acquisition. The depreciation and amortization corresponded to the value allocated to our assets as a result of the Acquisition.

        Restructuring charges.    We recorded restructuring charges, which consisted primarily of one-time termination benefits, of approximately $2.4 million during pro forma fiscal 2006 as a result of restructuring initiatives related to operational reviews conducted after the Acquisition. These restructuring initiatives were designed to achieve efficiencies and reduce costs in response to changes in projected demand for certain of our services and include one-time termination benefits related to the termination of approximately 45 employees. We recorded restructuring charges, which primarily consisted of one-time termination benefits, of approximately $5.5 million during fiscal 2005 as a result of similar restructuring initiatives. These one-time termination benefits related to the termination of approximately 125 employees.

        Interest expense.    Interest expense increased significantly primarily resulting from borrowings under our credit facilities in connection with the Acquisition.

        Other (income) expense, net.    Other expense in pro forma fiscal 2006 included a $3.9 million write-down in the fair value of our foreign currency exchange option offset by a $1.1 million unrealized gain related to two interest rate swaps.

        Income tax provision (benefit).    Income taxes were a provision of $0.6 million in pro forma fiscal 2006 compared to $24.0 million in fiscal 2005 as a result of amortization expense and interest expense associated with the Acquisition. Pro forma fiscal 2006 reflects a pro forma tax rate of 0.8% and fiscal 2005 reflects an actual tax rate of 28.7%. The pro forma tax expense is primarily due to losses of $51.4 million resulting from interest charges related to Acquisition indebtedness occurring in jurisdictions for which we have not recorded a tax benefit due to uncertainty regarding the realizability of such losses.

    Predecessor Fiscal Year Ended June 30, 2005 Compared to Predecessor Fiscal Year Ended June 30, 2004

        The table below sets forth statement of operations data and amount and percentage changes for our predecessor for the periods indicated.

 
  Fiscal Year Ended
June 30,

   
   
 
 
  Change in
Dollars

  Percentage
Change

 
 
  2004
  2005
 
 
  (in thousands)

   
 
Revenues   $ 361,179   $ 412,355   $ 51,176   14.2 %
Operating expenses     107,590     117,361     9,771   9.1  
Selling, general and administrative expenses     94,757     112,480     17,723   18.7  
Systems development and programming costs     57,465     62,690     5,225   9.1  
Depreciation and amortization     28,754     34,335     5,581   19.4  
Restructuring charges     1,740     5,512     3,772   216.8  
Impairment charges     4,214         (4,214 ) N/A  
Interest expense     271     334     63   23.2  
Other (income) expense, net     (1,323 )   (4,065 )   (2,742 ) 207.3  
Income tax provision     22,124     24,030     1,906   8.6  
Minority interests in net income from consolidated subsidiaries     1,229     1,909     680   55.3  
   
 
           
Earnings from continuing operations   $ 44,358   $ 57,769     13,411   30.2  
   
 
           

45


        Revenues.    Revenues increased in fiscal 2005 due primarily to increased revenues in our EMEA segment. Our EMEA revenues increased $48.8 million, or 27.4%, to $227.0 million, approximately $26.5 million of which was due to the inclusion of a full year of operating results from our Netherlands operations, which we acquired in fiscal 2004, and approximately $3.6 million of which was due to the inclusion of two months of operating results from our Spanish operations, with the remaining increase due to increased revenues from a number of European countries. Our Americas revenues increased $2.4 million, or 1.3%, to $185.4 million due to growth in Canada, Brazil and Mexico, partially offset by the loss of several U.S. insurance company customers.

        Operating expenses.    Operating expenses increased primarily as a result of higher operating costs as a result of the inclusion of a full year of operating expenses from our Netherlands operations, the inclusion of two months of operating expenses from our Spanish operations. Approximately $9.6 million of this increase resulted from the inclusion of our Netherlands operations, and approximately $0.4 million resulted from the inclusion of our Spanish subsidiary's operations. The remainder of this increase resulted from increased operating expenses in a number of other geographies.

        Selling, general and administrative expenses.    Selling, general and administrative expenses increased due to greater costs of executive, administrative and sales personnel resulting in part from an approximately $8.2 million increase for the inclusion of a full year of selling, general and administrative expenses from our Netherlands operations, an approximately $1.0 million increase for the inclusion of two months of selling, general and administrative expenses from our Spanish operations and increased costs of executive, administrative and sales personnel in several other geographies.

        Systems development and programming costs.    Systems development and programming costs increased primarily due to increased costs resulting from an approximately $3.5 million increase for the inclusion of a full year of expenses from our Netherlands operations, the inclusion of two months of expenses from our Spanish operations and increased systems development and programming personnel and external software consultant costs in several other geographies.

        Depreciation and amortization.    Depreciation and amortization increased in fiscal 2005 due to the inclusion of twelve months of expense related to our Netherlands operations, compared to the six months following its acquisition in fiscal 2004.

        Restructuring charges.    Restructuring charges during these fiscal years primarily consisted of one-time termination benefits. These restructuring initiatives were designed to achieve optimal efficiencies and reduce costs in response to changes in demand projections for certain services. One-time termination benefits relate to the termination of approximately 125 employees in fiscal 2005 and 26 employees in fiscal 2004.

        Impairment charges.    During fiscal 2004, we decided to discontinue the use of software that was previously purchased, as we determined that its intended use would no longer be feasible. This change required an impairment analysis to be performed in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, or SFAS No. 144. Since we decided to dispose of the software, we determined that there was no future cash flows expected to be generated by the software. As a result, the carrying value of this intangible asset was reduced to zero.

        Interest expense.    We incurred an immaterial amount of interest expense in both fiscal 2004 and 2005. Interest expense was related to certain notes payable to affiliates.

46



        Other (income) expense, net.    Other (income) expense, net was ($4.1) million and ($1.3) million in fiscal 2005 and fiscal 2004, respectively, and was primarily the result of interest income earned on cash deposits and interest income from notes receivable from related parties.

        Income taxes provision (benefit).    Fiscal 2005 reflects a tax rate of 28.7% and fiscal 2004 reflects a tax rate of 32.7%.

Liquidity and Capital Resources

        Prior to the Acquisition, our predecessor's principal sources of liquidity were capital contributions from ADP and cash generated from operations. Since the Acquisition, our principal sources of cash have included cash generated from operations and bank borrowings. Our principal uses of cash have included debt service, capital expenditures and working capital. We expect that these will remain our principal uses of cash in the future; however, we may use additional cash to pursue additional acquisitions. We also expect our cash needs to service debt to decrease following this offering due to the application of proceeds from the refinancing transactions to repay debt.

        We believe that cash flow from operating activities, proceeds from this offering and borrowings under our amended and restated senior credit facility will be sufficient to fund currently anticipated working capital, planned capital spending and debt service requirements for the foreseeable future, including at least the next twelve months. We regularly review acquisition and other strategic opportunities, which may require additional debt or equity financing. We currently do not have any pending agreements or understandings with respect to any acquisition or other strategic opportunity.

    Cash and Cash Equivalents

        As of September 30, 2006, we had cash and cash equivalents of $89.8 million. We fund our operations, working capital and capital expenditures with our cash on hand and short-term borrowings under our credit facility. Our cash on hand and short-term borrowings vary significantly based on our cash flows as set forth below.

    Cash Flows

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

 
  Predecessor
   
   
 
 
  Solera Holdings, LLC
 
 
  Fiscal Year Ended
June 30,

   
 
 
   
  Fiscal Year
Ended
June 30,
2006

  Three Months
Ended
September 30,
2006

 
 
  Three Months Ended
September 30,
2005

 
 
  2004
  2005
 
 
  (in thousands)

 
Operating activities   $ 74,017   $ 106,840   $ 14,056   $ 45,356   $ 28,191  
Investing activities     (141,228 )   (62,975 )   (4,896 )   (936,471 )   (7,935 )
Financing activities     96,199     (33,369 )       977,954     (19,128 )

        Operating activities.    Cash provided by operating activities increased by $32.8 million in fiscal 2005 from fiscal 2004, due primarily to additional net earnings and a significant increase in net working capital due to the timing of payables and receivables. Cash provided by operations decreased in fiscal 2006 due primarily to the fact that our fiscal 2006 figure only incorporates the results of our predecessor for the period from April 14, 2006 through June 30, 2006, and our fiscal 2005 figure incorporates a full twelve months of operations.

47



        Investing activities.    Cash used in investing activities in fiscal 2004 included the $116.8 million acquisition of our Netherlands operations and the sale of a portion of our medical claims business for $5.4 million. In fiscal 2005, we acquired an additional 50% interest in an affiliate in Spain for approximately $31.5 million. Cash used in investing activities in fiscal 2006 included the $924.4 million net cash amount used to complete the Acquisition on April 13, 2006. In the first quarter of fiscal 2007, we acquired a small operating entity in the Netherlands for approximately $1.0 million, net of cash acquired.

        Capital expenditures were $16.0 million, $7.7 million and $4.1 million in fiscal 2004, fiscal 2005 and fiscal 2006, respectively, and were primarily for the purchase of computers, computer software, leasehold improvements and furniture and fixtures. Our predecessor's capital expenditures were $9.7 million during the period from July 1, 2005 through the date of the Acquisition. As of September 30, 2006, we had no material capital commitments. We expect to incur capital expenditures of approximately $25.0 million in fiscal 2007, consisting of $12.0 million for computers, computer software, leasehold improvements and furniture and fixtures, $9.0 million for a new data center in Ann Arbor, Michigan, $1.0 million for a new facility in San Diego, California and $3.0 million for the purchase of software licenses that were not transferred as part of the Acquisition.

        Financing activities.    Financing activities in fiscal 2004 and fiscal 2005 included amounts received from ADP, the parent of our predecessor. Financing activities in fiscal 2006 included the proceeds raised by us to finance the Acquisition on April 13, 2006. The aggregate purchase price for the Acquisition was approximately $1.0 billion, including costs attributable to the Acquisition. The Acquisition was financed through:

    borrowings under our senior secured credit facility of approximately $714.9 million;

    borrowings under our subordinated unsecured credit facility of approximately $95.2 million; and

    the sale of equity securities to investment funds managed by GTCR and other related investors and certain members of our senior management for approximately $208.0 million.

        We utilized cash in financing activities of $19.1 million in the three months ended September 30, 2006, primarily due to the payment of interest and principal on our long-term borrowings, compared to none in the prior period due to our predecessor not having outstanding debt. Other principal financing activities in fiscal 2007 will include the refinancing transactions.

    Senior Secured Credit Facilities and Subordinated Unsecured Credit Facility

        In connection with the Acquisition, we entered into our existing senior secured credit facility, which consists of first lien and second lien credit facilities. The first lien credit facility includes (1) a revolving credit facility, which permits U.S. dollar or Euro-based borrowings and issuances of letters of credit of up to $50.0 million in the aggregate; (2) a domestic term loan of $240.0 million; and (3) a European term loan of €220.0 million. As of September 30, 2006, we had $7.0 million outstanding under our revolving credit facility with an interest rate of 9.5%, a $239.4 million outstanding domestic term loan with an interest rate of 7.75% and a €219.5 million ($280.6 million) European term loan with an interest rate of 5.33%.

        The second lien credit facility includes a European term loan of €165.0 million. As of September 30, 2006, we had €165.0 million ($211.0 million) in outstanding loans under the second lien credit facility with an interest rate of 8.58%.

        Our senior secured credit facilities allows for voluntary prepayments under specified conditions and requires mandatory prepayments and commitment reductions upon the occurrence of certain

48



events, including among others, a sale of assets, receipt of insurance or condemnation proceeds, excess cash flow, and issuances of debt and equity securities. Our obligations under our senior secured credit facility are secured by substantially all of our assets, and our senior secured credit facility contain certain covenants including, among others, requirements related to financial reporting, maintenance of operations, compliance with applicable laws and regulations, maintenance of interest rate protection, compliance with specified financial covenants, as well as restrictions related to liens, investments, additional indebtedness, dispositions of assets or subsidiary interests, dividends, distributions, issuances of equity securities, transactions with affiliates, capital expenditures, and certain other changes in the business. Financial covenants include the requirement to maintain a minimum interest coverage ratio and limit maximum total leverage, senior leverage ratios, and levels of capital expenditures.

        In connection with the Acquisition, we also entered into a subordinated unsecured credit facility, consisting of a European term loan in a principal amount of €80.0 million. As of September 30, 2006, the outstanding balance on this loan was €84.6 million ($108.1 million), including accumulated interest of $6.0 million, at an interest rate of 12.13%, with a maturity date in October 2014.

        Our subordinated unsecured credit facility allows for voluntary prepayments under specified conditions and requires mandatory repayments upon the sale of assets or receipt of insurance or condemnation proceeds. It also contains certain covenants including, among others, requirements related to financial reporting, maintenance of operations, compliance with applicable laws and regulations, compliance with specified financial covenants, as well as restrictions related to liens, investments, additional indebtedness, dispositions of assets or subsidiary interests, dividends, distributions, issuances of equity securities, transactions with affiliates, capital expenditures, and certain other changes in the business. Financial covenants include the requirement to maintain a minimum interest coverage ratio and limit maximum total leverage, senior leverage ratios and levels of capital expenditures.

        We were in compliance with our financial and restrictive covenants under each of our credit facilities as of September 30, 2006.

    Amended and Restated Senior Credit Facility

        In connection with this offering, we will also enter into an amended and restated senior credit facility. The final terms of the amended and restated senior credit facilities are still being discussed with our lenders. However, based on discussions with our lenders, we believe the terms of the amended and restated senior credit facilities will be as described herein. We expect that our amended and restated senior credit facility will consist of a $              million revolving loan, a $          million term loan and a €              million ($            million) term loan. We anticipate that the entire principal amount of the revolving loan will be available immediately following the closing of the refinancing transactions. The amended and restated senior credit facility will contain various financial covenants, potentially including covenants with respect to leverage ratio, interest coverage ratio and fixed charge coverage ratio. In addition, the amended and restated senior credit facility will contain covenants restricting us from undertaking specified corporate actions, including asset dispositions, acquisitions, payment of dividends and other specified payments, changes of control, incurrence of indebtedness, creation of liens, making loans and investments and transactions with affiliates. For more information, see "Description of Principal Indebtedness."

        We anticipate using the net proceeds of this offering to repay a portion of the indebtedness outstanding under our existing first lien credit facility, and all indebtedness outstanding under our existing second lien and subordinated unsecured credit facilities, including the payment of related prepayment premia. Assuming the sale of       shares of our common stock, at an assumed public

49



offering price of $             per share, which is the midpoint of the range set forth on the cover of this prospectus, and the application of the net proceeds therefrom as described under "Use of Proceeds," our outstanding indebtedness would have been approximately $                    million as of September 30, 2006.

Contractual Obligations and Commercial Commitments

        The following table reflects our contractual obligations as of June 30, 2006 on an actual basis and, with respect to our long-term debt obligations, on a pro forma basis giving effect to the refinancing transactions:

 
  Payments Due by Period
 
  Total
  Less than 1 Year
  1-3 Years
  3-5 Years
  More than 5 Years
 
  (in thousands)

Long-term debt obligations(1):                              
  Actual   $ 1,334,178   $ 83,491   $ 145,641   $ 221,220   $ 883,827
  Pro forma                              
Software license and other obligations     16,388     8,772     7,514     102    
Operating lease obligations     33,814     8,945     11,432     8,778     4,659
   
 
 
 
 
Total:                              
  Actual   $ 1,384,380   $ 101,208   $ 164,587   $ 230,100   $ 888,486
  Pro forma                              

(1)
Represents principal maturities and includes the effects of interest and interest rate swaps.

Off-Balance Sheet Arrangements

        Our off-balance sheet arrangements comprise our operating leases. As of September 30, 2006, we had no outstanding letters of credit.

Inflation and Seasonality

        We believe inflation has not had a material effect on our financial condition or results of operations in recent years. Our business does not experience any material level of seasonality.

Critical Accounting Policies and Estimates

        The audited financial statements contained in this prospectus have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the amounts reported in those 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. Those estimates form the basis for our judgments that affect the amounts reported in the 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 the consolidated financial statements of Solera Holdings, LLC and the combined financial statements of Claims Services Group, each of which appear elsewhere in this prospectus.

        Goodwill and other intangible assets.    We account for goodwill and other intangible assets in accordance with SFAS No. 142, Goodwill and Other Intangible Assets, which states that goodwill and intangible assets with indefinite useful lives should not be amortized, but instead be tested for impairment at least annually at the reporting unit level. If an impairment exists, a write-down to fair

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value (normally measured by discounting estimated future cash flows) is recorded. Intangible assets with finite lives are amortized over their estimated useful lives based on expected revenues to be generated from the use of such assets and are reviewed for impairment in accordance with SFAS No. 144. As of September 30, 2006, we had goodwill of $543.9 million and intangible assets of $419.8 million.

        Revenue recognition.    A majority of our revenues are attributable to fees for providing services. Customers generally are billed on a per-transaction basis and/or on a monthly subscription basis. Revenues are recognized only after services are provided, when persuasive evidence of an arrangement exists, if the fee is fixed and determinable, and when collectibility is reasonably assured.

        Certain services are sold through a single contract with multiple elements, including database services, hardware, and maintenance. We account for revenues with multiple elements in accordance with Emerging Issues Task Force Issue No. 00-21, Revenue Arrangements with Multiple Elements, or EITF 00-21. EITF 00-21 provides guidance on (a) how arrangement consideration should be measured, (b) whether the arrangement should be divided into separate units of accounting and (c) how the arrangement consideration should be allocated among separate units of accounting.

        Certain services may require us to perform setup and implementation activities necessary for the customer to receive services under the service contract. Up-front fees billed during the setup phase are deferred and amortized on a straight-line basis over the estimated customer life. Setup costs that are direct and incremental to the contract are capitalized and amortized on a straight-line basis over the estimated customer life.

        Revenues are reflected net of customer sales allowances, which are estimated based on both our examination of a subset of customer accounts and on historical experience.

        Foreign currency translation.    The assets and liabilities of our foreign subsidiaries are translated into U.S. dollars based on exchange rates in effect at the end of each period, and revenues and expenses are translated at average exchange rates during the periods. Functional currencies of significant foreign subsidiaries include Euros, British pounds, Swiss francs, and Canadian dollars. Currency transaction gains or losses, which are included in the results of operations, totaled $3.8 million in fiscal 2006. Gains or losses from balance sheet translation are included in unitholders' equity within accumulated other comprehensive income on the consolidated balance sheets.

        Internal use software.    Expenditures for software purchases and software developed or obtained for internal use are capitalized and amortized over a three- to five-year period on a straight-line basis. For software developed or obtained for internal use, we capitalize costs in accordance with the provisions of Statement of Position No. 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use. Our policy provides for the capitalization of external direct costs of materials and services associated with developing or obtaining internal use computer software. In addition, we also capitalize certain payroll and payroll-related costs for employees who are directly associated with internal use computer software projects. The amount of capitalizable payroll costs with respect to these employees is limited to the time directly spent on such projects. Costs associated with preliminary project stage activities, training, maintenance, and all other post-implementation stage activities are expensed as incurred. We also expense internal costs related to minor upgrades and enhancements as it is impractical to separate these costs from normal maintenance activities.

        Income taxes.    The provisions for income taxes, income taxes payable and deferred income taxes are determined using the liability method. Deferred tax assets and liabilities are determined

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based on differences between the financial reporting and tax basis of assets and liabilities and are measured by applying enacted tax rates and laws to taxable years in which such differences are expected to reverse. A valuation allowance is provided when we determine that it is more likely than not that a portion of the deferred tax asset balance will not be realized.

Recent Accounting Pronouncements

        On December 16, 2004, the Financial Accounting Standards Board, or the FASB, issued SFAS No. 123(R), which eliminates the alternative of applying the intrinsic value measurement provisions of Accounting Principles Board Opinion No. 25 to stock-based compensation awards issued to employees. Rather, SFAS No. 123(R) requires enterprises to measure the cost of employee services received in exchange for an award of equity instruments generally based on the grant-date fair value of the award. That cost will be recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period). The effects of adopting SFAS No. 123(R) will be dependent on numerous factors including, but not limited to, the valuation model chosen by us to value stock-based awards, the assumed award forfeiture rate and the accounting policies adopted concerning the method of recognizing the fair value of awards over the requisite service period. SFAS No. 123(R) is effective for fiscal 2007. The new standard will be applied to new awards and to awards modified, repurchased, or cancelled after the date of adoption. We have not yet quantified the effects of adopting SFAS No. 123(R), but we expect that the new standard will result in significant stock-based compensation expense.

        In March 2005, the FASB issued FASB Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations, an Interpretation of SFAS No. 143, or FIN 47. FIN 47 requires an entity to recognize a liability for the fair value of a conditional asset retirement obligation in the period in which it is incurred if the liability's fair value can be reasonably estimated. FIN 47 clarifies that the term "conditional asset retirement obligation" as used in SFAS No. 143, Accounting for Conditional Asset Retirement Obligations, refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. FIN 47 is effective no later than the end of fiscal years ending after December 15, 2005. The adoption of FIN 47, as of June 30, 2006, did not have a material impact on our financial position, results of operations or cash flows.

        In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an Interpretation of FASB Statement No. 109, or FIN 48. FIN 48 defines a criterion that an individual tax position must meet for any part of the benefit of that position to be recognized in an enterprise's financial statements. FIN 48 also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 is effective for our fiscal year beginning on July 1, 2007. We are currently evaluating the impact of FIN 48 on our financial statements.

        In September 2006, FASB issued SFAS No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans—an Amendment of FASB Statements No. 87, 88, 106 and 132(R), or SFAS No. 158. This statement would require a company to (a) recognize in its statement of financial position an asset for a plan's overfunded status or a liability for a plan's underfunded status, (b) measure a plan's assets and its obligations that determine its funded status as of the end of the employer's fiscal year, and (c) recognize changes in the funded status of a defined postretirement plan in the year in which the changes occur (reported in comprehensive income). The requirement to recognize the funded status of a benefit plan and the disclosure requirements are effective as of the end of the fiscal year ending after December 15, 2006. We are currently assessing the impact of adoption. The requirement to measure the plan assets and benefit obligations as of the date of the employer's fiscal year-end statement of financial position is

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effective for fiscal years ending after December 15, 2008. We are currently evaluating the effect that the adoption of SFAS No. 158 will have, if any, on our consolidated results of operations and financial condition.

        In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, or SFAS No. 157. This statement clarifies the definition of fair value, establishes a framework for measuring fair value, and expands the disclosures on fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. We are currently evaluating the effect that the adoption of SFAS No. 157 will have, if any, on its consolidated results of operations and financial condition.

        In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108, or SAB 108. SAB 108 considers the effects of prior year misstatements when quantifying misstatements in current year financial statements. It is effective for fiscal years ending after November 15, 2006. We applied the guidance in SAB 108 as of July 1, 2006. The application of SAB 108 did not have a significant effect on our consolidated financial statements.

Quantitative and Qualitative Disclosures about Market Risk

    Interest Rate Risk

        We are exposed to market risk from fluctuations in interest rates. We manage our interest rate risk by balancing the amount of our fixed rate and variable rate debt and through the use of interest rate swaps. The objective of the swaps is to more effectively balance our borrowing costs and interest rate risk. For fixed rate debt, interest rate changes affect the fair market value of such debt but do not impact earnings or cash flows. For variable rate debt, interest rate changes generally do not affect the fair market value of such debt, but do impact future earnings and cash flows, assuming other factors are held constant. At September 30, 2006, we had approximately $846.1 million of variable rate debt. Holding other variables constant (such as foreign exchange rates and debt levels), a one percentage point change in interest rates would be expected to have an impact on pre-tax earnings and cash flows for the next year of approximately $8.5 million, before giving effect to the interest rate swap agreements described below. After giving effect to this offering and the application of the net proceeds therefrom, we would have had $        million of variable rate debt at September 30, 2006, and, holding other variables constant, a one percentage point change in interest rates would have been expected to have an impact on pre-tax earnings and cash flows for the next year of approximately $        million, before giving effect to the interest rate swap agreements described below. The interest rate swap agreements described below reduce our exposure to interest rate risk associated with our variable rate debt for the periods in which the swap agreements are in effect.

        Effective April 27, 2006, we entered into two interest rate swaps, both with maturities on July 13, 2011. The first has a notional amount of $195.0 million and requires us to pay, on a quarterly basis, a fixed rate of 5.35%. The second interest rate swap has a notional amount of €368.4 million ($477.4 million, as of January 31, 2007) and requires us to pay, on a quarterly basis, a fixed rate of 3.72%. At September 30, 2006, the estimated fair market value of the interest rate swaps was $2.5 million and is recorded in other assets in the consolidated balance sheet. We expect to terminate these interest rate swaps in connection with the execution of our amended and restated senior credit facility and will be required under the terms of such facility to enter into a new interest rate swap with respect to 50% of the borrowings under the outstanding term loans.

    Foreign Currency Risk

        We conduct operations in many countries around the world. Our results of operations are subject to both currency transaction risk and currency translation risk. We incur currency

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transaction risk when we enter into either a purchase or sale transaction using a currency other than our functional currency. With respect to currency translation risk, our financial condition and results of operations are measured and recorded in the relevant domestic currency and then translated into U.S. dollars for inclusion in our consolidated financial statements. Exchange rates between these currencies and U.S. dollars have fluctuated significantly over the last few years and may continue to do so in the future. A substantial portion of our revenues and costs are denominated in or effectively indexed to U.S. dollars, but the majority of our revenues and costs are denominated in Euros, British pounds, Swiss francs, Canadian dollars and other currencies. Historically, we have not undertaken hedging strategies to minimize the effect of currency fluctuations on our results of operations and financial condition; however, we may decide this is necessary in the future.

    Commodity Price Risk

        We are not subject to any material commodity price risk.

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BUSINESS

        We are the leading global provider of software and services to the automobile insurance claims processing industry. Our customers include insurance companies, collision repair facilities, independent assessors and automotive recyclers. We help our customers:

    estimate the costs to repair damaged vehicles;

    determine pre-collision fair market values for vehicles damaged beyond repair;

    automate steps of the claims process;

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

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

        As of December 31, 2006, we had over 2,100 full-time employees and served more than 55,000 customers in 45 countries. Our customers include more than 900 automobile insurance companies, 33,000 collision repair facilities, 7,000 independent assessors and 3,000 automotive recyclers. We derive revenues from many of the world's largest automobile insurance companies, including nine of the ten largest automobile insurance companies in Europe and each of the ten largest automobile insurance companies in North America.

        Our operations began in 1966, when Swiss Re Corporation founded our predecessor. Solera Holdings, LLC, an entity founded in 2005 by Tony Aquila, our Chief Executive Officer, and GTCR, a leading private equity firm, acquired our predecessor in April 2006.

The Automobile Insurance Claims Process

        An overview of the automobile insurance claims process and its complexities provides a framework for understanding how our customers can derive value from our software and services. The automobile insurance claims process generally begins following an automobile collision and consists of the following steps:



First Notice of Loss

 

•    The policyholder initiates the claim process with the insurance company.
•    The insurance company assigns the claim to an assessor and/or a collision repair facility.



Investigation

 

•    The assessor conducts interviews, examines photos and reviews police reports.
•    The insurance company, assessor or collision repair facility estimates the cost to repair the vehicle.
•    In the case of a heavily damaged vehicle, the assessor or collision repair facility may request a pre-accident vehicle valuation.


     

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Evaluation

 

•    The insurance company reviews the estimate and/or pre-accident valuation and confirms the results of the investigation.
•    The insurance company may request additional information and/or require follow-up investigation.



Decision

 

•    The insurance company determines whether the vehicle should be repaired or declared a total loss.
•    Based on its evaluation, the insurance company determines who is liable for the claim and the repair or total loss amount it intends to pay.



Settlement

 

•    The insurance company notifies the policyholder or the collision repair facility of the amount it intends to pay.
•    The policyholder or collision repair facility may negotiate the final payment amount with the insurance company.



Vehicle Repair

 

•    The collision repair facility repairs the vehicle if it is not a total loss.
•    The collision repair facility purchases replacement parts from OEMs, aftermarket parts makers or automotive recyclers.
•    Further revisions to the claim payment amount may occur if additional damage or cost savings are identified.



Payment

 

•    The insurance company pays the policyholder or the collision repair facility.



 

 

 

        Each of these steps consists of multiple actions requiring significant and complex interaction among several parties. For example, the investigation step generally involves insurance companies, assessors, collision repair facilities and automotive recyclers and includes conducting interviews, taking and examining photographs, obtaining and reviewing police reports and estimating repair costs. When performed manually, many of these tasks, such as the mailing of vehicle photographs or the estimating of vehicle repair costs, can be time-consuming. In addition, without an efficient means of communication that facilitates real-time access to data, claim-related negotiations can result in substantial delays and unnecessary costs.

The Automobile Insurance Claims Processing Industry

        The primary participants in the automobile insurance claims processing industry are automobile insurance companies, collision repair facilities, independent assessors and automotive recyclers. We believe that our business is affected by trends associated with each of the following:

    Automobile Insurance Industry

        We estimate that the global automobile insurance industry processes more than 100 million claims each year, representing over $150 billion in repair costs. We believe the industry is relatively concentrated with a number of large automobile insurance companies accounting for the majority

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of global automobile insurance premiums. In the U.S., of the approximately 470 companies offering automobile insurance, the twenty largest providers accounted for over 70% of all automobile insurance premiums in 2005, and in 2004, the top 15 European non-life insurance companies accounted for 84% of total non-life insurance premiums.

        We believe that this industry is growing due to an increasing number of vehicles on the road and an increasing percentage of vehicles that have insurance. According to industry sources, from 2003 to 2006, the worldwide number of personal and commercial vehicles grew an average of 3.5% per year, to an estimated 928 million vehicles in 2006. From 2006 to 2016, the number of worldwide personal and commercial vehicles is estimated to grow 2% to 3% per year, with forecasted annual growth of 8% in Asia-Pacific countries.

        In some insurance markets, such as North America and Western Europe, automobile insurance is generally government-mandated and automated claims processing is widespread. Automobile insurance companies achieve growth in these highly competitive markets by gaining additional market share, and generally compete on price and quality of policyholder service. To remain competitive, insurance companies increasingly seek additional automated claims processing products and services to minimize costs and improve policyholder service.

        In other markets, such as Eastern Europe, Latin America, China and India, automobile insurance companies are growing due primarily to an increase in the number of vehicles and emerging government regulations that require vehicles to be insured. Many automobile insurance companies in these markets process claims manually, presenting significant opportunities for them to increase their operational efficiencies.

        The cost of automated claims processing software and services generally represents a relatively small portion of automobile insurance companies claims costs. We believe automobile insurance companies will increase their spending on automated claims processing software and services because incremental investments can result in significant cost reductions.

    Collision Repair Industry

        The collision repair industry is highly fragmented. We estimate there are approximately 100,000 collision repair facilities in our markets. The operating costs of these facilities have increased substantially over the past decade due to continued increases in vehicle diagnostic and repair technologies and changes in environmental regulations. In addition, collision repair facilities have increasingly established preferred relationships with insurance companies. These arrangements, known in the U.S. as direct repair programs, allow collision repair facilities to generate increased repair volumes through insurance company referrals. Insurance companies benefit by establishing a trusted network of collision repair facilities across which they can implement standard procedures and best practices. Insurance companies often require collision repair facilities to use specified automated claims processing software and related services to participate in their programs. We believe the combination of these factors will increase demand for our software and services that help collision repair facilities manage their workflow and increase their efficiency.

    Independent Assessors

        Independent assessors are often used to estimate vehicle repair costs, particularly where automobile insurance companies have chosen not to employ their own assessors or do not have a sufficient number of employee assessors and where governments mandate the use of independent assessors.

        In some markets, we believe changing government regulations and improved claims technology will result in a decrease in the number of independent assessors. However, in other

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markets, insurance companies are reducing their employee assessor staff to contain costs, which we believe will lead to a growth in the number of independent assessors. We believe the combination of these offsetting factors will result in a modest overall increase in the number of independent assessors and, therefore, the demand for automobile insurance claims processing software and services.

    Automotive Recycling Industry

        The automotive recycling industry is highly fragmented with over $25 billion in estimated worldwide annual sales by over 15,000 independent salvage and recycling facilities. Participants in the automotive recycling industry are a valuable source of economical and often hard-to-find used vehicle replacement parts. In addition, this industry has become more sophisticated and technology-driven in order to keep pace with innovations in vehicle technology. Additionally, insurance companies are increasingly mandating the use of aftermarket and recycled parts to lower the costs to repair damaged vehicles. We believe these factors will result in increased demand for automobile insurance claims processing software and services, as automotive recyclers seek to manage their workflows, maximize the value of their inventories and increase efficiency.

Key Drivers of Automobile Insurance Claims Processing Demand

        We believe that the principal drivers of demand for our software and services are:

    Inefficiencies in the Automobile Insurance Claims Process

        Claims Process Fragmentation.    The automobile insurance claims process involves many parties and consists of many steps, which are often managed through paper, fax and other labor intensive processes. In a June 2004 poll conducted by Insurance Services Office, Inc. and its wholly owned subsidiary, ISO Claims Services, Inc., approximately 75% of U.S. insurance companies identified improving claims-handling processes as their most important goal. Key areas for improvement identified by the survey included lowering operating costs, reducing fraud and improving claims-handling efficiency. By simplifying and streamlining the claims process, insurance companies can process claims faster and reduce costs.

        Unequal Access to Information.    Collision repair facilities typically have more information about vehicles in their shops than do insurance companies who often must make their damage estimates remotely or with limited information. Through access to detailed information about vehicle damage and replacement costs, insurance companies can more accurately estimate fair settlement values and reduce overpayment on claims.

        Disparate Claims Data.    Claims-related data generated by automobile insurance companies often is not stored, shared with other parties or captured in a format that is easily transferable to other applications. This, combined with the inability to transfer and manipulate data easily across multiple applications, hinders comparisons of repairs and claims. Increased access to data from industry participants generates more accurate repair estimates and allows automobile insurance companies to identify top-performing collision repair facilities.

        Conflicting Interests of Industry Participants.    Collision repair facilities benefit from high repair costs, which increase their revenues. Conversely, insurance companies benefit from low repair costs, which reduce their expenses. This conflict can result in high settlement costs and delays. Repair cost estimates that rely on common data sources can reduce these costs and delays.

        Inefficient Collision Repair Facility Workflow.    Many collision repair facilities manage their complex workflows manually or without specialized software. Manual workflow management leads to increased processing time, higher costs and more errors, problems that generally intensify as a

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facility grows. With claims processing software and services, collision repair facilities can more effectively manage their workflows and obtain detailed part availability and pricing information.

    Growth in the Automobile Insurance Claims Industry

        Growth in the Number of Worldwide Vehicles.    According to industry sources, from 2003 to 2006, the number of personal and commercial vehicles in use has increased an average of 3.5% per year, driven primarily by a 4% per year increase in sales of new vehicles. Additional growth of 2% to 3% per year is expected through 2016. As the number of vehicles on the road continues to expand, we believe the need for automobile insurance claims processing products and services will continue to grow to handle increased claims activity.

        Adoption of Automated Claims Processing Software and Services.    Many markets have only recently begun to adopt automated claims processing software and services to reduce inefficiencies. We anticipate that increased adoption of automated claims processing software and services in these markets will be a key driver of our growth.

Our Software and Services

        Our software and services can be organized into five general categories: estimating and workflow software, salvage and recycling software, business intelligence and consulting services, shared services and other.

    Estimating and Workflow Software

        Our core offering is our estimating and workflow software. Our estimating and workflow software helps our customers manage the overall claims process, estimate the cost to repair a damaged vehicle, and calculate the pre-collision fair market value of a vehicle. Key functions of our estimating and workflow software include:

    capturing first notice of loss information;

    assigning, managing and monitoring claims and claim-related events;

    accessing and exchanging claims-related information;

    calculating, submitting, tracking and storing repair and total loss estimates;

    reviewing, assessing and reporting estimate variations based upon pre-set rules;

    routing shop estimates for manual review; and

    scheduling repairs.

    Salvage and Recycling Software

        Our salvage and recycling software helps automotive recyclers manage their inventories in order to facilitate the location, sale and exchange of vehicle parts for use in the repair of a damaged vehicle. Key functions of our salvage and recycling software include:

    managing inventory;

    connecting to collision repair facilities to facilitate the use of recycled parts in the repair of a damaged vehicle;

    locating rapidly vehicle parts by price, year, model and/or geographic area;

    determining the interchangeability of automobile parts across vehicle models;

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    exchanging vehicle parts with other recyclers;

    preparing invoices and managing accounts receivable; and

    generating management reports.

    Business Intelligence and Consulting Services

        Our business intelligence and consulting services help our insurance company customers monitor and assess their performance through customized data, reports and analyses. Key elements of our business intelligence and consulting services include:

    analyzing claims amounts and payments;

    creating customized statistical reports on claims data and activity;

    measuring our customers' performance against industry standards; and

    monitoring key performance indicators.

    Shared Services

        Our shared services help our insurance company customers outsource claims-related tasks. The key components of our shared services include:

    reviewing repair estimates prepared by collision repair facilities;

    reviewing decisions to repair or replace damaged parts;

    auditing and facilitating settlement of repair prices with collision repair facilities;

    reviewing medical and workers' compensation bills; and

    communicating with policyholders.

        In the U.S., we currently provide shared services primarily to one automobile insurance company customer and also to other types of insurance companies.

    Other

        We provide additional services and products to our customers, which include selling hardware for use with our software, training, and call center technical support services. We also offer services that allow our customers to access operational and technical support in times of high demand following natural disasters and software that helps detect fraudulent activity. We also provide software and services that are not directly related to the automobile insurance claims process.

Our Databases

        At the core of our software and services are our proprietary databases. Each of our databases has been adapted for use in our local markets. We have invested over $200 million in the last ten years to maintain and expand our proprietary databases. Our primary databases include our repair estimating database, our total loss database, our claims database and our parts salvage databases.

        Repair Estimating Database.    We have created our repair estimating database over 35 years through the development, collection, organization and management of automobile-related information. The data in this database enables our customers to estimate the cost to repair a damaged vehicle. This database:

    contains detailed cost data for each part and the required labor operations needed to complete repairs on over 3,100 vehicle types;

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    covers over 95% of the vehicle models in our core markets;

    includes vehicles data dating back to 1970;

    includes over 3.3 million parts for vehicles with multiple model years, editions, option packages and country-specific variations; and

    includes over one million aftermarket parts.

        We update this database with data provided to us by third parties, including OEMs and aftermarket part suppliers, along with data we develop through our proprietary analyses of local labor repair times and damage repair techniques. The quality and accuracy of the database, which are very important to each of our customers, are continuously monitored and maintained using rigorous quality control processes, which include validating up to 20 million data points every month.

        Total Loss Database.    Our total loss database helps our customers determine the pre-collision fair market values of vehicles that have been damaged beyond the point where repair is economically feasible, as well as the amounts they pay policyholders for total losses. Additionally, our employees use this database to provide total loss estimating service to our customers. This database has been designed to accurately reflect the local fair market value of a vehicle rather than simply delivering a market value based on national or regional averages. Each year, we collect more than 20 million vehicle purchase and sale records from over 11,000 automobile dealerships, which we have combined with local market purchase and sale data collected from over 3,500 different sources, including web sites, local newspapers, magazines and private listings. We update this database by incorporating nearly two million data points per week which include the latest vehicle purchase and sale information including specific models, option packages, vehicle condition and mileage.

        Claims Database.    Our claims database enables our customers to evaluate their internal claims process performance, as well as measure the performance of their business partners. Our employees also use this database to provide consulting services to our customers and develop new software and services. Customers use this database to benchmark their performance against their local peer group through detailed analyses of comprehensive industry data. Compiled over the past 15 years, this database contains approximately two billion data points representing over 100 million automobile repair claims and over $190 billion in claims payments. We update this database by incorporating approximately 150,000 additional repair estimates every week.

        Parts Salvage Databases.    Our parts salvage databases contain data on approximately 130 million automobile parts through a network of approximately 3,000 automotive recyclers. These databases are used by our customers to quickly find locally available automobile parts and identify interchangeable parts across different vehicles.

Our Global Operations

        We have operations in 45 countries on five continents. Prior to December 1, 2006, we were organized into three regional operating segments: EMEA, Americas and the Netherlands. Since that date, we have reorganized our operations into two regional operating segments (EMEA and Americas) by incorporating our operations in the Netherlands into our EMEA segment.

    EMEA

        Our EMEA operating segment accounted for 57% of our pro forma revenues during fiscal 2006. EMEA comprises our operations in 31 countries in Europe, the Middle East, Africa and Asia. Our EMEA segment includes Austria, Belarus, Belgium, China, Croatia, the Czech Republic, Estonia,

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France, Germany, Hungary, India, Latvia, Lithuania, the Netherlands, Poland, Portugal, Romania, Russia, Serbia-Montenegro, Slovakia, Slovenia, South Africa, Spain, Switzerland, Ukraine and the United Kingdom. In Denmark, Greece, Israel, Japan and Lebanon we have licensed our automobile insurance claims processing technology to independent providers.

    Americas

        Our Americas operating segment accounted for 43% of our pro forma revenues during fiscal 2006. Americas comprises our operations in 14 countries in North and South America. Our Americas segment includes Brazil, Canada, Colombia, Costa Rica, the Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, the U.S. and Venezuela.

Key Competitive Strengths

    Leading Global Provider

        We are the leading global provider of software and services to the automobile insurance claims processing industry. We have operations in 45 countries across five continents. In each of our markets, we believe we are either the largest or second-largest provider of automobile insurance claims processing software and services based on total revenues. The large number of geographic regions in which we operate provides us with a strategic advantage when expanding into new markets by enabling us to utilize our database and vehicle coverage already present in adjacent or nearby markets. As insurance companies continue to expand their businesses globally, our international leadership position should further position us as a single provider of automobile insurance claims processing software and services to our customers on a global basis.

    Significant Barriers to Entry

        We believe that our proprietary databases pose barriers to entry due to the significant capital investment and time that would be required to develop a similar set of integrated databases and customize them for use in local markets. Our proprietary databases have been built through 35 years of developing, collecting, organizing and managing automobile-related information and data. We have invested over $200 million in the last ten years in developing and maintaining our proprietary databases, and customizing them for use in local markets.

    Long-Standing Relationships with Customers

        We have long-standing relationships with many of the world's largest automobile insurance companies. For example, our relationships with our ten largest customers in Europe and North America date back, on average, 16 and 17 years, respectively. Our software and services are typically integrated into our customers' systems, operations and processes, often making it costly and time-consuming for our customers to switch to another provider. These long-standing relationships have also allowed us to better understand our customers' needs and further expand these relationships over time, both with additional software and by increasing our customer support and training services. Additionally, several of our customers own minority interests in five of our local operating subsidiaries. We have found these partnerships to be effective when entering new markets as they have allowed us to collaborate more closely with our insurance company customers and rely on their local expertise to introduce, customize and market our software and services quickly and efficiently.

    History of Developing New Software and Services

        Since our inception, we have consistently developed and marketed new software and services in order to meet the needs of our customers. We work closely with our customers in order to

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determine the features and functions that they may require in the future. We have developed and introduced new software and services to the market through both internal development as well as through the acquisition and licensing of products and technology owned by third parties. For example, we recently introduced an auditing tool that allows insurance companies to identify repair estimates that should be further reviewed. We believe our focus on software development and customization creates incremental revenue opportunities as we expand the number and sophistication of the software and services that we offer.

    Attractive Operating Model

        We believe we have an attractive operating model due to the recurring nature of our revenues, the scalability of our databases and software and the significant operating cash flow we generate.

        Contract-Based Revenues.    A substantial portion of our revenues is derived from customers who have been under contract with us for several years. For fiscal 2006, we generated over 95% of our pro forma revenues from subscription-based contracts (where we charge a monthly fee), transaction-based contracts (where we charge a fee per transaction), and subscription-based contracts with additional transaction-based fees (where we charge both a monthly fee and a fee per transaction), all of which generate recurring revenues from our customers.

        Scalable Databases and Software.    Our databases and software have been designed to accommodate significant additional transaction- and subscription-based volumes with limited incremental costs. The ability to generate additional revenues from increased subscription and transaction volumes without incurring substantial incremental costs provides us with opportunities to improve our operating margins.

        Significant Operating Cash Flow Generation.    We believe we are able to generate significant operating cash flows due to our operating margins and the relatively moderate working capital required to grow our business. The operating cash flow we generate may be used to repay debt, finance acquisitions, expand geographically or further invest in database and software innovation.

Business Strategy

    Broaden the Scope of our Software and Services

        We intend to further broaden the capabilities, features and functionality of our claims processing software, as well as the breadth of our service offerings. We believe that expanding the breadth of our offerings will allow us to retain and strengthen our relationships with our existing customers by helping them improve the efficiency of their claims process. We also intend to develop new software and services for our insurance company customers that can help them process claims in areas other than automobile insurance.

    Expand Customer Base in Existing Markets

        We seek to expand our customer base in existing markets by competing on the quality of our software and services, our industry expertise, and our strong industry relationships. In some markets, such as North America and Western Europe, we intend to seek new customers by competing favorably on both price and service, as well as by providing a complete suite of claims processing software and services that optimize each step of the claims process. In other markets, such as Eastern Europe, Latin America, China and India, we intend to use the combination of our local expertise with our global presence and comprehensive databases to serve new automobile insurance companies and other customers who can use our software and services to reduce claims-related costs and increase their operational efficiencies.

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    Expand into New Markets

        As a result of recent growth in vehicle usage, regulatory and market developments, increasing penetration of automobile insurance, and rising adoption of automated claims processing by insurance companies, we believe that new markets represent significant opportunities for future growth. We have a history of successfully entering markets that previously had not used automated claims processing software and services. We intend to use this expertise to further expand in markets where we have recently established operations, such as China and India, and enter markets where we currently have no operations.

    Improve Operational Efficiencies

        We seek to operate more efficiently, reduce costs and improve our operating margins. We intend to pursue substantial operating margin improvements over the next two years. Major elements of this plan include productivity and technological enhancements and reduction of overhead. We have identified and targeted several operational initiatives that we plan to implement over the next year, including the elimination of database and infrastructure redundancies productivity and technology enhancements and reduction of overhead. If implemented, we expect that these initiatives will improve our operating margins.

    Pursue Strategic Acquisitions

        We plan to supplement our organic growth by acquiring businesses or technologies that allow us to expand our range of services, increase our customer base and enter new markets. When evaluating these opportunities, we will consider characteristics such as recurring revenues, strong operating and financial performance, enhanced products and services, long-standing customer relationships and strong management personnel.

Sales and Marketing

        As of December 31, 2006, our sales and marketing staff included 230 full-time professionals. Our sales and marketing personnel identify and target specific sales opportunities and manage customer relationships. They also design and plan launch strategies for new software and services, and plan and facilitate customer conferences and tradeshows. Our country managers are also involved in the sales and marketing process, though they are not counted as full-time sales professionals.

Customer Support and Training

        We believe that providing high quality customer support and training services is critical to our success. As of December 31, 2006, we had 413 full-time customer support and training personnel, who provide telephone support, as well as on- and off-site implementation and training. Our customer support and training staff generally consists of individuals with expertise in both our software and services and in the automobile insurance and collision repair industries.

Software and Database Development

        We devote significant resources to the continued development of our software and databases. We have created sophisticated processes and tools to achieve high-quality software development and data accuracy. Our ability to maintain and grow our leading position in the automobile insurance claims processing industry is dependent upon our ability to enhance and broaden the scope of our software and services, as well as continuing to expand and improve our repair estimating, total loss, claims and parts salvage databases. We often collaborate with our customers in the development process to focus on addressing their specific needs. We then incorporate what

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we have learned from our customers' workflow experiences and needs to deliver quality, workflow-oriented software and services to the marketplace quickly. We believe these efforts provide a significant competitive advantage in the development of new software and services.

        As of December 31, 2006, our software development staff consisted of 422 full-time professionals across six international software development centers. As of the same date, our database staff consisted of 346 full-time professionals across five international database development centers.

Competition

        We compete primarily on the functionality of our software, the integrity and breadth of our data, customer service and price. The competitive dynamics of the global automobile insurance claims processing industry vary by region, and many of our competitors are present in only a limited number of markets in which we operate. In Europe, our largest competitors include DAT and EurotaxGlass's, with whom we compete in multiple countries, and BCA and L'argus, with whom we compete primarily in one country. In North America, our largest competitors include CCC in the U.S. and Mitchell in the U.S. and Canada.

Intellectual Property and Licenses

        We enter into license agreements with our customers, granting each customer a license to use our software and services while ensuring the protection of our ownership and the confidentiality of the embedded information and technology contained in our software. As a general practice, employees, contractors and other parties with access to our confidential information sign agreements that prohibit the unauthorized use or disclosure of our proprietary rights, information and technology.

        We own registered trademarks and service marks that we use in connection with our software and services, including their advertising and marketing. For example, our trademark Audatex is registered in over 50 countries. In the U.S. and Canada, we market our collision damage estimating and total loss valuation software under the registered trademarks Penpro, Shoplink and Autosource.

        We license much of the data used in our software and services through short-term contracts with third parties, including OEMs, aftermarket parts suppliers, data aggregators, automobile dealerships and vehicle repair facilities, to whom we pay royalties.

Employees

        As of December 31, 2006, we had 2,136 full-time employees, 1,057 of whom were based in our EMEA operating segment and 1,079 of whom were based in our Americas operating segment. None of our employees is subject to a collective bargaining agreement. We consider our relationships with our employees to be good.

Facilities

        Our corporate headquarters are located in San Ramon, California, where we lease approximately 107,000 square feet of space.

        Our principal leased EMEA facilities include Zurich, Switzerland and Zeist, the Netherlands. Our principal leased Americas facilities include San Diego, California, Ann Arbor, Michigan, Plymouth, Minnesota and Milwaukie, Oregon. We also lease a number of other facilities across the regions where we operate. We own real estate in Minden, Germany, Brussels, Belgium and Reading, United Kingdom.

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        We believe that our existing space is adequate for our current operations. We believe that suitable replacement and additional space will be available in the future on commercially reasonable terms.

Legal Proceedings

        As a normal incident of the business in which we are engaged, various claims, charges and litigation are asserted or commenced against us. 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. We have from time to time been the subject of allegations that our repair estimating and total loss software and services produced results that favored our insurance company customers. In addition, we are currently one of the defendants in a putative class action lawsuit 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 products to be unfairly low.

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MANAGEMENT

Directors and Executive Officers

        Set forth below are the name, age, position and a description of the business experience of each of our executive officers and directors as of the completion of this offering.

Name

  Age
  Position
Tony Aquila   42   President, Chief Executive Officer and Director
Jack Pearlstein   43   Chief Financial Officer, Secretary and Treasurer
John Schwinn   47   Senior Vice President
Michael D. Conway   38   Vice President
Philip A. Canfield   39   Director
Craig A. Bondy   33   Director
Garen Staglin   62   Director
Roxani Gillespie   65   Director

        Tony Aquila has served as our President and Chief Executive Officer and as a member of our board of managers since April 2005 and will be a member of our board of directors upon completion of our corporate reorganization. From September 2001 until December 2004, Mr. Aquila held various positions, including President and Chief Operating Officer, at Mitchell International Inc., a provider of software and services to the automobile insurance, collision repair, medical claim and glass replacement industries. Mr. Aquila joined Mitchell when it acquired Ensera, Inc., an automotive claims workflow and software processing company Mr. Aquila founded in 1999. Prior to Ensera, Mr. Aquila was the Chief Executive Officer and founder of MaxMeyer America, Inc., an importer and distributor of European automotive refinishing products formed in partnership with MaxMeyer-Duco S.p.A.

        Jack Pearlstein has served as our Chief Financial Officer since April 2006. From September 2001 to November 2004, Mr. Pearlstein served as the Chief Financial Officer, Treasurer and Secretary of DigitalNet Holdings, Inc., a leading provider of network, security, information and application services to U.S. defense and intelligence agencies. From September 2000 until July 2001, Mr. Pearlstein served as Chief Financial Officer of Commerce One, Inc.'s Global Services division, which he joined in September 2000 when Commerce One, Inc. acquired AppNet, Inc., a leading provider of Internet- and electronic commerce-based professional services and solutions. Mr. Pearlstein also serves as a director of Syniverse Technologies, Inc., a NYSE-listed enabler of wireless voice and data communications for telecommunications companies, which is controlled by GTCR. Mr. Pearlstein has a B.S. in Accounting from New York University and an M.B.A. in Finance from George Washington University.

        John Schwinn has served as our Senior Vice President since April 2005 and leads the consulting and business analytics services groups. From September 2001 until December 2004, Mr. Schwinn served as Vice President of Corporate Development of Mitchell International Inc., which he joined in September 2001 when Mitchell International Inc. acquired Ensera, Inc., an automotive claims workflow and software processing company. From September 2000 until September 2001, Mr. Schwinn was Ensera's Chief Operating Officer and from January 1994 until September 2000, Mr. Schwinn was Vice President of Business Development for ADP's Claims Services Group. Mr. Schwinn has a B.S. in Economics from the Wharton School at the University of Pennsylvania, an M.S. in Economics from the London School of Economics and an M.B.A. from Harvard Business School.

        Michael D. Conway has served as our Vice President since April 2005. From September 2000 to December 2004, Mr. Conway held various positions at Mitchell International Inc., including Senior Director of Sales Operations and Senior Director of Business Development. From 1998 to 2000,

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Mr. Conway held various positions with OnHealth Network Company, a publicly-traded Internet health company, including Chief Financial Officer, Vice President of Finance, Controller and Secretary. Mr. Conway has a B.A. in Economics and Accounting from Claremont McKenna College and an M.B.A. from Claremont Graduate School's Peter Drucker School of Management.

        Philip A. Canfield will be a member of our board of directors upon completion of our corporate reorganization and has served as a member of our board of managers since April 2005. Mr. Canfield has been a principal at GTCR Golder Rauner, L.L.C. since 1997. Mr. Canfield has a B.S. in Finance from the Honors Business Program at the University of Texas at Austin and an M.B.A. from the University of Chicago. Mr. Canfield also serves as a board member of several private GTCR portfolio companies.

        Craig A. Bondy will be a member of our board of directors upon completion of our corporate reorganization and has served as a member of our board of managers since April 2005. He is a principal of GTCR, which he joined in July 2000. He previously worked in the investment banking department of Credit Suisse First Boston. Mr. Bondy has a B.B.A. in Finance from the Honors Business Program at the University of Texas at Austin and an M.B.A. from the Stanford Graduate School of Business. Mr. Bondy serves on the board of directors of VeriFone Holdings, Inc. and several private GTCR portfolio companies.

        Garen Staglin will be a member of our board of directors upon completion of our corporate reorganization and has served as a member of our board of managers since April 2005. From 2001 to 2004, Mr. Staglin served as the President and Chief Executive Officer of eONE Global LP, an emerging payments company. From 1993 to 1999, Mr. Staglin served as Chairman and Chief Executive Officer of Safelite Glass Corporation, a manufacturer of replacement autoglass and related insurance services. Mr. Staglin also serves as a director of Global Document Solutions, Inc., a digital printing, imaging and customer relationship management outsourcing company. Mr. Staglin has a B.S. in engineering from UCLA and an M.B.A. from the Stanford Graduate School of Business.

        Roxani Gillespie will be a member of our board of directors upon completion of our corporate reorganization and has served as a member of our board of managers since April 2005. Ms. Gillespie is a partner in the law firm of Barger & Wolen LLP, where she has worked since 1997. From 1986 to 1991, Ms. Gillespie served as the Commisioner of Insurance for the State of California. Ms. Gillespie also serves on the board of directors of 21st Century Insurance Group.

Board Composition

        Our certificate of incorporation will provide that our board of directors shall consist of such number of directors as determined from time to time by resolution adopted by a majority of the total number of directors then in office. Initially, we expect that our board of directors will consist of six or seven members, one of whom will qualify as "independent" according to the rules and regulations of the SEC and NYSE. We expect to add another independent director within 90 days after the effectiveness of the registration statement of which this prospectus is a part and a third independent director within one year after the effective date of the registration statement. Any additional directorships resulting from an increase in the number of directors may only be filled by the directors then in office. The term of office for each director will be until his or her successor is elected and qualified or until his or her earlier death, resignation or removal. Stockholders will elect directors each year at our annual meeting.

        Following the consummation of this offering, we will be deemed to be a "controlled company" under the rules of the NYSE and we intend to rely upon the "controlled company" exception to the board of directors and committee independence requirements under the rules of the NYSE. Pursuant to this exception, we will be exempt from the rules that would otherwise require that our

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board of directors be comprised of a majority of independent directors and that our compensation committee and nominating and corporate governance committee be composed entirely of independent directors. The "controlled company" exception does not modify the independence requirements for the audit committee, and we intend to comply with the requirements of the Sarbanes-Oxley Act and the NYSE rules, which require that our audit committee be comprised exclusively of independent directors within one year of an initial public offering.

Board Committees

        Prior to the completion of this offering, our board of directors will establish an audit committee, a compensation committee and a nominating and corporate governance committee. Our board of directors will adopt a written charter for each of its committees prior to the completion of this offering, which will be available on our website. The composition, duties and responsibilities of these committees are set forth below. Committee members will hold office for a term of one year. In the future, our board may establish other committees, as it deems appropriate, to assist with its responsibilities.

        Audit Committee.    The audit committee will be responsible for (1) selecting the independent auditors, (2) approving the overall scope of the audit, (3) assisting the board in monitoring the integrity of our financial statements, the independent auditors' qualifications and independence, the performance of the independent auditors and our internal audit function and our compliance with legal and regulatory requirements, (4) annually reviewing an independent auditors' report describing the auditing firms' internal quality-control procedures and any material issues raised by the most recent internal quality-control review, or peer review, of the auditing firm, (5) discussing the annual audited financial and quarterly statements with management and the independent auditor, (6) discussing earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies from time to time, (7) discussing policies with respect to risk assessment and risk management, (8) meeting separately, periodically, with management, internal auditors and the independent auditor, (9) reviewing with the independent auditor any audit problems or difficulties and management's response, (10) setting clear hiring policies for employees or former employees of the independent auditors, (11) handling such other matters that are specifically delegated to the audit committee by the board of directors from time to time and (12) reporting regularly to the full board of directors.

        Our audit committee will consist of                          . Our board of managers has determined that                          will be an independent director according to the rules and regulations of the SEC and the NYSE, and             will qualify as an "audit committee financial expert" as such term is defined in Item 401(h) of Regulation S-K. We expect to add another independent director to our audit committee within 90 days of the effectiveness of the registration statement of which this prospectus is a part and a third independent director to our audit committee within one year after the effective date of the registration statement.

        Compensation Committee.    The compensation committee will be responsible for (1) reviewing key employee compensation policies, plans and programs, (2) reviewing and approving the compensation of our executive officers, (3) reviewing and approving employment contracts and other similar arrangements between us and our executive officers, (4) reviewing and consulting with our Chief Executive Officer on the selection of officers and evaluation of executive performance and other related matters, (5) administration of stock plans and other incentive compensation plans and (6) such other matters that are specifically delegated to the compensation committee by the board of directors from time to time. Upon completion of this offering, we expect our compensation committee to consist of             and             .

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        Nominating and Corporate Governance Committee.    Our nominating and corporate governance committee's purpose will be to assist our board by identifying individuals qualified to become members of our board of directors consistent with criteria set by our board and to develop our corporate governance principles. This committee's responsibilities will include: (1) evaluating the composition, size and governance of our board of directors and its committees and making recommendations regarding future planning and the appointment of directors to our committees, (2) establishing a policy for considering stockholder nominees for election to our board of directors, (3) evaluating and recommending candidates for election to our board of directors, (4) overseeing the performance and self-evaluation process of our board of directors and developing continuing education programs for our directors, (5) reviewing our corporate governance principles and providing recommendations to the board regarding possible changes and (6) reviewing and monitoring compliance with our code of ethics and our insider trading policy. Upon the completion of this offering, our nominating and corporate governance committee will consist of             and             .

Compensation Committee Interlocks and Insider Participation

        Upon formation of our compensation committee, no member of our compensation committee will be an officer or employee of us, nor will any member have been an officer or employee of us at any prior time. Upon formation, there will be no interlocking relationship between any of our executive officers and compensation committee, on the one hand, and the executive officers and compensation committee of any other companies, on the other hand.

Code of Ethics

        We plan to adopt a code of ethics that will apply to our principal executive, financial and accounting officers and all persons performing similar functions. We intend to satisfy the requirements under Item 5.05 of Form 8-K regarding disclosure of amendments to, or waivers from, provisions of our code of ethics that apply to our principal executive, financial and accounting officers by posting such information on our web site.

Director Compensation

        It is anticipated that upon the closing of this offering, directors who are also our employees or affiliated with GTCR will receive no compensation for serving as directors. Following this offering, non-employee directors will receive compensation that is commensurate with arrangements offered to directors of companies that are similar to ours. We also expect to reimburse all directors for reasonable out-of-pocket expenses they incur in connection with their service as directors. Our directors will also be eligible to receive stock options and other equity-based awards when, as and if determined by the compensation committee pursuant to the terms of our 2007 Long-Term Equity Incentive Plan.

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Executive Compensation

        The following table shows compensation information for our Chief Executive Officer and each of our other executive officers, measured by base salary and annual bonus, for fiscal 2006. We refer to these officers in the prospectus as our named executive officers.


Summary Compensation Table

 
  Annual Compensation
   
Name and Principal Position

  Salary
  Bonus
  Other Annual
Compensation

  All Other
Compensation

Tony Aquila
President and Chief Executive Officer
  $ 303,650   $ 119,837   $   $

Jack Pearlstein(1)
Chief Financial Officer, Secretary and Treasurer

 

 

53,077

 

 

82,192

 

 


 

 

87,910

John Schwinn
Senior Vice President

 

 

150,493

 

 

68,206

 

 


 

 


Michael D. Conway
Vice President

 

 

154,705

 

 

61,556

 

 


 

 


(1)
Mr. Pearlstein joined us in April 2006 and prior to that received $87,910 from us for consulting services provided in connection with the Acquisition.

Option Grants in Last Fiscal Year

        We granted no options to purchase units in Solera Holdings, LLC in fiscal 2006 to any of the named executive officers.

Option Exercises and Year End Values

        None of the named executive officers had options outstanding in fiscal 2006.

Employment Agreements

        On April 13, 2006, we entered into amended and restated senior management agreements with each of our named executive officers, other than Mr. Pearlstein, with whom we entered into an employment agreement. The terms of each of these agreements are set forth below.

        The current annual salary of each of our named executive officers under their respective agreements was as follows: Mr. Aquila, $450,000; Mr. Pearlstein, $300,000; Mr. Schwinn, $200,000; and Mr. Conway, $200,000. Mr. Aquila's salary will increase to $475,000 on July 1, 2007 and to $500,000 on July 1, 2008. Each of our named executive officers may receive an annual bonus, based upon the satisfaction of certain financial performance criteria determined by our board, up to the following percentage of base salary: Mr. Aquila, 87.5%, which increases to 100% beginning in fiscal 2008; Mr. Pearlstein, 75%; Mr. Schwinn, 40%; and Mr. Conway, 35%. We expect to amend Mr. Aquila's agreement to implement a retroactive increase of his annual salary to $500,000 effective January 1, 2007.

        If employment of any named executive officer is terminated by us without "cause" (as that term is defined in the applicable agreement) or is terminated by the executive for "good reason" (as that term is defined in the applicable agreement) during the employment term, then such officer will be entitled to continue to receive a percentage of his base salary (150% in the case of Messrs. Aquila

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and Pearlstein, 50% in the case of Mr. Schwinn and 42% in the case of Mr. Conway), 75% of his bonus for any prior year, in the case of Messrs. Aquila and Pearlstein, and employee benefits, in each case, for the following severance period after the date of such termination: Messrs. Aquila and Pearlstein, eighteen months, subject to an extension of either six or twelve months by us; Mr. Schwinn, six months; and Mr. Conway, five months. The senior management agreements and Mr. Pearlstein's employment agreement contain provisions requiring the executive to protect the confidentiality of our proprietary and confidential information. Each named executive officer has agreed not to solicit any of our employees or persons with whom we have certain business relationships for the duration of his respective severance period or, if no severance period is applicable, twenty-four months following his termination.

        Each amended and restated senior management agreement, and the securities purchase agreement entered into by us and Mr. Pearlstein, provided also for the purchase of our Class A Common and Class B Preferred Units (each as defined in the applicable agreement) as described further under "Certain Relationships and Related Party Transactions." These units will be converted into shares of our common stock prior to the completion of this offering.

2007 Long-Term Equity Incentive Plan

        General.    Prior to the completion of this offering, we intend to adopt the 2007 Long-Term Equity Incentive Plan, which will be effective immediately prior to the completion of this offering. The equity incentive plan is designed to enable us to attract, retain and motivate our directors, officers, employees and consultants and to further align their interests with those of our stockholders, by providing for or increasing their ownership interests in us.

        Administration.    The equity incentive plan will be administered by the compensation committee of our board of directors. Our board may, however, at any time resolve to administer the equity incentive plan. Subject to the specific provisions of the equity incentive plan, the compensation committee is authorized to select persons to participate in the equity incentive plan, determine the form and substance of grants made under the equity incentive plan to each participant and otherwise make all determinations for the administration of the equity incentive plan.

        Participation.    Individuals who will be eligible to participate in the equity incentive plan will be directors (including non-employee directors), officers (including non-employee officers) and employees of, and other individuals performing services for, or to whom an offer of employment has been extended by, us or our subsidiaries.

        Type of Awards.    The equity incentive plan will provide for the issuance of stock options, restricted stock, deferred stock, dividend equivalents, other stock-based awards and performance awards. Performance awards may be based on the achievement of certain business or personal criteria or goals, as determined by the compensation committee.

        Available Shares.    An aggregate of             shares of our common stock will initially be reserved for issuance under the equity incentive plan, subject to certain adjustments reflecting changes in our capitalization. If any grant under the equity incentive plan expires or terminates unexercised, becomes unexercisable or is forfeited as to any shares or is tendered or withheld as to any shares in payment of the exercise price of the grant or the taxes payable with respect to the exercise, then such unpurchased, forfeited, tendered or withheld shares will thereafter be available for further grants under the equity incentive plan. The equity incentive plan will provide that the compensation committee shall not grant, in any one calendar year, to any one participant awards to purchase or acquire a number of shares of common stock in excess of       % of the total number of shares authorized for issuance under the equity incentive plan.

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        Option Grants.    Options granted under the equity incentive plan may be either incentive stock options within the meaning of Section 422 of the Internal Revenue Code, or the Code, or non-qualified stock options, as the compensation committee may determine. The exercise price per share for each option will be established by the compensation committee, except that in the case of the grant of any incentive stock option, the exercise price may not be less than 100% of the fair market value of a share of common stock as of the date of grant of the option. In the case of the grant of any incentive stock option to an employee who, at the time of the grant, owns more than 10% of the total combined voting power of all of our classes of stock then outstanding, the exercise price may not be less than 110% of the fair market value of a share of common stock as of the date of grant of the option.

        Terms of Options.    The term during which each option may be exercised will be determined by the compensation committee, but if required by the Code and except as otherwise provided in the equity incentive plan, no option will be exercisable in whole or in part more than ten years from the date it is granted, and no incentive stock option granted to an employee who at the time of the grant owns more than 10% of the total combined voting power of all of our classes of stock will be exercisable more than five years from the date it is granted. All rights to purchase shares pursuant to an option will, unless sooner terminated, expire at the date designated by the compensation committee. The compensation committee will determine the date on which each option will become exercisable and may provide that an option will become exercisable in installments. The shares constituting each installment may be purchased in whole or in part at any time after such installment becomes exercisable, subject to such minimum exercise requirements as may be designated by the compensation committee. Prior to the exercise of an option and delivery of the shares represented thereby, the optionee will have no rights as a stockholder, including any dividend or voting rights, with respect to any shares covered by such outstanding option. If required by the Code, the aggregate fair market value, determined as of the grant date, of shares for which an incentive stock option is exercisable for the first time during any calendar year under all of our equity incentive plans may not exceed $100,000.

        Termination of Options.    Unless otherwise determined by the compensation committee, and subject to certain exemptions and conditions, if a participant ceases to be a director, officer or employee of, or to otherwise perform services for, us for any reason other than death, disability, retirement or termination for cause, all of the participant's options that were exercisable on the date of such cessation will remain exercisable for, and will otherwise terminate at the end of, a period of 30 days after the date of such cessation. In the case of death or disability, all of the participant's options that were exercisable on the date of such death or disability will remain so for a period of 180 days from the date of such death or disability. In the case of retirement, all of the participant's options that were exercisable on the date of retirement will remain exercisable for, and shall otherwise terminate at the end of, a period of 90 days after the date of retirement. In the case of a termination for cause, or if a participant does not become a director, officer or employee of, or does not begin performing other services for, us for any reason, all of the participant's options will expire and be forfeited immediately upon such cessation or non-commencement, whether or not then exercisable.

        Restricted Stock and Deferred Shares.    Restricted stock is a grant of shares of our common stock that may not be sold or disposed of, and that may be forfeited in the event of certain terminations of employment, prior to the end of a restricted period set by the compensation committee. A participant granted restricted stock generally has all of the rights of a stockholder, unless the compensation committee determines otherwise. An award of deferred shares confers upon a participant the right to receive shares of our common stock at the end of a deferral period set by the compensation committee, subject to possible forfeiture of the award in the event of certain terminations of employment prior to the end of the deferral period. Prior to settlement, an

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award of deferred shares carries no voting or dividend rights or other rights associated with share ownership, although dividend equivalents may be granted in connection with restricted stock or deferred shares.

        Dividend Equivalents.    Dividend equivalents confer the right to receive, currently or on a deferred basis, cash, shares of our common stock, other awards or other property equal in value to dividends paid on a specific number of shares of our common stock. Dividend equivalents may be granted alone or in connection with another award and may be paid currently or on a deferred basis. If deferred, dividend equivalents may be deemed to have been reinvested in additional shares of our common stock.

        Other Stock-Based Awards.    The compensation committee is authorized to grant other awards that are denominated or payable in, valued by reference to or otherwise based on or related to shares of our common stock, under the equity incentive plan. These awards may include convertible or exchangeable debt securities, other rights convertible or exchangeable into shares of common stock, purchase rights for shares of common stock, awards with value and payment contingent upon our performance as a company or any other factors designated by the compensation committee. The compensation committee will determine the terms and conditions of these awards.

        Performance Awards.    The compensation committee may subject a participant's right to exercise or receive a grant or settlement of an award and the timing of the grant or settlement, to performance conditions specified by the compensation committee. Performance awards may be granted under the equity incentive plan in a manner that results in their qualifying as performance-based compensation exempt from the limitation on tax deductibility under Section 162(m) of the Code for compensation in excess of $1,000,000 paid to our Chief Executive Officer and our four highest compensated officers. The compensation committee will determine performance award terms, including the required levels of performance with respect to particular business criteria, the corresponding amounts payable upon achievement of those levels of performance, termination and forfeiture provisions and the form of settlement. In granting performance awards, the compensation committee may establish unfunded award "pools," the amounts of which will be based upon the achievement of a performance goal or goals based on one or more business criteria. Business criteria may include, for example, total stockholder return, net income, pretax earnings, various measures of cash flow, earnings per share or return on investment.

        Amendment of Outstanding Awards and Amendment/Termination of Plan.    Our board of directors or the compensation committee generally will have the power and authority to amend or terminate the equity incentive plan at any time without approval from our stockholders. The compensation committee generally will have the authority to amend the terms of any outstanding award under the plan, including, without limitation, the ability to reduce the exercise price of any options or to accelerate the dates on which they become exercisable or vest, at any time without approval from our stockholders. No amendment will become effective without the prior approval of our stockholders if stockholder approval would be required by applicable law or regulations, including if required for continued compliance with the performance-based compensation exception of Section 162(m) of the Code, under provisions of Section 422 of the Code or by any listing requirement of the principal stock exchange on which our common stock is then listed. Unless previously terminated by the board or the committee, the equity incentive plan will terminate on the tenth anniversary of its adoption. No termination of the equity incentive plan will materially and adversely affect any of the rights or obligations of any person, without his or her written consent, under any grant of options or other incentives theretofore granted under the Equity Incentive Plan.

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2006 Employee Securities Purchase Plan

        The 2006 Employee Securities Purchase Plan provides for the sale of Class A Common Units to our employees and employees of our subsidiaries, as designated by our board of managers. The plan authorizes our board of managers to sell Class A Common Units to any eligible employee, in each case pursuant to purchase agreements with terms and conditions to be set by our board of managers in its discretion. As of January 31, 2007, we have sold 2,070,268 Class A Common Units under this plan. We intend to terminate this plan prior to the completion of this offering.

2007 Employee Stock Purchase Plan

        Prior to the closing of this offering, we intend to adopt the 2007 Employee Stock Purchase Plan. The purpose of the plan will be to provide an incentive for our employees (and employees of our subsidiaries designated by our board of directors) to purchase our common stock and acquire an equity interest in us. A committee designated by our board of directors will administer the plan, under which we expect to reserve for issuance             shares of our common stock.

Director and Officer Indemnification and Limitation on Liability

        Our certificate of incorporation will provide that, to the fullest extent permitted by the Delaware General Corporation Law, as amended, or DGCL, and except as otherwise provided in our by-laws, none of our directors shall be liable to us or our stockholders for monetary damages for a breach of fiduciary duty. In addition, our certificate of incorporation will provide for indemnification of any person who was or is made, or threatened to be made, a party to any action, suit or other proceeding, whether criminal, civil, administrative or investigative, because of his or her status as a director or officer of us or service, while a director or officer of us, as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise at our request to the fullest extent permitted by applicable law against all expenses, liabilities and losses reasonably incurred by such person. Further, our certificate of incorporation will provide that we may purchase and maintain insurance on our own behalf and on behalf of any other person who is or was a director, officer, employee or agent of us or was serving at our request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Indemnification and Employment Agreements

        As permitted by the DGCL, our certificate of incorporation will include provisions that authorize and require us to indemnify our officers and directors to the full extent permitted under Delaware law, subject to limited exceptions. We intend to enter into separate indemnification agreements with each of our directors and certain of our officers which may be broader than the specific indemnification provisions contained in Delaware law. We have also entered into employment agreements with our executive officers. See "Management."

Our April 2005 Formation and Funding

        We sold the following securities to our managers, named executive officers and principal securityholders in connection with our formation and initial funding. Class A Common Units were sold at $0.10 per unit, and Class B Preferred Units were sold at $1,000 per unit.

 
  Class A
Common Units

  Class B
Preferred Units

  Aggregate
Purchase Price

GTCR Fund VIII, L.P.   33,874,400   846.860   $ 4,234,300
GTCR Fund VIII/B, L.P.   5,944,800   148.620     743,100
GTCR Co-Invest II, L.P.   180,800   4.520     22,600
   
 
 
  Total—principal securityholders   40,000,000   1,000.000   $ 5,000,000

Tony Aquila

 

4,040,021

 

16.625

 

$

420,627
John Schwinn   799,537   1.771     81,725
Michael D. Conway   566,357   2.014     58,650
Garen Staglin   216,589   2.379     24,037
Roxani Gillespie   121,447       12,145
   
 
 
  Total—managers and named executive officers   5,743,951   22.789   $ 597,184

        The units sold to our managers and named executive officers were issued pursuant to senior management agreements or securities purchase agreements, which are described in greater detail below under the caption "—Agreements Related to our 2005 Formation and Funding and the Acquisition—Senior Management Agreements and Securities Purchase Agreements."

The Acquisition

        On April 13, 2006, certain of our subsidiaries acquired: (1) all of the outstanding common stock of ADP Claims Services Group, Inc., its then current subsidiaries and ADP Integrated Medical Solutions, Inc. from ADP, (2) all of the outstanding common stock of ADP Hollander, Inc. from ADP Atlantic Inc., (3) all of the outstanding capital shares of ADP Business Services Group B.V. and Audatex Holding GmbH from ADP Nederland B.V., (4) all of the outstanding capital shares of ADP Network Services Netherlands B.V. from ADP Nederland B.V. and ADP International B.V., and (5) assets related primarily to our business owned by ADP Canada Co. and ADP Private Limited. This acquisition was financed through borrowings of $810.0 million, including a $16.9 million revolving loan and $501.7 million and $291.4 million term loans, and proceeds of $4.6 million from the issuance of Class A Common Units and $203.2 million from the issuance of Class B Preferred Units.

        In connection with the Acquisition, on April 13, 2006, we sold the following securities to and repurchased the following securities from our managers, named executive officers and principal

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securityholders. Class A Common Units were sold at $0.10 per unit, and Class B Preferred Units were sold at $1,000 per unit.

 
  Class A Common
Units Sold
(Repurchased)

  Class B
Preferred Units

  Aggregate
Purchase Price

GTCR Fund VIII, L.P.   36,923,096   169,067.130   $ 172,759,440
GTCR Fund VIII/B, L.P.   6,479,832   29,670.497     30,318,480
GTCR Co-Invest II, L.P.   197,072   902.373     922,080
   
 
 
  Total—principal securityholders   43,600,000   199,640.000   $ 204,000,000

Tony Aquila

 

530,551

 

1,526.318

 

$

1,579,373
Jack Pearlstein   2,862,344   1,213.766     1,500,000
John Schwinn   (187,484 ) 187.023     168,275
Michael D. Conway   (112,576 ) 202.608     191,350
Garen Staglin   23,622   223.600     225,963
Roxani Gillespie   24,606       2,461
   
 
 
  Total—managers and named executive officers   3,141,063   3,353.315   $ 3,667,422

        The units sold to and/or purchased from our managers and named executive officers were issued and/or repurchased pursuant to amended and restated senior management agreements, a securities purchase agreement or amended and restated securities purchase agreements, which are described in greater detail below under the caption "—Agreements Related to our 2005 Formation and Funding and the Acquisition—Senior Management Agreements and Securities Purchase Agreements."

Agreements Related to Our 2005 Formation and Funding and the Acquisition

        Purchase Agreement.    As described above, we issued Class A Common Units and Class B Preferred Units to affiliates of GTCR in our April 2005 formation and funding pursuant to a purchase agreement and issued Class A Common Units and Class B Preferred Units to affiliates of GTCR in connection with the Acquisition pursuant to an amended and restated purchase agreement. The amended and restated purchase agreement imposes continuing requirements on us in favor of the unitholders who purchased units in connection with the Acquisition or in connection with our 2005 formation, as well as in favor of certain of their assignees.

        We must deliver periodic financial statements and other company information to affiliates of GTCR, as long as the affiliate holds any of our units, as well as to any person or entity that holds at least 15% of either the Class A Common or Class B Preferred Units originally purchased by GTCR.

        In addition, we are required to obtain the consent of the majority of the holders of the Class B Preferred Units that affiliates of GTCR purchased pursuant to these purchase agreements prior to taking certain material company actions, such as declaring a dividend, issuing any debt or equity securities, making any loan to any person, merging with or selling substantially all of our assets to any other person, purchasing any other business, entering into any business other than businesses in the insurance claims processing, analytics and outsourcing industry, entering into certain related party transactions, amending our certificate of formation or LLC agreement and incurring indebtedness exceeding certain amounts. We are not required to obtain the consent of any of our unitholders in connection with our corporate reorganization.

        Senior Management Agreements and Securities Purchase Agreements.    In connection with our April 2005 formation and funding, we entered into senior management agreements with each of Messrs. Aquila, Schwinn and Conway and securities purchase agreements with Mr. Staglin and

77



Ms. Gillespie, pursuant to which these individuals purchased Class A Common Units and Class B Preferred Units. In connection with the Acquisition, we entered into amended and restated senior management agreements with each of Messrs. Aquila, Schwinn and Conway and, in the case of Mr. Pearlstein, an employment agreement, which set forth the terms of employment for each of our named executive officers following the Acquisition, as described in greater detail under the caption "Management—Employment Agreements." Each of our named executive officers also purchased Class A Common Units and Class B Preferred Units pursuant to these agreements, or, in the case of Mr. Pearlstein, a securities purchase agreement, and the agreements set forth certain terms and restrictions on all units held by these executives. In connection with the Acquisition, we also entered into amended and restated securities purchase agreements with Mr. Staglin and Ms. Gillespie pursuant to which these managers purchased Class A Common and Class B Preferred Units, and these agreements set forth certain terms and restrictions on all units held by these managers.

        Of the Class A Common Units purchased by our named executive officers and/or managers, 20% vested in April 2006 and the remainder vest on a quarterly basis pro rata over: (i) in the case of an executive officer, the first four years of his employment and (ii) in the case of a manager, the first four years of his or her service as a manager of us. If the employment of any executive officer or the service of any manager/director is terminated, the following units will be subject to repurchase by us, or by affiliates of GTCR to the extent that we do not exercise our repurchase right: Mr. Aquila, 3,927,679 Class A Common Units; Mr. Pearlstein, 2,356,608 Class A Common Units; and Messrs. Schwinn, Conway and Staglin and Ms. Gillespie, all Class A Common and Class B Preferred Units. The repurchase price for each unvested Class A Common Unit will be the lesser of its original purchase price or its fair market value as of the date of termination. The repurchase price for each vested Class A Common Unit, and, with respect to Messrs. Schwinn, Conway and Staglin and Ms. Gillespie, for each Class B Preferred Unit, will be the fair market value of each unit on the individual's termination date, except if termination is for cause (as that term is defined in his or her agreement), the repurchase price will be the lesser of the original purchase price or the fair market value as of the termination date.

        The amended and restated senior management agreements, Mr. Pearlstein's securities purchase agreement and the amended and restated securities purchase agreements prohibit the transfer of units, other than:

    to us or affiliates of GTCR pursuant to the repurchase right described above;

    to family members, pursuant to laws of inheritance or to a guardian, in each case so long as the transferee agrees to be bound by the transfer restrictions; or

    pursuant to a sale of us, in connection with participation rights in sales by affiliates of GTCR or certain public sales executed by specified affiliates of GTCR.

The transfer restrictions survive with respect to each share of our common stock until the earliest of:

    the date on which such share is transferred in a public sale permitted by the agreement; and

    the consummation of a sale of the business.

        Securityholders Agreement.    In connection with the Acquisition, we entered into a securityholders agreement with affiliates of GTCR and certain of our named executive officers. Subject to specified conditions, the agreement requires the securityholders who are parties to it to consent to any sale of us to a non-affiliate of GTCR if the sale is approved by the holders of a majority of the units subject to the agreement. This provision generally applies to any set of transactions that results in the acquisition, by a person or group of related persons, of substantially all of our assets or of an amount of our units with sufficient voting power to elect a majority of our

78



managers. However, a public offering of our units (or the equity units of our successor) or a sale to GTCR affiliates is not subject to this provision.

        Professional Services Agreement.    In connection with our April 2005 initial formation and funding, Solera entered into a professional services agreement with GTCR, pursuant to which Solera engaged GTCR as a financial and management consultant. Under this agreement, GTCR agreed to consult with our board of managers and management regarding corporate strategy, budgeting of future corporate investments, acquisition and divestiture strategies and debt and equity financings. Solera agreed to pay GTCR an annual management fee of $250,000 and to reimburse GTCR for fees and expenses incurred by GTCR or its personnel in connection with the performance of their obligations under this agreement. Solera also agreed to pay GTCR a placement fee equal to 1% of the gross amount of any debt or equity financing of us or any of our subsidiaries and to indemnify GTCR and its personnel against losses arising from their performance under the agreement (except due to gross negligence or willful misconduct). During fiscal 2005 and fiscal 2006, Solera paid fees to GTCR under this agreement of approximately $0.5 million and $11.0 million, respectively. This agreement will be terminated prior to the completion of this offering, and no placement fee will be payable to GTCR in connection with this offering.

    Advisory Services Agreement

        We entered into a letter agreement in February 2006 with Garen Staglin, one of our managers, pursuant to which Mr. Staglin received an advisory and success fee of $3.8 million upon the closing of the Acquisition.

    Consulting Agreement

        We entered into a consulting agreement in September 2006 with Roxani Gillespie, one of our managers, pursuant to which Ms. Gillespie was employed to resolve certain employee relations issues for us in the Netherlands. Ms. Gillespie was paid a fee of $26,000 per month for a three-month period under the terms of this agreement.

    Registration Rights Agreement

        We entered into a registration rights agreement pursuant to which we have agreed, following a reorganization and/or recapitalization of us as a corporation, to register for sale under the Securities Act shares of our common stock in the circumstances described below. All persons who purchased our units or stock prior to this offering are parties to the registration rights agreement. This agreement will provide some holders of our common stock with the right to require us to register common stock owned by them and other stockholders who are parties to the agreement and provides stockholders who are parties to the agreement with the right to include common stock owned by them in a registration statement under most other circumstances. The following describes such rights and circumstances following our reorganization as a corporation.

        Demand Rights.    The holders of a majority of the shares of our common stock issued with respect to units purchased by affiliates of GTCR in connection with the Acquisition or our 2005 formation and funding have the right to require us to register their shares.

        We call the right to require us to register shares a demand right and the resulting registration a demand registration. Stockholders with demand rights may make an unlimited number of such demands for registration on Form S-1 or, if available to us, on Form S-3. Holders of piggyback rights, described below, may include shares they own in a demand registration.

        Piggyback Rights.    A larger group of stockholders can request to participate in, or "piggyback" on, registrations of any of our securities for sale by us or by a third party. We call this

79



right a piggyback right and the resulting registration a piggyback registration. The piggyback right applies to the following shares:

    the shares described above that have demand rights;

    shares of our common stock held by specified executive officers, as well as any other executive officer who, with the consent of an affiliate of GTCR, becomes a party to the registration rights agreement. As of December 31, 2006, all of our executive officers who owned our Class A Common or Class B Preferred Units (including all of our named executive officers) were parties to the registration rights agreement; and

    shares of our common stock held by any other person to whom we issue equity securities and whom we permit, with the consent of an affiliate of GTCR, to become a party to the registration rights agreement.

        The piggyback right applies to any registration other than:

    this offering;

    a demand registration; or

    a registration on Form S-4 or S-8.

        Conditions and Limitations; Expenses.    The registration rights outlined above are subject to conditions and limitations, including the right of the underwriters to limit the number of shares to be included in a registration and our right to delay or withdraw a registration statement under specified circumstances.

        We are not required to make a demand registration on Form S-1 within 90 days of either a prior demand registration on Form S-1 or a prior piggyback registration, unless those stockholders with piggyback rights were unable to register all the shares they wished to in the prior piggyback registration. In addition, holders of securities with registration rights may not make any public sale of our equity securities (including sales under Rule 144) during a period that begins seven days before the effectiveness of a registration statement and that ends, in the case of this offering, 180 days after this offering and, in any other underwritten offering in which registration rights were exercised, 180 days after effectiveness. In either case, the managing underwriters for the relevant offering may agree to shorten this period.

        The underwriters in any demand registration will be selected by the holders of a majority of the shares with demand rights that are included in the registration, and the underwriters in any piggyback registration that is underwritten will be selected by the holders of a majority of the shares that are included in the piggyback registration.

        Other than underwriting discounts and commissions and brokers' commissions, we will pay all registration expenses in connection with a registration, as well as reasonable (or otherwise limited) fees for legal counsel to the stockholders with registration rights.

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PRINCIPAL AND SELLING STOCKHOLDERS

        The following table sets forth, as of                          , 2007 and after giving effect to our corporate reorganization, the beneficial ownership of our common stock by:

    each person that is a beneficial owner of 5% of more of our outstanding shares of common stock;

    each of our named executive officers;

    each of our directors;

    all of the executive officers and directors as a group; and

    each selling stockholder.

        Beneficial ownership is determined under SEC rules and generally includes voting or investment power over securities. Except as disclosed in the footnotes to this table and subject to applicable community property laws, we believe that each stockholder identified in the table possesses sole voting and investment power over all shares of common stock shown as beneficially owned by the stockholder. Percentage of beneficial ownership is based on                          shares of common stock outstanding as of                          , 2007, after giving effect to our corporate reorganization. Common stock subject to options that are currently exercisable or exercisable within 60 days of             , 2007 are deemed to be outstanding and beneficially owned by the person holding such options. Such shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Unless otherwise indicated in the footnotes below, the address for each beneficial owner is c/o Solera Holdings, Inc., 6111 Bollinger Canyon Road, Suite 200, San Ramon, California 94583.

 
  Shares Beneficially
Owned Prior to the
Offering(1)

  Shares
Being
Sold in
the
Offering(1)

  Shares Beneficially Owned
After the Offering(1)

 
Name

 
  Number
  Percent
  Number
  Percent
 
Stockholders owning 5% or more:                      
  GTCR Funds(2)         %           %
  Tony Aquila                      

Directors and Executive Officers:

 

 

 

 

 

 

 

 

 

 

 
  Tony Aquila                      
  Jack Pearlstein                      
  John Schwinn                      
  Michael D. Conway                      
  Philip A. Canfield(2)                      
  Craig A. Bondy(2)                      
  Garen Staglin                      
  Roxani Gillespie                      
  All directors and executive officers as a group (eight persons)                      

*
Less than 1%

(1)
Assumes no exercise of the underwriters' option to purchase additional shares. The number of shares held by our principal and selling stockholders will depend on the initial public offering price of a share of our common stock and the date upon which this offering is completed. In connection with our corporate reorganization, which will occur prior to the completion of this

81


    offering, all of our outstanding common and preferred units will be converted into shares of common stock. Each common unit outstanding immediately prior to the reorganization will be converted into a number of shares of common stock equal to its pro rata portion of: (1) the value of our total unitholders' equity implied by the value of the shares to be sold in this offering minus the total liquidation value of our preferred units, divided by (2) the initial public offering price of a share of our common stock. Each preferred unit outstanding immediately prior to the reorganization will be converted into a number of shares of common stock equal to its liquidation value divided by the initial public offering price. Our preferred units have a liquidation value equal to their initial issuance price of $1,000, plus accrued yield at 8% per annum, compounded quarterly. As of September 30, 2006, the aggregate liquidation value of our outstanding preferred units was approximately $212.1 million.

(2)
Consists of                          shares of common stock held by GTCR Fund VIII, L.P.,                           shares of common stock held by GTCR Fund VIII/B L.P. and                          shares of common stock held by GTCR Co-Invest II, L.P. The shares beneficially owned directly by each of GTCR Fund VIII, L.P. and GTCR Fund VIII/B, L.P. are beneficially owned indirectly by GTCR Partners VIII, L.P., the General Partner of each; and by GTCR Golder Rauner II, L.L.C., its General Partner. The shares beneficially owned directly by GTCR Co-Invest II, L.P. are beneficially owned indirectly by GTCR Golder Rauner II, L.L.C., its General Partner. Messrs. Canfield and Bondy, members of our board of directors, are principals of GTCR Golder Rauner II, L.L.C. Messrs. Canfield and Bondy each disclaim the beneficial ownership of these shares, except to the extent of his proportionate pecuniary interest in such shares. The address of each of GTCR Fund VIII, L.P., GTCR Fund VIII/B, L.P., GTCR Co-Invest II, L.P. and Messrs. Canfield and Bondy is c/o GTCR Golder Rauner II, L.L.C., 6100 Sears Tower, Chicago, Illinois 60606.

        The following table sets forth certain information regarding our equity ownership as of December 31, 2006 and after giving effect to our conversion into a corporation, assuming the underwriters' option to purchase additional shares is exercised in full.

 
   
  Shares Beneficially Owned After the Offering
Name

  Shares Being Sold
in the Offering

  Number
  Percent
GTCR Funds            

        We have agreed to pay all of the expenses of the selling stockholders in this offering other than underwriting discounts and commissions. In the event the underwriters' option is not exercised in full, the number of shares to be sold by the selling stockholders named above will be reduced proportionally.

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DESCRIPTION OF CAPITAL STOCK

        The following descriptions are summaries of material terms of our certificate of incorporation and by-laws as each will be in effect upon the closing of this offering. They may not contain all of the information that is important to you. To understand them fully, you should read our certificate of incorporation and by-laws, copies of which are filed with the SEC as exhibits to the registration statement of which this prospectus is a part. The following descriptions are qualified in their entirety by reference to the certificate of incorporation and by-laws and to the applicable provisions of the DGCL.

        Upon the closing of this offering, our authorized capital stock will consist of             shares of common stock, par value $0.01 per share, and             shares of preferred stock, par value $0.01 per share. Upon the closing of this offering, we will have             shares of common stock issued and outstanding and no shares of preferred stock issued and outstanding. In addition,             shares of our common stock will be reserved for issuance under our 2007 Long-Term Equity Incentive Plan and our 2007 Employee Stock Purchase Plan.

Common Stock

        All of our existing common stock is, and the shares of common stock being offered by us in this offering will be, upon payment therefor, validly issued, fully paid and nonassessable. Set forth below is a brief discussion of the principal terms of our common stock.

        Dividend Rights.    Subject to preferences that may apply to shares of preferred stock outstanding at the time, holders of outstanding shares of common stock are entitled to receive dividends out of assets legally available at the times and in the amounts as the board of directors may from time to time determine. For more information, see "Dividend Policy."

        Voting Rights.    Each outstanding share of our common stock is entitled to one vote on all matters submitted to a vote of stockholders.

        Preemptive or Similar Rights.    Our common stock is not entitled to preemptive or other similar subscription rights to purchase any of our securities.

        Conversion Rights.    Our common stock is not convertible.

        Right to Receive Liquidation Distributions.    Upon our liquidation, dissolution or winding up, the holders of our common stock are entitled to receive pro rata our assets which are legally available for distribution, after payment of all debts and other liabilities and subject to the prior rights of any holders of preferred stock then outstanding.

        Listing.    We expect to apply to list our common stock on the NYSE under the trading symbol "SLH."

Preferred Stock

        Following this offering, our board of directors may, without further action by our stockholders, from time to time, direct the issuance of up to              shares of preferred stock in series and may, at the time of issuance, determine the rights, preferences and limitations of each series. Satisfaction of any dividend preferences of outstanding shares of preferred stock would reduce the amount of funds available for the payment of dividends on shares of common stock. Holders of shares of preferred stock may be entitled to receive a preference payment in the event of our liquidation, dissolution or winding-up before any payment is made to the holders of shares of common stock. Under specified circumstances, the issuance of shares of preferred stock may render more difficult or tend to discourage a merger, tender offer or proxy contest, the assumption of control by a holder

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of a large block of our securities or the removal of incumbent management. Upon the affirmative vote of a majority of the total number of directors then in office, our board of directors, without stockholder approval, may issue shares of preferred stock with voting and conversion rights which could adversely affect the holders of shares of common stock. Upon consummation of this offering, there will be no shares of preferred stock outstanding, and we have no present intention to issue any shares of preferred stock.

Options

        We intend to adopt the 2007 Long-Term Equity Incentive Plan in connection with this offering. In connection therewith, we plan to issue options to purchase an aggregate of             shares of common stock at an exercise price equal to the initial pubic offering price concurrently with the completion of this offering.

Antitakeover Effects of Delaware Law and Our Certificate of Incorporation and By-laws

        Provisions of the DGCL and our certificate of incorporation and by-laws could make it more difficult to acquire us by means of a tender offer, a proxy contest or otherwise or to remove incumbent officers and directors. These provisions, summarized below, are expected to discourage certain types of coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of us to first negotiate with us. We believe that the benefits of increased protection of our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging takeover or acquisition proposals because, among other things, negotiation of these proposals could result in an improvement of their terms.

        No Cumulative Voting.    The DGCL provides that stockholders are denied the right to cumulate votes in the election of directors unless our certificate of incorporation provides otherwise. Our certificate of incorporation will not provide for cumulative voting.

        Action by Written Consent; Special Meeting of Stockholders.    Our certificate of incorporation will provide that stockholder action can be taken only at an annual or special meeting of stockholders and cannot be taken by written consent in lieu of a meeting, provided that the existing stockholders shall be permitted to take action by written consent for so long as the existing stockholders continue to hold 50% or more of our outstanding voting stock. Our certificate of incorporation and by-laws will also provide that, except as provided by law, special meetings of our stockholders may be called only by a majority of our board of directors or by the chairman of our board of directors.

        Advance Notice Procedures.    Our by-laws will establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our board of directors. Stockholders at an annual meeting may only consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of our board of directors or by a stockholder who was a stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has given our Secretary timely written notice, in proper form, of the stockholder's intention to bring that business before the meeting.

        In the case of an annual meeting of stockholders, notice by a stockholder, in order to be timely, must be received at our principal executive offices not less than 90 days prior to the anniversary date of the immediately preceding annual meeting of stockholders. In the event that the annual meeting is called for a date that is not within 30 days before or 60 days after the anniversary date, in order to be timely, notice by a stockholder must be received not later than the later of 90 days

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prior to the annual meeting of stockholders or the tenth day following the date on which notice of the annual meeting was mailed or public disclosure of the date of the annual meeting was made.

        In the case of a special meeting of stockholders called for the purpose of electing our directors, notice by the stockholder, in order to be timely, must be received not later than the tenth day following the date on which notice of the date of the special meeting was mailed or public disclosure of the date of the special meeting was made.

        Although our by-laws will not give our board of directors the power to approve or disapprove stockholder nominations of candidates or proposals regarding other business to be conducted at a special or annual meeting, our by-laws may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed or may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect its own slate of directors or otherwise attempting to obtain control of us.

        Authorized but Unissued Shares.    Our authorized but unissued shares of common stock and preferred stock will be available for future issuance without your approval. We may use additional shares for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued shares of common stock and preferred stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.

        Supermajority Provisions.    The DGCL provides generally that the affirmative vote of a majority of the shares entitled to vote on any matter is required to amend a corporation's certificate of incorporation or by-laws, unless either a corporation's certificate of incorporation or by-laws require a greater percentage. Our certificate of incorporation and by-laws will provide that the affirmative vote of holders of at least 662/3% of the total votes eligible to be cast in the election of our directors will be required to remove directors from office or to amend, alter, change or repeal our by-laws and specified charter provisions, and the affirmative vote of holders of at least 80% of our common stock will be required to amend, alter, change or repeal provisions of our certificate of incorporation related to corporate opportunities and transactions with GTCR or its affiliates. This requirement of a super-majority vote to approve amendments to our certificate of incorporation and by-laws could enable a minority of our stockholders to exercise veto power over any such amendments.

Corporate Opportunities and Transactions with GTCR

        In recognition that directors, officers, stockholders, members, managers and/or employees of GTCR and its affiliates and investment funds (each, a "GTCR Entity" and, collectively, the "GTCR Entities") may serve as our directors and/or officers and that the GTCR Entities may engage in similar activities or lines of business that we do, our certificate of incorporation will provide for the allocation of certain corporate opportunities between us and the GTCR Entities. Specifically, none of the GTCR Entities or any director, officer, stockholder, member, manager or employee of a GTCR Entity has any duty to refrain from engaging directly or indirectly in the same or similar business activities or lines of business that we do. In the event that any GTCR Entity acquires knowledge of a potential transaction or matter which may be a corporate opportunity for itself and us, we will not have any expectancy in such corporate opportunity, and the GTCR Entity will not have any duty to communicate or offer such corporate opportunity to us and may pursue or acquire such corporate opportunity for itself or direct such opportunity to another person. In addition, if a director or officer of us who is also a director, officer, member, manager or employee of any GTCR Entity acquires knowledge of a potential transaction or matter which may be a corporate opportunity for us and a GTCR Entity, we will not have any expectancy in such corporate opportunity unless such corporate opportunity is expressly offered to such person solely in his or her capacity as a director or officer of us.

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        In recognition that we may engage in material business transactions with the GTCR Entities from which we are expected to benefit, our certificate of incorporation will provide that any of our directors or officers who are also directors, officers, stockholders, members, managers and/or employees of any GTCR Entity will have fully satisfied and fulfilled his or her fiduciary duty to us and our stockholders with respect to such transaction, if:

    the transaction was approved, after being made aware of the material facts of the relationship between us and the GTCR Entity and the material terms and facts of the transaction, by (1) an affirmative vote of a majority of the members of our board of directors who do not have a material financial interest in the transaction ("Disinterested Persons") or (2) an affirmative vote of a majority of the members of a committee of our board of directors consisting of members who are Disinterested Persons; or

    the transaction was fair to us at the time we entered into the transaction; or

    the transaction was approved by an affirmative vote of the holders of a majority of shares of our common stock entitled to vote, excluding the GTCR Entities and any holder who has a material financial interest in the transaction.

        By becoming a stockholder of ours, you will be deemed to have received notice of and consented to these provisions of our certificate of incorporation. Any amendment to the foregoing provisions of our certificate of incorporation will require the affirmative vote of at least 80% of the voting power of all shares of our common stock then outstanding.

Transfer Agent and Registrar

        The transfer agent and registrar for our common stock is                          .

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DESCRIPTION OF PRINCIPAL INDEBTEDNESS

Amended and Restated Senior Credit Facility

        General.    In connection with the refinancing transactions, we will enter into an amended and restated senior credit facility with Goldman Sachs Credit Partners L.P., as lead arranger, syndication agent, joint bookrunner, administrative agent and collateral agent, Citigroup Global Markets Inc., as joint bookrunner, and Citicorp USA, Inc., as documentation agent, and a syndicate of banks, financial institutions and other institutional lenders. Set forth below is a summary of the expected material terms of the amended and restated senior credit facility. As the final terms of the amended and restated senior credit facility have not been agreed upon, the joint bookrunners and the final terms may differ from those set forth herein and any such differences may be significant. In addition, in connection with the syndication of the amended and restated senior credit facility, the pricing and structure of the amended and restated senior credit facility may be changed by the administrative agent, in consultation with us, subject to certain limitations.

        Borrowings under the amended and restated senior credit facility will be denominated in both U.S. dollars and Euros. Borrowings denominated in U.S. dollars will be made by Audatex North America, Inc. (the "U.S. borrower") and borrowings denominated in Euros will be made by Business Services Group Holdings B.V. and Audatex Holdings IV, B.V. (each, a "European borrower"). The amended and restated senior credit facility will provide for:

    a revolving credit facility that permits U.S. dollar or Euro-denominated borrowings of up to $          million in revolving credit loans and letters of credit,

    a U.S. dollar-denominated term loan in an aggregate amount of $           million, and

    a Euro-denominated term loan in an aggregate amount of €             million (or $          million).

        We intend to use the net proceeds from this offering to repay a portion of the indebtedness outstanding under our first lien credit facility and to repay in full the indebtedness outstanding under our second lien and subordinated unsecured credit facilities. See "Use of Proceeds." We expect that the full amount of the term loans will be outstanding upon the completion of the refinancing transactions. We do not expect to have any outstanding borrowings under the revolving credit facility immediately after the completion of the refinancing transactions.

        Availability.    Loans under the term loans will be available on the closing date of the refinancing transactions and not thereafter. Amounts borrowed under the term loans that are repaid or prepaid may not be reborrowed. Loans under the revolving credit facility may be used for general corporate purposes, including working capital. Amounts repaid under the revolving credit facility may be reborrowed.

        Interest Rates.    Borrowings denominated in U.S. dollars will bear interest at                          . Borrowings denominated in Euros will bear interest at         %.

        Amortization and Maturity.    The term loans will mature on the date that is seven years after the closing date, and will amortize in an aggregate principal amount equal to 1% per annum commencing                          , with the balance payable on the maturity date. The amended and restated senior credit facility will require that the terms loans be prepaid with the net proceeds from certain events, including specified asset and equity sales, insurance proceeds, incurrence of indebtedness and excess cash flow. The revolving credit facility will mature and the commitments thereunder will terminate on the date that is six years after the closing date.

        Guarantees.    All obligations of the U.S. borrower under the amended and restated senior credit facility will be unconditionally guaranteed by each of its existing and subsequently acquired or organized domestic subsidaries and all of the obligations of the European borrower under the

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amended and restated senior credit facility will be unconditionally guaranteed by each of its each existing and subsequently acquired or organized subsidiaries (collectively, the "Subsidiary Guarantors").

        Security.    The obligations of (a) the U.S. borrower under the amended and restated senior credit facility and the domestic Subsidiary Guarantors will be secured by substantially all the assets of the borrowers and each Subsidiary Guarantor, whether owned on the closing date or thereafter acquired (the "U.S. Collateral"), including but not limited to: (i) a perfected first priority pledge of all the equity interests in the U.S. borrower, (ii) a perfected first priority pledge of all the equity interests held by the borrowers, us or any domestic Subsidiary Guarantor (which pledge, in the case of any foreign subsidiary, shall be limited to 100% of the non-voting equity interests (if any) and 65% of the voting equity interests in such foreign subsidiary to the extent the pledge of any greater percentage could reasonably be expected to result in adverse tax consequences to us) and (iii) perfected first priority security interests in, and mortgages on, substantially all tangible and intangible assets of the U.S. borrower and each domestic Subsidiary Guarantor (including but not limited to accounts receivable, inventory, equipment, general intangibles, investment property, intellectual property, real property, cash, deposit and securities accounts, commercial tort claims, letter of credit rights, intercompany notes and proceeds of the foregoing) and (b) each European borrower under the amended and restated senior credit facility and the non-U.S. Subsidiary Guarantors will be secured by substantially all the assets of the borrowers and each Subsidiary Guarantor, whether owned on the closing date or thereafter acquired (the "European Collateral"), including but not limited to: (i) a perfected first priority pledge of all the equity interests in the borrowers, (ii) a perfected first priority pledge of all the equity interests held by the borrowers, the Company or any Subsidiary Guarantor and (iii) perfected first priority security interests in, and mortgages on, substantially all tangible and intangible assets of the borrowers and each Subsidiary Guarantor (including but not limited to accounts receivable, inventory, equipment, general intangibles, investment property, intellectual property, real property, cash, deposit and securities accounts, commercial tort claims, letter of credit rights, intercompany notes and proceeds of the foregoing).

        Representations and Warranties.    The amended and restated senior credit facility will contain customary representation and warranties, including, without limitation, with respect to corporate status; legal, valid and binding documentation; no consents; accuracy of financial statements, confidential information memorandum and other information; no material adverse change with respect to each funding under the revolving credit facility; absence of undisclosed liabilities, litigation and investigations; no violation of agreements or instruments; compliance with laws, payment of taxes; ownership of properties; inapplicability of the Investment Company Act; solvency; effectiveness of governmental approvals; labor matters; environmental and other regulatory matters; and validity, priority and perfection of security interests in the Collateral.

        Affirmative Covenants.    The amended and restated senior credit facility will contain customary affirmative covenants, including, without limitation, with respect to maintenance of corporate existence and rights; performance of obligations; delivery of consolidated financial statements and other information, including information required under the PATRIOT Act; delivery of notices of default, litigation, ERISA events and material adverse change; maintenance of properties in good working order; maintenance of satisfactory insurance; compliance with laws; inspection of books and properties; hedging arrangements satisfactory to the administrative agent; further assurances; and payment of taxes.

        Negative Covenants.    The amended and restated senior credit facility will contains customary negative covenants, including, without limitation, limitations on dividends on, and redemptions and repurchases of, equity interests and other restricted payments; limitations on prepayments, redemptions and repurchases of debt; limitations on liens and sale leaseback transactions;

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limitations on loans and investments; limitations on debt, guarantees and hedging arrangements; limitations on mergers, acquisitions and asset sales; limitations on transactions with affiliates; limitations on changes in business conducted by us and our subsidiaries; limitations on restrictions on ability of subsidiaries to pay dividends or make distributions; limitations on amendments of debt and other material agreements; and limitations on capital expenditures, in each case, subject to certain exceptions.

        Financial Covenants.    The amended and restated senior credit facility will contain the following financial covenants: (a) maximum ratios of consolidated total debt to consolidated EBITDA; (b) maximum ratios of first lien debt to consolidated EBITDA; and (c) minimum interest coverage ratios.

        Events of Default.    The amended and restated senior credit facility will contain customary events of default (with customary grace periods), including, without limitation, with respect to nonpayment of principal, interest or other amounts; violation of covenants; incorrectness of representations and warranties in any material respect; cross default and cross acceleration; bankruptcy; material judgments; ERISA events; actual or asserted invalidity of guarantees, security documents or the intercreditor agreement; and the occurrence of a change of control (as defined in the amended and restated senior credit facility).

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SHARES ELIGIBLE FOR FUTURE SALE

        Prior to this offering, there has been no public market for our common stock. Future sales of substantial amounts of our common stock in the public market, or the perception that such sales may occur, could adversely affect the prevailing market price of our common stock. No prediction can be made as to the effect, if any, future sales of shares, or the availability of shares for future sales, will have on the market price of our common stock prevailing from time to time. The sale of substantial amounts of our common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of our common stock.

Sale of Restricted Shares

        Upon completion of this offering, we will have             shares of common stock outstanding. Of these shares of common stock, the             shares of common stock being sold in this offering, plus any shares issued upon exercise of the underwriters' option to purchase additional shares, will be freely tradable without restriction under the Securities Act, except for any such shares which may be held or acquired by an "affiliate" of ours, as that term is defined in Rule 144 promulgated under the Securities Act, which shares will be subject to the volume limitations and other restrictions of Rule 144 described below. The remaining shares of common stock held by our existing stockholders upon completion of this offering will be "restricted securities," as that phrase is defined in Rule 144, and may be resold only after registration under the Securities Act or pursuant to an exemption from such registration, including, among others, the exemptions provided by Rule 144, 144(k) and 701 under the Securities Act, which rules are summarized below. These remaining             shares of common stock held by our existing stockholders upon completion of this offering will be available for sale in the public market after the expiration of the lockup agreements described in "Underwriting," taking into account the provisions of Rules 144, 144(k) and 701 under the Securities Act.

Rule 144

        In general, under Rule 144, a person (or persons whose shares are required to be aggregated), including an affiliate, who has beneficially owned shares for at least one year is entitled to sell, within any three-month period commencing 90 days after the date of this prospectus, a number of shares that does not exceed the greater of:

    1% of the number of shares of common stock then outstanding, which will equal approximately             shares immediately after the closing of this offering; or

    the average weekly trading volume of our common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.

        In addition to this volume limitation, sales under Rule 144 also are subject to manner-of-sale restrictions, notice requirements and the availability of current public information about us.

Rule 144(k)

        Under Rule 144(k), persons who were not our affiliate at any time during the 90 days preceding a sale, and who have beneficially owned the shares proposed to be sold for at least two years, are entitled to sell such shares without complying with the manner-of-sale, public information, volume limitation or notice provisions of Rule 144. The two-year holding period includes the holding period of any prior owner who is not our affiliate. Therefore, unless otherwise restricted, shares covered by Rule 144(k) may be sold at any time.

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Rule 701

        In general, under Rule 701, any of our employees, managers/directors, officers, consultants or advisors who purchased shares from us in connection with a compensatory stock or option plan or other written agreement before the effective date of this offering, or who purchased shares from us after that date upon the exercise of options granted before that date, are eligible to resell such shares in reliance upon Rule 144 beginning 90 days after the date of this prospectus. If such person is not an affiliate, the sale may be made subject only to the manner-of-sale restrictions of Rule 144. If such a person is an affiliate, the sale may be made under Rule 144 without compliance with its one-year minimum holding period, but subject to the other Rule 144 restrictions.

Lock-Up Agreements

        We and our managers/directors, executive officers and stockholders have entered into lock-up agreements with the underwriters. Under these agreements, subject to exceptions, we may not issue any new shares of common stock, and those persons may not, directly or indirectly, offer, sell, contract to sell, pledge or otherwise dispose of or hedge any common securities convertible into or exchangeable for shares of our common stock, or publicly announce the intention to do any of the foregoing, without the prior written consent of Goldman, Sachs & Co. and J.P. Morgan Securities Inc., until the expiration of the lock-up agreements. This consent may be given at any time without public notice.

2007 Long-Term Equity Incentive Plan

        Following the completion of this offering, we intend to file a registration statement on Form S-8 under the Securities Act to register common stock issued or reserved for issuance under our 2007 Long-Term Equity Incentive Plan. Any such Form S-8 registration statement will automatically become effective upon filing. Accordingly, shares registered under such registration statement will be available for sale in the open market, unless such shares are subject to vesting restrictions with us or the lock-up restrictions described above. We expect that the registration statement on Form S-8 will cover             shares.

Registration Rights

        As described above in "Certain Relationships and Related Party Transactions—Registration Rights," following the completion of this offering, subject to the lock-up period described above, parties to our registration rights agreement holding more than a majority of the shares of our common stock issued with respect to units of Solera Holdings, LLC purchased by affiliates of GTCR in connection with our 2005 formation and funding or the Acquisition will be entitled, subject to certain exceptions, to demand the filing of, and the inclusion of their shares in, registration statements relating to our securities. If this right is exercised, holders of up to             shares will be entitled to participate in such a registration. By exercising their registration rights and causing a large number of shares to be registered and sold in the public market, these holders could cause the price of our common stock to fall. In addition, any demand to include such shares in our registration statements could reduce our ability to raise needed capital through a public offering of common stock.

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CERTAIN MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

        The following is a general discussion of certain U.S. federal income tax considerations to holders of our common stock. This discussion is a summary for general information purposes only and does not consider all aspects of U.S. federal income taxation that may be relevant to holders in light of their particular investment circumstances or to certain types of holders subject to special tax rules, including partnerships, banks, financial institutions or other financial services entities, broker-dealers, insurance companies, tax-exempt organizations, regulated investment companies, real estate investment trusts, retirement plans, individual retirement accounts or other tax-deferred accounts, persons who use or are required to use mark-to-market accounting, persons that hold shares of our common stock as part of a "straddle," a "hedge" or a "conversion transaction," investors in partnerships and other pass-through entities, persons with a functional currency other than the U.S. dollar and persons subject to the alternative minimum tax. This discussion also does not address any non-U.S. tax considerations or any U.S. federal non-income, state or local tax considerations. This discussion assumes that holders hold their shares as "capital assets" within the meaning of Section 1221 of the U.S. Internal Revenue Code of 1986, as amended (the "Code"). This discussion is based on the Code and applicable U.S. Treasury Regulations, rulings, administrative pronouncements and decisions as of the date hereof, all of which are subject to change or differing interpretations at any time with possible retroactive effect. The authorities on which this discussion is based are subject to various interpretations, and any views expressed within this discussion are not binding on the U.S. Internal Revenue Service, or IRS, or the courts. No assurance can be given that the IRS or the courts will agree with the tax consequences described herein.

        For purposes of this discussion, a "U.S. Holder" is a beneficial owner of shares of our common stock that is

    a citizen or individual resident of the United States,

    a corporation (or entity treated as a corporation for U.S. federal income tax purposes) created or organized, or treated as created or organized, in or under the laws of the U.S. or any political subdivision of the U.S.,

    an estate the income of which is subject to U.S. federal income taxation regardless of its source or

    a trust (1) if a court within the U.S. is able to exercise primary supervision over the trust's administration and one or more U.S. persons have authority to control all substantial decisions of the trust or (2) that has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person.

        For purposes of this discussion, a "Non-U.S. Holder" is a beneficial owner of our common shares that does not qualify as a U.S. Holder under the definition above.

        If a partnership (or entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds our common stock, the tax treatment of a partner in the partnership generally will depend upon the status of the partner and the activities of the partnership. In this event, the partner and partnership are urged to consult their tax advisors.

        Each holder is urged to consult its tax advisor regarding the specific U.S. federal, state and local and non-u.s. income and other tax considerations of owning our common stock.

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Consequences to U.S. Holders

Dividends

        As discussed under the section entitled "Dividend Policy" above, we do not currently anticipate paying dividends. In the event that we do make a distribution of cash or property with respect to our common stock, any such distributions will be taxable as a dividend for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits (as determined under U.S. federal income tax principles).

        A U.S. Holder generally will be subject to U.S. federal income tax on any dividends received in respect of our common stock at a maximum rate of 15% if the U.S. Holder is an individual and certain holding period and other requirements are satisfied, and a maximum rate of 35% otherwise. Current law provides for certain increases beginning after December 31, 2010 in maximum tax rates applicable to dividends. If the amount of a distribution exceeds our current and accumulated earnings and profits, such excess will be allocated ratably among each share of common stock with respect to which the distribution is paid and treated first as a tax-free return of capital to the extent of the U.S. Holder's adjusted tax basis in each such share, and thereafter as capital gain from a sale or other disposition of each such share of common stock that is taxed to the U.S. Holders as described below.

Gain on Disposition of Common Stock

        A U.S. Holder that sells or otherwise disposes of our common stock in a taxable transaction will recognize capital gain or loss equal to the amount of cash plus the fair market value of property received in exchange for the common stock minus the U.S. Holder's adjusted tax basis in the common stock. Any capital gain or loss recognized by the U.S. Holder will be long-term capital gain or loss if the U.S. Holder has held our common stock for more than one year at the time of the sale or other disposition and short-term capital gain or loss otherwise. Long-term capital gains recognized by non-corporate taxpayers are taxable under current law at a maximum rate of 15%. Long-term capital gains recognized by corporations and short-term capital gains recognized by corporations or individuals are taxable under current law at a maximum rate of 35%. A U.S. Holder's ability to use any capital loss to offset other income or gain is subject to certain limitations.

Consequences to Non-U.S. Holders

Dividends

        A Non-U.S. Holder generally will be subject to U.S. federal income tax on any dividends received in respect of our common stock at a 30% rate (or such lower rate as prescribed by an applicable income tax treaty as discussed below) unless the dividend is effectively connected with the conduct of a U.S. trade or business, in which case under current law the dividend will be taxed at a maximum rate of 15% if the Non-U.S. Holder is an individual and certain holding period and other requirements are satisfied, and a maximum rate of 35% otherwise. A Non-U.S. Holder that is a corporation may also be subject to a 30% branch profits tax on after-tax profits effectively connected with a U.S. trade or business to the extent that such after-tax profits are not reinvested and maintained in a U.S. business. Current law provides for certain increases beginning after December 31, 2010 in maximum tax rates applicable if the dividend is effectively connected with the conduct of a U.S. trade or business. If the amount of a distribution exceeds our current and accumulated earnings and profits, such excess will be allocated ratably among each share of common stock with respect to which the distribution is paid and treated first as a tax-free return of capital to the extent of the Non-U.S. Holder's adjusted tax basis in each such share, and thereafter as capital gain from a sale or other disposition of each such share of common stock that is taxed to the Non-U.S. Holders as described below.

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Gain on Disposition of Common Stock

        A Non-U.S. Holder that sells or otherwise disposes of our common stock in a taxable transaction generally will not be subject to U.S. federal income taxation unless

    gain resulting from the disposition is effectively connected with the conduct of a U.S. trade or business; or

    we are or have been a U.S. real property holding corporation ("USRPHC") as defined in Section 897 of the Code at any time within the five-year period preceding the disposition, the Non-U.S. Holder owned more than 5% of our common stock at any time within that five-year period and certain other conditions are satisfied.

        In general, a corporation is a USRPHC if the fair market value of its "U.S. real property interests" equals or exceeds 50% of the sum of the fair market value of its worldwide (domestic and foreign) real property interests and its other assets used or held for use in a trade or business. We believe that we are not a USRPHC on the date hereof and currently do not anticipate becoming a USRPHC.

        If a Non-U.S. Holder is subject to U.S. federal income taxation upon the disposition of our common stock, the Non-U.S. Holder generally will recognize capital gain or loss (assuming, as noted above, that the Non-U.S. Holder holds our common stock as a capital asset within the meaning of the Code) equal to the amount of cash plus the fair market value of property received in exchange for the common stock minus the Non-U.S. Holder's adjusted tax basis in the common stock. Any capital gain or loss recognized by the Non-U.S. Holder will be long-term capital gain or loss if the Non-U.S. Holder held our common stock for more than one year at the time of the sale or other taxable disposition and short-term capital gain or loss otherwise. Long-term capital gains recognized by non-corporate taxpayers are taxable under current law at a maximum rate of 15%. Long-term capital gains recognized by corporations and short-term capital gains recognized by corporations or individuals are taxable under current law at a maximum rate of 35%. A Non-U.S. Holder that is a corporation may also be subject to a 30% branch profits tax on after-tax profits effectively connected with a U.S. trade or business to the extent that such after-tax profits are not reinvested and maintained in the U.S. business. A Non-U.S. Holder's ability to use any capital loss to offset other income or gain subject to U.S. federal income taxation is subject to certain limitations.

        Under certain unusual circumstances, an individual who is present in the U.S. for 183 days or more in the individual's taxable year in which the sale or other disposition of our common stock occurs may be treated as a Non-U.S. Holder under the definition above. In this case, unless gain from the sale or other taxable disposition of our common stock is already subject to tax as effectively connected with the conduct of a U.S. trade or business, the gain of the Non-U.S. Holder may be subject to a 30 percent tax on the gross amount of the gain and, in this case, the Non-U.S. Holder's ability to use other losses to offset the gain on our common stock will be limited.

Income Tax Treaties

        If a Non-U.S. Holder is eligible for treaty benefits under an income tax treaty entered into by the U.S., the Non-U.S. Holder may be able to reduce or eliminate certain of the U.S. federal income taxes discussed above, such as the tax on dividends and the branch profits tax, and the Non-U.S. Holder may be able to treat gain, even if effectively connected with a U.S. trade or business, as not subject to U.S. federal income taxation unless the U.S. trade or business is not conducted through a permanent establishment located in the U.S. Non-U.S. Holders are urged to consult their tax advisors regarding possible relief under an applicable income tax treaty.

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Withholding and Information Reporting

        A U.S. Holder or Non-U.S. Holder may be subject to backup withholding (currently at a rate of 28%) on the proceeds from a sale or other taxable disposition of our common stock, and a U.S. Holder may also be subject to backup withholding on the gross amount of any dividend or other distribution on our common stock unless the U.S. Holder or Non-U.S. Holder is exempt from backup withholding and, when required, demonstrates that status, or provides a correct taxpayer identification number on a form acceptable under U.S. Treasury Regulations (generally an IRS Form W-9, W-8BEN or W-8ECI) and otherwise complies with the applicable requirements of the backup withholding rules.

        In addition, a Non-U.S. Holder will generally be subject to withholding at rate of 30% of the gross amount of any dividend or other distribution on our common stock unless the Non-U.S. Holder qualifies for a reduced rate of withholding or an exemption from withholding under an applicable tax treaty or the dividend or other distribution is effectively connected with a U.S. trade or business (in which case the dividend or other distribution will be exempt from withholding but the Non-U.S. Holder will nonetheless be liable for any applicable U.S. federal income tax as described above). The Non-U.S. Holder may be required to demonstrate its qualification for a reduced rate of withholding or an exemption from withholding on a form acceptable under applicable U.S. Treasury Regulations (generally an IRS Form W-8BEN or W-8ECI).

        We may also be required to comply with information reporting requirements under the Code with respect to the amount of any dividend or other distribution on our common stock and the proceeds from a sale or other taxable disposition of our common stock.

        Any amount withheld under the withholding rules of the Code (including backup withholding rules) is not an additional tax, but rather is credited against the holder's U.S. federal income tax liability. Holders are advised to consult their tax advisers to ensure compliance with the procedural requirements to reduce or avoid withholding (including backup withholding) or, if applicable, to file a claim for a refund of withheld amounts in excess of the holder's U.S. federal income tax liability.

        The U.S. federal income tax discussion set forth above is included for general information purposes only. Holders are urged to consult their own tax advisors to determine the federal, state and local and non-U.S. tax considerations of owning our common stock.

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UNDERWRITING

        The company, the selling stockholders and the underwriters named below have entered into an underwriting agreement with respect to the shares being offered. Subject to certain conditions, each underwriter has severally agreed to purchase the number of shares indicated in the following table. Goldman, Sachs & Co. and J.P. Morgan Securities Inc. are the representatives of the underwriters.

Underwriters

  Number of Shares
Goldman, Sachs & Co.    
J.P. Morgan Securities Inc.     
Citigroup Global Markets Inc.    
Deutsche Bank Securities Inc.    
Lehman Brothers Inc.    
   
  Total    
   

        The underwriters are committed to take and pay for all of the shares being offered, if any are taken, other than the shares covered by the option described below unless and until this option is exercised.

        If the underwriters sell more shares than the total number set forth in the table above, the underwriters have an option to buy up to an additional             shares from the selling stockholders to cover such sales. They may exercise that option for 30 days. If any shares are purchased pursuant to this option, the underwriters will severally purchase shares in approximately the same proportion as set forth in the table above.

        The following tables show the per share and total underwriting discounts and commissions to be paid to the underwriters by the company and the selling stockholders. Such amounts are shown assuming both no exercise and full exercise of the underwriters' option to purchase             additional shares.


Paid by the Company

 
  No Exercise
  Full Exercise
Per Share   $     $  
Total   $     $  


Paid by the Selling Stockholders

 
  No Exercise
  Full Exercise
Per Share   $     $  
Total   $     $  

        Shares sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $                    per share from the initial public offering price. Any such securities dealers may resell any shares purchased from the underwriters to certain other brokers or dealers at a discount of up to $                    per share from the initial public offering price. If all the shares are not sold at the initial public offering price, the representative may change this offering price and the other selling terms.

        The company, its officers and managers/directors and holders of substantially all of the company's common stock, including the selling stockholders, have agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of their common stock or any

96



securities convertible into or exchangeable or exercisable for shares of common stock during the period from the date of this prospectus continuing through the date 165 days after the date of this prospectus, except with the prior written consent of the representatives. This agreement does not apply to any existing employee benefits plans. See "Shares Eligible for Future Sale" for a discussion of certain transfer restrictions.

        The 165-day restricted period described in the preceding paragraph will be automatically extended if: (1) during the last 17 days of the 165-day restricted period the company issues an earnings release or announces material news or a material event; or (2) prior to the expiration of the 165-day restricted period, the company announces that it will release earnings results during the 15-day period following the last day of the 165-day period, in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the announcement of the materials news or material event.

        Prior to this offering, there has been no public market for the shares. The initial public offering price will be negotiated among us and the representatives. Among the factors to be considered in determining the initial public offering price of the shares, in addition to prevailing market conditions, will be our historical performance, estimates of our business potential and earnings prospects, an assessment of the company's management and the consideration of the above factors in relation to market valuation of companies in related businesses.

        An application will be made to list the common stock on the New York Stock Exchange under the symbol "SLH." In order to meet one of the requirements for listing the common stock on the NYSE, the underwriters have undertaken to sell lots of 100 or more shares to a minimum of 2,000 beneficial holders.

        In connection with this offering, the underwriters may purchase and sell shares of common stock in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in this offering. "Covered" short sales are sales made in an amount not greater than the underwriters' option to purchase additional shares from the selling stockholders in this offering. The underwriters may close out any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase additional shares pursuant to the option granted to them. "Naked" short sales are any sales in excess of such option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in this offering. Stabilizing transactions consist of various bids for or purchases of common stock made by the underwriters in the open market prior to the completion of this offering.

        The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.

        Purchases to cover a short position and stabilizing transactions, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of the company's stock and, together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of the common stock. As a result, the price

97



of the common stock may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued at any time. These transactions may be effected on the New York Stock Exchange, in the over-the-counter market or otherwise.

        In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a "Relevant Member State"), each underwriter has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the "Relevant Implementation Date") it has not made and will not make an offer of shares to the public in that Relevant Member State prior to the publication of a prospectus in relation to the shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of shares to the public in that Relevant Member State at any time:

            (a)   to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities;

            (b)   to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts;

            (c)   to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the representatives for any such offer; or

            (d)   in any other circumstances which do not require the publication by the Issuer of a prospectus pursuant to Article 3 of the Prospectus Directive.

        For the purposes of this provision, the expression an "offer of shares to the public" in relation to any shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase or subscribe the shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

        Each underwriter has represented and agreed that:

            1.1   it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the Shares in circumstances in which Section 21(1) of the FSMA does not apply to the Issuer; and

            1.2   it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares in, from or otherwise involving the United Kingdom.

        The shares may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong) or (ii) to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder or (iii) in other circumstances which do not result in the documents being a "prospectus" within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), and

98


no advertisement, invitation or document relating to the shares may be issued, or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

        This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the "SFA"), (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

        Where the shares are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries' rights and interest in that trust shall not be transferable for 6 months after that corporation or that trust has acquired the shares under Section 275 except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; or (3) by operation of law.

        The securities have not been and will not be registered under the Securities and Exchange Law of Japan (the Securities and Exchange Law) and each underwriter has agreed that it will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Securities and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.

        The underwriters do not expect sales to discretionary accounts to exceed five percent of the total number of shares offered.

        The company estimates that the total expenses of this offering, excluding underwriting discounts and commissions, will be approximately $                    million.

        The company and the selling stockholders have agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act.

        Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for the company, for which they received or will receive customary fees and expenses. In particular, affiliates of Goldman, Sachs & Co. and Citigroup Global Markets Inc. are lenders under our existing senior credit facility and affiliates of Goldman, Sachs & Co. and Citigroup Global Markets Inc. may be lenders under our amended and restated senior credit facility. In connection with the repayment of the existing senior credit facility in connection with the refinancing transactions, affiliates of Goldman, Sachs & Co. and Citigroup Global Markets Inc. will receive their proportionate share in their capacities as lenders.

99



LEGAL MATTERS

        The validity of the common stock offered hereby will be passed upon for us by Kirkland & Ellis LLP, a limited liability partnership that includes professional corporations, Chicago, Illinois. Certain partners of Kirkland & Ellis LLP, are members of a limited liability company that is an investor in GTCR Fund VIII, L.P. and GTCR Fund VIII/B, L.P. Certain partners of Kirkland & Ellis LLP are members of a partnership that is an investor in GTCR Co-Invest II, L.P. Kirkland & Ellis LLP represents entities affiliated with GTCR Golder Rauner II, L.L.C. and its affiliates in connection with legal matters. Latham & Watkins LLP, Los Angeles, California will act as counsel to the underwriters.


EXPERTS

        The consolidated financial statements of Solera Holdings, LLC as of June 30, 2005 and 2006 and for the fiscal year ended June 30, 2006 and the period from March 24, 2005 (inception) to June 30, 2005 included in this prospectus have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their reports appearing herein and elsewhere in the registration statement, and have been so included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.

        The combined financial statements of the Claims Services Group as of June 30, 2004 and 2005 and for the fiscal year June 30, 2004 and 2005 and the period from July 1, 2005 through April 13, 2006 included in this prospectus have been audited by Deloitte & Touche LLP, independent auditors, as stated in their reports appearing herein and elsewhere in the registration statement, and have been so included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.


WHERE YOU CAN FIND MORE INFORMATION

        We have filed with the SEC a registration statement on Form S-1 under the Securities Act that registers the shares of our common stock to be sold in this offering. The registration statement, including the attached exhibits, contains additional relevant information about us and our common stock. The rules and regulations of the SEC allow us to omit from this document certain information included in the registration statement.

        You may read and copy the reports and other information we file with the SEC at the SEC's Public Reference Room at 100 F Street, N. E., Room 1580, Washington, D.C. 20549. You may also obtain copies of this information by mail from the public reference section of the SEC, 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates. You may obtain information regarding the operation of the public reference room by calling 1 (800) SEC-0330. The SEC also maintains a website that contains reports, proxy statements and other information about issuers, like us, who file electronically with the SEC. The address of that website is http://www.sec.gov. This reference to the SEC's website is an inactive textual reference only and is not a hyperlink.

        Upon completion of this offering, we will become subject to the reporting, proxy and information requirements of the Exchange Act, and as a result will be required to file periodic reports, proxy statements and other information with the SEC. These periodic reports, proxy statements and other information will be available for inspection and copying at the SEC's public reference room and the website of the SEC referred to above, as well as on our website, www.solerainc.com. This reference to our website is an inactive textual reference only and is not a hyperlink. The contents of our website are not part of this prospectus, and you should not consider the contents of our website in making an investment decision with respect to our common stock.

        We intend to furnish our stockholders with annual reports containing audited financial statements and make available to our stockholders quarterly reports for the first three quarters of each fiscal year containing unaudited interim financial information.

100



INDEX TO FINANCIAL STATEMENTS

Solera Holdings, LLC—Consolidated Financial Statements    
Report of Independent Registered Public Accounting Firm   F-2
Consolidated Balance Sheets as of June 30, 2005 and 2006 and September 30, 2006 (unaudited)   F-3
Consolidated Statements of Operations for the period from March 24, 2005 (inception) through June 30, 2005, for the year ended June 30, 2006 and for the three months ended September 30, 2005 and 2006 (unaudited)   F-4
Consolidated Statements of Unitholders' Equity (Deficit) for the period from March 24, 2005 (inception) through June 30, 2005, for the year ended June 30, 2006 and for the three months ended September 30, 2006 (unaudited)   F-5
Consolidated Statements of Cash Flows for the period from March 24, 2005 (inception) to June 30, 2005, for the year ended June 30, 2006 and for the three months ended September 30, 2005 and 2006 (unaudited)   F-6
Notes to Consolidated Financial Statements   F-7

Combined Financial Statements of Claims Services Group

 

 
Independent Auditors' Report   F-39
Combined Balance Sheets as of June 30, 2004 and 2005   F-40
Statements of Combined Earnings for the years ended June 30, 2004 and 2005, and for the period from July 1, 2005 through April 13, 2006   F-41
Statements of Combined Group Equity for the years ended June 30, 2004 and 2005, and for the period from July 1, 2005 through April 13, 2006   F-42
Statements of Combined Cash Flows for the years ended June 30, 2004 and 2005, and for the period from July 1, 2005 through April 13, 2006   F-43
Notes to Combined Financial Statements   F-44

F-1



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Managers of
Solera Holdings, LLC:
San Ramon, California

        We have audited the accompanying consolidated balance sheets of Solera Holdings, LLC and subsidiaries (the "Company") as of June 30, 2005 and 2006, and the related consolidated statements of operations, unitholders' equity (deficit) and accumulated other comprehensive income, and cash flows for the period from March 24, 2005 (inception) through June 30, 2005, and the year ended June 30, 2006. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal controls over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2005 and 2006, and the results of its operations and its cash flows for the period from March 24, 2005 (inception) through June 30, 2005, and for the year ended June 30, 2006, in conformity with accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP
San Jose, California
February 12, 2007

F-2



SOLERA HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except unit amounts)

 
  June 30,
   
   
 
  September 30,
2006

  Pro Forma
September 30,
2006

 
  2005
  2006
 
   
   
  (Unaudited)

ASSETS                        
CURRENT ASSETS:                        
  Cash and cash equivalents   $ 4,232   $ 88,826   $ 89,775   $  
  Accounts receivable—net     113     58,475     73,376      
  Other current assets     33     35,912     37,208      
  Deferred income tax assets         4,675     4,720      
   
 
 
 
    Total current assets     4,378     187,888     205,079      
PROPERTY AND EQUIPMENT—Net     397     38,285     44,095      
OTHER ASSETS     90     37,512     36,873      
LONG-TERM DEFERRED INCOME TAX ASSETS         6,605     6,812      
GOODWILL         541,421     543,898      
INTANGIBLE ASSETS—Net         441,294     419,805      
   
 
 
 
TOTAL   $ 4,865   $ 1,253,005   $ 1,256,562   $  
   
 
 
 
LIABILITIES AND UNITHOLDERS' EQUITY (DEFICIT)                        
CURRENT LIABILITIES:                        
  Accounts payable   $ 36   $ 14,043   $ 26,993   $  
  Accrued expenses and other current liabilities     256     107,479     115,752      
  Income taxes payable         23,901     24,774      
  Deferred income tax liabilities         3,525     3,381      
  Current portion of long-term debt         16,211     12,213      
   
 
 
 
    Total current liabilities     292     165,159     183,113      
LONG-TERM DEBT         831,628     833,903      
OTHER LIABILITIES     14     117     2,709      
LONG-TERM DEFERRED INCOME TAX LIABILITIES         51,264     48,978      
   
 
 
 
    Total liabilities     306     1,048,168     1,068,703      
CLASS B REDEEMABLE PREFERRED UNITS—Unlimited units authorized; 1,025, 204,239 and 204,239 units issued and outstanding as of June 30, 2005, June 30, 2006 and September 30, 2006, respectively     1,045     207,865     212,056      
MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES         9,375     10,513      
COMMITMENTS AND CONTINGENCIES (Note 15)                        
UNITHOLDERS' EQUITY (DEFICIT):                        
  Class A Common Units: unlimited units authorized; 46,786,383, 93,140,904 and 93,140,904 issued and outstanding as of June 30, 2005, June 30, 2006 and September 30, 2006, respectively     4,254     4,907          
  Deferred unit-based compensation         (1,446 )        
  Accumulated deficit     (740 )   (19,627 )   (38,056 )    
  Accumulated other comprehensive income         3,763     3,346      
   
 
 
 
    Total unitholders' equity (deficit)     3,514     (12,403 )   (34,710 )    
   
 
 
 
TOTAL   $ 4,865   $ 1,253,005   $ 1,256,562   $  
   
 
 
 

See notes to consolidated financial statements.

F-3



SOLERA HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per unit amounts)

 
  Period from
March 24, 2005
(Inception)
Through
June 30, 2005

   
  Three Months Ended
September 30,

 
 
  Year Ended
June 30, 2006

 
 
  2005
  2006
 
 
   
   
  (Unaudited)

 
Revenues   $ 155   $ 95,084   $ 288   $ 111,482  
   
 
 
 
 
Operating expenses     228     29,013     550     32,710  
Selling, general and administrative expenses     673     27,105     452     30,890  
Systems development and programming costs         15,080         16,176  
Depreciation and amortization     16     23,571     38     25,176  
Restructuring charges         2,871         895  
Interest expense         14,842         17,857  
Other (income) expense, net     (22 )   1,836     (31 )   4,340  
   
 
 
 
 
      895     114,318     1,009     128,044  
   
 
 
 
 
Loss before provision for income tax benefit and minority interests     (740 )   (19,234 )   (721 )   (16,562 )
Income tax provision (benefit)         (1,268 )       243  
Minority interests in net income of consolidated subsidiaries         921         1,085  
   
 
 
 
 
Net loss     (740 )   (18,887 )   (721 )   (17,890 )
Dividends and redeemable preferred unit accretion     93     88,789         4,191  
   
 
 
 
 
Net loss allocable to common unitholders   $ (833 ) $ (107,676 ) $ (721 ) $ (22,081 )
   
 
 
 
 
Net loss allocable to common unitholders per unit:                          
  Basic and diluted   $ (0.02 ) $ (2.11 ) $ (0.02 ) $ (0.25 )
Weighted average units used in the calculation of net loss per unit allocable to common unitholders                          
  Basic and diluted     38,055     50,933     40,982     87,114  

Pro forma net loss data (unaudited)—Note 1

 

 

 

 

 

 

 

 

 

 

 

 

 
  Net loss allocable to common unitholders as reported         $ (107,676 )       $ (22,081 )
  Pro forma adjustment for income tax benefit           1,561           255  
         
       
 
  Pro forma net loss allocable to common unitholders         $ (106,115 )       $ (21,826 )
         
       
 
  Pro forma basic and diluted net loss allocable to common unitholders per common unit         $           $    
  Weighted average units used in pro forma basic and diluted net loss per common unit allocable to common unitholders                          

See notes to consolidated financial statements.

F-4



SOLERA HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF UNITHOLDERS' EQUITY (DEFICIT) AND
ACCUMULATED OTHER COMPREHENSIVE INCOME

FOR THE PERIOD FROM MARCH 24, 2005 (INCEPTION) THROUGH JUNE 30, 2005,
THE YEAR ENDED JUNE 30, 2006 AND THE THREE MONTHS ENDED SEPTEMBER 30, 2006
(UNAUDITED)

(In thousands, except unit amounts)

 
  Class A
Common Units

   
   
   
   
 
 
   
  Accumulated
Other
Comprehensive
Income

   
   
 
 
  Deferred
Unit-Based
Compensation

  Accumulated
Deficit

   
 
 
  Units
  Amount
  Total
 
BALANCE—March 24, 2005 (Inception)     $   $   $   $   $  
  Issuance of Class A Common Units, net of issuance costs of $332   46,786,383     4,347                 4,347  
  Dividend       (20 )               (20 )
  Accretion of redeemable preferred units       (73 )               (73 )
  Net loss and comprehensive net loss                   (740 )   (740 )
   
 
 
 
 
 
 
BALANCE—June 30, 2005   46,786,383     4,254             (740 )   3,514  
  Issuance of Class A Common Units, net of issuance costs of $930   46,354,521     89,442                 89,442  
  Deferred unit-based compensation           (1,807 )           (1,807 )
  Amortization of deferred unit-based compensation           361             361  
  Dividend       (3,605 )               (3,605 )
  Accretion of redeemable preferred units       (85,184 )               (85,184 )
  Components of comprehensive loss:                                    
    Net loss                   (18,887 )   (18,887 )
    Foreign currency translation adjustments               3,763         3,763  
   
 
 
 
 
 
 
      Total comprehensive loss                       (15,124 )
                               
 

BALANCE—June 30, 2006

 

93,140,904

 

 

4,907

 

 

(1,446

)

 

3,763

 

 

(19,627

)

 

(12,403

)
  Cumulative effect of adopting new accounting principle       (1,446 )   1,446              
  Unit-based compensation       191                 191  
  Dividend       (3,652 )           (539 )   (4,191 )
  Components of comprehensive loss:                                    
    Net loss                   (17,890 )   (17,890 )
    Foreign currency translation adjustments               (417 )       (417 )
   
 
 
 
 
 
 
      Total comprehensive loss                       (18,307 )
                               
 
BALANCE—September 30, 2006   93,140,904   $   $   $ 3,346   $ (38,056 ) $ (34,710 )
   
 
 
 
 
 
 

See notes to consolidated financial statements.

F-5



SOLERA HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 
  Period from
March 24, 2005
(Inception)
Through
June 30, 2005

   
  Three Months Ended
September 30,

 
 
  Year Ended
June 30, 2006

 
 
  2005
  2006
 
 
   
   
  (Unaudited)

 
CASH FLOWS FROM OPERATING ACTIVITIES:                          
  Net loss   $ (740 ) $ (18,887 ) $ (721 ) $ (17,890 )
  Adjustments to reconcile net loss to net cash provided by (used in) operating activities:                          
    Depreciation and amortization     16     23,571     38     25,176  
    Minority interests in net income of consolidated subsidiaries         921         1,085  
    Provision for doubtful accounts         69         124  
    Amortization of deferred unit-based compensation         361         96  
    Deferred income taxes         (5,847 )       (2,278 )
    Change in fair value of financial instrument         2,850         4,275  
    Accrued interest on mezzanine loan         2,639          
    Other         368         29  
    Changes in operating assets and liabilities—net of effects from acquisition of businesses:                          
      (Increase) decrease in accounts receivable     (112 )   3,540     (42 )   (11,997 )
      Increase in other assets     (124 )   (8,044 )   (32 )   (19,875 )
      Increase in accounts payable     36     3,487     37     12,525  
      Increase in accrued expenses and other liabilities     270     28,922     164     19,583  
      Increase in accrued interest         11,406         17,338  
   
 
 
 
 
        Net cash provided by (used in) operating activities     (654 )   45,356     (556 )   28,191  
   
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:                          
  Capital expenditures     (412 )   (4,112 )   (143 )   (6,895 )
  Purchase of foreign currency exchange option         (7,912 )        
  Acquisitions of business—net of cash acquired         (924,447 )       (1,040 )
   
 
 
 
 
        Net cash used in investing activities     (412 )   (936,471 )   (143 )   (7,935 )
   
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:                          
  Proceeds from issuance of debt         821,017          
  Debt issuance costs         (31,782 )        
  Repayments under revolving credit facility         (16,946 )       (19,128 )
  Proceeds from sale of Class A common units—net of offering costs     4,347     87,635          
  Proceeds from sale of Class B redeemable preferred units—net of offering costs     951     118,030          
   
 
 
 
 
        Net cash provided by (used in) financing activities     5,298     977,954         (19,128 )
   
 
 
 
 
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS         (2,245 )       (179 )
   
 
 
 
 
NET CHANGE IN CASH AND CASH EQUIVALENTS     4,232     84,594     (699 )   949  
CASH AND CASH EQUIVALENTS—Beginning of period         4,232     4,232     88,826  
   
 
 
 
 
CASH AND CASH EQUIVALENTS—End of period   $ 4,232   $ 88,826   $ 3,533   $ 89,775  
   
 
 
 
 
SUPPLEMENTAL DISCLOSURES OF NON CASH FINANCING ACTIVITIES:                          
Dividends and redeemable preferred unit accretion   $ 93   $ 88,789   $   $ 4,191  
   
 
 
 
 

See notes to consolidated financial statements.

F-6



SOLERA HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2005 AND 2006 AND FOR THE PERIOD FROM MARCH 24, 2005 (INCEPTION)
THROUGH JUNE 30, 2005 AND FOR THE YEAR ENDED JUNE 30, 2006

(INFORMATION WITH RESPECT TO THE THREE MONTHS ENDED
SEPTEMBER 30, 2005 AND 2006 IS UNAUDITED)

(In thousands, except per unit and unit amounts)

1.    ORGANIZATION AND BASIS OF PRESENTATION

        Description of Business—Solera Holdings, LLC ("Solera") was formed under the laws of the state of Delaware on March 24, 2005, by GTCR Golder Rauner II, L.L.C. ("GTCR") and members of Solera's management. Solera and its subsidiaries (collectively, the "Company") provide software and services to the automobile insurance claims processing industry. On April 13, 2006, the Company acquired the Claims Services Group from Automatic Data Processing, Inc. ("ADP") for approximately $1.0 billion, including certain transaction costs, financed with equity from GTCR and Solera's management and debt (the "Acquisition").

        The accompanying consolidated statement of operations for the year ended June 30, 2006 includes the operating results of the Claims Services Group from the Acquisition date, along with that of the Company for the entire year ended June 30, 2006. Prior to the Acquisition, the Company was involved primarily in developing its business plan, recruiting personnel, providing consulting services, raising capital and identifying and evaluating assets for acquisition.

        A wholly owned subsidiary of the Company was formed on February 2, 2005 as Solera Claims Services Business, Inc. and was reincorporated as Solera, Inc. in March 2005, and all of its outstanding capital stock was contributed to Solera. Solera Claims Services Business, Inc. had no significant activity. As such, the inception date for the accompanying consolidated financial statements is considered to be March 24, 2005.

        Principles of Consolidation and Basis of Presentation—The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. These financial statements present the consolidated financial position and results of operations of the Company. The consolidated financial statements include all adjustments necessary for a fair presentation of the business, and all intercompany balances and transactions of the Company have been eliminated.

        Unaudited Interim Financial Statements—The accompanying consolidated balance sheet as of September 30, 2006, consolidated statements of operations and cash flows for the three months ended September 30, 2005 and 2006, and the consolidated statement of unitholders' equity (deficit) for the three months ended September 30, 2006, are unaudited. The unaudited financial statements include all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of such financial statements. The information disclosed in the notes to the financial statements for these periods is unaudited. The results of operations for the three months ended September 30, 2006 are not necessarily indicative of the results to be expected for the entire fiscal year or for any future period.

        Unaudited Pro Forma Information—The unaudited pro forma balance sheet gives effect to the following as if it had occurred on                          , 2006:

    The Company is currently a Delaware limited liability company. Prior to the completion of this offering, the Company will convert into a Delaware corporation. Upon the effectiveness of the

F-7


      conversion, all of the Company's outstanding preferred and common units will be automatically converted into shares of common stock based on their relative rights as set forth in the Company's limited liability company agreement. Specifically, each outstanding common unit will be converted into a number of shares of common stock equal to its pre-offering equity value divided by the initial public offering price. Each outstanding preferred unit will be converted into a number of shares of common stock equal to its liquidation value divided by the initial public offering price. The redeemable preferred units have a liquidation value equal to their initial issuance price at $1,000, plus accrued yield at 8% per annum, compounded quarterly. As of September 30, 2006, the aggregate liquidation value of the Company's outstanding redeemable preferred units was $212.1 million. All pro forma share numbers are based on an assumed initial public offering price of $               , the midpoint of the range set forth on the cover of this prospectus.

        The unaudited pro forma income statement data present the pro forma effects of applying a provision for income taxes to historical net income. Such provision reflects the income taxes had the Company been taxed as a C corporation for the year ended June 30, 2006 and the three months ended September 30, 2006.

        Pro forma net income (loss) per share is based on the weighted average common units outstanding. Pro forma net income (loss) per share is computed as if the conversion into a Delaware corporation described above occurred on July 1, 2005.

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        Cash and Cash Equivalents—The Company considers all highly liquid investments with original maturities of 90 days or less at the time of purchase to be cash equivalents.

        Property and Equipment—Property and equipment is stated at cost and depreciated over the estimated useful lives of the assets using the straight-line method. The estimated useful lives of assets are as follows:

Buildings   20 to 40 years
Building improvements   5 to 15 years
Leasehold improvements   Lesser of 10 years or useful life
Data processing equipment   3 years
Furniture and fixtures   4 to 7 years
Machinery and equipment   3 to 6 years
Software licenses   3 years

        Goodwill and Other Intangible Assets—The Company accounts for goodwill and other intangible assets in accordance with Statement of Financial Accounting Standard ("SFAS") No. 142,

F-8



Goodwill and Other Intangible Assets, which states that goodwill and intangible assets with indefinite useful lives should not be amortized, but instead tested for impairment at least annually at the reporting unit level. If an impairment exists, a write-down to fair value (normally measured by discounting estimated future cash flows) is recorded. Intangible assets with finite lives are amortized over their estimated useful lives on an accelerated basis to reflect the pattern in which the economic benefits of the intangible assets are consumed. All other intangible assets are reviewed for impairment in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets ("SFAS No. 144").

        Impairment of Long-Lived Assets—In accordance with SFAS No. 144, long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset.

        Classification of Equity Securities—The Company has adopted the guidance of Emerging Issues Task Force Topic ("EITF") D-98, Classification and Measurement of Redeemable Securities, in the measurement and classification of its equity securities.

        Use of Estimates—The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect the amounts reported in the Company's consolidated financial statements and accompanying notes. The Company bases its estimates and judgments on historical experience and on various other assumptions that it believes are reasonable under the circumstances. However, future events are subject to change and estimates and judgments routinely require adjustment. The amounts of assets and liabilities reported in the Company's balance sheets and the amounts of revenues and expenses reported for each of its fiscal periods 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, goodwill and intangible asset impairments, amortization of intangibles, restructurings, liabilities under defined benefit plans, unit-based compensation and income taxes. Actual results could differ from these estimates.

        Revenue Recognition—A majority of the Company's revenues are attributable to fees for providing services. Customers are generally billed on a per-transaction basis and/or on a monthly subscription basis. Revenues are recognized only after services are provided, when persuasive evidence of an arrangement exists, the fee is fixed and determinable, and when collectibility is reasonably assured.

F-9



        Certain services are sold through a single contract with multiple elements, including database services, hardware, and maintenance. The Company accounts for revenue with multiple elements in accordance with EITF Issue No. 00-21, Revenue Arrangements with Multiple Deliverables ("EITF 00-21"). EITF 00-21 provides guidance on (a) how arrangement consideration should be measured, (b) whether the arrangement should be divided into separate units of accounting, and (c) how the arrangement consideration should be allocated among separate units of accounting.

        Certain services may require the Company to perform setup and implementation activities necessary for the client to receive services under the service contract. Up-front fees billed during the setup phase are deferred and amortized on a straight-line basis over the estimated customer life and setup costs that are direct and incremental to the contract are capitalized and amortized on a straight-line basis over the estimated customer life.

        Revenues are reflected net of customer sales allowances, which are based on both specific identification of certain accounts and a predetermined percentage of revenue based on historical experience.

        Operating Expenses—Operating expenses include the compensation and benefits costs for operations, database development and customer service personnel, other costs related to operations, database development and customer support functions, as well as third-party data and royalty costs, and the cost of computer software and hardware used directly in the delivery of our products and services.

        Foreign Currency Translation—The net assets of the Company's foreign subsidiaries are translated into U.S. dollars based on foreign currency exchange rates in effect at the end of each period, and revenues and expenses are translated at average exchange rates during the periods. Functional currencies of significant foreign subsidiaries include Euros, British pounds, Swiss francs, and Canadian dollars. Foreign currency transaction gains or losses, which are included in the results of operations, totaled $0 for the period from March 24, 2005 (inception) to June 30, 2005 and $604 for the year ended June 30, 2006. Gains or losses from balance sheet translation are included in unitholders' equity within accumulated other comprehensive income on the consolidated balance sheets.

        Internal Use Software—Expenditures for software purchases and software developed or obtained for internal use are capitalized and amortized over a three- to five-year period on a straight-line basis. For software developed or obtained for internal use, the Company capitalizes costs in accordance with the provisions of Statement of Position No. 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use. The Company's policy provides for the capitalization of external direct costs of materials and services associated with developing or obtaining internal use computer software. In addition, the Company also capitalizes certain payroll and payroll-related costs for employees who are directly associated with internal use computer

F-10



software projects. The amount of capitalizable payroll costs with respect to these employees is limited to the time directly spent on such projects. Costs associated with preliminary project stage activities, training, maintenance and all other post-implementation stage activities are expensed as incurred. The Company also expenses internal costs related to minor upgrades and enhancements, as it is impractical to separate these costs from normal maintenance activities.

        Income Taxes—The provisions for income taxes, income taxes payable and deferred income taxes are determined using the liability method. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured by applying enacted tax rates and laws to taxable years in which such differences are expected to reverse. A valuation allowance is provided when the Company determines that it is more likely than not that a portion of the deferred tax asset balance will not be realized.

        Fair Value of Financial Instruments—Derivative financial instruments are used principally in the management of foreign currency and interest rate exposures and are recorded on the consolidated balance sheets at fair value. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized as a charge or credit to earnings. If the derivative is designated as a cash flow hedge, the effective portions of the changes in the fair value of the derivative are initially recorded in accumulated other comprehensive income/loss and are subsequently reclassified into earnings when the hedged transactions occur and affect earnings. Ineffective portions of changes in the fair value of cash flow hedges are recognized as a charge or credit to earnings. Derivative instruments not designated as hedges are marked-to-market at the end of each accounting period with the results included in the consolidated statements of operations.

        Advertising—Advertising costs are expensed when incurred and are included in selling, general and administrative expenses. Total advertising costs for the Company were $6 and $1,573 for the period from March 24, 2005 through June 30, 2005 and for the year ended June 30, 2006, respectively.

        Unit-Based Compensation—Effective July 1, 2006, the Company adopted SFAS No. 123 (revised 2004), Share-Based Payment ("SFAS 123(R)") which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors, including employee stock options and unit awards, based on estimated fair values recognized over the requisite service period. Prior to adoption of SFAS 123(R), pursuant to SFAS No. 123 Accounting for Stock-Based Compensation, the Company accounted for employee unit awards under Accounting Principles Board ("APB") No. 25, Accounting for Stock Issued to Employees ("APB Opinion No. 25") and followed the Disclosure—Only Provisions of SFAS No. 123. The Company has not granted any options since inception.

F-11



        The Company adopted SFAS 123(R) using the prospective transition method. Under this method, SFAS 123(R) is applied to new awards and to awards modified, repurchased or cancelled after the adoption date of July 1, 2006. Compensation cost that was previously recorded under APB Opinion No. 25 for awards outstanding at the adoption date, such as unvested options, will continue to be recognized as the options vest. Accordingly, for the quarter ended September 30, 2006, unit-based compensation expense includes compensation cost related to estimated fair values of awards granted after the date of adoption of SFAS 123(R) and compensation costs related to unvested awards at the date of adoption based on the intrinsic values as previously recorded under APB Opinion No. 25.

        The fair value of unit options awards granted after July 1, 2006 will be estimated on the grant date using the Black-Scholes option valuation model. This valuation model for unit compensation expense requires the Company to make assumptions and judgments about the variables used in the calculation including the expected term (weighted average period of time that the options granted are expected to be outstanding), the volatility of Solera's common units, an assumed risk free interest rate and the estimated forfeitures of unvested unit awards. No compensation cost is recorded for awards that do not vest. For awards granted after July 1, 2006, and valued in accordance with SFAS 123(R), the Company will use the straight-line method for expense attribution. Since the Company's common units have not been actively traded in the past, the Company uses the simplified calculation of expected life described in the Securities and Exchange Commission Staff Accounting Bulletin No. 107 ("SAB 107") and volatility is based on an average of the historical volatilities of the common stock of several entities with characteristics similar to those of the Company. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option.

        The Company has not granted any options to purchase its units since inception. During the year ended June 30, 2006, the Company granted fully vested and restricted common units to certain employees and directors and recorded $1,808 in deferred unit-based compensation and related amortization expense of $285 related to the fully vested units and $76 related to the unvested units (see Note 11).

        On July 25, 2006, the Company granted the right to purchase 3,294 restricted common units to certain employees. The difference of $0.88 between the fair value of each common unit of $0.98 and the per unit purchase price of $0.10 resulted in deferred unit-based compensation of approximately $2,900. This amount will be recognized as expense on a straight-line basis over the vesting period of 60 months. During the three months ended September 30, 2006, the Company recorded $97 as an expense related to these rights.

        Certain Risks and Concentrations—The Company offers a broad range of services to a diverse group of customers throughout North, Central and South America, Europe, the Middle East, Africa and Asia. The Company performs periodic credit evaluations of each customer and monitors

F-12



their financial condition and developing business news. Revenues for the period from March 24, 2005 (inception) through June 30, 2005 were not material. The Company did not have any customers with sales which exceeded 10% of total revenues for the year ended June 30, 2006.

        Comprehensive Income (Loss)—The Company accounts for comprehensive income (loss) under the provisions of SFAS No. 130, Reporting Comprehensive Income (Loss), which establishes standards for reporting and displaying comprehensive income (loss) and its components in the financial statements. Comprehensive income (loss) as defined includes all changes in equity during a period from nonowner sources. For the period ended June 30, 2005, there was no difference between the Company's net loss and comprehensive loss. For the year ended June 30, 2006, comprehensive income consists of net loss and foreign currency translation adjustments and is presented in the consolidated statement of unitholders' equity (deficit).

        Recent Accounting Pronouncements—In March 2005, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations, an Interpretation of SFAS No. 143 ("FIN 47"). FIN 47 requires an entity to recognize a liability for the fair value of a conditional asset retirement obligation in the period in which it is incurred if the liability's fair value can be reasonably estimated. FIN 47 clarifies that the term "conditional asset retirement obligation" as used in SFAS No. 143, Accounting for Conditional Asset Retirement Obligations, refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. FIN 47 is effective no later than the end of fiscal years ending after December 15, 2005. The adoption of FIN 47 as of June 30, 2006, did not have a material impact on the Company's financial position, results of operations or cash flows.

        In June 2006, the FASB issued FASB Interpretation No 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109 ("FIN 48"). FIN 48 defines a criterion that an individual tax position must meet for any part of the benefit of that position to be recognized in an enterprise's financial statements. FIN 48 also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 is effective for the Company's fiscal year beginning on July 1, 2007. The Company is currently evaluating the impact of FIN 48 on the Company's financial statements.

        In September 2006, FASB issued SFAS No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plansan Amendment of FASB Statements No. 87, 88, 106 and 132(R) ("SFAS No. 158"). This statement would require a company to (a) recognize in its statement of financial position an asset for a plan's overfunded status or a liability for a plan's underfunded status, (b) measure a plan's assets and its obligations that determine its funded status as of the end of the employer's fiscal year, and (c) recognize changes in the funded status of a defined postretirement plan in the year in which the changes occur (reported in comprehensive income). The requirement to recognize the funded status of a benefit plan and the disclosure requirements

F-13



are effective as of the end of the fiscal year ending after December 15, 2006. The Company is currently assessing the impact of adoption. The requirement to measure the plan assets and benefit obligations as of the date of the employer's fiscal year-end statement of financial position is effective for fiscal years ending after December 15, 2008. The Company is currently evaluating the effect that the adoption of SFAS No. 158 will have, if any, on its consolidated results of operations and financial condition.

        In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements ("SFAS No. 157"). This statement clarifies the definition of fair value, establishes a framework for measuring fair value, and expands the disclosures on fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the effect that the adoption of SFAS No. 157 will have, if any, on its consolidated results of operations and financial condition.

        In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108 ("SAB 108"). SAB 108 considers the effects of prior year misstatements when quantifying misstatements in current year financial statements. It is effective for fiscal years ending after November 15, 2006. The Company applied the guidance in SAB 108 as of July 1, 2006. The application of SAB 108 did not have a significant effect on the Company's consolidated financial statements.

        Net Income (Loss) Per Common Unit—The Company calculates net loss per common unit in accordance with SFAS No. 128, Earnings Per Share ("SFAS No.128"). Under SFAS No. 128, basic net loss per common unit is calculated by dividing net loss by the weighted-average number of common units outstanding during the reporting period excluding units subject to repurchase.

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        Reconciliation of units used in this calculation of basic net loss per unit is as follows (in thousands):

 
  Period from
March 24, 2005
(inception)
through
June 30, 2005

  Year Ended
June 30, 2006

  Three Months
Ended
September 30,
2005

  Three Months
Ended
Sept. 30, 2006

 
Weighted average number of common units   43,444   56,692   46,786   93,141  
Weighted average common units subject to repurchase   (5,389 ) (5,759 ) (5,804 ) (6,027 )
   
 
 
 
 
Units used to calculate basic net loss per unit   38,055   50,933   40,982   87,114  
   
 
 
 
 

        For the years ended June 30, 2005 and 2006, outstanding redeemable preferred units of 1,025 and 204,239, respectively, and nonvested carried common units of 5,803,968 and 6,030,866, respectively, have been excluded, as they are antidilutive due to the Company's net loss. For the three months ended September 30, 2005 and 2006, 1,025 and 204,239 redeemable preferred units, respectively, and 5,803,968 and 5,628,827 carried common units, respectively, have been excluded, as they are antidilutive to the Company's net loss.

3.    OTHER (INCOME) EXPENSE—NET

        Other (income) expense—net consists of the following:

 
  Period from
March 24, 2005
(Inception)
Through
June 30, 2005

  Year
Ended
June 30, 2006

 
Interest income   $ (22 ) $ (405 )
Net realized and unrealized gains and losses on derivative instruments         2,850  
Foreign exchange gain on notes receivable and notes payable from affiliated parties         (604 )
Other         (5 )
   
 
 
Other (income) expense—net   $ (22 ) $ 1,836  
   
 
 

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4.    ACQUISITION OF CLAIMS SERVICES GROUP OF ADP

        On April 13, 2006, the Company acquired the Claims Services Group from ADP for approximately $1.0 billion. The Acquisition consisted of an asset purchase with respect to certain assets controlled by ADP, primarily in North America, and a purchase of a controlling interest in the outstanding shares of entities controlled by ADP, primarily in Europe. With respect to Sidexa S.A. (France), Informex S.A. (Belgium), Audatex Espana S.A. (Spain), Audatex Datos Espana S.A. (Spain), Audatex Portugal S.A. (Portugal) and Audatex Mexico S. De R.L. de C.V. (Mexico), the Company is the controlling shareholder, with ownership of 75%, 98%, 75%, 88%, 51%, and 51% of the outstanding shares, respectively. Claims Services Group's results of operations have been included in the accompanying consolidated statements of operations from the date of the Acquisition.

        The aggregate consideration was determined as:

Cash paid to ADP   $ 988,321
Transaction costs and other     14,254
   
    $ 1,002,575
   

        The Acquisition was accounted for as a purchase pursuant to SFAS No. 141, Business Combinations. Under purchase accounting, the total purchase price was allocated to the Claims Services Group's net tangible and identifiable intangible assets based on their estimated fair values as of April 13, 2006, as set forth below. The excess of the purchase price over the net tangible and identifiable intangible assets was recorded as goodwill. The fair value of the identifiable intangible assets pertaining to customer relationships, software and database technology and trademarks was established based on a discounted cash flow approach. The preliminary allocation of the purchase price was based upon certain estimates and assumptions that are subject to change. The primary areas of the purchase price allocation that are not yet finalized relate to certain employee related liabilities, income and non-income based taxes and residual goodwill.

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        The purchase consideration has been allocated on a preliminary basis as follows:

Cash   $ 78,128  
Accounts receivable     62,010  
Other assets     55,363  
Property and equipment     37,929  
Intangible assets:        
  Software and database technology     239,200  
  Customer relationships     173,900  
  Trademarks     13,500  
Accounts payable and other accrued liabilities     (89,930 )
Tax-related liabilities     (79,121 )
Minority share of net assets     (8,064 )
Goodwill     519,660  
   
 
    $ 1,002,575  
   
 

        In certain tax jurisdictions the Acquisition was structured as an asset purchase and the resulting goodwill of approximately $90,277 attributable to these jurisdictions is deductible for income tax purposes.

        The unaudited pro forma information presented below reflects the combined results of the Company and the Claims Services Group as if the Acquisition and the related financing transactions had occurred at the beginning of each period presented. These results are not necessarily indicative of future operating results nor of those that would have occurred had the Acquisition been consummated on those dates:

 
  Period From
March 24, 2005
Through
June 30, 2005

  Year Ended
June 30, 2006

 
Pro forma:              
  Revenues   $ 103,035   $ 430,230  
  Net loss allocable to common unit holders     (33,111 )   (92,645 )
  Net loss allocable to common unit holders per unit:              
    Basic and diluted     (0.40 )   (1.08 )
  Weighted average units used in the calculation of net loss per common unit allocable to common unit holders:     82,209     86,006  

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5.    RESTRUCTURING CHARGES

        The Company has recorded restructuring charges, which primarily consist of one-time termination benefits, of $2,871 during the year ended June 30, 2006, and no restructuring charges for the period from March 24, 2005 (inception) through June 30, 2005. These restructuring initiatives were designed to achieve efficiencies and reduce costs in response to changes in projected demand for certain services. One-time termination benefits relate to the termination of approximately 45 employees during the year ended June 30, 2006. The restructuring reserves are included in accrued expenses and other current liabilities on the consolidated balance sheets. The following table summarizes the charges for restructuring and related activities, including payments made and the ending reserve balances by business segment:

 
  Balance
at July 1,
2005

  Purchase
Accounting
April 14,
2006

  Adjustments/
Additions

  Payments
  Balance
at June 30,
2006

  Adjustments/
Additions

  Payments
  Balance at
September 30,
2006

EMEA   $   $ 514   $ 1,303   $ 164   $ 1,653   $   $ 50   $ 1,603
Americas         281     1,568     241     1,608     895     973     1,530
   
 
 
 
 
 
 
 
Total   $   $ 795   $ 2,871   $ 405   $ 3,261   $ 895   $ 1,023   $ 3,133
   
 
 
 
 
 
 
 

        The EMEA business unit encompasses the Company's operations in Europe, the Middle East, Africa, and Asia. The Americas business unit encompasses the Company's operations in North America, and Central and South America.

6.    RECEIVABLES

        Accounts receivable is net of an allowance for doubtful accounts of $0 and $1,665 at June 30, 2005 and 2006, respectively. Accounts receivable at June 30, 2005 were not material. There were no customers with accounts receivable representing 10% or more of consolidated accounts receivable at June 30, 2006.

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7.    PROPERTY AND EQUIPMENT—NET

        Property and equipment at cost and accumulated depreciation at June 30, 2005 and 2006 are as follows:

 
  2005
  2006
 
Property and equipment:              
  Land and buildings   $   $ 12,844  
  Machinery and equipment     136     2,013  
  Furniture and fixtures     84     3,403  
  Data processing equipment     191     13,037  
  Leasehold improvements     2     5,360  
Software licenses         2,935  
Capital leases         34  
   
 
 

Property and equipment at cost

 

 

413

 

 

39,626

 

Less accumulated depreciation

 

 

(16

)

 

(1,341

)
   
 
 

Property and equipment—net

 

$

397

 

$

38,285

 
   
 
 

8.    GOODWILL AND INTANGIBLE ASSETS—NET

        Changes in goodwill for the year ended June 30, 2006 and for the three months ended September 30, 2006, by business segment are as follows:

 
  EMEA
  Americas
  Total
Balance—July 1, 2005   $   $   $
  Additions from the Acquisition     434,702     84,958     519,660
  Cumulative translation adjustments     21,448     313     21,761
   
 
 
Balance—June 30, 2006   $ 456,150   $ 85,271   $ 541,421
  Cumulative translation adjustments     2,547     (70 )   2,477
   
 
 
Balance—September 30, 2006   $ 458,697   $ 85,201   $ 543,898
   
 
 

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        Components of intangible assets, excluding goodwill, are as follows; there were no intangibles at June 30, 2005:

 
  June 30,
2006

  September 30,
2006

 
Intangibles (excluding goodwill):              
  Internally developed software   $ 18,024   $ 25,300  
  Customer relationships     179,138     180,304  
  Trademarks     14,396     14,206  
  Software and database technology     250,299     247,815  

Less accumulated amortization

 

 

(20,563

)

 

(47,820

)
   
 
 
Intangible assets—net   $ 441,294   $ 419,805  
   
 
 

        Intangible assets (except goodwill) have finite lives and, as such, are subject to amortization. The weighted average remaining useful life of the intangible assets is 13 years (3 years for internally developed software, 20 years for customer relationships, 4 years for trademarks and 9 years for software and database). Internally developed software is amortized on a straight-line basis. The other intangible assets are amortized on an accelerated basis to reflect the pattern in which economic benefits of the intangible assets are consumed. Amortization of intangibles totaled $0 and $20,563 for the period from March 24, 2005 (inception) through June 30, 2005 and the year ended June 30, 2006. Estimated amortization expenses of the Company's existing intangible assets for the next five years ended June 30 are as follows:

2007   $ 87,176
2008     71,897
2009     59,061
2010     48,366
2011     37,891
Thereafter     136,903
   
Total   $ 441,294
   

        The above useful lives represent the Company's best estimates. However, actual lives may differ from these estimates. In addition, the expected future amortization may vary based on fluctuations in foreign currency exchange rates.

9.    FINANCIAL INSTRUMENTS AND DERIVATIVES

        Financial Instruments—At June 30, 2005 and 2006, the carrying amounts of cash equivalents, receivables, accounts payable, and other liabilities approximated their fair values because of the

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short-term maturities of these financial instruments. The carrying amounts of long-term debt at June 30, 2006, approximated fair value based on prevailing interest rates.

        Derivatives—In the normal course of business, the Company is exposed to interest rate changes and foreign currency fluctuations. The Company strives to limit these risks through the use of derivatives such as interest rate swaps and foreign exchange options. Derivatives are not used for speculative purposes. However, the Company's derivative instruments are not designated as hedging instruments.

        In February 2006, the Company entered into a foreign currency exchange option (the "FX Option") that gives the Company the option to call USD $200,000 at a strike price of 1.1646 EUR/USD at any time up to February 8, 2011. In February 2006, the Company paid approximately $7,912 for the FX Option. As of June 30, 2006 and September 30, 2006, the fair value of the FX Option approximated $3,980 and $3,369, respectively, and was recorded in other assets in the consolidated balance sheet. The decrease in fair value of approximately $3,932 and $611 was recognized in other expense in the statement of operations during the year ended June 30, 2006 and the three months ended September 30, 2006, respectively.

        Effective April 27, 2006, the Company entered into two interest rate swaps with maturities on July 13, 2011. One swap has a notional amount of $195,000 and requires the Company to pay a fixed rate of 5.35%. The second interest rate swap has a notional amount of €368,421 and requires the Company to pay, on a quarterly basis, a fixed rate of 3.72%. The estimated fair market value of the interest rate swaps was $1,082 and $(2,583) as of June 30, 2006 and September 30, 2006, respectively. The fair value of the interest rate swaps was recorded in other assets as of June 30, 2006 and in other liabilities as of September 30, 2006 in the consolidated balance sheet. The increase in fair value of approximately $1,082 during the year ended June 30, 2006 and the decrease in fair value of approximately $3,665 for the three months ended September 30, 2006 were recognized as a reduction and an increase to other (income) expense net, respectively, in the consolidated statements of operations.

        The estimated fair values of the Company's derivatives were determined based on quoted market prices and may not be representative of actual values that could have been realized or that will be realized in the future.

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10.    LONG-TERM DEBT

        Long-term debt at June 30, 2006, consists of the following:

Senior Secured Credit Facilities:      
  First Lien Credit Facility:      
    Domestic Revolver Loan, due April 2012   $ 11,000
    Domestic Term Loan, due April 2013     240,000
    European Term Loan, due April 2013     281,127
  Second Lien Credit Facility—      
    European Term Loan, due October 2013     210,845
Subordinated Unsecured Credit Facility—      
  Mezzanine Loan, due October 2014     104,867
   
      Total     847,839

Less current portion

 

 

16,211
   

Long-term portion

 

$

831,628
   

        Senior Secured Credit Facilities—In April 2006, the Company entered into a senior secured credit arrangement (the "Senior Secured Credit Facilities") under a First and Second Lien Credit and Guaranty Agreement (the "First and Second Lien Credit Facility") with a syndicate of commercial lenders. The First Lien Credit Facility includes a revolving commitment ("Revolver Credit Facility") which permits U.S. Dollar or Euro-based borrowings and issuances of letters of credit of up to $50,000 in the aggregate; a domestic term loan commitment ("Domestic Term Loan") of $240,000; and a European term loan commitment ("European Term Loan") of €220,000. As of June 30, 2006, the Company had $11,000, $240,000 and $281,127 (€220,000) in outstanding loans under the Revolver Credit Facility, Domestic Term Loan and European Term Loan, respectively, with interest rates of 9.25%, 7.30% and 5.06%, respectively.

        The Second Lien Credit Facility includes a European term loan commitment ("European Second Term Loan") of €165,000. As of June 30, 2006, the Company had $210,845 (€165,000) in outstanding loans under the European Second Term Loan.

        Borrowings under the Senior Secured Credit Facilities bear interest, to be reset at the Company's option, at a rate determined by the sole lead arranger of the syndicate of commercial lenders equal to (i) the offer rate on dollars based on the British Bankers' Association Settlement Rate for deposits or (ii) the offer rate on the Euro from the Banking Federation of the European Union, or (iii) in the event such rates are not available, then the offered quotation rate to first class banks in the London inter-bank market or European inter-bank market by Citibank USA Inc. for deposits, respectively, in each case, plus an applicable margin that varies based upon the Company's consolidated leverage ratio, as defined in the agreement. Beginning on September 30, 2006, consecutive quarterly principal payments of $600 and €550 are required for the Domestic

F-22



Term Loan and European Term Loan, respectively, under the First Lien Credit Facility with the remaining balance due in April 2013. The Senior Secured Credit Facility allows for voluntary prepayments under specified conditions and requires mandatory prepayments and commitment reductions upon the occurrence of certain events, including among others, sale of assets, receipt of insurance or condemnation proceeds, excess cash flow, and issuances of debt and equity securities.

        The obligations under the Senior Secured Credit Facility are secured by substantially all of the assets of the Company. The Senior Secured Credit Facility contains certain covenants including, among others, requirements related to financial reporting, maintenance of operations, compliance with applicable laws and regulations, maintenance of interest rate protection and compliance with specified financial covenants, as well as restrictions related to liens, investments, additional indebtedness, dispositions of assets or subsidiary interests, dividends, distributions, issuances of equity securities, transactions with affiliates, capital expenditures, and certain other changes in the business. Financial covenants include the requirement to maintain a minimum interest coverage ratio and limit maximum total leverage, senior leverage ratios, and levels of capital expenditures.

        Subordinated Unsecured Credit Facility—In April 2006, the Company entered into a subordinated unsecured credit guaranty agreement ("Subordinated Unsecured Credit Agreement") with a syndicate of commercial lenders. The Subordinated Unsecured Credit Agreement consists of a European term loan ("European Mezzanine Loan") of €80,000. As of June 30, 2006, the Company had an outstanding European Mezzanine Loan balance of $104,867 (€82,000), including accumulated interest of $2,700, at an interest rate of 11.91% with a maturity date in October 2014.

        Borrowings under the Subordinated Unsecured Credit Agreement bear interest, to be reset at the Company's option, at a rate determined by the sole lead arranger of the syndicate of commercial lenders equal to (i) the offer rate on dollars based on the British Bankers Association Settlement Rate for deposits or (ii) the offer rate on the Euro from the Banking Federation of the European Union, or (iii) in the event such offer rates are not available, then the offered quotation rate to first class banks in the London inter-bank market or European inter-bank market by Citibank USA Inc. for deposits in each case, plus an applicable margin of 9%, which shall be capitalized, compounded, and added to the unpaid principal amount of the European Mezzanine Loan on the last day of each interest period on no less than a quarterly basis.

        The Subordinated Unsecured Credit Agreement allows for voluntary prepayments under specified conditions and requires mandatory repayments upon the sale of assets or receipt of insurance or condemnation proceeds. This agreement also contains certain covenants including, among others, requirements related to financial reporting, maintenance of operations, compliance with applicable laws and regulations and compliance with specified financial covenants, as well as restrictions related to liens, investments, additional indebtedness, dispositions of assets or subsidiary interests, dividends, distributions, issuances of equity securities, transactions with

F-23



affiliates, capital expenditures, and certain other changes in the business. Financial covenants include the requirement to maintain a minimum interest coverage ratio and limit maximum total leverage, senior leverage ratios, and levels of capital expenditures.

        In connection with the Senior Secured Credit Facilities and the Subordinated Unsecured Credit Facility Agreements the Company incurred approximately $32,000 in financing costs, which were deferred and included as part of other assets in the consolidated balance sheet and are amortized on the effective interest method as interest expense over the term of the debt. Amortization of deferred loan costs for the year ended June 30, 2006, included in interest expense was approximately $974.

    Future Minimum Principal Payments

        Future minimum principal payments as of June 30, 2006, are as follows:

2007   $ 16,211
2008     5,211
2009     5,211
2010     5,211
2011     5,211
Thereafter     810,784
   
Total   $ 847,839
   

11.    REDEEMABLE PREFERRED AND COMMON UNITS

        Securities—The Company is authorized to issue an unlimited amount of the following securities.

        Class A Redeemable Preferred Units—each unit holder accrues a daily yield at the rate of 8% per annum, compounded on the last day of each calendar quarter, on the unreturned capital contributions made in respect of such Class A Redeemable Preferred Unit plus all unpaid yield for all prior quarterly periods. Any distribution by the Company will be made; first, in respect of all accrued and unpaid yield on the Class A Redeemable Preferred Units; and second, in respect of all unreturned capital on the Class A Redeemable Preferred Units. These units may only be issued in exchange for other securities of the Company. No Class A Redeemable Preferred Units have been issued or are outstanding.

        Class B Redeemable Preferred Units—each unit holder accrues a daily yield at the rate of 8% per annum, compounded on the last day of each calendar quarter, on the unreturned capital contributions made in respect of such Class B Redeemable Preferred Unit plus all unpaid yield for all prior quarterly periods. Any distribution made by the Company will first be paid to holders of

F-24



Class A Redeemable Preferred Units. Any excess will be distributed to the holders of Class B Redeemable Preferred Units; first, in respect of all accrued and unpaid yield on the Class B Redeemable Preferred Units; and second, in respect of all unreturned capital on the Class B Redeemable Preferred Units. The Class B Redeemable Preferred Units can be redeemed at any time by the Company at their redemption value (unpaid yield and unreturned capital). The holders of the majority of Class B Redeemable Preferred Units (GTCR) control the Company through their ownership of common units and board of managers' representation. Therefore, in accordance with EITF Topic D-98, Classification and Measurement of Redeemable Securities, the Company has classified the Class B Redeemable Preferred Units as redeemable securities.

        Class A Common Units—each holder has the right of one vote per unit.

        Class B Common Units—holders of these units have no voting rights. No units have been issued or are outstanding.

        Unit Purchase Agreement—On April 1, 2005, the Company entered into a unit purchase agreement (the "Unit Purchase Agreement") and completed the first of two investment transactions with GTCR. Pursuant to the first investment transaction, the Company issued an aggregate of 40,000,000 Class A Common Units ("common units") at a price of $0.10 per unit and an aggregate of 1,000 Class B Redeemable Preferred Units ("preferred units") at a price of $1,000 per unit to GTCR, resulting in proceeds before issuance costs of $5,000. Concurrent with this first GTCR investment, certain executives, managers and other employees purchased an aggregate of 6,786,383 common units at a price of $0.10 per unit and 24.56 preferred units at a price of $1,000 per unit resulting in proceeds of $703. The total proceeds before issuance costs from these investment transactions were allocated to the preferred units and common units at their respective offering prices. The offering prices of these securities of $0.10 per common unit and $1,000 per preferred unit were considered to be the fair value as the Company was in the development stage. The Company incurred issuance costs of $405. Issuance costs of $332 and $73 were allocated to the common and preferred units, respectively, based on their relative fair value.

        On April 13, 2006, in connection with the Acquisition, the Company amended and restated the Unit Purchase Agreement in order to facilitate the second of two investment transactions with GTCR. Pursuant to the second investment transaction, the Company issued an aggregate of 43,600,000 common units at a price of $0.10 per unit and 199,640 preferred units at a price of $1,000 per unit to GTCR, resulting in proceeds before issuance costs of $204,000. Concurrent with this second GTCR investment, certain executives, managers and other employees purchased an aggregate of 3,692,840 common units at a price of $0.10 per unit and 3,574.8 preferred units at a price of $1,000 per unit, resulting in proceeds of $3,944. Additionally, pursuant to the second investment transaction, the Company repurchased 938,319 common units from certain executives, directors, and employees, at a price of $0.10 per unit, resulting in total cash cost of $94. The net proceeds before issuance costs from these investment transactions were allocated at fair value

F-25



based on management's best estimate of $90,466 ($0.98 per unit) for common units and $119,285 ($600.40 per unit) for preferred units. A third-party valuation specialist assisted management in establishing the fair values for the securities issued. The Company incurred issuance costs of $2,185. Issuance costs of $930 and $1,255 were allocated to the common and preferred units, respectively, based on their relative fair values. As the preferred units can be redeemed at any time by the holders of the units, the carrying value of the preferred units is adjusted to their redemption amount on each balance sheet date. These adjustments resulted in accretion of $73, $85,184, and $4,191 for the period from March 24, 2005 (inception) to June 30, 2005, the year ended June 30, 2006 and the three months ended September 30, 2006, respectively.

    Redeemable Preferred and Common Units Held by Certain Executives, Directors and Other Employees

        Co-Invest Preferred and Common Units and Carried Common Units—Pursuant to terms of the Unit Purchase Agreement, certain executives, directors and other employees were granted the right to purchase redeemable preferred and common units ("Co-Invest Preferred Units" and "Co-Invest Common Units", respectively). These Co-Invest Preferred and Common Units were fully vested upon purchase. Additionally, certain executives, directors and other employees were granted the right to separately purchase common units ("Carried Common Units"). The Carried Common Units become vested in accordance with a vesting schedule, typically over a 4 year period, as long as the holders are employed by the Company or any of its subsidiaries.

        In the first investment transaction on April 1, 2005, Co-Invest Common Units were issued at $0.10 per unit which was determined to be the fair value since the Company was in the development stage, and as such, no compensation expense has been recognized on these units as of June 30, 2005 and 2006.

        On April 13, 2006, in conjunction with the Acquisition, certain employees and directors received 3,574.8 Co-Invest Preferred Units and 3,692,840 Co-Invest and Carried Common Units for a payment of $3,944. The Co-Invest Preferred and Co-Invest and Carried Common Units had fair values of approximately $2,146 and $3,605, respectively. The $1,807 difference in cash paid and fair value received was recorded as deferred unit based compensation. The deferred unit-based compensation attributed to the Co-Invest Common Units of $265 was recognized immediately as an expense in the consolidated statement of operations for the year ended June 30, 2006 since these Common Units are fully vested on June 30, 2006. The deferred unit-based compensation attributed to the Carried Common Units of $1,542 was to be amortized over the vesting period of 4 years. At June 30, 2006, compensation expense of $361 has been recognized on Co-Invest and Carried Common Units.

        At June 30, 2005 and 2006, 5,803,968 and 6,030,866 Carried Common Units are subject to the Repurchase Option as defined below.

F-26



        Repurchase Option—The Carried Common Units are subject to repurchase upon the executive's or the employee's separation from the Company (together, the "Repurchase Option"). In the event of the executive's or employee's separation, the Carried Common Units (whether vested or unvested and whether held by executive or one or more of executive's transferees, other than the Company and GTCR) will be subject to repurchase. The Company may assign its repurchase rights to any person, provided that if there is a subsidiary public offering and the securities of such subsidiary are distributed to the members of the Company, then such subsidiary will be treated as the Company with respect to any repurchase of the securities of such subsidiary. In the event of a separation, (i) the purchase price for each unvested Carried Common Unit will be the lesser of (A) the original cost for such unit and (B) the fair market value of such unit as of the delivery date of the repurchase notice or supplemental repurchase notice, as the case may be, and (ii) the purchase price for each vested Carried Common Unit will be the fair market value of such unit as of the delivery date of the repurchase notice or supplemental repurchase notice, as the case may be; provided, however, that if the executive's or employee's employment is terminated with cause, the purchase price for each vested Carried Common Unit will be the lesser of (A) the executive's or employee's original cost for such unit and (B) the fair market value of such unit as of the delivery date of the repurchase notice or supplemental repurchase notice, as the case may be.

        Additional Common Units—The Company has reserved 932,879 additional common units (the "Additional Units") for issuance to other executives and employees of the Company and its subsidiaries (including executives and employees of acquired companies). In the event that any portion of such Additional Units has not been issued prior to a sale of the Company, the Company shall issue an aggregate number of Class B Common Units equal to 50% of the portion of the Additional Units that have not been issued as of such time to the Chief Executive Officer ("CEO") and the other current executives of the Company or its subsidiaries, in the amounts and to such executives (including the CEO) as directed by the CEO to the Company in writing. This provision terminates upon the earlier to occur of a separation of the CEO and the consummation of a sale of the Company.

12.    EMPLOYEE BENEFIT PLANS

        Pension Plans—The Company's foreign subsidiaries sponsor various defined benefit plans and individual defined benefit arrangements covering certain eligible employees. All of the defined benefit plans and arrangements are closed to new members. The benefits under these pension plans are based on years of service and compensation levels. Funding is limited to statutory requirements. The Company uses a June 30 measurement date for its foreign pension plans. The Company had no international deferred benefit plans prior to the Acquisition. The change in benefit

F-27