Solera Holdings Inc. (SLH, Financial) filed Quarterly Report for the period ended 2008-12-31.
SOLERA HOLDINGS INC is an integrated group of leading automotive claims solutions companies with the vision to continuously improve the automobile insurance claims processing industry worldwide. The Solera companies help customers automate and simplify their automobile claims process and improve their ability to monitor and manage their businesses through data reporting and analytics. Solera Holdings Inc. has a market cap of $1.56 billion; its shares were traded at around $24.35 with a P/E ratio of 18 and P/S ratio of 2.9.
The U.S. dollar has strengthened significantly versus most major foreign currencies we have used to transact our business over the last several months. For example, one Euro was equal to approximately $1.58 on June 30, 2008, $1.44 on September 30, 2008, and $1.41 on December 31, 2008. The change from June 30, 2008 to December 31, 2008 represents a strengthening of the U.S. dollar versus the Euro of approximately 10.8%. We anticipate that currency exchange rates will have a negative comparable impact on our revenues, but have a positive comparable impact on our interest expense and our intangibles amortization expense for the full fiscal year ending June 30, 2009.
In February 2006, we entered into a foreign exchange option, that gave 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. We paid approximately $7.9 million for this option. In November 2008, we sold the foreign exchange option for $12.4 million. The increases in fair value of the option prior to the sale of approximately $7.6 million and $10.6 million during the three and six month periods ended December 31, 2008, was due to increased volatility in spot rates for the U.S. dollar and Euro and changes in interest rates, and was recognized in Other income - net in our condensed consolidated statement of operations.
Non-cash charges. We incurred a pre-tax, non-cash charge of $1.6 million and $3.2 million, during the three and six month periods ended December 31, 2008 related to all restricted stock units and stock options outstanding as of December 31, 2008. We expect the remaining pre-tax, non-cash charge to be approximately $18.2 million, expensed ratably over vesting periods of up to 60 months.
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SOLERA HOLDINGS INC is an integrated group of leading automotive claims solutions companies with the vision to continuously improve the automobile insurance claims processing industry worldwide. The Solera companies help customers automate and simplify their automobile claims process and improve their ability to monitor and manage their businesses through data reporting and analytics. Solera Holdings Inc. has a market cap of $1.56 billion; its shares were traded at around $24.35 with a P/E ratio of 18 and P/S ratio of 2.9.
Highlight of Business Operations:
Foreign currency. During the three and six month periods ended December 31, 2008, we generated approximately 72% and 73% of our revenues and incurred a majority of our costs 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 $24.9 million and $66.2 million during the three and six month periods ended December 31, 2008, recorded as a component of Accumulated other comprehensive (loss) income in stockholders equity. Net foreign currency gains flowing through our condensed consolidated statements of operations during the three and six month periods ended December 31, 2008, were $1.8 million and $1.0 million, respectively.The U.S. dollar has strengthened significantly versus most major foreign currencies we have used to transact our business over the last several months. For example, one Euro was equal to approximately $1.58 on June 30, 2008, $1.44 on September 30, 2008, and $1.41 on December 31, 2008. The change from June 30, 2008 to December 31, 2008 represents a strengthening of the U.S. dollar versus the Euro of approximately 10.8%. We anticipate that currency exchange rates will have a negative comparable impact on our revenues, but have a positive comparable impact on our interest expense and our intangibles amortization expense for the full fiscal year ending June 30, 2009.
In February 2006, we entered into a foreign exchange option, that gave 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. We paid approximately $7.9 million for this option. In November 2008, we sold the foreign exchange option for $12.4 million. The increases in fair value of the option prior to the sale of approximately $7.6 million and $10.6 million during the three and six month periods ended December 31, 2008, was due to increased volatility in spot rates for the U.S. dollar and Euro and changes in interest rates, and was recognized in Other income - net in our condensed consolidated statement of operations.
Non-cash charges. We incurred a pre-tax, non-cash charge of $1.6 million and $3.2 million, during the three and six month periods ended December 31, 2008 related to all restricted stock units and stock options outstanding as of December 31, 2008. We expect the remaining pre-tax, non-cash charge to be approximately $18.2 million, expensed ratably over vesting periods of up to 60 months.
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