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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





Form 10-Q





(Mark One)

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

For the quarterly period ended March 31, 2009

OR



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

For the transition period from  to

Commission
File Number 001-33461





Solera Holdings, Inc.

(Exact
Name of Registrant as Specified in Its Charter)







|                                                               |  |                                                     
|-------------------------------------------------------------- |  | ----------------------------------------------------
|Delaware                                                       |  | 26-1103816                                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)                
|                                                               | 
|15030 Avenue of Science San Diego, California 92128            |  | (858) 724-1600                                      
|(Address of Principal Executive Offices, including Zip Code)   |  | (Registrants Telephone Number, Including Area Code)







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





Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has
been subject to such filing requirements for the past 90 days.    Yes  x    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of large accelerated filer, accelerated
filer, and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



|                           |  |                      |  |                                               |  |                             
|-------------------------- |  | -------------------- |  | --------------------------------------------- |  | ----------------------------
|Large accelerated filer  x |  | Accelerated filer   ̈ |  | Non-accelerated filer   ̈                      |  | Smaller reporting company   ̈
|                           |  |                      |  | (Do not check if a smaller reporting company) |  |                             

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes   ̈    No  x

The number of shares outstanding of the issuers common stock, as of May 7, 2009, was 69,514,521.









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TABLE OF CONTENTS



|        |  |                       |  |                                                                                                                               |  |         
|------- |  | --------------------- |  | ----------------------------------------------------------------------------------------------------------------------------- |  | --------
|        |  |                       |  |                                                                                                                               |  | Page(s) 
|PART I  |  | FINANCIAL INFORMATION |  |                                                                                                                              
|        |  | Item 1.               |  | Financial Statements (Unaudited)                                                                                              |  | 3 to 21 
|        |  |                       | 
|        |  |                       |  | Condensed Consolidated Balance Sheets as of March 31, 2009 and June 30, 2008.                                                 |  | 3       
|        |  |                       | 
|        |  |                       |  | Condensed Consolidated Statements of Operations for the three and nine month periods ended March 31, 2009 and March 31, 2008. |  | 4       
|        |  |                       | 
|        |  |                       |  | Condensed Consolidated Statements of Cash Flows for the nine month periods ended March 31, 2009 and March 31, 2008.           |  | 5       
|        |  |                       | 
|        |  |                       |  | Notes to Condensed Consolidated Financial Statements.                                                                         |  | 6       
|        |  |                       | 
|        |  | Item 2.               |  | Managements Discussion and Analysis of Financial Condition and Results of Operations.                                        |  | 21 to 31
|        |  | Item 3.               |  | Quantitative and Qualitative Disclosures About Market Risk.                                                                   |  | 32      
|        |  | Item 4.               |  | Controls and Procedures.                                                                                                      |  | 32 to 33
|        |  |                      
|PART II |  | OTHER INFORMATION     |  |                                                                                                                              
|        |  | Item 1.               |  | Legal Proceedings                                                                                                             |  | 33      
|        |  | Item 1A.              |  | Risk Factors                                                                                                                  |  | 33 to 42
|        |  | Item 2.               |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                   |  | 42      
|        |  | Item 3.               |  | Defaults Upon Senior Securities                                                                                               |  | 42      
|        |  | Item 4.               |  | Submission of Matters to a Vote of Security Holders                                                                           |  | 42      
|        |  | Item 5.               |  | Other Information                                                                                                             |  | 42      
|        |  | Item 6.               |  | Exhibits                                                                                                                      |  | 43      



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PART IFINANCIAL INFORMATION



|ITEM 1. | FINANCIAL STATEMENTS.
|------- | ---------------------

SOLERA HOLDINGS,
INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2009 AND JUNE 30, 2008

(In thousands, except share amounts)

(Unaudited)



|                                                                                                                                                                     |  |               |           |   |              |   |           |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | --------- | - | ------------ | - | --------- | -
|                                                                                                                                                                     |  | March 31,2009 |           |   | June 30,2008 |  
|ASSETS                                                                                                                                                               |  |               |           |   |              |   |           |  
|CURRENT ASSETS:                                                                                                                                                      |  |               |           |   |              |   |           |  
|Cash and cash equivalents                                                                                                                                            |  | $             | 188,042   |   |              | $ | 149,311   |  
|Accounts receivable  net                                                                                                                                            |  |               | 89,854    |   |              |   | 95,843    |  
|Other receivables                                                                                                                                                    |  |               | 10,709    |   |              |   | 9,784     |  
|Other current assets                                                                                                                                                 |  |               | 18,857    |   |              |   | 18,314    |  
|Deferred income tax assets                                                                                                                                           |  |               | 4,577     |   |              |   | 4,802     |  
|                                                                                                                                                                     |  |               |           |   |              |   |           |  
|Total current assets                                                                                                                                                 |  |               | 312,039   |   |              |   | 278,054   |  
|PROPERTY AND EQUIPMENT  net                                                                                                                                         |  |               | 48,068    |   |              |   | 49,243    |  
|OTHER ASSETS                                                                                                                                                         |  |               | 14,268    |   |              |   | 22,980    |  
|LONG TERM DEFERRED INCOME TAX ASSETS                                                                                                                                 |  |               | 5,138     |   |              |   | 5,162     |  
|GOODWILL                                                                                                                                                             |  |               | 612,301   |   |              |   | 646,098   |  
|INTANGIBLE ASSETS  net                                                                                                                                              |  |               | 317,976   |   |              |   | 330,218   |  
|                                                                                                                                                                     |  |               |           |   |              |   |           |  
|TOTAL                                                                                                                                                                |  | $             | 1,309,790 |   |              | $ | 1,331,755 |  
|                                                                                                                                                                     |  |               |           |   |              |   |           |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                 |  |               |           |   |              |   |           |  
|CURRENT LIABILITIES:                                                                                                                                                 |  |               |           |   |              |   |           |  
|Accounts payable                                                                                                                                                     |  | $             | 25,225    |   |              | $ | 32,191    |  
|Accrued expenses and other current liabilities                                                                                                                       |  |               | 94,031    |   |              |   | 103,597   |  
|Income taxes payable                                                                                                                                                 |  |               | 16,950    |   |              |   | 12,449    |  
|Deferred income tax liabilities                                                                                                                                      |  |               | 784       |   |              |   | 842       |  
|Current portion of long-term debt                                                                                                                                    |  |               | 5,660     |   |              |   | 6,336     |  
|                                                                                                                                                                     |  |               |           |   |              |   |           |  
|Total current liabilities                                                                                                                                            |  |               | 142,650   |   |              |   | 155,415   |  
|LONG-TERM DEBT                                                                                                                                                       |  |               | 569,525   |   |              |   | 624,570   |  
|OTHER LIABILITIES                                                                                                                                                    |  |               | 45,446    |   |              |   | 33,475    |  
|LONG-TERM DEFERRED INCOME TAX LIABILITIES                                                                                                                            |  |               | 46,987    |   |              |   | 36,558    |  
|                                                                                                                                                                     |  |               |           |   |              |   |           |  
|Total liabilities                                                                                                                                                    |  |               | 804,608   |   |              |   | 850,018   |  
|                                                                                                                                                                     |  |               |           |   |              |   |           |  
|MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES                                                                                                                      |  |               | 14,052    |   |              |   | 15,429    |  
|                                                                                                                                                                     |  |               |           |   |              |   |           |  
|STOCKHOLDERS EQUITY:                                                                                                                                                |  |               |           |   |              |   |           |  
|Common shares, $0.01 par value: 150,000,000 shares authorized; 69,491,199 and 64,816,018 issued and outstanding as of March 31,
2009 and June 30, 2008, respectively |  |               | 602,816   |   |              |   | 510,900   |  
|Accumulated deficit                                                                                                                                                  |  |               | (64,173   | ) |              |   | (110,157  | )
|Accumulated other comprehensive (loss) income                                                                                                                        |  |               | (47,513   | ) |              |   | 65,565    |  
|                                                                                                                                                                     |  |               |           |   |              |   |           |  
|Total stockholders equity                                                                                                                                           |  |               | 491,130   |   |              |   | 466,308   |  
|                                                                                                                                                                     |  |               |           |   |              |   |           |  
|TOTAL                                                                                                                                                                |  | $             | 1,309,790 |   |              | $ | 1,331,755 |  
|                                                                                                                                                                     |  |               |           |   |              |   |           |  

See accompanying notes to condensed consolidated financial statements.



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SOLERA HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND
NINE MONTH PERIODS ENDED MARCH 31, 2009 AND 2008

(In thousands, except per share amounts)

(Unaudited)



|                                                                         |  |                             |         |   |                            |   |         |      |  |   |         |   |  |   |         |  
|------------------------------------------------------------------------ |  | --------------------------- | ------- | - | -------------------------- | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                         |  | Three Months EndedMarch 31, |         |   | Nine Months EndedMarch 31, |  
|                                                                         |  | 2009                        |         |   | 2008                       |   |         | 2009 |  |   | 2008    |  
|Revenues                                                                 |  | $                           | 139,263 |   |                            | $ | 138,049 |      |  | $ | 413,556 |   |  | $ | 394,320 |  
|                                                                         |  |                             |         |   |                            |   |         |      |  |   |         |   |  |   |         |  
|Cost of revenues:                                                        |  |                             |         |   |                            |   |         |      |  |   |         |   |  |   |         |  
|Operating expenses                                                       |  |                             | 32,079  |   |                            |   | 32,803  |      |  |   | 95,521  |   |  |   | 98,130  |  
|Systems development and programming costs                                |  |                             | 14,793  |   |                            |   | 16,389  |      |  |   | 44,930  |   |  |   | 48,939  |  
|                                                                         |  |                             |         |   |                            |   |         |      |  |   |         |   |  |   |         |  
|Total cost of revenues (excluding depreciation and amortization)         |  |                             | 46,872  |   |                            |   | 49,192  |      |  |   | 140,451 |   |  |   | 147,069 |  
|Selling, general and administrative expenses                             |  |                             | 41,484  |   |                            |   | 40,889  |      |  |   | 118,555 |   |  |   | 111,956 |  
|Depreciation and amortization                                            |  |                             | 22,227  |   |                            |   | 24,034  |      |  |   | 63,413  |   |  |   | 69,887  |  
|Restructuring charges                                                    |  |                             | 658     |   |                            |   | 1,171   |      |  |   | 1,412   |   |  |   | 2,837   |  
|Interest expense                                                         |  |                             | 9,518   |   |                            |   | 11,406  |      |  |   | 29,612  |   |  |   | 34,288  |  
|Other income  net                                                       |  |                             | (909    | ) |                            |   | (563    | )    |  |   | (15,143 | ) |  |   | (6,328  | )
|                                                                         |  |                             |         |   |                            |   |         |      |  |   |         |   |  |   |         |  
|                                                                         |  |                             | 119,850 |   |                            |   | 126,129 |      |  |   | 338,300 |   |  |   | 359,709 |  
|                                                                         |  |                             |         |   |                            |   |         |      |  |   |         |   |  |   |         |  
|Income before provision for income taxes and minority interests          |  |                             | 19,413  |   |                            |   | 11,920  |      |  |   | 75,256  |   |  |   | 34,611  |  
|Income tax provision                                                     |  |                             | 5,394   |   |                            |   | 2,699   |      |  |   | 23,167  |   |  |   | 7,641   |  
|Minority interest in net income of consolidated subsidiaries             |  |                             | 2,032   |   |                            |   | 1,913   |      |  |   | 6,105   |   |  |   | 4,799   |  
|                                                                         |  |                             |         |   |                            |   |         |      |  |   |         |   |  |   |         |  
|Net income                                                               |  |                             | 11,987  |   |                            |   | 7,308   |      |  |   | 45,984  |   |  |   | 22,171  |  
|                                                                         |  |                             |         |   |                            |   |         |      |  |   |         |   |  |   |         |  
|Net income per share:                                                    |  |                             |         |   |                            |   |         |      |  |   |         |   |  |   |         |  
|Basic                                                                    |  | $                           | 0.17    |   |                            | $ | 0.11    |      |  | $ | 0.69    |   |  | $ | 0.35    |  
|                                                                         |  |                             |         |   |                            |   |         |      |  |   |         |   |  |   |         |  
|Diluted                                                                  |  | $                           | 0.17    |   |                            | $ | 0.11    |      |  | $ | 0.68    |   |  | $ | 0.34    |  
|                                                                         |  |                             |         |   |                            |   |         |      |  |   |         |   |  |   |         |  
|Weighted-average shares used in the calculation of net income per share: |  |                             |         |   |                            |   |         |      |  |   |         |   |  |   |         |  
|Basic                                                                    |  |                             | 69,053  |   |                            |   | 63,732  |      |  |   | 66,637  |   |  |   | 63,339  |  
|                                                                         |  |                             |         |   |                            |   |         |      |  |   |         |   |  |   |         |  
|Diluted                                                                  |  |                             | 69,491  |   |                            |   | 64,689  |      |  |   | 67,137  |   |  |   | 64,539  |  
|                                                                         |  |                             |         |   |                            |   |         |      |  |   |         |   |  |   |         |  

See accompanying notes to condensed consolidated financial statements.



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SOLERA HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTH
PERIODS ENDED MARCH 31, 2009 AND 2008

(In thousands)

(Unaudited)



|                                                                                             |  |                            |          |   |      |   |         |  
|-------------------------------------------------------------------------------------------- |  | -------------------------- | -------- | - | ---- | - | ------- | -
|                                                                                             |  | Nine Months EndedMarch 31, |         
|                                                                                             |  | 2009                       |          |   | 2008 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                        |  |                            |          |   |      |   |         |  
|Net income                                                                                   |  | $                          | 45,984   |   |      | $ | 22,171  |  
|Adjustments to reconcile net income to net cash provided by operating activities:            |  |                            |          |   |      |   |         |  
|Depreciation and amortization                                                                |  |                            | 63,413   |   |      |   | 69,887  |  
|Minority interests in net income of consolidated subsidiaries                                |  |                            | 6,105    |   |      |   | 4,799   |  
|Provision for doubtful accounts                                                              |  |                            | 1,222    |   |      |   | 752     |  
|Stock-based compensation                                                                     |  |                            | 4,848    |   |      |   | 3,373   |  
|Deferred income taxes                                                                        |  |                            | (3,642   | ) |      |   | (6,393  | )
|(Increase) in fair value of financial instrument                                             |  |                            | (10,599  | ) |      |   | (729    | )
|Other                                                                                        |  |                            | 61       |   |      |   | 656     |  
|Changes in operating assets and liabilities  net of effects from acquisition of businesses: |  |                            |          |   |      |   |         |  
|(Increase) decrease in accounts receivable                                                   |  |                            | (4,139   | ) |      |   | 2,092   |  
|(Increase) in other assets                                                                   |  |                            | (4,431   | ) |      |   | (4,927  | )
|Increase (decrease) in accounts payable                                                      |  |                            | (3,468   | ) |      |   | 395     |  
|(Decrease) in accrued expenses and other liabilities                                         |  |                            | (8,531   | ) |      |   | (11,267 | )
|(Decrease) in accrued interest                                                               |  |                            | (211     | ) |      |   | (116    | )
|                                                                                             |  |                            |          |   |      |   |         |  
|Net cash provided by operating activities                                                    |  |                            | 86,612   |   |      |   | 80,693  |  
|                                                                                             |  |                            |          |   |      |   |         |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                        |  |                            |          |   |      |   |         |  
|Capital expenditures                                                                         |  |                            | (16,090  | ) |      |   | (13,906 | )
|Acquisitions of businesses  net of cash acquired                                            |  |                            | (99,399  | ) |      |   |        |  
|Increase in restricted cash                                                                  |  |                            | (1,182   | ) |      |   |        |  
|Investment in joint venture                                                                  |  |                            |         |   |      |   | (314    | )
|Proceeds from the sale of foreign exchange option                                            |  |                            | 12,400   |   |      |   |        |  
|                                                                                             |  |                            |          |   |      |   |         |  
|Net cash used in investing activities                                                        |  |                            | (104,271 | ) |      |   | (14,220 | )
|                                                                                             |  |                            |          |   |      |   |         |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                        |  |                            |          |   |      |   |         |  
|Proceeds from sale of common shares, net of offering costs                                   |  |                            | 86,019   |   |      |   |        |  
|Principal payment on financed asset acquisition                                              |  |                            | (2,976   | ) |      |   | (3,646  | )
|Repayments under revolving credit facility                                                   |  |                            |         |   |      |   | (8,548  | )
|Repayments of long-term debt                                                                 |  |                            | (4,342   | ) |      |   | (21,943 | )
|Repurchase of common shares                                                                  |  |                            | (3       | ) |      |   | (112    | )
|Proceeds from stock purchase plan and exercise of stock options                              |  |                            | 1,441    |   |      |   |        |  
|                                                                                             |  |                            |          |   |      |   |         |  
|Net cash provided by (used in) financing activities                                          |  |                            | 80,139   |   |      |   | (34,249 | )
|                                                                                             |  |                            |          |   |      |   |         |  
|EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS                |  |                            | (23,749  | ) |      |   | 17,050  |  
|                                                                                             |  |                            |          |   |      |   |         |  
|NET CHANGE IN CASH AND CASH EQUIVALENTS                                                      |  |                            | 38,731   |   |      |   | 49,274  |  
|CASH AND CASH EQUIVALENTS  Beginning of period                                              |  |                            | 149,311  |   |      |   | 89,868  |  
|                                                                                             |  |                            |          |   |      |   |         |  
|CASH AND CASH EQUIVALENTS  End of period                                                    |  | $                          | 188,042  |   |      | $ | 139,142 |  
|                                                                                             |  |                            |          |   |      |   |         |  
|SUPPLEMENTAL CASH FLOW INFORMATION                                                           |  |                            |          |   |      |   |         |  
| Cash paid for interest                                                                     |  | $                          | 29,264   |   |      | $ | 33,725  |  
| Cash paid for income taxes                                                                 |  | $                          | 23,058   |   |      | $ | 17,322  |  
|SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:                      |  |                            |          |   |      |   |         |  
| Capital assets financed                                                                    |  | $                          | 1,586    |   |      | $ | 3,739   |  
| Note payable from acquisitions of businesses                                               |  | $                          | 17,330   |   |      | $ |        |  

See accompanying notes to condensed consolidated financial statements.



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SOLERA HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



|1. | ORGANIZATION AND BASIS OF PRESENTATION
|-- | --------------------------------------

Description of Business Solera Holdings, Inc. and subsidiaries (the Company or Solera) is a leading global provider of software and services to the automobile insurance claims processing
industry. Its software and services help its 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 monitor and manage their businesses through data reporting and analysis. The Company is active in over 50 countries and derives most of its revenues from its estimating and
workflow software.

Solera was formed in March 2005. In April 2006, Solera acquired the Claims Services Group
(CSG), a business unit of Automatic Data Processing, Inc. (ADP), for approximately $1.0 billion. Prior to the acquisition of CSG, Soleras operations consisted primarily of developing its business plan,
recruiting personnel, providing consulting services, raising capital and identifying and evaluating operating assets for acquisition.

Solera accounted for the acquisition of CSG using the purchase method of accounting. The Company 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.

In May 2007, the Company completed an initial
public offering of shares of the Companys common stock. In the initial public offering, the Company sold 19,200,000 shares of common stock and the selling stockholders sold 10,987,500 shares of common stock. In connection with the
initial public offering, the Company amended its corporate status and converted from a Delaware limited liability company into a Delaware corporation with 150,000,000 authorized shares of common stock, par value $0.01, and 15,000,000 authorized
shares of preferred stock, par value $0.01. Upon the effectiveness of the conversion, all of the Companys outstanding preferred and common units were automatically converted into shares of common stock based on their relative rights as set
forth in the Companys limited liability company agreement. As a result, 31,633,211 common units were converted into 31,633,211 shares of common stock, and 204,016 preferred units were converted into 13,889,974 shares of common stock.

In November 2008, the Company completed a secondary public offering of 4,500,000 shares of the Companys stock. In
connection with the offering, the Company raised $86,019,000 in net proceeds. The Company used proceeds from the offering to purchase the outstanding share capital of HPI, Ltd (see note 3) in December 2008.

Principles of Consolidation and Basis of PresentationThe accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with United States (U.S.) generally accepted accounting principles (U.S. GAAP) and applicable regulations of the Securities and Exchange Commission (SEC) and should be
read in conjunction with the Companys audited Consolidated Financial Statements for the fiscal year ended June 30, 2008, included in its Annual Report on Form 10-K filed with the SEC on August 29, 2008 (2008 Form
10-K). The Companys operating results for the three and nine month periods ended March 31, 2009 are not necessarily indicative of the results that may be expected for any future periods.

The preparation of the accompanying unaudited condensed consolidated financial statements requires the use of estimates that affect the
reported amounts of assets, liabilities, revenues, expenses and contingencies. Estimates are updated on an ongoing basis and are evaluated based on historical experience and current circumstances. Changes in facts and circumstances in the future may
give rise to changes in these estimates and may cause actual results to differ from current estimates.

The unaudited
condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.



|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|-- | ------------------------------------------

Soleras significant accounting policies are described in Note 2 to the Companys audited Consolidated Financial Statements for the fiscal year ended June 30, 2008, included in the Companys Annual Report 2008 on
Form 10-K. As of May 8, 2009, these accounting policies have not significantly changed. Recently issued accounting pronouncements, both adopted, and not yet adopted are also described in Note 2.

Recent Accounting PronouncementsIn September 2006, the Financial Accounting Standards Board, or FASB, issued
Statement of Financial Accounting Standards (SFAS) No. 157,Fair Value Measurements (SFAS No. 157). SFAS No. 157 clarifies the definition of fair value, establishes a framework for measuring fair value
and expands the disclosures on fair value measurements. The Company adopted SFAS No. 157 effective for the Company beginning on July 1, 2008 for all financial assets and liabilities that are recognized or disclosed at fair value in the
financial statements on a recurring basis (at least annually). The adoption of SFAS No. 157 resulted in a reduction to liabilities of approximately $592,000 and is reported as a component of Accumulated other comprehensive (loss) income in
stockholders equity.

In February 2008, SFAS No. 157 was amended by FASB Staff Position No. 157-2,
Effective Date of Measurements (FSP No. 157-2), which deferred the effective date of SFAS No. 157 for nonfinancial assets and nonfinancial liabilities, except for those recognized or disclosed on a recurring basis (at
least annually), to fiscal years beginning after November 15, 2008. The Company is currently evaluating the effect that the implementation of FSP No. 157-2 will have on its consolidated financial statements beginning in fiscal year
2010.



6



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##### Table of Contents

In February 2007, the FASB issued SFAS No. 159,The Fair Value Option for
Financial Assets and Financial Liabilities (SFAS No. 159). SFAS No. 159 permits companies to choose to measure certain financial instruments and certain other items at fair value, and requires that unrealized gains and
losses on items for which the fair value option has been elected be reported in earnings. The Company adopted SFAS No. 159 on July 1, 2008 and did not elect the fair value option for any of its financial assets or liabilities.

In March 2007, the FASB ratified EITF Issue No. 06-11, Accounting for Income Tax Benefits of Dividends on Share-Based
Payment Awards (EITF No. 06-11). EITF No. 06-11 requires companies to recognize the income tax benefit realized from dividends or dividend equivalents that are charged to retained earnings and paid to employees for
non-vested equity-classified employee stock-based payment awards as an increase to additional paid-in capital. EITF No. 06-11 became effective for the Company on July 1, 2008. The adoption of EITF No. 06-11 has had no
material impact on the Companys financial position or results of operations.

In June 2007, the FASB ratified
EITF Issue No. 07-3, Accounting for Nonrefundable Advance Payments for Goods or Services Received for Use in Future Research and Development Activities(EITF No. 07-3). EITF No. 07-3 requires that nonrefundable
advance payments for goods or services that will be used or rendered for future research and development activities be deferred and capitalized and recognized as an expense as the goods are delivered or the related services are performed. EITF
No. 07-3, became effective, on a prospective basis, for the Company on July 1, 2008. The adoption of EITF No. 07-3 has had no material impact on the Companys financial position or results of operations.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements
(SFAS No. 160). SFAS No. 160 amends ARB No. 51, Consolidated Financial Statements, to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation
of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS No. 160 changes the way the
consolidated income statement is presented. It requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interest. It also requires disclosure, on the face of the
consolidated statement of income, of the amounts of consolidated net income attributable to the parent and to the noncontrolling interest. SFAS No. 160 is effective for the Company beginning in fiscal year 2010 and will apply prospectively, except
for the presentation and disclosure requirements, which will apply retrospectively. The Company is currently assessing the impact that adoption of SFAS No. 160 will have on its consolidated financial statements. The adoption of SFAS No. 160 may
require increased disclosures in the Companys consolidated financial statements.

In December 2007, the FASB
issued SFAS No. 141 (revised 2007), Business Combinations(SFAS No. 141(R)). SFAS No. 141(R) expands the definition of a business combination and requires the fair value of the purchase price of an acquisition,
including the issuance of equity securities, to be determined on the acquisition date. SFAS No. 141(R) also requires that all assets, liabilities, contingent considerations, and contingencies of an acquired business be recorded at fair
value at the acquisition date. In addition, SFAS No. 141(R) requires that acquisition costs generally be expensed as incurred, restructuring costs generally be expensed in periods subsequent to the acquisition date, and changes in
accounting for deferred tax asset valuation allowances and acquired income tax uncertainties after the measurement period impact income tax expense. SFAS No. 141 (R) is effective for the Company beginning in fiscal year 2010 with early
adoption prohibited. The Company is currently evaluating the effect that the implementation of SFAS No. 141(R) will have on its consolidated financial statements on future acquisitions. During the nine months ended March 31, 2009, the
Company incurred and would have expensed approximately $3,200,000 of acquisition-related costs as SG&A expenses had SFAS No. 141(R) been implemented throughout fiscal year 2009.

In March 2008, the FASB issued SFAS No. 161,Disclosures about Derivative Instruments and Hedging Activities, an amendment of
FASB Statement No. 133 (SFAS No. 161). SFAS No. 161 is intended to improve transparency in financial reporting by requiring enhanced disclosures of an entitys derivative instruments and hedging activities and
their effects on the entitys financial position, financial performance, and cash flows. SFAS No.161 applies to all derivative instruments within the scope of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities(SFAS No. 133), as well as related hedged items, bifurcated derivatives, and nonderivative instruments that are designated and qualify as hedging instruments. Entities with instruments subject to SFAS No. 161 must provide more
robust qualitative disclosures and expanded quantitative disclosures. The Company adopted SFAS No. 161 beginning January 1, 2009. The adoption of SFAS No. 161 has had no impact on the Companys financial position or results of
operations.

In April 2008, the FASB released FASB Staff Position No. 142-3, Determination of the Useful Life of
Intangible Assets (FSP No. 142-3), which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142,
Goodwill and Other Intangible Assets. The intent of FSP No. 142-3 is to improve the consistency between the useful life of a recognized intangible asset under SFAS No. 142 and the period of expected cash flows used to measure the
fair value of the asset under SFAS No. 141(R) and other U.S. generally accepted accounting principles. FSP No. 142-3 is effective for the Company beginning in fiscal year 2010. The Company is currently evaluating the potential impact, if
any, the adoption of FSP No. 142-3 will have on its consolidated financial position, results of operations and cash flows.



7



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##### Table of Contents

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted
Accounting Principles (SFAS No. 162). SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities
that are presented in conformity with generally accepted accounting principles. SFAS No. 162 will become effective 60 days following the SECs approval of the Public Company Accounting Oversight Board amendments to
AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. The Company does not expect the adoption of SFAS No. 162 to have a material effect on its consolidated results of
operations or financial condition.



|3. | BUSINESS COMBINATIONS
|-- | ---------------------

On
December 19, 2008 (Acquisition Date), the Company (through an indirect wholly owned subsidiary) entered into an agreement (the Agreement) to acquire 100% of the outstanding share capital of HPI Ltd. (HPI)
from a subsidiary of Aviva Plc (Seller). HPI is a leading provider of used vehicle validation services in the United Kingdom. The Companys acquisition of HPI is expected to enhance its delivery of decision support data and software
applications to its customers.

Pro forma financial information HPIs operating results since the
Acquisition Date have been included in the Companys condensed consolidated statements of operations. The following financial information is summarized, on a pro forma basis, as if the Company and HPI were combined at the beginning of each of
the periods presented. The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of
each of the periods presented. The pro forma financial information prior to the Acquisition Date combines the historical results for the Company for those periods, with the historical results for HPI for those periods, (translated from
Pound Sterling into US dollars using the weighted average exchange rates in effect for the retrospective periods), as adjusted for U.S. GAAP, giving effect to the U.S. GAAP push-down of the value of the goodwill and intangible
assets related to HPI recorded by HPIs parent company and the related amortization of intangibles other than goodwill, which resulted from the purchase of HPI by the predecessors ultimate parent in August 2004. The following table
summarizes the unaudited pro forma financial information:



Three months EndedMarch 31,

Nine months EndedMarch 31,(amounts in thousands, except per share data)

2009

2008

2009

2008Revenues

$
139,263

$
150,560

$
436,259

$
445,457Net income


11,987


9,948


50,263


26,783Net income per share  basic


0.17


0.16


0.75


0.42Net income per share  diluted


0.17


0.15


0.75


0.41


Purchase price allocationThe total consideration for the
transaction was approximately $122,767,000 (£79,698,000), consisting of approximately $103,293,000 (£67,056,000) in cash paid to Seller at closing, $2,144,000 (£1,392,000) of transaction costs, and a subordinated note in
the principal amount of approximately $17,330,000 (£11,250,000) issued to Seller and guaranteed by the Company (the Seller Note). The Seller Note accrues interest at an annual rate of 8.0% and becomes due and payable in full
on December 31, 2011, subject to certain acceleration events contained in the Seller Note and restrictions contained in the Companys Amended and Restated First Lien Credit and Guaranty Agreement (the Credit Facility). Interest
on the Seller Note is payable annually. The Agreement also provides that Seller will be entitled to additional cash payments following closing up to a maximum aggregate amount of approximately $7,394,000 (£4,800,000) if HPI achieves
certain financial performance targets during the calendar years 2009, 2010 and/or 2011. All amounts payable to Seller are payable in Pound Sterling.

Under the purchase method of accounting, the total purchase price is allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values on the
Acquisition Date. The results of operations of HPI are included in the accompanying unaudited condensed consolidated statement of operations from the Acquisition Date.

The Company allocated the purchase price on a preliminary basis to tangible assets, liabilities, and identifiable intangible assets
acquired, based on their estimated fair values as of the date of acquisition. The excess of the purchase price over the aggregate fair values was recorded as goodwill. None of the goodwill value recorded as part of the acquisition of HPI will be
deductible for foreign income tax purposes.



8



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##### Table of Contents

The following table summarizes the preliminary purchase price allocation as of
March 31, 2009:



(amounts in
thousands)

December 19,2008Purchase Price AllocationGoodwill

$
54,661Intangibles Assets


69,626Deferred Income Tax Liability


(19,551
)Cash acquired


14,390Net tangible assets less cash acquired


3,641Total

$
122,767


Amortization of intangible assetsPurchased identifiable
intangible assets are amortized on an accelerated basis to reflect the pattern in which economic benefits of the intangible assets are expected to be consumed. The following table lists the purchased intangible assets acquired as part of the HPI
acquisition, their estimated useful lives, accumulated amortization, and net book value:



(amounts in
thousands)

Gross PurchasedIntangible Asset

Amortizationrecorded as ofMarch 31, 2009


Translation    Adjustments


Net BookValue as
ofMarch 31, 2009Trademark (Indefinite life)

$
16,482

$



$
(1,278
)

$
15,204Customer list (15.0 year life)


17,561


(1,025
)


(1,363
)


15,173Technology (12.0 year life)


35,583


(1,851
)


(2,760
)


30,972Total

$
69,626

$
(2,876
)

$
(5,401
)

$
61,349


Adjustments to HPIs assets and liabilities, and allocation of purchase
price, are preliminary and are based on the Companys preliminary estimates of the fair value of the assets acquired and liabilities assumed. The Company is in the process of reviewing all assets acquired and liabilities assumed to establish
their respective fair values. The Company may adjust the preliminary purchase price allocation after obtaining more information regarding, among other things, asset valuations, liabilities assumed, and refining of preliminary estimates related to
projected revenue and expenses used to establish the preliminary fair value of acquired identifiable intangible assets and the related useful lives. The completion of this process may change the allocation of the purchase price, which could affect
the fair value assigned to the assets and liabilities, and could result in a change to the unaudited condensed consolidated financial statements and pro forma financial information presented herein. The final determination of the purchase price
allocation is expected to be completed by the end of the Companys fiscal year 2009.



|4. | NET INCOME PER COMMON SHARE
|-- | ---------------------------

The
Company calculates net income per common share in accordance with SFAS No. 128, Earnings Per Share (SFAS No. 128). Under SFAS No. 128, basic net income per common share is calculated by dividing net income by the
weighted-average number of common shares outstanding during the reporting period excluding shares subject to repurchase. Diluted shares outstanding include the dilutive effect of in-the-money options and nonvested restricted stock and stock units,
which is calculated based on the average share price for each fiscal period using the treasury stock method. Under the treasury stock method, the amount the employee must pay for exercising stock options, the amount of compensation cost for future
service that the Company has not yet recognized, and the amount of any excess tax benefits or deficiency that would be recorded in additional paid-in capital when the award becomes deductible are assumed to be used to repurchase shares.

Reconciliation of shares used in this calculation of basic and diluted net income per share for the three and nine month periods ended
March 31, 2009 and 2008 is as follows (in thousands, except per share data):



Three months EndedMarch 31,


Nine months EndedMarch 31,2009


2008


2009


2008Net income

$
11,987


$
7,308


$
45,984


$
22,171Weighted-average number of common shares


69,458



64,884



67,094



64,837Weighted-average common shares subject to repurchase


(405
)


(1,152
)


(457
)


(1,498
)Weighted-average number of common shares used to compute basic net income per share


69,053



63,732



66,637



63,339Effect of dilutive common stock equivalents:Stock options to purchase common stock


32



32



46



5Restricted common stock awards


406



925



454



1,195Weighted-average number of common shares used to compute diluted net income per share


69,491



64,689



67,137



64,539Basic net income per share

$
0.17


$
0.11


$
0.69


$
0.35Diluted net income per share

$
0.17


$
0.11


$
0.68


$
0.34




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##### Table of Contents

For the three and nine month periods ended March 31, 2009, potential common stock
equivalents of approximately 349,000 and 240,000 respectively, are not included in the diluted net income per share calculation above, because their effect was antidilutive for the periods. For the three and nine month periods ended March 31,
2008 potential common stock equivalents of 28,140 and 45,538, respectively, are not included in the diluted net income per share calculation above, because their effect was antidilutive for the periods.



|5. | RESTRUCTURING CHARGES
|-- | ---------------------

The
Companys restructuring initiatives have been focused on the objective of eliminating waste and improving operational efficiencies. The restructuring reserves are included in Accrued expenses and Other current liabilities and Other liabilities
in the consolidated balance sheets.

The Company recorded restructuring charges of $658,000 and $1,412,000 during the three
and nine month periods ended March 31, 2009, respectively, primarily related to termination benefits. The Company recorded restructuring charges of $1,171,000 and $2,837,000 during the three and nine month periods ended March 31, 2008,
respectively.

For the restructuring charges recorded during the three and nine month periods ended March 31, 2009,
approximately $615,000 and $756,000 respectively, resulted from employee terminations and restructuring activities that pertained to Operating and System development and programming expenses, and $43,000 and $656,000, respectively, pertained to
Selling, general and administrative expenses. For the restructuring charges recorded during the three and nine month periods ended March 31, 2008, approximately $919,000 and $1,266,000, respectively, resulted from employee terminations and
restructuring activities that pertained to Operating and System development and programming expenses, and $252,000 and $1,571,000, respectively, resulted from employee terminations and restructuring activities that pertained to Selling, general and
administrative expenses. The restructuring balances at March 31, 2009 of $9,494,000 included severance-related liabilities of $7,881,000, lease related liabilities as a result of facilities consolidation efforts of $2,213,000 and cumulative
translation adjustments of ($600,000). The restructuring balances at June 30, 2008 of $14,563,000 included severance-related liabilities of $11,269,000, lease related liabilities as a result of facilities consolidation efforts of $2,610,000 and
cumulative translation adjustments of $684,000.

In February 2008 the Company initiated a new plan, Americas
2008, which is focused on creating a more efficient and flexible employee work force across the Americas. Termination benefits of $658,000 and $1,545,000, respectively, for this plan relate to the termination of approximately 23, and 57
employees during the three months and nine month periods ended March 31, 2009.

In February 2008, the Company concluded
its employee termination activity under the Americas 2007 plan, which commenced in February 2007 and was designed to create appropriate resource levels and efficiencies for various functional groups across the Americas segment, which
encompasses the Companys operations in North America, Central America and South America. Termination benefits for this plan related to the termination of approximately 112 employees. Remaining restructuring liabilities under this plan are
comprised of amortization of lease related liabilities over the remaining 3.8 year term of the lease.

In June 2008, the
Company initiated a new plan, EMEA 2008, which is focused on creating a more efficient and flexible employee work force for parts of its EMEA segment, which encompasses the Companys operations in Europe, the Middle East. Termination
benefits of $9,515,000 for this plan related to the termination of approximately 50 employees during the fiscal year ended June 30, 2008. Additional termination benefits of $0 and $849,000, incurred during the three and nine month periods ended
March 31, 2009, related to the termination of 14 employees as part of the acquisition of UC Universal Consulting Software GmbH and was recorded as a component of goodwill as of the purchase date. During the three month period ended
March 31, 2009, there were no additions to the EMEA 2008 plans. The liability balance as of March 31, 2009 includes a cumulative currency translation adjustment of ($441,000) and is expected to be paid by the end of fiscal year 2011.

The EMEA 2007 plan, which focused on creating a more efficient and flexible employee work force for parts of its
European operations in the EMEA segment has been substantially completed. Termination benefits for this plan related to the termination of approximately 45 employees during the fiscal year ended June 30, 2007. The liability balance related to
this plan includes a cumulative currency translation adjustment of ($159,000) as of March 31, 2009. The remaining balance of this plan relates to employee related termination benefits which are expected to be paid by the end of fiscal year
2010.

The following table summarizes the charges for restructuring and related activities, including payments made and the
ending reserve balances by reportable segment (in thousands):



|                        |  |      |      |   |                            |   |       |         |  |   |             |   |  |             |       |   |      |   |        |          |  |   |        |   |  |   |        |   |  |   |        |  
|----------------------- |  | ---- | ---- | - | -------------------------- | - | ----- | ------- |  | - | ----------- | - |  | ----------- | ----- | - | ---- | - | ------ | -------- |  | - | ------ | - |  | - | ------ | - |  | - | ------ | -
|                        |  |      |      |   | Solera Restructuring plans |   |       | Total   | 
|                        |  | CSG1 |      |   | EMEA 07                    |   |       | EMEA 08 |  |   | Americas 07 |   |  | Americas 08 |       |   | EMEA |   |        | Americas |  |   | Total  |  
|BalanceJune 30, 2008   |  | $    | 142  |   |                            | $ | 1,397 |         |  | $ | 9,515       |   |  | $           | 2,628 |   |      | $ | 881    |          |  | $ | 10,919 |   |  | $ | 3,644  |   |  | $ | 14,563 |  
|Additions               |  |      | (142 | ) |                            |   |      |         |  |   | 849         |   |  |             | 2     |   |      |   | 1,545  |          |  |   | 842    |   |  |   | 1,412  |   |  |   | 2,254  |  
|Payments/amortization   |  |      |     |   |                            |   | (939  | )       |  |   | (3,375      | ) |  |             | (417  | ) |      |   | (1,992 | )        |  |   | (4,314 | ) |  |   | (2,409 | ) |  |   | (6,723 | )
|Translation adjustments |  |      |     |   |                            |   | (159  | )       |  |   | (441        | ) |  |             |      |   |      |   |       |          |  |   | (600   | ) |  |   |       |   |  |   | (600   | )
|                        |  |      |      |   |                            |   |       |         |  |   |             |   |  |             |       |   |      |   |        |          |  |   |        |   |  |   |        |   |  |   |        |  
|BalanceMarch 31, 2009  |  | $    | 0    |   |                            | $ | 299   |         |  | $ | 6,548       |   |  | $           | 2,213 |   |      | $ | 434    |          |  | $ | 6,847  |   |  | $ | 2,647  |   |  | $ | 9,494  |  
|                        |  |      |      |   |                            |   |       |         |  |   |             |   |  |             |       |   |      |   |        |          |  |   |        |   |  |   |        |   |  |   |        |  



|1 | Restructuring plan from acquisition of CSG, includes amounts for EMEA and Americas.
|- | -----------------------------------------------------------------------------------



10



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##### Table of Contents

|6. | GOODWILL AND INTANGIBLE ASSETSNET
|-- | ----------------------------------

Changes in
goodwill by business segment during the nine months ended March 31, 2009 are as follows (in thousands):



|                            |  |      |          |   |          |   |        |       |  |   |          |  
|--------------------------- |  | ---- | -------- | - | -------- | - | ------ | ----- |  | - | -------- | -
|                            |  | EMEA |          |   | Americas |   |        | Total | 
|BalanceJune 30, 2008       |  | $    | 557,084  |   |          | $ | 89,014 |       |  | $ | 646,098  |  
|Additions from acquisitions |  |      | 65,892   |   |          |   | 2,148  |       |  |   | 68,040   |  
|Translation adjustments     |  |      | (100,874 | ) |          |   | (963   | )     |  |   | (101,837 | )
|                            |  |      |          |   |          |   |        |       |  |   |          |  
|BalanceMarch 31, 2009      |  | $    | 522,102  |   |          | $ | 90,199 |       |  | $ | 612,301  |  
|                            |  |      |          |   |          |   |        |       |  |   |          |  

Components of intangible assets, excluding goodwill, are as follows (in thousands):



|                                        |  |               |          |   |              |   |          |  
|--------------------------------------- |  | ------------- | -------- | - | ------------ | - | -------- | -
|                                        |  | March 31,2009 |          |   | June 30,2008 |  
|Intangible assets (excluding goodwill): |  |               |          |   |              |   |          |  
|Internally developed software           |  | $             | 30,522   |   |              | $ | 27,862   |  
|Customer relationships                  |  |               | 194,734  |   |              |   | 202,970  |  
|Trademarks                              |  |               | 30,444   |   |              |   | 17,264   |  
|Software and database technology        |  |               | 296,138  |   |              |   | 285,015  |  
|                                        |  |               |          |   |              |   |          |  
|                                        |  |               | 551,838  |   |              |   | 533,111  |  
|Less accumulated amortization           |  |               | (233,862 | ) |              |   | (202,893 | )
|                                        |  |               |          |   |              |   |          |  
|Intangible assets  net                 |  | $             | 317,976  |   |              | $ | 330,218  |  
|Trademarks with indefinite lives        |  |               | (15,204  | ) |              |   |         |  
|                                        |  |               |          |   |              |   |          |  
|Net finite lived intangible assets      |  | $             | 302,772  |   |              | $ | 330,218  |  
|                                        |  |               |          |   |              |   |          |  



11



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##### Table of Contents

Intangible assets (excluding goodwill and certain trademarks) have finite lives and, as
such, are subject to amortization. The weighted average remaining useful life of the intangible assets is 10.1 years (2.0 years for internally developed software, 16.5 years for customer relationships, 0.2 years for trademarks and 7.5 years for
software and database). Internally developed software is amortized on a straight-line basis. 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 $18,112,000 and $50,866,000 for the three and nine months ended March 31 2009, respectively, and $19,809,000 and $57,165,000 for the three and nine months ended March 31, 2008, respectively. Estimated
amortization expense of the Companys existing intangible assets, including those from the Companys acquisition of HPI, for the next five fiscal years ending June 30 are as follows (in thousands):



|                          |  |   |        
|------------------------- |  | - | -------
|2009 (remaining 3 months) |  | $ | 17,664 
|2010                      |  |   | 63,660 
|2011                      |  |   | 51,575 
|2012                      |  |   | 41,066 
|2013                      |  |   | 30,721 
|Thereafter                |  |   | 98,086 
|                          |  |   |        
|Total                     |  | $ | 302,772
|                          |  |   |        

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.

Goodwill and intangible assets related to the Companys acquisition of HPI are preliminary, and could change materially, until the final purchase price allocation is completed and HPI-related asset and liability
valuations are finalized. The Company may adjust the preliminary purchase price allocation after obtaining more information regarding, among other things, asset valuations, liabilities assumed, and refining of preliminary estimates related to
projected revenue and expenses used to establish the preliminary fair value of acquired identifiable intangible assets and the related useful lives.



|7. | FAIR VALUE MEASUREMENTS
|-- | -----------------------

The
Company adopted SFAS No. 157 on July 1, 2008 for all financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). SFAS No. 157 defines fair
value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

SFAS
No. 157 defines fair value as the price that would be received upon sale of an asset, or paid upon transfer of a liability, in an orderly transaction between market participants at the measurement date and in the principal or most advantageous
market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities
should include consideration of non-performance risk including the Companys own credit risk.

In addition to defining
fair value, SFAS No. 157 expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in
measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels
are:



| |  |  | Level 1  inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.
| | - |  | ------------------------------------------------------------------------------------------------------------



| |  |  | Level 2  inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are
not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 3  inputs are generally unobservable and typically reflect managements estimates of assumptions that market participants would use in pricing the
asset or liability. The fair values are, therefore, determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following section describes the valuation methodologies the Company uses to measure different financial assets and liabilities at fair
value.



12



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##### Table of Contents

Investments Other Than Derivatives

The Companys investments, other than derivatives, primarily include bank issued certificates of deposit and money market accounts.

In general, and where applicable, the Company uses quoted prices in active markets for identical assets or liabilities to
determine fair value. This pricing methodology applies to the Companys Level 1 investments such as international money markets and bank issued certificates of deposit. If quoted prices in active markets for identical assets or liabilities
are not available to determine fair value, then the Company would use quoted prices for similar assets and liabilities or inputs other than the quoted prices that are observable either directly or indirectly. These investments would be included
in Level 2. The Company does not currently hold any Level 2 investments. The Company would value Level 3 investments using internally developed valuation models, whose inputs would include interest rate curves, credit spreads, stock prices,
volatilities and any other relevant inputs. Unobservable inputs used in these models are significant to the fair value of the investments. The Company does not currently hold any Level 3 investments.

Derivatives

In
general, and where applicable, the Company would use quoted prices in an active market for identical derivative assets and liabilities that are traded on exchanges. These derivative assets and liabilities would be included in Level 1. The Company
does not currently have any Level 1 derivatives. The fair values for the derivative assets and liabilities included in the Companys Level 2 derivatives are estimated using industry standard valuation techniques to extrapolate future reset
rates from period-end yield curves and standard valuation models based on the Black-Scholes option valuation model. Market-based observable inputs including spot and forward rates, volatilities and interest rate curves at observable intervals are
used as inputs to the models. Level 2 derivative assets and liabilities primarily include certain over-the-counter options, and futures. In certain cases, market-based observable inputs are not available and the Company would use management judgment
to develop assumptions which would be used to determine fair value. These derivative assets and liabilities would be included in Level 3. The Company does not currently have any Level 3 derivatives.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table presents our assets and labilities measured at fair value on a recurring basis at March 31, 2009 (in thousands):



|                                                  |  |         |        |         |   |        |         |  |       |   |  |   |       
|------------------------------------------------- |  | ------- | ------ | ------- | - | ------ | ------- |  | ----- | - |  | - | ------
|                                                  |  | Level 1 |        | Level 2 |   |        | Level 3 |  | Total
|Assets                                            |  |         |        |         |   |        |         |  |       |   |  |   |       
|Bank-issued issued certificates of deposit(1)     |  | $       | 20,960 |         | $ |       |         |  | $     |  |  | $ | 20,960
|Cash and cash equivalents - money market funds(1) |  |         | 44,296 |         |   |       |         |  |       |  |  |   | 44,296
|Restricted cash - money market funds(2)           |  |         | 1,328  |         |   |       |         |  |       |  |  |   | 1,328 
|                                                  |  |         |        |         |   |        |         |  |       |   |  |   |       
|Total                                             |  | $       | 66,584 |         | $ |       |         |  | $     |  |  | $ | 66,584
|                                                  |  |         |        |         |   |        |         |  |       |   |  |   |       
|Liabilities                                       |  |         |        |         |   |        |         |  |       |   |  |   |       
|Interest rate swaps                               |  |         |       |         |   | 25,630 | (3)     |  |       |  |  |   | 25,630
|                                                  |  |         |        |         |   |        |         |  |       |   |  |   |       
|Total                                             |  | $       |       |         | $ | 25,630 |         |  | $     |  |  | $ | 25,630
|                                                  |  |         |        |         |   |        |         |  |       |   |  |   |       



|(1) | Included in cash and cash equivalents on the Companys condensed consolidated balance sheet.
|--- | --------------------------------------------------------------------------------------------



|(2) | Included in other current assets and other assets on the Companys condensed consolidated balance sheet.
|--- | --------------------------------------------------------------------------------------------------------



|(3) | Amount includes adjustment of $592,000 due to the adoption of SFAS No. 157, expanded disclosures included with
footnote 8.
|--- | --------------------------------------------------------------------------------------------------------------------------



|8. | FINANCIAL INSTRUMENTS AND DERIVATIVES
|-- | -------------------------------------

Financial Instruments  At March 31, 2009 and June 30, 2008, the carrying amounts of cash equivalents, receivables, accounts payable and other liabilities approximated their fair values because of the short-term
maturities of these financial instruments. The carrying amounts of long-term debt at March 31, 2009 and June 30, 2008 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.



13



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##### Table of Contents

In February 2006, the Company entered into a foreign currency exchange option (the
Fx Option) that gave the Company the option to call $200,000,000 at a strike price of 1.1646 EUR/USD at any time up to February 8, 2011. The Fx Option was not designated as a hedging instrument. The Company paid approximately
$7,912,000 for the Fx Option.

In November 2008, the Company sold the Fx Option for $12,400,000. During the three and nine
month periods ended March 31, 2009, the Company recorded no gain, and a gain of $10,599,000, respectively, due to increased volatility in foreign currency rates and changes in interest rates. The gain was recognized in Other income  net
in the condensed consolidated statement of operations.

In June 2007, the Company entered into three U.S. dollar-based
interest rate swaps (US Term loan interest rate swaps) and three Euro-based interest rate swaps (EUR Term loan interest rate swaps). The following table summarizes the fair value of our assets and liabilities related to
derivative financial instruments, and the respective line items in which they were recorded in the Condensed Consolidated Balance Sheets as of March 31, 2009 (in thousands):



|                                               |  |                       |  |            |         |  
|---------------------------------------------- |  | --------------------- |  | ---------- | ------- | -
|                                               |  | Balance SheetLocation |  | Fair Value |        
|Derivatives designated as hedging instruments: |  |                       |  |            |         |  
|US Term loan interest rate swaps               |  | Other Liabilities     |  | $          | (15,417 | )
|EUR Term loan interest rate swaps              |  | Other Liabilities     |  |            | (10,213 | )
|                                               |  |                       |  |            |         |  
|Total included in Other Liabilities            |  |                       |  | $          | (25,630 | )
|                                               |  |                       |  |            |         |  

These interest rate swaps were designated and documented at their inception as cash
flow hedges and are evaluated for effectiveness quarterly. The effective portion of the gain or loss on these hedges is reported as a component of Accumulated other comprehensive (loss) income in stockholders equity and reclassified into
earnings when the hedged transaction affects earnings. The ineffective portion on these cash flow hedges is recognized in interest expense. 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.

The
obligations under the Amended and Restated Senior Credit Facility are secured by substantially all of the assets of the Company. Upon the occurrence of an event of default, the lenders will be able to seek the remedies available to them pursuant to
the Amended and Restated Senior Credit Facility. For a description of the events of default and the remedies available to the lenders, please see the Amended and Restated Senior Credit Facility, which was filed with the Securities and Exchange
Commission on June 25, 2007 as Exhibit 10.1 to our Quarterly Report on Form 10-Q.

The following table summarizes the
outstanding derivatives designated as cash flow hedges as of March 31, 2009 (in thousands):



|                                 |  |  |  |           |   |  |                   |  |                 |  |                            |       
|-------------------------------- |  |  |  | --------- | - |  | ----------------- |  | --------------- |  | -------------------------- | ------
|Type                             |  |  |  | FixedRate |   |  | Start Date ofSwap |  | End Date ofSwap |  | Notional AmountOutstanding
|Interest rate contracts          |  |  |  |           |   |  |                   |  |                 |  |                            |       
|US Term loan interest rate swap  |  |  |  | 5.4450    | % |  | 06/29/2007        |  | 6/30/2011       |  | $                          | 50,000
|US Term loan interest rate swap  |  |  |  | 5.4180    | % |  | 06/29/2007        |  | 6/30/2011       |  | $                          | 67,465
|US Term loan interest rate swap  |  |  |  | 5.4450    | % |  | 06/29/2007        |  | 6/30/2011       |  | $                          | 75,000
|EUR Term loan interest rate swap |  |  |  | 4.6030    | % |  | 06/29/2007        |  | 6/30/2011       |  |                           | 35,350
|EUR Term loan interest rate swap |  |  |  | 4.6790    | % |  | 06/29/2007        |  | 6/30/2011       |  |                           | 50,000
|EUR Term loan interest rate swap |  |  |  | 4.6850    | % |  | 06/29/2007        |  | 9/30/2010       |  |                           | 60,000

The following table summarizes the effect of derivative instruments on the
Condensed Consolidated Statement of Operations and other comprehensive income (OCI) for the three and nine months ended March 31, 2009 (in thousands):





|                                                          |  |                                                |         |   |                                                                        |                  |                                                           |   |        |                                                              |  |                                                 |  |   |      |  
|--------------------------------------------------------- |  | ---------------------------------------------- | ------- | - | ---------------------------------------------------------------------- | ---------------- | --------------------------------------------------------- | - | ------ | ------------------------------------------------------------ |  | ----------------------------------------------- |  | - | ---- | -
|Derivatives in SFAS No. 133 Cash FlowHedging Relationship |  | Gain / (loss)Recognizedin OCI onDerivatives(1) |         |   | Location of gain/(loss) Reclassifiedfrom AccumulatedOCI into Income(1) |                  | Gain / (loss)ReclassifiedfromAccumulatedOCI intoIncome(1) |   |        | Location of Gain /(loss) Recognizedin Income onDerivative(2) |  | Gain / (loss)recognizedin IncomeonDerivative(2) | 
|Three Months Ended March 31, 2009                         |  |                                                |         |   |                                                                        |                  |                                                           |   |        |                                                              |  |                                                 | 
|US Term loan interest rate swaps                          |  | $                                              | (486    | ) |                                                                        | Interest Expense |                                                           | $ | (1,737 | )                                                            |  | Interest Expense                                |  | $ | (249 | )
|EUR Term loan interest rate swaps                         |  |                                                | (1,793  | ) |                                                                        | Interest Expense |                                                           |   | (816   | )                                                            |  | Interest Expense                                |  |   | (115 | )
|                                                          |  |                                                |         |   |                                                                        |                  |                                                           |   |        |                                                              |  |                                                 |  |   |      |  
|Total                                                     |  | $                                              | (2,279  | ) |                                                                        |                  |                                                           | $ | (2,553 | )                                                            |  |                                                 |  | $ | (364 | )
|                                                          |  |                                                |         |   |                                                                        |                  |                                                           |   |        |                                                              |  |                                                 |  |   |      |  
|                                                          |  |                                                |         |  
|Nine Months Ended March 31, 2009                          |  |                                                |         |   |                                                                        |                  |                                                           |   |        |                                                              |  |                                                 | 
|US Term loan interest rate swaps                          |  | $                                              | (10,626 | ) |                                                                        | Interest Expense |                                                           | $ | (3,932 | )                                                            |  | Interest Expense                                |  | $ | (250 | )
|EUR Term loan interest rate swaps                         |  |                                                | (13,411 | ) |                                                                        | Interest Expense |                                                           |   | (617   | )                                                            |  | Interest Expense                                |  |   | 108  |  
|                                                          |  |                                                |         |   |                                                                        |                  |                                                           |   |        |                                                              |  |                                                 |  |   |      |  
|Total                                                     |  | $                                              | (24,037 | ) |                                                                        |                  |                                                           | $ | (4,549 | )                                                            |  |                                                 |  | $ | (142 | )
|                                                          |  |                                                |         |   |                                                                        |                  |                                                           |   |        |                                                              |  |                                                 |  |   |      |  

| | 
| | 

| | (1) | Effective portion
| | --- | -----------------

| | (2) | Ineffective portion and amount excluded from effectiveness
testing
| | --- | ------------------------------------------------------------------



14



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##### Table of Contents

The following table summarizes the effect of the derivative financial instrument not designated in specified hedging
arrangement on the Condensed Consolidated Statements of Operations for the three and nine months ended March 31, 2009 (in thousands):



|                                                                      |  |                                                           |               |                                                          |               |  |   |       
|--------------------------------------------------------------------- |  | --------------------------------------------------------- | ------------- | -------------------------------------------------------- | ------------- |  | - | ------
|                                                                      |  | Location of gain /(loss)Recognized in incomeon Derivative |               | Amount of gain /(loss)Recognized in incomeon Derivatives
|Derivatives not designated as hedging instruments under Statement 133 |  |                                                           | 3 monthsended |                                                          | 9 monthsended
|Foreign Exchange Contract                                             |  | Other income - net                                        |               | $                                                        |              |  | $ | 10,599
|                                                                      |  |                                                           |               |                                                          |               |  |   |       
|                                                                      |  |                                                           |               | $                                                        |              |  | $ | 10,599
|                                                                      |  |                                                           |               |                                                          |               |  |   |       



|9. | LONG-TERM DEBT
|-- | --------------

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



|                                                 |  |               |         |              |   |        
|------------------------------------------------ |  | ------------- | ------- | ------------ | - | -------
|                                                 |  | March 31,2009 |         | June 30,2008
|Amended and restated first lien credit facility: |  |               |         |              |   |        
|Domestic term loan, due May 2014                 |  | $             | 217,045 |              | $ | 218,697
|European term loan, due May 2014                 |  |               | 342,155 |              |   | 412,209
|Subordinated note payable, due December 2011     |  |               | 15,985  |              |   |       
|                                                 |  |               |         |              |   |        
|Total                                            |  |               | 575,185 |              |   | 630,906
|Less current portion                             |  |               | 5,660   |              |   | 6,336  
|                                                 |  |               |         |              |   |        
|Long-term portion                                |  | $             | 569,525 |              | $ | 624,570
|                                                 |  |               |         |              |   |        

Senior Secured Credit Facilities  On May 16, 2007, in
conjunction with the closing of its initial public offering, the Company entered into an Amended and Restated Senior Credit Facility Agreement with a syndicate of commercial lenders, consisting of a $50,000,000, Revolving Credit Facility, a
$230,000,000 Domestic Term Loan and a 280,000,000 European Term Loan. As of March 31, 2009, the Company had $0, $217,045,000 and $342,155,000 (259,111,000) in outstanding loans under the Revolving Credit Facility, the
Domestic Term Loan and the European Term Loan, respectively, with interest rates of 3.375%, 3.125%, and 3.438%, respectively. Borrowings under the Amended and Restated Senior Credit Facility 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 (1) the offer rate on dollars based on the British Bankers Association Settlement Rate for deposits or (2) the offer rate on the
Euro from the Banking Federation of the European Union, or (3) 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 June 30, 2007, consecutive quarterly minimum principal payments
of $575,000 and 700,000 are required for the Domestic Term Loan and European Term Loan, respectively, under the Amended and Restated Senior Credit Facility with the remaining balance due in May 2014. Future quarterly minimum principal
payments will be reduced each time a voluntary prepayment occurs. The Amended and Restated 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.

For the three months ended March 31, 2009, the Companys cumulative principal payments under the European and Domestic Term Loan
principal payments were $853,000 (654,000) and $551,000, respectively, which amounts equal the minimum quarterly payments applicable during the period. For the nine months ended March 31, 2009, the Companys cumulative principal
payments under the European and Domestic Term Loan principal payments were $2,677,000 (1,963,000) and $1,653,000, respectively, which amounts equal the aggregate minimum quarterly payments applicable during the period. Except for the
quarterly minimum principal payment of $853,000, the decrease in the European term loan balance during the three and nine months ended March 31, 2009 was due to changes in foreign currency exchange rates.

The obligations under the Amended and Restated Senior Credit Facility are secured by substantially all of the assets of the Company. The
Amended and Restated Senior 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, business combinations, 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. The Amended and Restated Senior Credit Facility contains a leverage ratio, which is applicable only to the revolving loans and
applies only if at least $10,000,000 of revolving loans, including outstanding letters of credit, are outstanding for at least ten days during the prior fiscal quarter. Any amounts drawn on the revolver become due and payable in full in April 2012.



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##### Table of Contents

Subordinated note payable to a Subsidiary of Aviva Plc
(the Seller)  As part of its December 2008 agreement to acquire the outstanding share capital of HPI from Seller (see note 3), a subsidiary of the Company issued to Sellar a subordinated note (the Seller Note)
in the principal amount of approximately $17,330,000 (£11,250,000) which is guaranteed by the Company. The Seller Note accrues interest at an annual rate of 8.0% and the principal amount becomes due and payable in full on
December 31, 2011, subject to certain acceleration events contained in the Seller Note and restrictions contained in the Companys Amended and Restated Senior Credit Facility. All amounts payable to Seller are payable in
Pound Sterling (with interest paid annually). The value of the note on March 31, 2009, was $15,985,000. The reduction in the value of the note was due to changes in foreign currency exchange rates.

Future Minimum Principal Payments Future minimum principal payments pursuant to the Amended and Restated Senior
Credit Facility and the Seller Note for the next five fiscal years ending June 30 are as follows (in thousands):



|                          |  |   |        
|------------------------- |  | - | -------
|2009 (remaining 3 months) |  | $ | 1,415  
|2010                      |  |   | 5,660  
|2011                      |  |   | 5,660  
|2012                      |  |   | 21,645 
|2013                      |  |   | 5,660  
|Thereafter                |  |   | 535,145
|                          |  |   |        
|Total                     |  | $ | 575,185
|                          |  |   |        



|10. | EMPLOYEE BENEFIT PLANS
|--- | ----------------------

Stock-Based CompensationEffective July 1, 2006, the Company adopted SFAS No. 123(R), Share-Based Payment (SFAS No. 123(R)) which requires the measurement and recognition of compensation
expense for all stock-based payment awards made to employees and directors, including employee stock options and share awards, based on estimated fair values recognized over the requisite service period.

The Company adopted SFAS No. 123(R) using the prospective transition method. Under this method, SFAS No. 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 Accounting Principles Board (APB) Opinion No. 25 for awards
outstanding at the adoption date, such as unvested stock awards, will continue to be recognized as the stock awards vest. Accordingly, for the three and nine months ended March 31, 2009, stock-based compensation expense includes compensation
cost related to estimated fair values of awards granted after the date of adoption of SFAS No. 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 stock and option awards granted after July 1, 2006 is estimated on the grant
date using the Black-Scholes option valuation model. This valuation model for stock-based compensation expense requires the Company to make assumptions and judgments about the variables used in the calculations including the expected term (weighted
average period of time that the shares and options granted are expected to be outstanding), the volatility of the Companys common shares, an assumed risk free interest rate and the estimated forfeitures of unvested share 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 No. 123(R), the Company used the straight-line method for expense attribution. Expected volatilities
utilized in the model are based on a combination of implied market volatilities, historical volatility of the Companys stock price and other factors. The risk-free rate is derived from the U.S. Treasury yield curve in effect at the time of
grant. The expected term of option grants is the estimated weighted-average period until exercise or cancellation of vested options, allowed for under guidance outlined by Staff Accounting Bulletin (SAB) No. 107 and SAB
No. 110, Topic 14, Share-Based Payment.

Stock-based compensation expense of $1,659,000 and $4,848,000 was
recognized in the three and nine months ended March 31, 2009, respectively, and $1,732,000 and $3,373,000 for the three and nine months ended March 31, 2008, respectively.

As of March 31, 2009, the total remaining unrecognized compensation cost related to unvested stock options and restricted stock
awards, net of estimated forfeitures, amounted to $18,034,000, which will be amortized over a weighted average period of 3.1 years.

Restricted StockPrior to the Companys May 2007 initial public offering, the Company had a restricted stock program under which shares of common stock were issued to certain employees, which may vest up to five
years from the date of grant. These shares have transfer restrictions and in certain circumstances must be returned to the Company at the original purchase price. Following the Companys May 2007 initial public offering, the Company has granted
restricted stock units to certain employees and directors. The restricted stock units are issued pursuant to a vesting schedule and generally vest ratably over four years. The value of the Companys restricted stock units, based on market
prices, is recognized as compensation expense over the restriction period in accordance to their vesting terms.



16



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##### Table of Contents

The stock-based compensation expense related to restricted stock awards and restricted
stock units included in net income was $825,000 and $2,689,000 for the three and nine months ended March 31, 2009, respectively, and $1,481,000 and $2,831,000 during the three and nine months ended March 31, 2008, respectively.

A summary of the status of unvested stock awards and restricted stock units as of March 31, 2009 and activities during the nine
months ended March 31, 2009, is presented below:



|                           |  |                                      |   |  |                                                   |      |                                               |   |      
|-------------------------- |  | ------------------------------------ | - |  | ------------------------------------------------- | ---- | --------------------------------------------- | - | -----
|                           |  | Number ofrestrictedcommonstock/units |   |  | WeightedAveragePurchase priceper commonstock/unit |      | WeightedAverageFair valueper commonstock/unit
|Unvested at June 30, 2008  |  | 804,682                              |   |  | $                                                 | 0.20 |                                               | $ | 9.33 
|Granted                    |  | 191,184                              |   |  | $                                                 | 0.01 |                                               | $ | 23.30
|Vested/Released            |  | (236,673                             | ) |  | $                                                 | 0.19 |                                               | $ | 9.78 
|Forfeited                  |  | (26,838                              | ) |  | $                                                 | 0.11 |                                               | $ | 15.19
|                           |  |                                      |   |  |                                                   |      |                                               |   |      
|Unvested at March 31, 2009 |  | 732,355                              |   |  | $                                                 | 0.16 |                                               | $ | 12.42
|                           |  |                                      |   |  |                                                   |      |                                               |   |      

Due to the significant difference between the purchase price and fair value per
common stock/unit, the fair value of the right to purchase these restricted stock/units and intrinsic value of the restricted stock/units were equal.

The estimated total remaining unamortized compensation expense of $8,178,000, net of forfeitures, is expected to be recognized over the remaining vesting period of 3.0 years. The fair value of awards granted and
vested during the nine months ended March 31, 2009, was $4,454,000 and $2,296,000, respectively. The fair value of awards granted and vested during the nine months ended March 31, 2008, was $2,850,000 and $0, respectively.

Stock OptionsStock options are granted to employees at exercise prices equal to the fair market value of the
Companys common stock on the date of grant. Stock options are granted pursuant to a vesting schedule, and generally vest ratably over four years and have a term of 10 years for options granted under our 2007 Long Term Incentive Plan and 7
years for options granted under our 2008 Omnibus Incentive Plan. Compensation expense for stock options is recognized over the requisite service period for each separately vesting portion of the stock option award. The stock-based compensation
expense related to stock options was $808,000 and $2,087,000 for the three and nine months ended March 31, 2009, and $251,000 and $542,000 during the three and nine months ended March 31, 2008, respectively. The estimated total remaining
unamortized compensation expense of $9,856,000, net of forfeitures, is expected to be recognized over the remaining vesting period of 3.2 years.

The aggregate intrinsic value of total stock options outstanding and exercisable at March 31, 2009 was $3,750,000 and $1,016,000 respectively. The fair value of awards vested during the three and nine months
ended March 31, 2009 was $1,232,000 and $1,968,000, respectively. The weighted average remaining contractual life of total stock options outstanding and exercisable at March 31, 2009 was 8.8 years and 8.6 years, respectively.

A summary of the Companys stock option activity for the nine months ended March 31, 2009 is as follows:



|                              |  |                  |   |  |                                |      
|----------------------------- |  | ---------------- | - |  | ------------------------------ | -----
|                              |  | Number ofOptions |   |  | Weighted AverageExercise Price
|Outstanding at June 30, 2008  |  | 1,067,403        |   |  | $                              | 22.49
|Granted                       |  | 673,100          |   |  |                                | 24.03
|Exercised                     |  | (55,550          | ) |  |                                | 16.05
|Cancelled                     |  | (55,925          | ) |  |                                | 20.98
|                              |  |                  |   |  |                                |      
|Outstanding at March 31, 2009 |  | 1,629,028        |   |  | $                              | 23.40
|                              |  |                  |   |  |                                |      
|Exercisable at March 31, 2009 |  | 269,637          |   |  | $                              | 21.98
|                              |  |                  |   |  |                                |      

Cash received from options exercised was $187,000 and $923,000 during the three and
nine months ended March 31, 2009. The tax benefit related to options exercised during the three and nine months ended March 31, 2009 was $30,000 and $234,000. There is no current tax benefit related to options exercised due to a full
valuation allowance against U.S. deferred tax assets.



17



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##### Table of Contents

The fair value for stock options granted during the three and nine month periods ended
March 31, 2009 and 2008, was estimated at the date of grant using the Black-Scholes option valuation model with the following weighted-average assumptions:



|                                                   |  |                             |      |   |                            |   |      |      |  |   |      |   |  |   |      |  
|-------------------------------------------------- |  | --------------------------- | ---- | - | -------------------------- | - | ---- | ---- |  | - | ---- | - |  | - | ---- | -
|                                                   |  | Three Months EndedMarch 31, |      |   | Nine Months EndedMarch 31, |  
|                                                   |  | 2009                        |      |   | 2008                       |   |      | 2009 |  |   | 2008 |  
|Stock option grants:                               |  |                             |      |   |                            |   |      |      |  |   |      |   |  |   |      |  
|Expected term of stock options (years)             |  |                             | 6.1  |   |                            |   | 6.1  |      |  |   | 6.1  |   |  |   | 6.1  |  
|Risk-free interest rate                            |  |                             | 3.2  | % |                            |   | 4.5  | %    |  |   | 3.2  | % |  |   | 4.5  | %
|Dividend Yield                                     |  |                             |     |   |                            |   |     |      |  |   |     |   |  |   |     |  
|Volatility                                         |  |                             | 26.8 | % |                            |   | 32.8 | %    |  |   | 26.8 | % |  |   | 32.8 | %
|Weighted-average grant-date fair value (per share) |  | $                           | 7.54 |   |                            | $ | 9.67 |      |  | $ | 7.90 |   |  | $ | 8.92 |  

Employee Stock Purchase PlanThe Company offers an
Employee Stock Purchase Plan (the ESPP) that allows eligible employees to purchase shares of common stock at a price equal to 95% of the lower of the fair market value of the common stock at the beginning of the offering period and the
end of the offering period. Compensation expense for the ESPP is recognized on a straight-line basis over the offering period. Each offering period has a six-month term, which runs either from January 1 to June 30 or from July 1 to
December 31. For the three and nine months ended March 31, 2009, the Company recorded compensation expense of $26,000 and $72,000, respectively. In July 2008, the Company issued 9,637 shares under the ESPP, representing approximately
$221,000 in employee contributions accumulated during the January 1, 2008 through June 30, 2008 offering period. In January 2009, the Company issued 13,414 shares under the ESPP, representing approximately $307,000 in employee
contributions accumulated during the July 1, 2008 through December 31, 2008 offering period.

Pension
PlansThe Companys foreign subsidiaries sponsor various defined benefit plans and individual defined benefit arrangements covering certain eligible employees. The benefits under these pension plans are based on years of service
and compensation levels. Funding is limited to statutory requirements.

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



|                                                 |  |                             |      |   |                            |   |      |      |  |   |        |   |  |   |        |  
|------------------------------------------------ |  | --------------------------- | ---- | - | -------------------------- | - | ---- | ---- |  | - | ------ | - |  | - | ------ | -
|                                                 |  | Three Months EndedMarch 31, |      |   | Nine Months EndedMarch 31, |  
|                                                 |  | 2009                        |      |   | 2008                       |   |      | 2009 |  |   | 2008   |  
|Service cost  benefits earned during the period |  | $                           | 665  |   |                            | $ | 876  |      |  | $ | 2,062  |   |  | $ | 2,470  |  
|Interest cost on projected benefits              |  |                             | 812  |   |                            |   | 875  |      |  |   | 2,528  |   |  |   | 2,453  |  
|Expected return on plan assets                   |  |                             | (713 | ) |                            |   | (799 | )    |  |   | (2,218 | ) |  |   | (2,240 | )
|Amortization of gain                             |  |                             | (26  | ) |                            |   |     |      |  |   | (80    | ) |  |   |       |  
|                                                 |  |                             |      |   |                            |   |      |      |  |   |        |   |  |   |        |  
|Net pension expense                              |  | $                           | 738  |   |                            | $ | 952  |      |  | $ | 2,292  |   |  | $ | 2,683  |  
|                                                 |  |                             |      |   |                            |   |      |      |  |   |        |   |  |   |        |  



|11. | PROVISION FOR INCOME TAXES
|--- | --------------------------

The
Company recorded an income tax provision of $5,394,000 and $23,167,000 for the three and nine months ended March 31, 2009, and $2,699,000 and $7,641,000 for the three and nine months ended March 31, 2008, respectively. The expected
tax provision derived from applying the federal statutory rate to the Companys income before income taxes for the three and nine months ended March 31, 2009 differed from the Companys recorded income tax provision primarily due to
valuation allowance release on a portion of the deferred tax assets that are supported by refundable income taxes and lower foreign income tax rates in certain jurisdictions whose earnings are considered indefinitely reinvested. These benefits
are offset by valuation allowance recorded on certain foreign losses that do not meet the more-likely-than not standard of realizability and foreign withholding tax liabilities.

FIN No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of SFAS No. 109 (FIN No. 48), prescribes that a tax
position is required to meet a minimum recognition threshold before being recognized in the financial statements. Gross unrecognized tax benefits as of March 31, 2009 and June 30 2008 are $20,910,000 and $17,298,000, respectively. No significant
interest and penalties have been accrued during this fiscal year. During the quarter, a portion of the Companys FIN No. 48 unrecognized tax benefits related to a prior year was released due to the closure of a local income tax audit for
one of the Companys foreign affiliates.

Pursuant to the acquisition agreement dated February 8, 2006 between ADP
and Solera, ADP has indemnified Solera for all tax liabilities related to the pre-acquisition period, attributable to the Claims Services Group acquired on April 13, 2006. The Company is liable for any tax assessments for the
post-acquisition period for its U.S. and foreign jurisdictions. The Company does not anticipate that the amount of existing unrecognized tax benefits will significantly increase or decrease within the next twelve months.



18



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|12. | COMPREHENSIVE (LOSS) INCOME
|--- | ---------------------------

The
components of comprehensive (loss) income are as follows (in thousands):



|                                              |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|--------------------------------------------- |  | --------------------------- | ------- | - | -------------------------- | - | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                              |  | Three Months EndedMarch 31, |         |   | Nine Months EndedMarch 31, |  
|                                              |  | 2009                        |         |   | 2008                       |   |        | 2009 |  |   | 2008    |  
|Net income                                    |  | $                           | 11,987  |   |                            | $ | 7,308  |      |  | $ | 45,984  |   |  | $ | 22,171  |  
|                                              |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Other Comprehensive (loss) income:            |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Foreign currency translation adjustments      |  |                             | (28,086 | ) |                            |   | 30,231 |      |  |   | (94,273 | ) |  |   | 62,533  |  
|Unrealized net loss on derivative instruments |  |                             | (212    | ) |                            |   | (8,289 | )    |  |   | (18,804 | ) |  |   | (17,925 | )
|                                              |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Comprehensive (loss) income                   |  | $                           | (16,311 | ) |                            | $ | 29,250 |      |  | $ | (67,093 | ) |  | $ | 66,779  |  
|                                              |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  



|13. | SEGMENT AND GEOGRAPHIC INFORMATION
|--- | ----------------------------------

The Company manages its business operations through two strategic business units which, based upon the information reported to the chief operating decision maker who is the Chief Executive Officer, are the Companys two reportable
segments: EMEA and Americas. 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, Central and South
America. Based on management fee studies, the Companys Corporate segment allocates certain costs related to providing services to its reportable segments. These costs are managed at the Corporate level and include costs related to financing
activities, business development and oversight, and tax, audit and other professional fees of the Company. The Company evaluates the performance of its reportable segments based on operating results before income taxes:





|                                                        |  |      |           |   |          |   |         |           |  |   |         |   |  |   |           |  
|------------------------------------------------------- |  | ---- | --------- | - | -------- | - | ------- | --------- |  | - | ------- | - |  | - | --------- | -
|(in thousands)                                          |  | EMEA |           |   | Americas |   |         | Corporate |  |   | Total   |  
|Three Months Ended March 31, 2008                       |  |      |           |   |          |   |         |           |  |   |         |   |  |   |           |  
|Revenues                                                |  | $    | 85,969    |   |          | $ | 52,080  |           |  | $ |        |   |  | $ | 138,049   |  
|Income (loss) before income taxes and minority interest |  |      | 26,828    |   |          |   | 8,316   |           |  |   | (23,224 | ) |  |   | 11,920    |  
|Assets                                                  |  |      | 1,027,887 |   |          |   | 307,191 |           |  |   | 20,053  |   |  |   | 1,355,131 |  
|Capital expenditures                                    |  |      | 2,405     |   |          |   | 1,744   |           |  |   |        |   |  |   | 4,149     |  
|Depreciation and amortization                           |  |      | 14,637    |   |          |   | 9,397   |           |  |   |        |   |  |   | 24,034    |  
|Interest expense                                        |  |      | 14        |   |          |   | 79      |           |  |   | 11,313  |   |  |   | 11,406    |  
|Other (income) expense  net                            |  |      | (1,979    | ) |          |   | 231     |           |  |   | 1,185   |   |  |   | (563      | )
|Three Months Ended March 31, 2009                       |  |      |           |   |          |   |         |           |  |   |         |   |  |   |           |  
|Revenues                                                |  | $    | 87,913    |   |          | $ | 51,350  |           |  | $ |        |   |  | $ | 139,263   |  
|Income (loss) before income taxes and minority interest |  |      | 25,974    |   |          |   | 12,626  |           |  |   | (19,187 | ) |  |   | 19,413    |  
|Assets                                                  |  |      | 1,027,620 |   |          |   | 277,088 |           |  |   | 5,082   |   |  |   | 1,309,790 |  
|Capital expenditures                                    |  |      | 3,300     |   |          |   | 2,138   |           |  |   |        |   |  |   | 5,438     |  
|Depreciation and amortization                           |  |      | 14,449    |   |          |   | 7,777   |           |  |   | 1       |   |  |   | 22,227    |  
|Interest expense                                        |  |      | 341       |   |          |   | 70      |           |  |   | 9,107   |   |  |   | 9,518     |  
|Other (income) expense  net                            |  |      | (696      | ) |          |   | (353    | )         |  |   | 140     |   |  |   | (909      | )



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|                                                        |  |      |           |   |          |   |         |           |  |   |         |   |  |   |           |  
|------------------------------------------------------- |  | ---- | --------- | - | -------- | - | ------- | --------- |  | - | ------- | - |  | - | --------- | -
|(in thousands)                                          |  | EMEA |           |   | Americas |   |         | Corporate |  |   | Total   |  
|Nine Months Ended March 31, 2008                        |  |      |           |   |          |   |         |           |  |   |         |   |  |   |           |  
|Revenues                                                |  | $    | 241,300   |   |          | $ | 153,020 |           |  | $ |        |   |  | $ | 394,320   |  
|Income (loss) before income taxes and minority interest |  |      | 71,018    |   |          |   | 21,451  |           |  |   | (57,858 | ) |  |   | 34,611    |  
|Assets                                                  |  |      | 1,027,887 |   |          |   | 307,191 |           |  |   | 20,053  |   |  |   | 1,355,131 |  
|Capital expenditures                                    |  |      | 6,164     |   |          |   | 7,742   |           |  |   |        |   |  |   | 13,906    |  
|Depreciation and amortization                           |  |      | 41,747    |   |          |   | 28,140  |           |  |   |        |   |  |   | 69,887    |  
|Interest expense                                        |  |      | 42        |   |          |   | 235     |           |  |   | 34,011  |   |  |   | 34,288    |  
|Other income  net                                      |  |      | (5,032    | ) |          |   | (974    | )         |  |   | (322    | ) |  |   | (6,328    | )
|Nine Months Ended March 31, 2009                        |  |      |           |   |          |   |         |           |  |   |         |   |  |   |           |  
|Revenues                                                |  | $    | 258,825   |   |          | $ | 154,731 |           |  | $ |        |   |  | $ | 413,556   |  
|Income (loss) before income taxes and minority interest |  |      | 79,137    |   |          |   | 35,881  |           |  |   | (39,762 | ) |  |   | 75,256    |  
|Assets                                                  |  |      | 1,027,620 |   |          |   | 277,088 |           |  |   | 5,082   |   |  |   | 1,309,790 |  
|Capital expenditures                                    |  |      | 6,913     |   |          |   | 9,177   |           |  |   |        |   |  |   | 16,090    |  
|Depreciation and amortization                           |  |      | 39,413    |   |          |   | 23,992  |           |  |   | 8       |   |  |   | 63,413    |  
|Interest expense                                        |  |      | 421       |   |          |   | 207     |           |  |   | 28,984  |   |  |   | 29,612    |  
|Other income  net                                      |  |      | (1,127    | ) |          |   | (286    | )         |  |   | (13,730 | ) |  |   | (15,143   | )

The Company conducts its sales, marketing and customer service activities
throughout the world. Geographic revenue information is based on the location of the customer. No single country other than the United States, the United Kingdom, the Netherlands, and Germany accounted for 10% or more of total external revenue or of
long-lived assets.



|                                  |  |          |         |              |   |               |  |                |        |         |   |          |  |       |        |  |   |        |  |   |        
|--------------------------------- |  | -------- | ------- | ------------ | - | ------------- |  | -------------- | ------ | ------- | - | -------- |  | ----- | ------ |  | - | ------ |  | - | -------
|(in thousands)                    |  | Europe * |         | UnitedStates |   | UnitedKingdom |  | TheNetherlands |        | Germany |   | AllOther |  | Total
|Three Months Ended March 31, 2008
|Revenues                          |  | $        | 36,689  |              | $ | 37,504        |  | $              | 15,132 |         | $ | 16,187   |  | $     | 12,884 |  | $ | 19,653 |  | $ | 138,049
|Property and equipment  net      |  |          | 4,326   |              |   | 23,538        |  |                | 9,245  |         |   | 346      |  |       | 9,145  |  |   | 4,440  |  |   | 51,040 
|Three Months Ended March 31, 2009 |  |          |         |              |   |               |  |                |        |         |   |          |  |       |        |  |   |        |  |   |        
|Revenues                          |  | $        | 35,029  |              | $ | 37,276        |  | $              | 21,219 |         | $ | 14,186   |  | $     | 12,684 |  | $ | 18,869 |  | $ | 139,263
|Property and equipment  net      |  |          | 2,719   |              |   | 21,550        |  |                | 11,689 |         |   | 186      |  |       | 7,441  |  |   | 4,483  |  |   | 48,068 
|                                  |  |          |         |              |   |               | 
|(in thousands)                    |  | Europe * |         | UnitedStates |   | UnitedKingdom |  | TheNetherlands |        | Germany |   | AllOther |  | Total
|Nine Months Ended March 31, 2008  |  |          |         |              |   |               |  |                |        |         |   |          |  |       |        |  |   |        |  |   |        
|Revenues                          |  | $        | 101,044 |              | $ | 110,874       |  | $              | 42,410 |         | $ | 45,440   |  | $     | 37,679 |  | $ | 56,873 |  | $ | 394,320
|Property and equipment  net      |  |          | 4,326   |              |   | 23,538        |  |                | 9,245  |         |   | 346      |  |       | 9,145  |  |   | 4,440  |  |   | 51,140 
|Nine Months Ended March 31, 2009  |  |          |         |              |   |               |  |                |        |         |   |          |  |       |        |  |   |        |  |   |        
|Revenues                          |  | $        | 108,495 |              | $ | 110,699       |  | $              | 48,131 |         | $ | 46,594   |  | $     | 41,517 |  | $ | 58,120 |  | $ | 413,556
|Property and equipment  net      |  |          | 2,719   |              |   | 21,550        |  |                | 11,689 |         |   | 186      |  |       | 7,441  |  |   | 4,483  |  |   | 48,068 



|* | Excludes the United Kingdom, the Netherlands, and Germany.
|- | ----------------------------------------------------------



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CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE

SECURITIES LITIGATION REFORM ACT OF 1995

This report contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are identified by the use of terms and phrases such as anticipate, believe,
could, estimate, expect, intend may, plan, predict, project and similar terms and phrases, including references to assumptions. However, these words are
not the exclusive means of identifying such statements. These statements relate to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. These statements also relate to our future
prospects, developments and business strategies and include, but are not limited to, statements about: changes in the amount of our existing unrecognized tax benefits; our revenue mix; factors that may effect our future operating results; the impact
of currency exchange rate fluctuations on our financial results; our expectations regarding equity-related expenses; our income taxes; restructuring plans, potential restructuring charges and their impact on our revenues; our operating expense
growth and operating expenses as a percentage of our revenues; stability of our development and programming costs; growth of our selling, general and administrative expenses; decrease of total depreciation and amortization expense; decrease in
interest expense and possible impact of acquisitions or future foreign currency fluctuations; our use of cash and liquidity position going forward; cash needs to service our debt; and the possible affects of the global economic downturn on our
business and operations.

Actual results could differ materially from those projected, implied or anticipated by our forward-looking
statements. Some of the factors that could cause actual results to differ include: those set forth in the sections titled Risk Factors, Managements Discussion and Analysis of Financial Condition and Results of
Operations, and elsewhere as described in this Quarterly Report on Form 10-Q. These factors include, but are not limited to: our reliance on a limited number of customers for a substantial portion of our revenues; effects of competition on our
software and service pricing and our business; unpredictability and volatility of our operating results, which include the volatility associated with foreign currency exchange risks; risks associated with and possible negative consequences of
acquisitions, joint ventures, divestitures and similar transactions, including risks related to our ability to successfully integrate HPI; affects of the global economic downturn on demand for or utilization of our products and services; our ability
to increase market share, successfully introduce new software and services and expand our operations to new geographic locations; time and expenses associated with customers switching from competitive software and services to our software and
services; rapid technology changes in our industry; effects of changes in or violations by us or our customers of government regulations; costs and possible future losses or impairments relating to our acquisitions; use of cash to service our debt;
country-specific risks associated with operating in multiple countries; and other factors that are described from time to time in our periodic filings with the Securities and Exchange Commission (SEC), including those set forth in this
filing in Part II, Item 1A  Risk Factors.

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



|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|------- | --------------------------------------------------------------------------------------

The following discussion of our financial condition and results of operations should be read in conjunction with the 2008 Consolidated Financial
Statements and accompanying notes included in our Annual Report on Form 10-K for the year ended June 30, 2008 filed with the SEC on August 29, 2008 (2008 Form 10-K). You should read the following discussion and analysis of our
financial condition and results of operations in conjunction with our consolidated financial statements and the notes to those statements included elsewhere in this Quarterly Report on Form 10-Q.

All percentage amounts and ratios were calculated using the underlying data in whole dollars. Operating results for the three and nine months ended
March 31, 2009 are not necessarily indicative of the results that may be expected for any future period. We measure the effects on our results that are attributed to the change in foreign currency rates by measuring the incremental difference
between translating the current results at the monthly average rates for the same period from the prior year, compared to the monthly average rates used to translate current year actual results.

Overview of the 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 and determine pre-collision fair market values for vehicles damaged beyond repair;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



| |  |  | automate and 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 March 31, 2009, we served over 55,000 customers and
were active in more than 50 countries with approximately 2,100 full-time employees. Our customers include more than 900 automobile insurance companies, 33,000 collision repair facilities,
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| | 7,000 independent assessors and 3,000 automotive recyclers. We derive revenues from many of the worlds largest automobile insurance companies,
including each of the ten largest automobile insurance companies in Europe and at least nine of the ten largest automobile insurance companies in North America.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Company History

Solera Holdings, LLC was formed in March 2005. In April 2006, subsidiaries
of Solera Holdings, LLC acquired the Claims Services Group, or CSG, a business unit of Automatic Data Processing, or ADP, for approximately $1.0 billion. Prior to the April 2006 CSG Acquisition, Solera Holdings, LLCs operations consisted
primarily of developing our business plan, recruiting personnel, providing consulting services, raising capital and identifying and evaluating operating assets for acquisition.

We accounted for the April 2006 Acquisition using the purchase method of accounting. We allocated the aggregate April 2006 CSG Acquisition consideration
to the tangible and intangible assets acquired and liabilities assumed based on their respective fair values as of the date of the April 2006 Acquisition, which resulted in an increase in the accounting basis of some of our assets.

In May 2007, in connection with our initial public offering, we converted from a limited liability company into a Delaware corporation, and all of the
Class A Common Units and Class B Preferred Units of Solera Holdings, LLC were converted into shares of our common stock.

In
November 2008, the Company completed a secondary public offering of 4.5 million shares of the Companys stock. In connection with the offering, the Company raised $86.0 million in net proceeds. The Company used proceeds from the offering to
purchase the outstanding share capital of HPI, Ltd (see note 3 ) in December 2008.

On December 19, 2008, we (through an indirect
wholly owned subsidiary) acquired 100% of the outstanding share capital of HPI Ltd., or HPI, from a subsidiary of Aviva Plc. HPI is the leading provider of used vehicle validation services in the United Kingdom. We allocated the aggregate $122.8
million (£79.7 million) consideration to the tangible and intangible assets acquired and liabilities assumed, based on their respective fair values as of the date of acquisition. Fair values attributed to the tangible and intangible assets
acquired and liabilities assumed are preliminary, and could change materially, until the final purchase price allocation is completed and HPI-related asset and liability valuations are finalized. We may adjust the preliminary purchase price
allocation after obtaining more information regarding, among other things, asset valuations, and liabilities assumed, and refining preliminary estimates related to projected revenue and expenses used to establish the preliminary fair value of
acquired identifiable intangible assets and related useful lives.

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. Based on management fee studies, our Corporate segment allocates certain costs related to providing services to our reportable segments. These costs are
managed at the Corporate level and include costs related to our financing activities, business development and oversight, tax, audit and other professional fees. The accounting policies for each of our segments are the same. We evaluate the
performance of our reportable segments based primarily upon their respective revenues and earnings before interest, taxes, depreciation and amortization (or EBITDA). For the most part, we do not evaluate our costs and expenses on a per segment
basis.

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



|                      |  |                              |       |  |                             |   |  |      |       |  |       |   |  |   |       |  |       |   |  |   |       |  |       |  
|--------------------- |  | ---------------------------- | ----- |  | --------------------------- | - |  | ---- | ----- |  | ----- | - |  | - | ----- |  | ----- | - |  | - | ----- |  | ----- | -
|                      |  | Three Months Ended March 31, |       |  | Nine Months Ended March 31, |  
|(dollars in millions) |  | 2009                         |       |  | 2008                        |   |  | 2009 |       |  | 2008  |  
|EMEA                  |  | $                            | 87.9  |  | 63.1                        | % |  | $    | 85.9  |  | 62.3  | % |  | $ | 258.8 |  | 62.6  | % |  | $ | 241.3 |  | 61.2  | %
|Americas              |  |                              | 51.4  |  | 36.9                        |   |  |      | 52.1  |  | 37.7  |   |  |   | 154.8 |  | 37.4  |   |  |   | 153.0 |  | 38.8  |  
|                      |  |                              |       |  |                             |   |  |      |       |  |       |   |  |   |       |  |       |   |  |   |       |  |       |  
|Total                 |  | $                            | 139.3 |  | 100.0                       | % |  | $    | 138.0 |  | 100.0 | % |  | $ | 413.6 |  | 100.0 | % |  | $ | 394.3 |  | 100.0 | %
|                      |  |                              |       |  |                             |   |  |      |       |  |       |   |  |   |       |  |       |   |  |   |       |  |       |  

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



|                               |  |                              |       |  |                             |   |  |      |       |  |       |   |  |   |       |  |       |   |  |   |       |  |       |  
|------------------------------ |  | ---------------------------- | ----- |  | --------------------------- | - |  | ---- | ----- |  | ----- | - |  | - | ----- |  | ----- | - |  | - | ----- |  | ----- | -
|                               |  | Three Months Ended March 31, |       |  | Nine Months Ended March 31, |  
|(dollars in millions)          |  | 2009                         |       |  | 2008                        |   |  | 2009 |       |  | 2008  |  
|Insurance companies            |  | $                            | 56.8  |  | 40.8                        | % |  | $    | 56.2  |  | 40.7  | % |  | $ | 173.3 |  | 41.9  | % |  | $ | 160.3 |  | 40.7  | %
|Collision repair facilities    |  |                              | 48.7  |  | 34.9                        |   |  |      | 52.6  |  | 38.2  |   |  |   | 149.5 |  | 36.2  |   |  |   | 149.4 |  | 37.9  |  
|Independent assessors          |  |                              | 13.0  |  | 9.4                         |   |  |      | 14.4  |  | 10.4  |   |  |   | 40.5  |  | 9.8   |   |  |   | 41.5  |  | 10.5  |  
|Automotive recyclers and other |  |                              | 20.8  |  | 14.9                        |   |  |      | 14.8  |  | 10.7  |   |  |   | 50.3  |  | 12.1  |   |  |   | 43.1  |  | 10.9  |  
|                               |  |                              |       |  |                             |   |  |      |       |  |       |   |  |   |       |  |       |   |  |   |       |  |       |  
|Total                          |  | $                            | 139.3 |  | 100.0                       | % |  | $    | 138.0 |  | 100.0 | % |  | $ | 413.6 |  | 100.0 | % |  | $ | 394.3 |  | 100.0 | %
|                               |  |                              |       |  |                             |   |  |      |       |  |       |   |  |   |       |  |       |   |  |   |       |  |       |  



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During the three and nine month periods ended March 31, 2009, the United States, United Kingdom,
Netherlands, and Germany were the only countries that individually represented more than 10% of total revenues or assets.

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

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.
| | - |  | ---------------------------

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

Our core offering is our estimating and workflow software, which is used by our insurance company, collision repair
facility and independent assessor customers and which represents the majority of our revenues. Our salvage and recycling software, business intelligence and consulting services, shared services and other offerings represent in the aggregate a
smaller portion of our revenues. We believe that our estimating and workflow software will continue to represent a majority of our revenue for the foreseeable future.

Cost of Revenues (excluding depreciation and amortization)

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

Operating Expenses

Our operating expenses 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.

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.

Selling, General and Administrative Expenses

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

Depreciation and Amortization

Depreciation includes depreciation attributable to buildings,
leasehold improvements, data processing and computer equipment, 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 April 2006 CSG Acquisition.

Interest Expense

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



23



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Other Income-Net

Other income-net consists of foreign exchange gains and losses on notes receivable and notes payable to affiliates, as well as other miscellaneous income and expense. Previously, other income  net also consisted
of foreign exchange gains and losses on a foreign exchange option, which was sold in November 2008.

Minority Interests in Net Income of Consolidated
Subsidiaries

Several of our customers own minority interests in certain of our local operating subsidiaries. Minority interests in
net income of consolidated subsidiaries reflect such customers proportionate interest in the earnings of such operating subsidiaries.

Income
Tax Provision

The expected tax provision derived from applying the federal statutory rate to our income before income taxes during
the three and nine months ended March 31, 2009 differed from our recorded income tax provision primarily due to valuation allowance release on a portion of the deferred tax assets and lower foreign income tax rates in certain jurisdictions
whose earnings are considered indefinitely reinvested. These benefits are offset by valuation allowances recorded on certain foreign losses which do not meet the more-likely-than-not standard of realizability and foreign withholding tax liabilities.
Our tax provision for the remainder of fiscal year 2009 continues to heavily depend on the jurisdictional mix of pretax earnings, our actual and forecasted profitability, establishment of valuation allowances in certain jurisdictions, and varying
jurisdictional income tax rates that are applied to related earnings.

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;
| | - |  | ------------------



| |  |  | fluctuations in foreign currency exchange rates;
| | - |  | ------------------------------------------------



| |  |  | acquisitions, joint ventures or similar transactions;
| | - |  | -----------------------------------------------------



| |  |  | expenses to develop new software or services;
| | - |  | ---------------------------------------------



| |  |  | restructuring charges related to efficiency initiatives; and
| | - |  | ------------------------------------------------------------



| |  |  | expenses and restrictions related to indebtedness.
| | - |  | --------------------------------------------------

Foreign currency.During the three and nine month periods ended March 31, 2009, we generated approximately 73.2% 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 $28.1 million and $94.3 million during the three and nine month periods ended
March 31, 2009, recorded as a component of Accumulated other comprehensive (loss) income in stockholders equity. Net foreign currency gains realized and recorded in our condensed consolidated statements of operations during the three and
nine month periods ended March 31, 2009, were $0 million and $1.0 million, respectively.

During the current fiscal year, the U.S.
dollar has strengthened significantly versus most major international currencies we have used to transact our business. For example, one Euro was equal to approximately $1.58 on June 30, 2008, $1.44 on September 30, 2008, $1.41 on
December 31, 2008, and $1.32 on March 31, 2009. The change from June 30, 2008 to March 31, 2009 represents a strengthening of the U.S. dollar versus the Euro of approximately 16.5%. We anticipate that currency exchange rates
will have a negative comparable impact on our revenues, but have a positive comparable impact on our expenses 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 $0.0 million and
$10.6 million during the three and nine month periods ended March 31, 2009, 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.



24



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##### Table of Contents

Non-cash charges.We incurred a pre-tax, non-cash charge of $1.7 million and $4.8 million,
during the three and nine month periods ended March 31, 2009 related to all restricted stock units and stock options outstanding as of March 31, 2009. We expect the remaining pre-tax, non-cash charge to be approximately $18.0 million,
expensed ratably over vesting periods of up to 60 months.

Restructuring charges.We have incurred
restructuring charges in each period presented and also expect to incur additional restructuring charges, primarily relating to severance costs, over the next several quarters as we work to improve efficiencies in our business. We are currently
evaluating several plans that would eliminate redundant personnel in each of our segments, as well as reduce our need for certain facilities. If we execute all of these plans, we would expect to incur restructuring charges over the next twelve
months. These potential charges, consisting primarily of termination benefits, will reduce our cash balances. We do not expect reduced revenues or an increase in other expenses as a result of any of these restructuring plans.

Results of Operations

Amounts and percentages
throughout our discussion and analysis of financial conditions and results of operations may reflect rounding adjustments.

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



|                                                                 |  |                             |   |  |                            |   |  |       |   |  |       |  
|---------------------------------------------------------------- |  | --------------------------- | - |  | -------------------------- | - |  | ----- | - |  | ----- | -
|                                                                 |  | Three Months EndedMarch 31, |   |  | Nine Months EndedMarch 31, |  
|                                                                 |  | 2009                        |   |  | 2008                       |   |  | 2009  |   |  | 2008  |  
|Revenues                                                         |  | 100.0                       | % |  | 100.0                      | % |  | 100.0 | % |  | 100.0 | %
|                                                                 |  |                             |   |  |                            |   |  |       |   |  |       |  
|Cost of revenues:                                                |  |                             |   |  |                            |   |  |       |   |  |       |  
|Operating expenses                                               |  | 23.1                        |   |  | 23.7                       |   |  | 23.1  |   |  | 24.9  |  
|Systems development and programming costs                        |  | 10.6                        |   |  | 11.9                       |   |  | 10.9  |   |  | 12.4  |  
|                                                                 |  |                             |   |  |                            |   |  |       |   |  |       |  
|Total cost of revenues (excluding depreciation and amortization) |  | 33.7                        |   |  | 35.6                       |   |  | 34.0  |   |  | 37.3  |  
|Selling, general & administrative expenses                       |  | 29.8                        |   |  | 29.6                       |   |  | 28.7  |   |  | 28.4  |  
|Depreciation and amortization                                    |  | 16.0                        |   |  | 17.4                       |   |  | 15.3  |   |  | 17.7  |  
|Restructuring charges                                            |  | 0.5                         |   |  | 0.8                        |   |  | 0.3   |   |  | 0.7   |  
|Interest expense                                                 |  | 6.8                         |   |  | 8.3                        |   |  | 7.2   |   |  | 8.7   |  
|Other income  net                                               |  | (0.7                        | ) |  | (0.4                       | ) |  | (3.7  | ) |  | (1.6  | )
|                                                                 |  |                             |   |  |                            |   |  |       |   |  |       |  
|                                                                 |  | 86.1                        |   |  | 91.3                       |   |  | 81.8  |   |  | 91.2  |  
|Income before provision for income taxes and minority interests  |  | 13.9                        |   |  | 8.7                        |   |  | 18.2  |   |  | 8.8   |  
|Income tax provision                                             |  | 3.9                         |   |  | 2.0                        |   |  | 5.6   |   |  | 2.0   |  
|Minority interest in net income of consolidated subsidiaries     |  | 1.4                         |   |  | 1.4                        |   |  | 1.5   |   |  | 1.2   |  
|                                                                 |  |                             |   |  |                            |   |  |       |   |  |       |  
|Net income                                                       |  | 8.6                         | % |  | 5.3                        | % |  | 11.1  | % |  | 5.6   | %
|                                                                 |  |                             |   |  |                            |   |  |       |   |  |       |  

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



|                                                                 |  |                             |   |  |                            |   |  |        |   |  |       |   |  |       |   |  |        |   |  |       |   |  |       |  
|---------------------------------------------------------------- |  | --------------------------- | - |  | -------------------------- | - |  | ------ | - |  | ----- | - |  | ----- | - |  | ------ | - |  | ----- | - |  | ----- | -
|                                                                 |  | Three Months EndedMarch 31, |   |  | Nine Months EndedMarch 31, |  
|                                                                 |  | 2009                        |   |  | 2008                       |   |  | Change |   |  | 2009  |   |  | 2008  |   |  | Change |  
|                                                                 |  | $                           |   |  | $                          |   |  | $      |   |  | %     |   |  | $     |   |  | $      |   |  | $     |   |  | %     |  
|Revenues                                                         |  | 139.3                       |   |  | 138.0                      |   |  | 1.3    |   |  | 0.9   |   |  | 413.6 |   |  | 394.3  |   |  | 19.3  |   |  | 4.9   |  
|                                                                 |  |                             |   |  |                            |   |  |        |   |  |       |   |  |       |   |  |        |   |  |       |   |  |       |  
|Cost of revenues:                                                |  |                             |   |  |                            |   |  |        |   |  |       |   |  |       |   |  |        |   |  |       |   |  |       |  
|Operating expenses                                               |  | 32.1                        |   |  | 32.8                       |   |  | (0.7   | ) |  | (2.2  | ) |  | 95.5  |   |  | 98.1   |   |  | (2.6  | ) |  | (2.7  | )
|Systems development and programming costs                        |  | 14.8                        |   |  | 16.4                       |   |  | (1.6   | ) |  | (9.7  | ) |  | 44.9  |   |  | 49.0   |   |  | (4.1  | ) |  | (8.2  | )
|                                                                 |  |                             |   |  |                            |   |  |        |   |  |       |   |  |       |   |  |        |   |  |       |   |  |       |  
|Total cost of revenues (excluding depreciation and amortization) |  | 46.9                        |   |  | 49.2                       |   |  | (2.3   | ) |  | (4.7  | ) |  | 140.4 |   |  | 147.1  |   |  | (6.7  | ) |  | (4.5  | )
|Selling, general & administrative expenses                       |  | 41.5                        |   |  | 40.9                       |   |  | 0.6    |   |  | 1.5   |   |  | 118.6 |   |  | 111.9  |   |  | 6.7   |   |  | 5.9   |  
|Depreciation and amortization                                    |  | 22.2                        |   |  | 24.0                       |   |  | (1.8   | ) |  | (7.5  | ) |  | 63.4  |   |  | 69.9   |   |  | (6.5  | ) |  | (9.3  | )
|Restructuring charges                                            |  | 0.7                         |   |  | 1.2                        |   |  | (0.5   | ) |  | (43.8 | ) |  | 1.4   |   |  | 2.8    |   |  | (1.4  | ) |  | (50.2 | )
|Interest expense                                                 |  | 9.5                         |   |  | 11.4                       |   |  | (1.9   | ) |  | (16.6 | ) |  | 29.6  |   |  | 34.3   |   |  | (4.7  | ) |  | (13.7 | )
|Other income  net                                               |  | (0.9                        | ) |  | (0.6                       | ) |  | (0.3   | ) |  | 61.7  |   |  | (15.1 | ) |  | (6.3   | ) |  | (8.8  | ) |  | 139.3 |  
|                                                                 |  |                             |   |  |                            |   |  |        |   |  |       |   |  |       |   |  |        |   |  |       |   |  |       |  
|                                                                 |  | 119.9                       |   |  | 126.1                      |   |  | (6.2   | ) |  | (5.1  | ) |  | 338.3 |   |  | 359.7  |   |  | (21.4 | ) |  | (6.0  | )
|Income before provision for income taxes and minority interests  |  | 19.4                        |   |  | 11.9                       |   |  | 7.5    |   |  | 62.9  |   |  | 75.3  |   |  | 34.6   |   |  | 40.7  |   |  | 117.4 |  
|Income tax provision                                             |  | 5.4                         |   |  | 2.7                        |   |  | 2.7    |   |  | 99.9  |   |  | 23.2  |   |  | 7.6    |   |  | 15.6  |   |  | 203.2 |  
|Minority interest in net income of consolidated subsidiaries     |  | 2.0                         |   |  | 1.9                        |   |  | 0.1    |   |  | 6.2   |   |  | 6.1   |   |  | 4.8    |   |  | 1.3   |   |  | 27.2  |  
|                                                                 |  |                             |   |  |                            |   |  |        |   |  |       |   |  |       |   |  |        |   |  |       |   |  |       |  
|Net income                                                       |  | 12.0                        |   |  | 7.3                        |   |  | 4.7    |   |  | 64.0  |   |  | 46.0  |   |  | 22.2   |   |  | 23.8  |   |  | 107.4 |  
|                                                                 |  |                             |   |  |                            |   |  |        |   |  |       |   |  |       |   |  |        |   |  |       |   |  |       |  



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##### Table of Contents

Revenues

During the three months ended March 31, 2009, revenues increased $1.3 million, or 0.9% (17.7% after adjusting for changes in foreign currency exchange rates) and during the nine months ended March 31, 2009,
total revenues increased $19.3 million, or 4.9% (or 12.6% after adjusting for changes in foreign currency exchange rates) versus the same prior year period due to the acquisition of HPI, and higher revenues in both our EMEA and Americas segments.

During the three months ended March 31, 2009, our EMEA revenues were $87.9 million, an increase of $2.0 million, or 2.3% (24.8% after
adjusting for changes in foreign currency exchange rates) compared to the same periods in the prior year, principally due to a $9.5 million increase from the acquisition of HPI, a $6.1 million (net of currency effect) collective increase in
transaction, flat fee, and maintenance revenues offset by a $15.8 million decline resulting from the change in value of the Euro by 12.7%, and Pound Sterling by 27.3%, versus the U.S. dollar. During the nine months ended March 31, 2009,
our EMEA revenues were $258.8 million, an increase of $17.5 million, or 7.3% (17.3% after adjusting for changes in foreign currency exchange rates) compared to the same period in the prior year, due principally to a $10.4 million increase from the
acquisition of HPI, and a $22.4 million collective increase in transaction based revenue, subscriptions revenues in several countries from both existing and new customers, offset by a $20.3 million decline resulting from the change in value of
international currencies.

Our Americas revenues for the three months ended March 31, 2009, were $51.4 million, a decrease of
$0.7 million, or 1.4% (an increase of 6.1% after adjusting for changes in foreign currency exchange rates) compared to the same periods in the prior year, principally comprised of a $3.4 million increase in transaction and subscription revenues
in the U.S., Canada, Brazil and Mexico, offset by a $3.7 million decline resulting from the change in value of the non U.S. currencies versus the U.S. dollar. During the nine months ended March 31, 2009, our Americas revenues were $154.8
million, an increase of $1.8 million, or 1.1% (or 5.2% after adjusting for changes in foreign currency exchange rates) compared to the same period in the prior year, due to a $7.8 million collective increase in transaction and subscription
revenues in the U.S., Canada, Brazil and Mexico, offset by a $6.2 million decline resulting from the change in value of international currencies versus the U.S. dollar.

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



|                               |  |                                   |      |   |                                  |      |    |               |   |      |                  |  |      |   
|------------------------------ |  | --------------------------------- | ---- | - | -------------------------------- | ---- | -- | ------------- | - | ---- | ---------------- |  | ---- | --
|                               |  | Three Months Ended March 31, 2009 |      |   | Nine Months Ended March 31, 2009 |     
|(dollars in millions)          |  | RevenueGrowth                     |      |   | PercentageChange                 |      |    | RevenueGrowth |   |      | PercentageChange | 
|Insurance companies            |  | $                                 | 0.6  |   |                                  | 1.1  | %  |               | $ | 13.0 |                  |  | 8.1  | % 
|Collision repair facilities    |  |                                   | (3.9 | ) |                                  | (7.5 | )% |               |   | 0.1  |                  |  | 0.1  | % 
|Independent assessors          |  |                                   | (1.4 | ) |                                  | (9.6 | )% |               |   | (1.0 | )                |  | (2.4 | )%
|Automotive recyclers and other |  |                                   | 6.0  |   |                                  | 39.8 | %  |               |   | 7.2  |                  |  | 16.6 | % 
|                               |  |                                   |      |   |                                  |      |    |               |   |      |                  |  |      |   
|Total                          |  | $                                 | 1.3  |   |                                  | 0.9  | %  |               | $ | 19.3 |                  |  | 4.9  | % 
|                               |  |                                   |      |   |                                  |      |    |               |   |      |                  |  |      |   

Revenue growth for each of our customer categories after adjusting for changes in foreign currency
exchange rates are as follows:



|                               |  |                                   |      |                  |                                  |   |               |   |                  |  |      |  
|------------------------------ |  | --------------------------------- | ---- | ---------------- | -------------------------------- | - | ------------- | - | ---------------- |  | ---- | -
|                               |  | Three Months Ended March 31, 2009 |      |                  | Nine Months Ended March 31, 2009 |  
|(dollars in millions)          |  | RevenueGrowth                     |      | PercentageChange |                                  |   | RevenueGrowth |   | PercentageChange | 
|Insurance companies            |  | $                                 | 8.8  |                  | 15.7                             | % |               | $ | 23.2             |  | 14.5 | %
|Collision repair facilities    |  |                                   | 5.0  |                  | 9.5                              | % |               |   | 13.8             |  | 9.2  | %
|Independent assessors          |  |                                   | 0.9  |                  | 5.8                              | % |               |   | 1.2              |  | 2.8  | %
|Automotive recyclers and other |  |                                   | 9.8  |                  | 66.2                             | % |               |   | 11.5             |  | 26.6 | %
|                               |  |                                   |      |                  |                                  |   |               |   |                  |  |      |  
|Total                          |  | $                                 | 24.5 |                  | 17.7                             | % |               | $ | 49.7             |  | 12.6 | %
|                               |  |                                   |      |                  |                                  |   |               |   |                  |  |      |  

Operating expenses

During the three months ended March 31, 2009, Operating expenses decreased by $0.7 million, or 2.2% (an increase of 10.7% after adjusting for changes in foreign currency exchange rates) and during the nine months
ended March 31, 2009, Operating expenses decreased $2.6 million, or 2.7% (an increase of 2.5% after adjusting for changes in foreign currency exchange rates), versus the same period in the prior year, due to reductions in our operating
expenses in our Americas segment, and a decline in the value of international currencies versus the U.S. dollar, offset by increased spending in our EMEA segment.

During the three months ended March 31, 2009, our Americas operating expenses decreased $0.9 million, or 6.6% (2.7% after adjusting for changes in foreign currency exchange rates), due principally to a $0.6
million decrease in personnel related expenses and a $0.6 million decline resulting from the change in value of international currencies versus the U.S. dollar. During the nine months ended March 31, 2009, our Americas Operating expenses
decreased $5.8 million, or 13.0.% (11.2% after adjusting for changes in foreign currency exchange rates) due principally to a reduction of $2.8 million in personnel costs, $1.4 million in professional fees, $0.9 million from delivery charges,
and a $0.8 million decline resulting from the change in value of international currencies versus the U.S. dollar.

During the three months
ended March 31, 2009, our EMEA Operating expenses increased $0.2 million, or 1.1 % (20.8% after adjusting for changes in foreign currency exchange rates), principally comprised of a $2.2 million increase from the acquisition of HPI, a
$1.8 million increase in third party licensing, personnel costs, and telecom usage, offset by a decrease of $0.9 million in external maintenance and support, and a $2.9 million decline resulting from the change in value of international currencies
versus the U.S. dollar.



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##### Table of Contents

During the nine months ended March 31, 2009, our EMEA Operating expenses increased
$3.2 million, or 6.0% (13.9% after adjusting for changes in foreign currency exchange rates), due principally to an increase of $2.5 million from the acquisition of HPI, $2.7 million in third party licenses, $1.0 million in personnel related
costs, and $1.5 million in professional fees and telecom usage, offset by a decline of $1.2 million in external maintenance charges and a $3.3 million decline resulting from the change in value of international currencies versus the U.S. dollar.

We continually evaluate our operating costs in order to identify inefficiencies and eliminate unnecessary costs. We anticipate that,
although our operating expenses may increase, they will decline as a percentage of revenues over the next several quarters.

Systems development and
programming Expenses

During the three months ended March 31, 2009, SD&P decreased $1.6 million, or 9.7% (increase of 0.1%
after adjusting for changes in foreign currency exchange rates), and during the nine months ended March 31, 2009, Systems development and programming expenses, or SD&P, decreased $4.1 million, or 8.2% (4.9% after adjusting for changes in
foreign currency exchange rates), compared to the same period in the prior year, due to decrease in our SD&P expenses in both our Americas segment and our EMEA segment.

During the three months ended March 31, 2009, our Americas SD&P expenses decreased $0.9 million, or 14.1% (12.0% after adjusting for
changes in foreign currency exchange rates), due principally to a reduction of $0.6 million in personnel related costs and a $0.1 million decline resulting from the change in value of international currencies versus the U.S. dollar. During the nine
months ended March 31, 2009, our Americas SD&P expenses decreased $3.0 million or 15.2% (14.3% after adjusting for changes in foreign currency exchange rates), due principally to a $2.3 million reduction in personnel costs, and $0.9 million
reduction in professional fees, and a $0.2 million decline resulting from the change in value of international currencies versus the U.S. dollar, partially offset by an increase of $0.4 million from equipment and other expense.

During the three months ended March 31, 2009, our EMEA SD&P expenses decreased $0.7 million, or 7.1% (7.5% after adjusting for changes in
foreign currency exchange rates), due principally to a decline of $1.3 million resulting from the change in value of international currencies versus the U.S. dollar, offset by an increase of $0.5 million from the acquisition of HPI. During the nine
months ended March 31, 2009, our EMEA SD&P expenses decreased $1.1 million, or 3.5% (1.4% after adjusting for changes in foreign currency exchange rates), compared to the same period in the prior year comprised, principally of an increase
in our external development costs of $1.6 million and a $0.8 million increase from the acquisition of HPI, offset by a reduction of $1.2 million in personnel related costs, $0.8 million from decreased professional fees, and a $1.2 million decline in
the value of international currencies versus the U.S. dollar.

Our SD&P expenses fluctuate throughout the year based upon the levels
and timing of product releases. We expect our SD&P costs to remain relatively stable over the next several quarters.

Selling, general and
administrative expenses

During the three months ended March 31, 2009, SG&A increased $0.6 million or 1.5% (12.2% after
changes in foreign currency exchange rates), and during the nine months ended March 31, 2009, Selling, general and administrative expenses, or SG&A, increased $6.7 million, or 5.9% (10.7% after adjusting for changes in foreign currency
exchange rates), compared to the same period in the prior year, comprised principally of increases in stock compensation, and acquisition related costs and the acquisition of HPI, partially offset by a decline in the value of international
currencies versus the U.S. dollar.

During the three months ended March 31, 2009, the SG&A increase of $0.6 million was due to a
$4.3 million increase in personnel cost primarily in our EMEA segment (including $2.0 million from the acquisition of HPI) mostly offset by a $4.4 million decline resulting from the change in value of international currencies versus the U.S. dollar.
During the nine months ended March 31, 2009, the SG&A increase of $6.7 million was due principally to an $8.1 million increase in personnel related costs (including $2.3 million from the acquisition of HPI), a $1.5 million increase in stock
compensation, a $2.4 million increase in professional fees primarily related to acquisition costs, and $1.4 million related to facilities, equipment and advertising expense, partially offset by a decline in the timing of Sarbanes-Oxley fees totaling
$2.0 million and a $5.4 million decline resulting from the change in value of international currencies versus the U.S. dollar.

We expect
these expenses to continue to increase as we continue to expand our business into new markets, and we incur additional costs associated with being a public company and we incur costs related to acquisitions, similar transactions and related
activities.



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Depreciation and Amortization

Depreciation and amortization expense decreased $1.8 million, or 7.5% (an increase of 3.5% after adjusting for changes in foreign currency exchange rates), and $6.5 million, or 9.3% (5.8% after changes in foreign
currency exchange rates), for the three and nine month periods ended March 31, 2009, respectively, compared to the same prior year periods. During the three months ended March 31, 2009, the decrease in depreciation and amortization expense
was due primarily due to a $2.7 million decline resulting from the change in value of international currencies versus the U.S. dollar, partially offset by amortization of intangible and capital assets purchased during the current fiscal year.

During the nine months ended March 31, 2009, the decrease in depreciation and amortization expense was due primarily to lower
intangibles amortization expense of $4.6 million for identifiable assets such as our client list and database purchased in the April 2006 CSG Acquisition, and a decline of $2.4 million resulting from the change in value of international currencies
versus the U.S. dollar.

These intangible assets are amortized on an accelerated schedule to reflect the pattern in which economic benefits
of the intangible assets are consumed. Although we expect to experience significant depreciation and amortization in the future as we amortize intangible assets purchased in the April 2006 CSG Acquisition, we anticipate that the amount of total
depreciation and amortization expense from the April 2006 intangible assets will continue to decline over the next several years.

Restructuring
Charges

We recorded restructuring charges of $0.7 million and $1.4 million for the three and nine month periods ended
March 31, 2009, respectively, related to one-time termination benefits in connection with the Americas 2008 plan, which began in February 2008. 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 decreased $1.9 million or 16.6% (9.0% after adjusting for changes in foreign currency exchange rates) and $4.7 million or 13.7% (11.4%
after adjusting for changes in foreign currency exchange rates), during the three and nine month periods ended March 31, 2009, respectively, compared to the same periods in the prior year. During the three months ended March 31, 2009,
interest expense declined $1.2 million due to lower borrowings under our credit facilities, and an additional $0.9 million decline resulting from the change in value of international currencies versus the U.S. dollar. During the nine months ended
March 31, 2009, interest expense declined $4.1 million due to lower borrowings under our credit facilities, and a decline of $0.8 million resulting from the change in value of international currencies versus the U.S. dollar.

We expect that our annual interest expense will continue to decrease as we repay outstanding indebtedness, notwithstanding the potential of future
acquisitions. The decrease or increase in interest expense may also be impacted by future foreign currency fluctuations.

Other Income-net

Other income  net increased $0.3 million and $8.8 million, during the three and nine month periods ended March 31, 2009,
respectively, compared to the same periods last year, primarily due to increases in the value of our foreign exchange option, which we sold in November 2008. During the three months ended March 31, 2009, Other income  net increased $0.6
million primarily due to transactional foreign exchange gains, partially offset by a $0.3 million decline resulting from the change in value of international currencies versus the U.S. dollar. During the nine months ended March 31, 2009, Other
income  net increased by $8.8 million primarily related to the $10.6 million gain associated with the sale of our foreign currency option, partially offset by a loss from foreign currency exchange of $1.8 million.

Income Tax Provision

The expected tax
provision derived from applying the federal statutory rate to our income before income taxes during the three and nine months ended March 31, 2009, differed from our recorded income tax provision primarily due to valuation allowance release on
a portion of the deferred tax assets that are supported by refundable income taxes and lower foreign income tax rates in certain jurisdictions whose earnings are considered indefinitely reinvested. These benefits are offset by valuation
allowance recorded on certain foreign losses that do not meet the more-likely-than not standard of realizability and foreign withholding tax liabilities. Our tax provision for the remainder of fiscal year 2009 continues to heavily depend on the
jurisdictional mix of pretax earnings, our actual and forecasted profitability, establishment of valuation allowances in certain jurisdictions, and varying jurisdictional income tax rates that are applied to related earnings. During the quarter, a
portion of the Companys FIN No. 48 unrecognized tax benefits related to a prior year was released due to the closure of a local income tax audit for one of the Companys foreign affiliates.



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Liquidity and Capital Resources

Prior to the April 2006 CSG Acquisition, our predecessors principal sources of liquidity were capital contributions from ADP and cash generated from operations. Since the April 2006 CSG Acquisition, our
principal sources of cash have included cash generated from operations, bank borrowings, and equity offerings. Our principal uses of cash have included debt service, capital expenditures, working capital and most recently, for acquisitions. We
expect that these will remain our principal uses of cash.

On November 13, 2008, we filed a registration statement on Form S-3 with
the SEC, registering the issuance and sale by us of shares of our common stock. On November 19, 2008, we issued 4,500,000 shares of our common stock for net proceeds of $86.0 million under this shelf registration statement. If we raise
additional funds by issuing equity securities, further dilution to our then-existing stockholders may result. Additional debt financing, such as our amended and restated senior credit facility, may involve agreements that include covenants limiting
or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Any debt or equity financing may contain terms, such as liquidation and other preferences that are not
favorable to us or our stockholders. If we raise additional funds through collaboration and licensing arrangements, or research and development arrangements with third parties, it may be necessary to relinquish valuable rights to our technologies,
research programs or potential products, or grant licenses on terms that may not be favorable to us.

We believe that cash flow from
operating activities 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 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 agreements with respect to any significant pending acquisition or other similar transactions.

Cash and Cash Equivalents

As
of March 31, 2009, we had cash and cash equivalents of approximately $188.0 million. We fund our operations, working capital and capital expenditures with our cash on hand and short-term borrowings under our amended and restated 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:



|                      |  |                             |        |   |      |   |       |        |  |   |       |  
|--------------------- |  | --------------------------- | ------ | - | ---- | - | ----- | ------ |  | - | ----- | -
|                      |  | Nine Months Ended March 31, |       
|(dollars in millions) |  | 2009                        |        |   | 2008 |   |       | Change | 
|Operating activities  |  | $                           | 86.6   |   |      | $ | 80.7  |        |  | $ | 5.9   |  
|Investing activities  |  | $                           | (104.3 | ) |      | $ | (14.2 | )      |  | $ | (90.1 | )
|Financing activities  |  | $                           | 80.1   |   |      | $ | (34.2 | )      |  | $ | 114.3 |  

Operating activities.Cash provided by operating activities was $86.6 million and
$80.7 million, during the nine month periods ended March 31, 2009 and 2008, respectively. The $5.9 million increase in cash provided by operating activities for the nine months ended March 31, 2009, versus the same period last year was
principally comprised of a $23.8 million increase in net income, partially offset by an increase of $10.6 million in the fair value of our foreign currency option prior to its realized sale.

Investing activities. Cash used in investing activities for the nine month periods ended March 31, 2009 and 2008, was $104.3 million and
$14.2 million, respectively. During the nine months ended March 31, 2009, we paid $99.4 million in cash for multiple acquisitions, net of cash acquired, including $93.9 million related to the acquisition of HPI, partially offset by proceeds of
$12.4 million from the sale of our foreign currency option. Capital expenditures, consisting of computers, computer software, leasehold improvements and furniture and fixtures, were $16.1 million and $13.9 million, for the nine month periods ended
March 31, 2009 and 2008, respectively.

Financing activities.Cash provided by/(used in) financing activities for the nine
month periods ended March 31, 2009 and 2008 was $80.1 million and ($34.2 million), respectively. The $114.3 million increase in cash provided by financing activities for the nine months ended March 31, 2009, was primarily due to our
November 2008 equity offering, with net proceeds of $86.0 million, and prior year voluntary repayments of long term debt, (loan and revolving credit facility) on our amended and restated senior credit facility of $26.4 million.

Amended and Restated Senior Credit Facility

In connection with our initial public offering in May 2007, we entered into an amended and restated senior credit facility. Our amended and restated senior credit facility consists of a $50.0 million revolving credit facility, a
$230.0 million domestic term loan and a 280.0 million European term loan. As of March 31, 2009, we had $0, $217.0 million and $342.2 million (259.1 million) in outstanding loans under the revolving credit
facility, domestic term loan and European term loan, respectively, with interest rates of



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3.375%, 3.125%, and 3.438%, respectively. The amended and restated senior credit facility contains a leverage ratio, which is applicable to only the
revolving loans and applies only if at least $10.0 million of revolving loans, including outstanding letters of credit, are outstanding for at least 10 days during the prior fiscal quarter.

In addition, the amended and restated senior credit facility contains 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 of loans and investments, and transactions with affiliates.



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Subordinate Note Payable

As part of our December 2008 agreement to acquire the outstanding share capital of HPI from a subsidiary of Aviva plc (the Seller), we issued to Sellar a subordinated note (the Seller Note) in
the principal amount of approximately $17.3 million (£11.3 million) which is guaranteed by us. The Seller Note accrues interest at an annual rate of 8.0%, and interest is payable to Seller annually. The principal amount becomes due and payable
in full on December 31, 2011, subject to certain acceleration events contained in the Seller Note and restrictions contained in the amended and restated senior credit facility. All amounts payable to Seller are payable in Pound Sterling. The
decrease in the U.S. dollar amount of the Seller Note from December 19, 2008 (approximately $17.3 million) to March 31, 2009 (approximately $16.0 million) reflects the strengthening of the U.S. dollar versus the Pound Sterling during
this period of time.

Off-Balance Sheet Arrangements

Our off-balance sheet arrangements consist of our operating leases. There have been no material changes in our off-balance sheet arrangements since June 30, 2008, the end of our prior fiscal year.

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

Our consolidated financial statements included in this Quarterly Report on Form
10-Q have been prepared in accordance with generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the amounts reported in our consolidated financial statements.
On an ongoing basis, we evaluate estimates. We base our estimates on historical experiences and assumptions which we believe to be reasonable under the circumstances. Those estimates form the basis for our judgments that affect the amounts reported
in the consolidated financial statements. Actual results could differ from our estimates under different assumptions or conditions. Our significant accounting policies, some of which may be affected by our estimates and assumptions, are more fully
described in Note 2 to our audited Consolidated Financial Statements for the year ended June 30, 2008 and our critical accounting policies are more fully described in Part II, Item 7 Managements Discussion and Analysis of
Financial Condition and Results of Operations, each of which were included in our Annual Report on Form 10-K. As of May 7, 2009, there have not been any significant changes in our critical accounting policies and estimates.

Recent Accounting Pronouncements

Recent accounting
pronouncements are detailed in Note 2 to our consolidated financial statements included in of this Quarterly Report on Form 10-Q.

Available Information

Our internet website address is www.solerainc.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the Exchange Act), will be available free of charge through our
website as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. Our website and the information contained or incorporated therein are not intended to be incorporated into this Quarterly Report on Form
10-Q.



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|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
|------- | -----------------------------------------------------------

Foreign Currency Risk

We conduct operations in many countries around the world. Our results of operations are subject to
both currency transaction risk and currency translation risk. We incur currency transaction risk when we enter into either a purchase or sale transaction using a currency other than our functional currency, which is the U.S. dollar. 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 we expect that they will continue to fluctuate 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, Pound Sterling, Swiss francs, Canadian dollars and other international currencies.

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, $1.41 on December 31, 2008 and $1.32 on March 31, 2009. The change from June 30, 2008 to March 31, 2009 represents a
strengthening of the U.S. dollar versus the Euro of approximately 16.5%. If currency exchange rates were to remain constant, we anticipate that the recent strengthening of the U.S. dollar will have a negative impact on our revenues, but have a
positive impact on our interest expense and our intangibles amortization expense for the full fiscal year ending June 30, 2009, compared to the same period last year. Currency exchange rates had a positive impact on our revenues during the
first quarter of fiscal year 2009 and a negative impact on our revenues during the second and third quarters of fiscal year 2009 compared to the same periods last year. A hypothetical 5% increase or decrease in the U.S. dollar versus other
currencies in which we transact our business would have resulted in a $5.1 million and $15.1 million change to our revenues during the three and nine months ended March 31, 2009 respectively, and a $20.1 million change on our full fiscal year.

Historically, other than the foreign currency option described in this Quarterly Report on Form 10-Q, 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 to do so in the future.

Interest Rate Risk

We are exposed to interest rate risks primarily through borrowings under our revolving loan arrangement
and term loans. Interest on these borrowings is based upon variable interest rates. Our weighted-average borrowings outstanding under the revolving loan arrangement and term loans during the three and nine months ended March 31, 2009 was $569.5
million and $591.3 million respectively and the weighted-average interest rate in effect at March 31, 2009 was 5.4%. Based on the foregoing, a hypothetical 1% increase or decrease in interest rates would have resulted in a $1.4 million and $4.4
million change to our interest expense for the three and nine months ended March 31, 2009, respectively.

In June 2007, we entered
into three U.S. dollar-based interest rate swaps with notional amounts of $50.0 million, $81.0 million ($67.5 million as of March 31, 2009 per the planned reduction in notional amounts over the life of the swap contract), and
$75.0 million, each with maturities on June 30, 2011, which require us to pay fixed rates of 5.445%, 5.418%, and 5.445%, respectively. We also entered into three Euro-based interest rate swaps with notional amounts of
69.8 million (35.4 million as of March 31, 2009 per the planned reduction in notional amounts over the life of the swap contract), 50.0 million, and 60.0 million, each with maturities as late as
June 30, 2011, which require us to pay fixed rates of 4.603%, 4.679%, and 4.685%, respectively. These interest rate swaps are designated and documented at their inception as cash flow hedges and are evaluated for effectiveness quarterly. The
effective portion of the gain or loss on these hedges is reported as a component of Accumulated other comprehensive (loss) income in stockholders equity and reclassified into earnings when the hedged transaction affects earnings. The
ineffective portion on these cash flow hedges is recognized in Interest expense. The estimated fair values of ($15.4 million) and ($8.7 million) on U.S. dollar-based swaps and (7.7 million) ($10.2 million) and 1.7 million
($2.7 million) on Euro-based swaps was recorded in Other assets/(Other liabilities) in the consolidated balance sheet as of March 31, 2009 and June 30, 2008, respectively. The change of $24.0 million in the fair value of swaps, net of
tax, reflects the effective portion of loss on these hedges and is reported as a component of Accumulated other comprehensive (loss) income in stockholders equity.



|ITEM 4. | CONTROLS AND PROCEDURES.
|------- | ------------------------

In accordance with
Section 302 of the Sarbanes-Oxley Act of 2002 and Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, management, under the supervision and with the participation of the chief executive officer (CEO) and
chief financial officer (CFO), evaluated the effectiveness of our disclosure controls and procedures at the end of the period covered by this report as well as any changes in disclosure controls and procedures that occurred during the
period covered by this report. Our management, including our CEO and CFO, has concluded that our disclosure controls and procedures are effective as of March 31, 2009.



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No changes in our internal control over financial reporting occurred during the quarter ended
March 31, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We intend to review and evaluate the design and effectiveness of our disclosure controls and procedures on an ongoing basis and correct any deficiencies that we may discover in the future. Our goal is to ensure that our senior management
has timely access to all material financial and non-financial information concerning our business. While we believe the present design of our disclosure controls and procedures is effective to achieve our goal, future events affecting our business
may cause us to significantly modify our disclosure controls and procedures.

PART IIOTHER INFORMATION



|ITEM 1. | 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.



|ITEM 1A. | RISK FACTORS
|-------- | ------------

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

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

We derive a substantial portion of our revenues from sales to large
insurance companies. During the nine months ended March 31, 2009, we derived 14.2% of our revenues from our ten largest insurance company customers. The largest three of these customers accounted for 3.0%, 2.2%, and 1.5%, respectively, of our
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 fiscal year 2008, we
were notified by a U.S. insurance company customer that it will not renew its contract with us. During fiscal year 2009, this customer has been transitioning our services to another provider. We believe that the transition will accelerate during the
fourth quarter of fiscal year 2009 and be completed by the end of fiscal year 2009. This contract accounted for approximately 1.4% of revenues in fiscal year 2008 and approximately 1.5% of revenues during the nine months ended March 31, 2009.
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.



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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. We also encounter regional or country-specific competition in the markets for automobile insurance claims processing software and services and our complimentary products and services. For example Experian®is our principal competitor in the United Kingdom in the vehicle validation market. If one or more of our competitors develop software or
services that are superior to ours or are more effective in marketing their software or services, our market share could decrease, thereby reducing our revenues. In addition, if one or more of our competitors retain existing or attract new customers
for which we have developed new software or services, we may not realize expected revenues from these new offerings, thereby reducing our profitability.

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

Moreover, many insurance companies have historically entered into agreements with
automobile insurance claims processing service providers like us and our competitors whereby the insurance company agrees to use that provider on an exclusive or preferred basis for particular products and services and agrees to require collision
repair facilities, independent assessors and other vendors to use that provider. If our competitors are more successful than we are at negotiating these exclusive or preferential arrangements, we may lose market share even in markets where we retain
other competitive advantages.

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

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

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

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 costs, including a portion of our debt service costs, in currencies other than the U.S. dollar,
mainly 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 $28.1 million and $94.3 million for the three and nine month periods ended March 31, 2009.
Recent global economic conditions have impacted currency exchange rates. Over the last several months, the U.S. dollar has strengthened significantly versus most major foreign currencies we use to transact our business. For example, one Euro was
equal to approximately $1.58 on June 30, 2008, $1.44 on September 30, 2008, $1.41 on December 31, 2008, and $1.32 on March 31, 2009. The change from June 30, 2008 to March 31, 2009 represents a strengthening of the U.S.
dollar versus the Euro of approximately 16.5%. Further fluctuations in exchange rates against the U.S. dollar could decrease our revenues and associated profits and, therefore, harm our future operating results.



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

Our growth is
dependent upon market growth and our ability to enhance our existing products and introduce new products on a timely basis. We have addressed and are likely to continue to address the need to introduce new products both through internal development
and through acquisitions of other companies and technologies that would complement our business or enhance our technological capability. In fiscal year 2009, we acquired UC Universal Software Consulting GmbH, Inpart Servicos Ltda. and HPI, Ltd.
Acquisitions involve numerous risks, including the following:



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



| |  |  | difficulties in integrating or retaining key employees of the acquired company;
| | - |  | -------------------------------------------------------------------------------



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



| |  |  | entering geographic or product markets in which we have no or limited prior experience;
| | - |  | ---------------------------------------------------------------------------------------



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



| |  |  | disruptions to our operations;
| | - |  | ------------------------------



| |  |  | diversion of our managements attention;
| | - |  | ----------------------------------------



| |  |  | potential incompatibility of business cultures;
| | - |  | -----------------------------------------------



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



| |  |  | limitations on the use of net operating losses;
| | - |  | -----------------------------------------------



| |  |  | negative market perception, which could negatively affect our stock price;
| | - |  | --------------------------------------------------------------------------



| |  |  | the assumption of debt and other liabilities, both known and unknown; and
| | - |  | -------------------------------------------------------------------------



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

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

Additionally, we may finance future acquisitions and/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 also seek to restructure our business in
the future by disposing of certain of our assets, which may harm our future operating results, divert significant managerial attention from our operations and/or require us to accept non-cash consideration, the market value of which may fluctuate.

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.



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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. Moreover, 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 potentially less valuable to insurance companies in those states. Some states have adopted total
loss regulations, that, among other things, require insurers use a methodology deemed acceptable to the respective government agency.

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

In addition, the Belgian Competition Department notified us that it has chosen to continue to investigate a complaint relating to estimates generated by our software of
the costs to repair damaged vehicles originally brought by a trade association representing collision repair facilities that was withdrawn by the trade association in 2005. Pursuant to European Union competition laws, the Belgian Competition
Department has asserted its authority to conduct this investigation as it relates to the Western European region.

We have a large amount of goodwill
and other intangible assets as a result of the April 2006 Acquisition, the HPI acquisition and other acquisitions. Our earnings will be harmed if we suffer an impairment of our goodwill or other intangible assets.

We have a large amount of goodwill and other intangible assets and are required to perform an annual assessment for possible impairment for accounting
purposes. At June 30, 2008 and March 31, 2009, we had goodwill and other intangible assets of $976.3 million and $930.3 million, respectively. If we do not achieve our planned operating results or other factors impair these assets, we
may be required to incur a non-cash impairment charge. Any impairment charges in the future will adversely affect our results of operations.

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

We incurred restructuring charges of $13.3 million in fiscal year 2008 and an additional $1.4 million in the nine months ended March 31, 2009. These charges consist primarily of termination benefits paid or
to be paid to employees. As of March 31, 2009, our remaining obligation associated with these restructuring charges and others from prior periods is $9.5 million. We regularly evaluate our existing operations and capacity, and we expect to
incur additional restructuring charges as a result of future personnel reductions, related restructuring, and productivity and technology enhancements, which could exceed the levels of our historical charges. We are currently evaluating further
plans that, if all implemented, would result in additional restructuring charges ranging from $5.0 million to $10.0 million over the next 12 to 18 months. These potential charges could harm our operating results and significantly reduce our
cash position or increase debt. In addition, we may incur certain unforeseen costs once these activities are implemented.

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

We have a significant amount of indebtedness. As of March 31,
2009, our indebtedness, including current maturities, was $575.2 million, and we would have been able to borrow an additional $50.0 million under our amended and restated senior credit facility. During the three and nine months ended
March 31, 2009, our aggregate interest expense was $9.5 million and $29.6 million, respectively, and the cash paid for interest was $9.0 million and $29.3 million, respectively.

Our indebtedness could:



| |  |  | make us more vulnerable to unfavorable economic conditions and reduce our revenues;
| | - |  | -----------------------------------------------------------------------------------



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



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



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| |  |  | 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.



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Our amended and restated senior credit facility contains covenants that 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 also 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 under the amended and restated senior
credit facility. 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.

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

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



| |  |  | Automobile Usage - Number of Miles Driven: In 2008, the number of miles driven in the United States and several of our large western European markets declined due
to high gasoline prices and difficult economic conditions. Fewer miles driven can result in fewer automobile accidents, which can reduce the transaction-based fees that we generate.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Number of Insurance Claims Made: In 2009, the number of insurance claims for vehicle damage submitted by owners to their insurance carriers has declined slightly in
several of our markets, including some of our large western European markets. While we do not know whether the decline in the number of claims made is a result of fewer accidents, other factors, such as vehicle owners reluctance to pay the
insurance policy deductible for vehicle repair, or a combination of factors, fewer claims made can reduce the transaction-based fees that we generate.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Sales of New and Used Vehicles: In 2008, the number of new vehicles sold in the United States and several of our large western European markets declined due to high
gasoline prices and difficult economic conditions. Fewer new light vehicle sales can result in fewer insured vehicles on the road and fewer automobile accidents, which can reduce the transaction-based fees that we generate.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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

We cannot predict the timing, strength or duration of any economic slowdown or subsequent economic recovery, worldwide or in particular economic markets.
These and other economic factors could have a material adverse effect on demand for or utilization of our products and on our financial condition and operating results.

We have a history of net losses and may not maintain profitability in the future.

For fiscal years
2008, 2007 and 2006, we had net income (loss) of $0.6 million, ($80.9) million and ($18.9) million, respectively. As of March 31, 2009, we had an accumulated deficit of approximately $64.2 million. Fiscal year 2008 was our first year since
the April 2006 Acquisition for which we did not report a significant loss. We will need to maintain or increase revenues and maintain or reduce expenses, which include the amortization of the remaining $302.0 million of intangible assets that
we had as of March 31, 2009 and interest expense associated with our indebtedness, to improve or sustain our profitability. We cannot assure you that we will achieve a significant level of profitability. Future decreases in profitability could
reduce our stock price, and future net losses would reduce our stock price.

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

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

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

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;
| | - |  | --------------------------------------------------------------------------------------------------------------------



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| |  |  | our networks, our customers networks or our third-party service providers networks; and
| | - |  | -----------------------------------------------------------------------------------------



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

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



| |  |  | power loss or other telecommunications failures;
| | - |  | ------------------------------------------------



| |  |  | earthquakes, fires, floods, hurricanes and other natural disasters;
| | - |  | -------------------------------------------------------------------



| |  |  | computer viruses or software defects;
| | - |  | -------------------------------------



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



| |  |  | errors by our employees or third-party service providers.
| | - |  | ---------------------------------------------------------

As part of our ongoing process improvements efforts, we have and will continue to migrate product and system platforms to next generation platforms, and the risks noted above will be exacerbated by our migration
efforts. Because many of our services play a mission-critical role for our customers, any damage to or failure of the infrastructure we rely on, 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 are active in over 50 countries, where we are subject to country-specific risks that could adversely impact our business and
results of operations.

During the three and nine months ended March 31, 2009, we generated approximately 73% of our revenues outside the U.S.,
respectively, and we expect revenues from non-U.S. markets to continue to represent a majority of our total revenues. Business and operations in individual countries are subject to changes in local government regulations and policies, including
those related to tariffs and trade barriers, investments, taxation, currency exchange controls and repatriation of earnings. Our results are also subject to the difficulties of coordinating our activities across more than 50 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, possible terrorist attacks and pandemic disease.
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 service 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 service offerings that we are able to implement, successfully or otherwise, can cause significant variations in our cash flow from operations, and we may experience a decrease in our
net income as we incur the expenses necessary to develop and design new software and services. 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, variations of vehicle accident rates due to factors such as changes in fuel prices or new vehicle purchases and their impact on
vehicle usage, and competitive conditions, or changes in 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.



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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 our outstanding common stock. In the case of debt financings, we may have to grant additional
security interests in our assets to lenders and agree to restrictive business and operating covenants. If we cannot obtain adequate capital on favorable terms or at all, we may be unable to support future growth or operating requirements and,
accordingly, our business, financial condition and results of operations could be harmed.

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, 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, ABZ, Hollander, Informex, Sidexa, HPI and IMS, 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 not engaged in extensive direct brand promotion activities, and we may not successfully implement brand enhancement efforts
in the future.

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 software, products or technology, including claims data or other data, which 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 or 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 arrangements with third parties, which may be costly or impractical. These claims may also require us to
stop selling our software and/or services as currently designed, which could harm our competitive position. We also may be subject to significant damages or injunctions that prevent the further development and sale of certain of our software or
services and may result in a material loss in revenue.

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

We rely on a combination of trade secrets, copyrights, know-how,
trademarks, patents, license agreements and contractual provisions, as well as internal procedures, to establish and protect our intellectual property rights. The steps we have taken and will take to protect our intellectual property rights may not
deter infringement, duplication, misappropriation or violation of our intellectual property by third parties. In addition, any of the intellectual property we own or license from third parties may be challenged, invalidated, circumvented or rendered
unenforceable. Furthermore, 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 or current
employees, despite the existence of nondisclosure and confidentiality agreements and other contractual restrictions. If our trade secrets become known or we fail to otherwise 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.



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Currently, we believe that one or more of our customers in our EMEA segment may be infringing our
intellectual property by making and distributing unauthorized copies of our software. Enforcement of these intellectual property rights may be difficult and may require considerable resources.

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

We depend upon the ability and experience of our key personnel, who have substantial
experience with our operations, the rapidly changing automobile insurance claims processing industry and the markets in which we offer our software and services. The loss of the services of one or more of our senior executives or key employees,
particularly our Chairman of the Board, Chief Executive Officer and President, Tony Aquila, could harm our business and operations. On March 30, 2009, Dudley Mendenhall replaced Jack Pearlstein as our Chief Financial Officer, Treasurer and
Assistant Secretary. Mr. Pearlstein had announced his planned retirement in October 2008 and will serve as a consultant to us through June 30, 2009, which consulting services include assisting Mr. Mendenhall with integration and transition
planning. Our failure to successfully integrate Mr. Mendenhall into our company and his role as our Chief Financial Officer could interrupt or harm our business and operations.

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

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

We have been and continue to be involved in legal proceedings, claims and other litigation that arise in the ordinary course of
business. For example, we have been involved in disputes with collision repair facilities, acting individually and as a group in some situations that claim that we have colluded with our insurance company customers to depress the repair time
estimates generated by our repair estimating software. 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 and strategic partners that we have not complied with the terms of our agreements with them, some of
which are the subject of pending litigation and any of which could in the future lead to arbitration or litigation. While we do not expect the outcome of any such pending or threatened litigation to have a material adverse effect on our financial
position, litigation is unpredictable and excessive verdicts, both in the form of monetary damages and injunction, could occur. In the future, we could incur judgments or enter into settlements of claims that could harm our financial position and
results of operations.

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

Prior to our initial public offering in May 2007, we were not 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 continue to work with our legal, independent
accounting and financial advisors to identify those areas in which changes should be made to our financial and management control systems to manage our growth and our obligations as a public company. These areas include corporate governance,
corporate control, internal audit, disclosure controls and procedures and financial reporting and accounting systems. We have made, and will continue to make, changes in these and other areas. However, the expenses that are required as a result of
being a public company are and will likely continue to be material. Compliance with the various reporting and other requirements applicable to public companies also require considerable time and attention of management. Until we have more experience
operating as a public company, we may have difficulty predicting or estimating 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.



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

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



| |  |  | authorization of the issuance of blank check preferred stock without the need for action by stockholders;
| | - |  | -----------------------------------------------------------------------------------------------------------



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



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



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



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

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, our amended and restated senior credit facility limits 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.



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

Not applicable.



|ITEM 3. | DEFAULTS UPON SENIOR SECURITIES.
|------- | --------------------------------

None.



|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
|------- | ----------------------------------------------------

None.



|ITEM 5. | OTHER INFORMATION.
|------- | ------------------

None.



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|ITEM 6. | EXHIBITS.
|------- | ---------



|            |  |                                                                                                                        
|----------- |  | -----------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                            
|            | 
|10.1        |  | Employment Offer Letter between the Registrant and Dudley Mendenhall dated March 9, 2009.                              
|            | 
|31.1        |  | Certification by Tony Aquila, Chief Executive Officer.                                                                 
|            | 
|31.2        |  | Certification by Dudley Mendenhall, Chief Financial Officer.                                                           
|            | 
|32.1        |  | Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



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SIGNATURES

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



SOLERA HOLDINGS, INC./s/ Tony AquilaTony AquilaChief Executive Officer and President(Principal Executive Officer)/s/ Dudley MendenhallDudley MendenhallChief Financial Officer(Principal Financial and Accounting Officer)


May8, 2009



44