Insurance Auto Auctions Fourth Quarter
Earnings Expected to be Below Expectations
SCHAUMBURG, Ill., Jan. 26 Insurance Auto Auctions, Inc.
, a leading provider of automotive salvage and claims processing
services in the United States, today announced that its net earnings in the
fourth quarter will be below expectations of $.25 to $.27 per share. The
Company expects earnings for the fourth quarter to be $.14 to $.16 per share.
Earnings for the fourth quarter of 1999 were $.29 per share.
As previously reported, the Company has experienced a decline in the
profitability of its purchase agreement contracts. The Company has made
considerable progress in renegotiating these contracts and in mitigating the
risk associated with them. However, unexpected delays in converting two key
purchase agreements to consignment type contracts negatively impacted fourth
quarter results. The Company's new CEO, Thomas O'Brien, has been devoting
significant time to addressing the purchase agreement profitability issue.
Mr. O'Brien, Chief Executive Officer, commented, "We have begun a top to
bottom review of all our operations to put the Company back on track to regain
our profit and growth momentum. My review may well lead the Company to
consider a restructuring charge. Until this review is completed, we cannot
comment on 2001 results."
The Company plans to release its fourth quarter 2000 earnings and hold its
regular conference call for analysts and investors on February 14, 2001.
Further comment on 2001 and the possibility of a restructuring charge is
expected to be made at the conference call.
The Company also announced that it has been in negotiations to enter into
a business combination on which agreement could not be reached because of the
Company's recent financial performance and credit market conditions.
About Insurance Auto Auctions, Inc.
Insurance Auto Auctions, Inc., founded in 1982, a leader in automotive
total loss and specialty salvage services in the United States, provides
insurance companies with cost-effective, turnkey solutions to process and sell
total-loss and recovered-theft vehicles. The Company currently has 56 auction
sites across the United States.
This press release contains forward-looking information that is subject to
certain risks, trends and uncertainties that could cause actual results to
differ materially from those projected, expressed, or implied by such forward-
looking information. In some cases, you can identify forward looking
statements by our use of words such as "may, will, should, anticipates,
believes, expects, plans, future, intends, could, estimate, predict, potential
or contingent," the negative of these terms or other similar expressions. The
Company's actual results could differ materially from those discussed or
implied herein. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed in the Company's annual
report, Form 10-K for the fiscal year ended December 31, 1999 and the
Company's quarterly report on Form 10Q for the quarter ended
September 30, 2000. Among these risks are: conducting business pursuant to
the purchase agreement method of sale; fluctuations in the actual cash value
of salvage vehicles; the ability to successfully renegotiate existing purchase
agreement contracts; the quality and quantity of inventory available from
suppliers; the ability to pass through increased towing costs; that vehicle
processing time will improve; that the Company's towing business will reach
forecasted levels of profitability; legislative or regulatory acts, changes in
the market value of salvage; competition; the availability of suitable
acquisition candidates; the ability to bring new facilities to expected
earnings targets and the dependence on key insurance company suppliers.
For additional information regarding Insurance Auto Auctions free of
charge via fax, dial 1-800-PRO-INFO and use the Company's stock symbol,
"IAAI."
Additional information about Insurance Auto Auctions, Inc. is available on
the World Wide Web at http://www.iaai.com .
