CCC Information Services Group Inc. Posts Strong Fourth Quarter Operating Performance
CHICAGO--Feb. 7, 2002--CCC Information Services Group Inc. , a leading provider of software and other technology to the automobile-claims and collision-repair industries, today reported net income from continuing operations, before non-recurring charges, of $3.0 million, or $0.13 per share, for the fourth quarter ended December 31, 2001 compared with a net loss of $13.0 million, or $0.60 per share, in the same quarter of 2000. Under GAAP (generally accepted accounting principles) reporting standards, the Company recorded a net loss of $3.5 million or $0.16 per share for the fourth quarter, compared with a net loss of $23.4 million or $1.08 per share in the same period a year ago.Operating income, before non-recurring charges, rose to $7.3 million in the fourth quarter, compared with a loss of $3.7 million in the same quarter of 2000. Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA), before non-recurring charges, increased to $10.0 million compared with $6.7 million in the third quarter and negative $480,000 in the fourth quarter a year ago.
Revenues from the Company's U.S. business in the fourth quarter of 2001 increased 5.7% from the fourth quarter a year ago, rising from $45.2 million to $47.8 million. CCC made the decision to exit its international operations in the second quarter of 2001.
"CCC posted its second consecutive quarter of improved financial performance," said Githesh Ramamurthy, chairman and chief executive officer of CCC Information Services Inc. "While the non-recurring charges taken contributed to a net loss for the quarter, it is clear that -- on an operating basis -- we have restored CCC to a company that generates consistent cash flows with a much lower expense base."
During the quarter, the Company recorded a pre-tax charge of $4.3 million as an estimate of the amount that CCC will contribute toward the potential settlement of the largest of the class action lawsuits related to the Company's total loss valuation product. Upon completion of the anticipated settlement, this would resolve potential claims arising out of approximately 30 percent of the Company's total transaction volume during the time period covered by the lawsuit. This settlement would extinguish 14 of the 21 class action suits pending against the Company related to total loss. The Company currently anticipates that the proposed settlement would include a resolution of any potential claims for indemnification or contribution by its customers relating to the transactions covered by the settlement.
Additionally, together with one of the Company's largest customers, Nationwide Mutual Insurance Company, CCC has entered into an agreement to settle another of these class action lawsuits. The settlement agreement, which is contingent on court approval, does not require any cash contribution by CCC. The company has agreed, however, for a period of three years, as part of the settlement, to additional procedures for collecting and supplementing information to update and further verify the condition adjustment used in the total loss valuation product. The Company estimates that the cost of these activities would not have a material impact on operating cash flow. The details of this proposed settlement are outlined in our Form 8-K filed this morning.
There is, of course, no assurance that the settlements will be successfully completed or, if completed, that the final settlements will be on the terms or levels of participation outlined above. There is also no assurance that existing or potential claims arising out of the remainder of the Company's total loss transaction volume could be settled on comparable terms.
"We believe that these settlements will address a substantial portion of our total loss transaction volume represented in the class action lawsuits and will resolve the majority of the class action suits pending against the company. CCC will not be admitting liability in connection with either settlement; rather, CCC wishes to avoid the expense and burden of extended litigation," said Ramamurthy. "Indeed, we continue to stand firmly behind the total loss product and we believe our product is a superior methodology for delivering fast, fair local market values."
As a result of the successful restructuring that occurred earlier in the year, the Company has also taken an additional charge of $4.3 million to write off excess office space in Chicago. This is expected to reduce the company's overall annual expense run rate by roughly $1.8 million per year.
In the fourth quarter, CCC's net debt level was reduced to $6.8 million from $36.0 million at the end of the third quarter and a high of $43.8 million reached during the second quarter of 2001. The debt reduction, in part, reflected the successful completion of a $20 million rights offering while the remaining reduction was attributable to cash flows generated from operations. The Company also closed a new $30 million revolving credit facility with LaSalle Bank and Harris Bank during the quarter.
For full-year ended December 31, 2001:
| -- | CCC's full-year U.S. revenues climbed 5.3% to $186.3 million from $176.9 million. Consolidated revenues (including the exited international operations) rose 1.8 % to $187.9 million from $184.6 million. |
| -- | U.S. revenues continued to grow at an average of 5-6% per year with products like Electronic Direct Repair, Auditing, and Recycled Parts Service growing on average greater than 30% per year. |
| -- | The Automotive Services Group continued to demonstrate strong revenue growth of approximately 10% per year. |
| -- | The Company's net loss for the year, before non-recurring charges, was $6.9 million or $0.32 per share compared with a net loss of $21.7 million, or $1.00 per share in 2000. |
| -- | After the aforementioned charges, under GAAP, the Company reported a loss of $1.39 per share for the full-year 2001, compared to a loss of $0.42 in the same period a year ago. |
"Today, CCC is a greatly improved company with solid momentum and a strong financial position moving into 2002," said Reid E. Simpson, executive vice president and chief financial officer. "Our plans anticipate continued success and strength:
-- Revenue growth in line with our U.S. growth trends of 2001,
-- Operating income and EBITDA performance in-line with fourth
quarter 2001 results before non-recurring charges, and
-- Strong positive cash flows throughout the year."
About CCC
CCC Information Services Group Inc. , headquartered in Chicago, is a leading supplier of advanced software, communications systems, Internet and wireless-enabled technology solutions to the automotive claims and collision repair industries. Its technology-based products and services optimize efficiency throughout the entire claims management supply chain and facilitate communication amongst 14,600 collision repair facilities, 350 insurance companies, and a range of industry participants. For more information about CCC Information Services, visit our Web site at www.cccis.com.
This release contains statements that constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are subject to the safe harbor provisions of those sections and the Private Securities Litigation Reform Act of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those described in the Company's filings with the SEC, and that actual results or developments may differ materially from those in the forward-looking statements, and startup businesses are inherently uncertain. Specific factors that might cause actual results to differ from our expectations include, but are not limited to, competition in the automotive claims and collision repair industries, the ability to develop new products and services, the ability to protect trade secrets and proprietary information, the ability to generate the cash flow necessary to meet the Company's obligations, the outcome of certain legal proceedings, and other factors. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis, judgment, belief or expectation only as of the date hereof. The Company has based these forward-looking statements on information currently available and disclaims any intention or obligation to update or revise any forward-looking statement.
CCC Information Services Group Inc.
Consolidated Operating Results
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
2001 2000 2001 2000
Revenues:
CCC U.S. $47,776 $45,201 $186,259 $176,889
CCC International 55 1,499 1,682 7,752
------- -------- -------- --------
Net revenue 47,831 46,700 187,941 184,641
------- -------- -------- --------
Expenses:
Production and
customer support 7,325 9,775 32,498 41,449
Commissions,
royalties and
licenses 2,593 2,514 10,129 13,512
Selling, general and
administrative 21,511 23,270 90,892 86,663
Depreciation and
amortization 2,687 3,196 11,820 11,499
Product development
and programming 6,394 7,820 30,429 27,895
Restructuring
charges 4,300 6,017 10,499 6,017
Litigation
settlement 4,250 950 4,250 2,375
------- -------- -------- --------
Total operating
expenses 49,060 53,542 190,517 189,410
------- -------- -------- --------
Operating income
(loss) (1,229) (6,842) (2,576) (4,769)
Interest expense (2,096) (882) (5,680) (3,135)
Other income
(expense), net (1,651) 354 (920) 5,101
Gain on exchange of
investment
securities -- -- -- 18,437
Loss on investment
securities and note
receivable -- -- (27,595) --
CCC Capital Trust
minority interest
expense (427) -- (1,371) --
Equity in losses of
ChoiceParts
investment (334) (1,283) (2,486) (2,071)
------- -------- -------- --------
Income(loss) from
continuing
operations before
income taxes (5,737) (8,653) (40,628) 13,563
Income tax benefit
(provision) 1,213 (3,328) 18,329 (3,452)
------- -------- -------- --------
Income(loss) from
continuing
operations before
equity losses (4,524) (11,981) (22,299) 10,111
Equity in net losses
of affiliate -- (7,684) (2,354) (15,650)
------- -------- -------- --------
Income(loss) from
continuing
operations (4,524) (19,665) (24,653) (5,539)
Income(loss) from
discontinued
operations, net of
tax 1,010 (3,768) (5,972) (3,704)
------- -------- -------- --------
Net income(loss) $(3,514) $(23,433) $(30,625) $ (9,243)
======= ======== ======== ========
Per Share Data:
Income(loss) per
common share -
basic from:
Continuing
operations $ (0.20) $ (0.91) $ (1.12) $ (0.25)
Discontinued
operations 0.04 (0.17) (0.27) (0.17)
------- -------- -------- --------
Income(loss) per
common share - basic $ (0.16) $ (1.08) $ (1.39) $ (0.42)
======= ======== ======== ========
Income(loss) per
common share -
diluted from:
Continuing operations $ (0.20) $ (0.91) $ (1.12) $ (0.25)
Discontinued
operations 0.04 (0.17) (0.27) (0.17)
------- -------- -------- --------
Income(loss) per
common share -
diluted $ (0.16) $ (1.08) $ (1.39) $ (0.42)
======= ======== ======== ========
Weighted average
common shares
outstanding
- Basic 22,480 21,687 21,967 21,851
======= ======== ======== ========
- Diluted 22,480 21,687 21,967 21,851
======= ======== ======== ========
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands, except share amounts)
(Unaudited)
December 31, December 31,
2001 2000
-------- --------
ASSETS
Cash $ 766 $ 912
Accounts receivable (net
of reserves of $2,288
and $3,271
at December 31, 2001
and December 31, 2000,
respectively) 11,346 16,867
Current portion deferred
income taxes 5,322 --
Other current assets 6,461 5,212
-------- --------
Total current assets 23,895 22,991
Property and equipment
(net of accumulated
depreciation of $25,376
and $32,141 at December
31, 2001 and December
31, 2000, respectively) 13,487 21,812
Goodwill (net of
accumulated amortization
of $11,562 and $15,312
at December 31, 2001 and
December 31, 2000,
respectively) 4,896 7,224
Deferred income taxes 18,587 8,004
Investments 302 23,764
Notes receivable -- 5,257
Other assets 1,027 788
Net assets of
discontinued operations -- 4,848
Total assets $62,194 $94,688
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Book overdraft $ 1,205 $ 8,682
Accounts payable 7,658 15,309
Accrued expenses 28,570 19,153
Income taxes payable -- 375
Current portion of
long-term debt 421 314
Deferred revenues 6,297 4,044
-------- --------
Total current
liabilities 44,151 47,877
Long-term debt 7,145 42,000
Deferred revenues 66 120
Other liabilities 3,737 2,573
Net liabilities of
discontinued operations 536 --
-------- --------
Total liabilities 55,635 92,570
-------- --------
Preferred Securities in
CCC Capital Trust 13,370 --
-------- --------
Common stock ($0.10 par
value, 40,000,000 shares
authorized, 25,503,567
and 21,759,279 shares
issued and outstanding
at December 31, 2001 and
December 31, 2000,
respectively) 2,967 2,593
Additional paid-in
capital 124,188 103,279
Accumulated deficit (85,587) (54,962)
Accumulated other
comprehensive loss (10) (423)
Treasury stock, at cost
($0.01 par value,
4,286,665 common shares
in treasury at December
31, 2001 and December 31,
2000) (48,369) (48,369)
-------- --------
Total stockholders'
equity (deficit) (6,811) 2,118
-------- --------
Total liabilities and
stockholders' equity
(deficit) $ 62,194 $ 94,688
======== ========
CCC Information Services Group Inc.
Pro-Forma Consolidated Statement of Operations
Unaudited
(In thousands, except per share amounts)
Fourth Quarter 2001 Fourth Quarter 2000
-------------------------- --------------------------
Non- Non-
Recurring Recurring
As Adjust- As As Adjust- As
Reported ments Adjusted Reported ments Adjusted
-------- -------- -------- -------- -------- --------
CCC U.S.
Revenue $ 47,776 $ -- $ 47,776 $ 45,201 $ -- $ 45,201
CCC
International
Revenue 55 -- 55 1,499 -- 1,499
-------- -------- -------- -------- -------- --------
Total Revenues 47,831 -- 47,831 46,700 -- 46,700
Expenses:
Production and
customer
support 7,325 -- 7,325 9,775 -- 9,775
Commissions,
royalties and
licenses 2,593 -- 2,593 2,514 -- 2,514
Selling,
general and
administrative 21,511 -- 21,511 23,270 3,800 F 27,070
Depreciation
and
amortization 2,687 -- 2,687 3,196 -- 3,196
Product
development
and
programming 6,394 -- 6,394 7,820 -- 7,820
Restructuring
charges 4,300 (4,300)B -- 6,017 (6,017)G --
Litigation
settlement 4,250 (4,250)A -- 950 (950)H --
-------- -------- -------- -------- -------- --------
Total operating
expenses 49,060 (8,550) 40,510 53,542 (3,167) 50,375
-------- -------- -------- -------- -------- --------
Operating
income (loss) (1,229) 8,550 7,321 (6,842) 3,167 (3,675)
Interest expense (2,096) 1,424 C (672) (882) -- (882)
Other income
(expense), net (1,651) 1,682 D 31 354 -- 354
CCC Capital
Trust
minority
interest expense (427) -- (427) -- -- --
Gain on exchange
of investment
securities -- -- -- -- -- --
Loss on
investment
securities and
note -- -- -- -- -- --
Equity in losses
of ChoiceParts (334) -- (334) (1,283) -- (1,283)
-------- -------- -------- -------- -------- --------
Income (loss)
from continuing
operations
before income
taxes (5,737) 11,656 5,919 (8,653) 3,167 (5,486)
Income tax
benefit
(provision) 1,213 (4,131) (2,918) (3,328) 3,525 197
-------- -------- -------- -------- -------- --------
Income (loss)
from continuing
operations
before equity
losses (4,524) 7,525 3,001 (11,981) 6,692 (5,289)
Equity in loss of
Enterstand -- -- -- (7,684) -- (7,684)
-------- -------- -------- -------- -------- --------
Income (loss)
from continuing
operations (4,524) 7,525 3,001 (19,665) 6,692 (12,973)
Income (loss)
from
discontinued
operations, net
of tax 1,010 (1,010)E -- (3,768) -- (3,768)
-------- -------- -------- -------- -------- --------
Net income (loss)
applicable to
common stock $ (3,514)$ 6,515 $ 3,001 $ (23,433)$ 6,692 $(16,741)
======== ======== ======== ========= ======== ========
Earnings Per
Share:
Income per common
share -- basic
from:
Continuing
Operations $ (0.20)$ 0.33 $ 0.13 $ (0.91)$ 0.31 $ (0.60)
Discontinued
Operations 0.04 $ (0.04) -- (0.17)$ -- (0.17)
-------- -------- -------- --------
Income (loss)
per common
share --
basic $ (0.16)$ 0.29 $ 0.13 $ (1.08) $ 0.31 $ (0.77)
======== ======== ========= ========
Income per common
share -- diluted
from:
Continuing
Operations $ (0.20)$ 0.33 $ 0.13 $ (0.91)$ 0.31 $ (0.60)
Discontinued
Operations 0.04 $ (0.04) -- (0.17)$ -- (0.17)
-------- -------- -------- --------
Income (loss)
per common share
-- diluted $ (0.16)$ 0.29 $ 0.13 $ (1.08)$ 0.31 $ (0.77)
======== ======== ========= ========
Weighted average
shares
outstanding:
Basic 22,480 22,480 21,687 21,687
Diluted 22,480 22,480 21,687 21,687
Notes to Pro-Forma Income Statement
A Reflects a charge of $4.3 million related to settlement costs of a
litigation matter involving the Company's total loss product.
B Reflects a restructuring charge of $4.3 million for the write-off
of the 233 N. Michigan Ave. facility, net of expected sublease
income.
C Reflects $1.4 million for the write-off of deferred financing fee
assets recorded in conjunction with entering a new credit facility
in November 2001.
D 1.) Reflects $1.0 million of non-cash charges recorded in
conjunction with the decision to shut-down CCC International, net
of gains on asset sales.
2.) Reflects $1.1 million of charges to write-off an investment
and an associated Note Receivable and accrued interest deemed
uncollectable.
3.) Reflects a $0.5 million gain on the settlement of a previously
written-off Note Receivable with Insurquote.
E Income of $1.0 million related to the final wind down of our
claims outsourcing business.
F 1.) Reflects $0.8 million of bad debt expense recorded in
conjunction with the decision to shut-down CCC International's
D.W. Norris business in December 2000.
2.) Reflects $4.6 million gain related to the final resolution of
previously accrued expenses associated with a vendor agreement
focused on technology testing and roll-out of certain products and
services in fourth quarter 2000.
G Reflects $6.0 million charge related to the shut-down of CCC
International's D.W. Norris business in December 2000.
H Reflects a charge of $1.0 million related to settlement costs of a
litigation matter with American Salvage Pool Association in fourth
quarter 2000.
CCC Information Services Group Inc.
Pro-Forma Consolidated Statement of Operations
Unaudited
(In thousands, except per share amounts)
Fiscal Year 2001 Fiscal Year 2000
-------------------------- --------------------------
Non- Non-
Recurring Recurring
As Adjust- As As Adjust- As
Reported ments Adjusted Reported ments Adjusted
-------- --------- -------- -------- --------- --------
CCC U.S.
Revenue $186,259 $ -- $186,259 $176,889 $ -- $176,889
CCC
International
Revenue 1,682 -- 1,682 7,752 -- 7,752
-------- --------- -------- -------- --------- --------
Total
Revenues 187,941 -- 187,941 184,641 -- 184,641
Expenses:
Production
and
customer
support 32,498 -- 32,498 41,449 -- 41,449
Commissions,
royalties
and
licenses 10,129 -- 10,129 13,512 (1,900)I 11,612
Selling,
general
and
administra-
tive 90,892 -- 90,892 86,663 3,800 F 90,463
Depreciation
and
amortization 11,820 -- 11,820 11,499 -- 11,499
Product
development
and
programming 30,429 -- 30,429 27,895 -- 27,895
Restructuring
charges 10,499 (10,499)B -- 6,017 (6,017)G --
Litigation
settlement 4,250 (4,250)A -- 2,375 (2,375)H --
-------- --------- -------- -------- --------- --------
Total
operating
expenses 190,517 (14,749) 175,768 189,410 (6,492) 182,918
-------- --------- -------- -------- --------- --------
Operating
income
(loss) (2,576) 14,749 12,173 (4,769) 6,492 1,723
Interest
expense (5,680) 1,424 C (4,256) (3,135) -- (3,135)
Other income
(expense),
net (920) 1,682 D 762 5,101 (4,100)J 1,001
CCC Capital
Trust
minority
interest
expense (1,371) -- (1,371) -- -- --
Gain on
exchange of
investment
securities -- -- -- 18,437 (18,437)K --
Loss on
investment
securities
and note (27,595) 27,595 L -- -- -- --
Equity in
losses of
ChoiceParts (2,486) -- (2,486) (2,071) -- (2,071)
-------- --------- -------- -------- --------- --------
Income (loss)
from
continuing
operations
before
income
taxes (40,628) 45,450 4,822 13,563 (16,045) (2,482)
Income tax
benefit
(provision) 18,329 (20,706) (2,377) (3,452) 3,541 89
-------- --------- -------- -------- --------- --------
Income (loss)
from
continuing
operations
before
equity
losses (22,299) 24,744 2,445 10,111 (12,504) (2,393)
Equity in
loss of
Enterstand (2,354) -- (2,354) (15,650) -- (15,650)
-------- --------- -------- -------- --------- --------
Income (loss)
from
continuing
operations (24,653) 24,744 91 (5,539) (12,504) (18,043)
Income (loss)
from
discontinued
operations,
net of tax (5,972) (1,010)E (6,982) (3,704) -- (3,704)
-------- --------- -------- -------- --------- --------
Net income
(loss)
applicable
to common
stock $(30,625)$ 23,734 $ (6,891) $ (9,243)$ (12,504)$(21,747)
======== ========= ======== ======== ========= ========
Earnings Per
Share:
-------------
Income per
common
share --
basic from:
Continuing
Operations $ (1.12)$ 1.12 $ -- $ (0.25)$ (0.58)$ (0.83)
Discontinued
Operations (0.27)$ (0.05) (0.32) (0.17)$ -- (0.17)
-------- -------- -------- --------
Income (loss)
per common
share --
basic $ (1.39)$ 1.07 $ (0.32) $ (0.42)$ (0.58)$ (1.00)
======== ======== ======== ========
Income per
common share
-- diluted
from:
Continuing
Operations $ (1.12)$ 1.12 $ -- $ (0.25)$ (0.58)$ (0.83)
Discontinued
Operations (0.27)$ (0.05) (0.32) (0.17)$ -- (0.17)
-------- -------- -------- --------
Income (loss)
per common
share --
diluted $ (1.39)$ 1.07 $ (0.32) $ (0.42)$ (0.58)$ (1.00)
======== ======== ======== ========
Weighted
average
shares
outstanding:
Basic 21,967 21,967 21,851 21,851
Diluted 21,967 21,967 21,851 21,851
Notes to Pro-Forma Income Statement
A Reflects a charge of $4.3 million related to settlement costs of a
litigation matter involving the Company's total loss product.
B 1.) Reflects a restructuring charge of $4.3 million for the
write-off of the 233 N. Michigan Ave. facility, net of expected
sublease income.
2.) Reflects a charges of $2.8 million and $3.4 million recorded
in the second quarter of 2001 for severance and outplacement costs
associated with the decisions to restructure CCC US operations and
wind down CCC International, respectively.
C Reflects $1.4 million for the write-off of deferred financing fee
assets recorded in conjunction with entering a new credit facility
in November 2001.
D 1.) Reflects $1.0 million of non-cash charges recorded in
conjunction with the decision to shut-down CCC International, net
of gains on asset sales.
2.) Reflects $1.1 million of charges to write-off an investment
and an associated Note Receivable and accrued interest deemed
uncollectable.
3.) Reflects a $0.5 million gain on the settlement of a previously
written-off Note Receivable with Insurquote.
E Income of $1.0 million related to the final wind down of our
claims outsourcing business.
F 1.) Reflects $0.8 million of bad debt expense recorded in
conjunction with the decision to shut-down CCC International's
D.W. Norris business in December 2000.
2.) Reflects $4.6 million gain related to the final resolution of
previously accrued expenses associated with a vendor agreement
focused on technology testing and roll-out of certain products and
services in fourth quarter 2000.
G Reflects $6.0 million charge related to the shut-down of CCC
International's D.W. Norris business in December 2000.
H 1.) Reflects a charge of $1.0 million related to settlement costs
of a litigation matter with American Salvage Pool Association in
fourth quarter 2000.
2.) Reflets $1.4 million related to settlement costs of an
arbitration proceeding captioned Autobody Software Solutions, Inc.
v. CCC Information Services Inc.
I Reflects a charge of $1.9 million recorded in the third quarter of
2000 in connection with the write-off of impaired prepaid
marketing fees.
J Reflects $4.1 million gain recorded in the first quarter of 2000
on the termination of the sales and marketing agreement between
InsurQuote Systems, Inc. and CCC.
K Reflects $18.4 million gain in the second quarter of 2000 in
connection with the exchange of our equity investment in
InsurQuote securities for ChannelPoint common stock.
L Reflects a loss of $27.6 million recorded in the second quarter of
2001 related to the write-off of the investment in ChannelPoint,
including a $4.9 million allowance related to a note receivable
plus accrued interest.