CCC Information Services Group Inc. Reports $0.02 EPS for the Third Quarter, Including Impact of a Net Charge Equal to $0.27 Per Share.CHICAGO Chicago, city, United States Chicago (shĭkä`gō, shĭkô`gō), city (1990 pop. 2,783,726), seat of Cook co., NE Ill., on Lake Michigan; inc. 1837. -- CCC CCC A very speculative grade assigned to a debt obligation by a rating agency. Such a rating indicates default or considerable doubt that interest will be paid or principal repaid. Also called Caa. Information Services See Information Systems. Group Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CCCG CCCG Canadian Conference on Computational Geometry CCCG Climate Change Co-ordinating Group ) reported net income of $0.5 million, or $0.02 per share, for the third quarter ending September September: see month. 30, 2004, compared to net income of $6.4 million, or $0.23 per share, for the same quarter in 2003. The Company's third quarter results include the net impact of a non-cash stock compensation charge in connection with the self-tender offer Self-tender offer A company that tenders for its own shares. and a net benefit related to a litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. settlement. Please review the income statement line items summarized below when analyzing the Company's third quarter results.
Impact of
Charge/(Benefit) on
------------------------
Q3 2004 Charge/(Benefit) Operating Net
Income Income EPS
--------------------------------------------- --------- ------- ------
Stock compensation expense non-cash 13.1 8.2 0.34
Litigation Settlement (2.6) (1.6) (0.07)
--------- ------- ------
Total Net Charge 10.5 6.6 0.27
--------------------------------------------- ========= ======= ======
Stock Compensation Expense Non-Cash During the quarter the company completed a $210 million self-tender offer to purchase 11.2 million shares, which leaves approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 15.9 million shares outstanding. Participation by the company's shareholders was high, as over 90 percent of the share base tendered their shares. Due to the high participation rate, the ownership profile of the company remained relatively unchanged. In connection with the self-tender offer, the company recorded a charge of $13.1 million, or $0.34 per share, to reflect non-cash stock compensation expense related to employee options. The ability of employee stock option holders to participate in the self-tender offer through the Company on a net exercise basis resulted in variable stock compensation accounting for the Company's Stock Incentive Plans, which resulted in the non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. . According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. stock compensation accounting requirements, the charge had to cover all vested vested adj. referring to having an absolute right or title, when previously the holder of the right or title only had an expectation. Examples: after 20 years of employment Larry Loyal's pension rights are now vested. (See: vest, vested remainder) employee stock options including those that were not tendered and those that were unable to be exercised due to the 44 percent pro-ration factor. Employee option holders received $3.5 million, or 1.7%, of the $210 million returned to shareholders. All stock option holders received the same terms and conditions for the self-tender self-tender An offer by a firm to repurchase some of its own securities from stockholders, generally on a pro rata basis from those shares offered for sale. as shareholders and warrant holders. There are no further requirements for stock compensation expense in connection with the tender offer. In addition, the variable stock compensation accounting for the Company's Stock Incentive Plans ended on August 30, the date the tender offer closed. Litigation Settlement The Company recorded a net benefit for a litigation settlement of $2.6 million, or $0.07 per share, for the third quarter, which was comprised of three parts. During the quarter, CCC received $4.8 million as a result of the settlement of a lawsuit lawsuit: see procedure; tort. filed by certain insurers that had issued policies to the Company involving coverage in connection with the company's vehicle valuation product now known as CCC Valuescope(TM) Claim Services. Of the $4.8 million, $0.3 million was used to pay for legal costs related to the litigation. CCC also recorded a charge of $1.9 million to increase its net reserve for settlement of the litigation relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc CCC Valuescope, from $4.3 million to $6.2 million. The net result of the insurance settlement, after the $1.9 million charge and deduction deduction, in logic, form of inference such that the conclusion must be true if the premises are true. For example, if we know that all men have two legs and that John is a man, it is then logical to deduce that John has two legs. of $0.3 million for legal costs resulted in the net pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta benefit of $2.6 million for the quarter. Financial Highlights Revenue for the third quarter increased 1.0 percent to $49.1 million, compared to $48.6 million for the same quarter in 2003. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the quarter was $1.4 million, including a net charge of $10.5 million representing the net effect of the charge and benefit mentioned in Table 1 above, compared to operating income of $10.7 million for the same quarter in 2003. Revenue for the first nine months of 2004 was $148.2 million, an increase of 2.6 percent compared to $144.5 million for the first nine months of 2003. Operating income for the first nine months of the year was $20.1 million, including two charges totaling $1.7 million in the second quarter, and a net charge of $10.5 million representing the net effect of the charge and benefit mentioned in Table 1 above. Operating income for the first nine months of 2003 was $29.4 million, including a charge of $1.1 million in the second quarter of 2003. The product portfolio revenues for the third quarter, including a comparison to the same quarter in 2003, are shown in the table below:
TABLE 2
($ in 000's)
% Change
vs.
Q1 Q2 Q3 Q3 Prior
Portfolio 2004 2004 2004 2003 Year
------------------------- --------- -------- -------- -------- -------
CCC Pathways $31,174 $31,255 $30,937 $29,504 4.9%
CCC Valuescope 10,139 10,161 10,301 10,720 (3.9)%
Workflow 6,258 6,541 6,391 6,645 (3.8)%
Information Services 502 504 511 445 14.8%
Other 1,530 1,012 952 1,307 (27.2)%
--------- -------- -------- --------
Total $49,603 $49,473 $49,092 $48,621 1.0%
----------------------------------------------------------------------
Key revenue highlights for the quarter are as follows: --The CCC Pathways(R) portfolio increased 4.9% from prior year due to the growth of our estimating solutions in the repair facility and insurance channels, as well as sales of our recycled parts solution to insurance companies. --The CCC Valuescope(TM) portfolio grew 1.4 percent sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen primarily due to the addition of new customers to the portfolio. --The Workflow The automatic routing of documents to the users responsible for working on them. Workflow is concerned with providing the information required to support each step of the business cycle. portfolio fell 3.8 percent from prior year as growth in CCC Autoverse(R) was offset by a decrease in EZNet(R). --Other revenue decreased in line with the company's plan to exit the customer hardware business, and a planned phase out by a customer of the CARS(R) Direct service, a product originally introduced in 1997. Revenue, operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. and income for the third quarter, compared to the same quarter in 2003, are as follows:
TABLE 3
($ in 000's)
%
Change
vs.
Q1 Q2 Q3 Q3 Prior
2004 2004 2004 2003 Year
--------------------------- -------- -------- -------- ------- -------
Revenue $49,603 $49,473 $49,092 $48,621 1.0%
Expenses
Production and Customer
Support 8,349 7,807 7,976 8,279 (3.7)%
Commissions, Royalties
and Licenses 3,174 3,145 3,166 3,184 (0.6)%
Selling, General and
Administrative 17,930 19,105 17,086 16,699 2.3%
Depreciation and
Amortization 2,103 1,805 1,719 1,944 (11.6)%
Product Development and
Programming 8,037 8,089 7,175 7,838 (8.5)%
Stock Compensation
Expense Non-Cash - - 13,139 - n/a
Litigation Settlement - - (2,586) - n/a
Restructuring Charge - 886 - -
--------- -------- -------- --------
Total Operating Expenses 39,593 40,837 47,675 37,944 25.6%
--------- -------- -------- --------
Operating Income $10,010 $8,636 $1,417 $10,677 (86.7)%
========= ======== ======== ========
Operating Margin 20.2% 17.5% 2.9% 22.0%
----------------------------------------------------------------------
Key operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. highlights for the quarter are as follows: --Production and customer support expenses declined from prior year due to costs incurred last year to transition to a new customer support model. --Selling, general and administrative expenses increased from prior year as a result of an increase to certain incentive compensation costs tied to business performance. The increase in compensation expense was partially offset by savings generated from improved expense controls and the organizational realignment re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. completed in the second quarter. --Product development and programming expenses decreased primarily due to the organizational realignment of the company that took place in the second quarter. The company issued the following guidance for the fourth quarter and full year 2004: --Revenue growth for the fourth quarter is expected to be in the 1 to 2 percent range versus the prior year, which would produce full year revenue growth in the 2 to 3 percent range. This is a change from our previous guidance of 3 to 4 percent. --Operating income for the fourth quarter should be in the $12 to $13 million range, with full year operating income expected to be in the $32 to $33 million range, including the impact of the charges taken in the second quarter of $1.7 million and the impact of the net charge of $10.5 million taken in the third quarter. This is a decrease from our previous guidance of $43 to $45 million due to the impact of the net charge taken in the third quarter. --Earnings per share for the fourth quarter is expected to be in the $0.36 to $0.39 per share range. Earnings per share for 2004 is expected to be in the $0.75 to $0.77 per share range, which represents a decrease from our previous guidance of $0.96 to $1.00 per share. Earnings per share guidance for the full year includes the impact of the reduction in the number of shares outstanding following completion of the self-tender offer as well as the effect of the $0.04 per share in charges taken in the second quarter and the $0.27 per share net charge recorded in the third quarter. Please note that due to the timing of the tender offer, the fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share base expected to be used for the fourth quarter earnings per share calculation is much lower than the fully diluted share base that is expected to be used for the full year earnings per share calculation. As a result, adding together the earnings per share for the individual quarters will not produce the full year earnings per share figure. (The company is using a fully diluted share base of 24.2 million to calculate the full year EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. figure and 17 million shares for the fourth quarter) CCC also supplied the following preliminary guidance for 2005: --Revenue growth is expected to be in the low to mid single digit A single character in a numbering system. In decimal, digits are 0 through 9. In binary, digits are 0 and 1. digit - An employee of Digital Equipment Corporation. See also VAX, VMS, PDP-10, TOPS-10, DEChead, double DECkers, field circus. percent range --Earnings per share is anticipated to grow by 85 to 95 percent over 2004. Please note that this guidance is based on expectations for 2005 earnings compared to 2004 reported results, which include the impact of the net charges taken in the second and third quarters, and also reflects the decrease in the fully diluted share base due to the self-tender offer --The company expects to use 17.3 million shares for the fully diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of calculation for 2005 The company will be hosting its third quarter earnings call to discuss results at 11:00 AM EST EST electroshock therapy. EST abbr. electroshock therapy . A live web cast will be made available at www.cccis.com. For additional information about CCC's third quarter results, please refer to the company's Form 10-Q Form 10-Q See 10-Q. , which was filed this morning. About CCC CCC Information Services Group Inc. (NASDAQ: CCCG), headquartered in Chicago, is a leading supplier of advanced software, communications systems In telecommunication, a communications system is a collection of individual communications networks, transmission systems, relay stations, tributary stations, and data terminal equipment (DTE) usually capable of interconnection and interoperation to form an integrated whole. , Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the and wireless-enabled technology solutions to the automotive claims and collision See CSMA/CD and collision avoidance system. Collision (physics) Any interaction between particles, aggregates of particles, or rigid bodies in which they come near enough to exert a mutual influence, generally with exchange of energy. repair industries. Its technology-based products and services optimize optimize - optimisation efficiency throughout the entire claims management supply chain and facilitate communication among approximately 21,000 collision repair facilities, 350 insurance companies and a range of industry participants. For more information about CCC Information Services, visit CCC's Web site at www.cccis.com. This release contains statements that constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of those sections and the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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. Specific factors that might cause actual results to differ from 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 prolonged pro·long tr.v. pro·longed, pro·long·ing, pro·longs 1. To lengthen in duration; protract. 2. To lengthen in extent. sales and implementation cycle of some of the company's new products, 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 All actions that are authorized or sanctioned by law and instituted in a court or a tribunal for the acquisition of rights or the enforcement of remedies. , 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 here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" . 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.
AND SUBSIDIARIES
CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
2004 2003 2004 2003
-------- --------- -------- ---------
Revenues $49,092 $48,621 $148,168 $144,450
Expenses:
Production and customer support 7,976 8,279 24,132 23,377
Commissions, royalties and
licenses 3,166 3,184 9,485 8,614
Selling, general and
administrative 17,086 16,699 54,120 52,415
Depreciation and amortization 1,719 1,944 5,628 5,888
Product development and
programming 7,175 7,838 23,302 23,690
Stock compensation expense non-
cash 13,139 -- 13,139 --
Restructuring charges -- -- 886 1,061
Litigation Settlement (2,586) -- (2,586) --
--------- -------- --------- --------
Total operating expenses 47,675 37,944 128,106 115,045
Operating income 1,417 10,677 20,062 29,405
Interest expense (1,199) (169) (1,471) (556)
Other income, net 265 45 432 201
Equity in income (loss) of
ChoiceParts investment 161 (150) 365 (144)
--------- -------- --------- --------
Income before income taxes 644 10,403 19,388 28,906
Income tax provision (161) (4,052) (7,356) (11,090)
--------- -------- --------- --------
Net income $483 $6,351 $12,032 $17,816
========= ======== ========= ========
Per Share Data:
Income per common share:
Basic $0.02 $0.24 $0.47 $0.68
========= ======== ========= ========
Diluted $0.02 $0.23 $0.45 $0.65
========= ======== ========= ========
Weighted average shares
outstanding:
Basic 22,965 26,256 25,351 26,210
Diluted 24,161 27,484 26,629 27,621
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
CONSOLIDATED INTERIM BALANCE SHEETS
(In thousands, except per share amounts)
(Unaudited)
September December
30, 31,
2004 2003
--------- --------
ASSETS
Cash and cash equivalents $11,427 $20,755
Short-term investments -- 7,004
Accounts receivable (net of allowances of $2,425 and
$2,943 at September 30,
2004 and December 31, 2003, respectively) 13,872 10,247
Other current assets 7,879 8,369
--------- --------
Total current assets 33,178 46,375
Property and equipment (net of accumulated
depreciation of $38,471 and
$36,211 at September 30, 2004 and December 31,
2003, respectively) 11,845 12,776
Intangible assets (net of accumulated amortization
of $1,355 and $713 at
September 30,2004 and December 31, 2003,
respectively) 1,512 2,153
Goodwill 15,747 15,747
Deferred income taxes (net of valuation allowance of
$11,599) 12,952 9,127
Investments 630 265
Other assets 3,814 292
--------- --------
Total assets $79,678 $86,735
========= ========
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Accounts payable $9,061 $5,937
Accrued expenses 18,602 16,522
Income taxes payable 3,653 1,602
Current portion of long-term debt 1,775 --
Deferred revenues 7,255 7,930
Other current liabilities 370 97
--------- --------
Total current liabilities 40,716 32,088
Long-term debt 168,281 --
Other liabilities 2,000 3,064
--------- --------
Total liabilities 210,997 35,152
--------- --------
Commitments and contingencies
Preferred stock ($1.00 par value, 100 shares
authorized, issued and outstanding) -- --
Common stock ($0.10 par value, 40,000,000 shares
authorized, 15,879,528 and
26,376,839 shares outstanding at September 30,
2004 and December 31, 2003,
respectively) 1,588 3,034
Additional paid-in capital 4,201 131,590
Accumulated deficit (84,856) (36,838)
Treasury stock, at cost (4,460,501 and 4,094,665
common shares in treasury
at September 30, 2004 and December 31, 2003,
respectively) (52,252) (46,203)
--------- --------
Total stockholders' (deficit) equity (131,319) 51,583
--------- --------
Total liabilities and stockholders' (deficit) equity $79,678 $86,735
========= ========
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Nine Months Ended
September 30,
2004 2003
--------- --------
Operating Activities:
Net income $12,032 $17,816
Adjustments to reconcile net income to net cash
provided by operating activities:
Restructuring charges 886 1,061
Equity in net (income) losses of ChoiceParts (365) 144
Depreciation and amortization of property and
equipment 4,986 5,388
Amortization of intangible assets 642 500
Deferred income tax provision (3,825) 585
Compensation expense related to issuance of
restricted stock 22 5
Stock compensation expense non-cash 13,139 --
Income tax benefit related to exercise of
options 827 306
Other, net 84 80
Changes in:
Accounts receivable, net (3,625) (658)
Other current assets 490 (128)
Other assets 28 (58)
Accounts payable 3,124 (593)
Accrued expenses 1,210 (5,511)
Income taxes payable 2,051 1,046
Deferred revenues (675) 934
Other current liabilities 432 (62)
Other liabilities (1,064) (949)
--------- --------
Net cash provided by operating activities 30,399 19,906
--------- --------
Investing Activities:
Capital expenditures (4,085) (4,828)
Purchase of short-term investments -- (7,008)
Proceeds from sale of short-term investments 7,004 --
Acquisition of Comp-Est, Inc. -- (13,205)
--------- --------
Net cash provided by (used for) investing
activities 2,919 (25,041)
--------- --------
Financing Activities:
Proceeds from borrowings on long-term debt 177,500 --
Principal repayments on long-term debt (7,444) --
Self-tender offer of common stock (210,000) --
Payments of self-tender offer costs (935) --
Payment of debt issuance costs (3,550) --
Proceeds from exercise of stock options 3,035 1,185
Payment of withholding tax related to
exercise of stock options (1,415) --
Proceeds from employee stock purchase plan 321 294
Payment of principal and interest on notes
receivable from officer -- 1,506
Principal repayments of capital lease
obligations (158) (359)
---------- --------
Net cash (used for) provided by financing
activities (42,646) 2,626
---------- --------
Net decrease in cash and cash equivalents (9,328) (2,509)
Cash and cash equivalents:
Beginning of period 20,755 20,200
---------- --------
End of period $11,427 $17,691
========== ========
Supplemental Disclosure:
Cash paid:
Interest 1,057 176
Taxes 7,862 9,096
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