CCC Information Services Group Inc. Reports $0.38 EPS for the Fourth Quarter of 2004.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:CCCG CCCG Canadian Conference on Computational Geometry CCCG Climate Change Co-ordinating Group ) reported net income of $6.5 million, or $0.38 per share, for the fourth quarter ending December December: see month. 31, 2004, compared to net income of $8.2 million, or $0.30 per share, for the same quarter in 2003. Included in the fourth quarter 2003 results is a $1.4 million, or $0.05 per share, tax related benefit associated with the completion of a tax audit. Fourth quarter 2004 results reflect the full impact of the company's 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. transaction. Revenue for the fourth quarter increased 3.2 percent to $50.5 million, compared to $48.9 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 $12.8 million compared to operating income of $11.1 million for the fourth quarter of 2003. Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: for the quarter was 25.3 percent compared to 22.6 percent for the same quarter in 2003. "We finished 2004 on a positive note," Githesh Ramamurthy, Chairman and Chief Executive Officer said. "Key customer wins in the quarter will generate momentum and drive revenue growth in 2005. We expect the majority of this new customer revenue to materialize ma·te·ri·al·ize v. ma·te·ri·al·ized, ma·te·ri·al·iz·ing, ma·te·ri·al·iz·es v.tr. 1. To cause to become real or actual: By building the house, we materialized a dream. in the second half of the year." Fourth Quarter Revenue & Expense Highlights The product portfolio revenues for the fourth quarter, including a comparison to the fourth quarter of 2003, are shown in the table below:
TABLE 1
($ in 000's)
----------------------------------------------------------------------
Portfolio Q1 Q2 Q3 Q4 Q4 % Change
2004 2004 2004 2004 2003 vs. Prior
Year
----------------------------------------------------------------------
CCC Pathways $31,174 $31,255 $30,937 $31,360 $30,172 3.9%
CCC Valuescope 10,139 10,161 10,301 11,041 10,532 4.8%
Workflow 6,258 6,541 6,391 6,683 6,462 3.4%
Information Services 502 504 511 499 468 6.6%
Other 1,530 1,012 952 902 1,268 (28.9%)
------- ------- ------- ------- --------
Total $49,603 $49,473 $49,092 $50,485 $48,902 3.2%
----------------------------------------------------------------------
% Change vs. Prior
Year 3.9% 2.9% 1.0% 3.2%
----------------------------------------------------------------------
Key revenue highlights for the quarter are as follows: --The CCC Pathways(R) portfolio increased 3.9 percent from prior year. Key drivers continued to be the growth of the company's estimating solutions in the repair facility and insurance channels as well as growth from CCC's recycled parts solution. --The CCC Valuescope(R) portfolio grew 4.8 percent compared to prior year. Growth came from new customers and higher transaction volume from current customers. --The Workflow The automatic routing of documents to the users responsible for working on them. Workflow is concerned with providing the information required to support each step of the business cycle. portfolio increased 3.4 percent compared to prior year as revenue expansion in CCC Autoverse(R) drove growth through a combination of existing customers expanding their use geographically ge·o·graph·ic also ge·o·graph·i·cal adj. 1. Of or relating to geography. 2. Concerning the topography of a specific region. ge , as well as new customer adoption. Revenue, operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. and operating income for the fourth quarter, compared to the fourth quarter of 2003, are included in the table below:
TABLE 2
($ in 000's)
----------------------------------------------------------------------
Q1 Q2 Q3 Q4 Q4 % Change
2004 2004 2004 2004 2003 vs. Prior
Year
----------------------------------------------------------------------
Revenue $49,603 $49,473 $49,092 $50,485 $48,902 3.2%
Operating Expenses
Production and
Customer Support 8,349 7,807 7,976 8,183 8,489 (3.6)%
Commissions,
Royalties and
Licenses 3,174 3,145 3,166 3,056 3,099 (1.4)%
Selling, General
and
Administrative 17,930 19,105 17,086 17,774 15,674 13.4%
Depreciation and
Amortization 2,103 1,805 1,719 1,838 2,035 (9.7)%
Product
Development and
Programming 8,037 8,089 7,175 6,863 8,544 (19.7)%
Stock Compensation
Expense Non-Cash - - 13,139 - - n/a
Litigation
Settlement - - (2,586) - - n/a
Restructuring
Charge - 886 - - - n/a
------- ------- ------- ------- --------
Total Operating
Expenses 39,593 40,837 47,675 37,714 37,841 (0.3)%
------- ------- ------- ------- --------
Operating Income $10,010 $8,636 $1,417 $12,771 11,061 15.5%
======= ======= ======= ======= ========
Operating Margin 20.2% 17.5% 2.9% 25.3% 22.6%
----------------------------------------------------------------------
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 as a result of efficiencies related to the new customer support model. --Selling, general and administrative expenses increased from prior year due to increased incentive compensation costs tied to business performance. --Product development and programming expenses decreased from prior year because of 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. of the company that took place in the second quarter. The sequential One after the other in some consecutive order such as by name or number. decrease for the quarter is due to the completion of development work on several new products. Full Year Financial Highlights Full year net income totaled $18.6 million, or $0.77 per share, for 2004, compared to net income of $26.0 million, or $0.94 per share, for 2003. Operating income for the year was $32.8 million compared with $40.5 million in 2003. Revenue for the full year 2004 was $198.7 million, an increase of 2.7 percent compared to $193.4 million for the full year 2003. Below is a chart, which details certain charges and benefits included in the 2004 and 2003 full year results:
TABLE 3
($ in millions)
----------------------------------------------------------------------
Impact of Charge / (Benefit)
on Full Year
------------------------------
Operating Net EPS
2004 Income Income
----------------------------------------------------------------------
Stock compensation expense non-cash (Q3) 13.1 8.2 0.34
Litigation settlement (Q3) (2.6) (1.6) (0.07)
Restructuring and 401(k) charge (Q2) 1.7 1.0 0.04
----------- --------- --------
Total Net Charge for 2004 12.2 7.6 0.31
=========== ========= ========
----------------------------------------------------------------------
2003
----------------------------------------------------------------------
Tax benefit (Q4) - (1.4) (0.05)
Restructuring charge (Q3) 1.1 0.7 0.02
----------- --------- --------
Total Net Charge/(Benefit) for 2003 1.1 (0.7) (0.03)
=========== ========= ========
----------------------------------------------------------------------
2005 Guidance For the full year, the company expects to report earnings per share of $1.25 - $1.35, assuming 17.5 million shares outstanding on a 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. basis. This is a change to prior guidance, principally due to the inclusion of a 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. of $3.0 million or $0.11 per share for performance based restricted stock grants for senior managers. These grants, which are being expensed over two years, vest at the end of 2006 based on 2006 earnings performance. The company expects the annual charges from these grants to be comparable to what it has historically granted in options and disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). in Note 1 to the financial statements. The company also expects additional charges from the adoption on FAS 123R beginning July July: see month. 1, 2005. This new accounting standard will require the company to expense the value of previously granted stock options that remain unvested at July 1, 2005. As the company has not yet fully evaluated its FAS 123R adoption and valuation alternatives and related financial statement impact, the above guidance excludes the impact of FAS 123R for existing stock options. On an operating basis, guidance includes revenue growth 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. range, which remains unchanged from the company's prior guidance. Growth will occur largely in the second half of the year as the company completes the implementation of customer wins from 2004. Full year operating income is expected to be in the range of $46 to $49 million. Again, this includes a non-cash charge of $3.0 million, spread ratably throughout the year, for the company's restricted stock incentive plan. The major non-operating items are interest expense and taxes. The company expects interest for the full year to be around $11 million and the tax rate to approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. 38%. For the first quarter of 2005, the company expects relatively flat revenue compared to the first quarter last year, but improved operating margins due to the benefit from the expense reduction program put in place last June June: see month. . Earnings per share for the first quarter should range from $0.26 to $0.29 per share, which includes a $0.03 per share impact for non-cash stock compensation expense. The company will be hosting its fourth 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. 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 ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 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 Year Ended
December 31, December 31,
------------------- --------------------
2004 2003 2004 2003
--------- --------- --------- ----------
Revenues $50,485 $48,902 $198,653 $193,352
Expenses:
Production and customer
support 8,183 8,489 32,315 31,866
Commissions, royalties and
licenses 3,056 3,099 12,541 11,713
Selling, general and
administrative 17,774 15,674 71,895 68,089
Depreciation and amortization 1,838 2,035 7,465 7,923
Product development and
programming 6,863 8,544 30,164 32,234
Stock compensation expense
non-cash -- -- 13,139 --
Restructuring charges -- -- 886 1,061
Litigation Settlement -- -- (2,586) --
--------- --------- --------- ----------
Total operating expenses 37,714 37,841 165,819 152,886
Operating income 12,771 11,061 32,834 40,466
Interest expense (2,515) 164 (3,986) (392)
Other income, net 120 71 552 272
Equity in income (loss) of
ChoiceParts investment 149 123 513 (21)
--------- --------- --------- ----------
Income before income taxes 10,525 11,419 29,913 40,325
Income tax provision (3,985) (3,195) (11,340) (14,285)
--------- --------- --------- ----------
Net income $6,540 $8,224 $18,573 $26,040
========= ========= ========= ==========
Per Share Data:
Income per common share:
Basic $0.41 $0.31 $0.81 $0.99
========= ========= ========= ==========
Diluted $0.38 $0.30 $0.77 $0.94
========= ========= ========= ==========
Weighted average shares
outstanding:
Basic 15,995 26,338 22,993 26,243
Diluted 17,171 27,752 24,258 27,655
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
(Unaudited)
December 31,
-----------------------
2004 2003
----------- -----------
ASSETS
Cash and cash equivalents $19,958 $20,755
Short-term investments -- 7,004
Accounts receivable, net 12,721 10,247
Other current assets 7,790 8,369
----------- -----------
Total current assets 40,469 46,375
Property and equipment, net 12,151 12,776
Intangible assets, net 1,298 2,153
Goodwill 15,747 15,747
Deferred income taxes, net 9,420 9,127
Investments 778 265
Other assets 3,770 292
----------- -----------
Total assets $83,633 $86,735
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Accounts payable $7,728 $5,937
Accrued expenses 19,085 16,522
Income taxes payable 97 1,602
Current portion of long-term debt 1,775 --
Deferred revenues 6,886 7,930
Other current liabilities 383 97
----------- -----------
Total current liabilities 35,954 32,088
Long-term debt 167,838 --
Other liabilities 1,716 3,064
----------- -----------
Total liabilities 205,508 35,152
----------- -----------
Common stock ($0.10 par value, 40,000,000
shares authorized, 16,125,124 and 26,376,839
shares outstanding at December 31, 2004 and
2003, respectively) 1,614 3,034
Additional paid-in capital 7,006 131,590
Other comprehensive income 72 --
Accumulated deficit (78,315) (36,838)
Treasury stock, at cost (4,460,501 and
4,094,665 common shares in treasury at
December 31, 2004 and December 31, 2003,
respectively) (52,252) (46,203)
----------- -----------
Total stockholders' equity (deficit) (121,875) 51,583
----------- -----------
Total liabilities and stockholders' equity
(deficit) $83,633 $86,735
=========== ===========
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except share amounts)
(Unaudited)
Year Ended December 31,
2004 2003
----------- -----------
Operating Activities:
Net income $18,573 $26,040
Adjustments to reconcile net income to net
cash provided by operating activities:
Equity in losses (income) of ChoiceParts (513) 21
Depreciation and amortization of property and
equipment 6,609 7,210
Amortization of intangible assets 856 713
Deferred income tax provision (benefit) (293) 1,327
Restructuring charges 886 1,061
Compensation expense related to restricted
stock 41 16
Compensation expense related to self-tender
offer 13,139 --
Income tax benefit related to exercise of
options 1,250 533
Other, net 88 78
Changes in:
Accounts receivable, net (2,474) 928
Other current assets 579 135
Other assets 144 335
Accounts payable 1,791 (2,542)
Accrued expenses 1,694 (8,891)
Income taxes payable (1,504) (966)
Deferred revenues (1,044) 178
Other current liabilities 445 (62)
Other liabilities (1,348) (1,102)
----------- -----------
Net cash provided by operating activities 38,919 25,012
----------- -----------
Investing Activities:
Capital expenditures (6,014) (7,491)
Acquisition of Comp-Est Inc -- (13,205)
Proceeds from sale short-term investments 7,004 --
Purchase of short-term investments -- (7,004)
----------- -----------
Net cash provided by (used for) investing
activities 990 (27,700)
----------- -----------
Financing Activities:
Proceeds from exercise of stock options 3,903 1,825
Payment of principal and interest on notes
receivable from officer -- 1,506
Proceeds from employee stock purchase plan 422 399
Proceeds from borrowings on long-term debt 177,500 --
Principal repayments on long-term debt (7,888) --
Self-tender offer of common stock (210,000) --
Payment of self-tender costs (935) --
Payment of debt issuance costs (3,550) --
Principal repayments of capital lease
obligations (158) (487)
----------- -----------
Net cash provided by (used for) financing
activities (40,706) 3,243
----------- -----------
Net increase (decrease) in cash and cash
equivalents (797) 555
Cash and cash equivalents:
Beginning of year 20,755 20,200
----------- -----------
=========== ===========
End of year $19,958 $20,755
=========== ===========
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