-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Was5KrlakjdZkJ8L6OScGlsj9mSYpEgxsbrptfjK36VmtSdVa9jxH/HNhNx3LEru xvZrzmEpOj4s0z9a5rgyEg== 0000912057-96-025687.txt : 19961113 0000912057-96-025687.hdr.sgml : 19961113 ACCESSION NUMBER: 0000912057-96-025687 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961112 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INSURANCE AUTO AUCTIONS INC /CA CENTRAL INDEX KEY: 0000880026 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MOTOR VEHICLES & MOTOR VEHICLE PARTS & SUPPLIES [5010] IRS NUMBER: 953790111 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19594 FILM NUMBER: 96659453 BUSINESS ADDRESS: STREET 1: 1270 WEST NORTHWEST HIGHWAY CITY: PALATINE STATE: IL ZIP: 60067 BUSINESS PHONE: 8477059550 MAIL ADDRESS: STREET 1: 1270 WEST NORTHWEST HIGHWAY CITY: PALATINE STATE: IL ZIP: 60067 10-Q 1 FORM 10-Q 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 September 30, 1996 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: 0-19594 ------- INSURANCE AUTO AUCTIONS, INC. ----------------------------- (Exact name of registrant as specified in its charter) California 95-3790111 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 1270 West Northwest Highway, Palatine, Illinois 60067 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (847) 705-9550 - -------------------------------------------------------------------------------- (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. /X/ Yes / / No APPLICABLE ONLY TO CORPORATE ISSUERS Number of shares outstanding of each of the issuer's classes of common stock, as of September 30, 1996: Class Outstanding September 30, 1996 ----- ------------------------------ Common Stock, $0.001 Par Value 11,282,088 shares INDEX INSURANCE AUTO AUCTIONS, INC.
PAGE NUMBER ----------- PART I. FINANCIAL INFORMATION......................................... 3 Item 1. Financial Statements (Unaudited).............................. 3 Condensed Consolidated Balance Sheets as of September 30, 1996 and December 31, 1995........... 3 Condensed Consolidated Statements of Operations for the Three Month Periods ended September 30, 1996 and September 30, 1995 and the Nine Month Periods ended September 30, 1996 and September 30, 1995................. 4 Condensed Consolidated Statements of Cash Flows for the Nine Month Periods ended September 30, 1996 and September 30, 1995........................................ 5 Notes to Condensed Consolidated Financial Statements.......... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................................. 8 PART II. OTHER INFORMATION............................................ 15 Item 1. Legal Proceedings and Other Matters........................... 15 Item 2. Changes in Securities ........................................ 15 Item 3. Defaults upon Senior Securities............................... 15 Item 4. Submission of Matters to a Vote of Security Holders........... 15 Item 5. Other Information............................................. 15 Item 6. Exhibits and Reports on Form 8-K.............................. 15 Signatures............................................................. 16
2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) INSURANCE AUTO AUCTIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) September 30, December 31, 1996 1995 -------------- ------------ ASSETS Current assets: Cash and cash equivalents $ 4,383,000 $ 362,000 Short-term investments 8,802,000 6,820,000 Accounts receivable, net 32,485,000 30,198,000 Inventories 9,377,000 9,495,000 Other current assets 2,773,000 3,591,000 ------------ ------------ Total current assets 57,820,000 50,466,000 ------------ ------------ Property and equipment, at cost, net 22,684,000 21,144,000 Other assets, principally goodwill, net 137,542,000 139,023,000 ------------ ------------ $218,046,000 $210,633,000 ------------ ------------ ------------ ------------ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current installments of long-term debt $ 2,064,000 $ 4,015,000 Accounts payable 22,956,000 20,531,000 Accrued liabilities 12,052,000 11,306,000 Income taxes 2,884,000 2,427,000 ------------ ------------ Total current liabilities 39,956,000 38,279,000 ------------ ------------ Long-term debt, excluding current installments 31,577,000 28,973,000 ------------ ------------ Total liabilities 71,533,000 67,252,000 ------------ ------------ Shareholders' equity: Preferred stock, par value of $.001 per share. Authorized 5,000,000 shares; none issued. -- -- Common stock, par value of $.001 per share Authorized 20,000,000 shares; issued and outstanding 11,282,088 and 11,270,141 shares as of September 30, 1996 and December 31, 1995, respectively 11,000 11,000 Additional paid-in capital 131,676,000 131,575,000 Retained earnings 14,826,000 11,795,000 ------------ ------------ Total shareholders' equity 146,513,000 143,381,000 ------------ ------------ $218,046,000 $210,633,000 ------------ ------------ ------------ ------------ 3 SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. INSURANCE AUTO AUCTIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Month Periods Nine Month Periods Ended September 30, Ended September 30, ------------------------- ---------------------------- 1996 1995 1996 1995 ---- ---- ---- ---- Net sales: Vehicle sales $48,707,000 $47,634,000 $156,922,000 $138,259,000 Fee income 19,973,000 17,348,000 60,616,000 52,145,000 ----------- ----------- ----------- ----------- 68,680,000 64,982,000 217,538,000 190,404,000 Cost and expenses: Cost of sales 54,941,000 52,125,000 172,568,000 147,533,000 Direct operating expenses 11,010,000 11,100,000 35,200,000 31,178,000 Amortization of acquisition costs 931,000 903,000 2,796,000 2,481,000 Special charges -- 4,226,000 -- 4,226,000 ----------- ----------- ----------- ----------- Earnings from operations 1,798,000 (3,372,000) 6,974,000 760,000 Other (income)expense: Interest expense 713,000 718,000 2,289,000 1,659,000 Interest (income) (232,000) (183,000) (632,000) (753,000) ----------- ----------- ----------- ----------- Earnings (loss) before income taxes 1,317,000 (3,907,000) 5,317,000 4,080,000 Income taxes (benefit) 566,000 (1,660,000) 2,286,000 1,734,000 ----------- ----------- ----------- ------------ Net earnings (loss) $ 751,000 $(2,247,000) $ 3,031,000 $ 2,346,000 ----------- ----------- ----------- ------------ ----------- ----------- ----------- ------------ Net earnings (loss) per common and common equivalent shares outstanding $ .07 $ (.20) $ .27 $ .21 ----------- ----------- ----------- ------------ ----------- ----------- ----------- ------------ Weighted average common and common equivalent shares outstanding 11,320,000 11,284,000 11,338,000 11,307,000 4 SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. INSURANCE AUTO AUCTIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Month Periods Ended September 30, ------------------------- 1996 1995 ---- ---- Cash flows from operating activities: Net earnings $ 3,031,000 $ 2,346,000 ----------- ----------- Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 6,195,000 4,733,000 Non-cash special charges -- 2,512,000 Change in assets and liabilities (net of effects of acquired companies): (Increase) decrease in: Accounts receivable, net (2,287,000) (387,000) Inventories 118,000 (2,291,000) Other current assets 818,000 (510,000) Other assets (84,000) (110,000) Increase (decrease) in: Accounts payable 2,351,000 (1,599,000) Accrued liabilities 1,241,000 1,967,000 Income taxes payable 457,000 (1,859,000) ----------- ----------- Total adjustments 8,809,000 2,456,000 ----------- ----------- Net cash provided by operating activities 11,840,000 4,802,000 ----------- ----------- Cash flows from investing activities: Sale (purchase) of short-term investments (1,982,000) 1,973,000 Capital expenditures (4,939,000) (8,249,000) Payments made in connection with acquired companies, net of cash acquired (1,797,000) (18,474,000) ----------- ----------- Net cash used in investing activities (8,718,000) (24,750,000) ----------- ----------- Cash flows from financing activities: Payment of notes payable (3,770,000) (856,000) Net proceeds from issuance of Senior Notes and notes payable 4,568,000 19,605,000 Proceeds from issurance of common stock 101,000 367,000 ----------- ----------- Net cash provided by financing activities 899,000 19,116,000 ----------- ----------- Net increase (decrease) in cash 4,021,000 (832,000) Cash and cash equivalents at beginning of period 362,000 2,529,000 ----------- ----------- Cash and cash equivalents at end of period $ 4,383,000 $ 1,697,000 ----------- ----------- ----------- ----------- Supplemental disclosures of cash flow information: Cash paid during the year for: Interest $ 2,597,000 $ 1,177,000 Income taxes 1,858,000 4,039,000 ----------- ----------- ----------- ----------- 5 SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. INSURANCE AUTO AUCTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. GENERAL The unaudited condensed consolidated financial statements of Insurance Auto Auctions, Inc. and its subsidiaries (collectively, the "Company") have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation for each of the periods presented. The results of operations for interim periods are not necessarily indicative of results for full fiscal years. As contemplated by the Securities and Exchange Commission ("SEC") under Rule 10-01 of Regulation S-X, the accompanying consolidated financial statements and related notes have been condensed and do not contain certain information that will be included in the Company's annual consolidated financial statements and notes thereto. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1995. 2. INCOME TAXES Income taxes were computed using the effective tax rate estimated to be applicable for the full fiscal year, which is subject to ongoing review and evaluation by management. 3. NET EARNINGS (LOSS) PER SHARE Net earnings (loss) per share is based on the weighted average number of shares of common and common share equivalents outstandin