EX-99.1 2 a5017306ex99-1.txt EXHIBIT 99.1 Exhibit 99.1 Insurance Auto Auctions Announces Improved Third Quarter Results WESTCHESTER, Ill.--(BUSINESS WIRE)--Nov. 9, 2005--Insurance Auto Auctions, Inc., a leading provider of automotive salvage and claims processing services in the United States, announced record vehicle returns during the third quarter. These results were driven by increased buying activity as a result of IAA's live auctions with internet bidding. The Company recorded revenues for the quarter of $68.1 million compared to $60.8 million in the third quarter of 2004. Fee income in the third quarter increased to $58.1 million versus $53.3 million in the third quarter of last year. IAA reported EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) of $11.0 million during the quarter compared to $9.0 million in the year ago period. EBITDA is a non-GAAP measure that the Company uses as a primary measurement of its financial results because it is indicative of the relative strength of the Company's operating performance. A table reconciling this measure to the appropriate GAAP measurement is included in the Form 8-K that the Company filed today. "We were pleased to deliver another outstanding quarter, which included higher sales and EBITDA results compared to the prior year," said Tom O'Brien, CEO. "These improvements were driven by our ability to generate an average per unit selling price that was more than $300 higher than it was only two years ago, producing a significantly better return for both our insurance company suppliers and IAA. Our combined offering of live auctions and industry leading Internet bidding capability has generated continued buying activity growth and, consequently, much higher average selling prices." 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 80 sites across the United States. Forward-Looking Statements The statements in this release should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in our Form 10-Q for the quarter ended September 25, 2005, that we filed with the Securities and Exchange Commission on November 9, 2005. The statements contained in this release that are not historical facts are forward-looking statements. Forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially form those projected, expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by use of words such as "may," "will," "should," "anticipates," "predict," "projects," "targeting," "potential," "or "contingent," the negative of these terms, or other similar expressions. Our actual results could differ materially from those discussed in or implied by forward-looking statements for various reasons, including those discussed in "Factors that Could Affect Future Results" in our Management's Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-Q for the quarter ended September 25, 2005. You should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, we undertake no obligation to publish, update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason. Additional information about Insurance Auto Auctions, Inc. is available on the World Wide Web at www.iaai.com Financial Tables Follow... INSURANCE AUTO AUCTIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (dollars in thousands) (unaudited) THREE MONTHS --------------------------------------- SUCCESSOR PREDECESSOR ------------------- ------------------- June 27, 2005 - June 28, 2004 - September 25, 2005 September 26, 2004 ------------------- ------------------- Revenues: Fee income $58,087 $53,250 Vehicle sales 10,056 7,502 ------------------- ------------------- 68,143 60,752 Cost of Sales Branch cost 42,456 40,157 Vehicle cost 8,643 6,229 ------------------- ------------------- 51,099 46,386 Gross profit 17,044 14,366 Operating expense: Selling, general and administrative 10,182 9,239 Loss (gain) on sale of property and equipment 351 (606) Merger costs - - ------------------- ------------------- 10,533 8,633 Earnings (loss) from operations 6,511 5,733 Other (income) expense Interest expense 6,350 362 Other income (140) (19) ------------------- ------------------- Earnings (loss) before income taxes 301 5,390 Income taxes (206) 2,036 ------------------- ------------------- Net earnings (loss) $507 $3,354 =================== =================== NINE MONTHS --------------------------------------------------------- SUCCESSOR PREDECESSOR ------------------ -------------------------------------- May 26, 2005 - December 27, 2004 December 29, 2003 - September 25, 2005 - May 25, 2005 September 26, 2004 ------------------ ----------------- -------------------- Revenues: Fee income $77,329 $103,203 $155,091 Vehicle sales 13,175 17,242 22,853 ------------------ ----------------- -------------------- 90,504 120,445 177,944 Cost of Sales Branch cost 56,937 72,554 118,150 Vehicle cost 11,295 14,640 19,400 ------------------ ----------------- -------------------- 68,232 87,194 137,550 Gross profit 22,272 33,251 40,394 Operating expense: Selling, general and administrative 13,582 15,822 26,076 Loss (gain) on sale of property and equipment 368 (896) (626) Merger costs 5,021 15,741 - ------------------ ----------------- -------------------- 18,971 30,667 25,450 Earnings (loss) from operations 3,301 2,584 14,944 Other (income) expense Interest expense 8,992 567 1,248 Other income (181) (2,442) (40) ------------------ ----------------- -------------------- Earnings (loss) before income taxes (5,510) 4,459 13,736 Income taxes (1,517) 4,899 5,426 ------------------ ----------------- -------------------- Net earnings (loss) $(3,993) $(440) $8,310 ================== ================= ==================== INSURANCE AUTO AUCTIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (dollars in thousands except per share amounts) SUCCESSOR PREDECESSOR ------------- ------------- September 25, December 26, 2005 2004 ------------- ------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $31,678 $13,325 Accounts receivable, net 41,876 50,443 Inventories 15,696 14,498 Income taxes receivable 3,889 - Deferred income taxes 4,629 4,693 Other current assets 4,657 1,613 ------------- ------------- Total current assets 102,425 84,572 ------------- ------------- Property and equipment, net 72,215 74,684 Deferred income taxes 14,417 6,481 Intangible assets, net 131,944 1,747 Goodwill 189,249 137,494 Other assets 10,552 482 ------------- ------------- $520,802 $305,460 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $30,102 $38,505 Accrued liabilities 20,489 13,513 Obligations under capital leases 426 1,094 Income taxes payable - 1,067 Obligations under line of credit - 6,000 Current installments of long-term debt 862 7,512 ------------- ------------- Total current liabilities 51,879 67,691 ------------- ------------- Deferred income taxes 51,463 20,729 Other liabilities 6,973 4,353 Obligations under capital leases 412 661 Senior notes 150,000 - Long-term debt, excluding current installments 114,138 9,375 ------------- ------------- Total liabilities 374,865 102,809 ------------- ------------- Shareholders' equity: Preferred stock, par value of $.001 per share (predecessor) Authorized 5,000,000 shares; none issued - - Common stock, par value of $.001 per share (predecessor) Authorized 20,000,000 shares; 12,709,758 shares issued and 11,569,156 outstanding as of December 26, 2004 None outstanding as of September 25, 2005 - 12 Common stock, par value of $.01 per share (successor) 100 shares authorized, issued and outstanding - - Additional paid-in capital 149,930 151,793 Treasury stock, 906,480 shares at December 26, 2004 (predecessor) - (9,637) Deferred compensation related to restricted stock - (4,343) Accumulated other comprehensive loss - (186) Retained earnings (loss) (3,993) 65,012 ------------- ------------- Total shareholders' equity 145,937 202,651 ------------- ------------- $520,802 $305,460 ============= ============= INSURANCE AUTO AUCTIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) (unaudited) SUCCESSOR PREDECESSOR ------------------ ------------------------------- Nine Months Ended May 26, 2005 - December 27, 2004 September 26, September 25, 2005 - May 25, 2005 2004 ------------------ ----------------- ------------- Cash flows from operating activities: Net earnings (loss) $(3,993) $(440) $8,310 Adjustments to reconcile net earnings(loss) to net cash provided by operating activities: Depreciation and amortization 6,340 5,464 9,724 (Gain) loss on disposal of fixed assets 368 (896) (626) Deferred compensation related to restricted stock - 4,343 350 Deferred income taxes (787) (1,448) - Tax benefit related to employee stock compensation 678 8,394 - Changes in assets and liabilities (excluding effects of acquired companies): (Increase) decrease in: Accounts receivable, net 14,314 (5,312) 2,075 Income tax receivable (1,270) (2,618) - Inventories (726) (472) 365 Other current assets (2,524) (520) 330 Other assets 887 (827) (1,437) Increase (decrease) in: Accounts payable (15,122) 6,719 2,999 Accrued liabilities (5,448) 12,279 3,770 Income taxes - (1,067) 3,464 ------------------ ----------------- ------------- Total adjustments (3,290) 24,039 21,014 ------------------ ----------------- ------------- Net cash provided (used) by operating activities (7,283) 23,599 29,324 ------------------ ----------------- ------------- Cash flows from investing activities: Purchase of IAAI, Inc. (356,753) - - Capital expenditures (5,904) (8,221) (17,645) Payments made in connection with acquisitions, net of cash acquired (271) (600) (1,912) Proceeds from disposal of property and equipment 225 1,391 1,268 ------------------ ----------------- ------------- Net cash used in investing activities (362,703) (7,430) (18,289) Cash flows from financing activities: Proceeds from issuance of common stock - 905 682 Contributed capital 143,600 - - Proceeds from short-term borrowings - 3,000 - Payment of financing and other fees (13,530) - - Principal payments on long-term debt (22,125) (3,762) (5,660) Purchase of treasury stock - (1) (1,504) Principal payments on capital leases (303) (614) (2,229) Issuance of senior notes 150,000 - - Issuance of term loan 115,000 - - ------------------ ----------------- ------------- Net cash provided (used) by financing activities 372,642 (472) (8,711) Net increase in cash 2,656 15,697 2,324 Cash at beginning of period 29,022 13,325 15,486 ------------------ ----------------- ------------- Cash at end of period $31,678 $29,022 $17,810 ================== ================= ============= Supplemental disclosures of cash flow information: Cash paid or refunded during the period for: Interest 1,987 689 1,376 ================== ================= ============= Income taxes paid 147 1,654 2,028 ================== ================= ============= Income taxes refunded 5,111 26 1,011 ================== ================= ============= Non-cash transactions: Options exchanged in merger transaction $5,653 $- $- ================== ================= ============= CONTACT: Insurance Auto Auctions, Inc. Scott Pettit, 708-492-7040 www.iaai.com or Ashton Partners Mary Jane Mortell (Media Inquiries), 312-553-6724 mmortell@ashtonpartners.com