EX-99.1 2 a5111146ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 Insurance Auto Auctions Announces Improved Fourth Quarter and Full-Year Results WESTCHESTER, Ill.--(BUSINESS WIRE)--March 27, 2006--Insurance Auto Auctions, Inc., a leading provider of automotive salvage and claims processing services in the United States, today announced improved financial results and record vehicle returns during both the fourth quarter and full-year 2005. These results were driven by increased buying activity as a result of IAA's live auctions combined with Internet bidding capability. The Company recorded revenues for the quarter of $69.9 million compared to $62.2 million in the fourth quarter of 2004. Fee income in the fourth quarter increased to $59.6 million versus $53.7 million in the fourth quarter of last year. IAA reported Consolidated EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) consistent with the definition in our senior credit agreement of $10.1 million during the quarter. A table reconciling this measure to the appropriate GAAP measurement is included in the Form 8-K that the Company filed today. Consolidated 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. "In the fourth quarter, we were once again able to significantly grow sales and earnings over the prior year as our enhanced service offering continued to deliver our suppliers with industry-leading returns," said Tom O'Brien, CEO. "Our dual bidding strategy of supplementing live physical auctions with a real-time Internet bidding capability through our I-bid LIVE product, which now includes additional state-of-the-art technology enhancements such as a multi-screen bidding option, has allowed us to generate a significantly higher average selling price than the prior year." Full-Year 2005 Results The Company recorded full-year 2005 revenues of $280.9 million compared to $240.2 million in 2004. Fee income for the year increased to $240.1 million versus $208.7 million during the prior full year. IAA reported Consolidated EBITDA of $52.6 million for the full year. "We had an outstanding year in 2005, both financially as well as through our ability to further strengthen our customer relationships," said O'Brien. "We generated an impressive year-over-year improvement in revenues and Consolidated EBITDA. We have clearly developed a product offering that is resonating more than ever with our customers and is allowing us to attract many new buyers to our platform, generating significantly higher selling prices at auction." O'Brien concluded, "In the coming year we will not only stay true to our dual bidding strategy of providing live auctions that are supplemented by our Internet bidding technology, but we will seek new ways to further enhance our service offering in an effort to improve our customers' returns and our buyers' experience with IAA. Also, we will continue to identify ways to grow strategically through the addition of new locations that fit our acquisition and greenfield investment criteria. We are very excited about the coming year and believe we have the ability to continue growing the company in 2006 by expanding upon our competitive position and enhancing our platform even further." 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 81 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 Annual Report on Form 10-K for the year ended December 25, 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 May Affect Future Results" in our Management's Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K for the year ended December 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 CONSOLIDATED BALANCE SHEETS (dollars in thousands except per share amounts) SUCCESSOR PREDECESSOR ------------- ------------- December 25, December 26, 2005 2004 ------------- ------------- ASSETS Current assets: Cash and cash equivalents $25,882 $13,325 Accounts receivable, net 46,920 50,443 Inventories 19,611 14,498 Income taxes receivable 2,732 - Deferred income taxes 8,511 4,693 Other current assets 5,323 1,613 ------------- ------------- Total current assets 108,979 84,572 ------------- ------------- Property and equipment, net 77,231 74,684 Intangible assets, net 126,378 1,747 Goodwill 191,266 137,494 Other assets 11,006 482 ------------- ------------- $514,860 $298,979 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $38,022 $38,505 Accrued liabilities 17,445 13,513 Obligations under capital leases 367 1,094 Income taxes payable - 1,067 Obligations under line of credit - 6,000 Current installments of long-term debt 1,143 7,512 ------------- ------------- Total current liabilities 56,977 67,691 ------------- ------------- Deferred income taxes 37,582 14,248 Other liabilities 12,765 4,353 Obligations under capital leases 329 661 Senior notes 150,000 - Long-term debt, excluding current installments 113,183 9,375 ------------- ------------- Total liabilities 370,836 96,328 ------------- ------------- 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 - 12 Common stock, par value of $.01 per share (successor) 100 shares authorized, issued and outstanding - - Additional paid-in capital 149,458 151,793 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) (5,434) 65,012 ------------- ------------- Total shareholders' equity 144,024 202,651 ------------- ------------- $514,860 $298,979 ============= ============= INSURANCE AUTO AUCTIONS, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (dollars in thousands) THREE MONTHS --------------------------- SUCCESSOR PREDECESSOR ------------- ------------- September 26, September 27, 2005 - 2004 - December 25, December 26, 2005 2004 ------------- ------------- Revenues: Fee income $59,597 $53,652 Vehicle sales 10,309 8,582 ------------- ------------- 69,906 62,234 Cost of Sales Branch cost 45,738 39,148 Vehicle cost 8,683 7,294 ------------- ------------- 54,421 46,442 Gross profit 15,485 15,792 Operating expense: Selling, general and administrative 11,048 8,901 Loss (gain) on sale of property and equipment (171) 927 Merger costs - - ------------- ------------- 10,877 9,828 Earnings (loss) from operations 4,608 5,964 Other (income) expense Interest expense 6,029 323 Other income (165) (27) ------------- ------------- Earnings (loss) before income taxes (1,256) 5,668 Income taxes 185 1,713 ------------- ------------- Net earnings (loss) $(1,441) $3,955 ============= ============= TWELVE MONTHS ----------------------------------------- SUCCESSOR PREDECESSOR ------------- --------------------------- May 25, December 27, December 29, 2005 - 2004 - 2003 - December 25, May 24, December 26, 2005 2005 2004 ------------- ------------- ------------- Revenues: Fee income $136,926 $103,203 $208,743 Vehicle sales 23,484 17,242 31,436 ------------- ------------- ------------- 160,410 120,445 240,179 Cost of Sales Branch cost 102,675 72,554 157,297 Vehicle cost 19,978 14,640 26,694 ------------- ------------- ------------- 122,653 87,194 183,991 Gross profit 37,757 33,251 56,188 Operating expense: Selling, general and administrative 24,630 15,822 34,978 Loss (gain) on sale of property and equipment 197 (896) 301 Merger costs 5,021 15,741 - ------------- ------------- ------------- 29,848 30,667 35,279 Earnings (loss) from operations 7,909 2,584 20,909 Other (income) expense Interest expense 15,021 567 1,572 Other income (346) (2,442) (67) ------------- ------------- ------------- Earnings (loss) before income taxes (6,766) 4,459 19,404 Income taxes (1,332) 4,899 7,139 ----------------------------------------- Net earnings (loss) $(5,434) $(440) $12,265 ============= ============= ============= INSURANCE AUTO AUCTIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) SUCCESSOR PREDECESSOR ------------- --------------------------- May 25, December 27, Twelve Months 2005 - 2004 - ended December 25, May 24, December 26, 2005 2005 2004 ------------- ------------- ------------- Cash flows from operating activities: Net earnings (loss) $(5,434) $(440) $12,265 Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: Depreciation and amortization 11,855 5,464 12,985 (Gain) loss on disposal of fixed assets 197 (896) 301 Deferred compensation related to restricted stock - 4,343 585 Deferred income taxes (1,874) (1,448) 1,595 Tax benefit related to employee stock compensation - 8,394 275 Changes in assets and liabilities (excluding effects of acquired companies): (Increase) decrease in: Accounts receivable, net 9,270 (5,312) (1,536) Income tax receivable (113) (2,618) - Inventories (4,641) (472) (896) Other current assets (3,190) (520) 1,486 Other assets 228 (827) (1,438) Increase (decrease) in: Accounts payable (7,202) 6,719 1,612 Accrued liabilities (8,732) 12,279 3,151 Income taxes - (1,067) 1,067 ------------- ------------- ------------- Net cash provided (used) by operating activities (9,636) 23,599 31,452 Cash flows from investing activities: Purchase of IAAI, Inc. $(356,753) $- $- Capital expenditures (9,943) (8,221) (28,717) Payments made in connection with acquisitions, net of cash acquired (271) (600) (1,912) Proceeds from disposal of property and equipment 1,488 1,391 1,520 ------------- ------------- ------------- Net cash used in investing activities (365,479) (7,430) (29,109) Cash flows from financing activities: Proceeds from issuance of common stock - 905 1,626 Contributed capital 143,805 - - Proceeds from short-term borrowings - 3,000 6,000 Payment of financing and other fees (13,586) - - Principal payments of long-term debt (22,799) (3,762) (7,547) Purchase of treasury stock - (1) (1,625) Principal payments on capital leases (445) (614) (2,958) Issuance of senior notes 150,000 - - Issuance of term loan 115,000 - - ------------- ------------- ------------- Net cash provided by (used in) financing activities 371,975 (472) (4,504) Net increase (decrease) in cash and cash equivalents (3,140) 15,697 (2,161) Cash and cash equivalents at beginning of period 29,022 13,325 15,486 ------------- ------------- ------------- Cash and cash equivalents at end of period $25,882 $29,022 $13,325 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $12,220 $689 $1,723 ============= ============= ============= Income taxes paid $147 $1,654 $5,404 ============= ============= ============= 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 Mike Banas (Media Inquiries), 312-553-6704 mbanas@ashtonpartners.com