SCHAUMBURG, Ill., July 27 /PRNewswire/ -- Insurance Auto Auctions, Inc.
(Nasdaq: IAAI), a leading provider of automotive salvage and claims processing
services in the United States, today reported lower net earnings for the
second quarter ended July 1, 2001. The Company recorded net earnings of
$2.2 million, or $0.18 per diluted share, versus net earnings of $5.2 million,
or $0.44 per diluted share, for the same quarter a year ago.
Net revenues for the quarter decreased 10.4 percent to $75.5 million
compared with $84.3 million in the second quarter of 2000. The decline in net
revenues is consistent with a planned strategic shift away from vehicles sold
under the purchase agreement method. Under the purchase agreement method, the
entire purchase price of the vehicle is recorded as revenue compared to only
the fees collected on the sale of a vehicle under lower risk consignment fee
based arrangements. This change in contract mix also contributed to the
significant increase in fee income for the quarter. Fee income in the second
quarter increased 15.4 percent to $38.6 million versus $33.4 million in the
second quarter of last year as a result of both increased volume and pricing
changes.
Gross profit for the quarter increased slightly to $24.4 million from
$24.2 million for the same quarter a year ago. Acquisitions made within the
past twelve months and the opening of new greenfield sites during the same
period contributed to a significant increase in operating expenses for the
quarter. In addition, higher information technology expenses were recognized
in 2001 as internal staffing costs have been redirected from capitalized
development costs to maintenance. Earnings from operations for the quarter
totaled $3.8 million compared to $8.8 million for last year's second quarter.
"We remain on track with our reorganization plans, growth strategy, and
information technology platform development while we continue to focus on our
cost structure. Our performance in the second quarter is in line with our
near term expectations and highlights the challenges the organization
faces," said Tom O'Brien, Chief Executive Officer.
In the first six months of 2001, net earnings decreased to $526,000, or
4 cents, per diluted share, as compared with $9.4 million, or 79 cents per
diluted share for the same period a year ago. The Company's net earnings for
the first six months of 2001 include pretax special charges of $6.0 million
that were recorded in the first quarter of 2001. Six month net earnings for
2001 before special charges would have been $4.0 million or 34 cents per
diluted share. Earnings from operations before special charges decreased to
$7.2 million, down from $15.9 million for the same period a year ago. The
special charges related to the Company's previously announced reduction in
workforce, abandonment of certain facilities and the repositioning of its
towing operations as well as other charges. The effective income tax rate was
42 percent in 2001 versus 41 percent in 2000. The effective income tax rate
reflects management's estimate of the applicable rate for the full year.
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 58 auction
sites across the United States.
This press release contains forward-looking information that is subject to
certain risks, trends and uncertainties that could cause actual results to
differ materially from those projected, expressed, or implied by such forward-
looking information. In some cases, you can identify forward-looking
statements by our use of words such as "may, will, should, anticipates,
believes, expects, plans, future, intends, could, estimate, predict,
targeting, potential or contingent," the negative of these terms or other
similar expressions. The Company's actual results could differ materially
from those discussed or implied herein. Factors that could cause or
contribute to such differences include, but are not limited to, those
discussed in the Company's annual report, Form 10-K for the fiscal year ended
December 31, 2000 or subsequent quarterly reports. Among these risks are:
conducting business pursuant to the purchase agreement method of sale;
fluctuations in the actual cash value of salvage vehicles; the ability to
successfully renegotiate existing purchase agreement contracts; the quality
and quantity of inventory available from suppliers; the ability to pass
through increased towing costs; that vehicle processing time will improve;
that the Company's towing business will reach forecasted levels of
profitability; legislative or regulatory acts, changes in the market value of
salvage; competition; the availability of suitable acquisition candidates; the
ability to bring new facilities to expected earnings targets; dependence on
key insurance company suppliers; and the level of energy and labor costs.
For additional information regarding Insurance Auto Auctions free of charge
via fax, dial 1-800-PRO-INFO and use the Company's stock symbol, "IAAI."
Additional information about Insurance Auto Auctions, Inc. is available on the
World Wide Web at http://www.iaai.com .
INSURANCE AUTO AUCTIONS, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands except per share amounts)
Three Month Periods Ended Six Month Periods Ended
July 1, June 30, July 1, June 30,
2001 2000 2001 2000
(Unaudited) (Unaudited)
Net revenues:
Vehicle sales $ 36,942 $ 50,845 $77,159 $ 105,809
Fee income 38,572 33,431 76,199 65,427
75,514 84,276 153,358 171,236
Costs and expenses:
Cost of sales 51,122 60,089 106,147 123,944
Direct operating
expenses 19,550 14,409 38,017 29,427
Amortization of
acquisition costs 1,005 985 2,011 1,933
Special charges - - 6,047 -
Earnings from
operations 3,837 8,793 1,136 15,932
Other (income)expense:
Interest expense 456 457 912 921
Interest income (315) (470) (683) (881)
Earnings before
income taxes 3,696 8,806 907 15,892
Income taxes 1,525 3,611 381 6,516
Net earnings $2,171 $5,195 $526 $9,376
Earnings per share:
Basic $.18 $.45 $ .04 $.81
Diluted $.18 $.44 $ .04 $.79
Weighted average
shares outstanding:
Basic 11,792 11,634 11,761 11,610
Effect of dilutive
securities - stock
options 148 252 208 218
Diluted 11,940 11,886 11,969 11,828
INSURANCE AUTO AUCTIONS, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands of dollars)
July 1, December 31,
2001 2000
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $35,875 $30,938
Short-term investments 3,911 4,859
Accounts receivable, net 45,398 48,091
Inventories 15,113 10,588
Other current assets 4,499 3,112
Total current assets 104,796 97,588
Property and equipment, net 35,603 30,492
Investments in marketable securities - 2,240
Deferred income taxes 5,264 5,123
Other assets, principally goodwill, net 128,229 130,264
$273,892 $265,707
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $20,038 $37
Accounts payable 39,182 38,176
Accrued liabilities 5,791 6,171
Accrued restructuring charges 2,821 -
Total current liabilities 67,832 44,384
Long-term debt, excluding current installments 121 20,141
Other liabilities 3,612 3,001
Deferred income taxes 11,129 10,440
Total liabilities 82,694 77,966
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 and 11,732,935 and 11,715,936
and shares as of July 1, 2001 and
December 31, 2000, respectively 12 12
Additional paid-in capital 139,893 136,962
Retained earnings 51,293 50,767
Total shareholders' equity 191,198 187,741
$273,892 $265,707
SOURCE Insurance Auto Auctions, Inc.
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Related links:
http://www.iaai.com
CONTACT:
Scott Pettit, Chief Financial Officer of
Insurance Auto Auctions, Inc., +1-847-839-4040; or General, Jeff
Wilhoit, +1-312-640-6757, Analysts, Martin McGarry,
+1-312-274-2249, or Media, Tim Grace, +1-312-274-2240, all of The
Financial Relations Board
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