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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 27, 1999
CCC INFORMATION SERVICES GROUP INC
(Exact name of registrant as specified in its charter)
Delaware 0-28600 54-1242469
(State or other (Commission File (IRS Employer Identification
jurisdiction of Number) Number)
incorporation)
World Trade Center Chicago
444 Merchandise Mart
Chicago, Illinois 60654
(Address of principal executive (Zip Code)
offices)
(312) 222-4636
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On January 27, 1999, CCC Information Services Group Inc, a Delaware
corporation, announced preliminary operating results for its fiscal quarter
ended December 31, 1998.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements: Not applicable
(b) Pro Forma Financial Information: Not applicable
(c) Exhibits
EXHIBIT NO. DOCUMENT
99.1 Press Release dated as of January 27, 1999.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CCC INFORMATION SERVICES GROUP INC
By: /s/ Gerald P. Kenney
---------------------
Name: Gerald P. Kenney
Title: Secretary and General Counsel
January 28, 1999
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EXHIBIT INDEX
EXHIBIT NO. DOCUMENT
---------- --------
99.1 Press Release dated as of January 27, 1999
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Exhibit 99.1
CCC INFORMATION SERVICES REPORTS PRELIMINARY RESULTS REFLECTING REVENUE
AND OPERATING INCOME IN-LINE WITH EXPECTATIONS. COMPANY ANNOUNCES THE
APPLICATION OF THE EQUITY METHOD OF ACCOUNTING FOR ITS INVESTMENT IN
INSURQUOTE.
Chicago, IL, January 27, 1999 Investor Relations Contact: (312) 222-4636,
Ext. 7837
CCC Information Services Group Inc. (Nasdaq: CCCG), the leading provider of
business solutions to the automobile claims industry, today announced 13.7%
revenue growth for its fourth quarter ended December 31, 1998. It is
important to note that net earnings in the attached table do not reflect the
final determination of the equity interest in the losses, associated with
CCC's investment in InsurQuote.
FOURTH QUARTER EVENTS
- - Revenues increased $6.0 million from prior year to $49.6 million.
- - Operating income recovers to $6.4 million.
- - A joint venture with the Hearst Corporation was signed to develop products
that will streamline the claims process in Europe.
- - Application of the equity method of accounting for InsurQuote, a non-cash
event.
QUARTERLY RESULTS
In announcing the results, David M. Phillips, Chairman and Chief Executive
Officer, said, "We have just completed a quarter that begins our march back,
reflecting operating income in line with expectations. As you remember, we
were going to focus on current products and service revenue growth, freeze
expenses and rationalize new initiatives that are not yielding near-term
profits."
Fourth quarter 1998 revenues of $49.6 million were $6.0 million, or 13.7%
higher than the same quarter last year. The increase in revenues was
principally due to continued growth in the Company's outsourcing business as
well as growth in the digital imaging product and collision estimating
software licensing.
Fourth quarter operating income of $6.4 million declined $.7 million or 9.8%
from the same quarter last year. Quarter-over-quarter operating margin
declined from 16.3% in 1997 to 13.0% in 1998. Operating expenses increased
$6.7 million or 18.3%, reflecting the growth in the claims outsourcing
business, increased expenditures to improve service levels, product
engineering expenses and new initiative expenses.
JOINT VENTURE
CCC and Hearst Corporation have agreed to establish a joint venture in Europe
to exploit the opportunity to provide insurers and collision repair
facilities with claims tools based on CCC's U.S. technology. The initial
market focus is Europe, which is larger than the U.S. market. Under the
provision of the joint venture, CCC owns 19.9%. A charge of $211 thousand was
recorded in the fourth quarter of 1998 for CCC's share of the joint venture.
Fourth quarter 1998 earnings per share, applicable to common stock on a
diluted basis before the effect of the final accounting calculation for the
equity loss from InsurQuote, of $0.17, was $0.01 or 5.5% below the fourth
quarter of 1997 but improved from the third quarter diluted earnings per
share of $0.11 per share. This amount reflects a gain on the redemption of
preferred stock of $225 thousand and a slight reduction in our effective tax
rate.
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FULL YEAR RESULTS
Revenues for the year ended December 31, 1998 of $188.4 million are 18.4%
higher than last year. The increase in revenue is primarily attributable to
continued growth in the Company's outsourcing business as well as growth in
the digital imaging product and collision estimating software licensing.
Operating income for the year ended December 31, 1998 of $22.9 million
declined $2.8 million or 11.0% from last year. During 1998, the Company
reported losses of approximately $9.5 million on new initiatives.
Year-over-year operating margin declined from 16.2% in 1997 to 12.1% in 1998.
Operating expenses increased $32.2 million or 24.1%, reflecting the growth in
the claims outsourcing business, increased expenditures to improve our
service level, product engineering expenses and new business initiatives.
Net income applicable to common stock, before the effect of the final
calculation for the equity loss from InsurQuote, declined from $15.5 million
in 1997 to $14.0 million, a decrease of 9.2%, for the year ended December 31,
1998.
Earnings per share, before the effect of the final calculation for the equity
loss from InsurQuote, applicable to common stock on a diluted basis for the
year decreased to $0.56, a 9.7% decrease from the $0.62 reported for the same
period last year. In 1998, the Company recorded a one-time, $0.04 per share
charge associated with the decision to relocate the processing operations of
the Claims Settlement Division to South Dakota.
INSURQUOTE INVESTMENT
In February 1998, the Company made a $20 million investment in InsurQuote.
Under the terms of the investment agreement, the existing management would
retain managerial control of the enterprise and work toward accomplishing
certain business goals, which, if accomplished, could result in substantial
additional payments by CCC for the benefit of the founding shareholders of
InsurQuote. Given CCC's 19.9% equity position and its limited involvement in
the day-to-day operations of the company, CCC and its outside accountants
determined that the cost method of accounting was appropriate to apply under
these circumstances.
As part of the year-end closing process, the company's outside accountants
again reviewed the nature of our relationship with InsurQuote, which was
originally designed and structured to allow InsurQuote to operate without
significant involvement from CCC. As a result of this review, and in light of
current applications of generally accepted accounting principles (GAAP) and
general views expressed by the SEC, the Company was advised that the equity
method of accounting should be applied. Additionally, given InsurQuote's
current stage of development and the absence of other substantial outside
investors, CCC may record up to 100% of the losses incurred by InsurQuote,
despite CCC's actual ownership of 19.9%. As required by GAAP, we will record
this method retroactively.
Along with our outside accountants, we are calculating the impact of applying
the equity method and currently can only estimate the non-cash charge to be
between $3.5 million and $14.5 million after-tax for the year ended December
31, 1998.
Once this issue is fully quantified, CCC will schedule another conference
call to discuss this matter in detail.
Mr. Phillips said, "Apart from this accounting issue, we are pleased with our
investment and believe in the success of InsurQuote's unique product
offerings."
OUTLOOK
The following statements are based on current expectations. Some of these
statements are forward-looking and actual results may differ materially.
Please see the Company's offering prospectus and 1997 Annual Report on Form
10-K for a discussion of associated risks.
Mr. Phillips commented on the Company's performance during the latest quarter
and its outlook for future quarters, "The Company continues to bring cost
growth in line with revenue growth. We will continue to spend to improve
quality, but believe this will result in improved cost savings of $5.0
million per year. Additionally we have reduced
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new business initiatives and believe International, InsurQuote Underwriting
Tools, ACCESS and Outsourcing will be profit contributors in 1999."
*****
CCC Information Services Group Inc. is the automotive claims industry's
leading provider of business solutions. Connecting people, processes and
information, CCC's innovative technology-based capabilities ensure that the
right information is always available - at the right time and to the right
person - to make the right business decision.
*****
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UNAUDITED AND SUBJECT TO FINAL ACCOUNTING DETERMINATION
FOR THE EQUITY LOSS FROM INSURQUOTE
CCC INFORMATION SERVICES GROUP INC.
CONDENSED OPERATING RESULTS AND SELECTED BALANCE SHEET DATA
THREE MONTHS AND YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
CONDENSED OPERATING RESULTS December 31, December 31,
---------------------------- -------------------------------
(Unaudited) (Unaudited)
1998 1997 1998 1997
-------- --------- -------- ----------
<S> <C> <C> <C> <C>
Revenues $ 49,551 $ 43,583 $188,437 $159,106
Operating expenses 43,123 36,460 165,565 133,401
-------- -------- -------- --------
Operating income 6,428 7,123 22,872 25,705
Interest expense (132) (33) (258) (139)
Other income, net 294 445 1,509 1,505
-------- -------- -------- --------
Income before income taxes 6,590 7,535 24,123 27,071
Income tax provision (2,582) (3,017) (9,915) (11,239)
-------- -------- -------- --------
Net income before minority interest
and equity losses 4,008 4,518 14,208 15,832
Minority share in earnings of subsidiary (15) - (1) -
Equity in net loss of joint venture (211) - (211) -
EQUITY IN NET LOSS OF INSURQUOTE NOT AVAILABLE - NOT AVAILABLE -
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NET INCOME 3,782 4,518 13,996 15,832
DIVIDENDS AND ACCRETION ON PREFERRED STOCK 228 (94) 43 (365)
-------- -------- -------- --------
NET INCOME APPLICABLE TO COMMON STOCK $ 4,010 $ 4,424 $ 14,039 $ 15,467
-------- -------- -------- --------
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PER SHARE DATA:
NET INCOME APPLICABLE TO COMMON STOCK
- BASIC $ 0.17 $ 0.18 $ 0.57 $ 0.65
-------- -------- -------- --------
-------- -------- -------- --------
- DILUTED $ 0.17 $ 0.18 $ 0.56 $ 0.62
-------- -------- -------- --------
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Weighted average common and common
equivalent shares outstanding
- Basic 23,972 24,194 24,616 23,807
-------- -------- -------- --------
-------- -------- -------- --------
- Diluted 24,297 25,182 25,188 24,959
-------- -------- -------- --------
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</TABLE>
<TABLE>
<CAPTION>
December 31,
---------------------------
SELECTED BALANCE SHEET DATA 1998 1997
------------ ---------
(Unaudited)
<S> <C> <C>
TOTAL ASSETS $90,678 $83,494
Mandatorily redeemable preferred stock 688 5,054
STOCKHOLDERS' EQUITY 49,380 45,827
</TABLE>
NUMBERS ITALICIZED ARE UNAUDITED AND SUBJECT TO FINAL ACCOUNTING DETERMINATION
FOR THE EQUITY LOSS FROM INSURQUOTE
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