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Letter to the Editor

CCC Information Services Group Inc. Reports Fourth Quarter and Full Year 2000 Results and Funding Commitment from Current Investor

CHICAGO -- CCC Information Services Group Inc., through its wholly-owned subsidiary CCC Information Services Inc., a leading provider of business solutions to the automobile claims industry, has announced the results for the fourth quarter and full year of 2000 and a funding commitment from Capricorn Investors III, L.P., one of CCC's existing shareholders.

In addressing the challenges faced in 2000, Githesh Ramamurthy, Chairman and CEO of CCC Information Services Inc. said, "We made some tough decisions throughout the year, designed to refocus the business on our core competencies and assets. As a result, we have created a strong platform for 2001 and beyond. Specifically, we exited an under-performing business, began executing our e-commerce strategy through DriveLogic(TM), and have supplemented the strong cash flow generated by our core CCC U.S. Tools business with a commitment for an additional $15 million of funding from an existing investor."

The Company expects to close the sale to Capricorn Investors III, L.P. of $15 million of Trust Preferred securities and warrants to purchase 1.2 million shares of common stock at $10 per share. The transaction is subject to completion of definitive documentation and other customary closing conditions and is expected to close within the next 30 days.

Fourth Quarter Results

• Fourth quarter 2000 revenues of $51.6 million included CCC U.S. revenues (up 3.4 percent on an underlying basis to $45.2 million), CSI ($4.9 million) and CCC International ($1.5 million).
• The Company recorded operating losses for the quarter of $11.1 million. CCC U.S. recorded operating income of $8.3 million for the quarter. Excluding non-recurring items of $7.3 million, the Company recorded operating losses of $3.8 million. Non-recurring charges included: $6.0 million of restructuring charges for the shutdown of the D.W. Norris outsourcing business, $1.0 million for litigation settlement, and $0.3 million, net for severance, settlements and asset write-downs.
• Net losses for the quarter totaled $23.4 million, or $1.08 per share. Excluding non-recurring items, net loss per share was $0.75 for the quarter.

Full Year 2000 Results

• Full year revenues totaled $209.8 million, including CCC U.S. revenue (up 4.3 percent on an underlying basis) to $176.9 million. CSI and CCC International revenues were $25.1 million and $7.8 million, respectively.
• Operating losses for the full year totaled $10.3 million. Excluding $11.4 million of non-recurring operating expenses, operating income was $1.1 million. CCC U.S. operating income of $26.1 million (up 25 percent from 1999) was offset by operating losses at DriveLogic ($19.1 million), CCC International ($3.4 million) and CSI ($2.5 million).
• Net losses for the full year totaled $9.2 million, or $0.42 per share. Excluding non-recurring items, net loss per share was $0.05 for the full year.

CCC's Description of Full Year 2000 Highlights

• CCC U.S. business continued to provide consistently strong earnings, cash flow, and growth in its customer base. Operating income grew by 25 percent (excluding non-recurring operating expenses) to $26.1 million, with annual EBIDTA of $35.7 million.
• Launched DriveLogic, our e-commerce subsidiary, focused on developing Internet and wireless-enabled technology solutions for the auto claims and repair industries and providing efficiency through collaboration.
• Announced DriveLogic's strategic relationships with MDSI Mobile Data Solutions Inc. to offer real-time workforce management for the North American auto insurance market, and Cognizant, a provider of technical resources to speed delivery of product to market.
• Released DriveLogic's first commercial product, Collision Repair Solution(TM), an Internet portal that helps repair facilities market and promote their business.
• Formed ChoiceParts, LLC, an online parts network along with the Dealer Services and Claims Solutions Groups of Automatic Data Processing, Inc., and The Reynolds and Reynolds Company.
• Increased collision repair facility customers to 14,000 - a Company record.
• Achieved record transaction volume on EZNet® with nearly a million claims-related transactions processed in a single day.
• Strengthened the CCC International leadership team, refocused efforts on the UK business and exited the non-core UK based outsourcing business (D.W. Norris), to improve profitability going forward.

Outlook

With a tighter focus on our core competencies, the Company anticipates and has targeted the following results:

• Improve CCC U.S. operating margins to 20 percent and EBITDA to $40 million for 2001.
• Achieve DriveLogic revenues in excess of $15 million, ramping to an annual rate of $100 million by the end of 2002.
• Attain DriveLogic profitability by first quarter 2002 and limit losses in 2001 to the level of those reported in 2000.
• Reduce CCC International losses and improve profitability by $5 million in 2001.
• Manage costs and infrastructure growth in DriveLogic and CCC International in tandem with our plans to bring new products, customers and markets on-line in the future.
• Execute a swift wind-down of D.W. Norris, our UK-based outsourcing business, with limited 2001 impact.

"We believe the investments we have made in DriveLogic, CCC International, ChoiceParts and our CCC U.S.Tools businesses position us well for growth and continued leadership," said Ramamurthy. "We expect revenue growth in 2001 in excess of 10 percent from the combination of our CCC U.S. Tools, DriveLogic and CCC International businesses. Furthermore, we expect to deliver positive, consolidated EBITDA in excess of $15 million, including over $40 million from CCC U.S. We believe our efforts in 2000 will help position CCC into a high-technology, high-margin, and top-quality company for 2001 and beyond."

INSIGHT would like to see some positive growth in CCC's stock price this year, after watching a 56 percent drop in value during 2000. As for the ChoiceParts venture, see our upcoming February issue for our publisher's analysis.

©2000 Collision Repair Industry INSIGHT
All Rights Reserved

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