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Letter to the Editor

CCC Information Services Group Inc. Posts Improved Fourth Quarter Operating Performance

CHICAGO -- CCC Information Services Group Inc. has reported net income from continuing operations, before non-recurring charges, of $3.0 million, or $0.13 per share, for the fourth quarter ended December 31, 2001 compared with a net loss of $13.0 million, or $0.60 per share, in the same quarter of 2000. Under GAAP (generally accepted accounting principles) reporting standards, the company recorded a net loss of $3.5 million or $0.16 per share for the fourth quarter, compared with a net loss of $23.4 million or $1.08 per share in the same period a year ago.

Operating income, before non-recurring charges, rose to $7.3 million in the fourth quarter, compared with a loss of $3.7 million in the same quarter of 2000. Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA), before non-recurring charges, increased to $10.0 million compared with $6.7 million in the third quarter and negative $480,000 in the fourth quarter a year ago.

Revenues from the company's U.S. business in the fourth quarter of 2001 increased 5.7 percent from the fourth quarter a year ago, rising from $45.2 million to $47.8 million. CCC made the decision to exit its international operations in the second quarter of 2001.

"CCC posted its second consecutive quarter of improved financial performance," said Githesh Ramamurthy, chairman and chief executive officer of CCC Information Services Inc. "While the non-recurring charges taken contributed to a net loss for the quarter, it is clear that -- on an operating basis -- we have restored CCC to a company that generates consistent cash flows with a much lower expense base."

During the quarter, CCC recorded a pre-tax charge of $4.3 million as an estimate of the amount that CCC will contribute toward the potential settlement of the largest of the class action lawsuits related to the company's total loss valuation product. CCC currently anticipates that the proposed settlement would include a resolution of any potential claims for indemnification or contribution by its customers relating to the transactions covered by the settlement.

Additionally, together with one of its's largest customers, Nationwide Mutual Insurance Company, CCC has entered into an agreement to settle another of these class action lawsuits. The settlement agreement, which is contingent on court approval, does not require any cash contribution by CCC. The company has agreed, however, for a period of three years, as part of the settlement, to additional procedures for collecting and supplementing information to update and further verify the condition adjustment used in the total loss valuation product.

"We believe that these settlements will address a substantial portion of our total loss transaction volume represented in the class action lawsuits and will resolve the majority of the class action suits pending against the company. CCC will not be admitting liability in connection with either settlement; rather, CCC wishes to avoid the expense and burden of extended litigation," said Ramamurthy. "Indeed, we continue to stand firmly behind the total loss product and we believe our product is a superior methodology for delivering fast, fair local market values."

As a result of restructuring CCC has also taken an additional charge of $4.3 million to write off excess office space in Chicago. This is expected to reduce the company's overall annual expense run rate by roughly $1.8 million per year.

CCC's full-year U.S. revenues rose 5.3 percent to $186.3 million from $176.9 million. Consolidated revenues (including the exited international operations) rose 1.8 percent to $187.9 million from $184.6 million. U.S. revenues continued to grow at an average of 5-6 percent per year with products like Electronic Direct Repair, Auditing, and Recycled Parts Service growing on average greater than 30 percent per year. The Automotive Services Group continued to demonstrate strong revenue growth of approximately 10 percent per year.

CCC's net loss for the year, before non-recurring charges, was $6.9 million or $0.32 per share compared with a net loss of $21.7 million, or $1.00 per share in 2000.

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